No dividend for holders of US-64
Escape hatch for investors
Handsome pay hike for Maruti MD
Weekend Air-India flight to Heathrow
Fitness manual for bank directors
Govt vows to refund taxes by July 15
JM Baxi in pact with Dubai Port for Vizag terminal
Ranbaxy to make childhood disorder drug
Microsoft Office XP in Bengali
Foreign Exchange, Bullion, Stock Indices

 
 
NO DIVIDEND FOR HOLDERS OF US-64 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 21: 
The Unit Trust of India (UTI) board today bit the bullet, taking the unpopular, but inevitable, decision to deny investors of US-64 a dividend.

This is the first time the flagship scheme will not give its investors an annual return since it was floated 38 years ago. Even in 2000-01, when the scheme was in crisis, the board had announced a 10 per cent dividend.

The announcement will come as a brutal blow to millions of unit-holders who have counted on the US-64 dividend to keep themselves going. However, many observers had seen the move coming. A decision the other way would have forced the government to pick up the tab.

For M. Damodaran, the UTI chief on a salvage mission, and the board members who went into a huddle today, there was no other alternative but to skip dividend this year. Not doing so would have pushed up the Centre’s budgetary commitment substantially.

The usually affable Damodaran did not speak to waiting reporters immediately after the meeting, but explained the outcome a little later. Then, the Trust put out a terse statement, saying what had been widely feared.

The dividend drought is expected to spark a fresh wave of selling. Most unit-holders who stayed with the scheme did so in the expectation of a dividend. They may sell at least a part of their holding to shore up their income, analysts said. This would especially be the case for retirees, who depend solely on dividend income.

The UTI release was silent on the MIP schemes up for redemption. Analysts were surprised at the timing of the announcement on skipping the US-64 dividend. The UTI board usually decides on such issues on June 30. Some said it could have been done to soften the impact.

“The flagship scheme is a net asset value-based (NAV) based scheme and there is no sanctity attached to announce any dividend.

“Whenever the performance of the scheme improves, the board can revisit the dividend,” Damodaran told reporters here tonight.

On how the shortfall in two schemes — monthly income plan 1997 (ii) and special institutional investors scheme — would be met, Damodaran said UTI would use a credit line of Rs 1,000 crore from State Bank of India on the back of a guarantee given by the Union government.

He also announced that the accounting year would become Sebi-compliant by March 2004. The US-64 corpus is said to be around Rs 12,582.84 crore.

   

 
 
ESCAPE HATCH FOR INVESTORS 
 
 
FROM SATISH JOHN
 
Mumbai, June 21: 
Small investors of US-64 who have seen their money melt away can win back some of their lost fortune with a little ingenuity and some patience.

At this point in time, a maximum of 5000 units can be repurchased under the limited redemption facility. Assuming these are sold, an investor can buy as many units at Rs 6.50 — pegged close to its net asset value. They can pocket the difference, or buy more units with it.

Analysts reckon the gap per unit would be close to Rs 4.50 per unit. Since Unit Trust has decided to skip a dividend, investors would rather retain the difference than go in for more units that offer little in the near future. The investor will gain at the government’s expense.

However, there are others who feel unit-holders would lose out in the bargain. An analyst tracking mutual funds said investment in US-64 should be seen as a fixed deposit.

Actually, it is like a cumulative deposit that appreciates 10 paise every month till May 2003, when the repurchase value of US-64 would be Rs 12.

Investors who exit and re-invest can forget about dividends as mutual fund regulations allow returns only if the corpus is positive. “This is not the case in US-64.”

With a dividend drought this year, most agree that it would be better to remain invested. “At least, you are sure the principal will fetch decent returns,” an analyst said. The government bailout announced in August last year would shield around 99 per cent of unit-holders, who were covered by the Unit Trust’s decision to enhance the repurchase limit from 3,000 units to 5,000 units. The mutual fund major and the government took several pre-emptive measures to quell the panic that followed the announcement of US-64’s abysmal net asset value.

   

 
 
HANDSOME PAY HIKE FOR MARUTI MD 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 21: 
Jagdish Khattar is getting a three-fold salary hike—and a three-year extension of his tenure as managing director of Maruti Udyog, the country’s largest carmaker.

Khattar, whose tenure ends later this year, is being handsomely rewarded for steering the carmaker out of the red and logging a profit of Rs 55 crore in 2001-02 after a brutal round of cost-cutting and slashing about 19 per cent of the company’s workforce through a voluntary separation package last year.

In 2000-01, Maruti Udyog had plunged into the red—the first time in its 18 years of existence—when it registered a loss of Rs 210 crore, brought on by a drastic slump in demand.

Although company sources refused to speak about the latest developments, it is believed that Khattar’s pay cheque will swell from Rs 30 lakh to over Rs 90 lakh. With graded performance bonuses, it could rise to as much as Rs 1.02 crore, which would put the Maruti MD among the 15 best-paid CEOs in the country.

Khattar will now rub shoulders with M.K. Sharma, vice-chairman of Hindustan Lever who gets a cheque of Rs 110.44 lakh, D.S Brar, CEO of Ranbaxy, who earns Rs 108.34 lakh and ICI Paints managing director who gets Rs 114.66 lakh.

At the top of the totem pole is Vivek Paul, vice-chairman and executive officer of Wipro, who earns Rs 402.24 lakh.

Maruti Udyog, which is now being controlled by Suzuki Motor Corporation of Japan after the government gave the Japanese company another 4 per cent stake in exchange for a Rs 1,000 crore control premium in April, isn’t limiting the pay hike to Khattar alone.

Sources said, “The pay package of the joint managing director and other directors of the company have also been hiked. But the pay rise will not be across the board and does not affect the smaller employees.”

Khattar had been lobbying for a pay hike for the past two years but his application had been turned down by heavy industry minister Manohar Joshi.

The pay hike was approved after Suzuki Motors took control of Maruti Udyog. Even though the government still holds a 46 per cent stake in the company, its consent is no longer required in administrative decisions like executive pay hikes.

One reason why the government had been stalling on a pay hike at Maruti Udyog was to pre-empt a situation where the CMDs of other public sector units would clamour for pay rises as well.

The government had four nominees on the Maruti board and had the right to appoint the managing director and chairman by rotation.

After handing over management control to Suzuki Motor, the government will be allowed to appoint just two nominees to the Maruti board.

The next step for Maruti will be to restructure some of its long-term outstanding debts. Maruti has Rs 440 crore of long-term debt from the Indian bankers which it took during the financial year 2000-01 to build its third production line. At that time, the loans were taken for a period of five years with the repayments due in 2005-06.

The company, which will receive an immediate cash injection of Rs 400 crore following the rights issue, is expected to use a portion of the funds to retire some of its debts. The rest will be used to introduce new vehicles.

The government has already announced that it plans to reduce its stake in Maruti Udyog to 45.4 per cent from 49.7 per cent at present.

Thereafter, the government will offload its remaining equity through public offer in two tranches by April 2004.

   

 
 
WEEKEND AIR-INDIA FLIGHT TO HEATHROW 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, June 21: 
Britain has relented in the face of persistent Indian demands for more time slots and allocated two slots that will allow Air-India to operate a weekend flight to Heathrow.

An Indian team led by civil aviation minister Shahnawaz Khan, which is still in London negotiating more flights between the two countries, has managed to wrest the time slots as a kind of pre-talk sweetener.

India has long been arguing that mere additions to the number of flights would not help as issues like time slots and landing rights at Heathrow were equally important. In fact, so important does India consider this issue that Indian premier Atal Bihari Vajpayee raked up it up at a meeting with his counterpart Tony Blair in New Delhi.

The British authorities, on the other hand, had been arguing that these were awarded by independent authorities and could not be issues for government-to-government talks.

In fact, British officials had always been keen to try shift all new flights to airports like Gatwick and away from the main airport Heathrow, a move that India resented. British Airways currently flies some 18 flights a week to India, including seven each to Delhi and Mumbai and two each to Calcutta and Chennai. The airline is keen on getting another four to five flights and possibly landing rights at Bangalore too.

Its British rival, Virgin, flies twice a week to India using A-I’s unused allotments and also wants a share in any new bilaterals awarded to Britain.

Air-India, on its part, wants to increase its number of flights to about 14 a week from the current 11 by this winter when it would have taken on board new leased planes, and later increase this number to 21 in a couple of years.

While it does not need to get more flights through the bilateral route for this winter’s schedule as it has still to fully use up its allotment of 16 flights a week, it will need to get them for its planned increase within a period of two years.

   

 
 
FITNESS MANUAL FOR BANK DIRECTORS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 21: 
The Reserve Bank of India (RBI) has asked banks to ensure a good blend of “historical skills” when they elect or co-opt directors on their board.

The advice is part of the central bank’s recommendations, based on suggestions made by the consultative group of directors on banks and financial institutions (FIs).

The RBI circular issued to banks today said the aim should be to represent sectors like agriculture, small-scale industry, co-operative, apart from tapping skills in marketing, technology and systems, risk management, strategic planning, treasury operations, loan recovery.

On the responsibilities of the board of directors, the RBI outlined four major areas: overseeing the risk profile, monitoring the integrity of business and control mechanisms, ensuring the expert management, and maximising the interests of its stakeholders.

The board said the responsibilities should be well-defined and directors should be made familiar with the functioning of the bank before they don the mantle.

He should also be made aware of the delegation of powers to various authorities by the board, strategic plan of the institution, organisational structure, financial and other controls and systems economic features of the market and the competitive environment.

The RBI feels independent/non-executive directors have a prominent role to play in creating and sustaining a pro-active governance framework.

In order to acquaint them with the operational environment, a brief note on the profile of the bank can be circulated among the new batch of directors. That should also specify the sub-committees and their roles, the delegation of power and profiles of top executives.

“It would be desirable for banks to get an undertaking from each independent and non-executive director to the effect that he/she has gone through the guidelines defining the role and responsibilities and enter into a covenant to discharge his/her responsibilities to the best of abilities, individually and collectively,” the circular issued by the central bank said.

The Reserve Bank wants directors exposed to modern managerial techniques and styles, technological development in banks and financial markets and risk-management systems to discharge their duties.

On the issue of transparency, the central bank said reviews of performance can be put before the board’s management committee. Only a summary of these reviews at regular intervals would be enough for the board. That would give the board more time to concentrate on strategic issues such as risk profile, internal control systems and the bank’s overall performance.

Banks have been told to keep directors updated on the progress made in introducing a progressive risk management system regularly.

Other items that have to be reported are exposures to related entities, including details of loans/investment made in subsidiaries. These should be accompanied by an asset classification.

Since banking is turning more complex and competitive by the day, the RBI feels the composition of the board should be commensurate with banks’ business needs. “There is an urgent need for making the boards of banks more contemporarily professional by inducting technical and specially qualified personnel.”

   

 
 
GOVT VOWS TO REFUND TAXES BY JULY 15 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 21: 
The Central Board of Direct Taxes (CBDT) will refund all pending amounts due to the salaried class by July 15. Higher revenue collections between April-June has prompted the government to take such a step.

“I have instructed all field officers to clear the refunds by July 15, specially to the salaried class,” said CBDT chairman P.K. Sarma. He added that the ongoing computerisation drive in the department would expedite the clearance of refund cases. The move is a part of CBDT’s effort to facilitate taxpayers and ensure higher tax compliance. Sarma also said the tax department had expedited the computerisation drive to ensure correct assessment of the tax and refunds.

Speaking on the sidelines of a seminar on TDS organised by the International Fiscal Association, Sarma said computerisation would not only help paying refunds in the case of TDS but also facilitate the checking of income-tax returns.

Sarma said, “We will widen the scope of TDS. In future it will be our thrust area because it is very important to our total revenue collections.” The entire collection of taxes by the CBDT is in a 40:60 ratio, where 40 per cent is from the TDS collection and the remaining 60 per cent is the personal collection, he added.

Asked to comment on a recent Delhi high court order quashing the government’s circular in 2000 waiving capital gains tax for foreign financial institutions that route investments via Mauritius, Sarma said, “We are examining the order passed by the high court. We have sufficient time to decide on what way we should proceed.”

Sarma added that advance tax collections was better in the initial months of this fiscal.

   

 
 
JM BAXI IN PACT WITH DUBAI PORT FOR VIZAG TERMINAL 
 
 
BY A STAFF REPORTER
 
Calcutta, June 21: 
JM Baxi & Co, one of the largest cargo handling agents in the country, have joined hands with Dubai Port Authority to set up a Rs 200-crore terminal in the eastern port of Visakhapatnam.

JM Baxi & Co will hold 74 per cent in the project, with Dubai Port Authority holding the remaining 26 per cent. The equity base of the company is Rs 55 crore.

Krishna B. Kotak, managing director of JM Baxi & Co, said the terminal will be a deep draughted one with a capacity of one million TEUs (20 equivalent units). He was in the city to address the 64th annual general meeting of the Calcutta Freight Brokers Association.

“Transhipment will become easier once the terminal comes up. The ships will not have to go to Singapore or Columbus for transhipment,” Kotak said.

Visakhapatnam is India’s top cargo handler in terms of volume, but it is mainly a bulk cargo port. It is served by 12 mainline container operators, including Morasia Line, APL, Maersk Sealand, Hyundai Merchant Marine Co, P&O Nedlloyd, Pacific International and Shipping Corporation of India.

Addressing the AGM, Vijay Kumar Chhajer, chairman of the Calcutta Freight Brokers Association said that there are some inherent deficiencies affecting the Calcutta and Haldia ports. The most important drawback is that ships often have to wait in the channel for want of berthing as draft restrictions in the navigation channel do not allow bigger vessels to be berthed.

   

 
 
RANBAXY TO MAKE CHILDHOOD DISORDER DRUG 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 21: 
New Jersey-based Ranbaxy Pharmaceuticals Inc (RPI), the wholly-owned subsidiary of Ranbaxy Laboratories Ltd, has received an approval from the US Food and Drug Administration (FDA) to manufacture and market a drug that combats attention deficit disorder among children.

Ranbaxy will produce and market the drug — a clone of the drug named Adderall manufactured by Shire US Inc — in an alliance with CorePharma LLC of Middlesex, New Jersey.

The two companies have received FDA approval to manufacture and market the fixed combination of drugs. which is the bio-equivalent to the innovator product, Adderall.

Total sales for Adderall in the US amounted to approximately $350 million, representing 8.9 per cent of the Attention Deficit Disorder (ADHD) market.

Ranbaxy plans to launch this product shortly in the US through wholesalers, distributors and retail pharmacies.

CorePharma LLC is the holder of the ANDA for this generic version of Adderall, while Ranbaxy Pharmaceuticals Inc has exclusive marketing and distribution rights to market this product in the US.

The drug is a combination of Dextroamphetamine Saccharate, Amphetamine Aspartate, Dextroamphetamine Sulfate and Amphetamine Sulfate tablets in 5mg, 10mg, 20mg and 30mg dosage forms.

This combination drug, is indicated for the treatment of Attention Deficit Disorder (ADHD), most commonly diagnosed as a childhood disorder. This product is an integral part of a total treatment programme, which typically includes other remedial measures (psychological, educational, social) for a stabilising effect in children with behavioural problems. The disorder is characterised by moderate to severe distractibility.

   

 
 
MICROSOFT OFFICE XP IN BENGALI 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, June 21: 
Microsoft India is developing the Bengali language version for its Office XP suite of products.

Speaking on the initiative, program manager localisation, Raveesh Gupta said, “We are in the advanced stages of development of the Bengali version of Office XP and expect to release it sometime in the next financial year (July 2002-June 2003).” Microsoft had released the product with versions in nine Indian languages in August last year.

The global IT products major is also working on versions in Oriya and Malayalam. The version in the Assamese language will be a derivative of the Bengali version. “The main issue with Indian languages is standardisation. Within a language, there are a number of variants in use. This is a deterrent towards development of the keyboard and list set,” says Gupta.

Office XP is available in 40 foreign languages including Arabic, Chinese, Dutch, French, German, Hebrew, Japanese, Korean and Russian.

Gupta says that Microsoft has received a formal request from the Bengal government and the West Bengal Electronics Industry Development Corporation (Webel). The version will be used to take information technology to the masses through the West Bengal state-wide area network (WBSWAN).

The version in Indian languages provides support and advanced enablement across the entire office suite of applications. Besides, Office XP also has a converter built into it to help users of different languages communicate on a common platform. The company has a ‘proofing list’ for all 48 scripts that acts as the base for its localisation program.

Microsoft’s localisation program aims to cater to the growing demand for local language software solutions, which is pegged at more than Rs 100 crore.

“The multilingual computing market has been given a boost by the various e-governance projects adopted by the state governments and the increase in PC penetration and internet usage,” says Gupta.

The major users of multilingual solutions are the government, printing and publishing and educational institutes.

The solutions have been used in the fields of data processing, accounting, banking, broadcasting and internet applications.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.91	HK $1	Rs.  6.20*
UK £1	Rs. 73.18	SW Fr 1	Rs. 31.65*
Euro	Rs. 47.18	Sing $1	Rs. 27.20*
Yen 100	Rs. 39.90	Aus $1	Rs. 27.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5435	Gold Std (10 gm)Rs. 5320
Gold 22 carat	Rs. 5130	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 8350	Silver (Kg)	Rs. 8320
Silver portion	Rs. 8450	Silver portion	   NA

Stock Indices

Sensex		3242.75		-21.27
BSE-100		1653.28		- 8.15
S&P CNX Nifty	1062.55		- 7.50
Calcutta	 117.46		- 0.48
Skindia GDR	 512.70		- 5.11
   
 

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