OCBs to come under Sebi ambit
Futures in 31 by Diwali
SWC bound by CLB order on four directors
Enron one step closer to quitting Dabhol
Gokak counter-offer valid: Sebi
Reserve respite for SBI on cards
MNC drug scrips steal show
SBI Home gropes for bailout funds
Panel to vet CIL merger plan

New Delhi, Nov. 5: 
The government is likely to take overseas corporate bodies (OCBs) out of the portfolio investment scheme of the Reserve Bank and instead treat them at par with foreign institutional investors (FIIs).

This comes in the wake of news reports that the government has given OCBs undue favours and treatment which placed them at a pedestal higher than that of local investors and that the government has but scanty records of their investment flows. The implications of this move would be to bring stock market trading by OCBs strictly under the control of Securities and Exchange Board of India (Sebi) as in the case of FIIs.

Speaking to reporters, J. Bhagwati, joint secretary in the finance ministry, said, .The OCB route will see a revision, RBI will come out with the revised guidelines shortly."

The government has also decided against giving any more incentives to the stock market. A high-level meet on the capital market has also decided that Sebi should shortly come out with norms on trading volumes, exposure standards and market caps for derivatives trading by foreign institutional investors.

Finance minister Yashwant Sinha today told newspersons, .There will be no more sops for the capital market..

Worried by the mounting criticism of the series of pro-market measures taken by this government, even from among BJP MPs, the finance ministry seems to have taken a decision that no more market-friendly package of measures would be announced.

Among measures announced recently are relaxation of buyback norms, introduction of limited futures and options in select scrips and increase in the investment limits available to foreign institutional investors up to the sectoral foreign direct investment cap levels. Despite these moves, there has been increasing pressure from brokers for further relaxations, especially in futures and options trading and in concessions on witholding tax.

However, several members of the joint parliamentary committee probing the recent stock market scam have been extremely critical of what they consider to be moves by the government to artificially prop up the market.

The JPC wants the government to instead tighten various surveillance measures on bourses and its main players, including overseas corporate bodies and FIIs.

The government has been accused of allowing OCBs to play in the market without any kind of surveillance and of misusing a double taxation treaty with Mauritius to take out money from the country at zero taxes.

The meet decided to recommend that the OCBs should be taken out of the portfolio investment scheme of the RBI where these NRI run companies had merely to let operating banks know of their investment flows into and out of India. The plan is to place them under Sebi surveillance.

A final decision on the issue will, however, be taken by the finance ministry in consultation with the Prime Minister.s Office and the external affairs ministry.

The high-level meeting between RBI Bank governor Bimal Jalan, Sebi chief D.R. Mehta and finance ministry officials also concentrated on other moves to tighten prudential norms.

The measures being considered include the grant of judicial powers to the Sebi tribunal. This tribunal will have the right to attach properties of those held guilty of misconduct.


New Delhi, Nov 5: 
The Securities and Exchange Board of India will launch futures trading in 31 scrips by Diwali. Sebi also plans to give the final clearance to a proposal to corporatise bourses at its next board meeting scheduled later this month.

Sebi chief D.R. Mehta told newspersons after a meeting with finance minister Yashwant Sinha, .Futures in individual stocks will be introduced by Diwali. This will be permitted in 31 active scrips..

Mehta said both the NSE and BSE were expected to be ready by that time with the necessary software and systems. Sebi has so far allowed derivatives trading in index futures and options in a bid to provide hedging instruments to the investors. However, volumes have been small and the market is hoping that futures in select scrips will provide the much-needed booster to this segment of the securities market.


Calcutta, Nov. 5: 
The Supreme Court today upheld a 1998 Company Law Board (CLB) order paving the way for appointment of four independent directors on the board of Manu Chhabria’s Shaw Wallace & Company (SWC).

Dismissing the special leave petitions filed by SWC and the All India Shaw Wallace Employees Federation against a Calcutta high court order, a bench comprising B. N. Kirpal and K. G. Balakrishnan said: .We see no reason to interfere with the Calcutta high court order. The petitioner can approach the CLB for changes in the 1998 order.. The court had also left the CLB order intact.

A company release confirmed the apex court had disposed of the petitions on the issue of appointment of government nominees on its board of directors, and said it is free to seek a change in the CLB’s previous order. The company contends that none of the grounds on which the original order was passed by the CLB, hold.

The board had, on July 27 1998, asked Shaw Wallace to appoint four directors on its board for two years. Two of those, to be nominated by CLB, were required to be experts in taxation and business management; the other two would be nominated by the central government and would specialise in audit, accounting, taxation and finance. According to the CLB, the two-year term would begin from the day the board holds its first meeting with the four directors . something that has not happened so far.

Winding-up petition

SWC’s decision to shift its registered office to Mumbai took a new turn with the Calcutta high court today admitting two separate applications for winding up of the company.

Admitting the applications, filed by two employees of the company, Justice S.K.Mukherjee fixed November 9 as the date of hearing. The employees filed two separate application under section 433 of the Companies Act 1956.


Nov. 5: 
Dabhol Power Company (DPC) today served a .Notice of Asset Transfer. to the Maharashtra State Electricity Board (MSEB). This will enable the company to start the process of valuing Dabhol’s assets following the termination of the power purchase agreement (PPA).

DPC took this decision after MSEB failed to make payments in time over the past two years and then ran up substantial arrears, said a company spokesperson. The payments to DPC include a repudiation of the PPA by MSEB.

The company claimed the transfer notice is an important step in the asset valuation process agreed to by all parties to the PPA and is necessary to protect the interests of Dabhol’s sponsors, lenders and other stakeholders. Since the transfer notice has been sent, the next logical step would be the final termination notice, which is also likely to be served in the near future to continue the legal process against MSEB.

According to Jimmy Mogal, director, corporate communications, DPC, .We would still prefer to resolve this dispute amicably through a negotiated purchase by the Government of India (GoI) and Indian financial institutions (FIs) of the foreign sponsors equity, including offshore lenders. debt. However, ongoing discussions between DPC and Government of India/Indian financial institutions are yielding no significant progress towards a fair and reasonable solution.. .

Consequently, DPC is left with little choice other than to serve the transfer notice to MSEB, which draws us closer to final termination of the PPA and the ultimate recovery of damages as allowed under the project documents,. he added.

Enron had decided to walk out of the 740-MW phase-I, which is operational, and 1,444-MW phaseII to be commissioned shortly, project over payment disputes with the Maharashtra State Electricity Board.

The Houston-based energy giant wants to pull out of the DPC project and recover its $ 1 billion investment in the project. The valuation of the DPC assets is a first step towards assessing the company’s true value.

Enron has a 65 per cent stake in the project while Bechtel and GE have 10 per cent each. The rest is held by the MSEB.

When Enron announced its intention to pull out, BSES and Tata Power had evinced interest in DPC but the figures they have been talking of falls way to short of Enron’s expectations. Simultaneously, Enron has been trying to strike a deal with state-owned National Thermal Power Corporation (NTPC) for which it has held preliminary talks with the Union government.


Mumbai, Nov. 5: 
The Securities and Exchange Board of India (Sebi) today said the counter-offer made by Pawan Kumar Sanwarmal for shares of Forbes Gokak was in tune with the norms and that it had no evidence to suggest that it breached the law.

The deal that the Pallonji Mistry group sewed up with the Tatas to take control of Forbes Gokak was threatened when Sanwarmal, a 42-year-old trader with a net worth of Rs 3 crore, played the interloper. He promised Rs 88.50 a share, up from Rs 80 that Shapoorji Pallonji & Co was ready to shell out in the open offer for 20 per cent of the Forbes Gokak’s equity.

The counter-offer was made public by Aryaman Financial Services Ltd, the manager to Sanwarmal, who has picked up 14.8 per cent in the erstwhile Tata group firm.


Mumbai, Nov. 5: 
The Reserve Bank of India (RBI) is likely to exempt the State Bank of India (SBI) from maintaining the cash reserve ratio (CRR) on India Millennium Deposits (IMDs) and the Resurgent India Bonds (RIBs).

If it comes through, the immunity will be a big blessing for the banking giant, helping it retain some Rs 1,000 crore which would otherwise have to be kept with the central bank as part of the balances under CRR.

A formal announcement to this effect is still to come, but sources say the RBI is .favourably disposed. towards the SBI’s request for a reserve relaxation.

According to bankers; several rounds of meetings have been held between the SBI topbrass and apex bank officials. State Bank argued that the deposits were raised in national interest to create a forex buffer.

The mid-term review of monetary and credit policy unveiled on October 22 withdrew all exemptions, barring inter-bank ones, in meeting CRR requirements. RBI governor Bimal Jalan said the move was part of a plan that aims at rationalising the ratio, scaling it down to around 3 per cent in the long term.

Optimism that SBI would win a breather pushed up its share from an opening quote of Rs 194 to the day’s high of Rs 203.74. It closed at Rs 200.35, a rise of over 3 per cent against its previous finish. The IMDs, targeted at NRIs and denominated in dollars, pound sterling and the euro, garnered around $ 5.23 billion. The RIBs collected $ 4.23 billion in 1998. While funds under RIBs were raised at 7.75 per cent (2.25 per cent above the six-month Libor), the cost of raising funds under IMDs was 8.50 per cent.


Mumbai, Nov. 5: 
Shares of multinational pharmaceutical companies have moved to the centre-stage, buoyed by hopes that the Centre’s new drug policy would relax the raft of price controls on their products.

Freedom to charge consumers their own prices is expected to boost the balance-sheets of these companies, which now have to submit at least 50 per cent of their products to the government’s price controls.

Some of the key beneficiaries on this count could be companies like Glaxo India, Burroughs Wellcome, E Merck, Knoll Pharma, German Remedies and Pfizer India. Analysts, however, are more cautious in gauging the impact of the move, saying the quantum of benefits for many of these companies can only be ascertained after the government announces the changes in the Drug Price Control Order (DPCO) down to the last detail. .We will have to wait till the final list comes out. Only then the implications will be known for specific companies,. said Prashant Nair, an analyst at Pranav Securities.

Though expectation about the removal of these curbs has been building up for some time, they have peaked over the past few days after indications that the government will soon a liberal policy that could give multinational drug companies a big shot in the arm.

The signs of that are already evident on stock exchanges, which have propelled shares of most pharmaceutical MNCs. The rally has been led by stocks like Glaxo India, which have been able to catch the fancy of foreign investors and local speculators alike. .

Most MNC drug stocks have lost value in the past few months, even as those of domestic pharmaceutical firms gained.Therefore, apart from the valuation, expectations about a dramatic reduction in the list of drugs of price control have fuelled buying,. an analyst said.

Today’s trading, too, offered evidence about the increased appetite for these shares: Glaxo shot up by close to 4 per cent or Rs 11.20 to finish off its highs at Rs 295.50.

The stock,which opened at Rs 285, scaled an intraday peak of Rs 299.40. The counter saw 79,653 shares change hands, leading to a turnover of Rs 2.34 crore. Other drug shares which grabbed the spotlight included German Remedies, Knoll Pharma, Parke Davis, Pfizer India and E Merck.


Calcutta,Nov. 5: 
The fate of the city-based SBI Home Finance Limited, promoted by State Bank of India and Housing Development Finance Corporation, hangs in balance because financial institutions (FIs) holding a part of its equity are yet to confirm their participation in a bailout package aimed at lifting its net worth.The company has sought support to the revival programme in a letter written to the institutions, but they have not made it clear whether they would pitch in.

State Bank and HDFC own 40 per cent of SBI Home Fin’s equity, mutual funds and Unit Trust of India 7.98 per cent, banks, FIs and insurance companies 9.93 per cent, foreign institutional investors (FIIs) 0.02 per cent, private corporate bodies 7.6 per cent and the public 34.35 per cent.

Senior officials said the uncertainty presents the State Bank management with three options . to infuse the required funds, ask the unwilling shareholders to leave and finally, to close down the company.

As the suspense over the fate of the revival deepens, the morale of officers in SBI Home Finance has taken a beating..They do not know what will happen. With the bailout funds elusive, they have been gripped by a fear that the SBI management may soon take the decision to close down operations,. they added. There are around 80 officers working in Calcutta.

The firm’s net-worth has been wiped out with losses of Rs 82.35 overwhelming shareholders. funds of Rs 17.76 crore (including reserves of Rs 2.76 crore) on March 31, 2001. Accumulated losses have shot up by Rs 21.7 crore in 2000-01 from Rs 60.65 crore at the end of 1999-2000.

The board of the home finance company has proposed that an additional capital of Rs 85 crore be injected to help achieve a turnaround. This money is to be raised from financial institutions,which will be issued Rs 8.5 crore worth of shares with a face value of Rs 10 each.

The bailout package also includes private placement of 25 lakh preference shares aggregating to Rs 25 crore (face value of Rs 100 each) with institutional investors. The issue of fresh capital would bring the net-worth, which is negative to the tune of Rs 64.59 crore at present, to a positive figure. This is based on the assumption that there will be no further losses. For the quarter ended June 30, the net loss stood at Rs 5.44 crore on the back of a total income at Rs 9.35 crore.


Asansol, Nov. 5: 
The central government has formed a high-powered consultative committee to review the merger proposal of Coal India Ltd’s seven subsidiaries.

Union minister for coal and communication Ram Bilas Paswan said here today that the committee will also look into the economic health of the three lossmaking coal companies, Eastern Coalfields, Bharat Coking Coal and Central Coalfields which have suffered over Rs 1000 crore loss last year. Paswan assured that the coal sector is not going to be privatised and not a single worker will be retrenched.

The coal minister also announced that 20,000 casual workers have been brought under payrolls. While declaring a one-time dole of Rs 50,000 for the families of the workers who have died of mine accident, assured more safety arrangements inside the coal mines. Paswan stressed the need for more stringent vigil to check coal pilferage, for which several coal companies are facing huge losses every year.

Paswan, accompanied by coal secretary N.K. Singh and CIL chairman N.K. Sharma, visited the Chinakuri mine, which is one of the largest coal mines of Asia.

British initiative

The Indo-British Partnership will meet early next year to take a long term view on Britain’s participation in India’s coal mining sector. Addressing a press conference in Calcutta today, Philip Deakin, director general of Association of British Mining Equipment Companies (ABMEC) said the IndoBritish partnership on coal mining is being strengthened.

Deakin said UK companies already have various exposures in the Indian mining industry, particularly in the coal sector.

The British companies offer a varied range of technology to the Indian coal industry both for higher productivity as well as safer and environment friendly production processes, he added.

ABMEC along with four British companies.Joy Mining Machinery, Stamler Corporation, Baldwin & Francis Ltd and Allenwest Wallacetown.are participating in the 6th International Mining and Machinery Exhibition starting tomorrow.


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