Gujarat barons lend voice to peace chorus
Railways signals separate track for suburban service
After payout pullback, now comes the comeback rush
HM to roll out three variants of Pajero
Govt loan pushes up gilt yields
Sebi bar on Sheth, six firms
Nocil unit in dire straits
Stage set for fertiliser reforms
Cellphone prices may be slashed 10%
Foreign Exchange, Bullion, Stock Indices

Mumbai/Ahmedabad, May 16: 
Can the politics defuse the powderkeg � industrialists in Gujarat want to get down to business.

A gaggle of industrialists with huge investments in the state, including Reliance and Gujarat Ambuja Cement, have issued an appeal to the citizens of Gujarat to stop the violence and back chief minister Narendra Modi�s efforts to bring peace and sanity to the state.

The move is the first organised effort by big-ticket investors in Gujarat to revive investor confidence in the state since the violence broke out over two-and-a half-months ago.

Until now, the corporate chieftains who have spoken on behalf of India Inc to condemn the mayhem in Gujarat had their bastions far away from the riot-hit state.

The industrialists from the state were, however, conspicuous by their silence, till the first public statement today on the riot-ravaged environment.

The advertisement titled �Gujarat Shall March Ahead� was signed among others by stalwarts like Mukesh Ambani, vice-chairman of Reliance Industries Ltd, Vinod Neotia, director of Gujarat Ambuja Cement, K. K. Patel, chairman and MD of Nirma Ltd, Arvind Lalbhai, chairman of Arvind Mills, Shrenikbhai K. Lalbhai, from the Lalbhai Group, S. K. Birla, chairman of VXL India, Sudhir Mehta, chairman of Torrent Ltd, Dilip Singhvi, MD of Sun Pharmaceuticals, Pankaj Patel, CMD of Cadila Heathcare, Chintan Parikh of Ashima Limited, Anil Patel, chairman of the Apollo Group, and Anil Bakeri, MD of the Bakeri Group.

Expressing deep concern �over the unabated violence in the state�, which they described as a �great tragedy� and blamed vested interests who are �out to destroy the image of Gujarat as a forward-looking state�, they said the culprits have no community and that the people of Gujarat have to stand up in defence of human values and should exert their moral pressure to initiate a movement for the return of peace and harmony.

�The idea was basically a wish,� declared Prafulbhai A. Shah, chairman of Garden Silk Mills. �It�s a message of hope and to let bygones be bygones.� Garden Silk was not affected as south Gujarat, where its operations are based, was insulated from the turmoil in the rest of the state.

The head honcho of a pharmaceutical company, who had signed the statement, was unavailable for comment. However, the spokesperson for the company said the idea was floated a couple of days ago. �As it originated from among the business fraternity, my boss signed it. The idea came from one of the old economy companies, a sector that had felt the brunt of the carnage.�

He said it was still possible to resurrect peace from the cadaver of butchered hopes and said most of the signatories were upset by reports in some sections of the media and comments made by politicians who, they said, were speaking for themselves.

Asked why the business community had been tardy in backing efforts to rehabilitate the riot victims, another industrialist said lives should be protected first. It is dangerous to even think of sending teams to camps.

�We were told that even protection of our teams in the camps would be a tough proposition�, the industrialist said. �At present, we cannot even enter without protection.�

�Because of communal disturbance, our employees living in the old city were unable to come to the office. Everybody has been affected. So everybody is interested in peace. We felt that we must do something. So we got together to issue an appeal,� said Shrinik Vaishnav, a senior executive of Nirma.

Bashir Ahmadi, a leading physician who was one of the 50 prominent people who issued the appeal, said: �We want to give an impression that we are all for peace. But our efforts will not be confined to issuing only peace appeals. We intend to go to the people in different areas and bring the people from both the communities together.�


New Delhi, May 16: 
The Indian Railways, wracked by losses amounting to Rs 5,413.41 crore on account of its social service obligations, has started to grapple with some existentialist questions to determine the way forward.

In its latest status report released today, the railways have started to ask whether they should continue to manage the loss-making suburban train operations in the country.

Railway minister Nitish Kumar, who presented the second report in both Houses of Parliament, said, �We are not scared of any competition and are ready to join hands with any partner for progress.�

This is the first time that the railways have raised such a loaded question�which is one of 19 basic questions that it says �need to be asked to clearly define a route map for the railways�. The key questions raised in the status paper are:

Whether IR should continue to suffer losses on suburban operation or should IR withdraw from the suburban business?

Whether suburban business should be run through joint venture companies formed in association with state governments with financial assistance from state governments and city administrations?

Whether high-speed passenger corridor projects should be taken up and, if so, who should fund it? Should this segment of passenger business be deregulated?

Should we have cross-subsidisation at all? What should be the level of cross-subsidisation

Should not the loss on account of below-cost passenger tariff be directly compensated from the General Exchequer?

The first status paper on railways was brought out in 1998 to present the problems confronting the railways with regard to the funding of sanctioned projects.

Analysis reveals that out of about Rs 59,000 crore worth of ongoing projects, a major component is financially unviable.

The spin-off of the suburban services was hinted at by the Rakesh Mohan committee whose report last year raised a storm with its suggestions to farm out loss-making services to private operators, slash fare concessions and adopt the principle followed by airlines where employees (who are entitled to concessional travel) never replace a full fare paying passenger.

Kumar today said, �Currently the operational losses (without taking into account depreciation and cost of capital) on account of running services on uneconomic branch lines is estimated at about Rs 449 crore per annum. Such poorly patronised loss making branch lines need to be managed differently.�

�Greater involvement of private sector would certainly help to reduce their losses and may even run the services profitably in many cases. Recently, an internal committee has been constituted to analyse the costs, earning and methods of operation of each and every line. Ways and means will be devised to reduce the losses,� he added.

On the issue of cross subsidisation, the status paper states that the railway ministry has constituted a committee of senior officers to examine all aspects of costing related to traffic movement on Indian Railways to analyse the traffic pattern and business environment.

Simultaneously, work of updating of survey ratios used for bifurcating joint costs between services is being carried out, which will make allocation of costs between services more realistic. Kumar said, �Indian Railways proposes to conduct a focused study and evolve appropriate strategies to convert the coaching services into a profit-making proposition.�

The status paper also plans to address the important question of should loss on account of below-cost passenger tariff be directly compensated from the General Exchequer, by cutting staff strength and reworking pension payment.

Staff costs account for about 50 per cent of the gross traffic receipts and the railways has reduced the fresh staff intake, which is likely to bring down the staff strength from 15.45 lakh to about 11.8 lakhs by 2010.


Mumbai, May 16: 
Having held out till Yashwant Sinha changed his mind on taxing pay-outs with investors, scores of companies are now rushing ahead with dividend declarations to keep edgy investors happy.

Corporate houses that proposed interim dividends after the budget and reversed them in the face of a Securities and Exchange Board of India (Sebi) ruling, are now getting back to investors with rewards. In many instances, the interim dividends planned coincide with the post-budget announcements � which was withdrawn within days.

Leading companies from the Tata group, including Tata Power Company, Tata Iron and Steel Company Ltd (Tisco) and Indian Hotels, have announced interim dividends.

While the board of Tata Power Company at declared an interim dividend of 50 per cent at its meeting today, Tisco directors considered and approved payment of an interim dividend of 40 per cent.

Indian Hotels Company informed the Bombay Stock Exchange (BSE) that its board today considered and approved the payment of an interim dividend of 80 per cent.

These dividends are similar to the ones taken back in March this year, just after the Union budget.

For instance, Indian Hotels planned to declare an interim dividend of 80 percent, Tata Tea 70 percent, Tata Power 50 per cent, Tata Steel 40 per cent, Tata Chemicals 50 per cent, Trent 50 per cent and Tata Investments 60 per cent.

The boards of other Tata companies will meet later this month to consider interim payouts. These include Tata Infomedia, Trent, Tata Chemicals and Tata Yodogawa.

Market watchers say other companies have also announced interim dividends, or plan to announce them soon. On this list are Colgate Palmolive, Godrej Consumer, GMDC, Chemplast Sanmar, Herbertsons and Macmillan Industries and a few others.

Experts believe most firms declaring interim pay-outs are not ready with final accounts for the year. �Therefore, they are declaring interim dividends and these are likely to be final dividends as well,� an analyst said.

Shailesh Haribakti, a chartered accountant, said companies have now accepted the reality on the way dividends will be taxed. �These companies have decided to go ahead with what was announced earlier, instead of waiting for final accounts. Most probably, the interim dividends would be the final ones,� he added.


New Delhi, May 16: 
Hindustan Motors plans to offer three variants of the Mitsubishi Pajero, its long-awaited sports utility, vehicle which is due to be launched by the end of this month.

HM plans to kick off with the top-of-the-line 3.2-litre feature-rich GLX model of the Pajero which will be imported as a completely built unit (CBU). Bookings for the 5-door, seven-seater GLX will start on May 22.

The first consignment of the 25-30 cars is scheduled to arrive on June 15 and delivery will start immediately after. HM plans to locally produce two other variants of the Pajero�the GLS and the GS models both of which will be powered by a 2.8 litre engine. All three models will run on diesel. While the imported version GLX will sport a sticker price of Rs 34 lakh, the GLS and the GS models�which will hit the roads only in September�will retail for Rs 25 lakh and Rs 20 lakh respectively.

�The Mitsubishi Pajero is an international product and we will not go in for any advertising. There have been enough enquiries that will take care of our next two consignments,� says Debashish Mitra, senior manager of Mitsubishi operations in north and east India. The GLX model has a monocoque design�which means that the body will be made out of a single sheet metal that will ensure greater rigidity and stability. The 3.2 litre engine delivers a huge horsepower of 161 ps @1300 rpm.

�The Pajero will be fitted in with a special kind of gear box so that the drivers will not face any tight corners while braking. There will be an ECV-controlled diesel engine that was developed and incorporated by Mitsubishi worldwide last year,� said Mitra.

Hindustan Motors will continue the production of GLS and GS models along with the import of GLX. �While this premier Pajero will continue to be imported in CBU form, the other two models will be slightly cheaper as we will import completely knocked down (CKD) kits. We have already installed extra equipment for it,� Mitra added.

Market sources said investment in the Chennai plant for the additional features amounted to Rs 50-60 lakh. The Pajero GLX will be available in two single-tone colours and two double-tone colours�Pyrenneese Black teamed up with Twin Silver and Forester Green teamed up with Queen silver.

�Initially, the Pajero will be distributed through selected dealers. Gradually, we will expand the network of dealers from whom the vehicle will be available. However, the number of service centres will be higher than dealer points. Although we are not going to the East at present, our focus on that region will increase during the festival season,� he added.


Mumbai, May 16: 
Yields on government securities have started hardening even as the full extent of the gilts scam unfolds to the horror of investors and regulators.

The rising yields � and falling prices � are the result of a situation in which a debt-starved government is ready to swallow up all the cash in the system, and hopes of an immediate bank rate cut are belied.

The increase has been broad-based: yields on the benchmark 10 year 2012 security, for instance, jumped to 7.85 per cent from the 7.05 per cent it hit recently. The interest rate on the dated paper had dipped by almost 300 basis points in the previous year to 7.05 per cent.

Is it sign that interest rates in the economy are hardening? No, reckon most experts. �This is a trend that is limited to the bond market, where participants have been disappointed by the absence of an interest rate cut in the recent monetary policy and the liquidity position has been tight. Nowhere have we seen deposit rates going up. HDFC, for one, has brought them down,� said an analyst who was among the people who thought softer rates are only a matter of time.

While most analysts are credited with the view that prices of government securities will stabilise at the current levels, there is another section which feels that they could plunge further should the tension along the Indo-Pakistan border come to a head. �There is likely to be a movement of 50 paise to Re 1 and the scope for any significant upside will be limited,� says Ashish Vaidya, assistant vice-president of HDFC Bank.

The recent trend of rising yields, he believes, is the fallout of expectations being built up about a bank rate cut, and the liquidity overhang before the monetary policy.

Though requests for more cash were granted by Reserve Bank governor Bimal Jalan, the feeling that a reduction in the benchmark rate may not come through has prompted sale of securities over the past few days. In the monetary policy announced last month, Jalan had indicated his intention to bring down this rate, but refrained from specifying how soon.

The RBI has indicated its willingness to bring down the cash reserve ratio (CRR) by 50 basis points � it has proposed to do this in the fortnight beginning June 15 � but it has not stopped the liquidity from tightening of late.

The squeeze has been attributed to the huge government borrowing programme, budgeted at Rs 1,43,000 crore for the current fiscal. According to analysts, while the government has mopped up around Rs 34,000 crore from the market so far amid the tight liquidity conditions, there is a sense that the reductions in cash reserve ratio could come before schedule.

Stocks weak

The Bombay Stock Exchange sensex lost 40 points after fresh bouts of selling by mutual funds and speculators. The benchmark 30-share index opened higher at 3391.14, dropped to an intra-day low at 3342.34 before ending at 3355.61 against Wednesday�s close of 3395.59, netting a loss of 39.98 points or 1.18 per cent.


Mumbai, May 16: 
The Securities and Exchange Board of India (Sebi) today barred Ketan Sheth, one of the accused in the multi-crore government securities (G-Secs) scam, and his six entities from buying, selling or dealing in the securities market till May 30.

The regulator has granted a post decisional hearing to Sheth and his entities on May 27, it said in a statement.

Sheth was yesterday remanded to CBI custody till May 27, in connection with the Rs 92.78 crore Seamen�s Provident Fund Organisation. He is also accused in the Rs 150-crore Nagpur District Central Co-operative Bank G-Secs scam.

Sebi said the decision was in view of the �emergent situation with relation to irregularities seen in G-sec transactions by Home Trade and related entities and to ensure that investors in the market do not suffer losses�.

The six firms that have been barred are�KSC Securities Ltd (member, Pune Stock Exchange), Giltedge Credit Capital Ltd (NSE member in derivatives and cash segments), Giltedge Financial & Management Services Ltd (BSE sub-broker), Giltedge Equiderivatives Ltd (sub-broker), Giltedge Investment Banking Services Ltd (category-I merchant banker) and Giltedge Portfolio Management Services.

Earlier this week, Sebi had extended the ban imposed on the Sanjay Agrawal promoted Home Trade from dealing in securities till completion of investigations and action thereon or one year, whichever is later.

The market regulator said the order was issued under Section 4(3) of the Sebi Act, 1992 read with Section 11 and 11b of the Act.


Calcutta, May 16: 
The petrochemical division of National Organic Chemical Industries Ltd (Nocil), the ailing company of the Mafatlal group, is in dire straits due to the unavailability of feedstock.

The company, which has already stopped production at the division in Mumbai about a month back, may have to close down the unit if the problem persists.

Nocil is the country�s first petrochemical plant, set up way back in 1968. However, its closure now appears imminent as the plant has become archaic and can hardly match the quality and productivity of the several new plants that have come up of late.

Sources said the plant badly needed funds for modernisation. Despite several efforts made by the promoters to sell off equities, there have been no takers.

In the absence of funds, the company has not even been able to repay its dues to various suppliers.

Closure of the plant is likely to render over 800 employees jobless. Unconfirmed report suggests that the company has already decided to offer a voluntary retirement scheme to all employees in the division.

The Nocil top brass was not available for comment despite several attempts made by The Telegraph.

Sources also pointed out that Bharat Petroleum Corporation (BPCL), which is the main supplier of naphtha to Nocil, has stopped supplying the feedstock because of the non-realisation of outstanding arrears from the company.

�We used to give huge credit facilities to Nocil for raw material uptake. But Nocil owes us over Rs 110 crore and we are no longer in a position to continue supplies,� a senior BPCL official said.

However, the other two divisions of Nocil� rubber chemicals and HDPE pipes�are still operational.

But sources said the HDPE pipe division of the company takes its feedstock from the petrochemical division. If the Mumbai division is finally closed, sourcing feedstock on a regular basis will become a problem.

An official in the HDPE pipe unit at Akola admitted that alternate sources are being tapped for the feedstock. Since there is now no production in the petrochemical division, the Akola unit is now sourcing raw material from other similar ventures including Indian Petrochemicals Ltd (IPCL).

In fact, having got wind of the state of affairs at Nocil, BPCL is now desperate to realise its dues from the company.

The Mafatlals had earlier proposed BPCL to convert part of the dues into equity and also asked for a soft loan in order to take up modernisation programme. But BPCL refused to take such a stake in the company.


New Delhi, May 16: 
The government today set the stage for fertiliser sector reforms, formulating the policy parameters for the seventh and the eighth pricing periods under the retention price schemes for urea units. The new norms, which were approved today by the Cabinet Committee for Economic Affairs (CCEA), will provide for a fair ex-factory retention price per tonne of urea in the case of each manufacturing unit based on the combination of norms and actuals with greater emphasis on efficiency, fertiliser secretary Nripendra Misra announced today. Industry is likely to gain about Rs 312 crore from the move.

The present norms approved are for the seventh pricing period, effective from July 1, 1997, and extended up to March 31, 2000. The eighth pricing period will be effective from April 1, 2000, to March 31, 2003, or till the new pricing policy for urea units comes into existence, whichever is earlier.

The policy aims at updating capital additions, salaries and wages, repairs and maintenance, packing material, selling expenses and other overheads. It also aims to bring about improved energy consumption norms, higher capital utilisation, re-assess production capacity and withdraw allowances based on plant vintage.

The department of fertilisers had earlier mopped up Rs 1,374 crore as interim revision in capacity and consumption norms from the urea units. It is further expected to raise it to Rs 1,833 crore.

The revision in the norms or parameters following the CCEA�s approval, will give finality to the interim decision taken in respect of the two pricing periods, that is from 1997-98 to 2002-03.

The CCEA also approved setting up of a joint-venture company named K-RIDE (Rail Infrastructure Development Company (Karnataka) Ltd. This will be formed under the Companies Act, 1956, with a 50:50 equity participation from the ministry of railways and the Karnataka government. Funds will also be raised through financial institutions for the project.

K-Ride will take up the implementation of four projects�Hubli-Ankola New Line with an anticipated cost of Rs 991.9 crore, Solapur-Gadag GC (Rs 265.77 crore), Hassan-Mangalore GC (Rs 217.82 crore) and Guntkal-Hospet Doubling for Rs 164 crore.


Calcutta, May 16: 
Cellular handset prices may decline further with the likelihood of a 5 to 10 per cent cut in customs duty. The effective rate now stands at 14.4 per cent, though the countervailing duty has been lifted.

The Indian Cellular Association (ICA) has been holding talks with the government on a possible duty reduction. �Reduction in prices is the only way to expand the market and give an impetus to the industry. That can happen only if taxes are reduced,� the association�s president, Pankaj Mohindroo, told The Telegraph

ICA expects a tax-induced price cut to turn the tide in favour of handset makers. A 5 per cent cut in customs duty is estimated to raise legal sales to 80 per cent, squeezing the grey market to about 20 per cent, from 75 per cent now.

Last year, the grey market accounted for 90 per cent of all handsets sold in the country. In April this year, the prices were reduced 10 to 12 per cent, prodded by duty cuts unveiled in the budget for 2002-03.

�The market grew almost two-and-a-half times after the prices were reduced. Legal sales now account for 25 per cent of the handset market. More than four million phones will be sold in India this year. Of this, three million will pass through the grey market if the present tax structure stays,� Mohindroo said. Next year, almost nine million cellphones are expected to be sold.

Explaining the need to slash tax rates to international levels, Mohindroo said: �In case of cellular firms, the revenues start flowing in after sales. The grey market is hindrance to the growth of the industry. The consumer also benefits because as the business grows, services can be offered at affordable rates.�

Retail handset sales went up 8 per cent in 2001. Replacement purchases made up 52 per cent of the total in 2001, from 42 per cent in 2000.

ICA feels a uniform sales tax of 4 per cent across the country would bring down cellphone prices by 5 to 8 per cent. In Bengal and Delhi, prices were pruned 25 per cent, against 15-20 per cent in the rest of the country.



Foreign Exchange

US $1	Rs. 49.03	HK $1	Rs.  6.20*
UK �1	Rs. 71.42	SW Fr 1	Rs. 30.30*
Euro	Rs. 44.66	Sing $1	Rs. 26.90*
Yen 100	Rs. 38.42	Aus $1	Rs. 26.50*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 5290	Gold Std (10 gm)Rs. 5150
Gold 22 carat	Rs. 4995	Gold 22 carat	NA
Silver bar (Kg)	Rs. 8050	Silver (Kg)	Rs. 8150
Silver portion	Rs. 8150	Silver portion	NA

Stock Indices

Sensex		3355.61		-39.98
BSE-100		1678.50		-19.37
S&P CNX Nifty	1092.80		-15.00
Calcutta	 114.90		- 1.24
Skindia GDR	 561.33		- 1.24

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