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The Stock ExchangeReview

The Stock ExchangeReview

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THE STOCK EXCHANGE REVIEWINVITES ARTICLES ON CAPITAL MARKETS

AND FINANCIAL MARKETSThe Stock Exchange Review invites articles on capital markets and financial markets coveringmajor market segments such as securities industry, banking, money markets, debt, derivatives,mutual funds, insurance and infrastructure finance. Articles should be original and in therealm of relevant areas such as conceptual framework, regulation and practice. Articles basedon research are particularly encouraged and those which are crisp and concise merit fasterconsideration. Articles accepted for publication will be paid honorarium and authors will beprovided five copies of the Review. The size of the article could be around 2000 words andfocus more on operational aspects rather than lengthy introductions and narrations. It wouldbe preferable if the articles are submitted through email (review@bseindia.com) butmanuscripts sent by post will also be accepted for consideration. Each article should beaccompanied by a certificate from the author stating that it is original and not sent for anyother publication considered. For any information/assistance in this regard, please send yourrequest to the above referred email.Articles may be sent to the following address:The Stock Exchange Review2nd Floor, P.J. Tower, Dalal StreetMumbai: 400 001, IndiaTel: 9122 2272 1233-34 (Ext.8045/8570)Fax: 9122 2272 3250 Email:review@bseindia.com

ReviewTForeign Companies Listed

1999 2000 2001 2002 2003

London 448 448 409 382 381

NYSE 405 433 461 472 466

Deutsche Borse 234 245 235 219 182

Luxembourg 226 216 209 197 198

Swiss Exchange 173 164 149 140 130

Australia 70 76 76 66 66

New Zealand 65 56 50 49 43

Singapore 54 63 68 67 76

Tokyo 43 41 38 34 32

Oslo 20 24 26 24 22

Vienna 17 14 14 20

Hong Kong 13 11 10 10 10

Kuala Lumpur 3 3 3 3 4

Buenos Aires 1 3 3 4 4

Sao Paulo 1 3 3 2 2

Source :WFE

Listing in the exchanges world-over is an opportunity for the firms to raisefunds globally. But there are several other aspects of listing in foreign stockexchanges beside just fund-raising activity. Firms are using DepositoryReceipts as a vehicle either to sell stake and control blocks or as a means tochange their governance structure. Firms incorporated in a jurisdictionwith weak investor-protection rights, often try to list themselves to moredeveloped securities markets to legally bond themselves to higher disclosurestandards and stricter enforcement. This in turn helps attracting investors,who would otherwise be reluctant to invest factoring in the risk of fraudand embezzlement. Beside this, firms listing in developed capital marketsexperience a shift in the ownership structure. Size and liquidity of homecountry’s market, extent of legal rules and investor protection, capital controlregulations and FDI restriction are some of the significant predictors ofcross-country listing. The data reconfirms the trend, wherein most numberof foreign companies listing is found in developed markets like NYSE,London and Luxembourg. Among the emerging markets cross-listing isyet to pick up. At this outset, if we look into the Indian market, it isconducive for foreign firms to enter through the depository receipts route.Indian Depository Receipts, the vehicle that can be used by the foreignfirms for cross-listing has been featured in the current issue.A brief about the several initiatives taken by BSE on the Corporate SocialResponsibility ground appears in this issue.

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Domestic Economy 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 (proj.)Gross Domestic Product (% change yoy) 6.5 6.1 4.4 5.6 4.3 8.7Value added in Agriculture (% change yoy) 6.2 0.3 -0.4 5.7 -5.2 12.6Industry 3.7 4.8 6.6 3.3 6.4 6.5Services 8.3 10.1 5.6 6.8 7.1 8.3Exports $ mn 33211 36760 44147 43708 52370 58900Imports $mn 42379 49799 50056 51261 61445 75000Money supply (M3) % change yoy 19.4 14.6 16.8 14.2 15.0 15.8WPI (% change yoy) 5.9 3.3 7.1 3.7 3.4 5.4Capital Issues (Rs. bn) 437 663 492 458 408.1 496.2Equity (Rs. bn) 117 249 142 62 73.9 201.2Debt (Rs. bn) 320 410 348 395 334 295.0GDRs/ADRs $mn 70 822 480 495 131 125FDI $mn 2480 2167 4029 6131 4660 -Portfolio flows $mn -68 3024 2760 2020 979 -NRI deposits $mn 960 1540 2317 2754 2808 -ECB $mn 4367 333 3737 -1576 -1698 -Total Foreign Capital Flows $mn (net) 8042 10184 9992 10573 12638 -Aggregate deposits (SCBs) (% change yoy) 19.3 19.3 16.2 11.5 16.1 17.3Non-food credit (% change yoy) 13.0 21.9 14.1 13.3 26.9 17.6Gross Fiscal Deficit (% of GDP) 6.5 5.4 5.6 6.1 5.9 4.8

Mar-03 Apr-03 May-03 June 03 July 03 Aug 03 Sep 03 Oct 03 Nov 03 Dec 03 Jan 04 Feb 04 Mar 04Govt. borrowings (Rs. bn) 28.9 84.9 154.4 300.2 154.4 261.4 -310 60 45.1 2.5 153.2Agg. deposits (% change yoy) 16.06 16.22 11.48 12.17 11.82 11.51 11.81 11.78 11.60 12.63 13.73 15.54 17.26Bank credit (% change yoy) 23.0 22.62 13.32 12.95 11.70 11.49 10.70 12.91 12.14 12.76 13.87 14.14 14.56Public Issues (Rs. cr) 350.00 0.00 0.00 993.34 388.00 394.16 531.99 665.50 192.0 537.7 834.44 3782.01 11970Rights Issues (Rs. cr) 29.52 1.96 0.00 0.00 0.00 0.00 164.86 80.89 7.71 98.02 110.86 34.43 280Private Placements (Rs. cr) 3299.56 586.53 1232.29 2008.07 3770.9 2845 2253.2 1037.79 421.3 1066.3 3593.10 4203.69 4410Overseas Floatations (Rs. cr) 72.50 0.00 0.00 75.00 0.00 0.00 0.00 1426.6 362.3 27.31 61.33 0.0 -Assets under management MFs. (Rs. cr) 79464 89238 98124 104762 112841 121040 121778 126726 132366 140093 145372 145657 139616Corporate Debt Floatations (Rs.cr) 3630 565 1225 1933 3664 3063 2147 1415 415 1328 4063 4216 4893

Monthly IndicatorsFeb03 Mar03

IIP 6.9 5.8 4.3 6.0 5.7 5.9 5.2 7.1 5.4 7.4 6.2 7.4Exports (% change yoy) 12.9 14.6 8.1 12.8 10.9 5.7 4.1 16.0 5.0 13.8 42.7 8.7 34.9Imports (% change yoy) 17.8 24.5 38.7 7.9 38.6 17.0 15.4 16.3 23.4 26.5 45.0 18.1 47.3Forex reserves $bn 69.1 71.1 74.3 77.9 78.2 81.2 82.6 85.6 88.7 92.1 96.5 100.8 106.4Non-food credit 27.8 26.2 26.3 16.4 16.2 15.5 15.2 14.1 16.9 16.0 16.2 16.6 17.7WPI 5.4 6.0 6.6 6.5 5.3 4.6 3.9 4.6 5.1 5.4 5.6 6.2 6.0Trade Balance $mn -441 -776 -1527 -1106 -1613 -1016 -1055 -932 -2025 -1924 -1722 -1464 -1223

Rates, Ratios, ReturnsFeb 04 Mar 04 Feb 04 Mar 04 Feb 04 Mar 04

Bank Rate 6.0 6.0 CRR 4.50 4.50 PE Ratio : SENSEX 18.71 18.55Savings bank rate 3.5 3.5 SLR 25 25 Price to Book Value 3.52 3.50Term deposit rate 5.00-6.00 5.00-6.00 Credit Deposit Ratio 55.39 55.62 Dividend Yield 1.79 1.81PLR 10.50-11.00 10.50-11.00 Re/US$ 45.17 44.93Call Money rate 4.40 4.50 Re/Euro 57.08 55.09 PE Ratio : NIFTY 20.32 20.7891 day T-Bills 4.37 Re/Yen 0.4236 0.4130 Price to Book Value 3.99 3.54CDs 3.92-5.06 3.59-5.75 Premium on Forward Markets(3mUS$) 0.39 1.24 Dividend Yield 1.49 1.62CPs 4.60-7.50 4.70-6.50 Avg. Yield on Govt. securities (10 yrs) 6.12 5.19

Sources: Center for Monitoring Indian Economy, The Stock Exchange, Mumbai, Reserve Bank of India, Financial Times, The Asian Wall Street Journal, The Economist, London. 1. Closing rates; 2. Last auction ratesof 91 TBs.; 3. Forecasts of GDP Growth by The Economist; 4. Short term interest rates; 5. Stock market indices ; Australia: All Ordinaries; Brazil: Bovespa; China: Shanghai B: France: CAC40; Germany: XETRA Dax;Italy: Mibtel General; Japan: Nikkie 225; Britain: FTSE.100; United States: Dow Jones Industrials; Malaysia: KLSE Comp; Mexico: IPC; Russia: RTS; South Africa: JSE All Share; South Korea: KoreaCmpEx; Taiwan:WeightedPr. Latest data available for the month; 6. Year 2003.

Particulars

Particulars

Particulars

Domestic Economy

Apr03

Austrl UK France Germany Italy Japan US Euro China Malay Korea Taiwan Mexico Brazil S.Africa RussiaG D P 4.0 2.7 0.6 0.2 0.1 3.4 4.3 0.6 9.9 6.4 3.9 5.2 2.0 -0.1 1.5 5.7Interest Rates 5.55 4.31 0.03 1.07 2.05 3.0 3.95 1.10 5.96 16.12 8.20 14.00Consumer Prices 2.4 1.3 1.8 1.1 2.3 - 1.7 1.6 2.1 0.9 3.1 0.9 4.2 6.7 0.7 10.5PLR (%) - 3.75 - 2.5 - 1.375 4.25 - - - - - - - - -Forex reserves ($bn) - - - - - - - - 416 48.3 1623 227 63 53 8.3 83Currency Units/$ 1.31 0.55 0.83 0.83 0.83 106 - 0.83 8.28 3.80 1150 32.9 11.2 2.87 6.34 28.5Year ago 1.66 0.64 0.94 0.94 0.94 121 - 0.94 8.28 3.80 1253 34.8 10.7 3.17 8.03 31.3Stock Index current 3416.4 4385.7 3625.2 3856.7 20352.0 11715.4 10357.7 1068.9 4202.0 901.9 880.5 6522.2 10517.5 22142.3 10692.6 752.66A month ago 3372.5 4492.2 3725.4 4018.16 20778.0 11041.9 10583.9 4116.7 879.2 883.42 6750.5 9991.8 21755.0 10895.8 670.1Year high 3443.9 4559.1 3785.4 4151.83 21129.0 11770.7 10737.7 1129.4 4262.9 908.9 907.43 7034.1 10157.1 24349.8 11178.5 752.66Year Low 3274.9 4309.4 3518.5 3726.0 19778.0 10365.4 10048.2 1036.3 3710.6 787.3 821.7 6041.6 8818.2 20763.2 10394.4 586.08PE ratio 18 15.3 16.3 13.6 15.9 43.1 21.6 - 15.4 16.9 14.6 20.7 16.3 9.1 12.6 10.4

May03 Jun03 Jul03 Aug03 Sep03

International Economy March

Markets

Oct03 Nov 03 Dec 03 Jan 04

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Feb 04

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CURRENT NEWS

BSE NEWS

COMMENT

PORTFOLIOHOUSEHOLD SAVINGS IN FINANCIAL ASSETS (%)

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The American Stock Exchange will be controlled by the Amex Membership Corporation,transferring the control of the Exchange from National Association of Securities Dealers(NASD).

SEBI has revised the letter of format for public announcements for takeover to improvedisclosures. The change have been made taking into account the development in the takeoveractivity and markets.

SEBI will introduce market-wide straight through processing (MW STP) before reducingthe settlement cycle from the current T+2 to T+1.

In order to impart greater transparency as well as strengthen the ‘know your client’ guidelinesfor mutual funds, SEBI has made declaration of PAN and bank account number mandatoryfor MF investors where the application amount exceeds Rs. 50,000.

Mr. Rajnikant Patel, COO,BSE welcoming Mr. RobertStrahota, Asst. Director, USSecurities and ExchangeCommission (centre) andMr. Ester Saversin - Jr. Asst.Director (Left) with a bouquetof flowers.

According to latest figures for FY03,released by the Central StatisticalOrganisation, allocation of grosshousehold savings towards equities isabove 4 percent compared to 2.7 percentin the previous fiscal. Around Rs.13,300crore was invested in the current fiscal,which is a more than 60 percent gain overthe last fiscal’s investment of Rs.8.25crore. A major reallocation took place inthe last decade, where investment ongovernment securities and claims ongovernment showed a consistent rise.However, there is a significant pull outof investment from UTI. Investment inpension funds showed a steady trend ofan average of 18 percent. Still the largestportion, around 40 percent of the grosshousehold savings continue to beinvested in bank deposits.

It’s clear that the process ofglobalization-rapid integration of theworld economy-has deliveredimpressive results. It has helped mostcountries enjoy greatly improvedmacroeconomic performance. Andthat has translated into better livingstandards-for almost everyone, andalmost everywhere.

Anne KruegerActing Managing DirectorInternational Monetary Fund

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Shares & Debentures UTI Govt Claims Govt Sec Pension & PPFSource: CSOSource: CSO

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Capital Market Training. Information. Publications.Forums. Skill Tests

� Any Student or a group of minimum 20 persons shall attract a discount of 25%. � Corporates nominating 5 participants for the programme can nominate the 6th person free of cost. � FINTECHANALYSIS ADVANTAGE – Registration for both Fundamental and Technical Analysis at the same time will attract a discount of ’ Rs. 450/-. � DERIVATIVE ADVANTAGE – Registration for bothBasic & Advance Derivatives same time will attract a discount of Rs. 750/-. � The course fees are inclusive of study materials (Lunch, Tea/Coffee for full day’s courses only) � DD/broker member’s chequemay please be made in the name of “The Stock Exchange, Mumbai”, the same should be payable at Mumbai.

Capital Market Training from BSE.BSE Training Institute21st Floor, P.J. Tower, Dalal Street, Mumbai.Tel:2272 1126-27, 2272 1233-34, Fax:2272 3250,Email:training@bseindia.com

FOR CERTIFICATION IN

Stock MarketsDebtDerivativesDemat & Depositories

On-line examination conducted inabout 50 centers in India.

e-LEARNINGPLATFORMFOR A WIDE RANGEOFCOURSES ONCAPITALMARKETS

http://bsetraininginstitute.bseindia.com

RECENT RELEASE FORTHCOMING

Addresses of Companies(revised)Working of the Stock Exchange(Gujarati).

FORTHCOMING CD ROMS

Addresses of CompaniesDirectory of BSE Members.

For a complete list of BSE Books, please call 2272 1046/2272 1233-34 (Ext. 8051) Fax:2272 1334 email:books@bseindia.com

ON SALE

CD ROMON

DERIVATIVES

CERTIFICATE PROGRAMME ON CAPITAL MARKETSA 3- month part-time programme conducted jointly with Jamnalal Bajaj Institute of Management Studies,

under which successful participants are awarded certificates from The University of MumbaiNext Batch Commencing in July 2004. Course Fee: Rs.10,500/-.CPCM

BSEnowledgeK

enterCCALENDER FOR JUNE AND JULY 2004

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Programme Dates FeesForeign Exchange Risk June 4 & 5 Rs. 5,000ManagementForeign Investment in June 9 Rs. 2,500India & AbroadFinance for Non-Finance June 11 & 12 Rs. 3,000ExecutivesCompliance Requirements June 12 Rs. 500for Member BrokersBSE’s Certificate Course on June 14 to 17 Rs. 4,000Stock Markets (BCCSM)Financial Innovations June 19 Rs. 4,000Venture Capital (New) June 22Fixed Income Derivatives June 23 Rs. 2,000Basic Prog. on Derivatives June 25 & 26 Rs. 2,750

Programme Dates FeesBOLT Operations July 3 Rs. 1,250

Debt Markets July 9 & 10 Rs. 4,000

Derivatives in Gujarathi July 10 Rs. 500

BSE’s Certificate Course on July 12 to 15 Rs. 4,000Stock Markets (BCCSM)

IPO,s July 16 & 17 Rs. 7,500

Compliance Requirements for July 17 Rs. 500BSE Member Brokers

Mergers & Acquisitions July 21 & 22 Rs. 5,000

Basic Programme on July 23 & 24 Rs. 2,750Derivatives

&CAPITAL MARKETS

onKnowledge

Know-how&CAPITAL MARKETS

onKnowledge

Know-how

7

FDI cap hike to 74% in private banks notified

The foreign direct investment (FDI) cap in private banks hasbeen raised to 74% under the automatic route from the existing49%. The guidelines notified today by the Department ofIndustrial Policy and Promotion (DIPP) has, however, placed acap of 49% on foreign institutional investor (FII) holding withinthe overall FDI limit. The notification said that the 74% limitwould include “aggregate foreign investment from all sources.”This would include portfolio investment scheme by FIIs, non-resident Indian investment, investments by overseas corporatebodies (OCBs), private placement, GDR/ADR, acquisition ofshares from existing shareholders and investment made by anyforeign investor in public offerings of the banking entity. On theFII investment limit, it is mentioned that the cap would ordinarilybe 24%. This could, however, be raised to 49% by the board ofdirectors of the bank passing a resolution followed by a specialresolution by the general body. The 10% limit for the holding ofan individual FII has been retained. Similarly, for NRIs, theindividual limit has been set at 5%, while the aggregate NRIholding has to be within 10%. The cap can be raised to 24% bya special resolution issued by the general body of the bank. Forprivate banks having an insurance subsidiary or a joint venture,the Government has said that the application for FDI has to besent to the RBI for it to consult the Insurance Regulatory andDevelopment Authority (IRDA) to ensure that the 26% foreigninvestment cap in the insurance entity is not breached.

RBI caps investments of bond houses

The Reserve Bank of India (RBI) has put investment restrictionson bond houses. The central bank said that investment of primarydealers (PDs) in unlisted non-SLR securities should not exceed10% of their portfolio. It said that PDs should not invest in non-SLR papers with an original maturity of less than one year, otherthan commercial paper and certificates of deposits. PDs are barredfrom investing in un-rated non-SLR bonds. The RBI has excludedinvestment in mutual fund schemes, which invest their entirecorpus in debt securities from these norms for PDs.

SEBI caps FII exposure in interest rate derivatives at US$100million

SEBI has fixed the FII exposure limit in interest rate derivatives atUS$100 million. A SEBI circular stated that the notional value ofthe gross open position of an FII in exchange-traded interest ratederivative contracts would be pegged at US$100 million. Inaddition the FII may take an exposure in exchange-traded interestrate derivatives contracts to the extent of the book value of theircash market exposure in government securities.

NASD’s Nasdaq launches single platform to trade NYSE, Amexand Nasdaq listed securities

The Nasdaq Stock Market announced a new trading platform forNYSE, Amex and Nasdaq securities, including ETFs. The newlylaunch system will be referred to as the NASDAQ market center.It is a consolidated system, encompassing SuperMontage, CAES,Intermarket, and the Automated Confirmation Transaction Service,as well as all recent functionality enhancements brought to Nasdaq’strading platform. The new system has the full capacity to trade allNasdaq, NYSE-listed, and Amex securities on one screen. Itfacilitates the trading of dually listed securities.

Euronext. liffe’s new OTC Facility launched on 31 March 2004

Following approval from the Financial Services Authority,Euronext.liffe will make available the third phase of its WholesaleServices for European equity derivatives when the OTC Facility islaunched on 31 March 2004. The OTC Facility will providetrade administration and clearing of OTC equity derivativesbusiness and combines the flexibility and anonymity of trading inthe OTC market with the efficiencies associated with tradingexchange listed derivatives. Customers will benefit from tradeconfirmation without the publication of trade price and size aswell as ease of trade administration. Access to a central counterpartywill enable the efficient use of capital and the freeing up of creditlines.

Stock exchanges join UN social forum

According to the Financial Times, the United Nations hasinaugurated the first ever meeting of corporate social responsibility(CSR) experts and national stock exchanges. The move is part of apush to convince companies that social and environmentalstrategies are central to managing risk. The UN said the attendance- which included heads and senior officials from Nasdaq andDeutsche Börse, and São Paulo , Istanbul, Jakarta, Shanghai,Canada and Italy, was evidence of rising interest in CSR as animportant risk management tool. The discussion followed a meetingin Zurich. The meeting focused on how investment companiescould better integrate CSR into their risk analyses.

SEBI sets cut-off time for trade in MF schemes

In the mutual fund arena, SEBI prescribed cut-off timings forpurchase and redemption of mutual fund schemes in order todeal with the practice of late trading. The move is aimed atpreventing a few investors from taking advantage of differentcutoff timings. For purchase transactions, the cutoff time will be 3p.m. for getting the same day’s NAV. For applications receivedafter 3 p.m. the closing NAV of the next business day shall beapplicable.

8

World over, corporates assuming significant role and responsibilityin promoting activities that encourage and enhance the quality ofsociety is gaining momentum. BSE in tune with adopting bestcorporate practices has made an initiative in this regard.

The Exchange has partnered with Akanksha Foundation, in itsmentorship program to help the economically underprivilegedchildren in their studies and personality development andencouraged its staff to volunteer their services to social causes. Fewof the employees of the Exchange act as mentors and help thechildren of Akanksha. Some employees have come together to forma trust for charitable purposes under the name “Pay back to society”.

As a first tape towards CSR, the exchange enabled some of the

books to the underprivileged children, the exchange underthe aegis of the Stock Exchange Foundation Trust, launchedLibraries through Pratham, (Mumbai Education Initiative) aleading NGO engaged in education of the underprivileged.

iii. Adop-a-gran: Under this programme, the Exchange is supporting20 economically deprived and socially alienated elderly personswith food and financial assistance, for a period of 3 years, throughHelpage India a leading NGO engaged in age care.

iv. Promoting better Financial Management and Governanceamongst NGOs: The project envisages equipping NGOsinvolved in various aspects of social work and development,the importance of sound and prudent financial management

CCCCCORPORAORPORAORPORAORPORAORPORATETETETETE S S S S SOCIALOCIALOCIALOCIALOCIALRRRRRESPONSIBILITESPONSIBILITESPONSIBILITESPONSIBILITESPONSIBILITYYYYY INININININ BSE BSE BSE BSE BSEHema SrinivasanDGM, CSR CellBSE

NGO’s to host their programmes in the BSE convention Hall.The NGO’s which hosted their programmes are save the ChildrenIndia (Empowerment of disadvantaged women & children) WorldWide Fund for India (Promotion of nature conversation andenvironmental protection) HelpAge India (Old age homes),Pratham India (Primary school education for underprivilegedchildren), Ashoka, Dignity Foundation and Magic Bus (trainingsession on theatre art techniques for underprivileged children).

Programs hosted by the CSR Cell of the Exchange :

BSE undertook to support a wide range of institutions involvedin social development work aimed at various segments of the societysuch as senior citizens, underprivileged children and youth etc.

i. Support to Educational Institutions: The exchange supportedNirmala Niketan, a leading Social work college, Mumbai, in itsfund raising activities on the eve of its golden jubileecelebrations. The college is to further expand its support to thedisabled, street children, women and the aged.

ii. Library Project: With a view to providing access to quality

and efficient governance structures which will help thefunctioning of the institutions engaged in Corporate SocialResponsibility.

v. Cataract Operations for the underprivileged: In the area of agecare, the Exchange has supported 500 beneficiaries for cataractoperations to be performed by a team of doctors associatedwith the NGO, HelpAge India

vi. Promoting Economic and Entrepreneurial education to theunderprivileged youths through Kherwadi Social WelfareAssociation, a leading NGO with a track record of 75 years inthe said area. The programme envisages provision of variousaspects of business education to help the youth acquire necessarybusiness and entrepreneurial skills.

vii. Basic Finance to School Children: The mission of BasicEducation on Finance project is to engage in and promoteeconomic and financial literacy.

The BSE, retained the services of GIVE Foundation, a non-profitorganisation, with a view to developing a philanthropy strategic

Inauguration of library for underprivileged children in association with PRATHAM.

9

Left to Right Dr. Manoj Vaish, Mr. M. M. Sabharwal, OBE, President, Mr. R. Venkataraman,Former President of India, Maj.Gen. I S Dhillon (Retd.)

plan for its community development projects. GIVE identifies and facilitates NGO partnerships and offers services tailor made to therequirement of the corporates.

GIVE held meetings, deliberations with the officers and staff of the BSE to ascertain the key beneficiaries that the BSE should target. Thekey areas of focus that came to light vide these meetings were:

1. Financial education ( Economic Independence)2. Environmental Improvement (Waste land development)3. Vocational Training for unemployed4. Rehabilitation / counselling the needy (Old age homes).5. Value based / ethical education, Primary education6. Health & Hygiene and7. Material needs ( donation of clothes, medicines etc)Of these, Vocational Training for unemployed was chosen as the first of the BSE’s CSR projects as1. It relates to BSE’s mission and values2. Scalable- Can start small and expand when successful3. Allows for stakeholder and employee participation4. Employees feel most strongly about improving the economic independence of most disadvantaged5. Capitalises on the skill and competencies of BSEKherwadi Social Welfare Association was short listed to partner BSE in its Economic education project.

Future Projects

Some of the projects envisaged are water conservation, green policy, home for the aged, recycling of water, recycling of wastes etc.

Dignity Foundation hosting the “World Elders Day” in the BSE Convention Hall. The Guests of honour were the thenDy. Chief Minister of Maharashtra, Shri Chaggan Bhujbal and the Sheriff Shri Kiran Shantaram.

10

Indian financial markets have come a long way since the adoptionof New Industrial Policy framework by Indian government in1991. There is an increasing trend towards the internationalisation ofIndian financial markets, driven mainly by the Indian government’swillingness to adopt liberalized and outward looking policy initiativeswith regard to its financial markets. The Indian government has takenseveral policy initiatives to: (a) gradually open up its financial marketsto the foreign investors; and (b) allow its own citizens to invest in theforeign financial markets. These initiatives include permitting: (a)Indian firms to issue their Depositary Receipts (DRs) in theInternational markets in April 1992; (b) Indian mutual funds to investin debt securities of select countries as well as launch overseas debtfunds in February 2002; (c) Indian investors to buy shares of foreigncompanies that had a listed Indian subsidiary in April 2003; (d) theresident Indians to remit $ 25,000 a year for investing in the foreignassets of their choice in January 2004. Latest policy initiative in thisregard has come in form of ‘Companies (Issue of Indian DepositoryReceipts) Rules, 2004’, which were issued by the Department ofCompany Affairs (DCA) on 23rd Feb 2004. These rules permit theeligible foreign firms to raise funds from the Indian capital market bylisting the Indian Depository Receipts (IDRs) on the Indian stockexchanges. This article discusses the concept of IDR and provides acritical review of the rules framed by the DCA for issuing IDRs. Adiscussion about the possible benefits of IDRs to the overseas issuingcompanies and the Indian investors is also included in this article.

The concept of an IDR can be understood as a mirror image of thefamiliar ADRs/GDRs. In a typical IDR program, an overseas companywould issue its equity shares denominated in its local currency (maybe in $) to an Indian Depository, which in turn, would issue IDRsdenominated in Indian Rupees to the investors in India. The actualequity shares of foreign issuer underlying the IDRs would be registeredin name of Indian depositary and are kept with the overseas ‘custodianbank’. Figure 1 depicts the mechanism for floatation of a typical IDRprogram. The Overseas Custodian is required to be a foreign bankhaving a place of business in India and needs approval from the FinanceMinistry for acting as a custodian while the Indian Depository needsto be registered with SEBI.

As per the rules issued by DCA, an overseas company must satisfy thefollowing conditions in order to be eligible issuing IDRs. Companyshould have (a) a pre-issue net worth of at least US$ 100 millions; (b)an average turnover of US$ 500 million during the 3 financial yearspreceding the issue; (c) been making profits for at least five yearspreceding the issue and have declared dividend of not less than 10%in each year for the said period; (d) pre-issue debt equity ratio of notmore than 2:1; and (e) also fulfilled any additional eligibility criterialaid down by the SEBI from time to time in this behalf. The presentIDR Rules do not require the issuing overseas company to have aplace of business in India. Further, it is also not mandatory for theissuing company to be listed overseas.

The criteria for the declaration of dividends may pose a problemfor the overseas companies interested in issuing IDRs. For example,in the US, it is not common for companies to declare dividends; all

the profits of a company are typically re-invested into the business ofthe company. It might have been better to prescribe criteria ofdistributable profits as laid out in the SEBI (Disclosure and InvestorProtection) Guidelines, 2000. As the Rules stand today, companiessuch as Microsoft would not be eligible to issue IDRs, as they mightnot have distributed dividends for the past five years.

An overseas company desirous of issuing IDRs would require theprior approval of SEBI. IDRs issued by any overseas company in anyfinancial year should not exceed 15 per cent of its net worth. Followingprocedure has been prescribed for taking the SEBI approval for issuingthe IDRs.

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• An application seeking permission to raise funds in India has to bemade to the SEBI at least 90 days before the issue-opening date,furnishing such information as may be notified from time to time witha nonrefundable fee of US $10,000, provided that, on permissionbeing granted, an applicant shall pay an issue fee of half a percent ofthe issue value subject to a minimum of Rs.10 lakh where the issue isup to Rs.100 crore in Indian rupees. Provided further where the issuevalue exceeds Rs.100 crore, every additional value of issue shall besubject to a fee of 0.25 percent of the issue value.

• SEBI may, on receipt of an application, seeking permission for fundraising in India call for such further information, and explanations, asmay be necessary, for disposal of such application. The issuing companyshall obtain the necessary approvals or exemption from the appropriateauthorities from the country of its incorporation under the relevantlaws relating to issue of capital, where required.

• The issuing company shall appoint an overseas custodian bank, adomestic depository and a merchant banker for the purpose of issueof IDRs.

• The issuing company shall deliver the underlying equity shares orcause them to be delivered to an Overseas Custodian Bank and thesaid bank shall authorize the domestic depository to issue IDRs.

• The issuing company shall file through a merchant banker or thedomestic depository a due diligence report with the Registrar andwith SEBI in the form specified.

• The issuing company shall, through a merchant Banker file aProspectus or Letter of Offer certified by two authorized signatoriesof the issuing company, one of whom shall be a whole-time directorand other the Chief Accounts Officer, stating the particulars of theresolution of the Board by which it was approved, with the SEBI andRegistrar of Companies, New Delhi, before such issue.

• The issuing company, seeking permission to raise funds shall obtainin-principle listing permission from one or more stock exchangeshaving nation wide trading terminals in India. The issuing companymay appoint underwriters registered with SEBI to underwrite theissue of IDRs.

Once the permission is granted and IDRs are issued, the repatriationof proceeds of an IDR issue would be subject to prevalent exchangecontrol regulations. The issued IDRs may be purchased, possessedand freely transferred by a person resident in India as defined insection 2(v) of Foreign Exchange Management Act, 1999, subject tothe provisions of the said Act. The secondary market trading of IDRson the Indian stock exchanges would take place in the same way asIndian listed corporate securities are traded.

The issuing overseas company, on a continuous basis, shall furnish tothe overseas custodian bank and Indian depository, a certificateobtained by it from the statutory auditor of the company or a charteredaccountant about utilization of funds and its variation from theprojections of utilization of funds made in the prospectus, if any, inquarterly intervals and shall also publish it or cause to be published inone of the English language newspapers having wide circulation inIndia. The quarterly audited financial results should be prepared andpublished in newspapers in the manner specified by the listingconditions. The accounts of the issuing company will have to berecasted according to the listing agreement, so that it is in tune withIndian accounting practices and easier for investors to understand.

There would be restrictions on redeeming the IDRs into underlyingequity shares. The IDRs are not redeemable into the underlying equityshares for a period of one year from the date of their issue. However,after the expiry of initial one year, a resident holder of IDRs canredeem the IDRs through the domestic depository, which on receivingthe request shall ask the Overseas Custodian Bank to get thecorresponding underlying equity shares released in favour of the Indian

CovereatureFDR. MANOJ KUMARAssociate Professor, FinanceIMT, Gaziabad

11

Issuer Company’s Home Country

Foreign IssuingCompany

Overseas Bank(Custodian)

Underlying Shares

Indian Capital Market

Money Dividend

Indian StockExchange

Indian Depository[NSDL/CSDL]

Listing of IDRs on Indian Stock Exchanges

Clearing HouseIDRs

DividendMoney Clearing Corporationof India Limited

Indian Investors

Typical Structure of an IDR Program

Source: Adapted from Kumar (2003)

resident for being sold directly on behalf of Indian resident, or beingtransferred in the books of issuing company in the name of Indianresident and a copy of such request shall be sent to the issuing companyfor information. All requests for redeeming the IDRs would also besubjected to the provisions of the Foreign Exchange ManagementAct, 1999 and other laws for the time being in force.

The present set of rules does not stipulate anything about the votingrights of the IDR holders. IDR holders could have voting rights if theissuing company so desires.

Indian investors need to consider the tax implications of investmentin the IDRs/underlying equity shares. The payment of dividend to theIDR holders will give rise to withholding tax and tax credit issues forIndian residents. Dividends declared by the issuer will be distributedby the domestic depository to the IDR holders. While domesticdividends are tax-exempt in the hands of shareholders, foreign dividendsare fully taxable. The implication would be that the IDR holderswould have to pay tax in India on the same. If tax has been withheldon dividends in the issuer’s country, the IDR holders will have to begiven tax credit for the same in India. While sale of IDRs in India maytrigger capital gains tax in India, there should not be any capital gainstax implications on sale of underlying shares in foreign countries, asmost countries do not levy capital gains tax on non-residents.

There are several reasons for an issuing overseas company to launchits IDRs program. Companies may issue IDRs as a part of raising hugefunds requirements to be raised from the multiple financial markets.IDRs program may also be launched by companies who are not in aposition to meet the onerous cost of compliance for listing on the USand other sophisticated markets. IDRs program may also facilitatethe process of corporate restructuring by way of mergers andacquisitions. IDRs will open up new avenues for foreign companieswanting to acquire or takeover Indian companies. This will facilitate

stock-swap transactions where Indian promoters have to be offeredstock in foreign companies in excess of current limit of US$25,000. Itenable the issuing company to develop new liquidity centers for itssecurities, thus, widening their share base and increasing their presencein India, which is a leading financial centre in the South Asia. Thelisting in India may also be attractive option for foreign companiesthat view India as a potential market for their products and or services.The launching of IDRs allows a company to demonstrate to its clients,suppliers and financiers that it is willing to achieve greater visibilityon the Indian market. The dissemination of more information, asapart of continuous disclosures, makes it possible for the company tobecome better known in the country, making it easier for them tointroduce their products or services on the Indian consumer market,which is of a considerable size. The setting up of a IDRs program maybe part of a benefits scheme for employees resident in the country, orrather, the offer of share participation in multinational companies viaIDRs.

The IDR route would be attractive for small and mid-cap foreigncompanies, typically based in the USA and South East Asia, which arefamiliar with Indian markets or have promoters of Indian origin. Also,India is an interesting listing option considering the costs of listingand potential valuations that can be achieved.

There are several reasons for the Indian investors to invest in theforeign companies through the route of IDRs programs. IDRs programsmake it possible for Indian investors to transact in the foreign securities,without being bogged by the difficulties of trading directly in theforeign securities. IDRs also provide the investors an easy route fordiversifying the portfolio’s “country risk”. IDRs Program may facilitatecorporate arrangements resulting from the processes of mergers andacquisitions, also making it possible to make strategic investments onthe part of the local investor. IDRs may contribute to an increase inliquidity on the domestic stock exchanges and make it possible forIndian financial market intermediaries to open up a new marketsegment, broadening the range of options available to their foreignand domestic clients.

With the cost of compliance increasing for companies that want to belisted in the US and other markets, listing in India may be an attractiveoption for foreign companies that view India as a potential market.However, the rules appear to be out of tune with the present practicesfollowed by the some of best companies operating in the internationalfinancial markets, as most of the prospective companies may not beable to meet with all the eligibility criteria. There is scope for changesin the rules considering the dynamics and working of internationalmarkets and companies. Nevertheless, this is a bold move by theGovernment to further open the Indian capital markets to the world.Unless the Rules are revised and tuned in with international practices,it will fail to attract foreign companies to Indian markets and IDRsmay just remain a mirage.

Norms set for Indian Depository Receipts

Companies incorporated outside the country can now raise resources from the Indian capital market with the Government notifying normsfor issue of Indian Depository Receipts (IDRs). Companies would have to have a pre-issue paid-up capital and free reserves of at leastUS$100 million and an average turnover of US$500 million during the three financial years preceding the issue. Besides, the issuingcompany should have been making profits for at least five years preceding the issue and should have declared a dividend of not less than 10%each year for the said period. It should also fulfil the eligibility criteria laid down by SEBI from time-to-time. Besides, the issuing companyshould also have a pre-issue debt equity ratio of not more than 2:1. All IDR issuances should have the prior nod of SEBI. The rules on IDRs,prescribed by the Government, do not require listing of the IDRs in a foreign bourse. As per the rules, an issuing company would onlyrequire listing of IDRs in recognised stock exchanges in India.

IDR means any instrument in the form of depository receipt created by the domestic depository in India against the underlying equity sharesof the issuing company. This has been stipulated in the Companies (Issue of Indian Depository Receipts) Rules, 2004. The norms, notifiedby the Department of Company Affairs (DCA), however, make it mandatory for the issuing company to have an established place of businessin India. The rules also stipulate that IDRs should not be redeemed into underlying equity shares before the expiry of the one-year periodfrom the issue date. Further, the IDRs issued by any issuing company in any financial year should not exceed 15% of its paid-up capital andfree reserves. An issuing company looking to get the nod of SEBI should pay a non-refundable fee of US$10,000 along with its application.On being granted the permission, an applicant would have to pay an issue fee of half a per cent of the issue value subject to minimum of Rs1 million where the issue is up to Rs.1 billion. Further, where the issue value exceeds Rs.1 billion, every additional value of issue would besubject to a fee of 0.25% of the issue value. The norms also specify the procedure and redemption of IDRs. A resident holder of IDRs maytransfer or ask the domestic depository to redeem the IDRs, subject to the provisions of the Foreign Exchange Management Act, 1999 andother laws for the time being in force.

12

The rapid technological developments have made it possible forspeedier transfer of money and securities. Sweeping technologicaladvances and the rapid growth of e-commerce have madeconventional, geographic, regulatory and market barriers irrelevant.Similarly, global connectivity and information flows provide accessto global markets and local players access to foreign markets andproducts. Investors have a wide range of choices in terms of systems,products and markets. The issuers worldwide are no longerrestricting themselves to their local markets. Many of the companiesare looking beyond the local markets. Exchanges like LondonStock Exchange aggressively reach out to companies world-overto list on their Exchange and also providing them a wide gamut ofservices.

We have reached a stage where we have competition amongExchanges and even across the global markets. Companies wouldwant to tap markets, which ensure a large investor base and asignificant level of liquidity.

A number of Indian companies have accessed the global marketsby ADR/GDR route with a view to raising the foreign exchangefor their global operations. With the projected growth rate of theIndian economy at 8% and the spurt in the forex markets, India isfast emerging as an important destination for global companies.

India is also fast emerging as a major destination for the back officeservices. We have seen a number of BPOs being set up by majorplayers across the globe. All the major technology companies likeMicrosoft, Sun, HP have their offshore operations in India.Technology Parks are being set up by each and every State providingthe state-of-the-art infrastructure.

IDRs is an innovative instrument enabling overseas corporates toraise funds through the Indian capital markets. It would enablethe Indian investors to invest in well performing companies andparticipate in the growth and prosperity of these companies. Itwould provide one more investment instrument to the Indianinvestors and this increases the choice of instruments available tothem.

The IDR would be an instrument denominated in Indian Rupeesand represented by underlying securities of the foreign company,which are listed on an international stock exchange. IDRs wouldbe listed on the Indian stock exchanges in the similar manner inwhich GDRs and ADRs issued by domestic companies are listedoverseas.

Hence, the foreign company would raise funds from Indianinvestors by floating IDRs and issue the securities underlying theIDRs to an overseas custodian bank, which, in turn, authorize thedomestic depository bank in India to issue IDRs to Indian investors.

The benefits that would accrue to the Exchanges once SEBI comesout with clear cut guidelines on issuance of IDRs on Indian boursesare discussed below :

1. International Attractiveness

The idea of the foreign companies coming into India with theissuance of IDRs itself is quite attractive to the Indian investors.It is likely to generate considerable interest on the part of the

Indian investors to subscribe to IDRs as soon as these are issued.The Exchanges in India are suitably equipped to handle listingand trading of IDRs.

2. Generation of Revenue

The foreign companies that would issue IDRs in the IndianCapital Market are required to seek listing on the recognisedStock Exchanges in India. It would result in inflow of listingfees to the Exchange. It would also augment revenue of theExchange in the form of transaction fees from members due toincreased business at their end.

3. Liquidity

The Exchange has all the necessary infrastructure in place tohandle trading aspects of IDRs which will be traded on theExchange just like other equity shares.

4. Market Capitalisation

With the issuance of IDRs, the Indian investors would considerthis as an opportunity to invest in quality shares of foreigncompanies. This would result in enhancing the marketcapitalisation since apart from the already listed and tradedcompanies on the Exchange, there would be an addition ofcompanies who have entered the Indian capital market byway of issuance of IDRs.

5. Trading Volumes

Trading of IDRs on the Exchanges would help enhance tradingvolumes on the Exchanges since most of the Indian investorswould definitely want to associate themselves with the wellperforming foreign companies.

6. Creation of a separate Index for IDRs

The recognised Stock Exchanges in India are highlyexperienced in the creation, maintenance and development ofindices. In this respect, the Exchanges can very well create aseparate index representing the foreign companies that haveissued IDRs. This could be of immense help in the followingways :

· The Indian investors can refer to this index to take purchase/sale decisions

· The foreign nationals could also relate this index for their buy/sell decisions

· The prospective foreign companies can also take a decision onissuance of IDRs based on the movement of this index

7. Availability of derivatives on IDR stocks

Based on the success of the IDR market in India, the Exchangescould think about introducing derivatives on IDR stocks moreor less on the same lines as that of the prevailing stock basedderivatives since the present infrastructure can be better utilisedfor the same. It would provide an excellent hedging mechanismfor the investors. There can also be arbitrage opportunitiesbetween the IDRs and underlying equity shares of the issuingcompany.

IIIIINDIANNDIANNDIANNDIANNDIAN D D D D DEPOSITORYEPOSITORYEPOSITORYEPOSITORYEPOSITORYRRRRRECEIPTSECEIPTSECEIPTSECEIPTSECEIPTSR. VAIDYANATH

GM, Business Development, BSE

13

Sr. Code Name Existing Revised Sr. Code Name Existing RevisedNo. Free Float Free Float No. Free Float Free Float

Factor Factor Factor Factor1 500410 A.C.C. 0.90 0.90 16 500209 INFOSYS TECH 0.75 0.752 500490 BAJAJ AUTO 0.70 0.70 17 500875 ITC LTD. 0.70 0.703 532454 BHARTI TELE 0.20 0.20 18 500510 LARSEN & TOU 0.90 0.904 500103 BHEL 0.35 0.35 19 500108 MAHA.TELE 0.45 0.455 500087 CIPLA LTD. 0.60 0.60 20 500312 ONGC 0.15 0.156 500124 DR.REDDY’S 0.75 0.75 21 500359 RANBAXY LAB. 0.70 0.707 500300 GRASIM IND. 0.80 0.80 22 500390 RELIANCE ENERGY 0.50 0.558 500425 GUJ.AMB.CEM 0.70 0.70 23 500325 RELIANCE INDUST 0.55 0.559 500010 HDFC 0.80 0.80 24 500376 SATYAM COM 0.90 0.9010 500180 HDFC BANK 0.80 0.80 25 500112 STATE BANK 0.45 0.4511 500182 HERO HONDA 0.50 0.50 26 500570 TATA MOTORS 0.65 0.6512 500696 HIND.LEVER 0.50 0.50 27 500400 TATA POWER 0.70 0.7013 500104 HIND.PETRO 0.50 0.50 28 500470 TATA STEEL 0.75 0.7514 500440 HINDALCO 0.80 0.80 29 507685 WIPRO LTD. 0.20 0.2015 532174 ICICI BANK 1.00 1.00 30 505537 ZEE TELE. 0.55 0.55

The changes in the Free-Float factors (as highlighted in the table) would come into effect from May 3rd 2004.

The Stock Exchange, Mumbai ‘BSE’, as a part of its initiatives towards development of Debt Market introduced the Zero CouponYield Curve (ZCYC) with a view to launch exchange traded derivatives in the future. The BSE Debt Segment provides a range ofproducts and services to investors and participants in the Indian Fixed Income markets.

Zero Coupon Yield Curve :

The term structure of interest rates or the yield curve describes the market’s view of the interest rates for various lending periods. Theserates form the backbone of the fixed income market and are used to price a wide array of products of differing complexities.The instruments that do not make periodic interest payments and wherein the principal amount together with the entire outstandingamount of interest on the instrument is paid as a lumpsum amount at maturity are known as ‘zero coupon’ instruments. These are soldat a discount to the redemption value, the discounted value being determined by the interest rate payable (yield) on the instrument.The Exchange is inclined towards development of an efficient Yield Curve which will help proper pricing of debt portfolios using ZeroCoupon spot rates to all market participants. This would also lead to availability of a new product to trade in / hedge interest rate riskin the market

BSE launches Scheme for creating Liquidity in Illiquid Scrips

With a view to address the issue of illiquidity in scrips traded in B2 group, the Exchange has devised a scheme for creating liquidity ininitially select 100 scrips in B2 group. The Quote system would be re-introduced on the BOLT system only for these scrips. The schemewas implemented w.e.f. April 19, 2004 on the BOLT system and is operational for an initial period of three months.Currently, under the Quote system, two way Quotes are present where, both the buy price and the sell price is indicated. Members canenter both Quotes and Orders at the same time, which will be present simultaneously in the system. Quote can be entered only of thescrips that are selected for the Quote system. The traders can enter Quote for all the client ID’s. However, a trader can place only oneQuote per scrip and the next Quote can be only entered after the execution or deletion of the previous Quote.All Quotes has a Buy side and a Sell side. When one side of a Quote gets exhausted the other side gets automatically killed. Traders canEnter, Modify and Delete Quotes during the continuous session. Quotes cannot be entered in the post closing session. The pendingQuotes are returned in the end of the trading session.

The salient features of the scheme are given below: -

• Eligible Scrips: The scheme would be initially available in 100 scrips identified in B2 group. A list of these scrips is enclosed asAnnexure- A.

BSE launches Zero Coupon Yield Curve

Review of the Free-Float factors of all constituents companies in SENSEX

Pursuant to the Guidelines laid down by the Index Committee of the Exchange that mandates review of the Free-Float factors of allconstituents companies in SENSEX on a quarterly basis, the Exchange has reviewed the Free-Float factors based on the quarter endingMarch 2004 shareholding data filed.

BSENews

14

• Matching: The Orders and Quotes would get matched first on the price and then on time priority, as per the existing Order-to-Order matching system. However, the Quote would have priority in execution only if an Order and the relevant side of the Quoteare at the same time

• Exclusivity: Both Orders and Quotes would co-exist. Order-to-Order matching would be possible and Quote would be matchedwith only Orders.

• Quote Spread Size between Bid/Offer Price: The spread of the Quotes i.e. the difference between the sell / offer and the buy / bidQuote would be maximum 10 times of the tick size applicable for the scrip. The Total Buy Quantity and the revealed Buy Quantityas well as the Total Sell Quantity and the Revealed Sell Quantity has to be in multiple of market lot. The revealed quantity has to beatleast 10% of the total quantity.

For example, if tick size of a scrip is 1 paise then the maximum spread size would be 10 paise. If tick size of a scrip is 5 paise then themaximum spread size would be 50 paise.

• The scrips selected under this scheme will have suffix ‘Q’ to the existing scrip Ids of the scrip.

• Admin Control in Quotes: The member can set rights for the traders under him through the TWS No 0 designated as AdminTerminal. The member can allow or disallow TWSs operating under his membership for this scheme. Also, the total buy/sell quantityfor the trader can be set from the admin terminal.

The members can download the list containing these revised scrip IDs in a text file from DLOAD under “Scheme of liquidity “. Thelist in an excel file can also be downloaded from BSE’s website www.bseindia.com in “What’s New” and “Downloads” sections.

Prof. N. Ravichandran

Shri Jagdish CapoorShri Jambunathan Srinivasa Iyer

Shri Pradeep Shah

Public Representatives join BSEShri S. Jambunathan has been re-elected as the Chairman of BSE. The other newly appointed Public Representative Directors onthe Board of BSE are Shri R. Gopalakrishnan, Executive Director, Tata Sons Ltd, Shri Vijay Mukhi, Managing Director, VijayMukhi’s Computer Institute, Shri Pradeep Shah, Chairman, IndAsia Fund Advisor Pvt. Ltd. and Prof. Ravichandran, Professor,Indian Institute of Management, Ahmedabad. Shri Jagdish Capoor , Chairman, HDFC Bank Ltd, is re-appointed as PublicRepresntative Director on the Board.

Welcoming their appointment Dr. Manoj Vaish, Executive Director & C.E.O. of BSE said, “We are quite thankful to these eminentprofessionals to have come on board. Their vast experience and expertise in their respective fields would be beneficial to BSE in moreways than one.”

Shri R Gopalakrishnan

Shri Vijay Ram Mukhi

15

Beta, R2,Volatility and Returns of SENSEX scrips for one year period (March 2003 - February 2004 )

Name BetaValues

Code Returns(1 year)

(%)

Co-efficient ofdetermination

(R2)

BSEIDaily

Volatility(%)

Weights ason 31/03/2004 (%)

Free Float Adj.Factor

500410 A.C.C. 1.34 0.52 2.53 83.79 1.29 0.90500490 BAJAJ AUTO 0.69 0.19 2.13 90.15 2.12 0.70532454 BHARTI TELE 0.72 0.08 3.51 446.47 1.88 0.20500103 BHEL 1.11 0.36 2.49 170.59 1.70 0.35500087 CIPLA LTD. 0.53 0.11 2.20 63.76 1.38 0.60500124 DR.REDDY’S 0.50 0.07 2.61 6.25 1.83 0.75500300 GRASIM IND. 1.05 0.33 2.49 223.39 2.57 0.80500425 GUJ.AMB.CEM 1.07 0.40 2.29 84.85 1.07 0.70500010 HDFC 0.43 0.06 2.31 94.18 4.15 0.80500180 HDFC BANK 0.50 0.13 1.91 61.86 2.83 0.80500182 HERO HONDA 1.04 0.27 2.71 160.32 1.61 0.50500696 HIND.LEVER 0.84 0.33 2.00 4.26 5.57 0.50500104 HIND.PETRO 0.81 0.20 2.48 72.45 2.83 0.50500440 HINDALCO 0.81 0.25 2.18 127.72 2.95 0.80532174 ICICI BANK 0.93 0.23 2.65 120.90 5.98 1.00500209 INFOSYS TECH 1.35 0.32 3.25 22.22 8.07 0.75500875 ITC LTD. 0.63 0.24 1.72 65.43 5.92 0.70500510 LARSEN & TOU 1.02 0.36 2.30 211.05 4.22 0.90500108 MAHA.TELE 0.84 0.22 2.44 33.47 1.19 0.45500312 ONGC CORPN 1.16 0.32 2.77 136.21 1.97 0.05500359 RANBAXY LAB. 0.67 0.29 1.70 50.82 4.01 0.70500325 RELIANCE 1.13 0.63 1.93 94.63 13.56 0.55500390 RELIANCE ENERGY 1.19 0.35 2.73 255.99 1.92 0.50500376 SATYAM COM 1.73 0.46 3.46 65.87 2.74 0.90500112 STATE BANK 1.14 0.50 2.20 124.42 4.71 0.45500570 TATA MOTORS 1.41 0.52 2.64 212.05 3.59 0.65500400 TATA POWER 1.27 0.43 2.62 233.29 1.76 0.70500470 TATA STEEL 1.42 0.53 2.63 186.73 3.48 0.75507685 WIPRO LTD. 1.52 0.46 3.04 10.66 2.08 0.20505537 ZEE TELE. 1.28 0.24 3.56 114.72 1.00 0.55

Beta = Co-variance(SENSEX, Stock)/ Variance(SENSEX)R2 = (Correlation)2

Avg. Daily Volatility = One standard deviation of daily returns of individual stock price for last one yearReturns = % variation in the stock price over last one year

Correlation of SENSEX withINDEX 1 Month 3 Months 6 Months 1 Year

(Mar 04) (Jan 04-Mar 04) (Oct 03-Mar 04) (Apr 03-Mar 04)

BSE-100 0.966 0.934 0.991 0.998

BSE-TECk 0.812 0.906 0.949 0.987

MSCI INDIA INDEX 0.998 0.991 0.995 0.999

NIFTY 0.994 0.992 0.997 1.000

NASDAQ 0.798 0.751 0.838 0.951

DOW JONES 0.827 0.674 0.953 0.971

S&P500 0.869 0.497 0.931 0.954

FTSE 100 0.931 0.444 0.825 0.937

NIKKEI -0.014 -0.522 0.355 0.862

TransportEquipments

7%

CapitalGoods2% Diversified

7%

Finance19%

FMCG11%

Healthcare7%Housing

Related2%

I.T13%

Media &Publishing

1%

Metal Products& Mining

6%

Oil & Gas18%

Telecom3%

Power4%

SENSEX - Sectoral Weights Mar 04

16

of The Stock Exchange, MumbaiParticular Dec-03 Jan-04 Feb-04 Mar-04 Mar-03 Mar-02

1 Turnoveri) Specified Shares (A Group) (Cr. Rs.) 44343.39 57937.14 47752.22 47877.21 18066.58 20948.41ii) B1 Group Securities (Cr. Rs.) 9093.37 6810.49 3317.68 2586.86 2113.41 4502.28iii) B2 Group Securities (Cr. Rs.) 722.06 576.41 271.00 204.22 74.93 255.60iv) F - Group Securities (Debt) (Cr. Rs.) 13.49 26.91 9.57 15.36 5.85 7.79v) G - Group Securities (Cr. Rs.) 0.00 0.02 0.01 0.01 0.49vi) T Group Securities (Cr. Rs.) 570.80 238.77 99.14 80.74 - -vii) Z- Group Securities (Cr. Rs.) 72.43 30.63 13.90 21.23 3.46 4.962 Total Turnover (i - vi) (Cr. Rs.) 54815.54 65620.37 51463.52 50785.63 20264.72 25719.04

(Bn. Rs.) 548.16 656.20 514.64 507.86 202.65 257.19(USD Bn.) 12.02 14.44 11.37 11.28 4.25 5.28

Cumulative from Jan (Cr. Rs.) 409372.67 65620.37 117083.89 167869.52 74623.78 93459.60(Bn. Rs.) 4093.73 656.20 1170.84 1678.70 746.24 934.60(USD Bn.) 89.80 14.44 25.80 37.09 15.66 19.18

3 Average Daily Turnover (Cr. Rs.)i) Specified Shares (A Group) 2015.61 2758.91 2513.27 2176.24 903.33 1102.55ii) B1 Group Securities 413.34 324.31 174.61 117.58 105.67 236.96iii) B2 Group Securities 32.82 27.45 14.26 9.28 3.75 13.45iv) F - Group Securities 0.61 1.28 0.50 0.70 0.29 0.41v) G - Group Securities 0.00 0.00 0.00 0.00 0.02vi) T- Group Securities 25.95 11.37 5.22 3.67 - -vii) Z- Group Securities 3.29 1.46 0.73 0.97 0.17 0.264 Total Average Daily Turnover (i to vi) (Cr. Rs.) 2491.62 3124.78 2708.61 2308.44 1013.24 1353.63

(Bn. Rs.) 24.92 31.25 27.09 23.08 10.13 13.54(USD Bn.) 0.55 0.69 0.60 0.51 0.21 0.28

Cumulative from Jan (Cr. Rs.) 18607.85 3124.78 5833.39 8141.82 1203.61 1507.415 Turnover for the month (Cr. Rs.)

High 3219.55 4134.61 3176.52 2845.55 1346.35 1664.16Low 2078.22 2124.46 2265.70 1702.38 545.02 875.98

6 No. of Shares Traded (in Crs)i) A Group (Total) 196.16 221.26 160.94 164.44 83.90 97.74ii) B1 Group (Total) 187.02 149.09 59.72 57.89 32.50 37.60iii) B2 Group (Total) 38.04 36.05 14.57 18.46 9.60 24.33iv) T- Group Securities 37.38 17.51 5.10 3.39 -v) Z- Group Securities 14.78 6.80 3.06 3.27 0.65 0.42

Total Shares Traded (i to v) 473.38 430.71 243.39 247.45 126.65 160.09vi) No. of Debentures traded (in Crs) 0.17 2.73 0.08 0.09 0.01 0.00vii) G Group 0.00 0.00 0.00 0.00 0.007 V-SAT Turnover (incl. in item no 2) (Cr. Rs.) 22984.58 25610.12 22907.56 21762.47 7835.03 15191.008 No. of Trades (in ‘000s) 23286.00 22346.00 15793.00 16121.00 8506.01 11233.25

Cumulative from Jan 179594.24 22346.00 38139.00 54260.00 31058.66 37761.829 Deliveries (Monthly)a) No. of Sharesi) Specified Shares (A Group) 56.37 54.18 33.44 42.14 22.14 26.68ii) B1 Group Securities 86.51 62.74 27.40 37.32 15.67 15.06iii) B2 Group Securities 22.81 24.59 10.44 16.22 8.25 16.98iv) G Group Securities 0.00 0.00 0.00 0.00 0.00v) T Group Securities 48.87 19.24 5.39 0.32vi) Z Group Securities 11.74 7.47 3.17 3.74

Total No. of Shares (in Crs) 226.30 168.22 79.84 99.74 46.06 58.72Cumulative from Jan 1248.83 168.22 248.06 347.80 151.32 170.53

b) Valuei) Specified Shares (A Group) 11293.11 13934.84 9493.35 10958.07 3889.48 5043.59ii) B1 Group Securities 4169.39 2730.86 1325.65 1406.86 533.73 996.40iii) B2 Group Securities 418.85 364.68 176.40 151.79 53.99 150.55iv) G Group Securities 0.00 0.02 0.01 0.01 0.45v) T Group Securities 771.67 258.33 110.00 16.34vi) Z Group Securities 44.33 36.45 15.09 23.90

b) Value (Cr. Rs.) 16697.35 17325.18 11120.50 12556.97 4477.65 6190.54Cumulative from Jan 103494.50 17325.18 28445.68 41002.65 15185.25 19532.08

10 Debenture Deliveries (Monthly)a) No. of Debentures (in Crs) 0.00 0.00 0.00 0.00 0.00 0.00Cumulative from Jan 0.00 0.00 0.00 0.00 0.00 0.01b) Value (Cr. Rs.) 0.01 0.00 0.00 0.00 0.00 0.00Cumulative from Jan 0.01 0.00 0.00 0.00 0.00 3.36

11 Market Capitalisation (Estimated)i) A Group (Cr. Rs.) 1076265.70 1029361.88 1024620.93 1053867.08 480318 453194ii) B1 Group (Cr. Rs.) 141101.19 125974.27 123086.92 110897.74 63714 125162iii) B2 Group (Cr. Rs.) 20890.86 18741.50 17648.10 16690.63 12463 16153iv) T Group (Cr. Rs.) 12652.28 10796.38 10625.35 674.39

KeytatisticsS

17

Particular Dec-03 Jan-04 Feb-04 Mar-04 Mar-03 Mar-02v) Z Group (Cr. Rs.) 22450.99 21980.39 20240.15 19076.95 15703 17715

BSE (i-v) (Cr. Rs.) 1273361.02 1206854.42 1196221.45 1201206.79 572197 612224(Bn. Rs.) 12733.61 12068.54 11962.21 12012.07 5721.97 6122.24(USD Bn.) 279.32 265.50 264.24 266.83 120.11 125.61

12 No. of Trading Days 22 21 19 22 20 19Cumulative from Jan 254 21 40 62 62 62

13 No. of Companies ListedNewly Listed 4 2 11 7 5 2Delisted 1 93 43 0 2 18Total 5644 5553 5521 5528 5650 5782

14 Newly listed securities of existing companies 40 65 73 117 25 59Cumulative from Jan 448 65 138 255 110 162

15 Capital Listed During the Month- Existing Companies (Cr. Rs.) 988.64 1770.53 51166.36 8680.46 730.70 1205.96- Newly Listed Companies (Cr. Rs.) 197.17 39.47 134.97 1682.64 149.64 4.35Total (Cr. Rs.) 1185.81 1810.00 51301.33 10363.10 880.34 1210.31

(Bn. Rs.) 11.86 18.10 513.01 103.63 8.80 12.10(USD Bn.) 0.26 0.40 11.33 2.30 0.18 0.25

16 Amount offered thro’ equity (prospectus)a) Total No. of Issues 2 2 7 5 0 1b) Par Amount (Cr. Rs.) 10.00 4.85 275.72 470.51 0.00 53.06c) No. of Issues (premium) 2 1 7 5 0 1d) Premium Amount (Cr. Rs.) 141.00 426.91 3618.49 11087.58 0.00 111.43e) Total amount (b+d) 151.00 431.76 3894.21 11558.09 0.00 164.4917 Amount offered thro’ other instruments

(Prospectus)f) Total No. of Issues 0 0 0 1 2 3g) Amount (Cr. Rs.) 0.00 0.00 0.00 1000.00 750.00 1200.0018 Total amount offered thro’ prospectus

Total No. of Issues (a+f) 2 2 7 6 2 4Amount (e+g) (Cr. Rs.) 151.00 431.76 3894.21 12558.09 750.00 1364.49

19 Amount offered thro’ equity by existinglisted companies

a) Total No. of Issues 0 0 1 2 2 3b) Par amount (Cr. Rs.) 0.00 0.00 27.54 212.42 13.30 22.95c) No. of Issues (premium) 0 0 1 1 1 3d) Premium Amount (Cr. Rs.) 0.00 0.00 6.89 56.92 21.09 16.11e) Total amount (b+d) 0.00 0.00 34.43 269.35 34.39 39.0620 Amount offered thro’ other instruments

by existing listed companiesf) Total No. of Issues 2 1 0 0 0 0g) Amount (Cr.Rs.) (Cr. Rs.) 400.00 400.00 0.00 0.00 0.00 0.0021 Total amt offered by existing listed companies

Total No. of Issues (a+f) 2 1 1 2 2 3Amount (e+g) (Cr. Rs.) 400.00 400.00 34.43 269.35 34.39 39.06

22 Total amount offered thro’ all offerdocuments (XVIII+XXI)Total No. of Issues 4 3 8 8 4 7Cumulative from Jan 29 3 11 19 8 14Amount (Cr. Rs.) 551.00 831.76 3928.64 12827.44 784.39 1403.55Cumulative from Jan (Cr. Rs.) 5297.17 831.76 4760.40 17587.84 1641.65 3769.81

(Bn. Rs.) 52.97 8.32 47.60 175.88 16.42 37.70(USD Bn.) 1.16 0.18 1.05 3.91 0.34 0.77

23 BSE Sensitive Index (30 Scrips) (1978-79=100)High 5838.96 6194.11 6035.80 5935.19 3277.27 3690.27Low 5131.54 5593.74 5567.12 5365.40 3048.72 3459.08Average 5424.67 5954.15 5826.74 5612.92 3155.70 3580.73Closing (Month End) 5838.96 5695.67 5667.51 5590.60 3048.72 3469.35

24 BSE TECK Index (2nd April 2001=1000)High 1302.89 1416.11 1301.17 1252.61 833.03 1046.23Low 1146.04 1193.32 1150.29 1128.49 748.44 951.92Average 1218.77 1301.23 1234.03 1184.18 794.99 998.77Closing (Month End) 1302.89 1219.06 1198.72 1157.95 748.44 967.62

25 BSE 100 Index (1983-84=100)High 3074.87 3297.19 3128.32 3124.95 1623.63 1793.01Low 2643.01 2878.90 2855.71 2831.32 1500.72 1705.41Average 2813.58 3142.23 3003.89 2956.07 1559.54 1746.78Closing (Month End) 3074.87 2946.14 2923.99 2966.31 1500.72 1716.28

26 BSE 200 Index (1989-90 = 100)High 766.31 818.17 775.10 772.59 389.31 404.95Low 658.54 714.62 707.23 699.27 359.12 389.57Average 702.79 780.30 744.32 730.80 372.82 396.76Closing (Month End) 766.31 731.05 725.66 733.53 359.12 393.90

27 The Dollex-200 (1989-90 = 100)High 279.73 299.11 284.93 284.26 136.00 138.38Low 239.49 262.06 259.93 257.86 125.87 133.02Average 256.65 285.78 273.72 270.55 130.28 135.53Closing (Month End) 279.73 268.62 266.94 281.46 125.87 134.39

28 BSE 500 Index (1989-90=100)

Conversion Table : 1Billion = 100 Crore �� 1 Crore = 10 Million � 1 Million = 10 Lakh �� 1 Lakh = 100 Thousand+ FII data except those pertaining to BSE sourced from SEBI***MAHURAT TRADING **SATURDAY TRADING

Particular Dec-03 Jan-04 Feb-04 Mar-04 Mar-03 Mar-02

18

High 2366.36 2517.28 2379.96 2366.34 1162.38 1193.16Low 2033.24 2191.35 2167.36 2128.10 1071.45 1151.26Average 2175.98 2400.75 2283.64 2235.05 1111.59 1170.99Closing (Month End) 2366.36 2246.83 2228.41 2243.60 1071.45 1164.68

29 P/E Ratio (Month Averages)BSE SENSEX based scrips (30) 17.30 19.39 18.71 18.55 13.74 17.55BSE 100 Index based scrips (100) 15.12 16.90 16.19 16.02 11.76 14.95

30 Price to Book Value (Month Averages)BSE SENSEX based scrips (30) 3.26 3.65 3.52 3.50 2.14 2.57BSE 100 Index based scrips (100) 2.93 3.27 3.13 3.08 1.76 1.81

31 Dividend Yield % (Month Averages)BSE SENSEX based scrips (30) 1.94 1.73 1.79 1.81 2.28 1.85BSE 100 Index based scrips (100) 2.40 2.14 2.25 2.28 3.07 2.29

32 No. of Registered FIIs + 517 527 534 540 502 49033 FIIs Purchases in

Secondary market in BSE (Cr. Rs.) 4357 4216 3640 3752 781 1926Cumulative from Jan (Cr. Rs.) 24963 4216 7856 11608 3689 6296

(Bn. Rs.) 249.63 42.16 78.56 116.08 36.89 62.96(USD Bn.) 5.48 0.93 1.74 2.58 0.77 1.29

34 FIIs Sales in Secondary market in BSE (Cr. Rs.) 2774 3784 2926 2950 817 1641Cumulative from Jan (Cr. Rs) 17772 3784 6710 9660 3236 5118

(Bn. Rs.) 177.72 37.84 67.10 96.60 32.36 51.18(USD Bn.) 3.90 0.83 1.48 2.15 0.68 1.05

35 Net FIIs Investments inSecondary market in BSE (Cr. Rs.) 1583 432 714 802 -36 285Cumulative from Jan (Cr.Rs) 7191 432 1146 1948 453 1177

(Bn. Rs.) 71.91 4.32 11.46 19.48 4.53 11.77(USD Bn.) 1.58 0.10 0.25 0.43 0.10 0.24

36 FIIs Purchases in Secondary market (Equity) (All-India) + (Cr. Rs.) 14027 16830 14952 17238 3361 3937Cumulative from Jan (Cr. Rs.) 94411 16830 31782 49021 11670 14151

(Bn. Rs. ) 944.11 168.30 317.82 490.21 116.70 141.51(USD Bn.) 20.71 3.70 7.02 10.89 2.45 2.90

37 FIIs Sales in Secondary market (Equity)(All-India)+ (Cr. Rs.) 7866 13654 12555 11634 2950 3546Cumulative from Jan (Cr. Rs.) 63953 13654 26209 37842 9991 11370

(Bn. Rs.) 639.53 136.54 262.09 378.42 99.91 113.70(USD Bn.) 14.03 3.00 5.79 8.41 2.10 2.33

38 Net FIIs Investments in Secondary Market (Equity) (All-India)+ (Cr. Rs.) 6161 3177 2397 5604 411 391Cumulative from Jan (Cr.Rs.) 30458 3177 5574 11178 1678 2781

(Bn. Rs.) 304.58 31.77 55.74 111.78 16.78 27.81(USD Bn.) 6.68 0.70 1.23 2.48 0.35 0.57

39 FIIs Purchases in Secondary market (Debt) (All-India)+ (Cr. Rs.) 890 822 1010 1986 930 87Cumulative from Jan (Cr. Rs.) 10684 822 1832 3818 1407 1135

(Bn. Rs. ) 106.84 8.22 18.32 38.18 14.07 11.35(USD Bn.) 2.34 0.18 0.40 0.85 0.30 0.23

40 FIIs Sales in Secondary market (Debt)(All-India)+ (Cr. Rs.) 669 129 734 1146 379 149Cumulative from Jan (Cr. Rs.) 5844 129 863 2009 709 551

(Bn. Rs.) 58.44 1.29 8.63 20.09 7.09 5.51(USD Bn.) 1.28 0.03 0.19 0.45 0.15 0.11

41 Net FIIs Investments in Secondarymarket (Debt) (All-India)+ (Cr. Rs.) 221 693 276 840 551 -62Cumulative from Jan (Cr. Rs.) 4840 693 969 1808 698 584

(Bn. Rs.) 48.40 6.93 9.69 18.08 6.98 5.84(USD Bn.) 1.06 0.15 0.21 0.40 0.15 0.12

42 Capital raised through Euro IssuesNo. of Issues * 1 1 0 1 1 0Cumulative from Jan 6 1 1 2 2 0Amount Raised (Cr. Rs.) 27.31 61.33 0.00 451.90 72.50 0.00Cumulative from Jan (Cr. Rs.) 1960.38 61.33 61.33 513.23 144.15 0.00

(Bn. Rs.) 19.60 0.61 0.61 5.13 1.44 0.00(Source - CMIE) (USD Bn.) 0.43 0.01 0.01 0.11 0.03 0.00

43 Members 712 715 720 721 712 711Individuals 207 207 206 206 212 215Corporate (Unlimited Liability)Clause (4) A 0 0 0 0 2of Securities Contracts (Regulation) Rules, 1957Indian Companies 485 488 494 495 480 472Foreign Institutional Investors 20 20 20 20 20 22Financial Corporations 0 0 0 0 0 0

44 Dollar Re. Exchange Rate (I USD - Rs.) 45.5880 45.4557 45.2700 45.0179 47.6400 48.740045 Scrips Listed 7368 7305 7185 7264 7363 7321