Bright Star goes all out to win over institutions
Forex reserves at new high of $ 42.9bn
Court stay gives a new twist to Claridges case
Orissa okays Indian Oil�s petro bond
Uco to close 50 more branches
Washing machine sales drop, but MNCs gain

Mumbai, June 9: 
Charry of becoming embroiled in fresh controversies on VST Industries, the financial institutions, which hold around 18 per cent stake in the Hyderabad-based cigarette company, have asked for several clarifications from Bright Star Investments.

ASK Raymond James�the lead manager of Bright Star�s open offer for VST shares�along with R. S. Damani, one of the promoters of Bright Star, had held several rounds of talks with the institutions in an effort to clear any misgivings on their offer.

�More meetings are slated on Monday in an attempt to swing the institutions to their side,� sources said.

At the presentation, it was clear that the prime concern of the institutions was regarding the antecedents of Bright Star�s funds and their motive behind the offer. Basically the institutions wanted to ascertain that Damanis are not asset strippers and their funds are legitimate and above board.

During the presentation, it was clearly stated that R. S. Damani was a long-term investor and the sources of his funds were also clarified.

Several meetings were held during the week at Yogakshema, the headquarters of the Life Insurance Corporation, and also at the headquarters of the Unit Trust of India.

It is believed that the top honchos of the leading institutions were more or less convinced after the meetings that Damani is not a frivolous player.

�They were a lot happier and at ease after meeting R. S. Damani,� sources said.

In fact, ASK Raymond has brought out a booklet specifically for institutions clarifying certain common queries raised by the institutions. �The investment managers at the institutions are concerned as they are answerable to policy holders and unit holders.�

On the nature of Bright Star�s funds, ASK Raymond has declared that the funds were proceeds from the sale of shares of Hindustan Lever and Infosys Technologies. These were long-term holdings in the books of Bright Star Investments which were specifically sold to finance the open offer, sources said.

Damanis have assured that if their offer sails through they will assume �the role of a long-term and active shareholder in VST�.

The institutions have been told that Damanis will get professional managers to represent them on the VST board.

Moreover, Bright Star promised to jack up slackening sales growth of the company and step up the capacity utilisation (40 per cent) of the plant once it gets a board berth.

It was also clarified that the Damanis will not stake a claim for a seat on the board for themselves. They will have professionals to represent them on the board who will also contribute to the company in a positive manner.

High court stay no hindrance

The stay by the Andhra High Court on the open offer for gaining a controlling stake in VST Industries may not necessarily prevent the two parties from accepting shares till Wednesday.

According to the legal opinion obtained by the Securities and exchange Board of India (Sebi), the two parties can continue to accept shares till Wednesday, the closing day for both the competing open offers.


Mumbai, June 9: 
The country�s foreign exchange reserves has touched a new high of $ 42.912 billion for the week ended June 1, bolstered by a jump in gold reserves which shot up by $ 121 million to $ 2.816 billion.

The rise in gold reserves has spooked speculations that it may be on account of revaluation of the yellow metal. While prices of the metal have risen firm in recent times, it had touched the yearly high in the previous month. Gold reserves during the previous week were placed at $ 2.695 billion.

According to the weekly statistical supplement released by the Reserve Bank of India (RBI) today, the break-up of the components of the total reserves for the week-ended June 1 showed that foreign exchange assets declined by $ 33 million to $ 40.092 billion against $ 40.125 billion during the previous week. The special drawing rights on the other hand, stood at $ 4 million.

The decline in foreign exchange assets may have been caused due to the central bank pumping dollars through public sector banks to help the Indian currency.

The rupee, it may be recalled, has been under pressure after the international rating agency Fitch downgraded India citing concerns about the fiscal policy, privatisation and the deterioration in the foreign investment climate. However, the currency has firmed up during the past few days due to ample dollar supply in the market.

Though the rupee is largely expected to trade around at the current levels, observers would be keenly watch whether the country�s foreign exchange reserves will be able to attain the $ 43 billion mark.

According to the weekly statistical supplement, the government�s borrowings under the ways and means account with the apex bank stood at Rs 6,790 crore, compared with Rs 13,413 crore in the previous week.

It may be noted here that under an agreement between the RBI and the government, if ways and means advances surpass Rs 7,500 crore, the government must make a fresh issue of securities.

The central bank added that the state governments� borrowings under the ways and means facility was lower at Rs 2,487 crore from Rs 3,794 crore in the previous week.


New Delhi, June 9: 
L�affaire Claridges gets murkier by the day. The split in the ranks of the T. N. Khanna faction, which has a 50 per cent stake in the hotel chain that has properties in Delhi and Mussoorie, has created a piquant situation after it missed a Company Law Board-ordained June 4 deadline to buy out the other half of the equity pie held by brother Arun Khanna�s family at a pre-determined price of Rs 3.33 lakh per share.

T.N. Khanna has obtained a stay from the Delhi high court till July 25 on the proceedings of the CLB which was arbitrating in the battle for control of the hotel chain.

The CLB, through an order issued on February 1, had said the dispute could be resolved if one of the owners bought out the other at the quoted price. It gave the T. N. Khanna faction the right to stump up the cash first and set a June 4 deadline to make the deposit in a court account. If it missed the deadline, the Arun Khanna group would get the right to make good on the offer.

CLB�s dispute resolution mechanism was made in the interests of the company. In the interim however, the T. N. Khanna faction split with two of the daughters supporting the father while a second camp was formed by a US-based daughter Rekha Chandok, who had rallied the support of two other sisters and her mother. Chandok has accused her father of trying to sell out the family�s interests in the hotel chain to a third party. She has offered to buy out the holdings of both branches of the family.

Abhisekh Manu Singhvi and and Pushpendra Kumar Bansal are currently appearing for Chandok and her mother. Once word of the split in the T. N. Khanna faction got out, the Arun Khanna group approached the CLB and argued that the goodwill of the company would be jeopardised if it was taken over by a family faction that was itself deeply divided.

In its May 22 order, the CLB permitted the Arun Khanna group to make a counter-offer. Alarmed by this development, the T. N. Khanna faction approached the Delhi high court and argued that even if his branch of the family was riven, there was nothing that could trammel the right T. N. Khanna and his two daughters to buy Arun Khanna�s holdings.


Bhubaneswar, June 9: 
The state government of Orissa today approved Indian Oil Corporation�s proposal of floating petro bonds in lieu of the 11 year sales tax holiday for the proposed oil refinery near Paradip port.

This decision brought an end to the long stand-off between the oil major and the state government.

This decision will be communicated to the centrally-empowered committee headed by the Union finance minister, government officials said.

The 11-year petro bonds with a coupon rate of 5 per cent per annum to be issued by IOC can be liquidated in the secondary market after seven years.

The interest will be payable twice a year. Investment bankers, JM Morgan Stanley and the SBI Capital Market will float the bonds in 2004-05.


Calcutta, June 9: 
The city-based Uco Bank, which registered a net profit of Rs 33 crore during 2000-01, may close another 40-50 branches in the current financial year. In 1999-2000, the bank had registered a net profit of Rs 37 crore.

Announcing the bank�s annual results here today Uco chairman V.P. Shetty said, �The net profit of Rs 33 crore has been achieved after providing Rs 140 crore for the voluntary retirement scheme and staff-related provisions.�

The bank�s operating profit increased by 21 per cent to Rs 214 crore from Rs 177 crore. �If VRS related amortisation is not taken into account, Uco�s operating profit growth comes to a whopping 50 per cent,� Shetty said.

Talking about the closure of bank branches, Shetty said after closing and merging quite a few, total number of branches now stand at 1708. �We may have to close another 40 to 50 branches in the current financial year,� Shetty said. During the last financial year, the bank recorded a business growth of 20 per cent at Rs 32,200 crore. Its income increased by 15.5 per cent to Rs 2,572 crore.

The bank has been able to maintain a capital adequacy ratio of 9.05 per cent by expanding its tier-II capital by Rs 150 crore. �The government had promised a recapitalisation fund of Rs 250 crore. We have not yet received it. In the current financial year, we have a provision of enhancing our tier-II capital by another Rs 125 crore. But we would like to get the recap fund from the government,� Shetty said.

The bank has registered a 17.30 per cent deposit growth to Rs 3,200 crore as against Rs 2,100 crore in the previous year. The growth in advances is to the tune of 24.47 per cent at Rs 2,104 crore as against Rs 1,374 crore in the previous year.

The credit-deposit ratio has reached 50 per cent as against 46.8 per cent in the previous year. The bank�s net non-performing asset (NPA) ratio now stands at 6.35 per cent. The level of gross NPA as on March 31, this year stands at Rs 1,284 crore as against Rs 1,651 crore o March 31, 2000. The bank, which had received 5,526 VRS applications, had already relieved 2,200 people as on March 31 this year. The total staff strength before the launch of the VRS was 31,200. �By the end of March 31 next year, the bank will be left with a workforce of 26,000 people,� Shetty said.

Uco has also appointed a consultant to work out a technology roadmap for the coming three years. The bank has also set up a risk management cell.

The bank has planned a business growth of more than Rs 6,000 crore in the current financial year to reach the turnover of Rs 38,500 crore.


New Delhi, June 9: 
The slowdown in the industry has led to shrinking volumes in the washing machine segment but the MNC players are landing on the top of the pile with positive growth figures while the local companies like BPL and Videocon have reported negative growth.

A study by ORG-GFK shows that while sales of the fully automatic (FA) washing machines increased marginally, the semi-automatic segment (SATT) registered a negative growth of 4.39 per cent.

Compared with 1999, overall washing machine sales have decreased to 10,6770 from 11,190 units. The market share for fully automatic segment has increased to 20 per cent from 18.61 per cent with sales going up from 2,083 to 2,103 units.

The market share of Videocon, market leader in semi automatic twin tub category, has fallen to 28 per cent from 34 per cent in 2000. Even in the fully automatic segment, the company�s market share has fallen to 12 per cent from 14.77 per cent.

While Whirlpool saw its market share expanding in the fully automatic sector from 18 per cent to 22 per cent, BPL saw its share shrinking from 18.51 per cent to 12 per cent in the same sector.

BPL also saw its market share in the semi-automatic washing machine segment fall from 21.61 per cent to 17 per cent.

Whirlpool retained its market share in this category at 16 per cent. The Korean firms LG and Samsung have consolidated their position in both the markets.

In the fully automatic segment, LG has increased its market share from 6.53 per cent to 9 per cent while in the semi-automatic segment it has increased from 11 per cent to 19 per cent. Samsung has a 5 per cent market share in the fully automatic segment and a mere 2 per cent in the semi-automatic category.

Electrolux, a new entrant in the fully automatic category, has seen its market share rise to 4 per cent market share from 2.91 per cent in 1999.

Godrej has registered shrinking market share in both categories, while Voltas captured 5 per cent of the market. Onida, a well known name in television, has also entered the washing machine market but failed to consolidate its position.


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