Banks loans passe as CP, NCD rates crash
Mumbai-- Commercial papers (CPs) and non-convertible debenture (NCD) rates have crashed leading Indian corporates to shun bank loans even at sub-prime lending rates.
Foe instance the rate of interest for the 10-year NCDs fell by around 45 basis points over the last one month to 10.80 per cent.
The yields of triple-A (AAA) rated 90-day CPs declined by 25 basis points to 9.05 per cent.
A financial analyst said that corporate papers have become too cheap and attractive in comparison to bank funds. Rates apart, there are other attractions as well. Part of the working capital loans taken from banks is demand loan, which has to be carried on your books for a fixed time. For corporate papers, there is no such obligation.
Recently Bharat Petroleum Corporation Ltd (BPCL) raised Rs 390 crore through a five-year NCD issue at a coupon rate of 9.95 per cent, which bond dealers said was the lowest primary market yield in recent times. Indal has also entered the market to raise Rs 50 crore, through a five-year paper at an identical coupon. The yields of corporate papers are dropping by the day on the back of easy liquidity conditions and expectations of a bank rate cut.
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US-64; outflows more than inflows
Mumbai-- During the 11-month period (July-May) ending May 31, Unit Trust of India’s, (UTI), flagship scheme US-64 has seen more outflows. This is mainly due to redemption pressure from companies.
In the July-June financial year that UTI follows, the gross sales (inflow) of the US-64 scheme was around Rs 2,800 crore against repurchase (outflow) of around Rs 3,000 crore, leaving a gap of around Rs 200 crore. It is estimated that this gap may widen by June when the fiscal year closes. During July-June 1999-2000, the US-64 scheme had registered gross sales of Rs 4,600 crore against repurchase of Rs 2,200 crore, signifying a net inflow of Rs 2,400 crore.
The primary reason behind the lukewarm response to US-64 and redemption pressure is the growing apprehensions about the erosion in net asset value (NAV) of the scheme.
Following the recommendations of the Deepak Parekh panel, set up after US-64 plunged into a crisis in 1999, UTI is expected to make the scheme NAV-linked from February next year. UTI put up a credible performance last year.
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Brightstar ups VST offer to Rs 151 a share
Kolkata— MG Damani’s Brightstar Investments, has increased the open offer price for VST Industries shares to Rs 151 per share.

Not only this it has also revised the stake to 30 per cent from 20 per cent.
Recently Russell Credit, ITC’s wholly owned financial subsidiary, had jacked up its own counter offer to Rs 125 from Rs 120 as against the then Damani’s standing offer of Rs 118 per share late last week.
This has raised a number of questions about their being someone else behind Damani’s action. Incidentally Damani is under a cloud with investigations by Sebi and the income-tax departments continuing against him.
Russell Credit has already placed a sum of Rs 33 crore in an escrow account. However, Brightstar has put out a meagre Rs 40 lakh in cash and the rest in stock, whose values may have depleted significantly in recent times.
If Brightstar honours its commitment, it will have to shell out a whopping Rs 67.5 crore.
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FII sellers in equity
Mumbai-- Foreign institutional investors (FIIs) sold equity this week with outflows of Rs 33.2 crore for the week ended May 31, 2001 against inflows of Rs 193.5 crore for the week ended May 24, 2001.
They were buyers in debt this week with inflows of Rs 53.6 crore against outflows of Rs 160.50 crore last week.
For the week ended May 31, 2001, FIIs made investments of Rs 20.40 crore against net inflows of Rs 33 crore for the week ended May 24, 2001.

For the week ended May 17, 2001, FIIs had made investments of Rs 385.2 crore against Rs 129.8 crore for the week ended May 10, 2001. FII investments for the week ended May 3, 2001 were Rs 268.4 crore and a week prior were still higher at Rs 302 crore.
Till May 31, 2001, FIIs made investments of Rs 10,668.3 crore. While during the month of May, their net inflows were Rs 786.9 crore.

Mutual funds (MFs) were sellers this week with net outflows of Rs 153.04 crore for the week ended May 31, 2001 against inflows of Rs 272.48 crore for the week ended May 24, 2001.

They were buyers in debt with inflows of Rs 87.26 crore for the week ended March 31, 2001 and sellers in equities with outflows of Rs 240.30 crore against outflows of Rs 41.89 crore last week.
During the month of May, MFs were buyers in debt with inflows of Rs 1,141.81 crore and sellers in equity with outflows of Rs 478.22 crore.
Their investments for the month were Rs 663.59 crore. For the year as on May 31, 2001, MFs were sellers in equities with outflows of Rs 3,266.06 crore and buyers in debt with inflows of Rs 3,811.69 crore.
On the whole, they were buyers for the year with inflows of Rs 545.63 crore.
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Clearing Corporation forms panels to work out organisational structure
Mumbai— The Clearing Corporation of India Ltd (CCIL) has set up three committees to work out the modalities for various operational and organisational structures amongst others. The three committees, comprising mostly of directors of the clearing-house, are expected to submit the reports by September this year.
Of this, one committee is expected to work out the modalities of farming out 49 per cent of the corporation’s equity to market players including primary dealers. The intention is to broaden the shareholding pattern. Currently, only six entities — State Bank of India, ICICI, IDBI, LIC, Bank of Baroda and HDFC — have subscribed to 51 per cent of the total corpus of Rs 50 crore.
MR Ramesh, CCIL, managing director said, the internal committees are working on various operational areas like deciding on the member admission fees, norms for additional shareholders, risk management system, norms for setting up the settlement guarantee fund and other organisational infrastructure issues.
At present, only institutions are eligible to become members of the clearing corporation. The committee would work out norms whereby other entities can also become members. This would be decided on the basis of financial and operational parameters like capital adequacy, size of the operation and prevailing risk management system.
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Dr Reddys’; Increased investor interest
Mumbai-- DR Reddy’s Laboratories, post listing on the New York Stock Exchange (NYSE), is getting increased investor interest in its American Depositary Shares (ADS) on the NYSE. This is following the company’s robust financial results and developments on the research and development and the generics front.
On June 1, the company’s ADS touched a new high of $17.5, but closed lower at $16.52 — a record jump of over 65 per cent from the offer price of $10.04 per ADS in just three weeks of its listing. Two ADS are equivalent to one share of the company. The company had raised $132.8 million (including a greenshoe option of $17.3 million) from global investors in April and was listed on NYSE on April 11.
What is more, during this period, the stock price on the domestic markets jumped a shade lower — by 51 per cent — from mid-April. Given the price of Rs 1,439 on the BSE on Friday, the company’s ADS on the NYSE are seen commanding a premium of 8 per cent to the local prices.
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