Templeton to buy out Pioneer for Rs 250 cr
RBI forecasts 6.5% growth next year
Gilt prices under pressure
Local steel makers set to jack up prices
HPL sales to touch Rs 2500 cr this fiscal
Another Plus for zippy Santro
Status quo on cellular plea
Zee hits 52-week high at Rs 182.35
Sebi focus on investor education
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 18: 
In what may be one of the largest deals in the domestic mutual funds market, Templeton Asset Management (India), an arm of Franklin Templeton, today signed a memorandum of understanding (MoU) to acquire the Chennai-based Pioneer ITI AMC Ltd for close to Rs 250 crore.

The deal, which will see Templeton acquiring the entire 100 per cent stake in Pioneer ITI— subject to due diligence and approvals from the Securities and Exchange Board of India and other regulatory bodies—will create the country’s largest private sector mutual funds manager, with assets of over Rs 8,100 crore.

It would also be the second largest in terms of size after Unit Trust of India (UTI), zooming ahead of private sector majors like Prudential ICICI, HDFC and Birla Sun Life among others.

The actual purchase is likely to be completed within the next two to three months.

Rabo India Finance Pvt Ltd, the subsidiary of Rabobank International, was the sole strategic and financial advisor to both Pioneer and ITI for the transaction.

“This is an exciting development for all of us, and it creates new and significant opportunities for Pioneer ITI’s investors, distributors, agents and employees,” Vivek Reddy, chief executive officer of Pioneer ITI AMC, said in a statement.

“The management team at Pioneer ITI looks forward to working closely with Templeton to continue providing world-class service and transparency, superior investment performance and quality customer experience,” he added.

Franklin Templeton set up operations in the country in 1996 and manages assets over $ 825 million as on February 28 this year.

On the other hand, Pioneer ITI, a joint venture between Pioneer and the Investment Trust of India (ITI) with both holding around 47.5 per cent each and employees the rest, was established in 1993 as India’s first private sector mutual fund. It has $ 842 million in assets under management, with an investor base of over 7.47 lakh across the country. The mutual fund has over 25 schemes in the debt, equity and balanced fund categories.

With today’s deal, Templeton has beaten rivals like Standard Chartered, American Insurance Group and Prudential ICICI, which were believed to have been interested in acquiring Pioneer ITI AMC, after Pioneer indicated its decision to exit from the mutual fund.

Sources said the acquisition is a significant pointer of Franklin Templeton’s efforts to expand world-wide and further demonstrates its commitment to its mutual fund operations in India.

The deal would lead to a synergy of operations While Franklin Templeton had achieved recognition for its expertise in fixed income, Pioneer ITI was strong on equity, they added.

Moreover, they pointed out, there was very little overlap between the two in terms of marketing strategy and sales focus.

Again, while Templeton’s strength is its institutional and affluent clients from the large distributor and banking channel, Pioneer ITI has achieved success with retail investors from agents and independent financial planners.

Pioneer ITI’s back-office capability and the in-house investor servicing operation also throws open several possibilities for the new entity.

Sources were of the view that this was an instance of ongoing consolidation in the mutual fund industry.

Many more such deals are now expected to come through as the extremely competitive industry has found the going tough in recent times following the poor capital market conditions.


New Delhi, March 18: 
The economy has climbed out of the recession and is steadily on the way to recovery.

Reserve Bank of India governor Bimal Jalan said the gross domestic product (GDP) should grow by 6-6.5 per cent next fiscal against 5.4 per cent this year and added that a soft interest rate regime would be maintained to spur investment.

“Looking at the signs of recovery in the world economy, this year should be better. Growth should be at least 6-6.5 per cent. The credit growth in India has also been higher. The forex reserves are stable and the liquidity situation is good. In the next 4-5 years, we should grow by about 7.0 per cent,” Jalan said on the sidelines of a seminar, jointly organised by CII and NCAER.

In growth figures projected today by National Council of Applied Economic Research (NCAER), agriculture is expected to grow at 3.8 per cent during the current financial year, in contrast to an estimated farm sector growth of 5.7 per cent.

The industry is forecast to grow at 4.8 per cent during the year while service sector growth is projected to be 6.4 per cent. NCAER has projected the overall growth at 5 per cent for the current year.

“India’s capacity to withstand both domestic and international shocks is much higher now. We should capitalise on this and sustain higher growths in the long term,” he added.

He suggested a long-term fiscal policy where investors were assured of a stable regime for the next 5-7 years which would be “adopted through consensus and is more equitable.”

Jalan hinted at more softer interest rates in the future but said, “There will no change in this matter now. The actual interest rate at which companies borrow funds from banks and FIs is still higher compared with the “headline” interest rates as indicated by prime lending rates averaging 11.5-12.5 per cent.”

Floating rates

RBI is likely to allow “floating” interest rates on term deposit scheme of banks, while planning to issue government securities (G-secs) with floating interest rates in the next fiscal, reports PTI.

“Both borrowing and deposit should have floating interest rates. There will, however, be options for depositors to opt for either fixed or floating interest rates,” a senior RBI official said here today.


Mumbai, March 18: 
The Reserve Bank of India’s ambivalent stand on interest rate reduction and Prime Minister Atal Bihari Vajpayee’s observation that the economy is not in a good shape put pressure on government bond prices which headed south in an otherwise thin market today.

“Of late, the market has not been witnessing buying. Therefore, selling even if it is to a lesser extent, leads to a sharp drop in government security prices,” said a senior analyst from a private bank.

In today’s trading, while bond prices dipped by as much as 75 paise, yields on the benchmark 10-year 11.50 per cent security rose by around 10 basis points. The security, which in early trade was around Rs 128.20, later plummeted to Rs 127.45.

Though RBI governor Bimal Jalan had earlier said that the central bank is in no hurry to cut interest rates, his today’s remark that the bias would continue to be towards softer interest rates left the market confused.

“There are conflicting remarks from the RBI. In such an event, players are only preferring to exit,” a dealer with one of the private sector banks said.


Calcutta, March 18: 
Domestic steel companies are set to increase prices of hot-roll and cold-roll products in the first week of April.

While the average increase in HR products will be around Rs 1,000 per tonne, CR products will see a price increase in the region of Rs 1,200-1,500 per tonne. The current prices for HR products hover around Rs 14,000-15,500 per tonne, while those for CR products are around Rs 19,000 per tonne.

Sources said the rise in prices of flat products in the domestic market—which comes after a year’s gap—is being planned since international prices in this segment have firmed up.

An Essar Steel official said leading steel makers in Japan, Korea and Europe have already increased prices by $ 20-30 per tonne. “Steel prices in the US market have also improved significantly since the demand for flat products is picking up,” he added.

The price rise is expected to strengthen bottomlines of all major steel makers in the country, including Steel Authority of India (SAIL), Tata Steel and c Essar in the next financial year.

Tata Steel, for example, has a very high proportion of flat products in its product mix. Since flat products witnessed a glut both in the domestic and international markets, the company had a very tough time in the last couple of years.

With the rise in demand now, the company is expected to perform well, more so if prices also go up.

According to the latest figures available, domestic sales of flat products have increased to 6.41 million tonnes in the last nine months of the current fiscal year compared with 6.27 million tonnes during the corresponding period in 2000-01.

The overall sales projection for the current year has been pegged at 8.8 million tonnes compared with the last year’s sales of 8.6 per cent.

More importantly, the inventory has been reduced by 2.36 lakh tonnes, leading to a growth in sales.

“With India having been excluded from Section 201 by the US, exports of galvanised products to that country are also likely to go up significantly,” the Essar official said, adding “ This will lend stability to the domestic market for flat products.”

SAIL has a total flat product capacity of around 5 million tonnes. But the company could not produce beyond 80 per cent of its capacity because of poor demand. In the CR segment, it produced merely 1.163 million tonnes in the first 11 months, though its overall capacity is 2.338 million tonnes.

“The flat product segment is expected to perform well next year as the demand is picking up. Hence, we hope we will be able to perform at rated capacity,” a senior SAIL official said.


Calcutta, March 18: 
Haldia Petrochemicals Ltd (HPL) expects to close its first year of commercial production with a gross sales turnover of Rs 2,500 crore (inclusive of discount, excise, sales tax).

The Rs 5,170-crore showcase project of Bengal started commercial production in August last year.

Despite the sluggish demand, HPL has been able to sell around 442,000 tonnes of polymer in the domestic market till date. Sales of chemicals stood at around 230,000 tonnes in the same period.

The company has been able to export around 99,000 tonnes of polymers to countries like China, Vietnam, Korea, USA and Bangladesh.

“The realisations in the export market have been lower than the domestic market, but it has not been negative. Price-wise, 2001-02 has not been very exciting,” HPL officials said.

The EBDIT (earnings before depreciation, interest and tax) of the company varied from month-to-month, depending upon the sales. It was highest in September last, when EBDIT was Rs 29 crore. In the current month, the company expects to earn an EBDIT of Rs 23 crore.

“Better supply chain management and good planning by HPL’s marketing team has resulted in this performance,” said Richard B. Saldanha, managing director of HPL.

The company earned a gross sales turnover of Rs 1,480 crore in 2000-01 when the commercial production had not yet started. Therefore, the current year’s figures are not comparable.

Daily sales were as high as 10,333 tonnes in last July, but it has come down to 6164 tonnes in March this year. The company attributes this fall to the industrial recession and the uncertainty in the international market following the September 11 terrorist attacks in the US.

Monthly collections are nearly Rs 230 crore on an average and the company has set an ambitious target of Rs 250 crore for the current month.

“However, the high interest burden, which stands at around Rs 45 crore per month, is eating into the company’s profit,” HPL officials added.

The financial institutions led, by Industrial Development Bank of India (IDBI) still maintain their rigid stance on debt restructuring, until majority shareholder Purnendu Chatterjee of The Chatterjee Group brings in an additional equity of Rs 1,000 crore.

“Restructuring will only begin once the promoter arranges a Rs 1,000-crore equity. Negotiations are still on with Chatterjee,” IDBI officials said. The total exposure of the FIs and the banks in HPL is to the tune of Rs 4,200 crore.

“Operation-wise the company is performing well. But until the debt is restructured, it will be difficult for the company to survive,” officials said.


New Delhi, March 18: 
Hyundai’s small car just got a little bigger. The Santro, the first tallboy in market, will now sport a 1100cc Epsilon engine styled Zip Plus and will be priced at Rs 3.35 lakh (for the basic model LE, ex-showroom Calcutta).

In a clear sign that the Indian market has truly come of age, the company chose to kick off the worldwide launch of the ZipPlus in Delhi today. Later, it will be unveiled in Korea and Europe.

The Zip Plus, which will be Rs 7,000 costlier than the Zip Drive, will be presented in two colours—Suave Blue and Forest Dew. It has knock sensors, along with features like deluxe console, chrome handles and new upholstery.

At present, the Santro Zip Drive has a 989 cc Epsilon engine under the hood. “We wanted to make the event special for India due to the response we have got here. Also to keep up with the government’s view of making India a hub for small cars, we would like India to experience our new engine before the world,” said Hyundai Motor India Ltd managing director Y.S. Kim.

“It is an addition to the product range and not a replacement of any previous models. This is for domestic purpose at present and we will continue to cater to the export market with our previous model only,” B.V.R. Subbu, president of Hyundai, said.

“We have expanded the capacity at our Chennai plant to 1.5 lakh from 1.2 lakh. So even if there is a heavy rush for this specific engine, it will not be a problem to accommodate sales,” Subbu added.

Hyundai is also planning a host of other launches this year. Where as Terracan is about to be launched with a 2.5-litre diesel engine with a price tag of Rs 18-20 lakh, the Indian specific features will take time to be incorporated in the production line.

“The full funding of $ 60 million for the present phase of expansion is internally done. During Diwali, we will also bring in the hatchback Accent, fitted with a 1.5-litre common rail diesel injection engine, that has been developed by Daimler Chrysler. If the customers want the old Peugeot engine after this, we will provide it but the new technology will be more fuel efficient and smooth,” Subbu said.

Hyundai intends to carry on with Santro for now. It will be another two years before the Getz, the new mini in its stable, will come to India.


New Delhi, March 18: 
The Telecom Dispute Settlement Appellate Tribunal (TDSAT) today said that a status quo should be maintained on the petition filed by cellular operators seeking prohibition of use of mobile switching centre (MSC) by basic operators for wireless in local loop (WiLL) services, till disposal of the application.

The tribunal deferred the hearing till April 30 on the use of V5.2 software which will limit the sphere of the limited mobility facility to be offered by basic telephony service providers.

The three-member bench of TDSAT comprising Justice Suhas C. Sen, R.U.S. Prasad and P.R. Dasgupta asked the parties concerned (cellular operators, mobile operators, Government of India and the telecom regulator Trai) to file their affidavits in the case at a mutually agreeable date and scheduled the next hearing for April 30.

Trai had asked the basic operators to incorporate the V5.2 interface in their WLL(M) services—wireless in local loop with limited mobility—which use the code division multiple access (CDMA) technology.

TDSAT was hearing a request for an ad-interim order from cellular operators to restrain the fixed line operators from using MSCs and adhering to the V5.2 interface specified by Trai.

According to a senior counsel representing the Association of Basic Telecom Operators, the status quo means, “The fixed line operators can continue to provide the service which has been permitted to them under their licence condition by the licensor (Government of India) pending the final order from TDSAT.”

Senior counsel for Cellular Operators Association of India (COAI) said, “The directive of status quo effectively means that there can be no change in the TEC (Telecom Engineering Centre) specifications or licence conditions that have already been laid down. Further, this would also mean that the fixed operators cannot change over to any other interface or provide the range and extent of full mobility services within the short distance charging area (SDCA).” The SDCA is a telecom jurisdiction that covers a radius of 250 kms.


Mumbai, March 18: 
The Zee Telefilms scrip hogged the limelight on the bourses today on hopes that its new programmes would generate handsome revenue and its strategic sale to a foreign partner would be completed soon.

The scrip rose to a 52-week high to Rs 182.35 during intra-day trading on huge buy orders. The counter was also the top traded share on the BSE with a turnover of Rs 124.93 crore with 70.35 lakh shares being transacted. Opening at Rs 173.90, the share rose to the day’s high at Rs 182.35 and later closed at Rs 177.75, up 5 per cent over its previous finish.

Brokers attributed the rise to the restructuring drive under way in the company after being mauled at the TRP ratings earlier. Analysts, on the other hand, feel that Zee has a winner in the NDTV-sponsored programme Jeena Isika Naam Hai.

Another factor which contributed to the buying spree was the optimism generated that Zee would soon find a foreign strategic partner.

Earlier, Zee had announced its intentions of divesting around 26 per cent stake in favour of a strategic partner. Recent reports say that Vivendi and AOL Time Warner are the frontrunners in this regard..

Zee is looking at growth in international markets to drive up its revenue and market share.


Mumbai, March 18: 
The Securities and Exchange Board of India (Sebi) will co-ordinate investor education programmes run by various organisations to improve their effectiveness and avoid duplication, G.N. Bajpai, Sebi chairman, said today.

Investor organisations and professional bodies of chartered accountants and company secretaries are involved in the training activity and Sebi’s participation will be in the form of co-ordination, Bajpai told reporters on the sidelines of the launch of the first facility for Net-based integrated trading in cash and derivative market at the National Stock Exchange provided by Geojit Securities. The first order was entered by Bajpai.

NSE managing director Ravi Narain said currently internet based trading has a 2 per cent share of total market volumes and is driven by retail participation.

Growth of internet infrastructure and improvement in availability of bandwidth for unlimited internet access would improve volumes, he added.



Foreign Exchange

US $1	Rs. 48.71	HK $1	Rs.  6.15*
UK £1	Rs. 69.34	SW Fr 1	Rs. 28.90*
Euro	Rs  42.90	Sing $1	Rs. 26.35*
Yen 100	Rs. 37.21	Aus $1	Rs. 25.25*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4930	Gold Std (10 gm)Rs. 4860
Gold 22 carat	Rs. 4655	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7725	Silver (Kg)	Rs. 7790
Silver portion	Rs. 7825	Silver portion	   NA

Stock Indices

Sensex		3613.28		-4.40
BSE-100		1761.19		-1.54
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