Sebi to tighten listing norms
IISCO bailout drives wedge in coalition
L&T cement hiveoff later
Palio prods Fiat to ramp up capacity
Thomas Cook eyes chartered flight service
MTNL outpaces rivals in internet access growth
UBI red carpet for blue-chips
Ombudsman reaches rural banks, gets more powers
Ciba FDI plan passes muster
Foreign Exchange, Bullion, Stock Indices

 
 
SEBI TO TIGHTEN LISTING NORMS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 14: 
The Securities and Exchange Board of India (Sebi) is set to tighten listing and delisting norms. The capital market regulator estimates that the market will see about 200 initial public offerings (IPOs) this fiscal.

The market reform measures outlined by Sebi chairman G.N. Bajpai includes tighter delisting norms and the setting up of a central listing authority

Addressing a seminar organised by the Institute of Companies Secretaries of India (ICSI) here today, Bajpai said Sebi is in the process of tracking down the promoters of vanishing firms to improve market sentiment.

Talking about the need to tighten delisting norms, Bajpai said, “Entrepreneurs should not create a situation where investors can neither exit nor get the profits of the wealth created by the company.” A Sebi committee is re-examining the delisting norms and will submit a final report within weeks, he said. “We are working very strongly on various issues including delisting norms for MNCs,” he added.

In favour of a centralised listing authority, Bajpai said, “It is necessary to have a first-entry-point screening of companies intending to raise funds from the market. “The proposed Centralised listing Authority (CLA) will lay down standard listing processes and carry out due diligence before securities are allowed to be listed on any exchange,” he said.

“The proposed authority, would be different from the national listing authority being tried out in the UK. It would be an autonomous body separate from the ambit of Sebi and have representation from stock exchanges”, he added.

Bajpai also said that Sebi and the Department of Company Affairs (DCA) were working together to track promoters of 225 vanishing firms, which raised funds from the capital market and then disappeared. Sebi is in touch with the police to track down the promoters, he said.

“Sebi and DCA are working together to reach out to the promoters of the vanishing companies,” Bajpai said. According to official data, the DCA and the market regulator identified 225 companies which vanished from the market after raising money through IPOs.

Maintaining a tough stance on the erring companies and their promoters for duping investors, he said, “The companies might have disappeared but the people have not, “ he said, adding Sebi has been in touch with the police to track down phantom promoters.

Pavan Kumar Vijay, vice-president of ICSI, suggested that in the proposed CLA, listing and trading should be separated. S.P. Narang, ICSA secretary, said there are one or two stock exchanges in most of the countries, while in India there are 23 stock exchanges which are heavily dependent on listing fees.

Alstom probe

Sebi is examining a complaint alleging insider trading in Alstom Power India’s scrip in December 2001-february 2002 before group firms were merged with it. The investor who filed the complaint has accused the directors of having prior information that Alstom Power Boilers, Alstom Transport and Alstom System would be folded into one and that they profited from it.

   

 
 
IISCO BAILOUT DRIVES WEDGE IN COALITION 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, June 14: 
A major row has broken out between Trinamool leader Mamata Banerjee and her NDA partners over the shoddy way in which the Union Cabinet has dealt with a proposal to revive IISCO and a plan it has cleared to whittle down reservation for jute packaging.

The Cabinet, at a meeting held here earlier this week, cleared only two parts of the Rs 1,400 crore revival package — a Rs 540 crore voluntary retirement scheme to lay off 9,000 workers and shut down of the steel-maker’s Kulti plant.

The “real revival components”, comprising Rs 333 crore of investments, some Rs 200 crore in loan write-offs and Rs 200 crore to take care of future losses, was not cleared.

Steel ministry sources confirmed the government carried out a sleight of hand by agreeing to these “in-principle” without making any budgetary commitments towards these expenses. Instead, it asked SAIL to continue exploring the possibility of roping in TyazpromExpo as a joint venture partner.

If SAIL is unable to prove before the Board of Industrial and Financial Reconstruction that it has done enough or has a workable and serious plan to revive IISCO, at the next hearing of the board slated for July 1, the Burnpur based company may well be shut down altogether.

A furious Banerjee has sought an immediate appointment with Prime Minister Atal Bihari Vajpayee to lodge her complaint against the way the BJP-led government is treating projects in her home state even as it clears revivals in states run by more powerful NDA partners.

Sources point out that in sharp contrast, the loss-laden Vizag Steel has been given several bailouts simply because it is located in TDP supremo Chandrababu Naidu’s home state and an HMT unit in Uttranchal has been saved from closure because it lies in Planning Commission deputy chief K. C.Pant’s area.

Banerjee is doubly furious with Vajpayee as he has disregarded another plea made by her and cleared a plan that seeks to dilute reservation for jute packaging of foodgrain by 60 per cent within a three-year period. The move could sound the death-knell of Bengal’s ailing jute industry.

In two separate letters shot off to the PM, Banerjee has pointed out that most central decisions in the recent past on PSU closures have hit West Bengal. “The maximum number of PSUs have been closed down in Bengal and lakhs of people have become jobless,” she wrote, seeking a revival package for IISCO.

   

 
 
L&T CEMENT HIVEOFF LATER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 14: 
Larsen & Toubro Ltd has temporarily deferred plans to demerge its cement division. “The demerger is being discussed internally in view of the situation related to Grasim Industries picking up a stake in the company,” L&T managing director A M Naik said.

The company has posted a 10 per cent rise in net profit to Rs 346.80 crore in the last financial year from Rs 315.06 crore in the previous year. The total sales and service income at Rs 8358.85 crore was up close to 7 per cent over the previous year. The board has recommended a 70 per cent dividend aggregating an outgo of Rs 174.34 crore.

L&T’s net profit for the fourth quarter ended March 31, 2002 fell to Rs 186.76 crore from Rs 250.40 crore in the corresponding previous quarter. Net sales stood higher at Rs 2,829.03 crore as against Rs 2,479.68 crore in the same quarter previous year.

   

 
 
PALIO PRODS FIAT TO RAMP UP CAPACITY 
 
 
FROM SHASHWATI GHOSH
 
New Delhi, June 14: 
Fiat India is expanding production capacity at its Kurla plant to 75,000 units a year, a move that it has been emboldened to make after the success of its Palio range of hatchback compacts launched last May. The company, which has secured government permission to raise production at its refurbished Kurla plant, is hoping to break even this fiscal with sales of over 50,000 cars .

Fiat India has already made a strong start with sales of 4,200 cars in April that includes about a 100 Sienas, its mid-size sedan that it has recently repackaged.

“Our aim is to sell over 50,000 cars this year to break even. Estimates and research about the market shows that the demand for cars, especially small cars, will be high. After reaching breakeven, we want to be ready for any extra demand that might come our way,” company sources said. He refused to say how much Fiat India would be investing to raise production capacity.

The Palio — which was launched worldwide simultaneously — has revived the fortunes of the company, which was losing money hand over fist with its Uno. The success of the Palio has prompted the company to come out of variants like the Adventure and the Palio Sport. The company has roped in Sachin Tendulkar, India’s heavy-hitting celebrity brand endorser, to plug its Palio variant and now the new Siena.

Recently Fiat launched the sedan version (Siena) and station wagon version (Adventure) from the same platform. It is gearing up to launch Weekend — the estate version of the model.

“The Uno is being manufactured only against bookings. We expect the Adventure and Weekend to do as well since both segments have very few offerings,” he said. Only 150-200 Unos are being manufactured now.

“We should be able to meet our break-even targets and also utilise a part of the excess capacity this year. Next year, we expect a boom. As the Kurla factory is working at optimum capacity, we have already started gearing up the Ranjangaon facility near Pune for production,” he said.

   

 
 
THOMAS COOK EYES CHARTERED FLIGHT SERVICE 
 
 
FROM VIVEK NAIR
 
Mumbai, June 14: 
After venturing into travellers’ insurance, Thomas Cook (India) Ltd, the leading travel and related services company is pinning hopes on an approval from the ministry of civil aviation for its proposed outbound charter services, at competitive, yet “fair and stable” fares.

In doing so, the company is planning to give a tough fight to airlines, which sources say, offer volatile fares based on the demand. “During a lean season fares could be around Rs 25,000 whereas it could be over Rs 70,000 in peak times. However, the company if allowed to operate out-bound charter services will not only offer competitive fares vis-a-vis airlines, but also will be fair and stable,” sources pointed out.

Sources added that Thomas Cook in UK and Germany collectively own the world’s largest leisure airline (charter) fleet of close to 90. While these were earlier operating under different sub brands such as JMC, Condor, Sunworld etc, plans are now on to uniformly brand them.

This issue was also stressed on by senior management of the company at an analysts’ meet yesterday. In a presentation, Ashwini Kakkar, CEO and managing director, Thomas Cook India, said that the company was optimistic about its venture into travel insurance business where returns are high relative to the investment. While the size of this business is pegged at around Rs 4000 crore, Thomas Cook is aims to grab Rs 40 crore.

It recently entered the Insurance market with the launch of TravelCare. In addition it also offers a Personal Accident Insurance and Household Burglary cover with purchase of some of its products. It plans to introduce additional programmes like customised insurance plan for corporate traveller sand insurance cover for students going abroad for studies.

   

 
 
MTNL OUTPACES RIVALS IN INTERNET ACCESS GROWTH 
 
 
FROM SATISH JOHN
 
Mumbai, June 14: 
The internet subscriber base of Mahanagar Telephone Nigam (MTNL) is showing an exponential growth even as its rivals have seen a flat graph.

After providing free internet service to basic telephone subscribers for three months, the basic telephone major has, in a masterstroke, decided to levy a modest sum of 10 paise per minute on its subscribers.

By all accounts, the offer was better than its competitors since, unlike other ISPs, its service was post paid — an MTNL subscriber pays for the service after using it while others service providers charge fees upfront.

Further, the easy manner of subscription — using a telephone connection that is also the password — gives the user a lot of comfort.

Simpler access and billing-after-use has helped MTNL snare Netizens from rivals. Though is too early to announce who wins the ISP sweepstakes, the basic telephony major that runs operations in Delhi and Mumbai claimed a lakh subscribers, spread in both cities.

“We had hardly 35,000 subscribers in March. We have added one lakh and our tally is now 1.35 lakh,” he said.

Industry watchers are unsure whether the growth will be sustained over the long run. While applauding the strategy followed by MTNL to get more users into its fold, they feel it is the free offer that has really hooked people. “Since it will now levy a charge, it is highly unlikely that it will continue to get more subscribers.”

MTNL officials argue that the ease in using the Net is a factor that will help enlist and retain the subscribers. “At Rs 6 an hour, MTNL has got a winner at hand” say analysts tracking the sector. It is still very competitive.”

   

 
 
UBI RED CARPET FOR BLUE-CHIPS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, June 14: 
United Bank of India (UBI), which has turned around this year, plans to lower interest rates for industrial customers and house-building advances. While it will be cutting its prime lending rate from a current 12 per cent to 11.5 per cent, the rate cut offered on actual lending will be worked out depending on the client and could even be higher than half a percentage point.

The Calcutta-based bank is also planning to offer a four metro “any branch banking facility” to its customers, many of whom, are companies with multi-city businesses and have been pointing out a need for this.

UBI chairman and managing director Madhukar told The Telegraph that the bank had worked out a new lending policy based on a risk-weighted interest rate software developed indigenously, which would work out lower interest offerings to blue-chip and near blue-chip industrial customers.

The current loan rates range between a sub-PLR rate of 9.5 per cent for short term loans and a high of 14 per cent for personal loans, but using the new system, which segments customers into four categories assigning them risk weights of 0-4, UBI plans to offer even lower interest rates to woo borrowers back to its fold.

The lowest sub-PLR rate, however, is not likely to fall significantly, rather interest rate offerings to individual customers are likely to be lower or higher depending on current risk perception about them. The bank will focus on existing blue chip accounts as well as scout out “for new accounts which will have to come out of other banks’ folds because of RBI’s new guidelines limiting group and individual account exposures.

Madhukar said he was keen to come out with four new product offerings, which would include one for industrial customers and one for the rural market. “We don’t want to be fashionable — offering multiple products just for the heck of it, instead we want to offer products which we can deliver well and with agility.”

The bank, which had been plagued by high non-performing assets in the past, plans to reduce its NPA levels to 5 per cent from 7.9 per cent. Madhukar said UBI did not plan to sell loss assets to any asset reconstruction company set up by the government. It would rather tackle its NPAs through a twin policy of containment and reduction.

“We have added very little by way of fresh NPAs. This policy of containment will be fine tuned. Also, our policy of going in for out of court settlement with long standing NPA customers will also continue,” he said.

PTI adds: UBI plans an initial public offer by January to raise its capital base and carry out expansions. “We are planning to come out with an IPO by the end of the third quarter. It will depend on our ability to retain the profitability,” he said.

   

 
 
OMBUDSMAN REACHES RURAL BANKS, GETS MORE POWERS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 14: 
The Reserve Bank of India (RBI) has enlarged the ambit of the Banking Ombudsman Scheme to cover all the regional rural banks in addition to all commercial banks and scheduled primary co-operative banks.

The changes announced by the central bank also grant wider authority to the ombudsman. The new scheme came into effect from today. This decision was taken after review of the Banking Ombudsman Scheme, 1995. This was then formulated to provide an expeditious redressal grievance mechanism to bank customers. RBI added that the need to revise and widen the extent and scope of the authority and functions of the banking ombudsman was under its consideration.

Consequently, the new scheme provides for the institution of a “reviewing authority” to review the ombudsman’s award. Here, the central bank pointed out that a bank against whom an Award has been passed, may, with the approval of the chief executive, file an application to the deputy governor-in-charge of the rural planning and credit department of the RBI to seek a review of the award. “The bank can request for such a review only when the Award appears to the patently in conflict with the bank’s instructions and/or the law and practice relating to banking,” it noted.

RBI said that the scheme has been revised to enable the banking ombudsman to function as an arbitrator on references to him of disputes either between banks and their customers or between two banks. The value of the subject matter of individual disputes under arbitration will not exceed Rs 10 lakh.

However, the adjudication of pending complaints and execution of the awards already passed before coming into being of the Banking Ombudsman Scheme, 2002, will continue to be governed by the provisions of the 1995 scheme.

The banking ombudsman attempts to resolve customer complaints by settlement through agreement, recommendation for settlement and/or by passing an Award. At present, there are 15 offices of the banking ombudsman across the country.

Banks’ performance

Meanwhile, the RBI today said it was happy with the 19 nationalised banks which posted a 132 per cent growth in net profit while reducing their non-performing assets during the last fiscal.

“I am happy with the performance of the banks,” RBI governor Bimal Jalan told reporters after meeting finance minister Yashwant Sinha in New Delhi.

The cumulative net profits of 19 nationalised banks surged by 132 per cent to profit at Rs 4,860 crore in 2001-02, with erstwhile weak banks —Indian Bank, Dena Bank, UBI and Uco Bank —posting an over-impressive growth.

   

 
 
CIBA FDI PLAN PASSES MUSTER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 14: 
The government today cleared the Rs 71.58 crore proposal by Swiss company Ciba Speciality Chemicals Holdings Inc to raise its foreign stake in its Indian arm from 40 per cent to 89 per cent. The Goa-based firm makes speciality chemicals consisting of additives, dyes and chemicals.

The proposal was among the 36 foreign direct investment proposals worth Rs 245 crore, cleared by commerce minister Murasoli Maran, on the basis of recommendations made by Foreign Investment Promotion Board (FIPB).

The committee also cleared Mauritius-based GE Plastic’s Rs 25 crore proposal to raise its stake in its Indian arm from 50 per cent to 100 per cent. Based in Gurgaon, the plant makes polycarbonated sheets and industrial plastics.

UK-based Rio Tinto Minerals Development Limited has been permitted to increase its stake in its Indian operations from 75 per cent to 85 per cent with a capital infusion of Rs 20 crore.

The International Finance Corporation has been allowed to convert debt worth Rs 24 crore into equity in Mumbai-based Schoolnet India Limited. Schoolnet offers K-10 programmes for school children from kindergarten to Class X. The debt conversion will be in accordance with the FCCB guidelines and Sebi pricing norms.

German company Enercon GMBh’s Rs 26 crore proposal to set up a 21 mw wind power project in Karnataka was also cleared.

The Rs 1.47 crore proposal of Japanese watch maker Citizen Watch Company and Citizen Trading Co to increase equity in the local subsidiary, Citizen Watches to 75 from 51 per cent was also cleared.

The Rs 12.84 crore proposal by Singapore-based PSA Marine Pte Ltd, for providing comprehensive port management and marine services was also cleared.

UK-based Kimpals Ltd has been allowed to invest Rs 10 crore to increase its stake in its Indian arm from 98 per cent to 100 per cent.

German air and sea freight forwarding company Schneker AG got approval to hike stake in its Indian unit, Schneker International by investing Rs 3.71 crore. Other proposals cleared were; German firm Thvssenkrupp Elevator AG’s proposal to invest Rs 25.05 crore in its Indian subsidiary. Korean firm Dong-a Hwa Sung’s Rs 5.70 crore proposal to set up a wholly-owned subsidiary for manufacturing automobile rubber parts, was cleared.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 49.01	HK $1	Rs.  6.20*
UK £1	Rs. 72.26	SW Fr 1	Rs. 30.90*
Euro	Rs. 46.45	Sing $1	Rs. 27.10*
Yen 100	Rs. 39.45	Aus $1	Rs. 27.35*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5370	Gold Std(10 gm)	Rs. 5230
Gold 22 carat	Rs. 5070	Gold 22 carat	NA
Silver bar (Kg)	Rs. 8325	Silver (Kg)	Rs. 8275
Silver portion	Rs. 8425	Silver portion	NA

Stock Indices

Sensex		3312.07		+  0.91
BSE-100		1692.89		+  5.44
S&P CNX Nifty	1085.70		+  2.85
Calcutta	 118.18		+  0.18
Skindia GDR	 534.35		-  0.47
   
 

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