Crude deal with Iraq may see rupee harden
Petrochem prices set to yo-yo
City all set for private video conferencing
Group holding firm buys Telco stake in Tata Elxsi
Tech stocks slump in dull debut
Corsa pips Astra
3-year limit on FCNR deposits
Foreign Exchange, Bullion, Stock Indices

New Delhi, Jan 1: 
The proposed swap deal with Iraq for crude at $ 7 per barrel, if finally endorsed by the United Nations, can trigger a sharp appreciation in the exchange rate of the rupee against the US dollar.

This will also dampen the international oil prices as India is a major buyer in the market.

A reduced oil import bill would mean a reduced demand for the dollar which, in turn, will force the rupee to appreciate.

The Reserve Bank of India cannot allow such an appreciation in the exchange rate of rupee as it would hurt the exporting community. Such a situation will force the RBI to intervene in the forex market to buy up dollars to depreciate the rupee.

The Reserve Bank of India has been doing such a balancing act whenever the rupee has tended to appreciate beyond a point.

But an intervention to depreciate the rupee can bring down

the rates in the forward market. The proposed deal with Iraq thus poses a major exchange rate management problem for the central bank.

India’s forex reserves came under strain in the face of the unrelenting rise in the prices oil. India imports about 83 million tonnes of crude and small quantities of LPG and kerosene.

The government feared a situation similar to 1991 when country faced a serious foreign exchange crisis. The situation could lead to a crisis if one or two institutional investors pull out. It was to pre-empt such a crisis that the government went in for the millennium fund which collected around $ 5.5 billion.

Banking circles say the government overreacted to the situation by mobilising such a huge amount at an exorbitant cost.

It could have managed the situation with a fund of about $ 2-2.5 billion.The fund will push up the government’s interest burden and interest payments abroad. International oil prices have already begun to soften. Indications are that prices would stabilise around $ 25 a barrel.

The credit for restoring stability to the chaotic oil market should go to Iraq.


Mumbai, Jan 1: 
After the flare-up in crude oil prices in 2000 which buoyed their performance during the year, petrochemical producers in the country are anticipating a roller-coaster ride in product prices this year following reports that the Organisation of Oil Exporting Countries (Opec) will resort to production cuts again and risks associated with the prospects of a “hard landing” of the US economy.

Recently, some relief was seen on the feedstock cost front with a significant fall in the prices of naphtha, a crucial feedstock used in the petrochemical industry, in line with the drop in crude oil prices. Prices of the feedstock plummeted to $ 170 per tonne from the September highs of $ 310 per tonne. In India, prices of the product declined to around Rs 13,000 per tonne in December.

While the declining prices have come as good news to many of the small- and medium-sized companies, the euphoria is unlikely to last longer, sources feel. Opec members will be meeting on January 17 where the forum is expected to approve plans to reduce production in a bid to bring about ‘market stability’.

Although February crude oil prices have dropped to over $ 25 per barrel, sources aver that a rally in crude prices is likely to occur after the January 17 meeting of the Opec.

Further, there are reports that ice, snowfall and sub-zero wind chills in the developed countries would boost demand for heating oil.

In India, the effect of declining crude prices was reflected in the downward revision in prices of nearly all the products in the month of December. For instance, Reliance Industries Ltd, the petrochemical giant, brought down prices of polyethylene by over 5 per kg to Rs 44.3 while that in poly vinyl chloride, the reduction was over Rs 4.2 per kg to Rs 38.8 per kg. Sources now do not rule out the possibility of these prices firming up slightly in the event of crude prices rising again later this month.

Despite this development, industry sources aver that there are other factors which could exert a downward pressure on petrochemical prices in the coming months. “We feel that regional demand faces potential risk from the prospect of a hard landing of the US economy, which may affect the regional demand-supply balance and therefore the prices of petrochemicals,” a senior official from one of the leading companies told The Telegraph.

The official added that besides this fear, the addition of significant petrochemicals capacity by the Gulf producers over the next few quarters may affect the regional supply.

“Though this capacity is primarily targeted at the lucrative European markets, some of the production may flow into Asian markets thereby adding to the regional supply,” he said.

Analysts note that in a volatile price regime scenario, integrated world scale producers with globally competitive cost positions will be in a best position to withstand any movements in the prices of products and feedstock.


Calcutta, Jan 1: 
The city will host its first private video conferencing facility this week. Two centres will be opened — one right at the centre of the city and the other at Salt Lake.

Sham Electronics on Chittaranjan Avenue and Russel Video Conferencing, a cybercafe in Salt Lake’s sector III, are giving finishing touches to the installation of a studio and other facilities for the debut. The charge for a five-minute exchange will be five times the STD and ISD tariffs. There are other attractions as well: celebrities will be roped in to interact with customers across the country.

Currently, only VSNL provides these services on a commercial basis, but high charges limits its customers to two-three a month. There are over fifty manufacturing and software firms in the city which have installed integrated service digital network (ISDN) to meet their own requirements.

The two companies will provide the service as franchisees of Seco Global View, a New Delhi-based firm with plans to invest Rs 1,000 crore in organising 500,000 franchise video conferencing centres globally over the next year.

The company has already spent Rs 100 crore to develop over 100 franchisees, covering major Indian cities. Arrangements in over 250 overseas video-conferencing centres are also in place.

While VSNL charges Rs 7,500 for a video conferencing facility Seco Global View’s will offer its studio for the first half-hour for Rs 5,000, and Rs 2,500 for every 15 minutes of dialogue.

One needs a 50 square furnished area with proper lighting arrangement and ISDN connections or V-sat to bag a franchisee deal. Seco Global View provides equipment, networking, operations training and marketing support from time, for an one-time investment of Rs 3.5 lakh.

While Sanjib Roy of Russel Video said he has invested Rs 8 lakh in the venture, which included a cyber cafe along with the video conferencing facility. For Mamta Chadha of Sham Electronics, it was even cheaper.


Mumbai, Jan 1: 
Auto major Tata Engineering took another step towards restructuring its assets when it divested 39.69 lakh shares in favour of group holding company Tata Sons.

Informing the Bombay Stock exchange to this effect, Tata Elxsi said the deal was transacted on December 27. However, the information on the price at which the deal was struck was not made available.

Consequently, the shareholding of Tata Sons in Tata Elxsi has increased to 59.69 lakh shares representing 19.17 per cent of the equity share capital of Tata Elxsi.

The reorganisation of Tata Elxsi’s shareholding structure started in November 2000, when Tata Sons acquired around 14 lakh shares of the software company’s stake from Telco. The automobile giant has been doing some major restructuring in its assets portfolio. Not only has it hived of its construction equipment division into a separate joint venture with Hitachi, but the auto major is also hoping to find a partner for its axles division which has been spun off as a separate subsidiary.

Market grapevine avers the reorganisation of the Tata Elxsi shares is a part of a more complicated exercise towards a possible integration of operations of its four infotech companies. Tata Consultancy, Tata Elxsi, Tata Infotech and Tata Technologies. In fact, the chairman of Tata Sons had gone on record when he told this paper that an effort is currently on to assimilate the merger of the group’s infotech companies. This will take time as the overlap of business and valuation of TCS had to be sorted out.

Meanwhile, Tata Elxsi recently ramped its manpower strength to cater to the software development requirements in the overseas market. The company had recently embarked on a massive recruitment drive and is planning to double the existing strength of its software professionals.

It is currently focused on the four key segments of film and videos, CAD/CAM, education and research, and commercial networking. The company had 750 employees before it started the next round of mobilising more software engineers. It has a full-fledged development centre in Bangalore, the scaling up of infrastructure to support the increased manpower should not pose a problem. The company proposes to scale up its global presence by opening six new offices in the US and Europe.

Tata Elxsi’s gross sales last year was up 31 per cent to Rs 121.63 crore. After-tax profit rose 142 per cent to Rs 6.71 crore during fiscal 2000. Although a significant portion of its revenues continues to come from the system integration business over the last two years, it has demonstrated its ability to expand its software business.


Mumbai, Jan 1: 
Not a dream debut for 2001, but a reaffirmation of faith in safe-haven, old-economy stocks and a thumbs down for technology shares that were seen as tickets to instant affluence at the height of boom this time last year.

The wheel came full circle for the Bombay Stock Exchange (BSE) sensex, which ended the first day of the new year with a loss of 17.04 points at 3955.08 points. On January 3, the first session in 2000, the index had rocketed 369.29 points.

Investor participation was poor because this was the first day of the year and foreign funds (FIIs) kept stayed away from the trading ring.

The 30-share index opened at 3990.65 and rose to a high of 4021.83 before closing lower at 3955.08 as against Friday’s finish of 3972.12, netting a loss of 17.04 points. The turnover dropped to Rs 3,962.63 from Rs 4739.97 crore on December 29.

Dhiraj Sachdev of HDFC Bank said the market lacked direction and operators were trading cautiously.

“Foreign institutional investors remained on the sidelines as they generally allocate funds by the second and third week of January,” he said.

Fresh buying in old-economy stocks kept them firm. Local institutions purchased small lots of Tisco, Tata Chemicals, ACC, L&T, SBI and Sterlite attracted strong buying interest.

Among the new media entertainment shares, Balaji Telefilms, Mukta Arts hit their upper-end circuit filters.

However, the sensex failed to close in positive territory as select heavyweights such as Lever, Infosys, Satyam Computer and Zee Telefilms suffered a setback because of selling by institutional investors.

Starting on a strong note, cyclicals surged in the early hours, helping the index shoot past the 4000-mark. The increase was fuelled by a wave of speculative buying. Later, the operators turned heavy sellers in select heavyweighted shares.

The high-priced infotech, communication and entertainment (ICE) stocks were clobbered in the face of little support from FIIs, which have actually been net sellers during the last couple of weeks.

Dealers said operators were waiting for third-quarter results, which are expected to be trickle in from the second week of this month.

Himachal Futuristic was the top traded share in terms of volumes. It clocked a turnover of Rs 558.09 crore followed by Infosys Tech (Rs 486.67 crore), Zee Telefilms (Rs 423.04 crore), Global Telesystems (Rs 421.48 crore) and Satyam Computer (Rs 357.86 crore).

HFCL dropped by Rs 3.95 at Rs 1273.05, Infosys Tech by Rs 91 at Rs 5614.55, Global Telesystem by Rs 4.45 at Rs 797.55, Satyam Computer by Rs 7.55 at 315.70, Lever by Rs 6.35 at Rs 200, Escorts by Rs 8.20 at 126.70, SSI by Rs 47.40 at Rs 1383.90, Sun Pharmaceutical by Rs 14.65 at Rs 523.60 and Wipro by Rs 31.05 at 2375.35.

The gainers included ACC, which increased by Rs 1.60 at Rs 160.60, Bajaj Auto by Rs 4.50 at Rs 230.25, Colgate by Rs 2.70 at Rs 169.35, Dr Reddy’s by Rs 7.00 at 1279.70, Glaxo by Rs 10.75 at 465.20, Grasim by Rs 4.95 at Rs 293.85, Gujarat Ambuja by Rs 2.80 at Rs 160.90, L&T by Rs 3.35 at 199, Reliance by Rs 3.35 at Rs 342.35, Telco by Rs 1.50 at Rs 89.40 and Tisco by Rs 2.45 at Rs 132.55.


New Delhi, Jan 1: 
Corsa, the millennium car from General Motor India has overtaken its elder brother Astra in sales, within 10 month of its launch in March 2000. GM India sold 4,069 units of Corsa during the calendar year 2000 while it could sell only 3,071 units of Astra during this period. The company sold total 7,140 units during the 12 month period as against 2,561 units in 1999, registering a 178 per cent growth.

Astra recorded 20 per cent growth in sales as 3,071 units were sold in 2000. In 1999, the company sold 2,561 units of Astra. In December, GM sold 201 Corsa cars and 159 Astra cars, totalling 360 units as against 135 units sold in December, 1999.

According to a spokesperson, “The new engine, improved air-conditioning system and fresh look of Astra have caught the fancy of people. While the newly launched Corsa 1.6 GSi and improved availability of 1.4 variants have propelled the growth of Corsa sales in the last five months The new variant 1.6 GSi has been accepted as the best value for money variant in this category.”

Recently, GM launched “Achtung Baby,” meaning, “Watchout Baby” a 1.6 GSi Opel Corsa for Rs 6.36 lakh (ex-showroom Delhi). The product has been positioned against Ford’s Ikon 1.6 Zxi and Hyundai’s Accent 1.5 GLS.

Meanwhile, it has firmed up plans to launch a new model in the domestic market soon. The car is likely to be launched by middle of this year or even earlier.

GM India is examining a other variants in Corsa. Already it has four variants, two each in 1.4 and 1.6 segments. Corsa 1.4 GL without stereo is available for Rs 5.81 lakh, the 1.4 GLS with stereo is for Rs 6.27 lakh, Corsa 1.6 GSi with stereo is for Rs 6.43 lakh while Corsa 1.6 GLS with stereo is for Rs.6.80 lakh (ex showroom Delhi).    

Calcutta, Jan 1: 
The Reserve Bank of India (RBI) has asked commercial banks not to accept, or renew, foreign currency (non-resident) deposits for a maturity of more than three years.

The move is being seen as a fallout of the recent volatility in the value of rupee and the global downtrend in interest rates.

A senior RBI official said FCNR (B) deposits are being capped at levels that are considered prudent at this point of time. “The bank has become more stringent in the matter. The depreciation in rupee has forced it to toughen norms,” he added.

The minimum maturity for FCNR (B) deposits has been raised from six months to a year. These are deposits where banks have to repay the principal amount and the interest in foreign currency.

This leaves them vulnerable to sharp fluctuations in rupee and differences in interest rate regimes.

Banks have been told not to discriminate in the interest paid if the deposits have a similar maturity profile, and are parked from the same date, regardless of the branch or office.

The permission to offer varying rates of interest, based on the size of deposits, will be subject to the following conditions

n Banks shall, at their discretion, decide the currency-wise minimum quantum on which differential rates of interest may be offered. Term deposits below the prescribed quantum and the same maturity will fetch the same yield

n The differential rates of interest shall be subject to the overall ceiling

n Interest rates paid should be in line the schedule; it should not be set after negotiations between the depositor and the bank

Senior RBI officials said some banks had been negotiating with the depositors on interest rate. “To stop this practice, the central bank has laid down stringent guidelines,” they added.

Banks have been reminded that no brokerage on deposits in any form to individuals, companies, associations or institutions, is allowed. They have been barred from employing/engaging individuals or entities to collect deposits or sell other deposit-linked products on the basis of fee or commission.

In 1999-2000, the banking industry mopped up FCNR (B) deposits to the tune of $ 9,069 million. State Bank of India, Bank of india, Canara bank, Syndicate Bank and Indian Overseas Bank are among those which have raised them in a big way.

A significant proportion of the balances in FCNR (B) accounts is held abroad, in the form of foreign currency assets.



Foreign Exchange

US $1	Rs.46.67	HK $1	Rs.5.90*
UK £1	Rs. 69.69	SW Fr 1	Rs.28.60*
Euro	Rs. 43.44	Sing $1	Rs. 26.60*
Yen 100	Rs. 40.80	Aus $1	Rs. 25.75*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4620	Gold Std(10 gm)	4550
Gold 22 carat	Rs. 4360	Gold 22 carat	4210
Silver bar (Kg)	Rs. 7625	Silver (Kg)	7730
Silver portion	Rs. 7725	Silver portion	7735

Stock Indices

Sensex		3955.08		-17.04
BSE-100		2023.82		-8.38
S&P CNX Nifty	1254.30		-9.25
Calcutta	120.17		+0.02
Skindia GDR	640.04		-2.99

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