Raid on UTI brass spoils market mood
31 brokers under scanner
Wipro net profit zooms 97%
HDFC Bank listed on Big Board at a discount
ITC net crosses Rs 300 crore in first quarter
Sebi clamps down on DSQ Software
Tussle over sharing of petroleum assets
Lever plant mired in labour trouble
Telco calls off mid-size car plan with Peugeot
Foreign Exchange, Bullion, Stock Indices

Mumbai, July 20: 
Markets fretted about the swoop on key Unit Trust of India (UTI) officials, including former chairman P S Subramanyam, and saw it as a desperate hunt for scapegoats who could be nailed as fall guys for the US-64 debacle.

Even senior officials of the Securities and Exchange Board of India (Sebi) were upset with the raids on the Trust top-brass, as were many market intermediaries. They felt the crackdown was an attempt by the government to fix responsibility for the problems at UTI days before Parliament’s monsoon session begins.

“There is no point hunting for scapegoats among people you just fired. Even if they deserve a CBI inquiry, this would not address the core problems facing the Trust,” a senior Sebi official said.

Foreign funds echoed a similar sentiment, saying knee-jerk reactions like this cannot conceal the fact that successive governments have failed to stem the rot in the country’s largest mutual fund.

“There is no denying that governments have failed to regulate UTI. It’s time the government learnt that it’s not its business to be running mutual funds,” ASK Raymond James CEO John Band said.

The rumblings of discontent came on a day the Bombay Stock Exchange (BSE) sensex ended a roller-coaster ride with a 30.18-point loss at 3340.75 points. It opened on a heady note following overnight gains on US bourses, but gave up the early gains when reports about the Central Bureau of Investigation (CBI) swoop on key UTI officials trickled in.

“The nervousness extended a five-day loss streak on the BSE even though operators appeared to have been buoyed by the 30-point jump in the Nasdaq on Thursday. However, the euphoria evaporated once the UTI bombshell exploded,” dealers said.

The fall in the sensex could be gauged by a decline in 23 of the 30 scrips that make up index. These included heavyweights such as BHEL, ACC, GACL, L&T, MTNL, NIIT, Ranbaxy, Reliance, Satyam Computer, State Bank and Zee Telefilms.

A recovery was triggered by brisk buying in technology shares at the fag end of the session.


Calcutta, July 20: 
A Securities and Exchange Board of India (Sebi) probe has revealed that employees and a caucus of market intermediaries colluded to rig the Cyberspace share. The kingpin, though, was Arvind Johri, the company’s promoter who was arrested by the CBI on May 22.

Johri owns Century Consultants (CCL), a broking firm that was a member of the Bombay and National Stock exchanges before it was suspended for manipulating the price of Cyberspace share.

Confirming the findings, Sebi chairman DR Mehta said: “The Bombay and National Stock Exchanges had investigated trading in the share, and passed on the information to us. We have so far identified the intermediaries which were involved in ramping up the stock and ordered fresh probes into the dealings of 31 brokers. We also have with us the details of trading by the intermediaries’ clients, who were primarily Cyberspace employees.”

The CBI probe has revealed that Johri and his associates were embroiled in a Rs 150-crore scam, which entailed borrowing money from banks to drive up the Cyberspace stock. The Johris owned 20 other companies, and maintained as many as 60 bank accounts in Lucknow, 36 in Mumbai and two in Delhi.The broking firm had swindled Rs 32 crore from the Lucknow-based City Co-operative Bank and borrowed from public sector banks under various schemes to play up the market.

Sebi, NSE and BSE swung into action when it appeared that the stock price of Cyberspace was being rigged, while the RBI stepped in when loans extended by the Lucknow-based bank to the group turned sticky. The Cyberspace scrip peaked at Rs 1,193.60 on June 22 last year before being suspended by both exchanges in April.


Bangalore, July 20: 
Wipro on Friday reported a less-than-expected 97 per cent rise in its net profit for the past quarter at Rs 214 crore and 28 per cent increase in revenues at Rs 798 crore.

Though the Bangalore-based software services giant bettered industry growth rates, analysts said it had fallen short of the Rs 850 crore that the market had been hoping for.

Senior officials said they would not pursue a strategy of cutting prices to boost business volumes, something peers like Satyam Computers and Infosys Technologies have been doing.

“In the current environment, we had the option of using price cuts to boost volumes against the tougher and long-term option of focusing on value, leveraging our technology skill sets and taking a Six Sigma quality approach to delivery. We chose to pursue big deals and compete with key telecom integration players,” company chairman Azim Premji said.

He announced a $70-million global system integration contract from the telecom subsidiary of Lattice Group, a company which is part of London’s Financial Times Index. The deal is a part of the Lattice Group’s investment of £ 460-million in a UK national fibre optic project known earlier.

The Wipro chief said the project will generate revenues of more than $ 30 million for the company in the current financial year, most of which will come through in the second half.

“Looking ahead, we believe that we will continue to grow ahead of the average industry growth rates. With the Lattice Group project in our bag, we expect our growth to increase in the second half of this financial year.”

Analysts share Premji’s optimism that the firm’s growth in the quarters ahead will be higher than those racked up others in the industry.

The performance was greeted by a bounce in the Wipro scrip on the Bombay Stock Exchange (BSE), where it closed Rs 1380.75 after opening at Rs 1379.80 and rising to an intra-day high of Rs 1434.70.

The loss over its previous finish was attributed to profit booking in anticipation of sizzling numbers.

Wipro Technologies, the global IT services business, accounted for 65 per cent of the group revenues, which rose 46 per cent for the quarter to Rs 521 crore. The company said it was hedging its portfolio by getting more orders from Europe.


Mumbai, July 20: 
HDFC Bank Ltd today became the second private sector bank to get listed on the New York Stock Exchange (NYSE), after ICICI Bank went in for a listing last year.

The bank today saw the debut of its American Depository Shares (ADS) on the bourse under the symbol ‘HDB,’ at $ 14.50, though it was priced at $ 13.83 per share.

The pricing of the ADS represented a discount of 3.50 per cent to HDFC Bank’s closing price of Rs 225.10 on the Bombay Stock Exchange (BSE) today. Each ADS represents three domestic equity shares. HDFC Bank said its total ADS offering stood at $ 150 million.

While the pricing of the issue has come as a disappointment to some who were looking for a price of over $ 14 per share, the bank had, in a filing with the US Securities and Exchange Commission (SEC) earlier this week, said it plans to offer 11 million ADS, representing 33 million underlying shares.

The ADS issue aims to raise $ 175 million and it has a greenshoe option of $ 25 million. Though the ADS was priced at a discount to its closing price on the domestic bourses, the scrip opened at $ 14.50 on the NYSE and touched a high of $ 14.60, later dipping to a low of $ 14.25 at the time of writing this report. The counter saw a volume of 1,106,300 shares.

According to Aditya Puri, managing director, HDFC Bank, the proceeds of the ADS would be used to fund future growth.

The paid-up capital of the bank is likely to go up by Rs 33 crore to Rs 276 crore following the ADS issue.


Calcutta, July 20: 
ITC Ltd, the city-based tobacco giant, has recorded a nearly 21 per cent increase in net profit for the quarter ended June 30, while net sales grew just 4.15 per cent.

Net profit during the first quarter of the 2001-2002 fiscal stood at Rs 300.67 crore, a jump of 20.76 per cent from Rs 248.97 crore in the previous corresponding quarter. Net sales grew by just 4.15 per cent to Rs 1047.89 crore from the previous comparable figure of Rs 1005.99 crore. Other income increased to Rs 26.42 crore from Rs 17.73 crore.

Total expenditure was lower at Rs 551.55 crore against Rs 567.16 crore during the first quarter of 2000-01. The ITC scrip, which opened at Rs 789 on the Bombay Stock Exchange today, touched a high of Rs 797 immediately after the announcement of the first quarter results, despite falling to a low of Rs 778 earlier during the day. It finally closed at Rs 791.05.

Interest charges were brought down significantly by almost 20 per cent to Rs 18.62 crore from Rs 23.01 crore in the year-ago period and gross profit stood at Rs 504.14 crore (Rs 433.53 crore).

Depreciation charges were slightly higher at Rs 38.03 crore from Rs 37.81 crore last year and provision for taxation went up to Rs 165.44 crore from Rs 146.75 crore.

ITC said: “Pursuant to the accounting standard for taxes on income, the company has recorded a cumulative net deferred tax liability of Rs 57.32 crore up to March 2001, as a reduction from the general reserve.”

Further, the favourable impact of the deferred tax asset of Rs 7.56 crore for the first quarter of this year and Rs 6.79 crore in the first quarter last year, has been adjusted in the provision for taxation.

Marketmen said the result was in line with their expectations.

Bata net dips

Bata India Ltd has posted a net profit of Rs 5.56 crore for the quarter ended June 30, 2001, as against Rs 6.21 crore in the previous corresponding quarter. Total income in the present quarter however stood at Rs 221.84 crore, up from the previous comparable figure of Rs 209.09 crore.    

Mumbai, July 20: 
The Dinesh Dalmia-promoted DSQ Software Ltd today got it hard from the Securities and Exchange Board of India (Sebi), following the detection of fraud in DSQ’s bid to acquire a US firm.

The market regulator not only prohibited the company from accessing the capital markets for a year and debarred its promoter from dealing in securities for the same duration, but also cancelled the company’s acquisition of Fortuna Technologies, being done on a share swap basis.

“Investigations are being conducted into the alleged market manipulations in certain scrips, including DSQ Software. The investigations prima-facie revealed that DSQ intended to acquire Fortuna Technologies Inc of the US,” Sebi said.

Three overseas corporate bodies (OCBs), Technology Trust, Softee Corporation and New Vision Investment, registered in Mauritius, are stated to hold the entire stake of Fortuna Technologies, Sebi alleged.

Explaining the modus operandi, Sebi stated: “T. C. Ashok, who owns the three OCBs, and DSQ Software, agreed that DSQ would acquire the business of Fortuna Technologies, for which, it agreed to allot 14 million equity shares valued at Rs 959 crore, at a rate of Rs 685 per share on a non-repatriable basis in demat form, to the three Mauritius-based firms.”

Stating that the deal was not above board, Sebi declared “Investigations revealed that the deal relating to the acquisition of Fortuna Technologies of USA, swapping 14 million DSQ shares, is not genuine.”

Picking holes in the deal, Sebi pointed out that Fortuna Technologies, the target company, agreed to take the shares of DSQ at the rate of Rs 685 per share, when its market price was only Rs 200. Further, the shares were being issued to New Vision Investment Pvt Ltd of New Delhi, whereas the Mauritius-based entity was New Vision Investment Limited.

Sebi claimed that several shares were released to New Vision Investment Private Ltd, an entity which was not connected to the transactions. Moreover, no company named New Vision existed at the address given by it, Sebi said.


New Delhi, July 20: 
National oil companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) are resisting the move to make available their infrastructure to private oil companies which are desperate to enter marketing of petroleum products.

“Nowhere in the world does such a thing happen,” said a senior executive of a national oil company. Industry circles say though no formal proposal has so far emanated from the government, private oil companies have already started lobbying hard for it. They have sought access to facilities such as pipeline, and terminals. National oil companies maintain that the common carrier concept for pipelines should be applicable for fresh capacities and not for the existing ones. Similarly, the terminals and retail outlets they own and operate should remain their exclusive properties.

It is unlikely that the government will force them to part with these facilities. But the fact that some of the private oil companies enjoy tremendous political clout makes them worry about the shape of things to come. In a deregulated petroleum market, companies such as Reliance Petroleum and MRPL (Mangalore Refinery and Petrochemicals Ltd) cannot be denied marketing rights. In the case of Essar, the refinery is far from completion and it is not an immediate candidate for marketing rights. But it will be entitled to all the facilities which RPL and MRPL get as and when its refinery at Vadinar in Gujarat goes into operation. Private oil companies realise that marketing of petroleum products is not all that easy as running a refinery. They have to create the necessary infrastructure at enormous costs to compete with national oil companies. Oil companies the world over are shying away from marketing in view of the shrinking margin and are concentrating on marketing.

It is the lack of infrastructure which forced RPL to enter into a marketing arrangement with IOC for 52 per cent of its controlled products. For the remaining, they proposed a joint venture and applied for a licence. The ministry of petroleum and natural gas has been sitting over the application for nearly 18 months now.

A couple of months ago the ministry decided that the joint venture could not be given a licence as it had not invested the mandatory Rs 2000 crore in the petroleum sector. IOC has represented against it though RPL does not seen very enthusiastic about chasing it.

IOC is really in a fix over its joint venture proposal with RPL. As per the existing marketing arrangement, both IOC and RPL are partners. If the joint venture does not materialise and RPL undertakes marketing of the remaining products on its own, it will be competing with IOC. It is illogical to be a partners and rivals at the same time, they say.


Calcutta, July 20: 
Industrial unrest is beginning to mount at Hindustan Lever Ltd’s Garden Reach factory regarding the wage dispute and the management’s decision to shut down the glycerine manufacturing facility. The Hindustan Lever Sramik Karmachari Congress (HLSKC), affiliated to the Sramik Sangram Committee, has already obtained support from a majority of workers for a strike, protesting what it alleged was the management’s dilly dallying on fresh wage talks.

The union has also alleged the HLL management plans to phase out the production of major products like glycerine, ‘Wheel’ detergent, ‘Close-Up’ toothpaste and ‘Lifebuoy’ soap and instead outsource them from small sector units.

“The phasing out of these products will render 431 workers jobless. Moreover, the company will have to compromise a great deal on its quality if the products are outsourced from small sector units,” an HLSKC spokesman alleged.

The company however has attributed the proposed closure of its glycerine plant, which has around 30 workers, to labour problems.

“The glycerine plant had to be shut down involuntarily as there was no means of disposing process waste. This was due to a slowdown by a section of contract labourers in the coal feeding/ash removal system in the factory’s boiler house, directly linked to the waste disposal system,” a senior HLL official said.

While the boiler is now being kept operational by switching over to fuel oil, use of glycerine process waste in the boiler has had to be discontinued, resulting in the shutdown of the glycerine distillation facility, he added.

The official said the glycerine evaporation facility will remain fully operational, reiterating the company’s long-term commitment both to consumers and to Bengal.

Regarding the wage demands, HLL said the union is demanding a hike of more than Rs 14,000 per employee per month. Moreover, the company said it has proposed several technological improvements in the Garden Reach factory to enable it service the market better and retain competitiveness. “But the union refuses to discuss the management’s proposals for improving productivity norms. The management believes that to sustain the viability of the factory, its productivity must improve and match that of the best within the company,” the HLL official said.

HLSKC however said it has only demanded parity in the wages between the executives and workers on the lines of the Fifth Pay Commission’s recommendations.


Mumbai, July 20: 
Tata Engineering and Locomotive Company (Telco) and French auto major PSA Peugeot Citroen have called off their planned venture to develop a mid-size car for India.

“The proposition was found to have been adversely affected by the high logistics costs between the two countries, apart from the limited market in India for a car of this kind,” Telco company said.

Telco said in January it was conducting a feasibility study to evolve a mid-size passenger car based that would be based on PSA Peugeot Citroen platform and manufactured by it.

“Peugeot’s platform was not found feasible after we considered the volumes, pricing and costs involved in developing and manufacturing a mid-size car,” Rajiv Dube, general manager (commercial passenger car division), told The Telegraph. However, industry circles expect the Tatas to look at a JV with the French auto major in the premium car segment.

The Tatas have, however, kept their options open on future relations with PSA Peugeot Citroen. “We will keep our channels of communication open with the French car major,” Dube said.



Foreign Exchange

US $1	Rs. 47.12	HK $1	Rs.  5.95*
UK £1	Rs. 67.43	SW Fr 1	Rs. 26.95*
Euro	Rs. 41.25	Sing $1	Rs. 25.50*
Yen 100	Rs. 38.21	Aus $1	Rs. 23.85*
*SBI TC buying rates; others are forex market closing rates


Calcutta				Bombay

Gold Std (10gm)	Rs. 4450	Gold Std (10 gm)Rs. 4405
Gold 22 carat	Rs. 4200	Gold 22 carat	  N.A.
Silver bar (Kg)	Rs. 7125	Silver (Kg)	Rs. 7225
Silver portion	Rs. 7225	Silver portion	  N.A.

Stock Indices

Sensex		3340.75		-30.18
BSE-100		1578.43		-11.57
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Skindia GDRNA	 594.86		- 1.59

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