Bank stocks come alive
Rs 800-cr package to bail out Madhavpura
Nasscom shortlists 8 as Dewang’s successor
Dip in SBI’s non-food credit disbursal
Escorts net dips 4.4% to Rs 107.4 cr
Badla rollback ruled out
ACC still to come out of Tata shadow
Tata Power sales up 21%
Balco brass packed off to Korba
Foreign Exchange, Bullion, Stock Indices

Mumbai, June 20: 
Expectations of a 50-100 basis point cut in the bank rate propped up bank shares on bourses and knocked down yields of a few government securities to record lows.

Many in the money market feel a lower benchmark rate will be preceeded by a reduction in the repo rate from the present 6.5 per cent in view of the comfortable liquidity position.

Hopes that a cut is imminent sparked a scramble for dated securities among investors, pushing up prices and bringing down yields.

For instance, the return on the 10-year 10.50 per cent 2011 security dipped to an all-time low of 9.62 per cent. The drop was 4 basis points over its previous close, but analysts say it will settle lower at 9.50 per cent; five-year papers were fetching around 5 basis points less at 8.75 per cent.

In the stock markets, operators fed with reports that a rate cut was around the corner saw a window of opportunity in bank shares.

As a result, HDFC Bank, ICICI Bank, State Bank of India (SBI) and Corporation Bank ended with smart gains.

HDFC Bank opened at Rs 206, peaked at Rs 213.90 before ending a tad lower at Rs 213.05 in an increase of Rs 8.35 over its previous finish. ICICI Bank, another key private sector player, was also a big draw, its share finishing at Rs 144.85 after opening at Rs 143 and hitting a high of Rs 146.70.

There was a mild selloff at the SBI counter early in the session on jitters that a VRS at the country’s largest bank would bite into its fourth-quarter and full-year earnings. The scrip had opened at Rs 221.95 but declined to Rs 218.25. However, it ended at Rs 225.75 after rate-cut hopes renewed buying.

Senior money market analysts say expectations of a cut have been fuelled by a perception among a large section of industry that interest rates will have to go down further to help the economy cope with a slowdown and to boost credit offtake by firms.


New Delhi, June 20: 
The much-awaited revival plan of the scam-tainted Madhavpura Mercantile Cooperative Bank (MMCB) was cleared today with both the Centre and the Gujarat government agreeing to stand guarantee for the Rs 800-crore bailout package.

According to the package that has been worked out, MMCB will issue bonds worth Rs 800 crore which will be picked up by the Gujarat-based cooperative societies.

While the Union government will stand guarantee for 70 per cent of the amount, the remaining 30 per cent will be guaranteed by the Gujarat government.

The details of the bond will be worked out by the Reserve Bank of India.

The revival package was finalised at a high-level meeting at home minister L.K. Advani’s office which was attended by finance minister Yashwant Sinha, agriculture minister Nitish Kumar, textile minister Kanshi Ram Rana and Gujarat chief minister Keshubhai Patel.

The decision follows the recommendation of the committee appointed by the Central Registrar of Cooperatives, which had suggested induction of funds.

The funds are to be inducted by other cooperative banks in the state as promised by them and also from the depositors’ insurance scheme.

The Gujarat chief minister said top priority would be given to repayment of small depositors with deposits less than Rs 1 lakh.

The bail-out plan also stresses that the new management would take “effective steps” to ensure recovery of advances made to the various debtors of the bank, including the Ketan Parekh group, he said. “None would be spared in this effort,”he added.

Elaborating on the guarantee scheme, Keshubhai Patel said the bank would ensure that Rs 600 crore, now in government securities, would not be withdrawn for six years as part of the guarantee by the state and central government.

Another Rs 468 crore would be provided in respect of deposit insurance.

Patel said the package also provides for proper restructuring of bank’s management to instill investors’ confidence.

Sinha made it clear that the Centre would not bail out the bank and it was for the state coop banks to pool the money.

The total deposits with state cooperative banks in Gujarat currently amounts to about Rs 17,000 crore of which four per cent would be pooled to revive MMCB.

Patel said the revival scheme would provide for reorganisation of MMCB in an “appropriate legal structure”.

The package have been worked out after RBI expressed the opinion that the revival of MMCB was “commercially viable”.

The scam surfaced when MMCB defaulted in repayment of bank pay-orders of the order of Rs 134.7 crore to Bank of India which lodged a protest with the Central Bureau of Investigation (CBI).


New Delhi, June 20: 
The National Association of Software and Service Companies (Nasscom), the apex body for India’s software and services companies, will choose late president Dewang Mehta’s successor by the end of July.

Nasscom has set up a screening committee to fill the post that fell vacant after Mehta died early this year in Australia where he had gone as part of an IT delegation led by Pramod Mahajan, minister of information and technology.

Nasscom chairman Phiroz Vandrevala, who is also executive vice president of Tata Consultancy Services, said, “We have shortlisted about eight candidates; the list will be further pruned to three after a meeting next week. We expect the final candidate to be offered the job by July-end.”

“The shortlisted candidates are from diverse backgrounds — some are from government, while others are industry, consultancy firms and even financial institutions. Currently, the Nasscom secretariat is well equipped to manage the daily affairs of the organisation and the chairman and two vice chairmen are providing additional support,” he added.

Nasscom’s executive council met in New Delhi on March 15 under the chairmanship of Vandrevala. Besides constituting a council to select a head for Nasscom, it created a governance committee to make recommendations regarding the organisation’s structure, role and responsibilities.

Vandrevala is confident that Nasscom will continue to successfully address all the issues concerning the software industry.

He is also optimistic that the spectre of the downtrend that has cast a cloud over the industry will recede once the companies worldwide realise that it is the unorganised sector that has been responsible for the current state of affairs. Nasscom has been trying to highlight this issue.


Calcutta, June 20: 
State Bank of India, the banking behemoth, has witnessed a Rs 2000-crore dip in its non-food credit disbursal in the first two months of the current financial year.

This has forced the bank, which will announce its annual results tomorrow, to focus more on personal banking, trade finance and mid-cap companies in the current financial year to prop up its advances to around Rs 18,000 crore.

Bank chairman Janaki Ballabh attributes the dip in credit to the slowdown in the economy. The bank’s advances as on December 29, 2000, stood at Rs 10,9157 crore. Its personal banking advances, which stood at Rs 13,343 crore as on March 31 this year, was 12.5 per cent of its total advances. “We want to take this figure to 15 per cent of our total advances in the current financial year, which means a net increase of Rs 6,000 crore,” he said.

The bank had introduced 70 special personalised banking branches a year ago, out of which 40 have started yielding profits. It is focusing on retail products to increase advances in the personal banking sector. “There will be hardly any NPAs in the personal banking sector since recovery is assured,” Ballabh said.

Housing loans is one area where the bank has recorded tremendous growth in the last three years.

Commenting on the lower credit offtake of the bank, Ballabh said, “Credit offtake is always down in April and May. We expect a turnaround in industrial production within another three to four months.”

Vepa Kamesam, managing director and group executive (national banking group) of SBI, said, “The automobile, steel and textile sectors are in a very bad shape. We have decided to target the mid-cap companies who are unable to tap the capital markets and will need our funds to meet their working capital requirements.” Kamesam will join the Reserve Bank of India as a deputy governor on July 1.

ATM network

The bank today launched its ATM networking project to link 100 ATMs and over 260 branches in seven cities across the country, to attract the tech-savvy customer and provide more value addition for its existing 90 million customers. The cities which have been connected by the network are Calcutta, Mumbai, Chennai, Delhi, Hyderabad, Bangalore and Pune.

The bank will have more than 1,000 ATMs in place by March 2002. It has already issued 12 lakh ATM cards in the last three months.


New Delhi, June 20: 
Escorts Ltd today reported a 4.41 per cent dip in the net profit at Rs 107.39 crore last fiscal compared with Rs 112.35 crore during 1999-2000.

The company’s sales went up marginally to Rs 1578.84 crore last fiscal as against Rs 1570.01 crore in 1999-2000.

“Tractor industry sales are down this year by almost 10 per cent despite bumper crops,” Escorts chairman Rajan Nanda said in a statement hoping that the slackening of demand was a “temporary phenomena”.

Escorts sold 45,000 tractors last year which amounted to 19.4 per cent of the market share, he said, adding “the company is now targeting a 23 per cent market share based on its enhanced product offering, which could give it a growth in volumes of up to 10 per cent.”

The board of directors of the company recommended a 45 per cent dividend to shareholders for 2000-01 fiscal.

Eicher sales up 13%

Eicher Motors today reported a 12.6 per cent rise in commercial vehicles sales at 614 units in the 5-11 tonne segment over 545 vehicles in the year-ago month.

During April-May 2001-02, Eicher sold 1,015 vehicles, which was higher by 15.7 per cent against the year-ago sales of 877 vehicles, a company statement said here.

Eicher said it has continued to outperform the domestic industry in terms of sales in the 5-11 tonne segment, as industry volumes fell by 39 per cent in May, 2001, over the same month last year.

Eicher has also announced its plans to enter the domestic heavy commercial vehicle industry this year.


New Delhi, June 20: 
The finance ministry will be advising the Securities and Exchanges Board of India (Sebi) to continue with its proposed ban on carry forward trading despite hectic lobbying by broker and industry lobbies.

Under considerable flak from the Joint Parliamentary Committee (JPC) for having opened up the badla window some four years ago despite recommendations to the contrary, the ministry does not want Sebi to roll back the measures they took then.

Finance ministry officials also want to link the powers Sebi has been demanding with time-bound supervisory reportage. Officials plan to hold meetings with Sebi to discuss how to go about this.

This thinking has also emerged as result of mounting criticism from the JPC on Sebi’s inaction or delayed action in the face of several stock market scams. The idea is that though it is an independent authority, Sebi should be made accountable in some form so that lapses can be detected in time. How this will be done has however yet to be decided. The ministry has already decided to grant judicial powers to the Sebi tribunal. This tribunal will have the right to attach properties of those held guilty of misconduct as well as the power to impose penalties in multiples of the amount involved in the scam. At present, Sebi can impose a maximum penalty of Rs 5 lakh.

Sebi may also be given the power to freeze bank accounts of those held guilty of stock market manipulations.

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 about the lack of powers and investigative staff to probe possible manipulations in stock market markets

Sebi will be banning forward trading from July 2 and introducing rolling settlement instead. However, there are pressures to allow partial badla as alternatives to rolling settlement, especially in stock exchanges where there are no deferral products in the rolling mode.

A Sebi panel had recommended banning carry forward trading to contain volatility in the stock markets soon after a bear run on the market saw the sensex go into a free fall just two days after this year’s Union budget was announced. But market players have been lobbying against the move warning this could create a liquidity crunch.


Mumbai, June 20: 
The Tata group continues to be represented by its nominees on the board of cement major Associated Cement Companies Ltd (ACC), even though the Tatas have sold their entire stake in the company to Gujarat Ambuja Cements Ltd.

The Tatas exited ACC last year, after they sold their entire stake in the company for a total consideration of Rs 925 crore.

However, the continued presence of the Tata nominees on the ACC board as independent directors, is being interpreted by analysts as a ploy to avoid an open offer by GACL for the time being. Gujarat Ambuja did not have to make an open offer when buying out the Tatas, as the stake involved was less than 15 per cent and there was no change in management.

ACC observers say if the Tata nominees resign from the board, it will be construed as a change in management which will force the Sekhsarias to make an open offer for ACC shares, something which they are keen to avoid at this stage.

The Tata nominees on the ACC board — P. K. Mistry, P. J. Jagus and N. A. Soonawala — continue in their capacity as directors in ACC Ltd. In fact, Mistry and Jagus, who are retiring this year on the basis of rotation, have again sought reappointment.

While Soonawala is the non-executive vice-chairman of Tata Sons, Jagus and Mistry have been associated with ACC for quite a number of years, since the time Shapoorji Pallonji Mistry was at the helm. Jagus, who had joined ACC in 1947, was appointed as whole-time director in 1985. Similarly, P. K. Mistry has served on the board since April 1975 and was even managing director from April 1970-1975.

However, when the Tatas decided to sell their stake in ACC in two tranches to Gujarat Ambuja, both S. P. Mistry and S. Ganguly resigned as directors of the company on April 26, 2000. Besides, N. A. Palkhivala, the legal eagle and trouble-shooter for the Tatas has also retired from the directorship of the company, with ACC clarifying that it will not fill the vacancy. Palkhivala will, however, continue as chairman emeritus of ACC.


Mumbai, June 20: 
Tata Power Ltd, the country’s largest private sector power utility, has reported a 21 per cent increase in sales to Rs 3,361 crore for the year ended March 31, 2001, compared with Rs 2,781 crore last year.

However, higher fuel costs during the year under review brought down distributable profits to Rs 363 crore, as against Rs 417 crore in the previous year.

Encouraged by higher revenues, the company has recommended a dividend of 50 per cent as compared with 42 per cent last year.

The company said distributable profits were higher last year mainly in view of some exceptional profits, like profit on repurchase of euro notes and sale of investments.

Corporate tax paid by the company for the year under review was lower at Rs 127 crore, from Rs 182 crore in the previous year mainly due to the capitalisation of the new Jojobera, Belgaum and Khopoli units.


New Delhi, June 20: 
Bharat Aluminium Company (Balco) courted another controversy today when it ordered all executives at its headquarters here to shift within 14 days to Korba, the Chattisgarh town which was rocked by a wave of worker protests after the Centre sold the company to Sterlite.

The company has also stopped the supply of finished metal used as inputs to its Bidhanbag unit near Asansol in West Bengal.

Company secretary Subhash Hans confirmed the transfers, but insisted that supplies to Bidhanbag have been halted because production of raw material at Korba has not picked up. This claim was disputed by union leaders, who said the plant was operating at 50 per cent of its rated capacity, and that there were enough stocks to feed Bidhanbag.

Unions are agitated that packing the 45 executives off to Korba will leave the Delhi office with around 150 non-executive employees, who will now have little to do. “We have already moved out the finance and personnel departments to Korba. Others, like planning and company affairs, will be moved out soon,” Hans said. The heads of personnel, finance and marketing and certain key officers had already been shifted a few weeks back, along with records and files.

Unions see the move as the precursor to a bigger layoff plan. Coming a month before a VRS, it is perceived as a ploy to pressure people into leaving. Company officials and workers now harbour fears that the new pay scale based on the recommendations of the Justice Mohan Committee report would be put on hold.

“It vitiates the industrial peace fostered by pacts signed earlier. The company was rocked by a 67-day violent strike by workers in the past few months after it was sold to Sterlite. Union officials will discuss the developments soon and a fresh strike may be considered,” P. N. Sharma. general secretary of Balco Employees Union, said.

The transfer letter handed to executives was terse: “To control and focus on our business better, it has been decided to make Korba the centre of our activities and, hence, we need to relocate all current resources there. You are advised to join duty at Korba on or before July 2, 2001.”



Foreign Exchange

US $1	Rs. 46.96	HK $1	Rs.  5.95*
UK £1	Rs. 65.56	SW Fr 1	Rs. 25.90*
Euro	Rs. 40.02	Sing $1	Rs. 25.50*
Yen 100	Rs. 38.12	Aus $1	Rs. 24.05*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4520	Gold Std(10 gm)	N.A
Gold 22 carat	Rs. 4265	Gold 22 carat	N.A
Silver bar (Kg)	Rs. 7400	Silver (Kg)	N.A
Silver portion	Rs. 7500	Silver portion	N.A

Stock Indices

Sensex		3406.05		-  4.90
BSE-100		1648.07		-  5.83
S&P CNX Nifty	1097.60		+  0.95
Calcutta	 116.21		-  0.03
Skindia GDR	 610.55		+  8.19

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