Three reporting levels for acquirers
Sensex suffers 121-point jolt
Birla Corp trims price band of rights offer
Sinha allays fears on growth
IOC staff call strike
VSNL set for dotcom splash
For Muthiah, to be Ficci chief isn’t cricket
Foreign Exchange, Bullion, Stock Indices

 
 
THREE REPORTING LEVELS FOR ACQUIRERS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 13: 
The Justice P N Bhagwati committee on takeovers today decided to make it mandatory for an acquirer of shares in a company to disclose his holding at three separate stages. The acquirer will also have to inform the stock exchanges and the target company when these thresholds — fixed at 5 per cent of the outstanding equity, 10 per cent and 14 per cent — are breached.

The Bhagwati committee, which was set up by the market regulator Securities and Exchange Board of India, met here today to fine tune the takeover code after recent corporate raids mounted by a new breed of carpetbaggers set the dovecotes aflutter and brought to light certain glaring deficiencies in the guidelines.

The proposed rule change marks a significant departure from the 1997 takeover code which deemed that the acquirer had informed the target company once his equity stake crossed the 5 per cent mark.

The 1997 code had put the onus on the target company to inform the stock exchange.

Today’s recommendation harks back to the 1994 takeover code which had stipulated that the company and the exchange ought to be informed after an investor acquires more than 5 per cent of the equity.

The Bhagwati panel’s recommendation to introduce two additional slabs is part of an effort to keep the promoters of companies and their shareholders apprised of any move to corner shares in the company.

Corporate observers say the recommendation is an offshoot of the recent Bombay Dyeing-Arun Kumar Bajoria squabble. It may be recalled that while Bajoria claimed that Bombay Dyeing was informed immediately after his group’s stake touched 5 per cent, the Nusli Wadia-owned textile giant had denied that it was ever informed at that time.

Earlier, after the mandatory announcement when the 5 per cent threshold was crossed, a promoter of a company had no way of knowing the raiders’ moves till the 15 per cent mark was reached.

If the Sebi board accepts the recommendation, promoters will have some lead time to prepare their takeover defence.

If this was not enough to put corporate raiders on leash, the committee will tomorrow debate on the quantum of the open offer. At present, the offer is pegged at a minimum level of 20 percent. The debate will centre on a crucial aspect: whether the bar should be raised so that the offerer is forced to make an offer to ensure that his holding after the offer is not less than 51 per cent.

The committee will also take up for debate the proposal for a mandatory open offer for the entire equity, that is 100%. However, this is unlikely say Sebi sources.

The two-day crucial meeting to finetune the takeover code, which began today, will take up the role of financial institutions in takeover battles. The role of the FIs in the BSES Ltd case and also the controversial Gujarat Ambuja-ACC deal which bypassed minority shareholders and institutional shareholders will come up for discussion.

A raging debate earlier had thrown up the suggestion that the limit on creeping acquisition — a route that promoters with a low-ball stake in the companies they control can take to enhance their holdings through annual market purchases — should be raised above the current level of 5 per cent.

The meeting tomorrow will take up this contentious issue. It will also weigh a proposal for a lock-in period for the shares that the promoters acquire from the market.    


 
 
SENSEX SUFFERS 121-POINT JOLT 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 13: 
Following a global slump in technology stocks, share prices on the Bombay Stock Exchange (BSE) tumbled as skittish operators sparked a selloff that sent the sensex tumbling 121 points on the opening day of the new account.

Despite the decline, a few old-economy shares saw good buying interest and closed with impressive gains in a lacklustre session that was marked by the total absence of foreign institutional investors (FIIs) and domestic institutions. After shedding almost 81 points on Friday, the market lost further ground as selling pressure was seen almost across the board following the sharp fall in the US markets on Friday and a sharp decline on most Asian bourses earlier today.

The undertone in the markets was distinctly bearish. Rising oil prices, due to the tensions in West Asia, accentuated the selloff.

The 30-scrip today opened lower at 3842.63, moved in a narrow range of 3863.35 and 3797.50, before closing at 3820.08 compared with last Friday’s finish of 3941.13. This represented a loss of 121.05 points or 3.07 per cent over its previous close. The dramatic developments in the US Presidential elections has created uncertainty in global markets, almost forcing operators to ignore the increased net purchases by FIIs. The sharp fall by 171.36 in the tech-focused Nasdaq last weekend and its weak futures opening this afternoon set the tone for a slump when Dalal Street resumed work for the day.

Among the new-economy pivotals, Satyam was down 8.69 per cent at Rs 327.50, Zee Telefilms was down 9.11 per cent at Rs 265. Infosys was down 5.89 per cent at Rs 7370 while lost NIIT lost 6.27 per cent — which contributed heavily to the sensex loss.    


 
 
BIRLA CORP TRIMS PRICE BAND OF RIGHTS OFFER 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Nov 13: 
Birla Corporation Ltd (BCL), the flagship company of the Priyamvada Birla group, has revised the price band of its rights offer and fixed it at Rs 16-19 (inclusive of premium). Earlier, the band was set at Rs 20-24 (inclusive of premium).

The Birla Corp scrip closed on the Bombay Stock Exchange (BSE) today at Rs 13 after hitting an intra-day high of Rs 13.40 and a low of Rs 12.80. Analysts feel the scaling down of premium is a step towards aligning the rights offer to the market price.

The rights issue is being made to meet the capital expenditure on the upgradation of its cement plant at Chittorgarh and to part fund the cash losses of over Rs 48 crore suffered during the previous years.

BCL which was promoted in 1919 by G.D. Birla was later taken over by M.P. Birla. Over the years, the company also saw a transformation in its structure, from just being a jute mill to a multi-product company having six major divisions.

After the demise of M.P. Birla, Priyamvada Birla took over as the chairman in the year 1990.

The company, which has diversified interests in cement, jute goods, blended yarn, calcium carbide & industrial gases, vinoleum floor covering, wall papers and auto trims, is planning to restructure its various business divisions to have a sharper focus.

According to sources, BCL has appointed advisors to review its business operations in the light of its current financial position apart from suggesting a strategy for pushing its growth levels.

Cement contributes to over 80 per cent of the company’s total revenue and it has a total installed capacity of 39 lakh tonnes. In jute, the company’s capacity stands at over 40,000 tonnes.

While the auto trim division manufactures moulded door trims, the vinoleum division makes PVC vinyl floor covering.

The synthetics division manufactures spun yarns where the major products are viscose yarn, polyester yarn, polyester/viscose blended yarn and polyester/cotton blended yarn.    


 
 
SINHA ALLAYS FEARS ON GROWTH 
 
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