Three-man UTI panel to review audit findings
ICICI clears court hurdle to merger
Time limit for equity dilution
Parke Davis leaps on merger buzz
Mauritius help to check fraud
Cell firms to move Supreme Court
Infy promoters cut holding
Review of call centre norms sought
Reva brings a whiff of fresh air to Delhi
Foreign Exchange, Bullion, Stock Indices

Mumbai, April 11: 
The board of trustees of Unit Trust of India (UTI) today constituted a three-member committee, comprising its own trustees, to recommend whether the audit findings of investments made in nine companies, including the deals in Reliance Industries, merits a deeper probe by an investigative agency.

Talking to reporters after a marathon board meeting, UTI spokesman K. Madhava Kumar said: “The committee will study the reports thoroughly and decide about cases to be handed over to investigative agencies.”

Asked to name the firms, the official parried the question saying he could not remember them. However, he confirmed Reliance was on the first list. The committee has a fortnight to submit its recommendations.

The urgency and the seriousness in pursuing the cases can be gauged from the tight deadline set for the panel. Once its report is in, the UTI board will decide what can be done at a meeting slated for the month-end. It will weigh the recommendations and decide if the nine cases need to be probed further by a government agency.

“The board will take a view based on the findings of the committee,” Kumar told reporters after the meeting that stretched close to eight hours.

Narsimham Murthy, M. R. Mayya and D. T. Pai, all UTI board trustees who attended today’s meeting, are on the committee. Murthy was among the two new members—the other was H. Bhojani—who have been given a berth on the UTI board. It was his first UTI meet.

The meeting was crucial as the board was supposed to decide whether to refer the independent auditors’ report on the controversial 1995 investments made by UTI in Reliance to the Central Vigilance Commission (CVC).

The independent auditors submitted their report on Reliance, in which the Trust is alleged to have poured over Rs 1,000 crore, in private placements in 1995.

The Tarapore Committee report had recommended a special audit of 18 companies, including Reliance Industries, Essar Oil, DSQ Software, Cyberspace and a few others to determine if prudential norms and investment advice were ignored by UTI’s fund managers.

“For the remaining nine companies, the audit work is still going on, but we cannot fix a specific deadline for submission of reports concerning them,” Kumar said.

UTI chief M. Damodaran rushed out of the huddle, but refused to offer comment to waiting reporters, saying he was 15 minutes behind time for another meeting.

Jamini Bhagwati, the finance ministry’s representative, oversaw proceedings from Delhi, via satellite. He participated in the deliberations of the UTI board through video-conferencing, the spokesman said.

The board also reviewed audit reports, the performance of funds and discussed the liabilities arising out of the monthly income plans and the net asset values of schemes quoting below their assured repurchase price.


Mumbai, April 11: 
The Mumbai high court today cleared the merger of ICICI with ICICI Bank and the share-swap ratio that would make the amalgamation complete.

The verdict paves the way for the creation of the country’s second largest bank — after State Bank of India — and tosses out objections raised by a section of ICICI investors that the ratio was skewed in favour of the bank. One last approval, expected soon, from the Reserve Bank (RBI) and the two organisations will be one.

“We will inform the RBI about the court’s decision. We will wait for its approval to come through,” Kalpana Morparia, ICICI executive director, told reporters. The merger will take effect from March 30, 2002.

“The court approves the merger ratio and the scheme,” Justice D. K. Deshmukh of the Mumbai high court said, while setting aside the objections of ICICI shareholders.

The new entity, the country’s largest private sector bank, will have assets close to Rs 1 trillion, second only to State Bank of India (SBI) with around Rs 3 trillion.

Morparia said an organisational structure has already been put in place, even though the Reserve Bank has not put its seal of approval on the union. On March 30, the entity met all requirements under statutory liquidity ratio (SLR) and the cash reserve ratio (CRR)

After the merger, ICICI Bank’s SLR obligation will be Rs 23,000 crore, while its CRR could be Rs 4,500 crore. In other words, 27,500 crore will remain with RBI.

The CRR, Morparia said, will be maintained on reporting Fridays. The first installment could be sent a fortnight after the merger is approved by the central bank. The current CRR stands at 5.5 per cent, while SLR is 25 per cent of a bank’s net demand and time liabilities.

On being asked about how the merged entity would lend the mandatory 40 per cent of its money to the priority sector — agriculture, small industry and housing — Morparia said her institution expects the Reserve Bank to set a time-table for meeting the condition. At present, ICICI’s figure is close to 10 per cent.

ICICI Bank’s share was up 0.12 per cent at Rs 124, while ICICI’s stock jumped 0.57 per cent at Rs 62.15 on the BSE.


Mumbai, April 11: 
ICICI Ltd has made a separate application to the RBI, asking for a time-frame within which it will have to scale down its equity exposure to 5 per cent of its advances. This is the maximum that banks can invest in stocks.

Kalpana Morparia said the equity stakes held by ICICI arose out of the money it lent to companies under project finance. “We will ask for a time-frame to reduce equity exposure.” She did not specify the present level of exposure.


Mumbai, April 11: 
The Parke Davis scrip perked up on talk that a planned merger with Pfizer India is imminent. The market expects 1.5-3 shares of Parke-Davis to be swapped for each Pfizer stock.

Opening firm at Rs 205, the Parke Davis scrip shot to a day’s high of Rs 215, a sharp gain of around 14 per cent. It closed at Rs 203.25, showing a spurt of Rs 14.15, or 7.48 per cent, over the previous finish of Rs 189.10. The counter witnessed 1169 deals, resulting in a turnover of Rs 99.57 lakh. The low-volume Parke Davis scrip has appreciated by more than 16 per cent in a month.

On the other hand, the Pfizer scrip finished at Rs 481.35 after opening at Rs 472 and hitting an intra-day peak of Rs 493.

The merger is expected following Pfizer Inc’s world-wide acquisition of Warner-Lambert, Parke Davis’ parent.

In August last year, there were strong indications about the union when Hocine Side Said, managing director of Pfizer, was sent to Parke Davis in the same slot. After that, Pramod H. Lele resigned as chairman and managing director, and from the Parke Davis board. Parke Davis had said the appointment of Said would help integrate the operations of Pfizer and Parke Davis.

Sources close to Pfizer India did not comment on the merger, but said the legal union of the two entities will be completed after legal, statutory and regulatory approvals.

Pfizer Inc holds a 40 per cent stake in Pfizer India Ltd; Warner-Lambert owns as much in Parke-Davis India.

According to analysts, the merged entity will be among the top ten pharmaceutical companies in India. Industry experts say there is a wealth of synergies in most products made by the two firms. The concerns are limited largely to cough syrups, where Benadryl and Corex compete against each other on the drug shelves. However, there are reports that Benadryl will be positioned as an over-the-counter product to avoid conflict.

Pfizer India grabbed attention a few months ago, when its parent said it was planning a 100 per cent arm. The US drug major had squelched fears that the new unit would chip away at the existing outfit, saying the completely owned arm would only register, preserve and defend Pfizer Inc’s intellectual property rights.


New Delhi, April 11: 
The financial services commission of Mauritius and the Securities Exchange Board of India (Sebi) will sign a memorandum of understanding on sharing confidential information on portfolio funds which could help the market regulators keep tabs on money laundering.

India and Mauritius will also be renewing a controversial double taxation treaty though it might be “improved” upon.

“The double taxation treaty will stay. There will be no change in it. But we will keep reviewing it for further improvement. I will put forward some of the suggestions at a meeting with the Prime Minister scheduled tomorrow. If he is agreeable, we would like to have a formal MoU between the two stock exchange boards,” said Paul Raymond Berenger, deputy prime minister of Mauritius and the country’s finance minister, at an interaction session with the Confederation of Indian Industry.

He said: “The treaty has benefited both the nations in increasing genuine foreign direct investment flows. We would not like to change it, but would want to sign this MoU in order to share confidential information and also keep tabs on money laundering.”

Mauritius will also extend an invitation to India to join the Egmonds Group—which has been set up by the developed nations to curb economic offences in order to provide full co-operation in checking tax evasion.

“I have urged the Indian government to join the Egmonds group to check corruption and money laundering. We would also like to improve upon the mutual assistance legal Bill in order to facilitate easy exports. But a big body is required to fight offences like terrorist financing and white collar crimes,” he said.

Berenger also expressed solidarity with India’s fight against terrorism and supported India’s case for permanent membership of the UN security council.


New Delhi, April 11: 
Cellular operators have decided to try their luck at the last frontier of justice—the Supreme Court—to stop fixed line telephony operators from offering mobile services through the Wireless in Local Loop (WLL) system.

The cellular industry today asserted that fixed operators are trying to muscle into what essentially is there turf through a devious means. They will not have to pay any entry fees and will not be subject to the same terms that are applicable to licensed cellular operators.

“WLL (M) is no march of technology. Code Division Multiple Access (CDMA) technology that is being used to offer WLL (M) services is nothing but a full-fledged mobile technology that has been in use in the rest of the world since 1995 to offer mobile services under a mobile licence,” said a statement by the Cellular Operators Association of India (COAI).

COAI also claimed that WLL (M) was about six times more expensive than the fixed line service in rural areas and about double the price of fixed line services in urban areas.

The affordability of WLL (M) services should not be judged by only comparing call charges; it should include a comparison of all aspects like call charges, monthly rental, and the handset costs. The local call charge of Rs 1.20 per 3-minute call was only an introductory deception and could not be sustained, COAI claimed.

With the crash in STD tariffs by 60 per cent and the reduction in their share of long distance revenues, the fixed-line operators have abandoned the plank of affordability and are now actively lobbying to get their call charges doubled to Rs 2.40 per 3-minute call and the monthly rental increased to Rs 600.


Calcutta, April 11: 
The promoters of Infosys Technologies, moving away from the beaten track, have sold 2.8 lakh shares in the market during the last financial year to rake in over Rs 100 crore. They now hold a little over 1.9 crore shares of the company compared with 1.92 crore shares a year ago. Their present stake of 28.72 per cent is valued at over Rs 7,384 crore at the prevailing market price of the Infosys stock.

While the promoters reduced their holding in the company—albeit marginally in percentage terms—the foreign institutions have increased their stake by 7.7 per cent to 36.59 per cent.

The total foreign holding in Infosys now stands at 40.44 per cent, which includes the company’s American Depository Receipts (ADRs) as well. Overseas control in the company had peaked at 41.83 per cent at the end of December, but in the last quarter, the foreign institutions sold out part of their holding.

The Infosys board appears to be welcoming foreign investment in the stock and has recommended increasing the threshold for foreign institutional investment from 49 per cent to 100 per cent. The company would be seeking shareholders’ approval for the proposal at its next annual general meeting.

Even as the foreign institutions remained bullish, the mutual funds exited the Infosys counter, reducing their stake by over 6 per cent in the last financial year. Their combined holding in the company is 7.33 per cent now, compared with 13.46 per cent a year ago.

The public holding in the company has remained largely unchanged at over 14 per cent. In addition, the company’s employees hold 6.5 per cent, while the Infosys Welfare Trust holds 1.25 per cent.


New Delhi, April 11: 
The National Association of Software and Service Companies (Nasscom) today said the department of telecommunications (DoT) should remove procedural bottlenecks, hampering the growth of call centres, and also sought review of licensing norms for call centres.

In its recommendations submitted to DoT, Nasscom has sought a review of certain areas in the licensing agreement to set up international and domestic call centres in India.

Nasscom, the apex industry association for software and service companies in India, has suggested that sharing of bandwidth should be allowed for disaster recovery.

The association pointed out that after the September 11 attacks in the US, there has been an increased focus by enterprises on disaster recovery and business continuity planning. Nasscom said this is important in order to build confidence among overseas customers.

Submitting the recommendations, Nasscom president Karnik Karnik said, “The IT-enabled services industry in India, particularly the call centres and back-office segment, has been growing at over 70 per cent and currently employs over 1 lakh people and generates revenues of Rs 7,100 crore.”


New Delhi, April 11: 
Reva, the country’s first electric car, was launched in Delhi today and will hit the roads in Calcutta later this year.

The two-door hatchback, which is powered by a battery that has to be recharged every 80 kms, comes at a nifty price of Rs 2,54,340 in Delhi (ex-showroom).

Reva, which can carry two adults and two kids (it is really a tight squeeze at the back), is being positioned as a city runabout with a top speed of 65 kms an hour. The drawback: there is little legroom and too little headroom. If you’re over 6 feet tall, it’s decidedly uncomfortable.

The batteries can be recharged at home or work place using a 220 volt, 15 amp power source. Although Reva is the country’s first electric car on Indian roads, Bhel has been running its electric bus in the capital for quite a few years.

Positioned essentially as a city car, the 80-km range compares well with affordable electric cars the world over where the batteries on an average have to be recharged every 65 kms. However under ideal conditions, foreign electric cars can run for up to 160 kms before the batteries need to be recharged.

Industry watchers say that often there is a psychological block to electric cars over the question of range covered on a single electric charge. According to an international trade magazine, even in Los Angeles, the average daily miles travelled is 38 miles a day or about 51 kms.

Reva has so far sold 150 cars in Bangalore, where it was first launched 11 months ago. About 40 per cent of them were women. Reva is also targeting the city-based professional and retired people.

“Since Reva is a zeo pollution city car, we have requested the Delhi government to provide concessions on road tax and offer sales tax waiver to Reva owners. This has already been extended by the Karnataka and Rajasthan governments,” said Chetan Maini, managing director of Reva Electric Car Company.

“The running cost of the car is 40 paise per kilometres in terms of electricity cost,” said Maini who is a mechanical engineer from Stanford University where he was a project leader of a team that worked on hybrid electric vehicles. The company plans to sell 1,500 to 2000 cars over the next year, he said.

The car, produced at the company’s plant in Bangalore, has a very high local content—almost 92 per cent.



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