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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Satyam Saga
Goldman, Avendus investment bankers
Hyderabad, January 27
The fraud-hit Satyam Computers today announced appointment of Boston Consulting Group (BCG) as its management adviser and Goldman Sachs and Avendus as investment bankers to assist in the revival process and assured the anxious employees that their salaries would be paid on time.

L&T to raise stake
New Delhi, January 27
Engineering major Larsen and Toubro (L&T) today said it was considering to further raise its stake in the fraud-hit Satyam Computers Services Ltd.

SEBI to seek Raju’s custody again

PwC suspends arrested partners
New Delhi, January 27
Auditor PricewaterhouseCoopers (PwC) today said it has suspended two of its partners — S Goplakrishnan and Srinivas Talluri — who worked on the accounts of scam-hit Satyam Computer and were arrested last week.



EARLIER STORIES



The logo of Honda Motor Co, Japan's second-biggest carmaker, is pictured in front of the company headquarters in Tokyo on Tuesday.
The logo of Honda Motor Co, Japan's second-biggest carmaker, is pictured in front of the company headquarters in Tokyo on Tuesday. Honda announced further production cuts in North America and Japan, as the industry struggles with weak demand in a brutal economic downturn. — Reuters

Verdict on Rajus’ bail plea today
Hyderabad, January 27
The verdict on bail petition of disgraced former chairman of Satyam Computers B Ramalinga Raju and other top executives will be delivered by a local court here tomorrow.

Monetary Policy
Industry disappointed
New Delhi, January 27
Having expected cut in the policy rates, industry today felt let down by the Reserve Bank which announced no step to bring down the interest costs even when low inflation offered an opportunity for an aggressive approach to stem economic downturn.

Gone! Over 80,000 jobs in one day
Chicago/London, January 27
A staggering over 80,000 job cuts were announced in a single day across the world yesterday, reflecting how deep the economic meltdown has run.

No fear of recession, says FinMin
New Delhi, January 27
The government today said inflation will come down to a more realistic level, as has been indicated by the Reserve Bank of India, but there is no fear of recession.

Maruti cars dearer
New Delhi, January 27
The country's largest carmaker, Maruti Suzuki, today hiked the prices of its various models by up to Rs 10,000, while the second largest four wheeler firm Hyundai is mulling over raising prices by up to two per cent next week.

Telenor drops rights issue
New Delhi, January 27
Norwegian telecom firm Telenor today said it would fund its $1.6 billion investment in acquiring a 60 per cent stake in Unitech Wireless with cash flow and new debt, scrapping the 12-billion-krone rights issue.

UB, Diageo in talks for stake sale in USL
New Delhi, January 27
Liquor baron Vijay Mallya-promoted United Breweries (UB) is in final stages of negotiations to sell up to 14.9 per cent stake in group firm United Spirits Ltd (USL) to the world's number one spirits maker Diageo.

ONGC-Mittal buyout
New Delhi, January 27
Oil and Natural Gas Corp and its billionaire partner Lakshmi N Mittal will pay $80 million signing bonus for taking a 25 per cent stake in Kazakhstan's prospective Satpayev oil field in the Caspian Sea.





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Satyam Saga
Goldman, Avendus investment bankers
Suresh Dharur
Tribune News Service

Hyderabad, January 27
The fraud-hit Satyam Computers today announced appointment of Boston Consulting Group (BCG) as its management adviser and Goldman Sachs and Avendus as investment bankers to assist in the revival process and assured the anxious employees that their salaries would be paid on time.

The decisions were taken at a crucial meeting of the government-appointed board members of the software giant. However, no decision was taken on the appointment of new CEO and CFO for the embattled company.

The board concluded the discussions relating to Satyam’s finance requirements to help tide over “immediate, compelling operational expenses”. The proposed management structure was discussed and a formal statement reflecting the plan of action would be released this week, a company statement said here.

A three-member team from BCG would work closely during the “revival process” while the investment banker would advise the company on strategic options like identifying strategic investors, obtaining expressions of intent and ensuring fair and transparent approach to the entire process.

“An important point to note is that BCG will not be charging Satyam any fees for their services and this reflects their commitment to the task,” Deepak Parekh, a key member of the board, said.

“The company reaffirmed that the salaries for January would be paid as scheduled and this would be achieved from its internal accruals and receivables”, the release said.

On the issue of the alleged inflated headcount, the board said “further validations have been done relating to the employee numbers and there are sufficient data that points to reinforce the understanding that the earlier reported numbers hold good.”

On L&T purchasing large shares in Satyam, board member Manoharan, who chaired today’s meeting, said, “The reasons for the same are best explained by the purchaser. It should not be taken as an indication of support by the government-appointed board, for change of control of Satyam, at this stage”.

“Appropriate, fair and transparent measures for enabling open bids will be devised by the company’s board in consultation with SEBI and the Centre, since adequate number of bidding interests have been evinced to the new board,” it said.

The six-member board also ruled out possibility of selling “parts” of Satyam. “The board has received several proposals. Some have shown interest in evaluating Satyam as an integrated entity, while others have expressed interest in portions of Satyam’s business”.

“A sale of “parts” of Satyam at this stage would be contrary to the mandate of regulating the affairs of Satyam as a going concern, as stipulated by the Centre. It is therefore not an option that is being evaluated currently”, the statement said.

Another board member Kiran Karnik said he was in touch with customers on a daily basis and they continued to engage with Satyam confidently. “We have been assured by the actions of some of our key customers, who have sent strong message to other vendors, to refrain from poaching Satyam’s associates (employees) or business”, he said.

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L&T to raise stake
Tribune News Service

New Delhi, January 27
Engineering major Larsen and Toubro (L&T) today said it was considering to further raise its stake in the fraud-hit Satyam Computers Services Ltd.

Commenting on a news channel, L&T chairman AM Naik said, "Overall, we are only trying to improve our situation," adding "if nothing else, to really make L&T Infotech bigger by our stake in Satyam".

L&T is the largest single investor in Satyam and had taken up almost five per cent of the stake before the scam broke out. It then raised its stake to 12 per cent and has been seeking with the government to place one of its officials on the newly appointed board of the software exports company.

Incidentally, L&T Infotech's revenues are expected to touch Rs 2,500 crore this fiscal.

The comments from L&T came even as the income tax sleuths started their investigations in the Rs 7,800-crore scam with the idea of looking at the benami deals and with an angle to tax deducted at source.

The company's chief financial officer Y M Deosthalee reiterated the view, saying: “We need to have a reasonable stake in the company."

However, Deosthalee also said "going forward, there will be complications”.

There will be a number of challenges in front of L&T, one of them being convincing investors about enhancing its software business, which forms less than 10 per cent of its revenue. Satyam faces liabilities in the form of US class action lawsuits after former chairman B. Ramalinga Raju admitted to inflating earnings for "several years".

Earlier, Tarun Das, a member on the newly-formed Satyam board, had said: "We have looked at the legal issues which the company faces because of the class actions suits filed in America and have appointed legal advisers to deal with that."

SEBI to seek Raju’s custody again

Market regulator SEBI will appeal against the decision of a local Hyderabad court to deny it the custody of former Satyam chairman B Ramalinga Raju and his brother Rama Raju.

"With SEBI's application there were certain technical issues. Now they would appeal to the court again," Corporate Affairs Minister Prem Chand Gupta told reporters here today. SEBI had sought a day's custody of Ramalinga Raju and Rama Raju to question them on the issue of insider trading in the company. The two brothers are currently in judicial custody.

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PwC suspends arrested partners

New Delhi, January 27
Auditor PricewaterhouseCoopers (PwC) today said it has suspended two of its partners — S Goplakrishnan and Srinivas Talluri — who worked on the accounts of scam-hit Satyam Computer and were arrested last week.

"In light of recent allegations, S Gopalakrishnan and Srinival Talluri have been suspended of all their duties and functions as partners of Price Waterhouse, pending completion of the investigations into Satyam matter," the global auditing major said in a statement.

The two partners were arrested late last week by Andhra Pradesh police, after which Price Waterhouse had expressed its regret over their detention and said it would continue to cooperate fully with the authorities. — PTI

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Verdict on Rajus’ bail plea today
Tribune News Service

Hyderabad, January 27
The verdict on bail petition of disgraced former chairman of Satyam Computers B Ramalinga Raju and other top executives will be delivered by a local court here tomorrow.

The arguments over the bail plea of Raju and former chief financial officer (CFO) V Srinivas concluded today in the court of the sixth additional chief metropolitan magistrate Ramakrishna who reserved his orders for tomorrow.

The bail peition of Raju’s younger brother and former managing director of Satyam Rama Raju will come up for consideration tomorrow.

All three accused in the Rs 7,100 crore fraud in the software giant are presently lodged in Chanchalguda cental jail here following their remand to judicial custody till January 31.

Meanwhile, the bail petition filed on behalf of PriceWaterhouseCoopers (PW) auditors, S Gopalakrishnan and T Srinivas will come up for hearing on January 29.

The PwC counsel Masthan Naidu, who filed the petition in the court, said that he had not received any notice so far from the advocates of the Andhra Pradesh Crime Investigation Department seeking police custody of the two auditors.

The police arrested the two auditors on January 24 in connection with the Satyam fraud case and the duo was sent for judicial remand for 14 days.

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Monetary Policy
Industry disappointed

New Delhi, January 27
Having expected cut in the policy rates, industry today felt let down by the Reserve Bank which announced no step to bring down the interest costs even when low inflation offered an opportunity for an aggressive approach to stem economic downturn.

The apex business chambers said the RBI had a great opportunity to take steps for a lower interest regime, in the face of its own assessment of inflation going down by three per cent by March.

"We are disappointed that the central bank in its credit policy announcement has held back its activism in further pruning the repo and reveres repo rates at a time when, by its own admission, inflation was expected to moderate to three per cent by March," Ficci said.

CII director-general Chandrajit Banerjee said, "There is still no sign of reversal in the slowdown in the manufacturing sector, with many sectors experiencing a decline in production. This might have an impact on employment, unless fresh measures are taken to offset the decline in domestic demand".

Assocham president Sajjan Jindal said the demand creation and liquidity availability are still issues and would remain so until interest rates are further moderated.

PHDCCI president Satish Bagrodia said industry, particularly the MSME sector, is continuing to experience difficulty in availing credit at reasonable cost from the banking sector.

"The gross bank credit to small, medium and large industry has declined from 26.7 per cent during 2006-07 to 25 per cent during 2007-08," he said.

The chamber asked the RBI to further bring down the cash reserve ratio by 50 basis points from the present five per cent. — PTI

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Gone! Over 80,000 jobs in one day

Chicago/London, January 27
A staggering over 80,000 job cuts were announced in a single day across the world yesterday, reflecting how deep the economic meltdown has run.

Construction machinery manufacturer Caterpillar, pharma major Pfizer, telecom firm Sprint Nextel Corp and home improvement retailer Home Depot together accounted for 61,000 lay-off announcements.

The global job losses represent yet another evidence that the financial crisis that erupted on Wall Street has now infected the whole of the corporate world, engulfing industries ranging from health care to heavy equipment makers.

Dutch banking and insurance group ING said it would slash 7,000 jobs, while another Dutch company Philips announced 6,000 job losses. The electronics major has 2,500 workers in the UK.

Britain's largest steelmaker Corus had said it would cut 3,500 jobs from its global workforce, with more than 2,500 of them in the UK.

On the other hand, some companies are taking extreme measures to avoid job cuts. Virgin Atlantic introduced a pay freeze at all levels yesterday and many companies have already introduced short working weeks and cuts in hours.

Caterpillar cut its workforce by 20,000, while the drugs major Pfizer said it was slashing 26,000 posts. Home Depot, the do-it-yourself chain, laid off 7,000 workers; and Sprint Nextel, the telecom conglomerate sacked 8,000.

Another major trimming was announced by Texas Instruments which will trim its workforce 3,400. — PTI

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No fear of recession, says FinMin

New Delhi, January 27
The government today said inflation will come down to a more realistic level, as has been indicated by the Reserve Bank of India, but there is no fear of recession.

"Falling inflation is not indicative of coming recession in the economy...No fear of recession," Economic Affairs Secretary Ashok Chawla said, while commenting on the third quarterly review of the credit policy announced by the central bank.

Noting that inflation is coming down to a more realistic level, he said,"... definitely it shows that demand has slowed down. What we have is a situation of downturn and not recession." Having touched a peak of 12.91 per cent in August 2008, inflation came down to below 6 per cent in January. — PTI

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Maruti cars dearer

New Delhi, January 27
The country's largest carmaker, Maruti Suzuki, today hiked the prices of its various models by up to Rs 10,000, while the second largest four wheeler firm Hyundai is mulling over raising prices by up to two per cent next week.

"The price increase has been necessitated by the increase in input costs and foreign currency changes," Maruti Suzuki India (MSI) said in a statement.

When contacted, the Hyundai Motor India spokesman told PTI that the company would increase the prices of its various models by up to two per cent, "to be effective latest by February first week".

After the price hike, MSI's latest model A-Star would be dearer by Rs 10,000 as the introductory price of its global small car, which was launched in November last year, has been withdrawn.

The prices of different petrol and diesel variants of the premium hatchback Swift has been hiked by Rs 5,000-Rs 6,000, while all variants of the mid-size sedan Swift DZiRE would be expensive by Rs 7,000. MSI also increased the prices of all variants of its sedan SX4 by Rs 9,000.

The company, however, did not alter the prices of M800, Alto, WagonR, Zen Estilo, Versa, Grand Vitara, Omni and Gypsy, the statement said.

Earlier this month, General Motors India and Toyota Kirloskar Motor had also hiked the prices of their cars owing to rising input costs. GMI had hiked its cars prices by up to Rs 10,000 across all models from January 10, while TKM cars became costlier by up to Rs 25,000 from the beginning of 2009.— PTI

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Telenor drops rights issue

New Delhi, January 27
Norwegian telecom firm Telenor today said it would fund its $1.6 billion investment in acquiring a 60 per cent stake in Unitech Wireless with cash flow and new debt, scrapping the 12-billion-krone rights issue.

"Telenor has decided to propose that there will be no payment of dividend to shareholders for 2008. Furthermore, it is Telenor's intention that no dividend will be proposed for 2009. A final decision on dividend proposal for 2009 will be made after (the) closing of the financial accounts for 2009," it said in a statement.

Additionally, the Oslo-headquartered company said instead it has signed an 8 billion Norwegian krone ($1.19 billion) three-year term loan, which may be used to finance the investment in India's Unitech Wireless, part of Indian property developer Unitech Ltd.

"Closing the Indian transaction is subject to certain conditions being fulfilled...(and) Telenor anticipates that this will take place during the first quarter of 2009," it said, adding that it is confident that all conditions would be be met within the indicated time frame.

Unitech CEO Sanjay Chandra had told PTI yesterday that Unitech Wireless was expected to close the telecom deal with Telenor by early February. The negotiations for tower sharing, which is one of the preconditions for closing the deal, are at an advanced stage and the company is expected to sign the tower-sharing agreement sometime next week.

According to Unitech sources, the talks are with Tata Teleservices and Reliance Communications. — PTI

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UB, Diageo in talks for stake sale in USL

New Delhi, January 27
Liquor baron Vijay Mallya-promoted United Breweries (UB) is in final stages of negotiations to sell up to 14.9 per cent stake in group firm United Spirits Ltd (USL) to the world's number one spirits maker Diageo.

"The deal is inching towards finalisation," a source close to the development said.

Mallya and his senior team comprising UB Group CFO Ravi Nedungadi, USL president and managing director Vijay Rekhi and USL CFO P A Murali will be meeting their Diageo counterparts tomorrow at New York for the stake sale.

When contacted, a UB Group official spokesperson declined to comment.

Diageo, on the other hand, confirmed that both parties are in talks but declined to divluge details.

"Diageo can confirm that it is reviewing a possible collaboration with United Spirits Ltd. However, there is no certainty at this stage that these discussions will result in a transaction," a Diageo spokesperson said.

Meanwhile, Mallya had confirmed that its officials are meeting with Diageo in New York on Wednesday.

"I don't deny (there is) a meeting with Diageo in New York on Wednesday. There are several other interested players also," Mallya told NDTV, adding any strategic player would see USL as a route to market.

Mallya also said the group is open to selling up to 14.9 per cent of a total of 17 per cent of treasury stocks in USL to a strategic partner. — PTI

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ONGC-Mittal buyout

New Delhi, January 27
Oil and Natural Gas Corp and its billionaire partner Lakshmi N Mittal will pay $80 million signing bonus for taking a 25 per cent stake in Kazakhstan's prospective Satpayev oil field in the Caspian Sea.

ONGC Mittal Energy Ltd, the joint venture of ONGC Videsh Ltd and Mittal Investment Sarl, have signed Heads of Agreement with Kazakhstan's national oil firm KazMunaiGas (KMG) for the stake, Petroleum Secretary R S Pandey said. — PTI

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