Tokyo drama on eve of Maruti divestment meet
Rupee closes below 49-mark
Quartet to boost Unit Trust sales
One-year ban on Home Trade
Home Trade laid baits in Bengal
Quarterly review of co-op banks
Khaitans sell Romai estate to Rossell Tea
Honda makes a U-turn, to launch SUV
Need to tighten PF investment norms
Foreign Exchange, Bullion, Stock Indices

New Delhi, May 13: 
The Cabinet Committee on Divestment (CCD) meets tomorrow to clear the proposal to sell a part of the government’s stake in Maruti Udyog, the country’s largest car maker.

But there was some drama on the eve of the crucial meeting with Suzuki Motor Corporation issuing a statement in Tokyo saying that it was unaware of the plans by the Indian government to hand it majority control over the joint venture.

“The government has been saying they want to privatise it (Maruti Udyog), but other than that, we don’t know anything,” Suzuki spokesman Takeaki Nukii said in Tokyo.

The government seemed to be in a flap over what could be a last-minute hitch on a deal that disinvestment minister Arun Shourie recently said had been hammered out with a team of Suzuki officials.

Shourie refused to comment on the latest twist in the Maruti saga.

“We have not been contacted by the Japanese officials for any clarification on the issue,” said Pradeep Baijal, secretary in the disinvestment ministry. “So we cannot speak about the matter at present. There is some problem that needs to be cleared up.”

In early May, a Japanese team led by Nakanishi, director on the Suzuki Motor board, had left India after clinching the deal with the government.

At that time, it was being speculated that it would be a two-step deal: in the first stage, the government would not participate in a Rs 400-crore rights issue and instead renounce its claim to the shares in favour of Suzuki Motor.

The deal was that the government would sell the rights shares at a premium and also collect a ‘control premium’ from the Japanese automaker which would get a majority stake in the company.

After the rights issue, Suzuki Motor’s stake in the carmaker was supposed to rise to about 54 per cent from 50 per cent at present. The government currently has a 49.7 per cent in the company with the employees holding the rest in its small equity capital base of Rs 132 crore.

In the second stage, the government planned to bring down its stake in Maruti Udyog to around 25 per cent through a public issue.

P. K. Basu, joint secretary in the ministry, said, “I have no clue that such a statement has been issued in Japan.”

Shourie had earlier said, “The deal would see Suzuki’s stake in Maruti rise to 54 per cent from 50 per cent, while the government’s would shrink to 25 per cent.”

While the government officials have never given the exact valuation of Maruti, they indicated that the government wanted to retain a 25 per cent stake in the company after the two-step divestment.

Reports in the media have suggested that the value of the company has been fixed at Rs 4,850 crore at Rs 100 per share.

The government had gone so far down the path of disinvestment that the DoD had already cleared the file and was waiting for the approval from the ministry of heavy industries. After that, the file would be placed before the Cabinet Committee of Disinvestment.

Last week, this problem was solved as Manohar Joshi, minister for heavy industries who has been opposed to the Maruti selloff, took up the post of Speaker of the Lok Sabha and handed over charge to Suresh Prabhu, former power minister.


Mumbai, May 13: 
The rupee today closed at an all-time low of 49.01 as a sudden upsurge in demand for dollars from companies forced the currency off the edge.

The pressure is expected to continue on Tuesday. A section of dealers reckons that the currency is likely to hover in the current range. While there has been a supply of dollars into the market, it has been more soaked up by a rise in demand, much of it from companies.

The rupee opened on a weak wicket today, tumbling beyond the crucial resistance level of 49 to a dollar in the morning session. However, fears in some quarters that this would be followed by a dramatic slide proved to be unfounded as the currency remained locked in a narrow range for the best part of the day.

Starting at 49.00/49.01 per dollar, the rupee moved in a tight band of two paise as some state-run banks —believed to be Canara Bank and Bank of India — sold dollars, possibly at the behest of the Reserve Bank of India.

According to dealers, while the rupee lost ground in the initial hours of trading due to a dollar scramble by banks and a build-up in positions by other players, inflows of the greenback later in the day helped stabilise the market. At the end of the day, the rupee finished at 49.01, down two paise over its previous close.

In the forward market, the premia rates were steady across the board. For instance, the one-month forward premium closed at 5.92 per cent against 6.01 per cent last week. The three-month forward rate was 6.05 per cent, and the benchmark six-month premium was 6.02 per cent — down a shade from Friday’s 6.07 per cent.

The Reserve Bank of India (RBI) today fixed the reference rate for the dollar at Rs 49.02 and for the euro at Rs 44.92 compared with Rs 48.98 and Rs 44.80 on Friday.

In cross currency trades, the rupee dipped moderately against the euro and edged lower against the British sterling, in line with the dollar gains abroad.

The Indian unit opened lower against the single European currency at 44.76/78 from last Friday’s close of 44.75/77.


Mumbai, May 13: 
The Unit Trust Of India (UTI) has decided to zero in on four schemes in its portfolio to boost sales.

They are the UTI Index Fund, the UTI G-Sec Fund, the UTI Bond Fund and the Petro Fund. The schemes have a combined portfolio of more than Rs 2,500 crore. The UTI G Sec fund has a corpus of around Rs 300 crore, while the bond fund has Rs 1,319.39 crore in its kitty.

“We will try to showcase the achievements of these funds and promote them over others,” Unit Trust of India sources said. The troubled mutual fund major will treat the four products as its flagship schemes as part of an initiative that is being launched as a pilot project.

The shift in focus comes at a time when the institution scampered to safety by reviving its Unit Scheme (US-64), but its recent decision to borrow Rs 617 crore from its development reserve fund (DRF) for redeeming MIP-97 has renewed concerns over its viability.

Industry watchers say they are not surprised that US-64, UTI’s flagship earlier, has been pushed off centre-stage as attention is riveted to other schemes in its portfolio. “The Trust needs some well performing schemes to win back the confidence of investors,” they said.

Thanks to re-rating of public sector companies — mainly refinery stocks like HPCL and BPCL after IOC made its swashbuckling bid for IBP — UTI’s sectoral fund dedicated to the petroleum industry has been doing well. The UTI Bond Fund, launched in May 1998 as an open-end pure debt fund, invests in rated corporate debt papers and government securities with easy liquidity.

The scheme offers two options — income (introduced from October 2001) and growth. Under the income option, the fund has recently declared an income of 5 per cent for the quarter. It had earlier declared an income of 3 per cent for the quarter for all eligible unit holders in the scheme on January 24, 2002.

The fund’s corpus stood at around Rs 1,366 crore on April 29. In an investor-friendly move, UTI deferred the sales charge imposed under UTI Bond Fund from 1 per cent to 0.5 per cent on repurchases made within three months. The cut took effect from May 2. Contingent deferred sales charge of 0.5 per cent on repurchases made between three and six months has been removed.

UTI Bond Fund has given an absolute return of 3.11 per cent in the past three months ended May 8, 2002.


Mumbai, May 13: 
The Securities and Exchange Board of India (Sebi) has extended the ban imposed on the Sanjay Agrawal-promoted Home Trade Ltd from dealing in securities till the completion of investigations and action thereon or one year, whichever is later.

At a post-decisional hearing today, the regulator imposed the fresh ban order under Section 11/11B of the Sebi Act, 1992 pending investigations, Sebi said in a release. No representative of Home Trade appeared for personal hearing today nor responded to the summons after Sebi had debarred the tainted broking firm on April 29 from undertaking any activity till May 10, for its alleged involvement in the multi-crore government securities scam.

Sebi said it was extending the ban order to ensure no further harm or detriment was caused to the market or investors were not adversely affected and safety and integrity of the market remained unimpaired. Sebi chairman G.N. Bajpai had last week said it would investigate into the diversion of funds, if any, into the stock market by the banned entity. “The markets are safe and if required we may look into any diversion of funds by Home Trade Ltd,” he had stated.

The broking entity was banned as it was revealed that it had violated regulations and guidelines laid down for brokers.

No change in norms

Meanwhile, the Reserve Bank of India (RBI) does not intend to change the norms for trading in government securities following the multi-crore gilts scam involving several co-operative banks and brokers.

“The RBI rules on G-secs are well known and we have no plans to change them,” RBI governor Bimal Jalan told reporters here today after releasing the ‘India Development Report 2002’ brought out by the Indira Gandhi Institute of Development Research (IGIDR) and Oxford University Press.

The Nagpur, Osmanabad and Wardha district central co-operative banks among others, as also the Seamen’s Provident Fund organisation lost several crores when they gave money to broking firms Home Trade and Gilt Edge for investing in G-secs, but failed to secure physical delivery of instruments. Jalan said the apex bank was also in touch with the Maharashtra government regarding the recent scam. The fraud cases were being dealt with as per the law, he added.

Referring to setting up an apex co-operative body, the RBI governor said “The government is considering the idea and it is for them to decide.”

On the borrowing programme and the response to auctions of government stock, he said “The appetite keeps on changing from week to week and we are not too concerned about it.”

Earlier, Jalan, while releasing the report, said India has seen a 6 per cent growth in the last 20 years till 2000. “So why is it surprising when we talk of 7 to 8 per cent growth?”

Referring to the public delivery system in offices and institutions, Jalan said it has become paper-ridden and largely non-functional. However, there were some instances of best practices.


Calcutta, May 13: 
Home Trade had tried to make inroads into Bengal, and the government fears it might have duped some of the state’s co-operative banks.

Six months back, Sanjay Agarwal, Home Trade’s chief executive officer, asked a senior executive of the state’s registrar of co-operative societies to help him promote his firm among the co-operative banks in Bengal.

U.K. Dasgupta, joint registrar of co-operative societies — the executive responsible for the monitoring of the urban co-operative banks in Bengal — said Agarwal visited him last year. He sought Dasgupta’s help in building bridges between Home Trade and co-operative banks, and asked for a comprehensive list of the state’s 52 urban co-operative banks.

“We refused to help him. We told him that the banks decide on brokers independently, and we could not interfere with their choice. But, on his own, he could have lured the management of some of the co-operative banks into investing through Home Trade,” Dasgupta said.

The registrar of co-operative societies in the state has not detected transactions with Home Trade so far. It cannot find out whether the brokerage succeeded in winning over the management of co-operative banks in the state unless it conducts an inspection of their books.

“At least, a dozen co-operative banks in the state are in a precarious position. Some can collapse any day. Their finances are in a shambles due to bad credit and investments. Collusion with Home Trade would mean the last nail in the coffin for them,” Dasgupta said.

“The audited reports filed by the banks with the registrar may not reflect a loss. It can be detected only if the securities in possession are compared with the assets listed in the balance-sheet. Besides, the audited reports do not always mention the name of brokers engaged by a bank, which would have given us a clue,” he added.

The bottomline is that the regulatory authority of co-operative societies in the state will not be able to even trace transactions with Home Trade, let alone gauge the losses it may have inflicted, unless it inspects books.

Besides mandatory half-yearly reviews, the registrar can examine records only if there are specific complaints against a bank.

“Political interference often makes it difficult for us to take action against the corrupt. Even inspectors and auditors are known to have been intimidated into giving untrue reports,” Dasgupta said.

The possibility of Home Trade having preyed on banks in Bengal looks strong. The impression that its activity was limited to Maharashtra and Gujarat has been dispelled by the revelation of an Orissa rural co-operative bank having lost Rs 10 crore in deals with the portal.


Calcutta, May 13: 
Shaken by the string of recent scams, the Reserve Bank of India (RBI) has asked the Registrar of Co-operative Societies to conduct quarterly inspection of urban co-operative banks (UCBs).

These banks are inspected every six months, but rip-offs in the co-operative world convinced the central bank that the review must be more frequent to detect discrepancies early.

Talking to The Telegraph U.K. Dasgupta, joint registrar of co-operative societies in charge of UCBs (West Bengal) said: “We have got directions from the RBI for frequent inspection of UCBs. It has been decided that inspections will be conducted on a quarterly basis.”

Three RBI inspectors have been assigned the task of keeping tabs on the 52 urban co-operative banks in Bengal. “However, we have a strong force of around 1,200 officers and it will not be tough for us to conduct quarterly inspections,” Dasgupta said. Some of Bengal’s 52 co-operative banks are in bad shape, tottering on the brink of collapse, largely because of poor financing decisions and siphoning of funds.

In some cases, the RBI has issued show-cause notices asking why the licences of the bank should not be cancelled. Some of these banks have even been directed not to sanction loans, while others have had their board management changed by the Registrar of Co-operative Societies to ensure transparency.

The registrar has not found a link between Bengal’s urban co-operative banks and Home Trade, the internet brokerage at the centre of the gilt scam that started from the Nagpur District Central Co-operative Bank.

Curiously enough, urban co-operative banks have been handed a list of the instruments in which they can invest their surplus funds by the RBI, but have to seek registrar’s approval every time they actually do so.


Calcutta, May 13: 
The Khaitans of Eveready Industries India Limited (EIIL) today sold the Romai Tea estate in Assam to Rossell Tea for a consideration of Rs 13.91 crore.

This is the fifth garden in Assam which the Khaitans have sold in recent times. They had sold four other gardens in Assam—Gingia, Majulighat, Sejuli and Pobhoi. The company had earned Rs 60 crore through the sale of these gardens. Gingia, Majulighat and Sejuli were sold to M.K. Shah Exports.

The yield of Romai tea estate is around 7.5 lakh kg.

Rossell Tea Limited (RTL) had been looking for gardens, both in Assam and the Dooars for quite sometime now, tea industry sources said. RTL had five tea gardens within its fold prior to this acquisition.

The four gardens directly under RTL’s fold are Dikom, Nokhroy, Borahi and Nagrijul. It controls Bokakhat through Bokakhat Tea Company Pvt Limited.

The Khaitans had last year taken the decision to sell some of their unremunerative tea estates for retiring high-cost debt. They have already sold four gardens in Darjeeling and one in Dooars.

The proceeds of the Romai sale will go towards the repayment of debts, an official spokesperson said.

High interest charges had adversely affected the overall performance of the company in the last few years. In order to reduce the interest burden and to improve operational efficiencies, it has taken up a restructuring exercise, which includes consolidation of tea operations to achieve economies of scale, sale of tea estates with low financial viability and utilisation of proceeds to repay debts.

“A part of the exercise has already been implemented and the balance is expected to be completed within the current year,” officials of the company said.

With the disposal of the less remunerative tea estates, the company’s operations will comprise only profitable estates, which will improve its performance, they said.

Operational consolidation with the estates of the erstwhile Bishnauth Tea Company Limited has also helped the company to attain economies of scale.

The company has also obtained a favourable debt-restructuring package from ICICI, their lead financial institution. The FI has converted Rs 450 crore loans into foreign exchange loans, which has resulted in lowering of interest, from 16 per cent to 10 per cent.


New Delhi, May 13: 
The breakout from the sedan-mindset is beginning to gather pace with one more major automobile maker—Honda Siel Cars India—planning to launch a sports utility vehicle (SUV).

Honda Siel India, which has two sedans in the market—the Accord and the City—had been toying with the idea of coming out with a supermini or a small sedan. It has now mothballed those plans in favour of the CR-V —an SUV that is powered with a 2.4 litre VTEC four-cylinder engine that churns out 160 bhp that can pack in two full-size mountain bikes with the rear seats folded. The company hasn’t put a date by when it plans to pull the wraps off its next offering —but it isn’t likely to be this year.

“It does not make any sense to overshadow the City’s presence in India. Although it is a five-year old model, the City’s suspensors are best in the category for Indian roads. So we will spend a year-and-a-half to consolidate our presence in India before bringing in any cars,” says Ananda Mohan Gupta, general manager (marketing), Honda Siel Cars India Ltd.

“One of the vehicles we have considered is the CR-V. Though we will not add any more competition in the upper C segment or the B-segment, the SUV category is an interesting proposition,” he added.

The SUV market is just about to start buzzing with Hindustan Motors planning to launch the Mitsubishi Pajero later this year bearing a sticker price of over Rs 20 lakh. Ford is also planning to come in with the Escape, which was showcased at the Auto Expo in the capital in January and Toyota has talked of bringing the Prado. If the Honda CR-V is manufactured in India, it will be priced at about the same level as the Accord —which is about Rs 15 lakh, which means it will be costlier than the Tata Safari but cheaper than the Pajero or the Prado.

CR-V’s biggest USP is that it is as fuel efficient as a sedan and its performance is as good as a passenger car. In the international market, its closest competitors are Ford Escape, Subaru Froster (which may come in because of the alliance with General Motors), Suzuki Grand Vitara and Hyundai Santa Fe.

As all these vehicles are slated to be launched by the year end— either in CBU form or manufactured in India, Honda reckons it will be a good bet for it to bring in the CR-V instead of Logo, Life, Today (small cars) or Civic (a sedan that is positioned between the City and the Accord) at present.

“These are long-term plans. Right now, we are looking at increasing our dealerships from 30 to 40 in India. We have got only one dealer in Calcutta and will soon be appointing dealers in Bhubaneswar and Guwahati,” Gupta said.

The Honda plant in Greater Noida in Uttar Pradesh has the capacity to make 30,000 cars on three-shift basis.


Calcutta, May 13: 
The multi-crore government securities scam that has engulfed a number of provident funds besides co-operative banks, has revealed significant deficiencies in the regulatory supervision of the investments made by the autonomous trusts. A senior official in the provident fund department said inadequacy of power made it impossible for the regulator to conduct “foolproof” examination of the books of accounts of the provident funds.

“Under normal course of business, a physical verification of assets is not possible. Discrepancies between the assets on books and in actual possession may take a long time to come out of the closet. It would happen only if the provident funds disclose them voluntarily or if they default in paying their beneficiaries,” he added.

In May 2000, a computer-aided compliance system was introduced. This was done to do away with the system of regular inspection, in response to the industry’s demand of putting an end to the ‘inspector raj’.

“The trusts now have to file a monthly report on investments in the electronic mode, which will not reflect any difference between assets in hand and on paper. We, on our own, cannot conduct an inspection unless there are specific complaints against a fund,” the official said.

Various investment companies had tried to source from the department contact details of the provident fund trusts. The department had sensed that these firms were eyeing the funds, yet could not take prophylactic measures due to loopholes in the regulatory framework, he added.

“The possibility of provident funds in Bengal having colluded with Home Trade cannot be ruled out as we know there are a number of trusts that do not follow the prudential norms,” he said.

The regulator mandates that the provident funds must invest 25 per cent of their corpus in central government securities, 15 per cent in state government securities, 40 per cent in bonds issued by public sector companies, and the balance 20 per cent, in any of the three instruments.

“We act on the complaints received by us from the beneficiaries of the funds. We haven’t received any till date. We can certainly audit the accounts of these trusts if we receive instructions from our headquarters. But no such action has been taken yet,” said Rajat Goswami, regional provident fund commissioner. There are around 500 trusts in the city, out of 600 in the state.



Foreign Exchange

US $1	Rs. 49.01	HK $1	Rs.  6.20*
UK £1	Rs. 71.72	SW Fr 1	Rs. 30.35*
Euro	Rs. 44.88	Sing $1	Rs. 26.80*
Yen 100	Rs. 38.52	Aus $1	Rs. 26.30*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 5310	Gold Std (10 gm)Rs. 5185
Gold 22 carat	Rs. 5015	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 8100	Silver (Kg)	Rs. 8265
Silver portion	Rs. 8200	Silver portion	   NA

Stock Indices

Sensex		3442.49		+11.17
BSE-100		1717.27		+ 5.54
S&P CNX Nifty	1119.65		+ 3.25
Calcutta	 117.48		- 0.34
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