Pep pills for IPO market
Satyam net vaults 36% at Rs 119.4 crore
Tata Tea Q3 net up 26%
Marginal dip in Indal net profit
Mallya to uncork ally’s name in two days
Magic moment for Airtel users
Pay hike for directors
Small bourses seek cover
RBI comfortable with govt borrowing
Foreign Exchange, Bullion, Stock Indices

 
 
PEP PILLS FOR IPO MARKET 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 21: 
The Sebi-appointed primary market advisory committee headed by M.S. Verma has recommended that multinational companies which had promised to list their Indian subsidiaries on local bourses should be asked to fulfil their commitment.

Making another proposal that could have a far-reaching impact, it said banks raising funds to meet capital adequacy norms should also be asked to come out with public issues by the Reserve Bank of India (RBI).

Reviewing the primary markets in the current year, the committee said Rs 3,777 crore was mopped up between April and December 2001, but the figure will go up to Rs 6,000 crore in the current year — the average amount raised in the past few years.

However, asking MNCs, most of which entered India on the condition that shares of their arms would be traded on exchanges, will set a cat among the pigeons.

“Many multinational companies are given the permission to start operations on the condition that after a few years they have to make a certain percentage of their shares available to the public,” the committee said. The onus of ensuring that the conditions are honoured rests with the authorities.

Coke was among the MNCs to have agreed to list Hindustan Coca-Cola Beverages, its local subsidiary, on domestic bourses. However, the cola giant has asked the government for relaxation after its arm suffered losses.

Ironically, the suggestion comes at a time when scores of MNCs are de-listing from bourses by buying back their equity from Indian shareholders. “It is going to be an unpopular decision by a country that is wooing foreign majors to invest in the market,” an analyst said.

The proposals made today are not new, and have been echoed by many market experts in the past to revive the primary market . The committee said it might be appropriate to set up a common panel for listing securities of a company on any exchange to ensure that there is a degree of uniformity in standards.

A core listing committee, comprising NSE managing director, BSE executive director or its representative, can be constituted. If the share is listed on other bourses, the executive directors of the respective exchanges will have to be co-opted on the panel.

Verma also recommended allowing simultaneous offerings in the domestic and overseas markets, and asked Sebi to examine the pros and cons of the matter soon. It has also favoured electronic transfer of funds in addition to other modes of payment for public/rights issues.

In a move seen as encouraging companies in their bid to list on bourses, the committee said “there was a need rationalise the issue advertisements in order to further reduce the cost of public issues”.

The committee recommended that the focus should be on giving “material and critical” disclosures in the advertisements and advise the prospective investors to go through the offer document for other details.

   

 
 
SATYAM NET VAULTS 36% AT RS 119.4 CRORE 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Hyderabad, Jan. 21: 
Satyam Computers today beat market forecasts by reporting a 36 per cent leap in third-quarter net profit at Rs 119.43 crore, but its bottomline was 11 per cent weaker when measured against the earnings racked up in the second quarter of 2001-02.

Total income stood at Rs 446 crore against Rs 453.5 crore in the last quarter, which had seen a net profit of Rs134 crore.

Group chairman B. Ramalinga Raju told reporters after the results were announced this morning that the performance was along expected lines and projections made earlier.

Refuting reports of price cutting or billing to retain the market, he said, “There is no significant pricing pressure from the existing clients and we still continue business with our top 10 customers.”

He predicted software earnings in the fourth quarter at Rs 455 crore, and said his company was branching out to China, a country ripe with service sector opportunities.

“To begin with, we will open an office there and work our way through the competitive market.”

The Satyam chief expressed hope that divestment of Sify will be completed in the next two quarters, and Merrill Lynch, the advisor, will find a suitable strategic partner. “We will take over the services activity of Sify along with nearly 230 software engineers. We will be totally out of the internet sector soon.”

K. Thiagarajan, vice-president of planning and strategy, conceded that there was a 1.2 per cent drop in off-shore billing, which stood at $ 24.3 per man hour.

“We intend to continue with our fixed-rate contract jobs with sharper focus on the services sector,” he added.

Compared with the previous quarter ended September, total revenues and the income from software exports have gone up from Rs 426 crore to Rs 446 crore and Rs 418 crore to 431.55 crore respectively.

“The impact of September 11 terrorist attacks in US is not as serious as made out earlier. We have been able to sustain a reasonable growth,” Raju told a press conference at the Satyam Technology Centre on the city’s outskirts.

For the nine months ended December, total income stood at Rs 1,320.53 crore against Rs 857.43 crore during the corresponding period last year. Net profit has gone up to Rs 374.97 crore from Rs 204.82 crore for the nine month period ended December 2000. Income from software exports touched Rs 1,251.10 crore compared with Rs 811.01 crore in the corresponding period last year.

   

 
 
TATA TEA Q3 NET UP 26% 
 
 
OUR BUREAUX
 
Jan. 21: 
Tata Tea Limited today reported a 25.65 per cent rise in third-quarter after-tax profit (PAT) this fiscal at Rs 20.67 crore as against Rs 16.45 crore in the corresponding period last year despite a continued slowdown in the retail market for branded teas.

Income from operations during the quarter was lower by only 2 per cent to Rs 197.50 crore compared with Rs 201.63 crore in the corresponding quarter previous year, company officials said after a board meeting.

The higher PAT was arrived at mainly due to additional income of Rs 7.01 crore during the quarter from sale of shares which was not there in the same quarter of previous fiscal.

PAT from operations this quarter stood at Rs 13.66 crore, down 16.96 per cent, from Rs 16.45 crore during the third quarter of 2000-2001. Total expenditure stood at Rs 168.47 crore against Rs 165.26 crore as consumption of raw materials was lower on account of greater usage of Tata Tea’s own garden tea and lower purchase from auctions.

The company’s nine-month PAT was lower by 3.14 per cent at Rs 88.29 crore against Rs 91.15 crore last year.

Eveready net loss

B.M. Khaitan-controlled Eveready Industries India Ltd (EIIL) has registered a net loss of Rs 5.73 crore during the third quarter ended December compared with a net profit of Rs 10.47 crore in the corresponding previous quarter.

A steady decline in sales and a hefty increase in net interest charges were largely responsible for the setback even as other income increased manifold to Rs 25.80 crore from Rs 3.35 crore last year.

Net sales during the quarter dipped to Rs 226.06 crore from Rs 263.38 crore, while net interest charges shot up to Rs 30.12 crore from Rs 19.59 crore in the third quarter of 2000-2001.

The company, however, continued to remain in black during the nine-month period of the current financial year with a net profit of Rs 7.84 crore as against Rs 34.22 crore during the corresponding previous quarter.

Mphasis BFL net up

Mphasis BFL Limited has recorded a 113 per cent rise in net profit at Rs 12.90 crore for the third quarter ended December compared with Rs 6.05 crore in the corresponding period last financial year.

The income for the period under review was almost flat at Rs 80.36 crore compared with Rs 80.70 crore in the October-December quarter of 2000, the company said in a release here today.

The net profit showed a marked improvement due to rise in gross margins and reduction in selling and administrative expenses.

The net profit and income for the nine months ended December stood at Rs 27.72 crore (Rs 6.21 crore for April-December 2000) and Rs 229.36 crore (Rs 188.81 crore) respectively.

   

 
 
MARGINAL DIP IN INDAL NET PROFIT 
 
 
BY A STAFF REPORTER
 
Calcutta, Jan. 21: 
Indian Aluminium Company (Indal) has registered a net profit of Rs 30.1 crore in the third quarter ended December 31, slightly lower than Rs 30.7 crore clocked in the previous corresponding quarter.

The company’s turnover, however, also increased by 2 per cent to Rs 330.8 crore from Rs 323.8 crore last year.

For the cumulative nine-month period, Indal’s turnover increased by 6 per cent to Rs 998 crore and net profit was also up by 6 per cent to Rs 89.5 crore.

In a statement, the company has pointed out that the production at the two alumina plants at Belgaum and Muri was 110,600 tonnes while metal output from smelters at Alupuram and Hirakud stood at 11,262 tonnes.

The two sheet plants at Belur and Taloja improved production by 20 per cent at 17,338 tonnes. Foil production at Kalwa remained at 1,243 tonnes during the third quarter. The production at the Alupuram extrusions unit was 1,888 tonnes.

Domestic sales improved by 5 per cent at Rs 1,623 crore.

The company said that the continuing slowdown in the domestic industrial sector has had an impact on almost all end-user segments of the aluminium industry, particularly in building and construction, transportation and consumer durables.

“Indal will continue with its thrust on niche market segments in the domestic and export regions for high value-added products where it holds competitive strength and will try to maintain its growth and profitably level,” stated the company.

   

 
 
MALLYA TO UNCORK ALLY’S NAME IN TWO DAYS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 21: 
United Breweries (UB) today said it will sign an agreement with a strategic partner, whose identity it was not ready to reveal now, in the next two days.

“We have short-listed the foreign company and we will sign the agreement within a couple of days,” group chairman Vijay Mallya told reporters on the sidelines of the McDowell Indian Derby 2002 here today.

Four of the world’s top breweries are in the fray to buy a stake in a company that has grabbed 40 per cent of the market. Belgium’s Interbrew, Holland’s Heineken, South African Breweries (SAB) and Denmark’s Carlsberg are the ones vying for 26 per cent of UB, which markets the well-known Kingfisher beer brand.

Analysts say global breweries, their sights set on developing countries where much of the future demand will come from, are betting on a three-fold rise in the Indian market’s appetite for beer over the next 10 years.

Foreign companies are tempted by the prospect of Indians guzzling 72 million cases of beer every year, even as per capita consumption of the beverage is only half a litre. What has fired their expectations is the shift in drinking preferences from spirits to beer, and growing hopes that the panoply of government restrictions on liquor production and consumption will be relaxed.

UB, whose Kingfisher makes up almost 50 per cent of all beer produced in the country, is seen as the best vehicle for global majors eager to ride into India. Mallya, on the other hand, wants a partner who will help him market his best-seller abroad without threatening the dominance of the brand in the local market.

He would also like to retail the ally’s foreign brands at home. Given these considerations, there are some indications that Interbrew, reportedly in talks, is the favourite.

   

 
 
MAGIC MOMENT FOR AIRTEL USERS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 21: 
Ab kariye just thoda sa intezar; new airtime rates will be announced soon; ab kariye aur bhi Magic! Enjoy!!”.

The SMS message sent out today to its pre-paid subscribers signalled that Airtel, the cellular mobile service provider in Delhi, Karnataka, Andhra Pradesh, Chennai and Himachal Pradesh, was ready to pick up the gauntlet that had been flung by state-owned MTNL earlier this month when it slashed airtime rates for its fledgling pre-paid service in Mumbai and Delhi.

Pre-paid customers form the largest chunk of all cellular service customers and companies are at pains not to irk these fickle customers who are ready to switch loyalties in an instant.

Airtel is all set to slash air time (talk time) rates for its pre-paid cash cards on Thursday or Friday. Despite this, Airtel rates will be 50-75 paise per minute higher than the MTNL package. Initially, Airtel will cut rates only in Delhi to stem the movement of the pre-paid customers to MTNL’s pre-paid card Trump.

It also plans to extend the cuts to the other four circles of operations once the service providers there lower their rates. At present, the airtime rates for its pre-paid cards vary in circles where Airtel offers service.

MTNL’s Trump, on a Rs 399 pre-paid card, offers a total talk time of 98 minutes and airtime rates of Rs 2.50 per minute for an outgoing call and Rs 1.80 per minute for an incoming call.

Airtel’s pre-paid Magic card costs Rs 495 and offers a total talk time of 49.33 minutes with airtime rates fixed at Rs 5 for an outgoing call and Rs 3 for an incoming call.

The company has already filed the mandatory proposal to Telecom Regulatory Authority of India. Under the Trai Act, a telecom service provider has to inform the regulator any change in existing rates or introduction of a new rate to the regulator and should wait for five working days before it can be charged from the customers.

However, the Magic cash card, which is scheduled to be launched in Calcutta on Thursday, is likely to priced lower than the existing pre-paid cards in the city, said sources in the company.

   

 
 
PAY HIKE FOR DIRECTORS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 21: 
Companies that make inadequate or no profits have been allowed to double the remuneration they pay their directors. The Department of Company Affairs (DCA) issued a notification today that announced the hike in the graded remuneration ceilings for managerial persons, i.e. director-level positions.

The remuneration ceiling in the highest slab which covers companies with an “effective capital” of over Rs 100 crore has been raised to Rs 4 lakh from the existing level of Rs 2 lakh.

In the lowest slab which covers companies with an effective capital of less than Rs 1 crore, the ceiling on monthly managerial remuneration has been raised to Rs 1.5 lakh from Rs 75,000.

Effective capital is the sum of the company’s paid-up capital, long term loans, reserves and surplus, reduced by aggregate of investments, accumulated losses and preliminary expenses not written off.

The notification has been issued under sub section (1) of section 641 of the Companies Act, 1956 amending schedule XIII, to the said Act.

It may be pointed out that these remuneration ceilings do not cover companies that make profits. They can pay managerial remuneration equivalent to 5 per cent of the net profit for one such managerial person. If there are more than one such managerial person, then the limit is 10 per cent for all of them put together.

   

 
 
SMALL BOURSES SEEK COVER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 21: 
Regional stock exchanges under the banner of Federation of Indian Stock Exchanges (FISE) have petitioned the Securities and Exchange Board of India (Sebi) to exempt smaller exchanges with a negligible turnover from having to go through the demutualisation process.

The federation has argued that there is no one-size-fits-all strategy that can be applied uniformly to the regional stock exchanges and said the interests of the small bourses that are forced to undergo the demutualisation process should be protected.

FISE chairman Vijay Bhushan told reporters the market regulator should exempt exchanges with nil or negligible turnover from the demutualisation process and said they would be better if they are allowed to emerge as financial institutions which act as investment intermediaries and provide a grievance redressal mechanism across the country.

“We have made suggestions to Sebi to take into account the different problems being faced by smaller and regional stock exchanges. We have also written to them that there is no single demutualisation model that can solve the problems encountered by all the exchanges. So, Sebi should take us into confidence before finalising rules for corporatisation of exchanges,” Bhushan said in reference to the suggestions on demutualisation submitted to Sebi by Bombay Stock Exchange recently. Interestingly, two of the country’s leading stock exchanges—Bombay Stock Exchange and National Stock Exchange—are not part of the FISE fraternity with the other exchange opting out of the federation being OTCEI.

Bhushan, who is also the president of DSE, said the federation which represents 20 of the 23 stock exchanges in the country, has called for a roadmap from Sebi which should be circulated to the stock exchanges and debated before being put into implementation.

   

 
 
RBI COMFORTABLE WITH GOVT BORROWING 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan 21: 
The Reserve Bank of India (RBI) today said it was not unduly worried about the government overshooting its borrowing targets and said this had not put any pressure on interest rates.

The central bank said it expected the economy to register a growth rate of 5 to 6 per cent at the close of this fiscal.

“There is no problem with government borrowing; the interest rates have come down and there are no concerns,” RBI governor Bimal Jalan told reporters after a meeting with finance minister Yashwant Sinha here today.

Jalan said the country had very healthy foreign exchange reserves which had almost touched $ 49 billion. “We are very comfortable and reserves are rising,” he said adding that increased borrowings by the government was not a cause for concern from the point of view of debt, interest rates or monetary management.

Jalan said it was now necessary to step up the pace for the introduction of full convertibility on the capital account.

The RBI governor, who later in the day chaired a session at the India Today Conclave, also called for a flexible interest rate regime to facilitate easier credit flow to corporates at lower rates.

“The interest rate structure should be more flexible. Most of the money that is locked in by investors is for three to- five year maturity and the most significant part, therefore, is to make the interest rate structure more flexible than it is now so that banks can pass on the benefits to the corporate houses,” he said.

Jalan said the main intermediation of savings in the organised sector in India is done by banks.

“In the Indian system, savers are not borrowers and so there is a mindset of the savers of expecting a fixed rate on contractual savings. We should change it,” he said, adding that flexibility can be introduced if we have a more responsible saving class.

Interestingly, flexibility of interest rates was also one of the demands made by the financial sector mandarins during their pre-budget meeting with the finance minister earlier this month.

Replying to queries on faster implementation of capital account convertibility as suggested by the Y.V. Reddy report, Jalan said a cautious and guarded approach for introducing full convertibility as displayed by India is now finding favour with international agencies like International Monetary Fund (IMF) replacing the enthusiasm the agency shared with many countries in opting for full convertibility during the mid-nineties.

“The experience in the last 10 years, particularly in the case of many south Asian countries, has not been encouraging in case of full convertibility. The process has been marred by many financial scams and asset-price inflation. The solution, therefore, is to increase the pace of reforms, including capital account convertibility and making more productive investments rather than setting a timetable for convertibility,” he said.

According to Jalan, in the post-WTO scenario there has been a lot of defensiveness in our mindset which needs to go.

“The new world has brought with it new challenges. Now geographical distance is no longer a competitive advantage. While transportation and communication rates have come down drastically, cost has become independent of distance,” he said.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.26	HK $1	Rs.  6.10*
UK £1	Rs. 69.36	SW Fr 1	Rs. 28.60*
Euro	Rs. 42.72	Sing $1	Rs. 25.95*
Yen 100	Rs. 36.39	Aus $1	Rs. 24.50*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4790	Gold Std (10 gm)Rs. 4720
Gold 22 carat	Rs. 4525	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7500	Silver (Kg)	Rs. 7570
Silver portion	Rs. 7600	Silver portion	NA

Stock Indices

Sensex		3382.29		+5.24
BSE-100		1613.50		+1.56
S&P CNX Nifty	1091.35		-1.80
Calcutta	 113.74		+0.14
Skindia GDRNA	 542.86		-5.12
   
 

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