VSNL files for listing on NYSE
Several sectors in slow motion
Fera to fade out today
Three-month amnesty scheme for corporates
Merger of CARE, Icra under study
Rossell Ind to shift base to Mumbai
Cheminor merges with DRL
ACC in the red with Rs 59cr loss

Mumbai, May 31 
Telecommunications major Videsh Sanchar Nigam Ltd (VSNL) has filed its prospectus for an eventual listing on the New York Stock Exchange (NYSE).

Confirming the development at a press conference called to announce VSNL�s special monsoon rate package, director (finance) RSP Sinha told reporters: �We expect to get a listing on the NYSE within the next three to four weeks.�

VSNL�s equity will, however, see no accretion by virtue of the listing as the PSU major proposes a conversion of the existing global depository receipts (GDRs) into American depository receipts (ADRs) on a 1:1 ratio. He said the application was being made for a level II listing on NYSE which covers companies which are not coming out with any fresh offer of equity. At present, the global depository receipts listed on London stock exchange account for 31 per cent of the company�s total equity base. VSNL had floated GDRs in two tranches in 1994 and 1999. About 12 per cent of the GDRs, which were floated in 1999, are covered by a ,lock-in period which will end in January 2001.

All the GDRs, except those restricted by the two-year lock-in period, will be converted into ADRs. Sinha expected the GDR holders to opt for a conversion. The move will help increase the liquidity of the VSNL receipts in the international markets and also pave way for a better valuation.

Meanwhile, at the press conference held today, VSNL announced 50 per cent cut in internet rates and free internet access in the night as part of special �monsoon package� applicable from June 1 to July 31, 2000. �Free night access on VSNL�s optimised internet network is designed to deliver real value to customers and make internet a mass phenomenon,� said S K Gupta, VSNL chairman and managing director.

The company has offered benefits to existing customers through advanced renewal facility during the offer period. Upon renewal, their existing hours in the account will be doubled and will be added to the new plan subscribed. VSNL has also announced online registration of services by visiting VSNL website.    

New Delhi, May 31 
Industrial activity continues to leap but many engines of growth in the economy may be losing steam.

According to the Confederation of Indian Industry�s (CII) Ascon report, growth rates in key sectors like automobile, cement, construction, cellular services and almost all consumer durables have slumped. The survey categorises growth rates above 20 per cent as excellent, between 10 and 20 per cent as good, between 0 and 10 per cent as moderate and negative growth rates. According to this classification, all the above sectors (barring cement) have registered double-digit growth rates in April 2000 over April 1999, but the rate of increase has dropped.

The growth in overall production of automobile industry has plummeted by more than half � from 21 per cent last April to 7 per cent in April this year. Cars, multiutility and heavy commercial vehicles, light commercial vehicles, scooters, motorcycles, all three wheelers have taken a major beating. Maruti Udyog, the country�s top auto firm, had to recently cut its production due to low sales. �We took the decision to cut production as potential customers deferred their purchase due to delay in the sales tax announcement by various state governments. Further, during April, we normally shut down our plant for maintenance,� company managing director Jagdish Khattar had said. The CII report attributes the downtrend to the pile-up in car inventories. Consumer durables like refrigerators, air-conditioners, water coolers, washing machines have shown double digit growth in April this year but the rates are lower when measured against the corresponding month of last year.

The CII report points out that growth of such durables is driven by the rural market which has defferred its purchases due to a bad agricultural year. Growth rates in the cement and construction industry have fallen due to low investment in infrastructure by government and private companies.

The Ascon report surveyed 110 sectors spread across basic goods, intermediate goods, capital goods, consumer durables, consumer non durables, and services. Of them, 13 sectors have shown excellent growth rates, 34 have recorded high growth rates, 45 sectors have logged moderate growth, 18 sectors are reeling under negative growth rates.

The outlook for the next six months is that the automobile industry will remain in much the same situation, though sales of consumer durables are likely to grow by 10-15 per cent in the next six months due to hopes of a good monsoon.

The sunrise infotech sector will also post good growth of more than 20 per cent. Though the finished steel sector has posted a growth of 13.3 per cent , the next six months will grow between 5-10 per cent. Tea and wagon will see negative growth in the next six months.    

New Delhi, May 31 
The draconian 27-year-old Foreign Exchange Regulation Act (Fera) will lapse tomorrow paving the way for a more humane legislation � the Foreign Exchange Management Act.

The most significant change brought in by the new act is that forex law violators will no longer be treated as criminals but as civil offenders. Fema was enacted by the government as Fera had become incompatible with the new liberalised economic policies followed in the country today.

Sections 3 to 9 of Fema spell out the important rules for those dealing in foreign exchange. The violation of these provisions would invite a monetary penalty amounting to a maximum of three times the sum involved, in contrast to five times prescribed in Fera. While specifying that there would be no prosecution in forex violation cases, the law says that in case an offender fails to pay the penalty, the enforcement directorate (ED) could move the court, which could then send the offender to jail.

In jail too, the offender would be treated like a civil prisoner who has to pay for his stay behind bars.

Cases already under Fera would have to be settled within a two-year timeframe, ie by May 31, 2001, after which they would lapse. However, if the Fera cases were in court, it would end with the verdict given by the judicial officer.

At present, there are about 4000 cases which are before the courts under Fera and another 3000, in which investigation is almost complete. These 3000 cases are ready for filing before the competent courts. However there are about 346 cases investigations of which are still in the nascent stage. The enforcement directorate may not be in a position to pursue them and these would be decided under the Fema.

Fema provides for a number of appellate authorities who could be approached by a person against whom the directorate officials have adjudicated and levied penalties. Section 5 and 6 of the Act provide for freer convertibility of rupee into other currencies regarding�current account transactions� as compared with the same in �capital account transactions�.


New Delhi, May 31 
The Company Law Settlement Scheme, announced by the law, justice and company affairs Ram Jethmalani on May 16 in the Lok Sabha, comes into force on June 1 and will be valid till August 31.

The scheme is intended to permit defaulting companies to file all pending documents along with payment of a lumpsum amount based on the period of delay. Under the scheme, the applicant company or its officers will have to make a declaration to the relevant Registrars of Companies (ROCs), stating that the company will apply within the stipulated time, with the necessary fees, seeking relief from prosecution.

The government has sought the co-operation of the three premier training bodies � the Chartered Accountants of India, Company Secretaries of India and Cost and Works Accountants of India � in making the Company Law Settlement Scheme a success. The government has also sought the co-operation of the captains of industry and all professional bodies to use their good offices to ensure that individual companies come forward and take full advantage of the one-time offer.

The government has declared that on the expiry of the three-month period the Department of Company Affairs will come down heavily on erring firms.    

Mumbai, May 31 
The country�s two leading credit rating agencies � the IDBI-promoted Credit Analysis & Research Ltd (CARE) and IFCI�s Investment Information and Credit Rating Agency (Icra) � are exploring the possibility of a merger.

�We are exploring the possibility of a merger. It will benefit both the credit rating agencies,� said IDBI chairman G.P. Gupta.

Moody�s Investor Services of the US has a 11.36 per cent stake in Icra; Fitch Ibca is the foreign consultant of CARE but it has no equity. This will ensure that the process of merger will be smooth, said an official. IDBI is undertaking a major capital restructuring exercise in order to improve its languishing share valuation in order to come out with an issue of American Depository Shares (ADS). The two rating agencies, by virtue of the rapport between their promoters, may find the merger to be smooth. Incidentally, IDBI holds around 30 per cent of IFCI�s equity.

Earlier, addressing shareholders at the annual general meeting, Gupta said: �The share price is a major area of concern for us at IDBI. Once the capital restructuring exercise comes through there will be considerable improvement in share valuation�. The majority of the shareholders voiced concern over the stagnating IDBI share price.

The IDBI share is currently hovering at around Rs 36 as against the initial public offer (IPO) around six years back at a price of Rs 130.

He said the financial institution was forming a capital reconstruction committee to devise ways to enhance shareholders� wealth. �The capital reconstruction proposal is under consideration of the board and the details will be announced at an appropriate time,� he said.

He defended IDBI�s poor discounting on the stock bourses by saying that the stock of some companies have appreciated considerably after an overseas listing. IDBI has therefore kept its options open for an ADR issue.

On the ADS issue, he admitted that there could be some drag on account of its 30 per cent shareholding in Industrial Finance Corporation of India (IFCI) but expressed the confidence that these hiccups would be overcome.

He defended IDBI subscribing to the Rs 101 crore right�s issue of IFCI. �We have subscribed to the issue as we wanted to protect our 30 per cent shareholding,� he said.

On insurance, Gupta said the financial institution had not yet decided on its strategic partner.

The FI was planning overseas (cross-border) operations towards which it would submit a proposal to the Union finance ministry in two to three days� time.

Overseas operations would entail funding Indian companies wishing to set up ventures abroad and not necessarily to set up offices there, he clarified.    

Calcutta, May 31 
Rossell Industries Ltd, the leading city-based tea company, which has recently been acquired by Unilever, has decided to shift its registered office to Mumbai.

The company will move a special resolution in this regard to secure shareholders� approval at the next annual general meeting.

Back in the mid-eighties, the Unilever group had shifted the headquarters of BrookeBond Lipton India out of the city amid a lot of controversy. BrookeBond Lipton was eventually merged with Hindustan Lever Ltd � the Unilever flagship company in India. Rossell argues that since the management of the Unilever group of companies in India operates from Mumbai, �it is considered expedient to transfer the registered office of the company from Calcutta.�

The company officials, however, said Rossell would establish an investor service desk at Calcutta for shareholders from the eastern region to ensure that the shareholders in the region were not inconvenienced.

Rossell had incurred a net loss of Rs 5.12 crore during the last financial year against a net profit of Rs 5.81 crore in 1998.

Unilever has already gained management control in the company with the UK-based Jokai Tea Holdings transferring its 37 lakh shares.Unilever�s wholly-owned subsidiary Lipton India Exports Ltd had bought another 15 lakh shares through an open offer at Rs 173 apiece.

Unilever has sought the approval from the Foreign Investment Promotion Board to purchase 38.50 lakh shares, held by Y.K. Modi and associates in India. Once the FIPB�s approval comes through, Unilever will have 80 per cent of Rossell�s 1.1 crore subscribed shares.

Market sources claim Unilever would prefer to buy back all the shares before delisting Rossell. No company official was available to comment on this aspect.    

Hyderabad, May 31 
Cheminor Drugs today merged with Dr. Reddy�s Laboratories (DRL) to emerge as a leading pharmaceutical company that straddles the bulk drugs and formulation segments, besides gaining strong R & D muscle.

The swap ratio of the merger has been fixed at 25 Cheminor shares for nine of DRL. The boards of the two companies decided to hire the services of the PricewaterhouseCoopers Securities (PwC) to conduct a valuation.

In April last year, the Rs 498-crore DRL took over the Chennai-based American Remedies

The merger with the Rs 215-crore Cheminor propels DRL to the top-three slot in the country. It will now become a fully integrated pharmaceutical entity by embracing the actives, intermediates, finished dosages, custom chemical synthesis and biotechnology besides diagnostics. DRL�s strengths lie in drug research for cancer and diabetes. It has filed 44 patents and received 12 of them in the cancer and diabetes drugs categories.

�We are in the big league now.; we could have done it much earlier. But we waited till we achieved proficiency and leadership in all segments of the pharmaceutical industry,� DRL chief K. Anji Reddy said after the board meeting. Dr Reddy�s Holdings (DRH), controls 25.40 per cent in DRL and 35.34 per cent in Cheminor Drugs. The promoter�s stake in the merged entity will be 27.59 per cent with Anji Reddy and his family holding 3.80 per cent.    

May 31 
Cement major ACC Ltd has reported a net loss of Rs 58.85 crore for the year ended March 31, 2000, as against a net profit of Rs 56.84 crore in the previous year.

The company posted a loss despite cement sales increasing from the previous year�s 92.34 lakh tonnes to 99.45 lakh tonnes this year. The year saw the cement major post sales to the tune of Rs 2760.06 crore as against Rs 2,609.06 crore in the previous year. Despite its poor performance, the company declared a dividend of 10 per cent for the year. Expenditure was up mainly due to power and fuel expenses to Rs 350.88 crore as against Rs 299.66 crore last year. Operating profit stood at Rs 227 crore. The company has indicated that a major restructuring operation is on the anvil with the divestment of non-cement businesses. Interest cost was also marginally up from the previous year.

Tata Chemicals Ltd has registered a 35 per cent fall in its net profit for the year ending March 31, 2000. Net profit slumped to Rs 117.29 crore as against Rs 181.67 crore in the previous year.

During the year, Tata Chemicals clocked a net sales figure of Rs 1521.01 crore which was lower than Rs 1,464 crore recorded in the previous fiscal. Coupled to an investment income of Rs 117.36 crore which comprised Rs 79.95 crore being profit on sales of shares, and other income of Rs 21.92 crore, the total income was placed at Rs 1660.29 crore (Rs 1500.30 crore).

Tata Chemicals said that sales and profits were higher in the fertiliser division despite the fact that it had to carry higher closing stocks of urea at the end of the year.

Parke-Davis (India) Ltd ratcheted up its net profit by 140 per cent to Rs 16.61 crore for the year ended March 31, 2000 on the back of a 12 per cent rise in sales at Rs 200.39 crore.

The board, which met here today, has not recommended any final dividend for 1999-2000, a company release said adding an interim dividend of 50 per cent was declared in April.

Power major, BSES Ltd has posted a 13.54 per cent rise in net profit at Rs 306.82 crore for the year ended March 31, 2000, on total income of Rs 2,429.63 crore, which was up by 3.41 per cent compared to the previous year.

Net sales rose by 10.69 per cent to Rs 1,947.87 crore, while income from EPC contracts and computers services dwindled to Rs 390.57 crore from Rs 500.40 crore.

The directors recommended that the interim dividend of Rs 3.70 per share (37 per cent) paid earlier be taken as the final dividend for the reported year.    


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