Weak rupee breaches 47-mark
Bargain hunters prop up tech stocks
Scam watch on global advisors to PSU selloff
Fresh Enron blow to Maharashtra
Three group firms to merge with Kesoram
Audit scare for watchdogs
ICICI macro view on micro-credit
Battle of wills on WiLL rages on
Five win in first lap for BSNL cellular order
Foreign Exchange, Bullion, Stock Indices

 
 
WEAK RUPEE BREACHES 47-MARK 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 16: 
The rupee plunged to 47.05 against the dollar, its lowest ever, amid fears that a tacit acceptance of the slide by the Reserve Bank (RBI) and the government will keep it under pressure.

The currency finished the day at 47.02/04, a shade higher than its intra-day trough, but its lowest close nevertheless. Its previous closing low was 46.88 recorded on November 20 last year.

Today’s slide was caused by a dash for dollars by companies and banks in a market that did not have enough of the US currency.

The Reserve Bank of India (RBI) did not step in, its hands-off strategy seen by many as an indication that it is not averse to a mild depreciation of the rupee.

Most currencies in the region have lost considerable ground to the dollar in recent months, prompting analysts to predict that the rupee will be under increased pressure in the immediate term.

Dealers expect a plunge to 47.10 when trading resumes on Tuesday, unless there is large-scale dollar infusion either through the RBI, or other banks and exporters. The slide in currencies of east Asian countries has fuelled fears that the rupee could even hit 47.50 in the space of a few days.

“There is nothing sacred about the rupee’s current levels. It may even touch Rs 47.50 soon,” said N Subramanian, senior analyst at e-mecklai.

His comments came hours before finance minister Yashwant Sinha told reporters in Delhi that the fall should be seen in the overall global context. East Asian currencies, the minister said, depreciated between 6 to 10 per cent. The forex market saw in this comment signs that authorities, including the central bank, were not opposed to a modest depreciation of the rupee.

Today’s choppy session was marked by a sense of nervousness that sent the rupee hurtling past the crucial 47 barrier to 46.99/47.02 in early morning deals after opening at 46.92/94. Though it touched yet another low of 47.03 soon, dollar sales by a few state-run and foreign banks lifted it to 46.95.

Dealers said one of the major reasons for the currency’s woes were thin dollar supplies which failed to keep pace with the unusually high demand from companies and banks.

“Dollar supplies are drying up. Though FIIs have not sold heavily, there are just not enough greenbacks to meet the needs of buyers,” said HDFC Bank’s Rohan Lazrado.

Though the rupee was later seen trading in a range of 46.95-97 during better part of the post-noon session, there was a spike in dollar demand at the fag end of the day, which dragged down the rupee to its nadir of 47.03/05, before it finished the day at 47.02/04. The currency has, therefore, lost 13 paise against its previous finish of 46.89/90 and it has depreciated over 33 paise in the last two sessions.

Gilts volatile

Prices of government securities (gilts) moved in sync with the rupee amid poor volumes. “Players preferred to wait for the rupee to stabilise before taking major positions in the market,” said a dealer at the money market. The 11.43 per cent 2008 paper recovered to Rs 104.23 in the afternoon, up from Rs 104.08 in the morning but down from Rs 104.27 on Friday.

   

 
 
BARGAIN HUNTERS PROP UP TECH STOCKS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 16: 
The Bombay Stock Exchange (BSE) sensex today overcame initial hiccups to close 67.85 points higher at 3251.62 in a relief rally driven by bargain hunters in search of beaten-down, but promising, technology shares.

The buying lifted the sentiment, but many were not sure how long it would last. There is a feeling the rally cannot be sustained at a time when most new-economy companies have predicted bleak numbers caused by a slowdown in the US, a country that buys much of their products. “I don’t expect today’s rise to sustain. There are no significant factors which could lead to an upsurge. The market will remain bearish and negative till it finds a new bottom,” an analyst said.

Last week, Infosys, a technology bellwether that has delivered spectacular gains to investors and customers, said sales in the current financial year will take a 30 per cent beating.

An early selloff that sent key stocks like Hindustan Lever and Zee Telefilms plunging dragged the sensex to a 27-month low at 3096.51. Lever dropped the maximum permissible 8 per cent. Trading in Zee Telefilms, under fire from investors and fund managers over its alleged links to tainted broker Ketan Parekh, was frozen after it lost 16 per cent.

The momentum for a recovery was built around noon when institutions stepped in to pick up stocks going for a bargain. The buying was not limited to Zee and Hindustan Lever, but was spread across a large spectrum, which included Infosys Technology, Satyam Computers, Reliance Industries.

There are indications that a foreign institutional investor (FII) picked up 15 lakh Zee shares, which lifted the stock from its intra-day low. Infosys perked up on reports that the Government of Singapore’s holding in the company had crossed 5 per cent.

Essel Packaging, a Subhash Chandra group company, shot up 16 per cent, the highest possible. So did Wipro, Pentamedia Graphics, Global Tele-Systems, DSQ Software, Digital Equipment and Silverline. Several old-economy shares also staged a smart rally.

Margins revised

BSE imposed a special margin of 25 per cent on Grasim Industries’ share from today. It also revised the rates on ACC to 25 per cent, DSQ Software to 25 per cent, gujarat fiscon b2 50 per cent, Sai Info Service to 50 per cent, Shonkh Tech to 50 per cent and Wockhardt to 25 per cent. The exchange has set up a system of making direct pay-out of securities into client accounts held with depositories in an effort to protect investors.

   

 
 
SCAM WATCH ON GLOBAL ADVISORS TO PSU SELLOFF 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, April 16: 
The core group of secretaries is likely to informally vet the list of approved global advisors to its public sector disinvestment programme in the light of allegations that some of them are involved in the stock market scam perpetrated by a bear cartel.

Senior officials said though the department of disinvestment has not initiated such a move, they would take up the issue at the core group of secretaries to ensure that the process is above board.

Besides the cabinet secretary and the disinvesment secretary, the finance and industry ministries and the planning commission as well as the concerned economic ministries are members of this body which decides on the selloff of PSUs.

Several FIIs are under scrutiny to determine whether they have links with a Mumbai-based bear cartel that has been accused of manipulating stock prices.

In an interim report submitted to the finance ministry on Sunday which is due to be tabled in parliament tomorrow, the Securities and Exchange Board of India (Sebi) is believed to have referred to their role too.

One of the firms under investigation is Credit Suisse First Boston which has the mandate for the divestment of Videsh Sanchar Nigam Ltd.

Officials feel that the FIIs have till now not been involved in any stock market manipulations aimed at PSU stocks but say that it would be best if things were cleared up after a thorough scrutiny.

The government has in the recent past been forced to refer allegations regarding share price rigging in VSNL’s case to Sebi.

The finance ministry does not want to be embroiled in any controversy that engulfs foreign financial institutions (FIIs).

Last year, it had been accused of favouring FIIs by issuing a circular that permitted them to route investments into India through “shell investment firms” in Mauritius which took advantage of a double taxation avoidance treaty with the Indian Ocean tax haven.

   

 
 
FRESH ENRON BLOW TO MAHARASHTRA 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 16: 
After settling for a conciliation process with the Centre, Enron-promoted Dabhol Power Company (DPC) has now taken on the Maharashtra government, by slapping a fresh arbitration notice for the state electricity board’s default in payment of Rs 225.26 crore.

“We confirm that DPC has issued a notice of arbitration to the Maharashtra government for failing to honour its obligations under the guarantee,” Jimmy Mogal, spokesperson for DPC said.

The amount was inclusive of the December bill of Rs 102 crore, January bill of Rs 111 crore and interest thereon, sources said.

According to the notice, DPC’s claim was currently evaluated at Rs 225.26 crore and the company had reserved the right to modify the sum.

DPC said today’s action is one of a number of steps the company is taking to protect its rights and the rights of its stakeholders. Other recent actions included declaring political force majeure under the power purchase agreement (PPA) and calling upon the central government to commence the conciliation process over their failure to honour the counter-guarantee for December.

Enron India chief K. Wade Cline has urged the state government to remedy this continuing default failing which DPC would have “no option but to take appropriate action.” DPC has sought relief through payment of Rs 225.26 crore forthwith pursuant to provisions of state guarantee without any set-off counter claim, deduction or withholding or damages, MSEB sources said.

Govt conciliator

The Centre today named former Supreme Court judge and Law Commission chairman Justice Jeevan Reddy to act as a conciliator in the dispute over unpaid bills of the Dabhol power project .

It had earlier said it would enter conciliation with Enron after DPC sent a ‘political force majeure’ notice to the Maharashtra State Electricity Board (MSEB), official sources said. Enron has named former Australian State Chief Justice Sir Laurence Street as its conciliator.

When contacted, Justice Reddy said he had not yet received any communication from the government in this regard.

Both the conciliators would now appoint a third person and the three-party panel would begin the conciliation process.

   

 
 
THREE GROUP FIRMS TO MERGE WITH KESORAM 
 
 
OUR BUREAU
 
Calcutta, April 16: 
In a strategic move aimed at shoring up its bottomline, B.K. Birla flagship Kesoram Industries Ltd is planning to merge three group companies with it.

A meeting of the board of directors of Kesoram Industries has been called on April 23 to consider the merger of Birla Century Finance Limited (BCFL), Bharat General and Textile Industries Ltd (BGTIL), and Hindustan Heavy Chemicals Limited (HHCL) with itself.

BCFL reported gross sales of Rs 12.6 crore for the year ended March 31, 2000 and earned a net profit of Rs 1.7 crore. For the three months ended December 31, 2000, the company reported sales of Rs 7.4 crore and earned a net profit of Rs 70 lakh. The Indian promoters have a 17.3 per cent stake in the company.

BGTIL is a fully-owned subsidiary of Kesoram with interests in textiles and garments. HHCL is an unlisted company.

The proposal to merge these three companies comes almost two years after Kesoram Industries spun off its textiles business into Kesoram Textiles Limited.

The Kesoram board will also consider the annual results and the recommendation of a dividend for the financial year 2000-2001 as the company had made a huge turnaround during the year so far, after suffering huge losses in the previous fiscal.

The total net profit for the nine-month period of 2000-2001 stood at Rs 7.43 crore against a net loss of Rs 4.17 crore during the corresponding period last year.

Since August last year, mystery buyers have been scooping up Kesoram shares from the open market prompting B.K. Birla to adopt the creeping acquisition route in an effort to ward off predators.

In February this year, there were reports that Shiv Kumar of Genesis International, a Dubai-based offshore investment company that advises several Indian companies and high networth individuals, had picked up a 12 per cent stake in Kesoram stoking fears of a raid on the company.

Kumar has since said he doesn’t intend to buy any more shares.

   

 
 
AUDIT SCARE FOR WATCHDOGS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, April 16: 
Bowing to the spate of complaints against regulators — be they stock market or telecom watchdogs—Prime Minister Atal Bihari Vajpayee today made it clear that the Comptroller and Auditor General’s office will audit the regulators’ functioning, to make them more accountable to the legislature.

“You will need to devise norms to audit the regulatory authorities. Their accountability needs to be ensured,” Vajpayee told a gathering of government auditors here today.

This is being read as a signal to regulatory bodies like the Securities and Exchange Board of India (Sebi) and the Telecom Regulatory Authority of India (Trai) that they will be brought under stricter audit scrutiny and that their decisions, or lack of decisions, may be probed.

The Vajpayee government is facing the flak for the market regulator’s inability to get a whiff of the goings on in the markets and its failure to take action before the scam threatened the stability of the country’s banking and stock market system.

Earlier, the telecom regulator had been under attack for taking decisions which favoured one set of private telecom companies over others, including state-run telecom companies.

In fact, even before the Prime Minister made the statement, the Comptroller and Auditor General of India, P. N. Shunglu, warned that regulatory bodies were regulating the government, rather than acting as arbitrators between consumers and service providers.

In an obvious reference to decisions taken by the telecom watchdog on telephone rates and license fees, he said: “We observe government revenues being affected, powers of the government being compromised and no corresponding user advantage. So long as the government remains the main service provider, their utility is in question.”

Vajpayee was also at loggerheads with the auditors over their respective stands on auditing public sector units which were being handed over to private control.

The Prime Minister clearly stated only some vestiges of audit control could be retained over such firms as otherwise it could hinder the entrepreneurial initiative of the management.

Shunglu, however, observed, “those who believe that decision-making is stifled by audit, do not wish to decide.”

CAG reports which are tabled in Parliament have often been embarrassing for various governments as they have highlighted various fiscal lapses committed by their officers and the Vajpayee government has been no exception. But usually, the relatively low-profile department has never bothered to take up policy issues affecting audit, with the government.

   

 
 
ICICI MACRO VIEW ON MICRO-CREDIT 
 
 
BY A STAFF REPORTER
 
Calcutta, April 16: 
The ICICI group is weighing a move to increase its presence in the micro-credit business. It also plans to enter financing of urban infrastructure in a big way.

Lalita Gupte, joint managing director and chief operating officer of ICICI told newspersons here today: “We have started the micro-credit business on a small scale in Maharshtra. But we are seriously considering the business. May be in another year’s time things will be more clearer.”

The merger of Bank of Madura with ICICI Bank has given a boost to the ICICI group’s foray into the micro-credit business.

“Bank of Madura has done some excellent work in micro-credit. This will help us a lot,” Gupte said.

She said the bank’s role is changing from that of a lender to a networking agent. “Banks should try to locate multi-national companies who can buy the products that the villagers produce,” she said.

According to available estimates, more than five lakh persons below the poverty line have gained access to organised micro-credit facilities in India in the last one year, through about one lakh self-help groups supported by nationalised banks and other micro-credit institutions.

Total disbursements till date are about Rs 150 crore, of which Rs 50 crore is from the banks and Rs 100 crore through the specialised micro-credit institutions.

Gupte was in the city to address a seminar on ‘Roadmap towards achieving a 9 per cent GDP growth rate,’ organised by the Indian Chamber of Commerce. The seminar was also attended by noted economist Isher Ahluwalia.

Charting out the roadmap for reaching the 9 per cent growth target, Gupte said it was essential to first boost investment in the economy. This could be done by encouraging private investment and raising domestic savings.

She also emphasised on the need to rejuvenate the capital markets, adding the government should bring in an improved system of supervision and regulation.

Both Ahluwalia and Gupte felt that there should be a change in the mindset of the people to take the economy forward.

   

 
 
BATTLE OF WILLS ON WILL RAGES ON 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 16: 
An adamant communications minister Ram Vilas Paswan said today the wireless-in-local-loop (WiLL) technology which enables basic operators to offer limited mobility was part of the New Telecom Policy unveiled in 1999.

Sticking to his guns at a meeting of ministers who form the group on telecom and information technology (GoT-IT), Paswan defended his decision to introduce WiLL technology, saying it was taken after ensuring a level-playing field for cellular operators. The three-hour meeting, a stormy affair that yielded no agreement, saw PAswan arguing that the licence fee paid by mobile service providers has fallen 3 to 7 per cent after it was brought on par with those of basic operators.

Paswan had told a GoT-IT and the strategic management group (SMG) meeting in November that his ministry had taken into account recommendations made by the Telecom Regulatory Authority of India (Trai) before allowing WiLL-based limited mobility for basic service providers. “Trai has already compensated cellular operators, who can now retain 5 per cent of the revenue they passed on to fixed service providers earlier,” Paswan is believed to have told today’s meeting.

Finance minister Yashwant Sinha and information technology minister Pramod Mahajan argued that the WiLL option does not appear appropriate at a time when convergence requires all services to merge to the benefit of customers.

Cellular operators’ demand to receive a revenue share from long distance calls — something basic operators are entitled to — was also discussed along the contentious issue of revenue sharing.

Paswan said spectrum charges, based on a formula which applies uniformly to basic and cellular companies, have now been linked to annual gross revenue of an operator.

Mahajan told reporters after the meeting that a report on the controversial limited mobility issue would be finalised within the April 30 deadline. The issue, which had been referred by the government to the group, is still pending with the Telecom Dispute Settlement and Appellate Tribunal (TDSAT). GoT-IT will determine whether the New Telecom Policy 1999 allowed limited mobility. It will also assess if the move ensures level playing field among operators and helps the government achieve its objective of providing services at the cheapest possible rates.

   

 
 
FIVE WIN IN FIRST LAP FOR BSNL CELLULAR ORDER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 16: 
Five telecom companies—four international and one local—have qualified the technical bid to supply 40 lakh cellular equipment to Bharat Sanchar Nigam Ltd (BSNL).

The five in race are Lucent, Ericsson, Alcatel, Motorola and Himachal Futuristic Communications Ltd (HFCL).

The Rs 1,800-crore tender was floated to procure cellular telephones lines based on global system for mobile (GSM) communications technology.

Lucent, Ericsson, Motorola have bid to provide cellular telephones lines in all the four zones —north, east, west and south zones—of BSNL. Alcatel is the fourth bidder for north and south zones.

HFCL, the only Indian telecom equipment manufacturer to have cleared the technical bid, is the fourth bidder for east zone.

Sources in BSNL said, “We hope to expedite the process for financial bids in the next two to three months. The price of telecom equipment are falling at a faster pace and we hope that we will get quality equipment for competitive price.”

“We hope to provide cellular phone services in select few towns by August 15. The network would be put up by July end. The full service will be operational by the year end or by early next year,” sources said.

BSNL had already announced that it would price both incoming and outgoing calls at Rs 3.50 per minute. The monthly rental had been fixed at Rs 400. It has fixed Rs 500 per subscriber as the registration charge and an activation fee of Rs.500 for its cellular service.

Excluding the two metros of Delhi and Mumbai, BSNL is likely to offer full-fledged mobile service in 600 cities.

In the first phase, BSNL will launch its services in Calcutta, Haldia, Patna, Chennai and Hyderabad. BSNL will offer 5,000 connections in Calcutta and 1,000 each in Chennai, Patna, Hyderabad and Haldia.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.47.04	HK $1	Rs. 5.95*
UK £1	Rs. 67.52	SW Fr 1	Rs. 27.05*
Euro	Rs. 41.80	Sing $1	Rs. 25.65*
Yen 100	Rs. 37.75	Aus $1	Rs. 23.55*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4360	Gold Std(10 gm)	Rs.4270
Gold 22 carat	Rs. 4155	Gold 22 carat	Rs.3950
Silver bar (Kg)	Rs. 7375	Silver (Kg)	Rs.7425
Silver portion	Rs. 7475	Silver portion	Rs.7430

Stock Indices

Sensex		3251.62		+67.85
BSE-100		1516.98		+44.05
S&P CNX Nifty	1044.60		+19.70
Calcutta	 112.63		+ 1.73
Skindia GDR	 NA		-
   
 

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