Budget-eve hiccups for market
Lobbying ends, over to Sinha
Hind Petro, BPCL selloff put on fast track
Abbott Labs set to tighten grip on Knoll Pharma
Pepsi one up on Coca-Cola
Foreign Exchange, Bullion, Stock Indices

Mumbai, Feb. 27: 
The inferno aboard the Sabarmati Express singed the markets today, blowing away the pre-budget excitement that grips bourses at this time of the year.

The Bombay Stock Exchange (BSE) sensex, which had put on almost 100 points on Tuesday, surrendered some of those gains when it closed with a 7.08-point loss of 3705.66 points compared with 3712.74 a day before.

The fallout of the attack on devotees returning from Ayodhya sparked caution, prompting many to discard shares and scurry for cover. Several stocks fell to profit booking by operators.

Even institutional investors were seen shuffling their portfolios by swapping one stock for another within a particular sector. For instance, there were more takers for Hindustan Petroleum than Bharat Petroleum. Similarly, two-wheeler major Bajaj Auto was a bigger draw than Hero Honda for some fund managers.

Speculators swarmed many counters with sell orders, worried how events will unfold over the next few days after the attack on pilgrims at Godhra in Gujarat early this morning.

�The markets fear that the attacks could lead to communal tension, and this precipitated the slide,� a broker said. Market watchers were worried about just how today�s attacks will affect legislative business in Parliament on Thursday � the day Union finance minister Yashwant Sinha presents the Budget for 2002-03.

Some buying by foreign institutional investors (FIIs) stemmed the slide in the later half of the session, brokers were hedging their bets on what the budget will offer.

Opening stronger, the 30-share index shot up to its intra-day high at 3758.11, but dipped below the 3700-mark to the day�s low of 3677.62 before closing at 3705.66 compared with Tuesday�s finish of 3712.74 points. The BSE-100 index also dropped by 8.31 points to finish at 1780.33 against 1788.54. Today�s loss, though modest, ended the four-day spell of advances in the sensex that had been fuelled by hopes of a reform-oriented budget.

The main market barometer has risen about 12 per cent in February, driven primarily by the government�s bold privatisation initiatives, which have fired expectations of bigger initiatives in the budget.

Dealers said purchases in select old-economy stocks, led by cement, helped lift the sensex out of its trough. Hindustan Lever Limited (HLL) scored handsome gains on good buying support from institutional investors, helping the market close with a small loss.

Foreign institutional investors have stepped up their investment in stocks, encouraged by the Railway Budget and a pre-budget Economic Survey that is being seen as a harbinger of more reforms and interest rate cuts.

Stocks of state-run companies were mixed after rallying over the past two months on expectations of more selloffs. Cement companies broadly added gains after the railway budget lowered freight rates on cement on Tuesday.

In the specified group, 113 shares, including 17 from the index, registered moderate declines, while 55 others closed with slim gains.

The volume of business was Rs 1668.07 crore, up from Rs 1490.22 crore on Tuesday.

Satyam Computer was the top traded share with a turnover of Rs 223.87 crore, followed by Reliance Industries Rs 141.27 crore, Infosys (Rs 103.05 crore), HPCL (Rs 84.40 crore) and Zee Telefilms (Rs 81.26 crore).

Among the gainers were Satyam Computer, which increased Rs 2.40 at Rs 296.15, Reliance by Rs 3.00 at Rs 324.75, HPCL by Rs 6.55 at Rs 290.35, ACC by Rs 6.80 at Rs 173.65, Grasim Industries by Rs 6.95 at Rs 307.95, L&T by Rs 1.70 at Rs 204.05, Bajaj Auto by Rs 26.90 at 477.15.

Rupee hardens

The rupee rallied to 48.72/73 against the dollar, a leap of seven paise from Monday�s record-low close of 48.79/80. The rebound was driven by an upsurge in foreign fund inflows, which prompted banks to unwinding their long dollar positions ahead of the budget.


New Delhi, Feb. 27: 
Industry lobbyists are keeping their fingers crossed. They have represented their case and cause. By mid-day, they will know the fate of their wishes. Here�s a peekaboo into all the backroom lobbying that�s gone on in the run-up to the B-Day.

Tobacco firms are pressing for the removal of the 15 per cent surcharge levied on cigarettes to funnel funds for the creation of the National Calamity Contingency Fund (NCCD). In its pre-budget memorandum to the finance ministry and the Central Board of Excise and Customs (CBEC), the Tobacco Institute of India (TII) has asked the government to withdraw the NCCD and not to increase the current excise duty rate.

TII has also asked to retain specific duty structure for cigarettes, as against the duty structure based on ad valorem, that is, on price. At present, duty on cigarettes is compounded on the basis of volumes, on the base of per 1000 sticks, on the various cigarette slabs based on grade and length. The 5 per cent surcharge is being paid at present over and above the Basic excise duty and Additional Excise duty.

Meanwhile, a lobbying war has broken out between domestic and foreign liquor manufacturers over taxes on imported bottled liquor. While foreign firms want the whopping 700 per cent levy on foreign bottled liquor scaled back to reasonable levels, domestic manufacturers, who import foreign whisky and other liquor in barrels to blend with their local produce want a heavy differential between the two.

The pharma lobby is looking rationalisation of import duties on raw materials and drug intermediates, bulk drugs and formulations. Pharma firms have suggested that duty on raw materials, drug intermediates and bulk drugs be reduced to 15 per cent and that on formulations be reduced from 35 per cent to 25 per cent.

OPPI, which has 68 members including all pharma MNCs and leading Indian companies like Ranbaxy, Torrent, Wockhardt and Dabur to name a few, wants penalties on transfer pricing adjustments to be toned down.

Another sector pinning its hopes on the budget is the soft drink industry. The sector, which got an 8 per cent reduction in special excise duty last year, is asking for more. It wants the 16 per cent special excise duty (SED) it gives over and above Cenvat of 16 per cent, to be scrapped.

Biscuit makers want their Cenvat obligations to be nil, while sugar-boiled confectionery makers have suggested that excise duty for products up to a retail price of Rs 2, should be reduced from 16 to 8 per cent. Among the demands of the dairy industry is that the present sales tax on compound cattle feed be removed by placing it under zero floor rate.

But it is the hard-hit IT sector which is looking to the finance minister to give it a new lease of life. The distress of the hard ware industry has brought the four apex IT organisations�Mait, Cetma, Tema and Elcina�together, who have threatened to close down operations if duty anomalies concerning raw materials and finished products are not removed.

The industry wants the government to implement the IT Agreement of the WTO in 2005 as per commitment, and not advance it to 2003. It has also sought a slew of tax sops like nil customs duty on all capital goods for IT, electronics and telecom manufacturing.

It has also demanded a special scheme for the hardware sector like domestic tariff area, as list-based exemption may be tedious.


New Delhi, Feb. 27: 
The government has decided to appoint advisors who will submit their reports on the valuation of the two state-owned oil refiners�Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp�in the next two months.

A decision in this regard was taken by the Cabinet Committee on Divestment (CCD) here today, paving the way for the selloff of the two oil refiners and signalling the government�s resolve to deregulate the country�s Rs 3,00,000 crore oil industry and reduce the government�s budget deficit.

In 1997, India promised to begin opening Asia�s fourth-biggest oil market, but has been wary of going through with the changes which will raise consumer prices for petro-goods including cooking gas and kerosene.

Last month, it started the process with the sale of IBP Ltd to Indian Oil Corporation (IOC) and said that it would look to start the process for the selloff of HPCL and BPCL by June. IOC has been kept out of the bidding process for the two other refiners, to stop it from perpetuating a monopoly in the petro goods retail segment.

The CCD also decided to sell the government�s remaining 26 per cent stake in Modern Food India (MFIL) to its strategic partner Hindustan Lever Ltd (HLL) for Rs 44 crore at Rs 11,489 per share.

Two years ago, the government sold its 74 per cent stake in the ailing Modern Foods to the Unilever subsidiary for Rs 105.45 crore.

�The rules are to evaluate the fair market price and compare it with the rate given before. We found the current market price lower, so we decided on the same price,� he said.

Terming the MFIL privatisation as a �major success�, he said, �by selling the remaining stake to strategic partner in the bakery corporation, disinvested in 1999-2000, government wanted to send the �right signals� to investors seeking equity in PSUs.�


Mumbai, Feb. 27: 
The US-based pharma major Abbott Labs is strengthening its hold over subsidiary Knoll Pharma through a buy-back offer at a price of up to Rs 350 per share. Abbott Labs holds around a 58 per cent stake in the company.

The move incidentally comes after the sale of its majority stake in yet another subsidiary, Abbott Laboratories (India) Ltd, to Pharmacia of the US. Market circles said the buy-back move indicated the parent�s increased commitment to the subsidiary whose most popular brands include Brufen and Digene.

In a communication to the stock exchanges, the company said the board today decided to seek in-principle approval from shareholders through postal ballot for authorising the buy back of shares at a maximum price of Rs 350 per share, in accordance with the buy back norms.

The company, however, did not specify the quantity of shares that it sought to acquire.

The board also has decided to sell or divest its undertaking at MIDC Industrial Area, Jejuri, Pune, as a going concern, subject to shareholders� approval. The unit manufactures various pharmaceuticals formulations.

The maximum buy-back price represents an over 10 per cent premium to the closing price of Knoll on the Bombay Stock Exchange (BSE) today.

The scrip, which has been moving in positive territory following the buy-back announcement, today showed a rise of close to 4 per cent, closing at Rs 317.60 after opening at Rs 310 and rising to an intra-day high of Rs 318.

Meanwhile, the company has posted a net profit of Rs 48.69 crore for the year ended November 30, 2001, comprising 11 months, as against Rs 72.2 crore in the year ended December 31, 2000. Total income for the year was at Rs 341.19 crore as against Rs 364.31 crore in the previous year.

Earlier, Abbot had made an open offer to Knoll Pharma shareholders for acquiring a 20 per cent stake the latter at Rs 328 per share. This followed the world-wide acquisition of Knoll Pharmaceuticals Ltd from BASF by Abbott for a total consideration of $ 6.9 billion.


New Delhi, Feb. 27: 
The King has been dethroned � Coke has been knocked off its perch by arch-rival PepsiCo. Pepsi has pipped Coca-Cola on the prestigious Fortune 500 list of the world�s most admired companies.

In the periodical�s �All stars� list of the world�s most admired companies across all categories, PepsiCo shot up the totem pole to come in at 16 (from last year�s ranking of 61) and came in ahead of Coca-Cola which had slipped to the 20th position from 15 in the previous year.

In the New York-based magazine�s latest measure of �the world�s most admired companies, PepsiCo has moved up from number 5 in year 2000 to number 1 in the beverage industry category for 2001. That forced Coke out of the top slot �a pre-eminent position that it has always enjoyed on the list till now.

The ranking is based on an annual survey of 10,000 directors, executives and analysts in different industries and all over the world. It rates companies on the basis of nine attributes including quality of management, innovation and financial soundness.

PepsiCo scored an average of 7.47 on various parameters, whereas Coca_Cola managed 7.15. Only seven of the top 50 companies are headquartered outside the United States. These are Nokia, Toyota, Sony, Nestle, Honda, BP and Singapore Airlines.

In the separate category of Beverages, Pepsi bottling group, the bottling company of the Cola major which was formed three years back, gets a ranking of 4, whereas Coca-Cola Enterprise, the bottling company of Coca-Cola gets a ranking of six. Their scores are 6.42 and 6.36 respectively.

In previous years, the survey was conducted during the second quarter of the year and the results were published in October. Although no list of the world�s most admired companies was published last year, this year�s rankings are based on a survey conducted during the fourth quarter of 2001.

The latest Fortune 500 list is bad news for Coke chairman Douglas Daft who has been trying to put the beverages maker back on its feet after a period of turmoil that cost his predecessor his job.

In the two years that he has been in the hot seat, Daft has been trying to recapture the momentum that made the Atlanta-based, 115-year-old, Coca-Cola the world�s largest beverage maker.

The company has been stagnating for five years, with annual average sales growth at just 2.6 per cent and an annual average earnings decline of 6.1 per cent over the period. Coke earned $ 3.3 billion on sales of $ 20 billion over the last four quarters.



Foreign Exchange

US $1	Rs. 48.74	HK $1	Rs.  6.15*
UK �1	Rs. 68.98	SW Fr 1	Rs. 28.15*
Euro	Rs. 42.13	Sing $1	Rs. 26.20*
Yen 100	Rs. 36.18	Aus $1	Rs. 24.65*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

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Silver bar (Kg)	Rs. 7625	Silver (Kg)	Rs. 7755
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Stock Indices

Sensex		3705.66		-  7.08
BSE-100		1780.23		-  8.31
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