Govt mum, but industry vocal on bourse booster
Rupee tests 47.27, more losses seen
FIs step in to save Star Paper
Tata Finance debentures downgraded
Lufthansa support for Sahara
Govt clears 25 FDI plans worth Rs 1,118 crore
Maruti MPV to be priced at Rs 7 lakh
Tele-density to touch 7% by 2005
Foreign Exchange, Bullion, Stock Indices

New Delhi, Sept. 7: 
Prescriptions to revive the stuttering economy floated around like confetti as the government’s mandarins went into a day-long huddle with industry barons here today.

While there was general agreement over what ought to be done to jump-start the economy, the one area where there seemed to be some dissonance was over industry’s demand for reviving the capital market.

In its lengthy presentation made at the meeting of the Prime Minister’s trade and industry council, the finance ministry did not deem the revival of the capital markets — which has been in the doldrums since the market crash in early March — as worthy of mention. However, both the Federation of Indian Chambers of Commerce and Industry (Ficci) and the Confederation of Indian Industry (CII) put it at the top of their discussion papers for the meeting.

“There is no single factor that will rev up the economy. It will have to be a host of factors. We will have to depend on both fiscal and monetary measures. We will have to have a multi-pronged strategy; we can’t repose faith in one particular point and say this is going to happen,” finance minister Yashwant Sinha told newspersons.

But both Ficci and CII seemed to think differently, believing that a vibrant stock market was the sign of a robust economy. CII president Sanjiv Goenka felt the ban on badla and the exit of bank finance were the two critical factors responsible for the meltdown of the markets.

Goenka made four suggestions to ratchet up the sensex to a level of 4200—first, the RBI must instruct banks to increase loans against Group A and B1 shares, second, allow margin trading, third, reduce interest rates, and fourth, increase the foreign portfolio limit from 49 per cent to 74 per cent. The sensex has been languishing at 3200 after touching a heady 4438 on February 15 this year.

Ficci went a step further: it panned Sebi’s decision to ban all deferral products like badla which plunged the sensex into a free fall, leading to a drastic reduction in volumes and drying up new investments. To buttress its argument, the Ficci enclosed a survey which revealed that confidence in Sebi had sunk to a rock bottom, with 53 per cent of the respondents reporting low confidence in the market regulator and only 2 per cent expressing high confidence in it. The survey showed that 84 per cent of the respondents felt that the sudden discontinuation of badla had precipitated the crisis on the stock markets.

Other measures suggested by Ficci and CII included a strong divestment drive, systematic interest rate cuts, a boost to infrastructure investments, fillip to the housing and construction sectors, sops for the rural and agro-based industry to deepen the rural economy, exchange rate correction and deep focus on SEZs.

Low rate regime

Finance minister Yashwant Sinha said today the present rates were perhaps the “lowest ever”.

But it was for the Reserve Bank to take any decision on interest rates as it was in the central bank’s domain, Sinha said.

“If you look at interest rates today, perhaps, they are the lowest-ever. I have repeatedly said that it is not the ministry of finance but the RBI which will revise rates,” Sinha told reporters on the sidelines of the World Savings Bank Institute Asia-Pacific regional group meeting.


Mumbai, Sept. 7: 
The rupee was today pounded to 47.25/26 against the dollar, its lowest close ever, but the currency’s end-of-the-day quote represented a recovery from its intra-day trough of 47.27.

The plunge, coming after two months of relative stability, touched off fears in the dealing rooms of the forex market that the pressure on the currency will persist and could push the rupee to 47.30.

The fall was largely attributed to a scramble for dollars, the supplies of which were not enough to meet the sudden upsurge in demand. According to dealers, foreign funds and a handful of custodian banks made a beeline for greenbacks.

Today’s close marked a decline of nine paise over 47.1750/1800, the lowest close so far. The currency had plumbed 47.20/21 in intra-day deals on July 3.

Nationalised banks, led by State Bank of India, were seen selling dollars at the instance of the Reserve Bank, but the amount was not enough to stem the slide.

“The clamour for dollars today has not been seen for a long time. This piled pressure on the rupee since early morning, and the weakness remained for the better part of the day,” said N Subramanian, analyst at e-Mecklai.

The market is worried over the slackening pace of portfolio investments by FIIs in the equity markets, which have largely remained flat over the past few sessions.

Recent data released by the Securities and Exchange Board of India (Sebi) shows foreign institutional investors (FIIs) as net sellers to the tune of over $ 31 million on bourses early this month. In August too, their investments in shares and bonds had shrunk to a little over $ 80 million.

The rupee opened steady at 47.18/19, and though it remained stable around 47.22/24 during late-noon deals, the buying picked up towards close as banks rushed to cover their flanks.

It was only few minutes before the close that it touched the day’s low of 47.27.

Mirroring the trend in the spot market, forward premia hardened. The six-month forward premium ended at 4.71 per cent, up from 4.65 per cent on Thursday.

With predictions of more trouble for the rupee, there is a possibility that the exporters would prefer hold on to their dollars parked in overseas banks.


Calcutta, Sept. 7: 
Financial institutions have decided to extend a lifeline to the G. P. Goenka-controlled Star Paper Mills by restructuring its high-cost debts.

The FIs, which include ICICI, IFCI and the Industrial Development Bank of India (IDBI), have decided to reduce interest charges on the loan from 18 per cent to 15 per cent, giving the company a major breather. Moreover, the FIs have decided to convert a portion of the borrowings into equity.

Addressing shareholders at the company’s 63rd annual general meeting, Goenka said after a portion of the company’s debt is converted into equity, the promoters’ stake will come down from 65 per cent to 52 per cent and that of the FIs will go up from 16 per cent to 30 per cent.

“A proposal for restructuring loans by way of part conversion into equity, reduction in interest rates and revision of repayment schedules was recently submitted to the FIs. We will soon enter into an agreement with them,” Goenka said.

Last year, the market was agog with rumours that Goenka would sell off Star Paper Mills.

However, with the financial institutions now coming forward to provide assistance, that seems unlikely.

Goenka said the company has already initiated steps to bring down its borrowing costs.

The secured loans of the company stand at Rs 88.93 crore and its unsecured loans are in the region of Rs 10.02 crore. The total interest outgo is in the region of Rs 17.24 crore.

The institutions have also been requested to provide additional funds required to complete the company’s on-going modernisation scheme, including that of rebuilding the paper machines.

“The company has sought modifications in certain terms and conditions as approved by the institutions and also in the validity of their letter of intent. One of the institutions is yet to give a letter of intent, but we expect to get it soon,” Goenka added.

The company has sought Rs 25 crore from the FIs for modernisation of the plant.

Commenting on the current year’s prospects, he said there has been a perceptible softening of paper prices in the domestic market, particularly in the printing and writing segment, owing to the imbalance in the demand-supply position and lower exports. A sharp decline in the global prices of pulp and paper are also a cause for concern.


Mumbai, Sept. 7: 
Crisil today downgraded the Rs 260-crore non-convertible debenture issue of the controversy-plagued Tata Finance from A minus (A-) to AA minus (AA-).

The rating rebuke was handed despite the fact Tata Industries, the main promoter of TFL, arranged a three-month liquidity of Rs 200 crore to help the embattled finance company redeem its maturing debts.

The FAA rating on the company’s fixed deposits was also brought down a notch to FA, while the P2 rating on its commercial paper programme lowered to P1+.

Crisil had placed the ratings of TFL under watch with developing implications on July 27 after the company announced unauthorised financial transactions and losses in Niskalp Investments, its erstwhile subsidiary, and a few other associate companies.

The rating watch will continue till the agency carries out an assessment of possible regulatory action and the Tata group resolves how to sort out the mess arising from TFL’s exposure to Niskalp and associate companies.

Investments in Niskalp were made through inter-corporate deposits, as a result of which the finance company’s capital adequacy took a beating.


New Delhi, Sept. 7: 
Air Sahara today joined hands with Lufthansa Technik AG for technical support that covers engine maintenance for the domestic airline’s 737 fleet.

The agreement marks the German carrier’s second alliance in India after its agreement with ModiLuft ended in three years in 1996 . The understanding included leasing, training and technical co-operation.

Uttam Kumar Bose, chief executive officer of Air-Sahara, said: “This contract could provide a basis for a possible expansion of collaboration between Lufthansa Technik and Air Sahara.”

Lufthansa Technik will support and maintain Air Sahara’s fleet, lend its expertise to run engines, auxiliary power units and provide access to its inventory of spare parts required for Boeing 737-400’s, 700’s and 800’s.

“This is part of our expansion strategy. We are planning to augment our fleet in a big way over the next 18 months. To achieve that goal, we were looking at a reliable support partner to help maintain our fleet,” he added.

This engineering support, Bose said, will bring in the expertise required to manage such a fast expansion, ensure safety, dispatch reliability and on-time performance for our fleet. We are also in negotiations with Lufthansa to start a frequent flyers’ scheme.”

Lufthansa’s sales director (Asia/Australia), Johannes Bussman, said: “For us, this contract is an important step towards expansion in the Asian market.”

Together with its more than 20 subsidiaries and affiliates, Lufthansa Technik represents the world’s largest provider of technical services for the aviation industry.

Besides its four core areas of maintenance, overhaul, components and engines, the German company offers specialised engineering, maintenance management services apart from sophisticated logistics.

The link-up coincided with an announcement that the airline’s much-awaited expansion plan will be launched this month to achieve periodicity and on-time performance.

Sahara said it will soon add three new-generation aircraft and start offering tickets on the internet from October 2. The frequency on metro routes, particularly on the Delhi-Mumbai circuit, will be increased with a fifth daily flight between the two cities from September 20.

Of the six planes now in business, Sahara owns one and has leased the rest. In addition, it has four helicopters.

The company plans to generate Rs 560 crore in revenues during the current financial year and grab a 8-9 per cent market share; it has set a target of cornering 18-20 per cent by the end of next financial year.


New Delhi, Sept. 7: 
The government today cleared 25 foreign direct investment (FDI) proposals worth Rs 1,118 crore, including a Rs 120-crore proposal of South African Breweries India Ltd for downstream acquisitions and setting up of an investment company in the brewery sector. The board also cleared a proposal of Uttam Steel Ltd to manufacture cold rolled annealed and un-annealed sheets and coils.

The 25 proposals, covering the steel industry, software development and IT services, NBFC activities, mechanical and electrical equipment and components, were approved by commerce and industry minister Murasoli Maran on the recommendations made by the Foreign Investment Promotion Board (FIPB), an official statement said here.

A proposal of Otis Elevator to enhance foreign equity from 68.90 per cent to 100 per cent by infusing Rs 109.24 crore was approved by the board.

Other proposals cleared included a Rs 47-crore proposal of Mauritius-based company Chrysalis Raga for developing software solutions and a Rs 5.95 crore proposal of Moody’s Investment India Ltd to increase foreign equity from 13.84 per cent to 20.84 per cent and act as a special vehicle for expanding credit ratings and analysis in the domestic market.

Another foreign company Bagemeyer NV’s proposal for 100 per cent FDI through inflow of Rs 23.50 crore over a period of five years for the development of a design centre and electronic components was also cleared. Other proposals cleared included UK-based Smiths group to manufacture, design and market a wide range of equipment accessories through infusion of Rs 4.70 crore over a period of five years, a Rs 1.23-crore proposal of Nortels Service Apartments Pvt Ltd for business of service apartments with attendant facilities and a Rs 1.30-crore proposal of Borg Warner Turbo Systems Worldwide to manufacture turbo chargers and component parts.

The board also cleared a Rs 1 crore proposal of Topconcrete Pvt Ltd to manufacture ready mixed concrete and building materials. Proposals which did not include any fresh inflow of funds include TFL Leather Technique Pvt Ltd for bulk import of specialised leather, chemicals and selling the same to tanners, Safilo International for import and wholesale of ophthalmic frames and sunglasses, Harlow Butler Merwanjee Forex Ltd for foreign exchange broking, Garban Intercapital Ltd for securities and fixed income broking and Intertoll India Consultants (P) Ltd as maintenance service provider to the Noida Toll Bridge Company.


New Delhi, Sept. 7: 
Maruti Udyog is planning to pull the wraps off its multi-purpose vehicle (MPV)—codenamed Model C— by the end of this calendar year which will be priced at Rs 6.5-7 lakh.

Company sources said they had still not decided on a name for the vehicle and rubbished media reports that claimed it would be called Every Plus.

“The name will be finalised by the next weekend,” company sources said.

Although it will be placed in the same segment as Ford’s Ikon and Hyundai’s Accent in India, internationally, the model falls in the segment of Daimler Chrysler’s Voyager and Honda’s Odyssey.

“All our previous models starting from Maruti 800, Zen, Esteem, Baleno had been launched to create a new market in India. We want to do the same with our latest design. Hence, the choice of the model,” company sources said. The eight-seater will have sliding doors and a 1300 MPFI engine.

Maruti will not bring out any other car in this fiscal because the additional investment will need board approval which is not possible to obtain due to the on-going tussle between the government and Suzuki Motor.

Sources said, “It will be some time before the company can bring a wide range of models. Till then, we will stick to our policy of introducing one new model every year.”


Calcutta, Sept 7: 
India proposes to increase its tele-density from 3.8 per cent to 7 per cent by the year 2005 and further to 15 per cent by 2010, telecom secretary Shyamal Ghosh said today.

Tele-density in the country is expected to touch 4.5 per cent by March next year. Stating this, Ghosh said the telecom sector will require an investment of around $ 100 billion in order to meet the above targets.

He was speaking at a session organised by the Bengal Chamber of Commerce in the city on the opening up of the internet telephony segment. The telecom secretary said to avoid creating a digital divide in the country, it is necessary to first ensure universal access for the masses, prior to opening up the sector.

Bharat Sanchar Nigam Ltd (BSNL) is already trying to making telephones available on demand by 2002. The basic telephone service provider has also outlined a plan to provide phones in all villages in the country using wireless technology in areas where it is not possible to lay fibre cables. Ghosh added the number of wireless subscribers is expected to be around 50 million by 2007.

Videsh Sanchar Nigam Ltd has also commenced a project christened Sanchar Sagar to make bandwidth available on demand. The ministry has also issued a letter of intent to one company for satellite telephony. Long distance telephony is expected to be opened up by 2004.

Ghosh said internet service providers will have to obtain a separate license to provide unified messaging services.

The telecom sector, he said, is expected to consolidate through a series of mergers and acquisitions, adding that each sector may have a minimum of three players to enable healthy competition and growth. Besides, he predicted the country will soon have infrastructure at par with international standards, by the time other countries tide over the present economic slowdown.



Foreign Exchange

US $1	Rs. 47.26	HK $1	Rs.  5.95*
UK £1	Rs. 68.67	SW Fr 1	Rs. 27.55*
Euro	Rs. 42.33	Sing $1	Rs. 26.60*
Yen 100	Rs. 38.97	Aus $1	Rs. 24.15*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4530	Gold Std (10 gm)Rs. 4460
Gold 22 carat	Rs. 4275	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7025	Silver (Kg)	Rs. 7130
Silver portion	Rs. 7125	Silver portion	NA

Stock Indices

Sensex		3198.40		-4.15
BSE-100		1512.98		+3.90
S&P CNX Nifty	1035.20		-0.90
Calcutta	 108.18		-0.06
Skindia GDR	 511.47		-8.11

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