CSE faces Rs 67 cr pay-in shortfall
HFCL weighs share buyback
Sinha moves demand for grants worth Rs 37,640cr
Amara Raja under scanner
Probe shadow on BSE poll
Industry slams biodiversity Bill
Freeze on VRS payout at Balco
Foreign Exchange, Bullion, Stock Indices

New Delhi and Calcutta,March 19: 
A frisson of fear coursed through the Calcutta Stock Exchange on Monday as rumours of fresh suicides by bear-mauled brokers rippled through Lyons Range and the crisis deepened with estimates of a Rs 67 crore shortfall in the pay-in for the settlement number 150 which is slated for Thursday.

In Delhi, the finance ministry asked the Securities and Exchange Board of India to submit a report on the CSE crisis while Sebi officials in Mumbai said they were just waiting for the payment crisis to blow over at the country’s third largest stock exchange before pulling the plug on the CSE broker-directors.

There was panic on the street when a news agency put out a report saying the CSE authorities were planning to mortgage the exchange building to raise bank loans should the need arise. This was immediately denied by bourse president Kamal Parekh who had held an emergency meeting with brokers in the afternoon.

According to a senior CSE official, the payment shortfall in the next settlement is expected because the three errant brokers at the heart of the snowballing crisis — Dinesh Singhania, Ashoke Poddar and Harish Biyani — seem to be unable to stump up the cash to cover their deals. The three brokers do not have any securities or funds left with the exchange. CSE invoked the bank guarantees and fixed deposits of the three brokers to complete the official payout last Saturday. Still there was a gap of around Rs 33 crore.

“The total outstanding of these three operators will be over Rs 100 crore, which is way above the bourse’s existing corpus in the settlement guarantee fund,” sources said.

CSE has also decided to “expunge” some dubious trades during the period for which the settlement is due. This may reduce pay-in by around Rs 15-20 crore.

Waiting to pull the plug

Sebi officials said in Mumbai that they were deliberately delaying action against the “misgovernance of the CSE board” because they did not want to aggravate the crisis. “We are looking at various aspects of the matter (payment crisis) and we will take tough measures after some time,” officials said. “Any action against the exchange at this juncture might have a snowballing effect.”

“Our immediate concern is that the settlement number 150 at CSE goes through normally. We will wait for the pay-in on March 22 and the pay-out slated for March 23 to go through before we take any action,” they added.

On a day when the Sensex dipped 23.25 points at 3722.49 in skittish trading, the finance ministry asked Sebi to ensure that the contagion that hit CSE did not spread to the other bourses.

Ministry officials said additional measures could be considered to tighten control over the bourses run by stockbrokers.

Officials are particularly scared that the payment crisis on CSE could erupt on the Bombay Stock Exchange. “We still don’t have a clear picture but the broker cartels operating on the BSE seems to be the same people operating in Calcutta,” they said.


Calcutta, March 19: 
Himachal Futuristic Communications (HFCL) may announce a buyback offer to prop up its limp share price.

The company is concerned about the dramatic erosion in the value of its share because of the unprecedented bear hammering, and will soon call a board meeting to discuss the issue. “We are worried about the sudden plunge in the share price engineered by a handful of rouge traders. The situation has to be tackled soon,” a senior company official said. The HFCL scrip has shed 70 per cent of its value over the past couple of weeks, and sparked a wider payment crisis. It is now being quoted at Rs 213 even though its book value is more than Rs 300.

Some ‘unknown faces’ are believed to have piled up a substantial number of shares. There are unconfirmed reports that Reliance Industries is stocking up on HFCL shares through some of its brokers.

There was no clarification from the Ambanis, but the HFCL official said there is always a threat from takeover tycoons given the way the share has plummeted. The buyback move is designed to pre-empt such attempts. The HFCL promoters are reportedly keen to raise their stake in the company from 35 per cent to a more comfortable level through the creeping acquisition route, though the official refused to comment on it.

He said no company or individual has informed HFCL about purchasing more than 5 per cent of its equity capital so far. “There is heavy buying taking place, but we don’t know who is picking up the shares and why. It is possible that the price of our share has turned so attractive that investors are making the best of it,” the official said.

The market has been agog with rumours that Kerry Packer, who acquired 9 per cent in the company a few months back for Rs 1,000 crore, is trying to raise his holding. The official, however, denied any such development, saying Packer would have talked to the promoters if he wanted to do so. Also, the Australian tycoon will require prior approval from the Foreign Investment Promotion Board.

Established in 1987, HFCL has a Rs 2000 crore turnover. The firm has witnessed a steady growth with the net profit for the third quarter ended December 2000 rising to Rs 130 crore compared with Rs 27 crore in the corresponding period last year.


New Delhi, March 19: 
Amid slogan-chanting over the armsgate scandal, finance minister Yashwant Sinha introduced a Rs 37,640.71-crore supplementary demand for grants which will help the government meet its expenses this fiscal.

The new demands entail an outgo of only Rs 5,134.68 crore. The rest is being met out of the amounts which have not been spent on plan and non-plan schemes. The grants will be approved despite the political turmoil because the Congress, the main Opposition party, has indicated it will not stall it.

Food subsidy was up at (Rs 3,774.6 crore) and fertiliser subsidy was Rs 122 crore more than the budget estimates. The other expense which overshot what the budget had provided for last year were loan repayments, which increased Rs 1,164-crore due to a sharp fall in the value of the rupee. This included sovereign loans repaid by the government and the forex cover for State Bank’s Resurgent India Bonds.

The other big ticket spending was the Rs 2,000 crore spent on corporatising the department of telecom into Bharat Sanchar Nigam (BSNL). The government also sought Rs 581 crore more for para military forces in strife-torn Kashmir and the North East.

The department of disinvestment, which managed to sell only Balco, asked for Rs 6.19 crore to pay for the professional services (advisors) it used in disinvestment of state-owned companies.

Sinha, barely audible in the pandemonium of charges and counter charges, said the cash outflows were kept at Rs 32,505 crore because of savings by departments and higher receipts.

The supplementary demand for grants to Railways in the current year, also introduced in the House today, has been fixed at Rs 136 crore.

Both supplementary demands were introduced even as the Opposition tried to halt the proceedings, demanding the resignation of the Prime Minister Atal Bihari Vajpayee over the Tehelka expose on bribery in defence deals. The House was adjourned soon after they were moved.


Mumbai, March 19: 
The scrips of Amara Raja Batteries saw a freefall over the past five sessions and the prices have halved. The exchanges are investigating the volatility in the counter.

Sources at Sebi said that both, BSE and NSE have been asked to investigate the volatility in the counter which saw the share price piercing the upper bands earlier, only to shed the gains in a turnaround that saw the management blowing the whistle on them.

The share today closed 8 per cent down at Rs 93.75, forcing circuit filters to be clamped to prevent any further depreciation in the price. The BSE has already impounded the pay-out and NSE is expected to follow suit. Shailesh Bajaj and 14 other brokers in BSE are being probed in the alleged price rigging. Management claims that the company was approached by the errant brokers to rescue them from the present predicament. However, they, in turn, requested Sebi to investigate the matter. The same broker was involved in the Sesa Goa counter a couple of years ago that saw a major default.

Insider trading?

Meanwhile, HiTech Drilling, where Aban Lloyd Chiles acquired control from the Tatas, witnessed exceptional rise in volumes in the days prior to the announcement. The deal, publicised on March 18, saw volumes skyrocketing to touch 2.02 lakh shares with a equally impressive gain in value of the share to Rs 50.70.


Mumbai, March 19: 
Elections to fill up three slots on the board of the Bombay Stock Exchange (BSE) may be a tame affair as brokers who ran the 125-year old bourse so far slug it out with the Securities and Exchange Board of India (Sebi).

Five hopefuls, in the fray after a candidate pulled out at the last minute, are vying for three slots in stark contrast to the previous year when there was a consensus among brokers over who should get the seats.

The five candidates in the race are Ashok Kumar Damani, Sunil M Shah, Apurva Shah, Rajendra Prasad Jhunjhunwala and Kirtikumar F Vora. Alok Churiwala of Churiwala Securities, a prominent broking house, withdrew his candidature today, which was the last day for withdrawals.

The probe by the capital market watchdog into the conduct of the board members, who were recently restrained from discharging their duties, has cast a shadow on the elections.

In addition, its decision to keep board members out of trading have robbed the BSE board seat of its glamour. The elections may be meaningless with the government already talking of demutualising bourses and professionalising their boards.

Seven brokers were recently restrained from acting as directors on board of the country’s premier exchange. Deena Mehta, the first woman president of the bourse, had the dubious distinction of remaining at the helm only for a day.

The broker members who got the by Sebi stick were Deena A. Mehta, Himanshu N. Kaji (honorary treasurer) and broker members, Jayesh K. Sheth, Kirit B. Shah, Motilal Oswal and Niranjan K. Nanavati.

Seven of the BSE board’s 18 directors are brokers elected by members while four are Sebi nominees. The market regulator is represented by L K Singhvi, executive director, S Habibbullah, Samir Biswas and Janki Raj. N P Sharada, Anna Malhotra (retired IAS officer), S S Thakur, Samir Barua and D R Dhanuka (retired judge) are the public nominees.


New Delhi, March 19: 
The domestic pharma industry feels that the biodiversity Bill does not fulfil the need for a simple regulatory regime. Instead, it has been criticised as a step towards the license raj.

The industry’s view point came across at the Assocham summit on ‘Biotechnology — The new World’. The two day summit began here today to discuss the Bill which has been tabled in the Parliament.

According to Kiran Mazumdar Shaw, CMD of Biocon India: “If the Bill is passed, it will prevent private companies and researchers to take innovative lead. Instead, it will introduce a license raj.” The industry needs a simple regulatory and a strong patent regime, added Shaw.

She criticised the Bill on the grounds that it seeks to nationalise bio technology and, if passed, will be a stumbling block in the country’s way to a bio-technology super power.

“The Bill seeks to undermine the research done by scientists and companies. It favours government stronghold. This will be detrimental to private enterprise,” she said. She advocated more involvement by the state governments.

At the summit, the industry said that globally pharma companies are reducing research and development expenditure. Multinational drug majors will be forced to cut R&D budgets and either conduct R&D through collaboration or outsourced the work to small and medium-sized firms.

According to Shaw, drug firms outsource around 25 per cent of the research work.. Revenues of contractual research work was estimated at $ 7 billion in 2000. Outsourced research is estimated to account for 40 per cent of a firms’ R&D expenditure by 2005.

In his inaugural address, Murli Manohar Joshi, minister for HRD and Science and technology urged against mindless aping of the West. He advised biotechnologists and industry to exploit the potentials of ayurved and other indigenous medicines.

Shaw corroborates, “India’s knowledge base in ayurveda and unani medicine, along with modern high throughput screening formats offers a powerful combination to pursue drug discovery.”

According to Manju Sharma, secretary, department of biotechnology, investment on biotechnology is expected to go up from the present Rs 65 crore to Rs 20,000 crore by 2010. She said in the next plan period, government will spend Rs 300 crore on genomics, including, vaccines against infectious agents and novel drugs.


New Delhi, March 19: 
Hit by an ongoing strike, Balco’s new management seems to have stopped paying voluntary separation packages to employees who have decided to leave. This has set the stage for a fresh round of confrontation with employees of the hapless aluminium giant.

Balco’s company secretary Subhash Hans claimed, “All those who applied by December have been paid off; there are only a few cases of those who applied in February who have not been paid as yet. ” In all, some 140 workers have been gone off the rolls at the end of February under the VRS scheme.

However, the union claims even dues such as ex-gratia, gratuity and provident fund have not been paid to those employees who have left the organisation. Their point is pay-outs to those who applied in December were made by the previous management — the Union government. The dues of the later claimants are supposed to be taken care of by the new management and they haven’t got their money.

The employees are agitated as they feel the company has enough funds to meet their dues. “They have gained control of Rs 300 crore in cash reserves and another Rs 400 crore in raw material and various other material stocks,” charged Balco union general secretary P.N.Sharma. Balco also seems to have violated norms by changing the signatories authorised to withdraw money from banks without a board resolution.

Union officials have cried foul, fearing that money could be siphoned off through a series of financial asset stripping exercises while labour dues remain unpaid.

Balco officials however deny any such intentions. Hans said, “There is no need for such a board resolution ...the management has changed ... we need to run the company hence this change (in signatories).”

However, legal eagles differ. Said senior Supreme Court advocate Deepak Battacharya, “A corporate body is a separate entity in the eyes of law and steps like changing authorised signatories have to be backed by board resolutions even when someone has gained control of 51 per cent of the company’s equity capital. This is a technical requirement.”

Critics of the deal, under which the government sold off Balco to Sterlite Industries for a mere Rs 551 crore, have argued that by transferring a company with cash reserves of Rs 300 crore the government was in effect selling the company for just Rs 251 crore as this reserve was being transferred to the new management. The latest charges by the employees union could reignite the flagging campaign to scupper the deal.



Foreign Exchange

US $1	Rs. 46.69	HK $1	Rs. 5.90*
UK £1	Rs. 66.87	SW Fr 1	Rs. 26.95*
Euro	Rs. 41.42	Sing $1	Rs. 26.05*
Yen 100	Rs. 38.38	Aus $1	Rs. 22.95*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4330	Gold Std(10 gm)	Rs.4250
Gold 22 carat	Rs. 4090	Gold 22 carat	Rs.3930
Silver bar (Kg)	Rs. 7300	Silver (Kg)	Rs.7305
Silver portion	Rs. 7400	Silver portion	Rs.7310

Stock Indices

Sensex		3722.49		-23.25
BSE-100		1784.34		-9.78
S&P CNX Nifty	1186.70		-6.85
Calcutta	122.66		-0.28
Skindia GDR	NA		-

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