UTI in no hurry to sell equities
Atal woos Japanese investors
HP-Compaq merger on rocks

Dubai, Dec. 8 
Unit Trust of India chairman M. Damodaran today ruled out the possibility of dumping equities in its flagship scheme US-64 as it might have an adverse effect on the market, but threatened to sell non-performing shares to competitor companies at a higher price.

�Unit Trust will not dump the shares it is holding just to achieve that objective (increasing the debt exposure in US-64), but was working out schemes to get maximum returns from both non-performing and performing assets,� Damodaran told non-resident Indian investors here.

�One of the factors holding the market down now may be the feeling that UTI may offload shares to meet redemptions once it accepts NAV-based listing next month. But we are not going to sell to meet fund demands,� he said.

The UTI chief, however, threatened to sell unattractive shares to their competitors at attractive prices.

UTI will offer its stake in companies yielding nothing to their rivals if these companies themselves did not buy back the shares, he said, adding �we are concerned only with investors� interests.�

Damodaran assured NRI investors in the Gulf that US-64 was firmly on the road to recovery and suggested that investors stay with the fund for better returns.

He told reporters that the US-64, which will be traded on the basis of its net asset value (NAV) from January 1, was being restructured along with other schemes to reduce the equity exposure and increase debt exposure.

Damodaran also said UTI will not launch assured-return close-ended schemes though it may have monthly income schemes with variable returns.

He said the UTI board will consider the recommendations of the Malegam committee on restructuring India�s largest mutual fund at the end of this month or early next month.

He also clarified that UTI has not yet approached Infosys Technologies with any proposal to convert its entire equity holding in the company into American Depository Receipts (ADRs) for offloading them in the international markets.

Damodaran said there is no proposal to convert its 5.6 per cent holding in the infotech major to ADRs and market abroad to realise a higher value.

VRS plan

Damodaran said the fund is planning to introduce a voluntary retirement scheme to reduce non-performing staff and offer incentives to performers. �A voluntary retirement scheme will be offered to those who are not able to deliver while putting in place a variable component in the pay structure of fund managers, marketing staff and research team,� he said.

UTI�s move to reward performers within the organisation has been well accepted, he added.

Many fund managers, who had left UTI for better pastures, have now sent feelers to return to the country�s biggest mutual fund.

�UTI will also bring in new faces in areas where it has no expertise,� Damodaran said.


Osaka, Dec. 8: 
Pledging continued political stability and economic reforms, Prime Minister Atal Bihari Vajpayee today sought Japanese investments in India in sectors like infrastructure, telecommunications, information technology, energy and textiles.

�Now, more than ever before, India offers excellent opportunities to do business. There is political stability, there is growing commitment to economic reforms across the political spectrum,� Vajpayee, who is on a five-day visit to Japan, said while addressing an India business meeting.

The meeting was organised by Kansai Economic Federation, Kansai Association of Corporate Executives, Osaka Industrial Association and Osaka Chambers of Commerce.

Assuring Japanese investors that his government was committed to simplification, rationalisation and ensuring transparency of regulatory procedures and institutions, the Prime Minister welcomed Tokyo�s recent decision to lift economic sanctions against India.

�This should provide further impetus to financing infrastructure development, in turn leading to enhanced business opportunities,� he remarked.

Stating that tourism in India is another area where both the need and the scope for Japanese investment are large, Vajpayee said Buddhist pilgrimage sites in the country such as Ajanta, Ellora, Bodh Gaya, Nalanda, Varanasi and Sanchi have always attracted many Japanese tourists and pilgrims.

�We will further improve facilities on the Buddhist circuit and seek Japanese collaboration in this endeavour,� he said at the meeting attended by CII and Ficci delegations, including their presidents Sanjeev Goenka and R.S. Lodha.

Pointing out that India had already completed many successful projects with the help of Japanese companies, including several electricity generation programmes as well as construction of ports, bridges and highways, the Prime Minister said Japanese companies were working on the ambitious Delhi metro project.

He said India looked forward to Japanese participation in many more such railway projects.


San Francisco, Dec. 8: 
The largest single shareholder in Hewlett-Packard Co. has said that it would oppose the company�s acquisition of Compaq Computer Corp., dealing a potentially mortal blow to the merger spearheaded by HP Chief Executive Carly Fiorina. The David and Lucile Packard Foundation, which holds 10 per cent of HP�s stock, said it had made a preliminary decision to vote against the merger.

The decision unites all the children of HP�s founders against the deal, creating an opposition block of 18 per cent of the company�s stock and a public relations nightmare for the management.

HP and Compaq vowed to press forward with the $ 25.2 billion merger, saying in a statement that they were disappointed by the foundation�s position but would campaign in the coming weeks to secure the support of other investors.

Walter Hewlett, the son of founder Bill Hewlett, said he would solicit proxies against the merger if the management put it to a vote.

�I believe there is sizeable and widespread opposition to this transaction,� said Hewlett, an independent software developer who sits on the board of directors at HP, where he initially voted for the merger. Hewlett first voiced opposition to the deal last month.

Analysts said the latest developments could spell the end of Fiorina�s stewardship of the technology bellwether, which she argues must reinvent itself as a services and high-end computer powerhouse. Many investors have opposed the plan from the outset, arguing that the deal would saddle HP with a bloated, low-profit personal computer business and lose customers and sales while management was distracted by the overwhelming task of integrating a global work force of 1,35,000.

HP shares jumped to $ 25 in after-hours trading on Friday from a close of $ 23.52 on NYSE. Shares of Compaq tumbled 12 per cent to $ 10.01.


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