Broker bandh numbs markets
LIC moves court to salvage MRL stake
UTI suspends 2 EDs
Bharti pulls out of VSNL race
End to cell row in sight
Bata MD on his way out
Tax cases settled before April not to be reopened
HFCL offers board berth to Packer
Bengal sore over SERC order on tariff hike
Foreign Exchange, Bullion, Stock Indices

Mumbai, July 23: 
The brokers� strike today crippled trading on bourses, squeezing turnover on the Bombay Stock Exchange (BSE) to Rs 7.62 crore � its lowest ever. Only 95 of the 10,281 scrips listed were traded, dragging the sensex down by 9.77 points at 3330.98 against Friday�s close of 3340.75.

Volumes on the National Stock Exchange (NSE) sank to 3.5 million shares compared with 60.4 million shares last Friday. It dipped to 2.70 lakh from Friday�s 4.73 crore on the BSE, where the A group accounted for 43 of the 95 scrips traded. Many shares, such as Bajaj Auto, Gujarat Ambuja Cements Ltd, Grasim, HPCL, Glaxo and Telco, did not change hands at all. The few deals that were wrapped up were done by institutional investors, especially foreign funds.

There was virtually no trading at all on the regional bourses like Calcutta, Ahmedabad and Delhi. Brokers said the strike was total in exchanges where institutional brokers do not operate.

The strike had been called by Securities Industry Association of India (SIA), a body formed last Tuesday, to protest the implementation of rolling system and the ban on carry-forward.

In Delhi, brokers of National Stock Exchange (NSE) made a representation to the finance ministry drawing attention to the sharp drop in volumes across bourses and demanded immediate remedy by restoring badla and banning rolling settlement till adequate infrastructure for derivative trading is put in place.

�The strike is not the only solution. We would like the finance minister to break this impasse, failing which we will even approach Prime Minister Atal Behari Vajpayee,� NSE board member Vinod Jain told reporters here on behalf of the Association of NSE Members of India (ANMI) before meeting finance ministry advisor Rakesh Mohan.

Through a memorandum presented to the ministry and Sebi, SIA has demanded re-introduction of deferral products and liberalisation of bank financing to bring back liquidity in the market. It has argued that badla was a safe investment option, which offered better returns than other available instruments.

The brokers� body is not opposed to rolling settlement introduced this month, but has asked the government to set up a platform for electronic funds transfer so that trading in the rolling mode and the derivatives segment can flourish.

SIA also called for alternative arrangements like margin trading and stock lending, which are available in the global markets.

DSE president Sudhir Joshi said Delhi-based members at the exchange have not undertaken a single transaction even though the DSE is officially open.


Mumbai, July 23: 
The Life Insurance Corporation (LIC) today filed a suit in Mumbai High Court seeking to reverse a decision by its junior officers to accept an open offer from the Modis for a 35 per cent stake in Modi Rubber Limited (MRL).

Pressing for the withdrawal of the �unauthorised and illegal transaction�, the insurance major argued that the powers to divest stakes are vested in its investment committee, which has not considered whether MRL shares should be sold. It said the middle-level officers who were found to have been responsible for the mistake had been suspended.

LIC�s legal salvo came on a day when the Modis appeared to have off the challenge from financial institutions (FIs) when their open offer for 35 per cent in MRL was oversubscribed by one per cent. The offer, which closed today, did not evoke any response from financial institutions (FIs).

LIC has written to the HSBC Securities and Capital Markets (India) Private Limited, merchant bankers to the MRL open offer, and Karvy Consultants, registrar to the issue, repudiating and �rescinding the unauthorised transaction�.

MRL managing director B K Modi said in Delhi he had no word from his merchant bankers. �We have still not heard from HSBC Securities about the outcome of the open offer,� B.K. Modi, managing director of Modi Rubber, said.

When told that HSBC sources had confirmed that they received 36 per cent of the equity (including LIC�s 12 per cent stake) in response to the open offer, Modi said it would be some time before the shares were transferred to the promoters.

He refused to say whether he would hold talks with the other financial institutions on buying out their combined 32 per cent stake. �I have not got an official letter from HSBC. A decision (on talks with the other FIs) will be taken only after that. Such decisions take a lot of time,� he said.

UTI, IDBI and IFCI did not subscribe to the open offer. Trust chief M Damodaran confirmed his institution did not subscribe to the offer, but shifted all queries to S.K. Chakrabarti, chairman of IDBI, which is the lead institution in the open offer.


New Delhi, July 23: 
Mumbai, July 23: Unit Trust of India (UTI) today suspended its two executive directors M.M. Kapur and S.K. Basu who have been arrested by CBI on charges of misappropriation of public funds. Their portfolios have been reallocated to the other executive directors.

Confirming this, UTI chairman M. Damodaran said the suspension orders were served today. However, he clarified that the mutual fund major is yet to send showcause notices to the three officials.

�This suspension and reallocation of work among executive directors is to clean up the working of the India�s largest fund manager and to maintain transparency,� senior UTI officials said.

Executive director D.S.R Murthy would now take additional charge of the department of funds management (equity schemes), department of market operations, department of international finance and the venture capital funds division, in addition to his existing responsibilities, the UTI statement said.

The department of funds management (debt schemes and US-64) and money market operations would be looked after by B.S. Pandit.

A.N. Palwankar, who was on deputation as advisor to UTI Institute of Capital Markets, would be in-charge of investors� relations and would also monitor UTI ICM.


New Delhi, July 23: 
It is going to be a straight contest between Reliance and the Tatas for the 25 per cent stake in Videsh Sanchar Nigam Ltd (VSNL) which the government will shortly put up for sale. The third formidable contender�the Bharti-SingTel consortium�today announced that it was dropping out of the race.

�We have decided not to bid for VSNL for strategic reasons. We have taken this decision in the wake of the emerging prospect of winning six to seven mobile licences as a fourth cellular licensee. We feel that at this stage we would like to concentrate on building simultaneous networks in a short period of time and consolidate our leadership position in the recently acquired Calcutta circle,� the consortium said. The Bharti-SingTel statement said the two companies were �deeply committed to the development of Indian telecommunications. We shall pursue the international voice telecommunications business when it is opened-up to private sector participation next year.�

Bharti is also in the process of building a nationwide long distance network and has commenced its activities in four circles to provide basic telephony services.

The consortium has also decided to opt out of the data room visits or any site visit, which is part of the preliminary process before the bidding begins for VSNL. �Respecting the sanctity of the disinvestment process, especially as we could be competing with VSNL in the medium term, we have taken this strategic decision to withdraw before the data room visits or any site visit, to maintain the highest ethics of business and competition.�

With the formal exit of Bharti, only Reliance and Tata Telecom are the only two major companies in the race. Both BPL and Sterlite were tossed out of the fray after the government decided not to allow tainted companies from bidding under its privatisation programme.


New Delhi, July 23: 
The Union communications ministry expects to resolve legal tangles in the fourth cellular bids by the end of this week.

Communications minister Ram Vilas Paswan was reluctant to comment on the ongoing legal wrangle. He, however, said, �We will hold a press conference in a day or two (to explain the government�s position).�

The department of telecommunications (DoT) has sent a team of senior legal counsel and officials to Chennai. The final round of financial bids for the fourth cellular licences was stalled after four public interest litigations were filed in the high courts of Delhi, Chennai, Mumbai and Patna.

All the litigations have one common allegation: the bids quoted by the companies were much lower than the internal estimate prepared by DoT.

�It is a problem for both the government and industry since the man hours invested by us (the government) in undertaking the bids process is huge and a delay of each day is a loss for the government. We expect that a solution will be found by the weekend,� said a senior official in the communications ministry.

While the government has accepted the final financial bids for the fourth cellular slot, it decided to either wait for a decision from the Supreme court or vacate the stay orders issued by the Chennai high court.

DoT is trying to get a stay from the Supreme Court against the order passed by the Chennai high court which has restrained DoT from awarding licences for the fourth cellular slot. The petition filed by Delhi Study Group at Delhi high court is yet to be admitted and is scheduled for hearing on August 18.


Calcutta, July 23: 
Bata India Limited, the 51 per cent subsidiary of the Toronto-based Bata Shoe Organisation (BSO), is likely to remove Chandu Morzaria as its managing director soon and appoint Fernando Garcia in his place in a top-rung shake-up aimed at revving up the stuttering sales machine.

Garcia, who handles retail sales and marketing at the company�s Toronto hub, is expected to arrive in India at the end of this month and take charge in the second week of August.

Morzaria, the managing director and regional executive of south-Asia, joined Bata India on January 31 after serving as the vice-president and executive director at the Bata headquarters, besides being a part of its global executive committee. Despite his exit from the top spot in India, he will continue as the regional executive of South Asia from Calcutta.

Earlier, William Keith Weston had donned two caps � that of the managing director and the regional executive. The company was believed to have been looking for a managing director who could share the responsibilities with Morzaria. G. C. Bahuguna, who had remained an executive director even after his retirement in 1999, has also put in his papers.

Though M.J. Z. Mowla, Bata�s senior vice-president, refused to comment on the reshuffle in the company�s India top-brass, the measures are seen as an attempt to boost its Rs 760-crore bottomline. The moves come at a time when Bata India�s second quarter net profit sagged 10 per cent at Rs 5.56 crore against Rs 6.21 crore in the same period last year. �The distribution of the responsibilities will sharpen the focus on marketing, sales and proper cash management,� sources said.

Apart from the changes in the top rung, a number of expatriates have been handed several key positions to reverse the sales slide. One of them is Harnan Ordonez, who has been flown in from Toronto to revamp the wholesale business. The other is Tony Van Es, who has been deputed here with a three-year term to take steps to maintain product quality.

W. Riber has been drafted in from Bata Pakistan to draw up a fresh merchandising strategy as part of the company�s increased emphasis on product development. Meanwhile, sales to wholesalers against credit have been restricted to recover outstandings from them. �This has yielded some positive results for the company,� sources said.


New Delhi, July 23: 
In a move to reduce hardships of tax-payers and avoid litigation, the government today issued a notification that disallows reopening of income tax assessment cases finalised before April 2001.

In a statement issued here today, the Central Board of Direct Taxes (CBDT) said, �Assessments, where the proceedings have become final before April 2001 will not be reopened under Section 147 of the Act to disallow expenditure incurred to earn exempt income by applying the provisions of Section 14a inserted in the Income Tax Act.�

The Finance Act 2001 inserted a Section 14a in the Income Tax Act which said that no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income.

The section was introduced restrospectively in order to clarify and state the position of law that any expenditure related to income, which does not form part of total income, cannot be set off against other taxable income.

�Reopening of past completed assessments, having attained finality, on the basis of newly inserted provisions of Section 14A is likely to cause hardship to a large number of taxpayers and would result in increasing avoidable litigation,� CBDT said.

The Central Board of Direct Taxes (CBDT) has considered the matter and directed all chief commissioners and director general of Income Tax that the assessments where the proceedings have become final before April 1 this year should not be reopened.


Calcutta, July 23: 
The Himachal Futuristic Communications (HFCL) management has offered Kerry Packer�s Consolidated Press Holding (CPH), which holds a 9.09 per cent stake through a nominee, a berth on the company�s board.

Speaking to The Telegraph, HFCL chairman Vinay Maloo said: �Consolidated Press Holding�s nominee, Ecom.Com, is an associate promoter in Himachal Futuristic. We have offered CPH a berth on the HFCL board for being a long-term shareholder in the company. Packer has not decided whether to accept the offer.�

The combined holding of the Indian and foreign promoters in HFCL stands at 26.9 per cent.

Packer had invested about Rs 1,040 crore to acquire the HFCL stake a year ago. The company had issued 71,65,650 shares at Rs 1,450 each to Ecom.Com in two tranches. At the time of allotment however, HFCL had said there would be no change in the �board or control of the management of the company as a consequence of the allotment of the shares�.

Speaking on Packer�s plans, Maloo said: �We are confident that he will not withdraw from the company despite the failure of the HFCL-Nine Broadcasting. We understand that CPH will wait for opportunities to emerge in terrestrial broadcasting.�

Packer�s investment in HFCL has depreciated by Rs 970 crore, while the money he pumped into joint ventures formed with HFCL have also not yielded any returns. Consolidated Futuristic Solutions and Excelnet Commerce were the ventures formed apart from HFCL-Nine Broadcasting. The alliance between the two companies was derailed when it failed to clinch a five-year contract with the Doordarshan for supply of television software to be telecast on DD-Metro at prime time. An HFCL-Nine Broadcasting�s subsidiary had planned a merger with Balaji Telefilms, but was called off in haste. The television business will be shut down from September 10. Maloo said CPH has no interest in satellite television, and there are no immediate plans of reviving it. Packer had planned to invest in a number of other ventures, but pulled out just in time. One of these was a $ 250-million (Rs 1,200 crore) venture capital fund he wanted to float with stockbroker Ketan Parekh and HFCL, but it never saw the light of the day. Packer had also planned to invest $ 100 million (Rs 480 crore) in a dotcom venture and media startups.

CLB scan

The Company Law Board (CLB) has inspected the accounts of Himachal Futuristic to examine its investments.

Admitting it, HFCL chairman Vinay Maloo said: �We were among many companies whose books have been audited in connection with investments.�

The Securities and Exchange Board of India (Sebi), the capital market watchdog, in its preliminary investigation report to the Joint Parliamentary Committee (JPC) probing the recent stock market scam, has noted that the HFCL group had lent Rs 425 crore to various entities of Ketan Parekh.

Out of the said amount, Rs 150 crore was routed through a Zee group company Digital Super Highway, and the balance through a HFCL group finance company, Burlington Finance.


Calcutta, July 23: 
The state electricity regulatory commission�s (SERC) order, turning down the West Bengal Power Development Corporation�s (WBPDCL) proposal to revise tariffs, has the state government up in arms, with power minister Mrinal Banerjee deciding to take up the matter with the panel.

Speaking to The Telegraph, the minister said, �We are now going through their observations on tariff revision. Initial studies show there are some errors in the commission�s calculations. The SERC has also not taken into account certain interest charges. All these put together have lowered the tariffs.�

Banerjee further said the matter will be taken up with the SERC in due course. �WBPDCL needs a tariff hike for its survival,� he said.

While rejecting WBPDCL�s proposal to raise tariffs, the SERC has, instead, recommended a tariff lower than the current one.

The SERC has recommended a price of Rs 1.51 per unit of power for the 2000-01 fiscal, which should further come down to Rs 1.43 per unit in 2001-02. WBPDCL now charges Rs 1.51 per unit to its sole buyer the West Bengal State Electricity Board (WBSEB). WBPDCL had proposed to raise the price to Rs 1.67 per unit for 2000-01 and Rs 1.64 per unit for 2001-02.

This is the first time the SERC has given its judgement on tariff revision for any power utility.

When contacted, B.K.Paul, managing director of WBPDCL said, �We are examining the report and the exercise will be over by the end of next week. We will then sit together with the SERC to sort out the issue.�

While the SERC order says interest on working capital cannot be taken into account while judging the tariff proposal, WBPDCL is however, against this observation.

Secondly, the two differ on the question of the percentage of return on equity. According to the Indian Electricity Act (1948), all power utilities are entitled to earn a 16 per cent return on equity. But, while going through WBPDCL�s tariff proposal, SERC said the state utility is entitled to only a 12 per cent return on equity.

�NTPC is are entitled to get a 16 per cent return on equity, but in our case, the return on equity should be only 12 per cent. Is this acceptable?� a top-level WBPDCL official said.

The state power utility has the 1260-MW Kolaghat thermal power station, Bakreswar thermal power plant (5 x 210MW), Bandel thermal power station (630 MW) and Santaldih thermal power station (480 MW) within its fold.



Foreign Exchange

US $1	Rs. 47.12	HK $1	Rs.  5.95*
UK �1	Rs. 67.13	SW Fr 1	Rs. 26.64*
Euro	Rs. 40.99	Sing $1	Rs. 25.50*
Yen 100	Rs. 38.11	Aus $1	Rs. 23.55*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4460	Gold Std(10 gm)	Rs. 4410
Gold 22 carat	Rs. 4210	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7150	Silver (Kg)	Rs. 7225
Silver portion	Rs. 7250	Silver portion	NA

Stock Indices

Sensex		3330.98		-  9.97
BSE-100		1571.97		-  6.46
S&P CNX Nifty	1070.65		-  7.05
Calcutta	 121.52		-  0.17
Skindia GDR	 561.83		- 33.03

Maintained by Web Development Company