Shot in arm for demat trade
IFB to divest stake in foreign subsidiaries
Bhel plans multiple joint ventures for hydel power

 
 
SHOT IN ARM FOR DEMAT TRADE 
 
 
FROM NITHYA SUBRAMANIAN
 
New Delhi, Oct 28: 
Dematerialised share transaction on Indian bourses is set to get a boost with the Securities and Exchange Board of India (Sebi) allowing a time gap of three months between connectivity with depositories and the commencement of compulsory trading.

To start paperless trading, companies have to establish connectivity with the two depositories—National Securities Depository Ltd and Central Securities Depository Ltd. So far, there was no time gap and this led to great confusion.

“Now there will be adequate time for companies to establish connectivity with the depositories before trading in the demat form. With the new circular issued by Sebi the compulsory dematerialised trading will begin only after three months,” sources in the Delhi Stock Exchange (DSE) said.

The companies which, however, fail to establish connectivity with both the depositories on the scheduled date would be traded only on the ‘trade for trade’ settlement window of the exchanges from the following settlement period.

From October 31 another 182 scrips will be traded in the dematerialised form. These are mostly in the B1 and B2 segment. Some of the companies are ADF Foods Ltd (formerly American Dry Fruits Ltd), DCM Financial Services Ltd, Hawkins Cookers Ltd, IL&FS Venture Corporation Ltd, Jain Studios, Jenson & Nicholson (India), Mathew Easow Research, ModiLuft and SBI Home Finance.

The market regulator has also given the stock exchanges the freedom to put up to 150 scrips (other than those already announced by the Sebi) on the demat list by December 31.

All these changes are part of Sebi’s effort to ensure a smooth transition to paperless trading on the bourses.

The capital market watchdog had started off by introducing trading in the demat form for certain liquid scrips in the A-group. Over a period of time, it is planning to bring trading of all the scrips in the demat mode.

Meanwhile, NSDL is set to launch its software facility to enable a depository participant to make enquiries from the main system. The depository participant can use its own network for this purpose.

NSDL has also enhanced the security of messages transmitted between the depository and its business partners.    


 
 
IFB TO DIVEST STAKE IN FOREIGN SUBSIDIARIES 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Oct 28: 
The cash-strapped IFB Industries has decided to disinvest its holdings in some of its foreign subsidiaries.

The foreign subsidiaries include Hanway Ltd and New Star Ltd of UK, Crestwood Enterprises Ltd, Mauritius, Gate Pacific Pte Ltd, Singapore and Sebastopol Corporation NV, Netherland Antilles.

“Disinvestment in these subsidiaries requires approval from the Reserve Bank of India. The matter is currently under consideration,” sources said.

Sources said that the company has taken a decision to come out of all non-core businesses following discussions with financial institutions and banks in the course of formulating a proposal of debt restructuring.

The company, which was running a tea garden under a leave and licence agreement with Shikarpur and Bhandapur Tea Estate (SBTEL) due to expire on April 2000, has allowed the agreement to lapse.

Sources said, “A decision not to renew the leave and license agreement was duly communicated to SBTEL and pursuant to an arrangement with United Bank of India, the company has come out of the business and the liabilities to the bank were eventually taken over by a third party through an associate company.”

The company has come out of the management of IFB Finance, which has been taken over by the Rajarathinam group. The Rajarathinam group has also taken over Benaras Bank, Dave Sugar, Dave Paints (formerly known as Garware Paints), Sanmarg Finance and various other companies.

The Rajarathinam group has already acquired about 14 per cent of the equity of IFB Finance Ltd. “They have evinced interest in acquiring further equity in the company. The process of acquiring more stake in the company is currently on,” sources further added.

As part of the process of change of management, all the directors nominated by IFB group including Bijon Nag, K. Srinivasan and the managing director S.K. Biswas have resigned. Currently, the Rajarathinam group’s nominees on the board are M.V. Subramaniam, N. Ponnuswamy, S.K. Mani and T. Palavivelu. The day-to-day executive functions of the company are being performed by S. Rammurthy, a representative of the Rajarathinam group.

Early last year, IFB Industries had approached bankers and financial institutions with a proposal for restructuring its debt portfolio.

Sources said that the proposal for debt restructuring undertaken by the FIs and banks have now advaned to the stage of final consideration at the apex level of the FIs and banks.

According to the draft proposal, the company has asked for substantial relief in terms of reduction of interest burden, period of repayment and synchronisation of repayment with the company’s earning capacity.    


 
 
BHEL PLANS MULTIPLE JOINT VENTURES FOR HYDEL POWER 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Oct 28: 
Bharat Heavy Electricals Ltd (Bhel) is planning multiple joint ventures for hydel power generation across the country.

According to a senior Bhel official, the company has already signed a memorandum of understanding with the Bhakra Beas Management Board. Discussions are on with several other organisations for similar MoUs which will culminate in joint ventures.

The public sector engineering behemoth is keen on the hydro-electric project not only because it has “immense potential” but also due to a recession in the thermal power industry.

The official says Bhel produces very good equipment for hydel power at a much cheaper price compared with the imported ones.

“For hydro-electric generation, our products give a plant load factor of 98.4 per cent which is no way lower than any international yardstick,” the official said.

The company already has bagged an order from 1020 MW Tala Hydro Electric Power in Bhutan.

Bhel has also carried out major contracts in New Zealand, Malaysia, Nepal and Thailand. The official said efforts were on to get similar contracts from other Asian countries where hydel power had a great potential for growth.

“Our research and development wing is capable of innovating equipment competing with major multinational players,” the official said.

The PLF of the company’s thermal generation sets is around 68.3 per cent.

Exports, the official said, hold the key to the company’s future growth especially when the power industry in the country is facing a recession.

The government had earmarked 40245 MW of fresh capacity for the Ninth Plan period, but it could not even complete 30 per cent of this target till date.

“This is the reason why we have given the main thrust on exports of equipment and services so as to keep our growth record intact,” the official said.

The company’s export earnings stood at Rs 703 crore last year on an overall sales of Rs 6659 crore.

The major markets for the company’s products and services spread across Asia. The company also has plans to tap the European market, the official said.

The official indicated that the company is trying to touch a level of Rs 1000 crore in its export turnover over the next couple of years.    

 

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