Gilt auctions open to retail investors
Forbes raider squares off for fresh bout
Shaw Wallace lines up Rs 280cr expansion
Terms set for more cellular frequency
PowerGrid eyes distribution
HPL goes hunting downstream

Mumbai, Dec. 9: 
In an attempt to boost retail participation in government securities (gilts), the Reserve Bank of India (RBI) has permitted small investors to table non-competitive bids worth at least Rs 10,000.

This means that a retail investor would only have to put in the required amount in government securities without quoting the yield or the price at which he would like to purchase the securities in an auction.

Central bank officials said the allocation will be made on a non-competitive basis at the weighted average rate emerging from auctions based on competitive bidding. Retail investors will enjoy the facility through banks and primary dealers. The minimum amount for bidding will be Rs 10,000 (face value) and in multiples of that figure.

According to the Reserve Bank officials, all retail investors will be given a combined allocation of securities, up to 5 per cent of the notified amount in the auction.

RBI clarified that participation on non-competitive basis is open to any person, including individuals, firms, companies, corporate bodies, institutions, provident funds, trusts and other entities approved by the central bank.

Regional rural banks, urban co-operative banks and non-banking finance companies will also be able participate on a non-competitive basis. However, this will be treated as an exception given their statutory obligations.

Commenting on the RBI’s decision to deepen retail trading in securities, money market observers said the move is likely to improve investor participation in the gilts market, apart from opening it to a larger pool of individuals and institutions.

Unlike other investments, the main advantage of gilts is that it carries no risk. However, in spite of the instrument’s attractiveness, not much retail participation has been witnessed over the past few years.

According to money market watchers, one of the difficulties often faced by investors is the requirement of having to maintain current or subsidiary account with the Reserve Bank of India (RBI). In addition, many find it hard to fathom the nuances of submitting a competitive bid.

“We decided to relax the facilities in light of the difficulties faced by retail investors,” a central bank spokesperson said, while commenting on the market-widening move.

The RBI said participation on a non-competitive basis in government securities auctions will be open to investors who do not maintain current or subsidiary general ledger account with it. They can make a single bid for an amount not exceeding Rs 1 crore (face value).


Mumbai, Dec. 9: 
Pavankumar Sanwarmal, the man behind the counter offer for Forbes Gokak Ltd, who has pitted himself against construction baron Pallonji Mistry, has been asked by the Securities and Exchange Board of India (Sebi) to deposit highly liquid securities in the escrow account, instead of shares of Pilani Investments.

Sanwarmal had deposited as a guarantee, the shares of Pilani Investments, the main holding company of the Birla flagship, Century Textiles and Industries Ltd. The Pilani shares, listed on the Delhi Stock Exchange, have been dormant for long.

On November 29, Sebi directed Sanwarmal’s lead managers to ensure that securities with greater liquidity are deposited in the escrow account. His request for extension of the deadline for despatch of offer letters from December 5 to December 19, has been granted by the market regulator. “The Sebi order directing me to change the securities within three days was difficult to comply with, as their order was dated November 29. We therefore requested for an extension,” he told The Telegraph in an exclusive interview.

However, this time he will be extremely careful and has decided to deposit either bank guarantees or securities that are easily encashable.

The diminutive man hardly looks the hostile and aggressive corporate raider, but has nevertheless, given the Mistry group a tough time.

Operating from the 15th floor of Maker Chambers V at Nariman Point, Sanwarmal was candid about the fact that he has put the Pallonji Mistry group in a spot. Last week, Pallonji suddenly withdrew the appeal filed before the Securities and Appellate Tribunal contesting Sebi’s decision to allow Sanwarmal’s counter offer.

“They have probably withdrawn the appeal to soothe our feelings,” reasoned the 41-year old raider with several investment firms under his belt, besides a large farm on the outskirts of Pune. However, he is not biting the bait.

“I have brought several deficiencies in their (Mistry) offer to Sebi’s notice. If I am proved correct, Sebi can even strike down the open offer,” he claimed.

Sanwarmal alleges the Mistry group has violated Sections 25 and 26 of the takeover code in their offer.

Sanwarmal, though, is not new to Forbes Gokak. “We were holding more than 5 per cent of Forbes’ equity since the 1980’s though we may recently have ramped up our shareholding,” he revealed. “We would have been silent investors if the Tatas continued at the helm.”

However, he has no such confidence in Mistry’s management ability.

Referring to one of the construction tycoon’s local finance companies and to South India Viscose, which is a BIFR case, he said, “They are good in the construction business, but their other businesses have not done well.”

Sanwarmal also claimed to hold a significant stakes in several other companies, whose names he refused to reveal at this juncture.

Besides, Kayur Mehta, son of Forbes chairman Freddie Mehta is a friend, a relationship which dates back to the days when Kayur was the managing director of Tata Investments, a company where Sanwarmal holds a significant stake. While the stake in Tata Investments may have come down, it is not a negligible one.

He also holds a significant stake in DNI Investments, a Thapar group holding company. The shares were acquired by his father, Sanwarmal Sedmal, a leading farmer, who received the “Krishi Pandit” award for highest productivity in wheat from the central government. Sedmal, who had no children, adopted Pavan Kumar, the youngest son of his elder brother.


Calcutta, Dec. 9: 
Liquor major Shaw Wallace will invest Rs 200 crore in setting up six new breweries around the country, and Rs 80 crore in upgrading its distilleries.

The company is also set to foster strategic alliances with foreign spirit and wine majors to launch new brands.

“Shaw Wallace is investing in its beer production capacity as we expect consumption in the country to pick up,” Amar Sinha, director, said.

The company has 17 breweries across the country. Shaw Wallace also intends to launch new brands of premium whisky and wines.

The company is investing in its facilities in a bid to turn itself around. Sinha, who has taken over as director (sales) five months back, said: “We will invest to improve our facilities and retire debts,” Sinha said. Close to Rs 200 crore of high cost debt was retired by the company earlier this year.

The company also intends to step up its marketing drive and has decided to use golf as a vehicle.

“We are not only sponsoring leading golf tournaments in the country, but also importing golf kits for sale under the Royal Challenge brand. The idea is to promote the game and the brand among youngsters,” Sinha added.


New Delhi, Dec. 9: 
The Department of Telecommunications (DoT) has rejected the demand for the allocation of additional spectrum to cellular mobile service providers unless they have a subscriber base of over 9 lakh in one circle. Spectrum is a range of wave-lengths applied to gauge radio frequencies.

An internal committee of DoT, which oversees allotment of additional frequency to cellular operators using global system for mobile (GSM) communications, has in its report rejected the demand for more spectrum.

The report has advised the cellular operators to use the available frequency optimally.

“None of the cellular operators in the country has more than 4.5 lakh subscribers in a service as per the latest available figures. As such, the already allotted frequency spectrum of 6.2 megahertz will be sufficient for another 24-30 months in Delhi, Mumbai and the other metros if the networks are planned optimally,” the committee’s report said.

Cellular operators, particularly in the metros, claim that they are facing problems in offering quality service to their subscribers.

They contend that this has also been a major hindrance to their plans to add more customers.

“The present allotment of frequency spectrum is insufficient as there are certain congested places in the service areas where the subscriber base is very heavy.

The problem is further compounded because of infrastructural constraints like security, space and power for the installation of additional base stations in the congested areas,” said a senior executive of Cellular Operators Association of India (COAI).

However, the committee said in its report that operators can enhance the subscriber capacity if they use the latest technology using micro and pico cells which are capable of providing advance radio frequency features. These new cells can provide connectivity to double the number of subscribers as against the existing cells used by the operators.

The committee has however recommended that cellular operators in Delhi and Mumbai may be allotted an additional 2 Mhz spectrum after one year.

“This would be given either in the GSM 900 Mhz or 1800 MHZ band based on their needs so that operators may plan their networks optimally in advance and order the equipment for their future needs,” DoT sources said.


Calcutta, Dec. 9: 
Powergrid Corporation of India Ltd (PGCIL) has decided to enter the distribution business in a big way. The PGCIL board, which meets on December 18, will take the final decision on the matter. The idea is to initially set up a 100 per cent subsidiary through which PowerGrid will invest in distribution joint ventures.

Addressing a press conference here today, R.P. Singh, chairman and managing director of the company said, “The decision to form a distribution company will be taken in the next board meeting. In the distribution joint ventures we will remain as the minority partner. The board will also pass the resolution for inviting partners, domestic and global, in distribution at its next meeting.”

As far as its transmission business is concerned, PGCIL is finalising a joint venture with Tata Power to set up transmission lines from Bhutan’s Tala Hydro Project (1020 MW), to Delhi, for evacuation of power in the eastern region and transmit surplus power from there to the northern region. PGCIL will remain the minority partner in this venture also.

Jain said the power sector in the country needs an investment of about Rs 80,000 crore in the next 10-12 years. Of this, PGCIL alone will spend Rs 50,000 crore, he said. The remaining Rs 30,000 crore will come in two forms — one through the joint venture route and the other through 100 per cent private investments by independent private transmission companies (IPTC).

PGCIL has identified a basket of eight projects totalling about Rs 22800 crore that can be implemented through the IPTC route and 17 parties have already submitted ‘expression of interest’ in June this year.


Calcutta, Dec. 9: 
Even though the mother plant is tottering under a financial crisis, the high-powered committee on Haldia Petrochemicals’ downstream units is making a fresh bid to attract investors from neighbouring Orissa to invest in downstream projects.

Instructions to interact with prospective entrepreneurs from Orissa have come from chief minister Buddhadeb Bhattacharjee, who recently visited the state and invited investors to participate in HPL’s downstream projects.

The committee, comprising Jawhar Sircar, state commerce and industry secretary, D. P. Patra, managing director of West Bengal Industrial Development Corporation and Richard B. Saldanha, will meet entrepreneurs in Orissa on Monday. The committee had held similar presentations in Patna and Bangalore early this year. HPL has witnessed a sharp dip in polymer sales, to 32,000 tonnes, from 58,000 tonnes a few months ago. However, this is not being viewed as an exception, as polymer sales have flagged globally.

“We are trying to find out if investors want a discount on polymers or any other incentives. In the present recession, we will have to consider their proposals and see how best we can accommodate them,” a senior state government official said. According to the latest status report on Haldia Petro downstream projects, about 11 units have come up in Orissa. The number of downstream projects on October 31 stood at 473.

Out of these 473 projects, 443 have come up in West Bengal and the remaining 30 are in other states, with six in Bihar, three in Jharkhand, eight in Chattisgarh, and one each in Uttar Pradesh and Maharashtra.

However, most investments are in the small scale and medium scale sectors. Of the 473 units, 430 are in the SSI and 40 in the medium-scale sectors. Only three projects have come up in the large-scale sector.

“Large-scale investment is always welcome. But in the present environment, we do not expect any major investment immediately. Hence, we are looking at the small scale and medium sectors, so that there is an immediate offtake of polymers,” sources added.

While the government is making a fresh bid to invite downstream projects, it is also trying to rope in Indian Oil Corporation into the project. Sources said HPL chairman Tarun Das, along with state commerce and industry minister Nirupam Sen, will meet IOC chairman M.A. Pathan next week.

IOC officials confirmed the meeting and said some positive developments are expected to emerge soon. “We had a positive meeting with the FIs, including IDBI,” they said.


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