Russell one up on Bright Star
Demand for probe
BSNL flexes its muscles
Aptech floats two firms, splits equity in 60:40 ratio
ICICI, Arvind Mills dragged to court
Mahindras to start 5-day shift
Ramesh Gelli gets marching orders
Calcutta brokers unite to survive
Foreign Exchange, Bullion, Stock Indices

Mumbai, June 8: 
Russell Credit, the wholly-owned subsidiary of ITC Ltd, today won the first round of the battle against Damani-owned Bright Star Investments with the Securities and Exchange Board of India (Sebi) deciding that the shareholders of VST Industries who have already accepted ITC subsidiary’s offer at Rs 125 per share will not be allowed to switch over to Bright Star’s higher price of Rs 151 per share.

A senior Sebi official, on condition of anonymity, said the shareholders cannot switch because of the prevailing takeover rules set by the market regulator.

John Band, CEO of ASK Raymond James, which is lead managing Bright Star’s open offer, appeared unfazed by today’s development.

According to Band, Sebi’s decision may result in three to four per cent of small shareholders losing Rs 26 per share.

However, there are a vast majority of small shareholders who are yet to take a decision. The financial institutions are also expected to take a decision shortly, Band said.

It may be recalled that Bright Star made an initial offer for acquiring a 26 per cent equity stake in VST Industries in mid-February at Rs 112 per share. After waiting and watching for some time, Russell Credit came out with a counter-offer for a 20 per cent stake in VST and priced it at Rs 115 per share. Bright Star answered back by revising its offer price to Rs 118 per share which was promptly countered by the ITC subsidiary which raised its offer price to Rs 125 per share in two stages.

However, Bright Star had the last laugh in this price war when it jacked up its bid to eye-popping Rs 151 per share on June 3, which was the deadline set for price revision.

However, during the interim period some investors had accepted Russell Credit’s offer at Rs 125 per share. After Bright Star revised its offer price to Rs 151 per share, many among them wanted to switch over to the higher offer.

The Sebi official said the market regulator had already made it clear in its takeover rules that the switching of acceptances between different offers is not possible. “We cannot change rules midway when the contest is on,” the Sebi official said.


Mumbai, June 8: 
Bright Star today approached Sebi for freezing payment for VST shares since some “parties with manipulative motives were raising the scrip price artificially”.

“To catch wrongdoers .... we request the Securities and Exchange Board of India order the stock exchanges to freeze pay-out of the VST shares to brokers pool accounts for purchases made during the past three days (June 6 to 8) until the bonafides of the buyers can be established beyond doubt,” said John Band, chief executive of Ask-Raymond James.


New Delhi, June 8: 
Bharat Sanchar Nigam Limited (BSNL) today snapped its interconnection links with several exchanges of all six private fixed line telephone service providers even before the latter could reply to the state-owned entity’s revised revenue share proposal.

The standoff between BSNL and the basic telephone companies continued with a meeting today between the representatives of the two sides failing to bring about a thaw in the relations.

Another meeting is scheduled to be held on Monday. The failure of the two sides to reach an agreement could lead to a flurry of lawsuits against the government-run telecom company.

Meanwhile, the Telecom Regulatory Authority of India (Trai) has asked BSNL officials to meet them (chairman and its two members) on Wednesday to explain its stand on the issue.

The Association of Basic Telecom Operators (ABTO) had met Trai officials on Thursday to discuss the issue.

A revenue sharing arrangement had been agreed by both parties based on the Telecommunication Interconnection Regulation, 1999, which allows private operators to retain 60 per cent of the revenue from a call while the remaining 40 per cent should be handed over to BSNL.

However, BSNL has now asked these companies to revise the interconnection charges, a demand that has been opposed by private operators.

On Thursday evening, BSNL snapped the interconnection links from its exchanges which do not have the software to meter the local calls emanating from private operators’ exchanges.

Officials in BSNL said, “We have removed the interconnection in a few exchanges because there was no metering facility to record local calls. But we have not disturbed the interconnection where STD and ISD metering facilities have been provided. We have also decided not to give interconnection to new exchanges set up by private operators.”

Private telecom operators fear that BSNL has just started flexing its muscles and might snap the links from even those exchanges which have the metering facilities.

“How can we trust them not to snap the links even before the expiry of the June 22 deadline by when we are supposed to come up with an alternative revenue sharing proposal? It is unethical and we will be forced to approach the highest court of land,” said an irate senior executive of a private telecom company.

However, BSNL chief D.P.S. Seth today promised a delegation of private fixed line service providers led by ABTO that the interconnection links would be restored. He claimed that there was no move by any of the BSNL directors to discontinue interconnection.

However, till going to the press, the interconnections links had not been restored.

Under the interconnection agreement, BSNL carries forward the local, STD and ISD calls made by the subscribers of a private basic telecom company to any subscriber’s premises irrespective of the service provider.


Mumbai, June 8: 
The board of Aptech Ltd today approved a restructuring proposal that will create two separate listed companies for its software and training business.

“Hexaware Technologies Ltd (HTL) will be merged into Aptech’s software business while the training business will retain the Aptech brand,” chairman Atul Nishar said.

After the restructuring, Aptech shareholders will get 60 shares of Aptech training and 40 shares of Aptech Software in lieu of 100 shares held of the company when the two businesses are listed separately.

HTL shareholders having three shares (Rs 5 each) will get one share of Aptech Software (Rs 10 each), he said.

The entire restructuring process, subject to statutory approvals, was expected to take about four to six 6 months.

Post restructuring, the equity of Aptech Training will be Rs 18.15 crore while it will be Rs 22.09 crore for Aptech Hexaware Software.

The company (HTL) has posted a net profit of Rs 27 crore with revenues pegged at Rs 104 crore in fiscal ended December 2000

The Aptech restructuring proposal was greeted by the stock exchanges and the scrip spurted 12.03 per cent on the Bombay Stock Exchange today. The scrip which opened at Rs 104 rose to an intra-day high of Rs 117.70 before closing at Rs 115.45. The counter witnessed 10,030 trades resulting in a turnover of Rs 15.45 crore.


Mumbai, June 8: 
The debt restructuring plan of the Ahmedabad-based Arvind Mills has received a setback with the Indian unit of Commerzbank filing a criminal complaint against the ailing textile company and ICICI Ltd, the financial powerhouse, for breach of trust.

The complaint was filed in Ahmedabad on June 6, the Indian unit of the German bank said.

Commerzbank’s Singapore branch was part of a group of 14 banks that lent AML $ 75 million in November 1996. ICICI was also one of the lenders, and appointed to serve as trustee for the loan.

The statement said AML executed a series of sale and leaseback transactions with ICICI between 1998 and 1999 involving a total of Rs 362 crore ($ 77 million) of assets without the knowledge of the other creditors.

“These assets actually were part of the very assets which constituted the security of the syndicate and the transactions were done between AML and ICICI without the knowledge or consent of the syndicate in breach of obligations of AML as a borrower and that of ICICI as a trustee,” the statement said.

Jayesh Shah, CFO of Arvind Mills, denied the allegations made by Commerzbank and said “The bank has neither a valid criminal case nor a civil case.”

“It is very unfortunate that Commerzbank which is practically shutting its shop in India is resorting to such practices to get a higher and preferential payments compared to other co-lenders and in the process trying to damage the reputation of one of the leading corporation of India,” he said.

The bank also alleges that AML sold a part of its garment manufacturing divisions to ICICI without the knowledge of the other creditors.

The Commerzbank statement further alleged that AML diverted Rs 395 crore ($ 84.1 million) to various subsidiaries at a time when the firm was defaulting on payments to creditors.


Mumbai, June 8: 
Feeling the heat of reduced demand and stiff competition, the multi-utility vehicle-cum-tractor manufacturer Mahindra & Mahindra today said that its automotive plants in Mumbai, Nashik and Zaheerabad will operate on a five-day week basis till further notice.

Informing the local bourses, M&M attributed the move to “aligning its production with the market demand at all plants of the automotive sector.”

Similar steps were announced recently by Tata Engineering and Locomotive for their Jamshedpur plant. These steps are taken due to shrinking demand exacerbated by competition sniping at their heels.

Offlate, Toyota Kirloskar and Telco have shown marked improvement in their market share in the multi-utility segment.


Mumbai, June 8: 
The controversy surrounding the presence of Ramesh Gelli, founder promoter of Global Trust Bank (GTB) on the bank’s board resurfaced with the Reserve Bank of India (RBI) asking him to quit the board.

The issue had virtually died down following his resignation from the post of chairman and managing director in April this year and the consequent appointment of R S Hugar in his place.

Though Gelli held the post of additional director subsequent to his resignation as CMD of the bank, sources close to RBI said that the central bank was forced to step into the picture after a shareholder proposed Gelli’s name for directorship in the bank’s forthcoming annual general meeting on June 16 in Hyderabad.

RBI had reportedly asked Gelli to distance himself from the working of the bank. Sources added that while Gelli will have no other option but to step down from the board, a clearer picture is likely to emerge next week.. Senior GTB officials were not available for comment on the matter and a spokesperson from the bank also refused to divulge further details in this regard. It may be recalled that Gelli had stepped down from the CMD’s post in April this year after being dragged into allegations concerning price rigging of the Global Trust Bank scrip.

The bank attributed this development to corporate governance. However, Gelli had proposed to resign from both the posts. GTB stated that he had earlier proposed to step down from the position of managing director in July 2000.


Calcutta, June 8: 
Worried about the apparent lackadaisical attitude of the Calcutta Stock Exchange (CSE) authorities, the brokers of the beleaguered bourse today formed a forum to press their demands.

One of the major demands of the members is the formation of a wholly-owned subsidiary of CSE which will allow the brokers to trade on both the National Stock Exchange and the Bombay Stock Exchange.

The move has been prompted by the sheer decline in trading volume on CSE after the payment crisis had rocked the exchange in early March.

The forum—Calcutta Stock Brokers’ Association—will also demand a white paper from the exchange authorities on the payment crisis and the measures adopted to resolve it.

A convener of the forum said the brokers are finding nobody to fall back on after the elected board had resigned.

“The way the exchange is functioning, it is simply nearing a natural death. The only way to ward off the crisis is to align with the BSE and NSE so that all the brokers can get terminals and trade directly without paying extra brokerage,” the member said.

Meanwhile, the CSE managing committee, headed by the former chairman of Sate Bank of India Dipankar Basu, is expected to submit its report to the Sebi-nominated board tomorrow.

Basu told reporters after the managing committee’s meeting today that memberships of the two premier exchanges “is one option that is being seriously considered.”

Basu said the membership would be sought to start trading in derivatives after carry-forward trading comes to an end on July 2.

According to Basu, various other options were being explored to save the century-old bourse.

“It is an evolving process and the final decision will take some time, though I know this is urgent. I cannot say anything more than this at this point as things will take some time to stabilise,” he said.

Earlier in the day, nearly 400 active brokers of the Calcutta Stock Exchange participated in the meeting when it was decided that the newly formed forum would first like to know what the managing committee and the Sebi-nominated board had been doing since the elected CSE board had resigned.

The forum would also take up with the exchange authorities various issues for which they have received no official explanation over the past couple of months.

The name of the body has been approved by the Registrar of Companies (ROC) and the executive committee members explained that the ROC registration was sought to avoid various legal formalities.

To begin with the association will have an 11-member executive committee. Ajit Day, a leading broker and former CSE president, will act as the convener.

“We would have to join either BSE or NSE but members’ opinion are divided on which exchange would offer them greater facilities,’’ Day said.

Briefing reporters after the meeting, Day said the members of CSE has a right to know what was going on in the exchange and the managing committee should officially inform the members their findings on the stock scam and other developments on a regular basis. “Issuing a press release after a meeting or addressing a press conference was not enough,” Day added.



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