Ketan’s share swindle: Synchronised, matched & washed
BK Modi hands baton, keeps remote
SK out of Modiluft
Practice of Sanatan Dharma through VHP
KP admits to Madhavpura plunder
Birla Global Finance shifts focus to two-wheelers
AirTel, Escotel to share network
Indian Hotels shops for funds
Foreign Exchange, Bullion, Stock Indices

 
 
KETAN’S SHARE SWINDLE: SYNCHRONISED, MATCHED & WASHED 
 
 
FROM SATISH JOHN
 
Mumbai, Jan. 3: 
An interim report submitted by Securities and Exchange Board of India (Sebi) to the Joint Parliamentary Committee indicts Ketan Parekh for conniving with FIIs and overseas corporate bodies (OCBs) to ramp up the shares of Aftek, Infosys, Shonkh Technologies, Mascon Global and Global Trust Bank.

In cases, where share deals represented more than 5 per cent of paid-up equity, stock exchanges and the companies involved were not sent the mandatory intimation.

Through “synchronised, matched and washed deals”, volumes were puffed up and artificial liquidity created in these shares, Sebi’s report to the committee said.

In stock parlance, if a sell order is put with the knowledge that there will be a buy order for the same number of shares, it is known as a “matched/washed” deal.

OCBs, especially Kensignton, Brentfield, Wakefield, Far East and Almel, in addition to Coral Reef, a sub account of R P & C International, and Kallar Kahar, a sub account of the FII Credit Suisse First Boston, were found to have indulged in circular trading.

The surge in the shares of the companies mentioned above in early 2000, says the Sebi report, hampered efficient price discovery and distorted bourses’ systems that ensure fair and transparent deals.

The market regulator has inferred that transactions between Parekh’s entities and the OCBs (Brentfield, Kensington, European and Far East) and sub-account Kallar Kahar were essentially circular trading.

“Shares bought earlier from Parekh’s companies were sold back to them after a short period of time. This was done by synchronising buy and sell orders,” says the Sebi report, a copy of which is now with The Telegraph.

Sebi says there was no change in ownership of the shares, held temporarily by Brentfield, European, Far East and Kensington, OCBs and the sub-account of Kallar Kahar.

“The orders, for same quantity and at the same rate, were put in at the same time or within seconds of each other to ensure that shares sold by Parekh’s entities were purchased by the OCBs and Kahar,” the report states.

There appears to be part of some arrangement or understanding for parking of shares with Kensington for a limited period, Sebi said.

“On many occasions, Ketan Parekh’s associates company violated takeover norms by acquiring more than 5 per cent stake and not intimating the company or the stock exchange,” the capital market watchdog said.

   

 
 
BK MODI HANDS BATON, KEEPS REMOTE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 3: 

Dilip steps into CEO’s shoes

Bhupendra Kumar Modi, chairman and chief executive officer of ModiCorp, today stepped down from the positions he was holding in the company in favour of his son Dilip Kumar Modi, who has been appointed the new CEO. Wife Veena Modi has been made chairman.

But the makeover is a cautious one. Possibly wary of the way many Delhi business scions have dealt with tycoon fathers who gave up control, B.K. Modi will continue as chairman of Modi Holdings—the holdings company through which he controls all his businesses. Since the company has a 72 per cent stake in ModiCorp, he will still retain control over the steering albeit by remote control. Earlier, through the 1990s, successions in the Shriram family as well as in Apollo Tyres had seen fathers pitted against their sons in public and court room battles, after the younger generation had been given control. Many feel this is the reason why B.K. Modi has decided to play safe.

The remaining stake in ModiCorp is held by Singapore Technologies Telemedia (20 per cent) and company employees hold the balance(8 per cent). It is the corporate entity through which BK Modi operates in the areas of IT, telecom and the internet, with several companies under its fold like Spice Communications, a cellular service provider in Punjab, internet service provider Spice Net, Modi GBC, which is into documentation preservation, and Cellebrum, an internet firm.

Dilip Modi is already CEO of Spice Communications Ltd and joined the ModiCorp board a couple of months back. BK today also asserted that his wife Veena was involved in the business from early stages in various capacities, though few have heard of it. He said the total turnover of the companies that come under the ModiCorp umbrella is about Rs 1,500 crore. ModiCorp’s valuation stands at about $ 100 million now against $ 20 million three years back.

Further, BK said as chairman of Modi Holdings, he will now try to settle the spat over control of Modi Rubber, where a fight had broken out between him and financial institutions over control of the company. He has, over the last year, tried to gain full control of the company through a buy-out bid, but was thwarted by the FIs, which now effectively control the firm.

   

 
 
SK OUT OF MODILUFT 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Jan. 3: 
The battle for control of Modiluft Airlines, now renamed Royal Airways, has reached a decisive phase, with the new management booting out chairman Satish Kumar Modi and two other directors loyal to him at an annual general meeting held here.

The move, however, has sparked off a fresh controversy with claims and counter claims on the issue. The Modis, of course, deny anything at all has happened. While S.K. Modi remained unavailable for comments, his aides denied any such meeting was held and reiterated the Modi house would take legal action against claims to the contrary. But those who attended the AGM at a club on the outskirts of the city said the meeting was held on December 31 and Modi himself attended it. In fact, he tried to pull off a coup stating that the meet was illegal as a stay had been obtained against it by a shareholder Prem Chand Sharma from a Ghaziabad court.

However, the new Modiluft management, loyal to NRI brothers—Ramesh S. Kansagra and Bhupesh S. Kansagra, who control over 56.8 per cent in the company—pulled off a counter-coup. They managed to get an order from the Delhi high court rescinding the Ghaziabad one. Following this, Modi walked out of the meet.

An airline official confirmed that the AGM had been held and the resolution throwing out Modi has been passed and “this has been notified to all statutory and regulatory authorities.”

   

 
 
PRACTICE OF SANATAN DHARMA THROUGH VHP 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 3: 
Having declared his partial retirement from business, BK Modi has indicated that he will now devote his time and energy to ‘spiritual’ and philanthropic pursuits.

“I will take up more responsibilities in the field of public work” and “build the brand of India in the global community.”

Counting poverty, corruption and terrorism as factors inhibiting India from taking her “true place in the world,” Modi prescribed education, tolerance and reinforcement of sanatan values as the remedy.

Life after 53, the tyre and telecom tycoon feels, should be devoted to the propagation of Sanatan Dharma.

The former admirer of the Gandhi family now says he will do that under the aegis of the Vishwa Hindu Parishad (VHP).

“There is a lack of awareness about the Hindu religion in the world, though the same is not the case with Christianity or Islam. The VHP is working to promote unity among Hindus of the world,” said Modi.

“I have found that in US, there is a lack of awareness about Hinduism. This of course is more true in the case of China.” Apart from Hinduism, it is Indian family values which Modi will propagate abroad.

Also on Modi’s agenda is connecting and networking with the Indian diaspora.

“Ten million Indians in developed countries are earning about Rs 100 crore. There is a need to pool resources in terms of finance and knowledge.”

However, despite his new-found love for religion and the VHP, he also plans to be associated with international bodies on corporate governance.

   

 
 
KP ADMITS TO MADHAVPURA PLUNDER 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 3: 
Big Bull Ketan Parekh today confessed to having drawn Rs 888 crore from Madhavpura Mercentile Co-operative Bank (MMCB) for stock investments owing to which the bank went into the red.

Deposing before the Joint Parliamentary Committee (JPC), Parekh said his borrowing far exceeded his limit of Rs 205 crore. He was unable to repay the amount as he fell into a “vicious cycle” due to the payment crisis in the stock market.

Parekh, who gave a 100-page statement to the JPC, claimed that whatever he did was in the interest of the nation and to make the Indian bourses globally attractive.

He said the rise in the stock market indices last year was in line with the international trend.

JPC chairman Prakash Mani Tripathi said Parekh told the committee that he “was trying to see that Indian (stock) market, which is the fifth largest in the world, makes an impact in the global market where investment can be profitable.”

Parekh is expected to depose again tomorrow. The Joint Parliamentary Committee is likely to question him on Sebi’s charges that he used the proprietary account of Credit Suisse First Boston to rig prices of Nirma, DSQ Biotech and Adani Export.

   

 
 
BIRLA GLOBAL FINANCE SHIFTS FOCUS TO TWO-WHEELERS 
 
 
FROM VIVEK NAIR
 
Mumbai, Jan. 3: 
Birla Global Finance Ltd (BGFL), the flagship finance company of the AV Birla group is restructuring its asset portfolio by focussing on the fast-growing two-wheeler market and curtailing exposure to the high-end car financing segment.

Additionally, BGFL also may rope in a strategic partner in its leasing and hire-purchase subsidiary, where it is now looking at creating a separate shareholding structure.

Sources close to BGFL said these moves form part of its efforts to combat the tough phase that domestic non-banking finance companies (NBFCs) are passing through.

The present competitive environment has led to rate wars in the high-end auto loan segment, which forms part of its core activities. In such a scenario, the company has decided to virtually exit high-end car financing and focus largely on the small car segment.

Further, the two-wheeler segment has now been identified as a thrust area and company circles averred that it will be in a position to harness the rising retail demand in two-wheelers, which has seen most of these manufacturers reporting better performance in recent times.

“We have entered the two-wheeler segment in the non-metro areas and the company is successful out there. Further, we plan to reduce emphasis on high-value car financing and have decided to take up only those cases where good margins can be obtained,” sources said.

BGFL has already finalised plans for a rights issue to shore up its net worth. However, the plan has been on hold following the poor capital market conditions. Interestingly, such plans have come at a time when Crisil has downgraded BGFL’s NCD and fixed deposit programme.

Crisil said the downgrade reflects the decline in its market position in the retail asset financing business and deterioration in the financial risk profile on account of low capitalisation and weak profitability from core operations.

   

 
 
AIRTEL, ESCOTEL TO SHARE NETWORK 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Jan. 3: 
AirTel and Escotel, the city’s leading cellular service providers, today announced a strategic tieup to share their cellular infrastructure in common circles.

While infrastructure sharing is becoming quite prevalent in Europe, this is the first time in the country that two cellular operators, competing in the same market, have entered into a formal agreement to co-operate by sharing their infrastructure.

The strategic tieup will see both operators saving on capital and operational expenses in their common circles. For instance, AirTel will be able to use Escotel’s existing infrastructure to launch its services.

AirTel is operational in Delhi, Himachal Pradesh, Chennai, Karnataka, Andhra Pradesh and Calcutta. It is also in the process of launching services in Haryana, Punjab, UP (West), Maharashtra, Mumbai, Gujarat, Madhya Pradesh, Tamil Nadu, and Kerala. Escotel is operational in UP (West), Haryana and Kerala, and is in the process of launching services in Punjab, UP (East), Rajasthan and Himachal Pradesh.

Announcing the coming together of the two service providers, Anil Nayar, president, mobility, Bharti Televentures said, “We believe that such initiatives will best serve the objective of rapidly building telecom infrastructure in the country.”

Manoj Kohli, executive director and CEO, Escotel said, “This is the first time in the country that two cellular operators who are competing in the same circles have come together to optimise the utilisation of infrastructure.”

   

 
 
INDIAN HOTELS SHOPS FOR FUNDS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Jan. 3: 
The board of Indian Hotels Company Limited has given an in-principle approval to raise additional long-term funds for the company’s modernisation and expansion plans. The funds are expected to be raised at low-cost.

It will be used to reduce Indian Hotel’s interest burden by repaying its existing high-cost borrowings and also provide funds for routine capital expenditure and expansion programmes.

“The timing of this issue was important as the business environment and the financial markets have experienced a drastic change since September 11,” said R. Krishna Kumar, managing director of Indian Hotels. “We would also like to take benefit of the prevailing low interest rates in the markets, especially when our business outlook has improved in December,” he added.

The company will raise the resources through two processes. A private placement of secured premium bonds with warrants for an amount of up to Rs 250 crore has been proposed for now. The warrants would carry a low coupon rate which, together with a redemption premium, would give a yield-to-maturity not exceeding 10.5 per cent, the company said.

However, the bonds will have attached warrants exercisable at a price of Rs 150-200 per share to be determined at the time of the issue.

The other mode of raising funds, the company said, is to arrange a low-coupon yen loan of up to an equivalent of $ 25 million to be negotiated with the lenders.

The bonds would be allotted to investors shortly and the warrant holders will be entitled to equity shares after 18 months of allotment. Post-warrant, the equity capital will rise 4.5 per cent to Rs 47.25 crore from Rs 45.12 crore. The pricing will be decided once the final bids from investors are received in the next couple of weeks.

The company is expected to get in touch with local and foreign investors and investment bankers.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.26	HK $1	Rs.  6.10*
UK £1	Rs. 69.72	SW Fr 1	Rs. 28.95*
Euro	Rs. 43.57	Sing $1	Rs. 25.80*
Yen 100	Rs. 36.66	Aus $1	Rs. 24.50*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4690	Gold Std (10 gm)Rs. 4630
Gold 22 carat	Rs. 4430	Gold 22 carat	  NA
Silver bar (Kg)	Rs. 7600	Silver (Kg)	Rs. 7745
Silver portion	Rs. 7700	Silver portion	  NA

Stock Indices

Sensex		3308.02		+38.86
BSE-100		1585.44		+20.15
S&P CNX Nifty	1072.25		+11.50
Calcutta	 108.88		- 0.15
Skindia GDR	 504.69		+ 3.63
   
 

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