Gelli offers to step down as Global Trust chairman
Infosys growth warning stains annual report card
Enron keen on truce to get rid of Dabhol
More brokers to come under CBI scanner
Fear of blanket downgrade
Ministerial tug-of-war over WiLL tech
Foreign Exchange, Bullion, Stock Indices

April 11: 
Ramesh Gelli today decided to resign as chairman and managing director of Global Trust Bank (GTB) to blunt allegations that he colluded with Ketan Parekh to rig the share price of his bank ahead of its aborted merger with UTI Bank.

The move capped a week of troubles for the beleaguered Gelli who battled charges that the high-profile broker funnelled a part of the money he swindled from Bank of India to GTB. He is also accused of bending rules to finance scores of other brokers and shovelling more funds into stock markets than what is permitted by the Reserve Bank of India (RBI).

Gelli, who holds around 30 per cent in GTB with his family, will request a board meeting of the bank on Thursday to allow him to step down from both posts. In July last year, he had offered to step down as the managing director as part of a drive to improve corporate governance, hand over the responsibility of running the bank to an independent professional and to devote himself to the planned insurance foray.

A release put out by Gelli quoted him as saying that he had decided to leave to �bring in freshness in GTB�s approach and seize the opportunities for new growth.� He said he would be associated with the bank, share his experience with the new team and was likely to spearhead its future initiatives.

There is mounting speculation that Sridhar Subasri, an executive director on the board believed to be close to the GTB chief from their Vysya Bank days, may step into Gelli�s shoes.

The GTB chief had come under fire in recent weeks for having allowed his bank to over-stretch itself to stock markets. He defended himself by saying that the bank�s exposure to the capital market was kept within limits set by the RBI.

The bank had clarified that its involvement in the pay-order scam was only Rs 2 crore (not Rs 12 crore as alleged), an amount which was not kept with itself but paid to the Big Bull�s creditors. Also, Gelli said Parekh�s stake in the bank was under 2 per cent.

Meanwhile, GTB today admitted that Vidyut Investments, an investment arm of a Delhi-based pharmaceutical firm, and three investments entities owned by a consumer goods firm in Ahmedabad, held a 9.14 per cent stake on March 31 this year.

The bank said Vidyut�s stake varied from 4.43 per cent (53.82 lakh shares) on October 13 last year to 3.08 per cent (37.40 lakh shares) on March 31. Since the holding never exceeded the 5 per cent mark, there was no need to report it to regulators,� the bank said.

The shareholding of three investment companies � believed to be of the Nirma group � was first 1.57 per cent (19 lakh shares) on April 4 last year. Their maximum investment was 4.71 per cent (57 lakh shares) on February 1 this year, which was unchanged till March 31.

GTB made it clear that investors who buy 5 per cent or more in the bank have to obtain prior approval from the RBI. �The onus is solely on the investing company or group to obtain prior approval from RBI and inform it about the acquisition of its shares in excess of 5 per cent under Securities and Exchange Board of India rules,� a bank release said.


Mumbai, April 11: 
Technology bellwether Infosys Technologies today unwrapped a 114.23 per cent surge in 2000-01 net profit but gave investors the jitters when it confessed that sales growth in the current financial year will decelerate 30 per cent. It blamed the bleak projections on a slowing US economy, which it said will rein in first quarter growth to 2 to 4 per cent.

For a company that has almost made investors blase about three-digit growth rates, Infosys said it expects an income of Rs 580-590 crore for the quarter ending June 30 and Rs 2,500-2,560 crore for year ending March 31, 2002.

Nandan Nilekani, managing director, said the 30 per cent growth forecast was made after taking into account �economically challenging conditions and the cost structure.�

Chairman and CEO N.R. Narayan Murthy said North America, which accounted for 73.5 percent of the revenue in 2000-01 compared with 78 per cent in the previous year, was in the throes of an economic contraction which had forced clients like Cisco, Nortel and Lucent to cut back orders.

Asked if Infosys was letting go of cutting-edge telecoms startup clients, sales head Murthy said it had turned picky. �Our self-preservation instincts are higher than our need to do cutting-edge development,� he said.

The profit warning stunned markets, casting a pall of gloom on a day when the company unveiled a fourth-quarter net profit which trailed expectations. The scrip was battered 16.25 per cent to Rs 3228.85 on the Bombay Stock Exchange compared with its previous finish of Rs 3855.75.

Fourth-quarter zoomed 94.48 per cent at Rs 181.67 crore against Rs 93.42 crore in the same period of the previous year. Total income doubled to Rs 572.08 crore from Rs 286 crore in the same period. For the year ended March 31, total income was up 112.7 per cent Rs 1959.94 crore compared with Rs 921.47 crore in 1999-2000.

Nilekani managing director, Infosys, said the fourth sector figures were dampened by a weakening telecommunication sector, which accounts for 18.4 per cent of its revenues. A slowdown in the investment banking/broking category as a result of the turbulence in the capital markets choked orders.

He said the company will shift strategy to added old economy stalwarts among new clients and will increase the proportion of business done for companies in Europe and Asia. He denied customers having asked for a cut in billing rates, and said there was no pressure from its Fortune clients to cut prices.

During the last quarter, Infosys wrote off investments amounting to Rs 2.21 crore made in Alpha Thinx Mobile Services AG, which had filed for liquidation. The company has acquired 37 clients in the last three months and is planning to add 1,500-2,000 employees to its current tally of 9,800.

Global Tele net

Global Tele-Systems Ltd (GTL) has reported a 91.48 per cent rise in its net profit at Rs 437.59 crore for the financial year ended March 31, 2001, compared to Rs 228.52 crore in the previous fiscal.

The board has recommended a dividend of Rs 3 per share, GTL said in a notice to the Bombay Stock Exchange today.

Total income was higher by 37.83 per cent at Rs 868.65 crore last fiscal, as against Rs 630.21 crore in the corresponding previous fiscal.

In 2000-2001, the company earned an extra-ordinary income of Rs 195.17 crore (Rs 119.22 crore in 1999-2000).


New Delhi, April 11: 
Enron, the US energy giant, appears to be far more keen than its adversary, the Maharashtra State Electricity Board (MSEB), on reaching a negotiated settlement to the present controversy surrounding Dabhol Power Company (DPC).

According to diplomatic and official circles, Enron finds the present situation untenable. Though Enron�s position may look legally sound, a protracted battle can scuttle its plan to get out of DPC.

Enron, in tune with its new corporate strategy, has already pulled out of all projects in the country except DPC. The US power major had already announced that it would sell its 30 per cent stake in oil and gas fields such as Panna, Mukta and Tapti. Besides, it withdrew from the Dolvi power project promoted by the Mittals� Ispat and scrapped the memorandum of understanding (MoU) with Indian Oil Corporation to transport imported gas.

The much-trumpeted joint venture with MSEB and Global Telesystems for laying optic fibre cables in Maharashtra, is also off. Enron is now saddled with only DPC which it may sell provided it finds a buyer.

Enron president Jeffrey Skilling has also gone on record, hinting the possibility of Enron withdrawing from DPC. �We should not be there building a $ 2 billion power plant. Our cost is too high to do that.�

The difficulty in finding a buyer for the project lies in the fact that DPC�s tariffs are unsustainable. The liquefied natural gas it has contracted is also expensive, as is the freight for transporting the LNG.

If the tariff, however, is lowered through a negotiated settlement, as recommended by the Godbole Committee, the task of locating a buyer will not be all that difficult. However, it is not clear whether the government will extend the same guarantee if the company changes hands.

Enron�s position appears to be legally sound because its agreement with the SEB has been negotiated by its solicitors. However, the US power major realises that arbitration will prolong the uncertainty over the project. This is what happened to its plan to sell its stake in the oil and gas fields.


Mumbai, April 11: 
Stock brokers and companies that had dealings with fallen Big Bull Ketan Parekh are likely to come under the scanner of the the Central Bureau of Investigation (CBI). The extension of the scope of the probe follows news of loans extended by several leading companies to Parekh�s outfits, sources said.

The probe will expand its scope in the coming days as new facts come to light, sources said. The agency is keen to keep the investigations on companies at a low key, in view of the controversies involved in the deals and is still formulating ways to go about it.

At present, the agency has started interrogating brokers linked with the Big Bull�s brokerages. However, considering the likely fallout of the investigations on the bourses, the investigations will be conducted discreetly, to avoid spreading panic.

CBI sources revealed that the agency is still sifting through records detailing the transactions of KP and his associates.

While Parekh has so far been cooperating with the investigators, Ramesh Parikh, chairman of Madhavpura Co-op Bank is unwilling to do so, sources said.

Ketan Parekh will appear before the sessions court tomorrow and the CBI is likely to present new evidence to press for judicial custody. CBI can hold an accused for a maximum 14 days, without a chargesheet.

CBI sources said the Securities and Exchange Board of India (Sebi) has so far not sought any information from them. Sebi, during yesterday�s hearing in the case relating to Anand Rathi, had said the pitch was queered with three enforcement agencies investigating the scam.

CBI sources further added that the agency has conducted joint operations with the income tax department in raiding offices belonging to the accused. �In some cases the offices were sealed by the IT department.�

Meanwhile, the IT department yesterday deputed officials to scan certain documents with the CBI.


Mumbai, April 11: 
A spate of downgrades now stares in the face of the entire domestic software services industry following Infosys Technologies Ltd�s grave revenue slowdown projection for the current financial year.

The infotech major�s result, that caught a large section of optimist analysts and marketmen on the wrong foot, is likely to trigger a de-rating for the entire sector.

As Infosys is considered a trend setter, its projections will have an impact on the industry. It is likely that the sector is set for a de-rating by the analysts.

�An entire de-rating will take place. When the industry leader gives a bleak picture, it has implications on the industry,� said Anil Advani, IT analyst at UTI Securities.

�The days of the information technology sector, particularly the software services industry in posting stupendous growth rates are clearly over. The returns for the industry will now get rationalised and there will be a lot of moderation,� said Nikhil Vora, portfolio advisor,

Vora and other analysts are planning to either downgrade Infosys or the entire sector.

There are doubts about the sustained performance of this sector in this fiscal. �Will Infosys be able to up or even maintain billing rates? Given the visible impact of the US slowdown, we feel it will be an uphill task to manage a sustained billing rate,� added Vora.

The hugely disappointing 30 per cent growth forecast by the company, which has been clocking an 80 per cent compounded annual growth rate, even surprised those who believed that future growth rates would stabilise at around 40-50 per cent level in a worst scenario.

However, optimists aver that Infosys is only being �conservative� in its projections. �It is only playing safe. Infosys sure will record a revenue growth of just over 40 per cent,� said an analyst from a private sector bank.

He added that today�s sharp fall in the market could be a knee-jerk reaction and the stock may recover after a couple of days as the markets have earlier discounted the negatives in view of the repeated revenue warnings from the US.

Some analysts, however, expect the current slowdown to persist for two more quarters and feel that only the fittest will survive. �Mid-cap companies who are not into high end of the value chain better watch out,� said an analyst.

As the fiscal has just started, it is probably too early, to say whether the software services balloon has burst.


New Delhi, April 11: 
The battle over wireless in local loop (WiLL) has taken an interesting turn with the tug of war clearly pitting the finance and home ministries against the communications ministry. It�s now Messrs Yashwant Sinha and L.K. Advani versus Ram Vilas Paswan, holding forth on �to be or not to be�.

However, while both Sinha and Advani � who are likely to oppose mobile services by basic operators using WiLL technology at the ministerial meeting� are still drawing up battle plans, Paswan today asked Bharat Sanchar Nigam Ltd to go ahead with WiLL systems in rural and urban areas.

The group of ministers on telecom and IT is scheduled to meet next week to discuss the issue and will give its recommendations by April 30. But Paswan is clearly not willing to wait on WiLL.

Senior finance ministry officials said they felt the frequency spectrum, to be used by WiLL mobile phones to relay calls, was a �scarce commodity,� which should ideally be auctioned.

�Besides the economic reasoning, many in the government feel it would be best if controversial decisions should be stalled right now, given the political situation,� officials said.

They reason that this is a controversy, which the BJP government, already reeling from a double whammy over Balco and Tehelka, can avoid at the moment.

Paswan, however, is not losing any sleep over the government�s woes.

In a closed door meeting today with the CGMs of the telecom circles, he said: �All of you are requested to respond quickly to the D.O. letter sent from director (planning) seeking projections of WiLL for the year 2001-02 and 2002-03 by April 10. We have plans to procure 75 per cent of the mobile handsets needed for limited mobility.�

Sources said Paswan has promised full support to BSNL�s proposal to procure another six lakh lines of WiLL equipment for rural applications, mainly to provide telephones in rural areas and to replace faulty village public telephone systems.

Paswan has also assured BSNL that the government will provide the necessary support to proceed with loss-making projects. �We are thinking of advance commitments from the government for initial funds to meet the estimated annual loss,� communications ministry sources said.

However, Paswan expressed disappointment over the slow progress made in meeting VPT obligations, which is hampering the government�s objective of providing telephones in all villages by 2002, outlined in the New Telecom Policy-1999 (NTP-99).

Today�s meeting also reviewed the financial performance of the corporatised BSNL. The provisional financial performance and cash flow in BSNL showed a total revenue of Rs 17,289.59 crore from April 2000 to January 2001. The working expenses stood at Rs 7,084.37 crore and capital outlay was at Rs 10,584.76 crore.

The ministerial group, headed by Sinha, includes infotech Pramod Mahajan and information and broadcasting minister Sushma Swaraj, apart from Advani and Paswan.

The government had earlier agreed to allow fixed line phone companies to offer limited mobility, using the WiLL technology, which was hotly contested by cellphone operators and the opposition, which smelled a scam in the move.

Hence, it constituted the GoM to consider the issue afresh.



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