Sebi bars bourse office-bearers from trading
Sebi begins probe at crisis-free CSE
RBI seeks supersession of Madhavpura board
Sensex rides 95 points on FII support
Confusion over fresh valuation of UTI Bank, GTB merger
Paswan promises 3.5% tele-density by March-end
ICICI sells 5% Bank stake to Pru
French firms to recruit Indian interns
IA trims flab, to lease 2 planes
Foreign Exchange, Bullion, Stock Indices

 
 
SEBI BARS BOURSE OFFICE-BEARERS FROM TRADING 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, March 15: 
The Securities and Exchange Board of India (Sebi) today barred stock exchange office-bearers from proprietary or personal trading and asked other broker-directors to disclose details of their personal deals.

The move, part of a package, were announced after the regulator held a board meeting here to discuss ways to prevent a repeat of last week’s bear rampage. BSE directors are already being probed for their role in the market mayhem.

Sebi chairman D. R. Mehta told reporters that the code of ethics, which won an in-principle clearance from the board today, forbids proprietary trading by presidents, vice-presidents and treasurers of bourses, either for themselves or for their dependants, as long as they remain in office. He refused to say whether the BSE board members suspended so far would be reinstated if they relinquished trading.

The top 200 top scrips will come under on-the-spot compulsory rolling settlement by July 1. Exchanges have been asked to ensure that brokers keep a percentage of their gross, not net, trade as margin money from March 31. This will make it tougher for broker cartels to manipulate stock markets.

The Sebi chief said exchanges have been accepting self-certification so far, but a new software to be introduced will enable them to carry out compulsory checks.

Along with the curbs came new disclosure requirements for brokers and other market intermediaries, revised norms for public issue of debt, half-yearly disclosure standards for mutual funds and rules to check multiple and bogus public-issue applications.

Brokers or market intermediaries who offer advice on investment in shares will have to disclose whether they, or their family members, have an interest in the firms they recommend.

Firms that do not have their shares listed can come out with debt issues. The facility, limited to infrastructure firms so far, was enlarged after the Sebi board agreed the market was mature enough to deal with it. The curbs were clamped when the market regulator was swamped with complaints from small investors of firms not repaying debt.

However, the board clarified that debt issues will have to carry an investment-grade rating; for amounts above Rs 100 crore, two agencies will be have to confirm the credit rating.

Before raising debt, the promoters will have to bring in 20 per cent of the project cost as equity contribution, and hold on to for at least three years from the date of the debt issue. Where the debt-size is more than Rs 100 crore, the promoters will have to chip in with at least Rs 100 crore before the issue opens, and pay the balance on a pro rata basis.

Mutual funds have been told to disclose unit capital, reserves, dividend payouts, NAVE swings over six months, ratio of management fees and recurring expenses to net assets, investments in and payments made to associate firms.

Mehta said at least top 200 scrips from the ABM and BLESS systems will be brought under compulsory rolling settlement from July 1, up from the 163 that exist now on a voluntary basis. The move is tune with finance minister Yashwant Sinha’s assurance in Parliament a few days back.

   

 
 
SEBI BEGINS PROBE AT CRISIS-FREE CSE 
 
 
FROM OUR BUREAUX
 
March 15: 
A three-member team from the Securities and Exchange Board of India today started scrutinising the past two weeks’ trades at the Calcutta Stock Exchange (CSE) even as the bourse successfully wrapped up its pay-in for the troubled settlement number 149 with Unit Trust of India and other financial institutions stepping in to stave off a payment crisis.

Sebi’s team will try to ascertain whether there were any irregularities that snowballed into a potential crisis at the bourse.

In Delhi, however, Sebi chairman D.R. Mehta refused to say whether the watchdog was investigating any of CSE’s broker directors for their role in almost precipitating the crisis.

Speaking of Sebi’s probe into the Mumbai bear cartel which had sent bourses crashing, Mehta said 20 entities were being investigated and a preliminary report could be expected by mid-April.

He also said he would be hearing the Harshad Mehta case on March 30. The scam tainted broker was accused of ramping the shares of BPL, Videocon and Sterlite in mid-1998.

Mehta demanded fresh powers for Sebi including judicial powers that would empower it to attach the properties of those held guilty of misconduct. He also wanted Sebi to be conferred powers to hike penalties. Currently penalties are limited by a Rs 5 lakh ceiling. Sebi would like penalties to be in multiples of the amount involved in a scam.

The spectre of a payments crisis on the CSE receded after the FIs picked up a large chunk of the Rs 230 crore pay-in commitment at CSE. The exchange also invoked the bank guarantees of a few brokers. Unconfirmed reports say the bourse is likely to suspend a few brokers including Harish Biyani for defaulting on payments.

   

 
 
RBI SEEKS SUPERSESSION OF MADHAVPURA BOARD 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 15: 
The Reserve Bank of India (RBI) has approached the Gujarat government, seeking supersession of the board of Madhavpura Mercantile Cooperative Bank and the appointment of an administrator. The apex bank had already freezed the banking activities of Madhavpura following a payment crisis.

The move comes immediately after RBI filed a criminal suit against the bank at the Ahmedabad Metropolitan Court yesterday for making wrong disclosures and statements as well as not adhering to assurances given to the central bank.

Speaking to newspersons here today, RBI deputy governor Y.V. Reddy said the central bank would extend support to the administrator, if and when appointed.

According to Reddy, no cooperative bank has approached RBI seeking assistance. He assured that there is sufficient liquidity within the system to take care of Madhavpura-type crisis.

Reddy, who was speaking to the reporters after addressing the annual general meeting of Indian Banks Association, said the exposure of banks to capital market activities, including lending to broking firms, was within the stipulated five per cent norm.

“As per the information with RBI, there has been no violation of the exposure limit by banks,” he added.

   

 
 
SENSEX RIDES 95 POINTS ON FII SUPPORT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 15: 
Despite the choppy political climate in the Centre, the Bombay Stock Exchange (BSE) sensex stood firm and gained 94.83 points to close at 3819.86 today. The recovery that continued for the second day in succession was due to a voracious buying binge by foreign institutional investors (FIIs).

With today’s gain, the sensex has gained 279 points or 8 per cent against Tuesday’s close.

While the traded volume of business remained low at Rs 1704.07 crore, it was marginally better than yesterday’s turnover of Rs 1651.99 crore.

The last hour of trading saw demand in old economy and tech counters picking up, which resulted in the sensex touching the day’s high of 3824, up by 99 points against the previous close. Opening weak at 3666.30, the sensex later gradually moved upwards to the intra-day high of 3823.78 and closed with a net rise of 94.83 points or 2.55 per cent at 3819.86 as against yesterday’s close of 3725.03.

The markets were bolstered by the fact that FIIs have been consistent net buyers since March 2, recorded as ‘Black Friday’ on the bourses, with heavy net investments of about Rs 1235 crore till March 13. Their fresh support right from the start of session not only forced bear operators to cover short sales positions but also attracted local institutions and bull operators to enter into fresh commitments.

Even the fresh downslide on Wall Street, coupled with the threat of resignation by Trinamool Congress chief Mamata Banerjee and withdrawal of her party’s support to NDA government if the resignation of defence minister George Fernandes was not accepted, failed to deter players from taking up positions.

FIIs pumped in heavy funds in Indian bourses, withdrawn from the global markets in the light of economic recession in the US, which has pressurised technology stocks in particular and others in general, dealers said.

FIIs focussed their attention on technology, media and telecom stocks, which were at the lowest levels.

Among the 99 gainers in the specified list, Global Telesystems, SSI and Aptech were locked in the 16 per cent upper price band, besides twelve others which finished above 8 per cent.

Himachal Futuristic rose by Rs 26 to Rs 219.85, Infosys Tech by Rs 169.90 to Rs 4878.75, Satyam Computer by Rs 15.75 to Rs 246.50, DSQ Software by Rs 12.20 to Rs 138.15, Wipro by Rs 86.30 to Rs 1679.60, ACC by Rs 7.45 to Rs 164.95 and Cipla by Rs 25.90 to Rs 1000.35,.

Surveillance director

Rajnikant Patel has been appointed director-inspection and surveillance of BSE. The appointment comes at a time when the exchange is battling a crisis of confidence after leakage of the alleged conversation between a surveillance department official and the former BSE president Anand Rathi, giving details of market operations of various players.

Patel has worked with many premier institutions like Reserve Bank of India and BNP Paribas among others. He comes with more than 15 years experience in inspection and compliance in the field of banking and financial services. Prior to joining the BSE, he was in-charge of inspection and compliance at BNP Paribas.

   

 
 
CONFUSION OVER FRESH VALUATION OF UTI BANK, GTB MERGER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 15: 
Confusion persists over the move by UTI Bank to seek a fresh valuation of the merger with Global Trust Bank, with the latter indicating to the stock exchanges that it has not received any official communication about the appointment of Deloitte, Haskins & Sells in this regard.

Unconfirmed reports say differences have cropped up between the two banks with GTB not pleased with Deloitte’s appointment.

In a communication to the stock exchanges, GTB said, “No official communication has been received from UTI Bank about the appointment of any agency to carry out a fresh valuation.”

When contacted, senior officials of Global Trust Bank denied that there was any differences between the two banks. UTI Bank also informed the exchange that there were no differences between the banks and denied reports that it had threatened to pull out of the merger.

UTI Bank sources here said that the valuation report of Deloitte is likely to be released shortly.

Meanwhile, the RBI is awaiting the final report of the Sebi which is investigating the issue of price manipulation in the Global Trust scrip.

A preliminary report has established there was prima facie evidence of price rigging. “We will wait for the detailed report from Sebi before making any announcement,’’ an RBI spokesperson said.

In Delhi, Sebi’s senior executive director L.K. Singhvi said, “We had given prima facie indication to the RBI of market manipulation in the GTB scrip price during October-December 2000. Detailed investigations are on.”

   

 
 
PASWAN PROMISES 3.5% TELE-DENSITY BY MARCH-END 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 15: 
Union communications minister Ram Vilas Paswan today promised to achieve 3.5 per cent tele-density target by the end of this month. He ruled out further disinvestment in Videsh Sanchar Nigam Limited or Mahanagar Telephone Nigam Limited.

Paswan said efforts have been made to increase the tele-density from about 1.5 per hundred in the last 50 years to 3.5 telephones per hundred.

Inaugurating the one-day seminar, ‘Get Connected III on the Telecommunications’ focusing on education, training and research, organised by the British Council, Paswan said: “We are presently adding 1,000 telephones every hour in the country. The future is full of action and accelerated growth is anticipated.”

Outlining the recent telecom policy initiatives by the government, Paswan said that the Convergence Bill will be introduced in the current session of the Parliament. “The exploding demand for telecom and communication facilities in rural areas may require fresh appraisal after some time.”

The minister suggested setting up of a specialised IIT type institution in India to act as a centre of excellence. “Such an institution could impart training and upgradation of skills to meet the growing requirements of the private and public sectors,” said Paswan.

Referring to the Arthur Anderson report, which says, there is considerable scope of co-operation between Indian and the UK firms, Paswan said, “New partnerships should be created between them to match the growing demand for skilled people in the Indian telecom sector and also for other countries.”

He said that Indian institutions can get British experts for imparting specialised telecom training.

Presiding over the function, the British High Commissioner, Sir Rob Young said that the potential synergy between Indian and British firms offer huge opportunities for partnership to meet the demand in the telecom sector.

Delivering the key-note address, Bharti chairman Sunil Mittal said there is a need to enhance financial support to Indian technical institutes.

   

 
 
ICICI SELLS 5% BANK STAKE TO PRU 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 15: 
ICICI Ltd has sold 4.99 per cent of its stake in ICICI Bank to Prudential Assurance Company, a foreign institutional investor, for an average price of Rs 170 per share.

While total consideration for the deal is reported to be around Rs 186.86 crore, ICICI said it has realised a gross capital gain of Rs 173 crore from the transaction. ICICI’s stake in the bank now stands at 50.60 per cent of the latter’s equity capital and plans are on to further offload around 3 per cent to a foreign institutional investor in the current fiscal year, which will bring down its stake to 47 per cent. Following this, ICICI Bank will cease to be a subsidiary of ICICI.

Speaking to The Telegraph, senior ICICI officials said the financial institution now intends to complete the process of bringing down its stake in ICICI Bank to 40 per cent by the year 2002.

The issue of bringing down its stake by another 7 per cent is proposed to be either through ‘another acquisition’ or offloading to another investor. Current RBI regulations stipulate that promoters of private banks must have a maximum stake of 40 per cent.

Commenting on the deal, ICICI said it had sold the 4.99 per cent (10,992,000 equity shares) to Prudential and the sale was carried out on the NSE at an average price of Rs 170, at a premium of about 13 per cent to the average closing share price of the last 6 months and a premium of about 4 per cent to the average closing share price of the last three days.

A press statement further explained that at the time of granting the banking license to ICICI Bank, the RBI had specified that ICICI will gradually have to reduce its holding in the bank to 40 per cent. One of the alternatives for ICICI Bank was to issue fresh equity capital to dilute the parent’s holding. However, as ICICI Bank has a capital adequacy ratio of 14.6 per cent, it does not require fresh capital.

ICICI had since reduced its holding in the bank over a period of time from 100 per cent to 55.59 per cent following the offer sale by ICICI in 1997, issue of ADS in 2000 and the merger of Bank of Madura with ICICI Bank.

ICICI Bank officials here added that after the bank would cease to be a subsidiary of ICICI, it will be consolidated as per equity method of accounting for ICICI’s US GAAP consolidated financial statements. ICICI has asked the RBI to permit completion of the balance dilution by the end of the financial year 2001-02. “Given the consolidation opportunities in the Indian banking sector, ICICI Bank will consider selective acquisition opportunities after careful assessment,” the statement added.

On the BSE today, the ICICI Bank scrip closed at Rs 185.65 after witnessing some amount of volatility. The scrip had opened at Rs 165.40 and shot to a day’s high of Rs 194 and touched a low of Rs 157.45. On the other hand, the ICICI scrip finished at Rs 94.90 after opening at Rs 90 and rising to a day’s high of Rs 96.20.

   

 
 
FRENCH FIRMS TO RECRUIT INDIAN INTERNS 
 
 
BY A STAFF REPORTER
 
Calcutta, March 15: 
French companies will take in young Indian professionals as interns under an Indo-French Exchange Programme.

As many as 50 French companies have so far responded to the programme initiated by the French embassy in New Delhi, for providing exposure about their style of management and technology to young Indian professionals, French ambassador Bernard De Monteferrand said here today.

Addressing a meeting organised by the Confederation of Indian Industry (CII), eastern region, De Montferrand said almost all top French companies have responded favourably to the programme so far.

Under the programme, fresh graduates and young executives in technical and management disciplines would be taken as interns for three to six months, depending on the size of the companies. At the end of the tenure, they could even be absorbed by these companies, Montferrand noted.

The ambassador said that almost all first-rated companies have been expanding their operations in India. This should encourage other French companies to follow suit, he said.

Montferrand added the French wine industry was also preparing to enter the Indian market in a big way after quantitative restrictions are removed in April.

French wine groups have also initiated a joint study on promotion in the Indian market and have drawn up plans to build up awareness amongst Indian consumers and also to help local trade market French brands.

   

 
 
IA TRIMS FLAB, TO LEASE 2 PLANES 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, March 15: 
Indian Airlines today abolished five director-level posts as part of an exercise to cut flab and decided to add two leased Airbus 320s to its ageing fleet.

The decisions were apparently prompted by the sombre financial figures before the company. The budget estimates for 2001-02 indicate a net loss of Rs 251.50 crore due to the stiff increase in fuel and other input costs, the statement said, adding that the company is likely to end the current financial year with a net loss of Rs 177.25 crore.

“The airline is working out a series of measures to cut down losses substantially,” a statement issued by the airline said. The decisions taken by the airline’s board of directors here today as part of this resolve, scrapped the posts of directors of projects, civil engineering, medical, APU and short-haul operations. At the same time, six general manager level posts too were struck off the rolls.

The board cleared the induction of two A320s which will commence operations by winter this year, when air traffic peaks. The airline currently has 52 aircraft, many of them over 15 years old.

The airline board also approved the capital budget estimates and the revenue/expenditure budget estimates for 2001-02, which target an operating revenue of Rs 3922 crore, as against revised budget estimates of Rs 3758 crore for the current year.

The airline is also budgeting increase of the load factor to 67.6 per cent in 2001-02 as against the estimates of 65.7 per cent this year, an about three per cent increase, a statement said.

The number of passengers expected to be carried by the airline is estimated at 6.127 million during 2001-02 against the estimate of 6.007 million passengers during the current year, it said.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.63	HK $1	Rs.  5.90*
UK £1	Rs. 67.40	SW Fr 1	Rs. 27.30*
Euro	Rs. 42.46	Sing $1	Rs. 26.05*
Yen 100	Rs. 38.75	Aus $1	Rs. 22.75*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs. 4350	Gold Std (10 gm)Rs. 4270
Gold 22 carat	Rs. 4105	Gold 22 carat	Rs. 3950
Silver bar (Kg)	Rs. 7400	Silver (Kg)	Rs. 7405
Silver portion	Rs. 7500	Silver portion	Rs. 7410

Stock Indices

Sensex		3819.86		+94.83
BSE-100		1825.07		+50.18
S&P CNX Nifty	1217.15		+22.95
Calcutta	 124.12		+ 1.94
Skindia GDRNA	 613.67		- 5.35
   
 

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