Parke Davis, Pfizer to merge
Firodias spectators in Bajaj breakup drama
FI queries force BSES to defer results
Three in race for top SAIL post
Power Bill to be charged to absorb court shock
Fiat gathers speed while others trail
Jhawars raise stake to 32% in Usha Beltron
Mahendra Jalan pulls out of Tide Water race
1:2 bonus for UTI Petro fund
Foreign Exchange, Bullion, Stock Indices

Mumbai, June 24: 
The stage is set for the two titans to tie the knot. Parke-Davis India Ltd is to be merged with pharma major Pfizer India Ltd to create the country’s fourth largest pharmaceutical company with a turnover of more than Rs 600 crore.

The boards of both companies are meeting on Thursday to discuss the merger, long considered overdue with Warner-Lambert, the erstwhile parent of Parke Davis, becoming a subsidiary of Pfizer Inc from June 19, 2000.

In a communication to the stock exchanges today, both companies said that the amalgamation will be subject to necessary approvals, including that of their respective boards, shareholders of both Pfizer and Parke-Davis India, as well as the sanction of the Mumbai High Court.

Sources close to the company pointed out that the June 27 meeting is likely to only seek an approval from the board for the merger while the swap ratio may be announced at a later date.

The merger would create an entity whose products would be marketed by a sales force of 1,200, some of which would include leading brands like Corex (said to be the top brand in the domestic pharma industry), Benadryl, Protinex and Hepashield among many others. Pfizer India officials said the company plans to attain the top slot in every segment where it has a presence.

Pfizer India, which reported a turnover of Rs 362 crore for the year ended November 30 2001, has, of late, also introduced a new performance management system apart from hiring a leading PR outfit to work out a corporate image plan.

The merger between the duo have been doing the rounds over the past few months. In fact, in August last year, firm indications towards their merger emerged when Hocine Side Said, managing director Pfizer, was appointed as managing director of Parke Davis. Then, Pramod H. Lele resigned as chairman and managing director of Parke Davis as well as from the board of directors of the company. Parke Davis had then said that the appointment of Said was a step towards operationally integrating Pfizer and Parke Davis in the country.

Sources said that since then, the operational aspect of the merger has been completed with the successful achievement of the migration of the field force from Parke Davis.

Pfizer Inc has a 40 per cent stake in Pfizer Ltd, while Warner-Lambert held 22.16 per cent in Parke-Davis India.

Industry experts said that while synergies existed in most product areas, concerns centred around the cough syrup category, where Benadryl and Corex are competing products.

Parke-Davis (India) Ltd was incorporated in 1958. Some of its major products included Chloromycetin— the first broad spectrum antibiotic, Benadryl— an anti-tussive and an anti allergic and Ponstan—an analgesic. Apart from these, the other well-established brands include Gelusil, Neko and Listerine.

A few core segments of Pfizer India include anti-tussives, anti-infectives, vitamins, cardio vascular and vaccines. Among these, anti-tussives is the largest among various therapeutic categories, contributing to almost 35 per cent of its total sales. Some of its recently launched brands such as Hepashield and Magnex have been reporting double digit growth rates.

On the BSE today, the Parke-Davis scrip met with selling pressure at higher levels after it had opened at Rs 175 and shot to Rs 182.90. It closed marginally lower from these levels to end at Rs 180.05. On the other hand, the Pfizer scrip finished at Rs 464.95 after opening at Rs 466.05 and rising to Rs 469.

Astra Pharma move

Sweden-based Astra Pharmaceuticals AB has increased its stake in its subsidiary AstraZeneca Pharma India Ltd from 56.5 per cent to 87 per cent through an open offer, aggregating in an approximate outgo of Rs 57 crore.


Mumbai, June 24: 
Even as the estranged Bajaj scion is keen to jump the boat with his share of the family pie, the Firodias of Bajaj Tempo and Kinetic Motors —estranged partners of the Bajaj group and now arch rivals in the two-wheeler industry—are content to hold on to their stake in Bajaj Auto.

Incidentally, the Firodias’ stake is more than double the holding of Shishir Bajaj in Bajaj Auto, with company sources putting the stake of the two brothers—Abhay Firodia of Bajaj Tempo and Arun Firodia from Kinetic Motors—at 13.6 per cent.

While Shishir Bajaj, the estranged brother of Rahul Bajaj, is expected to return today from his week-long trip abroad, the chances of reconciliation between the two brothers who are separated by nine years in age, have been virtually ruled out.

Analysts say that it is only the price that the family is willing to pay that needs to be decided after Shishir returns to India on Monday night. They add that the money to buy out Shishir can be easily organised by the family.

Ironically, the Firodias had not parted with even one share in the generous buyback offer announced two years ago by Bajaj Auto. They continued to retain their holdings even when Bajaj Auto announced a buyback at Rs 400 per share, while BAL shares were quoting on the bourses at half the price.

Asked on the Firodias’ view of the developments and their reasons for being more loyal than the king, Kinetic chairman Arun Firodia, had a cryptic reply: “You should ask my brother Abhay on this, as he holds a bigger stake than I do.”

Observers, who have keenly watched the two groups, have an explanation to this strange turn of events, where the estranged former partners remain put with their respective holdings, while a family member wants to opt out.

“It is the cross-holdings of the two groups that has prevented them from selling,” they say. It is said that Bajaj Auto controls close to 20 per cent in Bajaj Tempo. The counter holdings in each other’s flagship companies have prevented the two parties from exercising the right to sell their respective stakes.

A senior BSE stock broker, Kisan Ratilal Choksey said that the current imbroglio will have no impact on Bajaj Auto’s performance.


Mumbai, June 24: 
Power utility major BSES Ltd today decided to defer the announcement of its annual results to June 28 as members of financial institutions on its board demanded further information and clarification on the company’s performance last year. The board was scheduled to consider the results at its meeting today.

“The board meet has been postponed as representatives of FIs like Unit Trust of India demanded further information and clarification on the company’s results for last fiscal,” said a board member.

The company today informed the stock exchanges that the meeting of the directors to consider and approve the audited financial results for the year ended March 31 “have been postponed from June 24 to June 28” without, however, pointing out the reasons for this. A BSES spokesperson, however, said the main reason was that the agenda before the board was “too large” due to which the accounts could not be considered.

While he did not comment on the items that figured in this agenda, he clarified that the meeting has been postponed to June 28 as it was more convenient to the directors.

According to sources, the FIs may have objected to BSES’ accumulated losses of three distribution companies operating in Orissa, which are estimated to the tune of around Rs 1,000 crore for the last fiscal while those since April 1999 are around Rs 960 crore.

Sources said the Comptroller and Auditor General had not yet cleared the distribution companies accounts for 1999-00 and BSES had also decided to set up a high-powered committee to revalue the assets of these companies.


New Delhi, June 24: 
It is now official: SAIL’s long-serving chairman Arvind Pande, is not going to get an extension. Pande, an IAS officer who had opted to join SAIL, is slated to retire in September.

Leading the race for the top slot at India’s largest steel-maker is another bureaucrat A.K. Mishra. A 1969 batch Orissa cadre IAS officer, Mishra is currently serving as additional secretary, programme implementation, who is considered close to steel minister B.K. Tripathi,

Vizag Steel’s chairman-cum-managing director B.N. Singh, who has heavyweight political connections in the form of his mentor Andhra Pradesh chief minister Chandrababu Naidu, is also in the running.

An interview panel headed by Public Enterprise Selection Board chairman T.K.A. Nair— with public sector technocrat R.S.S.L.N. Bhaskaradu and steel secretary N.N. Khanna as members—have recommended these two names from among 11 candidates they interviewed today.

At third position is SAIL’s finance director V.S. Jain. He will consequently continue to be in the running though he has not been favoured by the panel.

Mishra, who seems to be the frontrunner right now, is believed to be close to not only Tripathy but also to Orissa chief minister Naveen Patnaik who is Tripathy’s boss in the Biju Janata Dal.

However, in the forthcoming Cabinet reshuffle, the steel minister’s job itself might be given to someone else. In any case, a final decision on such top-level jobs is only taken by the Prime Minister himself.

The SAIL chairman’s post is a secretary-level job and is considered extremely prestigious despite the losses run up by the steel behemoth.

Mishra has had the experience of running Damodar Valley Corporation. He also held various other bureaucratic positions.


New Delhi, June 24: 
The government is planning to bring in a few vital amendments in the Electricity Bill 2001 to prevent orders like the one issued by Calcutta High Court in the CESC tariff hike case.

The Centre will introduce adequate provisions in the Electricity Bill (which is now before the Standing Committee of the House) to reduce litigation and delay in decisions through recourse to high courts. The government is likely to strengthen the functions and powers of the proposed appellate tribunal for electricity.

According to senior officials in the Central Electricity Regulatory Commission (CERC), an unprecedented situation has been created where the order of the quasi-judicial authority like the state electricity regulatory commission has been challenged in court. “How can the quasi-judicial authority be ordered to appear before the court as a respondent in a case. This will set a wrong precedent,” claimed a CERC official.

But legal experts feel that it is not new and even high courts have been made respondents. “A quasi-judicial body can be made a respondent in a case if it is necessary for an effective adjudication on an issue or a controversy,” said Pawan Duggal, a legal expert on IT and communications.

The regulatory bodies in India and abroad have gone through a learning process before they are accepted as impartial and effective. The Trai was embroiled in a controversy before its adjudicatory powers were taken away and given to a new quasi judicial authority the Telecom Dispute Settlement Appellate Tribunal (TDSAT).

“It is unfortunate we do not learn from the examples available with us. The government had been party to the whole controversy of Trai and the private firms. When the regulatory body for this sector (electricity) was under discussion, it was pointed out by many members of Parliament and by the industry that there is a need for a separate quasi-judicial,” said a senior official in the power ministry.


New Delhi, June 24: 
Passenger car sales slumped 9.7 per cent year-on-year in May, with Fiat India being the only major car manufacturer to ratchet up sales on the strength of its nippy Palio compact car and its new-look Siena mid-size offering.

All the other major car makers —Maruti Udyog, Tata Engineering and Hyundai —downshifted gears and moved into the slow track.

Sales of compacts like the Zen, Santro and Indica fell during the month even as the mid-size sedan segment charted a marginal growth for all companies other than Maruti Udyog.

According to data released by Society of Indian Automobile Manufacturers (SIAM), car sales stood at 39,171 units, down from the 43,364 units sold in May 2001. Sales for the combined period April-May 2002 fell by 8.8 per cent to 72,427 cars, from 79,469 cars in the year-ago period.

Market leader Maruti Udyog recorded a 26.63 per cent dip in the sales of vehicles across its full range of minis, compacts, vans and multi-purpose vehicles (MPVs). Sales of Maruti 800— the only model in the mini segment— fell to 9,370 units in May 2002, compared with 12,631 cars sold last May.

Driving on the good response to its new compact car Palio, sales of Fiat India grew by almost eight times to 3,525 cars during the review month from 450 cars sold a year ago. Fiat increased sales by 87 per cent not only on the sales of Palio, but also the new Siena. It sold 2,956 units of Palio and Uno in the compact category in May 2002, compared with 371 cars sold in the same month last year. It sold 569 units of Siena as against 79 sold in the same month last year.

Hindustan Motors also posted a 21.65 per cent growth at 1,621 cars in May 2002, as against 1,270 cars in May 2001.

Honda Siel’s sales rose by 17 per cent as the company sold 831 units of City and Accord as against the 710 cars it sold last year. Ford Motor Company’s local arm recorded a 6 per cent rise at 1,584 cars in May 2002 as against 1,495 cars in May 2001. General Motors posted a modest 3 per cent growth, selling 639 units of Astra and Corsa as against 621 cars sold in May 2001.

However, luxury car maker DaimlerChrysler’s May 2002 sales were 64.1 per cent less at only 61 units as against 170 units sold in May 2001.

Hyundai Motor India witnessed a 4.2 per cent drop, selling 7,761 cars compared with 8,109 cars sold last May, and the Santro selling only 5,965 cars as against 6,609 cars last May.

Sales of Telco fell by 37 per cent at 5,223 vehicles compared with 7,160 vehicles in May 2001 for the passenger car Indica and utility vehicles Tata Sumo and Safari taken together.


Calcutta, June 24: 
The Jhawar group, promoters of Usha Beltron (UBL), is raising its stake in the company from 23 per cent to over 32 per cent by acquiring 53,45,455 equity shares of Rs 5 each at a premium of Rs 28. The total investment will be over Rs 17.6 crore.

The company has also lined up equal investment from International Finance Corporation (IFC) of Washington in its equity. The financial institution will have a 15 per cent stake in the steel maker. IFC has also sanctioned a $ 21 million loan to UBL for its proposed Rs 120-crore project for setting up a one-lakh-tonne sponge iron plant and expansion of captive power generation capacity by 10 mw.

UBL vice-chairman Prashant Jhawar said IFC’s participation in the company through equity and debt would help it streamline its debt-equity ratio and generate more cash flow in the long run.

The debt-equity ratio of the company after the financial restructuring is completed will stand at 1.95:1 as against the existing 2.45:1.

The IFC loan will bear an interest of Libor plus 200 basis point, which is significantly lower than the company’s current borrowing rate.

While part of the IFC loan will be used to retire high cost debt, Jhawar felt that the better debt-equity ratio and improved cash flow will help the company to raise both short-term and long-term loans at much more attractive rates in the near future.

Company sources said UBL is also in talks with DEG of Germany and some others for an investment of Euro 10 million towards its equity. With this investment, UBL and its associates will have a 10 per cent stake in the company.

The financial restructuring will help the company reduce its interest burden by around 10 per cent from Rs 80 crore to a little over Rs 70 crore.

The company’s Rs 120 crore-project will be completed in 18 months. The project would help the company to make more value added products while the cost of production will be substantially reduced, Jhawar said.

UBL is also planning to relocate its cable business outside the country as the domestic market is suffering from over supply while the international demand is rising.

Jhawar, however, did not divulge where the cable business would be relocated.

The company plans to raise the prices of its products from July 1 by an average 4 per cent, Jhawar said.


Calcutta, June 24: 
Real estate baron Mahendra Jalan has pulled out of the race for Tide Water Oil, the Rs 186 crore lubricant major that the government is selling off. Jalan holds 14 per cent of Tide Water’s equity, and had earlier said he would bid for the 42 per cent stake being divested by the government, Life Insurance Corporation and Unit Trust of India.

Jalan had tied up with a multinational petroleum company to bid for Tide Water, but withdrew after his overseas partner was intimidated by the disturbances along the Indo-Pak border. Jalan now says, he may offload his 14 per cent stake in the open offer to be made by the acquirer of the company.

Jalan said, “The last date for submission of ‘Expression of Interest’ (EoI) was June 3, when the Indo-Pak border was burning. Our partners said they were not interested in entering India unless the situation improved. We have no expertise in running a petroleum company. Hence bidding for it alone made no sense. “The tension having subsided, our partner says it is willing to bid for Tide Water now. We have requested the government to extend the deadline for filing of EoI. We have not heard from the government yet, but if allowed to enter the race now, we certainly will.

“I am told we were not the only bidders to have withdrawn from the race due to the then prevalent political tension. Normalcy having been restored, a number of other foreign companies may join the race if the entry to it is opened again.”

There is no dearth of competitors anyhow. Besides, the leading government-owned oil companies, a host of multinationals have expressed their interest in Tide Water.

The US-based Chevron Texaco group that holds 22 per cent stake in the company is understood to have filed a formal EoI. Chevron Texaco holds the shares of Tide Water through a group firm called Four Star Oil & Gas Company. Jalan said if he was not allowed to bid for Tide Water, he would sell off his stake to the new promoters of the company. “I have already received some offers for my stake from mutual funds, but I will wait till the divestment is over,” he said.

Tide Water, which posted a net profit of Rs 10.02 crore in 2001-02, was established in 1921 as an importer of lubricants from its US parent. The government-owned Andrew Yule controls 27.71 per cent of Tide Water.

Its entire stake has been put on the block along with Unit Trust and Life Insurance Corporation’s combined holding of 14.27 per cent. The company that acquires the 41.98 per cent stake will also gain management control.

Tide Water controls about 5 per cent of the lubricant market in India, the industrial and automotive segments put together. It sells products under the Veedol and Nippon Mitsubishi brands. There is some concern among the bidders about Tide Water’s control over these two brands in future.

The Veedol brand is now owned worldwide by the Castrol-British Petroleum group, except in India. Castrol has already moved the Calcutta High Court objecting to the use of the Veedol brand by Tide Water in India.

On the other hand, the legal arrangement with Mitsubishi for the use of the latter’s brand is set to terminate in October next year.


Mumbai, June 24: 
The Unit Trust of India (UTI) has cheered the unitholders of two schemes which have outperformed other schemes in its portfolio.

UTI today announced that it has declared 1:2 bonus under the growth sector fund (Petro), i.e one bonus unit for every two units held in the fund, and declared a 2:10 bonus units under its children’s career plan (two bonus units will be issued for every 10 units held in the plan).

The growth sector fund (Petro) was launched in June 1999 and became open-ended in September 1999. The only one of its kind, the fund is dedicated to investment in petro stocks.

The petroleum sector has witnessed a great deal of activity in the recent past with the dismantling of the administered pricing mechanism (APM) and implementation of the disinvestment plan by the government. The fund has stood out in the UTI portfolio of schemes through capital appreciation as well as income distribution.

PTI adds from Delhi: Meanwhile, UTI is believed to have booked a profit of around Rs 2,680 crore by selling shares of Reliance Industries (RIL) from its portfolio during the four-year period ending March 2002.

The country’s biggest mutual fund has profited to the extent of Rs 550 crore by offloading an aggregate 3.23 crore shares of RIL last fiscal, mainly to avert a redemption crisis for various schemes, including US-64. When contacted, UTI officials said RIL was still among the top 10 equity holdings in the US-64 scheme.

“US-64 had a total exposure of 9.55 per cent in RIL last fiscal, which is highest for any individual company,” an official said.



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