Stocks gain, rupee claws back
Centre not to pick up tab for Dabhol dues
Buyouts abroad now easier
CSE seeks more time from Sebi
Mutuals bleed in tech wreck
Boost to tea exports
Nasscom panel to select new steward
Singapore keen to invest in software
Hero Honda scooters to hit the road in 3 years
Foreign Exchange, Bullion, Stock Indices

 
 
STOCKS GAIN, RUPEE CLAWS BACK 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, April 17: 
A beaten-down rupee clawed its way back from another all-time low of 47.10/13 against the dollar and the Bombay Stock Exchange (BSE) sensex vaulted 60.67 points, extending its gains to the second straight day on brisk buying in safe-haven shares.

The relief rally on bourses and in the forex markets buoyed investors and foreign institutional investors (FIIs), whose returns from investments in stocks fall with rupee’s depreciation.

The rupee plummeted to 47.10/13 early on but recovered dramatically after exporters brought in earnings stashed abroad and helped meet the growing demand for greenbacks.

Corporates’ appetite for dollars remained voracious, but the inflows from exporters and liquidation by long buyers propped up the rupee to 46.83/85 at the close. Forex dealers claimed that most deals were wrapped up in the range of 46.85/86.

On Dalal Street, foreign institutional investors took a shine to technology stocks while local institutions led by Unit Trust of India (UTI) scooped up defensive shares like Grasim and ACC.

Infotech shares, except bellwethers Infosys Technologies and Satyam Computer, gained the maximum possible 8 per cent.

The 30-share index opened weak at 3231.94, slipped to 3220.65 in response to Monday’s 52-point slide in the Nasdaq Composite Index. It later edged up to the 3300-mark to close at 3312.29 against its previous finish of 3251.62 in a 1.87 per cent increase.

FIIs, which had invested heavily in the last settlement, kept up their purchases of select software stocks. Index-based shares such as Reliance, Tisco, Telco, Bhel, Gujarat Ambuja, Grasim and Hindustan Lever were a big draw with local institutions. Market operators said the enthusiasm of FIIs spread to local players, which placed token buy orders for old economy stocks.

In the specified group, 149 shares, including 26 from the sensex, recorded sharp to moderate gains; 24 closed with losses.

Volumes at Rs 1286.34 crore were the heaviest in three weeks and marked big surge over Monday’s Rs 964.69 crore. Satyam Computer was the top traded share with a turnover of Rs 210.97 crore followed by Infosys (Rs 136.08 crore), Reliance (Rs 86.72 crore), Wipro (Rs 83.88 crore) and Zee Telefilms (Rs 58.94 crore).

Reliance shot up by Rs 6.30 at Rs 315.15, Wipro by Rs 96.70 at Rs 1085.85, Zee by Rs 2.55 at Rs 79.45, ACC by Rs 6.70 at Rs 138.90, Bhel by Rs 12.95 at Rs 143.85, Cipla by Rs 51.85 at Rs 972.45 and Dr Reddy’s by Rs 24.65 at Rs 981.80. The losers included Infosys Technologies, which declined by Rs 23.45 at Rs 3049.50, ITC by Rs 3.95 at Rs 819.20 and L&T by Rs 4 at Rs 211.

Gelli denial

Former Global Trust Bank (GTB) chairman Ramesh Gelli today denied he was involved in the trading of Bank of Madura shares before its merger with the ICICI Bank. “Sebi has not asked for any information on my involvement with A C Muthiah or Arun Kumar in the Bank of Madura share,” he said.

Muthiah had resigned from the GTB board of GTB on November 24, much before ICICI and BoM announced their merger. “There is no question of me being informed about ICICI and BoM merger by Muthiah and it would be wrong to assume that I was involved in any way just by virtue of knowing both parties,” he said in reaction to reports that appeared in a section of the press today.

Madhavpura-KP nexus

The Mandvi branch of Madhavpura Mercentile Cooperative Bank allowed unsecured and unauthorised overdrafts worth Rs 843.57 crore to 10 firms which were owned by Ketan Parekh’s associates, minister of state for finance, Balasaheb Vikhe Patil, told the Rajya Sabha in a written reply today.

The Reserve Bank, he said, has put GTB’s funded exposure to Parekh’s companies at Rs 219.52 crore and non-funded exposure at Rs 26.50 crore as on March 31, 2001.

Finance Minister Yashwant Sinha said Sebi has taken various steps to safeguard the interests of investors. These include moves to increase transparency on stock exchanges.

   

 
 
CENTRE NOT TO PICK UP TAB FOR DABHOL DUES 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 17: 
The Union cabinet was today briefed on the government’s decision not to pick up the tab for Dabhol Power Company’s unpaid bills.

The Union power ministry has adopted the stand that since the amount of dues was itself in dispute with the the Maharashtra government demanding fines from the US-owned power plant, the Centre has decided that it need not pay up at present in accordance with the counter-guarantee agreement it had signed for the fast-track power project.

The cabinet was also informed about the negotiations to bring about an amicable settlement to the dispute which has been referred for conciliation.

US power giant Enron which owns Dabhol has already slapped arbitration notices on the Centre after the Maharashtra State Electricity Board (MSEB) and the state government failed to pay for the power that they had purchased from the power utility.

The Centre had stood guarantor for the payments when a power purchase pact had been signed between Dabhol Power Company and the MSEB.

The Maharashtra government had earlier asked the Centre not to cough up the counter guarantee money as DPC owed the state about Rs 401 crore in penalties towards short supply of electricity.

Dabhol had demanded Rs 102 crore from the Centre stating the Maharashtra government had defaulted on its state electricity board’s December payment. But the state government cautioned the Centre against paying this money stating the state’s claim on the power utility was still pending.

Maharashtra claims DPC had supplied a mere 154 mw of power against the contracted 657 mw to MSEB between October 2000 and January 2001.

PTI adds: Official sources said the Godbole committee report on the Enron issue, which had recommended review of the power purchase agreement of DPC, was not discussed at the Cabinet meeting.

“The report was commissioned by the Maharashtra government and the Centre had no role to play in it,”they added.

   

 
 
BUYOUTS ABROAD NOW EASIER 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, April 17: 
The government today formally allowed all companies who have floated global deposit receipts or American depositary receipts to buy out businesses abroad through ADR/GDR stock swap under the automatic approval route. However these companies can only buy businesses in the same core areas and up to $100 million. Earlier this facility was allowed only to companies engaged in infotech, pharma and bio-tech.

The committee on overseas investment would consider investments beyond this limit. Proposals for direct investment in a joint venture or a wholly-owned subsidiary abroad by either a private or public limited company would be entitled to automatic approval without prior RBI reference if it has a profit earning record during the preceding three years and if the proposal is related to the companies core activity.

The government has said that the funding of such investments could be either through balances in the EEFC accounts of the investing companies, 50 per cent of ADR/GDR realisation or through domestic resources, including loans, equity and other contingent liabilities like guarantees that should not exceed 25 per cent of the net worth of the investing company.

The government would also increase the investment ceiling under the automatic route for investments in Saarc countries, Nepal and Bhutan.

   

 
 
CSE SEEKS MORE TIME FROM SEBI 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, April 17: 
The Calcutta Stock Exchange (CSE) has sought 15 days more from the Securities and Exchange Board of India (Sebi) to submit its report on the payment crisis last month.

Sources said the management committee, which had been assigned to submit a detailed report on the crisis by April 15, is yet to complete its inspection.

A committee member, preferring anonymity, said the report would take more time simply because “several transactions that took place during the period are now being probed.”

“Hopefully by the last week of this month we will be able to complete our inspection,” he said.

Confirming that the bourse has sought extra time from Sebi, CSE executive director Tapas Dutta said the management committee will first give its report to the governing board that comprises six public nominees and three Sebi representatives.

According to Dutta, Sebi executive director Pratip Kar, who oversaw the formation of the five-member management committee at CSE, has already been informed about the bourse’s request to extend the time limit.

The management committee is also weighing measures to revive the crisis-ridden CSE.

“We need to restore the confidence of the brokers and bring them back to business. At the same time, some hard decisions are needed to stop malpractices that triggered the crisis,” the committee member said.

   

 
 
MUTUALS BLEED IN TECH WRECK 
 
 
FROM SATISH JOHN
 
Mumbai, April 17: 
Mutual funds dedicated to information technology have been scalded by the crash in dotcom valuations and investor aversion to fledgling information technology firms.

Many funds which launched schemes to invest in the technology sector have seen the net asset value — the value of shares in a portfolio — of a Rs 10 unit plummet to Rs 3.50.

Asset management firms which won wide acclaim for their prowess with managing others’ money are struggling to stay afloat with new strategies to beat the market meltdown.

But, can they make a comeback? The odds are long. Unhappy investors, who left hard-earned savings to their judgement, are sniping at their heels. Even big names like Kothari Pioneer, ING Investment, Birla Mutual Fund and Alliance Mutual Fund are finding themselves in the line of fire.

“Their skills and efficiency have been brought into question,” says an analyst affiliated to a premier FII stock broking outfit. According to an analyst who keeps tabs on mutuals, most funds find it difficult to sell their way out of shares they know will be worth nothing in a sinking market.

Alliance New Millennium fund, floated to make the best of the tech boom, has seen NAVs of its dividend and growth schemes dive. Some of those units, with a face value of Rs 10, have plunged to Rs 3.53. The asset management firm’s problems go beyond the tech sector. Its Buy India schemes are also quoting below par, at Rs 4.58 per unit; basic industries dividend and growth units are languishing at Rs 7.45.

ING’s balanced portfolio scheme for dividend and growth is teetering at Rs 5.03. Kothari Internet Opportunities, a scheme drawn up at the height of the internet crush, is floundering at Rs 4.21; its income builder is adrift at Rs 7.60.

Birla’s IT fund is better off, but only just, at Rs 6.95. With schemes scraping the bottom at Rs 3.50 per unit, there are not many bravehearts who are expecting a turnaround soon.

The few optimists that there are point to ICICI Power as an example of a fund that rose from the ashes. Analysts disagree, saying funds which are in dire straits today are unable to churn portfolios fast enough to ride out the storm.

The Big Daddies can stand up to the pressure, but the minnows face the danger of being swept away by the wave of redemptions.

   

 
 
BOOST TO TEA EXPORTS 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, April 17: 
Twelve international consultants including Anderson Consulting, McKinsey & Co, Ernst Young, PricewaterhouseCoopers, Fergusson & Co are vying for a Tea Board mandate to prepare a mid-term strategy which will help the industry bolster its flagging exports.

The consultants have already made presentations to the board, which has been asked by the commerce ministry to map out a blueprint that coincides with the Tenth Five Year Plan starting 2002. The consultant, to be selected next month, will formulate and implement the strategy in an exercise which will be funded by the ministry. “It will submit a separate export plan for the current financial year, besides plotting a five-year strategy,” a board official said.

The board is treading the path taken by Coffee Board which gave McKinsey & Co a Rs 80-lakh mandate to sketch a similar plan.

Industry officials say countries which import from India have not been buying their full requirement in spite of the fact that the tea produced here is priced competitively. “A limited penetration of markets abroad and a short-sighted government policy have impeded exports.

As trade barriers are dismantled, only industries which are cost effective and receptive to customer needs will succeed,” they added.

The consultant will provide the Tea Board information on the way Sri Lanka, Kenya, Vietnam and Thailand grow tea, mark out trends in the emerging markets and identify countries which are likely to have a taste for Indian varieties.

There are growing indications that the industry faces a difficult year ahead in its effort to sell its products abroad.

The country exported 197.8 million kgs last year, but the price fetched slipped to Rs 88.07 per kg compared with Rs 102.54 a year ago.

   

 
 
NASSCOM PANEL TO SELECT NEW STEWARD 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 17: 
National Association of Software and Service Companies (Nasscom) will set up a screening panel to select a new president after the death of Dewang Mehta and a governing committee which will delineate the organisation’s role.

The new chief will step in at a time when the software industry is expected to grow between 40 and 45 per cent in 2001–02 to an estimated $ 8.5-9 billion. Preliminary figures put software exports at over $ 6.2 billion this year, a jump of over 55 percent over the $ 4 billion achieved in the previous year.

Nasscom’s executive council had met in Delhi on April 15 under the chairmanship of Phiroz Vandrevala, executive vice-president of Tata Consultancy Services. “The council constituted a committee to select a president and governance panel which will make recommendations on the organisation’s structure, roles and responsibilities,” Vandrevala said.

“The Nasscom secretariat is equipped to manage its affairs. The chairman and two vice-chairmen will provide additional support,” he added.

Today’s meeting was attended by senior industry leaders and past chairmen.

The executive council acknowledged the pioneering and unstinted efforts made by Mehta in building up the association as a key force in India’s IT industry.

“The screening committee will be constituted by the third week of May. It is likely to include Infosys chairman N R Narayana murthy and Saurabh Srivastva of IIS,” sources said.

According to the first-flash export numbers collated for the last financial year, exports grew 66 per cent in rupee terms and by 55 per cent in dollars. Preliminary projections for 2001–02 have been received from the top 25 companies which account for about 60 per cent of the total exports.

The growth forecasts are higher than those made in a McKinsey-Nasscom study.

“The Nasscom-McKinsey report has estimated software exports at $ 50 billion in 2008. To achieve that target, the industry will need to grow at the rate of 35 per cent every year,” said Nasscom vice-chairman Arun Kumar.

“A focus on markets other than the US and the anticipated acceleration in the world’s largest economy later this year could help the industry achieve its targets set for 2001-02,” Vandrevala said.

   

 
 
SINGAPORE KEEN TO INVEST IN SOFTWARE 
 
 
BY A STAFF REPORTER
 
Calcutta, April 17: 
Singapore is keen to invest in software development centres in India. It is also interested in the information technology hub in the city.

Kwok-Pun Wong, high commissioner of Singapore in India, who met state chief minister Buddhadeb Bhattacharjee today, discussed investment possibilities in the state. Although nothing specific emerged during their meeting, Bhatttacharjee sought to impress upon the high commissioner bout the infrastructural advantage and availability of skilled IT manpower in the state.

Earlier after a meeting with the Confederation of Indian Industry, eastern region, Wong told reporters that he would not make any commitment but only carry home the proposals of the chief minister.

In his speech at CII and Calcutta Chamber of Commerce, Wong noted that Singapore, which has already invested 2 billion Singaporean dollar in India, is interested in projects related to software parks, airlines and infrastructure.

“Singapore has wide experience in logistics and transport sectors like airport, airlines, shipping, highways which may be useful for Indian companies’’, he said.

   

 
 
HERO HONDA SCOOTERS TO HIT THE ROAD IN 3 YEARS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, April 17: 
Hero Honda Motors India Ltd is planning a foray into the scooters’ business within three years and may pose a challenge to market leader Bajaj Auto. Atul Sobti, senior-vice president marketing and sales said: “We will examine the strategy and explore the possibility of entering scooter market by 2004. By then our contract with Honda Motors for not entering the scooter market ends.”

Hero Honda has already given Bajaj Auto a run for its money by selling more bikes than bike and scooters combined sold by Bajaj. Hence, the company’s entry into scooter segment could pose serious challenge for Bajaj, which has lost a major chunk of its market share to LML.

During April to December 2000, Hero Honda sold 7.54 lakh bikes, while Bajaj sold 4.12 lakh bikes followed by TVS Suzuki which sold 2.65 lakh units.

Pawan Munjal, director and chief executive officer of Hero Honda said: “We can exercise the option of entering the scooters’ market. We will study the market and take a decision. Currently, it will be difficult to elaborate on the strategy.”

The company today announced an investment of Rs. 300 crore to increase the production capacity by 50 per cent from 1 million units to 1.75 million units. Hero Honda Motors registered a gross revenue of Rs 3,917 crore for the year 2000-2001.

The net profit of the company during the fiscal was Rs 250 crore with a sales turnover of Rs 3,170 crore for the same period.

Munjal is not worried about the Chinese bikes which are threatening to soon hit the domestic market.

“Indian emission and safety norms are very strict which they will have to pass before they can be sold in India. Pricing is another important consideration. But a bike is still a major investment for the Indian middle income group and they will not like to invest in something because it is cheap,” he said.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	 Rs.46.89	HK $1	Rs.  5.95
UK £1	 Rs.67.20	SW Fr 1	Rs. 27.05*
Euro	 Rs.41.28	Sing $1	Rs. 25.65*
Yen 100	 Rs.37.99	Aus $1	Rs. 23.65*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4400	Gold Std(10 gm)	Rs.4300
Gold 22 carat	Rs. 4155	Gold 22 carat	Rs.3980
Silver bar (Kg)	Rs. 7475	Silver (Kg)	Rs.7475
Silver portion	Rs. 7575	Silver portion	Rs.7480

Stock Indices

Sensex	    	3312.29		+60.67
BSE-100	    	1560.29		+43.31
S&P CNX Nifty	1067.00		+22.40
Calcutta	 114.46		+ 1.83
Skindia GDR	 573.33		-11.67
   
 

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