Markets brace for brave new dawn
Central funds to be tied to states’ zeal on reforms
ICI buys majority stake in Quest
London Terminator to help A-I regain market
Jet cuts fares on some routes
M&M plants to run four days a week
IDBI balks at IFCI bailout
Three in race to raise funds for PFC
Eveready net up 39% to Rs 12cr
Foreign Exchange, Bullion, Stock Indices

Mumbai, June 29: 
It was the end of an epoch as curtains were rung down on the 70-year-old carry-forward trading and five-day settlements. The Bombay Stock Exchange (BSE) sensex ended with a 52-point gain to close at 3456.78 amid jitters over the way operators adapt to new, more foolsafe modes of doing business.

Carry-forward, unique to the country, was a big draw with operators and, at its peak, accounted for over 90 per cent of the volumes on 23 bourses, but was banished after its abuse turned endemic. It enabled the rollover of positions from one settlement to another on payment of an interest charge, giving operators the freedom to bet on price swings. It will be replaced by a cash market and other instruments like derivatives, though they still remain a new concept for day traders here.

On Dalal Street, where many were apprehensive over the transition to a rolling settlement from Monday, Unit Trust of India picked up frontline stocks to shore up its net asset values for the quarter ended June 30, and helped the sensex close higher. The 50-share NSE index ended 1.27 per cent higher at 1,107.90 points.

Retail investors went for stocks hoping that new trading rules would help stamp out the kind speculation that has ripped them for years. “We expect a rally on Monday,” said Ramesh Damani, a prominent BSE broker. However, he was not sure whether the rally would be sustained because of liquidity fears.

Exchanges, reeling under the February 2 badla ban, were caught in a cleft when Sebi shortlisted 414 stocks to be traded under rolling settlement. More recently, the market regulator ruled that only 31 shares would be eligible for options trading. The list dropped big technology names like Wipro, HFCL, Zee Telefilms and Global Telesystems, referred to as momentum stocks.

After the brave talk of launching options trading on July 2, premier stock bourses such as NSE and BSE have finally admitted that they are not yet fully prepared to allow options trading.

Brokers call it quits

Traditional brokers daunted by the new trading regime are calling it quits. Most traditional broking outfits are ill-equipped to cope with derivatives and similar products, and fear that the volumes, already anorexic, will shrink further in future.

After the market regulator came down sharply on trading practices by banning a few prominent brokers from trading, the scene at the broking offices have changed drastically for the worse. The volumes are thinning and the new practices to be unveiled on July 2, has a majority of the traditional broking outfits ill-equipped, said a BSE broker who preferred not to be quoted.

“Everyday we find an announcement on the Bolt Screen that a broking outfit is voluntarily pulling down its shutters,” a BSE broker said.


New Delhi, June 29: 
The meeting of the full Planning Commission called today to finalise the Tenth Five-year Plan decided to push ahead with moves to link the release of central assistance to states with their signing memoranda of understanding to bring in fiscal reforms.

The decision will pit states in a confrontation with the Centre as many of them have protested the move which they feel is unconstitutional. The meeting also decided to focus on the farm sector, pegging higher investment in agricultural infrastructure, irrigation, and rural roads.

Prime Minister Atal Bihari Vajpayee, who chaired the meeting, also underlined the need for the plan to focus on other key sectors — infotech and biotechnology.

The Planning Commission, which includes several key economic ministers and Plan panel members also decided to bring in zero-based budgeting for all schemes before the Plan kicks off.

Planners were also asked to bring out a new blueprint for turning around the power sector, which has been consistently underperforming.

K.C. Pant, deputy chairman of the Planning Commission, admitted “on the issue of release of central assistance on the basis of agreed programmes of reforms through memorandum of understanding, some states have voiced their objections on the ground that this would be contrary to federal principles.”

But added, “We believe such an arrangement is essential if we are to improve the effectiveness and quality of government expenditure as well as bring about sustainability in public finances.”

Another controversial decision taken today was to make devolution of central funds to local bodies contingent on an effective transfer of authority for carrying out these functions and for raising revenues to the local bodies by the state governments.

The BJP-led government will however have to run the gauntlet of the National Development Council which includes chief ministers of all states before it can actually implement these new ground rules for sharing finances. The NDC is slated to meet next month. Many key chief ministers including West Bengal’s Buddhadeb Bhattacharjee and Punjab’s P.S. Badal, an ally of the BJP government, are known to be opposed to these measures.

FM reviews projects

Finance minister Yashwant Sinha today have reviewed the implementation of the various infrastructural project under the ministries of power, railways, road transport and highways.

He expressed concerns at the slow pace of implementation which led to time and cost overrun. He emphasised the need for well defined targets for implementing these projects.


Calcutta, June 29: 
ICI India has acquired majority stake in Quest International India Ltd (QIIL) from Hindustan Lever Ltd (HLL), for a consideration of Rs 152 crore.

This is the first major acquisition by the Rs 800 crore paints major, since a massive business restructuring exercise in late 1997.

ICI India will now hold 50 per cent in QIIL, while HLL’s stake has been reduced to 49 per cent, Quest International BV, a wholly-owned subsidiary of the UK based ICI plc holding 1 per cent.

ICI plc had earlier acquired Quest International BV from the Unilever group in 1997. But Quest remained as a division of the HLL until recently, when it was spun off into a separate company.

“While further strengthening Quest’s global position in the food and fragrance industry, this joint venture is a strategic milestone in the portfolio reshaping exercise of ICI India,” a senior ICI India official said.

The company has made the investment by deploying surplus cash generated from disposing off some properties and non-core businesses, he added. ICI however, is not required to make any open offer, as the company is not listed.

“The company, which produces fragrance, flavours and food ingredients at a couple of plants in the west coast, will help us strengthen our position in the speciality chemical business,” he said.

The new company will also introduce a wide range of products produced by Quest International BV, which has an annual turnover of $ 1 billion. The official said Quest creates and manufactures fragrance compounds and materials, cosmetic ingredients and dental flavours for use in a wide range of consumer products.

“Quest is a leading maker of food products like snacks, sauces, soups, meat products, cereals, bakery products, dairy, ice-creams, confectionery, soft drinks and alcoholic beverages,” he said.


New Delhi, June 29: 
Air-India today launched an attempt to “get back its place in the sun” by re-launching seven day operations out of Delhi to London and announcing aggressive plans to lease up to six aircraft to add flights to Singapore, Hong Kong, Gulf and Saudi Arabian sectors.

The seventh flight to London, nicknamed the ‘Terminator Flight’, will kick off on July 13, a Friday, four years after it ceased to operate.

The launch of the Friday flight however implies that Virgin Atlantic, Air-India’s code share partner on the route will be forced to compete with the Indian carrier when it launches its third flight. Air-India currently operates four flights a week between Delhi-London and has a code share deal with UK-based Virgin Atlantic for two more, making a total of six flights operated by the two.

Announcing the launch of the new service, Air-India’s commercial director V.K. Verma said the London Terminator is proof of Air-India’s new philosophy which emphasises “importance to improving presence and winning back lost market share.”

Air-India has already dry leased two wide-bodied aircraft and is slated to bring in two more this month.

Verma said it now plans to take the number of leased aircraft to six by this winter. The lease of a seventh plane was also being considered to service the Paris sector.

New planes will be used to add about 12 per cent seat capacity this year. “The key sectors we will be focusing on will be the Chennai-Hong Kong, direct service between Mumbai and Singapore and direct services from Cochin, Calicut and Trivandrum to Saudi Arabia and the Gulf,” Verma added. The airline executive also said long-term plans had been drawn up to resume flights to South Africa and Australia.


From Our Correspondent 
Jet Airways today followed up on Indian Airlines’ decision to slash fares on selected routes by reducing fares in four sectors out of Mumbai and announcing special excursion fares in five others.

The revised fares in its business class on four sectors and special return excursion fares in economy class in the other five sectors would come into effect from July one and be valied till August 31, a release said.


Mumbai, June 29: 
Auto major Mahindra & Mahindra (M&M), which is grappling with low demand for its products, today announced that its automotive plants will be working for 3-4 days in a week to meet current market requirements.

In a communication issued to the stock exchanges today, the company added this decision has been taken considering the general dip in demand during the monsoon season.

However, it added that depending upon the increase in demand, some workmen may be called whenever required and that the workmen will be paid wages for the days when they are asked not to report for work.

M&M has been facing a downturn in demand for its major products. While it has so far announced a series of reduced working days at its major plants, particularly the automotive units, the Credit Rating Information Services of India Ltd (Crisil) had some time back, downgraded M&M’s non convertible debenture issues due to concerns about its tractor and utility vehicle.


Mumbai, June 29: 
Institutional shareholders led by the Industrial Development Bank of India (IDBI) are resisting a move by the Centre to rescue the beleaguered Industrial Finance Corporation of India (IFCI).

Replying to shareholder queries at IDBI’s annual general meeting, S. K. Chakrabarti, acting chairman and managing director told shareholders that while the government’s initial proposal of merging IFCI with IDBI was resisted by the latter and the idea subsequently dropped, the government has now been asking that the stakeholders “take position” in IFCI. “But many have strongly argued against this and we are pursuing the matter with the government,” he added.

The proposal is believed to pertain to a Rs 1,000 crore NCD issue, to which banks and financial institutions have been asked to subscribe. Sources stated institutions and banks are waiting for the government to first pump in Rs 400 crore as assistance to IFCI, which the Centre has been reluctant to commit. The D Basu committee had recommended the government provide a Rs 400-crore assistance to IFCI and the institution should then rope in a strategic partner. The committee has also suggested that the institution be converted into a bank.

Earlier, Chakrabarti told shareholders that the institution, which was saddled by huge non-performing assets (NPAs), is looking at achieving a net NPA ratio of 7-8 per cent due to its methods of recovery apart from one-time settlement schemes and negotiated settlements. He added that setting up of an asset reconstruction company with fiscal incentives and legal support is an option which the institution is pursuing apart from setting up a corporate debt restructuring mechanism.

He also said the institution would convert into a universal bank in the next 1-2 years.

On the Dabhol power project, he said the domestic financial institutions were “ready to take it over” if the multinational exited. He added IDBI was in talks with Bechtel, GE and other construction contractors for the project, to resume work on phase-II, which is 92 per cent complete. The heads of institutions will meet in the capital on July 3 to take stock of the Modi Rubber Ltd issue, he said.


Meanwhile, IDBI plans to offload part of its 58 per cent stake in IDBI Bank Ltd to institutions and foreign partners. Chakrabarti said Life Insurance Corporation will be one of the institutions with whom the stake may be warehoused. Otherwise, IDBI will offload its stake to a strategic partner, largely of foreign origin.

The process of bringing down IDBI’s stake in IDBI Bank is expected to be completed in three months.


New Delhi, June 29: 
Power Finance Corporation (PFC) is scouting for a merchant banker who will help it generate Rs 7,50,000 crore for funding power projects. In the race for the job are ICICI, SBI Capital and Kotak Mahindra. The fund will be used to fund various power projects, as well as transmission and distribution projects in the states.

“Many leading merchant bankers are in the race and we will soon shortlist one to suggest means to generate the resources needed for the Tenth and Eleventh Plans. It is important that we have a proper plan to raise funds to be able to extend them to the state governments and the power generating units both in the public and private sectors,” said R. Krishnamoorthy, director (finance) of PFC. It also plans to raise Rs 400 crore through a seven-year paper, which will be used to fund renovation and modernisation of power plants and for other activities.

“It will be a Rs 200 crore issue with a green-shoe option of Rs 200 crore and an annual payment of 9.48 per cent per issue,” PFC sources said.

PFC offers funds for modernisation and renovation of power projects under the accelerated generation and supply scheme (AG&SP). Launched in 1997, the AG&SP was introduced to accelerate completion of priority renovation and modernisation of all power projects which were languishing for want of funds. At present, the AG&SP has a corpus of Rs 300 crore, which is expected to go up to Rs 500 crore during the Tenth and Eleventh Five-year Plans.

“AG&SP aims to increase investment in priority power projects, leveraging interest subsidy by about five times from the Government of India in the form of a budget grant to the power ministry, which is then distributed to state electricity boards/public sector units,” PFC sources said.


Calcutta, June 29: 
Eveready Industries India Ltd, the flagship company of the B. M. Khaitan group, has registered a 39.4 per cent increase in its net profit to Rs 11.87 crore for the year ending March 31, 2001, from Rs 8.51 crore in the previous year.

The company also posted a substantial rise in income, from Rs 840.21 crore in 1999-2000, to Rs 1017.92 crore in 2000-01. The profit of Rs 50.16 crore accruing from the sale of tea estates was also taken into consideration while calculating the income.

The company has clarified that since the results of 2000-01 came after the merger of Bishnauth Tea Co Ltd with EIIL, it could not be compared with the previous year.

The 2000-01 fiscal was an eventful one for EIIL. The company, which is into the tea and battery business, witnessed the sale of some of its unprofitable tea estates, the parting with long-time partners the Magors, and the merger of Bishnauth Tea with EIIL.

The company, in a release, said the battery division of the company operated under severe pressure due to the slowdown of the industrial sector as a whole, adverse market conditions and dumping of cheap imports from various countries. The tea division suffered a lower price realisation of Rs 4 per kg due to overall depressed conditions throughout 2000-01.

Satyam net soars 134%

Satyam Computer Services Ltd has registered a 134 per cent growth in net profit at Rs 316.2 crore during 2000-01. The company also registered a 83 per cent growth in revenue at Rs 1242 crore. During the year, the company also realised a gain of Rs.170.crore net of tax from the sale of 1.6 per cent in Satyam Infoway to Government of Singapore Investment Corporation.

Meanwhile, shareholders, at the annual general meeting held here today, approved a plan to raise $ 20 million through a preferential allotment of shares in 2001-02.

Novartis net dips

The net profit of Novartis India Ltd nearly halved to Rs 52.66 crore for the year ending March 31 compared with Rs 103.42 crore in the previous year.

The profits have been impacted by low sales growth, additional costs arising from higher customs levy, costs associated with setting of consumer health business, closure of Ciba Vision operations, depreciation of Rs 3 crore and provision of Rs 30 crore for taxation, the company said in a release here today. Net sales also registered a sharp fall to Rs 403.3 crore during this period compared with Rs 824.35 crore in the previous fiscal.

IBL suffers loss

International Bestfoods Ltd has posted a net loss of Rs 41.22 crore for the last fiscal as against a net loss of Rs 13.51 crore in the previous year. Total income in the reporting year was Rs 67.11 crore as against Rs 10.43 crore in the previous year.

The company has become a subsidiary of the Hindustan Lever Ltd (HLL) with effect from April 21, 2001. According to the company, the sales during the year have been affected due to intense price competition during the first half of the fiscal.

OIL dividend

Oil India Ltd has recorded a 14.05 per cent at Rs 467.36 crore during the last fiscal as against Rs 409.79 crore during 1999-2000. The company issued bonus shares of one share for every two shares for the reporting year thereby enhancing company’s paid up capital from Rs 142.67 crore to Rs 214 crore. The board has recommended a dividend of 80 per cent of paid up capital despite the bonus issue in the ratio of 1:2 made in October as against a dividend of 75 per cent in the previous year.

SPIC net down

Southern Petrochemical Industries Corporation Ltd (SPIC) has reported a lower turnover of Rs 2,293.49 crore in 2000-01 fiscal as against Rs 2,711.78 crore in the previous year and a lower profit after tax of Rs 15.57 crore against Rs 28.37 crore in 1999-2000.



Foreign Exchange

US $1	Rs.47.04	HK $1	Rs.  5.95*
UK £1	Rs.66.14	SW Fr 1	Rs. 25.80*
Euro	Rs.39.93	Sing $1	Rs. 25.50*
Yen 100	Rs.37.84	Aus $1	Rs. 23.50*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4480	Gold Std(10 gm)	Rs.4400
Gold 22 carat	Rs. 4230	Gold 22 carat	N.A.
Silver bar (Kg)	Rs. 7275	Silver (Kg)	Rs.7360
Silver portion	Rs. 7375	Silver portion	N.A.

Stock Indices

Sensex		3456.78		+ 51.92
BSE-100		1630.02		+ 20.45
S&P CNX Nifty	1107.90		+ 13.90
Calcutta	 116.38		+  0.95
Skindia GDR	 607.77		-  4.28

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