Sinha shrugs off worries, promises growth potions
National steel policy in offing
Heavy selling by foreign funds halts sensex rally
PNB opens exit door for staff
Thapars deliver snub to Bajoria
NIIT posts 57% rise in net, raises dividend
Panel hints at insurance policy for mutual funds
Foreign Exchange, Bullion, Stock Indices

 
 
SINHA SHRUGS OFF WORRIES, PROMISES GROWTH POTIONS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Oct 16: 
Finance minister Yashwant Sinha today quelled fears over the pace and direction of the economy, and said his government is brewing a heady mix of growth stimulants that will be injected this winter to nourish a recovery threatened by a sinking rupee and soaring inflation.

The menu will be a legislative and financial cocktail: Laws that help speed up reforms will be packed in with big doses of stimulus spending on mega power projects and cross-country highways.

A new Fiscal Responsibility Act will be moved in Parliament’s winter session to curb government expenditure. A new statute to take care of sick firms and make closure of companies easier will be framed, along with a competition law.

Speaking at the Economic Editors’ Conference here today, Sinha said he was confident his policy initiatives would pay off, the economy would recover well and the ‘prophets of doom and gloom’ would be forced to eat their own words.

“We will still be one of the fastest growing economies in the world,” an upbeat Sinha reassured reporters.

However, he conceded that the rising rate of inflation — which shot up to a 97-week high of 7.56 per cent — was a source of worry. Another area of concern was the depletion in foreign exchange reserves as a result of the higher oil-import bill, which is likely to be 50 per cent more than the $ 12 million estimated earlier. Even so, said the minister, the balance of payments situation will remain comfortable.

Brushing aside Standard & Poor’s bleak assessment of the economy, and low growth-rate projections of Centre for Monitoring Indian Economy, Sinha said the industrial slowdown was limited to a few sectors, such as capital goods, and could be reversed with the help of his policy pills.

“The downgrading of economic outlook by Standard & Poor’s is not a great cause for concern. I am not hazarding a guess on the GDP growth rate. But, on the basis of my experience during 1998-99, when a gloomy scenario was painted with a growth rate of 3.5-4 per cent, the actual figure was 6.8 per cent. I am confident of reasonable growth this year,” he said.

Sinha said the Banking Amendment Act would be moved in the forthcoming session of Parliament to allow a reduction in the government’s equity in PSU banks to 33 per cent.

A group of ministers is finalising a new Sick Companies Act, which is likely to be combined with bankruptcy laws that allow creditors to foreclose heavily indebted firms. The bankruptcy clauses in the new law would be one of the measures the government hopes will cut down the massive pile of bad loans public sector banks are saddled with.

New labour laws that allow industrialists to exit businesses, even as it protects the interests of labour, are being crafted by another group of ministers. However, in a rare display of pragmatism, Sinha said the finance ministry did not favour any pro-industry legislation that renders thousands jobless and leads to a new set of intractable problems.

At the centre of the government’s pump-priming plan this winter will be the financial closure of key power projects, and starting work on PM’s dream ‘Knit-India’ highway project. This is expected to catalyse demand for basic goods like steel, cement and machinery.

The minister said the disinvestment target of Rs 10,000 crore for this year was within reach because the ball has already been set rolling for the selloff in Air-India and Indian Airlines. In addition, the purchase of the government’s stake in oil companies by other state-owned firms early this year has generated cash that will be shown as earnings from selloff.

Laws opening up the insurance sector were passed earlier this year, paving the way for market regulators to invite applications from companies. The first batch of licences are expected to be handed out by the end of this month.    


 
 
NATIONAL STEEL POLICY IN OFFING 
 
 
FROM SPECIAL CORRESPONDENT
 
New Delhi, Oct 16: 
The government today asked steel producers to cut costs to be more competitive under the WTO regime while announcing that it would soon finalise a national steel policy to draw a road map of the Indian steel industry. “The national policy will be finalised in consultation with the steel industry and will take into consideration all aspects of production like demand and supply, quality of imported raw material and WTO,” steel minister B.K. Tripathy said.    

 
 
HEAVY SELLING BY FOREIGN FUNDS HALTS SENSEX RALLY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 16: 
The stock markets today turned extremely volatile with foreign institutional investors (FIIs) in a mad rush to unload both old and new economy scrips.

Mirroring the market mood, the 30-share Bombay Stock Exchange sensitive index, which opened on a firm note, crashed by more than 200 points from its intra-day high of 3930.10. It closed at 3728.67 as against last Friday’s close of 3738.93, thus netting a modest fall of 10.26 points.

The US-based Janus led the huge selling among the foreign institutional investors. Janus sold huge quantities of Infosys Technologies and Reliance Industries Ltd. The unwinding further spread to the counters of Satyam Computers, Hindustan Lever, Zee Telefilms among others. Some local operators also joined the fray.

The sensex today opened past the 3900-mark at 3908.73 and later touched the day’s high of 3930.10. The strong opening and intra-day high was largely due to the Security and Exchange Board of India’s decision to defer the introduction of rolling settlement by about three months and a strong turnaround on the Nasdaq last Friday. Reports about the possibility of a fall in the rising oil prices added to the bullish sentiment.

However, FIIs started booking profits at higher levels, with new and old economy stocks taking a beating. Infosys was the most active share with a turnover of Rs 626.63 crore of the total business volume of Rs 4,281.30 crore. Other top traded scrips were HFCL (Rs 616.68 crore), Satyam (Rs 449.28 crore) and Zee (Rs 380.45 crore).    


 
 
PNB OPENS EXIT DOOR FOR STAFF 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Oct. 16: 
Punjab National Bank (PNB) has formally offered a voluntary retirement scheme (VRS) to its 65,000 employees, the first nationalised bank in the country to do so.

The aim is to reduce around 13,000, or 20 per cent, of its staff. According to sources, the bank would like a 25 per cent cut in the number but it may not be possible for it to achieve that goal.

Called the PNB Employees Voluntary Retirement Scheme-2000, it will remain open for a month from November 1.

The PNB board had approved the VRS at its meeting on September 21 and 22. “It is difficult to say how many people will opt for it. We have earmarked more than Rs 200 crore to fund the scheme,” a senior PNB official told The Telegraph from Delhi.

The bank says it will not ask the finance ministry for loan to fund its severance package. “We will meet the requirement from our internal accruals. Our finance department is working on the funding pattern,” the official added.

Banking industry officials say the VRS is the result of an initiative taken by PNB chief S. S. Kohli who, as the chairman of the Indian Banking Association (IBA), wants to show that his bank can lead from the front on job cuts.

Earlier, Kohli had headed the seven-member committee that drew up the blueprint for banks’ voluntary retirement scheme. The finance ministry approved it, but gave individual boards the freedom to implement the scheme on their own terms.

According to IBA, the banking industry in India can become competitive only if it reduces its entire staff-strength by 25 per cent.

An employee who opts for PNB’s VRS will be entitled to an ex-gratia amount—which may be 60 days’ salary (pay plus stagnation increments, plus special pay plus dearness relief) for each completed year of service, or a salary for the number of months of remaining service, whichever is less.

PNB has said 50 per cent of the ex-gratia amount will be paid instantly in cash while the other half will be given in the form of bonds issued by the bank for a period of five years.

The employees will get gratuity, leave encashment and either pension or bank’s contribution towards PF as per existing rules.

However, PNB’s decision to introduce VRS has raised the hackles of unions in the banking industry.

“PNB has acted as a trend-setter. We will fight it on the issue. On October 24, the members of United Forum of Bank Unions are meeting in Calcutta to decide future course of action,” a senior representative of All India Bank Employees’ Association said.    


 
 
THAPARS DELIVER SNUB TO BAJORIA 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 16: 
Ballarpur Industries (Bilt) today took the fight straight into Arun Bajoria’s camp and contested the Calcutta-based jute baron’s claim that he had cornered a 6 per cent stake in the Thapars-promoted company. Rejecting Bajoria’s demand for a seat on the Bilt board, Gautam Thapar, managing director of the company, said, “if Bajoria wants a seat on the board, let him come to the AGM. Let the shareholders decide whether they want him or not.” Thapar seemed unperturbed by Bajoria’s holding in the company and said, “we are not worried. He has too little a shareholding to block any special resolution.”

The company said Bajoria directly holds just 2.9 per cent in Bilt against his claims of a 6 per cent holding. However, the company failed to confirm Bajoria’s claim of an additional 3 per cent held by associates and friends. “He (Bajoria) has 2.9 per cent stake which is in our records. We are not aware of how much he has through other unidentifiable sources,” Thapar said.

Bilt has already informed the Securities and Exchange Board of India (Sebi) that while Bajoria claims to have a 6 per cent stake in the company, “our records show just 2.9 per cent holding”.

Announcing the first quarter financial results, Thapar said Bilt has posted a 2.3 times growth in after-tax profit at Rs 23.09 crore. The turnover for the period was pegged at Rs 377 crore.

Chambers in arms

Spooked by Bajoria’s exploits, the apex business chambers have taken up the cause of the promoters and have asked Sebi to take a relook at the existing takeover guidelines. CII, Ficci and Assocham have said an atmosphere of hostile takeovers should not be encouraged.

Ficci president G.P. Goenka today said, “Existing rules and guidelines of Sebi cannot be set aside while judging the claims of Arun Bajoria.” Assocham president Shekhar Bajaj said a promoter should be allowed to raise holdings at his own pace up to 51 per cent without any annualised ceilings.

The CII has suggested changes in the takeover code to bring the creeping acquisition limits on a par with raiders.    


 
 
NIIT POSTS 57% RISE IN NET, RAISES DIVIDEND 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 16: 
NIIT Ltd has registered a 57 per cent growth in net profit at Rs 224.1 crore for the year ending September 2000 as against Rs 142.8 crore last year. The company has recommended a 42.5 per cent dividend as against 40 per cent offered last year on an equity of Rs 38.65 crore.

NIIT’s earning per share during the fiscal is Rs 57.99 compared to Rs 36.95 during 1998-99, representing a growth of 57 per cent.

The audited annual results of the company were approved at the board of directors’ meet held here today. The book value of a NIIT share of face value Rs 10 has gone up from Rs 107.1 to Rs 159.94 at the end of the year.

Announcing the results, Rajendra S Pawar, chairman of NIIT said, “A growth in earnings reinforces the sustainability and steadiness of NIIT’s business model that leverages on the strengths of our software and education business.”

Global revenues of NIIT and its subsidiaries for the financial year 1999-2000 grew by 40 6 per cent at Rs 1,237.1 crore as against Rs 880 crore last year.

Indian operations contributed 46 per cent to the global revenues bringing in a total of Rs 571.6 crore.

Business from US market grew at a rate of 55 per cent, contributing Rs 320.8 crore while business from Europe grew at 41 per cent to Rs 163.8 crore.

Global Tele net leaps

Global Tele-systems Ltd, has posted a 142.14 per cent rise in net profits for the quarter ended September 30. The net profit before extra-ordinary income stood at Rs 73.40 crore against Rs 30.31 crore in the corresponding previous quarter. The profit was achieved largely due to e-commerce services, software and engineering services, resulting in a better product mix, higher exports, reduction of hardware revenues and increase in services revenues, said Global Tele.

The company, during this quarter, recorded a 19 per cent rise in income to Rs 224.18 crore as against Rs 188.32 crore in the year-ago period.    


 
 
PANEL HINTS AT INSURANCE POLICY FOR MUTUAL FUNDS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 16: 
With investor protection gaining importance by the day, the B.G. Deshmukh committee, an advisory panel on mutual funds, today decided to look at the possibility of an insurance policy for each mutual fund.

In its meeting held today, the committee said such insurance cover may be taken by mutual funds for a certain percentage of its assets.

Officials from the Securities and Exchange Board of India said the issue will be taken up with the insurance companies and the Insurance Regulatory Authority (IRA). The introduction of indemnity insurance cover has assumed significance as the assets of mutual funds have been showing a growing trend, they added.

The committee took several decisions, including reduction in the initial offer period of mutual funds to 30 days from 45 days, uniformity in calculation and declaration of NAVs by close ended schemes and the availability of annual reports including the accounts of the asset management companies to unit holders.

Sebi said that as per the existing regulations, the schemes of mutual funds can be open for a period of 45 days and the asset management company should issue unit certificates or statements of accounts within 42 days from the date of closure of the initial subscription list.

At the meeting, it was decided that the present limit of a maximum of 45 days on the initial offer period should be reduced to 30 days. Within the next 30 days, the scheme should despatch statements of accounts and open for ongoing sales and repurchase.

It was also decided that the asset management companies may start dispatching the statements of accounts once the minimum subscription amount specified in the offer document is received even before the closure of the issue.

Apart from these measures, the committee decided to transfer the unclaimed redemption amount of mutual funds to a pool account, whereby the interest earned on such funds could be used for investor education.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.32	HK $1	Rs. 5.85*
UK Ł1	Rs. 66.99	SW Fr 1	Rs. 25.85*
Euro	Rs. 39.18	Sing $1	Rs. 26.05*
Yen 100	Rs. 42.84	Aus $1	Rs. 24.10*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta	Bombay

Gold Std (10gm)	Rs. 4570	Gold Std (10 gm	4550
Gold 22 carat	Rs. 4315	Gold 22 carat	4210
Silver bar (Kg)	Rs.7975	Silver (Kg)	8100
Silver portion	Rs. 8075	Silver portion	8105

Stock Indices

Sensex	3728.67		-10.26
BSE-100	1878.90		+12.50
S&P CNX Nifty	1175.45		-1.30
Calcutta	104.84		-1.45
Skindia GDRNA	566.27		+2.46
   
 

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