Plan to plug US-64 exodus
Telco on course with Rs 28cr net
Modis up ante in Xerox case
Banks, FIs meet next week to decide on Daewoo fate
EIH enthralled by Amarvilas charm
Grasim posts marginal rise in net
Satyam net drops 11% to Rs 108 crore
Tinplate draws up plan to double its capacity
TCS gameplan to achieve growth targets
Foreign Exchange, Bullion, Stock Indices

 
 
PLAN TO PLUG US-64 EXODUS 
 
 
FROM SATISH JOHN
 
Mumbai, July 25: 
The finance ministry and the Unit Trust of India (UTI) are devising a plan to keep existing investors tied to US-64 after the piecemeal redemption offer for those holding up to 5,000 units ends in May 2003.

The assured price for 5000 units will peak at Rs 12 in May 2003; those who want to sell over 5000 units in May next year will be offered either the net asset value (NAV) or Rs 10, whichever is higher.

In a re-run of the present arrangement under which the assured price goes up by 10 paise every month, UTI could draw up a plan where the units appreciate at a given rate every month from a base of Rs 10 — starting June 2003.

The exercise would require the government to continue supporting unit-holders of US-64. It has so far incurred a cost of Rs 350 crore to pay for the difference between the net asset value of units and the assured price.

Sources say there are several reasons why UTI has been forced to look at the situation beyond May next year, when skittish investors who will be allowed to sell units thereafter only at the NAV — quoted around Rs 6 now — besiege the Trust with redemption requests.

The fear is greater because few experts expect the NAV to improve from the current levels in the face of a stock slump and bleak chances of a rebound on bourses.

The turmoil in overseas markets and mounting concerns over a drought that could be the worst in over a decade have squelched hopes of a long-term rally in markets. That would limit chances of a dramatic recovery in the net asset values of US-64, a scheme whose investment portfolio is skewed towards equity.

More important, investors are likely to cash out of a scheme that stripped them of their regular dividend this year, unless there is a dramatic recovery in its worth.

There are other reasons why another plan will have to be drawn up by UTI and government, which may have to fork out more than what it has already doled out.

Not offering investors an incentive to stay with the scheme will force UTI to sell its equity holdings in blue-chips like ITC and Reliance by April-May. If that were to happen, it will send bourses into a tailspin and lead to adverse consequences for other market players too.

A rapid-fire stock sale might not smoothen out the wrinkles for UTI, which will have to haggle with buyers to get a decent price for its shares in firms like ITC. It has so far been fetching a premium on sale of these stocks.

For holdings of over 5,000 units, a repurchase facility linked to the NAV is available from January 2, 2001. If redeemed before May 31, 2003, the redemption will be at NAV-based prices. For less than 5,000 units, the assured repurchase price for May 2003 is Rs 12 per unit.

UTI manages around Rs 49,655 crore — which was the market value of funds under management on June 28 — invested by 28.96 million investors in its 72 schemes.

Redemption rush

At Rs 3,658 crore, UTI’s redemptions were 15 times its sales in June, the Association of Mutual Funds in India (Amfi) said. Sales were pegged at Rs 243 crore. The total outgo was around Rs 5,297 crore due to redemption of units on maturity of some schemes.

Total assets under the management of all mutual funds stood at Rs 1,00,703 crore in June against Rs 97,953 crore same time last year.

   

 
 
TELCO ON COURSE WITH RS 28CR NET 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, July 25: 
Tata Engineering and Locomotive Company (Telco) remained on course, announcing a widely expected first-quarter net profit of Rs 28.03 crore against a loss of Rs 98.9 crore same time last year.

Total revenues were pegged at Rs 2087 crore, a rise of 23 per cent over Rs 1697 crore in the same period last year. According to the company, sales of commercial vehicles increased 45.7 per cent to 21,376 during the quarter from 14,694 in the same period last year. This, Telco claimed, took its market share to 55 per cent from 52 per cent.

On the other hand, the company sold 17,591 passenger vehicles — which translates into a share of 11.5 per cent in this segment. Indica ended the quarter with total sales of 11,905 units, though volumes were affected by problems in Tata Sedan and the power crisis at its Pune plant in late May. However, in June, Indica emerged as the leader of the segment with a sales figure of 7,056, Telco said.

On the bottomline boost, Telco said this was achieved through an improvement in operating profit of Rs 75 crore and a reduction in interest cost of Rs 22 crore. Its operating margin increased to 11.5 per cent, helped by buoyant volumes, better product mix and cost savings.

Most analysts had been looking forward to a profit of Rs 20-30 crore. “The company’s results is in line with our expectations,” an analyst from a domestic brokerage said.

However, the numbers did not impress the markets, where the Telco stock finished lower after hitting highs earlier in the day. The slide was blamed on the possible impact poor monsoons would have on firms. The stock, which opened at Rs 143 and scaled the day’s high of Rs 146.90, ended at Rs 141.95. There were 7322 deals, generating a turnover of Rs 24.02 crore.

Telco had been suffering losses for seven straight quarters until December 2001, hobbled by tough conditions in the automobile industry, particularly its bread-and-butter commercial vehicles business.

The company brought down its net loss to Rs 53.73 crore in the financial year ended March 31, 2002 against Rs 500.34 crore in the corresponding period last year. No dividend was recommended because of the loss.

The company said it had incurred a capital expenditure of Rs 237 crore in the three months to June. At the same time, an amount of Rs 560 crore from the rights issue was used in repaying borrowings.

Tata Power profit

Tata Power Company Ltd has posted a net profit of Rs 83.73 crore for the quarter ended June 30, 2002 as compared with Rs 86.57 crore for the quarter ended June 30, 2001. Total Income has increased from Rs 963.44 crore in January quarter of 2001 to Rs 1070.13 crore in the quarter ended June 30, 2002.

   

 
 
MODIS UP ANTE IN XEROX CASE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 25: 
The Modis, who have been lying low since Xerox Corp of the US alleged that bribes had been paid to win government contracts when the Indian partner managed affairs at the digital imaging company, have forced the Xerox ModiCorp board to appoint Ernst & Young as internal auditors to trawl the company’s books and determine the truth about the allegations.

The Modis have been particularly upset over a PricewaterhouseCoopers report that said ‘improper payments’ had been made to four fictitious companies when the Modis ran the company. This raised questions about whether the bribes had been paid at all.

The appointment of Ernst & Young will allow for an independent examination of the PricewaterhouseCoopers (PwC) report. E&Y is the statutory auditor of SpiceCorp.

Xerox Corp’s admission about the bribes was made in late June to the Securities and Exchange Commission (SEC), the US market regulator, as part of a filing relating to accounting shenanigans there.

SpiceCorp believes that in order to correctly ascertain the facts relating to the alleged “improper payments” it is important that the audit be conducted immediately.

In a statement issued today, SpiceCorp said it was concerned about the allegations made against the SpiceCorp nominees on the XMC board. It said that to get to the truth behind the aspersions, SpiceCorp had also asked the internal auditor to look into XMC’s records and transactions and ascertain who was responsible for making and authorising payments to the government officials.

“We wish to arrive at the truth and are committed to fully co-operate with the government. In the national interest, I hope that the investigation is completed at the earliest and persons responsible for the current situation are brought to task immediately so that SpiceCorp’s image remains untainted,” said SpiceCorp chairperson Veena Modi.

“After coming to know the findings of the PwC report, SpiceCorp is keen to find out who is involved in these alleged payments,” the statement from SpiceCorp said.

A SpiceCorp spokesperson said Ernst & Young was appointed to examine the PwC’s report in which there is a reference to improper payments made by XMC to the tune of $ 70,0000 in the year 2000 alone.

The PwC report is a comprehensive one relating to Xerox Corporation, including the Indian operations.

Xerox Corp is a 68 per cent shareholder in Xerox ModiCorp and claims to have put a stop to the bribe-giving culture at the local subsidiary soon after it took charge in August 2000.

Peer review of an auditor’s report is rare and occurs when there are serious differences and lack of trust between the two partners in a joint venture. “If there is a doubt about the job of a previous auditor, then in special circumstances another auditor can be brought in to look into the accuracy of report filed by the previous auditor. It is certainly not a normal practice,” said N. D. Gupta, past president and council member of The Institute of Chartered Accountants Of India (ICAI) and a practising accountant.

SpiceCorp, which till 2002 was known as ModiCorp, has an 18 per cent stake in Xerox ModiCorp. Other associate companies of the Modis have a 7 per cent stake in XMC. The public holds about 7 per cent. SpiceCorp is involved in various businesses covering the full range of telecommunications, the internet, and IT.

“The board and company is completely independent of the other Modi group companies in terms of management, investments and shareholding,” according to Preeti Malhotra, company secretary of SpiceCorp.

   

 
 
BANKS, FIS MEET NEXT WEEK TO DECIDE ON DAEWOO FATE 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, July 25: 
A consortium of banks that lent money to troubled car-maker Daewoo Motors India will be meeting next week to decide whether they need to invoke the new securitisation ordinance which allows bankers to take over assets of corporations which default in loan paybacks.

Bankers led by the State Bank of India lent about Rs 400 crore in working capital to the Korean car company’s Indian arm, while financial institutions led by IDBI lent a whopping Rs 900 crore.

Daewoo has been talking to banks on several alternative restructuring packages which have involved various kinds of interest moratorium or waiver plans but the bankers have yet to agree, claimed banking sources.

Indian Overseas Bank chairman S.C. Gupta said here today that all banks which were part of the consortium would abide by any decision taken at next week’s meeting and “would be looking at the lead banker for guidance.”

The financial institutions who have more money at stake have already approached the Debt Recovery Tribunal, a cumbersome legal process which could take several years to end.

However, the new securitisation law, if invoked can see the banks and FIs taking over the carmakers assets without much ado.

Daewoo Motors India , which has a paid up capital base of Rs 792 crore, had run up accumulated losses of Rs 390 crore as of March-end, 2001. With further losses of about Rs 212 crore in the first half of financial year 2002, its capital has eroded by about 76 per cent. However, it is estimated that it has assets cost about Rs 3,000 crore to set up.

Global wire services had earlier reported that the carmaker had managed to get capital assistance from the Korean Development Bank to tide over its troubles. However, bankers here said they have yet to get back loans paid.

The bankers and FIs would also like to be taken on board in case Daewoo considers hawking its assets or leasing them to a rival automobile manufacturer so as to be able to get a charge on receipts.

Daewoo still has about 11,00 workers on its rolls down from an initial 1,750 and a has plant with a capacity to make 72,000 cars annually.

   

 
 
EIH ENTHRALLED BY AMARVILAS CHARM 
 
 
BY ANIEK PAUL
 
Calcutta, July 25: 
EIH Ltd, the company that manages the Oberoi chain of hotels, has acquired majority control in Amarvilas, Agra.

Standing barely 600 metres from the Taj Mahal, Amarvilas is said to be one of the best hotels in the world.

EIH increased its holding in Mumtaz Hotels Ltd—the company that owns Amarvilas—to 60 per cent, investing Rs 29.71 crore. EIH formerly held a 35 per cent stake in the company, but managed the property.

Mumtaz Hotels was promoted by one Bharath Bhushan Goyal, who however, continues to be the managing director of the company. It was known as Goyal’s International Hotels and Resorts Ltd, till EIH acquired a majority stake in it, and turned it into a subsidiary.

The Oberoi family scions—Vikram and Arjun—have been appointed as additional directors of Mumtaz Hotels, following the change of guard. The two are directors on the board of EIH as well. P.R.S Oberoi—the chairman of EIH—holds the same post in Mumtaz Hotels.

Amarvilas shot to prominence last year when Pakistan President General Pervez Musharraf stayed at the hotel during his three-day summit with Prime Minister Atal Bihari Vajpayee.

Amarvilas stands out for its architecture. It has 106 rooms and suites. All of them, and even the lobby, bar and the tea lounge, offer views of the monument.

Despite being an outstanding property, Amarvilas posted a loss of Rs 5.3 crore in 2001-02. Its income during the year was Rs 8.76 crore, of which about Rs 4.8 crore was in foreign currency.

The management of Mumtaz Hotels attributes the loss to the fall in tourist arrivals following the attack on the World Trade Centre and the December 13 attack on the Indian Parliament. Tourist inflow fell by 4.2 per cent in 2001, whereas it had recorded a 6.7 per cent growth in 2000.

   

 
 
GRASIM POSTS MARGINAL RISE IN NET 
 
 
OUR BUREAUX
 
July 25: 
Bogged down by exceptional items that included loss on sales of investment and loss on closure of its Mavoor unit, Grasim Industries Ltd recorded a marginal rise of 3 per cent in net profits of the current fiscal year ending June 30. Net profits rose to Rs 105.4 crore against Rs 102.2 crore in the same period of the previous year.

During the quarter, the company made excess provision for income tax of earlier years written back to the tune of Rs 68 crore. This apart the loss on sales of investment, closure of its Mavoor plant, sale of textile division (Gwalior) and employees separation cost stood at Rs over Rs 151 crore. Net turnover was virtually flat at Rs 1135.5 crore over Rs 1117.2 crore, a mere growth of 1.6 per cent.

HDFC net up 20%

The Housing Development and Finance Corporation Ltd (HDFC) has posted a 20 per cent rise in net profit for the first quarter ended June 30, 2002. Net profit rose to Rs 137.30 crore against Rs 114.06 crore for the corresponding period last year.

Loan approvals of the corporation during the quarter amounted to Rs 2104.62 crore against Rs 1593.12 crore in the same period last year, a growth of 32 per cent. Loan disbursements during the period amounted to Rs 1607 crore over Rs 1225.43 crore, an increase of 31 per cent.

Approvals and disbursements in respect of individual loans increased by 35 per cent and 37 per cent during the quarter. HDFC’s income from operations rose to Rs 702.88 crore over Rs 633.07 crore last quarter.

Moser Baer

Moser Baer India Ltd has posted a net profit of Rs 55.29 crore for the quarter ended June 30, 2002 as compared with Rs 45.38 crore for the quarter ended June 30, 2001. Total Income has increased from Rs 146.13 crore in January quarter of 2001 to Rs 193.75 crore in the quarter ended June 30, 2002.

Cadila Healthcare net up

Cadila Healthcare has posted a 2.9 per cent growth in net profit for the quarter ended June 30, 2002 at Rs 19.29 crore over Rs 18.75 crore in the same quarter last year.

Net sales were up by 17 per cent to Rs 167.8 crore during April-June 2002-03 from Rs 143.7 crore a year earlier. Revenues from exports grew by 38 per cent year-on-year to Rs 27 crore from Rs 19.5 crore.

ITH net at 84 lakh

International Travel House Ltd (ITH) has posted a net profit of 84 lakh in the first quarter ended June 30, 2002. The company declared a 10 per cent dividend for.

For the first quarter, profit before tax was Rs 1.41 crore In the first quarter, the company had an income of Rs 8.73 crore, a growth of 13 per cent, over the same quarter last year.

TVS Electronics net doubles

Computer peripheral manufacturer TVS Electronics Ltd said today its net profit almost doubled to touch Rs 48 lakh in the second quarter ended on June 30 as against Rs 25 lakh in the same period of previous year.

The company’s turnover during the quarter however dipped to Rs 51.49 crore from Rs 54.11 crore in the same quarter of fiscal 2001-02.

Gujarat Gas net down

Gujarat Gas Company Ltd has posted a 42.37 per cent drop in its net profit at Rs 9.93 crore for the second quarter ended June 30, 2002 compared with Rs 17.24 crore in the same period of the previous fiscal.

Total income for the period under review rose to Rs 98.16 crore from Rs 93.42 crore in the second quarter of 2001, the company informed the Bombay Stock Exchange today.

   

 
 
SATYAM NET DROPS 11% TO RS 108 CRORE 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
Hyderabad, July 25: 
Satyam Computer Services Ltd registered a drop in net profit by 10.72 per cent at Rs 108.44 crore for the first quarter ended June 30 this fiscal and has set a target of Rs 490 crore for the next quarter.

Releasing the first quarter results, Satyam managing director B Ramalinga Raju said here today that the company’s foray into business process outsourcing (BPO) has taken final shape and that space would be taken up by subsidiary Nipuna Services Limited. Satyam, whose net income has risen by 12 per cent at Rs 471.48 crore, has fixed a target of Rs 475 crore to 490 crore as income from software services for the next quarter and operating margin is expected to be around 31 per cent, he said.

The net profit for the quarter dropped from Rs 121.46 crore to Rs 108.44 crore while the domestic sales dropped from Rs 11.15 crore on June 30, 2001 to Rs 4.48 crore this year.

Income from software exports went up by Rs 58.19 crore at Rs 471.48 crore while the quarter has a sequential growth of 1.35 per cent in income, Raju said.

The consolidated results under US GAAP, which includes its 100 per cent subsidiaries, has shown 6.56 per cent hike in revenue over the previous quarter while the net income was up from $ 8.6 million to $ 16.11 this quarter.

Difference between Indian and US GAAP was due to losses incurred by subsidiaries and joint ventures and amortisation of deferred stock compensation, Raju said.

Declining to give details on its BPO initiatives, Raju said, “We have been interacting with 20 to 25 clients and are very close to clinch a deal in a couple of cases.” He also refused to divulge details about when Nipuna services would start operating in the BPO sector but said, “We have set up a good team and are evaluating all options.”

While admitting that domestic sales had come down by a big margin, Raju said the company would focus on the area and sounded optimistic about the results and future.

“The results are on expected lines. The travel advisories issued by major governments did result in postponement of visits and delays in decision making, but our robust business community plans helped in enhancing our operations,” he said.

   

 
 
TINPLATE DRAWS UP PLAN TO DOUBLE ITS CAPACITY 
 
 
BY A STAFF REPORTER
 
Calcutta, July 25: 
The Tinplate Company of India Ltd (TCIL) is planning to double its capacity to 250,000 tonnes in view of the increased demand abroad.

Addressing a press conference after the company’s 83rd annual general meeting here today, TCIL managing director Bushen Raina said the company would prefer the acquisition route to carry out the proposed brownfield expansion.

Currently, the company is busy expanding its capacity to 125,000 tonnes mainly through a ‘de-bottlenecking’ exercise.

Raina has also noted that TCIL is in talks with the global steel major, Usinor of France for technical and marketing collaboration.

“The Usinor team frequents our plant at Jamshedpur every quarter and gives us valuable inputs in terms of expertise, to add value to our products. We are in active discussion with the company to extend the relationship into a business partnership,” Raina said.

He has, however, pointed out that there has been no discussion on offering equity to Usinor.

TCIL, which came back into the black last year after five consecutive years of losses, has undertaken a financial restructuring exercise prepared by the financial institutions led by ICICI.

Raina said the company has issued optionally converted debentures worth Rs 45 crore to the financial institutions and Rs 66 crore to Tata Steel which is the promoter of TCIL.

“The financial institutions had placed a condition that we have to make a gross profit of Rs 4 crore every month after the restructuring is completed. We have however made Rs 5 crore of gross profit which has provided impetus to the FIs to formulate an interest restructuring from the current 17 per cent to 13 per cent,” Raina said.

He was optimistic about TCIL’s performance in the current financial year, after the second phase of restructuring by the financial institutions is complete.

The company is looking at the export potential of its products since demand is growing in Asian countries.

Last year, he added, TCIL earned around Rs 50 crore from exports which contributed 15-18 per cent to the turnover.

“This year, we have a target of exporting 25 per cent of our products and our ultimate aim is to raise our export level to 35 per cent of the turnover,” he said.

Raina has reiterated that Tata Steel has helped the company not only by providing raw materials but also great marketing support both in the country and abroad.

   

 
 
TCS GAMEPLAN TO ACHIEVE GROWTH TARGETS 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, July 25: 
Tata Consultancy Services (TCS) will expand its development facilities and human resources to keep up with the growth rates projected by the software industry.

“We will recruit over 3,000 personnel this year at the entry level,” says chief executive officer S. Ramadorai. “Most of these recruits will be from leading engineering colleges across the country. We are also keen to recruit strong domain experts in our effort to develop domain expertise in the various verticals in which we operate.”

TCS has also set definite goals to be met during the course of the year. The Rs 4,187-crore company aims to consolidate its position in existing markets and increase traction from clients. There are plans to develop emerging markets with a multiple country, multiple location strategy to minimise risk.

“We will strive to achieve growth targets by enhancing efficiency by leveraging on our assets and experience,” asserts Ramadorai. “Focus on the Asia-Pacific region will be increased and we expect around 10 per cent of our revenues to flow in from this region. We expect to increase the share of product revenues from 12 per cent to 25 per cent.” The infotech major has also decided to strengthen the international network of development centres by entering new markets.

“In line with the focus on the Asia Pacific region, we have inaugurated a development centre in Japan. We plan to develop programmes and software in the Japanese script to meet the demands of the market. The European market, especially eastern Europe, is a key market for us,” adds Ramadorai. “We already have a development centre in Budapest and are keenly pursuing markets in Germany, Belgium and Netherlands.”

Speaking on the company’s initiatives to drive growth in the domestic market, Ramadorai elaborates, “The domestic market is also a high priority area for the company. The main areas of focus are — complex systems integration projects, building excellence in professionals, innovating in human resources development, bringing in the required level of digitisation in the country and offering effective means to de-risk business.”

The software services company has offshore development centres across six major locations in the country — Bangalore, Calcutta, Chennai, Delhi, Hyderabad and Mumbai.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.68	HK $1	Rs.  6.15*
UK £1	Rs. 76.52	SW Fr 1	Rs. 33.10*
Euro	Rs. 48.15	Sing $1	Rs. 27.60*
Yen 100	Rs. 41.75	Aus $1	Rs. 26.10*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5275	Gold Std (10 gm)Rs. 5160
Gold 22 carat	Rs. 4980	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 8250	Silver (Kg)	Rs. 8265
Silver portion	Rs. 8350	Silver portion	   NA

Stock Indices

Sensex		3094.96		-12.52
BSE-100		1575.81		- 5.76
S&P CNX Nifty	1001.55		- 2.50
Calcutta	 114.40		- 0.45
Skindia GDR	 485.27		- 2.29
   
 

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