UTI Bank, Global Trust unveil merger plan
GIC to be converted into reinsurer
Enron to pick up more stake in Dabhol project
Hindalco to bid for 51% stake in Balco
Khaitans put garden sale plan on hold
Hind Motors bets on new models, CNG vehicles
Grasim net profit up 78% at Rs 91 cr
Rift over hire and fire policy to the fore
Bengal set to get high-speed data centre
Foreign Exchange, Bullion, Stock Indices

Mumbai, Jan 24: 
In a move that caught the financial world by surprise, UTI Bank Ltd and Secunderabad-based Global Trust Bank today decided to merge to form the largest new generation private sector bank that will be renamed as UTI Global Bank.

Mutual fund major Unit Trust of India, which is the main promoter of UTI Bank will continue to be the principal shareholder of the merged entity which will be the largest private sector bank in terms of assets, deposits, profits and branch network.

A memorandum of understanding to this effect was signed here today, UTI chairman P.S. Subrahmanyam said.

In a late evening communique to the Bombay Stock Exchange, the two banks said their boards of directors will meet on Saturday (January 27) to consider the scheme of amalgamation and the swap ratio as per the valuation report submitted by SBI Capital Markets Ltd, which acted as an advisor to both the banks.

P J Nayak, chairman and managing director of UTI Bank, will be the chairman of UTI Global Bank while Ramesh Gelli, chief of Global Trust Bank, will be on the board.

In a press communique issued later, SBI Capital Markets said Gelli will spearhead the merged bank�s foray into the insurance sector. S. Subasri, who is the executive director of Global Trust Bank, will join the board of UTI Global Bank as executive director.

The merged entity will have a network of 157 branches and 321 ATMs (automated teller machines) across the country.

At the end of December 2000, their combined networth was Rs 928.82 crore, advances touched Rs 7,904.24 crore, and deposits amounted to Rs 15,665.13 crore.

The net profits of the two banks aggregated Rs 161.24 crore.

The merger mania among private sector banks was sparked when HDFC Bank took over TimesBank. Soon after, ICICI Bank and Bank of Madura unveiled their merger plans which was cleared last week by the shareholders of the two banks.

�UTI Global bank is expected to effectively combine the strengths and complementary features of the two banks. It will be strongly capitalised with a networth likely to exceed Rs 1000 crore by the end of March 2001,� the statement said.

The bank will also have a well-diversified branch and ATM network, reinforcing the existing retail strengths of the two banks, the statement added.

UTI Bank, which started operations in 1994, is one of the four private sector banks that has yet to meet the Reserve Bank of India�s norm that requires promoters of the bank to dilute their stake to 40 per cent by March 2001. Global Trust Bank, on the other hand, has already complied with this stipulation.

For the year ended March 31, 2000, UTI Bank�s deposits rose to Rs 5700 crore and advances stood at Rs 3500 crore. The bank with a total ATM network of over 135 is planning to expand it to over 300 by the end of this year.

Global Trust Bank was incorporated in 1993 and it was promoted by Ramesh Gelli, Jayanta Madhab and Sridhar Subasri. It came out with an public issue of 2.6 crore shares at par in August 1994.

International Finance Corporation (IFC), Washington and Asian Development Bank, Manila are equity partners in the bank.

The deposits of the bank stood at Rs 6198.85 crore, registering a growth of 52 per cent. The gross income during this period stood at Rs 879.12 crore.


New Delhi, Jan. 24: 
The Union cabinet today approved a legislation that will turn General Insurance Corporation�s four subsidiaries into independent entities and restructure the holding firm into a national re-insurer.

It also cleared a large number of incentives to make investment in inland waterways an attractive proposition.

The four GIC subsidiaries � United India Insurance, National Insurance, New India Assurance and Oriental Insurance � will, once the law is cleared by Parliament, be able to compete freely taking their own individual decisions on rate structures, investment norms and interest charges.

The move comes in the wake of the opening up of the insurance market to private players. The four subsidiaries wanted greater leeway and independence in decision-making to be able to compete on a level footing with the new players.

The bill in the form of amendments to the Insurance Nationalisation Act 1972 will be introduced in the budget session of parliament.

It will seek to restrict GIC�s role to that of a reinsurer. Other powers it has exercised on behalf of the government over the insurance sector will be transferred to the Insurance Regulatory Development Authority while the rights over the four subsidiaries will revert to the Union government.

The subsidiaries will now have to register themselves as separate companies with IRDA, the insurance watchdog body, while GIC will be recognised as the national reinsurer.

In preparation for this de-linking, GIC had already pumped in fresh capital into its subsidiaries raising their capital from Rs 40 crore to Rs 100 crore. This was done to comply with new IRDA rules calling for a minimum equity level of Rs 100 crore for any independent insurance company.

The government plans to stipulate that a fixed percentage of all reinsurance business of domestic insurance companies have to be done with GIC.

This is being done to force insurance firms to retain at least a part of their reinsurance funds in India. With re-insurance open to private sector players, it was felt that players with MNC links would take advantage of this to park re-insurance funds, which form a substantial chunk of the insurance business, in financial markets in the west.

The cabinet today also decided to give 100 per cent tax exemption to investors in the inland waterways sector for a five year period. It also gave its approval to the Inland Waterways Authority of India to raise money from the bond market.

IWAI has also been permitted to set up joint ventures with private entrepreneurs with the government�s equity participation in these projects being limited to just 40 per cent. However, the projects themselves will be on a Build Operate and Transfer (BOT) basis.


New Delhi, Jan. 24: 
Enron Development Corporation, the US power giant, has got the green signal from the Cabinet committee on economic affairs to pick up an additional 13 per cent stake in the controversial Dabhol power project in the wake of Maharashtra State Electricity Board�s refusal to pick up more shares.

Parliamentary affairs minister Pramod Mahajan told newspersons after a two-and-a-half-hour long meeting of the CCEA that Enron could increase its investment from $ 886.9 million to $ 1.12 billion in the gas-based power utility in Maharashtra.

This came about after MSEB refused to invest more money in the second phase of the Dabhol power project. The Maharashtra government is currently locked in a bitter dispute with the US giant over the high power tariff being demanded by Dabhol Power Company (DPC).

The fresh equity infusion by Enron will bring down MSEB�s stake in DPC to 17 per cent from the present level of 30 per cent.

At present, Enron has a 50 per cent stake in the $ 1.87 billion project, while the remaining stakes are with Bechtel and General Electric, power equipment suppliers. To implement the second phase of the project, the partners were to pump in equity money in the same proportion. But MSEB has refused following its tiff with Enron over high power rates.

Out of the $ 1.12 billion being pumped in by Enron some $ 434.2 million would be used for phase I of the power project and $ 685.75 million for phase II, Mahajan said.

MSEB would, however, have the right to pick up the extra equity being brought in by Enron at a later stage at a mutually agreed price.

The CCEA today also approved the $ 969-million Oman-India fertiliser project along with a string of other proposals. The controversial project was finally cleared today and several hitherto unresolved problems sorted out. These included provisions for compensating Indian government in case Oman Fertiliser fails to deliver urea to the tune of $ 35 million.

Among other projects cleared were Dutch major Digital Future Investments which would set up a wholly owned subsidiary with an investment of $ 500 million (Rs 2250 crore) and a Rs 122-crore power transmission system for south Assam, Tripura and Mizoram.


Mumbai, Jan. 24: 
Hindalco today said it will bid for the government�s 51 per cent stake in Bharat Aluminium Company (Balco) in its quest to become a global non-ferrous major.

�The board of directors have authorised the company to enter into an agreement with the government for the purchase of a 51 per cent stake in Bharat Aluminium,� the A V Birla group firm said in a notice sent to the Bombay Stock Exchange today.

Sterlite Industries and the US-based Alcoa Inc, one of the world�s biggest aluminium companies, are the two other potential buyers which have expressed interest in Balco.

The grapevine on bourses is agog with stories that Hindalco may even team up with Alcoa to bid for the state-owned aluminium major, but there was no word from the company.

Hindalco, which acquired Indal from Canada�s Alcan last year, reported a 11 per cent rise in third-quarter net profit at Rs 170 crore compared with Rs 152.7 crore in the same period of the previous year. Net sales were up 12 per cent at Rs 561.1 crore from Rs 502.1 crore.

The nine-month profit stood at Rs 521 crore, up from Rs 452 crore in the corresponding period of the previous year.


Calcutta, Jan. 24: 
The Khaitans of the Williamson Magor group have put on hold plans to sell tea estates until the time an increase in tea prices can get them more lucrative deals.

The group had decided to sell the unprofitable gardens in Dooars and Darjeeling owned by Eveready Industries India (EIIL). Of the company�s 25 estates, 12 are in Dooars and Darjeeling while the rest, which could also be sold, are in Assam.

Aditya Khaitan, Eveready director and the youngest son of B. M. Khaitan who handles the group�s tea business, said prices are hardening gradually and there are indications of bigger gains in the next 15 days. �We are waiting for that to happen so that we can clinch better deals,� he added.

�We have made our valuations. We are getting offers, some of which do not match up to our price. We are waiting for the potential buyers to revise their offers. There is no hurry to sell our gardens. We will stick to our prices,� Khaitan said.

Prices at tea auctions have been inching up in the last five weeks. Good varieties, which were being sold at Rs 70-80 per kg in October and early November, are now fetching more than Rs 100. �The market is buoyant,� an industry official said.

Industry officials say the price spike at auctions has been caused by shrinking supplies. On January 8, the amount offered at the auctions was down 22 million kgs compared with the previous year. The Guwahati auction saw a decline of 22 million kgs while the one in Siliguri witnessed a fall of 5 million kgs. However, the supply at Calcutta auctions is 5 million kgs more than previous year�s level.

The buyers for its four gardens in Darjeeling and two in Dooars have already been identified. Three Darjeeling gardens will be sold to Ashok Lohia of Sycotta Tea Company for Rs 9.76 crore, while DLX will buy the fourth. Jayanti and Matelli in Dooars will be divested in favour of the Calcutta-based Bachawats for Rs 33 crore.

The sale will help the Khaitans cut interest costs by 25 per cent. At present, gross interest payouts on the company�s Rs 644.91-crore debt is pegged at Rs 83.48 crore � 10 per cent of its turnover of Rs 832.92 crore.

However, Eveready Industries is repaying banks and financial institutions on time.

The Khaitans have also decided to sell some of the unprofitable gardens under Bishnauth Tea.


Mumbai, Jan. 24: 
Hindustan Motors (HM) has lined up a range of models in all segments, and will focus on the sale of gas-run engines as part of a plan to overcome its bottomline blues.

The company is also thinking of reviving its Bedford brand of trucks, which are currently being exported in the form of completely knocked down kits (CKDs) to Bangladesh.

Company president B K Chaturvedi said if the new strategy to boost volumes pays off, it could achieve cash break-even in the next financial year. He was speaking at the launch of the Ambassador Classic, the result of a major modernisation drive in process improvement and product changes.

Officials conceded that Ambassador, the company�s mainstay, suffered from certain weaknesses, such as the absence of a wide distribution network in the west and north.

Hindustan Motors is now planning to correct the imbalance by expanding its dealership networks in these regions. It wants to enlarge the countrywide dealer network to 92.

Apart from changes in the Amby interiors aimed at making it a user-friendly vehicle, HM is now planning to cash in on the mounting demand for CNG-powered vehicles.


Jan. 24: 
Grasim Industries Ltd has posted a 78 per cent rise in net profit for the third quarter of the current fiscal ending December 31, 2000. Net profit rose to Rs 90.5 crore from Rs 50.9 crore in the same period of the previous year.

Turnover during this period stood at Rs 1189 crore against Rs 1061.8 crore, reflecting a 12 per cent increase. Grasim added that higher production and turnover volumes, aided by improved realisation in all of its businesses except textiles, contributed to the better performance during the quarter. Further, restructuring of high cost debts coupled with effective fund management saw interest costs go down by 5 per cent to Rs 59 crore from Rs 62 crore.

BoB net up 14%

Bank of Baroda (BoB) has posted a 14 per cent rise in net profit for the third quarter of the current fiscal at Rs 150.79 crore, against Rs 131.85 crore in the same period of the previous year.

The net profit for the first nine months of the year was up by 15.38 per cent to Rs 429.21 crore against the previous comparable quarter. The bank pointed out that a better asset-liability management and stronger growth in interest income vis-a-vis the fund cost, enabled it to post encouraging results.

Raymond net at Rs 22 cr

Raymond Limited reported a jump in net profit to Rs 21.91 crore in the third quarter of the current fiscal as against a loss of Rs 2.83 crore in the previous comparable quarter, even as sales for the third quarter shrunk from Rs 333 crore to Rs 257 crore.

The company attributed the decline in sales to the divestment of the steel division effective September 9, 2000.

Moser Baer net spurts 247%

Net profit of Moser Baer India Limited (MBIL) for the third quarter ended December 31, 2000, grew by 247 per cent to Rs 370.23 million from Rs 106.60 million in the previous comparable quarter.

Total revenues grew to Rs 924.76 million from Rs 410.50 million, up 125 per cent from the previous year�s figure.

Sales revenues grew 114 per cent from Rs 404.50 million to Rs 866.93 million in the same period. Net margin saw an increase, from 26 per cent to more than 40 per cent for the period under consideration.

BOC posts profit

Industrial and medical gas major BOC India Ltd today announced a net profit of Rs 0.51 crore during the third quarter of 2000-01 against a net loss of Rs 4.79 crore during the same quarter of the previous year.

Aggressive marketing led to an increased turnover of Rs 77.12 crore during the quarter, which was over 23.5 per cent higher than last year�s figure of Rs 62.42 crore, company officials said.

ICI net dips 41%

ICI India Ltd has reported a steep decline of 41.20 per cent in net profit during the third quarter at Rs 7.65 crore, compared with Rs 13.01 crore in the previous corresponding quarter. The board of directors of the company, earlier scheduled to meet in Gurgaon, today finally met in Mumbai and approved the unaudited results.

Net sales came down to Rs 216.78 crore from Rs 226.65 crore in the previous fiscal and operating profit at Rs 18.49 crore showed a decline of over 33 per cent from Rs 27.23 crore in the previous year�s corresponding quarter, company sources said.

Colgate net rises 22%

Colgate-Palmolive (India) Ltd posted a 22 per cent growth in net profit for the third quarter ending December 31, 2000, at Rs 12.2 crore, against Rs 10 crore in the previous corresponding quarter.

The company reported a 19 per cent rise in net sales, including other income, at Rs 306.3 crore, against Rs 257.9 crore in the same period last fiscal.

Net profit for the nine-month period ending December 311, 2000, was also higher at Rs 43.2 crore (Rs 35.4 crore) while sales stood at Rs 901.3 crore (Rs 818 crore).


Calcutta, Jan. 24: 
The contentious issue of the employment of contract labour has always seen a sharp division between industry and labour unions, with the former fully backing it and the latter firmly ranged against such employment.

An interface here today, organised by the Indian Chamber of Commerce (ICC), was no exception with Citu leader Kali Ghosh saying trade unions will not support employers hiring contract labour without adhering to labour standards.

The hire-and-fire system, he said, was not suitable to Indian conditions in spite of the fact that more and more industries were falling sick.

Ghosh also noted that contract labour should not be denied minimum wages and other benefits due to any ordinary worker.

IBP executive director (human resources) S. B. Mandal, said public enterprises should be allowed to hire workers on contract to reduce the quantum of liabilities.

He said when when the Railways were free to hire contract labour, other PSUs should also be allowed to do so.

ICC president C.K. Dhanuka felt contract labour was indispensable. �A number of units, particularly in the manufacturing sector, are extremely keen to utilise contract labour since this not only helps to control costs of production, but enhance both efficiency and productivity,� he said.

However, Pradip Sett of the Indian Institute of Management, Calcutta, said the contract labour system did not encourage employment creation.

Rajen Mehrotra, representative of the International Labour Organisation echoed a similar opinion, stating the employment of contract labour would lead to further joblessness, as witnessed in the ongoing globalisation process. He added the creation of employment was only possible through more investments.

He said it would be difficult for governments in south Asia to give organisations the freedom to adopt a hire-and-fire approach to recruitment s because these nations lacked an effective social security net.


Calcutta, Jan. 24: 
The Software Technology Parks of India (STPI) will set up a state-of-the-art high-speed data communication facility at the Salt Lake Electronics Complex (Saltlec) in association with the West Bengal Electronics Development Corporation (Webel) at an estimated cost of Rs 15 crore. The project will be implemented by STPI Bhubaneswar.

Senior officials from STPI Bhubaneswar, including additional director and officer-in-charge M P Dubey visited the site, where it plans to set up an earth station, and met Webel authorities to finalise talks on the project.

A memorandum of understanding (MoU) was signed between Webel and STPI in December last year. Webel has allotted 3 acres of land near the recently inaugurated STP-II at Saltlec and has sanctioned Rs 1 crore for the project. An initial investment of around Rs 8 crore will be made by STPI, Delhi.

The building is expected to be completed by June this year. Officials said the earth station will be functional within ten weeks of completion of work on the building.

The gateway will initially provide 32 mbps of bandwidth, which will later be upgraded to an optimum capacity of 100 mbps in stages. The project is the biggest undertaken by the government agency in the eastern region.



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