Enron opts out of broadband project
Duty brakes to stop used car import likely
VST prefers to wait and watch
Wild swings see sensex losing 40 points
Traders bring Siliguri tea auctions to a halt
No big increase in govt borrowings target seen
Bengal bid to bridge digital divide
BoB plans more foreign branches
City software park sees big jump in exports
Foreign Exchange, Bullion, Stock Indices

Mumbai, Feb. 22: 
US energy major Enron Corporation has shocked the Maharahstra government again.

Even before the heat and dust could settle on the counter-guarantee controversy, Enron today announced that it is pulling out of the fibre-optic cable joint venture with the Maharashtra State Electricity Board (MSEB). This venture was formed to set up a broadband network in the state.

The US power giant, however, stated that today�s decision has nothing to do with the counter-guarantee imbroglio.

The consortium for the fibre-optic cable network was selected by the MSEB through global bidding, with the state electricity board and Enron holding 40 per cent each and Global TeleSystems the balance 20 per cent.

The proposed objective of the consortium was to establish a 5,000-kms fibre-optic cable connecting cities and towns in Maharashtra.

Industry circles allude Enron�s row with MSEB and the state government over outstanding dues as having spurred today�s move, which was, however, vehemently denied by the US energy major.

Denying that Enron�s decision to quit the consortium was influenced by the ongoing feud with MSEB and the Maharashtra state government relating to the Dabhol Power Project, an Enron spokesperson declared both issues are �totally unrelated.�

The company instead attributed the move to a �lengthy delay� of more than eight months and �continued disagreement on critical commercial and regulatory issues.�

�Enron has determined that its involvement in the project is no longer financially viable and has elected not to pursue further participation in the project,� the company in a brief statement said.

�We have informed them that on account of lengthy delays in critical commercial clearances, we are not going ahead,� an Enron official said.

Enron last year had drawn up plans with the MSEB and Global TeleSystems to set up a broadband network covering almost the entire state.

However, even after washing its hands off the broadband venture, the company said it could consider options in the near future on any proposal to set up optical cable networks through the state highways.

Enron has entered into a joint venture for setting up an optical cable network in neighbouring Karnataka, with the distribution arm of the state electricity board there. �Even the Karnataka project is moving slowly,� the Enron spokesperson lamented.

Earlier, its subsidiary, the Dabhol Power Company (DPC), had invoked the Government of India�s counter-guarantee, after the MSEB and the Maharashtra government defaulted on its outstanding bill of Rs 79 crore for the month of November 2000, which made it the first foreign company to take the extreme step of invoking a central guarantee.

Simultaneously, DPC also invoked the counter guarantee of the government of Maharashtra for an amount of Rs 152 crore under the December 2000 bill, which is also overdue. The state government had to pay within seven days. While that grace period expired last week, DPC has so far not taken the extreme step of invoking the country�s sovereign guarantee.


New Delhi, Feb. 22: 
A 100 per cent duty on second-hand car imports appears likely, but there are enough indications that the industry�s demand for excise sops will not be conceded.

The automobile policy being finalised by the industry ministry has invited a lot of flak from the ministries which have been consulted on the issue.

The Planning Commission says there is no need for a separate auto policy and wants the sector to be treated like any other. The finance ministry favours a policy document which takes into account the massive greenfield investments poured into the sector.

Planning Commission member Montek Singh Ahluwalia has taken the stand that there is no need for a separate policy, nor a justification to accord high-tariff protection.

However, the ministry appears to be unanimous in its view that second-hand car imports should be taxed at the rate of 100 per cent to prevent the country from turning into a dumping yard for models which are rejected the world over.

However, the tariff protection must be compatible with the WTO bound rates, which are still being negotiated. Other ministries are pressing for a set of stringent �green� standards, which will help in shutting out second-hand imports.

The industry ministry has sought excise rebates for small cars but neither the Planning Commission nor the finance ministry appear to be in favour of it. Finance ministry officials say the automobile sector has enjoyed enough sops in previous budgets, and the market has stabilised.

The government will have to allow import knocked down automobile kits from April next year.

However, it will insist that car companies which entered into pacts promising to indigenise production and balance their imports � made at low tariffs � with exports honour their commitments.

It is not clear whether the policy stance of asking auto-makers who came in early to continue with their keep honouring their obligations will be acceptable to the World Trade Organisation (WTO).

Diplomats from the US and European Union have already taken India to a WTO dispute-settlement panel over its system of auto agreements, or memoranda of understanding.

Their argument is that the arrangement with automobile makers who import ready-to-assemble car kits amounts to unfair trade practice under the provisions of the GATT trade agreement and investment norms framed by WTO.


Hyderabad, Feb 22: 
Tobacco major VST Industries today said the motivation behind Bright Star Investments� open offer to acquire another 20 per cent in the city-based cigarette maker was �unclear� and that it would prefer to wait till it receives a formal communication from the Damani brothers before it decides its course of action.

The Damanis are brokers in Mumbai and created a stir earlier this month with their open offer for VST which they claimed was not a hostile attempt to take over the company.

Damani-owned Bright Star Investments has offered to purchase 30,88,384 shares at a price of Rs 112 per share. The scrip had been hovering round the Rs 50-60 levels before the open offer triggered a spike and sent the scrip shooting to almost Rs 112 in the past few days. The market expects the scrip to hit about Rs 150 before the Bright Star opens on March 31.

A company spokesperson said the VST board�s decision to adopt a wait-and-see approach was aimed at calling the bluff of the Damanis who have been claiming that there is no hostile intent behind their open offer. �We will be ready with a counter strategy when the real action begins,� he said.

Reacting to the VST statement, John Band, CEO of ASK Raymond James which is advising the Damani brothers, said: �The objective of the open offer is very clear. The Damanis want to hike their stake in the company. The board of VST is hiding behind the claim of ambiguity because they are undecided on what to do.� Band said the letter of offer was unlikely to reach VST before the middle of next month and that the company may have to suspend action till then.

Band reiterated that the Damani brothers were not interested in a change in the management of VST �as long as the management continues with its shareholder friendly policies.�

The Damanis have already built up a 14.97 per cent stake in VST through open market operations.

This is the second time that the Damanis are mounting scuh an exercise at VST. A few years ago they had embarked on a similar exercise when they had a stake of just 5 per cent in the company.

Will the AP govt sell?

Meanwhile, the situation has been confounded by talk that the cash-strapped Andhra Pradesh government could be considering the sale of its 4.7 per cent stake in VST.

There has been a lot of behind the scenes activity in the state secretariat with Chief Minister N. Chandrababu Naidu seeking clarifications from the Andhra Pradesh Industrial Development Corporation on l�affaire VST.

The state government�s stake in VST arises because of an investment made by the late Nizam on the express condition that the residue from the fund would be spent on the development of the Telengana region only.

Naidu�s concern arises from the sale of real estate in Hyderabad and some parts of Maharashtra. The government estimates that the company has raised some Rs 160 crore through such sales against a company estimate of Rs 110 crore. BAT, the parent company of VST with a 33.6 per cent stake, has denied speculation that it is behind the open offer of the Damanis. Some time ago, the FIPB had rejected the UK tobacco giant�s proposal to raise its stake in VST.


Mumbai, Feb. 22: 
Reacting to Nasdaq�s fall yesterday, the market witnessed a bearish sentiment. Most of the new economy counters today witnessed huge selling.

The index opened in a negative territory, 50 points lower at 4252.27. Though an initial recovery in share prices brought it to a day�s high of 4286.63, widespread selling brought it down to a low of 4190.96 before finally closing at 4262.55, a loss of 39.68 points from the previous close.

The bearish sentiment soon spread to the old economy counters resulting in the index slumping by around 100 points during intra-day trades. However, some amount of buying in Infosys, NIIT, Satyam, ITC, HLL, HPCL and RIL among others erased some of the losses.

The key stocks in the melee included Infosys and Wipro whose shares took a sharp beating in the US bourses yesterday.

Also, the rumour that the Union government might reconsider the Balco divestment to Sterlite for Rs 550 crore, kept the market on tenterhooks. Despite such concerns, various PSU stocks recorded gains on the hopes that divestment in these companies would gather speed.

In the specified group, 109, including 26 index-based stocks, registered sharp to moderate losses, while 31 others closed in the positive territory.

Himachal Futuristic was the most active share with the highest turnover of Rs 563.67 crore followed by Satyam Computer (Rs 395.42 crore), Zee Telefilms (Rs 381.73 crore), Infosys (Rs 376 crore) and Wipro (Rs 292.23 crore).

While HFCL declined by 9.45 to Rs 826.70, Satyam was down by 5.35 at Rs 337.90, Infosys by 107.70 at Rs 5,804.30, Wipro by 105.35 at Rs 2,624.20, HLL by 4.20 at Rs 218.05, Hindalco by 28.15 at Rs 815.95, NIIT by 49.15 at Rs 1261.10, Tisco by 4.40 at 155, Aptech by 50.05 at Rs 262.80.

While HPCL rose by 4.60 to Rs 193, ITC by 31.55 to Rs 819.85, RIL by 2.10 to Rs 417, Tata Elxsi by 21.20 to Rs 154.05, HCL Infosys by 23.70 to Rs 233.20, Sterlite by 11.60 to Rs 168.75 and P and G by 26.50 to Rs 718.85.


Calcutta, Feb. 22: 
Tea auctions at the Siliguri centre have come to a halt with the traders refusing to abide by the new auction norms which have come into force from February 1.

The Siliguri tea traders have also filed a case against Tea Board chairman N. K. Das in the Calcutta high court, opposing the new auction norms.

About four million kgs of tea have already piled up at the Siliguri auctions, while some are being diverted to the Calcutta tea auctions. Buyers at Calcutta and Guwahati Tea auction centres have already agreed to the new auction norms.

Auctions were not held on February 15 and 16 (sale 7) and sale 8, scheduled for today, did not take place. The tea samples for sale 9 were sent out last week as per the revised Tea Board directives, but buyers refused to accept the samples. Sale 10 has also been dropped.

Industry feels the new norms are hampering the tea business at a time when the prices have firmed up. The average price of CTC tea at Siliguri is Rs 75 per kg while dust is Rs 65 per kg.

Industry is opposed to three major areas in the new rules. Under the new auction norm, a buyer shall not be eligible for a free trade sample if he fails to participate in a minimum of 13 main sales in the relevant purchase year, with at least six main sales in each half of the purchase year in case of CTC leaf and dust categories.

However, for Darjeeling and orthodox tea, while buyers have to participate in 13 main sales, they are not required to adhere to half-yearly participation.

The traders contend free samples should be equal to 25 per cent of the sales held in the year.

The other area of contention is the division of lots. Lots up to 15 packages have been declared indivisible. Lots between 16-34 packages shall be divided among two buyers and no buyer shall get less than five packages. If the lot size is 35 packages and above then it should be divided among three buyers, with no buyer getting less than 10 packages.

The traders have also opposed the new norm on free trade sample of reprinted lots. Reprinted lots of teas are those teas which are not sold in a particular sale and are put in a different sale. The Tea Board has said for the sampling year 2000-01, only a small sample of 30 gms shall be distributed to buyers as free trade sample, irrespective of actual entitlement of the buyer or the size of the lots in case of reprinted lots. For the sampling year 2001-2002 the distribution of free trade samples for reprinted lots will be as per the buyer�s entitlement.

The Siliguri tea trade has already met the Tea Board chairman to convey their views and will meet him again Monday to find a solution.

When contacted, the chairman said, �Negotiations are on with the buyers and they will have to abide by the auction norms. The delay is affecting trade.�


Mumbai, Feb. 22: 
Finance minister Yashwant Sinha is not expected to deviate in his market-borrowing programme when he announces the resource mobilisation plans for the next financial year in the budget on Wednesday.

The money market is of the opinion that he will fix the gross market borrowing target in the range of Rs 1,18,000-1,25,000 crore, just above the Rs 1,17,000 crore budgeted for this year.

The optimism springs from the expectation that Parliament will pass the Fiscal Responsibility Bill, which will keep the increase in government borrowings at a modest level.

�According to indications for this year, Sinha has managed finances well, and does not appear to have overshot his borrowings by a large amount. Therefore, we feel the gross borrowings plan for the next year will not be significantly higher what was fixed in the current financial year,� said N Balasubramanian, deputy general manager, ICICI Ltd.

Current estimates say the government has borrowed Rs 1,09,933 crore so far this fiscal, of which Rs 97,000 crore has come from dated securities, and the balance from treasury bills.

According to ICICI Securities (I-Sec), the gross borrowing programme is likely to be fixed in the region of Rs 1,18,828 crore (against Rs 1,17,000 crore) while the net borrowing (after taking into account redemption) could be pegged around Rs 78,000 crore. Market watchers expect another auction of dated securities worth Rs 4,000 crore soon.

Sanjit Singh, senior debt analyst at I-Sec, says the fiscal deficit for 2001-02 could be Rs 1,20,857 crore, and the finance minister may go in for market borrowings of Rs 1,21,398 crore.

The debt market, he said, is looking forward to the passage of the Fiscal Responsibility Bill. If it does not win House approval, and the finance minister still announces a lower borrowings programme, the markets could rally after the budget.

There is a section of the market which feels the next financial year will see the much-awaited divestment programme in key state-owned firms will gather steam. There are estimates that the government can garner between Rs 8,000 crore and Rs 10,000 crore if its proposed selloff in key companies such as Air-India, VSNL and several others, is successful.

The markets are expecting a reduction in interest on small savings by 50 to 100 basis points, and another round of cut in the cash reserve ratio (CRR) by the Reserve Bank of India.


Calcutta, Feb. 22: 
The West Bengal Electronic Industries Development Corporation Ltd (Webel) is making an effort to bridge the digital divide in the state, with the launch of the Webel Distance Learning Project in the city today in association with IBM.

Under the project, Webel will set up distance learning centres, which will create a simulative virtual environment using the IBM Learning Space 4.0 � an e-learning solution � and will be the first of their kind in the country. The centre will offer courses in Lotus, DB2, e-business and Java, which will be certified by IBM and Lotus Development Corporation.

At present, there are plans to set up five city centres and 25 centres in various districts. These will be connected to the central hub located at Webel Bhavan, Saltlec, through a 64 kbps backbone.

Speaking on the occasion, chief minister Buddhadev Bhattacharya described the step as �the beginning of a new chapter in IT education in West Bengal.�

Bhattacharya said given the cost and infrastructure requirements of setting up technical colleges, distance learning would provide a cost-effective method of spreading IT education. He added that the number of private engineering colleges in the state will be increased.

Webel chairman Subroto Ganguly said the state had adopted the distance learning tool to meet the requirements of education in the infotech sector.


Calcutta, Feb. 22: 
Bank of Baroda (BoB) will increase the number of foreign branches, which account for 20 per cent of its business.

Branches will soon come up in Botswana and Malaysia. �The bank enjoys a presence in 15 countries through its network of 38 branches, which generate business worth Rs 1,500 crore,� bank chairman and managing director P. S. Shenoy said.

In the city to address a seminar on �New trends in banking for accelerating industrial growth� organised by Indian Chamber of Commerce here today, Shenoy said he expects a growth of 15 per cent in deposits and 20 per cent in advances this year. �At the same time, we will bring down our net non-performing assets, which now stand at 6.9 per cent of the total advances, by 1 percentage point,� he said.

The bank, the country�s second largest, has asked DSP Merrill Lynch to find a foreign partner for its insurance foray. Three have already been shortlisted.

The voluntary retirement scheme (VRS), which drew 6,700 applications from the bank�s 46,000 employees, cost it Rs 700 crore, which will be amortised over five years. �We have accepted all VRS applications. Of the 6,700 who opted, 3,000 are officers, 2,000 clerks and rest are sub-staff,� Shenoy said.

He called up on the industry to co-operate by following financial discipline and repaying loans on time so that they can be serviced better.

�A default in paying an instalment of the principal or interest on time must be considered seriously by managements. While banks are struggling to improve their quality of assets, borrowers, as a group, have an equal obligation to banks to service their accounts properly. At the end of the day, both of us are dealing with public money, and any contribution to inefficiency in the system is bound to affect us as tax payers,� Shenoy told the congregation of industrialists.

Talking about the progress in technology upgradation, Shenoy said of the 2,657 branches, 1,000 will be inter-connected within 18 to 24 months.


Calcutta, Feb. 22: 
The Software Technology Park (STP), Calcutta, expects to achieve an export revenue of Rs 250 crore for the financial year 2000-2001. It has recorded Rs 157 crore for the nine months ended December 31, 2000, excluding the revenues of Vedika Software, RS Software and Tata Consultancy Services (TCS).

PricewaterhouseCoopers� export revenue will be added to the STP�s export revenues for this fiscal. The company registered as an STP unit last financial year.

In 1999-2000, the total export revenues from the IT industry was worth Rs 700 crore. Of this, Rs 177 crore was generated from registered STP units and an estimated Rs 523 crore from non-STP units.

Meanwhile, the first incubated project by West Bengal Electronics Development Corporation (Webel) is expected to be ready by month-end.

Earlier, Webel had initiated an incubating scheme for companies who lacked infrastructure to start projects. At present, there are six projects being incubated under this scheme.



Foreign Exchange

US $1	Rs. 46.57	HK $1	Rs. 5.90*
UK �1	Rs. 67.13	SW Fr 1	Rs. 27.25*
Euro	Rs. 42.18	Sing $1	Rs. 26.40*
Yen 100	Rs. 40.10	Aus $1	Rs. 24.15*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4375	Gold Std(10 gm)	Rs.4310
Gold 22 carat	Rs. 4130	Gold 22 carat	Rs.3985
Silver bar (Kg)	Rs. 7375	Silver (Kg)	Rs.7440
Silver portion	Rs. 7475	Silver portion	Rs.7445

Stock Indices

Sensex		4262.55		-39.68
BSE-100		2166.16		-27.10
S&P CNX Nifty	1355.10		-15.10
Calcutta	133.34		-1.03
Skindia GDR	729.96		-27.45

Maintained by Web Development Company