BSE gets tough on delinquents
Breather for Bharti, other cellular firms
ITC to invest Rs 200 cr in agri-market venture
Consensus on margin trading eludes Sebi
Calcutta to be Samsung hub for east
Trai seeks proposals on international telephony
ONGC chants direct marketing mantra
Foreign Exchange, Bullion, Stock Indices

 
 
BSE GETS TOUGH ON DELINQUENTS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept. 3: 
Pay and comply. That’s the terse message the Bombay Stock Exchange (BSE) is sending to companies that list their shares on the bourse, but play truant on payments and mess with the rules. There are 228 of them who have been handed suspensions. Another 315 have been ticked off, taking the number in the rogues gallery to 543.

The new round of suspensions, to be effective from September 10, have been provoked by non-payment of listing fees and failure to comply with other norms of the exchange.

Officials did not say precisely which regulation or norm these companies violated to invite such a harsh penalty from an exchange which has listed the shares of 6,000 companies.

The last straw for the BSE brass was when the firms, slapped with show-cause notices, did not pay the listing fees for the financial year ended March 2001 despite the fact that they were given sufficient time to cough up the dues.

Market observers say the move by the exchange to suspend trading in these scrips would hit small investors harder because they would be deprived of the option to sell out. Present market conditions have meant that investors who want to offload their holdings in a company can do so only at a loss.

A study of the 315 scrips — most of which trade below par value — that will be suspended by the exchange reveal that a large number of them commanded hefty premiums during the salad days of the capital market at the height of the tech frenzy.

Some of those that face the whip are IFB Finance, Jord Engineers India Ltd, Kothari Sugars & Chemicals Ltd., Madras Petro-Chem. Ltd., Mikado Textile Ind, Montari Industries, Nagarjuna Granites Ltd and Narmada Agro Industries Ltd.

Other shares include Natco Polyplast, NEPC India Ltd, NEPC Paper And Board Ltd, NEPC Textiles Ltd, NEPC-Agro Foods Ltd. Orient Syntex Ltd, Oswal Spinning & Weaving Mills Ltd, R.S.Petrochemicals Ltd, Rama Pulp & Papers Ltd, Shaw Wallace Electronics Ltd, Beta Napthol Ltd, Carona Ltd, Enkay Texfoods Industries Ltd, Hindustan Photo Films Ltd.

It is learnt that one such company which the premier exchange is investigating for non-compliance of listing rules is the Chennai-based animation major, Pentamedia Graphics.

Market watchers shrugged off the move, saying the practice of suspending trading in scrips for non-payment of listing fees is not uncommon. Done to nudge companies to pay up, the measures usually work, companies relent and pay up.

Though a senior BSE official confirmed that the investigations were on, he did not elaborate on the specific areas where the companies had fallen foul of the regulations.

Though the suspensions are days away, the companies in the dock saw their shares knocked down by investors who ignored denials that there was nothing more to it than rumour.

In fact, the Pentamedia scrip dropped to a low of Rs 51.05 after opening at Rs 52.90. The counter managed to recover some ground towards the close and it finished at Rs 51.20. The share saw 3491 trades, resulting in a turnover of Rs 2.41 crore.

Explaining the rationale for the suspension, the exchange said that in not paying the annual listing fees, these companies had not complied with provisions of Clause 38 of the listing agreement signed with the exchange.

Recently, one of the prominent companies that saw its shares being suspended from trading was DSQ Software Ltd.

   

 
 
BREATHER FOR BHARTI, OTHER CELLULAR FIRMS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept. 3: 
The communications ministry today extended the deadline for signing the agreements for the fourth cellular licences by 15 days to October 1. This is a respite for companies who will get another fortnight to pay back the outstanding telecom dues which they must clear before they are allowed to sign the agreements.

The Bharti Group, which has to pay dues worth Rs 575 crore on account of JT Mobile—the Punjab cellular service provider which it bought five years ago—will be one of the biggest beneficiaries of the 15-day extension.

It also gives some breathing space to the other four companies that had emerged as successful bidders after the fourth round of bidding.

The Bharti Group was caught in a situation where the case for a waiver of part of the outstanding needed the sanction from the Cabinet and the new communications minister Pramod Mahajan, who will be out of the country till September 14.

But now with the extension, the Bharti Group will not only try to settle the issues with the department of telecommunications (DoT) but also hope that Mahajan will be back in the country in time to take a decision on the disputed dues along with his Cabinet colleagues.

The company plans to continue to hold discussions with DoT to reach a solution so that the company will have to pay less.

DoT sources said, “The company has one alternative and only one—it has to pay the outstanding to get a licence. But it can go for an arbitration once it has paid the dues.”

Sources in the Bharti group confirmed that this will be one of the option which is being actively pursued by the company.

The dues arise on account of JT Mobile, the Punjab cellular service provider that the group acquired in December 1996.

The Bharti Group has been contesting the extent of JT Mobile’s dues and the issue has been taken to court.

Last week , the attorney general had suggested three courses for the government to solve the issue. “The first is to waive the entire licence fee for the back period of 693 days. Second, to waive the licence fee partially. Third is to outright reject the claim for waiver of the licence fee. Needless to say outright rejection is bound to lead to litigation,” Sorabjee said.

“The government may well explore the possibility of fair and reasonable settlement keeping in mind the huge amounts involved and the desirability of avoiding time consuming and expensive litigations,” he added.

The Bharti Group has been trying to work out a programme to settle the dues through a combination of cash and bank guarantees. Bharti bagged eight circles in the bids which were held last month.

The government has already stipulated licences will not be issued until it clears all its previous dues.

The Bharti Group had proposed to pay up the principal amount in cash and the rest as bank guarantee. This was rejected outright when it was first made. It was sent up for review by the telecom commission after the second submission but no solution was reached.

   

 
 
ITC TO INVEST RS 200 CR IN AGRI-MARKET VENTURE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept. 3: 
ITC will invest Rs 200 crore over the next three years in its e-infrastructure initiative as part of its rural agri-marketing venture, which it started last year.

Under its e-chaupal programme, it has so far set up internet-supported marketing in 450 chaupals in 1500 villages.

Besides providing crucial knowhow to the farmers, the e-chaupal works in tandem with companies that wish to sell inputs to the farmers and buy output from them to sell in the market, mostly overseas, said S. Sivakumar, chief executive of the international business division of ITC Ltd.

The rural agri-marketing initiative is undertaken by this division.

Sivakumar said ITC will enter the area of contract farming in organic foods, in the new areas of fruits and vegetables in Andhra Pradesh and Karnataka, and for basmati rice and wheat in UP and Haryana.

ITC Foods, the recently-opened business of the tobacco-to-hotels major, also intends to get into packaged atta and confectionery, he said.

For organic food, the fruits that are under consideration are mango, banana, guava and passion fruit, he added.

“In future, our agri-marketing strengths will provide the backend for our foods business,” said Sivakumar.

ITC is already present in the area of contract farming in aquaculture, soyabean and coffee.

ITC’s agri-exports account for Rs 750 crore at present, which it hopes will go up substantially with the various agri ventures.

Soyabean, aquaculture and coffee are the companies biggest agri exports besides tobacco which it terms as a ‘restricted’ product.

In future, tobacco production will be balanced by non-tobacco agri-produce, said Sivakumar.

Sivakumar said Rs 10 crore has been invested in the e-chaupal initiative over the past year. The first six months was a pilot period; transactions over a subsequent four-month period amounted to about Rs 10 crore.

   

 
 
CONSENSUS ON MARGIN TRADING ELUDES SEBI 
 
 
BY A STAFF REPORTER
 
Calcutta, Sept. 3: 
The Securities and Exchange Board of India will consider the introduction of individual stock futures and margin trading at its board meeting in New Delhi on Tuesday. Though the market is optimistic about the outcome of the meeting, it looks unlikely that the Sebi board will take a final view on the issues tomorrow. The Sebi brass was locked in a meeting till late this evening, and it appears that they failed to arrive at a consensus on the introduction of margin trading which, for all practical purposes, would have meant the return of badla, though in a modified form. Individual stock futures may, however, get the nod.

Brokers feel that individual stock futures and margin trading are necessary to infuse liquidity into the markets.

The Sebi risk management committee has already recommended the introduction of stock futures and margin trading. Sources said Sebi might have to seek Reserve Bank’s permission to implement these measures. The introduction of margin trading will enable banks, institutions and individuals to finance third party trades.

According to a draft plan, stock exchanges will not only provide the platform for margin trading but also act as the clearing corporation, thereby protecting the lenders’ funds and stocks against default.

The proposed margin trading platform is expected to offer more security to lenders’ funds than badla. In the event of margin trading being approved, Sebi is likely to stipulate that stock exchanges offering margin trading facilities will have to offer systemic insurance against default through a sound settlement guarantee fund (SGF).

Introduction of individual stock futures, on the other hand, will open up arbitrage possibilities between the cash and futures segments, which too will help in increasing the overall depth of the markets. Individual stock options too offer arbitrage opportunities between the cash and derivatives markets, but it did not take off for the lack of stock lending-borrowing mechanism.

Brokers want margin trading to take off with individual lenders only, because the banks and institutions may need the approval of RBI to participate.

“Even without the participation of banks, margin trading will pull the markets up as individuals can always borrow from the banks on their own, and infuse the funds into the markets,” said analysts.

Among other issues that are likely to come up at the meeting tomorrow are short selling by institutions in the cash market, which so far was not allowed. The market regulator is expected to permit institutions to short in the cash market, when they go long in the futures market. This will give a fillip to trading in both the cash and futures markets.

   

 
 
CALCUTTA TO BE SAMSUNG HUB FOR EAST 
 
 
BY A STAFF REPORTER
 
Calcutta, Sept. 3: 
Samsung Electronics India Information and Telecommunications Limited (SEIIT) has decided to make Calcutta the hub for the east and strengthen its sales and service infrastructure in this region.

As part of its focus on the eastern region, the company plans to set up local logistics and billing models in Patna, Ranchi, Bhubaneswar and Guwahati.

Samsung has also decided to increase the number of channel partners in the east from the present level of 150 to 450.

Elaborating on the plans for the eastern region, Vivek Prakash, general manager for IT sales and marketing, said: “At present, the eastern region contributes a mere seven per cent to the company’s sales. By beefing up our operations, we plan to increase this share to 11 per cent by the year-end and winch it up to 20 per cent by 2002-end.”

Samsung Electronics India has set a sales turnover target of Rs 1325 crore this year compared with Rs 740 crore achieved last year.

   

 
 
TRAI SEEKS PROPOSALS ON INTERNATIONAL TELEPHONY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept. 3: 
The Telecom Regulatory Authority of India (Trai) today invited suggestions from the public prior to opening up international long distance (ILD) services.

The consultation paper released in this regard focuses on issues that are key determinants of the policy regime for the ILD sector, including the terms and conditions of the licence, type and nature of competition, selection criteria, types of services to be permitted, licence fee structure, carrier selection, inter-connection regime and other technical issues.

Trai has sought comments by September 30 on the various policy issues. It hopes to submit its recommendations to the government by the end of November.

The government has already announced plans to open up the ILD sector for private participation from April 1 next year as part of the New Telecom Policy (NTP) 1999.

The main issues which will be examined in detail by Trai include, terms and conditions of the licence, what the licence should allow—should it specify a set of services which the licensee can offer under the licence or should it be a licence that enables the licensee generally to offer carriage services since ILD is essentially a carriage service.

Other issues that need to be addressed include the time period of the licence, principles for tariff fixation and interconnection charges/revenue sharing, especially if the types of technologies allowed for ILD involve major differences in transporting telecom traffic.

It will also examine whether to give different licences for voice and data services, whether to allow various tele and bearer services. This is an important issue in view of the new convergence Bill which is likely to become an Act by next year.

Three broad policy issues which need to be addressed in the context of “Nature of Competition” are, whether to have only operators which own network facilities or also allow re-sellers of international bandwidth.

Another is whether to limit the number of ILD service providers. Comments have also been sought on who should be allowed to provide this service and whether there should be open competition without any limits on the number of operators.

The third issue is the time period within which competition should be introduced. Certain selection criteria may have to be specified, which may include a consideration of, for example, whether entry should be allowed through an entry fee subject to bidding or entry should be allowed to only those with a proven track record.

   

 
 
ONGC CHANTS DIRECT MARKETING MANTRA 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Sept. 3: 
In a major departure from the way it ran business in the past, Oil and Natural Gas Corporation (ONGC) has drawn up its first-ever “direct marketing strategy” that will help it remain competitive once all price controls on the oil industry are lifted in April next year.

The “take or pay” strategy will be considered at the next board meeting of the public sector oil major.

ONGC chairman Subir Raha told The Telegraph that his company is limbering up to grab emerging opportunities and boost its share in a fully deregulated market. To achieve that goal, Raha said his company will enter into long-term agreements with refineries — both in the private and public sectors — that will tie both sides to commitments on buying and selling specific quantities of crude and gas.

“The agreement will bind us and customers to penalty clauses. If you do not take the oil and gas in the agreed quantities, you pay a penalty. Similarly, we will be liable to pay the penalty if we fail to deliver products on schedule,” Raha said.

The objective of the strategy, he pointed out, is to ensure that the company sells products at competitive prices once the curbs are off.

At present, it hardly markets its produce—all of which is hawked to oil PSUs at highly subsided prices.

“The regulated oil sector has never been beneficial to us, especially because we sell at discounted prices under the administered price mechanism (APM). Unlike others, the regulated regime offers reverse protection to us,” Raha said.

ONGC, he said, gets 60 per cent less than the market price on its crude sales, and 50 per cent less on gas.

Deregulation, if accompanied by aggressive marketing, can be a boon for a company that intends to sell at the highest quoted prices in future.

The public sector oil producing major is also planning to appoint an agent who will advise it on ways to make inroads into the speculation-driven international oil marts. With plans to invest Rs 46,000 crore in the Tenth Plan, the company is eager to trade in the international markets.

“Public sector enterprises are not allowed to enter into speculative businesses. We will seek all required approvals, including those from the Reserve Bank of India, so that we can venture into international markets through an expert,” he said.

Meanwhile, the upstream major will soon open talks with petrochemicals companies to sell naphtha, a by-product.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.14	HK $1	Rs.   5.95*
UK £1	Rs. 68.64	SW Fr 1	Rs.  27.90*
Euro	Rs. 42.80	Sing $1	Rs.  26.75*
Yen 100	Rs. 39.69	Aus $1	Rs.  24.50*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4535	Gold Std(10 gm)	Rs. 4460
Gold 22 carat	Rs. 4280	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7050	Silver (Kg)	Rs. 7155
Silver portion	Rs. 7150	Silver portion	NA

Stock Indices

Sensex		3227.12		- 17.83
BSE-100		1520.08		- 14.65
S&P CNX Nifty	1048.05		-  5.70
Calcutta	 110.96		-  0.02
Skindia GDR	   NA		     —
   
 

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