Anand Rathi offers to step down
Govt ready to walk alone on reforms track
Abbott offer for Knoll
Hind Motors plans 10-hour shift
No recap funds forUco, United Bank
Buddha asks TUs to shun militancy
Kinetic bikes to have Korean tech
Electrolux to hardsell Allwyn brand
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 7: 
Bombay Stock Exchange president Anand Rathi today offered to step down amid a welter of allegations that he was the man who had tipped off a bear cartel about the huge outstanding positions of leading market operators, sparking a relentless wave of bear hammering last week that knocked the bottom out of the market.

“I am willing to step down tomorrow and am ready to face an investigation by the Securities and Exchange Board of India (Sebi),” Rathi said. “The allegations are wild and my credibility is at stake.”

The resignation, which will be placed before the BSE governing board, is being offered “in order to maintain the dignity of the office of the president of BSE.”

The allegations surfaced earlier in the week when media reports spoke of a tape recording of a conversation that Rathi had with BSE surveillance department chief S. Gerala. The tape is now reportedly in Sebi’s custody.

The tape pertains to a conversation that took place on March 2, following which the sensex collapsed by 176 points on a wave of selling as marauding bears swarmed the market with sell orders just two days after the sensex spiked up in a euphoric response to the Union budget proposals.

Denying the allegations, Rathi said: “No benefit has ever been availed by me nor I have obtained any privileged information for my own benefit or any other party’s benefit.” “I would like to place on record that neither I nor any of the other office bearers have ever been involved in anything that is against the ethical standards laid down by us for ourselves. We have already proven this board’s full independence and effectiveness.”

The BSE president said: “I have been deeply hurt by the serious allegations made against me in a section of the media, motivated, I believe, by elements disgruntled/unhappy with the progress made by and discipline instilled in the functioning of the BSE on all fronts.”

Earlier, Sebi chairman D.R. Mehta told reporters that even as investigations into last Friday’s crash were continuing, investigators were trying to ascertain the truth about the charges surrounding the leak of sensitive market information. “We are ascertaining the facts. The taped conversations are there and we are collecting the transcript,” Mehta said.

It is learnt that two brokers, who were present when Rathi was talking to Gerala, directed their respective offices to unload a few stocks, triggering the market mayhem.

It may be recalled that during the past few weeks, a large section of the stock market was unnerved about the weakening position of Big Bull Ketan Parekh with speculation rife that a leading private sector bank (Global Trust Bank) was unloading his shares that were pledged as collateral against a loan from the bank. This was denied subsequently by the bank.

The Reserve Bank of India (RBI) is now scrutinising the affairs of Global Trust Bank more closely with reports that the bank’s exposure to the stock markets may be greater than that warranted by the prudential norms. This has also been denied by the bank.

More curbs on sellers

Meanwhile, Sebi took further steps today to arrest the tidal wave of selling by directing market players to ensure that their sale transactions were backed by share deliveries from tomorrow.

At a meeting of its risk management group here this evening, the regulatory body decided that all sales transactions on the exchanges effective from tomorrow should be supported by delivery of shares unless a sale transaction is preceded by a purchase position of at least an equivalent amount in the name of the same client on the same or any other exchange.

This measure, which would also apply to the proprietary trading by members, will be reviewed after two settlement periods of the exchanges.

Mehta told reporters that the move would discourage naked short sales. The measure would be on a self-certification basis and would be subject to exchange off-site inspection up to sub-broker and client levels. The exchanges would share information to facilitate the verification.

Mehta also informed that the current margining system will be moved to the value at risk (VAR) scrip-wise model with effect from July 1. The VAR concept would help the exchanges in measuring the probable risks attached to volatile trading at any given period.

Some modalities have already been outlined and will finalised by the sub-group of the risk management group of Sebi headed by J.R. Verma. Sebi also directed the bourses to verify rumours about any specific entities to the extent possible in order to curb unwarranted speculation on the market.

National Stock Exchange managing director Ravi Narain said the Sebi move would have a positive impact on market as it would stop the “rumour mills” from grinding.

On Wednesday, Sebi imposed restrictions on short sales effective from Thursday to curb excessive volatility in share prices.

The sensex opened sharply up at 4062.41, and later fluctuated irregularly in a wide range of 4114.11 and 3913.67 before closing at 4046.89 as against Monday’s close of 3998.12, a gain of 48.86 points or 1.22 per cent.

Select old economy shares that had witnessed a rally at a time of the stock crash last weekend, beat a hasty retreat on selling in the form of profit booking by domestic operators and speculators in a bid to prune their losses.

After finance minister Yashwant Sinha told the Lok Sabha in the morning that there was no payments crisis on the stock markets, leading institutions like Unit Trust of India (UTI) and Life Insurance Corporation (LIC) made aggressive purchases in almost all technology stocks. Dealers said UTI bought huge quantities of Infosys, Satyam, NIIT and Wipro and buoyed the confidence of the operators.

The optimistic turnaround in the Nasdaq composite index that scored impressive rise for the second straight day last night also bolstered market sentiment.


New Delhi, March 7: 
Union Finance Minister Yashwant Sinha today said the Centre will go ahead with the ‘second-generation reforms’ outlined in the budget, even if there is no political consensus. “We believe it is possible to achieve a consensus for higher growth and the responsibility for building the consensus rests with the government. I assure you the government will do its best. But, if for achieving a better life for the people such a consensus eludes us, we will still go ahead with the reforms,” Sinha told the national council of the Confederation of Indian Industry (CII) here today, seven days after presenting the budget.

Sinha was responding to criticism that the government was incapable of implementing several policies in the budget. Several changes announced in the budget — such as the amendment to Chapter V-B of the Industrial Disputes Act — require legislation. However, even the BJP’s allies in the NDA, apart from the opposition Congress and the Left, are not in favour of harsh measures that can rebound on their political future.

Sinha said both he and the Prime Minister were fully aware “even when the budget was in the making” that the political pulls and pressures could thwart the reforms process. “But we believe it is our national duty and responsibility to push ahead with the reforms,” he said.

“If the changes cannot be implemented, the budget might be reduced to a bundle of intentions. Questions have been raised on whether the government has the political will. If we did not have the will, we would not have done it. We believe that there is a much larger consensus (for reform) today,” the finance minister said.

As evidence of this, Sinha pointed to the meeting of chief ministers on power sector reforms chaired by the Prime Minister on March 3.

“We had detailed discussions and there is a complete consensus on power reforms,” Sinha said.

But at least one political formation — the Left — has denied the existence of any consensus on power sector reforms. The CPI(M) even came out with a statement a day after the government claimed to have reached a common agreement.

The finance minister said industry had a major role to play in bringing about the consensus.

CII president Arun Bharat Ram said his organisation has already embarked on such a programme.


Mumbai, March 7: 
Abbott Laboratories is making an open offer to acquire 20 per cent of Knoll Pharmaceuticals at a price of Rs 328 per share. The planned acquisition in India follows the worldwide takeover of Knoll Pharmaceuticals in a $ 6.9-billion deal.

The price marks a discount of around 1.3 per cent to Knoll Pharma’s closing price of Rs 332.05 on the BSE today. The acquisition is expected to cost Abbott more than Rs 106 crore.

In a communication sent to stock exchanges today, Abbot said it intends to acquire 32,40,000 shares of Knoll Pharma, representing 20 per cent of its equity capital.

The offer has been made by Abbott Equity Holdings (Abbott UK), a company incorporated under the laws of England and Wales, and Abbott Laboratories (Abbot USA), a corporation which has been set up under the laws of the State of Illinois, US.

On March 2, Abbott UK had acquired from Lupharma GmbH the entire equity capital of Lupharma UK Holding One, which holds 82,62,000 shares with a face value of Rs 10 each of in Knoll Pharmaceuticals. This represents 51 per cent of the voting capital of the target company, the notice says.

The deal gave Abbott UK a 51 per cent shareholding in Knoll Pharma.

While the specified date for the offer, to be managed by Kotak Mahindra Capital Company, is March 9, it will open on May 2 and close on May 31.

This follows the acquisition of 51 per cent stake in Knoll by Abbott, UK earlier this month.

In India, the acquisition is expected to spawn a Rs 360-crore pharmaceutical major with products in anti-infectives, vitamins, cardio-vascular, diabetic, antacids, cough/cold and anti-inflammatory segments. It will also have a presence in hospital products, medical and paediatric diets.

Knoll, the seventh-largest in the Indian formulations market, dominates the anti-diabetics, antacids, cough/cold and anti-inflammatory segments.

Abbott’s portfolio, on the other hand, comprises anti-ineffective, vitamins and cardiovascular products apart from hospital products and paediatric nutrition.

The Knoll scrip hit a high of Rs 349.70 before closing at Rs 332.05 while the Abbott share finished at Rs 184 after opening at Rs 183.90, rising to a high of Rs 190 and hitting a low of Rs 180.


By Sutanuka Ghosal 
Ailing automaker Hindustan Motors is bending the rules to stay in business.

The company, which claims to be saddled with “an idle workforce of 50 per cent” at its Uttarpara factory, has suggested a five-day working week with a 10-hour single shift from 8 am to 6 pm to slash the overheads in order to operate on a no-profit, no-loss basis. Hindustan Motors reported a loss of Rs 62 crore on sales of Rs 1,813.50 crore for the year ended March 31, 2000.

The 10-hour single shift — scheduled to come into effect from All Fool’s Day on April 1 — “flouts” the provisions of the Factories Act which stipulates a maximum eight-hour shift. Companies have to pay an overtime of twice the normal hourly wage if the shift stretches beyond eight hours.

D. Munshi, HM’s factory manager, told The Telegraph: “The matter is currently being discussed with the employees. We will inform the state government if we take any such step.”

He claims that the switch to a five-day working week will save Rs 3.5 lakh a day in power costs alone.

HM is using a smart legal quibble to get round the sticky issue of overtime payment. HM claims the 10-hour shift includes a half-hour break, effectively reducing the working schedule to 9-1/2 hours a day or 47-1/2 hours per week.

“We are not flouting any law.,” says Munshi when asked about overtime payments. “We will have to pay the worker an overtime if he works more than 48 hours a week.”

However, veteran Citu leader Niren Ghosh said, “If a person works beyond eight hours, then the company has to pay an overtime. Working continuously for 10 hours results in fatigue. This itself is a violation of the labour laws. We are against this.”

The West Bengal labour department officials were unaware of the development and had no idea of how to deal with this unprecedented situation.

HM has had a torrid year with sales plummeting sharply as demand has dried up roiling the industry’s fortunes.Till February, the company sold 17,500 units. The management says it will be able to break even only if it sells 2,000 vehicles a month.

The change in the working schedule is being seen as a first step towards declaring the workforce surplus which will be carried to its logical conclusion with the framing of a voluntary retirement scheme (VRS). Uttarpara factory employs over 10,000 workers.

“Our experience reveals that the sales of our vehicles increases in the latter half of every financial year. The first half being a lean period where we sell 35 -40 per cent of total sales registered during the year. If we produce at the rated capacity we will only bloat our already inflated inventory,” a senior HM official said.

“Our assembly line is in operation for only one shift. Manufacturing of components in different shops for our assembly lines are generally designed to be undertaken in two shifts. As such although most of our plant is in operation for two shifts for full production, the same can be achieved in two shifts with the engagement of 50 per cent of the total workforce,” he said.

Uttarpara factory runs three shifts — morning, afternoon and night. There is also a general shift which is for eight and half hours.

The official further added that the company is under obligations for scheduled repayment to financial institutions but deteriorating sales and restricted cash flow have severely undermined operations.

Ajit Chakroborty of Hindmotors & Hyderabad Industries Employees Union said, “We have got the management’s notice. We will take a final decision after we discuss the matter with our president Subroto Mukherjee.”


New Delhi, March 7: 
The government will offer a recapitalisation package only to one weak bank — the Chennai-based Indian Bank. Two others, Calcutta-based United Bank and Uco, will be asked to implement a drastic restructuring package which will entail branch closures, job losses and cost cutting, finance secretary Ajit Kumar told The Telegraph.

Finance minister Yashwant Sinha had said earlier a financial revamp plan for weak banks could be unveiled in the supplementary budget, but Kumar made it clear today that only Indian Bank will be recapitalised.

The two Calcutta-based banks will not be given cash injections because their capital adequacy ratio was higher than 9 per cent, Kumar said. “Their boards will go ahead with restructuring plans. A few branches will have to be shut down, some staff will be shed.” He did not specify the amount that would be pumped into Indian Bank, or the number of branches Uco and United Bank would have to close.

Kumar, the brain behind the stillborn auto policy which was crafted during his tenure as the industry secretary, said the current system in which car-makers are asked to indigenise production and balance their import of components with matching exports is incompatible with the WTO. He indicated it might have to be scrapped by next month.

The government has had to change its stand on the issue after the US hauled the country to a WTO dispute settlement body. It argued that India’s system of MoUs (memoranda of understanding) with automobile manufacturers who import ready-to-assemble car kits is an unfair trade practice under the GATT agreement and investment norms which have been approved by the World Trade Organisation.

This could leave India vulnerable to a flood of imports of car kits without any corresponding rise in exports. Indians buy 6 lakh cars a year. If even a quarter of this is imported in the form of kits, it would mean a minimum import bill of about Rs 3,000 crore.

The finance secretary, however, said recent cuts in excise duties should make Indian components and cars far more competitive and give them an edge in a competitive market.

Kumar said small-scale firms will be protected in the aftermath of lifting of quantitative restrictions (QRs) on imports. “We will hike duties to bound rates if necessary and even impose anti-dumping levies. We can’t destroy them (SSIs). They generate employment and exports,” he pointed out.

He dismissed fears of cheap imports flooding Indian markets, after the end of QRs, as unfounded. “We have lifted QRs on items earlier but there was no spurt in imports. I don’t anticipate it now,” he said.

The finance secretary also indicated that the government has finalised many laws needed to usher in second generation reforms. “We are ready with the legislation to replace Sica and BIFR Acts (foreclosure law). They will be sent to the Cabinet soon, along with labour reform legislations,” he said.

Kumar made it clear that a new system of debt recovery tribunals with an apex tribunal at its head would be set up to wind up firms which fail to repay loans on time. “All this would be time-bound and not like the prolonged BIFR proceedings.”


Calcutta, March 7: 
Chief minister Buddhadev Bhattacharjee today asked central trade union leaders to shun militancy and settle labour disputes through peaceful negotiations with the management.

Bhattacharjee was addressing representatives of 13 central trade unions at a meeting in Writers’ Buildings. The meeting was convened to discuss industrial relationship with various trade unions in the state.

He said: “We are trying to improve the industrial climate in the state. I have met captains of various industrial sector to know their problems. Their main complaint is against labour unrest fomented by trade unions.’’

“Recent killings in a jute mill in Baranagar following labour disputes gave a wrong signal to industrial management and brought disrepute to the state. The government would never allow such militancy in the name of trade unionism. It is the responsibility of the government, management and trade unions to create congenial climate for investments,” he added.

The meeting was attended by labour minister Santi Ghatak, commerce and industry minister Bangsagopal Chowdhury and power and industrial reconstruction minister Mrinal Banerjee. Among central trade unions representatives, were Citu’s Chittabrata Majumder, Intuc’s Lal Bahadur Singh and Aituc’s Gurudas Dasgupta.

Sharp exchanges witnessed between Ghatak and Dasgupta over the lackadaisical attitude of the state’s labour department on genuine grievances of workers.

Dasgupta alleged that thousands of cases on labour disputes were pending in tribunals for over a decade, thereby denying justice to workers. It is difficult for trade unions to find any assistance from the labour department or directorate now.

“Several posts of tribunal judges are vacant for many years. At least 32 vacant posts of assistant labour commissioners are yet to be filled up. The departmental minister cannot perform his duty properly due to his old age and chronic sickness,” he told the chief minister.

Ghatak said that Dasgupta’s department was insensitive to workers’ plight. However, he admitted that he was sick and could not give more time to his work.


New Delhi, March 7: 
Kinetic Engineering Limited will launch six bikes in association with Korean motorbike company Hyosung. It will also launch indigenously developed scooters.

The company has also been approached by a Chinese firm for a technical collaboration.

However, officials were tightlipped about the offer. Arun Pande, managing director, Kinetic Engineering Limited, said, “I will not be able to comment on this.”

The six new bikes to be rolled out by Kinetic will cover the economy, combination and performance segments, including the GF series. Of the six, three will be in the 125-150 cc segment and the rest in 75-100 cc. The first bike, to be rolled out in technical collaboration with Hyosung, will be launched in July. However, Kinetic ruled out any equity partnership with the Korean company.

“We don’t need an equity partnership. Both of us are happy with the current arrangement. But we are open to any kind of change, if necessary,” Pande said.

Kinetic has already invested Rs 100 crore in the project at its manufacturing base in Pune.


Calcutta, March 7: 
Electrolux India is on a special drive to market its Allwyn brand of refrigerators with the launch of two models, Eternity and Infinity.

Arun Sharma, executive vice-president of Electrolux, said today, the company has set a target of capturing a 10 per cent market share for Allwyn refrigerators in the current year as against 6.5 per cent now. A Rs 10-crore campaign fund has been earmarked for promoting these brands during 2001, he said.

Electrolux acquired the Allwyn refrigerator brand in April 1999 as part of a joint venture. The Eternity and Infinity models were specially developed for Indian market at Electrolux’s Stockholm design centre. These are now made at its Nandalur factory in Andhra Pradesh.

Apart from incorporating the Durocool technology, the Eternity and Infinity models will have a door alarm facility, a first for Indian refrigerators, Sharma said. The refrigerators will be equipped with electronic panels which will sound an alarm if the doors are kept open beyond a certain permissible limit.



Foreign Exchange

US $1	Rs. 46.53	HK $1	Rs. 5.90*
UK £1	Rs. 68.13	SW Fr 1	Rs. 27.90*
Euro	Rs. 43.47	Sing $1	Rs. 26.20*
Yen 100	Rs. 48.73	Aus $1	Rs. 24.20*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4330	Gold Std(10 gm)	Rs.4240
Gold 22 carat	Rs. 4090	Gold 22 carat	Rs.3920
Silver bar (Kg)	Rs. 7400	Silver (Kg)	Rs.7400
Silver portion	Rs. 7500	Silver portion	Rs.7405

Stock Indices

Sensex		4046.89		+48.77
BSE-100		2000.34		+34.25
S&P CNX Nifty	1290.50		+19.05
Calcutta	130.61		+0.11
Skindia GDR	699.86		+7.00

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