Suzuki interest revs up Daewoo India
Bottled Chauhan spits fire at rivals
Sebi files writ against Sterlite buyback
Bayer offer price raises hackles
Dabur CGU eyes stake in banks
TCS weighs global float
New league table for PSUs
Usha Beltron targets Rs 2000cr turnover
TVS to give new look to Victor, Scooty
Foreign Exchange, Bullion, Stock Indices

New Delhi, June 19: 
A frisson of excitement ran through Daewoo Motors India Ltd (DMIL), the ailing Surajpur-based automaker, on the news that Suzuki Motor Corporation of Japan was interested in picking up a stake in parent Daewoo Motors of South Korea.

Agencies reported that Suzuki Motor, the Japanese mini-vehicle maker, was in the final stages of talks to pick up a stake in a new firm that will take over operations from South Korea�s failed Daewoo Motors. Although the size of the stake has not been indicated, the market rumours put it at about 15 per cent.

Suzuki, in which General Motors has a 20 per cent stake, is expected to pay 10 billion to 15 billion yen ($ 80 million to $ 120 million) for the stake, the reports said. However, no Suzuki representative was available to comment on the developments and the implications for Daewoo�s Indian operations.

Executives in DMIL, which has been on the rack ever since it was left out of a deal under which General Motors cherry picked the most lucrative elements of Daewoo�s world-wide operations in April, felt that if Suzuki picked up a stake in the Korea operations it would not be able to ignore the Indian company as Daewoo�s huge facility in India will help consolidate the position of the country�s biggest carmaker, Maruti Udyog.

Suzuki Motor recently raised its stake in Maruti Udyog to 54.2 per cent after paying Rs 1,000 crore to the Government of India as control premium, under the divestment exercise. The government has relinquished its claim to shares under a Rs 400-crore rights issue to be floated later this year.

GM has been loathe to increase its exposure to Daewoo, especially now that it may be called in to buy out a substantial part of the Agnellis� stake in Fiat, which has been hobbled by losses.

GM already owns a 20 per cent stake in Fiat of Italy and is believed to be considering overtures from the Agnelli family.

If GM is committed to Fiat, it would make sense to ask Suzuki Motor to partner it in the Daewoo acquisitions, which may or may not include the Surajpur plant.

A GM team had carried out a due diligence exercise at the Daewoo India plant before the March deal with the South Korean creditors of Daewoo Motors of Korea. It had been impressed with the plant, which is one of the latest in the Daewoo stable.

�We hope the news is true. Although we do not have any idea about the deal, we believe that it can be the answer to all the problems we have been facing. The Indian management will be glad to sell the firm off to SMC as that will imply a direct transaction. The equity shares of DMIL need not be transferred from Korean Development Bank to Daewoo Motor Corporation, but can be directly sold to Suzuki, through an independent MoU,� sources in DMIL said.

If Suzuki takes an interest in DMIL, it will inject a fresh lease of life into the company which is being hounded by its Indian creditors, which include Industrial Development Bank of India (IDBI), ICICI and Exim Bank.

On Wednesday, the Delhi high court stayed the appointment of four additional directors by Daewoo Motors India Ltd to its board on a joint plea by the three banks, which alleged that it was an attempt by the company to create a majority in the board and declare it sick.

Justice R. C. Jain also stayed the June 22 meeting of the board till July 30 directing that the four additional directors appointed by the company by a resolution on June 11, be made party to a suit filed by the ICICI against Daewoo.

Counsel for the three financial institutions alleged that the appointment of four directors by Daewoo in addition to the existing seven, was under a specific �design� to refer the company to the Board of Industrial and Financial Reconstruction (BIFR) to declare it sick. The banks have a joint stake of over Rs 1,500 crore in the company.

The banks had recently moved the Debt Recovery Tribunal (DRT) to recover their loans worth over Rs 900 crore from the carmaker.

Although the DRT had ruled that the banks would have first charge on the company�s assets, the banks have been prepared to draw up a gameplan to revive the company provided they control the Daewoo India board.

Asked to comment on Suzuki�s possible interest in Daewoo India, the banks� officials said, �If the reports are true, then we will also have to talk with Suzuki and review our intentions regarding the automaker. If the deal goes through, it will lend greater credibility to DMIL�s operations.�

Under the deal that GM penned with the South Korean creditors of Daewoo, the new Korean company will be capitalised through a $ 251-million investment from GM, which will take the largest 42.1 per cent stake in the venture while its global business partners were supposed to hold 24.9 per cent.

The GM-Daewoo deal that ignored the Indian operations included two plants in South Korea and a car factory in Vietnam.

It also took over eight sales units outside Korea, including seven in Europe and one in Puerto Rico, and a parts unit in the Netherlands.


New Delhi, June 19: 
Ramesh Chauhan, the chairman of Bisleri, today blasted his multinational rivals for the unseemly controversy that led to the revocation of his licence to make bottled water. A little over three weeks ago, the Bureau of Indian Standards (BIS) ordered the cancellation of Bisleri�s licence after it emerged that some bottles aboard an Alliance Air flight did not carry the ISI mark, a mandatory requirement.

Bisleri is the largest selling brand with a market share of around 45 per cent in the Rs 1,000-crore bottled water industry. Its main rivals are Coca-Cola with its Kinley brand and Pepsi with Aquafina.

Chauhan, who held a late night press conference here, said: �Nobody is going to succeed in this kind of competitive rivalry. The revoking of our licence is an attempt to damage the Bisleri name which we have built over 35 years.� He refused to say who had engineered the whole episode, but added, �We have suspicions in our minds.� Chauhan said the BIS had not shown to Bisleri the offending bottles in question which did not bear the ISI mark.

On Wednesday, Chauhan met the secretary, consumer affairs � which is the appellate authority � where it was decided that a technical audit of Bisleri�s Delhi plant would be undertaken. An outer limit of seven days has been given to sort out the issue.

Chauhan said he expected his licence to be restored within 2-3 days. The showcause notice to Bisleri was issued towards the end of April. Chauhan, however, admitted that despite the cancellation of licence, the plant had continued to operate as, he claimed, the cancellation of the licence was �bad in law�.

He claimed that Bisleri used to outsource the printing on the bottles and the missing ISI mark could have resulted due to human error.

He said the licence was cancelled only on the labelling issue, but admitted that later that BIS had raised some extraneous issues relating to packaging materials issued for the 200ml glass packs.


Mumbai, June 19: 
Taking up cudgels for the small investors, the Securities and Exchange Board of India (Sebi) has filed a writ petition in the Mumbai High Court seeking a stay against the Sterlite Industries� offer to buyback up to 50 per cent of the company�s capital.

�We have moved the court as the market regulator finds buyback scheme was not investor friendly,� G N Bajpai, Sebi chairman told reporters on the sidelines of a function organised by Association of Mutual Funds in India (Amfi).

The provisions in the buyback scheme to transfer shareholders� stake seemed to be contravening depositories� regulations, Bajpai added.

The matter would come up before the court tomorrow. Sterlite officials however declined to comment saying that while they have heard that the courts have been moved, �We are yet to see the Sebi papers�. �If what we hear is correct (of Sebi moving courts), then the matter is subjudice and we cannot comment on this�, the official said.

The Anil Agarwal promoted Sterlite Industries has been keen on delisting its shares from the stock bourses. This is not the first time that the company has faced flak from the market regulators� office. Earlier, the company was under a cloud in the matter pertaining to the price rigging of its share.

Alongwith Sterlite, BPL and Videocon International were involved in a price rigging scandal involving the late Harshad Mehta. Sebi had banned the three from approaching the capital markets.

The present case involved Sterlite�s offer to buy back shares at Rs 150 per share (a cash component of Rs 100 per share and debt component of Rs 50 through non-convertible debentures) was approved by Mumbai High

Court closes on June 21.

Investors� grievances forum had in a complaint to Sebi and Department of company affairs alleged that Sterlite was luring investors by sending cheques in advance, before shareholders tendered their shares for buyback, and thus contravening the court approved scheme.

Moreover, investors were not given an opportunity to retain part of their holdings as the payment for the entire holdings was enclosed by the company with the offer.

Meanwhile, Sterlite when contacted rebutted the charges levelled against them by saying that the Scheme is completely in consonance with all applicable laws and there has been no abuse of any kind.

�The scheme is simple, investor friendly and the response bears testimony to the fact that a large number of shareholders have accepted the Scheme�.

The scheme is entirely optional and is not mandatory or a compulsory imposition on any shareholder, the company .


Mumbai, June 19: 
The Bayer CropScience AG (BCS) open offer to shareholders of Aventis CropScience India Ltd (ACI) has kicked off a controversy. A Chennai-based investment company has alleged the offer price of Rs 157 per share is significantly below the actual negotiated price and does not satisfy the requirements of the takeover code.

Indian Syntans Investments Pvt Ltd, which holds close to 4.5 per cent stake in ACI, has also filed a complaint with the Securities and Exchange Board of India (Sebi). The company alleges that the offer by Bayer is �arbitrary, erroneous and unjustified in so far as it has been deliberately and wrongly calculated to discriminate against the minority Indian shareholders of ACI�.

Senior officials of the investment company told reporter here today they have also raised the issue with FIs including UTI and LIC, the other investors in ACI.

The open offer comes after BCS acquired Aventis CropScience SA (ACS-SA), the parent of ACI. Following the takeover, BCS indirectly acquired 67.08 per cent of ACI. According to Indian Syntans, BCS, in its public announcement on June 7 has stated that negotiated price is not applicable in determining the minimum offer price as per Regulation 20 (2) of the takeover code. Bayer has made an open offer to acquire 32.92 per cent of the ACI equity.

Refuting Bayer�s claim, N Narayanan, chairman, Indian Syntans today said that BCS has acquired 100 per cent of the share capital of ACS-SA with annual sales of Euro 4034 million for Euro 7250 million. Included in this sale is Euro 112 million from India, which constitutes the tenth largest market for ACS-SA.

He added that a sale multiple of 1.8 was taken as the basis of determining the negotiated price for ACS-SA as well as any of its subsidiary. Based on this norm and given sales of ACI of Rs 470 crore for the previous year, the enterprise value is Rs 846 crore.

This minus the debt of Rs 89 crore, the value of equity of ACI is Rs 757 crore. Thus with the total number of shares of ACI being over 1.39 crore, the negotiated price for ACI is Rs 541 per share.

The company in its complaint before the market regulator has said that as per the Regulation 20 (2) of the takeover code, the minimum offer price shall be the highest of the negotiated price or the six-month average of the stock market price. It added that the code does not state that in case of an indirect acquisition, negotiated price will not be applicable in determining the offer price.

However, Bayer today came out in strong defence to the open offer. In a press statement issued today, it said that the price has been derived on the basis of the regulations of the Sebi takeover code and therefore was based on the 26 week average price preceding the public announcement of the offer.


Kochi, June 19: 
Dabur CGU Life Insurance may pick up a strategic stake in a bank selling its insurance products to strengthen its relationships with it.

Aviva expects banks to generate about 30 per cent of its sales in India.

Stuart Purdy, chief executive of the company said, �We have exclusive distribution arrangements with 44 banks worldwide. We have acquired small strategic stake in many of them. Going forward, we may consider acquiring a small stake in an Indian bank as well to solidify distribution relationships.�

Dabur CGU Life Insurance is a joint venture between pharmaceutical major Dabur and Aviva plc of UK, which until recently was known as CGNU Plc.

Aviva holds 26 per cent of the joint venture in India, which has a paid-up capital of Rs 110 crore now. Dabur CGU has tied up with four banks in India for distribution of its products. These include American Express, ABN AMRO, Canara Bank and Lakshmi Vilas Bank. A director of Dabur CGU said the company was planning to tie up with at least three more banks by the end of the year.

Products launched

Dabur CGU launched its insurance policies today. The CGNU group has adopted the Aviva brand and India is the first country where products have been launched under the new brand.

It is the 13th private insurance company to launch risk products in India. The Life Insurance Corporation (LIC) is a leader in the market, followed by others such as ICICI Prudential and HDFC Standard Life.

The private insurers have so far collected Rs 300 crore of premium and issued about three lakh policies.

�To start with, we are launching four products. In about a couple of months, we plan to launch at least three more,� said Purdy. The company is also planning to launch credit insurance products for people borrowing money from banks and micro-finance organisations.

The four products launched today are a whole life plan, a single-premium plan and two variants of endowment policies. One of them is tailor-made for customers of banks selling its products.

Aviva policies will be sold through its offices in six cities � Delhi, Calcutta, Mumbai, Bangalore, Chennai and Hyderabad, and bancassurance partners ABN AMRO and American Express. The company has 700-strong sales force, which it intends to double in a year.

The company will set up offices in Ludhiana, Lucknow, Jaipur, Kochi, Pune and Ahmedabad next year.

For meeting its rural sale commitments, Dabur CGU is eyeing the market in West Bengal and the northeast. It will be setting up offices in Asansol and Guwahati soon. The company, however, refused to reveal its sales targets.


New Delhi, June 19: 
TCS, the country�s largest software company, is weighing the options between a simultaneous global-domestic IPO and a purely Indian flotation, scheduled sometime this year.

The markets have been waiting eagerly for the IPO from TCS, which is at present a division of Tata Sons, the Tata group�s holding company.

TCS executive vice president Feroze Vandrevala told reporters here today that the local stock market had been gone into a slump and might not be able to yield a good price for a purely Indian flotation.

Under Sebi rules, any company seeking listing on an Indian bourse has to offer at least 10 per cent of the stock to the public. TCS is not sure if the Indian market can absorb the size of the proposed issue, he said.

�The issue is likely to come out this fiscal but right now we cannot say anything about the exact timings or the size of the issue,� Vandrevala said.

The internal exercise on the modalities for the issue are now going on which will involve the adoption of accounting standards that are compatible with the US Generally Accepted Accounting Standards (GAAP).

Before the IPO comes, Vandrevala said the division would be spun off into a different company.

Meanwhile, TCS today announced its Chinese initiative with the launch of Tata Information Technology (Shanghai ) Co Ltd, a subsidiary of Tata Sons Ltd, in Shanghai.

TCS chief executive officer (CEO) S. Ramadorai got the licence to do the business at Shanghai yesterday. �TCS� vision is to leverage China for both domestic growth opportunities and the globally growing IT needs,� Vandrevala said.

While the headquarters will be in Shanghai, TCS will also have an office in Beijing that will undertake marketing activities for the company�s China operations.

In Hangzhou, TCS will set up a development centre that will provide end-to-end services for clients over the Asia Pacific region, in co-ordination with TCS� delivery centres in India.

According to a statement by Ramadorai, �In China, opportunity exists on two fronts. One as a market and the other as a place where software platforms can be developed.�


New Delhi, June 19: 
The government is planning to re-draw the league tables for public sector units with a premier league for big-time performers that will be conferred the status of �maha-navratnas�.

The �maha-navratnas� �the super category of public sector units�will be cherry picked on the basis of the financial performance and size and will be granted greater autonomy.

As a first step, the government will re-design the annual memoranda of understanding (MoUs) that it signs with all public sector enterprises so that it can encourage these companies to incorporate the best management practices around the world.

Heavy industries and public enterprises minister Suresh Prabhu spelt out his ministry�s intention to change the outmoded ways of working with the PSUs.

�The MoUs should no longer be drawn up on the basis of past performance; rather they should be framed by keeping in mind the goals that the company an attain if it adopts the best management practices. That will make them more competitive with the global players and make the CEOs more accountable. Each state-owned units MoU will take into account the specific environment within which it functions and benchmark its operations against the best global practices.�

�The government will review the performance of all the PSEs and then decide whom to give the �navaratna� or �maha-navaratna� status. If a company is doing exceptionally well, then it should get a higher status. At the same time, if it is doing badly, then it should be considered if the coveted status should be taken away from them,� he said.

Prabhu admitted that such a review had not been done in the past three years and said that this needs to be done immediately.

�There have been instances of mismanagement of the PSEs earlier and we need to review that and frame new MoUs so that these practices stop,� he said.

�A committee, chaired by the Cabinet secretary, will evaluate each and every enterprise. It will also try to identify those enterprises which are very big and need to be treated separately, like Bharat Sanchar Nigam Ltd (BSNL),� he added.

Prabhu also suggested that to bring about greater transparency in the expenditure of government departments, a common portal be created through which orders and purchase of goods will be made.


Calcutta, June 19: 
Usha Beltron (UBL), an Usha Martin Group company, is targeting a turnover of Rs 2,000 crore in the next five years. Currently, the integrated steel and steel products company earns a revenue of Rs 1,350 crore, of which Rs 400 crore comes from its overseas operations.

Almost 85 per cent of the company�s earnings are from the steel business, while the remaining comes from the cable business.

Joint managing director P Bhattacharya said: �We have made a conscious decision to move away from the cable business and concentrate on expanding our interests in the steel and steel products division.�

The UBL board has outlined an investment of Rs 120 crore in its steel business and is in advanced stages of discussion with international financial institutions for funding arrangements.

�The projects will be funded principally through fresh equity and disinvestment in the non-core business apart from some debt,� said Bhattacharya.

The company is also negotiating long-term competitive cost debt to replace a significant part of its short-term higher cost debt.

Speaking on Usha Beltron�s short-term debt, which stands at around Rs 500 crore, Bhattacharya said the company is restructuring it to distribute the loan between short and long-term loans, over a period of 10 years, so that repayment is uniform.

UBL expects to earn around Rs 25 crore from disinvestment of its real estate at Bangalore and a rolling mill at Agra.

The Jhawars, the promoters who hold a 32 per cent stake, will also pump in some equity.

The investments will be made mainly in a DRI (direct reduced iron) or sponge iron plant with an annual capacity of 100,000 tonnes and a 10MW waste heat power plant.

This project is expected to be operational within the next 18 months. These plants will insulate the Jamshedpur and Ranchi plants from any power purchase cost exposure and bring down manufacturing costs by almost Rs 800 per tonne.

Other projects include expansion of heat treatment and bright manufacturing facilities for value-addition of automotive grade steel, setting up of a steel cord plant for conveyor belt reinforcement and balancing of wire rope capacity.

Steel cord for reinforcement of conveyor belts is being manufactured through a technical and marketing collaboration with the Germany-based Gustav Wolf.

The company has already invested Rs 450 crore in steel in the last five years.

This investment includes the commissioning of a steel plant at Jamshedpur, a thermal captive power plant, adequate captive oxygen plant, lime plant and new steel melting shop, straight bar rolling mill, augmentation of heat treatment facilities and expansion of rope making capacity.

Reflecting on UBL�s cable business, Bhattacharya says, �It is a low capital intensive business and we plan to hold on to it and run it efficiently, but it will not be a major area of growth for us.�

The cable division contributes around 15 per cent of the company�s total revenues.


New Delhi, June 19: 
TVS Motor Company is planning to launch a few upgrades of its popular models including a 150 cc variant of the Victor in an effort to consolidate its market share.

Along with the sleek and high-powered Victor, the company is planning a variant of its popular scooter, TVS Scooty.

While the 110 cc Victor will get a more powerful engine, Scooty will have some cosmetic changes that will make it look sleeker.

With the 150 cc Victor, TVS will be launching its second bike in the high-powered bike segment.

At present, the only competitor in the category is Hero Honda�s CBZ and its own Fiero. Very soon a new entrant in the category will be Kinetic GF 150 from the Hyosung stable. Hyosung is a major motorbike manufacturer in South Korea with which Kinetic India has a tieup.

�We are not looking into any new platforms this year. The existing Scooty and Victor platforms are performing very well and we will be content to cash in on the demand for these products,� company sources said.

To shorten the three-month waiting period for the Victor, the company is raising capacity at its Hosur manufacturing facility which will be able to churn out 50,000 bikes a month from September. TVS at present produces 20,000 bikes a month.

The company has set aside Rs 50 crore for brand promotion. An investment of Rs 200 crore this year will be divided between Hosur and Mysore units. TVS is at present looking actively at the Asean countries to set up manufacturing base from where it will have better access to the countries like Thailand, Vietnam and Indonesia.

�Victor is being exported in small quantities. But once this unit comes up, we will have better opportunities to market a completely indigeneously developed product,� he said.



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