Auto majors to drive up prices
CSE to lift veil on defaulters next week
Raymond in revamp mode
ICICI board reappoints Kamath as chief
BSE brokers in a huddle to take stock
UTI Bank-GTB swap ratio stays
Govt approves 48 FDI plans worth Rs 683 cr
Wheat support price raised
Foreign Exchange, Bullion, Stock Indices

 
 
AUTO MAJORS TO DRIVE UP PRICES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 23: 
Less than a month after the budget slashed excise duties and car prices went tumbling, auto firms today said customers — pampered with a goodie that was too good to last — would have to pay more from April 1.

Maruti Udyog led from the front, announcing an increase ranging from Rs 4,000 to Rs 23,000 today even though it is being given a hot chase by its lean-mean adversaries. Korean chaebols Hyundai and Daewoo Motors are planning similar hikes.

Sources in Maruti said prices will go up by a minimum 3 per cent, though the precise figure is still being worked out. A company spokesman, struggling to explain the revisions to customers just getting used to a better bargain offered after the budget, blamed it on an ‘increase in internal cost structure’. He did not elaborate, but said the 8 per cent reduction in excise duties would be shared with customers. “The benefits of excise duty given to customers do not correspond with the cost structure of the company.”

Hyundai Motors India director (sales and marketing) B. V. R. Subbu said the hike, which would be in the region of 2 to 2.5 per cent and spread across all models, was due this month, but was held back because it would have been difficult to explain it immediately after the budget cut excise duties. “The internal cost structure of all manufacturers being the same, an increase in prices was inevitable. However, the 8 per cent duty cut will be passed on to buyers,” he added.

Maruti’s eight models, including the bread-and-butter 800 and the premium mid-size sedan Baleno, will cost more. The company slashed prices on February 28 by Rs 11,000-42,000, a month after it had jacked them up by Rs 2,000-12,000.

Analysts say the company may have decided to raise prices after reaping the gains from a year-end spike in sales. Companies often rush into eleventh-hour purchases to claim higher depreciation benefits and lighten their tax burden. Also, the leading auto maker’s gambit of slashing prices to reverse a slowdown in sales last summer had failed to pay off.

February sales skid

Maruti Udyog, Telco, Hyundai and Daewoo faced a slump in sales in February, as total passenger car sales in the month fell 14.5 per cent.

A Society of Indian Automobile Manufacturers (SIAM) report observed that the recessionary trend hit the passenger car segment hard.

During February this year, only 48,289 vehicles were sold as against 56,522 units sold in the same month last year. Further, passenger car sales declined 7 per cent to 5.25 lakh units during April-February 2000-01 from 5.65 lakh units sold in the same period last year.

Indian car major Maruti Udyog sold 30,564 units in February this year, as against 32,762 units in February 2000. Maruti’s sales during April-February 2000-01 fell by 14.4 per cent at 3.05 lakh units from 3.55 lakh units in the same period last year.

Sales of Hyundai Motor India fell by 8.6 per cent at 6,830 units in February this year, as against 7,475 units in the same month last year.

Daewoo Motors India Ltd also recorded a 52.3 per cent drop in car sales at 2,122 units this February, from 4,453 units in the previous comparable month.

Telco posted a 31.2 per cent fall in sales to 3,673 units, as against 5,345 cars last February.

Ford India saw sales dip 27.4 per cent to 1,005 cars in February 2001, from 1,386 cars in February 2000.

The performance of Honda Siel was no better, with sales plummeting 35 per cent to 653 cars in February 2001, as against 1,004 cars in February last year.

Sales of Fiat plunged 60 per cent to 601 cars in February.

   

 
 
CSE TO LIFT VEIL ON DEFAULTERS NEXT WEEK 
 
 
BY A STAFF REPORTER
 
Calcutta, March 23: 
The Calcutta Stock Exchange (CSE) will take a formal decision on Monday to declare the errant brokerages, which triggered the unprecedented payment crisis on the bourse and drove a broker to suicide, as defaulters. Addressing a packed press conference, CSE president Kamal Parekh said the defaulters’ sub-committee will examine the matter in detail and submit a report. The announcement came on a day when Lyons Range scraped through the payout for settlement number 150 after a five-day lurch between despair and uncertainty.

The exchange has asked all defaulting broking outfits to present their cases before the sub-committee on Monday. “We will take all necessary steps to prosecute defaulters and to recover losses to the maximum extent possible,” Parekh said.

He indicated that the bourse might initiate criminal proceedings against the brokers whose cheques were dishonoured. The exchange has sought legal opinion to deal with the culprits.

Of the 10 defaulting firms slapped showcause notices on Wednesday, only six, owned by two brokers, have responded. Others have been given more time to send in their replies.

The CSE governing board will meet in the first week of April to take stock of the situation and to find out if lapses on the part of the authorities fuelled the crisis, Parekh said.

It will also find ways to replenish the trade guarantee fund (TGF), which has been reduced by almost 50 per cent after Rs 38 crore from its kitty was drawn to meet the payment shortfalls that occurred in settlement numbers 149 and 150. CSE executive director Tapas Dutta said the exchange is considering several alternatives to fill up the corpus.

Dutta did not say whether the exchange will ask brokers to make fresh contributions to the base minimum capital, but top sources are of the opinion that it is inevitable.

The pay-out process for the settlement number 150 was completed, ending an agonising week during which the authorities had to invoke bank guarantees worth Rs 70 crore. An equal amount was raised by pledging shares of defaulting brokers with the financial institutions at the market price.

Parekh said the exchange will now work to win back the confidence of investors in the bourse, which has witnessed a sharp decline in trading volumes over the past couple of weeks.

   

 
 
RAYMOND IN REVAMP MODE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 23: 
Raymond Ltd is considering a restructuring which could see Raymond Apparel Ltd, its 100 per cent subsidiary, being merged into the company.

Raymond Apparel, which has a turnover of Rs 200 crore, has three major menswear brands in its folio, that include Park Avenue, Parx and Manzoni.

Additionally, the company also aims to be the world’s largest manufacturer of wool and wool-blended fabrics, apart from menswear, for which it is looking at global opportunities that include taking over manufacturing units or well-known brands.

Senior company officials said such a target may see its capacity being raised to over 30 million metres. Currently, Raymond has a capacity of 25 million metres of wool and wool-blended fabrics and ranks among the top 3 integrated producers in the world.

Speaking to The Telegraph, Pradeep Bhandari, director (finance) Raymond Ltd, said while the company may consider merging the subsidiary, such a move is not being immediately pursued by the company. “We are not planning any such merger for the moment. However, it may be done later.”

Such a merger, analysts said, could act in the interests of the company, as the menswear segment has witnessed high growth rates in recent times, reflected in its topline.

Competition in the apparel segment is now intense with the rivals like Indian Rayon, which acquired Madura Garments and its international brands such as Louis Philippe, Van Heusen, Allen Solly, Byford, Peter England. The acquisition is expected to catapult the A V Birla group company into the country’s largest branded apparel company.

Raymond officials, however, assert the company is well poised to meet the challenge, as its three brands have not only been well received in the market, but the group also has the capacity to create successful brands. Among the three brands in its repertoire, Park Avenue is reported to be the single largest formal wear brand in the country, while Parx includes a range of semi formal and casual cottons, denim wear and speciality fibre/blends.

Gautam Singhania, chairman and managing director, Raymond Ltd, said while the company recently divested some non-core businesses and is targeting a global presence, it is too premature to comment on acquisitions of companies or brands at this stage. “The world is a large market to study and at this point, it is not clear which route we will adopt,” he pointed out.

Singhania was speaking to newspersons on the occasion of the company unveiling the world’s largest suit, recognised by the Limca Book of Records, at a function here today.

The Guinness Book of World Recrods too has created a separate category for it. The suit, which has been created out of 1400 metres of fabric, uses nearly 8 kms of sewing thread and is mounted on a mannequin made of steel rods and alloy segments, and weighs 1.3 tonnes.

   

 
 
ICICI BOARD REAPPOINTS KAMATH AS CHIEF 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 23: 
ICICI Ltd today reappointed K V Kamath as managing director and CEO for a further period of five years. Kalpana Morparia and S Mukherji have been appointed as executive directors.

Anupam Puri, who recently retired from McKinsey and Company, has been appointed as a non-wholetime director with effect from May 3, while the retirement of S H Bhojani from the board was approved . Bhojani will be retiring on April 22 upon the completion of his contract.

The term lending institution also announced plans for re-organisation of its subsidiaries, ICICI Capital Services, ICICI Web Trade Ltd and ICICI Personal Financial Services Ltd. Senior officials of the company said that the institution would look at the possibility of merging these businesses or hiving off one or more businesses from one subsidiary to another.

Some changes have also been made on the board of ICICI Bank. Chanda Kochhar and Nachiket Mor have been inducted as executive directors for a period of five years.

P H Ravikumar, who was heading the corporate banking group at the Bank, would now be moving to ICICI in the corporate credit function.

   

 
 
BSE BROKERS IN A HUDDLE TO TAKE STOCK 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 23: 
The cup of woes is overflowing for the stock market.

Bruised market operators who are trying desperately to wriggle out of the bear grip got yet another shock today when the news filtered in that the income tax department has launched a nationwide search operation on six major brokers. The operators immediately went into a huddle to take stock of the situation.

Even at the end of the day’s trading, marked by intense volatility and a very low turnover, brokers were trying to gauge the impact of this sudden move on the market.

“It was a panic like situation in the afternoon as all kinds of rumours swirled in the markets, including income tax raids on top brokers,” some of them said.

“This is the last straw. It’s going to be bad. Very, very bad,” a Bombay Stock Exchange broker grumbled. Most of them felt that the market would open in the negative territory on Monday.

After nose-diving to an intra-day low of 3561 points, the BSE sensex swerved northwards today as local institutions bought in small quantities enabling a recovery and the bellwether index closed tab 3635.28, down 78.69 points from its previous closing.

According to market circles, a leading foreign fund was an aggressive seller in stocks. The fluid political scenario also contributed to the bearish sentiments prevailing in the markets.

The subdued sentiments were compounded by market reports that leading infotech companies are likely to announce profit warnings in the days to come. This broke the back of those scrips which till then their prices were perceived to have bottomed out.

Mirroring the BSE sentiments, the Nifty of the National Stock Exchange also shed 26.25 points to settle at 1161.3 points. Turnover on BSE remained low at Rs 1297.85 crore.

ITC Bhadrachalam hit the lower circuit at Rs 48.50 on news of a fire at the company’s plant in Andhra Pradesh. Telecom and media stocks also witnessed selling.

Infosys Technologies which bore the brunt of the rumours came off from a high of Rs 4,437 and nose-dived before recovering to settle at Rs 4,185 still losing 3.18 per cent from its previous close.

   

 
 
UTI BANK-GTB SWAP RATIO STAYS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 23: 
The share swap ratio of UTI Bank and Global Trust Bank has been maintained at the 2.25:1 suggested by SBI Caps earlier, even as Deloitte, Haskins and Sells, appointed for a revaluation, recommended a marginally higher ratio of 2.50:1, in favour of UTI Bank.

Sources said while the report was forwarded to the Reserve Bank of India (RBI) today, Deloitte fixed a relatively higher swap ratio as the book value of UTI Bank after the period ended March 31, 2000, showed some decline, due to a depreciation in the value of investments and non-performing assets. However, these could not be confirmed from both UTI Bank and Global Trust Bank, as senior officials, including P J Nayak, chairman and managing director, UTI Bank, were not available for comments.

With the swap ratio now maintained at 2.25:1, sources said the merger should proceed smoothly after it receives the RBI’s approval.

The RBI’s clearance, however, is expected only after the end of this month, as the apex bank is yet to receive a final report from the Securities and Exchange Board of India (Sebi), as regards the issue of price manipulation in the GTB scrip prior to the announcement of the merger.

A preliminary report to this effect, has indicated the existence of prima facie evidence that leading stock brokers indulged in price manipulation of the scrip.

The final observation by the market regulator could be crucial, as reports say if the price manipulation is established, the RBI could even veto the merger of the two banks.

The ratio of 2.50:1 as suggested by Deloitte, does not vary much from the range initially considered by SBI Caps at the time of the merger.

Deloitte was given a free hand to decide on the methodology for arriving at the ratio. The accounting and management consultancy firm adopted a multi-dimensional approach to give a fair valuation report.

In fact, SBI Caps, which brokered the deal, is said to have initially considered a similar range. The four criterion which SBI Caps considered include weighted EPS, Sebi pricing norms, book value and maintainable profits.

   

 
 
GOVT APPROVES 48 FDI PLANS WORTH RS 683 CR 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 23: 
Union commerce and industry minister Murasoli Maran, today cleared 48 foreign direct investment (FDI) proposals worth Rs 683 crore, including a 100 per cent FDI proposal of Broadband Solutions Pvt Ltd.

The proposals were cleared by the minister on the recommendations of the Foreign Investment Promotion Board (FIPB).

The largest in the list of those cleared today is the Rs 230-crore proposal of Broadband Solutions Pvt Ltd for setting up internet services provider (ISP) services.

Tamilnadu Industrial Development Corporation Ltd’s Rs 148.03-crore proposal, for setting up a high-tech industrial park, was approved. The government also gave the green signal to a Rs 95.52 crore proposal of Lafarge India Limited, to hike the foreign equity holding from 4.61 per cent to 12.48 per cent, for manufacturing and selling of cement. French financial institution BNP Paribas Equities Pvt Ltd’s plan to issue preference shares worth Rs 26 crore, as part of its non-banking financial services (NBFC), got the nod.

A Rs 23 crore proposal of French energy company, TotalFina Elf was given the go-ahead.

The proposal of Tata-British Petroleum Lubricants Ltd for increasing foreign equity from 50 per cent to 99 per cent for manufacturing and marketing of lubricants, was also approved. It involves a fresh infusion of Rs 6.37 crore.

Proposal of Akzo Nobel Chemicals International BV, for manufacturing polymerisation initiators has also been cleared. For Akzo Nobel, the increase in foreign equity is from 40 per cent to 74.98 per cent with an FDI inflow of Rs 34.2 crore.

Bayer Industries’ plan for manufacturing and marketing leather chemicals and auxiliaries, involving an FDI inflow of Rs 4.46 crore, was among those approved. Foreign equity in the company has gone up from 70 to 100 per cent.

The proposal of Nestle India Ltd to manufacture instant coffee and chicory-roasted coffee blends also got the nod. However, it did not involve any fresh FDI inflow.

   

 
 
WHEAT SUPPORT PRICE RAISED 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, March 23: 
Bowing to pressure from Punjab and Haryana, the central government today hiked the minimum support price (MSP) of wheat for the rabi harvest by Rs 30 per quintal, from Rs 580 a quintal to Rs 610.

The Cabinet Committee on Economic Affairs (CCEA), also approved a financial restructuring package for ailing public sector unit Sponge Iron India Limited (SPIL)s.

Agriculture minister Nitish Kumar, who briefed the press after the meeting, said the government has decided to raise the MSP of wheat, despite the recommendations of the Commission of Agriculture Cost and Prices (CACP) that prices be frozen.

“The CACP has not recommended any hike in wheat prices, but we have decided on it, so that farmers get best value for their produce,” said Kumar.

The CCEA, on two previous occasions, had deferred a decision on this politically sensitive issue, with finance minister Yashwant Sinha fighting the move tooth and nail as it carries a price tag of Rs 550 crore in extra subsidy burden for the Centre.

Last time the CCEA was scheduled to meet, Prakash Singh Badal and Om Prakash Chautala, chief ministers of Punjab and Haryana respectively, had rushed to the capital to argue in favour of a price hike with Prime Minister Atal Bihari Vajpayee.

The government was in a dilemma, as the politically conscious farmers could have created quite a few headaches for it, but sensible economics dictated otherwise. In the final count, however, it was populism which triumphed.

Besides adding to the already huge food subsidy bill of Rs 13,675 crore, today’s decision will also mean the government’s already overflowing granaries will have to create space for the new grain it will now be forced to buy.

Kumar, who was asked by newspersons how he would find space for the new grain which the government will have to buy, tried to pass the buck with: “The food ministry will look into the storage issue.”

The CCEA also decided to increase the minimum support prices for barley, gram, rapeseed mustard and safflower. The MSP for barley has been fixed at Rs 500 per quintal, up from Rs 430 last year. The MSP for gram has been hiked by Rs 85, from Rs 1,015 to Rs 1,100 per quintal.

Prices of both rapeseed mustard and safflower for the rabi season have been hiked from Rs 1,100 to Rs 1,200 per quintal. While accepting that there had been some problems in providing the MSP to a few regions which had recently become surplus, Kumar said this would be sorted out soon.

“Our intention is to provide the much-needed support to farmers. The higher MSP for oilseeds and pulses is intended to woo the farmers to diversify from rice and wheat production.”

The move will help in bridging the shortfall in production of oilseeds and pulses by increasing its acreage through such incentives, he added.

The CCEA also approved the financial restructuring of Sponge Iron India Limited (SPIL). The government has decided to convert an outstanding loan amounting to Rs 32.51 crore disbursed to SPIL, into equity, as a prelude to disinvestment of the company.

The government has also decided to write off accumulated interest and penal interest amounting to Rs 36.78 crore as on March 31, 2000.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.66	HK $1	Rs. 5.90*
UK £1	Rs. 66.61	SW Fr 1	Rs. 2670*
Euro	Rs. 41.68	Sing $1	Rs. 25.85*
Yen 100	Rs. 37.94	Aus $1	Rs. 22.85*
*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.7325		Silver (Kg)	Rs.7300
Silver portion	Rs.7425		Silver portion	Rs.7305

Stock Indices

Sensex		3635.28		-78.69
BSE-100		1714.54		-45.06
S&P CNX Nifty	1161.30		-26.25
Calcutta	121.46		-2.22
Skindia GDR	623.84		-10.16
   
 

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