GE Shipping, Sterlite clear buybacks
Reliance H1 net jumps 20% to Rs 1347 crore
Air fares set to rise
Wipro net leaps to Rs 262 cr in first half
Bruised rupee hits 46.86
Govt loan feast stokes credit concerns
HPL can’t hedge naphtha price
SAIL cuts loss to Rs 520 cr
Hind Motors losses mount
Foreign Exchange, Bullion, Stock Indices

Mumbai, Oct 31: 
Taking advantage of low share prices on the bourses and the fear of corporate raiders stalking their companies, the boards of Great Eastern Shipping Company Ltd and Sterlite Industries today approved proposals to buyback their shares.

Sterlite, the metals major with interests in copper and aluminium, said its board has defined a maximum price of up to Rs 200 for buying back its shares. For this purpose, the company has set aside Rs 280 crore.

Great Eastern, a company promoted by the Sheth family, however, said it plans to buy back its own equity shares up to an extent of Rs 150 crore at a price not exceeding Rs 42 per share.

On the bourses, the Sterlite scrip closed weak at Rs 163.65 against yesterday’s close of Rs 165.10. The Great Eastern share price fell sharply to Rs 30.80 from Rs 32.75. The boards of both companies announced their buyback offers after market hours.

Corporate observers said while small shareholders will get the opportunity to sell their holdings at higher prices, it will also help the promoters to consolidate their shareholdings in their companies at little cost.

The share buyback by Great Eastern will enhance the promoters’ holding in the shipping company by 2.5 per cent to over 15 per cent from the current level of 13 per cent.

It is incredible in today’s world for company managements to reign with such low stakes. The Sheths who also control Gesco, a real estate business which was hived off from Great Eastern, is currently facing a takeover threat from the AH Dalmia group which owns Renaissance Securities.

Sterlite has said it will exercise its buyback through secondary market operations, Great Eastern has not indicated so far the methodology that they will follow.

While the maximum buyback price for Sterlite works out to a 26 per cent premium over the current market price, the Great Eastern offer at the maximum band works out to 37 per cent over its current share price.

Meanwhile, Great Eastern Shipping reported lower profits for the second quarter at Rs 4.54 crore as compared with Rs 12.26 crore in the same period last year.

Marketmen attach a lot of significance to Sterlite opting for secondary market purchases instead of an open tender offer.

Broking circles aver that opting for buyback through the stock market route will ensure that speculators are careful not to short sell shares. It will also enable the company to buy more shares from the market in view of the lower market price.

The recent instance of Bajaj Auto’s buyback is still fresh in their minds. Bajaj Auto had opted for the tender route with the limit set at Rs 400.

However, the offer had no effect on the share price which is now ruling below Rs 300 levels despite a significant reduction in its floating stock as the generous buyback offer was fully subscribed by its shareholders.

In comparison, the petrochemical major Reliance is perceived to have been smarter having set a maximum price of Rs 303 for its share buyback. The Reliance share price hovers around this level despite the current bearish sentiments clouding the market place.    

Mumbai, Oct 31: 
Reliance Industries Ltd (RIL) has reported a 20.09 per cent jump in net profit to Rs 735 crore for the second quarter ending September 30, as against Rs 612 crore in the previous comparable quarter.

Reliance is the first private sector company to announce a net profit of Rs 1,347 crore for the first half of this fiscal, a 20 per cent growth over the previous year’s figure of Rs 1,122 crore. Sales have also gone up by 73 per cent to a record Rs 15,009 crore (Rs 8,673 crore).

Sales increased by 73.57 per cent to Rs 8,394 crore against Rs 4,836 crore in the previous corresponding period, while total expenditure shot up by 82.38 per cent to Rs 7,062 crore (Rs 3,872 crore).

Commenting on the performance in the background of volatile raw material prices, Anil Ambani, managing director, Reliance Industries said, “The unprecedented volatility in crude oil prices in recent times and the consequent sharp rise in feedstock costs, has led to pressures on the profitability of petrochemical companies globally.”

“It is extremely creditable that Reliance has reported a strong financial performance and maintained its operating margins in the face of these difficult industry conditions,” he added.

On the Bombay Stock Exchange (BSE), the Reliance scrip closed marginally higher at Rs 303.15 compared with the previous day’s close of Rs 301.25.

During the day, nervous punters had pulled it down to an intra-day low of Rs 294.55. Incidentally, Reliance announced its half yearly results only after the close of market hours. The Securities and Exchange Board of India, the capital market watchdog, had directed companies to announce their quarterly results either before or after the trading hours.

Depreciation stood at Rs 340 crore during the second quarter, as against Rs 240 crore in the same period last year, while interest was at Rs 333 crore (Rs 240 crore).

Manufactured exports, including deemed exports increased by over 300 per cent to Rs 1,684 crore (Rs 421 crore in the previous comparable half).

Total exports including that of petroleum products were Rs 3,837 crore, making Reliance the country’s largest manufacturer exporter.

Ambani said the company repatriated Rs 2,327 crore ($ 500 million) from its foreign currency assets in the first half.

The company’s investments in the nationwide optic fibre network for broadband and other convergence-related businesses have been pegged at Rs 15,000 crore.

The entire investment will be routed through Reliance Infocom Ltd, its 50 per cent subsidiary.

The promoters will increase their stake from 40 to 43 per cent through the creeping acquisition route. Ambani gave an indication of the target the promoters have in mind when he stated, “We will be happy to see our stake at 51 per cent in the next few years.”    

New Delhi, Oct 31: 
Air fares are expected to rise by end-November or early December. Indian Airlines, the big lumbering player in the domestic skies, plans to raise ticket prices by 8-10 per cent on an average.

The fare increases in some sectors may be as high as 14 per cent.

Sahara plans to follow suit. Jet Airways raised its fares earlier this month.

“We will be holding a board meeting on November 8 to take a preliminary look at fare hikes. We will take into account the cabinet’s final stand on the demand for a rollback in fuel prices and then decide,” IA board members said.

Petroleum product prices including aviation turbine fuel were raised last month.

Sahara Air’s chief executive Vandana Bhargava said her airline was “just waiting to see what the big player will do before announcing anything.”

Jet had initially wanted to raise fares by as much as 18-22 per cent arguing that the cost of fuel and spares had gone up sharply. However, the civil aviation ministry in a bid to cap the hikes ordered IA to hold the priceline.

Eventually, Jet too buckled and decided to restrict its price hike to about 10 per cent.

Besides the fear of a fare war with IA which had desisted from raising its prices, Jet was concerned that it should not do anything to give a headstart to two new airlines — Northstar and Crown Air — which are due to start operations early next year.

Both are being floated by non-resident Indians who want to kick off their airlines with about half a dozen planes, though they are yet to get licences to operate in India.

While Crown wants to start operations with Boeing 737-400s, Northstar wants 150-seater planes but has yet to tieup any deals.

Once these two airlines join the fray, price and freebie wars are expected to be far more frequent in the skies and none of the existing players want to be caught in a situation where high prices drive passengers to the new airlines.    

Mumbai, Oct 31: 
Wipro Ltd, India’s largest listed infotech company today announced a 121 per cent rise in its net profit to Rs 261.7 crore for the half year ended September 30, as against Rs 118.2 crore for the previous corresponding period.

The impressive profits were on the back of a 39 per cent growth in revenues to Rs 1358.9 crore, as compared with the previous year’s Rs 984.9 crore.

For the second quarter, net profit grew by 116 per cent to Rs 154 crore as against Rs 71.2 crore in the previous comparable quarter. Revenues during the period stood at Rs 740.40 crore as against Rs 564.6 crore for the corresponding period of last year, a growth of 31 per cent.

On the back of impressive results announced before today’s trading, the Wipro share gained Rs 133 to close at Rs 2381.80, from yesterday’s close of Rs 2248.80.

Wipro Technologies, which represents Wipro’s global infotech services business, accounted for 56 per cent of total revenues and 88 per cent of the profit before interest and tax. Its revenues increased by 79 per cent for the half-year to Rs 771.9 crore and profit before interest and tax went up by 137 per cent to Rs 256.2 crore.

Wipro Infotech, the domestic infotech services and products business, accounted for 29 per cent of revenues and 8 per cent of profit before interest and tax.

Wipro Infotech’s revenues grew by 13 per cent to Rs 394.3 crore, and profit before interest and tax by 145 per cent to Rs 23.2 crore. A focus on growing the services segment of its business, along with the spin-off of its peripherals business resulted in operating margin doubling from 3 per cent to 6 per cent for the half-year.

Wipro Technologies, increased its number of customers.

Revenues from north America were 65 per cent, Europe 27 per cent and Japan 7 per cent of its total.

The mix for the 1999-2000 financial year was America 70 per cent, Europe 24 per cent and Japan 5 per cent, with the balance coming from the rest of the world.    

Mumbai, Oct 31: 
Excessive dollar demand in the local forex markets sealed any chances of the rupee continuing on its recovery track from yesterday’s closing, as the Indian currency slipped to a new historic low of 46.86 per dollar. It indicates a steep decline of 22 paise from Monday’s close of 46.64.

In fact, the demand for the dollar was apparent from the start of the trading session with the rupee dipping to 46.80 per dollar in the early morning trade itself.

The rupee has been falling steadily from January onwards and has lost over 7 per cent against the greenback so far. Forex dealers felt that the rupee is inching towards the 47-mark and say unless the apex bank intervenes on a large scale, it will continue to be under pressure.

A dealer at Mecklai Financial stated that the Reserve Bank was active during the latter half of the trading session. Alarmed by the steep plunge in the rupee, the apex bank contacted several public sector and foreign banks to ascertain details like the identity of the buyers and their requirements.

“The phone calls from the Reserve Bank cooled off the Indian rupee to Rs 46.74-75 levels,” a forex dealer said.    

New Delhi, Oct 31: 
The government’s market borrowing has been ballooning out of proportion, stoking fears that its near-voracious appetite for funds will choke credit to companies and strain the Centre’s ability to service the piling debt.

The government had already borrowed close to Rs 48,930 crore from the market till the end of September, which is about 64 per cent of the Rs 76,382 crore budgeted for the entire fiscal.

Given that most of the big-ticket spending on grandiose road and power projects are expected will take off only in winter, there is going to be greater pressure to borrow larger amounts.

“We expect to spend about Rs 2,00,000 crore over the next six months on both plan and non-plan schemes, compared with Rs 1,30,000 crore spent in the first half. Traditionally, the expenditure picks up in the second half. So does the pressure to borrow,” expenditure department officials said.

The massive and rapidly increasing market borrowings bridges the ever-widening gap between the government’s revenues and expenses. The fiscal deficit itself has not been too high in the first half — Rs 42,592 crore, or 38 per cent of the amount targeted for the full financial year. In contrast, the government ran up a deficit of over Rs 55,000 crore during the same time last year. However, this happened largely because much of the planned expenditure has always been deferred to the second half of a financial year.

The anticipated increase in borrowings, coupled with the recent liquidity-tightening measures taken by the Reserve Bank of India (RBI), will come as a big blow to companies that want to raise credit at lower interest rates. Chambers have been lobbying hard to get the finance ministry and the RBI to take a series of steps to bring down rates.

The fear that government will be forced to borrow more to bridge its yawning fiscal deficit is also reinforced by internal assessments of actual tax collections.

Economists with the department of economic affairs say they do not expect tax mopup this year to grow by more than 8-10 per cent over last year’s levels, primarily because the sluggish industrial recovery has meant a declining excise collections.

“Efficiency has led to better collections now, but there is a limit to that. The economy has to recover to yield more taxes,” the officials added.

The department of revenue has targeted a collection of Rs 2,03,673 crore, an increase 35 per cent over last year.

But excise and corporate tax collections are expected to fall short as the rate of industrial growth is expected to be between 5 and 6 per cent. With few industries planning capacity expansions, non-oil imports, mainly of capital goods, will remain at a low ebb, implying a fall in customs collections.    

Calcutta, Oct 31: 
Purnendu Chatterjee, chairman of The Chatterjee Group (TCG) and an equal partner with the state government in Haldia Petrochemicals Ltd (HPL), today said there are no plans to set up a backward integration project that produces naphtha for captive consumption.

Chatterjee said while it was critical to tie up supplies, it is not possible to hedge completely against the increase in naphtha prices, which have now shot up to a high of $ 300 per tonne from $ 100 some time back. “How far back can Haldia Petro go?” he quipped, even as he expressed the hope that somebody will establish a naphtha plant at Haldia over the next five to seven years.

Holding the state responsible for the tardy growth of downstream industries, Chatterjee said there was a lack of confidence among entrepreneurs because it took 25 years for the project to be completed.

“People were not sure. They were not willing to invest in downstream projects unless they saw the granules,” he said, adding it is the availability of inputs from the mother plant is one of the best inducements for entrepreneurs to go ahead with downstream ventures.

Speaking at a seminar organised by the Bengal Chamber of Commerce — Haldia and Bengal: challenges and opportunities — Chatterjee said an all-pervasive role for the state in an ever-changing economy is not desirable. Instead, he said the private sector should take the lead, and urged entrepreneurs from the state to press ahead with bold initiatives.

Asked about his experience of working with the state government in HPL, Chatterjee said he had ‘become wiser’. “I will still do the same things, but may be not in the same way. HPL is not a charity. I have taken a risk. We changed everything in the original scheme. I thought it is an interesting and tough project.”

He said the vision of making HPL a world-class project and the most admired business now appeared closer than ever before. Chatterjee, however, spoke highly of Bengal’s labour — often considered an irritant to industries because of its militant streak.

The TCG chief said 23,000 people worked under contractors to build the world-class Haldia Petro plant within the time-frame. “It explodes the myth that Bengal’s labour is an obstacle to growth.”

Chatterjee said his new area of focus was life science projects. “If the last century belonged to physics, this one is going to be life sciences,” he said, adding the industry had tremendous potential to generate money.    

Calcutta, Oct 31: 
The Steel Authority of India Ltd (SAIL) has started reaping the benefits of its financial and business restructuring with losses down 62 per cent during the first half of the current fiscal.

The public sector steel company has been able to contain its losses at Rs 520 crore against a loss of Rs 1377 crore during the corresponding period in 1999-2000. According to a company release, the losses also include a non-cash provision of Rs 305 crore towards accrued leave liability.

“A healthy growth in sales turnover, combined with reduction in operating expenditure and lower capital related charges have been responsible for the improved results,” the release said.

The company has recorded a sales turnover of Rs 7523 crore, which is 5.3 per cent higher than the turnover of the previous comparable first half.

While domestic sales have increased by 4.8 per cent, SAIL’s average price realisation has gone up by around 11 per cent.

The SAIL plants achieved a growth of 14 per cent in finished steel production which included a higher component of flat products.

The company’s interest and depreciation burden has been reduced by 16 per cent to Rs 1456 crore, against Rs 1734 crore during the first half of the previous year. The overall debt burden has also been reduced by around Rs 200 crore because of the company’s policy of maintaining a low profile as far as fresh borrowing is concerned.

Commenting on the performance, SAIL chairman Arvind Pande said “Actions taken internally have helped in a substantial reduction in our losses. We hope to better this performance in the second half as the restructuring of our power and oxygen plant is completed.”    

Calcutta, Oct. 31: 
The GP-CK Birla flagship Hindustan Motors Limited today reported a net loss of Rs 24.08 crore during the second quarter ended September, 2000 compared with Rs 22.70 crore in the corresponding quarter of the previous fiscal. Officials here said cumulative net loss during the first half of 2000-2001 now stood at Rs 60.32 crore against Rs 45.80 crore last fiscal.

Net sales during the quarter, however, increased to Rs 369.12 crore from Rs 327.38 crore in the same period last year while total expenditure shot up to Rs 360.54 crore from Rs 315.75 crore.

Profit before interest and depreciation came down to Rs 11.97 crore from Rs 14.49 crore. Interest charges were brought down to Rs 25.13 crore from Rs 26.86 crore even as provision for depreciation increased to Rs 10.92 crore from Rs 10.33 crore.

Income from operations during the first two quarters taken together stood lower at Rs 637.76 crore against Rs 644.05 crore and profit before interest and depreciation came down by more than 50 per cent to Rs 12.05 crore from Rs 27.04 crore in the first half of previous fiscal.

The sale of the company’s Ambassador cars increased during the quarter to 5,418 from 3,623 cars in the previous quarter. Cumulative sales in the first six months is higher than the corresponding period of last year by 941 cars.

The company said the turnover of earthmoving equipment division was lower, due to reduced offtake by coal sector. More orders are expected in the second half. The liability towards additional salaries, if any, on account of the ongoing negotiations with unions at earthmoving equipment division has not been provided , the company added.    


Foreign Exchange

US $1	Rs. 46.86	HK $1	Rs. 5.90*
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Euro	Rs. 39.45	Sing $1	Rs. 26.25*
Yen 100	Rs. 42.96	Aus $1	Rs. 23.80*
*SBI TC buying rates; others are forex market closing rates


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