Mastek flashes first profit warning
Vandrewala elected chairman of Nasscom
Zee Tele in talks with RPG for broadband services
IPCL board meets Jan 19 to weigh sale of Vadodara Plant
Govt may allow PF cash to be parked in AMCs
Banks, Dunlop to discuss revival
Boston Education acquires US firm, to open UK office
NIIT to open 1000 centres next year
Foreign Exchange, Bullion, Stock Indices

 
 
MASTEK FLASHES FIRST PROFIT WARNING 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 26: 
Mastek Computers became the first infotech firm in India to flash a warning when its said its third-quarter sales could shrink by 5 to 7 per cent while its net profit might plummet by 60 to 70 per cent over the same period last year.

In a late-night notice sent to the Bombay Stock Exchange (BSE), the firm blamed its woes on the problems its US-based clients were facing in securing new venture funding. This has led to delays in closing large accounts with significant offshore potential. The share closed at Rs 321.85 today, down 7.96 per cent from Rs 349.85 at the close of trading last week.

The company has expressed fears that the groups profitability would be further impacted by provision made against dues from a dotcom customer who has yet to receive an additional round of funding and a charge for stock options granted to subsidiary employees in the UK.

The board of directors will meet on January 12 to discuss the full year impact in terms of revenue and profits and shall release the same thereafter along with the quarterly results. The caveat follows a string of warnings by global technology top guns like Microsoft, Intel and Cisco that their revenues and earnings would fall short of Wall Street expectations as fears over a slowdown in the US economy intensify.

The grim reminder came on a day when stock markets at home suffered yet another selloff in technology shares. Roaring into 2000 with a heady tally of 5,375 points on Jan 3, the sensex went through a gut-wrenching 28.44 per cent slide to close at 3826.82 today.

The contrast could not have been starker. What began with a 369.29-point surge on the first day of the year ended with a 79.08-point loss on the third last day of trading in 2000. In absolute terms, the index that is often seen as the barometer of stock markets’ health had lost a staggering 1540.78 points when brokers went home after another freefall.

There are still two trading sessions to go, but the bears are already stashing away their champagne bottles on ice as they pillage their way into 2001 — known as the Year of the Snake in the Chinese calendar because it is expected to be dominated by forces of evil, cunning, and the sway of supernatural powers.

Technology stocks took it on their chin. Software major Infosys Technolgies plumbed a 52-week low of Rs 5,500 in intra-day deals before closing at Rs 5544.10, down 4.35 per cent.

Operators and institutional investors, unnerved by Credit Suisse First Boston’s (CSFB) downgrading of the US infotech sector to neutral because of growing concerns over a slowdown-induced cut in spending by technology titans, sold their way out of domestic computer companies.

Investors punished public sector telecom majors, VSNL and MTNL, after a key meeting of the Cabinet Committee on Disinvestment (CCD) to discuss their selloff was put off last week.

“We have apprehensions that growth in the infotech sector will slacken to 50 per cent levels,” an analyst said. Dealers say the market is looking for positive signals infotech Big Daddies like Infosys and Satyam to renew confidence. Infosys, announcing its third quarter results on January 9, will be keenly followed by investors.

There are now fears that other research houses and FIIs will follow CSFB and announce their downgrades, knocking the bottom of an already weakened market. Though CSFB officials were not available for comment, sources said the downgrade follows expectations of lower billing rates in the last quarter of the current fiscal year as a result of a slowing US economy.

Surprisingly, on a day when scrips were clobbered across the board, Hindustan Lever held its ground and recorded minor gains.

   

 
 
VANDREWALA ELECTED CHAIRMAN OF NASSCOM 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec 26: 
Phiroz Vandrevala, executive vice president of Tata Consultancy Services, has been elected as the chairman of National Association of Software and Service Companies (Nasscom) for 2001.

Vandrewala takes over from Atul K Nishar, chairman of Aptech Ltd. Dewang Mehta continues to be the president of Nasscom.

Nasscom, the apex umbrella organisation of the domestic software and infotech service companies, today announced new office bearers of the association for 2001.

The chairman-elect of Nasscom, Phiroz Vandrevala said, “Our immediate endeavour at Nasscom would be to increase the size and revenue of the domestic software and IT services industry both in qualitative and quantitative terms and also provide a roadmap to achieve the target of $ 87 billion of annual revenue by 2008.”

He added, “During the year, we would increase the activities at Nasscom. More offices will open in different parts of the country, and launch Nasscom chapters in overseas markets. Among others, the focus of Nasscom in 2001 will be to increase the quality and quantity of manpower; enhance the physical and telecom infrastructure; remove the remaining procedural obstacles and help start-ups and small and medium enterprises to grow in export and domestic market.”

Anil Laud, managing director of Siemens Information System Ltd has been elected as vice chairman of Nasscom. In 2000 Vandrevala was the vice chairman of Nasscom. Arun Kumar, president of Hughes Software Systems Ltd has been re-elected as the honorary treasurer.

Nasscom elects office bearers for a one-year term.

   

 
 
ZEE TELE IN TALKS WITH RPG FOR BROADBAND SERVICES 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Dec 26: 
Zee Telefilms is in talks with the RPG group to set up a joint venture for broadband services.

Sources said the Rs 775 crore media giant, promoted by Subhash Chandra, has decided not to venture into the broadband sector on a stand-alone basis in 26 cities as it had planned earlier. Instead, it is looking for potential joint venture partners to come into the sector which needs heavy investment especially for laying hybrid-coaxial fibre cable (HFC).

“ Zee Telefilms will provide the services in Delhi, Hyderabad, Bangalore and Jabalpur on its own; in the other places it will opt for the joint venture route,” sources said.

Both Zee and the RPG group have been cagey about the recent developments. The change in Zee’s plans has been brought about because of its reluctance to invest Rs 4000 crore, required for the project, on its own. “Moreover, the joint venture partner can provide ready infrastructure in many areas. RPG, for instance, in Calcutta,” they added.

Zee, which is currently going through a rough ride on the bourses, has already signed a pact with MGM for English films and Sterling for set-top boxes, required for direct-to-home television and internet services. All these strategies have been undertaken as corrective measures to overcome the current problems. A.T. Kearney, appointed by the company for consultancy on its business restructuring model, has also suggested the joint venture route for the broadband network.

The company’s stock price nosedived from Rs 1630 in February to Rs 259.55 on Tuesday, an 84 per cent slump in the value of the stock in the past 10 months.

Stock market operators feel Zee has tried to bite off more than it could chew. The major decline in its share price is only a reflection of its flawed business strategies.

The bashing on the bourse has been exacerbated by the stomach-churning fall in the Nasdaq index which has driven all bourse indices down.This has forced the company to withhold its proposed public issue for the ambitious broadband project.

RPG Netcom, the cable TV provider, has already signed a memorandum of understanding with Satyam Infoway for providing internet-over -cable services. The company has an 800 km long HFC network.

The other RPG outfit that has an optic fibre network is CESC, the sole power provider in Calcutta. It could not, however, be ascertained whether any of these two companies will tie up with Zee.

   

 
 
IPCL BOARD MEETS JAN 19 TO WEIGH SALE OF VADODARA PLANT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec 26: 
The board of directors of the Indian Petrochemicals Corporation Ltd (IPCL) will meet on January 19 to consider the transfer of its Vadodara unit to the Indian Oil Corp Ltd (IOC). In a communication sent to the exchanges today, IPCL said the discussion will be on the basis on the instructions received by the company from the Union government.

It may be recalled that the Centre had earlier cleared the restructuring proposal of the company whereby its Vadodara unit would be sold to the IOC. It also decided to float fresh tenders for its facilities at Nagothane (Maharashtra) and Gandhar (Gujarat). Prior to this, the two plants will be de-merged and it will be followed by the government calling for international bids for disinvestment of 25 per cent stake to the strategic partners.

Leading companies like Dow Chemicals and BP Chemicals had at one point of time evinced interest in picking up a stake in the company. however, they subsequently backed out because of the slow pace of divestment. Consequently, Reliance Industries and the Soros-Chatterjee group had emerged as serious contenders to take over the company. IOC has joined hands with the Soros-Chatterjee combine to takeover IPCL.

The decision by the government to sell the Vadodara plant to IOC was based on the consideration that it would benefit both companies as the plant uses naphtha produced by IOC’s adjoining refinery. Recent reports indicate that both the contenders are again in the race to bag the remaining two plants for which the government will seek fresh bids.

IPCL’s Vadodara complex manufactures a wide range of commodities that include low density polyethylene, polypropylene, polyvinyl chloride, linear alkyl benzene, mono ethylene glycol, benzene and acrylates among others. During the previous year, the total production of these products in the complex stood at over 4.50 lakh tonnes.

While the government’s stake in the company is put at around 60 per cent, this is slated to decline to 35 per cent after the selloff which would see the strategic partner garnering a 25 per cent stake with management control.

   

 
 
GOVT MAY ALLOW PF CASH TO BE PARKED IN AMCS 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, Dec 26: 
The government is mulling a plan to allow provident and pension funds — including government-run funds for central government employees — to park money meant for corporate equity and debt markets with professional asset management companies.

If this is cleared by the various departments being consulted, it could form part of the budget announcements. Two years back, the government had allowed provident funds to invest 10 per cent of the fresh deposits in private sector securities. But very few PF boards had agreed to do so, mainly because private securities are perceived as risky and most PF trusts do not have the experience of managing such investments.

“We realised that with the natural tendency on the part of PF boards to play safe, it would be difficult to get them to invest even in long-term infrastructure securities. So we are thinking of giving them a safer way out — park your money with AMCs who will do your job,” finance ministry officials said.

The finance ministry estimates this could unlock a huge amount of money for private infrastructure securities. Various provident funds in the country have more than Rs 100,000 crore worth of funds with them. The employees provident fund organisation, the largest of them, alone has a corpus of more than Rs 41,000 crore.

Currently, besides the EPFO, which controls most PF savings of organised sector employees along with their employer’s contribution, a separate PF fund for government employees as well as company-run provident funds and public provident funds.

“The move to allow asset management funds access to these firms will also help inject much needed liquidity of the right kind into the market,” officials said.

Currently, most of the money coming into the market is being funnelled into short- or medium-term speculation on techie or MNC stocks. But little is being invested in fundamentally sound and “financially safe” but low-priced infrastructure and core industry stocks.

Moreover, new private sector infrastructure projects in power, roads and airports need large dollops of supporting investments. The government hopes this will come in part not only from the insurance companies being set up now but also from the existing PF and pension funds, egged on by more market friendly rules.

   

 
 
BANKS, DUNLOP TO DISCUSS REVIVAL 
 
 
BY A STAFF REPORTER
 
Calcutta, Dec 26: 
The West Bengal government has directed the bankers of Dunlop India Ltd to hold talks with the company’s management on its revival plan.

The state government will itself meet the Dunlop management on December 29 to discuss the issue.

“The banks have agreed to sit with the promoters, though no date has been fixed as yet. But it has to be before January 8,” Mrinal Banerjee, minister of power and industrial reconstruction said today after a meeting with the company’s bankers, namely the United Bank of India and State Bank of India.

The Board for Industrial and Financial Reconstruction (BIFR) had directed the promoters in its earlier meeting held on November 8 that the revival plan should get the support of banks, the state government and the employees union. BIFR had given Dunlop two months time to arrive at a consensus with all parties and categorically stated that if it fails to do so the board will change the present promoter, M. R. Chhabria. Dunlop’s time runs out on January 8.

“Both these meetings are very crucial,” Banerjee said.

Today’s meeting was also attended by the state finance minister Asim Dasgupta.

Banerjee said the government has asked the banks to review the revival plan again and come up with some suggestions.

The banks, however, are of the view that they cannot provide any financial support to the company and participate in the revival plan unless the management returns the Rs 100 crore which it has diverted. They have also raised questions on the credit-worthiness of Dunlop.

UBI, in a letter to the management stated that the company has diverted funds between June 1992 and March 1997 even though it was posting losses.

UBI has shown that the company’s investments in shares and loans in other group companies shot up from Rs 37 crore in 1991 to Rs 98 crore in December 1997.

At the end of today’s meeting, Biswajit Choudhuri, UBI chairman and managing director said, “We have reviewed the position. But our stand remains clear. Nothing much happened at today’s meeting.”

The banks themselves are under pressure from the Reserve Bank of India to reduce their non-performing assets. “In this scenario no bank would commit to provide funds to any company which is defaulting on its payments,” said an industry watcher.

Sops for Dunlop

Meanwhile, the state government has agreed in-principle to provide deferred payment facility to Dunlop for its power bill arrears.

The government will also extend other facilities and concessions to the ailing tyre company controlled by the Dubai-based Manu Chhabria, to keep its Sahagunj factory, which has several thousand employees, in operation .

   

 
 
BOSTON EDUCATION ACQUIRES US FIRM, TO OPEN UK OFFICE 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, Dec 26: 
The Rs 16.22 crore Boston Education Software Technologies Ltd (BESTL) has acquired the $ 1.5 million Infinity Software Inc, a US-based company.

Already a strong brand name in the IT education business, the company plans to focus on its software development activities and to open an office in UK this fiscal.

The Mumbai-based BESTL is also planning a public offering in the first quarter of 2001. Though the size of the issue is yet to be finalised, 90 per cent will be closely held and only 10 per cent will be offered to the public. The amount generated will be used to aggressively promote global software development activities.

Besides, Boston set up its wholly-owned subsidiary Nexus Infotech Pvt Ltd, a 100 per cent export oriented unit in March this year, for all its overseas software export development activities.

“Presently, only 4 to 5 per cent of the total revenue generated is from the software division. In another three to four years, we expect this share to increase to 50 per cent,” says Dipankar Mukhopadhyay, managing director, BESTL.

“We have also been associated with part of the ‘White House 2001’ project to develop a software package for NFO to aid the transition of the office of the US President.”

“We are now an established name in the infotech education and training business in Mumbai, but this year we plan to establish a national presence and will spread out to Chennai, Hyderabad and Calcutta,” says Mukhopadhyay.

The company will open its first eastern region career centre at Salt Lake in January 2001. The centre is being set up at a cost of Rs 30 lakh and is expected to develop into a hub centre for Jamshedpur, Ranchi, Bhubaneswar and Guwahati.

The company recently launched a portal, www.testvarsity.com, to enable IT professionals to test their skills online in eight subjects. Users can visit the site and test their knowledge by answering questions on the given subject. High scorers can also receive certification from Boston.

Commenting on the revenue model for the site, Mukhopadhyay said, “The user has to pay Rs 400 to access the questions. We are also in talks with corporates who can use these tests to recruit personnel. The financial results will show only after a year of operation.”

   

 
 
NIIT TO OPEN 1000 CENTRES NEXT YEAR 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec 26: 
NIIT, a Rs 1,237 crore company, plans to set up 1000 education centres in the next year to become the global leader in IT education and training by 2004.

NIIT today set up its 2000th education centre in the world with the launch of its third education centre in Allahabad. Its revenues from education projects touched Rs 625 crore for the year ending September 2000.

NIIT, which opened its first centre in Mumbai in 1982, today provides computer education in 26 countries including China, Indonesia, Malaysia, South Africa and the US.

NIIT, which enrolled 322,000 students and professionals in 1999-2000, today has nearly 3.5 lakh students on its rolls.

Suren Singh Rasaily, senior vice president and head of NIIT’s education & training business, said, “The tremendous response of our customers in embracing computers has led to the creation of a burgeoning IT training industry.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.65	HK $1	Rs.  5.90*
UK £1	Rs. 69.07	SW Fr 1	Rs. 28.00*
Euro	Rs. 43.37	Sing $1	Rs. 26.70*
Yen 100	Rs. 41.17	Aus $1	Rs. 25.60*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs. 4605	Gold Std (10 gm)Rs. 4560
Gold 22 carat	Rs. 4350	Gold 22 carat	Rs. 4220
Silver bar (Kg)	Rs. 7675	Silver (Kg)	Rs. 7755
Silver portion	Rs. 7775	Silver portion	Rs. 7760

Stock Indices

Sensex		3826.82		-79.08
BSE-100		1933.40		-48.58
S&P CNX Nifty	1212.00		-30.00
Calcutta	116.43		- 2.34
Skindia GDR	NA		-		 
   
 

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