Sebi blow to Herbertsons rivals
Bajpai takes charge
Mukesh coins mobile mantra
Five in fray for ILD service
Toyota gets go-ahead to make buses, trucks
Inter-Continental tag for Parkroyal
ADB, IFC may make way for new Centurion ally
Smart competition for credit cards
Andrew Yule gears up to sell two firms
Foreign Exchange, Bullion, Stock Indices

 
 
SEBI BLOW TO HERBERTSONS RIVALS 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb. 20: 
The Securities and Exchange Board of India (Sebi) today asked Vijay Mallya and Kishore Chhabria to sell a part of their stake in Herbertsons through an open offer to the public — the first such decree in the history of the Indian capital markets.

While Mallya has to bring down his stake to 21.38 per cent by divesting 8.88 per cent, Chhabria has been told to slash his holding to 10 per cent by selling 37.48 per cent.

Bete noires for long and never-say-die contenders for Herbertsons, Mallya and Chhabbria were found to have violated Sebi listing agreement and regulations of 1994—the substantial acquisition of shares and takeover rule. The two sides will have to file offer documents for the sale offer with Sebi within three months.

Sebi has initiated adjudication proceedings against the Mallya and Chhabria groups for violating its regulations of 1994 and 1997. None of the two rivals were available for comment on today’s order.

The sledge-hammer order will hit both warring partners hard, but it could scupper Chhabria’s manoeuvres to wangle Herbertsons through a hostile bid.

Sebi has decreed that the shareholding of Kishore and M. D. Chhabria, along with persons acting in concert, should be brought down to less than 10 per cent — the threshold limit under the 1994 regulations. At this level, they will not pose a threat to Mallya’s control.

The Mallya group, on the other hand, will have to bring down its holding to 21.38 per cent. This was the position prior to the acquisition, made in violation of Sebi rules. It will be around 11.38 per cent more than Chhabria’s stake. Mallya, along with persons acting in concert, increased his stake to 25.66 per cent in 1994. He acquired another 2.06 per cent through a scheme of merger and acquisition of six companies with United Breweries. The deals have fallen foul of listing agreement and Sebi provisions in force at that point of time.

Sebi sent a show-cause notice on January 8, 1999, and Mallya submitted his reply at the fag end of the month.

Kishore snapped ties with his brother and owner of Shaw Wallace, Manu Chhabria, and walked off with the Rs 121-crore BDA Distilleries, which was brought within the fold of the Mallya-owned Herbertsons.

Mallya had invited Kishore to join forces against Shaw Wallace, giving Manu’s younger brother 27 per cent in Herbertsons in a move that diluted his own stake to 21.38 per cent. But in 1995, Kishore started mopping up more shares.

The battle of attrition between the two Herbertsons rivals has raged for long, and is now in the high court and the Supreme Court.

Sebi’s hearing on the matter concluded on July 5, 2001 but it waited for the the judgement of the division bench on an appeal filed by Shirish Finance Investments & Pvt Ltd and others against the judgement of the single judge of the Mumbai high court.

   

 
 
BAJPAI TAKES CHARGE 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb. 20: 
Gyanendra Nath Bajpai today formally took over from Devendra Raj Mehta as chairman of an embattled market regulator late this evening. Effecting the change of guard, Bajpai said the government should support the Securities and Exchange Board of India (Sebi) by amending the rules, to protect investors’ interests.

Asked about his new role as market regulator, Bajpai said “Earlier (as Life Insurance Corp chairman), the government was the owner, but now my relationship with the Centre would be that of an independent regulator.”

As a regulator, he would have to balance the interests of investors, companies and the government, he added.

“I feel a great sense of responsibility. It is a very significant position. The biggest challenge will be to get investors back to the stock markets,” the 60-year old Bajpai told newspersons.

The outgoing Sebi chairman and his successor are a study in contrast. While Bajpai is known for energising LIC and making it dynamic to take on competition, Mehta has lately taken a lot of flak from critics for being caught unawares by last year’s stock market scam.

Mehta, however, leaves the office of the regulator proud by the fact that it was during his tenure that screen trading, dematerialisation of stocks, rolling settlement and derivatives trading were initiated, in a span of time considered remarkable even by standards of developed markets.

   

 
 
MUKESH COINS MOBILE MANTRA 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb. 20: 
With consumerism here to stay, the slogans are getting a little longer. Reliance Industries vice-chairman and managing director Mukesh Ambani has coined the latest one for bare necessities while unveiling the company’s strategy for the telecom sector.

The scion of the Ambani empire succinctly summed up the spirit of the times with—“Roti, Kapda, Makan aur Mobile Phone”—acknowledging the inroads that the cellphone has made in daily life.

The company plans set up a digital distribution system that will connect 1,500 cities and towns across 18 states, link 6,000 villages and build an organisation of more than 10,000 professionals.

Spelling out the company’s plans for the telecom sector, Ambani said: “Reliance Infocom will be a large community of developers in numerous areas of IT applications. The company will be engaged in enabling consumer access to mobile internet information and entertainment. We see Reliance Infocom as a powerful vehicle to win for India leadership in the knowledge world.”

Ambani also sought greater co-operation between private firms, in addition to a government-private sector partnership.

“Private players will have to cultivate a radically new mindset. Opportunities are vast and there is enough room for everyone, so a partnership is the need of the hour. For this, the rules of the game will have to be rewritten,” he said.

Delivering the keynote address at the “ Supercomm Asia 2002”, organised in India for the first time, he emphasised the need for private operators to share infrastructure.

“A spirit of collective commerce must prevail. While networking can increase marginal returns, sharing infrastructure will reduce costs, which, in turn, will increase value for consumers as well as operators,” said Ambani.

Lapping up Ambani’s New-Age mantra, communications minister Pramod Mahajan said the pace of technological changes in the telecom sector world-wide had made providing a level playing field a difficult proposition.

He said the government was trying its best to spread awareness about the tools of connectivity. One of the major thrust areas was to promote value addition and accessibility to services linking telephones to remote villages in the country.

Mahajan said though the country had come a long way, it still had to tackle the issue of high telecom tariffs.

He said that government-owned and private sector telecom firms would have to face up to the challenge of providing affordable and cost-effective connectivity, adding the customer remained the ultimate judge.

   

 
 
FIVE IN FRAY FOR ILD SERVICE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb. 20: 
Bharti, Data Access, Pacific Net Invest, Connecting Networks and Reliance have been given letters of intent (LoIs) to operate international long distance (ILD) telephony.

Communications and information technology minister Pramod Mahajan today announced that the five operators are scheduled to start ILD service from April 1. The government has issued the LoI to these five operators.

Inaugurating the three-day Supercomm Asia – 2002 here, he said that with the introduction of ILD facility, India will be at par with the advanced nations in the telecom sector.

The government is keen to foster unrestricted entry and unlimited competition in this sector, he added.

The tele-density in the country is more than four per 100 as against less than two five years back and hoped to reach more than 10 per 100 by the end of the decade, Mahajan said.

   

 
 
TOYOTA GETS GO-AHEAD TO MAKE BUSES, TRUCKS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb. 20: 
Carmaker Toyota has received the necessary approvals to make trucks and buses in India.

Toyota associate — Toyota Tsusho Corp — has received approval from the Foreign Investment Promotion Board (FIPB) to invest Rs 20 crore in a facility to make these vehicles through its joint venture Araco Polyflex Pvt Ltd. Araco Polyflex manufactures seats for Toyota Qualis, the multi utility vehicle from Toyota Kirloskar. It also makes seats for Toyota’s Landcruiser worldwide.

Araco Ltd is a Japan based trading company which has tied up with Polyflex India in a 66: 24 per cent joint venture to produce car parts. The initial investment was Rs 22 crore. Toyota Motor Corp has a stake in Araco Ltd.

Officials from Toyota Kirloskar feels, “In anticipation of the relaxation in Exim policy, they must have cleared the proposal to import buses and light trucks in India.”

The Toyota proposal was among a batch of 42 FDI proposals worth Rs 75 crore cleared today by commerce and industry minister Murasoli Maran on the basis of FIPB’s recommendations.

The proposals cover various sectors including chemicals, automobiles, telecommunications, insurance, light electrical and engineering equipment, consultancy and information technology. General Electric Corporation has received approvals to invest Rs 8.34 crore to raise its stake in GE Capital Services India from 75 per cent to 100 per cent.

Maran also cleared Rs 10 crore proposal by Hughes Escorts Communications Ltd for installation, operation and maintenance of V-Sat equipment and services and set up a 100 per cent wireless operating system.

Royal Dutch Shell Group has been permitted to amend its existing approval for establishing and operation of LNG import and regassification terminal. No fresh inflows are involved.

   

 
 
INTER-CONTINENTAL TAG FOR PARKROYAL 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, Feb. 20: 
Six Continents Hotels has appointed Parkroyal, an Eros Group enterprise, as franchisee for its Inter-Continental chain of hotels. The 217-room Parkroyal in the capital’s Nehru Place area will now be known as Parkroyal Inter-Continental.

This will be the second Inter-Continental hotel in Delhi, the first being the Suri Group’s Bharat Hotel property in Connaught Place. Parkroyal Inter-Continental will have access to various systems, including a reservation system available to Inter-Continental hotels world-wide. Six Continents has several hotel chain brands, with the prominent ones being Inter-Continental, Crowne Plaza, Holiday Inn Express and Staybridge Suites with clearly marked brand identities for all of them.

Speaking at a meet to mark the new tieup between Parkroyal and Inter-Continental, Daniel Deisbillets, CEO, Six Continents, Asia-Pacific region, said the company has ambitious targets for the whole region and is especially bullish on India. From owning, managing and franchising 169 hotels, the global chain plans to go up to 200 hotels in the next couple of years.

Already, Six Continents has two Inter-Continental hotels coming up in Mumbai and a resort in Goa. What is more, the hotel giant is looking to tie up properties in Bangalore and Chennai by next year. Of the two Mumbai Inter-Continental hotels, one is near the airport where it has a tieup with the Bharat Group and the other is on Marine Drive where Six Continents’ partner is Ravi Ghai.

Says Deisbillets, “India is a critical market.” The fast growth in domestic tourism and outward bound tourism is a clear indicator of the changing patterns in the tourism sector and the hotel major wants to stake a major claim in this expanding market.

   

 
 
ADB, IFC MAY MAKE WAY FOR NEW CENTURION ALLY 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, Feb. 20: 
Leading multilateral agencies, including Asian Development Bank (ADB) and International Finance Corporation (IFC), may agree to offload part of their stakes in Centurion Bank to facilitate the bank’s plan to hawk around 26 per cent stake to a strategic partner.

At present the Washington-based IFC holds around 8.36 per cent in Centurion Bank while the Manila-based ADB has around 10.22 per cent. Keppel Bank, the third foreign partner, holds about 17.7 per cent.

So the combined foreign holding in Centurion Bank, at present, is over 36 per cent. If the existing foreign partners are to retain their stakes, Centurion Bank cannot offer 26 per cent to any other foreign ally because then foreign investment in the bank would go above 62 per cent.

The Reserve Bank of India, in a recent notification, has clarified that foreign direct investment in private sector banks can go up to a maximum of 49 per cent.

Given this RBI fiat, it is imperative on the part of Centurion Bank’s existing foreign partners to dilute their stakes if the bank wants to offer a 26 per cent stake to a fourth ally.

Sources close to Centurion Bank, however, said there has been no formal communication from the multilateral agencies regarding the future of their holdings in the bank.

“We are hopeful that the combined stakes of both these multilateral agencies are not considered in the FDI limit. If, however, their holding is included in the total FDI limit, there is a possibility that these agencies may agree to sell part of their stakes,” sources close to the bank said.

According to sources, the bank has already been sounded by three players who are interested in picking up a stake in Centurion.

However, the sources are hopeful that in the forthcoming Union budget, finance minister Yashwant Sinha will raise the FDI limit in private banks to 74 per cent which will facilitate their stake sale plan.

Centurion Bank, which is a leading player in the two-wheeler financing segment, has over 60 branches in the country. Apart from its focus on retail banking, channel financing, commercial vehicles & construction equipment financing, Centurion is concentrating on capital market products and services.

   

 
 
SMART COMPETITION FOR CREDIT CARDS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, Feb. 20: 
Credit card issuers are set to get Zero competition—and they had better watch out.

Zero, a consortium of 13 companies and 27 banks, is set to launch a smart card for the masses, that poses a potential threat to plastic money issuers who continue to rip their customers by refusing to cut interest rates in a falling rate regime. The principle is simple and potentially pervasive, and the fact that it is already working in Cuddapah—a backward district of Andhra Pradesh—under a pilot project, is testimony of the cash-less consumerist wave it could ignite in the rest of the country.

Zero is being introduced by Alittle World Pvt Ltd, an Indian firm that has taken up the daunting but revolutionary task of building and operating a domestic payment network.

The 13 companies partnering it in the venture include Compaq Computers, Datacard Corp, Schlumbergersema, Sun Microsystems, Wincor Nixdorf, ACI Worldwide, Aplab, BAeHal Software Ltd, CMS Computers, FSS (Financial and Software and Solutions), Gemplus, Infineon Technologies, Pico-Peta Simputer and Proton World International.

The Institute for Development and Research in Banking-Technology, Hyderabad, a subsidiary of the Reserve Bank of India, has also agreed to participate in the pilot project.

Unlike traditional credit cards, Zero is tailor-made to circumvent all barriers against mass deployment of cards and card acceptance terminals.

Consumers can access the service through pre-paid re-loadable smart cards, which will be issued by PCO/STD/ISD booth owners. These cards can be bought , loaded, re-loaded, used and refunded at all booths.

Central systems for transaction processing, billing, card and application management will be set up by the supporting consortium.

The upgraded PCO booths are expected to bring in a revenue of more than Rs 1,500 crore in three years. While PCO owners all over the country are expected to invest Rs 175 crore, the promoters and the 13 companies are expected to invest about Rs 60 crore in the project.

“We will soon emerge as a new force and changes will be visible from as early as May, when the first phase of 22,500 service delivery points will come into existence in 21 cities. These booths will be upgraded to provide high-speed internet and a range of new services, like utility bill payment, low-priced net telephony, point-to-point video conferencing and text/voice messaging,” said ASM Daniel, secretary of the All India Sanchar Sewa Society, an apex body of PCO booth owners in the country.

Anurag Gupta, one of the promoters of Alittleworld Pvt Ltd said the smart card can be used by even the neighbourhood vegetable vendors.

“It is possible and we are optimistic that given the technology, we can convince not only panwallahs to use the smart card, but also the bhajiwali,” said Gupta.

   

 
 
ANDREW YULE GEARS UP TO SELL TWO FIRMS 
 
 
BY PALLAB BHATTACHARYA
 
Calcutta, Feb. 20: 
Disinvestment fever has now gripped the city-based Andrew Yule & Co (AYC) which has decided to sell off its entire stake in two profit-making group companies—Tidewater Oil & Co and Hooghly Printing & Co.

The move is aimed at strengthening the financial position of the sick public sector unit.

While AYC has already invited expressions of interest for its stake in Hooghly Printing, it is in the process of initiating a similar step for Tidewater Oil.

A.F. Ferguson has been retained as advisor for sale of AYC’s stake in Hooghly Printing, a 100 per cent subsidiary.

Confirming the move, AYC chairman Arindam Mukherjee said the company has accepted the government’s decision on the divestment of its stake in both profitable group firms.

“We have already invited letters of intent for our printing company and hope to make a similar move for Tidewater shortly,” Mukherjee said.

AYC holds 28 per cent in Tidewater, while its foreign collaborator Fourstar Oil & Gas of the US holds around 22 per cent.

The remaining 50 per cent is with banks and financial institutions and the public. The company produces and markets lubricants under the Veedol brand name.

The paid-up capital of Hooghly Printing and Tidewater Oil are Rs 10.20 crore and Rs 87 lakh respectively. Hooghly Printing is expected to register a turnover of Rs 6.9 crore in the year ending March 2002.

Tidewater, which has a manpower of around 550, expects its turnover to cross the Rs 200-crore mark by the year-end. Turnover last year stood at Rs 179.88 crore. The company, which has five plants, is one of the market leaders in automotive and industrial lubricants.

Mukherjee, however, denied any discussions with Fourstar for transferring its stake to the foreign partner.

“We have to go by the disinvestment department’s mandate and there is no question of any private placement,” he said.

Mukherjee hinted that A.F. Ferguson may be appointed as advisors for the Tidewater divestment also.

While he remained non-committal about how much Andrew Yule would generate from these sales, sources said the company should get around Rs 30 crore, which should shore up its bottomline to a large extent.

The company registered a dismal performance last financial year, posting a loss of Rs 26 crore.

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Rs. 48.62	HK $1	Rs.  6.15*
UK £1	Rs. 69.55	SW Fr 1	Rs. 28.40*
Euro	Rs. 42.58	Sing $1	Rs. 26.25*
Yen 100	Rs. 36.39	Aus $1	Rs. 24.85*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4980	Gold Std(10 gm)	Rs. 4890
Gold 22 carat	Rs. 4700	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7600	Silver (Kg)	Rs. 7680
Silver portion	Rs. 7700	Silver portion	NA

Stock Indices

Sensex		3558.21		- 39.40
BSE-100		1721.47		- 19.39
S&P CNX Nifty	1145.95		- 12.95
Calcutta	 121.81		-  1.56
Skindia GDR	 551.37		- 12.03
   
 

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