Goldman picks up 2% in Zee Tele
Escorts to sell 24% in mobike venture
Sensex plumbs 4,600, more losses seen
SBI targets Rs 5000 cr mopup via rights
Nestle net profit jumps 37% to Rs 28 cr
Tisco sets December date for supply of auto steel
WorldTel leaves MTNL in the lurch

Mumbai, April 24 
Goldman Sachs Investment Mauritius (I) Ltd (GSIM) has acquired 8 million equity shares of Zee Telefilms Ltd (ZTL) at a price of Rs 1,000 per share after it exercised the option of converting an equivalent number of convertible equity warrants of ZTL into shares. The deal means Goldman will have a stake of a little less than 2 per cent in the Subhash Chandra-owned company.

Zee had allotted the warrants to Goldman Sachs in January for a whopping Rs 800 crore. Each warrant was convertible into one equity share of Rs 1 each at a premium of Rs 999. The global investment bank exercised that option on April 20.

As a result of this transaction, the share capital of Zee has increased by Rs 80 lakh to Rs 41.25 crore and the share premium account rose to Rs 799.2 crore, a press statement issued by ZTL today said.

However, what is surprising is the fact that GSIM has preferred to convert these warrants into shares at a time when the ZTL scrip has been hammered on the markets in the recent past. Following the pressure on new economy stocks, the Zee scrip has seen its price plunge from over Rs 1,000 a little over a month ago. In fact, in today’s trading, it was stuck at the lower circuit limit at Rs 663.15 against an opening price of Rs 721. On April 20, the closing price of Zee at the BSE was Rs 783.45, thus indicating that it was picked up at a premium of over 27 per cent.

Of the eight million warrants, 4.1 million were exercised by GSIM during the year ended March 31 while the balance have been converted in the current financial year.

Zee had utilised a part of the funds generated from the conversion to repay its cash obligation to Star TV to acquire a 50 per cent stake in Asia Today Ltd, Siticable and PATCO. It may be recalled that on March 31, ZTL had paid off $ 154 million to Star TV, which also included pre-payment of $ 75 million that was due in September this year. ZTL had acquired Star TV’s stake in ATL, PATCO and Siticable for a consideration of Rs 1250 crore ($ 296.51 million).

The terms worked out by the two media giants was that ZTL would pay 50 per cent of the consideration in cash, the rest would be through issuing ZTL shares to Star TV. While ATL is the company which owns the broadcasting rights for a clutch of Zee channels that include Zee TV, Zee Cinema and Zee News, PATCO is a programmer provider to Zee Cinema. At the time of allotting the warrants allotted to Goldman Sachs, it was stipulated that they would be converted into 80 lakh equity shares of Re 1 each at an exercise price of Rs 1000 per equity share having a face value of Re 1 and a premium of Rs 999 within a period of three months from the date of allotment of warrants shares.    

New Delhi, April 24 
The Escorts board today approved the divestment of 24 per cent equity in Escorts Yamaha Motors (EYML) to Yamaha Motor Corporation for Rs 200 crore.

Escorts and Yamaha Motors held 50 per cent each in the joint venture. The sale of equity will give Yamaha Motor Corporation management control of the company, which manufactures motorcycles for the domestic market and exports.

The Japanese company will seek the Foreign Investment Promotion Board’s approval on Friday to hike its stake to 74 per cent by investing Rs 200 crore in the company. The transfer of equity is expected to be completed by the end of next month. The agreement between the two partners includes a clause which gives Escorts the first right of refusal if Yamaha decides to offload its stake in future. Following the decision, the current board of directors is likely resign and a new board will be constituted with greater participation from Yamaha. These decisions will be taken at a follow-up board meeting to be held in Japan soon, a company official said.

“We have always believed that business relationships are driven by value-additions by partners. It will be more appropriate for Yamaha Motor as the technology provider to assume the leading role in the business. With the change in management, the company will grow at a faster rate in the coming years and move towards improving its market-share,” Escorts group chairman Rajan Nanda said here.

The joint venture will bring in new technology and offer a wide range of cost-effective quality products that can gain a competitive edge over rivals in terms of price. It will have the added benefit of enlarging its scale of operations for manufacturing and supplying products worldwide, Nanda said. Escorts will continue to provide a strong base for manufacturing facilities, a countrywide dealership network and skilled manpower.

Motorcycles business was a division of Escorts before it was spun off into a separate company and a collaboration signed with Yamaha Motors.

The move comes at a time when there is a perceptible shift in the two-wheeler market from scooters to motorcycles.

Motorcycle sales registered a sales growth of 28.8 per cent between April 1999 and February 2000 with sales of 15.91 lakh units as against 12.35 lakh units in the year-ago period.    

Mumbai, April 24 
The Bombay Stock Exchange (BSE) sensex today slipped below the crucial 4,600 support level to 4511.05 in a 146-point loss as share prices tumbled on fears that the US justice department will press for the split of Microsoft.

The software giant’s predicament sparked renewed concerns that the Nasdaq will crash when it resumes trading on Tuesday.

Share prices of pivotals collapsed under renewed pressure from bears after resisting them for most of the day. Starting the day on a volatile note, shares gyrated and closed much lower on what was the first day of the new settlement on the BSE.

Operators hammered key infotech scrips like Infosys Technologies, Satyam Computer, NIIT besides ITC and Zee Telefilms — which have high weightage in the 30-scrip index —in the last 30 minutes of trading.

The sensex opened firm at 4723.27, moved in a narrow range of 4723.27 and 4582.11 till 3.00 p.m. It nose-dived thereafter to close at 4511.05 as against Thursday’s close of 4657.42. The BSE-100 index tumbled by 73.27 points to 2425.55 from previous close of 2498.82.

“The bulls were taken unawares when bears unexpectedly emerged at the fag end of the session. This forced the bulls to win down their positions,” market sources said. Sources said the Big Bull, now in Singapore, has kept a low profile of late. “The markets are in a correction,” said a dealer at ASK Raymond James, a leading foreign brokerage.

Shares like Lever, ACC, Nestle, Telco and Dr Reddy’s helped stem the sensex slide to some extent. Dealers now say the index will slip further given that it has breached the 4632-support level, and the fact that bears are still on the offensive.

One piece of consolation was that the badla rates dipped to 6 to 8 per cent on Saturday because of lower outstandings. In the specified group, 17 shares, including heavyweights like NIIT, Zee Telefilms, Satyam Computers and ITC were locked in the lower-end of their circuit filters.

Satyam Computer remained the most active scrip with a turnover of Rs 443.51 crore on a total volume of Rs 2566.15 crore.    

Bangalore, April 24 
The State Bank of India (SBI) plans to raise Rs 5000 crore from the capital market through a rights issue, once the Centre carries out the necessary amendment to the SBI Act, bank chairman G.G. Vaidya said here today.

Launching the gold deposit scheme in Karnataka, Vaidya told reporters that the bank would need additional funds following a corporate decision to raise the minimum capital adequacy ratio from 9 per cent to 12 per cent.

He said the bank was yet to work out the mode of dilution, but the first preferred option would be a rights issue. The Reserve Bank of India, which holds 59 per cent of its equity and all other shareholders would be offered the shares in the initial phase, before making them available to the public.

Vaidya said the SBI would raise Rs 4000-5000 crore to take care of the capital adequacy requirement for the next four to five years.

He said the bank’s priorities for the year included setting up an insurance venture, a technology upgradation plan and a credit information bureau. Vaidya stated that the SBI had so far collected 4 tonnes of gold under the gold deposit scheme since it was launched last November and has set a target of 100 tonnes for the year.

Expressing confidence about the success of the scheme, he said the purpose of the scheme was to bring privately held gold into circulation for productive uses, reduce the country’s reliance on imports and provide its owners with liquidity and additional income by way of interest. The minimum amount of gold accepted had been kept at a low level of 200 grams and the depositors can be individuals, Hindu undivided families, trusts or companies. Deposits are accepted for a period of 3-7 years and liquidity has been provided through rupee loans as also premature encashment after a lock-in period of one year.    

April 24 
Nestle India has recorded net sales of Rs 348 crore for the first quarter of the 1999-2000 fiscal compared with Rs 340.1 crore in the corresponding period last year. Net profits for the first quarter increased by 37 per cent to Rs 28.1 crore as against Rs 20.5 crore in the previous corresponding quarter, due to a change in accounting policy of stock valuation, reduction of green coffee prices and interest cost due to improvement in net working capital management. To comply with the revised accounting standard, the company has commenced valuing the closing stock of finished goods and work in progress at full cost, effective December 31, 1999.

Export volumes grew by 40 per cent at Rs 54.6 crore. However, realisation was lower due to highly competitive prices prevailing in international markets.

Its Maggi, Nescafe and Milo brands grew well. The company also launched ultra heat-treated liquid milk called Pure Milk. To improve market penetration, the company is focusing on small sized, shelf-keeping units of brands such as Everyday, Maggi, Milo and Nescafe.

Meanwhile, Carlos Donati has been appointed as chairman and managing director of Nestle India. At the annual general meeting of the company today, the chairman Narendra Singh Sarila announced that he would step down from the position and accept the position of chairman emeritus. Donati has already has five years experience in the company and is its managing director since July 1998. The company also announced that J.M Waelti, currently executive vice-president (finance and control), would become a member of the board of directors.

Wipro interim

The board of directors of Wipro Ltd today declared an interim dividend of 15 per cent for the year ended March 2000.

The directors will meet on April 26 to approve the results for the 1999-2000 fiscal, a company release said.

Wipro Ltd provides high-end information technology solutions to leading companies world-wide, and has other profitable businesses in niche markets.    

Jamshedpur, April 24 
The Tata Iron and Steel Company’s (Tisco) Rs 16,000-crore cold rolling mill (CRM) was today inaugurated by Tata group chairman Ratan Tata who said the unit will supply special-grade steel that can be used in automobile bodies.

Tisco managing director J J Irani told reporters that trial supplies to domestic car companies, which have shown keen interest in the project, will start by the end of this year. Since car body sheets have the potential to yield the maximum value-addition of $ 500 compared to the hot rolled coils, the Tisco MD said 60 per cent of the cold-rolling mill’s production will be dedicated to making special-quality steel. The mill is expected to achieve a capacity utilisation of 100 per cent in 13 months.

Tata said Tisco, which was conceived and built in the later half of the last century as part of a Swadeshi movement aimed at manufacturing steel in a modern way within the country, now faces the challenge of rising to the demands of globalisation and increased competition in a new century.

“Tata Steel will never stand still. With the commissioning of the cold rolled mill, domestic automobile firms and white goods companies will be in a position to procure quality steel sheets at prices which are globally competitive,” Tata said.

Nippon Steel Corporation played a leading role setting up Tisco’s CRM unit, providing technological support and start-up facilities. Initially, it was opposed to the CRM project because it felt it could cater to the cold rolled sheet requirements of auto makers, but now, after the project went on stream, Nippon director T Ochiai said he saw the Tatas as ‘their best partner’.

MHI, Hitachi, Toshiba, IHI and ITW Signode of Japan were among the other companies which extended a range of important facilities, along with Indomag and LOI of Germany, Sarclad of UK and CMI of Belgium. Tisco vice-president B Muthuraman, who was in charge of the project, said Tisco’s CRM unit had the lowest capital cost per tonne of Rs 10,500 compared with Rs 14,000-16,000 for similar Indian units and Rs 15,000 for the South Korea-based Posco. Apart from white goods and automobiles, he listed appliances, panels, drums and barrels and construction units as potential customers.    

New Delhi, April 24 
In a major setback to Mahanagar Telephone Nigam Limited’s (MTNL) ambition to expand its services abroad, WorldTel Network is likely to walk out of a consortium that was supposed to bid for basic and cellular licences in Bangladesh.

Sources say the pullout from the consortium — comprising MTNL and Telecommunications Consultants India Limited (TCIL) — is likely to be finalised at WorldTel’s meeting in London soon.

“The project may get a new foreign partner. WorldTel had asked for some changes in the consortium due to the delay in the project. They were not acceptable to us. If the company does quit, we will get a new partner. In any case, the project would be pursued and we will participate in it,” MTNL sources said.

The Bangladesh project was one in a series of joint endeavours by MTNL and TCIL in partnership with WorldTel — a telecom company floated by Sam Pitroda. The consortium also had plans to join the bidding race for offering fixed-line telephony, cellular and other value-added services in South Africa and Vietnam.

MTNL and TCIL, as a joint venture company with a foreign partner, had also decided to participate in the fourth round of bidding for operating basic telecom services. MTNL is eyeing the circles which did not attract bidders in the last three rounds.

In all, eight telecom circles — West Bengal, Assam, North-East, Kerala, Uttar Pradesh (East), Jammu and Kashmir, Himachal Pradesh and Andaman and Nicobar Islands — will be offered to private operators.

The planned joint venture had drawn up plans to bid for basic telephone services in North-East and Kerala. Sources said they will do so even if there is a change of foreign partner. “Kerala and North East are currently being seen by the venture as the best circles. It could also bid for others such as West Bengal or Uttar Pradesh,” sources in DoT said.

MTNL and TCIL, the two public-sector companies in the venture, are considering various options to raise equity for the venture. “Both companies can dip into their internal resources. They have enough to manage basic services in two circles. We may opt for other methods to raise resources if we bag a major contract outside the country,” sources said.    


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