Competition law to cover public sector
Zee places Rs 800-cr shares with Goldman
ITC net up 23% at Rs 167 crore
Telco loss shoots up to Rs 60 cr in third quarter
ICICI Bank to float $125 m ADS issue
Cadila on the prowl for OTC brands
Move to hasten loan recovery
Foreign Exchange, Bullion, Stock Indices

 
 
COMPETITION LAW TO COVER PUBLIC SECTOR 
 
 
FROM CHAITALI CHAKRAVARTY
 
New Delhi, Jan 24 
The committee set up by the government to frame a new competition policy is looking at the possibility of bringing public enterprises and state-owned monopolies within the purview of the new law.

The Monopolies and Restrictive Trade Practices (MRTP) Act — currently being overhauled to make way for the new competition policy — does not cover public sector enterprises and other state-owned monopolies. The industry has long been demanding that the Act should apply to government entities.

The panel is looking at ways to curb and prevent market dominance by introducing certain clauses that would facilitate splitting large players into several outfits, both in the public and private sectors. The changes in the Act are essentially meant to rein in companies that squeeze smaller rivals by the sheer weight of their market capitalisation and dominance.

The committee is studying several cases, like the break-up of the famed Standard Oil, the oil conglomerate, in the 1920s and AT&T’s dismemberment in the 80’s — Lucent Technologies was one of the businesses that emerged from the spin-off. They are also following keenly the arguments in the anti-trust proceedings against Microsoft, which is resisting intense US government pressure to split its business.

In an internal presentation to the committee, the Confederation of Indian Industry (CII) has said the best way to graduate towards a market-oriented deregulated economy is to bring government agencies within the ambit of a competition law.

“Natural monopoly of certain public enterprises like Mahanagar Telecom Nigam Limited (MTNL), Indian Oil Corporation (IOC) and Gas Authority of India Limited (GAIL) should be curbed by subjecting them to laws which apply to private firms,” said senior CII advisor T K Bhaumik.

“India has a very distorted competition policy where monopolistic positions are used to curb competition. The whole purpose of the new law should be to encourage competition,” he added.

A Ficci paper on competition policy presented to the government says: “The government units manufacturing and supplying goods, or rendering services, should be treated at par with their competitors in the private sector. They should be subjected to the same competition law. The only restriction that may be built into this principle are government enterprises engaged in any sovereign functions.”

The paper further says a competition law should have necessary provisions and enough teeth to review any executive policy, and even to facilitate amendments, when necessary    


 
 
ZEE PLACES RS 800-CR SHARES WITH GOLDMAN 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan 24 
The board of Zee Telefilms (ZTL) today said it had issued 80 lakh equity share warrants to Goldman Sachs Investments, a leading global investment bank for a whopping Rs 800 crore.

Zee Telefilms had recently bought Star TV’s 50 per cent stake in Asia Today (ATL), 50 per cent stake in PATCO and an equal stake in Siticable for Rs 1,250 crore ( $ 296.51 million). The money may be used to pay Rupert Murdoch’s Star Network, which had sold its stake in several ZTL subsidiaries.

In addition to this private placement, the Zee board meeting, convened to consider the third-quarter results, allotted 1.61 crore (1,6127,412 equity shares of Re 1 to Asia production, Mauritius, News Television (Mauritius), International Graphics Holding, News Television India, Live Wire Programmes and Trading Co. Pvt for acquiring their 50 per cent share holding in Winter Heath Co. Holding, M/S Siticable Network Ltd and M/s Programme Asia Trading Ltd.

The warrants allotted to Goldman Sachs will be converted into 80 lakh equity shares of Re 1 each at an exercise price of Rs 1,000 per equity share. These shares will have a face value of Re 1 and a premium of Rs 999 within three months from the date of allotment of warrants/ shares.

The terms worked out by the two media giants was that 50 per cent of the money will be paid by ZTL in cash while the other half will be settled by issuing ZTL shares to Star TV.

While ATL is the company which owns the broadcasting of a few Zee channels including Zee TV, Zee Cinema and Zee News, PATCO is a programme-provider to Zee Cinema. The deal, mediated by TNV Ayyar, advisor to the Essel group, was signed in Hong Kong.    


 
 
ITC NET UP 23% AT RS 167 CRORE 
 
 
BY A STAFF REPORTER
 
Calcutta, Jan 24 
Tobacco titan ITC rolled out a 23 per cent rise in third-quarter net profit at Rs 167.19 crore and a 14.69 per cent growth in sales at Rs 960.75 crore in a performance that gave the company enough to look forward to but offered little to investors who fretted it wasn’t good enough.

Disappointed shareholders sent the scrip tumbling across bourses in losses that ranged from Rs 48 on the CSE to Rs 31 on the Bombay Stock Exchange where it closed at Rs 793.70.

The board, which met here today to approve the financial results for the quarter ended December 31, said there was a recovery in the overall demand for cigarettes — both domestic sales and exports. The meeting, presided over by ITC chairman Y. C. Deveshwar, felt other segments of the company’s business — hotel, paperboard and packaging — were looking up in tune with the general economic recovery.

While pre-tax profit in the third-quarter grew 36 per cent, gross income stood at Rs 2,051 crore compared with Rs 1,868.50 crore in the same period of last year. Net sales, after providing for Rs 1,068.67 crore against excise duties, was Rs 960.75 crore as against Rs 837.64 crore. Provision for taxation was higher at Rs 116.21 crore as against Rs 72.32 crore.

Net profit for the nine-month was Rs 567.51 crore, up from Rs 485.78 crore in the same period last year. Sales during this period aggregated to Rs 2,793.50 crore compared with Rs 2,616.12 crore. Tax provision was higher by Rs 100 at Rs 349.31 crore. This figure is more than the Rs 314.61 crore provided for taxation during the entire 1998-99 financial year.

The board said the provision for taxation increased on account of ‘income-tax disallowance’ relating to certain state taxes for which provisions have been made as a matter of prudence.

Expenditure for the quarter was higher at Rs 641.22 crore as against Rs 587.63 crore. For the nine-month period, it was pegged at Rs 1,774.06 crore, marginally lower from Rs 1780.96 crore in the same period last year.

A highlight of the third-quarter performance was the substantial savings achieved in interest costs as a result of better working capital management and refinancing of debt.

On the Calcutta Stock Exchange, the ITC counter opened the day marginally higher at Rs 841 over its previous closing of Rs 836.40. The script surged to Rs 865 by midday in expectation of a Q3 net profit of Rs 200 crore. But, when the results belied these hopes, the share was hammered to Rs 787.10 before recovering to close at Rs 788.80.

Nalco net surges

National Aluminium Company (Nalco) today reported a 355 per cent increase in net profit to Rs 157.76 crore in the third quarter of current fiscal compared to rs 34.7 crore in the corresponding period last year, reports PTI.

Sales of the company during the period was up by 69 per cent to Rs 503.08 crore from Rs 298.05 crore during the same period last year.

For the nine-month period ending December, net profit increased by 107.2 per cent to Rs 335.83 crore from Rs 162.07 crore. Sales during the period was up by 44 per cent to Rs 1,455.23 crore from Rs 1,010.13 crore.    


 
 
TELCO LOSS SHOOTS UP TO RS 60 CR IN THIRD QUARTER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan 24 
Automobile major Tata Engineering and Locomotive Company Limited (Telco) reported a massive 179.70 per cent increase in third quarter losses at Rs 60.36 crore compared with Rs 21.58 crore in the corresponding period of the previous year.

Net sales, however, jumped 52.07 per cent to Rs 2390.17 crore compared with Rs 1571.74 crore in the previous year.

The company maintained an operating profit of Rs 132.54 crore during the period compared with Rs 133.79 crore in the corresponding period of the previous year. ]

The Telco scrip got battered on the Bombay Stock Exchange (BSE) today, losing Rs 18.45 and closing at Rs 212.60. The scrip had closed last week at Rs 231.05 and opened today at Rs 230.10.

The figures for the previous year and the corresponding periods include the financial results of the company’s construction equipment division.

A company release said the industrial recovery in the first two quarters was maintained in the third quarter as well, resulting in a 31 per cent increase in sale of commercial vehicles in the first nine months of the current year compared with the corresponding period of the previous year.

The company, in the first nine months, sold 36,563 units of Indica, managing to capture a 8.5 per cent share in the passenger car market.

The company said the third quarter results reflect the impact of the full-commissioning of Indica whose break-even level of operations is expected to be reached towards the end 2001. Meanwhile, the company has undertaken various cost reduction measures during the year, the full impact of which is expected in the last quarter.

Tata Tea net up

Tata Tea Ltd reported a net profit of Rs 32.52 crore for the third quarter ended December 31, 1999, compared with Rs 28.10 crore in the corresponding period of the previous year. Income from operations increased marginally from Rs 204.16 crore to Rs 233.02 crore.

The company said its overall turnover increased by approximately 5 per cent, while the sales volume of branded tea products increased by approximately 16 per cent.

The company said the output from its plantations, both in north India and south, was lower, while prices in South Indian auctions have also been last year levels. The company expects these trends to continue in the last quarter of the current year.    


 
 
ICICI BANK TO FLOAT $125 M ADS ISSUE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan 24 
ICICI Bank today approved a proposal to raise $ 125 million within the next three months through American Depository Shares (ADS) and, if necessary, a domestic issue to fund its technological and branch expansion.

A board meeting held today also approved an employee stock option scheme (ESOS) amounting to five per cent of the bank’s paid-up capital.

The bank has decided to go in for an overseas floatation in view of the favourable conditions in the international market.

“We will consider an overseas offering of equity capital, including ADS, and, if necessary, a domestic floatation,” the bank said in a release issued here today.

The details of the planned issue have not been laid out. The company said the final size of issue, the precise timing and the question of whether it will be an overseas or a domestic floatation will be decided after discussing the pros and cons with lead managers.

Prevailing market conditions will also influence the decision, the bank said.

ICICI Bank, a subsidiary of ICICI, said fresh equity flows are needed for future growth, capital investment in technology and channel infrastructure, and to ensure a higher level of capital adequacy.

ICICI currently holds around 75 per cent of ICICI Bank’s equity but analysts say that level must come down to 40 per cent in tune with Reserve Bank norms.

Following the announcement, the ICICI Bank scrip vaulted to a historic high of Rs 109.05. Earlier, it opened at Rs 103.90 from its previous day’s finish of Rs 101.

A general meeting of shareholders has been called on February 21 at Vadodara to secure their approval for the equity issue and the stock option scheme. The bank’s deposits and advances swelled 40 per cent during the nine-month period ended December 31.    


 
 
CADILA ON THE PROWL FOR OTC BRANDS 
 
 
BY RENU M.R. KAKKAR
 
Ahmedabad, Jan 24 
Cadila Health Care plans to invest Rs 250 crore to acquire domestic over the counter (OTC) brands and buy overseas drug companies.

Managing director Pankaj. R. Patel told The Telegraph that the company is scouting for manufacturing facilities in the US. “Cadila Healthcare will be among the top three players in the Indian pharmaceutical industry by 2005 and a leading Asian player in five to seven years.’’

Cadila president Ganesh Nayak said the company wants to capitalise on its strength in process synthesis. Five of the latest foreign drugs have been synthesised and launched in the Indian market by Cadila.

Meanwhile, the Zydus Cadila group is making a public issue of equity shares of Rs 600 crore which will open by mid-February. The share prices will be determined through the book building route.

Part of the issue proceeds will go in repaying high cost debt as well as to fund ongoing projects – the new plant at Moraiya, a bulk drug plant in Ankleswar and a research and development centre.

Cadila Health Care has entered into a technical collaboration with Ethical Holdings of the UK to manufacture and market nicotine transdermal patches to reduce craving for cigarettes. The company has also filed a patent for a new drug to treat cardiovascular ailments.

Nayak said, “the plan is to dominate the industry through a strategic and holistic approach . We have proven strengths in brand building and the contribution of the company’s new products as a percentage of total sales is very high.”    


 
 
MOVE TO HASTEN LOAN RECOVERY 
 
 
BY A STAFF REPORTER
 
Calcutta, Jan 24 
The finance ministry is planning to give more powers to banks to hasten the recovery of non-performing assets (NPAs), Balasaheb V. Patil, minister of state for finance (expenditure, banking and finance), said here today. Patil said banks may get the power to attach properties of the defaulters directly, like state finance corporations, instead of obtaining a court order as is the case now. He was in the city to attend a special state level bankers committee meeting (SLBC).

He said: “The volume of non-performing assets is rising in the country. Severe measures have to be taken against wilful defaulters and the government is planning to bring suitable legislation in this regard.”

Patil said he has asked the Reserve Bank of India (RBI) to make public the names of defaulters who have not been dragged to courts; the RBI now publishes the names of those who are the subject of legal proceedings.

He said in his meeting with bankers, he has urged them to make public the accounts of top hundred defaulters. He advised them to frequently keep personal contacts with the defaulters.

Addressing the senior bankers at the SLBC meeting, West Bengal finance minister Asim Dasgupta said: “The credit deposit ratio of the state has slipped to 41.9 per cent at the end of September 1999 against an all-India figure of 53.3 per cent.” He told the bankers to raise the credit deposit ratio above the 50 per cent mark in a year’s time.

At the meeting, Patil said he wanted more powers be given to branch managers while disbursing credit. “The CMDs should support the branch managers if the chief vigilance commission or the Central Bureau of Investigation conducts any raid against the branch manager on account of disbursal of credit beyond their power.” On the local area banks (LABs), Patil said his ministry has received 10 applications to set up such banks. “We have given permission to eight of them. Of these eight, two have already started setting up their infrastructure.” However, he added, his ministry will discourage the setting up of banks by families.

Take-out finance norms

The RBI has prescribed certain prudential norms for lending and “taking-over” financial institutions (FIs) in the case of takeout finance. This was necessary to meet the financing requirements of infrastructure projects as FIs and banks have been increasingly taking recourse to the new product of take out finance, RBI said in a statement here today.

The apex bank, in a recent circular to FIs, said it had examined the issue pertaining to the criteria for assigning risk weights and applying other norms in respect of takeout finance by FIs and banks.

FIs have been advised to assign risk weights and apply income recognition and provision norms in the case of takeout finance, the circular said.

Under a takeout finance arrangement, the FI or bank financing an infrastructure project (lending institution) transfers the outstanding of such financing to the books of another FI (take-over institution) on a pre-determined basis.

Takeout finance helps the banks in asset-liabilities management since they finance infrastructure which required long term funds out of their resources which are short term.

In the case of an unconditional takeover for the lending institution, the risk weight would be 20 per cent whereas the full credit is assumed by the institution taking over.    


 
 
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