Jalan set to loosen purse strings
Sebi cover for UTI investors
ICICI Home Finance loans get cheaper
Chambal Fertilisers to hive off software unit
Govt gets tough on village phone target
Apollo, Duncans close to Gleneagles deal
Fresh cash sops for power reforms
Leeway for Bengal industrial estates
Britannia set to bite into desi market
Foreign Exchange, Bullion, Stock Indices

Mumbai, April 25: 
Bimal Jalan cannot breathe new life into business, but there are signs he might give the flagging economy a cash injection many believe is the best therapy.

As he sews up his lean season monetary and credit policy, there is a feeling that the Reserve Bank governor has convinced himself about the need for a 0.5 percentage point reduction in cash reserve ratio (CRR).

A wide section of bankers are of the opinion that a cut in the ratio, which currently stands at 5.5 per cent, is coming their way. The optimists expect a full percentage point reduction. CRR represents the fraction of deposits that banks must maintain with the central bank.

If the market assumption on a 50-100 basis point reduction in CRR is correct, the banking system will have Rs 3,000-6,000 crore in fresh cash to lend.

However, most agree that the Reserve Bank governor will not bring down the benchmark bank rate, which is now at 6.5 per cent, though he is likely to reaffirm his commitment to regime of softer interest rates.

Expectation of a cut in the bank rate had been building up in March, when the central bank brought down the repo rate by half a percentage point to 6 per cent. It was pared on May 28 last year, by 25 basis points to 6.50 per cent, and has been unchanged ever since.

Despite flagging industrial growth and factories sitting on piles of unsold goods, there have been persistent calls from Corporate India to reduce interest rates. The refrain that the cost of money must go down for the industry to claw back is being heard quite often.

There is a small section of bankers which feels the CRR will not be slashed on Monday because there is enough liquidity in the system. There are others who see a reduction as part of the Reserve Bank�s stated goal of getting the ratio down to 3 per cent over a period of time.

�There are various possibilities. Jalan may bring down the CRR by 50 basis points on April 29 or announce a time-frame for pushing it down to 3 per cent,� a money market dealer said. There are brave-hearts who expect a timetable for a decline to 3 per cent. If that possibility, not ruled out by bankers at this stage, turns into a reality, banks would be wading through Rs 16,000 crore in fresh money at their disposal.

However, such a generosity is likely to be counter-balanced by Jalan, who might withdraw the range of facilities to minimise the impact of excess liquidity infusion. It is felt here that the RBI governor may take back certain re-finance facilities that are open to banks now.

For instance, banks can avail of �discretionary re-finance�, a cash assistance available at the bank rate, to the tune of 0.5 per cent of deposits. This facility, sources say, could be out if there�s too much money around.

Where the monetary policy is likely to be dramatic in its impact are bond and call money markets, which many say have been overheated over the past few months.

It is expected that the RBI may restrict borrowings in the inter-bank call money market by certain entities by linking it to net worth, and announce further changes in its Liquidity Adjustment Facility (LAF).

Some relaxation could come in for non-banking finance companies (NBFCs).

The Reserve Bank chief may announce an increase in their deposit acceptance limit, currently at 1.5 times of a company�s net-owned funds.


New Delhi, April 25: 
The Securities and Exchange Board of India (Sebi) today said it will safeguard the interests of investors in the Unit Trust of India (UTI), which apparently is under pressure to redeem monthly income plan (MIP) of 1997 by April 30.

After Sebi�s board meeting here today, chairman G.N. Bajpai told reporters: �UTI was discussed. Our job is to take care of the investors� interest. We will take care of it.�

He declined to comment on the outcome of the meeting, saying: �I don�t want to give details as the discussion is privy to the members of the board. Whatever is necessary to communicate, we will do it at the appropriate time.� Indications are that the regulator will insist that UTI � which only recently came under the purview of the capital market watchdog � would make timely repayments to investors.

Sebi might also permit UTI to float a new scheme to provide a switchover option to unit-holders of the close-ended MIP scheme of 1997 that matures on April 30 as part of efforts to provide some relief to the fund.

The country�s largest mutual fund has applied to Sebi to launch a new monthly income scheme exclusively for MIP 1997 investors. The unit-holders of MIP1997 can also opt for reinvestment in any other UTI scheme open for sale. UTI�s MIP-1997 had a corpus of over Rs 1,400 crore on December 31, while its market value was about Rs 980 crore.

The scheme is likely to run a shortfall of over Rs 400 crore. UTI has been in talks with its original sponsors � Life Insurance Corporation, State bank of India and Industrial Development bank of India � to bring in additional funds. Even if UTI does not get the funds from the financial institutions, it can still draw upon its development reserve fund assistance.

This is the second time in 12 months that UTI is facing problems in paying out money to the unit-holders. Last July, UTI froze the sale and repurchase of its flagship scheme US-64 after witnessing heavy redemptions. The government had then stepped in with a special liquidity package.

EDGAR system

Sebi has decided to introduce a system of filing of company information in line with the EDGAR system of the US by June. Initially, 200 companies will be asked to file all information relevant to shareholders on the Net. It will be extended to 2,000 companies by April 2003.


Mumbai, April 25: 
The aggressive streak displayed by ICICI Home Finance, stirring up the home finance market ever since its entry into the sector, is expected to continue with more action and another bout of rate cuts.

ICICI announced new rates for both its fixed rate and adjustable rate loans which will come into effect from today.

Interestingly, ICICI Home loans raised the interest rate for 1-5 years in fixed rate home loans from 10.25 per cent to 11 per cent. Rates for 6-10 year tenure have been reduced by 25 basis points to 11.50 per cent, while that for 11-20 years has shed 50 basis points from 12 per cent to 11.50 per cent.

Interest for 21-30 year tenure has been reduced from 12.25 per cent to 12 per cent in the fixed rate home loan category.

The ICICI Ltd subsidiary, ICICI Home Finance, has shed a wholesome 1 per cent in the adjustable rate loans for a loan tenor of five years. It has slashed interest rates from 11.50 per cent to 10.50 per cent, while for 6-20 years it has slashed interest rates from 11.50 per cent to 11 per cent.

ICICI Home Finance, by virtue of its aggressive streak in tweaking interest rates has become one of the leading home loan providers in the country. In addition, its interest rates on fixed rate loans will now be applicable on a monthly reducing balance. This will increase the end benefit to the customer in terms of his monthly instalment.


Calcutta, April 25: 
Chambal Fertilisers and Chemicals Ltd (CFCL), the Rs 1,795-crore K. K. Birla group flagship, is planning to hive off its software division�India Software Group (ISG)�into a separate company. The move is seen as a major step towards future growth in the highly competitive software services sector.

Sources said CFCL has chalked out a strategy to become a strong player in the financial as well as software services sectors, besides its traditional strength in manufacturing fertilisers and cement. Hiving off the software division from CFCL is a major step in this direction.

ISG recently set foot in the US through acquisition of Novasoft Information Technology Corp, a New Jersey-based software company. It is also on the look out for similar acquisition in the US and Europe in order to become a major global software service provider within the next couple of years.

Speaking to The Telegraph, ISG president and CEO, Yash Pal Sahni said acquisition is top on the agenda for CFCL to grow in the software services sector. �We are looking at opportunities both in the country and abroad for suitable acquisitions in order to expand our activities,� Sahni said. Sahni however refused to name of the companies CFCL is currently in talks with. �In six months, I hope, our future strategy will be able to take shape,� he added.

ISG has a state-of-the-art development centre spread over 30,000 sq. feet in Chennai. It also plans to set up similar development centres in cities like Calcutta and Bangalore depending upon demand.

�Software services are slightly different from other services sectors. It needs different kind of people who will be able to cater to very special needs of the manufacturing as well as other service sectors like finance and telecom,� says Sahni.


New Delhi, April 25: 
Union communications minister Pramod Mahajan today threatened to cancel the licences of all fixed line operators who have failed to set up village public telephones as per the licence agreement. He said the government was committed to give the highest priority to Village Public Telephony (VPT).

Speaking on the sidelines of a seminar held here today, Mahajan said 70,000 VPTs had already been provided in the past year which was a record in itself and 40,000 more were expected to be installed in the next four months. He said the government would be able to provide VPTs to all villages by the end of the year, adding that it was expected that the private sector would fulfil its obligations as far as installing VPTs across the country.

�I have called a meeting of all fixed line operators next month and I hope when they come to meet me they would have completed a major part of their roll out obligations. They will also have to give the government a time schedule by which they are likely to install VPTs in all the villages in their circle,� said Mahajan. �If they fail to meet the obligations, penalties would be imposed, which includes cancellation of licence and take over of their network,� he added.

Mahajan has already asked BSNL to prepare a strategy paper to review and assess the progress on VPTs. Currently, villages have been provided with a phones by using MARR system, underground cable, overhead lines and Inmarsat mini-m-terminals.

Meanwhile, delivering the inaugural address at the �First Asian Regional Conference on IT for Development�, organised by Media Lab Asia and UN ICT Task Force here today, Mahajan, who also holds the information technology portfolio, urged corporate houses to come forward to fund research and development activities and develop IT tools which will help bridge the digital divide.


New Delhi, April 25: 
Apollo Hospitals Enterprises Limited (AHEL) is in the final stages of negotiations to buy out Duncans� stake in the nearly 200-bed Duncan Gleneagles hospital just outside Salt Lake in Calcutta, which became operational more than a year ago.

Confirming the move, Prathap C. Reddy, chairman of the Apollo Hospitals group, said, �We are trying to buy out Duncans� stake in Duncan Gleneagles hospital and set up a 50: 50 joint venture with the Singapore-based Gleneagles.�

Reddy was in Delhi to inaugurate the Apollo Millennium hospital�a franchisee primary and secondary-care hospital with a capacity of 100 beds. He refused to divulge further details about the Duncan Gleneagles deal but said it is expected to be concluded in a few days. �The last steps of the deal are left and I am keeping my fingers crossed,� he said.

Talking about other expansion plans, Reddy said that a 350-bed company-owned tertiary hospital of AHEL is coming up in August in Ahmedabad which will involve an investment of Rs 130 crore. A company-owned 100-bed secondary hospital is coming up in Chennai this month at a cost of Rs 25 crore.

AHEL is a Rs 550-crore group with a network of 46 hospitals, which includes both self-owned and franchisee operations with management support.

�We want to have 8,000 beds by 2003 by opening more hospitals through both routes,� said Reddy. Apollo is also in the process of opening 200 franchisee primary clinics all over the country in the next two years, said Yogi Mehrotra, senior vice-president of AHEL.

Reddy added that Apollo has signed an agreement with a New York-based hospital group to provide medical data processing service, which it terms as �medical business process outsourcing�. It has done the pilot project with the hospital group, which he declined to name.

AHEL will be doing the medical data processing business under the technology implementation division of Apollo Health Street, a wholly owned subsidiary.


Calcutta, April 25: 
The Planning Commission, along with the Union finance and power ministries, has formulated an incentive scheme aimed at imparting a thrust to reforms in the country�s power sector.

A special fund to be used by state electricity boards (SEBs) for rightsizing, restructuring, reducing transmission/distribution losses and training has been created. However, they have to meet six conditions before they can get money out of the corpus.

Union power minister Suresh Prabhu informed state electricity boards and the central power sector utilities about the scheme at a review meeting held yesterday.

The SEBs and the heads of the central power utilities were told that the Planning Commission and finance ministry have earmarked funds that will be disbursed depending on improvement in their financial health. The kitty is in addition to the funds provided under the Accelerated Power Development Programme (APDP).

The six conditions that must be fulfilled to get the funds are: Reduction in aggregate transmission and commercial loss, reduction of cash loss, improvement in quality of power, elimination of theft, availability of reliability and consumer satisfaction. There will be no cap on the availability of the funds. �The corpus of the fund has not been decided,� sources said.

The incentive will be given to SEBs for improvements in performance by way of matching grants in the following manner: the SEB has to submit its provisional annual accounts for the previous financial year to the power ministry, which will see if there has been an improvement/reduction in gross operating surplus/deficit over audited figures of the preceeding year.

The actual improvement in surplus or deficit will be determined after factoring out revenues that can be attributed to tariff increase, additional generation purchase, sale of units and an increase in input costs of generation.

Once the figures are worked out, 25 per cent of the provisional incentive will be given as an advance grant for the year. State power boards will be entitled to a 75 per cent grant after they submit audited accounts of the previous year before the end of the fiscal. Apart from Prabhu, the meeting was attended by Jayawanti Mehta, minister of state for power, power secretary R. V. Sahi, and the chiefs of NTPC, Power Grid Corporation, Power Finance Corporation and Central Electricity Authority, in addition to heads of SEBs.

�All these have been discussed by the power minister. West Bengal is already taking steps to strengthen power sector reforms. We have already passed a law to put a check on power theft. We are also intensifying raids against power theft,� West Bengal State Electricity Board (WBSEB) chairman G.D. Gautama said.


Calcutta, April 25: 
In a bid to streamline the functioning of industrial estates, the Bengal government has decided to take away the management of these estates from the West Bengal Small Industrial Development Corporation (WBSIDC) and hand them over to entrepreneurial associations of the respective estates.

�We will move the Cabinet for bringing in such changes soon. We are currently working out the legal parameters involved. The entire exercise will take three-to-six months,� minister of cottage and small-scale industries Bansagopal Chaudhury said while addressing the Merchants� Chamber of Commerce (MCC) here today.

At present there are 16 such estates in the state�two of which are located at Kasba and Behala and the rest are in the districts. The government has plans to take the number of estates to 32.

Under the existing practice, the WBSIDC maintains and manages the functioning of the estates. �We feel that there should be some reforms in the way that WBSIDC functions. Handing of the management of industrial estates to entrepreneurial associations is a first step towards this. The WBSIDC and the entrepreneurial association will share the cost of running the estates,� the minister said.

The government�s decision has been prompted by the recent report of the Comptroller and Auditor General (CAG) which indicts the WBSIDC for failing to create the appropriate physical infrastructure for the small-scale sector�s growth.

Sunil Kanoria president of MCC pointed out that any SSI unit applying for an increase in existing power-load, either from CESC or West Bengal State Electricity Board has to wait for minimum four to five months.

Chaudhury said that they have formed a small committee comprising members of WBSEB, CESC and SSI department for solving the matter on case-to-case basis. �We have already solved 30 such cases,� he added.

Mobilisation of funds is another major area of concern for the SSI sector. Chaudhury said that the matter has been discussed at the meeting of the state level bankers committee held recently. The government has also sounded Sidbi, co-operative banks and Nabard for giving loans to the SSI sector.

At the interactive session, questions were also raised on the Calcutta Leather Complex at Bantala. The minister said the government has identified an Italian company for setting up the common effluent treatment plant. �Work on the plant will begin shortly,� he said.

He informed the MCC members that the government has already acquired 23 acres of land at Kona Expressway to set up the proposed hosiery park and is scouting for a joint venture partner for the project. West Bengal Consultancy Services (Webcon) has been assigned to do the entire project report.

The government also plans to acquire another 23 acres of land in Kona Expressway for setting up an apparel park.


Calcutta, April 25: 
Britannia Industries (BIL) is pulling out all stops to grab a bigger slice of the low-price biscuit market in Bengal and the north-eastern region.

The unorganised market (desi), which mainly caters to the value-for-money, low and medium income groups, has a whopping 50 per cent share of business. The low-price biscuit segment is made up of brands that sell below Rs 50 a kg.

Nikhil Sen, chief operating officer for Britannia�s bakery operations, says: �With �Tiger Chai Biskoot�, the latest launch under the Tiger brand, we expect to capture at least 15 to 20 per cent of the unorganised market. What this offers is a branded quality product at a price that matches that of other non-glucose biscuits.�

The bakery division contributes almost 88 per cent to the company�s turnover. Of this, almost 70 per cent comes from biscuits, where Britannia�s market-share is 38 per cent.

�We have six main brands at present � Marie Gold, Good Day, Cream Treat, 50-50, Milk Bikis and Tiger. The Tiger brand is the major contributor to revenue from biscuits,� Sen said. He refused to say specify the fraction of biscuit sales generated by the Tiger brand.

�The idea was to introduce a product that has a universal appeal and cuts across all income groups and economic strata, enlarging the brand equity of Tiger.�

The Rs 1,354-crore food major has mapped out a strategy to increase its market penetration. �BIL does not plan to launch any new brands this year. The focus is on driving volumes through the existing brands. However, there will be introduction of variants under each brand according to market requirements,� Sen said.

�As part of the brand building and awareness exercises, BIL has lined up launches of variants or events at least once every quarter,� he added.



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