Rupee plumbs new low at 45.17
Central Bank puffs up profits
Open house for
GAAP-inspired accounting rules under way
Ariba plans big for India
Hindalco Q1 net spurts 27.5%
VSNL extends monsoon package
Sharp rise in trade deficit in first quarter
Foreign Exchange, Bullion, Stock Indices

Mumbai, Aug 1: 
A battered rupee closed at a new all-time low of 45.15/17 due to a renewed scramble for dollars by banks and companies amid growing concerns that it could sink further.

That its closing was just a tad above its intra-day low of 45.17/18 was seen as an indication that the pressure on the currency has not eased. Today’s 13 paise slide takes the combined losses suffered in two sessions to a whopping 28 paise.

As the rupee wobbled, there were no signs that the Reserve Bank would mount another rescue operation — less than two weeks after it raised interest rates to halt the freefall.

RBI governor Bimal Jalan said in Delhi after talks with finance minister Yashwant Sinha and the ministry top brass that there was no reason to panic at the currency’s weakness. “There is no reason to panic. Absolutely not,” he told reporters, adding there would be no surprise announcements in the immediate future. He wondered how the market had ignored the rupee’s gains against the euro and pound.

The comments, coming from the head of an institution many hope will step in to prop up the currency, stoked fears that the worst was not over.

Many analysts say the rupee could test 45.25 on Wednesday given the voracious appetite for dollars, and the possibility that importers who could not complete their dollar-buying today will return to the market.

The rupee remained under pressure for the past two days, largely due to dollar demand from corporates. However, in today’s early-session trading, it was banks which were bidding the greenback.

The rupee careened out of control in post-noon trading, when banks were joined by corporates in the dash for dollars. “The rupee could even touch 45.50. But this will happen only if the RBI does not step in when it enters the 45.20-25 range,” said Rohan Lazrado, a senior manager with HDFC Bank.

The currency opened steady at 45.03/05, and hovered around these levels due to support from the State Bank of India (SBI). However, the largest bank and a key mover of the forex market retreated in the face of the heavy demand for dollars.

“The demand was the result of a statement made by a Reserve Bank official that the central bank is not targeting a fixed rate. The market interpreted this to mean that the RBI would not defend the rupee at this stage,” said N Subramanian, an analyst with e-Mecklai, a city-based forex brokerage.

The comments that RBI would keep off triggered a wave of dollar buying, both by state-owned banks and foreign ones. While the nationalised banks were mostly buying dollars for public sector oil companies and to make defence payments, foreign banks made spot-dollar purchases for foreign funds.

After this point, there was no let-up in the pressure, and the rupee soon dipped to its intra-day low of 45.17/18. At this level, the SBI was seen selling dollars, which pushed up the currency to 45.12. Later, it was confined to trading in a tight range of 45.10/15. However, dealers said there were wide quotes offered by banks, both for buying and selling dollars.

Dealers said the widening of the country’s first-quarter trade deficit by 26 per cent could also weigh on a weak rupee. “This could turn out to be negative for the rupee if there are no substantial inflows,” a dealer with a foreign bank said.    

Calcutta, Aug 1: 
Central Bank of India has overstated its profit for 1999-2000 by Rs 69.06 crore, its statutory auditors say. The bank’s operating profit for the last financial year was Rs 391.36 crore while the net profit stood at Rs 150.69 crore.

The team of auditors scanning the bank’s balance-sheet have also qualified key financial ratios, including the capital adequacy ratio, which has been pegged at 11.18 per cent. The auditors — S. K. Mehta & Co, N. Sarkar & Co, Datta Singla & Co, V.K. Dhingra & Co, Khanna & Annadhanam and M. Anandam & Co — say they have not been provided adequate information in certain cases even as they have come across several instances where provisions have not been made.

For instance, the initial contribution of Rs 45.83 crore to the pension fund has not been provided for. “Also, the Rs 4.87 crore spent on staff welfare has not been debited from the profit and loss account. This has inflated the profit by Rs 4.87 crore,” they said.

The auditors have also observed that depreciation on investments worth Rs 18.36 crore was charged to profit and loss account in the previous year, but a matching amount was withdrawn from the bank’s investment fluctuation reserve.

In the current year however, there was an appreciation in these investments. But, instead of crediting the surplus to the investment fluctuation reserve, the bank has shown it in the profit and loss account as ‘provisions and contingencies’. This has puffed up the profit for the year by Rs 18.36 crore.

The auditors say if the combined effect of these accounting flows, and the shortfall of Rs 45.83 crore in the provisions for pension funds of earlier years, are taken into account, the profit for 1999-2000 will be lower by Rs 69.06 crore.

The auditors have said the reconciliation of inter-branch accounts, which include transactions related to draft paid without advice and clearing differences, is in progress. Reconciliation of accounts with the Reserve Bank of India, other banks, nostro accounts, inter-branch accounts and nominal accounts, including UTI dividend accounts, have also not been completed.

“In the absence of requisite information from some branches, the classification of advances, the value of securities and other financial data are based on the inputs provided by the controlling offices,” the auditors have said in their note.

Another glaring anomaly that has caught the attention of auditors is that leave encashment benefits have been accounted for as cash payments — something that is not in tune with the accounting standard 15, a package of norms issued by the Institute of Chartered Accountants of India (ICAI).

The auditors have also said that the adequacy of provisions made against advances depend on the settlement of claims which have been lodged, or will be lodged, with credit guarantee organisations, and the actual value of securities.

“Advances given to units which have become sick, including those under nursing/rehabilitation programme and other advances classified as doubtful, have been considered secured/recoverable,” the auditors have said in their note.    

Calcutta, Aug 1: 
The Securities and Exchange Board of India (Sebi) has decided to organise Lok Adalat for the quick disposal of investors’ complaints against companies.

This is the first time that the market regulator will hold open-house sessions with investors in a system which will be similar to a banking ombudsman, but will have more powers.

A top Sebi official said regional offices have already been informed of the move, which is part of its effort to tackle the ever-growing number of complaints from investors. Initially, the interactions will be limited to 10 cities — Calcutta, Ahmedabad, Mumbai, Delhi, Chennai, Rajkot, Baroda, Jaipur, Kanpur and Cochin. However, the capital market watchdog will widen its scope if the feedback from the first phase is encouraging. “The first session will be held in Delhi this month. The interaction will be organised once in every quarter in a particular city,” the official said.

The official further explained that the open house, as Sebi calls it, would be a forum in which officials from the Reserve Bank of India, stock exchanges, department of company affairs and the registrar of companies would participate, besides the top brass from the market regulator.

The idea, he said, is to dispose off cases quickly and to invite suggestions from investors. In addition, the sessions will help in raising the level of investor awareness in the country.

The official said the open house will also try to involve companies so that a mutually acceptable settlement to a dispute can be found though discussions.

“The open house forum will be the right place to spell out such moves after listening to companies and their investors,” the official said.    

New Delhi, Aug 1: 
The government is planning to come out with a new set of accounting standards for Indian companies—India GAAP—in line with international practices.

P.L. Sanjeev Reddy, secretary, department of company affairs (DCA), today said the Institute of Chartered Accountants of India (ICAI) would complete framing the new guidelines soon. “India GAAP would be in line with the US, UK and other accounting standards followed globally,” he said.

The new standards would include harmonisation and consolidation of group accounts. “With several companies planning to tap the foreign markets, our accounting standards must match international standards,” Reddy said.

According to Reddy, the high-level committee under Justice Eradi would finalise the new Insolvency Act shortly which would then be forwarded to the Cabinet for its approval.

The new Act seeks to replace the older bankruptcy laws to speed up liquidation procedures.

Reddy said the draft competition law was expected to be finalised soon. “We have asked the Raghavan committee to speed up the process of preparing the draft guidelines,” he added.

According to Reddy, the proposed competition law would be flexible, dynamic and responsive.

The secretary said at present developing and developed countries do not enjoy the same market access. While non-trade barriers put up by developed countries should be brought down, Reddy said, predatory pricing and aggressive advertising by multinationals should also be taken into account.

Earlier, S.V.S. Raghavan, chairman of the committee which drafted the competition policy, said mergers and acquisitions were a reality. He said worldwide M&A deals account for nearly $ 3.3 trillion.

The competition policy would set a threshold for mergers and acquisitions, he said and added that companies would have to pre-notify the mergers and acquisitions.

If the company does not hear from the commission within 90 days, it can take it for granted that the merger has been approved.

Raghvan said whatever safeguards were required would be taken for cross border M&As.    

Mumbai, Aug 1: 
Ariba Inc, the leading business-to-business (B2B) e-commerce platform provider, is planning to take equity stakes in various market portals apart from setting up an Ariba India Net which would integrate several vortals in the country.

The company, which started its south Asia operations today, said the focus would be on India. It is planning to invest over $ 10 million, part of which will be accounted by equity stakes in various B2B market places.

Ariba is initially planning to set of around 50 such market places during the next 12 months in the country.    

Mumbai, Aug 1: 
Hindalco, the Aditya Birla Group flagship, today reported a 27.5 per cent jump in net profit to Rs 176 crore for the first quarter ended June 30, 2000 compared to Rs 138 crore in the corresponding period last year.

The company has recommended a final dividend of Rs 3 per share. This is in addition to the millennium dividend of Rs 5 per equity share paid earlier. Thus the total dividend for the year is put at Rs 8 as against Rs 6.50 per equity share last year.

The aluminium major’s net sales during April-June 2001 at Rs 565 crore is an 18 per cent increase over last year’s Rs 478 crore sales in the same period.

The sales figure reflect improved realisations and a better value product mix as the volumes in the first quarter remained close to levels reached in the same period of 1999-2000.

Hindalco’s operating profit for the period was Rs 270 crore, 26.2 per cent higher over Rs 214 crore in the previous year.

Gross profit is Rs 284 crore in comparison to Rs 226 crore in the corresponding period last year. Metal production during April-June is 61,835 mt as against 61,138 mt in the corresponding period last year. Rolled product at 16,284 mt is 27 per cent higher than the corresponding period last year.

Siemens Q3 net zooms

Siemens Ltd., has posted a profit of Rs 1.48 crore for the third quarter ended on June 30, compared with a profit of Rs 18 lakh in the corresponding period of the previous fiscal, registering a jump of 715 per cent.

This is a reflection of the restructuring program undertaken by the company for a turnaround.

Turnover improved to Rs 22.48 crore for the quarter as against Rs 20.68 crore for the corresponding period of the previous year. This represents an improvement of 8.7 per cent.

Siemens received new orders valued at Rs 89.34 crore for the nine months ended June 2000, as compared to Rs 94.57 crore, in the same period last year.

Major contributors to the turnover were the projects of railway transport systems, medical and standard products businesses.

Rossell struggles

Rossell Industries Ltd has reported a lower net profit of Rs 68 lakh during the second quarter ended June 30, 2000 against Rs 18.70 crore in the same quarter of the previous year.

However, it failed to stage any turnaround as first half results showed a net loss of Rs 8.03 crore against a profit of Rs 5.15 crore.

Net sales during the second quarter came down sharply to Rs 5.91 crore from Rs 7.52 crore while other income stood at a meagre Rs 8 lakh against Rs 15.69 crore in the corresponding previous quarter.

Net sales during the first six months now stand at Rs 15.40 crore (Rs 19.24 crore last year).

Total expenditure during the first half stood at Rs 21.33 crore (Rs 26.72 crore in the previous year) of which Rs 4.08 crore (Rs 3.53 crore) was incurred in the second half. Interest cost was almost halved to Rs 1.40 crore (Rs 2.65 crore in previous year) in the first half.    

Mumbai, Aug 1: 
Videsh Sanchar Nigam Ltd (VSNL) today extended its special monsoon package for internet subscribers till August 14.

In a letter addressed to its subscribers, Amitabh Kumar, director (operations), said, “All customers who have either renewed their accounts or have subscribed afresh will get the benefit of free night usage between 11.00 pm and 8.00 a.m. for three years.”

According to him, VSNL, was approached by several customers, who had subscribed to its internet service before June 1, for premature renewal of their accounts in order to avail themselves of the monsoon package.

“In deference to their demand, we are extending the facility of pre-mature renewal of accounts under the special monsoon rates.”

VSNL, in an attempt to counter other internet service providers, had decided on a 50 per cent cut in internet rates and free internet access in the night as part of a special monsoon package applicable from June 1 to July 31.

Free night access on VSNL’s optimised internet network is designed to deliver real value to customers and make internet a mass phenomenon, the telecom said.

Upon renewal, the existing hours in the account of the subscriber will be doubled and added to the new plan subscribed.

The company has also put in place its credit card gateway in co-operation with Easy Netcom and EVI company.

ADR listing

VSNL will list its American depository receipts (ADRs) on the New York Stock Exchange (NYSE) on August 15.

It will be the first public sector undertaking to get its ADRs listed on an American bourse.

The listing will not see an accretion to VSNL’s equity as the telecom monopoly proposes a conversion of the existing global depository receipts (GDRs) to ADRs on a 1:1 ratio.    

New Delhi, Aug 1: 
The country’s trade deficit in the first quarter of this fiscal has jumped around 30 per cent despite better showing on the export front.

Trade deficit for the quarter ending June 2000 went up to a staggering $ 2.98 billion (Rs 13,135 crore) compared with $ 2.37 billion (Rs 10,169 crore) in April-June 1999.

This is a reversal of the past two years’ trend when the trade gap had actually shrunk. While the trade deficit for 1997-98 was $ 13.2 billion, for the fiscal 1998-99 it was $ 8.1 billion. In 1999-2000 it had come down to just $ 7.5 billion. But the figures for the first quarter of the new fiscal seems to have gone against this.

The huge increase in trade deficit is mainly because of the rising oil import bill which spurted around 94 per cent to $ 3.9 billion in this quarter. While total volume of oil imports had not increased, analysts with the commerce ministry said, prices had been rising sharply, forcing higher forex outflow. Non-oil imports, in fact, grew by a modest 10.9 per cent.

Trade analysts expected further increase in the trade gap as oil prices were continuing to rise.

Exports during the quarter showed a more than healthy 27.65 per cent growth, going up from $ 7.9 billion to $ 10.1 billion. Much of the growth was powered by renewed global demand for Indian food products, gems and jewellery and infotech products.    


Foreign Exchange

US $1	Rs. 45.17	HK $1	Rs. 5.70*
UK £1	Rs. 67.78	SW Fr 1	Rs. 26.60*
Euro	Rs. 41.86	Sing $1	Rs. 25.65*
Yen 100	Rs. 41.19	Aus $1	Rs. 25.80*
*SBI TC buying rates; others are forex market closing rates


Calcutta	Bombay

Gold Std (10gm)	Rs. 4500	Gold Std (10 gm	4480
Gold 22 carat	Rs. 4250	Gold 22 carat	4145
Silver bar (Kg)	Rs.7900	Silver (Kg)	8015
Silver portion	Rs. 8000	Silver portion	8020

Stock Indices

Sensex	4253.69	-26.17
BSE-100	2135.38	-17.88
S&P CNX Nifty1326.85	-6.00	
Calcutta	121.11	+0.01
Skindia GDRNA	-	

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