Nasscom out of Dewang shadow
Hindujas rail against A-I bidding bar
Kinetic unveils ZX Zoom
LIC orders relook at three popular schemes
15 firms in fray for PowerGrid projects
Amendments to Companies Act go before Cabinet
Liquidator for Krushi Bank
Stiff norms for NBFCs’ stock investment
Nishkalp director under probe
Foreign Exchange, Bullion, Stock Indices

New Delhi, Aug. 16: 
Kiran Karnik, the man picked to replace Dewang Mehta, is likely to be lost in the crowd. In a clear break with the legacy of the man who was widely regarded as the face of IT in India, the National Association of Software and Services Companies (Nasscom) has decided on an organisational restructuring that sharply reduces the powers of its president.

The plan creates a cabal of industry shoguns that will focus on policy formulation and is designed to stop a personality from overshadowing the organisation.

Nasscom will have two bodies — the executive council and the chairman’s council — that will serve as think-tanks for the software industry’s apex organisation. The new organisational structure, announced here today by Nasscom chairman Phiroz Vandrevala, will come into effect from mid-September.

Henceforth, the Nasscom president will be part of the executive council which will consist of the chairman (Phiroz Vandrevala), two vice-chairmen (Arun Kumar and Som Mittal), 18 elected members and two immediate past chairmen. “The policies will be formulated by the Nasscom executive council and the chairman’s council,” said Vandrevala.

The chairman’s council consists of present chairman Phiroz Vandrevala (Tata Consultancy Services) and past chairman Harish Mehta, (Onward Technologies), N.R. Narayana Murthy (Infosys), F.C Kohli (TCS), Ashank Desai (Mastek Ltd), K.V. Ramani (Future Software Ltd), Saurabh Srivastava (Xanasa India), Raj Jain (R.S. Software) and Atul K. Nishar (Aptech).

The software organisation also gave in to the growing discontentment amongst it members in various parts of the country and decentralised the apex body by setting up regional organisations which are likely to have a separate secretariat. The apex body has been further divided into a central organisation and a regional organisation. The central organisation consists of three vice presidents dealing with organisation function, research and analysis, and relationship functions. There will be four regional organisations — North, South, East and West — each headed by a regional officer. The powers and functions of the regional officers are yet to be finalised. The pressure for a regional organisation has been building up for the past few years since many of the smaller software companies complained that the organisation based in Delhi was too distant. Nasscom, the apex umbrella organization for IT software and service organisations in India, was formed in 1988 with an objective to act as a catalyst for the growth of the globally competitive software-driven IT industry in India.

A non-profit organisation with over 870 member companies, it collectively contribute to more than 95 per cent of revenues of the Indian software industry.

Its members include software, Internet and E-commerce companies spanning private, public sectors that include home-grown companies and multi-nationals. Nasscom is internationally represented at World Information Technology Services Alliance and Asian Ocean Computing Industry Organisation.

Nasscom plans to expand its operations in the US and Europe. “We will hold the first event on October 23 in London in association with Financial Times. The US event will be held next year after the annual Nasscom event in February in India,” said Vandrevala.


New Delhi, Aug. 16: 
The Hinduja group has aggressively challenged the government’s show cause notice debarring it from bidding for Air India on the ground that the group has never been investigated by the CBI.

The strongly worded letter written by Ashok Leyland chairman R.J. Shahaney to disinvestment secretary Pradeep Baijal on August 6 also claims the Hinduja brothers Ä S.P Hinduja, G.P Hinduja and P.P Hinduja Ä have not “so far been charged with any offence,” though they are being probed by CBI.

New rules framed by the government debar any group or company which has been convicted, indicted or chargesheeted by a court of law or an agency of the government from bidding for a public sector company.

After the new rules were framed by a cabinet committee, Baijal had written to the Hindujas asking them to showcause why they should not be debarred from the bidding for Air India.

Shahaney also claims the showcause notice “fails to justify as to how offences committed by the Hinduja brothers are offences relating to the security and integrity of the country ... as the charges involve only certain alleged financial improprieties and irregularities in a defence deal.”

The Hindujas also pointed out that the government chose to change its own rules at the very end of the divestment process “against all accepted principles of fair play, natural justice and rule of law, evidently when AAL Consortium becoming a potentially successful bidder appeared as a distinct possibility.”

If the Hindujas manage to win their way through with this tough talk, it will mean a loss of face for the government but also a quicker end to the divestment process for the airline.

On the other hand if it sparks off a war of words which culminates in a court case, then the process could well get further delayed.

The new rules were framed after Prime Minister Atal Behari Vajpayee held several rounds of talks on this issue with home minister L.K.Advani, whose ministry actually gives security clearances to business groups bidding for any state-run company, and with finance minister Yashwant Sinha, whose budget figures would take a hit if the selloff is stalled.

If the Hindujas are finally disqualified, only Tata-Singapore Airlines would remain in the race.

Out of IBP race

Hinduja group flagship Ashok Leyland has withdrawn from the race for wresting control of oil marketing PSU, IBP, says PTI.


New Delhi, Aug. 16: 
Kinetic Engineering Ltd (KEL) today launched ZX Zoom, the 110 cc gearless scooter, priced at Rs 37,215 ex-showroom in Delhi. The company said that it will launch two performance bikes — GF 125 cc and GF 150 cc — by next month. It plans to launch a 4-stroke 60 cc scooter sometime later.

ZX Zoom is equipped with auto start, variomatic transmission and has certain enhanced features like new colours, larger visor and multi-reflective headlamps.

KEL joint managing director Sulajja Firodia Motwani said the company is planning a foray into the distribution of non-life insurance products.

“We are in talks with two-to-three private sector insurance players for distributing their non-life products through Kinetic Finance Ltd and 450 dealer network,” Motwani said.

KEL is also planning to start its customer relationship management initiative — Kinetic For Life, shortly.


Mumbai, Aug. 16: 
Life Insurance Corporation is looking into the viability of its three popular annuity products after its sales zoomed by around 530 per cent to Rs 866 crore.

The insurance major was offering an attractive 9.5 per cent to 10 per cent for the schemes. But it has decided on a relook when interest rates are falling.

“Our actuaries have begun profit-testing the three annuity schemes — Jeevan Suraksha, Jeevan Akshay and Jeevan Dhara,” LIC managing director A. Ramamurthy told The Telegraph. But he refused to divulge further details, saying the insurance major would take a decision only after seeing the report filed by the actuaries.

Industry circles said the move was on expected lines as the rates offered by LIC was high in a low interest-rate regime.

The corporation had recently reworked its rate of return on one of its most popular schemes —Bima Nivesh.

Ramamurthy said the insurance sector is witnessing a gradual shift towards single-premium schemes as investors prefer schemes like Bima Nivesh.

The popular shift towards single-permium and assured-return insurance schemes should be seen in the context of the slump in the secondary markets and a subsequent depression in the mutual funds business.

After reworking the returns on Bima Nivesh, its sales soared to Rs 3,156 crore, a growth of 1,815 per cent for the four months ended July 2001. The scheme has crossed the target set for the entire year in July itself.

A totally revamped Bima Nivesh 2001 has already been introduced. Changes brought about in the new one include bringing down the age at entry to 18 compared with the earlier 35 and the returns which will be based on the market rates.

The never before trend of investors flocking to buy Bima Nivesh was attributed to the Unit Trust of India’s recent US-64 imbroglio and a depressed interest rate scenario.

Expectedly, its bread and butter business comprising money back and endowment policies which have shown a sustained growth is, however, modest when compared to the growth exhibited in the pension products and single premium product segments.

The sales of endowment and money back policies in the first four months have been put at 35.43 per cent at Rs 894 crore as against Rs 660 crore in the corresponding period of previous year.

Industry circles say the sales growth for the period is equally impressive at 35.43 per cent.


New Delhi, Aug. 16: 
The Calcutta based EMC Steelal Ltd, ABB, Tata Power, Larsen and Toubro, Siemens and Alstom, are among the 15 companies in the fray to snap up eight transmission projects on offer from the PowerGrid Corporation of India Ltd.

Other bidders include Emirates Trading Agency, Korea Electric Power Corporation, KEC International, Instanaciones Abengoa, Spanish firm Cobra Instalaciones Y Services SA, ESKOM South Africa, EDF France, BSES, Jyoti Structures and Kalpataru Power Transmission Ltd. The bids will be opened on August 19. PowerGrid has identified eight projects which shall be implemented by independent private transmission companies (IPTC). The projects will be implemented on a build-own-operate-transfer (BOOT) basis.

The eight transmission systems projects are the Rs 2,730-crore Sipat-I (1980 mw), Rs 1,140-crore Rihand-II (1,000 mw), Rs 620-crore Maithon Right Bank (1,000 mw), Rs 1,500-crore Ennore (1,800 mw), Rs 620 crore-Karcham (1,000 mw), Rs 9,200-crore Kahalgaon, North Karnapura and Barh (5,280 mw), Rs 1,250-crore Neyveli Thermal Power station-II and III (500 mw) and the Rs 5810-crore Hirma-I (3960 mw).

These will be developed through a project-specific shell company, which will later be acquired by the IPTC.

The IPTC will obtain all necessary clearances and will develop and construct the projects under an implementation agreement to be executed with PowerGrid.

After commissioning, the entire operation, maintenance and repair of the projects shall be the responsibility of the IPTC, under a transmission service agreement (TSA) to be executed between IPTC and PowerGrid. The IPTC shall make available the entire capacity to PowerGrid.


New Delhi, Aug. 16: 
The Cabinet is expected discuss a proposed amendment to the Companies Act to incorporate new insolvency rules for sick companies at a late night meeting. The outcome of the meet will be known tomorrow at a press briefing.

According to a source in the ministry of law, justice and company affairs, the proposal is to amend provisions relating to winding up of sick companies under a time-bound programme.

The proposal suggests that the minimum wind-up period for a sick company will be six months and maximum two years. It also stipulates 0.1 per cent of the company’s annual turnover to be deposited in a fund which will protect the interests of investors and shareholders of a defunct company. The bill also provides for a National Company Law tribunal to decide cases relating to the winding up of sick companies.


Hyderabad, Aug. 16: 
The board of crisis-ridden Krushi Urban Co-operative Bank was superseded today and a liquidator appointed by the Registrar of Co-operative Societies (RCS). Armed with an RBI order on Tuesday for superseding the bank’s board, the RCS appointed special deputy registrar of co-operative societies V Nageshwara Rao as special officer to run the bank, which was in the eye of a storm following an alarming asset-liability mismatch.

As RBI officials inspected bank records, the city police, in a parallel development, arrested bank vice-chairman K Venugopala Rao, brother of the chairman Venkateshwara Rao, who was reportedly away in USA. The police have also sought confiscation of the chairman’s property, under the AP Protection of Depositors’Act 1999.

The state government and the RBI will jointly scrutinise accounts of all the 130 urban co-operative banks in the state established after 1995, in the light of the run on the Krushi Urban Co-operative Bank. Bad debts and the background of management personnel will be scrutinised.

Krushi Bank had followed an aggressive deposit drive offering a 16.5 per cent interest rate. However, the present crisis arose when Charminar Co-op Bank withdrew around Rs 30 crore from Krushi Bank in the first week of August.


Mumbai, Aug. 16: 
Alarmed by the Tata Finance Ltd (TFL) episode, a joint committee of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi) is in the process of drawing up stringent norms on equity investments of non-banking finance companies (NBFCs).

The regulations are likely to clamp sub-limits within the given exposure caps stipulated by the central bank. According to sources familiar with the development, the sub-limits will cover a wide range, including investments in a particular company or a group.

Under the existing regulations laid down by the Reserve Bank of India, NBFCs can invest 15 per cent of their funds in a company; the limit is 25 per cent in the case of a group. Sources here said the committee is likely to recommend a sub-limit in each of these categories which would specify whether an investment is core or non-core, strategic or non-strategic.

Though the exact limit which will be prescribed by the committee is not known at this stage, industry circles point out that the panel is likely to fix a ceiling ranging from 3 to 5 per cent based on the type of investment (equities, debentures etc) that an NBFC has made in a particular company through the capital market.

Sources pointed out that in view of the recent developments, the committee is now looking at ways of not only protecting the interests of depositors, but to ensure adequate transparency in investments made by finance companies. These will include the exposure of the NBFCs in their subsidiaries, companies in the same group and other business ventures in which the NBFC has invested. However, in view of the inter-corporate exposure that has now come to light, sources said the committee may lay down tough restrictions against investments made by an NBFC in a company belonging to the same group.

When contacted, a senior official from the central bank said while the committee has just begun its deliberations, it would be too early at this stage to comment on what the specific package of recommendations would be.

NBFC circles also feel the central bank may use this opportunity and lay a road-map to raise the capital to risk-weighted assets ratio (CRAR) for all NBFCs to 15 per cent.

For the non banking sector, the current controversy has come after an earlier crisis which tested the confidence of the depositor. Following this, the RBI had more than a year back, announced major relaxation in the norms for NBFCs following the Vasudev committee report. It permitted a limited access to public deposits even for those who are not rated. It also hiked the quantum of deposits which a minimum investment grade company can accept.

NBFCs are now required to maintain liquid assets as a specific percentage of public deposits. The liquid assets requirement will be 15 per cent of such deposits from April 1, 1999.


Mumbai, Aug. 16: 
The Tatas have launched an internal probe into the alleged “insider trading” by J E Talaulicar, a senior director on the board of Tata Sons Ltd, the principal holding company for the group. “We are looking into it,” a Tata official said. Sebi has initiated a probe against Talaulicar following a complaint by the National Association of Small Investors. Talaulicar is also the director of Tata Finance Ltd and TFL subsidiary Nishkalp Trading & Investment Co, and therefore privy to the developments in the company.

Sources at the regulator’s office suspect that the information could have influenced his decision to sell his personal holding of 1 lakh TFL shares.

It is believed that Talaulicar and his family members sold about 1 lakh TFL shares at a price of Rs 69 per share on “spot payment basis” when it was quoted at around Rs 32 per share on the bourses. However, the market intermediary through whom Talaulicar sold the shares, had issued various cheques for a total amount of Rs 69 lakh on March 30, 2001.

Remarkably, shares from several depository accounts of the Talaulicars were transferred within the next two days. However, it is learnt that Talaulicar has stoutly stuck to his stand that the shares were sold in the month of May this year.



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