ITC holding in Oberoi over 13%
Sebi roots for wider disclosures
SBI chief chants core mantra
SBI Home decision next fiscal
Govt sticks to morning budget
Honda hopes to ride on Hero back for success
Qualis fuels Toyota’s India run
FII stake in Telco doubles
D-Link eyes Bengal project
Foreign Exchange, Bullion, Stock Indices

Calcutta, Jan. 15: 
Three ITC investment arms have scaled up their holding in EIH Ltd — the company that manages the Oberoi chain of hotels — to 13.36 per cent, according to disclosures made by the company to stock exchanges today.

At the current market price, the value of ITC’s investment in the EIH stock exceeds Rs 150 crore.

A senior official dealing with ITC’s investments refused comment on the matter, but chairman Y.C. Deveshwar has always taken the stand that his company did not harbour an intention to dislodge the existing EIH management.

The P.R.S. Oberoi-led management of EIH has always maintained that it did not perceive takeover threats in the share acquisition by ITC’s investment firms.

The EIH promoters appear unfazed by the aggressive investment by tobacco major’s investment firms — Peninsular Investments, New Deal Finance and Megatop Financial Services.

The promoters of the company held 40.57 per cent on December 31, marginally higher than the 39.15 per cent they were controlling at the beginning of the financial year.

According to the shareholding pattern filed with stock exchanges by EIH today, Peninsular held 27.44 lakh shares (5.24 per cent), while New Deal and Megatop held 23.2 lakh shares (4.43 per cent) and 19.36 lakh shares (3.69 per cent) respectively on December 31 last year.

Even as ITC’s investment arms substantially increased their stake in the country’s second largest hotel company, Unit Trust of India (UTI) has diluted its holding. The mutual fund major was holding a little more than 12 per cent at the beginning of the financial year, but now has only 8.84 per cent, through 46.31 lakh shares.

With Life Insurance Corporation’s (LIC) 39.14 lakh shares (around 7.5 per cent), total institutional stake (including that of foreign institutional investors) stands at 27.98 per cent; the public holds 18.09 per cent (including GDRs).

The ITC investment firms have raised their stake in EIH by around 3 per cent in the last six months alone.

The investment companies acting in concert now hold over 70 lakh shares, and can increase stake up to 15 per cent –8.6 lakh shares – without making an open offer.

The EIH stock has fluctuated between Rs 190 and Rs 286 in the past year. Even after the attacks in the US, which jolted hospitality chains the world over, the stock has not fallen below Rs 210 — thanks to the aggressive buying — even as shares of all other hotel companies tanked.

On Tuesday, the scrip closed at Rs 215 on the Bombay Stock Exchange (BSE). The gainers are the shareholders of the company, who had pledged full support to the EIH management at the company’s annual general meeting in August.


Mumbai, Jan. 15: 
The Securities and Exchange Board of India’s (Sebi) second interim report on the stock scam of 2001 has proposed disclosure of cash flows every three months, and pressed for amendments in the law to prevent proliferation of shell companies.

It also says brokers should not be allowed to float sub-broking arms. The “holding firm-subsidiary relationship” is used as a smokescreen to shift positions, enter into circular/fictitious trades and to get around the restriction that does not allow a broker to be a client of another. Therefore, Sebi has taken the stand that a broking outfit should be prohibited from setting up a firm under the garb of a “broker/sub-broker”.

The market regulator says its proposals are prompted by the instances of companies manipulating their own share prices by funding brokers through subsidiaries.

One of the ways to ensure that firms do not rig their own scrips by diverting funds to brokers through their arms, associates or partnerships, is to call for a complete set of financial statements on a quarterly basis. These should include loans, advances, inter-corporate deposits to their subsidiaries, associates, partnerships, along with statements of their cash flows.

These details should form part of quarterly disclosures which companies are required to file under the listing agreements with exchanges. If implemented, it will essentially lead to more comprehensive dissemination of information, and, therefore, help in thwarting the designs of stock felons.

The move comes after a year in which several companies were alleged to have bank-rolled Big Bull Ketan Parekh to ramp up the value of their stock prices. These firms have, however, maintained that the funds were lent for investments in other companies. The regulator is yet to make up its mind on the issue.

Sebi’s probe revealed Zee Telefilms, Himachal Futuristic, DSQ Software and Adani Exports having lent money to Parekh. Recently, the Essel Group, the promoters of Zee Telefilms, paid the last instalment and staved off what could have been a big embarrassment.

Alarmed by the under-cover dealings between brokers and companies, the Sebi report says: “In this covert operation, a company first transfers funds to its related entities. They, in turn, shovel these funds to stock brokers for rigging the prices of the shares by routing the funds through a complicated web of companies.”

The result of the money-go-round is that investors lured to invest at manipulated prices are saddled with low-value paper when the market melts, Sebi’s report says.


Calcutta, Jan. 15: 
Banks should identify and outsource non-strategic work, leaving employees free to concentrate on core banking activities, especially high-value added activities, to bolster staff productivity.

The proposal was made by Janki Ballabh, the chairman of State Bank of India, at the three-day Bank Economists’ Conference (Becon) being held here. His theme was, ‘Unleashing employee productivity: need for a paradigm shift.’ The remarks have assumed importance because they come from the head of a bank, which accounts for a third of the business in the industry.

Non-strategic work essentially means servicing customers. They include routine work like issuing drafts, accepting FDs, reaching out to clients and other related activities. While private and foreign banks have farmed out these jobs, their nationalised counterparts get their own employees to do these tasks.

Banks, Ballabh said, should devote their energies to key areas like credit management, asset management, treasury operations and other core lines of business. There is a stronger need to do it because the spate of voluntary retirement schemes had left banks with fewer hands. Banks, he said, should re-deploy staff from administrative offices, packing them off to branches to ensure customer services do not suffer.

Redeployment strategies would include putting employees to carry out non-funds business, recovery efforts, new business areas like insurance and mutual funds.


Calcutta, Jan. 15: 
SBI Home Finance will have to wait for the next fiscal to see what the future has in store for it—revival or closure. Speaking on the sidelines of the Bank Economists’ Conference (Becon), State Bank of India chairman Janki Ballabh said, “We will review the operations of the company for the current financial year and then take a final decision.” The bank holds 26 per cent in the crisis-ridden home finance firm.

The board of SBI Home Finance has already decided to scale down operations because institutional shareholders have not infused the much-needed capital of Rs 110 crore necessary to put the company on the road to revival. Other shareholders include Unit Trust of India, Housing Development Finance Corporation, LIC and GIC. The company has 24 offices across the country, including the head-office at Calcutta.

Regarding the infotech subsidiary the bank plans to set up, he said that the proposal is with the government and is likely to be approved soon. The proposed subsidiary will take care of the e-broking, internet banking and other IT-related activities of the bank. SBI plans to invest Rs 600 crore in the infotech subsidiary in the next two to three years.

The country’s largest bank is also scouting for opportunities to hike its exposure to the capital markets in the next financial year. “We now have a less than 1 per cent exposure to the capital markets. Given the opportunity, we may invest in some good stocks next fiscal,” the chairman said.

The bank’s current exposure to the bourses is around Rs 500 crore, which is less than 1 per cent of its total asset value of Rs 3,15,644 crore.

Talking about the credit offtake of the bank he said, “Credit offtake has not taken place at the rate expected.”

While the retail sector has fared well, no major offtake has taken place in the corporate sector. Large companies have almost stayed away, though mid-cap companies have borrowed some funds.”


New Delhi, Jan. 15: 
The Union budget will be presented at 11 a.m. on February 28 — a convention that finance minister Yashwant Sinha began two years ago.

The Cabinet today finalised the dates for the Union budget session, which will begin on February 25 with a joint address to both houses by the President. While the Railway budget will be presented to the House on February 26, the Economic Survey will be presented the next day.

The Cabinet also decided to reverse its earlier decision to wind up Benares Sate Bank (BSB) after Bank of Baroda (BoB) expressed interest in taking over the ailing bank.

Briefing reporters, Parliamentary affairs minister Pramod Mahajan said the government has asked the Reserve Bank of India (RBI) to speed up BoB’s proposal to acquire the Benares-based scheduled bank, which was founded in 1946.

“The government had decided on September 24 last year to wind up the bank. However, this was not formally communicated to the RBI. However, the central bank has informed the government about BoB’s interest in taking over the bank. The Cabinet has, therefore, decided to let BoB pursue its interest,” Mahajan said.

The Cabinet also approved the signing and ratification of a double tax-avoidance treaty with Mexico.


New Delhi, Jan. 15: 
Japanese giant Honda Motor Company is looking to advance its sales targets by a year. The company expects to bag a 75 per cent market share, selling 1.75 million scooters and motorcycles this year both through Hero Honda—its joint venture with the Munjals—and Honda Motorcycle and Scooter India Pvt Ltd (HMSI).

Expressing his faith in the Munjals’ management, Honda chairman Yoshihide Munekuni said, “We are projecting our targets depending on the Hero group’s market reading ability. While sales of HMSI Activa have picked up, it will be Hero Honda which will lead the way. R&D development for both companies will take place together.”

“We will invest Rs 100 crore in HMSI to acquire additional land in its neighbourhood so that it can double its capacity to 2,50,000 units from 1,20,000 units at present. This will be in addition to the Rs 200 crore already invested,” he said.

Munekuni projected that the two wheelers market will grow up to 5-6 million units in the next three years. “By 2004, when both companies will be making all the products, we will be able to keep up the market share.”

HMSI president and CEO Haruo Takiguchi said, “We will try to build up the extra capacity by September itself. Now we are working double shifts to keep up with the demand. In 2002-03 we plan to sell double the today’s figure.”

HMSI will acquire 1 lakh square metres of land for the additional facility.

The subsidiary is also showcasing various products—Elysium, a concept model, smart Dio in aluminium die cast frame, VFR FI engine (its eco-friendly offering), and Giorno Crea cut engine-first scooter with idle-stop technology.

Pawankant Munjal, CEO of the Hero group said, “We are confident of our partnership with Honda. We are looking at possibilities of adding a third factory with capacity of more than 2 million units to increase production. We have already presented Honda with a five-year plan under which 10 products will be introduced. Of these, three will be introduced in the next two years.”

Brijmohan Lal Munjal, chairman and managing director of Hero Honda said, “We are not worried about the 2004 deadline. We have plans for the motorcycle segment and will foray into scooters only if required. Meanwhile we may be bringing in higher capacity bikes through the CBU route and add them to the production portfolio later on.”


New Delhi, Jan. 15: 
Toyota Kirloskar Motor Ltd (TKML) today launched the petrol version of its multi-purpose vehicle ‘Qualis’ and said it planned limited imports of completely built units (CBUs) of the Land Cruiser, Prado and Camry into the country soon.

The Camry is the highest selling car in the US, followed by the Honda Accord, a rivalry likely to spill over to Indian roads as well, where it will be pitted against the Accord, rather than the Hyundai Sonata.

“Following the remarkable success of the Toyota Qualis GST Super in the Indian market, we have decided to introduce the new petrol version. We are targeting the premium car segment and expect to leverage our present market share considerably with this launch,” TKML managing director Sachio Yamazaki told reporters here. The petrol version of the ‘Qualis’ has been priced at Rs 8.45 lakh (ex-showroom, Delhi).

“TKML plans to manufacture 1,500 units of the new model of the Qualis in the first year and will consider increasing this number after evaluating the market response,” he said.

The ‘GST Super’ will be fitted with a two-litre petrol engine. Launched in January 2000, Qualis has cornered a 40 per cent share of the multi-purpose vehicle market in 2001, up from 35 per cent in the previous year, Yamazaki said, adding the Qualis has sold more than 50,000 units since its launch.

Yamaha turnaround

The ailing Yamaha Motor India Pvt Ltd (YMIL) hopes to break even this year and post a net profit of by end of 2003 on the back of a cash infusion of Rs 350 crore made by the parent Japanese company last month.

The Japanese parent today said it will invest Rs 350 crore in the Indian operations via a preferential issue and will launch two new motorcycles this year.

One-third of this investment would be utilised to conduct research and development in India, a senior company official said here, adding the country could become a major export destination for Yamaha’s global operations.

“We are bringing in Rs 350 crore from Yamaha to invest in YMIL. Most of these funds will be used to re-orient our product development and sales channel management systems. We are also launching two new motorcycle models in 2002,” YMIL managing director M. Shibuya told newspersons here.

He said this money would be brought in through a preferential issue at a coupon rate of 14 per cent with a six-year redemption.

One-third of this investment would be used for R&D activities in India, he said, adding the Foreign Investment Promotion Board (FIPB) has already approved this investment.

In fact, the Indian arm expects to achieve break-even this year. After clocking Rs 700 crore turnover last fiscal, the company, a wholly-owned subsidiary of the Japanese giant, said it will make cash profits by 2003.

Asked if the company is also planning to launch scooters in India, Shibuya said the company was open to the idea “But we will think about it when we get to the number one or second position in the motorcycle market in the country. We are fourth right now and have a long way to go.”

Yamaha has also identified R&D as a major thrust area, Shibuya said, adding “In keeping with Yamaha’s new focus of consolidating its presence in the four-stroke, fuel economy segment, the R&D team is currently working on several new models for the Indian market.”

He said the company is in the process of linking up its headquarters with entire Tier-I vendors and dealer network to get real-time information and conduct real-time business. “The IT backbone should be completed by December.”


Calcutta, Jan. 15: 
Foreign institutional investors (FIIs) have doubled their stake in Tata Engineering and Locomotive Company (Telco) in the last nine months. The FIIs held 13.34 per cent in Telco at the close of the third quarter, as against 6.57 per cent at the beginning of the financial year.

According to analysts, interest in the stock stems from the recovery of the company’s passenger car business. The company incurred a loss of Rs 500 crore in the last financial year, but this year its performance has improved significantly.

Telco claims to control around 20 per cent of the mid-size car market. The company sold 42,377 cars in the last nine months, as compared with 32,560 in the 2000-01 financial year. There has been a significant growth this year in Telco’s medium and heavy commercial vehicle business as well. It has sold 39,273 vehicles in this category till December 2001, as against 36,214 in the last financial year.

John Band, of financial consultant ASK Raymond James, said: “The revival of Telco’s passenger car business has generated interest in the stock among the FIIs. But foreign investors are not comfortable with Telco’s involvement in the passenger car business. They would prefer if Telco turned its passenger car division into a joint venture, or better still, sell it off altogether.

“Though Indica is now selling quite well and the company is making money out of it, the Indica experience indicates that developing a full range of passenger cars may not be a good idea for Telco. It is an excellent commercial vehicle manufacturer and should ideally remain focussed on that.”

The Tatas have increased their shareholding in the company marginally in the last nine months to 25.65 per cent. Mutual funds including Unit Trust of India hold 6.3 per cent, banks and financial institutions hold 15.75 per cent, while the public—including global depository receipt (GDR) holders—have a 38.96 per cent stake.

In the last quarter, FIIs have raised their stake by close to 4 per cent. Thanks to the FII buying, the stock has gained over 70 per cent in the last three months. It closed around Rs 116 today.


Calcutta, Jan. 15: 
D-Link (India), the integrated IT solutions provider, will submit a proposal to the West Bengal Electronics Development Industry Corporation (Webel) by the end of this week to provide networking solutions for the state government’s e-governance project. Director (sales) of D-Link Prabodh Vyas has already held discussions with SK Mitra, managing director of Webel, on the issue.

D-Link has a tieup with Webel to provide training to the nodal agency’s project consultants at its Goa plant.

The company has lined up a number of new products.

Known for its dial-up modems, D-Link has introduced motherboards. “A range of products will be introduced in the next three months. Once our assembly line is in place, we expect to produce around 30,000 units every month. We expect the motherboard segment to contribute almost 25-30 per cent of the total growth, ” Vyas says.

The company is also laying special emphasis on its internet telephony range of products. D-Link has a distribution relationship with Clarent Corporation to introduce voice-over-internet-protocol (VoIP) solutions in the country. Clarent is a global leader in the internet telephony segment. D-Link will market Clarent’s products mainly to ISPs, telecom service providers and government organisations in India and Sri Lanka. D-Link will also manufacture VoIP products in the country and is in the process of customising the products to suit Indian conditions and requirements. Further, it plans to introduce products in the wireless segment.

On the company’s growth plans for the next fiscal, Vyas says, “We will consolidate our present position by introducing new products and further strengthening our distribution system. This year, we invested substantially in expanding our manufacturing facilities and hope to reap gains next year.”

D-Link has made major investments in software development and R&D, funded by the Rs 45 crore IPO in February 2001. The company which clocked a turnover of Rs 174 crore in March 2001, expects to achieve above Rs 200 crore in March 2002.



Foreign Exchange

US $1	Rs. 48.29	HK $1	Rs.  6.10*
UK £1	Rs. 69.82	SW Fr 1	Rs. 28.75*
Euro	Rs. 43.12	Sing $1	Rs. 26.05*
Yen 100	Rs. 36.89	Aus $1	Rs. 24.70*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 4735	Gold Std (10 gm)Rs. 4725
Gold 22 carat	Rs. 4470	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7600	Silver (Kg)	Rs. 7690
Silver portion	Rs. 7700	Silver portion	   NA

Stock Indices

Sensex		3352.52		-55.32
BSE-100		1604.66		-17.31
S&P CNX Nifty	1094.15		-15.65
Calcutta	 113.65		- 0.93
Skindia GDR	 543.70		+ 6.09

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