BMS trains guns on defence reform
Satyam Comp raises $ 140 m via ADS issue
Stocks rebound on FII rescue
Rupee bounces back from 47.04
Ethics code set for JPC members
Mahindra BT defers IPO
Khaitans forge tea export tieups
Morepen, Ameritek in diagnostic kit venture
LCC lines up Rs 41cr software centre in Saltlec
Foreign Exchange, Bullion, Stock Indices

 
 
BMS TRAINS GUNS ON DEFENCE REFORM 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, May 15: 
The BJP government is likely to be embroiled in another controversy, this time unleashed by its own supporters. The Bharatiya Mazdoor Sangh, the party’s labour arm, has issued a call for an agitation in the country’s ordnance factories to protest against the government’s policy of allowing foreign direct investment in defence production.

The BMS, which has been highly critical of the BJP government in the past, has now written to the government protesting its recent policy decision of allowing up to 100 per cent private participation and up to 26 per cent foreign investment in defence production.

The trade union front, which claims to be the largest in the country, feels the move compromises national security as defence secrets including the state of defence preparedness as well as quality of products being used by the armed forces may be revealed to foreign powers.

Government officials are perturbed as BMS is reportedly planning an agitational programme against the move in the country’s ordnance factories. What is most embarrassing for the government is that it is its own labour union could put it in the dock over this issue and not the much-maligned Left unions, which have also protested the move.

Sources said BMS is likely to close ranks with Congress and Left unions on their agitational programme which would hit all ordnance factories.

The BMS has been attacking the economic policies of the BJP government for quite sometime now, especially its labour and disinvestment policies. Its head, Dattopant Thengdi, had even gone to the extent of branding finance minister Yashwant Sinha as a “criminal.” Other Sangh Parivar constituents have also been attacking the BJP’s economic policies, especially their policy of opening up to the world economy. Its already under attack from the Swadeshi Jagran Manch for allowing cheap imports to flood the market, killing domestic small-scale manufacturers as well as permitting foreign insurance giants to enter the Indian market.

These repeated attacks by “its supporters” have been a cause of great embarrassment for the BJP-led government and a shot in the arm for its critics in opposition parties like the Congress and the Left.

The BJP government, however, does not show any sign of backing down from its stand of defence production despite the temper tantrums of its labour supporters. It has not even responded to the letter written by the BMS leadership.

The official stand on allowing private participation and even FDI in defence production is that India in any case imports most of its major ordnance requirements such as fighter aircraft, naval frigates, sophisticated artillery and even certain types of bombs.

   

 
 
SATYAM COMP RAISES $ 140 M VIA ADS ISSUE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 15: 
Satyam Computer Services Ltd, the Hyderabad-based software services major, today made its debut on the New York Stock Exchange (NYSE) when its American Depository Shares (ADS) opened at $ 11.16 after the opening bell.

The issue of 14.5 million ADS mopped up $ 140.8 million. Each ADS is equivalent to two regular shares.

The opening price denotes a premium of 14.9 per cent over the pre-listing price of $ 9.71 per ADS. This is par with its closing price of Rs 228.20 on the Bombay Stock Exchange (BSE) on Tuesday.

The ADS was underwritten by Merrill Lynch & Co., Deutsche Banc Alex Brown, Banc of America Securities LLC, Salomon Smith Barney and CLSA Emerging Markets.

The Satyam ADS will trade on the New York Stock Exchange under the symbol SAY.

Satyam said it offered 14.5 million ADS, excluding a 15 per cent oversubscription option. It had earlier filed with the Securities and Exchange Commission (SEC) to offer 12.5 million ADS and 1.875 million more if demand warranted.

The SAY scrip met with good response upon its listing and, at the time of writing this report, it had touched a high of $ 11.60 before sliding a bit to $ 11.20. Over 1.2 million shares were traded within 90 minutes of its listing.

Later, participating in a video conference, Satyam Computer chairman B. Ramalinga Raju, said 26 per cent of the proceeds will be utilised to clear outstanding debt, 40 per cent will be deployed for expansions and the rest for strategic acquisitions. The debt of the company is placed in the region of Rs 150-200 crore.

Sources close to the company said the issue was oversubscribed seven times with institutional investors mopping up a large slice of the issue.

The ADS was listed within three days of the issue announcement — the fastest in the country. It is also the first accelerated IPO from Asia on the US bourses.

Satyam Computer now joins its other well known peers like Infosys Technologies which is listed on Nasdaq, and Wipro and Silverline technologies which are listed on the New York Stock Exchange.

A total of nine Indian companies are listed in the United States which include Satyam Infoway, Satyam Computer’s subsidiary, which is listed on Nasdaq.

Last June, the dotcom bubble burst and flattened technology stocks that saw the Nasdaq index almost halve over the space of 12 months. Since then, most Indian companies led by Wipro have chosen to list on the less turbulent NYSE.

Analysts say the Satyam Computer’s listing would enhance the profile of the company that derives a bulk of its revenue from the North American markets.

The company is the fourth largest provider of information technology services in India and offers a comprehensive range of services, including software development, system maintenance, packaged software integration and engineering design services.

   

 
 
STOCKS REBOUND ON FII RESCUE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 15: 
It was relief rally everyone on Dalal Street was looking for a day after the ban on carry-forward deals. The Bombay Stock Exchange (BSE) sensex ended a roller-coaster session with a modest 8 point gain at 3576.96 on strong buying support from foreign institutional investors (FIIs) and domestic institutions like the Unit Trust of India .

The 30-share index slumped over 159 points to its intra-day low of 3480.42 after opening 88 points lower over its previous finish as operators reacted to the ban by selling across the board. Several shares plunged 8 per cent, the maximum they can in a day.

The slide was reversed when FIIs and domestic mutual funds led by UTI started picking up stocks at low valuations in the post-noon session. Market circles said the interest shown by foreign investors is an indication that they wanted an end to badla.

“FIIs have reacted positively to the Sebi move because carry-forward, in its current form, is not allowed even in the developed countries. Therefore, they saw an opportunity in stocks which were hammered and decided to pick them up,” an analyst said.

Sources said the buying was spread across technology and old-economy shares. Satyam Computers, Infosys, NIIT, Zee Telefilms, ICICI, Castrol, Grasim and Reliance Industries were among the scrips which ended the day with smart gains.

Apart from UTI, the other prominent institutional buyers were Goldman Sachs, LIC, Alliance Capital, Zurich Asset Management apart from few others.

The markets are now awaiting a decision from a crucial US Federal Reserve meeting which is expected to agree on yet another reduction in interest rates. Analysts are of the opinion that stocks at home could extend its gains in Wednesday’s trading if the rates are nudged down by more than 50 basis points.

The volume of business was higher at Rs 1359.56 crore compared with Rs 1020.59 crore on Monday. Satyam Computer was the top traded scrip, notching a turnover of Rs 200.67 crore. Satyam jumped by Rs 3.40 at 228.20, Reliance by Rs 10.35 at Rs 370.80, Infosys by Rs 12.20.

   

 
 
RUPEE BOUNCES BACK FROM 47.04 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 15: 
The rupee extended its loses to the second straight day, dipping to an intra-day low of 47.04 — perilously close to its record low of 47.05 — as banks rushed to scoop up dollars in a choppy session at the inter-bank forex market here today.

What stopped the currency from slipping further was the absence of significant demand from importers and the sizeable inflow of dollars which were held by exporters abroad.

According to forex market sources, the rupee was under pressure from the start of trading, opening with a massive gap of four paise compared with Monday’s finish of 46.98 at 47.02.

With demand for the dollars still strong from banks which expect a steeper slide, the rupee soon hit the day’s low around noon.

However, banks rushed to sell off their holdings when the anticipated demand for dollars did not materialise and exporters decided to sell their kitty of dollars. The rupee recovered to Monday’s levels, and remained largely range-bound before closing at 46.99/47 in a loss of three paise over its previous finish.

The currency had plumbed a historic low of 47.05 in April, and dealers say they had reconciled themselves to a similar slide today when exporters suddenly waded in with their dollars.

Though dollar supplies are expected to remain adequate in view of the strong buying by FIIs on stock exchanges today, sources say the rupee will move in a tight band over the next few days.

“The rupee is likely to hover around 46-98 levels. It may touch 47.05 if there is a massive demand for dollars,” said Kamla Aithan, forex consultant with e-Mecklai, a local forex firm.

FIIs are believed to have pumped in over $ 2.19 billion in equities since the beginning of this year and they were net buyers to the tune of Rs 111 crore on May 14. This is likely to swell if they maintain the tempo of purchases made today.

The rupee has depreciated by over eleven paise since May 8 following continuous dollar demand from corporates and importers. Forex sources said that a large part of the demand came from a large public sector oil company which is estimated at over $ 300 million.

   

 
 
ETHICS CODE SET FOR JPC MEMBERS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, May 15: 
The Joint Parliamentary Committee investigating the stock market scam today decided that its members should come clean on their financial interests and desist from attending hearings on companies in which they have interests.

One of the first MPs to come forward to comply with this was Samajwadi Party MP Amar Singh who declared his interest in ABCL and four other companies.

Barring Amar Singh, the JPC chairman said no other member had so far given such information about their links, if any, with stock market or companies.

“All members will be required to inform the committee (about their interests)”, JPC chief Prakash Mani Tripathi said here today. “We will then decide whether these companies fall within the gamut of the probe.”

Tripathi said this was a basic rule guiding all parliamentary committees. Any member with personal, pecuniary or direct interest in companies which are to be examined should desist from attending the hearings.

The committee also received a synopsis of Sebi’s report on the stock market scam which had earlier been presented to the finance ministry.

The Sebi report had blamed short sellers like First Global, Nirmal Bang and R.S. Damani for the recent stock market crash.

It has also highlighted the misuse of the banking system by stockbroker Ketan Parekh who channelled bank funds of up to Rs 2,000 crore into the stock market. The report shows a nexus between banks, corporates and brokers with funds going to and fro between the three to be used in the stock market.

The entities that lent funds to Parekh included Himachal Futuristic Communications Ltd (HFCL), Global Trust Bank and Madhavpura Mercantile Co-operative Bank.

Among those who briefed the probe committee today were finance secretary Ajit Kumar, banking secretary Devi Dayal, the Reserve Bank’s deputy governors Jagdish Kapoor and S.P. Talwar, and joint secretary (capital market) J. Bhagwati.

   

 
 
MAHINDRA BT DEFERS IPO 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, May 15: 
Mahindra British Telecom has put off its initial public offer (IPO) because of the bearish conditions prevailing on the stock market and the dismal outlook for the technology sector as a whole which has precipitated a slump in valuations.

Sources said MBT would now wait for an “opportune time” to hit the markets with its long-awaited IPO. The beleaguered Mahindra & Mahindra Ltd (M&M), the multi-utility vehicles and tractor maker, and its British partner had plans to unlock a part of its equity in its lead infotech subsidiary through this offer.

While conforming the development, a senior M&M official said the delay was more due to the current status of the technology stocks. “It is a very good issue and, therefore, we would like to hit the markets at the right time,” he added while refusing to say when that might be.

As per MBT’s plan, the flotation through the book building route will consist of a primary issue of over 53.18 lakh equity shares of the face value of Rs 2 each. The two shareholders of Mahindra-British Telecom Ltd — Mahindra Information Technology Services Ltd and British Telecommunications Plc (BT) — will be divest 63.82 lakh shares of the face value of Rs 2 each through the sale offer. Marketmen say the decision to put off the flotation is justified: if they had rushed through with the issue, the company would have got a low valuation.

For the beleaguered utility and tractor maker, the selloff would have unlocked the value of its investment in MBT. On the basis of the turnover of Rs 200 crore posted by MBT in the previous year, the analysts had estimated that M&M’s 57 per cent stake in the company would be valued at about Rs 700 crore.

MBT has full-fledged software development centres in Mumbai and Pune and in London. MBT’s clientele includes companies like BT and MCI Worldcom. However, it has since been reducing its dependence on BT. The company is engaged in telecommunications software business, software engineering and e-business. MBT has a subsidiary company in the US called MBT International Inc and marketing offices in the UK, the US, Australia, Oman and India.

Analysts are concerned about the company’s huge dependence on orders from BT. The two companies had earlier signed an agreement under which BT had guaranteed business worth at least £ 35 million each year till March 2003.

This represents an increase of 36 per cent over the business of pound sterling 63.15 million that BT placed with MBT over the past three to four years.

   

 
 
KHAITANS FORGE TEA EXPORT TIEUPS 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, May 15: 
The Khaitans have established a network of marketing channels to export their teas to Europe from tomorrow.

The formal marketing agreement under which the Magors sold the teas produced by the Khaitan-owned gardens in Assam ended today.

The Khaitans have signed agreements with marketing outfits in 16 countries including with giants like Tetley, Twinings, and Taylors who will now lift teas from them directly. They have also appointed broking agents in the UK, Germany, Ireland and the US who will handle the exports on their behalf.

With this new marketing arrangement, the company aims to export 10-12 million kgs of tea in the current financial year.

“All the big buyers have agreed to lift tea from us. In fact, some 6-7 very big buyers have agreed to lift tea from us,” a top company official said.

The entire marketing team of Williamson Magor group was in the UK over the past fortnight to cobble the company’s tea export strategy.

Before the split between the Magors and the Khaitans, the group (including George Williamson) used to export about 20 million kgs.

“Out of this, about 12 million kgs of tea belonged to Bishnauth Tea and McLeod Russell,” the official said.

Earlier, the company had an arrangement with Philip Magor who would broker the deal on behalf of the Khaitans.

“There was an agreement between the two that the Magors would export our teas in countries like the UK, Ireland, Germany and others,” officials said.

The Magors were paid a commission which was based on the prices and quantity of teas.

The Khaitans will now start marketing second flush teas on their own. The first flush teas were exported through Magor’s Newbury office in London.

The company is also working out a marketing strategy to export teas to West Asia, and Pakistan. In fact, a team from Williamson Magor will leave for these countries in another two weeks.

Buyers in the UK and other European countries are eager to lift quality second flush teas produced during May and June.

Buyers from the UK and Ireland place order for CTC teas while the other parts of the continent import orthodox teas. “Indian tea has great demand in these markets,” industry officials said.

Williamson Magor officials said Indian teas face stiff competition during July, August and September when the Kenyan teas come into the market.

“This time we will try to market teas that come during July in countries like Pakistan and West Asia. They are eager to lift teas produced during this time,” a senior company official said.

Tea prices on the international markets have been firming up. CTC teas are being sold at a price of $2-2.5 per kg and orthodox teas are being sold at $4 per kg.

   

 
 
MOREPEN, AMERITEK IN DIAGNOSTIC KIT VENTURE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 15: 
Morepen Labs has entered into a strategic manufacturing joint venture with Ameritek Inc of the US to manufacture the latter’s range of rapid diagnostic kits in India and all other SAARC countries, except Pakistan. The investment in the joint venture is around Rs 5 crore.

However, in the first six months, Morepen will import these products for test-marketing. It wizll begin manufacturing the products only early next year at its plant at Baddi, Himachal Pradesh. Ameritek will transfer the technology and will co-brand the products under the ‘dBest-Morepen’ brand name.

The initial product portfolio will comprise test kits that can diagnose fertility and pregnancy, AIDS, Hepatitis-B, Hepatitis-C, cardiac problems and tumours. Most of these kits are in one-step formats including cassettes, dipstrip, midstream test and multi-parameter test strips for urinalysis.

According to S. Ahuja, vice-president Mediapath Division, the diagnostic arm of Morepan that came into existence last year September, “The imported products will be out in the market within 4-5 weeks.”

K. C. Yee, MD and president of Ameritek USA, said once production commences in India, the company will initially pick up an equity stake of 25 per cent in the venture. Ameritek has USFDA approved manufacturing facilities and an R&D base in USA.

According to Sushil Suri, chairman Morepen Laboratories Limited, the USP of the test kits is their convenience and price. For all the tests, the cost to the end user is at around Rs 50-70 for home users and Rs 30-50 for laboratories. He said 80 per cent of Morepen’s target market will be laboratories. Mediapath is already targeting 14,000 labs as part of its marketing strategy.

Recently, the Ahmedabad-based Cadila Pharmaceuticals launched its NEVA kit for AIDS detection. The kit, which can detect the absence or presence of AIDS in three minutes, costs Rs 39 per test. The Morepen single-use test kit for AIDS costs Rs 65, though the time for diagnosis is the same.

Suri said Morepen is targeting 1 lakh retailers in the first year of operations for these OTC kits. He said the company is eyeing a 15 per cent market share of the $ 30 million rapid test diagnosis market, which, he says, is growing at 30 per cent per annum.

   

 
 
LCC LINES UP RS 41CR SOFTWARE CENTRE IN SALTLEC 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, May 15: 
LCC Infotech, the city-based infotech education and training company, plans to set up a software development facility at Salt Lake Electronics Complex (Saltlec). The project, a three-tower 12-storeyed edifice, will be built over 1.2 lakh square feet at an estimated cost of Rs 41 crore.

The centre will house the offices of LCC and provide facilities for voice conferencing, data transmission and satellite conferencing. LCC plans to rent out at least 50 per cent of the space in the building to entrepreneurs who implement offshore projects, but do not want to set up offices in the city, says Jasbir Singh, company general manager (brands).

The project is coming up a time when plans are being drawn up to diversify into medical informatics services like medical transcription, software development, coding and billing and training for nursing schools, though Singh expects them to contribute only 5 per cent to the total revenues.

Software development accounted for Rs 6.5 crore of LCC’s turnover of Rs 92.28 crore in 2000-2001. In the current financial year, it expects a turnover of around Rs 160 crore while the share of earnings from software is seen at Rs 12 crore.

LCC has revamped its education courses and cut down on their duration. Its planned residential-cum-training centres in Durgapur and Siliguri will open by July 15. “This is an entirely new concept in the area of IT training. We will set up a chain of study centres and offer six-month residential training programmes which are an extension of our TISM courses. We are spending around Rs 2 crore on this project,” says Singh.

LCC has signed an understanding with Orissa to provide computer training and education in 1,593 government and government-aided schools in the state.

It already has centres in 28 schools, while others will be covered in six phases. The project, which is part of the IT education initiative recommended by Prime Minister’s taskforce on IT, will be completed by December at an estimated cost of Rs 25 crore.

Commenting on the returns from this project, Singh said: “We expect an average of 300 students, who will be required to pay Rs 45 per month for the course, in every school.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs.46.47	HK $1	Rs. 5.95*
UK £1	Rs.66.58	SW Fr 1	Rs.26.45*
Euro	Rs.41.20	Sing $1	Rs.25.50*
Yen 100	Rs.38.12	Aus $1	Rs.24.00*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs.4450		Gold Std(10 gm)	Rs.4370
Gold 22 carat	Rs.4200		Gold 22 carat	Rs.4040
Silver bar (Kg)	Rs.7325		Silver (Kg)	Rs.7360
Silver portion	Rs.7425		Silver portion	Rs.7365

Stock Indices

Sensex		3576.96		+  8.03
BSE-100		1724.10		+  5.84
S&P CNX Nifty	1145.30		+  4.50
Calcutta	 120.75		+  0.33
Skindia GDR	   NA		     -
   
 

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