Bharti acquires Spice Cell for $ 90 m
Mobile Goliath in the making
Institutions agree to sell Modi Rubber stake
DVC set to lift curbs on power supply
DSQ in the dock over share swindle
DSE chief under fire
Foreign Exchange, Bullion, Stock Indices

 
 
BHARTI ACQUIRES SPICE CELL FOR $ 90 M 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 16: 
“I am taking AirTel to your city,” a triumphant Sunil Bharti Mittal, chairman and group managing director of Bharti Group, told The Telegraph after wrapping up a $ 90 million all-cash deal to take over Spice Cell, the Calcutta-based cellular operator owned by the Modis and Hong Kong-based Distacom.

The north-based Bharti Group, which is aggressively expanding its service to the east, south and west, sewed up the deal that comes laden with liabilities worth $ 20 million.

The deal means that the Bharti Group will no longer have to pursue its bid for the fourth cellular operator’s licence in Calcutta.

Lazard India acted as the bankers and advisers to Bharti, ABN Amro for Distacom and HSBC for ModiCorp.

A formal announcement on the deal is expected to be made by B.K. Modi in Calcutta tomorrow. Spice Cell officials said they were unaware about the deal and had no idea what the future held.

Sources said there could be some changes at the top but no retrenchments in the rank and file. Spice Cell has 145 employees and a subscriber base of about 1 lakh which will raise Bharti group’s total subscriber base to above 8 lakh.

The company will formally change the brand name from Spice to AirTel tomorrow and launch Magic, its pre-paid cellular card. Bharti takes over control and management of the company with immediate effect. “It will normally take about 3-4 months for the AirTel brand to appear on the old mobile phones. However, we will try to make that happen sooner,” said Mittal.

The acquisition has been made through Bharti Cellular Ltd, a wholly-owned subsidiary of Bharti Televentures Ltd. Modicorp and Distacom, along with their other partners, consented to the deal on Friday and it was formalised today. Modicorp has a 51 per cent stake in Spice Cell while Distacom and other foreign companies hold the remaining 49 per cent.

With the acquisition of the Calcutta cellular licence, Bharti has expanded its footprint to the eastern part of India. The company will now operate in three of the four major metros—Delhi, Calcutta and Chennai—in addition to Bangalore (Karnataka) and Hyderabad (Andhra Pradesh).

“The acquisition of Calcutta marks an important milestone for Bharti as we wanted to make its presence felt in the eastern part of India. It was also important that Bharti took over a running operation in Calcutta as opposed to building a new one,” said Sunil Mittal.

“With this acquisition, Bharti reiterates its commitment to the development of telecom services with a pan-Indian footprint covering all key destinations,” he added.

Dilip Modi, chairman of Spice Cell, said, “We are happy that Bharti will now take over from Spice Cell to serve our valued customers in Calcutta. With an impressive history of providing world class services to customers across India, Bharti will further enhance the value that we have brought to customers in the city.”

Spice Cell was earlier known as Modi Telstra—a 51:49 joint venture between ModiCorp and Australia-based telecom giant Telstra. Telstra moved out of the arrangement in 1999. The company had targeted a subscriber base of 1.5 lakh by the end of 2001.

   

 
 
MOBILE GOLIATH IN THE MAKING 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 16: 
Sunil Mittal-promoted Bharti Group is poised to establish the largest cellular footprint in the country having virtually bagged the fourth cellular operator’s licence in seven of the 11 circles after the second round of financial bids were opened today.

With just one more round of bidding to go, Bharti is set to create a monolithic network that will bridge the north and the south, and link the east and the west.

Bharti, which has taken over Spice Cellular’s operations in Calcutta in an all-cash deal, will now drop its Rs 77.85 crore bid for the fourth cellular licence leaving Reliable Internet Services Ltd as the sole bidder with a bid amount of Rs 78 crore. However, the Reliance group company is out of the race in 13 of the 15 circles it had bid for in the first round.

The government is unlikely to get a huge price from the bids for 17 circles since the second round of bidding failed to raise the price.

At the end of second round of bidding for the fourth cellular operator, the government could get only Rs 196 crore more from the first round at Rs 1,486 crore.

The Bharti group has ensured the licence for the Mumbai circle with a chart-busting bid of Rs 203.66 crore edging out Reliable Internet Services Ltd. The latter was the second bidder in the circle but did not bid higher than the reserve price of Rs 203.65 crore.

Reliable bid only Rs 90.15 crore in the second round for the circle and thus has been eliminated. The company’s position also remain ambiguous due to technical reasons as the communications ministry is re-evaluating its bids for Delhi. Sources in communications ministry said, “We are evaluating the bid for Delhi made by Reliable Internet services Ltd.”

At the end of the second round of bidding for the fourth cellular player in 17 circles, Bharti has topped in seven circles out of 11 they bid for. “We will look at valuable circles in the next round of bidding,” Bharti Group chairman and managing director Sunil Bharti Mittal said.

The company is likely to bid aggressively for Gujarat and Maharashtra, where they are locked in a tough bidding battle with Escorts Telecommunications and Barakhamba Sales and Services Ltd respectively.

In Delhi, Birla-AT&T is ahead of Reliable and Escorts with the bid amount at Rs 170.60 crore which will now become the reserve price for the third and final round of bidding to be held on July 19.

Barakhamba Sales and Services Ltd continued to maintain its lead in four circles—Chennai, Maharashtra, Karnataka and Andhra Pradesh.

   

 
 
INSTITUTIONS AGREE TO SELL MODI RUBBER STAKE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 16: 
Flush with funds after the sale of Spice Cell to the Bharti Group, Bhupendra Kumar Modi today claimed that he had sewn up a deal with the financial institutions under which the Modis—he and brother Vinay Kumar—will acquire their 44 per cent stake in Modi Rubber Ltd.

B.K. Modi said the FIs had agreed to sell their entire stake through the open offer which has been extended till July 23 under an order issued by the Mumbai high court today.

While IDBI chairman S.K. Chakrabarti confirmed that the FIs have agreed to sell their 44 per cent in Modi Rubber at Rs 90 per share, he set certain terms for the stake sale. “We have agreed on the prevailing price subject to certain conditions,” Chakrabarti told The Telegraph.

Modi’s claim is significant because it is being made a day before a crucial meeting of the MRL board to reconsider the decisions that were taken at June 28 meeting where B.K. Modi was unseated as managing director.

“An additional amount of Rs 50 crore has been deposited in the bank to buy the stake of the FIs that will be left out of the open offer,” said B.K. Modi to The Telegraph.

The Modis have offered to buy 35 per cent of the equity at Rs 90 per share through the open offer.

An amount of Rs 85 crore had been deposited earlier in the account to buy the 35 per cent stake, said B.K. Modi, adding that the paper work for the transfer of shares was being done.

Meanwhile, the Mumbai high court has extended the closing date for the Modi Rubber open offer to July 23. The offer was slated to close today. This is the second time that the offer date has been extended. Earlier, the open offer was slated to close on July 3.

The date for the open offer has been extended on the same ground on which it had been extended earlier, said HSBC. The last time the high court had extended the date after the court directed Sebi to reconsider its directive debarring M.K. Modi from participating in the open offer. M.K. Modi, the third brother, holds a 4.5 per cent stake in MRL through Modipon.

M.K. Modi had filed a case arguing that he should be allowed to participate in the open offer on the ground that the family had split in 1989 and he had nothing to do with the business of BK and VK Modi.

Sebi, which was to take a decision on the issue, has not allowed Modipon to participate in the open offer on the grounds that they are part of the promoter group.

   

 
 
DVC SET TO LIFT CURBS ON POWER SUPPLY 
 
 
BY A STAFF REPORTER
 
Calcutta, July 16: 
Damodar Valley Corporation (DVC), having registered a net profit of Rs 176 crore in 2000-01, has decided to remove restrictions on the supply of power to the medium and small-scale enterprises (SMEs), and reduce the notice period for revision in contract demand for bulk consumers.

A quantum less than 5 MVA (megavolt amps) will be provided to facilitate power supply to medium and small units. Bulk consumers, most of whom are battling an industrial recession, can now buy 25 per cent less than their contract commitments by giving the corporation a two-month notice, instead of the one year they were required to serve earlier.

“These were self-imposed restrictions. The industrial scenario has changed over the years and, therefore, we decided to remove them,” DVC secretary A. K. Basu said here today. Procedures are being simplified to facilitate quick supply of power.

The company also plans to double capacity from its existing 2761.5 MW by the end of Eleventh Plan and modernise 10 old plants in a Rs 1,900-crore package, for which the corporation is currently talking to the financial institutions.

DVC’s turnover jumped to Rs 2,208 crore compared with Rs 1981 crore in 1999-2000. Pre-tax profit increased to Rs 242 crore from Rs 233 crore. However, net profit has gone down marginally from Rs 183 crore from Rs 176 crore due to minimum alternative tax and depreciation on its Mejia plant, which went on stream during the year. It generated 8188 million units against 8138 million units in the previous year.

However, cash flows to the company were down even though generation increased to 7,856 million units from 7,704 million units in 1999-2000. This is largely the result of a 94 per cent spurt in dues from state electricity boards (SEBs). They owed the corporation Rs 2,931 crore instead of Rs 1509 crore in 1999-2000. Of this, Bihar State Electricity Board accounts for Rs 2085 crore while West Bengal State Electricity Board is sitting on dues worth Rs 846 crore; the non-SEB dues have also increased from Rs 522 crore to Rs 632 crore.

“We are against the Centre’s proposal to waive 60 per cent of delayed payments. The government is also considering several concessions. The securitisation scheme will have an adverse effect on our cash flows. We feel there should be no waiver,” J. Chatterjee, financial advisor to the corporation, said.

The state power boards have not been paying up even in the first three months of this financial year.

   

 
 
DSQ IN THE DOCK OVER SHARE SWINDLE 
 
 
BY ANIEK PAUL
 
Calcutta, July 16: 
The Securities and Exchange Board of India (Sebi) is investigating the existence of fake DSQ Software shares in the market.

Besides being one of the most actively traded stocks, DSQ Software was one of Ketan Parekh’s favourites, as a result of which it is now under the scanner of the market watchdog and the Joint Parliamentary Committee (JPC) probing the scam.

The National Stock Exchange (NSE), conducting its own probe into the existence of counterfeit DSQ Software shares, has decided to suspend trading in the stock from July 27. This is seen as an indication that the two sets of investigations have yielded enough evidence to nail the Chennai-based firm. Sebi chairman D R Mehta said the suspicion about foul play arose when Harish Chandra Biyani, a Calcutta Stock Exchange (CSE) defaulter, deposited 10 lakh DSQ Software shares in physical form with the CSE to clear his dues to the bourse.

CSE executive director Tapas Datta said the exchange had sent the shares to the company for transfer and dematerialisation in April. “DSQ Software had acknowledged the validity of the shares, but they could not be dematerialised because NSE and the Bombay Stock Exchange (BSE) refused to list them.” However, these shares, which are understood to have been issued in a private placement or preferential issue, were granted listing by regional exchanges.

The Dinesh Dalmia-promoted DSQ group of companies, comprising DSQ Software, DSQ Industries and DSQ Biotech, had a close relationship with various Calcutta-based stockbroking outfits, and even funded some brokers from the city.

In its preliminary report to the JPC on the scam, Sebi has said: “The problem at CSE arose because some brokers took large positions mainly in HFCL and DSQ Software shares and were unable to meet their payment obligations.” The report also mentions that Calcutta-based associates of Ketan Parekh had “substantial transactions” in DSQ Software among a host of other scrips over a long period of time.

   

 
 
DSE CHIEF UNDER FIRE 
 
 
FROM DEVLIN ROY
 
New Delhi, July 16: 
A section of brokers at the Delhi Stock Exchange (DSE), led by four directors, have complained to the Securities and Exchange Board of India (Sebi) and the department of company affairs (DCA) of ‘serious irregularities’ committed by present DSE president Sudhir Joshi and company secretary Rajesh Kapoor by failing to maintain the minutes of the board meetings held since January.

According to sources, the four directors, including past president Bharat Bhusan Sahny, S. L. Gupta, Ramesh Goel and M. K. Gupta had also initiated a move of no-confidence motion against the president last month which was unsuccessful.

The issue of no-confidence motion was first raked up on June 27 in the presence of the Sebi representative Salil Gupta, DCA representative L M Gupta and independent director and public representative Prakash Aggarwal. However, the no-confidence motion could not be discussed at the June 27 a meeting s it was not on the agenda.

Sources reveal that the plummeting turnover of the exchange and the lack of any efforts on part of the president to expand activities and to start derivative trading were the other main reasons behind the move top oust him.

Commenting on the developments, Joshi said the no-confidence motion was raised at the June 27 meeting at the spur of the moment and a notice was given by one of the directors for taking up the issue a day later on June 28. However, there was no quorum at that meeting and so it was adjourned and subsequently the directors withdrew the no-confidence motion.

Joshi however admitted that due to certain technicalities a few minutes of some meetings could have remained unsigned.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.14	HK $1	Rs.  5.95*
UK £1	Rs. 66.07	SW Fr 1	Rs. 26.30*
Euro	Rs. 40.49	Sing $1	Rs. 25.35*
Yen 100	Rs. 37.75	Aus $1	Rs. 23.65*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4455	Gold Std(10 gm)	Rs. 4380
Gold 22 carat	Rs. 4205	Gold 22 carat	N.A
Silver bar (Kg)	Rs. 7225	Silver (Kg)	Rs.7320
Silver portion	Rs. 7325	Silver portion	N.A

Stock Indices

Sensex		3434.83		- 19.16
BSE-100		1607.26		-  6.79
S&P CNX Nifty	1105.55		-  4.90
Calcutta	 125.72		+  0.26
Skindia GDR	 600.92		-  2.51
   
 

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