ICICI merger goes to investors
Anti-money laundering Bill cleared
Delhi bourse on BSE alliance path
ACC buys out Etex in Eternit Everest
Swadeshi hawks train guns on FDI in retail
Alpic hunts for new insurance partner
Indian Oil puts expansion plans on the backburner
Decision on drug price curbs soon
Canon to hike market-share
Foreign Exchange, Bullion, Stock Indices

Mumbai, Dec. 18: 
The decks for the creation of the country’s first universal bank will be cleared when ICICI Ltd and ICICI Bank seek permission of their shareholders for a reverse-merger on January 24 and 25.

The financial entities have submitted a scheme of amalgamation to the Mumbai and Ahmedabad high courts to convene the shareholders’ meeting following Reserve Bank of India’s (RBI) nod to start legal formalities.

The central bank has not cleared the union per se, but asking both sides to win court approval is seen as a sign that it has no problems with a process that would spawn the country’s second largest commercial bank.

Until the final word is out from the Old Lady of Mint Street, ICICI is gearing up to live with the rigours of the reserve norms (CRR and SLR) that are in force for commercial banks functioning in the country.

K. V. Kamath, managing director and CEO of ICICI Ltd, said his institution has sold assets over Rs 4,000 crore so far. Selling these assets, largely corporate and project loans, is a step towards meeting a target of Rs 8,000 crore set for the purpose. He made it clear, however, that retail assets were not offloaded in the purge.

Money raised from the sale, as well as an investment of Rs 8,000 crore in government securities, will help the merged outfit meet statutory liquidity ratio (SLR) norms.

It is estimated that the burden of maintaining the cash reserve (CRR) and statutory liquidity ratios will be close to Rs 18,000 crore annually.

Kamath, speaking to reporters at a function organised by the Mumbai Press Club here today, said the bank will be ready with a strategy for international expansion in early 2002.

ICICI Bank, having won regulatory approvals to open a representative office in the UK, has set its sights on the four key financial hotspots of New York, London, Dubai and Singapore.

Predicting intense competition between the new-generation private sector banks and foreign banks because of the changing situation in the financial sector, Kamath said: “Though none of the foreign banks have lined up huge capital investments so far, the threat posed by them continues to be a big one for us.”

He said the structure of financial business, technology, range of products being offered and the channels through which they are provided, have changed dramatically over the last couple of years. “There is also the process of deregulation. All these elements will force the financial services industry to change.”

ICICI Bank, he said, has seen over the past few years seen as massive surge in internet accounts and it is now among the top three banks in the world in Net banking — a business that could double in six months.

The merger of ICICI and ICICI Bank will engender an entity with assets of Rs 95,000 crore, and 8,275 employees on its rolls.


New Delhi, Dec. 18: 
The Cabinet today cleared a redrafted Prevention of Money Laundering Bill which seeks to tackle funding of terrorist groups and narcotics mafia amongst other things.

The Bill, which was introduced in Parliament last year, had been referred to a Parliamentary committee which had sought to dilute some of its provisions. The re-worked Bill accepts some of the recommendations of this committee, but has taken a harder stance against narcotics and terrorist funding.

The new Bill has set a floor limit of Rs 30 lakh for funds generated from any other crime, but there is no minimum amount set for laundering of narcotics or terrorist funding.

Besides terrorism and drug offences, the Bill covers rebellion, culpable homicide, extortion, kidnapping, dacoity, forgery, counterfeiting, prostitution, offences under the Arms Act and the Narcotic Drugs and Psychotropic Substances Act and corruption by public servants only. However, it does not cover businessmen who generate black money by falsifying accounts and by over- or under-invoicing exports and imports.

Nor will it cover corrupt politicians or their relatives who do not fall within the ambit of the definition of ‘public servant’. In fact, economic offences other than counterfeiting and forgery are not covered by this Act at all. These will be covered by the even weaker Foreign Exchange Management Act.

Offences under the Bill are punishable with imprisonment of three-seven years and fines of up to Rs 5 lakh. In case the offence is related to laundering money gained from drug trafficking or terrorism, the jail term could go up to 10 years.

The Cabinet also approved the signing of an air services pact between India and Yugoslavia and decided to rename Port Blair airport after revolutionary Veer Savarkar and Bhopal airport after Raja Bhoj.

The Cabinet Committee on Economic Affairs which also met here today, approved allocation of two coal based methane blocks in Raniganj and Jharia to a consortium formed by ONGC and Coal India Ltd for exploration and production. The CCEA also awarded another block at Raniganj to Essar Oil, a Bokaro-based block and another at North Karanpura to ONGC and IOC. Reliance Industries has also been given two blocks at west and east Sohagpur.

The Cabinet Committee also gave mega-power status to the 4x 660 megawatt Sipat Super Power Thermal Power project being set up by NTPC near Bilaspur in Chattisgarh. The power station, set up at a coal pithead, will supply power to Madhya Pradesh, Gujarat, Daman & Diu and Dadra & Nagar Haveli.

The CCEA also cleared a Rs 61 crore turnaround plan for Electronics Corporation of India Ltd. This includes waiver of Rs 16 crore in interest payments and conversion of a Rs 45 crore loan into equity.


New Delhi, Dec. 18: 
The Delhi Stock Exchange (DSE) has set a time frame of three months for its subsidiary — DSE Clearing Corporation — to seek membership of Bombay Stock Exchange (BSE). Once the subsidiary becomes operational, the exchange may opt for a reverse merger with the subsidiary, which will indirectly make DSE a subsidiary of BSE.

According to highly-placed sources at DSE, an initial corpus has already been created out of the sum of Rs 1 lakh received from each of the 80-and-odd members. Another 20-25 members are expected to join up by December 25, which is the last date for signing on as a member of the DSE Clearing Corporation.

The non-refundable deposit of Rs 1 lakh which will go into the initial equity of the subsidiary which has been set up with an authorised capital of Rs 25 crore, enabling members to trade both in the securities and derivative segments of BSE.

This marks a throwback to the original proposal which was to provide DSE members access to the BSE through a subsidiary. The subsidiary plan had been hanging fire for long and was scuttled on some pretext or the other every time it came up for discussion at the board meeting. The DSE Karamchari Union has been one of the strongest opponents of the plan and had on several occasions in the past drawn the attention of the independent directors to the alleged ‘misuse’ of exchange reserves for setting up the subsidiary.

At the last AGM, a committee headed by then president Sudhir Joshi was formed to look into the issue which finally decided not to set up the subsidiary by using the exchange funds because of the stiff resistance from public-nominee directors.

DSE president Vijay Bhushan says that with traded volumes plunging sharply over the past few months, the exchange was forced to revive the proposal that would give its members the opportunity to trade on the largest stock exchange in the country.


Mumbai, Dec. 18: 
Associated Cement Companies Ltd (ACC), the country’s largest cement maker, today announced its plan to acquire the entire equity of Eternit Everest Ltd held by its co-promoters—the Belgium-based Etex Corp.

ACC said the proposed acquisition is aimed at further strengthening its presence in products related to the cement business and the construction industry and is expected to enhance shareholder value for both companies.

Analysts aver the deal is a step towards consolidating ACC’s hold over the company as the foreign partner appears to be disinterested in the Indian operations. Moreover, most cement companies are now considering ways to add value to their product.

ACC, which took the lead in entering the ready-mix concrete segment, a relatively new concept in the country, was reported to have been looking for a way out. The long gestation period was touted as one of the reasons for the disenchantment. Therefore, a section of analysts are confounded by its move to invest more in the venture.

The Eternit Everest stake will be acquired by ACC at a price of Rs 22 per share. The Eternit share zoomed to touch Rs 31.05 from Rs 28 on the back of 84 trades for 17,700 shares. Interestingly, ACC’s shares fell sharply from an intra-day high of Rs 160.50 to close at Rs 153.75. Marketmen however said the fall had more to do with the general correction in the cement counters.

The share purchase agreement to be entered into on December 26, will see ACC’s stake in Eternit Everest Ltd rise from 38.50 lakh shares (26.01 per cent) to 112.50 lakh shares (76.01 per cent).

Eternit Everest Ltd is a public limited company listed on the BSE.

The acquisition, ACC said, is subject to the Reserve Bank of India’s nod and other approvals, if any. The proposed acquisition is an inter se transfer of shares amongst promoters and therefore an open offer for the remaining shares lying with the public appears unlikely, say analysts tracking the cement industry.

Eternit Everest Ltd was set up in November 1934 in equity participation with Turner and Newall plc UK, for making fibre-based cement products. It has four plants in India, with ACC holding 26.01 per cent of its paid-up share capital.

In 1988-89, T&N’s equity stake of 49.56 per cent was transferred to Eteroutremer S A, Belgium, the holding company of the Brussels-based Eternit group. It is the largest manufacturer of fibre-based cement products in the world and has diversified into other products in the building industry. More recently, Eternit was taken over by the Etex group.


New Delhi, Dec. 18: 
The swadeshi brigade is frothing at the mouth again: this time it’s over the issue of permitting foreign direct investment (FDI) in retailing. The saffron sorority is incensed over the intense lobbying mounted by the organised retail segment to allow 100 per cent FDI which will enable the world’s top retail chains like Wal-Mart and GAP to set up shop in India if they so desire. The swadeshis argue that such a dispensation will ruin the vast numbers of small retailers and lead to job losses.

At present, the government does not allow FDI in the retailing sector. A few foreign companies have come in through joint ventures where their proposals were cleared on a case-by-case basis or through franchisee agreements as in the case of Marks and Spencers, which set up shop in Mumbai and Delhi recently. In a debate organised by the Confederation of Indian Industry on the contentious issue, C. A. Verghese from the Swadeshi Jagran Manch said FDI was the most expensive way of funding in India. He felt that FDI in retailing would seriously undermine the fortunes of the neighbourhood kirana stores.

“Retail is the last link in the supply chain and involves low technology. Capital for this sector should be sourced from within the country,” he said. He said retailing technology should be sourced directly from developers, but there was no need to allow foreign investment in retailing.

S. V. Phene of Trent Ltd (the retailing venture of the Tata group) encored the views of the swadeshi lobby saying that the turnover of Wal-mart alone was $ 180 billion, which is almost the same size of the entire retail industry in India. While Wal-mart employs 1.4 million people, 20 million people in India are employed by retailing.


Mumbai, Dec. 18: 
The board of Alpic Finance will meet on January 5 to restructure its operations, which will see the company make another bid to enter the insurance arena.

The NBFC, which recently faced flak from its fixed deposit holders, will consider ways to enlist “strategic partners” either local or overseas for “future planning in insurance and other related businesses”.

The board will also chart the road map for holding dialogues with banks and institutions to settle the dues in “mutually acceptable ways”. In a communication to the Bombay Stock Exchange, the company said it proposes to hike FII investment up to 49 per cent.

Alpic’s renewed interest in seeking a foray into the fast expanding insurance sector has surprised industry circles here. This is because the company had earlier called off the partnership with German insurance major Allianz, which later tied up with two wheeler major Bajaj Auto Ltd for both life and general insurance joint ventures.

The company also informed BSE that the board will take up a proposal to exit broking activities, confirming rumours on the issue.

Today’s announcement of a possible insurance venture created a lot of interest in the Alpic counter. However, the share still closed below par on the BSE. The scrip was quoting below par at Rs 7.60, but healthy volumes on weekend saw the counter making rapid progress to close at Rs 8.55. Total shares traded in the counter were in the region of 1.86 lakhs.

Earlier, the company’s fixed deposit holders had refused to accept a plan under which Alpic’s FDs would be converted into shares of Allanzers Distribution Services (ADS) of Rs 30, which included a premium of Rs 20.

Alpic Finance, which defaulted on its FDs, had been directed by the Company Law Board through an order dated July 9, to stick to a repayment schedule where depositors would be repaid in four to five instalments stretching up to 2005.


Calcutta, Dec. 18: 
Indian Oil Corporation (IOC) is likely to defer its Rs 13500-crore investment plans for expansion of the Koyeli and Panipat refineries as well as the Paradeep refinery greenfield project. Sources said the oil major is taking a relook at its investment plan in view of the unprecedented slowdown in the economy.

The public sector giant had earlier planned to double the capacity of its Panipat refinery and upgrade the one at Koyeli. While the Panipat refinery would require funds of over Rs 3,370 crore, the Koyeli expansion project would need around Rs 3,000 crore.

“Though the expansion project is not a difficult one, but the decision has to match the present demand-supply scenario. We don’t want to create fresh capacity when there is no growth in demand,” a senior official said.

What’s more, the company is reviewing all its investment decisions as the oil sector is being thrown open to private players in April. “It is the hour of consolidation and we will have to monitor the situation closely. Any hurried decision may have an adverse impact on the company in the medium and long term,” the official added.

IOC, the only Fortune-500 company from India, is extremely cash rich, with a formidable credit worthiness. Hence, it is not the lack of funds that is keeping the company from making any fresh investments at this time, he added.

Besides putting off its brownfield expansion plans, the company also intends to ‘go-slow’ on setting up a refinery at Paradeep in Orissa, which will require an investment of Rs 8,312 crore.

“While we are not abandoning any project, but we may not be able to initiate any work now,” sources said.

The initial capacity of the Paradeep refinery was pegged at 9 million tonnes per annum.

The company currently has seven of the total 17 refineries in the country. Its total refining capacity stands at 38 million tonnes per annum, and has an over 33 per cent share of the country’s overall refining capacity.


New Delhi, Dec. 18: 
The Cabinet Committee on Economic Affairs will consider in three weeks’ time a draft note that will list the drugs that should be taken out of the purview of price controls.

The chairman of the National Pharmaceutical Pricing Authority (NPPA), B. S. Baswan, said a Cabinet note on pruning the list of items in the Drug Price Control Order is under preparation and the final list of is expected by early half of January.

The DPCO contains 67 bulk drugs at the moment and the pharmaceutical industry has been demanding that the list be pruned substantially. Baswan said it has still not been decided how many drugs to take off the list, but he said the proposal was to weed out at least 50 per cent of the items from the DPCO.

Even as speculation intensifies on the drugs that will be taken off the list, a public interest litigation has been filed in the Delhi high court accusing the pharmaceutical companies of “arbitrarily” raising the prices of scheduled and non-scheduled drugs.

The PIL filed by Phulka, an NGO, and advocate B. L. Wadhera said prices of medicines had risen by over 400 per cent in the past few years.

A division bench of the Delhi high court bench comprising justices Devinder Gupta and S.K Kaul has set February 12 as the next date for hearing on the PIL.

The PIL has sought a direction to activate the NPPA to enforce the government’s Drug Price Control Order of 1995, stating that the authority had almost become defunct. The petitioner has said the government in its affidavit had admitted that NPPA did not have sufficient staff to keep tabs on companies that were resorting to exorbitant price hikes.

The function of NPPA is to implement and enforce the provisions of the DPCO order. The DPCO list for bulk drugs is in existence from the year 1995 under which there were 74 drugs in the list.

However, about three months back ago, the list was pruned to 67 bulk drugs following an order issued by a Mumbai high court. The DPCO order comes under section 3 of the Essential Commodities Act of 1955.

Unlike earlier when the essential nature of the drug was the only primary criterion, the new economic criteria of market share and turnover have been applied to arrive at the new list. “One of the benchmarks suggested is that companies having more than 50 per cent of the market share and a particular turnover, say Rs 20 crore or more, will be kept under the price control,” said Baswan.

Ranbaxy’s popular drug Ciprofloxacin, which has a 17 per cent market share of the Rs 300 crore market in this segment, will go off the list under this criterion. However, Baswan said NPPA has suggested six such combinations of market share and turnover and the final acceptance is to come from the government.

According to industry sources companies like Ranbaxy, Dr Reddy’s Laboratories, Pfizer, Glaxo SmithKline are likely to be the biggest beneficiaries of the move to take some drugs off the DPCO.


Calcutta, Dec. 18: 
Canon India, the wholly-owned subsidiary of Canon Singapore, has outlined plans for a new distribution model to increase its sales and service network across the country by December this year.

“We expect to capture an 18 per cent market share in the printer segment by June 2002,” Alan Grant, managing director of Canon India said.



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