The SBI has also sought to increase the cap on foreign
equity to 30 per cent from the present 20 per cent. As per the prevailing SBI Act, the RBI
stake in the SBI cannot go below 55 per cent, and foreign equity cannot go above 20 per
cent. The SBI has sought an amendment in the Act.
New Delhi : The export promotion capital goods scheme has been extended to give
zero-duty import cover to the capital goods, bio-tech, engineering, textiles and chemical
sectors. The threshold limit has been lowered under this scheme to Rs 1 crore from the
earlier level of Rs 20 crores.
In the case of textiles this facility has been restricted to 41 items, most of
which are not manufactured in India. The scheme for advance licensing and the duty
entitlement passbook scheme has also been extended to inland container depots at Dahej,
Nagpur, Cochin, Nashik, Rudrapur and Dighi.
Govt. rules out
intervention in FI sell-off
Calcutta : The government will not interfere with financial
institutions decision to sell off their stakes in companies, finance minister
Yashwant Sinha has announced. This has reference to the plea made by the two national
industry chambers, Ficci and Assocham, which wanted the government to prevent institutions
from selling their stake in companies in the open market without prior consultation with
The immediate case in question is that of Modi Rubber Ltd.
whose shares institutions want sell off to a strategic buyer. The Confederation of Indian
Industry, another industry body is not in favour of government intervention, and has said
that institutions should have the freedom to take their own investment decisions.
Exim Bank signs
MoU with Chinas Exim Bank
Mumbai : The Export Import Bank of India signed a memorandum of
understanding with the Chinese Exim Bank to jointly promote and facilitate Indo-Chinese
trade and investment. Indias Exim Bank believes there is huge potential for the
export of select Indian items to China, especially agricultural and industrial products,
oil meal, computer software, high grade iron ore, polished granite slabs, leather and
leather products, chemical and allied products, and gems and jewellery.
An Exim Bank study says that Chinas import structure is
heavily tilted towards manufactured goods accounting for 84 per cent and
also has an unmet demand for primary commodities like iron ore, cotton yarn, rice, spices,
etc., which Indian exporters can take advantage of.
SEBI frowns on
preferentials at discount
Mumbai : The Securities & Exchange Board of India is said to be
unhappy over companies making initial public offerings issuing preferential allotment to
themselves at discount prices prior to the public issues. Sebi is said to have withheld
clearance of IPOs from three software companies for this reason. These include Geometric
Software, STG International and Melstar Software.
Of the three, the promoters of STG International are reportedly opting to bring in
the additional money, increase their contribution and break the impasse.
Inc's chairman in India
Mumbai : Citigroup's 66-year-old chairman and co-CEO Stanford I Weill is visiting
India to take a look at business here and, incidentally, to remarry his wife, Joan, in the
Indian tradition at Agra. At the business end, he has expressed his interest in Citi
entering the insurance sector in India, but is not at all happy with the 26 per cent cap
on equity holding by foreign partners in the sector. He's happy enough at a personal
level, though, with what he calls his 26 per cent stake in his married joint venture. The
re-wedding, to take place on Saturday 6 November, will be attended by Citibankers and some
friends in India and will be accompanied by the chanting of shlokas. He will be clad in a
American Home Products, Warner
Mumbai : Warner Lambert Co. and
American Home Products Co., two of the world's giant pharmaceuticals have announced a
mega-merger worth $72 billion. American Home Products will use its shares to acquire the
shares of Warner Lambert. The new company is to be called American Warner Inc. Combined
sales are expected to be $26 billion this year and from the third year on, the merged
company expects to save around $1.2 billion annually.
The merger is expected to affect the combine's position in India as well. Sales would
exceed Rs 650 crore now and the merged company's ranking could jump to number four.
Currently, AHP subsidiary Wyeth Lederle is ranked 19, and Parke Davis, owned 40 per cent
by Warner Lambert, is ranked 22. Warner Lambert also has a 100 per cent subsidiary, Warner
New Delhi : Of the 10 companies that had bid for buying out the 74 per
cent government stake in Modern Foods, the committee set up by the government for
the strategic partner has shortlisted Nestle, Hindustan Lever Ltd, Britannia and
Evergreen. The final selection will happen in a two-phased process to be completed by the
first week of December. The final divestment by the
government will take place on December 15.
The shortlisted companies will be evaluated on grounds of financial and technical
viability. Modern Foods' assets have been valued at Rs 109 crore, but the final equity
price is as yet not announced
IDBI to tie up
with a commercial bank
Mumbai : IDBI is expected to finalise its plans to tie up with a
commercial bank which would have a much bigger retail reach than itself, in order to widen
its own reach in the retail banking business. This is a crucial step in its
plans to be a universal banking entity and for raising cheaper funds.
The process will be in two steps: first, IDBI will pick up some equity stake in the bank;
this will be followed by merging the bank with itself.
Leo and MacManus
New York : Advised by Morgan Stanley Dean Witter, Leo - parent company of
Leo Burnett - and MacManus, the parent of D'Arcy Masius Benton & Bowles, have decided
to merge. This will be the biggest merger in the global advertising industry in more than
No value has been put on the deal since both parties are equals in strength. The new
entity emerging out of the merger, is to be called BDM for the time being. It will be
headquartered in Chicago.
Mumbai : The Tata group has decided not to merge its Orissa-based Ipitata
Refractories with Tata Refractories, as planned earlier, because it feels Ipitata would
pull down the bottomline of Tata Refractories. Instead Ipitata is now to be sold. Tata
Refractories has already reduced its stake in Ipitata from its earlier 51.9 per cent. The
name of the company has also been changed from Ipitata Refractories to Nilachal
Refractories and prospective buyers have been approached though nothing has come out of it
Ipitata/Nilachal, which primarily supplies to steel and cement companies and mainly
produces fire clay and high alumina refractories, has been severely hit by the recession.
While in 1998-99, it clocked a turnover of Rs
20.5 crore, its net losses ran into Rs 19.62 crore. In the first half of this year,
however, it has reportedly achieved a cash breakeven.
acquire stake in Hyundai company
Chicago : Global aluminium giant Alcoa of the US, has
signed a letter of understanding with the heavily indebted Hyundai group, to pick up a
majority stake in Korea's Koralu Aluminium. The terms of the deal are still under wraps.
The Hyundai Group has been under pressure from the Korean government to sell some of its
businesses to reduce its debt load by half.
Agfa to be
New Delhi : In line with its decision to globally bring its entire
imaging business under its wholly-owned subsidiary, the $5 billion Agfa Gevaert NV, Bayer
AG will spin off its photographic and medical equipment division in India, currently part
of its domestic subsidiary (51 per cent stake), into a separate entity. The company has
already approached the FIPB for approval to set up Agfa Gevaert India and wants to set up
the new company in the first
quarter of 2000.
The parent company will bring in the necessary Rs 8,00,000 to 1 million to set up the new
company. The Agfa brand of photo films will, however, continue to
be marketed by MCC Imaging Pvt Ltd in India. The idea behind the formation of the new
company is to better leverage the Agfa brand and garner bigger market share in India's
fast growing imaging sector.
San Miguel may
pick up stake in London Pilsner
Bangalore : Associated Breweries Ltd, which has a licensing agreement
with San Miguel Corporation of Philippines to manufacture and distribute San Miguel lager
beer in India, may offer a minority stake to the Philippines-based company in its
Mumbai-based subsidiary, London Pilsner Breweries Ltd.
Talks have happened, though decisions have yet to be taken. London Pilsner Breweries has
been floated to set up a 1.5 lakh hecta litre brewing facility in south Goa. On an initial
investment of Rs 40 crore, the facility is expected to be completed in 18 months. Picking
up the equity stake would give San Miguel direct entry into India.
GAIL GDR lists at $9.67
: The global depository receipts issue of the
Gas Authority of India Ltd, which was oversubscribed over 2.3 times was listed on
the London Stock Exchange at $9.67. This is expected to generate Rs 945 crore for the
Indian government, for 22.5 million GDRs or 16 per cent of its stake, down from 83.3
percent to 67.3 per cent.
At the prevailing exchange rate, it converts at Rs 70 a share, at a discount of abut
11.3 per cent to the domestic rate of Rs 79 per share.
may get delayed
Mumbai : It is likely that the
promised rolling settlement in A group shares that was slated for introduction by the fist
week of December may get delayed.
The delay is caused by the non-availability, as yet, of a
mechanism for daily badla under the rolling settlement regime. The J R Varma panel, which
is evolving such a mechanism, had its first meeting on Thursday, and plans to have its
next meeting only towards the end of November. It is expected that another month will go
by before a mechanism is put in place.
Rolling settlement can be effectively implemented only
after the introduction of an appropriate badla mechanism.
SCHIL to sell Dundee MF
New Delhi : Dundee Mutual Fund
has tied up with the Stock Holding Corporation of India to sell the Dundee MF schemes.
SCHIL will also help unit holders redeem their units through the SCHIL network.
Dundee will be leveraging the strength of SCHILs 70
centres across the country for its distribution work. It sees SCHIL as an appropriate
organisation to help widen its servicing capability.
Initially, nine of SCHILs centres will be deployed,
which will be extended to its other centres.
Birla MF has more
Mumbai : Birla Advantage Fund, a
Birla mutual fund has increased its exposure to software stocks from levels of 33.7 per
cent weightage to 42.4 per cent during the July-September 1999 quarter. The new stocks
added to the portfolio include Fujitsu ICIM, Digital Equipment, Sierra Optima, Citicorp
Securities and Subex Systems.
Simultaneously, the Fund has reduced its exposure to FMCG
and pharma stocks, including heavyweights like Glaxo, Hoechst Marrion and Burroughs
Rajiv Vij to head
Rajiv Vij, hitherto vice president,
marketing, has been promoted as country head (India) and chief executive officer,
Templeton Asset Management.
Vij replaces Vijay Advani, who has moved on to become
managing director, Templeton Worldwide Inc.
Vij, an electronics engineer from IIT, Delhi, and an MBA
from IIM, Calcutta, was part of the core team that started Templeton operations in India.
In his new capacity, he will be in charge of the entire India operations.
Advani, new MD at Templeton Worldwide
Mumbai : Vijay Advani, until September the country head of
Templeton India Asset Management has been given charge as managing director of Templeton
Worldwide Inc. based in Singapore, with effect from October 1, 1999. Advani will look
after the mid/near east region for Templeton Worldwide.
FI divestment subject of
New Delhi: Indian industry chiefs have protested against the move by
Indian financial institutions to go ahead with divesting their stakes in companies in the
open market. Bodies such as FICCI and Assocham have written to the finance minister to
intervene and prevent such a move.
It is these businessmen's contention that their interests should be
protected, and that FIs should offer the stakes to the existing promoters and give them
first right to acquire the shares the institutions want to sell. They want FIs to arrange
"negotiated deals" with promoters, and only if that doesn't work should they
seek other buyers.
Financial institutions, on the other hand see this as an infringement of their right to
exit as investors. They are of the opinion that such freedom is necessary to keep
managements on their toes and improve returns and thereby increase shareholder value.
The protest has come in the wake of institutions (The Unit Trust of India, Life
Insurance Corporation, General Insurance Corporation, and Industrial Development Bank of
India) inviting bids for the purchase of their 44 per cent holding in Modi Rubber Ltd. If
the open offer goes through, the Modis will lose control of the company.
VRS policy, other reforms for PSU banks
New Delhi: A separate voluntary retirement scheme tailor-made
for the banking sector is on the cards. This will be part of several measures that are
being drawn up to bring in banking reform, which include, besides VRS, privatising public
sector banks by amending the Banking Companies Act and the debt recovery tribunal. A VRS
scheme for banks is expected to bring down costs through shedding excess manpower costs.
Changes have been proposed in the Banking Companies Transfer & Acquisition of
Undertaking Act and the SBI Act to accelerate the pace of privatisation (including that of
the State Bank of India) and reducing the government stake in banks to below 51 per cent.
The Sick Industries Companies Act will also be amended to facilitate quicker recovery of
bad debts from sick companies. The proposals are to be introduced in the next session of
Norms for nidhis
New Delhi: The department of company affairs has rationalised norms for
nidhi companies (mutual benefit societies) so as to protect investor interests
and restrict misuse by nidhi managements. Nidhi deposits are not to exceed Rs 20 crore,
beyond which they will cease to have the nidhi status and will be considered
as non-banking finance companies.
Nidhis will not be allowed to change managements without prior approval from the
DCA, the RBI, or the shareholders through a special resolution. No nidhi will be allowed
to accept deposits for a period of less than six months, nor to extend loans to its
directors beyond Rs 15 lakh.
Nidhis will have to restrict their branches within the states in which they are
registered, and the number of branches in a state to three, besides the registered
headquarters. Those with branches outside the state will be required to close them down
within three years, and the three-branch norm within the state will have to be implemented
in five years.
The new norms also specify that nidhis maintain a contingency fund, built up by
transferring 0.5 per cent of each deposit into the fund, which is to be kept as a deposit
with a nationalised bank.
New accounting policy for insurance sector
New Delhi: The Insurance Regulatory Authority of India has chalked out
a draft accounting policy for the insurance sector. The new accounting policy will apply
to both general and life insurance companies. The new accounting policy is designed to
bring in transparency and make the shareholder its focus rather than the regulator.
To this end, some vital sections are to be taken out of the Insurance Act of 1938,
and incorporated into the rules and regulations after the ratification of the new
insurance bill. The new policy will include disclosure norms including segmental reporting
over industry segments or categories of business activities within segments and
to cut government stake in banks
New Delhi : Amendments are being made to the
Bank Nationalisation Act in a bid to reduce the government's stake in public sector banks
to levels below 51 per cent. The proposal is to formulate broad policy guidelines for the
entire industry, after which it will be up to individual banks to chart their own course
of action. The proposal will be placed before Parliament during the winter session for
discussion and political consensus.
Given the governments role as a major shareholder, its
unwillingness to invest fresh funds is affecting banks' balance sheets. Banks have to
comply with higher capital adequacy of 9 per cent by March 2000 and 10 per cent by March
2001, for which they need the additional funds. Insufficient capital is also hampering
their expansion plans.
HDFCs MF venture
Mumbai: The Housing Development Finance Corporation and Standard Life
Investments have signed an agreement for a mutual fund joint venture.
Standard Life Investments is the
investment division of Standard Life Assurance Company of the UK. The latter holds 5 per
cent equity stake in HDFC. Standard Life Investments will hold 26 per cent in the asset
management company that will be jointly floated for the mutual fund foray.
Syndicate Bank issue
Mumbai: Public Sector -- Syndicate Bank -- which had closed its maiden
public issue on 30 October 1999 has met with an oversubscription of around 3.75 times the
issue size of Rs.125 crore. The bank received around 4 lakh applications and about 80 per
cent of the amount collected has been from retail investors.
After this issue, the government stake in
Syndicate Bank has fallen to 73 per cent from the earlier 100 per cent.
Gilt trade regulations
Mumbai: The Reserve Bank of India has eased the stipulation that made
trades in government securities to be compulsorily settled in two days. Banks need not
follow the two day norm anymore provided they abide by the regulations prescribed by the
concerned stock exchanges.
For example, the National Stock Exchange
prescribes a settlement of trades in government securities within five days.
The RBI has said that it should be
notified about the deals through the subsidiary general ledger.
Banks closed on 1 January
Mumbai: All scheduled commercial banks and
regional rural banks will be closed on 1 January 2000. The Reserve Bank of India has
issued a directive to this effect to all the concerned banks. This is part of the
contingency plan for preparing for the year 2000.
Bangalore IT exhibition
Bangalore: The five day information technology event, Bangalore IT.Com
1999 has begun. As part of the event, a three day National Conference on Electronic
Governance will also be held.
Pondy unveils IT park
Pondicherry: Around 21,000 square feet of office space for information
technology companies is coming up at the IT park in Pondicherry. The first phase of the
park has already been inaugurated. There are two buildings with office space ranging from
400 square feet to 1,500 square feet.
Companies will be allowed to build their
own premises if they want to, after buying up plots of land in the park. The IT park will
contain a convention centre, conference rooms, business incubators and business centres.
Videsh Sanchar Nigam Ltd. has provided the
park with a 2 mbps fibre optic connectivity.
IL&FS scheme gathers
Mumbai: IL&FS Asset Management Companys IL&FS Growth &
Value Fund -- an open ended scheme -- has collected Rs.125 crore. Out of this, Rs.50 crore
was from IL&FS, while the rest came from 4,500 other investors.
ABN Amro gets
Mumbai: ABN Amro Bank Indias 7-year, 12.5 per cent, Rs.100 crore
subordinated debt issue has been assigned a credit rating of AAA by Crisil. The issue will
help the bank in shoring up its capital adequacy ratio.
Allianz takes majority stake
Frankfurt: Allianz AG of Germany will buy 70 per cent of the equity
capital of Pimco Advisors, US-based fund managers for $3.3 billion.
Alianz is the biggest European insurance
company. Pimco has about $255 billion of funds under its management.
IDBI to float issue
Mumbai: The Industrial Development Bank of India will raise around
Rs.1,250 crore through a subordinated debt issue and Rs.500 crore through a preference
issue. These issues will shore up IDBIs tier-II capital.
ABN Amro receives funds
Mumbai: ABN Amro Bank India has received $35.5 million funds from its
Dutch parent ABN Amro Bank NV. The bank will use the funds to enhance its capital adequacy
ratio and for making up for the costs incurred in buying the retail division of Bank of
The bank is also intending to raise Rs.100
crore through a debt issue, which will increase its capital to risk weighted assets ratio
to 10.5 per cent.
ARC to provide the
alternative to banks
New Delhi: The asset reconstruction company or ARC to be set up by the
government will take over the non-performing assets of loss-making banks and issue them
zero coupon bonds.
The government will be the majority
shareholder in the ARC, while banks, financial institutions and even multilateral lending
institutions will be offered minority stakes. The government has not yet decided as to
when the ARC should be set up.
ARC was part of the Narasimham
Committees recommendation on weak banks.
IFC to pick up stake in
New Delhi: The International Finance Corporation will take a 20 per cent
equity stake in Sundaram Home Finance, a subsidiary of Sundaram Finance. Sundaram Home
Finance will offer long-term housing loan products to Indian individuals.
Fiat Sundaram Auto Finance Pvt. Ltd. will
exclusively finance Fiat cars in India. The company is a 49 : 51 joint venture between
Sundaram Finance and Fidis SPA, a subsidiary of Fiat Auto.