Cadila lifts 27% in German Remedies
Satyam net in fourth quarter soars 164%
Reliance battered in 86-point sensex fall
Zee fails to clear air
Sebi asked to wrap up Rathi probe by April 23
Fresh missive to banks on exposures
Voltas global arm to merge with parent
Telecom who’s who in VSNL fray
Nasscom rubbishes World Bank alarm
Foreign Exchange, Bullion, Stock Indices

Mumbai, April 10: 
Cadila Healthcare beat two multinationals to win the bidding for a big stake in German Remedies (GRL), a drugmaker with links to major German pharmaceutical firms.

The Ahmedabad-based firm will acquire 27.72 per cent at a price of Rs 650 per share from Asta Medica AG (Asta) and Heller Vermogensverwaltungs GmbH (Heller) in a Rs 148.6-crore deal. The price represents a 22.4 per cent premium to GRL’s closing price of Rs 531.20 on the Bombay Stock Exchange (BSE) on Monday. It has also gained perpetual rights to five Asta Medica brands for Rs 52.6 crore under the agreement reached today.

Cadila, acquiring the stake through wholly-owned subsidiary Recon Healthcare, will make an open offer for a further 20 per cent stake at the same price, as required by Sebi’s takeover code. Recon will finance the acquisition through a Rs 55.8-crore equity injection by Cadila and Rs 200 crore raised in debt.

Cadila’s surprise acquisition came in the face of strong bids from US majors Pharmacia Corp and Bristol-Myers Squibb, and domestic drug heavyweight Ranbaxy Laboratories.

The market gave the deal a frosty reception, beating down German Remedies’ shares 10 per cent to Rs 478.15 on the BSE over worries the two companies are not made for each other. The scrip opened at Rs 535, jumped to a day’s high of Rs 542 but later slipped to a day’s low of Rs 468 when reports about the deal filtered in. It had closed at Rs 531.20 on Monday.

Though the acquisition is expected to benefit Cadila, pharmaceutical analysts are not sure if it gives GRL any gain. They point to Cadila’s price-focused marketing strategy under which it offers hefty discounts to stockists and retailers to push its products. Medicines made by GRL, on the other hand, are prescription driven and marketed with doctors.

“Cadila’s marketing strategy has not evolved at all and it has been pushing its products through trade. GRL’s products require a different approach to selling. It needs to be seen whether Cadila makes success out of the acquisition,” said C Srihari, pharmaceutical analyst at Khandwala Securities.

Other experts say both companies complement each other, though an overlap may occur in pain management and blood-related products.

The five Asta brands are Deriphyllin, Paractol, Ildamen, Xipamid and Beta Xipamid. The licence for Deriphyllin, the largest of the five, shall extend to 63 countries. The remaining can be sold within the sub-continent. Cadila said it will hold talks to include other countries under the licence without paying more.

Five-year-old GRL has a portfolio of brands from three German companies — Asta Medica, Schering AG and Boehringer Ingelheim International AG. With licences to drugs made by five other firms, the company is a leader in gynaecological, respiratory and gastro-intestinal medicines. Its also has a presence in the oncology, cardio-vascular, dermatology segments.

Cadila’s makes drugs mainly for cardio-vascular, anti-infective, gastro-intestinal and biological disorders.

The acquisition is expected to consolidate the Zydus Cadila group’s dominance in the gastro-intestinal segment and give it a foothold in the market for respiratory and gynaecology products. The acquisition will also help it move up the ladder, to the fourth slot, in the domestic formulations business.


Mumbai, April 10: 
India Inc’s earnings season got off to a rousing start today with Satyam Computer Services bettering market expectation and recording a whopping 164 per cent rise in net profit for the fourth quarter ended March 31 this year.

Net profit of the Hyderabad-based infotech company soared to Rs 111.34 crore compared with Rs 42.09 crore in the same period of the previous year.

Satyam attributed the strong performance to its good customer base and the new businesses it generated during the quarter.

Contrary to the recent trend, Satyam did not issue any advance profit warning for the current financial year and even said many of the factors that contributed to its strong fourth quarter performance would support its growth in the next few quarters.

However, Satyam chairman B. Ramalinga Raju was guarded in his comment on the future and said, “We are cautiously optimistic about our growth prospects for the current financial year.”

Raju said the company took extra initiative to manage its key customers and this resulted in an increase in existing clients’ contribution to business to 83 per cent of total revenues (63.27 per cent during fourth quarter of 1999-2000 and 78 per cent during the third quarter of the last financial year).

The company would endeavour to constantly enhance long-term relationship with major clients, he added.

The top ten customers of Satyam accounted for 49 per cent of revenues as against 56 per cent in the previous quarter, indicating an increase in business from other customers and overall increase in the total number of clients.

The company won more than 110 new customers during the year with as many as 32 being roped in the fourth quarter.

Acknowledging the strength of its consumer base, Satyam said “The goal is to increase market share in its top 50 accounts.”

The partnerships with enterprise technology vendors like i2, Ariba, Siebel, Vignette and SAP have also helped to win new projects and increase market share at existing accounts, it added.

While revenues for the fourth quarter stood at Rs.384.24 crore, up 85.80 per cent over the revenue of Rs.206.79 crore in the corresponding quarter of the previous fiscal, the revenue for the financial year ended March 2001 stood at Rs.1241.67 crore, which represented an increase of 82.86 per cent over Rs 679.01 crore earned in the previous year. The net profit after tax (before extraordinary items) was up 134.43 per cent from Rs 134.86 crore in 1999-2000 to Rs.316.16 crore in the last financial year.

The results, which came after market hours, widely surpassed analysts predictions of a 100-110 per cent growth in net profit. “They are quite stunning,” remarked an analyst.

While the scrip may hit the 8 per cent upper circuit limit during tomorrow’s trading on the bourses, analysts felt that Raju’s cautious optimism on future growth would be closely monitored.

Satyam said a significant trend during the fourth quarter was the change in business mix. It witnessed an increase in traditional maintenance business with a marginal decrease in e-commerce projects.

While internet and e-commerce provided 23 per cent revenues (30.73 per cent during the third quarter), the traditional maintenance business stood at 23 per cent (18.47 per cent during Q3). The ERP business also grew marginally contributing 8 per cent (6.8 per cent during Q3) to the total revenues.


Mumbai, April 10: 
A selloff in Reliance Industries and Zee Telefilms fuelled an 85.69-point decline in the Bombay Stock Exchange (BSE) sensitive index, which closed at 3544.08 after plumbing a 52-week low of 3458.39 earlier in the day.

Foreign funds and operators sold their way out, winding up positions after reports that Ketan Parekh had confessed to receiving funds from Zee group companies and HFCL during interrogations by the Central Bureau of Investigation (CBI).

Reliance, the old-economy war-horse which had stabilised the index during the recent bear rampage, was battered. Investors were worried about its downgrade by J P Morgan, a leading foreign fund, from ‘buy’ to ‘under-performer’ at a time when the company is close to declaring its annual results for 2000-01.

Brokers unnerved by the Big Bull’s admission sold heavily in the K-10 counters — shares in which Parekh’s had a big exposure.

The 30-share index opened slightly lower at 3542.44, dropped to the day’s low of 3422.11 before closing at 3458.39 against Monday’s finish of 3544.08, netting a fall of 85.69 points or 2.42 per cent.

The BSE-100 Index dropped by 41.26 points to 1605.38 from previous close of 1646.64. The markets recovered at the fag end when Satyam’s spectacular performance was flashed across trading screens.

Despite Dow Jones industrial average and the Nasdaq composite index showed moderate gains last night, global news also remained discouraging with analysts’ downgrade of chip maker Intel and Texas Instruments reminding overseas investors that many companies continue to struggle with slump in demand and a weak economy.

On the National Stock Exchange, the S&P CNX Nifty index declined by over 25 points. It opened at 1129.10 and improved to a day’s high of 1129.75. Thereafter, it dropped to a low of 1093.05, before winding up at 1103.05, showing a sharp fall of 25.30 points.


Mumbai, April 10: 
Zee Telefilms today stepped out to clear the air over the alleged dubious deals between its associate firms and Ketan Parekh but its answers only deepened the mystery. The company denied having lent any money to brokers, but said it had acquired shares of media and entertainment firms as part of a long-term strategy to bolster growth.

In a faxed response, it said Zee Network lent funds for the acquisition of 28.5 per cent in Amitabh Bachchan Corporation, 15 per cent in B4U, a TV channel promoted by Bharat Shah, and four other firms in deals worth Rs 220 crore. “We will bring these into the public domain at the proper time.”

The stock markets punished the country’s largest private television network, its share sinking 16 per cent to Rs 119.65. Investors panicked over reports which alleged that Zee’s associated firms financed companies of Ketan Parekh. Himachal Futuristic Limited also saw it share plunge 16 per cent below the three-digit mark to Rs 99 on mounting investor concerns over the company’s nexus with the Big Bull.

The Zee spokesperson said the investment companies which picked up stakes in other media outfits were not part of Zee Telefilms, the flagship, but associate firms of Essel group, which oversees the entire electronic media ventures.

There is a buzz that in regulatory agencies that Zee borrowed funds from Global Trust Bank, but the company has failed to explain why it required these loans when its stake acquisitions in other entertainment and media firms were being carried out by the Essel group.

Market circles say the possibility that these funds may have been passed on to the Big Bull as loans against the collateral of shares of AB Corp and other companies must be investigated. Sebi has already said it will probe allegations that there have been links between corporates and brokers more minutely.

Zee refused to disclose the details of investments made by its associate companies, saying these had to kept a secret due to their strategic nature and the cut-throat competition.

The company has informed BSE and Sebi that it had bought stakes in B4U and AB Corp through its privately listed Essel group companies in early March. These shares were transferred to Zee in March-end.

The entertainment major said it was not obliged to keep stock exchanges posted about the deals. The acquisitions were made by privately listed firms which are part of the Essel group. “We were not involved when the shares of AB Corp and B4U were being acquired by group companies. We keep a arms length between these firms,” the Zee official said.


Mumbai, April 10: 
A division bench of Bombay High Court today directed the Securities and Exchange Board of India (Sebi) to complete investigations into former Bombay Stock Exchange (BSE) president Anand Rathi’s case by April 23.

“There should not be an anxiety to hang a person,” the division bench said in remarks which are seen as a dressing down for Sebi. The court adjourned the case to April 24, asked the regulator to convene a board meeting between April 16-23 and told it to be ready with its order at the next hearing.

Rathi’s counsel argued before the court that Navratan Capital and Securities Pvt Ltd, an NSE brokerage, should be kept out of the ban because Anand Rathi and Amit Rathi have resigned from its board. Sebi said their stake in the company has come down considerably after they stepped down but Rathi’s lawyer claimed the two still hold 7.68 per cent.

Sebi said the process of gathering fresh evidence was delayed because other investigative agencies like CBI and income tax authorities have either frozen/sealed the accounts, or seized documents that could hold the key to its probe.

The court rapped the capital market watchdog for its tardy pace of work, saying it should have passed an order, given a hearing to the broker and confirmed the order by now.

Rathi himself made a brief appearance, but left the court room before his case was heard. Deena Mehta, former BSE chief who occupied the top slot for a day, also showed up but walked out when discussions veered towards BSE broker-directors.


Mumbai, April 10: 
The Reserve Bank of India (RBI) has sent a fresh directive to all commercial banks asking them to submit details of their capital market exposure for the quarter ended March 31 this year. RBI officials, however, insisted that the directive had nothing to do with the current controversies engulfing the banking system wherein bank funds were used in the stock markets amid reports that some banks even exceeded the prudential limits set by the central bank.

“This has got nothing to do with all this. This is a routine practice which is done every quarter,’’ an RBI spokesperson said.

Bankers, however, say that the directive, which is the second in a span of a month, is crucial in view of the forthcoming monetary and credit policy due on April 19. The policy is expected to announce a revision in norms for banks’ exposure to the capital market.

It is believed that the data gathered from all banks will be reviewed by a joint committee of the RBI and the Securities and Exchange Board of India (Sebi). The committee will submit its recommendations to the RBI.

In view of the present crisis, it is expected that the apex bank will tighten guidelines on banks’ capital market exposure and risk management norms. In the first week of March, the RBI had directed select private sector, foreign and large state-run banks to submit their exposures to the capital markets.

Meanwhile, the RBI said that it had asked all nationalised banks to extend the one-time settlement plan for recovery of bad loans by another three months to September 30. Earlier, the RBI had extended the deadline under this plan to June 30 from March 31.

In a press statement issued today, the RBI said that it “has advised all public sector banks that they should process all the applications for recovery of dues relating to non-performing assets received up to June 30 and decide on them not later than September 30’’.

The decision was taken after a recent meeting of the chiefs of public sector banks with finance minister Yashwant Sinha.


Mumbai, April 10: 
In a move to strengthen its position in the field of electro-mechanical projects in India, Voltas Ltd’s board today approved the merger of Voltas International Ltd (VIL), its wholly owned subsidiary, with itself effective from April 1 this year.

Voltas International, with a turnover of Rs 140 crore and net worth of Rs 20 crore, has been operating as international arm of Voltas for the last two decades. It was a leading electro-mechanical turn-key project contractor, Voltas said in a release here.

The parent company would be able to offer VIL’s expertise in Indian infrastructure projects like mass transit systems, power plants, large water supply projects and airports apart from strengthening its position in engineering, procurements and construction for electro-mechanical projects in India.

Some of the projects executed by VIL were Bahrain International Airport, Central Emergency Hospital, Abu Dhabi, Abu Dhabi Trade Centre, UAE, The New Hong Kong International Airport at Chek Lap Kok among others.

Meanwhile, the company board also appointed A Soni, the executive director of the company as the deputy managing director with immediate effect.


New Delhi, April 10: 
Reliance Telecom, Tata Telecom, Bharti Televentures, SingTel, Sterlite and BPL have thrown their hats in the ring for a part of the government’s stake in public sector telecom behemoth, Videsh Sanchar Nigam Ltd (VSNL).

Today, which was the last date for submitting expressions of interest for acquiring the government’s 25 per cent stake in VSNL, saw every big telecom player in the fray.

Other companies eyeing a stake in the telecom major, which offers long-distance telephony, include Dishnet and Videocon.

“There is a long way before the strategic partner(s) can be picked from the companies which have submitted the expression of interest today. We are yet to finalise the price for the 25 per cent stake. However even by the current market value it would be more than Rs 2,500 to Rs 3,000 crore,” communications ministry sources said.

“The scrutiny of the bids will be undertaken over the next few months. We hope to complete the whole process by the year-end,” sources added.

SBI Caps-Credit Suisse First Boston are the advisors for the disinvestment process.

Despite the sluggish market conditions, private telecom companies are optimistic about generating the necessary funds to acquire the stake.

“A consortium comprising Bharti Televentures of the Bharti Group and Singtel, the Singapore-based telecom major has put in a bid today,” said Akhil Gupta, joint managing director of Bharti Enterprises. Singapore Telecom, which holds a 15 per cent stake in Bharti Televentures, may also bid separately.

A senior Bharti Group executive said: “We are aware the amount will be huge and have already drawn up plans to generate such resources. We also have a back-up plan.”

Sources in Tata Industries confirmed that company has made a bid today and claimed it may bring in group companies as partners and is unlikely to have a foreign partner in the proposed consortium.

The relatively small players, Dishnet and Videocon, are likely to conclude alliances with big companies and financial institutions, or settle for a smaller stake.

Early this year, the government had decided to disinvest a 25 per cent stake in VSNL to a strategic partner and 1.97 per cent to employees, which will bring down the government’s share in the public sector telecom company to 26 per cent.

The department of disinvestment (DoD) had proposed divestment of the government’s 53 per cent equity in phases. The divestment will enable the VSNL board to take independent decisions and introduce new services. Disinvestment minister Arun Shourie said after the divestment, the VSNL board will be given more autonomy to venture into new businesses.

The divestment in VSNL is expected to be completed quickly since its monopoly on long distance will end by 2002.


New Delhi, April 10: 
Despite a World Bank warning today that Indian software exports were likely to take a beating due to a global infotech slowdown, the industry remains bullish on growth prospects.

In its annual global development finance report released here today, the bank said: “A slowdown in India’s high-technology service exports appears imminent due to a global downturn in information technology.”

The bank’s lead economist on development prospects, William Shaw, added the downturn in the US economy could hit Indian software companies.

But Nasscom, the chamber representing software developers, boldly countered this by claiming India expects its annual software exports to go up from a current $ 4 billion to $ 50 billion by 2008.

Nevertheless, bourses across the country seemed to reflect the Bank’s belief as IT stocks continued to fall.

However, the World Bank added though Indian software exports were likely to dip along with other sectors, since the country was not particularly dependent on exports, its economy as a whole would not be severely affected. India’s ratio of exports to GDP is just about 12 per cent, the report pointed out.

But Nasscom feels by expanding into new markets like Australia, India can continue to experience a high software export growth. The chamber said it had set a software export target of $ 104 million in the current fiscal, to Australia.

Nasscom today opened an Australia chapter with an objective to increase business opportunities for Indian IT companies and to support member companies who have subsidiaries and branches in Australia.

During 1999-2000, Indian software exports to Australia were estimated at $ 68 million.

Nasscom president Dewang Mehta said: “With the kind of response and respect the Indian IT industry has in Australia, we are confident of a 60 per cent growth in software exports to Australia in 2001-02 and hope to reach a healthy figure of $ 170 million worth of exports.”

The Bank also feels India need not be unduly worried about its tech stock future, but for different reasons. Shaw, who presented the report here today, said “With modern IT tools helping corporates read the future better, the time between business downswings and upwsings “has shortened considerably and one can expect better days for the world economy soon.”



Foreign Exchange

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Euro	Rs. 41.70	Sing $1	Rs. 25.30*
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Calcutta				Bombay

Gold Std (10gm)	Rs. 4295	Gold Std (10 gm)Rs. 4200
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