Aegon seeks bank ally for big splash
Tatas sell 4% more in ACC to Gujarat Ambuja
Bill proposes breakup of SEBs
Zee to peg ADR size below $ 1 bn
Indiainfo acquires India Abroad
CII plans rating agency for states
Takeoff signal for Karnataka airport
Bar on premia issues by zero-profit firms likely
Foreign Exchange, Bullion, Stock Indices

New Delhi, May 9 
Aegon, the world’s third largest insurance company, is in the final stages of selecting an Indian partner for its foray into the country. The Dutch major, which plans to operate in the life insurance sector and pension funds, has already shortlisted three banks as its probable partner though its top officials are cagey about revealing the names.

Apart from the insurance foray, the company has decided to increase its investments in the Indian stock markets to $ 100 million.

Aegon’s business development manager for India Bert-Jaap Brons said, “We will finalise the joint venture partner once the rules and regulations are in place. We want to be absolutely clear about everything before we enter the market.”

The company had initially considered 60 companies from which it selected 15. Now the list had been pruned further, Brons said.

Aegon, which manages assets worth 228.80 billion euros, plans to initially invest around Rs 100-125 crore. In the next 10 years, “we envisage total capital requirement of about Rs 500 crore,” Brons said.

As part of its focus on Indian market, Aegon has decided to increase its investment in the Indian capital markets from $ 30 million to $ 100 million. The fund will primarily invest in stocks of blue chip companies.

Aegon, it may be mentioned, acquired financial services company Transamerica recently for about $ 10 billion. Transamerica has a presence in India through its alliance with Apple Finance and is involved in consumer finance business.

While there would be a single company for insurance and pension funds, Brons did not rule out the possibility of using Transamerica’s network to distribute its insurance products in the country.

Elaborating on the insurance company’s plans, Brons said Aegon sees a lot of potential in rural areas.

“Everybody is looking at big cities for market, but we see a lot of opportunity in the rural market. It is a challenge to penetrate these markets as the products and its pricing have to be done very carefully,” he said.

Supporting the government’s stipulation that 50 per cent of funds have to be invested directly in government bonds, Brons said globally most countries insisted on similar investments and therefore the Insurance Regulatory and Development Authority’s (IRDA) norm was justified and in line with practices abroad.

According to Brons, Aegon has a decentralised system of operations and has a multi-domestic approach. Therefore, the Indian operations would have a high degree of autonomy and would have a local management.

“The local managers would have the freedom to make their own independent decisions with very little interference from the top Aegon management in Netherlands in its day to day activities,” he added.

Iffco-Tokio Marine tieup

Iffco, the world’s largest fertiliser co-operative, will foray into the insurance business through a joint venture with Japanese insurance major Tokio Marine.

It has signed a memorandum of understanding (MoU) with the Japanese firm, for undertaking the general insurance business in India through a joint venture.

The initial paid-up capital of the joint venture would be Rs 100 crore, of which Iffco would contribute Rs 74 crore and the rest will be brought in by its Japanese partner.

The scope of the proposed insurance venture — Iffco-Tokio General Insurance Ltd — includes fire, marine, rural and social insurance, Iffco managing director Uday Shankar Awasthi said here yesterday.

The insurance products on offer would be a mix of existing and new products, such as a special package for the fertiliser industry and a farmers’ package policy, he said.    

Mumbai, May 9 
The Tatas have sold another 4 per cent in Associated Cement Companies (ACC) to Ambuja Cement India, a subsidiary of Gujarat Ambuja Cement Ltd (GACL). GACL had earlier bought a 7.2 per cent stake from the Tatas last December.

Sources say Ambuja Cement India is believed to have forked out Rs 252.77 crore for the fresh purchase. GACL had paid Rs 455 crore for the 7.2 per cent holding it acquired late last year. This deal gives Gujarat Ambuja — which owns 60 per cent of its subsidiary — a 11.2 per cent stake in ACC.

However, a spokesperson of Gujarat Ambuja declined to comment on the transaction. “I have nothing to say on the matter,” he said.

The deal comes after Gujarat Ambuja earned a reprieve from Sebi on the 7.2 per cent stake it bought earlier. The market regulator said the stake purchase did not amount to a change in management and, hence, an open offer was not required.

It was of the view that the mere transfer of stake does not amount to a change in management control or even sharing of management control ‘unless the acquiring party is in a position to change the majority of directors on the board of the company’.

Under the MoU signed between the Tatas and Gujarat Ambuja, the Tatas had the option to sell their remaining 7 per cent holding in ACC, though the understanding did not specify a time-frame for the sale.

Gujarat Ambuja had acquired the ACC share last year at Rs 370 per share in a deal worth Rs 455 crore.

While the 15 per cent creeping acquisition limit must be adhered to, GACL has not crossed that threshold, Sebi officials said while explaining their order. The case was being eagerly followed by companies and legal circles because of the precedents that would be set. In view of the importance of the case, Sebi had consulted attorney general Soli Sorabjee to take a stand on the sensitive case.    

New Delhi, May 9 
The draft Electricity Bill has proposed that all state electricity boards (SEBs) must be split into two or three horizontal bodies, which could be public sector units or privately held companies.

If the draft Bill — to be considered by the Cabinet soon — is passed by state legislatures, SEBs can continue to exist for just six months from the day it is ratified. They will have to be broken up into successor companies dealing in generation, distribution and transmission activities.

Quite predictably, the Bill has ruffled many feathers within the government. Many in the Cabinet, who feel the Bill will invite lot of political resistance, are trying to get power minister P.R. Kumaramangalam to dilute its provisions, especially those relating to the break-up and privatisation, in an effort to reach a consensus.

The BJP’s allies are particularly touchy. They feel the Bill must be discussed in greater detail with states before being cleared by the Union Cabinet.

Bureaucrats, too, are upset because the new Bill has a clause which says civil courts cannot hear pleas challenging the orders passed by an electricity authority or commission under this Act.

This means authorities at the state and central levels will be the final arbiters of justice in all matters concerning the power sector, closing all avenues of resolution under civil laws.

The transmission companies will act as successor companies to SEBs, inheriting all their legal rights and obligations. Since they will carry the legacy of these boards, they will remain a state utility for at least the next three years, after which, they could be converted into a joint venture. Later, rival transmission companies can also be set up.

However, the three-year transition period will not apply to generating and distribution companies carved out of SEBs. They can be transferred to joint ventures or even to private companies right away.

All SEB employees will be divided and redeployed in the new companies. The draft Bill makes it very clear that the transfers cannot be disputed or challenged in court, and that workers cannot ask for compensation under the Industrial Disputes Act.

The Bill provides for the imposition of a cess of 2 paise per kilowatt of power generated from fossil fuel burning plants.

This money is to be spent by the government to promote and augment renewable energy power sources.

In an effort to protect consumers, the draft provides for setting standards of performance by state and central electricity commissions for power suppliers. If these power supplying companies fail to live up to these standards then they can be asked to pay up compensation to consumers.    

Mumbai, May 9 
Zee Telefilms (ZTL) has pruned its American Depository Receipts (ADR) offering to what it said would be ‘significantly less than $ 1 billion’. This is much less than the $ 1.5 billion the company had targeted earlier.

While merchant banking circles attribute the smaller ADR size to poor market conditions, Zee Telefilms vice-chairman and managing director Vijay Jindal denied the link.

“Earlier, it was only an enabling resolution and we had taken shareholders’ permission for a total ADR issue size of $ 1.5 billion. Today however, the board of directors decided that it should be less than $ 1 billion,” Jindal told The Telegraph.

Though he did not disclose the exact size being planned, he said Zee Telefilms would was working to complete the formalities of the ADR listing, and would file the prospectus early next month.

The entertainment major said funds raised from the ADR issue will be used to consolidate its position of leadership by expanding the existing line of businesses lines and developing new ones in the fast-growing internet and multi-media segment.

Donaldson Luffkin Jenerette and DSP Merrill Lynch were appointed as the lead managers to the ADR issue. The process of naming the two co-lead managers is now under way.

Jindal said his company was looking at opportunities on the world-wide web and in the ISP business, building on them as the key planks of its growth strategy. In this regard, he said the company will make significant investments in e-commerce, apart from ISPs and its existing range of portals.

Starting off with four channels — Zee TV, Zee Cinema, Zee News and Music Asia — Zee has grown in strength with a 10 channels under its belt. This includes the four regional language channels — Alpha Marathi, Alpha Bengali, Alpha Punjabi and Alpha Gujarati. It also started two English channels, Zee Movies and Zee English, in March this year.

The company is also looking aggressively at the internet business. Having set up, a separate subsidiary to launch new initiatives, it is planning to invest over Rs 800 crore over the next few years in Web-related activities.

Net profit zooms

Meanwhile, Zee has reported a 160 per cent rise in net profit for 1999-2000 at Rs 333 crore from Rs 128 crore in the previous year.

While sales and services during the year shot up to Rs 408.58 crore (Rs 175.25 crore), commission income was pegged at Rs 67.35 crore (Rs 50.92 crore).    

Mumbai, May 9 Pvt Ltd today said it had entered into an in-principle agreement with the US-based India Abroad Publications Inc (IAPI) to acquire the latter in a major stock-cum-cash deal.

Though details of the deal were not divulged due to some ‘legal constraints,’ it would result in IAPI becoming a wholly-owned subsidiary of Pvt Ltd, indiainfo chairman Raj Koneru told newspersons here today. India Abroad would, however, continue to have a separate identity despite being a 100 per cent subsidiary of indiainfo.

Terming the deal as a merger, Koneru said that it would be would be concurrent with indiainfo’s planned initial public offering (IPO). As per the deal, IAPI shareholders would receive shares of indiainfo according to a pre-determined ratio. IAPI’s 10 per cent stake in the New Delhi-based India Abroad News Service (IANS) would stand transferred to his company, he said.

Koneru said it would enable indiainfo gain access to the repository of news and events covered by IAPI. While it would leverage India Abroad’s brand equity in the overseas markets by branding and promoting its international edition as, would continue to cater to the audience within India.

“The content created by India Abroad has great advantages for us. The deal will not only help us strengthen our focus on NRIs and providing them good content, but in selling other services such as B2B and B2C as well,” he said.

Later, speaking to reporters, Koneru confirmed that the promoters stake in is likely to be diluted with IAPI shareholders obtaining a stake in the company.

Recently, indiainfo had formed a strategic alliance with Videsh Sanchar Nigam Ltd (VSNL) whereby the latter picked up a 30 per cent equity stake in indiainfo.    

Calcutta, May 9 
The Confederation of Indian Industry (CII) is planning to embark upon a rating exercise of a different kind. While companies have so far gone through the rating grind, it will now be the turn of the states to do so.

The CII will set up an agency to rate states in association with the Rajiv Gandhi Foundation.

Announcing this, newly elected CII president Arun Bharat Ram told newspersons here today that a rating agency is being set up under the chairmanship of Bibek Debroy of the Rajiv Gandhi Foundation, comprising a team of experts from the chamber.

The rating agency will be set up in line with internationally reputed credit rating agencies like Moody’s and Crisil to help investors, both Indian and foreign, take decisions regarding their investment portfolios and opportunities available at the state level.

Stating that the new rating agency would submit its first comprehensive report in October this year, with the information in its publications scheduled to be updated every six months, the CII president claimed that reports about the states’ industrial potential would be comprehensive and analytical. He said the states will be judged in proper perspective, keeping in mind the competitive potential of every state.

Ram stressed that the CII rating agency would be a totally unbiased and truly professional one.

Besides, CII will also set up task forces to enable states improve their efficiency and attract investors, he said.

CII has also identified eight sectors — textile, garments, drugs and pharmaceuticals, electronic consumer goods, automotive parts, household appliances, software and machine tools, on which it will carry out a study focusing on their export potential. The report will try to work out a strategy to boost exports in these areas.

Further, the CII president said that for the year 2000-01, the GDP is expected to grow at 7 per cent, and industry at 8.5 per cent. The services and agricultural sectors were expected to grow by 9 per cent and 2 per cent respectively.

On the recommendations to the government pertaining to information technology, the CII president stressed on the need to implement a 90 days deadline for having all government forms on the Net, a 3-year plan to make all government procurement available on-line, making computer education mandatory in schools by 2003 and designing appropriate e-commerce laws.

Outlining CII’s initiatives in the area of information technology, Ram said a national committee on e-commerce has been set up which would study measures to facilitate the growth of this sector. CII will also set up a dotcom forum, a forum for CIOs and a round table of CEOs on infotech and e-commerce to identify issues which would help promote future growth in this area.    

Mumbai, May 9 
The controversial Bangalore international airport may finally see light at the end of the tunnel.

The Karnataka government has shortlisted six applicants from the 17 bids it received and expects to complete the entire process by June.

Among the leading consortia shortlisted by the government are Reliance and Changi international airport; the Swedish engineering major ABB; the international engineering major Bechtel; Siemens, Larsen & Toubro and Zurich International airport; Hoctief; and Amsterdam’s Schipol International airport. Incidentally, the Tatas who were earlier awarded the project and later withdrew did not bid for the project this time.

In an interview to The Telegraph, R V Deshpande, Karnataka’s minister for large & medium industries and infrastructure development, said: “The bid documents have been handed over to the parties and we will finalise by June-end and have a ground-breaking ceremony by November.”

The site has already been selected at Devanahalli, 23 kms from Bangalore. The project cost is estimated at Rs 1500-Rs 2000 crore approximately.

The state has also received three proposals from leading telecom majors to build an optical fibre network. Among the contenders are US-based Lucent Technologies with local telecom cables major Finolex cables, the Reliance group, and the Bangalore based BPL group. The project is estimated to cost Rs 500 crore, the minister said.

Meanwhile, the present defence airport in Bangalore which has obtained the status of an international airport will transfer the title to the new airport once it becomes functional, the minister said.

The Karnataka government will hold a global investors’ meet from June 5. Deshpande was here to promote and showcase the state of Karnataka and held a road show today to promote the state. “We will showcase the state as the destination in India,” he added. Internationally renowned management consultants Arthur Andersen has been appointed as the “event manager” to the global investors meet.

On the proposed airport, he declared that it will become the “gateway of the south”.

The new airport is expected to give a shot in the arm for industries like horticulture, floriculture and sericulture sectors apart from the booming knowledge based companies in the state.

The minister claimed that June will be observed as the investors month and the proposals generated at the “global investors meet” will be cleared in the same month.

At the investors’ meet, the state will showcase 17 projects and plans to give a big push to the tourism sector, which has been ignored till now.

The state has hired RITES to study how best to develop the coast and set up fisheries ports dotting the state’s 223 kilometre coastline.

Along with the setting up of fisheries ports, the state will develop a cold chain across the state.

A state official informed that today’s presentation was attended by the who’s who of Mumbai’s businessmen.    

Mumbai, May 9 
The Securities and Exchange Board of India (Sebi) is considering a proposal to bar companies without a profitability record from making premium issues and thereby stymie fly-by-night operators from accessing the capital market.

Several suggestions were bandied about at a meeting convened here today by the stock market regulator including which said it should be mandatory for the merchant bankers to justify the issue price.

At present, companies without a profit record can get their debt or equity issues appraised by a bank or financial institutions along with 10 per cent participation by the latter and make a premium offer.

The meeting, which was attended by representatives of the National Stock Exchange, Bombay Stock Exchange and bourses of Bangalore, Hyderabad, Chennai and Pune, was convened to review the recent trends in the primary market.

. A press statement issued by Sebi further added that one of the suggestions was to limit appraisal of banks and financial institutions to only equity issues for the purpose of meeting eligibility criteria. The other suggestion was to reduce the time taken for listing after the initial public offering (IPO).

The stock exchanges also wanted that the promoters’ contribution should be in the form of cash and made either before or along with the issue. The amount should be kept in a separate escrow account and be released along with the issue proceeds.

They also suggested that the public offer norms for opening separate account and disclosures regarding utilisation of funds raised should be made applicable to the promoters’ contribution.

At present, only 20 per cent of the promoters’ equity is subjected to lock-in period for three years. It was suggested that the remaining 80 per cent of the promoters’ stake should be subjected to one-year lock-in period from the date of allotment of the issue.    

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