Sebi to get more legal ammo in arsenal
Reliance to cut 3,000 jobs in textile revamp
FI rescue act helps sensex rebound
Dipankar Basu heads management panel of CSE
Bottomlines of UTI Bank, GTB may take a hit
Cash-flush Tata Steel weighs new ventures
3 deputy MDs
Import fears stalk white goods industry
Maran sees spurt in revenue
Foreign Exchange, Bullion, Stock Indices

 
 
SEBI TO GET MORE LEGAL AMMO IN ARSENAL 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, April 2: 
The finance ministry is likely to arm the Securities and Exchange Board of India (Sebi) with more powers even as it considers recasting the stock market regulator’s board.

According to ministry officials, the government will put more full time members on the Sebi board who will be picked from various specialised fields. As part of the overhaul strategy, the ministry officials hinted that some of the present incumbents on the board might be relieved over time.

The ministry has also decided to grant judicial powers to the tribunal of Sebi. This tribunal will have the right to attach properties of those held guilty of misconduct as well as the power to impose penalties.

At present, Sebi can impose a maximum penalty of Rs 5 lakh. The market watchdog, in a representation to the finance ministry, had sought the right to impose penalties in multiples of the amount involved in a particular scam.

The officials admitted that Rs 5 lakh ceiling was “too low” a penalty for brokers who could make several thousands of crores through market manipulations. “They should be made to pay back the money that small investors have lost and the penalty should be such that it acts as a proper deterrent to all who are tempted to follow their footsteps.”

Sebi may also be given the power to freeze bank accounts of those held guilty of stock market manipulations. However, Sebi will not get extraordinary powers to search and seize documents. Instead it will be asked to work within the parameters of the criminal procedure code for such tasks.

Officials also asserted that though most people do not know, market related crimes are already cognisable. “Sebi can use various provisions of the exiting laws to press charges at trial courts.”

According to the ministry officials, the market watchdog has so far been wary of using this facility and preferred to impose monetary penalties.

The finance ministry has already written to Sebi asking it to complete the process of corporatisation of bourses by the middle of this month.

Sebi has been under a scanner for some time because of, what many consider, inordinate delay in reacting to various market scams.

Sebi, on its part, has long been complaining of lack of powers and investigative staff to probe possible manipulations in stock market markets.

CSE probe

Calcutta bureau adds: Sebi has launched a thorough probe into the payment shortfall that recently hit CSE.

Sources said the market watchdog is investigating into the alleged lapses in the bourse’s surveillance department as well as the “dubious” activities of a couple of broker-directors on the CSE board.

Sebi executive director L.K. Singhvi, who is in charge of the surveillance cell, is leading the investigation, they added.

The primary question that remains unanswered is that how the three big brokers, Dinesh Singhania, Ashok Poddar and Harish Biyani took such large positions in Himachal Futuristics, Global Tel and DSQ Software, hoodwinking the exchange’s surveillance department.

This apart, the committee’s role in disposing 28 lakh shares of HFCL at a discounted price during the payment crisis and its decision to sit on the shares of DSQ lodged by Biyani are also being probed.

Sources said the price of the DSQ scrip was over Rs 150 per when the shares were lodged. But the committee did not sell them in the market and the value of the stocks has eroded by almost 50 per cent now. “Had the shares been sold then, there would have been no problem in replenishing the settlement guarantee fund,” sources said.

Sebi executive director in charge of secondary market Pratip Kar said the Sebi surveillance wing has embarked on “an investigation at a larger scale” and “nothing can be said at this moment.”

   

 
 
RELIANCE TO CUT 3,000 JOBS IN TEXTILE REVAMP 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 2: 
Reliance Industries (RIL) will focus on high value-added men’s wear under the Vimal brand, phase out women’s apparels and relocate yarn-processing facilities around Silvassa under a textile business restructuring plan.

The rejig will lead to 3,000 layoffs, or 20 per cent of the company’s 15,000 workers who will be offered a voluntary separation package. The revamp comes at a time when the company is planning massive investments in the infocom industry. It targets textiles, which was a once a revenue spinner but lost its pre-eminence to petrochemicals and other businesses. It now accounts for less than 1 per cent of the turnover, which is still a staggering Rs 1,000 crore in a Rs 20,000-crore group.

Reliance said the focus will shift to its range of home textiles sold under the Harmony brand. While other products will be phased out, the polyester filament yarn processing business will be relocated around Silvassa from Naroda.

Vimal’s men’s wear will include blended and worsted suiting made at Naroda while women’s wear such as sarees and dress materials will be phased out. The penetration will be deepened by launching nationwide showrooms, besides the existing retail channels. Senior company officials said more flagship showrooms and retail outlets will come up across the country in a strategy which has been employed by other firms such as Indian Rayon and Raymond.

The company says the revamp aims to strengthen the leadership of the Vimal and Harmony brands, increase market share, protect the interests of all employees of the textiles business and enhance shareholder value substantially.

The VRS programme to be announced will provide the option of alternate employment to certain employees based on their skills. The package, expected to cost Rs 80 crore, will offer generous compensation for every year of continuous service, an ex-gratia for every year of remaining service up to the age of retirement and gratuity for the years spent at work.

Commenting on the restructuring plan, K Narayan, president, textiles business, said, “We are going ahead with the restructuring plan to sharpen our competitiveness, improve quality, boost margins on Vimal and Harmony products in the broader interests of our employees and shareholders.”

The Reliance scrip opened at Rs 385, plunged to a low of Rs 375, touched the high of Rs 392.95 and closed at Rs 389.45 on the Bombay Stock Exchange.

   

 
 
FI RESCUE ACT HELPS SENSEX REBOUND 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 2: 
A year can be an epoch in stock markets. As Dalal Street wound up the first day of the new financial year, it was burdened with the legacy of a slump that has cost investors a mind-boggling Rs 3,42,125 crore in lost shareholder wealth and rogues in the trading ring, their freedom.

The Bombay Stock Exchange (BSE) sensex closed the day with a 38-point loss, but not before it had plumbed a 22-month low of 3436.33 in early-session deals. A rescue act by local financial institutions later in the day helped a rebound.

The picture could not have been starker — roaring to 5001.28 on the first day of this month last year and retiring sheepishly to 3566.26 on April 2. In the gut-wrenching plunge through 1435.02 points, the market cap of all shares listed shrivelled from Rs 9,12,842 crore on March 31, 2000 to Rs 5,60,617 crore.

The woes don’t end there. Traded turnover dwindled to a niggardly Rs 936.66 crore today on a bourse which averaged Rs 6000 crore effortlessly. And, 98 per cent of that value, or Rs 921.43 crore, came from the specified group, leaving other categories of scrips with just 0.93 per cent, or Rs 8.75 crore.

The poor volumes forced domestic institutions to restore respectability to the market by propping up flagging counters that opened after Big Bull Ketan Parekh’s arrest last Friday. “Institutions saved the day, sending a reminder that Ketan was not the only one who could ramp up stocks,” a dealer said.

FIs zeroed in on index-based shares like Infosys, Satyam Computer, Hindustan Lever and Zee Telefilms and triggered an immediate turnaround in the sensex, a broker said. KP stocks HFCL and Global Tele were hammered but Zee recovered smartly on enquiries from institutions after hitting a low early on.

By mid-session, the BSE had fought back from a trough of 3436.33, (a intra-day loss of 168 points) to end the day at 3566.26.

Auto major Telco had to almost live down history as its share price skidded 8 per cent to Rs 59.65, perilously close to the historic 12-year low of Rs 59.5 plumbed on July 25, 1989.

Banks press sales

One nagging worry for brokers is the fear of banks selling mortgaged shares, particularly the K-10 scrips. It is estimated that they may offload securities worth Rs 600 crore in the next 5-6 days. “The trend has already started. I expect shares worth Rs 500 crore to be offloaded by banks in the next few days. The selling is likely to be limited to K-10,” said P H Ravikumar, director, ICICI.

   

 
 
DIPANKAR BASU HEADS MANAGEMENT PANEL OF CSE 
 
 
BY A STAFF REPORTER
 
Calcutta, April 2: 
The Calcutta Stock Exchange (CSE) has set up a five-member management sub-committee, headed by former State Bank of India chairman Dipankar Basu, that will oversee the day-to-day operation of the century-old bourse.

Besides Basu, the other members of the sub-committee are executive director Tapas Datta, PriceWaterhouse Coopers’ partner Roopen Roy, UTI executive director B.G. Daga and IIM professor V.N. Reddy.

“The immediate task of the sub-committee will be to chalk out a roadmap to revive the exchange and review the financial position,” Basu said. Its immediate challenge is to replenish the settlement guarantee fund which got eroded to meet the payment defaults, he added.

Talking to The Telegraph, Pratip Kar, executive director in-charge of the secondary market at the Securities and Exchange Board of India (Sebi), said, the management committee has been formed because the CSE by-laws do not allow the appointment of a chairman on the board without an election.

The truncated CSE board met today where Kar, who is a permanent invitee, was present.

“The committee has been set up in such a manner that all its members can meet as frequently as possible. The committee has no Sebi nominee. It will act as a forum to assist the management solve any problem that may arise,” Basu said while talking to the reporters after the meeting.

The sub-committee will be responsible for the overall management of the exchange. It will also embark on a fact finding exercise and submit its report to the Sebi within 10 days.

Terminal problem

Today about 50 CSE terminals were deactivated in the morning due to some confusion. This triggered off large scale resentment among the members.

   

 
 
BOTTOMLINES OF UTI BANK, GTB MAY TAKE A HIT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 2: 
With Bank of India’s (BoI) bottomlines set to take a hit due to the pay-order scam, the spotlight is on other banks as well where Ketan Parekh holds accounts.

The big bull, who has now fallen from grace, has a broking account with Global Trust Bank (GTB) and is also learnt to hold accounts in other private sector banks, including, the UTI Bank.

Sources said, GTB’s funded exposure to Parekh’s firms Triumph International and Classic Credit stand at around Rs 91 crore, down from the earlier Rs 108 crore.

With share prices sliding due to Parekh’s arrest, sources fear that GTB may take a hit of 5 per cent in this Rs 90 crore exposure.

“Considering the fact that the equities have lost some value, we feel, the bank may be affected to the tune of 5 per cent (Rs 4.5 crore). However, it is still too early to state whether the bank will take a hit,” said sources close to GTB.

While it has been mentioned that the big bull has an account with Standard Chartered, bank officials denied it. “We can confirm that the bank does not have a single account by the name of Ketan Parekh in our Fort branch,” a senior official said.

UTI Bank officials, however, were not available for comment.

Sources said that a clearer picture about the banks’ loss in this fiasco is set to emerge in a day or two.

   

 
 
CASH-FLUSH TATA STEEL WEIGHS NEW VENTURES 
 
 
BY A STAFF REPORTER
 
Calcutta, April 2: 
Tata Iron and Steel Company is exploring the possibility of entering into new business areas, according to managing director J.J. Irani.

Addressing newspersons here today Irani said: “Our capital expenditure has gone down substantially over the years. We will be having an investible surplus of Rs 1,000 crore. Out of this Tata Steel will invest Rs 300-400 crore every year in steel business. The remaining amount may be invested in new businesses.”

However, Irani kept mum on the likely areas that Tata Steel is planning to foray into. “It may be steel, it may be non-steel,” he said.

Terming the financial performance of Tata Steel for the just-ended fiscal as “good”, Irani said: “It will be announced within another two months time. Reduction in cost and rise in productivity have yielded better results for the company.”

B. Muthuraman, executive director (special projects) who will step into the shoes of Irani on July 22 said, “China is becoming the favoured destination of all global players. Tata Steel already has ferro-chrome conversion arrangement with a Chinese partner.”

Tisco has already started exporting hot rolled coils to China and from this financial year cold rolled coils will also be exported.

Asked whether the company has plans to set up a steel facility in China, Muthuraman refused to comment, saying that these are internal matters. The company has however, decided to set up a ferro-chrome facility in Australia. The cost of the project is Rs 300 crore.

The company today announced its physical performance which shows that total steel sales has gone up by 6 per cent to 3.38 million tonnes from 3.19 million tonnes in 1999-2000. Sales have increased in the domestic market by 11 per cent from 2.69 million tonnes to 2.97 million tonnes.

   

 
 
3 DEPUTY MDS 
 
 
BY AMIT CHAKRABORTY
 
Calcutta, April 2: 
Tata Steel will create posts for three deputy managing directors to elevate three executive directors.

According to sources, T.K. Mukherjee, executive director, operations, will be the deputy managing director in-charge of steel business. A.N. Singh, current executive director, town planning, will become deputy managing director, social service. Firdose Vandrevala, executive director, marketing and sales, will be deputy managing director, allied businesses.

   

 
 
IMPORT FEARS STALK WHITE GOODS INDUSTRY 
 
 
FROM SHASHWATI GHOSH
 
New Delhi, April 2: 
The white goods industry’s salad days of being pampered in a protective cocoon are over. The end of import quota curbs on mixies to grills to colour televisions has forced it into a battle with price warriors from abroad.

Duty walls will remain high but companies still harbour fears that cheap Chinese and Korean goods will give them a run for their money. High-end products will continue to flow in for the rich, for whom price tags do not matter.

In an attempt to protect an industry standing up to the swelling tide of imports, the government is considering whether it can impose anti-dumping duties and tariffs on Chinese goods.

Much of it flows through Nepal, where these items are assembled and exported to India, duty free, under a free-trade pact with the mountain kingdom. This passage may be choked in a review of the treaty expected in December.

Colour TVs are already going for a bargain in anticipation of competition: Videocon’s 21-inch model is selling at Rs 8,500 instead of Rs 11,500 two years ago; washing machines cost 20 per cent less.

Prices across most segments are likely to tumble. “Dealers are selling 14-inch colour TVs imported from China and Korea at Rs 4,500 and 21-inch models at Rs 5,800. Five-and-half kg washing machines could cost Rs 5,000, after paying the duty,” says Rabinder Chopra, a market analyst.

However, the industry is counting on Indian consumers’ legendary brand loyalty to fend off the foreign onslaught in the middle segments. Sunil Goel, Samsung India’s finance director, says the expected surge in imports of low-cost electronic items such as calculators and watches will affect the mass, not the brand market.

“India-specific customised products will be able to hold its own ground in the face of competition.”

Another saving grace, Chopra points out, is that Chinese goods “do not have much to offer by way of durability or quality”. At the end of the day, local firms like to believe, only price-sensitive consumers will switch over to cheap imports.

“There should be more incentives for local production and sops for exports to give domestic firms a level-playing field. This will make them strive for greater economies of scale,” says Goel. The current export regime, he claimed, does not even offset the duties paid for import of components and the raw materials purchased in the domestic market.

   

 
 
MARAN SEES SPURT IN REVENUE 
 
 
FROM OUR CORRESPONDENT.
 
New Delhi, April 2: 
The lifting of quantitative restrictions (QRs) will boost revenues and help check smuggling, Union minister of commerce and industry, Murasoli Maran, said here today.

The availability of products like designer clothes, accessories, gems, jewellery, champagne and cigars will not impact the mass market because they are used by the upper crust of society, he said. Many of these items, already being purchased from the grey market now, will make their way into homes through legitimate channels. More important, they will boost the exchequer’s kitty through a rise in duty collections.

The minister, speaking at a Ficci-organised national seminar on the new exim policy, urged chambers to form a committee to monitor the industry’s competitiveness. “The end QRs will force the industry to face competition,” he said. “WTO is a rule-based game and we should play fair. However, India is capable of bowling googlies,” the minister said, brushing aside misgivings about a surge in imports.

He agreed that some form of protectionism is required, but made it clear that it will be offered only during the transition period and will be limited to infant industries. “Infants should mature,” he exhorted as he stressed that long-term requirements must be balanced with immediate concerns.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Closed	HK $1	Rs.  5.90*
UK £1	Closed	SW Fr 1	Rs. 26.45*
Euro	Closed	Sing $1	Rs. 25.45*
Yen 100	Closed	Aus $1	Rs. 22.35*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs. 4315	Gold Std (10 gm)Rs. 4225
Gold 22 carat	Rs. 4075	Gold 22 carat	Rs. 3910
Silver bar (Kg)	Rs. 7325	Silver (Kg)	Rs. 7255
Silver portion	Rs. 7425	Silver portion	Rs. 7260

Stock Indices

Sensex		3566.26		-38.12
BSE-100		1659.26		-32.45
S&P CNX Nifty	1138.10		-10.10
Calcutta	120.06		- 1.34
Skindia GDR	   NA		   -
   
 

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