Anxious India Inc weighs survival plan
Stock slumpmasks battlefor control
Aviation ministry plea for fund support
Rupee ends at 48.03, stock rally holds
Jindal Steel to make mega rails
Deadline set for First Global probe
Railway plans in Iraq derailed
Foreign Exchange, Bullion, Stock Indices

Mumbai, Sept. 19: 
A blue-ribboned conference of topguns of Corporate India turned into an occasion for hair-splitting on the economy in the aftermath of the terror strikes in US.

Barons at the National Council meeting of the Confederation of Indian Industry (CII) made no secret of their misgivings about the slowdown deepening into a recession.

Struggling to dodge the worst in a worlwide slump, leading industrialists like M.S. Banga of Hindustan Lever and former Tata Steel MD J.J. Irani observed that the recent quirk of events had upset the best-laid plans and sent calculations awry.

As they took stock of the situation, a nervous Rajive Kaul, managing director of the Calcutta-based Nicco Corporation, said: “The mood is not at all upbeat. Clearly, we are all meeting in uncertain times.” The cataclysmic international developments have come at a time when a whiff of optimism was beginning to waft across the industry; the sense was that a recovery was close at hand, possibly by the end of this year.

A few optimists, however, came up with solutions to problems thrown up by last week’s carnage in the US. CII president Sanjiv Goenka was one. The vice-chairman of the RPG group was of the view that an interest rate cut would help in the current circumstances.

Citing Federal Reserve’s monetary boost on Monday as an example, he said the half a percentage point cut to kickstart the shell-shocked US industry was worth emulating. “Even in the US, a 1 to 1.5 percent cut could make a huge difference to business sentiment.”

The CII chief also had an advice for the entire corporate sector at this hour of crisis: restructure and prune costs. “We have to think seriously about restructuring for efficiency. Cost cutting is an absolute priority.”

However, its not only the old-economy sector which is feeling the heat generated by the attacks. The new-economy sector comprising of the software services industry, which derives a substantial chunk of revenue from exporting to the US is also feared to find the going tough at least in the immediate term.“It is too early at this stage to get a fix on the extent of setback to the infotech industry as a result of the attacks in US,” Nasscom chairman Phiroz Vandrevala said.

He added that most of the domestic software companies are now engaged in the process of finding whether any of the affected firms need assistance. “At worst, we may see a growth of 30 to 35 per cent, instead of 40 per cent, but that is better than numbers in any other sector.”

Others like Jagdish Khattar, managing director, Maruti Udyog put up a brave face. He said the auto giant will go ahead with its planned launch of a new multi-purpose vehicle (MPV) in the next quarter.

Acknowledging the fact that any further impact on the global economy would hurt the Indian economy, Khattar said: “Any change in the Indian economy will hit the automobile industry hard as consumers will stop purchases in a war-like situation. But as of now we are optimistic and going ahead with all the planned launches’’.

D.S. Brar, managing director of Ranbaxy Laboratories, the research-oriented pharmaceutical major, which has a significant exposure in the US, said though the country is not yet getting into a recession mode, any negative impact on the US economy would have its repercussions on the domestic economy as well.

Subodh Bhargava, chairman of Eicher Motors, was more circumspect when he said no one can predict what the future holds for the industry

“As of now, fears of a recession are unfounded. We were waiting for the post-monsoon acceleration in demand. But a war-like situation in the region is not good for the economy.”


Mumbai, Sept. 19: 
The slump in the capital markets has thrown up two investor breeds trying to make the best of opportunities in a crisis — promoters who find themselves vulnerable to raids, and predators on the prowl.

The lure of blue-chip shares — many of which are quoting at prices far below their net-worth — available on the cheap is tempting wannabe Bajorias and insecure barons desperate to fend off audacious interlopers.

Bottom-fishing is what they call in the stock market, but it is essentially means looking for the best bargains. These buyers, active ever since shares swooned last week, are not necessarily contrarian investors — people who swim against the tide. They could be industrialists, or deep-pocketed investors, or green mailers — the blokes who threaten you to buy shares on their terms, or face the consequences of a topple-game.

Promoters like the Tatas are seen as being susceptible to takeovers even though they hold to close to 26 per cent in most group companies.

Market watchers say they, along with groups like A V Birla, have used the fall in share values to fortify themselves.

On the other end of the spectrum are leading FIIs like Franklin Templeton — with a reputation for being contrarians — which have been aggressive traders in recent days, filling the void left by funds such as Janus.

Raj Kataria, senior vice-president (mergers and acquisitions) at DSP Merrill Lynch, says the current situation is godsend for raid-spooked promoters. It gives them the perfect ruse for a big buyback: to say that the price of a share does not reflect its inherent value.

The market is already awash with rumours that a leading petro-chemical major, which saw its share trampled in the panic selling last week, is shoring up its holding in group firms through the creeping acquisition route.

Under rules laid down by the Securities and Exchange Board of India (Sebi), promoters can buy shares up to 5 per cent of a company’s paid-up capital — a threshold many of them may find too low for comfort. They would rather buy shares this way, than do so when a company’s stock commands a high premium.

Even as firms and promoters use the market meltdown to guard their turfs, a group of high net-worth corporate investors are busy cherry-picking — the market jargon for selecting the most promising scrips.

John Band, CEO of ASK Raymond James, a prominent broking outfit, said the current scenario provides a great opportunity for such investors. His firm helped Abhishek Dalmia of Rennaissance Estates and R S Damani of Bright Star Investments launch open offers for Gesco Corp and VST Industries respectively.

Band, who prefers to call them activist shareholders, said: “The slump has spawned interesting opportunities. Companies with good assets, but without the skills to maximise shareholder value, are attractive targets.” In short, firms with good assets and bad managements are the ones to feel the heat.


New Delhi, Sept 19: 
A day after the world’s airlines scurried to their governments for bailout packages to head off a deepening crisis in the industry, the civil aviation ministry said it intended to petition for a central handout to meet the increased security costs at airports.

The ministry plans to approach the finance ministry on the issue shortly. A detailed note on the issue is being worked out, civil aviation officials said.

The two airlines—Indian Airlines and Air-India— said they did not need any money to run their day-to-day operations.

Their stand is at a variance from the global trend where airlines in the West have been asking for huge doles to deal with the losses they have run up in the aftermath of the terrorist strikes. A-I will, however, be allowed to utilise its entire earnings from the sale of Hotel Corporation of India to retire the high-cost debt it is currently laden with.

A-I will also be shutting down non-operational offices abroad in a cost-cutting move. Indian Airlines will also be undertaking a cost cutting exercise, to pay for increased cost of spares.

“We will not be hiking fares ... that would be a bad move and would simply lose us passengers,” civil aviation ministry officials said.

The government will be buying new X-ray machines which can be taken inside aircraft cargo holds to check on tipoffs. It will also be acquiring new high resolution passenger X-ray machines and microwave sensors for a large number of sensitive airports.

More sniffer dogs will also be hired to check on plastic explosives which are difficult to detect using X-ray machines. The ministry today also announced the cancellation of 250 airport access passes today to beef up security at major airports in view of the heightened security threats following the terrorist attacks in the US.

Civil aviation minister Shahnawaz Hussain today made a surprise inspection of domestic and international airports in Delhi and reviewed the security arrangements. Among other things, the minister instructed physical frisking of all passengers and baggages including VIPs and disabled passengers at all airports in the country.


Mumbai, Sept. 19: 
The rupee ended at yet another historic low of 48.03 as the scramble for dollars showed no signs of easing on a day the Bombay Stock Exchange (BSE) steadied with a 21.69-point gain at 2804.16.

The stock rally was led by Hindustan Lever, which caught the fancy of local funds who shared the sentiment that bank finance for margin trading would help lift the pall of gloom over bourses.

However, the rise in share values masked fears of a possible military conflict in the vicinity of the country. Dealers say economic implications of the imminent US assault on Afghanistan impact have prevented big gains.

In fact, the US markets remained in the negative territory when trading opened today and the European market also suffered moderate losses.

However, markets in Asia carved out modest gains today for the second day in a row.


New Delhi, Sept. 19: 
To cater to the fast-emerging high-speed train network, Jindal Steel and Power Ltd (JSPL) has embarked on a Rs 400-crore project to manufacture 120 metre steel rails which will be the longest rails to be manufactured in the world and nearly five times the size of the 26 metre rails made in India at present.

Speaking to The Telegraph, JSPL vice-chairman and managing director Naveen Jindal said the rail and universal rolling beam plant which is being set up near its existing sponge iron plant at Raigarh in Chattisgarh would commence production by June next year.

Sales are being targeted globally but Jindals said they would also explore the possibilities in India. The plant, which has been designed by SMS-Demag of Germany has been bought second-hand from ISCOR of South Africa and has been entirely shipped to India sometime back.


Mumbai, Sept. 19: 
The Securities and Appellate Authority has upheld the Securities and Exchange Board of India’s interim order against First Global Stock Broking but has directed the market regulator to complete the inquiry and pass final orders within 10 weeks from today. In case Sebi fails to do that, then the “order will seize to operate,” the Securities and Appellate Authority has said.

“It should not be a problem as the enquiry officer was appointed way back on May 31,” the 57-page Securities and Appellate Authority order said.

The appeal filed before Sebi by Shankar Sharma, Devina Mehra and First Global was against Sebi’s interim order debarring them from undertaking any fresh business as stock broker, merchant banker or portfolio manager pending inquiry.

“The impugned order passed on May 25 states that the ban on the appellants undertaking fresh business would continue pending inquiry, meaning that if the inquiry is prolonged the ban on the appellants taking fresh business also would continue,” C. Achuthan, presiding officer at the Securities and Appellate Authority reasoned.

“It may not be fair and proper to allow the inquiry to continue indefinitely and thereby subject the appellants to undue hardship,” the Securities and Appellate Authority order said.

“A show cause notice has been served on the appellants on July 18. It is felt that in all fairness the inquiry be completed as expeditiously as possible.”

While the order restrained itself from drawing any conclusion based on facts put forth by both parties, the tribunal said it is doing so to enable the inquiry officer to hold a purposeful inquiry and the respondent to pass an appropriate order.


New Delhi, Sept 19: 
With war clouds looming large over Afghanistan and its neighbouring areas, several projects of the Indian Railways that were to have been executed later this year in Iraq have been derailed.

The railway ministry has decided to stall negotiations with the Iraqi government till the tension over war games in the region dissipates.

It has also decided to push for the payment of the dues that Iraq owes the railways for projects undertaken in 1999.

A project to enhance rail communications for Iraqi railway, which had been agreed in principle early this year, has been stalled.

Other important projects which were at the proposal stage like the export of rolling stock, maintenance of assets, setting up training facilities, research and design services and facilities have also been put on hold.

Discussions on the export of rolling stock had reached an advanced stage and the railways were planning to send a delegation to Iraq to start discussions with the Iraqi ministry of transport and communications by the year-end.

“It is unlikely we will go ahead with our discussions. The situation is very volatile in that region and it would not be prudent to proceed further on the talks held in July with Iraqi minister for transport and communications Ahmed Murtadha Ahmed Al-Khalil,” said a railway board member.

“Even if we undertake discussions, the international procedures stipulate that it has to have the blessing of United Nations since the sanctions against Iraq are still valid. Further, we would like Iraqi government to fulfil their obligations under earlier contracts,” he added.

Officials in the railway ministry said not only Iraq but the whole region also has a vast potential for railways.

However, the political situation in part of Asia deters many countries from taking up projects.

“The Indian Railways have been involved in the development of railway infrastructure in Iraq as well as in consultancy and management aspects. But, payments for a few of the projects are yet to be cleared, we would like that to be cleared first so that we can start with a clean slate,” said a senior official in Ircon, the railway’s consultancy arm.



Foreign Exchange

US $1	Rs. 48.03	HK $1	Rs.  6.05*
UK £1	Rs. 67.69	SW Fr 1	Rs. 29.55*
Euro	Rs. 41.66	Sing $1	Rs. 27.15*
Yen 100	Rs. 41.13	Aus $1	Rs. 23.40*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4780	Gold Std(10 gm)	Rs. 4700
Gold 22 carat	Rs. 4515	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7500	Silver (Kg)	Rs. 7550
Silver portion	Rs. 7600	Silver portion	NA

Stock Indices

Sensex		2804.16		+ 21.69
BSE-100		1299.06		+  3.08
S&P CNX Nifty	 912.2		+ 12.00
Calcutta	 96.15		+  1.04
Skindia GDR	 438.37		-  3.76

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