Reverse merger to hurt ICICI profit
Rating rap for IFCI
Suzuki Vitara fuels Maruti grand dream
Indica sales hit the fast track in September
Flexibility is the USP of Windows XP
CSE asked to hunt for new guardian
Fresh steps unveiled to boost exports
Experts want positive govt stand at WTO
Bharti to complete network in east soon
Foreign Exchange, Bullion, Stock Indices

 
 
REVERSE MERGER TO HURT ICICI PROFIT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 4: 
ICICI has confessed that terrorist attacks in the US and a wrenching slowdown could hurt its performance, while a planned conversion to a universal bank could mean a squeeze on the bottomline.

The caveats figure in the annual report filed with the Securities and Exchange Commission (SEC). The institution, which has its American Depositary Share (ADS) listed on the New York Stock Exchange, is required to furnish information on its financial position and the outlook to the US capital market watchdog.

There is the first-ever mention by the institution in its report that the possibility of a reverse merger with ICICI Bank is being explored as part of the universal banking plans.

Should ICICI Bank and ICICI merge, businesses now under the financial institution would be regulated in the way Indian banks are monitored, the report says. These include directed lending, maintenance of statutory reserve ratios and higher effective income tax rates.

Changes in regulation will affect the profitability of the combined business of the merged entity, which, the report says, will have assets and funding sources different from those seen in ICICI Bank or the parent, ICICI.

For instance, the statutory liquidity ration (SLR) — a norm under which specifies how much and where banks must invest to retain enough cash in their hands — will increase market risk of the combined entity.

The income, profitability and risk profile of the merged bank may, therefore, be adversely affected if it has to live up to the regulatory requirements. This could, for instance, crimp income in the initial years after conversion.

Because the bank would not be able to function in the way ICICI and ICICI Bank now do, its business, growth and financial performance will undergo a change; this would show on the price of our equity shares and ADS.

“If we are not able to succeed in new business areas, we may not meet projected earnings and growth targets,” ICICI said. The institution says it is looking ways to grow internationally and to shuffle the stakes it holds in subsidiaries. A spokesperson made it clear that the profit fears were listed merely as risk factors in the annual report.

If the conversion falls through, ICICI will be required to dilute its stake in ICICI Bank to 40 per cent. “We expect no change in the group’s long-term strategy of operating as a virtual universal bank with financial products in the wholesale and retail segments,” it added.

   

 
 
RATING RAP FOR IFCI 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 4: 
The Investment Information and Credit Rating Agency (Icra) has downgraded the short-term, medium-term and long-term rating of IFCI. It has also decided to keep the financial institution on a rating watch, but without the negative implications issued in July 2001.

While the short-term rating has been revised two notches downward from A1+ to A2+ indicating high safety, the medium-term rating has also seen a similar lowering from MAA- to MA, which indicates adequate safety. IFCI’s long-term rating, on the other hand, has been downgraded three notches from LAA- to LA-, indicating adequate safety.

Icra had placed the FI on a rating watch with negative implications in July this year, owing to liquidity pressures being faced by it due to bunching of repayments. It is now taking various measures to restructure liabilities, but continues to be on a rating watch. Another review may be taken up after the process is completed, Icra managing director P. K. Choudhury told The Telegraph.

According to a statement issued by Icra, the Centre has already announced a financial package envisaging infusion of funds to improve IFCI’s capital adequacy and debt equity ratio.

“The revised ratings take into account the pressure on liquidity, high level of NPAs resulting in income loss and increased provisioning resulting in net losses and lower capital adequacy ratio at 6.22 per cent as on March 31, 2001. The ratings also factor in IFCI’s role and position in the Indian economy and the large shareholding of public sector institutions and nationalised banks in IFCI,” the statement added.

Icra has stated that IFCI’s net NPA levels continue to be high at 21 per cent as on March 31 this year.

   

 
 
SUZUKI VITARA FUELS MARUTI GRAND DREAM 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Oct. 4: 
Maruti Udyog Ltd (MUL) has lined up plans to import partner Suzuki Motor Corporation’s Grand Vitara in completely built unit (CBU) form.

Suzuki, which holds a 50 per cent stake in MUL, is keen to introduce its best-seller in India to take on rivals like Mercedes Benz, Ford, Mitsubishi and General Motors, which are also planning to import their high-end models.

Confirming the move, MUL’s director (marketing and sales) J. Sugimori said the Grand Vitara is sure to take the Indian auto market by storm because of its technological supremacy as well as aesthetic beauty and comfort level.

“The Vitara has already cornered a large part of the north American market despite the tough competition,” he said, adding the car will be imported from Suzuki’s facility in North America.

While Sugimori declined to comment on the probable price of the vehicle, MUL sources said it may be priced a little over Rs 20 lakh, given the high import duties.

Maruti is also planning to launch the Versa, the company’s first multipurpose vehicle, by the end of this month. Maruti’s main competitor in this segment is Toyota’s Qualis.

Registration norms

Meanwhile, Maruti Udyog has approached the West Bengal government to ease the registration process for passenger cars, in line with the system in Delhi where the entire process done at the dealers’ point.

Nigam said the existing registration process takes an unnecessarily long time and sometime poses a great deal of harassment. The company has also sought the state government’s approval for allowing the Maruti Omni to run as a taxi in Calcutta.

   

 
 
INDICA SALES HIT THE FAST TRACK IN SEPTEMBER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct. 4: 
Telco today declared that its small car Indica has overtaken rivals like Maruti and Hyundai to emerge as the largest selling car in the hotly competitive ‘B’ segment, just two years after its launch.

The Indica left its rivals way behind in the war of wheels thanks to its September sales figures. While the Indica sold 5,405 units in September, unofficial figures put sales of the Maruti Zen at 4,008 units. Hyundai sources said the Santro sold 4,953 units in the last month. The Accent, Hyundai’s mid-size offering, has sold 1527 units in the month under review.

“The Indica has consistently been amongst the top three cars in the segment since its launch, but in September this year, it has, for the first time, acquired the number one slot in an eight-model segment comprising five manufacturers,” the company stated.

Hyundai sources, however, said Santro could not be compared with the Indica; diesel and petrol cars cannot be compared as the segments are different. “You have to compare like with like, apples are compared with apples,” sources said.

Moreover, they pointed out the Indica is powered by a 1400 cc engine, while the Santro is charged by a 1000 cc engine. Further, sources argued that Telco does not provide the number of Indica vehicles sold in the petrol and diesel variants separately. Hyundai, on the other hand, includes export figures.

Industry circles however pointed out both players target the same segment and the vehicles are also priced in the same range.

Indica’s good show in September was all the more heartening as it came in a month when most manufacturers have seen a significant dip in volumes.

   

 
 
FLEXIBILITY IS THE USP OF WINDOWS XP 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 4: 
Microsoft today equated its new showpiece software — Windows XP which is due to be launched worldwide in November — to a new car model that can double as a family vehicle and a six-door stretch limo.

The product is the next version of Microsoft Windows and goes beyond Windows 2000 and Windows Millennium, claimed Sanjiv Mathur, head marketing, Microsoft Corporation India Private Ltd.

Windows XP brings the convergence of Windows operating systems by integrating the strengths of Windows 2000—standards-based security, manageability and reliability with the best features of Windows 98 — and Windows Me — Plug and Play, easy-to-use user interface, and innovative support services to create the best Windows version yet.

Windows XP is built on an enhanced Windows 2000 code base, with different versions aimed at home users and business users: Windows XP Home Edition and Windows XP Professional.

While maintaining the core of Windows 2000, Windows XP features a new visual design. Common tasks have been consolidated and simplified, and new visual cues have been added for easy navigation of the computer.

Designed for home use, ‘fast user switching’ lets everyone use a single computer as if it were their own, doing away with the need to log someone else out or decide whether to save another user’s files. In order to run reliable multi-user sessions, a total of at least 128 MB of RAM is recommended.

Fast user switching is expected to makes it easier for families to share a single computer. For example, if a mother uses the computer to work on finances and has to leave for a short period of time, her son can switch to his own account and play a game. All of this is done without logging out. Switching users is easy with the new Welcome screen easily customisable with pictures for each user who logs on to the computer.

The Windows XP has new visual styles and themes that use sharp 24-bit colour icons and unique colours that can be easily related to specific tasks. For example, green represents tasks that enable users to do something or go somewhere, like the Start menu.

The Start menu has been designed to adapt to the way one works. It also groups the most frequently used files and applications together for quick and easy access.

The Windows XP also claims to help keep track of files by arranging them in various groups. Users can view documents by type, or group files according to the time last modified. It can also a arrange files in groups using webview technology. For example, if a file or folder is selected, a list of options allows the user to rename, move, copy, e-mail, remove it, or publish it to the Web. This option is already available in Windows 2000. Windows XP takes this information and brings it into view directly on the desktop.

Windows XP also introduces an easier-to-manage taskbar by grouping multiple instances of the same application.

For example, instead of having nine instances of a Microsoft Word file, each arranged horizontally on the taskbar, Windows XP groups them together on one taskbar button. In this scenario, only one taskbar button is visible, showing the number of files that are open for the application. Clicking the button shows the vertical list of all file names. In addition, the files can all be cascaded, tiled, or minimised at the same time.

Moreover, in XP, the Windows Media Player 8 includes new features such as DVD video playback with rich media information and full screen controls, CD-to-PC music copying and automatic conversion of MP3 files.

   

 
 
CSE ASKED TO HUNT FOR NEW GUARDIAN 
 
 
BY ANIEK PAUL
 
Calcutta, Oct. 4: 
Calcutta Stock Exchange (CSE) executive director Nityananda Dasgupta, insisting that he be relieved of his responsibilities by February, has asked the board to look for someone who can step into his shoes.

Dasgupta, who says he is not keen on continuing in the post beyond that time, came in as a replacement for Tapas Datta, whose services were terminated in August. Dasgupta was reluctant to assume charge, but yielded to persuasion by a senior Securities and Exchange Board of India (Sebi) official and the CSE board.

He has cited personal grounds for his decision to leave. “I am 67 already, and would like to retire. Besides, I think the exchange needs a younger and more energetic person at the helm of its affairs,” he added.

So far, Lyons Range has not started searching for the right candidate, but is expected to do so now that Dasgupta has set a time for his exit.

In another development, CSE is considering the option of moving the Delhi-based National Forum for Consumer Protection to claim damages from IndusInd Bank, its clearing banker. It has already claimed compensation from CMC for bugs in the margin software supplied by it.

A senior CSE official was in Delhi today seeking legal opinion on the matter. On his return tonight, the bourse will chart its course of action, sources said. It is understood to have demanded Rs 50 crore in compensation from CMC. The extent of damage caused by CMC and IndusInd have been evaluated by a senior exchange official.

CMC chairman and managing director S. S. Ghosh today met CSE chairman Dipankar Basu to discuss the issue. “The exchange wants to reach an agreement with CMC and IndusInd on the compensation,” Dasgupta said.

The company has been held responsible for bug-ridden margin software, but the state-owned firm argues that it was as much CSE’s job as its own to detect snags. Besides, the exchange has sent regular reports to Sebi on various crucial operational matters. The bug was detected by CSE officials after the payment crisis rocked the bourse in March.

The exchange has accused IndusInd of delays in reporting bounced cheques issued by defaulters, who continued to trade and carry forward open positions despite defaulting on margin payments.

   

 
 
FRESH STEPS UNVEILED TO BOOST EXPORTS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct. 4: 
A second package of export incentives, within a fortnight, was announced today which included upward revision of duty drawback rates for 300 product groups and abolition of value caps under the Duty Entitlement Passbook Scheme (DEPB) for about 400 items.

The measures aimed at reversing sagging exports in the face of global economic slowdown also included revision of the drawback rate for capital goods and machinery to five per cent of the free on board (fob) value.

This is the second announcement made by the government in recent times to overcome slowdown in exports after the one percentage point reduction in export credit rate by the Reserve Bank of India last month.

The measures follow a demand by exporters to restore the old duty drawback rates prevailing prior to June.

The duty drawback, is an incentive meant to neutralise the taxes borne by exporters on inputs to make export items competitive.

The decision to do away with the value caps imposed under DEPB for about 400 items is expected to boost exports of engineering, chemical, textile and other products.

The drawback rates in respect of more than 300 product groups where the rates had been reduced by 20 per cent this year, are being revised upwards so that the overall decrease prevailing prior to June is brought down to about 10 per cent, an official statement said.

The statement said a 10 per cent cut in drawback rates was essential due to the abolition of 10 per cent surcharge of basic customs duty.

The industry has also been representing against the DEPB value caps which, according to them, was a hindrance to growth of exports of high value added products, it said.

The statement, however, added that this one-time measure for promoting exports would be reviewed after March next year. The government had made a downward revision in duty drawback for over 700 items while making specific entries with separate drawback rates and individual drawback caps in June 1.

   

 
 
EXPERTS WANT POSITIVE GOVT STAND AT WTO 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 4: 
Economists and industrialists have asked the government to stop stonewalling key trade issues at the ministerial round of the World Trade Organisation at Doha in November where it must go after doing a thorough homework.

“The commerce minister came back from the Seattle Round and said we went well-prepared and came back well prepared. But this time he will have to say we went ill-prepared and returned ill-prepared if the ministry does not prepare itself with relevant facts,” Bibek Debroy, director of the Rajiv Gandhi Foundation, said at the Confederation of Indian Industry (CII) meet on India’s interest in WTO.

Debroy condemned the government’s attitude to oppose everything in sight. “The WTO will not destroy or harm any Indian industry. The industrial community needs a shakeout and exit of uncompetitive firms. Industrial leaders are not afraid of a competition policy at a national policy,” Debroy said.

T.K. Bhaumik, senior advisor of CII, said: “If India needs its problems to be addressed on a global platform then it should go to Doha round with a positive frame of mind. There is no other option in front of India. We are a member of Saarc which is not functioning at all. Rather than complaining on the issues that other countries are raising, it should come out with its own agenda.”

Bhaumik said: “We need pro-active offerings and transparency in the agenda. We should not be afraid to re-negotiate on the issues we are not agreeing to.”

He said the government should also stop complaining about the non-implementation of decision that were taken at earlier WTO rounds and use that as an excuse to stop other nations from tagging on new issues to the agenda.

“Implementation issues are required to be addressed but the developed countries are not doing something that is violating the signed document. So India will have to address it from its own platform and not squabble about it,” Bhaumik said.

The commerce ministry was pulled again for failing to come up with a drafted agenda and issues to be addressed. It was also largely blamed for the misconception created in the minds of the agricultural group about the open regime.

   

 
 
BHARTI TO COMPLETE NETWORK IN EAST SOON 
 
 
FROM M.R.VENKATESH
 
Chennai, Oct. 4: 
Bharti Enterprises Ltd, a leading private telecom company which is building a country-wide fibre-optic cable network plans to cover the eastern region in its next phase, Sunil Bharti Mittal, chairman and managing director of the company, announced here today.

Bharti launched its AirTel brand of cellular services here today and the chairman said the company is planning to make Chennai the focal point of its telecom operations.

AirTel’s entry into Chennai follows Bharti’s recent acquisition of a majority stake of 89.5 per cent in Skycell Communications, one of the two existing cellular licensees in the city. Skycell Communications Ltd has also been rechristened as Bharti Mobinet Ltd. “We have already invested Rs 100 crore for the Chennai operations and another Rs 100 crore will be pumped in the coming year to provide world class cellular services in Chennai”, Mittal said.

He said Bharti had chosen Chennai as the hub for its mobile, fixed line and undersea cable operations and added that the company’s submarine cable link between Chennai and Singapore was expected to become commercially operational in the first quarter of next year opening up unlimited global communication access for Indian customers.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.00	HK $1	Rs.  6.05*
UK £1	Rs. 70.67	SW Fr 1	Rs. 29.15*
Euro	Rs. 43.93	Sing $1	Rs. 26.60*
Yen 100	Rs. 39.80	Aus $1	Rs. 23.55*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4860	Gold Std(10 gm)	Rs. 4770
Gold 22 carat	Rs. 4590	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7675	Silver (Kg)	Rs. 7730
Silver portion	Rs. 7775	Silver portion	NA

Stock Indices

Sensex		2788.97		+ 34.02
BSE-100		1296.96		+ 16.84
S&P CNX Nifty	 911.65		+ 12.00
Calcutta	  96.23		+  0.47
Skindia GDR	   NA		    -
   
 

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