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  • MARCH 3, 2001

Top stories this week…

Maruti gains…
Car sales, for the first time in last four months, grew by 7 percent to 54,545 units in January 2001 thus reversing the trend in the current year (car sales had fallen 41 percent year-on-year in December to 31,847 units). The improvement in aggregate car sales reflect a smart performance by Maruti Suzuki, the country’s leading car manufacturer, which recorded an impressive 29 percent growth in sales volume in January 2001.

ICICI to fetch Rs 5 bn…
ICICI Limited has decided to divest around 15 percent stake in ICICI Bank to a foreign strategic partner. The basic objective is to bring down the promoter’s holding to around 40 percent from the current level of 56 percent, in accordance with the Reserve Bank of India’s licensing norms. ICICI is expected to receive close to Rs 5 billion (US$ 106 million).

Cadbury net up sharply…
Cadbury India has recorded a 42 percent increase in net profit for the calendar year 2000 to Rs 520 million (US$ 11 million) from Rs 367 million (US$ 7.8 million) in the previous year. Net sales have also gone up by 12 percent to Rs 5.7 billion (US$ 121 million). Though sales growth in the fourth quarter was below expectations, the cost-cutting initiatives undertaken by the company has resulted in marginal rise in operating margins. The company has recommended a dividend of Rs 5 per share (US$ 0.1) for the current year.

The `political` effect…
The Railway Budget has proposed a marginal rise in freight rates of 3 percent to mobilise additional revenue of Rs 5 billion (US$ 106 billion) during 2001-02. However, the much expected passenger fare hike did not come through probably because of forthcoming elections in 5 states. The ministry has also deferred almost Rs 10 billion (US$ 212 million) as dividend liability.

Disinvestment - Will he manage it?
The Finance Minister Mr. Yashwant Sinha has fixed the disinvestment target as Rs 120 billion (US$ 2.5 billion) for 2002. He has lined up big-ticket disinvestment for the next fiscal year, which includes Videsh Sanchar Nigam Limited (VSNL), Air India and Maruti Udyog Limited. The government has targeted Rs 100 billion (US$ 2.1 billion) in the current year but managed to achieve just Rs 25 billion (US$ 531 million) (through sale of Balco and restructuring of four standalone refineries).

PPF loses its shine…
The Budget for 2002 has proposed a major reduction in interest rate and small savings schemes of post offices, provident fund and general provident fund by 1 percent to 1.5 percent with effect from March 1st 2001. The cut, expected following the reduction in bank rate by 50 basis points earlier this month, is a strategy to bring down interest rates further.

ITC for VST…
ITC, the tobacco and hospitality major, has made a counter offer for acquiring a 20 percent in the Hyderabad based cigarette company, VST Industries. ITC has made a competitive open offer through its 100 percent subsidiary, Russell Credit, at Rs 115 per share (US$ 2.4), against Rs 112 per share (US$ 2.4) offered by the Mumbai based Damani Brothers.

RBI cuts bank rate…
The Reserve Bank of India has reduced bank rate by 50 basis points, the second time in about a fortnight, to 7 percent. The new rate becomes effective from 1st March 2001. Following this, The Housing Development Finance Corporation (HDFC), the country’s premier housing finance corporation, has lowered its lending rate by 50 basis points.

Tata’s for VSNL…
The Tata group is planning to bid for the government’s stake in the public sector long-distance telecom operator Videsh Sanchar Nigam Limited (VSNL). Reportedly, a consortium of Tata companies has plans to submit the bid by fist week of April. With this the number of companies bidding for VSNL has been on the rise, which include France Tele, Essar and Reliance Infocom.

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