Fresh margin fails to halt sensex fall
S&P shocks Telco with lower credit rating
Bids for fourth cell operator this week
Nashik strike jolts Mahindra
SBI Caps, CSFB picked as VSNL advisors
Bengal seeks Rs 850 cr ADB loan for Sagardighi
Stage set for Bandel, Santaldih transfer
Spice unveils fast track connection
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 5: 
The Securities and Exchange Board of India’s (Sebi) measures to curb turbulence on bourses had no effect on Dalal Street today, where the BSE sensex plunged 97.04 points to close below the key 4,000-mark at 3998.12.

Dealers reported heavy selling pressure in new and old economy shares. Foreign fund managers held back their investments on fears of a slowdown in global infotech spending.

The selloff occurred even as Sebi imposed additional volatility margins of 10 to 20 per cent if the price of a share fluctuates 60 per cent over a six-day period, down from 80 per cent earlier.

As a result, 81 shares will come under the higher margins against 39 earlier. The securities watchdog has made it clear that it is a temporary measure and would be reviewed in due course.

The move follows a meeting the market regulator held with the Bombay, National and Calcutta stock exchanges to discuss the March 2 bear hammering on the BSE which sparked a 176-point sensex crash and the string of losses later in the week.

The market regulator is probing the unusual rise and fall of the sensex and the role played by a handful of broking firms and FIIs.

A statement released by Sebi after the meeting said the rates of volatility margin and other slabs would remain unchanged. No exemptions will be allowed to any class of investors, including financial institutions, FIIs and mutual funds.

The 10 per cent additional margin on the daily net outstanding sale position will cover scrips in the modified carry forward system and automatic lending borrowing mechanism (ALBM).

Devina Mehra, director at First Global, one of the broking houses under the scanner, appeared non-plussed after a Sebi team scrutinised recent deals. “It is their prerogative to investigate and I would not like to comment on it,” she said.

She said the risk-reward ratio for investing in the market, especially in tech shares, is against investors, and felt the market has not bottomed out. She pointed to a few cement shares which are quoting at price/earnings ratios higher than infotech stocks. “We are cautious because valuations appear stretched. The sensex could even plumb 3,400.”

Nikunj Modi, a dealer at Refco Sify, said it is a dicey situation, one in which the market is still searching for its bottom.

Panic and uncertainty hung over the trading ring. Tech stocks, mainly Big Bull Ketan Parekh favourites, were battered on what was the opening day of a new account. Global Trust Bank, another share he fancies, also took it on its chin.

Zee Telefilms has bled over 30 percent in the last three trading sessions. HFCL was also mauled by bears, shedding 25 per cent to Rs 508.05. Global Tele fell 35 per cent to Rs 264.40. All three are considered as Parekh’s hot favourites.

Investors swarmed the counters with sell orders. The profit-taking, accentuated by the fact that bourses will remain closed on Tuesday because of Id, was seen even at low valuations.

The 30-share sensex hit its day’s high of 4127.12, later nose-dived to a low of 3947.71 before closing at 3998.12 against Friday’s finish of 4095.16, netting a fall of 97.04 points or 2.37 per cent.

In specified group, 107 counters including 23 from the index, suffered sharp losses while 35 others, mostly pharmaceutical shares, closed with smart gains.

Satyam Computer dipped by Rs 16.05 at 246.60, Infosys by Rs 125.15 at Rs 4814.70, Himachal Futuristic by Rs 96.75 at 508.85, Reliance by Rs 8 at 409.45 and Wipro by Rs 56 at Rs 2022.95.

Investigation starts

Sebi has started investigating last week’s fall on the stock markets.

The ‘Gang of Four’, whose transaction details have been sought are Ajay Kayan’s C Mackertich, Radhakishan Damani, Nirmal Bang and First Global. The transactions of two foreign institutional houses- Credit Suisse First Boston (CSFB) and Morgan Stanley will also be scrutinised by Sebi.

The inspections which commenced on Saturday are being carried out by the apex market regulator and NSE and BSE officials in Mumbai, Calcutta and Delhi.

K R Bharat of CSFB was unavailable as he was travelling. Morgan Stanley officials were not willing to comment.


Mumbai, March 5: 
Standard & Poor’s today downgraded the corporate credit rating of Tata Engineering & Locomotive Company (Telco) to BB from BB+ and placed it on credit watch with negative implications.

The international credit rating agency has cited various reasons for the downgrade. The most important being the “significantly” increased volatility in sales of commercial vehicles of the company than that factored into its business profile. Strong competition in the small car market and a weakened financial profile are the other factors which contributed to the lower rating.

According to S&P, Telco has been placed on credit watch with negative implications because of the uncertainty faced by the company in raising about Rs 512 crore of fresh equity.

Commenting on the financial profile of the company, S&P said extreme volatile market conditions in the short run, huge costs incurred on the Indica project and a large debt burden inhibit material improvement. It, however, cautioned that if Telco fails to raise fresh equity, the rating could be lowered further.

News about the rating downgrade coupled with bad market conditions today led to the Telco share finishing weaker at Rs 92.40 after opening at Rs 97 and rising to an intra-day high of Rs 99.50. The counter saw over 9677 shares being traded, earning a total turnover of Rs 26.21 crore.

Commenting on the new rating assigned to Telco, S&P said it reflected the company’s dominant position in the heavy and medium commercial vehicles segment.

It, however, added that the company is exposed to volatile and growing consumer market, increased competition from new entrants and difficulty in achieving satisfactory market acceptance for its new and improved product range.

According to S&P, Telco is selling a mass-produced passenger car, Indica, which compliments its existing sales of multi purpose utility vehicles. For the Indica project to be viable on its own, the vehicle, it noted, must meet local consumer preference at a competitive price. The car’s success is also constrained because of the underdeveloped components and parts industry.

Telco’s financial performance for the first nine months of the current fiscal year has been weak, hit by a fall in sales of medium and heavy commercial vehicles, low operating margins, and higher capital costs on full commissioning of the car project.


New Delhi, March 5: 
By the end of this week, the department of telecommunication (DoT) will invite bids for issuing licences to the fourth operator of the cellular mobile telephone service.

The licences will be given to the operators in Delhi, Mumbai, Calcutta, Chennai and 17 telecom circle service. Bids will also be invited to fill up the existing vacant slots in West Bengal and Andaman & Nicobar circles.

The 17 telecom circles include, Andaman & Nicobar, Andhra Pradesh, Bihar (including Jharkhand), Gujarat, Haryana, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh (including Chhatisgarh), Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh-West, Uttar Pradesh-East and West Bengal.

According to the guidelines issued by the minister of communications, Ram Vilas Paswan, in addition to one time licence fee, the licencee will pay a 17 per cent revenue share to the government.

It is mandatory for successful bidders to deposit, at least, 20 per cent of the bid amount within a day and the balance 80 per cent within 10 days of opening of the final bid.

The licences will be granted on non-exclusive basis for a period of 20 years and further extendable by 10 years. The service area for the licences shall be same as those of the existing licences of cellular operators. It would be a three-staged bidding process.

DoT has also fixed 49 per cent foreign equity cap in the company bidding for the licence.

The net worth of the bidding companies have been fixed at Rs 100 crore for category A service area, Rs 50 crore for category B and Rs 30 crore for category C.

The existing players will not be allowed to bid for this licence in their current area of operation. The bidding companies shall be required to submit a bank guarantee of Rs 50 crore for category A, Rs 25 for category B and Rs 15 crore for category C before the date of signing the licence agreement.


Mumbai, March 5: 
After Nagpur it is now Nashik’s turn to jolt Mahindra and Mahindra. Workers at the Nashik unit of the auto major have gone on a strike demanding revision in wages and payment of arrears.

The Nashik plant manufactures multi-utility vehicles.

The strike comes close on the heels of a similar trouble at the Nagpur unit of Mahindra and Mahindra which, however, got resolved quickly.

The Nashik impasse has now raised doubts about the production schedule of the company.

In a communication sent to the stock exchanges today, Mahindra and Mahindra said except for the Nashik unit all other manufacturing units of the company are functioning normally.

The company, however, indicated, that a meeting will soon be held to resolve the Nashik impasse. State labour minister Hemant Deshmukh will be present at the meeting.

According to reports, the strike took an ugly turn yesterday when 11 people got injured after violent incidents.

As news about the Nashik strike reached the stock market, the M&M counter witnessed heavy selling and the scrip finishing sharply lower at Rs 155.75 after opening at Rs 161.90 and rising to an intra-day high of Rs 163.50. During intra-day deals, the scrip touched a low of Rs 152.50. The counter witnessed 5931 trades with a total turnover of Rs 15.92 crore.

According to analysts, the strike occurred at a time when conditions in the domestic automobile industry is not quite rosy. So far in the current year, the industry has continued to be sluggish and across the four-wheeler industry sales figures have shown a steady decline in each quarter.


New Delhi, March 5: 
The government today appointed SBI Capital Market and Credit Suisse First Boston as global advisors for the privatisation of Videsh Sanchar Nigam Ltd (VSNL). For CMC Ltd, KPMG has been chosen as the consultant.

VSNL was among the 27 PSUs listed for disinvestment by finance minister Yashwant Sinha in his 2001-02 budget as part of efforts to mop up Rs 12,000 crore through sale of government equity.

SBI Caps and Credit Suisse First Boston were chosen among a host of leading global financial entities, including I-Sec, Solomon Smith Barney and Anand Rathi Securities, sources said.

The advisors for VSNL were being mandated to help the government offload 25 per cent equity to a strategic partner by July 15 this year.

Besides, the government has also decided to give about two per cent equity to employees through a stock option scheme, likely to come after finalisation of the new partner which will have management control.

A-I due diligence

The government has set March 31 as the deadline for completing the due diligence by the short-listed bidders for Air-India and Indian Airlines in its plan to hand over the two airlines to strategic partners by June 15 this year. Officials in the department of disinvestment are expecting receipt of final bids along with the evaluation in the first week of May while the Cabinet clearance would be expected by the end of May.

The government has already signed the confidentiality undertakings with the short-listed bidders. JM Morgan Stanley are advising the government for Air-India disinvestment while the Indian Airlines sell off is being handled by ANZ Grindlays.


Calcutta, March 5: 
The West Bengal government has approached the Asian Development Bank for a long-term loan of around Rs 850 crore for the proposed 500 MW Sagardighi power project.

The coal-based project, with an investment of over Rs 1,000 crore, will be set up by the West Bengal Power Development Corporation (WBPDCL).

Initially, the size of Sagardighi project was 1,000 MW and the investment was pegged at Rs 4,000 crore.

WBPDCL had jointly floated the Sagardighi Power Generation Company with the Developments Consultants Ltd for the proposed 1,000 MW project. In the venture, Developments Consultants Ltd held 74 per cent stake with WBPDCL holding the remaining 26 per cent. “The objective behind setting up the joint venture was to usher in private investment into the state’s power sector. But the company failed to obtain clearance from the Central Electricity Authority due to lack of fuel linkage,” a senior WBPDCL official said.

Since Sagardighi Power Generation is now in the process of winding up, WBPDCL has decided to go alone with it, taking fuel linkage from Eastern Coalfields. The project size has also been scaled down to 2x250 MW in order to reduce the cost.

A senior Developments Consultants official said, despite several efforts, the fuel linkage for the project could not be obtained.

“Initially, several multinational firms showed a lot of interest in the project. But the delay in finalising the linkage came in the way,” he said.

The government had also tried to convert the project from coal-based to gas-based. But the economics of the project was far from being viable.

WBPDCL has already made a fresh application with the CEA for the project. Sources said, it has made a detailed presentation on the proposed power project before the Asian Development Bank.

“Asian Development Bank funds mostly the infrastructure projects. But the agency has shown interest and it may fund around 65 per cent of the total project, although the government has sought 85 per cent,” they said.

WBPDCL has also decided to go alone with the two units in Bakreswar thermal power project, as the other private sector generation company formed to set up these units, is in the process of being wound up.


Calcutta, March 5: 
West Bengal State Electricity Board (WBSEB) will transfer its Bandel and Santaldih generating stations to West Bengal Power Development Corporation (WBPDCL) as part of its drive to revamp the lumbering sector.

Power secretary Asim Barman told The Telegraph that the state has already embarked on a power-reforms drive, and that the process of handing over the two thermal plants was part of it. While no date has been fixed for the exercise to be completed, he said it should be wrapped up in 2001-2002.

WBPDCL, formed in 1985-86 with the transfer of WBSEB’s generation units, has two major thermal power plants under its fold — Kolaghat (6x210MW) and Bakreswar (3x210). WBSEB has as many, at Bandel and Santaldih. The two units have close to 5,000 employees on their rolls.

Bandel has four 80 MW units and a 210 MW unit; Santaldih has four 120 MW units. Sources say Durgapur Project’s 395 MW generation unit will also be handed over to state power development corp.

Sources said the power department is assessing the land, staff strength, number of houses and other details before the two generating plants are handed over. “It is a signal that the plants will be handed over to WBPDCL soon, but only after the elections,” a senior WBSEB official said.

The decision to transfer the board’s plants was taken by the state Cabinet in 1997. “The government did not move for three years. It is doing so now because the Centre has put pressure on states to reform their electricity boards,” a senior power department official said. Barman denied this was the case, saying the reforms process had been initiated long time back. “It would be carried out within our framework.”

Power sector experts say Bengal must reform its SEB if it wants to tap the Rs 1,500 crore set aside by the Centre under the Accelerated Power Development Programme (APDP) in 2001-02.

Initially, APDP will coincide with the Ninth Plan ending in 2002. Therefore, states will prepare only such projects which would be completed by March 2002. Funds under APDP will be provided to the state governments/SEBs as a special assistance over and above the normal central plan allocation. More important, the disbursement will be scheme specific.

Funds provided under the scheme cannot be diverted to other uses by states. If they do, a corresponding sum will be deducted from the annual plan assistance given by the Centre to the state government that year, or over a period of time.

Three kinds of projects eligible for assistance under APDP:

Renovation and modernisation/life extension/upgrading of old power plants

n Upgrade of distribution network, including sub-transmission

Metering and energy audits

According to norms laid down by the central government, APDP assistance, split equally between a grant and loan, will finance 50 per cent of the project cost. SEBs will have to raise the rest from their internal resources, or take loans from Power Finance Corporation and financial institutions.


Calcutta, March 5: 
Spice Telecom will launch Fast Talk — a facility that offers instant connections even before the verification of a wannabe subscriber is completed — on Tuesday.

According to general manager (marketing), R Mahesh, a customer has to wait for three days of checks before he is given his number. The new product will allow instant connections, with a cap on air-time usage linked to the security deposit. It will be available at all Spice centres, and even at home on request. Bills will be dispatched in the usual manner.

“The new product is part of the company’s initiative to focus on the post-paid customer. The most important aspect of the pre-activated card has been the integration of the fraud management systems and credit monitoring systems. This will enable us to ensure that customers use air-time worth the deposit until their credentials have been verified.

“Only BPL in Mumbai and AirTel in Karnataka offer pre-activated cards, which account for around 80 per cent of their total sales,” chief operating officer Arun Kapoor said.

“At present, post-paid customers account for only 35 per cent of our customers. The rest comes from the pre-paid Cashcard connection. We want to reverse the equation,” Kapoor said. There is more money in the post-paid segment, which could contribute 50 per cent to sales if Fast Talk catches on.

“We have set up 25 mini customer-care centres, called Spice Zones, in Calcutta. In the next two months, we will add another 25.” The round-the-clock service centres will service subscribers who now depend on two authorised service centres. Three on-line centres will also come up by the month end.

The city’s leading cellular service provider will invest Rs 30 crore till June as part a larger plan to upgrade its infrastructure. The number of base stations will be increased from 60 to 80, switch capacity from 1,20,000 to 1,50,000 and HLR capacity from 95,000 to 1,50,000. As an answer to rivals who provide services in metro rail stations, Kapoor says Spice is gearing up for a facility that will enable its subscribers to talk while travelling on the train.

A comprehensive customer relation management (CRM) solution will be introduced by June. It is close to a deal with a leading CRM software provider. “Once that is in place, the system will be implemented in 45 days,” Mahesh said.

Kapoor said the CRM will enable the company to understand customers better and provide tariff rates and services that suit their lifestyle and requirements. “We will customise our products in tune with various user segments.”



Foreign Exchange

US $1	Rs. 46.53	HK $1	Rs. 5.90*
UK £1	Rs. 68.32	SW Fr 1	Rs. 27.90*
Euro	Rs. 43.34	Sing $1	Rs. 26.20*
Yen 100	Rs. 39.05	Aus $1	Rs. 24.20*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4340	Gold Std (10 gm)Rs. 4230
Gold 22 carat	Rs. 4100	Gold 22 carat	Rs. 3910
Silver bar (Kg)	Rs. 7375	Silver (Kg)	Rs. 7380
Silver portion	Rs. 7475	Silver portion	Rs. 7385

Stock Indices

Sensex		3998.12		-97.04
BSE-100		1966.09		-55.50
S&P CNX Nifty	1271.45		-34.90
Calcutta	130.50		-3.42
Skindia GDR	698.26		-18.08

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