Markets not sure of rate cut
Rupee clobbered
Corporate India down but not out
Reliance inks licence pact for ISD service
Jessop suitor mulls tie-ups
Cheaper Lancer to take on rivals
Accent prices go up
Foreign Exchange, Bullion, Stock Indices

Mumbai, Feb. 25: 
Stocks were subdued today in anticipation of budget boosters, but nerves in the money market jangled as the poll punch to BJP made a widely expected cut in small saving rates look less likely.

Pre-budget rally on bourses continued, though the Bombay Stock Exchange (BSE) sensex was up only 9.43 points. But, in the money markets, where hopes of a cut in small savings rates in the budget were dealt a blow, there is a growing feeling that the outcome is not certain.

There is a fear that election reverses for the ruling BJP in the assembly elections will dissuade the finance minister from slashing rates on Public Provident Fund (PPF) in the fear of alienating the middle class further.

The apprehensions sparked a plunge in the prices of government securities, some of which lost about a rupee in the course of intra-day trading. The benchmark 11.50 per cent 2011 security sank to a low of Rs 127.60 against last Friday’s close of Rs 128.70, a fall of over a rupee.

The 11.03 per cent 2012 security plummeted to a day’s low of Rs 125 against its previous finish of Rs 125.70. Though prices of both papers bounced back from their intra-day lows on account of some late buying, dealers said it was still a big fall over their last close.

By contrast, share prices perked up, keeping the sensex anchored in positive territory. Foreign investors reposed confidence in the market even as local shareholders adopted a “wait and watch” attitude in the wake of a fractured verdict in Uttar Pradesh elections.

The 30-share sensitive index, the main barometer of stock market enthusiasm, was trapped in an extremely narrow range of 3618.30 and 3580.89, after opening on a promising score of 3610.21 points. It ended the day at 3613.51 compared with Friday’s finish of 3604.08, netting an increase of 9.43 points. The NSE S&P CNX index also inched up two points to settle at 1,165.50.

“The poor showing of the ruling BJP in states where elections were held, is likely to halt moves to cut interest rates on small savings by the finance minister as it would alienate people of the country from the party,” said a analyst who tried to gauge the impact of the ballot blow on the government’s reform zeal.

Prices of government securities have gone up in the past few weeks on hopes the finance minister will usher in a low-rate regime by bringing down interest on small savings. The market believed this would set the pace for the Reserve Bank of India to prune the repo rate or the bank rate in the weeks following the budget.

Some analysts, however, said today’s slide in gilt prices was largely a knee-jerk reaction to political developments over the weekend, and that the decline would be arrested.


Mumbai, Feb. 25: 
Fears that the BJP’s poll reverses in Uttar Pradesh will choke reforms pounded the rupee to yet another closing low of 48.79/80 against the dollar today.

The series of setbacks for a party that leads the Central government, especially the prospect of having to sit out of power in the four states that went to elections, stirred concerns Prime Minister Atal Bihari Vajpayee will have less room to push growth-inducing measures.

Reacting to the apprehensions, the rupee tested an intra-day low of 48.88, considerably weakened from Friday’s finish of 48.76. Rumours flew thick and fast that the weekend triumphs may tempt the Congress to table a no-confidence motion against the NDA coalition.

Market watchers are anxious that the poll debacles could keep Yashwant Sinha off bold moves in the Union Budget. One area where the government can be forced back from tough steps, feel analysts, is in the initiatives required to tame fiscal deficit. If that were to happen, it could provoke downgrades in the country’s sovereign rating from international rating agencies.

The rupee opened weak at 48.78/80, but started slipping immediately amid a rush for greenbacks.

Dealers blamed the fall on a combination of sheer panic, and some amount of speculative buying by foreign banks.

Dollar sales by foreign banks and a telecom company helped the rupee recover from its trough of 48.88, though dealers say the pressure on the currency will remain.

Its course will be influenced by the budget, and investments by foreign funds.


New Delhi, Feb. 25: 
India Inc may have been clobbered—but like a prize fighter it’s wearing a gutsy smile. It’s been a horrific year for industry—annus horribilis as Queen Elizabeth II once called it—with 52 per cent of the companies reporting a slump in turnover and 67 per cent of the respondents to a Ficci survey on the country’s bleak industrial landscape saying their profits had fallen during the nine-month period April-December 2001.

“This scenario of falling sales is triggering increased domestic competition which is squeezing margins and leading to falling profits,” says the Ficci survey.

But there’s a ray of hope in the gloom-and-doom scenario: 65 per cent of the respondents said they were planning fresh investments in 2002 against 35 per cent who were planning to batten down the hatches and a majority—51 per cent—said they would be going in for fresh recruitments this year.

“It is noteworthy that as many as 65 per cent said they plan to make fresh investments this year. Although in many cases these investments will be in the form of acquisitions rather than greenfield ventures, they still hold promise of infusing new capital into projects and improving business activity,” Ficci said in the survey report titled ‘Corporate Performance in 2001’. “Given the depressed demand scenario, companies are competing for limited orders. In fact the order book position has also been hit with 53 per cent saying their order book position currently is worse off than that at the same time last year,” the survey said.

Corporate India blamed their woes on a range of factors—from the depressing macro-economic environment to drooping business sentiment. The survey found 82 per cent respondents saying they had been adversely affected by the fall in demand.

The poor showing of India Inc has been exacerbated by instability following the wave of terrrorist attacks with 43 per cent of the companies saying their businesses had been affected as a result. They said this had been compounded by the global economic slowdown which 52 per cent of the respondents said had roiled their prospects.

The survey covered industries such as pharmaceuticals, services, textiles, manufacturing, telecom and heavy machinery. Most of the responses came form medium to large organisations.

There are, however, two positive trends—exports have seen an upturn in 52 per cent of the companies in April-December 2001 compared with the previous year. Secondly, 57 per cent of the companies reported that their inventories had fallen. This meant that the companies had been using up their stocks rather than going in for fresh production. This means that there could be an upswing in production once the stocks get depleted.


New Delhi, Feb. 25: 
Reliance Communications today signed the licence agreement to provide international long distance (ISD) service in the country which has hitherto been the monopoly of Videsh Sanchar Nigam Ltd (VSNL).

“Reliance has signed the licence agreement with the department of telecommunications for international long distance services. The licence agreement was signed following the payment of Rs 25 crore bank guarantee and Rs 25 crore entry fee,” sources said here.

Bharti, Data Access, Pacific Net Invest and Connecting Networks are the other four operators who have been issued Letters of Intent (LOIs) to start ISD service.

A few out of the five operators are likely to start ISD service from April 1, when the monopoly of VSNL ends.

Last week the government had issued the LoI to these five operators.

Reliance, which last month got the licence for offering domestic long distance services (STD), is a major player in the fixed telecom services with a licence to start services in about 17 states.

Industry sources said, “We expect Reliance and Bharti to launch their ISD services in April. Both companies have already set up the necessary infrastructure.”

According to a company executive in Bharti, “It is a matter of time before we sign the licence. But we are bullish about starting the service much faster.”

Communications and information technology minister Pramod Mahajan had recently said, “With the introduction of ILD facility in the country, India will be at par with most advanced nations in the world in the telecommunication sector.”


Calcutta, Feb. 25: 
Ruia Cotex has plans to revive the ailing public sector engineering firm Jessop & Company through collaborations. The Rs 225-crore industrial group is reportedly the highest bidder for Jessop, which has been put on the block by the government.

P. K Ruia, chairman of Ruia Group of Industries, said the company is looking for collaborations to revive the unit. He has also pointed out that there is no retrenchment plan for the 1,500-odd workers of Jessop.

“We have no retrenchment plan for workers as increasing production will require greater staff strength. Jessop is facing problems due to its low production level,” he said.

Ruia, who was here today to inaugurate its textile processing unit at Ganganagar near Calcutta, said the group plans to diversify into engineering with the proposed acquisition of Jessop.

Ruia Cotex would also enter into collaborations and appoint consultants for revival of Jessop, he said. If the group finally bags the PSU, Jessop’s focus will be shifted from wagon manufacturing to engineering in the areas of road rollers, railway tracks, and infrastructure projects like bridges.

While wagon industry is facing a severe order crunch, the infrastructure sector has immense potential for growth, which Jessop will be able to tap with its tremendous skill and superior technology, he said. Ruia said he is waiting for the government decision, expected by the end of this week.

Once the government approval comes through, the group will prepare a revival strategy for Jessop and send it to the Board for Industrial and Financial Reconstruction (BIFR).

On allegations that Jessop was being sold at a “throw-away price” of Rs 18 crore, he said the company may “have a large asset base, but it also has large liabilities.” The reserve price of Rs 17 crore was arrived at by using well-accepted pricing methods, he said. “We are confident of achieving a positive net worth for Jessop in next few years, ” he said,

The disinvestment ministry, in the wake of opposition from various quarters, said the government is in no hurry to sell Jessop and is making a last-ditch attempt to revive the company, which has an accumulated loss of Rs 351 crore.

In order to step into the state’s industrial scene, Ruia Cotex today commissioned its textile processing unit with an installed capacity of 10 tonnes per day. The group has made an investment of Rs 40 crore in the new plant. The Ganganagar plant, which has latest wet processing facility for fabrics, would operate as a one-stop facility to meet requirements for all knitted fabrics and garments.


New Delhi, Feb. 25: 
C.K Birla’s Hindustan Motors is buzzing with derring-do. The once-staid maker of the Ambassador—which incidentally will bring a dash of whimsy by wearing a retro look later this year—plans to bring out a cheaper version of the Mitsubishi Lancer that will be priced at Rs 7.2 lakh and take on mid-sized cars like the upper-end versions of the Ford Ikon, hasten the advent of the long-awaited Pajero sports utility vehicles, and hopes to swing a deal to bring the famed London black cabs to India.

It’s the Lancer move that looks the most audacious: just last month at the Delhi Auto Expo, the company had signed a deal with Ford India to make engines for the latter’s Ikon at its Pithampur plant. Now, it aims to bring the Lancer—which was rated as the best-looking car three years in a row in the JD Power Asia study—down to affordable levels to take on the higher-priced Ikon versions.

“The car was always appreciated for its looks and performance. But the consumer input said it looked very costly. The car with all the luxury features was placed in the upper C segment. To fit the budget of the consumers buying the Ford Ikon or the Hyundai Accent, we have come up with the GL version of the car priced at Rs 7.2 lakh. If the consumer can stretch his budget by Rs 50,000, he will now get a Lancer,” explained Debasish Mitra, senior manager, north and east for HM.

Till now the four variants of Lancer have all been priced in the range of Rs 8.53-9.87 lakh.

HM has also decided to advance the production schedule for Pajero to September. The locally-built version of the SUV, which was earlier supposed to hit the roads only next year, will be made at the Chennai plant.

“The Pajero will be launched in May-June with the vehicle being imported as a completely built unit (CBU). These models ll be priced at Rs 32-33 lakh,” said Mitra.

HM has sought approval from the Foreign Investment Promotion Board for technology transfer from Mitsubishi and hopes that it will be in place around that time. The company is targeting sales of 1,000 units in the very first year after launch.

Meanwhile, HM is holding negotiations with London Taxis International, a unit of UK-based Manganese Bronze Holdings, which makes the famed London’s black cabs to manufacture the same in India.

The London taxis—which carry a sticker price of $ 35,800 (a little over Rs 17 lakh)—would be quite expensive for the Indian market. However, HM feels local production will bring down the price.


New Delhi, Feb. 25: 
Hyundai Motor India has at last hiked the prices of all the five variants of its Accent model by up to Rs 15,000 from Tuesday. The company is not, however, raising the prices of Santro — its hot-selling small car — and the luxury sedan Sonata.

The Accent is currently sold in GLE, GVS, GLS, GLX and GTX variants which are priced at Rs 5.5 lakh, Rs 5.7 lakh, Rs 6.09 lakh, Rs 6.66 lakh and Rs 7.28 lakh (all ex-showroom Delhi) respectively, a company statement said here today.

Hyundai Motor India attributed the price hike to an increase in production costs.



Foreign Exchange

US $1	Rs.48.80	HK $1	Rs.  6.15*
UK £1	Rs. 69.73	SW Fr 1	Rs. 28.45*
Euro	Rs. 42.69	Sing $1	Rs. 26.30*
Yen 100	Rs. 46.44	Aus $1	Rs. 24.70*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4985	Gold Std(10 gm)	Rs. 4900
Gold 22 carat	Rs. 4705	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7600	Silver (Kg)	7630
Silver portion	Rs. 7700	Silver portion	NA

Stock Indices

Sensex		3613.51		+  9.43
BSE-100		1747.62		-  0.19
S&P CNX Nifty	1165.45		+  1.95
Calcutta	 122.49		-  0.55
Skindia GDR	 558.90		+ 10.77

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