gains rs 700-cr compensation for losing monopoly
new delhi: the union cabinet has finally decided to end the monopoly of
videsh sanchar nigam limited (vsnl) in international voice telephony. the cabinet
has approved that private players will be allowed in this arena from april 1,
2002, two years ahead of schedule. it has also decided that vsnl will be compensated
with a rs 700-crore package, for this early truncation of its monopoly.
as part of the compensation package, the state-owned company has been allowed
to enter the national long-distance service without paying the required license
fee of rs. 100 crore. also waived is the condition of revenue sharing with the
government. vsnl has been exempted from sharing any revenues for the first five
the government has appointed
salomon brothers to evaluate the compensation package. if the evaluation states
that the compensation is not enough, the government may be ready to share part
of the revenue earned from private international operators.
rbi allows top nbfcs to become banks
mumbai: in a major move,
the reserve bank of india is set to allow select top non-banking finance companies
to convert themselves into banks. such companies will be required to put in applications
in accordance with the new bank licensing norms, which are likely to be out over
the next few days, unlike financial institutions, which could convert themselves
into banks directly by moving the rbi.
finance ministry is said to have approved the proposal and it will be part of
the new bank licensing norms. the original licensing norms for the new banks did
allow nbfcs to float banks. the new policy will allow nbfcs to convert themselves
into banks provided they fulfil the very stiff criterion.
other things, the rbi will look at track records, asset base and capital adequacy
ratio, besides other financial parameters. any default in repayment of public
deposits by an nbfc will rule out the possibility of its converting itself into
thanks to these stringent conditions,
only a handful of nbfcs are expected to be eligible to convert themselves into
first steps towards restructuring
calcutta: financial institution, ifci, which has
to contend with the report on its operations by an expert committee headed by
former managing director of state bank of india, mr. basu, has taken a few steps
towards restructuring itself. these steps are ahead of the basu committees
report on the institutions strategy and repositioning.
expert committee will advise the institution on the role that ifci can play in
the emerging economic and financial scenario, especially with respect to products
and segments with which it can reposition itself.
management of the institution has begun taking some major steps to improve ifci's
financials and make its portfolio healthier. first among the steps is a request
to the government for an additional rs 400 crore by way of additional preference
share capital, augmenting share capital through a rights issue and considering
kfw funds, earlier treated as grant, as tier i capital.
has also decided to use outside experts for diagnostic studies of corporates facing
problems and providing solutions for corporate restructuring. recovery will also
be stepped up through the debt-recovery tribunals and by enforcing security. it
will also focus on monitoring of projects during implementation and thereafter
on an ongoing basis. it will also move to settle default cases with government
guarantee to improve profitability.
citigroup to buy associates first for $31.1billion
new york: citigroup, the biggest financial company in the us with $791
billion in assets and $51 billion in equity, is buying the largest listed us finance
company, associates first capital, for $31.1billion in stock.
associates first capital has $100 billion in assets and $10 billion in equity
and the takeover should propel citigroup to a market capitalisation of around
this is the first big acquisition citigroup is making after
mr. sandy weill took control of the us giant, after mr. john reed's retirement
as chairman and co-chief executive.
now looks more like a finance company than a bank when it comes to consumer financial
services, particularly in the us. while many traditional banking businesses are
suffering from narrowing profit margins, lending to non-bank consumers offers
in buying associates,
citigroup is paying about 50 per cent more than their closing price on tuesday.
but because citigroup has a higher price-earning ratio, the deal is expected to
add to its earnings despite the hefty premium.
to make eps accounting norm mandatory
mumbai: the countrys apex accounting
body, the institute of chartered accountants of india (icai) is to soon come out
with mandatory accounting norms on earnings per share applicable for accounting
periods commencing on or after april 1, 2001. the norms will be applicable to
all enterprises, irrespective of whether or not their equity shares or potential
equity shares are publicly traded.
the institute has just released an
exposure draft which proposes that an enterprise should present basic and diluted
eps for each class of equity shares that has a different right to share in the
net profit for the period.
the proposal, which is based on the international
accounting standard, further proposes that where the profit-and-loss account includes
extraordinary items, the enterprise should disclose two basic and diluted eps
figures, one which includes the extraordinary item and another wherein the impact
of such extraordinary item has been excluded.
it is hoped that, by making
this mandatory, it will make it easier for analysts and investors to make comparisons
of performance among different enterprises for the same period, and among different
accounting periods for the same enterprise.
the exposure draft also
takes into account the issue of bonus or right shares, buyback of shares, stock
options, etc. which may necessitate proper calculation of eps and provides illustrations
that highlight these issues in the calculation of the eps.
new products from lic
view of the threat to its business from private players, the countrys largest
and monopoly life insurance player, the life insurance corporation, is planning
to launch a few new products by the end of november this year to cater to various
segment of customers. it will also, simultaneously, withdraw or restructure some
of the products, which are not doing too well in the market.
had envisaged four to five new products, including one exclusively for ladies,
and was planning to launch these new schemes by the end of the year.
prices touch 10-year high
london: as the meeting of the apex
oil controlling body, organisation of petroleum exporting countries, failed to
halt the turmoil in the markets, the price of oil jumped to a ten-year high. in
the london futures market, contracts for brent blend finished at $32.80 a barrel,
a gain of 95 cents on the day and its highest close since 1990, when prices were
buoyed by iraq's aggression towards kuwait.
crucial opec meeting is to begin in vienna on sunday, where saudi arabia is likely
to press other members of the cartel to agree an increase in crude output. saudi
arabia, the world's leading oil producer, has been under increasing pressure from
the us and other oil consumers, to engineer lower crude prices.
analysts said that any rise in production agreed by opec could be too late to
prevent shortages later in the year. oil prices have been rising in recent months
because of evidence that the stockpiles of oil in the us, the world's largest
consumer of the commodity, are at their lowest for more than 20 years.
also state that opec is not releasing enough oil to meet global demand. they say
that even if opec changed its policy at the vienna meeting, the cartel would fail
to prevent a shortage of supplies during the northern hemisphere's winter.
owned by large oil companies have been reluctant to add to stocks while the futures
markets traders have been betting that oil prices will be lower in the future
than they are today.
worry is that such a reversal in sentiment might require a shock that could just
as easily send prices tumbling out of control rather than stabilise them.
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