New Delhi, February 16
Hard bargaining between Essar and Vodafone, which clinched a deal to acquire control in mobile player Hutch-Essar, is likely to start in the next 10 days on restructuring of shareholders agreement and other related issues, including partnership deal.

After the initial bonhomie that saw Vodafone CEO Arun Sarin offering 'roses' on Valentine's Day and 'sweets' the next day after his meeting with Ruias, Essar pulled a surprise announcing it would take a decision in due course by "ensuring all shareholders rights, including those in agreement with Hutchison Telecom, are adhered to." "I am coming soon I hope", Mr Sarin told reporters after a meeting with Prime Minister Manmohan Singh to wind up his three-day India visit.

"There is still some work to be done and we will do that work in the coming weeks".

"I am going back with the very positive feeling that we are working together... they are the founding partners in this venture... I would very much like for them to continue," Mr Sarin said.

Essar, which had earlier taken cudgels on Vodafone's unilateral announcement to share infrastructure with rival Bharti Airtel even before fructification of the deal with HTIL, is keeping open all its options, including Right of First Refusal.

Amid speculation that Essar might be taking a hard line to bargain for a premium from Vodafone for exiting the venture, where it has 33 per cent stake, the British giant has made it clear that it would not sweeten the offer, which would be the same as that made for HTIL's controlling stake.

Quoting the legal opinion, Mr Sarin had asserted that when it came to Vodafone, Essar did not have a Right of First Refusal (RoFR) to enable it to match the top bid.

Sources in the know, however, said Essar was still holding on to the RoFR clause, which it had annexed while making a bid for HTIL's stake, presumably to emphasise that it would want all protections, if not more, in the yet to be signed shareholders agreement.

At the same time, Essar may also be looking for a possibility of partnering Vodafone in the management, sources said. But there was no word from Essar on these issues.

Last night, Essar had said it "sees telecom as a core part of its business portfolio in the long term" and would not exit the business, in an obvious indication that it could still seek majority control, should there be no agreement with Vodafone.

However, the two sides had preliminary round of talks at the Ruias' mansion in Mumbai yesterday, which sources close to the development said, was mainly to establish a good will.

Before leaving, Mr Sarin said he was convinced that Essar would remain a partner in the mobile venture. "The shareholders agreement with Essar will be hopefully signed soon". — PTI

New Delhi, February 16
Reliance Industries Ltd has sought government permission to sell LPG from its Jamnagar refinery as a fuel to automobiles.

Reliance, which till now sold most of the 2.4 million tonnes per annum of LPG produced from its Jamnagar refinery in Gujarat to state-run retailers, is facing a surplus situation after the public sector firms reduced purchases upon increase in their own production.

The government is, however, yet to take any decision," an industry source said.

Currently, only state-run refiners Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp are allowed to sell indigenously produced LPG as a fuel for automobiles.

Private sector companies have to use imported LPG.

The source said Reliance, which already sells 3,000 tonnes per month of imported auto-LPG in parts of southern and western India, is looking at displacing up to 15 per cent of the petrol market with auto-LPG.

The total auto-LPG sale in India is about 15,000 tonnes per month.

The company plans to sell LPG to automobiles through its network of 1,260 petrol stations across the country. — PTI 

New Delhi, February 16
The Assocham has recommended to the SEBI to double the quota reserved for mutual funds in initial public offers (IPOs) from current level of 5 per cent to at least 10 per cent.

In a communication to SEBI, Mr Prithvi Haldea, Co-Chairman of Assocham Capital Markets Committee pointed out that at present 35 per cent of shares are reserved for retail investors, 15 per cent for high net worth individuals/corporates and 50 per cent for qualified institutional buyers (QIBs). Within the QIB quota, 5 per cent is reserved for mutual funds.

In August 2005, with the objective of promoting investments by individual investors through the mutual fund route, SEBI had mandated that 5 per cent of the 50 per cent QIB quota i.e. 5 per cent of the issue size would be reserved for mutual funds. In addition, they were allowed to compete for allocations on a proportionate basis in the balance 45 per cent quota.

A study by Prime Database and Assocham of all 40 IPOs between April and December 2006 reveals that mutual funds have demonstrated a huge appetite for IPOs. In as many as 32 of these, they subscribed heavily and not only used up their 5 per cent quota but were also able to extract significant allocations from the balance QIB quota.

According to Mr Haldea, “The time is now ripe for upping the quota for mutual funds. Any increase in this quota is indirectly an increase for the small investors and would help in mobilising more household savings for the capital market.

“On the other hand, mutual fund investments in IPOs are long-term in nature and as such are ideally suited for the retail investors. Greater holdings by funds would also reduce the post-listing volatility. Significantly, mutual funds would be able to provide the benefits of IPOs to investors who normally fail to obtain allotments in oversubscribed issues. Many investors give IPOs a miss because of the operational hassles and the uncertainty on allotments.”

The increase in mutual funds quota, argues Assocham, should come out of the QIB and not the retail quota. For PSU IPOs, in specific, the entire QIB quota should be reserved for the domestic QIBs.

Reservations are critical as there is presently not a level-playing field and the domestic investors cannot be considered at par with the trillion-rich FIIs. 

Hyderabad, February 16
The Rangachari Committee appointed to examine alleged violations of RBI guidelines in mobilising deposits by Margadarsi Financiers has found fault with the group company of media baron Ramoji Rao.

State government Finance Adviser and former Chairman of the Insurance Regulation and Development Authority N. Rangachari submitted the report to Chief Secretary J. Harinarayana yesterday

In his 10-page report, Mr Rangachari said it was 'clearly established' that Margadarsi Financiers had been violating provisions of Section 45 S of the RBI continuously for years and hence 'action laid down by the RBI Act of 1934 gets attracted'.

The Reddy Government, which has been at loggerheads with Ramoji Rao since it came to power in 2004, has been targeting the media baron's various business interests, including his finance company.

The Rangachari report, which was unofficially released to select media houses, said that sometime in 1998, the RBI had instructed Margadarsi not to accept fresh deposits and to prepare a plan for repayment of the existing deposits to be in line with the provisions of Sec 45 S of the RBI Act.

"After trying to implement a plan for repayment of deposits which Margadarsi Financiers agreed with the RBI, there has been serious violations and apparently the projected plan had not been kept up by Margadarsi," the report said.

According to the report, while Rs 619.25 crore was the outstanding deposit money as on March 31, 2000, it went up to Rs 2610.38 crore by 2006.

"It is apparent that Margadarsi had not kept to the obligation imposed by Section 45 S of the RBI Act in the matter of raising deposits from members of public," the report concluded.

Kolkata, February 16
The Calcutta High Court today stayed the order of the Company Law Board (CLB) directing the West Bengal Government to transfer 155 million shares of Haldia Petrochemicals Ltd to The Chatterjee Group (TCG), which would have given it the management control of the company.

Mr Justice Jayanta Biswas passed the interim order maintaining status quo on the position prior to passing of the CLB order on HPL on January 31, after hearing counsel for the West Bengal Industrial Development Corporation (WBIDC) and TCG.

Counsel appearing on behalf of the petitioners, WBIDC and the West Bengal Government, sought a stay on the CLB order arguing that the transfer of shares being held by them along with 520 million shares would give almost total ownership control of the company to TCG, which was the bone of contention.

Countering this, the respondents argued that in the CLB order it was mentioned that TCG and others held 58 per cent of HPL shares, WBIDC 37 per cent, the Tatas 3 per cent and others 2 per cent. TCG counsel maintained that 155 million shares had been transferred by WBIDC in 2004 following which collective shareholding by TCG and others stood at 58 per cent.

The CLB in its order had directed transfer of 155 million shares to Chatterjee Petrochem (Mauritius) Company and other investors.

The court said the position prior to the passing of the CLB order be maintained until further orders or disposal of the appeal and fixed February 28 for the next hearing. — PTI 

Mumbai, February 16
India's forex reserves increased by a whopping $5.031 billion to stand at $185.078 billion during the week ended February 9, as against $180.047 billion during the week ended February 2. The reserves were up by $995 million during the preceeding week ended February 2, compared to a week-ago period. Foreign currency assets, too, increased by $5.119 billion to $178.084 billion during the week. — PTI