Bill to regulate NBFCs cleared
Bombay Dyeing plans to merge subsidiary
RBI rescues battered rupee
State Bank net soars 71% to Rs 606 cr
Rediff buys ThinkIndia
Dhanraj Mills moves SC to block share sale
CESC net loss in H1 leaps to Rs 33cr
Great Eastern’s day of reckoning
Reliance Petroleum first half net gallops to Rs 726 crore
Foreign Exchange, Bullion, Stock Indices

 
 
BILL TO REGULATE NBFCS CLEARED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 30: 
The cabinet today approved the Financial Companies Regulation Bill 2000 replacing provisions of the RBI Act 1934 relating to regulation and supervision of non-banking financial companies (NBFCs).

The Financial Companies Regulation Bill is expected to be introduced in the winter session of the Parliament as there is no effective law to govern NBFCs.

According to broad parameters, the companies which are not incorporated as finance companies will not be allowed to mobilise or raise public deposits. This is expected to improve the accountability of the NBFCs.

Moreover, the company law board will decide all cases of investors and its decision will have to be implemented by both the Reserve Bank of India and Securities and Exchange Board of India.

The cabinet today also cleared an ordinance that will pave the way for the formation of a dedicated road fund out of the one rupee cess levied on petrol and diesel for development and maintenance of road infrastructure in the country. The cess is expected to fetch the government Rs 6000 crore.

About 50 per cent of the cess on diesel, or Rs 2,500 crore, will be used to develop rural roads while 57.5 per cent of the remaining Rs 3,500 crore will be spent on national highway development.

The funds will first be deposited in the Consolidated Fund of India (CFI), from where it will be transferred annually to the non-lapsable and non-diversionary dedicated road fund, sources said.

The fund is expected to give a fillip to the national highway development project which envisages four or six laning of 13,250 km of national highways by the National Highways Authority of India (NHAI).

The Rs 54,000 crore project covers the 5,950-km golden quadrilateral connecting the four metros (Delhi-Mumbai-Chennai-Calcutta) and the 7,300-km north-south and east-west corridors.

Parliamentary affairs minister Pramod Mahajan said the central road fund has already collected more than Rs 5000 crore.

An ordinance for a dedicated fund for development and maintenance of national highways arose as this legislation cannot be passed immediately.

The cabinet also decided to introduce a bill in the winter session to repeal 21 obsolete acts, including one dating back to 1856. Mahajan said these acts had become redundant for various reasons and were being removed from the statute book as part of the administrative reforms process. The decision to repeal these acts is based on recommendations of the commission on review of administrative laws, chaired by P.C Jain, to make the statute book brief.

The new textile policy was also discussed at today’s cabinet meeting. But a decision has been deferred till November 2, 2000.

Minister for textiles Kashiram Rana said, “The cabinet which discussed the issue approved several proposals, but some others are yet to be cleared and hence a decision will be taken at the next meeting on November 2.”

The meeting also decided to close down the the public sector Petrofils Cooperatives Ltd in Vadodara, which has accumulated losses of Rs 460 crore in the last five years. A voluntary separation package will cost the government Rs 95 crore.    


 
 
BOMBAY DYEING PLANS TO MERGE SUBSIDIARY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 30: 
In a surprise move, Bombay Dyeing & Manufacturing Company said its board will meet tomorrow to discuss the merger of its wholly-owned subsidiary Scal Investments with the company.

The timing of the move has perplexed corporate mavens as it comes at a time when the company is fighting to ward off a hostile takeover by jute baron Arun Bajoria who has cornered around 14 per cent of the company’s equity.

S S Kelkar, Bombay Dyeing’s executive director and the company’s official spokesperson, refused to spell out the rationale for the merger. “The board is meeting tomorrow and it will inappropriate for me to comment on the issue at this juncture,” he said.

In 1982-83, Bombay Dyeing had sold its flats and properties not connected with its operations to Scal Investments Ltd, its wholly owned subsidiary. Investors will find Scal Investments attractive because of its huge funds parked in debt securities and its valuable real estate in Mumbai.

Scal Investments, in turn has a 100 per cent subsidiary called Scal Services. Bombay Dyeing has a few other wholly-owned subsidiaries like Archway Investment and Pentafil Investment.

The company has been periodically developing small chunks of its real estate in the city. One landmark property developed by the company houses the famous “Twin Towers”, near Prabhadevi, in the central suburbs. Corporate observers tracking the industry say it has become a sort of trend for companies to merge their profitable subsidiaries with themselves to boost investor value.

Earlier, these subsidiaries were set up to avoid taxes and the profits of these subsidiaries were routed back by way of dividends.

After the announcements in this year’s Union budget, the strategy to subsidiarise has become less attractive for corporates.

This is in view of the hike in dividend tax on corporates. The loss-making Tata Chemicals merged its investment subsidiary Sabras Investment (which made a killing in ACC shares) with the company. Sabras Investment had made huge profits during the year by selling ACC shares to the Sekhsarias of Gujarat Ambuja Cement.

On similar lines, pharma companies like Sun Pharma and Glenmark are said to have de-subsidiarised its wholly-owned 100 per cent export oriented companies foregoing their export benefits while at the same time benefiting from higher profits accruing to the parent company by way of saving on dividend tax.

Corporate circles are speculating whether there is any connection between today’s announcement and the strategy to ward off Bajoria which the Wadia-owned textile giant is certain to deny.

The balance sheet after the amalgamation will be healthier and as a result, the shares might get a better valuation.    


 
 
RBI RESCUES BATTERED RUPEE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 30: 
The Reserve Bank of India (RBI) today stepped in to rescue a battered rupee in a dollar-selling intervention that brought back the currency from its lowest-ever point of 46.90/92.

Market sources say the salvage operation, carried out through a clutch of state-owned banks, saw the central bank pouring in an estimated $ 50-100 million from its war chest. As a result, the rupee rallied from the brink to end the day at 46.64/65, a sharp 26 paise gain from its intra-session low.

Forex dealers were surprised at the indirect intervention, which was described as ‘aggressive and massive’. The seriousness of the RBI in rescuing the rupee was evident from the lower quotes given for dollars at periodic intervals by banks.

With dollar sales resulting in a sharp recovery for the rupee, analysts are now of the opinion that the currency is poised for further gains, especially because dollar supplies are expected to improve on Tuesday.

“If dollars flow in from companies, we could see the rupee even bouncing back to 46.50. Another factor which is expected to check the slide in the rupee is today’s statement made by Opec that it was ready to increase crude oil output by 5,00,000 barrels a day.

The rupee opened at 46.72/74 as against its previous finish of 46.74/75. Thereafter, a steady decline in its value was observed as companies and banks bid heavily for the dollar. The currency soon touched its nadir at 46.90/92 a little after noon.

Though some selling at this point helped push up the rupee to 46.88, the sentiment continued to remain bearish.

At this stage, when most marketmen were expecting the rupee to dip further, the surprise Reserve Bank intervention occurred. The dollar sales during the last 30 minutes of trading saw the rupee recovering to a high of 46.61/64 before finally closing at 46,64/66.

It was, therefore, stronger by around 10 paise over its previous all-time close of 46.74/75.

So far, the rupee has plummeted on account of the firm oil prices, tensions in West Asia Middle East, a weakening euro and diminishing inflows from foreign institutional investors (FIIs).

This has resulted in a depreciation of 70 paise in the space of this month; the current fiscal so far, its value has fallen over 7 per cent.

Some dealers say despite today’s intervention and the resultant upsurge in the rupee’s value, confidence in the currency would increasingly be determined by factors, such as oil prices. Unless oil prices ease, the rush for dollars will continue, an analyst said.    


 
 
STATE BANK NET SOARS 71% TO RS 606 CR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 30: 
State Bank of India, the country’s largest commercial bank, has posted a massive 71 per cent rise in net profit at Rs 605.70 crore in the second quarter ended September 30. Profit during the same period of the previous year was Rs 354.60 crore.

SBI said the growth in net profit was achieved due to higher operating profits even though provisions in the first half had surged to Rs 1206.14 crore from Rs 1043.03 crore last year. This was largely due to the higher provisioning for NPAs at Rs 700 crore against Rs 560 crore in the previous half.

Briefing newspersons here today, outgoing chairman G G Vaidya said the bank has reported a 14.35 per cent rise in interest earned at Rs 6,203.75 crore for the second quarter over Rs 5,425.16 crore in the same period last year and a 15.84 per cent increase in other income at Rs 904.89 crore (Rs 781.12 crore).

Vaidya attributed the improved profitability to fall in average deposit cost at 7.53 per cent as on September 30 as against 7.86 in March last, improvement in the net interest margin to 3.23 per cent as on September 30 as against 3.16 per cent in March last and increased volumes of business.

“We hope to close this fiscal with a profit of Rs 2,400-2,500 crore’’, he added. Janki Ballabh is taking over as the chairman from November 1.

For the half year ended September 30, SBI reported a 52 per cent rise in net profit at Rs 1,067.40 crore (Rs 702.45 crore).

Total expenditure was up by 11.85 per cent to Rs 12,768.37 crore (Rs 11,415.39 crore).

Vaidya said the the bank had extended the earliest closing date for its India Millennium Deposits from October 31 because of recent holidays.

When asked about the bank’s insurance foray, he revealed that a partner would be announced in mid-November. He also said the bank would soon launch an IT subsidiary.    


 
 
REDIFF BUYS THINKINDIA 
 
 
OUR BUREAU
 
New Delhi, Oct 30: 
Rediff.com today announced the acquisition of ThinkIndia.com, a US-based portal, privately held by promoters Gopal Krishna, Gaurav Dalmia and Sandy Rekhi.

The portal which focuses on Indians in the US will be renamed Rediff USA.

“This merger is the first step ... our mission is to make Rediff.com, the online portal of choice for Indians worldwide,” said Ajit Balakrishnan, chairman and chief executive of Rediff.com India Ltd.

Rediff officials were unable to throw light on the transaction value. However, they said it would make ThinkIndia a wholly-owned subsidiary of Rediff.com.

Rediff also said it planned to customise its content, services and marketplace offerings for the Indian community in the US through dedicated pages for Indians living in major US metropolitan areas including greater Washington D.C, Los Angeles, San Francisco Bay area, Chicago and Houston.

The web site’s city pages would be designed to provide users with information they needed to connect with local Indian community and update on local Indian news, events, movies, restaurants and Indian business directories.    


 
 
DHANRAJ MILLS MOVES SC TO BLOCK SHARE SALE 
 
 
FROM SATISH JOHN
 
Mumbai, Oct 30: 
Dhanraj Mills, which holds the controlling block of shares in Killick Nixon Ltd (KNL), has filed an appeal before the Supreme Court to set aside a special court directive that allows the custodian to invite tenders for KNL shares.

The 10.80 lakh shares, which add up to 31 per cent of Killick Nixon’s equity capital of Rs 3.25 crore, can prove to be crucial in retaining the control of the company. Earlier, special court judge S H Kapadia had specified the norms for selling the controlling block of shares by the custodian in the company.

Killick Nixon is a diversified company with interests in construction equipment, furnaces and marketing exterior paints.

The appeal was filed some time last week. Dhanraj Mills has argued before the apex court to quash and or set aside the final judgement passed by the special court judge. “The learned judge did not appreciate that the attached assets cannot be sold off before the date of distribution,” the company has contended in its appeal before the Supreme Court.

Dhanraj Mills has emphasised the fact that the sale is meant for distribution only. Many in the legal profession say for Dhanraj Mills, the auction of 10.80 lakh shares could even mean foregoing the controlling stake of the company. Realising this, the custodian, at the direction of the special court, had planned to issue a public advertisement, inviting bids for the purchase of controlling shares.

The offer should be for the entire block of shares and the purchaser will have to comply with Sebi’s regulations on takeovers.

The disposal committee was to comprise the custodian as chairman and representatives of the director general-investigation of the department of revenue, managing directors of UTI Securities and ICICI Brokerage and an official from the Mumbai branch of the custodian to decide in the sale which was to be executed by UTI Securities and ICICI Brokerage.    


 
 
CESC NET LOSS IN H1 LEAPS TO RS 33CR 
 
 
BY A STAFF REPORTER
 
Calcutta, Oct 30: 
CESC has registered a 50 increase in its net loss to Rs 33 crore during the first half of the current financial year ending September 30, 2000. The company had registered a net loss of Rs 22 crore in the corresponding period of the previous year.

However, the company has been able to pare the net loss in the second quarter from Rs 24 crore last year to Rs 18 crore this year.

Turnover in the first six months rose by 10 per cent to Rs 983 crore from Rs 894 crore in the previous year.

Turnover in the second quarter t increased by 10.28 per cent to Rs 504 crore as against Rs 457 crore in the corresponding period of the previous year.

The net loss in the second quarter has been restricted to Rs 18 crore in spite of the depreciation charge of Rs 22 crore on the commissioning of Budge Budge unit II. As a result, depreciation charge has increased by 56 per cent in the first half to Rs 153 crore from Rs 98 crore last year. In the second quarter the depreciation charge has increased by 65 per cent to Rs 81 crore from Rs 49 crore in the previous year.

However, it has been able to reduce its power purchase cost by 40 per cent in the second quarter from Rs 118 crore to Rs 71 crore.    


 
 
GREAT EASTERN’S DAY OF RECKONING 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Oct. 30: 
The fate of the 160-year-old Great Eastern Hotel is likely to be decided on Tuesday when the state tourism minister, Manab Mukherjee, puts the proposal to privatise the state-owned hotel before the Cabinet.

Sources said the state government has finalised the handover of the hotel to the French firm, Accor Asia Pacific. The minister today called a meeting of all four employee unions and told them about the proposal to be taken up.

“Chief minister Jyoti Basu wants to seal the future of Great Eastern Hotel before he moves out of office.

“The proposal is expected to be cleared,” a senior government official said. The government had invited bids for privatisation early last year.

The handover will lead to the retrenchment of all 500 employees. Accor will spend Rs 15 crore on the severance package. However, it has said a screening committee will interview employees who are below 45 years of age.

“If they are found suitable, they will be absorbed. The committee will comprise representatives of the unions, the state tourism and finance ministries, and Accor Asia Pacific,” the sources said.

Of the 500 employees, about 170 are below 45 years of age; there are 30 officers, 100 staff and 370 workers.

Great Eastern Hotel, which is currently running on grants-in-aid, was set up in 1840 by D. Wilson & Co. It became a public undertaking of West Bengal in 1975. Five years later, it was nationalised by the state government under the Great Eastern Hotel (Acquisition of Undertaking) Act, 1980. Spread over an area of 6.5 bighas, it is a four-star hotel with 215 rooms, 13 big banquet halls and seven selling outlets, comprising restaurants and bars. The salary bill is Rs 30 lakh per month.

The condition of the hotel started deteriorating since 1967 and the occupancy rate has now dwindled to 20-25 per cent.

Accor will invest Rs 100 crore in the hotel, developing it as a heritage five-star property. Initially, the government will hand over the lease of the hotel for 30 years. In the first year, Accor will pay a lease rental of Rs 1.5 crore to the state government.

Tourism department sources said Tulip Star Hotels and Rosewood Hotels (promoted by Manish Financial Limited) had also submitted bids but state government had rejected the latter on the ground that it was not ‘was not up to the mark’. Tulip’s bid was rejected because they wanted to develop Great Eastern as a three star hotel.

“More important, they do not have enough experience to run a hotel,” sources said.

All the four unions — Great Eastern Staff and Workers Association (Intuc affiliated), Great Eastern Staff and Employees Union, Great Eastern Staff and Workers Union and Great Executive Association — met the tourism minister today.

Atiar Rahman, secretary of the Intuc union, said: “We do not know why the minister called us today. He did not give us a formal proposal.

But what he has told us really disappointing. We will go on warpath if the government wants to push the scheme. The scheme will affect the interest of the workers.”    


 
 
RELIANCE PETROLEUM FIRST HALF NET GALLOPS TO RS 726 CRORE 
 
 
FROM OUR CORESPONDENT
 
Mumbai, Oct 30: 
Reliance Petroleum Ltd (RPL) has posted a net profit of Rs 726 crore on a sales of Rs 14.308 crore for the first half of the current fiscal year ending September 30.

During this period, the company posted an operating profit of Rs 1,479 crore and a cash profit of Rs 1,023 crore. Exports of RPL products amounted to Rs 2,138 crore.

Anil D Ambani, managing director, RPL, said that “We are encouraged by RPL’s strong financial performance in the very first six months of its operations.”

The Reliance group holds 64 per cent of the equity share capital of RPL, international investors around 7 per cent, domestic financial institutions around 9 per cent about 2 million shareholders nearly 20 per cent.

Hindalco edges up

The aluminium major, Hindalco Industries Ltd has posted a modest 9 per cent rise in net profits for the first quarter of the current fiscal year. Net profit rose to Rs 1,754 crore over Rs 1,613 crore in the same period of the previous year.

During the quarter, net sales rose to Rs 5,508 crore as compared to Rs 5,517 crore in the second quarter of 1999-2000. For the first half, while net profit stood at Rs 3,512 crore (Rs 2,992 crore), the net sales were placed at Rs 11,160 crore (Rs 9,941 crore).

Commenting on its outlook, Hindalco said that consumption growth, reduction in production in North America and shrinking inventories have had a salutary impact on prices which are resulting in improved realisations both at home and abroad.

Tata Chem in black

Tata Chemicals returned to profits for the second quarter, after posting a loss in first quarter for the first time in its history. However, the net profit at Rs 47.35 crore is still lower than Rs 55.82 crore posted for the corresponding previous quarter.

Sales turnover in the half year ending September 30, 2000 has increased by 13 per cent compared to the previous year. The sales volume of soda sah increased by 16 per cent urea by 6per cent.

“Soda Ash and Urea are the two main products of the company and any improvement in performance is directly linked to these businesses,” the company declared.

EIH Q2 net up 49%

Oberoi group flagship, EIH Ltd today reported a 49 per cent rise in net profit at Rs 9.99 crore during the second quarter of the current fiscal against Rs 6.71 crore in the same period last year.

Total income increased by 18 per cent to Rs 119.29 crore during the quarter ended September 30 compared to Rs 101.00 crore in the corresponding period of 1999-2000, according to the unaudited financial results of the company.

Indo Rama out of red

Indo Rama Synthetics reported a net profit of Rs 11.12 crore for the half year ended September 30, 2000 as against a net loss of Rs 15.07 crore in the corresponding period last year. Announcing the result here today, O P Lohia, managing director, Indo-Rama ascribed the turnaround primarily to enhanced production and capacity utilisation of over 100 per cent.

Net sales for the period has gone up by 27 per cent, from 792.1 crore in the corresponding period last year to Rs 1,006.43 crore in the first half of the current fiscal. The company’s operating profit during the period increased 25 per cent to Rs 155 crore from Rs 124 crore for the corresponding period last year.

Indo Rama has reported a 69 per cent increase in cash profit of Rs 64 crore, maintaining its operating margins at 15.4 per cent. The company has made a provision for depreciation or deferred revenue expenditure to the tune of Rs 53 crore and absorbed interest cost of Rs 91 crore.

Bata India net dips 89%

Bata India Ltd has reported 89 per cent drop in net profit at Rs 38 lakh for the quarter ended September 30, 2000 as against Rs 3.64 crore in the same quarter last year.

The sales for the quarter were higher at Rs 173 crore as against Rs 164 crore a year ago, a growth of 5.45 per cent.

The other income for the quarter increased 68.42 per cent from Rs 19 lakh to Rs 32 lakh. The retail sales for the quarter increased 6 per cent in terms of value and seven per cent in volume during the nine months ended September 30, 2000.

Exide profit Rs 14.03 cr

Exide Industries Ltd has posted a higher pofit of Rs 14.03 crore for the quarter ended September 30, 2000 compared to Rs 13.36 crore in the previous corresponding quarter. The net sales in this quarter was Rs 198.99 crore as against Rs 195.99 crore in 1999-2000.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.65	HK $1	Rs. 5.90*
UK £1	Rs. 68.11	SW Fr 1	Rs. 25.55*
Euro	Rs. 39.56	Sing $1	Rs. 26.30*
Yen 100	Rs. 42.91	Aus $1	Rs. 24.15*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4540	Gold Std(10 gm)	4500
Gold 22 carat	Rs. 4285	Gold 22 carat	4160
Silver bar (Kg)	Rs. 7900	Silver (Kg)	8010
Silver portion	Rs. 8000	Silver portion	8015

Stock Indices

Sensex		3689.43		-39.69
BSE-100		1894.56		-28.17
S&P CNX Nifty	1167.15		-11.55
Calcutta	102.87		-0.40
Skindia GDR	NA		-
   
 

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