Madame Modi�s mystery meeting
L&T deal puffs up Reliance net profit
Figures shatter high-growth myth
Court rejects ModiCorp plea on VSNL stake
Slim rise in Grasim net
Tribunal jams Bharti STD debut
Questions on IPO
Tisco lines up string of revamp steps
Underwriters bail out South Asian Petrochem
Foreign Exchange, Bullion, Stock Indices

Mumbai, Jan. 31: 
Are the Modi brothers�Bhupendra Kumar and Vinay Kumar�warring again?

The united facade presented by the two sons of the late Gujarmal Modi, who had buried the hatchet in their carefully orchestrated attempt to wrest control of Modi Rubber Ltd from the financial institutions, appears to be crumbling, if recent incidents are to be believed.

On January 22, the Sebi office had an interesting visitor. Bhupendra Kumar�s wife came to Mumbai to meet Sebi chairman D.R. Mehta to make a personal plea on behalf of B.K. Modi�s investment companies�Modi Holdings Limited and its subsidiary Modikem�to exempt them from making an open offer on completion of the acquisition of the FIs� stake which is close to 44.25 per cent (including the 1.10 crore shares that LIC had offered in response to last year�s open offer by the Modis).

It was believed that the feud between the two brothers was over after they joined hands to acquire the shares of Modi Rubber Ltd from the FIs.

In fact, the brothers had worked out a common strategy to wrest the controlling stake from the FIs when they signed a shareholders� agreement which stipulated that the shares acquired from FIs would be shared equally between them.

Mrs Modi�s attempt to secure an open offer exemption was contested by the Vinay Kumar Modi faction which was caught off guard.

Representing the V.K. Modi faction at Sebi was senior counsel Suresh Parekh and Dua and Associates who argued that the two factions had a shareholders� agreement which ensures that both factions spilt the shares equally between themselves. Incidentally, the application before Sebi for exemption has only come from the B.K. Modi faction.

The V.K. Modi group said all actions relating to acquisition of shares of Modi Rubber would be a concerted effort between the two as per the agreement signed by the two parties and it precluded both the parties from taking any unilateral action in the matter of acquiring MRL shares.

When The Telegraph contacted B.K. Modi�s office to ascertain his views, Modi officials said the industrialist was away in Varanasi and only he could speak on the Modi Rubber issue.

While making her plea for a waiver of the open offer condition, Mrs Modi said she had been often asked by the employees of the company when her family would restart operations at Modipuram, the main plant for its flagship company which is currently closed.

It is unusual for wives to put in an appearance before the market regulator.

Sources said the Sebi chief heard her out but remained non-committal.

Mrs Modi who made an appearance along with Doogar & Associates, merchant bankers, said the minority shareholders have already got an opportunity to exit from MRL when the VK Modi and BK Modi factions made a public offer last July to acquire 35 per cent of the equity capital at a price of Rs 90 per share.

The B.K. Modi group�s main contention during the presentation has been that the deadlock in MRL will continue and the plant will remain closed leading to the loss of employment for about 3500 employees, loss of revenue, and a loss on shareholders� investment.

Requests to Sebi for the waiver of the open offer norm were first heard by a panel headed by retired Justice S.M. Jhunjhunwala last December. The panel said the financial institutions had not confirmed their intention to quit MRL at one go. Besides, there was the problem with a court case filed by Life Insurance Corporation which said that the shares that were tendered by two renegade officials in response to the Modi open offer did not have the sanction of its board. �It is not possible to conclude that all concerned financial institutions have made their intention clear to sell their entire shareholdings in one go,� the committee headed by Justice Jhunjunwala said.

Further, it pointed out that there was no transparency as to the price at which the proposed acquisition is to take place.

It also said that if an exemption was granted, it would adversely affect the interests of the minority shareholders.

The Sebi panel, therefore, contended �that the proposed acquisition is likely to jeopardise the interest of public shareholders, the grant is not recommended�.

The big question now is: will the financial institutions sell their controlling stake of 44 per cent in Modi Rubber? They had declined to part with their stake in response to last year�s open offer at a price of Rs 90 per share. If the same price is offered to them now, it is possible they will not bite the bait.


Mumbai, Jan. 31: 
It was L&T shares, not petrochemicals, which saved Reliance Industries the blushes.

As India�s most-watched company took the wraps off its third-quarter report card, out came a net profit of Rs 822 crore. Measured against Rs 684 crore in the same period of 2000, this marks a 20 per cent growth � but a 32 per cent fall (at Rs 464 crore) if the L&T deal is prised out.

The company�s sales slumped 15 per cent, or Rs 963 crore, at Rs 5467 crore from Rs 6430 crore, as the downturn began to bite into the petrochemicals industry.

�These are challenging times in the petrochemical industry. We continue to feel the downturn and a weak environment in which prices have gone down,� company managing director Anil. D. Ambani told reporters.

He put the fall in product prices at 15-30 per cent, though the blow was partially softened by declining crude and naphtha costs. The top-line took a 1 percentage point beating from a fall in volumes, and a 5 percentage point knock due to depressed prices, he added.

Trading sales during the quarter rose to Rs 299 crore from Rs 125 crore. A rise in other income to Rs 137 crore from Rs 51 crore, and a fall in interest cost to Rs 218 crore from Rs 294 crore, took the net profit to Rs 822 crore.

The growth in profit failed to meet the market�s expectations. The company�s scrip was hammered on bourses. On the Bombay Stock Exchange, it lost 4.5 per cent at Rs 299.60.

For the nine-month period, net profit jumped to Rs 2142 crore from Rs 1887 crore even as sales fell to Rs 18,091 crore against Rs 19,287 crore in the same period previous year.

Eyes on IBP

The Ambanis today tabled their bid to acquire the government�s 33.6 per cent stake in IBP through Reliance Petroinvestments, a subsidiary which has been formed to pick up stakes in selloff-bound public enterprises.

Ambani said the group will participate in the power sector through BSES, the Mumbai electricity distributor in which it controls a large stake. BSES � one of those in the race to acquire Dabhol Power Company � could be offered more projects. He did not give details.


New Delhi, Jan. 31: 
Economic growth plummeted to 4 per cent during 2000-01 from 6.1 per cent in the previous year despite a robust 6.7 per cent growth in the manufacturing sector.

National income during the period rose 3.7 per cent to Rs 10,44,915 crore against Rs 10,07,743 crore in the previous year.

According to figures released by the Central Statistical Organisation (CSO), gross domestic product (GDP) at factor cost calculated at constant prices relative to the base year 1993-94 is estimated at Rs 18,95,843 crore against Rs 17,55,638 crore in the previous year, an increase of 4 per cent.

GDP at current prices during 2000-01 is estimated to have grown by 8 per cent. National income at current prices during 2000-01 is estimated at Rs 16,79,982 crore compared with Rs 15,57,781 crore in 1999-2000, showing a rise of 7.8 per cent during the year. National income at factor cost had grown by 6.3 per cent during 1999-2000.

The grim tidings came with another piece of worry: the Centre�s fiscal deficit shot up by over 37 per cent to Rs 89,014 crore in the first nine months of the current fiscal over the corresponding period of the previous year, mainly due to sluggish revenue receipts. This is 76.5 per cent of the amount budgeted for this year. This time last year, the gap was 58.1 per cent of the targeted level.

Per capita income (per capita net national product at factor cost) in real terms (at 1993-94 prices) for 2000-01 is estimated at Rs 10,254 against Rs 10,067 for 1999-2000, an increase of 1.9 per cent. Per capita income at current prices is estimated at Rs 16,487 in 2000-01 as against Rs 15,562 for the previous year, depicting a growth of 5.9 per cent.

An analysis of the quick estimates of GDP (at factor cost) during 2000-01 reveals that financing, insurance, real estate and business services grew by 2.9 per cent against 10.6 per cent during the previous fiscal year. Growth in the agriculture sector stood at -0.4 per cent against one per cent during 1999-2000, the CSO figures said. Gross domestic savings in the country rose marginally to 23.4 per cent at Rs 4,88,328 crore in 2000-01 against 23.2 per cent in the previous fiscal.


New Delhi, Jan. 31: 
The Delhi high court today rejected the petition of ModiCorp challenging the government order that had barred it from bidding for Videsh Sanchar Nigam Ltd. The order paves the way for the government to accept bids for the 26 per cent stake in VSNL which is being put on the block tomorrow.

The court upheld the government�s contention that ModiCorp had submitted its proposal long after the deadline for the submission of expressions of interest. Moreover, it did not meet the minimum net worth criteria.

Modicorp said it was reviewing the order and would decide its course of action after studying the entire judgement in detail. �We are in the process of studying the order. Our next step will be decided once we complete the study� Modi Corp spokesperson told The Telegraph.

Justice Manmohan Sarin who gave the judgement, said ModiCorp had placed their proposal at a belated stage.


Mumbai, Jan. 31: 
Grasim Industries Ltd has reported a marginal rise in net profit for the third quarter of the current fiscal year ending December 31. Net profit rose to Rs 94.1 crore against Rs 93 crore in the previous comparable quarter.

The rise came despite a 5 per cent decline in turnover to Rs 1126.8 crore compared with Rs 1189 crore in the year-ago period.

For the nine-month period, net profit was higher at Rs 268.6 crore from the year-ago figure of Rs 224.6 crore. Similarly, net turnover rose to Rs 3518.2 crore against Rs 3577.1 crore in the same period, previous year.

Bombay Dyeing loss

Bombay Dyeing & Manufacturing Company Ltd has suffered a net loss of Rs 22.94 crore in the third quarter ended December 31 compared with Rs 11.71 crore in the same period of the previous fiscal.

Net sales/income from operations in the period under review were higher at Rs 201.64 crore as against Rs 200.61 crore in the third quarter last year, the company informed the Bombay Stock Exchange today.

The net loss has been arrived after considering extra-ordinary items of Rs 2.07 crore (Rs 1.78 crore in the third quarter last fiscal) being voluntary retirement compensation, it said.

The company said following the September 11 attacks in the US, prices of Asian polyester intermediates recorded a steep fall and consequently even domestic prices dropped.

As a result, the inventories have had to be written down to the extent of Rs 16.45 crore to reflect the ruling prices at the end of the quarter.

Britannia net up 45%

Britannia Industries Ltd (BIL) has posted a 44.58 per cent increase in net profit at Rs 22.7 crore for the third quarter ended December 31, as against Rs 15.7 crore in the year-ago period. Net sales were up by 9 per cent at Rs 3,480 crore as against Rs 3,181 crore in the same period previous year, it said in a release here today.


New Delhi Jan. 31: 
Bharti Telesonic, the country�s first private STD operator, today received a jolt when the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) stayed the telecom regulator�s interim order which allowed it to start operations from January 26.

A day before IndiaOne began operations, Trai had passed an order which said mobile-to-mobile STD calls which are made by cell-phone users without the operator code (0-10-50 for Bharti and 0-10-20 for BSNL) should be considered as �default traffic� and should be routed over IndiaOne�s and BSNL�s networks on alternate days.

Bharti group chairman Sunil Bharti Mittal was unfazed by TDSAT order and claimed that the stay would favour them too. �This decision is in Bharti�s favour as it will allow operators to choose their long distance operator rather than be mandated to distribute the traffic on an equal basis on alternate days. We will also look forward to the speedy implementation of the carrier access code (CAC) regime for both long distance operators to offer the consumer a choice,� said Mittal.

�As IndiaOne continues its operations, it reaffirms its commitment to offer the consumers true value and a choice,� he added.

In their attempt to interpret the implications of the TDSAT order, Bharti executives and BSNL officials made conflicting claims.

Bharti executives claimed that mobile-to-mobile calls would continue to be serviced by IndiaOne. �Those mobile operators who have tied up with us to route their calls will send their calls to IndiaOne network,,� said a company executive.

But BSNL officials claimed that all mobile-to-mobile calls would be routed over its network and would not be distributed on alternate days over Bharti and BSNL�s networks.

The tribunal stayed the order after BSNL moved a petition on Wednesday against Trai�s order of January 25. The state-owned company�s counsel, Maninder Singh, argued that the regulator had no powers to decide who would get business (in terms of STD traffic) and on what basis.

Justice S. C. Sen, chairman TDSAT, has scheduled the next hearing of the case on February 8. The interim order from Trai was viewed as a windfall for Bharti as it could potentially take away half of BSNL�s traffic right from the first day that it launched mobile-to-mobile STD operations.


Mumbai, Jan. 31: 
Bharti Tele-Ventures� maiden public offer may have found many takers among institutions, but it is not known if retail investors will also be impressed after today�s development at the tribunal.

Merchant banking circles say the response of small investors, who can buy almost 25 per cent of the shares on offer, will signal whether the primary market is looking up.


Calcutta, Jan. 31: 
Tata Steel plans to replace four blast furnaces with a modern prototype imported from a European company that has supplied a premium one before.

It is also considering setting up state-of-the-art finishing mills for long products, besides new mills for rod, bar and structurals. The plan, which will increase the capacity of the Jamshedpur plant by over two million tonnes, could cost the company Rs 2,000 crore, but will help it cope with the sagging demand for flat products.

The country�s largest steel maker in the private sector has decided to invest in expansion at a time when the industry has been laid low by a vice-like recession. The aim is to focus on long steel, whose share in the company�s product portfolio has been dwindling for some time even as prices of flat steel are under pressure.

�We are one of the lowest cost producers of steel in the world and our quality is of global standard. But unfortunately, the economy is in such a bad shape that the flat products are far from getting their actual price,� sources said.

Long products, mostly used in the construction industry, still have a reasonably good market. �This is the reason why several companies, which includes the loss-making PSU Rashtriya Ispat Nigam, have bounced back to profit,� sources said.

A senior company official, asked about the investment plan, did not give away details. �We will do whatever we feel is best to enhance shareholder value.�

Tata Steel recently completed the first phase of its modernisation programme with a focus on cold-rolled products, which have taken a beating as auto and white good makers � which are the biggest customers � slipped into a slump.

The Jamshedpur unit, which can produce 3.7 million tonnes now, will be in a position to roll out over 5.5 million tonnes once the furnaces and mills come up.


Calcutta, Jan. 31: 
South Asian Petrochem, promoted by the Dhunseri group, has overcome its immediate financial problems following full payment of the funds committed by the underwriters of its flop public issue.

The company had floated a Rs 74.5-crore simultaneous but unlinked public issue of fully convertible debenture (FCD) and equity to part finance its Rs 450-crore PET resin project at Haldia.

The FCD carrying 14 per cent interest and equity issue had failed to evoke an adequate response. Fortunately, for C.K. Dhanuka of Dhunseri group, the issue was fully underwritten.

According to a company release, the underwriters�IDBI, Exim Bank, Punjab National Bank, Canara Bank, United Bank of India, J.M. Morgan Stanley, UTI Bank, SBI Capital Markets and M. Prasad and Co�have fulfilled their commitments after the issue closed last week.



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