Pay-in shortfalls on Dalal Street, CSE
Deena Mehta meets Sebi chief, pleads innocence
Three BSE directors bow out
No decision on bank exposure
Slowdown in US to impact profits, warns VisualSoft
Double-digit inflation looms
Aban open offer for Hitech stake
Usha Beltron wins dumping case in US
Bilt close to Sinar Mas buyout deal
Foreign Exchange, Bullion, Stock Indices

 
 
PAY-IN SHORTFALLS ON DALAL STREET, CSE 
 
 
OUR BUREAUS
 
New Delhi andf Calcutta, March 22: 
Payment problems pooped the party on Thursday when the two premier bourses — the Bombay Stock Exchange and the Calcutta Stock Exchange — reported shortfalls of Rs 14 crore and Rs 16 crore respectively.

The trouble at crisis-racked CSE was expected — the total pay-in shortfall amounted to Rs 67 crore as reported in The Telegraph yesterday. The size of the pay-in was Rs 230 crore.

However, the CSE authorities were able to limit the gap to just Rs 16 crore by cancelling several trades of the three errant brokers — Dinesh Singhania, Ashoke Poddar and Harish Biyani.

On the BSE, where some pay-in problems had been anticipated in settlement number 51, the trouble erupted because two brokers, whom the exchange refused to name, were unable to come up with either cash or the securities.

The BSE officials said the shortfall would not pose a problem as the exchange would access its trade guarantee fund (TGF).

They said the exchange held capital and assets worth Rs 7.5 crore belonging to the two brokers. The sum does not include the value of their membership rights.

The two brokers will be given some time to come up with the requisite funds before their assets are sold to recover the amount spent from the TGF.

BSE’s deputy executive director Manoj Vaish said: “Our rules do not permit the disclosure of the names of the errant brokers. We have to give them the opportunity to make good the default. The exchange still believes that they will bring in the money.”

In Calcutta, bourse president Kamal Parekh said the Rs 16 crore shortfall would be met by drawing down from the trade guarantee fund in order to complete the pay-out process tomorrow.

“We blocked several dubious trades of the three brokers and made them good at the receivers’ end. That helped us to cover a large part of the payment shortfall,” Parekh added.

Biyani today deposited 10 lakh shares of DSQ Software worth over Rs 13 crore with the exchange.

Top sources said the exchange received over Rs 23 crore from the dubious trades. A sum of Rs 10.5 crore was raised by forcing a few brokers, who had reneged on their margin money commitments in the two earlier settlements, to cough up the cash. Another Rs 1.5 crore was rustled up by selling the shares of the tainted brokers.

Parekh said the bourse would give the 10 firms belonging to the three errant brokers another day to reply to the showcause notices that were issued on Tuesday.

“If we don’t get a reply within 24 hours, we will declare them defaulters and start proceedings against them,” he added.

Parekh hinted that the three brokers have 14 CSE cards which could be put on sale to recover the losses incurred by the bourse because of their payment default.

The CSE president said the pay-out would be successfully completed tomorrow and there would be no overhang of the payment problem on settlement number 151, slated for March 29.

Today’s pay-in, which took almost five hours to complete, was entirely supervised by the two senior officials of Securities and Exchange Board of India.

The shortfall will erode the bourse’s TGF by around 50 per cent taking into account the sum of Rs 22 crore that was drawn down in the last settlement.

Parekh however reiterated that the exchange was not going to seek fresh capital from the brokers to beef up the corpus.

   

 
 
DEENA MEHTA MEETS SEBI CHIEF, PLEADS INNOCENCE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 22: 
Broker members of the Bombay Stock Exchange (BSE), led by former president Deena Mehta, today met Securities and Exchange Board of India (Sebi) chairman D. R. Mehta and placed their respective views before the regulatory body.

While the Sebi chairman refused to comment on the hearing, Mehta said she had requested the chairman to expedite the investigations and restore innocent members of the governing board to their positions within seven days of the hearing.

She said her company, with an ISO-9002 certification, was the first corporate member of the bourse and neither she nor any of its promoters had undertaken any proprietary trading in the exchange.

“I have nothing to fear as I believe I am innocent,” she declared. “I will stand up and fight this injustice, I have done nothing wrong.”

The hearing on her case, presented by her lawyers, took two-and-a-half hours. A press statement issued by Mehta said: “I have suo moto, given my total transaction logs of both BSE and NSE, since the conversation took place, to Sebi. This has been done to facilitate speedy inspection and determination of the matter.”

“I neither heard any conversation nor have I been privy to, or sought any information, nor benefited from such information.”

Sources added that the Sebi officials asked very few questions.

The market watchdog heard the six broker directors in connection with its orders restraining them from acting as directors following their alleged involvement in price manipulations on the BSE.

None of the brokers were present and were instead represented by their legal counsel at the hearing. Former BSE president Anand Rathi’s counsel had made oral submissions yesterday.

   

 
 
THREE BSE DIRECTORS BOW OUT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 22: 
Troubles on Dalal Street today took a turn for the worse when three of the seven BSE broker-directors quit even as the other four girded themselves for a legal battle with Securities and Exchange Board of India (Sebi) which had stripped them of their seats and the right to trade.

Jayesh Sheth, Kirit Shah and Niranjan Nanavati, who did not say why they resigned, had something common between them — they were not present in the room when the alleged conversation between the former BSE president Anand Rathi and a surveillance department official took place.

“You heard right, I have resigned. But I have no comments to offer,” Sheth said. He refused to say whether the sorry of state of affairs at the 125-year-old exchange had forced them to walk out in a huff. The market grapevine has it that pressure from Sebi, investors and the media forced them to resign, but there was no confirmation of this.

On March 12, the seven brokers were restrained from acting as directors. The four who have decided to slug it out are Deena Mehta, who was the acting president, Anand Rathi, who stepped down as president but continued as director, Himanshu Kaji, honorary treasurer, and Motilal Oswal.

The departures came on a day when the sensex shed 77.10 points to finish at 3713.97 over renewed fears of a payment crisis brewing at the Calcutta Stock Exchange.

The slide was caused by a wave of selling in pivotals such as Hindustan Lever, Reliance, State Bank of India, Hindustan Petroleum, Gujarat Ambuja, Tisco, Telco, Infosys, NIIT, Satyam Computer and Zee Telefilms amid thin volumes, dealers said.

Local financial institutions, who had driven up the market over the past few days, offered no buying support.

Operators made no fresh commitments ahead of the pay-in on the BSE and CSE. High badla rates prompted many to cut their long positions. “If the settlement goes through without problems, shares might be steady on Friday,” said Nikunj Modi, a dealer at Refco Sify.

The slump in global markets, where the US bourses extended their losses into the third straight day, stoked the selloff at home. On Wall Street early Thursday, the Dow was quoting 215.27 points lower at 9271.73 points.

   

 
 
NO DECISION ON BANK EXPOSURE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 22: 
A panel of officials from the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi), which met today to discuss norms relating to banks’ financing of equities and investments in shares, failed to reach any decision on the matter.

Senior RBI officials said the meeting only discussed various issues, taking into account all aspects relating to capital markets and banks. The committee, however, is expected to announce its decision relating to banks’ advances to the capital markets in a few days.

   

 
 
SLOWDOWN IN US TO IMPACT PROFITS, WARNS VISUALSOFT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 22: 
The Hyderabad-based VisualSoft Technologies today became the third domestic infotech company to issue a profit warning following a slowdown in the US market.

Mastek Ltd and NIIT Ltd have already issued similar revenue warnings.

According to analysts, such lowering of profit projections would further affect the valuation of the entire infotech sector which have already shown a sharp decline in recent times. Nearly all infotech shares have witnessed sharp downfalls due to the continuous meltdown on the Nasdaq and concerns that slowdown in the US markets would hit sales and profitability of domestic software companies.

In a communication sent to the Bombay Stock Exchange today, VisualSoft said the US slowdown has affected the demand for the company’s sales, covering developer tools as well as enterprise infrastructure application products, thus impacting the income and profits for quarter ending March 31, 2001.

On the BSE today, the VisualSoft scrip was locked at the lower circuit filter limit following the announcement. The scrip which opened at Rs 355, closed at Rs 308.15. Market circles expect the downward movement in the scrip to continue for few more sessions.

Meanwhile, KPIT Infosystems has also warned that its revenue in the current quarter will show no growth and profit will be affected due to lower spending by some US customers.

   

 
 
DOUBLE-DIGIT INFLATION LOOMS 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, March 22: 
Buried under the market mudslide and the bribery bombshell is a monster waiting to strike — inflation.

Feeding on the surplus cash floating around after the cut in interest rates and an industry in the throes of a slowdown, a double-digit rate of inflation looms larger than ever before.

According to a report prepared by B. B. Bhattacharya of the Institute of Economic Growth, the economy can brace itself for a rate higher than 10 per cent in the coming months. Too much money and not enough output to back it up are dealing a double whammy to investors: dwindling returns on their investments and a creeping rate of inflation.

Finance ministry economists, having seen the report, conceded the situation is ‘alarming’. They have good reasons to. Bhattacharya had predicted, with success, that the inflation rate would soar above 8 per cent after the price of oil was raised.

The cut in rates by US Federal Reserve on Tuesday has piled pressure on the Reserve Bank to follow suit. The central bank, having already trimmed its Bank Rate by one percentage point in two instalments, is widely expected to take the cue and announce another 50 basis points reduction.

Ministry officials fear more interest rate cuts will spark bigger troubles.

“It will obviously fuel inflation, which could be politically embarrassing for the government, especially as it faces elections in several states,” the officials added.

The finance ministry’s own figures, which show an 18.5 per cent increase in vegetables and fruit prices, have stoked concerns. The last time prices of onions shot up in 1998, it cost the BJP power in Madhya Pradesh, Rajasthan and Delhi.

For the large number of pensioners who depend on interest incomes from savings, high inflation, coupled with lower interest, could deal a twin blow.

   

 
 
ABAN OPEN OFFER FOR HITECH STAKE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 22: 
Aban Loyd Chiles Offshore (Aban) is making an open offer to the shareholders of Hitech Drilling Services India Ltd (HDSIL) to acquire over 1.57 crore equity shares representing 77.50 per cent of the latter’s equity capital at a price of Rs 92 per share.

The open offer follows Aban’s acquisition of Tata Industries 22.5 per cent stake in Hitech at a price of Rs 92 per share recently.

In a communication issued to the stock exchanges today, Aban said the offer includes over 1.57 crore fully paid up equity shares and 41,798 partly paid up equity share.

DSP Merrill Lynch, which is acting as the adviser for the entire acquisition, said the offer is not subject to any minimum level of acceptance. The offer will open on April 25 and close on May 24.

The acquisition is expected to make Aban a market leader in the domestic offshore drilling industry while for the Tatas it would mean an exit from a non-core area of operation.

Aban officials added that there would be significant synergies from the integration of Hitech’s assets to the company.

   

 
 
USHA BELTRON WINS DUMPING CASE IN US 
 
 
BY A STAFF REPORTER
 
Calcutta, March 22: 
The city-based Usha Beltron Ltd (UBL), the lone Indian exporter of steel wire rope, has won an anti-dumping case in the US.

The six commissioners, including labour representatives of the International Trade Commission (ITC), USA, unanimously ruled on Wednesday that imports from India caused no material injury or threat to the domestic wire rope industry.

The US department of commerce imposed a provisional 21.14 per cent dumping duty on imports of steel wire ropes from India, China and Malayasia in September last year. The duty was hiked to 38.65 per cent in February this year on further verification.

Following the threat to its crucial export market, UBL appointed legal experts on international trade to fight the charges and won the case Wednesday, with considerable support from its customers, including several oil majors.

The company’s wire rope consumers in the US stood by it in respect to price, quality and speciality of the products. Steel wire ropes are used extensively in offshore oil rigs and elevator operations in the US.

UBL’s annual exports of wire ropes from its Ranchi unit to the US stood at around Rs 25 crore. Although exports completely ceased since September, UBL continued to cater to the US market from its Thailand and UK units, which were not affected by the dumping charges.

The 200,000-tonne US market for steel wire ropes accounts for a third of the global market.

Prashant Jhawar, managing director of UBL, who briefed newsmen on the “significant judgement,” noted that the US market was strategic for the company not only for its current exports but also for the future potential it held.

Of the 40,000 tonnes of wire rope produced at the company’s Ranchi unit, the domestic market could hardly take 20,000 tonnes. In Thailand too, the domestic market could take just about 4,000 tonnes against a production of 18,000 tonnes. This made UBL heavily dependent on its exports and hence it could not afford to take the dumping charges lightly, Jhawar said.

Jhawar added that the company’s Houston, Texas-based subsidiary, Usha Martin America, will be refunded the deposits it maintained with the US authorities for the duration of the case.

   

 
 
BILT CLOSE TO SINAR MAS BUYOUT DEAL 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 22: 
Ballarpur Industries Ltd (Bilt) has informed all the stock exchanges concerned that Bilt Paper Holding Co of the Lalit Mohan Thapar Group is finalising the acquisition of Sinar Mas Pulp and Paper (India) Ltd.

The deal with Sinar Mas Pulp and Paper (India) Ltd, a wholly-owned subsidiary of the Indonesia-based paper major, is expected to be through by April and payment is likely to be made by the end of that month, sources close to the deal said.

Sinar Mas, which commenced its Indian operations about three years back, has decided to bow out of the Indian market because of financial trouble with the Indonesian parent, highly-placed company sources said.

Significantly, the takeover is not being effected by Ballarpur Industries, the group’s flagship company, but by Bilt Paper Holding Co.

Sources said the Lalit Mohan Thapar group will not buy less than a 51 per cent stake in Sinar Mas India, thereby ensuring effective management control. Bilt Paper Holding Co was earlier known as APR, prior to the restructuring of Bilt.

Following the family settlement of the Thapar group in November, which saw the division of the assets and businesses of the Thapar group into four groups, Bilt and APR had gone to the Lalit Mohan Thapar group.

In the first phase of its restructuring, Bilt had hived off all non-paper businesses like chemicals, foods, media (The Pioneer), leather and glass.

The pulp business of APR was transferred to Ballarpur Industries in the second phase of restructuring. Sinar Mas has a production capacity of 1.51 lakh tonnes per annum at its plant in Bhigwan near Pune.

Industry sources say post-acquisition, Bilt will be able to use its surplus pulp for production in the plant,as Sinar Mas used to import pulp for production.

The Rs 400-crore Sinar Mas India had been talking to leading paper companies through bankers before it zeroed in on the Lalit Mohan Thapar group.

Following the acquisition, the group’s paper production will increase by 1.5 lakh tonnes and turnover will go up from Rs 1400 to Rs 1800 crore. This will see the group’s market share rise to about 20 per cent from the present 14 per cent.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.69	HK $1	Rs. 5.90*
UK £1	Rs. 66.41	SW Fr 1	Rs. 26.95*
Euro	Rs. 41.58	Sing $1	Rs. 25.90*
Yen 100	Rs. 37.70	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. 4260
Gold 22 carat	Rs. 4105	Gold 22 carat	Rs. 3940
Silver bar (Kg)	Rs. 7325	Silver (Kg)	Rs. 7290
Silver portion	Rs. 7425	Silver portion	Rs. 7295

Stock Indices

Sensex		3713.97		-77.10
BSE-100		1759.60		-37.29
S&P CNX Nifty	1187.55		-19.55
Calcutta	 123.68		- 2.31
Skindia GDR	   NA		   -
   
 

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