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B U S I N E S S

SEBI eases takeover norms
Mumbai, February 13
Keeping in view the circumstances of the Satyam scam where Larsen and Toubro (L&T) has emerged as a major bidder for the distressed company, the Securities and Exchange Board of India (SEBI) today announced relaxed takeover norms for companies in special situations.

Industry lukewarm to rail budget
New Delhi, February 13
Complimenting Railway Minister Lalu Prasad Yadav’s Budget proposals, Assocham president Sajjan Jindal summed up his performance as extremely dynamic in making Railways a profitable viable organisation.

Big US banks on verge of insolvency: Report
New York, February 13
Some large American banks are on the verge of insolvency and would require a more direct government role than the plan outlined this week, a media report said today.

Banks providing more credit: Montek
New Delhi, February 13
With lending becoming a key area of concern amid declining industrial production, the Planning Commission today said banks had in fact started providing more credit in the last few weeks.

Marriages sink
London, February 13
There has been a considerable drop in weddings in UK in the recent times as fewer people are marrying, courtesy credit crunch and high cost of divorce.

Exports to grow 12-15% in FY ’09: Nath
New Delhi, February 13
Owing to global slowdown exports will grow by only 12-15 per cent in the current year, Trade Minister Kamal Nath said. The minister’s comment comes at a time when the industry is reeling under pressure and the trade target of $200 billion looks impossible to achieve.


Naresh Nayyar (2nd from right), director (sales and marketing), Lectrix Motors Limited, at the launch of the company’s e-bike (model e1) in Karnal on Friday.
Naresh Nayyar (2nd from right), director (sales and marketing), Lectrix Motors Limited, at the launch of the company’s e-bike (model e1) in Karnal on Friday. The model will be available in the price range of Rs 28,500-31,000. The bike will run 700 km in one-litre petrol. Tribune photo: Ravi Kumar

EARLIER STORIES



A group of minibond holders block a main thoroughfare as they protest in Hong Kong on Friday.
A group of minibond holders block a main thoroughfare as they protest in Hong Kong on Friday. More than 40,000 investors have put a total of $2 billion of their savings into minibonds and other complex products backed by Lehmans. The loss in their value has sparked continuous protests across the city. — AFP

Punjab’s venture capital plan hits roadblock
Govt decides to expand scope
Chandigarh, February 13

Ambitious plans of the Punjab government to float a venture capital fund have hit a roadblock with the government’s prospective partners demanding that the fund be a diversified fund and not restricted to the Information Technology (IT) sector alone.

Nissan reviews tie-up plans with Chrysler
Tokyo, February 13
Nissan is reviewing its tie-up plans with Chrysler as the Japanese automaker struggles to boost profitability amid a global downturn.

Hyundai ups prices
New Delhi, February 13
Hyundai Motor India Ltd, country's second largest car manufacturer today announced an increase in the prices of Santro, i10 and Accent across all its variants by 1.2 per cent to 3 per cent on account of raising input cost.






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SEBI eases takeover norms
Shiv Kumar
Tribune News Service

Mumbai, February 13
Keeping in view the circumstances of the Satyam scam where Larsen and Toubro (L&T) has emerged as a major bidder for the distressed company, the Securities and Exchange Board of India (SEBI) today announced relaxed takeover norms for companies in special situations.

The conditions for relaxation of the takeover norms include superseding of the company’s board by the state or central governments and the setting up of a reconstituted board.

SEBI chairman Chandrashekar Bhave also stated that no competitive bid could be made by a rival bidder after a potential acquirer with the approval of the board makes a public announcement of an open offer.

“The process provides for details, including the time when the public offer would be made in which the change in management would be effected,” Bhave said.

As per the current norms, companies making an open offer would be required to fix the offer price at the average price of the past 26 weeks or the two immediately preceding weeks, whichever is higher. The rules also make it mandatory for an acquirer to make an open offer of 20 per cent of the company’s equity immediately after acquiring a 15 per cent stake.

This measure is seen as disadvantageous to any company making a bid for the troubled Satyam Computer Services since its average price over the past 26 weeks amounted to around Rs 250. The closing price of Satyam today on the Bombay Stock Exchange was Rs 46.30. L&T, which has picked up nearly 13 per cent in the company from the open market, has been demanding a relaxation of the takeover norms. The Spice group controlled by the BK Modi group has also emerged as a major suitor for Satyam.

SEBI has also ordered that the target company’s board even if set up by the government would have to apply to SEBI for a relaxation of the takeover rules. The board would also need to present a transparent plan to the market regulator, SEBI said today.

The regulator is also likely to allow the target company’s board to determine the exact stake that would be purchased by the acquirer. SEBI, on its part, would decide whether an acquirer would need to make an open offer at all or if so at what percentage such an offer would need to be made.

Companies applying for relaxation of what is known as the Chapter III rules should also present details, including the length of time when the public offer would be in effect.

Meanwhile, the government-appointed board of Satyam was, however, hopeful that more suitors would turn up to bid for the company. Satyam chairman Kiran Karnik said the board was in the process of formulating a transparent process to encourage more companies to bid for the company.

According to sources, the board is likely to set up a separate committee headed by a retired Supreme Court judge to oversee the bidding process. This would ensure that the bid finally selected by the company’s board passes muster before the market regulator.

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Industry lukewarm to rail budget
Tribune News Service

New Delhi, February 13
Complimenting Railway Minister Lalu Prasad Yadav’s Budget proposals, Assocham president Sajjan Jindal summed up his performance as extremely dynamic in making Railways a profitable viable organisation.

Jindal said the budget was user friendly as fairs had gone down and 43 new trains had been proposed that would provide convenience to passengers and freight users.

The Assocham chief also said in order to further upgrade Railways, the proposed borrowings were a step in the right direction but suggested that the Rail freight should have also gone down as it would have given some relief to India Inc. in coping with recessionary trends.

Federation of Indian Export Organisation, while welcoming the commissioning of the dedicated freight corridor from Delhi to Mumbai, stated that this might provide some respite to the trade since 60 per cent of the containerised cargo from the northern hinterland moves through this route.

According to Chandrajit Banerjee, director general, CII, freight corridors, containers and improved passenger amenities that were announced in the budget would go a long way in making India’s railway network more modern and efficient.

The budget did not find mention of any public-private partnership projects, that the industry was expecting.

The industry body also welcomed the reduction in passenger fares for all trains by 2 per cent.

Meanwhile, newly inducted FICCI president Harsh Pati Singhania said it was a mixed budget.

The Railways Minister had refused to respond to the current slowdown by cutting freight rates and helping the industry and economy in the midst of a slowdown. He had also proposed stepping up of a passenger train and a goods train capacity by 22 per cent and 78 per cent respectively.

FICCI feels that this would help when the economy comes out of the current slowdown and resumes the high growth trajectory.

PHDCC president Satish Bagrodia said the budget had missed an opportunity to reduce freight rates across the board to stimulate the economy, which was showing all signs of slowing down. 

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Big US banks on verge of insolvency: Report

New York, February 13
Some large American banks are on the verge of insolvency and would require a more direct government role than the plan outlined this week, a media report said today.

A sober assessment of the growing mountain of losses from bad bets, measured in today’s marketplace, would overwhelm the value of the banks’ assets, financial experts were quoted by the New York Times as saying.

None of the experts’ research focuses on individual bank, and there are certainly exceptions among the 50 largest banks in the country, the newspaper said.

“Nor do consumers and businesses need to fret about their deposits, which are federally insured. And even banks that might technically be insolvent can continue operating for a long time, and could recover their financial health when the economy improves,” it said.

But without a cure for the problem of bad assets, the credit crisis that is dragging down the economy will linger as the banks cannot resume the ample lending needed to restart the wheels of commerce, the newspaper said, quoting economists and experts as saying the answer is a larger, more direct government role than in the Treasury Department’s plan outlined this week

The Treasury programme leans heavily on a sketchy public- private investment fund to buy up the troubled mortgage-backed securities held by the banks. Instead, the experts said the government needed to plunge in, weed out the weakest banks, pour capital into the surviving banks and sell off the bad assets.

Of course, the Obama administration’s stimulus plan could help to spur economic recovery in a timely manner and the value of the banks’ assets could begin to rise. Absent that, the prescription would not be easy or cheap.

Estimates of the capital injection needed in the US range to $1 trillion and beyond. By contrast, the commitment of taxpayer money is the $350 billion remaining in the financial bailout approved by Congress last fall, the newspaper said. — PTI

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Banks providing more credit: Montek

New Delhi, February 13
With lending becoming a key area of concern amid declining industrial production, the Planning Commission today said banks had in fact started providing more credit in the last few weeks.

“In the last few weeks or so, there has been a change and the availability of credit from banks has improved,” Planning Commission deputy chairman Montek Singh Ahluwalia said at a function here.

He said credit availability from banks had improved after various measures taken by the government and several meetings of the RBI and finance ministry officials with the banks.

Recently, External Affairs Minister Pranab Mukherjee, who is holding charge of the finance portfolio, asked banks to step up lending to small and medium industries and infrastructure to stimulate the economy.

Since mid-September, the RBI has infused over Rs 4,00,000 crore to overcome liquidity shortage, but there were complaints that banks were not lending due to risk aversion.

In order to boost demand, the government has taken a slew of measures, which include four per cent reduction in excise duty and raising public expenditure, as part of two stimulus packages.

However, in spite of these measures, industrial production again crashed by two per cent in December against a growth rate of a whopping 8 per cent a year ago, after contracting for the first time in 15 years in October. — PTI

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Marriages sink

London, February 13
There has been a considerable drop in weddings in UK in the recent times as fewer people are marrying, courtesy credit crunch and high cost of divorce.

“The downward trend in marriage is long term. However, it has no doubt been helped by the current economic climate that is reflected in the cases we are seeing where couples are seeking to renegotiate the financial terms of their divorce settlements,” Barrister Joanna Grandfield said.

Weddings in England and Wales are currently at the lowest level, according to figures released by the Office for National Statistics.

Moreover, the figures show that average groom waits longer to marry — he is almost 37 years old and his bride nearly 34, the Guardian reported.

In 2007, only 231,450 people got married in England and Wales, a decrease of 3.3 per cent on 2006, and a drop of 34 per cent since 1981. This represents the lowest annual number of marriages registered since 1895, when 228,204 people said: “I do”.

“The declining figures are no doubt partly due to the perception that wives do really rather too well in divorce, and that it is a long and stressful procedure,” Grandfield was quoted as saying by the Guardian.

“However, there is and always will be a place for an institution that enables people to make a formal, public commitment to each other, and new processes such as collaborative law, which are perhaps still not well recognised, can make the motions of divorce less painful.” — PTI 

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Exports to grow 12-15% in FY ’09: Nath
Tribune News Service

New Delhi, February 13
Owing to global slowdown exports will grow by only 12-15 per cent in the current year, Trade Minister Kamal Nath said.

The minister’s comment comes at a time when the industry is reeling under pressure and the trade target of $200 billion looks impossible to achieve. As per the data released, the exports have fallen for the third month in a row by 1.1 per cent in December to $12.69 billion.

Nath said while the government was monitoring the credit availability situation and injecting liquidity into the system, it was important for the banks to lend. The RBI is taking steps to ensure that it becomes attractive for the banks to extend credit to industry.

Hinting at more relaxed Foreign Direct Investment (FDI) norms in the interim budget that is to be announced on Monday, the minister said the government would issue detailed guidelines on the changed FDI policy.

On the FDI front, the country has received $1.38 billion in December 2008 and the government is targeting $35 billion in 2008-09. The FDI received in April-December period is to the tune of $21.2 billion. In December, the inflows were less by $1.55 billion as compared to December 2007.

The Trade Minister had recently said the country would achieve a $30-billion inflow only in the current fiscal year.

The government, while taking a serious note of the trickle in FDI, had on Wednesday relaxed the rules that excluded indirect investment through domestic companies as FDI.

Nath advised India Inc to look inwards and tap domestic demand to circumvent the demand slack arising out of the deep recession in the world economy.

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Punjab’s venture capital plan hits roadblock
Govt decides to expand scope
Ruchika M Khanna
Tribune News Service

Chandigarh, February 13
Ambitious plans of the Punjab government to float a venture capital fund have hit a roadblock with the government’s prospective partners demanding that the fund be a diversified fund and not restricted to the Information Technology (IT) sector alone.

According to sources in the state government, only one company has come forward to partner with the state government to launch the Punjab Venture Capital Fund (PVCF) after the state government had called for an expression of interest (EoI) for the same. Most of the companies demanded that the PVCF be a diversified fund and not be restricted to IT sector.

“We have now decided to expand the scope of the venture capital fund. While 25 per cent of the fund will be reserved for IT and ITeS sector, the remaining 75 per cent will be used for diversified businesses. We will again call for an EoI so that more companies can participate in this venture,” he said, adding that the fund would be established by the end of first quarter in 2009-10.

The move to set up a VC fund gains significance as the Punjab government is trying to woo industrialists to set base here. With liquidity crunch being a problem for start up ventures, the state government hopes to get many takers for its PVCF scheme. “We will not restrict ourselves to those who are setting up industry in Punjab alone. Anyone wanting to set up industry in any part of the country can apply and get the seed money to set up his venture,” an official said.

While the Punjab Industries’ Department has about Rs 4 crore for the fund, it is looking for surplus funding from the state government and the private partner to create a corpus. “We are aware that the state can improve on its GDP only by promoting the manufacturing sector. Thus, we are coming up with this new initiative to provide seed money for start-up ventures,” said a senior official in the state government, adding that the fund will be managed by a team of venture capitalists.

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Nissan reviews tie-up plans with Chrysler

Tokyo, February 13
Nissan is reviewing its tie-up plans with Chrysler as the Japanese automaker struggles to boost profitability amid a global downturn.

Nissan Motors has decided to put on hold the plans to Chrysler produce a full-size pickup truck for Nissan by 2011, and for Nissan to produce a small car for Chrysler by 2010, Nissan spokesman Mitsuru Yonekawa said today.

The deal, inked last year, to have Tokyo-based Nissan supply a model based on the Versa model, to Chrysler for sale in South America starting this year, is still on, he said.

But the other partnership plans are being looked at again in detail as part of an overall cost-cutting effort at the embattled company, Yonekawa said.

Such deals are called an OEM, or “original equipment manufacture,” agreement in the auto industry. That means one automaker supplies products to another company for the second company to sell under its own brand.

Chrysler vice-chairman Jim Press said yesterday the tie-up was still on, and Chrysler just reviewed interiors for one of the projects.

But Frank Klegon, Chrysler’s product development chief, conceded the Nissan deal would duplicate some products from Italian automaker Fiat, with which Chrysler has recently announced an alliance.

Klegon said Chrysler, based in Auburn Hills, Michigan, is still working with the Japanese automaker, but he also noted that no contract has been signed with Nissan. — AP

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Hyundai ups prices

New Delhi, February 13
Hyundai Motor India Ltd, country's second largest car manufacturer today announced an increase in the prices of Santro, i10 and Accent across all its variants by 1.2 per cent to 3 per cent on account of raising input cost.

The retail prices across these models have gone up ranging from Rs 3,601 to Rs 14,636.

After the price hike, Santro will be costlier by Rs 3,601-Rs 5,163, the premium hatchback i10 will be dearer by Rs 3,974-Rs 7,637 and the prices of Accent have gone up by Rs 14,636.

However, prices of rest of the model range comprising the newly launched premium hatch i20 and the premium luxury car Sonata remains unchanged, it said in a statement.

The new prices are applicable with immediate effect, it added. — UNI

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