Skirmishes send stocks into a tizzy
Gilt yields go up, rupee claws back
Gold sparkles in shadow of guns
LML gameplan to ride out bad times
Zee, Star in stake sale spat
Corporate India on alert to catch e-snoopers
P&O evinces interest in Kulpi port
Gilts scam heat on six Bengal co-op banks
Tata Tele posts 31% rise in turnover
Foreign Exchange, Bullion, Stock Indices

Mumbai, May 21: 

Sensex at lowest level this year

As the border bristled and troops traded fire in a face-off hurtling towards a full-blown war today, the markets wilted in the heat of confrontation.

Stocks swooned as the government braced for a long haul on the battlefield and war games acquired a menacing intensity. Dalal Street was put on the edge, with the Bombay Stock Exchange (BSE) sensex losing 96 points to end at 3186.53 points — the lowest this calendar year.

The skirmishes on the frontier chipped away at shareholder wealth, measured by a gauge called market capitalisation. That was down a staggering Rs 15,000 crore at Rs 6,00,775 crore from Monday’s Rs 5,85,030 crore.

Most big operators jabbed at panic buttons, unwinding long-built positions in several leading stocks. Among the major losers were auto shares, the Reliance twins and index heavyweights like Lever and ITC.

The 30-share index had plunged over 150 points at one stage when it tested a five-month low of 3127.87. However, value picking by institutions and some bargain hunting by punters late in the day helped the sensex recoup some of the losses and close at 3186.53, a loss of 96.28 points compared with Monday’s finish of 3282.81.

The BSE-100, a much broader reflection of market vigour, tumbled 39.18 points to 1606.00 from its previous close of 1645.18. An operator with enough leverage to move share values was rumoured to have dumped shares heavily.

According to dealers, many operators who have borrowed to buy stocks are unwinding positions as their securities are worth much less now than they were when they had been pledged. As a result, lenders are asking for fresh margins.

The recovery, even though it came at the fag end of the session, was heartening to many brokers since it signalled that stocks had finally bottomed out. “We can confirm by tomorrow whether the markets are close to their bottom,” a broker affiliated to BSE and NSE said.

“What is a source of greater comfort is that foreign institutional investors (FIIs) are still with us. Given that they have usually been the most fickle of the lot, the kind who jump ship at the first sign of trouble,” he added.

Today however, FIIs purchased stocks worth Rs 118.9 crore, and sold shares valued at almost Rs 124 crore. Though they are still net sellers at Rs 5.1 crore, the amount is lesser than what has been seen in the recent past.

Mutual funds were net buyers to the tune of Rs 19.28 crore —purchases of Rs 90 crore and sales of Rs 70.74 crore.

“Local funds which were heavy sellers in most of key shares, including PSU stocks, early on. Later, they made good purchases in several stocks going cheap, helping spark a sharp recovery at the end,” the dealer said.

.The volume of business was higher at Rs 1416.79 crore from Rs 1086.11 crore on Monday. Satyam Computer was the top traded scrip with a turnover of Rs 151.63 crore. It was followed by IPCL with Rs 87.68 crore.

Derivative margin off

Sebi has lifted the 10 per cent price margin on 53 derivative stocks with immediate effect. It was imposed to check volatility in aftermath of September 11 terrorist attacks in the US. The decision to withdraw the measure was taken at risk management group’s meeting in April, Sebi said.

ICICI Bank in sensex

ICICI Bank will replace ICICI in the BSE sensex following the merger of the financial institution into the bank. Trading in the ICICI share will stop from May 31.


Mumbai, May 21: 
Bond and foreign exchange markets were edgy today, though a bruised rupee notched up a smart gain to close above the 49 mark at 48.99.

Yields on government security prices fell over 5 paise, and inter-bank call money rates continued to rule firm due to tight liquidity conditions.

Dealers said the rates closed at 7.25-7.50 per cent against Monday’s 7.10-7.20 per cent after moving in a band of 7.25-8.10 per cent.

Sources added most transactions were done below 8 per cent, after rates opened firmer at around 7.75-8.00 per cent.

“With yet another auction coming up, we expect liquidity to be tight in the short term. It will only improve in the medium term,” said an analyst with a foreign bank.

In the government securities markets, some gilts were dumped as the markets agonised over border blues. An analyst said yields on the benchmark 10-year security touched 8.20 per cent. The interest rate on this paper has risen by close to 90 basis points in a span of 2 weeks.

Given the jitters gripping the financial markets, the turnaround in value of the Indian currency surprised many. The rupee rallied smartly against the greenback, following strong dollar inflows from a foreign bank. Later, domestic banks stepped in to sell dollars. This happened despite the fact that the market remained nervous over the volatile situation on the frontier.

The rupee today closed at 48.98/99, a sharp gain of over four paise from Monday’s finish of 49.02/03 after it hit intra-day lows of 49.04/05. It had opened weaker at 49.03/04 early today.


Mumbai, May 21: 
Gold prices surged today on fresh buying as market players reacted to a spurt in international prices to a 27 month-high following tensions on the Indian-Pakistan frontier and in West Asia.

In Mumbai, standard gold shot up by Rs 55 per ten grams to Rs 5235. In the capital, prices of the metal rose to a seven-year high at Rs 5310 per ten grams, an increase of Rs 60 compared with its previous close. Standard gold was last quoted at Rs 5310 per ten grams on June 1, 1996.

Bullion analysts are of the view that prices of gold should rule firm, given the overall feeling that internationally, a bullish trend will emerge, at least in the immediate term. On Monday, prices of gold had touched a 27-month high of $ 316.40 per ounce in New York.

Some analysts feel overseas prices of the metal should touch $ 320 per ounce, with some even going on to suggest it could surpass $ 330 per ounce. In early morning London deals today, gold was ruling at over $ 315 per ounce. The bullish trend in the price of the yellow metal rubbed off on silver, which shot up to $ 4.78 per ounce — a new high since January — in the global market.

Prices of gold have been on the upswing in the overseas markets as investors consider the metal to be a “safe-haven” asset given the poor stock market conditions and low treasury bill interest rates. The tensions between India and Pakistan, the violence in West Asia, and a US warning late last week about yet another terror attack has helped trigger a gold rush of sorts.

In the bullion markets of Mumbai, the ten-tola gold bar (.999 purity) jumped to Rs 61,500 from Rs 60,900 on the previous day. Similarly, ready silver (.999 fineness) recovered Rs 95 per kg to Rs 8,210 from Rs 8,115.

Bhargava Vaidya, a bullion analyst, told The Telegraph that while today’s increase in prices of the yellow metal was largely due to the higher Comex close on Monday, the rise would have been sharper if the rupee weakened against the dollar today.

“Had the rupee lost ground, we would have witnessed a rapid rise in the domestic prices of the yellow metal. But, the local price was controlled as the rupee strengthened against the greenback.” Vaidya said one could expect a maximum loss of 2 per cent in gold prices in current circumstances.


New Delhi, May 21: 
Deepak Singhania is revving up to put loss-making LML Ltd back on track.

At the core of the managing director’s restructuring policy is a Korean-designed motorcycle, details of which are kept under wraps, and a ruthless restructuring policy that aims to prune nearly half the workforce and lay off vendors supplying parts to the Kanpur factory of the two-wheeler major.

The hush-hush project to manufacture the 110 cc motorcycle—aimed at the mass market which Singhania and his executives at the country’s second largest scooter maker want to unveil next month—is expected to be the single product that could help pull LML out of the morass it has sunk into, suffering an accumulated loss of some Rs 80 crore.

“The new bike is aimed at the biggest chunk of the two-wheeler market—the middle segment—which accounts for 40 per cent of the 4 million strong market for two-wheelers,” Singhania said.

Though not much is being revealed by either LML executives, the new product is expected to have few frills and will be basic comfort city bikes, the kind that propelled Hero Honda to the top slot in the market. LML hopes it will be able to sell 75,000 of them this year, increasing their current sales volumes by nearly 40 per cent. Later in the year another 110 cc bike may also be launched.

The reason why Singhania is pinning hope on this single-product launch is simple. The scooter market which accounted for about 52 per cent of the two-wheeler market shrank within just four years to a mere 10 per cent.

Where LML used to sell up to 4 lakh scooters, it managed to sell just one lakh last fiscal. And its problem it that it was and still is basically a scooter maker—seven out of its nine products are still scooters. “Our source of business has shrunk drastically,” admits the LML chief.

Falling sales forced the scootermaker to opt for a technical collaboration with Korean player Daelim Motors last year and launch two niche trend market bikes—Adreno FX and Energy FX. these bikes were targeted at small audiences (Singhania figures a market segment as small as 6 per cent of the total market) and fetched LML a mere 42,000 sales.

The huge half a million capacity at LML’s Kanpur factory simply went a begging. The company, which Singhania claimed would make a small net profit by March 31 this year, ran into a huge cash crunch. “Capacity doesn’t help us ... that’s the way the market has moved,” Singhania said.


Calcutta, May 21: 
Rupert Murdoch’s Star and Subhash Chandra-controlled Zee Telefilms are at loggerheads over stake sale. Star had offered to sell 1.09 crore shares held by it to the promoters of Zee—Subhash Chandra and his associates—but now threatens to sell to others.

Star offered the shares, representing 2.64 per cent equity stake, to Chandra in compliance with the agreements under which the shares were issued. The two companies had agreed to give Chandra the “first right of refusal” on the shares.

Star made a formal offer on April 19. Besides indicating the price—$ 38.81 million or Rs 194 crore—Star set May 2 as the deadline for payment of the amount. If Chandra wished to buy the shares, he would have to indicate his willingness within a week, Star added.

The shares are held by Asia Productions Ltd, a company registered in Mauritius. Since the seller is registered abroad, it was necessary to obtain Reserve Bank’s approval to complete the deal.

Star mentioned in its letter of offer that the regulatory approvals from the Reserve Bank would have to be obtained by Zee in keeping with the agreements between the two companies. Chandra, however, disagrees with this condition.

Star said: “It is the responsibility of Zee to obtain and provide to Asia Productions all necessary approvals to purchase the shares… and indemnify Asia Productions against any loss or expense that it may suffer in the event of Zee purchasing the shares without the required approvals.”

Chandra told Star up front that he was willing to buy the shares, but maintained it was Star’s responsibility to obtain the regulatory approvals. He said in a letter sent recently, “We are ready and willing to purchase the shares immediately upon Asia Productions obtaining the RBI’s permission to sell and transfer the shares. On our part, we are willing to render necessary co-operation to the extent necessary in obtaining the permission.”

The deal could not take place by May 2 for want of Reserve Bank’s approval. Star now says Chandra’s “first right of refusal” has lapsed and it can sell the shares to others.


New Delhi, May 21: 
E-commerce—the new kid on the block that has changed the way companies do business, rendering geographical distances and time zones irrelevant—is here to stay. But, the e-commerce that sets the cash registers ringing brings with it a new risk— e-snoopers.

A study conducted by Confederation of Indian Industry (CII) and PricewaterhouseCoopers observes that of the 103 large Indian and multinational companies that the survey covered, more than 80 per cent have suffered some form of internet security (IS) breach in the last 12 months, indicating a rise of 20 per cent over 2000-01.

While viruses continue to be the most chronic of all kinds of breaches, hackers and unauthorised users are also responsible for over two-thirds of the security breaches. Average downtime for all security breaches is at an alarming level of 29 hours compared with the international level of 21 hours.

The recent high profile international virus attacks such as Code Red and Nimda have contributed to the high incidence of virus-related breaches. The other common causes of security breaches for Indian enterprises have been manipulation of software application system programmes, identity thefts and telecom related frauds.

However, the study also revealed that most companies are establishing a security policy. About 40 per cent of the respondents already had a security policy in place compared with only 17 per cent of the respondents in 2000-01. Security is being adapted as the key business enabler, and 74 per cent of the respondents have increased their security budgets.

It said denial service attacks were on the rise, and found that exploiting the known vulnerabilities of operating systems was the most frequent method of attack. Indian businesses, it said, continued to discover breaches largely by reactive measures and this had led to unplanned downtime. In the UK, the average mean cost of a serious security incident was approximately £ 30,000. The survey pointed out that although the downtime loss was underestimated in India, it had emerged as an issue of serious concern.

But 47 per cent of the companies continue to operate without any formal security policy, making effective security management an almost impossible task. The survey however noted that business managers would continue to frame security policies for their respective companies and improve upon the existing policy initiatives. It also pointed out that in spite of having a formal security policy, effectiveness was observed to be low. Only 40 per cent of the respondents believed that security was highly effective and 17 per cent did not feel secured despite having a security policy in place, it added.

The manufacturing sector’s continued lack of appreciation of information security was a significant area of concern, according to the survey. It revealed that though 87 per cent of the sector was affected by security breaches, only 57 per cent had accorded priority to information security. This was 11 per cent lower compared with the industry average of 68 per cent.

The issue of information systems security was not limited to IT, finance companies and companies with e-commerce operations, but need to be appreciated by all business organisations, the survey said. One might not be directly affected by a security breach, but the possibility of being affected as a part of the supply chain was high.

The survey also pointed out that though 68 per cent of the respondents accorded high priority to information security and had developed complex business applications, capital expenses were still attributed as a critical barrier to effective security management.


Calcutta, May 21: 
P&O Developers Ltd has evinced interest in Bengal’s prestigious Kulpi port and the special economic zone (SEZ) scheduled to come up near the port.

W. T. Edgerley, , managing director of P&O Developers Ltd, today visited the port accompanied by Gopal Krishna, managing director of West Bengal Industrial Development Corporation (WBIDC), Atri Bhattacharya, executive director of WBIDC, and Alapan Bandopadhyay, district magistrate of South 24 Parganas.

Sources said Edgerley enquired about the land acquisition process and the development of infrastructure around the port, as well as the rehabilitation package that will be offered to local residents. He also met chief minister Buddhadeb Bhattacharjee and state commerce and industry minister Nirupam Sen.

Officials accompanying him took photographs of the area for further study, they added.

The Bengal Port and the SEZ will come up over an area of 3,500 acres. The port is being developed by WBIDC, Keventers Agro and Mukand Steel. WBIDC will have an 11 per cent stake in the company, with the other two holding the remaining 89 per cent. The SEZ is expected to give a boost to the state’s economy.

P&O Developers is a group company of P&O Nedlloyd Container Line. The latter is a 50:50 joint venture of P&O and Royal Nedlloyd, representing the liner shipping interests of the two companies. It is the world’s second largest container carrier, with an annual turnover of around $ 4.5 billion.

P&O Nedlloyd has over 70 established trade lanes and provides connections to more than 250 main ports serving 120 countries world-wide. P&O Nedlloyd’s fleet numbers 146 owned and chartered vessels.

Sources said Edgerley has not yet made any commitments to make investments in the port and the SEZ. “He will have to place the formal proposal before the board. He has come here to see what investment opportunities lie in the port and in the SEZ,” sources said.

WBIDC and Bengal Port will make a detailed presentation before the representatives of P&O Developers on Wednesday.

The WBIDC is upbeat on P&O’s interest in the Bengal Port and the SEZ. “This is P&O’s initial visit and the government expects it will translate into real investments,” sources said.

The state government had been trying to develop the SEZ for quite some time now. Almost one-and-a-half years have already passed since the memorandum of understanding was signed on the Bengal Port. “We are happy that P&O, one of the world’s largest shipping companies, with interest in other fields, has shown interest in Bengal. We are optimistic of a positive development,” top-level officials of the state commerce and industry department said.


Calcutta, May 21: 
The West Bengal government suspects five to six urban co-operative banks in the state to have been affected by the government security scam.

The state’s registrar of co-operative societies will conduct an audit of these along with some other urban co-operative banks to determine the extent of loss. But this will take at least a month.

Though most of these banks deny the charge, the state’s registrar for co-operative societies is not convinced. “We have evidence indicating involvement of some of these banks. We cannot take their denial on face value,” a senior official of the registrar of co-operative societies said.

The Reserve Bank of India (RBI) has already scrutinised the books of some of the banks, but its findings have not been reported to the state government yet.

“We are waiting for RBI to file its report with us. We hope to pick up valuable leads from it,” the official said.

The registrar of co-operative societies, however, refused to name the banks. “We are not sure about their involvement yet. Revealing names now could have serious consequences for these banks,” he explained.

The key question, however, is whether or not the government has the political will to debunk the management of the banks involved in the scam, as it may singe the names of political parties and leaders managing them.

Raghuvanshi Bank

The Reserve Bank has recommended removal of the governing board of the Gujarat-based Raghuvanshi Co-operative Bank for having lost Rs 6 crore in the multi-crore government security scam.

The Mumbai Police have already filed a case against the directors of Home Trade for allegedly embezzling Rs 6 crore out of the Gujarat-based bank.

The apex bank asked the registrar of co-operative societies to depose the bank’s governing board and to appoint an administrator, sources in RBI said. So far, the governing boards of three co-operative banks — Nagpur, Wardha and Osmanabad — have been superseded for alleged involvement in the scam.

In a related development, the commissioner of co-operative societies in Maharashtra, Ratnakar Gaikwad said the authorities had completed the audit of about 658 co-operative banks in the state and “gave a clean chit to most of them”.

Gaikwad said as a prudential measure, the registrar of co-operative societies would now seek reports on the non-performing assets, credit-deposit ratio and the financial performance from all the co-operative banks on a monthly basis so that alerts could be generate in advance.


May 21: 
Tata Telecom Limited (TTL) has registered a 31 per cent growth in turnover for the financial year ended March 31, 2002.

The company, a joint venture between the $ 6.8 billion US-based Avaya Group and Tata Group, has posted revenues of Rs 263.16 crore for the current fiscal as against Rs 200.46 crore achieved in the last financial year.

TTL has seen an 87 per cent increase in profits with Rs 15.68 crore for 2001-02, compared with Rs 8.37 crore in the previous year. The board of directors has recommended a 20 per cent dividend at Rs 2 per share for its shareholders.

TTL aims to double its revenues to over Rs 500 crore in the next three years with a 25 per cent year-on-year growth. The company has maintained a steady growth rate of 30 per cent for the past few years.

In view of the demerger of the TataFone division, the results for the fourth quarter ended March 31, pertain only to the business communications division.

TTL has transformed itself into an end-to-end business communications solutions provider and aims to bag the top slot in e-communications solutions in the country.

The company has also emerged as a strong force in the data networking market.

“Over the next three years we will adopt an aggressive approach, maximise call centre opportunities and strengthen our data presence,” vice-chairman Niru Mehta said.

TTL offers solutions for converged voice and data networks, customer relationship management (CRM) and unified messaging. It has a 60 per cent market share of the call centre solutions business.

The company is working on the development of call centre applications involving interactive voice response (IVR), computer telephony integration (CTI) and CRM solutions, involving an investment of around Rs 51.96 lakh.

Another key contributor to the performance of the communications solution provider has been the focus on growth through the indirect channel route. Almost 19 per cent of its business is from indirect channels, while direct channels contribute to 81 per cent of the business. The company aims to further enhance the ratio to 30:70 respectively.

Tata Telecom has successfully leveraged the technological expertise of Avaya in unified messaging, call centres, structured cabling systems and voice communication in the US market.

The Indian promoters have a 25.34 per cent stake in the joint venture while the US firm holds 25.5 per cent. Institutional investors hold 23.4 per cent, while the remaining 25.76 per cent is with the public.

Vysya Bank net up

Vysya Bank has posted a net profit of Rs 68.75 crore for 2001-02, up 78 per cent compared with the previous financial year. The bank plans to enter the area of debit card and internet banking services next month.

The bank’s managing director K. Balasubramanian said total business for the year had been in excess of Rs 16,000 crore. Deposits, advances and investments stood at Rs 8,068 crore, Rs 4,418 crore and Rs 3,597 crore respectively.

He said return on assets has improved from 0.42 per cent to 0.73 per cent, while return on equity has jumped from 5.98 per cent to 10.18 per cent.



Foreign Exchange

US $1	Rs. 48.99	HK $1	Rs.  6.20*
UK £1	Rs. 71.35	SW Fr 1	Rs. 30.50*
Euro	Rs. 45.03	Sing $1	Rs. 26.95*
Yen 100	Rs. 38.98	Aus $1	Rs. 26.80*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 5360	Gold Std (10 gm)Rs. 5235
Gold 22 carat	Rs. 5060	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 8200	Silver (Kg)	Rs. 8210
Silver portion	Rs. 8300	Silver portion	   NA

Stock Indices

Sensex		3186.53		-96.28
BSE-100		1606.00		-39.18
S&P CNX Nifty	1049.20		-25.15
Calcutta	 111.19		- 2.42
Skindia GDR	 540.62		-12.43

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