Congress selloff posers rattle govt
Trai rules out abolition of licence fee
HCL Insys net up at Rs 73 crore
Rupee weakens again, closes at new low
Gramophone hums a new tune with Saregama
Value of investments in Tata Sons vaults
Foreign Exchange, Bullion, Stock Indices

New Delhi, Aug 10 
Not often is the reform-warrior Congress known for giving the Swadeshi protagonists a run for their money.

But, in a near volte-face on its stated position, Congress thought-leader Mani Shankar Aiyar today put the BJP-led government on the mat with posers in a manner that conjured up memories of Jethmalani�s queries that caused the Congress embarrassment, and much more, in the Bofors gun deal.

Aiyar asked the government 13 uncomfortable questions on its disinvestment policy, or as he called, the absence of one. �Which PSU sectors are essential? How does the government decide which PSUs should be run by new owners and which by the government? why are profit-making PSUs being sold off?� he thundered to the chagrin of the treasury benches.

The questions left the two Aruns squirming. While Jaitley was the minister for dinsinvestment before, Shourie is now in the hot seat. Even BJP hard-liners who have Swadeshi sympathies smirked at their government�s discomfort.

Not that the Congress� is united on its �left turn�. It is in the throes of a debate on the direction in which the reforms that it started in 1991 should proceed. Public sector disinvestment, and the state�s role in the economy, lies at the core of it. However, MPs like former finance minister Manmohan Singh do not support what the party calls the �new realistic thinking�. There are no cracks in the facade, though. The party put up a united show today. Congress MPs in the Lok Sabha, including leader Sonia Gandhi, turned up in strength to attend the debate and endorse the new pro-Swadeshi, anti-divestment stance.

Aiyar, the Congress� pointman who was told to rip the selloff strategy into shreds had done his homework: He compiled and carried to the House literature culled from Sangh Parivar�s theology on the virtues of the public sector.

�We have always maintained � even when we were liberalising � that public sector shares should be divested to the Indians. This can include small investors, mutual funds and financial institutions, not multinationals and their collaborators here,� Aiyar said. � In addition, the money should be used to strengthen the public sector, not to bridge the fiscal deficit.�

�Our idea of disinvestment was only to revive capital market, whereas for the BJP-led coalition, the process is central to reform initiatives. It is like giving away all PSU profits in the form of a �dowry gift�,� he said in remarks that showed just how far the Congress had moved on liberalisation.

Aiyar demanded the government publish a white paper spelling out its policy on divestment while accusing it of being evasive in Parliament on its policy of PSU disinvestment.

�Does the government differentiate between profit-making PSUs and loss making ones while selling its stake? What does it mean by a core sector PSU?,� Aiyar asked the government.

Targeting Shourie�s statements that PSUs were inherently inefficient, Aiyar pointed out that these companies had, as a combined entity, given the government a 9 per cent return on net worth in the last financial year at a time when the country�s top companies were struggling with poor numbers.

Aiyar rattled the government with numbers on the comparative profitability of the private and public sectors: �ITC had a mere 5.8 per cent return on its net worth, ACC 4.6 per cent, Spic 2.5 per cent while Hind Motors had negative return of 11.55 per cent. And though SAIL had a negative return, it was half of Essar�s figure of - 43.5 per cent,� Aiyar said.

For once, the Left was nodding like never before. Basudeb Acharya, the CPM MP who had initiated the debate, was seen beaming at every point that Aiyar hammered home.    

New Delhi, Aug 10 
The Telecom Regulatory Authority of India (Trai) today said it would not abolish the licence fee on operators till the time the telecom market matures, both in terms of size and the easy availability of information.

Chairman M. S. Verma made it clear to the telecom industry that he heads a body that does not frame policy, but only suggests and recommend ways for the growth of the sector.

Addressing a meeting organised by Associated Chamber of Commerce and Industry of India (Assocham) in association with other telecom industry associations, Verma emphasised that the licence fee will remain in place for now. �Trai has drawn up a three-year roadmap for constructive regulation. The document makes it clear that while licence fee is not a source of revenue generation for the government, the structure is likely to remain in place till the entire phase of the movement from monopoly to re-regulation and de-regulation is completed,� Verma told the meeting.

The approach will be to offer incentives, rather than punish, provided the industry also behaves in a responsible manner and appreciates the concerns voiced by the authority.

Verma said Trai will soon announce a package to promote and encourage connectivity at the local level, which is considered a weak link in the telecom chain. He said Trai�s primary objective is to take care of customers under all circumstances. �The regulator will do everything to ensure that a customer get he wants, and what he deserves,� Verma said.

Ku band duty

The department of telecommunications (DoT) has recommended a 5 per cent customs duty on Ku band V-sat terminals and optical fibre. This happened on a day when an inter-ministerial meeting finalised the guidelines for opening up national long distance telephony, allowing private internet service providers (ISPs) to lay submarine cables and to enable them to sell bandwidth to other ISPs.

Videsh Sanchar Nigam Limited (VSNL) and its partner, FLAG, will be asked to frame the rules based on which it can offer bandwidth to private ISPs.

�The guidelines will allow private companies to set up network and offer national long distance services. They will be announced much before the August 15 deadline by the Prime Minister,� DoT secretary Shyamal Ghosh told reporters here today.    

Mumbai, Aug 10 
The Delhi-based HCL Infosystems has posted a net profit of Rs 73.60 crore for the year ended June 30, as against Rs 58.52 crore in the previous corresponding period.

During this period, the company registered a net income of Rs 233 crore as against Rs 96.3 crore, a huge 141 per cent increase. Similarly, total revenue during the year stood at Rs 915 crore against Rs 724 crore, an increase of 26.38 per cent.

Briefing newspersons here today, HCL chairman Shiv Nadar said that the company will seek shareholders� approval for a $ 500 million American Depository Receipt (ADR) issue at its annual general meeting scheduled for October 20. �The approval will not be for making a public offering as such, but to enable the company acquire other companies in all stock deals,� he said.    

Aug 10 
After a day�s respite, the rupee was again on a roller-coaster today, closing at a new low of Rs 45.86/87 per dollar, on the renewed demand for dollars from corporates.

Today�s close saw the Indian currency decline by a whopping 24 paise from its previous close of Rs 45.62/63 per dollar. While some dealers now expect the Indian currency to remain in the 45.80-90 band, others estimate it to breach the crucial 46 mark if the Reserve Bank of India (RBI) does not intervene at the 45.90 levels.

The day�s trading saw a genuine demand for dollars from corporates and importers after the market�s expectations about an inflow of dollars were belied.

Yesterday, the rupee gained by around 12 paise on unconfirmed reports that the central bank had asked one corporate to bring in funds which it had parked overseas. This, market sources said, resulted in improved supplies and saw the rupee staging a turnaround yesterday.

Opening at around Rs 45.64/66, the rupee initially fell to Rs 45.67/68 but attempted a feeble rally to Rs 45.60/61 on dollar sales by a large state-run bank in late morning deals. Even as the market�s aspirations about a good dollar inflow were belied, a combination of dollar-buying by importers and a lack of intervention by the RBI changed market sentiment and led to heavy all-round demand for greenbacks in late afternoon business.

Further, short-covering by banks towards the closing minutes of trade pushed the rupee down to its historic intra-day low of Rs 45.88 per dollar, before closing at Rs 45.86/87 per dollar.

No cause for concern

The rupee�s poor showing against the greenback should not be cause for much concern, as it fell against the dollar but rose against the euro, said N. Walter, chief economist and managing director, Deutsche Bank.

�It is unreasonable to equate the value of the rupee only to the dollar and not the euro,� he said.

Speaking at a seminar organised by the Ficci on �Globalisation, Liberalisation and Developing Countries,� he said issues such as social standards and environmental conditions should not be raised at the World Trade Organisation.    

Calcutta, Aug 10 
Gramophone Company of India Limited (GCIL) has been renamed as Saregama India Limited (SIL) to impart the company a �more robust and vibrant� image, company vice-chairman Sanjiv Goenka said here today.

The company has decided to cut its 800-strong workforce by 25 per cent to turn itself into a lean and productive organisation. �We will reduce the staff-strength in the current financial year. Anderson Consulting has suggested that we reduce the cost of operations and we are doing everything possible to address the issue. We have already taken steps to revamp our supply-chain management,� Goenka said.

At the same time, the capacity of the company�s factory at Dum Dum will also be increased from 1.5 lakh cassettes per day to 2 lakh.

Saregama India will launch its new brand Saregama. Its logo has already been drawn up by an agency called Rubicon. The brand, which will market Indian music, is expected to be launched next month, and will be marketed internationally through Saregama plc and RPG Music International.

�We have plans to list our company either at Nasdaq or on the New York Stock Exchange. The board will take a final decision in December. We have not yet decided the size of the issue. It all depends how the market behaves in the coming months,� an upbeat Goenka said.

In the past year, the company has been looking for a new name, which will reflect the changes that have taken place in the technology of music production since the invention of gramophone in the 19th century.

�Sa re ga ma are the notes that every India identifies with. Moreover, the company�s current need is to reflect dynamism and a contemporary mindset. We have to reposition the company as an organisation of tomorrow.,� Goenka said.

The new name Saregama was selected after extensive research and brainstorming. However, the famous logo of HMV � a dog sitting in front of a gramophone � will be continued in all HMV cassettes.    

Mumbai, Aug 10 
Ratan Tata is finally having the last laugh. Almost four years ago, he issued a controversial edict to all Tata group companies asking them to invest in the equity of holding company Tata Sons. The reason: it was payback time for these companies which had profited by using the Tata name. Many Tata satraps had then resented the directive.

Four years on, the bean counters have come up with just the sort of numbers that should make the Tata group chairman smug: the investments that the leading Tata companies had made in Tata Sons in 1995-96 have quadrupled in value since then.

Among the companies to invest in the holding company�s rights issue totalling Rs 300 crore were Tata Steel, Tata Engineering, Tata Chemicals and Tata Power. Ratan Tata told the extra-ordinary general meeting of Tata Electric Companies yesterday that merchant bankers value the current value of these investments in the region of Rs 1200 crore.

The investments had been made in view of the funds requirement for various investments by Tata Sons and also to correct the capital structure of the group�s holding company.

N.A. Soonawala, a senior director, told The Telegraph that the valuation was on the basis of several appraisals done by investment bankers in the recent past.

The equity capital of Tata Sons is around Rs 40 crore and 66 per cent of the stake is held by trusts. Since the group companies subscribed to its equity, Tata Sons has declared two bonus issues.

As per the latest reports, Telco holds 12,375 shares of Tata Sons, while Tisco holds 12,375 shares through its wholly-owned subsidiary Kalimati investment company. Tata Power and Tata Chemicals hold 6672 and 10,237 shares respectively.

The shares, which have a face value of Rs 1000, are however valued in their books at an aggregate value of Rs 231.64 crore.

The holding declined to current levels after a rights issue at Rs 1 lakh per share 1995-96 in a ratio of 1:5. The Tata Sons� rights issue received an overwhelming response by mopping up Rs 300 crore.

The issue was made at that time in view of the funds requirement for various investments and also to correct the capital structure. Since the charitable trusts which were the major shareholders could not buy the shares, they renounced their rights in favour of other Tata companies at a premium of Rs 25,000 per share. The issue was made in view of the funds requirement for various investments and also to correct the capital structure.

Tata Sons has five operating divisions. Of these, Tata Consultancy Services (TCS) is the largest division of Tata Sons, generating over 90% of the Tata Sons� income and profits. TCS has shown sustained growth in income and profitability in the past and the continued good performance of this division is critical to Tata Sons, given the large outlay of funds required to increase investments in group companies. Given the scope for the indian software industry, which at present accounts for less than one per cent of the global information technology services industry, TCS is expected to continue to grow at past growth rates.

Tata Sons has a large investment portfolio of shares in the core Tata group companies that has been increasing every year. Besides dividend income, Tata Sons has also generated income by divesting non-core holdings as well as divestments of holdings, which are above a slated strategic holding.    


Foreign Exchange

US $1	Rs.45.87	HK $1	Rs. 5.75*
UK �1	Rs.68.83	SW Fr 1	Rs. 26.30*
Euro	Rs. 41.46	Sing $1	Rs. 26.30*
Yen 100	Rs. 42.38	Aus $1	Rs. 26.15*
*SBI TC buying rates; others are forex market closing rates


Calcutta	Bombay

Gold Std (10gm)	Rs. 4520	Gold Std (10 gm	4500
Gold 22 carat	Rs. 4270	Gold 22 carat	4160
Silver bar (Kg)	Rs. 7900	Silver (Kg)	8030
Silver portion	Rs. 8000	Silver portion	8035

Stock Indices

Sensex		4253.23		-63.81
BSE-100		2110.68		-40.21
S&P CNX Nifty		1328.00		-16.95
Calcutta		119.97		-1.06
Skindia GDR		752.08		-0.60	

Maintained by Web Development Company