Vivendi, AOL on Zee ally list
Padmalaya buyout to cost Rs 59 cr
Dr Reddy’s closes maiden overseas deal
Wipro ISP, fluid power wings under one roof
Superb answer to Merc E-class
Fresh twist to Usha squabble
Move to get the Dunlop brand rolling
Foreign Exchange, Bullion, Stock Indices

 
 
VIVENDI, AOL ON ZEE ALLY LIST 
 
 
FROM SATISH JOHN
 
Mumbai, March 12: 
Zee Telefilms Ltd’s (ZTL) search for a strategic partner is expected to gather steam in the coming days.

The media giant has zeroed in on three suitors—AOL Time Warner, Vivendi Universal and Viacom—to divest a part of its stake.

Of the three, AOL and Vivendi are believed to be serious contenders. AOL Time Warner has preferred to route its offer through UBS Warburg, while Vivendi is expected to bid through Enam Financial COnsultants, sources said.

Gerald M Levin, CEO of the $ 38.2-billion AOL Time Warner, will meet ZTL chief Subhash Chandra in Delhi on Wednesday.

“Yes, I’ll be meeting him in Delhi tomorrow,” Chandra confirmed at the press conference held today to announce Zee’s acquisition of Padmalaya Telefilms.

The recent distribution tieup between Turner and Zee has also made things easier for the two. “A working relationship has helped the two companies to talk directly to each other,” a source revealed.

While Zee TeleFilms had begun the process of engaging a strategic partner by appointing leading foreign merchant banker UBS Warburg, it is now believed that local merchant banker Enam is also actively involved, with Vivendi giving it the mandate.

Industry sources reveal that the mandate given to UBS has expired and therefore the domestic company is itself actively talking to the international majors.

Zee officials, however, denied that the UBS mandate had expired. “They are still actively involved in the process,” an official said, adding that the company has received proposals from serious contenders through other merchant bankers as well.

“We provide our prospective suitors prior information on our strategic moves for acquiring controlling stakes in other companies,” Chandra said.

In the run-up to enlisting a strategic partner, Zee Telefilms has so far acquired controlling stakes in leading Punjabi language channel ETC Network and animation specialist Padmalaya Telefilms.

Zee is looking to enter into an alliance with an international media conglomerate that will provide better opportunities to distribute its products world-wide. The strategic partner is also likely to find representation on the company’s board.

   

 
 
PADMALAYA BUYOUT TO COST RS 59 CR 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 12: 
Zee Telefilms Ltd today announced that it will acquire a majority stake in Padmalaya Telefilms Ltd (PTL), a leading entertainment house with significant presence in film production and distribution, television software production and animation software. The Rs 59-crore all-cash deal includes an impending open offer to PTL shareholders.

“With this deal, Zee will get access to Padmalaya’s library of 300 movies and 1,500 hours of TV software useful for southern market and allow us to consolidate PTL financials with ZTL’s balance sheet,” Zee group chief Subhash Chandra Goyal told reporters here today.

The acquisition would also help synergise operations of animation units of Zee and PTL, making it the largest animation film maker in Asia, ZTL broadcasting chief executive officer Sandeep Goyal said.

Zee and PTL promoters, including G.A. Seshagiri Rao, managing director, would have 64 per cent and 36 per cent stake respectively in Padmalaya Enterprises Private Ltd (PEPL), a holding company of PTL, Subash Chandra said.

PTL would allot two million fully paid up equity shares of Rs 10 each at Rs 142.20 per share, on preferential basis to PEPL and Zee would provide the necessary funding of about Rs 28 crore for the deal, he said. With this infusion PTL’s capital base would expand to Rs 12.5 crore.

PEPL and Zee would make an open offer to PTL shareholders at Rs 148.50 per share for 21 lakh shares at a cost of Rs 31 crore Consequent to the offer, PEPL would hold 51 per cent controlling stake in PTL and its promoters (other than PEPL) would hold five per cent stake.

   

 
 
DR REDDY’S CLOSES MAIDEN OVERSEAS DEAL 
 
 
OUR BUREAUX
 
March 12: 
In its first overseas acquisition, Dr Reddy’s Laboratories Ltd is acquiring a 100 per cent stake in BMS Laboratories Ltd and Meridian Healthcare (UK) Ltd, a wholly-owned subsidiary of the former, in a deal valued at close to £ 9.05 million (around Rs 63 crore).

The acquisition would also provide a strong foothold for the Hyderabad-based research major in the European market, particularly in the booming generic segment.

Till now, DRL’s presence has largely been restricted to the US market, with its generic version of Prozac recently clocking impressive sales of close to $ 100 million.

The company today announced that it has signed an agreement to acquire 100 per cent of BMS and Meridian and that the transaction is expected to be complete by early April.

The BMS Group registered a combined turnover of around £ 8 million and profit after tax of £ 1.6 million in the financial year 2001. While Meridian manufactures, develops and markets generic pharmaceutical products, BMS, which is its holding company, is largely into packaging business.

DRL added that BMS and Meridian have fully-integrated manufacturing facilities for oral solids, liquids and packaging located in London and Beverley. Meridian currently markets more than 30 generic products through full and short-line wholesalers and has another 70 licences in the pipeline.

Announcing the acquisition, G.V. Prasad, CEO of Dr. Reddy’s Laboratories, said, “This acquisition is a key step in our efforts towards globalisation. It gives us entry into the regulated UK generics market through the BMS Group’s established product basket and strong marketing network. We expect it to jumpstart our generics business in the UK.”

Analysts welcomed the deal and pointed out that it would have a beneficial impact in the long run and that the company’s overseas income would be on the rise in the years to come.

Company circles here said DRL now plans to leverage on the extensive distribution set up of the group.

“They have a good marketing and distribution infrastructure, apart from excellent relationships with wholesalers and retail groups. Besides, the acquisition will add to our existing product pipeline,” a senior DRL official said. At present, DRL has only one generic product in the European market—generic Ranitidine (anti-ulcer) in the 150 mg and 300 mg categories.

DRL develops, manufactures and markets a wide range of pharmaceutical products in the country and overseas.

   

 
 
WIPRO ISP, FLUID POWER WINGS UNDER ONE ROOF 
 
 
FROM OUR CORRESPONDENT
 
Mumbai, March 12: 
Software services giant Wipro Ltd is restructuring its internet service provider (ISP) and fluid power businesses, combining both under a new subsidiary.

Wipro will buy out the 21 per cent held by venture capital funds of ICICI Ltd in its Netkracker Ltd for Rs 3 crore and spin it off, along with its fluid power business, into a new subsidiary — Wipro Fluid Power Ltd.

Explaining the rationale behind combining the two businesses under the new subsidiary, Wipro said “in response to changing market conditions, it has been decided to restructure the business from a sole retail ISP to a manufacturing unit.”

Netkracker was earlier a part of Wipro Net, a joint venture between Wipro and Dutch telecommunications operator KPN Telecom, formed to address the emerging internet services market. The retail ISP portion of Wipro Net was later spun off as a separate entity, under the name Netkracker Ltd, to facilitate funding its ongoing plans. It was later merged into Wipro Ltd after the latter acquired KPN Telecom’s 45 per cent stake in Wipro Net for Rs 108.8 crore.

Commenting on the hive off, Wipro chairman Azim Premji said it would help the fluid power business, which manufactures hydraulic equipment, to grow more aggressively and also give it the option to seek strategic investors for growth. Wipro has been in the mobile hydraulic equipment business for the past 25 years and is a market leader in the segment.

Meanwhile the Wipro stock, which opened at Rs 1797 on the Bombay Stock Exchange today, rose to Rs 1822, and later closed at Rs 1783.15.

   

 
 
SUPERB ANSWER TO MERC E-CLASS 
 
 
FROM SHASHWATI GHOSH
 
New Delhi, March 12: 
Skoda Automobile, the Czech automaker owned by Volkswagen of Germany, is preparing for a Teutonic battle.

Skoda plans to launch Superb, its luxury model, which will take on DaimlerChrysler India’s Mercedes E-class model.

The car, which resembles Volkswagen’s Passat and debuted at the Frankfurt Auto Show last year, is 4.8 metres in length, and has three diesel engine options—1.8 litre, 2 litre and a 2.8 litre V6 turbo engine. It also has petrol engine variants. It is set to hit the Indian roads around Diwali and will be imported as a completely built unit (CBU).

“It is set for a Diwali entry and will be targeted at the corporate market. But before that we would like to see a rationalisation of the customs duty on CBU imports and excise duty for manufacturing SKDs (assembly of semi-knocked down kits), both of which we are paying because of the non-clarity in the duty norms,” said Imran Hassen, managing director of Skoda Auto.

Superb’s biggest USP is that the passenger in the backseat can stretch out fully to rest his tired limbs after a hard day at the office. Press a button and a cushioned space opens out at the back of the front seat to offer you the luxury of stretching fully. With the automatic bartender attending to your needs, you can plan for the evening ahead.

“We are operating at a loss now. This will clean up our balance sheet a little more. But we will break even only two years down the line,” Hassen said.

At the Delhi Auto Expo in January, Skoda had showcased Fabia, Fabia Combi and Octavia Combi as assembled cars. Hassan is worried over the prolonged homologation process for cars in India.

“The R&D team in the Czech republic has come up with a petrol engine which has improved tailpipe emissions. Now India will take three months to homologate it. I will continue to supply the same old engine for that time. By the time the permission comes in, we will have a better engine. In today’s fast technology, the life for a single technology is maximum 15 years. If so much time is wasted in upgrading cars, people will be deprived,” Hassen said.

“The models showcased at the auto expo are all volume models and we will not dream of destroying their market by bringing them in as CBUs. We are training the staff and by June hope to bring the chassis and engine differently—so that we don’t continue to pay double tax. Then the cost of these cars will rationalise and we can offer better value. However, Superb—the D segment luxury sedan—will come in as a CBU,” he said.

   

 
 
FRESH TWIST TO USHA SQUABBLE 
 
 
FROM RAJA GHOSHAL
 
New Delhi, March 12: 
What’s in a name? Lots, if it is Usha and the two corporate houses fighting over it are the Vinay Rai promoted Usha Rectifiers Corporation and the Siddharth Shriram Group Usha International Ltd.

In a contempt case filed by Usha International, Delhi High court has, in an early February judgement, asked Usha India Ltd, (earlier name Usha Rectifier Corporation) to henceforth “indicate...whenever they use the corporate name Usha India Limited....that the said company is not connected with Usha Shriram Group of Industries.”

The squabble over the trademark arose about eight years back when Usha Rectifiers changed its name to Usha (India) Limited. Siddharth Shriram-owned Usha International filed a suit against the company to pre-empt the Vinay Rai-owned company from using the Usha brandname.

While that original case is still pending, the court had given a temporary injunction to Usha India Limited, restraining it from using the Usha name to sell consumer goods and household appliances.

However, this order was partly modified by Supreme Court in 1997, which allowed Usha India to use the corporate name for some specified categories of goods (where Usha Shriram was not present) but directed it to clearly indicate that the company making them was not connected with the Shriram group.

The contempt petition was filed by Usha International when the Vinay Rai company failed to comply with this order.

However, legal consultants for Usha India Ltd say the original suit is still before the court and Usha International will have to give indemnity for all the years if the case is decided in favour of Usha India. The court order also specifies that it will be incorrect to hold that the respondent is free to use the trade name Usha (India) Limited for product or services other than the specified ones.

“The spirit of the Supreme Court order is to distinguish the two corporate names and not the products in respect of which the corporate name is being used,” the latest Delhi high court order says.

Although the respondents claimed that they had not released any advertisements in newspapers in respect of the specified products, the court ruled that the company has to assert that it did not have links with the Shriram group company every time it used its corporate logo or name.

   

 
 
MOVE TO GET THE DUNLOP BRAND ROLLING 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, March 12: 
The locks on its factories notwithstanding, Dunlop is ready to roll on full steam ahead.

Even though there are no signs of the Sahagunj and Ambattur factories being reopened, the Dunlop India management is already taking steps to capitalise on the Dunlop brand. India Tyre & Rubber Company (I) Ltd (ITR), an associate firm of Manu Chhabria’s Jumbo World Holdings Ltd, will market a wide range of products under the Dunlop brand.

The products to be marketed by the Bangalore-based firm are mattresses, pillows, upholstery, sports goods, sports shoes, sports wear, fashion wear and industrial products like belts, adhesives, anti-vibro mountings, hoses and rubber sheets.

When contacted, Harsimron Singh Sandhu of India Infomedia—the official mouthpiece of Dunlop India Ltd—said, “The products will be outsourced and marketed by ITR. The company is using this opportunity as a test case to leverage the Dunlop brand and strengthen it.”

Dunlop, which at one point of time had a strong presence with Dunlopillo and mattresses, will not manufacture any of these products initially.

“However, ITR may pay some brand royalties to Dunlop India. It has no plans to market any other company’s brands at this juncture,” he said.

The company’s gameplan is to create distribution channels and position the brand afresh in the market.

The spokesperson said that it was too premature to project the sales turnover for the project, adding the management felt the venture had immense scope.

The move to re-establish the Dunlop brand also drew praise from senior executives of leading advertising agencies. “The brand equity of Dunlop is very high and the market is likely to accept its products easily.”

However, the move to leverage the Dunlop brand name has upset employees who feel that the management should take immediate steps to reopen the factories first. “Dunlop is known to the world for its tyres. But the company is taking no concrete step to reopen the factories,” the employees alleged.

However, the spokesperson said the Dunlop management was keen that the factories start functioning at the earliest and was doing everything within its means towards that end.

The company had recently held meetings with the West Bengal government on reopening the Sahagunj factory.

When contacted, senior officials of the state’s industrial reconstruction department said: “The Dunlop India management, led by its managing director T. C. Goel, had held meetings with us. From these meetings we concluded that the management is yet to draw up concrete plans for reopening the Sahagunj factory.”

The company’s bankers are also not upbeat about Dunlop’s move to reopen the factories. “We are not yet clear about their intentions. They should come forward with a concrete plan.”

   

 
 
FOREIGN EXCHANGE, BULLION, STOCK INDICES 
 
 
 
 

Foreign Exchange

US $1	Closed	HK $1	Rs.  6.15*
UK £1	Closed	SW Fr 1	Rs. 28.60*
Euro	Closed	Sing $1	Rs. 26.45*
Yen 100	Closed	Aus $1	Rs. 25.05*
*SBI TC buying rates; others are forex market closing rates

Bullion

Calcutta			Bombay

Gold Std (10gm)	Rs. 4965	Gold Std (10 gm)NA
Gold 22 carat	Rs. 4690	Gold 22 carat	NA
Silver bar (Kg)	Rs. 7725	Silver (Kg)	Rs. 7765
Silver portion	Rs. 7825	Silver portion	NA

Stock Indices

Sensex		3535.80		-68.17
BSE-100		1728.08		-26.64
S&P CNX Nifty	1150.45		-17.40
Calcutta	 118.78		- 2.30
Skindia GDR	 563.80		- 4.51
   
 

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