SPECIAL COVERAGE
CHANDIGARH

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DELHI


THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE
TERCENTENARY CELEBRATIONS
B U S I N E S S

Industry contracts by 0.5% in Jan
New Delhi, March 12
Industrial output showed negative growth for the second month in a row, the decline being 0.5 per cent in January, highlighting that stimulus packages failed to perk up manufacturing as well as mining so far.

TRAI for 3-yr lock-in on stake sale by new telcos
New Delhi, March 12
Amidst the controversial sale of stake by two new telecom operators, Swan and Unitech, at a huge premium, TRAI today recommended a 3-year lock-in period for stake sale by companies, which have recently got licences, in a bid to prevent them from making windfall gains overnight.

Bharti rejigs top brass
Manoj Kohli sells entire stake
New Delhi, March 12
On the day it emerged that Bharti Airtel’s CEO Manoj Kohli had sold his entire holding of 1,23,000 shares in the company, the country’s largest private sector telecom operator today also announced top-level changes in a bid to strengthen the company’s structure.

Inflation dips to 2.43 pc
New Delhi, March 12
Inflation fell for the sixth consecutive week, to 2.43 per cent, the lowest in over six years, as prices of food items like pulses, dairy products and edible oil softened further in the last week of February.

L&T, Spice, Tech Mahindra vie for Satyam
New Delhi, March 12
Three leading corporate houses — L&T, BK Modi-promoted Spice Corp and Tech Mahindra — have submitted their expressions of interest (EoI) to acquire majority stake in the scam-hit Satyam Computer.

Roche to buy Genentech for $46.8 billion
New York, March 12
Swiss drug maker Roche has agreed to acquire the remaining outstanding shares of US entity Genentech for $46.8 billion, making it the third largest deal in the global pharma industry in less than two months.


President and CEO, Honda Siel Cars India Ltd., Masahiro Takedagawa poses with advanced version of its premium sedan Accord with a 3.5-litre i-VTEC engine at its launch in Greater Noida
President and CEO, Honda Siel Cars India Ltd., Masahiro Takedagawa poses with advanced version of its premium sedan Accord with a 3.5-litre i-VTEC engine at its launch in Greater Noida on Thursday. It will be available in two variants — Accord V6 3.5 at Rs 24.8 lakh and Accord V6 3.5 Inspire at Rs 25.35 lakh. Tribune photo: Manas Ranjan Bhui 


EARLIER STORIES



A new car tyre is seen in Clairoix Continental tyre factory
A new car tyre is seen in Clairoix Continental tyre factory on Thursday, the day after announcements that the company would cut nearly 2,000 jobs and close production at two high-cost European tyre manufacturing sites amid a severe crisis in the auto industry. Production capacity of 8 million car tyres annually at its French site in Clairoix would affect some 1,200 employees. — Reuters

Credit Flow to MSMEs
Few takers for collateral-free loans

Chandigarh, March 12
The three stimulus packages announced by the government over the past three months have ensured an easy flow of credit to the micro, small and medium enterprises (MSMEs). However, the credit offtake is slow because of the unwillingness of the latter to avail credit. The standing advisory committee on SME of Reserve Bank of India (RBI) has found that even though the banks are flush with funds and willing to extend credit, the recession-hit MSME sector is itself unwilling to avail credit.

Rights Issues
SEBI moots easing disclosure norms

New Delhi, March 12
With companies preferring other modes of raising capital post IPO, the market regulator SEBI today proposed relaxing the disclosure norms for rights issues to help shareholders retain their stake and reduce overall cost of issuance. "Rights issues are further issuance of capital made by listed entities to its existing shareholders.

Tata Comm drops rights issue
New Delhi, March 12
Tata Communications, formerly VSNL, today said it has dropped the option of rights issue as of now and will incur a capex of $400-500 million in 2009-10 but has no cash crunch. The company said it has raised adequate debt and had strong cash on hand.






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Industry contracts by 0.5% in Jan

New Delhi, March 12
Industrial output showed negative growth for the second month in a row, the decline being 0.5 per cent in January, highlighting that stimulus packages failed to perk up manufacturing as well as mining so far.

This is the first time in 16 years that industry shrank for two consecutive months.

As such, the partial recovery in November proved an aberration in recent months with industrial growth turning negative in October, December and January.

Manufacturing output, having a weight of around 80 per cent in the Index of Industrial Production (IIP), declined by 0.8 per cent and mining production by 0.4 per cent in January, leading to negative industrial growth against a 6.2 per cent growth rate in the same month of 2008.

However, electricity generation rose, though at a slow pace of 1.8 per cent against 3.7 per cent a year ago. This clearly showed that stimulus packages have not given industry the desired boost.

"All three stimulus packages have not picked in. The industrial production figures would not reflect their impact," Chief Statistician Pronab Sen said.

The cumulative growth in industrial production for the period April-January 2008-09 stands at three per cent, and for manufacturing, mining and electricity, the cumulative growth rates during the period have been three per cent, 2.7 per cent and 2.6 per cent, respectively.

Nevertheless, a paradoxical picture is presented by the growth rates of capital goods and intermediate goods. The figure with regard to the former is a robust growth rate of 15.4 per cent and the latter is a substantial contraction of 9.2 per cent. The basic goods production contracted by one per cent.

The contraction of basic goods and intermediate goods is in line with the other IIP parameters, suggesting a recessionary trends.

But, the decent growth rate of capital goods segment shows that the capacity addition is taking place in the Indian industrial sector.

It is, however, a matter of deeper analysis as to which segments of industry, capacity addition is taking place and where intermediate products — intermediate to final product — are not being required.

In a sense the IIP figures are not startling as nearly 40 per cent of data is linked to exports, which have got a solid bashing from the global markets. But, it is also true that magnitude to which borrowing costs have been reduced have not had their full bearing on IIP parameters.

According to some estimates, 30 per cent of IIP changes are linked to interest rates. — Agencies

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TRAI for 3-yr lock-in on stake sale by new telcos

New Delhi, March 12
Amidst the controversial sale of stake by two new telecom operators, Swan and Unitech, at a huge premium, TRAI today recommended a 3-year lock-in period for stake sale by companies, which have recently got licences, in a bid to prevent them from making windfall gains overnight.

"...the main objective of the Authority has been to recommend measures to block the unearned gains arising from transaction in stakes of promoters particularly when the value of spectrum is not getting correctly reflected in the entry fee," TRAI said in a statement.

New telecom licencees tend to sell stake as they get start-up spectrum (radio frequency) bundled with the licence and demand huge premium in the market.

There should be a lock-in of the equity share capital of promoter(s), whose net-worth has been taken into consideration for determining the eligibility for grant of UAS licence, for a period of three years from the effective date of licence, it added.

Last year, the Department of Telecom (DoT) had suggested that existing telecom licensing norms be amended and a three to five-year lock-in be imposed on the sale of equity of promoter(s) in new entrants, including Swan, Shyam, Unitech, Loop Telecom, S Tel and Datacom, which were all given licences in early 2008.

The DoT referred this proposal to the telecom regulator.

On the issue of additional share capital, the regulator TRAI said, "the licensee companies/their holding companies by way of private placement/public issues should be permitted in accordance with statutory provisions (SEBI and Companies Act) subject to the condition that during the period coinciding with the lock-in period on sale of promoters equity, the equity of the promoter(s) shall not fall below 10 per cent of the total aggregate".

Besides, the management control of the licensee company shall be governed by the terms and conditions of the Licence Agreement.

TRAI has, however, permitted the promoters to sell their equity share even during the lock-in period with prior written approval of the Licensor (DoT) and on fulfillment of rollout obligations.

"This is subject to the condition that 50 per cent of the profit earned on sale transaction of promoter(s) equity shall be retained in the business as a special reserve and utilised for telecom network expansion only, while the balance shall be transferred to the Licensor," TRAI said.

The profit on sale of such shares is defined as the difference between sale value/agreed value of equity shares on the date on which the transfer of such shares take place and their face value on the date of application of the telecom licence. — PTI

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Bharti rejigs top brass
Manoj Kohli sells entire stake
Tribune News Service

New Delhi, March 12
On the day it emerged that Bharti Airtel’s CEO Manoj Kohli had sold his entire holding of 1,23,000 shares in the company, the country’s largest private sector telecom operator today also announced top-level changes in a bid to strengthen the company’s structure.

Sunil Bharti Mittal, CMD, Bharti Airtel, said, “Over the last couple of years, we have been able to build a world-class organisation. The company has grown not just in terms of revenue and market share but also in terms of strengthened processes, capabilities and governance. It has been our endeavour to empower our top management team, which has performed very well and is amongst the finest in the telecom world. Today, we have taken another step in further empowering the top management team and laid a strong foundation for embarking on the next phase of our exciting growth journey.”

As per the announcement, Manoj Kohli, CEO will increasingly focus on strategy development, governance and organisation development. He will lead the overall transformation programme.

Sanjay Kapoor has been elevated from president, mobile services, to a newly created position of deputy CEO. In his new role, Sanjay will lead the mobile, telemedia and DTH businesses. Sanjay will report to Manoj Kohli.

Having led the transformation at the Telemedia business, Atul Bindal will take over as president, mobile services. K Srinivas, who was executive director (East), mobile services and in charge of Sri Lanka operations, will take over as joint president, telemedia services. Atul and K Srinivas will report to Sanjay Kapoor.

David Nishball will continue as president, enterprise services, and will report to Manoj Kohli.

Earlier in the day, it emerged that Kohli, who owned 123,000 shares, sold 53,000 shares on March 6 and 70,000 shares on March 9.

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Inflation dips to 2.43 pc

New Delhi, March 12
Inflation fell for the sixth consecutive week, to 2.43 per cent, the lowest in over six years, as prices of food items like pulses, dairy products and edible oil softened further in the last week of February.

Even the prices of manufactured items, including iron and steel, textiles, chemicals and batteries, declined during the week ended February 28.

Wholesale prices-based inflation is now at a level seen in June 2002, by falling 0.6 percentage points from 3.03 per cent a week ago. It was 6.21 per cent during the corresponding week a year ago.

Terming the decline below 3 per cent on expected lines, economists expect inflation to reach zero in the next couple of months.

"This is on expected lines. It was during last February and March that inflation spiked. The prices of commodities, primarily oil and foodgrains, have moderated," said Chief Statistician of India Pronab Sen.

According to ICRIER Director Rajiv Kumar, "It is no surprise. In fact, we should now begin to start worrying about deflation. We could see zero inflation in 2-3 months." During the week, the prices of maize, arhar and moong declined by one per cent each. Dairy products fell by about 2 per cent while edible oil also fell by about one per cent.

Among manufactured products, prices of textile items like nylon filament yarn declined by two per cent while sacking bags fell by one per cent. At the same time, steel ingots were cheaper by as much as 13 per cent and batteries prices softened by three per cent. — PTI

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L&T, Spice, Tech Mahindra vie for Satyam

New Delhi, March 12
Three leading corporate houses — L&T, BK Modi-promoted Spice Corp and Tech Mahindra — have submitted their expressions of interest (EoI) to acquire majority stake in the scam-hit Satyam Computer.

The government-appointed board of the beleaguered IT company is meeting in Hyderabad tomorrow to scrutinize the EoIs. Business conglomerate Hinduja Group has pulled out of the competition.

Satyam closed registrations for potential bidders today as it began a process to sell 51 per cent stake in the company which is caught in the country's biggest corporate scandal.

The EoIs from prospective bidders, however, failed to lift the sentiments at the Satyam counter on bourses. The scrip on BSE closed the day down 3.18 per cent at Rs 47.20.

Engineering giant L&T, the single largest shareholder in Satyam at 12 per cent, said it has registered in the bidding process. Company spokesperson D Morada told PTI that "L&T has put in the EoI today".

Spice Corporation chairman B K Modi said the company has registered online. Earlier the day, Tech Mahindra said it has submitted the EoI and once the company receives the RFP (request for proposal) it will evaluate and conclude on next step.

The deadline to submit the bid and proof of adequate funds is March 20. — PTI

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Roche to buy Genentech for $46.8 billion

New York, March 12
Swiss drug maker Roche has agreed to acquire the remaining outstanding shares of US entity Genentech for $46.8 billion, making it the third largest deal in the global pharma industry in less than two months.

"Roche will acquire the outstanding publicly held interest in Genentech for $95 per share in cash, or a total payment of approximately $46.8 billion to equity holders of Genentech other than Roche," the two firms said in a statement.

Once the deal is completed, the Swiss firm would be acquiring 44 per cent in Genentech. Roche already holds about 55 per cent stake in the company.

The combined firm would be the seventh largest US pharmaceuticals company in terms of market share.

The Roche-Genentech announcement is the third major deal to be announced in less than two months. Last week, Merck said it would buy Schering-Plough Corp for about $41 billion.

In January, Pfizer had agreed to take over Wyeth, in a deal valued at around $68 billion.

According to the statement, the combined entity would generate approximately $17 billion in annual revenues and "will employ around 17,500 employees in the US pharmaceuticals business alone, including a combined sales force of approximately 3,000 people". — PTI 

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Credit Flow to MSMEs
Few takers for collateral-free loans
Ruchika M. Khanna
Tribune News Service

Chandigarh, March 12
The three stimulus packages announced by the government over the past three months have ensured an easy flow of credit to the micro, small and medium enterprises (MSMEs). However, the credit offtake is slow because of the unwillingness of the latter to avail credit.

The standing advisory committee on SME of Reserve Bank of India (RBI) has found that even though the banks are flush with funds and willing to extend credit, the recession-hit MSME sector is itself unwilling to avail credit. With their orders drying up in the export as well as domestic market and all expansion plans on hold, these MSMEs have little demand for credit at the moment.

According to the data available with The Tribune for the states of Punjab, Haryana, Himachal Pradesh and Chandigarh, new working capital limit of Rs 377.11 crore has been given to 830 units, while incremental credit to the tune of Rs 226.59 crore was given to 357 units. As many as 147 SME accounts were restructured with an amount involving Rs 168.20 crore.

Talking to The Tribune here today, Dr J. Saddakadulla, regional director, RBI, Chandigarh, said that they have taken several pro-active steps to ensure that there is easy flow of credit to MSMEs. “Banks have been asked to dispose of applications on time and each bank branch has been asked to open five new SME accounts in all urban and semi-urban areas per annum. We are also urging banks to have more specialised SME branches,” he said.

Anita Srinivasan, deputy general manager, rural planning and credit department, RBI, said that the apex regulatory bank was laying a lot of emphasis on banks to give collateral-free loans up to Rs 5 lakh. “However, this has found few takers. Though banks are willing to give collateral-free loans under Credit Guarantee Trust Fund for SMEs, the latter are unwilling to pay a guarantee of 1.5 per cent of loan availed and renewal fee, as it pushes up the cost of finance for borrowers,” she said.

The regional director also said that they have already formed a special state-level bankers committee on SMEs so as to monitor the credit flow to this sector. 

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Rights Issues
SEBI moots easing disclosure norms

New Delhi, March 12
With companies preferring other modes of raising capital post IPO, the market regulator SEBI today proposed relaxing the disclosure norms for rights issues to help shareholders retain their stake and reduce overall cost of issuance.

"Rights issues are further issuance of capital made by listed entities to its existing shareholders. Certain information about the entities that are listed and traded on the exchanges is available in the public domain," SEBI said in a discussion paper while making a case for less disclosures for rights issues.

SEBI said it may not be necessary to mandate exhaustive disclosure requirements.

"In such cases it may suffice to have a more restricted set of disclosures about the issue and the entity," SEBI said while inviting comments from the public by March 28.

The market regulator pointed out that quite often issuers choose preferential offers or qualified institutional placements or even ADR and GDR issuances over rights issues as these modes require less time, cost and efforts.

These alternate modes other than rights issues while helping the entities to achieve the capital raising needs, dilutes the existing shareholders stake in the entity.

The market regulator added that rationalisation of disclosure norms for rights issues would not only make the issuance process faster but also contribute to savings in paper, printing and distribution costs, reducing overall cost of issuance.

The SEBI Committee on Disclosures and Accounting Standards (SCODA) has recommended seperate set of disclosures for rights issues provided the listed company has been filing periodical statements for the last three years and has investor grievance handling mechanism with regard to share transfer.

SEBI recently ammended guidelines relating to timelines for rights issues resulting in reduction of more than two months in the process of coming out with such offers. 
— PTI 

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Tata Comm drops rights issue

New Delhi, March 12
Tata Communications, formerly VSNL, today said it has dropped the option of rights issue as of now and will incur a capex of $400-500 million in 2009-10 but has no cash crunch. The company said it has raised adequate debt and had strong cash on hand.

"The company has dropped the rights issue option as of now...it is not on the agenda. We have raised $350 million long-term debt, including bonds. Our capex in the current fiscal is $400-500 million, and looking at the trend, it will be the same in 2009-10," Corporate Strategy senior vice-president Srinivasa Addepalli told reporters. — PTI

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