Rupee maintains uptrend vs dollar for 13th straight week

MUMBAI, Sept 1: The rupee maintained its firm trend against the US dollar for the 13th straight week ended August 30, gaining four-and-half paise at 48.4950/5050 on unabated dollar inflows from exporters and foreign funds at the Interbank Foreign Exchange (Forex) market.

The local unit opened the week on a firm note at 48.53/54 and continued its northward journey in the first three days of the week on strong dollar supplies and feeble demand despite state-run banks, acting on behalf of the Reserve Bank of India (RBI), continued their dollar buying to stem the rupee’s appreciation.

The rupee breached the psychological barrier of 48.50 on Wednesday to touch a high of 48.47/48 but fell sharply to 48.54/55 the next day on heavy month-end dollar covering by corporates and sustained dollar buying by banks to take advantage of the longer week-end swap differentials.

Due to Monday’s New York holiday, the spot date for Thursday was shifted to September three.

The rupee closed at a seven-month high of 48.4950/5050, four and half paise up from its previous week’s close of 48.54/55.

Dollar supplies from exporters, Non-Resident Indians as well as foreign funds were strong during the week, but state-run banks checked the rupee’s appreciation, a senior forex dealer said.

The sharp gap in interest rate in US and India prompted heavy inward remittances from Non-Resident Indians and exporters to take advantage of the higher domestic interest rate.

Further, reports that many big corporates were lining up to take the cheap foreign currency loans to wind up their costlier domestic loans will also boost sentiment in favour of the rupee, he added.

The US fed last week kept the interest rate unchanged at its 40-year low of 1.75 per cent as compared to the higher domestic bank rate of 6.5 per cent, he pointed out.

Reflecting the strong dollar inflows, the forex reserves of the country have been steadily rising during the last few months and are currently at a record high of USd 61,035 million.

RBI, in its annual report yesterday, also noted that liquidity and inflationary conditions in the economy, combined with a strong level of foreign exchange reserves, were favourable for higher growth. The rupee, which tested its life-time low of 49.07 on may 16 this year on persistent Indo-Pak border tensions, has risen by 57 paise since then while in the fiscal it appreciated by 30 paise from 48.80 to 48.50.

The rupee is expected to open firm on Monday on bunched-up weekend dollar supply coupled with thin import demand on the beginning of the month, he said.

With foreign funds inflows picking up, the outlook for the rupee was positive.

Forward dollar premiums drifted lower as the spot rupee appreciated during the week. The ample liquidity in the money market and easy call rate which settled below the repo rate also helped premiums to move downwards.

The sixth-month annualised premiums slipped to a low of 4.04 per cent, before closing the week at 4.08 per cent, down from 4.11 per cent of the previous week’s close.

In the cross currency, the rupee fell sharply by 166 paise against pound sterling to 75.28 (73.62), 87 paise against euro to 47.80 (46.93) and 58 paise against yen to 41.05 (40.47) as dollar fell sharpy in the overseas market.

In the fiscal while the rupee appreciated about 0.3 per cent against usd, it fell sharply by 12.33 per cent against euro, 11.63 per cent against yen and 8.28 per cent against pound sterling as these currencies rallied significantly against dollar. (UNI)

Inflation rate inches up 0.38 points at 3.41 pc

NEW DELHI, Sept 1: A fall in primary articles and fuel prices failed to check the inflation rate which went up by 0.38 per cent due to increasing prices of manufactured products to touch a 35 week high of 3.41 per cent for the week ending August 17.

Annual rate of inflation stood at 3.03 per cent for the previous week and 5.35 per cent a year ago.

Wholesale prices (WPI) rose by 0.1 per cent at 166.9 up from 166.7 for the previous wee for the week ending June 22 was placed at 2.74 per cent against a provisional figure of 2.24 per cent, while final WPI stood at 165.2 against a provisional figure of 164.4.

Index for primary articles declined by 0.3 per cent to 173.7 from 174.2 during the last week mainly due to cheaper prices of food articles like tea (four per cent) and fruits and vegetables and inland fish (three per cent).

Prices of barley climbed up (six per cent), jowar and bajra (three per cent each), maize (two per cent) and masur (one per cent).

Index for non food articles rose by 0.9 per cent at 164.4 from 162.9 a week ago and 156.2 a year ago due to higher price of groundnut seed and fodder (six per cent each), raw silk (four per cent), raw rubber (three per cent), niger seed (two per cent). However, prices of raw wool fell (five per cent), raw cotton, cotton seed, copra and castor seed (one per cent).

Index for fuel, power, light and lubricants declined by 0.2 per cent to touch 238.2 from 238.7 a week ago and 181.1 a year ago.

Index for manufactured products rose by 0.4 per cent at 148.6 from 148 a week ago and 144.6 a year ago on account of dearer prices for food products which rose 1 per cent to touch 155.9 from 154.3 a week ago.

Prices of soyabean oil rose (34 per cent), solvent extracted groundnut oil (eight per cent), rice bran oil (seven per cent), bran (six per cent), ghee and oil cakes (two per cent) and gur (one per cent). However, prices of groundut oil declined by one per cent.

Index for textile group rose 1.6 per cent at 122.4 from 120.5 during the previous week owing to higher prices of viscose filament yarn (11 per cent), cotton yarn cones (six per cent), cotton knitted garments (five per cent), nylon filament yarn (two per cent) and cotton yarn hanks and synthetic yarn (one per cent each).

However, prices of texturised yarn, polyster yarn and hessian and sacking bags dropped (two per cent each) and hessian cloth (one per cent).

Index for paper and paper products fell by 0.5 per cent to 173.6 from 174.5 in the last week due to lower prices of other boards (three per cent), printing paper white and map, litho paper (two per cent each) and M G Paper poster and newsprint (one per cent each). Prices of ceramic laid woven paper moved up by five per cent.

Index for non metallic products rose by 0.4 per cent to 140.8 from 140.3 from the previous week due to higher prices of electrodes (eight per cent).

Index for basic metals, alloys and metal products rose by 0.2 per cent to 146.2 from 145.9 during the last week due to higher prices of tin boxes/containers (five per cent), utensils (four per cent) and barrels (three per cent).

Index for machinery and machine tools rose by 0.1 per cent to 130.2 from 130.1 for the previous week due to higher prices of agriclutural implements (five per cent) and cranes (three per cent).

Index for transport equipment and parts group declined by 0.1 per cent to 148.8 from 149 a week ago due to lower prices of springs (13 per cent).

Indices for all other groups remained unaltered at the previous week’s level. (PTI)

MUMBAI, Sept 1: St James Court Hotel Ltd, a UK subsidiary of the Indian Hotels Company Ltd (IHCL), a Tata enterprise, has proposed a major restructuring during the current fiscal that will enable it to turnaround by 2004-05.

"The restructuring move undertaken during the current fiscal should ensure that the company could achieve a break-even by fiscal 2004-05," IHCL Managing Director R K Krishna Kumar told UNI here.

St James Court, which currently runs a hotel and apartments at Buckingham Gate, has posted an operating loss before the interest for the year ended March 31, 2002 at 166,973 pound sterlings. After net interest for the period at 3,501,794 pound sterlings, the company made a loss of 3,668,767 pound sterlings for FY ’02.

Mr Kumar explained that most of the hotels and properties that the Tata-controlled hotel group acquired in the recent years were all endowed with great profit potential, but it comes with a rider of slightly longer gestation period.

It (gestation) holds good for other international hotels of the group as well, says Mr Kumar. The group’s operations in Sri Lanka has improved substantially contrary to the investor’s perception here and the room occupancy there has gone up from 46 to 64 per cent. It has two hotels viz Taj Samudra and Airport Garden Hotel, both in Colombo.

Apart from restructuring of St James, the group has proposed renovation and relaunch of key luxury hotels.

In addition, international expansion in select key gateway cities is also in the offing. This is in tune with its second stage of the strategy, which is to build brand awareness globally by building an international network of luxury hotels providing an exemplary product-service combination.

Further, the international expansion will be done by selective acquisitions of leading hotels/brands to give the Taj group a high-profile presence in key cities worldwide.

"We, as a policy, are always on the look out for suitable hotels/properties, he says. All acquisitions will be carefully evaluated for return and EVA (Economic Value Addition) criteria, as well as their impact on the group, according to Mr Kumar. As part of strengthening the brand image process within the country also, Mr Kumar said it has been decided that the brand leaders, Taj Mahal in Mumbai, Rambagh Palace in Jaipur and Lake Palace in Udaipur are relaunched during this fiscal to make a quantum leap in the perception of the ‘Taj’ as a luxury brand.

The restructuring process is not confined to St James alone. In fact, the parent IHCL, in a major restructuring move, has decided to pare down the number of companies in the Raj group to 30 from the existing 74.

In effect, this means the group will merge some companies based on their strategic needs as well as to eliminate cross holdings between themselves.

If necessary they may wind up some companies altogether, if that could help achieve consolidation within the group. This group "restructuring also include selling off some of the idle assets in favour of new acquisitions that we will be making as part of the ongoing process," says Mr Kumar.

It has almost completed the process of merging three hotel companies in the South viz. Oriental Hotels Ltd, Covelong Beach Hotels (India) Ltd and Coromandel Hotels Ltd, as also two investment companies resulting in a reduction of four firms.

The group, among its direct investment and other companies, has completed a restructuring involving Taj Investment Finance Company Ltd, Taj Trade and Investment Ltd, Taj Holdings Ltd, Taj Services Ltd, Taj Trade and Transport Company Ltd. This restructuring will reduce the total number of companies by three. (UNI)

LIC aims at 25 pct annual growth rate

MUMBAI, Sept 1: Developing products based on customers needs, expanding distribution channels along with technology innovation across all spectrums of activities were the key factors for the Life Insurance Corporation (LIC) of India to maintain a compounded average annual growth rate of over 25 per cent in the current fiscal, according to LIC Chairman S P Mathur.

Last year, LIC posted an overall growth rate of 20 per cent and its premium income from new business alone grew by about 40 per cent.

In a interview on LIC’s 46th foundation day today, Mr Mathur told UNI that the corporation was striving hard to match the market dynamics and customers’ aspirations.

"Our strategy is to ensure that LIC remains a dominant player in the insurance business," he said.

Though the market scenario is changing very fast following the entry of private and foreign firms, he felt that the confidence and comfort of the investors and policy holders with LIC would be the main factors for its future success.

"Our prime concern is the safety of the policy holders’ money and we don’t compromise on this front," he said.

Besides the highest number of policy holders of over 13 crore, LIC has the distinction of contributing Rs 1,64,000 crore as investments in various national projects including social welfare during the last four decades of existance. Mr Mathur, who took over the Chairman’s post last month, was fully convinced that the growth of the corporation would continue as long as its product offerings met the needs of the people and were affordable.

LIC, which had a total of 52 insurance schemes, will soon launch two innovative products, "Jeevan Samrudhi" and a "children money back" policy, targetting the family segment, Mr Mathur said.

Last year, the first premia (fresh cases) grew by 137 per cent, he said.

The growth in the first premium segment was an exception last year and LIC’s products like Jeevan Anand, Jeevan Rekha and Anmol Jeevan had performed extremely well, he said adding, "we must explore the opportunity further."

In this context, he said the corporation was in the process of expanding its agency network from the 8 lakh to 10 lakh during the current financial year.

It also has plans to introduce a green channel concept in clearing insurance proposals faster without any procedural delays. LIC has 27 divisional offices which had nil outstandings of maturity and survival claims last year.

On the distribution network, he said the corporation was exploring the possibility of having further alliances with commercial banks in an effort to expand their branch network in rural and remote places for sale of insurance products.

LIC has roped in two banks—Corporation Bank and Oriental Bank of Commerce—as its business partners by investing in their equity stake. "We leverage each other’s strenghts without shouldering the operational responsibilities," he said. Reacting to the suggestion that most policy holders were motivated by the rebate incentives offered by the Government, Mr Mathur said, hardly 2 to 3 per cent of their policy holders were eligible to avail the income tax rebate under the IT Act.

Today, out of a total population of 100 crore in the country, only around 2.80 crore were tax payers, of which a certain percentage having an annual income between Rs 1.50 lakh and Rs 5 lakh fell within the rebate bracket.

"Over 75 per cent of our policy holders do not come under IT rebate scheme and some of our policy holders’ annual premiums run into Rs 10-20 lakh", he said.

On investment policy, LIC has an annual investible funds of Rs 2,00,000 crore of which over 50 per cent go into investment in Government securities and bonds.

Of the remaining, about 15 per cent was earmarked for long-term viable infrastructure projects and about 10 per cent was being parked for investment in equity market.

Currently, Mr Mathur said, there were a few good projects in infrastructure sector and LIC’s investments were restricted to them alone.

Similarly, owing to a depressed capital market, the investment in equity was contained within the growth-oriented companies.

As per the guidelines laid down by Insurance Regulatory and Development Authority (IRDA) LIC can invest upto 10 per cent of its total funds in the stock market.

In this context, Mr Mathur mentioned that LIC preferred to purchase shares from the Unit Trust of India (UTI) and so far most of its Rs 2,300 crore investment in equity was made in the offers of UTI.

"All the deals with UTI are at market-driven prices", he said. He also said that LIC was not in the game of bailing out UTI and he had not received any such proposal from the Government. (UNI)

Passing the buck
RBI formulates coin distribution plan

MUMBAI, Sept 1: Coins and currency notes are to economy what blood is to human body. So, when there is shortage of coins and currency notes, it is like a person gasping for breath.

The shortage of coins in particular is making life difficult for the common man at market places, hotels and public transport services.

Keeping in view these problems, the Reserve Bank of India has chalked out a plan to meet the shortage.

The apex bank has invited applications from various agencies for undertaking distribution of coins on an experimental basis.

RBI sources said it would pay a service charge of Rs 250 per bag collected from its counters. The agencies, will however, have to distribute coins to the public at face value without any charge/commission.

The sources said that coins would be available in denominations of Rs five, two and Re one as also 25 and 50 paise.

Agencies such as public sector undertakings, cooperative banks, regional rural banks, reputed national and regional social welfare organisations will be assigned the distribution job.

This is one of the methods adopted by the RBI to deal with currency shortage. It may be recalled that the best, which runs the civic transport in the city, is also distributing coins in exchange of notes at select places.

However, since the last five to six years, coin shortage has emerged as a big issue in the daily life of the common man.

Noted consumer activist M R Pai, who is also the honorary secretary of the All-India Bank Depositors Association, has brought out a book on this issue in which he appreciates the measure taken by the RBI to deal with the situation. The issue of coins is a sovereign function vested in the Government of India. The Union Government has the responsibility to supply adequate coins to the RBI which acts as the sole agent for distributing them to banks and the general public.

Coins are in denomination of paise 5, 10, 20, 25, 50, and Re one Rs two and Rs five. Coins of larger denomination are also minted from time to time but are not in circulation.

Till a few years ago, one paise, two paise and three paise coins were also minted but now it has been discontinued.

The long-term coinage policy committee, appointed by the Union Government in 1985, has recommended minting coins of Re one, Rs two and Rs five and this has been accepted in principle.

Mr Pai says the life of a coin is much more than the notes.

The management of coins is a much more difficult and complex function as it involves coordination between RBI, Finance Ministry, the four mint centres, security forces, currency printing presses, local police, Railways and banks.

He said elaborate procedures have been laid down for counting, inspection, certification, movement and distribution of coins at various points.

The coins are minted in four mints located in Mumbai, Kolkata, Hyderabad and Noida, near New Delhi.

Coin and currency shortages have been aggravated by illegal traders. Although, it is an offence to buy or to sell currency for more or less than the face value, such trading takes place under the very nose of the authorities.

These illegal money dealers corner coins and sell it to needy persons and institutions such as traders and hotels at a premium. (UNI)

UB Group joins hands with Indian Beverage at Jammu

Excelsior Correspondent

JAMMU, Sep 1: The UB Group, Bangalore based liquor baron, the makers of Kingfisher, McDowell’s Mera No 1 and Bagpiper brand club soda and packaged drinking water and VENKATESHWARA ESSENCES & CHEMICALS Bangalore, the makers of renowned soft drink brands like Thril, RUSH and SPRINT, jointly have appointed INDIAN BEVERAGE as their franchisee bottler for the territory of State of Jammu and Kashmir for the bottling of their non-alcoholic beverages and soft drinks in a fast coming up 1 lakh litre per day capacity plant commissioned at Jammu.

Mr S K Mahajan, managing director INDIAN BEVERAGE while describing the details told this correspondent that, "at our plant, which is having the capacity to produce 120 bottles per minute of carbonated and packaged drinking water in the most hygienic atmosphere based on ISI and ISO specifications".

He added that entire plant is centrally air-conditioned which is one of its kind where all job will be done in such atmosphere and give direct employment to more than 150 persons.

He further stated that the trial production will commence by ending this month and its commercial production will start in the month of November 2002, as by that time the state level marketing and sales network will be completed and the product is programmed to be launched very soon.

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