Govt ready with blueprint for competition panel
Silverline snaps up US firm for $ 99 m
Battered rupee closes at new low of 46.76
Takeover-spooked Apollo Tyres bid to stall share sale
Saztec in Datamatics control
Suitors may link up to buy IISCO
Fresh look at Sidbi to fix share price
Bihar dumps HEC on Jharkhand lap
Eveready winds up miniature battery firm
Foreign Exchange, Bullion, Stock Indices

 
 
GOVT READY WITH BLUEPRINT FOR COMPETITION PANEL 
 
 
FROM NITHYA SUBRAMANIAN
 
New Delhi, Oct 27: 
The government has drawn up the contours of the proposed Competition Commission of India (CCI) in a draft that seeks to present it as super regulatory authority, especially in the area of mergers and acquisitions (M&A).

Sources in the department of company affairs (DCA) said the regulations will be part of the draft Bill on the new competition policy, now being formulated by the law ministry. The commission, they say, will enjoy more powers than other regulatory bodies, particularly in competition-related matters.

“If there are any disputes on the nature and degree of competition in the insurance or telecom industries, other regulators will have to inform CCI about the cases,” the sources said. Officials and members of the S.V. S. Raghvan committee, which penned the draft recommendations for a competition policy earlier, are fine-tuning guidelines to set up the commission.

Another Bill, to repeal the MRTP Act 1969 and pave the way for setting up the CCI, is also being framed. Unfair trade practice cases now under the purview of MRTP — which itself will be wound up as part of the Bill — will be transferred to consumer courts. Monopolistic and restrictive trading will be dealt with by the Competition Commission.

The commission, likely to have 10 benches, will have a member from the judiciary, while the others will be drawn from management, finance, accountancy, international trade and public administration. A bench, with two members, will deal with mergers and acquisitions cases exclusively.

“M&A activities have increased globally. This will catch on in India. Hence, there is need for a dedicated bench,” sources said.

The urgency to have a competition commission in place soon has become greater after calls from various multinational companies, which have said the existing MRTP Act is not good enough.

“MNCs are asking the government to speed up the process framing a Competition Law and setting up a regulatory authority. They feel that the existing MRTP Act does not suit their business needs,” sources said.

However, the government intends to enforce the Competition Act a year after it is enacted. “Companies should be given time to acclimatise themselves to the new set of norms,” officials said.

Similar laws, such as the British Competition Law, was passed in November 1999, but will come into force in May 2001. The European Union, too, has implemented its competition laws after a time-lag.    


 
 
SILVERLINE SNAPS UP US FIRM FOR $ 99 M 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 27: 
Silverline Technologies, a global software services and infotech solutions provider, today announced it would acquire SeraNova. Inc, a Raj Koneru-owned company that provides internet professional services globally.

The exchange ratio of SeraNova shares to Silverline’s ADRs has been set at 0.35. The $ 99-million all-stock deal will help Silverline deliver true end-to-end enterprise and e-business solutions, utilising an offshore-based global delivery model. Salomon Smith Barney advised Silverline on the deal.

Silverline, listed on local bourses, is traded on the New York Stock Exchange (NYSE). SeraNova is a Nasdaq-listed firm.

Koneru is the promoter of Indiainfo.com, an internet portal reported to be facing difficult times. The market had been awash with speculation in recent weeks about the SeraNova buyout, largely because it is seen as something that could help Koneru and IndiaInfo.com tide over troubles. On the Bombay Stock Exchange, the Silverline stock closed at Rs 320.80, up from its previous finish of Rs 310.60.

“We view the Silverline merger as a natural evolution of our stated strategy of orienting our business toward an offshore execution model,” Koneru, SeraNova CEO and president, said.

Lauding the deal, Shankar Iyer, president and CEO of Silverline technologies, said: “The combination creates one of the largest global services companies with an offshore delivery model to provide software, IT services and eBusiness solutions.”    


 
 
BATTERED RUPEE CLOSES AT NEW LOW OF 46.76 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 27: 
Fears of surging oil prices and limited dollar supplies again spelt doom for the rupee as the Indian currency ended at its lowest ever close of 46.74/76 to a dollar, after hitting a record intra-day low of 46.7850/79.

Despite the rupee closing at a record low, a section of forex analysts predicted a recovery from these levels on next Monday, as supplies are expected to improve after the Diwali holidays.

“We may see the rupee testing its intra-day lows achieved today on Monday. But if supplies were to improve, the currency might recover to 46.60 to a dollar,” an analyst with a foreign bank said.

However, others fear that such a recovery would be short-lived as apprehensions among corporates about international crude oil prices will continue to spur them towards dollar purchases.

In the event of crude oil prices hardening further and no fresh supplies coming in, some dealers expect the rupee to hit the 46.80 range in the immediate term.

Forex officials add that the falling euro which recently hit a record low against the US greenback would also be a damper on the rupee’s attempts at recovery.

“Though there may be some recovery, overall the scene looks quite bad for the rupee,” averred N Subramanian of e-Mecklai.

The rupee opened slightly weaker at the interbank forex market today, but with a wide quote of 46.68/72 to a dollar as banks took long positions on the dollar right at the start, fearing heavy dollar demand from corporates later in the day.

The currency soon began its gentle slide, falling below the 46.70 mark and towards noon, it was seen trading at 46.75/76 per dollar as both banks and corporates were buying dollars, fearing further weakness. The depleted dollar supplies due to Diwali which led to thin trading volumes, aggravated the situation.

The dollar buying, which was marked by the absence of any significant supplies, resulted in the rupee touching the intra-day low of 46.7850/79.

However, resistance at this level soon emerged as banks unwound long overbought dollar positions and helped the rupee to partly bounce back to Rs 46.74/76 at the end of trading hours.

Meanwhile, profit booking in old-economy shares in the absence of fresh institutional buying, resulted in the 30-share BSE sensex showing a loss of 28 points.    


 
 
TAKEOVER-SPOOKED APOLLO TYRES BID TO STALL SHARE SALE 
 
 
FROM SATISH JOHN
 
Mumbai, Oct 27: 
Fearing what it calls a backdoor takeover, the Onkar Singh Kanwar-owned Apollo Tyres has filed an appeal in the Supreme Court to set aside a special court judgement that allows a custodian to sell a block of tainted shares placed with it as part of a probe into the 1992 securities scam.

In what is emerging as the second battle for control, the threat comes in the form of an unknown raider. Kanwar had wrested the company after a four-year boardroom battle from his father and promoter, Raunaq Singh, in the mid-nineties.

This time around, the challenge is different. The shares that Harshad Mehta accumulated between 1992 and 1993 are now with a court-appointed custodian. The promoters are worried that an outsider who buys these shares will virtually emerge the biggest shareholder, and, therefore, win control. The management’s anxieties are heightened by the fact that Kanwar holds less than 26 per cent in his company.

Corporate observers say the outcome of the appeal, when it comes up for hearing on November 6, could prove to be a turning point in Kanwar’s efforts to retain control.

The management argues that no bidder or buyer willing to pick up 25 to 30 per cent — the company claims the shares with the custodian add up to that figure — will do so unless he wants control.

However, the claim that 3.63 crore shares are lying with it is disputed by the custodian. Sources in the custodian’s office say it is holding no more than 17 per cent of Apollo Tyres’ Rs 38.8-crore equity.

“The possibility of an overlap in the shares claimed by the notified parties cannot be ruled out,” sources said. However, there is no denying the fact that the control can tilt in favour of the party which acquires the shares from the custodian.

Apollo Tyres argues in its appeal that the ‘attached shares have been acquired illegally’. It says the shares claimed by the notified parties not only include the those registered in their names, but also a large number of Benami ones, apart from those which have been acquired illegal, or are still unregistered. The company says the entire lot should not be sold in a lot because doing so would depress the price of the share in the market. The special court order which says the shares should be sold as a single block opens up opportunities for a takeover.    


 
 
SAZTEC IN DATAMATICS CONTROL 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Oct 27: 
The Kanodia-owned Datamatics Technologies Ltd (DTL) has acquired a 53 per cent stake in Saztec International Inc, a Nasdaq listed high-end knowledge management company.

In 1996, the Indian infotech company had acquired over 5 per cent of Saztec’s equity. With two of its executives on Saztec’s board and control of about 58 per cent of its equity, the Nasdaq listed company would now become a subsidiary of DTL.

Speaking to The Telegraph, Lalit Kanodia, chairman, Datamatics, said that the acquisition would directly see DTL’s top-line surging by $ 10 million if the company were to go in for a consolidation of its accounts.

He added that it would establish a gateway for DTL in the US market and the idea was to use India as a production base. Kanodia however, did not reveal the consideration paid for acquisition of the 53 per cent, except pointing out that it was an all-cash deal.

DTL is now contemplating an initial public offer (IPO) by January-April next year. The book-building size of the forthcoming issue is expected to be between Rs 70-100 crore.

Subsequent to the domestic listing, DTL is contemplating a US listing either on the tech-heavy Nasdaq or the NYSE. Here, Kanodia added that proceeds raised from the offering would also be used for acquiring companies in the area of knowledge management. While the company had earlier planned to come out with the IPO in April this year, the issue had to be deferred following poor market conditions.

DTL is engaged in end-to-end knowledge management solutions. The company also provides solutions in data warehousing, imaging technologies, workflow and document management, data mining. It also builds knowledge portals that are an amalgamation of software applications, which consolidate, manage, analyse and distribute information across an enterprise using the internet.

On the other hand, Saztec which is into knowledge management, employs 150 people and its clients include PricewaterhouseCoopers, Unisys, Caterpillar and BlueCross.    


 
 
SUITORS MAY LINK UP TO BUY IISCO 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Oct.27: 
Tyazhpromexport (TPE) of Russia is likely to team up with Broken Hill Proprietory of Australia to take over the ailing Indian Iron and Steel company Limited (IISCO).

Steel Authority of India (SAIL) has shortlisted TPE, BHP and Mitsui of Japan for divesting the stake it holds in its fully owned subsidiary.

The companies are expected to submit their bids within the next two months and, if the plans drawn up at this stage play out well, IISCO should change hands by June next year.

“TPE is likely to team up with BHP to take over IISCO. The Australian mining giant is interested in operating the mines. Moreover, the link-up will provide TPE funds from BHP, which will help it buy IISCO. TPE has a strong technological presence in the Russian public sector steel industry, but IISCO is the first company in which they want management control. However, at the moment, both companies are bidding separately for SAIL subsidiary,” sources said.

TPE has been keen on IISCO since the late eighties, when a consortium of Japanese steel firms keen to snap up the SAIL subsidiary was forced out. TPE, which had prepared a feasibility report for IISCO’s modernisation in the seventies, showed interest in a joint venture proposal over the past few years, but the plans were stalled because Russia did not allow the rupee-rouble debt to be used for sealing the deal.

Initially, SAIL had decided to revive IISCO with a partner in a joint venture, where the steel major would hold a majority stake. However, the present management wants a complete sale.

IISCO has an integrated steel plant at Burnpur, foundries and pipe units at Kulti, collieries at Chasnala, Jitpur and Ramnagore, and iron ore mines at Gua and Chiria. The collieries’ reserves are estimated at 100 million tonnes while the Gua mine holds 182 million tonnes of iron ore. The Burnpur and Kulti plants are outdated, needing fresh investments to continue operations.

Groaning under years of continuous losses — Rs 189 crore in 1999-2000, Rs 363 crore in 1998-99, Rs 397 crore in 1997-98 and Rs 213 crore in 1996-97 — IISCO’s fate has been debated at the Board for Industrial and Financial Reconstruction (BIFR) since 1994. The silver lining is that the government’s loan write-off worth Rs 1,947 crore on April 1, 1999 helped IISCO start the last financial year on a clean slate.

One of the major areas of concern for IISCO is surplus staff, even though the number of employees has fallen from 42,000 in the seventies to 24,000 at present. The Burnpur Works has 14,500 employees, Kulti Works 3,500, iron ore mines have 900 and collieries employ 5,000. Of this, around 10,000 employees of IISCO (more than half of them from Burnpur) will retire in the normal course over the next 10 years.    


 
 
FRESH LOOK AT SIDBI TO FIX SHARE PRICE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Oct 27: 
The finance ministry has asked merchant banker SBI Caps to re-evaluate the Small Industries and Development Bank of India (Sidbi), taking into consideration its financial performance in the last few years, before arriving at a new share price.

Sources in the banking division of the finance ministry said, “After the differences that emerged in the meeting in August regarding the share price of Sidbi, the government has asked SBI Caps to take a fresh look.”

The merchant banker is expected to submit a new report shortly.

While Sidbi’s authorised share capital was doubled to Rs 1000 crore in March 2000, net profit was marginally up to Rs 459.4 crore, compared with the previous year’s Rs 450.4 crore. Standard assets as a percentage of total assets fell from 96.5 per cent in 1999-2000 to 96.2 per cent in 1998-99. Income also grew marginally from Rs 1528.5 crore in 1998-99 to Rs 1597.9 crore in 1999-2000.

Officials added that the gap between sanctions and disbursements has widened. While in 1998-99 sanctions stood at Rs 8,879.8 crore and disbursements were at Rs 6285.2 crore, in 1999-2000, sanctions grew to Rs 10,264.7 crore, while disbursements were just Rs 6963.5 crore.

Bankers are of the opinion that the value of the share should be much lower than the Industrial Development Bank of India’s (IDBI) demand of about Rs 50 per share. In fact, the public sector banks have valued Sidbi’s share at almost half of what IDBI has stated.

IDBI intends to divest 51 per cent of its stake in Sidbi to around 25 institutions, including public sector banks and insurance companies by the end of the year. The government had earlier passed a Bill permitting the move.

The banking division is keen that divestment of IDBI’s stake in Sidbi should be completed as soon as possible.

Sources in the finance ministry said the government had tried to act as a mediator to help in speedy restructuring.

“We tried to help them by holding a meeting here in the banking division. But both IDBI and the other banks could not arrive at a mutually acceptable price,” they added.    


 
 
BIHAR DUMPS HEC ON JHARKHAND LAP 
 
 
FROM OUR CORRESPONDENT
 
Ranchi, Oct 27: 
Bihar, three weeks away from a split that will give birth to a Jharkhand state, has refused to give the terminally sick Heavy Engineering Corporation (HEC) a lifeline by denying power supplies that were switched off after the public sector company failed to clear unpaid bills worth Rs 146 crore.

Over the last two weeks, the HEC management has appealed to the Bihar government to save the corporation from collapse by restoring its power supply, but without avail.

The Bihar State Electricity Board (BSEB) pulled the plug on the company on October 13. Having given up hopes of any reprieve, the HEC management is now waiting for succour from the new government that will preside over Jharkhand.

The BSEB had warned HEC that power supplies would remain suspended until the company clears its past arrears. However, it agreed to provide at least 5 MW every day to ensure the smooth functioning of essential supplies, water, and to supply power to its residential colonies.

However, HEC sources said the corporation did not owe more than Rs 25 crore to the BSEB. The HEC entered into an agreement with the BSEB way back in 1961 to draw at least 38 MW of power daily for its plants and residential complex.

The sources added that even in its heyday, the HEC could not utilise more than 33 MW of power everyday and by 1969 as “work orders continued to diminish”, the HEC reduced its power demand to around 24 MW per day. The current demand was 18 MW, sources said. The sources said, for the daily shortfall in power consumption since its inception in 1961, the BSEB had been imposing a penalty of nearly Rs 70 to 75 crore a month. Together with an annual penal interest of 24 per cent, the HEC as per BSEB records, now owes more than Rs 146 crore as arrears power bills.

However, HEC sources said out of Rs 45 crore that it owed to the BSEB, Rs 20 crore has already been paid.

The HEC was running some of its machines with the help of diesel generators temporarily. However, this had to be discontinued as the corporation has run out of cash to procure its daily requirement of diesel.    


 
 
EVEREADY WINDS UP MINIATURE BATTERY FIRM 
 
 
BY AMIT CHAKRABORTY
 
Calcutta, Oct 27: 
David has undone Goliath again. In a rare instance of its kind, Eveready Industries Ltd has been compelled to close down its miniature battery joint venture, due to the mushrooming grey market.

The B. M. Khaitan-group company which floated a joint venture, Eveready Energizer Miniatures Ltd, (EEML), along with Eveready Battery Company (EBC) Singapore, to sell imported miniature batteries in the Indian market, was forced to wind up the joint venture in three years. Under a direct arrangement with EBC, the joint venture had commenced imports of miniature batteries used in wrist watches, toys and other items.The company, formed in January 1997 with an equity capital of Rs 50 lakh, sold about two lakh batteries in the first year of its operations, grossing Rs 17 lakh. Sales jumped to Rs 70 lakh in the second year, but declined sharply to Rs 15 lakh in 1999-2000.

The board of directors of the company in its report in 1999-2000 noted that the “influx of low-priced batteries from China and Singapore and the easy availability of the product’’ in the grey market was responsible for the fall in sales.

Realising that there were few alternatives before it, the company, at an extra-ordinary general meeting held on October 18, unanimously passed a special resolution under Section 484 (I) of the Companies Act to voluntarily wind up the company.

A. Chakravarti, director of EEML, told The Telegraph that the winding up of the company will not have any bearing on the overall functioning of the battery business of Eveready Industries. However, it is a reflection of the fact that the mushrooming of the grey market can force a company in the organised sector to shut down.

According to market sources, wrist watch batteries, the main item dealt by EEML, are available half the price in the grey market. Chakravarti said the wholesale price for the Eveready miniature batteries was about Rs 10 a piece.    


 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	46.76	HK $1	5.90
UK £1	67.06	SW Fr 1	25.35
Euro	38.91	Sing $1	26.25
Yen 100	43.10	Aus $1	23.95
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta		Bombay

Gold Std (10gm)	Closed	Gold Std (10 gm	4530
Gold 22 carat	Closed	Gold 22 carat	4190
Silver bar (Kg)	Closed	Silver (Kg)	7970
Silver portion	Closed	Silver portion	7975

Stock Indices

Sensex			3729.12		-28.04
BSE-100			1922.73		+2.91
S&P CNX Nifty		1178.70		-7.60
Calcutta		103.27		-1.16
Skindia GDR		NA		-
   
 

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