Hint of cut in repo rate
Tata firms hand out fat dividends
Profit-taking dampens mood of Reliance twins
Sinha says rollback will upset budget integrity
Tougher loan rules for NBFCs
SBI may witness low credit offtake
Bharti sets Rs 2000 cr revenue target
Astra parent tightens hold
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 4: 
The stage was set last week; the action is now about to begin—exactly four days after finance minister Yashwant Sinha announced a 50 basis point cut in small savings interest rates in his fifth budget, the Reserve Bank of India has sent strong signals that it is ready to cut the repo rate by half a percentage point.

Repo rate is the interest rate at which RBI provides liquidity to banks against government securities.

Apart from the bank rate, which is widely regarded as the most important barometer of the interest rate structure, repo rate is the other useful tool in the hand of RBI to send rate cut signal.

The repo rate cut speculation gathered momentum today because of two developments.

First, RBI governor Bimal Jalan, who was in Delhi, made an observation that the country was heading towards a softer interest rate regime, though he was silent on the possibility of a cut in the bank rate.

Second, RBI announced a one-day fixed rate repo of 6 per cent for March 5 as against a rate of 6.5 per cent which was fixed for the daily repo auction today.

Though this cannot be taken as a signal that repo rates have been lowered by the central bank, it certainly lays the ground for a rate cut, analysts said.

“Tomorrow at the daily repo auction, we could see bids coming at 6 per cent, they added.

Earlier during the day, the RBI accepted four bids of Rs 6,150 crore through its daily repo auction, where rates were kept unchanged at 6.5 per cent.

The central bank clarified that as per the monetary and credit policy statement for 2001-02, it would have the additional option of conducting fixed rate repos to be used sparingly.

Prior to this announcement, hopes of an imminent cut in repo rate led to a sharp rally in prices of government securities. Many of the securities gained handsomely, some by more than a rupee in noon trades.

In fact, the rally resulted in prices of various government securities coming back to their pre-budget levels. Gilt prices had dropped after the budget as the markets were unhappy with the 50 basis point cut in small savings interest rates. The reduction was well below their expectations.

While the repo rate cut buzz is getting stronger, the market is also keenly watching the moves of commercial banks. Industry sources are, however, not very hopeful of an immediate cut in bank deposit rates even if RBI announces a reduction in repo rate.

According to them, RBI will have to nudge down the cash reserve ratio (CRR) further to force banks to prune their deposit rates.


Mumbai, March 4: 
Joining the interim dividend payout rush, the Tata group companies today announced hefty payouts for its shareholders.

Indian Hotels led the pack with an interim dividend of 80 per cent (Rs 8 per share) followed by Tata Tea with 70 per cent and Tata Investments 60 per cent.

While Tata Power, Tata Chemicals and Trent all declared 50 per cent each, Tata Steel has decided to pay an interim dividend of 40 per cent.

Not to be left behind, the Aditya Birla group of companies have now informed the Bombay Stock Exchange of their intention to convene board meetings to consider interim dividends.

Hindalco and Grasim—the big two of the Aditya Birla stable—have informed the Bombay Stock Exchange that their boards will meet tomorrow to decide on the issue.

The sudden haste on part of companies, big and small, to declare dividends before the end of the fiscal is to avoid finance minister Yashwant Sinha’s rationalisation measure to abolish dividend tax under section 115-0 of the Income Tax Act and omit section 10 (33) (I).

While all shareholders will benefit from this unexpected and unforeseen development, it is perceived that the major gainer will be the promoters of the respective companies. This is the last chance for most of these companies to hand out tax-free dividends to its promoters.

However, according to some experts, the actual tax incidence on promoters may be even higher once the new tax regulation is in place as the shareholder will have to pay tax on his dividend according to his annual income.

Whatever may be the end result, the queue for paying interim dividend is now lengthening by the day.

While the Tatas came out with their announcements today, the Reliance group was a step ahead. Reliance Industries, the flagship of the Ambani group, declared a dividend of Rs 4.75 per equity share yesterday, while Reliance Petroleum declared a dividend of 50 paise per share.

Dabur declared a 100 per cent interim dividend, while Godfrey Philips, the cigarette maker, declared a dividend of 125 per cent.


Mumbai, March 4: 
The dream rally that everyone was hoping for in the Reliance counters today was short-lived, thanks to profit-taking which spoiled the market mood and battered index heavyweights.

All eyes were obviously on Reliance Industries and Reliance Petroleum today because the merger plan of the two companies was unveiled by the Ambanis after the market hours on Friday.

Predictably, the Reliance counter rose sharply as investors and operators eagerly lapped up the share. Reliance Petroleum Ltd also moved gingerly in parent’s footsteps.

The Reliance counter opened firmly at Rs 329, from its previous week’s close of Rs 322.15. Thereafter it touched a high of Rs 339, a jump of Rs 16.85 from its earlier close. However, the rise could not be sustained and the scrip ended the day in the negative territory, suffering a loss of Rs 9.40 from its previous close. Reliance touched an intra-day low of Rs 311.65 and finally closed at Rs 312.95 in 36375 trades with 67.81 lakh shares changing hands on the BSE and the counter clocking a healthy trading volume of Rs 218.97 crore.

Reliance Petroleum, however, closed on the positive side at Rs 28.95, a marginal gain of 35 paise from its previous close of Rs 28.60.

According to brokers, foreign institutional investors were mostly sellers in the Reliance counter. Domestic institutions, however, made some token purchases in the counter that was not enough to propel the Reliance stock.

The 30-share BSE sensitive index was initially propelled by Reliance and its twin Reliance Petro. But when other index heavyweights surrendered gains, the sensex failed to hold on to its ground and ended the day at 3642.58, a loss of 36.17 points over its previous close. Led by the top index heavyweight Hindustan Lever, several stocks fell sharply and closed way below their intra-day highs with a few even registering sharp losses.

Rathi order modified

The Securities and Appellate Tribunal (SAT) today set aside the penalty of suspension of registration imposed by Sebi on the two Anand Rathi promoted companies. In an 84-page order, SAT said; “Sebi’s order against Mr Rathi made under section 11 B is not a penalty and further that the penalty of suspension of registration awarded in the case of the two appellant companies have been found unsustainable”.

Citing the Sebi order in the case of R.K. Aggarwal, the UP Stock Exchange chief, and J.C. Parekh who were allegedly found interfering with surveillance department rather more intensely, SAT said the restraint order in the case of Rathi also in all fairness be confined to, “holding any public position as a member of the governing board or the office bearer of the exchange or any capital market related public institutions” and not to extend to holding directorship or trusteeship in any other entities.


New Delhi, March 4: 
Finance minister Yashwant Sinha has said he will resist pressure to roll back any tax measure announced in the Union Budget as it would undermine the carefully crafted measures to deal with the problems that beset the nation.

”I will resist pressure to make tax give-aways because that would compromise the integrity of the budget,” Sinha told industrialists at a meeting to discuss the implications of the budget. “The budget is a holistic document. A tax give-away here or there will upset the balance of the budget. If India has to overcome its fiscal problems, we have to look at ways to raise revenues.”

He would maintain strict control over government expenditure. The entire budget would become simpler and transparent with the government moving to a single rate 16 per cent excise duty and only two rates of 10 and 20 per cent customs duty in two years, he added.

With all items attracting single 16 per cent Cenvat and imports of raw materials attracting 10 per cent and finished goods 20 per cent, the Part-B of the budget (which contains tax proposals) would become a one-page document, Sinha said.

He said a detailed exercise would be carried out in the next budget to push up excise rates of items enjoying full exemptions and those at the 8 per cent slab to the Cenvat rate of 16 per cent.

Sinha said he did not like the concept of “dream budgets” because these only lead to fall in revenue growth and push up the fiscal deficit. “A dream budget which gives away taxes and creates the feel-good factor, does not ensure revenue growth.”

He said the global economy is picking up and the exports are slated to go up resulting in higher GDP growth next fiscal. GDP growth last year had fallen to 5.4 per cent.


Mumbai, March 4: 
In its bid to clean up the operations of non-banking finance companies (NBFCs), the Reserve Bank of India (RBI) today ruled that all such firms granting or intending to grant demand or call loans will have to lay down a policy duly approved by their boards.

The policy, RBI says, should stipulate a cut off date within which the repayment of the loan would be demanded or called up and should record specific reasons if the cut off date was beyond one year. The NBFCs should also stipulate the rate of interest, paid quarterly or monthly, and where no interest is levied or a moratorium is granted, the sanctioning authority should record specific reasons, RBI said in a statement.

All such loans remaining unpaid for more than six months from the date of demand or call of where interest remained past due for a period of six months from the due date would be classified as non-performing assets.


Mumbai, March 4: 
State Bank of India’s (SBI) loan growth rate may dip to 10 per cent in the current financial year, from 17 per cent recorded in the previous financial year ending March 2001.

The lower growth is largely due to the prevailing industrial slowdown.

State Bank chairman Janki Ballabh indicated this to reporters here today. He, however, added that growth rate of the bank’s loans would pick up in the next financial year fuelled by growth in the manufacturing sector.

“We have seen the worst of times in the past year because of the slowdown, particularly in the manufacturing sector, which absorbs the maximum bank credit,” he said.

However, he added, that there are signals which point to the fact that the manufacturing sector is doing better. This trend could lead to an increase in demand for bank loans next financial year.

The chairman also said that despite loans to the commercial sector recording lower growth, the bank is experiencing good growth rates in the personal loan category.

Personal loans accounted for about 16 per cent of State Bank’s total loans. Ballabh said this category is experiencing more than 25-30 per cent growth which is the industry average in recent years.

The bank is selling its retail products through a giant branch network, he said. Once the government allows banks to sell insurance products, State Bank plans to sell insurance products through at least 500 branches.


New Delhi, March 4: 
The Bharti group is expecting its revenues to be around Rs 2,000 crore in the current financial year, while revenues of Bharti Televentures would be to the tune of Rs 1,600 crore.

“We expect that the revenues of Bharti group would be about Rs 2,000 crore during the current financial year,” Sunil Mittal, group chairman and managing director of Bharti, told reporters here today.

He said the revenues of Bharti Televentures was expected to be around Rs 1,600 crore.

Meanwhile, Bharti Telenet Ltd today launched its fixed-line telephony services in Delhi circle, breaking the 16-year-old monopoly that the state-owned Mahanagar Telephone Nigam Ltd has enjoyed in the capital.

Mittal said: “Delhi enjoys a special pride of place in our hearts at Bharti. Our association dates back to when we launched AirTel in 1995. I am proud to bring to Delhi, a world-class telephone service experience that will redefine the way Delhi communicates.”

He, however, ruled out the deployment of Wireless in Local Loop (WiLL) based on code division multiple access (CDMA) technology, which MTNL uses to offer mobile services in the city.

The company has decided to invest about Rs 250 crore in the circle and expects to generate Rs 100 crore revenue within the first year of operations. It expects to net 2.25 lakh customers by 2004 and about 1 lakh customers by March 2003.


Mumbai, March 4: 
Swedish major Astra Pharmaceuticals AB along with Astra Zeneca AB are making an open offer to acquire the balance 21,75,050 equity shares of AstraZeneca Pharma India Ltd representing 43.50 per cent stake at Rs 375 per share.

The offer opens on April 29 and closes on May 28, DSP Merrill Lynch, the managers to the open offer, informed the BSE today on behalf of Astra Pharmaceuticals AB.

Following the acquisition, AstraZeneca Pharma India will become a 100 per cent subsidiary of Astra Pharmaceuticals AB which will thus lead to the scrip being de-listed from the bourses. Astra Pharmaceuticals AB currently holds 28,24,950 (56.499 per cent) equity shares in AstraZeneca Pharma India while AstraZeneca AB does not have any stake in the Indian company.

AstraZeneca said that the price of Rs 375 per share offers a premium of 44 per cent over the company’s average price for the previous six months. The open offer was not conditional on any minimum level of acceptances and was subject to necessary statutory approvals, it said.

The stock markets responded favourably to the open offer, with the AstraZeneca Pharma scrip rising by more than 8 per cent to closed at Rs 327.40, a gain of Rs 24.25 over the previous finish of Rs 303.15. The counter saw only 81 shares being traded.

AstraZeneca group operates globally based upon a centrally adopted strategy of 100 per cent control of all its operating units.

“The business of AstraZeneca Pharma India being highly research, brand and technology driven requires the company to invest substantial financial resources, and was likely to limit its profitability in the medium term.”

The transfer of technology, brands, resources and know-how was facilitated within the AstraZeneca group by complete ownership. In order to justify greater commitment of resources to meet the market challenges, it was decided to make the offer.

The equity shares of AstraZeneca Pharma India are not actively traded and the combined total volume on BSE and the NSE for last 26 weeks is 73,597 shares (1.5 per cent of paid-up capital), it said, adding hence the offer was being made to enable public shareholders make an appropriate choice under the prevailing circumstances.



Foreign Exchange

US $1	Rs. 48.70	HK $1	Rs.  6.15*
UK £1	Rs. 69.04	SW Fr 1	Rs. 28.15*
Euro	Rs. 42.09	Sing $1	Rs. 26.25*
Yen 100	Rs. 36.83	Aus $1	Rs. 25.00*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 5085	Gold Std(10 gm)	Rs. 5000
Gold 22 carat	Rs. 4800	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7825	Silver (Kg)	Rs. 7880
Silver portion	Rs. 7925	Silver portion	NA

Stock Indices

Sensex		3642.58		- 36.17
BSE-100		1763.07		+  2.68
S&P CNX Nifty	1177.35		-  0.65
Calcutta	 123.74		-  1.42
Skindia GDR	 564.00		+ 15.51

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