Reliance rolls back dividend
MRPL drama takes new turn
Ranbaxy, Wockhardt in pact for US market
For new auto policy, small is always beautiful
HFCL joins hands with US firm for broadband
JPC report to be ready by monsoon
Floor prices to save Darjeeling tea
Foreign Exchange, Bullion, Stock Indices

Mumbai, March 7: 
Reliance Industries, which acquired enough ballast to burst into the Fortune 500 list when it announced a merger with Reliance Petroleum early this week, created waves again for all the wrong reasons when it became the first major blue chip to earn the dubious distinction of backtracking on a dividend announcement.

The move comes a day after the Securities and Exchange Board of India (Sebi) directed the bourses to strictly enforce a 30-day notice for declaring record dates for dividends.

Reliance said it would be asking its board of directors to pass a circular resolution rescinding its March 3 decision to grant a 47.5 per cent interim dividend to its shareholders.

Reliance and all its listed group companies—Reliance Petroleum Ltd (RPL), Reliance Capital Ltd (RCL) and Reliance Industrial Infrastructure Ltd (RIIL)—have informed the stock exchanges that they will be securing the consent of their respective boards through a circular resolution for revocation of the interim dividend declared for 2001-02.

The Reliance payout would have amounted to about Rs 490 crore while RPL, which had announced a 5 per cent interim, would have had to pay a little over Rs 260 crore.

Reliance and 150 other companies had scrambled to announce an interim dividend after Union finance minister Yashwant Sinha announced in his budget on February 28 that dividends would henceforth be taxed in the hands of the recipients from April 1.

The Reliance group, which has the largest investor pool in the country with 35 lakh shareholders, was among the 83 companies that actually announced interim dividends while the others had called board meetings to consider the payouts.

The Ambani flagship has accused the stock exchanges of being responsible for creating all the confusion by initially permitting them to set March 23 as the record date for the payout, which breached the 30-day stipulation under the listing agreement.

After the Sebi directive, the stock exchanges said all companies would have to adhere to the 30-day stipulation, creating turmoil among companies.

There was no news on whether any of the other company would take Reliance’s unprecedented step of first declaring a dividend and then backtracking on it.

The Tatas and Aditya Birla group companies had also announced interim payouts in an effort to beat the March 31 deadline. Among Tata companies, Tisco had announced a payout worth Rs 147 crore and group companies Tata Power and Tata Chemicals had promised to provide a windfall gain of over Rs 90 crore each to their shareholders. However, Rallis, the Tata group company, called off a board meeting today where an interim payout was to have been discussed.

In its tersely worded two-page communication to the Bombay Stock exchange, Rohit Shah, vice-president & company secretary of RIL, said: “As had been agreed by you, we had, vide our letter dated 1st March 2002, informed you that a meeting of the board of directors of the company would be held on March 3, 2002 to declare interim dividend for the financial year 2001-02, considering the larger interest of our shareholders.”

Giving a sequence of events which shows that BSE was kept informed about the chain of events, the letter continued, “Thereafter, we had, vide our letter dated 3rd March 2002 (after the conclusion of the meeting of the board of directors), informed you that the interim dividend had duly been declared by the directors at the said meeting. You had duly intimated your members about the said declaration of dividend, and the closure of our Register of Members for this purpose. Despite your prior agreement, and the formal intimation to your members, we have now been advised by your letter dated 6th March 2002 that the notice period given by us for fixing the book closure is falling short of the notice period required under Clause 16 of the Listing Agreement,” the letter said.

“Accordingly, since it will not be possible to fix date(s) of book closure on or before 30th March 2002 to conform to the notice period stipulated under Clause 16 of the Listing Agreement, we will be briefing our directors about these developments, and will be securing their consent through circular resolution for revocation of the interim dividend declared by the Board on 3rd March 2002,” the letter concluded.

Meanwhile, several companies that earlier had informed the stock exchanges of convening a board meeting have decided to go back on their agenda.

Exide Industries Ltd’s board has decided to cancel its board meeting scheduled to take place on March 12, to consider interim dividend, the company informed the Bombay Stock Exchange.

Wipro Ltd’s board has decided not to proceed with declaration of interim dividend for the year ending March 31, 2002, the company informed the Bombay Stock Exchange.

Hero Honda Motors shareholders can call themselves lucky as they are among the few exceptions which would still benefit the tax exemption because it was first off the block on March 1, allowing it to comply with the minimum notice period.


Mumbai, March 7: 
After finalising a mega-merger within its fold, the Reliance group is on the prowl again. This time around, the conglomerate is understood to be in negotiations with the AV Birla group for acquiring a stake in Mangalore Refinery and Petrochemicals Ltd (MRPL).

MRPL is a joint venture between the Birla group and Hindustan Petroleum Corporation Ltd (HPCL), with both of them holding an equal equity stake of over 37 per cent each.

The Birla group is currently engaged in discussions with HPCL to gain majority control of the venture.

Industry circles revealed that Lazard India is negotiating on behalf of the Birla group with Reliance for the stake sale in MRPL. However, when contacted, a Reliance spokesperson denied any such move.

Sources close to the Birla group also pointed out that they were committed to MRPL and that the group was not engaged in discussions with Reliance to sell its stake.

A senior Lazard official refused comment on the issue, with: “Please address such queries to the company and not to us.”

Interestingly, such a development has come at a time when the Birla group is almost close to finalising a deal with HPCL which will see the former gaining majority control in MRPL. Reliable sources here said that both the partners are almost close to reaching an agreement on the “cost of offloading HPCL’s stake” and that an announcement is expected shortly. This follows a meeting that senior Birla group officials had with their HPCL counterparts on this issue last week.

Industry circles here point out that negotiations between the Birla group and Reliance are likely to gather pace after the former consummates the deal with HPCL.

Though Reliance circles denied that the group was in talks with the Birlas for MRPL, analysts aver the possibility cannot be ruled out as the latter falls within the core area of the country’s largest private sector company.

What makes MRPL a prize acquisition for prospective suitors is the company’s state-of the-art 9-million tonne refinery.

On the other hand, the AV Birla group was, at one point of time, considering a plan to sell its stake in the joint venture in favour of HPCL.

The Birlas had made an offer to take management control of the company through a 51 per cent stake after negotiations on selling its stake to HPCL broke down.

The group first asked HPCL to buy out its stake in the joint venture company for a price arrived at by independent valuers. This was, however, turned down by HPCL, which valued the stake at Rs 1.60 per share, based on its book value and other liabilities of MRPL.

Following this, the Birlas made another offer to buy HPCL’s stake in MRPL at Rs 3.20 per share. With HPCL turned this down again, the group made yet another offer to raise its stake in MRPL through the infusion of funds in the company.


New Delhi, March 7: 
Ranbaxy and Wockhardt, two of the largest pharmaceutical companies in the country, have established a strategic business alliance for the US market.

This alliance will harness the product development and manufacturing expertise and capacities of Wockhardt and the sales and marketing of Ranbaxy Pharmaceuticals Inc (RPI), the wholly-owned US subsidiary of Ranbaxy, to optimise the commercial value of these products and support a positive revenue stream for both companies.

The alliance is a multi-product development, supply/sales and marketing agreement that will initially begin with Enalapril and Ranitidine tablets, but will soon include several more products.

The original inventor of Ranitidine—an anti-ulcer drug—is Glaxo. Its brand Zantac was the largest selling drug world-wide before the patent expired in 1997. Ranbaxy has been selling the drug in the American market since 1998.

In the year 2000, it sold Rantidine worth $ 17 million. It sells this drug in the US as 150 mg tablets. Wockhardt has an ANDA approval for Ranitidine. The entire market for this product is $ 500 million.

Enalapril came off patent last year. It is a drug with a market size of $ 600 million. Ranbaxy started selling this product for the last one year.

This alliance will include Ranbaxy Laboratories Limited (RLL) of New Delhi, Ranbaxy Pharmaceuticals Inc (RPI), Princeton, New Jersey, and Wockhardt Limited (WL) of Mumbai, India and its subsidiary Wockhardt Americas Inc. (WAI), New York City.

Enalapril and Ranitidine have both been available since patent expiration, individually under the RPI and Wockhardt label in the US.


New Delhi, March 7: 
The auto policy, which was unveiled here today by heavy industries minister Manohar Joshi, aims to turn India into an international hub for small cars, two-wheelers and auto components and a place for research and development, without spelling how it intends to achieve these goals.

Joshi said, “The policy is just to show the path India will take in future. It is more like a directive policy and puts into expression the need of the country. It does not provide the policy framework but only what we would like to have. The ministries of commerce, finance, road transport, petroleum and natural gas, environment and non-conventional energy resources will have to act together to put this policy in place.”

The policy left half the auto industry groping for specifics and the other half agitated over the government’s stated intention to give tax breaks to makers of cars with a length of 3.8 metres—which will benefit Hyundai’s Santro, Daewoo’s Matiz, Tata Indica, Maruti 800, Alto and Zen. Industry sources said they were waiting to see if the government would announce any immediate excise concessions for small cars which could have a bearing on car prices if the reliefs are passed on to the customers.

The policy aims at setting up independent auto design houses, and offer rebates on the applicable excise duty for every 1 per cent of the gross turnover of the company for the amount spent on research. Looking at the road conditions, the multi-utility vehicles will also be considered for a tax concession.


New Delhi, March 7: 
Himachal Futuristic Communications Ltd (HFCL) and US-based UTStarcom will jointly manufacture broadband access network systems that could emerge as a competitor to Qualcomm’s CDMA-based system.

UTStarcom plans to invest $ 25 million in its research and development centre in India to develop software solutions for telecom switching, wireline and wireless access requirements of basic fixed line telecom operators.

The R&D facility was operationalised here today. The total investment will flow in over a period of five years.

Hong Liang Lu, founder president and chief executive officer of UTStarcom Inc, said: “The company has focussed on India as it has a high growth telecommunications market. We aim to bring the latest and most cost effective technologies here and simultaneously add value locally through cutting edge development at the regional R&D centres.”

UTStarcom has already signed up with five basic service operators — Mahangar Telephone Nigam Ltd, BSNL, Hughes, Shyam Telelink and HFCL for the AN2000 broadband access network system. It will aggressively push its three important products — personal access systems (PAS), mSWITCH and AN2000.

PAS transforms the existing copper networks into high-capacity wireless networks capable of providing both voice and data services within a city or community.


Calcutta, March 7: 
It is a year since the securities scam surfaced on March 8 last with a Rs 122-crore payment crisis on the Calcutta Stock Exchange.

First, the Unit Trust of India (UTI), which played the white knight, faced a barrage of criticism for “bailing out the bourse,” following which the finances of the country’s largest mutual fund itself came under scrutiny. Today, the country’s largest mutual fund is beset with its own set of problems and is trying to restore its credibility with investors.

And a year later, the 30-member Joint Parliamentary Committee (JPC) probing the scam including alleged irregularities in UTI, says it will not be able to place its recommendations in Parliament “any sooner than the Monsoon Session”. The committee had earlier indicated that it would place its report in Parliament in the Budget Session.

“We hope to place our recommendations in the Monsoon Session, as it would lose its meaning if delayed any further. But there is still a lot to be done. We haven’t finished yet interviewing the government agencies,” a committee member said.

Some members said the Uttar Pradesh elections and the political uncertainty in Delhi had delayed progress, and it was still not clear whether they could finalise their recommendations before the Monsoon Session. “We are hoping to work overtime during the break between the Budget and Monsoon sessions, and make up as much as we can for the time lost so far. God help us if the political uncertainty destabilises the government in the meantime,” a JPC member from the Opposition said.

The panel has so far interviewed officials of the Securities and Exchange Board of India (Sebi) and the market regulator has filed three voluminous reports on the scam. The Reserve Bank too has submitted its observations and a number of its key officials have deposed before the panel. But JPC members said RBI officials would be required to appear before the panel again. Further, it has yet to complete interviewing Enforcement Directorate (ED) officials.

“Besides government agencies, we will have to question companies that had lent funds to brokers to play in the market, and UTI,” a JPC member said. Indications are the panel will take all those companies that had links with brokers to task.

While the JPC has interviewed UTI officials, sources said it focussed on means to revive the mutual fund. “We have still not begun probing whether UTI was involved in the scam,” a JPC member said.

Meanwhile, much has changed in the country’s capital markets. Rolling settlement and trading in derivative products have been introduced. Sebi chairman D. R. Mehta has retired, with former Life Insurance Corporation chairman G. N. Bajpai taking his place. Mehta’s parting comment on the scam was: “How many retail investors have suffered? Was the market closed even for a single day? There was no scam at all.”


Calcutta, March 7: 
Major Darjeeling tea producers are weighing a move to set floor prices for their tea, to check erosion in prices.

In 2001, the premium first and second flush of Darjeeling teas were sold below the previous year’s prices, yielding little profit for the companies. In some cases, teas were sold at prices that were lower than those in the year 2000 by Rs 20 per kg.

This forced the heads of companies like Goodricke Group, Chamong Tea and Ambootia Tea to put their heads together to find a solution to the problems before the industry. The Darjeeling tea industry is saddled with the problems of high input costs, low productivity and all-time low price realisations.

What followed from the meeting was a letter from K.S. David, chairman of Darjeeling Planters’ Association (DPA) to all the associations’ members, stating that certain quality parameters will have to be laid down for Darjeeling tea and floor prices fixed for quality tea so that no producer can sell teas at throw-away prices.

In his letter, David, who is also the managing director of the Goodricke Group, stated: “We are playing into the hands of the buyers by trying to under cut each other. We are ruining the reputation of Darjeeling tea, by producing teas that are called ‘Darjeeling’ but are worse than even medium orthodox of Assam. We sell these poor ‘Darjeeling’ teas at throw away prices — which are bought by unscrupulous buyers, who, in turn, are responsible for propagating the cheap tea. Darjeeling tea can sell provided the exclusiveness of its quality is maintained.”

“Some unilateral action is required to ensure that the producer cannot sell teas at throw away prices while simultaneously ensuring that the buying community is not forced to purchase so-called poor Darjeeling tea,” the DPA chairman said.

The average cost of production of Darjeeling tea is somewhere between Rs 200 and Rs 245 per kg but the average price realisation is as low as Rs 130 per kg.

Darjeeling tea faces another problem. While actual production is only around 9 million kgs, about 60 million kgs is sold over the world as Darjeeling tea, mostly in a blended form.

Most of these teas are spurious, which tarnish the image of Darjeeling tea both in the domestic as well as international markets.

The Tea Board had also introduced the trademark certification to check the misuse of the Darjeeling brand, but the response has been lukewarm.



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