Stocks wilt in slump shadow
Rupee plunges to new low at 47.48
HPL lenders offer marginal rate relief
Trai provides respite to ISPs
Kusum suspends operations at Rishra unit
Tatas to build share shield around Tisco
Friedman is new Ford MD
PepsiCo contract farming takes roots
Accord variant more of a status statement
Foreign Exchange, Bullion, Stock Indices

 
 
STOCKS WILT IN SLUMP SHADOW 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept. 11: 
Two years and eight months — that’s how far stock markets went back in time when the Bombay Stock Exchange (BSE) sensex closed at 3150.40 today.

The slump at home has mirrored the meltdown overseas, especially the US, but the drift in the Indian economy has frayed investor sentiment and clobbered indices.

Here’s how the fortunes on Dalal Street fluctuated: the sensex dipped to 3149.06 on January 5, 1999, bounced back to an all-time high of 6150.69 on last year.

The gut-wrenching roller-coaster has unnerved institutional investors, mainly the FIIs, who turned from being movers and shakers to net sellers early this month.

Ramesh Damani, a prominent broker at BSE attributed the bearish mood on the woes of the economy. “Volumes are low, prices of pivotals have gone limp and there are no signs of a recovery,” he rued.

While some see domestic troubles as the villains of the piece, others, like Ajay Menon of Geojit Securities, felt it had more to do with the mayhem on foreign exchanges.

Dealers said today’s 33.23-point loss in the 30-share index was the result of taut nerves over Prime Minister Atal Bihari Vajpayee’s remarks about “systemic maladies” in the economy.

Vajpayee had said that despite stable macro-economic indicators like low inflation, high forex reserves and selling food stocks, there were inherent weaknesses that had left the economy floundering on the shoals of recession.

The sensex opened a tad weaker at 3189.09, moved in a narrow range of 3198.81 and 3141.57 before ending its run at 3150.40 in a 1.04 per cent decline from 3183.63 on Monday’s close. NSE’s nifty finished 7.56 points lower at 1026.50.

In today’s trading, Infosys zoomed, Reliance Industries flared up and Satyam perked up. FIIs reportedly picked up about two lakh shares of Infosys, helping the sensex recover a part of its losses.

Infotech shares were the flavour of the day, propelling the BSE IT index by 18.37 points at 1386.82. Even second-rung shares like SSI, HCL Tech and Global Tele-Systems were big draws. PSU stocks such as those of Bhel, HPCL and BPCL suffered sharp falls, as did Hndustan Lever. Local funds led by UTI were believed to have offloaded a large part of their holdings in these firms.

In specified group, 102 shares, including 17 from the sensex, retreated while 64 advanced. Infosys was the top traded share with a turnover of Rs 155.03 crore. The volume on BSE was Rs 944.15 crore, up from Rs 934.21 crore on Monday.

On the NSE, the key gainers were Hindalco, ITC, Dabur, ABB, Satyam, Infosys, Smithkline Consumer and ICICI, while the prominent losers included Bhel, HPCL, Digital Equip, Mahindra &Mahindra and Hind Lever.

   

 
 
RUPEE PLUNGES TO NEW LOW AT 47.48 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Sept. 11: 
The rupee today continued its slide for the fourth consecutive session with the currency plummeting to a fresh historic intra-day low of 47.4850, on panic dollar-buying by importers.

Later, however, it rallied to close at 47.4150/4250, still a new low for a closing quote.

The currency appreciated after noon, on comments made by Reserve Bank of India governor Bimal Jalan, that the central bank is watching developments at the forex markets.

With a few nationalised banks offloading their dollar supplies, foreign banks were also seen unloading their long positions. This enabled the rupee stage a recovery from the day’s low.

In fact, it is for the first time in four sessions that dollar selling has resulted in some appreciation in value of the rupee. A few analysts, predicting light at the end of the tunnel feel the rupee is likely to settle around current levels and that it may hover around the 47.40-50 range in the days to come.

“We will now have to see how corporate India reacts to the comments made by the RBI governor. If some selling is seen around the current levels and the rupee stabilises thereafter, exporters will come forward and unload their dollar supplies,” a dealer from a foreign bank said.

Dealers said in today’s trading, though custodian banks acting on behalf of foreign funds were buying dollars, the fall in the rupee’s value was largely due to continuous buying by importers.

The rupee opened weak at 47.36/37 and started plumbing new depths thereafter.

“Some of the importers even panicked and began bidding for the dollar fearing that it could fall even further,” an analyst said, explaining the buying binge.

Despite intermittent dollar supplies from the nationalised banks, believed to be acting on behalf of the central bank, the fall in the rupee’s value could not be checked.

Foreign exchange circles point out that even if foreign funds were seen buying dollars, data from the Securities and Exchange Board of India (Sebi) showed that foreign institutional investors were marginal buyers to the tune of $ 7 million of shares and bonds on September 7 after net sales of $ 28.2 million during September 3-6.

So far in the current year, the net inflows from FIIs slowed to $ 2.67 billion against $ 1.56 billion for the previous year.

   

 
 
HPL LENDERS OFFER MARGINAL RATE RELIEF 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Sept. 11: 
In what appears to be a setback to Haldia Petrochemicals’ (HPL) efforts to win a rate respite, banks and financial institutions have made it clear that they will not cut interest on their loans to the project to levels below the prime lending rate (PLR).

They have, however, decided to reschedule loan repayments, giving the company five to seven years more to work off its debts. The loans had been raised between 17 and 19 per cent, but the company had requested the FIs and banks to reduce the rates to 8-11 per cent.

HPL had borrowed Rs 1,017 crore from FIs and Rs 1,154 crore from banks to achieve its financial closure. It had also secured a suppliers’ credit of Rs 457 crore from the Japanese Exim Bank and tied up external commercial borrowings of Rs 563 crore. Industrial Development Bank of India (IDBI) is the lead FI to the project, while State Bank of India (SBI) is the lead banker.

The core group, comprising representatives from IDBI, ICICI and SBI, is working out the size of the rate cuts that the lenders can afford, and will inform the HPL board about its decision within 10 days, sources said.

“All lenders feel the rate should not be brought down so sharply. We are considering a cut of one or two percentage points to give HPL some relief. The idea of pruning rates below PLR has been rejected by all financial institutions and banks,” an FI source said.

Haldia Petrochem will have to fork out Rs 350 crore if it has to service loans at the existing rates of interest.

The management has pinned its hopes on a rate cut so that it can save a substantial amount on this sum.

Apart from IDBI, ICICI and SBI, other lenders to the project are: Exim Bank, IIBI, Life Insurance Corporation, GIC, National Insurance Corporation, Oriental Insurance Corporation, Unit trust of India, Allahabad Bank, Dena Bank, Bank of Baroda, Bank of India, Canara Bank, Central Bank, Dena Bank and Federal Bank.

“We are looking into the debt restructuring of HPL. It will be a positive one. We do not want loans to the project to turn into a non-performing account,” State Bank managing director Y. Radhakrishnan told The Telegraph.

At his meeting with banks and FIs on September 5, state industry minister Nirupam Sen assured them that fresh equity will be brought in against the Rs 500-crore bridge loan which was taken from Industrial Development Bank of India (IDBI) to cover the Rs 969-crore gap in the equity of Haldia Petrochem.

“However, the minister did not tell us where the money will come from,” the FI source said.

   

 
 
TRAI PROVIDES RESPITE TO ISPS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept 11: 
The Telecom Regulatory Authority of India (Trai) today directed all basic service operators not to levy any additional charge for interconnection between internet service providers (ISP) and private sata networks.

Earlier Internet Service Providers Association of India (ISPAI) had asked the regulator to examine the issue and had protested against the levy of such charges by Bharat Sanchar Nigam Ltd.

Under an ISP licence, no such charges are to be levied for interconnection between two ISPs and between ISP and closed user group (CUG) of a very small aperture terminal (VSAT) hub.

The TrAI had sought the views of interested parties, including BSNL, on the matter. It was claimed that the additional charge was an inter-connect fee and was justified as an amount to address possible bypass of long distance data communication network and possible misuse of the data network for voice traffic.

Trai noted that access providers, including BSNL, do not have any ‘long distance data communications rights’ as data communication through the internet covers the whole world irrespective of distance. Further, mechanisms are available to check the misuse of resources for voice communications. In addition, for a dialup link with ISP, additional charges of the type under consideration are not levied.

The applicable charges are those, which are specified for the usage of resources in such a link. Similarly, additional charges should not be levied for providing leased line interconnection between ISPs and private data network. The arguments provided by BSNL were, therefore, not found tenable. The additional fee in the name of ‘interconnect charge’ is therefore, unjustified and not permissible in such cases.

   

 
 
KUSUM SUSPENDS OPERATIONS AT RISHRA UNIT 
 
 
BY A STAFF REPORTER
 
Calcutta, Sept. 11: 
Kusum Products Ltd, the vanaspati and ricebran oil major, today suspended operations at its Rishra unit in Hooghly district, saying operations were no longer economically feasible due to cheap imports.

Following the work suspension notice, the agitated workers numbering about 500, broke open the factory gate, ransacked the office and also put up a rail blockade on the Howrah-New Delhi main line for about an hour. The workers were yet to get their last month’s wages.

The management attributed the work suspension not only to the cheap vanaspati imports from Nepal following the Indo-Nepal treaty, but also the hike in the import duty on crude palm oil, the main ingredient for vanaspati preparation, from 25 per cent to 75 per cent imposed in the last Union budget.

Following the work suspension at Kusum Products, the only vanaspati maker which is continuing production in the state is Rasoi. The Rasoi management too made a representation to the state government last week about the threat from Nepalese imports.

Industry sources said vanaspati from Nepal has been giving tough time to domestic manufacturers due to the duty free imports allowed under the bilateral trade treaty.

   

 
 
TATAS TO BUILD SHARE SHIELD AROUND TISCO 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Sept. 11: 
Tata Sons is planning to raise its stake in the group flagship, Tata Iron and Steel Company (Tisco), from 26.2 per cent to more than 40 per cent over the next three to five years through market buying.

The move is aimed at fending off possible takeovers of the kind that have rocked Corporate India in recent times. A Tata Sons spokesperson said the promoters will continue to raise their holding in the steel major through purchases in the secondary market. Sebi norms allow promoters to buy up to 5 per cent of the shares in a company via the creeping acquisition route.

The spokesman, however, said Tata Sons had no plan to make an open offer for shares in the steel major even though Tisco’s current stock price does not show its intrinsic value. Sources say the company has been boasting of strong fundamentals despite being buffeted by an unprecedented recession.

Its share, down a whopping 47 per cent from Rs 158.50 on February 13, is now languishing at Rs 84. Marketmen blame the slowdown and the market mayhem for the drubbing, while sources close to the Tatas hold “abnormal market behaviour” responsible for the price plunge.

Unlike other steel makers, Tata Steel, one of the lowest-cost producers of the metal in the world, posted a handsome net profit of Rs 553 crore on sales of Rs 7759 crore last year. More important, it had reserves (excluding revaluation reserve) of Rs 4380 crore at the end of March 2001.

“If you consider these factors, the share price of the company should be much more than what it is now,” they said. It is not clear if Tisco will like to cash in on its limp share price and announce a buyback programme.

The Tatas hold 26.22 per cent of Tisco’s Rs 367.97-crore paid-up capital, Tata Sons 19.86 per cent, Telco 4.68 per cent and other associates 1.68 per cent. The financial institutions and mutual funds together control 32.81 per cent while the public commands a 32.45 per cent stake.

Having commissioned its new cold-rolling (CR) mill at Jamshedpur in 2000-01, sales of high-value CR products have grown leaps and bounds over the past year. The company has also completed its modernisation programme, and is ready to reap the benefits now.

The country’s oldest steel company in the private sector has drawn up ambitious plans for diversifying into telecom. Flushed with funds, it is on the lookout for acquisition opportunities in the telecom industry.

It intends to make large investments in units that make long products —acquisitions or greenfield projects — because it expects a construction-induced rise in demand for this variety of steel.

There are plans to invest over Rs 500 crore to set up a titanium project in Tamil Nadu and a ferro chrome project, either in Australia or in South Africa.

   

 
 
FRIEDMAN IS NEW FORD MD 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept 11: 
Ford India’s promise to enter the newly created D segment got a new lease of life with the appointment of David Friedman as the company’s new president and managing director.

He will be leading the new development phase of operations in Ford India and will put in place a growth strategy that will build on Ford Ikon’s success with the introduction of new models. This will include Ford India’s timely entry into the D segment with the launch of the Ford Mondeo scheduled for the end of this year.

Friedman has taken over from Philip G Spender who is relocating to the United States to become president of Auto Alliance International, Inc, a Ford Motor Company joint venture with Mazda.

Friedman, 39, previously was vice-president (finance and systems) at Ford India and was instrumental in developing the business model for the company’s operations.

   

 
 
PEPSICO CONTRACT FARMING TAKES ROOTS 
 
 
FROM RAJA GHOSHAL
 
New Delhi, Sept. 11: 
PepsiCo India is carrying its successful contract farming programme to more states. Talks have already started with several state government who have been keen to attract the cola giant.

Under the contract farming programme, Pepsico herds together a group of farmers and provides them with all the necessary inputs and buys half the crop at a pre-determined rate.

At present, the programme covers two states—Karnataka and Punjab—and five crops: tomato, potato, peanuts, chillies and basmati rice.

P.M. Sinha, chairman of PepsiCo India Holdings Pvt Ltd, said, “At this stage, we are in talks with some of the states to carry out contract farming there.” He however declined to name the states at this stage.

Sinha said the company may go in for newer crops with its foray into the new states, but was not willing to reveal the new crops at this point. According to a Pepsi spokesperson, the company has so far invested Rs 25 crore in Punjab.

Most of the produce from contract farming is exported by PepsiCo. Its export turnover in the last fiscal was Rs 300 crore.

“The pre-dominant portion of our exports are agri products for which a bulk of the backward integration is achieved by contract farming,” said the spokesperson. Processed foods like chilli paste and tomato paste accounts for about 20 per cent of the exports.

Pepsi, which earlier used to have a contract with the farmers to buy 100 per cent of the produce at a pre-determined price, now buys only 50 per cent. Sinha said. The 100 per cent buyback did not work well because farmers tended to route their crops to the mandis when the prices rose there. The company provides inputs like seeds, saplings and technology to the farmers as also extension of supervision services.

Sinha said an India-specific and a region-specific approach to contract farming needs to be developed. “Besides boosting private sector investment in agriculture, contract farming brings about a market focus to Indian farming,” he said.

Meanwhile, PepsiCo Beverages today launched a natural tomato juice in India under its flagship brand Tropicana. Priced at Rs 68 for a 1 litre tetra pack, the juice will be available in the leading outlets across the country. The tomato pulp for the juice is being sourced locally from a company in Bhilai. The 100 per cent Pure Tropicana was launched two years back and the company has since introduced apple, pineapple and grape variants.

   

 
 
ACCORD VARIANT MORE OF A STATUS STATEMENT 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Sept. 11: 
Honda Siel Cars India Ltd today launched Accord VTi-L, the luxury D segment car with all-leather interior, priced at Rs 15,78,675 (ex-showroom Calcutta) for the manual transmission model and Rs 16,54,675 for the automatic transmission version.

“Indian customers, especially the C and D segment buyers, buy cars as a statement about their status. They need a choice between Honda Accord launched two months back and something more fashionable. So the VTi-L was a natural choice, Teruo Fujisaki, president and CEO of HSCIL said at the launch.

The first buyers of the vehicle were south Indian filmmaker D. Raman Naidu, music director Iliya Raja, Dilip Chabbria, CEO of DC Designs, and Indipop signer Daler Mehandi. Mercury Car Rentals, a 100 per cent subsidiary of the Oberoi Group, has bought 22 cars for corporate rentals.

Although the introduction of the new model is supposed to increase the sales, HSCIL is not revising its target of selling 2,500 cars this fiscal. “The car market is not so active at present. Though we have sold above 300 cars in two months after launching the first model of Accord and is confident of reaching our target looking at the market conditions. The mood is shifting from small car buying to the larger cars but it will take a longer time before the mood catches on,” Anand Mohan Gupta, general manager marketing said.

“With some of the D segment car launches scheduled for the end of the year, the competition will heat up and as a segment get more exposure. We have no other cars planned to bring in this year but is looking forward for performance in competition,” Gupta added.

Although Hyundai’s Sonata has been launched, Ford’s Mondeo is yet to happen. The other manufacturers who are in line to launch their D segment cars include Toyota’s Camry, Skoda’s Octavia, General Motor’s Vectra and Mitsubishi Motor’s Galant.

Mercedes is also gearing up to launch its C-180 petrol and C-220 Diesel models in both Classic and Elegance trims.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.42	HK $1	Rs.  6.00*
UK £1	Rs. 69.14	SW Fr 1	Rs. 27.70*
Euro	Rs. 42.56	Sing $1	Rs. 26.65*
Yen 100	Rs. 38.91	Aus $1	Rs. 24.05*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4540	Gold Std(10 gm)	Rs. 4460
Gold 22 carat	Rs. 4285	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7050	Silver (Kg)	Rs. 7140
Silver portion	Rs. 7150	Silver portion	NA

Stock Indices

Sensex		3150.40		- 33.23
BSE-100		1496.52		-  9.87
S&P CNX Nifty	1023.40		- 10.00
Calcutta	 106.43		-  0.94
Skindia GDRNA	 511.92		-  0.65
   
 

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