Jalan rules out reduction in lending rates for now
State Bank VRS gets big response in Mumbai
Raymond to buy back 25% at Rs 160 per share
Selling in pivotals checks sensex rise
Godrej Agrovet picks up 74% in Hind Lever arm
Apeejay group plans to merge tea companies
Dunlop bid to rope in Sumitomo
Cisco to invest $ 10 m to set up 34 centres
IDBI Bank to focus on retail clients for growth
Foreign Exchange, Bullion, Stock Indices

New Delhi, Jan 15: 
Reserve Bank governor Bimal Jalan has ruled out an immediate reduction in lending rates, but said it was possible in the next financial year as a fallout of budget proposals. This quells speculation that Federal Reserve’s interest cut would prompt a rate realignment in the country.

Talking to reporters after his keynote address at the Bank Economists Conference here today, he said a tighter set of prudential rules will be unveiled to foster greater financial discipline.

The central bank chief allayed fears over the rising inflation, saying the core rate was still comfortable at 3 to 4 per cent.

Jalan favoured dilution of the government’s stake in banks through public issues and said the new Bank for International Settlement (BIS) capital norms will make fresh cash-injections into the banking system necessary. “The issue acquires significance in view of the government’s resolve to reduce its holdings in public sector banks,” he added.

Jalan said the infusion of capital by the government or the Reserve Bank has ramifications for the overall conduct of fiscal and monetary policies which, in turn, impinges on growth and stability.

“Capitalisation of banks by raising equity capital from the stock market appears preferable to either monetisation or expansion of the fiscal deficit. The government has so far contributed Rs 20,400 crore to recapitalise PSU banks, but more is needed,” Jalan said.

The RBI chief listed the high cost of business and mounting non-performing assets (NPAs) as the two main internal challenges before the banking system. He indicated that a new set of tighter prudential guidelines, in line with the suggestions of the Basle Committee on banking supervision, would be unveiled. Banks, he said, will have to make greater disclosures and ensure better asset-liability management to bring their operations on par with global standards.

“The most important policy contribution in the area of NPAs will be the enactment of legislation that make recovery processes smoother and legal action speedier,” Jalan said.

Legal reforms, he said, are now an important part of the agenda for financial sector reforms. “The legal framework has to be flexible to enable automation, electronic fund transfers and recoveries. “Efforts have to be made to streamline the working of debt-recovery tribunals,” he added.


Calcutta, Jan 15: 
State Bank of India employees in Mumbai, Ahmedabad and Delhi lined up in large numbers today to hand in applications, indicating their acceptance of the voluntary retirement scheme which is the biggest severance exercise in the country. In Bengal, however, where the unions have been the most vociferous in denouncing the scheme, the response was lukewarm.

The VRS scheme, which opened today and closes on January 31, aims to winnow about 10 per cent of the over 2.3 lakh employees from the bank’s rolls. According to industry estimates, the bank will have to fork out about Rs 800-1000 crore if that many employees choose to leave the bank.

Initial reports indicate that about 10 per cent of the employees in the Mumbai circle (Maharashtra and Goa) have opted for VRS. In the Delhi circle (which covers Rajasthan, western Uttar Pradesh, Union territory of Delhi and three districts of Haryana), about 5 per cent of the employees lined up to hand in their forms.

However, rough estimates indicate that only about 2 per cent of the employees in the Bengal circle (covering West Bengal and the Andaman and Nicobar islands) had opted for the scheme on the first day. The trends show that the officers and the women employees have submitted more VRS applications than the clerical and the award staff.

When contacted, senior bank officials refused to spell out how many had opted for VRS on the first day.

Umesh Nayek, general secretary of SBI Staff Association, Mumbai circle said, “Reports show that out of the 30,000 employees about 10 per cent have opted for VRS. A clearer picture will emerge by Wednesday.” SBI’s offices in Chennai were closed today because of a local holiday .

V.K. Gupta, general secretary of SBI Staff Association, Delhi circle said, “The total staff strength in Delhi circle is 28,000 and the news that we have received is that about 5 per cent of them have opted for VRS.”

B.B. Das general secretary of SBI Officers Association, Bengal circle, said the bank has given those who opt for VRS 15 days’ time to reconsider their decision. “We will try to persuade those who have submitted their applications to withdraw them,” he added.


Mumbai, Jan 15: 
The board of Raymond Ltd, the textile major, has decided to buy back its shares at a price of Rs 160 per share.

Raymond will buy up to 25 per cent of its issued capital of Rs 75 crore, a senior official said after the board meeting. On the stock market, the scrip fell sharply by around 5.8 per cent to close at Rs 121.65. The buyback price has been fixed at a premium of 31.52 per cent above today’s closing price at the BSE. Marketmen had expected a more generous offer.

The company proposes to hold an extraordinary general meeting on February 15 to consider the proposal, the company said in a notice to the stock exchange.

Raymond is the flagship company of the Rs 2000 crore Vijaypat Singhania group, with interest in textiles, readymades, files & tools, steel and prophylactics.

Flush with cash from the sale of two units, Raymond Ltd jumped on to the buyback bandwagon after the company sold its steel unit to Thyssen AG and its Bilaspur cement unit to the French cement giant Lafarge. While the cement unit was priced at Rs 785 crore, the steel unit fetched a sum of Rs 387 crore.

Analysts say the cost of the buyback would come out of the cash chest created out of the proceeds from the sale of the two units.

Raymond divested its steel undertaking to EBG, a subsidiary of ThyssenKrupp Stahl for a total consideration of Rs 412.26 crore. This will involve a cash payment of Rs 386.86 crore. The remaining Rs 25.40 crore will come through the issue of 2.54 crore shares of Rs 10 each of EBG India to Raymond.

Under the terms of the agreement, the steel undertaking will be transferred to a new company, EBG India Pvt, in which EBG will hold 76 per cent controlling interest. Raymond will hold the remaining 24 per cent.

Raymond has already received the cash payment for the unit. When the deal was struck, Raymond chairman cum managing director Gautam Singhania had hinted at the possibility of the company of quitting the joint venture at a later stage. Raymond has for the time being decided to hold its 24 per cent stake in the venture for a period of five years.

A senior Raymond official confirmed that the consideration for the cement unit sale was expected within a month.

“We have to get some paper work done at our end. As soon as this is completed, we will approach Lafarge for payment,” he said.

Raymond officials say the payment is being held up because of the delay in obtaining the necessary clearances from the Madhya Pradesh government to the transfer of mining rights to the new owners.

When the deal was struck, Lafarge expected the transfer of mining rights in Bilaspur to come through in three months unlike the Tisco deal which took more than a year to be finalised. Incidentally, the Bilaspur plant selloff was announced on April 28 last year.


Mumbai, Jan 15: 
Infosys Technologies and a few state-run oil companies were the key movers in a BSE session that saw the sensex close with a modest 10.18-point gain at 4046.76.

However, there was no clear pattern in the day’s trading. For instance, index heavyweight Hindustan Lever suffered steep losses even as its rival, Colgate, gained ground.

Refinery stocks were in good demand along with other old-economy shares. Tisco, which will announce its third-quarter results on Tuesday, was a big draw. Investors and brokers expect the steel major to unveil ‘encouraging’ numbers.

Infosys attracted buyers after reports that a leading foreign fund invested a good amount in the scrip at the prevailing prices after it was re-rated from ‘hold’ to ‘buy’ category.

Media shares took it on their chins, still reeling under the impact of diamond trader-cum-film financier Bharat Shah’s arrest. Some of them plumbed 52-week lows due to heavy selling pressure.

Analysts said the sensex would have notched up sharper gains, but for the string of losses suffered by heavyweights like Lever, ITC, MTNL, L&T, Zee Telefilms and ACC.

In the specified group, 85 counters, including 18 index-based shares, registered sharp to moderate gains while 54 showed losses.

With a turnover of Rs 936.61 crore, Infosys Technologies was the top traded share after a long time. Other shares briskly traded were HFCL, Satyam, Zee and Global Telesystem.

Infosys shot up by Rs 373.50 at Rs 6171.45, Satyam Computer by Rs 3.55 at Rs 387.55, Bajaj Auto by Rs 12.10 at Rs 274.95, Colgate by Rs 9.30 at Rs 178.45, HPCL by Rs 3.55 at Rs 173.75, Tisco by Rs 5.45 at Rs 133.00, SSI by Rs 56.75 at Rs 1173.45 and BPCL by Rs 14.65 at Rs 149.75.

Losers included HFCL which declined by Rs 69.10 at Rs 1091.95, Zee Telefilms by Rs 11.85 at Rs 229.55, Hindustan Lever by Rs 7.10 at 193.75 and MTNL by Rs 10.65 at Rs 176.40.


Mumbai, Jan 15: 
Godrej Agrovet Ltd (GAVL), a subsidiary of Godrej Soaps Ltd and a leading player in the animal feeds business, today acquired a 74 per cent stake in Gold Mohur Foods and Feeds Ltd (GFFL), a subsidiary of Hindustan Lever Ltd, for an undisclosed sum.

Godrej group chairman Adi Godrej told newspersons here that Hind Lever would retain the 26 per cent stake in the new joint venture company, which would consolidate GAVL’s position in the animal feeds and agriculture inputs market in the country.

The board of the new joint venture company, which would be effective from January 1, would have five members from the Godrej group and three from Hind lever, he said following the signing of a confidentiality pact.

With this acquisition, Gold Mohur would acquire HLL brands for this business, he added.

The acquisition would be funded by GAVL partly through internal accrual and debt, Godrej said adding Gold Mohur and Godrej Agrovet would collaborate for production while the distribution network of the two companies would remain separate.

There would be no change in the management structure of the joint venture company. Lazard Capital acted as advisor to Godrej group while in-house team of HLL structured deal, he added.

It may be recalled that Hind Lever had announced its intention to exit from the animal feeds business to align its business focus with that of its parent company, Unilever Plc. In line with this intention, the FMCG giant had, with the approval of its shareholders, transferred its animal feeds business in April 2000 as a going concern to its subsidiary GFFL.

The acquisition is expected to make Godrej Agrovet the leader in its major area of business, animal feeds. Apart from this segment, the company is also involved in the agricultural inputs market.

GFFL is the largest player in the animal feeds business with a turnover close to Rs 300 crore. It sells its animal feeds under Gold Mohur brand name in the poultry and cattle feed markets.


Calcutta, Jan 15: 
Apeejay Surrendra Group has initiated moves to bring all tea companies under a single outfit. In the initial round, Empire Plantation and Singlo India will be merged and, later, the combined entity will be folded into group flagship AFT Industries.

Group director Karan Paul had hinted at the merger plan at the launch of the group’s e-commerce portal in May last year. He confirmed the move, though a formal announcement is expected soon.

The proposal was under consideration for some time, but the holding pattern of AFT Industries ( formerly Assam Frontier Tea) — with 80 per cent of its 60,00,000 equity shares held in pound sterling — emerged as a problem.

The Pauls had acquired Empire and Singlo, both with an equity of Rs 60 lakh each, from Gillanders Arbuthnot in mid-80s. Empire has four gardens in Lower Assam’s Tezpur area. Singlo has as many in upper Assam’s Sibsagar district. From the group’s annual output of 22 million kgs, the two gardens account for eight million kgs.

According to a senior company official, the merger will give the group a combined capacity of 22 million kgs, making it the third-largest tea producer after Tata Tea and Williamson Magor. The city-based Apeejay Surrendra group, which has interests in tea, hotel, shipping, engineering, real estate, construction, finance and book retailing, launched teastall.com, the country’s first business-to-commerce (B2C) portal which sells exclusive single garden teas. The entry into e-commerce has helped the group’s Rs 200-crore tea business break into the lucrative value-added tea segment.

Apart from selling tea produced in the groups 17 gardens, all in Assam, the portal showcases 100 varieties from the world over. However, it now peddles a variety of other items such as, stocks and books.


Calcutta, Jan. 15: 
Dunlop India Ltd (DIL) has initiated talks to rope in Sumitomo Rubber Industries, the Japanese tyre major, as a strategic partner. The company expects to clinch the deal in a month.

The move is being seen as a strategy to ward off the impending threat of the Board for Industrial and Financial Reconstruction (BIFR) to change the management of the company. BIFR had said if all the parties, including banks and unions, do not agree to the revival scheme within January 8 then it would ask for management change in the company.

Addressing a press conference here today, Dunlop president M.D. Shukla said, “We had a discussion with the chairman of Sumitomo Rubber Industries N. Saito on January 12 for a strategic alliance. Several options were discussed. Our chairman M.R, Chhabria was also present at the meeting.”

Sumitomo owns the Dunlop Brand worldwide except in India. Chhabria has a 40 per cent stake in Dunlop through Rims and Wheels (Mauritius) and another 7 per cent through his group companies. The financial institutions hold 30 per cent in the company and the remaining portion is wit the public.

The Dunlop scrip is hovering around Rs 10.30 on the Bombay Stock Exchange.

Commenting on the form of Sumitomo’s possible involvement in the project, Shukla said he was not in a position to discuss about the matter now. “I am meeting my chairman in Dubai tomorrow to discuss about the matter. I will also brief him about the condition of the Sahagunj and Ambattur factories,” he said.

For Dunlop, the main problem is raising funds to carry on holding operations.

The company had already written to the BIFR, asking whether it can go ahead with the revival plan without the banks’ nod. “In several cases BIFR had allowed companies to go ahead with the revival plan without the nod of the banks. In our case United Bank of India is not willing to give the working capital. We have told BIFR to give us a moratorium after which we will repay them in tranches. The West Bengal and Tamil Nadu governments are also ready to give us concessions.”

Shukla said he was planning to write to the West Bengal seeking loans. The company is willing to keep it building on 62A Mirza Ghalib Street as a collateral for this loan. IDBI has valued the property at Rs 23 crore.

Shukla said the company immediately needs about Rs 12 crore to carry on with the holding operations.

He said Chhabria has already brought in Rs 26 crore and another Rs 5 crore through a letter of credit. “If we make a production of Rs 25 crore we will be able to reach a break even point. We need Rs 11 crore for raw materials,” he said.


New Delhi, Jan 15: 
Cisco Systems today pledged to invest $ 10 million to set up network academies and centres of excellence in the country.

In all, Cisco will set up 34 networking academies and centres of excellence to churn out 7,000, information technology networking professionals. Cisco alone recruits 4000-5000 networking professionals each year.

John Chambers, Cisco chief executive officer, said, “About $ 8.6 million will be spent on network academies and the remaining $ 1.4 million on centres of excellence, which will focus on data, voice and video.”

While refusing to divulge further plans for India, Chambers said, “We will soon announce our other plans. India is a vast market and is of importance to us.”

Interestingly, the announcement by the multinational networking company overshadowed the meeting of the National Advisory Committee on Information Technology as Union minister for information technology Pramod Mahajan, cut short his meeting to accommodate Cisco chief John Chambers.

Dewang Mehta of National Association of Software and Services Association, who is a member of the advisory committee, said, “We discussed issues ranging from efforts needed to make India an information technology super power by increasing the strength of IT professionals.”

“We have also suggested the allocation of a separate area for setting up a manufacturing centre of excellence in any part of the country, which has, good infrastructure facilities like—consistent power supply and proximity to ports.”

The advisory committee also pointed out that it is important to have a single window clearance at the Centre. Sources in the IT ministry said Karnataka and Tamil Nadu were discussed as potential states.


Calcutta, Jan 15: 
IDBI Bank has outlined an ambitious growth plan for 2001-2002 which aims at increasing retail customers from 5 per cent to 20 per cent. The bank has introduced a number of schemes like demat accounts, loan against shares, housing loans and auto loans to attract customers.

“Our emphasis is shifting from the corporate to the retail segment. This is mainly because it gives us better returns with smaller risks,” IDBI Bank director M C Shah said. There are also plans to increase the number of branches from 51 to 90, and to expand to 50 more cities by this year. Two hundred ATMs are also planned, up from 68 (of which 17 are off site) at present.

The bank is offering the SmartCard, a debit-cum-credit card. “We will also market a co-branded credit card for Stanchart,” says A K Manocha, regional head (east). IDBI Bank will also market insurance products, mutual funds and act as agents to a pool of retail and corporate customers.

Shah says his bank aims at a five-fold increase in its 2,00,000 customers in December 2000.

“We have adopted a three-pronged strategy to improve performance and provide better services. Focusing on the retail market, introducing new technological products and a thrust on schemes to retain personnel are the key elements of the plan,” Shah added.

The bank plans to spend a substantial amount on technology. The expenditure for this is expected to go up to 5 per cent from a measly 0.5 per cent at present. Mobile banking services are now being offered in 10 cities.



Foreign Exchange

US $1	Rs. 46.55	HK $1	Rs. 5.90*
UK £1	Rs. 68.71	SW Fr 1	Rs. 28.25*
Euro	Rs. 43.98	Sing $1	Rs. 26.45*
Yen 100	Rs. 39.16	Aus $1	Rs. 25.35*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4490	Gold Std(10 gm)	Rs.4440
Gold 22 carat	Rs. 4240	Gold 22 carat	Rs.4110
Silver bar (Kg)	Rs. 7650	Silver (Kg)	Rs.7680
Silver portion	Rs. 7750	Silver portion	Rs.7685

Stock Indices

Sensex		4046.76		+10.18
BSE-100		2077.20		+4.92
S&P CNX Nifty	1286.75		0.00
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