Cash criterion for FIs in takeovers
Paswan eyes convergence portfolio
Lines freed for mobile PCOs
HCL Tech’s American flotation gets go-ahead
Zee first-half net profit at Rs 59 cr
ICICI net dips in second quarter
Foreign Exchange, Bullion, Stock Indices

New Delhi, Oct 20: 
If old-economy barons like Nusli Wadia and Lalit Mohan Thapar, under attack from more low-profile raiders, think they can count on financial institutions (FIs) as major investors in their companies to play white knights, they might just be safer with second thoughts.

Top finance ministry mandarins who control the policies of the country’s all-powerful state-owned financial institutions feel these big-time investors should support corporate managers who can give them higher returns on their shares.

In an interview with The Telegraph, insurance secretary P. K. Banerjee said FIs should support managements which give them better yields on their investments in a company. He emphasised that the nominee directors’ job is to protect FI investments, not the interests of a particular group.

“If a change in guard brings higher yields, it should be preferred. If continuing the existing management will give better results, then one should persist with it,” Banerjee said.

Financial institutions, including General Insurance Corporation (GIC) and Life Insurance Corporation (LIC), own large chunks of equity in most big Indian companies. In a few bluechips, such as ITC and BSES, they are the single-largest shareholders.

The insurance secretary predicted that mergers and acquisitions, which are now routine occurrences in much of the West, would soon become commonplace in the country. “As long as a takeover is legal, there is nothing anyone can do.”

Despite what the finance ministry feels now, past experience shows that FIs have played safe, and preferred status quo. Managements under takeover threats have always found them trusted supporters. The only exception has been the case of Calcutta-based Shaw Wallace, where FIs acquiesced with NRI businessman Manu Chhabria in his takeover bid.

But, more recently, in the case of Modi Rubber, where FIs tried to change the company’s management by selling their 44 per cent stake, pressures exerted by the Modi group stalled the move. The institutions had long been complaining that Modi Rubber was heavily indebted, defaulting on its loan repayments and was grossly mismanaged.

Banerjee’s statements assume significance after Sebi chief D. R. Mehta’s meeting with the finance ministry top-brass on Thursday, where is known to have pressed his case for more powers to police takeovers. He is also believed to have discussed the takeover bids being made by Arun Bajoria.

The Calcutta-based jute baron has been buying up stocks in the Nusli Wadia-controlled Bombay Dyeing and the Thapar family-run Ballarpur Industries, threatening to upset the balance of power on the boards of these companies.

The finance ministry’s thinking is also interesting at a time when the Bajoria-Wadia tussle has seen the industry divided on the issue.

Ficci has extended tacit support to Bajoria, saying all that is important is to determine whether his purchases were in conformity with the takeover code. “In case the code is followed, the current law cannot be set aside,” it said.

CII and Assocham, on the other hand, have asked Sebi to raise the creeping acquisition limit for promoters to bring them on par with market raiders.    

New Delhi, Oct 20: 
Communications minister Ram Vilas Paswan today made a pitch for heading the ministry of convergence — a planned omnibus body that will straddle the domain now covered by the ministries of information & broadcasting, information technology and telecommunications.

His argument was that since most of the changes required to give shape to the Convergence Bill are being made in the Indian Telegraph Act, 1885, it was in the fitness of things that others should coalesce into the communications ministry, and he be given the control over the monolith.

His claim, made at a seminar on convergence here today, may not be easy to entertain given that the other two ministries that will make up the new body are headed by political heavyweights, who will not be amenable to a proposal that seeks to strip them of their turf and influence.

Paswan said he will take steps to ensure that the Convergence Bill is introduced in Parliament during the winter session. However, he made it clear that it is the government would have to take the administrative decision for any such ministerial restructuring because it is politically sensitive.

“The sub-group on convergence led by Fali S Nariman has recommended integration of the three ministries and now we are working on the structure of the nodal ministry,” he said.

The group, which submitted its final report, has recommended a super-regulator to oversee voice and data communication though any medium (telecom or broadcasting), on the lines of Telecom Regulatory Authority of India (Trai). It is likely to be called the Communications Commission of India (CCI).

Paswan supported a single regulatory body for convergence, which, he said, should have the powers to issue licences and to allocate spectrum. It would be supported by the Wireless Planning Commission.

Department of telecommunications (DoT) secretary Shyamal Ghosh said: “DoT will not wait for the convergence Act to issue licences for new service providers.

“Regulation is just not possible in an era of convergence. We have passed on this job to the Communications Commission,” Nariman, who is the convenor of the group on convergence, said while delivering his keynote address at the seminar.    

New Delhi, Oct 20: 
India will soon have mobile PCOs, similar to those in Bangladesh. The Telecom Regulatory Authority of India (Trai) today allowed cellular service providers to set up public call offices and offer long distance services (STD) within their circles at rates they are free to set.

However, the tariff offered should be less than, or equal to, airtime charges. Under a novel Grameen Bank scheme, women in Bangladesh get loans to buy mobile phones, which are used to offer people call facilities within a limited area. “

Users of this service should not be charged a tariff which is more than the airtime charge, plus an appropriate fixed network charge, if the call has been made over a portion of the fixed network,” the telecom watchdog said in a statement.

Cellular service providers would, however, be free to offer a lower tariff for the service. “It strikes down the earlier order passed by DoT. It will certainly boost service and help customers,” T. V Ramachandran, executive chairman, Cellular Operators Association of India (COAI), told the Telegraph.

The department of telecommunications had earlier prohibited cellular firms from setting up PCOs to offer services, except in situations of ‘inherent mobility’. For instance, these could be the times when one is travelling in trains, buses and taxis. “

We did not understand why an alternative made available by technology should be denied by through administrative orders,” a senior Trai official said. The regulator has recommended that service providers should be required to display prominently the tariff which is applicable, and the charges the users of this service are liable to pay.

According to Trai, there is a need for service providers to develop competitive strategies to enhance their revenue and service base, rather than to expect guaranteed returns by keeping alternative services out of the reach of the public.

The regulator today submitted its recommendations on the provision of mobile community phone services to the government. The authority said its suggestions have been offered in the context of the NTP ‘99, and a wider public interest, rather than being based on the viewpoint of a section which might be affected.

The regulator feels if an alternative service is available to people at lower rates, it should be made available, subject to specified conditions, and without any discrimination. “

There are certain sections of the people which would find this service to be beneficial. For instance, those who are old, or ailing, may not like to go outdoors to the fixed service PCOs,” the Trai official said.

According to the regulator, the set of recommendations will increase the scope of services available to the general public.    

New Delhi, Oct 20: 
The government today cleared 36 foreign direct investment (FDI) proposals worth Rs 2620 crore, including HCL Technologies Ltd’s American Depository Receipts (ADR) float.

The proceeds from HCL Technologies’ proposed ADR worth Rs 2250 crore will be used to set up software units under the Software Technology Park scheme and for other expansion activities.

Commerce and industry minister Murasoli Maran also cleared Honda Siel Car India Ltd’s proposal to hike equity to 99 per cent from the existing level of 90 per cent for a consideration of Rs 14.4 crore.

Maran, on the advice of the Foreign Investment Promotion Board (FIPB), also approved Pacific Netinvest Pvt Ltd’s proposal to set up telecommunication services with an investment of Rs 38.31 crore with 49 per cent foreign equity Asia Pacific Exports’ application for issue of preference shares worth Rs 106 crore.

Proposals covering agriculture, bio-technology, tourism, textiles, machine tools, software development, portfolio management services and telecommunication services, were approved in today’s meeting.

In the consultancy and management services sector, Carlyle Asia Investments Advisors has been permitted to set up a 100 per cent subsidiary, with an investment worth Rs 4.5 crore, for providing consultancy services including advisory investment and management in relation to IT, telecom, internet and the software industry.

Portfolio management company Quantum Advisors was allowed to bring in 50.49 per cent foreign equity with FDI close to Rs 133 crore.    

Mumbai, Oct 20: 
Zee Telefilms has posted a 59 per cent increase in net profit to Rs 58.8 crore for the first half of the 2000-01 fiscal.The entertainment major’s consolidated revenues rose 35 per cent to Rs 451.3 crore, while total income showed an impressive growth of 45 per cent at Rs 186.1 crore.

Zee Telefilms said in a statement that the increase in revenues reflects a strong performance in every major segment. Gross advertisement revenue during the six months registered a healthy growth of 28 per cent to Rs 296 crore, despite stiff competition, the statement added.

Net profit for the quarter ended September 30 2000, stood at Rs 32.05 crore, as against Rs 20.06 crore in the previous corresponding quarter.

The negative revenue growth in the UK operations of the company, Zee said, was due to the migration from the analog to the digital platform. However, the company claimed it successfully completed the migration on August 31, two months ahead of schedule.

Pointing out that the Indian television industry was passing through a phase of intense competition among the existing players and new entrants, the company stated that it was well poised to manage the competition and retain its leadership. Zee added that it expects to continue to grow at a healthy pace, on the strength of growth in advertisement revenues, pay revenues and syndication revenues in the future.

Zee said the latest ace up its sleeve, ‘Sawaal Dus Crore Ka,’ to be telecast on Zee TV, has evoked a very good response from advertisers, even before its launch.    

Mumbai, Oct 20: 
ICICI Ltd has posted a 9 per cent decline in net profit for the second quarter of the current fiscal ending September 30. Net profit fell to Rs 254 crore, as against Rs 278 crore in the previous comparable period.

The institution said that net profit was hit due to three factors, which included a higher provisioning requirement of about Rs 30 crore consequent to the revision of provisioning guidelines by the RBI,.

Further, as against a net capital gain of Rs 75 crore in the second quarter a year ago, there was a loss of Rs 19 crore in the current quarter. ICICI also incurred an additional interest expense of about Rs 34 crore, as it redeemed a significant portion of its preference shares consequent to the increase in distribution tax rate.

However, ICICI said that if the impact of higher provisioning requirement and the additional interest expense would have been excluded, net profit for the first half would have been Rs 600 crore, a rise of 11 per cent.

However, profit for the first half stood at Rs 541 crore, a marginal increase over Rs 540 crore in the previous year. The institution added that its net NPA ratio declined to 7.6 per cent at March 31, 2000, to 7.3 per cent at September 30. However, gross NPAs at September 30 climbed up to Rs 6331 crore, a rise of 5 per cent over that in March 31.

During the second quarter, the fund-based income rose to Rs 2012 crore (Rs 1839 crore) and for the first half it was placed at Rs 4,013 crore (Rs 3,711 crore).

During the half-yearly period, its approvals aggregated Rs 31,719 crore, against Rs 24,130 crore for the previous year, thus showing a growth of 31.5 per cent. Disbursements aggregated Rs 16,745 crore against Rs 11,0404 crore, a growth of 51.7 per cent.

Grasim net up 11%

Grasim Industries Ltd has posted an 11 per cent rise in net profit for the second quarter of the current fiscal. Net profit rose to Rs 82.97 crore against Rs 74.85 crore in the same period of the previous year.

The company reported a turnover of Rs 1192 crore (Rs 1030 crore) for the quarter, a 16 per cent rise over the previous comparable period.

It added that higher production and turnover volumes were the key drivers with interest costs, which were reduced by 16 per cent to Rs 60 crore (Rs 72 crore), due to effective fund management and restructuring of high cost debts.

The company, which has identified cement and fibre as its core business areas, has entailed a capex programme of Rs 253 crore, with Rs 193 crore to be invested in the current year.

Most of these investments will be made in its cement section, with Rs 83 crore being invested for setting up a grinding unit at Bhatinda and Rs 32 crore for setting up four ready-mix concrete units in other parts of the country.    


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