Sebi forms sub-group to study short sales pattern
Sales tax on aviation fuel, sponge iron capped at4%
Five-year tax waiver sought for online deals
Cement firmsrush to enlist Accenture for recast advice
Reliance to reduce product prices
Tupperware action on imitators
WBSEB plans to securitise dues
Bajaj Auto loses balance, sales skid 45%
Foreign Exchange, Bullion, Stock Indices

Mumbai, Jan 2: 
The Securities and Exchange Board of India today constituted a sub-group of the D. C. Anjaria committee to examine the pattern of short sales on the market and recommend ways to regulate them.

The sub-group, which will consist of Dr D C Anjaria, B V Goud, M M Kapoor, Himanshu kazi, Raghavan Putran, Ajit Khandelwal among others, will also look at the down-tick rule for short sales and to examine the feasibility of market-wide scrip-wise intra-settlement position limit for short sales or long purchases. It will also study the issue of imposing margins beyond certain position limits.

The DC Anjaria committee for the regulation of short sales, which met here today, was widely expected to come out with some restrictions on naked short sales and decide the question of allowing short-sales on the downtick. However, it is believed that the the committee was divided on the issue of applying some stringent restrictions on naked short sales.

In a press statement issued after the meeting, Sebi said the group would conduct a study of the empirical evidence of the data available for the last three years and in particular over the past six months to examine the impact of short sales on price volatility in the market.

The group, it added, will also suggest measures to encourage stock lending so that more short sellers are covered by delivery through stock market borrowing and it will examine the issue of a creating a level playing field for the short sellers and the long buyers.

For the capital markets, the postponement of any decision on the short sale front is likely to be seen as good news since a significant section of operators and pundits was opposed to any control on naked short sales, particularly in the wake of the present bearish conditions.

Earlier, the committee had ruled that short sellers and long buyers would have to disclose their positions every day so that there was complete transparency in these deals apart from disallowing naked short sellers to receive badla charges.

PTI adds: Sebi has also proposed a system for settlement that will make payments directly to investor accounts and thus improve efficiency, liquidity, better receipt of corporate benefits like bonus and rights, said sebi chairman DR Mehta. Clearing houses and corporations would have to ascertain from each beneficiary the account details and send the advice for direct payments, he said.

The investors would receive payments directly to the extent of instructions received from clearing members, he said. In those cases where instructions were not given, the payments would go to the pool accounts.

The market regulator had set up a group under JR Verma, a Sebi member, to formulate a penalty structure for non-performance and failure to adhere to the proposed rules on direct payments, Mehta said.

The Verma group on depository would consider ways to reduce balances existing in pool accounts and the National Securities Depository Ltd would amend its bye-laws to facilitate transfer of corporate benefits to pool accounts, he said.

�We have also proposed introduction of an online transfer facility between depositories for both, market and off-market transactions. At present, such information is exchanged by batch method,� Sebi chief said.


New Delhi, Jan 2: 
The Cabinet today decided to introduce the Central Sales Tax (Amendment) Bill 2000, renamed as the Central Sales Tax (Amendment) Bill 2001, which seeks to amend the Central Sales Tax Act 1956.

The amendment seeks to include Aviation Turbine Fuel (ATF) provided to �Turbo-prop Aircraft�and �sponge iron� as �declared goods.� As provided under section 15 of the Bill, the rate of sales tax on such declared goods will not exceed 4 per cent.

At present, sales tax is levied on ATF at different rates by states and Union Territories varying between 0 to 36 per cent.

Presently, iron and steel in various forms like pig iron and cast iron have been declared as goods of special importance in inter-state trade. Sponge iron is in no way different from pig iron and hence the amendment to include it in the list of declared goods.

The Cabinet today also approved the re-promulgation of the Indian Council of World Affairs (ICWA) Ordinance 2000 which lapsed on Monday. The primary objective of the council under the re-promulgation will be to promote the study of international affairs and foreign policy.

The re-promulgation is necessary to maintain continuity and enable the government to continue with renovation works of ICWA and help resume activities of the council till such time as the ICWA Bill 2000 as passed by the Lok Sabha is considered and passed by the Rajya Sabha in its next session.

The Cabinet also approved the introduction of the Delhi Apartment Ownership Bill 2000 with a provision for repealing Delhi Apartment Ownership Act 1986. The Bill seeks to protect an individual�s title to an apartment.


New Delhi, Jan 2: 
The National Association of Software and Service Companies (Nasscom) today sought a five-year tax moratorium on e-commerce transactions and cheaper computers for schools and students in a 10-point proposal to finance minister Yashwant Sinha.

�We seek the government�s continued support to software and IT service industry in India. The current need is to continue with the incentives, further simplify procedures, implement more economic reforms, reduce the cost of computerisation, and spend more towards setting up of IITs or IIITs and boost e-commerce activities,� said Nasscom president Dewang Mehta.

Mehta added, �We told the finance minister that in order to have continued 50 per cent plus growth in exports and to achieve $ 50 billion of annual software exports target by 2008, it is essential that the physical and telecom infrastructure is quickly enhanced and the procedural obstacles are completely removed.�

Nasscom has recommended that computer software development and IT software services should be continued to kept outside the purview of service tax in the domestic market.

The software association has also sought on-site services to be recognised as integral part of computer software exports under Section 10A/10B of Income Tax Act. This Section provides for an income tax holiday to units registered with 100% EOU, EPZ, STP.

These two sections had replaced the old Sections 10A /10B. Mehta said, �The problem with the new sections is that they have narrow definition of computer software, with the result many income tax officials believe that on-site services exports are not exempted from income tax under the new sections.�

Currently 60 per cent of India�s software exports are through on-site services. In 2000-01, out of the projected $ 6.2 billion of software exports, almost $ 3.7 billion is expected to be through on-site services.

According to Nasscom, another major problem in Section 10A/10B is regarding change in ownership and the tax treatment, thereafter. Mehta said, Section 10A/10B of Income Tax Act is a deterrent to mergers and acquisitions.

Nasscom has requested that the sub-section 9 read and Explanation 1 be omitted both from Section 10A as well as 10B of Income Tax Act, so that mergers and acquisitions can take place without obstacles.

The software association has also demanded that software units in backward areas should be granted a tax holiday like other units under Section 80IB of Income tax act Section 80IB.

The association has also sought that dividends from overseas subsidiary companies of IT Software and service companies should be exempted from tax.

Under Income Tax Act, if an overseas branch office brings in profits from its overseas software activities into India, then it gets income tax exemption, whereas an overseas subsidiary for similar operations does not get similar exemption.This anomaly needs to be modified, said Mehta.


Mumbai, Jan 2: 
Several years of painstaking work in reorganising cement companies in India has made Accenture (formerly Andersen Consulting) a favourite with global cement makers which are rushing to it for precious recast advice.

Siam Cement, the largest cement producer in south-east Asia with a kiln capacity of 18.8 million tonnes of clinker or approximately 23 million tonnes of cement, has hired Accenture. The assignment will be handled by the consultant�s Indian office.

In addition to the Thai cement company, Accenture�s services have been sought by a leading cement manufacturer in Saudi Arabia and another firm in Poland for revamps.

This was disclosed by Sid K Khanna, managing partner (India and West Asia) at the launch ceremony of Accenture. The management and technology consulting organisation kicked off a campaign to popularise its new identity in India.

�Accenture is a word coined to connote an accent or emphasis on future, just as the firm focuses on helping its clients create their future,� Khanna said.

Accenture�s shift to provide consultancy services to cement companies abroad comes after the firm gained valuable insight while restructuring almost 40 per cent of Indian cement firms.

Asked if the Indian cement firms have finally seen light at the end of the tunnel vis-a-vis the demand and supply, Khanna said he was not sure. However, he said the industry�s fortunes are closely tied to the level of industrial growth. Cartelisation to jack up prices has never worked in the long term, he said.


Mumbai, Jan 2: 
In tune with the steady prices of crude oil, Reliance Industries Ltd (RIL) today effected marginal reductions in prices of its products.

The largest reduction was seen in that of partially oriented yarn (POY) which was brought down to Rs 61.70 per kg.

While prices of most products were either unchanged or down marginally, industry circles interpreted the change in the light of prevailing crude prices, currently at $ 24 a barrel.

Other products whose prices were revised included polyester staple fibre (PSF) by 50 paise to Rs 51 per kg, PTA by the same amount to Rs 33.25 per kg and MEG to Rs 33.30 per kg.

In December, RIL had brought about a strong reduction in prices of products following a sharp downturn in prices of crude oil. On that occasion, while prices of PE were brought down by over 5 per kg to Rs 44.3, in PVC the cut was by Rs 4 per kg to Rs 39 per kg.

With Opec slated to discuss the issue of production cuts again later this month, sources do not rule out the possibility of crude prices firming up consequent to the enforcement of any such cuts. This is expected to bring about a slight improvement in the prices of petro products.

Meanwhile, on the BSE today, the Reliance scrip attracted huge buying interest following positive expectations from its forthcoming third quarter results due on January 30. The scrip which opened at Rs 341.25, shot up to an intra-day high of Rs 359 before closing at Rs 357.30. Market circles expect the company to post good performance as prices of most of petro products were on the upswing in the quarter gone by due to developments on the crude front.

Reliance Petro pact

Meanwhile, an agreement was signed between Reliance Petroleum Ltd, Gujarat Maritime Board and ICICI in Gandhinagar today to provide comfort to lenders (financial institutions) and make infrastructure projects bankable.

P N Roy Chowdhury, vice-chairman GMB, Shekhar Damle, deputy general manager, Vijaya Rao, senior vice-president of ICICI, and Hemant Desai, senior executive vice-president of Reliance, signed the agreement, an official release said.

The Reliance Group has set up the world�s largest grassroot refinery for processing crude oil at Jamnagar.


New Delhi, Jan 2: 
Copycats beware, Tupperware will soon file law suits against imitators flooding the market.

Newly appointed managing director of Tupperware India, Kanwar S Bhutani, said a certain company has copied all their materials. Bhutani said many of their products were protected under patent laws and the company is likely to take legal action against unethical practices.

Bhutani said the company has achieved a turnover of Rs 60 crore in the last calendar year. �This year we are looking forward to clock Rs 80 crores� said Bhutani, adding �We plan to double business in 2-5 years.� He said the company achieved break even last year.

Tupperware is looking for partners for selling its wares in the country. The company is considering the options of partnerships with other direct-selling companies, as also alliances with non-direct marketing companies. �We are looking at partnering with companies making food products,� Bhutani said.

With airtight seals, Tupperware products help to maintain the freshness of food and prevent spillage. Refusing to divulge names, Bhutani said the company is in the final stages of talks with some companies on this account.

The other thing the company is looking for is manpower, or rather womanpower. This direct marketing company which has an all-women dealer network of 20,000 women in India, plans to add an equal number of women to the workforce this year, said Bhutani.

Tupperware also launched �Quick shake,� which can be used for blending juices, milk shakes, making salad dressings or sauces, blending flour and water, making instant pudding and for whipping cream. The product, with a 500 ml capacity is priced at Rs 185 and has been launched in 16 cities around the country. Tupperware, which has already launched 75 of its virgin plastic storage and service containers, is also looking at extending its product range to food preparation.

Tupperware, in India since 1996, set up a $ 2 million machine plant in Hyderabad in March 2000.


Calcutta, Jan 2: 
The West Bengal State Electricity Board (WBSEB) has worked out an action plan effective from January 1, which envisages securitisation of its dues worth Rs 3000 crore and sets targets for increasing revenue and reducing expenditure.

The board has directed the heads of all departments to submit a progress report for each month by the seventh of the following month. According to an analysis of WBSEB�s revenue earnings and expenditure, around Rs 66 crore is required each month to implement the securitisation of dues programme.

The state government is actively considering a move to extend necessary assistance for liquidation of the board�s dues payable to state public sector undertakings like West Bengal Power Development Corporation Ltd (WBPDCL) and DPL.

The board has spelt out several measures in the action plan to garner the additional Rs 66 crore. It has already submitted a tariff revision proposal to West Bengal State Electricity Regulatory Commission (WBSERC) to earn an additional monthly amount of Rs 35 crore. Another Rs 20 crore revenue will be augmented from centralised bulk consumers, decentralised bulk consumers, low and medium voltage consumers and CESC. The board has also planned to reduce expenditure by Rs 9.3 crore.

Further, sources said WBSEB will have to raise bonds to the tune of Rs 3,000 crore to securitise its dues. The bonds will be tax-free and will be guaranteed by the state government. WBSEB�s major creditor is National Thermal Power Corporation, whose dues run up to Rs 1,200 crore.

The money will be kept in an escrow account, from where it will go to the respective creditors. �If SEB fails to service the bonds, then the state government will provide necessary financial support through budgetary allocations,� sources said.


Mumbai, Jan 2: 
Two-wheeler giant Bajaj Auto (BAL) ended 2000 with one of its worst performances ever. Its sales plunged 45 per cent in December compared with the same period last year.

The website hosted by the country�s largest two-and-three wheeler maker said its sales dropped 73,000 units from 1,32,000 vehicles in corresponding period of previous year.

The figures exclude completely knocked down (CKD) kits supplied to its affiliate firm, Maharashtra Scooters, (MSL), but include sales of completely built units of MSL, the firm said.

The sales slump has started telling on its share price, which shed Rs 3.25 to close at Rs 227 today on the Bombay Stock Exchange (BSE). The intra-day trough was pegged at Rs 222.20, a record low. The 52-week high and low were Rs 437 and Rs 223.

Even as Bajaj Auto struggled to retain its balance, Hero Honda, its arch-rival in the Japanese motorcycle market, weathered a recession with a 25.5 per cent jump in sales in December.

It sold 85,785 units, up from 68,382 units in the same month last year. It has lined up a intensive marketing blitzkrieg, featuring Hrithik Roshan and Indian cricket captain Saurav Ganguly to sell its bikes in the coming months.

Meanwhile, Bajaj Auto informed stock exchanges that its board will meet on January 16 to consider the unaudited third quarter results, which many in the market fear will be dismal.

Analysts say scooter sales � its bread-and-butter product � plummeted 75 per cent in December, year-on-year. In December 1999, Bajaj had launched �Bajaj Crorepati Hangama�, a sales promotion campaign that nudged several undecided buyers into showrooms.

Therefore, say the analysts, the results of the two periods are not strictly comparable.

There are growing fears that increased competition in the coming months will scald Bajaj�s bottomline in the short to medium terms, an analyst affiliated to a leading mutual fund said.

The immediate future is crucial for Bajaj Auto as the company plans to unleash �Eliminator�, its 175 cc four-stroke bike under the Kawasaki marquee. Saffire, a four-stroke scooter with a futuristic design launched recently in select towns, will also be launched in more cities and towns across the country.

The two launches may help Bajaj Auto regain some ground in future. However, analysts wonder whether that will be enough given that the industry is seeing a major shift towards 100 cc bikes.

Kinetic Motors launched a model on its own, while LML teamed up with Daelim to introduce its version of the high-powered bike. Officials of both companies say customer response has been encouraging.

However, all is not lost for Bajaj Auto. Analysts say it has several things going right.

One of them is that it has Rs 1,300 crore in cash reserves, which works out to around Rs 130 per share.

What is incredible is that this level has been maintained even after its generous offer to buy back shares at Rs 400 each.

Over Rs 700 crore has been set side for the purpose.



Foreign Exchange

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