Bombay Dyeing unfazed by threat, rules out buyback
New twistto Maruti crisis, output takes a hit
ICE meltdown chills Wipro ADS hopes
Modest top-line growth forecast at Lever in Q3
Industrial growth drops to 4.8% in Aug
Interest rate breather for IFL
Compaq wages web war against Dell
Foreign Exchange, Bullion, Stock Indices

 
 
BOMBAY DYEING UNFAZED BY THREAT, RULES OUT BUYBACK 
 
 
FROM SATISH JOHN
 
Mumbai, Oct 12: 
Nusli Wadia is bristling at the audacious attempt by jute baron-turned-corporate raider Arun Bajoria to lay siege to Bombay Dyeing but is more than confident that they will see off the challenge.

The confidence stems from the fact that Wadia controls almost 40 per cent of the voting rights that include those of GDR holders (4.84 per cent stake) which has been vested with the Bombay Dyeing management.

The company will never succumb to a greenmail attempt, said a senior company official. “We will never opt for a buy-back. The company’s cash resources will be put to better use to help out company grow,” he added.

Meanwhile, Bombay Dyeing has taken a stand that Bajoria has violated the rules by failing to inform the company after crossing the 5 per cent threshold limit in accordance with the takeover code.

In the depository era, managements have no control over who is buying their stock.

The management feels that the Company Law board’s decision to deny Bajoria voting rights for four months in respect of the shares held by him is a big blow to the predator’s ambitions.

“He didn’t say anything at the DCA meeting about his stake,” a Bombay Dyeing official claimed.

Meanwhile, Bombay Dyeing’s solicitors Amarchand & Mangaldas & Suresh A. Shroff & Co. yesterday filed their version with the apex market regulator. The Sebi chairman is expected to call a hearing early next week, say sources close to the market regulator’s office.

But at the August 4 meeting before Sebi authorities, Bajoria had stated that he had crossed the 5 per cent limit on March 16. A copy of the same was couriered to Nusli Wadia. However, Bombay Dyeing officials contend that this was not a valid intimation.

“He gave us a list of names. We downloaded data available with the depositories. We found that this was simply not true. He crossed the 5 per cent limit only on May 16,” said company officials.

The company also disputes Bajoria’s claim that he has over 14 per cent stake in the company. “As per the information we have from our company registrars, we conclude that he has only 11.21 per cent,” the Bombay Dyeing officials said.

The company’s management is livid over Bajoria’s charge that it has not been doing enough for its shareholders. The senior Bombay Dyeing official pointed out that the company had never skipped dividend in the past 115 years since it was incorporated in 1885.

“We have seen wars, depression, the Wall Street collapse and several calamities, but never have we let our shareholders down. That’s why our share has been treated more like a government security by our loyal shareholders,” the official said.

Many of the minority shareholders (many of them Parsis) have passed the shares down through the generations. On being told that many among the shareholders believe that the Bajoria’s challenge is a welcome development, the official retorted that the problem is with the shareholders who were willing to sell shares at such low levels.

The company’s cash reserves alone amount to Rs 550-600 crore, most of it invested in securities and such other instruments. In addition, the company has properties that could fetch over Rs 1000 crore.

But valuation of its property is a futile exercise as the textile policy has yet to allow mills to relocate to enable them to develop their mill lands.    


 
 
NEW TWISTTO MARUTI CRISIS, OUTPUT TAKES A HIT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi Oct 12: 
The ongoing strike by Maruti Udyog Employees Union took a new turn today, with the management asking employees to give a written undertaking promising not to “indulge in any activity which adversely affects production and discipline.”

The directive led to a sharp drop in output at the Maruti plant today, which rolled out about 400 units against the normal schedule of about 1000-1200 units per day. Only 300 employees were allowed to enter the factory today.

The notification says only those workmen shall be allowed to enter the factory who give an undertaking in writing.

Maruti union’s general secretary Mathew Abraham said “We will not sign this declaration. We want to work but the management did not let us in.”

Meanwhile all the union leaders who were arrested earlier this week were released today.

According to Maruti, the average cost to company (CTC) per workman was Rs 22,500 per month in 1999-2000. The incentive scheme sought by the union would have increased the CTC to Rs 38,330 per workman per month.

Maruti officials claimed such a sharp increase would result in an additional burden of Rs 51 crore a year, which the company cannot bear at this stage.

Maruti says as a result of union agitation there has been considerable loss of production. Hence they have sent this notice, effective October 10, to workmen.

“The workmen who do not give the undertaking would be deemed to be on illegal strike. The management is not making any pre-condition for workmen to join their duty. In terms of the contract of employment, the workmen are duty-bound to adhere to norms of discipline and give normal output,” said Maruti officials.    


 
 
ICE MELTDOWN CHILLS WIPRO ADS HOPES 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 12: 
The hammering taken by technology companies in markets at home and overseas markets today forced Wipro to slash the projected price for its maiden American Depositary Share (ADS) offering to $ 52.48 per share from $ 62.86.

The software major said in its prospectus sent to the Securities and Exchange Commission (SEC) that the BSE closing price of its share was $ 63.86 on September 15, the day the first offer document was filed. It fell to $ 52.48 on October 10.

The company said it is required to make amendments to the prospectus regularly, and updating facts does not, in any way, compromise the actual price of the share when it is listed.

Market analysts say if the downturn in the equity market persists, there is a possibility that the collection target may be scaled down further. At current prices, Wipro aims to raise $ 131.3 million, down from the $ 166.2 million planned earlier.

There are others who think the tremors on stock exchanges will not stop company from getting a better valuation when it offers 2.8 million American Depository Shares (ADS) to US investors.On Dalal Street today, the Wipro scrip did not reflect the unease within the company, gaining Rs 43.46 to close at Rs 2326.55. It opened at Rs 2,275, hit an intra-day high of Rs 2357 and a low of Rs 2195.

Wipro offers high-end infotech solutions to leading companies worldwide, apart from having other profitable businesses in several niche areas. Its market capitalisation, one of the highest for an Indian company, is a staggering $ 14.6 billion.

It has three primary business segments: global IT services, Indian IT services and consumer care & lightning. In global infotech services, the company provides research and development services for hardware and software design to technology and telecommunication companies.

It also offers software application development services to corporates. Top clients include Lucent, NCR, Nortel and Compaq. Its fastest growing business segment, global services accounted for 45 per cent of its revenue and 77 per cent of its operating income for the year ended March 31, 2000.

On the other hand, Indian infotech services and products contributed 35 per cent to its revenue and 12 per cent to its operating income. A more modest 14 per cent of its revenues came from its consumer care and lighting businesses.    


 
 
MODEST TOP-LINE GROWTH FORECAST AT LEVER IN Q3 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 12: 
Stuck in a bind after years of fast-track growth, Hindustan Lever Ltd (HLL) is expected to announce a modest top line growth of 4-6 per cent with profits continuing to grow at a fast clip of 20-25 per cent.

The fast-moving consumer goods giant will announce its third quarter results tomorrow for the calendar year 2000. The numbers will be coming in at a time when research agencies have been scaling down the growth forecasts for the sluggish Indian economy to as low as 5.8 per cent from a government estimate of 8 per cent at the start of this fiscal.

“I don’t see any major surprises”, says Rajesh Kothari, an analyst tracking the FMCG companies at Khandwala Securities. He predicted a modest topline growth of six per cent with the bottom line growth of 18 per cent.

Nirav Sheth, an analyst at SSKI Securities expects topline growth at 3-to-3.5 per cent but is more generous with the profit growth estimates which is expected to grow at a robust 25 per cent over the corresponding period of the previous year.

Analysts expect the bottom line growth to come from the high margin products from the premium segment.

The FMCG major expects income growth not to come from its popular segment catering to the rural markets, a market that HLL had a lot of expectations from and believed would deliver the results in the future.

However, analysts tracking the industry call their rural initiative a lot of hype. The foray into the rural markets is yet to yield HLL the required results, say analysts. Adding to its agony was the poor monsoon spell in few of the states.

In the current scenario - the share price of HLL, termed a “defensive stock” in the market, has already been discounted at the marketplace. After climbing to a 52-week high of Rs 325 on the BSE, the scrip tumbled to touch a 52-week low of Rs 185. The share price closed at Rs 192.85 today after touching an intra-day low of Rs 187.

Analysts disagree on where the growth in profits are coming this year. While the analyst at Khandwala Securities feels that the profit growth is driven by the premium segment, the SSKI analyst reckons that profit growth will essentially come from the low raw material prices this year.    


 
 
INDUSTRIAL GROWTH DROPS TO 4.8% IN AUG 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 12: 
There seems to be no end to bad news. Close on the heels of the Reserve Bank of India and private economic think tanks paring the overall growth target for the current fiscal, the industry today reported a drop in the growth rate to 4.8 per cent in August compared with 7.3 per cent in the same month last year.

The poor performance on the industrial front is mainly attributed to the manufacturing and power sectors.

The industrial performance for the month of August is in keeping with the findings of various industry associations which have forecast a substantial decline in industrial production, confirming the depressed state of the Indian economy.

During the first five months of the current fiscal (April-August), industrial growth dipped to 5.3 per cent compared with 6.2 per cent during the same period last year, according to the latest index of industrial production (IIP) figures released by the Central Statistical Organisation (CSO) here.

The manufacturing sector, which currently accounts for more than three-fourths of the weightage in the IIP, fell sharply to 5.0 per cent in August this year as against 7.4 per cent registered last year. Cumulative growth in the manufacturing sector during the first five months of the present fiscal also declined to 5.6 per cent compared with 6.8 per cent in the previous year.

The mining sector, however, continued its upward trend and recorded a growth of 6.8 per cent in August compared with 1.7 per cent in the same month last year. The power sector recorded a poor growth of 0.6 per cent in August as against 10.9 per cent growth rate in the same period last year.    


 
 
INTEREST RATE BREATHER FOR IFL 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Oct 12: 
Banks and financial institutions have agreed to reduce interest rates on loans given to Indian Foils Ltd, the troubled Calcutta-based company which has informed the Board for Industrial and Financial Reconstruction (BIFR) that it is potentially sick.

“We had requested the banks and financial institutions to give us some interest waiver,” said a top-level official of the company said. “The banks have informed us that they will reduce the interest by 3 per cent. The FIs have also said they will reduce the interest by 2 per cent. This has come us a real relief to us.”

The banks and FIs were charging 16 per cent interest on loans to the company. ICICI is the lead financial institution and State Bank of India is the lead banker of IFL.

IFL, which is being taken over by Sterlite Industries under an agreement with the Khaitans reached early this year, has unsecured and secured loans worth Rs 278.29 crore. Out of this, the FIs have provided loans worth Rs 130 crore. The gross interest cost of the company amounts to Rs 53.41 crore. The company had registered a loss of Rs 40.40 crore in 1999-2000.

The official said the company has already retired its inter-coporate deposits of Rs 20.81 crore.

The new management has already pumped in Rs 30 crore. According to an agreement with B.M. Khaitan, the promoter of the company, Sterlite will acquire 1.10 crore shares of Rs 10 at a price of Rs 23.50. And another one crore warrants will be converted into equity on September 2001 at the same price.

“We have already converted 10 per cent of the warrants into equity by paying Rs 2.35 crore. We have enough time to convert the rest into equity,” the official added.

After the takeover is completed, Sterlite will have a 55 per cent stake, Williamson Magor 27 per cent, and the FIs and mutual funds 7 per cent. The remaining 11 per cent is with the public.

The company, whose main focus is now to turnaround, has decided to rationalise its product range. “We will gradually get out of heavy products and give more emphasis on light products. The focus is also on value addition,” the official said.

The company has already downsized the workforce at both its factories, Hoera and Kamarhati.    


 
 
COMPAQ WAGES WEB WAR AGAINST DELL 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 12: 
Two of the world’s biggest computer companies are spoiling for a new bout in an old joust: Personal computer (PC) giant Compaq will take on arch-rival Dell in an Indian encounter that could change the way people purchase PCs in a country waking just a little late in the dawn of the internet revolution.

By deciding to sell computers off the Web — rather than off the shelf — Compaq has locked horns with an adversary that is widely reckoned as the Peter Pan of direct selling.

Dell has the prime-mover advantage by virtue of having used this marketing ploy first, but it set up shop in India only recently. Compaq, which has been around longer but determined to cover its direct-selling flank, launched its online store today with the aim of beating the enemy at its own game.

The Web shop makes Compaq the first company in India that will help customers wrap up the entire transaction online, without having to wait for a sales representative to arrive at their door. Orders can be placed at www.compaq.co.in/cooldukaan http://www.compaq.co.in/cooldukaan>. Its vision statement: “Everything to the internet.”

Michael S Dell, chairman and chief executive of Dell Computer Corporation, had announced during his recent visit to the country that his company would set up a base here. “Our core competence is direct selling and we will do it in India,” he said.

The weapon Compaq could use to best its rival is time. Dell said it would deliver products seven days after the order was placed, but Compaq now promises a faster, nimbler service by promising deliveries within two to three days.

At the end of the day, it could all be a game of logistics. Dell does not have a unit here. Products are shipped to India from its factory in Malaysia. Compaq, which has a unit in Bangalore, promises customers the convenience of shopping on the Net and the option to purchase a configure-to-order PC.

Compaq’s website includes features to facilitate customer enquiry, customised configuration, purchase and post-purchase order tracking.

Primarily targeted at the small and medium business segments, small offices and home offices, the Compaq online store will have a customer-call centre in India’s Garden City to answer queries.

“The launch of Compaq’s online store consolidates the company’s leadership as an innovator in a web-driven economy. It is in tune with its commitment to provide best-in-class technology and world class service — all at the click of a button,” said Paul Blinkhorn, vice-president (commercial personal computing group), at Compaq Computer Corporation.

According to Neelam Dhawan, director (sales), Compaq India, the company aspires to create a world where virtually all information is online.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.28	HK $1	CLOSED
UK £1	Rs. 67.63	SW Fr 1	CLOSED
Euro	Rs. 40.08	Sing $1	CLOSED
Yen 100	Rs. 43.02	Aus $1	CLOSED
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta	Bombay

Gold Std (10gm)	CLOSED	Gold Std (10 gm	4525
Gold 22 carat	CLOSED	Gold 22 carat	4185
Silver bar (Kg)	CLOSED	Silver (Kg)	8100
Silver portion	CLOSED	Silver portion	8105

Stock Indices

Sensex	3847.58		+11.07
BSE-100	1931.88		+19.34
S&P CNX Nifty	1206.25		+4.35
Calcutta	107.68		+0.76
Skindia GDRNA	-		-
   
 

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