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Top stories this week… - Views on News from Equitymaster
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  • May 19, 2001

    Top stories this week…

    Limiting ‘exposures’…
    The Reserve Bank of India (RBI) has released its final guidelines aimed at curbing bank exposure to the capital market, but has asked banks not to get into short selling or arbitrage operations. Other guidelines issued include loans against shares where the end-use is other than investment in stocks has been put at the 5 percent ceiling. Besides, margins on loans against demat shares has also been hiked to 40 percent. Read more…

    Carrier’s open offer…
    Carrier, the US air-conditioning giant, has decided to raise its stake in its Indian subsidiary, Carrier Aircon, to 100 percent from the current level of 51 percent. The open offer for the remaining 49 percent stake in the company has been made at a price of Rs 100 per share (US$ 2.1 per share). Read more…

    Will it continue?
    Foreign Direct Investment (FDI) has gone up by 32 percent in the first quarter of the current year to almost US$ 994 million from US$ 752 million recorded in the corresponding quarter of the previous year. However, FDI inflow declined by more than 30 percent in March 2001 to US$ 229 million. Meanwhile, the Foreign Investment Promotion Board’s FDI approval has gone up by 110 percent to US$ 2.3 billion in the first quarter of the current year. Read more…

    The investor focus…
    The Securities and Exchange Board of India (SEBI), in a sweeping move, has decided to ban carry forward transactions post July 2, 2001. The Sebi chief Dr. D. R. Mehta also said that all existing carry forward positions (i.e. as on May 14, 2001) would have to be liquidated by September 3, 2001. But carry forward positions built after May 14, 2001 will have to be liquidated by July 2, 2001. There will be no price limits (limit-up or down) for 414 stocks that will come under the rolling settlement cycle from July 2. Read more…

    Lacklustre performance…
    Federal Bank, one of the largest private sector banks, has reported a 32 percent jump in net profits to Rs 610 million (US$ 12.9 million). This was backed by a sharp rise in operating margins from 20.5 percent in fiscal year 2000 to 25.8 percent in 2001. The bank's topline growth of 4 percent was disappointing. This was due to the comparatively slow growth rate in advances and deposits, which rose by 20 percent and 19 percent respectively. Priority sector advances contributed 62 percent of the net bank credit against the RBI stipulated mark of 40 percent. Read more…

    DPCO to be relaxed…
    The new drug policy framed by the government is expected to reduce the span of price control from the current 40 percent to about 24 percent of the total domestic formulations market. Reportedly, it is also planning to reduce the number of drugs under Drug Price Control Act (DPCO) from 74 to 31, which is expected to benefit multinational pharma companies like Hoechst Marion and Glaxo. Read more…

    Ballooning deficits…
    Oil pool deficit for the current year is expected to touch Rs 190 billion (US$ 4.0 billion). As a result, government might reconsider the dismantling of administered price mechanism (APM). This is because once APM is dismantled, the oil pool deficit will have to be shifted to the general budget, which could affect the fiscal state of the economy. To mitigate the problem, the petroleum ministry has been asked to recover around Rs 63 billion (US$ 1.3 billion) excess payments made to the oil companies. Read more…

    The buy-back saga continues…
    United Technologies Corporation, the US based conglomerate, has decided to buy-out the entire outstanding equity (31.1 percent) of its Indian subsidiary, Otis Elevator (India), at Rs 280 per share (US$ 5.9 per share). Currently the parent company holds 69.8 percent stake in the company. The offer would open on July 9, 2001 and end on August 7, 2001. Read more…

    Long way to go…
    Hughes Tele.com (HTL), the basic service provider in Mumbai and Maharashtra, has reported a lower net loss of Rs 2,088 million (US$ 44.4 million) in 2001 compared to Rs 2,701 million (US$ 57.4 million) in 2000. Though telephony revenue grew sharply by 118 percent to Rs 1,392 million (US$ 29.6 million) in 2001, this is 25 percent lower than Rs 1,858 million (US$ 39.5 million) targeted by the company during its Initial Public Offering (IPO). Read more…



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