Wipro plans $ 500 m global float
Bajaj Auto caps buyback offer at Rs 450 a share
FM talks tough on loan defaults
Adidas gets go-ahead to hike stake in local arm
Click beats tea sale gavel
Daewoo sets turnover target at Rs 3100 cr
ICICI Bank ADR priced at $ 11
Freeze on MTNL accounts lifted

Mumbai, March 28 
Wipro Ltd, the Rs 1804 crore vegetable oil-to-information technology giant, today announced its plans to raise a whopping $ 500 million through an issue of American Depository Receipts (ADR)/Global Depository receipts (GDR). The proceeds from the issue will be used to finance acquisitions both at home and abroad in the area of information technology, senior Wipro officials said. The officials however, refused to spell out a time-frame for the overseas issue.

The announcement ends several months of speculation over an overseas listing by Wipro whose meteoric rise on the stock markets has made chairman Azim Premji — who owns 75 per cent of the company — the richest Indian in the world.

Earlier, this month the company had denied reports that it was planning an ADR issue in a communication sent to the BSE. This sent its stock plummeting below the Rs 7000-mark.

Wipro announced its intentions about the overseas offering in a late evening notice sent to the stock exchanges. Earlier, the company’s stock price witnessed a sharp rally to close higher at Rs 6009.25. The scrip had opened at Rs 5750 and then fell to an intra-day low of Rs 5671. However, sustained buying at the counter boosted the stock at the close to Rs 6009.25. Brokers expect the rally at the counter to continue over the next few days following the announcement of an overseas issue.

Infotech analysts welcomed Wipro’s decision to go in for an overseas listing which, they said, was not only “overdue’’ but would also significantly increase its “currency’’ in the international markets. Although Wipro officials refused to give further details about the acquisitions it was planning, informed sources said a part of the proceeds would be used to finance its e-commerce business.

While the company had earlier formulated a comprehensive business strategy for its e-commerce foray, it is believed that the company has identified finance and retailing businesses, besides telecom and manufacturing areas in the area of e-commerce.

Incorporated in 1945, Wipro’s principal lines of businesses include information technology comprising software services and systems and services, consumer products, lighting and healthcare technology services.

Sales of the company for the year ended March 31, 1999 stood at Rs 1804 crore, up by around 31 per cent while after-tax profit stood at Rs 170.2 crore. The company has targeted its revenues from software and services to account for 40 per cent of its total turnover in the current year.

The company also boasts of well known brands such as Santoor, a toilet soap. Its second strong brand is Wipro’ with four products such as Wipro Sunflower Vanaspati, Wipro Shikakai soap, Wipro Baby Soft range and Wipro bulbs. While Wipro Sunflower Vanaspati has consistently been a profitable brand, Shikakai is known to be a brand leader in the special hair care soap category.    

Mumbai, March 28 
Bajaj Auto today decided to buy back 15 per cent stake from the market, giving its shareholders a lot to cheer about at a time when the scrip has been languishing in an otherwise buoyant market.

The board of the two-wheeler major, which met today, decided to buy up to 15 per cent of its paid-up equity capital at a maximum price of Rs 450 per share. The company will buy back approximately 1.80 crore shares.

The news is expected to impart vibrancy to the Bajaj Auto counter which has been a laggard on the bourses. The Bajaj Auto scrip today opened on the Bombay Stock Exchange at Rs 374.90 and touched an intra-day high of Rs 388 and an intra-day low of Rs 368.45 before closing at Rs 376.

Though brokers were expecting a buyback price of around Rs 500 per share, they felt that Rs 450 is a good bargain and expected the scrip to move northwards after today’s announcement.

In a press statement, Bajaj Auto explained that it can utilise up to 25 per cent of the paid-up capital and free reserves to buy back shares as per Sebi regulations.    

Mumbai, March 28 
Finance minister Yashwant Sinha today exhorted banks to impose stiff punishment on wilful defaulters, “however high or mighty they might be”.

Speaking at the annual general meeting of the Indian Banks Association (IBA) here, Sinha said he was worried by the trend of rising non-performing assets (NPAs) among private and foreign banks. “I was surprised to notice that the NPAs of private sector and foreign banks were increasing,’’ Sinha said adding there were some introspection to be done in this regard.

The finance minister laid down a five-point plan to prevent the creation of fresh NPAs. “The five-fold strategy envisages creating conditions to stem the tide of NPAs, greater professionalism, quick settlement of disputes, transparency coupled with boldness in actions and coming down heavily on wilful defaulters.’’

The finance minister said banks should distinguish clearly between wilful defaulters and a genuine case of default.

While tackling NPAs, Sinha told banks to arrive at quick decisions on bad loans. For instance, a decision to write off bad debts must be implemented without any delay.

The finance minister also said the prevailing transaction cost of two to three per cent was high. He told banks to actually cut costs or raise volumes at the same costs.

On providing more autonomy to the Reserve Bank of India (RBI), Sinha said the government was looking at segregating the present role of the central bank and its function would be limited to a supervisory role.

He said this in response to an observation made by the RBI governor Bimal Jalan who said all micro-issues of day-to-day administration of banks should be removed from the purview of the central bank so that it can focus on supervisory functions.

IBA chairman A T Pannir Selvam said the banking sector needed legal reforms on a wide range of issues, including debt recoveries.

He said the government should abolish the Board for Industrial and Financial Reconstruction, or else it would lead to NPAs galloping to Rs 1 lakh crore in the next two years from the current level of Rs 58,000 crore.

Earlier, speaking at the board meeting of the Industrial Development Bank of India (IDBI), Sinha asked the board to prepare a strategy for improving the health of the financial institution.

He made this remark while pointing out that the last three years had been difficult for the economy in terms of growth and demand. “IDBI needed to address itself to its declining capital adequacy ratio and increasing net NPAs”.

Sinha also stated that the main challenge facing the financial sector was to meet global competition on the Indian soil. Here, he called upon IDBI to look in the overseas markets both in terms of raising resources and financing projects.    

New Delhi, March 28 
The government has cleared 28 proposals of foreign direct investment (FDI) worth Rs 100.52 crore, allowing Adidas to raise its stake in its Indian subsidiary and giving liquor major Seagram India Ltd six months more to meet its export obligations.

The government has allowed Investsmart India to bring Rs 20-crore of FDI which is 20 per cent of its equity. Investsmart India is promoted by ILF&S to sell financial products, relating to primary and secondary markets, and mutual fund units through the internet.

Adidas India has been allowed to increase its paid-up capital by Rs 30.96 crore that will raise its stake in its India subsidiary to 91.4 per cent from 80 per cent.

The approvals are based on the recommendations of the Foreign Investment Promotion Board (FIPB), an official release said.

The government has given Seagram six months more to meet its export obligations. It also extended the deadline for Shaw Wallace’s rights issue.

RK Swamy BBDO Advertising Ltd’s proposal to bring in Rs 10.86 crore, raising the foreign principal’s equity from 20.1 per cent to 50.1 per cent, has also been approved. BBC Worldwide India Ltd’s proposal to offer advertisement support services to Indian advertisers for advertising overseas was also cleared.

In the software sector, Global Software Ltd will bring in 28 per cent foreign equity worth Rs 1.74 crore. Denmark-based FLS Automation will bring FDI worth Rs 2 crore, while Horizontal Drilling International SA of France has been allowed to set up a 100 per cent cent subsidiary.

Several other proposals cleared include that of infotech firm Aptech Ltd, Kob Medical Textiles, Edgemond India, Navin.Com India, Tubeknit Fashion and Aqua Apparels.    

Calcutta, March 28 
Tea was auctioned in cyberspace today. But, while the first-ever online tea auction may have changed the way the commodity is bought and sold in India, Net evangelists who gloat that the worldwide web is the easiest way to do business will have to trudge a long way before they can write off the gavel as a relic best buried.

The industry applauded today’s sale of 660 kgs of tea by Apeejay Group of Industries at an attractive price of Rs 135 per kg on teaauction.com, saying it was a cheap, quick way to reach bulk buyers, and to encourage greater participation.

Whatever else it might have done, the online auction has rocked the cosy citadels of traditional auction houses, forcing many of them to hitch their old-world carriages to the new-age internet bandwagon.

Stories about greying auction houses and fuddy-duddy brokers — who actually controlled more than 80 per cent of the market — thinking of going online are swirling in the industry.

Some of them have already discussed their plans with the regulatory body, Tea Board, the leading industry associations and the six tea auction committees in the country.

A formal presentation of their Net initiative will be made before the Indian Tea Association next month. Industry sources say major software firms, including NIIT, have even been told to sew up the technical aspects of online tea auctions.

However, a senior representative of the Tea Board present at the launching of teaauction.com today as ‘an observer’ gave no hints about what the regulator thought about this site. The reticence has deepened doubts about the legitimacy of the site — which is working outside the purview of the regulator and the niceties of norms.

Industry experts present at the launch said several grey areas and problems remain unanswered in the idea of cyber-auctions. Key among them are assurances about credit facilities available from major tea auctioneers, assurance of quality from brokers and transparent payment mechanisms. For it to catch on, experts say virtual auction houses will have to embrace many features and safeguards of traditional auctions.

On the other hand, the approach of old-time auction houses in warming up to the Net has been cautious, even slow. “The endeavour will be to promote the interests of everybody who has a stake in the tea industry when we develop the on-line system of auctions,” said a senior member of CTTA.

An overriding concern of promoters of online auctions will be to ensure a transparent payment mechanism for the seller, apart from cast-iron guarantees of quality to the buyer.

“The tea industry’s production over nine months (March to November) is traded round the year. Online auctions, without controlling the sales volumes, may trigger volatility,” an industry observer said.    

Calcutta, March 28 
Daewoo Motors India (DMIL) has set an ambitious turnover target of Rs 3,100 crore for 2000-01 in what is a sharp increase over the current year’s projection of Rs 1,300 crore.

DMIL, the loss-making Indian subsidiary of Daewoo Motors of Korea, expects to break even next year by selling 90,000 cars compared with 40,000 in the current financial year. The company’s Surajpur plant in Uttar Pradesh operated at less than 50 per cent of its capacity till February but has now started running two work-shifts to increase production. Daewoo deputy managing director Byung-Soh Min said monthly production of cars will be raised to 7,200 from July from 4,500 at present.

The Korean giant, which has invested over Rs 4000 crore in its Indian arm, hopes its popular small car, Matiz, will fuel set the pace for the turnover increase.    

Mumbai, March 28 
ICICI Bank has priced its American Depository Receipts (ADR) at $ 11 per share. The ADR has been oversubscribed 12 times. The bank is offering one ADR for every two underlying equity shares of Rs 10. The ADR price conforms to expectations.

ICICI Bank will thus be the first private sector bank to be listed on the New York Stock Exchange (NYSE). The company will be listed on the exchange with the ticker code IBN.

While the bank initially pegged the overseas float at $ 125 million, it was later enhanced to $ 175 million. The issue is expected to bring down the promoter ICICI’s stake in the bank to over 60 per cent from the existing 74 per cent.    

New Delhi, March 28 
The Delhi high court today directed the income tax department to lift the freeze on the bank accounts of Mahanagar Telephone Nigam (MTNL) but asked the company to pay around Rs 200 crore in taxes by March 30.

The two-member bench comprising Justice Arun Kumar and Justice D. K. Jain told both sides to implement the court order. The petition comes up for hearing again on April 26.

MTNL’s petition claimed the income tax department’s decision to freeze its bank accounts was illegal because the matter is still pending with the Committee on Disputes (CoD).

MTNL claims that its licence fee paid to the DoT — something the income tax department feels is being used by the company to evade taxes — is non-taxable. The dispute is pending before the CoD, a panel headed by Cabinet secretary Prabhat Kumar.

“We will pay the amount immediately once the freeze on our assets is lifted. The issue of whether the licence fee should be taxed or not is to be decided by the CoD. This will determine the basis on which we will approach the IT tribunal,” MTNL director finance P. Sundaresan said.

He claimed the freeze had not affected the company’s normal financial transactions. However, sources said transactions in Delhi were hit, but that there were no problems in Mumbai. “We had normal dealings. There was no problem in Mumbai. In Delhi though, banks did refuse to operate our accounts till this evening,” MTNL sources said. The income tax department had attached and frozen MTNL’s accounts in 14 banks across Delhi and Mumbai on Tuesday.

Officials maintain the company has never refused to pay tax but insisted that it would do so only on the portion of the income that is taxable. The bone of contention is the licence fee paid to DoT. The income tax department has accused the company of raising this annual fee from a fixed Rs 101 to Rs 124 crore in 1994-95 to reduce its tax liabilities.    


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