Sinha looks into lockers
Tempers fray in VSNL funding for Tata Tele
Birlas sound private banks
Govt firm on Coke stance
Grasim sells Gwalior textiles unit
Carens to precede Hyundai Terracan
Palio unveils Adventure
Uco net profit leaps 400% to Rs 164 cr
Markets in Asia, Africa on GIC menu
Foreign Exchange, Bullion, Stock Indices

New Delhi, May 29: 
Faced with the prospect of having to pay for a costly war, the government is gearing up to squeeze out more revenues by chasing tax dodgers and finding those who ought to contribute but do not.

Finance minister Yashwant Sinha today gave his taxmen a free rein to intensify search and seizure operations, go after people with bank lockers and track down firms in the yellow-book that do not pay taxes. Conceding the troop build-up on the border was putting pressure on the government�s spending plans, he asked revenue officials at a conference held here to intensify search and seizure operations. �I would hate to have a tax shortfall,� the finance minister told reporters.

India has massed about 7.5 lakh troops on the western border as it girds up for a decisive fight against terror attacks launched from Pakistani territory. The mobilisation means money will have to drawn from other heads for the military, though Sinha allayed fears of a runaway deficit by saying the border build-up �had been factored into the budget.� The possible rise in expenditure comes at a time when the fiscal deficit in the first quarter of 2002-03 is expected to be about 40 per cent higher than what it was in the same period last year.

Shrugging off the impact of a war, a confident Sinha said fears the economy might under-perform were misplaced. �The global economy is on the recovery path and the US economy is picking up. Despite the challenges, we are going to perform well,� he said.

The finance minister said the government would focus on direct tax and excise collections this year. Foreign trade has been sluggish and exports are falling even as customs duty rates are being scaled down to levels required under global commitments by India.

A key objective of the tax department, he said, is to collect huge tax arrears, half of which is locked up in disputes. The minister told taxmen to go beyond the normal parameters set out for identifying tax payers, using innovative methods to bring more people into the net.

For instance, people with bank lockers who do not pay tax should be told to account for it, while businesses that are listed in yellow pages but never report profits should be forced to come clean on their finances.

�The war-like situation has continued for many years. I don�t think that should come as an alibi for any failure on the revenue front,� Sinha warned. The revenue target for 2002-03 has been set a high Rs 1,72,965 crore.


Mumbai, May 29: 
Videsh Sanchar Nigam�s (VSNL) planned Rs 1,200-crore investment in Tata Teleservices is snowballing into an ugly row with the government threatening to move the Company Law Board against a board decision the Tatas argue is fair and above board.

On a day Bombay House marshalled its forces in defence of the move to suck out VSNL�s money to bankroll Tata Teleservices, communications minister Pramod Mahajan said the government would consider all options, including going to court, to ensure that the Tatas do not succeed in their motive.

One of the government nominees on the VSNL board, Rakesh Kumar, disputed managing director S. K. Gupta�s claim that the decision was unanimous, and that the agenda for Tuesday�s meeting was known a week back.

On the other hand, Tata nominees refuted charges of �asset stripping�, saying the money in Tata Teleservices was a long-term investment � to be made over five years � that would be shown in VSNL�s balance-sheet.

Kishor Chaukar, managing director of Tata Industries, the holding firm for the group�s telecom foray, said his company was looking at more such investments in companies which have no conflict with VSNL�s interests. A sub-committee to finalise details will be formed, but it might not include government nominees.

Disinvestment secretary Pradip Baijal said his ministry had nothing to do with the issue, which should be judged by the shareholders� agreement signed between the communications ministry and the Tatas.

At a press conference in Mumbai this evening, the VSNL chief maintained the decision to invest in Tata Tele was �irreversible�. VSNL sought government approval to offer basic phone services before the Centre sold its stake, but its plea was shot down because that would pit it against BSNL and MTNL, he said.

Chaukar and Gupta said no communication had been received from the government after the VSNL board cleared the investment they believe is in tune with the Companies Act and the shareholders� agreement.

Asked if the decision could be blocked by the Centre, they said the share-purchase agreement signed with government on acquiring 26 per cent stake does not visualise any veto power by the government nominees.

On whether it was prudent for VSNL to invest in the loss-making Tata Teleservices, Chaukar shot back: �Can you show me any basic services new player making profits?� However, questions on whether a due diligence or a valuation TTL�s business was done went unanswered.

Chaukar claimed it was in the best interest of VSNL to invest in TTL at par, instead of doing so at a premium later after it establishes its business presence.

Analysts say Tata Tele needs money to square up with rivals Reliance and Bharti, which are rolling out basic services over the next few months.


Calcutta, May 29: 
The A.V. Birla group may acquire a small stake in a private sector bank to forge a strategic alliance with it, though it does not intend to venture into full-fledged banking.

S.K. Mitra, the group�s director for financial services, said: �The group needs to tie up with a bank to complete its portfolio of financial services. We may have to pick up a token stake in the bank to clinch the deal.�

The group has already initiated negotiations with a couple of banks. �Their initial reaction was impressive, but the devil lies in the detail, which will have to be worked out,� Mitra added.

A big industrial house�like the AV Birla group�can acquire a maximum of 10 per cent in a bank. If the A.V. Birla group needs to have a greater control on the bank, it may ask Sun Life, its partner for financial services, to join it in acquiring the stake.

Mitra said: �Though Sun Life has exited banking internationally and intends to remain focussed on life insurance and asset management, they would certainly consider investing in a bank in India, if it benefits the businesses run jointly by them and the A.V. Birla group.�

The A.V. Birla group has diverse interests in financial services. It runs an asset management company and a life insurance business in alliance with Sun Life.

The group also has an investment company servicing high net worth clients and foreign institutions. The group also offers investment advisory services, and has an insurance broking outfit through which it intends to sell non-life risk products.

Mitra, however, ruled out the possibility of the group venturing into banking in the foreseeable future, though it was among the first few that had evinced interest in foraying into the business.

�Given the cap on investment by leading industrial houses, banking does not look a viable business for us anymore. Besides, one needs to commit at least Rs 1,000 crore now to acquire a respectable space in the banking industry,� he explained.

Overseas investment

After Sun F&C, Birla Sun Life Mutual Fund is considering schemes that will invest exclusively in overseas debt instruments.

Birla Sun Life can invest up to Rs 180 crore of its total corpus of Rs 4,500 crore in overseas securities. It is awaiting regulatory approvals, and hopes to set the ball rolling within the next three months.

Mitra said the mutual fund was planning to launch three new schemes. One of them, he said, was an index fund tracking the National Stock Exchange�s Nifty, which should hit the market in a month and a half. The details of the other two, he refused to divulge.


New Delhi, May 29: 
Commerce and industry minister Murasoli Maran said today there is no change in government�s stance on Coca-Cola�s request for waiver of the divestment clause.

�There is no change in our stance regarding Coke. The position remains the same at present,� he told reporters after a meeting of group of ministers here. The company said it could not sell shares in its Indian operations to the public because of adverse conditions in the stock market and the fact that it has been losing money.

The minister pointed out that Coca-Cola�s request for waiver of the divestment clause had been turned down by the Congress government in 1991, and by the Foreign Investment Promotion Board two times in 2001-02.

Coke�s application was reconsidered after it cited new developments.


Calcutta, May 29: 
Grasim, the Aditya Vikram Birla group flagship, has sold its oldest textiles unit at Gwalior to Melodeon Exports for Rs 15 crore.

The company, which has decided to concentrate on its cement business and production of viscose staple fibre (VSF), has booked a loss of Rs 32 crore on account of this sale.

The Gwalior unit, where from the company had started its long journey, was making huge losses due to the intense competition in the textile industry which is facing an unprecedented glut in demand.

�The one-time losses are acceptable, rather than carrying on with a loss-making unit year after year,� sources said.

Grasim will now consolidate its textiles operations only at its Bhiwani unit in Haryana, which makes both the Grasim and Graviera brands.

Sources said the textiles division, which contributes merely 6 per cent to the company�s overall turnover, needs to slash its cost and increase productivity in order to stay afloat in the present situation.

�Consolidating operations in a single location will help the company to fulfil this objective,� they added.

Asked whether the company has plans to come out from the textile business, the company spokesperson replied: �There is no such plan as yet although the earnings from this division is low compared with cement and VSF.�

However, she said Grasim will continue to focus on cement and VSF which have a reasonably good demand and are also performing very well.

The VSF and cement businesses contribute 39 per cent each to the company�s overall turnover.

One thing, however, is clear, the company does not intend to make any sizeable investment in the textile sector at least in the immediate future, sources said. Only a few structural changes are likely to be taken in order to keep the division rolling.

The sale of the Gwalior unit, for instance, will help the company to bring down substantially the value of current assets, thus improving the position of its fabric business in terms of economy of scale and operations.

The company is also trying to reduce the input cost, which forced the division to post negative returns over the past few years.

The company also has plans to aggressively garner shelf space, improving its services to the outlets and increasing the visibility of the brands at the retail level.


New Delhi, May 29: 
Hyundai Motors India Ltd plans to bridge the gap between the Accent, the mid-size sedan and Sonata, its premium offering, by bringing in Carens�a small multi-purpose vehicle (SMPV) from the Kia stable, with whom it has an international joint venture.

The Carens, which is likely to be priced between Rs 9-10 lakh, is an MPV, and looks more like a semi-notchback sedan, with an in-built boot. Bringing the Carens in September, the festival season, implies that the plans for Terracan� the sports utility vehicle�are being put on the backburner for the time being.

Sources said that the plans for the Terracan are still there, but Carens will make the first appearance as this will be a cheaper car in the MPV, MAV category that is flourishing in India at the moment. It will be a better volume car.� The Terracan would have been priced between Rs 18-20 lakh if imported as a completely built unit (CBU).

Carens, for the time being, is planned as a CBU import, but sources said, �It will go into production much earlier than the Terracan.�

The six-seater Carens will compete with the Toyota Qualis priced around Rs 8 lakh and Maruti Versa priced at Rs 5.5 lakh. Though Carens is priced higher than both the cars, market researchers believe its sedan-like look, combined with the performance and stability of an MPV, will attract customers more than the Versa, which looks like a van and the Qualis, which though equipped with a higher seating capacity is in no way an elegant vehicle.

For now, the Carens is expected to be powered with 1.6 litre engine from Hyundai�s Accent Tornado.


Mumbai, May 29: 
Fiat today unveiled the Palio Adventure, from its highly successful Palio range, in the country.

The subsidiary of the Italian car major hopes that the latest thing on four wheels to hit Indian roads will create a new segment in the highly competitive domestic car market.

With the launch of the Palio Adventure, the company will be close to completing its 178 platform of passenger cars for India.

In addition to the launch, Fiat re-christened the Siena Weekend as Palio Weekend in line with its international strategy to include the model in the Palio range.

The price tags for Palio Adventure and Palio Weekend have been aggressively pegged at Rs 6.95 lakh and Rs 6.70 lakh respectively (ex-showroom Delhi).

Commenting on the launch, M. P. Bianchi, chairman and managing director, Fiat India said: �With the Palio Adventure, Fiat will take the lead in creating a new segment in the market�.


Calcutta, May 29: 
The Calcutta-based Uco Bank today unveiled a 400 per cent growth in net profit for the financial year 2001-02. The bank posted a net profit of Rs 164 crore in the year ended March 31, 2002, as against Rs 33 crore in the previous year.

With this Uco Bank joins United Bank of India in scripting a turn around story. Uco Bank�s chairman V.P. Shetty said: �It�s time people stopped referring to us as �erstwhile weak banks�.�

The bank, however, still has Rs 1,751 crore of accumulated losses, which it intends to set off against its capital and clean up its balance sheet. Shetty said bank had already applied for the ministry�s approval, and it should be able to wipe off its past losses within a couple of months.

�Once we have cleaned up our balance sheet, we will consider going to the capital markets to raise funds. But that, I presume, would not happen until the middle of 2003-04,� he said. United Bank too intends to raise capital next year.

After setting off its past losses against its capital, Uco Bank will have Rs 606 crore of tier-I capital and Rs 588 crore of tier-II capital left with it. The bank will need to capitalise itself to maintain its capital adequacy ratio (CAR) at over the Reserve Bank stipulated level of 9 per cent. As of March 31, it had a CAR of 9.64 per cent after adjustments for the proposed set off of past losses.

The bank�s total business volume�or the total of deposits and advances�crossed Rs 40,000 crore during the year, having grown by nearly 25 per cent. It now projects its balance sheet to grow past Rs 100,000 crore within the next five years.

The bank�s performance in 2001-02 was pulverised by the spurt in income from treasury operations. Income from trading in securities during the year was Rs 346 crore. The net interest income during the year was Rs 730 crore.

The bank has also reduced its non-performing assets (NPA) considerably during the year. Its gross NPA was reduced from18.79 per cent to 11.71 per cent, while net NPA was brought down to 6.35 per cent from 8.75 per cent.

Having turned the corner, Uco Bank is now planning to recruit people, as well as invest Rs 200 crore in technology. The bank intends to increase its staff strength from 24,624 to 25,268 by 2003.

At the same time, it is about to finalise its vendors for implementation of its technology plan drawn up by a consultant.


New Delhi, May 29: 
The state-owned re-insurance major General Insurance Corporation is aggressively pursuing inward re-insurance in the global markets.

GIC officials said their future strategy would be to focus on the Saarc, south-east Asian, Gulf and African markets in a bid to expand their re-insurance coverage.

GIC�s head of reinsurance P. K. Mor said �We expect the foreign inward business to reach approximately $ 145 million, after being de-linked from our four subsidiaries in the financial year 2001-02. The targeted foreign inward business for the fiscal 2002-03 is expected to touch $ 200 million. We are concentrating a lot on reinsurance from the African and Asian regions.�

GIC had been able to attract just $ 44 million of the foreign re-insurance business in 2000-01.

�We are completely focussing on the reinsurance business now. We are undertaking several projects to ensure that GIC becomes the major hub for reinsurance activities for the Afro-Asian region,� another GIC official added.

Sanjeev Misra of Heritage Finance and Trust India said, �GIC is now developing the foreign inward portfolio very aggressively and could emerge as a leading reinsurer of choice in the African and Asian countries.�

The major chunk of the foreign reinsurance business came from fire insurance, which cornered a good 68 per cent. This is followed by miscellaneous reinsurance, which brought in 14 per cent, marine hull (12 per cent), cargo (4 per cent) and engineering (2 per cent).

The national reinsurer has already procured business from places like Africa, West Asia, south-east Asia, Thailand, Philippines, Taiwan, Korea, Indonesia and Bangladesh over the last three-four years.

Over the years, GIC�s Swift division (single window inward facultative treaty reinsurance) has been carrying on the inward reinsurance business for the national reinsurer since the year 1991.

GIC is already the market leader in reinsurance in several African and Asian countries like Kenya, Nigeria, Nepal, Bhutan, Maldives and Mauritius.

Based on its net worth which is approximately Rs 2,293 crore and its asset base of about Rs 6,557 crore, GIC aspires to emerge as one of the leading reinsurers in the Afro-Asian region.



Foreign Exchange

US $1	Rs. 48.98	HK $1	Rs.  6.20*
UK �1	Rs. 71.55	SW Fr 1	Rs. 30.65*
Euro	Rs. 45.59	Sing $1	Rs. 26.95*
Yen 100	Rs. 39.38	Aus $1	Rs. 27.15*
*SBI TC buying rates; others are forex market closing rates


Calcutta			Bombay

Gold Std (10gm)	Rs. 5505	Gold Std(10 gm)	Rs. 5400
Gold 22 carat	Rs. 5200	Gold 22 carat	NA
Silver bar (Kg)	Rs. 8375	Silver (Kg)	Rs. 8280
Silver portion	Rs. 8475	Silver portion	NA

Stock Indices

Sensex		3160.24		+ 13.41
BSE-100		1611.76		+  8.82
S&P CNX Nifty	1041.65		+  3.45
Calcutta	 112.41		+  0.22
Skindia GDR	   NA		     -

Maintained by Web Development Company