FIs saddled with bad corporate bonds
Tata Power steps into new age
Reliance Petro net spurts 52%
Birth pangs for panel on wagon purchase
IDBI net dips 19% in first quarter
CESC first-quarter loss rises to Rs 40 cr
Tata Metaliks shelves plan to set up foundry unit
CSE gropes for new helmsman
Foreign Exchange, Bullion, Stock Indices

 
 
FIS SADDLED WITH BAD CORPORATE BONDS 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, July 30: 
The country’s top financial institutions (FIs) have not only lost staggering sums in the recent stock market meltdown but have also been bled white by corporate debt instruments which have turned into dud assets.

IDBI, the country’s premier financial institution, has lost public funds of over a thousand crore by investing in non-convertible debentures of a horde of companies — some of them supposedly in blue chips, many others in small-time firms which few have heard of!

According to an investigation, whose report is now with the finance ministry, IDBI was saddled with over Rs 1,059 crore in gross outstanding assets on March 31.

Though the amounts are a few crore in most cases, the NCDs were floated by virtually unknown companies — Asil Industries, Atash Industries, Hamco Mining, Jhaveri Polymers, Kesar Enterprises, Patheja Brothers, Ponni Sugar, Shutham Electricals.

Finance ministry officials said they are still trying to find out what prompted IDBI to invest in NCDs of little-known companies when better-known firms presented more secure options.

Some of these bad debts are in fact of very recent origin. “Asil Industries is a company where IDBI put in Rs 7.5 crore just some months back and now it’s a bad debt,” officials said.

Officials tried to brush away allegations that these investments too might have been motivated by political pressures, but admitted that “extra constitutional pressures” may have been involved.

Officials say they are flummoxed how a premier institution could have gone wrong even in the purchase of NCDs, usually considered a safe investment in the market.

In fact, officials were at pains to point out that out of 10 FIs which they control or monitor, only three hold NCDs which have turned bad. Besides IDBI, the others on the loser’s list are ICICI and Calcutta-based IIBI.

Faced with such staggering bad debts, IDBI has written off NCDs worth Rs 87 crore of for 14 lucky companies, officials said. But the remaining Rs 972.13 crore is still due and is now being reflected on the debit side of the giant FI’s balance-sheet.

Interestingly, those whose NCDs have been written off are not all small timers: they include the likes of Pal Peugeot, JCT Fibres, Iridium India and Standard Motors.

Pal Peugeot will surely be pleasantly surprised to find some Rs 20 crore of the Rs 25 crore worth of NCDs it sold to IDBI written off. Iridium India’s entire Rs 28.75 crore NCD has been written off as has JCT Fibres’ Rs 7.99 crore NCD. Similarly, Standard Motors’ Rs 2.49 crore has been totally written off.

ICICI, too, has a list of some 47 companies whose NCDs it purchased which later became NPAs.

Some 38 of these are small companies from each of whom it has bought less than Rs 10 crore in NCDs. But it is these which are likely to come under a scanner.

Many of the firms — like Mafatlal, Ispat Profiles, JK Synthetics, Jain Irrigation and JK Udaipur Udyog — are common to both the financial institutions. IIBI, luckily, has a far smaller amount locked up in non-performing NCD — just Rs 72.92 crore. But again it reflects the list is shorter than that of IDBI — APS Star, Pal Peugeot, Kirloskar Ferro and Modern Thread.

“Obviously, the collective wisdom of fund managers of all three institutions went wrong,” officials said.

   

 
 
TATA POWER STEPS INTO NEW AGE 
 
 
FROM SATISH JOHN
 
Mumbai, July 30: 
Tata Power, having raised its stake in Tata Teleservices (TTL), will drive the group’s ambitious plan to harmonise basic services and its high-stakes broadband foray.

Its broadband venture and basic phones will closely rival that of Reliance Industries in scale and size. According to corporate observers, Tata Power will be the beachhead around which the group will build its basic phones and broadband services.

Tata Power, which is independently weaving a fibre-optic network across the country, picked up a big stake in Tata Teleservices from Tata Industries, which was till recently its biggest shareholder. The move was prompted by natural synergies between broadband and basic phone services.

A TTL spokesperson told The Telegraph that there are plans to extend basic services to most parts of the country, a task that will be backed up by synergising the broadband activities of Tata Power with the voice and data offering of Tata Teleservices. “The details are still being discussed,” TTL added.

Tata Power’s stake acquisition will help the Hyderabad-based Tata Teleservices raise a part of the Rs 6,500 crore that it needs to invest in expansion over the next five years.

In another hint of a close coordination with its cellular venture, TTL said: “Tata’s interest in cellular activities are being realised through BPL, Birla, AT&T and the Tata combine. The broadband and cellular operations of TTL will be synergised to reduce costs and offer a wider range of services.”

Analysts say the “synergising” by Tata companies will help the group achieve economies of scale and to attract more subscribers by spreading it across much of the country.

Tata Power recently picked up 15.20 crore TTL shares valued over Rs 152 crore, replacing Tata Industries — which is the main promoter — as the largest stake holder in the telecom company. It now holds shares worth Rs 254.70 crore in Tata Teleservices’ total equity base of Rs 556 crore.

Sources at Bombay House say Tata Power’s experience in fibre optic networks will help in drawing up a blueprint to synergise the communications businesses for the group in a better way.

The Tata group has 10 companies in various segments of the telecom business and it is presumed that the group will rope in all of them to consolidate its presence in the industry.

Sources say Tata Power’s exposure in TTL is expected to increase further as the telecom firm’s expansion plans take shape. The company has bagged the letters of intent for all the 15 circles for which they tabled bids.

“Among these circles, based on various considerations, we have decided as part of first phase to convert our letters of intent into license in 8 circles- Delhi, Punjab, Haryana, Maharashtra, Gujarat Karnataka, Tamil Nadu and perhaps Kerala,” TTL said.

   

 
 
RELIANCE PETRO NET SPURTS 52% 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 30: 
Putting up a spectacular show, Reliance Petroleum Ltd (RPL) today reported a healthy 52 per cent jump in net profit for the first quarter ended June 30. The net profit of the Ambani group company touched Rs 456 crore in the first quarter compared with Rs 300 crore in the year-ago period.

While sales rose 48 per cent to Rs 8,865 crore against Rs 5,983 crore, RPL’s bottomline growth surprised many. According to the analysts’ guesstimates, RPL’s net profit was projected to be around Rs 325 crore on a sales of over Rs 8,200 crore.

Encouraged by the robust growth in the bottomline, the RPL scrip surged three per cent to finish at Rs 44.40 on the Bombay Stock Exchange.

“The good performance can be attributed to the improvement in throughput, a weakening rupee and protection in the form of higher import duty on naphtha,” S. Ramesh, senior analyst (oil & gas) at ICICI Securities said.

Analysts, however, were apprehensive about RPL sustaining the same growth in the next quarters with many saying that the company is unlikely to achieve high capacity utilisation as witnessed during the first quarter.

During the first quarter, RPL achieved a capacity utilisation of 108 per cent, processing 7.3 million tonnes of crude against 5.8 million tonnes in the previous year, thus overshooting estimates of 6.75 million tonnes.

Other income was at Rs 24 crore (Rs 13 crore) while cash profit was at Rs 655 crore (Rs 435 crore).

RPL’s exports during the quarter at Rs 1,440 crore ($ 306 million) were the highest in the Indian corporate sector.

Commenting on the results, Anil D. Ambani, managing director of RPL, said, “We are encouraged by RPL’s strong financial performance in the quarter ended June 30. RPL’s high capacity utilisation, its ability to supply products to the most discerning global markets, and the demonstrated flexibility to alter the product mix to take advantage of niche opportunities, provide a unique competitive edge to RPL.”

   

 
 
BIRTH PANGS FOR PANEL ON WAGON PURCHASE 
 
 
FROM M. RAJENDRAN
 
New Delhi, July 30: 
Railway minister Nitish Kumar’s plans to set up a committee to monitor the purchase of wagons still remains only on paper amid differences over its composition. The committee is supposed to directly report to the minister.

The in-principle decision to set up the committee was taken early this month but the members are yet to be selected. The committee of senior officials was to work in co-ordination with the existing wagon procurement division within the ministry.

Sources in the railway ministry said senior officials in the railway board had brought to the notice of Kumar that slow progress in the procurement of wagons had led to inability to meet demand, which was one of the important reason why the railways has been losing market share to the road sector.

A railway board member confirmed that a decision to set up a committee was taken early this month. “We discussed this issue (procurement of wagons) and the minister decided to set up a committee to speed up the process. But the members have yet to be appointed,” he said.

“There were differences over the selection of members for the committee. While a few board members wanted to pick the members from among the existing officers, others wanted to include ex-officials. As a result, the whole proposal still remains on paper,” sources said.

The government had planned to acquire an additional 4,250 wagons during the year. This was in addition to the planned target to procure 23,000 wagons during 2000-2001 against 18,750 wagons during 1999-2000. Since the ministry is facing a massive funds crunch, the process had been delayed, sources said.

Kumar had announced a freeze on wagon procurement soon after he took over following allegations that some wagon makers had used sub-standard material while fulfilling earlier contracts.

Last week, he promised an all-party delegation of MPs from Bengal that wagon orders would start flowing again, adding that this would not in any way prejudice the cases against the errant wagon makers who would be penalised. Most of the wagon makers are based in Bengal and have been going through a rough patch after the freeze on procurement.

The railway budget had significantly stepped up the annual plan outlay for the year 2001-02 by 11 per cent to Rs 11,090 crore against Rs 10,002 during 2000-01, without any increase in budgetary support. The railways fixed the freight target at 500 million tonnes for 2001-02, a 25 million-tonne increase over the current year.

   

 
 
IDBI NET DIPS 19% IN FIRST QUARTER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 30: 
The Industrial Development Bank of India (IDBI) today reported a 18.65 per cent dip in net profit at Rs 181.90 crore in the first quarter of this fiscal as against Rs 223.60 crore during the same quarter last year.

Net profit was lower in first quarter on account of a higher Rs 264-crore provisioning for bad and doubtful debts this year as against Rs 80 crore in the last fiscal.

Its profit before tax (PBT) declined by 23 per cent to Rs 191.90 crore during the first three months of this year as against Rs 250.60 crore last year.

IDBI’s income from operations was up by 4.4 per cent at Rs 2,157.50 crore during April-June 2001 compared with Rs 2,066.50 crore last fiscal.

Its expenditure was marginally lower at Rs 1,602.90 crore in the first quarter of 2001 as against Rs 1,652.70 crore in the same quarter last fiscal.

   

 
 
CESC FIRST-QUARTER LOSS RISES TO RS 40 CR 
 
 
OUR BUREAUX
 
July 30: 
CESC Limited, the R.P. Goenka flagship, has dipped further into the red and suffered a net loss of Rs 40 crore for the first quarter ending June 30 compared with Rs 15 crore in the corresponding period last year.

The company registered a marginal rise in net sales to Rs 517 crore as against Rs 501 crore last year.

The interest burden of the company has also increased from Rs 103 crore to Rs 108 crore this fiscal.

CESC said in a release that the sales and consequential revenue growth was offset by higher depreciation and higher interest resulting from additional borrowings necessitated by delays in tariff and fuel surcharge revision. The depreciation charge has increased from Rs 72 crore to Rs 78 crore.

Sterlite fares well

Sterlite Industries (India) Ltd has posted a 21.69 per cent rise in net profit at Rs 127.91 crore for the financial year ended June 30, compared with Rs 105.11 crore in the previous fiscal.

The board has recommended a dividend of 110 per cent. Dividend outflow, including dividend tax, aggregates Rs 33.68 crore, the company said in a release here today.

Net sales/income from operations is 39.63 per cent higher at Rs 2,890.46 crore last fiscal, it said.

Other income is at Rs 28.10 crore last fiscal compared with Rs 32.76 crore in the previous year.

The growth in sales and profits was due to higher capacity utilisation of the smelter and the rod plants, increased sales volume in domestic and export markets and achievement of cost efficiencies at all levels of operations.

Indal net up 12 %

Indian Aluminium Company Ltd (Indal), an AV Birla group company, has posted a 12 per cent rise in net profit at Rs 28.6 crore for the first quarter ended June 30 as against Rs 25.57 crore in the same period last fiscal.

The net sales in April-June grew by 18 per cent at Rs 335.88 crore as against Rs 285.2 crore in the first quarter of 1999-2000, Indal said in a release here today.

The exports registered a 7 per cent rise in the first quarter at Rs 88.27 crore (Rs 82.21 crore), it said.

Moser Baer sales spurt

Data storage media manufacturer Moser Baer today reported a 106 per cent rise in sales at Rs 145.14 crore for the first quarter of 2001-02 as against Rs 70.3 crore posted in the same period last year.

Net profit rose from Rs 30.7 crore to Rs 45.38 crore, while total revenues grew to Rs 146.13 crore from Rs 71.56 crore earlier.

Attributing the growth to the rise in sales of optical media products worldwide, the company said the global optical media market is expected to grow at a compounded annual growth rate of 50 per cent till year 2003.

Wockhardt Q2 net

Pharma major Wockhardt Ltd has posted a 70.68 per cent rise in net profit at Rs 22.7 crore for the second quarter ended June 30 compared with Rs 13.3 crore in the corresponding period last fiscal. Income from operations increased by 14 per cent at Rs 168.8 crore in the reporting quarter as against Rs 148 crore in the same period last year, the company said in a release here today.

On a consolidated basis, including the UK subsidiary Wallis Labs, net profit grew by 67 per cent at Rs 25 crore while sales rose 14 per cent to Rs 191 crore, it added.

Chairman Habil Khorakiwala said, “Substantial rise in the operating performance is direct result of our strategic focus on biotechnology and lifestyle products.”

   

 
 
TATA METALIKS SHELVES PLAN TO SET UP FOUNDRY UNIT 
 
 
BY A STAFF REPORTER
 
Calcutta, July 30: 
Tata Metaliks Ltd (TML) has shelved its plan to set up a foundry project.

According to company chairman T. Mukherjee, the project was found unviable after a feasibility study and market analysis. The company had incurred an expenditure of Rs 83.9 lakh on the feasibility study and the company charged it on the revenue account.

During the last financial year, Tata Metaliks produced 111,266 tonnes of hot metal and based on it the company has targeted a 20 per cent rise in sales this year.

The first quarter results have already shown a growth with sales increasing from Rs 24.32 crore in the previous year to Rs 30.71 crore in the current financial year. The net profit has surged to Rs 3.78 crore from Rs 1.72 crore in the corresponding period of the previous year.

Tata Metaliks, which achieved a profit of Rs 9.30 crore in 2000-2001, has declared a maiden dividend of Rs 1.20 per share.

TML is also planning to retire its huge debt burden to reduce interest costs, Mukherjee said. The interest cost for the last financial year declined by 30 per cent to Rs 2.8 crore from Rs 4.2 crore in 1999-2000.

To focus on marketing, the company has recently launched a ‘tatkal’ scheme.

   

 
 
CSE GROPES FOR NEW HELMSMAN 
 
 
BY ANIEK PAUL
 
Calcutta, July 30: 
Even as the Calcutta Stock Exchange (CSE) struggles to reconcile soaring costs and sagging income, there is a fresh crisis brewing — executive director Tapas Datta will step down in September and, as a former president of Lyons Range warned, leaving it virtually headless. The problem has been aggravated by the delay in laying down a roadmap for demutualisation of bourses, even though the finance minister had said all exchanges would be corporatised by July 2, and brokers barred from their management.

CSE officials close to Dutta said he is unlikely to seek an extension of his term, which ends on September 22. When asked whether he wanted to stay on, Dutta said: “My abilities as the exchange’s executive director have come under heavy criticism from various quarters after the payments crisis. Even if I seek an extension, do you think the CSE board or the Securities and Exchange Board of India (Sebi) will approve it?”

The CSE statute requires an annual general meeting (AGM) to be called and fresh elections held for broker-directors by September. But given the decision to bar brokers from the management of exchanges, holding polls to choose directors from among them will be a pointless exercise.

After the erstwhile CSE broker-directors resigned in the aftermath of the March mayhem, a five-member management sub-committee, comprising the executive director and four public representatives of the CSE board, was set up. Dutta was given the charge of running the routine business of the bourse in an interim arrangement which was supposed to remain in place until the bourse was demutualised.

“If Dutta steps down, the exchange will virtually become headless. If the CSE board has plans to replace him, they should have started grooming someone to step into his shoes,” CSE Brokers Association convenor Ajit Kumar Dey said.

The members of the bourse, he said, will press for an extension of his term, more so because of the present crisis. “It is important for the executive director to be experienced in the management of the exchange. Finding a replacement for Dutta is not easy,” said another former CSE president.

According to Sebi chairman D.R. Mehta, whether or not the CSE runs into another crisis depends on the finance ministry’s recommendations on the management of bourses. “The market regulator does not have much to say on the matter, and the CSE, I guess, will have to wait for the ministry to come up with clarifications,” Mehta told The Telegraph.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.15	HK $1	Rs.  5.95*
UK Ł1	Rs. 67.15	SW Fr 1	Rs. 27.00*
Euro	Rs. 41.26	Sing $1	Rs. 25.85*
Yen 100	Rs. 37.67	Aus $1	Rs. 23.50*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4425	Gold Std(10 gm)	Rs. 4365
Gold 22 carat	Rs. 4180	Gold 22 carat	N.A.
Silver bar (Kg)	Rs. 7125	Silver (Kg)	Rs. 7210
Silver portion	Rs. 7225	Silver portion	N.A

Stock Indices

Sensex		3285.89		+ 34.36
BSE-100		1544.54		+ 16.33
S&P CNX Nifty	1061.45		+  9.75
Calcutta	 119.24		+  0.93
Skindia GDRNA	 548.63		+  6.14
   
 

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