Centre plays peacemaker in Dabhol
Crisil move sparks row
Income tax threshold may go up
SBI task force to assess post-VRS staff requirement
Glaxo net profit dips 8% to Rs 70.5 cr
Tobacco shares hit butt-end
Smoking ban unrealistic:Deveshwar
Paswan backs free incoming calls on cellular phone
Bengal gets Sahara to promote tourism
Foreign Exchange, Bullion, Stock Indices

New Delhi, Feb. 7: 
Power minister Suresh Prabhu today indicated the Centre will look at several options to settle the dispute between Dabhol Power Company (DPC) and the Maharashtra government, including a renegotiation of the power purchase agreement (PPA).

The minister discussed all possible ways of resolving the tangle in meetings with finance minister Yashwant Sinha during the day. “The standoff cannot go on. We are looking at various options,” he added.

Alternatives considered include legal remedies and getting a central power utility like NTPC or PowerGrid to buy power from Dabhol, instead of Maharashtra State Electricity Board (MSEB).

Today’s flurry of talks was prompted by DPC’s decision on Tuesday to invoke the Centre’s counter-guarantee to recover its Rs 79-crore bill for November after the state government refused to pay. The pact with MSEB, signed in 1992, is guaranteed by Maharashtra and counter-guaranteed by the Centre. Refusal to pay does not entail an international dispute, but also a lowering of India’s credit rating.

The finance ministry is likely to clear MSEB’s bill in a fortnight unless the state government arrives at an amicable agreement on the issue with the Enron-promoted Dabhol Power Company.

Soon after the meeting between the power and finance ministers, finance secretary Ajit Kumar went into a huddle with Maharashtra chief secretary V. Ranganathan and the state’s finance secretary, Anupam Dasgupta, to explore all possible ways in which the two sides could bury the hatchet.

Ranganathan, apparently, gave Kumar an assurance that the state government is willing to hold talks with Enron to settle differences if DPC came forward to discuss the issue. It now appears that the Centre will advise DPC to open talks on the differences it has with the state government.

Maharashtra has been complaining that the power generated by Dabhol was not affordable, and that it had to pay for it even when its offtake was nil. It says that there should be talks to rework the power purchase pact, and if that is not possible, the output should be bought by a central utility.


Mumbai, Feb. 7: 
The Credit Rating Information Services of India Ltd (Crisil) today defended its decision to downgrade Maharashhtra’s bonds even as Enron Virodhi Andolan alleged a nexus between the rating agency and Enron.

The issue took a queer turn when chief minister Vilasrao Deshmukh himself referred to this nexus. Asked to comment on the allegations levelled by Pradyumna Kaul, the convenor of Enron Virodhi Andolan, Deshmukh said, “there is scope for doubt regarding the relations between the two.”

Crisil, in a statement, said, it “operates its ratings and advisory divisions independent of each other, with separate manning and with strong firewalls between the two activities.”

The advice given to MSEB, over the years, on the issues of risk has always been objective. There has never been any advise that conflicts with the stance taken by the ratings division, the rating agency said.

Meanwhile, Kaul told The Telegraph that the documents lying with his organisation and those with the finance minister, give a completely different picture of the credibility and the integrity of the advice and recommendation that Crisil has given MSEB for which the chairman and board of Crisil are directly responsible.

In fact, it is unfortunate that Crisil has got itself involved in controversial dealings with Enron who are under scrutiny, he said.

Kaul has threatened to make public certain documents on Friday that will give credence to his allegation.


New Delhi, Feb. 7: 
Unlike his previous budgets, finance minister Yashwant Sinha has to reckon with the politics of his budget this time.

Politically sensitive states such as Uttar Pradesh and Tamil Nadu are going to polls after April. The budget will have to compensate for the uninspiring performance on the political front. This is why Sinha cannot afford to present a harsh package. Sinha’s budget is expected to contain a series of concessions for the salaried class, the investing public and the corporate sector. These may not amount to much, but may just be enough to create a feel-good impression.

This does not mean there will be no fresh taxes. Sinha has already made up his mind to tax the service sector in a big way. This is one area expected to get him maximum tax revenue. The tax policy review committee headed by Partho Shome has also made a recommendation to this effect.

Professionals like doctors, lawyers and consultants are expected to be brought under the service tax net. A budget cannot be considered feel-good unless it offers some benefits to the salaried class. There is justification for reducing income tax rates, even though it is not easy. The next best option is to raise the tax brackets, which have never been indexed to inflation in the country. The finance minister knows that the peak marginal rate here is higher than in comparable countries.

The salaried class received the largest number of benefits from Palaniappan Chidambaram’s dream budget. With direct tax collections buoyant so far this year, finance minister can confidently offer certain concessions by raising the existing income brackets. Though no final decision has been taken on the issue, the proposals which are under consideration indicate a significant change in income brackets.

If the personal income tax structure is revamped in the budget, finance minister cannot afford a status quo on corporate tax. Unless the corporate sector benefits, stock markets, where the success of the budget will be reflected, will not move up.

There are several number of reasons for changing the corporate tax structure. The marginal rate of corporate tax is higher than the marginal rate of personal income tax. It is also higher than the rates in comparable countries.


Calcutta, Feb. 7: 
The overwhelming response to its voluntary retirement scheme (VRS) has forced State Bank of India (SBI) to set up a taskforce comprising two deputy managing directors to determine the precise requirement of staff under all categories in order to right-size the workforce. The exercise, to be carried out by P. K. Sarkar and A.K. Purwar, will be restricted to corporate centre and business group headquarters in the initial phase. The decision to set up the panel was taken by the central management committee at its meeting last week. “The group will submit its report within seven days. A similar exercise will be implemented at the local head-offices, zonal offices and other offices later,” sources said.

According to senior officials, departmental heads have been told to send in estimates of workload, the number of employees who have applied for VRS and the size of staff required to run operations smoothly.

SBI, the largest bank in the country with 2.33 lakh employees, received 33,000 applications for early retirement. However, the bank has taken a decision to restrict the number to 23,000, exactly 10 per cent of the total staff-strength.

The maximum number of VRS seekers are from Mumbai at 5,265, of which 2,417 are officers; in Delhi, the number is 4,99. Employees have time until February 15 to withdraw their applications, but the bank has already decided not to accept requests from officers who are below 55 years of age.

The withdrawal of applications has already started, with 64 employees from the Bengal Circle having second thoughts. B.B. Das, general secretary of the All India State Bank Officers’ Association, said: “We are confident that a reasonable number of employees in Bengal Circle will withdraw their VRS applications. It may be less so in Mumbai and Delhi.”

Meanwhile, it has finalised the list of 106 branches, which will market products of its insurance joint venture with Cardif, a wholly-owned subsidiary of French Bank BNP. The banks has applied for a licence to IRDA, and expects it soon.

In all, 28 branches have been selected in Delhi, 30 in Mumbai, 18 in Chandigarh, 20 in Chennai, four each in Hyderabad and Bangalore, two in the Patna Circle and eight in the Bengal Circle.


Mumbai, Feb. 7: 
Glaxo India has recorded an 8 per cent decline in net profit for the financial year ending December 31, 2000. Net profit declined to Rs 70.54 crore from Rs 77.08 crore in the previous year. During the year, net sales rose to Rs 934.62 crore over Rs 885.50 crore. Inclusive of other income, the total income stood at Rs 989.69 crore (Rs 938.26 crore).

Commenting on the results, V Thyagarajan, vice-chairman and managing director said, “The year was a challenging one. Trading conditions were particularly difficult and highly competitive. This, coupled with the restructuring of marketing teams and the anxiety associated with the global merger has resulted in a below-expectation performance.”

While the board of directors in their meeting today lowered the dividend to 50 per cent from 60 per cent in the previous year, Glaxo said during the year, industry grew at a rate of around 10 per cent, mainly fuelled by the new product introductions by smaller Indian companies.

Despite the poor bottomline performance, the Glaxo scrip finished higher on the BSE today on speculations of a possible merger with SmithKline Beecham Pharma this year, following a merger of the international operations of the two. The stock closed at Rs 438.95 after opening at Rs 437.90 and rose to an intra-day high of Rs 448. The counter witnessed 1.90 lakh trades with a total turnover of Rs 8.46 crore.

The company said Glaxo Wellcome Plc and SmithKline Plc have merged under an agreement effective December 27, following which Glaxo India is now an affiliate of GlaxoSmithKline Plc. It, however, remained non-committal about its merger with SmithKline Beecham in India.

Meanwhile, group firm Burroughs Wellcome (India) Ltd also put a disappointing bottomline performance with net profit declining to Rs 19.15 crore over Rs 29.34 crore in the previous fiscal.


Mumbai, Feb. 7: 
A selloff in technology stocks and investor fright at shares of tobacco companies today sent the Bombay Stock Exchange (BSE) into a 62.36-point plunge at 4375.29.

Brokers blamed the retreat from new-economy scrips on worse-than-expected results announced by Cisco late on Tuesday. Tobacco shares faced the heat a day after the Cabinet approved a Bill which bans smoking in public places and keeps all tobacco companies out of sponsoring events.

ITC was on a slow burn through the day, losing a whopping 10 per cent when it closed at Rs Rs 788.90, after opening lower at Rs 878 and plumbing an intra-day trough of Rs 774.

The bearish undertone, accentuated during the last 30 minutes of trading, was marked by heavy FII selling in ICE counters such as Infosys, SSI, Satyam Computers, Digital Equipment, Silverline, HFCL, Global Tele-Systems and Zee Telefilms.

Among the few infotech shares which bucked the trend was Fujitsu ICIM, which was locked at its upper-end circuit filter of Rs 136; other gainers include Ramco Systems and Citicorp.

Though select old-economy stocks did continue to do well, the degree of buying in them was not enough to prop the sensex to a positive close. “We had hoped there would be a pre-budget rally. However, that does not seem to be happening, at least for now, even though we are only a little over two weeks away from the day,” complained a nervous operator.

According to brokers, operators dumped new-economy stocks because of fears that market dismay over Cisco’s performance would drive tech-heavy Nasdaq lower when it opened on Wednesday. The San Diego-based internet powerhouse warned that the earnings slowdown witnessed in the last three months could continue for at least two more quarters.

Reflecting the nerves, the sensex opened steady at 4376.92 and within a few minutes touched a high of 4379.22.

Later, it fluctuated in negative territory through the day and touched a low of 4303.28 before closing at 4312.93 as against Tuesday’s finish of 4375.29 in a loss of 62.36 points, or 1.43 per cent.

Satyam Computers was the top traded share, clocking a turnover of Rs 592.27 crore. It was followed by HFCL (Rs 529.11 crore), Infosys (Rs 323.23 crore), Wipro (Rs 321.16 crore) and ITC (Rs 274.46 crore).

The main losers were Satyam, which dropped by Rs 24.35 at Rs 382, HFCL by Rs 65.20 at Rs 941.65, Infosys by Rs 196.85 at Rs 6489.60, ITC by Rs 89.35 at Rs 788.90, Grasim by Rs 5.70 at Rs 342.25, Zee Telefilms by Rs 17.15 at Rs 238.20, Silverline by Rs 18.95 at Rs 244.40 and Digital by Rs 42.30 at Rs 678.10.

Key gainers were ACC which rose by Rs 1.70 at Rs 188.60, Glaxo by Rs 4.15 at Rs 438.95, Lever by Rs 1.35 at Rs 202.90, L&T by Rs 3.40 at Rs 276.80, RPL by Rs 2.05 at Rs 66.40, Telco by Rs 2.30 at Rs 104.45, BPCL by Rs 9.85 at Rs 187.75, E-Merck by Rs 18.55 at Rs 472.95, Pfizer by Rs 23.65 at Rs 610.75 and Tata Power by Rs 5.35 at Rs 132.55.

Meanwhile on the Calcutta Stock Exchange, the ITC scrip was pounded by operators who feared the two-way prohibition would have an adverse impact on the earnings of cigarette manufacturers. The scrip plunged to close at Rs 791.60 against previous close of Rs 879.80. The sharp decline sent pushed CSE’s 40-share index to 2098.53 points at the close.


Hyderabad, Feb.7: 
ITC chairman Yogi C. Deveshwar today characterised the move to ban on smoking in public places and sponsorships by cigarette firms as a ‘measure difficult to implement’.

He said the decision itself was a progressive one, but felt it would not be practical to implement it in a country where a large section of the population consumed tobacco in one form or the other. These included cigarette smokers, tobacco chewers and bidi consumers. However, he made it clear that the industry would be ready to implement any fiat which was reasonable,practical and in tune with rationality.

“The move will lead to widespread smuggling from Nepal and Bangladesh, which will translate into revenue losses worth thousands of crore,” the ITC chairman told reporters here today.

Deveshwar said the tobacco industry was neither consulted nor informed about the move to prohibit public smoking and stop event sponsorships. Contending the measure would be self defeating, Deveshwar said the government should get its priorities right. “Almost 75 per cent of the population, for instance, does not have enough potable drinking water.”

He said the move against sponsorship will hit domestic industries more, and put them in a disadvantageous position. “The government would have no control on foreign brands promoting events such as Formula One and other events. This will mean patronising these firms at the cost of the local industry.”

Asked for ITC’s reaction to the move to ban smoking in public places, Deveshwar said his company would study the issue in detail. “I have not seen the full document. I will be able to tell the potential damage to ITC after consulting my colleagues,” he added.


New Delhi, Feb. 7: 
Union communications minister, Ram Vilas Paswan, stressed that free in-coming calls will enhance the tele-density and provide the necessary impetus to cellular service. He was speaking at the launch of Mahanagar Telephone Nigam Ltd’s Dolphin, the cellular service based on Global System for Mobile Communication minus the roaming facility. Bharat Sanchar Nigam Ltd will also launch the GSM service by September or October 2001.

Paswan said, “While the issue of calling party pays (CPP) or free in-coming calls is pending with the Telecom Regulatory Authority of India, we expect a decision soon. Cellular users are wary of accepting calls since they have to pay for it. If CPP is introduced, there would be more call completions and less of congestion on the network.”

MTNL’s cellular service is supported by 147 base stations and expected to be increased to about 200 in Delhi. Its competitors, AirTel and Sterling have already set up more than 200 base stations in the city.

The cellular services have been made operational in Delhi at a cost of Rs. 100 crore. Another Rs. 100 crore has been invested in Mumbai for similar services which is due to be launched by month end.

Meanwhile, MTNL chairman and managing director, Narendra Sharma indicated that the company would achieve break-even in the second year of its operations.

“We are expecting a monthly revenue of Rs 1,000 per user and as per the targets of the corporation, we should achieve break-even by the end of the first year of operations or in the early part of second year’s operations,” he said.

MTNL has started services at the rate of Rs. 1.50 for an in-coming call for one minute and Rs. 2.70 for an outgoing call with a monthly rental of Rs. 400.

The corporation has also announced the launch of a separate division handling the cellular services under the leadership of G. M. Mishra, principal general manager (marketing), Sharma said.


Calcutta, Feb. 7: 
The Sahara group today unveiled a Rs 900-crore project for West Bengal that will put the state firmly on the country’s tourist map.

Addressing a press conference to announce Sahara’s plans for the state, chairman Subrata Roy said the project envisages linking the state’s two most virgin tourism regions, the Sundarbans and Teesta Valley, not only with the national tourism circuit but also with the international tourism circuit. Further, the group was also looking for land for a five-star club-cum-hotel and business centre in the city.

The project, still in the conception stage, is to be completed in phases in four years from the date of sanction of the master plan and acquisition of land, after the necessary approvals from the centre, Roy said.

He claimed that world class facilities, including floatels, catamarans, luxury launches and coastal cruise liners, would be part of the ‘Integrated Sahara Tourism Project,’ in which the West Bengal government will be an equity partner.

Roy said he has already been assured of full support including equity participation and escort services by the state government agencies for implementation of the project.

He said the group was also going ahead with a plan to establish a call centre in the city within three months.

Giving details of the project, he said the idea is to create infrastructure and globally market packaged tours covering the world’s largest delta and mangrove forests, the wild rivers draining into the Bay of Bengal, wildlife, international biospehere reserve, island resort, the Teesta Valley, the Himalayas, hill-top monastries and the rich socio-cultural life of the eastern and north-eastern region.

As regards infrastructure, Sahara Airlines will introduce daily flights from Calcutta to New Delhi and Mumbai and also to parts of the north-east, besides connecting flights for Jaipur and other important tourist destinations on the Sahara circuit.

Regarding the group’s investment plans, Roy said about Rs 500 crore would be spent for networking 7,000 branches all over the country. A few branches will also be opened abroad covering the US, Europe and Australia.

Besides selling the group’s financial products, the fully-networked branches would also be utilised for dealing in consumer products, gold and silver, money transfer and e-learning. The networked branches could also be franchised out to overseas business groups to sell products by co-branding with Sahara within India and abroad, Roy said.

In the Teesta Valley project, the plans include preparation of a golf course and club house, wooden challets, airconditioned cottages, water sports and other adventure tourism activities.

The city-based Modular Consultants has been appointed to prepare the master plan, expected to be ready within six months, Roy added.



Foreign Exchange

US $1	Rs. 46.43	HK $1	Rs. 5.85*
UK £1	Rs. 67.76	SW Fr 1	Rs. 27.60*
Euro	Rs. 43.22	Sing $1	Rs. 26.25*
Yen 100	Rs. 40.06	Aus $1	Rs. 25.15*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs.4480		Gold Std(10 gm)	Rs. 4400
Gold 22 carat	Rs.4230		Gold 22 carat	Rs. 4070
Silver bar (Kg)	Rs.7700		Silver (Kg)	Rs. 7775
Silver portion	Rs.7800		Silver portion	Rs. 7780

Stock Indices

Sensex		4312.93		-62.36
BSE-100		2214.24		-26.13
S&P CNX Nifty	1370.80		-16.30
Calcutta	130.09		-1.77
Skindia GDR	752.79		-4.34

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