The Deposit growth bank deposits continue to increase by leaps and bounds inthe current fiscal. The latest RBI weekly statistical supplement indicatesthat deposit growth in the period April 1 to July 31 was Rs 26,965 crorecompared to Rs 22,061 crore during the same period in 1996-97. But this riseis exaggerated as the head of research, ANZ Grindlays Investment Banking,Anindya Chatterjee points out.

As on March 31, FCNR(B) deposits amounted to $8,436 million or Rs 33,322crore, taking the dollar at Rs 39.50. Upto July 31, the appreciation in thevalue of the dollar was 7.6 per cent, which means that the FCNR(B) deposits,denominated in dollars, appreciated by around Rs 2,720 crore. In otherwords, of the increase in deposits this fiscal, Rs 2,720 crore was due torupee depreciation alone. That means actual deposit growth has been Rs24,245 crore or 4 per cent. Since during the same period last year, therupee held steady, the percentage growth in deposits at 4.4 per cent washigher than the percentage growth of 4 per cent this fiscal.

Container Corporation

The outright rejection of a share buyback in Concor by the Government is astep in the right direction. Especially since there is no sense buying backthe shares that were initially divested, that too at a premium (resultingfrom the company's skewed equity pattern) and then divesting at adiscount.

Concor's peculiar shareholding pattern is highlighted by the fact that ofthe 23 per cent government divestment earlier, the Morgan Stanley fund holdsas much as 19 per cent. Another 4 per cent is being managed by the same fundon behalf of UTI. Thus with the entire free float under the control of onesingle FII, the traded prices of around Rs 450 are unrealistic. More so,because a player like Morgan Stanley is in business for enhancing its ownbottomline.

It is, therefore, likely that a sale to the Government would be at a mark-upand not at the book building price of around Rs 325 per share. Thus, giventhat the Government were to pick up the free float of 23 per cent at apremium, its chances of divesting the same at a price equal to or higherthan its purchase price would be minimal. Especially since the Governmenthas already announced a six million share divestment through a GDR issue inSeptember at the book building price. It would make more sense for theGovernment to divest a part of its current equity in the open marketdirectly. A move which would once and for all put paid to Morgan Stanley'sdesigns. But this option is fraught with potholes, especially since theGovernment would find it difficult to convince the Parliament of the need todivest shares at a discount to the market price. Especially in a scenariowhere the benefits will accrue to international investors.

More so since there is no denying the immense growth potential which Concorenjoys given its monopoly status in the container transport industry.

Besides the inherent advantages of low distribution and handling costs and awell-spread infrastructure base. Volume traffic at Concor has alsoincreased at a CAGR of 45 per cent for the five year period from 1996-97,while revenues have increased by 61 per cent and PAT by 40 per cent.

More importantly the company has also managed to get a $ 94 million loanfrom the World Bank, for procuring assets relating to the company'sactivities. Furthermore the threat of any competition is almost non-existentat least for the forseeable future. Companies like M&M Realty and Kirloskarshave evinced interest but their progress has been tardy, more so sinceinfrastructure and capital investment making entry costs prohibitive. Thusgiven these many upsides, there can be no doubt about the success of thecompany's GDR issue, even if it is at slightly higher levels.

Railway telecom network

Newsreports indicate that the law ministry has approved the railways'proposal to auction its captive telecom network to the private vendors. Thismove if implemented could finally ensure true competition for the DoT. Theidea mooted by the railways deserves to be applauded not only because of thebenefits that would accrue to it, but also because of the largerimplications it would have on the basic services in the country Firstly, allresponsibility of maintaining the telecom network would shift from therailways to the private investor. Secondly for the railways which is reelingunder a severe cash crunch, it would mean access to additional revenues.

Thirdly, the private investor would take on the responsibility for upgradingthe network, which will enable the railways to concentrate on its corecompetencies,that of transporting people and goods.

Currently DoT enjoys a virtual monopoly with respect to basic services.

However, recently telecom licences have been granted to private players like- Techno Telecom ( Bihar ), Hughes Ispat ( Maharashtra) , Reliance Telecom (Gujrat ), Tata Teleservices ( Andhra Pradesh ), Shyam Telecom ( Rajasthan ),Essar Commvision ( Punjab ) and Bharti Telenet (Madhya Pradesh ). Wherethese private operators are liable to set up their own infrastructure andbackbone optic fibre networks which entail an enormous capital cost. Coupledwith huge licence fees, the operators are hardpressed to kick-off operationsin time. Thus the railways network could prove to be a god sent opportunityto the existing and prospective private operators.It would help the privatebasic operator to fulfil his obligations of catering 10 per cent of hisconnectivity to the rural populace. From 1999, domestic long distancetelephony is to be opened up for the private sector. This network wouldprove crucial therein.

(With contributions from Percy Dubash & AG Krishnan)