Rupee staggers to 48.20 as war nerves jangle
Border scare for Reliance Petro
Wipro pounded by layoff whispers
US-64 comes with new strings
NCAER cuts growth forecast to 4.8%
Govt rules out steep cuts in petro levy
Sansui bullish on Salt Lake
Kayan trips up scam custodian
NTPC fears output losses from availability tariffs
Foreign Exchange, Bullion, Stock Indices

 
 
RUPEE STAGGERS TO 48.20 AS WAR NERVES JANGLE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec. 27: 
The rupee today crashed to a historic low, closing at 48.19/20 against the dollar, on panic that the current border build-up may lead to a war with Pakistan. The fall came despite some spirited dollar selling in noon trades, which pulled back the currency from the trench. Though nationalised banks played knights to the rescue, market circles believe that it was actually indirect intervention by the Reserve Bank of India (RBI) which brought some respite.

However, buying soon resumed in late evening deals when the expected intervention by the apex bank did not take place. The Indian currency finally closed at a new low, surpassing the previous low of Rs 48.1250/1350 recorded on October 8. Today’s fall represented a loss of around 15 paise over Wednesday’s close of 48.05 per dollar.

Forex circles still believe that the rupee’s course in the coming days will be determined by border developments and that any negative news could be detrimental for the currency.

But analysts in the same breath opine that the rupee might recover from these levels if the central bank steps in. “It has to be seen at what level the RBI intervenes. It may come if the rupee declines by 5-10 paise from the current levels,” an analyst averred.

Today’s trading was punctuated by extreme volatility right from the start as the rupee opened in a wide range of 48.00/08 per dollar. What followed was continuous buying by panicky companies who had so far held back their demand for the greenback as the rupee was going strong.

“The corporates have become panicky on witnessing the troop movements along the border. Therefore, there is genuine demand for dollars, as they expect the rupee to weaken in the days to come,” a dealer pointed out.

Market circles added that even as dollar buying continued, the rupee hit a low of 48.16/18 per dollar in noon trades. It was however, at this level that massive amount of selling by nationalised banks. This selling brought the rupee back to 48.11 levels.

While the rupee was subsequently seen trading steady in a range for 48.12-16 per dollar in noon trades, the situation changed when dollar buying again resumed towards the close.

With no sales coming in and markets interpreting this to mean that the RBI was comfortable with the rupee’s level, the Indian currency closed at the low of 48.19/20 per dollar. The currency is still far away from its record intra-day quote of 48.43 per dollar touched on September 17 following the terrorist attacks in the US.

In the forward market today, the six month premia against the dollar dropped by 10 basis points to 6.75 per cent on receiving interest as exporters were selling forward dollars. However, near-term premia rose with the one-month premia rising to 7.46 per cent.

   

 
 
BORDER SCARE FOR RELIANCE PETRO 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec. 27: 
The war drums are taking a heavy toll on the share price of Reliance Petroleum Ltd (RPL), the country’s largest private sector oil company which boasts of a mammoth 27-million tonne refinery.

Shares of RPL slipped for the second consecutive day on huge unloading, following market rumours that its refinery, situated at Jamnagar in Gujarat, close to the Pakistan border, may be forced to shut down due to security risks. This was despite denials by the company about work at the plant being stopped or curtailed. “Work at the plant has been going on as normal and market rumours are baseless,” a company official told The Telegraph.

The stock dipped more than 5 per cent today, taking total losses in the last two days to 14.5 per cent. Opening at Rs 26.90, the scrip rose marginally to Rs 28.85, after which concerns over the plant’s proximity to the border brought on a selling spree. The scrip finally closed at Rs 25.65, a drop of Rs 1.45 over the previous finish.

RPL was, however, one of the most active scrips on the Bombay Stock Exchange (BSE) today, with a whopping 150.34 lakh shares changing hands. The counter saw 15,721 trades, with a turnover of Rs 40.38 crore.

Broking circles aver that with the uncertainty about the current border situation, the counter could witness more selling pressure in the days to come. But some are optimistic that the scrip may recover.

It was not RPL alone which suffered a fall in value. Other oil stocks including BPCL and HPCL also moved south, albeit for different reasons. Market circles said this was due to a statement by finance minister Yashwant Sinha that decontrol of the petroleum sector might not be fully adhered to.

Meanwhile, the 30-share BSE sensex dipped yet another 44.08 points to close at 3131.78. Traded volumes on the BSE too dropped to 81.5 million shares from Wednesday’s 94.4 million.

   

 
 
WIPRO POUNDED BY LAYOFF WHISPERS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec. 27: 
Shares of the software services giant Wipro Ltd were today battered on rumours that it is pruning workforce by laying off around 300 employees, due to the challenging business outlook.

The stock, which was the among the highest traded shares, was one of the top five losers of the day, even though company officials denied market speculations of layoffs to combat the present downturn.

Analysts pointed out that FIIs were heavy sellers at the counter and the unloading was due to concerns pertaining to Lucent (one of Wipro’s prominent clients) and downsizing rumours.

Market circles were agog with rumours that the Azim Premji-owned company has set an internal target of curtailing its workforce by 800 engineers over one year and around 300 jobs will be cut by the end of this month as a part of this process. Company officials however vehemently denied that any such internal target has been set or that Wipro plans to lay off staff now.

The panic saw the Wipro scrip, which opened at Rs 1,644.45, fall from the day’s high of Rs 1,673.90 on a massive selling deluge to a low of Rs 1,425. The scrip finally closed at Rs 1,455.15, a sharp drop of Rs 201.55 or 12.17 per cent over the previous finish. Around 18.93 lakh shares changed hands, yielding a turnover of Rs 288.57 crore.

The domestic software services industry, it may be recalled has been facing tough times particularly since the September 11 terrorist attacks on the US that ultimately led to a pruning of growth rates for the industry.

Industry analysts are now looking forward to Wipro’s third quarter report-card, which is expected shortly. In the second half of the current year, the company had managed to scrape ahead of expectations with a 40 per cent growth in net profits.

   

 
 
US-64 COMES WITH NEW STRINGS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Dec. 27: 
Unit Trust of India (UTI) has revamped its crisis-wracked Unit-Scheme-64 (US-64) before it opens for sale and repurchase from next month.

In its new garb after the makeover, the scheme will offer growth and income options, while the sale and repurchase of units will be linked to its net asset value (NAV) — the real worth of its investments — from January 1.

In an indication that the right lessons have been drawn from investing in dubious stocks, 75 per cent of its assets under the scheme will be parked in debt instruments — of which at least 7.5 per cent will be channelled into Government of India securities, or gilts.

The norms that will govern debt investments in future have been laid down. “For picking up corporate debt, the minimum rating would has been fixed at ‘AA’ grade,” UTI said.

One of the most significant decisions is that investments in equity will be capped at 55 per cent of assets under management. US-64 is being amended so that it meets Sebi’s guidelines on open-ended mutual fund schemes.

UTI, which has 50 per cent of the total assets managed by mutual funds in the country, has said a minimum of 25 per cent will be kept in equity. Currently, 61 per cent of the assets under the scheme is invested in equity, while the balance 39 per cent is in debt, including government securities and money market instruments. The overhaul of the investment portfolio in favour of more debt will be completed by June 30, 2003.

The revamped US-64 will offer both income and growth options. Under the income option, there will be a provision for payment of income distribution or reinvestment of income distribution at the NAV-linked price.

The growth option will see the income being ploughed back and reflected in its NAV. UTI said the changeover from income to growth option, and vice versa, will be permitted at the respective net asset values. Existing investors will be under the income scheme, unless they specifically opt for the growth option. New investors who do not indicate their choice in the application form will be treated under the income option.

The minimum initial investment in US-64 has been fixed at Rs 5,000, with subsequent minimum investment at Rs 1000 per folio; no upper limit has been set.

The date of acceptance of an application for sale or repurchase of units will be the day on which the branch office of UTI or its UFCs (UTI Financial Centres) or its authorised collection centres of UTI with Cash Management Service (CMS) accepts the application.

UTI further said the sale of units will be at a price not exceeding 103 per cent of NAV, which means a premium of 3 per cent on the market value of its portfolio.

On repurchase, UTI said within a year from the date of investment, the price will be set at a sum not below 97 per cent of the NAV. In effect, it means the discount would be pegged at 3 per cent of the value of its market investments.

However, the repurchase pricing is flexible and changes after the completion of one year. Between one year to two years from the date of investment, UTI has specified that the repurchase price will be not below 98 per cent of the NAV.

From 2-3 years from the date of investment, it will not be below 99 per cent of the NAV. After three years, it has endeavoured to pay at NAV, that is 100 per cent of its unit value.

It has further declared that partial repurchase under a folio has to be for a minimum of Rs 1000, but has stipulated that the outstanding balance in the folio after such repurchase should be not less than Rs 5,000.

Meanwhile, UTI has endeavoured to declare net asset value (NAV) on a daily basis. It has also announced that it will follow the Sebi prescribed limit for expenses. There are moves to de-list US-64 from all stock exchanges, in view of its NAV-based pricing.

   

 
 
NCAER CUTS GROWTH FORECAST TO 4.8% 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec. 27: 
The National Council of Applied Economic Research (NCAER) today further revised downward its GDP growth forecast to 4.8 per cent and said export performance would be bleak in the current fiscal.

“We forecast a growth of 0.6 per cent in exports in dollar terms, down from 20 per cent growth witnessed last year. Even this is an optimistic scenario,” NCAER said in its latest Macro Track.

The independent think-tank also revised the fiscal deficit upward to 6.5 per cent of GDP, up from 5.8 per cent in the August forecast. The Union budget had estimated fiscal deficit for the year at 4.7 per cent. The revision in the deficit forecasts casts another pall over the already-stuttering economy.

NCAER has suggested the global recession as the main reason for such a bleak future.

It, however, thinks the political turmoil will not only hit trade but also the tourism and aviation sectors.

On the agricultural front, the council said the last monsoon turned out to be less than ‘satisfactory’ in terms of its distribution across regions and over the months during June-September and estimated the growth of real GDP from agriculture at a moderate level of 3.8 per cent during 2001-02.

The council forecast that the industrial output comprising mining and manufacturing growth in value of output at 4.8 per cent, down from 5.7 per cent estimated in August.

Meanwhile, K.K.Nohria, newly-elected president of Associated Chambers of Commerce and Industry of India, said, “In order to achieve the Prime Minister’s goal of 9 per cent GDP in the medium term, we should aim for a 7 per cent GDP growth during 2002. The goal is achievable with further revision of policies. It is not only exports that has created the downfall but the weakness in the economy itself is the reason.”

Nohria said, “Rationalisation of labour laws and competitive taxes will work wonders in this scenario. Introduction of Fiscal Responsibility Act will help the government to keep its act on balance.”

Nohria feels enhanced purchasing power of the middle income group will revive the industry and in turn the economy. He suggested some immediate actions on the part of government to enhance the monetary power of the people.

   

 
 
GOVT RULES OUT STEEP CUTS IN PETRO LEVY 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Dec. 27: 
The government today decided against any deep cuts in excise and customs duties on petro-products except on aviation turbine fuel (ATF), where duties will be cut steeply to encourage air travel.

It also agreed on a draft Cabinet note setting up a Downstream Petroleum Sector Regulatory Authority which will control all petro-products, including goods like kerosene and cooking gas on which price controls will stay.

The government also decided to bring in dual pricing for kerosene — one, a highly subsidised one for supply through the public distribution system only to families identified as living below the poverty line and another less subsidised price for the rest. However, even kerosene and cooking gas which will remain subsidised will be linked to import parity prices, though not fully.

The new downstream regulatory authority will control all companies engaged in refining, import and export, transport, marketing and distribution of petro-goods.

Any new companies entering the field will have to seek permission from the authority.

The government has, however, retained the power to take over management of facilities and business premises of any oil sector entity in the event of war, natural calamity, industrial unrest or any matter affecting public interest.

This can even be done without giving any notice to the entity being taken over. Officials said this draconian provision was being inserted keeping mind war-time needs.

These decisions were taken at a high level meeting between finance minister Yashwant Sinha and petroleum minister Ram Naik held here today on the oil sector policy. Sinha who spoke to reporters after the meeting said a note based on his discussions would soon be sent to the Cabinet along with the draft DPSRA Act.

Sinha admitted that the final contours of the oil policy differed from what had been earlier envisaged. “We may differ in some areas from the original Cabinet decision on oil sector deregulation,” he said.

The government had earlier planned to bring down duties on crude oil to 5 per cent and petro-products to 15 per cent.

But stiff resistance from finance ministry, which is hamstrung by low revenue collections, saw to a compromise decision to lower tariffs marginally on most petro-products, excepting on ATF.

The finance minister for obvious reasons refused to divulge the new duty formulations for petro-goods or even to confirm whether tariff would be reduced even marginally.

A decision was however taken to pass on duties on petro-products like petroleum to consumers in the post-APM scenario. Currently these are being absorbed by subsidies from the oil pool account.

It was decided that after April 2002, subsidised kerosene would be sold at a discount of 33 per cent to the import parity prices. This level of subsidy would be gradually reduced over the next five years.

   

 
 
SANSUI BULLISH ON SALT LAKE 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Dec. 27: 
Japanese colour television manufacturer Sansui has decided to shift its entire production base to Videocon’s Salt Lake factory in the city, with whom it has a marketing alliance.

Videocon, which holds the manufacturing and marketing rights for Sansui’s colour televisions in the country, used to manufacture the latter’s CTVs at all its eight factories, including Aurangabad and Bangalore.

After shifting the entire production base to the Salt Lake factory, Sansui may also consider making the factory as its main export base from where it will source products to neighbouring Asian countries, sources further added.

Sansui has also decided to manufacture its latest models, which are yet to be launched in the country, at the Salt Lake factory. One of the products that will be manufactured at the factory is a combi-television—a combination of a VCD, DVD and a television.

Among other new products will be a television fitted with a colour-filter technology, which will give a soothing effect to the eyes and save them from harmful radiations. The product will be launched from the factory next month.

The Salt Lake factory currently manufactures CTVs under the Videocon, Akai and Sansui brand names. It churns out 30,000 CTV sets and 10,000 appliances, such as refrigerators, air-conditioners, microwave ovens and washing machines, per month.

Of the 30,000 CTVs produced each month from the factory, 10,000 are under the Sansui brandname. However, the production of colour televisions under the Sansui brand is likely to increase to 35,000 sets per month.

This will take the total CTV production capacity of the Salt Lake facility to six lakh sets per annum. “Our target is to achieve a production of 1 million CTV sets within a year’s time and the company is confident of achieving that,” sources further added.

The Sansui CTVs manufactured at Salt Lake are now marketed only in the eastern region. “The Salt Lake facility will now meet the Indian market’s entire demand for Sansui products. Videocon has a widespread marketing network covering more than 5,000 dealers and has a deep penetration in the rural markets too. Sansui will be able to leverage Videocon’s extensive network for marketing its products,” sources said.

Videocon had acquired this factory from Philips India Limited at a consideration of Rs 9 crore. The unit was bought by Kitchen Appliances India Limited, a wholly-owned subsidiary of Videocon, in December 1998.

The factory’s monthly production capacity when Videocon took over, was only 16,000 CTV sets. “The company has been able to substantially increase the productivity of the factory with a workforce of only 300 and has also been able to expand product range. Sansui’s decision to declare this facility as its production base has been guided by all these factors,” sources said.

The Dhoots, promoters of Videocon, have decided to pump in Rs 150 crore into the factory.

   

 
 
KAYAN TRIPS UP SCAM CUSTODIAN 
 
 
BY ANIEK PAUL
 
Calcutta, Dec. 27: 
For the first time, a high court has passed an interim order “staying the effect” of a notification issued by the custodian of the special court set up under the Special Court Act of 1992.

The Act promulgated by the Union government after the securities scam of 1992 gave the special court the status and authority of a high court and its orders could only be challenged in the Supreme Court. This was done to ensure “speedy recovery” of the misappropriated funds running into thousands of crores of rupees.

The Calcutta high court has passed an order seeking judicial scrutiny of notifications issued by the special court on November 20 to Calcutta-based stockbroker Ajay Kayan, his father Gouri Shankar Kayan and their stock-broking firm C. Mackertich & Co, 10 years after the scam took place.

A similar appeal filed by Harshad Mehta’s brother Hitesh Mehta challenging the notification and the constitutional validity of the Special Court Act was quashed by the Mumbai high court in July 1992.

Three separate writ petitions were filed by Kayan and his associates.

The interim order in response to each of them opens thus: “Considering the fact that the impugned notification has been issued on November 20, 2001, in respect of transactions allegedly made between April 1, 1991 and June 6, 1992. This court is prima facie of the view that the matter calls for examination by this court.”

The custodian of the special court had not mentioned the list of charges against Kayan, his father or his firm, prompting them to file a writ in the Calcutta high court one month after the notification was issued.

Besides appealing against the notification, the writ challenged the validity of the Special Court Act 1992.

While ordering the “stay of the effect of the Special Court notification” till February 28, 2002, the court also barred the notified entities from disposing of their properties. The three petitions are slated to come up for further hearing on February 14. The court has directed both Kayan and the custodian of the special court to file their affidavits by that date. The custodian of the special court is expected to move the Supreme Court contesting the high court order.

Following the notification, the three bourses — the Bombay Stock Exchange, the National Stock Exchange and the Calcutta Stock Exchange — had de-activated the trading terminals of C. Mackertich Ltd, as for all practical purposes it was the reincarnation of the now-defunct notified firm.

Despite the interim relief offered by the Calcutta high court, the CSE has decided to bar C. Mackertich Ltd from trading because its membership stands “impounded”.

The stock exchange has already taken the opinion of Sandersons & Morgans — its lawyers — on the matter and discussed it at the board meeting on December 26.

Along with Kayan and the entities connected with him, the special court has notified Shyam Sundar Dalmia — another leading Calcutta-based broker.

Dalmia appealed to the special court against the notification. The matter will be heard by it on January 9.

Meanwhile, the special court has allowed Dalmia to make payments and deliver stocks to the CSE to clear outstanding trades.

   

 
 
NTPC FEARS OUTPUT LOSSES FROM AVAILABILITY TARIFFS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Dec. 27: 
The National Thermal Power Corporation (NTPC) today warned that if the power regulator remains adamant on its new tariff norms, the country will have to live with power shortages for several years to come because there will be no great incentive for power producers to raise their generation capacities.

NTPC, the country’s largest power producer in the country, cautioned the government that if the power public sector company implements the availability-based tariff norms as prescribed by Central Electricity Regulatory Commission (CERC), the power sector regulator, it will be able to add only 7,930 megawatt of power till 2012 as against the target of 20,470 capacity addition and a total capacity addition of 40,145 mw by March 2012.

NTPC is up in arms against implementation of availability based tariff (ABT) since it was first introduced in January 2000.

ABT is a mechanism to determine tariff based on (a) the fixed amount of power to be generated for supplying to State Electricity Boards (SEBs), and (b) the actual power used by SEBs and the cost incurred by power generators.

NTPC chairman cum managing director C.P. Jain claimed, “There are more disincentives for us in the power tariff norms under the ABT schemes formulated by CERC and we feel that the regulator has not taken into account the policy issues which the government has spelt out for the sector while calculating the ABT.”

Power shortages has been the biggest infrastructural constraint cited by industry in the recent CII business confidence survey. If the projections made by NTPC are accepted, then the road ahead for power generation looks grim.

”This will be a major burden not only for us but would also stifle our efforts to expand. To set up more generating units we need resources. If the ABT is implemented as suggested by CERC we are bound to loose revenue and with already many SEBs not clearing their outstanding dues the company will become sick,” said a senior executive in NTPC.

Sources also claimed, “NTPC would stand to suffer a substantial reduction of revenue as a result of the Commission’s order to adopt Target Availability levels.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.20	HK $1	Rs.  6.10*
UK £1	Rs. 69.69	SW Fr 1	Rs. 28.05*
Euro	.Rs. 42.56	Sing $1	Rs. 25.65*
Yen 100	Rs. 36.66	Aus $1	Rs. 24.05*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4710	Gold Std(10 gm)	Rs. 4640
Gold 22 carat	Rs. 4445	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7650	Silver (Kg)     Rs. 7690
Silver portion	Rs. 7750	Silver portion	NA

Stock Indices

Sensex		3131.78		- 44.08
BSE-100		1490.58		- 34.91
S&P CNX Nifty	1020.00		- 14.25
Calcutta	 104.87		-  0.99
Skindia GDRNA	 508.78		-  4.75
   
 

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