Volumes down to a molehill
Pay-in liability on CSE dips to Rs 250 cr
Miffed ONGC Videsh boss may quit
Banks seek control of erring firms
IDBI to knock IRDA door in April
Dunlop writ against BIFR
Govt clears 19 FDI plans worth Rs 217 cr
Dabur’s Real in new pack
RCI plans to diversify into travel services
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 12: 
The raft of market-enervating measures introduced over the weekend by an increasingly nervy Securities and Exchange Board of India and the retail investors’ complete loss of confidence in equities have been responsible for sending volumes skidding on the bourses to abysmal levels that are redolent of the pre-screen trading days.

The traded turnover on the BSE has slipped from a pre-budget level of Rs 5,289 crore clocked on February 27 to a piffling Rs 1,409.31 crore on March 12.

The story is the same at the National stock exchange, BSE’s arch rival where turnover during the period under review plunged from Rs 6,077 crore to Rs 1,945.94 crore.

The other major bourses at Calcutta and Delhi have suffered much the same fate as investors scalded by the 10-day firestorm on the bourses have shied away from trading.

Brokers say the market has become as treacherous as the quicksand at Madh Island in Mumbai.

Sebi’s measures to wring out the volatility on the markets through additional margins, a cap on brokers’ exposure and restrictions on off-market loans to bolster stocks has badly crimped volumes. Brokers have been most incensed by the ban on short sales

except those that are backed by securities borrowed from recognised intermediaries.

“The price discovery process has been subverted by the market regulator,” said a dealer at a leading broking house.

While Sebi chairman D.R. Mehta has said even highly advanced markets have clamped down on short sales on the down tick during extraordinary times, broking circles argue that the comparison is illogical as the US bourses have a fairly advanced futures and options market that give investors a choice.

“Moreover, it is the short sellers who come forward to buy during such times as they eventually square off their short positions,” the dealer argued. The short covering by the bears restores demand to some extent and provides a level playing field in the market.

The common thread that wove stocks like Himachal Futuristic, Global Tele-Systems, Zee Telefilms, Satyam Computer, Sterlite, Aftek Infosys, Silverline Technologies, DSQ Software, Pentamedia Graphics and Ranbaxy has now been snapped. This is after the big bull, the one-man army behind the counters, lost credibility after a barrage of negative reports appeared in the press.

According to brokers, another reason for the rapid decline in turnover was due to the sudden slump in the trades and turnover volumes in scrips like Himachal Futuristic, Global Tele and DSQ Software which until then were always at the top of the totem pole for the specified list. These stocks careened on a downhill course to hit the maximum lower limit of 16 per cent and thus traded turnover on the bourses started to shrink.

The three stocks were operator-driven stocks as volatility and liquidity in these stocks attracted them like bees to honey.

Brokers say that only after Sebi allows short selling in the markets will trading volumes climb back to their previous levels. Dealers also contend that day traders have disappeared from the markets for the time being.

Markets safe: Mehta

BSE president Dina Mehta today asserted that the capital markets were “safe” and that there was no payment problem.

The BSE president told reporters soon after her meeting with finance minister Yashwant Sinha to discuss the situation in the wake of bear hammering that the capital market suffered, days after the presentation of the Union budget.

This was Mehta’s first meeting after she took over as president.

Mehta, however, declined to comment on the volatility of the stock markets.


Calcutta, March 12: 
The pay-in liability on the Calcutta Stock Exchange (CSE) is now estimated at Rs 250 crore for the settlement number 149, down from Rs 326 crore in previous settlement ended March 1.

Sources say the figure has come down because top market operators have taken a cautious approach in making fresh investments, particularly in the battered technology stocks.

However, the situation outside the bourse is more grim: Conservative estimates put the payment obligation in unofficial deals at over Rs 500 crore.

A payments crisis still looms as several top brokers have run out of money and have nowhere to borrow from. “The exact size of losses borne by the four leading brokers who delayed payments but it certainly runs into several crores of rupees,” sources said. The reluctance of most banks to pump in funds into the crisis-ridden market has made their predicament worse.

“The problems are growing by the day. No solution appears probable until the government intervenes directly,” a senior stock broker at CSE said.

Panic grips Lyon’s Range, the country’s third largest exchange. Brokers, spooked by the pounding in most top traded shares, are shying away from making fresh commitments. “Trading in a choppy market is suicidal. The hammering has spread to almost all top stocks,” the broker said.

The turnover, which reflects the sentiment on the bourse, dipped to Rs 265 crore on Monday. Buyers were not available even at quoted rates. The CSE 40-share index gyrated between 2024.34 and 1938.23 points, but finished the day at 1947.79.

Top CSE brokers are talking to major financial institutions, which hold the key to avert a payment crisis, sources said. Exchange authorities are enforcing the collection of margin deposits strictly to prevent a shortfall that could trigger a fresh payment crisis in the next clearing session.

More than 30 terminals belonging to brokers who have not paid their margin money have been ‘deactivated’ in the past few days.

The bourse has kept Sebi posted about the status of margin deposits and the action taken against errant brokers. Executive director Tapas Dutta said all steps are being taken to make the Calcutta Stock Exchange a safe place for investors. “If a payment crisis were to erupt again, we have adequate funds and securities to tide over it,” he added.


New Delhi, March 12: 
Atul Chandra, managing director of ONGC Videsh, may put in his papers very shortly protesting against the government move to appoint Subir Raha, director (personnel) of Indian Oil Corporation, as the chairman and managing director of Oil and Natural Gas Corporation.

Chandra has, in writing, sought reversion to the post of group general manager, a post below the level of director, which he held before he was elevated to the post of managing director of ONGC-Videsh. He is a director on the board of ONGC as well.

Chandra was a strong contender for the top post of ONGC, which will fall vacant after the present incumbent Bikas Chandra Bora superannuates on April 16.

However, he did not appear for the interview held on March 7 as he realised, belatedly though, that the government had somebody else in mind for the job.

Chandra stands to gain financially if reverted to the post of group general manager. He can then apply for the voluntary retirement scheme, an option he cannot exercise in the present post.

Bora is understood to have discussed the issue with Jauri Lal, director (personnel).

It is not known whether the government will allow him to go. Sources say Raha also holds him in high esteem.

Bora has already forwarded to the ministry of petroleum and natural gas Chandra’s proposal to upgrade ONGC Videsh into a schedule A company. If accepted, his post would also be upgraded to schedule A.

According to official circles, Chandra would be persuaded to stay as head of ONGC Videsh by upgrading his designation to schedule A. This can be done without upgrading the company. A similar arrangement was worked out in the eighties to accommodate major general S.C.N. Jattar as managing director of ONGC Videsh.

Bora has been backing ONGC Videsh to the hilt despite strong reservations of finance director Inder Nath Chatterjee. The present ONGC boss is also upbeat about the equity deals authored by Chandra.

It remains to be seen whether Bora’s successor shares the same perception about the role of ONGC Videsh.


Mumbai, March 12: 
The Reserve Bank of India (RBI) is believed to be considering a proposal to carry out an amendment in the Banking Regulation Act that will allow them to hold a majority stake in companies — like financial institutions (FIs).

The Act caps a bank’s equity exposure in a company at 30 per cent. Some of them have indicated that changes in the law are necessary to force a change in management when it emerges as one of the options to turn around a sick company.

These views emerged at a recent meeting of banks and financial institutions. A senior RBI official said the apex bank is weighing the pros and cons of various amendments which could be carried out in the Banking Regulation Act. He did not specify whether these include the removal of the 30 per cent ceiling on a bank’s investments in a firm’s equity.

However, there are reports of differences between bankers. Some say the notion that a change in management will discipline errant borrowers or help resuscitate a sick unit is unfounded, and the success rate in this direction is poor.

Sources here said a section of bankers is of the view that they should follow financial institutions, which had asked promoters of steel companies to pledge their entire stake with lenders. It is now felt that this should be the practice once an account turns into a non performing asset (NPA).

After the shares are handed over, lenders can set milestones to be achieved by borrowers within a time-frame. The progress in achieving then milestones could be monitored. If the promoters fail to achieve these goals, or fail to do so in the time limit given to them, lenders should be given the powers to change the management of the company.

The issue of changing errant managements comes at a time when the banking sector has been saddled with massive NPAs, which have grown from Rs 41,000 crore in 1996 to more than Rs 60,840 crore in the year ended March 31, 2000.


Calcutta, March 12: 
The Industrial Development Bank of India (IDBI) will submit its application to the Insurance Regulatory and Development Authority (IRDA) by April.

Addressing a press conference here today IDBI chairman S.K. Chakrabarti said, “M.P. Chitale & Company, which was appointed by us to conduct a study on our insurance foray has submitted its report. It is being examined by Y.P. Gupta, who has been appointed by us as an advisor. We expect that by April 30 we will be in a position to submit our application to IRDA.”

However, the financial institution has yet to decide on its area of insurance operation—life or general.

IDBI is also serious about its plan to transform into a universal bank. It has appointed Boston Consulting Group to work out the roadmap for universal banking and its implementation, according to Chakrabarti.

The institution has also appointed KPMG to choose a partner for its wholly-owned subsidiary IDBI Intech which is into system integration, call centre operations and e-commerce services. The firm will also prepare a technology map for the subsidiary. The paid-up capital of the company is Rs 50 crore.

In order to finance the film and entertainment industry IDBI has worked out a scheme which will be placed before the executive committee on March 16.

Chakrabarti was in the city to address the members of Bengal Chamber of Commerce and Industry on emerging financial scenario in the country.

He said, “The new millennium will see banks and FIs moving towards universal banking. The traditional working capital financing is no longer banks’ major lending area while FIs are no longer dominant in term lending. The risk of one- product dominance is being realised by both banks and FIs and they need to diversify their product portfolio. The aim of universal banking is to provide all financial needs of a customer under one roof. The leaders in the financial sector will be aiming to become a one-stop financial shop.”

Commenting on the the corporate debt restructuring cell to help companies to reorganise their debt repayment schedule, Chakrabarti said IDBI had been appointed as the nodal agency. “Reserve Bank of India is in the process of finalising the framework of the cell,” he said.

IDBI has evolved a finance scheme for the entertainment industry in consultation with the RBI, ministries of Information & broadcasting and finance and the film industry.

Chakrabarti feels that institutionalised availability of funds would result in substantial reduction in film costs besides resulting in sustained exponential growth.

The draft report has laid out some broad guidelines for films to be eligible for assistance.

Chakrabarti said that the borrower should be a corporate entity, promoted by reputed producers and backed by established directors and other technicians. “Assistance will be provided for 50 per cent of the estimated budget of the film. The debt-equity ratio should not exceed 1:1. The promoter’s contribution will be not less than 30 per cent.” The loan will be for a period of not more than two years and the prevailing interest rates will be applicable. The film would require to be comprehensively insured. A committee of experts will be set up to determine the amount of financial assistance to be provided by the institution.


Calcutta, March 12: 
Dunlop India Ltd (DIL) today filed a writ petition in the Calcutta High Court against the Board for Industrial and Financial Reconstruction (BIFR) for not clearing the rehabilitation scheme which is pending for more than a year. The company also filed a writ petition against Industrial Development Board of India, the operating agency. A company spokesperson said BIFR has remained silent and is waiting for United Bank of India and State Bank of India to clear the scheme.

The banks, it may be mentioned, have maintained that until M.R. Chhabria, the promoter, brings back Rs 100 crore which had been siphoned off they will not clear the rehabilitation scheme. They also expressed their lack of confidence in Chhabria’s management.

According to the bankers, if the rehabilitation scheme was cleared then their exposures to Dunlop will become unsecured as asset sale was a major funding proposal in the plan.

The company, however, claimed that Chhabria had already pumped in Rs 32 crore, including letters of credit worth Rs 6 crore in the past one year.

The company spokesperson further claimed that Chhabria will infuse fresh funds to the tune of Rs 15 crore. “Infusion of this money will take promoters contribution to Rs 47 crore,” the spokesperson added.

However, the company is silent about roping in Japanese tyre major Sumitomo Rubber Industries as a strategic partner.

On January 15, Dunlop president M.D. Shukla announced with much fanfare that Sumitomo had evinced interest in the company and a deal would be clinched within a month. But almost two months have passed and the company is yet to finalise any deal.

Though Dunlop had resumed operations for over a year at both its Sahagunj and Ambattur factories, the employees are not getting their salaries on regular basis. They have juts received salaries for December.

The management, in a release, said after the infusion of Rs 32 crore, which gave a breather to the company, they had expected a positive attitude from all stakeholders, including banks.

“We have now sought the help of the judiciary to prevail upon BIFR and IDBI to quickly sanction the draft rehabilitation scheme,” the company spokesperson said.

The next hearing of BIFR is scheduled to take place on March 28.


New Delhi, Mar 12: 
The government has cleared 19 foreign direct investment (FDI) proposals worth Rs 217 crore, including Norcool India’s Rs 97 crore and Bharti Duraline’s Rs 60 crore plans.

Norcool will invest the amount, which will be brought in by converting loan into equity, to produce refrigeration units; Bharti Duraline will become a 100 per cent foreign-owned company after this approval, to manufacture telecommunication products, an official statement said.

While Radiant Group was given the approval to bring in Rs 23 crore FDI for software development, UCB SA of Belgium will invest Rs 17.29 crore to again increase foreign holding to 100 per cent from the present 50.99 per cent, it said.

Analjit Singh-promoted Max India has been granted the permission to bring i Rs 2.56 crore to manufacture bulk drugs so that foreign equity holding in the company goes up by 21 per cent to 95 per cent.

The government also cleared telecom major RPG Cellular’s proposal to invest Rs 9.3 crore, which will be invested in group companies and in operating cellular services. In yet another one by the RPG Group, Rs 2.1 crore will be brought into India for financing telecom projects via RPG Communications Holdings.

In the only advertising industry proposal, Ambience & Arcy Advertising Pvt Ltd was given permission to hike foreign equity by 23 per cent to 74 per cent with Rs 70,000 FDI for the purpose of advertising, media planning and corporate communications.

Also, Alfa Laval India will bring Rs 2.47 crore FDI to manufacture flow equipment and thus increase foreign equity holding to 100 per cent.

Two proposals for software development were cleared apart from Radiant; New Horizons Cybersoft will conduct equity swap issue of two million shares amounting to Rs 8 crore, while IT Microsystems India will increase foreign holding fractionally to bring in Rs 1 lakh FDI.


New Delhi, March 12: 
Dabur Foods today raised the prices Real Fruit Juice, its flagship brand, and relaunched it in a new ‘spin-cap’ package. The revision has been made even as the budget scrapped the 16 per cent excise duty on processed foods made from fruits and vegetables. The prices of one-litre Real mango, orange and tomato juice packs have gone up from Rs 58 to Rs 60; mixed fruit and pineapple juices will cost Rs 68, up from Rs 65. However, the prices of 200-millilitre orange, pineapple and mango packs have been reduced by Rs 2; orange and pineapple will be available for Rs 13 while mango cost Rs Rs 10.

“The price cut on 200-ml packs has been in line with the budget. In the case of one-litre packs, the price was decided on the basis of our expectation that the budget would cut excise duty by 8 per cent. Now that there is a full exemption, prices may be reduced later,” Dabur CEO Amit Burman said.


Calcutta, March 12: 
RCI, the world’s largest timeshare vacation exchange with more than 85 per cent of the global market, is diversifying into travel services.

With operations in 94 countries, a space bank of 3,600 resorts and seven million clients last year, RCI’s global owner, Cendent Corporation, has identified ticketing, visa facilitation and car facilities for timeshare members as big revenue spinners.

While RCI subsidiaries in many countries have already become IATA members, RCI India has applied for an agency licence and is gearing up to offer travel packages to over 40,000 members in the country.

RCI India managing Raju Shahani said a separate company, RCI Travel Pvt Ltd, has been floated to pursue new business opportunities as part of its global initiative.

The trend for vacationing at resorts and hotels abroad is catching on, Shahani said, adding international trips accounted for 30 per cent of the trips made by RCI members in India in late 90s.

RCI now plans to rope in companies as timeshare members.



Foreign Exchange

US $1	Rs. 46.56	HK $1	NA
UK £1	Rs. 68.27	SW Fr 1	Rs. 27.25*
Euro	Rs. 43.33	Sing $1	NA
Yen 100	Rs. 38.60	Aus $1	NA
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4460	Gold Std(10 gm)	Rs.4340
Gold 22 carat	Rs. 4210	Gold 22 carat	Rs.4010
Silver bar (Kg)	Rs. 7500	Silver (Kg)	Rs.7490
Silver portion	Rs. 7600	Silver portion	Rs.7495

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