Institutions prop up market
CSE may probe lapses in margin collection
Centre asserts right to control liquor makers
Oil majors seek global tieups
Parekh on SAIL board
Sprite adds fizz to cola war
Software firms expect big orders
Tata Bearings pact with Japanese firm
Webel plans new venture
Foreign Exchange, Bullion, Stock Indices

 
 
INSTITUTIONS PROP UP MARKET 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 21: 
Stirred by reports that a slice of Reliance Petroleum equity would be offloaded to strategic partners, investors went on a buying binge that led to a 118.67-point bounce in the Bombay Stock Exchange (BSE) sensex.

Leading the charge were local financial institutions and foreign institutional investors (FIIs), which showed a remarkable appetite for stocks across old and new economy firms.

Reliance Industries, expected to make big gains from selling 13 per cent of the 64 per cent it holds in RPL as a parent, was a big draw with financial institutions and foreign funds. Infosys, Lever, ITC, and MTNL were other big attractions.

The session began on a tentative note as the overnight slide on rate-miffed Wall Street left operators groping for clues. The 30-share BSE index dropped to its low of 3618.14 on selling triggered by fears that a Rs 45-crore payment shortfall on the Calcutta Stock Exchange (CSE) would spill over to Dalal Street.

Things looked up after institutions led by Life Insurance Corporation and a few mutual funds mopped up shares going for a bargain. That changed the course of the sensex, which scaled an intra-day high of 3801.78 before closing at 3791.07 against Tuesday’s finish of 3672.40 in a 3.23 per cent leap. “A lot of institutional buying was seen. It is a positive signal that the markets are near the bottom,” a dealer affiliated to local bank said.

On Tuesday, the Dow Jones Industrial Average slumped 238.35 points to 9,720.76 and the technology-laced Nasdaq Composite Index tumbled 93.72 points to 1,857.48 as investors expecting a generous cash burst by the Federal Reserve fretted about the 50 basis points cut in the key interest rate. The market was betting the rate-setting panel of the US central bank would trim rates by 75 basis points to reverse a slowdown.

Meanhwile, renewed exporter dollar sales and unwinding of long positions by banks helped the rupee post a modest rally against the U S currency today after coming under some early pressure due to dollar demand from a few state-run banks. The rupee closed at 46.68/69 per dollar, slightly higher from overnight levels of 46.6975/7050 following a weak start at 46.70/72 and an initial dip to intraday low of 46.7250/7350.

h3>Rathi deposition Lawyers appearing on behalf of Anand Rathi presented their oral arguments at a Sebi deposition today on why the former BSE president and his four broking firms should not be barred from trading.

Written submissions will be made tomorrow. Neither Sebi chief D R Mehta nor the lawyers were willing to comment on the arguments that were made during the 90-minute hearing.

The six broker-directors — Deena Mehta, Himanshu Kaji, Jayesh k Sheth, Kirit B Shah, Motilal Oswal and Niranjan K Nanavati — will put up their case before the market regulator on Thursday.

   

 
 
CSE MAY PROBE LAPSES IN MARGIN COLLECTION 
 
 
BY A STAFF REPORTER
 
Calcutta, March 21: 
The Calcutta Stock Exchange may set up a fact-finding mission to ascertain whether there was any lapse on the part of the management in the collection of mark-to-market margins.

Share market mavens are still puzzling over how the payments problem on the bourse could have snowballed into such a major crisis if the mark-to-market margins had been collected properly.

CSE president Kamal Parekh said the fact-finding exercise was very important to pre-empt any distortions in future payment obligations.

“But right now we are focusing all our energies to try and resolve the current crisis and restore investors’ confidence in the market,” he said.

Parekh is optimistic about completing pay-in and pay-out for the settlement number 150 successfully. The pay-in is scheduled tomorrow.

“We have learnt that some shares are being transferred to CSE’s account by the three brokers who have failed to honour pay-in commitment in the two earlier settlements. If those shares come, most of the problems will be resolved,” Parekh said.

The CSE president, however, refused to furnish details about the volume of the shares and their market value.

“Let the shares first come into CSE’s account, only then will we be able to say anything about them,” he added.

Asked whether the three defaulting brokers had sent an emissary to apprise the CSE of their ability to meet their payment obligations, Parekh said some associates of the three brokers had informed the bourse that a chunk of shares would be transferred into CSE’s account.

Parekh said the bourse would be in touch with the financial institutions to sell the shares at the current market price as soon as they are lodged with CSE.

Later, a top CSE broker said the bourse was now in a position to meet at least 80 per cent of the pay-out liability.

“There may be a meagre Rs 10-15 crore shortfall which will have to be collected. For an exchange like CSE, that is not a very big task,” he said.

Parekh reiterated that brokers would not be asked to shore up the base minimum capital even if the exchange had to draw down on the trade guarantee fund from which Rs 22 crore was used in the last settlement.

Parekh said the bourse was sympathetic to the problems being faced by the small brokers who may be given some more time to meet their payment obligations. But until they pay up, their terminals will remain de-activated, he added.

   

 
 
CENTRE ASSERTS RIGHT TO CONTROL LIQUOR MAKERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 21: 
The Union Cabinet today asserted its right to control breweries, cleared a financial recast package for Engineering Projects India (EPIL) under which a Rs 900-crore loan will be converted into equity and approved a proposal that will allow firms to employ women in night shifts.

The government will seek from the Supreme Court’s Constitution Bench a stay on a 1997 ruling in which the judges ruled that industries which produce alcohol meant for potable use would be under the exclusive control of states.

The Cabinet intervention was forced by a legal dispute between Haryana Brewery and the Haryana government, the outcome of which is expected to settle the question of who regulates the industry and the larger issue of liquor licensing.

EPIL recast

Parliamentary affairs minister Pramod Mahajan told reporters after the meeting that EPIL’s plan and non-plan loans worth Rs 225.49 crore will be converted into equity. The interest on government loans, amounting to Rs 675.95 crore on March 31, 2000, will also be swapped for shares; outstanding loans of Rs 125.97 crore will get an interest holiday.

EPIL has been allowed to take up overseas projects, but there would be no plan/non-plan support or a counter-guarantee from the government. Based in Delhi, the company executes material handling and civil construction projects, and has wrapped up 240 deals, valued at Rs 2,000 crore, so far.

It is saddled with liabilities arising from the non-payment of loans worth Rs 225 crore and Rs 800 crore in unpaid interest, much of it due to the Iran-Iraq war and the international embargo against the Saddam Hussein regime.

Night shift for women

In a move that ends a long-held labour taboo, the Cabinet set the ball rolling for a legal provision that will allow firms — primarily infotech and software — to employ women in factory night shifts. The government will now have to frame a Bill and see it through Parliament before it becomes law.

The Cabinet also approved setting up of 22 industrial training institutes (ITIs) in the north-eastern states and Sikkim through a centrally sponsored scheme at a cost of Rs 50 crore while Rs 49 crore will be spent on upgrading 35 existing institutes.

A proposal that makes it mandatory for companies to print symbols on packed food to indicate whether it is vegetarian or non-vegetarian was approved. A final notification to amend the provisions of Prevention of Food Adulteration Rules, 1955 will be issued soon.

The Cabinet also approved a memorandum of understanding between India and Australia to promote tourism. It will help the two countries develop and expand tourism to the mutual benefit.

   

 
 
OIL MAJORS SEEK GLOBAL TIEUPS 
 
 
FROM VIVEK NAIR
 
Mumbai, March 21: 
The state-owned oil majors, which recently got the permission to source their own crude oil requirements, are scrutinising the possibilities of joint ventures with global majors for this purpose.

Plans are also afoot to opt for hedging instruments and other risk management products in collaboration with such companies which would act as a buffer against volatile prices.

Though domestic oil companies are yet to take any concrete move in this direction, awaiting a formal communication from the Centre with regard to the de-canalisation, sources said that the idea of joint venture with foreign majors is very much on the cards.

“It is a certain possibility. There are companies like Shell, Exxon, TotalFina and others who would offer their expertise and experience to us in importing crude oil,” a senior official from one of the leading oil companies told The Telegraph.

Tthe most significant benefit will be obtaining crude security, since most of the global oil majors either source crude oil from their own fields or in tieups with others.

So far, the Indian Oil Corporation (IOC) acted as the sole canalising agent for these companies. Crude oil was so far sourced either through the issuance of tenders or the spot market.

Sources said that whenever a tender was moved, prices would shoot up, once the companies jointly approached the market.

“In the spot market too, our volumes were not too large to give us some relief. This would be overcome once we forge alliances with global majors,” the source added

Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have full-fledged international trading divisions.

However, both the companies are not expected to import their own crude requirements immediately.

Some of the domestic oil companies are canalising decontrolled products for their customers.

“We don’t foresee any major problem after the decanalisation move,” sources said.

At present, crude oil is estimated to form around 80 per cent of the cost structure in the oil PSUs.

   

 
 
PAREKH ON SAIL BOARD 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, March 21: 
The government today expanded the board of Steel Authority of India Ltd (SAIL) inducting six new non–official directors, including HDFC chairman Deepak Parekh, former RBI deputy governor R.V. Gupta and economist Isher Judge Ahluwalia.

The board revamp was done in accordance with the latest guidelines of Securities and Exchange Board of India that makes it mandatory for companies to draw at least half of the board’s strength from among non official directors.

SAIL already had four non-official directors and 10 officials. With the current expansion, the board strength goes up to 20.

Apart from Parekh, Gupta and Ahluwalia, the directors appointed now include R.P. Sengupta of IIM, Calcutta, P.M. Mohapatra, IAS (Retd.) and Atul Sarma of Indian Statistical Institute.

These new directors, whose appointment was formalised by the SAIL board today, will have a three-year tenure. Their appointments would be ratified by the shareholders at the annual general meeting.

   

 
 
SPRITE ADDS FIZZ TO COLA WAR 
 
 
FROM RAJA GHOSHAL
 
New Delhi, March 21: 
It’s known as the no-nonsense soft drink, that “bujhaaye only pyaas, baaki all bakwaas.”

Of late, however, Sprite is doing much more — it’s the latest from the Coke arsenal to be used in its war of ads with rival Pepsi.

Coke has so far been at the receiving end of the ad game. In fact, Pepsi’s ripoffs on its campaigns caught on faster than Coke’s ads did, with Pepsi’s “Nothing official about it,” and its spoof on the “Eat cricket, Sleep cricket, Drink only Coca Cola,” doing maximum damage.

The spoof’s now on Pepsi. After stinging with the Thums Up ads, it packs a punch with its Sprite.

Continuing its series of knocking ads, the latest ad for Sprite sends the message that its drinkers are smarter than those of Pepsi.

The Sprite ad, a reply to Pepsi’s roller-coaster ad being aired from late February, shows the Sprite drinker, with a glass of the drink in hand, being asked the time by a girl. The situation is similar to the Pepsi ad, where the Pepsi drinker does not spill his drink in a roller-coaster ride, but does so when he turns his wrist to tell the time.

Not so the Sprite drinker. The no-nonsense chap simply shifts the glass from one hand to the other to tell the time, with “Don’t be a fool, be cool,” heard in the background. To rub it in, the ad has people dressed as in the Pepsi commercial, spilling drink all over themselves. Finally comes the punchline, “Dikhawa hai waste, trust only taste.”

The Sprite account recently changed hands, moving from McCann-Erickson to Leo Burnett, even as the Coke account has moved from Leo Burnett to McCann-Erickson.

The Pepsi spokesperson refused to comment on the ad, saying the company had not seen the specific commercial.

However, he was quick to add that umpteen Sprite spoofs of Pepsi did not work in the past and this one was equally unlikely to do so. Besides, he pointed out that according to an IMRB study, the Pepsi ad has a consumer rating of 86 on a scale of 100.

Pepsi also said the clear-solution category of soft drinks, to which Sprite belongs, is so small that it hardly spends anything on its 7 UP brand.

Coke’s position, however, is that Sprite globally has been positioned as a no-nonsense drink, which is what is conveyed in the ad. But then, positioning apart, reference to the Pepsi ad in the Sprite commercial is unmistakable.

The Sprite ad comes even before the dust has settled on the “Dil maange more” controversy between the two rivals. Pepsi filed a legal notice against that ad, complaining Coke violated its copyright to that adline.

Defending its latest ad, Coke maintains that Sprite will cock a snook at all unrealistic hypes and the Pepsi ad, where the drink does not spill despite the roller-coaster ride, is one of them. What of the Thums Up ads?

The Coke spokesperson justified it, saying Thums Up is positioned as a macho drink, hence its ads are action-oriented.

The battlelines seem to be drawn for a hot, hot summer. Cool off with your favourite soft drink and remember the wise adman who coined: ‘Dikhawo pe mat jao, apni akl lagao.’

   

 
 
SOFTWARE FIRMS EXPECT BIG ORDERS 
 
 
FROM VIVEK NAIR
 
Mumbai, March 21: 
Domestic software service providers are pinning their hopes on obtaining orders from several new multinational giants, who are now believed to be actively looking at India as an active offshore base for meeting their software requirements.

This follows the rather disturbing trend of many US-based companies, who have indicated their intentions to bring down their capital spending.

Some of the bigwigs that are learnt to be looking at India include Standard Chartered Bank, Deutsche Bank, Merrill Lynch and the New York Stock Exchange (NYSE), among others.

Sources said these majors are now conducting due diligence studies on the feasibility of using India as an outsourcing base.

“It seems that many such companies, who used to depend mostly on US software majors and never considered India before, are now looking at the country as a good outsourcing option. A definite trend should emerge after the next six months,” averred a senior Infosys official.

The official added that many domestic software services companies, including Infosys, are now upbeat on the prospects of obtaining more offshore work not only from their existing clients, but new ones as well. This trend is being seen as a major fallout of the decline in capital spending by US companies.

Among local software majors, Infosys, for instance, has 52 per cent of its export turnover coming from on-site work and the rest from offshore projects.

Software analysts also concur with the view that the prevailing circumstances in the US markets may lead to offshore services gaining prominence. “We may see the contribution of offshore services surpassing that coming from on-site work in the coming year,” points out a senior analyst.

Sources added that Indian companies may even hike their fees from software services activities, considering the huge difference vis-a-vis the US majors. For instance, Sapient, a US-based software major is learnt to charge an average of around $ 22,000 per man month, as against an Indian company, which on an average charges around $ 10,000 per man month.

“Considering this huge difference, we have the potential of even hiking the fee by 20-30 per cent, if not 100 per cent,” says an analyst.

However, there are many others who point out that such an event is unlikely to occur in the present circumstances. As evident in the case of GE and Wipro, sources said that many of the US-based clients are now pressurising local companies for bringing about a reduction in their tariffs.

Analysts here contend that with the existing scenario getting more tougher for software service providers, only frontline companies are likely to post more than satisfactory growth rates.

“We feel that Infosys, Satyam Computer, Wipro and HCL Technologies among few others will continue to post good growth rates in the present circumstances,” an analyst from a foreign brokerage said.

He added that as the scenario will get more competitive in the coming fiscal, with price pressures mounting on local companies, only those with strong geographical spread, superior technology and a wide clientele base would be in a position to survive.

   

 
 
TATA BEARINGS PACT WITH JAPANESE FIRM 
 
 
FROM AMIT CHAKRABORTY
 
Kharagpur, March 21: 
Tata Bearings, a division of Tata Iron and Steel Company (Tisco), has tied up with Nachi Fujikoshi of Japan, to manufacture automobile grade bearings.

Tisco’s bearing division, at one go, has increased the annual production capacity to a record 25 million units from 15 million units.

Inaugurating the increased production capacity by 10 million units to clinch the top spot in the fast expanding Indian ball bearing business, J J Irani, managing director, Tisco, said, following today’s expansion at a cost of Rs 35 crore, Tata Bearings is now the second largest ball bearing manufacturer in the country after SKF Limited.

He said, since the company was taken over from Metal Box in October 1983, Tata Bearings’ productivity has increased five times, from 3.5 million units to 25 million units in a span of 18 years. The product will be marketed among Tata Bearing’s existing customer base which include Toyota, Maruti, Mico, Hero Group, Escorts, LML, Piaggio-Greaves and Telco. Other major customers include the leading fan and automobile accessories manufacturers. Plans are also afoot to increase the production of high-value taper bearings which have a large export potential.

   

 
 
WEBEL PLANS NEW VENTURE 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, March 21: 
The West Bengal Electronics Industry Development Corporation Ltd (Webel) will set up a joint venture company to provide data services, networking and telecom and systems integration services.

It has earmarked an initial fund of Rs 6 crore for the project and is presently scouting for a partner for the venture.

“The partner for the joint venture is expected to be finalised in another two weeks and an agreement will be signed soon,” managing director S K Mitra said.

The new company will have a number of strategic business units which will focus on specific type of services and will operate as independent profit centres.

The government has already earmarked a fund of Rs 10 crore for the West Bengal State Wide Area Network (WBSWAN) project, which will connect Calcutta with various districts, through a 2 mbps optical fibre link.

“The link will be the backbone for the internet information kiosks that have been developed by us,” Mitra said.

“The new company will cater to information needs of people in various districts,” he added.

Further, Mitra felt that there will be a gradual increase in service-related activities and fall in manufacturing activities.

Pact with Cisco

Webel has also finalised a tieup with Cisco Systems, the global leader in internet networking, to set up the Cisco Networking Academy Program in the state.

The agreement was signed between Webel’s S. K. Mitra and Manoj Chugh, president (India and SAARC), Cisco Systems.

Webel Informatics Ltd, a wholly-owned subsidiary of Webel, has been designated as the regional networking academy and will receive networking equipment, comprehensive training and technical support from Cisco.

Webel is also in talks with various technical institutes and universities to set up local hubs across the state.

The academy, based on the e-learning model that delivers web-based educational content and on-line training, will teach students to design, build and maintain computer networks.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.46.69	HK $1	Rs. 5.90*
UK £1	Rs.66.70	SW Fr 1	Rs. 27.35*
Euro	Rs.41.96	Sing $1	Rs. 25.95*
Yen 100	Rs.37.76	Aus $1	Rs. 23.20*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs.4350		Gold Std(10 gm)	Rs.4260
Gold 22 carat	Rs.4105		Gold 22 carat	Rs.3940
Silver bar (Kg)	Rs.7325		Silver (Kg)	Rs.7305
Silver portion	Rs.7425		Silver portion	Rs.7310

Stock Indices

Sensex		3791.07		+118.67
BSE-100		1796.89		+38.43
S&P CNX Nifty	1207.10		+36.15
Calcutta	125.99		+4.55
Skindia GDR	627.56		+0.01
   
 

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