Stocks remain range-bound amid optimism
New rural electrification policy to focus on NE
Reserve Bank frowns on UBI cash clutter
Cement, jute get priority in Birla Corp recast drive
Gift pack to light up Diwali mood
Foreign Exchange, Bullion, Stock Indices

 
 
STOCKS REMAIN RANGE-BOUND AMID OPTIMISM 
 
 
BY OUR BUREAUX
 
Oct 26: 
Optimism was the buzzword as markets ushered in Samvat 2057 after a spell of lacklustre trading in the past couple of months that has seen indices fall like nine pins.

The Bombay Stock Exchange (BSE) sensex finished 13.55 points higher at 3,757.16 after trading in a narrow range during its hour-long moorat session. The National Stock Exchange (NSE) Nifty gained 4 points to close at 1,187.

Amid sporadic fireworks on Dalal Street, ensconced in their dealing rooms with families, brokers and employees started their business after worshipping Lakshmi, the goddess of wealth.

The highlight of the day was the listing of Sterlite Optical and Hughes Tele.com. After a heady start, the two scrips attracted the kind of interest that surprised even seasoned operators.

Hughes Tele.com, a share issued at par after its fixed price portion devolved on underwriters, was listed at a premium.

Sterlite Optical Technologies, a company formed after Sterlite Industries was split into two, witnessed its share, with a face value of Rs 5, trading in the region of Rs 900.

The Silverline share was in the limelight, gaining 9 per cent on the back of reports that its directors will meet in the US today to consider acquisition of a Nasdaq-listed company.

On Wednesday, the sensex leapt 92 points, even though Dow Jones industrial average shed 66.59 points to end at 10,326.48 points while the Nasdaq plunged 190 points, or 5 per cent, to close at 3,229.59.

Trading started on a cautious note as local institutions made token purchases.

Tushar Shah of KBS Securities, a BSE broking outfit, said the sentiment was positive.

“The markets sustained well and ended on a good note. Sensex is likely to touch 4,050 points and rest there for a while.”

His prediction of an upturn was based on the fact that shares, many of them blue-chips, are quoting at rock-bottom prices.

Among the old-economy shares, Raymond hit the upper-end 8 per cent circuit filter because of what brokers described as value picking by investors. Shares of pharmaceutical companies such as Cipla, Ranbaxy and Sun Pharma also went up. Mahindra & Mahindra was hammered after it disappointed investors with poor second-quarter results on Wednesday.

On the Calcutta Stock Exchange (CSE), rings of smoke from incense sticks filled the cavernous hall at 7 Lyons Range as brokers welcomed the new year, Samvat 2057. Trading was not brisk, but expectations about a rally were high.

“We are now looking forward to a more successful and meaningful year ahead. The signs of a brighter tomorrow are already evident,” a beaming CSE president K. Parekh said.

Parekh pointed to the healthy performance of companies in the second quarter as a signal that the economy was in fine fettle.

“The economy is moving, albeit slowly, in a positive direction. Financial institutions and FIIs are shaking off their inhibitions, and investing afresh in equity,” he added.

The CSE president said the weak sentiment in the capital markets was transitory, and it is only a matter of time before they bounce back. “The situation will improve for the shares of technology and old-economy companies,” Parekh said.

The Calcutta Stock Exchange, he said, will regain its lost ground by taking a number of steps, including the introduction of derivatives trading, expansion to other cities, and setting up a new building.

Parekh did not rule out mergers with smaller exchanges to boost its trading volumes. “We will be able to emerge as a strong force over the next few months,” he added.    


 
 
NEW RURAL ELECTRIFICATION POLICY TO FOCUS ON NE 
 
 
FROM M RAJENDRAN
 
New Delhi, Oct 26: 
The power ministry will soon unveil a separate policy for rural electrification with a special thrust on the north-east.

The group of ministers headed by finance minister Yashwant Sinha will soon examine the guidelines for a rural electrification policy. It is also expected to examine the possibility of enhancing the working of the Rural Electrification Corporation (REC).

Sources in the power ministry said, “The new power minister has taken the initiative to focus on rural electrification. The policy will lay down a road map and also explore possibility of opening up rural electrification to the private sector.”

At a recent meeting of senior officials, Union power minister Suresh Prabhu had said that out of a total of 4,18,660 villages, only about 82,000 villages have been electrified so far. Further, of the total villages 39,216 villages in the north-east, about 28,000 have already been electrified.

Power ministry sources said that electrification work in the remaining villages in the north-east has not yet taken off due to various administrative and security problems.

Prabhu also asked the REC chairman to speed up funding of projects.

“The 100 per cent electrification of villages will continue to be an elusive goal. Going by the average annual rate of village electrification in these states, the remaining villages will be electrified in 702 years,” the Union power ministry stated at a presentation at the state power ministers’ conference.

Sources pointed out that rural electrification is a continuous activity and depends heavily on the financial resources of states, generating capacity and transmission distribution facilities in the states among others.

Source added the government may restructure the working of the REC in order to improve its functioning.

REC is a government-owned development financing institution engaged in promoting and funding rural electrification schemes.

It has been mobilising resources to bridge the gap between investment targets and budgetary support and internal resource mobilisation, by issuing bonds mostly on a private placement basis.    


 
 
RESERVE BANK FROWNS ON UBI CASH CLUTTER 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Oct 26: 
The Reserve Bank of India (RBI) has pointed out the sorry state of finances of the United Bank of India in 1999-2000, focusing attention on the failure to achieve the targets set in a 1998 plan aimed at reducing bad loans.

In a letter to the bank chairman, the RBI has asked why United Bank could not meet any of the goals fixed in the monitorable action plan (MAP) — a document it had submitted to the central bank two years back.

“Based on the data sent by your bank, it is observed that as on June 30, 2000, UBI has failed to achieve any of the targets fixed under the MAP,” RBI told the chairman and managing director in the letter. Responding to it, Biswajit Choudhuri, CMD, said: “I am aware of RBI’s observations. We have started taking measures.”

The central bank said the net profit of Rs 31 crore in 1999-2000 was possible because of high extraordinary income, which included Rs 13.38 crore in interest on income tax refunds.

If the income from recapitalisation bonds was excluded, the declared net profit would turn into a net loss of Rs 142 crore. Low profits were not the only problem. The bank could not generate an operating surplus.

The fact that no provisions were made for wage revision and pension liabilities of the previous years is likely to strain future profitability, RBI said.

“The bank was caught in a vicious circle of low income and growing inability to attract good business. The ratios of cost to total income and staff expenses to net total income were very high and unsustainable,” it added.

But, RBI found poor asset quality to be the biggest irritant. Gross non-performing assets (NPAs) declined — largely because of an increase in advances — but net NPAs went up. In absolute terms, net NPAs increased from Rs 566 crore to Rs 587 crore.

“The ratios of gross NPAs and net NPAs to total advances, at 27.63 per cent and 12.85 per cent, respectively, were higher than the industry averages. Besides, the fresh NPAs worth Rs 138 crore was a sign of poor credit management. Though total recoveries picked up during the year, cash recoveries slowed down. Doubtful loans shot up from 61 per cent of the total NPAs in 1998-99 to 66 per cent in 1999-2000,” the RBI said.

The bank, on its part, responds to the criticisms by saying bad loans are endemic to the industry at large, but measures are being implemented that will speed up recoveries.

“NPA is a chronic disease in the entire banking industry. We are making constant efforts to recover loans. I should say we are on the right path. I have already directed my departments to take stringent measures, suggested by the RBI. But the central bank should also understand in the circumstances in which we have to work,” Choudhuri said.

The annual accounts reveal that UBI’s assets (loans, investments) are not in line with much of its liabilities (deposits) — something bankers call asset-liability mismatches. In all, 59 per cent of deposits were parked with the bank for one to three years, though 62 per cent of its investments were made in instruments that would be redeemed after five years.

Weak finances were best mirrored in the capital adequacy ratio, which declined from 9.63 per cent in 1998-99 to 9.58 per cent in the last financial year. “However, considering the rise in balance-sheet size by Rs 2,293 crore and additional market risk weight of Rs 196 crore on approved investments as on March 31, 2000, the reported rise in risk-weighted assets by Rs 341 crore appeared to be low,” RBI said.    


 
 
CEMENT, JUTE GET PRIORITY IN BIRLA CORP RECAST DRIVE 
 
 
FROM VIVEK NAIR
 
Mumbai, Oct 26: 
Birla Corporation Ltd (BCL), an M P Birla group company, with diversified interests ranging from cement, jute goods, blended yarn, calcium carbide and industrial gases, vinoleum floor covering, wallpapers and auto trims, is planning to restructure its business.

The restructuring may result in the company exiting some of these businesses and attaining a ‘lean and mean’ structure, industry sources said.

It is believed that BCL may, at a later point of time, exit from the synthetics and vinoleum businesses and focus on cement and jute sectors as its core areas of interest. However, this could not be confirmed from the company as senior officials denied any knowledge of such a move.

BCL has appointed advisors to review its business operations in the light of its current financial position, sources added. The advisors will also suggest a strategy to push growth levels. BCL, which recorded a sales turnover of over Rs 1011 crore for the year ended March 31, 2000, however, showed a net loss of Rs 55 crore for the year.

BCL is now contemplating a rights issue to meet the capital expenditure on upgradation of its cement plant at Chittorgarh and to partly fund the cash losses of over Rs 48 crore incurred during the previous years.

While the company is yet to decide on the pricing of the issue, market circles believe it to be in the range of Rs 10-14 per share.

BCL, which was promoted in 1919 by G D Birla, saw a change in its focus from being a jute mill to a multi-product company with six major divisions, when it passed on to M. P Birla. After the latter’s death, Priyamvada Birla took over as chairman in the 1990.

In cement, which contributes to over 80 per cent of the company’s revenue, BCL’s total installed capacity after commissioning of the Rae Bareilly unit in Uttar Pradesh stands at 39 lakh tonnes. Thus it has six plants, two each at Satna in Madhya Pradesh, and Chittorgarh in Rajasthan, one at Durgapur and the Rae Bareilly plant. In the jute segment, the company produces well over 40,000 tonnes.

The synthetics division manufactures spun yarns where the major products are viscose yarn, polyester yarn, polyester/viscose blended yarn and polyester/cotton blended yarn.    


 
 
GIFT PACK TO LIGHT UP DIWALI MOOD 
 
 
FROM RAJA GHOSHAL
 
New Delhi, Oct 26: 
There are many ways to light up a Diwali, but perhaps none so effective as giving gifts—whether for the sheer joy of giving or for more material purposes.

Finding the appropriate gift has also been rendered easier with a wide array of products to choose from.

If you think Diwali is the perfect pretext to indulge in some dreamy rich milk chocolate, Cadbury’s is the place to be. For those with a sweet tooth, Cadbury’s has come up with a range that include among others, a musical jewellery box and an executive desk set in a multi-functional leather box filled with chocolate-coated almonds. Priced between Rs 85 and 1400, the gift items include confectionery packed in exquisite cut glass plates and bowls, airtight cookie jars, fruit bowls, crystal glasses and Chinese zylon and teflon coated non stick pans.

And for the discerning customer Cadbury’s has also imported its Milk Tray from South Africa, the company said.

Premium pen manufacturer Luxor Parker has come up with a range of Parker gift packs that put together the pens in assorted combinations. The range is available between Rs 100 and 8000. To add to their appeal, the Parker gift packs will come with a gold-plated paperweight, a silver-plated paper knife, a leather organiser.

One may invoke Ganesha through the Parker Ganesha Vector series, which has a printed rendition of the pot-bellied deity on the pen. The Parker Vector Time pen tells the time difference between various parts of the world with the twist of the pen’s cap. In fact, Luxor Parker set up a business-to-business division four years back, to produce gifts for the festive season. The division has grown by 25 per cent each year and accounts for 15 per cent of Luxor Writing Instrument’s annual turnover.

However, the public sector is not lagging behind in the gift race. MMTC states that its hallmark gold, silver, platinum, as also its branded silverware, Sterling Silver, are much sought after as corporate Diwali gifts.

For this Diwali, MMTC has come up with a range of traditional coins of Lakshmi and Ganesh in 10 gms, 5 gms and 2 gms. According to A. N Gaur, senior manager (marketing), MMTC, the gold and silver medallions of Lakshmi and Ganesh were totally sold out within the first week of the current season.

The prices of gold medallions of Lakshmi and Ganesh range between Rs 4900 for 10 gms and Rs 2500 for 5 gms, sales taxes extra.

The product range at MMTC also includes puja thalis, trays, frosted jug and glass sets and dry fruit bowl sets.

So think beyond the ubiquitous box of sweets and dry fruits this Diwali and watch the recipient’s face light up — and with it, your prospects too!    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Closed	HK $1	Closed
UK £1	Closed	SW Fr 1	Closed
Euro	Closed	Sing $1	Closed
Yen 100	Closed	Aus $1	Closed
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4560	Gold Std (10 gm	4535
Gold 22 carat	Rs. 4305	Gold 22 carat	4195
Silver bar (Kg)	Rs. 7900	Silver (Kg)	7995
Silver portion	Rs. 8000	Silver portion	8000

Stock Indices

Sensex		3757.16		+13.55
BSE-100		1919.82		+8.83
S&P CNX Nifty	1186.30		+2.40
Calcutta	104.43		+0.66
Skindia GDR	NA		-
   
 

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