Sheths make counter-offer of Rs 36 per Gesco share
State Bank millennium bonds mop up $ 5.2 bn
Centre split on ways to break Maruti logjam
India set to join WTO law panel
Petrogoods takes the gloss off export surge
London SE to help curb insider trading
Foreign banks keen on tieup with LIC
Commandstarts mobile Net service
NTPC urged to help provide cheap power
Foreign Exchange, Bullion, Stock Indices

 
 
SHETHS MAKE COUNTER-OFFER OF RS 36 PER GESCO SHARE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 7: 
The Sheths and the Mahindras today launched a counter-offer for Gesco Corporation shares at a price of Rs 36 each, in an effort to stave off the hostile offer made by Abhishek Dalmias of the Delhi-based Renaissance Estates.

The price represents a premium of 33.33 per cent over the Rs 27 that the Dalmias offered, but it falls far short of the going rate in the market. The scrip closed at Rs 41.20 today, up from Rs 38.80 on Monday amid a record-setting volume of 2.64 lakh shares.

The Sheths, who intend to acquire 33.5 per cent or 96.34 lakh shares, will require Rs 34.68 crore for the stock purchase. There was no reaction from the Dalmias, who have two weeks’ time under Sebi’s takeover code to revise their offer.

The Dalmias have already revised their offer price once, from Rs 23 to Rs 27, after the Gesco stock soared on bourses. Abhishek Dalmia has indicated in the past that his group is in a position to raise the offer price if a revision was necessary.

Merchant bankers feel the battle for control of the realty firm will be a long drawn-out affair because the Dalmias are unlikely to take hasty moves. “Let us see how the market perceives the offer. We have sufficient time to decide and come out with a plan,” sources close to the Dalmia group said.

While the Mahindras and Sheths have decided to join hands in an alliance they say will bring benefits for both, the feisty Abhishek Dalmia looks determined to overhaul the Gesco board, even though he has expressed full faith in the management.

Renaissance Estates had set aside Rs 70 crore to finance the acquisition when it made the hostile bid for Gesco Corp. For Sheth-M&M combine, it was HDFC chief Deepak Parekh who played a key role by bringing the two sides together and extending credit to help the Sheths see off the challenge.

The Gesco promoters, who now hold 11.5 per cent, will see their holding rise to 45 per cent, if the offer is fully subscribed. The financial institutions, with a 15 to 20 per cent stake, have already said they will sell their shares to the highest bidder.

Corporate observers watching the battle unfold point out that the white knight — Mahindra Realty & Infrastructure Developers — is itself a shaky firm with weak finances. They have doubts whether Gesco Corp will gain anything in joining forces with a company that suffered a loss of Rs 25.05 crore in 1999-2000 and Rs 7.2 crore in the previous year.    


 
 
STATE BANK MILLENNIUM BONDS MOP UP $ 5.2 BN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 7: 
The State Bank of India has collected around $ 5.23 billion through its India millennium deposit scheme which closed yesterday. The collections are still being collated, say SBI officials.

Forex circles say the figure could even exceed $ 5.5 billion. Almost 50 per cent of the collections have come from West Asia.

Merchant banking circles say Citibank has taken a runaway lead by collecting almost $ 750 to 800 million. HSBC, Standard Chartered Bank and Abu Dhabi Commercial Bank are the other foreign banks making significant collections, but were nowhere close to Citibank.

However, the news had no impact on the foreign exchange market with the rupee closing at Rs 46.66 against the dollar, shedding almost three paise from the previous day’s close. This was in stark contrast to the day’s opening when the rupee opened on a strong note at Rs 46.56.

SBI chairman Janaki Ballabh declined to comment. However, his office said the chairman would address the press tomorrow.

While banking circles say the IMD has overshot the Resurgent India Bond (RIB) issue in 1998 which collected $ 4.23 billion, they were not willing to be quoted on the final figure collected by the bank.

Shying away from making a guess they recalled the 1998 Resurgent India Bond having collected almost $ 1 billion in the last few hours of the closing date.

Pipeline funds may add significantly and banking circles say it could even add up to $ 6 billion at the end of the day.

IMD was aimed at boosting India’s forex reserves. The bank was expecting to raise over $ 4 billion through the scheme which is aimed at Indians residing abroad. While the core size of the issue was fixed at $ 2 billion. The issue opened on October 21.    


 
 
CENTRE SPLIT ON WAYS TO BREAK MARUTI LOGJAM 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 7: 
Differences between heavy industries minister Manohar Joshi and his deputy, V. B Kathiria, over ways to break the Maruti labour logjam spilled out into the public domain as political bigwigs like V P Singh and Congress president Sonia Gandhi waded into a row that has cost the company crores in lost production and crimped delivery schedules.

The strains came to the fore when Joshi today dismissed Kathiria’s suggestion that the government intervene to end the lingering deadlock, which assumed strong political hues when the former Prime Minister and the leader of the Opposition said it was time the Centre stepped in.

A meeting between the Maruti management, its union and the government, called by Kathiria today was called off. Joshi even denied the government had ever convened the meeting. “There was no meeting between the Maruti management and the union. We had not called any meeting today,” he said.

The senior minister, who had told union representatives that a meeting may be convened and asked the two government nominees to submit a report, appears to have backtracked. “We are closely monitoring the situation and will take suitable action at an appropriate time. At this moment we do not find it necessary to intervene,” he said in a deadpan tone.

Saying immediate government intervention was necessary, the former Prime Minister asked the Maruti management to withdraw the ‘good conduct undertaking’ foisted on employees.

“The good conduct undertaking is illegal and should be withdrawn immediately. If it stays, it will set a new trend and prompt companies to indulge in anti-labour practices in the country. Multinational firms, for instance, will have an excuse to impose such conditions on Indian workers,” Singh said.

Maruti, he said, was losing Rs 4 crore daily because of the 50-day-long agitation by over 4,000 workers. “The employees are not against work. They will return to work and even make up for the loss. However, the management is not ready to give up the good conduct undertaking it slapped,” he added.

The good conduct undertaking, imposed on October 12, requires all agitating employees to promise they would not take part in future protests. Singh said he will write to the Prime Minister Atal Behari Vajpayee soon seeking his intervention.

The Congress president also asked the government to start negotiations between the union and the Maruti management ‘at the appropriate level to arrive at a just solution’.

In a letter to Joshi, Gandhi said a decision on the demands of the union should take into account the interests of employees and the company.

Maruti employees union general secretary Mathew Abraham said only 300 of the 4,500 workers have returned to work and the current daily production was only 200 to 300 cars.    


 
 
INDIA SET TO JOIN WTO LAW PANEL 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 7: 
The Union Cabinet today approved India joining the agreement establishing an advisory centre on World Trade Organisation (WTO) law, which will allow India to obtain free legal services on international trade laws. The Cabinet also approved the proposal to amend the Chit Funds Act, 1982.

“Becoming a member of the WTO law centre will allow India to obtain certain legal services on WTO law free of cost and obtain support in WTO dispute settlement proceedings at discounted rates,” an official spokesperson said. The agreement is subject to ratification and comes into effect 30 days after the date upon which the 20th instrument of ratification has been deposited.

Parallel with the third ministerial conference of the WTO in Seattle on December 1, 1999, ministers of 29 countries signed the ‘Agreement establishing the advisory centre on WTO law.’ The agreement resolves to create a source of legal training, expertise and advice on WTO law readily accessible to developing countries and countries in transition. The advisory centre will be established in Geneva as an international organisation independent of the WTO.

By becoming a member of the Advisory Centre, India will also be able to participate in seminars on jurisprudence and other training activities free of cost.

The amendment to the Chit Funds Act also approved today will enhance the limits of the aggregate amount of the discount to be foregone by a subscriber and expand the scope of securities acceptable as deposits by the foreman. The Cabinet Committee on Economic Affairs today cleared the proposal to continue the centrally sponsored scheme for assistance to cooperative marketing, processing and storage programmes in underdeveloped or least developed states or union territories.    


 
 
PETROGOODS TAKES THE GLOSS OFF EXPORT SURGE 
 
 
FROM R. SASANKAN
 
New Delhi, Nov 7: 
The impressive export growth registered so far during the current fiscal has an element of artificiality as earnings from petroleum products constituted a significant component.

Export of petroleum products, mainly by the Reliance group, has been necessitated due to the softening of demand in the domestic market. The scenario will be rosier in the coming months with Reliance deciding to export its entire naphtha and import its requirement for petrochemicals.

Similarly, exports in many other manufactured products were also necessitated by the softening of the domestic demand and the excess capacity the industry is saddled with.

Official circles admit that the export boom was not out of a deliberate strategy of Indian businessmen to chase and build markets overseas. India lost nearly 20 per cent of its export market in 1998 and 1999 when the economies of south east Asia collapsed. These economies have recovered of late and Indian exports could recapture the lost share.

The present growth rate in exports look highly impressive mainly because of the low base in the previous years. Last year, export growth was only a little over 6 per cent and the year before only about 2 per cent.

This obviously indicates a slower growth in coming years because of the high base.

According to official reckoning, the current financial year should register an 18 per cent growth in exports and 14-16 per cent in imports. Official sources are not confident that the present trend in exports can be sustained .

Indian industrialists are not convinced that such as investment makes business sense considering the low profitability and the unpredictability of the export market. Even the multinationals which proclaimed their intentions to use India as an export base have preferred to confine their activities to the domestic market.

The main disincentive for exports is the wide gap in the profits between domestic and overseas markets. If the domestic market provides a 10 per cent profit, the maximum that can be expected from export market is only 4 per cent. Exports cannot be subsidised under the new trade regime.

To reduce the gap between domestic and export profits, the government should ensure 100 per cent offset of taxes paid on exported items.

This is not happening now. The exchange rate should also be managed in such a way that exporters are compensated for the rate of inflation which affects the cost of production.    


 
 
LONDON SE TO HELP CURB INSIDER TRADING 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 7: 
India’s major bourses are in talks with the London Stock Exchange (LSE) for implementing a sophisticated system’ to curb insider trading, as directed by the Securities and Exchange Board of India (Sebi). Top officials of the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) were recently in touch with the LSE for a software system that detects insider trading, LSE deputy chairman Ian G Salter told reporters on the sidelines of a CII seminar here today.

He said the system used in LSE now monitors share transactions and keeps track of connections between brokers and company officials.

Both the NSE and BSE signed a memorandum of co-operation with the LSE in February this year, which covers areas including training, regulatory development, information sharing and joint initiatives in a number of areas.

Salter met BSE president Anand Rathi recently at a function in Brisbane. Although the LSE official termed the meeting as informal, there are strong indications that the insider trading issue figured in their discussion.

Besides, the LSE chief is on a mission to promote techMARK — a market for pure tech companies — in India.

Salter said more than 214 companies who have raised over $ 2 billion between them, are listed on techMARK. “The index has outperformed all other technology indices around the world (including the Nasdaq) and trading in this sector now accounts for approximately 25 per cent of the domestic market.    


 
 
FOREIGN BANKS KEEN ON TIEUP WITH LIC 
 
 
FROM SATISH JOHN
 
Mumbai, Nov 7: 
Life Insurance Corporation’s (LIC) strategy to use banking channels for distributing life insurance products has received an encouraging response from three foreign banks —Standard Chartered, Citibank and HSBC.

Sources at the insurance major’s office reveal that the three reputed foreign banks have replied to the insurance major’s missives for a distribution tieup. “It’s still in the early stages,” the source said.

However, the country’s largest bank, the State Bank of India (SBI), is said to have politely conveyed its lack of interest in a distribution tieup with LIC, citing its plans to enter the sector on its own as the reason. Several other PSU banks which harbour ambitions of entering the life insurance sector have given an identical response.

Industry circles aver that LIC’s plan to enter into distribution alliances with foreign banks may pay off only if the insurance company introduces new products to woo the banks’ urban clientele. The foreign banks, on their part, are interested in opening their counters in LIC offices and are keen to know whether the insurance major would be willing to introduce co-branded products.

It may be recalled that at a recent press meet, LIC chairman G N Bajpai said the insurance behemoth would adopt a pro-active approach to take on its new rivals.

LIC plans to focus on the customer efficiency index, which it will achieve by leveraging its vast human capital and by tying up new distribution channels. LIC has identified banks, companies and direct marketing as the new channels that will help it grow 30 per cent on a year-on-year basis and will no longer depend solely on its 6.5 lakh agents for distribution.

While it is looking at a 30 per cent growth in the coming years its marketshare will logically drop from the current 100 per cent.

That the growth target LIC has charted for itself is ambitious can be gauged by the fact that in individual assurances segment alone it has 1013.89 lakh policies for Rs 5,36,451 crore. Group insurance has 235 lakh members with a sum of Rs 78,000 crore while group superannuation has members totalling 8.5 lakh with annuities per annum accounting for Rs 975 crore.    


 
 
COMMANDSTARTS MOBILE NET SERVICE 
 
 
BY A STAFF REPORTER
 
Calcutta, Nov 7: 
Command, one of the two cellular phone service providers in Calcutta, has launched mobile internet service—Commandworld—using Wireless Application Protocol (WAP).

Command has tied up with a number of leading portals like NDTV, Business Standard, India Infoline, Sharekhan, India FM and several others to provide mobile internet facility, chief operating officer of Command Rajiv Sawhney told reporters here.

The Command subscriber, he said, would be able to get information on various channels like news, finance, entertainment, city, shopping and travel. The service will also facilitate mobile e-commerce, for which the ways and means are being currently worked out.    


 
 
NTPC URGED TO HELP PROVIDE CHEAP POWER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Nov 7: 
Union power minister Suresh Prabhu has asked National Thermal Power Corporation (NTPC) to help consumers get low cost power.

Speaking at NTPC’s silver jubilee celebration here today, Prabhu exhorted the central power utility to increase the plant load factor (PLF) by another 2 per cent.

“An improvement of PLF from the current 80 per cent would help enhance the power situation in the country.”

He said central power utilities must adopt to the new realities. “They should be able to meet social obligations and at the same time act as a company to take on the challenges of a corporate culture and the competition it faces from foreign companies,” Prabhu said.

He also emphasised the need to develop good human resources within the organisation. At present, the Power Management Institute of NTPC is offering specialised courses to officers and fresh graduates to adopt to the new challenges of convergence.

The central power utility plans to install another 6500 megawatt in addition to its existing 19,435 MW. About 3000 MW would be added through its projects in Talcher and Simdhari while another 3,500 MW would be added through its projects in Rihand and Ramagindam by 2001.

NTPC operates 12 coal-based and seven gas-based power plants and recently diversified into hydro power.

The power PSU registered a 21.62 per cent growth in net profit at Rs 3,424.53 crore during 1999-2000 as against Rs.2,815.73 crore in 1998-99.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.66	HK $1	Rs. 5.90*
UK £1	Rs. 66.62	SW Fr 1	Rs. 26.10*
Euro	Rs. 40.23	Sing $1	Rs. 26.50*
Yen 100	Rs. 43.46	Aus $1	Rs. 24.25*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4535	Gold Std(10 gm)	4470
Gold 22 carat	Rs. 4280	Gold 22 carat	4135
Silver bar (Kg)	Rs. 7925	Silver (Kg)	7960
Silver portion	Rs. 8025	Silver portion	7965

Stock Indices

Sensex		3954.83		+23.29
BSE-100		2015.02		+11.48
S&P CNX Nifty	1246.75		+6.50
Calcutta	108.85		+0.77
Skindia GDR	617.54		-14.69
   
 

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