RBI sees softening of interest rates
Spurt in cement price under MRTPC watch
Exports grow 20 per cent in 7 months
Govt clears FDI plans valued at Rs 526 cr
New-age cover for directors
No distress sale of Maruti stake
State govt asks Accor to submit MoU by Dec 20
VSNL unveils high speed Net exchange
Four ISPs join forces
Foreign Exchange, Bullion, Stock Indices

New Delhi, Dec 1: 
The Reserve Bank believes interest rates will soften as government borrowings are under check.

“They (interest rates) have already started softening,” Reserve Bank governor Bimal Jalan told reporters on the sidelines of a seminar held here today.

He pointed out that despite a larger oil import bill, government borrowing remained under check and was likely to be within the target of Rs 1,17,000 crore for this fiscal.

With government borrowing not expanding due to robust tax collections, interest rates are expected to move southwards. Interest rates tend to harden whenever government steps up its own borrowing as it is the single largest borrower and is also perceived as the safest borrower in the market.

Jalan, however, made it clear the RBI would not aid this process with any further cuts in the cash reserve ratio (CRR), the amount of money that banks have to compulsorily keep with the central bank in this fiscal.

The central bank is also taking care to sterilise the receipts from the SBI’s India Millennium Deposit bonds which are expected to total around $5.5 billion to ensure there are no inflationary pressures due to excess liquidity.

“Our objective is to keep market movements orderly and ensure that there is no liquidity problem or rumour or panic-induced volatility,” he said while addressing a seminar organised by the Asia-Pacific Forex Congress.

Jalan, however, made it clear that oil price hike would be factored in to the medium-term foreign exchange policies. Analysts feel that this implies that the RBI will continue with its policy of not letting the rupee slide drastically against the greenback.

Jalan said the man on the street did not like to see his currency weakening as he saw this as an indication that his economy as well as his purchasing power was weakening, and this put pressure on decision makers worldwide to work towards stable exchange rates.

In the short run, the RBI would also continue to keep an eye on the rupee value against the US dollar on a daily basis while monitoring the trade-weighted real effective exchange rate in the medium term as part of its exchange rate management policy. “In the short-run, there is no option but to monitor the nominal rate,” Jalan said.

As the dollar was the most traded currency across the globe, he said “central banks have to pay maximum attention to the US dollar whether they like it or not.”

The rupee, which is currently hovering between Rs 46-47 a dollar, has depreciated more against the US currency as compared with pound sterling or the Euro.

Jalan said the RBI believed in keeping large stores of foreign exchange reserves in order to be able to face any contingencies like the oil price spiral. “This is the reason why we added $ 10 billion to our reserves in the last couple of years and have recently taken action to further augment our reserves to meet the cost of high oil prices,” the RBI governor added.

“We have followed a very careful policy to reduce our short-term debt which is lower than 7-8 years ago and also to ensure that relatively short-term deposits from NRIs, which are kept in FCNR(B) accounts, are matched by foreign assets of deposit-taking banks,” Jalan said.    

Mumbai, Dec 1: 
Surging cement prices and an unusual bonhomie among the fractious lot of cement manufacturers have raised several eyebrows in the government.

The Monopolies and Restrictive Trade Practices Commission (MRTPC), a quasi-judicial body functioning under the department of company affairs is investigating the sudden rise in prices, sources said. However, top officials from the cement industry were not available for their comments.

Leading cement manufacturers raised cement prices by Rs 10-15 per 50-kg in the Mumbai market earlier this week. Retail cement prices have now risen to Rs 160-170 per bag from Rs 140 in October.

Across the country, cement prices are looking up after a long recession. While it certainly is a heaven sent opportunity for cement manufacturers, celebrating the northward journey of cement prices may be a little too hasty, say industry analysts.

The mood has changed drastically in recent times. Cement manufacturers have reached an understanding to cut supply by imposing production cuts, over and above the annual maintenance shut down which is a regular feature for every cement company. The understanding comes at a time when the industry was in the throes of a three-year recession, which saw rivals like L&T and Gujarat Ambuja putting everything at stake by undercutting each other.

Last week, in a bid to artificially jack up prices by controlling supply, major cement manufacturers in the country closed ranks and decided to shut downs their plants longer than the conventional 20-25 days used for normal maintainence purposes.

The move, which portended the growing cartelisation in the industry, is being seen as an answer to the problem of cut-throat competition and price undercutting at a time when demand for the commodity is yet to show any significant improvements. However, analysts are skeptical about the new-found camaraderie in the industry due to its extremely competitive nature.

India is one of largest manufacturers of cement in the world.

Earlier, speaking to The Telegraph, Anil Singhvi, executive director, Gujarat Ambuja Cements Ltd (GACL), termed it as ‘pricing discipline.’    

New Delhi, Dec 1: 
India’s exports during April-October grew 20.51 per cent at $ 25,013.99 million compared with $ 20,757.15 million recorded during the same period of the last financial year.

The growth in October alone was 16.81 per cent at $ 3,685.22 million, higher than $ 3,154.91 million in the same month last year.

According to the provisional estimates released by Directorate General of Commercial Intelligence & Statistics (DGCI&S), India’s imports between April and October were up 14 per cent at $ 30,270.27 million from $ 26,552.71 million in the same period last year. Oil imports in the seven months to October 2000 are valued at $ 9,732.92 million, 84.15 per cent higher than $ 5,274.88 million in the corresponding period last year.

Non-oil imports are estimated at $ 20,537.35 million, down 3.48 per cent from $ 21,277.83 million in the same period last year. Imports in October are valued 9.2 per cent higher at $ 4,258.13 million compared with $ 3898.59 million in the same month last year.

In rupee terms, imports were up 16.50 per cent. The trade deficit for April-October 2000-2001 is estimated at $ 5,256.28 million, lower than $ 5795.56 million during the same period last year.    

New Delhi, Dec 1: 
The government today cleared 106 foreign direct investment (FDI) proposals valued at Rs 526 crore.

The plans, which were approved by commerce and industry ministry, after they passed the muster with the Foreign Investment Promotion Board (FIPB), include those of Bharati Global, Max India, Yahoo Web Services, Hinduja National Power Corporation, Hewlett -Packard Europe BV, Tata Home Finance, Citicorp Overseas Software, Silicon Automation Systems India and ACC Rio Tinto Exploration.

Bharati Global has been allowed to bring in FDI worth Rs 5.46 crore to manufacture and market empty hard gelatine capsules. Max India has been allowed a 26 per cent foreign holding, worth Rs 27.30 crore, for life insurance business.

Yahoo Web services India has been permitted to set up a 100 per cent owned venture to provide web space for banner advertising while Hinduja National Power Corporation will use the FDI inflows to set up a power plant.

Hewlett Packard Europe BV has received the nod for selling and servicing of testing, measurement equipment and electronic components. Tata Home Finance will bring in 30 per cent FDI for house finance and related activities. Citicorp Overseas Software has been allowed a 100 per cent FDI. ACC Rio-Tinto Exploration, a mineral exploration company, has been permitted to raise foreign equity from 50 to 56 percent.

The Satish Kaura-promoted Samcor Glass’ proposal to manufacture glass parts and shells for black and white television picture tubes, Sinar Mas Pulp India’s expansion into paper board and the UK-based FIO Group’s proposal for software development and export were among the other plans that were cleared.    

Mumbai, Dec 1: 
You name it, they insure it. After cars, houses and lives, it is the people in corporate hot seats who are rushing for covers against legal suits that can drive them to near bankruptcy and leave their companies bruised. The idea has come from a new breed of insurers who realised that managers who steer a company that prides itself on being listed on the Nasdaq or Wall Street run the risk of being hauled into a legal battle by an aggressive overseas investor.

Among the companies to have recently insured its directors is ICICI. The financial institution is believed to have taken a Rs 150-crore policy to cover its board members.

The prospect that firms dread most these days is a class action suit, where a lawyer does not charge a fee from the plaintiff but is entitled to a share of the award on winning the case.

Manohar Chainani, managing director of Mavich Insurance Services, an agency which represents Howden Insurance Brokers — a member of the leading foreign re-insurer Lloyds group — says the high-potential market is untapped in India. Local insurers are yet to enter the niche segment.

Companies such as Wipro, Infosys, Satyam, Sterling Infotech, Mahindra & Mahindra and Great Eastern Shipping have taken policies worth $ 15-20 million to guard their directors.

The risk increases dramatically if a company plans an initial public offer, or an issue of ADR/ADS. Factors like the globalisation of operations, amendments to the Companies Act, Sebi norms, corporate governance standards and foreign direct investment have also made directors more vulnerable.

Called directors & officers liability, the policy protects directors from allegations of a wrongful act and legal claims — all of which can turn out to be a personal liability — and gives them a shield stronger than those now available under the Companies Act.

The policy covers legal costs in defending allegations or fighting suits brought against directors alleging ‘wrongful act’. It also includes awards granted to the claimants against the directors and officers, including out-of-court settlements, civil fines, penalties, bail bonds and investigation expenses.

The desire to buy the cover is not limited to new-economy firms. Even pharmaceutical companies like Dr Reddy’s are waking up to the need for a risk-mitigating mechanism.

Chainani claims to have received enquiries from the Birla family in Calcutta for similar covers.    

New Delhi, Dec 1: 
The government will not resort to a distress sale of its 50 per cent stake in Maruti Udyog Limited and still plans to use the international bidding route to sell its stake in the carmaker, disinvestment minister Arun Shourie told the Lok Sabha today.

Shourie tried to assure MPs that the government would not sell its stake for a song.

“MUL has a strong strategic presence in the Indian market and its current year’s losses would not be allowed to impair its sale prospects,” he said.

He said a group of secretaries has been set up to recommend optimal ways of disinvestment. International tenders would be invited for competitive bidding after the report of this group was available.

Shourie told parliament that the production of cars was a low priority area for the government which intended to focus on anti-poverty programmes and hence the government felt it was necessary to divest its stake in Maruti.

Secondly, the minister said Maruti has failed to introduce new competitive models and its market share had gone down from 83 per cent to 55 per cent during the last three years.

The company, which made a profit of Rs 650 crore three years back, had suffered a loss of Rs 128 crore in the first seven months of the current financial year, he said.

Last year, Maruti Udyog’s profit came down to Rs 340 crore with its market share dwindling to 60-65 per cent from its previous dominant share of 83 per cent, the minister told the House.

Another factor that compelled the government to take this decision was that Suzuki Motors could not supply the new three models, the minister said adding that the deteriorating worker-management relations in the unit had also taken its toll.

Even as the minister made this statement, bureaucrats are believed to be continuing a dialogue with Japanese automaker Suzuki, the government’s partner in MUL on the modalities for the sale of its stake.

Recently, the cabinet committee on disinvestment (CCD) had decided to constitute a committee of secretaries to hold talks with Suzuki on the divestment issue.

The government is considering one of five routes to sell its stake: selling the entire government stake to Suzuki, selling to a third party acceptable to Suzuki, offering shares to the public, selling the stake to financial institutions/mutual funds, and selling both Suzuki‘s and the government’s equity to a third party.    

Calcutta, Dec 1: 
The state government has asked Accor Asia Pacific, the French firm that has bid for the loss-laden Great Eastern Hotel, to submit its memorandum of understanding (MoU) by December 20. Tourism minister Manab Mukherjee, the director of West Bengal Tourism Development Corporation, R. L. Mohapatra, and the tourism secretary recently met the representatives of Accor Asia Pacific in Delhi to discuss the matter.

Sources in the tourism ministry said it was at this meeting where an agreement was reached on asking Accor to submit the memorandum of understanding by December 20. Once submitted, the document will be sent to the legal and finance departments for further scrutiny. “We will have to see whether Accor has incorporated all points made by the state government,” a senior tourism ministry official said.

Accor’s Bangkok-based head office is currently drawing up the blueprint. Its Delhi office has told the state government it will try to submit the document on time, sources said.

On November 10, Rajiv Sharma, Accor’s director (development), had met the tourism minister to discuss the Great Eastern takeover. The firm was requested to absorb as many employees as it could to ensure that there is no resistance to the privatisation plan. The state government is in a hurry to get the memorandum of understanding from Accor so that it can close the deal by March 31.

Authorities at Great Eastern have already issued orders to stop the advance booking of banquet hall/rooms after March 31. If there are bookings which have already been made after that date, it should be cancelled forthwith and the advance amount refunded forthwith.

Meanwhile, life at Great Eastern has returned to normality. Uday Chand Sen, member secretary, Great Eastern Hotel, said: “There is no turmoil at present. Work at the hotel is normal.”

“We have already presented our views to the state government. It is expected that Manab Mukherjee will call us next week for another round of discussion,” said Atiar Rahman, president of Great Eastern Hotel Staff and Workers’ Association.

Accor will invest Rs 100 crore in developing Great Eastern as a heritage five-star hotel. The state government will hand over the lease of the hotel for a period of 30 years in the initial stage. The French company has said it will spend Rs 15 crore on a separation package for the hotel’s 500 employees.    

New Delhi, Dec 1: 
Videsh Sanchar Nigam Limited (VSNL) today unveiled its gigabit-routed internet exchange in Mumbai which will offer high speed connectivity and bandwidth to individuals, corporate users and internet service providers.

The exchange will be used to deliver high speed ultra-flexible dedicated links for the Indian internet network.

Earlier, VSNL had 396 mbps of internet connectivity, a majority of which was being delivered through 11 of its earth stations. These earth stations contribute 341 mbps, the FLAG optical fibre system provides 45 mbps and the remaining 10 mbps of bandwidth is sourced from SEA-ME-WE/FLAG to Singapore. Its total international bandwidth will now stand at 900 mbps.

The exchange forms the prime hub between the 40 gigabit-per-second SEA-ME-WE3 optical fibre system and the Indian internet network.

This network comprises over 200 internet service providers, 400 nodes and over 1000 corporate leased lines and the national internet backbone (NIB).

The gigabit switching fabric will link Mumbai with high speed internet nodes located at Cochin, New Delhi, Chennai, Calcutta, Bangalore, Hyderabad and Pune.

With the commissioning of the new switching fabric, VSNL will be able to offer high speed optical fibre connectivity worldwide.

The telecom PSU also simultaneously announced the commissioning of 3STM-1 links, amounting to 455 megabits per second of SEA-ME-WE3 optical fibre capacity, to the Globe Centre in New York.

Besides, VSNL is also in the process of commissioning an additional 100 mbps of connectivity via satellite, with links of 34/8 being commissioned at Calcutta and Hyderabad and 10 mbps at Chennai. Once installed, the Indian network will have a total of 500 mbps of fibre connectivity and 450 mbps of satellite capacity. The gigabit-routed centres of VSNL will serve as the nodal points for providing connectivity to Indian internet users.

Satyam gateway

Satyam Infoway Limited, the internet and e-commerce company today launched its international satellite gateway in Hyderabad. This is the company’s third satellite gateway after Mumbai and Ahmedabad.

“Our intention is to install satellite gateways in key cities across the country so that traffic meant for international locations is routed through these gateways and will not flow in the national long distance links of our internet backbone network. We have entered into tieups with SingTel, New Skies and Loral Cyberstar for these gateways,” said Rahul Swaroop, chief technology officer, Satyam Infoway.    

Calcutta, Dec 1: 
Even as VSNL, the biggest fish in the internet services arena came up with its internet exchange in Mumbai today, four major internet service providers, DishnetDSL, Satyam Infoway, MantraOnline and Enron, are in talks to set up an internet exchange to streamline communication facilities among themselves.

The exchange, which does not require much investment, is expected to considerably speed up interaction between users of the different ISPs.

DishnetDSL vice president Charles Chacko said the exchange, when in place, would be stop the misuse of bandwidth and save costs for all the ISPs. At present, when local internet users correspond with each other, their mail is routed via a server based in the US. The exchange will ensure that local traffic does not habe to be routed through servers abroad, thereby freeing up bandwidth for international data traffic.

Refusing to divulge any further details, Chacko said talks are on at present.

Chacko, who was present here today to launch Dishnet’s first dial-up access service in Calcutta, said the company had plans to lay submarine cable to have access to international bandwidth at international rates and has already submitted its proposal to the government.

The company currently has 140 mbps leased bandwidth, while its own gateway has 9 mbps bandwidth from SingTel of Singapore.

“Once we get our proposal cleared,” he said, “we will be able to lay the network in 13 months time.”    


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