Political flux weakens sensex
Jalan, Sinha in crisis talks
Banks hit as bourse invokes guarantees
Maharashtra,Enron in fresh standoff
Bank exposure norms to be reviewed
NTPC pays Rs 391 cr for SAIL power plants
IDBI cuts lending rates
Powdered soft drink Tang from Kraft Foods
Trai bounty for cellphone users
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 16: 
The rally on Dalal Street ran out of steam today as skittish investors, counting the skeletons that kept tumbling out in Tehelka’s bribery bombshell, scurried out of shares to escape the consequences of a possible government ouster.

Pivotals trod water in the post-noon session, reversing early gains, as the markets braced for Prime Minister’s late-evening television address to the nation over the revelations of sleaze.

Foreign institutional investors (FIIs) reposed their trust and embarked on a shopping spree in the much-mauled technology shares, but local institutions preferred to wait and watch. FIIs were believed to have made net purchases of Rs 292 crore.

The market saw signs of looming political instability in the Samata Party MP Prabhunath Singh’s demand that the principal secretary to the Prime Minister, Brajesh Mishra, and the officer on special duty in the PMO, N K Singh, be asked to quit.

This kept speculators and domestic operators — many of whom lost their shirts in the recent market mayhem —from entering into fresh commitments ahead of a weekend in which the government could be pushed to a razor edge.

Opening weak at 3752.36, the 30-share rallied smartly to its day’s high of 3867.47, raising hopes of further recovery in shares. However, it met with a strong resistance and dropped to a low of 3696.52 before closing at 3745.74 against Thursday’s finish of 3819.86 in a 74.12-point, or 1.94 per cent, decline.

Meanwhile, Sebi said the curbs imposed on short sales in client transactions and proprietary deals would continue.

Rupee weaker

Fears over the fate of the government sent the rupee to 46.70/71 in a seven-paise tumble over its previous finish of 46.63/6350. Dealers said the demand for greenbacks came from banks and companies nervous about the political storm that showed no signs of blowing over.


New Delhi, March 16: 
Reserve Bank of India (RBI) governor Bimal Jalan today met finance minister Yashwant Sinha to discuss, among other issues, the ongoing crisis on the bourses as well as a probe into the proposed merger of Global Trust Bank and UTI Bank. Sources in the finance ministry said the meeting had to be rushed through as the finance minister had to leave for an emergency meeting of the Cabinet on the ongoing political crisis.

Jalan informed Sinha about the preliminary report submitted by the Securities and Exchange Board of India (Sebi) on price manipulation of GTB shares before the merger and also apprised him of the central bank’s own initial findings.

The Reserve Bank had asked the market watchdog to examine allegations of price rigging in GTB scrips just before the merger, after studying the swap ratio fixed for the deal. Jalan is also reported to have discussed the ongoing market crisis and the possible role played in it by FIIs.


Calcutta, March 16: 
The payment crisis that has engulfed the Calcutta Stock Exchange threatens to hurt the banking industry with the bourse invoking the bank guarantees that were furnished by the brokers who have defaulted on their payments. The banks had issued the guarantees on the strength of the shares that the brokers had pledged with them. With the slump in the market, the value of those shares has eroded considerably and the banks will not be able to recover the amount of the bank guarantees even if they dispose of the shares.

CSE has asked HDFC Bank and IndusInd — the two banks that have provided most of the bank guarantees to the brokers — to pay up Rs 20 crore and Rs 15.75 crore respectively in order to meet the pay-in shortfall that was put at around Rs 48 crore till Friday morning.

Several public sector banks including the United Bank of India have been asked to release funds on account of the bank guarantees they had issued. While confirming receipt of CSE letter in this regard, UBI refused to say how much money it would have to release. Sources, however, estimated the amount at over Rs 15 crore.

While it is not clear whether CSE has been able to garner funds to meet the entire pay-out commitment, insiders say there is still a gap of Rs 23 crore. “However, it is not a very big amount and the exchange will be able to resolve the crisis within an hour or two,” a senior CSE member said. CSE executive director Tapas Datta later said the process for the pay-out has been started and would be completed by tomorrow.

The executive director however refused to comment on the strong rumours that CSE has been forced to declare a group of senior brokers including Ashoke Poddar and Harish Biyani defaulters.

Two Sebi directors supervised the pay-in and pay-out on the CSE throughout the day. Officials said because of the crisis, the banks would have to bear a combined loss of at least Rs 500 crore on accounts that include advance against shares and bank guarantees against securities.


New Delhi, March 16: 
The war of words between Dabhol Power Company and the Maharashtra government escalated today with the Enron subsidiary repudiating the latest claims made by the state.

The Maharashtra government today claimed that DPC owes the state some Rs 401 crore penalty towards inadequate supply of electricity and asked the Union government not to make any counter-guarantee payment to US power major Enron.

Dabhol Power had demanded Rs 102 crore from the Centre claiming that Maharashtra had defaulted on its state electricity board’s December payment.

Top state government officials who met finance secretary Ajit Kumar today cautioned the Centre against paying this money because Maharshtra’s claim on the power utility was still pending.

Maharashtra officials said DPC had supplied a mere 154 mw of power against the contracted 657 mw to MSEB between October last year and January this year. This, they explained, was a violation of the contract they had signed with Dhabol and the power utility was liable to pay the money towards power not supplied.

Reacting to the charges, a DPC official said the company had already conveyed its position. “We reiterate that MSEB is apparently looking for technicalities and raising frivolous claims in an attempt to avoid payment of amounts legitimately owed to DPC.”

“If we are unable to resolve this amicably it will be resolved by arbitration as required by the power purchase agreement. We are also disputing any attempts by MSEB and their guarantors to avoid paying the December invoice and have already communicated this to MSEB, Maharashtra government and the Government of India.

Maharashtra government officials, however, did not comment on Enron’s reported move seeking international arbitration on the payment imbroglio.

The Maharashtra government had already asked the Centre to take over distribution of power generated from the Dabhol power project, complaining that the tariff charged is too high. If this is accepted, central power utilities such as the National Thermal Power Corporation or Powergrid Corporation would be asked to buy up Dabhol’s power instead of the Maharashtra State Electricity Board.


Calcutta, March 16: 
The Reserve Bank of India is actively considering some changes in the norms governing banks’ investment in the capital markets.

The central bank of the country has decided to call a meeting of the expert committee on bank financing of equities within a week’s time to review the present norms and incorporate amendments.

A top-level RBI official said from Mumbai that some changes are expected to come. “RBI is currently taking a relook at the existing norms. It has already directed all banks to submit data on their capital market exposure by this week. This will be reviewed by the committee in another seven to ten days time.”

The committee on on bank financing of equities was set up by the RBI and the Securities and Exchange Board of India (Sebi) last year. It proposed that banks be allowed to invest a maximum of five per cent of their outstanding advances in equity shares, convertible debentures and mutual funds. This was later incorporated in the mid-term credit policy 2000-01.

Several banks, Punjab National Bank, Allahabad Bank and some others have already given their reports to RBI.

State Bank of India, however, claimed that its exposure to stock brokers and primary dealers is not significant. “We have more exposures in loans given to individuals against shares,” a senior SBI official from Mumbai said.

Bankers said in first week of this month, the central bank sought an “instant” report on banks’ exposures in bonds/debentures/preference shares and equity shares issued by public sector undertakings and the corporate sector.

“Later, in the second week they have asked for a detailed report on the banks’ exposure in the capital markets,” they further informed.

Bankers said there are clear indications that RBI will come up with some measures to further tighten the banks exposure in the capital markets.

There has been an 8 per cent increase in the banks’ exposure to the capital markets this year. Total investment by banks in bonds/debentures/preference shares issued by private companies rose to Rs 24,751 crore on February 23, 2001, from Rs 22,915 crore in March 24, 2000.

Further, banks’ investments in equity shares issued by public sector undertakings and private companies rose to Rs 3,198 crore on February 23 this year from Rs 2,841 crore on March 24 last year..

In the same period, total bank credit has risen by Rs 68,662 crore from Rs 4,35,958 crore to Rs 5,04,621 crore.

RBI, however, feels that this is not at all alarming. An RBI spokesperson said the total exposure is much below the stipulated ceiling of five per cent of total outstanding credit.

A section of the bankers feel the present turmoil in the stock market will soon settle down. “But the government should come out with some stringent norms to curb speculative trading,” they said.


New Delhi, March 16: 
Loss-making Steel Authority of India Ltd (SAIL) today concluded the power plant deal with National Thermal Power Corporation (NTPC). SAIL sold half of its shares at the two captive power plants in Durgapur and Rourkella to NTPC for Rs 391 crore.

Talking to newspersons, SAIL chief Arvind Pandey said, “NTPC will run the new entity, SAIL Power Supply Company. We will buy power from the new company at cost plus 16 per cent rate of return.”

Though, with this deal, SAIL can manage to shore up its bottomline for this fiscal, the running cost for these two plants will go up substantially for the steel giant. Till now, SAIL was buying power at cost The two power plants have a combined capacity of 240 megawatts.

Pandey said the new power company will, eventually, take over its other captive power plants at Bhilai and Bokaro. This means the state-owned steel company will have to foot substantial power bills in future.

The sale of these assets, along with Vizag and IISCO steel plants, is part of a restructuring process drawn up by McKinsey for SAIL.


Mumbai, March 16: 
Following the trend set by rival ICICI Ltd, Industrial Development Bank of India (IDBI) today brought down its lending rates by 50 basis points each. Accordingly, the minimum short-term lending rate has been reduced to 12 per cent and the minimum term lending rate has been pegged at 12.5 per cent.

Interest rates on individual loans would be fixed within a band of 3.5 per cent over MTLR/MSTLR depending on the risk perception, tenure and purpose of the loans in each case, IDBI said in a release here.

With IDBI cutting its rates, almost all banks and financial institutions have slashed either their lending or deposit rates after finance minister Yashwant Sinha, in this year’s budget, announced a 150 basis points reduction in interest rate on small savings. However, IFCI is yet to announce any reduction in its lending rates.

On March 14, ICICI announced a downward revision in its prime lending rates across the maturity spectrum by 50 basis points to 12.50 per cent.

Funding films

The executive committee of IDBI today approved the final draft proposal on modalities for financing the Indian entertainment industry.

Finance would be provided for films, both Hindi and in regional languages, and television serials among others, IDBI sources said after the meeting here today. Corporate entities promoted by reputed producers, directors and technicians would only be entitled for finance and not individuals or proprietors, they said.

The promoters’ contribution would not be less than 30 per cent of the estimated budget and the loans would be for a short tenure of two to three years, the sources said and added that producers would also have to offer a personal guarantee.

All other modalities like quantum of assistance and the debt equity ratio were being worked out by IDBI’s legal department, they said.

A joint institutional committee was set up in October last under the leadership of IDBI to study various aspects of financing the Indian entertainment industry following a green signal from the information and broadcasting ministry.


New Delhi, March 16: 
Kraft Foods, one of the largest food companies in the world, today launched Tang, its powdered soft drink (PSD), in the country.

Kraft has also roped in Dabur for distribution of the orange flavoured drink. However, the distribution agreement is not exclusive.

Beginning with Delhi, Tang will be available at over 20,000 retail outlets in Mumbai, Chennai, Bangalore and Hyderabad by the end of April.

Initially, the product will be imported. Later, the company plans to start manufacturing Tang in the country by June, at its Rs 25-crore 6000-tonne facility being set up in Hyderabad by KJS India Pvt Ltd, a 100 per cent subsidiary of Philip Morris India. Kraft is a Philip Morris company, with more than 70 major food brands in its repertoire, including beverages, cheese, chocolates and confectionery.

Giuseppe Fritella, marketing manager KJS India, estimates a 3.5 million PSD market in India. “Our target is to capture 10 per cent of that market in the next one year,” he said. Tang will be available in a 500 gm refill pack priced at Rs 100, serving 25. Also to be launched is a sachet packet of 25 gms priced at Rs 7.

Ajit Sehgal, director KJS India, said the product, has been competitively priced.

Amit Burman, CEO Dabur Foods said it entered into the alliance as Dabur’s hundred per cent fruit juice, Real and Tang are not competing in the same market, rather, they complement each other.


New Delhi, March 16: 
The Telecom Regulatory Authority of India (Trai) has asked mobile operators to refund the migration fee and wireless planning charges (WPC) collected from subscribers.

According to the 1999 Telecommunication Tariff (fourth amendment) Order, service providers cannot charge a fee when subscribers switch tariff packages. The companies have been told that standard tariff packages of TTO 1999 already incorporates an element of WPC. Therefore, no additional charges can be recovered from subscribers.

The move follows complaints from consumer organisations, scrutiny of documents and meetings with operators to ascertain whether there had been a violation of the 1999 order.

The regulator has come across evidence in the papers furnished by mobile firms that customers would be required to pay a fee, in addition to a WPC levy, if they changed tariff plans. However, the service providers have told Trai that a fee for migrating from a tariff package to another and WPC charges remain a mere provision in their statements, and that they have not been actually levied.

Service providers have, therefore, been asked to delete all statements which mention that users would have to cough up these amounts. More important, they have been ordered to refund to their subscribers any sum that may have already been collected from them under these heads. A compliance report will have to be filed by April 15.

AirTel service down

Bharti Enterprises’ cellular service, AirTel, went off the air for more than two hours leaving subscribers in a jeopardy here in the capital today. One of the largest private cellular providers in the capital, Airtel had their links snapped in the busy Connaught Place, ITO, central Delhi and parts of south Delhi area.



Foreign Exchange

US $1	Rs. 46.71	HK $1	Rs. 5.90*
UK £1	Rs. 66.67	SW Fr 1	Rs. 26.90*
Euro	Rs. 41.77	Sing $1	Rs. 26.00*
Yen 100	Rs. 38.38	Aus $1	Rs. 22.70*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4325	Gold Std(10 gm)	Rs.4250
Gold 22 carat	Rs. 4085	Gold 22 carat	Rs.3930
Silver bar (Kg)	Rs. 7300	Silver (Kg)	Rs.7335
Silver portion	Rs. 7400	Silver portion	Rs.7340

Stock Indices

Sensex		3745.74		+4.12
BSE-100		1794.12		-30.95
S&P CNX Nifty	1193.55		-23.60
Calcutta	122.94		-1.18
Skindia GDR	636.90		+22.63

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