Modis up offer price, FIs sulk
Tug of war over Air-India divestment
Hind Lever in brand revamp
Last lap for badla today
Automobile sales gather speed in May
M&M stake in Gesco to go up
Foreign Exchange, Bullion, Stock Indices

 
 
MODIS UP OFFER PRICE, FIS SULK 
 
 
OUR BUREAUX
 
June 22: 
The promoters of Modi Rubber today raised the open offer price to Rs 90 per share from Rs 81.50, but the financial institutions, who hold 44 per cent in the company, appeared to be in no mood to relent.

Sources said that though the revised price offered by the promoters of MRL met with support from the institutions, they were adamant in the view that the size of the offer be increased from the present 35 per cent to cover their entire stake.

“The institutions are continuing to insist on a block deal. They feel that if all of the FIs take part in the offer and their entire stake is lifted, they will be left with 9 per cent or if the retail investors are considered, only 20 per cent of their stake will be lifted. Therefore, the institutions are not participating in the offer,” the sources added.

Friday was the last day for a price revision for the open offer which opened on June 4. The financial institutions had earlier rejected the Modis’ offer of buying only a 35 per cent stake. The Delhi-based Modi group, who now own 24 per cent in Modi Rubber, plan to acquire 87.64 lakh equity shares of MRL constituting 35 per cent.

“We have raised the offer price and are now waiting for the financial institutions to respond,” said V. Anand, senior manager with HSBC Securities and Capital Markets, the merchant banker to the Modis’ open offer which is due to close on July 3.

Anand admitted the price had been revised because the open offer had received a very poor response so far.

K. Balakrishnan, director and head, corporate finance, HSBC, said, “Today was the final day for revising the price. Let us see what the response is.”

The MRL scrip zoomed upon news of the revision in the open offer price. The scrip, which opened at Rs 76.70, shot to a day’s high of Rs 80.50 and it finally closed lower than the day’s high at Rs 75.50.

Earlier during the day, the stock markets were rife with reports that Industrial Development Bank of India (IDBI) chairman, S K Chakrabarti was in favour of a price of Rs 110 for the offer. Efforts made by The Telegraph to contact the IDBI chief in this regard were futile as he was said to be travelling.

While the FIs, which comprise Unit Trust of India, Life Insurance Corporation, General Insurance Corporation, Industrial Development Bank of India and Industrial Finance Corporation of India, hold 44 per cent, banks and mutual funds hold about 6.8 per cent in the company.

The FIs have been insisting on a higher price — but haven’t yet spelt out what they find acceptable — and want the Modis to pick up their entire 44 per cent stake

In fact, two weeks ago, the financial institutions had rejected the Modis’ offer and threatened to come out with a counter-offer.

On Wednesday, the FIs turned the heat on the Modis with a representation to the Securities and Exchange Board of India (Sebi), urging the market regulator to declare the Modis’ open offer as null and void, as the offer, originally slated to open on May 16, had been delayed to June 4.

However, the Modis have argued that the delay in the open offer was a result of certain clarifications that had been sought by the market regulator. To compensate for the delay, the original offer price of Rs 80 for every Rs 10 share was raised to Rs 81.50 when the offer opened on June 4.

With the institutions shying away from participating in the open offer and reports that New York-based investor Purnendu Chatterjee has built up a 14.99 per cent stake in the company through open market purchases, the Modi Rubber drama has taken an interesting turn.

It is speculated that Chatterjee is in talks with a global tyre firm and with domestic companies to sell his stake, with Continental AG, Ceat Ltd and JK Industries being mentioned as the likely candidates.

Chatterjee is also expected to meet the FIs and formulate a joint strategy to take on the Modis.

Should that happen, the Modi brothers — Bhupendra Kumar and Vinay Kumar — could be in danger of losing control of MRL.

The Modis have cried foul and accused Chatterjee of flouting Sebi’s take-over code by failing to report his purchases when he crossed the trigger levels of 5 per cent and 10 per cent.

Sebi has already asked Chatterjee to furnish details of his equity holding in Modi Rubber and explain why he ad breached the take-over code by failing to report his purchases.

   

 
 
TUG OF WAR OVER AIR-INDIA DIVESTMENT 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, June 22: 
An intense high-level lobbying war has broken out between companies interested in seeing Air-India put on the block soon, and politicians interested in delaying the sale.

Companies keen on an early sale of Air-India want the Hindujas to clear the latest hurdle placed in their path—a fresh clearance by the Cabinet on their suitability as a partner in the disinvestment process in the light of the allegations about past involvement in the Bofors scam.

There are moves to wrap up the process of selling the 40 per cent stake and control of India’s premier international airline as early as mid-July, but this would obviously have to contend with clearance to the Hinduja group.

Prime Minister Atal Bihari Vajpayee has already held several rounds of meeting on this issue with home minister L.K. Advani whose ministry will have to give the actual security clearance to Hinduja group’s bid and with finance minister Yashwant Sinha, whose budget figures would take a hit if the selloff is stalled.

If the Hindujas are disqualified, the bidding process for sale of Air-India will have to begin again as only one bidder would then remain in the field—the Tata-Singapore Airlines combine. These two bidders have reached this stage after two rounds of bidding which saw many other contenders either leaving the race or being dropped by the government as unsuitable.

Under the rules framed for divesting government-owned companies, there has to be a fresh round of bidding to “widen the scope of the disinvestment and to give the government the best price possible”. Another round of bidding could mean the lapse of another year before monetary bids for Air-India start coming in.

This is exactly what politicians interested in seeing the sale scuttled are hoping for. Civil aviation minister Sharad Yadav, a long time Socialist, is dead set against privatisation moves but has been half heartedly going along with the Vajpayee government’s moves to sell off the two airlines that his ministry controls.

Moves to sell off Indian Airlines has virtually ground to a halt as Videocon, one of two bidders for the domestic major, is unlikely to be allowed to bid for any state-run company given its indictment by Sebi in a stock market scam. The Hindujas are the other bidder for 26 per cent stake in the airline.

Luckily for Yadav, he does not need to oppose the selloff of Air-India. Politicians within the BJP fold as well as outside are doing that for him. Samajwadi MP Amar Singh today came out strongly against the sale stating that if Tatas are the only bidders left in the race, then a sale to them would “tantamount to a scam”.

The disinvestment ministry and PMO too are not very keen on a quick selloff of the airline for different reasons.

   

 
 
HIND LEVER IN BRAND REVAMP 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 22: 
Topline tops the Lever growth agenda. Buffeted by sluggish rural sales and stiff competition in key product segments, India’s pre-eminent fast moving consumer goods company has decided to narrow focus and shuffle brands to stay at the cutting edge of the fight.

Delivering his maiden address to shareholders at the annual general meeting here today, Hindustan Lever (HLL) chairman M S Banga said the urgency to keep its sales machine in top gear was greater than ever before in the past. “Ensuring growth in our topline is our topmost priority.”

Banga blamed the flagging sales growth on a contraction in rural demand and rivals snapping at its heels in almost all segments that the company is present in. To counter the new challenge, he said 30 power brands and 10 regional jewels (brands) had been picked as driving forces in future.

“We will shuffle some of our brands and, in certain cases, even dispose a few. Some will be revamped and stretched into services, like the Lakme beauty saloon franchises.

The 30 power brands on which it has resolved to focus its energies and resources accounted for 80 per cent of revenues. If the 10 regional jewels are included, the share stands at 97 per cent. Banga did not set a target for future growth, but said concerted efforts would be made to improve all key parameters, especially the key area of capital efficiency.

A 25-member core team has been set up under Dilip Sehgal, director (new ventures & marketing services), to oversee the company’s entry into new businesses such as water and confectionery, which is already being test-marketed in Chennai. It will test the waters for ready-made rotis (chapatis) that it plans to make this year at a new factory.

The HLL chairman presented an action plan at the AGM which seeks to whip up a food revolution to accelerate agricultural growth — the key to reinvigorate and sustain effective demand.

Referring to what he called the paradox of Indian agriculture, Banga said warehouses were overflowing with foodgrains even as 42 per cent of the rural population and 49 per cent of urbanites received has calorie intakes less than the accepted norm. He said agricultural pricing should be guided by HLL’s philosophy of “challenge cost” instead of the cost-plus model.

   

 
 
LAST LAP FOR BADLA TODAY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 22: 
Come Saturday, and its curtains for badla, the hugely popular trading mechanism that allowed the rollover of speculative positions from one settlement to the other.

Formally referred to as the carry-forward method of trading, it will run its final lap in the portals of the 126-year-old Bombay Stock Exchange (BSE) at a session this evening.

Loved by audacious brokers and loathed by play-safe investors, no method of playing the stock market has brought so much fortune to so few, and so much misery to so many. It was as ubiquitous on the city’s exchanges as its tiffin wallahs.

At the height of a boom, it was the darling of operators in a hurry to make money. Outstandings on the badla account were a mind-boggling Rs 6,000 crore at the height of a boom. That changed as soon as stocks plunged. It was cast as one of the main villains which pushed bourses into a tailspin.

The 70-year-old badla system has been modified and revised on several occasions as market aberrations emerged. Critics slammed it, while Sebi, the market regulator, tried cleaning it.

Starting Monday, badla will be conducted on a daily basis, but the fact that few brokers have the infrastructure to do it means there was hardly be any investors keen on it, BSE officials say.

Scores of punters and brokers who used badla will now have to look at individual options as its substitute. It had its supporters and opponents, but it was the critics who prevailed.

Its end took a long time to come. Banned for short periods earlier, Sebi bit the bullet and outlawed forever last month. It was make way for rolling settlement to be introduced from July 2.

Many on BSE still feel that the ban on badla was a knee-jerk reaction on part of the market regulator. However, many have realised that the adoption of international best practices such as options trading would be the best bet for all.

While brokers and punters have plenty to rue about, they can comfort themselves that it will be five-day week now as BSE badla sessions were held on the sixth day, usually a Saturday.

Many brokers will be nostalgic about a practice that had become a part of their lives. However, the system has been criticised particularly in recent times for encouraging excessive speculation.

The unbridled speculation which had led to the downfall of many high-profile brokers that also resulted in many brokers failing to honour the commitments.

   

 
 
AUTOMOBILE SALES GATHER SPEED IN MAY 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, June 22: 
Car sales have recorded a modest 3 per cent growth in May on the back of a rise in the year-on-year figures posted by Maruti Udyog, Hyundai, Ford India, General Motors India and Mercedes Benz India.

During the month of May 2001, passenger car manufacturers sold 54,202 units, against 52,593 units sold in the same month last year.

However, cumulative car sales in the first two months of 2001-02 — April-May — were down by 5.9 per cent at 99,752 units as against 1.06 lakh units sold in the same period during 2000-01.

Two-wheelers and multi-utility vehicles (MUVs) have also recorded a positive growth in sales. Two-wheeler sales rose 7.5 per cent to 3.36 lakh units in May 2001, against 3.12 lakh units last year.

MUV sales increased by 9.8 per cent at 11,124 units in May this year as against 10,131 units sold a year ago.

However, sales of commercial vehicles fell during the month under review. Sales of commercial vehicles slumped 28.1 per cent at 8,294 units against 11,545 units sold in May last year.

According to figures released by the Society of Indian Automobile Manufacturers (Siam) here today, Maruti Udyog Ltd registered a 16.86 per cent growth in sales at 32,176 units, as against 27,533 units sold in May last year.

Korean car maker Hyundai Motor India Ltd sold 8,134 units during May 2001, as against 7,561 units sold in the same month last year.

Other car makers who recorded positive sales in May 2001 and during April-May 2001-02, are Ford India, General Motors India and Mercedes Benz India.

Ford sold 3,475 units during May 2001, as against 1,592 units in May last year.

General Motors also sold 623 units in May this year, as against 560 units in May 2000.

Mercedes Benz India Ltd recorded a robust 63.58 per cent sales growth at 173 units sold in May 2001, up from only 63 units in May 2000.

For some, however, it was a different story. Automakers Daewoo Motors India Ltd, Fiat India Automobiles Ltd, Hindustan Motors Ltd, Honda Siel Cars India Ltd and Telco, recorded negative sales during May 2001 and during April-May 2001-02.

Matiz to cost more

Daewoo Motors India (DMIL) said today that it would raise the prices of its premium small car Matiz by 2-3 per cent in northern and eastern from July.

This would result in a Rs 5,000-6,000 rise in prices of the car.

Earlier this month, Daewoo had raised the prices of the mid-size Cielo and Matiz cars by Rs 5,000 to Rs 13,000 in the western and southern markets.

Honda topper

Honda Siel has overtaken HM-Mitsubishi to clinch the highest ranking in sales satisfaction, according to JD Power Asia Pacific 2001 India Sales Satisfaction Index (SSI) study.

Recording an SSI score of 109 with above industry average performance on all factors except price evaluation, Honda Siel has ranked highest in sales satisfaction, Honda said in a statement here.

   

 
 
M&M STAKE IN GESCO TO GO UP 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, June 22: 
The equity holding of Mahindra & Mahindra in Gesco Corporation Ltd (GESCO) is set to go up to 59 per cent from the current 44 per cent following the restructuring proposal announced today.

According to the proposal, the realty and infrastructure undertaking of Mahindra Realty & Infrastructure Developers Ltd (MRIDL) will be merged into Gesco.

Thereafter, at a later date, it would be spun off into a subsidiary and IFC, Washington would pick up a 20 per cent stake in the new entity.

Following the restructuring, Mahindra Realty & Infrastructure Developers will be a pure investment company holding Gesco shares among other investments.

MRIDL shareholders would receive 54 fully paid up shares of Gesco (Rs 10 face value) for every 100 shares of the former.

Post de-merger, Gesco’s paid-up capital would stand at Rs 39.5 crore, as against the existing Rs 28.76 crore and total asset base would stand enhanced to Rs 422 crore.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 46.98	HK $1	Rs.  5.95*
UK £1	Rs. 66.51	SW Fr 1	Rs. 26.05*
Euro	Rs. 40.09	Sing $1	Rs. 25.50*
Yen 100	Rs. 37.87	Aus $1	Rs. 23.95*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta				Bombay

Gold Std (10gm)	Rs. 4515	Gold Std (10 gm)Rs. 4425
Gold 22 carat	Rs. 4265	Gold 22 carat	   NA
Silver bar (Kg)	Rs. 7300	Silver (Kg)	Rs. 7370
Silver portion	Rs. 7400	Silver portion	   NA

Stock Indices

Sensex		3381.76		-23.88
BSE-100		1620.20		-25.00
S&P CNX Nifty	1087.65		- 7.55
Calcutta	115 .11		- 1.01
Skindia GDR	609 .20		- 5.59
   
 

FRONT PAGE / NATIONAL / EDITORIAL / BUSINESS / THE EAST / SPORTS
ABOUT US /FEEDBACK / ARCHIVE 
 
Maintained by Web Development Company