2:1 swap ratio for ICICI merger
Second quarter net up 11%
Marching orders served on UTI officials over 58
Price warrior BA ready for truce
Govt worried over EU sops to Pak
Global Tele net profit dips to Rs 24 cr
Foreign Exchange, Bullion, Stock Indices

Mumbai, Oct. 25: 
Laying the foundation for what would be the country�s first universal bank, the boards of ICICI and ICICI Bank today approved a swap ratio of 2:1 for the merger of the two organisations � two shares of ICICI would fetch one share of the new entity.

ICICI�s holding in the merged entity � the second largest bank after State Bank � would be divested through share placements in 2003. ICICI Bank, as it will be called, will have over Rs 95,000 crore in assets, and will be steered by K V Kamath as its managing director.

The merger will take effect from March 31, or the day the plan wins clearance from the Reserve Bank, whichever is later. �The date will be determined by what the Reserve Bank articulates,� Kamath told reporters.

The burden of maintaining cash reserve ratio (CRR) and statutory liquidity ratio (SLR) for the bank will be Rs 18,000 crore. Kalpana Morparia, ICICI executive director, said the merged bank would face no difficulties in raising the funds to meet reserve norms. �The bank plans a distribution target of Rs 40,000 crore.�

Kamath made it clear that all regulatory requirements will be fulfilled, an indication that he does not expect any major concessions from the apex bank.

Procceds from the divestment of ICICI�s holding to institutional investors will flow into the coffers of the merged entity. The stake, which will decline from 46 per cent to 16 per cent once the merger is consummated, will be transferred to a special purpose vehicle (SPV).

The new bank�s board will be headed by N. Vaghul as the non-executive chairman. Apart from Kamath, the management would comprise H. N. Sinor and Lalita D. Gupte as joint MDs and Kalpana Morparia, S Mukherji, Chanda D. Kochhar and Nachiket M. Mor as executive directors.

The organisational structure of the merged bank is expected to evolve in the next six months. During this period, the bank is also likely to firm up its plans to establish international branches to tap Indians abroad. The number of subsidiaries will be reduced to 11 from the present 33.

The group is not clear about the foreign holding in the merged entity. Officials here said it was of the belief that there is a separate 49 per cent cap on portfolio holding, over and above the 49 per cent FDI limit. �We will seek a clarification from the government,� Morparia said.

Kamath said the retail segment will be a key driver of growth for the merged entity with respect to assets and liabilities. The merger is expected to enhance value for shareholders of ICICI through access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services.

After the merger of ICICI with ICICI Bank, the board of ICICI Bank will be reconstituted in compliance with the Banking Regulation Act, 1949 and corporate governance norms.

Layoffs ruled out

Kamath scotched possibilities of post-merger retrenchment, saying the existing 8,400 employees in the group will be re-deployed to reap optimum benefits.

No rating boost

International and domestic credit rating agencies today welcomed the merger, saying it was likely to create a stronger entity, but said rating would not change in the short term.

Moody�s Investors Service, said the union would not lead to an upgrade in its �ba2� rating. ICRA cautioned that the merger might affect profits, while Crisil placed ICICI�s three debt instruments on �ratings watch�.


Mumbai, Oct. 25: 
ICICI, the leading term lending institution, has posted a net profit of Rs 281.86 crore for the quarter ended September 30, up 11 per cent compared with Rs 253.92 crore in the corresponding period of the previous year.

Total income jumped from Rs 2206.92 crore in the second quarter of 2000 to Rs 2405.66 crore for the three months ended September.

ICICI Bank Ltd has posted a net profit of Rs 66.15 crore for the quarter ended September 30 compared with Rs 30.06 crore in the corresponding period last fiscal. Total income has increased from Rs 321.46 crore in the second quarter of 2000 to Rs 559.80 crore in July-September this year.

The results for the current year include the results of erstwhile Bank of Madura on their merger with the bank effective from March 10, 2001. The results are therefore not comparable with earlier periods, it said.


Mumbai, Oct. 25: 
In a sudden move, the Unit Trust of India (UTI) served a notice Wednesday to executive director Brij Gopal Daga, informing him that he is due for retirement on October 31.

This follows a recent decision taken by the UTI board to reduce the retirement age to 58 years from 60. Seven senior UTI officials � including former acting chairman K G Vassal � who have completed 58 years of age, have already been served retirement notices last week. These officials, along with Daga, will now retire on October 31.

The other senior officials who were served retirement notices last Friday include A. G. Joshi, P. C. Gupta, S. S. Hegde, S. S. Ratra, T. K. Das and R. H. Thatte.

However, Daga, executive director in charge of the marketing division, had already opted for voluntary retirement and was supposed to remain with UTI till December 31, and then join Central Depository Services Ltd (CDSL) on January 1.

In fact, announcing the UTI board�s decision to lower the retirement age to 58, Daga, (who, incidentally, is still the official spokesperson of the mutual fund) known for his wry sense of humour, said he had sought voluntary retirement.

He is now expected to join CDSL as managing director on November 1 itself, Bombay Stock Exchange sources said.

The news of Daga�s sudden exit comes on a day when prices of the US-64, of face value Rs 10, fell to Rs 6.90 on the National Stock Exchange (NSE).

Daga�s decision to quit UTI and join CSDL a complete two months before the scheduled date is related to the sudden marching orders served on him, sources said.

What puzzled observers was that senior officers who have already crossed the threshold mark of 58 years were sent notices early last week, but Daga�s name did not figure on that list.

For CDSL however, it is a blessing in disguise, as it has been headless for close to a year. The sooner Daga joins the better for the depository, which is yet to make an impact in the market, presently monopolised by National Depository Services Ltd, an NSE subsidiary. Daga�s marketing skills are expected to help CDSL in increasing its market share.

Uppermost in every UTI official�s mind now is finding successors to Daga and Vassal. While UTI has traditionally looked inwards when filling up the executive directors� posts, �It is no longer a certainty now,� a UTI official told this correspondent.

While UTI has already advertised for the post of �executive trustee� in a strategy to rope in outside talent, UTI sources say even the posts of executive directors may be filled up from an external talent pool.

It was always a practice to draft outside talent in the case of the chairman and executive trustee, which was done away with during the tenure of the former UTI chairman P. S. Subramanyam. He had also abolished the post of the executive trustee. That post has now been revived by present chairman M. Damodaran, who is trying hard to bring the beleaguered mutual fund major back on its feet and restore public confidence in it.

Malegam report

The UTI board will meet on October 30 to consider the recommendations of the Y H Malegam committee, which studied the corporate repositioning of the country�s largest mutual fund.

�We will meet on October 30 to take a view on the recommendations of the Malegam Committee,� Damodaran said.

The committee recommended that UTI, as part of its restructuring, should convert itself into an asset management company with a capital of Rs 1,000 crore.

, in the face of investible fund of nearly Rs 60,000 crore.

The panel said the stake of the sponsor of the AMC be capped at 40 per cent and remaining 60 per cent be offered to the public.

Suggesting that one AMC is enough to manage all of UTI�s funds, the committee also recommended a strategic partner, which could even be foreign, and hold a majority 60 per cent in the sponsor.

Declining to give any details of the panel�s recommendations, Damodaran said the board will consider all aspects of the report.

He added UTI would meet all its commitments including the Rs 17,000 crore redumption in some of its schemes in the next couple of years.


New Delhi, Oct. 25: 
British Airways seems to have taken on more than it could chew. The airline, which almost halved fares out of India, today hinted it was ready to retract in the face of a volley of protests from rivals and a .

�We are aware this (fare cut) has caused some concern and we are listening to them (other airlines and travel agents) in an effort to understand and address their concerns,� an airline spokesperson said after a meeting of BA�s top brass here on the issue.

British Airways recently announced a special scheme which allows passengers to take a round trip to London for as low as Rs 18,000 and to New York for just Rs 28,000, which is approximately half the normal fare at which tickets are sold by travel agents.

Meanwhile, the Director General of Civil Aviation (DGCA) has also taken strong exception to BA�s offer of cheap fares on the Delhi/Mumbai-London routes.

The scheme, forced by the slump in the airline business ever since the September 11 terrorist attacks, calls on travel agents to buy vouchers upfront, which can be later exchanged for tickets.

they have sold to passengers.

The move is designed to bring in money long before the tickets are actually sold out and is being described by British Airways as �an innovative offer.�

However both rival airlines and travel agents think otherwise. While nine airlines led by Air-India have already lodged a strong protest, pointing out that the offer violated pricing pacts that they have already agreed to, many travel agents do not like the idea of paying upfront.

The BA vouchers have to be bought before October 31 and tickets sold between November this year and March next. The rival airlines, which include Lufthansa, KLM and Air France, have given BA just 72 hours from October 23 to cancel its low fare scheme or face action.


New Delhi, Oct. 25: 
Prime Minister Atal Bihari Vajpayee today held a high-level meeting to consider ways to counter the threat to Indian industry posed by the European Union�s removal of import duties on Pakistani textile exports and the US� move to follow suit.

Pakistani textiles compete fiercely with Indian exports in these two key markets and the EU measure, taken as part of a package to woo Pakistan into the alliance against Afghanistan has India worried.

The meeting, which was attended by finance minister Yashwant Sinha, textiles minister Kashiram Rana and the PM�s principal secretary Brajesh Mishra, decided that India must use all diplomatic channels available to it to try gain similar concessions.

Besides removing duties, the EU has also increased Pakistan�s export quota by some 15 per cent. India exports about Rs 50,000 crore worth of textile products, a major slice of which goes to these two markets. Textiles in fact account for nearly 30 per cent of all Indian exports. Consequently, the Indian government is extremely worried that the sops given to Pakistan could well cripple this lucrative source of foreign exchange.

The meeting also considered ways to counter the threat from cheap Chinese and Bangladeshi exports. Indian industry has been adversely affected by undercutting by exporters from these countries, Rana said. It also decided to take steps to build Indian textile brands and encourage value addition by exporters.

WTO stand

In a separate Cabinet meeting, the government decided to oppose inclusion of any new items in the World Trade Organisation�s agenda. Briefing the Cabinet committee on WTO matters, commerce minister Murasoli Maran said all political parties had �broadly� endorsed the Centre�s stand on WTO issues.

The Cabinet committee took note of the Indian position and the stand proposed to be taken at the Doha ministerial conference scheduled to begin on November 9.

Approving India�s stand on various WTO issues, the Cabinet committee directed that further discussions might be held in the light of future developments, an official release said.


Oct. 25: 
GTL Ltd (formerly Global Tele-Systems) has posted a net of Rs 23.96 crore for the quarter ended September 30 compared with Rs 70.07 crore in the corresponding previous quarter.

Total income has decreased to Rs 156.90 crore in the reporting quarter from Rs 235.26 crore last year.

Net profit after extra-ordinary items stood at Rs 23.96 crore as against Rs 98.18 crore last year.

The company in a notice to the Bombay Stock Exchange said its board has appointed Vijay N Paranjpe as an additional and whole-time director with effect from November 1.

Colgate net down

Colgate-Palmolive (India) Ltd has posted a 6.25 per cent lower net profit at Rs 16.5 crore for the second quarter ended September compared with Rs 17.6 crore in the corresponding period last fiscal.

Sales were marginally below year-over-year quarter due to overall adverse market conditions, specifically the sharp decline in rural markets. This has been further impacted by the strong second quarter in 2000 where two key product launches had taken place, said Derrick Samuel, managing director.

The net sales for reporting quarter were clocked at Rs 293 crore, marginally less than Rs 294.8 crore in the previous corresponding quarter, he said.

The net profit after tax from ongoing business operations was Rs 16.5 crore for the current quarter against Rs 13.4 crore (after reducing the one time profit of Rs 4.2 crore on sale of real estate) for the same quarter of the previous year.

Britannia net Rs 25cr

Britannia Industries Ltd has posted a net profit of Rs 25.3 crore for the quarter ended September 30 compared with Rs 21.3 crore in the previous corresponding quarter.

Total income has increased to Rs 383.7 crore from Rs 354.3 crore last year.

Glaxo Q3 net up

GlaxoSmithkline Pharmaceuticals Ltd has reported a 17.94 per cent rise in net profit at Rs 18.08 crore for the third quarter ended September compared with Rs 15.33 crore in the same period last fiscal. Net sales stood at Rs 304.88 crore as against Rs 236.10 crore in the same period last year. Total income increased to Rs 312.43 crore as against Rs 243.30 crore in the corresponding previous quarter.

The merger of Smithkline Beecham Pharmaceuticals India Ltd with Glaxo India Ltd has been approved and consequently the company�s name is changed to GlaxoSmithkline Pharmaceuticals Ltd. Since the approval is effective January 1 this year, GlaxoSmithkline Pharmaceuticals Ltd�s results for the nine-month period from January to September, and the July to September quarter include that of Smithkline Beecham Pharmaceuticals India Ltd for the same periods, and hence are not comparable.

Voltas net falls

Voltas Ltd has posted a 19.09 per cent decline in net profit at Rs 3.56 crore for the second quarter ended September 30 compared with Rs 4.4 crore in the same period last year. Net sales stood at Rs 210.49 crore as against Rs 189.77 crore in the corresponding period previous year, said N.D Khurody, managing director.



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