ICICI implores Bajaj not to sell stake
BP Amoco hikes Castrol open offer price to Rs 350
Tribunal rejects Triumph plea
Rashtriya Chem eyes SAIL unit
Eveready to quit Nepal battery venture
2-year windup schedule for sick companies
Punjab and Sind Bank puts off Rs 100crore public issue
Eyeballs, fingers to open PC window
Benchmark yields on gilts hit new low
Foreign Exchange, Bullion, Stock Indices

 
 
ICICI IMPLORES BAJAJ NOT TO SELL STAKE 
 
 
FROM SATISH JOHN
 
Mumbai, Aug. 24: 
In a role reversal of sorts, ICICI today pulled out all stops to convince Bajaj Auto that its investment in the financial institution’s equity is worth retaining.

At a presentation made by the ICICI top-brass at Bajaj’s Akurdi hub in Pune, CEO K V Kamath and executive director Kalpana Morparia drove home the message that they were doing everything to expand retail business, embrace universal banking and cut bad loans.

Sanjiv Bajaj, the auto maker’s general manager, told The Telegraph: “The presentation was entirely ICICI’s initiative”. Bajaj Auto, which holds little over 5 per cent in the FI, called the meeting a routine affair between a company and its main stakeholders. The company, which sits on a Rs 1600-crore cash pile, has 35 per cent of its investments channelled into equity of firms. The balance is parked in fixed-income securities.

The term lending institution, more used to presentations made by companies than the other way round, took three hours to present its case before the Bajajs.

“ICICI has made similar presentations before foreign institutional investors and insurance major Life Insurance Corporation (LIC),” she said. The insurance monolith also controls a big stake in the institution.

“We make presentations before foreign institutional investors (FIIs), institutions and the press every time our annual results are announced,” Morparia added. However, sources say the tryst with the two-wheeler major came after an interval of two years.

Asked why it had chosen this time to make the presentation, Morparia said the date and the venue was decided after both sides found it convenient to meet.

It is an accepted practice for companies to make presentations before their large shareholders, an analyst at a leading brokerage said.

The development assumes significance because Bajaj Auto had earlier indicated that they wanted to scale down their equity investments in companies from the present level of 35 per cent.

However, after the presentation, the two-wheeler major said it would not sell off its holdings in ICICI Ltd.

“We have decided to hold on to our investment,” Bajaj said. He added that the company will periodically review its investment decisions. “We have been evaluating investments,” Bajaj told The Telegraph.

However, he made it clear that it was not the long-term objective of the company to retain its investment in ICICI.

Given the fact that the scenario could change dramatically and the risks involved in investing in a term-lending institution, Bajaj Auto said it cannot remain oblivious to the differences in market situation.

Mirroring the trend of other term lending institutions like IDBI and IFCI, the shares of ICICI is also quoting at a 52-week low. The ICICI shares closed today at Rs 54.25, a tad below the previous day’s close of Rs 54.65.

   

 
 
BP AMOCO HIKES CASTROL OPEN OFFER PRICE TO RS 350 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug. 24: 
British Petroleum Plc is raising its offer price in the lubricants major, Castrol India Ltd to Rs 350 per share.

The company is believed to have filed an application for the open offer that seeks to raise 20 per cent of the company’s equity capital, with the market regulator, the Securities and Exchange Board of India (Sebi).

The revised price represents a premium of 38 per cent to the company’s share price which closed higher at Rs 253.45 on the bourses today.

Opening at Rs 248.25, the scrip rose to an intra-day high of Rs 259, after which it finished Rs 253.45. The counter witnessed 8292 trades, resulting in a turnover of Rs 20.02 crore. Stock market circles expect further action in the counter in the days to come, following news about the revised offer.

According to the revised draft letter submitted to the market regulator today, the open offer will be open between September 7 and October 7. Earlier, a Mumbai court had upheld Sebi’s ruling on the date for calculating the open offer price. The British oil giant had made an open offer last year at a price of Rs 311.91 per share. The offer, if successful, would have enhanced Castrol’s shareholding in the Indian subsidiary to 71 per cent and then entailed a consideration of Rs 761 crore.

However, the market regulator had objected to the price calculation formula and pointed out that the prices should be calculated from the middle of March last year.

BP Amoco, which presently holds a 51 per cent stake in the company, acquired the stake as a result of its acquisition of Burmah Castrol Plc in July last year. The acquisition of Burmah Castrol Plc was for a consideration of £ 3 billion.

Presently, the foreign collaborators hold 51 per cent in the compan,y followed by foreign institutional investors with 9.47 per cent, Indian mutual funds 0.67 per cent, financial institutions 4.92 per cent, banks 0.54 per cent and the public around 33.4 per cent.

Castrol India is one of the major players in the lubes industry, with a market share of around 20 per cent. It has seven plants, of which the Silvassa unit is among the largest within the group in the world. It realigned operations in October last year, by merging the commercial and consumer businesses and keeping marine and industrial units as separate business divisions.

   

 
 
TRIBUNAL REJECTS TRIUMPH PLEA 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug. 24: 
The Securities Apellate Tribunal today rejected the Parekh-owned Triumph International Finance India Ltd’s appeal for an interim ruling against Sebi’s order restraining it from undertaking any fresh business.

SAT relied on the Mumbai high court’s order in the Anand Rathi case, which said the high court order was purely temporary, and is not a final finding of fault, is not punitive, and it is to protect the interests of the investors and the securities market.

Sebi had, on June 21, debarred Triumph International and five other market intermediaries from undertaking fresh business as stock brokers and merchant bankers. SAT said the “appellant has not established that there is a prima facie case in its favour. The balance of convenience is also not in its favour. Moreover, it said the appellant has not established that it would suffer irreparable injury in case the order is not stayed.

   

 
 
RASHTRIYA CHEM EYES SAIL UNIT 
 
 
BY A STAFF REPORTER
 
Calcutta, Aug. 24: 
Rashtriya Chemicals and Fertilisers Ltd (RCF), the public sector fertiliser major, is on the prowl.

The Mumbai-based company is keen to acquire the fertiliser unit of the Steel Authority of India Ltd’s Rourkela plant — it has put forward an expression of intent to the company.

SAIL has decided to sell the fertiliser unit as a part of its business restructuring, under which it plans to emphasise on its core competencies.

The company is also keen to acquire the loss-making Paradeep Phosphate Ltd. Confirming the move, RCF chairman D. K. Verma said the company is carrying out a due diligence exercise in both the plants through an internal committee.

“It will take some time to arrive at a decision as the price for the two units can be finalised only after the due diligence exercise is over,” he said.

Since both the plants are in Orissa, RCF will have a strong foothold in the eastern region if the deals finally come through.

Apart from acquisitions, the company is also setting up a greenfield project in a joint venture with Hindustan Zinc Ltd and Rajasthan State Mines & Minerals Development Corporation Limited.

While HZL and RSMMDC will hold a 25 per cent stake each in the project, RCF will have a 50 per cent stake in the venture. The project will involve an investment of Rs 300 crore, Verma said.

Verma said the company has nearly doubled its turnover in four years. “Our turnover stood at Rs 1,100 crore in 1996-97 while last year’s turnover was around 2,500 crore. We are optimistic about a 22 per cent annual growth on an average in the coming years,” he said.

The company’s operating profit has also gone up to Rs 100 crore and the net profit stood at Rs 68 crore in the last financial year.

   

 
 
EVEREADY TO QUIT NEPAL BATTERY VENTURE 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Aug. 24: 
After tea, it is now the turn of battery. Eveready Industries India Limited wants to sell off its 70 per cent stake in the Nepalese battery joint venture — Nepal Battery Company Limited. The remaining 30 per cent stake in the company is with the Nepalese people.

The company has already come out of the business of distribution of miniature and alkaline batteries, products of Eveready Energizer Miniature Ltd and Energizer India Ltd respectively, on account of low returns. However, the decision to pull out from Nepal will not affect the company’s Indian operations.

Sources said that Nepal Battery is on the verge of closure with more than 50 per cent of its employees having left the company.

The over abundant supply of local and imported batteries has severely eroded the company’s marketshare and sales volumes have dropped below the break-even point rendering the business unviable.

Senior officials said with unsold stocks piling up, the company was forced to stop production on several occasions. The company, however, continued to pay full wages and salaries to all its workmen and staff even during occasions when production was stopped.

The officials claimed that the situation further aggravated due to continued non-co-operation and agitational tactics of a section of staff who were in charge of key functions such as production, supervision, sales, finance, accounts and administration.

In view of this, an application was submitted to the department of labour in Nepal for permission to close down the factory. The department of labour turned down the company’s proposal. Based on the legal advice, the company has filed a writ petition against the decision before the Supreme Court of Nepal.

The officials said that once the writ petition is vacated, Eveready will sell off the company.

“After going through a phase of restructuring, the company now wants to consolidate its businesses,” the officials further added.

The company has also come out from the business of cinema arc carbons on account of its unrelated nature from the mainstream activities.

   

 
 
2-YEAR WINDUP SCHEDULE FOR SICK COMPANIES 
 
 
FROM RAJA GHOSHAL
 
New Delhi, Aug. 24: 
Companies that go to the wall will have to wind up their act in a little over two years under a stringent time-bound schedule proposed under the Companies Amendment Bill 2001 which is expected to be introduced in Parliament next week.

The government has got tired of seeing ailing companies linger on for as many of 25 years after they first fell sick and the idea is to usher in a form of euthanasia so that these companies can be on a close down in a period of 730 to 845 days.

Last week, the cabinet had approved the repeal of Sick Industrial Companies (Special Provision) Act, 1985 and amendments in Companies Act 1956 providing for setting up of National Company Law Tribunal (NCLT) to deal with matters relating to amalgamation/reconstruction/rehabilitation/revival/winding up/oppression and mismanagement of companies under one roof. and not by different authorities like the Board for Industrial and Financial Reconstruction (BIFR), Company Law Board (CLB), High Court etc.

Under the proposed time schedule, reference to the proposed tribunal on sickness of company can take a maximum of 180 days and the tribunal will have to pass orders within 60 days.

There is a rigid programme for due process after that starting with special directions to give a report to tribunal (60 days), operating agency to prepare a schedule (60 days), in case of amalgamation, tribunal may sanction scheme (60 days), scheme for financial revival (60 days)

Finally, a period of one year will be given for winding up a company after passing the windup order has been given under the relevant sections. All of that adds up to a grand total of 845 days -- a little over two years.

At present, there are 3195 cases pending before various high courts in matters relating to winding up of companies, with an average time period of 20-25 years for disposal of the cases.

The Bill sets rigid time limits for every stage of the process and compliance by the concerned parties. Time limits have also been set for the passing of orders by presiding officers.

In case this is not possible, then a speaking order has to be made which is a mandatory requirement. Thereafter, the Bill provides an additional time period by when an order has to be passed.

The Bill also makes it mandatory to make reference to the proposed tribunal when a company has become a sick industrial company.

The Bill defines a sick industrial company as one whose accumulated losses at the end of any financial year are 50 per cent or more of its net worth in any one or more of four immediately preceding financial years.

   

 
 
PUNJAB AND SIND BANK PUTS OFF RS 100CRORE PUBLIC ISSUE 
 
 
FROM DEVLIN ROY
 
New Delhi, Aug. 24: 
Punjab and Sind Bank (PSB) has deferred its plans to go for a Rs 100crore public issue because of the slump in capital markets and the low premium the floatation would have generated after a sharp drop in its net profits in the last financial year.

Senior officials of the bank, who met finance secretary Ajit Kumar here today to apprise the government of the steps taken by the bank to shore up its bottomline, told The Telegraph that the public issue has been shelved for the time being as it would not have been a fruitful exercise in the present circumstances.

“We have decided to drop the plans for the public issue for the time being as the market is not favourable.

Moreover, the bank is not in a position to charge a premium which it richly deserves” PSB chairman N. S. Gujral said. Instead the bank is likely to resort to another issue of subordinated bonds to shore up its tier-II capital. However, the amount and timing of the issue is yet to be decided.

The meeting, which reviewed the functioning of PSB following the Rs 13 crore net profit in 2000-01 (mainly on account of VRS) as against Rs 62 crore in 1999-2000, also took note of the high level of net non-performing assets (NPAs) which stood at 12 per cent on March 31.

PSB, which has nearly 746 branches all over India, also gave its commitment to revive ailing branches and start aggressive recovery of its non-performing assets.

“We have given our commitment to aggressive NPA recovery and will post a net profit of Rs 75 crore in this fiscal,” Gujral said, adding that the bank has been instructed to present its projections for the next three years and also to present its quarterly progress report to the government on a regular basis.

Gujral said the bank had earlier decided to go for a Rs 60 crore public issue, which was subsequently raised to Rs 100 crore. The issue would have led to the equity of the bank going up to Rs 450 crore with the Capital Adequacy Ratio (CAR) increasing from 11 per cent to 12 per cent.

PSB had also some months back issued Rs 60 crore subordinated bonds for boosting its Tier-II capital.

   

 
 
EYEBALLS, FINGERS TO OPEN PC WINDOW 
 
 
FROM M RAJENDRAN
 
New Delhi, Aug. 24: 
It’s called biometrics — and its all about eyeballs, fingers and guys who are paranoid about security.

In the not too distant future, you won’t have to remember your password or carry an electronic card as access mechanism to open your internet connection or even the personal computer — your fingers or eyes will do all that for you.

Welcome to the Brave New World of biometrics-based identification systems.

These systems use the recognition of a personal feature such as someone’s voice, fingerprint or the retina to provide a positive identification match.

“These systems offer several advantages compared with other security systems,” claims S. Rajendran, general manager of Acer India Private Ltd. “This (biometrics) security systems were mostly used to control access to rooms. Now, however the technology is being more widely deployed with many computer vendors using fingerprint sensors to control access to hardware and software applications,” says Samdhani Bhasha, business manager, Acer India Private Ltd.

He adds, “The fingerprint sensors are also being used to provide authentication for logging on to networks. Many analysts believe that the biggest use for this technology will be to ensure secure e-commerce transactions.”

According to a report by Information security industry survey 1999, e-business operations are 57 per cent more prone to a security breach. Another research by WarRoom Research on Fortune 1000 companies shows that 52 per cent respondents had experienced unauthorised access to their computer and servers.

Basha says, “Most IT analysts foresee strong growth for biometrics-based products with forecast of future market size varying greatly. It is generally agreed, however, that the market will grow to be in excess of $ 1 billion within next few years.”

Rajendran reckons many of these biometric systems will start hitting the Indian market and institutions like banks, financial institutions and IT managers have already started evaluating these products. Industry experts are confident that these products will hit Indian market within next two years.

However, Sameer Kochhar, consultant Skoch consultancy, feels it is just too much hype because it will only be a “niche within a niche”.

“It is not at all in the radar of many of the PC buyers both the corporate and individual customers. Many companies have not even bothered to install enterprise-wide firewalls to ensure security of their systems. So, biometric-based systems won’t be a priority, “ says Kochhar.

He is more dismissive. “Even if the PC manufacturers provide this as a value addition, the price-sensitive Indian customer will go for a second best lower priced product,” he adds.

Even in countries like US where hand-based technologies are popular internally, they are not so easy to implement with the general population because one has to address several factors like weather conditions and cleanliness (a smudged fingerprint won’t give you access).

Kochhar said, “These products have to first become popular with strategic and mission critical sectors like defence. No doubt, the general customers will eventually realise the importance of such a system but even in countries like the US and European countries, it has yet to take off. It is more in an evolution stage.”

   

 
 
BENCHMARK YIELDS ON GILTS HIT NEW LOW 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug. 24: 
Yields of the benchmark 10-year government security today fell to a new low of 9.08 per cent, reflecting the liquidity in the banking system.

Apart from the ample supply of money available in the system, liquidity is set to be further boosted this weekend on huge inflows from redemption of bonds and coupon payments. Over Rs 8,000 crore is estimated to flow on account of the redemption of the 11.75 per cent 2001 bond and another Rs 600 crore on coupon payments.

Money market circles are also not expecting a fresh issue of bonds from the government as it has received substantial inflows, including around Rs 9,350 crore from the Reserve Bank of India (RBI) through a dividend transfer.

Reflecting the current state of the money market, the 11.50 per cent 2011 security rose to Rs 115.87 from Rs 115.36 yesterday. Yields on the security fell to a new low of 9.08 per cent as against 9.15 per cent on Thursday.

Even as liquidity in the system continues to rise on one hand, the credit offtake from banks has not shown any improvement following the industrial slowdown. Capital inflows too have been strong, aiding liquidity.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.12	HK $1	Rs.  5.95*
UK £1	Rs. 67.98	SW Fr 1	Rs. 28.05*
Euro	Rs. 42.96	Sing $1	Rs. 26.55*
Yen 100	Rs. 39.18	Aus $1	Rs. 24.90*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4560	Gold Std (10 gm)Rs. 4500
Gold 22 carat	Rs. 4305	Gold 22 carat	     NA
Silver bar (Kg)	Rs. 7075	Silver (Kg)	Rs. 7165
Silver portion	Rs. 7175	Silver portion	     NA

Stock Indices

Sensex		3305.51		-3.28
BSE-100		1562.87		+7.11
S&P CNX Nifty	1069.15		-2.35
Calcutta	 112.59		-1.14
Skindia GDR	  NA		  -
   
 

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