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Top stories this week…

May 5, 2001

MTNL goes overseas…
Mahanagar Telephone Nigam Limited (MTNL) and WorldTel have entered into an agreement to provide basic telephony services in Dhaka, Bangladesh. The project envisages installing 300,000 telephone lines in Bangladesh. MTNL would be responsible for installation, maintaining and operating the network while WorldTel would bring the necessary investments and management expertise. Read more… Robust exports…
Merchandise exports of the country reported almost 20 percent growth in the fiscal year 2001 to US$ 44 billion, which is higher than the 18 percent targeted by the central bank. Imports, in contrast, reported only a 0.3 percent growth to US$ 50 billion despite a 62 percent surge in oil imports in the current year. The trade deficit for the year was also down to US$ 6 billion in the current year from US$ 13 billion last year, reflecting a 55 percent drop. Read more…

Growth lowers…
Reliance Industries has recorded a 10 percent growth in net profits to Rs 26 billion (US$ 553 million) for the fiscal year 2001. The manufacturing sales increased by 29 percent, which was driven largely by higher volumes and growth in realisations. Better realisations could have been led by focusing on higher value added products. Production increased by 16 percent to touch 10.4 million tonnes. But, the doubling of effective tax rate for FY01 has impacted the post tax profits. This is because the company falls under the minimum alternative tax (MAT) provisions. Read more…

IRDA imposes new norms…
The Insurance Regulatory Development Authority has barred insurance companies promoted by big business houses including Reliance, Tata’s and Birla’s from investing more than 5 percent of funds in their group companies. The new norms assume significant importance as there are more than 6 insurance ventures promoted by manufacturing as well as finance companies. Read more…

The cruising PSU…
The Shipping Corporation of India (SCI), the government owned shipping major, has reported a 149 percent growth in net profits to Rs 4,016 million (US$ 85 million) for the year ended 31st March 2001. The topline growth in the current quarter is even more impressive recording a sharp 22 percent growth in the fourth quarter to Rs 8,520 million (US$ 181 million). Operating margins have also gone up from 19 percent in 2000 to 25 percent in the current year. Read more…

SEBI wakes up…
The Securities and the Exchange Board of India (SEBI) has decided to lift the ban on short sales from 2nd July 2001. Besides this it has also decided to introduce rolling settlements for more than 200 scrips. It has also decided to reintroduce the stock lending and borrowing scheme from the same day. The risk management group under SEBI has also finalised to allot a unique identification number for all transactions of more than Rs 0.1 million (US$ 2,150). Read more…

Clearing the mess…
ICICI has reported a 56 percent drop in net profits to Rs 5 billion (US$ 106 million) for the year ended March 2001 due to a higher provisioning for Non-Performing Assets (NPAs). Excluding the accelerated provision of Rs 8 billion (US$ 170 million), ICICI's profits have actually increased by 11 percent. This effort has helped the institution in bringing down the net NPAs to advances ratio to 5.2 percent (7.6 percent in 2000). However, gross NPA ratio is still high at 9.9 percent. The approvals and disbursements of ICICI jumped by 29 percent and 24 percent respectively. Read more…

RBI extends credit…
The Reserve Bank of India (RBI) has extended a special liquidity support facility to Global Trust Bank to the extent of Rs 4 billion (US$ 85 million). The RBI extended this facility to serve as a fallback mechanism if the bank were to face any liquidity concerns. This will help restore the customers’ faith in the bank, which is facing allegations of insider trading and over exposure through loans to one of the key brokers accused in the recent stock market scam. Meanwhile, the bank has plans to bring down its capital market exposure to just 3 percent of the total advances from 10 percent currently.
Read more…

The cement consolidation continues…
Grasim Industries has acquired UP Cement Corporation for a consideration of Rs 2.4 billion (US$ 51 million). This is expected to consolidate its presence in the Indian cement sector (the company already has a cement capacity of 11 million tonnes). But UP Cement’s two plants were closed since 1998 as the company was referred to BIFR for restructuring, which failed to take off. Read more…

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