Move to abolish no-delivery period
Cement to cost more across the country
France Tele makes right noises
DCL to up stake in Bakreswar
Indefinite bank strike threat
Allahabad Bank seeks plot at Salt Lake to relocate hub
Uniform fertiliser subsidy plan in limbo
Hero infotech staff to getstock option
SMIFS in no hurryto lift more BSL equity
Foreign Exchange, Bullion, Stock Indices

Mumbai, Nov 28: 
The secondary market advisory committee headed by SS Tarapore today recommended the abolition of no-delivery period, reduction in period between two book closures, and disclosure of material events by a corporate within 15 minutes of the conclusion of the board meeting.

The recommendations of the committee, which has been constituted by the market regulator Securities and Exchange Board of India, were announced by the former deputy governor of the Reserve Bank of India.

Terming small investors as a “bedrock of the capital market”, Tarapore said the changes and procedures would help further ease and facilitate their dealings with the intermediaries in the secondary market.

Among the landmark decisions taken by the committee today was the one relating to the abolition of the no-delivery period. The committee felt that with the progress in dematerialisation and consequent reduction of paper work related to physical securities, the work load on the clearing house/corporation have reduced substantially.

No delivery period exaggerates the share price depending on the mood in the counter as “delivery” or “payment” during the period is not needed by the buyer or the seller.

The committee agreed to abolish the concept of “no delivery” period for corporate actions such as issue of dividend and bonus shares for the companies whose securities are traded in the compulsory dematerialised form.

If the decision is implemented, it will ensure continuous trading of shares on ex-basis and will reduce the possibilities of price manipulation during the no-delivery period.

In addition to this, the committee deemed that the current requirement of 90-days gap between two book closures should also be reduced to 30 days.

On the contentious topic of compulsory implementation of client code by all stock exchanges prescribed by Sebi, the committee decided that a stock exchange that does not implement the mandatory client code requirement by January 1, 2001, then those exchanges will not be allowed to conduct carry forward and ALBM sessions.

This decision is significant as it comes at a time when promoters have grumbled about raiders cornering their companies shares leaving them and their intermediaries in the dark till the very last moment.

In another important decision, the Tarapore committee said companies would be required to make its decision regarding dividend bonus and rights announcements or any material event within 15 minutes of the conclusion of the board meeting in which the decision has been taken. Such an announcement can also be within the market hours.

Separately, Sebi will be discussing with the chambers of commerce the stages and nature of disclosure required to be made

On minimum floating stock requirement, the committee felt that the current regulatory regime provides for a minimum public holding at the time of initial listing but there is no requirement to maintain a minimum floating stock post-listing on a continuous basis.

The committee deemed that no preferential allotment/buyback of listed companies would be permitted if, as a result of preferential allotment or buyback, the non-promoter holding falls below the ceilings permitted under the Sebi disclosure investor protection guidelines which are applicable at the point of entry. The current thresholds are 10 per cent for information technology, media, and infrastructure companies and 25 per cent for the rest.

In case of new companies, the above limits of 10 per cent and 25 per cent or non-promoter holding would have to be maintained on a continuous basis, even after listing.

In case of existing companies, it was decided to make a beginning by mandating that the non-promoter holding must be atleast 10 per cent. In cases, where such holding is less than 10 per cent, the companies will be given time up to one year to raise the levels of non-promoter holdings or buy out the public shareholding in a manner laid down in the Sebi takeover regulations.

However, the committee clarified that the floating stock stipulations will not be applicable to BIFR companies.

Sebi will also issue necessary guidelines to facilitate the use of secondary market for primary issues.    

Mumbai, Nov 28: 
Cement companies have decided to raise prices by Rs 12 to Rs 24 across the country and regulate supplies between November 27 and December 4, days after a self-imposed ‘despatch holiday’ gave them the room to charge more from customers in the country’s commercial capital.

Cement dealers in Mumbai, the largest market with an average monthly consumption of 3 lakh tonnes, confirmed that prices have indeed gone up by Rs 20-50 bag to over Rs 168 in the region. However, companies are cagey on whether the price hikes will be extended to the rest of the nation.

“I have no idea,” is all that Anil Singhvi, executive director of Gujarat Ambuja Cements (GACL), said when asked if customers in other areas could expect higher prices.

There are fears that Mumbai, which has seen a flurry of increases including Rs 15 last fortnight, will pay Rs 180 for a bag next month. Current prices are pegged at Rs 159 in Calcutta, Rs 130 in Delhi while it hovers around Rs 180 in Chennai.

Reports that a nationwide price hike is imminent fuelled a massive rally in cement shares today. Several companies saw their scrip bouncing back from intra-day lows. The ACC scrip, which fell to an intra-day low of Rs 133.15 after opening at Rs 137.70, finished higher at Rs 141.95; Gujarat Ambuja finished at Rs 161.55 after opening at Rs 163 and dipping to a day’s low of Rs 158.20; Larsen & Toubro ended higher at Rs 190.25 after opening at Rs 187 and hitting a low of Rs 182.50.

Analysts, however, say price increases achieved by creating an artificial scarcity — the despatch holidays one way of doing that — will run into resistance from customers.

They also say companies risk punitive action by Monopolies and Restrictive Trade Practices (MRTP) Commission, which could see the price manipulation as a sign of cartelisation.

“The government should intervene at this point. It is absolutely ridiculous on the part of the manufacturers to go in for a dispatch holiday and cartelise in Mumbai,” an analyst said.

Another industry watcher said firms will not achieve their goal if dealers are unable to offload their stocks. “The most important question is whether there is a pick-up in demand. If that does not happen, then the decision to raise prices by halting supplies will not bring out results,” he added.

Sources said the supply curbs clamped by companies follow a long period of overcapacity, cut-throat competition and depressed prices. A combination of these factors forced most companies to report poor financial numbers in recent times.    

New Delhi, Nov 28: 
France Telecom has identified cellular services, internet access and long-distance telephony as the three areas that will receive the bulk of the investments in future.

The company is ready to buy the government’s 56.23 per cent stake in Mahanagar Telephone Nigam (MTNL) and Videsh Sanchar Nigam (VSNL) if the government divests its stake in them.

The two companies had been in negotiations for a joint venture, which would have offered an array of value-added services.

However, the talks were scuppered by the uncertainty in the telecom sector and litigations over MTNL’s entry into cellular services.

France Telecom is looking for partners to forge cellular ventures in circles that are now vacant, but could be opened to companies soon.

“There is huge scope for growth in cellular telephony in India given its low level of telephone connections per head,” Christian Delebarre, director (public affairs), France Telecom, said.

The France Telecom board has not finalised a proposal to pump more funds into the Indian telecom industry, but it is expected to clear a two-fold increase in its current investment. Delebarre said his company was in holding talks with the state-owned and other telecom companies, including MTNL, and would soon draw up its investment strategy.

The French major holds around 26 per cent in BPL Telecom, the cellular service provider in Maharashtra, Mumbai, Tamil Nadu and Kerala. It has invested about Rs 250 crore in the project.

“India is a major market for us. We are closely watching the developments and will soon finalise our plans,” Delebarre said.

He declined to name the companies which could be chosen as partners for the several telecom joint ventures planned, but said France Telecom would like to hold a controlling stake.

“It is very difficult to comment when and with whom we will tie up. We are in talks with many operators. All I can say is that we would like control in the company,” he said.

The company may also join hands with an Indian player for the National Long Distance communication (STD) sector — a segment which has just been opened to private firms. BPL Telecom would be the first choice as a partner, but others could also be considered if they had the right credentials.    

Calcutta, Nov 28: 
Development Consultants Ltd (DCL) is planning to raise its equity stake in Bakreswar Power Generation Company (BPGC). At present, the Rs 200-crore Calcutta-based project consultancy firm holds a 14 per cent stake in the power project.

A final decision to this effect will be taken after the financial closure of the project, company sources said.

Ogden, the global power major, holds a 60 per cent stake in Bakreswar Power, while the remaining 26 per cent is with West Bengal Power Development Corporation (WBPDCL).

Sources said the capital restructuring, when in place, may see a minor reduction in stakes of both WBPDCL and Ogden. They, however, refused to clarify the reason for such a restructuring.

The company has recently appointed Crisil to ascertain the cash adequacy of the West Bengal State Electricity Board. Although WBSEB has no role to play in terms of setting up the project, its financial health is required to be assessed since it will purchase bulk of the power from the project.

“We are expecting that Crisil will submit its report in the next couple of months. The financial closure will be completed within a very short while after that,” a senior DCL official said.

The rating agency has been appointed at the instance of Industrial Development Bank of India, which is the lead financial institution of the project.

BPGC will invest Rs 1620 crore to set up the two units (IV and V) of 210 MW each in Bakreswar. While the equity portion is 33 per cent of the project cost, the remaining portion will be financed through borrowing.

According to a senior WBPDCL official, the cost of the power generated from the project has been worked at Rs 3.9 per MW.

WBSEB will purchase 68.5 per cent of the power generated from the project.

The WBPDCL official explained that the joint venture company will have the right to sell power elsewhere in the country over and above the stipulation.

Meanwhile, the third unit of the Bakreswar thermal project could not be commissioned in time because of problems in the generator, supplied by the Bharat Heavy Electricals Ltd.

The official has pointed out that the third unit is likely to be commissioned by January. The other two units are, however, performing well, he added.    

New Delhi, Nov 28: 
Bank employees today threatened to go on an indefinite strike if the government goes ahead with plans to bring in legislation enabling it to reduce state-held equity in nationalised banks to 33 per cent.

“We will launch an indefinite strike if the government goes ahead with its plans,” Harvinder Singh, spokesperson for the Bank Officer’s Confederation said here today.

Bank workers today held a protest march before Parliament to focus attention on their demands. Finance minister Yashwant Sinha has already made it clear that his government was determined to go ahead with the legislation despite opposition from both the Congress and Communist parties.

The United Forum of Bank Unions (UFBU), an umbrella group of nine bank unions representing over a million employees, said about 25,000 bankmen took part in the march led by CPI leader Gurudas Dasgupta and Congress MP Margaret Alva.

V. K. Gupta, Delhi convenor of UBFU, told newspersons that the unions were also against what he termed ‘intimidatory’ tactics being employed by bank managements to force a voluntary retirement scheme on them. Though the march itself was stopped about 500 yards away from Parliament, agitated MPs took up cudgels on behalf of bank workers within the legislature’s portals.

Describing the government’s decision to bring in amendments to the Banking Companies (Acquisition and Transfer) Act as a retrogade step, CPM MP Nilotpal Basu said employees were being penalised instead of taking efforts to recover the mounting non-performing assets.

Basu, who raised the issue during zero hour in the upper House, was supported by several Congress members led by Suresh Pachouri. However, as soon as Basu raised the issue, Congress leader Manmohan Singh, the man who as finance minister set the reforms ball rolling in 1991, went out of the house. Singh is believed to be against the Congress’ decision to oppose the sale of the government’s equity in banks.    

Calcutta, Nov 28: 
Calcutta, Nov 28: The city-based Allahabad Bank has sought an acre of land in Salt Lake from the state government to relocate its existing headquarters from Netaji Subhas Road. “We need the land for our building. At present, most key operations are scattered. We want to bring them all under one roof,” bank chairman B. Samal told The Telegraph.

Earlier, the bank was interested in Jessop & Co’s building at Netaji Subhas Road, but there was no deal because the two sides failed to agree on a price. “After that happened, we decided to buy a piece of land,” Samal said.

The CMD will soon meet state chief minister Buddhadeb Bhattacharjee to discuss the matter. “We have not yet fixed a date but it will happen soon,” he said.

Samal said his bank was not in a position to pay the market price. “We will request the chief minister to give us the land at a lower rate. But if the state government does not, we will buy a smaller plot,” he said.

Samal said no amount had been set aside for the planned building and it all depends on how soon the bank can strike a deal for the plot.

Meanwhile, reducing non-performing assets (NPAs) will be the bank’s top priority in the immediate term. It wants bad loans reduced from Rs 1,694 crore at the end of March 31, 2000 to Rs 500 crore by the end of the current financial year. Finance minister Yashwant Sinha will review NPAs next month.

After its meeting with the finance minister on November 14, the bank decided to send 30 executives to the branches as part of an intensive loan-recovery drive. “I have asked my officers men to visit defaulters and get hold of them. If they refuse to pay up, the officers have been given orders to attach their properties on the spot,” Samal said.

Samal is personally monitoring 51 accounts, all of which involve more than Rs 5 crore in unpaid loans and interest.

“There has been some progress but much more is needed. At the same time, many compromise deals are being entered into,” he added.    

New Delhi, Nov 28: 
The new formula for fertiliser subsidy proposed by the Expenditure Reforms Committee might not be implemented in spite of adequate support from the bureaucracy.

Official circles say there are many practical problems in implementing them. The panel, headed by K. P. Geethakrishnan, suggested a uniform subsidy for all fertiliser plants.

This would be fixed by taking the weighted average of differential subsidies.

Under the existing formula, based on the Marathe panel’s report, the subsidy for each unit is worked out separately, taking into consideration the feedstock cost, the cost of the plant and capacity utilisation.

On the face of it, the Geethankrishnan panel’s prescription looks attractive, but its implementation will not result in lowering the total quantum of subsidies.

Sources say a uniform subsidy cannot be paid unless there is a common feedstock and the same price.

Senior executives of the fertiliser industry met in the capital today to take stock of the situation. They are of the view that the bureaucracy would make a mess of the situation if it decides to implement the uniform subsidy formula.

Fertiliser plants uses different feedstock such as naphtha ,fuel oil and natural gas. These units are in different locations.

Even for gas-based plants, gas for plants located at landfall points is substantially cheaper than it is for those located along the HBJ pipeline. The difference works out to Rs 1,150 per thousand million cubic metres.

There are significant differences in the prices of various feedstock. A few years ago, the ex-factory price of naphtha and fuel oil used to be the same in all locations. From April 1 1999 however, the ex-factory prices of naphtha differ across refineries. So do the rates of sales tax. In Gujarat, naphtha attracts a sales tax of 22 per cent, followed 20 per cent in Tamil Nadu. In Uttar Pradesh, it is only 6 per cent.

The subsidy is calculated mainly on the cost of feedstock. Given that its price differs from plant to plant, it is impractical to have a uniform subsidy for all. Some of the fertiliser plants are depreciated while others are relatively new, with higher capital costs.

Officials who understand the fertiliser industry say Geethakrishan could not do justice to the subject. Though a former finance secretary with experience in expenditure control, he is not known to be familiar with agriculture and related issues.

The fertiliser subsidy has grown in line with the domestic cost of feedstock such as naphtha, fuel oil and gas. The increase in the administered prices of petroleum products helped the government mop up revenue. Some of these are now decontrolled. It is natural that the quantum of fertiliser subsidy goes up proportionately.    

New Delhi, Nov 28: 
The marriage of the old economy with the digital one is turning out to be a boon for employees.

Gone are the days of the pink slips and the golden handshakes. Brick-and-mortar companies now are talking not only of retaining employees but also offering them sops like stock options which can be encashed within a short time, unlike their dotcom cousins. Going a step further, even die-hard traditional companies are exploring the world of the mouse and what lies in it for them.

The Hero Group will soon announce a stock option scheme for its senior managers in its infotech venture. “We plan to give about a 25 per cent stake in our infotech company to our senior managers, which then will be increased to accommodate other employees. Our aim is to help motivate the employees through ESOPs,” said Sunil Kant Munjal, managing director, Hero Cycles Ltd India.

The Hero Group took its first steps in the information technology sector through Hero Corporate Services Ltd in July. The infotech venture, which has an initial investment of Rs 30 crore, will eventually see the corpus swell to Rs 150 crore by 2002.

Hero Corporate Services Limited has set up two separate divisions, Enterprise Plus solutions and Customer Plus solutions.

“We do not believe in throwing out people to change with the new economy. Rather, we believe in changing them to be part of the new economy,” said Munjal.

He added, “It also helps to pick up people with the right bent of mind for the right kind of work when such a transition takes place.”    

Calcutta, Nov 28: 
SMIFS Capital Services Limited (SMIFS) will not raise its stake in BSL Ltd at least for the moment from the existing 6.33 per cent.

Utsav Parikh, the co- promoter of the company, said there was no plan to pick up a sizeable chunk in the LNJ Bhilwara group company.

“The shares of the company have been lying with SMIFS Capital Markets Ltd, which is a broking firm, for the last four years. Now we have only transferred the shares from one group company to the other,” Parikh said.

Since the transfer is in excess of five per cent and accordingly, as required under Sebi, we have duly intimated BSL about it, he added.

Parikh also pointed out that the move is part of the restructuring of the investment portfolios.

“We have decided to transfer all investments to SMIFS which is a wholly-owned subsidiary of Indovision. This is only a business decision to strengthen focus on the investments and make out more useful strategies,” he said.

Asked about BSL’s allegations that SMIFS did not inform the company as well as the stock exchanges about the purchase of shares violating the Sebi regulations, Parikh said, “There was nothing wrong in procedures and BSL is not the authority to decide whether we were legally correct or not. Competent authorities will decide on it.:

On BSL’s claims to have sought details from SMIFS about their entire holdings in the company, including in concert, Parekh said, “We have not received any letter from BSL till this morning. Only on receipt of the letter we can clarify our position.”    


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