Firms told to pick up demat tab
Blanket approval for petro IPOs
Heavyweights on Thursday agenda
Nalco sale plan raises hackles
Govt finds fault in RPL deal
EPF rate to remain at 9.5%
Mphasis profit leaps 189%
Sale of sick PSUs to be hastened
IDBI in talks with ADB for $ 200-m loan
Foreign Exchange, Bullion, Stock Indices

Mumbai, July 9: 
A Sebi committee looking at ways to make share dematerialisation (demat) cheaper has suggested that companies bear a substantial part of the cost.

The aim is to provide relief to investors, and for that to happen, the panel says firms should pick up much of the tab for demat, more so because they have been able to cut expenses earlier incurred on share transfer work, printing, postage and salaries of employees.

However, the committee was rocked by the resignation of Kirit Somaiya, MP and president of Investors Grievance Forum (IGF), and a dissent note filed by Manubhai Shah, the managing trustee of Consumer Education and Research Centre (CERC). The rumblings were felt on the day the report was finalised. Ironically, the two members represented small investors, the section the panel was supposed to help.

The committee has proposed expanding the scope of shares that can be sold in physical form by including small-value lots worth Rs 10,000. At present, there is no value specified, but there is a cap of 500 shares. “This would obviate the need for investors to comply with the formalities of dematerialising such shares.”

The report says Sebi should work out a formula to fix charges to be paid by companies, and the share of it that would go to depositories. This is necessary to ensure that the expenses are passed on to shareholders equitably.

The committee has also said courier expenses incurred on dematerialising securities of the same company, but different demat accounts belonging to a single family submitted together, should not be recovered separately from each account holder (family member).

It is possible that the market regulator will request the department of telecommunications to reduce charges paid by depository participants (DPs) who wish to connect their wide area network, the report said.

If one of the joint holders dies or the shares are transferred to a new account opened by survivors, depositories should not levy any charges on DPs, who, in turn, should not ask those who make the transfers to pay for it.

The committee says Sebi should find out whether the law gives a DP the right to dispose off securities if clients do not clear accumulated dues that wipe out advance.

The ideas of Somaiya and Shah on account closure charges was spiked by most members on the ground that it was similar to the “exit load” for mutual funds. “It should be up to the DPs to decide whether there will be account opening charges, account closing charges, none or both.”

Shah, however, took a different line, saying DPs should not have untrammelled powers to raise charges to be paid by investors. “When the committee has been primarily constituted for the purpose of reducing the cost of dematerialisation for investors, it is improper and inconsistent to raise charges investors pay their DPs.”

Somaiya left the committee on this issue. However, other members were of the opinion that there was no breach of propriety by both NSDL and CDSL.


Mumbai, July 9: 
The government is planning a blanket clearance for initial public offerings (IPOs) of IOC, BPCL and HPCL to keep their disinvestment on course.

“My ministry has approved BPCL’s Rs 1,000-crore IPO and is in the process of doing the same for IOC and HPCL. I will take all three proposals to the Cabinet,” Ram Naik, Union minister for petroleum and natural gas, said.

The decision by state-owned oil companies to go public to raise funds for expansion had generated considerable concern among market watchers, particularly in the case of BPCL and HPCL, the two slated to come up for divestment this year. Many fear that an IPO at this stage will hit the divestment schedule.

HPCL is planning to come up with a Rs 1,000-crore IPO, while India Oil is looking at a Rs 1,600-crore floatation.

Naik, who was in the city today to inaugurate Speed, BPCL’s new-generation fuel, told reporters that the Tenth Five-Year Plan envisages additional capacity by setting up new refineries in the country. The three companies already have such projects in the pipeline.

For instance, Indian Oil is thinking of setting up a none-million tonne million tonne refinery at Paradip in Orissa, though some reports suggest it has been put on hold. Bharat Petroleum has lined up a six-million tonne refinery at Bina in MP, while HPCL is weighing a plan to build a none-million tonne refinery in Bhatinda.

“All are long-term projects and need huge financing. The share market is the best medium to raise these funds,” the minister said. The maiden issues, Naik said, would not hamper disinvestment in BPCL and HPCL. Instead, a stronger capital base would help them fetch better valuations for their shares.


Calcutta, July 9: 
The disinvestment of Bharat and Hindustan Petroleum, and public issues of GAIL, ONGC, IOC and NTPC will be discussed at the meeting of Cabinet Committee on Disinvestment slated for July 11.

“We expect to cross our target of mopping up Rs 12,000 crore. Some steps we have suggested to the finance ministry will also be discussed on Thursday,” disinvestment minister Arun Shourie said while talking to reporters at the Indian Chamber of Commerce here today.

Without commenting on public issues planned by the navratna companies, he said public sector companies that want to go public have a market capitalisation of nearly Rs 75,000 crore. The government can leverage the strong fundamentals to divest some of its shares, and to get rid of cross-holdings as well.

Shourie, who is also the Union minister for development of north-east, said: “We will adhere to the time table that we had chalked out for disinvestments.”

Some of the companies up for disinvestment are Nalco, Shipping Corporation of India, Engineers India, Concor and others. “For Nalco, we are working out whether the company should float a GDR or an ADR,” he said.

Talking about the North-east Summit to be organised in Mumbai on July 19 and 20, Shourie said the region has immense potential to attract investments.

“The major roadblock for investment in north-east is pockets of violence. This has tarnished the image of the region. It is a formidable task to sell the region to the investors and we are taking steps to achieve that goal,” he said. ICC president A. V. Lodha also spoke about the untapped opportunities that lie in India’s seven sisters.


New Delhi, July 9: 
A battle royale is developing between disinvestment minister Arun Shourie, on the one hand, and BJP’s Orissa-based ally, the Biju Janata Dal, on the other, over plans to go in for a strategic divestment in aluminium major Nalco.

Earlier, the government had agreed with Orissa chief minister Naveen Patnaik that it could divest in Nalco through sales to the public and through ADR or GDR issues, while retaining management control for some more time at least.

However, the disinvestment ministry is now preparing a new roadmap that calls for a strategic sale coupled with sale of shares to the public, which will eventually be followed by a foreign offering.

This is obviously not to the liking of Oriya politicians who do not want a replay of the Balco disinvestment drama in their home state with opposition from labour unions snowballing into an agitation that could pit the state government against the Centre.

They feel the Centre should be more sensitive to their state’s politics just as it has been towards another key ally — the Telugu Desam. Bowing to ‘sensitivities’, the BJP government has already put in the deep freeze the moves to sell off Vizag-based Rashtriya Ispat Nigam Ltd.

The BJD is known to be among BJP’s least demanding allies and has time and again accepted the larger partner’s stand on various issues. The party has even condoned the help that the BJP gave to its rebel partyman, Dilip Roy, in gaining a Rajya Sabha seat, fighting against a BJD candidate.

Just last week, BJD top bosses were congratulating themselves for having managed to wrest the East Coast Railway without really having to work too hard, but the sudden turn of events has placed them in a quandary.

If the Centre goes ahead with its plans to sell its stake in Nalco, which is considered a major industrial unit in the state, and the BJD is unable to prevent its privatisation, it may well have to face a lot of antagonism from its largely jingoistic support base.

The Union Cabinet has endorsed selloff proposals till now that have sought to offload 10 per cent in the domestic market and 20 per cent in the American market before roping in a strategic partner for another 29 per cent stake and selling about 2 per cent to the employees.

In all, the government currently holds about 87.5 per cent stake in the aluminium major. In fact, the Union government has already cleared a proposal for disinvestment of 30 per cent stake in Nalco through ADR/GDR issue, along with a domestic float, implicitly dictating that a strategic sale should be made later.


New Delhi, July 9: 
The department of company affairs (DCA) has detected that Reliance Petroleum Limited (RPL) violated provisions of the Companies Act under section 211 by failing to declare in its balance sheet for 1994-95 its purchase of shares of Reliance Industries Limited (RIL) and Reliance Capital Limited (RCL).

The discovery comes after an inspection of the books ordered last September. The inspections were ordered after Rasheed Alvi, an MP from the Bahujan Samaj Party (BSP), went to town with his damaging disclosures.

“The matter under enquiry is 7-8 years old and relates to 1994-95. RIL reiterates it has complied with all applicable laws, rules and regulations. RPL is co-operating with authorities for the expeditious conclusion of these matters,” a Reliance spokesman said.

The DCA report says: “The company (RPL) has violated the provisions of Section 211 read with Schedule VI of the Act. No information relating to dealing in shares of RIL and RCL was furnished in the balance sheet circulated among the shareholders.”

Alvi wrote to the government that Reliance had gone on record in admitting to the DCA that the balance sheet circulated to more than 49 lakh shareholders and outsiders was different from the balance sheet that was signed by directors and statutory auditors.

Reliance Petroleum has said in response that a printing error had crept in resulting in the omission of one line at the end of Page No 13 in the printed accounts. This omission, Reliance claims, is being sought to be blown out of proportion by the complainant to say that the company circulated two sets of balance sheets for the year ended 31 March, 1995.

The inspection report, signed by Deputy Director (Inspection) R.V. Dani and Registrar of Company K Pandian said RPL “violated provisions of Section 73 (3A), 217 and 211 read with Schedule VI of the Act.”

Alvi had alleged that the blunders cannot be attributed to a bonafide printing error. The omitted text in question is about RPL having made purchases of 22,51,100 shares of RIL (company under same management) of Rs 10 each and 14,51,900 shares of RCL of Rs 10 each. The signed set contained this omitted text on page 13 of the balance sheet as filed with ROC in February, 2001 but the circulated set of to the shareholders in 1995 did not.

Section 211 of the Companies Act provides that no person shall be sentenced to imprisonment for any such offence (mentioned under the section), unless it was committed willfully. Since Reliance has been vouching that it was an ‘inadvertent’ error, the prosecution is likely to be dropped, unless ofcourse, a wilful intention is established by the complainant.


New Delhi, July 9: 
Rejecting the finance ministry’s proposal for a 0.5 per cent rate cut on employees provident fund (EPF), the Central Board of Trustees of the fund today decided to retain the interest rate at 9.5 per cent.

“We have decided to stick to the present rate of 9.5 per cent. We will not allow curtailment of benefit to employees and if necessary, we will take it to the Cabinet for approval,” labour minister Sahib Singh Verma told reporters after the meeting of the CBT.

“I am conscious of my responsibilities for the welfare of working class. I consider it my duty to ensure the benefits available to the working class,” he said.

Verma said the CBT had earlier also rejected the finance ministry’s proposal to reduce the interest rate and had decided to retain it at 9.5 per cent for an interim period.

“If the finance ministry does not agree to our proposal again, in that case we will have to take it to the Cabinet,” he said, adding he would be meeting finance minister Jaswant Singh in this regard.

The board also cleared the proposal to introduce multi-benefit employees insurance scheme for helping those EPF beneficiaries who have lost their jobs as a result of the ongoing economic restructuring.


Mumbai, July 9: 
Mphasis BFL Group has reported a 189 per cent rise in consolidated net profit to Rs 13.85 crore for the quarter ended June 30, 2002 from Rs 4.80 crore in the same period of the previous year.

However, all eyes are now focussed on Infosys Technologies Ltd, which will announce its first quarter results on Wednesday. Analysts expect the Bangalore-based company to marginally better its performance this year.

Mphasis said the net profit for the current quarter also represents an increase of 4.5 per cent over the Rs 13.26 crore posted in the previous sequential quarter ended March 31, 2002 despite an increase of more than Rs 1.5 crore in tax provision.

Consolidated revenues at Rs 89.52 crore in the current year, increased by 23 per cent over the same quarter last year. On a sequential quarter on quarter basis, revenues grew by 6.6 per cent.

The improvement in net profit over last year, the group said, is due to improved gross margins and the reduction in selling, general and administrative expenses. During the quarter, the group added 15 new clients including one on Msource, the group’s call centre subsidiary. These include a large international financial institution, Emirates Bank, Sony Corporation and a large insurance company in India. Nine of the clients added are in the financial services vertical.

The group, however, said that manpower utilisation rates in the quarter remained flat compared with the quarter ended March 31, 2002 at 72 per cent.

Indo Gulf profit surges

Indo Gulf Corporation has posted a 35 per cent rise in net profit for the first quarter ended June 30, 2002. Net profits rose to Rs 68.23 crore against Rs 50.47 crore in the same period of the previous year.

The company’s sales turnover of Rs 714.49 crore was 23 per cent rise over the corresponding quarter last year. Indo Gulf added that a prudent debt restructuring has led to lower interest charges by 17 per cent during the quarter.

The turnover of its copper division stood at Rs 612 crore and this performance was commendable despite lower realisations consequent to falling LME prices and a reduced duty structure. It added that given the gradual economic recovery, the outlook for copper business appears positive. Further, with the recovery in copper prices at the LME, the realisation from this business is also expected to improve in the second half of this year.

In fertiliser, which contributed close to Rs 103 crore, the cap on production by the government have resulted in under-utilisation of the assets. Likewise, the reduction in the retention price by the government has impinged upon its fertiliser business.

Geometric Software Q1 net up

Geometric Software Solutions Company Ltd has reported a 14.30 per cent rise in net profit at Rs 2.44 crore for the first quarter ended June 30, 2002, compared to Rs 2.14 crore in corresponding period of previous fiscal.


Calcutta, July 9: 
Disinvestment minister Arun Shourie will try to sort out problems in selling public sector companies that have been referred to the Board for Industrial and Financial Reconstruction (BIFR) at the July 11 meeting of the Cabinet Committee on Disinvestment (CCD).

The move has been prompted by the opposition to the sale of Jessop & Co, a company that’s already before BIFR, from unions who argue their firm was worth much more.

“It is a peculiar situation for BIFR companies. Even if CCD clears the sale, the ultimate power lies in the hands of the chairman. This thwarts disinvestment and needs to be sorted out soon. We have sent a few suggestions to the finance ministry,” Shourie said here today.

The Cabinet panel cleared the sale of 72 per cent in Jessop & Co to Ruia Cotex for a consideration of Rs 18.18 crore on February 27. The proposal was then sent to BIFR.

Employees, however, feel their firm, with assets of more than Rs 200 crore, has been under-valued. They moved Calcutta High Court and won a stay on Ruia Cotex’s takeover of the company till July 31. The case will come up again on July 12, while the BIFR hearing is on July 18.

Union representatives have questioned Shourie’s decision to seal the deal at such a low price, if he knew the fate of Jessop would have to be decided by the BIFR.

CCD had also cleared a financial restructuring package, which involved financial support of Rs 63 crore and non-fund support of Rs 140 crore for Jessop. The plan was cleared on the condition that it would be implemented only after the company’s successful privatisation.


Calcutta, July 9: 
Industrial Development Bank of India (IDBI) is in talks with Asian Development Bank for a $ 150-200-million credit line to fund infrastructure projects in India.

“The process of identifying the projects for assistance under the scheme has already been initiated. The line of credit is expected by the end of the current financial year. Infrastructure is one area where IDBI wants to play a major role,” senior IDBI officials said.

The decision to borrow from ADB specifically for infrastructure projects was taken after the finance ministry asked the financial institution to support new projects by investing in their equity. However, the officials refused to say how much would be paid as interest, except that the rate would “be extremely competitive.”

The government has two important core sector projects in the pipeline — an eight-lane 7000 km expressway connecting Jammu and Kannyakumari and another one linking Silchar in the east to Somnath in Gujarat; a Golden Quadrilateral plan will knit the four metros.

The officials said IDBI’s resource mobilisation in the current financial year would be close to the amount it mopped up last year — over Rs 8,000 crore. In 2001-02, the institution had mobilised Rs 8,613 crore through debt instruments, Rs 8,405 crore through domestic borrowings and Rs 208 crore in foreign currency loans.

“IDBI is expected to sign an agreement to raise a syndicated foreign currency loan of $ 75 million. The FI is also expected to contract a $100-million line of credit facility from ADB soon. This is in addition to the$ 100 million loan sanctioned in 2001-02,” the officials said.

To meet its requirement of foreign currency resources, the Mumbai-based institution has been tapping the international finance market, from where it has raised substantial amounts through syndicated loans and floating rate bonds at modest rates of interest.

Officials said the emphasis is now on containing cost of funds through a tight spread over sovereign debt on incremental borrowings, coupled with a lower interest.

IDBI’s outstanding debt stood at Rs 5,64,193 million on March 31, 2001. Of that amount, rupee borrowings accounted for Rs 4,73,955 million while foreign currency loans made up Rs 90238 million. Apart from road projects, the financial institution is keen to finance telecom, power and urban infrastructure projects.

Officials said IDBI is ready to help companies raise funds at cheaper rates of interest by subscribing to their debt papers.



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