Ordinance to push bank reforms
Price pressures may hold back grants to states
Oct forex outgo pegged at $ 2 bn
NationalHighwaylonger by 5694 kms
Henkel Spic eyes full Calchem pie
Mobile Siva to go long distance
Foreign Exchange, Bullion, Stock Indices

New Delhi, Oct 11: 
To hasten the process of reforms in the financial markets, the government is planning to introduce ordinances that will allow it to reduce its holding in public sector banks to 33 per cent and permit General Insurance Corporation (GIC) to hive off its four subsidiaries and metamorphose into a national re-insurer.

The ordinances will obviate the immediate need to secure Parliament�s approval for the requisite amendments to the Banking Nationalisation Act 1969 and the General Insurance Act 1972. However, the government will have to cement the changes through legislative sanction at a later stage.

Usually, an ordinance has a validity of six months and it enables the government to go through with what it wants to do before seeking post-facto approval from Parliament.

Officials said the government did not want to delay the process any further by tabling amendment Bills in the winter session of Parliament and has hence opted for ordnance route.

�The government was unable to move Bills in this regard in the monsoon session of Parliament; the start of the winter session is almost a month away,� said sources. Hence, the amendments, already cleared by the finance and law ministries, will be tabled at the next cabinet meeting, said sources.

The amendments to the Banking Nationalisation Act 1969 had been initiated after the finance minister announced in this year�s budget the reduction of the government�s stake in public sector banks to 33 per cent. Banks will now be able to sell off equity to public, financial institutions and multinational companies.

However, the �public sector� character of the banks will be retained. �The government will continue to retain the right of ownership while allowing the banks to make decisions based on market diktats,� said sources.

The bank boards will have sufficient autonomy to take decisions on corporate strategy and business management, but the interests of the employees will be safeguarded.

Officials said the amendments to the GIC Act 1972 will clear the way for delinking GIC and its four subsidiaries�Oriental Insurance, New India Assurance, United India Insurance and National Insurance. GIC will no longer be a holding company and instead become the National Reinsurer.

Under the proposed ordinance, the four subsidiaries will become independent and will be allowed to compete with each other. The equity of the companies will be raised to Rs 100 crore each while GIC�s equity will be raised to Rs 200 crore. As the national re-insurer, 20 per cent of the re-insurance market will be reserved exclusively for GIC. This is being done as private re-insurance companies are also being allowed into the Indian market.

The amendments to the GIC Act is in line with the recommendations of the Poddar committee which had recently submitted its report. The Insurance Regulatory and Development Authority (IRDA) had set a deadline of October 16 for restructuring the national insurance giant.

Sources were, however, not in a position to comment whether the amendments would go through before this date. �With the Prime Minister recovering from his knee surgery in Mumbai, it is hard to say when the next meeting of the cabinet will be held,� they said.    

New Delhi, Oct 11: 
Worried about the inflationary pressures on the economy and a widening fiscal deficit, the finance ministry has evolved a strategy to slow the disbursal of grants to states, as recommended by the Eleventh Finance Commission.

The commission�s main report had proposed a revenue gap grant of Rs 35,000 crore for 15 special and non-special category states over five years. The amount earmarked for the current year is Rs 11,000 crore. In its supplementary report, the commission recommended Rs 5,000-crore grant for states which are considered relatively affluent. This is an unexpected burden for the finance ministry, which has been trying to limit the outgo from the central government.

With PSU investment unlikely to yield significant amounts this year, the finance minister may find it difficult to limit fiscal deficit to the targeted 5.1 per cent of the gross domestic product (GDP).

Meanwhile, finance minister Yashwant Sinha is having anxious moments over the rate of inflation which shot past 6 per cent on September 23. There is a high probability that the impact of the increase in prices of petroleum products will push it to 7 per cent.

The government has not taken a decision on the finance commission�s supplementary report, which recommended Rs 5,000 crore as grants to relatively wealthy states such as Andhra Pradesh, Karnataka, Tamil Nadu, Kerala, Maharashtra and Gujarat.

The report is still under consideration. The next step will be drafting of a Cabinet note, to be vetted by the Planning Commission.

The finance ministry will have to develop a criteria for disbursing the grants. The entire exercise will be deferred to the last quarter of the current financial year. This will enable the ministry to limit the outgo this year.

Similarly, the revenue gap grant of Rs 11,000 crore meant for the current year is being divided into 14 installments.    

New Delhi, Oct 11: 
The finance ministry expects foreign exchange reserves to be depleted by $ 2-2.25 billion this month due to the high cost of oil imports and outflows of foreign institutional investment, but expects much of it to be replenished by a State Bank�s bond issue � called the Millennium India Deposit Scheme � that could garner $ 2 billion.

�Foreign exchange reserves will be $ 35.25 billion by the end of this month,� senior officials in the department of economic affairs (DEA) said. The size of the kitty was $ 33.75 billion in August, down from $ 38.34 billion four months back.

Early forecasts on the depletion in reserves and the way oil prices would harden have helped the government respond to the situation and launch the bonds, the officials said.

�You can expect more measures aimed at liberalising hard-currency investments and long-term credit flows in the next few months. Net FII investments will continue to be negative, largely because they seem keen on profit taking,� they added.

The DEA, a division of the finance ministry which oversees exchange and investments and issues guidelines on these subjects, has been scanning the reserve position and investment flows over the past few months rather anxiously. �Our oil import bill this year is almost double the amount in the same period of last year. Naturally, our reserves are getting depleted. That is why we have decided to offer SBI�s RIB-II bonds though they carry interest rate higher than in the last series,� the officials said.

However, inflows of foreign exchange from the RIB bonds are not expected to lead to an appreciation of the rupee. �We feel the rupee-dollar rate will remain over 46 in the next three to four months,� officials said.

The pressure on the rupee will come mostly from oil importers and speculators. Imports of capital goods are also expected to pick up. �Traditionally, big projects take off in the winter season. With the finance minister having recently made it clear that he wants at least some big-ticket infrastructure projects to be launched in this season, it could means more demand for dollars in the coming months.�

The ministry also feels the trade deficit, which now stands at $ 3.7 billion, is likely to widen further. Imports will continue to grow at the rate of over 20 per cent in the coming months, even as growth in exports will be slower at 15-16 per cent.    

New Delhi, Oct 11: 
The government today added 5,694 kilometres to the national highway project, much of which will be laid in Bihar and Uttar Pradesh. With this, the total length of the network will go up to 57,704 kms from 52,010 kms.

Making the announcement, surface transport minister Rajnath Singh said the country�s first national waterway will be start from October 21. It will cover a distance of 1,650 kms, between Allahabad and Haldia.

Of the 5,694 kms that will be added to the national highway, 1,161kms will be in Uttar Pradesh, 1,131 kms in Bihar and 938 kms in Madhya Pradesh. Road conditions in Andhra Pradesh, Tamil Nadu, Assam Arunachal Pradesh, Mizoram and Orissa will be improved to connect them to the National Highway.

�Special attention has been paid to the most backward and densely populated areas. The highways are likely to help these areas develop to their full potential. The total investment for the project would be Rs 7,000-8,000 crore,� Singh said.    

Calcutta, Oct 11: 
Henkel Spic is keen to pick up the remaining 10 per cent stake in Calcutta Chemicals. At present, the German fast moving consumer goods (FMCG) major owns a 90 per cent stake in the company. It has offered Rs 267 per share to the minority shareholders of Calchem.

Talking to The Telegraph, A. Satishkumar, managing director of Henkel Spic India Ltd said, �We are keen to acquire the rest 10 per cent in Calchem. We have sent letters to the minority shareholders reminding them that they can offload their stake by October 13. It will be done according to the guidelines set by Securities and Exchange Board of India.�

�Since Calchem is a very old company some of its shareholders have already expired. We are giving a chance to their heirs to offload their shares,� he said.

Henkel Spic acquired 56 per cent of the company from Shaw Wallace, 26 per cent from K D Paul and Associates and 8 per cent from the public. The share capital of the company is Rs 80 lakh divided into 8 lakh shares of Rs 10 each. The first offer was given in early 2000 priced at Rs 267 per share. Talking about the future plans of the company, Satishkumar said that they are plans to modernise Calchem�s factory at Tiljala in Calcutta. �It is a very old factory. I cannot divulge the details now. But the modernisation plan will take shape within a year�s time,� he added.

Apart from this, the company will consolidate position and market products in this fiscal. �We have also undertaken a massive promotional campaign,� he said.

To begin with, Henkel Spic will launch a new variant of Margo which has natural moisturiser. �It will be a nationwide launch with the maiden launch in Calcutta,� the managing director said.

The company currently exports Margo to countries like Japan and West Asia. It is planning to sell the brand in other countries as well. �We are currently working on a plan to market the brand in countries which are more health conscious,� he said.    

Mumbai, Oct 11: 
The list of possible entrants in the national long distance telephony (NLD) sector seems to be getting longer, with C. Sivasankaran, of Sterling Cellular fame, believed to be considering a foray into the sector.

While developments in this regard are said to be in preliminary stages with Sivasankaran learnt to be scouting for a collaborator, reliable industry and financial institution circles told The Telegraph that he may enter into a tieup with Chanrai of Singapore which also has interests in telecom. This however, could not confirmed with Sivasankaran.

Industry sources said that Sivasankaran�s plans of a foray in long distance telephony comes after his earlier plan to offer local call dialling across the country.

They added that his experience in handling cellular operations in Tamil Nadu is likely to come handy for the venture.

Sivasankaran currently owns Srinivas Cellcom, the cellular operator in Tamil Nadu. Besides, he had also evinced interest in acquiring a stake in Chennai cellular services operator Skycell Communications, through which it expected to cover the entire state.

Incidentally, Srinivas Cellcom is said to be one of the few cellular operators that owed no dues to the government and was the first to migrate to the revenue-sharing system from a licence fee regime.

After the Union government announced its intentions of opening up the NLD sector to local competition, telecom majors like Videsh Sanchar Nigam Ltd, the BPL group, the Mittals of the Bharti group and the Power Grid Corporation have so far evinced serious interest in this sector. Further, the Reliance group is also contemplating an investment of over Rs 15,000 crore in the infocom business. FI circles state that due to the tough government regulations which prescribe a minimum networth of Rs 1,000 crore, only corporates with deep pockets are likely to enter this sector.

Sivasankaran had earlier announced strengthening of his infocom initiatives which included Dishnet, the internet service provider and ETH Ltd (Education-to-Home), which was to provide syllabus-based education on a TV channel. While both of these initiatives necessitated an investment of Rs 2,000 crore, for his cellular services venture in Tamil Nadu, he planned to focus on acquiring other cellular circles.

Last year, the Essar group had picked up a 20 per cent stake in Sterling Computers Ltd (SCL), following its acquisition of the entire equity of three unlisted private investment companies owned by Sivasankaran. SCL then held 51 per cent in Sterling Cellular, the cellular licencee for Delhi, which in turn held 80 per cent of Aircell Digilink, the licencee for UP (East), Haryana and Rajasthan.    


Foreign Exchange

US $1	Rs. 46.28	HK $1	Rs. 5.85*
UK �1	Rs. 67.56	SW Fr 1	Rs. 26.20*
Euro	Rs. 40.43	Sing $1	Rs. 26.05*
Yen 100	Rs. 42.84	Aus $1	Rs. 24.40*
*SBI TC buying rates; others are forex market closing rates


Calcutta	Bombay

Gold Std (10gm)	Rs. 4580	Gold Std (10 gm	4540
Gold 22 carat	Rs. 4325	Gold 22 carat	4200
Silver bar (Kg)	Rs.8025	Silver (Kg)	8130
Silver portion	Rs. 8125	Silver portion	8135

Stock Indices

Sensex	3836.51		-108.77
BSE-100	1912.54		-61.96
S&P CNX Nifty	1201.90		-37.05
Calcutta	106.92		-1.11
Skindia GDRNA	586.97		-16.05

Maintained by Web Development Company