Bajoria bolted out of market
Bombay Dyeing unveils buyback
Sebi lobbies to retain control over board
Texmaco plans to jump out of bandwagon
Koshika gets okay to raise stake
Tatas may up Trent stake
After Prozac, Dr Reddy’s sets sights on Glaxo drug
Five vie for tea campaign in Russia
Govt uneasy about UBI recap scheme
Foreign Exchange, Bullion, Stock Indices

 
 
BAJORIA BOLTED OUT OF MARKET 
 
 
OUR BUREAUX
 
Aug. 29: 
The Securities and Exchange Board of India (Sebi) today issued an order barring jute baron Arun Bajoria and his associates from dealing in securities and accessing the capital markets for one year. The Sebi decision came in connection with Bajoria’s acquisition of a 13 per cent stake in Bombay Dyeing last year, allegedly in violation of the takeover code.

Responding to the order, Bajoria said: “I will file a writ against the Sebi order. Even if for argument sake, I accept that the charges brought against me are correct, the penalty imposed on me is disproportionate. In such cases in the past, Sebi had imposed a nominal fine on the offenders.”

He said he would prefer to file a writ than moving the Sebi appellate tribunal because he doubted the credibility and impartiality of Sebi officials.

The Sebi move will, however, not affect his interest in Bombay Dyeing, in which he has been buying afresh. Bajoria had said in the past that his intentions were to profit from the company’s buyback offer. He said today that he was aware of the possibility of Seibu taking action against him, and had taken measures to protect his interest.

The Seibu order said the action was taken for non-compliance of take-over regulation and “attempted creation of evidence.” Bombay Dyeing had alleged that Bajoria did not inform the company when his holding exceeded the 5 per cent threshold. The takeover code mandates that an acquirer will have to inform the company within four days.

Bajoria had argued that he had informed the Calcutta Stock Exchange (CSE) about his holding crossing the 5 per cent mark through a letter despatched under certificate of posting. Bajoria produced the letter in defence of his argument, but Sebi refused to admit it as an evidence. Instead, the market regulator formed the opinion that Bajoria attempted to “create an evidence”.

Besides Bajoria, Sebi has barred his broking firms (Mega Resources and Mega Stock), his jute mill (The Hooghly Mills) and his relatives (Pooja Bajoria, Mohini Devi Bajoria, Lata Devi Bajoria and Meenakshi Jatia) from accessing the capital market and dealing in securities for one year.

Sebi has also ordered that an adjudicating officer will be appointed within 15 days to investigate the matter and decide whether any penalty should be imposed on Bajoria for alleged non-compliance of takeover regulations. Sebi, however, felt no specific directions was required to be issued for liquidating his holding in Bombay Dyeing as it had come down to below 5 per cent.

After remaining below the 5 per cent mark for some time, Bajoria started acquiring Bombay Dyeing shares from the market again, but when his holding crossed the 5 per cent threshold, he duly informed the company this time. Bajoria, along with his associates had acquired 20,69,732 shares of Bombay Dyeing on March 15 last year. This exceeded 5 per cent of the paid up equity capital of Bombay Dyeing. The total holding of Bajoria and his associates increased to 56,77,326 shares as of September 21 last year.

   

 
 
BOMBAY DYEING UNVEILS BUYBACK 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug. 29: 
Bombay Dyeing and Manufacturing Company Ltd today unveiled plans to buy back its equity at the rate of Rs 60 per share.

The buyback proposal will see the Wadias hike their stake from 40.85 per cent to a comfortable 54.47 per cent.

Interestingly, the Wadias had also resorted to purchases from the stock markets early this year in a bid to thwart potential raiders.

As of now, foreign institutional investors (FIIs), mutual funds and NRIs hold 6.35 per cent, FIs and banks have 16.91 per cent and others hold 35.89 per cent in the company.

Bombay Dyeing here said the promoters have so far bought over 18.98 lakh shares, for as high as Rs 61 per share in February this year and for as low as Rs 34 per share on March.

Significantly, while the offer price for the buyback has been pegged at Rs 60, the book value of the scrip is close to Rs 160. The company will invest a little over Rs 61 crore in the buyback.

Bombay Dyeing today said in accordance with various provisions, the maximum amount allowed to be utilised for implementing the programme is Rs 143.40 crore, representing 25 per cent of the paid-up capital and free reserves of the company. The company intends to buy back up to 25 per cent of its total existing share capital.

On the Bombay Stock Exchange today, the Bombay Dyeing scrip closed lower at Rs 39.80 after opening at Rs 40.50 and rising to an intra-day high of Rs 40.65.

   

 
 
SEBI LOBBIES TO RETAIN CONTROL OVER BOARD 
 
 
FROM SATISH JOHN
 
Mumbai, Aug. 29: 
It is a battle for the composition of the boardroom.

And it is between two parties—the Securities and Exchange Board of India and the Union government—who are supposed to be the custodians of corporate governance in the country.

The capital market regulator is now lobbying hard to make its executive directors full-fledged members of the board of directors — a move legal circles aver works at cross-purposes with the objective of broad-basing the board.

The government, on the other hand, is reportedly keen to have professionally qualified members on the Sebi board.

In fact, the finance ministry is drawing up a proposal to broadbase the board’s composition in order to infuse the principle of corporate governance at the regulatory level.

The board of the market regulator mainly comprises senior government officials and even the outside directors are representatives of the government.

The government is expected to put two-full time members on the Sebi board after the term of AV Birla Group chairman Kumar Mangalam Birla ends next month.

It is believed that Sebi chief D.R. Mehta has reportedly written to the government to speed up the appointment process of new members.

Sources indicate that the government intends to people the Sebi board with more independent professionals, even while ensuring that the position of the other directors on the board is not eroded.

“It is likely that the methodology followed in case of the Reserve Bank of India would be adopted at Sebi as well,” sources said.

Under Section 4 of the Sebi Act, 1992, the board of directors shall comprise a chairman, two members from among finance and law ministry officials, one member from among officials of the RBI under Section 3 of the Reserve Bank of India Act, 1934, and two other members to be appointed by the Centre, who shall be professionals with experience or special knowledge relating to the securities market.

Nominating Sebi’s executive directors on the board may also give rise to other problems.

The Central Bureau of Investigation (CBI) is still enquiring into the CRB Capital Markets case and is looking into the role of a serving executive director of Sebi.

Further, another executive director who was Sebi’s nominee on the governing board of the Calcutta Stock Exchange (CSE), is also facing flak due to the payments crisis that erupted on the bourse.

   

 
 
TEXMACO PLANS TO JUMP OUT OF BANDWAGON 
 
 
BY A STAFF REPORTER
 
Calcutta, Aug. 29: 
Texmaco, which has been synonymous with wagons for the last 61 years of operations, no longer wants to be identified as only a wagon maker. The reason is the railways’ erratic order placement, which happens to be the sole customer of wagons in the country.

“We would like to be identified as steel fabricators rather than wagon makers, as we are venturing into various other areas,” Texmaco president R.C. Maheswari said.

Speaking to newspersons after the company’s annual general meeting here today, Maheswari said no order for wagons has come from the railways so far, although the end of the first half of this fiscal is just a month away.

“But I can assure you that Texmaco will rise even in the face of severe challenges with the help of other initiatives,” he said.

The company is diversifying into hydro-mechanical equipment, which holds good prospects following the government’s intentions to explore potential in hydel power generation.

The K.K. Birla group company, which registered a turnover of Rs 140.52 crore in 2000-01, has already obtained orders worth Rs 250 crore in the last few months and expectations are that order value will double by the year-end.

The company has also embarked on a project of making “special wagons” with various value-added facilities which would help carry products like hot-rolled coil and cement.

“We are closely working with the Steel Authority of India Ltd (SAIL) and the Railways so that these special wagons can be developed and used,” Maheswari said.

   

 
 
KOSHIKA GETS OKAY TO RAISE STAKE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug. 29: 
Koshika Telecom, the cellular service provider in UP East, today secured approval from the Foreign Investment Promotion Board (FIPB) to raise the foreign stake in the company to 49 per cent which will bring in $ 60 million (Rs 282 crore).

Last month, the Vinay Rai-controlled company announced that it was in talks with Canada-based NRI Chiranjeev Kathuria—a founder-director of Koshika—to enable him to raise his stake in the cellular service operator from 10 per cent to 49 per cent under a deal valued at $ 120 million (Rs 564 crore).

Neither Vinay Rai nor his brother Anil could be contacted to confirm whether the present deal was with Kathuria and why the value of the investment had depreciated by half in a little over a month.

Koshika, which was the only cellular operator that failed to migrate to a revenue-sharing arrangement in August 1999, has faced serious problems in paying up its licence fee dues and has been engulfed in regulatory tangles.

Among the Rs 880 crore proposals cleared by the FIPB today, Bharti Cellular received clearance to amend its existing foreign currency approval with no fresh inflow of funds.

The major FIPB approvals issued today by commerce minister Murasoli Maran related to IT services, technology parks, banking and power projects. Compagnie De Saint Gobain of France has been allowed to bring in Rs 212.50 crore to set up an internet website for trading targeted at the chemical industry.

Information Technology Park Ltd received clearance for its Rs 50 crore proposal for the development, sale, renting and operational maintenance of a technology business park. Power equipment major ABB (South Asia based ) Holdings Ltd has been allowed to set up a wholly owned subsidiary in India.

The Rs 87.36 crore proposal of CLP Powergen India to set up a gas-based mixed fuel combine cycle power project and raise its equity from 88 to 100 per cent was also approved.

The government also cleared Classic Milkfoods Ltd’s proposal to raise its equity to 75 per cent with an FDI inflow of Rs 90.98 crore for the manufacture of butter oil. Also cleared was Dutch consumer electronics major Philips’ proposal to manufacture soda glass shells, soda glass tubings and lead glass tubings envisaging foreign investment worth Rs 24.78 crore.

India Life Asset Management Co Ltd was permitted to raise its foreign equity from 49 per cent to 66 per cent for NBFC activities involving an investment of Rs 16.53 crore.

ITW Signode India will raise its foreign equity from 51 to 100 per cent for manufacturing packaging machinery and consumables that will bring in FDI worth Rs 11.2 crore. Construction major Kvaerner Cementation India Ltd has also been allowed to increase the foreign equity from 64.38 per cent to 100 per cent and bring in Rs 24.78 crore for civil construction works.

The proposal by LaSalle Partners (India) Ltd, the real estate consultancy firm, to increase the overseas stake to 60 per cent was also approved without any fresh inflow of funds. This will lead to a change in equity holding pattern by the two parent companies —Jones Lang Wootten and LaSalle Partners.

   

 
 
TATAS MAY UP TRENT STAKE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Aug. 29: 
Tata Sons, which has a 25 per cent stake in Trent Ltd, may increase its stake in the future, said Simone Tata, chairman of the Tata’s retailing venture. Trent is a three-year old retailing venture which has notched up revenues of Rs 65 crore last year. The company, which first opened it Westside departmental store in Bangalore, has been aggressively moving to other cities. it recently opened its store in Calcutta and is planning to open a second store in south Delhi which will be the largest of its Westside stores.

At a press conference in Delhi today, Simone Tata said the group plans to open a around 100 grocery supermarkets across the country in the next fiscal. Each grocery store of 3,000-4,000 square feet will cost around Rs 30-40 lakh.

   

 
 
AFTER PROZAC, DR REDDY’S SETS SIGHTS ON GLAXO DRUG 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Aug. 29: 
Close on the heels of its success with the generic version of Prozac, Dr. Reddy’s Laboratories Ltd (DRL) has filed an Abbreviated New Drug Application (ANDA) with the US Food and Drug Administration (US FDA) for 4mg, 8mg and 24mg Ondansetron tablets. Ondansetron is the generic version of Glaxo’s successful drug, Zofran.

Analysts reckon that the anti-emetic drug, which caters to a niche market, has a huge potential and could turn out to be a money spinner for DRL if it is successful in its bid to obtain exclusivity for the drug.

However, they added that the entire process could take longer than expected, with some estimates saying that it could take around 18 months for various procedures to be cleared.

“DRL has filed the application for various dosages of the drug which means it could cover nearly the entire market for Ondansetron. If the company obtains exclusivity, it could turn out to be very attractive,” said C. Srihari, analyst at Khandwala Securities.

News of the filing led to spirited buying in the DRL counter and the scrip touched a 52-week high on the bourses today. Opening at Rs 1822.15, the scrip touched an intra-day high of Rs 1869.25, before closing at Rs 1880. Market circles, however, believe that the counter would continue to witness buying in the immediate term even though the outcome of the ANDA filing is of a long-term nature.

In a communication issued to the stock exchanges, DRL said it has notified Glaxo SmithKline Plc, upon which the latter filed a lawsuit against the company, alleging patent infringement.

The pharmaceutical major believed it has the first-to-file status for all the three strengths and if successful in its litigation, it would enjoy a 180-day marketing exclusivity on the product. DRL also claimed that it has first-to-file status on Omeprazole 40mg capsules, Ciprofloxacin 100mg and 750mg (rolling exclusivity) tablets and Olanzapine 20mg tablets, in addition to Ondansetron tablets 4mg, 8mg and 24mg.

DRL’s successful challenge of Eli Lilly’s patents on Prozac, enabled it to launch Fluoxetine 40mg capsules, making it the first Indian company to get 180-day marketing exclusivity for a generic product in the US.

   

 
 
FIVE VIE FOR TEA CAMPAIGN IN RUSSIA 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Aug. 29: 
Five advertising agencies — Bates India, RK Swamy BBDO, McCann Erickson, HTA and Rediffusion — are in the race for a promotional campaign to be launched in Russia by the Tea Board of India.

The agencies have already made presentations to the Tea Board.

“We have not selected anybody as yet. We will first examine which of these agencies has the best international links and then decide,” a top Tea Board official said.

The campaign, aimed at boosting exports of Indian tea to Russia, is expected to be launched by the end of September. The board has allocated Rs 2 crore for the campaign.

A few years back, big tea companies had joined hands to float a company called Project India Blend, for marketing Indian teas in Russia under the brandname ‘Nargis’. However, the project failed to generate the desired response.

“We have learnt the lesson from Project India Blend. The Tea Board will handpick teas from selected Indian exporters and also from Russian importers who sell Indian teas in packets. Only these will be featured in our promotional campaigns. Moreover, we have to work out a strategy which is effective within a limited budget, ” the Tea Board official said.

The major Indian tea exporters to Russia are J.V. Gokal, Hindustan Lever, Saraf Trading, Bhansalis, Global Exports, Girnars, Limtex and others. However, the most popular brand in Russia is Dilham — a Sri Lankan brand. Popular Indian brands sold in Russia are Maharaja and Princess Gita.

“We have already held talks with the Russian Tea and Coffee Federation on the matter. They are also keen on the project,” the official further added.

The Indian Tea Association (ITA) status report for 2001, reveals that the buying pattern of Russia, the largest importer of Indian tea, has reversed. The pattern clearly shows a shift towards exports of cheaper teas, thus associating Indian tea with cheaper brands.

The ratio of tea exports from north and south India, earlier 65:35, has now been reversed to 30:70. Exports of orthodox tea have declined and those of CTC teas has gone up.

Moreover, though Russia is buying steadily this year, but volumes are low. This has affected domestic prices as there is a huge stock of unsold teas lying with all companies.

The protocol signed with the Russian Tea Association in 1998 envisages an export of 100 million kg from India every year.

The Tea Board is also taking steps to enforce quality on packets sold as Indian tea in Russia.

“We have brought some packets sold as Indian teas in Russia. We are testing them here and if we find any anomalies the issue will be taken up with the Russian government,” the Tea Board official further added.

   

 
 
GOVT UNEASY ABOUT UBI RECAP SCHEME 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, Aug. 29: 
The Union finance ministry has raised questions on the capitalisation plans of the United Bank of India (UBI), even though the bank has said that it does not require any more funds at the moment.

The ministry, which expressed concern on how the bank proposed to garner Rs 50 crore for its recapitalisation, has, however, not prescribed any harsh measures, like closure of more branches.

Madhukar, UBI chairman and managing director said, “We were lucky to have been able to present our case before the finance ministry. Though the ministry raised questions on our capitalisation, we have told finance secretary Ajit Kumar that at the moment, our problem is not an additional capital of Rs 50 crore. What we need now is increase our yield and pick up assets where little initial capital outlay is necessary.”

The bank had increased its Tier-II capital by almost Rs 100 crore through private placement of bonds in the last financial year. This, the CMD said, has boosted its capital adequacy ratio to 10.5 per cent.

UBI also plans to introduce an innovative loan product to tide over the poor credit offtake.

“We are planning to introduce a new loan product meant for entrepreneurs who procure raw materials from semi-urban and rural areas. This loan will carry an interest lower by 1 per cent from the prevailing market rates. On one side this will help our credit portfolio to grow and help the rural economy on the other,” the CMD said.

The bank, whose non-performing assets (NPAs) hover around 10 per cent of the total advances, has adopted a new strategy to recover its bad debts.

The strategy envisages delegation of more power to branch managers for taking instant decisions on the recovery of NPAs. Earlier, each recovery proposal was forwarded to the CMD before any decision was taken. “This resolution has been passed at the last board meeting held on Saturday. And I hope this will enable us reduce the NPAs substantially,” Madhukar said.

The bank has already informed the finance ministry that it intends to bring down the NPAs to a level of 5 per cent in the current fiscal.

In the restructuring plan submitted to the finance ministry, the bank has said it wants to close down 55 of its unviable branches by March 2003. It has already closed down 23 of them. The bank is also trying to bring down the average cost of funds from 8 per cent to 7 per cent in the current year. Similarly, the average spread, now at 2.6 per cent, is expected to cross 3 per cent at the end of the current financial year.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 47.12	HK $1	Rs.  5.95*
UK £1	Rs. 68.59	SW Fr 1	Rs. 27.95*
Euro	Rs. 43.02	Sing $1	Rs. 26.60*
Yen 100	Rs. 39.42	Aus $1	Rs. 24.70*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4530	Gold Std(10 gm)	Rs. 4460
Gold 22 carat	Rs. 4280	Gold 22 carat	N.A.
Silver bar (Kg)	Rs. 7075	Silver (Kg)	Rs.7160
Silver portion	Rs. 7175	Silver portion	N.A.

Stock Indices

Sensex		3300.62		- 12.45
BSE-100		1560.68		-  2.51
S&P CNX Nifty	1067.45		-  3.20
Calcutta	 112.31		+  0.34
Skindia GDR	 554.21		-  1.85
   
 

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