Guj Ambuja to shop for funds
Move to keep PSUs in basic telecom race
Otis scrip shoots up on open offer
Pharma shares leap on freedom hope
Daikin to spend Rs 25 cr on new products
SEs brace for Morgan rating
Stock pileup chokes Bata production
Hind Motors stays in the red
Foreign Exchange, Bullion, Stock Indices

Mumbai, May 16: 
Gujarat Ambuja Cements Ltd (GACL) today said its board will meet on May 18 to consider a preferential issue that has stoked speculation about the money being used to raise the holding of the Sekhsarias and Neotias in ACC.

The company gave no details about the issue in a terse communication sent to stock exchanges, except the fact that the shares would be allotted to individuals other than promoters.

This surprised marketmen and analysts, who wondered how the country’s fourth largest cement maker would use money raised from the issue.

It had recently mopped up over $ 100 million through foreign currency convertible bonds.

There was no word from company officials, but sources in the industry say the preferential offer is likely to be made to foreign institutions or equity funds. The buzz is that Warburg Pincus, a leading private equity fund which recently picked up 5 per cent in the company, will be offered the fresh issue.

Market watchers feel a 5 per cent stake is likely to be divested at a minimum price of Rs 220 per share, a 19 per cent premium on GACL scrip’s closing price of Rs 189 on the Bombay Stock Exchange today. The share opened at Rs 195 and scaled an intra-day high of Rs 196.50 before settling lower.

There are conflicting opinions on where the money raised from the preferential issue would be used. Some point out that it will help the company retire debt, while many in the market and industry are of the view that the promoters would could pump in the funds to pick up more shares in cement major ACC — possibly through an open offer.

“It is very unlikely that the promoters of Gujarat Ambuja will be comfortable with their present holding in ACC. Therefore, an open offer cannot be ruled out,” an analyst said.

GACL had stunned corporate circles in late 1999 when it had bought the Tatas’ stake in ACC, piece meal, at a price of Rs 370 per share. It had initially purchased around 7.2 per cent for Rs 455 crore in a deal that gave the Tatas an option to sell their remaining 7 per cent later.

The buyout was completed last year when the Tatas sold their remaining 3 per cent stake, again at a price of Rs 370 per share, taking Gujarat Ambuja’s holding to a little over 14 per cent.

The deal was initially mired in controversy with calls for an open offer from GACL. However, the Securities and Exchange Board of India (Sebi) ruled that a stake transfer does not amount to a change in management control or even sharing of management unless the acquiring party is in a position to change the majority of directors on the board of a company.

With several open offers being made in the recent times, there is growing speculation that GACL may do the same, offering shareholders of ACC a price of over Rs 150 per share.


New Delhi, May 16: 
The government is likely to amend the memorandum of articles of association to help telecom public sector units like Bharat Sanchar Nigam Ltd (BSNL) and Videsh Sanchar Nigam Ltd (VSNL) get licences for basic and cellular services. It is simultaneously working on introducing a single licence under the convergence regime.

A senior department of telecommunications (DoT) official said at present, these PSUs cannot get licences since the equity of the holding company, in this case the government, is more than 50 per cent.

Both BSNL’s move to offer mobile services and VSNL’s plans to provide fixed line services had been stalled. In fact, the letters of cancellations are pending with communications minister Ram Vilas Paswan, DoT sources said.

Minister of state for communications Tapan Sikdar said, “An amendment, which will allow the PSUs to get licences, will be made soon.”

“There is no proposal to amend the licence conditions which have already been announced. But the terms and conditions will automatically be altered by a composite licence,” he added. Speaking at a seminar organised by the Federation of Indian Chambers of Commerce and Industry (Ficci), Sikdar said the limited mobility issue has seriously questioned the existence of separate licences for different telecom services.

He said the government was working towards a composite licence which would help operators offer a variety of telecom-related value-added services. An eight member special task force comprising members from basic operators and the cellular industry is expected to submit a draft proposal for introduction of a composite licence. “A single licence is inevitable and it has to be given. We will take up the matter once we get the feedback on the draft Communications Bill posted on the Net.”

Central vigilance commissioner N. Vittal, who is also a member of the Group on Telecom and Information Technology (GoT-IT) observed on a lighter note that the opposition from both cellular and basic operators has proved that the report was objective. “But,” he added, “it has reiterated the need for a single licence if the government’s objective to provide telephones in all villages is to be met.”

Meanwhile, BSNL chairman and managing director D. P. S. Seth said it will provide village telephones using voice over internet protocol (VOIP). He said the company plans to expand its reach to rural areas using this technology.


Mumbai, May 16: 
Otis Elevator Company, the US-based parent of Otis Elevator Company (India) Ltd, today unveiled plans to raise its stake in the Indian entity. The New Jersey-based firm, along with two group firms, today announced an open offer to buy a 31.1 per cent stake in the Indian subsidiary for Rs 280 per share.

With this, it joins the ranks of multinationals tightening control over their Indian subsidiaries.

The open offer announcement saw the Otis scrip hitting the 8 per cent upper circuit on the bourses today. The scrip, which opened at Rs 242.50, closed at Rs 242.95, against its previous finish of Rs 225. If the open offer sails through, the parent company’s holding in Otis India will rise to 100 per cent, thus leading to the eventual de-listing of the company from the local bourses.

The open offer has been made by a consortium comprising Otis Mauritius Ltd, along with Otis Elevator Company, USA, Otis Elevator Company (Singapore) Pte and Otis Elevator Company (Hong Kong) Ltd.

The offer is for acquiring up to 39,01,478 fully paid up outstanding equity shares of Rs 10 each, representing 31.10 per cent of the paid-up equity share capital and being the balance outstanding equity share capital of Otis India, at a price of Rs 280 per share, payable in cash.

The specified date of the open offer has been fixed as May 18. The offer, which will be open from July 9 till August 7, is not conditional on any minimum level of acceptances.

Following the open offer announcement in Carrier Aircon, the market expected a similar such offer from Otis, since United Technologies is the principal parent of both Otis and Carrier Aircon. This fuelled huge buying in the scrip in the past couple of days.

Otis was initially set up as a joint venture between Mahindra & Mahindra and Otis Elevator Company. While the US company held a 45 per cent stake, M&M held around 24 per cent. However, in July 1999, the Mahindras offloaded their stake in the company as they wanted to exit from non-core businesses.


Mumbai, May 16: 
Pharmaceutical stocks zoomed on reports that the government would loosen its tight grip on the industry by curtailing the list of drugs where it fixes prices to 31 from 74.

There was no official word from the capital about when the Drug Price Control Order (DPCO) — the charter that contains the list of drugs to be priced by the government — would be revised, but the mere indication that it would be done some time next week sent shares soaring on Dalal Street today.

Operators and institutions rushed into pharmaceutical stocks, propelling some of them by the maximum permissible 8 per cent, while others were up 13 per cent over their previous close.

The Glaxo scrip surged 10 per cent or Rs 35.60 at Rs 383.45, Burroughs Wellcome finished 12.88 per cent higher at Rs 205.45 and E-Merck shot up by 11.84 per cent at Rs 471 and Ranbaxy finished at Rs 486.60.

According to market sources, block-buster drugs from the Glaxo stable, such as ranitidine (anti-ulcer) sold under the Zinetac brandname, will be off controls, in addition to Dr Reddy’s Zoran, Cipla’s Ultac and Torrent Pharma’s Ranitin.


New Delhi, May 16: 
Daikin Industries, the Japanese partner of the Shriram group for the high-end air-conditioner segment, is planning to invest Rs 25 crore here to assemble and market 28 new products.

Daikin is targeting a turnover of Rs 100 crore during the current financial year and has gone in for extensive promotional and advertising activities.

The company has set aside Rs 6 crore for marketing the products.

Rajnish Ohri, general manager marketing of Daikin Shriram Air-conditioning Pvt Ltd, said, “After launching in August last year, we have been able to capture a market share of 6-7 per cent in the high-end market. This year we plan to capture 18-20 per cent of the premium segment.”

The Daikin range now available in India includes wall-mounted ACs, ceiling-mounted cassette ACs, ceiling-mounted and suspended ACs and floor-standing ACs.

Ohri said, “Daikin will be bringing in real split air-conditioners by the end of this year. This will enable one single outdoor unit to cool different areas of the house according to choice.”

The Silvassa plant assembles Daikin air-conditioners in India.

“At present, all the parts are being sourced from different factories across the world. But we have plans to indigenise some parts. World class quality thermostat, sheet metal, motor coil are now available in India,” Ohri said.

“But,” he added, “economies of scale is preventing us from opening core manufacturing units immediately. Probably in another three years we will come up with plans to do it.”

Daikin, it may be mentioned, has tied up with a number of big houses for business.


Mumbai, May 16: 
India’s weightage in the provisional set of indices to be announced by Morgan Stanley Capital International (MSCI) this week-end is expected to take a beating as a result of the fund’s intention to shift to a free-float criteria.

However, stock exchanges have already factored in the possibility and most analysts feel investors will not react adversely. “The possibility has already been discounted by the markets. Therefore, the announcement should not upset operators, where most indices are likely to remain range bound at the current levels,” said Manish Kharwa, an analyst at Pranav Securities. There is a feeling that the country’s weightage could drop to over 4 per cent from 8 per cent.

The provisional set of indices to be announced by MSCI will reflect the changes that will occur once it shifts to the free-float criteria.

MSCI currently calculates its weightage based on all shares, but under the new methodology, it will be computed on the availability of shares for investors — the floating stock. The new system is expected to hit companies in which promoters have high holdings and a small floating stock.

Wipro, the Bangalore-based software services major with a relatively low floating stock due to Azim Premji’s 80 per cent stake, could take it on its chin. Reliance Petroleum, National Aluminium Company Ltd, Sterlite Opticals and Videsh Sanchar Nigam Ltd (VSNL) could make their way into the list, while Hindalco, Housing Development Finance Corporation Ltd (HDFC) and HDFC Bank could win a rating upgrade.

Though FIIs consider MSCI weightages when they invest in emerging markets, analysts said a rating rap would hammer a few stocks but leave others largely unaffected. “Though the weightage for India may come down, the markets are likely to digest this given that it has been expected since December,” said Jignesh Shah, a strategist at ASK Raymond James.

India’s weightage fell when MSCI added 14 shares and dropped 10 in last year’s reshuffle. Aptech, Digital Equipment, Global-Telesystems and Jaiprakash Industries had moved in, while Arvind Mills, Bombay Dyeing, Essar Steel, Indian Rayon, Nocil, SPIC, Reliance Petroleum and United Phosphorus were booted out. MSCI announced its decision to go in for a free float in December. It had defined free float as the number of shares outstanding, less shareholdings classified as strategic and shares in which trading by international investors was restricted.


Calcutta, May 16: 
Saddled with stock pileup due to lower offtake, Bata India Limited has declared a production holiday at its Batanagar factory from May 21 to 25.

Taking into account that the factory is closed on Saturdays and Sundays and the annual compulsory privilege leave (ACPL) is between May 28 and June 1, production at Batanagar will actually remain suspended for 16 days at a stretch from May 19.

Bata declares ACPL twice a year—during the summer and the Pujas—when the employees avail their earned leave of 12 days.

The management has issued a notice to the 5,000 employees of Batanagar factory that they will be granted special leave with pay during the production holiday from May 21 to 25. The notice says, “All workmen and employees of Batanagar factory are hereby notified that owing to expected lower stock offtake from the factory it has been decided to grant special leave with full basic wages and 100 per cent dearness allowance to all workmen employees of the Batanagar factory.”

Confirming the move, M.J.Z Mowla, senior vice-president of the company, said, “We have to close down the production since the demand is not picking up and the stock is piling up at our factory. The market is also sluggish.”

“Last year we had to close down the factory for five days since the stock was piling up at the factory,” he added.

According to Mowla, Bata has taken the decision to restrict credit sales to wholesale dealers in order to recover outstandings from them. Bata India channelises a considerable portion of its products through wholesalers, while the bulk amount is sold through its own retail outlets.

The Batanagar factory manufactures 60,000-65,000 pieces of Hawai and canvas shoes and 22,000-24,000 pieces of leather shoes on a day.

The employees alleged that though the company will give them salary during the closure period, they will be deprived of the production incentive. Nilratan Kanjilal, general secretary of the Bata Mazdoor Union said, “While other shoe makers have been able to overcome the sluggish trend Bata has failed to do so.”


Calcutta, May 16: 
Hindustan Motors Limited, the C.K. Birla flagship, has suffered a net loss of Rs 18.97 crore in the financial year ending March 31 this year, as against Rs 62.28 crore in the previous financial year.

The net sales of the company has declined 7.25 per cent to Rs 1,388.89 crore compared with Rs 1,497.53 crore in the previous year.

The loss of the company would have been higher if it had not been able to register other income to the tune of Rs 108.85 crore which is an 820 per cent rise against Rs 11.82 crore in the previous year.

Hindustan Motors garnered Rs 100.93 crore from the sale of its earthmoving equipment division to Caterpillar India which has been recorded as other income. The company sold both its factories at Tiruvallur and Pondicherry on February 9.

Interest outgo of Hindustan Motors has shown a marginal fall from Rs 108.21 crore in the previous fiscal Rs 100.13 crore in the last financial year. Depreciation charges have also gone up to Rs 45.25 crore compared with Rs 42.94 crore in the previous year.

The paid up share capital of the company has shot up to Rs 161.26 crore against Rs 107.83 crore as fully convertible debentures of Rs 53.42 crore have been converted into equity shares as per the terms of the letter of offer on May 8, 2000.

The company has made no provision for certain doubtful debts, claims and advances as it is hopeful of recovering these amounts.

The company further added that since it adopts Modvat inclusive method of accounting, excise duty is accounted as an expenditure net of Modvat/Cenvat benefits.

Accordingly, net sales figure of the company has been derived by deducting from gross sales value the amount of such excise duty.

Texmaco net up 49%

Leading wagon manufacturer Texmaco Limited’s turnover for the year ended March 31 was up 7 per cent at Rs 150.10 crore as against Rs 140.52 crore in the previous fiscal.

The company registered a net profit of Rs 4.07 crore up 49.19 per cent from previous year’s Rs 2.73 crore. The board has recommended 15 per cent dividend.

Extraordinary items accounted for Rs 1.20 crore as against Rs 1.30 crore in the previous year.

Texmaco’s paid up capital is Rs 5.16 crore. The company’s restructuring exercise at the Agarpara Works has pruned the overheads and improved operational efficiency and capacity utilisation.

Apart from wagon building, Texmaco is planning to manufacture modern freight cars for petroleum products and chemicals, powdery and granular products in bulk as also automobiles and steel coils.

MBT pays 20%

Mahindra-British Telecom Ltd has reported 53 per cent rise in net profit at Rs 96.66 crore for the financial year ended March 31 compared with Rs 63.03 crore in the previous fiscal.

The board has recommended a 20 per cent dividend, Mahindra-British Telecom said in a release here today.

Income was up 63 per cent in the year under review at Rs 391.32 crore as against Rs 240.32 crore in 1999-2000, it said.

Mahindra-British Telecom chairman Anand Mahindra said the US slowdown had not adversely affected the company because of the strategic decisions taken last year.



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