Quit bourses, but pay up
Vysya jolted by IFC stake sale whispers
Lever fuels third straight rally
Car sales jump 9% in July
It’s return of the prodigal for Globsyn
Maruti 800 regains its magic
Uncertainty over BSL takeover bid
Aviva aims at 30,000 policies in first year
AirTel beep ready to sweep Delhi off its feet
Foreign Exchange, Bullion, Stock Indices

 
 
QUIT BOURSES, BUT PAY UP 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 13: 
The committee on delisting of shares constituted by the Securities and Exchange Board of India (Sebi) has said there should be ‘no prohibition per se’ on delisting shares from a stock exchange. However, it wants the exit price for delisting to be fixed through the book-building process.

The panel, headed by Sebi executive director Pratip Kar, has suggested that the offer price should have a floor — the share’s 26-week average on bourses. “Market forces of demand and supply should determine the price above the floor,” the committee said.

Taking a liberal line, the panel said shares listed on regional exchanges can be delisted without an exit offer, provided they are traded on the National and Bombay Stock Exchanges, two bourses with a nation-wide reach.

Exchanges have been advised to install infrastructure that enables investors to see the price on the screen, and makes the delisting process transparent.

Once securities have been delisted, the acquirer (the firm or a buyer) should give the remaining investors six months to sell their holdings, at the same price. To prevent price manipulation, stock exchanges should be kept under special watch by the market regulator.

At the same time, the committee has asked Sebi to allow exchanges to delist shares of companies that have been handed at least a six-month suspension in the past for failing to comply with their listing agreements.

It said a request would soon be sent to the Department of Company Affairs (DCA), seeking a Companies Act amendment that will allow stock exchanges to send applications for winding up companies.

The committee has recommended that a separate agency, the Central Listing Authority (CLA), be formed and assigned the task of scrutinising listing agreements and reviewing their provisions from time to time.

The authority’s scope, the panel recommends, should be expanded, and its powers enhanced. Companies that wish to list should send applications to it. The authority should have 11 members at most, drawn from areas such as the legal fraternity — judges and lawyers — and specialists in securities regulation and finance, apart from academicians and investor associations. At least four should come from exchanges so that they can help CLA scrutinise listing applications.

According to the committee, securities that have been delisted should be allowed to return only after a two-year cool-off.

The committee was set up after the regulator was made to sit up and take notice of a wave of recent delistings. Leading the pack have been multinationals, which want to check out of bourses for a variety of reasons. The growing trend, particularly over the past two years, has caught the attention of the finance ministry as well.

   

 
 
VYSYA JOLTED BY IFC STAKE SALE WHISPERS 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 13: 
Vysya Bank was in the spotlight today as two separate block deals were clinched on the Bombay Stock Exchange (BSE) amid reports that the shares changing hands made up 5.29 per cent of its equity.

Speculation was rife that the Washington-based International Finance Corporation (IFC) had offloaded 11 lakh shares. There was no word on the identity of the buyers, but they are believed to be a clutch of domestic funds and foreign institutional investors (FIIs).

Market watchers said the shares were sold in two lots of over 4.90 lakh and 5.60 lakh at Rs 260 and Rs 259, respectively. IFC, the World Bank arm that invests in private projects world wide, holds 10 per cent in the bank.

There are unconfirmed reports that IFC will eventually quit. Analysts say if reports about IFC’s stake sale have a ring of truth, it would make it easier for the ING group to raise its holding in Vysya to 49 per cent.

Early this year, the ING group had said it would pick up 24 per cent in the bank from the GMR group. Once this happens, the Dutch financial group’s holding in the bank will jump to 44 per cent from 20 per cent.

The market grapevine is abuzz with stories that the sale of shares today could have been prompted by a Foreign Investment Promotion Board (FIPB) decision treating IFC’s stake in Vysya as foreign direct investment (FDI).

This belief had restrained ING from increasing its holding in Vysya beyond the sectoral cap of 49 per cent. The combined FDI of ING and IFC would stand at 54 per cent. In keeping with these norms, the FIPB is believed to have conveyed to ING that it could hike its stake in the bank, provided it does not overshoot the limit.

ING had initially approached FIPB with a proposal to raise its stake to 49 per cent in Vysya Bank, which has a paid-up capital of Rs 22.6 crore. The assumption was that IFC’s holding would be categorised as FII investment.

The board did not accept this argument. It echoed the Reserve Bank’s view that since IFC acquired the shares through preferential allotment, not through secondary market purchases, its stake cannot be termed FDI.

On the BSE, the Vysya Bank share opened at Rs 271.50, shot up to Rs 288 but then plummeted to Rs 258. Later, it recovered marginally to finish at Rs 269.85. The scrip saw 3415 deals with over 13.45 lakh shares being traded, generating a total turnover of Rs 35.15 crore.

In June this year, ING announced it was buying the GMR group’s 23.99 per cent stake in the bank for a staggering sum of Rs 340.8 crore, or Rs 626.92 per share.

This investment was touted as the largest FDI in an Indian bank, and the first under the newly increased 49 per cent FDI cap. It also spawned the first truly Indian international bank. The stake purchase was the culmination of a process that was triggered in February, when ING group’s Bank Brussels Lambert said it was keen to own more of Vysya.

The GMR group brought down its holding in the bank to focus on its core areas of infrastructure, information technology and agricultural businesses. However, the group retains more than 4.5 per cent even now.

The Bangalore-based Vysya, with a network of 480 branches, has a large pool of customers and good clients. Established in 1930, it focussed on traders and retail loans initially. It was said to be the first among private sector banks to have introduced MICR cheques. It also floated a housing finance subsidiary and offered credit cards.

   

 
 
LEVER FUELS THIRD STRAIGHT RALLY 
 
 
OUR CORRESPONDENT
 
Mumbai, Aug. 13: 
Having taken it on the chin over the past few days, Hindustan Lever (HLL) was the unlikely star stock that helped Dalal Street rack up a three-day streak of gains and pushed up other blue chips.

On a day the session on National Stock Exchange was disrupted by a technical snag, the BSE stretched its own trading time till 5.10 p.m., almost an-hour-and-forty minutes later. The sensex, despite the stretched session, happily edged up by 28.55 points to close at 3036.40.

Lever carried the day, notching sharp gains on expectations of better prospects following good rains in many parts of the country. Pundits dubbed the surge in pivotals a ‘relief rally’ and said there was room for another 100-point advance in the key share gauge.

They were not very impressed with the day’s gains, mainly because traded volumes on most stock exchanges were niggardly. The business, at Rs 1152.14 crore, remained thin despite extension of trading hours.

Brokers, however, were cheered by reports that the northern belt — the country’s grain bowl — had been blessed with heavy and sustained showers over the past few days.

The 30-share index opened moderately higher at 3009.48, gradually moved up to a high of 3066.70. However, profit-taking at this point trimmed a part of the gains and sent it sliding to 3036.40. Measured against Monday’s close of 3007.85, it was a 0.95 per cent gain. The BSE-100 index also firmed up 10.75 points at 1533.19 from 1522.44.

Software counters, however, displayed a mixed pattern of trading on alternate bouts of buying and selling.

Among banks, Vysya Bank was a star performer, rising by Rs 6.10 to Rs 269.85 after fluctuating in a range of Rs 288-Rs258.

Lending the sensex more support were other old-economy heavyweights such as ITC, MTNL, Reliance Industries and Telco. Lever jumped by Rs 5.50 to Rs 173.45, ITC by Rs 11.30 to Rs 676.65, MTNL by Rs 2.75 to Rs 135.55, Reliance by Rs 1.55 to Rs 242.30, Telco by Rs Rs 2.65 to Rs 133.30, Satyam Computer by Rs 6.00 to Rs 212.10.

The losers included Bajaj Auto, which dropped by Rs 7.45 to Rs 445.20, HCL Technologies by Rs 3.80 to Rs 186.15 and Apollo Tyre by Rs 7.80 to Rs 117.90. In the specified group, 86 shares, including 21 from the sensex, registered gains, while 72 ended the day with losses.

Satyam topped the charts with a turnover of Rs 81.96 crore, followed by Mastek (Rs 110.36 crore), Infosys (Rs 87.63 crore), Aftek Info (Rs 65.72 crore) and Reliance (Rs 61.85 crore).

   

 
 
CAR SALES JUMP 9% IN JULY 
 
 
OUR CORRESPONDENT
 
New Delhi, Aug. 13: 
Domestic car sales went up by 8.7 per cent in July, going up to 43,427 cars this year from 39,938 cars sold in July last. Though major companies such as Tata Engineering, Hyundai, Fiat, Honda and General Motors posted an increase in sales, the country’s largest auto-maker Maruti as well as Ford Motors continue to record a negative sales growth.

The sales of the entry-level car Maruti 800 fell by 21.8 per cent to a mere 8,932 cars against 11,430 cars sold in the same month last year. Maruti’s overall sales fell by 25.26 per cent. Maruti officials said the impact of the price cut in Maruti 800 could only be felt in the sales of the last two days in July. “The main jump in sales will only be understood from the August figures.”

In the compact segment, though Maruti’s sales fell by 27.65 per cent, it still remained the leader in the segment, selling 8,698 cars in July compared with 12,023 cars a year ago. However, Telco’s single offering in Indica nearly matched the sales figures of Maruti with all its models like Wagon R, Zen and Alto. Telco recorded a 102.80 per cent jump in sales as it sold 8,528 Indicas as against 4,205 cars last July.

Fiat registered an increase of 81.54 per cent with its Palio and Uno, selling 2,905 cars against 536 vehicles in the same month last year. Hyundai recorded an overall growth of 40.69 per cent with 44.38 per cent sales increase coming from Santro. It sold 7,323 cars this year compared with 5,072 cars a year back.

The brightest performer in the mid-size segment was Hindustan Motors-Mitsubishi Lancer, which sold 1,523 cars in July as against 1,448 cars last year. Hyundai recorded an increase of 15.92 per cent selling 1,375 Accents compared with 1,156 units in July last year. Honda City’s sales increased by a huge 77 per cent as the company registered sales of 1,004 cars, as against 567 cars.

However in the mid-size sedan category, Ford Ikon and Maruti Esteem took a beating. Ikon sales dropped from 1,103 cars in July last to 952 cars this year. Maruti, however, managed to sell only 827 Esteems in July this year as against 1,244 cars sold a year ago.

In the executive class, sales of the C-class from Mercedes Benz stood at 41 cars, from 91 cars a year back. HM managed to sell only two Contessas. In the premium segment, only 20 E-class from the Mercedes stable were sold as against 92 cars in July last. While Ford sold 54 Mondeos, Honda Accord’s sales fell to only 65 units as against 209 cars sold in the same month last year. Hyundai sold 121 Sonatas in the given month as against 40 cars that they were able to sell in the same month last year.

In the luxury class, Mercedes Benz sold only three units of the S-class. Commercial vehicles continued to climb and recorded an increase of 33.8 per cent, selling 13,368 units from 9,988 units in July last year aided by growth in both the medium and heavy (M&H) and light vehicles (LCV) segment. While medium vehicle sales rose 15.2 per cent to 7,346 units, sales of LCVs jumped 66.7 per cent to 6,022 units during the month.

   

 
 
IT’S RETURN OF THE PRODIGAL FOR GLOBSYN 
 
 
ALOKANANDA GHOSH
 
Calcutta, Aug. 13: 
It’s a simple return-to-roots story. The company that started off in Calcutta—gave the city its first and only high-tech building ‘Infinity’—and pushed off to Gurgaon in Haryana is now returning home.

Globsyn Technologies is coming back to build on its existing strengths and drive growth. Bikram Dasgupta, chairman and managing director of the group says, “We will soon close down the Gurgaon office as incurring the overhead costs makes no sense. We have decided to concentrate on building the existing infrastructure and expand the bouquet of offerings, rather than investing in infrastructure.”

The software training and services firm had moved to Gurgaon in an effort to increase its spread. But with the downturn, things looked bleak for the company. Market conditions also forced Globsyn to abandon its Rs 14.77-crore initial public offering (IPO) plan in February last year.

Dasgupta said another reason for his return was that he felt the environment in the state is now more conducive to investment and growth, than it was two years ago. Besides software, the institute also plans to impart training in other sectors. The first step in this direction will be the inauguration of Globsyn’s business school of management on Wednesday.

“The downturn has infused sanity into the industry. Targets are now reality-oriented and have been set keeping market requirements in mind,” he said.

Globsyn currently has around 20 TechnoCampus and Knowledge Pubs across the country. Dasgupta says that his aim is to consolidate the existing infrastructure and add more products and variety to Globsyn’s portfolio.

As part of the plans to expand the product portfolio, the company has signed a strategic alliance with Navision India to set up a Navision Solution Training Academy as part of TechnoCampus. It will also serve as a Navision solution centre.

Navision was recently acquired by Microsoft at a cost of $ 1.45 billion and is one of the largest players in the small and medium enterprise segment. Yashvir Nagpal, managing director of Navision India says, “We already have 70 solution centres in India. The number is expected to go up to 100 by the year-end. We envisage a requirement of around 3,000 to 4,000 personnel trained in Navision products by 2003-end.”

Speaking on the agreement, Dasgupta says, “We will first study the market and based on the demand for the product, we will open training centres.” He, was confident that the product would find a good response in the eastern region, mainly because of the large number of SME players with a turnover between Rs 50 to 100 crore.

   

 
 
MARUTI 800 REGAINS ITS MAGIC 
 
 
PALLAB BHATTACHARYA
 
Calcutta, Aug. 13: 
It is happy days at Maruti again. The country’s largest car maker has decided to step up production of M-800 close to its installed capacity for the first time in years, thanks to a sudden surge in demand.

A senior official said there has been a 50 per cent spike in demand since July 24, when the company announced a steep price cut of Rs 15000-Rs 18000 on M-800 variants.

“After a long time, there is now a wait-in of 10 to 15 days for the delivery of an M-800,” said a dealer in Calcutta. “Everyday, we are get a large number of queries for this entry level car, and more than 50 per cent of these translate into purchases,” the dealer added.

To keep pace with the demand, around 400 cars are being rolled out of the factory every day — unthinkable until a few weeks back. “The bulk of the orders are pouring in from the southern and northern regions of the country. Other areas are also showing encouraging signs in sales growth,” the Maruti official said.

The company sold only 24,982 M-800 cars in the first quarter against 34797 units in the same period last year. It expects sales of over 30,000 units in the second quarter, if the current demand pattern holds over that period.

Asked whether this compromise on prices will affect bottomline, the official said the decline in realisations would largely be offset by growth in sale volumes.

“M-800 is still the most favoured brand, especially for the first-time buyer. The price cut was an exercise to bring back the entry-level customers and the overture proves to be highly successful,” the official said.

The official has said the company is getting good orders for M-800 from several African countries and Bangladesh.

The company is also eyeing the country’s vast rural markets to push up sales of its entry-level car.

Besides M-800, B segment offerings — Zen, Alto and Wagon-R — are also turning out to be big draws after the company decided to offer free insurance in the first year.

“Since the insurance comes free with the three models, the down payment is reduced substantially. If these are bought with the help of finance, several attractive schemes, besides free insurance, are being offered in a manner that suits everyone’s needs,” said a dealer.

   

 
 
UNCERTAINTY OVER BSL TAKEOVER BID 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 13: 
Uncertainty looms large over the success of the Sardas’ open offer for a 30 per cent equity stake in BSL Ltd—the textile major formerly known as Bhilwara Synthetics.

The Sardas have made the offer “conditional to full subscription”, which implies that they would not accept any shares at all if the offer is not fully subscribed.

Brokers said: “The condition betrays the Sardas’ lack of confidence about the response to the offer, though the price offered by them is handsome.”

The Sardas have offered Rs 80 per share. The BSL scrip moved up quite a bit since the Sardas entered the picture six months ago. The stock closed at Rs 61.55 on the National Stock Exchange today.

Ghanshyam Sarda is, however, confident of full subscription. In fact, he said he was optimistic that the offer would be over-subscribed, even if marginally. But unless the offer is fully subscribed, the Sardas are unlikely to gain management control of the firm.

The Sardas hold 11.86 per cent in BSL now. If they manage to mop up another 30 per cent through the open offer, their stake will surpass the promoters’ declared holding of 36.78 per cent by more than 5 per cent.

The success of the offer depends largely on the insurance companies and a Calcutta-based group of investment firms which have substantial holdings in BSL.

The combined holding of the insurance companies and banks stands at 9.52 per cent, whereas the Calcutta-based group of investment firms is said to hold around 6 per cent of BSL’s shares, though most of it indirectly.

A Sarda group official said: “If we manage to corner these shares, our offer will be fully subscribed. We have in the past offered to buy out the holdings of the insurance companies. Though they refused to sell out, they had said they would certainly consider selling their shares if an open offer was made.”

The Sardas had also offered to buy out the shares held by Unit Trust of India, but the mutual fund did not respond to their offer.

Instead, it sold off most of its shares in the market over the last three months. Unit Trust holds around 62,500 shares now, which represents a shade below 1 per cent of BSL’s equity capital.

Public holing in the company is pegged at 37 per cent, but the BSL shares are infrequently traded on the bourses. There were a large number of buyers today but hardly any sellers. On the National Stock Exchange, only 300 shares were traded today, whereas on the Bombay Stock Exchange, only 129 shares changed hands.

   

 
 
AVIVA AIMS AT 30,000 POLICIES IN FIRST YEAR 
 
 
A STAFF REPORTER
 
Calcutta, Aug. 13: 
Aviva Life Insurance—a joint venture between Dabur and Aviva Plc of UK—plans to sell 30,000 policies in the first year of its operations in India.

The company, which started selling policies in June, has recently obtained the approval of the Insurance Regulatory and Development Authority (IRDA) to introduce group insurance schemes. Aviva has also applied to the IRDA for approval of its pension schemes and term policies. It currently offers four schemes with several riders.

The company’s portfolio of products will be complete within the next two months, senior officials said. “Our target for the first year is selling 30,000 policies, but if the sales figures of the last two months are any indication, we should surpass it,” chief executive officer Stuart Purdy said.

Aviva has a capital base of Rs 110 crore now, which, over time, will be scaled up to support business growth. Purdy said: “Both the shareholders of the company—Dabur and Aviva Plc—are ready to infuse funds. We will increase our capital base as business grows.”

Revealing Aviva’s plans for eastern India—one of its key markets—Purdy said: “In the last couple of months we have sold 500 policies in Calcutta, and very soon plan to start a second office in the city. Over the next six months we should have offices in Guwahati and Asansol as well.”

Explaining Aviva’s thrust on Calcutta, Purdy said: “The per capita consumption of life insurance products is highest in Calcutta, which makes it a very important market for us. We want to establish ourselves as the city’s largest private insurer.”

Aviva is in talks with banks that have a large customer base in the east for bancassurance—or distribution of insurance schemes through the branch network of banks. “A tieup with a bank will significantly enhance our reach in the eastern market, but nothing concrete has emerged out of the talks yet,” Purdy said.

Aviva has already tied up with four banks—ABN AMRO, American Express, Canara Bank and Lakshmi Vilas Bank—for distribution of its schemes.

   

 
 
AIRTEL BEEP READY TO SWEEP DELHI OFF ITS FEET 
 
 
OUR SPECIAL CORRESPONDENT
 
New Delhi, Aug. 13: 
Leading cellular service provider AirTel today announced a slew of initiatives aimed to retain its market leadership in Delhi and across 16 states.

Come Friday and Delhi’s post-paid subscribers will not have to pay for calls received from the about 1.8 million AirTel subscribers across the country. Calcutta, by virtue of being the first to get a tariff package clearance from the Telecom Regulatory Authority of India, became the first metro to get the same package from AirTel last month, where it has been extended to pre-paid subscribers too.

Announcing the initiatives, Sarvjit S. Dhillon, CEO, AirTel Delhi and UP (West), said, “There are now more than 1.8 million AirTel subscribers in India, and in Delhi a majority of mobile subscribers choose AirTel. This must translate into benefits for AirTel subscribers.”

Further, AirTel’s post-paid subscriber in Delhi will not have to pay a special roaming rate of Rs 3 from Friday. This innovative service will allow all AirTel post-paid customers to carry their home rate (tariff plan applicable on their home network) when roaming in 16 networks where AirTel is a mobile service provider.

This service will be available in Mumbai, Himachal Pradesh, UP (West), Uttaranchal, Haryana, Punjab, Maharashtra, Madhya Pradesh, Chattisgarh, Gujarat, Kerala, and Tamil Nadu (excluding Chennai), as well as Andhra Pradesh, Karnataka and Calcutta.

All that subscribers need to do is to ensure that they log on to the AirTel network once they reach the destination.

AirTel today also introduced two new tariff plans that will be available from August 16. These subscription-based plans would provide customers the benefits of free outgoing and incoming calls. Designed to benefit heavy users, the plans address the needs of subscribers at two levels of usage. The new plans would apply from the subsequent billing cycle and would be available to all post-paid subscribers who opt for them.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.60	HK $1	Rs.  6.15*
UK £1	Rs. 74.44	SW Fr 1	Rs. 32.10*
Euro	Rs. 47.59	Sing $1	Rs. 27.30*
Yen 100	Rs. 40.86	Aus $1	Rs. 25.90*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 5265	Gold Std (10 gm)Rs. 5200
Gold 22 carat	Rs. 4970	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7925	Silver (Kg)	Rs. 7960
Silver portion	Rs. 8025	Silver portion	   NA

Stock Indices

Sensex		3036.40		+28.55
BSE-100		1533.19		+10.75
S&P CNX Nifty	 976.05		+ 6.20
Calcutta	 111.45		+ 1.92
Skindia GDR	 454.25		+ 2.00
   
 

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