The newly announced National IT policy coupled with the expectation of good quarterly results have buoyed up software stocks. The Infosys scrip was hovering at the Rs 1,960 mark on June 8, 1998. It recovered lost ground to trade at the Rs 2,178 mark on July 3. Thereafter it steadily rose to quote at its current level around the Rs 2,470 mark. The software major has posted better results than expected for the first quarter ended June 30, 1998. This led to a huge chunk of 4 lakh shares being traded in the range of Rs 2,450 to Rs 2,550. Contrary to expectation operating margins have been maintained around the 30-per cent mark. This is commendable as, with increase in manpower costs, margins are expected to be under pressure. Over 90 per cent of Infosys' turnover consists of export income. Total revenues increased to Rs 98.43 crore from Rs 45.48 crore. But, quite interestingly, the depreciation of the rupee has only contributed Rs 2.04 crore to the bottom line. This is contrary tothe general opinion that software results are driven mainly on account of the depreciation of the rupee. The Infosys bottomline for the period has increased by 157 per cent to Rs 23.7 crore. But all said and done Infosys might struggle to maintain its phenomenal growth owing to increased expenses on account of overseas operations.

T-bill yields

The Reserve Bank's decision on Friday to hike the yield of the 14- and 91-day treasury bill by 52 basis points and 42 basis points from 6.01 per cent and 7.35 per cent per cent respectively is the first step towards reviving the moribund secondary market for treasury bills.

The RBI has now pegged the yield of the 14-day and the 91-day treasury bills at more realistic levels of 6.53 per cent and 7.77 per cent respectively.The 14-day bill yield thus goes back to the level prevailing in mid-May, when the cut-off rate was 6.52 per cent. For 91-day T-bills, the last time such high yields were available was in March 1997, when the rate was 7.96 per cent. The364-day T-bill then had a cut-off of 10.10 per cent, indicating the need for a drastic upward revision in the current rates offered on this bill.

Although both the issues devolved on the RBI and the Primary Dealers, the RBI need not lose heart as the market was just testing the central bank. Now that it has hiked the yields, banks will subscribe to both these securities and the chances of devolvement will diminish. As the spread between the 91-day T-bill and the 364-day T-bill has fallen to a meagre 22 basis points, the apex bank should lose no time in hiking the yield of the longer T-bill.

AV Birla management

Reports indicate that the AV Birla group has fixed the retirement age for its senior executives at 60 years. Considering that the group has so far been following what is known as the STD (service till death) policy, the new initiative is a bold step forward. While the new retirement policy may serve the important function of creating opportunities for younger talent and ensure a youngermanagement, such a policy by itself cannot professionalise the group.

The policy will enable the group to effectively cut out the deadwood that it has accumulated over the years. It would also be able to counter the threat of the formation of power-centres that could be detrimental to its interests.While a rigid retirement age could result in several benefits, it could also lead to a loss of valuable experience and wisdom that some of the older executives may have acquired. By stipulating that the new policy would not apply to its think-tank, the Birla Management Centre (BMC), the group has sought to counter this possibility. For professionalisation, the group has a long way to go. The most important issue that it needs to address is transparency as no organisation can be said to be thoroughly professional unless it is transparent. Each of the group's companies being in diverse businesses, a step towards ensuring transparency may be taken by providing a detailed break-up of revenue and profitsdivision-wise. Another aspect that it needs to address is that of recruitment and career planning.

The perception is that relationships and community background counts for more in the group than professional credentials. On the other hand, while the group does give autonomy to its managers, insiders say that a parallel informal system exists where trusted persons act as a check on managers. Such perceptions need to be addressed effectively in order to attract and retain talent.

Shipping

Trading in ships seems to be more lucrative than sailing them, given the current dismal state. Reports say that industry majors like Gesco, Essar Shipping, Indian Steamship and India Cements have sold six bulk carriers and three offshore vessels. All this is because of a general decline in dry bulk and charter rates. Only SCI seems to be hellbent on garnering revenues through actually sailing ships. If the downturn continues for long, most of the players would end up being only traders. In the case of aturnaround after a prolonged dismal run, adequate tonnage might not be available.

(With contributions by AG Krishnan, Anirban Nag and Sarad Saraf)