Pre-merger scrutiny panel likely
Telco net profit falls 27% to Rs 71 crore
Re plunges to new low of 44.50
Zee leads 105pt sensex surge
Insurance licence quota for banks to take India by storm
Foreign Exchange, Bullion, Stock Indices

New Delhi, May 29 
The government is thinking of setting up a merger commission that will scrutinise proposals for mergers and acquisitions and decide whether they should be cleared after assessing their impact in terms of market dominance and competition.

The Raghavan committee report on competition policy has recommended the formation of a merger commission which will be part of the competition commission of India (CCI).

There will however be a provision that if the merger commission, which will be a separate bench, does not finally decide against a merger within a stipulated period of 90 days, it will be deemed that approval has been accorded.

The merger commission will be a part of CCI and at least two members will have to be detailed to deal with cases of mergers, amalgamations, acquisitions and takeovers.

The committee has however raised a note of caution regarding the monitoring of mergers by the merger commission.

The report says there is a need for mergers, amalgamations, and takeovers before Indian firms can compete with global giants.

The committee is concerned with premature implementation of competition law which will impede the process of necessary mergers. Such a result would harm the potential competitiveness of Indian companies and therefore hurt competition.

The merger commission should also have the power to advise on a demerger or severance of interconnection between undertakings or division of undertakings along the lines of the present MRTP Act 1969 with suitable modifications. This power needs to be essentially advisory in character and it should be left to the government to take a final view on a demerger/severance of interconnection.

In its report submitted last week, the Raghavan committee had said that the agreements between firms have the potential of restricting competition.

Most laws draw a fine distinction between horizontal and vertical agreements between firms. Horizontal agreements refer to pacts among competitors and vertical agreements to an actual or potential relationship of buying or selling to each other. The committee felt that both these laws should be covered by the competition law.

The committee also suggested that state monopolies, government procurement agencies and foreign companies should be brought within the ambit of the competition law. The law should cover all consumers who purchase goods or services regardless of the purpose for which the purchase is made.

The committee also held the view that predatory pricing � a tactic used by large company with deep pockets to undercut their rivals and make it uneconomic for them to compete � may be treated as an abuse only if its indulged in by a dominant undertaking. It felt that lower prices charged by a firm may sometimes constitute a gain in social welfare for the consumers.    

Mumbai, May 29 
Automobile major Telco has gone into a deep skid reporting a 27 per cent fall in net profit at Rs 71.20 crore for the year ended March 31, 2000 even though sales turnover rose 34 per cent year-on-year at Rs 8791.79 crore. In the previous year, it had reported a net profit of Rs 97.46 crore.

The bottom line would have been awash in red ink had the company not sold three ancillary divisions for an aggregate sum of Rs 134.34 crore. The profit from the sale of divisions accrued mainly from the company�s gear-box, axle and machine tool facilities, which were transferred to subsidiary companies on March 30 � just a day before the close of the financial year. It may be recalled that the auto major had transferred its construction equipment business unit to a separate subsidiary and later sold part of its stake to Hitachi of Japan last year.

The board also recommended a dividend of Rs 2.50 per share as against Rs 3 in the previous year.

The company explained the increase in sales turnover to an �improvement in the automobile industry led by the industrial recovery in the fiscal year 1999-2000�, which helped the company achieve total sales of 128,867 vehicles. In fact, the commercial vehicles division recorded higher sales commensurate with an improvement in the demand for medium and heavy commercial vehicles. Its market share also rose to 67 per cent driven by the implementation of marketing initiatives and the launch of Euro-compliant Cummins powered vehicles.

The company�s major investments in the new car facilities, as anticipated, adversely impacted its profitability as is the case in any new fully integrated car activity during the ramp-up period.

The company said that its production of Tata Indica increased steadily during the year but did not reach the break-even level, which is expected to be reached towards end of 2000-01. The Indica, the company claimed, received an overwhelming response from the market, notching up sales achieving of 54,992 units, giving the company a 19 per cent market share in its segment.

With a total sale of 82,835 utility vehicles and passenger cars, the company said it emerged as the second largest manufacturer of passenger vehicles in India. Export turnover also surged by 20 per cent to Rs 609 crore as compared with Rs 506 crore in the previous year.

The company�s export turnover during the year grew by 20 per cent to Rs 609 crore from Rs 506 crore in the previous year.    

Mumbai, May 29 
The rupee plunged to a new low of 44.59/50 at close today, felled by a massive demand for dollars amid thin supplies. Even as importers scrambled to scoop up greenbacks, exporters added to the problem by choosing to hold back their earnings abroad.

Apart from exporters holding on to their dollars abroad, a slowdown in FII inflows is also seen as a major reason for the rupee�s freefall.

Dealers said the Indian currency opened at 44.36/39 and continued to drift right from the start of the session. Such was the appetite for dollars that the rupee plumbed its intra-day low of 44.52 � much below the key psychological level of 44.50. However, further slide was prevented by the State Bank of India (SBI), which stepped in by selling greenbacks.

These were absorbed quickly by the market and it did have a marginal impact on the rupee when the currency closed a shade higher at 44.49/50 per dollar.

With the US and London markets closed today, analysts expect the rupee to open weak tomorrow as supplies are expected to remain thin.

�The forex markets are likely to be weak tomorrow and as key overseas markets are closed today, We could see the rupee tumbling to the 44.60 level tomorrow,� said Sangya Nigam, an analyst with Mecklai Finance.

In today�s trading, there was no speculative element in rupee�s decline, and volumes were thin. Apart from the importers bidding for greenbacks, dealers said a prominent aluminium company was also making enquiries for purchasing dollars. Most operators in the market said the rupee�s decline � almost 12 paise over its previous finish � was caused largely by thin dollar supplies. A high demand at the end of the month, they said, is not uncommon in the inter-bank forex market.

The rupee has, therefore, closed at a new low for the second consecutive trading session after the Reserve Bank of India (RBI) announced its package of measures last week.

On Thursday, the currency had plunged to an historic-low of 44.74/77.

Premia on the dollar, however, ended weaker with the six month-premium finishing at 2.79 per cent over last Friday�s close of 2.88 per cent.    

Mumbai, May 29 
The Bombay Stock Exchange (BSE) sensitive index today surged 105.14 points to 4189.85 on the back of heavy buying in old-economy stocks and a sharp gain in the Zee Telefilms share.

Brokers said sentiment was strengthened due to sustained buying by foreign as well as domestic funds.

The all-round change in sentiment can be gauged by the fact that 25 of the 30 index-based shares gained.

Zee Telefilms, which initially bore the brunt of heavy selling, reversed the trend on speculative support from a leading operator and settled at Rs 40 higher at 449.00 from previous close.

Shares from the Fast Moving Consumer Goods (FMCG) sector that were in the limelight today were Hindustan Lever, Britannia, Cadbury, Nestle, P&G, Reckitt & Colman and few others.

FIIs were buyers in FMCG counters and were also interested buyers in small lots of shares of NIIT, Satyam Computer, SSI Ltd, Wipro and Himachal Futuristic.

The day however clearly belonged to old economy stocks wherein most of them posted substantial gains. Software stocks witnessed mixed trend with Infosys, Satyam, DSQ software, KLG Systel and Mastek losing heavily.

While Wipro after losing 4 per cent ended the day four percent higher. The other gainers were HFCL,VSNL and Gramophone which recorded attractive gains.

Incidentally, auto-ancillary stocks like Amara raja, Apollo Tyres and Exide Industries also gained appreciably today. Bank stocks also took part in the rally with Corporation bank, HDFC bank, ICICI bank, SBI and Dena bank recording smart gains.

Mirroring the euphoria at the BSE, the NSE Nifty closed at 1306.55, up by 31.20 points (2.5 per cent), CSE closed at 121.39, up by 3.52 points (3. per cent).

Marketmen aver that the rise in Badla rates on the BSE, to 8 to 9 per cent from previous week�s 5 to 6 per cent, and increase in net outstanding positions to Rs 1866 crore from Rs 1722 crore has generated some buying interest in the market.    

New Delhi, May 29 
The Insurance Regulatory and Development Authority (IRDA) may consider a quota system for banks that apply for insurance licenses in order to ensure a healthy mix of banks and other companies while creating the first batch of private insurance companies.

�We want a mix of banks and other companies entering the insurance sector in the first lot. If there are more banks applying for licences initially, we will try to balance it out by having a quota system so that an equal number of other companies get licences too,� said sources in the insurance division.

The IRDA, however, wants only strong players be granted licences.

Analysts say that nearly 50 insurance companies across the world are eyeing the Indian market. However, not all of them will be lucky to get licences.

Officials said the applications will be scrutinised very thoroughly before the licences are issued. The amount of capital being pumped into the insurance venture initially will not be the sole criteria of selection.

The Bill has fixed a minimum capital requirement of Rs 100 crore. �We expect only a few companies to come in with a minimum capital of Rs 100 crore. But we will examine their capability to increase investments as and when required,� said officials.

�We will look at the financial strength of the Indian company and the foreign partner, their commitment to the Indian market and their capability of being a long-term player,� said officials.

Meanwhile, the IRDA is expected to come out with the guidelines by the middle of June.

A meeting between the IRDA and members of the advisory council is expected to be held soon.

The regulations will be within the framework of the IRDA Bill and will clearly lay down the rules relating to participation by foreign institutional investors (FIIs). Sources said the format of the application form will also be finalised soon.

The government wants to start issuing licences by the end of October.    

Mumbai, May 29 
Move over Yahoo, is here. The US internet major has gained a major lead by getting a country-specific domain name, and silently building a customer base to be in a position to start up operations within a few months., which is primarily into e-mail, Internet messaging and fax services, will not only leverage its traditional strengths but also provide content and facilitate e-commerce.

Informed circles say has lined up investments of close to $ 200 million for India.

In this context,, its portal is expected to provide both business-to-business (B2B) and business-to-consumer (B2C) services apart from �rich content� to both resident and non-resident Indians. Sources said would be �more than� an horizontal portal consisting of niche categories and offering services in the area of finance, travel, shopping among others.

Although details about the portal�s revenue model could not be obtained as senior officials could not be reached, it is understood that a significant part of the turnover would be accounted by e-commerce with advertising revenues also playing a key role.

Internet circles note that a critical factor which would place as one of the serious contenders in the play for eyeballs in the web arena would be its domain name �

�The domain name, offers a terrific advantage particularly among the NRIs and many others outside the country who want to know what is happening in India,� said an observer.

However, analysts say the flip side would be that the domain would raise a great deal of expectation, which might be difficult to meet. �Having a good domain name is not enough. It has to be seen how lives up to its expectations and whether it can sustain it in the wake of tough competition from established brands like Yahoo and Rediff,�� sources said.

Yahoo, which is in the process of setting up a base in India, is planning a range of features including financial and community services, auctions, e-mail in its whole strategy of B2B and B2C offerings apart from an Indianised content.

To overlook its foray into India, recently appointed Digvijay Singh as the CEO of and Arvindra Kanwal as the president of content. Both Singh and Kanwal were earlier with the Indian Express Group of Publications.

Early this year, had announced the formation of Inc, which would be a global incubator of Internet domain properties. Some of the properties which it is in the process of developing include,,,,, in addition to

The company has charted a course of developing websites in two categories of world geography and professions.

In case of the former, while some of the other sites include, the second category consists of sites such as,,, and    

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US $1	Rs 44.50	HK $1	Rs 5.60*
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