Jalan sees no more rate cuts
Rupee closes at new low of 47.35
IDBI against merger with bank
Cellular, basic players in airwaves spat
US interest
Recast helps JK Corp cut debt by 55%
HM seeks state clearance for Uttarpara layoffs
Bharti sets basic priorities
Registration of firms drops in June
Foreign Exchange, Bullion, Stock Indices

New Delhi, Sept. 10: 
Reserve Bank governor Bimal Jalan reckons that the interest rate cuts have run their course for now and no further cuts are imminent.

Jalan, who has already cut the bank rate twice this year and permitted commercial banks to lend at sub-PLR rates to its most creditworthy borrowers, said, “The trend of a falling interest rate has been quite high for some time. Both the economists and the government do not find the current rate of interest to be the culprit for economic slowdown. So we will not take any step to lower it now. The RBI has already softened the interest rate this year to improve the domestic scenario.”

“There was a broad discussion on the interest rate at the Prime Minister’s economic advisory council meeting. There was agreement that the rates were coming down and the regime continued to be positive,” Jalan said. The interest rate wasn’t the crucial element in the revival of the economy, he added.

“The external sector has continued to show good growth. Foreign exchange reserves have swelled to $ 45.3 billion. We only need to manage the funds so as to insulate the domestic economy against the economic slowdown,” he said.

Jalan’s compulsions are obviously far different from Alan Greenspan’s—the Federal Reserve chief has cut interest rates seven times this year to jump-start a guttering US economy. There is already speculation in the market that the Federal Open Markets could cut the federal funds rate—which is the rate at which banks lend overnight to each other—by another 25 basis points to 3.25 per cent when it meets next.

Jalan declined to comment on the recent falls in the rupee. He claimed that the RBI’s exchange rate policy would continue to insulate the rupee value from the “upheavals and shocks” of the market.


Mumbai, Sept. 10: 
A scramble for dollars sent the rupee hurtling to its lowest close of 47.34/35 on a day the country’s top money-man said he favoured a “realistic” exchange rate. That comment from Reserve Bank (RBI) governor Bimal Jalan spooked a market — driving the currency to its intra-day low of 47.36 — looking for clues on the right value.

Foreign funds led the rush for greenbacks, the supplies of which fell far short of the demand. There were growing fears the pressure on the rupee will increase when trading opens on Tuesday. Much of the dollar buying was caused by differences in the way Jalan’s remarks were read by various players in the market. A “realistic exchange rate” was interpreted by some analysts to mean the central bank is in favour of gradual depreciation of the rupee. “I feel that the RBI will allow a one per cent slide in the value of the rupee. This indicates it will rescue the currency after it plumbs a level of 47.70-47.75 per dollar,” a dealer with a foreign bank said. Others saw 47.50 as the trigger point.

The RBI governor, commenting on the exchange rate in Delhi today, cited the swelling foreign exchange reserves to suggest that the external sector was doing well.


Mumbai, Sept. 10: 
The Industrial Development Bank of India (IDBI) has decided against merging with its banking subsidiary, IDBI Bank.

This decision, taken at the institution’s board meeting today, is the first under P. P. Vora after he took charge as the chairman and managing director.

It indicates that IDBI will press ahead with a plan to divest its stake in the banking subsidiary in keeping with Reserve Bank of India (RBI) guidelines. It is also a signal that its universal banking idea will be have to be pursued independently — without any merger with the bank.

Senior officials told The Telegraph that IDBI would continue to support the bank, infusing capital when the need for it arose. Vora said IDBI Bank fulfils the capital adequacy norms laid down by the Reserve Bank, and that various proposals were being evaluated to ensure that it remains that way in future. The institution does have a few plans on the table, but he refused to provide details. Vora said today’s meeting chaired by him discussed a raft of “routine issues”, and there were indications that the debt-restructuring plan proposed by Haldia Petrochemicals was one of them. However, this could not be confirmed with the senior IDBI management.

The controversial Enron-promoted Dabhol power project, in which the institution has invested a lot of money, was another matter which is believed to have figured at meeting.

IDBI holds a 57 per cent stake in IDBI Bank and it is required to bring it down to 40 per cent by September 30 under central bank norms.

In an informal chat with reporters, after the meeting, Vora denied the universal banking proposal was taken up. He said the issue was not deliberated as the report by Boston Consulting Group (BCG) on the issue has not been presented. BCG has been appointed by the institution to draw up a roadmap for its foray into universal banking.

IDBI has been thinking of divesting its stake in IDBI Bank for the past few months, but the poor state of the capital markets has stopped it from going ahead with the share sale.

Sources close to IDBI said that due to this scenario, the institution is not in a position to find the right premium for its stake in the bank.

However, they add that the institution would look at meeting the RBI norms through various means that includes expansion of IDBI Bank’s equity, issuing shares to public or roping in a strategic partner.

The bank like many others, has over the past few months shifted focus to retail oriented banking. With service-oriented retail business being identified as a key area, the bank is now stressing on technology would be the main driver.

In addition to the retail focus, the bank is also concentrating on the Internet to emerge as a leading e-commerce enabler in the country.


New Delhi, Sept. 10: 
Recriminations have started to fly as both cellular and basic operators have started griping over the inter-connection agreement between them. Basic operators claim that the cellular operators are bypassing their exchanges in order to provide cheap calls from mobile phones to fixed line users, depriving them of “hundreds of crore in revenue.”

The cellular operators, on the other hand, are livid over the fact that the basic operators—read BSNL—are forcing them to take a tortuous route to provide a link between a cellphone user and a fixed-line user in two different cities within the same telecom circle.

The basic operators are claiming that the cellular operators are “misusing” their inter-connection arrangements by bypassing their exchanges in order to offer the calls at Rs 1.20 per minute.

A leading cellular operator in the north said, “We had sought interconnection at the point of origin of the call. But the basic operators aren’t ready to give us a handshake at the port of call because they would then have to share the revenues with us.” Let us illustrate what the gripe is really about: if a cellphone user in Pune wants to make a call to a fixed line user in Mumbai, cellular operator claim that the call has to be routed via BSNL’s exchange at Nagpur. From here, the call is taken by BSNL on its network to the subscriber in Mumbai for which it charges STD rates from the cellular service provider.

The cellular operators argue, “It would make a lot more sense and cost a lot less if the call was carried on our network from Pune to Mumbai. If the inter-connection is given at the Main Switching Centre (MSC) at Pune, we have no problem, but that is an issue that has to be examined by Trai.”

According to a letter sent to Trai and Telecom Commission chairman Shyamal Ghosh, the Association of Basic Telecom Operators claimed that a three-minute call if routed through the basic operator’s exchange would have normally cost Rs 18.60 per minute.

“Nowhere in the world mobile service is cheaper than the basic service. Strangely, only in India, mobile services are cheaper than basic services. We hope that the government will promptly intervene and stop this bypassing of the revenue immediately and stop Bharat Sanchar Nigam Limited and other basic service operators from turning sick,” stated an ABTO letter sent to Trai.

While ABTO has restrained from quoting an amount lost due to the operations undertaken by cellular operators bypassing the basic network, sources in BSNL said, “The loss is more than Rs 3,400 crore.”


New Delhi, Sept. 10: 
A two-member team from the Federal Communications Commission (FCC) of the US met private telecom operators. They are also scheduled to meet the government and officials of the Telecom Regulatory Authority of India.

Jacquelyn Ruff , associate chief at the Telecom Division of FCC’s international division and Anita Dey, regional director of FCC’s international division, today held talks with the Association of Basic Telecom Operators.


New Delhi, Sept. 10: 
JK Corp has spun off its paper undertaking, JK Paper Mills, Orissa, to the Central Pulp Mills Ltd (CPM), a group company, as part of its debt and business restructuring scheme which has now become effective.

The restructuring has helped bring down the company’s long term debt from over Rs 1,500 crore to less than Rs 700 crore, a reduction of nearly 55 per cent, with no write-offs by financial institutions and banks, the company claimed.

With the hive-off of the paper concern, JK Corp will be a focused cement firm with a capacity of 2.2 million tonne a year. With the acquisition of the paper business, CPM will have an output of 1,50,000 tonne per annum.

Announcing the restructuring, Hari Shankar Singhania, chairman & managing director of JK Corp, said, “We have been operating in the two core industries for a long time and hope to emerge stronger and focused in these businesses”.

The restructuring scheme had been approved by the creditors for long term debts and the equity shareholders of the company. Later, it was sanctioned by the high courts of Orissa and Gujarat.


Calcutta, Sept. 10: 
Hindustan Motors (HM) has submitted to the Bengal government a plan to rationalise its workforce even as it pursues a layoff case hanging fire at the Calcutta High Court for close to two years.

The C.K. Birla flagship wanted a three-day layoff at its Uttarpara plant, but the proposal was rejected by the industrial tribunal in August 1999. Unhappy, it appealed against the order to a single-judge bench of the Calcutta High Court in November 1999. The petition came up for hearing on August 31 before Justice Dilip Seth.

There were 9,954 employees when the suit was filed, but the number has now dropped to 7,697 — 6067 workers and 1,630 in the administration. Some of them opted for a voluntary retirement scheme, a few resigned and others retired.

Confirming the move, Prabal Chatterjee, HM’s senior vice-president, said: “This is an old case. It was not lying dormant. It has come up for hearing once again. Since the case is sub-judice, I cannot comment further.”

Sources say the company expects cost savings of Rs 1 crore a week if it can implement the three-day layoff plan. “In any case, the company is already grappling with several non-productive days,” the sources added. Between April and early September, 44 of the 163 working days had been declared “non-productive days”.

Chatterjee did not give details of the layoff plan, but said it is necessary to help the company stay afloat during recession.

“The state government had asked us to submit a plan on ways of running the Uttarpara plant. We need manpower rationalisation and productivity increases. We have to reduce the workforce, but I cannot say what the optimum staff-strength will be. We do not have any feedback from the government.”

The company, which rolled out 1,040 cars and sold 1,300 (including inventory) in August, has set a production target of 1,700 units this month.

Employees say they are ready to co-operate with the management if it has a concrete turnaround proposal.

“The staff-strength has come down and the productivity is higher since the layoff plan was conceived in 1998. We have been telling the management that there is no need to go to court. However, Citu and Intuc have decided to mount a joint movement. We will thrash out the matter with the state labour department,” Intuc union’s Ajit Chakroborty said.


New Delhi, Sept. 10: 
Bharti Enterprises will launch a new brand for its fixed line services business and has appointed a president to head its suite of long distance, fixed line and broadband services.

The new business group has been christened as ‘The Infotel Leaders’. The company has also divided its fixed line business into two regions.

Sunil Bharti Mittal, chairman and group managing director of Bharti Enterprises, said, “This major initiative of launching a new business group—The Infotel Leaders—signals the integration of our non-wireless businesses and is designed to ensure that synergetic businesses are run along similar lines tapping the best resources available across our businesses.”

“The creation of two major regions in the north and south underlines our strategic thrust towards expanding the fixed line services operations in the two regions. This new group will help Bharti gain a leadership position by providing discerning customers with world-class “telecom solutions” rather than mere products,” he added.

The new business group will be headed by Badri Agarwal, who will be the president of ‘The Infotel Leaders’. Earlier he was president of Bharti’s fixed line and broadband businesses.

Bharti today also announced the restructuring of the fixed line services businesses into two main regions each headed by an executive director.

These positions are being kept vacant and will be filled once the new businesses achieve operational stability and are ready to be merged as regions.

The northern region will comprise all the telecom operations in Delhi, Haryana and Madhya Pradesh. The southern region will comprise its operations in Karnataka and Tamil Nadu.

Mittal said, “Over a period of time this will result in the management of larger business areas with greater operational efficiencies and flexibility.”

The structure as it stands today has each circle headed by a chief executive officer.

At present, Rohtash Mal is the CEO of Delhi circle. S. Choudhary heads the Haryana circle, P. Swaminathan is the boss of the Madhya Pradesh circle, Cherian Kuruvilla is the head honcho at the Karnataka circle and K. Krishnan oversees the Tamil Nadu circle.

“Infotel Leaders has been created to provide world class, cutting edge solutions to its customers with a focus on the business segment. This new structure will continue to be supported by the strong apex team of corporate directors,” said Mittal.

This announcement follows Bharti’s recent announcement of a strategic roadmap for pan-India leadership in mobile services with an immediate investment of Rs 1500 crore.

It also follows Bharti’s plans of launching basic services in Haryana, Karnataka, Delhi and Tamil Nadu by the year end along with its proposed launch of domestic long distance services.


New Delhi, Sept. 10: 
If you are looking for indicators of a slowdown in the economy, here’s another: only 1,852 companies were registered in June 2001 under the Companies Act against 2,787 companies in the same month a year ago. In May this year, 1,978 companies were registered, which means that we are on a downslide whether you look at it sequentially or on a year-on-year basis.

Of the 1852 companies registered during the month, 1841 companies were limited by shares including one government company Ä Chattisgarh State Mining Corporation Ltd. The total authorised capital of the companies limited by shares put together amounted to Rs 321.1 crore. These comprised 101 public limited companies with an authorised capital of Rs 92.2 crore and 1,740 private limited companies with an authorised capital of Rs 228.9 crore.

The highest number of companies limited by shares registered during June was from Maharashtra (443) followed by Delhi (383). In West Bengal, 132 companies were registered.

The analysis of new registration by broad industrial classification during the month brings out that the highest number of companies were registered under the classification ”Financing, Insurance, real estate and business services (542), followed by manufacturing (526). Four hundred companies were also registered under the classification “wholesale and retail trade, restaurants & hotels.

Seventy seven companies closed down during June 2001, either because they had gone into liquidation or because their names were struck off under section 560 of the Companies Act. Of these, seven were public limited companies and 70 private limited units. Of the 77 units, 56 belonged to Pondicherry, 13 to Jammu and Kashmir, and 1 in West Bengal.



Foreign Exchange

US $1	Rs. 47.35	HK $1	Rs.  6.00*
UK £1	Rs. 69.43	SW Fr 1	Rs. 27.90*
Euro	Rs. 42.89	Sing $1	Rs. 26.70*
Yen 100	Rs. 39.40	Aus $1	Rs. 24.05*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4540	Gold Std (10 gm)NA
Gold 22 carat	Rs. 4285	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7050	Silver (Kg)	NA
Silver portion	Rs. 7150	Silver portion	NA

Stock Indices

Sensex		3183.63		-14.77
BSE-100		1506.39		- 6.59
S&P CNX Nifty	1033.40		- 1.80
Calcutta	 107.37		- 0.81
Skindia GDRNA	 512.57		+ 1.10

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