Govt weighs 3-tier excise structure
IDBI paves way for universal banking
SBI warms up for Net banking launch in July
MTNL to seek hike in rentals as sales dip
One more feather in Infosys cap
Eight-year plan for infotech under way
Cadila in pact with Sarabhai
Indian Oil net profit surges 47%
Foreign Exchange, Bullion, Stock Indices

New Delhi, Jan 31 
The government is considering a reduction in the number of excise slabs from six at present to three in tune with the recommendations made by the Raja Chelliah committee.

The finance ministry had applied its mind to a three-tier excise structure in last year�s budget but eventually slapped several surcharges that actually led to a six-tier slab� 8, 16, 24. 30, 32 and 40 per cent.

Sources in the revenue department said the government now wants to prune the number of rates to three. Some have even suggested that the multiple slabs be replaced with a single unique excise rate, and an additional value-added tax in different stages of production.

The three rates � merit, mean and demerit � will cover most goods, except petroleum products which may continue to attract a higher rate.

Merit goods, attracting the minimum 8 per cent rate, will include the poor man�s consumption goods, medicines, industrial and farm inputs, building products and basic goods.

The mean rate, now 16 per cent, may be changed. It will cover components, ancillaries and non-luxury consumption goods. Luxury items, and commodities which pose environmental and health hazards (liquor and tobacco), will come under the demerit category. The demerit rate is now 24 per cent, but there is a possibility that it may be tinkered with.

A few modvat adjustments to address complaints and remove anomalies arising from the last budget are also being considered by the revenue department, officials said.

Industry chambers have also been lobbying the government for a reduction in the number of excise slabs.

However, the government is unlikely to concede their demand for retaining the current levels of customs duty. Currently, there are seven customs duty rates � 5, 15, 25, 35 and 40 per cent.

Sources said some changes in duty levels are needed in the light of bilateral negotiations and commitments made to the WTO. However, officials say they are ready to allow the imposition of countervailing duty (CVD) on the maximum retail price to allay the industry�s fears.

At present, CVD is levied on assessable value, plus the basic customs duty. The industry has argued that this is unfair since it calculates taxes on the basis of the maximum retail price (MRP).    

Mumbai, Jan 31 
Industrial Development Bank of India (IDBI) today said it was devising a new floating rate mechanism for borrowers. The announcement came on a day when it unveiled wide-ranging plans to harness new opportunities offered by infotech, expand its venture capital business and introduce new products in areas like acquisition financing as part of a larger effort to turn itself into a universal bank.

�The Athreya panel report on transforming the financial institution into a universal bank has been approved,� IDBI chairman G P Gupta said.

The institution said it was working on the launch of a new infotech subsidiary that would offer a range of services in areas like e-commerce and portals. At a later stage, the arm will even branch out into providing internet access, implementation support, product customisation and training.

The floating interest scheme, which Gupta claimed could mean at least a one percentage point drop in the lending rates, will be anchored to the six-monthly average of secondary market quotes on five-year government paper. The new scheme will be updated on a quarterly basis.

At present, the lending rate for a AAA rated company works out to 12.45 per cent after taking into account a 0.5 per cent mark-up to cover administrative costs. It also includes a minimum one per cent spread over 10.95 per cent � the average yield offered on a five-year government paper between July-December 1999.

The spreads charged by IDBI on these loans would vary between 1 and 3.5 per cent based on the risk perception of companies but the maximum lending rate will be 15 per cent, officials said.

Elaborating on the infotech plans, officials said the Rs 100-crore authorised capital of the proposed subsidiary will be split between Rs 75 crore as equity and Rs 25 crore held in the form of preference shares. Gupta said a 50 per cent stake could be given to an equity partner.

IDBI�s Venture Capital Fund will have a corpus of Rs 50 crore for financing infotech firms. More important, norms related to the existing venture capital funds scheme will be relaxed. Ventures which deliver traditional products/services in emerging sectors and have sustainable competitive advantages will be eligible for funding from the scheme.

IDBI, Gupta said, was looking at acquisitions, particularly the nationalised banks, since they have a good branch network. He, however, ruled out strategic tieups with banks because that would not give his institution access to cheap resources.

IDBI�s third-quarter net profit plummeted 53.46 per cent to Rs 141 crore compared with Rs 303 crore in the same period of the previous year. Gupta attributed the decline to higher provisions for NPAs and taxes and competition-induced squeeze on margins. Issuing a profit warning, he said profits for the year ending March 2000 could be lower than those recorded in the previous year. Income from operations rose to Rs 1933 crore (Rs 1867 crore). In the first nine months, it stood at Rs 5718 crore (Rs 5490 crore). Sanctions at Rs 6,972 crore and disbursements at Rs 3,686 crore during the third quarter increased 34.7 per cent and 31 per cent respectively.    

Calcutta, Jan 31 
State Bank of India plans to launch internet banking in July. To begin with, the facility will be restricted to branches which handle non-resident Indian (NRI) and corporate accounts.

The country�s largest commercial bank, which hopes to report a net profit of Rs 1400 crore this year, will soon appoint an international consultant to draw up a 10-year perspective plan for technological upgradation. The bank has decided to spend Rs 500-750 crore over the next two years to overhaul its systems.

�We have already shortlisted three international consultants from among the seven that submitted bids. We will take a final decision in the next two weeks,� SBI chairman G.G. Vaidya said here today.

He said the technology roadmap should be ready in six months and it would be fully implemented in 18 months� time.

Vaidya, who was in the city to inaugurate the bank�s new local headquarters � Samriddhi Bhavan � on Strand Road, said the bank hoped to reduce its non-performing assets (NPAs) below 6.5 per cent by March 2000. At present, the bank is saddled with NPAs amounting of about Rs 699 crore, which works out to 6.7 per cent of its total advances. Total net worth of the bank is expected to jump to Rs 11,500 crore by March from Rs 10,450 crore in December last year. The SBI chief also inaugurated its third personal banking branch in the city at Salt Lake during the day.

The SBI chairman ruled out any reduction in its prime lending rate. �The recent rate cut in public provident fund (PPF) and other postal savings has no bearing on bank rate cuts,� he said.

The bank has decided to open 1,000 automated teller machines (ATMs) by March 2002.

The SBI gold deposit scheme has received encouraging response. �We have been able to mop up 1.5 tonnes of gold from about 1,000 depositors. We are yet to launch the scheme in Chennai and Bangalore where we hope to garner sizable deposits of gold. Our target is to mobilise 100 tonnes of gold,� Vaidya said. The bank was planning to introduce several new products this year and was weighing the merits of co-branding for its credit cards business, he added. At the inauguration ceremony, Vaidya said the customer should be the focal point and the employees should change their attitude while dealing with them.

Meanwhile, P.K. Sarkar, chief general of the Bengal circle, has been promoted as deputy managing director of the bank.    

New Delhi, Jan 31 
Mahanagar Telephone Nigam Ltd (MTNL) will seek an increase in monthly rentals as the company suffered a 6.7 per cent drop in net sales, though net profit increased by seven per cent for the quarter ending December 31, 1999.

�Net sales are down due to the implementation of tariff rebalancing based on recommendations made by the Telecom Regulatory Authority of India (Trai),�� S. Rajagopalan, chairman and managing director of MTNL, said here today.

Rajagopalan urged Trai to review its tariff proposals as MTNL has no option but to increase rentals. �I do not see any case for further drop in rentals. We will provide these results to the regulator and seek an increase in rentals. This is inevitable if the results do not improve in the fourth quarter.��

Rajagopalan was, however, optimistic of a rise in revenue in the fourth quarter. �The neutralisation of the negative impact of tariff re-balancing coupled with massive surge in registration for new telephone connections will improve the revenue in the fourth quarter.��

MTNL�s net sales dropped by 6.7 per cent to Rs 1,218 crore in the third quarter from Rs 1,306 crore in the corresponding period of the previous year. However, net profit increased by seven per cent at Rs 364.20 crore compared with Rs 340.54 crore in the previous year.

The company�s net sales for the nine months ending December also declined by 5.29 per cent at Rs.3,703 crore compared with Rs 3,910 crore in the previous year. Net profit during this period also dropped marginally from Rs 1,015.40 crore to Rs. 1,012.20 crore.    

New Delhi, Jan 31 
Infosys Technologies is on a roll, picking up all awards that are on offer.

Close on the heels of his Padma Shri, Infosys chairman and CEO, N.R. Narayana murthy will add another award to his cap, this time for the company which has ensured his place in the billionaire club along with Wipro chief Azim Premji and Shiv Nadar of the HCL group.

The government has decided to confer the national award for excellence in corporate governance�a brainchild of finance minister Yashwant Sinha announced in the 1999 Union Budget�to Infosys Technologies Ltd. Narayana murthy will receive the award next week.

The award was set up to encourage corporate houses to put their houses in order, which the government believed was a precursor to drawing more investors to the capital markets.    

New Delhi, Jan 31 
The government will soon announce an eight-year development plan for the information technology (IT) sector, targeting $ 50 billion in software export by 2008 from the present level of $ 4 billion.

The IT ministry will annually review the plan to make the amendments for reaching the target.

However, minister for information technology Pramod Mahajan was non-committal on whether the plan would be announced before the Union budget. �I cannot comment on whether the plan for the current year will be ready before the budget exercise begins but it should not take long.��

Inaugurating the Electronics and Information Technology exposition here, Mahajan today called for increased private sector participation in the IT sector. �The IT revolution should penetrate the villages. The private sector can play an important role in the efforts of government to take IT to the masses.��

He said change is the essence in the information technology sector. To keep pace with the rapid changes, development of infrastructure and spread of computer education are essential, Mahajan added. �This can only take place when the mindset of the people changes to pay for better and efficient service.��

Delivering the keynote address, A.P.J.Abdul Kalam, principal scientific adviser to the government, called for utilising information technology to achieve 100 per cent literacy in the country. �IT should be used to improve education, health and other basic necessities. The use of IT in education is not only important but inevitable,� he said.    

Calcutta, Jan 31 
Cadila Health Care Ltd has tied up with the Ambalal Sarabhai group to form the country�s largest veterinary drug firm.

Company president Ganesh Nayak said Zydus Cadila�s wholly-owned subsidiary, Zydus Aqrovet Pvt Ltd will form a 50:50 joint venture with Sarabhai Veterinary Ltd, a subsidiary of the Ambalal Sarabhai group. A memorandum of understanding to this effect was signed between the two on Saturday, he said.    

Mumbai, Jan 31 
Indian Oil Corporation has recorded a 47 per cent growth in net profit for the third quarter ended December 31 at Rs 506 crore compared with Rs 345 crore a year ago. Sales jumped 57 per cent to Rs 26,051 crore from Rs 16,558 crore. Gross turnover jumped to Rs 25,854.89 crore compared with Rs 17,901.43 crore. Other income was lower at Rs 179.10 crore while total expenditure was pegged at Rs 24,820.69 crore. Gross turnover for the first nine months of the fiscal stood at Rs 68,492.69 crore as against Rs 51,953.82 crore while income from sales and operations amounted to Rs 66,764.66 crore. Other income stood at Rs 402.77 crore and total expenditure amounted to Rs 62,673.24 crore for the nine-month period.

BoB net up

Bank of Baroda has recorded a 11.6 per cent growth in third-quarter net profit at Rs 131.85 crore from Rs 118.15 crore a year ago. Total income stood at Rs 1,430.26 crore, up 6.76 per cent from Rs 1,339.69 crore for the same period last year.

Interest income was pegged at Rs 1,296.64 crore during the quarter while other income was up at Rs 133.62 crore. Interest expenses amounted to Rs 858.75 crore while operating expenses stood at Rs 315.66 crore. During the first nine months of the fiscal, the bank earned an interest of Rs 3,821.80 crore while other income was Rs 416.68 crore. Total income for the period was Rs 4,238.48 crore while total expenditure was pegged at Rs 3,517.48 crore. Net profit for the nine-month period stood at Rs 372 crore, up from Rs 346.36 crore a year ago.

VSNL in fine fettle

Videsh Sanchar Nigam Limited (VSNL) has reported a 11.16 per cent jump in its net profit at Rs 298.40 crore for the quarter ended December 31 compared with Rs 268.42 crore in the same period of the last financial year.

The country�s international-call carrier�s gross profits increased 13.74 per cent to Rs 438.73 crore from Rs 385.72 crore over the same period. Net profit for the nine-month period ended December 31 remained relatively unchanged at Rs 1,000 crore.

Its third-quarter revenues from internet soared 112 per cent to Rs 50.06 crore from Rs 23.74 crore last year. Income from value-added services increased to Rs 456 crore from Rs 321 crore. However, total income fell from Rs 1,729 crore in Oct-Dec 1998 to Rs 1,681 crore in the third quarter of this year.

Exide earnings flat

Exide Industries� net profit in the third quarter ended December 31 changed little over last year. At Rs 11.7 crore, the figure was marginally higher than Rs 11.19 crore it reported in the same period last year. Gross sales stood at Rs 225.03 crore, up from Rs 215.49 crore in the third quarter of 1998-99.

For the first nine months of the current financial year, the net profit of the company stood at Rs 31.6 crore, marginally higher than Rs 29.4 crore recorded in the same period of 1998-99. Gross sales for the nine-month period grew 11.2 per cent over the same period last year.    

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