News Flashes

DCA notifies norms for issue of IDRs

3rd March 2004: Indian Depository Receipts (IDRs) are finally here with the Department of Company Affairs (DCA) notifying the concerned rules. Now global corporations such as Microsoft, General Motors and General Electric can issue their shares to Indian nationals in India irrespective of whether these companies have Indian operations. Foreigners, resident or employed in India, subsidiaries of global corporations and foreign funds registered in India will also be eligible to invest in the IDRs. The regulations notified by DCA will enable companies incorporated outside the country to issue shares in the form of depository receipts in India. The Securities and Exchange Board of India (Sebi), which regulates such issues, too will soon notify its own set of ground rules for regulating issue of the IDRs. The rules of issue of IDRs notified by the DCA state that only those companies registered overseas and having a pre-issue paid up capital and free reserves of at least $100m and average turnover of $500m during the three financial years preceding the issue will be eligible. Further, the issuing company should have made profits for at lease five years prior to the issue and should have declared dividend of at least 10% in those years. Also, the issuing company has to ensure that pre-issue debt equity ratio is not more than 2:1. The Companies (Issue of Indian Depository Receipts) Rules, 2004 clearly further state that the IDR issuer will have to fulfill the eligibility criteria laid down by Sebi and that it should obtain prior approval of the regulator to make any issue. The Companies will be required to make the application at least 90 days ahead of the opening of the issue in the format laid down alongwith a refundable fee of $10000. On receiving the approval, an issue fee of 0.5% subject to a minimum of Rs.10 lakhs will have to be paid for issues of up to Rs.100 crores. Where the issue size exceeds Rs.100 crores, a fee of 0.25% will be payable on the amount exceeding Rs.100 crores. The repatriation of proceeds of the issue will be subject to the laws in force relating to export of foreign exchange. The IDRs shall not be redeemable into underlying equity shares for a period of one year from the date of issue and the IDRs issued in a financial year cannot exceed 15% if the issuing company’s paid up capital and free reserves. The IDRs will have to be denominated in Indian Rupees. The IDRs will have to be listed on one or more stock exchanges having nationwide trading terminals, that is, on NSE or BSE or both.

Reliance Energy raises $178m via 5-year FCCBs

1st March 2004: Reliance Energy has raised $178m (Rs.805 crore) through 5-year zero-coupon foreign currency convertible bonds (FCCBs). Zero coupon means that interest will not have to be paid for five years and if converted, the yield to maturity is 2%. The FCCB issue was done at a conversion price of Rs.1007 per share, a 30% premium to Reliance Energy’s Monday closing price of Rs.775. The FCCB issue has a maturity of five years and will be converted into GDRs after a 30-day lock-in after listing. Earlier Reliance Energy had made a preferential allotment to FIIs at Rs.640 per share. The conversion reflects a 57% premium to the allotment price. With this, Reliance Energy has raised $750m (Rs.3300 crores) in the past week. This includes Rs.2500 crores raised via preferential allotments and Rs.800 crores raised through FCCBs. Of the Rs.2500 crores, over Rs.1500 crores was by way of a preferential allotment to Reliance Industries, Rs.600 crores domestic FIs and Rs.360 crores picked up by FIIs. The total demand for the FCCBs came to $3.3bn. Deutsche Bank was the lead advisor to the issue. The FCCBs would be listed on the Singapore Stock Exchange.

List of Books On Investment in Stock

Published by: Vision Books Pvt. Ltd. , 24 Feroze Gandhi Rd, Lajpat Nagar 3, New Delhi 110024 Phone: (011) 29836470 or 80 ,Fax: (011) 29836490 Email: [email protected] S.NO Name of the Book Author Cost 1 Financial Analyst’s Handbook William F. Sharpe Rs.325/- 2 Indian Mutual Funds M. Subramanian Rs.190/- 3 100-World Famous Stock Market Techniques Rs.170/- 4 Stock Market Analysis Rs.190/- 5 Investing Under Fire Rs.395/- 6 Trading Tips Tom Dorsey Rs.325/- 7 Fundamental Analysis for Investors Rs.170/- 8 Futures & Options Rs.280/- 9 Market Neutral Investing Rs.395/- 10 Technical Analysis (From A-Z) Rs.350/- 11 The Stock Market Dictionary Rs.170/- 12 The Psychology of Technical Analysis Rs.325/- 13 The New Commonsense Guide to Mutual Funds Rs.225/- 14 Candlestick Charting Explained Rs.280/- 15 Its When you Sell that Counts Rs.190/- Beginner’s Guide: S.No Name of the Book Author Cost 1 The Basics of Stock Rs.145/- 2 The Basics of Investing Rs.145/- 3 The Basics of Bonds Rs.145/- 4 The Basics of Speculating Rs.145/- 5 How to Manage Your Investment Risks & Returns Rs.145/-

1st March 2004:Reliance Energy Ltd – a Splash of Energy

Reliance Energy Ltd (REL), formerly BSES is the best example to prove that companies who are aggressive in achieving its mission by tapping its vast resources and draw up ambitious growth plans get a red carpet welcome from the market. The company’s market cap has risen almost 15% or nearly Rs 1,500 crore, in just a week after its announcement to raise Rs 3000 crore from issue of equity to promoters and institutions to fund an Rs 20,000 expansion plan. The gains came in a week that was marked by sharp fall in stock prices. Markets cheered the company’s move of being a global-scale player with leadership in the power sector across generation, transmission, trading and distribution having a market cap of over Rs 11,000 crore. Reliance Energy’s move would raise the company’s net worth to nearly Rs 6,500 crore, the third largest among the private sector companies, behind Reliance Industries and ICICI Bank. After the allotment of shares, the book value would vault 43% to Rs 312 per share, from Rs 217. The stock’s price to book value (P/BV) was 3 times before the announcement. Therefore, on the enhanced book value, the stock should see significant appreciation on the basis of P/BV parameter. For REL shareholders it has been a most eventful year. The stock was among the top 10 performing stocks in the sensex during 2003. It outperformed the sensex by 57% in 2003. Even in the current year, it has been the best performing utility stock, outperforming the sensex 29%. While REL stock has been appreciating, Reliance Industries’ shareholders too have been big beneficiaries. RIL’s investment in REL is now worth nearly Rs 6000 crore. While average cost of RIL’s shareholding in REL is close to Rs 350 per share, the market price is much higher at Rs 740 per share. Reliance Energy ranks among the top 25 private sector companies in the country on major financial parameters. It has revenues of over Rs 6400 crore, cash profit of Rs 600 crore and a net profit of Rs 350 crore. More importantly, the company is debt free at the net level, which gives it enormous scope for leveraging the balance sheet in future, for the purpose of financing its ambitious plans at a low cost of capital. Even more importantly, REL is making moves to step up operations in the crucial distribution sector. It has acquired 100% equity in the Andhra Pradesh and Goa projects to take these forward quickly. Its Kerala power plant has been restarted after lying shut for more than a year. It plans to recapitalise the Orissa distribution company and turnaround its operations. It plans to increase automation & distribution in Mumbai and revamp the system in Delhi to reduce distribution losses and raise margins. And, it is filling for new licenses and franchises for distribution networks in other states. Trading in power too is seen as an area of growth by the company in future.

1st March 2004: CDSL

Central Depository Services (India) Limited (CDSL) is a convenient, dependable and secured source of investing in public issues by having a demat account. The advantages of CDSL is it provides immediate updates of allotments, No Custody or ISIN charges, Unique account number to reduce risk of wrong transfer of securities. (The first 8-digits of the account number is the DP-ID and the last 8-digits is the Client-ID. Fill the IPO form accordingly), Monitor the status of your demat account with a daily portfolio valuation through CDSL’s Internet facility “easi”. The intending bidders have to deposit a refundable caution deposit of 25% of the reserve price by way of DD favouring. “The Authorized Officer Canara Bank, Jayanagar Shopping Complex, Banglore A/C K.L.N. Agro Techs (P) Ltd. on or before 24-3-04 before 10.00 a.m. The successful bidder should pay another 25% on the spot and the balance 50% within 30 days from that date. All other charges like legal, stamp duty etc., will be borne by the purchaser only. At any stage of the Auction, the Authorized Officer may accept/reject the bid or postpone the auction without assigning any reason thereof. For inspection of the property the date has been fixed on 22-03-04 & 23-03-04 between 10 a.m. to 5 p.m. intending buyer’s may inspect the plant & machinery, building by making their own arrangements to inspect the unit. For any other details the intending bidders may contact the undersigned during office hours between 10.00 a.m. and 5.00 p.m.

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