TDP tremors shake market
Rupee to erode further
Strong banks to bear hike in staff taxes
Hind Lever sales dip, net surges 26%
Kotak Mahindra to become bank
Half of Corporate India loses money
AirTel, Essar cell users in Gurgaon get respite
Indica, Palio zip ahead on sales track
Tight leash on spurious teas
Foreign Exchange, Bullion, Stock Indices

Mumbai, April 15: 
The political see-saw in Delhi put markets on the edge, sending the Bombay Stock Exchange sensex below the crucial 3,500-mark and pounding the rupee to a record low of 48.94 against the dollar. Dragged down 49 points at 3461.51, the 30-share index mirrored the fears operators and fund managers have about the way the government copes with pressure from allies to sack the Gujarat chief minister. Then, there were concerns about the manner in which the finance minister responds to calls for a rollback of budget moves.

In the forex market, the rupee plunged to 48.94 as state-owned banks led a scramble for dollars. It was the political postures of BJP and its coalition partners that was the cause of anxiety for importers and forex dealers.

On Dalal Street, the benchmark index opened on a optimistic note at 3514.01 and touched an intra-day high of 3533.02. However, unwinding of positions saw the market turning weak before the sensex closed at 3461.51 against its previous finish of 3510.60, a loss of 49.39 points. The market was skittish after BJP hawks shot down a request from the Telugu Desam Party over the weekend to boot out Narendra Modi as Gujarat chief minister.

Fears were deepened by the fact that the finance minister may be forced to rework his budget proposals, dealing a blow to the reform process. “The disinvestment process might be derailed. The southward movement of interest rates may be reversed as well,” a fund manager with a prominent mutual fund said.

Technology stocks and PSU shares bore the brunt of the selloff as operators wound down positions in the fear that the next few days will see more political convulsions.


New Delhi, April 15: 
The finance ministry expects the rupee to steadily lose value and sell at an average rate of over Rs 49 to the dollar within the next three months. Ministry officials who are conducting an internal assessment feels the rupee value could cross the Rs 49-mark by May and average at well over Rs 49 in June.

The Institute of Economic Growth, which acts as a think tank for the finance ministry, also assumes that rupee will weaken and trade at around Rs 49.13 in June. Officials said they expect Indian banks to continue to buy dollars partly as a policy designed to build up foreign exchange reserves at the cost of the rupee and partly to protect industrial interests. And this, they said, would help push the rupee downwards further.

“The move to weaken the rupee is partly deliberate ... it is aimed at helping out our exports which have turned non-competitive against other countries,” officials explained.

“Besides with real interest rates coming down, the incentive for conversion of rupee holdings into dollars may turn the Indian currency weaker,” officials said.

Foreign exchange reserves have turned buoyant with a holding of $ 54.15 billion as on March 29. Most of the fresh inflows are coming in from FIIS.


Calcutta, April 15: 
State Bank of India (SBI), Bank of India (BoI) and Bank of Baroda (BoB) have led a pack of strong banks in approaching the Union finance ministry to allow them to shoulder the additional tax burden of their employees due to the amendment of the income tax rules pertaining to the tax on perquisites imposed by Central Board of Direct Taxes (CBDT).

While strong banks are in favour of taking on the additional tax burden, others which are not so strong have approached Indian Banks’ Association (IBA) to settle the matter with the finance ministry. The Reserve Bank of India (RBI) has, however, decided to shoulder the additional tax burden of its employees.

The RBI had already borne the tax burden of its employees in the last financial year after the CBDT issued the amended income tax notification on September 25, 2001, imposing tax on perquisites and allowances. The amendment came into force from April 1, 2001.

In this year’s budget, finance minister Yashwant Sinha had relieved the perquisites tax burden on low-income employees.

He had announced that “No perquisites will be assessed for the assessment year 2002-03 in case of employees whose taxable salary, excluding perquisites, is up to Rs 1 lakh. For the subsequent years, Sinha has proposed “to give an option to the employer to pay the tax on perquisites on behalf of the employees (low salaried).”

Madhukar, chairman and managing director of United Bank of India, said: “We are aware of the situation. The matter has been referred to IBA at its last meeting. The association is currently working on it. We want an industry-wide settlement. Banks can shoulder the additional tax burden according to their profitability.”

“The matter is being discussed and it has already been taken up with the finance ministry. Let’s see what happens,” IBA sources said.

In last year’s budget, the finance minister had rationalised rules for valuation of perquisites on the basis of the cost to employer, except in case of houses and cars, where other parameters are adopted for simplicity.

The September notification on Income Tax on perquisites has generated a furore among employees in public sector units because direct government employees are relieved from paying tax on account of accommodation provided to them. The notification covers facilities such as leased housing accommodation, conveyance reimbursement, interest on staff advances among others.

Earlier, unions of various PSUs based in Mumbai had moved the Mumbai High court against the amended notification on taxing perquisites. They feel accommodation provided to bank employees should not be treated as perquisites since banks are recovering standard rents.


Mumbai, April 15: 
Hindustan Lever (HLL) today overcame a fall in turnover to report a better-than-expected 26.2 per cent leap in first quarter net profit at Rs 448.54 crore.

The fast-moving consumer goods (FMCG) giant saw its sales shrink 10 per cent at Rs 2380.66 crore compared with the corresponding quarter. The decline was caused by a fall in sales of key products like soap & detergents, personal wash, fabric wash and personal items.

On bourses, which were already forewarned of a decline in topline, the Lever share lost Rs 1.05 at Rs 222.95. The results were announced after the markets closed.

The profits include an exceptional income of Rs 74.72 crore (Rs.22.59 crore in previous year), arising from the sale of the company’s seeds business. On a comparable basis, the underlying results would show sales declining 10.1 per cent and operating profits rising 19.5 per cent.

The operating profits (profit before interest and taxation) went up 15.7 per cent, while profit after tax (before exceptional items) jumped 11.6 per cent, the company said. Earnings per share (annualised EPS) on a Re 1 share stood at Rs 7.79 (MQ 2001: Rs. 6.17) for the quarter.

The company’s turnover, net of excise at Rs 2380.66 crore, declined 9.9 per cent. The domestic fast-moving consumer goods business saw a fall of 5.4 per cent, while exports were down 30.7 per cent, largely because the firm stopped non-value added shipments.

Commenting on the first quarter results, Lever chairman M. S. Banga said: “We have delivered a 15.7 per cent growth in our operating profit despite lower sales through a richer portfolio and continued cost management”.

Lower sales in the first quarter, he said, were the result of continued sluggishness in the FMCG market. “We believe retail stocks have come down. As indicated last year, we have discontinued non-value added traded exports and enhanced profitability in foods at the cost of short-term volumes,” the Lever chief said.

Optimistic about the future, he said: “Improved agricultural growth should boost rural demand, albeit with a lag. The fall in prices of personal products, after excise duty reductions, should also drive consumption. We expect to see the full benefit of our recent innovations in power brands such as Lifebuoy, Close-up, Fair & Lovely.”

The company’s strengths in the dealer-focused “Continuous Replenishment System”, a mechanism to enhance supply chain efficiencies, will be consolidated, he said.

“We remain committed to driving bottomline through growth in power brands and relentless focus on cost efficiencies,” Banga said after unveiling a profit that was double the amount the market expected.

Other income declined of 6.1 per cent. Despite a sharp fall in interest rates, treasury income fell only marginally, reflecting efficient management of surplus cash.

Hindustan Lever said the results of the quarter are not fully comparable to the previous year on account of certain acquisitions and disposals made during last four quarters.


Mumbai, April 15: 
Leading non-banking finance company Kotak Mahindra Finance Ltd (KMFL) has decided to convert itself into a bank. This follows the in-principle approval to set up a bank granted by the Reserve Bank of India (RBI) earlier this year.

Today’s announcement puts at rest speculations in the past few months over the route likely to be adopted by KMFL while setting up a bank. KMFL said that this decision was taken at a board meeting held today where the directors decided that “in principle, subject to necessary approvals, including that of the RBI, KMFL would convert itself into a bank.”

Sources close to KMFL said the decision was taken after an assessment of the NBFC’s activities, which brought it to the conclusion that bringing all its operations under one roof would enable it to achieve synergies. KMFL presently has around nine subsidiaries that are involved in various areas.

For instance, it has an auto finance arm in joint venture with Ford Credit, an insurance subsidiary in a tieup with Old Mutual, investment banking and broking with Goldman Sachs and a wholly owned asset management company. Sources said that following its conversion into a bank, all these ventures would be its subsidiaries.

Company officials, however, parried questions on the induction of a strategic partner. This is because as per the RBI rules, the promoter stake in a private sector bank (in KMFL it now stands at 61 per cent) has to be brought down to 40 per cent. Sources here said that the bank was awaiting further clarifications from the central bank on its diktat that the stake reduction should be done in a year’s time.


New Delhi, April 15: 
It isn’t easy to believe, but it is true: More than half the country’s private sector was either bleeding or struggling with nominal profits in 2000-01.

According to a Ficci survey, of the 1,284 registered private sector companies, a staggering 55 per cent, or 713 companies, have either suffered losses or made negligible profits during the financial year 2000-01. The study calls them zero-profit companies, a euphemism for enterprises languishing in the doldrums.

Among the major companies which ran up huge losses in the financial year 2000-01 were Lloyds Steel Industries with Rs 408.1 crore, Essar Steel with 345.9 crore, Daewoo Motors with Rs 196.4 crore and Modern Syntex with Rs 132 crore. Others on the list included Timex Watches with Rs 47.6 crore, Ferro Alloy Corporation with Rs 44.3 crore and LML Ltd with Rs 41.3 crore, Tata Engineering & Locomotive with Rs 500.3 crore, Indian Charge Chrome with Rs 315 crore, Ispat Industries with Rs 312.5 crore and CESC Ltd with Rs 192.1 crore.

The top 10 loss-making firms lost money worth Rs 2,780 crore. Essar Steel, Indian Charge Chrome and Llyods Steel have figured on the list for three successive years —1998-1999, 1999-2000 and 2000-2001; Indian Charge Chrome has been bleeding for six years now.

Interestingly, 541 of the 1,284 zero-profit companies did not suffer losses between 1993-2000. Figures show that cumulative losses of 743 companies went up from Rs 722 crore in 1992-93 to a whopping Rs 8770 crore in 2000-01, putting a massive burden on institutional lenders.

The sharp rise in losses in the post-liberalisation period has occurred in spite of sops from the government. Analysts said reforms, and the boom it spawned in several sectors, induced many industries to expand rapidly, creating over-capacity in the system which drove companies with huge overheads and low sales into a financial mess.

The picture was different till 1995, when 1,284 private companies made a cumulative net profit of Rs 17,831.17 crore.

Many analysts believe the spurt in number of companies reeling under losses in 2000-01 is the result of economic slump.

Assocham on Sebi role

The Associated Chambers of Commerce and Industry (Assocham) today asked the government to make the Securities and Exchange Board of India (Sebi) the sole regulator for all listed companies in matters of investors as part of the eight-point strategy to improve corporate governance standards and boost investor confidence in the country.

“It is necessary to empower Sebi to effectively tackle manipulators and defaulters,” the apex chamber said in a statement and added that overlapping of regulators should be avoided.

It also sought setting up of special investor protection courts to deal with investor grievance to avoid scams in the financial sector.


New Delhi, April 15: 
Cellular subscribers of the three Delhi operators—AirTel, Mahanagar Telephone Nigam Ltd and Essar— can continue to enjoy local call status while travelling to Gurgaon for another 10 days.

The Telecom Dispute Settlement Appellate Tribunal (TDSAT) today stayed the department of telecommunications (DoT) order restricting the Delhi metro cellular service coverage within a distance of five kilometres of the Gurgaon telephone system. The stay will continue till the next hearing scheduled for April 24.

Bharti Televentures had requested the Telecom Regulatory Authority of India to intervene following the recent directive by the department of telecommunications, restricting cellular service coverage in the Delhi circle to within of five kilometres of the Gurgaon telephone system.

According the DoT directive, when a customer crosses the boundary of the Delhi metro circle on the highway to Gurgaon from Delhi, there should be a black patch which will belong to Escotel, and then another patch which will belong to AirTel, Essar and MTNL.

This is because the Gurgaon exchange is deep down in Gurgaon village, and hence a radius of 5 km will not include the said black patch. This black patch houses colonies like Sushant Lok, DLF, DLF corporate parks and Udyog Vihar.

Manoj Kohli, executive director and CEO Escotel, had claimed that “as per the licence conditions, Gurgaon was always a part of the Haryana licence.”

Bharti officials argue that cellular customers in Delhi who reside in these localities were forced to avail of roaming facilities in order to remain connected.


New Delhi, April 15: 
It’s been a hard year for car makers—but there are indications now that they are coming out of the chicane. Heading the pack are Fiat’s Palio and Tata’s Indica – the two outstanding B-segment models that helped ratchet up car sales at the respective companies.

After its makeover at the start of last year, the Indica has been locked all year in a frenzied battle for pole position in the hugely competitive B segment.

Tata Engineering, which has only one car in its stable – the Indica — saw its domestic sales climb by 45.5 per cent to 64,091 units from 44,055 units in the previous year. The Tatas plan to launch a mid-size sedan in June and hope to introduce a multi-purpose vehicle (MPV) – the Indica — which it showcased at the recent Geneva auto show – later this year.

The Palio changed the fortunes of Fiat India completely – sales leapt 127.1 per cent from 9370 units in April-March 2000-01 to 21,277 units this year.

Overall car sales during the year rose by a piffle – 0.48 per cent to 570,473 units from 5,67,728 units, according to the figures compiled by the Society of Indian Automobile Manufacturers (SIAM). Total car sales for the month of March 2002 was 65,147 units against 62,886 units in the year-ago period.

The SIAM does not give the model-wise performance of the industry but it’s a safe bet that the industry mavens will be looking closely at the troika – the Indica, the Palio and the Santro, which are the hottest selling cars in the industry.

The Santro was the best-selling B-segment offering till it was displaced by the Indica last September. It will be interesting to see how this battle turns out in the first six months of fiscal 2002 after the Tata sedan is launched.

The Tatas have already indicated that they might prune the production of Indica to make room on the assembly line for the sedan.

Maruti Udyog, the country’s largest automaker, saw its sales rise by just 1.83 per cent to 3,35,468 units from 3,29,438 units. It had a market share of 58.8 per cent this year, just a tick over the 58.0 per cent registered last year.

Daimler Chrysler saw its sales rise by a spunky 49.1 per cent but this was on a very small base for the expensive range of Mercedes cars.

The big surprise was Ford Motor which saw its sales dip by 15.6 per cent to 15,131 units from 17,992 units last year. Ford India’s josh machine – the Ikon – got coshed by the Palio 1.6 (the bigger engine model in the Fiat stable).

The company spokesperson said, “This year the concentration has been on the B-segment. The Ikon segment has shrunk. However due to good exports, we are doing well.” Ford has exported 30,392 cars during 2001-02.

Hindustan Motors sales dipped by over 23 per cent at 19,577 cars sold during 2001-02 as against 25,677 cars in 2000-01.

Multi-utility-vehicles MUVs) also performed poorly in March with sales dropping by 13.9 per cent at 13,023 units against sales of 15,130 units in the same month in 2001. For the entire fiscal the sales dropped by 2.8 per cent.

Commercial vehicle sales dipped by 2.4 per cent to 18,642 units in the month of March 2002 as against a sale of 19,108 units clocked in the same month last year. In 2001-02, the sales in commercial vehicles dropped by 3.17 per cent.

Meanwhile, motorcycle sales zipped ahead with whopping 36.8 per cent. Motorcycle manufacturers sold 28.93 lakh bikes during April-March 2001-02 as against 21.14 lakh units sold during the same period last year. Scooter sales fell by 2.61 per cent to 8,53,330 units from 8,76,224 units in the previous year.’


Calcutta, April 15: 
The Indian tea industry is poised for major changes with the Tea Board working on the rating of tea exporters and benchmarking of tea blend according to the recommendations of international consultants Accenture.

The board will also draw up a logo exclusively for Indian tea. This will put a check on the rising trend of marketing spurious teas abroad as Indian tea.

Accenture was appointed by the Tea Board to work out a mid-term export strategy for Indian tea industry.

The report tabled by the consultant envisages a 284 million kg export by 2006, which, it says, can be achieved by producing more orthodox teas.

The Tea Board has already set up 10 sub-committees for implementing Accenture’s recommendations.

The committees will deal with several issues like proper product mix, promotion and marketing, logo development, exporter rating system, export market diversification, market consolidation, Darjeeling and value addition, quality improvement, cost reduction and sourcing of funds.

These sub-committees will report to a steering committee comprising 20 representatives from industry, the exporting community, trade and others. The steering committee will report to the apex committee comprising the commerce secretary, the additional secretary and Tea Board chairman N. K. Das.

There will be a separate project management cell comprising members of Tea Board, Indian Tea Association, United Planters’ Association of South India (Upasi) and Accenture to oversee the implementation of the recommendations.

“The entire task will be completed within a year’s time. We will then come up with new norms for the tea industry to boost exports. The industry feels that exporters should have a rating system. They also feel that there should be a benchmarking of blend so that no cheap teas can be sold as Indian tea. All these are being discussed now,” senior Tea Board officials said.

The Accenture report says Indian tea exporters should target markets like Chile, Iraq, Pakistan, UAE and Iran.

The consultant has also asked the producers to check rising costs and suggested that they devise means to immediately increase output.

Tea Board officials said that the consultant has suggested to change the product mix of Indian tea and give more emphasis on orthodox tea production.

This would rectify the over-supply position of CTC tea in the market and enhance the competitive edge of Indian tea in the domestic as well as in the international market.

Under the World Trade Organisation regime, India, being primarily a CTC producer, will be subject to severe competition from the CTC tea producing countries which can offer their teas cheaper.



Foreign Exchange

US $1	Rs. 48.94	HK $1	NA*
UK £1	Rs. 70.34	SW Fr 1	NA*
Euro	Rs. 43.11	Sing $1	NA*
Yen 100	Rs. 37.25	Aus $1	NA*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 5160	Gold Std(10 gm)	Rs. 5030
Gold 22 carat	Rs. 4870	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7925	Silver (Kg)	Rs. 7870
Silver portion	Rs. 8025	Silver portion	NA

Stock Indices

Sensex		3461.51		- 49.39
BSE-100		1731.27		- 21.70
S&P CNX Nifty	1134.15		- 12.35
Calcutta	 117.99		-  0.85
Skindia GDR	 559.11		 - 0.43

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