State Bank narrows VRS scope
Insurance products in two months
Sebi to retain open offer rider for PSU selloff
Indian Bank to hive off MF, merchant banking arms
FII limit may go up to 49%
Renamed Samsung to focus on infotech
Sensex greets divestment push with 66-point rally
Chambers hail 2% surcharge
Foreign Exchange, Bullion, Stock Indices

Mumbai/Calcutta, Feb. 2: 
Swamped by the deluge of applications to its voluntary retirement scheme (VRS), State Bank of India (SBI) has decided to restrict the offer to officers who are over 55.

The modification, sources say, is likely to rule out 6,000 of the 18,000 officers who have filed for the separation package which closed on January 31 with more than 33,000 applications on the table.

There was no official word from the bank on the reasons, but sources said the move was aimed at retaining the younger officers, and to save on the amount that it would have to fork out if more people were to opt out of work soon.

Under the guidelines of the Indian Banks� Association, the VRS payment will include an ex-gratia amounting to 60 days� salary (pay, stagnation increment, special allowance and dearness allowance) for each completed year of service, or salary for the number of months� service left, whichever is less.

Bank chairman Janki Ballabh said on Friday that 10,000 applications will be rejected so that the actual number can be kept within the planned 10 per cent cut in its 2.33 lakh employees.

Of the 33,000 applications, 17,000 have come from officers, 12,200 from clerks, and 3,000 from subordinate staff, such as messengers and peons.

Barring officers, all requests for voluntary retirement from the other two categories will be accepted, a union leader said. If this were to happen, the number might exceed the 23,000 employees the bank wants to shed.

Though it is premature to say how many will opt out � employees have time until February 15 to withdraw their applications � sources say the number may be a little more than 27,000.

Mumbai, Kerala and Delhi are among the areas where the VRS has evoked a massive response. According to estimates, almost 65 per cent of the officers in Kerala have rooted for the scheme. Bengal and Patna circles, zones where the unions opposed to the offer have been most vociferous, gave it a cold shoulder.

The top-brass is worried that operations might be affected in VRS-happy areas might be affected. As a result, it now appears certain that several applications might be shot down, which could lead to widespread disappointment among the large number of officers who will not be able to leave.

While announcing the scheme, the bank had it would focus on re-deployment and retraining of staff, technological upgradation which involves reorganisation of functions, tasks and activities in the organisation. Sources say there may be large-scale transfers to areas and branches left short-staffed by the VRS.

�We do not want to destabilise the functioning of our 9,000 branches. So we will reduce the staff strength in line with our target. We will not disturb our day-to-day functioning. In some cases, we will take the advantage of redeployment and transfer policy,� Vepa Kamesam, managing director, said.

Asked how much it would cost the country�s largest bank to release its number of employees before their retirement age, Kamesan said his bank is still working out the figures.


Calcutta, Feb. 2: 
State Bank of India (SBI) expects to introduce bank-linked life insurance products by the end of the current financial year, or at the beginning of the next financial year.

Chairman Janki Ballabh, in the city to inaugurate 12 ATMs in the Bengal Circle, said his bank had filed its application for a licence with the Insurance Regulatory Development Authority on January 31, and that it was expected soon. The bank has selected Cardif, a wholly-owned subsidiary of French bank BNP, as a joint venture partner in its insurance foray. Cardif, which specialises in banking-insurance products, will hold 26 per cent while the rest will be with SBI.

The insurance business will be run by SBI Life Insurance Company, a firm which will have an authorised capital of Rs 250 crore, and an initial paid-up equity of Rs 175 crore.

�We will be providing a wide range of insurance items, which will be combined with banking products. For example, we will market housing/car loan with a life policy. Apart from that, there will be endowment policies. We hope to come up with a special insurance products for NRIs which will help them look after their relatives in India,� Ballabh said.

Meanwhile, SBI has launched an ambitious technology-upgradation plan. �We will be investing Rs 500-700 crore for technology upgradation in the next two years. We are now finalising the vendors, hardware and the software,� he said. There are plans to connect 2,500 branches within two years.

The bank has worked out a five-year perspective business plan. �In the next four years, we expect to double our deposits and advances,� Ballabh said. The bank, he said, has set a target of bringing down net NPAs to below 6 per cent of the total advances from 6.4 per cent in March last year.

There has been no decision taken so far on the separation of SBI�s associate banks. According to senior officials, the government had said in the past that they would be handed over to local banks. For example, State Bank of Hyderabad will be handed over to Andhra Bank. �No final decision has been taken by the government,� the officials said.


Mumbai, Feb. 2: 
Even as the government steps on the gas to speed up the process of divesting its stake in key public sector units, the Securities and Exchange Board of India (Sebi) has said strategic investors who either acquire a shareholding of more than 15 per cent in the PSU or effect a change in management will have to come out with an open offer to the minority shareholders.

The capital market regulator�s decision is in accordance with the takeover guidelines which makes it mandatory for an acquirer who picks up more than 15 per cent in a target company to make an open offer for another 20 per cent.

Sebi officials said the open offer price must be the same as that at which the acquirer buys the stake from the government.

Although companies can approach the market regulator seeking an exemption from making an open offer, Sebi officials said the Union government has not approached them seeking a waiver of the open offer condition. �We have not received any proposal from the government seeking to exempt acquirers from the mandatory open offer,� said a senior Sebi official.

Yesterday, as part of the divestment programme planned by the government, it decided to sell a 25 per cent stake in Videsh Sanchar Nigam Ltd (VSNL) to a strategic partner. The divestment is slated to reduce the government�s stake in the company from around 53 per cent to 26 per cent. In line with the Sebi guidelines, this means that the potential acquirer can have a stake of 45 per cent consequent to an open offer.

The government also announced its decision to bring down its stake in Delhi-based CMC Ltd from 83 per cent to 26 per cent. The Cabinet Committee on Disinvestment (CCD) also decided to continue the selloff process in Balco.

While news of the divestment resulted in the equity markets surging today with several PSU stocks showing sharp rises, market mavens say that attention will now be focused on the participants who are set to express interest in these companies and the valuation of the government�s stake.

Although the government had earlier set an ambitious target of Rs 10,000 crore from the selloff of its stake in key PSUs in this fiscal, the tardy pace in this respect has ensured that the target figure will not be met. Some of the key companies in which the government is likely to divest its stake include Maruti Udyog, MTNL, IBP and oil majors like Oil and Natural Gas Corporation and Indian Oil.


Calcutta, Feb. 2: 
As part of its restructuring drive, Indian Bank�one of the three weak banks�has decided to merge its housing subsidiary and hive off its merchant banking and mutual funds subsidiaries. The bank has also been selected by HDFC to market the latter�s insurance products.

Addressing a press conference here today, Ranjana Kumar, chairperson and managing director of the bank, said, �We will be able to hive off Ind Mutual Fund within this fiscal and sell it to some interested party. The talks have reached an advanced stage and we think we will bale to clinch a deal by March.�

The bank expects to sell the merchant banking subsidiary in the next financial year. �We have to get rid off the subsidiaries by March 2002 as per our restructuring plan,� she said.

The bank, whose capital adequacy ratio is negative, has gross non-performing assets of Rs 2830 crore. Till December this year, the bank had recovered Rs 330 crore locally and Rs 363 crore from its global operations. The bank has two international branches�one in Singapore and the other in Sri Lanka.

�We hope to reduce the NPA by Rs 600 crore in the current fiscal which will surpass our target to reduce it by 470 crore in the current fiscal,� Kumar said.

On the voluntary retirement scheme, Kumar said the bank had received 3,800 applications.


New Delhi, Feb. 2: 
The finance ministry is seriously considering a proposal to raise the cap on FII investments in Indian companies from the current 40 per cent to 49 per cent.

The move, which could form part of the budget package, is aimed at bolstering FDI flows into the country. India managed to attract below $ 2 billion in the last calendar year, even though informal targets for FDI were as high as $ 5 billion.

FIIs are currently allowed to acquire up to a 30 per cent stake in a company in the normal course, but can also pick up 40 per cent through a special resolution passed by the company.

The move to ease norms for FIIs, taking the cap up to 49 per cent, is likely to be welcomed by new economy companies � including those in infotech, media and pharma � which are heavily dependent on FII funding for both start-ups as well as long-term sustenance.

�We need to boost FDI intake as well as give techie firms funding, this should help on both counts,� ministry officials backing the move said.

The original proposal, finance ministry officials said, was to allow FIIs to acquire up to 51 per cent, but fear of foreign domination as well as the possibility of hawala money finding its way through the FII route, has seen the ministry favouring a lower cap at 49 per cent.

�Banks who have burnt their fingers with high NPA levels are wary of picking IPOs. FIs and FIIs are now the only ones willing to do so. One supposes the cap revision is because of this imperative,� K. K. Sengupta, a leading merchant banker, said.

Finance ministry officials said as measures to boost FDI investments by companies were still not totally successful, efforts this time round centred more towards attracting financial sector investments. �One of the arguments against FII investments in the past was possible financial instability, but with Indian markets turning more mature and with FII investments being channelled into specific areas, a mild hike in investment limits will not be much of a danger,� they said.

�Besides we don�t have capital convertibility, so no individual FII or pack of FIIs can really destabilise us even if we permit a cap hike,� they added.

Fickle FII investments was one of the factors blamed for the East Asian economic crisis and the Indian government has traditionally steered clear of of any decision which could lead to similar situations. Obviously, the need for creating non-debt foreign exchange flows seems to be forcing the government to be cautiously liberal on this front.


New Delhi, Feb. 2: 
Samsung Electronics India Pvt Ltd has changed its name to Samsung Electronics India Information and Telecommunications Ltd in a bid to re-position itself as a company with focus on information technology and telecommunications. The new company also plans to go public soon, though officials refused to comment further on the issue.

K.S. Kim, managing director of Samsung Electronics Operations in India, said, �Our core business would be personal telecommunications, office network and home appliances. The IT and telecom will be a major thrust areas for us. We expect to sell about six lakh handheld phones in the current year.�

This strategic move is a key initiative to accelerate Samsung�s growth in this segment in the country. The company expects to record a 40 per cent growth in 2001-2002. The total revenue target is Rs 1,650 crore. Out of this, about Rs 1,200 crore would come from IT and telecom products, Kim added.

The Indian arm of the Korean major earned a total revenue of Rs 1,210 crore in 2000-01, out of which Rs 740 crore came from IT and telecom products.

The company is also planning to introduce IT products which will help home and companies to exploit the convergence. Currently, Samsung Electronics India is developing a printer to accept Bluetooth technology.


Mumbai, Feb. 2: 
The market today greeted the government�s plan to disinvest a chunk of its equity in Videsh Sanchar Nigam Ltd (VSNL) and CMC Ltd with a 65-point rally spearheaded by public sector undertakings (PSUs).

Shares of most PSUs soared 8 per cent and some even hit the 16 per cent limit today, as the sector caught the fancy of investors. In fact, the levy of a 2 per cent surcharge on individual and corporate tax for the assessment year 2001-02, was largely ignored by the bourses, with industry welcoming the step with the hope that it would be a temporary one.

The 30-share BSE sensitive index gained 1.54 per cent at 4,352.26 points. The uptrend was clearly visible in the old economy shares which aided the sensex close on a positive note.

The two disinvestment candidates � VSNL and CMC � soared 16 per cent to Rs 382.15 and Rs 355.10 respectively after the government cleared dilution of a 25 per cent stake in VSNL and 57 per cent in CMC.

PSU power equipment maker Bharat Heavy Electricals Ltd and MTNL also hit the 8 per cent circuit filters.

Broking circles say the market will see public sector companies gaining ground as they expect MTNL and the smaller oil PSUs to be next on the block.

The sensex opened moderately down at 4280.96, gradually moving upwards to the day�s high of 4373.40 before closing at 4352.26, over yesterday�s close of 4286.11 � a net gain of 66.15 points or 1.54 per cent.

�The pre-Budget rally has begun,� a fund manager at a leading mutual fund said. �Hopes now rest on the Union Budget and the rally will gather speed in the coming days,� he added.

However, Himachal Futuristic and Global Telesystems suffered another setback due to sustained selling by a foreign fund.

Software bellwether Satyam improved by Rs 3.55 to Rs 414.75. Silverline was up by Rs 17.40 at Rs 268.55, Reliance by Rs 9.15 at Rs 394.35, ACC by Rs 9.50 at Rs 189.25, BHEL by Rs 13.05 at Rs 174.50, BSES by Rs 7.10 at Rs 220.20, Cipla by Rs 36.30 at Rs 1157.30, Grasim by Rs 8.50 at Rs 333.30, GACL by Rs 4.65 at Rs 190.55, HPCL by Rs 10.70 at Rs 190.40, Infosys by Rs 108.30 at Rs 6860.20, ITC by Rs 7.20 at Rs 901.05, L and T by Rs 11.85 at Rs 264.80, MTNL by Rs 11.20 at Rs 203.95, Ranbaxy by Rs 18.40 at Rs 682.90.


New Delhi, Feb. 2: 
The industry chambers have welcomed the Cabinet decision to impose additional 2 per cent surcharge on the income tax, saying, the move was necessary to raise resources to mitigate the losses suffered in the Gujarat earthquake. �It was inevitable in the wake of the devastating quake in Gujarat and was the only immediate measure in the hands of the government which could garner resources,� said Arun Bharat Ram, CII president, in a statement here.

The CII president also stated that a 1 per cent additional levy in December for natural disasters and calamities coupled with the additional 2 per cent would help mobilise resources and in the reconstruction of Gujarat.

Echoing similar sentiments, president of the Associated Chambers of Commerce and Industry of India (ASSOCHAM), Shekhar Bajaj said the industry supports the levy in this hour of crisis.

He said the government should effectively monitor the deployment of mobilised funds so that the earthquake victims receive adequate relief. He suggested, the government should utilise the expertise of the chambers, private sector and the non-governmental organisations in the task of rehabilitation.

However, Federation of Indian Chambers of Commerce and Industry (Ficci) said the surcharge of 2 per cent on individuals and companies alike for the assessment year 2001-02 must be temporary in nature and withdrawn immediately on completion of the task.

The chamber stated that government�s efforts should be supplemented with funds from the private sector with loans from housing finance development banks, commercial banks and infrastructure development and financing corporation. Ficci added that there was also a need to involve multilateral financial organisations like the World Bank and international aid agencies.

PHDCCI president Sushil Ansal said in a statement, �Though the corporate and other assessees are already shouldering the burden of a surcharge of 11 per cent and 10 per cent and even 15 per cent in some cases, the industry would partake in the responsibility in the wake of the calamity and partner in the reconstruction exercise.�

The budget should provide a reserve to be utilised in such severe times he said. The government should have a mechanism to ensure that funds collected through imposition of this 2 per cent surcharge and 1 per cent levied earlier for calamity relief are appropriately utilised, he added.

Following a Cabinet decision, the government promulgated an ordinance called Taxation Laws Amendment 2001 whereby a 2 per cent further surcharge was decided to be imposed on individuals (having income above Rs 60,000) and companies, to be utilised for relief and rehabilitation.

The additional revenue to be generated through these surcharges is Rs 1,300 crore.



Foreign Exchange

US $1	Rs. 46.40	HK $1	Rs.  5.85*
UK �1	Rs.68.60	SW Fr 1	Rs. 28.05*
Euro	Rs. 43.67	Sing $1	Rs.26.35*
Yen 100	Rs. 40.36	Aus $1	Rs. 25.40*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4505	Gold Std(10 gm)	4450
Gold 22 carat	Rs. 4255	Gold 22 carat	4115
Silver bar (Kg)	Rs. 7875	Silver (Kg)	7900
Silver portion	Rs. 7975	Silver portion	7905

Stock Indices

Sensex		4352.26		+66.15
BSE-100		2213.88		+38.07
S&P CNX Nifty	1378.85		+19.70
Calcutta	129.98		+1.82
Skindia GDR	734.84		-16.94

Maintained by Web Development Company