RIL moves to takeover BSES, makes open offer at Rs 234 a share
Mumbai: The Ambani family controlled, THE AMBANI-controlled Reliance Industries – which for long has been keen to take over the largest power distribution company in the country, BSES Limited – today announced an open offer for the latter’s shares, along with its fully-owned subsidiary Reliance Power Ventures. The open offer for acquiring 20 per cent equity shares of BSES Ltd, has been fixed at Rs 234 per share, representing the minimum 26-week average price specified under Sebi regulations. The open offer price is 8 per cent lower than Friday’s close of Rs 255. The one-month offer is expected to open in June.

According to the managing director of Reliance, Mr. Anil Ambani, stated that the offer represents a strategic step in the company’s pursuit for attractive growth opportunities in the power sector. Reliance will be required to make an investment of Rs 650 crore, approximately $150m, for the acquisition of 20 per cent of the paid-up capital of BSES at the offer price of Rs 234 a share.

If Reliance succeeds in acquiring control of BSES, besides emerging as the largest private sector player in the power arena, with planned generation facilities of 8,000 MW, it is claimed, it will also get a vehicle to participate in the divestment program of the power sector. It will also provide Reliance with the entry and the strength in its attempt to enter the broadband arena.

BSES, one of the leading power generation companies, based in Mumbai, has a capacity of 500 MW, which is being raised in excess of 1000 MW in the near future and to 2,000 MW eventually. It has also recently started operations as an internet service provider (ISP) in Mumbai and is in the process of laying an optic fibre backbone in the city.
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Mexican cement giant, Cemex, may buy 26 per cent in Jaiprakash unit
New Delhi: North-India based, Jaiprakash Industries, is said to be negotiating with Cemex of Mexico, the third largest cement producer in the world, for entering into a strategic equity alliance for its cement unit. Industry sources state that the company is also negotiating with Ciments Francais. Unconfirmed reports suggest that Lafarge and Italcementi, too, are in the race, but this was denied by the sources.

The company, which has run up a huge debt burden, has been seeking a minority strategic partner to help it stabilise its operations, for quite some time now. The company’s cement plants are located in Madhya Pradesh, and along with its subsidiary, Bela Cement, it has a total cement capacity of 4.2m tonnes. The company has bought additional limestone capacities and plans to hike its capacity, in tie-up with a strategic partner. Jaiprakash is active in the power, construction and engineering businesses. It is setting up three hydel power projects through its subsidiaries on a BOT basis. It also has engineering orders worth Rs 5,000 crore in hand.
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Italian auto giant, Fiat, hikes Indian subsidiary to 94.8 per cent
Mumbai: Italian auto major, Fiat Auto Spa, has raised its stake in its Indian joint venture, Ind Auto Limited, from 93 to 94.77 per cent following the conversion of subordinate loans worth Rs 270 crore to equity. Following the increase in stake, the name of the company has changed from Ind Auto to Fiat India Limited.

The company originally called Ind Auto, kicked off as a 49:51 joint venture, with Fiat increasing its holding to 76 per cent in August ’99. It was subsequently stepped upto 93 per cent in March ’00 following the inability of the Doshis to bring in additional capital into the company.

However, there will be no change in the management structure with Fiat man Mr. G. Ravina continuing as managing director. The Doshi family, despite their insignificant stake, will continue to have representation, with Mr. Vinod Doshi as chairman and Mr. Maitreya Doshi as wholetime director on the board.
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Asian Paints eyes Shalimar
Calcutta: The Rs 4,500 crore O P Jindal group-controlled Shalimar Paints Ltd (SPL), is set to see a new suitor in the form of Asian Paints Limited. This was confirmed by the vice-chairman of the country’s largest paint company, Mr. Ashwin Dani.

Asian Paints’ interest in the Calcutta-based SPL comes close on heels of rumours that SPL’s talks with Johannesburg-based Barlow have fizzled out. Barlow has interests in paints, pharmaceuticals, varnish and coal mines.

Berger Paints India Ltd, which initially was in the running to acquire Shalimar, later clarified that it was not interested in the takeover, due to pricing issues.

The Jindals, for a long time, has been wanting to exit the paints business. The company has not been investing substantially in its brands or expanding distribution network, which is what the paints industry primarily thrives on.

SPL has brands like Superlac (first quality synthetic enamel), Diamond (second quality synthetic enamel), Superlac Acrylic Premium ( premium synthetic enamel) and Husain, named after the famous painter M F Husain. The company is also planning to introduce the tinting mechanism by this year-end.
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Fiat and GM may soon join hands in India too
Mumbai: In keeping with their global alliance, General Motors India and Fiat India Auto are also likely to enter into a strategic tie up in the country.

The deal between the General Motors Corporation and Fiat Auto SPA envisages significant synergy in the areas of material cost reductions, leveraging of each group's powertrain activities, efficiency in the financial service operations and platform sharing.

According to a report in the Business Standard, top officials of both the companies, including Gianni Ravina, managing director, Fiat India Auto, met in Singapore last week to discuss the possibilities in India. However, Richard Swando, president and managing director, General Motors India, could not attend the meet as he was away at Detroit.

According to the deal struck by the two auto giants last month, Fiat Auto and General Motors Corporation will remain independent from each other and will continue to compete in different markets globally. GM is set to acquire a 20 per cent stake in Fiat Auto in exchange for $2.4 billion in GM common stock. With this Fiat's holding in GM will amount to approximately 5.1 per cent.

Meanwhile, sources said the Fiat Siena station wagon launch, due for next month, might be postponed further. Fiat, however, didn't reveal the exact timing of the launch.

According to sources the station wagon will be launched in three versions and will be priced between Rs 7-8 lakh. Fiat also has plans to open a cutting-edge weld shop in a few months from now.
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Broadband venture talks between Pacific Internet and Hinduja collapse
Mumbai: The joint venture talks between Internet service provider (ISP) Pacific Internet and the Thakral group on the one hand and the Hinduja Group, to provide broadband Internet access to the Indian market via the cable network of the Hinduja’s, have broken down. This was confirmed by Pacific and the Thakral group in a joint statement issued yesterday.

A Pacific Internet statement said the negotiations were discontinued as the two could not agree with the Hindujas on key terms of the joint venture.

The three companies had originally planned, a new company, Pacific Internet India to provide Internet narrowband, dial-up services and broadband connectivity over the Hinduja's fibre optic network in the city. The initial investment would have been close to $20 million and the authorised capital of the joint venture was fixed at $100 million.

The joint venture envisaged holding of 37 per cent each by the Hindujas and Pacific Internet, respectively, while the balance would rest with the Thakral group.
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Maruti slashes output, kicks off trial 5-day week
New Delhi: As a measure of tackling an unprecedented demand slump across the entire automobile industry, Maruti Udyog Ltd (MUL) has decided to go on a five-day week for a trial period of three-weeks, with a view to cutting down on its production. The five-day week is expected to be in force till its plant closes for week-long maintenance holiday from June 12-17.

MUL has an installed capacity of 3,50,000 units a year and is, at present, operating at 140 per cent capacity utilisation. With production exceeding demand and the company has decided to introduce a five-day week in certain core divisions like weld-shop and assembly line.

MUL had achieved an all-time high sales in the fiscal 1999-2000 in its 17-year history by selling over 4,06,290 vehicles (previous best being 3,53,234 units sold in 1997-98). The total sales comprised 21,447 units of exports.

In the domestic passenger car market, MUL achieved a growth of more than 24 per cent during the year, by selling 376,643 units as against 302,952 units sold during the corresponding period last fiscal. During this period, the sale of the Maruti 800 grew by 17 per cent, that of the Omni by 41 per cent and that of the Zen by 24 per cent over the corresponding period last year.Significantly, MUL consolidated its leadership in each segment with upgradation of the existing models and the introduction of new models.
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MNC contracts help Ranbaxy UK sales soar by 70 per cent
London: The UK-subsidiary of Ranbaxy Laboratories, is set to see its sales 70 per cent this year to $25m (Rs 104 crore), largely as a result of two supply deals with multinationals -- Eli Lilly and Smith Kline Beecham -- signed at the end of last year. The deals may help offset the negative effects of a likely cut by the British government in prices of generics. Products, whose prices are likely to be cut, accounted for about 10-15 per cent of Ranbaxy UK's 1999 turnover of $14.5m.

While the impact of the generics price cut is likely to be quite significant, company officials believe that other companies will be affected harder since Ranbaxy imports much of its products from India, where the costs of production are low. Ranbaxy has made rapid strides to become the eighth-largest generics company in the UK, with a control of over 40 per cent of the UK generics market share.
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Compaq enters net delivery arena with Alpha server launch
New York: Compaq now hopes to emerge as a serious player in the delivery of internet infrastructure, with its global launch of its new Alpha Server GS series on Tuesday, which is expected to bring in sales of $1bn in a year.

Compaq's acquisition of Digital in 1998 has helped the number one PC maker to break out of the PC mould and "aggressively attack" the $32bn high-end Unix market targeting dotcoms, telecom companies and financial services.

With the company strongly believing that ninety per cent of the internet infrastructure is yet to be deployed, the opportunity for developing net infrastructre for companies like Compaq is huge. To that end the company believes, that the Alpha server GS series will enable the company to work towards changing public perception of Compaq. Although about 50 per cent of Compaq's business is from enterprise solutions and services, the company is known primarily as a PC maker selling boxes.

Compaq has set a tartget of capturing 40 per cent of the share in the telecom sector, about 30 per cent from e-business applications and another 30 per cent from the high-end computing market with the launch of the new server series.
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