Morgan, GTB stick to their guns
Banks under scanner
Dalmia scents easy prey in bear run
VSNL rate cut ignites protests
SBI to begin staff rejig
Dabhol ball lobbed to Centre
Enron invokes surety again
BOGL revival scheme hits Chinese wall
Coloursoft plans feast for eyes
Foreign Exchange, Bullion, Stock Indices

New Delhi & Calcutta, March 8: 
Last week’s bloodbath on capital markets and the subsequent sabre-rattling moves of the Securities and Exchange Board of India (Sebi) may have been too much for Anand Rathi who quit as Bombay Stock Exchange president today but it failed to shake the two key figures in the drama. Both J M Morgan Stanley and Global Trust Bank are putting up a brave face and said they had no reason for concern.

“We have no cause for concern,” Naina Lal Kidwai, vice-president of JM Morgan Stanley said in New Delhi.

Kidwai welcomed the Sebi move, but said “they should check everyone.” She declined to go into the details as she was not handling the securities business.

The official of the leading foreign institutional investor was not sure why the company’s name figured among the speculators but said the allegation would not taint their image in the country.

Meanwhile, Global Trust Bank (GTB), whose stock market exposure is being investigated by the Reserve Bank of India, today said its total funded exposure to the capital markets is around Rs 500 crore, including loans against shares to individuals.

Claiming that all its exposures to individual brokers are within the prudential norms and it had the necessary risk management expertise to handle the amount, GTB denied reports that it is planning to unload shares on Friday.

“It was only mentioned as an example that if on a Wednesday, there is a shortfall in security, then the customers are advised to make up the security. The bank would wait for 24 hours and if that security is not made up, it would start selling on Friday,” it explained.

While funding for capital markets is one of the major business areas for the bank, speculations are rife that the bank has funded Ketan Parekh. During the past couple of weeks, the stock market was also agog with rumours that GTB was unloading the collateral placed by a big operator in the market, triggering unloading.


Mumbai, March 8: 
The Reserve Bank of India (RBI) has asked a cross-section of commercial banks to submit data on their exposure to the stock markets.

The review has been commissioned at a time when the leading private sector bank, Global Trust Bank is under public glare with reports that its exposure to the stock markets has been more than the prudential guidelines set by the apex bank. However, a senior RBI official denied any relation between the volatility witnessed in the stock markets and RBI’s concern over banks’ exposure in the markets. He said that it is a normal review undertaken periodically.

Now, RBI has sought data from select small and large nationalised banks, apart from the private and foreign banks, he added. The data will be used to make changes in the existing guidelines for banks’ exposure to the stock markets. It is likely to be presented before a joint RBI-Sebi committee. The amendments in the capital market exposure norms are expected during the forthcoming lean season credit policy in April.

“We will look at the data collected in detail and examine what has been the experience of these banks vis a vis the guidelines. If banks’ have experienced some difficulties, necessary changes will be made,” the official pointed out. Sources added that it is too early to say whether the existing norms on capital market exposure by banks will be strengthened in the wake of the present controversy.

In September last year, an RBI-Sebi committee had set free the purse strings when it ruled that banks’ exposure to the capital market by way of investments in shares, convertible debentures and units of mutual funds will be linked to their total outstanding advances. The exposure may be limited to 5 per cent of such advances as against the earlier norm of the incremental deposits of the previous year for investments in shares, said the ruling.


New Delhi, March 8: 
The roller-coaster on the bourses may have sent the faint hearted scurrying for cover, but the raider never had it so good.

Abhishek Dalmia, who established his reputation as a cool cat on the prowl following his bid on Gesco, is back in action following the crash in the stock market.

“A whole lot of business opportunities have come up due to the stock market crash.”

Enthused by the opportunities thrown up by a bear run, the whizkid with the eye for bargains said he is choosing shares which are beneficial for his investment business. So what is he buying?

“It is mostly old economy shares.”

While the raider protests he does not disclose his cards unless they become public knowledge, Dalmia’s holdings inevitably become so, thanks to his penchant for open offers and buying of shares en masse.

However, Dalmia, who has already acquired 1 per cent in Indian Rayon, amounting to 6 lakh shares of the Aditya Birla group company, has not taken advantage of the meltdown to lap up more shares in the company. The market is rife with rumours about a possible raid on the premier textile company.

The Renaissance Estates’ Managing director, who bought these shares about nine months back, said last fortnight that he was open to increasing his holding.

Dalmia’s claim to fame is his daring bid on Gesco last year. His well-publicised takeover bid through an open offer for 45 per cent in Great Eastern Shipping’s realty arm, though abandoned midway, let him pocket about Rs 9 crore by selling his stake to the promoters, the Sheth-Mahindra combine. Dalmia still retains about 9 lakh Gesco shares bagged through the open offer, but is undecided on what to do with the shares.

This time around, the raider has sighted easy prey, thanks to the bear run. The rampage, which sent the sensex into a tizzy, is alleged to be the handiwork of an alleged bear cartel operating out of Mumbai. The stock meltdown pushed down the sensex by over 200 points, soon after a budget day rally which saw the sensex gain a whopping 176 points in a single day’s trading.

Most market operators who perceived the budget as a positive one for the bourses, were taken by surprise by the bear downswing. Dalmia himself welcomed the budget, giving it a high 8 out of 10 score.

Dalmia, by his own admission, has a penchant for undervalued shares, which, he feels, have potential for appreciation. So market watchers stumbling upon sudden buying activity in some old economy counters know where they are likely to be headed.


Calcutta/New Delhi, March 8: 
A major double-headed controversy has erupted after Videsh Sanchar Nigam Ltd (VSNL) slashed its tariff last week for internet leased lines at its non-cable head stations — that is, everywhere else but Mumbai and Cochin — by about 40 per cent.

The move has piqued two interest groups for differing reasons. VSNL’s existing leased line customers are incensed because it perpetuates a skewed tariff structure that is loaded in favour of those in Mumbai and Cochin where customers get the service at a cost that is 20 to 70 per cent cheaper depending on the bandwidth capacity (see chart).

At the same time, it has enraged private internet service providers who are now setting up their own international gateways because it massively undercuts them. In fact, the Internet Service Providers Association of India (ISPAI) is planning to move the Monopolies and Restrictive Trade Practices Commission to protest the manner in which the erstwhile monopoly has tried to cut the ground from under their unsteady feet.

“While the procurement cost of international bandwidth ranges between Rs 50-60 lakh for 2 Mbps (megabits per second), VSNL is currently charging Rs 12 lakh. Thus, the private ISPs are on the verge of ruin,” says Caltiger CEO Joe Silva.

VSNL has a ready response for the skewed tariff structure that favours users in Mumbai and Cochin where it has its cable head stations.

“Our landing stations are in these two places. But when the bandwidth coverage is extended to other places, we need to pay the charges, fixed by the DoT, which is very high,” said Kumar.

VSNL sources bandwidth from two international consortia — FLAG (fibre optic link across the globe) and SEMEWE, the undersea link that connects Singapore to western Europe via the Middle East. The landing point for the FLAG link is in Mumbai, while the SEMEWE landing station is in Cochin. It says the rate for subscribers in Mumbai or Cochin has two components —the tariff for the leased line and the rate for the cable which is laid from the VSNL office to the subscribers’ end. But if a subscriber in Calcutta or any other city has to get a leased line, the tariff has three components. The subscriber will have to pay VSNL a normal leased line rate; secondly, there is the tariff that VSNL pays to Bharat Sanchar Nigam Ltd or Mahanagar Telephone Nigam for the cable link that connects either Cochin or Mumbai cable head to the subscribers office in Calcutta, and, thirdly, the cable charge for the connection from the VSNL office in Calcutta to the subscriber’s premises. VSNL is hoping to change all that once it gets the licence from the government for national long distance telephony which will allow it to offer STD services. When that happens, VSNL hopes to cut rates by 50 per cent.


Calcutta, March 8: 
With its voluntary retirement exercise nearing completion, the State Bank of India will now turn its attention to rationalising staff strength in its corporate centre and business group headquarters and will redeploy excess staff in branches across the country.

Confirming the move, bank chairman Janki Ballabh told The Telegraph from Mumbai, “Post-VRS we need people to carry on smooth functioning of our operations. The entire exercise is aimed at streamlining the activities of the bank and redeploying excess staff at its corporate headquarters.”

State Bank has granted voluntary retirement to nearly 24,000 employees. Letters have already been issued to them and the VRS will be effective from March 31.

The bank has decided to merge the SBI Mckinsey in-house team and the corporate centre and strategic planning department (associates and subsidiaries) with the organisational planning department.

Similarly, Project Uptech will be integrated with the development banking department. Project Uptech was set up by the bank to provide technical consultancy to the small scale sector. “Since the Project Uptech department undertakes developmental work for the SSI sector, we have found it logical to merge it with the developmental banking department,” Ballabh said.

“We want to integrate the functions of all the departments. Since the work can be easily handled by a fewer number of people and as more people are needed in the branches, we will redeploy them accordingly,” he added.

The community services banking department will be merged with the micro credit and lead bank department. Similarly, the credit department and department of credit administration will merge with industrial finance. Rupee travellers cheques department will be merged with the draft reconciliation department. The SBI computer centre will merge with corporate services and personnel.

“The above mergers /realignments, which are part of the bank’s restructuring exercise, will be undertaken immediately. The concerned departments have already been advised to implement the decision relating to rationalisation of staff at corporate centres and business group headquarters,” a senior SBI official from Mumbai said.

“I would like to reiterate that the functions carried out by the merged departments will continue unaltered. The deputy general managers of the post-merger departments will be required to take all effective steps for smooth integration of the functions and also put in place proper systems for effective supervision of the various activities,” the chairman of the largest bank in the country said.

Employees of SBI’s Bengal circle said there is a move in the central office to redeploy excess staff in Hyderabad and Cochin offices. However, Ashok Datta, general secretary of SBI Staff Association, said any sort of merger or redeployment will not be allowed unless it is discussed with the employees.


New Delhi, March 8: 
Even as Enron today added a fresh twist to the ongoing power saga by invoking the Centre’s counter guarantee, the war-weary Maharashtra government has raised the white flag.

The state government, looking for a way out of the imbroglio, has asked the Centre to take over distribution of power generated by the Dabhol power project.

Maharashtra, which has been complaining the tariff being charged by the Dabhol Power Corp was too high, wants a central power utility to step in and relieve it of the burden of buying power from the DPC.

Minister of state for power Jayawanti Mehta told the Lok Sabha today the state government has proposed the Centre take over the entire distribution of power from the Dabhol project either directly or through its public sector units. If this is accepted, the task of buying power from the project may fall on a central utility like NTPC or PowerGrid.

However, the minister said the state government had not sought any changes in the power purchase pact signed with Enron. The pact and high tariffs it entails has been the bone of contention between the state government and the US energy major.

Maharashtra has been complaining that Dabhol’s power was too expensive and that the state had to pay for it even when it did not lift any. Mehta said the DPC too had conveyed its support for any steps taken by the Maharashtra State Electricity Board (MSEB), the state government or the central government, in transferring the power supplied by them to central government utilities for onward distribution.

Further, the state government has formed an energy review committee under former home secretary Madhav Godbole, to review the situation and suggest future course of action, Mehta said.


Mumbai, March 8: 
For the second time, the Dabhol Power Company (DPC) today invoked Centre’s counter-guarantee, following the Maharashtra State Electricity Board’s (MSEB) failure to clear its outstanding bill of Rs 102 crore for December 2000. “Invoking the counter guarantee was necessary because the state government of Maharashtra has failed to pay this same amount after their guarantee, in favour of DPC, was invoked on February 8, 2001,” said DPC in a press statement.

Wade Kline, managing director of DPC said, “Although we could have invoked the government’s guarantee earlier, we delayed the decision, as long as possible, in order to give the MSEB more time to pay their December bill.”


Calcutta, March 8: 
The import of cheap lenses from China is threatening to scupper the revival plan of Bharat Opthalmic Glass Ltd (BOGL).

The public sector company has already informed the government about the unfair competition it is facing from Chinese lenses.

According to BOGL officials, the Chinese lenses do not conform to any optical specification and use of these would impair the vision of those who use these inferior lenses.

The Chinese glasses are about 30 per cent cheaper than BOGL’s rate of about Rs 11 for a pair of glass of 8.25 grams, the official said. Local opticians and stores are opting for these just because of the price advantage, he added.

BOGL, which is collaborating with the Calcutta-based Central Glass and Ceramic Research Institute to introduce high-tech glasses, has got the Chinese glass tested in its laboratory. The poor quality of the glasses has been brought to the notice of the customs department as well as the Union ministry of heavy industries.

“These do not conform to any optical specification,’’ the officials said.

Following the revival plan approved by the government that includes reduction of workforce at the Durgapur plant form 580 to 199, BOGL has set an annual production target of 70 tonnes of glasses.

Of this ophthalmic grade flint button glass, used in bifocal lenses, will constitute 80 per cent and high value optical glass 20 per cent. The latter is used by strategic sectors like defence, nuclear installations and institutions like Bhaba Atomic Research Centre (BARC).

However, the capacity achieved so far is lower than expected because of the competition from imported grey products from China.

In the speciality segment, BOGL is focusing on value added items such as optical and radiation shielding (ORS) window glasses and leak proof glass used as protective windows in nuclear reactor. BARC, officials said, had projected a requirement 170 tonnes in the next five years. A large order is also expected from Russia for its T-72 battle tanks. These special lenses enable night visibility up to 5 km.

With an optimistic order book and highly trimmed workforce, BOGL is expecting a fresh funding plan to be cleared by Industrial Development Bank of India and other agencies by the end of this month.

The government, too, is expected to convert its Rs 40 crore loan as equity and waive pending interest. BOGL officials said the company has sought a fresh Rs 5.80-crore capital infusion to renovate plant and equipment.


New Delhi, March 8: 
Coloursoft intends to bring 15 new international eyewear brands to the Indian market in the next one year.

The company will initially market a range of products from Centrostyle, Cooper Vision, Serengeti, Harley Davidson and Benetton. Hardeep Singh, CEO, Coloursoft says, “We plan to bring the Sisley brand to India in April this year.”

Singh says the idea behind marketing these international brands is to make them available here, with the same level of guarantee that one would get if bought abroad.

Currently, the organised eyewear segment is dominated by multinationals like Bausch & Laumb and Luxottica, which bought Ray Ban.

The three-year old Delhi based company is into the business of distribution and marketing of international brands in frames, contact lenses and eyewear accessories.

It currently enjoys exclusive distribution rights for both United Optical’s Benneton range of eyewear and Cooper Vision’s Silver 07 contact lenses.

Singh said it is cheaper for the consumer to buy international eyewear brands through Coloursoft than to buy it abroad. “Though there is a steep import duty of 68 per cent, but due to a special understanding with the brands we are marketing, we procure them at a special price.”

In the optical accessories segment, Coloursoft exclusively represents Centrostyle, a premier Italy-based global brand.

Coloursoft, which had a turnover of Rs 1 crore last fiscal, says it is likely to close this fiscal with over Rs 2 crore. The company handles its distribution operation through 10 main stockists who make these international brands available in 200 dealer outlets.

Singh is focussing on the frames market. He estimates it to be a Rs 100 crore market and aims at achieving 5 to 7 per cent of this market in the next two years.



Foreign Exchange

US $1	Rs. 46.52	HK $1	Rs. 5.90*
UK £1	Rs. 68.33	SW Fr 1	Rs. 27.75*
Euro	Rs. 43.40	Sing $1	Rs. 26.15*
Yen 100	Rs. 38.91	Aus $1	Rs. 23.40*
*SBI TC buying rates; others are forex market closing rates


Calcutta				Bombay

Gold Std (10gm)	Rs. 4360	Gold Std (10 gm	Rs. 4250
Gold 22 carat	Rs. 4115	Gold 22 carat	Rs. 3930
Silver bar (Kg)	Rs.7400		Silver (Kg)	Rs. 7420
Silver portion	Rs. 7500	Silver portion	Rs. 7425

Stock Indices

Sensex		4056.94		+10.05
BSE-100		1198.64		- 1.70
S&P CNX Nifty	1292.85		+ 2.35
Calcutta	 132.03		+ 1.42
Skindia GDR	  NA		-

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