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Kew Industries Ltd (KIL) to raise Rs 21 cr from IPO

26th August 2006: Auto component manufacturer Kew Industries Ltd is tapping the capital market to raise Rs 21 crore through an initial public offer to fund its expansion programme.

The Jalandhar-based company is issuing 70 lakh equity shares of face value Rs 10 each at a price of Rs 30. The issue constitutes 54.33% of the fully diluted post issue paid up capital of the company. It will open on August 28 and close on September 1.

Commenting on the purpose of the issue, Kew Industries Ltd Director Ashok Kumar said the company intended to utilise the proceeds from the IPO in modernising and expanding manufacturing facility and also enhancing its R&D centre.

"The majority of the fund will be used for plant, machinery and civil structure, and also in the working capital requirement," he said.

KIL, which supplies to leading commercial vehicle manufacturers like Tata Motors and Ashok Leyland, expects the expansion programmes to be completed by March next year.

"We have been given the Tier I supplier status by Ashok Leyland and currently about 70% of our revenue comes from the commercial vehicles component business," he said.

He said, going forward the company expected to increase its supplies to the government for defence requirements and also to Railways, adding the company has also started exports to countries like Italy and France and is in the process of expanding it further.

KIL's total income for FY06 stood at Rs 39.65 crore with a PAT of Rs 2.99 crore.

Deep Industries to tap capital market with IPO

25th August 2006: Air and gas compression company Deep Industries Ltd on Thursday announced its plans to tap the capital market to mop up around Rs 40 crore for funding its expansion plans.

"Deep Industries proposes to utilise the funds raised through the public issue to part finance its plans for procurement of plant and machinery for business expansion and office equipment valued at Rs 51.50 crore," Deep Industries Managing Director Rupesh Salva said.

While the company recently purchased a 100 tonne work over rig to be shortly deployed at ONGC, it plans to acquire 11 more compressors, slated to be commissioned by October.

The company will enter the capital market with a fixed price IPO of 1,13,00,000 equity shares of Rs 10 each at a price of Rs 36 aggregating to Rs 40.68 crore.

The issue, constituting 56.5% of the post issue paid up capital of the company, opens on August 29 and closes on September 4.

The total fund requirement along with the working capital need is estimated at Rs 60.28 crore. The company has already made a pre-issue allotment of 22 lakh equity shares to promoters, promoter group and others at Rs 30 per equity share aggregating Rs 6.6 crore.

While the company has received a sanction of Rs 13 crore term loan from the Union Bank of India, it would raise the remaining amount through the IPO.

The issue includes 11,30,000 equity shares reserved for employees and directors, 28,25,000 shares for NRIs and FIIs and 11,30,000 for scheduled banks and multilateral development financial institutions. The rest 62,15,000 equity shares would go to the public, Salva said.

Deep Industries has also bid for a coal bed methane block in Andhra Pradesh jointly with Coal Gas Mart LLC, US and Adinath Exim Resources Ltd, Ahmedabad and a coal bed methane block in Madhya Pradesh jointly with Coal Gas Mart LLC, US.

Tech Mahindra shares to be listed on BSE, NSE

25th August 2006: Tech Mahindra Ltd, which offered 12,746,000 equity shares through an IPO earlier this month, will be listed on Bombay Stock Exchange and National Stock Exchange on August 28.

Tech Mahindra, an IT solutions provider to telecom companies, had fixed the issue price at the upper end of the price band at Rs 365 per equity share of Rs 10.

Tech Mahindra IPO received an overwhelming response from all categories of investors getting over subscribed 70.09 times, the company said in a release.

While the qualified institutional buyer (QIB) portion was oversubscribed 103.98 times, the high net worth individual (HNI) category was oversubscribed by 123 times and the retail category was oversubscribed by 7.58 times. The issue received over 1.93 lakh bids, the release said.

The IPO of 12,746,000 equity shares of Rs 10 each consisted of a fresh issue of 3,186,480 equity shares and an offer for sale of 9,559,520 equity shares by Mahindra and Mahindra Limited and British Telecommunications Plc (of the issue. As many as 1,158,790 equity shares were reserved for eligible employees), which opened for subscription on August 1 and closed on August 4.

The issue constituted 11% of the post issue paid up capital of the company, and the net issue constituted 10% of the post issue capital, the release said.

The company proposes to use the proceeds for expansion of their project at Rajiv Gandhi Infotech Park in Hinjewadi, Pune, for which the company has been granted land measuring 98,923 square meters recently.

CAs may soon be able to keep books in US, Australia & Singapore

24th August 2006: Chartered accountants are seeking to widen their horizon. With gloabalisation gaining ground, they are keen to tap business in other countries and are willing to support opening of the Indian market on a reciprocal basis.

Efforts have been initiated to ink mutual recognition agreements (MRAs) with the US & Australia, and talks are at an advanced stage with Singapore so that Indian CAs can take up work in these countries. The government may give the move a thrust when a US delegation led by Franklin Lavin, under secretary for international trade, US dept of commerce, visits the country later this year.

US has informed New Delhi that its accounting regulator, the International Qualification Assessment Board (IQAB) is in touch with its Indian counterpart — the Institute of Chartered Accountants of India — and that the issue continues to be monitored during its trade policy review.

Meanwhile, ICAI, which is at an advanced stage of talks with Singapore in line with the comprehensive economic co-operation agreement (CECA) between the countries, has also started talks with its counterpart in Australia — the Institute of Certified Public Accountants of Australia.

It also has a joint working group with UK to work out an MRA. The talks are expected to gain pace due to a convergence of views between the government, the industry & some major legislative initiatives.

The limited liability partnership (LLP) bill, which allow partnerships without a cap on the number of partners, is expected to please both the professionals here and in the partnering country.

Now there is a ceiling of 20 partners in a partnership firm and 10 in a banking firm. Professionals say the new law will ensure a level playing field, while liberalising services trade. “We are ready to open up the accounting sector on a reciprocal basis.

Our professionals should be allowed to do in the partnering country what we allow them to do here. We see it as an opportunity, not as a threat,” said ICAI president TN Manoharan. He said that talks revolve around five areas for the convergence of the qualification.

These are the minimum eligibility for a student to enroll for accounting qualification, the curriculum, practical training, examination and the licensing needed for practice (not for working with a corporate).

MRAs have the advantage that the liberalisation could be broader than what is envisaged under the WTO — accounting, auditing and book keeping. Taxation-related services, restructuring, valuation and consultancy are not part of WTO talks.

Dress code for Chartered Accountants soon

24th August 2006: A dress code for practicing Chartered Accountants will be out by the end of this month with Institute of Chartered Accountants of India giving finishing touches to the recommendatory proposal to give its professionals a corporate look and don a new brand identity.

"We are in the process of finalising a dress code that will be announced by the end of this month," said ICAI president T N Manoharan.

He, however, said the proposal would not be mandatory in nature. "It will be more of a recommendation, though we expect it to be followed by the professionals," Manoharan said.

Elaborating on the proposal, he said the dress code would not be for day-to-day affairs but for events like business meetings and other official representations and engagements.

Set up under an Act of the Parliament, ICAI is the apex governing body working for regulation and development of the accountancy profession in India.

Manoharan clarified the code would be applicable only to professionals working in individual or partnership capacity. "Those who are employed with companies are not bound to follow as they will be acting as per the requirements and stipulations of the organisation they work for," he added.

A formal dress code, he said, could be a full-sleeve shirt, tie and shoes.

ICAI is also working on the design of a logo that Chartered Accountants could use on their visiting cards, letter-heads and other stationery. This follows a similar initiative of the institute where it had allowed its members to prefix the letters 'CA' before their names, similar to what doctors do. PTI DP PD AN ANS 08061125 DEL (Reopen DEL 24)

The steps are being taken at a time when ICAI is going in for major changes with regard to the development and working of accounting professionals in India.

The institute has recently taken a bold initiative as part of which the time-period for becoming a CA has been cut down, almost by one-and-a-half year. It has simplified the rigorous examination structure students have to go through and the new system is likely to be operational from next month.

In another move it has also permitted its members to set up management consultancy firms while retaining their status of being practicing CAs, who were so far not allowed to be equity holders in companies.

This has been done keeping in mind the growing role of CAs in management consultancy as well as to help them compete with major consultancy firms who could employ huge capital and human resource, Manoharan said. PTI DP PD AN ANS 08061126 DEL

GMR Infrastructure lists at Rs 215

21st August 2006: GMR Infrastructure Ltd on Monday listed 2.38% above its issue price at Rs 215 on the Bombay Stock Exchange. The Hyderabad-based infrastructure major had come out with a public offer of 3.81 crore equity shares of Rs 10 each at an issue price of Rs 210 per share (including a premium of Rs 200 per share).

The initial public offer of the company, with a price band of Rs 210-250, had been subscribed 6.68 times, primarily driven by the demand from institutional investors. The issue had opened for subscription on July 31 and closed on August 4. JM Morgan Stanley, DSP Merrill Lynch, Enam Financial Consultants and SSKI Corporate Finance Pvt Ltd were the book running lead managers for the issue.

Berger Paints to issue bonus shares in 3:5 ratio

19th August 2006: Leading paint manufacturer Berger Paints India Ltd on Friday said it will issue bonus shares in the ratio of 3:5 to the shareholders. The company informed the Bombay Stock Exchange that the shareholders had approved the bonus issue, where three bonus shares would be allotted for every five shares held, at the AGM held last month.

Global Broadcast News Ltd (GBN) files DRHP with Sebi; to raise Rs 105cr via IPO

19th August 2006: Global Broadcast News Ltd, a TV18 group company, on Friday said it has filed its red herring prospectus with the Securities and Exchange Board of India to enter the capital markets with its Initial Public Offer of shares.

GBN, which owns the news channel CNN-IBN, proposes to raise up to Rs 105 crore through an initial public offer of equity shares of Rs 10 each for cash at a premium, which would to be decided through 100% book building process, a company statement said.

The retail portion of the IPO comprises of Rs 100 crores and the issue of equity shares aggregating up to Rs 5 crores is reserved for the employees.

Of the net offer to public, 60% is reserved for allotment to Qualified Institutional Buyers on a proportionate basis, 5% of which will be available for allotment to mutual funds. Further, up to 10% of the net offer to public is reserved for allotment to non-institutional investors and the balance of up to 30% for allotment to retail investors, it said.

"The IPO is an important milestone in realizing our larger corporate vision. It would help strengthen GBN's position in the television news business and tap future growth opportunities," GBN Joint Managing Director Sameer Manchanda said.

The Book Running Lead Managers to the issue are ICICI Securities Ltd and Kotak Mahindra Capital Company Ltd. JM Morgan Stanley Limited and IL&FS Investsmart Limited are the Co- Book Running Lead Managers.

Voltamp Transformers Ltd. (VTL) IPO to open on August 24

19th August 2006: BUSINESS OVERVIEW: Voltamp Transformers Ltd. (VTL) is one of the leading manufacturers of transformers in India, with a strong presence in the high margin industrial segment. VTL has 5400 MVA p.a of transformer manufacturing upto 50MVA class transformers.

VTL has a unique business model with significant share of its revenues coming from the high margin industrial segment. VTL top ten customers include Siemens, L&T, ABB & suzlon & utilities such as Reliance & Torrent. Thus VTL is not exposed to receivables risk on account of financial ill health of SEB’s. VTL enjoys a leading position in the dry transformers segments as well as in the power & distribution transformers market in the industrial sector.

ISSUE DETAILS:

ISSUE SIZE (No. of shares)

PRICE BAND

OPENING DATE

CLOSING DATE

LISTING ON

LEAD MANAGER

46,39,648 Equity shares of Rs. 10

Rs. 295

To

 Rs. 345

 

24/08/2006

 

29/08/2006

NSE

&

BSE

ENAM FINANCIAL CONSULTANTS (P) LTD.

FINANCIAL HIGHLIGTS:

                                                                              ( Rs. in million)

Particulars

2006

2005

2004

Total Income

2864.67

1818.13

1136.13

Total Expenditure

2511.73

1577.89

969.32

NPAT

230.23

149.71

99.70

TOTAL Assets

1126.26

699.61

463.25

Share Capital

101.17

101.17

7.78

Net Worth

694.67

464.37

329.38

Reserves

593.50

363.20

321.59

INDUSTRY OVERVIEW:

Organized transformer industry is expected to grow at 15-20% through 05-08. The size of the organized transformer market in India is estimated at Rs. 20bn. And is largely dominated by ABB, Crompton Greaves, BHEl, Areva, Voltamp, Bharat Bijlee, Emco, Viajy Electricals, Kirloskar Electric & Indotec. Cost efficient designing & customer franchise are the two key barriers in the business & therefore a large unorganized market exists in the lower range of transformers.

KEY HIGLIGHTS:

VTL’s key strength lies in its unique sourcing ability for all key components from various ancillary units & manufacturing of transformers at its own premises. It thus manages to optimize as per the demand resulting in an asset turnover of over 3x, which is better than industry average. Infact VTL is amongst those with the highest return ratios in the industry.

SEBI, RBI to meet soon to decide on short selling

16th August 2006: The move to allow institutional investors to short sell securities might be delayed as there are perceptible differences between market regulator SEBI and the Reserve Bank on whether to allow FII right from the start.

While SEBI wants to adopt a big bang approach by allowing all institutional investors to short sell right from the beginning, the Reserve Bank favours a gradual process starting with domestic institutional investors, official sources said.

Technical committee of SEBI and RBI will meet soon to thrash out their differences, the sources said. Short selling, that is selling securities without owning them, is presently allowed only for retail investors.

SEBI is of the view that all institutional investors should be allowed from the beginning so as to have a deep and wide market. Domestic institutional investors were not large enough for a significant economies of scale to operate.

The Central Bank is however of the view that permission to short sell should be in a gradual manner starting with domestic institutional investors.

SEBI wants that even if it meant a delay of six months, permission on short selling should not be allowed in a piecemeal manner. It is already nine years since the idea was originally proposed and a few months delay would not make much of a difference, the sources said.

According to the present guidelines, institutional investors like FIIs, mutual funds, banks and insurance companies are mandatorily required to settle on the basis of deliveries of securities owned and held by them.

Sebi bans broker Credit Suisse First Boston (India) Securities (CSFB) for one month

12th August 2006: The Securities and Exchange Board of India (Sebi) has barred broker Credit Suisse First Boston (India) Securities (CSFB) from carrying on its trade for a month for violating its code of conduct for brokers. The order takes effect from September 1.

Sebi found the firm, registered as a broker on both the NSE and the Bombay Stock Exchange, to have executed trades of another broker C Mackertich Ltd, or CML, which, it claimed, was acting as an unregistered sub-broker in violation of the law.

“By allowing CML to act as an unregistered sub-broker, CSFB has miserably failed to abide by the Code of Conduct prescribed for a broker. Further, the possibility that the very trades executed by CML through the terminal of CSFB forming part of the trades that led to the manipulation of the scrip of South East Asia Marine Engineering and Constructions can also not be ruled out. In any event, the fact remains that CSFB allowed its terminal to be misused by CML,” G G Anantharaman, whole-time member, Sebi, said in his order today.

According to the regulator, between June 01, 1999, and May 31, 2000, CSFB traded in the scrip on behalf of CML, its own partner company Kallar Kahar Investment, and another firm Milhill Investment Limited.

During the period, the share-price moved from Rs 15 to Rs 389 within eight months, it pointed out.

Sebi allows MFs to launch capital protection scheme

12th August 2006: The Securities and Exchange Board of India (Sebi) has given the green signal to mutual funds to launch “capital protection-oriented schemes,” under which investors are assured of their capital invested even if the scheme underperforms.

As per Sebi guidelines, capital protection schemes have to be close-ended. However, investors investing in such schemes will not have an exit option before maturity. Among the guidelines stipulated by Sebi, asset management companies will not be allowed to repurchase units of a capital protection scheme before maturity.

But the asset management company (AMC) will not be allowed to repurchase the units of such a scheme before maturity. Also, AMCs will have to get such a scheme rated by a registered credit rating agency “from the viewpoint of the ability of its portfolio structure to attain protection of the capital invested therein,” the Sebi release said.

In some ways, the capital protection scheme is a form of an assured return scheme, which Sebi had banned some years back. The key difference here is that the AMC is assuring the investor of protecting his capital, and not returns, as used to be the case earlier.

Industry watchers feel this move could attract more retail money into the mutual fund industry, which has already been witnessing a good interest from that quarter of late.

“A significant portion of the fund — say up to 80-85% — is likely to be invested in highly-rated debt instruments, including government bonds,” said the CEO of a private mutual fund, on how capital protected schemes were likely to be structured.

“That will ensure protection of the capital to a large extent. The remainder will be invested in equity, allowing the investor to benefit in case the stock market does well,” he said. From an AMC’s point of view, shortfall on maturity is unlikely to be substantial due to the higher component of debt in the scheme.

Market upswing induces companies to launch IPOs

11th August 2006: The tremendous investors' response to the two big IPOs of Tech Mahindra and GMR Infrastructure is likely to lure those promoters who had shelved their IPO plans back into the market, market watchers said pointing to the trend in the last ten days.

Some of the companies that have rushed IPO applications to market regulator Sebi this week include Lanco Infratech Limited, ICRA and the Bangalore-based Sobha Developers.

The IPOs of companies such as Global Vectra Helicorp Ltd., Malwa Industries and Bluebird, are also on track. These companies are expected to enter the market once they receive observations on their Draft Red Herring Prospectus (DRHP) from the Securities and Exchange Board of India (Sebi), they said.

Encouraged by the recent uptrend in the market, companies that had shelved their IPOs, even after regulatory approvals were received, following high volatility on the bourses, are now ready to enter the market, the analysts said.

One such company is Kew Industries, which has already received SEBI observations on its DRHP. The company now plans to enter the market towards the end of this month.

The rally in the Sensex in the last ten days, in excess of 1,000 points, has also encouraged companies to enter the market after a two-month lull.

Lanco Infratech Limited, an infrastructure development company with interests in power generation, construction and property development, filed its Draft Red Herring Prospectus (DRHP) on August 7 with Sebi.

Investment and Credit Rating Agency (ICRA) also filed the DRHP with Sebi on Monday to raise funds from the market by diluting its holding. Realty major Sobha Developers too filed its DRHP with SEBI for its IPO on Monday.

IRDA issues norms for non-life products

11th August 2006: Bracing up for a detariff regime from January next year, insurance regulator IRDA has issued a 31-point draft revised 'File and Use' guideline for all general insurance products to be complied by insurers.

Products which are currently under tariff but which will be underwritten with modified rates after the tariffs are removed should be filed under these guidelines, after September 30, 2006.

IRDA requires that design and rating of products should provide clear and transparent cover, simple language for product description for laymen to understand and use similar wordings for describing same cover across all products such as clauses of renewal, basis of insurance, due diligence clause, cancellation clause, arbitration clause, etc.

Further, the product should be genuinely an insurance of an insurable risk with a real risk transfer and insurers should not enter financial guarantee business in any form.

Pricing of products should be based on support of appropriate data and technical justification; and terms and conditions of cover should be fair to both the insurer and insured.

Margins built into rates should be consistent with the experience of insurer in respect of commission, expenses of management, contingencies and profits.

IRDA said insurers should take steps to ensure that competition will not lead to unprincipled rate cutting and other improper underwriting practices.

IRDA has asked insurers to give their suggestions on the draft by August 25 for consideration and modifications, before the guidelines come into effect from September 30, 2006.

JM Financial launches corporate private equity fund

10th August 2006: JM Financial said it will launch a corporate private equity fund - JM Financial India Fund - with an initial corpus of $150-175 million.

According to a release issued by JM to the BSE, the US-based Old Lane Partners LP would be the lead investor or co-sponsor of the fund, which would invest in Indian companies.

"We are pleased to announce the setting up of our corporate private equity fund. This is in line with the expansion plans for the group. The India growth story, and strong emerging companies backed by new age entrepreneurs offer tremendous opportunity for the JM Financial Group to invest private equity capital," JM group chairman Nimesh Kampani said.

Service Tax – C&F

United Plastomers v. CCEx. [2006] (1) S.T.R. 194 (Tri.-Del.)

A dealer agent shall not be covered under the category of cleaning & forwarding agent services for the levy of service tax as the goods are not being directly or indirectly handled by them.

Service Tax on Royalties

Essel Propack Ltd. V. CST [2006] (1) S.T.R 150 (Tri.-Mumbai)

Royalty payment for use of technology cannot be equated with any services to be provided by foreign company to Indian company and thus are not liable for service tax.

Income from House Property

CIT v. Pateshwari electrical and Associated Industries P. Ltd. [2006] 282 ITR 61 (All.)

    Letting out of house property (having a sarai license and a license from District Health Officer) to a bank to be used as a Guest house to be treated as business income and not income from house property. The main reason was that the municipality of Nanital had assessed the property as a hotel establishment.

Sebi to issue policy statement on short selling

8th August 2006: Market regulator Sebi would soon come out with a policy statement on short selling of shares.

"You will soon see a policy statement (on the issue)," M Damodaran, chairman of Sebi, said.

Damodaran, however, refused to divulge whether such a statement will allow short selling by institutional investors or not.

Unless all issues relating to short selling are addressed, a decision could not be announced. All those concerned with the matter are being consulted, Damodaran said.

Short selling - selling stocks without actually owning them or selling them by delivering borrowed stocks - is currently permitted for retail investors.

The issue of allowing institutional investors to short sell is linked to the programme for stock lending and borrowing.

The stock lending and borrowing programme was in vogue for institutional investors until 1997 under FERA, which was replaced with FEMA in 1999-2000. Now the issue is whether proposed lending and borrowing programme could be allowed for foreign institutional investors under FEMA.

A revised scheme for lending and borrowing stocks was prepared after the stock markets experienced a huge volatility in May.

ICRA files IPO papers with Sebi

8th August 2006: ICRA, a leading credit agency, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for an offer for sale of 25.81 lakh equity shares of Rs 10 each for cash at a price to be decided through the book building process.

The offer for sale is by IFCI, State Bank of India and administrator of the specified undertaking of Unit Trust Of India.

The offer constitutes 25.81% of the fully diluted post-offer capital of ICRA. The equity shares are proposed to be listed on NSE as well as BSE with 50% of the offer reserved for qualified institutional buyers (QIBs), 15% for non-institutional investors and 35% for retail investors.

Tech Mahindra IPO priced at Rs 365

8th August 2006: Tech Mahindra Ltd has priced its IPO at the higher end of Rs 365 per share as against the offer band of Rs 315-365 per share.

The IPO of 1.27 crore shares, which closed on August 4, had seen subscription of 72 times.

Market observers said this was the highest oversubscription for any IPO in this fiscal so far and was expected to end a long subdued phase in the primary market.

The issue received robust response from the Qualified Institutional Buyers, particularly the foreign investors, with the QIB portion of the IPO receiving over 104 times subscriptions.

The issue constitutes 11% of the post issue paid up capital of the company and the net issue constitutes 10% of the post issue capital.

The company intends to use the IPO proceeds partly for expanding its existing facilities at Pune.

Kotak Mahindra Capital Company Limited and ABN AMRO Securities (India) Private Limited were the book running lead managers to the issue, while Intime Spectrum Registry Limited was the registrar to the issue.

Registration fees of sub-broker to double next year

8th August 2006: The Securities and Exchange Board of India (Sebi) has doubled the registration fees for sub-brokers with effect from the next financial year.

Sub-brokers have also been asked to pay the fees for a block of five years in advance from next fiscal compared with existing practice of submitting the fees annually.

As per a Sebi notification issued by the Bombay Stock Exchange to its members on Monday, sub-brokers who were granted certificate of registration before August 1, 2006, are required to pay Rs 10,000 for the block of five financial years starting April 1, 2007.

After the expiry of this five years, sub-brokers are required to pay Rs 5,000 for every subsequent of five financial years.

The change in fee structure for sub-brokers was brought about through an amendment in the Sebi (Stock Brokers and Sub-Brokers) Regulations 1992. Under the earlier fee structure, sub-brokers were required to pay Rs 1,000 per year to Sebi, a BSE official said.

Under the new rate structure, Sebi said sub-brokers who are granted certificate of registration by the Board on or after August 1, 2006, are required to pay Rs 10,000 for the block of five financial years commencing from the financial year in which the registrations have been granted.

GMR fixes IPO price at Rs 210 per share

8th August 2006: Power and infrastructure major GMR has fixed its initial public offering at the lower end of the price band of Rs 210 per share, investment banking sources said, pegging the total issue proceeds at about Rs 800 crore.

The IPO of Hyderabad-based GMR Infrastructure, which closed on Friday last week, was oversubscribed by 6.68 times primarily driven by the demand from institutional investors.

The company sold shares worth nearly Rs 800 crore in the public issue of 3.81 crore shares, which received bids for about 25.5 crore shares. The company had fixed the price band at Rs 210-250 per share.

While the IPO received oversubscriptions for nearly 11 times of the portion reserved for the Qualified Institutional Buyers (QIBs), the retail portion was under subscribed and received bids for only 52% of about 1.13 crore shares reserved for retail investors.

The company has fixed a 5% discount for the retail investors for the price derived from the book building process, which would lead to the share allotment at a price of Rs 199.50 per share to the retail investors.

The investment banking sources said that most of the bids were received in the range of Rs 230-250 per share.

GMR issue had opened on July 31 and closed on August 1, the same day when IPO of Tech Mahindra closed. However, the oversubscription was much larger at more than 72 times for Tech Mahindra.

GMR Infrastructure plans to use a part of the IPO proceeds for investment in various infrastructure Special Purpose Vehicles, which are currently in the development stages.

JM Morgan Stanley Private Limited, DSP Merrill Lynch Limited, Enam Financial Consultants Private Limited and SSKI Corporate Finance Private Limited are the BRLMs for the issue.

Reliance Mutual Fund unveils income, equity schemes

8th August 2006: Reliance Capital Asset Management Ltd on Monday filed initial papers with India's market regulator to launch an open-end income scheme and a three-year close-end equity fund.

Reliance Liquid Multiplier Fund would have the freedom to invest its entire corpus in debt and money market instruments of up to a year's maturity, but can also invest up to half the money in longer-term securities.

On the other hand, the Reliance Long Term Equity Fund would primarily invest in mid-cap and small-cap stocks, allocating at least 70% of its corpus to equity and up to 30% to debt-related securities.

In its offer document filed with the Securities and Exchange Board of India, the fund house said the minimum subscription requirement for the income fund would be 100,000 rupees under the retail plan and 10 million rupees for institutions.

The fund would charge no entry load but an exit load of 0.15% for redemption within 15 days.

For the equity scheme, there would be no entry load during the offer period but varying exit loads would be charged for redemption in the first three years.

The fund house managed assets worth about 262 billion rupees at the end of July, data from the Association of Mutual Funds in India showed.

Indiabulls gets nod for demerger of its real estate biz

8th August 2006: Indiabulls Financial Services Ltd has received Bombay Stock Exchange and National Stock Exchange nod for demerger of its real estate business.

The company said the NSE and BSE have approved its scheme of rearrangement, whereby Indiabulls Real Estate Ltd would be a separately traded public entity.

Last year, Indiabulls had acquired Jupiter Mills and Elphinstone Mills, located at prime areas in Mumbai, from NTC for building commercial office space.

"Every shareholder holding one share of Indiabulls Financial Services Ltd would get one share of Indiabulls Real Estate Ltd, the demerged entity," the company said.

Farallon Capital Management LLC, recently invested Rs 644 crore in the company under a share subscription agreement.

As per the agreement, Oberon Limited, a Farallon SPV will be allotted convertible preference and non-convertible preference shares against the deal.

Indiabulls, which had committed to complete the de-merger by the third quarter, has also applied to the Delhi High Court for its approval, the release said.

Large Taxpayer Units: Functions, Structure and Procedure

I           Preface 

            A number of tax administrations in the world have established special systems to administer their large taxpayers. In the 1950s and 1960s, several OECD countries introduced special tax audit operations for large operations. A more recent trend, especially in developing and transitional countries, has been to set up full-fledged large taxpayer units that are responsible for most tax administration functions relating to such taxpayers, including collection, enforcement of tax arrears and audit. Some developed countries (such as Australia, the Netherlands, New Zealand, the United Kingdom, the United States of America) have reorganized their tax administrations around different types of taxpayers, or taxpayer segments.

             In Asia, 13 countries have established LTUs at different points of time, including our neighbours Pakistan, Sri Lanka, Bangladesh and Nepal. The LTUs functioning in these countries have achieved a fair deal of success in meeting their objectives and have universally led to increased satisfaction amongst taxpayers by reducing their compliance and transaction costs and in bringing more efficiency in tax administration.

             Following the international practice, the Hon’ble Finance Minister in his Budget Speech 2005-06 announced the proposal to set up Large Taxpayer Units (LTUs) which would act as a single window facilitation centre for all large entities paying excise duty, corporate tax/income tax and service tax.

             The proposal has since been worked upon in the Government and wide ranging discussions have also been held with the trade and industry bodies/associations. It has been decided to establish LTUs in India in a phased manner. LTUs would be established initially in five large cities of the country, viz. Bangalore, Chennai, Delhi, Kolkata and Mumbai and will be made operational from early financial year 2006-07.

II         Definition and Eligibility

What is an LTU: LTUs will be self-contained tax administration offices under the Department of Revenue acting as a single window clearance point for all matters relating to central excise, income tax/corporate tax and service tax. Entities would be able to file their excise return, direct taxes returns and service tax return at such LTUs and for all practical purposes will be assessed to all these taxes at these LTUs. Such units would be equipped with modern facilities and trained manpower to assist the tax payers in all matters relating direct and indirect tax / duty payments, filing of documents and returns, claim of rebates/refunds, settlement of disputes etc. The scheme aims at reducing tax compliance cost and delays, and bringing out uniformity in the matters of tax/duty determination. An eligible taxpayer can opt to avail of the facility of LTU scheme. It is expected that large taxpayers, especially those having multi-locational units/factories, would take the benefit of the scheme by opting for it.

Eligible Taxpayers: Every taxpayer (single PAN-based entity)

(a)                who is presently assessed to income tax/corporation tax under the Income-tax Act, 1961 in any of the five cities (Bangalore, Chennai, Delhi, Kolkata or Mumbai)

and

(b)               who has paid during financial year 2004-05 

(i)        excise duty in cash (account current) of Rs 5 crore or more; or

(ii)       service tax in cash (account current) of Rs 5 crore or more; or

(iii) advance (income) tax/corporation tax of Rs 10 crore or more

is an eligible taxpayer for the purposes of being served by the LTU. 

III     Benefit/ Facilities offered   

(i)                         A large taxpayer (single PAN-based entity) can file all his direct taxes, excise and service tax returns at a single place, irrespective of the geographical location of their units.

(ii)                       All other documents, correspondence, intimations such as export / import related central excise documents, bonds, proof of exports, etc. pertaining to all these establishment can be filed with LTUs.

(iii)                      To begin with, the returns of the company and its units can be filed electronically and the payment of tax/duty can be made electronically. Gradually, these units would be provided with required software and infrastructure so that other documentations, such as filing of rebate/ refund claims, filing of intimations or permission, reply to notices can also be done electronically.

(iv)                     Digital signature certificates can be issued on request by the Department, free-of-charge, to facilitate electronic transaction. There would be no requirement for filing a parallel paper document.

(v)                       Upon joining the LTU, an officer of the level of Assistant / Deputy / Joint / Additional Commissioner would be appointed as ‘client executive’ for each taxpayer. The taxpayer can remain in touch with the client executive for assistance in any/all tax matters (for example for returns filing, classification issues, intimation matters relating to refund/rebate, exports, other claims, etc). This would ensure that the taxpayer need not interact with different section / officers of the LTU.

(vi)                     Once a taxpayer opts for the scheme, the erstwhile jurisdictional field officers (including preventive units of the erstwhile Excise Commissionerates) would not suo motu visit its units or interact with them for any issues arising. However certain procedures under the Central Excise Rules, requiring physical control, and verification of premises or documents, would be carried out by the local Commissioniorates under the express directions of the LTU. Further, in respect of excise and service tax matters, on-going investigation, appeals, provisional assessments that had commenced prior to the large taxpayer opting for LTU would continue to be with the erstwhile jurisdictional Commissionerate.

(vii)                    Cases, where show cause / demand notices have been issued by the erstwhile jurisdictional officers but not adjudicated, would stand transferred to LTU and the same would be adjudicated by officers posted at LTU. All pending matters with the jurisdictional Commisionerates of Income-tax, other than those with CIT(Appeals)  would stand transferred to the LTU.

(viii)                  The taxpayer would have the option to transfer any excess CENVAT credit (of central excise duty or service tax) accumulated in one manufacturing unit or service providing unit to any other eligible unit of his choice through a simple mechanism. Necessary changes in the CENVAT Credit Rule, 2004 are being made.

(ix)                     The taxpayer would have the facility of removing capital goods and inputs from one unit to any other unit of its choice, without payment of duty / reversal of credit through a simple method. Similarly the finished product of one unit can be transferred to another unit, without payment of duty, provided the second unit uses the products as inputs and pays excise duty on the finished goods manufactured using such inputs.

(x)                       The taxpayers would not be subjected to mandatory audit. The selection of a taxpayer for audit would be based on ‘risk assessment’. The Department would ensure that audit schedules are drawn in consultation with the taxpayers so as to cause minimum inconvenience.

(xi)                     The taxpayers would do self-sealing in case of all exports. In order to ensure that there is no delay in examination and sealing by the officer, the requirement of examination / sealing by the officers at the units of taxpayer is dispensed with.

(xii)                    It would be ensured that there is uniformity in the practice as regards classification, valuation, credit availment and similar other issues, for various units of a taxpayer. Trade notices will be issued centrally by the LTU.

(xiii)                  The rebate / refund claims would be disposed off within 30 days of their filing, if the claims filed are in order.

(xiv)                  With respect to income-tax specifically, facilities would be provided for on-line submission of returns, e-payment of taxes, electronic credit of income-tax refunds, and on-line filing of grievances and appeals.

 IV        Functions

             The LTU will perform all the statutory functions presently mandated under the Income Tax Act, 1961, Wealth Tax Act and Rules made there under (in respect of direct tax matters), under the Central Excise Act, 1944 and Rules made there under (in respect of central excise matters), Customs Act/Rules (in respect of functions handled by excise authorities) and under the Finance Act, 1994 and Service Tax Rules (in respect of service tax matters).           

V             Organizational structure 

            Each LTU will be manned by officers and officials drawn from the Customs and Central Excise Department and the Income Tax Department. The LTU will be headed by a Chief Commissioner drawn from either of the two Departments who will be the overall in-charge of the LTU for all matters pertaining to its functioning. Under the Chief Commissioner would be Commissioners who would perform the administrative and statutory functions in respect of the three taxes. Under each administrative/executive Commissioner, officers of the rank of Additional/Joint Commissioners would be placed as Range heads who, in turn, would be supported by Deputy/Assistant Commissioners and other supervisory and managerial staff.

 VI        Procedure   

i)             Application

                An eligible large taxpayer would submit ‘Consent Form’ (as per Annexure enclosed) while opting for LTU. The Consent Form may be sent to the Dy. Secretary, Central Board of Direct Taxes, Ministry of Finance, Room No. 243-F, North Block, New Delhi or faxed at 011-2309 3902. The Form can also be e-mailed at . On acceptance of the Consent Form, the taxpayer shall be issued a LTU membership number by the concerned LTU.

 ii)            Registration

                No new registration would be required. However, in case a new factory/service provider/registered dealer comes up after the taxpayer has opted for LTU scheme, new registration has to be taken from the LTU.

 iii)           Filing of returns

                The taxpayer would be required to file the direct taxes returns in the LTUs while in respect of excise matters, individual returns would be filed for all units (as is being done presently). However, all the unit returns would be filed with LTU office. Option would be given to the taxpayer for e-filing the returns.

 iv)           Payment of Taxes

                Facility for payment of the three taxes through the internet would be provided in the LTUs. The excise duty/service tax payable would be paid by the taxpayer separately for individual units. The taxpayer would, however, have the option to transfer any excess CENVAT credit (of central excise duty or service tax) accumulated in one manufacturing unit or service providing unit to any other eligible unit of his choice under cover of a transfer voucher. The credit balances at both the units would have to be suitably adjusted by the respective unit. In case duty/service tax is paid in excess of the amount due, the taxpayer can adjust it against his future tax / duty payments. For this purpose he shall take credit of the excess tax / duty, as if the same was tax / duty paid on his inputs, capital goods or input services. However, these adjustments would be allowed only under the same accounting head. In case a taxpayer wants to transfer inputs, capital goods or finished goods from one of his units to another, the same can be done without payment of duty on a challan. Both the units would have to maintain records showing receipt and dispatch.

 v)            Refunds

                The rebate / refund claims would be disposed off within 30 days of their filing, if the claims filed are in order. In respect of income-tax, facility for direct credit of refunds to the bank account of taxpayers would be made available.

 vi)           Audit and Scrutiny

                The unit-wise audit shall be conducted by the LTU. While there would be no ‘mandatory’ audit, case selection for audit would be based on ‘risk assessment’ and attempt would be made to ensure that audit schedules are made in consultation with the taxpayers so as to cause minimum inconvenience. Cases for scrutiny under the Income-tax Act will be similarly picked up on the basis of scientific risk management procedure.

 vii)          Adjudication/ Appeals

                In respect of direct taxes, all appeals presently pending with the CIT(Appeals) would be heard and disposed by them. All future appeals would be lie with the CIT(Appeals) in the LTUs. Facilities for on-line filing of appeals will also be provided.

                In respect of central excise/service tax matters, in cases where show cause/demand notices have been issued by the erstwhile jurisdictional officers, but not adjudicated, would stand transferred to LTU and the same would be adjudicated by officers posted at LTU. The process of adjudication would be completed within 3 months of the issuance of the notice, wherever possible. The erstwhile jurisdictional Commissioner (Appeals) would adjudicate the appeals pending with them. However, all future appeals would be filed with Commissioner (Appeals), LTU. In case any duty/tax has been short paid and a notice has to be issued for its recovery, the LTU would first inform the tax payer about his liability before issuance of any demand notice. In case the taxpayer pays up the duty/tax/interest within a period of 15 days from such intimation, no notice would be issued.

 viii)         Export

                All other documents, correspondence intimations such as export / import related central excise documents, bonds, proof of exports etc pertaining to all these establishment can be filed with LTUs. The taxpayers would be eligible for self-sealing in case of exports. In order to ensure that there is no delay in examination and sealing by the officer, the requirement of examination / sealing by the officers at the units of taxpayer is dispensed with.

 ix)           TDS Returns

                All companies are presently filing the quarterly TDS statements and the annual TDS returns electronically through the designated intermediary. The same system would continue after they join the LTU. However, jurisdiction over the TDS returns would shift from the local Commissionerates to the LTU.

 ix)           General Procedure

                In case of any procedure or difficulties which do not have revenue implications, the Chief Commissioner in-charge of LTU can prescribe procedures, methods or relaxations to facilitate tax compliance by the taxpayer.               

VII      Interactive forum

             A website is being developed enabling taxpayers to access all information relating to functioning of LTUs, avail e-services being offered in respect of the three taxes, submit miscellaneous applications and post their view/suggestions. At present, taxpayers can e-mail their views at .


 

Annexure

 

CONSENT FORM FOR COMPANIES PARTICIPATING IN LTUs

 

M/s ____________________________, hereby gives consent to be administered as a large taxpayer under the Large Taxpayer Unit situated at ______________ (Bangalore/Chennai/Delhi/Kolkata/Mumbai). Following information regarding the company is furnished.

 

1.      PAN :

2.      Address as in last income-tax return filed :

3.      Jurisdiction of Assessing Officer before whom income-tax return is filed :

4.      Details of registrations (under central excise and service tax Rules):

 

Name and address of the Unit

Excise Registration No. and particulars of present jurisdiction

Dealer Registration No. and particulars of present jurisdiction

EOU Registration and particulars of present jurisdiction

Service tax Registration No. and particulars of present jurisdiction

Input Service Distribution Registration No. (ISDN) and particulars of present jurisdiction

Others*

(please specify) including particulars of present jurisdiction

 

 

 

 

 

 

 

(* including exempted units)

 

5.      Details of TAN allotted and TDS returns filed in the following format

     

S. No.

Name and address of the Deductor

TAN

TDS effected under section(s) _____ of the IT Act, 1961

Jurisdiction of CIT before whom TDS return filed

1

 

 

 

 

2

 

 

 

 

 

6.      Details of total taxes paid by the company during financial year 2004-05

 

(i)                  Excise duty through cash (account current)

(ii)                Service tax through cash (account current)

(iii)               Advance tax (income tax/corporation tax) 

7.      Name, designation, phone and fax numbers and e-mail address of the contact person(s) of the company (to be authorized by the company)

 

 

(Signature)

 

(Name and Designation of the

                                                                                                                     person authorised u/s 140 of the IT Act, 1961)

Mediclaim after 55 gets dearer

7th August 2006: People over 55 have to pay agent's fee for getting medical insurance policy on doorstep.

If you are above 55 years of age and find insurance agents reluctant to sell mediclaim policy on your doorstep, you can address the problem by paying the commission that agents otherwise get from companies for mobilising business.

Insurance Regulatory and Development Authority (IRDA) norms allow general insurance companies to pay a maximum of 15% of the premium as commission to agents.

Two of the government-owned general insurance companies (United India Insurance and Oriental Insurance Company) recently issued circulars denying commission to agents for mediclaim policies sold to people above 55 years of age.

CS Rao, chairman of IRDA, justified the move. “For every service there is a charge. So in case a person wants an agent’s service, he will have to pay more. Those not availing of agents’ service would pay less,” he added.

“Oriental Insurance has filed for new mediclaim products, and we have told them that we will see that they are cleared. Health insurance is a non-tariff product. We are looking at the proposal,” Rao added.

The public sector general insurers are feeling the pinch of higher claims from people in the 55-65 age group.

They have to suffer an overall claims ratio of 150% in the health portfolio, which includes incurred claims of 130%, plus up to 10% agency commission, TPA fees, and acquisition costs. However, when it comes to health insurance claims of people above 55 years of age, the claims ratio climbs to over 180%.

The insurers hope their attempts at demotivating agents from selling health policies to people above 55 years can bring down their losses. The companies are already adding 5.4% to the mediclaim premium if a policyholder opts for cash-less hospitalisation.

M Ramadoss, chairman and managing director of Oriental Insurance, said the company had proposed changes in the existing mediclaim policies, with a higher premium for the higher age group and discounts for the lower age group, besides caps on room charges etc.

“We had filed the new products with IRDA in February. The company is awaiting IRDA’s approval,” he said.

Healthcare costs are rising by 10-12% every year, but the mediclaim premium has remained unchanged since 1998. A senior official at United India Insurance said, “It’s a loss-making business (health) with the high claims ratio. So we have decided to take some corrective measures.”

In 2005-2006, the total health insurance premium amounted to Rs 1,750 crore. The four public sector general insurers had almost a 90% share in the health insurance market.

According to Sandeep Dadia, director, Enam Insurance Consultants, the solution lay in increasing the customer base, and hiking the premium.

MFs can now invest in ADRs, GDRs

5th August 2006: The Securities and Exchange Board of India (Sebi) has allowed mutual funds (MFs) to invest in ADRs, GDRs, foreign securities and overseas exchange traded funds (ETFs), a move that is in line with the government’s decision to raise the overseas investment limit of the fund houses from $1 billion to $2 billion, announced in the 2006-07 budget.

In a circular issued by Sebi, the regulator has stated that MFs can invest in ADRs and GDRs issued by the Indian companies. They can also invest in the equity of the overseas companies listed on recognised foreign stock exchanges.

MFs can invest in foreign debt securities in the countries with fully convertible currencies and short term as well as long term debt instruments with highest rating (foreign currency credit rating) by accredited or registered credit rating agencies like A-1/AAA by Standard & Poor's, P-1/AAA by Moody’s, F1/AAA by Fitch IBCA and others.

They can also invest in government securities where the countries are AAA rated. The funds can invest in units or securities issued by overseas MFs or unit trusts which invest in the aforesaid securities or are highly rated and are registered with their respective regulators.

Sebi is expected to release a set of guidelines for MFs' overseas investment based on proposals submitted by the Association of Mutual Funds of India (Amfi).

The capital market watchdog said MFs can invest in ADRs or GDRs or foreign securities within overall limit of $2 billion, prescribing a sub-ceiling for individual MFs, which should not exceed 10% of the net assets managed by them as on March 31 of each relevant year. This limit can be maximum of $100 million per MF, it added.

It may be mentioned here that the finance minister, in his budget speech in February, had announced a proposal, whereby the limit of overseas investment by MFs was hiked from $1 billion to $2 billion. The budgetary proposal envisaged that a limited number of qualified MFs can invest cumulatively up to $1 billion in ETFs. For this, MFs, managing different schemes, should be in existence for a minimum period of 10 years as on December 31, 2006. The MF or its sponsors shall have experience, to be certified by the trustees, of investing in foreign securities and an appropriate disclosure regarding the nature of experience. The regulator has made mandatory compliance of some disclosure norms by the mutual fund industry.

Soon, your CA may charge you more

5th August 2006: Hiring Chartered Accountants (CA) for audit work is going to be costlier with the Institute of Chartered Accountants of India (ICAI) today revising the fee structure.

The institute today also decided to allow chartered accountants to provide management consultancy services as a corporate entity. Now a CA can provide management consultancy only as an individual or as a partnership firm.

ICAI president TN Manoharan said here that the new minimum fee structure is with reference to the size of a CA firm via-a-vis the population of the cities where they practice. It would come into force from next month, he said.

The fee-per-audit revision has been done after a gap of two years. For firms with five to ten partners in a city of 3m and above population, the revised audit fee would be Rs 6,000 (now Rs 5,000) and for firms with more than 10 partners, it would be Rs 12,000 (now Rs 9,000) per audit.

Similarly, for cities with population size less than 3m, audit fee has been increased to Rs 3,500 for firms with 5-10 partners, while for more than 10 partners it is now Rs 8,000, he said.

However, the condition shall not apply to income tax audit, VAT audit and audit under sales-tax law because these heads do not require statutory audit if it is below a certain limit, he said. The revision has been effected in the wake of spiralling prices, inflation and the increased service tax over the years.

ICAI said the decision to allow CAs to head management consultancy service firms without surrendering their certificate of practice has been taken to facilitate the profession’s growth in the wake of the outsourcing boom.

The condition is that the firm should be in the field of consultancy exclusively. This enables professionals to provide other functions like attestation of documents, while being in a consultancy firm, a practice disallowed so far.

The accounting regulator also revised the norms for accounting property, plant and equipment. As per the changes in accounting standards 10 and six, companies could capitalise the cost of major inspections or overhaul as a part of the cost of the asset.

The costs capitalised thus should be charged to the profit and loss account over a number of years, by way of depreciation. The change is made in line with international practice, said Mr Manoharan.

BSE awaiting Sebi nod for stake sale

5th August 2006: India's premier bourse Bombay Stock Exchange (BSE) is awaiting market regulator Sebi's nod for offloading 51% stake, in which the likes of NASDAQ and NYSE have shown interest.

BSE will be offloading 26% stake to a strategic partner and the remaining in retail market through an IPO.

Kotak Mahindra, the financial advisor for the demutualisation process, has selected eight leading global bourses for the stake sale.

"We are in the process of selecting our strategic partners. We will be completing this procedure by May 2007," Rajanikant Patel, CEO & MD of BSE, said.

Sebi is expected to prescribe criteria for selection of strategic partner and will be announcing these norms soon as the process has to be completed within a span of nine months.

"There exists automatic approval from the Reserve Bank for a foreign partner interested in 26% stake in an Indian financial institution," he added.

Robert Greifeld, president & CEO of NASDAQ, during his August 1 visit to the city had said he is in favour of global consolidation of exchanges and had also held a meeting with BSE officials to possibly discuss picking stake in the exchange.

NASDAQ had made a 2.4 billion pound bid for London Stock Exchange (LSE). However, the bid was rejected by LSE, after which NASDAQ hiked its stake to 25.3%, buying LSE's largest shareholder.

Sobha Developers files IPO papers

5th August 2006: Bangalore-based Sobha Developers has filed its draft red herring prospectus (DRHP) with Securities & Exchange Board of India (Sebi).

According to a release issued today, Sobha is planning to offer 94,76,800 equity shares of Rs 10 each for cash at a premium to be decided through the book-built process. "The issue would constitute 13% of the fully diluted post issue paid-up capital of the company," the release added.

P N C Menon, chairman of Sobha Developers, said: "This is a historic moment for us at Sobha Developers, and we look forward to this IPO as an event that will help us welcome new members into our family."

The company has reserved up to 9,47,680 equity shares for eligible employees. Thus, the net offer to public would stand at 85,29,120 equity shares.

Sobha Developers is entering the capital market to raise funds for land acquisition, on-going and forthcoming projects and repay certain debts, the release said.

The Book Running Lead Managers to the Issue are Kotak Mahindra Capital Company and Enam Financial Consultants. IL&FS Investsmart Limited is the Co-Book Running Lead Manager.

GMR IPO oversubscribed 6.5 times

4th August 2006: The IPO of GMR Infrastructure has been oversubscribed by 6.5 times when it closed on today evening.

GMR Infrastructure, having interests in airport, power and road projects, entered the capital markets on 31st July 2006 with a public issue of 38,136,980 equity shares of Rs.10 each in a price band of Rs. 210 to Rs. 250. The net offer to public constitutes 11.3% of the fully diluted post issue paid up capital of the company.

The company intends to use part of the issue proceeds for investment in various infrastructure Special Purpose Vehicles, which are currently in the development stage.

DLF defers pre-IPO share sale - sources

4th August 2006: Top property firm DLF Universal Ltd has put off plans to sell its shares to institutional investors before an initial public offer, two sources familiar with the development said.

"There are some issues to be sorted out, so it is not happening now - at least for the time being," said one source.

DLF, which plans to develop special economic zones and hotels to tap into a new trend in India's booming property market, declined comment.

Investor appetite for IPOs had soured after a stock market slide in May sliced the value of new listings. Shares in low cost airline Deccan Aviation have nearly halved to 76.95 rupees from the IPO price of 148 rupees.

DLF had aimed to raise between $100 million and $500 million in a pre-IPO placement of shares, the sources said.

"It is already behind schedule, so probably we would skip the pre-IPO sale and go ahead with the IPO straight away and complete it in a few weeks," said the second source.

A stock market recovery, up about a quarter from a low in June, and a willingness by companies to price their IPOs attractively have helped woo big investors back.

Two IPOs that opened this week from construction firm GMR Infrastructure Ltd. and software services provider Tech Mahindra Ltd got full bids, but demand from small investors have been sharply lower compared to in February or March, bankers said.

GMR, which sold shares to funds at as high as 270 rupees a share, fixed a price band of 210-250 rupees for bids in the IPO.

IPO by October.

DLF's IPO could hit the market in September, or October, sources said.

New Delhi-based DLF had filed an offer document with the regulator in May hoping to raise between $3-3.5 billion in an IPO in June. Bankers said those expectations have been scaled down.

The offering could still become India's biggest-ever, ahead of $1.17 billion raised by both software firm Tata Consultancy Services and state-run utility National Thermal Power Corp.

"We are still looking to raise about $2 billion," said the second source.

The New Delhi-based DLF planned to sell up to 12.8%, or 219 million shares including an option for an additional 17 million.

LIC Mutual Fund plans close-end fund

4th August 2006: LIC Mutual Fund plans to launch a three-year close-end equity fund that would primarily invest in mid-cap and small-cap stocks.

The company filed initial papers with the Securities and Exchange Board of India to launch LICMF India Vision Fund, the regulator's Web site showed on Thursday.

While the fund would largely invest in companies with a market cap of up to Rs 75 crore, "investment in large-cap stocks will be purely to take short-term advantage of the market momentum," the offer document said.

It would disclose the net asset value once a week.

The fund house managed assets worth about Rs 990 crore at the end of July, data from Association of Mutual Funds in India showed.

Now, CAs can open management consultancy cos

4th August 2006: Realising the threat posed by global management and consultancy firms like KPMG and Ernst & Young, the Governing body of Chartered Accountant professionals today allowed its members to set up management consultancy companies to help shore up capital and human resource.

Practicing CAs were so far not allowed to be equity holders in companies and could function in the capacity of individual or partnership firms.

Institute of Chartered Accountants of India (ICAI) president T N Manoharan said that its Council members had approved the proposal, keeping in mind the growing role of CAs in management consultancy as well as helps them compete with major consultancy firms who could employ huge capital and human resource.

Manoharan said professionals were increasingly being involved in management consultancy works and today's decision would help them expand to respectable levels.

"Gradually, decision-making jobs are being outsourced by managements to CAs. These include management decisions like deciding on debt or equity, methods to improve operational effiencies, interest swapping and cost effiency measures," he said.

He said that with the permission, CAs would get empowered to operate in a corporate form in specialised management subjects without the constraint of human resource or capital.

ICAI also introduced a new course on consultancy management which will be open to practicing CAs and based on self-assessment.

Mediclaim may need patients to `co-pay`

1st August 2006: Mediclaim policy-holders will not only have to pay a higher premium but also bear a part of the claims if the Insurance Regulatory Development Authority (IRDA) gives its nod to the proposal mooted by the four public sector insurance firms.

According to industry sources, the revamped Mediclaim policy will see the introduction of the concept of “copayment.”

In other words, the policy will not cover all expenses, and policy-holders will have to bear a portion of the cost.

For instance, on a hospital bill of Rs 1 lakh, a policy-holder may have to pay Rs 10,000. The concept of “copayment” will apply to both reimbursement as well as cash-less hospitalisation schemes.

However, the concept will be applicable only to those who have crossed the age of 40. Younger policy-holders will continue to get 100% cover.

“We are still working on the nitty-gritty of the new Mediclaim policy. It will take about two months to finalise the new scheme,” said sources.

V Ramasaamy, chairman and managing director of National Insurance Company, confirmed the development, and said the IRDA’s approval would be sought once the new terms were finalised.

On an average, Mediclaim premiums will go up by 15 to 20%, depending on the age of the policy-holder. Till now, policy-holders pay premiums irrespective of their age.

In the new scheme of things, even the region in which medical treatment is provided will have a bearing on the cost. For instance, policy-holders in Mumbai will have to pay more premium than their counterparts in Chennai.

The floor for the minimum sum insured is also set to go up. At present, the minimum sum insured under Mediclaim is Rs 15,000, and the policy is available in multiples of Rs 5,000.

The revamped Mediclaim policy will raise the level of the minimum sum insured to Rs 25,000, and will be available in multiples of Rs 25,000.

This means that a Mediclaim policy will be available for Rs 25,000, Rs 50,000, Rs 75,000 and so on, instead of Rs 15,000, Rs 20,000 and Rs 25,000 now.

The revamped policy will also have restricted cover on certain diseases. For example, hernia, piles, fibroids in uterus, and prostate gland enlargement are not covered in the first year of the policy now.

They get covered from second year onwards. The revamped Mediclaim will cover these from third year onwards.

GMR Infrastructure IPO fully bid - banker

1st August 2006: The initial public offering of construction firm GMR Infrastructure Ltd has been fully subscribed on the first day of the issue, although most bids were at the lower end of the price band, a banker said.

The 38.1-million-share offer by the firm, which specialises in road building and airport construction, had received bids for 40.3 million shares, he said.

The issue, which consists of 11.5% of the fully diluted equity, would raise up to 9.5 billion rupees at the top end of the band.

"It is quite a successful issue given the recent turbulence in the market and the fate of other IPOs," said the banker. "We expect the final demand to be around 5-6 times the offer."

The final pricing would be decided based on demand after the issue closes, he said.

Many companies, including low cost carrier Deccan Aviation Ltd, struggled to see their IPOs through in recent weeks as investors were hesitant to bid after May's emerging markets meltdown, sparked by rising interest rates.

Some of the IPOs - such as construction firm Punj Lloyd's and that of publisher Jagran Prakashan, which raised funds earlier this year, are trading below their IPO price.

The banker said that the response to the GMR issue on its first day exceeded expectations. The company, which aimed to sell 45.3 million shares in the IPO, sold some shares to funds ahead of the offering.

Those buyers include a private fund of ICICI Bank, Soros group's Mauritius-registered fund Quantum (M) Ltd, Citigroup Venture Capital International Ltd, and the state-run Punjab National Bank.

The current IPO price - in the 210-250 rupees band - is lower than the price at which some of these funds bought GMR shares a few weeks ago.

While the ICICI fund paid 261 rupees a share, other funds paid 270 rupees.

GMR has won contracts to build airports at Delhi and in the southern city of Hyderabad. It posted a net profit of 705.5 million rupees for the year to March 2006, and a total income of 10.90 billion.

The company also has power assets that include 440 megawatts of electricity-generating capacity in two plants, and it is adding another 500 megawatts, according to the offer document.

It also has the rights to develop and operate sections of national highways.

Irda's new guidelines may kill innovation

31st July 2006: Product innovation may take a back seat in general insurance, even as customers gain out of a price war.

The Insurance Regulatory and Development Authority (Irda) has decided that companies cannot introduce new features in products even as it frees pricing.

There is also confusion among insurance companies about the future of tailor-made policies which are currently allowed. Some time ago, Irda had proposed `file-and-use’ guidelines, where even policies tailor-made for customers with exceptional needs would have to be lodged.

Until now, tailor-made policies, or special contingency policies as they are defined by the industry, do not need any regulatory approval. An example of tailor-made policies is a specialised cover for institutions such as stock exchanges.

They also include mega-risk policies — umbrella policies covering all properties of corporates with sum assured of over Rs 10,000 crore. The restrictions on altering terms and conditions of standard policies are part of Irda’s draft guidelines on detariffing, which were issued last month.

The guidelines propose that product innovation be shelved until April ’08. The draft also states that new guidelines will supercede all directions issued earlier. Insurance companies say the guidelines are aimed at preventing confusion among buyers.

“Restrictions on altering the terms of a policy can be understood if it were only for those policies issued to lay persons who do not read the fine print and may be confused between two products.

But the same logic does not apply for corporates who have insurance departments,” said an official. He adds that one of the reasons for opening up the industry was to facilitate product innovation, which itself has now been disallowed.

Meanwhile, Irda has asked insurance companies for feedback to its guidelines. The companies are expected to discuss the draft in the next meeting of the general insurance council — an insurance body.

Guide for filing your tax returns

28th July 2006: The deadline for the salaried class to file tax returns is approaching. Hence, it is very important that individuals complete the procedure in the right manner. Even though individuals could have filed their returns in late June or early July, many of them wait till the last few days to file returns. In case you are still struggling to get your returns in order, here’s how you can go about it.

The process starts by selecting the right income tax returns form. The salaried class, which does not have income from business or profession, or capital gains, or income from agriculture, can opt for the Saral Form 2E, which is quite easy to fill and does not require additional calculations and disclosures. On the other hand, those who incur capital gains, or have business or professional income, have to fill Saral Form 2D.

While filling in Form 2D, investors must submit their bank details, along with the MICR code of their bank branch, which will be used to direct credit the tax refund, if any, to the bank. Most people run into problems on this front because they do not fill in the MICR code.

After selecting the returns form, individuals should collect the required documents. The most important document is Form 16, which is provided by the employer at the end of the year. If individuals have changed jobs during the year, they will have to submit two Form 16s. The next document is a certificate from the housing loan authority to classify the interest and capital repaid on housing loan. This will enable investors to calculate tax breaks in the form of division of amount repaid.

Individuals also have to gather the various proofs relating to their investments. In most cases, they don’t need to do any additional work on this count, because the proofs would already have been generated when investments were made in the last financial year. Now, only the copies of the proof of payment have to be collected.

This includes premium paid on insurance policies, payments made to public provident fund (PPF) or copy of the National Savings Certificate (NSC) payment. At the same time, there is an ELSS investment and an account statement of the fund to show that investment made during the year is enough for the returns.

Individuals also need to consider any additional income, especially under the head of income from other sources, like bank interest, as this is liable to tax. There have been cases when individuals did not show bank interest earned on savings accounts, as it was a small amount; but more importantly, under Section 80L, an amount up to Rs 12,000 was allowed as a deduction, so there was no tax to be paid.

Now, this Section has been removed and the impact of this is that any amount will be liable to tax and hence, even small amounts will have to be shown while filing tax returns. Anyone who has a bank account will have this additional source of income, because every savings account earns some interest income — even if it is only a few rupees — and this will have to be shown as income.

Moreover, where there is additional income — like dividends or long-term capital gains — which is tax-free, and individuals do not have to pay any tax on this amount. But the amount under these heads which is claimed as tax-free, should be mentioned, so that no tax needs to be paid on that sum. If there is tax deducted at source (TDS) on interest payments or some other receipts, then the relevant TDS certificate should be attached with the tax returns.

Once all this has been completed, individuals won’t face too much problem in calculating the final tax amount. If some tax needs to be paid, it will have to be done using a challan and the proof will have to be attached with the returns. Many banks accept I-T payments and hence, payment is no longer a troublesome exercise. However, completing the process before the last day should be the aim of individuals.

Singapore to open doors for 5 professions viz. architects, chartered accountants, nurses, dentists and health service providers

28th July 2006: Come 2007, the Lion City will be hunting ground for five categories of Indian professionals. Singapore will soon allow Indian architects, chartered accountants, nurses, dentists and health service providers to practice in the city-state without appearing for qualification tests.

The two countries are giving finishing touches to mutual recognition agreement (MRA) for the five mentioned categories of professionals. The exercise is likely to be completed in 3-4 months.

Singapore had committed to provide opportunities for Indian service providers to practice there in the Comprehensive Economic Cooperation Agreement (CECA) signed last year.

Commerce ministry officials said all formalities will be completed by year-end and the identified professionals will be allowed to set up shop in Singapore by the beginning of next year.

Other service providers mentioned in CECA need not despair.

“It is not possible to work on MRAs for large number of professions at the same time.

After we complete all formalities for the five identified categories, we will move on to other services identified in CECA,” an official said.

Other services include IT, engineering, financial services, university teaching and advertising.

As per CECA, there will be mutual recognition of 129 education degrees given by recognised universities and technical education boards.

CECA with Singapore is the first comprehensive bilateral economic agreement signed by India incorporating goods, services and investment. It includes free trade agreement in goods, an agreement on investments, mutual recognition agreements in services and conformity assessment of standards in goods.

Cooperation pacts in customs, science & technology, media, education, e-commerce and intellectual property are also part of CECA. The pact includes a Bilateral Investment Protection Agreement (BIPA), a Double Taxation Avoidance Agreement (DTAA) with additional safeguards to avoid misuse by shell companies and a Bilateral Economic Integration Agreement in Services.

Tax relief: FDs of five years or more to make the cut

27th July 2006: Fixed deposits of banks with a maturity of five years or more will only qualify for tax breaks with the government set to issue a notification this week.

An investment of up to Rs 1 lakh in bank term deposits of a medium maturity of five years or more will enable investors to qualify for a tax deduction of up to Rs 1 lakh starting from this fiscal.

Investments in bank deposits will now be eligible for a tax deduction similar to that offered for payment of insurance premia, payment of school tuition fee, repayment of the principal amount on housing loans besides contribution to small savings schemes under Sec 80 C of the Income tax Act.

Although the banking division of the finance ministry had recommended three years as the cut-off eligibility for a tax break in line with the banking industry’s demand, the revenue department did not go along with the proposal.

The Central Board of Direct Taxes was of the view that bank deposits could not be equated with the Equity Linked Savings Scheme (ELSS) which has a lower maturity of three years and yet offers tax breaks.

Officials said that there was the element of risk in equity linked schemes compared to bank deposits especially when a large number of banks have the backing of the sovereign.

Tax breaks are being provided for the first time for term deposits considering the difficulties faced by banks in mobilising medium term funds while competing with tax free instruments like small savings schemes.

The government also acceded to the demand of the banking industry this fiscal to provide this tax break after taking into account the blistering growth in credit last fiscal. The new scheme for tax deduction for term deposits is expected to address the issue of premature withdrawals.

In all the other schemes like the Public Provident Fund and the National Savings Certificate which offer a similar tax deduction, there is a lock-in.

Earlier, banks used to cite the advantage of flexibility in withdrawals before maturity compared to small savings schemes for term deposits even though it came with a penalty in some cases. Now with a tax benefit on offer, that flexibility will go.

Saral not: Professionals to get 20-page form

27th July 2006: After ‘Saral’ became not so easy for the salaried class, its now the turn of self employed doctors, engineers, chartered accountants and other professionals to face the income-tax blues.

The tax returns form for these people has expanded from a five-page affair to a 20-page business. They have been given a breather till October 31 to fill up the new forms, with the government extending the last date from July 31. Experts say while the effort of the government has been to make the income tax returns compact, but in the process they have made it lengthy and cumbersome.

“The new forms especially for the non-corporates having business income, is a very lengthy one. In fact, the new forms are detailed asking for lot of information and could be cumbersome for the one filing. People generally prefer simple forms, “Rajiv Tiwari, senior associate, Titus and Company said.

However, he said the forms are designed to reveal a greater degree of information to government about the cashflow of taxpayers and could help in higher collections.

Echoing similar views, Ravi Prakash, Principal Consultant, PricewaterhouseCoopers said instead of implementing the forms from this year, the government should have implemented them only from next year. They should have taken some more time and invited comments from the public instead of implementing it this year.

He also wondered as to how a taxpayer who is not required to enclose any document with the return form would make disclosures or notes related to the income computation. Also, he said, one is not required to enclose any tax withholding certificate or Balance sheet/report, along with the new return forms.

Peninsula Land to offload stake, raise Rs 450 cr and is also planning to float Rs 1k crore realty fund

26th July 2006: Peninsula Land Management, the real-estate arm of the diversified Ashok Piramal group, is planning to raise about Rs 450 crore by diluting part of its equity. The real estate firm is exploring two possibilities - either to go for a second public offering or offer part of its equity to qualified institutional bidders (QIBs) through a private placement route.

"We have plans to mobilise around Rs 400 to Rs 450 crore from the market. It could be a follow-on IPO or a placement with QIBs," Ashok Piramal Management Corporation group executive director Mahesh Gupta said.

The funds will be used for expansion activities, he added.

Peninsula Land is also planning to float a Rs 1,000-crore real estate fund to buy properties across India. "We have got a Securities and Exchange Board of India (Sebi) clearance to float a real estate fund. We are in the process of mobilising fund for the proposed funds," Mr Gupta said.

The company is also entering the special economic zone (SEZ) business in Goa and Pune. It has already created a sizeable land bank to set up SEZs - in Goa; the company has acquired around 250 acres.

Recently, Peninsula Land decided to merge the recently-acquired Dawn Mills Company with itself to consolidate the group's real estate businesses under a single entity. The merger will boost the company's saleable land bank and help develop its future real estate projects. Dawn Mills has 5 lakh sq ft near Peninsula Park in central Mumbai, which can be sold.

The Ashok Piramal group, which has interests in real estate, textiles, retail and engineering, owns 72.60% of Dawn Mills. The Rs 180-crore Peninsula Land has real estate projects in Mumbai and other cities, including a saleable land bank of 30 lakh sq ft in the Maharashtra capital, Goa and Pune.

Mukesh scales up RIL stake by 2% for Rs 2,688 crore

26th July 2006: The Mukesh Ambani group has scaled up its holding in Reliance Industries by nearly 2% to 49.83% during the quarter ended June through open market operations.

Going by the average market price of Reliance Industries, the promoters may have spent nearly Rs 2,688 crore for scaling up their stake.

The shareholding pattern of the company filed with stock exchanges revealed that the promoters held 694.3 million shares, representing a 49.83% stake on June 30. This was higher than their holding of 667.47 million, amounting to a 47.9% stake, on March 31.

The Reliance stock has been hovering around Rs 1,000 for the past quarter.

It shot up to its 52-week high of Rs 1,195 on May 10. It closed today at Rs 987.30 on the BSE, 1.56% higher than yesterday's close of Rs 972.10. Petroleum Trust holds 7.51% while the remaining holding of the promoter group is held by as many as 47 entities and individuals.

On June 30 financial institutions held 27.73% in the company against their holding of 28.85% in the March quarter. The public holding is around 14%.

Tech Mahindra public offer to open on August 1, price band Rs 315-365

26th July 2006: Tech Mahindra will be offer 1.27 crore shares of Rs 10 each in its initial public offer (IPO) through book building process.

The company has fixed the price band of Rs 315-365. The offer opens on August 1, 2006 and will close on August 4, 2006.

Following which, the shares will be listed on the Bombay Stock Exchange and National Stock Exchange.

Kotak Mahindra Capital and ABN Amro Securities India are the lead managers for the IPO.

The company plans to issue the proceeds from the IPO for expansion of its current facilities.

Taxable income to cover four more items

26th July 2006: Do not forget to include your interest earnings from bank deposits, National Savings Certificates, bonds and debentures of public sector units as taxable income now. The department could levy an interest or penalty for concealing such incomes.

This was the message from the income tax department on Tuesday for tax payers. In budget ’06-07, the finance ministry has erased a tax shelter, exempting interest income earned from these sources upto Rs 12,000. There was also an additional deduction of Rs 3,000 on interest on Government securities.

The exemptions were available under section 80L of the Income Tax Act. In a release the income tax department has said “interest income from bank deposits, National Savings Certificates, bonds, debentures of public sector units in the financial year 2005-06, even if the amount if below Rs 12,000.”

Cambridge Tech plans Rs 24 crore IPO

25th July 2006: Cambridge Technology Enterprises (CTE), a Hyderabad-based IT service provider will be going for an Rs 24-crore initial public offering. The company is raising funds to finance its Rs 30.7 crore investment plans.

"We have filed a draft prospectus with the Securities and Exchange Board of India (Sebi) for a public issue worth Rs 24 crore. Centrum Capital will be the lead manager for the issue," Krish Nangegadda, a director of CTE, said.

"We have planned an investment of Rs 30.7 crore for acquisitions, to build our competency centre in service-oriented architecture and to meet our working capital needs. While Rs 24 crore will be raised via public issue, UTI Bank has granted a term loan of Rs 4.7 crore. Further Rs 2 crore has been funded by CellExchange Inc," Y Ramesh Reddy, CFO of CTE, said.

CellExchange Inc, earlier owned 88% stake in CTE. It later divested its entire stake in the company. With a recent infusion of Rs 2 crore, it now has close to 10% stake in CTE.

As of today, promoters hold around 74% stake in CTE and around 16% is with employees in the form of stock options. The public will be offered 25-30% stake in the company.

Meanwhile, CTE is also planning to expand its market reach. "We will make investments in the west coast of the US," Nangegadda said. Nangegadda is also the president of CellExchange Inc.

Anil Ambani hikes stake in Reliance Energy Ventures (REVL), Reliance Capital Ventures (RCVL)

25th July 2006: Anil Dhirubhai Ambani has picked up an additional 2.2% stake in his group company, Reliance Energy Ventures (REVL), through open market transactions taking his total stake in the company to 43.97%.

Anil Ambani, along with PACs (persons acting in concert) Tina A Ambani, Jaianmol A Ambani, Jaianshul A Ambani, Kokila D Ambani, Anadha Enterprise, Bhavan Mercantile, AAA Global Business Management, AAA Project Ventures, Hansdhwani Trading Company, Reliance Capital and Reliance General Insurance Company, has acquired over 2.68 crore shares of REVL between June 27 and July 20.

Following the latest acquisition, the stake of Anil Ambani along with PACs in REVL stands at over 53.77 crore shares, aggregating to 43.97% of the company's total paid up capital, according to a release issued by REVL to the National Stock Exchange.

Anil Ambani, along with PACs, has also picked up 2.19% stake (amounting to about 2.68 crore shares) in Reliance Capital Ventures (RCVL). With this acquisition (between April 1 and July 19), the stake of Anil Ambani along with PACs in RCVL stands at over 51.13 crore shares aggregating to 41.8% of the company's total paid up capital, the release added.

Sebi to gag companies in 'quiet period' post IPO filing

22nd July 2006: The Securities and Exchange Board of India (Sebi) will shortly be coming out with regulations for the silent period of companies' initial public offers, in a move aimed at curbing the hype being created about the companies during silent period, M Damodaran, chairman of Sebi, said on the sidelines of a FICCI conference on market reforms & corporate governance imperatives.

Some hype is being generated about companies during the period from filing of their draft prospectus with Sebi to announcement date to push up the prices. Sebi's norms - to be out in a few weeks - would direct companies and market forces to talk only about the information provided in the prospectus during the silent period, Damodaran said.

Sebi would look into the composition of boards of companies to assess the quality and independence of the independent directors. Corporate governance is not just about numbers, but about the quality of the people on board, Damodaran said.

Good corporate governance is at least a necessary condition if not sufficient condition for the long time sustainable delivery of values to the shareholders. Without going through the experience of Enron or Worldcom, we can put regulations in place...Many other markets are receiving guidance from India on corporate governance, Damodaran said.

No rating of companies should be done before having the climate of corporate governance in the country. Till large number of companies practice corporate governance, let us not get into the practice of rating companies and giving away awards, Damodaran added.

Mandatory requirement of Permanent Account Number (PAN) for transactions in the cash market

GENERAL MANAGER

Market Regulation Department

E-mail:

MRD/DoP/SE/Cir- 8 /2006

July 13, 2006

The Executive Directors/Managing Directors/Administrators

of All Stock Exchanges

Dear Sir / Madam,

Sub:     Mandatory requirement of Permanent Account Number (PAN) for transactions in the cash market

1.      As you are aware, PAN has been made mandatory for transacting in the Futures and Options market as well as for operating a Beneficiary Owner (BO) Account in the Depository system.

2.      In continuation of the above and to further strengthen the Know Your Client (KYC) norms in the cash market with a view to facilitate sound audit trail,  it has been decided that PAN will be mandatory for all the entities/persons who are desirous of transacting in the cash market  with effect from October 1, 2006.

3.      The stock exchanges are advised to ensure that the members of their exchanges shall ;

3.1  Collect copies of PAN cards issued to their existing as well as new clients by the Income Tax Department and maintain the same in their record after verifying with the original. 

3.2  Cross-check the aforesaid details collected from their clients with the details on the website of the Income Tax Department i.e. http://incometaxindiaefiling.gov.in/challan/enterpanforchallan.jsp. 

3.3  Upload details of PAN so collected to the Exchanges as part of unique client Code.

 4.      The stock exchanges shall ensure that with effect from October 1, 2006 transactions in the cash market are executed only in respect of clients whose PAN details have been collected and uploaded to the exchange by the members.

5.      The Stock Exchanges are advised to ; 

5.1.   make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately. 

5.2.   bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website. 

5.3.   communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of August, 2006.

6.      This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

 

Yours faithfully,

  

V S SUNDARESAN

Sebi seeks information from PFC on IPO

22nd July 2006: Sebi has sought more information from state-run Power Finance Corporation on its proposed Initial Public Offer, which has been delayed after the government put all disinvestment decisions on hold.

"By now it (the IPO) would have been done... (but) we have to submit some more information to the Sebi," PFC Chairman and Managing Director V K Garg said. Garg, however, did not elaborate.

PFC had submitted its draft Red Herring Prospectus with the Securities and Exchange Board of India on June 5 for its IPO of 10% fresh equity along with the sale of 5% government equity.

The power PSU planned to issue 10.3 crore new shares of Rs 10 face value each, while the government was to sell 5.15 crore shares to raise an estimated Rs 1,500 crore. Government holding in the company would have come down to 86.36% from 100% at present.

PFC initially wanted to launch the IPO by early-July, but its plans were delayed after Prime Minister Manmohan Singh earlier this month put on hold all disinvestment proposals and decisions following objections raised by some constituents of the UPA government.

When asked whether PFC has approached Power Ministry for clarification on the status of the public issue, Power Secretary R V Shahi replied in the negative.

Besides PFC, the government's decision to hold divestment also affected forthcoming public offers of National Aluminium Company and Neyveli Lignite Corporation.

GMR Infrastructure Limited (GIL) IPO to open on July 31

19th July 2006: INTRODUCTION: GMR Infrastructure Limited (GIL) is a part of GMR group, having substantial experience in the development and operation of power plants and road projects. GIL is in process of developing an international airport adjacent to Hyderabad city, which is expected to commence commercial operations by July 2008. In addition, GIL has been awarded a contract to operate, manage and develop Delhi airport. GIL owns 100% share of 220 MW Manglore power plant and 370 MW Vemagiri power plant, and 51% share in 200 MW Chennai power plant. Apart from these, GIL has right to develop 140 MW hydroelectric power plant in Uttaranchal. GIL also owns various annuity road projects on a ‘Build-Operate-Transfer” basis in various parts of the country.

ISSUE DETAILS

ISSUE SIZE

(No. of Shares)

PRICE BAND

OPENING

DATE

CLOSING DATE

LISTING

ON

LEAD MANAGERS

38,136,980 Equity shares of Rs. 10 each

Rs. 210 to

Rs. 250

31.07.2006

04.08.2006

BSE &

NSE

JM Morgan Stanley,

DSP Merrill Lynch Ltd., Enam Financial Consultants

Pvt. Ltd., SSKI

OBJECTS OF ISSUE

Ř      Investment in various infrastructure SPVs (Special Purpose Vehicles)  promoted by GIL

Ř      Repayment of unsecured loans

Ř      Payment to sundry creditors

Ř      General corporate purposes

Ř      To achieve benefits from listing of equity shares 

FINANCIAL HIGHLIGHTS

PARTICULARS

(Rs. Mn.)

FY2005

    FY 2004

     FY2003

FY 2002

Total Income

 

10214.53

10033.44

4932.52

243.37

Total Expenses

 

9,043.29

8,977.28

4,512.75

142.07

PBIDT

 

 

1,171.24

1,056.16

419.77

101.30

Interest

 

 

1129.15

1215.63

712.37

84.68

Depreciation

 

1911.65

1874.81

796.36

1.32

Tax

 

 

52.70

77.05

65.64

22.50

PAT

 

 

1118.54

979.11

354.13

78.80

Equity Capital

 

1,586.62

1,771.62

1,771.62

771.62

Reserves

 

2.806.17

2,191.09

1,245.88

619.80

Loans

 

 

18,037.20

14,004.78

14,401.16

686.12

Fixed Assets

 

23,366.51

16,751.53

14,708.18

309.34


 

VALUATION

Considering the Adjusted EPS for FY05 of Rs.0.89, the issue price at the higher band of Rs. 250, discounts the EPS by 280.89 times and at lower price band of Rs. 210, by 235.95 times.

 

TRIGGER

 

 Post Issue Holdings in GMR Infrastructure Ltd.

Name of the Shareholder

          Number of

        Equity Shares

               Percentage

           Equity Share Capital (%)

India Development Fund

       11,737,404

                 3.55

ICICI Trusteeship Services Ltd

( ICICI Emerging Sectors Fund )

          9,578,544

                 2.89

Quantam (M) Limited

          2,490,555

                 0.75

Punjab National Bank

          1,000,000

                 0.30

Citigroup Venture Capital

International Mauriitus Ltd.

          3,672,966

                 1.11

NOTE 

  1. Minimum bid lot of 25 Equity Shares & thereafter in multiples of 25 Equity Shares
  1. Retail Individual Bidders will have two options for making payment of Application Money.  Option one is to make payment @ Rs.125/- per Equity Share OR Option two is to make full payment.
  1. Retail Individual Bidders can apply for maximum 400 Equity Shares under both the options (at upper price band)
  1. Retail Individual Bidders has to attach copy of their PAN card if they apply for 200 Equity Shares & above under both the payment options
  1. 5% discount will be available to Retail Individual Bidders only to issue price and  the same shall be refunded by the Registrars (Please do not deduct the same while making an application)
  1. Only Retail Bidders can Bid at “Cut-off Price”
  1. Non-Institutional Bidders has to make full payment on application
  1. In case of Resident Retail Bidders Cheques / Demand Drafts to be drawn in favour of “Escrow Account – GIL IPO – Retail – R”
  2. In case of Resident Non-Institutional Bidders Cheques / Demand Drafts to be drawn in favour of “Escrow Account – GIL IPO – Non-Institutional – R”

Essar Teleholdings to delist from BSE and five other regional stock exchanges

21st July 2006: Essar Teleholdings Ltd on Thursday said it will delist its shares from the Bombay Stock Exchange. The shareholders at the EGM held on July 15 approved the delisting of equity shares of the Essar Group Company from BSE and five other regional stock exchanges, the company informed the BSE. The company would also delist from Madras, Ahmedabad, Delhi and Calcutta stock exchanges, it added.

No extension of date for filing I-T returns

20th Ruling out the extension of the July 31 deadline for filing income tax returns, income tax authorities said that special counters will be opened from July 28 onwards to meet the eleventh hour rush.

Central Board of Direct Taxes (CBDT) spokesman AK Sinha said that there would not be an extension of last date, but special arrangements would be made in Delhi, Mumbai, Chennai, Bangalore and Kolkata for filing of I-T returns.

In Delhi, special arrangements would be made from July 28-31 to receive income tax returns, he said, adding that it was left to chief commissioners in other major cities to make necessary arrangements for this purpose.

Though July 29 and July 30 being Saturday and Sunday, the counters would function for the convenience of the public for filing I-T returns, he said appealing to tax-payers file returns from tomorrow onwards.

Regarding spot refunds for senior citizens, he said since they would be computer-generated from this year, the facility would be available only in those places where computer linkage could be established.

To a question, he asserted that tax department has been mandated to process all income tax refunds within four months of filing and at any cost assessees should get refunds before March 31.

“There is no possibility of delay in refunds as it would be totally computer-generated,” he said. However, there could be some delay in the refunds reaching the doorsteps of the assessees as dispatch would still be done manually, he said.

Three-star hotels, hospitals to get tax breaks

20th July 2006: The finance ministry will soon re-notify the list of infrastructure facilities eligible for tax concessions to include three star hotels and hospitals.

While hotels and hospitals were eligible for tax breaks as infrastructure, the benefit had got knocked off after the government erased Section 10(23G) from the Income Tax Act this year.

This section, among other things, had specified these and other sectors as eligible for the tax breaks. The ministry will soon issue a notification to re-confirm them along with SEZ developers, as eligible infra sectors under Section 36(1)viii of the Income-Tax Act.

While sub-Section 4 of 80IA defines infrastructure projects that are eligible for tax concessions, Section 10(23G) had included additional categories. These are hotel projects-for constructing a hotel of not less than three-star category as classified by the central government - and hospital projects, with at least one hundred beds for patients.

Till now, no applications has run into problems about the tax rebate because of this lacunae. But government officials said the a fresh tax rebate could face problem unless the anomaly is rectified. Section 10(23G) provided tax exemption to financial institutions for investments in approved infrastructure projects. The tax break was given to ensure low-cost capital for thrust area projects during the era of high interest and tax rates. But the macro-economic scenario has since changed, and the government withdrew the concession.

Section 80IA defines, among other things, the list of eligible infrastructure projects like road, highway, bridge, airport, port, rail system or any other public facility of a similar nature as may be notified by the CBDT. The list also includes projects like water supply, irrigation, sanitation and sewerage systems, generation and distribution of electricity or any other form of power and telecommunication services.

Over 55? No mediclaim policy for you

19th July 2006: If you are over 55 and want to buy a Mediclaim insurance cover, you’re in for a shock.

In a circular to its agents, Oriental Insurance said they will earn no commission on renewals or fresh sale of mediclaim policies to people in that age bracket. What it means is simple. Agents selling these policies will have no incentive to sell them to you.

And if you’re between 45 and 55, the company will accept your premium rather reluctantly. Which is why, agents selling policies to people in this age bracket will have to be content will a 10% commission as against the 15% they could earn earlier.

And assuming you do have a policy, stop expecting calls from the agent who sold it to you, reminding you to pay the premium.

According to sources, three other public sector general insurance companies — New India Assurance, United India and National Insurance — are likely to come out with similar circulars.

All the four public sector insurance companies have been struggling to manage huge losses on account of mediclaim policies due to a higher claims ratio. Currently, it ranges anywhere between 120%-170%.

A source in the industry said by disincentivising the sales force from selling or renewing policies to people in the older age bracket, companies are hoping to cut losses.

Theoretically though, you don’t need an insurance agent as an intermediary to buy the policy. You could go to the company and buy one directly. However, a source said that steps are being taken to make even this difficult. Customers will be put through medical tests to make sure they don’t suffer from any ailment before policies are issued to them.

In January, TOI had reported that the four PSU companies had issued a circular to agents and development officers asking them not to sell mediclaim policies with a sum assured below Rs 1 lakh. Also, the companies had put extra load on policies sold to people in a higher age group. However, the companies had to reverse the move after the insurance watchdog Insurance Regulatory and Development Authority (IRDA) had asked for them to justify the changes.

At that time, the insurance companies claimed the idea was to build a higher premium pool to service claims. A senior official at a PSU insurance firm said the companies wanted people to start buying mediclaim at a younger age.

IRDA gives green signal for Bharti-AXA life insurance

19th July 2006: Competition is hotting up in the life insurance segment, with the entry of more private players. Insurance Regulatory Development Authority (Irda) has given telecom major Bharti Enterprises the go-ahead to enter the life insurance business partnering French major AXA.

The regulator’s clearance comes close to one year after the agreement was inked between the two partners. Bharti will hold 74% stake, while AXA will hold 26% stake in the joint venture.

Bharti will be the second telecom company after Reliance to foray into the insurance business. However, both Reliance Life Insurance and Reliance General Insurance do not have a foreign equity partner. Currently, the foreign equity stake in domestic insurance companies is capped at 26%.

“We have cleared Bharti Enterprises’ application for a licence to enter into the life insurance business partnering AXA,” CS Rao, chairman, Irda, said. The JV company has earmarked Rs 500-crore investment for a period of 3-4 years. Bharti expects to encash on its telecom customer base to sell insurance products.

Irda is also vetting state-owned Punjab National Bank’s (PNB) application for a licence to foray into the life insurance business. US-based Principal Financial Group will hold a 26% stake in this four-way equity tie-up with PNB, Vijaya Bank and Berger Paints. PNB and Vijaya Bank will hold 30% stake each. The balance will be held by Berger Paints.

According to PNB executive director K Raghuraman, the new company will focus mainly on the group life insurance segment. He said that presentations were made recently to Irda. The JV is expected to commence business with a paid-up capital of Rs 110 crore. PNB already has ongoing ventures with the Principal Group, Vijaya Bank and Berger Paints.

Some of the other groups exploring the possibility of entry into the insurance business are Pune-based Kirloskars who are in talks with a few foreign players. The Finolex group and Bharat Forge are also looking for opportunities in terms of partnerships.

Right now, there are 15 players in the life insurance segment — state-owned LIC and 14 private players. Bharti AXA Life Insurance Company will be the sixteenth player. For private players, opportunities in this segment are reckoned to be huge as 80% of the population is without life insurance coverage.

As part of the comprehensive changes to the insurance law, Irda has mooted varying the percentage of foreign participation in the paid-up capital of an Indian insurance company depending on the category of the company. The regulator has also made out a case for separately defining a health insurance company to enable the formation of a health insurance company.

Domestic insurance companies will need capital infusion to sustain their growth. Capital is an issue because it takes nearly 6-7 years to break even in the industry.

Infosys allots 27 cr bonus shares

18th July 2006: Infosys Technologies Ltd has allotted over 27 crore bonus shares to the shareholders in the ratio of 1:1.

The Board allotted over 27.68 crore shares of Rs 5 each amounting to about Rs 138 crore as bonus shares in the ratio of one share for every equity share held, the IT major informed the Bombay Stock Exchange.

The shares were allotted to those shareholders whose name appears on the Register of Members / Register of Beneficiaries as on July 14, it added.

At the AGM held last month the company had received shareholders nod for the 1:1 bonus issue.

GMR revives IPO plans

17th July 2006: With a semblance of normalcy returning on the bourses, GMR Infrastructure, which bagged the contract for modernisation of Delhi airport, has revived its IPO plans and would hit the market by this month-end to raise up to Rs 1,100 crore.

The offering would be the first major IPO since that of Reliance Petroleum on May 11, which helped the Mukesh Ambani group company mop up Rs 2,700 crore.

GMR, the power and infrastructure major, was previously expected to launch its public issue last month but is now likely to hit the capital market by the end of July or early August with a public issue of more than Rs 1,000 crore, sources in the know said.

In order to attract even more investors' interest, the company is also likely to offer a discount of 5% to retail investors on the price discovered from the book building process.

The company is expected to offer its shares to the public in a price-range of Rs 225-260 per share, which is much lower than the price it got from private placements ahead of the offer, the sources said.

The company is planning to begin roadshows next week for attracting investors towards the public issue, while an approval from the Registrar of Companies is also expected next week.

GMR's top brass is in hectic consultations with its merchant bankers to plan the dates and roadshows for the IPO, sources said. However, an official spokesperson of the company, when contacted, declined to comment on the matter.

Kalam gives nod to changes in I-T Act

17th July 2006: The Taxation Laws (Amendment) Act, ‘06 got the assent of the President on Friday. The Act has made amendments to the Income-Tax Act to smoothen the approval and monitoring process for certain charitable entities, scientific research associations and prescribed filing of return by them.

The Bill was passed by Parliament in the last Budget session. Simultaneously, it has also toughened the tax rules for charitable institutions.

It has made it mandatory for those institutions with aggregate annual receipts below Rs 1 crore to require all payment exceeding Rs 20,000 to be made through an account payee cheque or bank draft.

It has mandated tax-deducted at source on renting of plant and machinery, equipment, royalty and non-compete fees.

Life insurance policies to have common format

14th July 2006: If you’re fed up of trying to decipher jargon spouted by different life insurance companies, you may get a breather soon. The Insurance Regulatory and Development Authority (Irda) has roped in National Insurance Academy (NIA), Pune, and other members from the life insurance industry to work out a common format and language for life insurance players.

Based on feedback from consumer courts, insurance ombudsman and customers, Irda has mandated NIA director KC Mishra to head the ‘harmonisation of documentation of the life insurers committee'.

"Each foreign partner of the insurance players has brought in their own definitions, language and procedures to the Indian market. This has led to confusion in the customer's mind and made it difficult to understand and compare products. We plan to change this," says Mishra, NIA director.

The committee, formed two weeks ago, has already obtained documentation from most life insurers. It is in the process of compiling the information and will now find a way to simplify the procedures and language to bring down the policy and proposal document to just two.

Currently, in the market there are close to 300 types of policy and proposal documents. It will then submit an exposure draft to all the insurance players by mid-August and submit a draft of the guidelines to Irda by August 31.

The plan will ensure that every player follows the same format of documentation as well the same language. To begin with, only linked and conventional life insurance products are covered under the plan.

“It’s a fairly complex procedure because information in 300-odd documents has to be brought down to two. So we’d like to tackle life insurance first,” says Mishra.

Though Irda has asked the committee to restrict the format to two documents, Mishra says in all probability it will be brought down to four. Within the four documents, the committee is hoping to ensure that each document is only one page.

Shirdi Industries Ltd. IPO - Withdrawn

13th July 2006: The Shirdi Industries Ltd. IPO has been withdrawn.

Actis makes open offer for 20% stake in Phoenix Lamps

11th July 2006: Private equity investor Actis, with its affiliate companies, has made an open offer to the shareholders of Phoenix Lamps Ltd to buy a 20% stake in the company.

The open offer made to the shareholders of Phoenix Lamps is to acquire about 47.69 lakh equity shares of Rs 10 each, representing 20% stake in Phoenix Lamps at a price of Rs 152 per share, subject to terms and conditions.

Argon India, Argon South Asia along with PACs, Actis India fund, Actis South Asia Fund and Actis Executive Co-Investment Plan LP made the open offer to the shareholders of Phoenix Lamps. Yes Bank Ltd is the manager to the offer.

The leading automobile halogen lamps manufacturer, Phoenix Lamps informed the Bombay Stock Exchange that the offer opens on August 31 and closes on September 19.

Earlier this month, Actis had announced that it would invest Rs 133 crore in Noida-based Phoenix Lamps, which owns the Halonix brand, to buy out the promoter stake and pick up a 36.7% stake in the company.

CAs could head for KPOs

11th July 2006: The world of finance is likely to face a big hole in its chartered accountants pool as more and more pass-outs are headed towards knowledge processing outsourcing firms, which are offering handsome salaries.

“We are expecting about 50% of the CAs passing-out over the next five years to join KPOs. In the last couple of years alone, 30% of all pass-outs have joined BPOs and KPOs,” CA Manoharan TN, president, Institute of Chartered Accountants of India (ICAI) said.

During campus placements held in March this year, a total number of 1,144 candidates were absorbed by 102 companies. Of the 1,144 absorbed, 459 joined BPOs and IT firms, according to figures collated by ICAI, which has a membership base of over 130,000 CAs.

Progeon and Gecis made over 160 offers each to the CAs. The revised syllabus for chartered accountancy also enables students to deal with international accounts. This has also increased the demand for qualified and trained people, and companies are not hesitant to dole out huge salaries.

During ‘05, 7,455 newly qualified CAs joined the profession and only about 17% of them obtained Certificate of Practice. The remaining 83% opted for employment. During campus placements, 517 CAs received offers worth over Rs 5 lakh per annum and 20 received offers for over Rs 9 lakh.

“CAs are proving assets for KPOs and the IT sector. To keep pace with the demand we intend to attract more quality students by initiatives such as simplifying the curriculum and increasing exam centres,” said Mr Manoharan.

Postal deposits may lose TDS exemption

10th July 2006: A fixed or recurring deposit with the post office could soon require you to pay tax on the interest earned.

The income tax department is mulling withdrawing the tax-deducted-at-source exemption on instruments such as fixed, recurring deposits and the national savings certificate offered by the department of posts.

The finance ministry had last month clarified that tax deducted at source (TDS) is applicable on the senior citizens savings scheme, operated by the department of posts.

The issue of withdrawal of the exemption was raised at the meeting of chief commissioners and directors-general of income tax earlier this week.

“It was pointed out by some zones that several instruments offered by the department of posts did not pay TDS. The matter is now under examination,” a finance ministry official said.

Increasing TDS collection is a focus area for the tax department since it accounts for 45 per cent of direct tax collections. Officials said the chief commissioners’ meeting noted that several government departments did not pay TDS because they were unaware.

At present, several instruments offered by the postal department such as fixed deposits, recurring deposits, investment deposits and national savings certificates are notified for exemption from TDS.

“There is a view that if TDS is applicable on the senior citizens savings scheme, which targets mainly retired persons, then it should be applicable on other investment instruments offered by the department of posts,” an official said.

The finance ministry had only last month said that interest accruing on deposits held under the senior citizens savings scheme, 2004, was taxable as per the provisions of the Income Tax Act, 1961 and was liable for tax deduction at source according to the provisions of section 194A of the Act.

The ministry had said that citizens investing in the senior citizens savings scheme would have to furnish a declaration in Form 15H or Form 15G to the bank / post office, in order to avoid deduction of tax.

Government moots Employees Stock Option Scheme (ESOS) for PSU banks

10th July 2006: India’s state-owned banks, poor cousins of their counterparts in private banks and new age firms when it comes to rewarding employees, may soon be able to shake off such an unwelcome tag.

The finance ministry is working on a proposal to unveil an Employees Stock Option Scheme (ESOS) for state-owned banks as part of the incentives to be offered to staffers to boost performance and to retain the talent pool in such banks.

Most of the new private banks which started operations after 1994-95 have liberal ESOS which has helped them to not only attract top flight talent including from foreign banks but to lure them to stay on also.

According to top government officials, the government is working on a proposal to kick off an ESOS for state-owned banks with a limit of up to one per cent of the bank’s capital. To begin with the scheme could cover only senior level management staff of the banks only or those manning board level positions in banks.

Later, once the scheme is unveiled it could be widened to cover staffers in other positions, officials said. The other form of compensation which the government has favoured is providing bonus to employees with a cap of one per cent of the bank’s net profit.

By rewarding key employees through generous issue of shares of the company at an attractive price firms seek to motivate them, thus driving performance with its impact on the top and bottomline.

In the Indian banking industry, this has been showcased in private banks such as HDFC Bank, ICICI Bank, UTI Bank and IDBI Bank prior to its merger with IDBI.

Senior bankers say that much of the success of these new age private banks could be attributed to the formulation of such employee compensation schemes.

For instance, these banks were able to draw top officials from foreign banks by offering stock options which in any case is restricted to just a handful in such overseas banks. What they offer instead is a large cash component.

HDFC Bank and IDBI Bank used this powerful tool of compensation successfully to draw in senior bankers from foreign banks during their initial years of business. However, some banks found that employees at the lower level favoured cash rather than deferred compensation in the form of stocks.

This is because the shares are vested and is to be exercised over a certain time-frame. The remuneration committee of the bank decides on the allotment of shares based on key performance parameters annually.

Says a senior banker who was associated with the ESOS in his bank, “It is a very important tool to ensure that the interests of the managements and the shareholders are aligned.

BSE plans a mix of IPO, strategic investor for demutualisation

8th July 2006: The Bombay Stock Exchange (BSE) is firmly taking steps to achieve the goal of demutualisation and is planning to take a route of bringing in a strategic investor and offer for sale/initial public offering (IPO). This was revealed by Rajnikant Patel, MD & CEO of BSE.

He said the exchange might go for an initial public offer (IPO) and also look for some strategic investors. “According to the guidelines, BSE has to divest 51%. We are mulling a 26% stake sale to strategic investors and the rest 25% through an IPO or an offer for sale. But, as of now, nothing has been finalised. If everything goes on smoothly, then the process might be completed by December 2006”, Patel said.

“As far as strategic investors are concerned, there could be more than one investor, too, and we will look at other exchanges, banks and financial institutions also,” he added.

BSE has appointed Kotak Mahindra Capital Company as financial advisor to achieve the goal of corporatised & demutualised (C&D) exchange. The deadline to complete the process has been extended till May 2007.

It may be recalled that BSE was the first stock exchange (SE) whose C&D scheme was clear by the Securities and Exchange Board of India (Sebi) last year. BSE became a corporatised entity in August 2005. As per the C&D scheme cleared by the regulator, following the corporatisation of the exchange within the period of 18 months the demutualisation process has to be completed.

Bajaj Auto buys more into ICICI Bank for Rs 630 crore

8th July 2006: Motorcycle major Bajaj Auto Ltd has increased its stake in private sector bank ICICI Bank through open market purchases. In two block deals on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)— valued at over Rs 630 crore — the auto major has bought 1.27 crore shares of ICICI Bank at a price of around Rs 500 per share.

The auto company bought 68,04,926 shares of ICICI Bank at Rs 499.73 per share as per data available on the BSE while on NSE it bought 58,66,552 shares at Rs 499.43. The ICICI Bank counter clocked trading volumes of 70.71 lakh shares on BSE, while on NSE it clocked volumes of 65.67 lakh shares.

The shareholding of Bajaj Auto in ICICI Bank as on March 31, 2006 was 2,41,32,703 shares amounting to a 2.71% stake in the company and post the acquistion, the shareholding would increase to 3,67,04,181 shares. This works out to just over 4% of the bank’s equity. Bajaj Auto has upped its stake in ICICI Bank as part of its investment portfolio, a company spokesperson said.

The ICICI Bank stock closed with a gain of Rs 13.80 (up 2.84%) at Rs 499.50 on the BSE on Friday. However, the Bajaj Auto stock skid 1.64% with a loss of Rs 45.40 to close at Rs 2,725.

BSE to offload 51% stake

8th July 2006: Bombay Stock Exchange Limited is looking to offload 26% of its equity to a strategic investor. A further 25% would be offloaded through an initial public offer, according to Rajnikant Patel, CEO and managing director, BSE Limited.

Kotak Securities has been appointed as an advisor for the stake sales. The exchange has set a deadline of May 2007 for completing these two deals, but is targeting the end of the calendar year for the same.

The strategic investor could be a domestic or overseas one, Patel said. This could also include other exchanges, banks and multi lateral agencies, he added. Patel was addressing an audience at BSE’s 132nd Foundation Day.

The exchange also unveiled a Gujarati website www.bseindia.com/gujarati.

As part of the demutualisation and corporatisation exercise of the stock exchanges, BSE became a company from an Association Of Persons in 2005.

DLF IPO may be delayed by 2 months

6th July 2006: Real estate developer DLF Universal’s mega initial public offer slated for mid-July is set to be delayed by at least a couple of months. As things stand now, the delay may not be prolonged, provided the company redresses residual investors’ grievances, which the company affairs ministry is looking into.

Capital market regulator Sebi had referred a decision on clearing DLF’s public offer to the company affairs ministry (MCA). DLF is expected to look at a fresh date, most likely in September-October.

A quick resolution of the last minute glitch in its estimated Rs 13,000 crore public offer looks possible as the government does not intend to institute an inspection or an investigation into the affairs of the company under company law provisions. “We follow a laid down procedure to redress investor grievances.

We would ask the firm to redress these issues at the earliest,” said a government source. The ministry’s next move would depend on how quickly the company responds to its request.

Launching an inspection or an investigation into the affairs of the company under section 209 or section 235 of the Companies Act would have proved damaging to the firm’s plans to go ahead with India’s biggest issue so far.

Company sources said that talks are currently on with the disgruntled group of minority shareholders and that all outstanding issues would be resolved soon.

Sources in investment banking circles said that the group would now have to take a fresh look at its valuation and IPO size, apart from coming out with a new deadline for the issue.

Post-control war, Birla's eye Idea IPO

5th July 2006: After taking full control of its cellular venture, Aditya Birla Group company idea cellular is looking at the possibility of an initial public offer besides expanding services with three new circles roll-out in the next three months.

"At some point of time the company would go public", Aditya Birla Nuvo Managing Director Sanjiv Aga said.

However, sources said the company would be assessing the situation on an IPO now and take view accordingly.

Idea Cellular, which is keen to enter the Mumbai circle and for which it has already applied to department of telecom for permission, is waiting for the approval.

"The application is still pending with the government", Aga said.

In rest part of the country, it is planning to enter into three new circles.

"We are rolling out in three new circles. Himachal, Rajasthan and eastern UP in the next few months. The company will also take a view whether to enter into national long distance in the next few months", Aga said.

The current eight circles are--Haryana, Delhi, UP (W), Gujarat, Maharashtra and Goa (one circle), MP and Chhattisgarh (one circle), AP and Kerala.

The combined holding of Aditya Birla Group companies in Idea stands at 98.3%, which includes Aditya Birla Nuvo Ltd with 35.7%, Birla TMT holdings 44.9%, Grasim Industries ltd 7.6% and Hindalco Industries Ltd 10.1%.

Idea has earlier announced that it would like to offload 35% to financial investors at some point of time at no-profit-no-loss.

Aditya Birla Group concluded acquisition of Tata Group's 9% stake in Idea Cellular Ltd for Rs 4,406 crore, putting an end to the high-profile corporate battle between India's top two business houses.

Idea has eight million cellular subscribers in the country.

Tech Mahindra IPO to hit market soon

30th June 2006: IT solutions company Tech Mahindra said it would stick to its schedule for the Initial Public Offer, despite the turbulent stock market and decreasing demand for IPOs.

"After we get the approval from SEBI, we will check with the investment bankers. The market doesn't make difference... During bad markets, demand for good scrips is very high. We will past muster," Tech Mahindra CEO Vineet Nayyar said.

He said SEBI clearance was likely to come by the third week of next month and the company will approach the market soon after.

The company would offer 11% of equity through the IPO to mobilise funds for expansion of its services delivery infrastructure.

Tech Mahindra is planning to have centres in Noida, Chennai, Hyderabad, Kolkata and Chandigarh with an investment of Rs 350 crores. The centres in Kolkata, Chandigarh and Noida will have capacity to seat 2,000 professionals each.

Tech Mahindra is planning to develop its centres in Kolkata, Chandigarh and Pune as special economic zones, which offer a host of tax concessions.

The company has recently acquired Axes Technologies and is open to more acquisitions and joint ventures, if they fit in the overall strategy of growth.

Nayyar said the company is gradually reducing reliance on British Telecom and expanding its client base including in geographies as diverse as Egypt, Qatar, Singapore and China.

In the last three years, the company's revenue has grown by around 30% from Rs 742 crores in 2004 to Rs 1,245 crores in 2006. Its net profit has grown from Rs 64 crores to Rs 235 crores during the same time.

Aditya Birla Nuvo - Outcome of CoD Meeting

30th June 2006: Aditya Birla Nuvo Ltd has informed BSE that the Committee of Board of Directors (CoD) of the Company at its meeting held on June 30, 2006, has approved the Date of effectiveness of the Scheme of Amalgamation between Birla Global Finance Ltd (BGFL) & the Company i.e. June 30, 2006. The Scheme will become effective with effect from September 01, 2005, which is the Appointed Date.

Further the Company has informed that the meeting of the Board of Directors of the Company will be held on July 03, 2006, inter alia, to consider recasted accounts on merger of BGFL & the Company.

Cheer up! Tax-free bonds are back

30th June 2006: Two years after the withdrawal of the highly popular tax-free Relief Bonds, investors will soon celebrate the return of a new high-return, tax-free instrument. Municipal bonds, better known as Munis across the world, will now be a reality in the Indian financial market.

The government has given the go ahead for the introduction of the bonds which will carry an 8% tax-free rate of return to be floated by municipal bodies across the country, with the government guarantee. The rate of return on these tradable bonds of varying maturities would be equivalent to 11.4% taxable.

It’s the guarantee which will make the bond a zero risk debt, and attract retail as well institutional players like banks, bond houses, mutual funds and insurance companies.

The bonds have been in the works for quite sometime. Municipalities with their weak financials find it tough to raise fund. Till now only a few municipalities like Ahmedabad and Nasik have floated bonds. At present there is a cumulative ceiling on annual municipal bond issuances (of as low as Rs 150-200 crore) and only select issues get a tax-free status. The government has now done away with both these restrictions.

The bonds are part of the UPA government’s attempt to give a big boost for development of urban infrastructure in the country. The National Urban Renewal Mission has set an ambitious agenda for investing in urban projects.

While the municipal bodies can issue bonds with higher coupon rates of above 8%, they will not qualify for a tax-free status. Some of these bonds will hit the market in this fiscal.

The bond issues will be approved by the Central government. When the municipal bond market grows, and becomes a significant source of urban infrastructure financing, the Centre’s control over bond issue has the potential to become a source of friction between the Centre and state government.

Globally, municipal bonds constitute a huge market. In the US, investors hold about $1.7 trillion worth of municipal bonds. As of now, the only investment avenues that offer similar tax-free interest are the small savings instruments, including the PPF, KVP and the NSC. But these instruments face the threat of coming within the tax net, with a Central government committee examining the subject. The government proposes to bring in a new tax regime for savings in which they would be exempt from tax at the stages of contribution and accumulation, but taxed on withdrawal (EET).

The Government of India’s 8% savings bonds introduced in April ‘04 are taxable. The Senior Citizens Savings Scheme offers a 9% taxable return, but its subscription is limited to those above 60 years (55 for those taking voluntary retirement).

Since the bonds will be virtually risk-free, as they carry a government guarantee, the attraction for subscribing to these bonds among the investors, at the cost of other avenues like fixed deposits, will be immense.

To take advantage of the scheme, the municipal corporations are working on a switchover to an accrual-based system of accounting, from the present cash-based system. The Institute of Chartered Accountants of India (ICAI) is already working on the draft norms for the new system of accounts, which the municipal bodies are expected to adopt soon.

Pre-IPO Sale: FIIs get a realty bite

29th June 2006: In a move that will impact initial public offering (IPO) plans of a host of real estate companies, the Reserve Bank of India (RBI) has said that FIIs can participate in the pre-IPO placements of these companies.

In a recent communication to the finance ministry, the central bank has said that shares picked up by FIIs in pre-IPO placements would be subject to a lock-in period of three years, which is currently stipulated for foreign direct investment (FDI). However, the pre-IPO placements to FIIs will not attract conditions laid down under Press Note 2 of ’05, which prescribes minimum built-up area and capitalisation for FDI in real estate projects.

Till now, FII participation was not allowed in pre-IPO placement of any real estate company. The question did not arise since not many realty firms were going for IPOs and pre-IPO placements. The policy on such investments gained significance after DLF and a number of other real estate companies came out with plans for IPOs.

The RBI has generally been wary of much foreign inflows creating a real estate bubble in the economy. While 100% FDI is allowed for in real estate, automatic clearance is available only to projects that adhere to minimum built-up area and capitalisation criteria.

Since real estate companies deal with various projects — including those which do not conform to these stipulations — doubts had cropped up on whether FIIs can buy shares of such companies. While the commerce and industry ministry had earlier cleared FII investment in pre-IPO placements, the RBI green signal provides the final seal of approval to the ticklish issue.

The RBI approval means that FIIs can invest in both IPOs and pre-IPO placements of real estate companies. The only stipulation that needs to be observed is a lock-in period of three years for all pre-IPO investments by FIIs in conformity with Sebi regulations. The central bank has emphasised on this stipulation despite the argument that FII investment in IPOs and pre-IPO placement is portfolio investment rather than FDI.

A copy of the RBI’s communication to the finance ministry has been sent to the commerce and industry ministry.

The question of FII investment in IPOs and pre-IPO placements of real estate companies came up for discussion after DLF sought clarifications on the applicability of FDI norms.

The commerce and industry ministry said that FII investment is categorised as portfolio investment and FDI norms of minimum capitalisation and minimum built-up are will not apply. The ministry conveyed its views to the RBI, which in this case is the final deciding authority.

The central bank’s go-ahead will now pave the way for flow of FII investments in the proposed IPOs of real estate companies like DLF and Parasvnath. On the basis of the RBI views, Sebi is likely to clear applications of real estate companies for FII investments.

“In this connection, we advise that we are of the view that the pre-IPO offer is in the nature of private placement/preferential allotment which is subject to lock-in period under Sebi (DIP) Regulations. Such issue of shares under the pre-IPO would therefore have to be reckoned as part of the FDI and would be subject to minimum lock-in period of three years stipulated for FDI holdings under Press Note (No 2 of 2005) stated above.

Therefore the FII investments in the pre-IPO holding would also attract the lock-in stipulations notwithstanding the clarification that the FII investments in pre-IPO and IPO issues are not subject to the guidelines contained in Press Note 2 (2005 series),” says the RBI communication to finance ministry.

State Bank of India (SBI) to issue fresh shares

3rd July 2006: State Bank of India, the country's largest lender, has made a proposal to issue fresh shares that could lower the government's holding to 51%.

The government is vetting the proposal that includes a public offer and a possible offer of shares to the bank's employees, the newspaper said, quoting unnamed officials.

India's central bank holds 59.73% of State Bank under 1955 government legislation, SBI Act. The act mandates the central bank hold at least 55% stake.

"A dilution of government holding over the next couple of years could be underway considering the bank's need to beef up its capital for business growth and to take care of more stringent regulatory norms," the financial daily said.

SBI officials could not be immediately reached for comment.

Government allows unlisted companies to sponsor ADRs, GDRs

30th June 2006: Unlisted companies, like those in real estate business, will now be able to make fully paid-up (sponsored) share issues abroad. The relaxation to the American Depository Receipts\Global Depository Receipts was announced by the finance ministry.

The facility of sponsored issues was so far restricted to listed companies only. But the government heeded representations made by industry associations like Ficci to permit “unlisted Indian companies to sponsor an issue of ADR\GDRs with an overseas depository against shares held by its shareholders”.

Sponsored issues are those where one or a group of investors commit themselves to subscribe to the entire offer. So there is no possibility of the issue being under-subscribed.

Commenting on the decision, R Sridhar, senior manager in PricewaterhouseCoopers, said real estate and other closely-held companies are usually reluctant to go public, but they have been urging the government to permit them to float shares abroad to selected parties.

The government has however put in a rider saying that unlisted companies which have issued the ADRs before August 31, ‘05, will have three years time to get themselves listed in an Indian stock exchange, after they start making profits.

All other unlisted companies would need to go in for prior or simultaneous listing in India, before making the sponsored issues. Also, the sponsored issue must be made available to all categories of shareholders of the company, and comply with the FDI policy for the sectors, the ministry release says.

Sebi to relax norms for derivatives trading

30th June 2006: Investors may now find derivatives more attractive. The Securities & Exchange Board of India (Sebi) is considering a proposal to re-define the universe of stocks eligible for trading in the derivatives segment. Stock exchanges may also be able to launch new sectoral futures indices, such as an auto index and a pharma index.


Currently, the scrips eligible for derivative trading are chosen from among the top 500 scips on the basis of various criteria, including data on market capitalisation (M-cap ), average dailytraded value and order size over a six-month period.


The market regulator is now considering relaxing some of these criteria for selecting individual stocks which can be traded in the futures market.


The new parameters are intended to increase the universe of stocks which can constitute sectoral indices. The move will thus help stock exchanges launch different sectoral and sub-sectoral futures indices, government sources said.


Details on the exact nature of the changes to be introduced was not available. Currently, 118 scrips are traded in the futures and options (F&O) segment.


"It is proposed to increase the number of stocks on which derivatives will be permitted. A presentation to this effect was made by Sebi officials at its board meeting on Monday. The board has asked Sebi to provide additional details before giving its nod," a source said.


The market regulator is scheduled to provide this information to Sebi board members before its meeting on July 10, 2006.


Sectoral indices were permitted for derivatives trading in December 2002. Experts said the move will help inclusion of new stocks (including group B1 stocks) in sectoral indices, making investments in F&O more attractive. According to PricewaterhouseCoopers associate director Dinesh Arora: "The derivative market in India is still evolving. Allowing more stocks in futures and options would certainly attract investors in derivative segment."

 

KPMG director (advisory services) Manish Mohnot said the change seems be focused on bringing 'more depth in the derivative market.'


Introducing financial derivatives will facilitate hedging in the most cost-efficient way against market risk.

 

In the late 1990s, the LC Gupta Committee had stressed the need to have equity derivatives, interest rate derivatives and currency derivatives and had suggested starting with stock index futures.


A survey conducted by the committee in May 1997 revealed that stock index futures ranked as the most popular and preferred type of equity derivatives, the second being stock index options and the third being options on individual stocks.
Stock index futures are internationally the most popular forms of equity derivatives.


SRIP TEASE


Change to bring depth in market Introduction of financial derivatives to bring about hedging in the most cost-effective way.

RBI cautions Sebi on revised stock lending scheme

30th June 2006: The Reserve Bank of India (RBI) has told Sebi and the government to exercise caution on the proposal to introduce a revised stock lending and borrowing programme for institutional investors, saying that it may violate provisions of the Foreign Exchange Management Act (Fema).

The proposal was discussed at the meeting of the Sebi board on Monday as part of a set of policy measures aimed at curbing excess volatility in the market. However, the Reserve Bank of India has said that foreign institutional investors (FIIs) could be allowed to participate in stock lending and borrowing only after ensuring that it is consistent with the provisions of Fema.

The regulator wants the government and Sebi to ensure that Fema provides for stock lending and borrowing by foreign institutional investors. It has also raised concerns relating to Know Your Client (KYC) norms and the audit trail for overseas portfolio investors with regard to the proposal to permit stock lending and borrowing as well as short sales. According to senior government officials, the government will refer the proposal to the law ministry to check out whether it is within the bounds of Fema.

The officials said that the RBI was fine with these proposals in principle and it was being studied now legally. Once the views of the law ministry are obtained, the proposal will be taken up again at the next board meeting of Sebi over the next three weeks.

The stock lending and borrowing programme was in vogue for institutional investors until 1997 under the old legislation, Fera, which was replaced with Fema in 1999-2000. Under Fema provisions, FIIs can invest in shares and debentures of companies and in exchange trade derivative contracts. The issue now is whether is there is an explicit provision permitting FIIs to lend or borrow stocks. A revised scheme for lending and borrowing stocks which are covered in the futures and options segments was readied after the stock markets experienced a major bout of volatility last month.

The proposal to allow institutional investors like FIIs to short sell - which is selling securities which they do not own at the time of sale - is linked to the programme for stock lending and borrowing. The plan is to allow short sales in the futures and options stocks - with the clearinghouse corporations being the authorised intermediaries for the scheme. They will provide the platform for those who want to either lend or borrow stocks.

According to officials, short sales for institutional investors would be allowed only after putting in place rigorous disclosure norms and ensuring that information or data on the short sales is available in the public domain. The idea is that at any point of time, there should be a realistic link to the extent of short sales and the inventory of stocks with the intermediaries.

Sebi to remove Clause 49 deterrents by next year

30th June 2006: The Securities and Exchange Board of India (Sebi) chairman M Damodaran on Thursday said the regulator is in the process of addressing issues coming in the way of implementing Clause 49 of the listing agreement.

The issues will be addresses by next year, he added. The clause mandates induction of independent directors on boards of listed companies. He was talking at the launch of a database on directors of listed companies compiled by Prime Database, a Delhi-based research firm tracking primary market. Mr Prithvi Haldea, MD, Prime Database, said while gathering data on board of directors of listed companies he has come across various cases where corporates are not strictly complying with Clause 49 norms.

Mr Haldea said Sebi should prescribe specific norms in relation to age and qualification of independent directors. Out of the 908 companies - data on whose directors was available with the Prime Database - 299 companies had promoter directors, described as non-executive chairman.

This is not in line with Clause 49 norms. Besides, there are few companies where independent directors are related to each other, again violating Clause 49 of the listing agreement. Reacting to observations made by Mr Haldea, Mr Damodaran said some of the issues will get addressed this year and part of the next year. He added educational qualification should not be a criteria to induct any person as an independent director on the board of any company.

"Educational qualification should not be an entry norm but, at the same time, it can not be a disqualification," said Mr Damodaran. "Formal education will make a person better equipped to be on the board. It will make him/her capable of bringing perception that is independent of promoters," he added.

Mr Damodaran also launched BSE's corporate e-filing system, Indian Corporate Electronic Reporting System (ICERS). It is an internet-based application, enabling dissemination of information seamlessly from the point of origin to the point of display on BSE website in the shortest possible time. This will help investors and users access corporate filings almost on a real time basis. Currently, the filings need to be uploaded from BSE, while in the new system it will get done automatically.

Companies will be able to e-file all corporate announcements and financial results. The application will be subsequently enhanced to cover all other compliance related filings by companies listed on BSE.

Corporate Announcements at NSE

30th June 2006: The following are the Corporate Announcements: ARVIND REMEDIES:


The company's Board of Directors (BoD) has recommended a dividend of 5% subject to the approval of members.


NSE LTP: 1.45 (-) Volume: 92317


B. L. KASHYAP AND SONS:


The company's BoD has recommended a dividend of 30% per equity share, on par value of Rs 10 each. B L Kashyap & Sons Limited's BoD has fixed book closure dates from July 29 to August 11 ' (both days inclusive) and decided to hold the forthcoming annual general meeting on August 11, '06.


NSE LTP: 919.10 (23.95) Volume: 20405


BANNARI AMMAN SUGARS:


The company's BoD has recommended a payment of 70% dividend for the year ended March 31, '06. The company's register of members and share transfer books will remain closed from September 20 to September 27, '06 (both days inclusive) for the purpose of annual general meeting and payment of dividend.


NSE LTP: 1139.65 (-32 .00) Volume: 1510


BHAGYANAGAR METALS:


The company has entered into an agreement for purchase of 25 acres of land for a total value of Rs 118 crore for development of IT park/housing township. This site is located near Hitech City, Hyderabad, which is the hub of activities for IT parks and housing townships. With this project the company will be fully diversified into a real estate and infrastructure development activity. The company is also in the process of getting construction contracts for IT parks. The current clients of the Group include Microsoft India (R&D ) Pvt. Ltd, Oracle Software (India) Ltd, Motorola India, Fusion Cybertech Pvt. Ltd, Matisse Network (India) Limited, Patn Telecom Solutions Pvt. Ltd and D E Shaw. The company has also initiated a housing project on 52 acres land in Vizag along with Salarpuria in Bangalore. The company has got approvals from registrar of companies for the name of Bhagyanagar India Limited; the same shall be taken up during the ensuing Annual General Meeting for the change of name of the company, as this name would represent its diversified activities.


NSE LTP: 64.00 (1.90) Volume: 227818


DCW:

The company has announced a dividend of Rs 0.30 per equity share of Rs 2 each, i.e. @ 15%, if approved at the company's forthcoming AGM to be held on July 6, '06 will be paid by July 10, '06.


NSE LTP: 11.20 (0.25) Volume: 217466


DISHMAN PHARMACEUTICALS AND CHEMICALS:


Dishman Pharmaceuticals And Chemicals has developed a unique position in bulk actives in the area of disinfectants. The company produces as many as 15 disinfectants and the division is likely to contribute significant growth to Dishman Group's total revenue. Dishman Pharmaceuticals & Chemicals' annual general meeting of the members/shareholders approved and passed, among others, the following resolutions: i. In respect of the FY06 a final dividend @ 35% (Rs 0.70 per share) on the paid up equity shares of the company has been declared by the members. ii. The company's members also decided, approved and resolved to appoint M/s Deloitte Haskins & Sells, chartered accountants, Ahmedabad as the company's statutory auditors to hold office as auditors from the conclusion of this annual general meeting until the conclusion of the next annual general meeting in place of retiring Auditors M/s Kunte & Associates, chartered accountants, who have expressed their unwillingness to be re-appointed as the company's auditors after the conclusion of this annual general meeting. (iii) Re-appointment of Mrs Deohooti J Vyas as a wholetime director of the company for further period of five years w.e.f. September 3, '06.


NSE LTP: 173.10 (14.30) Volume: 18657


HERITAGE FOODS:


The company has recommended a dividend for the year ended March 31, '06 @ Rs 3 per share (30%). The company has announced the book closure from July 21 to July 25, '06 (both days inclusive) for paying dividend for '05-06 and for holding the AGM on July 31, '06.

NSE LTP: 143.10 (1.75) Volume: 227645


HINDUSTAN PETROLEUM CORPORATION:


The company with a consortium led by Oilex, Videocon, GAIL & BPCL signed an exploration & production sharing agreement for Block No. 56 with Sultanate of Oman on June 28, '06. This is HPCL's first international exploration venture where it would have a 12.5% participating interest in the exploration, development and production phases.


NSE LTP: 230.75 (-14 .35) Volume: 961182


JYOTI STRUCTURES:


With regards to the sub-division of shares, the company proposes to issue new share certificates consequent to sub-division of shares of face value of Rs 2 each without calling for old share certificates of face value of Rs 10 each held by the shareholders and that the old share certificates shall automatically stand cancelled.


NSE LTP: 362.30 (2.05) Volume: 18060


LAKSHMI MACHINE WORKS:


The company's BoD at meeting held on June 28, '06 recommended a final dividend of Rs 200 per equity share of Rs 100 each. The company's annual general meeting will be held on August 18, '06.


NSE LTP: 19480.00 (507.55) Volume: 102


PEARL GLOBAL:


The company's BoD has recommended a dividend of 30% for FY06, subject to the approval of shareholders of the company in the ensuing AGM.


NSE LTP: 95.95 (4.60) Volume: 1098

Payment by shares to acquire know-how eligible for tax deductions

30th June 2006: Payment by issue of shares, for the purpose of acquiring know-how, is eligible for tax deduction, according to a ruling by Income-Tax Appellate Tribunal (ITAT), Pune, in the case of Mercedes Benz India.

Payment for acquisition of know-how was eligible for tax deduction under Section 35 AB Income-Tax (I-T) Act. In many cases, such payments were made in kind, by issuing equity shares to the seller of the know-how. The tax department has often taken the stand that payment by shares for acquiring know-how is not entitled to deduction.

Mercedes Benz India (MBIL) was a joint venture between Telco and Daimler Benz, with the latter holding 51%. According to the agreement between the parties, Daimler Benz had the option to make its contribution partly or fully in shares.

The latter made a part contribution in shares and claimed the deduction under Section 35 AB of the I-T Act. The assessing officer (AO) allowed the claim but the I-T commissioner had set aside the order of the AO.

The tax authorities cited a Supreme Court order in the case of Eimco KCP which stated that allotting shares could not be construed as expenditure.

The Pune tribunal held that the facts of the Eimco KCP were different from the case of MBIL. In the former, the amount was not paid after the incorporation of the company. The logical inference then is that had the amount been paid after the incorporation, there was a possibility of a decision in favour of a deduction.

The tribunal pointed out that the payment in the case of MBIL was after the incorporation of the company. Therefore, the apex court’s decision cannot be applied in this case. TP Ostwal, a senior chartered accountant, said: “The ITAT decision just explained the position of the law “.

Do you know what your tax liability is?

30th June 2006: The time to file income tax returns is around the corner. It is important for you to understand the basic tax liability for payment of income tax for the year 2005-06. Any shortfall in tax payment for the last year (i.e. till March 31, 2006) may be paid now, along with interest.


The Finance Act 2005 had specified the rates of income tax for the assessment year 2005-06 and the rates of income tax on the basis of which tax has to be deducted and advance tax has to be paid during the financial year 2005-06.

 

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The rates for deduction of income tax at source from salaries during the financial year 2005-06 and also for computation of ‘advance tax’ payable during that year in the case of all categories of tax payers have been specified in the Act. These rates are also applicable for charging income tax during the financial year 2005-06 on current incomes in cases where accelerated assessments have to be made, e.g., assessment of persons leaving India for good during that financial year, assessment of persons who are likely to transfer property to avoid tax etc (see table).

 

The tax payable would be enhanced by a surcharge at the rate of ten percent of the tax payable (after allowing rebate under Chapter VIII-A) in cases of individuals, Hindu undivided families, association of persons, and body of individuals with a total income exceeding Rs 10 lakhs. No surcharge would be payable by persons having incomes of Rs 10 lakhs or below.


Marginal relief would be provided to ensure that the additional amount of income tax payable, including surcharge, on the excess of income over Rs 10 lakhs is limited to the amount by which the income is more than Rs 10 lakhs. For example, the amount of tax and surcharge on a total income of Rs 10,20,000 calculated at the rates specified would have been Rs 2,56,000 and Rs 25,600 totaling to Rs 2,81,600.


The additional tax liability, as per this computation, incurred as compared to a person having a total income of Rs 10,00,000 is Rs 31,600. However, additional income as compared to a person having a total income of Rs 10,00,000 now comes to only Rs 20,000. Therefore, a marginal relief is given to the extent of Rs 11,600 in this case thereby providing that the additional tax liability cannot be more than the additional income. The total tax liability in this case will, therefore, be Rs 2,76,000.


Education cess


An additional surcharge called education cess is to be levied at the rate of two percent on the amount of tax computed, inclusive of surcharge , if any. For instance, if the income tax computed is Rs 2,00,000 and the surcharge is Rs 20,000, then the education cess of two percent is to be computed on Rs 2,20,000 which works out to be Rs 4,400. No marginal relief will, however, be available in respect of the education cess.

Indian CAs to soon get recognition in Singapore, UK

26th June 2006: Indian Chartered Accountants can look forward to practice in Singapore and the UK as the Institute of Chartered Accountant of India (ICAI) is in the process of signing a mutual recognition of professional agreement with the two countries.

ICAI president T N Manoharan said that the association, the apex body for CAs in India, was in very advanced stage of discussion with its counterpart in Singapore for signing the agreement.

"I am hopeful that in next two months, everything would be finalised between both the institutes," he said, pointing out that this was a part of the Comprehensive Economic Cooperation Agreement (CECA) with the city-state.

ICAI has also initiated talks with its counterpart in the UK. "This is at a preliminary stage now," he said, adding that besides mutual recognition of degrees, many other areas are being looked into for cooperation.

"For this, an Indo-UK study group has been formed at the instance of the Commerce Ministry and I expect that the agreement with the UK would be through by the end of this year," Manoharan said.

Apart from the two countries, SAARC nations like Nepal and Sri Lanka had also envinced interest in having similar kind of agreement with ICAI. "Dialogue would start soon," the ICAI president said.

Future Capital in talks with US fund for hospitality foray

23rd June 2006: Future Capital, the financial arm of the Future group (earlier known as Pantaloon Retail), is in talks with a leading US-based financial institution to be the equity partner for its $150-200 m foray into the hospitality sector, sources said.

The group is setting up a separate subsidiary to build 50 hotels in the 3 and 4 star category as part of a retail-led, mixed-used development project that will be built by Future Capital's $350m Horizon fund. The group will also be establishing a joint venture with an international hotel operator to manage the hotels.

Confirming the move, Samir Sain, CEO of Future Capital, said the plans are still at the drawing board stage. "We see the retail-led real estate developments having strong syngergies with hospitality, both for hotels and service apartments" he said. A retail-led mixed used development typically is a mall built on a large tract of land and includes residential, commercial and hotel developments. The group is planning to have such centres across tier I and tier II markets, sources said.

The proposed plan will be headed by Shishir Baijal, CEO of the group's real estate funds, Horizon and Kshitij, sources said. The group is hiring a senior team with a CEO to handle the business which would report to Mr Baijal.

Meanwhile the group is contemplating a corpus of around Rs 300-500 crore for its second real estate fund, Kshitij 2. Horizons, which focuses on areas of more than 50,000 sq ft, has a lot of foreign investors and closed recently at $ 263m, sources said. Kshitij 1 closed last year at around $350m.

Government says Senior Citizens Savings Scheme taxable

16th June 2006: The Government on Wednesday clarified that the Senior Citizens Savings Scheme, that gives 9% interest rates on investment up to Rs 15 lakh, is taxable and that tax would be deducted at source for those elderly people who come under the tax net.

Senior citizens beyond 65 years of age and having no taxable income can fill up form 15 H, finance ministry sources said.

Those who are between 55-65 years of age would have to fill up form 15 J in case they do not have taxable income, they said.

For all others, tax will be deducted at source on interest income, which is deposited in their savings accounts quarterly, the sources said.

The tax rate at 10% is raised to 10.2% due to education cess. Those with income beyond Rs 10 lakh per annum will also pay 10 per cent surcharge, increasing their tax liability on interest income to 11.22%.

The scheme was launched in August, 2004 when bank deposit rates had hit a low of 5-6%, making it one of most attractive options for senior citizens.

At that time Finance Minister P Chidambaram had made it clear that the scheme was taxable.

Investors were allowed to invest a maximum of Rs 15 lakh and the tenure is five years, extendable by three years. The scheme was open for those aged 60 and above and those who took voluntary retirement at the age of 55 and above.

Franklin Templeton to reopen Prima Fund sales

16th June 2006: Franklin Templeton Investments (India) on Wednesday announced plans to re-open sales in its open-end diversified equity fund, Franklin India Prima Fund (FIPF), which invests predominantly in mid-and-small-cap stocks.

Fresh subscriptions will be accepted from June 19, 2006, the company stated in a release issued here on Wednesday.

"Given the recent declines in mid-and-small-cap stocks and the consequent fall in their valuations to relatively attractive levels, our investment team is confident of deploying fresh inflows in good long-term opportunities," said Vivek Kudva, President of the company.

The fund was closed for fresh subscriptions in February 2006.

Market mayhem casts doubts on timing of DLF public offer

15th June 2006: A sustained fall in the stock market has put a question mark on the timing of the country's largest equity offering, the Rs 14,000-crore DLF Universal IPO.

The Delhi-based real estate firm's managing director Rajeev Singh said, "Currently, our sole focus is on obtaining the Sebi approval. We expect it in the next ten days. We will take a call on the timing after that." However, there is speculation in the market that DLF may even cut the size of the issue.

The company was initially expected to hit the primary market sometime in early July. But there is a growing thought among bankers that the IPO could be postponed till markets turn favorable.

The stock market has fallen 29% since its peak on May 11 when the Sensex touched 12,671 points. On Wednesday, the benchmark index ended at 8,929.44 points.

"Small investors, as well as HNIs who have taken a hit in the mid-cap crash will not return to the market in a hurry. Besides, the lack of oversubscription and weak listing of IPO shares have forced banks to stop IPO finance," said a market source. Mr Singh said, "We're looking at long-term investors as real estate plans typically result after two years. We're not looking at short-term market conditions." If DLF gives July a miss, the IPO may be delayed by more than a month as August is a lean period for FII investments. "Normally, corporates avoid IPOs and GDRs in August when big investors and fund managers go on vacation. So DLF will either try to tap the market in July or come back in September or October," said an investment banker. "There is speculation in the market that adverse conditions could postpone the (DLF) issue by a much longer period... may be towards September," said investment advisor Arun Kejriwal. "But many investors are also keeping their fingers crossed that merchant bankers don't bunch issues once the market improves," he added.

The DLF issue would serve as a test for other real estate companies. Major realty IPOs in the pipeline includes GMR Infrastructure, Lanco, Parsavnath Developers, Khanna Papers and others.

According to disclosures to Sebi, DLF plans to issue 202 million shares, with a greenshoe option of an additional 17 million shares. If fully subscribed, the IPO will result in a floating stock of 12.7% shares, diluting promoter KP Singh's holding to 87% from 99.5%.

Overall, the company proposes to reserve 2 lakh equity shares for allotment to employees. Of the balance, 60% will be allotted to QIBs (qualified institutional buyers) and at least 10% will be available for non-institutional investors. Retail investors will be allocated 30% of the shares. The firm is likely to raise up to Rs 14,000, which suggested the offer would be priced at up to Rs 736 a share. On reports that Sebi has asked for queries on litigations against DLF, Mr Singh said he is yet to get "a formal query from Sebi on this. I cannot comment anything further".

Service tax to be paid on brokerage income

12th June 2006: The new service tax valuation rules, which came into effect recently, will change the base on which tax is calculated. Service tax is to be paid on brokerage income, which, on an average, works out to 0.5% of the transaction value. The broker is also required to pay a stamp duty of 0.01%.

Till now, broking houses were deducting the stamp duty outgo from the brokerage commission to arrive at the net income on which the service tax was paid. Thus, the service tax was calculated on an amount which was lower than the commission earned by the broker.

They did this as the rules were silent on the matter and tax authorities never bothered. The new rules mandate service tax on the ‘gross’ consideration, which means the calculation will factor in the entire commission and not the amount arrived at after deducting stamp duty. Though the rules allow for a few deductions, stamp duty is not one of them.

For retail transactions, the amount may be small enough to be ignored. But the absolute brokerage earned on bulk trades placed by FIIs is high and a change in the service tax calculation could make a difference. On a monthly basis, this may not be an insignificant sum.

The new service tax rules came into effect on April 19. Market intermediaries are aware of the issue. “It’s like a sleeping dog. No one wants to wake it up.

However, brokers are aware of the possibility that they may have to face a higher service tax outgo. The issue is being discussed informally among them,” said a source.

It’s a matter of interpretation and one is unclear which way the excise department would go. While it’s perceived that even if the department does not insist on the amended calculation immediately, given a choppy market and recent losses suffered by investors as well as brokers, the matter might be pursued at a later point.

A pointer to this is the department’s intention to levy service tax on entry and exit loads of mutual funds. These are charges that investors have to bear while buying or selling mutual fund units.

Even though fund houses along with the industry-level organisation, Amfi, think that this would amount to double taxation, the excise department has spelt out that there should be a service tax on the loads.

Asia Leisure Services Ltd files red herring prospectus with Sebi

2nd June 2006: Asia Leisure Services Ltd, engages in tours and travel, proposes to enter equity market with a public issue of 85,72,000 shares of Rs 10 each through 100% book building.

The company intends to utilise the funds raised through this issue to part finance its expansion plan. The project envisages construction of hotels or taking over of existing hotels on long term lease, the company said in a statement.

It has appointed IDBI Capital Market Services Ltd as the book running manger and Intime Spectrum Registry Ltd as the registrar.

IT returns: Saral forms are valid as of now

26th May 2006: The Government on Thursday said Saral forms will be valid for filing of income tax returns as of now.

Sources in the Central Board of Direct Taxes said they are contemplating new forms to replace the Saral form, but no decision has been taken so far.

Until the new forms are notified, as and when the decision is taken, the existing forms will not only be valid, those filing on Saral forms would not be asked to file again in the new forms, they said.

Allcargo Global Logistics public offer to open on June 1, price band at Rs 625-725/share

24th May 2006: Port-based logistics service provider Allcargo Global Logistics is planning to enter the market on June 1 with a public issue of 20.79 lakh equity shares of Rs 10 each through book building.

The price band has been fixed at Rs 625 to Rs 725 per equity share of Rs 10 each. The issue closes on June 6. The issue will constitute 10.26% of the post-issue paid-up capital.

The company is planning to deploy the net proceeds of the issue for setting up of container freight stations (CFS) and inland container depot (ICD), prepayment of loan availed from Yes Bank and general corporate expenses including acquisitions.

Allcargo Global Logistics is planning to set up CFS and ICD in Chennai, Mundra and National Capital Region (NCR).

Deccan Aviation IPO gets extended IPO by 3 days, cuts price

24th May 2006: Deccan Aviation, which runs low-cost carrier Air Deccan, today extended its initial public offering (IPO) by three days and pared the lower limit of the price band by Rs 4.

The book-built issue with an original price band of Rs 150-175 was slated to close today. The new price band is Rs 146-175. This is the first instance of a price cut in a book-built public issue and extension of closing day.

“Possibly, this is the first example of a delayed closing of a public float,” said an investment banker.

Deccan Aviation Managing Director GR Gopinath said that the intention of the twin moves was to provide opportunity to the investors who were caught in the market mayhem in the past one week and could not participate in the issue.

“The issue was 1.06 times subscribed at the end of today. However, a lot of institutional investors told the merchant bankers that they could not focus on the issue as they were too preoccupied with the market slide. The company decided to provide them an opportunity to invest in the issue.

The price band was revised as it is mandatory under the Securities and Exchange Board of India rules if a corporate entity wanted to extend the closing date, merchant banking sources said.

They added that all the categories of the issue were fully subscribed. UTI and LIC were among the prominent institutions that put in bids for the Deccan Aviation stock.

According to the data available on the National Stock Exchange, out of the total issue size of 2.45 crore shares, the company received bids for 2.59 crore shares till late this evening.

However, analysts said the issue failed to evoke huge response from investors due to the company's poor financial condition.

“The loss-making company would break even only after two years. So investors were a bit bearish since the first day of the issue. The carnage in the market aggravated their fears,” they added.

Enam Financial Consultants and ICICI Securities are book-running lead managers for the issue and Karvy Computershare Private is the registrar to the issue.

Earlier, SBI Caps, JP Morgan and ABN Amro Rothschild had declined to manage the issue. The equity shares of the company are proposed to be listed on the BSE and NSE.

Sebi: existing system for IPOs to continue

17th May 2006: Market regulator Sebi said on Tuesday that it has no plans to revise the existing system for Initial Public Offerings (IPOs), under which quotas are provided for various class of investors. "SEBI has no plans to do away with the existing systems for Initial Public Offerings," it said in a formal statement here.

Zenith Birla files draft for Rs 131 cr

16th May 2006: Steel pipe manufacturer Zenith Birla (India) has filed its draft prospectus with the market, for a public issue of Rs 131 cr. Zenith is raising funds primarily to set up additional facilities for manufacture of mechanical tubes for application in the auto components sector and also for augmenting the working capital requirement for its existing operations, it said in a release. IDBI Capital Market Services and Keynote Corporate Service are the lead mangers of the issue.

Bluplast Industries to raise Rs 35 cr through IPO

16th May 2006: Plastic products manufacturer Bluplast Industries will raise around Rs 35 cr from its proposed initial public offer to expand capacity of its Daman plant. The company has received Sebi acknowledgement for its proposed IPO of 1.10 crore equity shares of Rs 10 each at a price of Rs 32 per share. Out of this, it has reserved 10 lakh equity shares for its permanent employees and the net public issue size is one crore equity shares.

Unity Infraprojects Ltd. (UIL) public offer to open on May 19

16th May 2006: UIL is one of India’s leading engineering and construction companies, with fast growing business that provides integrated engineering, procurement and construction services for civil construction and infrastructure sector projects. UIL has execute many projects on a turnkey basis, and in doing so, provided a range of specialized construction and operational services, including electrical, fire prevention & control, plumbing and air conditioning.

            UIL’S project expertise includes:

1)   Civil construction projects, which include structures such as commercial & residential buildings, mass housing projects and townships, industrial structures, information technology parks, corporate offices, transportation terminals including airports and railway stations, stadiums etc.

2)   Transportation engineering projects, including roads, bridges, flyovers and subways.

3)   Irrigation and water supply projects, including dams, tunnel, lift irrigation projects

Some of UIL’s major clients include, Airport Authority of India, The National Sports Club of India, Northeast Frontier Railway, Department of Irrigation, Govt. of Andhra Pradesh, Municipal Corporation of Greater Mumbai, Delhi Development Authority.

ISSUE DETAILS

ISSUE SIZE

(No. of Shares)

PRICE BAND

OPENING

DATE

CLOSING DATE

LISTING

ON

LEAD MANAGERS

34,43,000 Equity shares of Rs. 10 /-

 

Rs. 651

To

Rs. 732

19.05.2006

24.05.2006

BSE &

NSE

DSP MERRILL LYNCH

OBJECT OF THE ISSUE

The objects of the Issue are to achieve the benefits of listing on the Stock Exchanges and to raise capital, which will enhance the Company’s brand name provide liquidity to the companies existing shareholders. Listing will also provide a public market for the Equity shares in India.

FINANCIAL HIGHLIGHTS

PARTICULARS

(Rs. Mn.)

     FY 2005

    FY 2004

     FY 2003

FY 2002

FY 2001

Total Income

 

2,706.08

2,046.38

925.72

794.53

494.44

PAT

 

 

118.66

67.87

27.92

21.71

15.19

Equity Capital

 

100

100

100

100

56.51

Reserves

 

344.11

239.81

189.04

162.44

5.66

Fixed Assets

 

104.09

75.87

43.86

36.92

23.27

               

VALUATION

Considering the Adjusted EPS for FY05 of Rs.11.87, the issue price at the higher band of Rs. 732, discounts the EPS by 61.67 times and at lower price band of Rs. 651, by 54.84 times.

Patel Engineering public issue priced at Rs 440

15th May 2006: The construction firm Patel Engineering Ltd said on Monday it had fixed a price of Rs 440 per share for its follow-on public issue.

DLF Universal Ltd. files for Rs 13,600 cr IPO

13th May 2006: DLF Universal Ltd, which filed a draft red herring prospectus for its initial public offer with the Securities and Exchange Board of India today, aims to raise Rs 13,600 crore by issuing 202 million equity shares, each having a face value of Rs 2. The shares will be offered at a premium to be decided through a 100% book building process.

The issue, if the green shoe option is exercised, will constitute 12.77% of the fully diluted post-issue capital of the company. That will leave about 87% equity under the control of DLF Chairman KP Singh and his son, DLF Vice-Chairman Rajiv Singh.

If the company is able to raise the money from the market, its total value will be pegged at Rs 106,499 crore. The notional value of the holding in the hands of the father and the son will be Rs 92,899 crore, or about $20 billion, placing them second in the list of the richest Indians, just behind Mittal Steel Chairman LN Mittal.

“Notional is a good word. We are looking to create an institution, one that will take its rightful place not only in India but internationally,” said Rajiv Singh. The company’s balance sheet includes Rs 848.9 crore of “goodwill” in 2006, up from Rs 52.2 crore in 2005.

Of the targeted amount, the company intends to spend Rs 6,500 crore on land acquisition, Rs 3,100 crore on development and construction of existing projects, and Rs 4,000 crore on prepayment of loans.

Of the amount intended for land purchases, Singh said only a “small portion” would flow into special economic zones. “Most of it will be on homes, offices and retail,” he said.

The company has said in the prospectus that it’s has identified 62 cities for development of various projects. Until April 30, 2006, DLF Universal made partial payments to acquire 2,893 acres of land across the country.

All told, the company is evaluating residential, commercial and retail space projects of over 118 million sq feet in the country. Real estate consultants have valued DLF’s land bank at Rs 100,000 crore.

The company has said in the prospectus that it is adopting a new business model, based on the development and sale of commercial and retail properties. Earlier, it developed and leased properties. It believes the new model will protect it from steep declines in asset values as a result of market conditions.

In the IPO, the company proposes to reserve 200,000 equity shares for allotment to employees. Of the rest, at least 60% will be allotted to qualified institutional buyers, not less than 10% to non-institutional investors and not less than 30% to retail investors.

Kotak Mahindra Capital and DSP Merrill Lynch are the global coordinators and book running lead managers, Goldman Sachs and HSBC are advisors to the issue. Book running lead managers to the issue include Citigroup Global Markets India, Enam Financial Consultants, ICICI Securities, JM Morgan Stanley and UBS Securities India. SBI Capital Markets is the co-book running lead manager.

QIB route quickens pace of fundraising

9th May 2006: Listed companies can now raise funds locally through QIB placements, as per recent guidelines issued by Sebi. The move is aimed at encouraging companies to raise funds locally instead of through GDRs and FCCBs. “Over a period of time, it will reduce export of capital from India.

It will help compete with the GDR/FCCB market. The move will also open up options for Indian retail investors since securities will have to be listed on domestic bourses. In case of GDRs/ADRs, shares need not ever come into the Indian market,” Sebi chairman M Damodaran said.

A minimum of 10% of the issue should be reserved for mutual funds. It also prescribed limits on the minimum number of institutional investors with whom securities would be placed.

Accordingly, an Rs 250-crore issue should have at least two investors and an issue in excess of Rs 250 crore should be allotted to five investors or more. Companies are not allowed to make placement for more than 50% of the issue size to any single investor. For this purpose, QIBs belonging to the same group will be treated as a single investor.

Sebi said the floor price of the specified securities will have to be determined on the basis of guidelines applicable to GDR/FCCB issues and the price will have to be adjusted for corporate actions, such as stock splits, rights/bonus issues, etc. The Sebi move has evoked positive response. However, the one year lock-in, similar to a preferential allotment, may make the option less attractive.

“This is a good move as Indian companies can now raise funds at much cheaper rate and at higher speed in the domestic market. However, companies will still be tapping GDR/ADR or FCCB markets, especially when they want to raise large funds,” said Prithvi Haldea, MD, Prime Database, a research firm.

According to Ravi Kapoor, MD and head of India equity capital market, Citigroup: “Allowing companies to make QIB placement is a welcome move. It will help increase liquidity. In case of GDRs, there are issues like division of liquidity between markets and delays with regard to fungibility.”

Securities and Exchange Board of India (Sebi) issues norms for QIP

9th May 2006: Sebi to make the Indian markets more competitive and efficient, has decided to introduce an additional mode for listed companies to raise funds from the domestic market in the form of Qualified Institutions Placement (QIP).

Key features of the move include:

Issuer: A company, whose equity shares are listed on a stock exchange having nation-wide trading terminals and which complies with the prescribed requirements of minimum public shareholding of the listing agreement, will be eligible to raise funds in the domestic market by placing securities with Qualified Institutional Buyers (QIBs).

Securities: Securities that can be issued through QIP are equity shares or any securities other than warrants, which are convertible into or exchangeable with equity shares (hereinafter referred to as "specified securities").

A security, which is convertible into or exchangeable with equity shares at a later date, may be converted or exchanged into equity shares at any time after allotment of security but not later than sixty months from the date of allotment. The specified securities shall be made fully paid up at the time of allotment.

Investors / Allottees: The specified securities can be issued only to Qualified Institutional Buyers (QIBs). Such QIBs shall not be promoters or related to promoters of the issuer, either directly or indirectly. Each placement of the specified securities issued through QIP shall be on private placement basis.

A minimum of 10% of the securities in each placement shall be allotted to mutual funds. For each placement, there shall be at least two allottees for an issue of size up to Rs 250 crore, and at least five allottees for an issue size in excess of Rs 250 crore.

Further, no single allottee shall be allotted in excess of 50% of the issue size. Investors shall not be allowed to withdraw their bids / applications after closure of the issue.

Issue Size: The aggregate funds that can be raised through QIPs in one financial year shall not exceed five times the net worth of the issuer at the end of its previous financial year.

Placement Document: Issuer shall prepare a placement document containing all the relevant and material disclosures. There will be no pre-issue filing of the placement document with Sebi. The placement document will be placed on the websites of the stock exchanges and the issuer with appropriate disclaimer to the effect that the placement is meant only for QIBs on private placement basis and is not an offer to the public.

Pricing: The floor price of the specified securities shall be determined on a basis similar to that for GDR/FCCB issue, and shall be subject to adjustment in case of corporate actions such as stock splits, rights issue, bonus issue etc.

Other procedural requirements: The resolution approving QIP, passed under sub-section (1A) of Section 81 of the Companies Act, 1956 or any other applicable provision, will remain valid for a period of twelve months from the date of passing of the resolution. There shall be a gap of at least six months between each placement in case of multiple placements of specified securities pursuant to authority of the same shareholders’ resolution.

Involvement of Merchant Banker: QIP shall be managed by a Sebi-registered merchant banker who shall exercise due diligence and furnish a due diligence certificate to stock exchanges stating that the issue complies with all the relevant requirements. The merchant banker shall file a copy of the placement document and post issue details with Sebi within thirty days of the allotment for record purpose.

Rural Electrification Corporation (REC) plans IPO by December

6th May 2006: State-run Rural Electrification Corporation on Thursday said it plans to hit the capital market with its initial public offer amounting to 10% of its equity by December this year.

"We are working on the IPO. We plan to hit the market by the end of this year," REC Chairman and Managing Director Anil K Lakhina said.

Lakhina said the company was looking at selling 10% of its equity. However, he did not say how much amount the company was expecting to raise through the issue.

REC, which primarily funds rural electrification projects in the country, posted a net profit of Rs 800 cr in 2004-05. The company has an authorised capital of Rs 1200 crore, paid up capital of Rs 800 crore and net worth of about Rs 3,800 crore.

REC is the latest power sector utility to consider coming out with the IPO. Another public sector company Power Finance Corporation is expected to come out with the IPO next month, while National Hydroelectric Power Corp and transmission utility Power Grid Corporation also plan to hit the market by the end of this year. So far, NTPC Ltd is the only public sector power company that is listed on the bourses.

The government has already given a go-ahead to sell 5% equity in PFC along with its IPO. The government was likely to follow the same route in case of Power Grid and REC as well, though no decision had been taken so far, sources said.

DS Kulkarni raises Rs 60 cr via rights issue

4th May 2006: Pune-based real estate firm DS Kulkarni Developers Ltd today said it has raised about Rs 60 crore through its rights issue of 55 lakh shares.

The rights offer comprising 55 lakh equity shares of Rs 10 each were issued at a premium of Rs 100 each in the ratio of one new equity shares for every two existing shares held on March 21, DSK informed the Bombay Stock Exchange.

The rights issue which got subscribed, opened from March 30 and closed on April 29, it said.

Meanwhile the company's follow-on-offer of 55 lakh shares also got closed yesterday. It intends to raise about Rs 151 crore at the higher end of the price band of Rs 250-275 from the issue.

Development Credit Bank (DCB) to raise Rs 300 cr via IPO

4th May 2006: The Development Credit bank, an emerging private sector bank in India, would shortly go in for its IPO to raise Rs 300 crore.

The Aga Khan Fund for Economic Development (AKFED), an institution that supports economic development activities in the Third World, is its largest single shareholder and holds 69% of DCB's equity.

This (IPO) would reduce the AKFED stakes considerably, a top bank executive said here.

P Vasudevan, Head, Consumer banking group of the bank said that the Bank had applied for SEBI's permission for the IPO.

Being the first bank, which had been converted from a co-operative bank to private commercial bank, it wanted to increase its presence and make it a 'Pan India' one, he said.

The bank today launched its unique 'M-Power Current Account', claimed to be the first such in the country, here.

Under the scheme, the depositors need not maintain an average quarterly balance, but could still avail of several facilities like getting demand drafts up to Rs 50 lakh without paying any charges, free payable at par cheques up to Rs 50 lakh per month and electronic fund transfer facility upto Rs. one crore a month, he said.

The depositors should pay an annual fee of Rs 2,500 for using these facilities, he said.

Reliance Petroleum Ltd: Basis of Allocation

4th May 2006: Reliance Petroleum Ltd, a subsidiary of Reliance Industries, launched its initial public offer (IPO) on April 13 with a price band of Rs 57-62. The issue was closed on April 20.

 

RETAIL CATEGORY: - 13.80 TIMES
 

No. of Shares Applied

Ratio of Allottees

No. of Shares Allotted

100

5:69

100

200

10:69

100

300

15:69

100

400

20:69

100

500

25:69

100

600

3:7

100

700

1:2

100

800

40:69

100

900

5:8

100

1000

55:76

100

1100

11:14

100

1200

6:7

100

1300

14:15

100

1400

1:1

9:16

101

1

1500

1:1

109

1600

1:1

116

 

NON-INSTITUTIONAL CATEGORY: - 57.59 TIMES

TENTATIVELY LISTING ON 8TH OR 11TH

Karvy gets a reprieve, can open new a/cs

3rd May 2006: The Andhra Pradesh high court on Tuesday gave a breather to Karvy Stock Broking Ltd and allowed it to open fresh demat accounts. It also placed an interim suspension on Sebi’s April 27 interim order asking Karvy’s clients to shift their demat accounts to some other depository participant (DP) within 15 days.

 

Karvy is the largest DP with 7.5 lakh demat accounts across the country.

 

The high court ruling came in response to a Karvy petition against Sebi’s interim order. Karvy contested the order on the grounds that the regulator does not have jurisdiction under the Sebi Act and the Depositories Act, 1996 to give such an order. It also contested the delegation of such an order by a single member of Sebi.

 

G Anantharaman, whole-time director of Sebi, who passed the 252-page interim order refused to comment stating the matter was sub-judice.

 

When contacted, C Parthasarathy, chairman, Karvy group, who was in Mumbai said, “Having not read the court order , all I can say is investors need not worry about shifting their DP accounts.”

 

• Karvy says Sebi has no jurisdiction to pass such an order under the Sebi Act or the Depositories Act
• The delegation of the order by a single member of Sebi as against the Sebi board has also been challenged
• Sebi can file a counter-affidavit to the High Court ruling, or pass a final order after hearing out Karvy

Karvy’s counsel S Venkatramana said Karvy would submit its objections to Sebi on Wednesday. It was now upto Sebi to respond to the high court order, he said.

 

The court’s interim suspension will continue till the market regulator modifies its order or passes a final order.

Sebi, vide its ex-parte ad interim order dated January 12, had already directed two DPs, Karvy and Pratik not to open new demat accounts till further notice. On April 27, Sebi followed this up and barred 24 key operators including Indiabulls from the market. Twelve DPs were barred from opening fresh accounts for their involvement in the Yes Bank and IDFC IPO scam. It gave them 15 days to file objections.

 

Following Indiabulls’ clarification submitted to Sebi on April 28, the market regulator kept its order against Indiabulls in abeyance. Sebi also clarified the same day that the ban applied only to proprietary trades and not to trades on behalf of clients.

 

If Sebi’s final order maintains the ban on Karvy, then the latter would have no option but to take it up with the Securities Appellate Tribunal.

India Cements launches $75 mn FCCBs issue

3rd May 2006: India Cements has entered into a subscription agreement for $75 million foreign currency convertible bonds (FCCBs) on May 02, 2006.

According to a release issued by India Cements to the BSE today, the bonds, which have a maturity of 5 years and 1 day, are convertible at a conversion price of Rs 305.57 per share.

'The bonds are zero coupon bonds with a yield to maturity of 7.95%, calculated on a semi-annual basis. The aforesaid issue was significantly oversubscribed within a few hours of launch. The bonds are expected to be listed on the Singapore Exchange Securities Trading', the release added.

Sebi okays 20 VCFs to invest in realty sector

3rd May 2006: The Reserve Bank of India (RBI) has asked the banks to reduce their exposure to the real estate sector venture capital funds.

Real estate VCs attract funding from three sources — domestic institutional investors and banks, which account for 50-60% of the funds raised; corporate houses and high networth individuals, which account for 20-30% of the investment; and NRIs and PIOs who chip in with another 20%.

Given the current realty boom across the country, there’s not been much of problem in building a fund corpus, which after deployment, promises attractive returns to its investors. The Securities and Exchange Board of India (Sebi) has approved the proposals of close to 20 VCFs to invest in real estate in India.

Many of these VCFs are in the process of channelling a substantial amount from both local and global investors into realty acquisition and development. They started moving in since April ’04, when the government allowed VCFs to invest in realty and after FDI was allowed in the sector this year.

Venture funds promoted by ICICI, HDFC, Kotak, and Pantaloon and foreign funds with NRI components such as Solitaire Investments have already built up a portfolio of commercial realty that have established tenants.

No bills? You can still get I-T benefit

2nd May 2006: Here’s some good news for salaried employees who may be struggling to maintain details on exactly how they spend their allowances. Even if you lose your restaurant bills, or laundry bills, or other evidence to prove that your allowances have been spent in full, you can still claim tax exemption, provided the claim is reasonable, thanks to a recent order by the Income-Tax Tribunal, Mumbai.

The order means that if a salaried employee spends his allowance during the course of his duty, the I-T department is bound to accept the contention of the tax payer that he had spent the allowance in full, even if the claim is not backed by the necessary evidence. The allowance thus claimed should appear reasonable and should be in proportion to the salary.

An Income-Tax Appellate Tribunal (ITAT) order says that the tax authorities cannot insist on details of expenses actually incurred unless the specific allowances are disproportionately high compared to the salary received by him or is unreasonable with reference to the nature of duties performed by the taxpayer.

These issues have been analysed in an Income-Tax Appellate Tribunal (ITAT) order in the case of an employee with the Shipping Corporation of India, Madanlal Mohanlal Narang, who claimed exemption for uniform making allowance and uniform washing allowance amounting to Rs 51,554. The tax authorities declined to exempt the allowance from taxation on the ground that the evidence produced to prove that he had actually spent the amount, was insufficient.


The ITAT order says that the tax authorities cannot insist on details of expenses actually incurred unless the specific allowances are disproportionately high compared to the salary received by him or is unreasonable with reference to the nature of duties performed by the taxpayer.


Senior chartered accountant TP Ostwal said, “The decision is in tune with the current realities as it is impossible for an ordinary man to preserve all the documentary evidences of expenditure and the employers of large companies will not make frivolous payment without the business need”.


Section 10 (14) (I) of the Income-Tax Act provides for allowances for the purpose of meeting expenses incurred for official duties, but the exemption is available only to the extent to which such expenses are actually incurred. The assessing officer disallowed the exemption only on the ground that there were insufficient proofs that the tax payer has actually spent the allowance.


The ITAT, in its order dated April 21 quotes CBDT circular on April 1 1955. It said, “Special allowance or benefit being reasonable and not disproportionately high — No details of expenses actually incurred need be asked for the purpose of granting exemption under section 4 (3) of 1922 Act”.

Sebi order barring Karvy not to affect RPL IPO

28th April 2006: Sebi's order of barring Karvy as a registrar for new issues will not affect IPO of Reliance Petroleum.

Though Karvy has been barred from acting as a registrar for new IPOs, it will not affect RPL IPO as it has already happened; sources in Reliance Industries said.

In perhaps the largest ever oversubscription of a public issue in recent times, Mukesh Ambani-controlled Reliance Petroleum has received share applications for an unprecendent 49.72 times more than the size of its IPO.

Sebi: Only proprietary trades banned

28th April 2006: The Securities and Exchange Board of India (Sebi) has clarified that the ban on the three broking firms, Indiabulls, Anagram and Karvy is applicable only to own account (proprietary) trading by them. Clients of these brokerages, who have demat (trading) accounts with them will be free to trade as usual.

SEBI barred 24 key operators, including Indiabulls and Karvy Stock Broking, from operating in the stock market

28th April 2006: Sebi, in an order issued, has barred 24 operators from the market for indulging in the IPO scam.

The market regulator has also asked 12 depository participants not to open fresh demat accounts.

The order also barred Karvy Stock Broking from being a registrar for IPOs and Indiabulls from participating in the market.

HDFC Bank, Centurion Bank and IDBI Bank have been ordered not to open fresh demat accounts.

The order has also barred 85 financiers from the market.

G Anantharaman, whole time member of SEBI, vide an order dated April 27, 2006 has issued ex-parte ad interim order in the matter of Initial Public Offerings.

"In the recent past, while examining off-market transactions in the IPOs of Yes Bank (YBL) and Infrastructure Development Finance Company (IDFC), it came to the notice of SEBI that certain entities had cornered IPO shares reserved for retail applicants by making applications in the retail category through the medium of thousands of beneficiary accounts in the name of fictitious/benami entities with each of the application being of small value so as to be eligible for allotment under retail category.

"After the allotment, these fictitious/ benami allottees transferred these shares to their principals, who in turn, transferred the shares to their financiers. Most of these shares were sold immediately on listing.

"SEBI conducted investigations in respect of all the IPOs during the period from January 2003 to December 2005. The findings of investigations so far, prima facie, reveal violations of serious nature by the key operators, their financiers, concerned DPs and the depositories including violation of the provisions of SEBI Act, 1992 and Depositories Act, 1996 and the rules and regulations made thereunder. SEBI has issued directions against the concerned entities."

Godrej Consumer board nod for 1:4 split

27th April 2006: The board of directors of Godrej Consumer Products, which met today, approved a proposal to split stock in 1:4 ratio i.e one share of Rs 4 each would be split into four shares of Re 1 each. This was announced in a release issued by the company to the BSE today.

Shringar raises $20mn via FCCBs

27th April 2006: Shringar Cinemas has raised $20 million via foreign currency convertible bonds (FCCB).

According to a release issued by Shringar to the BSE, the issue comprised of $12 million, zero coupon Series A bonds due in 2011 and $8 million, 0.5% per annum Series B bonds due in 2011. "The yield to maturity (YTM) for Series A and Series B bonds would be 6.5% and 7.5%, respectively," the release added.

The proceeds of the issue will be used for capital expenditure in expansion and modernisation of multiplexes and the food court business, the release said.

No proposal for bonus/split: Reliance

27th April 2006: Mukesh Ambani-controlled Reliance Industries is not planning to issue bonus shares or splitting shares. Reliance, in a release issued to the BSE, said, "At present, there are no such proposals being discussed by the board of directors of the nature stated in some media reports."

Insurance Regulatory and Development Authority of India (Irda) suspends use of matrix for third-party motor risk cover

26th April 2006: Irda has suspended the use of the matrix that formed the basis for charging higher premium on third-party motor insurance, finding that it was being misused by general insurers.

The regulator has asked general insurers to go back to the system that prevailed prior to June 2003, when the matrix (a table of loading on motor insurance) came into effect.

The general insurers have been asked to load third-party motor premium tariff by 100% if the claims experience of any vehicle is adverse as per the insurer’s assessment. If the experience continues to be bad, then a further loading of 100% on the expiring premium can be charged, beyond which further loading is not allowed.

Irda said the loading matrix has led to undesirable practices, which have resulted in its suspension with immediate effect.

A senior official of a leading private sector general insurer said third-party motor insurance has high claims ratio and in some companies, the loss ratio is as high as 300%.

The regulator has also instructed insurance companies not to refuse third-party cover on motor vehicles.

It said the regional transport authorities, transporters and members of the insuring public has brought to its attention instances of refusal of third-party motor insurance cover by general insurance companies.

Irda said motor third-party insurance cover cannot be refused since it is a mandatory requirement under Section 146 of the Motor Vehicles Act, 1988.

It has been progressively receiving increasing number of complaints stating that insurers are either refusing third-party insurance cover (especially for commercial motor vehicles) or adopting dilatory tactics such as asking for a great deal of unrelated information or insisting on holding the documents relating to the vehicles for several days, aimed at making it difficult for the vehicle owner to get cover.

The regulator said it has been also been reported that besides the public sector insurers, the newly registered insurers are also refusing to entertain requests from commercial vehicle owners for motor third-party insurance.

Kotak MF launches twin advantage fund

26th April 2006: Kotak Mahindra Mutual Fund has launched a product - Kotak Twin Advantage Fund-Series II - that combines debt and stock options.

According to an official release by the company, Kotak Twin Advantage is a close-ended debt scheme with no entry load.

The scheme would invest 75 to 100% in debt and money market instruments and 0 to 25% in equity index options. The investment objective of the scheme is to generate income by investing in debt and money market instruments and to generate capital appreciation by investing in equity index options.

The fund gives investors an opportunity to capture the upside in potential of equity, with risk controlled participation in stock markets.

Nilesh Shah, president of Kotak Mahindra Asset Management Company, said: "As markets are trading at an all time high, valuations as reflected by P/E are higher than their long-term average. But fundamentals continue to be strong. Hence a lot of investors are contemplating to participate in equity markets."

Going by valuations, investors are concerned about the downside protection, but at the same time do not want to miss out the upside potential which is where Kotak Twin Advantage Fund-Series II helps, as it is "an innovative product meant for investors who strongly believe in the potential of equity markets," Shah said.

Tax tips for salary earners

25th April 2006: The main aim of tax planning is to reduce the incidence of income tax on you. This becomes imperative if you are the sole earning member of your family.

Reducing Your Tax Liability

Being salaried, you can reduce the incidence of tax in two steps: Firstly, by structuring your salary in a manner that will enable you to optimally utilise all the deductions related to it.

Secondly, by making investments/payments in pre-determined avenues which offer a deduction from the total taxable income, to the extent of the investment /payment made, subject to the maximum permissible limit.

STEP 1

Minimising The Tax Liability On Your Salary Income

Here’s taking a look at the various components of your salary and the tax exemptions attached to them...

House Rent Allowance (HRA)

If you stay in a rented house and receive HRA from your employer, you can claim a tax exemption to the extent of the least of the following three: 50% of your salary, if your house is situated at Mumbai, Calcutta, Delhi or Madras and 40%, if it is in any other place or Actual HRA received or Rent paid less 10% of the salary. Alternatively, if you are staying in your own house and you have taken a loan from a financial institution, on or after April 1, 1999, for the purpose of construction /acquisition of the house, then you can claim a deduction of up to Rs 1.5 lakh per annum from your total taxable income. If, however, you have taken the loan prior to April 1, 1999, then the deduction available is only Rs 30,000. employer (in the form of ticket restaurant coupons, etc.) do not attract tax.

Medical Reimbursement

You are eligible for a deduction of up to Rs 15,000 in the form of “medical reimbursements” from your employer. However, in order to claim this benefit, you must produce proper vouchers, such as medical bills, certificates from your doctor, etc.

Leave Travel Allowance (LTA)

If the entire amount available under LTA is actually incurred for travel for two journeys which are undertaken in a block of four calendar years, the entire LTA component does not attract tax. However, if only a partial amount is utilised, then the balance (i.e. the LTA available less the actual expenses) will attract tax.

STEP 2

Availing Of Provisions Under Section 80

Under Section 80 of the IT Act, you can claim tax deduction from your total taxable income to the extent of the investment/payment made in certain pre-determined avenues. Here’s taking a look at some of them...

Section 80C:

This section allows you to claim a 100% deduction from taxable income for any investment in or purchases of certain specified instruments up to a consolidated amount

Cash Vouchers

Non- refundable cash vouchers such as free meals provided by your of Rs 1 lakh per financial year. Some popular instruments allowed as deductions under this section include premiums paid for servicing life insurance policies, equity linked savings schemes of mutual funds, PPF and fixed deposits held with scheduled banks for a term of 5 years or more.

Section 80CCC:

This section offers a tax benefit on the servicing of pensions plans. As per the last union budget, the ceiling fixed for such deductions is Rs 1 lakh. However, there is a condition that the total deduction available to you under sections 80C, 80CCC and 80CCD (i.e. deduction in respect of contribution to pension schemes of the central government) are restricted to an aggregate of Rs 1 lakh.

Section 80D:

As per this section, premium paid towards servicing of health insurance can be deducted from your taxable income. However, this section comes with a ceiling of Rs 10,000 (Rs. 15,000 for senior citizens).

Section 80DD:

This section allows you to claim a deduction from your taxable income for expenses incurred for the medical treatment, training and rehabilitation of a dependant who has severe or ordinary disability. The benefit can be extended to specified amounts deposited in schemes framed by LIC, UTI and other identified institutions for the benefit of such dependants.
Section 80DDB:

Under this section, deduction for expenses that you incur on the medical treatment of certain specified ailments is available to the extent of Rs 40,000. For senior citizens, the limit for the deduction is raised to Rs 60,000. However, if you receive any reimbursement for these medical expenses from an insurer or your employer, you have to reduce the reimbursement amount while arriving at the final deduction applicable under this section to you.

Section 80E:

This section allows you to claim a deduction for interest on loans taken for pursing higher education.

Section 80G:

Any sum that you have paid in the current financial year as donations to certain specified funds, charitable institutions, etc., can be deducted from your taxable income.

Note: This article has been created based on the tax laws pertaining to the financial year 2006-07.

KEI to raise $60 mn via GDR, FCCBs

25th April 2006: KEI Industries Ltd, manufacturers of stainless steel wires and cables, today said it will raise $60 million through issue of Global Depository Receipts (GDR) or Foreign Currency Convertible Bonds (FCCB) or other convertible securities in the domestic or international markets.

The board of directors has approved the raising of funds through issue of convertible securities, GDR, FCCB by way of public issue, preferential allotment or international offering, the company informed the Bombay Stock Exchange.

The company would also increase the limit of Foreign Institutional Investors (FIIs) up to 49% of the paid-up equity share capital of the company, it said. The board also approved increase in the authorised share capital of the company from Rs 20 crore to Rs 25 crore by creation of 50 lakh equity shares of Rs 10 each aggregating to Rs 5 crore, it added.

Canara bank to raise Rs 3,000 to Rs 4,000 cr

25th April 2006: Canara Bank on Monday reported a 21.06% year-on-year growth in net profit at Rs 1,343.22 crore for 2005-06 and said it plans to raise Rs 3,000 crore to Rs 4,000 crore through follow on public issue and other instruments in the current fiscal. Canara Bank chairman and managing director M B N Rao said the raising of the capital through tier-I and tier-II issues would be in the 1:2 ratio.

Total income of the bank increased to Rs 10,089.03 crore for 2005-06 from Rs 9,115.80 in the corresponding period of previous year. For the quarter ended March 31, 2006, the bank posted a near five-fold increase in net profit at Rs 493.52 crore, up from Rs 102.30 crore for the corresponding period of the previous year. With aggregate business of the bank reaching Rs 1,96,229 crore -- deposits of Rs 1,16,803 crore, up 20.67%, and advances of Rs 79,426 crore, an increase of 31.45%, Rao claimed that Canara bank has emerged as number one among the nationalised banks.

The bank is targeting a global business level of Rs 2,33,000 crore for 2006-07, a growth rate of 18.74%, comprising Rs 1,38,000 crore under deposits and Rs 95,000 crore under advances, he said.

RPL fixes Rs 60 as issue price

25th April 2006: Reliance Petroleum on Monday fixed Rs 60 as the issue price for its maiden IPO, which offered 45 crore equity shares to the public.

DS Kulkarni public offer to open on April 25, price band Rs 250-275/share

24th April 2006: DS Kulkarni Developers Ltd on Monday said it has fixed the price band for its follow-on public issue of 55 lakh shares at Rs 250-275 per equity share. The 55 lakh equity shares of Rs 10 each would be issued though 100% book building process, DS Kulkarni informed the Bombay Stock Exchange.

The issue would open on April 25 and would close on May 03.

The price is 25 times the face value at the lower end of the price band and 27.50 times the face value at the higher end of the price band. The company develops residential housing colonies, including floorplans and amenities.

Adlabs to demerge radio biz, to list demerged co

24th April 2006: The Anil Ambani-controlled Adlabs Films (AFL) on Sunday approved the demerger of its FM radio business. It also announced that the new entity would be listed on the stock exchanges.

“The board of directors of AFL approved the proposal for de-merger of the FM radio business to a wholly-owned subsidiary (SPV),” the company said.

The demerger would involve the issue of pro rata shares by the SPV to all Adlabs shareholders in the ratio of two free shares of the SPV for every one share of AFL.

“The demerged company is proposed to be separately listed on the BSE and NSE to provide liquidity to all shareholders. The demerger will not have any impact on the share capital of AFL,” the company added.

The board also approved the amalgamation/merger of two subsidiaries of AFL — Entertainment One (India) and Mukta Adlabs Digital Exhibition — with the company.

The demerger is subject to requisite approvals from shareholders, licensing and regulatory authorities, lenders, stock exchanges and the high court.

Adlabs said the demerger, apart from unlocking shareholder value, would help the company by creating an independent focused organisation to lead the FM radio business which was seeing high growth.

It would also increase the financial flexibility for the FM radio business to independently raise resources for future growth, Adlabs said.

Reliance Petroleum (RPL) IPO subscribed 52 times

21st April 2006: The initial public offer of RPL has broken all records. The IPO has been subscribed 52 times and has received applications worth around Rs 1,40,000 crore, almost double the Rs 72,737 crore ONGC received in its issue in 2004.

The qualified institutional buyer (QIB) portion of the issue received 44 times subscription, the high net worth individuals’ (HNI) portion 16 times and the retail individual investors’ portion 9 times. The issue has got 2.1 million retail applications. So far NTPC had received the highest number of retail applications at 14.2 million.

The maximum bids have been made at Rs 62 -- the upper end of the band. The company sold shares through nine investment banks, including Citigroup and the local joint ventures of Merrill Lynch and Morgan Stanley.

Analysts said the huge success of the IPO was a crowning glory for Mukesh Ambani. For a greenfield project, which had nothing to show on the ground, the promoters' track record alone prompted such a huge response, they said.

RPL, subsidiary of Reliance Industries, was set up to build a refinery and polypropylene plant in the special economic zone of Jamnagar.

The issue is being made to part finance the Rs 27,000 crore export oriented refinery being set up by the company next to its existing refinery project. The SEZ refinery would focuses more on supplying Euro IV grade diesel and gasoline to the EU countries and also to the US market.

RIL has come up with IPO almost after 29 years as the last IPO of Reliance group had hit the market way back in 1977. The RPL issue had hit the market on April 13 and closed today.

Reliance may consider splitting its stock

21st April 2006: The Mukesh Ambani-led Reliance Industries is believed to be considering a stock split, according to sources.

Although a timeline has not been drawn for this, one of the options the company is believed to be considering is to split the stock in the ratio of 1:2 or even 1:4, like many IT giants have done in the past, sources said. A stock spit involves reducing the face value of a share, thus increasing the number of shares. The RIL stock, which still has an Rs 10 face value, could be split into two shares of face value Rs 5, or 10 shares of face value Re 1.

A company spokesperson, however, denied any such plans. “This is pure rumour. Though it may look logical for us to go for a stock split— with the stock at Rs 900/1,000 levels— there is actually no strong case for us to do that. The dynamics of RIL are far different from that of tech majors,” he added.

RIL currently has a market cap of over Rs 1.10 lakh crore. Several theories are doing the rounds on why RIL might wish to go in for a stock split. It would increase the share float, and with a proportional fall in the share price, the stock split would further bolster retail shareholder participation.

With the stock zooming close to the Rs 1,000 level, RIL chairman Mukesh Ambani is reportedly keen to ensure that RIL remains a company with the largest pool of retail shareholders. Sources said the scrip touching the 1k level could well be the trigger point to start the process. There is, however, no confirmation of this.

Time extended for Reliance Petroleum Ltd (RPL) IPO

19th April 2006: Stock market regulator Sebi has extended the market timing for Reliance Petroleum Ltd's IPO by eight hours owing to huge investor interest in the public issue. Application to RPL (a unit of Reliance Industries Ltd) shares can be made till 9 P.M. today and tomorrow. Besides, extra counters have been put up and additional applications forms made available to accommodate the huge turnout of applicants.

The IPO for 45 crore equity shares of RPL, which is building a 580,000 barrels per day refinery adjacent to RIL's existing 660,000 barrels per day refinery at Jamnagar in Gujarat, is to close tomorrow.

"The IPO Market Timings were 10 A.M. to 5 P.M. but owing to heavy rush SEBI has extended the time by which applications can be made on April 19 and 20 to 9 P.M.," a market source said.

The IPO had been oversubscribed 16 times, with Qualified Institutional Buyers making bids for 18 times the number of shares offered/reserved for them. Non-Institutional Investors made offers for 8.8 times of total shares reserved for the category.

60% of the shares on offer have been reserved for QIBs, while 4.5 crore shares have been blocked for Non Institutional Investors. Retail investors can get a maximum of 13.5 crore shares.

When contacted, a Reliance official said the company had deployed 50% extra counters and supplied additional application forms as the existing counters were swarmed by investors. "There is mad demand," he said.

Sources said the exchanges have officially announced extension of IPO market timing till 9 P.M. today in view of unprecedented demand for RPL shares leading to a huge load on brokers all over the country to punch data into BSE and NSE systems.

One of the reasons being attributed to the heavy turnout is the firming up of global crude oil prices, which touched a record 72 dollars per barrel.

DLF to go for Rs 10,500 cr IPO in June

19th April 2006: Real estate and construction major DLF will approach market regulator Sebi with a draft prospectus for its upcoming initial public offer (IPO) of over Rs 10,500 crore.

When contacted, company officials confirmed that the draft red herring prospectus will be filed with Sebi by April end and the IPO may hit capital market in the first or second week of June. The company has convened a pre-IPO meeting of shareholders to get their nod on issues like splitting the Rs 10-share into five shares of Rs 2 each and issuing a liberal bonus of seven shares for each share held to the existing shareholders.

The extraordinary general meeting would be held on April 20, they said, adding this would be followed by a pre-IPO survey to decide the price band for the shares.

Asked about the size of the IPO and money to be raised, the officials declined to comment but said this would be the largest IPO in the history of the India’s capital market. The company would be issuing 132,18,79,895 fully paid new equity shares as 7:1 bonus after splitting the shares. The notice has been sent to all shareholders enlisting 10 resolutions.

The company has capitalised a sum of over Rs 264.37 crore from the standing to the credit of share premium account, general reserve account and credit of surplus as per profit and loss account as on March 31, 2005 for issuance of new shares as bonus.

Tata Consultancy Services (TCS) net profit up 76.38%; offers 1:1 bonus

19th April 2006: TCS has posted 76.38% growth in net profit at Rs 832.12 crore for the quarter ended March 31, 2006, against the corresponding previous quarter’s Rs 471.77 crore. Total income during the period went up by 43.85% to Rs 3,709.21 crore from Rs 2578.52 crore in the same period last year.

The company's consolidated results according to the US GAAP showed that its net profit went up by 50% to Rs 2,966.75 crore in 2005-06 after posting a 36% per cent rise in total income at Rs 13,252.15 crore. The income growth of 36% was more than the industry average.

Buoyed by the good show, the company announced its maiden 1:1 bonus ratio, which means shareholders will get one bonus share for every equity share they hold.

The company also announced final dividend of Rs 4.50 per share, taking the total dividend to Rs 13.50 for 2005-06. The face value of the TCS stock is Re 1.

Earnings per share (EPS) stood at Rs 15.74 at the end of the quarter ended March 2006. EPS for 2005-06 increased to Rs 60.63 from Rs 42.02 in 2004-05.

S Ramadorai, CEO and Managing Director, said, “An outstanding performance in the fourth quarter has rounded off a defining year for the company, marked by large deals, strategic acquisitions, expansion in size and its transformation into a global corporation."

He added that the company was poised for "valuable growth opportunities" and it had the "right structure and leadership globally to take advantage of the tremendous opportunity."

TCS plans to add 30,500 people in this financial year. It made 9,200 offers for new recruits in various campuses. Its active customers at the end of the fourth quarter stood at 748, of which 89 were added in the quarter.

Kirloskar Bros declares 100% dividend

19th April 2006: Kirloskar Brothers Ltd on Tuesday declared a 100% final dividend for the financial year ended March 31, 2006. The board of directors has recommended a final dividend at Rs 2 per shares for the fiscal ending March 31, 2006, Kirloskar Brothers informed the Bombay Stock Exchange.

Govt throws Insurance Regulatory & Development Authority (Irda) open to private sector

17th April 2006: The Centre has decided to allow private sector insurance industry professionals to join the Irda as full-time members.

In six years of Irda’s existence, the Centre has only drawn officials from public sector companies to fill two important posts—member-life and member-non-life. However, the Centre has now decided d to heed the view of private insurers that Irda cannot have only officials from public sector companies as its members.

The Centre has called for applications from private and public sector insurance companies for the post of member-life, which has been lying vacant for the past couple of months after TK Banerji retired. 22 applications, including from the private sector, have been received.

Air Deccan IPO in mid-May likely

17th April 2006: Deccan Aviation has decided not to rope in any private equity investors for the present and plans to hit the market to raise approximately Rs 500-550 crore, sometime in the second week of May.

The initial public offering (IPO) for 2.45 crore shares is likely to be priced in a band of Rs 200-250. Two of the merchant bankers associated with the IPO, ABN Amro Rothschild and JP Morgan, may however, withdraw from it. The issue will now be lead managed by ICICI Securities, Enam and SBI Caps.

The reason for this, according to a senior company executive is that JP Morgan and ABN Amro have other commitments in May. However, should the IPO be delayed for any reason and hit the market only in June or July, these investment bankers may once again be part of the team.

While Deccan has been toying with the idea of a preferential allotment to private equity investors, even before the IPO, it was apparently taking too much time. The company needs to bring out the public issue before May 20; otherwise it will have to file a fresh prospectus with Sebi.

In fact Deccan was to bring the IPO in February, which got delayed because of a deal that the company was negotiating with Airbus. While ABN Amro and JP Morgan were comfortable with the public issue coming up in February-March, they now have other assignments.

However, sources say, the investment bankers were also not too comfortable with the pricing as indicated during the road shows overseas; they found it aggressive. At that time, the price being talked about was between Rs 300-325 per share.

The overseas investors have been a little wary of the aviation stocks because Jet Airways, which came out with its IPO in February last year, is currently trading below Rs 1,100.

However, the shortage of aviation stocks and the lower pricing should generate interest from both foreign and local investors, say merchant bankers.

Deccan Aviation incurred a net loss of Rs 19.5 crore for the year-ended March 2005, on a net income of Rs 305.5 crore. The loss for the six months ended September 2005, was Rs 72.5 crore, on a net income of Rs 328.86 crore.

The issue will result in a dilution of 25% of the post-issue equity of Rs 98.18 crore and the price band of Rs 250-250 would mean a market capitalisation of Rs 2,000-2,500 crore. Jet, which trades at Rs 970 have a market capitalisation of Rs 8,378 crore

Sebi relaxes minimum shareholding norms

14th April 2006: In a significant relaxation of listing rules, the Securities and Exchange Board of India on Thursday exempted a host of companies from the minimum 25% public shareholding requirement.

Companies with market capitalisation of Rs 1,000 crore and those having 20 million shares listed have also been exempted from the norm.

Companies which issued shares in initial public offers under Rule 19 (2)(b) of the Securities Contract (Regulation) Rules 1957 (SCRR) and those intending to get listed under the rule have been excluded from the requirement of having at least 25% public shareholding.

Rule 19 (2)(b) provides that a company can get listed with just 10% holding with the public provided the minimum net offer to the public is Rs 100 crore, a minimum of 20 lakh shares are offered to the public in an IPO through book-building method and allocation to qualified institutional buyers is 60 per cent of the size of an issue.

The rule was initially applicable to technology companies and, subsequently, companies across all sectors were brought under its purview.

The rule has been resurrected through a communication to the stock exchanges by Sebi, revising the minimum public shareholding norm.

The revised norms will provide relief to several companies, including software majors Wipro and TCS.

In a communication to the stock exchanges, Sebi said companies which at the time of initial listing had offered less than 25% but not less than 10% of the total number of issued shares in terms of Rule 19 (2)(b) of Securities Contract (Regulation) Rules 1957 (SCRR), or companies desiring to list their shares by making an IPO of at least 10% in terms of Rule 19 (2)(b), will be exempted from the norms. The new guidelines on revising Clause 40A of the equity listing agreement will come into force on May 1.

The exempted companies will be required to maintain the minimum level of public shareholding at 10% of the total number of issued shares for the purpose of continuous listing.

This requirement will not be applicable to government companies as defined under the Companies Act, infrastructure companies as defined under Sebi guidelines and to companies referred to the Board for Industrial and Financial Reconstruction.

The “public shareholding” for the purpose of continuous listing will continue to comprise shares held by entities other than promoters and promoter groups and shares held by custodians against which depository receipts are issued overseas.

Companies which do not meet the minimum public shareholding norm will be allowed a transparent mechanism to achieve compliance.

The mechanism for increasing the public shareholding to the minimum level would provide for various modes of issuing shares in the domestic market and a reasonable time period, as approved by the stock exchanges, Sebi said.

The market regulator has also revised the reporting format for shareholding patterns. Shareholding patterns will now be indicated under three categories — shares held by promoters and promoter groups, shares held by the public, and shares held by custodians and against which depository receipts have been issued.

Details such as the number of shareholders, the number and percentage of shares held and the number of shares held in the dematerialised form will have to be given for all the three categories.

RPL IPO subscribed 3 times

13th April 2006: Mukesh Ambani-controlled Reliance Petroleum Ltd's Initial Public Offer was subscribed more than three times within ten minutes of its opening.

The Initial Public Offer was fully sold out within 10 minutes of its opening in capital market.

The Qualified Institutional Buyers portion has been subscribed over six times, market sources said, adding that the retail portion was subscribed four times.

RPL had fixed a price band of Rs 57-62 for the IPO, which comprises of 135 crore shares, of which RIL would subscribe to 90 crore shares and the balance would be offered to the public.

Reliance Petro to list between May 5-10

13th April 2006: Reliance Petroleum Ltd’s initial public offer of 450 million shares has opened today. The IPO is expected to mop up at least Rs 2,565 crore in a price band of Rs 57 to Rs 62 a share. The issue closes on April 20.

The company’s stock is expected to be listed on the exchanges between May 5 and May 10. Once listed, Reliance Petroleum can be among the top 30 companies of the country in terms of market capitalisation.

Retail investors will have the option to pay Rs 16 a share on application. Retail investors can apply for a minimum 100 shares and a maximum of 1,600 shares.

30% of the public offer will be available for retail investors, 10% for high networth individuals and 60% for institutional buyers.

In addition to the IPO, Reliance Industries has subscribed to 900 million shares of the company at Rs 62 apiece, working out to a total consideration of Rs 5,580 crore.

Chevron pays $300 m for 5% in RPL on IPO eve

13th April 2006: Chevron India Holdings, Singapore-the 100% subsidiary of the second largest oil company in US, Chevron Corp-on Wednesday acquired 5% stake in Reliance Petroleum Limited (RPL) for $300 million. The deal, valuing RPL at $6 billion, is the first foreign investment in India’s oil refining industry in three decades.

Chevron also has the right to acquire another 24% (which will cost another $1.44 billion at today’s valuations) on conclusion of two memoranda of understanding (MoU) signed with RPL’s parent Reliance Industries: one, to optimise crude supply and product offtake and, two, to collaborate in other areas of the energy value chain.

The announcement has been strategically timed to coincide with the opening of Reliance Petroleum’s initial public offering on April 13.

The deal with Chevron is a rare instance of Reliance offering equity in its venture to another company. In 2002 it partnered Niko Resources, offering 10% equity in block D-6 in the Krishna-Godavari basin only to buy it back later. Earlier, its announcement to sell 4% equity in Reliance Infocomm to Qualcomm for $200 million did not materialise.

Chevron investment comes as a breather to the country’s downstream oil business which was recently rattled by UK giant BP Plc’s pull out of state-owned HPCL’s Bhatinda refinery project.

Analysts feel that Chevron’s move to buy equity stake in RPL will rekindle global oil majors’ interest to participate in India’s growing refining sector.

Chevron is one of the most aggressive players globally. Its planned expenditure of close to $15 billion on upstream and downstream activities during 2006, including $11.3 billion in upstream sector and $3.5 billion in downstream activities like refining and chemicals, is just a tad short of RIL’s 2004-05 revenues of about $17 billion.

RIL and Chevron could cooperate in many areas. In 2006, Chevron has planned investments in the deepwater blocks in the Gulf of Mexico and Africa, apart from developing LNG facilities and oil and gas E&P ventures. RIL, too, is pursuing investments in many of these countries.

If Chevron acquires an additional 24% equity in RPL, it will be one of the largest foreign direct investments in India.

MphasiS will not go with share buyback

12th April 2006: MphasiS BFL said on Wednesday that the company's board had decided not to proceed with the share buyback proposal in view of EDS' open offer.

A guide to filing your tax returns

12th April 2006: With the beginning of a new financial year comes the arduous task of filing your income tax returns of the previous year. For the purpose of income tax, your income comprises of your salary, revenue from house property, business and profession, capital gains from the sale of assets and income from any other source. If your income from all these sources during the course of a financial year exceeds the basic exemption limit applicable to you for that year, then you are required to file your tax returns.

Exemption Limits

Currently, there are three broad categories into which individuals are divided. Each of these categories comes with a basic tax exemption limit. If the income earned exceeds this limit, only then are you liable to pay income tax.

Individual male taxpayers enjoy a basic exemption limit of Rs 1 lakh.

Individual female taxpayers enjoy a higher exemption limit of Rs 1.35 lakh.

Senior citizens (persons above the age of 65 years) enjoy the highest exemption limit of Rs 1.85 lakh.

Tax Payable On...

Tax is payable on only that amount of income that exceeds the basic exemption limit.

Due Date

Normally, the due date for filing returns is July 31. However, it is extended to October 31 if you are a ‘working partner’ in a firm whose accounts are required to be audited or where your personal accounts are required to be audited under any law.

PAN

Acquiring a Permanent Account Number (PAN) from the IT department is a prerequisite for filing your returns.

Form To Be Used

Any person other than a company can file returns using Form No. 2D (also known as ‘Saral’).

Additional Documents To Be Filed

Along with the duly completed Saral, you must submit a statement showing the computation of your total income and the final tax payable. Depending on the components of your income, you might also have to attach additional documents such as: Form 16 in case of salary income.

Form 16A in case of non-salary income such as brokerage, contract, rent or professional fees.

In case you have made any investments prescribed under Section 80 or if you have taken a loan from any financial institution, then supporting papers have to be appended. Details of advance tax or any self-assessment tax that have been paid by you need to be mentioned in Saral. A photocopy of the challan should also to be attached.

Audit reports in case you are undergoing a tax audit or any other audit, as prescribed by law. “Profit and Loss Account” and “Balance Sheet and Capital Account” in case you are not covered by any audit and you have income under the head “business and profession”.

If You Miss The July 31 Deadline

If, however, the return of income is not filed by July 31 (or October 31 as the case may be), then it can still be filed before March 31 of the relevant assessment year.

Penalty

If however, you do not file returns before March 31, then a penalty of Rs 5,000 will be levied on you.

Conclusion

Sign your return in the appropriate places marked on the form before submitting it. Remember, the process of filing of returns is complete only when it is filed with the income-tax department at the correct tax collection office which would be dependent on your stream of income (e.g. salary, business income, etc.) or place of residence.

Ranbaxy Laboratories allots 1,17,423 equity shares under ESOS

11th April 2006: Ranbaxy Laboratories Ltd has informed BSE that ESOPs Allotment Committee of Directors at its meeting held on April 10, 2006 has allotted 117,423 equity shares on exercise of stock options under the Employees Stock Option Scheme(s) (ESOS) of the Company. The paid-up Equity Share Capital of the Company post allotment is 372591616 Equity Shares of Rs 5/- each aggregating Rs 1862958080.

Bharat Sanchar Nigam Limited (BSNL) drops its mega IPO plans

11th April 2006: State-owned Bharat Sanchar Nigam Limited has dropped plans for its proposed initial public offering during the current financial year.

"Government has been writing to us... We have taken advise from bankers and they have suggested that this is not an appropriate time to go for an IPO," S D Saxena, Director (Finance), BSNL said.

Asked by when the company would be ready to hit the capital market, he said "we need 12 to 18 months to clean up our accounts."

Earlier, BSNL had initiated the process of appointing an advisor for its proposed IPO and had invited bids from the merchant bankers.

The decision of BSNL to start such a process emerged from the government's policy to sell a small shareholding in profitable and non-Navratna public sector PSUs.

Conservative estimates value BSNL at around $15 billion.

During 2004-05, BSNL earned a net profit of Rs. 10,183crore, and expects to post a profit of around Rs. 8,000 crore during 2005-06.

Bhagwati Banquets & Hotels Limited (BBHL) plans Rs 100cr IPO

11th April 2006: Ahmedabad-based Bhagwati Banquets & Hotels Limited (BBHL) is planning to go for an initial public offering (IPO) of around Rs 100 crore next year. The Rs 25-crore company is raising funds worth approximately Rs 500 crore to set up six five-star hotels across India by 2020. A part of this fund-raising will be via the IPO route.

Narendra Somani, chairman and managing director of Bhagwati Banquets & Hotels Limited, said, “We have already set up a hotel in Ahmedabad. Next year, we will be setting up a five-star hotel and a convention centre in Surat and will expand to cities like Hyderabad, Bangalore, Lucknow and Mumbai in future. We will be investing Rs 50 crore-Rs 80 crore in every hotel.” By 2020, the company plans to have around 1,050 rooms under its banner.

Somani was in Hyderabad to announce the launch of its catering services in the city. This involves an initial investment of Rs 3 crore. BBHL is setting up a 5,500 sft centralised kitchen in the city and intends to have a capacity to serve 5,000 people per day. The company will be charging Rs 500 per person for its catering services.

BBHL is targeting a turnover of Rs 10 crore in the first year of its operations in Hyderabad and plans to grow by 20% thereon. The total catering industry in Hyderabad and Secunderabad is estimated to be around Rs 500 crore with 3,000-odd caterers.

The company is also in parleys with corporates in the city to expand its business. Some of its clients in the country include Reliance Industries, Honda Motors, Wipro, Sony TV and Grasim Industries. BBHL will be expanding its catering business to Bangalore in the next three months.

AML Steel files draft red herring prospectus with SEBI

10th April 2006: Chennai-based AML Steel Ltd has filed draft red herring prospectus with Securities & Exchange Board of India (Sebi) for its forthcoming follow-on public issue of equity shares of Rs 10 each for cash at a premium aggregating Rs 120 crore.

The company is raising the money to part finance its wholly-owned subsidiary’s integrated steel project being set up in Jharkhand, acquisition of existing steel plants and to fund the working capital requirements of the company and its wholly owned subsidiaries, a company release said. The subsidiary has already been allotted 384 acres of iron ore mine in Bokana village in Jharkhand to feed iron ore requirements to the above project.

Of the Rs 120 crore to be raised through the issue, Rs 20 crore would be raised as promoters' contribution and the balance Rs 100 crore would be the net offer to public.

The issue is to be made through a 100% book building process to be conducted on the Mumbai and National Stock Exchange.

Rolta India raises up to US $ 103.50 mn through issuance of GDRs

8th April 2006: Rolta India Ltd has informed BSE that the Company has successfully raised US $ 90 million, through the issue of 16,071,429 Global Depositary Receipts ("GDRs"). Further the issue provides for a green shoe option of US$ 13.50 million through the issue of 2,410,714 additional Global Depositary Receipts ("GDRs") to be exercised within 30 days by the joint Lead Mangers. With the exercise of this option the total number of GDRs issued will be 18,482,143 and the proceeds shall aggregate to US$ 103.50 million.

Each GDR was priced at US $ 5.60, equivalent to Rs 250/- per equity share. The issue was priced on April 07, 2006 and listing is expected to take place on or about April 18, 2006. The GDR price has been decided based on the average daily closing price for four weeks ending on the pricing date, which was Rs 250.89 of the BSE.

The GDRs are expected to be admitted to listing on the Official List of the UK Listing Authority and admitted to trading on the London Stock Exchange Plc’s regulated market listed securities. Lehman Brothers International (Europe) acted Global Coordinator and Sole Bookrunner on this transaction. Lehman Brothers International (Europe) and Cantor Fitzgerald Europe acted as joint Lead Managers.

ICICI Bank allots 15,021 equity shares under ESOS

8th April 2006: ICICI Bank Ltd has informed BSE that the Bank has allotted 15,021 equity shares of face value of Rs 10/- each on March 31, 2006 under the Employees Stock Option Scheme, 2000 (ESOS).

ICICI Bank shares barred for overseas investors

8th April 2006: India's central bank has barred further purchases of ICICI Bank shares by overseas investors since their holding has reached the permitted 74%. "ICICI Bank has reached the limit of 74% of its paid up capital," a press release posted on the central bank's website rbi.org.in said. Policy makers set a ceiling on foreign holdings in various sectors and companies set their own limit within the overall ceiling. For ICICI, the limit is similar to the ceiling set for the sector.

Sebi to get more powers: Damodaran

8th April 2006: Sebi chairman M Damodaran today said that the regulator is expected to get more powers to penalise defaulters. Delivering his keynote address at a seminar on Making Corporate Boards Work, organised by CERG Advisory, he said: "Sebi may be armed with powers to levy heavy penalties that today's penalties may look like peanuts."

In his tough, but witty, address, the Sebi chief added that despite the regulators best efforts some companies may try and exploit loopholes. "In the coming year, we may do a random check, of say 20 companies, for compliance with Clause 49 and come down heavily on 4-5 defaulters."

Even as the regulator made it clear that it can become a powerful adversary if forced to, Business Standard Editor and Publisher, T N Ninan, who was moderating the session, raised an important question: "Who will regulate the regulator?"

Damodaran replied that Sebi is learning on its part to run its business in a better way and is open to suggestions. Explaining the tough job of a regulator, he remarked that even as Sebi would continue to plug loopholes, the defaulting companies have to ultimately answer the stakeholders.

Reliance Petro public offer to open on April 13, price band Rs 57-62/share

7th April 2006: Reliance Petroleum Ltd, a subsidiary of Reliance Industries, will launch its initial public offer (IPO) on April 13 with a price band of Rs 57-62. The issue will close on April 20.

Retail investors will have a payment flexibility to apply with Rs 16 a share. The balance is payable at the time of allotment.

Reliance sources said Reliance Petroleum had received clearance from the Securities and Exchange Board of India for the IPO which would mobilise funds to finance the Rs 27,000-crore refinery at Jamnagar in Gujarat.

Investment banking sources said the company would organise a series of international road shows in cities, including Hong Kong, Singapore, London, Boston, New York and San Francisco. Reliance Industries Chairman Mukesh Ambani is expected to attend two of them.

A couple of days ago, Reliance Petroleum had concluded a pre-IPO private placement of Rs 2,700 crore to a clutch of investors.

They include LIC, State Bank of India, Goldman Sachs, Deutsche Bank, Citigroup, IDBI, Syndicate Bank, UTI Bank, Bank of Baroda, and Mukesh Ambani and his family.

The IPO will offer 1,350 million shares. Reliance will again acquire 900 million shares through the IPO, exactly the same amount to be offered to the public. This will have a three-year lock-in period.

Reliance Petroleum’s IPO might break the previous record of investor participation in a public float, investment banking sources said. National Thermal Power Corporation had set a record by attracting 15 lakh applications for its public issue in October, 2004.

After the issue, the company will have a Rs 4,500-crore equity. The company had also concluded syndicated loans of $1.5 billion to part finance the project.

Reliance Industries had invested Rs 2,700 crore in Reliance Petroleum as its equity contribution in three tranches in December, January and February.

As the pre-IPO placement has consumed 450 million shares, the public will be entitled to apply for 450 million shares.

Reliance Petroleum Limited

7th April 2006: Object of the issue: The proceeds will be utilized for the following purposes (i) To achieve the benefits of listing, (ii) To raise capital for financing the proposed Greenfield refinery and polypropylene project at Jamnagar, Gujarat.

IPO Snapshot

Type of issue

Book Building

Price

Rs.57 to Rs.62 per share

Issue Size

Rs.7,695 – Rs.8,370 crore

Issue Opening

13, April 2006

Issue Closing

20, April 2006

Face Value

Rs.10

Minimum Application

100 shares in multiples of 100 shares each

 

 

 

 

BRLM

• SBI Capital Markets Limited

• DSP Merrill Lynch Limited

• Enam Financial Consultants Private Limited

• HSBC Securities and Capital Markets (India)  Private Limited

• JM Morgan Stanley Private Limited

• ICICI Securities Limited

• UBS Securities India Private Limited

• Citigroup Global Markets India  Private Limited

Deutsche Equities India Private Limited

Registrar

KARVY Computershare Pvt. Ltd.

Investment positives

• The biggest advantage of this issue is that retail investors will have the option of paying only Rs.16 per share on application and can apply for a minimum of 100 shares and a maximum of 1,600 shares.

 • The background of RIL - The Company is promoted by RIL, which is the largest private sector company in terms of market capitalization. The company will be utilizing RIL’s resources and project execution skills to establish efficient and profitable operations.

 Issue Structure

 

Details

Crore shares

Total issue size

450.0

RIL’s contribution

270.0

Balance offer

180.0

Amount invested at IPO price by RIL

90.0

Balance amount

90.0

Pre – IPO placement

45.0

Reserve d for the general public

45.0

Qualified institutional bidders @ 60%

27.0

High Net Worth Investors @ 10%

4.5

Amount available for retail @ 30%

13.5

Stock Market Information

The equity shares of this company are proposed to be listed for the first time on the Bombay Stock Exchange Limited and National Stock Exchange of India Ltd. For this purpose BSE shall be the designated stock exchange.

Infosys to mull bonus share issue

7th April 2006: The board of Infosys Technologies Ltd, India's second-largest software services exporter, will consider issuing bonus shares at its meeting on April 14, the company said. The Nasdaq-listed company is also scheduled to announce its January-March quarterly results on the same day, the company said in a notice to the National Stock Exchange on Thursday.

Sebi finds more operators in IPO scam

7th April 2006: Capital markets regulator Sebi has hit pay dirt during its investigations into the role of more market operators in cornering shares reserved for retail investors in IPOs.

The Sebi probe has identified more operators and some market intermediaries involved in the misuse of the initial allotment process in public offerings dating back to ’04-05. A few more depository participants are also set to be put in the dock this time, according to officials.

The investigation launched by the regulator after January this year into the records and data of IPOs launched in ’05 and ’04 has now thrown up evidence against some market operators in manipulating allotment in the quota reserved for retail investors.

After the Yes Bank and the IDFC IPOs where a Sebi probe detected the scam, a similar story has unfolded in the case of some public issues launched in ’04, a fresh probe revealed.

The regulator is now on course to take action against few entities, who have been identified during the probe for their role in opening fictitious multiple demat and bank accounts to obtain allotment from the retail investors’ quota.

The IPOs in which there seems to be evidence of misuse include that of Suzlon Energy and NTPC, among others. There are indications of a few more IPOs, which could feature operators having gained allotment of shares through multiple demat and bank accounts.

On Tuesday, income tax officials had launched a countrywide survey on wind turbine maker Suzlon Energy and its associate and subsidiary companies to check out depreciation claims made by windmill owners. This survey is independent of the probe into IPOs.

The abuse of the IPO allotment process featured a handful of entities getting entitlement to shares reserved for retail investors in IPOs. This was done by putting in thousands of fictitious or benami applications.

Each application for the IPO was well within the cut-off figure of Rs 1 lakh for being eligible for allotment in the retail investors’ category. Once the allotment took place, these applicants with fictitious names and accounts transferred shares to their principals, who then transferred it to their financiers who had funded the investment in the IPO.

On the debut day of listing of the shares, they used to sell the shares, thus making windfall gains by cashing in on the differential between the issue price and the listing price. The Sebi probe covered several IPOs dating back to ’05, ’04 and ’03 to ascertain any misuse.

These include the offerings of Jet Airways, Sasken Communications, Suzlon Energy, Punj Lloyds, JP Hydro Power, NTPC, PVR Cinema, Shringar Cinema and a few others. On Wednesday, a parliamentary committee met up with senior Sebi officials to discuss the IPO allotment scam in New Delhi.

However, the extent of the misuse in these IPOs is not reckoned to be as high as shown in the IDFC IPO. But investigators have found more market operators involved in cornering shares apart from those like Roopalben Panchal, named in the Yes Bank and IDFC IPOs.

In the IDFC IPO alone, over 8% of the allotment in the retail segment was cornered by fictitious applicants who had opened multiple demat accounts. Roopalben Panchal alone managed to obtain an allotment of over 32 lakh shares. Others in the ring include Purushottam Budhwani, Sugandh and Manojdev Seksaria.

RPL raises Rs 2700 cr via pre-IPO placement

4th April 2006: Reliance Petroleum has raised Rs 2700 crore through its pre-initial public offer placement of 450 million shares. The placement made to a host of foreign institutional investors, financial institutions and banks was at Rs 60 a share. In a statement issued today, the company said these shares are locked in for a period of one year from the date of allotment of shares in the IPO.

Reliance Industries Chairman Mukesh Ambani is also believed to have invested Rs 450 crore in his personal capacity. Ambani’s personal stake in RPL will be around 1.67% after the IPO.

After the private placement, the size of the IPO, which is expected to open on April 10, would stand revised to 1350 million equity shares. Of these, Reliance Industries would subscribe to 900 million shares at the issue price.

For this purpose, RIL would make the payment one day prior to the opening of the issue at the higher end of the price band, the statement said. Thus, the net issue to the public would be 450 million shares.

The private equity investors, which are believed to have picked up equity, include Blackstone, Deutsche Bank, Citigroup and UBS.

RPL, a wholly owned subsidiary of RIL, is setting up an Rs 27,000-crore refinery at Jamnagar in Gujarat. The public offer will mobilise funds in a range of Rs 4,900-5,800 crore ($1.1-1.3 billion), depending on the issue price of the fully book-built issue.

RPL filed a red herring prospectus with the Securities and Exchange Board of India in the first week of this month. Sebi’s clearance is expected any day now. RPL had recently concluded a syndicated loan of nearly Rs 6,750 crore. It intends to seek additional financing through an export credit of $1-1.5 billion (Rs 4.500-6750 crore.

In a rare show, almost all public sector banks led by State Bank of India have picked up RPL shares. While SBI has invested around Rs 300 crore in the private placement, some of the relatively smaller public sector banks have invested between Rs 30 crore and Rs 60 crore in picking up RPL shares. Delhi-based Punjab National Bank too made investment in the RPL issue.

“As the demand was high, we have not got as much as we wanted. All were given proportional allotments,” said a bank chairman. In private sector, ICICI Bank has participated in the private placement. Over all, about 50% of the entire private placement was contributed to by Indian banks, sources said.

Fortis plans Rs 1k-cr IPO

3rd April 2006: After clinching the biggest acquisition in healthcare (Escorts Hearts Institute), the Shivinder-Malvinder-promoted Fortis Healthcare is set to hit the capital market with the biggest IPO in the sector. Though the company is still firming up the final issue size, sources close to the development said the size is expected to be in the region of Rs 1,000-1300 crore.

The company is learnt to have already roped in JM Morgan Stanley, Citi group and Kotak Mahindra to handle the issue. Fortis has also mandated consultancy major McKinsey to recommend a roadmap and strategy for the company’s future growth plan for the next 3-4 years.

McKinsey is expected to mainly suggest whether the company should go for greenfield and acquisition route to expand its hospital chain or opt for the management contract route for its pro-posed national spread.

Fortis Healthcare has set an ambitious national spread for its hospital chain, with a target of taking the total number of hospitals to 35 in next 3-4 years. The company currently has 10 hospitals, with two more hospitals set to be added in the next 2 months. Of this, one would be in South Delhi and the other in Jammu & Kashmir.

When contacted, Shivinder Singh, MD of Fortis Healthcare said the company’s IPO programme is still in the planning stage and no numbers have been finalised for the proposed offer yet. The extent of equity stake which will be offered through the proposed IPO could not be ascertained. Ranbaxy, the promoters’ flagship company, has 17% stake in Fortis Healthcare, while the majority 83% is with the promoter family and friends.

Sources said a major factor in arriving at the final figure for the IPO would depend on whether Fortis would go solo for setting up its pro-posed Rs 1,200 crore Medicity project in Gurgaon or would join hands with leading cardiologist Dr Naresh Trehan who has also announced a Medicity project in Gurgaon.

The two have been in talks for entering into a tie-up for jointly establishing the Medicity project, which would have significantly brought down the fund to be raised by the company. There is, however, still no agreement on this between the two. The Medicity project will have multispeciality hospital, medical, nursing and paramedical colleges and accommodation facilities for the attendants of patients.

Among the hospitals owned by Fortis are the multi speciality hospitals in Mohali (Punjab) and Noida and the two Escort hospitals - in Delhi and Faridabad.

Sun Pharmaceutical - Allotment of equity shares against conversion of FCCBs

1st April 2006: Sun Pharmaceutical Industries Ltd has informed BSE that the Committee of Directors of the Board of the Company at its meeting held on March 31, 2006, has allotted 216,007 Equity Shares of Rs 5 each of the Company at a premium of Rs 724.30 per share upon exercise of option of conversion for 3500 Zero Coupon Foreign Currency Convertible Bonds of US $ 1000 each (FCCB) into Equity Shares of the Company by certain FCCB Holders.

Consequently, the paid up Equity Share Capital of the Company has increased from 185,515,630 equity shares to 185,731,637 equity shares of Rs 5/- each, as of date.

Kalpataru board okays 1:1 bonus issue

1st April 2006: The board of directors of Kalpataru Power Transmission today approved a bonus issue in the ratio of 1:1, i.e. one free share for every shareholder holding a share. According to a release issued by Kalpataru to the BSE, the company's board today also approved a proposal for raising $75 million from local or overseas markets.

Bharat Earth Movers Limited (BEML) to raise Rs 450-500 cr via public offer

1st April 2006: BEML, the leading public sector firm dealing with construction and mining equipment and transport vehicles for the defence sector, plans to raise Rs 450-500 crore through a public issue during the second quarter of fiscal 2006-07. The company has already sent its proposal to the government and it is currently being examined by the ministries of defence and finance, said its chairman and managing director V R S Natarajan.

H said the company will offer 50 lakh shares to the public and the issue price will be determined through the book building process. The entire money being raised will be used to fund BEML's expansion and diversification plans, he said.

At present, the government holds 61% of the equity in BEML, while the rest is held by the public, employees, banks and financial institutions. As a result of expanded equity, the government holding will reduce to 54-55% post-issue with 2.25 crore shares. The company had made its initial public offer a decade ago.

Natarajan said the board of directors has approved a capital expenditure of Rs 160 crore during 2006-07. Rs 125 crore is being sought from the Union government for setting up a research and development unit in Bangalore for complete indigenisation of metro coaches and expansion of installed capacity to cater to the upcoming Metro system in Bangalore and other cities. BEML expects to get an order for supply of 130 coaches from Bangalore Metro as and when the project materialises.

The company, which gets 30% of its business from the defence ministry, expects to get the same in fiscal 2006-07. It has bagged an order from the defence ministry to supply 11 vehicles of 12x12 axle for carrying Brahmos missile, he added.

It also bagged an order from the defence services to supply around 1,000 Tatra trucks, trailers and recovery vehicles of different tonnage. BEML has three manufacturing facilities at Bangalore, Kolar Gold Fields (KGF) and Mysore.

Opto offer price band of Rs 240-270

30th March 2006: Opto Circuits India Ltd. said on Wednesday it had fixed a price band of 240-270 rupees for its follow-on public issue. Shares in the company were up 0.83% to Rs286.25 in a firm Mumbai market.

Hindustan Dorr board okays 1:5 stock split

28th March 2006: The board of directors of Hindustan Dorr Oliver has approved a stock split in the ratio of 1:5. According to a release issued by Hindustan Dorr to the BSE today, the company's board yesterday approved a proposal to sub-divide its existing equity shares with the face value of Rs 10 each into five equity shares of Rs 2 each.

Fidelity launches Special Situations Fund

28th March 2006: Fidelity Fund Management today launched a fund - Fidelity Special Situations Fund - the first of its kind in India.

Structured as an open-ended equity fund, it aims to deliver long-term growth by investing across the spectrum of Indian equities with a focus on companies in out-of-ordinary situations.

Speaking at the launch, Ashu Suyash, country head of Fidelity Fund Management, said: "The are a number of transformational events that are taking place in India today, which often put companies in special situations.”

Some illustrative list of special situations include turnarounds, companies whose growth characteristics have not yet been adequately recognised, companies that sell at significant discount to their underlying assets, companies having a unique product with strong demand potential or opportunities to use existing resources for generating new business streams, companies that are potential candidates for mergers and acquisitions or restructuring and out-of-favour stocks which display improving fundamentals.

Rajesh Singh, fund manager of Fidelity India Special Situations Fund, said: "At the heart of the investment strategy is identifying companies in special situations, which requires rigorous 360 degree, bottom-up research. This is true to Fidelity's approach to managing investments, which is predicated on bottom-up stock picking backed by intensive research by our team of investment professionals.

"Fidelity India Special Situations Fund is a more aggressive fund that will strive to add higher Alpha to the portfolio over the long-term, and should be an interesting style diversifier for investors."

Alpha measures a fund's risk-adjusted return in excess of returns generated by the market or the benchmark index.

Fidelity currently runs two funds in the country - Fidelity Equity Fund and Fidelity Tax Advantage Fund - with a combined corpus of over Rs 3,000 crore. Though it is too short a time period to comment on the performance of Fidelity Funds in the country, its maiden fund - Fidelity Equity Fund - is less than a year old, and data shows that Fidelity has so far managed to be in the middle of pack.

According to data sourced from Value Research, Fidelity Equity Fund has posted a return of 30.03% over the past six months and is ranked Number 71 among the 135 diversified equity funds tracked by Value Research.

IRDA cancels ICAN's licence

28th March 2006: Insurance regulator IRDA has cancelled the licence of ICAN Health Services, a third party health service provider, for violating code of conduct and failure to maintain working capital.

"(Considering that) the nature and the gravity of the charges as established, the application for renewal of the TPA is hereby declined," IRDA said in a circular.

A thorough investigation of IRDA revealed that the Goa-based Third Party Administrator (TPA) was guilty of not following the regulations, did not maintain working capital, changed ownership illegally and its financial condition deteriorated.

The TPA was also functioning improperly and against the interest of the policyholders, IRDA said.

Defer IPO by a year: BSNL to Government

27th March 2006: BSNL has sought a minimum time of one year before any decision on offloading a small stake of the government in the PSU could be considered.

The response comes in the wake of the ministry of finance asking BSNL for its view on listing the company by selling some government shares to the public. The PSU, after consulting its advisor ICICI Securities, said the IPO should be delayed by one year to ensure conformity of accounts with the listing requirements. BSNL also said in its response that it does not need to raise any fresh capital.

BSNL officials clarified that these were just BSNL's response to queries posed to them, and any final call on the mode of disinvestment has to be made by the government.

BSNL has been valued by various estimates at about $25 billion (above Rs 1 lakh crore), and a 10% stake sale could fetch the government between Rs 10,000-Rs 12,000 crore.

Gammon infra unit plans IPO

27th March 2006: Gammon Infrastructure Projects, a subsidiary of construction company Gammon India, is planning to raise funds through an initial public offering (IPO). According to a release issued by Gammon to the BSE today, the board has approved the proposal to issue shares through an IPO.

Kamdhenu public offer to open on April 3

27th March 2006: Kamdhenu Ispat Limited proposes to enter capital market with an Initial Public Offer of 1.28 crore equity shares. The proceeds of the equity shares of Rs 10 each priced at Rs 25 would be used to set up stock yards and meet out working capital requirements.

"The net proceeds of the issue would be deployed to set up five more stock yards for marketing company's construction material," said, company chairman Satish Aggarwal. Company already has five stockyards and proposes to build five more each in Himachal Pradesh, Rajasthan, Gujarat, Madhya Pradesh and Uttar Pradesh, he said.

The company proposes to enter capital market on April 3 with issue closing on April 8. The issue comprises of promoters contribution of 34.74 lakh equity shares of Rs 10 each at a premium of Rs 15 each and a net offer to the public of 91.25 lakh equity shares. The issue will also have green shoe option of 13.68 lakh equity shares to be offered at a price of Rs 25 each. Issue will constitute 67.33% of fully diluted post-issue capital of the company (without green-shoe) and 69.2% (with green shoe).

The current steel production capacity of the company's plant at Rajasthan including its 22 franchise steel units is over eight lakhs tonnes per annum. Kamdhenu that deals in steel bars, cement, SS water pipes has also taken up a housing project as a franchise worth Rs 50 crore to be developed near Chandigarh.

Chartered Capital and Investment Ltd is lead manager. Karvy Computershare Pvt Ltd is registrar for issue.

Secunderabad Healthcare - Open Offer

27th March 2006: Ashika Capital Ltd ("Manager to the Offer") on behalf of Mr. Medasani Munisekhar ("Acquirer") has issued this Public Announcement ("PA") pursuant to regulation 10 & 12 and in compliance with Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto ("Regulations") as below:

The Offer:

The Acquirer is now making this Open Offer ("Offer") to the Shareholders of Secunderabad Healthcare Ltd ("Target Company") to acquire 7,12,000 Equity Shares of Rs 10/- each comprising of 6,44,900 fully paid-up shares at a price of Rs 4.50 per share and 67,100 partly paid-up shares at a price of Rs 2.00 per share ("Offer Price") representing 20.00% of its subscribed & voting capital, payable in cash.

Schedules of Activities

Specified Date: March 24, 2006

Date of Opening of the Offer: May 11, 2006

Date of Closing of the Offer: May 30, 2006

Sundaram Mutual unveils Sundaram Rural India Fund

25th March 2006: Sundaram Mutual has launched Sundaram Rural India Fund, India’s first fund focusing on rural India and offers promising growth opportunity.

The fund is yet another pioneering investment opportunity from Sundaram Mutual that seeks to provide investors an ‘early bird’ advantage in what is likely to be a sustained long-term growth area, the transition of rural India. Government’s rural development focus combined with corporate India’s increasing rural involvement has fuelled rural India to become India’s growth propeller, said a press release.

According to T P Raman, managing director, Sundaram Mutual, "The expanse of rural India offers the most promising investment opportunities. The government’s Bharat Nirman Yojna for comprehensive rural upliftment and increasing corporate participation in rural areas are providing the much-needed impetus for the growth of rural India. Sundaram Rural India Fund is our initiative for the investors to participate in the big growth opportunity."

The Fund is an open-ended equity fund. New Fund Offer (NFO) opened on March 20, 2006 and closes on April 19, 2006. The issue of units is at Rs 10 each for cash and there is no entry load during NFO. The Fund would look into investing in companies with rural focus across sectors and market caps, he added.

The Securities and Exchange Board of India (Sebi) asks banks to dematerialise pledged shares

25th March 2006: SEBI has asked all banks to dematerialise shares pledged with them as collateral to prevent fraud. The equity market regulator’s advice came in the wake of detection of fraud by some listed companies, banking sources said.

Sebi has brought to the notice of the Indian Banks’ Association (IBA) that some listed entities obtained duplicate shares, dematerialised them and sold them in the secondary market when the original shares in physical form were still lying with banks pledged as collateral.

Banks seek shares and other securities from borrowers against loans disbursed as collateral, to be encashed in the event of default. The IBA, in a circular, has asked all its member banks to take necessary steps to comply with the Sebi request.

Sebi has said the banks need to convert all their equity/debt holdings into dematerialised form to avoid recurrence of fraud. But market participants feel that this move is not enough to counter fraud, as dematerialised shares do not carry a unique identification number. The lack of a unique identity for shares held in the electronic form provided room for deceit, they said.

Banking sources said the companies under scrutiny must be ones that were involved in defaults and whose loans had turned non-performing.

Loans for which promoters have pledged their shareholdings as collateral would account for about 20% of the total outstanding advances of banks, they said.

The loans to medium and large companies, outstanding at the end of March 2005, stood at Rs 2,90,186 crore. The figure has not changed much in 2005-06 as some banks, including State Bank of India, have actually witnessed a fall in lending to this segment of borrowers. The total non-food credit on March 3, 2006 amounted to Rs 13,78,436 crore.

Power Finance Corporation (PFC) appoints merchant bankers for IPO, likely to tap market in June

23rd March 2006: Power Finance Corporation has appointed three merchant bankers for its maiden public offer through which the government too would sell 5% of its stake. "ICICI Securities, Kotak Mahindra and Enam Financials have been appointed as Book Running Lead Managers for the PFC IPO," sources said.

The three were selected from among six shortlisted bankers. Citibank, HSBC and DSP Merrill Lynch were other contenders for the issue, which could raise over Rs 1,500 crore. Incidentally, the lead managers are the same who handled the public offer and disinvestment of powergiant NTPC in 2004.

The company is issuing 10% fresh equity while the government is divesting 5% stake. The issue comprises of 10.3 crore new shares and sale of 5.15 crore shares by the government. The bankers have already started the due diligence of the company and help the government in selecting legal advisors. "The legal advisors for the issue have also been appointed," sources said.

They said the company will file its draft Red Herring Prospectus with SEBI towards April-end after compiling this financial year's results. SEBI will take around 21 days to approve the prospectus after which the issue will hit the market in June.

PFC's paid-up capital is Rs 1,030 crore, which would rise to Rs 1,134 crore after the issue. Government holding would come down to 86.36% from 100% at present. Industry sources said PFC has a book value of Rs 65 per share and it could charge some premium over it. This could translate into a price band of Rs 70-100, which would fetch between Rs 1,080 crore to Rs 1,500 crore.

Hinduja TMT announces ESOP

23rd March 2005: Hinduja TMT Ltd on Thursday announced the roll out of the Employee Stock Option Plan, which would cover three per cent of its employees globally, including India. All eligible managers of the company, including those in India, Philippines, Mauritius, Canada and the US would be covered under the plan and they can exercise their options at the end of one year from the grant date, a company release said here. The company has over 7,000 employees worldwide, it said.

HCL Infosystems allots 5610 equity shares under ESOS

18th March 2006: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 5610 nos of equity shares of Rs 2/- each pursuant to exercise of 1122 options (Grant price Rs 538.15 & Rs 289/- per option) granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Satyam Computer - Conversion of Stock Options

18th March 2006: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company has allotted 31,882 equity shares through circular resolution on March 17, 2006 under stock option plans of the Company. Consequent to the above allotment, the paid up share capital of the Company has gone up from 324,177,055 equity shares of Rs 2/- each aggregating Rs 648,354,110 to 324,208,937 equity shares of Rs 2/- each aggregating Rs 648,417,874.

Kotak Mahindra - Allotment of equity shares under ESOP

18th March 2006: Kotak Mahindra Bank Ltd has informed BSE that the ESOP Allotment Committee of the Bank at it meeting held on March 16, 2006, has allotted 6,750 Equity Shares of Rs 10/- each, pursuant to exercise of Employees Stock Options granted under the Kotak Mahindra Equity Options Plan 2002-03 (Plan Series 2002-03/04).

Venus okays $20 mn FCCB/GDR issue

18th March 2006: The board of directors of Venus Remedies yesterday approved a proposal to raise $20 million via a FCCB/GDR issue. According to a release issued by Venus to the BSE today, the company's board has scheduled an EGM of the shareholders on April 15 to get their approval.

Punjab & Sind Bank to launch IPO next fiscal

16th March 2006: P&S Bank is gearing up to launch its initial public offer (IPO) in the next fiscal. However, the bank, which is wholly owned by the government at present, would decide on the size of IPO later. After the public issue, the government holding may come down to about 65%.

 

After the public issue, the government holding may come down to about 65%

The banks’s non-performing asset, which was at 8% in
the last fiscal, has come down to 3%

The bank has exceeded its targets in all departments including deposits & lendings

The bank’s chairman and managing director RP Singh said that the bank was comfortably placed with a capital adequacy ratio of about 14%. “We are fully prepared for the implementation of the Basel II norms in 2007. To further strengthen our position, we are exploring the option of visiting the market,” he said.

 

Mr. Singh said the bank would exceed all projected targets. Its non-performing asset (NPA), which was at 8% in the last fiscal, has come down to 3%. “We hope to bring it down further before the close of the year,” he said. The bank is expected to sell a large chunk of NPA portfolio in 2006-07.

 

Mr. Singh also added that the bank has exceeded its targets in all departments including deposits and lendings. That apart, the bank had earlier projected that it would bring down its net NPA level to 6% from 8%. “However, we have managed to bring it down to 3% already,” he said.

 

It may be noted that small banks are under pressure to clean up their balance sheets in the wake of the implementation of the stringent Basel II norms. Dena Bank is also all set to settle NPAs to the tune of Rs 600 crore in the next fiscal.

 

The banking industry is expected to settle NPAs worth Rs 6,000 crore in the next fiscal. This fiscal banks including State Bank of India and ICICI settled NPAs to the tune of Rs 4,500 crore.

No plan to sell Tata Steel stake: B K Birla

16th March 2006: Dismissing speculation that they have decided to sell off their stake in Tata Steel, the Birlas today said there was no such plan "at the moment." Birla family patriarch Basant Kumar Birla said here that there was no plan to sell off the group's holding in Tata Steel now.

"Entirely wrong," was the curt response by Birla when his attention was drawn to media reports that stated the Birla group had decided to sell their stake in Tata Steel in the wake of the stand-off with the Tatas over holding in Idea Cellular.

Eighty-six-year-old Birla, who heads the B K Birla group of companies, also said the Birlas' holding in Tata Steel is with Pilani Investments - one of the oldest Birla companies that has holdings in most of the Birla group companies and headed by B K Birla.

Birla, who, along with his grandson Kumar Mangalam Birla, only last year consolidated his holding in Pilani, was categorical that there was no plan to exit from Tata Steel. "At the moment, we do not have any intention of selling our stake in Tata Steel," he said.

Reliance MF raises record corpus

16th March 2006: Reliance Capital Asset Management Ltd has raised Rs 5,700 crore through its new scheme Reliance Equity Fund, the largest ever raised by an Indian mutual fund. Reliance Capital Ltd said on Thursday the money was raised from 925,000 investors. The asset management company is a wholly owned subsidiary of Reliance Capital Ltd.

Open offer for 20% of RNRL shares

16th March 2006: Anil Ambani's Reliance group (R-ADAG) will make an open offer from May 3 to May 22 to acquire 32.66 crore shares of Reliance Natural Resources Ltd for Rs 838 crore. The open offer would constitute 20% of the expanded equity share capital of RNRL and is in accordance with SEBI norms, RNRL informed the stock exchanges.

This follows a decision by the RNRL board on Wednesday, which also approved a preferential offer of 41 crore equity shares to R-ADAG or long term financial investors to strengthen the company's capital base and financial position.

As part of the preferential offer, R-ADAG will subscribe up to 41 crore shares for Rs 1,052 crore at a minimum price of Rs 25.65 per share. Post-allotment, the promoter holding will go up to 55% from 40% and RNRL's net worth will rise to Rs 1,660 crore from Rs 608 crore currently.

RNRL is one of the four companies transferred to Anil after settlement with elder brother Mukesh Ambani.

Ashapura Minechem Ltd to invest in Malaysian co

16th March 2006: Ashapura plans to invest $1 mn in Malaysia's Hudson MPA SDN BHD and $142,000 in India's privately-held Crystal Nanoclay Pvt Ltd, the company said on Thursday. Ashapura shares rose nearly 5% to Rs 1160.05 in a firm Mumbai market.

LIC to launch two new schemes

16th March 2006: As part of its aggressive drive to expand business, Life Insurance Corporation will launch two new products, a whole life and an annuity scheme on Friday. "LIC will launch two new products, Jeevan Tarang and Jeevan Akshay-4, taking the number of products launched this fiscal to 7," LIC's North Zone manager Ashok Shah said.

The whole-life policy 'Jeevan Tarang' is open to persons aged up to 60 years and provides risk cover up to 100 years. The plan gives tax benefits under Section 80C and 10(10D); a guaranteed annual survival benefit at 5.5% of sum assured throughout life after premium paying term.

While the annuity plan 'Jeevan Akshay-4' provides for payment of pension immediately on purchase of the policy. Shah said the scheme will give about 8.5% return and guarantees return of capital.

The age of entry is 40-79 and the minimum purchase price is Rs 50,000 or such amount which may secure a minimum annuity of Rs 3,000 per annum. The minimum annuity installment is Rs 250 per-month, Rs 750 per quarter, Rs 1,500 per half-year and Rs 3,000 per year.

Country's largest life insurer which launched a souvenir scheme Bima Gold in September 2005 to mark Golden Jubilee celebrations, expects to sell one crore such policies as the scheme closes on March 31.

Reliance Natural's $188-mn share offer to open May 3

16th March 2006: Reliance Natural Resources, an arm of the Anil Dhirubhai Ambani group, Wednesday said it would make a preferential offer of equity shares to the company's promoters and long-term investors to strengthen capital base.

An open offer for 326.6 million shares, representing 20% the expanded equity share capital of Reliance Natural Resources and aggregating in value Rs 8.38 billion ($188 million), will open May 3 and close May 22.

The preferential offer, which is subject to necessary approvals from shareholders, will be made at a minimum price of Rs 25.65, being the average of market prices for the preceding two weeks.

The offer price represents a premium of over 400% on the face value of Rs 5 a share of Reliance Natural Resources, a gas transmission utility.

Reliance Natural Resources' shares were distributed free of cost to over two million Reliance Industries shareholders as part of the restructuring last year of the diversified conglomerate to end a bitter family feud over its ownership.

A company statement said Reliance Natural Resources' net worth will increase 175% Rs.6.08 billion ($137 million) to Rs 16.60 billion ($373 million) on completion of the preferential offer.

The company's equity share capital will increase to 163.31 equity shares of Rs.5 each, aggregating Rs.8.16 billion ($183 million) and reflecting a market capitalisation of Rs 61.81 billion ($1.4 billion).

After the share offer, promoters will hold 55% of the company stake, retail investors will own 19%, foreign investors 16%, global depository receipts 4% and domestic institutions 6%.

1 million PAN cards are duplicates

11th March 2006: Over a million permanent account numbers (PANs) of the estimated 43 million issued may soon be deactivated on account of the revelation that individuals have received more than one number.

Both fraudulent and unintentional, these “duplicate” PANs have come to light after the revenue department completed its investigation into the matter. According to officials, between 2% and 3% of the 43 million PAN cards issued so far fall in this category.

Government officials said the department was in the process of sending letters to all taxpayers who were found to be in possession of duplicate PAN cards to ascertain if the multiple cards were in their name.

The department has in its communication to such taxpayers also identified the PAN card they should retain and quote for all future transactions.

Officials said since all cases of duplicate PAN cards had now been clubbed by the department, action would be taken against any assessee found to be deliberately using more than one PAN. The exercise to identify duplicate PAN cards was initiated a year ago.

“We are also informing all taxpayers who have been allotted duplicate PAN cards to contact our call center, Ayakar Sampark Yojana, and provide the PAN they intend to use,” an official said.

Officials said this year’s Budget provision empowering the department to issue PAN card suo motu would also allow the department to assign cards for all those transactions reported under the Annual Information Return that do not contain PANs.

Nearly 30% of the 17,00,000 transactions reported under the AIR up to December 31, 2005, did not have the relevant PAN.

The income tax department has now introduced an online system for taxpayers to know their PAN.

5 IPOs close lower than issue price

11th March 2006: Making money from initial public offers is getting more difficult. Five new issues out of 11 that were listed on the bourses in the past month closed at a discount to their issue price on the day of listing.

Gitanjali Gems, which was listed today, closed at Rs 167.15, down 14% from its offer price of Rs 195. Jagran Prakashan, which was listed on February 22, closed at 14.4% discount to its issue price of Rs 320 on the day of listing.

Jagran is currently traded at Rs 275.55, down 14%. Among other stocks, Sakuma Exports closed at Rs 46.95, down 6% on the day of listing over its issue price of Rs 50.

The stock has slipped further and currently is trading at Rs 43.45, down 13.1%. Sree Sakthi Papers, which closed at Rs 29.20 over its issue price of Rs 30 on the day of listing, is now trading at Rs 16.90, down 44%.

Dynamic Products was down 19% on the day of listing but recovered subsequently and is now trading at Rs 32.30, down 8% over its issue price of Rs 35.

GVK Power and Infrastructure closed at Rs 315.55 on its listing against its issue price of Rs 310 but currently it is trading at Rs 290.10, down 6% over its issue price.

State Bank of India (SBI) public offer likely during July-September 2006

11th March 2006: SBI on Friday said it is looking at a public offer in the second quarter of the next financial year and was also considering a stock split. ‘‘The public offer is likely to be worked out during July-September 2006,” SBI chairman AK Purwar said, though he did not elaborate on the size of the issue. The SBI chief also said the bank was in talks to acquire a bank in Bangladesh.

On Wednesday, TOI had reported that the government was proposing amendments to the SBI Act to enable it to go for a follow-on public offer and a stock split of equity shares which have a face value of Rs 10 at present. Purwar said the bank is considering a stock split and will also raise Rs 3,000-4,000 crore in debt in the next financial year.

Uttam Sugar Mills Ltd (USML) issue opens from March 16-21

9th March 2006: USML is going public in the third week of this month to part fund its two projects in Uttar Pradesh that will enhance its production capacity to 22,750 tonnes as against 9,750 tonnes, currently. "The total cost of the two projects is estimated at Rs 286 crore. We plan to garner Rs 120 crore through loans from banks and financial institutes, while the rest will be done through IPO," Executive Director USML U R K Rao said.

The sugar manufacturer, promoted by Adlakha family of Uttam Industrial Engeering Ltd, Lipi Boilers Ltd and Uttam Sucrotech Ltd, would issue 40 lakh shares and the IPO is open from March 16 to 21, 2006.

On the investment plans on the two units, Rao said over Rs 120 crore would be spent to set up a facility at Khaikheri (Muzaffarnagar). It would produce 4,500 tonnes premium quality sugar with co-generation of 15 MW power. About Rs 148 crore would be required to set up a facility at Shermau (Saharanpur) that would produce 5,000 tonne sugar and could be scaled up to 7,500 tonnes. The plant would also generate 30 MW of power, he said.

The two plants are likely to be commissioned by November this year. The company after commissioning of two projects would have crane crushing capacity of 22,750 tonnes and genarate 81 MW power, Financial Advisor USML S K Nangia said. USML's sugar plant at Libberheri (Rourkee) has a crane crushing capacity of 6,250 tonnes and generates 16 MW, while the unit at Barkatpur, currently, produces 3,500 tonnes of sugar with 10 MW of power. "Under phase II expansion plans underway, we aim to double Barakatpur capacity both in sugar and power," Nangia added.

Reliance Petroleum files prospectus for its IPO

7th March 2006: Reliance Petroleum today submitted the red herring prospectus for its initial public offering (IPO) with the Securities and Exchange Board of India (Sebi). This will be the largest IPO in the world for a greenfield project.

The company, a wholly owned subsidiary of Mukesh Ambani-controlled Reliance Industries, proposes to launch a book-built issue of Rs 11,250 crore to Rs 13,500 crore. The issue might hit the capital market in April.

The proceeds of the issue will be utilised to part finance the company's Rs 27,000 crore investment in the special economic zone at Jamnagar in Gujarat. It has recently concluded a syndicated $1.5-billion (approximately Rs 6,750 crore) borrowing deal.

Reliance Petroleum is setting up a refinery with a crude oil processing capacity of 27 million tonnes a year (580,000 barrels a day) and the completion target is before 2008. It is also setting up polypropylene plant with an annual capacity of 900,000 tonnes.

The merchant bankers for the issue are DSP Merrill Lynch, JM Morgan Stanley, Enam Securities, ICICI Securities, Citi and SBI Caps.

Super Forgings & Steels Ltd - Delisting of equity shares

4th March 2006: Super Forgings & Steels Ltd has informed the Exchange that the Shareholders of the Company in the AGM held on December 23, 2005 have decided to delist the shares from Calcutta and Bombay Stock Exchange.

HDFC allots 40,634 equity shares under ESOS

4th March 2006: Housing Development Finance Corporation Ltd (HDFC) has informed BSE that the Corporation on March 03, 2006, has allotted 40,634 equity shares of Rs 10 each under its Employees Stock Option Scheme (ESOS).

ACE Software - Delisting of equity shares from ASE

4th March 2006: ACE Software Exports Ltd has informed BSE that the equity shares of the Company have been delisted from the Ahmedabad Stock Exchange Ltd (ASE) w.e.f. February 27, 2006.

Satyam Computer - Conversion of stock options

4th March 2006: Satyam Computer Services Ltd has informed BSE that the Compensation Committee of the Directors of the Company has allotted 77,068 equity shares through circular resolution on March 03, 2006, under stock option plans of the Company. Consequent to the above allotment, the paid up share capital of the Company has gone up from 323,917,088 equity shares of Rs 2/- each aggregating Rs 647,834,176 to 323,994,156 equity shares of Rs 2/- each aggregating Rs 647,988,312.

Highlights of the Union Budget 2006-07

3rd March 2006: Highlights of the Union Budget 2006-07

  • GDP growth for FY06 likely to be 8.1% with the manufacturing sector at 9.4% ; agricultural growth bounced back to 2.3%; inflation, as on February 11, 2006 was 4.02%; non-food credit growing by over 25%.
  • Focus on Agriculture: output of food grains expected to be 209.3 MT, 5 MT more than the previous year.
  • Promoting employment: National Rural Employment Guarantee Scheme launched; in the current year, Rs 11,700 crore to be spent to create rural employment.
  • Enhancing Investment: Investment rate increased from 25.3% in 2002-03 to 30.1% in 2004-05.
  • BHARAT NIRMAN: In the first year of implementation, 2005-06: Rs 944.18 crore released so far as grant under AIBP, target of 600,000 hectares of irrigation potential expected to be created this year; against target of 56,270 habitations, 47,546 habitations covered until January, 2006.
  • Allocation for eight flagship programmes to increase by 43.2% from Rs.34,927 crore in 2005-06 to Rs.50,015 crore.
  • Sarva Siksha Abhiyan: 93% of children in age group 6-14 years are in school, number of children not in school has come down to about one crore; outlay to increase from Rs 7,156 crore to Rs 10,041 crore in 2006-07; 500,000 additional class rooms to be constructed and 150,000 more teachers to be appointed; Rs 8,746 crore to be transferred to the Prarambhik Siksha Kosh from revenues through education cess.
  • National Rural Employment Guarantee Scheme: allocation of Rs 14,300 crore for rural employment in 2006-07 with Rs 11,300 crore under NREG Act and Rs 3000 crore under SGRY, more funds to be provided according to need.
  • Government to provide equity support of Rs 16,901 crore and loans of Rs 2,789 crore to Central PSEs (including Railways); infusion of Rs 1,180 crore in cash and non-cash sacrifices of Rs 2,566 crore in last two years to restructure ten PSEs, including Indian Telephone Industries Limited and Heavy Engineering Corporation Limited; to develop India as a hub for gems and jewellery, an expert body to be constituted.
  • Micro Finance: 801,000 SHGs credit-linked in two years with credit of Rs 4,863 crore disbursed to these SHGs; another 385,000 SHGs to be credit- linked in 2006-07; NABARD to open a line of credit for financing farm production and investment activities through SHGs; Committee to be appointed on Financial Inclusion.
  • Petroleum, Chemicals and Petro-chemicals: a Task Force setup to facilitate development of large PC&P Investment Regions; three such Investment Regions expected to be developed in 2006-07.
  • Tourism: development of 15 tourist destinations and circuits to be taken up; 50 villages with core competency in handicrafts, handlooms and culture, close to existing destinations and circuits, to be identified and developed; 4 new institutes of hotel management to be established in Chhattisgarh, Haryana, Jharkhand and Uttaranchal; Plan allocation increased from Rs.786 crore to Rs.830 crore.
  • Telecommunication: to reach 250 million connections by December, 2007, provision of Rs 1,500 crore for Universal Services Obligation Fund in 2006-07; more than 50 million rural connections to be rolled out in three years.
  • Power: five ultra mega power projects of 4,000 MW each to be awarded before December 31, 2006; to create an enabling and empowered framework to carry out reforms an Empowered Committee of Chief Ministers and Power Ministers to be setup
  • Petroleum: under NELP VI., 55 blocks and area of 355,000 sq kms offered; investment of Rs.22,000 crore expected in the refinery sector, in the next few years.
  • Banking, Insurance and Pensions: net capital support to banking sector standing at Rs 22,808 crore, to be restructured to facilitate increased access of banks to additional resources for lending to the productive sectors; Bill on insurance to be introduced in 2006-07.
  • Capital Market: limit on FII investment in Government securities to be increased from $ 1.75 billion to $ 2 billion and the limit on FII investment in corporate debt from $ 0.5 billion to $ 1.5 billion; ceiling on aggregate investment by mutual funds in overseas instruments to be raised from $ 1 billion to $ 2 billion with removal of requirement of 10% reciprocal share holding; limited number of qualified Indian mutual funds to be allowed to invest, cumulatively up to $ 1 billion, in overseas exchange traded funds; an investor protection fund to be setup under the aegis of SEBI
  • Twelfth Finance Commission: Rs 94,402 crore to be released as States’ share in gross tax revenues in current year compared to Rs 78,595 crore in 2004-05; grants- in-aid to States are Rs 25,134 crore in RE 2005-06 against Rs 12,081 crore in 2004-05.
  • Gross Budgetary Support and Gross Fiscal Deficit: Centre's gross tax- GDP ratio: 9.2% in 2003-04, 9.8% in 2004-05, 10.5% in 2005-06 (RE), 11.2% in 2006-07 (BE); Gross Fiscal Deficit less than Gross Budgetary Support for Plan in 2004-05; revenue deficit for in 2005-06 to be 2.6% and fiscal deficit 4.1%.


BUDGET ESTIMATES FOR 2006-07

  • Plan Expenditure: estimated at Rs.172,728 crore, up by 20.4 per cent; Non-Plan Expenditure: Rs.391,263 crore, up by 5.5 per cent.
  • Revenue Deficit and Fiscal Deficit: revenue deficit estimated at Rs.84,727 crore, 2.1 per cent of the GDP; fiscal deficit estimated at Rs.148,686 crore, 3.8 per cent of the GDP.

 

TAX PROPOSALS

Indirect Taxes:

  • Customs · peak rate for non-agricultural products reduced from 15% to 12.5%; duty on alloy steel and primary and secondary non-ferrous metals reduced from 10% to 7.5%; this will also be the rate of duty for ferro alloys; on steel melting scrap raised to 5% and brought on part on par with primary steel;
  • Duty on ores and concentrates reduced from 5% to 2%.
  • Duty on refractories and on a number of materials for manufacture of refractories reduced to 7.5%.
  • Duty to be reduced on major bulk plastics like PVC, LDPE and PP from 10% to 5%; on naptha for plastics to NIL; on styrene, EDC and VCM which are raw materials for plastics to 2%.
  • Reduction of customs duty on 10 anti-AIDS and 14 anti-cancer drugs to 5%; on certain life saving drugs, kits and equipment from 15% to 5%; these drugs also exempt from excise duty and CVD.
  • Duty on packaging machines to be reduced from 15% to 5%.
  • CVD of 4% to be imposed on all imports with a few exceptions; full credit to be allowed to manufacturers of excisable goods.
  • Customs duty on vanaspati to be increased to 80%.
  • Reduction of: excise duty on all man-made fibre yarn and filament yarn from 16% to 8 %; import duty on all man-made fibres and yarns from 15% to 10%; import duty on raw materials such as DMT, PTA and MEG from 15% to 10%; import duty on paraxylene to 2%.
  • Excise: With the intention to converge all rates at the CENVAT rate at 16%; duty on aerated drinks and small cars to be reduced to 16%.
  • 8% duty to be imposed on packaged software sold over the counter; customised software and software packages downloaded from the internet to be exempt; DVD Drives, Flash Drives and Combo Drives to be fully exempt from excise duty.
  • Condensed milk, ice cream, preparations of meat, fish and poultry, pectins, pasta and yeast to be fully exempt; duty on ready-to-eat packaged foods and instant food mixes, like dosa and idli mixes, to be reduced from 16% to 8%.
  • Vegetable tanning extracts, namely, quebracho and chestnut to be exempt from duty; duty on footwear with a retail sale price between Rs 250 and Rs 750 to be reduced from 16% to 8%.
  • Concessional rate of 8% to be extended to all LPG stoves.
  • Duty on compact fluorescent lamps to be reduced from 16% to 8%.
  • Excise duty on specified printing, writing and packing paper to be reduced from 16% to 12%.
  • Re-imposition of excise duty at 12% on computers to enable domestic manufacturers to take CENVAT credit as well as to face competition from imports; price not to be impacted as duty to be eligible for full input tax credit,
  • Duty of 16% to be levied on set top boxes with reduction in customs duty from 15 per cent to nil.
  • Increase in excise duty on cigarettes by about 5%.
  • Service tax: New services to be covered including ATM operations, maintenance and management; registrars, share transfer agents and bankers to an issue; sale of space or time, other than in the print media, for advertisements; sponsorship of events, other than sports events, by companies; international air travel excluding economy class passengers; container services on rail, excluding the railway freight charges; business support services; auctioneering; recovery agents; ship management services; travel on cruise ships; and public relations management services.
  • Leasing and hire purchase to be treated on par with loan transactions, interest and installment of principal amount to be abated in calculating value of the service.
  • Proposal to set April 1, 2010 as the date for introducing national level Goods and Service Tax (GST); service tax rate increased from 10 per cent to 12% as another step towards converge between service tax rate and the CENVAT rate; net impact likely to be very small in view of credit available for service tax or excise duty payable.

    Direct Taxes
  • No change in rates of personal income tax or corporate income tax; no new taxes are being imposed.
  • One-by-six scheme will stand abolished.
  • Marginal revision in certain tax rates in the quest for equity- Minimum Alternate Tax (MAT) rate increased from 7.5% of book profits to 10% which is only one-third of the normal rate; long-term capital gains arising out of securities included in calculating book profits; period to take credit for MAT increased from five years to seven years.
  • Increase of 25%, across the board, on all rates of STT.
  • Investments in fixed deposits in scheduled banks for a term of not less than five years included in section 80C of the Income tax Act; limit of Rs 10,000 in respect of contribution to certain pension funds removed in section 80CCC subject to overall ceiling of Rs 100,000.
  • Definition of open-ended equity-oriented schemes of mutual funds in the Income tax Act aligned with the definition adopted by SEBI; open-ended equity-oriented schemes and close-ended equityoriented schemes to be treated on par for exemption from dividend distribution tax.
  • Anonymous or pseudonymous donations to wholly charitable institutions to be taxed at the highest marginal rate; such donations to partly religious and partly charitable institutions/trusts to be taxed only if the donation is specifically for an educational or medical purpose; such donations to wholly religious institutions and religious trusts not to be covered by the new provision.
  • Permanent Account Number (PAN) is the critical element in capturing incomes and expenditures; scrutiny of Annual Information Returns (AIR) on high- value transactions reveals that 60% of the transactions are without quoting PAN; hence proposal to take power to- issue PAN suo motu in certain cases and to direct persons to apply for PAN in certain cases; in due course, more transactions to be notified for which quoting of PAN to be mandatory, a few more transactions to be prescribed to be reported in AIRs.
  • Banking Cash Transaction Tax (BCTT) to continue for some more time until the AIR system is able to capture all significant financial transactions.
  • Fringe Benefit Tax (FBT) introduced last year as a revenue raising measure; justified on the principles of horizontal equity and vertical equity; on review, following changes being proposed
  • Value the benefit in the form of ‘tour and travel’ at 5% instead of 20%;
  • Value benefit in the form of ‘hospitality’ and ‘use of hotel boarding and lodging facilities’, in case of airline companies and shipping industry, at 5% instead of 20%;
  • Prescribe a threshold of Rs 100,000 under section 115WB(1)(c) so that only a contribution by an employer to an approved superannuation fund in excess of Rs 100,000 per year per employee to attract FBT. Under section 80C there is already exemption up to Rs 100,000 for contribution by an employee to an approved superannuation fund.

Indian Oil Corporation (IOC) sells 2.4% Gail stake for Rs 561cr

3rd March 2006: IOC has sold through a bulk deal on the National Stock Exchange 2,04,19,775 equity shares of GAIL at Rs 275 per share amounting to Rs 561.54 crore. According to a release issued by IOC to the BSE today, the sale constitutes 2.41% of the total equity capital of GAIL India.

Gallantt Metal public offer to open on March 6

2nd March 2006: Gujarat-based Gallantt Metal Limited will raise Rs 37.12 crore from the capital market with issue of 371.20 lakh equity shares of Rs 10 each at par to part finance an Rs 190.82 crore vertically-integrated greenfield steel plant at Gujarat.

The company has raised Rs 114.50 crore as term loans while promoters' contribution has been Rs 45.2 crore.

"Of the issue, 60 lakh equity shares is contribution from promoters, five per cent has been reserved for the permanent employees while the net offer to public is 295.64 lakh equity shares," said company CMD C P Agrawal.

Issue opens on March 6 and closes on March 10.

Malu Paper Mills IPO price fixed

2nd March 2006: Nagpur-based kraft paper and newsprint manufacturer Malu Paper Mills Ltd will enter the capital market with an initial public offer (IPO) of 66.67 lakh equity shares to part finance setting up a new unit and a captive power plant. The equity shares of Rs 10 each will be at a premium of Rs 20 per share aggregating to Rs 20 crore.

The issue opens on March 6 and closes on March 10, the company Joint Managing Director Banwarilal Malu said.

He said the issue proceeds will be used to part finance setting up of a new unit at Nagpur to produce 49,500 TPA of newsprint and writing and printing paper along with 6MW captive co-generation power plant. The total investment for the project is estimated to be Rs 70 crore out of which Rs 45 crore have been raised by term loans, Malu said.

The company will use new generation deinking method to manufacture premium quality newsprint by waste paper recycle. Orders have been placed for deinking plant from Finland, paper machine, boiler and turbine for 6MW power plant for the new project, he said. Post expansion, the overall unit capacity will increase to Rs 77,550 TPA, Malu added.

The company's profit after tax for nine months ended December 31, 2005 was Rs 259.35 lakh. Net offer to public is of 56.67 lakh while 5 lakh shares each have been reserved for NRIs and FIIs; Mutual Funds, banks and development financial institutions.

Pratibha Industries IPO priced at Rs 120

2nd March 2006: Pratibha Industries Ltd has fixed a price of Rs 120 for its Initial Public Offer (IPO) of 42.85 lakh shares subsequent to its entry in capital market.

The issue which opened for subscription on February 16, 2006 and closed on February 22 was oversubscribed by 23.63 times, the company said in a release.

The share would be listed on Bombay Stock Exchange Ltd and National Stock Exchange of India Ltd, it said.

Vivro Financial Services Pvt Ltd was the book running lead manager to the issue while Canara Bank (Merchant Banking Division) was the co-manager to the issue, it added.

Indian Oil Corp Ltd (IOC) to sell Oil and Natural Gas Corp Ltd (ONGC) stake by end-March

2nd March 2006: State-run refinery major IOC may sell a fifth of its 9.1% stake in ONGC before end-March, IOC Finance Director S V Narasimhan said. "The stake sale would be determined through a book building process depending upon the market price of ONGC," he said. Narasimhan also confirmed IOC's sale of 2.1% stake in state-run natural gas transporter GAIL India Ltd at Rs 275 a share to institutional investors.

State Bank of Hyderabad plans IPO

1st March 2006: State Bank of Hyderabad is waiting for the passage of the amended 'Subsidiary act' in Parliament to go for an IPO, a top bank executive said on Wednesday. The largest associate bank of State Bank of India, was working out the modalities and as the amendment was made, IPO would be announced during the next fiscal, Managing Director of the bank, Amitabha Guha, said.

The size and book value of the shares would be worked out after the amendment, Guha said. The Bank would come out with some bonds, if the amendment got delayed, he added.

The bank had set a challenging task of achieving a total business of Rs one lakh crore, gross profit of Rs 1000 crore, gross NPA level of one per cent of total advances and net NPA of 0.1 per cent of net advances and a network of 1000 branches by March 2008, Guha said.

The Bank's total business stood at Rs 51,057.17 crore as on Feb 24, 2006, with aggregate deposit at Rs 31,135.93 crore and advances at Rs 19,921.24 crore, he said. All the 940 branches have been connected by core banking solutions, the official said, adding the bank would provide 'any where banking' service in all the branches by June 2006.

Govt plans new window to make ADR/GDR issuers stay at home

8 February 2005: To make companies choose the domestic equity market over the ADR/GDR route, the finance ministry and the Securities and Exchange Board of India (Sebi) are considering an alternative window in the form of regulated institutional placements. The new window for follow-on offerings will be on the lines of the ADR/GDR issue but will take place in the domestic market.

Besides, unlike the existing placement route under the preferential offer window, the proposed regulated institutional placement will not have a lock-in period. The proposal would reduce the regulatory arbitrage that prompts companies to venture abroad instead of sticking to the domestic exchanges with follow-on issues.

Under the proposed alternative mechanism, listed companies would be allowed to raise funds from the domestic market through a regulated placement to qualified institutional investors (QIBs), including banks.

But FIIs, who are not registered with Sebi, would not be eligible for participating in the issue. There would a ceiling on the number of institutional participants at 49 and a minimum of two investors for issue size up to Rs. 250 crore and five investors for issue size in excess of Rs. 250 crore in such offers.

These issues will be listed on the bourses. Approval from stock exchanges would be required in respect of the shares issued through the placement route.

Government sources said as the placement would be to a set of informed investors, the disclosures and procedural stipulations would be relatively less as compared to the public issue process.

The current rally has seen only thin basket of blue chips riding it. This has led to complaints that the Indian market is overpriced. Companies currently prefer the GDR/FCCB route mainly because of its time and cost effectiveness.

However, this is resulting in a gradual export of the domestic market, as also impacting the depth of the domestic markets. Sources said the proposed regulated placement route would not allow direct or indirect participation of promoters or persons acting in concert.

FIIs, VC funds and foreign VC funds can participate in such above placements only if they have no special arrangements in the form of shareholder agreements including board representation.

The pricing requirements shall be on par with those for GDR issues, in terms of the existing guidelines. Allotments can be made on payment of 25% of the price, in case of equity shares and convertibles (other than warrants).

In case of warrants, the payment stipulations shall be 10% on allotment of warrants, with equity shares being allotted only after payment of balance 90%.

3i Infotech - Allotment of shares under ESOS

31st December 2005: 3i Infotech Ltd has informed BSE that the Company has allotted 11,800 equity shares on December 30, 2005, to the applicants under Employee Stock Option Scheme, 2000 (ESOS).

Stresscrete India - Open Offer

31st December 2005: Ashika Capital Ltd ("Manager to the Offer"), for and on behalf of Mr. Rajesh Babulal Vardhan ("Acquirer") along with Mr. Babulal Mishrimal Vardhan, Mrs. Diwalibai Babulal Vardhan, Mr. Ramesh Babulal Vardhan, Mrs. Manju Ramesh Vardhan, Mrs. Aruna Rajesh Vardhan and Mr. Dilip Babulal Vardhan ("Person Acting in Concert" / PACs"), has issued this Public Announcement, pursuant to regulation 10 & 12 in compliance with the Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto ("Regulations"), as below:

The Offer:

The Acquirer & PAC are making an Open Offer to the Public shareholders of Stresscrete India Ltd ("Target Company") to acquire 14,80,000 Fully Paid-Up Equity Share of Rs 10/- each, representing in aggregate 20.77% of the Post issue Voting Capital of the Company at a price of Rs 15.25 per equity share ("Offer Price") payable in cash.

Schedules of Activities

Specified Date: December 31, 2005

Date of Opening of the Offer: February 15, 2006

Date of Closing of the Offer: March 06, 2006

Patni Computer allots 38,190 equity share under ESOP

31st December 2005: Patni Computer Systems Ltd has informed BSE that the Compensation Committee of Directors of the Company vide circular resolution dated December 23, 2005 has allotted 38,190 Equity Shares of par value of Rs 2/- each to certain employees of the Company pursuant to exercise of the options granted to them under the Company's Stock Option Plan 2003 (Patni ESOP 2003).

Sebi`s New Year gift for promoters

31st December 2005: Promoters can hike stake to 75% via market buys.

Market regulator Securities and Exchange Board of India today made a slew of announcements to prepare the stock markets for “new tasks, processes and larger numbers” in the new year.

Among the changes are, permission to promoters to increase their holdings up to 75% through market purchases subject to open offers, a gradual introduction of unique identification numbers for investors and easing of disclosure requirements for secondary public offers.

The regulator said its takeover code would be amended to remove restrictions on market purchases and preferential allotments.

It has been proposed that promoters be allowed to sell their entire stake to an acquirer in case of a takeover provided the acquirer does not overstep the provisions of the listing agreement which require a minimum public holding of 25%.

Investors involved in transactions worth more than Rs 5 lakh will need to provide bio-metric identification while for others, PAN numbers will do for now. Eventually, all investors would be required to provide bio-metric identification, Sebi Chairman M Damodaran said.

In an announcement after Sebi’s 101st board meeting here today, Damodaran also permitted mutual funds to bring out gold exchange traded funds and pitched for optional rating of IPOs.

He also increased the position limit on derivatives and introduced refunds on public-issues through the Reserve Bank of India’s electronic clearing scheme (ECS).

Companies will also have the facility of single-filing of results for the Bombay Stock Exchange, the National Stock Exchange and Sebi. The regulator, however, has not allowed any extension of deadline to ensure companies strictly comply with the provisions of the listing norms.

Describing the changes as moves made to cope with the changed circumstances of the Indian market, Damodaran pointed out that the institution itself would have to be re-engineered to “attract good people” and retain them.

“We have tried to increase market efficiency as people are going abroad to raise money (due to the tedious regulations here) when they can do it here,” he explained.

One of the measures taken to ease the process of raising capital is the removal of disclosure statements by companies going in for subsequent public offers or issuance of other market-instruments to raise cash.

“Since these are known entities (through their IPOs) there is no need to repeat the entire process every time a company wants to raise Rs 200 crore,” he said.

Pointing to the increasing popularity of the primary markets among companies seeking to raise capital, the regulator has mooted the idea of setting up an “investor fund” or making alternate arrangements to sponsor independent rating of companies approaching the market for funds.

According to the outlined plan, those companies that wish to be certified by recognised agencies will have the option of doing so, without having to foot the bill for the same.

Another step aimed at easing the IPO worries of retail investors is the shifting of issue-refunds from the cheque- or DD-based model to electronic fund transfer through the RBI’s ECS.

Only investors in 15 cities in the country, where a system of interbank transfers is in place, will be benefited, while the refunds in other towns and cities will be transferred to the electronic form as and when the RBI extends its facility.

Sebi has also increased the maximum time period between two board meetings to 4 months from the current 3, though it is still mandatory for listed companies to have at least four board meetings a year.

It has also clarified that only reports pertaining to a company’s financial matters need be put up for shareholders’ approval and not necessarily all reports meant to exercise control over a firm’s affairs.

It has also clarified that sitting fees paid to executive directors are not needed to be approved by shareholders.


OTHER DECISIONS

Unique identification must. Investors transacting over Rs 5 lakh require to provide bio-metric details, others require PAN numbers

Position limits for derivatives being hiked

Optional rating of IPOs, cost to be borne by investor protection fund

No extension of Clause 49 deadline. 50 per cent independent directors on board must

Refund of payments through electronic clearing system

Go ahead for gold exchange traded funds

Raj Rayon fixes price band of Rs 55-65 for IPO

31st December 2005: Polyester yarn maker Raj Rayon Ltd said it has fixed the price band at Rs 55-65 for its public offer of 85 lakh equity shares.

The board of directors at its meeting held fixed the price band of Rs 55 at the lower-end and Rs 65 at the upper-end for the issue of 85 lakh shares of Rs 10 each to be offered at a price determined through the book-building process, the company informed the bourses.

The company is likely to raise Rs 46 crore at Rs 55 per equity share and Rs 55 crore at Rs 65 per share, it said. The issue price will be 5.5 times the face value at the lower end of price band and 6.5 times of the face value at the higher end of price band.

Sebi clears plan for rating IPOs

31st December 2005: Norm change is becoming the rule with Sebi. The market regulator has proposed that all investors buying shares worth over Rs 5 lakh will have to obtain a unique identification number (UIN). As per the new rules approved at a Sebi board meeting, promoters of companies holding 55% equity stake can purchase more shares from the market to hike holdings.

“The amendment (to the Takeover Regulations) will lend flexibility to corporate restructuring,” chairman M Damodaran said. The minimum public holding of 25% will stay.

Clause 49 stipulates that at least half or 50% of the total number of directors on a board should be independent. The only concession, which seems to have been made is in terms of the timing of board meetings. The maximum time between two board meetings has been increased to four months from the current three months.

“However the minimum number of board meetings that a company can have hasn’t been reduced. It remains four,” Mr. Damodaran said.

Companies that don’t comply with the norms will be penalised. Till date, only 20 companies of the 5,000 that are listed have complied with norms on corporate governance.

Sebi also cleared a decision to introduce, on an optional basis, the grading of initial public offers. Rating companies would do the grading and the cost involved in the exercise would be borne by either the Investor Protection Fund or some other external agency.

“It would provide expert information to the first-time investor and enable him in his decision,” Mr. Damodaran said. The disclosure norms for follow-on public offers and rights issues have also been reduced as they are already listed companies.

Sebi launched a gold exchange traded fund as suggested by the finance minister in the Budget. “This will facilitate the owning of gold through units by small investors for as low as Rs 100,” Mr. Damodaran said.

The decision to resume the MAPIN process seems to have been prompted by the recent abuse of the IPO allotment process in the Yes Bank offering. By insisting on a registration process and identification of investors, monitoring trades may be made easy.

Sebi has also said that the proposed limit of Rs 5 lakh for obtaining a UIN would be reduced progressively. Agencies capable of providing such facilities in a cost-effective manner would be assigned the responsibility of maintaining the databases.

Jagran targets Rs 400 cr via public offer

30th December 2005: Jagran Prakashan Ltd, publisher of the Hindi daily Dainik Jagran, plans to raise nearly Rs 400 crore through its initial public offer (IPO). The IPO, which intends to offer nearly 20% of the post-issue capital, will put the valuation of the company at Rs 2,000 crore, the second largest among the listed media companies.

At today’s closing rate on the BSE, HT Media, publisher of the Hindustan Times, leads the pack of media companies with a market capitalisation of Rs 2,045 crore.

Deccan Chronicles Holdings, which publishes Deccan Chronicle, has market capitalisation of Rs 1,288 crore, Mid-day Rs 362.27 crore, Sandesh 114.25 crore, TV 18 Rs 794.93 crore, NDTV Rs 1196.24 crore, TV Today Rs 528.67 crore.

Mahendra Mohan Gupta, CMD, Jagran Prakashan, declined to comment on the amount to be mopped up through the issue. He said: “We have filed the draft red herring prospectus with the Sebi for a book-built issue. The amount to be mopped up from the market will depend on the price of the issue. All I can say is that the company plans to issue 10,039,020 equity shares for Rs 10 each. The issue will also have a greenshoe option of up to 15.05 lakh shares.”

Jagran, established in 1942, is controlled by the Gupta family and is based in Kanpur. It publishes editions from 25 centres R K Agarwal, Chief Financial Officer said the public shareholding would be 20%, post issue.

The shareholding of the Gupta family, the promoters, would be around 59% from the present 74% while Independent News & Media Plc’s holding would come down to 20% from the current 26%.

If the greenshoe option is fully exercised, promoters’ stake would be further reduced to 58% and the public shareholding would go up to 22%.

Gupta said the company would spend over Rs 300 crore to finance its capital expenditure and expansion plans. Of this, the company would set aside Rs 80 crore for investment in other publications.

“We intend to be a strategic investor in some media companies and want to take part in their growth, “ he added. The company also planned to launch a second paper in its area of strength, he added.

Union Bank plans to raise Rs 500 cr by February 2006

30th December 2005: Union Bank of India plans to raise Rs 500 crore through a follow-on public issue of equity shares before the end of February 2006. The equity issue is part of the Rs 2,000 crore total capital requirement the bank has envisaged over the next three years, said K Cherian Varghese, chairman, Union Bank, today.

“Going by the current market price of the bank’s shares, we will be able to raise around Rs 500 crore,” Varghese said. Union Bank shares closed at Rs 116.05, up 1.49% from yesterday’s close. The government stake in Union Bank will fall to 55.43% after the public issue from 60.85% now.

The total capital requirement includes Tier-I capital of Rs 1,200 crore and the remaining in the form of Tier-II capital.

The bank has already filed a draft prospectus with the Securities and Exchange Board of India (Sebi). “We will hit the market within two weeks after receiving Sebi clearance,” Varghese said.

He said the bank’s capital adequacy would increase to about 12% after the issue and the bank would like to maintain the capital adequacy ratio at the same level all through

The impact of implementation of Basel II capital adequacy norms will be in the range of 0.60-0.75%.

Varghese said the 33% growth in credit till September 2005 continued in the quarter ended December 2005. The same was the case with deposits, which grew at 23%.

The bank has made a beginning at selling non-performing assets (NPAs) with a test sale of Rs 8 crore bad loans to Asset Reconstruction Company India Ltd (Arcil).

The bank has also discontinued the practice of lending short-term loans at rates linked to Mumbai inter-bank offered rates (Mibor). “We have now decided to go in for long term, high-yielding loans,” Varghese said.

HDFC MF launches close-ended fund

30th December 2005: The close-ended schemes are coming back into the limelight. Close on the heels of Franklin Templeton's closed-end fund, Franklin India Small Companies Fund, HDFC Mutual fund is also launching a closed-end fund - HDFC Long Term Equity Fund, a closed-end fund, with a maturity period of five years.

The scheme will be open for subscription on December 30 and will close on January 27, 2005. The fund will be automatically converted into an open-ended fund upon maturity of the scheme.

Unlike Templeton's scheme, which focuses on small cap companies, HDFC Long Term Equity Fund, plans to maintain a diversified portfolio stocks.

According to the fund, companies identified for selection in the portfolio will have demonstrated a potential ability to grow at a reasonable rate in the long term.

The scheme's aim will be to build a portfolio that adequately reflects a cross section of the growth areas of the economy from time to time.

While the portfolio focuses primarily on a "buy and hold" strategy at most times, it will balance the same with a rational approach to selling when the valuation becomes too demanding even in the face of reasonable growth prospects in the long run.

During the new fund offer (NFO), units will be available at Rs 10 each. The minimum application amount is Rs 5,000. The fund charges no entry load, though redemptions before maturity will attract exit loads.

If investors redeem within 12 months of investing, they will have to pay an exit load of 4%. As the tenure of investment gets longer, exit load decreases.

Sebi to probe IPO records of all MBs

29th December 2005: Wants to check whether multiple-application like that of Yes Bank had spread to others as well.

Market regulator Securities and Exchange Board of India has ordered a probe into the IPO records of merchant bankers (MBs) to see if there have been lapses regarding share allotments in primary issues.

Major primary offerings that hit the market in the past few months and merchant bankers involved in these issues will be under scrutiny.

Last week, Sebi ordered an inspection of the records of the two lead managers for the Yes Bank issue, Enam Financial and DSP Merrill Lynch.

Sebi feels the inspection needs to be broadbased to ascertain whether the multiple-application virus had spread to other issues as well.

Enam and DSP Merrill Lynch executives had no comments to offer, though it is understood that scrutiny of books in at least one of these two firms has already begun.

Among the other leading merchant banks, Kotak did not offer any comments. But Nimesh Kampani, chairman, JM Morgan Stanley, said, “We have not received any call from Sebi yet on this matter but we will be willing to cooperate in its investigation.”

Sebi feels the onus of ensuring that investors with multiple applications do not get allotment lies with the lead managers and registrars of issues. “The role of merchant bankers in ensuring multiple applications do not get allotments cannot be undermined. We will take action against them depending on the culpability found in our inspections,” a Sebi official said.

The regulator has already instructed depositories to increase their surveillance and be proactive in alerting the regulator in case there are any suspicious developments.

Merchant bankers, however, feel that their responsibility is only to ensure that allotments on multiple applications are not made to any one beneficiary account or to different applicants with identical first names.

These two parameters, according to them, have been complied with. They say allotments for applications having the same addressees may not always be correct.

This is because several applications come with funding, in which case an address in an application may be that of a financier who may have funded more than one client and deserves allotments accordingly.

Steel Authority of India (SAIL) delists from Calcutta Stock Exchange (CSE)

29th December 2005: Steel Authority of India (SAIL) on Wednesday informed the stock exchanges that it had delisted its shares voluntarily from Calcutta Stock Exchange (CSE). Many blue-chip companies are delisting shares from regional stock exchanges due to lack of trading volumes and presence of National Stock Exchange and the Bombay Stock Exchange Ltd.

Securities and Exchange Board of India (Sebi) fines Ispat for holding back 'information'

7th December 2005: Sebi has imposed a Rs 1 lakh penalty on Ispat Industries for non-disclosure of price sensitive information to stock exchanges. The action has been taken against the company for a statement made by its finance director in a news channel about its financial and expansion plans, which were price sensitive.

According to the Sebi order, Anil Sureka, executive director (finance) of Ispat Industries in an interview to a news channel in September 3 said that Ispat was targeting a turnover of Rs 4000 crore during the year ‘03-04 and the capacity expansion programme of the company along with cost saving initiatives would result in savings of about Rs 1000 crore a year.

The contribution of long term contracts to sales would move up to 50% from the current 10%. The export target for the current fiscal had been pegged at Rs 1300 crore, he had said. Sebi found that the statements made by the company official had the potential of influencing the price of the scrip of Ispat materially and also alleged that the information was not furnished to the stock exchanges.

The company was required under the Sebi (Prohibition of Insider Trading) Regulations, 1992 to furnish such price sensitive information exchanges in which the stock is listed. Sebi had earlier issued a show cause notice to the managing director and passed an order of warning dated March 31 ‘04 under Section 11 and 11B of the Sebi Act and referred the matter for adjudication. Now the adjudication officer imposed the penalty on the company.

Insurance Regulatory and Development Authority (Irda) all set for amendment to Insurance Act

2nd December 2005: The Insurance Regulatory and Development Authority (Irda) is slated to make its final recommendations to the finance ministry on the proposed amendment to the Insurance Act by the year-end.

The KP Narasimhan Committee had submitted its report to Irda on the amendment to the Act a few months back. The regulator would now hold talks with the various stakeholders before finalising the report.

“The report would be finalised only after we have held talks with the stakeholders, primarily the insurers, so as to be as industry-friendly as possible,” an Irda official said.

The issue however is unlikely to be taken up in Parliament during the current session. According to the regulator, there should be different norms of capital base for different segments of insurance. It has proposed a capital base of Rs 50 crore for health insurance companies.

For life and general insurance companies, the minimum capital base is likely to be kept at Rs 100 crore. It is also of the view that stand-alone health insurance companies should be allowed to operate in the country.

“Though there has been huge pressure from the insurers to reduce the minimum capital base norm, the regulator feels that there is no immediate need to do so. The capital base has not proved to be a hindrance as there are a number of players in the field already,” sources said.

The regulator is also of the view that for health insurance, the foreign direct investment (FDI) level should be fixed at 51%. The FDI level is now fixed at 26% though the government had proposed to increase it to 49%. The issue continues to be the bone of contention between the UPA government and its Left allies. The Left has said that it would not allow FDI in insurance to be hiked.

IVRCL raises $65mn via FCCBs

2nd December 2005: IVRCL Infrastructures and Projects have raised $65 million via foreign currency convertible bonds (FCCBs). According to a release issued by IVRCL Infrastructures and Projects to the BSE today, the zero coupon bonds have a tenure of five years and one day, and are convertible into equity shares at a premium of 55% to the NSE closing price of Rs 754.95 on November 30, 2005. "The proceeds are to be used for capital expenditure and investment in build, own, operate and transfer (BOOT)/build, operate and transfer (BOT) projects," E Sudhir Reddy, vice-chairman and managing director of IVRCL Infrastructures and Projects, said.

JBF Industries raises $34.5mn via FCCBs

2nd December 2005: JBF Industries has raised $34.5 million via foreign currency convertible bonds (FCCBs). According to a release issued by JBF to the BSE today, the five-year bonds are convertible into shares at Rs 90 per share. Jefferies International was the sole manager for the transaction, the release added.

Dawn Mills open offer at 13% premium

30th November 2005: Ambit Corporate Finance, on behalf of Alltime Mercantile Company and others acting in concert, today made a public announcement for buying up to 50,000 shares of Rs 50 each, representing 20% shares of Dawn Mills Company, at Rs 4,644 per share.

According to a release issued by Dawn Mills to the BSE today, the specified date of the offer is December 16, 2005. The offer will open on January 13, 2006 and close on February 1, 2006, the release added.

The shares of Dawn Mills closed at Rs 4,104 on the BSE today. The offer is thus at a premium of 13% (Rs 540).

Nirma to split equity shares in 1:2

1st December 2005: Nirma Ltd, a manufacturer of detergents, on Wednesday said it will split equity shares of the company in 1:2 ratio. The shareholders at the EGM approved the split of equity shares in the ratio of 1:2 under which every Nirma shareholder with one equity share of Rs 10 fully paid up would get two equity shares of Rs 5 each fully paid up, the company informed the Bombay Stock Exchange. The EGM has considered and approved the composite scheme of compromise and arrangement between Core Healthcare Limited (CHL) and Nirma Limited, whereby one equity share of Rs 5 each of Nirma would be allotted for eighty equity shares of Rs 10 each held in CHL, it said. Also one equity share of Rs 5 each of Nirma would be issued for 235 partly paid up equity shares of Rs 10 each held in CHL, it added.

Ratnakar Bank issues share in 1:1 ratio

1st December 2005: Ratnakar Bank Ltd on Wednesday said it will issue equity shares on rights basis to the shareholders in 1:1 ratio. The shareholders at the EGM, has approved the issue of equity shares of Rs 100 each, on rights basis to the company shareholders in 1:1 ratio, the Bank informed the Bombay Stock Exchange. The Bank will also increase its authorised share capital to Rs 300 crore from Rs 60 crore, it said.

Andhra Bank lines up Rs 800 crore public offer

1st December 2005: The Hyderabad-based Andhra Bank has filed for its follow-on public offer for 8.5 crore new equity shares to raise nearly Rs 800 crore to shore up its capital. The funds would be used to implement Basel II norms and support future credit growth.

The issue would constitute 17.53% of the paid-up equity capital after the public issue. The net offer to public is for 7.6 crore shares of Rs 10 each. The price would determine through book building.

The government’s stake in Andhra Bank will fall close to 51.5%. After the issue, its holding will drop to 51.5% from 62.5% now.

Andhra bank’s capital adequacy ratio stood at 11.94% as on September 30, 2005 against 14% a year ago. The bank reported a 21.55% growth in its net profit to Rs 132.89 crore in the July-September 2005 quarter against Rs 109.33 crore a year earlier.

Kingfisher Airlines to go for IPO in 2006

30th November 2005: UB Group Chief Vijay Mallya on Tuesday said the Group would raise a total of $400 million over the next one year, which includes an IPO for its aviation business, Kingfisher Airlines.

"The IPO Kingfisher Airlines will be coming next year and we intend to raise $200 million through this," Mallya said. On the spirit business, he said the company would be raising $200 million, which would be used for reduction of debt raised for purchasing Shaw Wallace and Company, as well as for funding the merged spirits entity 'United Spirits'.

"We expect to complete this by March 2006 and have a variety of options in front of us including going in for private equity placement or FCCBs," Mallya said.

On the company's bid for Air Sahara, he said they had submitted their valuation, "which is less than the $750-1000 million estimated valuation done by Ernst & Young." Regarding Air Sahara he said Kingfisher Airlines was open to a variety of options including a complete buyout, a stake in the company or going in for an alliance.

IBS Software Services plans to tap $ 50 million from IPO

28th November 2005: IT solution provider IBS Software Services plans to tap capital market with initial public offer of nearly Rs 230 crore next year to fund its expansion plans. The company, which spearheads its operations in the travel transportation logistics space and plans to open overseas office in Australia, will use the proceeds of IPO for consolidating its product space and global presence, told V K Mathews, chairman and managing director, IBS.

"We will be going for an IPO in October next year. A decision has not yet taken about the shares to be diluted, but the size of the offer will be not less than $ 50 million and this will be used for opening new offices abroad including one in Australia and developing new products," he said.

The company would soon make an overseas acquisition, he said adding the company would increase workforce to 1,000 in a year. Envisaging a 100% growth in the coming year, Mathews said IBS was developing software for aviation sector with Cendant TDS that could replace old travel transport logistics used by major airlines.

The Trivandrum-based company, which has bagged a major long-term contract from gas and petroleum major Shell International exploration and production for its iLogistics solution, is in discussion with several other oil firms.

"We are in talks with many companies including state owned Oil and Natural Gas Corporation for the implementation of this software solution," Mathews said. The iLogistics solution is expected to cut down the cost incurred on logistics by 10 to 20 per cent, he added.

SEBI okays ICICI Bank’s Follow-on Public Offer (FPO)

24th November 2005: ICICI Bank Ltd on Wednesday said it has filed Red Herring Prospectus with Securities and Exchange Board of India (SEBI) and has received its approval for a FPO of its equity shares.

Pursuant to the same, the bank is in the process of filing the Red Herring Prospectus with the Registrar of Companies, Ahmedabad, ICICI Bank informed the Bombay Stock Exchange.

The bank has decided to keep a five per cent reservation in the FPO for only those shareholders, who would be holding equity shares of the bank worth Rs one lakh as on November 25, it said.

The Bank would announce other details relating to the issue, such as the price band for the offer in due course, it added.

Inox lines up IPO to fund expansion

24th November 2005: Multiplex chain Inox is all set to hit the capital market with its initial public offering (IPO). The issue is expected to offer 1.6 crore shares, a combination of 1.2 crore fresh shares and 45 lakh shares from the promoters.

The proceeds of the issue would be utilised to finance Inox’s expansion plan. The company is in the process of expanding its business into the exhibition arena and also its new venture, which is distribution of space.

The company is planning to set up one multiplex each in Indore, Darjeeling, Hyderabad and Chennai while in Delhi; it plans to set up two multiplexes.

It has recently ventured into the distribution business and had distributed the films Kyon Ki, Garam Masala and Ek Haseena Ek Khiladi for certain territories. The company is also looking at distributing English films in the country.

Sources also revealed that the IPO would be used to get into some co-production treaties. Revenues stand at Rs 30 crore and are expected to notch up to Rs 70 crore in the next financial year. Inox is operational in Pune, Mumbai, Baroda, Goa, Jaipur and Nasik.

Kingfisher plans IPO to finance $1.9 billion Airbus deal

23rd November 2005: India's private Kingfisher Airlines, which placed orders for 30 Airbus A320 aircraft worth $1.9 billion at the ongoing Dubai Air Show, has said the carrier would go public to finance the deal.

“So far a mix of equity and debt has met all our deposit and pre-delivery payments for the aircraft orders. Going forward, we would have to take the company public,” its Chairman and Managing Director Vijay Mallya said.

But unlike other airlines, Kingfisher has plans to fly overseas only after consolidating its domestic network, he said.

“When I have the planes to do so, I will ask the Indian government to reconsider its current restrictions (on overseas flights by private operators)," said Mallya.

At present, Kingfisher flies a fleet of seven new Airbus A320 aircraft with one more A320 and three A319s scheduled to join its fleet by January. With this new order the total firm order for new aircraft with Airbus goes up to 40 A320s.

In June, Kingfisher signed contracts for 15 airbus aircraft, including five superjumbo A380s, in a $3 billion deal designed to capitalise on India's fast-growing air traffic market.

“We have had a wonderful start to our Airbus A320 services within India -- our guests love the aircraft and are delighted with what we offer, which is an attractive and unique travel experience at an affordable price,” said Mallya, whose airline he claims offers full service to passengers at true value fares.

“And when you like a product, you go out and buy more, which is what we are doing today with our additional airbus A320 order.”

Kingfisher is a rapidly growing force in India, having taken a six per cent share of the domestic market in just six months.

“Kingfisher may be young and dynamic, but it is also backed by the resources of a large and successful company, and it has the vision and determination to satisfy the large untapped demand that still exists for air travel in India,” says Airbus President and CEO Gustav Humbert.

“When you are successful, you grow rapidly, and it is great news that Kingfisher has again chosen Airbus aircraft for its fleet expansion.”

Bank a/c disclosure to be mandatory for I-T refund

23rd November 2005: Disclosure of bank account details will soon be mandatory to get refund of excess income tax paid. The I-T has decided that all cheques and pay orders to be issued next year onwards will have the assessee’s bank account details printed on it.

Refund cheques will not be sent out beginning next year until the assessee submits his bank account number and branch code, revenue department sources said. Income tax assessees are required to submit their bank details in the tax return form.

This is being done to prevent fraudsters from encashing such cheques by opening a false account. The proposal will also reduce burden on the banks of physically verifying the cheque presented for payment with the advice note issued by the tax department.

Since the cheques have three months validity, the RBI branch or designated SBI branch would have to retain advice notes issued till the cheques are presented.

The bank details, like in dividend cheques issued by companies, will work as a security feature as the account holder alone would be able to encash the pay order. “Eventually, we want to move towards electronic clearing of refunds,” the department sources said.

That would anyway require the assessee to declare his bank account details such as bank name, address of branch and account number as well as mandate the tax department to make such transfer.

At present, electronic clearing scheme (ECS) transfer is an option available to salaried taxpayers in a dozen cities including Delhi, Mumbai, Chennai, Ahmedabad, Bangalore and Hyderabad. However, only claims that are below Rs 25,000 can be refunded through electronic clearing at present.

The tax department has also decided that where the salaried assessee leaves the ECS mandate column in the tax return form blank, the refund would be made through electronic transfer.

Only in cases where the income tax assessee specifically states that he does not want an ECS transfer-refusing the mandate to the tax department would the refund be made by a cheque.

Compulink Systems Ltd. to raise Rs 27.23 cr via IPO, opens on Nov 25

22nd November 2005: Compulink Systems Ltd, an IP-led software products and services products, will enter the capital market with an Initial Public Offer of 45.38 lakh shares to mop up Rs 27.23 crore.

"The issue of 45.38 lakh shares of Rs 10 each at a price of Rs 60 includes an offer for sale of 10 lakh equity shares by SIDBI Venture Capital Ltd," Compulink Managing Director and CEO Vishwas Mahajan said. The issue would be open for bidding from November 25, to 30, he added.

The company, which offers a portfolio of specialised products and services in the Services Execution Management (SEM) space is looking to utilise the proceeds of the issue mainly to fund international marketing and term loan expenses.

"The amount will be spent towards product development of Rs 1.86 crore, international marketing expenses of Rs 9.86 crore, term loan repayment of Rs 8.25 crore, additional working capital of Rs 2.50 crore and IPO expenses of Rs 2 crore," Mahajan said.

The means of financing would be fully through the equity route and the deployment of funds and project implementation would be in FY-06 and FY-07, he added.

The equity shares are proposed to be listed on the Bombay Stock Exchange Ltd and the National Stock Exchange. Karvy Investor Services Ltd is the lead manager to the issue.

Small companies may be exempted from Fringe Benefit Tax (FBT)

21st November 2005: Small businesses, including partnership firms, may be exempted from paying fringe benefit tax (FBT) in the Budget for ‘06-07. The finance ministry may prescribe a turnover-based exemption to provide relief to small businesses, who are, in any case, not the real targets of FBT.

It’s mostly big corporates who disguise as expenses what they pay out to their employees as fringe benefits. Consequently, the FBT could be fine-tuned further in the run up to the Budget.

Some of the expenses, where the deemed benefit to employees is negligible but is currently covered by the tax, may also be spared. On the other hand, Sodexho and Accor meal and gift vouchers issued by companies to their employees could be brought into the tax net.

The ministry had recently exempted political parties and charitable trusts and institutions eligible for income tax exemption from the levy. Finance ministry is considering ways to make the tax more acceptable as well as simpler to implement.

Revenue secretary KM Chandrasekhar had recently told a tax conference in New Delhi that the ministry would address the industry’s concerns during the budget exercise. “We are open to suggestions on simplification. We will certainly try to take these ideas aboard and see what can be done during the budget exercise,” he had said.

The FBT was introduced in Budget ‘05-06 as surrogate tax on the employer. It’s levied on fringe benefits provided or deemed to have been provided by an employer to his employees. It has been designed as a presumptive tax to be applied only on certain nature of expenditure incurred by employers.

Business chambers have been demanding scrapping of the tax, but that’s a demand the ministry is unlikely to accede to. There have been demands that loss-making entities should be exempted from paying the tax. The ministry is unlikely to agree to this demand either.

But it may some see-reason on taxing expenses on brand ambassadors, given that the deemed benefit to employees by their company. Currently, 20% of the expenses incurred on brand ambassadors are subject to 30% FBT.

At the same time, expenditure on making an advertisement is not subject to the tax. Many tax experts point to inconsistency in the tax department’s circular on FBT given that brand ambassadors are usually used in advertisements.

FBT norms likely to be eased in Budget '06-07

18th November 2005: The fringe benefit tax law may get simpler and easier on corporates. Revenue secretary KM Chandrashekar said the finance ministry would address the concerns of the industry during the budget exercise. He has also promised a new scheme for deduction on research and development expenditure.

He added along with rationalisation of the tax structure, the finance ministry would need to broaden the tax base as well as increase revenue mobilisation.

“The complexity of the structure of FBT seems to be the most worrisome feature. We will certainly try to take the concerns aboard and see what can be done during the budget exercise,” he said at conference on international tax organised here by Ficci.

FBT was introduced in Budget for ’05-06 and the levy has so far yielded Rs 1,700 crore in revenues for the Center. The levy is a presumptive tax where it is presumed that a portion of expenditure incurred by companies and other employers under certain heads have been spent on employees. Currently, 20-50% such expenditure is taxed at the rate of 30%. These include expenses on sales promotion, transportation, leave travel and medical allowance.

The revenue secretary said the department had tried to address some of the concerns of the industry through an explanatory circular issued in September ’05. “We are still open to suggestions and simplification,” he added.

Some chambers of trade and commerce want the government to scrap the tax altogether. A scrapping of the tax is unlikely, at least in the next Budget.

Mr. Chandrashekar has also said that the revenue department, in consultation with department of science and technology, would rework the two schemes for expenditure on research and development-weighted deduction scheme and specific deduction-to bring a proposal that would ensure more focused and fruitful expenditure in R&D.

A committee has been constituted under the chairmanship of eminent scientist RA Mashelkar to recommend an appropriate scheme.

Government zooms in on seven sectors for liberal FDI

15th November 2005: The big-bang liberalisation of the foreign direct investment (FDI) policy, promised by Prime Minister Manmohan Singh, has taken final shape, with the commerce & industry ministry identifying seven sectors for removing barriers to foreign investment.

The sectors chosen include petroleum, coffee & rubber, mining, coal & lignite, power trading, airports and trading. While there are some differences of opinion in liberalising FDI in wholesale trading of telecom products, and mining of precious stones, a broad consensus within the government has been arrived at in all other areas.

The FDI liberalisation roadmap, recently forwarded to the Prime Minister by commerce & industry minister Kamal Nath, includes permission for 100% foreign investment in gas pipelines meant for natural gas through the automatic route.

As of now, the government permits only 74% FDI in this segment through the automatic route and prior permission is required to exceed this limit. A similar proposal has been made for infrastructure related to marketing of petroleum products.

Mr. Nath has also proposed 100% FDI in airports under the automatic route compared with the current 74%. The government's earlier position was that 100% FDI can flow into greenfield airports, but that can be done only with the government's prior permission.

The letter to the Prime Minister also calls for 100% FDI through the automatic route, for exploration and mining of diamonds as well as precious stones. However, the department of mines is of the view that the status quo should be maintained in this sector - restricting FDI under the automatic route to 74%.

Mr. Nath is also of the opinion, that 100% FDI should be allowed under the automatic route for processing and warehousing facilities for coffee and rubber. Ownership of plantations would be excluded from this liberalisation, which will be restricted only to processing and warehousing facilities as this can lead to value additions.

The recommendations from Mr. Nath follow a call by the Prime Minister for FDI liberalisation to boost economic growth. An inter-ministerial group carried out a thorough review of the FDI policy for all sectors before the suggestions were finalised. All the concerned ministries and departments were also consulted.

For coal & lignite as well, Mr. Nath has suggested that FDI up to 100% be allowed for captive mining under the automatic route. As of now, FDI is allowed only to the extent of 74%, except in the case of captive mining by power plants. The liberalisation available to the power sector is now being extended for all other purposes.

In case of trading, the commerce & industry ministry feels the policy should be rationalised, while retail is still being kept out of the FDI ambit in view of opposition from the Left.

Therefore, Mr. Nath has suggested that FDI in trading be allowed under the automatic route for all purposes, including wholesale trading and imports for re-exports. This facility is already available for units located in SEZs.

Currently, FIPB permission is required to trade, and views of government departments may differ depending on the nature of the permission required.

Cash & carry trading, export trading, and trading of high-tech products would all be viewed as wholesale trading, attracting similar treatment under the new dispensation.

The only exception to liberalisation of FDI in wholesale trading could be telecom, where the department of telecom feels 100% foreign investment should not be allowed under the automatic route.

Allowing wholesale trading under the FDI route and paving the way for foreign investment in institutional sales would discourage investment in manufacturing of telecom equipment, the department feels.

There is considerable opportunity to attract FDI in telecom equipment manufacturing and the potential should not be wasted, the department has argued. The final view on the issue would be taken on the basis of directions from the PM, it is understood.

While carefully avoiding sensitive areas like insurance and retail, Kamal Nath has gone full-throttle in power trading, proposing 100% FDI through the automatic route.

Though such clearances would be subject to compliance with sectoral regulations, there will be no need to approach the FIPB. The proposal is based on the Electricity Act of '03, which permits trading in electricity as a licensed activity.

Satyam exits Sify; sells stake for $62.62mn

11th November 2005: Satyam Computer Services has divested its entire stake in Sify by selling 1,11,82,600 equity shares of Rs 10 each, represented by American Depositary Shares (ADSs), for $62.62 million to Infinity Capital Ventures LP.

"The move would enable Satyam to focus on its core business and unlock value of investments. Sify has emerged as a strong player in the data and network space in India. I am sure Sify's management team will continue to scale up Sify's growth with the active support of the new investor," B Ramalinga Raju, chairman of Satyam Computer Services, said.

"As against an original investment of $5 million in Sify in 1995, the company has received a total gross consideration of about $117 million till date - making it a highly successful and value creating investment for shareholders," the release added.

The deal, representing 31.61% of Sify's equity, has been concluded at $5.60 per share to be paid in cash by Infinity, a company controlled by Silicon Valley entrepreneur Raju Vegesna.

In an update released by Satyam to the BSE, "In a separate transaction, Infinity Capital also agreed to purchase, directly from Sify, approximately 6.7 million, newly-issued shares at a purchase price of Rs 256.09 (about $5.60) per share in cash. The closing of the direct purchase from Sify, representing an additional investment of Rs 172.10 crore (about $37 million at an exchange rate of Rs 45.73), is expected to occur in late 2005 upon receipt of stockholder and regulatory approvals."

The total position will represent approximately a 40% ownership interest in Sify for Infinity, the update added.

Everest Kanto Cylinder Limited (EKCL) IPO opens on Nov 22

11th November 2005: Everest Kanto Cylinder Limited on Thursday said it is entering the capital market with an Initial Public Offering of Rs 90 crore to part fund its upcoming high pressure gas cylinders greenfield manufacturing facility at Gandhidham in Gujarat. The issue opens on November 22 and closes on November 25.

"The price band of the issue has been fixed at Rs 140-Rs 160 and the final price of the equity shares of the face value of Rs ten each would be determined through book building process," Everest Kanto Cylinder Chairman and Managing Director P K Khurana said.

The company is investing Rs 106 crore for its upcoming pressure gas cylinders manufacturing facility at Gandhidham that would add capacity of 3.4 lakh cylinders per annum to the existing capacity of 3.66 lakh cylinders per annum. The first phase of the project is expected to be completed by December 15 this year and the complete project is expected to get completed by March 31, 2006, he said. Everest Kanto is also in the process to establish joint venture manufacturing plant in China with an equity stake of 65% by 2006 end, he said.

5% of the issue has been reserved for employees and out of the net offer to the public upto 50% has been reserved for allotment on a discretionary basis to qualified institutional buyers, 15% for non-institutional investors and 35% to retail investors on proportionate basis, he added. SBI Capital Market Ltd is the book running lead manager for the issue.

Bombay Rayon Fashions Limited (BRFL) IPO by March '06

11th November 2005: Bombay Rayon Fashions Limited is entering the capital market with an initial public offer (IPO) for raising funds for its upcoming manufacturing facility near Bangalore.

The total cost of the project is envisaged at Rs 161.72 crore and is slated to be on stream by March 2006, BRFL managing director Prashant Agarwal said. The composite textile unit will have a production capacity of 2,000 kg per day of yarn dyeing and 48 looms for weaving.

The unit, which is to come up at the Apparel Park, Doddaballapur, near Bangalore, would have a debt portion of Rs 101.72 crore. The debt portion has already been tied up under Technology Upgradation Fund Scheme with 5% interest subsidy, Agarwal said. The rest of the funds would be equity component, he said.

The IPO is of 1,34,75,000 equity shares of Rs 10 each, the price band for which is Rs 60 to Rs 70 per equity share.

Piramyd Retail IPO opens today

10th November 2005: Retail chain of the Piramal Group Piramyd Retail Ltd will enter the capital market on Thursday with an initial public offer of 90 lakh equity shares to fund its expansion plans.

The company will use the proceeds to set up 12 additional mega stores and 69 Trumart stores at various locations in the country and repay the bridge loans, its Managing Director and Chief Executive Officer Krish Iyer said. It has already signed in for five properties in the national capital.

He said the price band had been fixed at Rs 120 to Rs 140 for the equity share of Rs 10 each for cash. The premium would be determined through book-building process. Post-issue, promoter stake will come down to 64%, he added.

Out of the net offer to public, at least 50% has been reserved for allocation on a discretionary basis to qualified domestic institutional buyers. The issue includes a promoter contribution of 40 lakh equity shares and the balance 50 lakh which constitutes 25% of the post issue paid up capital of Rs 20 crore comprises the net offer to the public.

Leverage India Fund raises $153mn

9th November 2005: Leverage India Fund, a private equity fund sponsored by IL&FS, Punjab National Bank and Taib Bank of Bahrain, has raised $153 million from foreign and domestic institutional investors. The fund will be managed by IL&FS Investment Managers (IIML), and will invest in sectors like infrastructure, life sciences, textiles and IT. IIML now has over $400 million under active fund management.

Indian Bank not to go for IPO soon

9th November 2005: Public sector Indian Bank on Tuesday said it would not go for any public issue in the near future. "We have passed through difficult phases and now only have we become healthy. We want to consolidate our strength and will not go for public issue now," Indian Bank Chairman K C Chakrabarty said.

Releasing the bank's half yearly results for this fiscal, he said the bank recorded a net profit of Rs.242.14 crore against Rs.242.14 crore of the last year's first six months.

The rise in the net profit was despite lower operating profits, additional prudential provision of standard assets at point four per cent and additional floating provision of Rs.62 crore made as per prudential norms, he said.

Despite thinning margins and impact of wage revision, the operating profit was maintained at the same level of six months of last year, excluding dwindling earning in treasury operations, he said.

The operating profit was Rs.420 crore for the six months of current fiscal against Rs.545 crore of the corresponding period of the last fiscal, which included Rs.116 crore of treasury operations, he said. In a bid to increase non-interest income, the bank would approach the insurance regulatory authority for a licence for insurance broker, he said.

MphasiS to raise $20 m debt for buy-back

9th November 2005: MphasiS BFL, the Rs 900 crore software and BPO solutions firm, is planning to raise a debt of $20-$25 million in the near future to fund the proposed buyback of its shares in the next fiscal. The company on Tuesday said that it is restricting its buy-back plan to up to 10% of its shares.

Said Alok Mishra, CFO, MphasiS: “Our current valuation is in the range of $400 million and we would need approximately $40 million for the 10% we are planning to buy back. A part of this will be met by debt which we are planning to raise and the remaining will be from internal accruals.” MphasiS has $8 million cash reserves.

“The buy-back is expected to be closed during April-May 2006 and the reason for restricting it to a maximum of 10% is to hasten the process as more than 10% of the buy back will take a longer duration,” noted Mishra. He added that the buyback is being planned as MphasiS seeks to lower its floating stock. This had been raised recently for acquisitions and also a 1:1 bonus issue.

MphasiS had used a blend of stock and cash for the recent acquisitions of Princeton Consulting, Eldorado and Kshema Technologies. The company has been in the news in the recent past over the leakage of customer data from its business process outsourcing (BPO) unit, the failed exit of its principal investor Barings, and the reported pulling back of 1,000 people from the services of BPO client Abbey Bank of UK.

The company posted a net profit of Rs 40.16 crore, up by 27.4% for the quarter ended September 30, 2005, compared with Rs 31.51 crore for the corresponding quarter of the last year. Total income of the company was up by 20.47% from Rs 191.10 crore in the second quarter of the previous year to Rs 230.22 crore for the quarter ended September 30, 2005.

National General members approve delisting of equity shares from 3 stock exchanges

5th November 2005: National General Industries Ltd has informed BSE that the members at the 19th Annual General Meeting (AGM) of the Company held on September 30, 2005, inter alia, have passed a resolution for de-listing of equity shares of the Company from the following Stock Exchanges:

1. The Stock Exchange, Ahmedabad.

2. The Jaipur Stock Exchange Association Ltd., Jaipur.

3. The Delhi Stock Exchange Association Ltd.

Aimco Pesticides - Open Offer

5th November 2005: Fortune Financial Services India Ltd ("Manager to the Offer") on behalf of Excel Crop Care Ltd ("Acquirer"), pursuant to and in compliance with Regulation 10 and 12 of Chapter III of The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 1997, and subsequent amendments thereto ("SEBI Takeover Code" or "Regulations") has announced as below:

The Offer:

The Acquirer is making an Offer to the public shareholders of Aimco Pesticides Ltd ("Target Company") to acquire 18,50,000 fully paid up equity shares of the face value of Rs 10/- each, representing in aggregate 20.03% of the post issue paid up capital of the Target Company at a price of Rs 24.50 per equity share (Offer Price) payable in cash and subject to the terms and condition.

Schedules of Activities

Specified Date: November 21, 2005

Date of Opening of the Offer: December 16, 2005

Date of Closing of the Offer: January 04, 2006

Dolphin Offshore - Issue of FCCBs

5th November 2005: Dolphin Offshore Enterprises (India) Ltd has informed BSE that the Managing Committee of the Company at its meeting held on November 03, 2005, has decided to issue Foreign Currency Convertible Bonds (FCCBs) upto US $ 20 million including Green Shoe Option, subject to approval of the shareholders of the Company. Further the Company has informed that an Extra Ordinary General Meeting of the Company will be held on December 01, 2005, for getting the shareholders approval for the aforesaid issue of FCCBs.

Securities and Exchange Board of India (Sebi) plans system for real-time monitoring

5th November 2005: The Securities and Exchange Board of India (Sebi) will soon install an integrated market surveillance system to check irregularities in stock markets by monitoring tradings throughout the day.

“As of now you only see end of the day action because we depend on any reports we get from the exchanges. If we see anything untoward on our screens then we make a phone call to clarify the matter. However, with this system intra-day action will be possible as the exchanges will keep feeding information throughout the day,” Sebi chairman M Damodaran said.

“We will still have to get the information from the exchanges but they will continuously feed it to us in the format that we want, thus making it much easier for us to take any action if anything is out of the ordinary. We will be one of the few countries to have this technology,” he added.

Mr. Damodaran was on his way to Australia, where the technology was developed and will survey SEs there to see how the system works. He stresses the need for investors to have access to trading.

JM Morgan to evaluate Indiabulls buyback plan

5th November 2005: The board of directors of Indiabulls Financial Services, which met yesterday, appointed J M Morgan Stanley as merchant banker and financial advisor and Nishith Desai Associates as legal advisor to give independent advice on a proposal to buy back shares. According to a release issued by Indiabulls to the BSE today, the board will meet again within 15 days to consider the buy back proposal after receiving reports from advisors, and completion of audit of the financial accounts of the company for the six months ended September 30, 2005.

Government may relax foreign investment norms for MFs

5th November 2005: The government is likely to relax norms which allow mutual funds to invest only in those companies abroad which have a 10% stake in a company in India. The options being considered by the government include allowing investment in any broad-based index such as the S&P 200.

“The existing norms have not had the desired effect and the government is reworking them to make them more attractive,” U K Sinha, who took over as chief executive officer of UTI AMC said. Sinha was earlier joint secretary in the finance ministry.

“There are hardly 42 companies which qualify for investment under the above norm and only about 13 of them are well known companies. Therefore, mutual funds do not really have much of a choice in terms of investment options,” A K Sridhar, chief investment officer, UTI AMC, said.

The existing investment norms allow mutual funds in India to collectively invest $1 billion in companies abroad, with each fund house being restricted to a sub-limit of $50 million. Further, mutual funds can only invest in those companies that have at least 10% stake in a company in India.

Bombay Stock Exchange (BSE) may buy stake in Calcutta Stock Exchange (CSE)

4th November 2005: The Bombay Stock Exchange is considering picking up a stake in the Calcutta Stock Exchange, the country’s oldest bourse, when it is put on the block for divesting 51% of its stake to reduce brokers’ rights. “We are working on how to make the business volume of BSE grow. We may consider taking a stake in CSE if we find business prospects,” said Rajnikant Patel, BSE executive director and CEO. He, however, said that a final decision has not been taken. “We will take a final decision after analysing if it makes business sense.”

Consolidation of regional stock exchanges was widely expected and even the Securities and Exchange Board of India (Sebi) chairman M Damodaran had earlier indicated that mergers and consolidation of stock exchanges were expected. The Federation of India Stock Exchanges was trying out a proposal of consolidation of regional stock exchanges and formation of Indonext.

Divestment of stock exchanges would be done mandatorily to comply with the guidelines issued by the capital market watchdog Sebi. Sebi wants to delink the member brokers’ right of trading and right of ownership of stock exchanges. This reform had been introduced taking a cue from the success story of the National Stock Exchange and will help curb manipulations in the market.

Sebi appointed CSE administrator T K Das had said that the process of divesting the 51% stake would start after a memorandum was passed by members at an AGM before November end this year. “We are presently working towards passing the memorandum that will clear the new structure of the bourse and after that we will take up the issue of divesting stake,” Das said.

Demutualisation of CSE has been cleared by the members in July at an extraordinary general meeting. In the past, the local bourse had been planning to offer the 51% stake to banks. The names of banks floating around were the State Bank of India, Allahabad Bank, UCO Bank and United Bank of India. According to estimates, the face value of 51% stake was at Rs 40 crore.

ICICI Bank plans shares at discount

4th November 2005: ICICI Bank will become the first private sector entity to sell equity shares to retail investors at a discount. The country's largest private sector bank hits the domestic capital market this month to raise over Rs 5,000 crore.

Shares will be sold to retail investors at a price lower than the prices for qualified institutional investors and non-institutional high-networth bidders. ICICI Bank executives confirmed the decision today.

A decision on how much discount could be given to existing retail shareholders and retail individual bidders would be taken just before the opening of the issue sometime in the third or fourth week of this month, the executives said.

The issue will also be the largest ever by a private sector entity. ICICI Bank has decided to have a concurrent domestic equity issue and an ADS (American depository shares) offer aggregating 20 crore shares, including a 15% greenshoe option.

The domestic issue will approximately be 73% of a total capital of Rs 7,000 crore to be raised by the bank. Both the domestic and ADS issues will have a greenshoe option amounting to Rs 1,050 crore. This issue and the ADS offer are part of a consolidated capital-raising exercise being undertaken by ICICI Bank.

According to the Securities and Exchange Board of India (Sebi) guidelines, 35% of the total issue size is reserved for retail investors, 15% for high-networth investors and the remaining 50% for qualified institutional investors.

The shares of ICICI Bank have fallen sharply over the last one month. The bank's share price has dropped from Rs 593.29 on October 3 to Rs 499.05 on November 2. ICICI Bank will adjust the differential amount against the amount payable on call or the amount to be refunded to existing retail shareholders and retail individual bidders, as the case may be.

If retail shareholders and retail individual bidders receive partly paid equity shares, they shall be required to pay the amount on call within 30 days of the allotment of the issue's equity shares. The bank shall issue a call notice simultaneously with the approval on the basis of allotments made by stock exchanges.


NEW ISSUE

·  Total capital to be raised: Rs 7,000 crore plus greenshoe of Rs 1,050 crore

·  The split between domestic and ADS: 73% domestic and 27% ADS

·  At 73%, the domestic issue size will be Rs 5,110 crore, plus greenshoe of Rs 766.50 crore

New norms to help IRDA recommend tax breaks for life insurance plans

4th November 2005: IRDA’S proposed new guidelines are set to bring unit-linked policies (Ulips) in line with traditional endowment products. IRDA is expected to issue final guidelines by next month after receiving comments on the draft guidelines that will be circulated in the industry soon.

Sources said that tightening the norms for Ulips will make it easier for IRDA to recommend tax breaks for life insurance products on the grounds that these are long-term retirement plans.

The regulator has already asked Bajaj Allianz Life Insurance to withdraw its single premium policy, Unit Gain SP, because of its short-term features. The company has agreed to withdraw the plan after a new policy to replace it is in place. Unit Gain had brought in for Bajaj Allianz close to a third of its single premium income.

IRDA’s tough stand on Ulips has been a bone of contention between the regulator and private insurance players for almost a year. While insurance companies feel that the regulator will end up stifling product innovation, IRDA is keen that insurance companies sell long-term retirement plans.

Delhi Stock Exchange (DSE) shares likely to go to escrow account

3rd November 2005: The Delhi Stock Exchange is likely to pass a resolution in order to transfer all shares of the exchange to an escrow account, most likely with HDFC Bank. A group of prominent members would operate the account.

The exchange has proposed that all registered shareholders sell 51% of their one share of Rs 2,000 each. These proposals are likely to be ratified at the DSE’s extraordinary general meeting on November 14.

As per a notice issued by the DSE to its members, “All the registered share-holders/members of the exchange including the shareholders whose shares are vested in the exchange do hereby agree to sell 51% of their one share of Rs 2,000 each which is proposed to be split into 2,000 equity shares of Rs 1 each in the share capital of the exchange, i.e. 1,020 equity shares of Re 1 each for a sale consideration of Rs 10 lakh and above payable in cash or kind as may be decided by the board of directors of the exchange.”

The notice further adds that all registered shareholders/members of the exchange including the shareholders whose shares are vested in the exchange be and are entitled to offer any number of shares up to 100% of their share to the acquirer and will get the sale consideration for the shares offered and accepted by them, but in case if the number of shares offered by the members exceed the requirement of the acquirer then such shares would be accepted in proportion to the total shares offered or in many manner as may be decided and approved by the board of directors of the exchange.

Meanwhile, a senior member of the DSE said that for a smooth functioning of the exchange, new and innovative products must be introduced. Alternative trading platform must be developed for companies not listed on Bombay Stock Exchange and National Stock Exchange.

Over 3,000 companies are listed on DSE. In 2004-05, three companies were listed on the exchange while 429 have been delisted. As per DSE data, the number of companies seeking delisting from the exchange has substantially reduced and only 16 have been actually delisted since April 1, 2005.

Union Bank of India (UBI) to go for its 2nd public issue of 4.5 crore shares

3rd November 2005: UBI will announce its second IPO of 4.5 crore shares in January next to cap its capital adequacy ratio (CAR).

The fixation of price band and other formalities is being worked out and the final figure of IPO will be announced later, UBI (Retail Banking) General Manager, Mr. V S R Murthy said.

Reviewing the overall performance of the bank whose net profit stood at Rs 301 crore for the Q2, Mr. Murthy said UBI achieved a total business of Rs 1,16,171 crores as on September 30, 2005.

He said in the process of extending various concessions to its retail customers, the bank have entered into tie-up with various leading automobile giants, builders, educational institutions and computer companies.

Mahindra & Mahindra Financial Services Ltd (MMFSL) plans IPO through book-building route

3rd November 2005: MMFSL informed the BSE that it would be coming out with an IPO, a combination of fresh equity issue and dilution by existing shareholders, at a price to be determined through the book-building process.

The board decision and disclosure follows M&M's announcement on Wednesday stating the extent of equity dilution it was prepared for in its financial subsidiary. "Subject to the approval of the shareholders, the Board has proposed a fresh issue not exceeding 1.5 crore equity shares including a green shoe option through an IPO at a price to be determined under the book building process. The IPO will also inter alia include an offer of sale not exceeding 1 crore equity shares, aggregating 14.25% of the paid up capital of the company by Mahindra & Mahindra Ltd, the promoter and the holding company and other existing shareholders of the Company," MMFSL's notice to BSE said.

The company's authorised share capital is also being raised from Rs 125 crore to Rs 140 crore. MMFSL has also declared an interim dividend of 15% on 7,01,56,080 equity shares of Rs 10 each aggregating Rs 10.52 crore and a dividend of 6.9% on 50,00,000 redeemable preference shares of Rs 100 each aggregating Rs 3.45 crore. Further, it was informed that Dr Pawan Goenka, who is President of M&M's Auto Sector, had joined the board as director.

Garment exporter Celebrity Fashions Ltd plans IPO

3rd November 2005: The Rs 160-crore Chennai-based Celebrity Fashions Ltd, garment exporter to some of the world's top brands and parent company of the menswear brand, Indian Terrain, plans an IPO to finance the setting up of new factories as well as for expansion of exclusive stores for its brand.

The company plans to enter the capital market with a public issue of 45.5 lakh equity shares of Rs 10 each on a book-building basis.

The issue, according to the company, will constitute 25.35% of the fully diluted post-issue paid-up capital of the company. Celebrity Fashions Ltd has filed a draft Red Herring prospectus with SEBI.

The IL&FS Investsmart is the book running lead manager for the issue. The company, says a release, believes that there exists strong opportunities for growth in the global textile industry in a quota-free regime and the branded apparel domestic market. Plans also include expansion of the corporate office and earmarking funds for potential acquisitions.

Gujarat State Petronet Ltd (GSPL) plans IPO shortly

3rd November 2005: GSPL, the gas distribution entity of Gujarat State Petroleum Corporation (GSPC), will come out with an initial public offering (IPO) in the next couple of months to fund the second phase of its pipeline project.

"We plan to enter the capital markets by December or January to raise funds for our expansion plans. We are offering 130 million shares that constitute 25% of our paid-up capital through the book building process," the GSPC Managing Director, Mr. D. J. Pandian, said.

Kotak Mahindra Capital has been appointed as the lead manager to the issue that would be co-managed by HSBC Securities Ltd and ICICI Securities Ltd. GSPL filed its draft red herring prospectus with SEBI.

Out of the issue, 15% of the shares would be reserved for high net-worth individuals, while 35% would be for retail investors. Qualified institutional buyers will be allotted the balance 50% of the shares.

GSPL, which is laying a 2,200-km gas grid across Gujarat, will use the funds for its 752-km expansion project that would take the gas pipelines to towns such as Rajkot, Morbi, Mehsana and Himmatnagar. The Gujarat Government, through GSPC, owns 79.5% of the equity in GSPL, while the IDFC-promoted India Development Fund holds the balance 20.5%.

No takers for Aptech open offer

3rd October 2005: IL&FS Investmart, on behalf of Aptech Investments, today announced that the acquirers could get only 3,403 shares (0.008%) in the open offer made to shareholders at Rs 67.50 per share.

According to a release issued by Aptech to the BSE today, the offer was made for acquiring 82,70,000 shares by Aptech Investments.

"The shareholding of the acquirers now total 1,05,54,403 shares, accounting for 25.65% of the paid-up capital of Aptech after the open offer, as against the envisaged holding of 1,88,21,000 accounting for 45.74% of the paid-up capital," the release added.

The initial offer, made on July 16, 2005, to acquire up to 68,90,000 shares was later hiked to 82,70,000 shares on September 20, according to releases issued by the company to the BSE.

IVRCL to raise $140mn

3rd October 2005: IVRCL Infrastructures & Projects is planning to issue raise $140 million by issuing FCCBs/ADRs/GDRs. According to a release issued by IVRCL to the BSE today, the board of directors of the company, which met on October 29, 2005, approved the proposal as against the earlier plan to raise up to $200 million.

ICICI Bank to offer ‘safety net’ in IPO

31st October 2005: ICICI Bank, which is planning a second public issue, intends to offer the price-stabilisation mechanism again. TCS had offered the price-stabilisation mechanism in its IPO, while the Belgaum-based Shree Renuka Sugars is another firm, which had followed this route.

ICICI Bank had raised Rs 3,500 crore, including a greenshoe option of Rs 450 crore, TCS mopped up over Rs 4,000 crore, and Renuka Sugars raised less than Rs 150 crore through their IPOs.

A safety net or price stabilisation mechanism is not a new concept in India. A few years ago the Bangalore-based Opto Circuits had offered a safety net for six months in its IPO. “It’s a good move on the part of ICICI Bank to look at a market stabilisation mechanism. It is coming at a time when the markets are volatile and this should provide some comfort to the investor,” said a fund manager.

However, some analysts believe that a price stabilisation mechanism should have been for a longer period. “A 30-day window is too short. Given the fact that there will a number of people who will be looking at exiting the counter post-listing, this move can impact the medium and long-term investors,” said a fund manager.

In all the three cases, the market stabilisation runs for a period of 30 days from the date the company is given trading permission from the exchanges.

ICICI Bank’s follow-on public offering is also unique in that the former could in consultation with the book-running lead manager (BRLM) and the co-BRLMs issue “may allot equity shares to existing retail shareholders and retail individual bidders at a differential low price as compared to the qualified institutional bidders and non-institutional bidders.”

Inox Leisure plans IPO

25th October 2005: Inox Leisure, a subsidiary of Gujarat Flurochemicals, is planning an initial public offering (IPO) of equity shares priced at Rs 10 each through the book building process. Gujarat Fluorochemicals announced this in a release issued to the BSE.

Life Insurance Corporation of India (LIC) launches new policy

20th October 2005: LIC on Tuesday launched a new policy ‘Jeevan Plus’. The unit linked whole life policy offers investment-cum-insurance throughout the lifetime of the policyholder.

LIC senior divisional manager C Narasavadhani said the policyholder could choose the level of cover within the limits, which will depend on the mode and level of premium he agrees to pay. The allocated premium would be applied to buy units as per the chosen fund type.

He said the policyholder’s Unit account would be subject to deduction of charges like life cover, critical illness benefit, accident benefit charges, administrative charges, policy charges and fund management charges.

Units would be allotted based on the Net Asset Value of the respective fund as on the date of allotment. There would be no Bid Offer spread. (Both the Bid price and Offer price would be equal to the NAV).

Deccan Chronicle Holdings Ltd (DCHL) allots FCCBs to JP Morgan

20th October 2005: DCHL has allotted 54,022 Zero Coupon rate convertible bonds to J P Morgan Securities. These bonds (FCCBs), due 2010, are worth 1,000 dollars each aggregating to 54.022 million dollars, the company informed the Bombay Stock Exchange.

Punj Lloyd files for IPO

19th October 2005: Punj Lloyd, a leading engineering construction company in the country, plans to mobilise over Rs 500 crore from the capital market through an initial public offering (IPO). The company filed its draft red herring prospectus with the Securities and Exchanges Board of India (Sebi).

The company proposes to enter the market with a public issue of 9,172,937 equity shares with a face value of Rs 10 each, at a price to be decided through the 100% book-building process. This comprises a fresh issue of 83,55,174 equity shares and an offer for sale of 8,17,763 equity shares.

The issue will reserve one lakh equity shares for employees. The issue will constitute 17.57% of the post-issue paid-up equity share capital of the company. The shares will be listed on the Bombay Stock Exchange and the National Stock Exchange (NSE).

Of the net offer for the public, at least 60% will be reserved for allotment to qualified institutional buyers (QIBs). About 5% of the QIB portion will be available for allocation to mutual funds (MFs).

Further, up to 10% will be available for allocation to non-institutional investors and the balance 30% will be available for allocation to retail investors. The book-running lead managers to the issue are ICICI Securities, DSP Merrill Lynch, Citigroup Global Markets India, and Kotak Mahindra Capital.

Punj Lloyd provides integrated design, engineering, procurement, construction and project management services for energy industry and infrastructure projects with operations spread across the Middle East, Caspian, Asia Pacific, Africa and South Asia. Standard Chartered, New York Life, Merlion Fund and Dunearn Investments, an affiliate of Temasek, hold stakes in the company.

The IPO of Bannari Amman Spinning Mills Ltd. (BASML) opens today

19th October 2005: Bannari Amman Spinning Mills Ltd., part of the Rs 1,200 crore Coimbatore-based Bannari Amman Group, has announced entering the capital market with an IPO of 7,000,000 equity shares. The face value of each share will be Rs 10, through the book-building process, a company release said.

The price band of the share is fixed at Rs 115 - Rs 135. The total amount to be raised would be Rs 80.5 crore at the lower band and Rs 94.5 crore at the upper band.

The issue opens on Oct 19 and closes on Oct 25, 2005. The shares will be listed in the stock exchanges of Mumbai (BSE) and the National Stock exchange, the release said.

BASML's net profit increased from Rs 3.62 crore in 2001-0 to Rs 11.53 crore in 2004-05, posting an increase of 47.1%. The total income has also increased from Rs 60.47 crore to Rs 75.62 crore with a 7.7% growth.

The Bannari Amman Group is a diversified group with business interests in sugar, textiles, food-processing, granite-processing, power-generation, transportation, distillery, automobile and healthcare.

Aroni Chemical - Open Offer

17th October 2005: JM Morgan Stanley Pvt Ltd ("Manager to the Offer"), on behalf of Winro Commercial (India) Ltd ("Acquirer") has issued this Public Announcement ("PA"), pursuant to and in compliance with Regulations 11(2) of Chapter III of Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ("Regulations"), as below:

The Offer:

The Acquirer is making this PA to the shareholders of Aroni Chemical Industries Ltd ("Target Company"), to acquire upto 452,915 equity shares of Rs 10/- each representing 10.98% of the fully paid up equity share capital of the Target Company at a price of Rs 31.50/- per equity share ("the Offer Price") plus interest of Rs 35.20 per equity share, calculated at the rate of 15% per annum from July 28, 1998 upto January 05, 2006 i.e. the scheduled date of the payment of consideration (the interest amount being subject to change depending upon the actual date of dispatch of such payment of consideration).

Schedules of Activities

Specified Date: October 14, 2005

Date of Opening of the Offer: December 02, 2005

Date of Closing of the Offer: December 21, 2005

India Cements Ltd (ICL) raises $100 mn in share sale

14th October 2005: India Cements Ltd raised $100 mn after selling 46.26 mn shares, ABN Amro Rothschild, the book runner of the deal said today. The offering, which was more than three times covered, is likely to expand to $115 mn, Rene Mijne, head of syndicate at ABN Amro Rothschild Asia told the agency. The company sold 23.13 mn GDRs or 46.26 mn common shares at Rs 97 each. The proceeds will be used to expand its production.

ICICI Bank to raise Rs 8,000 cr in India, US

14th October 2005: ICICI Bank today announced plans to raise up to Rs 8,000 crore through a combination of domestic and overseas equity issues, making it the largest ever equity float by a private entity in India. The bank will raise around 75% (Rs 6,000 crore) of the projected capital needs from the domestic market. ICICI Bank will have to limit its ADS (American depository shares) issue to around 25% of the planned capital raising as the foreign shareholding in the bank is already close to the 74 per cent ceiling permitted by the banking regulator.

The largest equity issue by an Indian corporate till date is that of Oil and Natural Gas Corporation (ONGC). In 2004, the government offered to sale a part of its stake in ONGC to mobilise over Rs 10,000 crore.

The core size of the capital-raising exercise by the year-end is expected to be around Rs 7,000 crore ($1.6 billion) and it will carry a greenshoe option of 15%. The board of the ICICI Bank approved the equity expansion plan today. JM Morgan Stanley and DSP Merrill Lynch will be the lead managers for the issue. ICICI Bank Deputy Managing Director Kalpana Morparia said the issue of fresh equity would help the bank meet its asset growth and capital requirements for adhering to the Basel II norms.

The bank’s capital adequacy ratio fell sharply to 11.5% during the second quarter of 2005-06, from 15.20% a year ago. After the issue, ICICI Bank’s tier I capital adequacy ratio will be raised from 7.2% to 10%. Its advances rose by 56.35% to over Rs 1,07,000 crore during the last quarter. The growth was largely contributed by a 73% jump in retail loans to Rs 68,537 crore during July-September, 2005.

The proposed issue will be around 18% of the expanded equity base, considering the price of the bank’s shares. Morparia said the domestic equity market had ample liquidity to absorb an offering as large as the one planned by ICICI Bank. The capital requirements are also meant to support the bank’s global growth ambitions. ICICI Bank recently acquired a small Russian bank, Investitsionno-Kreditny Bank, which provided it a foothold in Russia’s emerging market.

ICICI Bank had, in April 2004, raised Rs 3,050 crore through a public issue. In March this year, ICICI Bank completed a sponsored ADS issue at $21.11 a share, raising foreign holding in the company to 73.05%.

Life Insurance Corporation of India holds a 9.75% in ICICI Bank, New India Assurance Company (2.37%) General Insurance Corporation (1.31%) National Insurance Company (1.08%), private corporate bodies (3.91%) and Bajaj Auto (3.10%).

IDBI raised Rs 450 mn via Commercial Paper

14th October 2005: Industrial Development Bank of India Home finance Ltd raised Rs 450 mn on Thursday through a five-month commercial paper issue, the company's assistant general manager, Mayank Bhandhari, said. The paper was placed with mutual funds at 5.90%. The term starts on Oct. 18 and Oct. 19. The issue has been rated 'A1+' by ICRA Ltd., indicating highest safety. IDBI Home finance is a subsidiary of state-run Industrial Development Bank of India.

Ranbaxy Laboratories - Allotment of equity shares under ESOS

11th October 2005: Ranbaxy Laboratories Ltd has informed BSE that the ESOPs Allotment Committee of Directors at its meeting held on October 10, 2005, has allotted 48,313 equity shares on exercise of stock options under the Employees Stock Options Scheme(s) (ESOS) of the Company. The paid-up equity share capital of the Company post allotment is 37,24,42,190 equity shares of Rs 5/- each aggregating Rs 1,86,22,10,950/-.

Wipro allots 77,350 equity shares under ESOP

11th October 2005: Wipro Ltd has informed BSE that the Administrative Committee of the Board of Directors of the Company vide their circular resolution effective October 05, 2005 resolved to issue and allot 77350 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

Astra Microwave - Delisting of equity shares from OTC Exchange of India, Mumbai

11th October 2005: Astra Microwave Products Ltd has informed BSE that the OTC Exchange of India, vide their letter dated October 05, 2005, has approved the Voluntary Delisting of shares of the Company with effect from September 26, 2005.

Maheshwari Mega Ventures Limited to float Rs 100cr IPO

11th October 2005: Maheshwari Mega Ventures Limited of MPM-The Mall fame is planning to go in for a Rs 100-crore initial public offering (IPO) in the next six months. The company plans to raise funds for its upcoming ventures, which include three shopping malls and a five-star hotel. These ventures will also be funded by debt and internal accruals.

Girish Mallpani, chief executive officer of Maheshwari Mega Ventures Limited, said, “We are planning to raise money from the public for our new ventures. We will, therefore, be coming out with an IPO of approximately Rs 100 crore in another six months.” Maheshwari Mega Ventures is setting up an Rs 30-crore, 1,20,000-sq ft shopping mall called ‘Bonsai’. The mall is slated to be opened in another six months at Himayatnagar.

“We have already spent Rs 20 crore, and an additional investment of Rs 10 crore is required for the mall,” Mallpani said. The anchor store at the mall will be Pantaloon’s. Besides, the mall will have an automated car parking system for the first time in Hyderabad. The company has also tied up with Shringar Films Private Limited to set up a three-screen multiplex at the mall.

“We are also setting up a five-star hotel in the city for which we have tied up with an international hotel chain for management purposes. The 2.5 lakh-sq ft hotel will have 230 rooms. Besides, next to the hotel and within the same premises, we will be setting up a shopping mall that will run across 1.5 lakh sq ft of space,” Mallpani said.

The Rs 125-crore venture is expected to be ready by the end of 2006 and will also have an automated car parking system. “We are setting up another mall at Banjara Hills. Tentatively titled MPM Times Square, the Rs 60-crore mall will run across two lakh-sq ft of space and will be ready by 2007. The mall will also have a multiplex besides an automated car parking system,” he added.

Air-India’s IPO likely this fiscal, says Thulasidas

11th October 2005: Air-India is poised to go through with its IPO this fiscal itself, and significantly enhance its budget airline operations. A-I CMD V Thulasidas said the final decision on the IPO is expected soon and it planned to go through with the IPO this fiscal itself. “We have appointed Merrill Lynch as the advisors and their report is expected within a month and a half.

Following that a formal proposal will be given to the government and we hope to conclude the IPO this fiscal itself,” Thulasidas said. He said the IPO will “change the very character” of the airline and is intended to correct the debt-equity structure of the company. He said the company would go in for fuel hedging from the next fiscal, considering the impact of fuel prices on the airline’s operational efficiency.

“Last fiscal the average cost of fuel for the airline was $1.6 cents per gallon. This year we find that it is over $2 per gallon,” he said. It will be for the first time that A-I will be hedging its fuel price.

Thulasidas said the company would expand its budget airline, Air India Express. AI Express currently operates with three leased aircraft. Four more aircraft will be added to the budget operations in the first quarter of ’06. AI Express currently has 26 flights per week to Dubai, Abu Dhabi, Muscat, Salalah and Al Ain.

Non-Vat states and non-uniform rates plague new tax regime

10th October 2005: With five BJP-ruled states, Tamil Nadu and Uttar Pradesh yet to adopt Vat (Uttaranchal has adopted Vat effective October 1 and Jharkhand has announced its intent to join from January 1, 2006), the problems of incomplete implementation of the tax persists.

Despite a great amount of harmonisation, lack of uniformity in Vat rates among states continues to dog many industries. The rate differential in commercial tax rates among Vat and non-Vat states too has left scope for gainful discrimination –sometimes precipitating rate wars among states.

As for commodities like gold, precious stones and petroleum products, non-adherence by some states to the prescribed uniform floor rates (UFRs) results in trade diversion, to the detriment of states that are bound by UFRs.

A formula for the phasing out of the central sales tax (CST) on inter-state transactions - which distorts the Vat system - is yet to be worked out. The latest meeting of the empowered committee of state finance ministers resolved to cut the CST from 4% to 2% effective from April 1, 2006. A definite commitment on total withdrawal of CST continues to be elusive. Before phasing out CST, the finance ministry and the states will have to work out a scheme for neutralising the resultant revenue loss to states.

Since input tax credit is available only to the extent of the sales within the state, from which the inputs are sourced, bigger companies marketing their products across the country are unable to fully utilise the tax set-off facility offered under Vat.

Tata MF launches Contrarian Fund

8th October 2005: Tata Mutual Fund has launched the Tata Contra Fund, an open-ended equity scheme that will follow a contrarian investment approach. The fund will be investing in fundamentally strong companies that are currently traded at prices significantly lower to their intrinsic values.

“Contrarian investing focuses on identifying and investing in stocks that are fundamentally strong but relatively undervalued, due to short-term, non-recurrent reasons. With equity markets at all-time highs, contrarian investing can help investors diversify their portfolio and realise long-term value,” says Ved Prakash Chaturvedi, managing director, Tata Mutual Fund.

The new fund offering for the scheme has started from September 26, ‘05 and the closing date of the offer is October 25, ‘05. The experience of the last five years in the Indian markets gives a strong indication of the benefits of contrarian investing, says Mr. Chaturvedi.

Gujarat Industries Power Company Ltd (GIPCL) public offer to open on October 13

8th October 2005: GIPCL is visiting the capital market to raise Rs 275 crore for funding its lignite-based 250 MW power plant near Surat. The issue opens on October 13 and closes on October 19. Of the total issue, Rs 75 crore would be reserved for promoters and balance Rs 200 crore would be offered to the public, GIPCL Chairman Balwant Singh said.

Gujarat Urja Vikas Nigam Ltd, Gujarat State Fertilizers and Chemicals Ltd, Gujarat Alkalies and Chemicals Ltd and Petrofils Cooperative Ltd promote GIPCL.

Under its expansion programme, the company plans to set up 250 MW lignite-based power plant near Surat including a project for development of captive lignite mine at an estimated total cost of Rs 1,448 crore. The power plant and the captive mine project are to be financed on a 75:25 debt-equity ratio. The expansion unit would be located adjacent to the existing 250 MW lignite-based power plant at Nani Naroli near Surat and also involves development of lignite mines for captive fuel requirement of the plant.

The power plant would employ circulating fluidized bed combustion technology and the project would be implemented through EPC contract for which the tender invited through ICB route is under evaluation.

Online Media - Open Offer

8th October 2005: Ashika Capital Ltd ("Manager to the Offer") for and on behalf of Savera Construction Pvt Ltd ("Acquirer") has issued this Public Announcement ("PA"), pursuant to Regulations 10 & 12 in compliance with the Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto ("Regulations"), as below:

The Offer:

The Acquirer is now making an Open Offer to the shareholders of Online Media Solutions Ltd ("Target Company"), to acquire up to 21,00,860 Fully paid up equity shares of Rs 10/- each representing 20% of the Subscribed Share capital and 20.04% of Voting Capital, at a price of Rs 2/- per share ("Offer Price"), payable in cash.

Schedules of Activities :

Specified Date : October 17, 2005

Date of Opening of the Offer : November 23, 2005

Date of Closing of the Offer : December 12, 2005

Air Deccan files application with Sebi for IPO

8th October 2005: Low cost airline Air Deccan has filed an application with Sebi for entering the capital market. “We have filed an application with the Sebi and the matter is in the process,” chief revenue officer John Kuruvilla said. He declined to divulge details about the size and timing of the IPO, saying that the amount raised through it will be used to fund expansion.

Punj Llyod Ltd files prospectus with Sebi for its initial public offer

8th October 2005: Engineering and construction giant Punj Lloyd Ltd on Friday filed draft red herring prospectus with market regulator SEBI for its initial public offer. The company proposes to offer 9,172,937 equity shares of face value Rs 10 each at a price to be decided through the 100% book-building process, it said in a release.

This comprises a fresh issue of 8,355,174 equity shares and an Offer for Sale of 817,763 equity shares. The issue will include an employee reservation of 100,000 equity shares and will constitute 17.57% of the post issue paid-up equity share capital of the company.

Standard Chartered, New York Life, Merlion Fund and Dunearn Investments, an affiliate of Temasek, have a shareholding in the company.

The shares would be listed on the BSE and NSE. Of the net offer to public, 60% is reserved for qualified institutional buyers (QIB). 5% of the QIB portion shall be available for allocation to mutual funds. Further, up to 10% would be allocated to non-institutional investors and the balance 30% will be available for allocation to retail investors, it said.

ICICI Securities, Citigroup Global Markets India Pvt Ltd, DSP Merrill Lynch Ltd and Kotak Mahindra Capital Co Ltd are the book-running lead managers to the issue.

Punj Lloyd is one of the largest engineering and construction companies in India providing integrated design, engineering, procurement, construction and project management services for energy and infrastructure sectors. The company's operations are spread across the Middle East, Caspian, Asia Pacific, Africa and South Asia.

SEBI Press Release 108 -2005 - Minimum public shareholding requirements revised

Presently listed companies are required to maintain their public shareholding at a level that was required at the time of initial listing. The minimum public shareholding requirement, therefore, varied in accordance with the provisions applicable at the time of initial listing of the company. In a  meeting of the Securities and Exchange Board of India held here today, it has been decided to revise the above provisions related to minimum public shareholding as follows:

(1)    All listed companies will be required to maintain atleast 25% shareholding with public for the purpose of continuous listing.

(2)    This will not, however,  be applicable to companies which are permitted to make an Initial Public offer (IPO) of atleast 10% to public in terms of Rule 19(2)(b) of Securities Contracts (Regulation) Rules, 1957 (SCRR). Such companies will be required to maintain atleast 10% public shareholding for the purpose of continuous listing.

(3)    The aforesaid minimum public shareholding requirement will not be applicable to Government companies, infrastructure companies and companies registered with Board for Industrial Financial Restructuring (BIFR).

(4)    Listed companies, which are not presently  complying with the minimum public holding requirement as mentioned above, will be given a period of two years, for compliance,  from the date of issuance of circular  in this regard.

(5)    Listed companies which may in future fall short of the requisite minimum level as mentioned above on account of reasons like Corporate Debt Restructuring (CDR) packages etc. will be given a period of one year , for compliance, from the date of non - compliance.

The objective is to ultimately reach a single level of minimum public shareholding requirement for listed companies, in course of time. However, no time frame has been envisaged at this stage.

Qualified Institutional Buyers (QIB) – participation in book built issues

It has been decided in respect of participation of QIBs in book built issues that following measures should, henceforth, be implemented:

  1. QIBs shall bring at least 10% margin while submitting the bids.
  2. The allotment of shares to QIBs shall be on proportionate basis.
  3. Out of the existing 50% portion available for QIBs, 5% thereof shall be specifically available for Mutual Funds registered with SEBI. However, these Mutual Funds participating in QIB category will also be eligible for allotment in the remaining portion, i.e 45%, available to QIBs.

Detailed circulars are being issued separately.

Mumbai

August 26, 2005

Federal Bank to offer equity shares

24th August 2005: Federal Bank Ltd on Tuesday said it will issue two crore equity shares for its Global Depository Receipts offering. The board of directors have approved the issue, offer and allotment of up to two crore equity shares of Rs 10 each (including green shoe option) for issuance of GDRs in foreign countries, Federal Bank informed the Bombay Stock Exchange. The GDRs will be listed on a stock exchange outside India on a price to be determined, in accordance with all applicable rules and regulations, it said.

SEBI delists SUN F&C MF

23rd August 2005: The Securities and Exchange Board of India (SEBI) has cancelled the registration of SUN F&C Mutual Fund and has also withdrawn the approval granted to SUN F&C Asset Management (I) Pvt Ltd to act as the asset management company following their request.

SEBI Whole Time Member Madhukar, in his order, said the SUN F&C Mutual Fund, the Board of Trustees of SUN F&C Mutual Fund and the SUN F&C Asset Management cannot carry out any activity as a mutual fund, trustees or asset management company with immediate effect.

Earlier, the company had handed over the various schemes floated by it and the full responsibilities for management and administration of schemes to the Principal Mutual Fund, SEBI said in a release.

Further, the schemes which are not being handed over to Principal Mutual Fund have been closed as per the procedure.

SEBI delists SUN F&C MF

23rd August 2005: The Securities and Exchange Board of India (SEBI) has cancelled the registration of SUN F&C Mutual Fund and has also withdrawn the approval granted to SUN F&C Asset Management (I) Pvt Ltd to act as the asset management company following their request.

SEBI Whole Time Member Madhukar, in his order, said the SUN F&C Mutual Fund, the Board of Trustees of SUN F&C Mutual Fund and the SUN F&C Asset Management cannot carry out any activity as a mutual fund, trustees or asset management company with immediate effect.

Earlier, the company had handed over the various schemes floated by it and the full responsibilities for management and administration of schemes to the Principal Mutual Fund, SEBI said in a release.

Further, the schemes which are not being handed over to Principal Mutual Fund have been closed as per the procedure.

National Stock Exchange (NSE) stops trading in F&O (Future and Option) segment

23rd August 2005: NSE has stopped trading in its F&O segment until further orders due to the slow pace of trade confirmation on Monday. Trading in F&O was stopped at 11.25 am after request by members as they were facing problem due to slowing down of the confirmation process, NSE sources said. It (trading) will be started shortly with a pre-open period.

LIC to launch 'Golden Jubilee Policy'

23rd August 2005: Life Insurance Corporation will flag off its 50th year celebrations next month, with the launch of an affordable 'Golden Jubilee policy' for the masses. "We will enter the 50th year of existence in September. Apart from a series of programmes, we will launch a unique Gold Jubilee policy," LIC chairman A K Shukla said, adding the policy would be for all - the rich and the poor. LIC has filed the product with regulator IRDA for its approval; he said but declined to give details. However, LIC sources said the policy would offer life cover at an affordable rate and have different riders.

Weekly Technical Picks

16th August 2005: Sensex: During the whole week after considerable battle the sensex gained 12 points, NVS brokerage feel that it can be in downward trend.

 

BSE Metal Index

Rising and will rise – more than – 8000.

 

 

BSE Oil & Gas

About to launch new highs.

 

 

Allahabad Bank

Sell.

Alok Ind.

About to touch Rs.78

Arvind Mills

Buy at every decline

BOB

Sell.

BEML

Keep holding firmly till Rs.957.

Dhampur Sugar

Hold.

Engineers

Sell.

Essar Steel

Medium term Target price Rs.90

Essar Oil

Sell.

GIPCL

Sell.

Hind Zinc

Can be touch Rs.215

Infosys

Sell and then buy back

Mukund

Can be touch Rs.111

P&G

Expected top Rs.999

Ramco

Strong Buy for Long Term

SAIL

Can be touch Rs.59

TISCO

Sell.

Union Bank

Buy – Target Price Rs.153

VSNL

Hold

Gruh Finance

Buy – Target Price will be given later

Vindhya Teleser

Buy – Target Price will be given later

SEBI to tighten norms for Qualified Institutional Buyers (QIBs)

21st August 2005: Market regulator SEBI is likely to tighten norms for big investors like domestic and foreign financial institutions and mutual funds to make the investment process in public offers more transparent.

While there is no move to change the allocation pattern of retail investors and Qualified Institutional Buyers (QIBs), SEBI wants to ensure that merchant bankers do not misuse the discretionary powers of allocating shares to big investors.

Though shares issued in IPOs are allocated proportionally or on a pro-rata basis among retail investors, merchant bankers can now allocate shares to big investors classified as QIBs on a "discretion" depending on a host of factors including bid price, quantum of shares bid for and the quality of investor.

"This discretion is causing problem. If retail investors are allocated shares on a pro-rata basis, why not follow the same process for QIBs," an informed source said while hinting at changes in QIB investment norms. An internal group under SEBI is looking into various modifications in the IPO investment norms.

At present, SEBI norms allow an allocation pattern of 50% for QIBs, 15% for non-institutional buyers and 35% for retail investors. Retail investors are classified as those who invest upto Rs 50,000 in an IPO.

The discretionary nature of allotment was prescribed earlier to safeguard a company tapping the market, as SEBI wanted some screening on QIBs before they are allowed to pick up stake in an Indian company.

Sebi member sees Sensex at 16,000 before April

21st August 2005: It's not often that the market regulator turns Big Bull. That's exactly what happened at the BSE Ltd on Friday, when Securities and Exchange Board of India (Sebi) wholetime member Madhukar declared that he saw the Sensex hitting 16,000 within a year.

Clearly, the broking fraternity, present in full strength at the function to mark BSE's corporatisation, was taken aback, since the regulator obviously seemed to be more bullish than the bulls themselves.

Mr. Madhukar started off saying the Sensex would cross the 8,000-mark in a short span of time. And then came the clincher: "I see the Sensex touching 16,000 in a year.” "Sebi would provide the necessary support and direction to BSE to achieve this target", he went on.

Later, Mr. Madhukar said that the new trend opens challenges and opportunities for the investors and exchanges. The Sensex can touch 16,000 points with the good economic fundamentals and with the completion of the corporatisation process.

Clearly, the market players did not share Mr. Madhukar’s bullishness earlier in the day, since the Sensex shed 31 points after yo-yoing for the better part of the session. Far from even the 8,000 mark, the Sensex fell below the 7,800 mark by the end of the day.

While Mr. Madhukar was clearly the Bull of the day, the other wholetime member G Anantharaman turned to the sacred texts for the occasion. Reciting slokas from the Gita and Upanishads, he said BSE should be self-regulated so that the regulator can ask other bourses to follow its role model.

IFSL to raise $100mn via ADRs/GDRs

21st August 2005: IFSL, a non-banking finance company, is planning to raise $100 million through the issue of American Depository Receipts (ADRs), Global Depository Receipts (GDRs) or any other form of convertible securities. This was stated by the company in a release issued to the BSE. The board has also given approval for issue of 80 lakh equity shares on private placement basis, the release added.

Fringe Benefit Tax (FBT) deadline extended to August 31

17th August 2005: The last date for paying the first installment of the FBT, introduced in the last Budget, has been postponed to August 31, ’05, compounding the confusion over what kind of expenditure will come under its purview. The confusion arises from the delay by the Central Board of Direct Taxes (CBDT) in issuing a note clarifying about 100 questions on the FBT in Mumbai.

Some companies, like Tata Consultancy Services (TCS), have paid FBT before August 15. They have paid the tax on the condition that if it is found later that the amount paid was in excess of what was necessary, the balance will be adjusted towards the next installment. But many companies are waiting for the clarification and are hoping that the CBDT will release the note clarifying all the issues related to the new tax. The CBDT note was supposed to be issued before August 15, the last date for making the first installment of FBT.

FBT, as the Budget proposals envisage, is to be paid by the employer and the revenue authorities expect to raise Rs 3,000 crore from this tax this fiscal. For example, the provisions are not clear how to treat the gifts given to the employees by the company. If it is treated as entertainment, the company will have to pay tax at a regular rate on 20% of the expenditure incurred, including cost of gifts. If the gifts are not treated entertainment, the company needs to pay tax on 50 % of the cost.

VAT panel to meet on August 24

13th August 2005: Empowered committee of state finance ministers will meet on August 24 to discuss post-Vat implementation issues, including uniform floor rate (UFR) of tax on bullion. “The committee will meet to discuss the implementation issues that have come up after introduction of Vat,” empowered committee secretary Ramesh Chandra said.

When asked whether the complaint of the Delhi government about shift in bullion trade to Rajasthan and Gujarat because of less tax rate in the two states would be taken up, he said all implementation issues, including this one, would be discussed at the meeting.

Delhi has complained to the Vat panel about less than UFR tax on bullion in Rajasthan and Gujarat because of which the trade on precious items is being shifted to the two states.

Considering Delhi’s complaint, the Vat panel at its meeting on July 9 had decided that all states would impose at least 1% tax on bullion from August 1.

Karur Vysya Bank (KVB), Bajaj Alliance General Insurance Co (BAGIC) launch new insurance product

13th August 2005: KVB and BAGIC today launched their co-branded new Insurance product 'KVB Suraksha'. The comprehensive insurance cover would give protection to individuals and their personal assets from the financial trauma of accidents, P T Kuppuswamy, KVB Chairman and Athanusingh Mukherjee, Head Bancassurance, Bagic, said.

KVB Suraksha provides insurance cover to household articles of individuals against all possible risks including fire, strike, malicious damage, burglary and natural disasters like lightning, storm, tempest, earthquake and flood, Kuppuswamy said.

Of the three plans, the first plan was for a total sum assured of Rs 3.75 lakh (covering property all risk, baggage, personal accident, medical expenses due to accident and breakdown of home appliances), with a premium payable of Rs 420 per annum, he said.

Under plan two, the total sum assured was Rs 7.05 lakh with an annual premium of Rs 705, while total sum assured under plan three was Rs 11.40 lakh with a premium of Rs 1,115 per annum, Mukherjee said, adding in case of personal accident a part of the medical expenses was also covered under the policy.

Claiming that the bank expected to sell one lakh policies under all plans during this fiscal, Kuppuswamy said it expected a good interest for KVB Suraksha from Bank's large customer base among the middle income group, which was looking for a comprehensive cover at an affordable cost.

BAGIC would design more tailor-made products exclusively for KVB customers, Mukherjee said.

Bombay Stock Exchange (BSE) to turn corporate firm from August 19

13th August 2005: BSE is all set to become Bombay Stock Exchange Ltd on August 19, after getting the approval by its members at its annual general meeting (AGM) on August 18.

BSE on Friday issued a notice to its members for the AGM scheduled for 5 pm on August 18, where the dissolution of the stock exchange in its present form of an association of members, paving way for commencement of business under clause-11 of its corporatisation scheme as approved by the Securities and Exchange Board of India.

Media industry valuations hit the roof, HT Media IPO priced at Rs 530 a share

13th August 2005: The valuation of the media industry has shot through the roof with HT Media setting its initial public offer (IPO) price at Rs 530 for a share of Rs 10.

Its book-built public issue hit the market on August 4. At a price of Rs 530 a share, the market valuation of HT Media will be around Rs 2,500 crore. The market cap will be even higher as analysts say the listing can be at a premium.

HT Media will top the market cap ladder in the sector, which is now occupied by NDTV at Rs 1,433 crore. Deccan Chronicle, which went public in December 2004, is currently valued at Rs 1,207 crore. TV Today is valued at Rs 624 crore and Mid-day Multimedia at Rs 333 crore.

HT entered the marked with a public issue of 6.99 million shares at a price band of Rs 445 to Rs 530 per share. The issue was subscribed 20.86 times with a total subscription for 145.93 million shares against an issue size of 6.99 million shares.

Wipro allotted 41,425 equity shares under ESOP

13th August 2005: Wipro Ltd has informed BSE that the Administrative Committee of the Board of Directors of the Company vide their circular resolution effective August 11, 2005 resolved to issue and allot 41,425 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

Facts Securities - Open Offer

13th August 2005: Chartered Capital & Investment Ltd ("Manager to the Offer") on behalf of Mr. Rajiv Kashyap ("Acquirer"), pursuant to Regulation 10 and Regulation 12 as required under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 ("SEBI (SAST) Regulations, 1997") and subsequent amendments thereto has announced as below:

The Offer

The Acquirer intend to make on Open Offer in terms of the SEBI (SAST) Regulations, 1997 to the shareholders of Facts Securities Ltd ("Target Company") to acquire 10,09,560 equity shares of Rs 10/- each representing 20.00% of the total paid up capital / voting share capital of the Target Company at a price of Rs 4.00 (Rupees four only) per fully paid up equity share / Voting Rights ("Offer Price") payable in cash subject to the terms and conditions, whose names appear on the register of members on Specified Date i.e. September 08, 2005.

Schedule of Activities

Specified Date: September 08, 2005

Date of Opening of the Offer: October 04, 2005

Date of Closing of Offer: October 24, 2005

Satyam board allots 41,664 equity shares under stock option plans

13th August 2005: Satyam Computer Services Ltd has informed that the board of directors of the company has allotted 41,664 equity shares through circular resolution on August 9, 2005 under stock option plans. Further, the company informed that consequent to the above allotment, its paid-up share capital has gone up from 32,12,18,491 equity shares of Rs 2 each aggregating Rs 64,24,36,982. to 32,12,60,155 equity shares of Rs 2 each aggregating Rs 64,25,20,310.

Himachal Futuristic Communications (HFCL) to raise $75mn via FCCBs

13th August 2005: The board of directors of HFCL, approved a proposal to raise up to $75 million by issuing global depository receipts (GDRs)/euro bonds/foreign currency convertible bonds (FCCBs). This was announced in a release issued by the company to the BSE. The meeting also approved a proposal to issue up to six crore warrants to the promoters and their associates at Rs 23 per warrant, the release said.

12% Colgate India shares to change hands

12th August 2005: The Singapore-based Colgate-Palmolive(Asia) Pte, the wholly-owned subsidiary of New York-based Colgate-Palmolive Company is planning to buy 1,65,00,000 shares, constituting approximately 12% of the equity share capital, of Colgate-Palmolive(India) from Colgate-Palmolive Company. According to a release issued by Colgate-Palmolive (India) to the NSE today, the date of proposed acquisition is on or after August 18, 2005, and the mode of acquisition is inter-se transfer. "The proposed acquisition price is the prevailing market price on the date of acquisition," the release added.

FDs, small savings, MFs may come under exempt-exempt-tax (EET)

12th August 2005: All savings, including mutual fund schemes, fixed deposits, and small savings schemes, could come under the proposed taxation method of exempt-exempt-tax (EET).

The ministry of finance has constituted a five-member expert team whose mandate would be to work out a roadmap for moving towards the EET method of taxation of savings.

Chairing the committee, R Kannan, appointed actuary of SBI Life on deputation from the Reserve Bank of India, said: “All savings instruments, including mutual funds and fixed deposits in addition to small savings schemes, will be looked into.”

The mandate outlined to the committee does not identify any particular savings instrument. The term “savings instruments” could even mean savings in bank accounts.

“We have to take into account both from the savers and government’s point of view. In the case of savings, decision taken should optimally increase savings. The government, of course, would like to increase revenue through taxation. Hence the idea is to offer concession and at the same time increase total savings, even if this means decreasing the tax rate,” said Kannan.

If the government decides to include more savings instruments under EET, it will offer greater scope for individuals in terms of exemption at the time of contribution.

UB group plans open offer for Herbertsons’ shareholders

12th August 2005: In an exercise that will culminate in the creation of the world’s second-largest liquor company, the Vijay Mallya-controlled United Breweries (UB) group is set to announce an open offer to existing shareholders of Herbertsons before delisting the company from the stock exchanges. The open offer price is likely to be in the range of Rs 200 to Rs 210. But the offer price is yet to be finalised. The UB group controls 93% equity in Herbertsons, while the public holds 7%.

A senior UB official said, “As per the Sebi guidelines, we have to go for an open offer to acquire the remaining 7% stake in Herbertsons through a reverse book-building process.” The UB group will seek shareholders’ nod to delist Herbertsons from the bourses at the company’s AGM on August 24. The open offer will be made in September.

The UB group is in the process of consolidating its four spirit companies — McDowell’s & Co, Herbertsons, Shaw Wallace & Co and Triumph Distillers & Vintners — under one entity called United Spirits.

In March ’05, the UB group had bought a 49% stake Herbertsons after paying Rs 131 crore to liquor baron Kishore Chhabria. Following the deal, UB group’s holding in Herbertsons rose to 93%.

The UB group has been managing Herbertsons, though its ownership had earlier been challenged by Mr. Chhabria in various courts of the country. The dispute began when Mr. Chhabria acquired Herbertsons’ shares from the market, in addition to the 26% stake he had acquired originally.

Ahmednagar Forgings board nod for 2:1 bonus

11th August 2005: The board of directors of Ahmednagar Forgings, which met today, approved a proposal to issue bonus shares in the ratio of 2:1 i.e. two bonus shares for every share held. This was announced in a release issued by the company to the BSE today. An EGM has been called on September 3, 2005 to clear the bonus issue, the release added.

Talbros Automotive Components Ltd. 2nd public offer to raise Rs 50 crore

11th August 2005: Auto ancillary company Talbros Automotive Components Ltd will hit the capital market soon with its second public issue for raising upto Rs 50 crore to fund its greenfield forging plant and capital expenditure. "We have received the Securities and Exchange Board of India's (SEBI) approval for the issue of new equity shares aggregating to Rs 50 crore through 100% book building process. This second issue is likely to hit the capital market by August last week or early September," Talbros Automotive president K Sairam said.

Sairam said out of the total proceeds from public issue, the company would invest Rs 32 crore in greenfield forging plant at Bawal (Haryana), Rs 5 crore in joint venture floated by Talbros with Japanese company Nippon Leakless Corporation and Rs 9 crore for capital expenditure including debottlenecking the plants and modernisation. "Haryana State Industrial Development Corporation (HSIDC) has already allotted 6.75 acres for the greenfield plant having capacity of producing 700 tonne forges per month," he said.

Talwar Brothers promoted Talbros is a listed entity on the Stock Exchange, Mumbai (BSE) with a client base including Tata Motors, Eicher Motors, Ashok Leyland, Mahindra & Mahindra and Bajaj Motors. "Currently, promoters have 55% stake in the company and this is likely to dilute following the proposed second public issue," he added.

The company reported a 30% sales growth at Rs 29.10 crore for the quarter ended June 30, 2005 compared to the corresponding quarter of previous fiscal while net profit has increased by 158% at Rs 1.58 crore. "Collaborations with UK based Federal Mogul Sealing Systems (Slough) Ltd, Nippon Leakless and Japanese company Ishikawa Gasket Ltd gives the company access to new technologies and latest technical know-how," Sairam said.

Asked about the price band for the issue, he added that the sole book running manager UTI Securities would soon fix the price band after assessing required criteria.

Sundaram Mutual Fund launches Opportunities Fund

11th August 2005: Sundaram Mutual Fund yesterday announced the launch of Sundarm Capex Opportunities Fund, which will predominantly invest in equity and equity related instruments of companies in the capital goods sector to generate long term returns. The new open-ended equity fund opens for subscriptions today and closes on September 5. The minimum application amount is Rs 5,000.

"Companies across various industries are announcing capacity expansion plans to meet the increasing demand. Capital goods sector is the biggest beneficiary of this boom," SMF Chief Investment Officer Prasad said.

"While other companies incur capital expenditure to expand, those who supply the material, equipment, products and services are the ones who are quietly reaping the benefits immediately. Our fund invests directly in these immediate beneficiaries," he added.

He said BSE Capital goods index gave a return of 221% from June 2000 to April 2005 while the sensex gave a return of 24% during this period. Twenty one companies constituting BSE Capital Goods Index had grown by five times.

SMF Managing Director T P Raman said both the high and downstream companies investing in expansion offered huge potential.

He said the company would soon be launching a fund designed based on the theme of 'Emerging rural scene' and a 'Star' fund, which will invest in Indian companies, which have global aspirations and earn sizeable revenue through exports.

UTI Mutual Fund to launch offshore debt fund

10th August 2005: The UTI Mutual Fund is set to launch an offshore debt fund in association with the 150 year old Depfa Bank of Germany in the third week of this month. “We have recently signed a MoU with the Depfa Bank in this regard and the final agreement will be singed on the 24 or 25th of this month, DSR Murthy, executive director, UTI Mutual Fund said. Coinciding with the launch of the fund, a road show is proposed to be organized in Dubai, where Depfa Bank has a substantial clientele among the non-resident Indians. The fund, christened as UTI India Debt Fund, will operate through the conventional Mauritius route, Murthy added.

To begin with, Depfa will channelise $50 million for investment in India through the fund within a month of its launching. “But we are looking at a figure of $500 million investment in the country through this fund in a year’s time,” Murthy said. This apart, the UTI Fund has entered into a tie-up with the State Street Bank of the USA, the largest asset manager and custodian in the world, for launching of two funds in India. The funds, to come under the banner of UTI Global Titanic Fund and UTI Global Navigator Fund, will collect money in the country for investment abroad.

This being the first such schemes for UTI, the company is waiting for detail guidelines from Reserve Bank of India (RBI) before launching the funds. In another pioneering effort to offer better service to its customers, UTI MF intends to integrate some of its operations with the ATM facility of its sister concern UTI Bank soon. “To start with we will facilitate buying of units through ATMs of UTI Bank across the country”, Murthy pointed out. “The necessary software programmes to offer this facility in the ATMs is now under testing and the service will be launched within the next month.”

Apart from buying, the software is equipped to handle repurchase of units of certain liquid schemes of the company through the UTI Bank Debit Card. But as the card can be used in other business establishments besides the UTI Bank ATMs, tkhe company will require RBI permission for launching of the repurchasing service through ATMs. “We hope to get the requisite RBI permission and make available the repurchasing facility to our customers through the ATMs later, may be by the end of the current year”, Murthy added. Murthy said, the asset under management of the company which stood at Rs 20,740 crore by the end of March, 2005, has grown by Rs 2010 crore in the first quarter of the current year. “Our target is to increase it by 30% in the current year”, he said.

Compulink Ltd. to raise Rs 31.76 cr via IPO

10th August 2005: Pune-based IT company Compulink Ltd will soon hit the capital market with an initial public offer (IPO) for raising up to Rs 31.76 crore while its venture capital investor Small Industries Development Bank of India (SIDBI) will dilute its substantial stake in the company. "Compulink has filed draft prospectus with the Securities and Exchange Board of India (SEBI) for the proposed IPO and we are awaiting various clearances from the market regulator," Compulink CEO Vishwas Mahajan said.

The price band for the issue is likely to be fixed between Rs 60 to Rs 70, Mahajan said. The proposed public issue of 45.38 lakh equity shares of Rs 10 each for cash premium would raise Rs 27.23 crore at the lower band of issue price and Rs 31.76 crore at the higher band, he said. "Meanwhile, SIDBI, as a shareholder, will offer 10 lakh equity shares out of the total 45.38 lakh in the public issue. After the dilution, SIDBI will hold seven lakh shares in Compulink. In 2003, SIDBI had invested Rs 4 crore as venture capital," he said.

Mahajan said the proceeds of the IPO would be utilised to product development, international marketing, repayment of working capital and sourcing incremental working capital. He said the company is planning to set up offices in London followed by Singapore and US and would also forge alliances with international companies for effective marketing. "The company is also planning to acquire target customers in chosen verticals, markets and geographies," Mahajan added.

Bharat Earth Movers Ltd (BEML) plans Rs 400 cr public float next month

9th August 2005: BEML plans to raise about Rs 400 crore through a public issue next month. Announcing the public issue today at a press conference here, V R S Natarajan, chairman and managing director, BEML, said the government would offload a 7% stake through the issue. Post the issue, the government’s holding in the company would come down to 54% from the current 61%. ICICI Securities has been appointed as book-running lead manager for the fully book-built issue. Roadshows are being planned in places such as Hong Kong, Singapore and London for issue, said a senior I Sec official.

The company will reserve 10% each of the issue for BEML shareholders and employees. Out of the Rs 400 crore raised in the IPO, Rs 125 crore will be used for replacing old machinery in the company’s factories located in Bangalore, Mysore and Kolaroold in Karnataka. Nearly Rs 100 crore will be invested on setting up Mumbai Metro Consortium, a consortium planned to develop metro rail infrastructure in the country. Nearly Rs 84 crore will be utilised for upgrading the company’s in-house metro rail infrastructure. BEML will also utilise Rs 90 crore as voluntary retirement scheme (VRS) expenses for 2,000 of its 12,000 employees.

BEML also has plans to enter the contract mining segment and is expected to invest Rs 50 crore for setting up a joint venture in the segment. Earlier in July, the company board had approved an increase in the authorised share capital of the company from Rs 60 crore to Rs 100 crore by creation of 4 crore equity shares and consequential amendments in the memorandum and article in the article of association of the company.

Corporation Bank may sell government’s 6% stake next year

9th August 2005: Corporation Bank may consider diluting the government’s 6% stake next year, making it the bank’s third public offer. “Government holding in the bank is close to 57.17%. This would allow us another 6% dilution. Given the bank’s capital adequacy ratio, another fund raising would not be required at least this year. Then we might consider the proposal,” said V K Chopra, chairman and managing director.

Chopra also said the bank has considerable room for raising Tier-II capital as its capital adequacy ratio stood at 17.16%. On the quantum of funds the bank would raise, Chopra said, “The bank’s shares are ruling at Rs 440, while 6% would mean around 86 lakh shares.” This provides the bank to raise around Rs 370 crore from the primary market.

The bank is also looking at increasing its asset base by Rs 300 crore once it’s wholly owned subsidiary, Corp Home, is merged with it. The bank is also expecting a 30% growth in bottom-line and has targeted an Rs 55,000 crore total business for 2005-06. Last year, the bank registered an Rs 123 crore net profit, while total business achieved last fiscal stood at Rs 45,779 crore.

Meanwhile, the bank has applied to the Reserve Bank of India for opening representative offices in Dubai and Hong Kong. Back home, the bank has firmed up plans of opening 70 more branches by the year-end and has decided to set up majority of these in location other than south. It has also decided to install around 200 automated teller machines.

IPO allotments under Sebi scanner

9th August 2005: Sebi is looking into the allotment patterns of some of the big IPOs launched over the past six months. It is learnt that Sebi teams have started visiting and acquiring data from leading investment bankers to delve into the procedures followed for allotments, especially in the qualified institutional investor (QIB) segment. This follows several complaints by institutional investors who had alleged that too much discretion was being used by investment bankers in the book-building process in order to favour a few clients.

Sebi has informed investment bankers to be ready with IPO records for the last six months, as it will look at the procedure for allotments and will also track the clients to whom the allotments were made. After examining the data, Sebi will decide on the next step in its scanning of the process and also decide what changes are required in the current system.

Domestic institutions have been complaining that they are getting disproportionately small allotments in some big IPOs, where investment bankers were using their discretion to give FIIs a higher share. It has also been alleged that some FIIs were short-selling the stock and then arm-twisting to get a higher allotment to cover their positions. So, in effect, a player who was actually doing harm to the issue by selling it was being rewarded, domestic players said.

Sebi has also been indicating that that it will curb the discretionary allotment of shares to initial public offerings (IPOs). It has been studying the public issues to understand the amount of discretionary allotments that have taken place in these issues. It is seeking to handle the issue in a consultative manner after discussions with market players, including merchant bankers.

However, Sebi will stress on more transparency and less discretion in the allotment process. Under the current Sebi public issue norms, up to 50% of the issue is reserved for allotment to QIBs on a discretionary basis. The rest is reserved for non-institutional bidders (15%) and retail investors (35%) on a proportionate basis. QIBs include foreign institutional investors (FIIs), mutual funds, Indian financial institutions and insurance companies.

Reserve Bank of India (RBI) considers changing norms to raise Tier I capital

8th August 2005: RBI is contemplating whether to allow banks to raise Tier I capital by issuing innovative instruments. It is understood that the Central bank is currently examining a few proposals put forward by commercial banks, which include treating perpetual non-cumulative preference shares as Tier I. An internal RBI committee is looking at the matter, a source said.

This assumed importance in the light of the fact the government is in favour of allowing public sector banks to issue preferential shares. At present, only those in the private sector can raise capital via cumulative preference shares. But these are treated as Tier II capital.

RBI’s line of thinking would help public sector banks (PSBs) like Dena Bank and Oriental Bank of Commerce immensely as the Centre’s shareholding in these banks is just a shade above 51%.

Centre’s shareholding cannot go below 51% in PSBs under current regulation. The new proposal would give bankers flexibility in raising capital.

In fact, Uco Bank is also looking forward to a change in Tier I structure. The bank, which is planning to undertake a capital restructuring process, intends to raise its capital using innovative instruments. V Sridar, chairman and managing director of Uco, had said that the bank has put forward a proposal before the regulator, but he had refused to comment further.

Bankers welcome such a possibility. “A change in Tier I structure is the order of the day,” a senior banker said. He, however, mentioned that there is no way the RBI would allow banks to treat cumulative preference shares as Tier I.

Internationally, the US and the UK allow their banks to treat perpetual non-cumulative preference shares as part of their core capital. In fact, the Basel Committee of Bank for International Settlements (BIS) says banks’ Tier I capital should be non-cumulative and permanent in nature.

Hindalco members approve 10:1 stock split

8th August 2005: The members of Hindalco Industries at their EGM held on August 06, 2005, have approved the proposal of sub-division of the equity shares of the company. According to a release issued by Hindalco to the BSE, the company has approved the proposal to split one share of the face value of Rs 10/- each into 10 equity shares of the face value of Re 1/- each.

JP Morgan flies ahead for Air-India public offer

8th August 2005: Investment banking firm JP Morgan has emerged a front-runner for the mandate of an advisor for Air-India’s proposed initial public offering (IPO). The airline’s management committee has shortlisted two firms, including DSP Merrill Lynch, out of six investment banking outfits that made a presentation last month, A-I sources said. Two investment banking units had made attractive offers to clinch the mandate for drawing a roadmap for the state-owned carrier’s public offering, they said.

In July, six entities, including SBI Caps, DSP Merrill Lynch and HSBC Securities, had made a presentation before the airline’s management committee. About 15 firms had submitted expressions of interest in June for advising A-I on the public offer.

Going by the debt-equity norms, it would be ideal for Air-India to raise Rs 10,000 crore by way of equity, maintaining a debt equity ratio of 2:1, which is supposed to be a benchmark in the capital-intensive industry, merchant banking sources said. Air-India has a share capital of Rs 153.84 crore, which is fully subscribed by the central government, while its authorised capital is Rs 500 crore. It has a turnover exceeding $1.5 billion (about Rs 6,500 crore) and an asset base of over Rs 7,000 crore.

The IPO is likely to considerably strengthen the equity base and net worth, which would provide comfort levels to international financial institutions and export credit institutions to finance the aircraft acquisition plan, the sources said. Air-India had recently announced a massive fleet acquisition programme for the purchase of 50 Boeing jets at an approximate cost of Rs 30,000 crore beginning this fiscal till 2012-13.

External Commercial Borrowings (ECB)

RBI/2005-06/87
A.P. (DIR Series) Circular No. 5

August 1, 2005

To

All banks authorised to deal in foreign exchange

Madam/Sirs,

External Commercial Borrowings (ECB)

Attention of Authorised Dealers is invited to the A.P. (DIR Series) Circular No.40 dated April 25, 2005 and A.P. (DIR Series) Circular No.60 dated January 31, 2004 in connection with External Commercial Borrowings (ECB). A review of the ECB guidelines has been undertaken keeping in view the current macroeconomic situation, the experience gained so far by the Reserve Bank in administering the ECB policy and requests received from certain sectors.

2. Accordingly, it has been decided to liberalise/modify the ECB policy as indicated below:

  1. ECB with minimum average maturity of 5 years by non-banking financial companies (NBFCs) from multilateral financial institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of infrastructure equipment for leasing to infrastructure projects would be considered by the Reserve Bank under the Approval Route;
  2. Foreign Currency Convertible Bonds (FCCB) by housing finance companies satisfying specific criteria would be considered by the Reserve Bank under the Approval Route;
  3. Minimum holding of equity by the foreign equity holder in the borrower’s company (which would qualify the foreign equity holder as a recognised lender for ECB) has been clarified;
  4. Prepayment of ECB up to USD 200 million (as against the existing limit up to USD 100 million) may be allowed by Authorised Dealers without prior approval of RBI subject to compliance of applicable minimum average maturity period for the loan. Pre-payment of ECB for amounts exceeding USD 200 million would be considered by the Reserve Bank under the Approval Route.
  5. Currently, domestic rupee denominated structured obligations are permitted by the Government of India to be credit enhanced by international banks/international financial institutions/joint venture partners. Such applications would henceforth be considered by the Reserve Bank under the Approval Route.

3. The amended ECB policy will come into force with immediate effect and is subject to review.

4. Comprehensive and revised ECB guidelines are set out in the Annex to this circular.

5. Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated May 3, 2000 are being issued separately.

6. Authorised Dealer banks may bring the contents of this circular to the notice of their constituents and customers.

7. The direction contained in this circular has been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

 

Yours faithfully,

(Vinay Baijal)

Chief General Manager


 

Annex to A.P. (DIR Series) Circular No. 5 dated August 1, 2005

External Commercial Borrowings (ECB)

1. ECB refer to commercial loans [in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments (e.g. floating rate notes and fixed rate bonds)] availed from non-resident lenders with minimum average maturity of 3 years. ECB can be accessed under two routes, viz., (i) Automatic Route outlined in paragraph 1(A) and (ii) Approval Route indicated in paragraph 1(B).

(A) AUTOMATIC ROUTE

Under the extant policy, ECB for investment in real sector -industrial sector, especially infrastructure sector-in India, are under Automatic Route, i.e. do not require RBI/Government approval. In case of doubt as regards eligibility to access Automatic Route, applicants may take recourse to the Approval Route.

i. Eligible borrowers

(a) Corporates registered under the Companies Act except financial intermediaries (such as banks, financial institutions (FIs), housing finance companies and NBFCs) are eligible. Individuals, Trusts and Non-Profit making Organisations are not eligible to raise ECB.

(b) Non-Government Organisations (NGOs) engaged in micro finance activities are eligible to avail ECB. Such NGO (i) should have a satisfactory borrowing relationship for at least 3 years with a scheduled commercial bank authorised to deal in foreign exchange and (ii) would require a certificate of due diligence on `fit and proper’ status of the board/committee of management of the borrowing entity from the designated Authorised Dealer (AD).

ii. Recognised Lenders

(a) Borrowers can raise ECB from internationally recognised sources such as (i) international banks, (ii) international capital markets, (iii) multilateral financial institutions (such as IFC, ADB, CDC etc.,), (iv) export credit agencies, (v) suppliers of equipment, (vi) foreign collaborators and (vii) foreign equity holders. Furthermore, overseas organisations and individuals complying with following safeguards may provide ECB to NGOs engaged in micro finance activities.

(b) Overseas organisations planning to extend ECB would have to furnish a certificate of due diligence from an overseas bank which in turn is subject to regulation of host-country regulator and adheres to Financial Action Task Force (FATF) guidelines to the designated AD. The certificate of due diligence should comprise the following (i) that the lender maintains an account with the bank for at least a period of two years, (ii) that the lending entity is organised as per the local law and held in good esteem by the business/local community and (iii) that there is no criminal action pending against it.

(c) Individual Lender has to obtain a certificate of due diligence from an overseas bank indicating that the lender maintains an account with the bank for at least a period of two years. Other evidence /documents such as audited statement of account and income tax return which the overseas lender may furnish need to be certified and forwarded by the overseas bank. Individual lenders from countries wherein banks are not required to adhere to Know Your Customer (KYC) guidelines are not permitted to extend ECB.

(d) The key operative part in the credential of the overseas lender is that ECB should be availed from an internationally recognised source and one of the recognized categories is "foreign equity holder" as indicated above. It is clarified that for a "foreign equity holder" to be eligible as "recognized lender" under the automatic route would require minimum holding of equity in the borrower’s company as under:

(d. i) ECB up to USD 5 million – minimum equity of 25 per cent held directly by the lender,

(d. ii) ECB more than USD 5 million – minimum equity of 25 per cent held directly by the lender and debt-equity ratio not exceeding 4:1(i.e. the proposed ECB not exceeding four times the direct foreign equity holding).

iii. Amount and Maturity

    1. ECB up to USD 20 million or equivalent with minimum average maturity of three years
    2. ECB above USD 20 million and up to USD 500 million or equivalent with minimum average maturity of five years
    3. The maximum amount of ECB which can be raised by a corporate is USD 500 million during a financial year.
    4. NGOs engaged in micro finance activities can raise ECB up to USD 5 million during a financial year.
    5. ECB up to USD 20 million can have call/put option provided the minimum average maturity of 3 years is complied before exercising call/put option.

iv. All-in-cost ceilings

All-in-cost includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees payable in Indian Rupees. Moreover, the payment of withholding tax in Indian Rupees is excluded for calculating the all-in-cost.

The all-in-cost ceilings for ECB are indicated from time to time. The following ceilings are valid till reviewed.

Average Maturity Period

All-in-cost Ceilings over 6 month LIBOR*

Three years and up to five years

200 basis points

More than five years

350 basis points

* for the respective currency of borrowing or applicable benchmark.

v. End-use

    1. ECB can be raised only for investment (such as import of capital goods, new projects, modernization/expansion of existing production units) in real sector - industrial sector including small and medium enterprises (SME) and infrastructure sector - in India. Infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) ports, (vi) industrial parks and (vii) urban infrastructure (water supply, sanitation and sewage projects);
    2. ECB proceeds can be utilised for overseas direct investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS) subject to the existing guidelines on Indian Direct Investment in JV/WOS abroad.
    3. Utilisation of ECB proceeds is permitted in the first stage acquisition of shares in the disinvestment process and also in the mandatory second stage offer to the public under the Government’s disinvestment programme of PSU shares.
    4. NGOs engaged in micro finance activities may utilise ECB proceeds for lending to self-help groups or for micro-credit or for bonafide micro finance activity including capacity building.
    5. Utilisation of ECB proceeds is not permitted for on-lending or investment in capital market or acquiring a company (or a part thereof) in India by a corporate.
    6. Utilisation of ECB proceeds is not permitted in real estate. The term ‘real estate’ excludes development of integrated township as defined by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, SIA (FC Division), Press Note 3 (2002 Series, dated 04.01.2002).
    7. End-uses of ECB for working capital, general corporate purpose and repayment of existing Rupee loans are not permitted.

vi. Guarantees

Issuance of guarantee, standby letter of credit, letter of undertaking or letter of comfort by banks, financial institutions and NBFCs relating to ECB is not permitted.

vii. Security

The choice of security to be provided to the lender/supplier is left to the borrower. However, creation of charge over immovable assets and financial securities, such as shares, in favour of overseas lender is subject to Regulation 8 of Notification No. FEMA 21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000, dated May 3, 2000, as amended from time to time, respectively.

viii. Parking of ECB proceeds overseas

ECB proceeds should be parked overseas until actual requirement in India. It is clarified that ECB proceeds parked overseas can be invested in the following liquid assets (a) deposits or Certificate of Deposit or other products offered by banks rated not less than AA(-) by Standard and Poor/Fitch IBCA or Aa3 by Moody’s; (b)  deposits with overseas branch of an authorised dealer in India; and (c)  Treasury bills and other monetary instruments of one year maturity having minimum rating as indicated above. The funds should be invested in such a way that the investments can be liquidated as and when funds are required by the borrower in India.

ix. Prepayment

Prepayment of ECB up to USD 200 million may be allowed by ADs without prior approval of RBI subject to compliance with the stipulated minimum average maturity period as applicable to the loan.

x. Refinance of existing ECB

Refinancing of existing ECB by raising fresh ECB at lower cost is permitted subject to the condition that the outstanding maturity of the original loan is maintained.

xi. Debt Servicing

The designated Authorised Dealer (AD) has the general permission to make remittances of instalments of principal, interest and other charges in conformity with ECB guidelines issued by Government / RBI from time to time.

xii. Procedure

Borrower may enter into loan agreement complying with ECB guidelines with recognised lender for raising ECB under Automatic Route without prior approval of RBI. The borrower may note to comply with the reporting arrangement under paragraph 1(C)(i). The primary responsibility to ensure that ECB raised/utilised are in conformity with the ECB guidelines and the Reserve Bank regulations/directions/circulars is that of the concerned borrower and any contravention of the ECB guidelines will be viewed seriously and may invite penal action. The designated AD is also required to ensure that raising/utilisation of ECB is in compliance with ECB guidelines at the time of certification.

(B) APPROVAL ROUTE

The following types of proposals for ECB are covered under the Approval Route.

i. Eligible borrowers

    1. Financial institutions dealing exclusively with infrastructure or export finance such as IDFC, IL&FS, Power Finance Corporation, Power Trading Corporation, IRCON and EXIM Bank are considered on a case by case basis.
    2. Banks and financial institutions which had participated in the textile or steel sector restructuring package as approved by the Government are also permitted to the extent of their investment in the package and assessment by RBI based on prudential norms. Any ECB availed for this purpose so far are deducted from their entitlement.
    3. Cases falling outside the purview of the automatic route limits and maturity period indicated at paragraphs 1A(iii) (a) and 1A(iii) (b).
    4. ECB with minimum average maturity of 5 years by non-banking financial companies (NBFCs) from multilateral financial institutions, reputable regional financial institutions, official export credit agencies and international banks to finance import of infrastructure equipment for leasing to infrastructure projects.
    5. Foreign Currency Convertible Bonds (FCCB) by housing finance companies satisfying the following minimum criteria: (i) the minimum net worth of the financial intermediary during the previous three years shall not be less than Rs. 500 crore, (ii) a listing on the BSE or NSE, (iii) minimum size of FCCB is USD 100 million, (iv) the applicant should submit the purpose / plan of utilization of funds.

ii. Recognised Lenders

(a) Borrowers can raise ECB from internationally recognised sources such as (i) international banks, (ii) international capital markets, (iii) multilateral financial institutions (such as IFC, ADB, CDC etc.,), (iv) export credit agencies, (v) suppliers of equipment, (vi) foreign collaborators and (vii) foreign equity holders.

(b) From 'foreign equity holder', where the minimum equity held directly by the foreign equity lender is 25 per cent but debt-equity ratio exceeds 4:1(i.e. the proposed ECB exceeds four times the direct foreign equity holding).

iii. All-in-cost ceilings

All-in-cost includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees payable in Indian Rupees. Moreover, the payment of withholding tax in Indian Rupees is excluded for calculating the all-in-cost. The all-in-cost ceilings for ECB are indicated from time to time. The following ceilings are valid till reviewed.

Average Maturity Period

All-in-cost Ceilings over 6 month LIBOR*

Three years and up to five years

200 basis points

More than five years

350 basis points

* for the respective currency of borrowing or applicable benchmark.

iv. End-use

    1. ECB can be raised only for investment (such as import of capital goods, new projects, modernization/expansion of existing production units) in real sector-industrial sector including small and medium enterprises (SME) and infrastructure sector-in India. Infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) ports, (vi) industrial parks and (vii) urban infrastructure (water supply, sanitation and sewage projects);
    2. ECB proceeds can be utilised for overseas direct investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS) subject to the existing guidelines on Indian Direct Investment in JV/WOS abroad.
    3. Utilisation of ECB proceeds is permitted in the first stage acquisition of shares in the disinvestment process and also in the mandatory second stage offer to the public under the Government’s disinvestment programme of PSU shares.
    4. Utilisation of ECB proceeds is not permitted for on-lending or investment in capital market or acquiring a company (or a part thereof) in India by a corporate except for banks and financial institutions eligible under paragraph 1B(i)(a) and 1B(i)(b).
    5. Utilisation of ECB proceeds in real estate is not permitted. The term ‘real estate’ excludes development of integrated township as defined by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, SIA (FC Division), Press Note 3 (2002 Series, dated 04.01.2002).
    6. End-uses of ECB for working capital, general corporate purpose and repayment of existing Rupee loans are not permitted.

v. Guarantees

Issuance of guarantee, standby letter of credit, letter of undertaking or letter of comfort by banks, financial institutions and NBFCs relating to ECB is not normally permitted. Applications for providing guarantee/standby letter of credit or letter of comfort by banks, financial institutions relating to ECB in the case of SME will be considered on merit subject to prudential norms.

vi. Security

The choice of security to be provided to the lender/supplier is left to the borrower. However, creation of charge over immovable assets and financial securities, such as shares, in favour of overseas lender is subject to Regulation 8 of Notification No. FEMA 21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000, dated May 3, 2000, as amended from time to time, respectively.

vii. Parking of ECB proceeds overseas

ECB proceeds should be parked overseas until actual requirement in India. It is clarified that ECB proceeds parked overseas can be invested in the following liquid assets (a) deposits or Certificate of Deposit or other products offered by banks rated not less than AA(-) by Standard and Poor/Fitch IBCA or Aa3 by Moody’s; (b)  deposits with overseas branch of an authorised dealer in India; and (c)  Treasury bills and other monetary instruments of one year maturity having minimum rating as indicated above. The funds should be invested in such a way that the investments can be liquidated as and when funds are required by the borrower in India.

viii. Prepayment

(a) Prepayment of ECB up to USD 200 million may be allowed by ADs without prior approval of RBI subject to compliance with the stipulated minimum average maturity period as applicable to the loan.

(b) Pre-payment of ECB for amounts exceeding USD 200 million would be considered by the Reserve Bank under the Approval Route.

ix. Refinance of existing ECB

Refinancing of outstanding ECB by raising fresh ECB at lower cost is permitted subject to the condition that the outstanding maturity of the original loan is maintained.

x. Debt Servicing

The designated AD has the general permission to make remittances of instalments of principal, interest and other charges in conformity with ECB guidelines issued by Government / RBI from time to time.

xi. Procedure

Applicants are required to submit an application in form ECB through designated AD to the Chief General Manager, Foreign Exchange Department, Reserve Bank of India, Central Office, External Commercial Borrowings Division, Mumbai – 400 001 along with necessary documents.

xii. Empowered Committee

RBI has set up an Empowered Committee to consider proposals coming under the approval route.

C. REPORTING ARRANGEMENTS AND DISSEMINATION OF INFORMATION

i. Reporting Arrangements

    1. With a view to simplify the procedure, submission of copy of loan agreement is dispensed with.
    2. Borrowers are required to submit Form 83, in duplicate, certified by the Company Secretary (CS) or Chartered Accountant (CA) to the designated AD. One copy is to be forwarded by the designated AD to the Director, Balance of Payments Statistics Division, Department of Statistical Analysis and Computer Services (DESACS), Reserve Bank of India, Bandra-Kurla Complex, Mumbai – 400 051 for allotment of loan registration number.
    3. The borrower can draw-down the loan only after obtaining the loan registration number from DESACS, RBI.
    4. Borrowers are required to submit ECB-2 Return certified by the designated AD on monthly basis so as to reach DESACS, RBI within seven working days from the close of month to which it relates.

ii. Dissemination of Information

For providing greater transparency, information with regard to the name of the borrower, amount, purpose and maturity of ECB under both Automatic Route and Approval Route are put on the RBI website on a monthly basis with a lag of one month to which it relates.

2. Foreign Currency Convertible Bonds (FCCB)

The policy for ECB is also applicable to FCCB in all respects.

3. Structured Obligations

In order to enable corporates to raise resources domestically and hedge exchange rate risks, domestic rupee denominated structured obligations are permitted by the Government to be credit enhanced by international banks / international financial institutions/joint venture partners. Such applications would henceforth be considered by the Reserve Bank under the Approval Route.

Dabur India allots 1,36,989 equity shares under ESOS

5th August 2005: Dabur India Ltd has informed BSE that the Remuneration cum Compensation Committee of the Board has approved by way of resolution by circulation effective August 05, 2005 the allotment of 1,36,989 fully paid Equity Shares of Re 1 each for cash at par to the employees of the Company upon exercise of 1,36,989 stock options vested in them in terms of Employees Stock Option Scheme (ESOS) of the Company.

i-flex solutions - Open Offer

3rd August 2005: JM Morgan Stanley Pvt Ltd ("Manager to the Offer") on behalf of Oracle Global (Mauritius) Ltd ("Acquirer") and Oracle Corporation being a person acting in concert with Acquirer, pursuant to Regulation 10 and 12 of, and in compliance with, the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto ("the SEBI (SAST) Regulations") has announced as below:

The Offer

The Acquirer is making an Offer to the Public shareholders of i-flex solutions ltd ("Target Company") to acquire up to 15,586,914 equity shares being 20% of the Emerging Voting Capital of the Target Company pursuant to the Regulations 10 and 12 of, and in compliance with, the SEBI (SAST) Regulations, at a price of Rs 882.62 per fully paid up equity shares ("Offer Price"), payable in cash in accordance with the SEBI (SAST) Regulations, and subject to the terms and conditions.

Scheduled of Activities:

Specified Date: August 12, 2005

Date of Opening of Offer: September 27, 2005

Date of Closing of Offer: October 17, 2005.

New Cingular Wireless Services Inc. to exit Idea Cellular (Idea) for $300mn

30th July 2005: New Cingular Wireless Services Inc., which through its subsidiary, holds 74.3561 crore equity shares of Idea Cellular (Idea), corresponding to 32.91% equity shares of Idea, has offered to sell its holding to the remaining founder-shareholders - A V Birla Group and Tata Industries - at an aggregate price of $300 million (approximately Rs 17.50 per share).

According to a release issued by Indian Rayon to the BSE today, the A V Birla Group has decided to accept the offer for acquisition by the company and its subsidiary companies, subject to necessary approvals.

"In the event Tata Industries also accepts the offer, the number of shares to be acquired by the company & subsidiary will reduce to around 38.32 crore shares," the release added.

Bombay Rayon Fashion Ltd (BRFL) plans IPO for Rs 50 to 60 cr

30th July 2005: Fashion fabric and garment manufacturing company Bombay Rayon Fashion Ltd (BRFL) is planning to come out with an initial public offer (IPO) to raise Rs 50 to Rs 60 crore in this current fiscal. "We are planning an IPO with estimated size of Rs 50 to Rs 60 crore. The time frame and exact size of IPO will be finalised in two weeks," BRFL Managing Director Prasanth Agarwal said.

Agarwal said the market would be tapped this fiscal and the proceeds would be used to set up an integrated park in Bangalore with facilities such as yarn dyeing, weaving, processing and garmenting at a cost of Rs 161.70 crore. "The park to be constructed on 20.26 acre of land in Karnataka Industrial Township has been modelled on global lines with modern infrastructure and dedicated power and water supply with common effluent treatment plant," he said. Meanwhile, Export-Import Bank of India has invested Rs 5 crore as equity and sanctioned Rs 40 crore as term loan for the project, he said.

Further loans have been tied up with various banks under the Technology Upgradation Fund Scheme (TUFS) making the company eligible for interest subsidy of five per cent and processing machinery a direct subsidy of 10 per cent of the investment amount. "With the multifold expansion of garment capacity on the anvil, negotiations are on with premium labels like Marks & Spencer and JC Penny. At present, BRFL is catering to various international brands such as C&A, DKNY, Liz Claiborne, Wrangler, Federated Stores, Tom Tailor and Kiabi," he added.

Reliance board to consider closing buyback

22nd July 2005: The board of directors of Reliance Industries, which will meet on July 27, will consider a proposal to close the share buyback programme. This was announced in a release issued by the company to the BSE today.

Securities and Exchange Board of India (Sebi) asks Stock Exchanges (SEs) to check block deals

22nd July 2005: Sebi has asked SEs to clamp down on block deals that appear to be done to distort stock prices. Sebi said it has observed that large transactions in the form of block deals have been executed in certain scrips which prima-facie appears to have been negotiated in advance and hence put through the stock exchange mechanism in a synchronised manner.

In notices to the BSE and the NSE, Sebi said, “Media reports allege that these transactions have been executed with an ulterior motive to distort the fair price discovery in such scrips. Such market practices do not appear to be in conformity with the guidelines.”

The market regulator has asked SEs to inform their members and listed companies that such transactions are under regulatory purview. Sebi said action will be taken against those violating the regulatory provisions.

ICICI Bank allots 2,14,962 Equity Shares under ESOS

21st July 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 214,962 equity shares of face value of Rs 10/- each on July 18, 2005, under the Employees Stock Option Scheme, 2000 (ESOS).

Polaris Software Lab Ltd allotted 10,860 equity shares under ASOP

21st July 2005: Polaris Software Lab Ltd has informed BSE that the Shareholders Committee of the Board of Directors of the Company, at its meeting held on July 21, 2005, has allotted 10,860 equity shares to its employees / directors under Associate Stock option Plan (ASOP) 2000, 2001 & 2003.

Satyam Computer allots 50,957 equity shares under stock option plan

21st July 2005: Satyam Computer Services Ltd has informed BSE that the Compensation Committee of Directors of the Company at its meeting held today, has approved the allotment of 50,957 equity shares under stock option plans of the Company.

HCL Technologies allots 2,50,298 equity shares under ESOP

21st July 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company on July 21, 2005, has allotted 2,50,298 equity shares of Rs 2/- each (including 1,65,928 shares at a premium of Rs 125.50 per share; 2,200 shares at a premium of Rs 157.50 per share; 3,760 shares at a premium of Rs 194.50 per share, 43,760 shares at a premium of Rs 233.00 per share; 400 shares at a premium of Rs 233.50 per share; 10,470 shares at a premium of Rs 249.00 per share; 14,230 shares at a premium of Rs 251.50 per share, 1,000 shares at a premium of Rs 279.50 per share; 1,400 shares at a premium of Rs 281.50 per share; 7,150 shares at a premium of Rs 288.00 per share) to the employees on exercise of their Stock Options under the 1999 & 2000 Stock Option Plans (ESOP).

IL&FS Investment Managers - Allotment of shares under ESOP

21st July 2005: IL&FS Investment Managers Ltd has informed BSE that the Shareholders'/Investors' Grievance Committee of Directors at their meeting held today, approved the allotment of 38,000 equity shares of Rs 10/- each on conversion of stock options issued under the ESOP 2003 to the employees at a price of Rs 28/- per share.

Further the Company has informed that the Committee also approved the allotment of 2,35,500 equity shares of Rs 10/- each on conversion of stock options issued under ESOP 2004 to the employees at a price of Rs 35/- per share.

HCL Infosystems allotted 18,9850 equity shares under ESOS

21st July 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 18950 nos of equity shares of Rs 2/- each pursuant to exercise of 3790 options (Grant Price Rs 538.15 per option) granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme'(ESOS).

BSE, NSE warn against norm violation in block deals

21st July 2005: The stock exchanges — The Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE) has informed all its trading members to ensure compliance in large transactions that are in form of block deals. The exchange said strict action will be taken, if any member violates rules and regulation of the Securities and Exchange Board of India (Sebi) and stock exchange and is caught doing negotiated deals in advance between the parties and then putting the deals through the stock exchange mechanism in a synchronised manner.

The warning from the exchanges comes after Sebi in its letter dated July 14, 2005 ordered exchanges to inform the members and listed companies not to indulge in unfair trading practices. Sebi’s letter to exchanges is following their observations as well as media reports that large transaction might have been executed by certain market participants with a motive to distort the fair price discovery in scrips. Sebi said such market practices do not appear to be in conformity with the guidelines and regulations of Sebi and stock exchanges. Meanwhile, BSE official decline to comment on whether they will be conducting an enquiry on the block deals that have taken place on the exchange.

Kingfisher Airlines Ltd plans IPO in 2006

21st July 2005: Kingfisher Airlines Ltd, a low-fare carrier formed by the country’s biggest beer brewer, said it’s aiming for an initial public offer of its shares in 2006 to raise funds to finance its aircraft purchase.

Kingfisher Airlines, which has ordered 48 planes since December from Airbus SAS estimated at $5 billion, including five of the A380 aircraft, said it may have its shares traded on the exchanges of Mumbai and Singapore.

“The initial deposit and funding for the aircraft have been funded by the UB Group, but we have to look at the capital markets for funding the Jumbo airplanes,” said Vijay Mallya, chairman of the United Brewries Group, in an interview on Wednesday in Singapore.

Kingfisher Airlines, one of four new carriers that started flying in India in the past two years, is joining Jet Airways (India) Ltd in selling stocks to raise funds for expansion, aiming to tap the country’s surging demand for air travel.

Textiles to attract VAT from April '06: Ramesh Chandra

21st July 2005: All textile items will come under value added tax (VAT) from the next fiscal year, empowered committee secretary Ramesh Chandra said today. States have agreed that the VAT rate on textile items will not exceed 4% when it is implemented from April 1, 2006, Chandra said at a trader’s conference. At present, textile items attract additional excise duty and are exempt from VAT.

Panel moots lower entry barrier in insurance

21st July 2005: The Narasimhan committee, in its draft report on the proposed amendments in the Insurance Act, may stress the need to bring down the minimum required capital base from Rs 100 crore to Rs 45 crore for insurance companies.

The 11-member committee is preparing a draft on the proposed amendments in the Insurance Act. It is learnt that the report is almost ready and the committee would meet on July 22 to finalise the fine prints.

It may be noted that the government had earlier indicated it was not ready to change the capitalisation norms. However, a member of the committee said lowering the minimum capital base would encourage more companies to enter the insurance market.

“We want the government to reduce the threshold to encourage competition,” sources said, adding that the draft being prepared by them contained mere recommendations. The government would take a final call on the recommendations, they said.

ONGC likely to buy back 9.6% stake from IOC

21st July 2005: ONGC looks set to buy back its 9.6% stake from IOC. IOC had, in turn, bought these shares from the government in 1998. The petroleum ministry is likely to give the nod to IOC to divest its stake which is estimated to fetch around Rs 12,000 crore — an appreciation of 7.5 times since IOC had acquired it in 1998. IOC had bought 13,7067381 equity shares of ONGC at a price of 162.3 per share totaling Rs 1,617 crore.

Petroleum minister Mani Shankar Aiyar said: “IOC’s proposal to sell its stake and ONGC’s offer to buy back should face no problems. The proposal can go through.” The estimated value of IOC’s holding in ONGC is based on the last six month’s average scrip price which has been around Rs 883.

Faced with a resource crunch, IOC has recently approached the ministry with a renewed proposal to sell its stake in ONGC to raise resources for its proposed capital investments. IOC had initially proposed to sell its stake in September last when the lock-in period on sale of the cross holdings was lifted.

Senior petroleum ministry officials said a final decision on the proposal was held back at that time given the government’s plans to restructure the oil companies. “We should have no problems in taking a decision now, as the Krishnamurthy committee has come in,” a senior official said.

IOC’s renewed offer to sell its holding in ONGC comes at a time when the company is planning to expand its overseas operations and diversify into upstream and downstream sectors. IOC has been facing a severe resource crunch in the past few months because of the losses it has suffered from its marketing operations. The company may end the first quarter of this fiscal with its lowest ever profit. It has planned major expansion projects and the continued losses from its marketing operations is beginning to affect its plans.

Ruttonshah International - Open Offer

20th July 2005: Aryaman Financial Services Ltd ("Manager to the Offer") on behalf of M/s Orient Semi Conductors Pvt Ltd & Mrs. Bhavna Mehta ("Acquirers"), pursuant to Regulation 10 of Chapter III & in compliance with the Securities & Exchange Board of India, Substantial Acquisition of Shares & Takeovers (SAST) Regulations, 1997 and subsequent amendments thereto ("Regulations") has announced as below:

The Offer

The Acquirer are making an open offer to the shareholders of Ruttonsha International Rectifier Ltd ("Target Company") to acquire a further 641448 equity shares representing 20.00% of the equity share capital at a price of Rs 4/- per equity share ("Offer Price") for fully paid up shares of Rs 10/- each, payable in cash.

Schedule of Activities:

Specified Date: July 27, 2005

Date of Opening of the Offer: September 10, 2005

Date of Closing the offer: September 29, 2005.

Emco allots equity shares under ESOS

20th July 2005: Emco Ltd has informed BSE that the Board of Directors of the Company at its meeting held on July 20, 2005 has allotted 3,500 Equity Shares to its employees on exercise of Option I granted on May 19, 2000 & 1,000 Equity Shares on exercise of Option II granted on August 06, 2002 under Employees Stock Option Scheme, 2000 (ESOS).

Mather & Platt Fire Systems - Open Offer

20th July 2005: SBI Capital Markets Ltd ("Manager to the Offer") for & on behalf of WILO AG, & Allied Centrifugal Pumps Pvt Ltd ("Acquirers"), in compliance with, among others, Regulations 10 & 12 of the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 as amended ("Takeover Guidelines" or "Regulations") has announced as below:

The Offer

The Acquirer is making an offer to acquire up to 680,530 equity shares of Mather & Platt Fire Systems Ltd ("Target Company") of face value of Rs 10 each fully paid-up share representing 20% of the total outstanding voting equity share capital of the Target Company as on March 31, 2005, at a price of Rs 14.69 ("Offer Price") for each share of the Target Company, to be paid in cash in accordance with the Regulations.

Schedule of Activities:

Specified Date: July 19, 2005

Date of Opening of the Offer: September 09, 2005

Date of Closing the offer: September 28, 2005.

Flextronics Software has allotted 28,181 equity shares under ESOP

20th July 2005: Flextronics Software Systems Ltd has informed BSE that the Board of Directors of the Company at its meeting held on July 19, 2005, has allotted 28,181 equity shares to the employees who have exercised option of conversion of warrants under the ESOP Schemes of the Company.

Geometric Software - Grant of Options

20th July 2005: Geometric Software Solutions Company Ltd has informed BSE that the Company has granted 64,000 stock options to eligible employees of the Company and its subsidiaries under ESOP Scheme 2005. The grant has been made on the terms and conditions mentioned in "ESOP Scheme 2005".

Nam Credit & Investment - Open Offer

Chartered Capital & Investment Ltd ("Manager to the Offer") on behalf of Mr. Rakesh Bhhatia, Mrs. Arti Bhatia & Bharatiya Global Infomedia Ltd ("Acquirers") pursuant to Regulations 10 read with Regulation 12 of the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 (the "SEBI [SAST] Regulations", 1997) and subsequent amendments thereto has announced as below:

The Offer

The Acquirer is making an offer in terms of SEBI (SAST) Regulations, 1997 to the equity shareholders of Nam Credit & Investment Consultants Ltd ("Target Company") to acquire 9,30,000 fully paid equity shares of Rs 10/- each, representing 20% of the total issued, subscribed, paid up & voting share capital of the Target Company at a price of Rs 3.25 per fully paid-up equity share ("Offer Price") payable in cash subject to the terms & conditions.

Schedule of Activities:

Specified Date: August 12, 2005

Date of Opening of the Offer: September 05, 2005

Date of Closing the offer: September 26, 2005.

Bharat Overseas Bank plans IPO in October

20th July 2005: Bharat Overseas Bank is planning to tap the capital market in October with an initial public offering (IPO) to fund expansion plans and meet Basel II norms. "We have applied to the RBI for permission to float an IPO. A final decision will be taken in a few days," G Krishamurthy, chairman and CEO, said today. The bank has appointed SBI Capital Markets as merchant bankers for the issue, he added.

GHCL to raise $100mn via GDRs/FCCBs

20th July 2005: GHCL is planning to raise up to $100 million by issuing global depository receipts (GDRs) or foreign currency convertible bonds (FCCBs). This was announced in a release issued by the company to the BSE today. The board meeting, which cleared the overseas float proposal, also approved preferential issue of 45 lakh warrants to promoters wherein one warrant entitles them to one equity share of Rs 10 each at a price to be determined in line with Sebi guidelines, the release added.

Shriram Life Insurance Company gets licence from Irda

19th July 2005: Shriram Life Insurance Company, the recently-formed joint venture between the city-based Shriram group and the South Africa-based Sanlam group, has obtained the licence to operate in the life insurance market in the country.

The company, which received the r1 licence from Insurance Regulatory and Development Authority (Irda), is set to commence operations from September 1, according to a press release issued by the Shriram group today.

Shriram group manages funds of over Rs 6,700 crore in its truck financing business, and has a significant presence in consumer durables financing, insurance and stock broking.

Sanlam Life Insurance, a part of Sanlam group, is one of the biggest life insurance providers in South Africa.

ULIP norms may have safety feature

19th July 2005: The Insurance Regulatory and Development Authority (Irda) will come out with guidelines on unit-linked insurance plans (ULIPs) after holding consultations with the industry.

C S Rao, chairman, Irda, wishes to bring about some semblance of assurance to policyholders.

“There is a safety feature built into traditional plans under Section 27 (of the Insurance Act) to protect returns for policyholders,” he added.

Guidelines on unit-linked insurance plans (ULIPs) will try to ensure safety of insurance returns as has been in-built in the case of traditional insurance policies.

This was stated by Rao here today on the sidelines of Munich Re’s seminar on risk management.

Under ULIPs, the investment risk is passed onto policyholders, though a few insurance companies do offer some level of guaranteed returns.

“My concern is on proper disclosure to policyholders since the investment risk has been transferred to the individual. Further, the issue is also related to the actual relationship between the premium collected and the amount of insurance cover granted,” said Rao.

Today ULIPs, a risk-cum-investment product, are selling like hot cakes, as the capital markets are booming, and net asset value of most ULIPs is on the rise.

Motor risk detariffing put on ice

19th July 2005: The Insurance Regulatory and Development Authority (Irda) has put detariffing of motor insurance on the backburner. At a time when the insurance regulator is preparing a time-table for detariffing the non-life insurance industry, motor is likely to be the last risk product to be detariffed, contrary to what was expected earlier. “Motor insurance business will not see detariffing coming quickly,” C S Rao, chairman, Irda, said, even as he is keen to free the pricing of most non-life insurance products.

More likely than not, the most profitable portfolio of fire will be detariffed next. Bulk of the insurance business comes from fire and motor insurance, with the latter accounting for as much as 40%. Today as much as 70% of non-life premium income falls under a tariff regime. Taking cognition of the recent dilemma facing insurance companies post the detariffing of the marine hull business, Rao said the regulator needs to be careful as to which segment is to be detariffed.

“Insurers need to prepare themselves. I want to come out with a time-table for detariffing the industry which will give time to players to prepare and come out with minimum underwriting guidelines,” said Rao. He further elaborated that considering “marine hull is a reinsurance-driven business, this should not have happened.” When the Irda detariffed marine hull this April, insurance premium rates in this segment fell by as much as 50-60%.

While this augured well for the Indian shipping conglomerates, the insurance players found it difficult to place the risk even with the national reinsurer, the General Insurance Corporation of India (GIC). This followed many players quoting less than international reinsurance rates, said industry sources.

Meanwhile, detariffing auto insurance has hit a roadblock three times in a row as the insurance industry is insistent that detariffing of the market should also include freeing the price on third-party liability cover.

Today this cover is priced very low, making the business unviable. At the same time, the insurance regulator fears that detariffing of the motor insurance market could result in some individuals not being able to afford the cover.

HDFC Bank - Grant of options

19th July 2005: HDFC Bank Ltd has informed BSE that the Compensation Committee of the Bank at its meeting held on July 18, 2005, decided to grant 80,97,300 (Eighty lacs ninety seven thousand three hundred) options to 5194 employees of the Bank. Grant of these options would be covered by scheme titled as "ESOS VII". The options have been granted at a price of Rs 630.60 (Rupees Six hundred thirty and paise sixty only) per option. Each option will entitle the eligible employee for one equity share in the Bank.

The options would vest in the proportion of 30%, 30% and 40% upon expiry of 12 months, 24 months and 36 months respectively. The options can be exercised by the employees within a period of 2 years from the respective dates of vesting.

The grant of these options is pursuant to the resolution passed by the shareholders of the Bank at its meeting held on June 17, 2005.

Bank of Baroda (BoB) gets go ahead for public offer in September

19th July 2005: The finance ministry has given the go-ahead to BoB to tap the capital market in September for funding its expansion plans. BoB is likely to sell 7.1 crore shares to the public, which will dilute government holding in the bank from 66% to 53%, a bank official said.

The price of shares will be determined through the book building process, the official said. Going by the present market price of Rs 207-209, the bank is expected to raise close to Rs 1,500 crore.

BoB plans to expand its presence in US, UK, UAE, Singapore, Thailand, Malaysia, Sri Lanka, Male, Bangladesh and West Indies. The bank targets 25% of its business to come from overseas operations in the years to come. At home, the bank is also exploring possibility of a tie-up with another bank and foreign insurer to enter the life insurance business.

BoB will be sixth PSU bank to tap capital market in the last two years. Since January 2004, five banks - Punjab National Bank, Allahabad Bank, Dena Bank, Oriental Bank of Commerce and Syndicate Bank - have tapped the market.

Life Insurance Corporation of India (LIC) public offer likely by December

19th July 2005: LIC is planning to come out with an initial public offer (IPO) by December 2005 to meet the stipulated Insurance Regulatory Development Authority (IRDA) norm of having a minimum paid-up capital of Rs 100 crore.

Board level sources said today that since LIC was formed by an act of the Parliament in 1956 with a paid-up capital of Rs 5 only and entirely subscribed to by the central government, the company would now have to infuse fresh capital as per the norms laid down by the regulator.

They added that the company was toying with the idea of diluting 26% stake through the IPO. The decision, however, would have to be taken at the highest level, and approval of the cabinet was required for such a move.

Sebi ban to strip brokerages of extra commission

19th July 2005: Sebi plans to ban ‘hand-delivery’ of shares and make it compulsory for all FII trades to be settled through clearing corporation of bourses. When an FII buys securities, the broker purchases the stock on its own account. The FII pays the broker only after the shares are transferred to the custodian. For FIIs this is a way to avoid risk on the clearing house and possible default by the broker. While many, including the regulator, feel this is an imaginary fear since the trades are guaranteed by the clearing corporation, several FIIs take it seriously. These FIIs, as a policy, avoid settlement risks. Given the robust inflow of FII fund, it would be interesting to find out how they react to the Sebi decision.

The proposed ban will also strip some large institutional brokerages of the extra commission they earn through hand-delivery trades. Currently, there are two ways to settle trades in local exchanges. The first is through the clearing house where investors, through their broker/ custodian, settle cash and stock with the exchange directly. While settlement of transactions on the NSE is done by the National Securities Clearing Corporation (NSCCL), that of BSE is done by Bank of India (BOI) Shareholding. Both NSCCL and BoI Shareholding guarantee the settlement of trades, thus removing counter-party risk.

The other way of settling trades permitted by Sebi is ‘hand-delivery’ where investors settle on a DVP basis with local brokers. In this case, brokers often fund large clients for an average of four days. In ‘00, Sebi had moved in to curb hand-delivery system. But it later allowed FIIs and MFs to settle trades via hand-delivery, provided these are settled within two days of the payout date for settlement on the bourses.

Aptech - Open Offer

18th July 2005: IL&FS Investmart Ltd ("Manager to the Offer") on behalf of M/s Aptech Investments ("Acquirer") pursuant to Regulations 10 & 12 of the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto (the "SEBI [SAST] Regulations", 1997) has announced as below:

The Offer

The Acquirer is making an offer under Regulation 10 & 12 of the SEBI (SAST) Regulations, 1997 to the equity shareholders of Aptech Ltd ("Target Company") to acquire up-to 68,90,000 fully paid up equity shares of Rs 10/- each, representing in the aggregate 20% of the fully diluted equity voting capital of the Target Company at a price of Rs 61 per share ("Offer Price") payable in cash and subject to the terms & conditions.

Schedule of Activities:

Specified Date: August 01, 2005

Date of Opening of the Offer: September 05, 2005

Date of Closing the offer: September 26, 2005.

Prudential ICICI Asset Management Company (AMC) launched 'Prudential ICICI Infrastructure Fund'

18th July 2005: Prudential ICICI Asset Management Company (AMC) launched 'Prudential ICICI Infrastructure Fund', an open-ended fund which would invest in equities of companies belonging to the infrastructure sector. The fund offering will be open from July 18 to August 10.

"The projected outlay for infrastructure development in the country by 2006-08 is estimated to touch the $94.3 billion mark and we see this as a rewarding opportunity for long term investors to leverage through this fund," Prudential ICICI AMC's MD Pankaj Razdan said today.

The fund would invest across infrastructure sectors like cement, power, telecom, oil and gas, construction and banking. "We have identified a universe of 100 stocks in which the fund would invest," Prudential ICICI AMC's chief investment officer Nilesh Shah said.

The fund which has a minimum investment amount of Rs 5,000 per application will invest at least 95% of the corpus in equity and related securities and also has a provision to invest up to 30% in debt securities.

Prudential ICICI has enabled a systematic investment plan (SIP) through which investors can choose to invest into the scheme by way of standing instructions with select banks or through electronic clearing system auto debit facility.

Chemicals & Pharmaceuticals announces 1:2 bonus

18th July 2005: According to a release issued by Orchid Chemicals & Pharmaceuticals to the BSE, the board has approved issue of bonus shares in the ratio of 1:2 (one bonus shares for every two shares held).

Liberty Shoes to issue 1:1 bonus

18th July 2005: Liberty Shoes will issue bonus shares in the ratio of 1:1. The board of directors, which met today, recommended issue of bonus shares in the ratio of 1:1 i.e. one bonus share for every share held, the company said in a release issued to the BSE today.

Securities and Exchange Board of India (SEBI) reviewing 25% public holding norm

18th July 2005: SEBI is likely to amend the guidelines on 25% public holding in all listed companies, and come up with a time frame soon for meeting the norm. "Sebi is now reviewing the guideline. A time frame will be spelt out for listed companies," said a senior Sebi official today. Though Sebi had issued a circular last fiscal on the minimum public holding that a listed company must have, there is no time frame fixed in meeting the norm. Accordingly, Sebi had restricted promoters having more than 55% stake to acquire up to 2% of company shares every year without taking its permission, instead of the previous limit of 5%.

Aban Loyd Chiles Offshore Ltd has allotted 96,200 equity shares under ESOP

16th July 2005: Aban Loyd Chiles Offshore Ltd has informed BSE that the Compensation Committee of the Company at its meeting held on July 15, 2005, has granted 96200 Equity Shares under Employee Stock Option Scheme - 2005 (ESOP) to 71 eligible employees.

ICICI Bank allots 2,15,354 equity shares under ESOS

16th July 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 215,354 equity shares of face value of Rs 10/- each on July 11, 2005, under the Employees Stock Option Scheme, 2000 (ESOS).

United Van Der - Open Offer

16th July 2005: LKP Shares & Securities Ltd ("Manager to the Offer") on behalf of Mr. Ushpal Singh Sabharwal, Mr. Inderpal Singh Sabharwal, Mr. Jagmeet Singh Sabharwal & Mr. Dilprit Singh Sabharwal ("Acquirers") pursuant to Regulations 10 & 12 of the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto ("Regulations") has announced as below :

The Offer

The Acquirers are making the offer in terms of Regulation 10 & 12 of the Regulations to all the shareholders of United Van Der Horst Ltd ("Target Company") to acquire 799,100 fully paid up equity shares of the Target Company of face value of Rs 10/- each representing 20% of the issued & subscribed equity share capital & 20.01% of the voting capital in terms of Regulation 21(1) of the Regulations at a price of Rs 15 per equity share ("Offer Price") paid in cash in terms of Regulation 20 ("the Offer") of the Regulations.

Schedule of Activities:

Specified Date: July 15, 2005

Date of Opening of the Offer: September 05, 2005

Date of Closing the offer: September 24, 2005.

IDFC initial public offer oversubscribed 14 times

16th July 2005: The 100% book-built IPO of Infrastructure Development Finance Company Ltd (IDFC) that opened on Friday, July 15, was oversubscribed by 14.01 times on the first day of the offer with bids received for 565.4 crore shares as against 40.36 crore shares on offer in the price band of Rs 29 to Rs 34.

FIIs have bid for 396.52 crore shares or 70.12% of the total bids. MFs account for 22.9% of the total bids or 129.63 crore shares. Domestic FIs have bid for 31.63 crore shares or 5.59% of the total bids. The issue closes on July 22, 2005. Individuals have bid for 32.72 lakh shares.

Kotak Mahindra Capital Co Ltd is the book running lead managers while DSP Merill Lynch Ltd is the senior co-book running lead manager.

Securities and Exchange Board of India (Sebi) inspection of merchant bankers soon

16th July 2005: For the first time ever, Sebi is expected to begin inspection of select merchant bankers this week. Though the regulator always had the powers to do so, it never had the required manpower.

But now it feels it is time it looked into the systems and functioning of some of the merchant bankers. Highly placed Sebi sources said that the regulator would select about three or four large merchant bankers and an equal number of smaller ones to go through their books.

“That way, we can compare the systems and practices of the bigger and the smaller players and compare variance between them. If the systems followed by a particular entity are very good, we can even prescribe that as a benchmark to be followed by the entire merchant banking community,” a Sebi official said.

Sebi routinely inspects the books of a large number of brokers through its own staff and chartered accountants. It also inspects stock exchanges and depositories annually, entirely on its own. However, certain categories of intermediaries, among them merchant bankers, have never been inspected.

While the official made it clear the timing of the inspection had nothing to do with the heating up of the IPO market, they were significant since the regulator had never delved into the detailed functioning of merchant bankers.

“They may know it (the inspection) is bound to happen some time, but they don’t know who’s on the list,” the official said. There are about 129 merchant bankers. Since January 2005, about 10 new issues have hit the market, with the largest being Dena Bank’s, which raised Rs 236 crore.

Kirloskar Brothers to issue 2:1 bonus shares

16th July 2005: Kirloskar Brothers Ltd on Saturday said it will issue bonus shares in the ratio of 2:1 to the shareholders. The company said in a filing with the BSE that its board of directors have approved the issue of bonus shares to the shareholders in the ratio 2:1, meaning two bonus equity shares of Rs two each against existing one equity share held.

The board has also decided to increase the authorised share capital of the company from Rs 20 crore to Rs 50 crore. As a result, the revised authorised share capital of Rs 50 crore would be divided into 25 crore equity shares of Rs two each. Further, the related clauses of memorandum and articles of association of the company will be amended, subject to shareholders approval, the filing said.

Bharti Healthcare - Public Announcement for proposed acquisition & delisting of shares

15th July 2005: DSP Merrill Lynch Ltd ("Manager to the Offer") on behalf of Bharti Overseas Trading Company ("Acquirer") in respect of the proposed acquisition and delisting of the fully paid-up equity shares of Bharti Healthcare Ltd ("Target Company") pursuant to the Securities & Exchange Board of India (Delisting of Securities) Guidelines, 2003 (the "Guidelines") has announced as below:

The Acquirer makes public announcement of an offer to the public shareholders of the fully paid up equity shares of the Target Company (being all shareholders other than the Acquirer) to tender their equity shares in the Target Company being 1,677,959 fully paid-up equity shares of Rs 10 each representing 18.07% of the share capital of the Target Company, to the Acquirer, on terms & conditions as set out.

The Acquirer intends to acquire the shares at the Floor Price of Rs 82.60 per share.

Schedule of Activities

Bid Opening Date: August 01, 2005

Bid Closing Date: August 05, 2005

Announcement of Discovered Price / Exit Price and Acquirer's Acceptance / Non-acceptance of Discovered Price / Exit Price: August 09, 2005.

Satyam Computer allotted 31,872 equity shares under stock option plan

15th July 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 31,872 equity shares through circular resolution on July 15, 2005 under stock option plans of the Company.

Evidence of payment of Securities Transaction Tax for claiming deduction under section 88E of the Income Tax Act, 1961

The Exchange has received queries from various quarters with respect to evidence of payment of securities transaction tax for claiming deduction under section 88E of the Income-tax Act.

In this regard, it may be noted that the Central Board of Direct Taxes has issued notification no. 1 dated 6th January, 2005 in respect of the same which was earlier informed by the Exchange vide its circular reference no. NSE/F&A/5757 dated 13th January, 2005 to its members.

The said notification can be accessed at the link - http://www.incometaxindia.gov.in/Notifications/Incometaxact/2005/0120050106.asp

As may be seen, the assessee is required to furnish self-verified Form 10DB in respect of evidence of payment of securities transaction tax paid on the value of transactions entered into by him on a recognized stock exchange for claiming deduction under section 88E of the Income-tax Act alongwith his return of income.

A copy of the same is given below as Annexure for ready reference.  

 

ANNEXURE

Notification No. 1 of 2005, dt. 6th Jan., 2005

S.O. 30(E).- In exercise of the powers conferred by section 295 of Income Tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, namely:-

1.

1.      These rules may be called the Income-tax ( First Amendment) Rules, 2004.

2.      They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, -

(A). after rule 20A, the following rule shall be inserted, namely:-

‘ Evidence of payment of security transaction tax for claiming deduction under section 88E.

20AB. The evidence of payment of securities transaction tax which is required to be furnished alongwith the return of income by the assessee under first proviso to section 88E,–

(i) on value of transaction entered into by him in a recognised stock exchange, shall be in Form No. 10DB and shall be verified in the manner indicated therein;

(ii) on value of transaction of sale, by him, of a unit of an equity oriented fund to the Mutual Fund, shall be in Form No. 10DC and shall be verified in the manner indicated therein.’

(B). In Appendix-II, after Form No. 10DA, the following Forms shall be inserted, namely:-

 

Form No. 10DB

(See rule 20AB)

 

Form for evidence of payment of securities transaction tax on transactions entered in a recognised stock exchange

1. Name of the assessee:

2. Address of the assessee:

3. Permanent Account Number (PAN) of the assessee:

4. MAPIN of the assessee:

5. Name of the Stock Exchange in which transaction entered into:

6. Financial Year:

7. Name of the stock broker:

8. Address of the stock broker:

9. Stock broker code:

10. Details of value of securities transactions and securities transaction tax collected from the assessee:

Client code number

Code* of transaction

Value of transactions

entered into during the financial year

Total securities transaction tax collected from the assessee during the financial year

Value of transactions (included in value given in column 3) entered into in the course of business by the assessee

Securities transaction tax collected on value of transactions given in column 5

1

2

3

4

5

6

 

01

 

 

 

 

02

 

 

 

 

03

 

 

 

 

04

 

 

 

 

05

 

 

 

 

TOTAL

 

 

 

 

Verification

I, ________________ (full name in block letters), son/ daughter of ___________ solemnly declare that to the best of my knowledge and belief the information given in this Form is correct and complete and that the total amount of securities transaction tax shown therein is truly stated and is in accordance with the provisions of Chapter VII of the Finance (No.2) Act, 2004 and Securities Transaction Tax Rules, 2004.

Date :

Place :

[Name and Signature of the assessee]

 

 *CODES IN RESPECT OF TAXABLE SECURITIES TRANSACTION

S.No.

NATURE OF TRANSACTION

CODE

1.

Purchase of an equity share in a company or a unit of an equity oriented fund, where –

(a)   the transaction of such purchase is entered into in a recognised stock exchange; and

(b)  the contract for the purchase of such share or unit is settled by the actual delivery or transfer of such share or unit.

01

2.

Sale of an equity share in a company or a unit of an equity oriented fund, where –

(a)   the transaction of such sale is entered into in a recognised stock exchange; and

(b)  the contract for the sale of such share or unit is settled by the actual delivery or transfer of such share or unit.

02

3.

Sale of an equity share in a company or a unit of an equity oriented fund, where –

(a)   the transaction of such sale is entered into in a recognised stock exchange; and

(b)  the contract for the sale of such share or unit is settled otherwise than by the actual delivery or transfer of such share or unit.

03

4.

Sale of a derivative being “option in securities”, where the transaction of such sale is entered into in a recognised stock exchange.

04

5.

Sale of a derivative being “futures”, where the transaction of such sale is entered into in a recognised stock exchange.

05

Instructions

(i) Where an assessee has entered into transactions in a stock exchange under different client code through the same stock broker, details in this Form be filled separately for each such client code.

(ii) Separate Form be furnished in respect of transactions entered into in different stock exchanges and also for the transactions entered in same stock exchange through different stock brokers.

(iii) In column 4 of Table of item 10, fill the details of securities transaction tax collected by the stock broker from the assessee.

(iv) Where the assessee entering into a transaction is a stock broker on which securities transaction tax has to be paid by him, item 1 and item 7 shall be same and such assessee shall, in column 4 of the Table of item 10, fill the details of securities transaction tax collected from him by the stock exchange.

 

Form No. 10DC

(See rule 20AB)

 

Form for evidence of payment of securities transaction tax on transactions of sale of unit of equity oriented fund to the Mutual Fund

1. Name of the assessee:

2. Address of the assessee:

3. Permanent Account Number (PAN) of the assessee:

4. MAPIN of the assessee:

5. Name of the Mutual Fund having the equity oriented fund of which units sold by the assessee to that Fund:

6. Address of the Mutual Fund referred to in item 5:

7. Details of value of securities transactions and securities transaction tax collected from the person:

Name of equity oriented fund

Unique client code of the fund

Folio number of assessee

Value of transact-ions entered into during the financial year

Total securities transaction tax collected from the assessee during the financial year

Value of transactions (included in value given in column 5 entered into the course of business by the assessee

Securities transaction tax collected on value of transactions given in column 7

1

2

3

4

5

6

7

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

VERIFICATION

I, ________________ (full name in block letters), son/ daughter of ___________ solemnly declare that to the best of my knowledge and belief the information given in this Form is correct and complete and that the total amount of securities transaction tax shown therein is truly stated and is in accordance with the provisions of Chapter VII of the Finance (No.2) Act, 2004 and Securities Transaction Tax Rules, 2004.

Date :

Place :

 

[Name and Signature of the assessee] 

Instructions

(i) This Form be furnished separately for the transactions with each Mutual Fund.

(ii) Details of securities transaction tax paid on sale of units of various equity oriented fund under a Mutual Fund be given separately.”

Note: The principal rules were published under notification NO. S.O. 969 dated the 26th March, 1962 which has been amended from time to time, and last such amendment was made vide notification S.O.No. 1340(E) dated 2004.

F.No. 142/23/2004-TPL

Insurance Regulatory Authority of India (Irda) introduces group risk norms

15th July 2005: Irda has come out with guidelines with regard to group insurance policies. These guidelines, according to C S Rao, chairman of Irda, aim at streamlining the group insurance sector. “There have been issues with regard to disjointed groups calling themselves as groups to avail insurance. We have, therefore, defined what a group means to bring clarity in this sphere.” The guidelines also define the remuneration that an agent or a broker needs to be paid for selling group insurance.

According to these guidelines, a group shall comprise persons who assemble together with a commonality of purpose or for engaging in a common economic activity like employees of a company. Non-employer-employee groups may also be treated as groups provided the group organiser has the authority from majority of the group members to arrange insurance on their behalf or is doing so as part of a necessary security.

Insurers using the services of corporate agents have been asked to require the latter to file certificates at least once a year from an independent auditor confirming compliance relating to collection and credit of premium as per Irda regulations. According to Rao, it was because there have been some cases wherein “some corporate agents should not have been selected to sell the insurance products.” The premium charged and benefits admissible to members shall have to be clearly mentioned in the policy.

The guidelines also say that group discounts on premium should not be appropriated as additional remuneration to the agent, corporate agent, broker or group organiser and should be passed on to the members. Besides, the commission being paid to the agent or corporate agent in respect to group insurance shall not exceed the percentage approved by the Irda or Insurance Act, 1938 and they shall not get any other payment whether as management expenses, documentation expenses or otherwise.

The insurer shall also be responsible for the certificate of insurance issued by the group organiser or administrator and he/she will also remain responsible to ensure that all sales material and prospectus of the insurance plans are drawn in compliance with insurance regulations.

They will also have to conduct surprise inspection of books and records of the group organiser and manager at least once in a year. They will be held responsible to the persons insured in case of failure of the organiser or manager to account for the business to the insurer, if the insured can prove that premium has been paid. These guidelines, according to Rao, have been introduced because “individuals within groups are not being served well in many cases.”

Videocon Industries to raise Rs 5,000cr via GDRs or FCCBs

15th July 2005: The board of directors of Videocon Industries will meet on July 23, 2005 to consider a proposal to raise up to Rs 5,000 crore by issuing global depository receipts (GDRs) or foreign currency convertible bonds (FCCBs). This was announced in a release issued by the company to the BSE today.

Securities & Exchange Board of India (Sebi) may relax disclosure norms for compliant companies

15th July 2005: Sebi chairman M Damodaran has said the Board is looking to curb the discretionary allotment of shares to qualified institutional investors (QIB) in IPOs to ensure fair play. QIBs include foreign institutional investors (FIIs), mutual funds, Indian financial institutions and insurance companies. Sebi is also looking into the issue of companies making announcements of heavy oversubscription during the period an IPO is open, which sometimes misleads the general investor.

Additionally, the regulator is planning to further simplify the procedures for follow-on offerings by listed companies. This is because many listed Indian companies are now tapping the global markets through global depository receipts (GDRs) and foreign currency convertible bonds (FCCBs). These corporates are shunning the Indian markets as they feel that raising funds from the Indian market through a public issue is cumbersome and time-consuming.

Damodaran said that Sebi may relax disclosure requirements in public issues for those companies that have a good track record on compliance. Sebi is also looking at making offer documents more user-friendly and has been soliciting views of investor associations.

Taking about the performance of companies post-listing, he said, if the pricing is done properly, investors will benefit. He pointed out that, internationally, companies price their issue in such a way that post-listing there is something left on the table for investors to gain. “If you price the issues aggressively, there are chances of the stocks not doing well after they get listed on the exchanges.” He also pointed out that people should not invest in IPOs for short-term gains.

Structure of a Venture Capital Organisation

Promoter

 

Private

 

Promoter

 

Private

 

VC

UNDERTAKING

UNLISTED

 

SHARE

 

Trustdeed

 

SHAREHOLDER ACCEPT

 

XYZ MAILS

LIMITED

 

EMPLOYEES

 

 

VCU

 

 

 

INVESTORS

 

 

VCU

 

 

INVESTMENT ADVISOR

 

 

 

   TRUST

 

 

 

OWNERS

 

 

BOARD OF TRUSTEES

 

 

SPONSOR/ SETTLER

 
STRUCTURE OF A VENTURE CAPITAL ORGANISATION

 

 

i-flex Solutions allots 81,948 equity shares under ESOS

13th July 2005: i-flex Solutions Ltd has informed BSE that ESOP Allotment Committee of the Company at its meeting held on July 12, 2005, has allotted 81,948 equity shares to the eligible employees who have chosen to exercise their options under Employee Stock Option Scheme (ESOS) of the Company.

Satyam Computer Services Ltd allotted 50,112 shares under stock option plan

13th July 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 50,112 equity shares through circular resolution on July 12, 2005 under stock option plans of the Company.

Securities and Exchange Board of India (Sebi) panel favours penalty for incorrect information

13th July 2005: A panel appointed by the Sebi has suggested amendments to various provisions of the Sebi Act including empowering the market regulator to call for information from professionals working for market intermediaries. The panel also suggested that Sebi should have the power to impose monetary penalty on market players for giving false information. Currently under the Sebi Act, the regulator can impose monetary penalty for failure to furnish information or delay in furnishing information.

The committee headed by Justice Kenia was set up to identify the deficiencies in the existing provisions of the Sebi Act and also to suggest new provisions that can be incorporated in the Sebi Act to make it more effective and investor friendly. The group recommended that a separate Investor Protection Fund under the Sebi Act, on the lines of the Subscriber Education and Protection Fund under PFRDA Ordinance ‘04 may be established.

This fund should be set up for the purpose of investor education and awareness and to provide compensation to the small investors affected by fraud or misrepresentations or misstatements by companies or intermediaries. It said that the fund should be administered by Sebi and the corpus of the fund could come from unclaimed dividends of mutual funds, collective investment scheme or venture capital funds. The fund could also use any unclaimed money or securities of a client lying with intermediaries.

The panel also said that the maximum age limit of members of Securities Appellate Tribunal (SAT) should be raised from 62 years to 65 years in order to avoid frequent reconstitution of the tribunal.

Uttam Galva raises $30mn via FCCBs

13th July 2005: Uttam Galva Steel raised $30 million by issuing foreign currency convertible bonds (FCCBs), which will be listed on the Singapore stock exchange. "The FCCBs, which have a maturity of five years, offer a coupon of 2% payable semi-annually and a yield-to-maturity of 7.25% at the end of five years if not converted into equity shares during the period," the company said in a release issued to the BSE today. The conversion price has been fixed at Rs 64.46 per share, the release added. Macquarie Bank was the lead manager and sole book-runner for the offering, the release said.

Life Insurance Corporation (LIC) plans IPO for Saudi venture

13th July 2005: LIC plans to come up with a initial public offer for its joint venture in Saudi Arabia and is considering foray into Australia and New Zealand. LIC along with LIC International (Bahrain) and New India Assurance will hold 31% stake while Al Hoiker group of Saudi Arabia will have 29% interest in the Indo-Saudi Insurance Company being floated with a initial capital of about Rs 114 crore. "The remaining 40% would be offered to the public through an IPO," LIC chairman A K Shukla said here.

The insurer is also eyeing the Australian and New Zealand markets; he said adding "it is still in a preliminary stage." LIC is also focusing on its Mauritius operations and eyeing other African markets like Botswana, he said. LIC has decided to foray into overseas markets where New India has operations. Government has provided Rs 280 crore to LIC in the budget for the seed capital required for the overseas ventures.

At home, the company has no plans to tap the market as it would require amendment in the LIC Act, he said. There would be no need for capital if regulator IRDA accepts LIC's method of acturial valuation. LIC has already provided over Rs 11,500 crore for solvency requirements. The company has aggressive plans and has obtained government's permission for deputing a large chunk of its Class-III officers for the job of insurance advisors.

Wipro - Allotment of equity shares under ESOP

12th July 2005: Wipro Ltd has informed BSE that

1. Administrative Committee of the Board of Directors of the Company vide their circular resolution effective July 08, 2005 resolved to issue and allot 36512 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

2. Administrative Committee of the Board of Directors of the Company vide their circular resolution effective July 08, 2005 allotted 3300 equity shares of par value of Rs 2/- to JP Morgan Chaese Bank, the Company's depository as underlying shares in respect of ADRs to be issued and allocated to the purchasers, pursuant to exercise of the stock options granted to the employees under the Company's ADS stock option plan.

iGate Global Solutions - Allotment of shares on exercise of Stock Options

12th July 2005: iGate Global Solutions Ltd has informed BSE that the Share Transfer Committee of the Board of Directors of the Company at its meeting held on July 11, 2005, has allotted 10663 Equity shares of par value of Rs 4/- per share to the individual optionee's pursuant to the exercise of options granted under the Companies Employees Stock Option Plan, on receipt of payment of the subscription monies in respect of the said shares aggregating to Rs 1262156.78. The Grant price for 5799 shares was Rs 100.00, 500 shares at Rs 192.30, 1924 shares at Rs 105.50, 1195 shares at Rs 186.60, 933 shares at Rs 101.70 & 312 shares at Rs 209.14.

SEBI to monitor Integrated Market Surveillance System (IMSS) by February-March

12th July 2005: Market regulator SEBI will put in place a comprehensive IMSS by February-March as part of efforts to keep a better vigil on the sudden surge or fall in share prices. "The integrated market surveillance system will be in place by February-March," SEBI chairman M Damodaran told the media. The SEBI chief was in town last evening and had a series of meeting with senior Finance Ministry officials. "Once IMSS is in place, we will have real data on the market," he said.

IMSS is expected to generate alerts that will help SEBI to identify and detect serious market violations such as market manipulations, insider trading and other types of frauds that undermine market integrity. SEBI has already signed an agreement with a consortium of HCL Technologies Ltd and Securities Markets Automated Research Training and Surveillance Pty Ltd of Australia for the implementation of IMSS.

IMSS will enable SEBI to monitor market activities across various stock exchanges and market segments including both equities and derivatives. The system envisages integration of data available from Stock Exchanges, Clearing Corporation and Depositories into a single IMSS.

The new surveillance system will help the regulator detect abnormalities in the trading patterns and market manipulations on a real-time basis and enable it immediately step into action and curb such unfair trade practices. The proposed IMSS would be implemented across exchanges and segments and would integrate the surveillance systems of BSE, NSE, CDSL, NSDL and regional stock exchanges with that of SEBI in phases.

Till now, SEBI had to go through voluminous data on all the scrips, brokers and intermediaries received from the stock exchanges when there was any abnormal movement or market misconduct by any player. As a result, SEBI probes were time consuming and were not always effective in correcting the fault. In contrast, IMSS would focus on real-time reports from exchanges pertaining to abnormalities and suspicious transactions in terms of price, volume and concentration.

Although SEBI may not unearth market manipulation in each and every abnormal or suspicious transaction reported through proposed IMSS, it can carry out intelligent data analysis in the new surveillance system. This will enable it to take up future investigations when it is necessary. Market monitoring in India is itself a cumbersome process as there are over 9,000 brokers, several thousands of scrips and hundreds of market intermediaries trading daily. IMSS is likely to focus on the big brokers, active shares and leading intermediaries who constitute about 80-85% of the trading volumes.

Industrial Development Bank of India Ltd (IDBI) to float life insurance company with ally

12th July 2005: IDBI has decided to launch a life insurance venture in collaboration with a foreign player. The model and the partners are likely to be finalised in the next couple of months. IDBI has also decided to raise Rs 10,000 crore by way of bonds either from the domestic market or overseas this year. IDBI has engaged insurance consultancy firm Watson and Wyatt, headed by former SBI Life chairman and managing director S Krishnamurthy, for readying the model and the selecting partner for the venture. After finalising the model and the partners, IDBI would approach the central bank, Irda, and the government for approvals.

“S Krishnamurthy had earlier successfully set up SBI Life Insurance and, hence, we have provided him the mandate of developing the model for our insurance venture,” said V P Shetty, chairman. “Models such as induction of another domestic entity along with a foreign partner were models being looked into. IDBI would begin with a life insurance company which would be followed by our entry into general insurance,” Shetty said.

Talking about funds requirement, Shetty said IDBI would have to shell out around Rs 8,500 crore on account of bonds that mature in the next seven to eight months. “A portion of this fund requirement would be met through internal accruals and fresh borrowing of Rs 10,000 crore. The instrument, either ECB or domestic, would depend on the rate of interest prevailing at the time we decide to raise the fund,” he said.

Shetty said, “The bank expects to grow at 25% CAGR, while growth in the retail segment was pegged at 45%. Rate of growth of corporate and wholesale lending, on the other hand, was expected to grow at 25% each.” IDBI was also heavily concentrating on financing overseas corporate acquisitions. About the bank’s asset base, Shetty said, “We at IDBI intend to enhance the asset base to Rs 90,000 crore from Rs 81,365 crore as of March 2005. Total business, on the other hand, was expected to touch Rs 1.5 lakh crore by March 2006 against Rs 1.35 lakh crore.”

HDFC planning to raise $500 mn via FCCBs

12th July 2005: Housing finance major Housing Development Finance Corporation (HDFC) is planning to raise $500 million through foreign currency convertible bonds (FCCB). If the plan goes through, HDFC will become the largest ever FCCB issuer in India. Confirming the development, HDFC Managing Director Keki Mistry said, “We are awaiting the Reserve Bank of India approval for the issue.”

In the first week of June, the government eased the external commercial borrowing (ECB) norms by allowing non-banking finance companies and housing finance companies to raise money overseas through FCCBs subject to RBI approval. They were banned from accessing the overseas market for resources by the ministry a few years back.

Market sources said, HDFC was giving final touches to its FCCB plan and a formal announcement is expected soon. The housing major is holding its annual general meeting on July 15.

An FCCB is a bond convertible into equity shares, during an agreed period or on maturity. An FCCB instrument suits HDFC’s requirement well, as it does not require fresh capital at this point of time. Its capital adequacy ratio on March 31 was to the tune of 13.4%.

“After about five years, when the FCCBs get converted they will shore up HDFC’s capital base,” said sources. It has an asset base of Rs 40,531 crore and has posted a net profit of Rs 1,036.58 crore in fiscal year 2004-05.

Geometric Software allots 5,937 equity shares under ESOP

12th July 2005: Geometric Software Solutions Company Ltd has informed BSE that the Allotment Committee of Directors of the Company at its meeting held on July 12, 2005, has allotted 5,937 (Five Thousand Nine Hundred and Thirty Seven) Equity Shares on the exercise of vested stock options under ESOP Scheme 1999, ESOP Scheme 2001 and ESOP Scheme 2003.

Board of Hindalco Industries Ltd approves stock split in 1:10

12th July 2005: Hindalco Industries Ltd today said that it will subdivide equity shares of the company in 1:10 ratio. The board of directors has approved the proposal of sub-division of the equity shares of the company from one share of the face value of Rs 10 each into 10 equity shares of the face value of Re 1 each, subject to shareholders approval, Hindalco informed the Bombay Stock Exchange. The board has decided to call an EGM of the shareholders on August 06, 2005, it added.

Arvind Mills raises US$ 37.19 mn through GDR offer

12th July 2005: Arvind Mills Ltd has informed BSE that the Company has successfully raised US$ 37.19 million through the issue of 13.5 million Global Depositary Receipts (GDRs). A further 500,000 GDRs have been allocated as Greenshoe. Each GDR represents one underlying share. The GDRs will be listed on the Luxembourg Stock Exchange.

ICICI Securities and ABN AMRO Rothschild acted as Joint Global Co-ordinators, Joint Book runners and Joint Lead Managers on this transaction. Enam Financial Consultants Pvt Ltd acted as a Special Advisor to the Issue and Rajani Associates acted as Legal Advisors to the issue.

The GDR was priced at $2.7545 (Rupees 120) per GDR against a closing price of Rupees 126.75 per share on the BSE, Mumbai on July 11, 2005. Mr. Jayesh Shah, Director of the Company, said that the positive response to the Issue reflects the confidence that global investors have in the Company and its position in the Indian Textile Industry.

Union Bank plans to raise Rs 800 cr via IPO

11th July 2005: Union Bank of India will tap the capital market through public offer of 8 crore shares which could fetch it about Rs 800 crore to meet Basel II norms and other business requirements. This will be apart from its plan to raise Rs 700 crore Tier II capital this year to keep pace with asset growth as the Mumbai-based bank is targeting a business of Rs 1,22,000 crore this fiscal.

"We may go for public issue of eight crore shares. But not in one go, may be in two tranches," Union Bank chairman K Cherian Varghese said. The public offer which could hit market this fiscal will bring down government stake in the bank to 51% from 60.85%. At the current price of Rs 106 per share, the bank can easily raise upto Rs 800 crore by offering eight crore shares.

Union Bank is raising capital from market as its capital adequacy ratio is likely to come down to 10.75-11.25% from 12% after implementation of stringent Basel II norms in 2007 that prescribes for higher provisioning for operational risk. The bank has set a business (deposits + advances) target of Rs 1,22,000 crore in 2005-06 from Rs 1,00,000 crore in the previous fiscal. "We expect deposits to grow by 16.5% to Rs 72,000 crore and advances by 21% to Rs 49,500 crore in this fiscal," Varghese said.

KSL And Industries to consider stock split

4th July 2005: Indian textiles manufacturer KSL And Industries Ltd. told the Stock Exchange, Mumbai on Monday its board would meet on July 9 to consider a stock split.

VAT panel to meet on July 9

4th July 2005: Empowered Committee on value added tax will meet on Saturday to take up the issues arising after three months of implementation of the new tax system by 21 states, including compensation formula for any losses incurred by states due to VAT. "We will meet on July 9 to discuss implementation issues relating to VAT," Empowered Committee member secretary Ramesh Chandra said.

To a query on reported inability by states to comply with the directive of VAT panel to provide commodity-wise revenue collection data to calculate the compensation package, Ramesh Chandra said no state has told him so. Though it may be difficult to provide commodity-wise revenue collection data, it is always possible to have classification-based data, he said. "There may be a number of commodities, say in grocery, and to provide for revenue data for each commodity may be difficult task. But such data for grocery can be provided," the VAT panel secretary said.

Besides compensation formula, impact of new tax system on prices and ways to make VAT more consumer-friendly would also be discussed, he said. In short, implementation issues will be the agenda of the meeting, he said. Sources said shift of bullion trade from Delhi to two non-vat states, Rajasthan and Gujarat, is most likely to come up at the meeting. Though the issue is not in agenda, the panel will take it up if Delhi raises the matter, Ramesh Chandra said.

Gujarat State Petroleum Corporation (GSPC) plans IPO in 6-12 months

28th June 2005: GSPC, which has discovered India's largest-ever gas field, is planning an initial public offer (IPO) of 10-20% of equity to part fund the Rs 1,500 crore investment for beginning production from the Bay of Bengal field by 2007-end. "We plan to invest Rs 1,500 crore in developing the gas field. The funds would be raised through debt, internal resources and IPO in equal proportion," D J Pandian, managing director of GSPC, said today. He said GSPC, which is currently 100% owned by the Gujarat government, plans to dilute 10-20% equity through an IPO in the next 6-12 months. Pandian, however, did not give the amount GSPC plans to raise through the IPO. "It will depend on the premium we can command."

GSPC yesterday claimed to have found 20 trillion cubic feet of gas reserves in the third well in the block KG-OSN-2001/3, some 6-km from the Andhra coast. The initial estimates of the find are more than Reliance Industries' 14 trillion cubic feet find in deepsea in the same Krishna-Godavari basin, and ONGC's legendary Bassein field, off Mumbai coast, which has 10 TCF of proven reserves.

GSPC plans to begin production from the gas field by 2007-end beginning with an initial production of 5-7 million standard cubic meters. Pandian said the reserves announced yesterday were only an initial estimation based on testing of one of the five zones in the well and 3D seismic survey done previously. "We are not saying these are proven reserves."

Securities and Exchange Board of India (Sebi) proposes two-tier board for PSUs

28th June 2005: Board to have first level directors topped with a layer constituting the policy board. The Securities and Exchange Board of India is planning to propose to the finance ministry a two-tier board structure for public sector companies having large number of functional directors.

 

Bursting at its seams

 

March
1980

March
1990

March
2000

March
2004

No. of ROCs

18

19

20

20

No. of companies

5,60,00

2,02,000

5,42,000

6,75,000

No. of documents

2,82,465

10,10,640

27,12,170

33,75,700

Companies/ ROC *

3,139

10,638

27,122

33,700

Documents/ ROC

15,693

53,192

1,35,609

1,68,785

* 5 documents per company

 

This, the regulator feels, will resolve the issue of availability of independent directors and also ensure that the board is not unwieldy. The dual board structure will involve a first level of functional directors topped with a layer constituting the policy board, as is the practice in several European countries.

 

A focused internal group was working on the finer points and a proposal would be made to the ministry shortly, sources in Sebi said.

 

The dual board structure will enable companies to meet the regulatory requirement of having the requisite minimum number of independent directors while avoiding an unwieldy board.

 

The new proposal is a possible solution to the problem of getting enough number of independent directors in PSUs. According to Clause 49 of the listing agreement, at least 50 per cent of a board should consist of independent or non-executive directors.

 

In case of PSUs, Sebi had made it clear that the government nominees on the board could not be constructed as independent directors since they represented the interests of the majority shareholder.

 

Besides, the regulation also spelt out fairly stringent criteria for the selection of people who could be independent directors. All listed companies have been given time till December 2005 to comply with the regulations.

 

At present, there are PSUs with a very large number of functional directors as well as large number of government directors, apart from a whole-time chairman.

 

In such situations, the present prescription of 50 per cent independent directors means about 9-10 directors, which makes the board too unwieldy.

 

Earlier, Sebi had made its stance clear: because the board structure was unwieldy, it would not grant exemption to government companies or let them treat government directors as independent directors.

 

According to the Irani committee recommendations, one-third of the directors on the board should be independent. Even that may not really help significantly when there are numerous functional directors, which is typically the case in large companies.

 

In several European countries, companies are allowed to constitute a two-tier board structure with functional directors in the first level and policy directors in the second level. Independent directors are present in the policy board. India follows the American model with a single layer board structure.

Reliance Industries (RIL) to buy 6.97% stake in Reliance Energy from Reliance Industrial Investments and Holding

28th June 2005: Committee meets to discuss demerger modalities. Taking the first step towards untangling investments among the Reliance companies, the Mukesh Ambani-controlled Reliance Industries today proposed to acquire a 6.97% stake held by its wholly-owned subsidiary, Reliance Industrial Investments and Holding, in Reliance Energy. The proposed acquisition will take place in the next four days.

This follows a settlement between the Ambani brothers, Mukesh and Anil, over the ownership of the Rs 1,00,000-crore Reliance companies. The corporate governance committee of Reliance Industries is expected to meet tomorrow to discuss the shape of the demerger of the group.

In a notice to the stock exchanges, Reliance Industries proposed to acquire 1,36,22,707 equity shares, representing a 6.97% stake in Reliance Energy from Reliance Industrial Investments and Holding.

The Reliance group holds over 42% stake in Reliance Energy, through Reliance Industrial Investments and Holding and Reliance Power Venture. Reliance Capital (person acting in concert with the promoter group) holds nearly 6.46%.

Sources close to the development said the promoter holding in Reliance Energy would be vested with the Anil Ambani group. “The proposed acquisition of Reliance Industrial Investments and Holding’s stake to Reliance Industries is a move towards this,” they added.

Reliance Energy and Reliance Capital have convened separate extra-ordinary general meetings (EGMs) on July 19. Reliance Energy will place a resolution pertaining to preferential issue of shares aggregating to up to Rs 1,750 crore. Reliance Capital will place a resolution seeking shareholders’ approval for preferential issue of shares aggregating up to Rs 3,000 crore.

Resolutions pertaining to reclassification of authorised share capital and the raising the limit on foreign institutional investors (FIIs) holding in Reliance capital to 49% of its equity capital will also be placed at the EGM.

Reliance MF buys 8.6% in Pritish Nandy Communications Ltd. (PNC)

28th June 2005: Film and television programme maker Pritish Nandy Communications Ltd. informed National Stock Exchange that Reliance Mutual Fund bought an 8.6% stake in it on the open market on June 24.

Visesh Infotecnics to consider stock split

28th June 2005: Software services firm Visesh Infotecnics has today informed Bombay Stock Exchange that its board would meet on July 1 to consider splitting its shares.

Infrastructure Development Finance Company Ltd (IDFC) sets price band of Rs 29-34/share for IPO

28th June 2005: IDFC said that it had fixed a price band of Rs 29-34 per share for its upcoming initial public offer, which could raise up to $315 million. The eight-year-old IDFC plans to offer 403.6 million shares, comprising about 36% of its post-issue equity, including 120 million new shares and 283.6 million shares to be sold by existing shareholders.

The state-backed company is being floated to meet capital adequacy requirements and finance more projects in a country in need of more money for roads and power plants. India's cash-strapped government is relying on the private sector to finance new infrastructure.

The government of India owns 35% of IDFC's equity and the Industrial Development Bank of India owns 5%. Multinational agencies such as the Asian Development Bank and the International Finance Corporation, an arm of the World Bank, own another 40%. The rest is held by ICICI Bank, State Bank of India and other Indian financial groups.

Kotak Mahindra, DSP Merrill Lynch, SBI Capital Markets and JM Morgan Stanley are the banks working on the issue.

Videocon Industries raises $75 mn GDRs

28th June 2005: Videocon Industries Ltd. said today that it had raised $75 million through an issue of global depositary receipts (GDRs). The GDRs were priced at $10 each, a discount of about 3% to the underlying stock that closed at Rs 449.70 on Monday. Each GDR represents one share of the company.

Zodiac to consider bonus issue

28th June 2005: Apparel maker Zodiac Clothing Co. Ltd. today informed National Stock Exchange that its board would meet on July 5 to consider a bonus share issue.

Typhoon Holdings - Open Offer

25th June 2005: Fedex Securities Ltd ("Manager to the Offer") on behalf of Smt Kajal Shah ("Acquirer", which expression shall include Persons/entities deemed to be acting in concert with the Acquirer, in terms of the Regulations) pursuant to and in compliance with Regulation 10 & 12 of the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 ("SEBI (SAST) Regulations 1997") and subsequent amendments thereto has announced as below:

The Offer

The Acquirer is making an Open Offer to the public shareholders of Typhoon Holdings Ltd ("Target Company") to acquire upto 1,00,000 Equity Shares of Rs 10/- each, representing 20% of issued, subscribed and paid-up capital of the Target Company at a price of Rs 12/50 (Rupees Twelve Ps Fifty only) per equity share fully paid up ("Offer Price") payable in cash subject to terms & condition.

Schedule of Activities:

Specified Date: July 15, 2005

Date of Opening of the Offer: August 12, 2005

Date of Closing of the Offer: August 31, 2005.

Centurion Bank - Grant of stock options under ESOP

25th June 2005: Centurion Bank Ltd has informed BSE that the Bank on June 25, 2005 has offered 2,08,00,000 stock options under the Key Employees Stock Option Plan - 2004 (ESOP) to non-executive Directors of the Bank. This was approved by the shareholders by a special resolution passed through Postal Ballot & by the Board of Directors.

Aftek Infosys - Issue of FCCBs

25th June 2005: Aftek Infosys Ltd has informed BSE that on closing of 1% Foreign Currency Convertible Bonds Due 2010 (Bonds / FCCBs) offer on June 24, 2005 the Company has issued and allotted 3000 Bonds of US$ 10,000/- each aggregating to US$ 30 millions. The Bonds are convertible into Global Depository Receipts (GDRs)/equity Shares at an initial conversion price of Rs 94/- and are to be listed on Luxembourg Stock Exchange. Jefferies International Ltd, London have acted as the 'Manager' to the issue and Fortress Financial Services Ltd were the Advisor to the Company. The list of subscribers includes Royal Bank of Canada, Dresdner Kleinwort Wasserstein (London), Tuder Capital, Jefferies Asset Management & AIG.

Dhruv Makhan - Open Offer

25th June 2005: Chartered Capital & Investment Ltd ("Manager to the Offer") on behalf of the Mr. Bavchandbhai J Vaghani, Mr. Govindbhai J Vaghani, Mrs. Hasumati B Vaghani & Mrs. Kirtiben G Vaghani ("Acquirers"), pursuant to Regulation 10 and 12 as required under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 1997, ("SEBI (SAST) Regulations, 1997") and subsequent amendments thereto has announced as below:

The Offer:

The Acquirers intends to make an Open Offer in terms of the SEBI (SAST) Regulations, 1997 to the shareholders of Dhruv Makhan India Ltd ("Target Company") to acquire 17,40,000 equity shares of Rs 10/- each representing 20% of the total voting & paid-up capital of Target Company at a price of Rs 1.50/- per equity share ("Offer Price"), payable in cash subject to the terms and conditions, to those shareholders whose names appear on the register of members on Specified Date i.e. June 23, 2005.

Schedules of Activities

Specified Date: June 23, 2005

Date of Opening of the Offer: August 17, 2005

Date of Closing of the Offer: September 05, 2005

National Stock Exchange (NSE) to launch 2 sectoral indices, energy and pharmaceuticals, on July 1

25th June 2005: NSE proposes to launch two sectoral indices, energy and pharmaceuticals, on July 1, 2005. Each index will have 10 stocks from the respective sectors. Stocks in the index are among the most liquid in terms of trading turnover and trading frequency. The shares selected in the index are rank highest in terms of market capitalisation. The index will be maintained by IISL.

The energy sector includes companies belonging to petroleum, gas and power sub sectors. The CNX Energy index will capture the capital market performance of the energy sector. The CNX Energy Index represents about 91% of the market capitalization and 80% aggregate turnover of the energy sector universe. The constituents of CNX Energy index are: BPCL, Gail, HPCL, IOC, NTPC, Neyveli Lignite, ONGC, Reliance Energy, Reliance Industries and Tata Power.

The CNX Pharma index will capture the capital market performance of the Pharmaceuticals sector. The CNX Pharma Index represents about 66 per cent of the market capitalization and 54 per cent aggregate turnover of the pharmaceuticals sector universe. The constituents of the CNX Pharma index are: Biocon, Cadila Healthcare, Cipla, Dr Reddy, Glaxosmithkline Pharmaceuticals, Nicholas Piramal, Ranbaxy Labs, Sun Pharma and Wockhardt.

Phillips Carbon Black to raise $50mn

24th June 2005: The board of directors of Phillips Carbon Black will meet on June 27, 2005, to consider a proposal to raise up to $50 million via foreign currency convertible bonds (FCCBs) or global depository receipts (GDRs) and/or other securities. This was announced in a release issued by the company to the BSE today.

Zicom Electronic Security Systems to raise $12mn via FCCBs/GDRs

24th June 2005: Zicom Electronic Security Systems is planning to raise up to $12 million by issuing foreign currency convertible bonds (FCCBs) or global depository receipts (GDRs). According to a release issued by the company to the BSE today, the money raised would be used for expanding operations into new markets and product areas.

Pioneer Embroideries to issue 1:2 bonus shares

24th June 2005: The board of directors of Pioneer Embroideries, which met today, approved a proposal to issue bonus shares in the ratio of 1:2 i.e. one share for every two shares held. According to a release issued by the company to the BSE today, the record date will be decided later.

Insurance Regulatory and Development Authority (Irda) norms soon for overseas policyholders

24th June 2005: The Irda, the regulatory body for insurers, is learnt to be working on a set of norms for policyholders getting insured overseas. According to senior official with an insurance company, there will be a set of criteria for policyholders to ensure a due diligence of the company before they buy a policy. Also it will be made clear that if at all any dispute arises in any such policy, it will be resolved outside India under the host country’s jurisdiction and not under the jurisdiction of Irda.

The due diligence may include first-hand knowledge of the credential of the company, supervisory authority under which the insurer is being monitored and supervised, and the terms and conditions of the policy. Officials said with the Reserve Bank of India permitting Indian residents to remit $25,000 annually, many Indian residents are buying insurance policies offered by foreign companies. While the purchase of insurance policies is not a problem, it is important for the regulator to know the origin of the insurer and the policy so that the policyholder should not get harassed later, a source said.

The RBI had earlier issued a set of norms for resident Indians who were offered deposit taking products from mutual funds and banks operating overseas under the $ 25,000 liberalised fund transfer norm. The basic norms set out by RBI was that only deposits products offered by credible organisation only will be acceptable to Indian residents.

As a mark of the credibility, these organisations should be rated by international credit rating organisations. Moreover, these entities should clearly specify the regulatory authority under which they are being regulated. After the RBI relaxed remittance norms, mutual funds based abroad offered schemes to retail investors and even launched India-dedicated funds to attract investments.

Idea Cellular plans IPO

23rd June 2005: Idea Cellular plans for an early listing to raise equity as Cingular Wireless, its foreign stakeholder, is to retain its stake in the company. The move comes in the wake of its aborted attempt to offload 47.7% stake to a consortium led by Singapore Technologies Telemedia (STT) and Telekom Malaysia (TMI).

The move for an initial public offering (IPO) has gathered momentum as the stakeholders (US-based Cingular Wireless, Tatas and Aditya Birla Group) are looking at alternative modes for infusion of equity into the company, merchant banking sources said. The company is also actively scouting for strategic partners. However, stakeholders are of the opinion that an IPO would be the ideal vehicle as the company has a good reputation, subscriber base and valuation.

Idea Cellular is the fifth-largest mobile-phone company in the country and has over 5.4 million subscribers, they said. A number of foreign investors have also evinced interest in the company as the stakeholders held sell-off talks. “Stake sell off would be the first method for raising equity and IPO would be the next option,” they said.

Idea was planning for an IPO in 2004 and a subsequent listing. The company’s IPO plans received a jolt as AT&T Wireless had exited from the joint venture by selling of its 32.9% stake to Cingular Wireless. Details of the proposed IPO was not finalised at the time, with the company only planning to announce the dates.

Now with Cingular’s plans to offload its stake hitting regulatory hurdles, as the consortium led by STT and TMI has stake in competitor AirTel, the company is planning to retain its stake in Idea, they said.

If the deal would have been approved, the consortium would have bought out Cingular’s 32.9% stake, 6.7% stake of Aditya Birla group (of the total 33%) and 8.3% (of 33%) from Tata group. Meanwhile, sources in the Tata Group said that the group would buy out Cingular’s stake, in case the company still wants to exit from the venture and “if it is suitable”.

Post IPO, JM Mutual`s equity assets may more than double

23rd June 2005: JM Financial Mutual Fund's equity assets are expected to more than double following the initial public offer of its new equity scheme JM Emerging Leaders Fund. The fund manages about Rs 4,200 crore of assets today, of which less than Rs 100 crore is covered by equity-oriented schemes. The fund hoped to mobilise at least Rs 200 crore through its new equity scheme, said Krishnamurthy Vijayan, CEO of JM Financial Asset Management, today.

The market for equity schemes in south India is loosely classified as a retail market as mobilisation from corporates is relatively lower than that of other parts of the country. During the course of a presentation, JM’s team tried to deal with the general apprehension that the launch timing may be faulty because the market indices have reached record levels. The fund house said that corporate fundamentals continued to be strong, which offered investors opportunities.

JM Emerging Leaders Fund is an open-ended equity scheme which opened for subscription on June 16 and closes on July 4.

Deccan Chronicle postpones FCCB issue

23rd June 2005: Deccan Chronicle Holdings has postponed the proposed issue of foreign currency convertible bonds (FCCBs) for want of government approval. In a release issued to the BSE today, the Hyderabad-based company said the board of directors today recommended deferring the FCCB issue until the next board meeting for want of official notification from the government allowing foreign corporate bodies/NRIs/FIIs to invest in Indian newspaper companies.

Yash Papers public offer to open on June 30

22nd June 2005: Yash Papers Ltd has informed BSE that issue of 1,68,00,000 Equity Shares of Rs 10/- each for cash at premium of Rs 4/- per equity share aggregating to Rs 2352 lacs by the Company through prospectus will open on June 30, 2005 & will close on July 08, 2005.

Wipro Ltd allots 1,20,487 equity shares under ESOS

22nd June 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective June 20, 2005 resolved to issue and allot 120487 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

YES Bank IPO subscribed 19.79 times

22nd June 2005: The YES Bank IPO, which closed yesterday, has been subscribed 19.79 times. According to data on the NSE website, as against the offer for 7 crore shares in the price band of Rs 38-45 per share, bids have been received for 138.52 crore shares. The maximum bids (137.05 crore shares) have been made at Rs 45 per share.

Alok Industries raises additional $10mn via FCCBs' greenshoe option

22nd June 2005: Alok Industries has exercised the green shoe option to raise an additional $10 million. According to a release issued by Alok Industries to the BSE, the company has issued and allotted 200, 1% unsecured FCCBs with a face value of $50,000 each. The company has informed that the green shoe option is part of the 1%- "B convertible bonds of USD due 2010" (the "B Bonds"). The said additional B bonds, aggregating $10 million, are convertible at the option of the holders of the bonds into equity shares at any time on or after the issue date as mentioned in the offer circular.

Standard Life sells 4.9% HDFC stake for Rs 1,017.60cr

22nd June 2005: Standard Life, the Edinburgh-based mutual insurance company, has sold 4.9% stake in HDFC for Rs 1,017.60 crore (128 million pounds). The holding of Standard Life in HDFC after the sale has been reduced to 9.35%, Standard Life said in a release today.

Standard Life has two joint venture partnerships with HDFC - a life assurance company, HDFC Standard Life Insurance Company, in which it holds just under 15% and HDFC Asset Management Company in which it holds 49.9%.

Standard Life would be able to increase its share in the life insurance venture through this sale, and would do so immediately to the maximum level presently permitted by Indian laws, the release said.

"Standard Life expects to remain a major shareholder in one of India's best-known and most successful businesses. However, this share sale rebalances our holding and allows us to increase our direct interest in our insurance joint venture, which we believe has a great future", Sandy Crombie, group chief executive of Standard Life, said.

Income tax department will set up help centres for assisting small tax payers

22nd June 2005: The income tax department will set up help centres for assisting small tax payers, other than corporate and salaried tax payers from July 1, 2005. The help centres would be functional during the period from July 1 to September 9 from Monday to Friday, the income-tax department said in a release today.

There would be at least one or two such help centres in the jurisdiction of each chief commissioner of Income Tax (CIT) which would be set up in co-operation with local trade or industry associations. The centres, to be located outside the IT offices, would be manned by trained personnel from the IT department while the necessary infrastructure would be provided by the association.

The facilities to be provided by the help centres include helping small tax players in filling up their returns, forms, challans, computing their income, calculating tax liability and guide tax payers with tax related advice. The income-tax department would also review the further continuance of this service after September 30, it said.

Reliance Infocomm to raise Rs 15,000 cr via IPO by October or November this year

21st June 2005: Reliance Infocomm, an Anil Dhirubahi Ambani Enterprises group company, is planning an initial public offer (IPO) by October or November this year. The size of the IPO could be as big as Rs 15,000 crore, the country’s largest IPO, said sources.

The company is believed to have already begun the groundwork and the listing will enable it to raise capital for the expansion of its network. At a press conference yesterday, Anil Ambani had said that Reliance Infocomm would be listed in due course.

At the moment, it is not clear how much equity the ADAE group wishes to offload. While one of Reliance Infocomm’s rivals in the mobile telephony business, Bharti Televentures, is already listed, another competitor, Hutch, is planning an IPO soon.

During the financial year 2005, the company posted a net profit of Rs 51 crore against a net loss of Rs 391 crore in the previous year. Reliance Infocomm has a market share of over 19% in the Indian wireless market.

Operation of the Senior Citizens Savings Scheme, 2004 (SCSS)

RBI/2004-05/484

Ref.No.CO.DT.15.15.001/H-10236-10258/2004-05

June 3, 2005

Jyestha 13, 1927 (S)

The General Manager

Government Accounts Department

State Bank of India and Associate Banks;

Allahabad Bank / Bank of Baroda / Bank of India /

Bank of Maharashtra / Canara Bank / Central Bank of India /

Corporation Bank / Dena Bank / Indian Bank /

Indian Overseas Bank /Punjab National Bank / Syndicate Bank /

UCO Bank / Union Bank of India / United Bank of India /

 

Dear Sir,

 

Operation of the Senior Citizens Savings Scheme, 2004 (SCSS)

 

In continuation of our Circular No.RBI/2004-05/352 dated January 27, 2005, we now forward herewith a copy of Office Memorandum F.No.2-8/2004-NS-II dated May 31, 2005 containing clarifications on various issues relating to the captioned scheme. You are requested to convey the clarifications to your designated branches for implementation / guidance. You may also ensure that a copy of the clarification issued is displayed on the notice board by the designated branches for the guidance of the agents / investors.

 

2. Please acknowledge receipt.

 

Yours faithfully,

 

(D.Rajagopala Rao)

Deputy General Manager

 

 

F. NO. 2-8/2004-NS-II

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF ECONOMIC AFFAIRS

(BUDGET DIVISION)

NORTH BLOCK, CENTRAL SECRETARIAT,

NEW DELHI-110001, THE MAY 31, 2005.

 

OFFICE MEMORANDUM

 

SUBJECT: Senior Citizens Savings Scheme, 2004 (SCSS)-clarifications regarding.

 

The undersigned is directed to say that this Ministry has been in receipt of various suggestions and queries from various quarters seeking clarifications in respect of various provisions of the Senior Citizens Savings Scheme, 2004 (SCSS). These suggestions and queries have been examined in this Department and necessary clarifications are issued as under:-

 

ISSUES RAISED

CLARIFICATION

1. How to calculate interest for broken period (less than a quarter)

Interest for any period less than a ‘quarter’(as prescribed under the rules) shall be calculated as per the following formula:

 

Number of days x yearly rate of interest

 

365 or 366(in case of a leap year)

2. Subscribers may be permitted to obtain Loans by pledging the deposits/accounts under the scheme.

The facility of pledging, available in respect of few other small savings schemes, can not be provided in respect of SCSS as the subscriber of a pledged account will not be able to withdraw the interest amount periodically, defeating the very purpose of the scheme.

3. Premature withdrawal / partial withdrawals may be allowed for emergent medical treatment.

The facility of premature withdrawal /closure of account after one year is already permissible under rule-9 of the scheme. It is not possible to allow premature/partial withdrawals for any specific purpose before completion of one year.

 

However, in case it is felt that any provision(s) of the scheme is/are causing undue hardships to any subscriber, this Ministry may consider requests of such subscriber(s) for premature closure of accounts before completion of one year on a case to case basis depending on merits, in relaxation of normal rules provided the case(s) is/are specifically recommended by Financial Advisor (Posts) / Member (Development), Postal Services Board in respect of Department of Posts and Chief/General Manager, in charge of  Government Accounts Department in the case of banks.

4. How to calculate the 30 days’ period after receipt of retirement benefits when benefits are received in piece meal on different dates.

The facility of opening multiple accounts is already available under the scheme. The retired person can open more than one account, on receipt of the retirement benefits in piece meal, provided the relevant account is opened within one month of receipt of the particular retirement benefit.

 

 

( P. C. SINGH)

 

UNDER SECRETARY TO THE GOVERNMENT OF INDIA

 

Tele: 2309 3035

Satyam Computer allotted 12,159 shares under stock option plans

21st June 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 12,159 equity shares through circular resolution on June 21, 2005 under stock option plans of the Company.

Anil Ambani's open offer for 20% of Reliance Capital

21st June 2005: Anil Ambani has made an open offer to acquire 20% of Reliance Capital Ltd. at Rs 231 per share, according to a notice in a newspaper. Ambani, who was handed the responsibility of Reliance Capital in settlement of a long-running dispute with his older brother Mukesh, and AAA Enterprises -- in which Anil owns 98% -- are making the open offer following a preferential allotment of 60 million shares at Rs 228 each to Anil on June 19. Following the allotment, Anil and AAA will hold 32.03% in Reliance Capital. The offer price is the average of the daily high and low prices on the National exchange in the last two weeks, according to the notice.

Simplified Exit Scheme, 2005

Tuesday, 01 February, 2005, 13:44: The Ministry of Company has launched a fresh scheme to enable defunct companies to get their names struck off from the Register of Companies u/s 560 of the Companies Act, 1956 through the operation of the Scheme called “Simplified Exit Scheme, 2005” (SES 2005) [The “Scheme”]. This supersedes all circulars and schemes.

 

Operation of the scheme

 

The SES 2005 will come into operation on 1.2.2005 and will continue till 31.7.2005.

 

Eligibility

 

All defunct companies which are registered under the Companies Act, 1956 can apply under this Circular, except Section 25 Companies, subject to fulfillment of conditions laid down hereinafter. In particular, the following companies are eligible to apply under this Scheme:

(a)    Companies that did not carry out any business at any time;

(b)   Companies that carried out some business activity but discontinued the same thereafter;

 

Special provisions for NBFCs

 

In the case of a Non Banking Financial Company (NBFC) as defined under section 45-I(f) of RBI Act, 1934, the company can avail the scheme as below :

(a)If such NBFC is not registered with the RBI, it will be allowed to avail of this scheme only if it has not carried out any operation or commercial activity since its incorporation;
(b)If such NBFC is registered with RBI, it will be allowed to avail of this scheme if no objection from RBI to their availing the exit option under the Scheme is obtained and enclosed alongwith the application.

 

Special Provisions in case of Collective Investment Company

 

In case of a Collective Investment Management Company as defined in regulation 2(1)(h) of SEBI (Collective Investment Companies) Regulations, 1999, the company can avail the scheme as below:

(a)    If such Collective Investment Management Company is not registered with the

SEBI, it will be allowed to avail of this scheme only if it has not carried out any operation or commercial activity since its incorporation;

(b)   If such Collective Investment Management Company is registered with SEBI, it will be allowed to avail of this scheme if no objection from SEBI to their availing the exit option under the Scheme is obtained and enclosed along with the application.

 

Special provisions relating to Government Companies

 

Government Companies, which have no assets and liabilities may also apply for strike off/removal of name under this Scheme provided they comply with the other prescribed requirements and submit an approval letter issued by the concerned administrative ministry.

 

Submission of application

 

A company desirous of getting its name struck off under this scheme can apply to the Registrar of Companies concerned in the form prescribed in Annexure ‘A’. The application should be signed by two directors of the company which will include Managing Director or Whole Time Director, if there is one. The application shall be accompanied by:

 

* Board Resolution to exit from the Register of Companies, if a validly constituted Board of the Company is in existence. In case of companies where the number of directors is reduced below the quorum fixed by the Act for a meeting of the Board, the continuing directors or director may act for the purpose of increasing the number of directors to that fixed for the quorum in terms of regulation 75 of Table A of Schedule I to the Companies Act, 1956 or as per the relevant articles of association of the company.

 

* An affidavit by the Applicants as per Annex B above sworn before a Magistrate/Executive Magistrate/Oath Commissioner/Notary, to the effect that the company has not carried on any business or the company or did some business for a period upto a date (which should be specified) and then discontinued its operations, as the case may be, and has no assets or liabilities.

 

* An Indemnity Bond, duly notarized as per draft prescribed and enclosed in Annex ‘C’ to this Circular, to the effect that should there be any liabilities on the company, such liabilities will be met in full by the applicants, even after the name of the company is struck off the register of the companies. Such applicants will be liable jointly as well as severally.

 

* In case of companies which have not carried out any operations, business or commercial activity since their incorporation and have no financial information to furnish, a declaration by Applicants in the affidavit itself that the company has no assets and liabilities shall be sufficient and there shall be no need to attach separate audited financial statements. If however, such companies have been filing regular financial statements, they should file the financial statement for the latest year prepared upto a period which ended one month preceding the date of application.

 

* Companies which discontinued their operations after having carried out the same for some period, should file audited financial statements under the Companies Act, 1956 for the period upto which they carried on business provided such period is of one accounting year or more. For subsequent period, a Statement of Account as per format prescribed at Annex D of this Circular, for the latest year prepared upto a period which ended one month preceding the date of application should be enclosed.

 

* Where the period of operation is less than one accounting year, a Statement of Account, as prescribed at Annex D shall suffice.

 

* A declaration that the “Statement of Account” so submitted gives true and fair view of company’s financial position specifying the reasons for non submission of audited financial statements. However if companies wish to voluntarily file the regular audited financial statement even for the subsequent period, they may do so.

 

* Fee of Rs. 3000.

 

Non-eligibility

 

A company shall not be allowed to avail of this scheme in case any prosecution for a non-compoundable offence is pending against the company. The company shall declare pending litigations, if any, involving the company while applying under this Scheme. However, in respect of companies which are involved in compoundable offences under the Companies Act, 1956, the company will be allowed to avail of the scheme only if the company files a compounding application first and then applies under this scheme.

 

Indemnity

 

No penal action would be initiated against eligible companies availing this Scheme from the date of filing of the application for simplified exit.

 

Strike off

 

The applicant company under this Scheme would be deemed to be struck off from Register of Companies from the date of issue of Order/Notification by the ROC.

Flexo Film Wraps - Open Offer

20th June 2005: Ashika Capital Ltd ("Manager to the Offer") on behalf of Smt. Rajul S Jhaveri ("Acquirer") pursuant to Regulation 10 & 12 and in compliance with the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto ("Regulations") has announced as below:

The Offer

The Acquirer is making an Open Offer ("Offer") to the shareholders of Flexo Film Wraps India Ltd ("Target Company") to acquire upto 1151528 fully paid-up equity shares of Rs 5/- each, representing 20% of its paid up equity and voting share capital at a price of Rs 10/- per share ("Offer Price") payable in cash subject to terms & condition.

Schedule of Activities:

Specified Date: June 17, 2005

Date of Opening of the Offer: August 03, 2005

Date of Closing of the Offer: August 22, 2005

Standard Chartered Mutual Fund launches open-ended equity fund

20th June 2005: Standard Chartered MF today announced the launch of its maiden open-ended equity fund, the Standard Chartered Classic Fund. "This is an unrestricted, diversified fund that will aim to deliver consistent return. Units priced at Rs 10 during the offer time, the fund will open on June 27 and close on July 14," Standard Chartered MF Managing Director Naval Bir Kumar said today.

Kumar said equity markets have low systemic risk and are poised for growth. The equity market over the next decade has the potential to outperform and deliver over the risk free return, he said. "We do not think that we are entering late into Indian equity market as still the penetration level is low. By not committing to any particular sector or theme, we will ensure that it keeps generating consistent returns over a long period of time," he said.

Standard Chartered MF Vice President (Equity) Bobby Surendranath said the strategic risk control measures devised by the company 'equity circles' would ensure largest consistency of return through three-four quarter price focus. "Equity circles checks will deliver consistent annual upper quartile result and control overall business, liquidity and market risk. This will follow companies' profit over two to three years and identify consistent track record," he said. Surendranath added that equity circles are consisted of various checkpoints like idea generation, stock valuation, risk control and portfolio construction.

Nectar Lifesciences to raise Rs 90 cr via IPO, public offer to open on June 22, price band Rs 200-240/share

17th June 2005: Nectar Lifesciences, a manufacturer and exporter of sterile cephalosporins and sterile semisynthetic penicillin in India, is coming out with its IPO to raise nearly Rs 90 crore to part finance a new formulations facility being put up at Baddi in Himachal Pradesh.

The money being raised from the market would also help finance the expansion of its sterile cephalosporin plant and put up a R & D and corporate quality control centre at Derabassi in Patiala district of Punjab, Sanjiv Goyal, Managing Director of Nectar Lifesciences Limited, said today.

The IPO comprises issue of 38.70 lakh shares in a price band of Rs 200 to Rs 240 per equity share of Rs 10 each. It opens on June 22 and closes on June 28.

HCL Technologies allots 1,52,754 equity shares under ESOP

17th June 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company on June 17, 2005, has allotted 1,52,754 equity shares of Rs 2/- each (including 82,044 shares at a premium of Rs 125.50 per share; 1,490 shares at a premium of Rs 157.50 per share; 1,100 shares at a premium of Rs 194.50 per share, 39,242 shares at a premium of Rs 233.00 per share; 1,500 shares at a premium of Rs 238.50 per share, 1,498 shares at a premium of Rs 249.00 per share; 8,100 shares at a premium of Rs 251.50 per share; 2,900 shares at a premium of Rs 281.50 per share, 14,880 shares at a premium of Rs 288.00 per share) to the employees on exercise of their Stock Options under the 1999 & 2000 Employee Stock Option Plans (ESOP).

Praj Industries Board recommends bonus issue & stock split

17th June 2005: Praj Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on June 17, 2005, has recommended following actions for the approval of shareholders:

1. Issue of Bonus Shares @ 1 (One) share for every existing 1 (One) share.

2. Sub division of shares Existing Rs 10/- paid-up share to be subdivided into 5 shares of Rs 2/- paid up each.

3. Employees Stock Option Plan for the employees.

Central Bank of India IPO only after nod for capital recast

17th June 2005: Central Bank of India hopes to tap the capital market with its maiden Rs 150 crore public issue once the Government clears the proposal to restructure its bloated capital of Rs 1,120 crore.

The bank has proposed to the Centre that the Rs 1,120 crore capital be split into two parts — Rs 680 crore as preference capital and Rs 440 crore as equity capital. The proposal for restructuring Central Bank’s capital has been hanging fire for two years now. “We’re hoping for a positive response from the government soon,” a senior official said after the announcement of the award of an Rs 150 crore contract to TCS for implementing Core Banking Solution, covering 1000 branches of the bank.

Explaining that the only hitch was classification of preference capital, the official said that as per Basel II norms, perpetual preference capital is considered as part of Tier-I capital and that India does not have the concept of perpetual preference capital. Central Bank needs to tap the capital market to increase its Tier-I capital. Once the size of Tier-I capital increases, the headroom automatically gets created to raise Tier-II capital. According to Dalbir Singh, CMD, Central Bank of India, the bank plans to spend Rs 65 crore on expanding its ATM network and Rs 50 crore on allied activities.

ITC recommends stock split, bonus issue

17th June 2005: ITC board has said that it will split its equity shares in 1:10 ratio (one ordinary share of the face value of Rs 10 into ten shares of Re 1 each) and issue bonus shares, subject to shareholders approval.

According to ITC release issued to the BSE, the board will issue bonus shares in the ratio 1:2 (i.e. one bonus share of Re 1 each for every 2 fully paid-up ordinary shares of Re 1 each).

The board has also approved increase in the authorised share capital of the company from Rs 300 crore (divided into 30 crore ordinary shares of Rs 10 each) to Rs 500 crore (divided into 500 crore ordinary shares of Re 1 each), the release added.

Air Deccan to divest 33-35% through IPO, likely between Nov ’05 and June ‘06

17th June 2005: Air Deccan will seek to reach larger spectators in its maiden foray into the capital markets by floating 33-35% of its stock. The Air Deccan IPO, likely between November ‘05 and June ‘06, may see unloading of an estimated 17-19m shares in the market.

The airline expects the IPO to raise an estimated $300m. The two investors, ICICI and International Capital, which hold around 26% in the company with their $40m private equity placement in January ‘05, may reduce their exposure to half during the IPO. The promoters, led by its MD GR Gopinath, may divest 20% or more of their equity. The IPO will not only provide an avenue to investors to part-unlock the value of their investment, but will also help in better retention of employees holding stock under the ESOP.

While Air Deccan finance director Mohan Kumar did not comment on the price, he mentioned that it will be in keeping with the airline’s buoyant growth prospects. The airline, which carried just under a million passengers last fiscal clocked revenues of Rs 350-370 crore with a marginal profit.

The topline is expected to touch Rs 1,000 crore this fiscal on the back of multifold increase in profit over last year, and a targeted passenger carriage of four million. The airline proposes to ramp up its fleet strength from 18 planes now (including five Airbus 320s) to 27-28 planes by March 31, ‘06. Deliveries of its 62 planes (32 A320s and 30 ATR-500-42/72 series) which were ordered for in December-January ‘05 will also commence shortly.

Patni Computers to issue ADRs upto $150mn

16th June 2005: According to release issued to the BSE, the members of Patni Computer Systems at the AGM held on June 14, 2005, have okayed the issue of American Depository Receipts (ADRs) upto $150 million including the green shoe option.

Orchid Chemicals & Pharmaceuticals to raise $100mn via GDRs

16th June 2005: Orchid Chemicals & Pharmaceuticals is planning to float GDRs upto $100 million to fund its multi-therapeutic expansion and reduce interest burden. According to an Orchid release issued to the BSE, the board has considered a proposal to raise long term funds by way of issue of GDRs in the international market of $100 million, with an additional 15% green shoe option. The board has also considered issuing 25 lakh warrants, convertible into equity shares to the promoters, in accordance with Sebi guidelines for preferential issue. The authorised share capital is also being proposed to be increased to Rs 55 crore from Rs 45 crore, the release added.

Citigroup to buy 20% stake in JBF Industries via open offer

16th June 2005: Citigroup has made an open offer to acquire 20% stake in textile company JBF Industries at a price of Rs 46.50 per share. According to a JBF release issued to the BSE, Citigroup venture capital international growth partnership Mauritius and Citigroup venture capital international jersey have made an offer to shareholders to acquire 93.10 lakh equity shares representing 20% stake at a price of Rs 46.50 per share. The open offer is under regulation 10 of the Securities and Exchange Board of India (substantial acquisition of shares and takeovers) regulations, 1997, it said.

Kotak Mahindra Old Mutual Life Insurance expects to achieve break-even in '07-08

16th June 2005: Kotak Mahindra Old Mutual Life Insurance on Wednesday said it expects to achieve break-even by 2007-08. The company sees 100% growth in premium income during the current fiscal.

The company plans to ramp up its infrastructure in a big way and will open 10 new branches during the fiscal. It will also hike its life advisor base from existing 7,000 to 12,000 and increase the number of sales managers from 450 to 850 during 2005-06. Managing director Gaurang Shah said that the company posted a 198% jump in first year premium income to Rs 374 crore in 2004-05 from Rs 126 crore in 2003-04. "The company's loss has been reduced from Rs 49 crore in 2003-04 to Rs 45.6 crore in 2004-05", said Shah.

The company plans to launch new products this fiscal. It currently has 17 life insurance products. Shah said: “We believe the two most important areas today which will determine the growth of life insurance products are mortality and retirement products. We have planned a 100% growth for the current fiscal with focus on these products and continuous expansion in infrastructure and manpower”.

The company intends to achieve future growth through a stronger leverage on group synergies, greater focus on quality execution and innovative product offerings. “Our belief on segmented approach towards selecting target markets and segments shall continue and I believe that with higher penetration in states like Tamil Nadu and Punjab, we will be able to exploit the opportunity that the vibrant economy is offering in even smaller towns and rural markets, Shah added.

Dr Reddys Laboratories Ltd allots 12,000 shares

16th June 2005: Dr Reddys Laboratories Ltd said today that it has granted 12,000 equity shares as stock options to its employees. The 12,000 equity shares granted as stock options to the employees have an exercise price of Rs 5 which is the par value of the shares, the pharmaceutical company informed the Bombay Stock Exchange. The vesting period of this option is 25 per cent options each year over a period of four years. The options may be exercised within a period of five years from the date of vesting, it added.

Kingfisher Airlines plans IPO in 2007

16th June 2005: UB Group’s lifestyle carrier Kingfisher Airlines, which on Wednesday inked a $3bn aircraft, buy deal, plans to do an IPO next year to part finance its new initiative. UB Group chairman Vijay Mallya said that he proposes to take the airline public in view of its huge growth plans. Details of the IPO including divestment by promoters will be firmed up shortly. The airline has already ordered for 30 Airbus 320 planes to be delivered by ‘07.

Kingfisher is the first Indian carrier to sign a firm contract with Airbus for five A350-800 (dubbed a competitor to Boeing’s Dreamliner B787) and five new generation super jumbo A380. It has also tied up to purchase five A330, with five options to be exercised later. Mr. Mallya said that the airline will shortly apply for permission to the civil aviation ministry to go international by ’07. The airline will be three years old in the domestic skies by then. Incidentally, aviation minister Praful Patel had earlier hinted that norms for overseas foray by domestic carriers will be relaxed as the market and the operators mature and gain in experience.

The A380, which will be configured across 490 seats in a three class configuration with a super first class, is proposed to be deployed on non-stop services between Mumbai/Delhi and New York. While the 230 seater A350, in two class configuration, will be made use on flights between emerging hotspots in India like Bangalore and Dallas, San Fransisco and other destinations. The smaller A330 will fly between India and Europe and Asia. Deliveries of A330s are due to begin in the third quarter of ’07, those of the double-decker A380s in 2010 and those of the A350s in ’12. Engine selections have yet to be announced.

Yes Bank IPO sold in 5 minutes

16th June 2005: Within five minutes of its opening, Yes Bank’s initial public offering (IPO) was over-subscribed 5.5 times on Wednesday. By 10:30 am (that is half-an-hour after it opened for subscription), the issue — offering 70 million shares — was subscribed 5.5 times. Bidding by qualified institutional buyers (QIBs) was 11 times the portion kept for them (50% of the issue). The QIB bids were made at Rs 45 — the upper end of the band. The issue has been subscribed 8.27 times and the QIB portion has been subscribed well over 15 times according to data available. The Greenfield bank’s IPO priced at a band of Rs 38-Rs 45 is being sold through the book-built route.

Government permits 26% FDI in print media

16th June 2005: The Union Cabinet on Thursday, decided to permit foreign investment by NRIs, PIOs, overseas corporate bodies (OCBs) and portfolio investments, besides FDI, in print media, but maintained the ceiling of such investments at 26%.

The Cabinet, at a meeting chaired by Prime Minister Manmohan Singh, also decided to allow publication of facsimile editions of foreign newspapers and journals in India, without allowing them access to Indian content or advertisements, information and broadcasting minister S Jaipal Reddy said.

It also decided to increase the syndication limit of the total printed area from the present 7.5% to 20% under the automatic route. Reddy said while the FDI investment ceiling of 26% would remain, investments from other sources may be included within the same limit for the news and current affairs segments. He said these changes would be incorporated through amendments in the PRB Act with a view to give legal backing to these decisions.

Shalimar Productions Ltd to issue 2cr equity shares

11th June 2005: Shalimar Productions Ltd on Friday said it will issue 2 crore equity shares and increase its authorised share capital to Rs 4 crore. The board of directors in a meeting on June 8, have approved the issue of 2 crore equity shares of Rs 1 each fully paid at a price of Rs 2.50 per share on preferential basis, the food processing company informed the Bombay Stock Exchange. The board has also approved the increase in authorised share capital of the company from Rs 2 crore (divided into 2 crore shares of Rs 1 each) to Rs 4 crore (divided into 4 crore shares of Rs 1 each), it said.

Birla MF launches GenNext equity fund

11th June 2005: Birla Mutual Fund launched its new equity fund offer - 'Birla India GenNext Fund' on Friday, which will invest in equities of firms that are expected to benefit from consumption habits of young people in the country.

The new offer of the open-ended diversified equity fund will have dividend and growth options. The offer opens on June 14 and closes on July 12, said Raghvendra Nath, Head (Strategic and Business Development), Birla Sun Life Asset Management Co Ltd.

The new Fund would invest in companies across industries like auto, tourism, healthcare, banking, consumer durables and public sector that have at least 50% of their revenues coming directly from sales to end consumers, he said. An investor would have to put in a minimum of Rs 5,000 to take part in the scheme, he added.

Asked about how much the fund was expected to mobilize through the offer, Nath declined to hazard a guess but said they expect "good collections and the benchmark would be the amount raised by similar funds in recent times." Besides targeting companies that have brand identity for their products and services, the Fund will also focus on firms that are cash generating, have a predictable growth in earnings and are quick to adopt themselves to the changing needs of customers, he said.

Birla Sun Life, a JV between Aditya Birla Group and Sun Life Financials of Canada, has nine schemes in equity segment and 10 schemes in debt segment, with total assets under management of over Rs 11,000 crore. In the total assets under management, equity funds account for 22%.

Share deals done for $22mn in Bharti Tele

9th June 2005: Two block share deals worth $22 million in Bharti Tele-Ventures Ltd. were done early today on the BSE, trade data showed. The identity of the buyers and sellers in the deals of 4.3 million shares at 222 rupees each were not immediately known. A Bharti official said it was a "pure market transaction, and not related to the company's management".

Bharti, owned 32.81% by Singapore Telecommunications Ltd., has a market value of about $9.5 billion. It was the top traded stock on the Bombay exchange in early deals. Officials at private equity investor Warburg Pincus, which has been selling its holding over the past year, were not immediately available for comment. In March Warburg, which originally held 18.52% of Bharti, sold about 6% in record-sized deals for $561 million. ($1 = 43.52 rupees)

Mahindra to consider bonus share issue

9th June 2005: The board of Mahindra & Mahindra Ltd, will meet on June 14 to consider a bonus share issue, it told the Bombay exchange today.

Nicholas Piramal's 1:10 rights issue at Rs 175/share

9th June 2005: Nicholas Piramal's Committee of Directors (Rights issue) has fixed the rights issue price at Rs 175 per share. According to a release issued by Nicholas Piramal to the BSE, the company would issue 1,90,01,600 equity shares of Rs 2 each at a premium of Rs 173 per share amounting to Rs 332.53 crore. The release further said that the rights issue would be in the ratio of 1:10 (one rights equity share for every 10 existing equity shares).

Provogue public offer to open on June 10, price band Rs 130-150/share

8th June 2005: Provogue (India) Ltd will hit the capital market on June 10 with its initial public offer to raise up to Rs 60 crore for setting up new manufacturing facilities and retail stores. The company plans to add 40 new Provogue studios and 21 mega stores and set up a trouser making unit at Daman as part of its expansion plans which would be funded through the IPO, Provogue Managing Director Nikhil Chaturvedi said today.

The issue of 40.49 lakh equity shares of face value Rs 10 each would close on June 16 and constitutes 25% of the fully diluted post issue paid-up capital of the company. The company has fixed a price band of Rs 130-150. At the lower end of the band, it would raise about Rs 52.64 crore while at the upper end it would mop up Rs 60.74 crore.

Williamson Magor - Open Offer to the shareholders of Williamson Tea Assam

8th June 2005: ICICI Securities Ltd ("Manager to the Offer") on behalf of McLeod Russel India Ltd, Williamson Magor & Company Ltd, United Machine Company Ltd, Ichamati Investments Ltd and Nitya Holdings & Properties Pvt Ltd (collectively referred to as "Acquirers") pursuant to Regulation 10 and Regulation 12 of the Securities & Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto (SEBI (SAST) Regulations, 1997), has announced as below:

The Offer:

The Acquirers are making an open offer to the shareholders of Williamson Tea Assam Ltd ("Target Company") to acquire up to 2,835,000 fully paid-up equity shares of the face value of Rs 10 each representing in the aggregate 20% of the paid-up equity share capital of the Target Company at a price of Rs 145 per share ("Offer Price") payable in cash subject to the terms & conditions.

Scheduled of Activities:

Specified Date: June 10, 2005

Date of Opening of the Offer: August 01, 2005

Date of Closing of the Offer: August 22, 2005

Wipro has allotted 59,700 equity shares under ESOS

8th June 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective June 03, 2005 resolved to issue and allot 59,700 equity shares of Rs 2/- each pursuant to exercise of stock options by eligible employees.

HCL Technologies allots 98,122 equity shares under ESOP

8th June 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company on June 07, 2005, has allotted 98,122 equity shares of Rs 2/- each (including 48,022 shares at a premium of Rs 125.50 per share; 2,400 shares at a premium of Rs 157.50 per share; 2,650 shares at a premium of Rs 194.50 per share, 31,500 shares at a premium of Rs 233.00 per share; 3,350 shares at a premium of Rs 249 per share, 1,400 shares at a premium of Rs 251.50 per share; 1,000 shares at a premium of Rs 281.50 per share; 7,800 shares at a premium of Rs 288 per share) on exercise of their Stock Options under the 1999 & 2000 Employee Stock Option Plans (ESOP).

Jindal Poly Films public offer to open on June 9, price band Rs 360-400/share

8th June 2005: Jindal Poly Films Ltd, manufacturer of flexible packaging and metallised films, has fixed a price band of Rs 360-400 per share for its public issue which will raise Rs 300 crore. The proceeds of the issue would be used for funding the expansion of the company's facilities at Nasik and Khanvel. ICICI Securities and JM Morgan Stanley Private Ltd are book running lead managers to the issue while Karvy Computershare Private Ltd is the registrar.

Avance Technologies to split shares in 1:10 ratio

8th June 2005: Avance Technologies said today that it will split shares of the company in 1:10 ratio. The Board of Directors of the company at its meeting held on June 3 has approved the split of equity shares of the company from one share of Rs 10 each fully paid-up to ten share of Rs 1 each, subject to necessary approvals of the shareholders, the company informed the Bombay Stock Exchange.

Gujarat Borosil - Delisting of shares from CSE

7th June 2005: Gujarat Borosil Ltd has informed BSE that the equity shares of the Company have been delisted from The Calcutta Stock Exchange Association Ltd (CSE).

Nucleus Software - Grant of Options

7th June 2005: Nucleus Software Exports Ltd has informed BSE that the Compensation Committee of the Board of Directors of the Company at its meeting held on June 02, 2005 granted options to the eligible employee of the Company including employees of subsidiaries. The Numbers of options granted are 55,000 and ordinary shares covered by the options granted are 55,000 shares of Rs 10/- each. Exercise price is Rs 170/- per options and the vesting period is 2 years 2 months from the date of grant of options. The exercise of option is permitted upto a maximum period of 2 years after vesting of the option and shall lapse if not exercised within such period.

Satyam Computer - Conversion of Stock Options

7th June 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 52,199 equity shares through circular resolution on June 07, 2005 under stock option plans of the Company.

D-Link - Grant of Options

7th June 2005: D-Link India Ltd has informed BSE that the D-Link ESOP Trust at its meeting held on June 06, 2005 granted 32,500 options to its employees in accordance with D-Link (India) ESOP plan. Further the Company has informed that the Compensation Committee of the Board had approved the above at its meeting held on June 01, 2005.

Indo Rama Synthetics - Delisting of equity shares from CSE

7th June 2005: Indo Rama Synthetics (India) Ltd has informed BSE that the equity shares of the Company have been delisted from the Calcutta Stock Exchange Association Ltd (CSE) w.e.f. April 25, 2005.

iGate Global to issue 7 lakh subsidized stock options to employees

7th June 2005: iGate Global Solutions Ltd has announced that the shareholders of the Company have approved grant of stock options to employees at a discount to the market price of shares at the company's Annual General Meeting held on June 03, 2005.

About 7 lakh subsidized stock options will be granted to approximately 300 - 350 senior employees of the company at a discounted price of Rs 100 with a 4-year vesting period. This special stock option grants are in addition to the regular stock option grants of the company, which is open to all employees based on performance and grade.

Commenting on this innovative stock option plan, Phaneesh Murthy, CEO of the Company said "We need to ensure that our senior employees are committed to the growth of the company and a sense of ownership is essential for ensuring this commitment. We also want our people to participate in the process of creating wealth for our shareholders"

The difference between the issue price and the market value as on the date of issue as per SEBI guidelines will be amortized equally over the vesting period.

AMP-Sanmar to quit insurance business

7th June 2005: India's insurance sector - both life and non-life segments - was opened up to private players in December 1999, ending the decades-long monopoly of public sector companies, including Life Insurance Corporation (LIC) in life insurance sector and General Insurance Corporation (GIC), New India Assurance, Oriental India Insurance and United India Insurance in the non-life sector.

Over six years after the insurance sector was opened up to private players in India, AMP-Sanmar Life Ltd, one of the first private entrants in life insurance sector, today said it was exploring all options, including exiting the business. AMP-Sanmar Life, a joint venture between Australia's AMP Life and Chennai-based Sanmar Group, was exploring options for restructuring ownership of their venture, including "outright sale to an existing or new player or bringing in a new partner," a statement here said. The move has been initiated, as the Australian partner AMP Life has decided to exit the life insurance venture in India, it said.

AMP Life holds 26% while Sanmar Group owns the remaining 74% in the life insurance joint venture. "The restructuring of ownership will have no impact on the policy holders. The business will continue and the policies will continue to be valid and will be honored as per terms and conditions," said Graham Meyer, managing director, AMP-Sanmar. He said the move was necessitated after AMP's decision to stay focused on its core wealth management business in Australia and New Zealand and keep its Asian focus centered in asset management through AMP Capital Investors. "Sanmar has decided to take advantage of this opportunity to review its stake in the business, as well," the statement said. Meyer said AMP Sanmar remained a successful business and that this process would help ensure that it can now embark on its next phase of development.

"We want to assure our policy holders that they can rest assured that any restructuring will only precede if it is in the clear interests of AMP Sanmar's policyholders, employees and shareholders," he said. As for the staff, Meyer said, "During this time, they will be encouraged to remain committed to the business and convey the same sentiments to our customers. We will also continue to update our policy holders and staff on all developments".

Kotak Mahindra Bank Ltd. approves 3:2 bonus share issue

7th June 2005: The board of private sector Kotak Mahindra Bank Ltd. has approved the issue of bonus shares in the ratio of three for every two shares held, the bank told the stock exchanges today.

Sebi clears Rabo India’s banking foray

7th June 2005: Rabo India Securities, a 100% subsidiary of Rabo India, has received a category I merchant banking licence from the Securities and Exchange Board of India (Sebi). This will enable the Indian subsidiary of Rabobank Netherlands to offer the whole gamut of investment banking products, including open offers and IPOs. The Indian arm now offers only advisory services in M&A. Rabo is also looking to set up a $50m private equity fund for the food and agri businesses along with another equity partner.

“Our focus in India will be on investment banking which will cover the restructuring of corporates, refinancing, capital markets other than our key areas such as food, agri business and telecom,” said Sanjiv Bhasin, CEO, Rabo India Finance. The investment banking arm will be headed by Ashutosh Maheshvari.

On the new private equity fund, which will be launched in the last quarter of ‘05, Mr. Bhasin said, “We are looking at a private equity fund for investments in the food and agri space. We will look either at greenfield companies or SMEs.” According to him, NBFCs have an inherent advantage over banks in acquisition financing in the absence of restrictions.

He also added that Rabo India is not contemplating a move to convert itself into a bank. “Rabo views India as a high potential country. There is no move to convert into a bank now. There is enough potential in our present form of existence. We have not reached a stage where our growth will be impacted.”

Planters' punch: Farm income off taxmen's radar

6th June 2005: Rich tax-payers who also earn pots of money as farm income, which is tax-free, can sit back and relax, as they will not get scrutiny notices from tax authorities.

The Central Board of Direct Taxes (CBDT) is set to exclude returns filed by individuals — or non corporate assessees — claiming “exempt” income over Rs 2 lakh from the compulsory scrutiny basket.

“The Board has proposed dropping all such cases from compulsory scrutiny following the wide variation in interpretation of ‘exempt’ income by field formations. This created considerable confusion last year,” said a senior official.

The CBDT had, for the first time last fiscal, called for compulsory scrutiny of all returns where the exempt income was above Rs 2 lakh for non-corporate assessees. For corporate assessees, all cases where income exceeding Rs 10 lakh has been claimed as “exempt” was brought under compulsory scrutiny

Besides individual tax payers, I-T returns of trusts and institutions who enjoy income-tax exemptions may also be excluded from the compulsory scrutiny basket.

Senior officials said that I-T returns of banks and PSUs, NSE 500 and BSE ‘A’ group companies will, however, continue to be under compulsory scrutiny this fiscal. So would stock brokers. Chief commissioners are, however, set to be given powers to issue general guidelines for pruning down the number of cases to be taken up for scrutiny

Exempt income includes dividends that are tax free at the hands of the shareholder and long-term capital gains arising out of equity transactions struck on a stock exchange. It also includes gratuity, interest on specified tax-free bonds, agriculture income and so on.

The CBDT’s move had meant that even a rich farmer’s returns would be scrutinised, if he filed a tax return showing a taxable interest income. However, just a month after issuing these guidelines last year, the CBDT sent revised instructions calling for scrutiny only in “certain cases”.

The intention was to scrutinise cases where unaccounted income is likely to have been camouflaged as exempt income. There could be cases where a small plot of land that is not even under cultivation is shown to fetch massive farm income.

Return to be filed where principal place of business is and not Registered Office Rules: HC

6th June 2005: The UP Income Tax Dept. wanted India Glycols to file its return from Moradabad where they have their factory and registered office whereas the company has been doing so from Kolkata for a long time. The matter finally landed up at High Court which has ruled that Notice by AO of Moradabad to file IT return where factory and registered office are located is not valid when Principal place of business is Calcutta.

 

The petitioner was having its principal place of business at Calcutta, as such since day one it was filing returns in Calcutta. Petitioner has a factory and registered office at Moradabad. ITO Moradabad issued notices to petitioner for filing returns in Moradabad as it is having its registered place of business thereat. Commissioner (Lucknow) held that the AO, Moradabad, had got jurisdiction as petitioner is having registered office thereat. So petitioner should have filed and in future would file returns with appropriate official.

 

Observations of HC:

++ In the writ petition, in paragraph 3 the petitioner has stated "it has been filing its income-tax return in Calcutta", where its principal place of business, viz., its corporate office is situated. It has also been averred that the permanent account number (PAN) of petitioner No.1 under the said Act has been allotted by respondents Nos.1 and 2 in Calcutta. It was further submitted that till today the petitioner has been filing returns and the appropriate AO has been assessing the same. Of course, during the pendency of the writ petition, he contends, pursuant to the interim order passed in this petition, returns are being filed regularly. It is the settled position of law to decide the question of jurisdiction in a writ matter, the court is to look into amongst others the place of business of the respondent against whom the relief is sought for and the records relating to the case situate within the territorial limit of the particular court, and the cause of action either partly or wholly shall have arisen within the territorial limit of the court.

 

++ Under section 124 of the said Act an assessee cannot be compelled to file its return with the Assessing Officer, within whose jurisdiction the assessee does not have its principal place of business, meaning thereby an inappropriate AO cannot ask the petitioner to submit returns and this statutory protection is being enjoyed by the assessee under the aforesaid section. Such protection of the petitioners will be taken away by the impugned two orders as well as notices. Moreover, the petitioners have already submitted the returns for the assessment years for which the impugned notice has been issued and the orders have been passed. The petitioner-company therefore, in effect would be compelled to file fresh returns and to be assessed once again and it may so happen that because of late filing of returns the petitioner might be subjected to penalty and also payment of interest.

 

++ Principal place of business of the company is termed and/or treated as the place wherefrom all control over the business activities is located. This principal place of business may or may not be a registered place of business.

++ In this case the petitioners have stated in the writ petition specifically that the principal place of business is located at Calcutta and as such respondent No.2 having been satisfied as to the fact of location of the petitioner's principal place of business at Calcutta, has assessed. I am unable to find lawful reason how such a decision could be rendered nugatory by the counterpart at Lucknow or for the matter at Moradabad.

Indian Bank to fix IPO price at Rs 60/share

6th June 2005: Indian Bank, which is raising Rs 600-1,200 crore through IPO sometime in September, is likely to price its initial public offer (IPO) at about Rs 60 a share. "The bank's IPO will hit the market before September end. The premium is likely to be Rs 50 on a share of face value Rs 10," a top Indian Bank executive said. The bank is yet to appoint merchant bankers to value its shares. It has also not decided whether or not the issue would be priced through the book-building route. The size of the maiden issue will be in the range of 10-20 crore shares and the final offer price could be at about of Rs 60 per equity share, the bank official said. The government equity is slated to come down to 70% post IPO.

Air Deccan plans IPO between Nov’05 and June’06

6th June 2005: Air Deccan Ltd. plans an initial public offering between November 2005 and June 2006 to raise money for expansion, the firm's chairman G.R. Gopinath said today. "The size is yet to be decided," he added.

Public Provident Fund Scheme, 1968 – Clarifications

RBI/2004-05/480
Ref.No.CO.DT.15.02.001/H-9844-9866/2004-05

 

May 25, 2005
Jyeshtha 4, 1927 (S)

 

The General Manager Government Accounts Department
State Bank of India and Associate Banks
Allahabad Bank / Bank of Baroda / Bank of India /
Bank of Maharashtra / Canara Bank / Central Bank of India /
Corporation Bank / Dena Bank / Indian Bank /
Indian Overseas Bank /Punjab National Bank / Syndicate Bank /
UCO Bank / Union Bank of India / United Bank of India /

 

Dear Sir,

 

Public Provident Fund Scheme, 1968 - Clarifications

 

Please refer to our Circular No.CO.DT.15.02.001/H-9593-9615/2004-05 dated May 14, 2005 forwarding therewith Government of India Notification dated May 13, 2005 issued by Ministry of Finance, amending the provisions of the PPF Scheme, 1968 with effect from May 13, 2005.

 

2. In this regard, Government of India, Ministry of Finance vide letter F.No.2/8/2005-NS-II dated May 20, 2005 have, inter alia, issued the following clarifications :

 

i) Sequel to amendments to various Small Savings Schemes to restrict the scope of investments only to individuals, the accounts, if any, opened by juristic persons (HUFs, Trusts, Provident Funds, etc.) i.e. persons other than individuals (through single or joint accounts or deposits by guardians on behalf of minors and persons of unsound mind as per rules) on or after May 13, 2005, under any of the small savings scheme including Public Provident Fund Scheme, 1968, shall be treated as void ab initio and immediate action should be taken to close such accounts and to refund the deposits without any interest to the depositors.

 

ii) It may, however, be noted that the above amendments shall not be applicable to the existing accounts opened in accordance with the rules in operation prior to the amendments dated May 13, 2005. These shall continue till maturity and deposits/withdrawals in/from these accounts shall be allowed to be made in accordance with the said rules. However, any extension of existing accounts shall be subject to the amendments dated May 13, 2005.

 

3. In view of the above, you may please issue suitable instructions to all your designated branches / offices operating the PPF Scheme, 1968 and ensure strict compliance with the same.

 

Yours faithfully,

 

(D.Rajagopala Rao)
Deputy General Manager

Yes Bank public offer to open on June 15, price band Rs 38-45/share

3rd June 2005: Yes Bank has finalised a book-building price of Rs 38-45 for its upcoming IPO. The IPO is open from June 15 to June 21. The bank is expected to collect Rs 266 crore (on the lowest side of the price band) and Rs 315 crore (on the higher side). It has appointed DSP Merrill Lynch and Enam Financial Services as lead managers. The bank has a paid-up capital of Rs 200 crore, which will rise to Rs 270 crore after the IPO.

Yes Bank is promoted by Rana Kapoor (its CEO) and Ashok Kapur (part-time chairman). The two collectively own 52% in the bank. This is likely to fall to around 40% after the IPO. Rabo Bank has expressed its intention to retain the 20% it currently has. The holding of private equity investor CVC will drop to 7.4% from 10%, while the other two investors — AIF Capital and Chrys Capital — will hold 6% each against the current 7.5%. The bank has four branches in Mumbai, Delhi and Gurgaon.

Revision of approval norm for service exports likely

3rd June 2005: The Finance Ministry has agreed to review the stipulation that requires trade and industry to get approval from the Revenue Department before exporting services. The approval is necessary if the industry has to avail itself of credit on inputs used in the export of services. Exporters of services are now required to declare the inputs used in the export of services.

"Industry's suggestion on this matter would be looked into. We will see what can be done without jeopardising the interests of the revenue," a senior Finance Ministry official said. The industry has been contending that the Finance Ministry can adopt a procedure of post-export scrutiny rather than insisting on approval for export of services. "The requirement for approval is somewhat impractical, because in services, you can't wait till the approval comes. Otherwise, you lose business. If there is no approval, then you can't claim credit on the inputs. The other option would be to go ahead and do the business and forget the credit on the tax paid on inputs. The Government's intent is to give credit for inputs," an industry official said.

Now for the not-so-palatable news: The Finance Ministry has clarified that Cenvat (Central value-added tax) credit cannot be claimed on the service tax paid on advance payments till the services are actually rendered. After the Budget, service tax is applicable on all advance payments towards taxable services.

The industry now wants credit on the service tax paid on advance payments to be allowed as soon as the service tax has been paid, irrespective of when the services are rendered. "In case of service tax on advance payments, credit on service tax paid can be claimed only when the services are received by the person making the advance payment," a senior Finance Ministry official said. The Finance Act, 2005 mandated that service tax is payable on payments made as an advance for rendering services. This stipulation is, however, yet to be brought into force and would become applicable from a date to be notified by the Union Government.

The Government had, in the recent Budget, enlarged the scope of `taxable services' to include `services to be provided.' It also stipulated that payments received `before, during or after' the provision of taxable services would form part of the gross amount for charging service tax.

ICAI finalises Guidance Note on fringe tax

4th June 2005: Corporates would soon have guidance on how they should account and disclose the amounts paid towards fringe benefit tax (FBT).

The Institute of Chartered Accountants of India (ICAI) has finalised a Guidance Note that requires corporates to disclose FBT as a separate line item in their financial statements.

This would also imply that FBT would have to be disclosed separately in both the quarterly as well as annual earnings disclosures of corporates.

"The FBT has to be shown as a line item that is separate from the current tax liability of the company. FBT is not a tax on income of the company and therefore cannot form part of the current tax liability," said Mr Ved Jain, Chairman, Fiscal Laws Committee of the ICAI.

He also said that FBT couldn't be considered as part of employee cost as it was an additional tax and the liability to pay this tax was on the employer and not on the employee.

Export of Services Rules, 2005

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) and sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules, namely:-


1. Short title and commencement.-


(1) These rules may be called the Export of Services Rules, 2005.


(2) They shall come into force on the 15th day of March, 2005.


2. Definitions.- In these rules, unless the context otherwise requires,-


(a) “Act” means the Finance Act, 1994 (32 of 1994);


(b) “input” shall have the meaning assigned to it in clause (k) of rule 2 of the CENVAT Credit Rules, 2004;


(c) “input service” shall have the meaning assigned to it in clause (l) of rule 2 of the CENVAT Credit Rules, 2004.


3. Export of taxable service.- The export of taxable service shall mean,-


(1) in relation to taxable services specified in sub-clauses (d), (p), (q), (v) and (zzq) of clause (105) of section 65 of the Act, such taxable services as are provided in relation to an immoveable property which is situated outside India;


(2) in relation to taxable services specified in sub-clauses (a), (f), (h), (i), (j), (l), (m), (n), (o), (s), (t), (u), (w), (x), (y), (z), (zb), (zc), (zi), (zj), (zn), (zo), (zq), (zr), (zt), (zu), (zv), (zw), (zza), (zzc), (zzd), (zzf), (zzg), (zzh), (zzi), (zzj), (zzl), (zzm), (zzn), (zzo), (zzp), (zzs), (zzt), (zzv), (zzw), (zzx) and (zzy) of clause (105) of section 65 of the Act, such services as are performed outside India:


Provided that if such a taxable service is partly performed outside India, it shall be considered to have been performed outside India;


(3) in relation to taxable services, other than,-


(i) the taxable services specified in sub-clauses (a), (f), (h), (i), (j), (l), (m), (n), (o), (p), (q), (s), (t), (u), (v), (w), (x), (y), (z), (zb), (zc), (zi), (zj), (zn), (zo), (zq), (zr), (zt), (zu), (zv), (zw), (zza), (zzc), (zzd), (zzf), (zzg), (zzh), (zzi), (zzj), (zzl), (zzm), (zzn), (zzo), (zzp), (zzq), (zzs), (zzt), (zzv), (zzw), (zzx) and (zzy); and


(ii) the taxable service specified in sub-clause (d) as are provided in relation to an immoveable property, of clause (105) of section 65 of the Act,-

 

(i) such taxable services which are provided and used in or in relation to commerce or industry and the recipient of such services is located outside India:


Provided that if such recipient has any commercial or industrial establishment or any office relating thereto, in India, such taxable services provided shall be treated as export of services only if-


(a) order for provision of such service is made by the recipient of such service from any of his commercial or industrial establishment or any office located outside India;


(b) service so ordered is delivered outside India and used in business outside India; and


(c) payment for such service provided is received by the service provider in convertible foreign exchange;


(ii) such taxable services which are provided and used, other than in or in relation to commerce or industry, if the recipient of the taxable service is located outside India at the time when such services are received.


Explanation.- For the purposes of this rule “India” includes the designated areas in the Continental Shelf and Exclusive Economic Zone of India as declared by the notifications of the Government of India in the Ministry of External Affairs Nos. S.O.429(E), dated the 18th July, 1986 and S.O.643(E), dated the 19th September 1996.


4. Export without payment of service tax.- Any service, which is taxable under clause (105) of section 65 of the Act, may be exported without payment of service tax.


5. Rebate of service tax.- Where any taxable service is exported, the Central Government may, by notification, grant rebate of service tax paid on such taxable service or service tax or duty paid on input services or inputs, as the case may be, used in providing such taxable service and the rebate shall be subject to such conditions or limitations, if any, and fulfillment of such procedure, as may be specified in the notification.


[F. No. B2/4/2004-TRU]

(V. Sivasubramanian)

Deputy Secretary to the Government of India

Adani Exports plans Rs 50 crore OFCDs issue

1st June 2005: A meeting of the board of directors of Adani Exports is scheduled to be held on June 09, 2005, to consider the issue of secured optional fully convertible debentures (OFCDs) on private placement basis subject to the members’ approval. According to a release issued by Adani Exports to the BSE, the total issue size of OFCDs will not exceed a sum of Rs 50 crore.

Tata Mutual Fund aims Rs 500-600 crore via IPO

1st June 2005: Tata MF is targeting to collect about Rs 500-600 crore from the initial offering for its mid cap mutual fund, an open-ended equity fund. The initial issue period started on May 19 and is slated to close on June 15. The Mid Cap companies present opportunity for good long-term growth and wealth creation, on the back of expansion of the Indian industry, Tata MF managing director Ved Prakash Chaturvedi said on Tuesday.

The mutual fund would target retail investors to mop up funds during initial offering and expects to raise about Rs 500-600 crore, he said. Indian mid cap corporates are expected to show a 20% annual growth in the next two years. The prospects for high returns are accompanied by risks of current high valuation, he added. The key to manage risks was disciplined and research based stock picking approach and the fund would hold 30-40 mid cap stock in investment portfolio of the scheme, he added.

Mutual Fund Summit 2005 - "Indian Mutual Fund Industry : Crossing the Rubicon"

It gives a great pleasure to inform you that CII is organising Mutual Fund Summit 2005, CII's Flagship national event, scheduled between 15 and 16 June 2005 at Mumbai.

 

Mutual Fund Summit 2005

"Indian Mutual Fund Industry : Crossing the Rubicon"

15 - 16 June 2005, Hilton Towers ● Mumbai

 

This national initiative is supported by Association of Mutual Funds in India (AMFI), with Pricewaterhouse Coopers (PwC) as the Knowledge Partner and NDTV PROFIT as the Media Partner.

 

Mutual Fund Summit 2005 would cover a wide range of topics of interest to stakeholders in the industry, like Evolution of the Indian Mutual Fund Industry, Challenges of Growing the Market, Mutual Fund Products-Emerging Scenario, International Perspective-Learning’s and At the Cross Roads of Financial Intermediation.

 

Thus the theme.  "Indian Mutual Fund Industry: Crossing the Rubicon"

 

We have received an overwhelming response with over 120 professionals from the Industry who have already registered for the event and the list is growing for this Summit, since the seats are limited, I would greatly appreciate if you could confirm to us by faxing the Registration Form at the earliest.

 

The Brochure, Tentative Programme and Registration Form are available at www.mutualfundsummit.com.

 

Please forward this information to the appropriate Departmental Heads in your Organisation with a request to nominate a few colleagues, to attend this Summit. And also requesting you to send in your confirmations/nominations or mail your registration details to or

Lakshmi Overseas Industries Ltd (LOIL) to raise Rs 77.21 crore via equity

1st June 2005: LOIL, the India's leading rice processor, will raise about Rs 77.21 crore for expansion and also foray into power generation. "The company is expanding the capacity of its existing integrated rice processing plant and diversifying into the power sector. It proposes to set up a husk-based power plant with latest technology," the company said in an EGM notice to shareholders. A small portion of electricity from the husk-based plant would be used by it and the rest sold through state government power agencies.

The company has firmed up plans to raise resources through the preferential allotment route to Citigroup and to promoter group companies. The company in the notice said it would issue 19 lakh shares of Rs 10 each at a price of Rs 304 including premium to Citigroup Venture Capital International Growth Partnership Mauritius Ltd (CVCIGPML). The company will garner Rs 57.7 crore by allotting 14.7% shares of the company to Citigroup.

It proposed to issue 6.4 lakh shares to group company, LOIL Continental Foods Ltd at the same price Rs 304 a share through which the company will benefit by Rs 19.45 crore. The promoter shareholding after the proposed issue will drop to 42.97%. The promoter holds 47.32% stake. FIIs currently hold 7.01%. Public holding at 21.17% at present will be reduced to 5.63% and 17.01% after the new investor Citigroup company gets 14.70%.

MFs can't use IPO ticket, asked to call launches as 'new fund offerings' (NFO) or ‘new scheme offerings’ (NSO)

31st May 2005: Securities and Exchange Board of India (Sebi) will soon direct mutual funds to term their new scheme launches as ‘new fund offerings’ (NFO) or ‘new scheme offerings’ (NSO), and disallow them from using the term IPO. This is so that an MF IPO may not be confused with equity offerings from companies.

The MF industry was earlier asked by the regulator to find alternative terms for their new offerings. The board of the Association of Mutual Funds (AMFI) has approved the new terms and informed the Sebi. “We want to differentiate MF scheme launches from those of equity offerings through IPOs. So Amfi has found a new term for a new scheme offering from MFs. This is to avoid confusion among investors,” said Amfi chairman AP Kurian. Sources said that Sebi will soon issue a direction that all new MF offerings will be sold under the new term.

In recent months, as the primary market was booming, a lot of investors put money in new MF schemes, which were marketed as IPOs at par. These investors may have thought that MF IPOs were similar to shares sold by companies. Many thought that as these IPOs were coming at par, they could make a killing as most recent equity offerings of companies got listed at huge premiums to the offer price. Another issue that has to be sorted out is whether an MF could classify an initial offering as ‘at par’. They have also to consider the upfront load charged. Equity funds generally charge a 2.5% upfront load which some argue should be highlighted while selling the new schemes.

MFs can't use IPO ticket, asked to call launches as 'new fund offerings' (NFO) or ‘new scheme offerings’ (NSO)

31st May 2005: Securities and Exchange Board of India (Sebi) will soon direct mutual funds to term their new scheme launches as ‘new fund offerings’ (NFO) or ‘new scheme offerings’ (NSO), and disallow them from using the term IPO. This is so that an MF IPO may not be confused with equity offerings from companies.

The MF industry was earlier asked by the regulator to find alternative terms for their new offerings. The board of the Association of Mutual Funds (AMFI) has approved the new terms and informed the Sebi. “We want to differentiate MF scheme launches from those of equity offerings through IPOs. So Amfi has found a new term for a new scheme offering from MFs. This is to avoid confusion among investors,” said Amfi chairman AP Kurian. Sources said that Sebi will soon issue a direction that all new MF offerings will be sold under the new term.

In recent months, as the primary market was booming, a lot of investors put money in new MF schemes, which were marketed as IPOs at par. These investors may have thought that MF IPOs were similar to shares sold by companies. Many thought that as these IPOs were coming at par, they could make a killing as most recent equity offerings of companies got listed at huge premiums to the offer price. Another issue that has to be sorted out is whether an MF could classify an initial offering as ‘at par’. They have also to consider the upfront load charged. Equity funds generally charge a 2.5% upfront load which some argue should be highlighted while selling the new schemes.

Hotel Leela allots 1,42,590 equity shares

31st May 2005: Hotel Leelaventure said today that it has allotted 1.42 lakh equity shares on conversion of options received from Foreign Currency Convertible Bond holders. The hotel allotted 142,590 equity shares of Rs 10 each at a premium of Rs 142.50 per share on May 30, on conversion of options received from FCCB holders of face value of $0.5 million; it informed the Bombay Stock Exchange.

Jindal Poly Films 2nd public offer to raise Rs 300 crore

31st May 2005: Jindal Poly Films, a manufacturer of flexible packaging and metallised films, will tap the capital market for the second time with a public issue of Rs 300 crore to fund its expansion plans. "The proceeds of the issue will be used to expand our facilities at Nasik and Khanvel and for meeting the expenses of the issue," Jindal Poly Films Ltd non-executive director Shyam Jindal said today. The issue opens for bidding on June 9 and closes on June 15. ICICI Securities and JM Morgan Stanley Private Ltd are the book running lead managers to the issue while Karvy Computershare Private Ltd is the registrar.

"The total investment for the expansion plans would be Rs 600 crore out of which Rs 300 crore will be raised through the public offer. The rest of the money would be funded by loans and internal accruals", Jindal Poly general manager (Finance) Sanjeev Aggarwal said. The price for the issue would be announced two or three days before the issue as per the new SEBI guidelines. "The average interest rate of borrowing which would be taken mainly from Rabobank and Commerz Bank of Germany would be 5%", he said.

JK Corp gets board nod to spin off cement unit

31st May 2005: JK Corp, promoted by the HS Singhania group, is hiving off its cement business into a separate company and is exploring the possibility of roping in a strategic partner for the business. The JK board approved the proposal on May 24. The management is currently working on a detailed scheme to facilitate the formation of an independent company to run the cement business. JK has also decided to hive off investments, worth Rs 150 crore, from itself as part of the restructuring exercise. The group has routed some of its investments for paper, sugar through JK.

Investment banking sources said that multinational cement firms and a private equity firms have evinced interest in picking up a strategic stake in the cement business. A senior JK group official said that JK may look at the possibility of roping in a partner to grow the cement business at a later date. “An independent cement company has a better opportunity for raising funds. We are looking at many options to raise funds,” the official added.

Industry sources said that the company could not attract a suitable partner since for the cement business it was not an independent entity. JK, which markets the cement under the brand name of Lakshmi Cement, is planning to expand capacities as part of its efforts to gain major market share. The company has turned around with a net profit of Rs 73 crores for the year ended March 31, ’05. The company has a total institutional debt of Rs 600 crore.

Capital market probable to have an ombudsman

31st May 2005: Appointment of ombudsmen, which is now in practice in banking and insurance sectors, may soon be extended to the capital market for speedy resolution of investor complaints. The JJ Irani Committee, set up to advise the government on the new company law, is expected to make such a recommendation. The committee will inform the government about the role of such arbitrators, as the market already has a regulator empowered to address investor grievances. It is part of a series of recommendations the committee is likely to make on investor protection.

The insurance ombudsman can address complaints about contracts of a maximum value of Rs 20 lakh and insurance companies have to honor the awards in three months. The banking ombudsman can resolve disputes between banks as well as a whole lot of customer complaints as common as delay in the payment of cheques.

The committee is also expected to recommend the introduction of insurance coverage for investors in listed companies. It remains to be seen how the committee justifies insuring investments in listed companies, which goes against the basic investment principle that return should be proportionate to the risk taken.

Also, it remains to be seen, who will pay the premia and whether such cover would be allowed for the entire investment or part of it. At present, deposits in banks can be insured for up to Rs one lakh.

The committee will tell the government that the level of protection should be different for different classes of investors. It will also tell the company affairs ministry to review the transfer of money from the Investor Education and Protection Fund to any fund other than the Consolidated Fund of India.

The committee is expected to recommend that the company affairs ministry, Sebi, RBI and stock exchanges should coordinate to protect investors. The panel is of the view that investor protection needs to be addressed in a separate chapter under the new Companies Act.

ABG Shipyard plans Rs 100cr IPO

31st May 2005: ABG Shipyard will launch an initial public offer of shares later this year to raise Rs 100 crore ($23 million) to fund its capacity expansion, the company said late on Monday. The Mumbai-based shipbuilder, who has received Rs 140 crore by way of private equity funding, aims to expand its facilities by 2007 at a cost of Rs 450 crore.

ABG received the funding in return for a sale of a near 27% stake in the company to Standard Chartered private equity and Leverage India fund, which is managed by IL&FS Investment Managers Ltd. Standard Chartered made the investment in ABG through Merlion India fund, which it manages along with Singapore's state investment arm, Temasek Holdings.

Vishal Exports plans bonus issue

31st May 2005: Vishal Exports Overseas Ltd. informed the National exchange today that its board would meet on June 14 to consider a bonus share issue and an issue of global depositary receipts or American depositary receipts.

Dabur India allotted 62,500 equity shares under ESOS

30th May 2005: Dabur India Ltd has informed BSE that the Remuneration cum Compensation Committee of the Board has approved by way of resolution by circulation effective May 30, 2005 the allotment of 62,500 fully paid Equity Shares of Re 1 each for cash at par to the employees of the Company upon exercise of 62,500 options vested in them in terms of Employees Stock Option Scheme (ESOS) of the Company.

IOL Broadband to issue 20 lakh pref shares

30th May 2005: The board of directors of IOL Broadband at its meeting held on May 28, 2005, has approved the issue of equity shares on a preferential basis. According to a release issued by IOL Broadband to the BSE, the company is to issue upto 20 lakh equity shares of Rs 10/- each in one or more tranches to specified investors at a price of Rs 11/- per share.

The preferential issue of the equity shares shall be subject to necessary approvals of the shareholders of the company, the release said. The company also informed that the board of directors has resolved to convene an EGM of the shareholders of the company on June 24, 2005, the release further added.

Kotak Mahindra Bank allots 39,800 shares under Esops

30th May 2005: Kotak Mahindra Bank on Monday said it has allotted 39,800 shares as stock options to employees of some of its subsidiaries. The Bank has allotted 39,800 equity shares as stock options to employees of some subsidiaries, in accordance with SEBI Guidelines, 1999, at an exercise price of Rs 200 per share; it informed the Bombay Stock Exchange.

Out of the total, 33% of the options are exercisable between June 1, 2006 and March 1, 2007, a further 33% between June 1, 2007 and March 1, 2008 and the balance 34% between June 1, 2008 and March 1, 2009, it said.

Pentamedia barred from selling more shares

28th May 2005: Pentamedia Graphics Ltd., an Indian animation studio, has been barred by the country's stock market regulator from selling additional shares until further orders after it received complaints against the company's share transfer agents.

The Securities & Exchange Board of India received complaints from a branch of the Oriental Bank of Commerce, a state-owned lender, against the agent Cameo Corporate Services Ltd. based in the southern city of Chennai, regarding the company's share certificates, the regulator said in an e-mailed statement yesterday.

“The information so far collected by SEBI has raised doubts regarding the genuineness of the share certificates in question,'' the statement said. Pentamedia “is directed not to issue any further shares or alter its share capital in any manner until further directions.” The company and its directors have been barred from issuing any further shares or alter its share capital for the time being, the statement said.

Infosys underwriters buys additional ADSs

28th May 2005: The underwriters to the sponsored secondary ADS offering of Infosys Technologies, have exercised their over allotment option. As per the release issued by Infosys to the BSE, the underwriters have purchased up 2,000,000 ADSs, representing 2,000,000 equity shares at a price of $67.

Moschip Semiconductor - Allotment of equity shares under Stock Options Plan

28th May 2005: Moschip Semiconductor Technology Ltd has informed BSE that the Board of Directors of the Company has allotted 22,125 equity shares through circular resolution on May 26, 2005 under the Stock Options plan 2001 & 2002 of the Company.

Hongkong and Shanghai Banking Corporation Ltd (HSBC) may foray into insurance

28th May 2005: HSBC is keen on setting up an insurance subsidiary in India. About 10% of the British banking group’s revenue comes from the insurance business. “We would like to set up a subsidiary to enter both the life and the non-life insurance businesses. We are constantly talking to the regulators,” said Stephen K Green, group chief executive of the firm’s holding company, HSBC Holdings Plc. He was recently in Hong Kong to attend the group’s customary informal annual general meeting of shareholders in its previous headquarters.

HSBC made headway into the Chinese insurance market in 2002 when it picked up 10% stake in China’s second largest life insurance company, Ping An Insurance. Recently, HSBC entered into agreements to increase its stake in Ping An from 10% to 19.9% with an investment of $1.03 billion. HSBC wants to enter the insurance business across the Asia Pacific region, said Michael R P Smith, president and chief executive officer of the HongKong and Shanghai Banking Corporation Ltd, the Asia Pacific wing of the banking company.

Asked if HSBC's entry into insurance is conditional on the Indian government lifting the FDI cap in the sector from 26% to 49%, said Smith, "We are not too worried about the FDI cap. It would be better if the cap is lifted but even otherwise we would like to enter into the manufacturing of insurance products. We are evaluating it at the moment." HSBC plans to be different from the existing 14 private insurance players in India by adopting the bancassurance model.

"Bancassurance will be the differentiating factor for us. We are a great believer in bancassurance. When you get it right, it can be a great driver," said Smith. HSBC has 40 branches across India through which it plans to sell insurance products. HSBC customers hold more than 7 million insurance policies in over 40 countries.

Satguru Agro - Post Offer Status

28th May 2005: Keynote Corporate Services Ltd ("Manager to the Offer") on behalf of Shri Bharatbhai V Changela ("Acquirer") alongwith Mr. Atulkumar Patel, Mr. Bhagwanjibhai Patel, Mr. Vallabhbhai Patel, Mr. Dineshbhai Kalavadia, Mr. Prafulkumar Kalavadia, Mr. Sureshbhai Vamja, Mr. Vinubhai Changela ("PACs") has issued the Post Offer Public Announcement to the equity shareholders of Satguru Agro Industries Ltd ("Target Company"). The details subsequent to the completion of the Offer made vide Public Announcement dated December 20, 2004 pursuant to and in compliance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulation, 1997 and subsequent amendments thereto, to acquire upto 8,99,000 equity shares representing 20.00% of the paid-up equity capital of the Target Company at a price of Rs 1.40 per fully paid up equity shares payable in cash are as under:

------------------------------------------------------------------------------------------------------------
            Particular                                                 Proposed in the          Actuals
                                                                           Offer                          document
------------------------------------------------------------------------------------------------------------

1. Offer Price                                                       Rs 1.40                       Rs 1.40

2. Shares acquired in the open offer                      8,99,000 (20.00%)        42,600 0.95%)
3. Post Offer shareholding of acquirer / PACs       31,04,600 (69.07%)        22,48,200 (50.02%)
------------------------------------------------------------------------------------------------------------

Dr Reddys Laboratories - Grant of Options

28th May 2005: Dr Reddys Laboratories Ltd has informed BSE that the Company has granted following Stock Options:

1. 178,560 stock options at an exercise price of Rs 5, which is the par value of the shares of the Company and

2. 32,500 stock options at an exercise price of Rs 725, which is the Fair Market Value of the share of the Company as per Dr Reddy's Employee Stock Option Scheme, 2002.

The Shares covered by such options are 211,060.

The vesting period of these option is 25% options each year over a period of four years. The options may be exercised within a period of five years from the date of vesting.

Avance Technologies Board to consider stock split

28th May 2005: Avance Technologies Ltd has informed BSE that a meeting of Board of Directors of the Company will be held on June 03, 2005, to consider to split the nominal face value of the equity shares of the Company from Rs 10/- each fully paid up to Rs 1/- each fully paid, subject to the necessary approval of the shareholder's of the Company.

Indian Bank plans its maiden public offer in September

27th May 2005: Indian Bank would float its maiden public offer during September 2005, its Chairman and Managing Director M B N Rao said. The bank was planning to raise approximately Rs 200 crore from the capital market by charging a premium of Rs 50 per share. Rao said that the public issue would augment Tier I capital requirement, while the bank would also seek to hike Tier II capital by floating bonds during the current year. In the previous year, the bank raised Tier II capital by floating bonds worth Rs 300 crore. Post IPO, government shareholding would come down to 70% in Indian Bank.

Infosys prices ADS at $67

27th May 2005: Infosys Technologies today priced its sponsored American depository shares at $67 per ADS. The issue, including that to underwriters, is likely to fetch over $1 billion. The price of $67 per ADS is at a 2.5% discount to yesterday’s closing price of the company’s scrip on Nasdaq and is at a 34% premium to domestic share prices. The underwriters of the issue have seven days to exercise their option for 20,00,000 shares.

Over 14,500 investors offered more than 52 million shares, or over three times the total size of the sale. As their total holding was over 184 million shares, an allocation factor of 8.68 per cent had been arrived at, TV Mohandas Pai, chief financial officer of Infosys, told reporters. That is, 16 million means 8.68% of 184 million.

So, “for a shareholder who has tendered exactly 8.68% of his total holding, or less, all the shares tendered will be accepted. For a shareholder who has tendered more, the balance will be returned,” Pai explained. “This is a historic day for us, and for India,” Pai said, “as the offer is the first billion-dollar ADS from an Indian firm”.

Hotel Leela plans $85 mn FCCBs

27th May 2005: Hotel Leelaventure Ltd. plans to raise $85 million through foreign currency convertible bonds to fund its expansion plans, a senior company official said today. "The terms of the issue are under finalisation. The funds will be used for setting up new hotels in Hyderabad and Chennai," said Jairaj Nair, general manager, corporate finance at Hotel Leela. The company has not appointed any arrangers and issue will be self-arranged, he said.

State Bank of India (SBI) to raise $600 mn via bonds by June or July

25th May 2005: SBI, the country's largest bank, plans to raise $600 million through bonds in June or July to fund its overseas expansion, its chairman said today. The offering is part of SBI's $1 billion medium-term notes programme, of which the bank had raised $400 million in December through five-year bonds at a spread of 117.5 basis points over comparable U.S. Treasuries. "We would like to raise the balance funds quickly because our overseas balance sheet is expanding well," said A.K. Purwar.

When asked whether SBI had appointed arrangers to manage the bond issue, Purwar said the bank was working on it. Citigroup, HSBC and Deutsche Bank had managed its earlier issue. SBI, which manages about a fifth of all deposits and loans handled by commercial banks in India, has received permission from domestic authorities to set up a branch in Israel, and is awaiting approval from the Israel government, Purwar said. Earlier this year, SBI bought a 51% stake in Indian Ocean International Bank Ltd., Mauritius, for $8 million and is hunting for acquisitions in Asia and Africa to expand operations. SBI, owned 59% by the central bank, has some 9,000 branches across India and about 200,000 employees.

Municipal bond issues up to Rs 200 cr to be tax-free in FY06

25th May 2005: A substantial transition is in the offing for infrastructure investment in the country. Urban sector reforms, including water supply, roads, housing, energy and even sewage disposal, could be the next big news for the financial sector, as municipal bodies rush in with bond issues to mop up resources for funding these programmes.

The finance ministry has made municipal bond issues up to Rs 200 crore tax-free in ‘05-06. Government sources said the cap could also be raised in the course of the year, depending on the size of the applications. That is a big sum for the cash-strapped municipal bodies as they undertake large-scale projects to make the large metros livable. In ‘04-05, while Ahmedabad Municipal Corporation raised Rs 100 crore as tax-free bonds, Chennai Metropolitan Water Supply and Sewerage Board raised another Rs 50 crore from the debt market.

The focus on municipal bodies would also dovetail into the projected National Urban Renewal Mission, which would cover seven mega cities, 30 smaller cities and other important urban centres. A cabinet note is expected to be put up soon by the ministry of urban development. Simultaneously, to ensure fiscal discipline, the National Advisory Council has recommended drawing up fiscal responsibility legislation for the local governments in urban and rural areas. “The Union government may consider enacting legislation incorporating mandatory measures to promote fiscal prudence and accountability in local self-governments,” the high-powered body has advised the Union government.

The National Urban Renewal Mission projects a new thrust to social housing and is expected to encourage the states to address issues like repeal of the Urban Land Ceiling Act, the Rent Control Act and a corresponding reduction in the rates of stamp duty. According to government sources, the rising interest in funding the municipal sector is in line with international trends. In India, because of competing demands, financing of urban sector projects had not received due importance so far. But officials in infrastructure financing companies said the ease of recouping costs of service provided is making the municipal sector a viable investment avenue. This is in sharp contrast to the problems of levying user charges for cross-country infrastructure projects.

National Highway Authority of India (NHAI) floats Rs 2k-cr tenders for 5 projects

25th May 2005: NHAI, the highway development regulator has floated tenders for five road projects worth over Rs 2,000 crore, which are parts of NHAI’s Golden Quadrilateral project and East-West Corridor project.

NHAI has called bids for the four-laning of the 240-km Palanpur-Saroopgunj section in the Gujarat-Rajasthan route; six laning of the Badarpur elevated highway (NH2) in the Delhi-Haryana corridor; six-laning of (NH 8) Vadodara-Baruch road project; six-laning of Baruch-Surat (NH8); and the four-laning of the Tiruchi-Madurai (NH 45-B) which is a Rs 524-crore project. All these projects will be under the Build-Operate and Transfer (BOT) scheme of NHAI.

These projects are likely to be completed in the next 30 to 40 months. Given the heavy traffic load of about 20,000 to 25,000 passenger car units a day in all these stretches, NHAI anticipates a good response from the private sector. NHAI officials said that the authority would call bids for 10 more road projects in Andhra Pradesh and Karnataka in June. NHAI sources said that the on-going expansion and strengthening of the 125-km highway forming part of the Chennai-Tiruchi-Madurai four-laning project, would give a fillip to the economic growth and infrastructure development of its central and southern districts.

NHAI is also planning to take up four-laning of the Tindivanam-Tiruchi section under the BOT scheme. Given the heavy traffic load of about 20,000 to 25,000 passenger car units a day on this stretch, good response was anticipated for the contract from the private sector. Work on the Tiruchi-Madurai section, which caters to around 15,000 to 20,000 passenger car units a day, would be taken up with NHAI funds.

Galpha Laboratories plans Rs 50 crore IPO by September

25th May 2005: Galpha Laboratories is planning an Rs 50 crore initial public offering by September this year. The funds will be used for the company’s expansion plans in the domestic as well as global markets. Galpha, a player in the segments of nutritional supplements, antibiotics, gastro-intestinal and pain management formulations, plans to pick up potential brands as part of its market expansion plan. Besides, it proposes to set up a facility to cater to the regulated markets overseas.

Galpha was established in 1986 in the field of pharmaceutical marketing. It started its operations in the eastern and north eastern markets in the country with a handful of products. It strengthened its product portfolio with the introduction of a range of nutritional products under its flagship brand —B-Colen. The company entered into the antibiotics segment with the Odicef brand, which is now a brand leader.

According to company sources, Galpha has around 100 products in its portfolio and has a sales team of about 600. The company is now setting up its new formulation facility at Baddi in Himachal Pradesh, which is expected to be commissioned soon. With the recent launch of an exclusive export division, Galpha has chartered out its course to be a global player by exporting various products to the developing countries.

Patni Computer allots 25,775 equity shares under ESOP

25th May 2005: Patni Computer Systems Ltd has informed BSE that the Compensation Committee of the Company vide circular dated May 20, 2005 allotted 25,775 Equity Shares of par value of Rs 2/- each to certain employees of the Company pursuant to exercise of the options granted to them under the Company's Stock Option Plan 2003 (Patni ESOP 2003).

HCL Infosystems has allotted 2,385 equity shares under ESOS

25th May 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 2385 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme'(ESOS).

Interface Financial Services Board approves stock split

25th May 2005: Interface Financial Services Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 24, 2005, has approved a proposal to split the equity shares of the Company currently of the face value of Rs 10/- into 10 equity shares of the face value of Re 1/- each subject to the necessary approval of the members at the Extra Ordinary General Meeting of the Company scheduled to be held on June 25, 2005.

Insurance Regulatory and Development Authority (IRDA) sets new online training norms

25th May 2005: IRDA today issued a 26-point guideline for on-line agents training institutes which stipulates at least 100 hours of training in life or non-life insurance. IRDA has said the institutes must strictly adhere to the guidelines, which come into effect from today, or face punitive action like fine, suspension or cancellation of licence.

The applicants shall have to undergo at least 100 hours' training in life or general insurance business and the time allotted for composite training is 150 hours', where an applicant is seeking licence for the first time to act as an insurance agent, IRDA said.

The training duration should be for minimum 18 days for 100 hours' and 27 days for 150 hours training with maximum six hours per day. Similarly, the duration should be minimum 9 days for 50 hours training and five days for 25 hours at the time of renewal with maximum six hours per day, it said.

The guidelines said no product training or market survey should be included in this 150 or 100 or 50 hours' training, but revision examination might form part of it. Every institute should have at least one qualified faculty who is an Associate or Fellow from the Insurance Institute of India for each stream to solve the online queries of students. The initial approval will be for one year and consideration of further renewal will depend on compliance level of rules and regulations during the period of approval.

Aarvee Denims & Exports allots 3.4 mn preferential shares

25th May 2005: Textile manufacturer Aarvee Denims & Exports said today that it would make a preferential allotment of 3.37 million shares to a German development financial institution for $6.7 million. The sale at Rs 86 a share to Deutsche Investitions-und Entwicklungsgesllschaft mbH is part of a 4.5 million preferential allotment totaling Rs 38.7 crore ($8.9 million), the company told the Bombay exchange. The Ahmedabad-based company will allot 1.12 million shares to its founders at the same price, it said. Aarvee's board also approved an increase in its authorised share capital to Rs 50 crore from Rs 35 crore.

Rubfila International - Open Offer

24th May 2005: Chartered Capital & Investment Ltd ("Manager to the Offer") on behalf of M/s Rubpro Sdn. Bhd. (Rubpro), Ms. Annie Guat Khuan Chew, Mr. Barry Yates, Mr. Christopher Chong, Mrs. Minal Bharat Patel, Mrs. Bharati Bharat Dattani, Mr. Dhiren Shah ("Acquirers") and Mr. M Jayabalan ("Person Acting Concert") pursuant to Regulation 10 and 12 as required under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, ("SEBI (SAST) Regulations, 1997") and subsequent amendments thereto has announced as below:

The Offer:

The Acquirers & PAC are making an offer to the public shareholders of Rubfila International Ltd ("Target Company") to acquire 63,36,742 equity shares of the Target Company, representing in the aggregate 20% of the issued and subscribed paid up equity share capital of the Target Company at a price of Rs 4/- per share payable in cash subject to the terms and condition.

Schedules of Activities

Specified Date : May 24, 2005

Date of Opening of the Offer : July 15, 2005

Date of Closing of the Offer : August 03, 2005

Grant of exemption for proposed acquisition of shares of Shricon Industries Ltd.

24th May 2005: SEBI has passed an order dated March 21, 2005 granting exemption to Arani Agro Oil Industries Ltd. (acquirer) from complying with requirement of Regulation 15 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, with regard to making public announcement in the case of the proposed acquisition of equity shares of Shricon Industries Ltd. (SIL) from the public shareholders under regulations 10 and 12 subject to certain conditions.

Ref: PR No.64/2005, dated March 29, 2005

Grant of exemption for proposed acquisition of shares of ITI Limited

24th May 2005: SEBI has passed an order dated March 23, 2005 granting exemption to the acquirer viz. Union of India from making an open offer under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 in the matter of proposed acquisition of shares of ITI limited (ITI).

Ref: PR No.63/2005, dated March 29, 2005

Satyam Computer - Conversion of Stock Options

24th May 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 24,027 equity shares through circular resolution on May 24, 2005 under stock option plans of the Company.

Hindustan Construction - Delisting of equity shares from CSE

24th May 2005: Hindustan Construction Company Ltd has informed BSE that the Equity shares of the Company has been voluntarily delisted from The Calcutta Stock Exchange Association Ltd (CSE).

Yokogawa India - Transfer of shares under ESOS

24th May 2005: Yokogawa India Ltd has informed BSE that as per the Employee's Stock Option Scheme (ESOS) 1997, Yokogawa India Ltd Employees Welfare Trust has transferred 37,000 shares to the respective beneficiaries account on their request.

Indian shareholders to benefit from ADR: Sify

24th May 2005: The proposal for American Depository Receipts (ADRs) by Nasdaq-listed Sify is aimed at creating "liquidity" for its Indian shareholders, according to a top company official. "We are not listed on the Indian stock markets. Hence, we want to provide liquidity to our Indian shareholders by converting the Indian shares into ADRs," R Ramaraj, CEO and MD of Sify, said.

Sify proposal for ADRs is pending with the foreign investment promotion board (FIPB) as it would result in FDI upto 100%. Currently, the foreign equity in Sify stands at 58%. The ADR proposal had led to speculation that Satyam Computers, which holds about 32% stake in Sify, may be planning to offload its stake in the venture. However, Ramraj ruled out any such plans by Satyam. "The intention is to give a liquidity option to Indian shareholders," Ramraj said.

The other major Indian shareholder in Sify is venture capital fund Venture Tech, which holds less than 7% stake in the internet firm. The ADR proposal was deferred by the FIPB at the behest of the department of telecom, which is reviewing FDI in internet service providers (ISPs).

Sasken Communication Technologies files red herring prospectus

23rd May 2005: Sasken Communication Technologies has filed its draft Red Herring Prospectus (RHP) with the Securities Exchange Board of India, the stock market regulator in the country, for an initial public offer (IPO) of its equity shares, to be listed on the stock exchanges in Mumbai. Sasken aims to raise "over Rs 100 crore" via the offer, chairman and chief executive officer, Rajiv C Modi, has said.

The announcement comes on the heals of a fresh round of investments in the firm, this time by MVC VI & FVCI Limited, a firm in which New Enterprise Associates, a US based venture fund has an interest. MVC has taken an eight per cent stake in the firm for $9 million, according to the RHP. This brings the total venture funding in Sasken to about $26 million to date.

The telecom R&D outsourcing partner to global hardware firms will issue 50 lakh shares of face value of Rs 10 each. This constitutes 18.17% of the fully diluted post-issue paid-up capital of the firm, the RHP says. Of these, 45 lakh (16.36%) will be set aside for the public and offered entirely through book building. The rest will be reserved for the firm's employees. Enam Securities has been chosen as the book running lead manager for the offer.

The firm's promoters intend to use money raised through the offer to both increase overall business and boost the share of its products division in revenues and profits. Currently, telecom R&D services are the mainstay of Sasken's revenues and profits. The expansion could entail trebling headcount to over 3,000.

Satyam Computer - Conversion of Stock Options

23rd May 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 207,327 equity shares through circular resolution on May 23, 2005 under stock option plans of the Company.

JMT Auto to consider raising funds through rights issue or share offer

23rd May 2005: The board of automobile parts maker JMT Auto will meet on May 28 to consider raising funds either through rights issue or by way of share offer, the Bombay Stock Exchange (BSE) said today.

Infotech Enterprises allots 65,659 shares under stock option plan

23rd May 2005: Infotech Enterprises Ltd has informed BSE that the compensation committee of Directors has allotted 65,659 equity shares to the employees who exercised the stock options granted to them under Infotech ASOP 2001 & Infotech ASOP 2002.

Faze Three Board approves stock split

23rd May 2005: Faze Three Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 21, 2005, has approved the sub-division of existing equity shares of the face value of Rs 10/- each into 5 equity shares of the face value of 2 each, subject to the approval of the members and consequently amending Memorandum & Articles of Association of the Company.

ICICI Bank has allotted 1,94,366 equity shares under ESOS

23rd May 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 194,366 equity shares of face value of Rs 10/- each on May 16, 2005 under the Employees Stock Option Scheme, 2000 (ESOS).

Agro Dutch Board to consider Rights Issue

23rd May 2005: Agro Dutch Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 01, 2005, to consider the rights issue of the equity shares of the Company.

HDFC Bank's Esops aimed at motivating employees

23rd May 2005: HDFC Bank plans to seek shareholders’ approval to allow its board of directors to participate in employees’ stock option schemes. The move comes at a time when the RBI has not cleared similar proposals mooted by a few other private sector banks. Though the Securities and Exchange Board of India (Sebi) rules permit companies to offer stock options to all directors, the central bank has not been in favour of such a move.

The Banking Regulation Act gives RBI sweeping powers over all forms of remuneration. HDFC Bank has in a notice to its shareholders said, “The present as well as future employees in the cadre of officers to the managing director, as well as the board of directors of the bank, will be entitled to participate in the ESOS, subject to the applicable regulatory requirements and guidelines.”

Remuneration to the directors on the boards of banks is governed under Section 35 of the Banking Regulation Act. The RBI has to approve all proposals for remuneration to the board members. Earlier, a few private sector banks had approached RBI for granting employee stock options to independent directors too. Companies like Infosys Technologies grant employee stock option plans (Esops) to their independent directors.

Esops are used by companies to retain talent in the organisation. Most of the bigger private sector banks use this route in order to retain their talent, especially among the senior level. HDFC Bank has said that the ESOS was aimed at motivating employees and thus improving the profitability of the bank.

UCO Bank members to approve delisting of equity shares from CSE

21st May 2005: UCO Bank Ltd has informed BSE that an Annual General Meeting of the members of the Bank will be held on June 10, 2005, inter alia, to accord to the Board to delist the Bank's Equity shares from the Calcutta Stock Exchange Association Ltd (CSE) at Kolkata.

Amtek Auto to issue $150mn FCCBs

21st May 2005: The members of Amtek Auto, at their EGM held yesterday, have decided to issue foreign currency convertible bonds (FCCBs) of $150 million. According to a release issued by Amtek Auto to the BSE, the members have increased the borrowing limit of the company from Rs 1,000 crore to Rs 2,000 crore.

Wipro allots 12,300 equity shares under ESOS

21st May 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective May 19, 2005 resolved to issue & allot 12300 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

Alok Industries raises $60mn through issue of FCCBs

21st May 2005: Alok Industries has raised $60 million through the issue of 1%unsecured Foreign Currency Convertible Bonds (FCCBs). According to a release issued by Alok Industries to the BSE, the company accordingly has issued and allotted 1200 FCCBs at face value of $50,000 each. The issue also carries a greenshoe option of $10 million exercisable within a period of one month from the listing of the FCCBs.

Order in respect of BSE (Corporatisation and Demutualisation) Scheme, 2005

21st May 2005: Order under Section 4b (6) Read With Section 4b (7) Of The Securities Contracts (Regulation) Act, 1956 In The Matter Of The BSE (Corporatisation And Demutualisation) Scheme, 2005.

S. O. 684(E). 1.0 BSE (also known as ‘The Stock Exchange, Mumbai’) is an Association of Persons and a recognised stock exchange having its principal place of business at Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai 400 001. It is required to be corporatised and demutualised under the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as ‘the SC(R)A’).

1.1 BSE, vide its letter dated 9th March, 2005, submitted a Scheme for its corporatisation and demutualisation for approval to the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) in terms of sub-section (1) of section 4B of the SC(R)A. SEBI made enquiries and obtained further information from BSE through meetings with the officials of BSE and the BSE Broker’s Forum. Vide letter dated 23rd March 2005, SEBI communicated its observations on the said Scheme to BSE and advised it to resubmit the Scheme after considering the said observations.

1.2 SEBI made further enquiries from BSE and explained its observations to BSE through meetings with its officials on 24th March and 27th March 2005. BSE, vide its letter dated 30th March 2005, submitted a revised Scheme. It was noted that while this Scheme, inter alia, provided for the succession of BSE being an Association of Persons by a company to be incorporated under the Companies Act, 1956 under the name and style of the ‘Bombay Stock Exchange Limited’ for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities as recognized stock exchange and segregation of ownership and management from the trading rights of the members, it did not provide for certain matters required for the purpose of and in connection with the corporatisation and demutualisation of BSE as observed by SEBI vide its letter dated 23rd March, 2005. The observations made by SEBI included the following:

a. Voting Rights: The voting rights of a shareholder, who is also a trading member along with that of persons acting in concert with him, may be restricted to 5%.

b. Trading Members: Only those members, who are registered with SEBI under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 may be trading members of the demutualised stock exchange.

c. Board Composition: The Governing Board, on or after due date, may be constituted in accordance with the provisions of the Articles of Association of Bombay Stock Exchange Limited in force from time to time, provided that -

i. the representation of trading members does not exceed 1/4th of the total strength and the remaining directors are appointed in the manner as may be specified by SEBI from time to time,

ii. the Chief Executive, by whatever name called, is an ex-officio director, and

iii. SEBI shall have the right to nominate as many directors on the Governing Board, as and when deemed fit, irrespective of the size of the Governing Board.

d. Utilisation of Assets and Reserves: Bombay Stock Exchange Limited may not do anything contrary to the provisions of section 4B (3) of the SC(R)A. It may not use the assets (other than current assets) of BSE transferred to it or the proceeds from disposal of such assets or the proceeds from disposal of successive species of assets acquired from the proceeds of disposal of such assets for any purpose other than the business operations of the stock exchange.

e. Uniform Standards: Uniform standards may be followed for admitting any person as a trading member of the exchange or accepting his surrender. All trading members may have similar rights and privileges.

1.3 Therefore, vide letter dated 15th April 2005, SEBI advised BSE to submit the Scheme in conformity with the observations made by SEBI. SEBI made further enquiries and explained the observations to BSE through the meetings on 26th, 27th and 28th April 2005. BSE finally submitted a revised Scheme (hereinafter referred to as ‘the Scheme’) vide its letter dated 2nd May 2005.

2.0 Submissions of BSE on the Observations of SEBI

2.1 Voting Rights: Vide letter No. BSE/ED/084/05 dated 4th May, 2005, BSE has submitted that the restriction on voting rights should not be applicable to Public Financial Institutions as defined under section 4A of the Companies Act, or otherwise they would not be able to participate in the disinvestment as they generally have subsidiaries which are brokers. This is necessary to avoid any problems pertaining to interpretation of the term "persons acting in concert" at a later date and to facilitate the leading Public Financial Institutions to acquire a strategic stake in the equity of the exchange.

2. 2 Trading Members: A few Members are not registered with SEBI under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, but will nevertheless become trading members on corporatisation and demutualisation. However, in accordance with Rule 3 of the SEBI (Stock Brokers and Sub-Brokers) Rules, 1992, such Members would not be able to buy, sell or otherwise deal in securities until they are registered with SEBI. Therefore, the trading members should be a stock broker or a trading member or clearing member of any segment of the exchange.

2.3 Board Composition: BSE Scheme did not include the provisions: (i) the remaining directors are appointed in the manner as may be specified by SEBI from time to time, and (ii) SEBI shall have the right to nominate as many directors on the Governing Board, as and when deemed fit, irrespective of the size of the Governing Board. In this regard BSE has submitted that the manner of appointment of remaining directors will be provided in the Articles. The rules of BSE and other Exchanges provide for the number of SEBI nominees on Governing Board.

2.4 Utilisation of Assets and Reserves: BSE has submitted that the purport of this observation is not clear and it appears to impose restrictions on the exchange which are not required under the SC(R)A nor is otherwise justified. The Scheme does not provide for any of the matters prohibited in section 4B (3) of the SC(R)A.

2.5 Uniform Standards: BSE has accepted the observation of SEBI. However, it has suggested modified clause which appears to give perpetual preferential treatment to the existing members, as they used to have so far.

 

3.0 Consideration of the Scheme and the Submissions of BSE

The Scheme of BSE, the information submitted by it and the other submissions of BSE have been considered. It is noted that the Scheme provides for most of the matters required for and in connection with its corporatisation and demutualisation. The findings in respect of the submissions of BSE are as follows

3.1 Voting Rights: Section 4B (6) of the SC(R)A provides that SEBI may, inter alia, restrict the voting rights of the shareholders who are also stock brokers of the recognized stock exchange. SC(R)A does not provide for differential treatment amongst the shareholders who are stock brokers with respect to voting rights.

3.2 Trading Members: The members of BSE, who do not have certificate of registration from SEBI, may include the persons who are not ‘fit and proper’ to be registered under the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 read with SEBI (Criteria for Fit and Proper Person) Regulations, 2004 or whose certificate of registration has been cancelled by SEBI or those who are not interested to trade on the demutualised stock exchange. It is not desirable to have such unregistered persons as trading members in an exchange and by virtue of the same, as representatives of trading members on the Governing Board of Bombay Stock Exchange Limited. If such persons wish to be trading members, they should have SEBI registration.

However, taking into consideration the submission of BSE, such members may, within 3 months from the due date, obtain SEBI registration. Therefore, a suitable provision has been made in the Scheme.

 

3.3 Board Composition: The corporatised and demutualised stock exchange will be functioning in a dual capacity i.e. as a Self Regulatory Organization and a profit-making company. In such a case, the conflict of interest, which corporatisation and demutualisation as enshrined in the SC(R)A intends to avoid, may creep in. Therefore, demutualised stock exchange needs to be effectively regulated. Further, a Stock Exchange is a State under Article 12 of the Constitution and hence amenable to writ jurisdiction. Therefore, it is necessary for SEBI to ensure the highest standards of governance in stock exchanges. The Scheme should contain a specific reference to regulatory powers of SEBI and SEBI should, in the interest of trade and public interest, have express powers in-built in the Scheme to make or amend the rules of the Bombay Stock Exchange Limited including that of the constitution and powers of the Governing Board. Hence, the clause relating to Board composition is required to be modified to retain the powers of SEBI to appoint or nominate directors as and when deemed fit. A suitable provision has been made in the Scheme accordingly.

3.4 Utilisation of Assets and Reserves: It is the spirit of section 4B (3) of SC(R)A that the assets and reserves of the exchange should not be used for the benefit or enrichment of the trading members at any point of time and should be used only for exchange operations. This is to ensure that the assets and reserves built from the support of the public system are used only for public purpose and that the Exchange continues to operate as an exchange. Such assets and reserves should also not be used for the benefit or enrichment of any particular section, for example the shareholders / stock brokers of the exchange. It is, therefore, imperative to ensure that the existing assets and reserves transferred from the erstwhile exchange are utilised only for the operations of the exchange. The shareholders / trading members should not have option to take away the assets and reserves inherited by the demutualised exchange. The requirement of use of assets and reserves only for exchange operations would give the necessary comfort to the new investors during the process of disinvestment / initial public offer. This would bring discipline in the management. Further, such provision would ensure the functioning of the stock exchange in performing its duty as a self-regulatory organization as well as a for-profit company. Hence, it is felt that it is in the interest of trade and in the public interest that the assets and reserves (other than current assets) of BSE are used by the demutualised exchange only for exchange operations. Therefore, a suitable provision has been made in the Scheme.

3.5 Uniform Standards: Demutualisation means segregation of membership into ownership right and trading right. The members would become shareholders of the demutualised exchange and may also become trading members. The trading rights of these shareholders who are also trading members should rank pari passu with the trading rights of any other trading member. After Corporatisation and Demutualisation, there will be only one class of trading members with similar rights and privileges. Any additional privileges given to existing members who become trading members would create value to the trading rights of such members. Therefore, uniform standards should be followed in terms of capital adequacy, deposits, fees, etc while admitting any person as a trading member or accepting his surrender. Though all members must have similar rights and privileges, keeping in view the submissions of BSE and for limited purpose of facilitating the smooth transition, the Scheme is modified to allow additional privileges to the existing members with the prior approval of SEBI.

3.6 BSE has provided that upon transfer of the duties and functions of the clearing house of BSE to the clearing corporation, all the members of BSE should be admitted as clearing members of the clearing corporation, so as to enable the members to clear the trades in the same manner as is presently being done by them. It is felt that by virtue of such provision the existing trading members shall automatically become members of the clearing corporation without requiring them to qualify or comply with the prescribed requirements of the clearing corporation. The clearing corporation will have its own rules which will be approved by SEBI at the time of their recognition. The clearing members will have to separately qualify and comply with the rules of clearing corporation. Therefore, the provision has been suitably modified.

4.0 In view of the above, SEBI is satisfied that it would be in the interest of trade and also in the public interest to approve the Scheme with certain modifications as mentioned above in consonance with the object of the SC(R)A. Accordingly, the Scheme is hereby approved with the following conditions in terms of section 4 B (6) of the SC(R)A:

a. Voting Rights: On and from Due Date, no Shareholder, who is a trading member, shall have voting rights (taken together with voting rights held by him and by persons acting in concert with him) exceeding 5% of the voting rights in Bombay Stock Exchange Limited.

b. Board Composition: The Governing Board, on or after Due Date, shall be constituted in accordance with the provisions of the Articles of Association of Bombay Stock Exchange Limited in force from time to time, provided that -

(i) the representation of Trading Members does not exceed one-fourth of the total strength of the Governing Board, and the remaining directors are appointed in the manner as may be specified by SEBI from time to time, and

(ii) the Chief Executive, by whatever name called, is an ex-officio director.

Nothing contained in this condition shall preclude SEBI from nominating directors on the Governing Board as and when deemed fit.

4.1 The approved Scheme is enclosed as Annexure A.

5.0 Compliance and Monitoring

BSE and Bombay Stock Exchange Limited, as the case may be, shall ensure compliance with the Scheme within the time as specified in the Scheme and shall not do anything contrary to the provisions of Scheme and submit compliance report to SEBI in the manner as may be specified by SEBI.

6.0 SEBI reserves its rights to amend, alter or modify the Scheme in the interests of trade and public interest and in furtherance of the objectives of the corporatisation and demutualisation of the stock exchange.

7.0 The Scheme shall come into effect on the day of its publication in the Official Gazette.

F. No. SEBI/MRD/ 40967 /2005

 

M. DAMODARAN

CHAIRMAN

SECURITIES AND EXCHANGE BOARD OF INDIA

Place: Mumbai

Date : May 20th 2005

 Encl: Annexure A

 


Annexure-A

The BSE (Corporatisation and Demutualisation) Scheme, 2005

Index

S.No.

Topic

1

Title and Commencement

2

Definitions

3

Incorporation of Bombay Stock Exchange Limited

4

Governing Board of Bombay Stock Exchange Limited

5

Allotment of Shares of Bombay Stock Exchange Limited

6

Listing of Shares of Bombay Stock Exchange Limited

7

Transfer to Bombay Stock Exchange Limited

8

Trading Rights

9

Demutualisation

10

Voting Rights

11

Dissolution of BSE

12

Rules, Bye-Laws and Regulations of Bombay Stock Exchange Limited

13

Clearing Corporation of Bombay Stock Exchange Limited

14

Utilisation of Assets and Reserves

15

Compliance with the scheme

16

Power to Relax Provisions of this Scheme

THE BSE (Corporatisation and Demutualisation) Scheme, 2005

1. Title and Commencement

1.1 This Scheme shall be called The BSE (Corporatisation and Demutualisation) Scheme, 2005 (hereinafter referred to as "this Scheme").

1.2 This Scheme shall have effect on its publication under sub-section (4) of Section 4B of the Securities Contracts (Regulation) Act, 1956.

1.3 BSE shall be corporatised and demutualised in accordance with this Scheme on and from the appointed date as may be notified by the Securities and Exchange Board of India (SEBI) in respect of BSE under Section 4A of the Securities Contracts (Regulation) Act, 1956.

Provided that the activities specified in the respective clauses of this Scheme shall be implemented as per the time schedule specified in those clauses.

2. Definitions

In this Scheme, unless the context otherwise requires, -

2.1 "Bombay Stock Exchange Limited" means the company incorporated in pursuance of clause 3 of this Scheme for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities as a recognized stock exchange and to succeed BSE.

2.2 "BSE" means the stock exchange also known as "The Stock Exchange, Mumbai", an unincorporated association of persons having its principal place of business at Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai, which has been recognized by the Central Government under the Securities Contracts (Regulation) Act, 1956 by and under notification No. 17/2/56-SE/EAD dated August 31, 1957, and whose name has been changed to BSE pursuant to the approval granted by SEBI by its letter No.SMD/SEAID-I/BSE/592/02, dated 10th January, 2002.

2.3 "Due Date" means the date, as may be determined by the Governing Board of BSE, which shall not be later than 3 months from the date of publication of the order under sub-section (7) of section 4B of the Securities Contracts (Regulation) Act, 1956.

2.4 "First Shareholders" means the fifty Members, selected by the Governing Board of BSE, who will subscribe to the Memorandum of Association and Articles of Association of Bombay Stock Exchange Limited for the purpose of its incorporation.

2.5 "Governing Board" means the Board of Directors of Bombay Stock Exchange Limited.

2.6 "Member" means a person who is a member of BSE as per the register of members maintained by BSE under Rule 64 of the Rules, Bye-Laws and Regulations, 1957 and does not include a Limited Trading Member of BSE.

2.7 "Record Date" means the date, prior to the Due Date, fixed by the Governing Board of BSE for determining the Members who will be entitled to shares of Bombay Stock Exchange Limited pursuant to clause 5 of this Scheme.

2.8 "Rules, Bye-Laws and Regulations, 1957" means the Rules, Bye-laws and Regulations, 1957 of BSE on the day preceding the Due Date.

2.9 "Rules, Bye-Laws and Regulations of the Derivatives Segment" means the Rules, Bye-laws and Regulations, 2000 of the Derivatives Segment of BSE on the day preceding the Due Date.

2.10 "Rules, Bye-Laws and Regulations of Bombay Stock Exchange Limited" means the Memorandum of Association, the Articles of Association and the Rules, Bye-laws and Regulations of Bombay Stock Exchange Limited including the Rules, Bye-laws and Regulations of any segment of Bombay Stock Exchange Limited.

2.11 "Shareholder" means a person who holds any equity share(s) of Bombay Stock Exchange Limited.

2.12 "Trading Member" means a stock broker or trading member or clearing member of any segment of Bombay Stock Exchange Limited and registered with SEBI as such under the SEBI (Stock Brokers and Sub-Brokers) Regulations 1992:

Provided that Bombay Stock Exchange Limited shall not have clearing members after the clearing function is transferred to a recognized clearing corporation under clause 13.1 of this Scheme.

2.13 Words and expressions used and not defined in this Scheme but defined in the Securities and Exchange Board of India Act, 1992, the Depositories Act, 1996, the Securities Contracts (Regulation) Act, 1956, the Companies Act, 1956, the rules and regulations made under these Acts, the Rules, Bye-Laws and Regulations, 1957 or the Rules, Bye-laws and Regulations of the Derivatives Segment shall have the same meanings respectively assigned to them in the above mentioned acts, rules, bye-laws and regulations.

3. Incorporation of Bombay Stock Exchange Limited

3.1 The First Shareholders shall incorporate a public company limited by shares under section 12 of the Companies Act, 1956 in the name and style of "Bombay Stock Exchange Limited".

3.2 The First Shareholders shall each subscribe to and pay for 10,000 fully paid-up equity shares of the face value of Re.1/- each for cash at par of Bombay Stock Exchange Limited.

4. Governing Board of Bombay Stock Exchange Limited

4.1 The first Governing Board shall comprise of such of the members of the Governing Board of BSE on the date of incorporation of Bombay Stock Exchange Limited as are named as first directors in the Articles of Association of Bombay Stock Exchange Limited, subject to the condition that the representatives of the Members do not exceed one-fourth of the total strength of the Governing Board.

4.2 The first Governing Board may hold office till Due Date.

4.3 The Governing Board, on or after Due Date, shall be constituted in accordance with the provisions of the Articles of Association of Bombay Stock Exchange Limited in force from time to time, provided that -

(i) the representation of Trading Members does not exceed one-fourth of the total strength of the Governing Board, and the remaining directors are appointed in the manner as may be specified by SEBI from time to time, and

(ii) the Chief Executive, by whatever name called, is an ex-officio director.

4.4 Notwithstanding anything contained in clause 4.3, SEBI may nominate directors on the Governing Board as and when deemed fit.

5. Allotment of Shares of Bombay Stock Exchange Limited

5.1 Every Member or his nominee, as the case may be, (other than the First Shareholders) as on the Record Date shall be entitled to 10,000 fully paid-up equity shares of the face value of Re.1/- each for cash at par of Bombay Stock Exchange Limited.

5.2 Every Member or his nominee, as the case may be, who has more than one membership card as on the Record Date, shall be entitled to additional 10,000 fully paid-up equity shares of face value of Re.1/- each for cash at par for every additional membership card held by him

5.3 Bombay Stock Exchange Limited shall allot the equity shares to the entitled Members or their nominees, as the case may be, by the Due Date.

Provided that the allotment to a Member suspended by BSE shall be held in abeyance till the suspension continues.

5.4 The invitation to subscribe to, and the offer, issue and allotment of equity shares of Bombay Stock Exchange Limited pursuant to this clause shall not be considered as being an invitation, offer, issue or allotment to the public.

6. Listing of Shares of Bombay Stock Exchange Limited.

Bombay Stock Exchange Limited may at any time list its securities on any recognized stock exchange.

7. Transfer to Bombay Stock Exchange Limited

Pursuant to this Scheme, on and from the Due Date,:

7.1 all assets, properties, undertakings, segments (including the Derivatives Segment), business, books, records, registers, funds, reserves, rights (including, in particular, intellectual property rights, leasehold rights, tenancy rights if any and all rights of nomination of former Members which have vested in BSE), powers, authorities, interests, privileges, exemptions, permissions, licenses, registrations and recognitions (including, in particular, the recognition of BSE as a recognized stock exchange under the Securities Contracts (Regulation) Act, 1956) of or belonging to or in the possession or control of BSE or to which BSE may be entitled, including those held by any trustees in trust for BSE or for the Members or Limited Trading Members of BSE and Trading Members and/or Clearing Members of the Derivatives Segment of BSE or for the objects and purposes of BSE, and including those vested in or held by any committee of BSE, shall stand transferred to and shall vest in and shall be in the possession or control of and shall become the entitlement of Bombay Stock Exchange Limited, and Bombay Stock Exchange Limited shall have the same right, title and interest therein or thereto as BSE and such trustees or committees had immediately prior to the Due Date.

7.2 all obligations and liabilities of BSE shall stand transferred to and shall become obligations and liabilities of Bombay Stock Exchange Limited.

7.3 Bombay Stock Exchange Limited shall, in place and stead of BSE, become a party to, and shall be bound by and entitled to, all contracts, agreements and other instruments to which BSE is a party or by which BSE is bound or to which BSE is entitled, and the same may be enforced and acted upon by or against Bombay Stock Exchange Limited accordingly.

7.4 all notices, actions, claims and proceedings (including all legal, quasi legal, revenue, disciplinary and arbitration notices, actions and proceedings and including also disciplinary, suspension, default, delisting and other notices, actions and proceedings by BSE to or against the Members or Limited Trading Members of BSE or Trading Members and/or Clearing Members of the Derivatives Segment of BSE, any companies and others) of, by or against BSE shall not abate and shall be deemed to be made, instituted or continued by or against Bombay Stock Exchange Limited in place and stead of BSE.

7.5 the employees of BSE shall become the employees of Bombay Stock Exchange Limited in place and stead of BSE on the same terms and conditions as existing immediately prior to the Due Date.

7.6 notices and circulars issued and acts done by the Governing Board of BSE shall, unless and until such notices and circulars are modified or rescinded by the Governing Board, continue to subsist in relation to Bombay Stock Exchange Limited and shall be deemed to have been issued and done by the Governing Board.

7.7 all resolutions passed and acts done by the Governing Board of BSE or general body of Members shall, unless and until modified or rescinded by Governing Board or general body of Shareholders of Bombay Stock Exchange Limited, as the case may be, continue to subsist in relation to Bombay Stock Exchange Limited and shall be deemed to have been passed and done by the Governing Board or general body of Shareholders of Bombay Stock Exchange Limited, as the case may be.

 

8. Trading Rights

8.1 A Member or a Limited Trading Member of BSE, who is registered as a stock broker on the day preceding the Due Date shall become a Trading Member of the Cash Segment of Bombay Stock Exchange Limited on the Due Date;

8.2 A Member who is not registered as a stock broker on the day preceding the Due Date shall become a Trading Member of the Cash Segment of Bombay Stock Exchange Limited on being registered as a stock broker under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 within 3 months from the Due date.

8.3 A Trading Member and/or a Clearing Member of the Derivatives Segment of BSE on the day preceding the Due Date shall become a Trading Member and/or a Clearing Member of the Derivatives Segment of Bombay Stock Exchange Limited on the Due date.

8.4 After the Due Date, a person desirous of becoming a Trading Member of any segment of Bombay Stock Exchange Limited shall be admitted if he complies with requirements and brings in specified fees and deposits as specified in the Rules, Bye-laws and Regulations of Bombay Stock Exchange Limited.

8.5 Bombay Stock Exchange Limited shall, for the purpose of admitting any person as a Trading Member of a segment, follow uniform standards in terms of capital adequacy, deposits, fees etc. irrespective of mode of acquisition of trading right by that person:

Provided that different standards may be followed for admission of a person as a Trading Member who has acquired trading right by way of transmission;

Provided further that different standards may be followed for admission of Trading Members in different segments.

8.6 A Trading Member may surrender his membership of any segment to Bombay Stock Exchange Limited in the manner specified in the Rules, Bye-laws and Regulations of Bombay Stock Exchange Limited

8.7 Trading Members of the Cash Segment of Bombay Stock Exchange Limited and the Clearing Members of the Derivatives Segment of Bombay Stock Exchange Limited shall clear and settle trades respectively till the clearing and settlement function is transferred to a recognized clearing corporation under clause 13.1 of this Scheme.

8.8 Irrespective of the date or mode of acquisition of trading right, the Trading Members in a segment of Bombay Stock Exchange Limited shall have uniform rights and privileges.

Provided that Bombay Stock Exchange Limited may, with the prior approval of SEBI, grant additional privileges to those Trading Members who were Members on the day preceding the Due Date.

8.9 Trading Members of Bombay Stock Exchange Limited on the Due Date shall continue to have the same rights and privileges in respect of their clients and constituents and other members arising out of or under any act, omission or contract or law, notification, order, direction, etc. as had accrued to them while being Members or Limited Trading Members of BSE or Trading Members and or Clearing Member of Derivative Segment of BSE on or before the Due Date.

8.10 Trading Members of Bombay Stock Exchange Limited shall be bound by all obligations and liabilities towards their clients and constituents, SEBI, BSE and other authorities or other persons arising out of or under any act, omission or contract or law, notification, order, direction, etc. while being Members or Limited Trading Members of BSE or Trading Members and or Clearing Members of Derivative Segment of BSE on or before the Due Date

9. Demutualisation

9.1 A Trading Member may or may not be a Shareholder.

9.2 A Shareholder may or may not be a Trading Member.

10. Voting Rights

10.1 Bombay Stock Exchange Limited shall ensure that atleast 51% of its equity shares are held by public other than shareholders having trading rights in the manner and within the period prescribed in sub-section (8) of Section 4B of the Securities Contracts (Regulation) Act, 1956.

10.2 On and from the Appointed Date, Bombay Stock Exchange Limited shall ensure that public other than shareholders having trading rights continuously hold at least 51% of equity shares.

10.3 On and from Due Date, no Shareholder, who is a Trading Member, shall have voting rights (taken together with voting rights held by him and by persons acting in concert with him) exceeding 5% of the voting rights in Bombay Stock Exchange Limited.

11. Dissolution of BSE

On and from the Due Date:

(i) Bombay Stock Exchange Limited shall be entitled to, and shall, commence business and operations as the successor of BSE; and

(ii) BSE shall stand dissolved.

12. Rules, Bye-Laws and Regulations of Bombay Stock Exchange Limited

12.1 The Rules, Bye-laws and Regulations, 1957 and the Rules, Bye-laws and Regulations of the Derivatives Segment of BSE on the day preceding the Due Date shall, unless contrary to or inconsistent with or excluded by this Scheme, apply to Bombay Stock Exchange Limited on and from the Due Date.

12.2 Bombay Stock Exchange Limited shall incorporate the provisions of this Scheme appropriately in the "Rules, Bye-laws and Regulations of Bombay Stock Exchange Limited" on or before the Due Date.

12.3 The "Rules, Bye-laws and Regulations of Bombay Stock Exchange Limited" may be amended after the Due Date in accordance with the applicable laws, provided that no such amendment is inconsistent with any provision of this Scheme.

13. Clearing Corporation of Bombay Stock Exchange Limited

13.1 Bombay Stock Exchange Limited shall, within one year of the Due Date, subject to the prior approval of SEBI, transfer the duties and functions of the clearing house of Bombay Stock Exchange Limited to a clearing corporation, being a company incorporated under the Companies Act, 1956 and recognized by SEBI as a clearing corporation under the Securities Contracts (Regulation) Act, 1956.

13.2 Until the duties and functions of the clearing house are transferred as provided in clause 13.1, the clearing and settlement functions in relation to trading on Bombay Stock Exchange Limited shall be carried out by the clearing and settlement mechanism as used by BSE or in such other manner as the Governing Board may determine.

14. Utilisation of Assets and Reserves

14.1 Bombay Stock Exchange Limited shall not do anything contrary to the provisions of section 4B (3) of the Securities Contracts (Regulation) Act, 1956.

14.2 Without prejudice to the generality of the provisions in 14.1, Bombay Stock Exchange Limited shall not use the assets and reserves (other than current assets) of BSE transferred to it under clause 7.1 of this Scheme or the proceeds from disposal of such assets or the proceeds from disposal of successive species of assets acquired from the proceeds of disposal of such assets for any purpose other than the business operations of the stock exchange.

15. Compliance with the scheme

15.1 BSE and Bombay Stock Exchange Limited, as the case may be, shall ensure compliance with the provisions of this Scheme at all times and shall not do anything contrary to the provisions of this Scheme.

15.2 Without prejudice to the generality of the provisions in 15.1, BSE and Bombay Stock Exchange Limited, as the case may be, shall continuously comply with the provisions in Clauses 4.3, 8.4, 8.5, 8.6, 8.8, 10.2, 10.3, and 14.

15.3 BSE and Bombay Stock Exchange Limited, as the case may be, shall report compliance with the provisions of this Scheme in such manner as may be required by SEBI from time to time.

16. Power to Relax Provisions of this Scheme

If any difficulty arises in giving effect to the provisions of this Scheme, SEBI may, at the written request of BSE or Bombay Stock Exchange Limited, as the case may be, relax any of the provisions of this Scheme.

The BSE (Corporatisation and Demutualisation) Scheme, 2005

21st May 2005: Pursuant to the requirements of the Securities Contracts (Regulation) Act, 1956, [SC(R)A] as amended in 2004, the Stock Exchange, Mumbai (BSE) submitted its Scheme for Corporatisation and Demutualisation to the Securities and Exchange Board of India (SEBI) for approval. SEBI, after following the due process and on being satisfied that it is in the interest of the trade and also in the public interest, approved the Scheme; with certain modifications vide Order dated May 20, 2005.  

The salient features of the Scheme are as follows:–

  • A for-profit company limited by shares under Section 12 of the Companies Act, 1956, in the name and style of Bombay Stock Exchange Limited (BSE Ltd.) shall be incorporated to succeed BSE.
  • The ownership and management of BSE Ltd. shall be segregated from the trading rights of the members.
  • Initially the membership cardholders of BSE shall become shareholders of BSE Ltd. and they may also become the trading members of BSE Ltd.
  • A limited trading member (Deposit based Member) of BSE also shall become a trading member of BSE Ltd.
  • After Corporatisation and Demutualisation, there will be only one class of trading members with similar rights and privileges and uniform standards shall be followed in terms of capital adequacy, deposits, fees, etc. while admitting any person as a trading member or accepting his surrender.
  • The Governing Board of BSE Ltd. shall be so constituted that the representatives of the trading members do not exceed one-fourth of the total strength of the Governing Board.
  • BSE Ltd. shall ensure that the existing assets and reserves transferred from BSE are utilised only for the operations of the corporatised and demutualised exchange. 
  • BSE Ltd. shall ensure that atleast 51% of its equity shares are continuously held by public other than shareholders having trading rights.

The Order and the Scheme have been submitted for publication in the Official Gazette.

The full text of the order and the scheme is available on our website: www.sebi.gov.in

Mumbai

May 20, 2005

Motor insurance claims ratio climbs to 180%

20th May 2005: The claim ratio for motor insurance in 2004-05 was estimated at 180% as compared to 150% in the previous year. This means that for every Rs 100 paid as premium, a claim of Rs 180 has been made. According to industry statistics, each claim has been in the range of Rs 1-1.5 lakh and one out of every four policy holders has met with an accident. The overall claims are estimated to be in the range of Rs 6,000 crore.

Credit rating agency Icra estimates that about 3.5 lakh accidents are reported annually in India, claiming 85,000 lives. The largest number of third party claims comes from commercial vehicles.

“Traditionally, claim ratios are the highest for motor insurance and that is normal as every one out of four policies is claimed,” an official source said. And, public sector general insurers take the maximum hit on motor portfolio. “Most private sector general insurers abstain from entering into motor insurance in a big way as it is a bleeding portfolio,” the source added.

To reduce the burden, the government was earlier planning to float a separate company for motor insurance to provide relief to the state-owned general insurance companies.

Icra assigns 'LAAA' to Power Grid Corporation (PGCIL) bond

20th May 2005: Credit rating agency Icra today reaffirmed the highest safety rating 'LAAA' to the Rs 5,500 crore long-term bonds of state-run transmission monolith Power Grid Corporation. Icra also reaffirmed the 'A1+' rating to the Rs 550 crore short-term debt and Rs 50 crore Commercial Papers of PGCIL, it said in a release. The ratings considered PGCIL's strategic role in the power sector, being responsible for developing inter-state transmission network and national grid management. It took into account the low level of operating risks in its core operations, a cost plus transmission tariff structure and superior operating efficiency, the agency said. The rating also factored the new tariff norms for 2004-09, PGCIL's sovereign ownership and the support from the government of India, Icra said.

Nucleus Software - Grant of Options

20th May 2005: Nucleus Software Exports Ltd has informed BSE that the Compensation Committee of the Board of Directors at its meeting held on May 10, 2005 granted options to the eligible employee of the Company. The numbers of options granted are 6250 and ordinary shares covered by the options granted are 6250 shares of Rs 10/- each. Exercise price is Rs 146/- per option and the vesting period is 3 years from the date of grant of options. The exercise of option is permitted upto a maximum period of 2 years after vesting of the option and shall lapse if not exercised with in such period.

Faze Three Board to consider stock split

20th May 2005: Faze Three Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held tomorrow i.e. May 21, 2005, to consider sub-division of face value of its shares, into shares of smaller denomination.

Electrosteel Castings Ltd. to raise $50mn via GDRs

20th May 2005: Electrosteel Castings Limited, manufacturer of ductile iron pipes, would raise GDRs to meet capital expenditure plans and part repayment of its existing loans. A company official said that the board would meet on June 3 to approve the GDR issue, adding that the company plans to raise $ 50 million from this route. The GDRs would be listed on the Luxembourg Stock Exchange. The company plans to expand the Khardah facility in West Bengal for which Rs 100 crore was required including working capital. The entire process was likely to be completed by middle of August.

Bharti Tele-Ventures drops ADR plans

20th May 2005: Bharti Tele-Ventures has dropped plans to issue American Depositary Receipts against existing shares due to lack of interest from key shareholders, it told the National Stock Exchange today. Bharti earlier had plans for an issue of up to 200 million shares under this route, it said.

Uttam Galva plans $60-mn FCCB or GDR issue

20th May 2005: Uttam Galva Steels Ltd said today that it will raise $60 million from overseas through issue of Foreign Currency Convertible Bonds or Global Depository Receipts. The Board of directors have approved the offer, issue and allotment of either FCCBs, GDRs, securities representing either equity shares or other offerings of up to an aggregate amount of $60 million, subject to the approval of the shareholders, the company informed the Bombay Stock Exchange.

HCL Technologies - Allotment of equity shares under ESOP

19th May 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company today has allotted 1,34,378 equity shares of Rs 2/- each (including 54,174 shares at a premium of Rs 125.50 per share, 3,114 shares at a premium of Rs 157.50 per share, 3,300 shares at a premium of Rs 194.50 per share, 4,850 shares at a premium of Rs 222.00 per share, 46,910 shares at a premium of Rs 233 per share, 250 shares at a premium of Rs 239.50 per share, 4,376 shares at a premium of Rs 249 per share, 7,654 shares at a premium of Rs 251.50 per share, 4,200 shares at a premium of Rs 281.50 per share, 5,550 shares at a premium of Rs 288 per share) to the employees on exercise of their Stock Options under the 1999 & 2000 Employee Stock Option Plans (ESOP).

Diana Tea members approve stock split

19th May 2005: Diana Tea Company Ltd has informed BSE that the members at the Annual General Meeting of the Company held today have accorded splitting of equity shares of the Company from existing Rs 10 per shares to Rs 2 per share.

Sebi to ease delisting norms for small cos

19th May 2005: Market regulator Securities and Exchange Board of India (Sebi) will provide major relief to small companies within the next six months by easing norms for delisting their shares from the bourses. "There will be a simpler exit route... We are working on it. In six months time, we will come up with something," Sebi chairman M Damodaran said when asked whether the regulator was considering easing of delisting norms for small investors. "We are looking for an alternate... Reverse book-building is a difficult and costly affair," he said on the sidelines of the CII annual session here.

Small companies find it extremely difficult to delist through reverse book-building route as price discovery is not possible when their shares are not traded actively in bourses. Unless their shares are delisted, the small companies have to pay all listing charges even if they are not feasible for them. At present, a company needs to come up with a price through the reverse book-building process for buying back its shares from investors. Most of the thinly traded scrips command a price which is less than the face value. So, the company concerned has to offer a premium to buy back its remaining shares.

Blackstone plans India dedicated fund

19th May 2005: Global equity investment and advisory firm Blackstone has said it was open to come up with an India dedicated fund for infusing capital into corporates depending on response to its initial $1billion investment. "The $1 billion is only a beginning. If deal flow is encouraging, we should be raising India dedicated funds," Blackstone MD Akhil Ggupta said.

Justifying the India entry of Blackstone, whose primary markets are the US and Western Europe, Gupta said the group had done enough due diligence on the economy and it’s potential. India was selected for its operations ahead of BRIC (Brazil, Russia and China) nations and Japan due to the country's economic strengths, demography and democracy, Gupta, a former top Reliance official, said.

Asked was there any weaknesses in the economy, Akhil said, "yesterday's underperformance is today's opportunity." Blackstone, which selected India as the destination for FDI in the Asian economies, has set a cap of Rs 100 crore on investments in various sectors, including retail, BPO and IT-enabled services. Gupta made it clear that Blackstone would be investing in those entities that have excellent management, good growth prospects and competitive advantage.

"We are agnostic on sector and size," Gupta said adding that the group would invest wherever there was scope for improving value addition and needed private equity. Globally it has a target investment of $100-400 million in the identified sectors, but in India it had set a target of Rs 100 crore irrespective of the sectors and size of the industry.

Motorola plans first ever stock buyback

19th May 2005: Motorola Inc. said on Wednesday its board had authorized its first ever stock buyback program, allowing it to repurchase up to $4 billion worth of its shares in the next three years. Motorola, the world's second biggest mobile phone maker, said that, based on current share prices, this represents about 10 per cent of its total market capitalization. Motorola had 2.45 billion shares outstanding as of April 2, cash and equivalents of $11.3 billion and net cash of about $6 billion. The company's chief financial officer, David Devonshire, said last week that Motorola was considering stock buybacks. Its shares rose slightly to $17.19 in late trading on Inet after closing at $16.90 in regular trading on the New York Stock Exchange.

Rockwool India members to approve delisting of equity shares from BSE & HSE

19th May 2005: Rockwool (India) Ltd has informed BSE that an Extra Ordinary General Meeting of the members of the Company will be held on June 11, 2005, to consider the proposal for delisting the equity shares of the Company from The Mumbai Stock Exchange Ltd, Mumbai (BSE) & Hyderabad Stock Exchange Ltd, Hyderabad (HSE).

Kilburn Engineering Board to consider Rights Issue

19th May 2005: Kilburn Engineering Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 27, 2005, to consider the issue of equity shares on rights basis to the shareholders of the Company.

Samtel Color - Grant of options under ESOS

19th May 2005: Samtel Color Ltd has informed BSE that the Remuneration & Compensation Committee of the Board of Directors of the Company at its meeting held on May 09, 2005 have granted 8928 options at Rs 104.60 to the eligible employees Under Employees Stock Option Scheme' 2001 (ESOS'2001) of the Company.

Kale Consultants - Grant of Stock Option

19th May 2005: Kale Consultants Ltd has informed BSE that the Remuneration & Compensation Committee of the Board of Directors, at its meeting held on May 16, 2005, has granted 115,000 options under Kale Consultants Ltd Employees Stock Option Scheme.

Suryadeep Salt Refinery & Chemicals members approve stock split

18th May 2005: Suryadeep Salt Refinery & Chemicals Works Ltd has informed BSE that the members at the Extra Ordinary General Meeting of the Company held today, have accorded to Split-up / subdivision of Equity Shares. Every shareholder holding one equity share of Rs 10/- each will be allotted ten equity shares of Rs l/- each.

Comply with Clause 49: SEBI to India Inc

18th May 2005: Sebi, the market regulator gave an ultimatum to India Inc. today for complying with stipulation of appointing independent directors on their Board by December 31, saying there would be no relaxation or extension of the deadline for complying with Clause 49. "Sebi, as a market regulator, expects total compliance of corporate governance norms. We have given enough time for those who have to meet the requirement of Clause 49," said Sebi Chairman M Damodaran.

Clause 49 mandates that a company needs to appoint independent directors, whose number should be at least 50% of the total board members. Going a step forward, he said meeting Clause 49 norms was a "necessary condition" but not a sufficient one as there were other clauses in the corporate governance norms laid down under the Listing Agreement. "Clause 49 is the minimum standard. You might comply with that and yet not with the corporate governance," he said.

Maintaining that a company complying with corporate governance can generate higher shareholder value, Sebi chief said companies have to sustain the process of sticking to the best practices. Damodaran did not buy the argument that induction of independent directors in the board of a company may hinder the decision making process, and said "if a board is constituted properly, 80% of the job is done." "Best managed companies don't have many problems in going along with their shareholders," he said.

Beeyu Overseas Ltd (BOL) second public issue to open on May 26

18th May 2005: The Kolkata-based Rs 37 crore, Beeyu Overseas Ltd (BOL) is one of the leading tea exporters in India, plans to tap the capital market with its second public issue of 71,40,000 equity shares of Rs 10 each at a premium of Rs 4.

The company is seeking to triple its tea manufacturing capacity from 3,000 tonne per annum to over 9,000 tonne per annum by 2006. For this, the company has lined up an investment of Rs 15 crore. The capital mobilisation form the public issue is expected to be around Rs 10 crore, while the company has already secured a term loan of Rs 3 crore from the State Bank of India (SBI). The balance amount of Rs 2 crore would be funded from the internal accruals of the company.

The issue will open for subscription on May 26, 2005 and will close on June 3, 2005. The equity shares of the company are proposed to be listed on the stock exchanges of Mumbai, Kolkata, Cochin, Coimbatore and inter-connected stock exchanges.

Hindustan Lever Board approves delisting of shares from stock exchanges

18th May 2005: Hindustan Lever Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 29, 2005 has considered voluntary delisting of shares from Ahmedabad, Bangalore, Delhi, Calcutta, Cochin, Guwahati and Madras Stock Exchanges subject to the approval of the members at the forthcoming Annual General Meeting scheduled on June 24, 2005.

Venus Remedies - Delisting of equity shares from 3 stock exchanges

18th May 2005: Venus Remedies Ltd has informed BSE that the equity shares of the Company have been voluntarily delisted from Delhi, Jaipur & Ahmedabad Stock Exchanges.

Sebi bans UBS Securities Asia Ltd for 1 year

18th May 2005: In a first action against those involved in May 17, 2004 market crash; Sebi on Tuesday prohibited UBS Securities Asia Ltd, a foreign institutional Investor, and its associates from issuing off-shore derivative instruments (ODIs) with underlying Indian securities for one year. UBS, its affiliates and agents are prohibited from renewing or rolling over any of the ODIs already issued against the positions held by it in the Indian securities market for one year, Sebi whole-time member G Anantharaman said in his order here on Tuesday. The capital market watchdog asked UBS to establish highest standards of Customer Due Diligence process in line with the requirements of FII Regulations of Sebi. UBS was a significant participant in the cash as well as the derivatives (F&O) segment of the Indian securities market during May 2004.

Wipro allots 25,581 equity shares under ESOS

18th May 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective May 13, 2005 resolved to issue & allot 25581 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

HCL Infosystems allotted 1,250 equity share under ESOS

18th May 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 1250 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme'(ESOS).

Infrastructure Development Finance Company (IDFC) files draft red herring prospectus with SEBI

18th May 2005: IDFC has filed a draft red herring prospectus with Securities and Exchange Board of India (SEBI) for a public issue of 40.36 crore shares of the face value of Rs 10 each. The 100% book built issue comprises a fresh issue of 12 crore equity shares of Rs 10 each and an offer for sale of 28.36 crore shares at a price to be determined through 100% book building, the company said in a release.

The objective of the issue is to achieve benefits of listing, raise capital to support the future growth in assets and meet the applicable capital adequacy requirements. The company has appointed Kotak Mahindra Investment Banking as the book-running lead manager, DSP Merrill Lynch as the Senior Co-managers while Karvy Computershare Pvt Ltd has been appointed as registrar to the issue, it said.

Government on trail to hike foreign direct investment (FDI) cap in insurance to 49% from present 26%

17th May 2005: The government is preparing to walk the talk on raising the equity limit for foreign direct investment (FDI) from 26% to 49% in the insurance sector. A draft Cabinet note on raising foreign equity in insurance companies has been prepared by the insurance division of the finance ministry. The proposal has been circulated for approval of the concerned ministries, before piloting it to the Cabinet for approval.

However, a hike in the FDI limit for the insurance sector will need an amendment to the Insurance Act, 1938. This means Parliament will have to ratify the measure. Of the three budget promises on FDI by FM P Chidambaram in ’04-05, those for telecom and civil aviation have been implemented.

Local companies are wooing the government to allow more foreign equity in their companies. The current paid-up requirements of Rs 100 crore for general and Rs 200 crore for life insurance have become difficult benchmarks, given the pace of growth of the market. Companies feel injection of additional foreign equity will reduce costs. Insurance penetration has been low at around 2%. The sector was liberalised for the private players during end 1999.

SEBI ties up with HCL Technologies for market surveillance solutions

17th May 2005: HCL Technologies Ltd has announced on May 17, 2005, that it has signed a multi million dollar agreement with Securities and Exchange Board of India (SEBI) for implementing a comprehensive integrated market surveillance system for monitoring the market activities across stock exchanges and market segments (including both equities and derivatives).

The project involves implementation of application software, hardware, networking and communication infrastructure. The solutions from the Company, and its partners, was chosen over those of some of the leading IT Companies on account of strong surveillance domain expertise, systems integration capabilities and proven technology delivery competencies. The application software product for surveillance being implemented has been developed by SMARTS Pty Ltd, which is a leader in the provision of real time market surveillance systems for securities markets & regulators and is currently being used in 16 exchanges and 4 regulators globally.

The solutions shall be implemented in a period of 9 months and the Company shall support the solution at SEBI for a period of 6 years thereafter. "HCL feels privileged to be chosen by SEBI for such a key project. We shall bring to bear our deep domain expertise in this space and will work closely with SEBI to ensure this become a key part of the far reaching changes that the regulator is making to ensure that financial markets become more transparent and efficient", said J Vijay (Corporate Vice President - HCL).

Geometric Software Solutions allotted 12,114 equity shares under ESOP

17th May 2005: Geometric Software Solutions Company Ltd has informed BSE that the Allotment Committee of Directors of the Company, at its meeting held on May 17, 2005, has allotted 12,114 equity shares on the exercise of vested stock options under ESOP Scheme 1999, ESOP Scheme 2001 and ESOP Scheme 2003.

Mazda Ltd. to allot 5 lakh equity shares

17th May 2005: Mazda Ltd today said it will allot five lakh equity shares as warrants to the promoter and private investors. The Board of Directors have approved the issue, offer and allotment of five lakh equity shares as warrants to the promoter and private investors at a convertible price of Rs 70 per share (Rs 10 face value + Rs 60 premium), subject to shareholders' approval, the company informed the Bombay Stock Exchange.

Infomedia India - Grant of Stock Options

17th May 2005: Infomedia India Ltd has informed BSE that the Compensation Committee of the Board of Directors and the Board of Directors of the Company has vide its resolution dated May 16, 2005, amended the agreement of Mr. Prakash Iyer - Managing Director and granted further 1,00,000 Stock Options to him.

Filmcity Media Board to consider Sub division of equity shares

17th May 2005: Filmcity Media Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 26, 2005, inter alia, to consider Sub division of its equity shares pursuant to section 94 A & other applicable provisions, if any, of the Companies Act, 1956 that the existing 55,00,000 Equity Shares of Rs 10/- each to be sub divided into 5,50,00,000 Equity Shares of Rs 1/- each.

Interface Financial Board to consider stock split

17th May 2005: Interface Financial Services Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held May 24, 2005, to consider the Split the nominal face value of the equity shares of the Company from Rs 10/- each fully paid-up to Rs 1/- each fully paid subject to the necessary approval of the Shareholders of the Company.

Interlink Financial Services Board approves stock split

17th May 2005: Interlink Financial Services Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 16, 2005, have approved to Split-up the Equity Shares of the Company. Every share holder holding 1 Equity share of Rs 10/- each will be allotted 10 equity shares of Rs 1/- each, subject to the approval of the shareholders at the Extra Ordinary General Meeting of the members to be held on June 07, 2005.

Yokogawa India - Transfer of shares under ESOP

17th May 2005: Yokogawa India Ltd has informed BSE that as per the Employee's Stock Option Scheme (ESOP) 1997, Yokogawa India Ltd Employees Welfare Trust has transferred 54,000 shares to the respective beneficiaries account on their request, w.e.f. May 13, 2005.Further the Company has informed that this transfer of shares will in no way effect Issued Capital.

Sebi may allow non-promoters to hold 10%

17th May 2005: The Securities and Exchange Board of India (Sebi) is likely to allow select companies to reduce the minimum non-promoter holding to 10%. The issue is slated for discussion at a scheduled Sebi board meeting to be held later this month. Though Sebi officials were tightlipped about the issue, sources close to the regulator said the 10% holding could be allowed only for those companies which followed governance norms as well as achieved a minimum level of liquidity and market cap. Sources said the minimum non-promoter holding in a company could be held at two levels -- 25% and 10% -- with a switching mechanism between the two.

            Earlier this year, it was notified in the official gazette of Sebi that the minimum non-promoter holding would be maintained at 25% but the listing agreement was never amended to reflect this. This confused many companies as there was no clear direction from Sebi on whether to adhere to the original norms or switch to the new norms. At present, a minimum 10% float is allowed for those companies with a minimum issue size of Rs 100 crore and Rs 1,000 crore market capitalisation.

            Sources said it had been suggested at various times that promoters should be able to switch between the two levels – 25% and 10%. This will, however, be possible after the capital markets watchdog makes some adjustments to the secondary market listing norms. The Sebi board meeting will also decide whether an open offer is justified for raising stakes beyond 55%. The gazette notification had made it mandatory for promoters with a 55% stake to go in for an open offer if they wanted to increase their stake up to 75%. Taking the creeping acquisition route was disallowed, as were other market-related routes such as preferential allotments.

 

Corporate governance is the key


 

Ř      Minimum non-promoter holding in a firm can be held at two levels — 25% and 10%

Ř      Sebi to decide whether an open offer is justified for raising stakes beyond 55%

Ř      There can be a return to the previous regime of unrestricted creeping acquisition to 75%

No plans yet to issue American Depositary Receipts (ADRs): Wipro

17th May 2005: Wipro Ltd. has no immediate plan to issue ADRs, its chief financial officer said on Monday. "There is no such proposal under consideration," said Suresh Senapaty. "The company has not taken any decision (on the issue)." New York-listed Wipro is 84% owned by billionaire Azim Premji.

HCL Infosystems - Issue of options under ESOP

16th May 2005: HCL Infosystems Ltd has informed BSE that the Board of Directors of the Company has considered and approved the proposal to grant 17400 options under the Employee Stock Option Plan (ESOP) of the Company as detailed below:

1. No of option granted : 17400

2. Grant date : May 14, 2005

3. The Exercise Price will be closing market price of the shares of the Company on May 13, 2005 at the stock exchange where the shares are quoted and which recorded the highest trading volume on the date of grant.

Nagarjuna Construction Board recommends stock split

16th May 2005: Nagarjuna Construction Company Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 16, 2005, has recommended the sub-division of equity shares of Rs 10/- each into 5 Equity Shares of Rs 2/- each.

Fortis Financial divested entire equity shareholdings in its Wholly Owned Subsidiaries (WOS)

16th May 2005: Fortis Financial Services Ltd has informed BSE that the Company has divested its entire Equity Shareholding in its WOS Fortis Securities Ltd and Fortis Comdex Ltd. The Company has realized Rs 280 million from divestment of 40,00,000 fully paid up Equity Shares of Rs 10 each of Fortis Securities Ltd & Rs 7.50 million from divestment of 7,50,000 Equity shares of Rs 10 each of Fortis Comdex Ltd. This has resulted in a gain of Rs 240 million to the Company.

ICICI Bank allots equity shares under ESOS

16th May 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 462,298 equity shares of face value of Rs 10/- each on May 09, 2005 under the Employees Stock Option Scheme, 2000 (ESOS). Further the Bank has informed that Ms. Chandra Kochhar and Dr Nachiket Mor, Executive Directors of the Bank has been allotted 13,000 and 56,000 equity shares respectively.

Infosys Technologies allotted 78,920 equity shares under stock option plan

16th May 2005: Infosys Technologies Ltd has informed BSE that the Board of Directors of the Company vide their resolution dated May 13, 2005, has allotted 78,920 equity shares of par value of Rs 5/- to the optionees pursuant to the exercise of the options granted to the employees under the Company's 1999 Stock Option Plan.

UTI Bank allotted 11,01,995 of equity shares under ESOP

16th May 2005: UTI Bank Ltd has informed BSE that the Committee of Directors of the Bank has on May 14, 2005 made the allotment of 11,01,995 equity shares of Rs 10/- each to the employees of the Bank, under ESOP.

Talbros Automotive Component (TACL) plans 2nd public issue of Rs 50 cr in June 2005

16th May 2005: TACL, a gasket maker, plans to raise Rs 50 crore from the primary market. The shares of the company are listed on the Bombay Stock Exchange and Delhi Stock Exchange. The company plans to list its shares on the National Stock Exchange as well. TACL's second public offer of Rs 50 crore will be raised through a 100% book building route that is slated to hit the market in June 2005. The company is expecting the SEBI approval this week. The number of shares to be issued through the offer would be decided closer to the issue. As per the offer, the promoters would contribute Rs 2.5 crore to the offer with net offer to the public constituting Rs 47.5 crore.

Kotak Mahindra Bank made a Grant of 42,600 Stock Options to employees of Kotak Mahindra Old Mutual Life Insurance Ltd.

16th May 2005: Kotak Mahindra Bank Ltd has informed BSE that the Bank has, as on May 14, 2005, made a grant of 42,600 stock options to the employees of Kotak Mahindra Old Mutual Life Insurance Ltd, one of the subsidiaries of the Bank, in accordance with the provisions of the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme), Guidelines, 1999. The exercise price of the options is Rs 200 per share. 33% of the options are exercisable between June 01, 2006 and March 01, 2007, a further 33% between June 01, 2007 and March 01, 2008 and the balance 34% between June 01, 2008 and March 01, 2009.

The Insurance Regulatory and Development Authority (Irda) moving to de-tariff part of fire insurance, Shopkeeper segment to be rid of price control

14th May 2005: Irda has identified one segment of the fire portfolio for the next phase of de-tariffing. The Authority, which had recently deregulated marine hull tariffs, is almost on the verge of taking a decision to free the pricing of the shopkeeper segment of the fire policy.

The fire policy, which earns the second largest premium — next to the motor portfolio — has two segments. One is for corporates and another is the shopkeeper segment, where the materials in a shop are also covered. Irda is considering removing the pricing controls on the shopkeeper segment of the fire policy as it would be easy for the insurers to fix a cost to the policy. “It is easy to manage and insurers with limited expertise on pricing can always assess the risks involved,” said sources at Irda. Irda may then move to decontrol the entire fire portfolio which is a profitable one for the insurers.

By removing price control, Irda believes there will be a greater degree of competition among the domestic general insurers, leading to cheaper prices. This will help shopkeepers to avail of the policies. Generally, shopkeepers shy away from taking any insurance policy. Earlier, in a last-minute decision, Irda had to defer its plan to de-tariff the own segment motor portfolio from April 1 as the regulator thought the industry was not prepared for such a significant change.

Advocating a gradual strategy for de-tariffing, it decided to remove price control on insuring marine hulls from April 1. The Tariff Advisory Committee (TAC), a constitutional body supervised by Irda, regulates the pricing of 70% of the products of the general insurance industry. Some of the major portfolios which are so far regulated by TAC are motor, fire and engineering.

PowerGrid hopes to raise Rs 1,500 cr via IPO in September-October this year

14th May 2005: Powergrid Corporation plans to float its initial public offering in September-October this year. The transmission major hopes to raise Rs 1,500 crore through its IPO. PowerGrid has an equity base of Rs 3,000 crore and plans to issue fresh equity of 10%. The transmission company could raise Rs 320 crore on face value of Re 1 share each if it decides to go for 10% fresh equity. According to PowerGrid CMD RP Singh, the price band could be Rs 45-46 per share.

The price band will be decided later in consultations with the government and merchant bankers. PowerGrid plans to follow the model of NTPC. However, Mr. Singh declined to say whether the government will also divest an equal amount of equity in the corporation. “We are keen on the public offer, we are upbeat... but it all depends on various regulatory approvals. We plan to tap the market by September-October this year,” Mr. Singh said.

Havells India offers bonus issue

14th May 2005: Electrical equipment maker Havells India has approved a bonus share issue in the ratio of one for every held, the company informed BSE on Thursday.

Aditya International Board to consider delisting of securities from ASE

14th May 2005: Aditya International Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 19, 2005 to consider delisting of securities from Ahmedabad Stock Exchange (ASE).

Multi-Arc India Board approves Rights Issue

14th May 2005: Multi-Arc India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 13, 2005, has considered & approved the issue of 50,58,880 Equity Shares on Right basis, to the existing Equity Shareholder at a price not exceeding Rs 30/- per share in the ratio of 1:1.

HCL Infosystems members to approve stock split, by Postal Ballot

14th May 2005: HCL Infosystems Ltd has informed BSE that the members of the Company will consider approving the following resolutions, by means of Postal Ballot:

1. Authorising the Board to sub-divide the existing 8,00,00,000 equity shares of Rs 10 each in the authorised share capital of the Company into 40,00,00,000 equity shares of Rs 2/- each & consequential amendment in the Memorandum & Articles of Association of the Company.

2. Authorising the Board to create, issue, offer and allot to or for the benefit of such person or persons as are in the permanent employment and the Directors (including whole-time Directors) of the Company at any time, equity shares of the Company and/or warrant (whether attached any securities or not) with an option exercisable by the holder of such Options to subscribe for equity shares or any securities convertible into equity shares at such price, in one or more tranches as the Board at its absolute discretion deem fit, whereby the exercise or conversion could give rise to the issue of no. of equity shares not exceeding in the aggregate of 33,35,487 no. of equity shares of Rs 10 each or equivalent to such number of equity shares adjusted for sub-division of the equity shares of the Company (excluding outstanding warrants and conversions, if any).

3. Authorising the Board to create, issue, offer and allot to or for the benefit of such person or persons as are in the permanent employment and the Directors (including whole-time Directors) of a subsidiary Company and a Holding Company at any time, equity shares of the Company and/or warrant (whether attached any securities or not) with an option exercisable by the holder of such Options to subscribe for equity shares or any securities convertible into equity shares at such price, in one or more tranches as the Board at its absolute discretion deem fit, whereby the exercise or conversion could give rise to the issue of no. of equity shares not exceeding in the aggregate of 33,35,487 no. of equity shares of Rs 10 each or equivalent to such number of equity shares adjusted for sub-division of the equity shares of the Company (excluding outstanding warrants and conversions, if any).

4. Amending the right in the Employee Stock Option Scheme 2000 of the Company in order to align the options granted to the proposed sub division of the equity shares, whereby each option granted would confer a right to one equity share of Rs 10/- each or its equivalent.

The Company has appointed Mr. R K Pandey, Former Executive Director of The Delhi Stock Exchange Association Ltd, as Scrutinizer for conducting the postal ballot process in a fair & transparent manner.

The Postal Ballot form duly completed should reach the scrutinizer on or before June 08, 2005. The Scrutinizer after completion of scrutiny will submit his report to the Chairman and Chief Executive Officer who will declare the results on June 13, 2005.

Zigma Software Board to consider Stock Split

13th May 2005: Zigma Software Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 20, 2005, to discuss & consider on Splits of Stock of the Company.

IQMS Software Board to consider stock split

13th May 2005: IQMS Software Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 20, 2005 to discuss about the Sub-division of its Equity Shares pursuant to Sec 94A & other applicable provisions if any of the Companies Act, 1956, such that the existing 1,30,00,000 Equity Shares of Rs 10/- each be sub divided into 13,00,00,000 Equity Shares of Rs 1/- each.

UTI Bank Committee of Directors to allot equity shares under ESOP

13th May 2005: UTI Bank Ltd has informed BSE that a meeting of the Committee of Directors of the Bank will be held on May 14, 2005, to consider the allotment of equity shares under ESOP.

Satyam Computer allots 23,021 equity shares under Conversion of Stock Options

13th May 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 23,021 equity shares through circular resolution on May 13, 2005 under stock option plans of the Company.

Powergrid Corp plans IPO by September

13th May 2005: Powergrid Corp, the country's largest power transmission firm, said today that it was planning an initial public offering of shares in September. "We are open to an IPO. We are in discussion with the government for offering 10% of the equity in an IPO," said chairman and managing director R P Singh. The company had a paid up equity of Rs 3,200 crore ($740 million), he said. He did not give more details but another official said the government may sell a part of its stake and the company would also issue fresh equity for the IPO.

Standard Chartered Mutual Fund to launch equity schemes

13th May 2005: Standard Chartered Mutual Fund is set to launch equity schemes and has received requisite regulatory approvals to enter the equity fund management business. Making this announcement, Jaspal Bhindra, general manager, Standard Chartered Bank remarked, "We feel the time is now right to get into equities." This view stems from two important factors: One, growing global competitiveness of Indian companies and India being in the global arena and maturing of stock markets and investors in their expectation of returns and tenor of investments in equity funds.

Elaborating on these two points, Naval Bir Kumar, managing director, Standard Chartered Asset Management Company Private Limited stated that Indian companies have realized that global integration is a necessity. In order to be globally competitive, Indian companies over the last few years have restructured, improved productivity levels and reduced capital costs. While software has been the big growth story, there is a bigger base of Indian companies spread across diverse sectors that have managed to successfully compete in the global arena. It is this strength that will sustain the Indian story and will lend the much-needed depth to the stock market. Equity markets are also getting re-rated as India moves to a higher growth rate on the back of global integration and liberalization.

Standard Chartered Mutual Fund was launched five years ago, focusing purely on debt with several innovative products like the Short Term fund, Dynamic Bond Fund and Medium Term Fund. Equity investments were then regarded as high-risk, high return type of investments. Investors thus had unrealistic expectations from fund houses. Over the next 5-10 years the growth in the Indian economy will be fueled through infrastructure spending, a young and growing population making manufacturing and service companies even stronger.

IDBI to raise Rs 15 cr via bonds

13th May 2005: Industrial Development Bank of India has modified the term of IDBI Omnibonds launched today from 10 years 3 months to 7 years. IDBI will be raising Rs 15 crore through the Tier II bonds; it informed the National Stock Exchange today.

Bajaj Hindustan raises $10 mn FCCBs

13th May 2005: Bajaj Hindustan has raised $10 million through the issue of Foreign Currency Convertible Bonds (FCCBs) on exercise of greenshoe option. With these $10 million convertible bonds, the overall size of convertible bonds issue has increased to $50 million, the company informed the Bombay Stock Exchange today. Earlier, the company raised $100 million through the issue of 2.08 crore Global Depository Receipts (GDRs) aggregating $60 million and $40 million through the issue of FCCBs (both excluding the greenshoe), it said. The GDRs, each representing one underlying share, were priced at $2.88 each (Rs 125 per share). The zero-coupon convertible bonds have a tenor of five years. The GDRs and the convertible bonds will be listed on the Luxembourg Stock Exchange, it said. Citigroup acted as the sole book-runner & lead manager to this transaction, it added.

Bank of India (BoI) plans to raise $250mn

13th May 2005: BoI aims to raise between $250 million and $300 million through 5-year medium term notes (MTN) in June or July to fund its expansion overseas, a senior bank official said on Thursday. "The bank has planned to raise up to $1 billion to fund the growth in its overseas operations, and this is the first tranche," said G Narayanan, general manager, Treasury. Bank of India has mandated Deutsche Bank, HSBC and Barclays Capital for the offering, he said. Investors are likely to be from Europe and Asia. Narayanan said the bank had not fixed a time for raising the entire $1 billion.

Orient Abrasives Ltd. (OAL) to consider stock split

13th May 2005: The board of OAL will meet on May 25 to consider splitting its equity shares, the company told the Bombay Stock Exchange today.

Yes Bank’s IPO postponed

13th May 2005: As the bank waits for SEBI clearance of the red-herring prospectus, the IPO is delayed from the May 9th (preplanned) schedule. It is likely to enter the market in June or July. The bank was due to hit the primary market with an IPO of seven crore shares to raise Rs 300-350 crore. The bank has appointed DSP Merrill Lynch and Enam Financial Services as lead managers for the IPO.

SEBI to ease secondary issue norms

13th May 2005: The recent investment boom in foreign currency convertible bonds (FCCB) and Global Depository Receipt (GDR) is leading the SEBI to simplify secondary issue norms. However, the secondary offers will be made easier based on the disclosure record of the issuing company. Currently, the Indian companies find it easier to raise money from abroad and over the past year, they have raised 3billion dollars through FCCB’s alone. The reason could be because the procedure followed by them is straightforward.

“We have been told by a large number of people that when a company is already listed, you do not have to ask the same set of questions and subject that company to the same procedure as you did the first time round. When the company comes for a follow-on offer to raise capital, we will ask fewer questions. This is a major condition, provided during the time it has been a listed entity, it has a track record of continuous disclosure,” Mr. Damodaran, SEBI Chairman stated.

Life insurance: be careful enough while choosing an insurance policy

12th May 2005: Life is uncertain and one should always be prepared to face the future. Life insurance is one instrument which can protect you and your family from a future financial crisis. It is often misunderstood as a means of saving and compared with other general saving instruments. But one should be careful enough while choosing an insurance policy. The policy should be chosen according to one's own requirement. Here is a rough guide to the various insurance schemes available for consumers to help them tide over unexpected events.

Today, private insurance companies are trying to grab the pie from Life Insurance Corporation (LIC). This has given ample opportunity to investors to choose the required products from an array of insurance policies. While there are lots of life insurance policies that are available in the market, these are mainly divided into six categories. These are term policy, endowment, moneyback, pension, wholelife and Ulip.


Term insurance


It covers a person against death for a limited term. You pay for the policy period and at the end of the term, the contract or policy expires. If no claims are made against the policy during the term, you don't receive any benefits after the policy expires, just like an auto or general insurance.

 

But the biggest benefit of this is you have to pay a marginal premium as compared to other policies. Young people with large financial obligations are usually better off with term insurance policies. The substantially lower premiums enable them to purchase sufficient coverage to protect against loss of income.


Whole life insurance


This is also called as permanent insurance. It does not expire if you continue to pay the premiums regularly. It provides coverage similar to term life insurance, but it also provides an investment vehicle. A portion of the premium goes for life insurance, while the rest goes into an investment account.


This account can be either an interest bearing account or a variable (stocks and bonds) investment account. You pay the same premium till the termination payment period.


Whole life insurance policies are valuable because they provide permanent protection and accumulate cash values that can be used for emergencies or to meet specific objectives. Another important aspect of this policy is that it also protects you after the period of policy termination.

 

Endowment insurance policy


This plan is appropriate for people of all ages and social groups who wish to protect their families from a financial setback that may occur owing to their demise. It covers risk for a specified period, at the end of which the assured sum is paid back to the policyholder, along with the bonus accumulated during the term of the policy.


Many investors use endowment policy to fund anticipated financial needs, such as college education for their children or retirement. Premium for an endowment life policy is much higher than that of a whole life policy.

 

Moneyback scheme


Unlike other policies, this policy gives you a return after a certain period of time. It provides periodic payments of partial survival benefits during the term of the policy. The rest of the amount is paid at the end the term with a bonus. The risk cover on the life continues for the full sum assured even after payment of survival benefits and the bonus is also calculated on the full sum assured. This is suitable to the Indian psyche of the life insurance policyholder who wants returns at frequent intervals.

 

Pension plans


This is suitable for those who want a regular income after their retirement. In this scheme policyholders contribute regularly over a period of time or in a lumpsum amount to form a corpus. This corpus is used to yield a regular income that is paid to policyholders until death starting from his desired retirement age. This is also known as annuity schemes. Typically, annuities are bought to provide a solution to one of the biggest financial insecurities of old age.


Unit linked insurance plans (Ulip)


Unit linked insurance plans (Ulip) are the flavor of the season. These plans are now contributing over 50% of the private life insurance companies since their inception in 2004. In an era of booming stock market, these schemes are giving investors a higher return as well as life protection. Encouraged by the response, many players are launching different savings and endowment plans in the unit-linked format.


According to the IRDA, a company offering unit linked plans must give the investor an option to choose among debt, balanced and equity funds. This policy is suitable for young people who can take risk. These give flexibility of insurance and mutual funds.

 

Insurance coverage is essential for every individual. In a country of over one billion population, almost 70% people are still uninsured. So they should be aware of all the available insurance policies. How much and what type of insurance one needs differs from person to person. So it is better to fix your targets and consult an insurance agent to avail the best policy.

HDFC Asset Management Company (AMC) increase its stake in Television Eighteen Ltd (TV18)

12th May 2005: HDFC AMC has increased its stake in TV 18 to 7.3% through market purchase between January 17, 2005 and May 6 by its various schemes.

HDFC Equity Fund has acquired 1.87 lakh shares, amounting to 1.11% of the paid-up equity capital of the company, thereby increasing its holding to 5.2% of the paid-up share capital of TV18; the mutual fund informed the National Stock Exchange on Wednesday.

In another deal, HDFC Prudence Fund has bought 1.84 lakh shares of TV18 amounting to 1.09% of the paid-up equity capital of TV18, increasing its stake to 2.28% of the paid-up capital of the company, it said.

The aggregate holding of HDFC AMC under its various schemes after the said acquisition is 12.34 lakh shares aggregating 7.30% of the paid-up capital of TV18, it added.

SEC Allows Two Years of IFRS Information

11th May 2005: SEC has recently adopted rule changes regarding International Financial Reporting Standards ("IFRS").  The SEC has adopted amendments to Form 20-F that will allow foreign private issuers reporting for the first time under IFRS to provide two years of audited financial statements rather than three years. In particular, foreign private issuers that change to IFRS will be able to omit (for the first financial year starting either before or after January 1, 2007) the earliest of the three years of audited financial statements required by Form 20-F. The SEC has imposed certain specific requirements in order to take advantage of this accommodation, and made a variety of conforming changes to Form 20-F. For the text of the Adopting Release, click on http://www.sec.gov/rules/final/33-8567.pdf.

Godrej Consumer lines up 2nd share buyback at max Rs 400/share

11th May 2005: Godrej Consumer Products today announced a second buyback of shares through an open offer at a maximum of Rs 400 a share. Its first buyback took place in 2001. The total outgo for the fresh buyback, which was approved by the board in a meeting held today, has been pegged at Rs 4.8 crore. The company also proposed another buyback from the open market at a maximum price not exceeding Rs 400 a share for an aggregate amount not exceeding Rs 10.5 crore.

"This buyback is pursuant to section 77A(2)(b) of the Companies Act, 1956, the Sebi Buyback Regulations and is subject to the approval of shareholders by postal ballot," a company note to the stock exchanges said. According to the latest shareholding pattern available from the BSE, the promoters hold 68.19% stake in the company, while mutual funds and the Unit Trust of India hold 1.97%. Banks and financial institutions, including insurance companies, hold 0.18%. Foreign institutional investors hold 17.44% in the company as on March 31, 2005.

HCL Infosystems allots 2,961 equity shares under ESOS

11th May 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 2961 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme'(ESOS).

Mastek allotted 2,204 shares under ESOP

11th May 2005: Mastek Ltd has informed BSE that Committee of Directors of the Company at its meeting held today has allotted 2,204 shares under the Employees' Stock Option Plan (ESOP).

Investors of UAE have to pay capital gains tax here

11th May 2005: Investors from United Arab Emirates (UAE) have to pay capital gains tax on their investments in India, according to a ruling by the Authority for Advance Ruling (AAR), a quasi judicial body which decides on the taxability of cross-border ventures in advance. The AAR gave this ruling on Monday on an application filed by Abdul Razaq Memon, a UAE national, who sought the opinion of the AAR on the issue of whether tax is payable on the capital gains arising from his Indian investments. The AAR ruled that he had to pay tax. According to sources, the AAR ruled that the Double Taxation Avoidance Agreement between India and the UAE was not useful for this purpose since UAE does not have a tax regime.

Sintex Industries - Post Offer Status

10th May 2005: Ambit Corporate Finance Pvt Ltd ("Manager to the Offer") on behalf of Lightwood Investment Ltd ("Acquirer") has issued Post Offer Public Announcement to the equity shareholders of the Sintex Industries Ltd ("Target Company"). This Announcement is in continuation, of and should be read in conjunction with, the Public Announcement dated December 08, 2004 ("PA"), the Revised Public Announcement dated February 24, 2005 and the Letter of Offer dated February 23, 2005 issued to the shareholders of the Target Company in terms of the applicable provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto upto the date of the PA (the "SEBI Takeover Code"). The terms used, but not defined in this Announcement, will have the same meaning assigned to them in the PA and the Letter of Offer:

----------------------------------------------------------------------------------------------------

            Item                             Proposed in the Offer               Actuals
                                                            document
----------------------------------------------------------------------------------------------------

a. Offer Price                            Rs 286.41 per share                 Rs 286.41per share

 

b. Shares acquired in                3,695,333 shares                     14,325 shares
   the Offer                                i.e. 20.00%#                            i.e. 0.08%#

 

c. Post Offer Shareholding         7,610,333 shares                     3,929,325 shares
   of the Acquirer upon               i.e. 41.19%#                            i.e. 21.27%#
   transfer of shares                       and                                            and
   accepted under Offer              1,985,000 warrants                  1,985,000 warrants
                                               optionally convertible                optionally convertible
                                               into equivalent number             into equivalent number
                                               of shares                                of shares
----------------------------------------------------------------------------------------------------

# Considering the conversion of 915,000 warrants into equivalent number of Shares, the expanded capital of the Target Company after the preferential issue and conversion of warrants would be 18,476,664 shares.

AllBank Finance to enter insurance segment

10th May 2005: AllBank Finance has decided to foray into the insurance sector and would appoint a consultant for the purpose. AllBank Finance is a wholly owned subsidiary of Allahabad Bank. ''We are exploring the possibility of entering the insurance and real estate finance segments. We will soon appoint a consultant to prepare a detailed roadmap for the insurance venture,'' Allbank CMD ON Singh said. The bank has already approached the IRDA and would decide by three months on whether to go for life or non-life segment. Singh said AllBank, if it decided to go for life insurance, would tie up with three-four other banks in view of the higher corpus requirement, but would go on its own in the non-life segment.

Satyam Computer allotted 51,252 shares under stock option plans

10th May 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 51,252 equity shares through circular resolution on May 10, 2005 under stock option plans of the Company.

Simbhaoli Sugar to raise Rs 50cr via rights issue

10th May 2005: The board of directors of Simbhaoli Sugar Mills today approved a proposal of rights issue to raise around Rs 50 crore. According to a release issued by the company to the BSE today, the ratio will be decided at a later date. "The rights issue would be priced in the range of Rs 50- 60 per equity share pursuant to the resolution passed in the EGM of the shareholders held on March 19, 2005 authorising the board to raise capital up to Rs 75 crore," the release added.

Balkrishna Industries Board to consider Bonus Issue

10th May 2005: Balkrishna Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 16 to consider a bonus share issue.

Flextronics Software members to approve delisting of shares from BSE & NSE

10th May 2005: Flextronics Software Systems Ltd has informed BSE that an Extra Ordinary General Meeting (EGM) of the members of the Company will be held on June 03, 2005 for seeking their approval for getting the shares delisted from The Stock Exchange, Mumbai (BSE) and the National Stock Exchange of India Ltd (NSE). Accordingly May 27, 2005 has been fixed as the specified date for the purpose of the EGM.

Indian Oil Corporation (IOC) to float Rs 500 cr bond

10th May 2005: IOC will float Rs 500 crore bonds by this month to meet its working capital requirements. The non-revision of fuel prices have placed heavy burden on the company's finances and thus it is resorting to increased borrowings, IOC chairman S Behuria said today. The total borrowing of IOC in a year have shot up by 80% to Rs 18,000 crore currently from Rs 10,000 crore as of June 2004.

Jubilant Organosys raises $100 mn FCCB issue

10th May 2005: Jubilant Organosys Ltd, a composite pharmaceuticals industry player, on May 09, 2005 has announced that it has priced a US$ 75 million (approximately Rs 3.25 billion) unsecured and Zero coupon 5-year FCCB (Foreign Currency Convertible Bond) issue with an upsizing option of US$ 25 million (approximately Rs 1.08 billion), with a Yield to Maturity of 6.6% per annum, placed with International investors. The FCCB has a 50% conversion premium at Rs 1365.32 per share.

Application has been made to list the FCCBs on the Singapore Stock Exchange. The FCCBs will be convertible into Rupee stock listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) or GDSs listed on Luxemburg Stock Exchange at the option of the holder.

The proceeds of the issue will be used to fund the capital expenditure for the Company's expansion plans, acquisition and any other permitted use. JP Morgan Securities Ltd was the sole book runner and global coordinator for this transaction.

Wipro allotted 8,400 & 18,585 equity shares under ESOS

10th May 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective May 03 & May 04, 2005 resolved to issue & allot 8400 equity shares of Rs 2/- each and 18585 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

Shree Ganesh Forgings Ltd. (SGF) to raise Rs 15 cr via IPO

9th May 2005: Forgings manufacturer, Shree Ganesh Forgings Ltd will hit the capital market with an issue of 50 lakh equity shares to raise Rs 15 crore for partly funding the expansion of its Navi Mumbai facility. "The company is offering 50 lakh equity shares of Rs 10 each at a premium of Rs 20 per share to fund its expansion plans," said chairman and managing director Deepak Sekhri. The company is planning a two-phased expansion of its plant at Navi Mumbai at a proposed cost of Rs 32.5 crore, part of which (Rs 15 crore) would be funded by the proceeds of the IPO, he said.

The first phase of expansion costing Rs 23 crore will be funded through the IPO, a term loan of Rs 7.51 crore from Corporation Bank and internal accruals amounting to Rs 49 lakh with the project going on stream by December next year. The second phase of expansion would be funded by a term loan from Corporation Bank and internal accruals. The issue would be open from May 18 till May 24 and the shares would be listed on the Stock Exchange, Mumbai (BSE). Keynote Corporate Services Ltd and Bigshare Services Pvt Ltd have been appointed as lead managers for the issue, he added.

The Foreign Investment Promotion Board (FIPB) defers Sify's ADR plan by two weeks

9th May 2005: FIPB has deferred a proposal by internet service provider (ISP) Sify to issue American Depository Receipts (ADRs) with 100% FDI by two weeks. A meeting of FIPB, held on April 27, decided to defer the proposal by two weeks at the behest of the department of telecom, which is reviewing the matter of FDI in ISPs providing virtual private network (VPN) services.

Sify had sought FIPB approval for the issue of ADRs against its 1,57,20,800 equity shares held by both domestic and international shareholders to a maximum of 100% foreign equity on the basis of its ISP licence granted by DoT and having surrendered all international gateways. The current foreign holding in Sify is 58%.

DoT had issued a provisional clearance to Sify in January this year for amending its licence after it furnished Rs 10 crore entry fee and bank guarantee in respect of its VPN service. Subsequently, FIPB had given approval to Sify's ADR issue. However, DoT later issued directions to ISP licensees seeking amendments for VPN service.

Whirlpool of India - Issue of Preference Shares

9th May 2005: Whirlpool of India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 27, 2005, has decided to issue, offer and allot not more than 15,50,00,000 Redeemable Cumulative Preference shares of Rs 10/- each to Whirlpool Corporation or its subsidiaries on preference basis. Further the Company has informed that above mentioned issue of Redeemable Cumulative Preference Shares aggregating upto Rs 1550 million is subject to the consent of the shareholders in the ensuing Annual General Meeting of the Company to be held on June 17, 2005 and necessary RBI permission.

Opto Circuits to issue 5:10 bonus shares

9th May 2005: The board of Opto Circuits Ltd. has approved a bonus issue of five shares for every 10 held, the company informed Bombay Stock Exchange today. It said its fourth-quarter net profit nearly doubled to Rs 7.17 crore from Rs 3.66 crores a year ago.

Ramco Systems to raise Rs.75 cr via Rights Issue

9th May 2005: Ramco Systems Limited today said that the company would raise fresh capital to the tune of Rs.75 crore for future expansion programmes. The company's board of directors has approved the raising of fresh capital by issue of equity shares on rights basis for an amount not exceeding Rs.75 crore, said a statement issued to the National Stock Exchange. Ramco Systems' board has also constituted a committee to decide about the size, timing, basis of offer, premium and other modalities of the proposed rights issue, added the statement.

CRISIL - Post Offer Status

9th May 2005: Kotak Mahindra Capital Company Ltd ("Manager to the Offer") on behalf of The McGraw-Hill Companies, Inc. and S&P India LLC ("Acquires") has issued Post Offer Public Announcement to the Shareholders of CRISIL Ltd ("Target Company"). The details of the offer made pursuant to the Public Announcement dated February 17, 2005, a corrigendum to the same dated March 08, 2005 and the public announcement for upward revision of offer dated April 11, 2005, under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 to acquire 4,170,562 fully paid-up equity shares of Rs 10/- each, representing 65.57% of the paid-up equity capital of the Target Company (subject to a minimum level of acceptance of 2,643,983 shares representing 41.57% of the paid-up equity capital of the Target Company) at a revised price of Rs 775/- (Rs. Seven Hundred and Seventy Five only) per fully paid-up equity share, payable in cash are as under:

----------------------------------------------------------------------------------------------------------------------
            Item                             Proposed in the                    Actual
                                                Letter of Offer
----------------------------------------------------------------------------------------------------------------------
a. Offer Price                            Rs 680/- per fully paid            Rs 775/- per fully paid up
                                                up equity share                    equity share (As per revised offer)


b. Share acquired in the            35,34,488 (55.57%)[As per     31,20,948 (49.07%)
   Open Offer                            revised offer: 41,70,562
                                                (65.57%)]

 

c. Post Offer shareholding of
   Acquires                                35,34,488* (55.57%)[As per   31,20,948* (49.07%)
                                                revised offer: 41,70,562*
                                                (65.57%)]
----------------------------------------------------------------------------------------------------------------------


Note: The above percentage are calculated based on the total paid-up equity capital comprising 63,60,750 shares as on February 17, 2005.

* Excluding 600,000 (9.43%) held by Standard & Poor's International LLC

Interlink Financial Services Board to consider stock split

9th May 2005: The board of Interlink Financial Services Ltd. will meet on May 16 to consider a stock split, the company informed the Bombay Stock Exchange today.

Dishman Pharmaceuticals Board approves to issue $50mn FCCBs

9th May 2005: Dishman Pharmaceuticals & Chemicals Ltd will issue unsecured Foreign Currency Convertible Bonds up to $ 50 million with a right to retain over-subscription upto 20 per cent of the issue. The board at its meeting on Sunday also decided to convene an Extraordinary General Meeting on June 3 for approval by shareholders, the company informed the Bombay Stock Exchange today.

Kotak Mahindra Bank - Grant of Stock options

9th May 2005: Kotak Mahindra Bank Ltd has informed BSE that the Bank on May 07, 2005, has made a grant of a 10,58,600 stock options to employees of the Bank and its subsidiaries in accordance with the provisions of the provision of the Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme), Guidelines, 1999. This includes 1,28,500 options granted to Directors which are subject to approval of Reserve Bank of India.

The exercise price of the options is its Rs 200 per share. 33% of the options are exercisable between June 01, 2006 and March 01, 2007, a further 33% between June 01, 2007 and March 01, 2008 and the balance 34% between June 01, 2008 and March 01, 2009. In respect of options granted to Directors the exercise period for the first tranche will commence from one year from the date of the approval of the Reserve Bank of India.

Goldiam issues 1:1 bonus shares

9th May 2005: The board of jewellery exporter Goldiam International Ltd. has set bonus share issue in the ratio of one share of every held, the Bombay Stock Exchange (BSE) said today.

Century Enka to buy back Acordis stake

9th May 2005: Yarn maker Century Enka Ltd will buy back up to 30% of its shares from Acordis Overseas Investment BV at Rs 122 each, the Bombay Stock Exchange (BSE) said today. It said Acordis holds 38.24% in the company. Century Enka's shares closed at Rs 153.70 on the BSE on Friday. The buyback is subject to shareholder and court approval.

Bata rights issue to hit market by end-May

7th May 2005: Bata India’s Rs 70-crore rights issue is likely to hit the market in the third week of May, according to a senior Bata official. The Securities and Exchange Board of India (Sebi) has already approved the issue. Bata India, part of Canada-based Bata Shoe Organisation, plans to offer the shareholders one share for every four they hold. This fund-raising exercise will help the shoe major to fund its restructuring programme. The Canada-based promoter holds 51% in Bata India and is expected to subscribe fully to the rights issue, according to sources. Domestic mutual funds and other financial institutions, including banks, hold 16.76% at the end of March 2005. Public holdings in the company stood a shade above 26%.

Godrej Foods - Delisting of Securities from 2 Stock Exchanges

7th May 2005: Godrej Foods Ltd has informed BSE that the Securities of the Company have been delisted from the Madhya Pradesh Stock Exchange w.e.f. March 21, 2005 & from the National Stock Exchange of India Ltd (NSE) w.e.f. April 19, 2005 pursuant to the Securities & Exchange Board of India (Delisting of Securities) Guidelines, 2003.

Infosys ADR offer opens on May 9

7th May 2005: Infosys has informed the stock exchanges that its American Depository Receipts offering will open on May 9 and end on May 19. The firm is seeking to convert up to 16 million shares listed on Indian stock exchanges in Mumbai, into American Depository Receipts (ADRs) through a sponsored secondary issue. When listed as American Depository Shares on the Nasdaq, these will increase the company’s float on that exchange by around 6 per cent, taking the total to 14 per cent. Proceeds of the sale will go to holders of equity shares in India who turn in those shares for the US listing. The company was providing all equity shareholders the opportunity to participate in the ADS offering on terms contained in a separate Invitation to Offer, Infosys said.

IDBI - Issue of seventh tranche of IDBI Omnibonds (2005-06)

7th May 2005: Industrial Development Bank of India Ltd (IDBI Ltd) has informed BSE that it proposes to launch the seventh tranche of IDBI Omnibonds (2005-06) issue on May 09, 2005, viz. IDBI Omnibonds 2005K for an amount of Rs 950 million.

HCL Infosystems has allotted 4,896 equity shares under ESOS

7th May 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 4896 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme'.(ESOS).

Associated Cement Companies Ltd (ACC) allotted shares under Employees Stock Options

ACC has informed BSE that pursuant to the resolution passed by circular dated May 06, 2005, by the Shareholders/Investors Grievance Committee:

29,050 shares were allotted against exercise of Stock Options granted to employees under the Employees Stock Option Scheme 2000.

10,674 shares were allotted against exercise of Stock Options granted to employees under the Employees Stock Option Scheme 2001.

25,125 shares were allotted against exercise of Stock Options granted to employees under the Employees Stock Option Scheme 2002.

23,850 shares were allotted against exercise of Stock Options granted to employees under the Employees Stock Option Scheme 2003.

Multi-Arc India Board to consider Rights Issue

6th May 2005: Multi-Arc India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 13, 2005, to consider Issue of Equity Shares on Right Basis to existing shareholders.

Flextronics Software has allotted 17,663 equity shares under ESOP

6th May 2005: Flextronics Software Systems Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 05, 2005, has allotted 17,663 equity shares to the employees of the Company who have exercised their options of conversion of warrants under the ESOP scheme of the Company.

Satyam Computer - Conversion of Stock Options

6th May 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 16,253 equity shares through circular resolution on May 06, 2005 under stock option plans of the Company.

Filtron Engineers - Delisting of shares from PSE

6th May 2005: Filtron Engineers Ltd has informed BSE that the shares of the Company have been delisted from Pune Stock Exchange Ltd (PSE) w.e.f. March 31, 2005.

Nagarjuna Construction (NCC) to consider stock split

6th May 2005: The board of Nagarjuna Construction Company Ltd. will meet on May 16 to consider a proposal to split its shares, the company told the Bombay Stock Exchange today.

Tata Teleservices allotted equity shares on conversion of FCCBs

6th May 2005: Tata Teleservices Maharashtra Ltd has informed BSE that the Finance Committee of the Board of Directors of the Company has approved the issue and allotment of an aggregate of 37,36,417 Equity Shares of Rs. 10/- each to various investors who have exercised their right to convert FCCBs of US$ 2,100,000 held by them into Equity Shares. The Equity Shares have been issued and allotted at a premium of Rs, 14.96 per Equity Share (i.e., at a Issue Price of Rs.24.96 per share) in accordance with the terms of the FCCB Issue. The deemed date of allotment of the Equity Shares is April 29, 2005. It may not be out of place to mention that out of the total FCCBs of USD 125 million issued by the Company in June 2004, FCCBs aggregating USD 49.06 million have so far been converted into 8,72,89,834 equity shares (including 6th Tranche) of the Company at a premium of Rs.14.96 per share.

Shopper's Stop IPO priced at Rs 238

6th May 2005: The initial public offering of Indian retailer Shopper's Stop has been priced at Rs 238 per share, closer to the top end of a previously set band of Rs 210 to Rs 250, a banker said late on Thursday. The issue of 6.95 million shares, representing 20.2% of the retailer's expanded equity, raised Rs 165 crore ($38.1 million). The issue was subscribed about 15 times when it closed on Wednesday, the banker said. The opening of the IPO was delayed last week by a day on an order of the Guwahati High Court, which was stayed by the Supreme Court the next day. The Bombay-based company has 16 stores across the country and plans to list on the Bombay and National stock exchanges in the next two weeks.

Foreign insurance cos can set up liaison offices here

5th May 2005: The RBI has said that it will provide general permission to foreign insurance companies that plan to set liaison offices (LO) in India once they obtain a clearance from the Insurance Regulatory and Development Authority (Irda).

But these LOs of foreign insurance companies cannot engage in any trading, commercial or industrial activity. Moreover, these offices cannot offer any consultancy or any other services either directly or indirectly.

Prior to the establishment of the insurance regulator, the RBI had been granting approval for setting up LOs. Foreign insurers set up such offices in India to examine the prospects of doing business through joint ventures. Several companies have a LO through which they conduct a search for a partner and hold negotiations.

Among other conditions set by RBI, the LO will not have signing/commitment powers and will have to meet its expenses exclusively through funds received from their head office. It cannot borrow or lend money from/to any person in India, nor can it acquire immovable property in the country.

4% VAT on life-saving drugs to continue

5th May 2005: The government has dropped the move to exempt life-saving drugs from the purview of the value added tax (Vat). They will continue to attract 4% tax. While states will have the freedom to make exceptions to this rule for a select list of medicines, the empowered committee of state finance ministers has decided not to notify drugs in the category of goods exempted from Vat.

At its meeting here on April 26, the empowered committee had resolved to firm up a list of life-saving drugs in the wake of the proposal made by some states to exempt at least some commonly used medicines from Vat.

On that day, the panel had also announced the decision to add a small number of items including salt and bread to the original list of 46 items eligible for exemption. Also, Vat on medical equipment and devices were cut from peak rate of 12.5% to 4%. But a final decision on the proposal to keep drugs out of Vat could not be taken. “There will not be further exemptions,” Ramesh Chandra, the panel’s member secretary said on Wednesday.

Nicholas Piramal Committee of Directors approves 1:10 Rights Issue

5th May 2005: Nicholas Piramal India Ltd has informed BSE that Committee of Directors of the Company (Constituted by the Board of Directors for the purpose of taking various decision in connection with Rights issue) at its meeting held on May 05, 2005 has approved the Share Ratio for the Rights Issue as 1:10 i.e. one Rights Equity Share of Rs 2/- each for every 10 Equity Shares of Rs 2/- each held by the shareholders in the Company as on the Record Date to be later announced. The price per share for the Rights issue would be decided later as may be permitted but prior to filing Letter of Offer with the Designated Stock Exchange.

GTL - Conversion of FCCBs

5th May 2005: GTL Ltd has informed BSE that the Company has allotted 1,991,308 equity shares on May 02, 2005 on conversion of Foreign Currency Convertible Bonds (FCCBs) of CHF 5.5 million. The Company had launched its FCCB issue for CHF 80 million in August 2004, with an option to the bondholders to convert into equity shares anytime from November 22, 2004 upto August 20, 2009 at a fixed conversion price of INR 103/- per equity share. With the conversion of FCCBs as above on May 02, 2005, the foreign shareholding in the Company has gone up to 28.74% of the Company's expanded capital.

Solix Technologies bonus shares in 10:1 ratio

5th May 2005: Solix Technologies said today that it will allot bonus equity shares to its shareholders. The board of directors have approved the allotment of bonus shares in the ratio of 10:1 that is, ten bonus equity shares for every one held by the shareholders, by capitalisation of available reserves into the paid-up capital of the company, Solix informed the Bombay Stock Exchange. The board has fixed the record date as March 14, 2005, it added.

Board of Greenply Industries approves stock split

5th May 2005: Greenply Industries Ltd said today that it has approved stock split of equity shares. The board of directors have recommended a sub-division of equity shares of Rs 10 each into two equity shares of Rs 5 each, the company informed the Bombay Stock Exchange. The board has also decided to merge Worthy Plywoods Ltd with the company, it added.

Gujarat Apollo Board recommends 1:1 Bonus Issue

5th May 2005: Gujarat Apollo Equipments Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 05, 2005 has proposed the issue of Bonus Shares in the ratio of 1:1. The existing paid-up capital of the Company is Rs 35 million. Further the Company has informed that the Extra Ordinary General Meeting for approval of the members is proposed to be held on June 25, 2005.

Large numbers of Mutual Funds fall back in the market

5th May 2005: Investors were in for a loss as they charged in to seize par value offers from MFs. At present only five schemes out of fifteen are trading at a premium. The rest 66% are being traded at loss or discount to the initial offer price which varies from 10% to 2%. The 10 loss making funds have led the investors to lose out Rs. 300 crores. However, even the remaining five schemes have fetched a mere 22 crores gain on an investment of 1950 crores.

LIC MF Opportunity Fund, which collected over Rs 100 crore in February 2005, has been the biggest loser. Its net asset value declined by 9.54% over its offer price of Rs 10 per unit. The fund also underperformed to Sensex and NSE mid cap index. The second biggest loser is Can Emerging Equities. Its NAV declined 8.5%.

The third biggest losers were the Nifty and Sensex funds floated by Reliance Mutual Fund. The NAV of the Reliance index funds, which were floated in February, declined by around 6.75%. Fourth was the Opportunity Fund launched by ABN AMRO. Its NAV declined 5.5%. The biggest gainer was Kotak Midcap Fund followed by Multi Cap Fund floated by Chola Mutual Fund.

HB Leasing Board to consider delisting of shares from DSE

5th May 2005: HB Leasing & Finance Company Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 07, 2005, to consider the following:-

1. Take on record the Audited Financial Results of the Company for the year ended as on March 31, 2005.

2. Seeking the shareholders approval for the delisting of equity shares of the Company form the Delhi Stock Exchange.

Simbhaoli Sugar Board to consider right issue

5th May 2005: Simbhaoli Sugar Mills Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 10, 2005, to consider right issue of equity shares of the Company to meet cost of its business plans.

Kanoria Chemicals voluntarily delisted shares from CSE

5th May 2005: Kanoria Chemicals & Industries Ltd has informed BSE that the Equity Shares of the Company has been voluntarily delisted from The Calcutta Stock Exchange Association Ltd (CSE) w.e.f. March 30, 2005.

Vyapar Industries Board approves proposal for raising of funds by public issue

4th May 2005: Vyapar Industries Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 29, 2005, has approved the following:

1. Raising a sum upto Rs 400 million by was of public issue for the purpose of financing its expansion program and also for its enhanced working capital requirements.

2. Extra-Ordinary General Meeting will be held on May 24, 2005 for the purpose of obtaining shareholders approval for the public issue and raising the FII investment limit in the Company.

New penalty norms for BSE brokers, History of violation and extent of profit to be determinants

4th May 2005: The Stock Exchange, Mumbai (BSE) has decided to revise the penalty structure imposed on its members by the surveillance and supervision department. The revised norms, which became effective from Monday, are based on history of violations by a particular member.

The penalty will be levied on the basis of profit accrued from the violation. These norms will be applicable on all violations on or after April 1, 2004 and detected after May 2, 2005. The history of violations by members will be built from April 1, 2004 onwards.

BSE’s surveillance department monitors positions of all the active trading members. In a notice sent to all its members, BSE has listed eight types of violations for which penalty norms have been revised.

These include circular trading, fictitious trading, creating artificial volumes, price manipulation (rigging), manipulation of order book, placing of orders at unrealistic prices when circuit filters are open, placing orders that result in rogue trades and late submissions of details or submission of wrong information.

With respect to building of history of violations by members, a penalty point structure has been devised as per which every warning issued to members by the exchange authorities will attract five penalty points.

So, fine up to Rs 10,000 will attract 15 points, fine of more than Rs 10,000 but less than Rs 25,000 will attract 40 points, 50 points will be levied on a member who is asked to pay a fine of more than Rs 25,000 but less than Rs 50,000 while a member paying fine of Rs 50,000 to Rs 1 lakh will attract 60 penal points. If the penalty levied is based on profit, points will be calculated on the basis of profit impounded.

The profit to be impounded will be calculated for violations which are coupled with price manipulation and where price manipulation can be established beyond doubt. Also, it will be calculated only when the cost of acquisition and the sale proceeds can be calculated\estimated based on weighted average price.

For all the violations except the one related to late submission of details, under the existing norms penalty levied was in the range of Rs 15,000-25,000 or two to three times of profit made out of the transaction, whichever was higher.

Against the existing penalty structure, the revised norms envisage categorising market violations into three category viz, I, II and III based on penalty points accumulated prior to the violation under consideration.

SBI MF to launch four products by Sept 2005

4th May 2005: SBI Mutual Fund, one of the fastest growing asset management companies in the country, has decided to launch four new products this fiscal, while mulling an offshore fund and tie-ups with other banks to augment growth. The AMC, which recorded a 26% growth in 2004-05, would launch a commodity fund, capital guaranteed fund, multi-cap fund and multi income plan floater by September, 2005, company managing director P G R Prasad said today.

The company has already applied to market regulator Sebi for the commodity fund, while application for the remaining three would be made soon, he said. The SBI MF was also planning the launch of an equity-based offshore fund and was talking to designated partners. It has also tied up with Andhra Bank, Federal Bank and some private sector banks in the southern region and was holding talks with Allahabad Bank to sell its products through its branches.

On the overseas front, SBI MF has tied up with local partners in Dubai and Kuwait. It would also join hands with local players in Muscat, Bahrain, Hong Kong and Singapore soon. Meanwhile, SBI, sponsor of SBIMF, has entered into a joint venture with Societe General Asset Management (SGAM) of France to form SBI Funds Management. Prasad said SBIMF, having Rs 6,595 crore worth of assets under its management, had 37% stake in the JV.

ICICI Bank allotted 1,16,742 equity shares under ESOS

4th May 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 116,742 equity shares of face value of Rs 10/- each on May 02, 2005 under the Employees Stock Option Scheme, 2000 (ESOS).

Patni Computer - Grant of options

4th May 2005: Patni Computer Systems Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 26, 2005 has approved the grant of 45,000 options under the Company's Stock Option Plan 2003 (Patni ESOP 2003) to the Independent Directors of the Company at an Exercise Price of Rs 381/- each per share.

Further the Company has informed that The Compensation Committee of Directors of the Company vide circular resolution dated April 27, 2005 has approved the grant of 1,45,000 Options under the Company's stock Option Plan 2003(Patni ESOP 2003) to certain employee of the Company at an Exercise Price of Rs 381/- each per share.

Vijay Textiles Board approves allotment of 2:1 Bonus Shares

4th May 2005: Vijay Textiles Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 04, 2005, has allotted 6,65,34,000 equity shares of Re 1/- each as Bonus shares to the existing members in the ration of 2:1 i.e. two additional equity shares for every one equity share held by the members.

Hinafil India Board to consider stock split

4th May 2005: Hinafil India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 10, 2005, inter alia, to consider splitting of shares from Rs 10/- to Rs 1/- subject to the approval of the shareholders at Extra Ordinary General Meeting.

Spentex Industries voluntarily delisted shares from CSE

Spentex Industries Ltd has informed BSE that the securities of the Company have been voluntarily delisted from The Calcutta Stock Exchange Association Ltd (CSE) with effect from March 30, 2005.

Flextronics Software Board to consider proposal for delisting of securities from BSE, NSE

4th May 2005: Flextronics Software Systems Ltd has informed BSE that the Board of Directors of the Company have received letter from the Company's Promoter, Flextronics Sales & Marketing (L-A) Ltd on May 04, 2005, proposing for voluntary delisting of the Company, who are currently listed on the Stock Exchange, Mumbai and the National Stock Exchange of India, under the provision of Securities and Exchange Board of India (Delisting of Securities) Guidelines, 2003 ("Regulations"), to acquire all outstanding shares of the Company, in accordance with the Regulations. Hence, the Company proposes to take up the matter at the forthcoming meeting of the Board of Directors of the Company scheduled to be held on May 05, 2005.

Tamil Nadu Newsprint & Papers - Delisting of equity shares from MSE

4th May 2005: Tamil Nadu Newsprint & Papers Ltd has informed BSE that the equity shares of the Company have been voluntarily delisted from Madras Stock Exchange (MSE) with effect from April 28, 2005.

Satyam Computer - Conversion of Stock Options

4th May 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 45,322 equity shares through circular resolution on May 03, 2005 under stock option plans of the Company.

Gujarat Ambuja Cements has allotment 33,000 shares under ESOS

4th May 2005: Gujarat Ambuja Cements Ltd has informed BSE that the Share Allotment & Investor Grievance Committee at its meeting held on May 03, 2005, has allotted 33,000 Equity Shares on exercise of the stock options by the employees as per details given below:-

1. ESOS 2000-2001 - 4,400

2. ESOS 2001-2002 - 6,200

3. ESOS 2002-2003 - 7,750

4. ESOS 2003-2004 - 14,650

Royal Airways to raise Rs 9 cr via FCCBs

4th May 2005: Royal Airways Ltd. said today its board has approved raising upto Rs 9 crore by way of foreign currency convertible bonds (FCCBs) to buy additional aircraft, a company spokesman said. "The board has approved raising up to Rs 9 crore through FCCBs to buy aircrafts," the official said. Royal Airways, which has recently got regulatory approval to change its name to SpiceJet Ltd., proposes to launch a budget airline called SpiceJet soon.

Arvind Mills to seek shareholders' nod for GDR issue

4th May 2005: Arvind Mills is seeking shareholders' approval to issue upto 14 million Global Depository Receipts (GDRs) and related securities. An extra ordinary general meeting of the shareholders of the company would be held on May 30 to consider and approve issue of GDRs and related securities, including green shoe option, if any, Arvind Mills informed the Bombay Stock Exchange today.

Will RBI face service tax now?

4th May 2005: If the government has its way, then Reserve Bank of India is soon to face the pinch of service tax. At present, the central bank is only exempt from income tax under the RBI Act.

However, it is noticed that the RBI Act came into existence in 1949 when there was no service tax. One industry source states that, therefore, the Act has not provided for an exemption from service tax.

The RBI handles the government business such as distribution of pension, manages subscription to government bonds, collection of direct and indirect taxes, it is also considered a storehouse of financial data.

The Centre has budgeted service tax collections for 2004-05 at Rs 14,150 crore. The reduction of tariff and duty structure including the decreasing of the rate of corporate tax last year has led the government to balance the loss of revenue by heightening service taxes.

Open Offer by IVRCL Infrastructures to the public shareholders of Hindustan Dorr-Oliver

4th May 2005: UTI Securities Ltd ("Manager to the Offer") on behalf of IVRCL Infrastructures & Projects Ltd ("Acquirer") pursuant to Regulation 10 & 12 in compliance with the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulation 1997 and subsequent amendments thereto [SEBI (SAST) Regulations) has announced as below:


The Offer


The Acquirer is making an Offer to the public shareholders of Hindustan Dorr-Oliver Ltd ("Target Company") to acquire 7,95,625 fully paid-up equity shares of Rs 10 each representing 18.80% of the paid-up equity shares capital of the Target Company, being existing Public Shareholding of the Company, at a price of Rs 145.60 per share ("Offer Price") payable in cash ("Offer") subject to the terms & conditions.


Scheduled of Activities


Specified Date: May 27, 2005


Date of Opening of the Offer: June 22, 2005


Date of Closing of the Offer: July 11, 2005

HCL Technologies allots equity shares under ESOP

3rd May 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company on May 03,2005, has allotted 1,66,918 equity shares of Rs 2/- each (including 53,436 shares at a premium of Rs 125.50 per share), 3,400 shares at a premium of Rs 157.50 million, 3770 shares at a premium of Rs 194.50 per share, 12,530 shares at a premium of Rs 222.00 per share, 75,054 shares at a premium of Rs 233 per share, 5,348 shares at a premium of Rs 249 per share, 4,260 shares at a premium of Rs 251.50 per share, 600 shares at a premium of Rs 257.50 per share, 1130 shares at a premium of Rs 281.50 per share, 7,390 shares at a premium of Rs 288 per share) to the employees on exercise of their Stock Options under the 1999 & 2000 Employee Stock Option Plans (ESOP).

Narmada Chematur - Delisting of equity shares from 2 Stock Exchanges

3rd May 2005: Narmada Chematur Petrochemicals Ltd has informed BSE that the equity shares of the Company have been delisted from The Stock Exchange, Ahmedabad w.e.f. February 18, 2005 & from Vadodara Stock Exchange Ltd.

Nagreeka Exports - Delisting of equity shares from CSE

3rd May 2005: Nagreeka Exports Ltd has informed BSE that the equity shares of the Company have been delisted from The Calcutta Stock Exchange Association Ltd (CSE) with effect from March 30, 2005.

Chola GAF gets good response

3rd May 2005: The Chola Mutual Fund, the financial services arm of the Murugappa group, on Tuesday said the response to its recently launched Chola Global Advantage Fund has been 'good' so far, particularly from retail investors. Subscription for the open-ended diversified equity fund opened from April 19 and would end on May 16.

Though the company had not set any specific target for the fund, the initial response had been good with more retail investors opting for it, Vineet Potnis, Chief Marketing Officer of the company said.

The fund would invest in Indian companies, which were expanding their business in Global markets and expecting at least 20% of turnover from exports, he said. The company had identified 30 to 35 such companies out of the 123 globally competitive Indian companies, Potnis said.

The scheme offered both cumulative and dividend options and units would be offered at Rs 10 per unit plus applicable load. Minimum application amount during the initial offer period is Rs 5,000 and in multiples of Rs one thereafter, he said.

Insurance Regulatory Authority of India (IRDA) appoints 3 new TAC members

3rd May 2005: Insurance Regulatory Authority of India has elected three new members for its Tariff Advisory Committee, which sets the premium rates for various general insurance products. The members are GIC chairman R K Joshi, National Insurance chairman B Chakraborti and Oriental Insurance chief M Ramadoss, IRDA said in a circular. The appointment comes after the retirement of heads of three general insurers -- P C Ghosh (GIC), H S Wadhwa (NIC) and S L Mohan (OIC).

IRDA chairman C S Rao heads the TAC, which also has IRDA member (non-life) Mathew Varghese as vice chairman. Other members of TAC are Ajit Narain of Iffco Tokio, Antony Jacobs of Royal Sundaram Alliance Insurance, Shrirang V Samant of HDFC-Chubb and Maharashtra Government Insurance Fund CEO A K Abhang. K K Srinivasan is the secretary of the Committee.

Infosys allots 90,288 shares as Esops

3rd May 2005: Infosys Technologies Ltd. today allotted 90,288 equity shares to its employees under the stock options plans of the company. The Board of Directors has allotted 5,220 equity shares of par value of Rs 5 to Deutsche Bank Trust Company Americas, the company's depository, as underlying shares in respect of the ADR's to be issued and allocated to the purchasers. This comes in pursuance to the exercise of the options granted to the employees under the company's 1998 Option Plan, Infosys informed the Bombay Stock Exchange (BSE). The Board has also allotted 85,068 equity shares of par value of Rs 5 to the optionees as detailed in the resolution, pursuant to the exercise of the options granted to the employees under the company's 1999 Stock Option Plan, it said.

Reliance Energy (REL) allots 97.5 lakh shares to Reliance Power Ventures Limited (RPVL)

3rd May 2005: Reliance Energy today allotted 97.5 lakh equity shares to Reliance Power Ventures Limited on conversion of warrants. The company informed the Bombay Stock Exchange that a decision to this effect was taken at the meeting of committee of directors held on May 2, 2005 and it allotted equity shares of Rs 10 each at a premium of Rs 630 each to RPVL on conversion of warrants. The company said the approval was accorded by shareholders of the company at the Extraordinary General Meeting on March 22, 2004, pursuant to the SEBI (DIP) Guidelines, 2000.

It further said the company had allotted warrants of Rs 640 each to one of the promoter companies’ viz. RPVL on April 2, 2004. Each of these warrants is convertible into one equity share of Rs 10 each at a premium of Rs 630 each. RPVL had paid 90 per cent of the issue price of warrants, that is, Rs 576 per warrant. RPVL, in exercise of the option of conversion, paid the balance amount of Rs 64 per warrant and applied for allotment of 97,50,000 equity shares on the above terms.

IDFC paves way for Govt to sell stake

3rd May 2005: The government is open to divesting its stake in the Infrastructure Development Finance Company Ltd (IDFC) in three years, according to the new shareholders agreement to be signed in few weeks. IDFC's initial public offer is slated to hit the markets by June-end, but the size of the issue is not known. However, Rajiv B Lall, managing director & CEO, IDFC has stated for three years, post-IDFC's initial public offering (IPO), there will be sovereign backing but after that the government may even exit the institution. Currently, the government is the single largest shareholder in IDFC with 35 per cent. The government's stake will be significantly diluted post issue, but it will remain the single largest shareholder. Other shareholders include Industrial Development Bank of India (IDBI) and State Bank of India both of which hold 5 per cent each, domestic institutions hold a total of 25 per cent.

Foreign investors including American International Group, IFC Washington, Asian Development Bank (ADB), Government of Singapore, CDC, Deutsche Asia Pacific among a host of others, hold 40 per cent. The institution is aiming to be the preferred financier for the infrastructure sector by offering various options such as senior secure debt, junior secure debt, structured equity, and mezzanine funds to generate fee-based income. In three years time, IDFC will need capital at the projected growth rate of 25-30 per cent a year. The institution currently has total assets of Rs 8,423 crore.

RBI hikes reverse Repo rate by 25 basis points (bps)

3rd May 2005: The RBI has hiked the Reserve Repo rate by 25 basis points (bps). It is now 5.0% from 4.75%. The aim is to maintain price stability in the country. However, the fixed repo rate under LAF will continue to remain at 6%. "The overall stance...will continue to be...provision of appropriate liquidity to meet credit growth and support investment and export demand in the economy while placing equal emphasis on price stability," the RBI said in a statement.

The Bank Rate has remained untouched at 6%. The CRR has been left at 5% following the review of the current liquidity situation though the central bank would continue to pursue the mid-term objective of reducing the CRR to minimum statutory level of 3%. The latest need of the day is to mend the existing guidelines for finances of the SSI’s which constitute an important part of the economic growth. The RBI is reviewing all its existing guidelines on financing small scale sector. Similarly, the sectors of debt restructuring, nursing of sick units are also going to be taken under consideration with a view to rationalising, consolidating and liberalising them.

IT firms to benefit from revised FBT

2nd May 2005: Software companies are set to be the biggest beneficiaries of the recast in the proposed FBT valuations. For all employers, 20% of the total expenses incurred on conveyance, tour and travel (including foreign travel) will be the base on which FBT will be charged.

But for software companies, only 5% of such expenditure will be charged to FBT. Another sweetener is that only 5% of the total expenses incurred by software firms on use of hotel, boarding and lodging will be taken for calculating FBT.

This will substantially reduce their tax liability. Extensive travel undertaken by software professionals could be the rationale for lowering the valuation. In fact, FM P Chidambaram has gone on record to say that FBT will not be levied on legitimate business expenses.

Employers in sectors (other than computer software) will be taxed on 20% of the total expenses on use of hotels. Pharma companies will also stand to gain. Here too, the base for calculating expenses on foreign travel and tour will be 5%.

The government is also set to continue with sops for employers in the hotel business. The value of fringe benefits will be 5% instead of 20% on any expenditure incurred on or payment through paid vouchers that are not transferable and usable only at eating joints.

For transporters, the value of fringe benefits will be 5% instead of 20% on expenses incurred in the repair, running (including fuel) and maintenance of cars and the amount of depreciation.

For airlines, the value of fringe benefits on expenses incurred for repair, running (including fuel) and maintenance of aircraft and the amount of depreciation will be taken as nil.

FBT retained at 30%

2nd May 2005: Finance Minister P Chidambaram on Monday did not dilute the effect of the fringe benefit tax and retained it at 30 per cent for corporate India. However, for individuals, he had some respite in the form of removing the withdrawal tax altogether for savings bank account holders. For current account holders, withdrawals of over Rs 25 lakh will be taxed.

            Chidambaram also brought some cheer to women tax payers, hiking the exemption limit to Rs 1.35 lakh per annum. For India Inc, the fringe benefit tax noose seems to have tightened, with the several deemed benefits now coming under its ambit. Contributions to superannuation funds will attract the FBT as will concessional tickets provided to staff by companies and phone mobile bills.

The following are highlights of what Finance Minister Chidambaram announced on the floor of Parliament:

• Expenses on conferences to come under FBT

 

• Repairs and maintenance of cars to come under FBT

 

• Guest house and club facilities, gifts to be under FBT

 

• Foreign travel expenses to be under FBT

 

• Sales promotion expenses exempted from FBT

            • Contribution to superannuation funds to be under FBT

Charitable trusts, Universities likely to escape fringe tax

2nd May 2005: Charities and universities can now heave a sigh of relief. Charitable trusts, universities and institutions already enjoying income tax exemption will also be exempt, with a recast of the definition of ‘employer’.

Fringe benefits would mean any privilege, service, facility or amenity, directly or indirectly provided by an employer, whether by way of reimbursement or otherwise. The deeming provisions may, however, stay.

Senior citizens and women have reason to cheer too. The FM is set to announce a hike in the threshold exemption for senior citizens from the proposed Rs 1.5 lakh to Rs 1.85 lakh. A pensioner with a taxable income up to Rs 1,85,000 will not have to pay income tax. For women, the threshold exemption is set to be raised from the originally proposed Rs 1.25 lakh to Rs 1.5 lakh. The tax burden of these segments worked out to be higher than last year due to the withdrawal of standard deduction and deduction under 80 L of the Income-Tax Act.

A higher threshold exemption will at least ensure that their tax liability does not rise further. Investors too, can a heave a sigh of relief, with the government planning to do away with the restrictions on eligibility of tax benefits under Section 80 C. The term “income chargeable to tax” is set to be dropped.

Savings accounts likely to be exempt from withdrawal tax: FM

2nd May 2005: While moving official amendments to the Finance Bill on Monday, finance minister P Chidambaram is all set to blunt the criticism against his budget proposals by whittling down both the controversial tax proposals on fringe benefits and cash withdrawals. He is also likely to raise the exemption limit for women and senior citizens. Perpetual tax exemptions to units located in special economic zones is also set to be granted.

The FM is set to spare savings bank accounts from the 0.1% tax on cash withdrawals. And that’s not all. The threshold limit for the tax that would be levied mainly on withdrawals from current accounts and encashment of term deposits is being raised to Rs 25,000 for individuals and HUFs. The limit will be even higher at Rs 1 lakh for businesses. This means a 0.1% tax will have to be paid by companies, firms and institutions only if cash withdrawals exceed Rs 1 lakh on a single day. This is far more liberal than the original budget proposal to levy the tax on withdrawals exceeding Rs 10,000 on a single day.

Corporate India will have to look at paying the proposed fringe benefit tax, but will feel the bite a whole lot less. Advertising is set to be exempt from FBT. Expenses on conveyance, tour and travel (including foreign travel) are likely to attract FBT. Use of telephone including mobile phones will attract a 20% FBT — higher than the originally-proposed 10%. Expenditure on leased lines is, however, set to be excluded. Pharma and IT companies will be gainers, with a lower tax burden. Individuals and HUFs engaged in business will be out of the purview of FBT.

UTI MF collects over Rs 1,000 cr from Dividend Yield Fund

2nd May 2005: A K Sridhar, chief investment officer of UTI AMC, today said the fund has received close to two lakh applications for the new dividend yield fund, and the amount collected in the IPO may be over Rs 1,000 crore. The fund opened for subscription on April 11 and closes tomorrow.

"We will distribute dividends as frequently as possible," Sridhar said, adding the new fund targets even risk-averse investors as it will offer a comfortable return through dividends without the risk of capital depreciation. He said the new fund is not looking at blue-chip stocks like Reliance or Infosys, which do not pay a higher dividend as a proportion to their share prices and do not promise much capital appreciation. Instead, "we are looking at 40-45 high dividend yielding stocks in about five sectors," he added.

Some of the companies which qualify for the new UTI AMC scheme are ONGC, HPCL, GSFC, ICI, Glaxo, Tata Chemicals, Ashok Leyland and Bata. The fund will invest money in those stocks that declare dividends more than the average dividends of Nifty and BSE Sensex companies. Although some of the sectors like petroleum and banks witnessed lower dividends last fiscal, Sridhar said dividend payments may improve this fiscal with higher growth in industry and net profits of corporates and banks.

The National Buildings Construction Corporation Ltd (NBCC) will get itself rated & listed

2nd May 2005: NBCC, a PSU which was in the red just four years ago, is today a Rs 700-crore plus company, with profits almost doubling every year for the last three years. With an order-book position worth more than Rs 3,000 crore, it now aims to cross the Rs 1,000-crore turnover barrier to become a navratna public sector company. It’s CMD Arup Roy Choudhury, who is credited with turning NBCC around, talks about various issues confronting the industry in an interview with Sanjeev Sinha. Excerpts:


Despite many recent sops from government, the construction industry seems to be in the doldrums. Why?


Only the tax-benefit extended to housing loans has actually benefited the construction industry; but indirectly, in the form of a real estate boom. The government, however, has imposed a 10.2% service tax on this sector and, in the recent budget, included housing units (numbering more than 12) in its net. Taxes on steel are also leviable now, which will raise costs by 3-4%, which the customer will ultimately have to pay. Other factors that plague the industry include an unorganised/untrained workforce, corruption at all levels, uncontrolled (and erratic) increases of basic raw material prices plus the absence of a national level regulator.


How does the industry compare with its global counterparts? What should it do to compete internationally?


Indian companies have been doing exceedingly well compared to their global counterparts. But they come under severe constraints when operating in third countries, where the country of the competitor’s origin is a major player in political and financial terms. Companies from such countries are at an advantage in projects that need multilateral or bilateral financing. Further, some global action has to be taken to demolish the demographic barrier which seems to be there all across the world where, even today, white-skinned supervisors are considered to be more knowledgeable and paid much more than dark-skinned engineers or technicians.

 

Are the steep rises in cement and steel prices effecting the industry’s performance?


The steep price rises have definitely affected the industry because it has become normal practice now to award the work without price escalation. And, even if that gets provided for, the normal indices of the escalation clause that a contract document might provide would not compensate for such abnormal increases.


The nation’s construction industry is still dominated by ‘fly-by-night’ operators. Can stricter norms and the presence of a regulatory body improve the situation?


To prevent fly-by-night operators from operating in the highly lucrative construction sector, and especially in the real estate sector, it is necessary that the customer should consider not only the cost but also the delivery mechanism. It should not always be the case of going for the cheapest cost available or cheapest tender; one also must look at quality of the product, execution capability and the realistic cost considerations thereof.

The construction sector and the real estate sector should have a uniform platform for regulating the entire industry. At the moment there are 7-8 bodies, all of which claim to operate in each other’s field and claim to be pushing the interest of the construction and real estate industry. Yes, strict norms along with the presence of a regulator could be considered in the construction industry. But the regulator must be a person of eminence with experience drawn from the construction industry, not a retired bureaucrat.


What is NBCC’s focus now?


NBCC’s immediate goals are to wipe out all the losses that it has incurred in its operations in Libya and Iraq almost 15 years ago. Followed by that, NBCC would go in for a rating from a professional body and list itself in the stock exchange, where NBCC shares should be traded as a tradable commodity. NBCC will also soon cross the Rs 1,000-crore turnover barrier and can thereafter become a navratna public sector company.

Oriental Bank of Commerce (OBC) issue priced at Rs 250/share

2nd May 2005: OBC has fixed the issue price at Rs 250 per share. The public float of 5.80 crore shares was fixed at Rs 250 each, after being offered in a pre-determined Rs 235-260 band. The issue had closed on April 25, 2005 with a subscription of nearly 18 crore shares.

HCL Infosystems allots 5,000 equity shares under ESOS

2nd May 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 5000 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme (ESOS)'.

GTL Committee of Board to consider conversion of FCCBs

2nd May 2005: GTL Ltd has informed BSE that a meeting of the Committee of the Board will be held on May 02, 2005, to consider allotment of 19,91,308 equity shares of Rs 10/- each for cash at a premium in terms of the offer document to Foreign Currency Convertible Bond (FCCB) holders, consequent upon the exercise of right to convert FCCBs worth Swiss Francs (SFr) 55,00,000/-.

Ramco Systems Board to consider Rights issue

2nd May 2005: Ramco Systems Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 09, 2005, to consider issue of equity shares on Rights Basis.

Sgn Telecoms Board to consider stock split

2nd April 2005: Sgn Telecoms Ltd has informed BSE that a meeting of the Board of the Directors of the Company will be held on May 09, 2005, to recommend the splitting of 1 equity share of Rs 10 each into 10 equity shares of Rs 1/- each.

Skanska Cementation members approve delisting of equity shares from CSE

2nd May 2005: Skanska Cementation India Ltd has informed BSE that the members at Annual General Meeting of the Company held on April 29, 2005, inter alia, have accorded to delist the Company's equity shares from The Calcutta Stock Exchange Association Ltd (CSE), Calcutta without giving an exit option to the members.

Himatsingka Seide - Delisting of equity shares from CSE

2nd April 2005: Himatsingka Seide Ltd has informed BSE that the equity shares of the Company have been delisted from The Calcutta Stock Exchange Association Ltd (CSE) w.e.f. March 30, 2005.

Godrej Consumer Board to consider proposal for buy back

2nd May 2005: Godrej Consumer Products Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 10, 2005, inter alia, to consider a proposal for buy back of shares under the authority of the Board of Directors pursuant to the first proviso of section 77A(2)(b) of the Companies Act, 1956.

Dishman Pharmaceuticals Board to consider FCCB

2nd May 2005: Dishman Pharmaceuticals & Chemicals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on May 08, 2005, to review and consider, inter alia, the unsecured Foreign Currency Convertible Bonds (FCCB).

Asahi Infrastructure Board approves stock split

2nd April 2005: Asahi Infrastructure & Projects Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 29, 2005, has unanimously resolved to Spilt the existing Equity Share Capital consisting of 37,19,600 Equity shares of Rs 10/- each into 3,71,96,000 Equity Shares of Rs 1/- each subject to approval of shareholders in the forthcoming Extra-Ordinary General Meeting to be held on June 01, 2005.

Rallis India - Delisting of equity shares from CSE

30th April 2005: Rallis India Ltd has informed BSE that Equity Shares of the Company have been voluntarily delisted from Calcutta Stock Exchange Association Ltd (CSE) w.e.f. April 28, 2005.

Polaris Software - Grant of stock options under ASOP 2003

30th April 2005: Polaris Software Lab Ltd has informed BSE that the Remuneration & Compensation Committee of the Board of Directors of the Company at its meeting held on April 27, 2005 has granted 36,000 numbers of options at Rs 116.10 per share under the Associate Stock Option Plan 2003 (ASOP 2003).

Kilburn Engineering - Delisting of Shares from VSE

30th April 2005: Kilburn Engineering Ltd has informed BSE that the shares of the Company have been delisted from the Vadodara Stock Exchange Ltd (VSE) w.e.f March 24, 2005.

Innosoft Technologies members approve preferential issue of equity shares

30th April 2005: Innosoft Technologies Ltd has informed BSE that the members at the Extra Ordinary General Meeting of the Company held on April 30, 2005, have approved the issue of 11,50,000 equity shares of Rs 10/- each at a premium of Rs 15/- per share to Ms. Swarnalatha Bandla, USA on a private preferential basis.

Hindustan Construction to pay Rs 6/share dividend

30th April 2005: The board of directors of Hindustan Construction Company, at their meeting held on April 29, 2005, has recommended a payout of Rs 6/- per equity share. The company said in a release issued to the BSE today.

Himachal Futuristic - Conversion of FCCBs

30th April 2005: Himachal Futuristic Communications Ltd has informed BSE that the Company has on April 29, 2005, converted 31 Foreign Currency Convertible "C" Bonds (FCCBs) of US $ 50,000 each into 5795939 equity shares at the price of Rs 11.70 per share.

GCCL Construction & Realities - Delisting of Securities from ASE

30th April 2005: GCCL Construction & Realities Ltd has informed BSE that the Securities of the Company has been delisted from Ahmedabad Stock Exchange (ASE) w.e.f. March 31, 2005.

CCL Products gets shareholders' nod for FCCB issue

30th April 2005: The shareholders of CCL Products (India) Ltd, formerly known as Continental Coffee Ltd, have at the extraordinary general meeting held on Friday approved a resolution to raise funds to the tune of $20 million through issue of foreign currency convertible bonds (FCCBs) with a right to retain excess subscription to the tune of $2 million.

The EGM has also approved a proposal to enhance the borrowing powers of the board of directors to Rs 200 crore and authorised the board to create charge on the immovable and movable properties of the company to the extent of new borrowing limits of the board. Further, they approved an increase in the authorised capital of the company to Rs 20 crore; the company informed the stock exchanges.

Berger Paints Board approves buy back of equity shares

30th April 2005: Berger Paints India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 29, 2005, has approved buy back of the Company's own fully paid up Equity Shares of Rs 2/- each for an amount not exceeding Rs 185.90 million representing 10% of the total paid-up equity capital and free reserves of the Company, at a price not exceeding Rs 60/- per equity share.

The Company has clarified that the resolution passed by the Board at the said meeting providing for a maximum price of Rs 60/- does not indicate that the Company will be obliged to buy or continue to buy shares so long as the price is below Rs 60/-. Similarly the fact that the resolution indicates a maximum aggregate purchase price of Rs 185.90 million does not indicate that the Company will utilize or is obliged to utilize the entire amount of Rs 185.90 million in the buy-back.

Further the Company has informed that at the said meeting the Board of Directors has also decided to explore suitable relationships with appropriate global and regional paint companies, in order to sustain, expand and capture the multifold growth of the Indian paint industry in particular and the strategic countries in general.

BPL - Delisting of equity shares from DSE

29th April 2005: BPL Ltd has informed BSE that the equity shares of the Company have been voluntarily delisted from the Delhi Stock Exchange Association Ltd (DSE) w.e.f. March 31, 2005.

Godrej Consumer Products - Delisting of equity shares from CSE

29th April 2005: Godrej Consumer Products Ltd has informed BSE that the equity shares of the Company have been delisted from The Calcutta Stock Exchange Association Ltd (CSE) w.e.f. March 30, 2005.

GIC Housing Board defers public issue

29th April 2005: GIC Housing Finance Ltd has informed BSE that the Board of Directors of the Company at its meeting held today have deferred the decision of the issue of fresh capital through public issue.

GlaxoSmithKline Pharmaceuticals shareholders approve buyback of equity shares

29th April 2005: GlaxoSmithKline Pharmaceuticals Ltd has informed BSE that the shareholders of the Company has, through Postal Ballot, approved the buyback of the equity shares of the Company, upto a limit not exceeding Rs 2306.521 million being 25% of the existing paid-up share capital and Free Reserves of the Company, at a price not exceeding Rs 800 per equity share from the open market through Stock Exchanges.

H S India - Delisting of securities from 3 Stock Exchanges

29th April 2005: H S India Ltd has informed BSE that the securities of the Company have been delisted from the following stock exchanges:

1. Ahmedabad Stock Exchange Ltd with effect from March 31, 2005;

2. The Delhi Stock Exchange Association Ltd with effect from March 31, 2005; and

3. Jaipur Stock Exchange Ltd with effect from March 30, 2005.

GCCL Infrastructure - Delisting of securities from ASE

29th April 2005: GCCL Infrastructure & Projects Ltd has informed BSE that the securities of the Company have been delisted from Ahmedabad Stock Exchange (ASE) w.e.f. April 29, 2005.

Kalindee Rail - Delisting of equity shares from MSE

29th April 2005: Kalindee Rail Nirman Engineers Ltd has informed BSE that the shares of the Company have voluntarily delisted from the Madras Stock Exchange Ltd (MSE) with effect from March 31, 2005.

Gopala Polyplast - Delisting of securities from JSE

29th April 2005: Gopala Polyplast Ltd has informed BSE that the securities of the Company have been delisted from Jaipur Stock Exchange Ltd (JSE) w.e.f. March 30, 2005.

Khandelwal Extractions - Delisting of Equity Shares from DSE

29th April 2005: Khandelwal Extractions Ltd has informed BSE that the Company's equity shares have been delisted with the Delhi Stock Exchange (DSE) with effect from March 31, 2005.

Pricol - Delisting of equity shares on CSE & MSE

29th April 2005: Pricol Ltd has informed BSE that the equity shares of the Company have been delisted from the Coimbatore Stock Exchange Ltd (CSE) & Madras Stock Exchange Ltd (MSE).

Intra Infotech Board approves sub-division of shares

29th April 2005: Intra Infotech Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 28, 2005, has approved the sub-division of shares of the Company from Rs 10/- paid up to Re 1/- paid up.

Dagger-Forst Board approves Rights Issue

29th April 2005: Dagger-Forst Tools Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 28, 2005, has decided to issue Rights Shares, subject to various statutory approvals, at the ratio of one share for every three shares held, at a price to be decided by the Committee appointed by the Board in consultation with the Merchant Bankers.

Dabur India - Grant of Stock Options

29th April 2005: Dabur India Ltd has informed BSE that the Compensation Committee in its meeting held on April 28, 2005, has granted 1,21,757 options under Dabur Employees Stock Options Scheme 2000 to the eligible employees of the Company with the following terms & conditions:

1. Out of the above, 6,109 options have vesting period of 4 year & 6 months and the balance 1,15,648 options have vesting period of 1 year.

2. The said options shall be exercisable within a period of 3 years after vesting of the same.

3. The said options carry the right to apply for equivalent number of equity shares of the Company of Re 1/- each at par.

Glenmark Pharmaceuticals issues 1,51,000 shares under ESOS

29th April 2005: Glenmark Pharmaceuticals has issued 1,51,000 shares as stock options to the employees under Employee Stock Option Scheme (ESOS). The company informed BSE

Gujarat Apollo to consider bonus issue

29th April 2005: The board of Gujarat Apollo Equipments will meet on May 5 to consider a bonus share issue, the company told the Bombay Stock Exchange today.

Solix Technologies members approve stock split

29th April 2005: Solix Technologies Ltd has informed BSE that the members at the Extra Ordinary General Meeting of the Company held on April 26, 2005, have accorded to sub-divided the equity shares of the Company having a nominal face value of Rs 10/- per share into equity shares having a nominal face value of Rs 2/- per share and consequently amending the Memorandum & Articles of Association of the Company with regards to the share capital of the Company.

BSE plans strict penalties for anti-market practices

29th April 2005: In order to check anti-market practices like circular trading and share price manipulation, the Bombay Stock Exchange (BSE) has decided to levy strict penalties on parties involved in such practices. The Disciplinary Action Committee of the exchange, in its meeting held on April 19, has decided to revise norms against violations detected by its surveillance and supervision department.

The exchange has devised a method, according to which a party involved in any wrong doing will have to pay an incremental cash fine on the basis of the number of instances of violations detected. The exchange has devised a system of penalty points under which history, based on the materiality and the number of instances of violations will be built up.

The market witnesses a variety of violations like circular trading, manipulation of prices and order book, placing orders at unrealistic prices when the circuit filter is open, placing orders that result into rogue trades and delay in submission of information to the exchange. The revised norms will be effective from May 2, ’05. The norms will be applicable to all violations which happened on or after April 1, ’04 and detected after May 2, ’05.

RIL scrips under Sebi’s scanner

29th April 2005: Securities and Exchange Board of India (Sebi) is keeping close watch on scrips of Reliance Industries Ltd (RIL) in the light of allegations made by Anil Ambani about breach of corporate governance norms in RIL. "Sebi keeps everything under surveillance", chief economic advisor and government representative on Sebi board Ashok Lahiri told reporters here today before the beginning of board meeting. "If anything comes up in surveillance Sebi will look into the matter", Lahiri said when asked what steps the capital market watchdog is taking on the alleged breach of governance norms in RIL. Anil Ambani, RIL vice chairman and managing director has leveled charges of breach of governance practices in India's largest listed entity.

India Infoline IPO oversubscribed 7.34 times, likely to be priced at Rs 76

29th April 2005: The Initial Public Offering (IPO) of India Infoline, one of the leading online broking and financial advisory services companies in India, has got an overwhelming response with the offer getting subscribed by 7.34 times. The company received bids for 85.74 million shares as against the 11.88 million shares on offer in the issue. Of the total applications, almost 99.99% were received at the upper end of the price band. Keeping in mind the interests of the retail investor who have participated enthusiastically in the issue and the prevalent market conditions, the management has decided to price the issue at Rs 76.

Speaking on the pricing decision, Nirmal Jain, chairman and managing director, India Infoline Ltd, said, "We would like to have a very positive start to our relationship with the retail investors who have expressed confidence in our business model and enthusiastically participated in the issue." Promoted by Nirmal Jain and R Venkataraman, India Infoline has a retail branch network of 73 branches at 36 locations across India and proposes to set up an additional 77 branches in 50 cities across India to have a network of 150 branches to further strengthen its geographic reach.

Hindustan Times (HT) to offload 15.08% stake through IPO

28th April 2005: HT Media Ltd has filed a draft red herring prospectus with the Securities and Exchange Board of India (Sebi) for a 100% book-built public issue of 46,40,000 equity shares (fresh issue) of Rs 10 each by HT Media Ltd and an offer for sale of 23,55,000 equity shares of Rs 10 each from HPC (Mauritius) Ltd. The offer will also have a greenshoe option of 6,96,000 shares by the promoters, Hindustan Times Ltd. The IPO size (value) is still unclear.

The issue will constitute 15.08% of the fully diluted post-issue capital of the company, assuming the greenshoe option is not exercised, and 16.33%, assuming that it is exercised, according to the draft prospectus. However, going by the proposed expenditure of the estimated amount raised via the fresh issue, it appears that the HT Media IPO is expecting to raise Rs 250-270 crore.

Of the money raised via the fresh issue, the company has earmarked Rs 76.40 crore for capital expenditure, Rs 76 crore for sales and marketing and Rs 10 crore for its radio services. The company recently signed a memorandum of understanding with Virgin Radio (Asia) Ltd for its FM radio venture.

HT Media is a K K Birla group company. The promoters hold 77.11% of the pre-issue equity share capital while Henderson has a 15.83% stake and Citicorp holds 7.06% of the pre-issue share capital. The draft prospectus indicates that in October 2004, Citicorp had acquired a 8.27% stake in the company for Rs 69 crore, giving it a pre-transaction value of Rs 765 crore, which indicates that the company's valuation has shot up by over Rs 700 crore in the last six months.

Going by the prospectus, the current valuation of HT Media Ltd could be as high as Rs 1,462 crore, market sources said. Hindustan Times reported a net profit of Rs 15.71 crore for the first nine months ended December 2004 as against a loss of Rs 2.49 crore in the nine-month period ended in March 2004. The company's total income stood at Rs 473.77 crore versus Rs 421.77 crore during the same period the previous year.

A rise in advertising revenue to Rs 368.82 crore from Rs 328.23 crore and subscription revenue to Rs 94.48 crore from Rs 83.67 crore resulted in the net profit climbing during the nine months ended December 2004. The company had Rs 307 crore in its share premium account (cash reserves) on December 31, 2004.

The launch of the Mumbai edition of "The Hindustan Times" is expected in mid-2005. The draft says that "The Hindustan Times" is expected to invest Rs 50 crore in capital expenditure at the time of the launch of the Mumbai edition, of which Rs 12.60 crore had already been invested by March 31, 2005. The Mumbai operations are expected to incur losses in its early years of operation, the draft adds.

The draft says that "The Hindustan Times" during the period ended 31 December, 2004, derived about 79% of its revenues from advertisements, of which the top 10 advertisers contributed about 8% of the total revenue. About 20% came from circulation revenue. The sole book running lead manager to the issue is Kotak Mahindra Capital Company.

EPF to get you 9.5% interest now

29th April 2005: The salaried class has some reason to cheer. The Government on Friday issued the much-awaited notification on payment of an enhanced rate of Employees Provident Fund (EPF) of 9.5 per cent for the year 2002-03 and 2003-04. What this simply means is that the four-crore odd subscribers of EPF will be paid a higher interest rate on their provident fund corpus, to which a compulsory deduction is made each month by the employer. So, if you left your job anytime during the past two years and have not made a claim for the PF amount due to the uncertainty on the interest rate, now is the time to do so. You will now be paid back your PF amount at an interest of 9.5% instead of the interim 8.5% that you would have got earlier.

Kirloskar board approves stock split

29th April 2005: The board of Kirloskar Brothers’ has approved splitting each of its shares into five shares, the Bombay Stock Exchange said on Friday.

Allsec Tech IPO at Rs 135 per share

28th April 2005: Allsec Technologies Ltd has fixed the price of its Initial Public Offering at Rs 135 per equity share. The IPO, which closed for subscription on April 20, was oversubscribed by over four times. The board of directors of the Chennai-based BPO, which met here, also decided to list the shares on the stock markets between May six and nine, R Jagadish, chief executive officer, Allsec Technologies, said.

He said the company has raised Rs 42.4 crore from the public issue at Rs 135 per share, which was adequate to meet its expansion plan of setting up a 1000-seater BPO facility in Chennai. "The expansion plan is for Rs 38 crore. The remaining amount would be kept for working capital expenses," he said. The price band of the public issue was Rs 135 to Rs 162 per share on a face value of Rs 10.

Allsec Technologies, which became India's first pure-play voice-based BPO to tap the capital markets, is issuing 3,141,200 equity shares under the IPO. The public issue comprised 149,600 equity shares to employees and 2,991,600 to the public. Jagadish said 25% of the public issue, which was reserved for small and retail investors, was oversubscribed by 1.5 times, as per the final analysis.

Shopper's Stop IPO fully subscribed

28th April 2005: The initial public offering of retailer Shopper's Stop Ltd. was fully subscribed just over an hour after its opening on Thursday, a banker said. The issue was bid about 1.3 times by 11:15 am, with nearly half the bids coming in at the top end, the banker said. The issue closes on May 4. The issue of 6.95 million shares represents 20.2% of the retailer's expanded equity, priced at Rs 210 to Rs 250 per share, raising up to Rs 170 crores. Scheduled to open on Wednesday, the IPO was delayed by an order of the Guwahati High Court, which was stayed by the Supreme Court later in the day. The market regulator then cleared the IPO. The Bombay-based company has 16 stores across the country.

Sebi clears Shoppers' Stop IPO

28th April 2005: Sebi has cleared the much-awaited IPO of Shoppers’ Stop, a leading retail chain in the country, ending speculation over the fate of the offer which was facing uncertainty till Tuesday.

The Guwahati High Court, on Tuesday, directed Sebi to put the IPO on hold, after the Burrabazar Investors’ Welfare Association, a Kolkata-based minority investors association, moved a writ petition challenging the offer, before the High Court.

However, the SC has stayed the interim order of the Guwahati High Court, prompting Sebi to revoke its stay. With this, the offer, which was earlier scheduled to open on April 27, will now open on April 28 and close on May 4, ‘05. Shoppers’ Stop plans to raise Rs 121 crore by way of book-building. The floor price of the issue has been fixed at Rs 210 per share.

The offer is lead managed by Enam Financial Consultants, JM Morgan Stanley, Kotak Mahindra Capital, ICICI Securities and IL&FS Investsmart.

Videocon Industries members approve GDR Issue

27th April 2005: Videocon Industries Ltd has informed BSE that the members at the Extra Ordinary General Meeting of the Company held on April 13, 2005 have approved issue of Global Depository Receipts (GDR) and/or Equity Shares through Prospectus/Letter of Offer or Circular and/or by Private Placement on preferential basis and/or on Rights basis, and/or any combination of any or all these methods, for an amount not exceeding Rs 20000 million including premium, if any at such time, price, manner and on such terms as the Board may, in its discretion deem fit and appropriate in one or more tranches.

Further the Company has informed that in first tranche the Company has proposed to issue Global Depository Receipt with underlying equity shares wherein each GDR will represent one equity shares. The aggregate amount of the proposed issue of GDR, the pricing of GDR and number of GDR to be issued will be decided in a fortnight.

The allotment and listing of equity shares pursuant to proposed GDR will be prior to allotment of equity shares pursuant to the Merger of Petrocon India Ltd with the Company.

HCL Infosystems allots 965 equity shares under ESOS

27th April 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 965 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Polaris Software allotted of equity shares under Associate Stock Option Plan (ASOP)

27th April 2005: Polaris Software Lab Ltd has informed BSE that the Shareholders' Committee of the Board of Directors of the Company in its meeting held on April 26, 2005, has allotted following new equity shares to its employees under the Associate Stock Option Plan (ASOP) 2000 & 2001:

 

Scheme Shares

Date of Grant

Options Price

No of Allottees

No of Shares

ASOP 2000

October 18, 2001

Rs 71.50

12

1750

ASOP 2000

January 28, 2003

Rs 126.70

1

260

ASOP 2001

September 26, 2001

Rs 57.00

20

7095

ASOP 2001

October 18, 2001

Rs 71.50

2

2000

Total

 

 

35

11,105

 

Satyam Computer allotted 33,422 equity shares under stock option plan

27th April 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 33,422 equity shares through circular resolution on April 26, 2005 under stock option plans of the Company.

Southern Ispat (SI) board okays 6.52 lakh bonus shares allotment

27th April 2005: The board of directors of Southern Ispat (SI) at its meeting held on April 18, 2005, has approved to allot 6.52 lakh equity shares of Rs 10/- each by way of bonus shares. According to a release issued by Southern Ispat to the BSE, the shareholders have given their nod at the EGM held on March 25,2005 by debiting the reserves & surplus and crediting the share capital account.

HDFC raises Rs 125 cr via issue of bonds

27th April 2005: Housing Development Finance Corporation has raised Rs 125 crore through an issue of bonds, debt dealers said on Wednesday.

Arvind Mills to raise $40mn via GDRs

27th April 2005: Arvind Mills today reported a 29% increase in consolidated net profit at Rs 117.38 crore for the year ended March 31, 2005 as against Rs 91.21 crore in FY04. According to a release issued by the company to the BSE today, total consolidated income increased to Rs 1,972.25 crore for the year ended March 31, 2005 from Rs 1,579.74 crore in FY04. The board has recommended a dividend @ 10%. The board also approved a proposal to issue up to 14 million shares to raise approximately $30-40 million via GDRs.

Patni Computer to consider ADR offering in June this year

27th April 2005: Patni Computer Systems Ltd has announced that it is planning an American Depositary Shares (ADS) issue, which is likely to hit the market by second or third quarter of the calendar year. The purpose for this issue is to generate proceeds for construction and development of new infrastructure facilities in India and for other general corporate purposes. The company disclosed that it would register with the Securities and Exchange Commission (SEC) of US, after receiving shareholders' approval. The ADR offering is subject to a number of factors like stock market conditions and the company's and underwriters' decision of an appropriate time. A decision on the number of shares to be tendered is also yet to be taken.

Amtek Auto raises $125 mn via issue of convertible bond

27th April 2005: Auto parts maker Amtek Auto has raised $125 million to repay an existing loan and for general use through the issue of a convertible bond due in 2010. The deal, which has a $25 million greenshoe option, was priced late on Tuesday at par to yield 5.85%, according to the term sheet. The 5-year bonds carried a coupon of 0.5%. The conversion price was set at Rs 209.83 per share, a 25% premium to the volume weighted average price of Amtek shares of Rs 167.864. Shares in Amtek ended 1.25% higher at Rs 170 on Tuesday. Barclays Capital was the sole bookrunner and lead manager for the offering. ICICI Bank and Bank of India were co-lead managers.

4% VAT levied on inputs, capital goods, drugs

27th April 2005: Petrol & diesel, salt, bread, khadi, gur, jaggery to be exempt from VAT. The empowered committee of state finance ministers on the value-added tax (VAT) has decided that all industrial inputs, medicines, medical equipment and devices will attract a uniform 4% tax. The 4% rate will also apply to capital goods, barring a small negative list of items like building materials.

The chairman of the empowered committee, Asim Dasgupta, said the 21 states that had signed up for the VAT would notify the rates by the end of this month. Dasgupta said the committee would take some time to finalise its view on life saving drugs. Till then, such medicines will continue to attract 4 per cent VAT. He said a view regarding petroleum products had also been taken. “Diesel and petrol will be out of VAT,” he said.

The committee also decided to expand the list of exempt items to include branded and unbranded salt, all kinds of bread, khadi, gur, jaggery and goods distributed through the public distribution system. States have been given the option to impose either VAT, 4 per cent or no tax on atta, maida and suji. An option of 4 per cent or 12.5 per cent VAT rate on dry fruits has also been given to states.

Supreme Court okays Shoppers' Stop IPO

27th April 2005: The Supreme Court today gave go-ahead for the Rs 150 crore initial public offer of India's leading retailer Shoppers' Stop by staying an interim order of the Shillong Bench of Guwahati High Court restraining the IPO. When the petition by the Shoppers' Stop was mentioned before the Bench headed by Justice N Santosh Hagde, he said in the peculiar facts and circumstances of the case, the interest of justice will be met only by staying the impugned order of the High Court. Ensuring a hassle free IPO, the Court said till it decided the matter no other Court or forum shall pass any interim order pertaining to the IPO.

Shopper's Stop delays IPO

27th April 2005: Retailer Shopper's Stop said on Wednesday it had delayed the opening of its initial public offering (IPO) following an order from the market regulator. In a notice to the Bombay Stock Exchange, the company said the regulator's request was in response to an order by the Guwahati High Court. "Sebi has asked us to hold the IPO. We hope to resolve the issue in a day or two," a company official said.

Media reports said an investors' association in the north-eastern state of Assam had filed a petition in court on grounds that the parent company had not published annual reports or held annual general meetings for its firms for several years.

The issue, comprising 6.95 million shares, representing 20.2% of the retailer's expanded equity, was priced at Rs 210 to Rs 250 per share and was expected to raise up to Rs 170 crore ($39.7 million). The Mumbai-based company has 16 stores across the country and is partly owned by the Raheja family.

21 states agree on uniform VAT rates

26th April 2005: Twenty one states, which have switched over to value added tax (VAT), today agreed to adopt uniform rates for industrial input, capital goods and essential commodities like medicines, salt, bread and PDS items. "It has been possible to arrive at a full consensus among states on convergence of VAT rates. All states will come out with notifications on VAT rates by the end of this month," Asim Dasgupta, chairman of the empowered committee on VAT, said after a marathon meeting of state finance ministers today. Medicines, medical equipment and devices will attract 4% VAT. "The empowered committee will form a view on what is to be included in life saving drugs," Dasgupta said.

The meeting also discussed thread-bare the tax treatment of petroleum products. "Diesel and petrol will be out of VAT while LPG can attract VAT," he said. Dasgupta said industrial inputs and capital goods will attract VAT at 4%. He, however, added there will be a small list of capital goods like building material that will be exempted. Essential items like branded and unbranded salt, bread, gur, jaggery and all food items distributed through the public distribution system will be exempted from VAT.

Bharti Healthcare shareholders approve delisting of equity shares from BSE

26th April 2005: Bharti Healthcare Ltd has informed BSE that the shareholders at the Extra Ordinary General Meeting of the Company held on April 22, 2005, have approved to delist the Equity shares of the Company from The Stock Exchange, Mumbai (BSE).

Suryadeep Salt Refinery Board approves stock split

26th April 2005: Suryadeep Salt Refinery & Chemicals Works Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 25, 2005 has considered and approved the proposal of split-up / subdivision of equity shares of the Company subject to approval of the members at the EGM to be held on May 18, 2005.

Standard & Poor's to become majority shareholder of CRISIL

26th April 2005: CRISIL Ltd has informed BSE that Standard & Poor's has announced that, subject to verification of the shares tendered, the preliminary information received from the Registrar to the offer indicated shareholders of the Company, which is India's leading provider of credit ratings, financial news and risk and policy advisory services, have tendered more shares than the minimum level of acceptance of 2,643,983 shares specified by Standard & Poor's in its offer. Consequently, upon verification of acceptances and completion of remaining offer formalities, including receipt of final approval from the Reserve Bank of India, Standard & Poor's would become the majority shareholder of the Company. Kotak Investment Banking is the exclusive financial advisor to The McGraw-Hill Companies, Inc, and Manager to the offer.

Laffans Petrochemicals members approve delisting of securities from DSE

26th April 2005: Laffans Petrochemicals Ltd has informed BSE that the members at the Annual General Meeting of the Company held on March 30, 2005, have accorded to voluntarily delist the securities of the Company from The Delhi Stock Exchange Association Ltd (DSE).

Matrix Labs to raise $200mn via GDRs/ADRs/FCCBs

26th April 2005: The board of directors of Matrix Laboratories, which met today, has approved a proposal to raise up to $200 million by way of GDRs/ADRs/FCCBs. This was announced in a release issued by the company to the BSE today.

Adlabs to raise $6mn via fresh preference shares

26th April 2005: The board of directors of Adlabs Films, which met on April 21, 2005, has approved a further preferential issue of equity shares to Arisaig Partners (Asia) Pte at Rs 150 per share aggregating to investment value of $6 million. According to a release issued by Adlabs to the BSE today, the total proposed investment in the company through the preferential mode now amounts to $12 million.

Bharti Tele issues 52,24,479 equity shares to Shyam group

26th April 2005: The board of directors of Bharti Tele Ventures, which met on April 25, 2005, has issued 52,24,479 equity shares of the company to Shyam Cellular Infrastructure Projects (SCIPL). According to a release issued by Bharti to the BSE today, the shares have been issued to SCIPL upon conversion of Rs 100 crore optionally convertible redeemable debentures (OCRDs) issued to it last year as part of consideration for the acquisition of 67.5% stake of Shyam Group in Hexacom India - the holder of licences for Rajasthan & North East circles

Anil Ambani writes to SEBI, BSE and NSE on IPCL issue

26th April 2005: In the continuing drama over his resignation from Reliance Group petrochemical company IPCL, Anil Ambani has asked market regulator SEBI and stock exchange authorities to look into the issue as well as adherence to all relevant laws. Reliance Industries Vice-Chairman and Managing Director Anil Ambani, engaged in a battle with elder brother Mukesh over the control of Reliance empire, wrote to SEBI, Bombay Stock Exchange and National Stock Exchange on Monday evening, coinciding with IPCL's public statement that the younger Ambani ceased to be a director from January 20.

IPCL comes under SEBI scanner

26th April 2005: Taking note of developments relating to the status of Anil Ambani as director on the board of Reliance Group entity IPCL Ltd, Securities and Exchange Board of India has asked stock exchanges to check the company's adherance to listing agreement. The matter (directorship and related correspondence) came up for review at the weekly surveillance meeting with exchanges last evening, SEBI sources said here today. The exchanges have been asked to monitor trading in IPCL scrip and look into the company's conformity with provisions of the listing pact, they said.

Mukesh Ambani-headed IPCL had yesterday said Anil's resignation from its Board of Directors became effective from January 20 this year when the board considered it even as the younger brother said he had not heard anything from the company on his status as director on the board. The board of IPCL is meeting today to consider the financial results for 2004-05.

UTI Bank's GDR raises $17.7 mn

26th April 2005: UTI Bank Ltd. has raised an additional $17.73 million via its recently floated global depositary receipts issue, the bank told the Bombay Stock Exchange today. UTI Bank said the underwriters to the issue had decided to exercise a greenshoe option to buy a little over 3 million GDRs at $5.91 each. The total size of the issue now stands at 43.49 million GDRs. In March, UTI Bank had raised $240 million through the issue.

Bajaj Auto Finance to raise Rs 100 cr via secured bonds

26th April 2005: Bajaj Auto Finance plans to raise Rs 100 crore through an issue of secured bonds, the company told the Bombay Stock Exchange on Monday. The funds will be through the private placement route and will finance working capital requirements and other corporate expenses.

Floater funds perceived to be latest boon to the market

25th April 2005: The debt category of the mutual fund market is seeing a boom in investors due to rising interest rates. This year, floaters, as they are called, have given the highest risk-adjusted returns, with risk being measured as the standard deviation of a scheme.

The top five floater schemes on a risk-adjusted return basis were Tata Floating Rate Fund short-term option with a one-year return at 4.92%, Grindlays Floating Rate Fund (annual return 4.67%), Prudential ICICI Floating Rate Plan (annual return 4.92%), HDFC Floating Rate Income Fund (annual return 4.86%) and UTI Floating Rate (annual return 4.99%).

Floating schemes are used to mitigate interest rate risk. This is done by investing in debt securities whose rates are flexible to accommodate changes in interest rates. These securities are marked to a benchmark rate like the g-sec yield for a comparable tenor or the Mibor (Mumbai inter bank offer rate), plus a spread to compensate the buyer for the additional risk such as corporate debt, securitised paper and asset-backed securities.

Investors looking to invest in floaters should enter when the interest rates are low and should go along as rates rise up. Floaters will be the way to go as we are faced with increasing inflation, high oil prices and a global economic environment which favors higher rates.

Floaters have negligible scope for returns via capital appreciation. During the last quarter of FY05, floaters managed quarterly returns in the range of 1.2-1.33%. UTI Floating Rate Fund recorded the highest quarterly returns on an absolute basis of 1.33%. Many financial advisors are still recommending floaters because they expect a further rise in interest rates.

HCL Infosystems allots 10,790 equity shares under ESOS

25th April 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 10,790 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Jyoti Structures Board to consider ESOS

25th April 2005: Jyoti Structures Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 26, 2005, to consider Employee Stock Option Scheme (ESOS).

Aban Loyd shareholders approve stock split

25th April 2005: The members of Aban Loyd Chiles Offshore at its extraordinary general meeting held on April 23, 2005 have approved the stock split of fully paid equity shares of face value of Rs 10/- each in to 5 fully paid equity shares of face value of Rs 2/- each.

According to a release issued by Aban Loyd to the BSE, the company has also approved the subdivision of partly paid equity shares of face value of Rs 10/- each of which Rs 5/- per share paid up into partly equity shares of face value of Rs 2/- each of which Re 1/- per share paid up.

Ultratech board recommends dividend of 75p/share

25th April 2005: The board of directors of Ultratech Cement at its meeting held on April 23 has recommended a dividend of Rs 0.75 per share of face value of Rs 10/- each for the year ended March 31, 2005, the company said in a release issued to the BSE.

United Bank to consider IPO after wiping out losses

25th April 2005: The bank also expects to pay dividend to the government, its shareholder, in the next fiscal, for the first time since 1992, executive director K N Prithviraj, told the media. The bank posted a net profit of Rs 300 crore in 2004-05 compared with Rs 315 crore in 2003-04. Total business grew by 11.4% from Rs 31,179 crore in 2003-04 to Rs 37,187 crore in 2004-05.

Explaining the fall in net profit despite higher business, Prithviraj said this was owing to a fall in trading income from government securities. The bank earned Rs 318 crore from securities in 2003-04, but this dropped to Rs 250 crore for the fiscal ended March 31, 2005. "Last year, trading income was more than the net profit. This time it is not and so this year the profit is more because of core banking business," he said.

On accumulated losses, he said the bank had accumulated losses of around Rs 278 crore and hoped to clean up its balance sheet by September 2005. "After this, the bank might go for its initial public offer (IPO) to raise tier-1 capital. The bank expects to pay dividend in 2005-06 after almost 12 years," he added.

Prithviraj said the bank hoped to reach the Rs 50,000 crore business mark by March 31, 2007. "The target is Rs 45,000 crore business in 2005-06 and, by 2006-07, business of Rs 50,000 crore," he added. The bank will go in for an organisational revamp on the basis of a National Institute of Banking Management report, which is expected by May 30, 2005.

Standard deduction is available in case of family pension

23rd April 2005: It has been the steady companion of the salaried class over the past two decades. However, if the current budget is passed in its present form, then one would have already taken the last benefit when collecting the March payslip.

The item at the centre of attention is standard deduction and bearing the brunt of the impact here will be the salaried class, as well as senior citizens receiving a pension. In the midst of this gloom, there is a silver lining. Though available to only a select few, the standard deduction available for family pension still continues.

Standard deduction was a fixed sum that the salaried could deduct from their gross income, and the deduction here was based on the income earned by the individual. For those with salary incomes less than Rs 5 lakh, the standard deduction available was Rs 30,000, while for above Rs 5-lakh income, it was Rs 20,000.

According to chartered accountants, the logic behind giving such a deduction was that the salaried, too, had incidental expenses related to earning their income. Further, unlike those in business or professions, the expense cannot be set off against the income earned, this benefit was considered necessary.

There will be a negative impact on this front for individuals, but for the present, it is being masked under the change in slabs that have been proposed in this budget due to which the overall tax to be paid will reduce.

Amidst the gloom among working individuals as well as senior citizens receiving pension, there is still a standard deduction that several people can take the benefit of. This is the standard deduction that is available in case of family pension. A family pension is a regular monthly amount that is payable by the employer to a person belonging to the family of an employee in the event of his death.

The sum allowed as a deduction is a maximum of Rs 15,000 or one-third of the amount of the pension, whichever is higher. It has to be noted that the standard deduction that is proposed to be eliminated by this year’s budget is the one that is calculated under Section 16 of the Income Tax Act.

The standard deduction in the case of family pension is under Section 57 of the Act. Tax experts say that such benefits should continue because it provides much needed relief for families trying to cope with the loss of their family members.

Patels Airtemp - Delisting of shares from ASE

23rd April 2005: Patels Airtemp (India) Ltd has informed BSE that the shares of the Company have been voluntarily delisted from The Stock Exchange, Ahmedabad (ASE) w.e.f. February 28, 2005.

Aksh Optifibre - Delisting of securities from JSE

23rd April 2005: Aksh Optifibre Ltd has informed BSE that the securities of the Company have been voluntarily delisted from The Jaipur Stock Exchange Ltd (JSE).

ATN International - Delisting of equity shares from 3 Stock Exchanges

23rd April 2005: ATN International Ltd has informed BSE that the equity shares of the Company have been delisted from Delhi Stock Exchange Ltd, Ahmedabad Stock Exchange Ltd & Jaipur Stock Exchange Ltd.

Wipro allotted 28,251 equity shares under ESOS

22nd April 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective April 21, 2005 resolved to issue & allot 28251 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

Wipro allots 8400 equity shares under ESOS

22nd April 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective April 19, 2005 resolved to issue & allot 8400 equity shares of Rs 2/- each pursuant to exercise of the stock options by the eligible employees.

HCL Infosystems allotted 8,519 equity shares under ESOS

22nd April 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 8,519 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Satyam Computer allots 9,438 equity shares under stock option plans

22nd April 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 9,438 equity shares through circular resolution on April 22, 2005 under stock option plans of the Company.

Steel Tubes of India - Delisting of equity shares from DSE

22nd April 2005: Steel Tubes of India Ltd has informed BSE that the equity shares of the Company have been delisted from Delhi Stock Exchange (DSE) w.e.f. March 01, 2005.

Cyber Media public offer to open on May 4

22nd April 2005: Cyber Media (India) Ltd., which publishes a clutch of technology-related magazines, will launch its initial public offering (IPO) of shares on May 4 at Rs 60 per share, its managing director said today. Pradeep Gupta, whose company also owns the Indian subsidiary of industry researcher International Data Corp. (IDC), said the shares sold would constitute about 28% of the post-issue capital, giving the firm a valuation of about Rs 60 crore ($13.7 million). Khandwala Securities will be the lead manager of the issue to raise Rs 17 crore, Gupta said.

Cyber Media, based in Gurgaon, a satellite town of Delhi, publishes a set of magazines including Dataquest, which has no relation to the American magazine of the same name. It also runs an Internet job portal for technology workers. Gupta said the company planned to launch a new magazine, Global Outsourcing and take its biotechnology magazine, BioSpectrum, to Singapore, both later this year. The company also plans to offer content services to foreign publishers.

KEI to raise $15 mn via GDRs/ADRs

22nd April 2005: The board of KEI Industries has approved raising up to $15 million by way of Global Depositary Receipts, American Depositary Receipts, foreign convertible bonds or private placement, the company told the Bombay Stock Exchange today. Shares in KEI Industries, which makes electric and telephone cables, were up 1.2 per cent at Rs 95 on BSE.

Wipro announced a surprise 1:1 bonus issue

22nd April 2005: Wipro Ltd., India's third-largest software services exporter, said on Friday its quarterly net profit rose 38% in line with market forecasts, as clients ramped up technology outsourcing. The company also announced a surprise bonus issue in the ratio of one share for every share held, barely a year after giving two bonus shares for every held.

Irda unlikely to renew Reliance Life licence

21st April 2005: Insurance Regulatory and Development Authority (Irda) is unlikely to renew the unused licence of Reliance Life Insurance after three years of its issuance. Sources at Irda pointed out that the insurance regulator was reviewing its earlier decision and was most likely to cancel the licence soon as it had not been made functional. “If they want to be in life insurance, they can apply for a fresh licence. We would not like to renew it anymore,” an Irda source said, adding that the necessary files for this had already been moved.

Life, non-life insurers can tie-up for products for the poor

21st April 2005: This is part of a fresh set of regulations for micro insurance that have been finalised and would be notified in two to three months, T K Banerjee, Irda member, said today. Irda had earlier barred joint selling of life and non-life insurance products, but has now decided to permit partnerships for providing affordable insurance cover for the poor. The new regulations are aimed at providing an infrastructure over which micro insurance can be developed in a proper manner to make available insurance to the poor at affordable premium.

Irda has also decided to have a shorter training period for micro insurance agents, who would not be entitled to sell other insurance products. The minimum number of hours of training required for micro insurance agents will be reduced to 25 hours against 100 hours for normal insurance agents, Banerjee said. The insurance regulator also threatened to insist on a quota on rural branches. “The new insurance companies are busy tapping the potential in urban and metro areas and very few branches have been opened to cater to the needs of rural population. If the matter continues in the same manner, Irda has to rethink and introduce a system for opening of branches in rural areas,” he said.

Irda also plans to come out with guidelines on unit-linked insurance plans (ULIPs) stipulating a life cover of three to five times the annual premium. This will result in most ULIP products of life insurers getting debarred. “Life insurers will have to either phase out or stop selling their ULIPs which do not meet the new guidelines,” Banerjee, said on the sidelines of a seminar on information technology in insurance. The insurance sector has grown rapidly after opening up the sector to the private players. The per capita insurance premium has gone up to Rs 750 from Rs 300 since 2000.

Corporation Bank to raise $50-$100 mn

21st April 2005: Corporation Bank plans to raise $50 million to $100 million through a one-year foreign currency loan, a senior bank official said today. The borrowing is likely to be completed in a week and the funds will be used for normal banking operations, the bank's general manager, M Narendra said.

Satyam files for 15-mn ADS offer

21st April 2005: Satyam Computer Services said today that it had filed for an American Depositary Receipts (ADS) offer against existing domestic shares. It aims to convert up to 30 million domestic shares into 15 million ADS, but Satyam did not say when the offer will be launched. Bankers say such issues are aimed at improving floating stock in the US market and allow local shareholders to capture the premium enjoyed by the US listed stocks of Indian companies. Satyam's New York-listed ADRs closed Wednesday at a 24% premium over its local shares.

Ind Swift members approve stock split

20th April 2005: Ind Swift Ltd has informed BSE that the members at the Extra Ordinary General Meeting of the Company held on today have approved the resolution for the stock split i.e. sub division of every equity share of Rs 10/- each into 5 equity shares of Rs 2/- each.

Indusind Bank completes Rs 1700 mn Tier-II bond issue

20th April 2005: Indus Bank Ltd, one of the fastest growing new-generation private-sector banks in the country has mobilised Rs 1700 million in its Tier-II bond issue during March 2005. The issue is listed on the Wholesale Debt Market (WDM) segment of National Stock Exchange of India (NSE) and is rated by ICRA (LA+) and Fitch [A+ (ind)].

The privately placed unsecured redeemable non-convertible subordinated bonds offered three options, with 63-month (coupon rate 8.1% p. a. and floating rate 1 year INBMK plus 190 bps spread) and 111-month (coupon rate 8.5% p.a.) maturity periods. The issue was to augment the Bank's capital for further asset expansion and implementation of Basel-II norms. AK Capital Services Ltd. acted as the Sole Arranger to the issue.

"We are very pleased with the response garnered by our Tier-II bond issue. This will help us in maintaining our CAR at adequate levels in a Basel-II scenario. Even after this issue, we still have scope to raise more Tier-II funds. We will, explore that option as and when we need further capital," said Bhaskar Ghose, MD & CEO, of the Bank.

PSL - Delisting of equity shares from PSE & ASE

20th April 2005: PSL Ltd has informed BSE that the equity shares of the Company have been delisted from The Pune Stock Exchange Ltd (PSE) w.e.f. March 14, 2005 & from Ahmedabad Stock Exchange (ASE) w.e.f. March 31, 2005.

VBC Ferro Alloys - Delisting of Securities from MSE & HSE

20th April 2005: VBC Ferro Alloys Ltd has informed BSE that the securities of the Company have been delisted from Madras Stock Exchange Ltd (MSE) & The Hyderabad Stock Exchange Ltd (HSE) w.e.f December 02, 2004 & April 04, 2005, respectively.

Adarsh Derivatives - Delisting of Securities from DSE

20th April 2005: Adarsh Derivatives Ltd has informed BSE that the equity shares of the Company has been delisted from the Delhi Stock Exchange (DSE) w.e.f. March 31, 2005.

JMC Projects India - Delisting of shares from ASE

20th April 2005: JMC Projects (India) Ltd has informed BSE that the shares of the Company have been delisted from Ahemedabad Stock Exchange (ASE) w.e.f March 31, 2005.

Satyam Computer allotted 31,938 equity shares under stock option plans

20th April 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 31,938 equity shares through circular resolution on April 19, 2005 under stock option plans of the Company.

Apollo Hospitals to raise $135 m via GDR

20th April 2005: Apollo Hospitals plans to raise $135 million (about Rs 590 crore) through global depository receipts (GDRs) that may be listed either on the London or Luxemburg exchange. The capital is being raised to upgrade existing facilities and fund acquisitions in outsourcing and healthcare sectors.

Along with the issue of GDRs, the promoters would be allotted equity warrants of 2.5 per cent of the existing capital. The warrants would allow the promoters to retain their stake at the current level of 31.83 per cent, said Suneeta Reddy, director, finance.

The GDR has been triggered by the need to fund the company’s strategy to consolidate existing operations and look at acquisitions, Reddy added. Apollo’s $ 135 million GDR issue will be split in to two parts. About $ 75 million would be issue of fresh capital, while $ 65 million would be a sponsored issue. In the sponsored issue existing shareholders can offload their shares.

Syndicate Bank files herring prospectus with Sebi for 2nd public issue

20th April 2005: Syndicate Bank has filed a red herring prospectus with the Securities and Exchange Board of India to make a second public issue of 5 crore shares, a release said here on Tuesday. "The issue is being made to augment the capital requirements in keeping with Basel II norms and to meet our future growth objectives," the bank's chairman and managing director Kantha Kumar said. The bank expects to raise about Rs 250 crore to Rs 300 crore, implying a price of Rs 50 to Rs 60 per share.

The bank has reserved 50 lakh equity shares to be offered to its employees and another 50 lakh shares to existing shareholders, the releases said. The remaining will be split among qualified institutional buyers (200 lakh), non-institutional buyers (60 lakh) and retail investors (140 lakh). Lead managers to the issue, which is scheduled to open in end-May, are SBI Capital Markets Limited, Enam Financial Consultants Pvt. Ltd., JM Morgan Stanley Private Limited and SSKI.

Review of Dematerialisation Charges

According to Circular issued by Sebi, MRD/DoP/SE/Dep/Cir-4/2005, dated January 28, 2005 for Review of Dematerialisation Charges –

  1. Investors have been representing to SEBI seeking a reduction in the charges paid by them for dematerialisation of securities. The rationalization of charge structure for dematerialisation was discussed at the Secondary Market Advisory Committee of SEBI (SMAC).
  2. After careful consideration of the recommendations of the SMAC, as a first step, it has been decided to rationalize the existing charge structure as under:

2.1.   Effective from February 1, 2005 :-

    1. No investor shall be required to pay any charge towards opening of a Beneficiary Owner (BO) Account except for statutory charges as may be applicable;
    2. No investor shall be required to pay any charge for credit of securities into his/her BO account; and
    3. No custody charge shall be levied on any investor who would be opening a BO account on or after February 1, 2005.

2.2.   With effect from April 1, 2005 the custody charges shall not be levied on any investor. However, the Depositories may levy and collect the charges towards custody from the issuers, on a per folio (ISIN position) basis as at the end of the financial year, according to the table given below:

 

Issuers to pay @ Rs.5.00 (*) per folio (ISIN position) in the respective depositories, subject to a minimum as mentioned below:

 

Nominal value of admitted

securities (Rs.)

Annual Custodial Fee payable by a Issuer to each Depository(Rs.) (*)

Upto 5 crore

  4,000

Above 5 crore and upto 10 crore

10,000

Above 10 crore and upto 20 crore

20,000

Above 20 crore

30,000

* Plus service tax as applicable

 

The issuers would be required to pay custody charges to the Depository with whom they have established connectivity based on the total number of folios (ISIN positions) as on 31st March of the previous financial year or the minimum amount, as the case may be, by 30th April of the each financial year failing which Depositories may charge penal interest subject to a maximum of 12% p.a.

 

3.      All the Stock Exchanges are advised to:-

  1. Implement the above with immediate effect by making necessary amendments to the bye-laws and Listing Agreement, as applicable;
  2. to bring the provisions of this circular to the notice of the listed companies/Issuers and also to put up the same on the website for easy access to the investors ; and
  3. communicate to SEBI the status of the implementation of the provisions of this circular and the action taken in this regard in Section II, item no. 13 of the Monthly Development Report for the month of February, 2005.

 

4.      The Depositories are advised to:-

  1. make amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately, as may be applicable/necessary;
  2. bring the provisions of this circular to the notice of the DPs of the Depositories and the issuers whose securities have been admitted into the depositories and also to disseminate the same on the website; and
  3. communicate to SEBI the status of the implementation of the provisions of this circular in the Monthly Development Report for the month of February, 2005.

 

5.      This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.

Shopper's Stop public offer to open on April 27, fixes price band Rs 210-250/share

20th April 2005: Retailer Shopper's Stop Ltd. has fixed the price band for its initial public offering (IPO) at Rs 210 to Rs 250 per share. The issue, comprising 6.95 million shares, representing 20.2% of the retailer's expanded equity, is expected to raise up to Rs 170 crore. The issue opens on April 27 and is managed by Enam Financial Consultants, JM Morgan Stanley, Kotak Mahindra Capital Co. and ICICI Securities. The Mumbai-based company, which has 15 stores in nine Indian cities, is partly owned by the Raheja family, which has interests in real estate and construction.

Gujarat Ambuja plans 1:2 bonus, 1:5 split

20th April 2005: According to a release issued by the company to the BSE today, the board has approved an interim dividend of 60% i.e. Rs 6 per share and bonus shares in the ratio of 1:2 i.e. one equity share for every 2 shares held. "The board also approved a proposal to split existing equity shares of with a face value of Rs 10 each into equity shares with a face value of Rs 2 each, subject to approval of the shareholders," the release added.

Dabur raises Rs 10 cr through issue of CP

19th April 2005: Maker of personal healthcare products Dabur India Ltd. raised Rs 10 crore today by issuing 60-day commercial paper (CP), money market dealers said. The paper was placed at 5.41% and the term begins on Thursday. The issue has been rated 'P1+' by Crisil Ltd, indicating highest safety.

India Infoline public offer to open on April 21, price band Rs 70-80/share, will use proceeds to double network

19th April 2005: India Infoline today said that it will double the number of its branches to 150 within the next 18 months. "The proceeds of the Initial Public Offering (IPO) which are expected to be Rs 83 crore to Rs 95 crore, will be used for doubling the number of branches to 150 within the next 18 months besides setting up a centralised office in Mumbai", India Infoline director R Venkatraman said while announcing the launch of the IPO. "We will also launch the facility of applying for IPOs online next month", he added.

The company would hit the capital market with an IPO of 1.18 crore equity shares with a price band of Rs 70-80 per share. The issue would open on April 21 and close on April 27, he said. Of the issue, 8.78 lakh shares would be reserved for allotment to employees of the company and its subsidiaries. Of the balance, 55 lakh shares have been reserved for allocation to Qualified Institutional Bidders (QIBs) while 27.5 lakh shares have been reserved for allocation to non-institutional bidders and retail individual bidders, he said. Enam Financial Consultants Private Ltd would be the sole book running lead manager to the issue while Intime Spectrum Registry Ltd is the registrar to the issue.

Apollo Tyres raises Rs 30 cr via CP

19th April 2005: Apollo Tyres Ltd. raised Rs 30 crore on Tuesday through 90-day commercial paper (CP) issues, money market dealers said. The paper was placed at 5.54%. The term starts later this week. The issue has been rated 'P1+' by Crisil Ltd., denoting highest safety.

Apar Industries in expansion mode, to tap market

19th April 2005: The board of directors of the company is expected to approve the proposed expansion plan of the company soon. The company will also tap the market to fuel its expansion programme and has proposed issue equity shares and convertible warrants through private placement. “We would make sizable investments to expand our manufacturing capacities. If the expansion plan is approved by the board, the board would also consider the proposal for the issue of further equity shares and warrants convertible into equity shares to select group of investors and promoters or persons acting in concert with the promoters on preferential basis,” D C Patel, company secretary of AIL said.

But he did not divulge further details on the investments likely to make by the company. Recently, the board of the company has approved the proposal to set up an additional unit to manufacture and sell power transmission conductors at Baddi in Himachal Pradesh, with initial capital expenditure of around Rs 3 crore. The company has reported a net profit of Rs 11.4 crore on a net sale of Rs 188.8 crore in the third quarter ended December 2004. The promoters’ holds over 70% stake in the company and 4.57% stake is held by the institutional investors, while over 21% is held by the public.

UTI Bank Committee of Directors to allot equity shares under ESOP

19th April 2005: UTI Bank Ltd has informed BSE that a meeting of the Committee of Directors of the Company will be held on April 20, 2005, to consider the allotment of equity shares under ESOP.

Valuemart Info Technologies Board to consider issue of new equity shares

19th April 2005: Valuemart Info Technologies Ltd has informed BSE that a meeting of Board of Directors of the Company will be held on April 21, 2005, to consider the issue and allotment of new equity shares of Rs 2/- each to the shareholders of the Company pursuant to the scheme of reduction in capital of the Company confirmed by the Hon'ble High Court of Karnataka and Registered with Registrar of Companies, Karnataka.

Pentamedia awaiting BSE nod on Mayajaal

19th April 2005: Shareholders of Pentamedia Graphics Ltd would be allotted shares of Mayajaal Entertainment Ltd, a group company into which almost all businesses of Pentamedia were transferred under a restructuring, after getting the approval from Bombay Stock Exchange (BSE). "We have applied to the BSE for approval," Padma Suresh, company secretary, Pentamedia Graphics, said, in a release here. Pentamedia had received the approval of Madras High Court for the business restructuring last year. Shareholders of Pentamedia would be allotted shares of Mayajaal in the ratio 10:6 (6 shares of Mayajaal for every 10 shares held in Pentamedia) as per the scheme approved by the High Court, she said.

The Chennai-based Pentamedia had transferred business activities of its three subsidiaries viz., Media Dreams (which is engaged in film and tele-serial production), Intelivision Ltd (produces and telecasts entertainment and education programmes for children and runs a children's TV channel Splash) and Kris Srikkant Sports Entertainment Ltd (produces TV software for cricket), under the restructuring. Also, the production and content creation activities of Pentamedia through its animation (3D, 2D) and Num TV division (Internet TV) were demerged and merged with Mayajaal. Pentamedia will restrict itself to distribution, marketing and relating activities of content globally, he release said. Following the restructuring, Pentamedia is holding the majority shareholding in Mayajaal.

Srei Infrastructure raises Rs 153 cr through GDRs

19th April 2005: Srei Infrastructure Finance has raised Rs 153 crore ($34.9 million) by way of a Global Depositary Receipts (GDR) issue, the company said late on Monday. The issue comprised 8.65 million GDRs priced at $4.05 each, representing four equity shares of the company. The GDRs are listed on the London Stock Exchange, the company said. Srei, which provides financing for construction equipment and infrastructure projects, said it proposes to use the funds for strengthening its capital base. Shares in Srei were up 3.2 per cent at Rs 46.50 on Tuesday in a strong Bombay market.

Government not to impose tax on FII

19th April 2005: The Government on Tuesday said it is not considering imposing tax on foreign institutional investors (FIIs) to curb volatility in the stock markets. "Government is not presently considering imposition of tax on FIIs," Minister of State for Finance S S Palanimanickam said in a written reply in the Rajya Sabha. FII investments in Indian securities market are governed and regulated by the provisions of Sebi Act, 1992, Sebi (Foreign Institutional Investors) Regulations, 1995 and Fema, 1999, he said. FIIs are also required to ensure compliance with the guidelines, directives and instructions issued by Sebi or the RBI or the Union Government, the Minister of State for Finance said.

Polaris board to consider buyback

19th April 2005: The board of directors of Polaris Software will meet on April 27, 2005 to consider a proposal to buy back shares. This was announced in a release issued by the company to the BSE today.

Adlabs Films to issue preference shares at Rs 150/share

19th April 2005: The Board of Directors of Adlabs Films, at its meeting held on April 18, 2005, have approved the preferential issue of company's equity shares to BSMA at a price of Rs 150/- per share aggregating to $6 million, the company said in a release issued to the BSE.

Vat panel decision on petro tax rates by month-end

19th April 2005: The empowered committee on Vat will take a final decision on tax treatment of petroleum products by the month-end. The move comes in the face of rising fuel costs due to increase in tax rates on petroleum products and severe revenue loss to some states. States like Delhi and Uttar Pradesh will have to face revenue loss from diesel till the Vat panel resolves the issue of floor rate of tax on petroleum products on April 26, state government officials said. Sources said Delhi may have to take out diesel from Vat list as empowered committee chairman Asim Dasgupta made it amply clear that petroleum products will be out of Vat as their prices are not market-determined. “Petroleum products are still out of Vat. There will be no deviation. The reason why petroleum products have been kept out of Vat is that they are not marketable commodity and fall under administered price mechanism,” Mr. Dasgupta said. Delhi has imposed Vat on diesel at 20%, which is much higher than the earlier sales tax of 12%. Uttar Pradesh also charges 20% sales tax on diesel. In contrast, neighboring states like Haryana and Punjab have kept it at 12% and 8.8% respectively. Delhi government said that it had lost revenue by 40-50% during the first 13 days of Vat regime.

IKF Technologies to raise Rs 50 cr via GDRs

19th April 2005: IKF Technologies today said it will issue Rs 50 crore worth Global Depository Receipts which will be floated on the Luxembourg Stock Exchange. The Board of Directors, in a meeting held on April 18, has approved the Rs 50 crore GDRs issue, subject to approval of the shareholders, the company informed the Bombay Stock Exchange. The Board has also approved the stock split from Rs 10 per share to Re 1 per share, it added.

Strides Arcolab issues $40mn FCCBs

19th April 2005: Strides Arcolab has issued and allotted $40 million, 0.5% foreign currency convertible bonds (FCCBs) on April 18, 2005. According to a release issued by Strides to the BSE today, the FCCBs are convertible into equity shares at an initial conversion price of Rs 358.70 per share with a fixed rate of exchange on conversion of Rs 43.7767 = $1.00. Deutsche Bank was the sole lead manager and book runner for the issue, the release added.

Unimin India - Delisting of equity shares from CSE

18th April 2005: Unimin India Ltd has informed BSE that the equity shares of the Company have been delisted from The Calcutta Stock Exchange Association Ltd, Kolkata (CSE) with effect from March 10, 2005.

Vaibhav Gems - Delisting of equity shares from ASE

18th April 2005: Vaibhav Gems Ltd has informed BSE that the equity shares of the Company have been delisted from The Stock Exchange - Ahmedabad (ASE) w.e.f. March 31, 2005.

Nu Tech Corporate Services - Open Offer

18th April 2005: Indian Overseas Bank ("Manager to the Offer") on behalf of M/s Superstar Exports Pvt Ltd ("Acquirer No 1") , M/s Raneka Fincom Pvt Ltd ("Acquirer No 2"), M/s Padmavatiasha Properties & Projects Pvt Ltd ("Acquirer No 3") and M/s Pranam Securities Ltd ("Acquirer No 4") (Collectively referred as "Acquirers") has issued the Public Announcement to the fully paid equity shareholders of Nu Tech Corporate Services Ltd ("Target Company"), pursuant to Regulation 10 read with regulation 12 and in compliance with the Securities & Exchange Board of India (Substantial Acquisitions of shares and Takeovers) Regulations, 1997 and subsequent amendment thereto ["SEBI (SAST) Regulations"] as below:

The Offer

The Acquires are making an offer to acquire 24,00,001 equity shares of the 10/- each fully paid up representing 20% of the paid up equity share capital / Voting Right of the Target Company at a price of Rs 4.34/- (Rupees Four and Thirty Four paisa only) per fully paid up equity share (Offer Price) payable in cash subject to the terms & conditions.

Schedule of Activities

Specific Date: May 13, 2005

Date of opening of the Open Offer: June 09, 2005

Date of closing of the Open Offer: June 29, 2005

ICICI Bank has allotted 1,90,900 equity shares under ESOS

18th April 2005: ICICI Bank Ltd has informed BSE that it has allotted 190,900 equity shares of face value of Rs 10/- each on April 11, 2005 under the Employees Stock Option Scheme, 2000 (ESOS).

Omax Autos - Delisting of equity shares from ASE

18th April 2005: Omax Autos Ltd has informed BSE that the equity shares of the Company have been delisted from The Stock Exchange - Ahmedabad (ASE) w.e.f. March 31, 2005.

Industrial Investment Trust - Open Offer

18th April 2005: Indian Overseas Bank Merchant Banking Division, ("Manager to the Offer") on behalf of M/s Superstar Exports Pvt Ltd ("Acquirer No 1"), M/s Raneka Fincom Pvt Ltd ("Acquirer No 2"), M/s Padmavatiasha Properties and Projects Pvt Ltd ("Acquirer No 3"), and M/s Pranam Securities Ltd ("Acquirer No 4") (Collectively referred to as "Acquirers") has issued Public Announcement to the fully Paid Equity shareholders of Industrial Investment Trust Ltd ("Target Company"), pursuant to Regulation 10 read with Regulation 12 and in compliance with the Securities and Exchange Board of India (Substantial Acquisitions of shares and Takeovers) Regulations, 1997 and subsequent amendments thereto ["SEBI (SAST) Regulations"], as below:

The Offer

The Acquires are making an offer to acquire 20,00,000 equity shares of Rs 10/- each fully paid up representing 20% of the paid up equity share capital / Voting Right of Target Company at a price of Rs 40/- (Rupees Forty Only) per fully paid up equity share ("Offer Price") payable in cash subject to the terms and conditions.

Schedule of Activities

Specific Date: May 13, 2005

Date of opening of the Open Offer: June 09, 2005

Date of closing of the Open Offer: June 29, 2005

Pondy Oxides Board approves Rights issue

18th April 2005: Pondy Oxides and Chemicals Ltd has informed BSE that the Board of Directors of the Company at its meeting held on April 16, 2005, has approved the Rights issue of Equity Shares in the ratio of 2 shares for every 3 shares held by the shareholders on the record date to be decided by the Board.

PFC plans to raise Rs 9500 cr, likely to tap market in June

18th April 2005: Power Finance Corporation (PFC) targets to raise Rs 9,500 crore in the current financial year to assist companies setting up power projects. Power Finance Corporation chairman and managing director Arvind Jadhav said, “It is exciting times for the sector. The companies are over-booked and inventories are running full. There are issues revolving around resources.” He said that 10 per cent of the amount being raised will be from the overseas market. It raised Rs 8,900 crore last year while the loans sanctioned were Rs 18,000 crore. The company expects to exceed the target this year. Power Finance Corporation also plans to tap the capital markets in June this year. The company expects to raise over Rs 2,000 crore, which will be deployed for financing of projects in generation, distribution and transmission. The company has sought the permission from the Union government to add 10 per cent to its existing equity. Its current equity base is Rs 1,300 crore.

YES Bank IPO likely by mid-May

18th April 2005: YES Bank is likely to hit market in the second week of May with its initial public offer (IPO) of 7 crore shares to raise up to Rs 300 crore. "If everything goes well, YES Bank IPO will open by May 9," Rana Kapoor, CEO of YES Bank, said today. The bank has already filed a red herring prospectus with Sebi for its offer through the book building process, he added.

Though the bank is yet to announce a price band for the offer, market sources said it could be in the range of Rs 30-42 per share. The bank has appointed DSP Merrill Lynch and Enam as the lead managers for the IPO. The stake of two promoters - Rana Kapoor and Ashok Kapur- will come down from 52% to about 40% after the IPO.

Rabo Bank of the Netherlands has expressed its intention to retain 20%stake it currently has in the bank. While private equity investor CVC's holding will come down to 7.4% from 10%, the other two investors - AIF Capital and Chrys Capital - will hold 6% each as against the present 7.5%.

YES Bank is also planning to raise about Rs 100 crore as Tier-II capital by September, Kapoor said. The bank, which currently has 4 branches, has received license from RBI to open 16 branches by September. It has also set a target to have 30 branches by March 2006.

VAT panel decision on petroleum products on April 26

18th April 2005: The empowered committee on value added tax (VAT) will take a final decision on tax treatment of petroleum products by the end of the month. The move comes in the face of rising fuel costs due to increase in tax rates on petroleum products and severe revenue loss to some states. States like Delhi and UP will have to face revenue loss from diesel till the VAT panel resolves the issue of floor rate of tax on petroleum products on April 26, state government officials said today.

They added that Delhi may have to take out diesel from the VAT list as Asim Dasgupta, chairman of the empowered committee, made it amply clear that petroleum products will be out of VAT as their prices are not market-determined. "Petroleum products are still out of VAT. There will be no deviation. The reason why petroleum products have been kept out of VAT is that they are not marketable commodities and fall under the administered price mechanism," Dasgupta said.

Delhi has imposed a VAT of 20% on diesel, which is much higher than the earlier sales tax of 12%. Uttar Pradesh also charges 20% sales tax on diesel. In contrast, neighboring states like Haryana and Punjab have kept it at 12% and 8.8%, respectively. The empowered committee had earlier decided on a minimum tax rate of 20% on diesel. The Delhi government has admitted it has lost 40-50% revenue during the first 13 days of imposition of VAT. A K Walia, finance minister of Delhi, said: "We are losing revenue to the neighboring states. We have asked the empowered committee to ask other states to increase the tax on diesel to 20% or allow us to violate the floor rate."

HCL Technologies - Allotment of equity shares under ESOP

16th April 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company on April 15, 2005, has allotted 1,20,684 equity shares of Rs 2/- each (including 56,328 shares at a premium of Rs 125.50 per share; 1,100 shares at a premium of Rs 157.50 per share; 440 shares at a premium of Rs 194.50 per share; 2200 shares at a premium of Rs 201.50 per share; 42,716 shares at a premium of Rs 233.00 per share; 5,704 shares at a premium of Rs 249.00 per share; 5,796 shares at a premium of Rs 251.50 per share; 1,100 shares at premium of Rs 281.50 per share; 5,300 shares at a premium of Rs 288.00 per share), to the employees on exercise of their stock options under the 1999 & 2000 Employee Stock Option Plans (ESOP).

Panel to decide on rate variations today

16th April 2005: The Empowered Committee of State Finance Ministers on Vat will take a decision on Saturday on removing variations in tax rates. The committee will also discuss in detail the issue of price rise due to implementation of Vat by states from this month, its chairman Asim Dasgupta said. As a preparation for the meeting, the committee collected data on variation in Vat rates and other implementation issues from officials of the 21 states that have switched over to the new tax system.

Satyam Computer converts stock options

15th April 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 52,532 equity shares through circular resolution on April 15, 2005 under stock option plans of the Company.

OBC's issue to open on April 25

15th April 2005: OBC's public issue for 5.8 crore equity shares of Rs 10 each will open on April 25. It will close on April 29. The offer will be made through the book building process. The price-band for the follow-on offering will be decided on April 23, the company announced today at a pre-offer roadshow. “The offering will help us meet Basel II norms. It will also help us with our growth plans," said Narang. Citigroup Global Markets India Pvt Ltd, DSP Merril Lynch Ltd, ICICI Securities Ltd, Kotak Mahindra Capital Company Ltd and Bajaj Capital Ltd are the book-running lead managers to the issue. The shares are proposed to be listed on the NSE and the BSE.

HCL Infosystems - Issue of options under ESOP

15th April 2005: HCL Infosystems Ltd has informed BSE that the Board of Directors of the Company has considered and approved the proposal to grant 23384 options under the Employee Stock Option Plan (ESOP) of the Company as detailed below:

1. No of option granted: 23384

2. Grant date: April 15, 2005

3. The Exercise Price will be closing market price of the shares of the Company on April 13, 2005 at the stock exchange where the shares are quoted and which recorded the highest trading volume on the date of grant.

Ipca Laboratories - Delisting of equity shares from ASE

15th April 2005: Ipca Laboratories Ltd has informed BSE that the equity shares of the Company have been delisted from The Stock Exchange - Ahmedabad (ASE) w.e.f. March 31, 2005.

Hindustan Powerplus - Public Announcement

15th April 2005: DSP Merrill Lynch Ltd ("Manager to the offer") on behalf of Caterpillar Commercial S A ("Acquirer") in respect of the proposed acquisition and delisting of the fully paid-up equity shares of Hindustan Powerplus Ltd (the "Target Company") pursuant to the Securities & Exchange Board of India (Delisting of Securities) Guidelines, 2003, has announced as follows:

Offer

The Acquirer invites the public holders of the fully paid-up equity shares of the Target Company (being all holders other than the acquirers) to tender to the Acquirer, on terms and subject to conditions set out, all of their equity shares in the Target Company, being 2,543,746 equity shares of Rs 10 each as at April 14, 2005, representing approximately 8.01% of the fully paid-up equity share capital of the Target Company.

The Guidelines requires determination of "Floor Price" for the shares to be acquired pursuant to the reverse book-building process.

The Acquirer intends to acquire the shares at the Floor Price of Rs.66/- per share and as such the Acquire reserves the right not to acquire the offered shares at any higher price established pursuant to the reverse book-building set forth in the Guidelines.

Schedule of Activities:

Bid Opening Date - May 02, 2005.

Bid Closing Date - May 06, 2005.

Announcement of Exit Price and the Acquires Acceptance / Non-Acceptance of Exit Price: May 10, 2005.

Geometric Software Solutions - Allotment of equity shares under ESOP

15th April 2005: Geometric Software Solutions Company Ltd has informed BSE that the Allotment Committee of Directors of the Company, at its meeting held on April 14, 2005, has allotted 19,542 equity shares on exercise of vested stock options under ESOP Scheme 1999, ESOP Directors - 2000 Scheme, ESOP Scheme 2001 and ESOP Scheme 2003.

Hindustan Times (HT) to arm itself with IPO for Mumbai

15th April 2005: Hindustan Times Media Ltd is planning to tap the primary market sometime this year, according to industry sources. When contacted, senior company officials neither confirmed nor denied it. Necessary approvals for the initial public offering (IPO) are still awaited, it is learnt.

The KK Birla group-owned Hindustan Times is set to launch a Mumbai edition this summer. HT Media recently sold 8.27% equity to Citicorp International Finance Corp for Rs 69 crore. Based on this, the company’s valuation is around Rs 765 crore. The Citicorp investment brings the foreign direct investment in the company to 24.64%, including the 15.38% stake sold to Henderson Asia Pacific Equity Partners in December 2003 for about Rs 100 crore.

Jindal Polyfilm 2nd public offer to raise Rs 300 crore

15th April 2005: Jindal Polyfilm, a BC Jindal Group company, will raise Rs 300 crore through a public issue of equity shares from the domestic market. The offer price will be fixed via book-build route. To be announced just before its opening, the offer price would be around Rs 450 per share, according to sources. The issue is being managed by ICICI Securities and JM Morgan Stanley. This will be the second public issue of the company. The first one was launched in 1994 at Rs 195 per share.

The Rs 700-crore Jindal Polyfilm manufactures flexible packaging materials called BOPET (Biaxially oriented PET) film, BOPP (Biaxially oriented polypropylene) film and metallised films. It also manufactures and sells POY and makes polyester chips for captive consumption. The films are used in labels, adhesive tapes, food packaging and wrapping for tobacco, consumer and textile products.

Bank of Baroda may sell shares in June or July

15th April 2005: Bank of Baroda, India's fifth-biggest lender by assets, said it may sell shares as early as in June this year. "We have permission up to September but we are targeting June or July," Chairman Anil Khandelwal said today. He didn't give a timeframe or a target size for the sale. Gujarat-based Bank of Baroda signed an Rs 5 billion ($114 million) technology agreement with the Indian unit of Hewlett-Packard Co to upgrade the bank's computer systems over five years.

Bharat Forge okays GDR of $100 mn and FCCB of $120mn

15th April 2005: The board of auto parts maker Bharat Forge Ltd. has approved a Global Depositary Receipts (GDR) issue of $100 million and a foreign currency convertible bond (FCCB) issue of $120 million. The GDR, which includes a $10 million greenshoe option, will be priced at $27.50 per GDR, the company told the Bombay Stock Exchange today. The FCCBs will be offered in two tranches of $60 million each.

Wipro has allotted 55,995 equity shares under ESOS

14th April 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors vide their circular resolution effective April 13, 2005 resolved to issue and allot 55,995 equity shares of Rs 2/- each pursuant to exercise of stock options by eligible employees.

Aekta - Delisting of equity shares from DSE

14th April 2005: Aekta Ltd has informed BSE that the equity shares of the Company have been delisted from the Delhi Stock Exchange Association Ltd (DSE) with effect from March 01, 2005.

Gujarat Ambuja board to consider bonus/stock split

14th April 2005: Gujarat Ambuja Cements Ltd (GACL) has decided to consider a bonus issue of equity shares and a stock split at its board meeting on April 20. The company, in a communique to The Stock Exchange, Mumbai (BSE), announced that its board will also consider the unaudited financial results for the quarter ended March 2005 and payment of interim dividend on equity shares, on the same day.

CSD canteens to be exempt from VAT: PM

14th April 2005: Prime Minister Manmohan Singh today said he had promised the armed forces to look into their demand to exempt from value added tax (VAT) goods sold at the CSD canteens. “I promised them (the armed forces) that I will look into it," said Mr. Singh. The Prime Minister said the armed forces had brought to his notice the hardship faced by them due to implementation of value added tax in the CSD canteens.

Allahabad bank fixes issue price at Rs 82/share

14th April 2005: Allahabad Bank has fixed the issue price for its public offer at Rs 82 per equity share of Rs 10 each. According to a release issued by Allahabad Bank to the BSE, the issue price was fixed in consultation with book running lead managers. The second public offer of the bank for 10 crore equity was open for bidding from April 6 to April 12. The book running lead managers to the BSE were SBI Capital Markets, DSP Merrill Lynch, ICICI Securities, JM Morgan Stanley, Kotak Mahindra Capital and Enam Financial Consultants, the release added.

Virat Industries - Delisting of equity shares from 2 Stock Exchanges

13th April 2005: Virat Industries Ltd has informed BSE that the securities of the Company have been delisted from The Stock Exchange, Ahmedabad w.e.f. March 31, 2005 and Vadodra Stock Exchange Ltd w.e.f. April 06, 2005.

BDH Industries - Delisting of equity shares from 2 Stock Exchanges

13th April 2005: BDH Industries Ltd has informed BSE that the equity shares of the Company have been voluntarily delisted from The Madras Stock Exchange Ltd and The Stock Exchange, Ahmedabad, w.e.f. March 31, 2005.

EPC Industrie - Delisting of securities from ASE

13th April 2005: EPC Industrie Ltd has informed BSE that the securities of the Company are delisted from The Stock Exchange, Ahmedabad (ASE) with effect from March 31, 2005.

Bliss Chemicals & Pharmaceuticals - Delisting of equity shares from DSE

13th April 2005: Bliss Chemicals & Pharmaceuticals India Ltd has informed BSE that the equity shares of the Company have been delisted from The Delhi Stock Exchange Association Ltd (DSE) w.e.f. March 31, 2005.

Shiva Texyarn - Delisting of equity shares from MSE

13th April 2005: Shiva Texyarn Ltd has informed BSE that the equity shares of the Company have been delisted from Madras Stock Exchange Ltd (MSE) with effect from March 31, 2005.

Provogue files draft red-herring prospectus with Sebi

13th April 2005: Provogue, a Mumbai based textile major, has filled its draft red-herring prospectus with the Securities and Exchange Board of India. The company proposes to issue 40,49,402 equity shares at a price to be determined via book-building. The lead managers to the issue are SBI Capital Markets, Karvy Investor Services and Anand Rathi Securities. The Issue is being made through the 100% book building process where 50% of the Issue shall be issued on a discretionary basis to Qualified Institutional Buyers. Further, not less than 15% of the Issue shall be available for allocation on a proportionate basis to Non- Institutional Bidders and not less than 35% of the Issue shall be available for allocation on a proportionate basis to Retail Bidders.

HCL Infosystems allots 11,866 equity shares under ESOS

13th April 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 11866 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

VAT panel to meet on Apr 15-16 to discuss rates

13th April 2005: The empowered committee on value added tax (VAT) today said lack of uniformity in VAT rates among states was a serious issue, and advanced its meeting to April 15-16 to consider the matter. "We are ready to admit that VAT rates are not uniform (among states). That is why we have advanced our meeting, which was earlier scheduled for May, to April 15-16," Ramesh Chandra, empowered committee secretary, said today. On traders' grievances over VAT, he said doors of negotiations were open, and asked the traders to present their case before the committee.

On the controversial issue of VAT on CSD canteens, he said it was up to the defence and finance ministries to give concessions to these canteens. Various issues like difference in VAT tax structure between states have surfaced after implementation of VAT from April 1. So far, 20 states have implemented the new system. Uttar Pradesh, Tamil Nadu, Uttaranchal, besides BJP-ruled states - Rajasthan, Madhya Pradesh, Gujarat, Jharkhand and Chhattisgarh has not introduced VAT.

Shringar cinemas prices IPO at Rs 53/share

13th April 2005: Indian film distributor and multiplex operator Shringar cinemas Ltd has priced its initial public offering at Rs 53 a share, the top end of a previously set band of Rs 47 to Rs 53, a company official said. The offer of 8.1 million shares, representing a dilution of up to 25.82% of the owner's stake, was subscribed more than eight times when it closed on April 11. The offering is expected to raise Rs 429 mn. Mumbai-based Shringar Cinemas plans to use the money to set up theatre complexes in more cities. The shares are likely to be listed on the Mumbai and National stock Exchanges in the next two weeks.

India Infoline public offer to open on April 21, price band Rs 70-80/share

13th April 2005: India Infoline Limited, one of the leading retail investment advisory and intermediary Company, has fixed a price band between Rs 70 and Rs 80 for its forthcoming public issue of 11,878,138 equity shares of face value of Rs 10 each at a price to be determined through 100% Book building route to finance its expansion plans. The issue is slated for open for bids on April 21, 2005 and close for subscriptions/bids on April 27, 2005. Enam Financial Consultants Private Limited is the Sole Book Running Lead Manager to the issue.

Out of the present issue, 878,138 equity shares are reserved for allotment to employees of the Company and out of the balance, at least 50% i.e. 5,500,000 shares are reserved for allocation to Qualified Institutional Buyers (QIBs) on discretionary basis, 25% i.e. 2,750,000 shares are reserved for allocation to Non Institutional Bidders and 25% i.e. 2,750,000 shares are reserved for Retail Individual Bidders both on proportionate basis.

India Infoline carries out the business of broking, distribution of personal finance products including mutual funds, fixed deposits, government bonds etc., corporate agency of life insurance and commodities broking through its separate wholly owned subsidiaries. Promoted by Nirmal Jain and R Venkataraman, India Infoline has a retail branch network of 73 branches at 36 locations across India and proposes to set up an additional 77 branches in 50 cities across India to have a network of 150 branches to further strengthen its geographic reach. The Company's online portals 'Indiainfoline.com' and '5paisa.com' are well known brands amongst retail investors across India.

Sebi Investor Education Programme (Investments in Mutual Funds)

Introduction

Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.

 

With an objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answer format which may help the investors in taking investment decisions.

 

What is a Mutual Fund?

 

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

 

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders.

 

The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

 

What is the history of Mutual Funds in India and role of SEBI in mutual funds industry?

 

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds.

 

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are – to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

 

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors.

 

All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type.

 

How is a mutual fund set up?

 

A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset management company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

 

SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme.

 

What is Net Asset Value (NAV) of a scheme?

 

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV).

 

Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

 

What are the different types of mutual fund schemes?

 

Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

 

Open-ended Fund/ Scheme

 

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.

 

Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

 

Schemes according to Investment Objective:

 

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

 

Growth / Equity Oriented Scheme

 

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

 

Income / Debt Oriented Scheme

 

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

 

Balanced Fund

 

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

 

Money Market or Liquid Fund

 

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

 

Gilt Fund

 

These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.

 

Index Funds

 

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme.

 

There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.

 

What are sector specific funds/schemes?

 

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

 

What are Tax Saving Schemes?

 

These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

 

What is a Load or no-load Fund?

 

A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads.

 

A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

 

Can a mutual fund impose fresh load or increase the load beyond the level mentioned in the offer documents?

 

Mutual funds cannot increase the load beyond the level mentioned in the offer document. Any change in the load will be applicable only to prospective investments and not to the original investments. In case of imposition of fresh loads or increase in existing loads, the mutual funds are required to amend their offer documents so that the new investors are aware of loads at the time of investments.

 

What are a sales or repurchase/redemption price?

 

The price or NAV a unitholder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable.

 

Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unitholders. It may include exit load, if applicable.

 

What is an assured return scheme?

 

Assured return schemes are those schemes that assure a specific return to the unitholders irrespective of performance of the scheme.

 

A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document.

 

Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. Some schemes assure returns one year at a time and they review and change it at the beginning of the next year.

 

Can a mutual fund change the asset allocation while deploying funds of investors?

 

Considering the market trends, any prudent fund managers can change the asset allocation i.e. he can invest higher or lower percentage of the fund in equity or debt instruments compared to what is disclosed in the offer document. It can be done on a short term basis on defensive considerations i.e. to protect the NAV. Hence the fund managers are allowed certain flexibility in altering the asset allocation considering the interest of the investors. In case the mutual fund wants to change the asset allocation on a permanent basis, they are required to inform the unitholders and giving them option to exit the scheme at prevailing NAV without any load.

 

How to invest in a scheme of a mutual fund?

 

Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Now a days, the post offices and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post offices should not be taken as their own schemes and no assurance of returns is given by them. The only role of banks and post offices is to help in distribution of mutual funds schemes to the investors.

 

Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective decisions.

 

Can non-resident Indians (NRIs) invest in mutual funds?

 

Yes, non-resident Indians can also invest in mutual funds. Necessary details in this respect are given in the offer documents of the schemes.

 

How much should one invest in debt or equity oriented schemes?

An investor should take into account his risk taking capacity, age factor, financial position, etc. As already mentioned, the schemes invest in different type of securities as disclosed in the offer documents and offer different returns and risks. Investors may also consult financial experts before taking decisions. Agents and distributors may also help in this regard.

 

How to fill up the application form of a mutual fund scheme?

 

An investor must mention clearly his name, address, number of units applied for and such other information as required in the application form. He must give his bank account number so as to avoid any fraudulent encashment of any cheque/draft issued by the mutual fund at a later date for the purpose of dividend or repurchase. Any changes in the address, bank account number, etc at a later date should be informed to the mutual fund immediately.

 

What should an investor look into an offer document?

 

An abridged offer document, which contains very useful information, is required to be given to the prospective investor by the mutual fund. The application form for subscription to a scheme is an integral part of the offer document. SEBI has prescribed minimum disclosures in the offer document. An investor, before investing in a scheme, should carefully read the offer document. Due care must be given to portions relating to main features of the scheme, risk factors, initial issue expenses and recurring expenses to be charged to the scheme, entry or exit loads, sponsor’s track record, educational qualification and work experience of key personnel including fund managers, performance of other schemes launched by the mutual fund in the past, pending litigations and penalties imposed, etc.

 

When will the investor get certificate or statement of account after investing in a mutual fund?

 

Mutual funds are required to despatch certificates or statements of accounts within six weeks from the date of closure of the initial subscription of the scheme. In case of close-ended schemes, the investors would get either a demat account statement or unit certificates as these are traded in the stock exchanges. In case of open-ended schemes, a statement of account is issued by the mutual fund within 30 days from the date of closure of initial public offer of the scheme. The procedure of repurchase is mentioned in the offer document.

 

How long will it take for transfer of units after purchase from stock markets in case of close-ended schemes?

 

According to SEBI Regulations, transfer of units is required to be done within thirty days from the date of lodgment of certificates with the mutual fund.

 

As a unitholder, how much time will it take to receive dividends/repurchase proceeds?

 

A mutual fund is required to despatch to the unitholders the dividend warrants within 30 days of the declaration of the dividend and the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase request made by the unitholder.

 

In case of failures to despatch the redemption/repurchase proceeds within the stipulated time period, Asset Management Company is liable to pay interest as specified by SEBI from time to time (15% at present).

 

Can a mutual fund change the nature of the scheme from the one specified in the offer document?

 

Yes. However, no change in the nature or terms of the scheme, known as fundamental attributes of the scheme e.g.structure, investment pattern, etc. can be carried out unless a written communication is sent to each unitholder and an advertisement is given in one English daily having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. The unitholders have the right to exit the scheme at the prevailing NAV without any exit load if they do not want to continue with the scheme. The mutual funds are also required to follow similar procedure while converting the scheme form close-ended to open-ended scheme and in case of change in sponsor.

 

How will an investor come to know about the changes, if any, which may occur in the mutual fund?

 

There may be changes from time to time in a mutual fund. The mutual funds are required to inform any material changes to their unitholders. Apart from it, many mutual funds send quarterly newsletters to their investors.

 

At present, offer documents are required to be revised and updated at least once in two years. In the meantime, new investors are informed about the material changes by way of addendum to the offer document till the time offer document is revised and reprinted.

 

How to know the performance of a mutual fund scheme?

 

The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. The NAVs of mutual funds are required to be published in newspapers. The NAVs are also available on the web sites of mutual funds. All mutual funds are also required to put their NAVs on the web site of Association of Mutual Funds in India (AMFI) www.amfiindia.com and thus the investors can access NAVs of all mutual funds at one place.

 

The mutual funds are also required to publish their performance in the form of half-yearly results which also include their returns/yields over a period of time i.e. last six months, 1 year, 3 years, 5 years and since inception of schemes. Investors can also look into other details like percentage of expenses of total assets as these have an affect on the yield and other useful information in the same half-yearly format.

 

The mutual funds are also required to send annual report or abridged annual report to the unitholders at the end of the year.

 

Various studies on mutual fund schemes including yields of different schemes are being published by the financial newspapers on a weekly basis. Apart from these, many research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance. Investors should study these reports and keep themselves informed about the performance of various schemes of different mutual funds.

 

Investors can compare the performance of their schemes with those of other mutual funds under the same category. They can also compare the performance of equity oriented schemes with the benchmarks like BSE Sensitive Index, S&P CNX Nifty, etc.

 

On the basis of performance of the mutual funds, the investors should decide when to enter or exit from a mutual fund scheme.

 

How to know where the mutual fund scheme has invested money mobilised from the investors?

 

The mutual funds are required to disclose full portfolios of all of their schemes on half-yearly basis which are published in the newspapers. Some mutual funds send the portfolios to their unitholders.

 

The scheme portfolio shows investment made in each security i.e. equity, debentures, money market instruments, government securities, etc. and their quantity, market value and % to NAV. These portfolio statements also required to disclose illiquid securities in the portfolio, investment made in rated and unrated debt securities, non-performing assets (NPAs), etc.

 

Some of the mutual funds send newsletters to the unitholders on quarterly basis which also contain portfolios of the schemes.

 

Is there any difference between investing in a mutual fund and in an initial public offering (IPO) of a company?

 

Yes, there is a difference. IPOs of companies may open at lower or higher price than the issue price depending on market sentiment and perception of investors. However, in the case of mutual funds, the par value of the units may not rise or fall immediately after allotment. A mutual fund scheme takes some time to make investment in securities. NAV of the scheme depends on the value of securities in which the funds have been deployed.

 

If schemes in the same category of different mutual funds are available, should one choose a scheme with lower NAV?

 

Some of the investors have the tendency to prefer a scheme that is available at lower NAV compared to the one available at higher NAV. Sometimes, they prefer a new scheme which is issuing units at Rs. 10 whereas the existing schemes in the same category are available at much higher NAVs. Investors may please note that in case of mutual funds schemes, lower or higher NAVs of similar type schemes of different mutual funds have no relevance. On the other hand, investors should choose a scheme based on its merit considering performance track record of the mutual fund, service standards, professional management, etc. This is explained in an example given below.

 

Suppose scheme A is available at a NAV of Rs.15 and another scheme B at Rs.90. Both schemes are diversified equity oriented schemes. Investor has put Rs. 9,000 in each of the two schemes. He would get 600 units (9000/15) in scheme A and 100 units (9000/90) in scheme B. Assuming that the markets go up by 10 per cent and both the schemes perform equally good and it is reflected in their NAVs. NAV of scheme A would go up to Rs. 16.50 and that of scheme B to Rs. 99. Thus, the market value of investments would be Rs. 9,900 (600* 16.50) in scheme A and it would be the same amount of Rs. 9900 in scheme B (100*99). The investor would get the same return of 10% on his investment in each of the schemes. Thus, lower or higher NAV of the schemes and allotment of higher or lower number of units within the amount an investor is willing to invest, should not be the factors for making investment decision. Likewise, if a new equity oriented scheme is being offered at Rs.10 and an existing scheme is available for Rs. 90, should not be a factor for decision making by the investor. Similar is the case with income or debt-oriented schemes.

 

On the other hand, it is likely that the better managed scheme with higher NAV may give higher returns compared to a scheme which is available at lower NAV but is not managed efficiently. Similar is the case of fall in NAVs. Efficiently managed scheme at higher NAV may not fall as much as inefficiently managed scheme with lower NAV. Therefore, the investor should give more weightage to the professional management of a scheme instead of lower NAV of any scheme. He may get much higher number of units at lower NAV, but the scheme may not give higher returns if it is not managed efficiently.

How to choose a scheme for investment from a number of schemes available?

As already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look into the past track record of performance of the scheme or other schemes of the same mutual fund. They may also compare the performance with other schemes having similar investment objectives. Though past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future, this is one of the important factors for making investment decision. In case of debt oriented schemes, apart from looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts.

 

Are the companies having names like mutual benefit the same as mutual funds schemes?

 

Investors should not assume some companies having the name "mutual benefit" as mutual funds. These companies do not come under the purview of SEBI. On the other hand, mutual funds can mobilise funds from the investors by launching schemes only after getting registered with SEBI as mutual funds.

 

Is the higher net worth of the sponsor a guarantee for better returns?

 

In the offer document of any mutual fund scheme, financial performance including the net worth of the sponsor for a period of three years is required to be given. The only purpose is that the investors should know the track record of the company which has sponsored the mutual fund. However, higher net worth of the sponsor does not mean that the scheme would give better returns or the sponsor would compensate in case the NAV falls.

 

Where can an investor look out for information on mutual funds?

 

Almost all the mutual funds have their own web sites. Investors can also access the NAVs, half-yearly results and portfolios of all mutual funds at the web site of Association of mutual funds in India (AMFI) www.amfiindia.com. AMFI has also published useful literature for the investors.

 

Investors can log on to the web site of SEBI www.sebi.gov.in and go to "Mutual Funds" section for information on SEBI regulations and guidelines, data on mutual funds, draft offer documents filed by mutual funds, addresses of mutual funds, etc. Also, in the annual reports of SEBI available on the web site, a lot of information on mutual funds is given.

 

There are a number of other web sites which give a lot of information of various schemes of mutual funds including yields over a period of time. Many newspapers also publish useful information on mutual funds on daily and weekly basis. Investors may approach their agents and distributors to guide them in this regard.

 

If mutual fund scheme is wound up, what happens to money invested?

 

In case of winding up of a scheme, the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. Unitholders are entitled to receive a report on winding up from the mutual funds which gives all necessary details.

 

How can the investors redress their complaints?

Investors would find the name of contact person in the offer document of the mutual fund scheme whom they may approach in case of any query, complaints or grievances. Trustees of a mutual fund monitor the activities of the mutual fund. The names of the directors of asset management company and trustees are also given in the offer documents. Investors can also approach SEBI for redressal of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned mutual fund and follows up with them till the matter is resolved. Investors may send their complaints to:

 

Securities and Exchange Board of India

Mutual Funds Department

Mittal Court ‘B’ wing, First Floor,

224, Nariman Point,

Mumbai – 400 021.

Phone: 2850451-56, 2880962-70

 

 

What is the procedure for registering a mutual fund with SEBI ?

 

An applicant proposing to sponsor a mutual fund in India must submit an application in Form A along with a fee of Rs.25,000. The application is examined and once the sponsor satisfies certain conditions such as being in the financial services business and possessing positive net worth for the last five years, having net profit in three out of the last five years and possessing the general reputation of fairness and integrity in all business transactions, it is required to complete the remaining formalities for setting up a mutual fund. These include inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board of trustees comprising two- thirds independent trustees, incorporating the asset management company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the registration certificate is issued subject to the payment of registration fees of Rs.25.00 lacs For details, see the SEBI (Mutual Funds) Regulations, 1996.

 

 

What is the procedure for redressal of investor grievances?

 

When investors send complaints to SEBI, SEBI takes up the matter with the concerned mutual funds and follows up with them till they are resolved.

 

In case of complaints, investors may write to :

 

Securites And Exchange Board of India,

Mutual Fund Dept.,

Mittal Court 'B' Wing,

Nariman Point,

Mumbai 400 021.

Satyam Computers allots 27,803 shares to staff under stock option plan

12th April 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 27,803 equity shares through circular resolution on April 12, 2005 under stock option plans of the Company.

Rama Paper Mills - Delisting of securities from 3 Stock Exchanges

12th April 2005: Rama Paper Mills Ltd has informed BSE that securities of the Company have been delisted from the following Stock Exchanges:-

1. Uttar Pradesh Stock Exchange Association Ltd w.e.f February 24, 2005.

2. The Delhi Stock Exchange Association Ltd w.e.f March 01, 2005.

3. The Stock Exchange Ahmedabad w.e.f February 28, 2005.

Kamat Hotels India - Delisting of Securities from DSE

12th April 2005: Kamat Hotels (India) Ltd has informed BSE that the securities of the Company have been delisted from Delhi Stock Exchange Association Ltd (DSE).

TRF Board approves delisting of shares from CSE & Magadh Stock Exchange

12th April 2005: TRF Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 23, 2005 have resolved to delist the equity shares of the Company with the Calcutta Stock Exchange Association Ltd (CSE), Kolkata & the Magadh Stock Exchange Association, Patna.

STI India has delisted equity shares from DSE & ASE

12th April 2005: STI India Ltd has informed BSE that 1,75,00,000 Equity Shares Rs 10/- each fully paid up of the Company have been delisted from The Stock Exchange Ahmedabad (ASE) & The Delhi Stock Exchange Association Ltd (DSE) w.e.f February 28, 2005 & March 01, 2005 respectively.

Phyto Chem - Delisting of equity shares from HSE

12th April 2005: Phyto Chem (India) Ltd has informed BSE that the equity shares of the Company have been delisted from the Hyderabad Stock Exchange (HSE) w.e.f April 04, 2005.

JIK Industries - Delisting of shares from ASE

12th April 2005: JIK Industries Ltd has informed BSE that the shares of the Company have been delisted from the stock Exchange, Ahemedabad (ASE) w.e.f March 31, 2005.

ICICI Bank allots 1.05 lakh shares to staff under Employees Stock Option Scheme (ESOS)

12th April 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 105,005 equity shares of face value of Rs 10/- each on April 04, 2005, under the Employees Stock Option Scheme, 2000 (ESOS).

Electronic Filing of Returns of Tax Collected at Source Scheme, 2005

12th April 2005: Notification No. 121/2005 Dated 30.03.2005: The Central Board of Direct Taxes, vide this notification, has specified Electronic Filing of Returns of Tax Collected at Source Scheme, 2005. It shall be applicable to all persons filing returns of tax collected at source on computer media under sub-section (5B) of section 206C of the Income-tax Act, 1961. It consists of methodology for preparation and furnishment of e-TCS Returns. It explicitly makes a mention of the procedure to be followed by e-TCS intermediary and its general responsibilities. It also, declares the powers of the e-filing Administrator and powers of the Board as regard to revocation of the authorisation of an e-filing Intermediary.

Subex Systems has allotted 17,776 equity shares under ESOP

11th April 2005: Subex Systems Ltd has informed BSE that the Allotment committee of the Board of Directors of the Company considered and approved on April 11, 2005 the allotment of 17,776 Equity shares pursuant to exercise of ESOPs by eligible Employees & Directors under the ESOP scheme 2000.

Wipro has allotted shares under ADS Stock Option Plan

11th April 2005: Wipro Ltd has informed BSE that the Administrative Committee of the Board of Directors vide circular resolution dated April 07, 2005 allotted 2400 equity shares of par value of Rs 2/- each to JP Morgan Chase Bank, the Company's depository as underlying shares in respect of ADRs to be issued and allocated to the purchasers, pursuant to the exercise of the options granted to the employees under Company's 2000 ADS stock option plan. Further the Company has informed that the Administrative Committee of the Board of Directors vide their circular resolution effective April 08, 2005 resolved to issue and allot 12000 equity shares of Rs 2/- each pursuant to exercise of stock options by eligible employees.

Ranbaxy Laboratories has allotted 1,11,710 equity shares under ESOS

11th April 2005: Ranbaxy Laboratories Ltd has informed BSE that the ESOPs Allotment Committee of Directors at its meeting held on April 11, 2005, has allotted 1,11,710 Equity Shares on exercise of stock options under the Employees Stock Option Scheme (ESOS) of the Company.

Wipro allotted 2,000 shares under ADS Stock Option Plan

11th April 2005: Wipro Ltd has informed BSE that the Administrative Committee of the Board of Directors of the Company vide circular resolution dated April 04, 2005 allotted 2000 equity shares of par value of Rs 2/- each to JP Morgan Chase Bank, the Company's depository as underlying shares in respect of ADRs to be issued and allocated to the purchasers, pursuant to the exercise of the options granted to the employees under the Company's 2000 ADS stock option plan.

NIIT Ltd Board approves ESOP 2005

11th April 2005: NIIT Ltd has informed BSE that based on the recommendations of the Compensation Committee, the Board of Directors of the Company at its meeting held on April 08, 2005, have approved an Employee Stock Option Plan (ESOP 2005) to issue options exercisable into equity shares or securities convertible into equity shares up to 19,25,000 equity shares of face value Rs 10 each of the Company. The ESOP 2005 is in complete supersession of the Employee Stock Option Scheme ("ESOP 2000"). The Employee Stock Option Plan (ESOP 2005) is subject to the approval of the shareholders of the Company. The approval of the shareholders for ESOP 2005 is being sought by means of postal ballot.

NIIT Technologies Board approves ESOP 2005

11th April 2005: NIIT Technologies Ltd has informed BSE that based on the recommendations of the Compensation Committee, the Board of Directors of the Company at its meeting held on April 08, 2005, have approved an Employee Stock Option Plan (ESOP 2005) to issue options exercisable into equity shares or securities convertible into equity shares up to 38,50,000 equity shares of face value Rs 10 each of the Company. The ESOP 2005 is in complete supersession of the Employee Stock Option Scheme "ESOP 2000". The Employee Stock Option Plan (ESOP 2005) is subject to the approval of the shareholders of the Company. The approval of the shareholders for ESOP 2005 is being sought by means of postal ballot.

Oriental Bank of Commerce (OBC) second public offer opens on April 25

11th April 2005: OBC will hit the market with its second public offer on April 25 for raising up to Rs 1,700 crore. "The public offer for 5.8 crore equity shares will open on April 25 and close on April 29," a senior OBC official said today. The bank will announce the price band for the issue two days before the issue opens for subscription, he said, adding the final price will be decided on a book-building process.

The OBC scrip is hovering around Rs 305 per share, and, going by the present price trend, the bank expects to raise up to Rs 1,700 crore. The shareholding of the government in OBC is slated to come down to 51.2% from 66% after the public offer. OBC had filed the prospectus with Sebi for its public offer during the second week of March. The public offer is expected to raise the bank's capital adequacy ratio, which was eroded after it acquired the ailing Global Trust Bank (GTB) along with bad assets worth Rs 1,400 crore.

Bata rights at Rs 54/share

11th April 2005: The rights issue committee of Bata India, at its meeting held on April 9, 2005, have fixed the issue price of the rights issue at Rs 54 per share including the face value of Rs 10 per share. This was announced in a release issued by the company to the BSE today.

AllSec Technologies public offer to open on April 13, price band Rs 135-162/share

11th April 2005: AllSec Technologies, a voice-based BPO, today fixed a price band of Rs 135-162 per share for its Initial Public Offering (IPO) which will open on April 13 and close on April 20. "The proceeds from the IPO for 31.41 lakh shares will be used for setting up a new facility in Chennai besides repaying loans and making strategic investments or joint ventures abroad", Founder and President of Allsec Technologies Adi Saravanan said. "The first phase of the new facility will be completed by this month while the full facility will be functional by the year-end", he added.

Allsec Technologies, the first voice-based BPO to tap the capital market, would offer 31.41 lakh equity shares constituting 26.25% of the fully-diluted post issue paid up equity capital of the company. Of the offer, 1,49,600 shares have been reserved for the employees of the company while the number of shares that have been reserved for non-institutional bidders and retailers stand at 7,47,900 shares each, he said.

IL&FS Investmart Ltd and Kotak Mahindra Capital Company Ltd would be the book-running lead managers to the issue while Karvy Computershare Private Ltd would be the registrar to the issue, he said. The shares are proposed to be listed both on The Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE).

BSE launches mid-cap, small-cap indices

11th April 2005: In a bid to track the performance of mid and small capital companies, the Bombay Stock Exchange (BSE) today introduced two new indices - the BSE Mid-Cap Index and the BSE Small-Cap Index. The indices would be calculated and disseminated on a real time basis on BSE's BOLT terminal with effect from today, the exchange said in a release. The base year of the indices would be 2002-2003, and the base index value would be 1,000 for each of the indices based on a free-float methodology, the release added.

The BSE Mid-Cap index would include 231 companies representing 15% of BSE's eligible universe with the highest average market capitalisation of Rs 2,476 crore and lowest at Rs 18 crore, it said. The total market capitalisation (average) of the Mid-Cap Index is Rs 2,28,315 crore, the release added. The BSE Small-Cap index would cover 425 companies with the highest average market capitalisation of Rs 417 crore and the lowest at Rs 5 crore. The total market capitalisation (average) of the index is Rs 76,750 crore, the release said. "The stock exchange would be reviewing the constituents of the indices on a quarterly basis," the release added.

19 firms line up buy-back offers

11th April 2005: It is going to be a hot summer for the markets, judging by the number of open offers lined up. The promoters of as many as 19 companies have lined up buy-back offers in April and May. They are expected to spend Rs 1,407 crore on the exercise. Of the 19 buy-back offers, 16 companies are buying back shares through tender offers to shareholders, while three companies have proposed to buy-back shares through open market operations.

The promoters of 16 companies propose to acquire a total of 87.89 million shares valued at Rs 1,165 crore through open offers to shareholders. The three companies going through the open market process include GlaxoSmithKline Pharma, Aegis Logistic and DIL. The three companies have proposed to buy back 4.35 million shares and have set aside Rs 243 crore from general reserves. Of the 16 open offers to shareholders, the current market prices of eight companies have been above the offer price. The remaining eight companies are traded below their open offer prices.

Sunshield Chemicals currently commands a premium of 271% over the offer price of Rs 10. Bihar Caustic Chemicals is quoted at Rs 55.70 against the offer price of Rs 23.27. Alstom commands a 45 per cent premium over its offer price of Rs 75.03. The current market prices of Crisil, SKF, Shriram Investment and Shriram Transport are also well above their respective offer prices. SKF’s promoters have proposed to delist the company after buying back the remaining 24.48 million shares with the public, amounting to 46.42 per cent of the company’s paid-up capital at a floor price of Rs 153 with offer price of Rs 180. The company proposes to spend Rs 440 crore on the proposed buyback offer. McGraw Hill Companies (of which Standard & Poors is a division), and its wholly owned subsidiary, S&P India LLC have made an open offer to buy 3,534,488 shares of Crisil at Rs 680 per share aggregating to Rs 240 crore.

Of the 16 open offers, the biggest is that of Shaw Wallace of Rs 300 crore, which is slated to open on April 18 and close on May 7. McDowell & Company Ltd (acquirer) along with its wholly-owned subsidiary Phipson Distillery and United Spirits, a wholly-owned subsidiary of Phipson Distillery Ltd, jointly and severally have made a voluntary open offer to the shareholders of Shaw Wallace to acquire up to 12,001,518 fully-paid equity shares of the company representing 25% of the equity capital at a price of Rs 250 per share.

Wipro plans to issue Restricted Stock Units

6th April 2005: Indian software companies are looking at rewarding their employees through an instrument called restricted stock or restricted stock units (RSUs). Wipro is looking at issuing restricted stock units for its employees from the current fiscal, 2005-06, after the April-June quarter. Wipro's objective is to have a deferred salary component that locks in the employees for some years. Wipro’s board and compensation committee has approved an RSU scheme, and the shareholders are expected to give approval to it on June 11, 2005.

Value Added Tax (VAT) in Maharashtra

The Value Added Tax System of taxation of sales of goods in Maharashtra is effective from 1st April, 2005. The following explains some of the basic issues:

                     

TREATMENT OF CLOSING STOCK AS ON 31ST MARCH, 2005

 

This explains the treatment of closing stock as on 31st March, 2005.

1. Set-off of the tax paid on purchases in closing stock is available if goods in stock are resold after 1st April, 2005 upto 31st December, 2005.

 

2. (a) The dealers who wish to claim set-off on closing stock have to furnish statement of closing stock upto 30th April, 2005, whereas

    (b) Manufactures, Importers, Retailers under composition, Drugs and medicine dealers           related to schedule entry C-29 of VAT Act, 2002, need not furnish statement of            closing stock.

 

3. (a) Set-off will be available on purchases covered by Bombay Sales Tax Rules, 1959 applicable as on 31st March 2005;

    (b) In respect of purchases covered by any of the earlier laws other than Bombay                   Sales Act, 1959, set-off will be available of sum collected separately from claimant dealer.

 

4. Goods held as on 31.03.2005 by trade originally manufactured by an exempted unit under Package Scheme of Incentives are to be taxed on the margin of gross profit at the scheduled rate of tax in VAT.

 

 

COMPOSITION SCHEME FOR RETAILERS

 

1. Turnover limit of Rs.  50 lakh for retailers opting for composition. Note: The Maharashtra Government has moved the Empowered Committee of State Finance Ministers to all retailers.

 

2. Composition scheme is available to the dealer satisfying following criteria

    (a) Atleast 90%of sales are made to persons who are dealers. (i.e. consumers)

    (b) He should not be a manufacturer or importer.

    (c) He should not effect inter-state purchase after 1st April, 2005.

    (d) He should not be selling liquor.

 

3. Rate of Tax:

    (a) 8% on the difference of the total of all sales and of all purchases (including tax, if any) during the return period.

         (i) The selling dealer should not collect tax separately on sales.

         (ii) The selling dealer should not claim set-off

    (b) For the return period 1st April, 2005 to 30th September, 2006 the retailer should consider only 5/6thn of the turnover of sales instead of the total of all sales.

 

4. Other Facts:

     (a) Need not issue “tax invoice” – he should issue bill/cash memorandum.

     (b)Bill/ Cash memorandum should cont6ain the following particulars:

          (i) should be serially numbered;

          (ii) signed and dated;

          (iii) give full name and style of business;

          (iv) address of place of business;

          (v) number of his certificate of registration;

          (vi) particulars of goods sold (quantity/number etc.) and sale price thereof

 

     (c) Bill/cash memo must also contain the following certificate_

“I/we hereby certify that my/our registration certificate under the Maharahtra      Value Added Tax Act, 2002 is in force on the date on which sale of goods specified in this bill/cash memorandum is made by we/us, and that the transaction of sale covered by this bill/cash memorandum has been effected by me and it shall be accounted for in the turnover of sales while filing my returns”.

 

 

TAX INVOICE

 

1. The registered dealer under VAT may issue tax invoice. If he issues tax invoice then only the purchasing dealer can claim set-off on his purchases.

 

2. The registered dealers opting for composition scheme need not issue tax invoice. He may issue bill or cash memorandum.

 

3. An unregistered dealer can not issue tax invoice.

 

4. The Tax invoice shall contain the following particulars on the original as well as on all copies thereof:-

     (i) The word “tax invoice” in bold letters at the top or at any prominent place. Rubber stamp may be used for this purpose (For old stationery)

     (ii) Certificate as below to be printed on invoice (Rubber stamp may be used for old stationery)

“I / We hereby certify that my / our registration certificate under the Maharashtra Value Added Tax Act, 2002 is in force on the date on which the sale of goods specified in this “tax invoice” is made by me / us and that the transaction of sale covered by this “tax invoice” has been effected by me / us and it shall be accounted for in the turnover of sales while filing of return and the due tax, if any, payable on the sale has been paid or shall be paid”.

     (iii) The name, address and registration certificate number of the selling dealer.

     (iv) An individualised serialised number and date on which the tax invoice is issued.

     (v) Description of the goods, the quantity or as the case may be, number and price of goods sold.

     (vi) The rate of tax and amount of tax charged thereon must be indicated separately; and

     (vii) Signed by the selling dealer or by a duly authorised person.

     (viii) Other norms are similar to the requirements of the earlier Bombay Sales Tax, 1959 (now repealed)

 

N.B. There is no prescribed format in which the tax invoice is to be raised. The registered dealer may use a format suitable to his business needs.

 

 

HIGHLIGHTS OF SET-OFF UNDER VAT

 

1. Full set-off is available to the dealers on purchase effected on “tax invoice” –where VAT is separately on or after 1st April, 2005.

 

2. Set-off is also available on manufacturing of tax free goods and branch transfers outside the State but only in excess of 4%.

 

3. Set-off is available for dealers under Works Contract under normal VAT rules and norms as well as under the composition scheme.

 

4. Set-off available for FL-II Liquor retail shops on similar pattern as existed under BST Rules, 1959.

 

Dealers in second hand passenger cars subjected to a 4% VAT but entitled to set-off of the taxes paid to their vendor on purchases made for reconditioning the car.

 

 

OTHER ISSUES

 

I.       Who needs a new Registration ?

1. All existing dealers registered  under Bombay Sales Tax Act, 1959 (BST) whose turnover in F.Y.2004-2005 e4xceeds Rs. Five lakh need not apply for new certificate or new number. The old number under BST will continue.

2. Dealers who are not registered under BST but are registered under any other earlier (repealed) Acts, have to apply for new R.C. Number.

3. Voluntary registration is available without any deposit amount.

4. For Voluntary registration, Income Tax PAN and introduction by another registered dealer or Tax Consultant is required.

 

II Books of Accounts: Quite simple, only an additional column of VAT tax paid on purchases and for VAT levied on sales are to be added in the purchase and sale register respectively. Other books of accounts remain the same.

 

III Periodicity of Returns: Made much fewer. New norms are as follows:-

(i)   Tax liability in 2004-05 more than Rs. 1 Lakh                 - Monthly

(ii)  Tax liability in 2004-05 between Rs. 12000 to 1 Lakh    - Quarterly

(iii) Tax liability in 2004-05 below Rs. 12000                        - Six monthly

       Retailers under composition                                             - Six monthly

Inter-division transfers can't be sales: ICAI

7th April 2005: Companies should not report inter-divisional transfers as sales in their accounting books, says the Institute of Chartered Accountants of India (ICAI). It has made an announcement regarding the recognition of revenue that will change the way several companies report financial figures. Many companies show a gross figure as sales, which include inter-divisional transfers. But now, the ICAI says such transfers should not be accounted for as sales since this is inconsistent with the existing regulations, known as Accounting Standard 9, on revenue recognition. Companies that were reporting inter-divisional transfers as sales will now have to reduce their sales to that extent, but profits will not be affected by this move. Accounting Standard 9 deals with revenue recognition and is mandatory. So auditors will have to ensure that the standard is followed.

The announcement dated April 2, ’05 says, “In case of inter-divisional transfers, risks and rewards remain within the enterprise and also, there is no consideration from the point of view of the enterprise as a whole; the recognition criteria for revenue recognition are also not fulfilled in respect of inter-divisional transfers.” Reporting inter-divisional transfers separately is common in many companies, where the output of one division is the input for another. There are various ways of showing the net impact — this can either be done at cost or at the prevailing market price. It does not affect profits in any manner, as both sales and raw material costs are inflated on par.

But what it does is inflate sales. In reality, the division has not actually sold these goods and, hence, will not receive any monetary consideration from an outside party. For example, a company’s total sales may be Rs 200 crore, including Rs 50 crore as inter-divisional sales. At present, if inter-divisional transfers are to be included in sales, then it must be mentioned separately in the accounts. According to the new rule, the sales in the above said case will have to be shown as Rs 150 crore. Some of the well-known companies that have large inter-divisional transfers are Reliance Industries, IPCL, Indian Oil, Ispat Industries, Nirma, Neyveli Lignite, Sterlite, SAIL, Gail and HPCL, among others. These companies may not be accounting for it in the same manner, but the end-result is the same.

IBM to expense Esops starting Q1 of 2005

7th April 2005: IBM said it will begin to reflect quarterly expenses for stock-option compensation, starting with Q1 of 2005, in keeping with new accounting norms set to kick in this year. The world’s largest computer maker also reiterated that its full-year stock compensation expense for 2004 was 55 cents a share, or 11% of its total ‘04 reported net earnings per share. IBM’s ‘04 net income per share, excluding expensing stock options, was $4.94. According to new accounting norms, companies must expense costs related to stock options granted to employees for periods starting after June 15, ‘05.

Publicly traded technology companies had aggressively opposed the accounting requirements, arguing that they would put them at a competitive disadvantage to non-US-based tech firms and that there was no definitive way to value Esops with much accuracy. IBM’s bottom-line won’t be the hardest hit compared with other tech companies that depend more on stock option grants to compensate their employees. IBM’s ‘04 net earnings per share would have been reduced by 11% had it expensed options.

Duckback plans maiden public issue

8th April 2005: The maker of the ‘Duckback’ range of waterproofs, boots, bags and all-weather products is going public. Bengal Waterproofs Ltd. (BWL), owner of Duckback, has plans for an initial public offering (IPO) by the end of 2005. It is planning to raise around Rs 20 crore from the public offering, which will be used for mechanisation of the product process and for diversification into soft luggage. The company will invest Rs 40 crore for these activities by 2007. The executive director of Bengal Waterproof, Amit Mukherjee, said the company has initiated discussion with two merchant bankers ICICI Securities and SBI Capital Markets for the IPO.

“The Duckback rainwear range will be expanded with new product categories, after 85 years. Out of Rs 40 crore investments, 50% will come from internal accruals and the rest will be funded through IPO. The IPO is likely by the end of the current year,” he said. BWL has a strong brand in the rainwear segment but demand was seasonal, admitted Mukherjee. According to him, BWL expected over 50% growth in sales to Rs 85 crore over the next two years after its diversification into goods like inflatable astrodomes and soft luggage. Bengal Waterproof registered a turnover of Rs 54 crore in the last financial year.

Kingfisher Airlines plans IPO in 18-24 months

8th April 2005: Kingfisher Airlines, which would launch its operations from May 9, plans to float a public issue in the next 18-24 months. Alex Wilcox, president of Kingfisher Airlines, said: "United Breweries Holdings has invested $40 million as fully-paid capital in the airline. We plan to go public in the next 18 to 24 months or even sooner." The airline's aircraft would have an all-economy configuration and provide prices lower than other competing airlines, he said, adding "dynamic pricing" would be the key to the company's fare structure depending on seasons as well as time of the day. The first aircraft - an A-320 - will be arriving early May, and the first revenue flight would be launched on May 9, Wilcox said, adding while four aircraft would be leased, the airline would buy ten more A-320s and three A-319s in the near future. It would also have ten A-319s with purchase options.

Gokaldas prices IPO at Rs 425/share

8th April 2005: Apparel maker and exporter Gokaldas Exports Ltd. said late on Thursday its initial public offering had been priced at Rs 425 per share, the top end of a pre-determined price band of Rs 375 to Rs 425. The offer of 3.13 million shares, representing 18.2 per cent of the company's expanded share capital, is expected to raise about Rs 150 crore. The offering, which closed on April 6, was subscribed 47 times, the company said. The shares will be listed shortly on the Bombay and National stock exchanges.

Centurion Bank - Offering of Stock Options

31st March 2005: Centurion Bank Ltd has informed BSE that the Bank has on March 31, 2005, offered 2,02,00,000 stock options under the Key Employees Stock Option Plan-2004. The shareholders approved this earlier by a special resolution passed through Postal Ballot.

Hindustan Construction Company - Preferential allotment of equity shares

31st March 2005: Hindustan Construction Company Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 31, 2005, has allotted 29,05,540 fully paid Equity Shares of Rs 10/- each for cash at a premium of Rs 440/- per share (i.e. at an issue price of Rs 450/- per equity share) aggregating to Rs 130,74,93,000 to the following SEBI registered Foreign Institutional Investors and Domestic Mutual Fund on a preferential basis:

a. Goldman Sachs Investment (Mauritius) I Ltd (FII) - 9,50,000 Equity Shares.

b. Morgan Stanley Investment Management Inc A/c Morgan Stanley India Investment Fund Inc (FII) - 10,88,880 Equity Shares.

c. Morgan Stanley Mutual Fund A/c Morgan Stanley Growth Fund - 8,66,660 Equity Shares.

Indian Airlines (IA) board clears public offer plan

31st March 2005: Indian Airlines (IA) has decided to tap the capital market through a public offering to fund its fleet acquisition plan and enhance its debt-equity ratio. The IA board, which met on Wednesday, approved an initial public offering (IPO), which would be subject to government nod, an official spokesman said without giving further details. The board also approved the financial results for the last fiscal showing net profit for the second consecutive year. If the government clearance goes through, IA becomes the first state-owned carrier to decide to raise funds through an IPO.

Bharat Forge plans $300mn GDRs/FCCBs

31st March 2005: The members of Bharat Forge, at the extra ordinary general meeting (EGM) of the company held on March 30, 2005, appointed committee of directors for the purpose of GDRs/ FCCBs issues. According to a release issued by Bharat Forge to the BSE, the committee of directors, at its meeting held on March 31, 2005, have proposed to raise $300 million through the issue of Global Depository Receipts (GDRs) and/or Foreign Currency Convertible Bonds (FCCBs), subject to market conditions.

VAT gets endorsement from World Bank, IMF

31st March 2005: A day before 20 states switchover to the Value-Added Tax, World Bank and IMF said the new regime would prevent evasion, push up revenue and help cash-starved government to come out of debt trap. "A comprehensive VAT widens tax net, as it makes tax evasion difficult. Going by the experience of other countries, vat has proved beneficial and leads to revenue buoyancy," world bank country director Michael Carter said in an interview on the eve of the new tax coming into effect.

Asked whether implementation of VAT in patches was feasible, he said, "21 states is better than none. It is interesting to see what happens in other states." Although traders are opposing vat claiming it had some serious flaws, carter said, "There is no reason not to implement VAT just because there are some flaws in it. It will be a learning process for states. You got to have flaws when you are implementing something for the first time." IMF also endorsed tax reforms but said more needed to be done to instill fiscal discipline among state governments.

Plan panel report finds serious flaws in VAT

31st March 2005: Coinciding with the 3-day traders bandh against VAT implementation, the mid-term appraisal of the 10th Plan has pointed to "serious design flaws" in the tax even as Planning Commission deputy chairman Montek Singh Ahluwalia maintained that it was a more "rational" system. "There are serious design flaws in the suggested VAT structure. The proposed VAT does not extend to all indirect taxes on goods as entry tax and octroi will continue," the Plan panel said in the draft mid-term appraisal of Tenth Plan. "All in all, the combined incidence of central and state VAT would be close to 30%. It could be higher if we consider taxes that are going to be retained after VAT is introduced," it said.

Ahluwalia, however, said; "VAT is a more rational system. States that don't adopt VAT would, in fact, be imposing a cost on their own producers. I can assure that both international and domestic investors setting up new plants prefer to set them up in states that have VAT than those who don't." The Commission strongly recommended that to boost the manufacturing sector, the effective rate of indirect tax of both centre and states will have to be brought down to the ASEAN level of 10-12%. "High tax burden will keep prices high and dampen demand, particularly in the case of low-income consumers," it said.

Govt to go ahead with VAT despite strikes

31st March 2005: The government insisted it would launch a new value-added tax (VAT) as planned on Friday, despite a countrywide strike against the reform by thousands of wholesale and retail traders. Shopkeepers across India were planning to keep their shutters down for a second day on Thursday in a three-day protest against the levy, which they complain is complex, has been poorly prepared and could lead to a heavier tax burden for them.

The measure, India's biggest tax reform for years, has been delayed five times in nearly 10 years but a senior official said it was set to go ahead on time despite the protest and objections by some state governments. “VAT will be launched tomorrow and there is absolutely no question of deferring it," said Ramesh Chandra, secretary of the federal panel overseeing VAT implementation. "Systems are very much in place."

The tax aims to create a uniform system, curb rampant evasion and increase revenue for the cash-strapped state governments. At least 21 out of the 29 states are expected to adopt it. But some states, including five led by the main opposition Bharatiya Janata Party (BJP), are refusing to implement it, fanning worries among traders that they will lose out to businesses in the holdout states.

VAT is levied on the value manufacturers and retailers add to goods at each point of sale and will replace a web of sales taxes across the states that create duplicate taxation. It will cover 550 goods and have two basic rates of 4 percent and 12.5 percent, with a special rate of 1.0 percent for gold and silver ornaments.

Traders say they do not yet know which rates apply to which goods. They also complain that other taxes, including a central sales tax, will continue to run alongside VAT. The government intends to phase out the central sales tax by April 1, 2006.

HCL Infosystems has allotted 3,828 equity shares under ESOS

30th March 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 3828 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

HCL Infosystems has allotted 24,432 equity shares under ESOS

30th March 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 24432 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Retail investors can now put Rs 1 lakh in IPOs

30th March 2005: The Securities and Exchange Board of India (Sebi) have raised the allocation of shares for retail investors in book-built issues from 25% to 35%. The definition of a retail investor has now been amended to include those investing up to Rs 1 lakh in such initial public offerings, up from the prevailing Rs 50,000. In sweeping changes made to the depositor and investor protection guidelines, Sebi has also reduced the bidding, granting an option to listed issuers to disclose the price band or floor price one day before the opening of bids, while ensuring relevant and uniform bid-data displays on the websites of stock exchanges.

With the increase in allocation size to retail investors, the allocation to non-institutional investors has been reduced to 15% from the current 25%. The allocation to qualified institutional buyers (QIBs) remains at 50%. Where it is mandatory for QIBs to be allocated 60% of the shares issued, the allocation for retail investors will be 30%. However, this is a transitory provision since ultimately, all allocations will be harmonised, in line with the amendments made. The bidding period also stands reduced to three working days from the current 5-10 days. The existing guidelines require all issuers (whether listed or unlisted), making a public issue through the book built process to disclose the price band or floor price in the Red Herring Prospectus.

Sebi has decided to give an option to listed issuers to either disclose the price band in the offer document or to disclose the price band or floor price at least one day before the opening of bids. In order to ensure dissemination of relevant information to the public, Sebi is amending the guidelines to improve the contents of and to ensure uniformity in data display on the websites of the stock exchanges and to ensure that data are available for a further period of three days after the closure of the bids or issue. The amendments made with respect to retail investors will be applicable to public issues whose draft offer documents are filed on or after April 4, 2005.

13 companies delist in FY05

30th March 2005: At a time when there is a flood of initial public offerings (IPO), instances of companies delisting from bourses are also on the rise. In the fiscal 2004-05 so far, around 13 companies have opted for delisting compared with only three companies in 2003-04. According to the data available with Prime Database, delisting offers in 2004-05 were worth over Rs 1,000 crore. In stark contrast, the three delisting offers in the previous financial year amounted to around Rs 950 crore.

“Most of the delisting that we witness on the bourses pertain to MNCs and cannot be linked directly to market performance. That is why we have witnessed these delistings even when the markets are going up,” said merchant banking sources. Among the companies that delisted their shares in 2004-05 were Amalgamations Repco Ltd, SRP Tools Ltd, Vickers International Systems Ltd, India Gypsum Ltd, Rochees Breweries Ltd, e-Serve International Ltd, Ideaspace Solutions Ltd, Astra Zeneca Pharma Ltd and CTR Manufacturing Industries Ltd. The most recent example is Madras Aluminium Company Ltd (Malco). On Monday, a meeting of the board of directors of Bharti Healthcare Ltd was held to discuss the proposed delisting of the company from The Stock Exchange, Mumbai (BSE).

Delisting on the bourses is done through the reverse book building wherein the company offers to buy back shares from the remaining shareholders. Reverse book building is used for efficient price discovery. It is a mechanism where, during the period for which the books are open, offers are collected from the shareholders at various prices, which are above or equal to the floor price.

IDFC says maiden float hinges on market scene

30th March 2005: The Infrastructure Development Finance Company (IDFC) will take into account stock market conditions before finally deciding on its initial public offering (IPO). “We are not 100 per cent certain that the IPO will happen. It all depends upon the market,” said Rajiv B Lall, managing director & CEO. With a capital adequacy ratio (CAR) of 36%, IDFC has adequate capital to take care of its fund requirement for three years.

IDFC also proposes to shortly launch a second infrastructure development fund with a corpus of about Rs 1,300 crore. This follows IDFC having committed the bulk of its existing Rs 850-crore India Development Fund. Though the board and shareholders have approved an aggressive five-year plan for the institution, Lall said: “It is not until the third year that we will fall short of our tier-I target.”

He declined to disclose the size of the IPO, but said the institution’s balance sheet would grow from the present Rs 8,000 crore to Rs 25,000 crore over five years at an average annual growth of 30%. IDFC has planned an external commercial borrowing offering of $ 150-200 million and is in talks with various multi-lateral agencies and domestic institutions capable of providing foreign exchange loans.

IDFC to launch IPO in the month of June

29th March 2005: Infrastructure Development Finance Company (IDFC) a state-run Indian lender that funds the construction of roads and power plants, is planning to crash into the capital markets by June 2005 end to fund its capital requirements, and will shortly launch a second infrastructure development fund with a corpus of about Rs 1,300 crore. "We are planning to launch an initial public offering depending on the market conditions by June which will include pro-rata dilution of the existing shareholders and have new investors on the board," said IDFC CEO and managing director Rajeev Lall.

Rajeev Lall, however, did not reveal details about the size of the IPO but said, "in the Indian scheme of things it will be a substantial offering." Lall said the government, which has about 35% stake, would continue to be the single largest shareholder, though its stake would come down. Under the IPO, which would be part primary and part secondary, there would be pro-rata sale of stake by existing shareholders while new investors would also pick up equity.

The company would launch the second infrastructure fund with a corpus of about Rs 1,300 crore and the amount would be raised in the next 8-10 months. The fund will have maximum overseas participation and the company has committed bulk of its earlier Rs 850 crore India Development Fund to over five projects, Rajeev Lall said, adding, "We are in the pre-marketing stage and would soon launch the marketing for the second fund.”

Bank of Maharashtra, Dena Bank rush to bond mart for Tier II capital

30th March 2005: Public sector Bank of Maharashtra (BoM) and Dena Bank have rushed to the bond market to shore up their Tier II capital before the financial year ends on Thursday. Mumbai-based Dena Bank whose capital adequacy ratio (CAR) was just above 10% as on December 31, 2004 has entered the market on Tuesday with an Rs 225-crore issue, which includes a greenshoe option of Rs 100 crore. It had last tapped the bond market in March 2004 for Rs 150 crore. Pune-based BoM is already in the market since March 24 with an Rs 200-crore issue, merchant bankers pointed out.

The Dena Bank issue with 109 months maturity carries an annual coupon of 7.3%. The BoM issue with 63 months carries a coupon of 7.1%. Merchant bankers expect both the issues to sail through smoothly. According to MV Nair, executive director, Dena Bank: “This forms part of our plan to enhance the capital level during this fiscal. CAR should now be in the range of 11% to 12%.” In January, the bank had tapped the equity market to raise Tier I capital by Rs 216 crore.

Bharti Healthcare to delist shares from BSE

28th March 2005: Bharti Healthcare Ltd today said it would consider delisting of the company's shares from the Bombay Stock Exchange. Pursuant to the request received from Bharti Overseas Trading Company (BOTC), the promoter shareholder, the board of directors will consider the delisting of shares from BSE as per the applicable guidelines, Bharti Healthcare informed the Bombay Stock Exchange.

IDBI to issue fourth tranche of IDBI Omnibonds 2005

28th March 2005: Industrial Development Bank of India Ltd (IDBI Ltd) has informed BSE that it proposes to launch the fourth tranche of IDBI Omnibonds (2005) issue on March 27, 2005, viz. IDBI Omnibonds 2005F (IDBI Omnibonds series '2005 F') for an amount of Rs 1570 million. The tranche is being issued under the scheme for restructuring of liabilities of IDBI Ltd, finalized under auspices of the Govt of India wherein the existing investments of select banks/ institutions get reinvested in IDBI Bonds on the maturity date i.e. March 27, 2010.

CRISIL - Allotment of equity shares under ESOP

28th March 2005: CRISIL Ltd has informed BSE that the Allotment Committee of Directors at its meeting held on March 28, 2005, has allotted 4,750 (Four Thousand Seven Hundred Fifty only) Equity shares of Rs 10/- each of the Company to the employees pursuant to their exercising the stock options granted to them under the Employees Stock Option Scheme (ESOP) of the Company. Out of these 4750 shares, 3150 shares have been issued at a price of Rs 341.45 per share and 1600 shares have been issued at a price of Rs 269.90 per share.

PNB to list new shares on Tuesday

28th March 2005: Punjab National Bank (PNB) is planning to list the additional eight crore shares allotted recently to investors on March 29. "We will be listing the additional shares on both the BSE and the NSE on March 29," a senior PNB official said today. The basis of allotment has been decided, the official said without disclosing details. The bank had earlier fixed the cut-off price at its maximum limit of Rs 390 per share. The public offer received bids for 125.05 crore shares as against the offer for eight crore shares. The bank got bids worth over Rs 48,000 crore out of which it would retain Rs 3,120 crore at Rs 390 per share.

Dena Bank to raise Rs 225cr via bonds

28th March 2005: Dena Bank is to issue unsecured, non-convertible, redeemable subordinated bonds (tier II bonds series VIII) with a face value of Rs 10 lakh each for cash aggregating Rs 125 crore. According to a release issued by Dena Bank to the BSE, the bank has an option to retain over subscription of up to Rs 100 crore. The issue will open on March 29, 2005 and close on March 31, 2005. The tenor of the bonds will be for 109 months at a coupon rate of 7.30% and rating is 'A+' by CARE, the release added.

Southern Ispat members approves 1:8 bonus issue

28th March 2005: The members of Southern Ispat at its extra ordinary meeting held on March 25 have approved a proposal to issue and allot bonus shares not exceeding 6.52 lakh equity shares of Rs 10 each, aggregating Rs 65.23 lakh, from its reserves and surplus, as bonus shares to its existing shareholders. According to a release issued by Southern Ispat to the BSE, the bonus share issue will be in the ratio of one equity share for every eight shares held as on record date.

Punjab National Bank, Allahabad Bank in 60:40 JV

28th March 2005: Punjab National Bank and Allahabad Bank plan a 60:40 joint venture in Kazakhstan at an initial investment of Rs 100 crore in the next two months. PNB and Allahabad Bank have already got the Reserve Bank's nod to float a subsidiary in Kazakhstan and will now need an approval from monetary authorities there, Allahabad Bank chairman O N Singh said. "It will take another two months to start a subsidiary in Kazakhstan," he said. PNB already has a representative office in the Central Asian nation, which is slated to witness high growth on the back of oil and steel sectors.

Allahabad Bank has also applied to the RBI to set up a branch in Hong Kong and representative offices in China, Singh said. At home, the bank is planning to revive its subsidiary Allbank Finance and convert it into a merchant-banking arm. It has surrendered non-banking finance company license of Allbank Finance to the RBI. Allbank Finance has a capital base of Rs 60 crore. Though the RBI had asked Allahabad Bank to liquidate the NBFC arm, the Kolkata-based bank wants to convert it to a merchant banker, he said. Allahabad Bank is also going for a major revamp process and has engaged global consultants Ernst & Young to assist it to transform into a tech-savvy bank within the next two years. "We have earmarked Rs 300 crore investment for IT upgradation," Singh said.

Accounting norms for VAT

28th March 2005: The Institute of Chartered Accountants of India (ICAI) has approved the guidance note on accounting for state level value added tax (VAT). The guidance note requires that the input tax paid on purchase of inputs and capital goods, which are available, as VAT credit should not be included in the cost of purchase. The note also requires that input credit available on opening stock at the commencement of the scheme should be credited to the opening stock account. The guidance note has specified that VAT collected from the customers should not be included in the sales figure and similarly VAT paid should not be treated as expenditure in financial statements. The guidance note recognises that the VAT payable on sales in an indirect tax that would ultimately be borne by the final consumer. The guidance note, which deals with many accounting issues that are likely to arise on implementation of the state level VAT, would be released shortly.

IRDA issues new norms for marine hull insurance

28th March 2005: With marine hull insurance going out of the administered regime from next month, Insurance Regulatory and Development Authority (Irda) has issued new norms for marine and war risk covers. The new norms come after a communication from the finance ministry and the decision of the Tariff Advisory Committee.

Irda has directed all general insurers to indicate the net minimum premium rate for each class of business they would offer with all possible built-in features while filing the products. "Under no circumstances can insures write business below such rate," Irda said in the directive.

"Insurance companies wanting to write marine hull class of business and the war risk insurance for marine hulls are required to file separately with Irda the re-insurance arrangement for protecting the net account exposures," it said, adding they should ensure that the proposed arrangements terminate on March 31, 2006.

SEBI defers implementation of Clause 49 till December

25th March 2005: The Securities and Exchange Board of India (SEBI) decided to defer implementation of Clause 49 of the listing agreement for independent directors till December 31, 2005. The corporates are currently not in a state of preparedness to comply with clause 49 of listing agreement dealing with independent directors, chairman M Damodaran said. The companies would get nine months to identify the appropriate independent directors and equip them to function effectively, he said. The objective of this decision is to improve the quality of corporate governance at the board level, Damodaran added.

Tripex Overseas - Open Offer

25th March 2005: Vivro Financial Services Pvt Ltd ("Manager to the Offer") on behalf of M/s Surbhi Capital & Finance Pvt Ltd, M/s Lakhani Marketing Pvt Ltd, Mr. Manindersingh S Jolly and Mr. Ashok P Jain who are acting in concert with each other for the purpose of this open offer ("Acquirers") and to the fully paid equity shares of Tripex Overseas Ltd ("Target Company"), pursuant to provisions of Regulations 10, 11(1) and 12 and in compliance with the Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) regulation, 1997 ("Regulations") and subsequent amendments thereto has announced as below:

The Offer:

The Acquirers are making Open Offer in terms of the Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997 to the fully paid equity shareholders of the Target Company to acquire 10,20,000 equity shares representing 20% of the total equity shares capital of the Company and 20.02% of the total voting capital of the Target Company at a price of Rs 10/- per equity shares payable in cash ("Offer price"). The individual Acquirers shall acquire such shares in the following numbers:

Surbhi Capital & Finance Pvt Ltd: 3,06,000 no of shares of Target Company

Lakhani Marketing Pvt Ltd: 3,06,000 no of shares of Target Company

Mr. Manindersingh S Jolly: 2,04,000 no of shares of Target Company

Mr. Ashok P Jain: 2,04,000 no of shares of Target Company

Schedule of Activities

Specified Date: March 31, 2005

Date of Opening of the Offer: May 18, 2005

Date of Closing of the Offer: June 07, 2005

Satyam Computer - Conversion of Stock Options

25th March 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company has allotted 20,585 equity shares through circular resolution on March 24, 2005 under stock option plans of the Company.

Hindoostan Spinning Weaving - Delisting of equity shares from NSE

25th March 2005: Hindoostan Spinning Weaving Mills Ltd has informed BSE that the equity shares of the Company will be delisted from National Stock Exchange Ltd (NSE) with effect from April 05, 2005.

Suryavanshi Spinning Mills - Delisting of Equity Shares from 3 Stock Exchanges

25th March 2005: Suryavanshi Spinning Mills Ltd has informed BSE that the Equity Shares of the Company have been delisted from The Hyderabad Stock Exchange Ltd (HSE) w.e.f March 31, 2004, Madras Stock Exchange Ltd (MSE) w.e.f April 21, 2004 & The Delhi Stock Exchange Ltd (DSE) w.e.f March 01, 2005.

Sebi rules to be made simpler: Damodaran

24th March 2005: Securities market regulator Securities and Exchange Board of India (Sebi) is in favour of making its regulations simpler so that there is no cause for confusion for investors. This was stated by newly appointed chairman M Damodaran at an international seminar on Emerging Capital Markets in Mumbai on Wednesday. Delivering the inaugural address Mr. Damodaran said, “at Sebi there are a mind boggling number of regulations but one of my first and foremost tasks would be to make them simpler so that people like me can understand it in a better way.” He said, there has to be clarity, certainty and continuity in the regulations and they should play a conducive role for the regulator to achieve its goals of protecting investors’ interest as well as developing the market. In this regard he said that Sebi has already undertaken a comprehensive review of its various regulations and an internal committee is looking into the matter.

HSBC acquires 2.15 lakh IBP shares

24th March 2005: IBP today said that HSBC Global Investment Funds, Mauritius has acquired 2.15 lakh shares of the company, taking its stake in the oil-retailing outfit beyond 5.5%. The shares, representing 0.97% of the share capital of IBP, were acquired through an open market purchase on March 7, 2005, IBP informed the National Stock Exchange on Thursday. The shareholding of HSBC Global Investment Funds after the said acquisition is 12.58 lakh shares aggregating 5.68% of the share capital of IBP Ltd, it added.

Saksoft public offer to open on March 30

24th March 2005: Chennai-based Saksoft Limited, which provides end-to-end business solutions that leverages technology and enables its clients enhance their business performance, will come out with 25 lakh equity shares of Rs 10 each for cash at a premium of Rs 20 each, aggregating Rs 7.5 crore through its IPO, opening on March 30. The issue will close on April 7.

The amount would be used to partly finance its Rs 14.62 crore expansion programme, including the Rs five crore meant for acquisitions, Aditya Krishna, Managing Director of the company, formerly known as Sak Infotech Ltd, said today. The expansion would mainly be in its development centre at Noida near Delhi. Future plans included taking the employee strength from the present 235 to 770 by March 2007, mostly in Noida, he said adding that there was no scope for expansion of its other development centre in Chennai.

On the Rs five crore-acquisition programme, Krishna said his company was now holding talks with a few companies and had almost zeroed in on one company, doing the same business. He refused to give details, saying the talks were in the initial stage. The company, which has many leading international banks as its clients, achieved a turnover of Rs.15.80 crore and a net profit of over Rs three crore for the first half ended September 2004.

21 out of 29 states to launch VAT: Chidambaram

24th March 2005: Finance Minister P Chidambaram said today that 21 out of 29 states would launch the Value Added Tax (VAT) on the scheduled date of April 1, 2005. The launch of VAT, India's most significant tax reform for years, had been in doubt after the main opposition Bharatiya Janata Party (BJP) said last weekend that five states it rules would not implement the tax on April 1. "Most state finance ministers are strongly committed to launch VAT from April 1. At least 21 states are ready to launch VAT. I urge the other states not to miss the historic opportunity," said Chidambaram. VAT has been delayed five times in the past 10 years.

Mysore Cements to issue shares to ICICI Bank

24th March 2005: Mysore Cements on Wednesday said it would issue upto 80 lakh equity shares on preferential basis to ICICI Bank Ltd. The shareholders at an EGM have approved the issue and allotment of 80 lakh equity shares of Rs 10 each to ICICI Bank Ltd in accordance with Sebi guidelines, the company informed the Bombay Stock Exchange.

Gokaldas Exports sets price band of Rs 375-425/share for IPO

23rd March 2005: Gokaldas Exports today fixed a price band of Rs 375-425 per share for its forthcoming initial public offering (IPO) to raise up to Rs 132.81 crore. The company is planning to use the IPO proceeds to set up new factories and repay working capital loans. While the new factories would cost the company an estimated Rs 45.6 crore, modernisation and expansion plans would cost Rs 20 crore. The working capital loans of the company stand at Rs 30 crore. The IPO would be for 31.25 lakh shares of Rs 10 each, and constitutes 18.8% of the fully diluted, post-issue paid-up capital of the company. The issue will open for bidding on March 30, 2005 and close on April 6. While Enam is the book running lead manager to the issue, Karvy is the Registrar.

Nicholas promoter firm divests 8% stake

23rd March 2005: Nandan Piramal Investments, a part of the promoter group of Nicholas Piramal, sold 90 lakh shares (totaling 4.75% of the paid-up equity of Nicholas Piramal) on February 28, 2005 and over 62.72 lakh shares (aggregating 3.301% equity) on March 1, 2005. According to a release issued by Nicholas Piramal to the NSE today, the mode of sale is off-market deals. "The shareholding of Nandan Piramal Investments in the company after the said sales is 8,05,614 shares, aggregating 0.424% of the total paid-up capital," the release added.

Centurion Bank raises $70mn via issue of GDRs

23rd March 2005: Centurion Bank has raised $70 million through an issue of 1,45,83,300 global depositary receipts (GDRs) priced at $4.8 each. According to a release issued by the bank to the BSE today, each GDR represents 15 equity shares of Re 1 each. "The GDRs will be listed on the Luxembourg Stock Exchange," the release added. The funds will be used to enhance the bank's capital adequacy ratio and increase lending, the release said. "Citigroup acted as the sole book runner and lead manager to the GDR offering. The bank has given a greenshoe option to the book runner for up to $10 million," the release said.

SBI Life Insurance doubles capital base

23rd March 2005: SBI Life Insurance, a joint venture between State Bank of India and Cardif SA of France, doubled its capital base to Rs. 350 crores. The joint venture partners have contributed the additional amount in proportion to their stake of 74:26. This is the second capital infusion by the promoters since its inception in 2001. The authorized capital of the company also stands increased to Rs. 500 crores. Commenting on the capital infusion, Mr. S. Krishnamurthy, MD and CEO, SBI Life Insurance, said, “Since inception the company has been registering a triple digit percentage of growth. So far, the company has covered more than 3 million lives.... The infused capital will be optimally utilized to support the expansion of our business.” The company has 34 branches across metros, mini-metros and towns across the country with a market share of 12.75%.

I-T claim may slash pension plan bonuses

23rd March 2005: Holders of pension plans, sold by private insurance companies, could see their bonuses vastly slashed if the Income Tax department succeeds in pressing home its claims. I-T sources said the insurers have reported huge losses in their respective pension schemes. But the department has reasoned that under Section 10 and Section 80CCC of Income tax Act, the pension schemes are exempt from tax only if they make a profit under the schemes.

Further, the department’s argument is that these companies have run up huge losses under these schemes only because they have been offering assured returns to subscribers. Therefore, the department’s contention is that tax breaks under Section 80 CCC should not be granted to such pension schemes.

This is but one part of the I-T department’s close scrutiny of the working of life insurers. The department plans to reopen the assessment of all private life and non-life insurance companies for earlier years, as it feels that the losses reported by these companies were “exaggerated”. Except for the public sector major Life Insurance Corporation, most of the insurers have recorded losses till date.

The I-T department said the insurance companies reported losses only because they set off provisions for shoring up their solvency margins against their income. The department is now contesting the set-off. Every insurance company has to make provisions, out of its income, to shore up its solvency margin, according to the norms of the Insurance regulatory Development Authority.

If the I-T department succeeds in its contention that a provision is not an expense and, therefore, not eligible to be set off against the year’s income, the insurance companies’ losses will be vastly reduced.

The companies’ tax liability will go up. “It will have an impact on the capacity of the insurance companies to pay bonuses and dividend thereafter as the payment has to be made out of their own resources,” a top I-T source said. The source said most private insurers have not furnished their actuarial reports “to avoid showing the real extent of their losses and income.”

3i Infotech public offer to open on March 30, price band Rs 90-100/share

23rd March 2005: 3i Infotech Ltd. (formerly ICICI Infotech Ltd.) plans to raise up to Rs 230 crore from its initial public offering slated to open at the month-end. The company provides software services and products to customers mainly in the banking, financial services and insurance industries. The company on March 22 had filed its Red Herring Prospectus with the registrar of companies. It has fixed a price band of Rs 90-100 per share for the offer of up to 23 million shares, including a green shoe of 3 million shares, comprising 42.6% of the post-issue capital. The issue opens on March 30 and is scheduled to close on April 4.

The company said funds from the issue would be used to repay old loans and redeem preference shares issued to its parent ICICI Bank Ltd. After the IPO, the promoters’ holding (92.45 per cent) is expected to come down to 56.20 per cent. The issue is being made through 100% book building process wherein up to 50% of the net issue will be allocated on a discretionary basis to qualified institutional buyers (QIBs). A minimum of 15% of the net issue will be available for allocation on a proportionate basis to non-institutional bidders and a minimum of 35% of it will be available for allocation on a proportionate basis to retail individual bidders.

3i Infotech posted a profit of Rs 4.36 crore on revenue of Rs 230 in the past year to March 2004. Its profit in the first nine months of the current year to March was Rs 16.26 crore on revenue of 210 crore. ICICI Bank and its subsidiaries now account for 27% of 3i's revenue, down from 100% in 2000.

Hi-Tech Gears Board approves allotment of Bonus Shares

22nd March 2005: Hi-Tech Gears Ltd has informed BSE that the Board of Directors of the Company at its meeting held today, has approved allotment of 46,92,000 Bonus Equity Shares in the ratio of 1:1 of Rs 10/- each to the shareholders whose names appear in the register of members as on the Record Date i.e. March 17, 2005.

HCL Infosystems has allotted 13,601 equity shares under ESOS

22nd March 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 13,601 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Patni Computer has allotted 11,600 equity shares under Patni ESOP 2003

22nd March 2005: Patni Computer Systems Ltd has informed BSE that the Compensation Committee of Directors of the Company vide circular resolution dated March 04, 2005 allotted 11,600 Equity Shares of par value of Rs 2/- each to certain employees of the Company pursuant to exercise of the options granted to them under the Company's Stock Option Plan 2003 (Patni ESOP 2003).

Govt vows to launch VAT on April 1

22nd March 2005: Government vowed today to launch the value-added tax (VAT), its biggest tax reform in years, on its target date of April 1 even though five states ruled by the main opposition party are backing out. "There is no way VAT will be delayed. It will be launched on schedule," Ramesh Chandra, secretary of the VAT committee of state finance ministers, said today. The new tax, which has been delayed five times in 10 years, hit a fresh setback over the weekend when five states ruled by opposition Bharatiya Janata Party (BJP) said they would not implement the plan in its present form and demanded changes.

"We have consulted experts. We were pleasantly surprised when they said states which do not implement VAT will be the losers, especially when 75% of the country will launch it," Chandra said. Value-added tax (VAT), levied on the value that manufacturers and retailers add to goods at each sale point in the chain, seeks to replace a complex web of sales taxes, which resulted in duplicate taxation. It is the centerpiece of the cash-strapped government's overhaul of India's complex and inefficient tax system. It aims to create a uniform tax across India's 29 states, curb tax evasion and increase the government's tax takes. Chandra said a panel of state finance ministers on VAT would meet on Thursday to finalise the launch of the tax on April 1.

Government to release PSU divestment white paper soon

22nd March 2005: The government will come out with a comprehensive white paper (status report) on disinvestment in public sector undertakings (PSUs) during the monsoon session of the Parliament, minister of state for finance S S Palanimanickam said today. "The focus of the disinvestment policy has changed from the earlier one, emphasising strategic sale, to a broad-based strategy encompassing the disinvestment of minority shareholding in profitable PSUs while retaining at least 51% shareholding and full management control with the government," he said in a written reply to a question in the Rajya Sabha today. The new policy also prescribes restructuring and modernisation of loss making but revivable PSUs, including the induction of a private investor and closure or sale of chronically sick PSUs after ensuring that the dues of the employees along with compensation are settled, the minister said.

Varun Shipping issues 27 lakh shares to FII

22nd March 2005: The committee of directors of Varun Shipping Company, which met today, allotted 27,00,000 equity shares on preferential basis to Transportation Infrastructure and Energy Investment, a sub-account of Matterhorn Advisory Singapore Pte, which is a registered foreign institutional investor (FII). This was announced in a release issued by Varun Shipping to the NSE today. The release did not mention the price of the allotment.

Committee to discuss VAT on March 24

22nd March 2005: State finance ministers on the value-added tax (VAT) committee will hold a meeting on March 24 to discuss the launch of the tax scheduled for April 1, the committee's chairman said on Monday. The launch of the tax, India's most significant tax reform for years, was thrown into doubt at the weekend after the main opposition party the Bharatiya Janata Party (BJP) said five states that it ruled will not implement the tax at the launch date. Ashim Dasgupta chief of the tax committee told, "We are meeting on the 24th of March. We will have a news conference and we will give you our views."

VAT, levied on the value manufacturers and retailers add to goods at each sale point in the chain, is due for adoption by India's states to replace a web of sales taxes that lead to duplicate taxation. Economists and a leading traders' lobby said the reform, the centerpiece of the government's overhaul of the tax system, might be delayed or implemented only in some of India's 29 states as a result of the BJP decision. But officials of the ruling Congress-led coalition said the introduction of the tax would go ahead as planned.

HDFC has allotted 7,85,920 equity shares under ESOS

21st March 2005: Housing Development Finance Corporation Ltd (HDFC) has informed BSE that the Corporation on March 21, 2005, has allotted 7,85,920 equity shares of Rs 10 each under its Employees Stock Option Scheme (ESOS).

UTI Bank has allotted 4,14,197 equity shares under ESOP

21st March 2005: UTI Bank Ltd has informed BSE that the Committee of Directors of the Bank on March 21, 2005, has approved the allotment of 4,14,197 equity shares of Rs 10/- each to the employees of the Bank, under ESOP.

Alembic - Delisting of securities from VSE

21st March 2005: Alembic Ltd has informed BSE that the securities of the Company have been delisted from Vadodara Stock Exchange Ltd (VSE) w.e.f March 14, 2005.

Mastek has allotted 35,205 shares under ESOP

21st March 2005: Mastek Ltd has informed BSE that Committee of Directors at its meeting held on March 21, 2005, has allotted 35,204 shares under the Employees' Stock Option Plan (ESOP).

UTI Bank starts trading on London Stock Exchange (LSE)

21st March 2005: UTI Bank has raised a total $239.30 million through its Global Depositary Receipts issue, which was on Monday admitted for trading on the London Stock Exchange (LSE). UTI Bank raised over Rs 1,000 crore by listing 40.49 million GDRs at the main market of LSE, with each GDR representing one underlying share. UTI Bank is the first Indian company to list on LSE this year. Citigroup and Merrill Lynch, who acted as book-runners and joint lead managers for the offering, advised it.

Allahabad Bank public offer to open on April 6

21st March 2005: Allahabad Bank will tap the market early next fiscal to raise about Rs 900 crore. "We will come up with our second public offer on April 6. The bank will issue 10 crore shares," said O N Singh, chairman of Allahabad Bank. He declined to predict the price of the issue saying, "It will be determined through the book-building process." The bank had tapped the market three years ago, and raised about Rs 100 crore. Considering the present market price of the Kolkata-based bank's scrip at about Rs 93.4 at major bourses, sources said the final price could be close to Rs 90. The bank has appointed six leading merchant bankers - DSP Merrill Lynch, Kotak Securities, JM Morgan Stanley, SBI Caps, I-Sec and Enam Financial for managing the issue.

Reliance MF raises Rs 1,773cr

21st March 2005: Reliance Mutual Fund has collected Rs 1,773.50 crore through the initial public offering for its equity opportunities fund. Over 2.2 lakh investors across the country participated in the IPO, an official release said today. "The asset management company had appointed business associates in smaller cities and towns," the release said.

Bhushan Steel & Strips to raise Rs 30 cr via preferential issue

21st March 2005: Bhushan Steel & Strips Ltd. has decided to raise Rs 30 crore through preferential issue. The Board of Directors approved preferential issue of securities or instruments having an aggregate value not exceeding Rs 30 crore at its meeting held on March 19, 2005, the company informed the Bombay Stock Exchange on Monday. The decision is subject to the required approvals, including approval of members of the company, it said. The proposed preferential issue will result in issue of equity shares or warrants or other instruments or securities converting into equity shares on a pari passu basis, it added.

Microsoft launches VAT compliant AdVATage

18th March 2005: Microsoft Corporation India on Friday announced the roll out of its end-to-end VAT compliant solution 'AdVATage' aimed at the SMB segment. "With the nearing VAT regime its imperative that SMBs build efficiencies by adoption of VAT compliant IT solutions", Rajeev Mittal, director small and medium solutions and partners (SMS&P), Microsoft said in a release here. "There is pressing need to educate businesses in this segment on the fundamentals of VAT and how they can leverage IT to integrate VAT enabled accounting solutions with their existing IT infrastructure," he said.

Seminars would be conducted to launch AdVATage solution in Hyderabad, New Delhi, Mumbai, Bangalore, Chennai, Kolkata, Pune and Ahmedabad, to reach out to SMBs across the country and generate awareness on adoption of VAT solutions enabling them to leap into a high growth phase, he said. The seminar will comprise of interactive discussions to explain the fundamentals of VAT and its implications for the SMB segment in particular, Mittal added.

Max Healthcare plans Rs 95cr equity placement

18th March 2005: Max Healthcare, a subsidiary of Max India, is planning to raise Rs 95 crore through a second round of equity placement by December 2005. "We have one more round of equity (placement) to go, and hope to raise about Rs 95 crore by December," said Ananjit Singh, chairman of Max India. The company is in talks with prospective investors, he said without divulging details. He, however, denied any plans to take Max Healthcare public. The company had allotted 13.8% stake for Rs 25 crore to Warburg Pincus group arms - Madison Holding and Melany Holdings - in December 2004.

Savings accounts may escape withdrawal tax

18th March 2005: Finance minister P Chidambaram has hinted at withdrawing the controversial tax proposal relating to imposition of 0.1% tax on withdrawal of Rs 10,000 or more a day from at least a savings bank account. Replying to the three-day debate on the Budget for 2005-06 in the Lok Sabha on Thursday, Mr. Chidambaram said, “I have not dealt with tax proposals. I am sensitive to the concerns of the members and you will have some good news at the time of discussion on the Finance Bill.” Though Mr. Chidambaram did not specifically refer to the proposal for 0.1% tax on cash withdrawals, he hinted at it by saying Prime Minister Manmohan Singh had asked him why there was so much uproar in the House when he had proposed it during the Budget presentation. He added, “I told the Prime Minister that I was applying yours and mine austere standards when I had made the proposal.” During the debate, members cutting across party line demanded withdrawal of the proposed tax on cash withdrawal from banks. Referring to other tax proposals including the fringe benefit tax on corporates, he said, “I have not dealt with any aspects of the Finance Bill. I will deal with this in greater details when we take up the Finance Bill.”

Aban Loyd Chiles to raise $100mn, plans 1:5 split

18th March 2005: The board of Aban Lloyd Chiles Offshore has approved splitting each of its equity shares into five, the Bombay Stock Exchange said on Friday. The board also approved raising up to $100 million by way of foreign convertible bonds or Global Depositary Receipts, it said. Shares in Aban were up 3.2 per cent at Rs 2,045 in a firm BSE.

Videocon to raise Rs 2,000cr via GDRs

18th March 2005: Videocon Industries board, at its meeting held yesterday, has approved in principal to issue GDRs and/or equity shares, private placement on preferential basis and/or on rights basis, and/or any combination of any or all these methods for an amount not exceeding Rs 2,000 crore including premium. According to a release issued by Videocon to the BSE, the board has also approved to increase the authorise share capital to Rs 300 crore.

ICICI Bank's ADS priced at $21.11

18th March 2005: ICICI Bank's sponsored American Depositary Shares (ADS) offering registered with the US Securities and Exchange Commission has been priced at $21.11 per ADS. According to a release issued by ICICI Bank to the BSE, the banks equity shareholders have sold 1.92 crore ADSs, constituting 3.84 crore local equity shares. Each ADS represents two of the bank’s equity shares. Merrill Lynch International, Morgan Stanley and UBS Investment Bank were the joint global coordinators and joint book runners to the offering, the release said. The joint book runners also have the option to purchase up to an additional 28 lakh ADSs, representing 57 lakh equity shares. The bank will not receive any of the proceeds from this offering, the release added.

HCL Tech allots shares under Esop

17th March 2005: HCL Technologies on Thursday said it has allotted 1.55 lakh equity shares to its employees. The employees stock option allotment committee has allotted 1,55,138 equity shares of Rs 2 each, HCL informed the Bombay Stock Exchange. The shares allotted include 77,160 at a premium of Rs 125.50 per share, 3,100 at a premium of Rs 157.50 per share, 3,560 at a premium of Rs 194.50 per share, 53,380 at a premium of Rs 233.00 per share and 6,270 at a premium of Rs 249, it added.

FCI plans Rs 4,000cr bond issue

17th March 2005: State-run grain procurement agency Food Corporation of India (FCI) plans to open a Rs 4000-crore bond issue on Monday, merchant bankers said.

Yes Bank likely to price initial float at Rs 50 per share

17th March 2005: Yes Bank is likely to price its initial public offer (IPO) at around Rs 50 per share. The bank plans to mop up around Rs 350 crore through this issue, for which it filed the Red Herring Prospectus with the Securities and Exchanges Board of India (SEBI). The public issue of 7 crore equity shares of Rs10 each will be entirely priced through the book-building process. DSP Merrill Lynch and Enam Financial Consultants have been appointed the book-running lead managers for the issue.

ICICI Bank to raise Rs 350 cr

17th March 2005: ICICI Bank's third public offering of Unsecured Redeemable Bonds for Rs 350 crore with right to retain over subscription upto Rs 350 crore is to open on March 26. The issue would close for subscription on March 31, 2005, ICICI Bank said today. The issue offers various options under three types of bonds - tax saving bond, regular income bond and children growth fund. NRIs would be eligible to invest in these bonds on both repatriable and non-repatriable basis, it said. The rating agencies ICRA and CARE have assigned AAA rating for bonds, indicating highest safety regarding timely payment of principal and interest, it said.

Bata 1:4 rights issue at Rs 45-54/share

17th March 2005: Bata India today said that it has approved a plan to increase the authorised share capital of the company to Rs 70 crore and allot about 1.28 crore additional equity shares under a rights issue. According to a release issued by Bata to the BSE, the extra ordinary general meeting of the company held on February 02 had agreed to increase the authorised share capital of the company from Rs 60 crore to Rs 70 crore by creation of additional one crore equity of Rs 10 each. The company's proposed rights issue is to offer 1,28,57,000 equity shares of Rs 10 each for cash at a premium within a price band of Rs 45 to Rs 54 per share, the release added. Shares under the rights issue would be distributed in the ratio 1:4, i.e. one equity share for every four held by shareholders.

UTV shares rise as high as 30.8% on debut

17th March 2005: Television show producer and film distributor UTV Software Communications Ltd. (UTV) made a strong debut on the Bombay Stock Exchange (BSE) on Thursday, rising as much as 30.8% in early trade. Shares in UTV climbed as high as Rs 170 on the BSE after they opened at Rs 165, a 27% premium to their offer price of Rs 130. The shares were among the most heavily traded in a weak early market. The company's initial public offer raised Rs 91 crore ($21 million) through an issue of nearly 7 million shares, representing 34.1% of its post-issue equity capital. The float was priced at the top end of a pre-determined band of Rs 115-130, valuing the company at about Rs 267 crore.

Bharti to file for ADR soon

16th March 2005: Bharti Televentures, the country’s top listed mobile services firm, will file documents with the Securities Exchange Commission for a sponsored share offering in a few months, the firm's chairman said today. "We will be doing the SEC filing for the sponsored ADR (American Depository Receipt) in the next few months," said Sunil Mittal. Bharti has shareholder's permission for sponsoring an offer of up to 200 million shares.

South Indian Bank to consider issue of further share capital

16th March 2005: The board of directors of South Indian Bank will meet on March 31, 2005 to consider a proposal for raising more capital by issuing shares. According to a release issued by the bank to the BSE today, the board will also fix a date for an EGM to clear the proposal.

GlaxoSmithKline Pharmaceuticals (GSK) to buy back Rs 231 cr shares

16th March 2005: GlaxoSmithKline Pharmaceuticals, the largest multinational pharmaceutical company in the country, today announced its open market buy back of equity shares at a price not exceeding Rs 800 per share. The company will witness a fund outflow of Rs 230.65 crore on financing this share buyback programme. At the proposed buyback price of up to Rs 800, the company will be able to buy 2.88 million shares, which represents 3.3% of the company's equity capital. However, at the current market price of Rs 770, the company will be able to buy 2.99 million shares or 3.43% of the equity capital of the company.

If the company succeeds in buying back these shares, its parent-GlaxoSmithKline Plc’s stake in the company will increase to 50.83% from the current level of 49.15%. The company's UK-based parent company will, however, not participate in the buyback programme. S Kalyanasundaram, managing director of GlaxoSmithKline Pharmaceuticals, said in a release, "The buyback of shares will enhance earnings and improve shareholder value. The operating performance of the company has significantly improved since 2001.” The enhanced performance, together with income from the sale of properties, has resulted in substantial cash generation and a favourable liquidity position as on date."

Lakshmi Vilas Bank (LVB) plans 7:20 rights issue

16th March 2005: The Tamil Nadu based Lakshmi Vilas Bank (LVB) has firmed up plans to raise Rs 44.57 crore through a 7:20 rights issue priced at Rs 55 per share. The date for the issue however is yet to be finalised. The fund raising exercise being undertaken by the bank was primarily for Basel-II compliance and enhancement of capital adequacy for business growth.

“We have decided to raise Tier-I capital at the bank that will help us in achieving Basel-II compliance. Fresh capital will also allow us to meet capital adequacy requirements for new business that we generate at the bank. Given the rate of growth of business at LVB we would require fresh capital soon,” A Krishnamoorthy, chairman and chief executive officer of LVB, said.

“Although we are very comfortable with regards to capital adequacy which stands at 13.59 per cent as of now against 13.79 by the beginning of the year,” Krishnamoorthy explained. The capital base of the bank including both Tier-I and Tier-II stands at Rs 289 crore as of March 2004, while its net worth stood at Rs 226 crore. LVB is a professionally managed bank with the promoters holding only around 1.66% while the general public holds 80% of the stake. The second largest holding was from private corporate bodies at a total of 10.72%.

YES Bank files IPO papers, to offer 70 million shares

16th March 2005: YES Bank, has filed for an initial public offer (IPO) of 70 million shares, a top bank official said today, as it aims to expand business in the rapidly growing economy. Bankers said they expect the offering would raise about Rs 350 crore ($80.3 million). The bank, owned 20% by the Netherland's Rabo Bank, began operations in August 2004. "This is fresh issue of shares," Rana Kapoor, managing director of YES Bank said, adding the sale would represent 25% of the bank's expanded capital. That would value the bank at about Rs 1400 crore. The offer is expected to hit the market in the second half of April, Kapoor said. Citigroup's private equity arm holds 10% of YES Bank's Rs 200 crore equity capital, while AIF Capital, Hong Kong and ChrysCapital, Mauritius each have 7.5%. Indian founders own 52.1%, with the remaining 2.9% held by employees. The bank has appointed DSP Merrill Lynch and Enam Financial as book running lead managers for the offer.

Centre possibly will raise ceiling for ECBs

16th March 2005: The government is planning to raise the overall limit of external commercial borrowings (ECB) for the next financial year. According to sources close to the development, the internal limit for the current fiscal had been set at $9 billion by the Centre. The finance ministry is expected to raise this to $10-12 billion for 2005-06 as ECB inflows in the current fiscal have already crossed $9 billion. The issue is likely to be taken up at the high-level co-ordination committee meeting on ECBs later this month.

Sources said there is a move to take foreign currency convertible bonds (FCCBs) out of the purview of the ECB. This is because the ministry feels that FCCBs are not debt per se, rather it is quasi equity by nature. There is a proposal to club it under the foreign direct investment category and also set separate limits for FCCB borrowings under both, the automatic and the approval routes. The eligibility criterion for companies to raise funds through FCCBs may also be reviewed. The finance ministry is believed to be in favour of allowing housing finance and leasing companies to tap ECBs.

The ministry is of the opinion that financing options for leasing companies has dried up and they should be allowed to look overseas. The RBI is apparently not inclined to the move. There is also a proposal to allow textile companies to tap the ECB market to enable them expand and take advantage of the opportunities in the post-quota regime. At present, textile companies are only allowed to borrow through the ECB route for refinancing their high-cost domestic debt. Companies engaged exclusively in infrastructure funding may also be allowed to raise ECBs. This is in line with the added impetus accorded to the infrastructure sector by the government in the Budget, sources said.

No VAT, if states not ready, says FM

16th March 2005: Finance minister P Chidambaram today told Parliament that the existing sales tax system would continue in those states that were unable to implement value-added tax (VAT) from April 1. “No state has communicated its unwillingness to pass the VAT legislation,” Chidambaram said in a written reply. Uttar Pradesh, Uttaranchal, Jharkhand, Tamil Nadu, Mizoram, Nagaland, Himachal Pradesh and Chandigarh are yet to have their VAT legislation approved.

Replying to a query on special relief to small dealers and traders, Chidambaram said: “Small dealers with an annual turnover not exceeding Rs 50 lakh, who are otherwise liable to pay VAT, shall have the option of a composition scheme with payment of tax at a small percentage of turnover. “As decided by the empowered committee, it is expected that a number of state level taxes on purchase or sales of goods, like state sales tax, turnover tax, purchase tax, additional sales tax, surcharge, entry tax (not in lieu of octroi) etc will be subsumed in VAT.”

The latest status on VAT legislation is like this: five states -- Haryana, Rajasthan, Bihar, Tripura and Jammu & Kashmir have enacted the legislation, including an Ordinance, without presidential assent. Whereas presidential assent has been communicated to 11 other states, namely, Madhya Pradesh, West Bengal, Kerala, Andhra Pradesh, Karnataka, Gujarat, Assam, Delhi, Maharashtra, Chhattisgarh and Meghalaya. In Punjab, Orissa, Pondicherry, Manipur, Daman & Diu, Dadra & Nagar Haveli, the VAT legislation is ready and has been sent for Presidential assent. In Arunachal Pradesh, Goa and Sikkim, the legislation has been approved by the state assemblies but is yet to be sent for presidential assent.

“The empowered committee of state finance ministers has decided to implement VAT and has finalised the VAT design, after prolonged deliberations and due consideration of advantages offered by the VAT system,” Chidambaram said.

Jubilant Organosys - Allotment of shares on conversion of FCCB's

16th March 2005: Jubilant Organosys Ltd has informed BSE that at the meeting of the Special Committee of the Board of Directors held on March 16, 2004, allotment of 27,379 equity shares of Rs 5/- each at a premium of Rs 813.23/- per share has been made to Swiss Finance Corp. Mauritius Ltd., on conversion of a part of the Foreign Currency Convertible Bonds (FCCBs) amounting to US $ 5,00,000.

Geometric Software Solutions has allotted 15,242 equity shares under ESOP

16th March 2005: Geometric Software Solutions Company Ltd has informed BSE that the Allotment Committee of Directors of the Company at its meeting held on March 16, 2005, has allotted 15,242 (Fifteen Thousand Two Hundred Forty Two) Equity Shares on the exercise of vested stock options under ESOP Scheme 1999, ESOP Scheme 2001 and ESOP Scheme 2003.

ICICI Bank allots 59,260 shares under ESOS

16th March 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 59,260 equity shares of face value of Rs 10/- each on March 14, 2005 under the Employees Stock Option Scheme, 2000 (ESOS).

Nucleus Software - Allotment of options under Employee Stock Offer Scheme-2002

16th March 2005: Nucleus Software Exports Ltd has informed BSE that the Compensation Committee of the Board of Directors of the Company in its meeting held on March 09, 2005 has resolved to grant Six thousand (6,000) options to the employees of the Company at the price of Rs 135.23 each under the Employee Stock Offer Scheme - 2002 ("Scheme"). These options shall vest on July 01, 2007.

Crew BOS Products to raise $10 mn via FCCBs

16th March 2005: The board of leather and accessory maker Crew BOS Products has approved a proposal to raise up to $10 million through the issue of foreign shares or foreign convertible bonds or private placement, the BSE said on Wednesday.

Agro Dutch Industries - Delisting of equity shares from 3 Stock Exchanges

16th March 2005: Agro Dutch Industries Ltd has informed BSE that the equity shares of the Company has been delisted from Jaipur Stock Exchange, Madras Stock Exchange and Ludhiana Stock Exchange under voluntary delisting of SEBI Guidelines 2003.

UTI Bank raises $239.30 million through GDRs

16th March 2005: UTI Bank has informed BSE that the bank has issued 40,490,300 GDRs, each GDR representing one underlying share. The issue price for one equity share representing the underlying share to the Global Depositary Receipt (GDR) of Rs 10 each fully paid up has been fixed at $5.91 which is at par with the closing price of the bank's share of Rs 256.65 on the NSE on March 15, 2005. In addition, the lead managers can exercise a green shoe option of 6,073,600 GDRs. Further the bank has announced that it has successfully raised $239.30 million through the issue of 40.49 million GDRs (excluding the greenshoe). Each GDR represents one underlying share.

The GDRs will be listed on the London Stock Exchange. The GDRs were placed through a book building exercise. Citigroup and Merrill Lynch acted as book runners and joint lead managers on this transaction. The GDR issue attracted demand of over $1 billion. P J Nayak, chairman and managing director of UTI Bank said, "The response to the offering underscored investor interest in the strong growth story of UTI Bank. The capital being raised will be used to support the growth of the Bank in the medium term."

HCL Infosystems - Issue of options under ESOP

15th March 2005: HCL Infosystems Ltd has informed BSE that the Board of Directors of the Company at their meeting held on March 15, 2005 has considered and approved the proposal to grant 60216 options under the Employee Stock Option Plan (ESOP) of the Company as detailed below:

1. No of option granted: 60216

2. Grant date: March 15, 2005

3. The Exercise Price will be closing market price of the shares of the Company on March 14, 2005 at the stock exchange where the shares are quoted and which recorded the highest trading volume on the date of grant. Based on the ESOP scheme approved by the shareholders of the Company.

Wipro allots shares under ADS stock option plan

15th March 2005: Wipro Ltd has informed BSE that the Administrative Committee of the Board of Directors of the Company vide circular resolution dated March 11, 2005 allotted 120452 equity shares of par value of Rs 2/- each to JP Morgan Chase Bank, the Company's depository as underlying shares in respect of ADRs to be issued and allocated to the purchasers, pursuant to the exercise of the options granted to the employees under Company's 2000 ADS stock option plan.

Satyam Computer - Conversion of Stock Options

15th March 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 6,197 equity shares through circular resolution on March 15, 2005 under stock option plans of the Company.

Panasonic AVC Networks - Delisting of securities from DSE

15th March 2005: Panasonic AVC Networks India Ltd has informed BSE that the securities of the Company have been delisted from the Delhi Stock Exchange Association Ltd (DSE) w.e.f. March 01, 2005.

Tarai Foods - Delisting of securities from CSE

15th March 2005: Tarai Foods Ltd has informed BSE that the securities of the Company have been delisted from The Calcutta Stock Exchange Association Ltd (CSE) w.e.f. March 04, 2005.

i-flex Solutions has allotted 60,100 equity shares under ESOP

15th March 2005: i-flex Solutions Ltd has informed BSE that ESOP Allotment Committee of the Company at its meeting held on March 14, 2005, has allotted 60,100 ESOP equity shares of face value of Rs 5/- each to the applicant employees of the Company. These shares shall rank pari passu in all respects with the existing equity shares of the Company.

IT People Board approves Employees Stock Option Plan 2005

15th March 2005: IT People India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 14, 2005, has approved and adopted Employees Stock Option Plan 2005 pursuant to resolution passed by the Shareholders in their meeting held on September 30, 2004.

IVRCL fixes public issue price at Rs 385-415

15th March 2005: Infrastructures and Projects Ltd has fixed the price band for its public issue between Rs 385 and Rs 415 per equity share of Rs 10 each. The issue is to raise Rs 126 crore with a green shoe option aggregating Rs 144.9 crore. The issue opens on March 18 and closes on March 23, IVRCL vice chairman and managing director E Sudhir Reddy said today. The net proceeds of the public issue, through the book building process, would be deployed for investment in build-operate-transfer (BOT) or build-own-operate-transfer (BOOT) projects, repayment of debt and for purchase of capital equipment, he said.

Upto 50% of the issue shall be offered on a discretionary basis to Qualified Institutional Buyers (QIBs), while 25% each would be allocated on a proportionate basis to non-institutional bidders and retail individual bidders, Reddy said. Enam Financial Consultants Pvt. Ltd is the sole Book Running Lead Manager to the issue and the Registrar is Karvy Computershare Pvt. Ltd, he said. The shares would be listed on the Stock Exchange, Mumbai (BSE) and the National Stock Exchange of India (NSE), Reddy added.

Irda de-tariffs marine hull insurance cover from April 1

15th March 2005: In a major de-tariffing move that will benefit the shipping industry, the Insurance Regulatory & Development Authority (Irda) has removed the price control on insuring marine hulls from April 1. Irda said all classes of marine hull insurance stand de-tariffed in respect of new businesses and renewals effective April 1, 2005. As a consequence, these classes of insurance will come within the purview of the “File and Use” regulations, as applicable to non-tariff products of Irda, said Irda in intimation to the domestic general insurers. The Tariff Advisory Committee (TAC), a constitutional body supervised by Irda, regulates the pricing of 70% of the products of the general insurance industry. Some of the major portfolios that are so far regulated by TAC are motor, fire, engineering, marine hull business.

Industry observes say that the marine hull portfolio is currently a Rs 300 crore business for the domestic insurance industry and with the pricing of the portfolio being detariffed, there will be competition among the general insurers to offer cheaper pricing for the product. Since this is for the first time that such a major tariff portfolio has been decontrolled, it would be interesting to see the price war, the de-tariffing move would trigger. Observers point out that the price will plummet and will be used by the general insurers to acquire other tariff businesses from the shipping houses.

Sebi glare on broker fee dues, Issues warning by public notice, sets March 31 deadline

15th March 2005: The Securities and Exchange Board of India (Sebi) have come down heavily on the stockbrokers who have failed to clear their registration fees dues. The market regulator has issued a warning publicly — by way of newspaper advertisements — that any broker who fails to clear his registration fee dues with penal interest before March 31, 2005, will attract initiation of summary proceedings against them under the Sebi (Procedure for Holding Enquiry by Enquiry Officer and Imposing penalty) regulations, 2002. Sebi has also said, “without prejudice to other enforcement actions, trading terminals of defaulting brokers will also be deactivated after the stipulated time limit.” In a public notice issued on Monday, Sebi said, “Several brokers have willfully defaulted in paying the registration fees despite giving several opportunities.”

A Sebi official said, “Most of the brokers from the bigger and active stock exchanges (SEs) have cleared their registration fees dues. But it is the brokers belonging to smaller SEs that have to clear their dues.” As per Sebi’s handbook of statistics on the Indian securities market for 2003-04, there were 23 SEs in the country of which most active were only two; the National Stock Exchange (NSE) and The Stock Exchange, Mumbai (BSE), which together has a broker strength of 1,643. Against this, total brokers registered with Sebi across all the SEs are 9,368. One bone of contention between the brokers and the regulator is that the turnover figure arrived at by Sebi for individual brokers stated in the statements issued by Sebi to SEs on August 25, 2004 are not up to the mark. As these figures are in dispute, brokers say the final figure of the fee, including the penal interest charged at the rate of 15%, is also on the higher side in some cases.

LML to raise overseas capital

15th March 2005: LML today said that it would raise capital from overseas by issuing Foreign Currency Convertible Bonds (FCCB) up to Rs 250 crore. The shareholders in an EGM have approved the issuance of FCCBs of up to Rs 250 crore and that of 45 lakh equity shares on preferential basis to Mauritius-based Morrington Investments Ltd, the company informed the Bombay Stock Exchange. The EGM has also approved to issue 20 lakh equity shares and 0.001 per cent non-cumulative, non-convertible redeemable preference shares up to Rs 125 crore to the existing lenders of the company. The shareholders have approved to issue 27 lakh warrants to Mauritius-based Waterloo Investments Ltd, it said. The company also gave its nod to the increase in authorised capital from Rs 60 crore to Rs 250 crore divided into equity capital of Rs 100 crore and 0.001 per cent non-cumulative non-convertible redeemable preference share capital of Rs 150 crore. The company has also agreed to increase its borrowing limit from Rs 500 crore to Rs 750 crore and the limit to create Mortgage/Charge from Rs 500 crore to Rs 750 crore, it added. The EGM has also appointed Lalit Kumar Singhania as Whole-time Director for a period of 5 years starting March 28, it said.

GSK approves buyback at Rs 800/share

15th March 2005: The board of drug maker GlaxoSmithKline Pharmaceuticals told the BSE on Tuesday that it had approved a buyback of shares at up to Rs 800 per share. The total buyback would be of up to a quarter of its total equity capital and would not exceed Rs 231 crore, the notice said.

Fidelity to launch first fund on March 21

15th March 2005: The US-based Fidelity Fund Management (FFMPL) will float its maiden mutual fund product Fidelity Equity Fund, an open-ended growth scheme, in the country on March 21. The scheme would close for subscription on April 19, 2005, said FFMPL head of business Ashu Suyash. The scheme is aimed at generating long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities, Suyash added. The mutual fund would charge entry fee (load) of 2.25% for investments less than Rs five crore and would levy exit load of 1% for redemptions from lump sum investments held for less than six months, Ashu said. The scheme would contain a portfolio of about 75 stocks. While there are no restrictions on individual holdings, the fund manager would rarely allocate over 4% to one stock, ensuring diversification across companies, Ashu added. Suyash did not elaborate on specific sectors that looked attractive for investment but said the MF would follow bottoms up approach.

IDBI Bank has allotted 5,05,812 equity shares under Employees Stock Options

14th March 2005: IDBI Bank Ltd has informed BSE that the Remuneration Committee of the Bank has on today, allotted 5,05,812 equity shares of Rs 10/- each, pursuant to exercise of Employees Stock Options granted to Employees.

Tata Teleservices - Allotment of equity shares on conversion of FCCBs

14th March 2005: Tata Teleservices Maharashtra Ltd has informed BSE that the Finance Committee of the Board of Directors of the Company has approved the issue and allotment of an aggregate of 75,51,122 Equity Shares of Rs 10/- each to various investors who have exercised their right to convert FCCBs of US$ 4,244,000 held by them into Equity Shares. The Equity Shares have been issued and allotted at a premium of Rs 14.96 per Equity Share (i.e., at a Issue Price of Rs 24.96 per share) in accordance with the terms of the FCCB Issue. The deemed date of allotment of the Equity Shares is March 11,2005. Further the Company has informed that out of the total FCCBs of USD 125 million issued by the Company in June 2004, FCCBs aggregating USD 32.31 million have so far been converted into 5,74,87,454 equity shares (including Fourth Tranche) of the Company at a premium of Rs 14.96 per share.

Datamatics Technologies members approve introduction of two new Employees Stock Option Plans

14th March 2005: Datamatics Technologies Ltd has informed BSE that the members at the Extra Ordinary General Meeting of the Company held on March 14, 2005, has approved the resolutions for introduction of two new employees stock option plans viz the key Employee Stock Option Plan, 2005 and the General Employee Stock Option Plan, 2005.

Jet shares ends Day 1 at Rs 1,304

14th March 2005: The shares of Jet Airways (India) finished Day 1 at Rs 1,304.20 on the NSE - a gain of 18.56% (Rs 204) to the IPO offer price of Rs 1,100 per share. The counter clocked a huge volume of nearly 1.28 crore shares and a turnover of Rs 1,608 crore, according to data available on the website of NSE. The scrip closed at Rs 1,305 on the BSE with a volume of over 68 lakh shares. The first trade on the NSE was struck for 4,000 shares at Rs 1,428, an NSE official said after the listing ceremony. The scrip was listed on the BSE at Rs 1,211. The 1.72 crore shares offered in the IPO had raised Rs 1,899 crore for the company.

Oriental Bank of Commerce (OBC) files papers with Sebi for second public issue

14th March 2005: OBC has filed the prospectus with Sebi for its public offer to raise about Rs 2,000 crore in the middle of April. "We filed the draft red herring prospectus with Sebi on Saturday," said OBC chairman B D Narang. Narang said the issue is likely to open for subscription in mid-April after getting Sebi's approval, which is expected in the next three weeks. OBC had earlier planned to tap the market in March so that the bank could report a healthy financial result with higher capital adequacy ratio for FY05. OBC's capital adequacy ratio (CAR) was eroded after it acquired the ailing Global Trust Bank, which had bad assets of Rs 1,400 crore and a huge loss. The New Delhi-based bank received the green signal from the finance ministry on February 18 for issuing 5.8 crore equity shares of Rs 10 each. The issue will be priced through the book-building route.

ING Vysya 3:1 rights issue opens tomorrow

14th March 2005: The 3:1 rights issue of ING Vysya Bank at a premium of Rs 35 per share will open tomorrow. According to a release issued by the bank to the BSE today, "the issue of 6,82,40,214 equity shares of Rs 10 each at a premium of Rs 35 per share aggregating Rs 307.08 crore will open on March 15, 2005. While the last date for receiving request for the application form will be March 30, the issue closes on April 13, 2005." Letter of offer, along with the composite application form (CAF), for the rights offer has been dispatched to shareholders whose names appeared in the register of members as on record date, i.e. February 28, 2005, the release added.

Talbros Automotive to raise Rs 50 crore

14th March 2005: The share issue committee of the board of directors of Talbros Automotive, which met on March 11, 2005, has approved the draft red herring prospectus for filing with Sebi for raising Rs 50 crore. The funds will be raised by issuing shares through the book-building process at a price to be determined by the lead manager to the issue in due course, according to a release issued by the company to the BSE today. "The members also approved setting up a forging unit at Bawal, Haryana at a cost of approximately Rs 32 crore. The proposed forging unit shall meet around 65% of the requirements of forged auto components of the company's group company - Q H Talbros - for its captive consumption. The balance 35% will be sold to foreign buyers with whom negotiation are in the process of finalisation," the release added.

NPIL to raise funds through rights issue

14th March 2005: Nicholas Piramal India has informed BSE that the company has decided to raise funds not exceeding Rs 3,500 million through issue of equity shares on rights basis. The Board of Directors of the company has constituted a committee of directors and delegated power to the committee to do all such acts and deeds as may be required to work out the modalities and other procedural matters with regard to the proposed rights issue. The committee is authorised to inter alia determine the final size of the rights issue the price band per share prior to Sebi filing, the final price per share, the rights ratio and record date. Enam Financial Consultants and Kotak Mahindra Capital Company have been appointed as managers to the proposed issue.

Jet Airways to be listed on BSE, NSE from March 14

12th March 2005: Jet Airways will debut on both the National Stock Exchange (NSE) and The Stock Exchange, Mumbai (BSE) on Monday. The stock will also be made available for trading in the F&O segment. NSE said the stock of Jet Airways would open for trading in the cash segment on March 14 and trading would also commence in F&O segment. The private airline, which had floated an IPO for 1.72 crore shares of Rs 10 each, constituting 20% of the post issue capital, had raised Rs 1,899 crore with the issue price fixed at Rs 1,100 per share. The BSE has informed members that equity shares of Jet Airways (I) Ltd are being admitted to dealings in the list of A group securities with effect from March 14. Single stock futures and stock options contracts will also be available for trading in the derivatives segment.

The airline's board has approved allotment of 96.40 lakh shares to qualified institutional buyers, including FIIs (75.53 lakh shares), FIs/banks (9.72 lakh), mutual funds (9.62 lakh) and insurance companies (1.46 lakhs). In the retail segment, which was oversubscribed by 2.98 times, the airline allocated 44.7 lakh shares while in the non-institutional investor segment (high net worth individuals) 28.64 lakh shares were allotted. Analysts feel that the high price of the share kept most of the employees away from putting in the bids, resulting in an under-subscription of the employee quota. A total of 1,564 employees bid for 2.92 lakh shares while the number of shares allotted stood at 2.91 lakh shares. In all 12 lakh shares were available for allocation to them. The IPO received 4.47 lakh bids for 27.75 crore shares, resulting in over subscription of 16.08 times the issue size.

Sony Entertainment buys SAB TV for $13 million

14th March 2005: Indian broadcaster SAB said on Monday it would sell its TV channel and related assets to Sony Entertainment Television Satellite (Singapore) for Rs 57 crore ($13 million), and focus on its core production facilities. The board subject to shareholders' approval has approved the proposal to sell the TV brand, part of its programming library and related assets, company vice-chairman and managing director Makarand Adhikari said in a release.

The company has entered into an agreement with SET for the SAB TV brand, about 1,305 hours of library strength valued at Rs 75-80 crore, and related assets, Makarand Adhikari said. The company would also execute a programming agreement with SET India for content supply worth Rs 75 crore, Adhikari added. The deal would have no impact on the equity pattern as well as management of SABTNL, Adhikari said.

Sri Adhikari Brothers Television Ltd. (SAB) will use the proceeds to upgrade studios and production and post-production facilities and set up an animation division. The group companies held by core promoters would launch current affair & news channel "Janmat" & Marathi channel "Mi Marathi" by May, 2005, Adhikari said, adding, the company would also provide exclusive content to both the channels.

Bhushan Steel to raise Rs 30 crore

14th March 2005: The board of directors of Bhushan Steel & Strips will meet on March 19, 2005, to consider a proposal to issue shares or any other instrument on preferential basis to raise Rs 30 crore. According to a release issued by the company to the BSE today, "the preferential issue will result in issue of equity shares or warrants or other instruments / securities converting into equity shares on a pari-passu basis.

Royal Airways to raise Rs 15 crore

14th March 2005: Royal Airways is planning to raise Rs 15.30 crore by issuing 15.30 lakh fully convertible debentures of Rs 100 each. According to a release issued by the company to the BSE today, "IL&FS Trust Company through the IL&FS Pvt. Equity Trust will subscribe to 15,00,000 FCDs for the Leverage India Fund." The IVC Employees Welfare Trust will subscribe to 30,000 FCDs, the release added.

2 mega block deals in Bharti shares for Rs 2,467cr

14th March 2005: The Bharti Tele-Ventures counter today witnessed two block deals totaling 11.20 crore shares for a consideration of Rs 2,467 crore, constituting 6% of the company's equity. According to information available, the first block deal of 6.95 crore shares was at Rs 218 per share on the BSE while the second one of 4.25 crore shares was at Rs 223.90 a share on the NSE. A company official confirmed the two block deals. "This is perhaps the biggest block deal in the history of the Indian equity markets. This transaction acknowledges the leadership position Bharti enjoys in the telecom industry across the world," a Bharti spokesperson said.

Sebi sets FII investment cap in corporate debt at $500 m

12th March 2005: The Securities and Exchange Board of India (Sebi) on Friday notified a separate limit for investments made by FIIs in corporate debt at $500 million. This cap will be over and above the sub-ceiling of $1.75 billion for government debt (including treasury bills) under the overall external commercial borrowing (ECB) ceiling. The move from Sebi follows a clarification issued by the finance ministry, which said the sub-ceilings for government securities (G-Sec) and for corporate debt would be separate and would not be fungible. Sebi said sub-ceilings of $1.75 billion and $500 million will be applicable for FIIs under both the 100% debt route and the general 70:30 route. The overall investment limit under the 70:30 route in G-Sec and treasury bills (T-Bills) will remain at $200 million. However, the monitoring and allocation of investment limit will be continued in the same manner, as was done prior to this clarification, Sebi said.

Earlier both government and corporate debt investments of FIIs investing 100% of their corpus in debt (100% debt FIIs) were reckoned within the limit of $1.55 billion. But now following the finance ministry clarification, Sebi has said, investments in government debt only will be reckoned within the sub ceiling of $1.55 billion. The FII investment in corporate debt shall now be, therefore, reckoned within the sub ceiling of $500 million. To conform to the sub ceiling of $500 million, there will be no further investment or rollover allowed of existing position in corporate debt by both 100% debt and general (70:30) FIIs and their sub accounts till the holdings fall within the stipulated cap of $500 million. Subsequently, the limit of $500 million shall be allocated among 100% debt and 70:30 FIIs, Sebi said in a circular.

HCL Infosystems has allotted 400 equity shares under ESOS

12th March 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 400 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Perm Somani Financial Services - Delisting of securities from JSE

12th March 2005: Perm Somani Financial Services Ltd has informed BSE that the securities of the Company have been delisted from the Jaipur Stock Exchange Ltd (JSE) w.e.f. February 19, 2005.

Jasch Industries - Delisting of shares from DSE

12th March 2005: Jasch Industries Ltd has informed BSE that the equity shares of the Company have been delisted from the Delhi Stock Exchange Ltd (DSE) w.e.f. March 01, 2005.

HCL Infosystems has allotted 18,675 equity shares under ESOS

12th March 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 18675 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

Gujarat Ambuja Cements - Grant of Stock Option under ESOS

12th March 2005: Gujarat Ambuja Cements Ltd has informed BSE that the Compensation & Remuneration Committee of the Company at its meeting held on March 10, 2005 has granted 8,12,325 Stock Options to its eligible Whole Time Directors and employees under the ESOS Scheme 2004-2005.

SBI to raise Rs 4,000cr tier-II capital

11th March 2005: State Bank of India (SBI) is planning to raise tier-II capital (subordinated debt) worth Rs 3,000-4,000 crore to support credit growth. "Credit growth is going to be substantial in the next fiscal (2005-06) in all sectors. Therefore, the bank is exploring options to raise capital of Rs 3,000-4,000 crore through tier-II bonds," SBI chairman A K Purwar said today. Purwar did not specify any time frame in which the bonds with a five-year maturity would hit the market. Asked about tapping the equity market, Purwar said: "I will not rule out the possibility of going for a public offering as the current market is very attractive. The bank is likely to comply with US GAAP norms by the end of this fiscal." Replying to a query on rising interest rates, Purwar said: "Inflation and world oil prices are the key challenges to managing interest rates. If inflation is kept within reasonable limits, interest rates are expected to settle down." High government borrowing would also impact the rates, he added.

BSE, NSE raise alarm, urge investor caution

11th March 2005: India’s leading bourses, the National Stock Exchange (NSE) and The Stock Exchange, Mumbai, on Thursday sounded a major warning to investors and market participants, asking them to remain cautious in the wake of heightened market activity and intense volatility. The warning came even as NSE said it had unearthed irregular transactions in the cash market and the derivatives segment. The red alert to its members has come at a time when the markets are booming and benchmark indices are breaching all-time high levels every day. Benchmark indices - the Nifty of the NSE and the Sensex of The Stock Exchange, Mumbai (BSE) — touched all-time closing highs of 2,168.95 and 6,915.09 respectively on March 8, 2005.

The NSE, in two separate notices marked “For Special Attention”, has also warned of strict action against members who enter into non-genuine transactions either on their own behalf or on behalf of their clients. In a circular sent to its members on Thursday, NSE has said, “The market has been witnessing increased activity in terms of volumes and various indices have been recording all time highs, which may be due to various underlying factors. While we are sure that members must be exercising caution in executing orders on their own behalf and on behalf of their clients, members are once again advised to be vigilant about the activities of their sub-brokers and clients.” Chitra Ramakrishna, deputy managing director, NSE said, “We as an exchange release formal warnings to investors from time to time. The one which we have issued today is a kind of trading alert for investors as well as market participants so that they can take informed decisions while dealing on the exchange.”

In an identical notice, BSE also asked members to exercise due diligence while registering new clients. It also asked its members to monitor the clients’ trading pattern and they’re past trading record including large concentration in one or few stocks. They have also been asked not to deal with entities, which have been debarred from trading by Sebi or other regulatory authorities, failing which strict action would be taken against them. NSE said, “Some transactions in the cash market as well as in derivatives segment have come to our notice where illiquid securities and options contract are traded with huge price difference and option contracts fetching undue high premium.” In such transactions, same set of members has reversed transactions (at abnormal price differences in cash and at a premium in the case of options) that had no relevance to the movement in prices in underlying securities at that point of time, it said.

IPOs all spiced up to raise Rs 8,000 cr

11th March 2005: Post-Budget, the primary market seems all set to hot up after a brief lull. With stock markets on fire, another public offer boom appears to be about to happen. Market sources say the three months of March, April and May will see more than two dozen IPOs and secondary offerings hitting the market to raise over Rs 8,000 crore. Among the important offers are Oriental Bank of Commerce (estimated to be around Rs 2,000 crore), Bank of Baroda (around Rs 1,500 crore), Allahabad Bank (around Rs 700 crore), YES Bank (around Rs 300 crore), IVRCL Infrastructure (around Rs 270 crore), Jaypee Hydro Power (around Rs 180 crore) and 3i Infonet (around Rs 175 crore). Other public issues in the offing are those of Gokuldas and Provogue. Market sources say lead managers are getting busy with the peak season. ICICI Securities, Enam, JM Morgan Securities, Kotak and SBI Caps have landed big mandates. Most of the offers are taking the book-building route. A few offers have already hit the market. These include Punjab National Bank (Rs 3,000 crore), Gateway Distriparks (Rs 150 crore) and Emami (Rs 35 crore).

LIC rejects less than 1% claims

10th March 2005: State-owned Life Insurance Corporation’s (LIC) claim repudiation ratio — the claims, which are rejected, is lower than 1%. Sources at Insurance Regulatory and Development Authority (Irda) have found out that private sector life insurers, on the other hand, have a repudiation ratio of over 13%. LIC’s death claims were being settled within 21 days and the outstanding claims as on March 2004 were at their lowest ever at 0.13%, said an LIC official. A low repudiation ratio indicates that the insurer is paying all claims which are payable under the policy’s terms. However, the settlement of any insurance claim also involves interpretation of a lot of technical conditions, which are generally used by the insurers to reject the claims. “At LIC, we normally do not get into too much technicalities considering the fact that most policyholders are not so rich,” conceded a senior official of the Corporation.

A high repudiation ratio may also explain the fact that private life insurers have low claim records in the post-liberalisation period. “Our claim ratio has remained low and in line with our projection for the Indian market,” said a Delhi-based life insurance company. The private life insurers have maintained that the Indian life insurance market is a profitable one and two of the life insurance companies — Bajaj Allianz Life Insurance and Max New York Life Insurance — have already announced profits within the first three years of their operation. Globally, life insurance companies take six to seven years to break-even. LIC has centralised its claim processing system to manage over Rs 20,000 crore worth of claims out of the one crore policies annually. It is making efforts to bring its outstanding claims ratio to below 0.02% in survival benefits (SB) and maturity and 1.5% in death claims. No claim will remain outstanding for more than 30 days and beyond this limit, such cases will be reported to the marketing manager. Investigations will be completed within seven days,” said the LIC official.

Nicholas Piramal plans $100 mn GDR

10th March 2005: Pharmaceuticals major Nicholas Piramal India is planning a nearly $100 million (about Rs 473 crore) global depository receipts (GDR) issue as part of its fund-raising exercise. The company is likely to announce the details of the issue towards the end of the week. Sources close to the development said the proposed GDR issue would help the company, which was in the process of expanding its presence in the global drugs market, and would establish its visibility on overseas bourses. The proceeds of the issue would be utilised to fund expansion drives and acquisitions, they said, adding that the GDR issue would be listed in three months. A Nicholas Piramal executive refused to comment on the issue. He said: “We are considering several options to raise funds and are not in a position to comment on any particular instrument at this juncture. The board will take a decision on March 12.”

IDFC, IDBI to float infrastructure SPV

10th March 2005: The finance ministry would soon initiate talks with financial institutions like IDBI and IDFC for floating the proposed special purpose vehicle (SPV) announced by finance minister P Chidambaram to fund projects in the infrastructure sector. Senior finance ministry officials said that an SPV under the aegis of banks and FIs would lend a greater degree of operational flexibility to its functioning. The ministry, at present, is working out the legal nitty gritties of the SPV. An official said the finance ministry would be required to sort out the legal procedures, especially since a part of the foreign exchange resources could also be drawn for funding necessary imports.

The officials said the SPV would raise funds by issuing bonds to banks and FIs. “The interest rate at which it lends would be much lower than the normal PLR of banks,” said the official. The SPV would liaise with the inter-institutional group (IIG) of banks and FIs while lending to projects. Once the SPV receives a project proposal, it would forward it to the IIG, which will appraise it. The funding by the SPV will be judiciously tied to the Rs 1,500 crore viability gap-funding corpus earmarked for core sector projects.

Indian Overseas Bank Board approves raising of equity overseas

10th March 2005: Indian Overseas Bank has informed BSE that the Board of Directors of the Bank in its meeting held on March 10, 2005 has considered the agenda of raising of equity capital overseas and listing them in overseas exchanges and has approved the proposal subject to obtaining necessary approvals from the appropriate authorities.

Glenmark Pharmaceuticals Board to consider allotment of Bonus Shares

10th March 2005: Glenmark Pharmaceuticals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 18, 2005 to consider allotment of Bonus Shares.

S.Kumars Nationwide to issue preference shares

10th March 2005: The members of S.Kumars Nationwide, at their extra ordinary general meeting to be held on March 29, 2005, are to authorise the board of the company to offer, issue and allot appropriate number of equity shares of face Value of Rs 10/- each on a preferential basis. According to a release issued to the BSE, the company, as per the Sebi guidelines, is to issue preferential shares to S.Kumar Enterpises (Synfabs) at an aggregate price of Rs 15 crore, on such terms and conditions as may be deemed fit by the board.

Dil Board to consider buyback of equity shares

10th March 2005: Dil Ltd has informed BSE that a meeting of the Board of Directors of the Company is scheduled to be held on March 17, 2005, to consider the following:

1. Proposal for purchase of Company's own equity shares under applicable laws pertaining to Buy Back of equity shares;

2. Proposal to shift the Registered Office of the Company.

Ind Swift Laboratories - Delisting of Securities from DSE

10th March 2005: Ind Swift Laboratories Ltd has informed BSE that the Securities of the Company has been delisted from the Delhi Stock Exchange Association Ltd (DSE) with effect from March 01, 2005.

Skanska Cementation Board recommends delisting of equity shares from CSE

10th March 2005: Skanska Cementation India Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 02, 2005, has proposed to delist the equity shares of the Company from The Calcutta Stock Exchange Association Ltd (CSE).

Shrachi Securities - Delisting of securities from MSE

10th March 2005: Shrachi Securities Ltd has informed BSE that the securities of the Company have been delisted from Madras Stock Exchange Ltd (MSE) with effect from March 07, 2005.

Jaiprakash Hydro fixes price band of Rs 27-32 for IPO

10th March 2005: Jaiprakash Hydro-Power Ltd. (JHPL) has priced its proposed IPO of 18 crore shares of Rs 10 each at Rs 27-32 per share. According to a release issued by Jaiprakash Associates to the BSE today, the issue will open on March 22, 2005 and close on March 29, 2005. "The red herring prospectus has been filed with the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh, Jalandhar on March 8, 2005, and the same has been taken on record," the release added.

IDBI to issue third tranche of IDBI Omnibonds 2005

10th March 2005: Industrial Development Bank of India (IDBI) has proposed to launch the third tranche of IDBI Omnibonds (2005) issue on March 10, 2005, viz. According to a release issued to the BSE, the IDBI Omnibonds 2005E (IDBI Omnibonds series '2005 E') are to be issued for an amount of Rs 50 crore.

HSBC to bring in $150mn fresh capital

10th March 2005: HSBC is planning to infuse $180 million in its India operations. "This will be through fresh infusion of $150 million by way of new capital as well as $30 million in the form of retained profits," HSBC India CEO Niall Booker said today. The funds will be used for supporting the growth of retail and commercial banking, Niall said, adding this was the second tranche of funds being infused in India operations in the last 24 months. Asked about HSBC's stake in UTI Bank, Booker said after the overseas issue of the private bank, the stake of HSBC would be reduced to 12.5% from the present 14%.

DCB to get fresh capital of Rs 140cr

10th March 2005: Aga Khan Fund for Economic Development (AKFED), the principle shareholder in Development Credit Bank (DCB), has decided to inject fresh capital to the tune of Rs 140 crore ($32 million) into the bank subject to regulatory approvals. At present, AKFED holds 47 per cent stake in DCB. Iain Cheyne, director of AKFED and the bank said, “At present, AKFED is in dialogue with the Reserve Bank of India (RBI) to discuss the process for timely infusion of the new capital into the bank and ensure full compliance with new foreign investment guidelines.” The infusion of fresh capital will help the bank grow its business and also create further provisions for the bank’s legacy of non-performing assets (NPAs), said the bank in a statement. The bank’s NPAs to net advances, as on March 31, 2004, stood at around 5 per cent. Its capital adequacy ratio stood at 14.14 per cent.

Wipro - Allotment of shares under ADS Stock Option Plan

9th March 2005: Wipro Ltd has informed BSE that the Administrative Committee of the Board of Directors vide circular resolution dated March 07, 2005 allotted 75000 equity shares of par value of Rs 2/- each to JP Morgan Chase Bank, the Company's depository as underlying shares in respect of ADRs to be issued and allocated to the purchasers, pursuant to the exercise of the options granted to the employees under Company's 2000 ADS stock option plan.

Finmin to ease ECBs, FCCBs norms

9th March 2005: The Government today said it is contemplating relaxing norms governing External Commercial Borrowings (ECBs) to enable Indian corporates access higher foreign capital at low cost. Besides, a review is underway to remove restrictions on Foreign Currency Convertible Bonds (FCCBs) for which announcement will be made at an appropriate time, U K Sinha, joint secretary (Foreign Direct Investment and ECB) in the Finance Ministry, said today. Sinha said restrictive measures continued to be applied on FCCBs under FEMA and needed to be softened. The Finance Ministry has already applied its mind on the issue, he said. Sinha also said his ministry was in favour of a cap on interest for overseas borrowings so that high cost external borrowing is discouraged. He made it clear that the government would not allow an unrestricted interest rate regime for ECBs in view of the East Asian meltdown caused by high interest rates and short duration of borrowings in the late 1990s.

Express Leasing - Open Offer

9th March 2005: Aryaman Financial Services Ltd ("Manager to the Offer") on behalf of Mr. Praful Nanji Satra and Mrs. Minaxi Praful Satra ("Acquirers") pursuant to Regulation 10 and 12 of Chapter III and in compliance with the Securities and Exchange Board of India Substantial Acquisition of Shares and Takeovers (SAST) Regulations 1997 and subsequent amendments thereto (the "Regulations") has announced as below:

The Offer

The Acquirers are making an open offer to the public shareholders of Express Leasing Ltd ("Target Company"), whose name appear on the register of member as on the specified date March 18, 2005 to acquire 5,00,000 equity shares representing 20% of the share capital at a price of Rs 11/- (Rs Eleven Only) per fully paid up equity share for fully paid up shares (the "Offer price") payable in cash.

Scheduled of Activities

Specified Date - March 18, 2005

Date of Opening of the Offer - May 02, 2005

Date of Closing of the Offer - May 21, 2005

Bata files offer document with Sebi for its proposed right issue

9th March 2005: Bata India Ltd today filed the offer document with Securities & Exchange Board of India for its proposed rights issue in the ratio of 1:4. The issue would be given at a face value of Rs 10 and premium would be charged within a price band of Rs 35 to Rs 44, company officials said today. Proceeds of the rights issue would be utilised for upgradation and modernisation of the company's outlets and operations in the country.

Satyam Computer has allotted 19,227 equity shares under stock option plan

9th March 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 19,227 equity shares through circular resolution on March 09, 2005 under stock option plans of the Company.

Rolta India - Delisting of equity shares from 4 Stock Exchanges

9th March 2005: Rolta India Ltd has informed BSE that the equity shares of the Company have been delisted from the following Stock Exchanges, pursuant to the special resolution passed by the members of the Company at the 13th Annual General Meeting of the Company held on December 15, 2003:

1. Bangalore Stock Exchange Ltd, Bangalore w.e.f. January 28, 2004

2. The Stock Exchange, Ahmedabad w.e.f. March 18, 2004

3. The Delhi Stock Exchange Association Ltd, New Delhi w.e.f. March 08, 2004

4. The Calcutta Stock Exchange Association Ltd, Kolkata w.e.f. March 01, 2005

Bank of India - Delisting of equity shares from 4 Stock Exchanges

9th March 2005: Bank of India has informed BSE that the equity shares of the Bank were delisted from the following Stock Exchanges, in pursuance of the decision taken by the Board at its meeting held on May 21, 2004.

1. The Stock Exchange, Ahmedabad w.e.f. October 15, 2004

2. Madras Stock Exchange Ltd w.e.f. October 19, 2004

3. The Delhi Stock Exchange Association Ltd w.e.f. December 11, 2004

4. The Calcutta Stock Exchange Association Ltd w.e.f. February 02, 2005

India Cements raises Rs 123cr via OCDs

9th March 2005: India Cements said today that it has allotted over 2 crore equity warrants and 87 lakh optionally convertible debentures for Rs 123.11 crore to Mauritius-based ADRC Ltd. India Cements has allotted 2,96,00,561 equity warrants on receipt of Rs 13.91 crore at Rs 4.70 per warrant and 87,36,000 optionally convertible debentures (OCDs) for Rs 109.2 crore, the company informed the Bombay Stock Exchange. The shareholders of the company had passed the resolution at the EGM held on January 17 and the board of directors had approved it at their meeting held on January 21, 2005, it added.

Small, medium IT firms are planning their IPOs

9th March 2005: Seeing the boom in stock markets, many small and medium sized IT firms, including Servion Global Solutions, Accel-ICIM Frontline, Bahwan Cybertek and Dax Networks, are planning initial public offerings (IPOs) to fund their growth and expansion plans. Though the timeframe for the IPOs is yet to be finalised, it is learnt that the companies would hit the market in the next 12-18 months. Many of these companies are closely-held while some of them have significant holdings by foreign partners or private equity funds. These IT firms have an annual turnover of Rs 50-150 crore and will look at diluting the capital base by at least 20 per cent through the public issues.

Galaxy Agrico Exports Board to consider delisting of shares

8th March 2005: Galaxy Agrico Exports Ltd has informed BSE that the meeting of the Board of Directors of the Company will be held on March 11, 2005, to consider delisting of shares from the Ahmedabad Stock Exchange and Kolkata Stock Exchange.

CRISIL - Corrigendum to the open offer

8th March 2005: Kotak Mahindra Capital Company Ltd ("Manager to the Offer") for and on behalf of The McGraw-Hill Companies Inc and S&P India LLC ("Acquirers"), pursuant to and in compliance with, among others, regulation 10 & 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulation, 1997, as amended has announced corrigendum to the earlier Public Announcement (PA), to the shareholders of CRISIL Ltd ("Target Company"):

As per the information received from the Target Company, the equity share capital of Target Company has increase from 6,349,150 shares as on December 31, 2004 to 6,360,750 shares as on the date of the PA (i.e. February 17, 2005). Accordingly, this Offer for acquiring 3,534,488 shares subject to a minimum level of acceptance of 2,643,983 shares represents 55.57% and 41.57% respectively of the equity share capital of the Target Company as on the date of the PA as against 55.67% and 41.64% respectively of the equity share capital of the Target Company as on December 31, 2004.

The terms used but not defined in this announcement shall have the same meaning assigned to them in the PA.

BRPL - Delisting of equity shares from CSE

8th March 2005: Bongaigaon Refinery & Petrochemicals Ltd (BRPL) has informed BSE that the equity shares of the Company have been delisted from Calcutta Stock Exchange Association Ltd (CSE) w.e.f. March 01, 2005. However, considering the interest of the general investors, the Company have simultaneously been shifted to Permitted Category of the CSE.

Max India - Allotment of stock options under Max Employee Stock Plan - 2003

8th March 2005: Max India Ltd has informed BSE that the Remuneration Committee of Directors of the Company at its meeting held on March 04, 2005 granted 62,450 Stock Options to Mr. B Anantharaman, Joint Managing Director under the Max Employee Stock Plan - 2003. The said options entitle one equity share of Rs 10/- each at par for every one Option exercised and the said Options will be vested after one year from the date of grant i.e. March 04, 2006.

Dhanuka Pesticides - Delisting of securities from DSE

8th March 2005: Dhanuka Pesticides Ltd has informed BSE that the securities of the Company have been delisted from the Delhi Stock Exchange Association Ltd (DSE) with effect from March 01, 2005.

Birla Ericsson Optical - Delisting of shares from CSE

8th March 2005: Birla Ericsson Optical Ltd has informed BSE that the equity shares of the Company have been delisted from the Calcutta Stock Exchange Association Ltd (CSE) with effect from March 04, 2005.

PSL board approves 50-lakh preferential issue

8th March 2005: The board of directors of PSL at its meeting held on March 07, 2005, have approved allotment of 50 lakh equity shares of Rs 10/- each fully paid up on preferential allotment basis in accordance with "SEBI Guidelines" for preferential issue. According to a release issued to the BSE, the board of directors of the company has convened an extra ordinary meeting on April 07, 2005 for the shareholders approval for the aforesaid purpose. The board of directors of the company further added that the company has bagged another prestigious order worth Rs 343 crore from Larsen & Toubro, for pipe supply, coating and other related works pertaining to GWRDC and NWRDC projects of Gujarat government, forming part of the "Sujalam Sufalam" and "Modera to Darohi" irrigation works. The project is to be executed within the financial year 2005-2006 and the company has taken effective steps to complete the same as per the schedule requirement, the release added.

Wipro has allotted 5,770 equity shares under ESOS

8th March 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors vide their circular resolution dated March 04, 2005 resolved to issue and allot 5770 equity shares of Rs 2/- each pursuant to exercise of stock options by eligible employees.

HCL Infosystems has allotted 8,855 equity shares under ESOS

8th March 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 8855 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Option Scheme' (ESOS).

ABN Amro MF kicks off public offer of Opportunities Fund

8th March 2005: ABN Amro Asset Management Company (AMC), which manages assets worth over Rs 1,000 crore, has launched the public offering of ABN Amro Opportunities Fund. The open-ended equity scheme will invest across market capitalisations and sectors compared with its existing equity scheme. Speaking at the launch, Nikhil Johri, COO, ABN Amro AMC, said: “The country’s economy is on a high growth trajectory contributed by businesses across sectors combined with a favorable policy environment.” Mihir Vora, fund manager of the new scheme, said, “We are bullish on certain sectors like cement, engineering, construction, et al, and will have the flexibility to invest up to 35% of the fund corpus in any given sector.”

Gujarat Ambuja Cements Ltd. has allotted 75,450 equity shares under ESOS

7th March 2005: Gujarat Ambuja Cements Ltd has informed BSE that the Share Allotment & Investor Grievance Committee at its meeting held today has allotted 75,450 Equity Shares on exercise of the stock options by the employees as per details given below: -

1. ESOS 1999-2000 - 100

2. ESOS 2000-2001 - 40,075

3. ESOS 2001-2002 - 12,075

4. ESOS 2002-2003 - 23,200

TOTAL 75,450

Hindustan Construction Company Limited to raise Rs 130.75cr

7th March 2005: Hindustan Construction Company Ltd (HCCL) has informed BSE that the Board of Directors of the Company at its meeting held today, has approved the following:

1. Issue of 29,05,540 Equity Shares of Rs 10/- each for cash at a premium of Rs 440/- per share i.e. at an issue price of Rs 450/- per equity share and aggregating to Rs 1307.50 million on a preferential basis.

2. To increase the limit for investment by FIIs in the Company upto 49% of the paid-up equity share capital.

3. To convene an Extraordinary General Meeting on March 31, 2005 for obtaining the approval of the members to above Issue of shares and increasing the FII limits of investments as mentioned above.

The names of the investors to whom the preferential issue is proposed to be made:

1. Morgan Stanley Investment Management Inc A/c Morgan Stanley India Investment Fund Inc - 10,88,880 fully paid equity shares of Rs 10/- each for cash at a premium of Rs 440/- per equity share i.e. at an issue price of Rs 450/- per equity share.

2. Morgan Stanley Mutual Fund - 8,66,660 fully paid equity shares of Rs 10/- each for cash at a premium of Rs 440/- per equity share i.e. at an issue price of Rs 450/- per equity share.

3. Goldman Sachs Investments (Mauritius) Ltd - 9,50,000 fully paid equity shares of Rs 10/- each for cash at a premium of Rs 440/- per equity share i.e. at an issue price of Rs 450/- per equity share.

Aegis Logistics Board approves Buy-Back of equity shares

7th March 2005: Aegis Logistics Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 04, 2005, has approved Buy-Back of the fully-up paid Equity Shares of the face value of Rs 10/- each for an aggregate amount not exceeding Rs 61.60 million at a maximum price of Rs 75/- per share.

Mukand Ltd. to raise Rs 1650 million

7th March 2005: Mukand Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 05, 2005, has approved the requirement of raising of funds for the Company of Rs. 1650 million. The board has appointed a committee to consider and recommend whether funds should be raised by way of loan or rights issue or a combination of loan and rights issue.

Thiru Arooran Sugars Board approves preferential issue of shares

7th March 2005: Thiru Arooran Sugars Ltd has informed BSE that the Board of Directors of the Company at its meeting held on March 07, 2005, have accorded their approval for preferential issue of 5,64,700 Equity Share Warrants to the Promoter's Group in accordance with SEBI (Disclosure and Investor Protection) Guidelines, 2000. Further the Company has informed that an Extraordinary General Meeting of the Shareholders will be held on April 01, 2005 to seek the approval of the members as required under Section 81 (1A) of the Companies Act, 1956.

Gujarat Foils - Open Offer

7th March 2005: Vivro Financial Services Pvt. Ltd ("Manager to the Offer") on behalf on Mr. Pramod Jain ("Acquirer"), Chairman & Managing Director of Gujarat Foils Ltd ("Target Company"), pursuant to the directions issued by the Securities and Exchange Board of India (SEBI) order dated May 30, 2003 and subsequent order issued by Securities Appellate Tribunal, Mumbai ("SAT") dated January 28, 2005 and in compliance with the provisions of Chapter III of the Securities & Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 ("Regulations") and subsequent amendments thereto has announced as below:

The Offer

The Acquirer is making Offer to the fully paid equity shareholders of the Target Company to acquire 13,14,010 equity shares representing 20% of the total voting equity share capital of the Target Company at a price of Rs 3.68 per equity share payable in cash (the "Offer Price") out of which Rs 3.00 being the price under regulation 20 and Rs 0.68 being the interest @ 6% on the Offer Price for a period from August 31, 2001 till May 30, 2005 being the last scheduled date to payment to the shareholders as per the said Orders of SEBI & SAT subject to the terms and conditions:

Schedule of Activities

Specified Date: March 10, 2005

Date of Opening the Offer: April 27, 2005

Date of Closing the Offer: May 16, 2005

Hindustan Construction Board to consider preferential issue of shares

7th March 2005: Hindustan Construction Company Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 07, 2005, to consider the proposal to raise additional capital by way of issue of fresh equity shares on a preferential basis and / or by way of issue of FCCBs, GDRs or other permitted securities.

International Diamond Services - Delisting of securities from JSE

7th March 2005: International Diamond Services Ltd has informed BSE that the securities of the Company have been delisted from Jaipur Stock Exchange (JSE) w.e.f. February 19, 2005.

Oriental Bank of Commerce to issue stock at discount

7th March 2005: Oriental Bank of Commerce hopes to price their forthcoming shares issue in a band of Rs. 275/- to Rs. 300/- ($6.30-$6.88) each, a discount of up to a fifth to its market price, its chairman said on Monday. B.D. Narang, who is also the bank's managing director, said the bank would offer 58 million shares with a face value of 10 rupees, raising up to 17.40 billion rupees ($399 million) if priced at the higher end of the range. "We are hoping that the pricing for the issue will come within a band of 275 rupees to 300 rupees," said Mr. Narang. Oriental Bank shares were trading up 6.0% at 347.90 rupees on the Bombay Stock Exchange on Monday afternoon, meaning the shares could be offered at a discount of as much as 21%. A filing will be made with the Securities and Exchange Board of India this week and the issue is slated to open in April, he added. The issue would dilute the government's stake in the bank to about 53% from the present 68%.

DSP Merrill Lynch, ICICI Securities and other merchant bankers will manage the issue, said Mr. Narang. He added the issue would be priced at a discount because the bank was keen to have more participation from retail investors and for them to benefit. Funds currently own about 13.5% of the bank's stake, he said. "We are very much interested that we should have a lot of retail investors. We are eager that the small investor gains," the chairman said. Narang also ruled out for the same reason a stake offer by Oriental Bank to a strategic investor. "We will not go that route. We would like that a lot of diversified ownership should be there," he said. "If somebody wants to buy from the market, he's always welcome to do that.”

Sterling Biotech members approve sub-division of equity shares

5th March 2005: Sterling Biotech Ltd has informed BSE that its members, at an Extra Ordinary General Meeting held today, have approved Sub-division of one equity share of face value of Rs 2/- each to two equity shares of face value of Rs 1/- each.

LIC launches unit linked pension plan

4th March 2005: Life Insurance Corporation (LIC) of India launched a unit linked pension plan 'Future Plus' today. "The plan comes with a host of features like accident benefit, critical illness rider which can be opted for at the time of taking policy and is available with or without life cover," T Chattopadhyay, zonal manager, south central zone said today. He said the policy can be surrendered at no loss on the bid value of the units after two years of policy existence and a small charge of upto a maximum of 4% is levied if surrendered within two years. He also highlighted performance of the zone till February 15 and said that the zone stood at number one on four counts on all India map including number of policies and the sum assured.

Andhra Pradesh Paper Board to consider preferential issue of shares

5th March 2005: Andhra Pradesh Paper Mills Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 12, 2005, to consider the following:

1. Issue of equity shares on Preferential basis to (i) IL & FS Trust Company Ltd A/c IL & FS Private Equity Trust - Leverage India Fund and (ii) Trustees, IVC Employees Welfare Trust for an amount not exceeding Rs 1,01,00,000/- in accordance with Chapter XIII of SEBI (Disclosure and Investors Protection) Guidelines, 2000.

2. Increase in Authorized Capital from Rs 237.50 million to Rs 350 million and consequential amendments to Memorandum and Articles of Association of the Company.

3. Issue of further equity shares on Rights basis.

4. Convening the Extraordinary General Meeting of the Members for seeking the approval of shareholders for the above matters.

Apollo Tyres and Ipca Laboratories - Delisting of equity shares from ASE

5th March 2005: Apollo Tyres Ltd and Ipca Laboratories Ltd has informed BSE that the securities of the Company has been delisted from The Delhi Stock Exchange Association Ltd (DSE) with effect from March 01, 2005.

DS Kulkarni Developers - Delisting of equity shares from ASE

5th March 2005: DS Kulkarni Developers Ltd has informed BSE that the equity shares of the Company have been delisted from Ahmedabad Stock Exchange (ASE) w.e.f. January 28, 2005.

Sebi allows bank guarantees, FDs as cash for margin trading

5th March 2005: The Securities and Exchange Board of India (Sebi) have improvised its regulatory framework for margin trading (MT) and securities lending and borrowing system (SLBS) with immediate effect. The move is seen benefiting market players. In a major relief to market participants, Sebi has said that bank guarantees (BGs) and fixed deposits (FDs) will be treated as cash equivalent for the margin payment towards MT. In the current regime, payment of maintenance margin to avail MT facility is payable only in cash. In a circular issued on Friday Sebi asked stock exchanges (SEs) to implement this and other changes proposed in the circular with immediate effect. Sebi said, “Henceforth for the payment of margin requirements, FDs with banks and BGs issued by banks will be treated as cash equivalent.”

Jaypee Hotels fixes cut-off-date in relation to offer for sale of equity shares held by JAL in JHPL

5th March 2005: Jaypee Hotels Ltd (JHL) has informed BSE that the Jaiprakash Associates Ltd (JAL) has decided to offer for sale 18,00,00,000 equity shares held by it in Jaiprakash Hydro-Power Ltd (JHPL), through the process of Book Building. Out of the aforesaid issue 8,00,00,000 equity shares, reservation has been made for 10% i.e. 1,80,00,000 equity shares for allotment to the shareholders of JAL and the Company, the group companies, on competitive basis. Further the Company has that for the purpose of determining the list of shareholders of the Company who are entitled to participate in the reservation portion of the Offer, the cut-off date has been fixed as March 11, 2005.

Amtek Auto promoters to get preference shares

5th March 2005: Amtek Auto members, at their extraordinary general meeting of the company to be held on March 24, 2005, are to authorise the board to issue and allot equity shares of the company by way of preferential offer on firm allotment basis to the promoters of the company. According to a release issued to the BSE, the promoters would be issued 48,00,000 equity shares of Rs 2/- per share at a premium of Rs 188/- per share aggregating to Rs 91.20 crore.

LML opens $26mn conditional FCCBs

5th March 2005: LML is considering a $26 million conditional overseas offer of FCCBs in two tranches. According to a release issued to the BSE, while series A consists of $20 million FCCBs due on 2008, the series B offer consists of $6 million due on 2010. The EMG Corporate Finance of UK has been mandated as a lead manager to the offer, with the offer expected to close on March 08, 2005, the release said. The company said shareholder approval is likely to be received at the EGM scheduled for March 15.

Gujarat NRE Coke launches $55mn FCCBs

5th March 2005: Gujarat NRE Coke has launched and closed $55 million (including a $5 million greenshoe option) FCCB issue on March 04, 2005. According to a release issued to the BSE, the bonds are spread over a period of 5 years with a 1% coupon rate and a yield to maturity of 5.85%. The price of each FCCBs has been set at Rs 185/-, and will be listed on the Luxembourg Stock Exchange, the release added.

Express IPO in expected 4 months down the line

5th March 2005: The Express group is considering an Rs 100 crore initial public offering. The promoters of Indian Express Newspapers (Bombay) are expected to list the company on the stock exchanges in the next four months. The Express group seems to be looking at an Rs 100 crore initial public offering, but company CEO and editor-in-chief Shekhar Gupta said the size of the issue had not yet been decided. Gupta confirmed that the Express group had “in principle decided to go in for an IPO”, but said no decision had been taken on the merchant bankers or the schedule. “We have had meetings with merchant bankers and are in the process of taking a view,” he said over the telephone from New Delhi, adding that it could take up to four months for the IPO to hit the market. Gupta refused to comment on the purposes for which the money raised would be used. The Indian Express Newspapers (Bombay) publishes The Indian Express and The Financial Express in English, apart from the Marathi daily Loksatta and several speciality trade magazines.

Jayavant Products - Open Offer

4th March 2005: Fedex Securities Ltd ("Manager to the offer") on behalf of Jyoti Bright Bar Ltd (hereinafter referred to as "Acquirer", which expression shall include its Directors, Shri Jitendra J Mehta and Shri Deven J Mehta who are Persons acting in Concert with the Acquirer), pursuant to and in compliance with Regulations 10 and 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 [SEBI (SAST) Regulations 1997] and subsequent amendments thereto as announced as below:

The Offer

The Acquirer is making an open Offer to the public Shareholders of Jayavant Products Ltd ("Target Company") to acquire 10,50,000 equity shares of Rs 10/- each, representing 20.00% of issued, subscribed and paid up capital of the Target Company, at a price of Rs 4/- (Rupees Four Only) per each Equity Share fully paid up ("Offer price"), payable in cash ("the Offer"), subject to the certain terms and conditions:

Specified Date: March 24, 2005

Date of Opening of the Offer: April 21, 2005

Date of Closing of the Offer: May 10, 2005

Satyam Computer - Conversion of Stock Options

4th March 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 30,953 equity shares through circular resolution on March 04, 2005 under stock option plans of the Company.

Pradeep Metals - Delisting of equity shares from DSE

4th March 2005: Pradeep Metals Ltd has informed BSE that the equity shares of the Company has been delisted from the Delhi Stock Exchange Association Ltd (DSE) with effect from March 01, 2005.

ONGC - Delisting of shares from DSE

4th March 2005: Oil & Natural Gas Corporation Ltd (ONGC) has informed BSE that the shares of the Company have been delisted from the Delhi Stock Exchange Association Ltd (DSE) with effect from March 01, 2005.

ICICI bank has allotted 25,458 shares under ESOS

4th March 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 25,458 equity shares of face value of Rs 10/- each on February 28, 2005 under the Employee Stock Option Scheme, 2000 (ESOS).

Fortis Financial Services - Delisting of securities from DSE

4th March 2005: Fortis Financial Services Ltd has informed BSE that the securities of the Company has been delisted from the Delhi Stock Exchange Association Ltd (DSE) with effect from March 01, 2005.

Datt Mediproducts members approve delisting of equity shares from 3 Stock Exchanges

4th March 2005: Datt Mediproducts Ltd has informed BSE that the members at the Extraordinary General Meeting (EGM) of the Company held on February 28, 2005, have approve and authorised the Board to seek voluntary delisting of Company's Equity Shares from The Delhi Stock Exchange Association Ltd, The Calcutta Stock Exchange Association Ltd and The National Stock Exchange of India.

PNB issue priced at Rs 350-390/share

3rd March 2005: Punjab National Bank (PNB) has fixed the price band for its eight crore share offer at Rs 350-390 per share. According to a release issued by the bank to the BSE, the 100% book-built issue is scheduled to open on March 7, 2005 and close on March 11, 2005. "The minimum lot size for applying in the said issue is 15 shares, and in multiples thereof," the release added.

Pay Rs 10 tax on cash withdrawal of Rs 10,000

28th February 2005: To check tax evasion, Government on Monday proposed a tax at the rate of 0.1 per cent on cash withdrawals of over Rs 10,000 or more from banks on a single day. This is being done "since it is felt that large cash transactions become part of black money," Finance Minister P Chidambaram said presenting the 2005-06 General Budget in the Lok Sabha. "Thus, a person withdrawing Rs. 10,000 in cash would have to pay a sum of Rs 10 as tax," he said, observing the measure had being levied with a view to meeting the commitment made in the National Common Minimum Programme.

Trimming benefit, tax on some perks

28th February 2005: Employers giving perks other than conveyance and canteen allowances will now have to pay a Fringe Benefit Tax at the rate of 30 percent. Announcing the new tax, which will be on an "appropriately defined base", Finance Minister P Chidambaram said there are many perquisites disguised as fringe benefits escaping tax. Neither the employer nor the employee pays any tax on these benefits, which are of considerable material value, he said. At present, where the benefits are fully attributable to the employee they are taxed in the hands of the employee, that position will continue. In addition, the Minister has proposed that where the benefits are usually enjoyed collectively by the employees and cannot be attributed to individual employees, they shall be taxed in the hands of the employer. However, transport services for workers and staff and canteen services in an office or factory will be outside the tax net, he said.

Finance Minister, P. Chidambaram announces major relief for taxpayers

28th February 2005: Providing major relief to tax prayers, Finance Minister P Chidambaram announced total exemption for income of Rs. One lakh per year. Persons getting annual income of Rs one lakh to Rs.1.25 lakh will have to pay 10% income tax while those getting Rs.1.25 lakh to Rs.2.5 lakh will have to pay 20%. Those getting about Rs.2.5 lakh will be subjected to 30% income tax. Announcing these in the 2005-06 budget, Finance Minister P Chidambaram announced that the level at which the surcharge of 10% will apply has been raised to Rs.10 lakh taxable income.

The minister announced that standard deduction has been removed. Instead, every taxpayer will be allowed a consolidated limit of Rs one lakh for savings, which will be deducted from the income before tax is calculated. All prevailing sectoral caps are to be removed. The rebate under section 88 is to be eliminated and section 80L will be omitted.

In addition to the sum of Rs one lakh, the deducation on interest paid on housing loan for self-occupied house property, medical insurance premia, specified expenditure on disabled dependant, expenses for medical treatment for self or dependant or member of a HUF, deducation in respect of interest on loans for pursuing higher studies and deduction to a person with disability will continue to receive the same tax treatment as prevails now.

The threshold exemption levels for women have been revised to Rs.1.25 lakh and for senior citizens to Rs.1.5 lakh.

You have time till Dec to get Unique ID number

25th February 2005: The Securities and Exchange Board of India (Sebi) has relaxed Market Participant and Investor Scheme (Mapin) requirements for individual investors by extending the deadline for getting the Unique Identification Number (UIN) to December 31, ’05. Sebi has also decided to set up a committee to look into the coverage of Mapin and other related matters. The constitution of the committee will be announced shortly. Mapin is a central database of market participants that the Sebi is creating to streamline the functioning of the capital market.

Sebi had earlier directed that all investors who carry out transactions in the securities market of a value of Rs 1 lakh and above would be required to obtain the UIN by March 31, ’05. This was also applicable to investors in mutual funds and collective investment schemes. According to a release, Sebi said that it has received representations from investors regarding the difficulties in meeting the time line of March 31, ’05, for getting the UIN. “In order to alleviate their difficulties, it has been decided to give some more time to them to obtain the UIN. Accordingly the ‘notified date’ has been extended to December 31, ’05,” the release said.

Geometric Software Solutions members approve grant of stock options under ESOP Scheme 2005

25th February 2005: Geometric Software Solutions Company Ltd has informed BSE that the members at the Extraordinary General Meeting of the Company held on February 25, 2005 have approved the following:

1. To create, issue, offer and grant 700,000 stock options, which shall be convertible into 700,000 equity shares of Rs 10/- each to present and future employees and eligible Directors of the Company, whether they are shareholders of the Company or not, under ESOP Scheme 2005.

2. To extend the benefits of the ESOP Scheme 2005 to the employees of the subsidiaries of the Company, whether they are shareholders of the Company or not.

Sintex Industries - Revised Schedule of Activities for Open Offer

25th February 2005: Ambit Corporate Finance Pvt Ltd ("Manager to the Offer") on behalf of Lightwood Investment Ltd ("Acquirers") pursuant to and in compliance with Regulation 10 and in facts and circumstances of the case of acquisition of Shares in the Sintex Industries Ltd (Target Company) amounts to Change in control in terms of Regulation 2(1)(c) and Regulations 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeovers) Regulations, 1997 and subsequent amendments thereto has announced the Revised Schedule of Activities in its Revised Public Announcement which is in continuation of, and should be read in conjunction with, the earlier Public Announcement to the Shareholders of the Target Company:

Revised Scheduled of Activities:

------------------------------------------------------------------------------------------------------------
                                               Original Schedule                   Revised Schedule
------------------------------------------------------------------------------------------------------------

Specified Date:                         December 31, 2004                December 31, 2004
Date of Opening of the Offer       January 27, 2005                   March 02, 2005
Date of Closing of the Offer        February 16, 2005                   March 21, 2005
------------------------------------------------------------------------------------------------------------

ICICI Bank has allotted 37,730 shares under ESOS

25th February 2005: ICICI Bank Ltd has informed BSE that Bank has allotted 37,730 equity shares of face value of Rs 10/- each on February 21, 2005 under the Employees Stock Option Scheme, 2000 (ESOS).

ITC has allotted 16,203 shares under ESOS

25th February 2005: ITC Ltd has informed BSE that the Company on February 23, 2005 has issued and allotted 16,203 Ordinary Shares of Rs 10/- each, upon exercise of 16,203 Options by Optionees under the ITC Employee Stock Option Scheme (ESOS).

Spentex Industries - Delisting of securities from ASE

25th February 2005: Spentex Industries Ltd has informed BSE that the securities of the Company have been delisted from The Stock Exchange, Ahmedabad (ASE) with effect from February 18, 2005.

Indiabulls GDRs priced at $2.45/share

25th February 2005: Indiabulls Financial Services has fixed the price of a $45 million Global Depository (GDR) issue, which is expected to be listed on the Luxembourg Stock Exchange. According to a release issued to the BSE, each GDR, representing one share of Rs 2 each, was priced at $2.45 (Rs 107) per GDR representing a discount of 5% to the average of last three days closing price of the shares on The National Stock Exchange. The company has granted an over-allotment option of up to $15 million to Merrill Lynch International - the lead manager and sole bookrunner for this offering. The GDR price was fixed after market trading hours on February 24, 2005, the release added.

Tata Power Company - Allotment of FCCB

24th February 2005: Tata Power Company Ltd has informed BSE that the allotment of a US$ 200 million Foreign Currency Convertible Bond (FCCB) has been completed on February 24, 2005. The Company had earlier launched a US$ 200 million, 5 year FCCB issue carrying a 1% coupon, convertible at a 50% premium over the closing share price of February 08, 2005 and bearing a yield to maturity (YTM) of 3.88% compounded semi-annually. These bonds will be listed on the Singapore Stock Exchange. J P Morgan was the sole underwriter and book runner to the offering.

Tasc Pharmaceuticals Board allots equity shares

24th February 2005: Tasc Pharmaceuticals Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 24, 2005 has allotted 15,00,000 equity shares of Rs 10/- each at a premium of Rs 40/- each. This allotment is in respect of the second and final conversion of the convertible warrants issued by the Company on private placement basis.

Satyam Computer has allotted 29,815 equity shares under stock option plan

24th February 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 29,815 equity shares through circular resolution on February 24, 2005 under stock option plans of the Company.

Kanika Infotech Board to consider Split of Equity Share

24th February 2005: Kanika Infotech Ltd has informed BSE that a Board meeting of the Company will be held on March 03, 2005, to consider the Split of Equity Share.

HCL Technologies - Allotment of shares under ESOP

24th February 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company has on February 23, 2005 allotted 2,08,462 equity shares of Rs 2/- each (including 1,33,596 shares at a premium of Rs 125.50 per share; 7,200 shares at a premium of Rs 128.00 per share; 2,050 shares at a premium of Rs 157.50 per share; 1,150 shares at a premium of Rs 194.50 per share; 9,900 shares at a premium of Rs 222.00 per share; 28,104 shares at a premium of Rs 233.00 per share; 1,000 shares at a premium of Rs 239.50 per share; 14,346 shares at a premium of Rs 249.00 per share; 7,020 shares at a premium of Rs 251.50 per share; 2,396 shares at a premium of Rs 281.50 per share; 1,700 shares at a premium of Rs 288.00 per share), to the employees on exercise of their stock options under the 1999 & 2000 Employee Stock Option Plans (ESOP).

Wipro has allotted 97,630 equity shares under ESOS

23rd February 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors vide their circular resolution dated February 23, 2005 resolved to issue and allot 97,630 equity shares of Rs 2/- each pursuant to exercise of stock options by eligible employees.

Open Offer by Pantaloon Retail to the shareholders of Galaxy Entertainment

23rd February 2005: Edelweiss Capital Ltd ("Manager to the Offer") on behalf of Pantaloon Retail India Ltd ("Acquirer") pursuant to regulation 10 in compliance with Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto ("SEBI (SAST) Regulations") has announced as follows:

The Offer

The Acquirer is making an offer under Regulation 10 of the SEBI (SAST) Regulations to the Public shareholders of Galaxy Entertainment Corporation Ltd ("Target Company") to acquire upto 2,542,400 fully paid equity shares of Rs 10/- each, representing in the aggregate 20% of the Post issue voting capital at a price of Rs 51/- (Rupees Fifty One only) per share ("the Offer price") payable in cash subject to the terms & conditions mentioned.

Schedule of Activities

Specified Date: March 18, 2005

Date of Opening of the offer: April 14, 2005

Date of Closing of the Offer: May 04, 2005

IRDA puts checks on mega covers

24th February 2005: Insurance regulator IRDA has barred companies from seeking special discount of 5% in exchange of agency commission for mega risk covers above Rs 1,500 crore from the next fiscal. IRDA also raised the eligibility criteria from Rs 3 crore to Rs 15 crore for companies to get the special discount. Big companies will have the option of seeking risk cover for fire, petrochemical, engineering or other businesses covered under the tariff regime directly with the insurer and get a 5% discount. "If they seek the service of brokers and agents, the companies will not get the discount," the regulator said. IRDA chairman C S Rao said: "The cover under mega risk policies and project finance above Rs 1,500 crore sum insured will be eligible for brokerage commission irrespective of capital structure, and the insured will not be eligible for the 5% special discount." Regarding government departments where paid-up capital cannot be determined, IRDA said the special discount would continue as before.

Yes Bank plans Rs 300cr public issue in 3 months

24th February 2005: Yes Bank, the Rana Kapoor-promoted new age commercial bank, is planning to expand its capital base by raising Rs 300 crore through a public offering. The bank is planning to double its net worth from Rs 217 crore currently to more than Rs 500 crore. The issue would be a book-built one. Speaking after the conference announcing a tie-up with Max New York Life for increasing the fee-based business, Mr. Kapoor said: “We will come up with an IPO within the next 90 days. The bank will file the Red Herring prospectus with Sebi in March-April.”

Post-issue, the public shareholding in the bank would go up to 25%. The bank's capital base will go up to Rs 517 crore after the IPO from the present level of Rs 217 crore. The foreign holding in the bank is slated to come down to around 35% from the present 45%. The current shareholders of Yes Bank are Rabobank of Netherlands (holding 20%) and three private equity investors — CVC International, Chrys Capital and AIF Capital (the three investor holds 25%). Rana Kapoor and Ashok Kapur together hold 52.5%, and the bank employees hold the remaining 2.5%. After getting a licence from the RBI on May 2004, Yes Bank has been able to mop up Rs 600 crore in deposits and disburse Rs 750 crore in loans. The bank now has a capital adequacy ratio of more than 20%.

Vijay Textiles to issue bonus shares

24th February 2005: Vijay Textiles today approved the issue of bonus shares in the ratio of 2:1. The board of directors, in a meeting, approved the issue of bonus shares in the ratio of 2:1, that is, two additional equity shares for every one existing equity share held, the company informed the Bombay Stock Exchange. The company will hold an extraordinary general meeting of its members on April 1 for obtaining necessary approval for issue of bonus shares, it added.

Sebi tightens margins in cash segment

24th February 2005: Tightening the margining requirement for the cash market at a time when equity markets are booming, the Securities and Exchange Board of India (Sebi) has asked all stock exchanges (SEs) to collect the Value at Risk (VaR) margin upfront and Mark to Market (MTM) margin on the next day before the beginning of trading. These changes in the collection of margins will be effective from May 18, 2005. Sebi has, however, relaxed its norm with respect to mode and collection of margins by brokers from their clients.

The move from Sebi is seen as aligning the risk management framework across the cash and derivatives market and is expected to reduce the risk in the cash market. The tightening of risk containment measures for the cash market will put it on par with the derivatives market in terms of risk containment. The Sebi move follows detailed deliberations on the subject at the various meetings of the Sebi Advisory Committee of Derivatives and Market Risk Management. In a communication sent to all SEs on Wednesday, Sebi said, “SEs should put in place the necessary systems to ensure the operalionalisation of the comprehensive risk management framework with effect from May 18, 2005.”

Indiabulls to raise $60 mn via GDRs

23rd February 2005: Indiabulls Financial Services will raise up to $60 million through Global Depository Receipts from the international capital market to fund its working capital requirements. The $60 million GDR will consist of a main green shoe component of up to $45 million and over allotment option of up to $15 million, the company informed the National Stock Exchange (NSE) here on Wednesday. The additional working capital will be used to conduct business, expand the same and undertake new initiatives, which are expected to contribute to the growth of the company, it said. It expects to sustain its current business growth rate of over 100% and is projecting a consolidated net profit of Rs 52.5 crore for FY 2004-05.

HDFC has raised Rs 250 cr via bonds

24th February 2005: The Housing Development Finance Corporation has raised Rs 250 crore by privately placing bonds with banks, debt dealers said today.

HOEC - Voluntary Delisting of equity shares from MSE

21st February 2005: Hindustan Oil Exploration Company Ltd (HOEC) has informed BSE that the equity shares of the Company have been voluntarily delisted from Madras Stock Exchange Ltd (MSE) with effect from February 16, 2005.

Oriental Bank of Commerce gets GOI approval for second public offer

21st February 2005: Oriental Bank of Commerce has informed BSE that Govt. of India (GOI) vide their letter dated February 17, 2005 have conveyed their approval for second public offer by the Bank for 5,80,00,000 equity shares.

ICICI Bank to raise Rs 800 cr through public issue of bonds

21st February 2005: The second-largest commercial bank, ICICI Bank Ltd., intend to raise up to Rs 800 crore through a public issue of bonds, the company said on Monday. The issue has three options: tax saving bonds, regular income bonds and children growth bonds. The interest rates on the bonds with maturities ranging from 5 to 10 years are between 6 and 7.25%. The issue, which has been rated 'highest safety' by ICRA and CARE, will open for subscription on February 28 and close on March 9, the bank said in a statement. The core issue size is Rs 400 crore, but ICICI has the option to retain an over-subscription of another Rs 400 crore.

PNB to publicize price band for the public issue on Mar 4

21st February 2005: Punjab National Bank would announce the price-band for the second public issue of eight crore equity shares on March 4, said the CMD S S Kohli on Monday. The bank's second public issue through book-building route would remain open for subscription from March 7 to 11. "We are not announcing beforehand the price-band for the issue as per SEBI instructions as it leads to fluctuations in prices at stock exchanges. We will, however, announce the price-band on March four so that there is no fluctuation in the stock exchange," said Mr. Kohli.

iGate Global Solutions - Allotment of shares on exercise of Stock Options

21st February 2005: iGate Global Solutions Ltd has informed BSE that the Share Transfer Committee of the Board of Directors of the Company on February 21, 2005 allotted 7925 equity shares of par value Rs 4/- per share to the individual optionee's pursuant to the exercise of options granted under the Companies Employees Stock Option Plan, on receipt of payment of the subscription monies in respect of the said shares aggregating to Rs 9,22,405/-. The Grant price for 4325 shares was Rs 100/-, 1000 shares at Rs 186.60/-, 100 shares at Rs 133.05/-, 2500 shares at Rs 116/-.

Dr Reddys Laboratories - Grant of Options under ESOS, 2002

21st February 2005: Dr Reddys Laboratories Ltd has informed BSE that the Company has granted 12,000 stock options to an employee of the Company at an exercise price of Rs 5/-, which is the par value of the shares of the Company. The shares covered by such options are 12,000. The vesting period of these options is 25% options each year over a period of four years. The options may be exercised within a period of five years from the date of vesting.

GTC Industries - Delisting of equity shares from VSE

21st February 2005: GTC Industries Ltd has informed BSE that the Equity Shares of the Company have been delisted from Vadodara Stock Exchange Ltd (VSE).

Hexaware board approves for 1:5 stock split

21st February 2005: The board of directors of Hexaware Technologies has recommended a split of one equity share with a face value Rs 10/- each to five equity shares with a face value Rs 2/- each. This was announced in a release issued by the company to the BSE today.

Pantaloon plans open offer for Galaxy

19th February 2005: The board of directors of Pantaloon Retail, which met on February 18, 2005, has approved a proposal to acquire 20 lakh shares of Galaxy Entertainment at a premium of Rs 34 per share totaling Rs 8.80 crore. According to a release issued by Pantaloon Retail to the BSE, the acquisition, on a preferential basis, will amount to 15.73% of the paid-up capital of Galaxy Entertainment Corporation. "The company will make an open offer to the share holders of Galaxy Entertainment Corporation as per SEBI (Substantial Acquisition of Shares & Takeovers) Regulations, 1997," the release added. While Pantaloon Retail shares closed at Rs 823 on the BSE, Galaxy was locked at its 10% upper limit at Rs 56.65 - a gain of Rs 5.15. The Galaxy counter saw unusually high volume of over 95,000 shares as against the normal 2-week daily average of 36,000 shares.

Continental Credit & Investments - Delisting of securities from VSE

19th February 2005: Continental Credit & Investments Ltd has informed BSE that the securities of the Company have been delisted from Vadodara Stock Exchange (VSE) with immediate effect.

Ajanta Soya - Delisting of equity shares from LSE

19th February 2005: Ajanta Soya Ltd has informed BSE that the equity shares of the Company have been delisted from The Ludhiana Stock Exchange Association Ltd (LSE) with effect from February 08, 2005.

Videocon Industries Board to consider issue of GDRs

19th February 2005: The board of directors of Videocon Industries will meet on February 25, 2005, to consider an issue of global depository receipts (GDRs) and/or preferential issue of equity shares to raise funds. This was announced in a release issued to the BSE today.

Crisil okays McGraw-Hill's open offer

19th February 2005: Crisil Limited on Saturday said its board had approved the open offer to its shareholders by McGraw-Hill Companies Inc for purchase and transfer of shares. The board members have decided to support the proposed purchase and transfer of shares of the company to The McGraw-Hill Companies Inc or S&P India, to be acquired by making a voluntary open offer to the shareholders, Crisil informed Bombay Stock Exchange.

PNB IPO likely at Rs 350-375

19th February 2005: The price band for Punjab National Bank’s (PNB) second public issue is likely to be around Rs 350-375, said sources close to the issue. Given this, the government is likely to rake in Rs 1,050-1,125 crore by March 31, 2005 with the reduction of its holding by 30 million shares in the state-owned bank. “Since the bank is eyeing to mop up around Rs 3,000 crore through this public issue, the upper limit of the price band could be expected at Rs 375 if the market rules at the present level,” said a merchant banking source. PNB, which is hitting the market on March 7, is expected to announce the price band for the book building offer on March 5, said chairman and managing director SS Kohli.

Geometric Software Solutions has allotted 23,217 equity shares under ESOP

18th February 2005: Geometric Software Solutions Company Ltd has informed BSE that the Allotment Committee of Directors of the Company, at its meeting held on February 17, 2005, allotted 23,217 (Twenty Three Thousand Two Hundred Seventeen) Equity shares on the exercise of vested stock options under ESOP Scheme 1999, ESOP Directors - 2000 Scheme, ESOP Scheme, 2001 and ESOP Scheme 2003.

ICICI Bank has allotted 73,925 equity shares under ESOS

18th February 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 73,925 equity shares of face value of Rs 10/- each on February 14, 2005 under the Employees Stock Option Scheme, 2000 (ESOS).

HCL Inforsystems allots 34,251 equity shares under ESOS

18th February 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 34251 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Options Scheme' (ESOS).

Tata Steel looks at overseas listing, Could be either NYSE or LSE

18th February 2005: After Tata Motors last year, it is the turn of Tata Steel of the Rs 54,000 crore Tata group to be listed abroad. The Tata brass is set on listing the shares of the second largest steel maker in the country either on the New York Stock Exchange (NYSE) or the London Stock Exchange (LSE). “It is important because as a global player it is good to be listed in London or New York. That is something we are thinking about,” said Tata Steel Managing Director B Muthuraman. Muthuraman also said it was uncertain when a decision on this would be made. Tata Motors last year listed its shares on the NYSE by converting its GDRs to American Depository Receipts (ADRs).

Fidelity gets SEBI nod for launching mutual funds in India

18th February 2005: World's largest fund house Fidelity, which manages assets worth 1.2 trillion dollars, has got SEBI approval for launching mutual funds in India. "We are pleased to receive the approval from SEBI and will launch the first Fidelity fund in India shortly," Fidelity fund management head of business Ashu Suyash said in a statement. Fidelity Fund Management Private Ltd, the Indian arm of the Fidelity International Ltd, has received the certification of registration from SEBI, a company release said. "We believe the mutual fund business will record substantial growth in the years to come and we look forward to playing a significant role in it," he said. Fidelity has an investor base of 20 million worldwide.

HDFC has allotted 88,958 equity shares under ESOS

18th February 2005: Housing Development Finance Corporation Ltd (HDFC) has informed BSE that the Corporation has on February 18, 2005, allotted 88,958 equity shares of Rs 10/- each under its Employees Stock Option Scheme (ESOS).

UTI Bank has allotted 32,356 equity shares under ESOP

18th February 2005: UTI Bank Ltd has informed BSE that the Committee of Directors of the Bank on February 18, 2005 made the allotment of 32,356 equity shares of Rs 10/- each to the employees of the Bank, under ESOP.

La-Mere Apparels - Delisting of shares from ASE

18th February 2005: La-Mere Apparels Ltd has informed BSE that the equity shares of the Company have been voluntarily delisted from The Stock Exchange Ahmedabad (ASE) with effect from January 28, 2005.

Madhya Pradesh Glychem - Delisted of shares from MPSE

18th February 2005: Madhya Pradesh Glychem Industries Ltd has informed BSE that the equity shares of the Company have been delisted from Madhya Pradesh Stock Exchange (MPSE) w.e.f. February 08, 2005.

ICICI Bank - Notice of forfeiture (Public Issue April 2004)

18th February 2005: ICICI Bank Ltd has informed BSE that the Bank had issued and allotted 8,771,300 Partly paid-up equity shares of face value of Rs 10/- each issued at Rs 280/- per share on which Rs 150/- had been paid up (Rs 5/- towards share capital and Rs 145/- towards share premium) in terms of the Prospectus dated April 12, 2004. The Balance amount of Rs 130/- (Rs 5/- towards share capital and Rs 125/- towards share premium) was payable on Call.

The Bank had issued a Call Notice dated May 31, 2004 to the holders of partly paid-up equity shares for payment of call money of Rs 130/- per partly paid-up equity share (Rs 5/- towards face value and Rs 125/- towards share premium). The last date for payment of call money was June 23, 2004. The Bank had sent two Reminders dated October 15, 2004 and December 30, 2004 and also issued a Notice of Forfeiture dated January 31, 2005 advising the holders of partly paid-up shares to pay the call money together with interest thereon, on or before March 07, 2005 failing which the equity shares would be liable for forfeiture including the amount already paid thereon.

CRISIL - Schedule of activities for Open Offer

18th February 2005: Kotak Mahindra Capital Company Ltd ("Manager to the Offer") on behalf of The McGraw Hill Companies Inc and S&P India LLC, acting in concert with each other pursuant to and in compliance with, among others, regulation 10 and 12 of the securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 as amended, has announced the Schedule of Activities for the open offer to the shareholders of CRISIL Ltd as below:

Schedule of Activities:

Specified Date: February 18, 2005

Date of Opening of the Offer: April 06, 2005

Date of Closing of the Offer: April 25, 2005

HCL Inforsystems allots 4,550 equity shares under ESOS

18th February 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 4550 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Options Scheme' (ESOS).

UTI Bank Committee of Directors to consider allotment of shares under ESOP

17th February 2005: UTI Bank Ltd has informed BSE that a meeting of the Committee of Directors of the Bank will be held tomorrow i.e. February 18, 2005, to consider the allotment of 32,356 equity shares of Rs 10/- each under ESOP.

Nagarjuna Construction - Grant of Options under NCC ESOP 2004

18th February 2005: Nagarjuna Construction Company Ltd has informed BSE that the Board of Director of the Company at its meeting held on January 31, 2005 approved grant of 268460 Options to the employees of the company at the rate of Rs 110/- per option in accordance with the NCC Employee Stock Option Plan - 2004 as approved by the Compensation Committee in this regard. The shareholders of the Company had at their Extraordinary General Meeting held on November 16, 2004 accorded approval to the company for issue of 3,00,000 Options to the employees of the Company under the NCC Employee Stock Option Plan (ESOP) – 2004.

UTI eyes Rs 30,000cr AUM by Jan '06

17th February 2005: UTI Asset Management Company (UTI AMC) is eyeing the booming IPO market for increasing its assets under management (AUM) by 50% to Rs 30,000 crore by January 2006. "We will go for investments in IPOs as the pricing continues to be attractive," a senior official told said today. UTI AMC, which has increased its equity exposure to about 50% of its Rs 21,500 crore AUM over the years, is considering investing about Rs 5,000 crore in growth stocks and IPOs. "We expect our AUM to touch Rs 30,000 crore in the next 12 months going by the present trend in the market," the official said.

Investing in IPOs? A few tips

17th February 2005: The Indian stock markets are continuing to climb up newer highs on the back of strong FII inflows, which is also responsible for the apparently strong economic prospects. Stock prices continue to rise and are touching new 52-week highs consistently. There is everything positive at the current instance for Indian equities and thus this has been attracting investors to the equity markets.

Taking advantage of this competitive environment in the stock markets, many companies are timing their initial public offers during this period, as they are able to 'price' higher than they would have otherwise when the scenario is not favorable for equities. In this article, while we would refrain from commenting on whether one should invest in an IPO or not.

But should one just jump for an IPO as soon as it is announced? Here an attempt has been made to outline some issues that investors should look at before they making investment decision. Before investing in an IPO, investors are suggested to run a check on the following factors:

  • Who are the Lead Managers to the issue? Do Lead Managers act as an indicator of the quality of the issue?
  • What is the promoter holding in the company? Is there any participation from financial institutions or a venture capital firm?
  • Where is the company investing my money? Is it going to give me good returns?
  • Which sector does the company operate? What is the growth prospect of the company vis-ŕ-vis the sector?
  • Do the promoters have enough experience?
  • Will the money invested yield maximum returns? Are the profit projections achievable?
  • How do I justify the price of the issue?
  • Does the company enjoy tax benefits?

To conclude, we believe that before investing into equities (either through secondary or primary markets), certain key issues like assessing one's own risk bearing profile, the investment time horizon and fundamentals of the company must be strictly adhered to. After all, it’s your money.

3i Infotech plans book-built IPO of two crore shares

16th February 2005: ICICI Bank-promoted 3i Infotech is planning an initial public offer (IPO) of 2 crore shares of Rs 10 each. The book built IPO, constituting 39.21% of the fully diluted post-issue equity capital, has a greenshoe option of 30 lakh shares. Of the total issue size, 4 lakh shares are reserved for employees and 50% of the net issue is reserved for qualified institutional bidders (QIBs). While non-institutional bidders have been reserved 25% of the net issue, retail investors have been reserved 25%. JM Morgan Stanley and DSP Merrill Lynch have been appointed as the book running lead managers to the IPO.

Wipro has allotted 85,442 equity shares under ESOP

16th February 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors vide their circular resolution effective February 15, 2005 resolved to issue and allot 85,442 equity shares of Rs 2/- each pursuant to exercise of stock option by eligible employees.

Satyam Computer has allotted 63,640 equity shares under stock option plan

16th February 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 63,640 equity shares through circular resolution on February 16, 2005 under stock option plans of the Company.

Apollo Tyres - Voluntary Delisting of Securities from LSE

16th February 2005: Apollo Tyres Ltd has informed BSE that the securities of the Company have been voluntarily delisted from The Ludhiana Stock Exchange Association Ltd (LSE) w.e.f. February 08, 2005.

Hindustan Oil Exploration - Open Offer

16th February 2005: Ind Global Corporate Finance Pvt. Ltd ("Manager to the offer") on behalf of Burren Energy India Ltd, London ("BEIL" / "Acquirer Company") and Unocal Bharat Ltd ("UBL", "Persons acting in concert"/"PAC") pursuant to and in compliance with among others, Regulation 10 of Chapter No. III of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers), Regulations, 1997 and subsequent amendments thereto [SEBI Takeover Regulations"/"Regulations"] has announced as follows:

The Offer

Pursuant to the provisions of Regulation 10 of the SEBI Takeover Regulations, since BEIL has acquired the shareholding from Unocal International Corporation in an off-shore transaction and since UBL holds 26.01% of the shares of Hindustan Oil Exploration Company Ltd ("HOEC" /"Target Company"), which is more than the stipulated minimum trigger limit of 15%, BEIL is making the open offer to all the remaining equity shareholders of HOEC. BEIL proposes to acquire 1,17,48,990 Equity Shares representing 20% of the paid up equity share capital of the Target Company at a price of Rs 92.41 per fully paid up equity share ("Offer Price") payable in cash ("Offer") subject to the terms & conditions made in the Public Announcement and the Letter of Offer.

Schedule of Activities:

Specified Date - February 16, 2005

Date of Opening of Offer - April 08, 2005

Date of Closure of the Offer - April 27, 2005

LIC to drive Rs 10,000 cr more into equities

16th February 2005: State-owned Life Insurance Corporation could increase its market exposure to 10% from the current 7-8%. In simple terms, this would mean an investment of over Rs 10,000 crore into equity. “The present market value, in absolute terms, stands at about Rs 31,000 crore and there is no restriction on taking it further,” said chairman LIC RN Bharadwaj. Taking advantage of the spurt in equity markets, LIC plans to launch three new unit-linked products: Bima Nivesh (at 5.9% interest rate), Unit-linked Assurance and Unit-linked Pension once the regulator clears them. Mr. Bharadwaj said globally insurance companies invest upto even 50% of their funds in equities. LIC’s exposure is low since the markets here lack depth, he said.

PNB to strike the market with Rs 3,000 cr IPO by March 7

16th February 2005: Punjab National Bank has decided to hit the market on March 7 for raising close to Rs 3,000 crore through its second public offer of eight crore shares. "Our issue will open on March 7 and close on March 11. The price band of the issue will be declared a day before the issue opens," a senior PNB official said today. PNB had talks with officials of the Finance Ministry on Wednesday to finalise the date and other fundamentals. The issue will be priced through the book-building process but the bank will fix a price-band in consultation with Finance Ministry.

The bank has appointed five merchant bankers -- DSP Merrill Lynch, JM Morgan Stanley, Kotak Securities, I-Sec and Enam Financial to manage the public offer. Of the eight crore share that will be offered, PNB will reserve 80 lakh shares for existing small shareholders and an equivalent amount for employees. The remaining 6.4 crore shares will be sold to the public, the official said. Going by the present market price of Rs 422 a share, PNB sources said the bank aims to mop up Rs 3,000 crore easily. The issue is slated to bring down government's holding in the bank to 57% from the present 80%.

LIC and other insurers to absorb service tax in FY05

16th February 2005: LIC and other insurers are likely to absorb the 10% service tax and 2% education cess at least in the current fiscal. Insurers are, however, waiting for the finance ministry to clarify certain points on the tax. "We will not charge service tax from policy holders this fiscal," LIC chairman R N Bhardwaj said, adding it would be adjusted in the commission paid to agents. He declined to give any figure of the total outgo that LIC was expecting from the service tax and education cess as it could be assessed only after the end of the fiscal year on March 31.

Service tax, which was extended to the risk component of the insurance policies in the last budget, will have to be paid by consumers from next fiscal, industry sources said. There has been some ambiguity after the finance minister proposed service tax on risk premium in the budget for 2004-05. Later, the Central Board of Excise and Customs came up with a notification that gives an option of 10% service tax on the annual premium or 1% of total premium. Insurance industry sources said the cost of buying an insurance product would go up next fiscal, as all insurers would incorporate the service tax into the premium charged from consumers.

Infosys Technologies has allotted 17,641 equity shares under stock option plan

15th February 2005: Infosys Technologies Ltd has informed BSE that the Board of Directors of the Company vide their resolution dated February 15, 2005, allotted 17,641 equity shares of par value of Rs 5/- to the optionees pursuant to the exercise of the options granted to the employees under the Company's 1999 Stock Option Plan.

Federal Bank is thinking over rights-cum-public issue for growth plans

15th February 2005: Federal Bank Ltd is considering the possibility of coming out with a rights-cum-public issue for its future growth plans. S Santhanakrishnan, director of the bank said, Federal Bank is growing at a much faster pace and it needs to raise capital very soon. The ideal size of the issue would be between Rs 600 crore and Rs 750 crore to comply with the Basel-II norms. The issue is likely to hit the market during the next financial year. He said that the bank is also looking at inorganic growth in the near future. “The bank is looking at acquisition as a important route for its growth. We will acquire one or more banks in the immediate future. Acquisition is a route which we are considering for our overseas presence as well, he added.”

Blossom Industries Board approves delisting of equity shares from 3 Stock Exchanges

15th February 2005: Blossom Industries Ltd has informed BSE that the Board of Directors of the Company in their meeting held today, have taken the following decisions: -

1. Delisting of Equity Shares from The Stock Exchange, Mumbai, The Stock Exchange, Ahmedabad, and the Vadodara Stock Exchange in accordance with the provisions of the SEBI (Delisting of Securities) Guidelines, 2003.

2. The Extra Ordinary General Meeting of the Company be convened on March 19, 2005 to secure the consent by a special resolution of the members for the Voluntarily Delisting of the shares of the Company from all the Stock Exchanges.

Maars Software International Board to consider issue of securities

15th February 2005: The meeting of the Board of Directors of Maars Software International Ltd will be held on February 18, 2005 to consider issue of Equity shares / GDR / ADR / and or any other instrument as may be considered at the aforesaid meeting, the Bombay Stock Exchange said today.

PCS Board to consider proposal for raising capital by issue of ADRs

15th February 2005: The Board meeting of Patni Computer Systems Ltd will held on February 19, 2005 to consider the proposal to raise the capital by way of issue of American Depository Receipts (ADRs), the Bombay Stock Exchange said today.

GTL Board to consider allotment of equity shares under conversion of FCCB

15th February 2005: GTL Ltd has informed BSE that a meeting of the Board of Directors of the company will be held on February 16, 2005, inter alia, to consider allotment of 7,24,112 Equity Shares of Rs 10/- each for cash at a premium in terms of the Offer document to Foreign Currency Convertible Bond (FCCB) holders, consequent upon the exercise of right for conversion of FCCBs worth Swiss Francs (SFr) 20,00,000/-.

Reliance MF has launched EOF

15th February 2005: Reliance Mutual Fund has launched an open-ended Equity Opportunities Fund to provide long-term capital appreciation by investing in stocks across sectors and industries of all market capitalisations. The issue would remain open till March seven and there would be no entry-load during the initial public offer. The minimum application amount for the IPO, which is offered to the public, is Rs 5,000 and in the multiples thereafter, Reliance Mutual Fund said in a release here.

The fund is a diversified equity scheme, which would try to invest in stocks of companies representing a broad view of the strong Indian growth stories. It would invest up to 75-100% in equity and equity-related instruments and up to 25% in debt securities and money market instruments with an aim to generate regular income, the release added.

"The fund would seek both value and growth, which are likely to commence from the ongoing structural changes in government policies, infrastructure spending and continuous global economic reforms which try to integrate different economies across the globe," it said. It would provide growth and bonus option under the growth plan and dividend payout and dividend reinvestment option under the dividend plan, it added.

No change seen in detariffing motor insurance business

15th February 2005: Insurance Regulatory and Development Authority (IRDA) today confessed that the present administered tariff regime for motor insurance business is likely to continue in the next fiscal. "We are likely to miss the April deadline (for detariffing motor insurance business)," IRDA chairman C S Rao said today. He said that detariffing of motor insurance has to be done for both owners' damage and third party liability. "It cannot be done in isolation," he added.

The general insurance industry, particularly after the advent of private players, has been demanding detariffing of motor insurance because, according to them, the products were under priced. They said that with detariffing, there could be reduction in cost of insurance and would be better for both the industry and consumers.

Industry sources said insurers would be in a better position to price the odd portion of motor insurance by taking into account 30 rating factors including make and model, engine power, age of vehicle, licensed carrying capacity, safety features and repair and replacement costs. The road transport industry, however, fears that detariffing could lead to an increase in premiums and thus increase working costs.

Infosys Technologies has allotted shares under stock option plan

14th February 2005: Infosys Technologies Ltd has informed BSE that the Board of Directors of the Company vide their resolution dated February 14, 2005, transacted the following business:

a) Allotted 12,320 equity shares of par value of Rs 5/- to Deutsche Bank Trust Company Americas, the Company's Depository, as underlying shares in respect of the ADR's to be issued and allocated to the purchasers, pursuant to the exercise of the options granted to the employees under the Company's 1998 Option Plan.

b) Allotted 48,273 equity shares of par value of Rs 5/- to the optionees pursuant to the exercise of the options granted to the employees under the Company's 1999 Stock option Plan.

Sterlite Optical Technologies - Delisting of securities from DSE

14th February 2005: Sterlite Optical Technologies Ltd has informed BSE that the securities of the Company have been delisted from Delhi Stock Exchange Association Ltd (DSE) with effect from January 20, 2005.

Vaibhav Gems members approve delisting of equity shares from 3 Stock Exchanges

14th November 2005: Vaibhav Gems Ltd has informed BSE that the shareholders at the Extra Ordinary General Meeting held on February 12, 2004, have approved Voluntary delisting of equity shares of the Company from Jaipur Stock Exchange, Delhi Stock Exchange & The Stock Exchange, Ahmedabad.

LIC to come up with new schemes

15th February 2005: Today Life Insurance Corporation said that it would come up with three new products including a single premium scheme and a pension plan. "Our individual assurance segment has grown by 35% in premium income at about Rs 11,000 crore so far. Our group insurance schemes have grown by 67-127 percent in the past few years," said LIC chairman R N Bhardwaj. According to data compiled by IRDA, the state-owned insurer had mopped up Rs 10,316 crore in premium selling over 1.26 crore policies during April-December this fiscal. "We still have two months to go," Bhardwaj said indicating that premium income could cross Rs 13,000-14,000 crore in this fiscal. LIC plans to come up with three new products -- a modified version of its single premium policy Bima Nivesh offering 5.9% return, a unit-linked pension plan and another flexi-life endowment product. LIC has filed the products with IRDA and hopes to launch them in the coming months.

Max India has allotted equity shares under "Max Employees Stock Plan 2003"

10th February 2005: Max India Ltd has informed BSE that the Allotment Committee of Directors of the Company at their meeting held on February 10, 2005 allotted 62700 equity shares of Rs 10/- each of the Company for cash at par, arising from the exercise of Options in the ratio of one equity share for every option under the "Max Employees Stock Plan 2003" of the Company to the following option-holders:

1. Mr. B Anantharaman - 25000 equity shares

2. Mr. Mukesh Shivdasani - 16,667 equity shares

3. Mr. K S Ramsinghaney- 13,333 equity shares

4. Mr. Surendra Kaul - 7,700 equity shares

Satyam Computer has allotted 5,810 shares under stock option plan

10th February 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 5810 equity shares through circular resolution on February 10, 2005 under stock option plans of the Company.

Sebi cancels registration of 5 stockbrokers

10th February 2005: Securities and Exchange Board of India (SEBI) has passed orders dated January 31, 2005 cancelling the certificate of registrations of the following five stock brokers with immediate effect:

Sr. No.

Name of the broker

SEBI Regn. No.

Exchange

1

M/s. Arunima Investment (P) Ltd.

INB200898939

OTCEI

2

M/s. Scon Fin. Services Pvt. Ltd.

INB200566931

OTCEI

3

M/s. Richmond Securities Pvt. Ltd.

INB241076331

ICSEI

4

Manoj Bhargava

INB160182817

JSE

5

M/s Tula Finance Ltd.

INB100830634

UPSE

  The aforesaid five stock brokers were declared defaulters / expelled by the respective Stock Exchanges and ceased to be members of the Exchange, thereby failed to fulfill the pre-requisite condition of registration as stock broker with SEBI.  Their registrations have been cancelled in terms of Sub-Regulation (5) of Regulation 16 of SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002.

Tata Power to raise $200m through FCCB issue

10th February 2005: The Tata Power Company (TPC) has raised $200 million through a five-year foreign currency convertible bond (FCCB) issue, carrying 1% coupon. The offering was made after fulfillment of certain conditions to the closing of the issue. These bonds have been listed on the Singapore Stock Exchange. The bonds are convertible at 50% premium over the closing share price of February 8 and bear a yield to maturity of 3.88%, compounded semi-annually. The closing price on the Stock Exchange, Mumbai (BSE) on February 8 was Rs 393.90. JP Morgan, who was the sole underwriter and book runner to the offering, completed the deal in 30 hours after receiving the mandate from the company.

SAT overrules Sebi order again

10th February 2005: The Securities Appellate Tribunal (SAT) has found loopholes in yet another Sebi order. SAT has reduced the penalty imposed on Rameshchandra Mansukhani, Chairman and Promoter of Man Industries Ltd, from Rs 4.36 crore to just Rs 1 lakh, as Sebi awarded the penalty based on the law prevailing at the time of issuing the order. The continous failure of Sebi to defend its judgements in the appellate tribunal is making a mockery of its orders. Picking holes in the Sebi order, SAT said, ‘‘there appears to be no application of mind that at the relevant time the maximum penalty was Rs 5 lakh and therefore, the penalty of Rs 4.36 crore was not permissible under law.’’ The law existed at the time of commission of the offence has to be applied and not the law as existing on the date of the order, it said.

UTV fixes IPO price band at Rs 115-130

9th February 2005: UTV Software Communications has fixed the bidding price band of Rs 115-130 per share for its proposed public issue to raise upto Rs 91 crore to part finance business expansion plans. The bidding for 100% book built issue for 69.99 lakh shares of Rs 10 each would open on February 21 and close on February 25, UTV said in a release today. The offer consists of 45 lakh fresh equity shares and offer for sale by CPQD, a Canadian private equity investor, of 24.99 lakh shares. The book running lead manager for the issue is Enam Financial Consultants Ltd and co-book running lead manager is IL&FS Investment Ltd, it added.

Dr Reddys Laboratories - Delisting of shares from four Stock Exchanges

9th February 2005: Dr Reddys Laboratories Ltd has informed BSE that the application for delisting of Company's equity shares were filed with four stock exchanges viz. The Hyderabad Stock Exchange Ltd (Regional Stock Exchange), Madras Stock Exchange Ltd, the Calcutta Stock Exchange Association Ltd and the Stock Exchange Ahmedabad and all four Stock Exchanges have approved the delisting of the Company's equity shares.

The equity shares of the Company are now listed on the following Stock Exchanges:

1. The Stock Exchange, Mumbai

2. The National Stock Exchange of India

3. New York Stock Exchange (ADS listed).

CLC Global - Delisting of securities from ASE

9th February 2005: CLC Global Ltd has informed BSE that the securities of the Company have been delisted from Ahmedabad Stock Exchange (ASE) w.e.f. February 08, 2005.

Apollo Tyres - Delisting of securities from ASE

9th February 2005: Apollo Tyres Ltd has informed BSE that the securities of the Company have been voluntary delisted from the Ahmedabad Stock Exchange (ASE) with effect from January 28, 2005.

IDBI Bank has allotted 1,88,669 equity shares under ESOS

9th February 2005: IDBI Bank Ltd has informed BSE that the Remuneration Committee of the Bank has on February 09, 2005 allotted 1,88,669 equity shares of Rs 10/-, pursuant to exercise of Employee Stock Options granted to Employees.

ITC has allotted 19,137 shares under ESOS

9th February 2005: ITC Ltd has informed BSE that the Company on February 05, 2005 has issued and allotted 19137 Ordinary Shares of Rs 10/- each upon exercise of 19137 options by Optionees under the ITC Employees Stock Option Scheme (ESOS).

Laffans Petrochemicals Board to consider application for delisting from DSE

9th February 2005: Laffans Petrochemicals Ltd has informed BSE that the meeting of the Board of Directors of the Company will be held on February 15, 2005, inter alia to consider & approve the application for delisting from Delhi Stock Exchange (DSE) and to approve the date of book closure.

Jet Airways sets price band of Rs 950-1,125 for IPO

9th February 2005: Jet Airways has fixed the price band for its book-built initial public offering at between Rs 950 and Rs 1,125 per share. The issue, which opens on February 18, will close on February 24, merchant bankers said, adding that the prospectus was filed with registrar of companies on Tuesday. The airline plans to launch its roadshows in Mumbai on Friday. SEBI had last week cleared the IPO. Through the IPO, the Naresh Goyal-promoted airline is to offer 20% of fully diluted equity capital by way of a 100% book-building route. On offer would be 1.72 crore shares of Rs 10 each, comprising a fresh issue of 1.42 crore shares and offer for sale of 30.21 lakh shares. The latter is the 4.2% stake held by Isle of Mann registered Tail Winds, one of the promoting entities. While 60% of the issue would be offered to qualified institutional buyers, further 15% would be available for allotment to non-institutional bidders and the remaining 25% to retail investors. The purpose of the IPO is to gain benefits of listing like enhancing visibility and brand name, raising capital and retiring certain outstanding debt of IFC and IDFC. The lead managers are Deutsche Equities, HSBC Securities and Capital Markets (India), UBS Securities, Citigroup Global Markets, DSP Merrill Lynch and Kotak Mahindra.

Infosys Technologies has allotted equity shares under stock option plan

8th February 2005: Infosys Technologies Ltd has informed BSE that the Board of Directors of the Company vide their resolution dated February 08, 2005, has transacted the following business:

a) Allotted 2420 equity shares of par value of Rs 5/- to Deutsche Bank Trust Company Americas, the Company's Depository, as underlying shares in respect of the ADR's to be issued and allocated to the purchasers, pursuant to the exercise of the options granted to the employees under the Company's 1998 Option Plan.

b) Allotted 56,241 equity shares of par value of Rs 5/- each to the optionees as detailed in the resolution, pursuant to the exercise of the options granted to the employees under the Company's 1999 Stock option Plan.

HDFC allots 2,38,139 equity shares under ESOS

8th February 2005: Housing Development Finance Corporation Ltd (HDFC) has informed BSE that the Corporation on February 08, 2005 allotted 2,38,139 equity shares of Rs 10 each under its Employees Stock Option Scheme (ESOS).

Ador Welding - Delisting of equity shares from MSE & ASE

8th February 2005: Ador Welding Ltd has informed BSE that the equity shares of the Company have been voluntarily delisted from the Madras Stock Exchange Ltd, (MSE) Chennai with effect from December 22, 2004 and The Stock Exchange, Ahmedabad (ASE) with effect from January 28, 2005.

Indus Networks members approves delisting of shares from 3 Stock Exchanges

8th February 2005: Indus Networks Ltd has informed BSE that the members at the Annual General Meeting of the Company held on December 16, 2004, inter alia, have accorded to delist the equity shares of the Company from The Hyderabad Stock Exchange Ltd, Hyderabad, The Stock Exchange Ahmedabad, Pune Stock Exchange Ltd, Pune.

Hughes Software - Conversion of Warrants under ESOP

8th February 2005: Hughes Software Systems Ltd has informed BSE that the Board of Directors of the Company by way of a resolution by circulation on February 07, 2005 have allotted 238,925 equity shares to the employees who have exercised their options of conversion of warrants under the ESOP Schemes of the Company.

Moschip Semiconductor allots 12,600 shares under stock option plan

8th February 2005: Moschip Semiconductor Technology Ltd has informed BSE that the Board of Directors of the Company at its meeting held on February 07, 2005, has allotted 12,600 equity shares to the employees of the Company, under the Stock Option plans - 2001 & 2002 of the Company.

Centurion Bank to raise Rs 600-cr

8th February 2005: Centurion Bank is likely to tap both domestic and foreign markets for raising as much as Rs 600 crore for strengthening its capital base in view of the increased business and commitment to globally stringent Basle-I norms. The shareholders of the bank at their Extraordinary General Meeting on Monday approved the proposal for raising of capital up to Rs 600 crore in one or more tranches, it informed the BSE. Shares of nominal value Re 1 could be offered through a domestic public issue and/or on a private placement basis, or equity shares underlying securities in the form of Global/American Depository Receipts, Foreign Currency Convertible Bonds or any other permitted instruments to be listed on such stock exchanges in India, it said. The domestic and/or international offering(s) could be to Foreign Investors, FIIs, NRIs, Corporate Bodies, Trusts, Mutual Funds, Banks, Insurance Companies, Pension Funds, individual and/or Trustees and/or Stablisation Agents.

Satyam allots shares under Esop

8th February 2005: Satyam Computer Services Ltd on Tuesday said its board has approved the allotment of 38,774 equity shares under the company's stock option plans. Consequent to the allotment, the paid up share capital of the company has gone up to 319,005,686 equity shares of Rs 2 each aggregating Rs 63.8 crore from 318,966,912 equity shares of Rs 2 each aggregating Rs 63.79 crore, the company informed NSE.

Vijayanand Roadlines is planning for an IPO for its aviation venture

4th February 2005: South India-based road transport and logistics company Vijayanand Roadlines Ltd (VRL) is planning to go for an IPO to fund its upcoming aviation venture. The public offer is expected to be announced this year, according to the company. With the fresh investments, the Rs 400-crore company, which is among the largest road transport operators in South India, plans to launch a ‘value for money’ airline in the country. VRL managing director VB Sankeshwar said that details such as the value of the IPO were yet to be worked out and that it would not include the company’s media division. In an effort to go public, the family-owned VRL is also trying to hire professionals to beef up its board. “We are now making changes in our management structure for the IPO. This is for the sake of our aviation venture. We are clear that we want to go for an IPO this year,” Mr. Sankeshwar said. He said that the company would appoint consultants and work on finalising the details of the IPO after the new recruitments are completed. He said that ‘home work’ on the company’s aviation plans would begin in May and the launch would happen a year or two later. “We are clear that we will launch an airline, because we have done well in road transport,” he added. VRL’s value for money airline intends to initially connect the western and southern parts of India, flying less-connected and not-connected routes.

Sebi observations on IPO of Jet Airways

4th February 2005: The Securities and Exchange Board of India (Sebi) has issued observations for the initial public offer (IPO) of Jet Airways (India) Ltd (JAIL). A senior Sebi official said, “We have forwarded our final observations to the airline as stipulated under the required time period of 21 days. It was issued last Friday only. We have asked them to clarify their position on certain issues. Following their reply they can proceed with the IPO”. As per the Sebi guidelines once the market regulator gives in-principle approval and issues some observations, the company has to file the reply to those observations, which should satisfy the regulator. The company can then come out with an IPO within three months of the issue of final observations. The Sebi official said various observations have been issued in case of JAIL, some of which includes with respect to the revaluation of aircraft, repayment of loans by the company as well as details of the holding company.

The Naresh Goyal-promoted airline is to offer 20% of the fully diluted equity capital through 100% book built offering. The offer would be for 1.72 crore shares of Rs 10 each comprising a fresh issue of 1.42 crore shares and offer for sale of 30.21 lakh shares or 4.2% stake held by Isle of Mann registered Tail Winds Ltd, one of the promoting entities. Of the total issue size, 60% of the issue would be offered to Qualified Institutional Buyers (QIBs), 15% would be available for allotment to non-institutional bidders (NIBs) including High Networth Individuals (HNIs) and balance 25% to retail individual investors. The object of the IPO is to gain benefits of listing like enhancing visibility and brand name, raise capital and retire certain outstanding debt of IFC and IDFC, it said. The book running lead managers (BRLMs) to the issue are Deutsche Equities India Pvt. Ltd, HSBC Securities and Capital Markets (India) Pvt. Ltd, UBS Securities India pvt ltd, Citigroup Global Markets India pvt ltd, DSP Merrill Lynch Ltd and Kotak Mahindra Capital Company ltd.

SECURITIES AND EXCHANGE BOARD OF INDIA (PROCEDURE FOR HOLDING ENQUIRY BY ENQUIRY OFFICER AND IMPOSING PENALTY) (THIRD AMENDMENT) REGULATIONS, 2004

S.O No. 28 (E).-.In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, namely :-

1.      These Regulations may be called the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Third Amendment) Regulations, 2004.

2.      They shall come into force on the date of their publication in the Official Gazette.

3.      In the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, in regulation 13, in sub-regulation (1), in clause (a), in sub-clause (i), the words “warning or” appearing before the word “censure” shall be omitted.

 

G.N. BAJPAI

CHAIRMAN

SECURITIES AND EXCHANGE BOARD OF INDIA

 

F.No. SEBI\LAD\DOP\ 30057 \2004

 

________________________________________________________________

 

Foot Notes :-

1.      Securities and Exchange Board of India(Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, were notified in the Gazette of India on 27.9.2002 vide S.O. No. 1045(E).

  1. The Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 were subsequently amended –
    1. On November 27, 2003 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Amendment) Regulations, 2003 vide F. No.SEBI/LAD/DOP/22093/2003).
    2. On December 30, 2003 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Second Amendment) Regulations, 2003 vide F. No. SEBI/LAD/DOP/24418/2003.
    3. On July 13, 2004 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Amendment) Regulations, 2004 vide F. No. SEBI/LAD/DOP/ 14982/2004.
On September 2, 2004 by the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Second Amendment) Regulations, 2004 vide S.O.No.997(E).

SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND TAKEOVERS) (SECOND AMENDMENT) REGULATIONS, 2004

S.O. 5(E).In exercise of the powers conferred by Section   30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, namely:-

  1. (i) These regulations may be called the Securities and Exchange Board of    India (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2004.

     (ii) These regulations shall come into force on the date of their publication in the Official Gazette.

2.      In the Securities and Exchange Board of India (Substantial Acquisition of      Shares and Takeovers) Regulations, 1997 -

(i)                  in regulation 2, in sub-regulation (1), 

(a) for clause (h) the following shall be substituted, namely:-

“(h) promoter”, unless otherwise provided elsewhere, means-

(i)                  any person who is directly or indirectly in control of the company; or

(ii)                any person named as promoter in any document for offer of securities to the public or existing shareholders or in the shareholding pattern disclosed  by the company under the provisions of the Listing  Agreement, whichever is later; or

(iii)               any person named as person acting in concert with the promoter in any disclosure made in terms of the Listing Agreement with the stock exchange or any other regulations or guidelines made or issued by the Board under the Act.

      and includes,

(a)    where such person is an individual,

(i)                  his  spouse , parents, brothers, sisters or children;

(ii)                any company in which twenty six per cent.(26%) or more of the equity share capital is held by him or by the persons mentioned in sub-clause (i) or any firm or Hindu Undivided Family in which he or any of the persons mentioned in sub-clause (i) is a partner or member;

(iii)               any company in which a company specified in sub-clause (ii), holds more than fifty per cent.(50%) of the equity share capital;

(iv)              any firm in which the aggregate of his holding and the holdings of the persons mentioned in sub-clause (i) is  more than fifty per cent.(50%) .

(b)   where such person is a body corporate,

(i)                  a subsidiary or holding  company of that body corporate;

(ii)                any company in which the said body corporate holds twenty six per cent.(26%) or more of the equity share capital;

(iii)               any company which holds twenty six per cent.(26%)  or more of the equity share capital of the said body corporate;

(iv)              any company in which persons acting in concert hold twenty six per cent.(26%) or more of the equity share capital and those persons acting in concert also hold twenty six per cent.(26%)  or more of the equity share capital in such  body corporate;

(v)                any other body corporate under the same management as the said body corporate within the meaning of sub-section (1B) of section 370 of the Companies Act, 1956;

Explanation I: A financial institution, scheduled commercial bank, foreign institutional investor, mutual fund and a venture capital fund shall not be deemed to be a promoter merely by virtue of its shareholding.

Explanation II: A financial institution, scheduled commercial bank, foreign institutional investor or a venture capital fund shall be deemed to be a promoter of its subsidiary and of the mutual fund sponsored by it, as applicable.

(b)  for clause (j), the following shall be substituted, namely -

 

“(j) “public shareholding” means shareholding held by persons other than promoters as defined under clause (h).”

(ii) in regulation 3,

(a) in sub-regulation (1),

(1) in clause (e), in sub-clause (iii), after the proviso,  the following Explanation shall be inserted, namely - :

Explanation: For the purpose of the exemption under sub-clause (iii) the term “promoter" means -

 

(i)                  any person who is directly or indirectly in control of the company; or

(ii)                any person named as promoter in any document for offer of securities to the public or existing shareholders or in the shareholding pattern disclosed  by the company under the provisions of the Listing  Agreement, whichever is later;

and includes,

(a) where the promoter is an individual, -

(1) a relative of the promoter within the meaning of section 6 of the Companies Act, 1956 (1 of 1956);

(2) any firm or company, directly or indirectly, controlled by the promoter or a relative of the promoter or a firm or Hindu undivided family in which the promoter or his relative is a partner or a coparcener or a combination thereof:

    Provided that, in case of a partnership firm, the share of the promoter or his relative, as the case may be, in such firm should not be less than fifty per cent.(50%)";

(b) where the promoter is a body corporate,-

             (1) a subsidiary or holding company of that body; or

  (2) any firm or company, directly or indirectly, controlled by the promoter of that body corporate or by his relative or a firm or Hindu undivided family in which the promoter or his relative is a partner or coparcener or a combination thereof:

Provided that, in case of a partnership firm, the share of such promoter or his relative, as the case may be, in such firm should not be less than fifty per cent.(50%).”


 (2)  after clause (k), the following shall be inserted, namely –

“(ka) acquisition of shares in terms of guidelines or regulations regarding delisting of securities specified or framed by the Board”.

(b) after sub-regulation (1) the following sub-regulation shall be inserted, namely:

“(1A) The benefit of availing exemption under the relevant clauses of sub-regulation (1), shall be subject to compliance with requirement specified in sub-regulation (2A) of regulation 11.”

(iii)               in regulation 7, in sub-regulation (1), after the words “fourteen per cent.” the words “or fifty four per cent. or seventy four per cent.” shall be inserted;

(iv)              in regulation 10, the following proviso shall be inserted, namely-

“Provided that no acquirer shall acquire shares or voting rights, through market purchases and preferential allotment pursuant to a resolution passed under section 81 of the Companies Act, 1956 or any other applicable law, which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise more than fifty five per cent. of the voting rights in the company;

  Provided further that if the acquirer has acquired shares or voting rights through such market purchases or preferential allotment beyond fifty five per cent. of the voting rights in the company, he shall forthwith disinvest the shares acquired in excess of fifty five per cent. and shall be liable for action under these Regulations and the Act.

Explanation : In case of acquisition through preferential allotment the limit of fifty five per cent. voting rights as provided under this regulation shall be reckoned with reference to the increased share capital pursuant to such preferential allotment.”  

(v)  in regulation 11,

        (a) in sub-regulation (1), for the figure and words “75 per cent.” the words and figure “fifty five per cent.(55%)” shall be substituted;

         (b)   for sub-regulation (2), the following shall be substituted, namely –

              “(2) An acquirer, who together with persons acting in concert with him has acquired, in accordance with the provisions of law, fifty five per cent.(55%) or more but less than seventy five per cent. (75%) of the shares or voting rights in a target company, may acquire either by himself or through persons acting in concert with him any additional share or voting right, only if he makes a public announcement to acquire shares or voting rights in accordance with these regulations:

   Provided that no acquirer shall acquire shares or voting rights, through market purchases and preferential allotment pursuant to a resolution passed under section 81 of the Companies Act, 1956 or any other applicable law, which (taken together with shares or voting rights, if any, held by him or by persons acting in concert with him), entitle such acquirer to exercise more than fifty five per cent. of the voting rights in the company;

   Provided further that if the acquirer has acquired shares or voting rights through such market purchases or preferential allotment beyond fifty five per cent. of the voting rights in the company, he shall forthwith disinvest the shares acquired in excess of fifty five per cent. and shall be liable for action under these Regulations and the Act.

Explanation : In case of acquisition through preferential allotment the limit of fifty five per cent. voting rights as provided under sub - regulation (ii) shall be reckoned with reference to the increased share capital pursuant to such preferential allotment.”  

                     (c) after sub-regulation (2), the following shall be inserted,   namely -

“(2A) Unless otherwise provided in these regulations, an acquirer, who seeks to acquire any shares or voting rights whereby the public shareholding in the target company may be reduced to a level below the limit specified in the Listing Agreement with the stock exchange for the purpose of listing on continuous basis, may acquire such shares or voting rights, only in accordance with the of guidelines or regulations regarding delisting of securities specified by the Board:

    Provided that, the provisions of this sub-regulation shall not apply in case of acquisition by virtue of global arrangement which may result in indirect acquisition of shares or voting rights or control of the target company.”

 (vi).  in regulation 20, in sub-regulation (7), after the proviso, the following shall be      inserted, namely –

 “Provided further that the shares or voting rights so acquired taken together with the acquisition under the public offer and shares or voting rights, if any, held by him or by persons acting in concert with him, do not result in public shareholding in the target company being reduced to a level below the limit specified in the Listing Agreement with the stock exchange for the purpose of listing on continuous basis.”

(vii).     in regulation 21,

(a).       in sub-regulation (1), the following proviso shall be inserted, namely –

 

“Provided that where any public offer is made in pursuance of sub-regulation (2) of regulation 11, such public offer shall be for such percentage of voting capital of the target company so that the acquisition does not result in the public shareholding in such company being reduced to a level below the limit specified in the Listing Agreement with the stock exchange for the purpose of listing on continuous basis.”

(b)  after sub-regulation (1), the following sub-regulation shall be inserted, namely –

“(2) Where an acquirer acquires more than fifty five per cent. (55%) shares or voting rights in the target company through an agreement or memorandum of understanding and the public offer made under regulation 10 or sub-regulation (1) of regulation 11 to acquire minimum percentage of voting capital as specified in sub regulation (1) of regulation 21 results in public shareholding being reduced to a level below the limit specified in the Listing Agreement with the stock exchange for the purpose of listing on continuous basis, the acquirer shall acquire only such number of shares under the agreement or the memorandum of understanding so as to maintain the minimum specified public shareholding in the target company;”

(c) for sub-regulation (3), the following shall be substituted, namely –

“(3) If consequent to the public offer made in pursuance of global arrangement referred to in proviso to sub regulation (2A) of regulation 11, the public shareholding falls to a level below the limit specified in the Listing Agreement with the stock exchange for the purpose of listing on continuous basis, the acquirer shall undertake to raise the level of public shareholding to the levels specified for continuous listing specified in the Listing Agreement with the stock exchange, within a period of twelve months from the date of closure of the public offer, by

        (i)       issue of new shares by the company in compliance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000; or

(ii)   disinvestment through an offer for sale in compliance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, of such number of shares held by him so as to satisfy the listing requirements; or

 (iii) sale of his holdings through the stock exchange.

 

    Provided that in case of acquisition of shares or voting rights or control in a target company where the public shareholding is below the limit specified for the purpose of listing on continuous basis in terms of the Listing Agreement with the stock exchange, the acquirer shall undertake to raise the level of public shareholding to the levels specified for continuous listing in terms of the listing conditions specified in the Listing Agreement with the stock exchange, within the period specified under the Listing Agreement.”

 

(viii). in regulation 45, in sub-regulation 6, after clause (c), the following shall be inserted, namely –

“(d) directions under section 11(4) of the Act;

  (e) cease and desist order in proceedings under section 11D of the Act;

  (f) adjudication proceedings under section 15HB of the Act.”

                                                         [F. No. SEBI/LAD/  29278 /2004]

                                                                         G.N. BAJPAI

                                                                        CHAIRMAN

Securities and   Exchange Board of India

 


Footnote:

      The SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (the said Regulations) were published in the Gazette of India on 20th February 1997, vide S.O. No. 124(E).

      Subsequently a Corrigendum was published in the Gazette of India, Extra- Ordinary on 6th February 1998 vide S.O. No. 106(E).

      The said Regulations were subsequently amended by –

1. SEBI (Substantial Acquisition of Shares and Takeovers)(Amendment) Regulations, 1998 published in the Official Gazette vide S.O. 930(E) dated 28th October 1998.

2. SEBI (Appeal to the Securities Appellate Tribunal) (Amendment) Regulations, 2000, published in the Official Gazette vide S.O.278(E) dated 28th March 2000.

3.   SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2000 published in the Official Gazette vide S.O. 1178 (E) dated 30th December 2000.

4.  SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2001 published in the Official Gazette vide S.O. 791 (E) dated 17th August 2001. 

      5.   SEBI (Substantial Acquisition of Shares and Takeovers) (Second Amendment) Regulations, 2001 published in the Official Gazette vide S.O. 875 (E) dated 12th September 2001.

6. SEBI (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2001 published in the Official Gazette vide S.O. 1058 (E) dated 24th October 2001.

7. SEBI (Substantial Acquisition   of Shares and Takeovers) (Amendment) Regulations, 2002 published in the Official Gazette vide S.O. 127(E) dated 29th January 2002.

8. SEBI (Substantial Acquisition   of Shares and Takeovers) (Second Amendment) Regulations, 2002 published in the Official Gazette vide S.O. 954(E) dated 9th September 2002.

9. SEBI (Substantial Acquisition   of Shares and Takeovers) (Third Amendment) Regulations, 2002 published in the Official Gazette vide S.O.1328 (E) dated 18th December, 2002.

10. SEBI (Substantial Acquisition   of Shares and Takeovers) (Amendment) Regulations, 2004 published in the Official Gazette vide S.O.  982   (E) dated 30th August, 2004.

Infosys Technologies has allotted 20,813 equity shares under stock option plan

3rd February 2005: Infosys Technologies Ltd has informed BSE that the Board of Directors of the Company vide their resolution dated February 03, 2005, allotted 20,813 equity shares of par value of Rs 5/- to the optionees pursuant to the exercise of the options granted to the employees under the Company's 1999 Stock Option Plan.

HCL Technologies - Allotment of shares under ESOP

3rd February 2005: HCL Technologies Ltd has informed BSE that the Employees Stock Option Allotment Committee of the Company has on February 03, 2005 allotted 1,55,896 shares of Rs 2/- each (including 88,906 shares at a premium of Rs 125.50 per share; 1,850 shares at a premium of Rs 157.50/- per share; 3,100 shares at a premium of Rs 194.50/- per share; 43,640 shares at a premium of Rs 233/- per share; 10,300 shares at a premium of Rs 249/- per share; 5,900 shares at a premium of Rs 251.50/- per share; 700 shares at a premium of Rs 281.50/- per share and 1,500 shares at a premium of Rs 288/- per share) to the employees on exercise of their stock options under the 1999 & 2000 Employee Stock Option Plans (ESOP).

Wipro - Allotment of 77508 equity shares under ESOS

3rd February 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors vide their circular resolution effective February 01, 2005 resolved to issue and allot 77508 equity shares of Rs 2/- each pursuant to exercise of stock option by eligible employees.

United Phosphorus - Delisting of equity shares from MSE

3rd February 2005: United Phosphorus Ltd has informed BSE that the equity shares of the Company have been voluntarily delisted from the Madras Stock Exchange Ltd (MSE) with effect from January 19, 2005.

BHEL - Delisting of equity shares from ASE

3rd February 2005: Bharat Heavy Electricals Ltd (BHEL) has informed BSE that the equity shares of the Company have been voluntary delisted from The Stock Exchange, Ahmedabad (ASE) with effect from January 28, 2005.

ICICI Bank has allotted 12,975 shares under ESOS

3rd February 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 12,975 equity shares of face value of Rs 10/- each on January 31, 2005 under the Employees Stock Option Scheme, 2000 (ESOS)

DS Kulkarni Developers - Delisting of equity shares from PSE

3rd February 2005: DS Kulkarni Developers Ltd has informed BSE that the equity shares of the Company have been delisted from Pune Stock Exchange (PSE) with effect from January 15, 2005.

Indraprastha Medical Corporation - Delisting of shares from DSE

3rd February 2005: Indraprastha Medical Corporation Ltd has informed BSE that the shares of the Company have been delisted from the Delhi Stock Exchange Association Ltd (DSE) with effect from January 20, 2005.

Murli Agro Products - Delisting of securities from JSE

3rd February 2005: Murli Agro Products Ltd has informed BSE that the securities of the Company have been delisted from the Jaipur Stock Exchange (JSE) with effect from December 20, 2004.

KLG Systel - Delisting of securities from ASE

3rd February 2005: KLG Systel Ltd has informed BSE that the securities of the Company have been delisted from The Stock Exchange-Ahmedabad (ASE) with effect from January 28, 2005.

Satyam Computer has allotted 14,699 equity shares under stock option plan

2nd February 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 14,699 equity shares through circular resolution on February 02, 2005 under stock option plans of the Company.

Infosys Technologies allots 15,113 shares under stock option plan

2nd February 2005: Infosys Technologies Ltd has informed BSE that the Board of Directors of the Company vide their resolution dated February 01, 2005, allotted 15,113 equity shares of par value of Rs 5/- to the optionees pursuant to the exercise of the options granted to the employees under the Company's 1999 Stock Option Plan.

HCL Infosystems allots 4,140 shares under ESOS

2nd February 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 4140 nos of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Options Scheme' (ESOS).

Datt Mediproducts Board approves proposal for delisting

2nd February 2005: Datt Mediproducts Ltd has informed BSE that the Board of Directors of the Company at their meeting held on January 29, 2005, inter alia have approved the proposal to get the Company delisted from Delhi, Calcutta and National Stock Exchange of India Ltd & continue listing with Mumbai Stock Exchange, subject to the approval of the shareholders in the general meeting.

Amzel Automotive Board approves delisting from BSE

2nd February 2005: Amzel Automotive Ltd has informed BSE that the Board of Directors of the Company at their meeting held on January 28, 2005 have approved delisting of the Company from Mumbai Stock Exchange through Reverse Book Building process in Compliance with guideline 7 of Securities and Exchange Board of India (Delisting of Securities) Guidelines 2003.

Geometric Software Solutions - Grant of Stock Options

2nd February 2005: Geometric Software Solutions Company Ltd has informed BSE that the Company has granted 400 stock options to eligible employees of its subsidiary under ESOP Scheme 2003. Further the Company has informed that said 400 stock option were earlier surrendered by the employees on their resignation from the services of the Company and were added back to the pool and are re-issued.

NIIT members to approves issue of FCCBs

2nd February 2005: NIIT Ltd has informed BSE that an Extra Ordinary General Meeting of the members of the Company will be held on February 24, 2005 to approve the issue of Foreign Currency Convertible Bonds (FCCBs) to foreign investors up to an aggregate of US$ 10,000,000/-.

IL&FS Investment Managers - Allotment of shares under ESOP

2nd February 2005: IL&FS Investment Managers Ltd has informed BSE that the Shareholders'/Investors' Grievance Committee of Directors at their meeting held on February 02, 2005, inter alia, approved the allotment of 1,62,572 shares of Rs 10/- each on conversion of warrants issued to the employees under the ESOP Scheme at a price of Rs 28/- per share.

UBI plans Rs 300 cr issue

2nd February 2005: Kolkata-based United Bank of India (UBI) is planning to raise around Rs 300 crore by way of issuing tier 2 subordinated bond even as the Mumbai-based Union Bank of India is in the market with its Rs 300 crore fund raising exercise, with a greenshoe option of another Rs 150 crore. Sources said UBI is in the process of finalising its plan. The pricing and other formalities will be finalised within a few days, sources added. The bank, with nearly Rs 1,600-crore growth in its loan book during the first six months of the current fiscal against an increase of Rs 529 crore for the whole of 2003-04, plans its issue to keep a healthy capital adequacy ratio (CAR) against its growing loan assets. CAR as on September 30, 2004 stood at 15.28%. UBI has spruced up its operation to increase its advances across all sectors and clients, with the aim of increasing advances by 35% during the current fiscal, against around 7% in 2003-04 and 5% in the preceding year respectively. Each branch has been given a target of selling 15 retail credit accounts each month. UBI also aims to add 200,000 savings accounts. Meanwhile, Union Bank’s Rs 300-crore issue hit the market on Monday. The issue is finely priced at 7.15% for 123 months, an investment-banking source said. So far, the issue got around Rs 200 crore of subscription, the source added.

VSNL - Delisting of equity shares from CSE

1st February 2005: Videsh Sanchar Nigam Ltd (VSNL) has informed BSE that the equity shares of the Company have been voluntarily delisted from The Calcutta Stock Exchange Association Ltd (CSE).

Sunshield Chemicals - Open Offer

1st February 2005: Ambit Corporate Finance Pvt. Ltd ("Manager to the Offer"), on behalf of the Mr. Amit Champaklal Choksey, Aeonian Investments Company Ltd (AICL) and Abhiraj Trading & Investments Pvt. Ltd (ATIPL) ("Acquirers") who are acting in concert with each other for the purpose of this open offer pursuant to Regulation 10 & 12 and in compliance with the Securities and Exchange Board of India (Substantial Acquisition of Shares & Takeover) Regulation 1997 and subsequent amendments thereto (the "SEBI Takeover Code") has announced the following:

The Offer

The Acquires are making the offer to the shareholders of Sunshield Chemicals Ltd (Target Company) in terms of Regulations 10 and 12 of the SEBI Takeover code. The Offer is for acquisition of upto 7,35,306 equity shares from the shareholders of the Target Company representing 20% of issued and voting equity share capital of 36,76,530 shares at a price of Rs 10 per share (Rupees Ten Only) (the "Offer Price") payable in cash. ATIPL would be acquiring all the shares accepted under this offer.

Schedule of Activities

Specified date: February 25, 2005

Date of opening of the offer: March 23, 2005

Date of Closing of the offer: April 11, 2005

Essar Shipping raises $47 mn via FCCBs

1st February 2005: Essar Shipping Ltd has informed BSE that the Company has successfully completed the international offering of Foreign Currency Convertible Bonds (FCCBs) and allotted on January 31, 2005, 47,000 - FCCBs, each of US$ 1000/- for cash at par, aggregating to $47 million. The funds will be used for part financing the cost of the Vadinar Oil Terminal Project being set-up at Vadinar District Jamnagar in the State of Gujarat through its wholly owned subsidiary Vadinar Oil Terminal Ltd.

Essar Oil raises $166 mn via FCCBs

1st February 2005: Essar Oil Ltd has informed BSE that the Company has successfully completed the international offering of Foreign Currency Convertible Bonds (FCCBs) and allotted on January 31, 2005, 166,000 - FCCBs, each of US$ 1000 for cash at par, aggregating to $166 million. The proceeds would be used for part financing the cost of the 10.5 MMTPA Oil Refinery Project being set-up at Vadinar, District Jamnagar in the State of Gujarat.

PFC gets approval for IPO

1st February 2005: The power ministry has given an in-principle approval to Power Finance Corporation Ltd’s initial public offering, a senior company official said on Monday. The Center is, however, yet to take a decision on selling its shares in the company, the official said. “The power ministry has circulated a draft cabinet note proposing an initial offering of shares of up to 10% of PFC’s equity capital,” he said. PFC will issue fresh shares to facilitate the IPO and help it raise money. The government currently holds a 100% stake in the company. Power Finance hopes to get the Centre’s approval for the issue by March and the issue is likely to hit the market by June, the official said.

Bank of India plans Rs 100-cr equity issue

1st February 2005: With at least 12 banks and financial institutions announcing plans to float public issues of equity shares aggregating around Rs 12,000 crore are expected to hit the capital market in 2005. Bank of India, which had postponed the launch of its second public issue, on Monday announced its plans to float a fresh issue of equity for Rs 100 crore immediately in the beginning of the new fiscal. The bank’s chairman and managing director M Venugopalan said: “We plan to seek the Government’s nod for a second public issue of Rs 100 crore in April 2005. The additional capital will help us maintain our capital adequacy to a level above 12% (from the current 11.8%) as well as to support our credit growth.”

IL&FS Investment Board approves buy back of shares at a maximum price of Rs 75/share

1st February 2005: IL&FS Investment Managers Ltd has informed BSE that the Board of Directors of the Company at their meeting held on February 01, 2005, has approved repayment of cash to the shareholders through buy back upto Rs 62 million for a maximum of 12,00,000 shares of Rs 10/- each at a maximum price of Rs 75/- per share. The Buy back will be from the open market through the stock exchanges as permitted under the Companies Act, 1956 and the SEBI Regulations. The said Buy Back is subject to the approval of the shareholders through the Postal Ballot mechanism. Its shares rose more than 8% on the news to 65.45 rupees.

Satyam Computer - Conversion of Stock Option

1st February 2005: Satyam Computer Services Ltd has informed BSE that the Board of Directors of the Company allotted 13,501 equity shares through circular resolution on January 31, 2005, under stock option plans of the Company.

Irda concerned over underwriting skills of insurance companies

1st February 2005: Raising concerns over the underwriting skills of insurance companies to properly price products, the Insurance Regulatory and Development Authority (Irda) has said that it would consider all factors before taking a final decision on de-tariffication of the insurance sector. “The Irda is concerned over the underwriting skills of insurance companies to properly price the product as the companies don’t seem to be in possession of adequate data,” said Irda chairman CS Rao. “The Indian insurance market has some irregularities and therefore regulations are necessary. However, these regulations are not meant to be static and these can be relaxed when there is enhanced mutual trust between insurance companies and Irda,” Rao added. The Irda chairman called upon insurance companies to tap the ‘potential’ of the rural market and help in raising awareness about the concept of insurance, which would help in facilitating the growth of the Indian economy. Speaking about the growth of the insurance sector in India, Rao said the Irda had still not received an application for stand-alone health insurance. Irda has also set a cap of Rs 10,000 to Rs 50,000 on sum assured for micro insurance on life and non life sectors which can be provided by NGOs.

ICICI's infotech arm plans IPO

29th January 2005: ICICI Bank's information technology services affiliate, ICICI Infotech, said that its shareholders had approved plans for an initial public offering of shares. It gave no details of the proposal. ICICI Bank accounts for less than 30% of the overall business of ICICI Infotech, which has now been renamed 3i Infotech, a statement said.

Moschip Semiconductor - Allotment under Stock Option Plans

31st January 2005: Moschip Semiconductor Technology Ltd has informed BSE that the Board of Directors of the Company has allotted 13,288 equity shares through circular resolution on January 31, 2005 under the Stock Option plans - 2001 & 2002 of the Company.

Infosys Technologies - Allotment of shares under Stock Option Plan

31st January 2005: Infosys Technologies Ltd has informed BSE that the Board of Directors of the Company vide their resolution dated January 31, 2005, has transacted the following business:

a) Allotted 1640 equity shares of par value of Rs. 5/- to Deutsche Bank Trust Company Americas, the Company's Depository, as underlying shares in respect of the ADR's to be issued and allocated to the purchaser, pursuant to the exercise of the options granted to the employees under the Company's 1998 Option Plan.

b) Allotted 12458 equity shares of par value of Rs. 5/- each to the optionees as detailed in the resolution, pursuant to the exercise of the options granted to the employees under the Company's 1999 Stock option Plan.

Creeping acquisition norms to apply prospectively: Sebi

29th January 2005: The Securities and Exchange Board of India (Sebi) clarified on Friday that the new creeping acquisition norms, which cap creeping buys up to 55% holding will be effective with prospective effect and not retrospectively. The second amendment to Sebi (Substantial Acquisition of Shares and Takeover) Regulation 2004 was notified on December 30, 2004, and will be effective from that date and hence will not cover promoters’ holdings prior to that date. Sebi chairman GN Bajpai said, “There is no proposal to ask the promoters who already hold more than 75% stake in their companies to bring it down to the level of 55%. The new rules will be applicable to only those promoters who increase their holdings through creeping acquisition and cross the limit of 55%. For them, a provision of mandatory offer has been inserted.” On the issue of minimum public holding of 25%, Mr. Bajpai said, “Sebi is working on rules and regulations to ensure that all listed companies have a minimum 25% public holding as was assured in Parliament.” On the difficulties faced by investors, especially those in the retail segment, in getting a Unique Identification Number (UIN) by April 1, 2005, Mr. Bajpai said, “we will not put investors to inconvenience”, but did not elaborate if the deadline would be extended.

No demat charges from Feb 1 and custody charges from April 1

29th January 2005: Securities and Exchange Board of India said on Friday that no charge should be levied on opening of a demat account except statutory charges effective from February 1. There would be no charge for credit of securities into investors' demat account and no custody charge would be levied on any investor who would be opening a demat account on or after February 1, Sebi said in a notification to the stock exchanges. Sebi said with effect from April 1, the custody charges would not be levied on any investor. However, the depositories may levy and collect the charges towards custody from the issuers, on a per folio basis as at the end of the financial year. SEBI has advised all stock exchanges to implement the changes with immediate effect by making necessary amendments to the byelaws and Listing Agreement.

Sebi tightens norms on creeping acquisitions

25th January 2005: Sebi has amended the takeover regulations to tighten the creeping acquisition norms for promoters. An acquirer, as per the amendment, will have to make an open offer to raise stake beyond 55% in a company. This means that promoters will not be allowed to increase their stake in a company beyond 55% without making an open offer. Earlier, Sebi’s takeover regulations permitted creeping acquisition up to 75%. Promoters could increase their holding in a company by buying up to 5% of the company’s equity capital each year and they could take it up to 75% through this route, according to earlier regulation. Now, an acquirer will not be allowed to acquire shares or voting rights through market purchases or preferential allotment beyond the 55% limit without an open offer. “No acquirer, along with persons acting in concert (can) acquire more than 55% (from the current 75%) of the shares or voting rights in a company, unless such an acquirer makes a public announcement to acquire shares in accordance with the regulations,” the notification said.

Air India and Indian Airlines to launch IPO in '05-06

28th January 2005: Public sector carriers Air India and Indian Airlines are preparing for their initial public offers by the next fiscal to fund their fleet acquisition programmes and enhance debt-equity ratio. "We have told the airlines to start working towards that end. It will take some time and the two airlines could launch the IPO in the later part of 2005-06," Civil Aviation Minister Praful Patel said. Replying to questions on the issue, he said the proceeds of the IPO would be used by the two airlines to finance their fleet expansion plans. While Jet Airways has already launched its IPO, low-cost carrier Air Deccan has also announced plans to go ahead with its IPO by September 2006. Asked about the government decision to set up a National Investment Fund out of disinvestments proceeds, Patel said the fund had "nothing to do with our scheme of things for the IA and AI... We don't need this (Fund) to infuse equity". "We plan to use the money raised from the proposed public offerings by these airlines to fund their acquisition plans and improve their debt-equity ratio", he said.

Best ways to save on taxes

28th January 2005: With the end of the financial year drawing near it’s high time for late-risers to draw up their savings plans and save on paying income tax. Think of long-term investments while saving. It makes more financial sense as you end up having a sizeable nest egg. There are many options for professionals to save as well as invest for the future. The more common ones are the public provident fund (PPF), National Savings Certificate (NSC), ULIP, housing loans, LIC and infrastructure bonds. While a number of public sector banks offer PPF accounts, NSCs are available from major post offices. While most banks offer housing loans, financial institutions such as PFC and IDBI offer infrastructure bonds. Private sector bank ICICI has recently joined the infrastructure bond bandwagon.

Income tax rates vary, depending on the annual income slabs one falls under. The slabs are

* annual income up to Rs 50,000 Tax: nil

* annual income between Rs 50,001 and Rs 60,000 10%

* annual income between Rs 60,001 and Rs 1,50,000 20%

* annual income of Rs 1,50,001 plus 30%

For those earning Rs 1 lakh or below a year, they do not have to pay income tax due to rebate provided under Section 88D of the Income Tax Act. The best option for income tax payees is the PPF. “It’s flexible in terms of how much one invests, starting from the minimum of Rs 500 a year and slowly ramping up annual deposits as one’s income rises.” Besides being a long-term investment plan (there is a lock-in period of 15 years, though loans are available from the 3rd year) it is also competitive compared to other savings instruments in the market with its 8% interest rate.

Another good option for first-time investors is to opt for NSCs, which again provides an 8% interest. It’s a good idea to roll your investments and earn a bigger amount later. Reinvest your NSCs every six years. But a catch is that the interest from NSCs should not be more than Rs 12,000 a year. Then the extra income will become a taxable. Section 88 of the Income Tax Act provides investments avenues that will lessen the tax burden. Under this section a maximum of Rs 1 lakh can be invested. This is further divided into two categories: Rs 70,000 in instruments such as PPF, LIC, NSC, ULIP and housing loan principal repayment. The rest Rs 30,000 can be invested in infrastructure bonds. There is also a rebate for school tuition fees paid for children, which is included in the Rs 70,000 limit.

For those earning Rs 5 lakh plus annually there are no rebates under Section 88. These professionals would be better off opting for a pension plan and a medical insurance plan (each up to Rs 10,000 yearly). A number of insurance companies offer a slew of pension and mediclaim plans. Women assesses and senior citizens have special rebate from income tax. Most income tax experts feel that for those who have just fallen under the tax net the best option is to split their money in to a number of investment options, especially in cumulative schemes. This way a taxpayer gets into the habit of saving for the future from an early age.

SEBI for Cos to have min 25% public stake

28th January 2005: Securities and Exchange Board of India intends to introduce rules and regulations that will require all listed companies to have a minimum 25% public holding. There was an assurance given to Parliament that every company over time must have at least 25% of capital in the hands of the public, SEBI chairman G N Bajpai told reporters after conferring 'Finance Man Of The Year Award 2004' on IDBI chairman and managing director M Damodaran in Mumbai on Friday. The SEBI has modified the substantial acquisition and takeover norms to ensure that companies, which have public holding of less than 25%, adhere to the norms in a phased manner in 2-3 years. On the difficulty faced by investors, especially those from retail segment in getting unique identification number (UIN) by April one, Bajpai said, "We will not put investors to inconvenience" but did not say if deadline would be extended. Earlier in his inaugural address, SEBI chief said major complexities were arising in management of finance due to environmental changes and differences in disclosure norms and financial sector entities could not remain aloof from that. The financial sector organisations were facing challenges, as most of them were becoming one stop shop for banking, mutual fund and insurance products to optimise resources and get better returns, he said.

Air Deccan plans IPO by Sept '06

27th January 2005: Air Deccan is aiming for an initial public offer (IPO) by September 2006 to raise funds for expanding its fleet and extending its routes abroad. The airline is aiming to raise between $250 million and $300 million, selling at least 25% of its shares, said Air Deccan's managing director G R Gopinath in Singapore. He did not identify the investment banker who will manage the sale. The airline is seeking approvals from the government to hedge up to half of its jet fuel purchases and may begin the hedging by the second half if it gets approvals, Gopinath said.

Jaiprakash to raise $100 mn in FCCBs

24th January 2005: Jaiprakash Associates will raise up to $100 million through Foreign Currency Convertible Bonds (FCCBs). The Board of Directors of the company also approved the disinvestment of up to 196 million equity shares (constituting 40% of the total equity) of Jaiprakash Hydro Power Ltd., a wholly owned subsidiary of the company through the process of book building.

Infosys Technologies - Allotment of equity shares under ESOP

24th January 2005: Infosys Technologies Ltd. has informed BSE that the Board of Directors of the Company vide their resolution dated January 24, 2005 has allotted 1360 equity shares of par value of Rs 5/- to Deutsche Bank Trust Company Americas, the Company's Depositary, as underlying shares in respect of the ADRs to be issued and allocated to the purchases, pursuant to the exercise of the options granted to the employees under the Company's 1998 Option Plan.

How does VAT work?

24th January 2005: Value Added Tax (VAT) leads to avoidance of multiple taxation and lowering of taxes for the manufacturers and traders and lowers prices of final goods for consumers. How does VAT work? It is basically providing set-off for the tax paid at every stage of value-addition to the goods. The VAT liability, according to the White Paper released, is calculated by deducting input tax credit from tax collected on sale during the payment period. In the present regime, inputs worth Rs. 1,00,000 are purchased for producing final goods worth Rs 2,00,000 in a month. Then Input tax is paid at 4 per cent and output tax paid at 10 per cent. In this, the input tax works out to Rs 4,000 and output tax on sales works out to Rs 20,000. Under the VAT regime, the levy on sales of final goods worth Rs 2,00,000 would work out to Rs 16,000 (output tax of Rs 20,000 minus Rs 4,000 set off as input tax). The input tax credit will be given to both manufacturers and traders for purchase of inputs and supplies meant for both sale within the states as well as other states.

Foodgrain exempted from VAT, 4% optional rate for tea

19th January 2005: States will have the option to exempt rice and other foodgrain from value added tax (VAT) in the first year of the new regime, subject to a review later. The empowered committee of state finance ministers has decided to provide states the option to either exempt specific foodgrain from VAT or levy the merit goods rate of 4%, considering their socially sensitive nature, convenor, Asim Dasgupta said. In addition, the committee also gave tea-growing states the freedom to impose 4% VAT on tea, instead of the general rate of 12.5% in the first year of VAT, since the tea plantation sector was facing serious difficulties. Again, the decision would be reviewed later. All tax-paid goods purchased on or after April 1 ’04 and still in stock as on April 1 ’05 would be eligible to receive input tax credit, said Mr. Dasgupta. Resellers holding tax-paid goods on April 1 ’05 would also be eligible for input tax credit. Inter-satte trade date would be totally computerised.

Under the VAT system covering about 550 goods, there will be only two basic VAT rates of 4% and 12.5%, plus a specific category of tax-exempted goods and a special VAT rate of 1% for gold and silver ornaments etc. In general, all goods, including declared goods, will be covered under VAT and will get the benefit of input tax credit. The largest number of goods (270) comprising items of basic necessities such as drugs and medicines, agri and industrial inputs, capital goods and declared goods would be under 4% VAT rate. There will be about 46 commodities under the exempted category, including a set of maximum of 10 commodities which each state would be allowed to select from a broader approved list for VAT exemption. The exempted commodities include natural and unprocessed products in unorganized sector as well as items that are legally barred from taxation. The remaining commodities would be under the general VAT rate of 12.5%. The few goods that would be outside VAT as a matter of policy would include liquor, lottery tickets, petro products, as the prices of items are not fully market-determined. These items will continue to be taxed under the sales tax act of the respective states. Mr. Dasgupta said the committee did not want to include more commodities under the exempted category. The central sales tax (CST) would be phased out after one year of VAT regime, to avoid the tendency among some traders to book local sales as CST.

VAT likely to be imposed on imports too

19th January 2005: Sooner or later, imports may come under the purview of value-added tax (VAT). Official sources told FE that a proposal of the empowered committee of state finance ministers to bring imports in the VAT chain was being considered by the finance ministry. However, finance minister P Chidambaram is unlikely to exercise this option in the forthcoming budget. It is reckoned that VAT regime would need to settle down before the new impost could be brought in. Imposition of the VAT — an alternative to sales tax — on imports would require an amendment to the constitution.

Explaining the rationality behind the move, the sources said that idea of imposing VAT on imports wasn’t incompatible with any multilateral obligation of the country, including those under the World Trade Organisation. VAT could be imposed on imports even as the government was keen to progressively reduce customs duties to the Asean level, the sources said. Also, since VAT permits input tax set-off, imposing it on imports would not result in any cascading effect. The empowered committee has had a round of deliberations on the proposal with the finance ministry, sources said. North Block is learnt to have indicated that it was not averse to the idea. VAT on imports would require establishment of suitable tax collection mechanism as also adequate safeguards for protection of interest of land-locked states. VAT or its equivalents on imports exist in many Asian countries, at an average rate of 4-5%.

Coal India likely to go public

18th January 2005: Coal India Ltd (CIL), fully owned by the government, is likely to make an initial public offer (IPO) to part-finance its Rs 21,000-crore investment plan, according to sources in the parent ministry. The ministry and CIL are considering an IPO following the huge success of the float by National Thermal Power Corp (NTPC), another government-owned company. CIL chairman Shashi Kumar neither denied nor confirmed that an IPO was under consideration. However, he said an IPO would be useful for CIL. “CIL is now doing well and an IPO will provide us an opportunity to mobilise some funds for the Rs 21,000-crore expansion that we have planned till 2006-07 to meet the revised coal production target,” said Mr. Kumar.

CIL aims to ramp up annual production to 373 million tonne (mt), mainly of thermal grades, by 2006-07 against the earlier target of 350mt. CIL, in which the government holds the entire equity of Rs 6,316 crore, has reported a sharp increase in profitability. The Rs 26,000-crore company reported a provisional profit of Rs 4,434 crore for the first nine months of 2004-05 fiscal against Rs 2,755 crore for the corresponding period of the preceding fiscal, a growth of 61%. In 2003-04, it reported a gross profit of Rs 5,955 crore and a net profit of Rs 3,030 crore. Rising demand from the power sector and the new payments system have boosted the company’s sales realisation. The power sector consumes around 78% of the coal produced by CIL.

Second, CIL is now the cheapest coal producer in the world and it has been constantly reducing its production cost despite growing input and labor costs. Thus, while the ministry had given CIL a target of producing coal at Rs 564 per tonne in the current fiscal, CIL did so at Rs 560. The earnings per manshift have gone up from Rs 617 to Rs 630. Third, CIL is looking for an internationally reputed auditor to format its accounts and those of its subsidiaries in line with international financial reporting standards (IFRS). At present, the Comptroller & Auditor General of India audits the books. CIL is likely to select the auditor by April 2005 and complete the auditing process before the end of the current calendar year. The IFRS auditing will satisfy customers in international markets as well as increase public confidence in CIL. CIL has seven producing subsidiaries — Bharat Coking Coal Ltd, Central Coalfields, Eastern Coalfields, Mahanadi Coalfields, Northern Coalfields, South Eastern Coalfields Ltd and Western Coalfields Ltd.

All states to implement VAT: FM

18th January 2005: Union Finance Minister P Chidambaram on Friday asserted that all state governments were gearing up for the introduction of the Value Added Tax regime from April 2005. "Every state government has either passed laws or promulgated ordinance for VAT regime. We will enter the VAT regime from April," Chidambaram told reporters here. He dismissed reports that Uttar Pradesh was dragging its feet on the VAT issue. Chidambaram said West Bengal Finance Minister Asim Dasgupta, who is the chairman of the empowered committee on state finance ministers, had seen the draft VAT regulation that was being readied by the UP government. Asked about Karnataka's concern that there would be revenue loss to the state following the entry into the VAT regime, he said "I don't believe that will be the case. I believe VAT will be revenue enhancing and not revenue reducing". Chidambaram said the Centre is committed to compensate any revenue loss as per the agreed formula in the VAT white paper.

Government to impose VAT on 550 goods

17th January 2005: The government has decided to impose VAT on 550 goods. The State level VAT to have will have dual rates of 4% & 12%. There will be 1% Value Added Tax on gold and silver goods. But there will be no state level VAT on petrol, diesel and alcohol.

PFC, PGCIL to hit capital market with IPOs soon

17th January 2005: Government on Monday said it is considering proposals for IPO of Power Finance Corporation and Power Grid Corporation. "PFC has sent its proposal. We are examining it but no decision has yet been taken," Power Secretary R V Shahi told reporters on the sidelines of a conference on open access. Though he refused to give a deadline by when the power PSUs' public offer will hit the markets, indications are it may not be in the current fiscal. "Power Grid IPO will be late...not immediately," Shahi said when asked about the public offering of the central transmission utility. Move to allow PSUs to come up with IPO has gathered momentum after the successful public offering of NTPC, through which government mopped up Rs 5,400 crore in November 2004. Asked about the amount the two PSUs are planning to raise in the IPOs, Shahi declined to comment. However, industry sources said while PFC will be looking at raising Rs 1,500 crore, PGCIL is aiming to mop up about Rs 1,000-1,200 crore. Government may also ride piggyback on the two power PSUs to divest some of its stake, as was the case in NTPC.

PNB has filed prospectus with Sebi for forthcoming IPO

17th January 2005: PNB has filed draft red herring prospectus with Sebi for its second equity issue of eight crore new shares of Rs 10 each to be issued at a premium. The offer for public would be for Rs 6.4 crore shares while Rs 80 lakh shares each would be reserved for employees and existing retail shareholders respectively, investment-banking sources said. The offer document for 100% book built issue was filed with the capital market regulator on January 14, sources said. Part of proceeds from the issue would be used to fund future growth and meet capital requirements arising of implementation of Basel-II norms, they said. The amount raised from the issue of three crore shares would be returned to the government and equivalent number of shares of Rs 10 each would be cancelled from the capital base, sources added. ICICI Securities, DSP Merrill Lynch, Enam Consultants, JM Morgan Stanley, Kotak Mahindra Capital are among the lead managers for the issue, they added.

ICICI Bank allots 45,685 shares under ESOS

13th January 2005: ICICI Bank Ltd has informed BSE that the Bank has allotted 45,685 equity shares of face value of Rs 10/- each on January 10, 2005 under the Employees Stock Option Scheme, 2000 (ESOS).

Hexaware Technologies - Issue & Allotment of shares under ESOP

13th January 2005: Hexaware Technologies Ltd has informed BSE that at the Capital Issue Committee Meeting, the following equity shares were issued & allotted under the ESOP Schemes:

1) Pursuant to the Hexaware Technologies Ltd - Employees Stock Option Scheme - 1999, 13 beneficiaries of the Trust have exercised 91,683 Warrants. The Capital Issue Committee approved the same on January 12, 2005, as recommended by the Compensation Committee. The Company has issued and allotted 30,561 equity shares of Rs 10/- each under the said Scheme.

2) Pursuant to the Hexaware Technologies Ltd - Employees Stock Option Scheme - 2002, 51 employees have exercised 78,392 Options. The Capital Issue Committee approved the same on January 12, 2005, as recommended by the Compensation Committee. The Company has issued and allotted 78,392 equity shares of Rs 10/- each under the said Scheme.

Hexaware Technologies - Grant of Options under ESOP

12th January 2005: Hexaware Technologies Ltd has informed BSE that the Compensation Committee on January 12, 2005, has decided to issue 41,500 Options to the Employees of the Company under Hexaware Technologies Ltd - Employees Stock Option Plan - 2002 (ESOP) Scheme. The price per option is Rs 538/-. The Option granted to the employees on the basis of the Experience, seniority of the employee, length of service, performance record, merit of the employee, and / or any such other criteria that may be determined by the ESOP Compensation Committee at its sole discretion.

IDBI Flexibonds to offer 5.50-7.20%

13th January 2005: Industrial Development Bank of India (IDBI) is seeking to raise Rs 800 crore through the public issue of bonds, called Flexibonds-22. The issue offers four investment options, with the interest rates ranging between 5.50% and 7.20%. The issue has a target amount of Rs 400 crore with a greenshoe option to retain an additional amount of Rs 400 crore. This is the first public issue of bonds being made since IDBI’s conversion into a banking company. The investment options on offer are infrastructure (tax saving) bond, growing interest bond, retirement bond, and regular income bond. Subscribers to infrastructure bonds will have priority in allotment over subscribers to other bonds.

Under the infrastructure bonds, investors have three annual interest options and two cumulative options carrying interest rate of 5.50% to 6.0%. The growing interest bond offers an interest rate of 5.5% in the first year to 7.0% in the fifth year. The minimum investment of Rs 30,000 in the retirement bond carries quarterly interest installment of Rs 515, Rs 845, Rs 1,360 and Rs 1,685 under the four options available. The regular income plan offers interest of 7.05%, 6.90%, 7.20% and 7.05%. The minimum investment in infrastructure bond is Rs 5,000, while in growing interest bond and regular income plan it is Rs 10,000. The last issue of IDBI Flexibonds 21, with a target amount of Rs 500 crore was oversubscribed by nearly 300%.

Sebi moves to cut demat cost for small investors

13th January 2005: The Securities and Exchange Board of India (Sebi) have decided to abolish opening and custody charges for demat accounts, in a bid to reduce the transaction cost for small investors. Investors have long been demanding a lowering of the cost of operating dematerialised accounts and Sebi had set up a committee to look into the issue. Sebi chairman G N Bajpai said that the move is intended to reduce the burden for small investors who are seeking to enter the stock market and to encourage more people to go in for demat holding of shares. Though trading on bourses is in demat form, lots of investors are yet to demat their shares.

At present, depository participants charge investors, on an average, account opening and maintenance fees of Rs 1,700 per year and demat charges of Rs 53 per certificate, over and above transaction charges of 0.05% of the value of the transaction or Rs 20, whichever is higher. The Sebi committee had suggested that the depository participants should not levy account maintenance and demat charges for small investors. The panel also suggested that small investor should be defined as those who buy or sell securities worth Rs 50,000 or less on any business day. It also said that there could be a cap on maximum transactions in a financial year to qualify as a small investor. The panel also wanted small investors to be allowed to shift accounts between depository participants without any transaction charges or other incidental charges.

No plan to tax FIIs, assures FM, SEBI

13th January 2005: Finance Minister P Chidambaram said on the government had no plans to tax or cap purchases by foreign institutional investors (FII) in Indian stock markets. "Watching capital flows does not mean either curbing or capping FII inflows, nor does it mean taxing FII inflows. There is no controversy. There is no capping or taxing of FII inflows," Chidambaram told reporters on the sidelines of a water workshop. "The Governor and I have spoken to each other and our views are the same," Chidambaram added. RBI Governor Y V Reddy had created a flutter in the market on Wednesday when he suggested steps like ceiling and taxes to improve the quality and quantity of FII inflows. After Finance Minister P Chidambaram rejected the suggestion, Reddy later clarified that price-based measures such as taxes could be examined though their effectiveness is arguable and hence not desirable.

SEBI chief GN Bajpai also assured that there was no reason for changing policy norms for foreign institutional investors (FIIs) investing in stocks. "...I would like to send out a single to the market that there is no reason for change in the policy stance and that is what has been clarified by the Finance Minister and therefore the market participants should act as they were acting earlier," Bajpai said in Mumbai. Bajpai said the Finance Minister has already clarified that RBI Governor's statement had been misunderstood and "there is no change in the policy stance with reference to capping either FII inflow or raising any tax on FII inflows." "RBI Governor has also himself clarified that he is not in favour of capping FIIs, therefore why people should misunderstand (his) statement and interpret it differently," Bajpai told a private news channel.

Sebi has imposed penalty of Rs 5 lakh on Ahmedabad stock broker

24th December 2004: The Securities and Exchange Board of India (Sebi) has penalised an Ahmedabad-based stock broker to the tune of Rs 5 lakh for not furnishing relevant documents to the investigating officer who was enquiring involvement of Piyush Jhaveri, proprietor of the Parshawa Finance, into alleged price manipulation of MOH Ltd. Mr. Jhaveri is also a sub-broker with P Suryakant Shares & Stock Brokers Pvt. Ltd. Sebi ordered an enquiry and launched adjudicating proceedings against the Ahmedabad-based broker following the investigation into the alleged price manipulation of MOH Ltd.

The Sebi order said, “The investigation officer was grossly handicapped in view of the non-receipt of the required information/documents sought by the investigating authority and this hampered the progress of investigation into the alleged price manipulation in the stock of MOH Ltd. I am of the view that a penalty of Rs five lakh would be commensurate and justified.” MOH Granites Ltd came out with public issue of 67 lakh equity shares of Rs 10 each at par in August 1996. Its shares were listed on The Stock Exchange, Mumbai (BSE) and Ahmedabad Stock Exchange. The company changed its name to MOH Ltd and diversified into the information technology activity.

Mr. Jhaveri was asked to produce evidence to prove his innocent and was also asked to produce book for accounts for the same. He claimed that he had already sent the documents required by Sebi official through under certificate of posting. The Sebi investigating official denied having received any such documents and an adjudicating proceedings were launched against the ASE broker.



Gammon board nod for 1:5 stock split

12th January 2005: The board of directors of Gammon India, which met today, has approved the proposal for stock split. According to a release issued to the BSE today, the board has decided to sub-divide shares with a face value of Rs 10 per share into shares with a face value of Rs 2 per share (i.e. one share of Rs 10 each will be split into 5 shares of Rs 2 each) subject to necessary approvals.

Sun Pharma board meet on January 21, 2005

12th January 2005: Sun Pharma would finalise its third quarter results for the financial year 2004-05 on January 21. The board of directors would meet on January 21 to consider the unaudited financial results for the third quarter ended December 31, 2004; the company informed the Bombay Stock Exchange today. The Pharma major had posted a net profit of Rs 103.13 crore and the total income was reported at Rs 314.22 crore in the quarter ended September 30, 2004.

VIP Industries grants options under ESOS

12th January 2005: VIP Industries Ltd has informed BSE that the Company has granted 8,00,000 options under the Employees' Stock Option Scheme 2004 (ESOS).

Blow Plast grants options under ESOS

12th January 2005: Blow Plast Ltd has informed BSE that the Company has granted 8,00,000 options under the Employees' Stock Option Scheme 2004 (ESOS).

MoF approves PNB's second IPO plan

12th January 2005: The Ministry of Finance (MoF) has finally given its approval to the Punjab National Bank (PNB)’s proposal to make a second public offering and return equity to the government. The bank hopes to issue eight crore fresh shares to mobilise around Rs 2,700 crore and to return three crore shares to the government at the market price. At the end of the exercise, the government’s stake in the bank would have come down from 80% at present to 57.8%. Unlike its first issue that was at a fixed price, this issue would be through book building and would be in the price range of Rs 330-340, banking sources said.

The issue had been hanging for some time as the MoF wanted to sell a part of its stake in the market, piggybacking the bank’s own public offer — like it did when NTPC came out with its public issue. However, the law ministry said this was not possible because the Banking Regulation Act did not allow the government to sell its stake in the market. Subsequently, the merchant bankers changed the plan that sought to return equity to government post issue. After receiving the proposal, the MoF forwarded it again to the law ministry. The law ministry, this time, sought the view of the solicitor general on the new proposal forwarded by the merchant bankers of PNB.

While the government at a point wanted to bring down the equity to the 51% level, it was subsequently decided to leave some headroom for any contingency, including a merger. The bank is preparing to file its application to Sebi. As on date, the bank has a 26.5 crore equity, of which the government has 21.2 crore. The total issued shares would increase to 34.5 crore post-issue. After the return of equity, the bank would have 31.5 equity shares with the government having 18.2 crore shares. PNB on Tuesday closed at Rs 374.5 on the NSE with a volume of 18,37,053 shares.



22 offers await market regulator’s nod to raise Rs 1,000 crore

12th January 2005: Market regulator Securities and Exchange Board of India (Sebi) is adopting a cautious approach in giving the green signal to medium- and small-sized initial public offerings (IPOs). A total of 22 offer documents, each planning to raise anywhere between Rs 86 lakh to Rs 200 crore from the primary market in the beginning of 2005, await Sebi clearance. A scrutiny of data compiled by primary market tracker Prime Database, shows that these companies, if given a go-ahead by Sebi, will raise a total amount of about Rs 1,000 crore. Sebi is, however, in no hurry to clear these offer documents that have been filed with it in the last three months. A senior Sebi official said, “All the offer documents are being examined carefully and many a time we have to send them back to the companies and their lead managers before we clear them. Companies with strong potential and good fundamentals only will be cleared.”

K Srinivas, head of investment banking, UTI Securities, however, feels that the market regulator is being over-cautious in its approach. He said, “A small-sized issue does not necessarily mean that it is a bad issue, as the bigger ones have also disappointed the investors after getting listed at relatively higher premiums.” “The market regulator has already laid down stringent disclosure norms in the offer documents after the experience of the ’90s. All the companies that have filed offer documents in the recent past have adhered to these norms and there is little scope left for loopholes,” Mr. Srinivas added. Of the 22 offer documents filed with Sebi, 15 issues awaiting Sebi clearance have issue sizes ranging from Rs 86 lakh to Rs 21 crore. The smallest among these is Capricorn Systems Global Solutions, which will tap the market with an issue size of Rs 86 lakh.

In the private sector, there are issues like that of Emami, which plans to tap the market with an Rs 200 crore issue. Others in the pipeline are Shopper’s Stop (with a target to raise Rs 150 crore), UTV Software Communication (Rs 150 crore), Amar Remedies (Rs 100 crore), Gateway Distriparks (Rs 45 crore) and SMS Pharmaceuticals (Rs 40.50 crore) are the other major issues that are awaiting Sebi approval.

Haldia Petro IPO unlikely this fiscal

11th January 2005: The initial public offer (IPO) of Haldia Petrochemicals (HPL) is unlikely to hit the capital market this financial year. HPL was supposed to submit the draft prospectus to Sebi, but has not been able to do so as yet, officials said. Asked whether the delay in floatation would have any impact on equity restructuring of the company as the public issue was an integral part of the corporate debt restructuring package, they said: "We will keep all the stakeholders informed about this," and added that the management was trying its best to come out with the IPO as early as possible.

Wipro - Allotment of shares under ADS Stock Option Plan

11th January 2005: Wipro Ltd has informed BSE that the Administrative Committee of the Board of Directors vide their circular resolution effective January 06, 2005 resolved to issue and allot 112368 equity shares of Rs 2/- each pursuant to exercise of stock options by eligible employees. Further the Company has informed that the Administrative Committee of the Board of Directors vide circular resolution dated January 06, 2005 allotted 2000 equity shares of par value of Rs 2/- each to JP Morgan Chase Bank, the Company's depository as underlying shares in respect of ADRs to be issued and allocated to the purchasers, pursuant to the exercise of the options granted to the employees under Company's 2000 ADS stock option plan.

Wipro - Allotment of shares under ESOP

11th January 2005: Wipro Ltd has informed BSE that Administrative Committee of the Board of Directors of the Company vide their circular resolution effective January 10, 2005 resolved to issue and allot 47,636 equity shares of Rs 2/- each pursuant to exercise of stock options by eligible employees.

HCL Infosystems allots 6,100 shares under ESOS

11th January 2005: HCL Infosystems Ltd has informed BSE that the Committee of Directors (Share Allotment) of the Company has allotted 6100 no’s of equity shares of Rs 10/- each pursuant to exercise of the options granted under 'HCL Infosystems Ltd - Employee Stock Options Scheme’ (ESOS).

Ranbaxy Laboratories allots 93,068 shares under ESOS

10th December 2005: Ranbaxy Laboratories Ltd has informed BSE that the ESOPs Allotment Committee of Directors at its meeting held today (January 10, 2005) has allotted 93,068 Equity Shares on exercise of stock options under the Employees Stock Option Scheme (ESOS) of the Company.

Centurion Bank Board approves proposal of raising additional equity capital

10th January 2005: Centurion Bank Ltd has informed BSE that the Board of Directors of the Bank at their meeting held on January 10, 2005, inter alia, approved a proposal to raise additional equity capital of an amount not exceeding Rs 6000 million in one or more tranches, either by way of a domestic public issue or by way of private placement of equity shares or by way of an international offering (ADR/GDR/FCCB or any other convertible instruments), subject to the approval of the shareholders of the Bank by a special resolution under section 81(1A) of the Companies Act, 1956 and subject to all other provisions of applicable laws. The Board decided to convene an Extraordinary General Meeting of the Bank to seek their approval of the shareholders for the same.

Natco allots 6 lakh shares under Esop

10th January 2005: Hyderabad-based Natco Pharma said today that it has granted six lakh options worth Rs 60 lakh to its employees. The board of directors and the compensation committee of the company met on January 7 to allot six lakh options to its employees at an exercise price of Rs 10 per option with an exercise period ranging 2 to 4 years from the date of vesting of the options, the company informed the NSE today.

PM announces Dual citizenship but cutoff year 1950

8th January 2005: Dual citizenship would be extended to all overseas Indians who migrated from India after January 26, 1950, Prime Minister Manmohan Singh announced. In his inaugural address at the third Pravasi Bharatiya Divas (PBD) summit organized by the ministry of overseas Indian affairs and the Federation of Indian Chambers of Commerce and Industry (Ficci) in Mumbai, Dr Singh said, “I am happy to announce that we have decided to extend the facility of dual citizenship to all overseas Indians who migrated from India after January 26, 1950 as long as their home countries allow dual citizenship under their local laws.” Singh said his government would simplify the citizenship application form for overseas Indians. A new user-friendly form, combining the three forms prescribed earlier, had also been evolved and would be notified soon, he added.

The prime minister said his government would simplify the format of the certificate of registration of overseas citizens of India. Various options, including the possibility of introducing a smart card, were being considered, he added. Similarly, he said, his government had unveiled a civil aviation policy to meet the requirements of the overseas Indians by allowing Indian private airlines to fly abroad. Singh said the government was building new international airports in major metros and would soon modernise 30 other airports across the country.



OBC to raise Rs 1800 cr from public offer

8th January 2005: Oriental Bank of Commerce will raise up to Rs 1800 crore through its second public offer by the end of this fiscal. "We will be raising Rs 1500-1800 crore from the market by the end of this fiscal. We expect to receive approval for our second public offer from the government in the next two-three weeks," said OBC chairman BD Narang. The government holding in the bank will come down to 53% after the offer from 68% at present. Narang said the price band of the issue would be decided after regulatory approvals from the government, the RBI and market regulator SEBI. Meanwhile, he said the bank has performed very well in the third quarter and the results will be announced on January 31. OBC has also appointed National Institute of Bank Management (NIBM) to advise on the merger process with GTB. NIBM will submit its report on the matter on February 15, he said.

PNB to raise Rs 3,000 cr from public offer

8th January 2005: Punjab National Bank plans to raise about Rs 3,000 crore through its second public offer of eight crore shares. "The government has cleared PNB's public offer proposal of eight crore shares. The government holding in the bank will come down to 57% after the offer from the current 80%," a senior Finance ministry official said. PNB had earlier proposed to issue five crore shares to the public, but the government has revised upwards the figure to eight crore shares, he added. The bank would, however, return three crore shares to the government after the proposed offer.

PNB officials confirmed the move but declined to give the price at which the offer will be made. The bank has decided to fix the public offer price through book-building route. The issue is slated to hit the market this year. The PNB share price is hovering at about Rs 400 at major bourses. Three years ago, the Delhi-based bank had tapped the market with its maiden public offer of Rs 167 crore at less than Rs 50 per share. Meanwhile, the board of directors of the bank would meet on January 28 to consider the results of the third quarter of current fiscal, PNB informed the Bombay Stock Exchange. The bank posted a net profit of Rs 412.55 crore for the quarter ended September 30, 2004, compared to Rs 299.76 crore in the year-ago period. Total income also increased to Rs 2,698.88 crore in the second quarter from Rs 2691.88 crore a year ago.

Dena Bank Board adopts final prospectus for second public issue

7 January, 2005: Dena Bank has informed BSE that the Board of Directors of the Bank at their meeting held on January 07, 2005, has adopted the Final prospectus to be filed with SEBI and has also fixed up the premium of Rs 17/- per share on the face value of Rs 10/- each for cash (at an issue price of Rs 27/- per equity share) for offer through prospectus in the public issue of 80 million Equity shares aggregating to Rs 2160 million. The Public Issue of the Bank is scheduled to open on January 24, 2005 and will close on January 29, 2005.

Motherson Sumi sets 1:2 bonus ratio

7 January, 2005: Motherson Sumi Systems has set a bonus share issue ratio of one share for every two shares held, the Bombay Stock Exchange said on Friday. The ratio is subject to approval by shareholders, it said.

Market movement unusual: Sebi

7 January, 2005: Market regulator Securities and Exchange Board of India on Thursday said the movements in the stock market during the past two days were "slightly unusual" and "we are keeping a close watch on the trading pattern". "The movements in the market were slightly unusual and we are keeping a close watch and analysing the data", Sebi chairman G N Bajpai told newspersons at the Bombay Stock Exchange. "We will take action for any inappropriate movement," he said referring to the sudden volatility in the market. After a bull run, the Sensex lost nearly 280 points in the past two days.

BCCL takes stakes in Pantaloon

7 January, 2005: Bennett, Coleman & Co Ltd has struck deals to acquire stakes in Pantaloon Retail (India) Ltd and Celebrity Fashions (P) Ltd, makers of the Indian Terrain clothing brand. In Pantaloon, BCCL will acquire 4.53%, while in Celebrity Fashions it’ll be 12%. The Pantaloon deal is aimed at raising funds for the purpose of expansion, a company official said on Thursday. Pantaloon, which started operations in 1987 as a menswear maker, is now a leading retailer running stores, hypermarkets and food bazaars. It plans to increase its space capacity to 3 million sq. feet (278,700 sq. meters) from one million over the next 18 months, CP Toshniwal, head of corporate planning at Pantaloon, said. The share sale will raise about Rs 70 crore, he said. The company said it would issue 9,53,653 fresh shares at Rs 734 each to the media group. The media group was making a purely financial investment, Toshniwal said. Pantaloon will also issue 408,165 convertible warrants to its founders at Rs 735 each, he said. After the conversion of these warrants, Bennett, Coleman will hold 4.26% in the expanded equity. A shareholders meeting will be held on February 4 to seek their approval.

In the tie-up between BCCL and Celebrity Fashions — the first of its kind — the Rs 150-crore Chennai-based company sees a “perfect fit”, in the words of managing director V Rajgopal. While Celebrity, which owns the popular Indian Terrain brand of men’s casual wear, is eager to imprint its brand on the minds of middle-class urban consumers, BCCL has the right medium to reach the message. The four-year-old Indian Terrain brand, growing at a fast 15%, is set to cross Rs 35 crore in sales in 2004-05, and competes directly with brands like Raymond’s ColorPlus and Allen Solly.

Speaking about how the brand partnership with BCCL would help Indian Terrain, Rajgopal said, “This partnership will help us establish Indian Terrain as a brand for the global Indian, and for all the values it stands for, such as style, design and relevance of fashion. If you can’t take the brand message across in sufficient velocity, the brand will never get built.” Currently operating through nine manufacturing facilities in Chennai, Celebrity Fashions supplies apparel to iconic American and UK-based fashion brands like Timberland, JC Penney, Diesel, Banana Republic, Quicksilver, Nautica and Marlboro. Celebrity has independent design studios to cater to foreign brands. “We give up to 35-40% of design inputs to our customers,” said Rajgopal. Detailing the firm’s expansion plans, Rajgopal said Indian Terrain proposes to become an Rs 100-crore brand by 2007, while Celebrity has projected to become a Rs 400-crore firm by then. The company is also looking at a minimum equity infusion of about Rs 30 crore from SBI Caps for infrastructure development, which includes plant and machinery. The firm plans to float an IPO three to four years down the line. In addition to its existing portfolio of men’s casual wear; Indian Terrain plans to expand to knitwear and womenswear in the near future. The Indian menswear market is estimated at about Rs 800 crore.



Jet to raise Rs 1,500 cr in IPO

7 January, 2005: Jet Airways has filed a draft prospectus with India's market regulator for an initial public offering of 17.2668 million shares, the company said in a statement today. The price of Jet's shares will be discovered through a book-built process, and is expected to raise about Rs 1500 crore, a company official said.

Sponsored ADR/GDRs can bypass FIPB

5th January 2005: The government is planning to allow sponsored American depository receipts (ADR)/ global depository receipts (GDR) issues of companies through the automatic route. This means that companies would no longer need the approval of the foreign investment promotion board (FIPB) for issuing sponsored ADR/GDRs. Instead, they can go ahead with such offers after informing the RBI about their respective proposals. Sources said that the two departments concerned with ADR/GDR issue and FDI policy - the department of economic affairs and the department of industrial policy and promotion - would first review the existing policy guidelines regarding the issue of sponsored ADR/GDRs and then make the changes required to bring it under the RBI’s automatic route. Also, the proposal may have to go to the Cabinet Committee on Economic Affairs (CCEA) for final approval. This move comes in the wake of companies joining the sponsored ADR/GDR bandwagon. Though the issue of fresh shares through the ADR/GDR route is currently automatic, companies going for sponsored ADR/GDRs have to seek FIPB approval. This is because such an issue amounts to secondary market transactions, where existing shares are offered for sale via sponsored issues instead of fresh shares.

Institure of Chartered Accountants of India is organising a Non-Residential Conference on Mutual Fund

Non-Residential Conference of Chairmen, Directors and CFOs of Mutual Funds & Asset Management Companies and Chartered Accountants to be held at Windsor Hall, Hotel InterContinental, Marine Drive, Mumbai on 17th January, 2005.

PROGRAMME STRUCTURE

Inauguration

09.30 A.M. - 10.00 A.M.

Technical Session - I

10.00 A.M. - 11.30 A.M.

Theme - An Overview of General Issues in Mutual Funds

§         Review of Report 'Reform of the Mutual Funds Industry - India' by Cadogan Financial

§         The future of ETFs and REITs

§         What the Indian Mutual Funds need to do to increase their presence in the Retail Market

Tea Break

11.30 A.M. - 11.45 A.M.

Technical Session - II

11.45 A.M. - 13.15 P.M.

Theme - Regulatory Issues - The Indian Mutual Fund Scenario

§         Current Regulatory Structure

§         Trends in Regulation

§         Overview of Tax Laws, Securities Laws and Related Legislations - Constraints and Opportunities

Lunch

13.15 P.M.-14.15 P.M.

Technical Session - III

14.15 P.M.-15.45 P.M.

Theme - Related Issues

§         Accounting and Auditing and Assurance Standards related issues

§         Issues in Transparency

§         Regulatory Issues - Questions before SEBI

Tea Break

15.45 P.M.- 16.00 P.M.

Technical Session - IV

16.00 P.M.- 17.30 P.M.

Theme - Mutual Funds Fees and Expenses

§         Issues in Disclosure of Transaction Expenses

§         Issues in Disclosure of Mutual Fund Fees and Cost

§         Brokerage Allocation Practices and Revenue Sharing

Open House

End of Programme

17.30 P.M.- 18.00 P.M.

 

 

Air Deccan to float Esop for staff, may go in for early IPO

5th January 2005: Air Deccan has decided to float an employee stock option scheme (Esop) for its 1,000-strong workforce. The airline, which is divesting up to 26% equity for $40m to the ICICI Ventures-Capital International combine, will set aside 10% of its stock for its employees at a price to be decided in a few days by a financial consultant. While the airline is bound by its agreement with investors to go public within five years, it may take the big step well before the deadline, said Air Deccan managing director GR Gopinath. The airline is targeting revenues of $550-600m by FY09. It expects to close this fiscal with revenues of $90m and a fleet of 15 aircraft. Five years down the line, the airline is looking to fly between 50 and 60 planes.

Before the recent round of divestment, Mr. Gopinath held 26%, Brindavan Beverages 20%, an NRI firm 20%, a Japanese investor 20% and other promoters and high net worth individuals held the remaining 14% in the airline. The private equity deal (26%) and Esops (10%) will see the stakes of the promoter/investor reduced by a commensurate percentage. The funds brought by the new investors will also result in expansion of the equity capital to Rs 200-210 crore, and support its fleet augmentation plan. The proposed Esop will include both a stock option and an employee stock purchase option from an earmarked quota of shares during the IPO. The eligibility for the stock option will be decided on the basis of service in the company.

The number of shares offered will be worked out according to the employees’ earnings and position in the company. Going by this logic, pilots and engineers, who are possibly the highest paid employees of the airline, are likely to get a larger volume of stock options, Mr. Gopinath said. One-third of the workforce belongs to the security arm, while the community of pilots and engineering department constitute another tranche of 300-plus employees. The stocks allotted through Esop are likely to carry a lock-in period of 12 months from the date of IPO. While the Esop scheme is expected to encourage employees to stay longer with the company, they can take the stock with them on quitting the company. According to Mr. Gopinath, Esops are a constructive way of sharing the company’s dreams with its employees. Not too many airlines across the world offer stock options to their workforce. Esops are generally limited to the top executives, he added.



Allahabad Bank gets shareholders approval for public issue

4th January 2005: Today, Allahabad Bank received consent of its shareholders to raise fresh funds for future expansion and consolidation plans through second public issue of Rs 100 crore by the book-building route. "We will issue 10 crore equity shares with aggregate face value of Rs 100 crore at a premium to be decided within the next twenty days," said Allahabad Bank chairman and managing director O N Singh. He said consequent upon the completion of the issue, the issued capital of the bank would stand increased to Rs 446.70 crore and the government's stake will come down to 55.23% from existing 71.16%.

Singh said the proceeds would be utilised to augment resources to meet the funding needs commensurate with its projected expansion plans and to enable the bank to further strengthen its capital for Basel II Capital Accord Compliance and to ideally position the bank to capitalise on emerging business opportunities. Asked to give an idea on the proposed price-band, the CMD said, "We have not taken any view. I think it should be market driven. We will decide it in the first week of February." "I have an offer from a FII for offering shares at 5.5 PE. I can tell you that the proposed offer will not be at discount to market price even though we have refused the offer from FII as we want to widen investor base," he said.



Andhra Bank raises Rs 200-crore subordinated debt

4th January 2005: Andhra Bank today said that it has raised subordinated debt bonds worth Rs 200 crore for a period of 111 months at a coupon rate of 7.25% per annum. The bonds were fully subscribed to on the same day. IDBI Capital Market Services Limited, Mumbai; Darashaw & Company Private Ltd, Mumbai; and A K Capital Services Limited, New Delhi, acted as arrangers to the issue, according to a press release. The capital to risk assets ratio (CRAR) for Andhra Bank, for the year ended March 31, 2004, was 13.71% and for the half year ended September 30, 2004 it was 14%, as against the prescribed norm of nine per cent.

White paper on VAT likely today

4th January 2005: The empowered committee of state finance ministers may come up today with a ‘white paper’ on value-added tax after consultation with trade and industry bodies to ensure smooth implementation of the new tax regime from April. VAT panel, headed by West Bengal finance minister Asim Dasgupta, readied the white paper in December-end, but decided to issue it after a final consultation with trade and industry representatives scheduled today, official sources said. The paper would lay down the VAT rates for about 530 items — 4% for medicines, agri and manufactured inputs, 12.5% for final products. Precious metals would attract 1% VAT, while items relevant to national security would be exempt.

‘Demerit goods’ may attract higher VAT rates while sugar, tobacco and textiles covered under special additional duties would be out of VAT net. Petroleum products, whose prices are market determined, have also been kept out of VAT ambit. The white paper would also lay down procedures for collection of VAT from traders. Sources said most traders would be out of the VAT ambit. Traders with an annual turnover of up to Rs 40 lakh would be exempt from filing VAT returns, while traders with Rs 40 lakh to Rs 5 crore would have to pay VAT at 1%. The panel had assured traders that the new tax regime would be transparent.

Sebi sticks to mutual fund investor norm

4th January 2005: The market regulator, Securities and Exchange Board of India (Sebi), has taken a firm stand on the single-investor norm. It has now specified that the rule, also called the “20-25 norm”, will not only be implemented at the scheme (portfolio) level but also at the plan level. However, as a relief to mutual fund (MF) players, Sebi has extended the deadline of its implementation to January 31. This effectively means that each MF scheme and plan that does not have a minimum of 20 investors or has a single investor holding more than 25% of its assets will either have to close down or merge with other schemes. The latest data furnished by the MF industry to Sebi shows there are 130 schemes and plans with Rs 15,048 crore assets under management (AUM).

A Sebi official said, “We have considered the case thoroughly and have come to the conclusion that the 20-25 norm will only be effective if it is implemented not only at the scheme level but also at the plan level. There is no scope of reconsideration on this issue as Sebi had issued the circular in this regard as early as December 12, 2003.” He said, the idea is to broadbase the industry and increases the retail reach. This will only happen if the 20-25 norm is implemented across the schemes and plans of each mutual fund. In fact, fund houses should make an effort of having a minimum number of 40 investors in each scheme and plan to go truly retail, he said.

The Association of Mutual Funds in India (Amfi) members had made several representations to Sebi and requested the regulator to implement the aforesaid norms only at the scheme level. Sebi had issued a letter to MF players in the previous week asking them to give details of the unit holders of the schemes and plans and their share of assets in percentage terms. Sebi had said that it would take the final decision with regard to implementation, if convinced that the retail investors of MFs would not be affected adversely. Meanwhile, most of the fund houses, especially the top league players like HDFC MF, Prudential ICICI AMC, Franklin (Templeton) India Pvt Ltd, have closed down certain plans in the last week of December, since those did not comply with the Sebi norms.

BoB board approves public issue

4th January 2005: Bank of Baroda has said that the shareholders of the company unanimously approved the proposed public issue, subject to previous sanction of the Central Government and other Regulatory Authorities. BoB informed BSE about this development.

Sundaram MF has launched SMILE fund

3rd January 2005: Sundaram MF has launched Sundaram small and medium Indian leading equities (SMILE) fund. The initial public offer (IPO) for the scheme will open on Jan 3 and will end on Jan 24. It is an open-ended equity fund with the BSE 500 as its benchmark. It will deploy from a minimum of 65% to a total of 100% of its total assets to small and medium caps. Small caps have been defined as those companies with a market cap of less than Rs 200 crore.

The fund can keep a maximum of 15% of its corpus in cash and money market instruments. Not more than 35% of the corpus can be invested in large caps, according to the prospectus of the fund. The fund's track record, according to sources at Sundaram is as follows: the Sundaram select mid-cap has given annualised returns of 69% since its inception, 87% over the last two years and 35% over the last one year. The fund has yielded 64% over the last six months.



Bata rights issue seen at 1:4

3rd January 2005: Bata India Ltd’s, country’s largest manufacturer and marketer of footwear products, has proposed rights issue, which is likely to be in the ratio of one share for every four (1:4). Bata India, which is a part of Canada-based Bata Shoe Organisation, plans to raise Rs 60-65 crore to fund its restructuring programme. Bata has convened an extraordinary general meeting (EGM) on February 2 here, to seek shareholders’ approval for the issue. The Canada-based promoter holds 51% in Bata India and is expected to subscribe fully to the rights issue, according to sources. Domestic mutual funds and other financial institutions, including banks, hold 15.35%, at the end of September 2004. Public holdings in the company stood a shade above 26%. Bata India appointed ICICI Securities as the lead manager to the issue.

A senior Bata official said, “We are yet to finalise the offer size.” He declined to confirm the offer ratio of 1:4. Bata had earlier said that rights shares would be issued at a premium to be determined by its board in consultation with the merchant banker at the time of the issue. Bata India, loss-making footwear major, has chalked out a restructuring plan to be back in black during 2005. It had reported a net loss of Rs 25 crore for the quarter to September 30, 2004, as against a loss of Rs 57 crore in the corresponding period of the preceding fiscal. For the full year to December 31, 2003, Bata had reported a net loss of Rs 26 crore. The company is expecting to wipe out Rs 40 crore of its accumulated loss by 2006. As part of its recast plan, the company is streamlining its retail businesses, which includes a new-look retail format stores across the country. It is also investing in a point of sale (PoS) system to make all its stores online. Bata has set a sales target of Rs 840 crore during 2005, as against the estimated Rs 750 crore in 2004.

ICICI Bank allots 1,05,255 shares under Esop

01st January 2005: ICICI Bank has allotted 1,05,255 equity shares of face value of Rs 10 each on December 27, under the Employees Stock Option Scheme, the bank informed the Bombay Stock Exchange yesterday. The country's largest private bank, ICICI, has allotted about 44 lakh shares to its staff, including the top brass, so far this year through employee stock option plan.

Natco Pharma to consider Esops

Natco Pharma said today that it would consider granting stock options to its employees on January 7. The remuneration committee would meet on January 7 to discuss granting stock options; the Hyderabad-based company informed the Bombay Stock Exchange.

;;¤*.¸¸.·´¨`»* * Wish you a Happy New Year * *«´¨`·.¸¸.*¤*::

You are on the way to so Many Wonderful Things in the Year to Come. Hope it will be the happiest you’ve ever known, and that it will be a year filled with dreams come true.

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VAT from April 1, 2005

30th December 2004: Describing the value added tax (VAT) as the most important tax reform measure attempted in the last 10 years, finance minister P Chidambaram today asserted that the system will be implemented from April 1, 2005. "All states are on board. Eleven states have already sent their VAT bills, and other states are expected to send their bills soon. We are on the right path, and the VAT system will be implemented from April 1, 2005," he said. Lauding the efforts of Asim Dasgupta, chairman of the empowered committee of state finance ministers on VAT, Chidambaram highlighted some measures accepted by the committee.

Stating that there would be four types of tax rates - 0%, 1%, 4% and 12.5%, he said about 530 items have been identified for VAT, and 250 of them would attract only 4% tax. The empowered committee has agreed to fix the threshold limit of turnover at Rs 5 lakh. "At this limit, around 75% of small traders would be out of the tax net," Chidambaram said, adding "traders with turnover up to Rs 40 lakh would have the facility of compounding system, which would minimise the need for detailed account-keeping." The empowered committee has agreed for continuing existing incentives given by state governments to specific industries. "No new incentives would be allowed. Whatever in the pipeline will continue," he said.

OBC plans public issue this fiscal

29th December 2004: Oriental Bank of Commerce (OBC) cleared a proposal for a public offer of 50 million shares at a premium. The bank plans to hit the market during the current financial year itself. It will decide on the price band and work out other details after it receives government clearance, a senior OBC executive said. He added that the bank hopes to raise over Rs 1,300 crore from the issue. The bank will shortly approach the government for permission for the public offer. Post-issue, government holding is expected to decline to around 53% from the present 66.48%. Besides raising capital, the board discussed a host of other issues including the appointment of a global consultant to work out the details of the merger of Global Trust Bank.

On Tuesday, the bank’s share closed 1.45% higher at Rs 327.05 on the Bombay Stock Exchange and 1.53% higher at Rs 327.30 on the National Stock Exchange. At the end of September 2004, mutual funds held 3.17% stake in the company, while banks and insurance companies accounted for 9% of the shares and FII holding was estimated at 12.32% per cent. The bank’s equity shares have a face value of Rs 10 each and the premium is to be decided through a book-building process. OBC has a share capital of Rs 193 crore and reserves worth Rs 2,484 crore. It would use the additional capital to sustain 30% growth in business targeted at Rs 80,000 crore during the current financial year.

Emami files prospectus with Sebi

29th December 2004: Emami has filed a draft red herring prospectus with Sebi for its forthcoming public issue of 50,00,000 equity shares at Rs 2 each. An official spokesperson said the public issue would be made through the book-building route, and shares would be listed on the Mumbai and Kolkata stock exchanges. Anand Rathi Securities and ICICI Securities have been mandated to be the book-running managers for the public issue. Emami posted a total income of Rs 216.81 crore and a post-tax profit of Rs 21.67 crore in the previous fiscal.

Reliance buyback at Rs 570/share, investment bankers appointed

27th December 2004: The board of the country’s biggest petrochemicals maker and private-sector refiner, Reliance Industries Ltd. has approved a buy-back of its shares at Rs 570 per share, according to sources. The buy-back will not exceed Rs 2999 crore ($684 million), equivalent to 10% of the company's paid-up capital, the company told the Bombay Stock Exchange (BSE). The notice also said Anil Ambani, vice-chairman of Reliance Industries, abstained from voting on the buy-back resolution.

Investment bankers J M Morgan Stanley and DSP Merrill Lynch have been appointed managers and advisors respectively to the share buyback proposal of Reliance industries Ltd (RIL). Nimesh Kampani, chairman of J M Morgan Stanley and DSP Merrill Lynch chairman Hemandra Kothari were present at the RIL headquarters, where the crucial board meeting is being held. RIL is to seek approval of the Securities and Exchange Board of India before January 10 and the buyback offer would be open for a year, company sources said adding they would like to complete the process as early as possible.

RBI eases norms for bank finance on ESOP

25th December 2004: Easing norms for bank finance for employee stock option plans (ESOP), Reserve Bank of India on Saturday said banking entities can extend to purchase shares of companies employing them up to 90% of price or maximum Rs 20 lakh, whichever is lower. RBI had received representations from banks and corporates that existing margin on banks financing of ESOPs may be relaxed as ESOPs have gained in popularity, earlier, the ceiling on bank financing under ESOP was Rs 10 lakh subject to 40% margin. Financing under ESOP would continue to be treated as banks' exposure to capital market within the overall ceiling of five per cent, it added.

J&K Bank 2nd public offer likely in Jun-Jul 2005

25th December 2004: Jammu & Kashmir Bank is planning to tap the markets sometime in June-July while exploring options of including a strategic partner. “We are thinking of second public offer in June-July next year,” chairman M Y Khan said, but declined to reveal the amount which was expected to be “much more” than Rs 100 crore. The private bank would need more capital to meet the Basle-II norms, which envisages higher provisions for operational risks apart from market and credit risks. The bank may seek the approval of the state government to dilute its equity below 51% to raise more capital from the market. The Jammu & Kashmir government has a majority 53.15% stake in the bank. The FIIs' holding has come down to less than 25%. J&K Bank recently hiked its FII holding to 33% and as a result there has been renewed interest in the bank from foreign investors. "The FII stake in the bank has already crossed 25% and their interest in the bank has pushed up the share price also," said Mr. Khan.

The share prices of J&K Bank surged to intra-day high of Rs 382 on Friday from Thursday’s close of Rs 374 on BSE. Khan said the bank was on the lookout for buy-outs of banks but there is nothing on the prospect now. "There are too many small private banks. Not all will exist in years to come. Everyone is on the lookout for M&As. So are we," he added. J&K Bank is also looking for a strategic partner but it has yet to shortlist one, he added. J&K Bank has a paid-up equity of Rs 48.25 crore and reserves of Rs 1,545 crore as on September 30, 2004. While the bank was one of the fastest growing among private players, its net profit fell by 47% to Rs 105 crore during the first half of this fiscal from Rs 198 crore in the year-ago period. The total income of the bank also fell by over 10% to Rs 820 crore from Rs 914 crore in the year-ago period. Khan said the bank-incurred loss in treasury operations in the first half of this fiscal, which it would be able to make up in the second half. J&K Bank targets 25-30% rise in loan advances and 15 per cent growth in deposits this fiscal.



i-Flex allots 14,050 shares under Esop

24th December 2004: i-Flex Solutions Ltd has allotted 14,050 equity shares of face value Rs 5 per share under the Employees Stock Option Plan. These shares will rank `pari passu' in all respects with the existing equity shares of the company, i-Flex informed the Bombay Stock Exchange today.

L&T allots 61,245 shares under Esop

24th December 2004: Larsen & Toubro Limited said today that it has allotted 61,245 shares to its employees who had exercised their options under the Company's Esop Scheme. "The aforesaid shares will rank pari-passu with the existing shares of the company in all respects, including dividend that may be declared hereafter," the company informed the Bombay Stock Exchange.

ICICI Bank allots 93,368 shares under Esop

22nd December 2004: Country's largest private sector bank ICICI has allotted 93,368 equity shares at face value of Rs 10 each under the Employees Stock Option Plan. The shares were allotted to the employees on December 20, ICICI Bank informed the Bombay Stock Exchange today.

ITC allots 64,229 shares under Esop

22nd December 2004: ITC Ltd has allotted 64,229 ordinary shares of Rs 10 each as 64,229 options to be exercised under the ITC Employees Stock Option Scheme (ESOS). The company informed the Bombay Stock Exchange today about the allotment.

BoR plans preferential issue

23rd December 2004: Privately managed Bank of Rajasthan plans to issue shares equivalent to a 14.75% stake in the bank to foreign institutional investors (FIIs) or strategic partners, its chairman said today. PK Tayal said the bank was looking for a price of Rs 85 to 95 a share and that it had made presentations to a number of funds. "These will be new shares and will not hit the market at once. There will be a lock-in period," he added.

The IPO of Impex Ferro Tech Limited opens today

22nd December 2004: Impex Ferro Tech Limited would hit the capital market with an initial public offering of 800 lacs equity shares of Rs 10/- each at par. The issue opens on today i.e. December 22. Ashika Capital Limited is the lead manager and Maheshwari Datamatics Pvt. Ltd. is the Registrar to the issue.

Kolkata companies are in line up for Rs 3,000-crore public issues

22nd December 2004: Year ’05 is expected to be a good one for domestic stock markets and a host of Kolkata-based companies are latching on to the opportunity. With both the BSE Sensex and S&P CNX Nifty reaching new highs, at least 16 companies across sectors are firming up plans to tap the equity market to raise capital. Most of these companies are expected to cash in on the rising stock market in the very first month of 2005. Total issue size of these companies would be over Rs 3,000 crore. Some are coming with their initial public offers (IPOs), others with their second public issue or rights issue. The companies include Allahabad Bank, Balaji Group, Bata India, Beeyu Overseas, Emami, Haldia Petrochemicals, McNally Bharat Engineering, Lux Hosiery and Ramkrishna Forgings. The market has been rising too fast for his liking. The issue size varies for different companies. While the small cap companies are targeting mopping up of about Rs 10 to 20 crore, major ones are looking at around Rs 500 crore.

OBC is planning for second public issue

22nd December 2004: Oriental Bank of Commerce (OBC) is considering hiking its capital through a public offer to sustain its growth in business after the merger of ailing Global Trust Bank (GTB) with it. The bank intends to dilute government holding by about 10% to 56.5% after the public offer; sources informed. OBC has scheduled a meeting of its board of directors on Dec 28 to discuss the agenda for the proposed increase in equity share capital.

IRDA revises tariff advisory panel

22nd December 2004: The Insurance Regulatory Authority of India has reconstituted the Tariff Advisory Committee effective from January 1, 2005. IRDA chairman CS Rao will head the panel, which would also have IRDA member (non-life) Mathew Varghese as vice-chairman. The other members of TAC are GIC chairman PC Ghosh, New India Assurance CMD R Beri, Oriental Insurance CMD SL Mohan, National Insurance CMD HS Wadhwa, Iffco-Tokio CEO Ajit Narain, Royal Sundaram Alliance Insurance CEO Antony Jacob, HDFC-Chubb CEO Shrirang V Samant and Maharashtra Government Insurance Fund CEO AK Abhang. KK Srinivasan was elected as the secretary of the Committee, IRDA said in a circular. "Members mentioned above have been declared elected, pursuant to the election procedure as laid down in the regulations, to represent insurers in the respective constituencies as enshrined in the rules," IRDA said. The next election of representatives of insurers on the TAC will be held and results thereof will be declared on or before December 31, 2007.

Sebi cancels registration of 12 brokers

22nd December 2004: The Securities and Exchange Board of India (Sebi) has cancelled the registration certificate of 12 stock brokers with various stock exchanges for failing to meet regulatory norms. The stock brokers were declared as defaulters and expelled by the stock exchanges and ceased to be members of the exchanges as they failed to fulfill the pre-requisite condition of registration as stock broker, Sebi said. The brokers declared defaulters by Sebi were Anil Kumar Nanda (Uttar Pradesh Stock Exchange), Ashsih Bamba, Sonali Securities (OTC Exchange), Naval Kishore V Sharma, PV Kaimal, PT Joseph, Sukesh Bhaskaran, Thomas Mathew, Surinderpal Singh (Cochin Stock Exchange), Chandra Kanta Jain, JK Jain & Co and Praveen Ramawat (Jaipur Stock Exchange), it added.

FIPB defers Sify ADS issue, seeks RBI nod

21st December 2004: Seeking the Reserve Bank of India’s (RBI) nod, Foreign Investment Promotion Board (FIPB) has deferred Sify’s sponsored ADS issue for two weeks. Sify is planning to sponsor an issue of ADRs with an overseas depository against stock held by domestic and foreign shareholders. The size of the sponsored ADR offering will not exceed 15m equity shares. Sify is in the process of identifying the lead manager and the pricing of the issue will be decided later. The company currently has a foreign holding of 58.1% and if the balance holding of equity shares is subscribed to in the ADR divestment, the foreign holding will be 100%. There will be no change in the paid-up equity share capital of Sify pursuant to the proposed sponsored ADR offering. The face value of each equity share is Rs 10, which is fully paid up, and each equity share will be represented by one ADR. Satyam spokesperson declined to comment on the development. Since the proposal involves issues of sponsored ADRs, the board directed that the comments of RBI may be sought first before consideration of the FIPB and deferred the proposal for two weeks.

PNB ready for second public offer

21st December 2004: The Punjab National Bank (PNB) is ready to tap the market for the second time to raise more capital and is waiting for government's nod. PNB intends to sell 5 crore shares and the value of the public offer is estimated at over Rs 1,100 crore going by the present price of the bank's shares. "We are ready. But we are waiting for the government nod," PNB executive director K C Chakrabarty said after signing a MoU with money transfer agent Western Union. PNB, which had raised over Rs 165 crore three years ago, is planning to raise more capital to meet the stringent Basle-II norms requiring higher provisions for market, credit and operational risks by 2006.

Asked whether PNB was looking for more buyouts of banks, Chakrabarty said, "we are not thinking about acquisition unless the second offer comes and we mop up capital and meet the Basle-II norms." However, he hastened to add that if government decides anything on M&A, PNB would consider it. PNB had acquired ailing Nedungadi Bank last year. Its board had also approved taking over of ailing IFCI early this fiscal but the merger is yet to happen due to a number of legislative and other hurdles. On interest rates, he said PNB's benchmark prime lending rate was not going to change, as it was competitive. However, restructuring of deposit rates was an ongoing process. To a higher end, the rates have hardened and on lower end it is still higher, he added.



Sebi to change norms for pref issue

20th December 2004: The Securities and Exchange Board of India (Sebi) is planning to amend the norms for a preferential issue by raising the lock-in period to three years from the current one year. Sebi’s Primary Market Advisory Committee (PMAC) has received a number of suggestions from the public in this regard. It is also likely to change the norms for calculating minimum pricing of preferential allotment, introduce shares with differential voting rights and listing of such shares. The market regulator may extend the non-transferability condition to the pre-preferential issue holdings of the promoter and their relatives. This is to prevent misuse of preferential allotment by promoters.

The suggestion says: “The existing condition with respect to lock-in on shares issued to the promoter and the promoter group is made onerous with the requirement that the entire preferential allotment is to be locked in for three years without any reference to the 20% rule.” Another suggestion is regarding pricing of preferential allotment. It is proposed to involve changes in the manner in which minimum price is to be calculated. Instead of the weekly high and low of the closing prices of shares, the weighted average price of the shares based on all transactions on the exchanges is to be reckoned.

At present, the preferential allotment price is determined taking the average of the previous six months’ stock price or previous two weeks’ stock price. There are also suggestions that pricing of infrequently traded shares will be based on the provisions of Sebi (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

Jindal Stainless has raised $50 mn for Orissa project

20th December 2004: India’s largest stainless steel manufacturer, Jindal Stainless, has raised $50m through a foreign currency convertible bonds (FCCB) issue for its capital expenditure plans in Orissa. The issue got an extremely good response from foreign investors and was two times oversubscribed within an hour of its launch. According to a statement, the issue attracted subscription of $108m from around 20 global investors worldwide. The five-year foreign currency convertible bonds, carries 0.5% coupon and can be converted into company’s shares at Rs.119.872 per share i.e. a 28% premium to Friday’s closing price of Rs. 93.65 per share.

Investors can redeem the bonds at maturity on December 23, 2009, giving a yield of 5.75%. In addition there is a green shoe option of $10m. Morgan Stanley, the sole book runner for the deal executed it, probably, as the last deal of this calendar year, done just before Christmas. Commenting on the successful launch of the FCCB issue Arvind Parakh, director - finance said, “The extremely positive response to the issue shows commitment of international investors in the company and belief in the strong foundation, the company will be on the completion of its backward integration project in Orissa.” Jindal Stainless intends to invest significant capital to develop an integrated ferro-alloy and stainless steel facility in Duburi, Orissa.



IDBI raises $250 mn via external borrowings

18th December 2004: Industrial Development Bank of India on Friday raised $250 million from global markets for its business operations. The banking entity has raised $250 million through five year bonds priced at 1.62 per cent above comparable US treasury bills, bank sources said. This is the first international borrowing of IDBI after it conversion into a banking entity from a development finance institution, they said. Earlier, IDBI had raised $300 million through External Commercial Borrowings to fund restructuring in the steel sector, they added.

Matrix Labs agrees to issue of 1:1 bonus

17th December 2004: The board of directors of Matrix Laboratories Ltd (MLL) at its meeting held here on Thursday has fixed January 20 as record date for sub-division of equity shares and bonus issue. In a statement to stock exchanges, the company said its board has also constituted a compensation committee for administration and superintendence of ESOP 2004 with three of its directors -Puneet Bhatia as Chairman, and C. Ramakrishna and N. Prasad as members. Earlier, the shareholders of Matrix Labs at the 19th annual general meeting approved the resolutions for the issue of bonus shares in the ratio of 1:1 and sub-division of equity shares (stock split) into a face value of Rs 2 from the present face value of Rs 10. Addressing the shareholders at the AGM, the MLL Chairman and CEO, N. Prasad, said the stock split would improve the liquidity of the equity shares of the company, besides being more accessible to the retail investors. He said for sustainable growth, the company would focus on intellectual property (IP) value creation both in active pharmaceutical ingredients and dosage forms, cost-effective and quality manufacturing strengths, strong marketing and contract manufacturing of formulations for regulated markets.

Budget 2005 may raise minimum taxable income

17th December 2004: The finance ministry is considering raising the minimum taxable income limit further in keeping with the policy of reducing tax burden on low income groups. In Budget 2005, the ministry will attempt a revamp of the direct tax structure, with a view to “removing the regressiveness in the current structure, so that low income groups get more benefits,” according to senior officials. While moving the Finance Bill in August this year, finance minister P Chidambaram had exempted payment of income tax for those with taxable income of up to Rs 1,11,250, and provided rebates for income between Rs 1 lakh and Rs 1,11,250 so that the real income after tax would not be less than Rs 1 lakh. Officials indicated that people with taxable income higher than the threshold fixed in August might get the benefit of waiver of tax payment in this year’s Budget. “We would like to get rid of as much exemptions, deductions and rebates as possible, in an effort to simplify the tax structure and make it more user-friendly,” an official said. “We are looking at tax incentives critically.”

Mr. Chidambaram did not change the tax rates or slabs in the last Budget, even as he mentioned in the Budget speech that tax slabs “were causing concern.” He had said that he was unable to alter the tax slabs in the wake of “larger responsibility” assumed by the government for investment and welfare programmes. Officials said in the forthcoming Budget, there would be a definite attempt to expand the direct tax base. A new methodology for tracking high value transactions is being considered. The idea is to progressively shift the incidence of tax more to the high-income groups, while reducing the burden on the lower middle class. Of the nearly 3.4 crore persons filing income tax returns, only 2.7 crore assessees are taxpayers. Of this, around 1.4 crore assessees benefited from the exemption for taxable income of up to Rs 1,11,250.

SC dismisses appeal against its order on Mauritius tax treaty

17th December 2004: Amid reports of FIIs migrating from Mauritius to newer destinations seeking better tax and administrative environment, there comes good news for FIIs based in Mauritius. The Supreme Court (SC) has dismissed a curative petition filed against its recent decision on the Indo-Mauritius Double Taxation Avoidance agreement.

A curative petition is the last appellate forum for the judicial process in the country. Hence, the implication of the petition’s dismissal is that the status quo on this issue continues. Earlier, a two-judge bench of the SC had upheld a government circular stating that even a certificate of residence from the Mauritius government made the company eligible for tax exemption under the Indo-Mauritius DTAA. TP Ostwal, senior chartered accountant, said “Judicial challenge to the CBDT circular on this issue ends with the dismissal of the curative petition. It means the status quo continues.” Bijal Ajinkya, an associate of Nishidh Desai Associates, said, “The decision is in tune with the principles of international taxation. This enhances India’s credibility in the international fora as the judgment of the Supreme Court is in line with the principles of public international law and also adds to the confidence of the international investor community.”

Earlier, the SC had dismissed a review petition on the same issue. The Supreme Court verdict had clearly underlined the tax benefits available for Mauritius-based companies in India. Litigation on the issue began with the I-T department’s decision to question the authenticity of claims by certain corporates that they were Mauritius-based. As the department investigated these claims of residence in Mauritius, the CBDT issued a circular on April 13, 2000, stating that a certificate of residence issued by the Mauritius government should be accepted as proof of residence. This circular was challenged by a host of entities, including the People’s Union for Civil Liberties and a retired income tax officer, SK Jha, before the Delhi High Court. The Delhi High Court quashed the CBDT circular, holding it ultra vires Section 90 of the I-T Act, which allowed treaties only for the purpose of avoiding double tax and not for encouraging trade and investment. It was also held that the circular took away the discretion of the I-T department in determining the residence of an entity.



Saregama to consider rights issue

17th December 2004: The board of Saregama India, which makes pre-recorded cassettes and compact disc, will meet on December 23 to consider a rights issue of shares, the Bombay Stock Exchange said today.

Rights price propels ING Vysya

17th December 2004: The ING Vysya scrip is on fire with the private bank offering rights shares at a price of Rs 45, at a point when scrip is ruling over Rs 500. The announcement is possibly the biggest discount on rights issue offered by an entity, pushed up the scrip 19%. The share price opened at Rs 506, higher than the previous close of Rs 422. It ended at Rs 503 per share. The bank board has cleared a proposal to raise further equity capital through a rights issue of shares. The capital mobilisation, said sources, is driven by ramping up the paid-up capital, an issue the RBI has been insistent about. However, the pricing was intriguing. “I don’t understand this,” said a senior investment banker. The bank plans to offer three equity shares for every one equity share held by shareholders on the record date. The share is being offered at Rs 45, way below the market price. The offer price includes a premium of Rs 35 per share. The move is likely to be a windfall for existing investors on the counter, who would benefit from the difference in the market price (Rs 503) and offer price (Rs 45).

ING Vysya Bank managing director, Bart Hellemans said that the intention for going for a rights issue was to raise the paid-up capital and diversify the shareholding base. Dutch ING group, which holds 44% stake in the bank, has agreed to fully subscribe to its entitlement in the rights. “The paid-up capital will rise from Rs 22 crore to Rs 91 crore, after the rights issue. We are issuing three shares for every share held,” he added. He said that if a shareholder acquired the bank’s shares for Rs 400 and subscribes to three additional shares for Rs 145 (Rs 45 per share) the holding cost will be Rs 535. “It’s usually the case that when a rise in the number of shares, the share price is comes down,” he said. “The bank looked at various options for raising equity,” he added. To a query whether the offer price will lead to a windfall to the bank’s shareholders, Mr. Hellemans said: “It will lead to a windfall for the shareholders, because it is only for the shareholders of the bank.” He said that as per Sebi norms, banks were free to price the rights issues.



SBT to raise Rs 195 cr through issue of bonds

16th December 2004: State Bank of Travancore, part of the SBI group, is planning to raise up to Rs 195 crore through bonds to strengthen its capital base. The executive committee of the board has approved a proposal to augment Tier-II capital by issue of bonds to the extent of Rs 195 crore through private placement, the Thiruvananthapuram-based bank said in a communication to the Bombay Stock Exchange today.

ING Vysya board approves 3:1 right issue

16th December 2004: The board of directors of ING Vysya Bank, at their meeting held yesterday, has decided to raise further equity capital through issue of shares on rights basis, according to a release issued to the BSE. The existing shareholders of the bank shall be offered in the ratio of 3 equity shares for every 1 equity share held as on record date at a premium of Rs 45 per share (including a premium of Rs 35/-), the release added.

Free food provided by your company will be taxed from now

15th December 2004: Next time your employer provides some food and beverages, be sure to check out the more details because you may suddenly find yourself paying tax on the amount spent on such items. For starters, while consumption of alcoholic beverages, during working hours may or may not be against office rules, you can be sure that under the tax laws, the employee will foot some of the tax bill. While tea and coffee are fine, remember not to gorge too much on food at one go.

At present, several benefits made available to an employee by the employer qualify as perquisites. These perquisites are then valued according to the rules laid down for this purpose and the value of such perquisites are added to the income of the employee and taxed accordingly. Recently, there have been some changes in the rules regarding a couple of items on the perquisite list and both employers, as well as employees, would do well to consider the details of these changes. Among the changes, one related to free meals has to be considered carefully. First the words ‘free meals’ present earlier has been substituted by ‘free food and non-alcoholic beverages’. Earlier meals could include several items, which differed from company to company. The recent changes make it clear that any alcoholic beverage provided free of cost during working hours to the employee will be considered as perquisites. The employer can still continue giving paid vouchers to his employees for this purpose as long as the amount is within the limit specified by the tax department, which stands at Rs 50 per meal.

According to chartered accountants, the word to note is ‘per meal’ and hence, there need not be a restriction of just Rs 50 per day because one can eat more than one meal during a day. Further more, these vouchers should not be transferable from one person to the other and more importantly, should be for use at eating joints only. This has to be considered carefully, for some vouchers given by companies may be redeemable at other places where there are food items and may not necessarily be an eating joint. One also has to note that while looking at the exact meaning of the word ‘meal’, one has to exclude tea and snacks provided during working hours. The venue where this is received is also important and the places include office or business premises.



Essar Steel to raise $500 mn

15th December 2004: Essar Steel is awaiting an approval to raise up to $500 million in convertible instruments to fund a potential acquisition of the rest of Hygrade Pellets, the company said today. The funds will also be used to buy 100% of Steel Corporation of Gujarat, it said in a statement to the Bombay Stock Exchange (BSE). Prior to the announcement, Essar shares had risen 2.8% to Rs 36.45 in firm trade on the BSE.

Chola MF has launched new fund

15th December 2004: Chola Mutual Fund has launched an open-ended equity scheme Chola Multi-Cap Fund. It targets to raise Rs 75 crore through the initial public offering. Chola Multi-Cap Fund IPO, which is open for subscription from December 14, 2004 to January 10, 2005, would invest in equity and equity-related instruments across all ranges of market capitalisation, said Chola chief executive Sashi Krishnan. "We had launched Chola Mid-Cap fund in August. The fund was very good but the market sentiment was not. This time we are launching the multi-cap fund when both factors are strong to benefit the investors," added Mr. Krishnan. The exposure to large cap and mid cap stocks would be maintained between 25-75% while exposure to small cap stocks would not exceed 15%, he said.

Through the multi-cap fund, the MF will be able to provide investors with added diversification, allowing tactical shifts across market caps depending on the conditions, he added. The scheme would have both cumulative and dividend options. Krishnan said the scheme would target retail and individual investors and expects to gather Rs 75 crore through the public offer. The performance of the diversified funds has been far better with investors getting 14 times return compared to five times return from the Sensex boom, he said. Profits of Indian corporates will be higher in the next few years resulting in superior returns from equities, he said.



Sebi gets two new directors

14th December 2004: The appointments committee of the cabinet today announced the appointment of G Anantharaman and Madhukar as whole time members of the Securities and Exchange Board of India. Anantharaman and Madhukar would hold the positions till they attain the age of 62 years or until further orders, an official release said today.

Yes Bank to float Rs 300 cr IPO next year

14th December 2004: Yes Bank, which started operations three months back, will launch its initial public offer (IPO) next year. The size of IPO is expected to be around Rs 300 crore. The bank has a capital base of Rs 200 crore. It is aiming at increasing the net worth to Rs 500 crore, in the next six months, from the current Rs 217 crore. “We would infuse substantial capital very soon to increase our net worth to Rs 500 crore. We are finalising the IPO plan,” said, managing director and CEO Rana Kapur. He refused to give further details.

Stakeholders of the bank include Rabobank, with 20% equity and institutional investors who collectively hold 25% equity. Ashok Kapur (non executive chairman) and Mr. Kapur, the two Indian promoters, jointly have 52% share in the bank. Top managers hold the rest of the equity. Yes Bank is looking at tying up with the cooperative banks, particularly in Maharashtra, and the northern region to increase its focus on the agri sector. Mr. Kapur said the bank aims at distinguishing itself as a knowledge bank instead of a universal bank.

The bank has the licence to open new branches in new markets. At present, the bank has a presence only in Mumbai and Delhi. “We have got the licence to open a branch in Chennai and Bangalore,” Mr. Kapur said, adding that as many as 12 branches would be opened up by the end of this fiscal. Yes Bank already has a tie-up with Corporation Bank and UTI Bank for payment. It is in talks with other public and private banks for further tie-ups to increase its distribution system.

IDBI is planning for $300-mn bond issue

14th December 2004: Industrial Development Bank of India (IDBI) wants to price an issue of five-year US dollar-denominated bonds at 125/130 basis points (bps) above mid-swaps, a source close to the deal said today. Barclays Capital and Merrill Lynch are the lead managers of the $300 million offering.

Sun Pharma issues additional FCCBs

14th December 2004: Sun Pharmaceutical has informed BSE that the company has issued on December 13, 2004 additional $75 million Zero Coupon Foreign Currency Convertible Bonds due 2009. The FCCB convertible is at Rs 729.30 per equity share and having 4.61% per annum yield to maturity. This takes the total issued size of the FCCB to $350 millions.

Sebi tells SEs to look at listing norms of Reliance firms

14th December 2004: Market regulator Sebi asked the stock exchanges to look into the listing agreement provisions of Reliance Group companies for corporate governance and monitor the trading pattern in all listed companies of the Reliance empire. The directive was given at Sebi’s weekly scrutiny meeting under the supervision of its chairman GN Vajpayee. A Sebi official said the stock exchanges were told that if they had not taken any step, including looking into listing agreement provisions for corporate governance, they should do it immediately, considering the seriousness of the issue. The stock exchanges were also asked to chronologically analyse reports about the Reliance empire appearing in the media over the past few weeks.

A K Batra resigns from Sebi board Mumbai

14th December 2004: A K Batra, a full-time member of the Securities and Exchange Board of India (Sebi), has resigned citing health reasons. His departure, which follows a one-month absence due to a medical operation, means there are now four vacancies on the nine-member Sebi board. Mr. Batra’s term was supposed to end in the middle of 2005.

A-I issues tenders for leasing 6 Boeings

13th December 2004: Air-India has issued global tenders for dry-leasing six Boeings 747-400s for delivery between April and October next year. According to the tender of documents, three of these aircraft are 747-400 combis, with a seating capacity between 220 and 300; three others are passenger aircraft with 389 seats in a three-class configuration. These passenger planes would be leased for a period of one to there years. A-I has sought delivery of two of the combi aircraft between April 15 and June 15, ’05, while the third combi is required to be delivered in October.

HSIL to issue two bonus shares for every three shares held

13th December 2004: The board of Hindustan Sanitaryware & Industries told the Bombay exchange today that it had set Jan 6 as the record date for the issue of two bonus shares for every three shares held by existing shareholders.

RIL bags ‘Petrochemicals Company of the Year’ award

13th December 2004: Reliance Industries Ltd (RIL) has bagged the `Petrochemicals Company of the Year' award for 2004, instituted by Platts, a US-based energy information company. The award acknowledges the increasing importance of petrochemicals manufacturing and marketing as an integral part of energy complex, RIL said in a release today. RIL executive director H S Kohli received the award at a ceremony held in New York, it added.

BoB is planning to raise Rs. 90 crore through public offering by February ’05

13th December 2004: Bank of Baroda (BoB) is planning to hit the capital market by February 2005 to raise Rs 90 crore through a public issue. The bank’s board, which cleared the proposal, recently, is, however, yet to finalise the premium to be charged for the proposed issue. BoB’s executive director, Mr. K Ramakrishnan, said that it would utilise the money raised to meet its growth plans. At present, the bank’s capital base is Rs 295 crore, and post issue the capital will go up to Rs 385 crore. The bank hopes to cross an annual business of Rs 1,50,000 crore by March 2005. It also plans to expand its overseas operations by setting up branches in Bangkok, Singapore, Toronto, Houston Leicester, Australia and New Zealand in a phased manner. It already has 69 overseas offices in 19 countries, which includes branches, representative offices, subsidiaries and joint ventures.

As per Mr. Ramakrishnan, all overseas branches are making profits and its share in the total business of the bank ranges between 20-25%. He said the bank’s NPA has already declined to 2.27% and is expected to go below 2% by March end, 2005. With regard to technology up gradation in the bank, he said the bank plans to pump in about Rs 600 crore in the next three to four years on interlinking as many branches as possible with ATMs and to cover maximum branches under the core banking solution. It now plans to add another 1,000 ATMs to its existing network of 500, taking the total number to 1,500 by 2007. Focusing on retail lending, the bank is soon introducing new software, Loan Automated Process System (LAPS), which will take care of all types of retail lending by minimising the lengthy process. As far as agriculture lending is concerned, the bank plans to double its farm lending within the next three years, for which it has already encouraging self- help groups and farmer clubs in the rural areas.



Sebi sets March 31 deadline for bourses to corporatise

13th December 2004: The Securities and Exchange Board of India (Sebi) has set a deadline of March 31, 2005 for all stock exchanges (SEs) to convert themselves into corporatised and demutualised entities. The regulator has chalked out a time-bound programme to achieve this process and has also asked SEs to reduce the stake of their trading members (brokers) to 49% within one year of turning into corporate entities, that is, by March 31, 2006. In a letter written to SEs last week, Sebi has spelt out tough steps to be taken by the regulator in case of failure to meet this time schedule, which includes severe punishment including de-recognition.

According to sources familiar with the development, Sebi informed all the SEs, which are required to corporatise and demutualise themselves, to submit their schemes of corporatisation and demutualisation (C&D) on or before December 15, 2004. Sebi has laid out a date-wise time schedule for the SEs and has listed the onus of responsibility for each and every step to be taken. The aim behind this exercise is to complete the whole C&D process within the March 31, 2005 deadline. The C&D process of bourses was to be completed much earlier, as the Sebi appointed Kania Committee had submitted its report way back in 2003. But the process got disrupted, as there were some changes required to be made in the Securities Contract Regulation Act (SCRA). With the new government at the Centre taking charge and with the promulgation of annance in September amending SCRA, the process again gained momentum.

Two major changes were proposed in the SCRA amendments. One was the reduction of brokers’ representation on the governing board of the exchanges to 25%, as against the Kania Committee’s recommendation of 33%. This apart, the trading members’ stake in the demutualised entity is now to be reduced within a period of one year from demutualisation, as against the Kania panel’s suggestion of three years. The tentative time-schedule for completion of this process was informally discussed by the regulator with all SEs at its meeting held on November 9, 2004 at Mumbai. Sebi will make enquiries with respect to schemes submitted to it and give hearings to SEs. The hearings will take place when the regulator proposes to reject a scheme.

UAE residents won’t have to pay capital gains tax here

13th December 2004: A recent ruling given by The Authority for Advance Rulings (AAR), chaired by Justice Quadri, has cleared the path for the application of the Indo-UAE tax treaty. In it’s ruling, the AAR has firmly held that merely because there is no tax incidence in the other country (the UAE, in this particular case), it does not imply that such income can be taxed in India. The AAR has emphasised that tax treaties override domestic tax laws. The AAR held, “It is clear that under the tax treaty, capital gains arising from alienation of shares in Indian companies in the hands of a UAE resident are taxable only in the UAE and not in India.” In this case, Emirates Fertiliser Trading, which was a UAE resident partnership firm, filed an application with the AAR.

Glenmark, Jaiprakash approves the convertible issues

13th December 2004: The boards of drug maker Glenmark Pharmaceuticals and cement and construction firm Jaiprakash Associates have separately approved of convertible bond issues, the Bombay Stock Exchange (BSE) said. The Glenmark issue, approved on Dec. 11, is for $100 million, the BSE said. No other details were immediately available. The Jaiprakash issue, also decided at a meeting on Dec. 11, would be for $75 million, with an option to retain over subscription of an additional $25 million, the BSE said.

Vedanta efficiently completes bond issue

13th December 2004: London-listed, Indian mining company Vedanta Resources Plc said that it had successfully priced a $500 million global bond offering. The offering consists of 6-5/8 percent notes, due in February 2010. Vedanta said the deal, the largest bond issue by a company with predominantly Indian assets, was three times oversubscribed and had generated orders of more than $1.5 billion. "This bond issue forms an important part in our strategy, supporting our $2.2 billion growth pipeline," said Vedanta chief executive Anil Agarwal. The proceeds of the offering will be used to support the company's capital investment and for general corporate purposes. Barclays Capital, Deutsche Bank and ABN AMRO covered the bond issue.

Hutch investors may rework board pre-IPO

11th December 2004: Stakeholders of the post-merger Hutch India corporate entity are likely to constitute an all new board of directors, in the run-up to the IPO. But, while there are sufficient indications to that effect, the principal shareholders are not willing to hazard a guess on the precise size or composition of the new board. It is believed, however, that the board constitution exercise will begin once the Reserve Bank of India (RBI) clears the final ownership structure of the consolidated Hutch India entity. By the way, the FIPB has already cleared Hutchison Max Telecom’s planned consolidation with existing Hutch affiliates — Hutchison Essar Telecom, Hutchison Telecom East, Hutchison-Essar South and Fascel. Therefore, the RBI clearance is not expected to be delayed unduly.

It’s not immediately known whether the post-merger entity will have a new name too, but, in its latest filing with the New York Stock Exchange on December 1, all Indian mobile telecom operators in which Hutchison Telecommunications International has any direct or indirect interests, are being officially referred to as ‘Hutch India’ collectively. Hutch, neither Essar nor Kotak is willing to comment on the final size and composition of the Hutch India board, post-consolidation. A Hutchison spokesperson said: “We have no comments on the composition of the Hutch India board, post-consolidation. These are discussed strictly at the stakeholder level.” An Essar orator said, “We are yet to take a decision on the Essar representation on the board of the consolidated Hutch-Essar entity. There is no decision on whether there will be Essar-nominated executive directors on the board of the merged company.” A Kotak spokesperson said, “We are waiting for the RBI clearance now and we believe it is routine”.

The lack of any official confirmation notwithstanding, speculation is rife otherwise in senior management levels within all three companies. One theory is that the NYSE-listed Hutchison Telecom, which is the single largest block-holder in the consolidated Hutch India entity with a 42% direct stake and a 14% non-controlled, indirect stake, is most likely to have the sizeable representation on the board, followed by the Ruias of Essar. That of course, does not require too much of “inside info” to figure out since it is natural for major shareholders to have the most say on the board. What is interesting, however, are the specific names doing the rounds? Hutchison India MD Asim Ghosh and Hutchison India deputy MD Sandip Das are both ‘tipped’ to be executive directors in the merged company. Other high-sounding names similarly tipped to be non-executive directors are: Dennis Lui, who is Hutchison Telecom executive director & CEO; Ting Chan, Hutchison Telecom executive director & deputy MD; Frank Sixt, Hutchison Whampoa group finance director and Canning Fok, chairman of Hutchison Telecom and group managing director of parent, Hutchison Whampoa.



Vedanta raises $600m via bond issue

11th December 2004: Vedanta Resources (Vedanta) the London-listed mineral resource company with large Indian operations, has raised $600m through a bond issue. Earlier, the company had planned to raise $500m. However, the overwhelming response to the issue has encouraged the company to accept another $100m worth of bonds as a green shoe option. This would be the single largest bond issue by an entity with manufacturing operations in India. The earlier record was a $400m bond offering by SBI. The bonds have been priced at Libor plus 275 bp. The six-month Libor is at 2.67%. The bond issue had attracted offers to the tune of over $1.5bn. The bonds will be listed on the London stock exchange.

Barclays Capital and Deutsche Bank were appointed joint lead managers and book runners for the proposed bond offering which will be sold into Asia, Europe and US, while ABN Amro Bank was the joint lead manager. The bonds are a pure debt issue with no equity conversions. S&P and Moody’s, the leading international rating agencies, have assigned India sovereign ratings to Vedanta which made it the first manufacturing group with Indian operations to secure a Baa3 rating from Moody’s. Only ICICI Bank and State Bank of India have a similar rating in India. The rating is equivalent to the ratings assigned to Indian treasury bonds. The ratings have been instrumental in securing fine rates for the company’s bonds. S&P and Moody’s have rated the bonds themselves BB/Ba2. The proceeds of the bond issue will be used for Vedanta’s 1mt per annum Alumina refinery project that is under construction in Orissa. The proceeds will also be used to expand Balco smelter capacity by 2.45 lakh tonnes per annum.



FIIs call in at Cyprus for India Entry

10th December 2004: Cyprus, the newest EU member, is all set to become the newest low-tax country for routing foreign investments into India. The country taxes corporate profits at rates lower than those in Mauritius. Dividends and profits from trade in securities are normally tax-free in Cyprus. Tax consultants have been advising FIIs to avoid the Mauritius route due to the questions being raised on the money laundering front and the majority of the new FIIs registering with Sebi are dumping Mauritius for Luxembourg.

Cyprus was one of the 10 new member states that joined the EU’s ranks recently, along with Hungary, Poland, the Czech Republic, the Slovak Republic, Slovenia, Estonia, Latvia, Lithuania and Malta on May 1 2004. Ernst & Young has established a cross-border strategic tax task force to advise clients on issues arising from the accession, says the company website. “We expect a large number of foreign investors operating in India out of Mauritius to shift to Cyprus. It is only a matter of time,” said a tax consultant at the Mumbai office of one of the big four. This is more so because the majority of the new FIIs registering with Sebi these days originate from Europe. “Cyprus now fulfils all OECD norms and the EU Code of Conduct. With the recent revisions to its corporate law, it is excellently positioned as an entry-level jurisdiction for anyone seeking to do business, especially FIIs operating in India,” said a top FII source.

Profits from the disposal of shares, stocks and securities in any recognised stock exchange are exempt from income tax in Cyprus. Cyprus corporate tax rates are now the lowest in Europe at 10%. The only exception being the Isle of Man’s 12.5%. Unilateral tax relief has been introduced for foreign tax paid abroad. This will be credited against any Cyprus tax, regardless of the existence of any double taxation agreement with the country where the foreign tax is paid. “Cyprus also has a framework under which FIIs can pay lower taxes in their home countries. These tax treaties allow companies to set off taxes paid here against the taxes they pay in their home countries,” a tax expert said.

Tax losses can be set off against future profits

About 50% of the interest received by corporations, excluding interest received in the context of the ordinary trading activity of the corporation (banks, interest on debtors) is exempted from tax. Capital gains tax is imposed only on the disposal of property situated in Cyprus. Dividend income can be exempt from tax if the Cyprus Company holds at least 1% stake directly in the company paying the dividend. The exemption does not apply if the company paying the dividend engages directly or indirectly in over 50% of its activities that produce investment income and the foreign tax burden on the income of the company paying the dividends is substantially lower than the Cypriot tax burden. The country treats a company as its tax resident if it is managed and controlled from Cyprus. All expenses incurred in earning income can be deducted from taxable profit. Tax losses in a year can be carried forward and set off against future profits.



Sebi gets designated court in Delhi

10th December 2004: The Delhi High Court has set up a designated court for dealing with Securities and Exchange Board (Sebi) prosecution cases even as a proposal for setting up such a court in Mumbai is pending before the Maharashtra government. The setting up of the court would facilitate the expeditious disposal of about 300 Sebi cases which are pending in different courts in the capital. In pursuance of the direction of the Delhi High Court on December 1, 2004, the Sessions Judge, Delhi has transferred all Sebi prosecution cases to the court of additional sessions judge Asha Menon, Sebi said in a release today. The market regulator had moved a proposal for setting up a designated or special court before the Chief Justice of the Delhi High Court to facilitate expeditious disposal of the cases, it said. Sebi said a similar proposal for setting up a designated court in Mumbai is pending before the Maharashtra government.

Vedanta may price dollar bond today

10th December 2004: London listed, Indian mining company Vedanta Resources is expected to price a 5 Ľ-year dollar-denominated bond today, said a market resource. The offering, which is estimated between $300m and $400m, has so far attracted $800m of orders, the sources added. Price guidance for the bond was set at 275 bps over mid-swaps, sources had said earlier. Barclays Capital and Deutsche Bank are the joint book runners. ABN Amro is the lead manger.

30-days notice must for merger, bonus shares

9th December 2004: The Securities and Exchange Board of India (SEBI) said the listed companies, whose stocks are available for derivatives contracts or were part of index with derivatives, should give a 30-days notice for corporate action like merger, de-mergers, share split and bonus shares. The clause 16 of the equity listing agreement should be amended to incorporate this change, Sebi said in a communication to stock exchanges.

Before, Sebi had said that listed companies have to give an intimation 15 days in advance in case of demat scrips and 21 calendar days in case of physical scrips to the stock exchanges, about their book-closure/record date. This amendment is being introduced on the basis of suggestion by panel on derivatives and Market Risk Management that the listing agreement clause be ended for extension of notice period only for purpose of adjustment of corporate actions like mergers and bonus shares and that too only for such stocks on which derivatives are available. This decision should be implemented with immediate effect, Sebi added.



Zodiac to issue 750,000 shares

9th December 2004: Zodiac Clothing told the Bombay Stock (BSE) that its board has approved the issue of 750,000 shares to three funds at Rs 400 per share. Of these, 1,00,000 shares will be allotted to Matterhorn Ventures, 3,00,000 shares to Reliance Energy Investments and 3,50,000 shares will be allotted to India Capital Fund. Zodiac shares were down 1.2% at Rs 430 on a slightly firm Bombay index.

Indoco Remedies fixes price band of Rs 220-245 for IPO

9th December 2004: Pharmaceutical company Indoco Remedies has fixed the price band of Rs 220 to Rs 245 for its maiden public issue. The initial public offer (IPO) consists of 30 lakh equity shares of Rs 10 each. The bidding for 100% book-building issue will open on December 17 and close on 23. The promoters and the promoting group currently hold 79.75% of the paid-up equity capital of Rs 8.82 crore, which would decrease to 59.51% after the issue.

The proceeds will be utilised to partly fund the company’s expansion programme, to set up a formulation plant at Baddi, Himachal Pradesh, an API manufacturing plant, R&D centre, and repayment of loans for brand acquisition and purchase of office. Enam Financial Consultants Private Ltd is the book running lead manager and IL&FS Investments Ltd is the co-book running manager for the issue. Intime Spectrum Registry is the registrar to the issue.

For the financial year ended June 2004, the company reported net sales of Rs 156.6 crore and a net profit of Rs 21.2 crore. Indoco is ranked No 34 as per ACNielsen ORG-Marg Retail Audit at the all-India level and ranks No 23 in terms of prescription generation by ACNielsen ORG-Marg Prescription Audit of June 2004.



Board of Satyam approves the ADS issue

9th December 2004: The board of Satyam Computer Services has approved an issue of American Depositary Shares (ADS) against existing shares in the company, the Bombay Stock Exchange (BSE) said. Satyam Computer Services is the India's fourth-largest exporter of software services. The BSE said the issue would not exceed 30 million shares of the company, equivalent to 15 million ADS, including a greenshoe option, if any.

Hindustan Motors to hive off Chennai, Indore plants

9th December 2004: Hindustan Motors is in preparation to hive off its Indore and Chennai plants into a separate company.  HM is also looking at roping in private equity investors. Temasek, Actis and Chrysallis Capital are in consultation to pick up stake of over 26% in the new company. The company, owned by the CK Birla group, has been considering some buying interest lately, on reports that the company may start a restructuring plan. The stock was at Rs 16.30 and clocked a volume of 13.87 lakh shares traded on the BSE. Whereas the Indore plant has been a profitable unit, the Chennai plant, which makes Lancers, has been nonviable, though, HM officials, refused to comment.

The company is looking up to encash the rising demand for engines and transmission equipment from both domestic and overseas auto manufacturers. By now, HM has entered into separate agreements with Ford India, General Motors and Mahindra & Mahindra for supply of engines and transmission products, which are being manufactured at its Pithampur plant. They are setting up to enter into similar alliances with other car majors as well. Apart from utilising spare capacity and widening its customer base, these arrangements will help the company to earn additional revenue.

Its Chennai plant, which manufactures the Lancers, is looking to bring in more Mitsubishi models in the country. Sources in the company said that stagnation in Lancer sales, with a price tag of Rs 8 lakh and manufactured under a technical licence from Mitsubishi of Japan, was threatening the viability of the Chennai plant, set up by HM at a cost of Rs 250 crore. With Lancer sales hovering at 350-400 cars per month, the company is now having discussions with Mitsubishi for introducing newer models either in the Rs 6-6.5 lakh or above Rs 10 lakh segment. It was not possible for HM to enter the small car segment, as it would require huge investment. Apart from the Pithampur unit that already manufactures auto components, the company is preparing out aggressive plans to manufacture auto components at its Uttarpara unit in West Bengal.



Go public early was advised to PowerGrid

8th December 2004: IDBI Capital, DSP Merrill Lynch and Kotak Mahindra have urged the PowerGrid Corporation of India Ltd to go for the proposed initial public offering (IPO) as early as possible. They have opined that this is the best time to tap the market, especially since the recent IPOs of National Thermal Power Corporation and Power Trading Corporation were oversubscribed. However, the merchant bankers have strongly recommended that PowerGrid should try and get its loss of Rs 1,200 crore compensated from the Centre for its operations in the northeast. The loss has been accumulated since 1998 after the corporation made the transmission network operational in northeast. PowerGrid has already made an appeal to the finance ministry to compensate the loss. These agencies have also observed that PowerGrid should make efforts to recoup its Rs 600-crore worth equity. This took place after the power ministry in 1997 amended the tariff applied for the corporation. “These two suggestions are a must to increase the valuation and PowerGrid’s market cap,” sources said. The recommendation to tap the market at the earliest is crucial, as the corporation on November 18 had said that it would go public only in the middle of 2005-06. It has already expressed its desire in this regard to the Union finance ministry.

Icra gives 'LAAA' to NTPC bond

8th December 2004: Credit rating agency Icra reaffirmed the highest safety 'LAAA' rating to the Rs 1500 crore bond issue of National Thermal Power Corporation. The rating considered NTPC's dominant position in the power sector, diversified customer base and its cost competitiveness due to superior operational efficiencies and proximity of its coal-based plants to pit heads, Icra said in a release. The rating also factored the state-run giant's strong financial position and the recent initial public offer of the company, which resulted in an inflow of Rs 2,700 crore. In another exercise, ICRA reaffirmed the highest safety ratings to the long-term debt, fixed deposits, short-term debt and Commercial Papers of Power Finance Corporation. The ratings took into account PFC's stable financial performance, its sovereign ownership and its important role in implementation of various government schemes for development of the power sector, Icra said.

BSE suspends 158 companies

8th December 2004: The Bombay Stock Exchange has suspended 158 companies for non-compliance of various requirements of the listing agreement from the bourse with effect from December 21, 2004. The 158 companies have failed to comply with the requirements of clause 35 and clause 51 of the listing agreement regarding submission of shareholding pattern and registration for EDIFAR (Electronic Data Information Filing And Retrieval system) respectively, BSE said in a release in Mumbai today.

Government plans SEZ Bill by Dec-end

8th December 2004: The government will introduce legislation for special economic zones by the end of this month. The highlights of the fiscal package include, among other sops, 20-year income tax holiday for SEZ units and enhanced I-T benefits for Offshore Banking Units (OBUs). SN Menon said, “The government is working on a legislative framework and a fiscal package for SEZs to be put in place by December end.” The draft bill has been sent to the law ministry for approval. Mr. Menon said the new legislation would also give complete freedom to developers to allocate space, as well as infrastructure and services, on commercial terms. In case of mismanagement of services or insolvency of the developer, an administrator may be appointed for up to one year for stability.

The government has given an in-principle approval to 33 SEZs, while five others, including Wipro’s Salt Lake SEZ in West Bengal; two in Pondicherry and one in Bangalore are under consideration. On OBUs in SEZs, he said that out of the 16 approved units, six have started functioning. Apart from tax benefits, the OBUs will be exempt from requirements like CRR, SLR and priority sector lending. Mr. Menon said the government has proposed to further simplify the procedures for attracting foreign direct investment, which will not require approval of the Foreign Investment Promotion Board (FIPB). He said that after the changes are incorporated, investors will only require the nod of Board of Approval, which will be headed by the additional secretary in the commerce ministry. An approval committee headed by the development commissioner will grant approval for manufacturing and service units at the zone level.



Gateway Distriparks files IPO draft

8th December 2004: Gateway Distriparks, a container freight station and logistics company, has filed a red herring prospectus with the Securities and Exchange Board of India for its initial public offering for 2.1 crore shares, slated to hit the capital market in early 2005. The shares of Rs 10 each would be issued at a price to be decided through the book-building route, the company said in a release. The offer comprises a fresh issue of 1.1 crore shares and an offer-for-sale of one crore shares by some existing shareholders and would represent 28% of fully paid-up post-issue capital, the release said. The proceeds of IPO would be used for business growth plans, strategic initiatives and acquisitions, it said. IL&FS Investmart and Kotak Mahindra Capital Company would act as the book running lead managers for IPO. The company operates one CFS at JNPT, it added.

SBI to float next MTN issue in 2005-2006

8th December 2004: State Bank of India is likely to float a second offering of its medium-term notes (MTN) foreign currency bonds in next financial year to fund its operation of overseas offices. The country's largest commercial bank concluded the first MTN offering for $400 million last week and next offering is likely to be some time after March 2005, senior SBI official said. When asked about the size of the next issue, the official said the size would be fixed near to the issue time, based on assessment of requirement and the demand from investors. The funds raised from MTN would be used for financing regular credit operations and retire high cost debt of the overseas offices, he added. SBI has established USD one billion MTN programme and first tranche comprised of notes valued $400 million, which is listed on Singapore Stock Exchange. The first tranche of the five-year medium term note issue was oversubscribed 3.5 times and a total 118 investors participated in the offer with 50% demand from Asia, Europe (41%) and the rest from offshore US accounts. Moody’s and BB by Standard and Poor’s rated MTN issue Baa2. The rating by Moody's pierced India's sovereign rating of Baa3.

Satyam is planning for ADS issue

7th December 2004: Satyam Computer Services’ board will meet on December 8 to consider an American Depositary Share (ADS) issue against existing shares in the company, the Bombay Stock Exchange (BSE) said.

Securities bill to limit brokers' strength on SE boards to 25%

7th December 2004: The representation of stockbrokers on the governing board of a recognised stock exchange is set to be reduced to one-fourth of the total strength of the board, according to The Securities Laws (Amendment) Bill, 2004. The bill introduced by the government in Lok Sabha today, says every recognised stock exchange will also have to issue fresh equity to ensure that at least 51% of its total equity capital is held by the public, distinct from the shareholders having trading rights in the exchange. This would be done within 12 months from the publication of the order on demutualisation of stock exchanges.

The Minister of State for Finance, Mr. S S Palanimanickam, introduced the bill for structural reforms of stock exchanges from a mutual organisation to a demutualised form in Lok Sabha today. Demutualisation means the separation of ownership and management from the trading rights of members of a recognised stock exchange according to a scheme approved by SEBI. The bill replaces an ordinance promulgated by the President on October 12 this year. It has also stipulated certain changes from the earlier version of the bill, which has lapsed due to the dissolution of the 13th Lok Sabha. These include the provision relating to definition of ‘derivatives’, which included non-securities based derivatives, such as those based on rates on indices.

These have been omitted, in view of the apprehension that the amendment would create further disability to the existing ‘over the counter’ derivatives. It has also omitted the provisions specifying the conditions for delisting of securities by stock exchanges. Instead it has left delisting to be defined in the rules, to be framed under the proposed Act. This will provide flexibility for regulation of delisting. The provision in the earlier bill for spot delivery contracts has also been deleted, as the existing provisions are considered adequate for regulation of certain category of spot contracts, the new bill says. The clause on non-attachment of investment assets has also been omitted, as such a provision could be misused to pass off assets of brokers as client assets and thus “frustrate attachment proceedings”.

The remaining provisions of the bill are similar to the ordinance. The government had promised the joint parliamentary committee on stock scam, that it would introduce this bill to streamline the functioning of stock exchanges to break their owner-trader nexus. The bill has accordingly given larger powers to Sebi to regulate the exchanges. The bill permits members of one stock exchange to enter into contract with members of other stock exchanges, subject to such terms and conditions as stipulated by respective stock exchanges with the prior approval of SEBI. It also proposes certain amendments in the Depositories Act, 1996 to provide for enhanced existing penalties and make provision for monetary penalty for certain contraventions. It stipulates grant of immunity in certain cases by the Central government and filing of appeal from the Securities Appellate Tribunal to the Supreme Court on the lines of provisions contained in the SEBI Act of 1992.



UTV to launch enlarged IPO in Feb ’05

7th December 2004: TV show maker and film distributor UTV Software Communications Ltd said today that it would launch an initial public offering (IPO) with an enlarged float in February 2005. The details were still being worked out, said UTV Chief Executive Ronnie Screwvala. UTV, which filed IPO papers in July for a 6 million-share offer, or nearly 32% of its expanded equity base, had expected to raise about 1 billion rupees ($22 million). It had said in September it would delay its IPO by three months as it had cash on hand for its immediate needs after a stake sale.

UTV to launch enlarged IPO in Feb ’05

7th December 2004: TV show maker and film distributor UTV Software Communications Ltd said today that it would launch an initial public offering (IPO) with an enlarged float in February 2005. The details were still being worked out, said UTV Chief Executive Ronnie Screwvala. UTV, which filed IPO papers in July for a 6 million-share offer, or nearly 32% of its expanded equity base, had expected to raise about 1 billion rupees ($22 million). It had said in September it would delay its IPO by three months as it had cash on hand for its immediate needs after a stake sale.

Allahabad Bank gets Govt approval for second public issue

6th December 2004: Government has approved Allahabad Bank's second public issue of at least Rs 100 crore. The bank plans to issue 10 crore equity shares at the face value of Rs 10 each, the bank informed BSE. An appropriate premium will be decided by the bank, it said.

Sebi imposes penalty on Kosha Investments

4th December 2004: The Securities and Exchange Board of India (Sebi) have smack a huge monetary penalty of Rs. 18.8 crore on Kosha Investments (KIL) for failing to make an open offer to shareholders of Snowcem India (SIL) and causing loss to investors. Sebi directed KIL on January 27, 2004, to make a public offer with June 29, 1999 as the reference date.

France Tele’s BPL sale attach at Rs 350-600 cr

4th December 2004: France Telecom has offloaded its 26% stake in BPL Mobile’s Mumbai circle. According to the company’s website, “France Telecom has refocused on its core activities and on Europe. Several subsidiaries were divested in 2003, particularly Telecom Argentina, Wind, Casema, CTE Salvador and Eutelsat.” The exact price at which the stakes were sold is not known, but it’s estimated to be between Rs 350 crore and Rs 600 crore, based on the valuation of BPL Mobile’s Mumbai circle. While some analysts said the actual value of the deal could be lower, since France Telecom has probably made a “distress sale”, other analysts felt the price was possible since the Mumbai circle is one of the fastest growing markets.

BPL Mobile has a 1.2m subscriber base and is the second-largest operator in the city. It has reported average revenue per user (ARPU) of over Rs 360 per subscriber. Based on an EBITDA of Rs 250 crore and considering a multiple of 8-12, the enterprise valuation of the Mumbai circle works out to Rs 2,000-3,000 crore. The debt is to the tune of Rs 650 crore. Hence, the equity valuation works out to Rs 1,350-2,350 crore. The value of 26% of the equity works out to Rs 350-600 crore. With this, the last of the foreign ‘strategic’ investors has exited from BPL Mobile. France Telecom, which was one of the first joint ventures in the telecom field in India, had tied up with BPL Mobile in 1995. Despite the 26% stake, it was more of a financial investor than a strategic investor. “They did not bring in the brand, technology or the marketing advice. BPL Mobile was managing the show,” said a source.



Service tax on transport agencies from Jan 1

4th December 2004: Service tax on goods transport agencies — a Budget announcement kept in abeyance after the truckers' strike in September — will now come into effect from January 1, 2005 with certain modifications. A notification issued today said service tax would be levied on 25% of the gross amount charged from the customer. Transportation of fruits, vegetables, eggs or milk will not attract any service tax. Service tax will also not be levied if the gross amount charged on all consignments transported in goods carriage is not more than Rs 1500. For individual consignments, the limit has been set at Rs 750.

Persons making payments towards freight will be liable to pay service tax in case the goods are transported from a factory registered under the Factories Act, companies under the Companies Act and a corporation established under any law. Also goods transported from registered societies, cooperative societies, excisable goods under central excise will attract service tax. The tax is to be paid by goods transport agencies. The changes are in tune with the recommendations of a committee constituted to examine an appropriate mechanism for collection of service tax from goods transport agencies.



UTV has postponed its IPO

4th December 2004: Film and television company UTV’s public issue, which was initially scheduled for September-November, has been postponed. UTV is looking to raise around Rs 80-90 crore from the IPO. The company has announced no fresh date, but the IPO is expected to hit the market around February. This is the third postponement of UTV’s IPO. UTV’s two previous attempts to go for an IPO had to be aborted after the market tanked. The first was in the first half of 1999, soon after it turned broadcaster with the acquisition of Tamil language Vijay TV from the UB Group. On the second occasion, in June 2000, UTV consolidated all its operations into a single entity in preparation for an IPO, but the move had to be called off after the market fell sharply.

Company chairman Ronnie Screwvala said investment bankers suggested that UTV give the newly launched kids channel ‘Hungama TV’ enough time to consolidate before launching its IPO. This would give a better P-E ratio. The channel was launched on September 26. The pressure on the company for an early IPO had also eased following the sale in August this year of 44% of Vijay TV’s equity to the STAR group for a consideration of Rs 31.5 crore, it was felt among investment banking circles. Around May 2001, UTV had sold a controlling stake of 51% in Vijay TV to STAR, giving the latter management control over its first south Indian channel. Later on, another small 3% of the equity was picked up by STAR. With the 44% stake passing on to STAR, Vijay TV currently is a 100% STAR subsidiary. UTV promoter Ronnie Screwvala, in June this year, announced the buy-back of 16% of STAR’s holding and CDPQ’s 31% equity in UTV, raising the promoter’s share in the company to 54%. In the latest round, UTV is looking at raising around Rs 80-90 crore from the IPO.



Textile Companies are planning for IPO

4th December 2004: A number of textile companies are coming out with initial public offerings, encouraged by booming stock markets and rising business opportunities. Bangalore-based apparel export major Gokuldas Exports; Reid & Taylor, part of the Mumbai-based S Kumars group; and the Mumbai-based apparel major Provogue are understood to have finalised plans for IPOs. Some other mid-cap textile companies are also putting their IPO plans in place.

Though a few textile companies have been toying with the idea of public floats for quite sometime, the process has gathered steam only recently. Some of them have already appointed merchant bankers to get going the process. Gokuldas Exports, with a turnover of close to Rs 600 crore, is believed to have appointed Mumbai-based Enam Financial Consultants as advisers to the IPO. The S Kumars group has short listed four leading merchant bankers for its proposed IPO for Reid & Taylor, which is currently a division. Acme Clothing, which promotes the Provogue brand, is also understood to have given a mandate to a leading merchant banker. Merchant bankers are currently making presentations to company managements, according to sources.

Dena Bank finalises Rs 200 cr equity issue

3rd December 2004: State-owned Dena Bank has finalised on Wednesday its over Rs 200 crore second public issue, scheduled to hit the market in the first quarter of next fiscal with a price band of Rs 23-27. The bank’s board have gave its nod for the issue, with a face value of Rs 80 crore, of 8 crore shares to the public which will bring down the Centre’s stake in the bank to 51%. “The Centre will dilute its 20% stake in the bank to 51% and this is for the first time that any bank has been permitted to bring down the government stake to 51%,” said A Khandelwal, chairman and managing director of Dena Bank. The bank is planning to file its prospectus on Friday and the lead managers of the issue are JM Morgan and SBI Caps. Khandelwal said that the bank needed capital to boost its capital adequacy ratio to 12% from 10% to expand its business.

FIIs can invest only $500m in corporate bonds

3rd December 2004: The Securities and Exchange Board of India (Sebi) announced a $500 million cap on foreign institutional investors’ (FII’s) investments in corporate bonds. This limit is over and above the $1.75 billion overall ceiling on FII investments in the Indian debt market. Thus, foreign funds can invest up to $2.25 billion (approximately Rs 9,900 crore) in Indian debt, including government securities, treasury bills and corporate debt.

Sun Pharma issues additional FCCBs worth $75mn

3rd December 2004: Sun Pharmaceuticals has launched an additional five year zero coupon foreign currency convertible bonds (FCCB) for $75 million, taking the total size of its issue to $350 million. The bonds would be converted into shares at a 50% premium over the November 17 closing price of the company's Bombay-listed shares of Rs 486.20. The bonds carry a yield-to-maturity of 4.61% per year. The bonds will be listed on the Singapore Stock Exchange. J P Morgan is the Sole Book Runner & Jermyn Capital Partners is the co-manager to the issue.

IDBI plans dollar bond

3rd December 2004: The Industrial Development Bank of India plans to launch a five-year US dollar-denominated bond, said the lead managers. Barclays Capital and Merrill Lynch have been mandated to lead manage the offering, which will be launched following investor presentations in Asia, Europe and the Middle East subject to market conditions.

Dena Bank sets price band for share issue

2nd December 2004: Dena Bank has set a price band of Rs. 23-27 per share for a proposed public issue of 80m shares. After the issue, the government’s stake would drop to 51% from 71%.

... ready for VAT from April, white paper within 15 days

1st December 2004: Decks have been cleared for the introduction of Value-added Tax from April 2005, and a white paper on the new tax regime will be circulated among states in 15 days. "A draft white paper on Value-added Tax will be ready within 15 days and circulated in the country," Asim Dasgupta, the chairman of the Empowered Committee on VAT, said after a meeting with Finance Minister P Chidambaram. After the white paper is circulated, states will go for a nationwide awareness campaign.

Leading industry and trade bodies – CII, Ficci, Assocham, Confederation of All India Traders, and Bharatiya Udyog and Vyapar Sangh – will interact with VAT panel regularly so that their apprehensions and doubts over the implementation of the new tax regime can be addressed. Dasgupta, who is also West Bengal Finance Minister, said most of the states are ready with their VAT legislations and the remaining states are expected to get the nod of their respective assemblies in the winter session. He said a delegation from Uttar Pradesh, which has been the only state to oppose VAT introduction, will meet him in Kolkata on December 4.

BSE shifts 176 stocks to ‘trade to trade’

2nd December 2004: As a part of Surveillance review and pursuant to the meeting with the capital market regulator Securities and Exchange Board of India (Sebi), The Stock Exchange, Mumbai (BSE) has decided to shift 176 stocks to Trade-To-Trade (“T”) group from December 6, 2004. The exchange in a notice to its members said that, “with a view to take preventive surveillance measure, to ensure market safety and safeguard the interest of the investors, the exchange has taken this decision”. However, if these stocks as on the shifting date are in No-Delivery period then such stocks will be transferred to “T” Group following the completion of its no-delivery period.

In another strict step, the exchange has decided to retain 326 stocks in “Z” group (already traded and settled on trade to trade basis), which are eligible to be transferred to “T” group for not complying with the various clauses of Listing Agreement etc. Further, as and when the review of “Z” group is taken up by the Exchange and if any of such stocks qualify to be excluded from “Z” group then such scrips shall be transferred to “T” group. BSE said its members would be intimated of any such changes as and when it happens by way of a notice. In another development the exchange has decided to shift 176 stocks currently traded on trade-to-trade basis to their original groups from December 6, 2004. However, if these stocks as on date are in no-delivery period then such scrips will be shifted back to their original group after the expiry of this period, it said.

The IPO of Bharati Shipyard will strike the market tomorrow

1st December 2004: Bharati Shipyard would hit the capital market with an initial public offering of 1.25 crore equity shares at a price band of Rs 55-66 per share. It will raise up to Rs 82.5 crore for funding its capacity expansion plans. The issue is 100% through book-building route. The issue opens on tomorrow i.e. December 2 and closes on December 8. SBI Capital Markets and Enam Financial Consultants are the book running lead managers to the issue.

BSE to shift 362 stocks to T group

1st December 2004: Following a review of market trends by the Securities and Exchange Board of India, the Bombay Stock Exchange will shift 362 stocks including Birla Kennametal, Ind-Swift Labs and Kinetic Engineering to "T" group from December 6 to safeguard investor's interest. As part of a surveillance review and pursuant to a meeting with Sebi, 362 stocks would be shifted to T group. They would be settled on trade-to-trade basis to ensure market safety, BSE said in a notice to the broking members.

Some of the other stocks being shifted to T category include Kirloskar Pneumatic, Mahindra Ugine Steel, Nicco, Roto Pumps, Salora International, Talbros Automotive Components, Torrent Gujarat Biotech, Veronica Labs and Zodiac Clothing, it added. The broking members should take adequate precaution while trading in the above scrips as the settlement would be done on trade-to-trade basis and no netting off positions was allowed in these scrips.

Govt to tighten IPO norms to control companies vanishing act

1st December 2004: Finance minister P Chidambaram is expected to soon announce tightening of the regulatory mechanism, including ironing out differences between RBI and Sebi, to check the vanishing companies. The minister assured Mr. Murli Deora at a meeting of the consultative committee that he would make public the steps his ministry will take to check cheating. Officials said the steps may include putting additional curbs on the end use of the proceeds of public offers. The ministry has also held meetings with the company affairs ministry and Sebi on the issue.

Independent think tanks have also briefed the minister and on the subject. The officials said the ministry is in favour of shifting focus on monitoring the use of the proceeds from public issues. The approach is different from the one adopted by the company affairs ministry and the market regulator so far. These have largely been aimed at nabbing the absconding promoters of such companies. The company affairs ministry has a central coordination and monitoring committee, co-chaired by its secretary and the Sebi chairman, to monitor the action taken against the vanishing companies and unscrupulous promoters.

The committee has set up four task forces in Mumbai, Delhi, Chennai and Kolkata under the jurisdiction of the four regional directors of the ministry. The task forces are expected to identify the companies which have disappeared, or which have misutilised funds mobilised from investors, and suggests appropriate action in terms of Companies Act or Sebi Act. According to information posted by the company affairs ministry on its web site, there are 122 companies which have vanished after raising finance from the public. The ministry treats a company as a defaulter, if it becomes irregular in filing statutory returns with the registrar of companies. The phenomena of vanishing companies had peaked in the early nineties.

According to finance ministry officials, despite significant measures taken by Sebi since then to restore confidence and transparency in the markets, small investors have not forgotten the incidents. Chidambaram is keen to ensure that the government is seen to be taking proactive steps on the issue, to make small investors interested in share markets again.

IOB plans Rs 150 crore tier-II bond issue

1st December 2004: State-run Indian Overseas Bank proposes to raise Rs 150 crore through bonds to shore up its tier-II capital, the bank said in a statement to the Bombay Stock Exchange. The bank mobilised Rs 200 crore in July through a private placement of bonds, which had tenure of 120 months and annual interest of 6.4%. The bonds are rated AA+ or ‘high safety’ by CRISIL.

Sun Pharma completes $275m FCCB issue

1st December 2004: Sun Pharma has completed allotment of a $275m FCCB issue. Earlier in the month, company had launched a 5-year Zero Coupon FCCB for $275m. It was priced at a 50% premium over the November 17 closing price with 4.61% per annum yield to maturity. This is subject to greenshoe of up to $75m. These bonds are expected to be listed on the Singapore Stock Exchange. JP Morgan was the book runner & Jermyn Capital Partners were the co-manager to the issue.

Finolex has raised Rs 75 crore through bond issue

30th November 2004: PVC pipes & resin maker Finolex Industries has raised Rs 75 crore through an issue of privately placed bonds, the arranger to the deal said. Barclays Bank was the sole arranger to the issue. The proceeds from the issue will be used for a brownfield expansion project to expand plant capacity by 130,000 tonnes per annum, which will take total production capacity to 260,000 tonnes.

Telecom firm TCIL postpones IPO

30th November 2004: India’s state-run Telecommunication Consultants India Ltd. (TCIL) has postponed its initial public offering of shares until the next financial year, starting next April, the company's chairman said today. "We are recasting our accounts. The IPO will not be in this financial year. It is likely to be next year," chairman GD Gaiha added.

P& SB is planning to mop up Rs 48 cr through bonds

30th November 2004: The government-owned Punjab & Sind Bank is eyeing at mopping up about Rs 48 crore through its bonds as part of efforts to strengthen its capital base. Assigning an adequate safety "LA" rating to the bank's Tier-II bonds, credit rating agency Icra said, "The high net non-performing assets, coupled with moderate capitalization levels, translate into inferior solvency 1 for the bank in relation to that of other public sector banks." "However, there is a likelihood of support from the Government of India in event of any liquidity problems," the rating agency said noting pressures on profitability of the bank due to high overhead expenses and high level of NPAs though "significant" treasury profits supported profitability.

The "LA" rating factored the strengths arising from 100% ownership of the Government, low cost deposit base and moderate franchise in North India, which accounts for 70% of advances and 85% of deposits. In another exercise, ICRA reaffirmed the high safety "LAA+" rating to the long-term subordinated bond programme of the country's sixth largest banking entity, Bank of India. The rating agency also reaffirmed the highest safety "MAAA" rating to the term deposit programme of BOI and both the ratings factored BOI's strong franchise operations including foreign operations, favourable low cost deposit base, improving core profitability and liquidity. However, it said, "The rating continues to be constrained by its (BOI's) asset quality and the comparatively lower capitalisation levels.



Robert P. Miles-warren Buffet expert seminar on Investment methods

29th November, 2004.A seminar by Mr.Robert P. Miles who is an expert on Mr. Warren Buffet's Investment methods is being organised in Mumbai.He will explain the Science of investing and art of managing. The seminar is being organised by Indiatimes in association with Bajaj capital and others. Have your investment methods produced consistently excellent returns regardless of the market? If not, then it's time you investigated the methods of the man who has made and kept more money in the stock market than anyone else. Get inside the head of the world's shrewdest investor, Warren Buffett, the world's greatest investor and the second richest man in the USA. No matter how much or how little money you have in the market right now, this Summit will make an amazing difference in the investment choices you make in the future and the returns those investments produce for you. Catch ROBERT P. MILES the world renowned expert on Warren Buffett share the extraordinary investment and management secrets of Warren Butffett and help you create your own millions. Registration Fee List Price: Rs. 10,000 per delegate Early Bird Registration Fee (if you REGISTER & PAY by 20th of November 2004):Rs 8,000 per delegate Group Registration Fee: Rs. 6,000 per delegate (3 or more delegates) For More details please email at [email protected].

Amendments to tax audit forms 3CA, 3CB and 3CD

November,16 2004 NOTIFICATION NO-280/2004, Dated : November 16, 2004 In exercise of the powers conferred by section 295. read with section 44AB, of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely : 1. (1) These rules may be called the Income-tax (Fourteenth Amendment) Rules, 2004. (2) They shall come into force from the 1st day of December, 2004. 2. In Appendix -II to the Income-tax Rules, 1962, - (A) in Form No. 3CA, in item No. 3, after the words, figure and letters "Form No. 3CD", the words "and the Annexure thereto" shall be inserted; (B) in Form No. 3CB, for item No. 4, the following items shall be substituted, namely : "4. The statement of particulars required to be furnished under section 44AB is annexed herewith in Form No. 3CD. 5. In my/our opinion and to the best of my/our information and according to explanations given to me/us the particulars given in the said Form No. 3CD and the Annexure thereto are true and correct."; (C) in Form No. 3CD, for the Note occurring at the end, the following shall be substituted, namely : "Note : 1. The Annexure to his Form must be filled up failing which the Form will be considered as incomplete. 2. This Form and the Annexure have to be signed by the person competent to sign Form No. 3CA or Form No. 3CB, as the case may be. Annexure PART A 1. Name of the assessee : 2. Address : 3. Permanent Account Number : 4. Status : 5. Previous year ended : 31st March 6. Assessment year : PART B NATURE OF BUSINESS CODE Sl. No. Parameters Current year Preceding Year 1. Paid up share capital 2. Share Application Money 3. Reserves and Surplus 4. Secured loans 5. Unsecured loans 6. Current liabilities and provisions 7. Total of Balance Sheet 8. Gross turn over 9. Gross profit 10. Commission received 11. Commission paid 12. Interest received 13. Interest paid 14. Depreciation as per books of account 15. Net Profit (or loss) before tax 16 Taxes on income paid/provided for in the books .................... Signed Place : .................. Date : .................. Note : Please enter the relevant code pertaining to the main are of your business activity. The codes are as follows : Sector Sub-Sector Code (1) Manufacturing Industry Agro-based industries 0101 Automobile and Auto parts 0102 Cement 0103 Diamond cutting 0104 Drugs and Pharmaceuticals 0105 Electronics including Computer Hardware 0106 engineering Goods 0107 Fertilizers, Chemicals, Paints 0108 Four & Rice Mills 0109 Food Processing units 0110 Marble & Granite 0111 Paper 0112 Petroleum and Petrochemicals 0113 Power and energy 0114 Printing & publishing 0115 Rubber 0116 Steel 0117 Sugar 0118 Tea, Coffee 0119 Textiles, Handloom, Power looms 0120 Tobacco 0121 Tyre 0122 Vanasapati & Edible Oils 0123 Others 0124 (2) Trading Chain stores 0201 Retailers 0202 Wholesalers 0203 Others 0204 (3) Commission Agents General Commission Agents 0301 (4) Builders Builders 0401 Estate agents 0402 Property Developers 0403 Others 0404 (5) Contractors Civil contractors 0501 Excise Contractors 0502 Forest Contractors 0503 Mining Contractors 0504 Others 0505 (6) Professionals Chartered Accountants, Auditors, etc. 0601 Fashion designers 0602 Legal Professionals 0603 Medical professionals 0604 Nursing Homes 0605 Specialty hospitals 0606 Others 0607 (7) Service Sector Advertisement agencies 0701 Beauty Parlours 0702 Consultancy Services 0703 Courier Agencies 0704 Computer Training/Educational and Coaching institutes 0705 Forex Dealers 0706 Hospitality services 0707 Hotels 0708 I.T. enabled services, BPO service provides 0709 Software development agencies 0711 Transporters 0712 Travel agents, tour operators 0713 Others 0714 (8) Financial Service Sector Banking Companies 0801 Chit Funds 0802 Financial Institutions 0803 Financial service providers 0804 Leasing Companies 0805 Money Lenders 0806 Non Banking Finance Companies 0807 Share Brokers, sub-brokers, etc. 0808 Others 0809 (9) Entertainment Industry Cable T.V. productions 0901 Film distribution 0902 Film laboratories 0903 Motion Picture producers 0904 Television Channels 0905 Others 0906 Sd/- (D.P. Semwal) Director (TPL-III) F.No.142/24/2004-TPL

Ramco is planning to raise $6m by means of preferential allotment

27th November 2004: Ramco Systems will raise about $6m through a preferential allotment to group companies and a ‘domestic consulting firm’, at around Rs 330 per share. A major portion of this amount, almost $4.5m, will be pumped in by group companies i.e. Madras Cements and Ramco Industries, while the consulting firm is likely to bring in $1.8m, official sources said. Madras Cements, which is pumping in about Rs 17 crore, and Ramco Industries (Rs 5 crore) will together pick up 5% equity stake in Ramco Systems, while the consulting firm will pick up a 2% stake in the company. The proceeds of the issue will be used to meet the ‘working capital’ requirements of the company, sources said.

Previously, Ramco Systems informed the BSE that its board has decided to issue about 6.11 lakh shares to the promoter group by way of preferential allotment. It will also issue 2.5 lakh securities in convertible warrants to a “select investor.” Ramco Systems had reported a net profit of Rs 2.3 crore on a turnover of Rs 32.7 crore for the quarter ending September 30, 2004. The company’s scrip closed at Rs 380.7 on the BSE at the close of trading on Thursday.

Do MFs yield more than ULIP? ULIP don’t offer investors any choice

27th November 2004: Mutual funds and unit-linked plans (ULIPs) of life insurance companies address different financial planning needs and cannot be compared. MFs target investment returns while ULIPs aim at life insurance, i.e., protection against financial strains caused by death/critical illness. Investment returns from ULIPs are a secondary benefit. Globally, ULIPs are more popular as they are more transparent, flexible and easier to grasp than traditional insurance products, but they are not superior to MFs.

That is firstly since only 70-80% of the payments made are invested in the first few years in ULIPs. The rest pays the broker, fund manager and funds the life cover. The principle of compounding thus works against investors, to dent net returns. It is better to buy the cheapest, most comprehensive, life insurance via a ‘term’ or ‘pure risk coverage’ policy, investing the difference between that and ULIP into a MF. That could net gains of 1% per annum over a decade, despite returns from both instruments being identical.

Secondly, advantages like Sec 88 are also available in ELSS Funds, which have lower exit loads than ULIPs. Thirdly, funds offer a far wider choice of investments — from aggressive growth funds, income funds, to cash funds. Fourthly, funds have an open architecture in distribution; most big distributors offer funds from all 29 fund houses, but it is largely its “tied agents” who offer a company’s insurance. So, in ULIPs, customers lack choice and cannot compare. Fifthly, tax-free switching is allowed within ULIPs’ sub-plans, but not across companies. Hence ULIP holders must pay the exit load to move investments if the fund performance of one company is poor. So, even if ULIPs offer a well-packaged (and occasionally a ‘principal and returns guaranteed’) product with tax advantages, which is offset by high initial costs, illiquidity, and exit loads.

In sum, the issue is not of whether to get insurance or MFs, but how much of each. Ignore the savvy marketing of ULIPs as being the “best of both worlds”, and seek out the best rates, benefits and returns. The best financial planner is the one who puts investor interests over commissions.

Sebi prescribes minimum disclosure in offer document

27th November 2004: Offer Document: An offer document contains very useful information about a mutual fund scheme. They are required to be given to the prospective investor by the mutual fund. The Securities and Exchange Board of India (Sebi) has prescribed minimum disclosures in the offer document and an investor, before investing in a scheme, should carefully read the same. This legal document has to be constantly updated by the fund, if not through reprinting, with sufficient additions. Though the fat offer document need not be read from beginning till end, there are some crucial things that an investor should peruse.

For starters, one must know the fund’s investment objective and its portfolio asset allocation strategy. It gives the investor information about the risk profile of the scheme and more importantly, tells you where (the securities) your money is going to be invested in and in what proportion. It also has useful information about the track record of your fund manager and his experience. Also, glance through the expense ratio of the fund and its risk factors. As a thumb rule, stay away from funds with any lock-in period and prefer an open-ended scheme that provides liquidity at all times. Last, but not the least, check the performance of schemes with a similar profile. This is in case it is a newly launched scheme. This is a good way to gauge whether it would live up to your expectations.

Jaiprakash Hydro consider IPO plan over ‘low’ pricing

26th November 2004: Jaiprakash Hydropower, the Delhi-based electricity generator, may further delay or cancel plans for an IPO despite strong market conditions and a budding appetite for power stocks. Top industry sources said the promoters were not too happy with the price that the market was willing to offer for the shares. They felt that Rs 20 per share was too low for a power plant that was successfully running its operations. They had expected at least Rs 35-40 per share, sources added.

Jaiprakash Hydropower was originally expected to launch its Rs 350-380 crore public issue sometime in September-October ‘04. ICICI Securities, JM Morgan Stanley and UTI Bank were the advisers. Jaiprakash Associates, the Promoter Company and ICICI, the country’s second-largest bank, were supposed to sell a portion of their holding in the company — about 30-40%. ICICI had invested in the company during the early phase of construction of the plant, and sought a partial exit. The promoters, meanwhile, sought to cash in on a portion of their equity after the successful completion of the 300 MW plant in Himachal Pradesh. The promoters hold 80%, while the rest is held by ICICI Bank. The power plant began operations last year.

The uncertainty over the issue comes when the stock markets are booming and power stocks, far from being laggards, are leading the pack. The National Thermal Power Corporation’s IPO in October at Rs 5,111.9 crore was the country’s second largest after Tata Consultancy Services (TCS). Today, the scrip, which debuted at Rs 70 — 12.9% premium to the issue price of Rs 62 — is quoting at Rs 76.85 and has a market capitalisation of Rs 63,366 crore, the third-largest after ONGC and Reliance Industries. Buoyed by the company’s performance, the government has drawn up plans to sell stakes in other public sector power firms such as Power Grid Corporation and Power Finance Corporation. Sources added that the IPO has not been formally called off, but has been put on the backburner. “We are still waiting for a word from the company. But yes, there has been a delay,” they said.

SEBI to protect investors in Reliance case

26th November 2004: Securities and Exchange Board of India (SEBI) would take up the issue of Reliance group enities' corporate governance and disclosure practices with the stock exchanges to decide on future course of action for investor protection. The capital market watchdog was monitoring developments concerning listed companies of the Reliance group, including Reliance Energy whose six directors resigned today, said a senior SEBI official.

SEBI would get in touch with The Stock Exchange, Mumbai (BSE) and National Stock Exchange (NSE), to discuss the disclosures and governance standards followed by Reliance group entities, he said. The developments have huge implications for stakeholders including millions of shareholders of the Reliance group, he said. The regulator is yet to decide "on course of action on the recent developments", which impacted the trading of the Reliance group scrips, as SEBI chairman G N Bajpai was currently out of the country, he said.

Meanwhile, a BSE official said the bourse has not sent any communication to any Reliance group entity to seek their version on developments, including the reported differences over ownership and exodus of directors from REL board. An NSE official said that the exchange has not sent any notice to RIL since its chairman has clarified the status of ownership.

Companies Act likely by May 2005

25th November 2004: The government said it would introduce the Bill for the Companies Act in the Budget Session next year and the new Act was expected to be in place by May 2005. "We will introduce the bill for the new Companies Act in the Parliament in the later session of the Union Budget and the new act was expected to come into being by May 2005," Union Company Affairs Minister PC Gupta said at the National Accounts Convention. The committee comprising chambers of commerce, Sebi, RBI and Ministry of Law and finance officials headed by JJ Irani would look into the comments and views received on the concept paper and submit a report to the consumer affairs ministry in 90 days.

Gupta said the government has proposed to reduce the provisions of the Companies Act to 289 from the present 781. He said the government wanted to free the corporate world of bureaucratic hurdles and provide it with a level playing field for competition with multinational companies. It was taking strong action against vanishing companies and would rope in the services of NGOs for building investor confidence and education. Two major scams had hit the credibility of the stock market and had shaken investor confidence, he said, adding, without the two scams, there would have been 20 crore small investors in the market.

Deccan Chronicle IPO quickly oversubscribed

25th November 2004: The initial public offering of publisher Deccan Chronicle Holdings Ltd. was oversubscribed 1.3 times within minutes of its opening today, as investors bet on its strong growth prospects and expansion plans. The offer of 8.01 million shares, in the price band of 162 rupees to 194 rupees per share, is open until Dec. 2, with the shares listing on stock exchanges in late December. A banker to the issue said the portion set aside for qualified institutional bidders, or nearly 60%, was oversubscribed two times. Bids were largely at the lower end of the price band, the banker said.

The Hyderabad-based publisher, set to become India's most valuable listed newspaper firm, has the option of selling an additional 1.2 million shares if there is demand. Deccan could be valued at as much as 7.5 billion rupees, far more than two other listed newspaper publishers -- Mid-Day Multimedia Ltd., worth 1.2 billion rupees, and The Sandesh Ltd., worth 728 million. At the top end, the IPO would raise 1.79 billion rupees through the sale of 22.3% of Deccan's expanded equity. The firm plans to use the money to launch in new markets.

Deccan made a net profit of 175 million rupees on total revenues of 1.2 billion in the year to March 31, 2004. It earns 85% of its revenue from advertisements, and estimates these will grow at over 10% over the next couple of years.

LIC has launched two children’s plan

24th November 2004: Life Insurance Corporation launched two schemes -- a money-back children's plan 'Jeevan Anurag' and pension with endowment plan 'Jeevan Nidhi'. Jeevan Anurag offers money back facility of 20% of the sum assured in the last three years of the policy and the balance 40% is paid during maturity, LIC officials said. Jeevan Nidhi offers life cover along with guaranteed additions of Rs 50 per thousand for five years and bonuses thereafter. On survival, the policyholder would get a pension from the accumulated sum. Both the policies offer riders of accidental and disability benefits, term assurance and critical illness benefits. They can be paid in the single premium mode or periodically.

Syndicate Bank to raise Rs 100 crore via bonds

24th November 2004: Syndicate Bank is to raise Rs 100 crore through private placement of bonds. The bank’s Board of Directors took the decision, they has also informed BSE. Syndicate Bank will raise Rs 100 crore in subordinated debt, which would enhance its Tier-II capital.

HDBC Bank’s ADR by mid of January

24th November 2004: A proposed issue of American Depositary Receipts (ADRs) by HDFC Bank, India's third-largest commercial bank, is likely to take place in mid-January, a HDFC group official said. "We are working with the US SEC (Securities and Exchange Commission) and due diligence is being done," Deepak Parekh, chairman of HDFC, which founded privately managed HDFC Bank. Parekh said no lead managers had been appointed.

Dena Bank IPO draft decision on Dec 1

24th November 2004: Board of Directors of Dena Bank will meet on December 1 to consider the draft prospectus for its second public issue aimed at raising at least Rs 80 crore. The board will decide on the price of the shares of face value totaling Rs 80 crore with appropriate premium that would be offered to the public, in the meeting next month, the bank informed the BSE. The bank's Board will also finalise the draft prospectus to be filed with market regulator Sebi, it said.

Six MF majors post decline in corpus by Rs 6,651 crore in July-October

24th November 2004: Major fund houses like HDFC MF, Prudential ICICI MF, LIC MF, Templeton India MF, Kotak Mahindra MF and Reliance MF have been the worst hit in terms of erosion in corpus during the past four months. An analysis of the latest Amfi (the Association of Mutual Funds in India) data on corpus shows that the six mutual fund majors have seen their asset base shrink by a whopping Rs 6,651 crore during the July-October period when both debt and equity markets went on a tailspin.

The comparison considered 15 largest fund houses in the country each having a corpus of more than Rs 4,000 crore and their combined asset base constitutes Rs 1,34,922 crore as against the fund industry’s Rs 1,47,995 crore as on October 31, 2004. The six funds have seen 4-18% fall in corpus, thanks mainly to the huge redemption pressures. The fall in value of portfolio holdings due to market volatility has also contributed to a dip in their asset base. However, UTI Mutual Fund, the country’s largest fund house, has been the best performer as its assets swelled by Rs 1,204 crore followed by HSBC (corpus increased Rs 552 crore) and Principal PNB MF (Rs 262 crore).

Among the 15 funds, HDFC MF is the biggest loser as its asset base shrunk by 2,298 crore to the current level of Rs 13,807 crore, from Rs 16,105 crore at the beginning of July to Rs 13,807 crore at the end of October, a fall of 14.27%. Prudential ICICI MF follows closely with a loss of Rs 1,367 crore, from Rs 16,071 crore to Rs 14,704 crore, a decline of 8.51%. In terms of percentage, LIC MF is the biggest loser with its corpus plunging 18% during the period, from Rs 4,960 crore to Rs 4,064 crore. In terms of growth, HSBC MF has topped the list of gainers with its asset base galloping 10.1% to Rs 6,015 crore followed by UTI Mutual Fund (corpus up 6.38% to Rs 20,079 crore) and Principal PNB MF (up 5.43% to Rs 5,087 crore). Others like SBI MF (1.85%) and JM MF (0.66%) have also seen marginal growth in corpus.

Jet Airways to make a decision for its IPO by end of December

24th November 2004: India’s largest domestic carrier by market-share, the Mumbai-based Jet Airways is planning to float an initial public offer and the decision on the size of the issue will be taken by the end of December, said the chairman Naresh Goyal. "We are seriously looking at going in for an IPO to improve the balance sheet. The decision will be before the end of December," he added.

The IPO of Bharati Shipyard would hit the market on Dec 2

23rd November 2004: Bharati Shipyard would hit the capital market with an initial public offering of 1.25 crore equity shares on December 2 to raise up to Rs 82.5 crore for funding its capacity expansion plans. The issue is 100% through book-building route. The price band for the issue has been fixed at Rs 55-66, said managing director PC Kapoor. The proceeds of the issue, which closes on December 8, would be used for capacity expansion at the vessel building facility at Ratnagiri, he added. The company plans to increase the shipbuilding capabilities to 170 m in length of the vessel from the present 120 m and the capacity to 25,000 DWT from 9,000 DWT and would make large passenger and cargo vessels.

It is in the process of acquiring a defunct shipyard in Goa, which would lead to capacity addition, he said, adding the acquisition would be completed within a month. The issue would constitute 55.56% of the fully diluted post issue paid up capital of the company. About 10% of the issue is reserved for allotment to permanent employees of the company and out of the balance, 50% is reserved for allocation to qualified institutional buyers on discretionary basis. About 25% is reserved for non-institutional bidders while rest 25% for retail individual bidders on proportionate basis, he said. SBI Capital Markets and Enam Financial Consultants are the book running lead managers to the issue.

SBI MF has increased its stake in IVRCL Infra

20th November 2004: SBI Mutual Fund has acquired additional 60,000 shares of IVRCL Infrastructures and Projects Ltd and raised its stake in the company to 5.11%. The mutual fund acquired 0.36% stake (60,000 shares) on November 16 through market operations, SBI Funds Management Private Limited informed the National Stock Exchange. SBI MF's stake in the infrastructure company, after the acquisition, is 5.11% (8.62 lakh shares) of the paid up capital.

The IPO of GSPC will be only after gas strike

23rd November 2004: The Gujarat State Petroleum Corporation will announce an initial public offering of equity shares only after it makes a discovery in the Krishna Godavari basin off the Andhra coast. GSPC faced a spate of technical problems during the first of a four-well exploration programme in block KG-OSN-2001/3 on the Krishna Godavari basin. The company has plugged and abandoned the KG-1 well after failing to successfully complete a test of the main target reservoir. CK Koshy, chairman of GSPC said, "The IPO will be after we make a discovery in KG basin. A discovery will give the company good valuation and fetch good price." Gujarat state government holds 100% stake in GSPC. GSPC has already announced merger of its subsidiaries – Gujarat State Petronet, Gujarat Info Petro and Gujarat State Fuel Management – with itself.

"Our finances are comfortable and we can wait (till a discovery)," Koshy said adding the company plans to drill 16 wells in all at about Rs 40 crore per well. The KG block is adjacent to the recent gas discoveries made on block D6 by Reliance Industries, and in block KGO-2 by ONGC. The IPO will give the company cash for the multi-million dollar development of any find, he said. GSPC, which hired Saipem's jack-up rig Perro Negro-3 for drilling four wells in 200 days, has moved to the next location. Koshy said GSPC would put to production an onshore oil discovery in Gujarat in the next six months. "We are putting up production facilities at the discovery made in CB-ONN-2000/1 in Cambay basin and hope to begin producing 10,000 barrels per day by June 2005," he added. The discovery, made on the sixth well drilled on the 1424 sq km block, is estimated to hold 10 million barrels of oil reserves. GSPC will drill two more wells on the block, where state gas utility Gail (India) Ltd is an equal partner.

Allahabad Bank is planning for their 2nd public issue, eyeing Rs 500 Cr

23rd November 2004: Allahabad Bank is all set to shed the image of a small bank and become a mid-sized bank with a balance sheet of approximately Rs 60,000 crore. The bank will come out with a public offering of approximately Rs 500 crore (considering a conservative premium of Rs 40 per share) in January to build a capital structure in line with the proposed increase in the balance sheet. The public issue is likely to come at a premium, which will be determined by the prevailing market price.

O N Singh, chairman and managing director of Allahabad Bank, confirmed the development. “We will come out with our second public offering, adding Rs 100 crore to our capital in January. We have applied for the necessary permissions. This issue would be aimed at taking the bank to our immediate target of Rs 60,000 crore of business.” With the public offering, the capital base of the bank would go up to Rs 346.70 crore from Rs 246.70 crore currently. The net worth of the bank would also go up by virtue of the share premium that the bank would draw from its investors. The government stake in the bank would come down by 12%, from 71% to 59%. Mr. Singh declined to comment on the pricing of the issue. “It will certainly be at a premium that would be determined by the merchant bankers taking into consideration the ruling market prices,” he said.

Taking into account the fact that the bank had come out with its initial issue at par in October 2002, the new issue is seen as a facelift for the bank. With the bank’s current market price prevailing at Rs 57 per share, the issue size could even be higher than Rs 500 crore. After achieving the target of Rs 60,000 crore, Allahabad Bank has set a target to get into the league of big banks with a total business of more than Rs 100,000 crore. “Our target for the Rs 60,000 crore is for March 2005. For the next 2 years, our aim is to become a large bank.” The bank has already got the RBI approval for the public offering and is awaiting the finance ministry’s approval to proceed with the filing of the draft application. According to MoF sources, the bank would get the government’s approval in the next 10 days. “We want to speed up the process. We want to focus all our energy into this,” explained Mr. Singh.

The IPO of PowerGrid may take some time

22nd November 2004: PowerGrid Corporation has conveyed to the Union finance ministry on its inability to go in for an initial public offer (IPO) before the first half of fiscal 2005-06. It first wants the Centre to compensates it for losses on the north-eastern network, which pays just one-third of total charges.

PowerGrid Corporation has sought time till the first half of 2005-06 for its IPO. The corporation wants the government to help it deal with accumulated losses of over Rs 1,200 crore on the north- eastern transmission network. We will look into the issue. PowerGrid’s statement to the finance ministry comes on the heels of the disinvestments secretary’s announcement that IPOs of PowerGrid and Power Finance Corporation are in the pipeline. Sources said that PowerGrid commissioned the northeastern transmission network in 1998, during the NDA regime. However, due to the non-payment of full charges by the northeastern states, there has been a shortfall in revenue collection.

“PowerGrid wants the Centre to resolve this issue first, and then ask it to go for its IPO. The corporation, in the meantime, will appoint a consultant to work out the details for the proposed IPO,” sources noted. The corporation registered a profit of Rs 748 crore over a turnover of Rs 2,805 crore in FY 2003-04, a growth of 11% in turnover and 16% in net profit compared to FY 2002-03. The corporation, in its 2003-04 annual report, claimed that its performance would have been better but for the continued revenue gap in the north-eastern region and the delayed commissioning of hydro projects.

Andhra Bank is in preparation for their 2nd public offer

22nd November 2004: Andhra Bank is planning to make a second public offer, subject to regulatory approvals. Andhra Bank informed the Bombay Stock Exchange that, "The size, price and timing of the issue would be communicated separately at an appropriate time."

The additional FCCB has been issued by Sun Pharma

20th November 2004: Sun Pharmaceutical Industries has launched an additional issue of five-year foreign currency convertible bonds (FCCB) for $50 mn, taking the aggregate size of the bonds issued by the company recently so far to $275 mn. The additional bonds was priced at 50% premium over the closing price of 17 November with 4.61% per annum yield to maturity. J P Morgan is the book runner and Jermyn Capital Partners Plc is the co-manager to the issue too. The issue was launched after the stock exchange trading hours on Nov 19. Dilip Shanghvi, chairman and MD, had said that the issue would enable the company to seriously look at acquisition opportunities in the United States.

The price band for Deccan Chronicle IPO is set at Rs 162-194/share

19th November 2004: The initial public offer (IPO) of Deccan Chronicle Holdings Ltd, the publishers of the Andhra Pradesh-based newspaper Deccan Chronicle, will be open for subscription from November 25 to December 2, 2004. The issue will comprise 8.01 million equity shares and the price band set for the book-built issue is between Rs 162 and Rs 194 per equity share. The float will have a green-shoe option of 1,201,960 equity shares and ICICI Securities Ltd has been appointed as the stabilisation agent.

Including the green-shoe option, the issue will constitute 22.3% of the fully diluted post offer paid-up capital and excluding the green-shoe option, the issue will constitute 20% of the paid-up capital. In the price band of Rs 162 to Rs 194, the IPO is expected to yield between Rs 130 crore and Rs 155 crore to the company. The capital raised will be used to finance new printing facilities, to venture into new territories and to fund future strategic initiatives & acquisitions. The company will be launching Deccan Chronicle in Tamil Nadu shortly.

ICICI Securities Ltd has been appointed as the book-running managers to the issue. The equity shares of Deccan Chronicle Holdings will be listed on the National Stock Exchange.

Sun Pharma is planning to raise $225mn by means of FCCB issue

19th November 2004: Sun Pharmaceutical Industries is raising $225m through a five-year foreign currency convertible bonds (FCCB) issue. These bonds will be listed at Singapore Stock Exchange. The bonds were priced at a 50% premium over the closing price of Wednesday; with 4.61% per annum yield to maturity.

Jermyn Capital Partners is the co-manager and JP Morgan is the book runner to the issue. The issue was launched after the close of stock exchange trading hours on November 17, ’04. Dilip Shanghvi, chairman and MD said, “This enables us to seriously look at acquisition opportunities we’d chose to do, in the US market space.” Sun Pharma had earlier shelved its plans for an FCCB issue due to unfavorable market conditions. It has now launched the issue with the revival of the bond markets. Once the issue is concluded, the total amount raised by Indian pharmaceutical companies through the FCCB route will rise to $415m. Earlier in April this year, the company's board of directors had approved raising of funds through the FCCB route. The funds were primarily for the purpose of funding an acquisition in the US.



HDFC Bank to raise $300 million via ADS

18th November 2004: HDFC Bank Limited has decided to raise up to $300 mn through issue of equity securities in the form of American Depository Shares. Bank officials said the proceeds of the issue would be utilised to augment the capital base to meet the future requirements arising out of growth in asset portfolio and enhance its ability to provide loans and other financial products to its customers. A portion of the issue will also be used to fund infrastructure growth through expansion of branch network and other distribution channels, officials said. HDFC's Capital Adequacy Ratio was 10.9% as on September 30, 2004, of which Tier I CAR was 7.8%, they said adding additional capital was required to support future growth and expansion of business. The bank has convened an Extra-ordinary General Meeting (EGM) to get consent of shareholders to raise the additional capital in the form of ADS, to be listed on the New York Stock Exchange.

SEBI has imposed penalty on IL&FS Investsmart

20th November 2004: The Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs two lakh on IL&FS Investsmart Ltd (IIL), for certain irregularities and violations of regulations by the broking company. IIL is a member of The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). As per the Sebi order dated November 18, 2004, the penalty has been slapped on account of failure by IIL to exercise due diligence in allowing exposure to clients in violation of section 15HB, granting trading terminals at places other than those specified by the market regulator, granting trading terminals to franchisees without any agreement specifying the scope/ responsibilities of franchisee in this regard.

Insurers seek tax break for equity-linked products

18th November 2004: The MF sector uncorked the bubbly when the FM announced the withdrawal of long-term capital gains tax on equity-linked schemes in Budget 2004. But the equity-linked single-premium insurance products being offered by life insurance companies don’t enjoy this break, and the insurance sector is lobbying hard for it. Equity-linked insurance policies are caught in the twilight zone when it comes to tax breaks. Budget 2003 withdrew tax benefits (offered to incentivise insurance) under section 88 and section 10(10D) of the I-T Act on those policies where the sum assured was less than five times the annual premium. The contention was that these products were modelled more on the lines of investment products (like MFs), with very little element of insurance. Therefore, they deserved no tax concession under the above-mentioned sections. The maturity benefits of these policies were taxable, as income from other sources, in the hands of the individual. Then came Budget 2004, and long-term capital gains were exempted from tax for all equity-linked MFs. But equity-linked insurance policies seem to have been ignored, and individuals holding these policies could be taxed on maturity.

Companies like ICICI Prudential Life Insurance, Bajaj Allianz Life Insurance offer unit-linked policies that are similar to schemes offered by MFs. There’s only one difference — a nominal life cover. A policyholder can pay a single premium and choose for the money to be invested in an equity-linked fund for a certain period. This fund will invest 90-100% in equities. For instance, in the case of ICICI Prudential’s LifeLink 2 policy, a sum assured of 105% of the premium can be selected. Obviously, as the sum assured is not five times the premium, no tax benefits would be available on maturity. The entire maturity amount would be taxable as income from other sources at the tax rate applicable to the income level of the policyholder. But, at the same time, if the person were to invest in an equity-linked MF, any withdrawals made after one year would be tax-free. This seems to have put single-premium policyholders at a disadvantage compared to their MF counterparts.

OCL issues CP for Rs 10 crore

18th November 2004: Cement and soda ash manufacturer OCL raised Rs 10 crore by issuing 90-day commercial paper (CP) at 6.18% to a mutual fund, said debt dealers. The term starts next week. The issue has been rated 'A1+' by ICRA Ltd., indicating the highest level of safety.

HDFC has raised Rs 100 crore by means of issuing CP

16th November 2004: Housing Development Finance Corporation (HDFC) raised Rs 100 crore through a commercial paper (CP) issued today, money market dealers said. The company, India's leading home finance firm, placed the 90-day CP at 5.74 per cent with banks. The term begins on Thursday. HDFC's CP issues have been rated 'A1+' by ICRA Ltd., indicating highest safety.

Sebi unveils uniform norms for investor protection funds

16th November 2004: The Securities and Exchange Board of India (Sebi) has come out with comprehensive guidelines for investor protection funds (IPF), with a view to bringing about uniformity in the practices followed by stock exchanges (SEs). The regulator has issued guidelines with respect to the constitution, management and utilisation of IPFs.

According to the new guidelines, the management of IPFs will be administered by way of a trust created for the purpose which will consist of at least one public representative, one representative from the registered investor associations recognised by Sebi and executive director of the respective stock exchange. Crediting 1% of the listing fees received, on a quarterly basis will form the corpus of IPF. The issuer companies pay security deposits to the exchanges while coming out with initial public offerings (IPO). This deposit is paid at the rate of 1% of the total amount to be mobilised and stays with the exchange for a certain period of time. The interest earned on this deposit is to be fully credited to IPF, the Sebi guidelines said.

A certain portion of transaction charges collected from the broker-members is also to be contributed to IPF. SEs should continue the present practice of contributing to the IPF from these charges. Sebi would determine the legitimacy of the claims received from claimants, the IPF trust may adopt the arbitration mechanism at the SE level and seek the advice of the defaulters committee to sanction and ratify the payments to be made to investors.

The guidelines also suggest a lower limit of a single claim of an investor arising out of default by a member-broker of the SE. Sebi said SEs is free to fix suitable compensation limits, in consultation with the IPF trust. However, the amount of compensation available against a single claim of an investor should not be less than Rs 1 lakh in case of major SEs like The Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and Rs 50,000 in case of other SEs. SEs can review this limit upwards every three years in consultation with the IPF trust.

RBI eases share transfer within sectoral limits

The Reserve Bank of India (RBI) said that prior permission of the Foreign Investment Promotion Board (FIPB) is not required for transfer of shares/convertible debentures of a domestic company, by way of sale, from residents to non-residents. At present, transfer of shares to non-residents requires prior permission of the FIPB, followed by RBI’s approval. However, the revised norm will not be applicable to companies in the financial service sector i.e. banks, non-bank finance companies and insurance, RBI said in a notification.

The exemption from the government approval for such transfer will be subject to certain conditions. The conditions are: the activities of investee company should be under the automatic route, under foreign direct investment (FDI) policy, non-resident shareholding after the transfer should comply with sectoral limits, under FDI policy and the price at which the transfer takes place should be in accordance with the pricing guidelines prescribed. As a measure for simplifying procedures, increase in foreign equity participation by fresh issue of shares and conversion of preference shares into equity capital have been put under general permission, provided such increase falls within the sectoral cap and are within the automatic route, RBI said. The general permission does not include transfer of shares from residents to non-residents of entities in the financial sector like banks, non-banking finance companies and insurance companies, it added.

What do you mean by an ADR issue?

15 November 2004: ADR stands for American depository receipt. ADRs enable investors based in the US to invest in stocks of non-US companies trading on a non-US exchange. ADRs are denominated in dollars. A depository bank issues an ADR and each ADR represents one or more shares. Simply put, US brokers purchase shares of a foreign company, say Infosys, on behalf of their clients. The shares are delivered to a custodian bank which in turn brings the Depository Banks into the picture. The depository bank then issues a certificate called the ADR with each ADR representing a fixed number of shares. The ratio of number of shares to an ADR is decided in such a way that American investors find it comfortable. ADRs are subsequently listed on US stock exchanges.

Are there different types of ADR issues?

Yes. ADRs can be sponsored or unsponsored. Sponsored ADRs are those in which the company actively participates in the process. Sponsored ADRs can be Level I, Level II or Level III. There is also what is called Rule 144A ADRs. ADRs were first offered in the US in the 1920s. Many Indian companies have issued ADRs. Infosys is the first Indian company to use the ADR route to raise funds overseas.

Is an ADR different from ADS?

No, the words are often used interchangeably. The individual shares represented by an ADR are called American Depository Shares.

What advantages do an ADR issue offer?

To the company issuing ADRs, it provides access to American market. A company can therefore raise additional resources. To an American investor it provides the opportunity to invest in stock of companies not listed in the US. ADRs neutralise the problems caused in the course of offering shares belonging to a company in any country in US. Huge operational, custodial and currency conversion issues can come into play if the ADR route is not used.

The IPO of Haldia Petro is likely to get delayed

15th November 2004: The much-awaited initial public offer (IPO) of Haldia Petrochemicals Ltd is likely to get delayed beyond the deadline of December 31, 2004. The sources said that readying all the papers required in filing the draft red herring prospectus with the Securities & Exchange Board of India was going to take more time than earlier expected. Two months' time was generally required between the filing and starting of road shows, they said, adding the public issue was not likely hit the market before the end of January 2005. Asked if the delay would affect the ongoing financial restructuring of HPL, sources said the exercise had been already completed and would have no material bearing on the company. HPL had already engaged Kotak Mahindra and DSP Merrill Lync as advisors to the issue.

The public issue of Dena Bank is coming soon

15th November 2004: Dena Bank is probable to mop up at least Rs 80 crore through its public offer of shares, which would probably be in the next month. After the issue, the government's stake will go down to 51%. With this second issue, the bank's capital base would increase to a minimum of Rs 287 crore. The move is in view of expansion plans and meeting the globally stringent Basel-II capital norms to be in place by December 2006. "The prospectus will be ready by the end of this month for the second public issue of the bank for Rs 80 crore," chairman A K Khandelwal said, adding that the total issue amount is at base value and premium will be decided once the prospectus is ready.

The bank scrip closed at Rs 24.70 in the Bombay Stock Exchange and Rs 24.65 in the National Stock Exchange on Friday. The bank, which had come out with a Initial Public Offer for Rs 180 crore in November 1996, recently received Centre's approval for the second public issue of eight crore shares of Rs 10 each. "The government's holding will come down to 51% from the present 70.9% after the proposed issue," Khandelwal said. Apart from Centre's holding of about 71%, institutional investors hold about 6% and others, including about 20% by the public, hold the remaining 23%.

The capital adequacy ratio of the bank improved from 8.09% to 10.28% of its deposits by September end this fiscal. As part of efforts to rationalise banking operations, Dena Bank is planning to merge its 50 loss-making branches with other branches by the end of this fiscal. Khandelwal said, the bank is aiming to axe its net non-performing assets to less than 5% of net advances by the end of this fiscal from the present 7.85%.

L&T to issue more FCCBs

11th November 2004: Larsen & Toubro has decided to issue additional foreign currency convertible bonds of $25 million after exercising the green-shoe option, taking total size of FCCB offering to $150 million. Last week, the engineering and construction major had raised $125 million by issuing FCCBs to international investors. The managers to the issue exercised the green-shoe option of $25 million on the same terms and conditions at which the bonds were priced on November 1. L&T has informed the same to Bombay Stock Exchange.

The bonds are convertible into Global Depository Shares, at a premium of 35% over closing price of L&T stock at Rs 831.70 on November 1, anytime after 41 days of close of issuance. The additional FCCB issue was launched after market trading hours on November 10, 2004 and "we have received good response", said the L&T official. The proceeds of the bonds issue would be used to finance capital expenditure plans as well as domestic and international acquisitions. The bonds with a five-year maturity are redeemable at a premium to provide a yield of 4% per annum and carry a coupon rate of 1.25% payable annually. The bonds would be listed on the Hong Kong Stock Exchange, L&T said.

The IPO of Deccan Chronicle would hit the market anytime between November 25 to December 2

9th November 2004: Newspaper publisher Deccan Chronicle Holdings is set to price its initial public offer (IPO) in range of Rs 162 to Rs 194 per share, said the banker working on the offer. He added that the issue would be open between November 25 to December 2. At the top end of the offer, the IPO would raise Rs 179 crore, by selling 22.3% of its expanded capital, including the basic offer of 8.01 million shares plus a green shoe option of 1.2 million. At the upper end of the price band the company would be valued at Rs 802 crore. The Hyderabad-based company publishes an English daily, the Deccan Chronicle, and a Telugu newspaper Andhra Bhoomi.

PNB is planning for IPO

8th November 2004: Punjab National Bank is in anticipation of getting government approval for a fresh public offer of shares which is probable to hit the market in January 2005. S.S. Kohli, the chairman and managing director said, "We are planning to offer 50 million shares through the book building method. We are awaiting government approval."

The IPO of Hutchison is likely to hit market in first half of 2005

4th November 2004: The long-awaited initial public offer (IPO) from Hutchison is likely to take place sometime in the first half of 2005. The Foreign Investment Promotion Board (FIPB) has cleared its consolidation proposal. While Hutch will consolidate all its group entities under the Hutchison Max Telecom (HMTL) name, it will ultimately change its name to Hutchison Essar so as to reflect the ownership pattern of the consolidated entity.

The Hutch IPO has been delayed due to the delay in consolidation. In June, HMTL had applied to the FIPB seeking transfer of shares of Hutchison Essar Telecom (that operates in Delhi), Fascel (Gujarat), Hutchison Telecom East (Kolkata), Hutchison Essar South (Andhra Pradesh, Karnataka, Chennai, Punjab, UP West, West Bengal) and Aircel Digilink India (Uttar Pradesh, east, Rajasthan, Haryana) to HMTL. Subsequent the international IPO of Hutchison Telecommunications International (HTIL), the IPO of the Indian entity was pushed forward to the first quarter next year. Investment banking sources said that “This deadline now seems very aggressive, given that a lot of formalities are yet to be completed such as the share swap, name change, etc.” These sources said that the IPO was likely to be completed within the first half of next year.

In the consolidated entity, Hutch’s foreign holding company, HTIL, will hold a 42% stake directly and an additional 14% non-controlled and indirect stake. The Indian shareholders including the Ruias of Essar will hold 22% directly in India and a 6% offshore stake, which is the result of the buyout of the stake of the Hong Kong-based Distacomm. The other Indian shareholders include the Hindujas who will hold little more than 5% stake while the Max group will hold about 3%.

The Essar stake could increase if it buys out the stakes of the Hindujas and Max group. There is also the possibility that the latter might decide to continue to hold equity in the company or offload their stake at the time of the initial public offer.

L&T has raised $125m through FCCB issue

3rd November 2004: Larsen & Toubro, the engineering and construction lead has mopped up $125m through the issue of foreign currency convertible bonds. The five-year convertible bonds carry a coupon of 1.25%, which translates into a yield to maturity of 4%. The bonds carry a face value of $1,000 and will be redeemed at 114.9% of the face value. The bonds can be converted into GDRs representing equity shares of the company at the discretion of the bondholders. The conversion price has been pegged at Rs 1,122.8 per bond, which is at a premium of 35% to Monday’s closing price of Rs 831.70 on the Bombay Stock Exchange. Equity dilution, following the conversion, has been pegged at around 4%. The bonds will be listed on The Stock Exchange of Hong Kong.

The money raised would be utilised to finance inorganic growth. “We are looking at acquisitions in the areas of engineering services and IT services, both in India and abroad, and we plan to use part of the funds for our inorganic growth. Besides, our capex for the year aggregates to around Rs 250 crore,” said a senior company official.

The company has an option to call the bonds at the end of 3 years, subject to the closing share price of each of the previous 30 days being at least 130% of the conversion price, with the prior approval of RBI. Citigroup and ABN Amro Bank had arranged the deal. Company officials declined to specify the total demand for the bond offering. “We got a very encouraging response from investors in and across Asia, Europe and UK,” company officials said.

Jet is planning for Rs. 1,500 CR IPO

3rd November 2004: India’s largest domestic carrier by market-share, the Mumbai-based Jet Airways, has finalised its initial public offering (IPO) which is be down to hit the market early next year, sources familiar with the situation told. The IPO will raise about $350m (Rs. 1,575 crore), market sources said. It is learnt that, Naresh Goyal the promoter of Jet Airways is planning to offload up to 35 to 40% of his stake in the company. Proceeds from the issue will be used to fund the airline’s international foray. UBS, Deutsche Bank, HSBC and CLSA have been appointed as merchant bankers to the issue.

THE IPO OF S.A.L. STEEL LIMITED WILL STRIKE THE MARKET ON 1ST NOVEMBER

1st November 2004: S.A.L. Steel Limited has came up with a public issue of 4,20,00,000 shares at a price band of Rs 12-14 per share. This will raise funds between Rs 50,40,00,000 to Rs 58,80,00,000. The issue opens on November 1 and closes on November 5 and it will be 100% through book-building route. SBI Capital Markets Limited and IL&FS Investsmart Limited are the book running lead managers to the IPO.

Government has cleared Dena Bank share issue

20th October 2004: It is cleared today that, the government has cleared state-owned Dena Bank’s proposed public issue of 80 million shares. The bank had earlier announced its proposed issue would hit the market in the October-December quarter. After the issue, the government's stake will go down to 51%, the minimum required under current laws, from 71%.

SEBI has imposed penalty on Zandu Pharma

11th November 2004: The Securities and Exchange Board of India have imposed a penalty of Rs 50,000 on Zandu Pharmaceuticals Works. The penalty was imposed since they were failed to appoint a common share agency for demat and physical shares. Sebi on its adjudication order said that the penalty has been imposed under depository participant regulations. Sebi had appointed an officer on 8th December 2003 to inquire into and adjudge the alleged contravention, it said.

Payment for transfer of technology outside India is liable to tax here

9th November 2004: Payment for transfer of technology, if the transaction takes place outside India, will be liable to be taxed in India, according to a ruling by the Authority for Advance Ruling (AAR) on an application filed by global pharma major Pfizer. The AAR also accepted an argument put forward by Pfizer, the company that had applied before the AAR, that technical information and know-how, which is transferred through diskettes, can be construed as capital assets and can claim exemption accorded to capital gains. The AAR decides on matters related to taxation. Though its decisions are binding only on the particular case it decides, its rulings are considered as general guidelines on similar matters.

TP Ostwal, senior tax consultant, said, “Such issues crop up on a regular basis. It is high time the Central Board of Direct Taxes (CBDT) came out with a circular clarifying the issue. In the Pfizer case, the AAR just followed the principles laid down by the apex court on similar issues.” In this case, the issue was whether the consideration paid to Pfizer by a Denmark-based company, EAC Nutrition, for transferring trademarks and technical know-how on ways to produce Protinex and Dumex — manufactured and marketed in India by Pfizer India, a group company of Pfizer — is taxable in India or not.

The transfer of the relevant documents occurred in Bangkok. Hence, two issues were considered. The first one was whether transfer of know-how could be considered royalty that is taxable in India. The second issue dealt with the taxability of a transaction that took place outside India. In this case, the transaction was carried out between Pfizer India, Panama and EAC Nutrition, Denmark. Pfizer Corporation owned the technological know-how for manufacturing nutritional food supplements Protinex and Dumex, manufactured and sold by Pfizer India, a group company. In November 2003, EAC Denmark acquired the trademark and technology information from Pfizer Corporation.

Under a separate agreement, Pfizer Corporation and EAC agreed to terminate the licence granted to Pfizer India to manufacture under the same trademark. Around $7m was paid as consideration for extinguishments of the licence. The dossier containing the technology information was handed over to EAC in Bangkok. EAC had withheld tax at the rate of 21% on payment of consideration to the applicant, Pfizer Corporation, for the transfer of technology and the tax has been deposited with the government of India. Pfizer Corporation had approached the AAR, objecting to the withholding of tax on the ground that Pfizer Corporation, based in Panama, has transferred the documents containing know-how and technical information outside India to EAC, Denmark and hence, it’s not taxable in India. To support this point of view the company cited Supreme Court’s decision in the matter of Scientific Engineering House (1986) and another apex court verdict in the case of ACC (’01). Both these rulings had been cited to support the view that if technical information is put on media like diskettes, then the transaction could be construed as one pertaining to tangible assets. Since they are considered tangible assets handed over outside India, the capital gains on transfer of assets cannot be subject to taxation in India.

Besides, a non-resident is taxable in India only if the income is received in India or it accrues or arises outside India. The department’s argument was that the payment was for transfer of process of manufacture and it was, in fact, imparting technical know-how. Hence, it should be considered as royalty taxable under Section 9 (1) of I-T Act. The AAR ruled that, “We are, therefore, of the view that receipt from transfer of technical information in the form of dossier in Bangkok is a receipt on transfer of capital asset and is not chargeable to tax in India under Section 5 (2) (11), read with Section 9 (1) of the Act, as the asset in question was situated outside India.”

Sebi may get to question professionals connected to securities market

9th November 2004: The Securities and Exchange Board of India (Sebi) may get powers to cross-examine professionals associated with securities markets like chartered accountants, auditors and lawyers. Auditors certify financial statements and documents filed before Sebi by companies. Certification of false information and doctored financial statements by auditors, for submission to stock exchanges and investors, hugely affects securities markets. The market supervisory body, however, cannot call for information or take action against misconduct as special statutes like the Chartered Accountants Act and the Advocates Act govern professionals. This seriously limits Sebi's ability to investigate and establish corporate frauds and offences.

Auditors of listed companies being investigated by Sebi for frauds or malpractices often refuse to reveal information about securities transactions of their clients pleading confidentiality. Even the Institute of Chartered Accountants (ICAI) cannot extract such information on behalf of the regulator, at present. The proposal may be further enhanced so that erring professionals may be barred from practice or appearing before Sebi to represent other companies in future cases. This, however, may be opposed by the ICAI and so will have to be further discussed with the institute and the government, said a source. Sebi chairman has constituted an experts group to suggest amendments to the Sebi Act, 1992 to identify weaknesses in the existing provisions. At a recent meeting, the group discussed at length the need to enable Sebi to seek information needed to complete investigations of corporate offences. Sebi has more or less accepted the amendment, said a source.

“At present, Sebi has powers to call for information from persons associated with the securities markets. But professionals are not persons associated with the markets and so the regulator does not have the power to take action against such professionals for misconduct and unethical practices,” explained a member of the committee. The proposal will have to be forwarded by Sebi to the MoF, which will have to seek Cabinet's and Parliament's approval for implementation. Amendments to the legislations governing these professionals like Chartered Accountants Act and Advocates Act may also be required. Amendments are also being deliberated upon to incorporate in Sebi Act the recommendations of the Joint Parliamentary Committee's (JPC) report (December '02) on the stock market scam.

“Personally, I think this is a good proposal. Right now, Sebi can directly ask chartered accountants for information required for its investigations. It can also seek the information through the institute since all chartered accountants are members. But members always cite confidentiality in which case even the institute cannot force the information out of its members,” admitted an office bearer of the ICAI.

Pension sector possibly will overtake insurance

9th November 2004: The government expects the pension sector to overtake insurance segment once it is opened up to private players. UK Sinha, the joint secretary of Capital Markets and Pension said, Pension sector has immense potential and within five years, it will emerge as the second largest within the financial sector after banking. In order to exploit the potential within the sector, the government favours multiple pension fund managers (PFMs) for the segment with investors having the flexibility in switching from one PFM to another, he added. Conversely, Sinha added the proposed regulator Pension Fund Regulatory Development Authority (PFRDA) would take a final call on the number of pension fund managers to be allowed and also the investment guidelines and the minimum capital to be maintained by the fund managers.

Pointing out that majority of the pension schemes are still from the government sector, Sinha said at least one fund manager will be from the public sector and the PFMs would offer broadly three schemes - equity, balanced and debt plans - depending on the age and risk appetite of the investors. However, before allowing PFMs, a central record keeping and accounting agency (CRA) would be set up and it would serve as the nerve centre for the proposed Defined Contribution scheme, where both employers and employees would equally contribute 10% of basic pay and dearness allowance.

Supreme Court gives explanation on global taxes

8th November 2004: The Supreme Court's decision in TCS's case that shrink-wrapped software is a 'good' and thus liable to sales tax, is likely to have a positive offshoot effect, at least on one front. This decision will provide some clarity in the realm of international taxation. The reason is that the Supreme Court (SC) in its decision points out that in case of shrink-wrapped or off-the-shelf products, the copyright in the program remains with the originator of the program. In other words, there is no transfer of copyright. This observation provides clarity that payment made for purchase of shrink-wrapped software should not be treated as royalty.

Last fiscal, tax authorities levied huge demands on Indian importers of shrink-wrapped software. The contention of the tax authorities was that such payments constitute royalty in the hands of the foreign exporters. Thus, the Indian payer's ought to have deducted tax at source. Under the Income-tax (I-T) Act, 1961, the rate of withholding tax for royalty payments is 20%, though it can be as low as 10% under the provisions of a few tax treaties. This issue is still pending at various levels of appeal.

The definition of royalty under the I-T Act, means the transfer of all or any rights in respect of any copyright, literary, artistic or scientific work. Even the Organization of Economic Co-operation and Development (Oecd) in its model convention defines royalty to include the use of a copyright. Further, Oecd's commentary points out that payments made for shrink-wrapped software, which is put to general use is not a royalty payment.

Under the Indian Copyright Act, a buyer of a book is eligible for its fair use. Similarly, a lawful possessor of shrink-wrapped software is eligible for its general use, including the right to make copies. There is no transfer of Intellectual Property rights in either case. Thus if purchase of a book is regarded as an outright purchase and not a royalty payment, the same treatment should be meted out for shrink-wrapped software.

A senior official of a software company adds, “The SC's decision strengthens the argument that Indian importers need not deduct tax at source on import of shrink-wrapped software.” A few countries have held that sale of a shrink-wrapped software is sale of a copyrighted product (such as a book) and not a transfer of a copyright. Thus, the payments made for it do not constitute Royalty. Both the United States and Australia have taken such a view.

CBDT, based on the recommendations of the Emerging Task Force, is currently discussing the issue of withholding taxes when software - both shrink-wrapped and customised, is imported into India. A draft circular is expected to be issued this month.

I-T department attaches defaulters assets to recover its arrears over Rs 85,000 Cr

8th November 2004: In its effort to recover sum unpaid amounting to over Rs 85,000 crore, the income-tax department, Mumbai, has started attaching properties and assets of taxpayers who have not paid their dues. A core committee comprising senior officials of the I-T department, Mumbai, at a meeting, decided to speed up the recovery proceedings including issuing orders for attachment of assets and properties of assessees who have not paid up their arrears despite several reminders.

According to I-T source “There are provisions in the Income-tax Act to recover arrears by attaching properties and assets.” Mumbai, which accounts for nearly 40% of the all India direct tax collection, also accounts for 40% of the Rs 85,000 crore of arrears.

Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty (Second Amendment) Regulations, 2004

Notification No. SO 997(E), Dated 02-09-2004, Issued by SEBI: In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, namely: -

1.      These Regulations may be called the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) (Second Amendment) Regulations, 2004.

  1. They shall come into force on the date of their publication in the Official Gazette.
  2. In the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 (hereinafter referred to as 'the said Regulations');

(a) In regulation 15, after clause (c), the following shall be inserted, namely-

"(ca) such intermediary, being a sub broker ceases to be a sub broker consequent upon the stock broker with whom it is affiliated ceasing to be a stock broker due to declaration as defaulter or suspension or cancellation of certificate of registration of the stock broker."

(b) In regulation 16,

(i) for sub regulation (1) the following shall be substituted, namely –

"16(1) The Chairman or member may appoint an officer of the Board, not below the rank of Assistant General Manager or Assistant Legal Advisor for giving his recommendation after following the summary procedure in respect of any matter specified in regulation 15:

Provided that in respect of any matter specified under regulation 15, if a representation is received from an intermediary to dispense with the procedure laid down in regulation 16, the Chairman or the member may not appoint an officer of the Board under this sub-regulation and pass an appropriate order after considering the representation of the intermediary:

Provided further that where the Board has reasonable grounds not to accept the surrender of certificate of registration, it shall follow the procedure as laid down in regulation 16 before passing the order."

(ii) after sub regulation (5), the following sub regulation (6) shall be inserted, namely-

"(6) the Chairman or the member may pass a common order in respect of a number of intermediaries where the subject matter in question is substantially the same or similar in nature."

Sebi works to improve Capital Market

3rd November 2004: The Securities and Exchange Board of India said it will encourage monitoring and enforcement of corporate governance standards by the private sector, including rating agencies, to attract international funds for Indian capital market. G.N. Bajpai, the Sebi chairman said at the FICCI's annual global conference on capital markets that "Looking at the enormity of the task, the public sector enforcement (capital market watchdog) will always be inadequate and we must bring in private sector regulation and enforcement mechanism into force to help monitor work." If corporate governance is made mandatory, it runs the risks of becoming a mere formality and our emphasis is to move from rule based to principal based governance practices, added Mr. Bajpai. The CG rating is gradually gaining acceptance. These ratings should capture the quality of governance practices. Referring to various risks associated with the capital market investments, the Sebi chief said maintenance of records and audit trail would help deal with operation risks.

Advantages of L-1 over an H-1B

3rd November 2004: Student visas of the US are described with the alphabet and numerical number F-1. To be eligible to receive the same, a foreign student should show that he has been granted admission in a recognised university of the US. The university should issue to that student a computer generated SEVIS mode Form I-20.

Along with the same, the student, whilst applying for a student visa, has to show to the consular officer that his intention in traveling to the US is bonafide to study there and he has sufficient funds to meet with the expenses of tuition fees, lodging, boarding and other miscellaneous expenses during his study in the US. He also has to show that he has no intention of permanently residing in the US or to illegally work there. The student has to show his strong family and financial ties in his home country.

What are the requirements to receive H-1B visas?

The first and foremost requirement to receive an H-1B visa is the availability of the quota number. As of today, the 65000 yearly quota for the fiscal year 2004, i.e. for the period October 1, 2004 to September 30, 2005, are exhausted. Anyone who wants to receive an H-1B visa now will have to wait for a year. To be eligible to receive this visa, one should be a graduate or having equivalent work experience, three years’ work experience is counted as one year’s college education. There should be a job available in USA, which needs a degree holder.

The employer has to then file a labour condition application with the labour department, informing it that it is intending to offer that job to a foreigner and that the salary offered is not less than the current market rate and the foreigner is not invited to displace an existing American worker or to break the prevailing strike. Thereafter, the US employer has to file a petition with the concerned USCIS officer in whose jurisdiction it is carrying on its business operations.

After the petition is approved, the foreign employee has to apply for an H-1B visa at the American Consulate in whose jurisdiction he resides. He has to satisfy the consular officer about his credentials. Thereupon, he would be issued an H-1B visa.


What is the advantage of an L-1 visa over an H-1B visa?

The advantage of an intracompany transferee L-1 visa over the speciality occupation H-1B visa is that any quota numbers does not restrict L-1 visas. They can be issued in any number in a year. The employee is not required to be paid the salary at the current market rate. He can be paid the salary in his home country also. If the employee is a manager or an executive and receives L-1 visa, he can work in USA for one year more than the employee on a H-1B visa.

United Phosphorous Limited Completed Issue.

The United Phosphorous Limited completed its Issue of Foreign Currency Convertible Bonds (FCCB) Aggregating to US $ 75 Million in October 2004. The advisors to the company were Fortune Financial Services (I) Ltd.

SEBI’s draft rules for the collection of securities transaction tax

2nd November 2004: The Securities and Exchange Board of India (SEBI) has published the draft rules for the collection of the Securities Transaction Tax (STT). According to the draft rules, value of the taxable securities would be computed on the volume-weighted-average price of the transaction.

The volume-weighted-average price of the transaction would be computed in the following manner, the quantity of shares purchased or sold in each trade of the equity share executed by the person on that day, shall be multiplied by the price at which the trade has executed, to determine the trade value of each trade; the aggregate trade value will then be divided by the total quantity of the equity shares traded by the person on that day, to determine the volume-weighted-average price of the equity share for that person for that day.

Stripping of dividend before 2002 legit: ITAT

28th October 2004: The government’s attempt to boost its revenues by cracking down on dividend stripping has received a setback. The Income-tax Appellate Tribunal (ITAT) Mumbai has said dividend stripping carried out prior to FY02, was part of legitimate tax planning. The Finance Act 2001 closed a loophole that allowed dividend stripping. No specific calculation has not been made on the amount of tax collected by denying tax benefits to dividend stripping, tax officials say off the record that the tax collected this way would be in excess of Rs 1,000 crore. The term “dividend-stripping” is taxman’s jargon for buying mutual fund units at the time of announcement of a dividend, and selling it at post-dividend price for recording a loss, which is used to claim a tax benefit.

The Finance Act 2001 has incorporated a provision disallowing any loss claimed if a unit is sold within three months of the date of purchase. However, many assessing officers had disallowed even claims for assessments prior to assessment year 2002-03 (FY02) when the new provision becomes operational. The assessing officers were retrospectively operating the relevant provision introduced in the Finance Act 2001. The current ITAT decision is expected to provide relief to those who were aggrieved by such decisions.

The ITAT, in this case, has accepted the argument that transactions made prior to assessment year 2002-03 (when the new provisions became operational) were entitled to the tax benefit as the new provision was not retrospective. Since the ITAT is the second appellate authority on tax matters, after Commissioners of Income Tax (CIT) — Appeals, its decision will have a bearing on those who claimed tax benefits for similar transactions.

Finmin has launched scheme for e-filing of tax returns

23rd October 2004: The finance ministry has announced a scheme that would enable individuals and tax deductors to file returns over internet, using digital signatures, while the department of coal has announced Coalnet, a wide area network, which links it with all its constituent organisations. The IT department is unveiling the guidelines for an interconnected grid of statewide area networks.

The Central Board of Direct Taxes (CBDT) has notified a new scheme for the 2004-05 assessment year, under which salaried individuals with PAN numbers in 60 cities would be permitted to file returns and enclosures electronically, provided they do so with their own digital signatures. Such people should have income from salaries alone, and not under the head of ‘profits and gains’ of business or profession. The CBDT has also authorised eligible categories of chartered accountants, advocates, employers who deduct tax from salaries and registered companies to function as ‘e-return intermediaries’. These registered e-intermediaries may receive paper returns from taxpayers, digitise and transmit them electronically to the IT department through the internet, using digital signatures.

The department of coal has been interlinked to Coal India (CIL) headquarters and 8 subsidiaries. VSATs have been deployed for video conferencing right up to the room of the minister. The next phase would interlink subsidiary companies to its offices, and senior officers of the department would be able to track developments remotely sitting in the conference room of the department in Delhi. For the time being, the ministry of communications and information technology is creating a core, common infrastructure that can be shared by all departments and both state and central governments. Access centres will be set up across the country.

Payment of Income Tax through Internet

20th October 2004: Payment of income tax through Internet has now become possible. IDBI Bank Ltd. has launched this facility on 16th of this month. Account holders of IDBI Bank Ltd., who are registered for net banking with the bank, can avail of this facility and pay Income Tax 24 x 7 x 365. IDBI account holders desirous to pay taxes over Internet would have to log on to this site (www.incometaxindia.gov.in) or http://tin.tin.nsdl.com and follow the instructions. After payment, account holders would be able to generate the taxpayers’ counterfoil containing the Challan Identification Number (CIN). Other banks are also likely to provide similar facilities in near future.


Visit http://www.incometaxindia.gov.in/ for further information
.

Simplification of Foreign Investment Procedures

23rd October 2004: In order to create the surroundings in India more eye-catching for foreign investors, Government has decided to make simpler the procedure by placing the following under the General Permission route (i.e. RFI route) instead of the existing Government approval route (i.e. FIPB route) for speedy and streamlined investment approvals:

 (a)    Transfer of shares from resident to non-resident (including transfer of subscribers’ shares to non-resident) other than in financial service sector provided the investment is covered under automatic route, does not attract the provisions of Sebi’s (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, falls within the sectoral cap and also complies with prescribed pricing guidelines.

 (b)   Conversion of ECB/Loan into equity provided the activity of the company is covered under automatic route; the foreign equity after such conversion falls within the sectoral cap and also complies with prescribed pricing guidelines.

 (c)    Cases of increase in foreign equity participation by fresh issue of shares as well as conversion of preference shares into equity capital, provided such increase falls within the sectoral cap in the relevant sectors, are within the automatic route and also complies with prescribed pricing guidelines.

 In respect of the procedural simplifications given at para. 1 above, the onus of complying with the sectoral cap/limits prescribed under the FDI policy as well as other guidelines/regulations would rest with the buyer and seller/issuer.

 The Reserve Bank of India is bringing out necessary notification/circular under FEMA giving details of the simplification of procedures.

Why PAN is important while you are shopping

20th October 2004: In an short while, when you make any high value purchases such as a Versace ensemble, or a Tag Heuer watch, or a Mont Blanc pen you will now have to carry your PAN card along with you.


Purchases of what value will now require compulsory quoting of PAN?

The Finance Ministry is become hard to continue compulsory quoting of PAN to the high-value purchases of over Rs 50,000. Individuals who are buying items of personal use will have to quote their PAN number in payments against their bills.

 

When is this new law coming into effect?

The Income Tax rules (Rule 114B) will be amended soon to include such high-value purchases to the list of transactions where quoting of PAN is already mandatory. Changes in the IT rules can be done outside the Budget.

 

Why is the government so keen for this new law?

The government wants to keep track of high networth individuals who could be tax evaders. Finance Minister P Chidambaram had in July this year directed taxmen to track lifestyle expenses of the non-salaried class. Of the 3.4 crore IT assessees, there are just 75,000 assessees with taxable income of over Rs 10 lakh.

 

As of now, where is quoting of PAN necessary?

Presently, quoting PAN is compulsory for a host of transactions including sale and purchase of immovable property valued at over Rs 5 lakh and sale and purchase of motor vehicles. Time deposits of over Rs 50,000, sale or purchase of securities whose value exceeds Rs 10 lakh, a deposit of over Rs 50,000 in any account with post office savings bank and so on all need quoting of PAN.

 

What about annual information return (AIR)?

Some of the financial transactions for which PAN quoting is compulsory such as purchase and sale of immovable property and cars — will be also included in the list of transactions for which annual information return (AIR) have to be filed. The responsibility of filing AIR to tax authorities will rest with the third party. For example, the registrar of immovable property will have to file information returns. Likewise, the car dealer will have to furnish AIR to tax authorities. The tax information network will receive the AIR for digitisation. These will be matched with IT returns filed by individuals.

 

Will high value purchases also be included in the AIR?

There is no accord yet on whether high value transactions should be included in the AIR list. The CBDT think that the list of financial transactions on which AIR have to be filed should be limited to around 10 to begin with.

LIC may take up service tax for the year 2004-05

19th October 2004: LIC policyholders may not have to pay the Service Tax at least this year, as the public-sector insurance company could absorb the additional tax burden. According to S B Mathur the chairman of LIC, "It looks pretty difficult to pass on the Service Tax burden to consumers this fiscal.” LIC is working out the net burden of the 10% Service Tax and 2% Education Cess on the risk premium and the impact on the price of its products. He added, "If there is a significant net burden, it may be transferred to policyholders. If it is not substantial, it may be absorbed by LIC."

The Finance Minister P Chidambaram had turned down the request of the insurance industry seeking exemption of insurance premium from the service tax. However, he has given an option for insurance consumers - either to pay 10.2% on the risk cover or pay 1% of the gross premium. The service tax proposed in the budget would not only increase the insurance premium for consumers, it would also create difficulties for insurers in calculating the tax on different consumers having varied risk profile. Most of the private players have decided to hike the premium on account of the service tax.

Switching of Mediclaim policy from one company to another will be allowed

18th October 2004: Stating anxiety over slow growth in health insurance cover, IRDA today mooted ways to allow consumers to switch over from one company to another for mediclaim policies and prevent rejection of claim by insurers. CS Rao the IRDA chairman said, "We are exploring various options available to overcome the problem of repudiation of claims on grounds of pre-existing conditions."

There have been several instances when insurers rejected the claims of policyholders mentioning certain preconditions embedded in the policies. The problem comes up when consumers intentionally or unintentionally do not disclose details on some of their illnesses or health problems, when they buy a mediclaim policy. Another aspect being considered is devising a mechanism to enable "portability of insurance" so that policyholders have the freedom to switch their policies from one insurer to another. This would ensure that the consumer get the best policy at the lowest premium rate. Mr. Rao said, "We hope to resolve these issues to the satisfaction of all concerned during the course of this year."

However the number of medical insurance policies sold increased from 7.53 million in 2001-02, to 10.28 million in 2003-04, Rao said, "There are still concerns on adequacy of coverage, the type of covers and the manner in which the claims are processed." Attributing inadequate data to slow growth, Rao said IRDA is firming up a methodology on collection of health data on a uniform basis and implement it after consulting insurers and third party administrators.

IRDA to strengthen the norms for agents

18th October 2004: Pulling up some corporate agents for unfair practices, insurance regulator IRDA on Monday said it will come up with stringent guidelines for agents to safeguard the interest of consumers and insurers. At the Ficci seminar, the IRDA chairman, CS Rao said "We would issue some guidelines on the manner of selection of corporate agents, the manner in which their activities should be monitored, and precautions to be taken so that there is complete disclosure of the policy implications for the clients." Admitting that IRDA has "no experience" on the working of corporate agents, he said, "While this model has the potential to reach a large section of population in a short time, there are concerns about the mode of sale of policies." He pointed to some advertisements by corporate agents, which gave an impression that they themselves are insurers, and said, "It can become a big problem”. “We would like to prevent it before it becomes big." Rao said IRDA would like to ensure that both the corporate agent (the company) and their employees selling the insurance product have obtained a licence. IRDA also plans to come up with a guideline that would ensure that corporate agents provide full disclosures to insurers on the policies sold by them, the number of individuals covered and for how many years. "Insurers have to be extremely careful in dealing with corporate agents and keep a vigilant eye on the way the sales are affected," Rao said.

Reliance might have invested Rs 1,000 crore in NTPC’s IPO

16th October 2004: The promoters of the Reliance group are believed to have invested about Rs 1,000 crore in the just-concluded initial public offering of National Thermal Power Corporation. The bids were in the upper range of the band of Rs 52-62 per share and came under the high net worth individuals (HNI) category. Sources said many other Indian corporates have also applied for shares of NTPC, who’s IPO was oversubscribed by around 13 times. Sources close to the lead managers said, among the financial institutions that have invested around Rs 1,000 crore each are HSBC, Capital International, GMO, Pictet of UK, LIC, SBI, GIC and UTI.

The IPO consisted of a fresh issue of 43.29 crore shares and an equal number of shares by way of divestment by the government of India. ICICI Securities, Enam Financial Consultants and Kotak Mahindra Capital have been the lead managers to the issue. Sources said the Reliance promoters had submitted two bids amounting to Rs 1,600 crore for ONGC shares, when its IPO hit the market in March. The bids were made in the HNI category. The NTPC IPO, the first divestment by the new government, received good response from foreign institutional investors and local financial institutions (FIs), who have put in around $10bn in the IPO. Total investments, including QIBs, HNIs and retail investors, are over $15bn.

The share of NTPC might be priced at Rs. 62

15th October 2004: Indicated by highly encouraging market response, National Power Thermal Corporation is probable to price its share at Rs 62 for its mammoth public offering to sell 86.58 crore shares to clean up a enormous Rs 5,368 crore. The pricing committee for the issue for sale of 5 % government equity along with raising fresh capital for an identical volume would meet later today to decide on the cut-off price. P Narsimramulu, the director (finance) of NTPC said, "The issue has been oversubscribed by over 12 times with more than 90 % of the bids coming at Rs 62, the upper end of the price band." He added that the government has mandated NTPC to decide on the price and allocation and the pricing committee would inform the government about the decision. Fascinatingly, this is the foremost time that the government has allowed any PSU to decide the cut-off price and allocation on its own. Narsimramulu said, the allocation of the shares among bidders would be decided by October 26-27.

SEBI panel favors tightening of norms for report

15th October 2004: The Accounting Standards Committee of the Securities and Exchange Board of India (Sebi) has suggested amendments to the listing agreement with stock exchanges regarding submission of financial results. The committee has also said that the difference between the net profits figures in un-audited results and audited results should not exceed 10%. It said, “The percentage of variation between the un-audited results and the audited results, should be reduced from 20% or more to 10% or Rs 10 lakhs, whichever is higher, in case of net profit after tax.” The Accounting Standards Committee, headed by YH Malegam, had recommended various changes to clause 41 of the listing agreement, regarding the submission of financial results. It said that in case of exceptional or extraordinary items, the percentage of variation should be 10%.

The committee made it clear that the option of publishing the audited quarterly or half-yearly results within two months of the close of the quarter or the half-year, instead of un-audited quarterly or half yearly results within one month, followed by limited review, may be removed. The committee said that companies have an option to publish either stand-alone or consolidated financial results in the newspapers. However, the option once exercised, shall not be changed for the entire financial year. In case the company changes its option in any subsequent year, it shall furnish comparative figures for the previous financial year, in accordance with the option exercised. In case the company opts for publication of stand-alone financial results in any financial year, it shall, in addition, be required to publish information pertaining to its consolidated results in respect of the group’s turnover, net profit after tax and earnings per share.

SBI MF has announced dividends

4th October 2004: Today, SBI Mutual Fund announced dividends for two of its schemes for the period ended September 2004. The company has declared a dividend of one per cent (0.935 per cent for other investors excluding individuals and HUF) under the Magnum Income Plus Fund - investment option, a company statement said. The fund also declared a dividend of 0.50 per cent (0.468 per cent for other investors excluding individuals and HUF) under its Magnum NRI Investment Fund - short-term plan. All investors, who have invested in the schemes as on September 30, 2004, were eligible for the dividend payment, it said.

Paying your taxes is now got an ease

4th October 2004: To get better the momentum and precision of tax collections, the Income Tax department has set up a new online accounting system called Oltas. This is in process since June 1, 2004. This arrangement makes the process very easy for payment of taxes and make certain that taxpayers get a improved service. All designated branches of banks across India have been networked with Tax Information Network (TIN) and the I-T department.

Let us look at how the taxpayer can benefits from these changes. The foremost feature of Oltas is that now an easy single-copy challan has to be filled up as an alternative of the four-copy challan earlier. Under the old system, there were seven different types of challans for depositing direct taxes into the government account. In Oltas, only three types of challans have replaced these. As a result, there is one for payment of income-tax, corporation tax and wealth tax (challan no ITNS 280); another for depositing tax deducted at source from corporates or non-corporates (challan no ITNS 281); and a third one for payment of gift-tax, estate duty, expenditure tax and other direct taxes (challan no ITNS 282). The challans can be downloaded from the I-T departments website: http://www.incometaxindia.gov.in/.

These challans are also available at all local income-tax offices. Every challan has a unique identification number known as the challan identification number (CIN). This CIN comprises of three parts, namely, a seven-digit basic statistical return (BSR) code of the branch where the tax is deposited; date of deposit of the tax and the serial number of the challan. Therefore, CIN, along with the permanent account number (PAN) of the taxpayer is unique for every challan throughout the country. This system is used for identifying a challan in Oltas, which ensures that correct credit is given for payments of taxes by the taxpayers. When a taxpayer pays his tax at any of the designated bank branches, the collecting branch will accept his cash/cheque and will stamp the counterfoil of the challan with a rubber stamp containing the CIN. The new challan is divided into two parts: it has a main portion at the top and a counterfoil at the bottom. The bank will retain the main portion of the challan and will return the counterfoil, duly stamped to the taxpayer.

The branch will then capture the entire data of the challan and transmit it electronically to the I-T department. The department will use this information received from the banks to give credit for the taxes paid by the assessee. The bank will send the paper copy of the challan to the zonal accounts office. The taxpayer has to take care to fill the challan properly, since there is only one copy of it. He has to ensure that all the right columns are ticked and he obtains a proper stamped acknowledgement from the banks indicating the CIN. The PAN and the tax-deduction account number (TAN) should be correctly indicated in the challan. The new challan has fewer fields than the old one and therefore, can be filled up faster. Furthermore, if the taxpayer is paying taxes at his own bank branch, he can get the acknowledgement for taxes paid immediately rather than visit the branch again under the old system. In Oltas, the taxpayer no longer needs to attach copies of the challan with his return of income. He has to only indicate CIN in his income-tax return for proof of payment of prepaid taxes, such as advance tax or self-assessment tax. Thus, Oltas ensures an accurate and prompt credit for all taxes paid by the taxpayer.

Hutch is in the preparation for an IPO in June 2005

2nd October 2004: Hutchison Telecommunications International Ltd. (HTIL), a Hutchison Whampoa Ltd. unit seeking an IPO worth up to $1.1 billion, said it plans in the development its India mobile operations by June 2005. The Hong Kong based telecom firm said its intentional is to propose 10% of its India unit. It is the minimum that is required by the Securities and Exchange Board of India, in an initial public offering split between global institutions and India's local retail investors. Chief executive officer Dennis Lui said, "We are doing this IPO because of our commitment to our Indian partners."

Analysts have valued the India business at $3 billion, which means the India IPO, could worth $300 million. The separate listing of the fast-growing India business, regarded as the most attractive holding in HTIL, has damage the reputation of investors interest in HTIL. "There's still a lot of hurdles we have to go through in terms of regulatory approving processes", Lui said, stressing there were uncertainties as to the timing of the India listing. The holding of HTIL’s in the India mobile business will come down to 50.9% from the current 56%.

HTIL has cut the size of its New York and Hong Kong offering by about a quarter to $965 million-$1.1 billion from an earlier target range of $1.2-$1.5 billion after a indifferent investor response. Hutchison Whampoa, which is controlled by Asia's richest businessman Li Ka-shing, is selling 1.155 billion shares or 25.67% of HTIL in a price range of HK$6.52-HK$7.55 each. Other assets in HTIL include telecoms operations in Hong Kong as well as cellular holdings in Israel, Thailand, Sri Lanka, Ghana, Paraguay and Macau.

DECCAN CHRONICLE HAS FILED PAPERS FOR IPO

1st October 2004: Deccan Chronicle Holdings Ltd., the newspaper publisher has filed initial public offering (IPO) papers for 8.01 million shares. The bankers are expecting that the issue to raise up to Rs 150 crore. A banker working on the deal said, "The filing was done late on Monday and the issue is expected to be launched by November." He said the basic issue signifies 20% of Deccan's enlarged capital. The book-built offer, consisting only of new shares, will have a greenshoe option of 1.2 million shares. The Hyderabad-based company publishes an English daily, the Deccan Chronicle, and a Telugu newspaper Andhra Bhoomi. The bankers for the issue are ICICI Securities Ltd. and IDBI Capital Markets. Due to the restriction on foreign portfolio investments in the media sector, the issue will be open only for domestic investors.

SEBI IS RE-EVALUATING THE DELISTING NORMS

1st October 2004: The Securities and Exchange Board of India (Sebi) is reviewing the delisting guidelines it had issued in 2003. The Sebi move is prompted by the reactions of companies, which are said to be very unhappy with the price discovery system through the reverse book-building method. The senior Sebi officials, saying that they were working on the revised guidelines and the amendments would be issued within a month, confirm this. While the reverse book-building method itself may not be canceled, the regulator will bring in range of changes so that the refurbish system results in more efficient price discovery.

Subsequent to the prologue of the Sebi-mandated reverse book building system for delisting, only a handful of companies have taken this route. Among these is Hewlett-Packard, which offered an exit option to the investors of Digital GlobalSoft. But merchant bankers have said that the reverse book building method is susceptible to market manipulation in that operators pull up the price of the target scrip ahead of the record date so as to jack up the offer price which is calculated as an average of prices in the previous six months. A short time ago, making a bid to delist Vickers Systems, Eaton Corporation refused to accept the Rs 185 per share price that had been arrived at through the reverse book-building method.

Under the guidelines, the floor price is determined by calculating the average of prices in the 26 weeks prior to the date of announcement. However there is no cap and corporates feel that the final price may be manipulated by groups of investors. One of the major changes expected is that de-listing should commence if the non-promoter shareholding falls below 25%. At present there is a lot of uncertainty over this threshold level since Sebi’s Takeover Code allows up to a 90% stake for promoters.

Further the listing agreement specifies various levels at which corporates can remain listed depending upon when the company listed on the bourses. If the 25% limit is finally fixed it would resolve once and for all as to when a corporate would have to delist and this will produce uniformity on how much stakeholding a promoter should have in a company. Sebi officials, however, said that they had not yet thought of a price band within which the bidding could be done, though merchant bankers said that a price band could provide an indicative range to the investors even though the final price may not exactly fall with the range.



Foreign companies with permanent BPO arm to be taxed

29th September 2004: The final utterance has been said on the taxation of business process outsourcing (BPO) units. Tax will be levied on the income of a foreign company with a BPO arm here, which qualifies as a permanent establishment (PE). On the other hand, a foreign company outsourcing services to a BPO outfit here will not be taxed in India if it does not have a PE. The final circular issued by the Central Board of Direct Taxes (CBDT) is broadly on the same lines as the draft circular issued earlier.

The amount to be taxed in India is the BPO’s arms-length income. This is the BPO’s income had it been a separate enterprise, dealing independently with its head office. Simply put, if the foreign company has a fixed place of business of its own in India or functions through a dependant agent, it will be construed to have a PE in India and will be liable to tax. A senior finance ministry official said, “The profits attributable to the PE on which the foreign company will be taxed in India will be determined on the arms-length principle on the premise that the PE is a distinct and separate enterprise dealing independently with the head office.”

At the same time as computing the profits of the PE, deduction of expenses incurred in connection with the activity of the PE in India or elsewhere would be allowed. What expenses are deductible would have to be determined in accordance with the accepted principles of accountancy and the provisions of the Income Tax Act. The dependent agent will be separately assessable on his personal income, again, on the basis of the arms-length principle. Tax experts, however, say that the word PE and business connection have been used synonymously. According to experts, “This may not be correct as a PE is a much narrower definition.” According to them, the circular does not address a situation where the taxable foreign entities are non-treaty countries. It also does not fully address the industry’s view that the payment of arms-length price should extinguish the tax liability of foreign enterprise.

The new CBDT circular has been issued after withdrawing a controversial BPO circular issued on January 2, ’04. The earlier circular differentiated between ‘core’ and ‘incidental’ services for tax purposes. According to the latest circular, a foreign company is treated as having a PE in India under Article 5 of the Double Taxation Avoidance Agreements entered into by India with different countries if the company carries on business in India either through a sales office or agent (other than an independent agent). In such cases, the profits of the foreign company attributable to the business activities carried out in India by the PE becomes taxable under Article 7 of the DTAA.

IDFC is planning an IPO in January

27th September 2004: Infrastructure Development Finance Company Ltd (IDFC) is planning to hit the capital market with its initial public offering (IPO) in January. The board at its meeting held in New Delhi on Monday approved an IPO proposal by way of offer for sale by existing shareholders upto 30% of the stake, IDFC said in a announcement here. A company official said, the company is to file its prospectus with the Securities and Exchange Board of India later. It said that the issue is planned for January 2005 and the board has appointed merchant bankers and legal advisors for the IPO. The board has also appointed committee of directors to facilitate and monitor the process of offering, it added.

Tata MF has announced 5% dividend

24th September 2004: Tata Mutual Fund has declared a maiden 5% dividend for its "equity P/E fund", an open ended scheme, under dividend option. Tata MF said in a release today that the record date for the dividend payout of Rs 0.50 per unit on the face value of Rs 10 each is September 23. The net asset value of the scheme (dividend option) on September 23, 2004 stood at Rs 11.44 per unit.

The IPO of IL&FS Investmart is stroked with Sebi’s blockade

24th September 2004: Investmart’s proposed IPO has run into problem with the Securities and Exchange Board of India (Sebi). The market supervisory body has initiated adjudication proceedings against IL&FS for certain violations relating to its stock trading and depository activities. Sebi has also raised queries about the issue with the lead manager of the IPO. According to sources, though these queries were sent to the lead managers a couple of months back, Sebi is yet to hear from them. IL&FS Investmart runs a leading stock trading business and is a member of both the NSE and BSE.

The regulator will decide on clearing the IL&FS Investmart issue only after the lead manager to the issue responds to their queries. IL&FS Investmart proposes to make an IPO of 35 lakh shares of Rs 10 each through book building. Besides, the company also proposes to offer 65 lakh shares of Rs 10 each for sale held by their promoter IL&FS and Orix Corporation of Japan. As per the offer for sale plan, IL&FS proposes to sell 13.93% stake in the IL&FS Investmart comprising of 48.75 lakh shares, while Orix proposes to sell 16.25 lakh shares comprising 4.84% of the issued, subscribed and paid-up capital of IL&FS Investmart.

Following Sebi queries, the Foreign Investment Promotion Board (FIPB) has also deferred a decision on the company’s request to allow FIIs, NRIs, overseas corporate bodies (OCBs) and foreign venture capital investors registered with Sebi to participate in the IPO. The IL&FS Investmart public offer was initially expected to hit the market by June. Top company executives earlier claimed that the delay in the offer was because the company was looking out for quality investors to offer the shareholding. IL&FS Investmart operates in the areas of investment advisory and broking, merchant banking, project syndication, securities broking and distribution of financial products. The merger of the two companies IL&FS Merchant Banking Services and DebtonNet India into IL&FS Investmart further enhances IL&FS Investmart’s service portfolio and market execution abilities.

Government may hold on to CST at 4% till VAT takes over

24th September 2004: The government may retain the central sales tax (CST) rate at 4% in the ensuing fiscal, when states switch over to the value-added tax system. According to sources, the proposal came from the finance minister P Chidambaram during his meeting with the Empowered Committee of State Finance Ministers on VAT is to continue with the 4% CST rate for one year till the VAT rule stabilise. The Centre has promised to provide 100% compensation to states in the first two years of CST phase-out. This will be reviewed in the third year. A one-year deferment in the CST phase-out would give both the Centre and states some official pardon, considering that the annual revenue mobilised from CST is over Rs 15,000 crore. The entire precede goes to the states’ pooled money.

Different options on CST phase-out may be looked at 4% in the first year of introduction of VAT, 2% in the second year and nil in the third year. The technical expert committee on VAT will also provide inputs on the timing of the CST phase-out. The phasing out after the introduction of VAT will enable states to move to a destination-based system. The finance minister is also understood to have given an indication that it may be politically tough to push for another constitutional amendment that would give states the power to levy service tax. States want the power to levy service tax, as it would also help shore up revenues after transition to VAT.

But as of now, the constitution gives the Centre the power to levy service tax and states and the Centre to collect and appropriate the proceeds. Mr. Chidambaram has understood to say that he was awaiting the recommendations of the Twelfth Finance Commission on the devolvement of service tax proceeds to states. Currently, 28% of the service tax proceeds are transferred to states and this will continue till a final view is taken. A separate meeting would be convened to discuss this issue, including the constitutional amendment.

Securities Transaction Tax (STT) will be applicable from Oct 1

23rd September 2004: The Securities Transaction Tax (STT) will be levied on all shares traded in stock exchanges from October 1. Finance minister P Chidambaram has cleared the date for the rollout of the new tax rule announced in this year’s budget. The new capital gains regime will apply to all ‘sell’ transactions effective from this date, even if shares were bought prior to October 1, 2004. So investors who have already bought shares will gain if they sell these shares on or after October 1. This is because the concessional capital gains tax of 10% will apply to ‘sell’ transactions i.e. shares sold on or after October 1. Shares sold before October 1 will attract the marginal rate, which is 30% in most cases. The new rules will be notified shortly, said senior officials.

The STT will be levied on the volume weighted average price for all shares i.e. the aggregate value of all trades carried out by a person divided by the total quantity of shares traded by the person on a given day, gives the volume weighted average price. The STT rates are 0.15% on delivery-based trades, where the levy will be equally split between the buyer and seller. An STT rate of 0.015% will be levied on sellers in non-delivery based equity transactions and 0.010% on sellers of derivatives. Wherever STT is paid, long-term capital gains tax will be nil, whereas short-term capital gains will be taxed at 10%. The benefit of the set-off on securities transaction tax (STT) against tax paid on business income has also been extended across all categories of investors paying the levy. For investors paying the levy, tax payable on business income will now be net of the STT paid.

When MFs invest their money (collected from unit holders) to buy shares, the STT will apply. However, no STT will be levied on units allotted to investors and it will only be imposed when these units are sold back to the MF. Market players say that the underlying sentiment in the market is to book profits once the new tax regime takes effect in October. They believe that retail and high networth investors are reluctant to sell in the market in September. This is another key reason for share prices to run up sharply over the past few weeks. The trend in the index futures segment is an indicator of this effect.

The price of the October futures is trading at a higher discount to the underlying Nifty index than September. The September Nifty futures closed at Rs 1752 while the Nifty index closed at 1754. The October Nifty futures closed at Rs 1747. The open interest in September futures fell, while that in October futures rose. Market players say that investors who hedge their positions against a fall in share prices by short selling Nifty futures are rolling over their outstanding positions to October futures. A CEO of a leading institutional brokerage pointed out “The market psychology is such that everyone expects selling to start in the first week of October. However, not everyone will go on a selling spree. Those who bought mid-cap shares earlier this year may sell.”

LIC MF has launched the IPO of a hybrid scheme

22nd September 04: LIC Mutual Fund has launched the initial public offer (IPO) of floating rate monthly income plan (MIP), a hybrid scheme which will invest in floating rate instruments and equity. The IPO is open from September 21 to October 8, 2004. The objective of the scheme is to generate consistent returns and minimize interest rate risk and generate capital appreciation, through investing in equity and equity-related instruments. The mutual fund offers investment under two plans, Plan A which will invest up to 80% of the amount in floating rate securities and the remaining 20% of the corpus would be invested in equities. Plan B will invest up to 90% of its assets in floating rate securities and the remaining 10% of its assets would be invested in equities. The minimum investment amount is Rs 5,000 for the growth plan.

Exams conducted for Insurance Agents is now becoming a Challenge for Insurance Institute of India (III)

23rd September 2004: Organizing and supervising exams has hardly ever been so intimidating and that too an exam for about 3.5 lakh prospective insurance agents and financial advisers who will sell you insurance policies once they clear the question papers. Completely confused and stressed to find a way out, the Insurance Institute of India (III), the body holding the exams for the would-be insurance agents, is seriously thinking of employing ex-military personnel of Kendriya Sainik Board to take care of supervision across 125 examination centers.

The Insurance Regulatory and Development Authority (IRDA), on the other hand, feels that the formation of a full-fledged Life Insurance Council, much in the lines of an ‘association of insurers’, that exists globally, will be able to restrain the confusion that now goes for exams. Incidents of students running out of exam centres with answer sheets, threat calls to school principals, insurance executives barging in to help their candidates, have been on the constant rise. A string of incidents are reported from states like Bihar, Madhya Pradesh and Uttar Pradesh.

Mr. S J Gidwani, secretary general of III, seemed really disturbed. “We are into the business of education, development of course content and improving the efficiency of insurance business, rather than into policing and warding off cheating practices”. “Insurance is a business of trust and it is distressing having to devote so much time these days to such malpractices. We have had preliminary talks with the Kendriya Sainik Board and will pursue the issue with them and the government. This may be slightly long drawn by the time talks fructify. If this materialises, then the ex-military officers have to be state publicly at various examination centres.” Mr. Gidwani said.

Being an absolutely independent authority, these officials will report any annoying incident and malpractice to the III immediately. At present, school and college authorities have been conducting exams; unlike by insurance company representatives a couple of months back. Incidentally apart from facing threats, school authorities are at times fooled by some insurance executives who pose as regulatory authorities and walk into the hall. Sometimes with a majority of female staff managing primary school children, controlling dishonest candidates for them becomes a difficult task. On the regulatory front, the IRDA feels proper formation of Life Insurance Council should be put in place at the earliest.

UTV HAS POSTPONED ITS IPO BY 3 MONTHS

23rd September 2004: A source well-known with the deal said today that the media firm UTV Software Communications has put on hold its proposed initial public offering (IPO) for about three months. "The company is comfortable after the sale of its stake in Vijay TV," the source, which declined to be identified, told return with. UTV raised Rs 31 crore through that stake sale to News Corp's Star India and the source said the company was in no big hurry for the IPO funds. The company had filed IPO papers in July for a six million-share offer, or nearly 32% of its expanded equity base. The source said the company had received the necessary regulatory approvals for launching the IPO.

ICICI Lombard is in preparation for an IPO to get 10% market share

22nd September 2004: ICICI Bank has set a target of 10% market share for its non-life insurance subsidiary ICICI Lombard General Insurance following which the company will float an initial public offering. The life insurance company has also been given a similar target, however, its IPO may get delayed, as break even will take several years in life insurance. ICICI Lombard is the largest private insurance company with a market share of 4.5%. There are 12 non-life insurance companies including the four state-owned incumbents but excluding the Agriculture Insurance Corporation and Export Credit Guarantee Corporation, which are specialised companies.

In the life insurance business ICICI Pru has a market share of over 5%. But the competition is equally stiff in the life insurance industry with 14 players including the Life Insurance Corporation. “We should have a relevant market share of about 10% before we come out with an IPO,” said K V Kamath, the managing director of ICICI Bank while responding to a question on ICICI Bank’s plans to list its insurance subsidiaries.

ICICI Lombard is likely to go public first because it has broken even and reported a net profit of Rs 24 crore in March 2004 against Rs 2 crore in the previous year. Mr. Kamath said, “We will observe the performance of ICICI Lombard in the next two quarters. And we would like to have a market share of 25-30% among private general insurance sector.”

Speaking at the occasion of ICICI Prudential’s number of policy holders crossing 1-m mark, company’s managing director Shikha Sharma, said that the promoters have plan to infuse capital in the company. However, she declined to comment. Among private players in the general insurance market, ICICI Lombard has a market share of 22%. At present, it has a capital base of Rs 675 crore while it has incurred losses of Rs 164 crore in March 2004. ICICI Prudential has a market share of 5.5% but among private life insurance companies it has a share of 34%. The total sum for the 1m policyholders has touched Rs 22,500 crore. Mr. Kamath said the ICICI Prudential would continue to have innovative usage of channels and expand branch network in order to grow.

CANBANK MF HAS LAUNCHED OPEN-ENDED SCHEME

22nd September 2004: Canbank Mutual Fund launched ‘Canindex’, an open–ended index scheme linked to S&P CNX Nifty. The IPO will open on September 17 and will be open till September 27. The investment of the scheme will be made in Nifty stocks in the same proportion and weightage it represents in the index. The scheme will thus replicate returns, commensurate with the index movement.

            RV Shastri, chairman and managing director, Canara Bank at a function organised at Mumbai, launched the scheme. The scheme offers two options; income and growth. The minimum investment is Rs 5000. The expense ratio of the scheme is fixed at 1% of weekly average net assets of the scheme. The entire initial issue expenses of the scheme initial issue expenses of the scheme will be borne by the AMC. The CanIndex Scheme is targeted at retail as well as corporate clients.

            Canbank Mutual Fund had launched 24 schemes since its inception and currently, manages 13 open-ended scheme and 2 close-ended schemes. The fund house, currently, manages assets of over Rs 1800 crore and has two lakh investors.

THE IPO OF NTPC OPENS ON OCT 7

22nd September 2004: National Thermal Power Corporation (NTPC), which has fixed a price band of Rs 52-62 per share, on Tuesday said that its initial public offer (IPO) will open for subscription on October 7 and close on October 14. An NTPC release said, it finalised its IPO details with the finalisation of the price band and filing of the draft Red Herring prospectus with the Registrar of Companies on Tuesday. NTPC will offer 866.83 million shares, amounting to 10.5% of the post-issue expanded capital, with a face value of Rs 10 each. The issue comprises fresh issue of 432.91 million shares and an offer for sale of equivalent number of shares held by the government, which is part of the government’s disinvestment plan.

The lead managers for the NTPC issue are ICICI Securities, Enam Financial Consultants and Kotak Mahindra Capital. The proceeds from the issue will be utilised to expand NTPC’s long-term resources.            After carrying out the IPO, the government holding in the company will come down to 89.5% of the expanded capital of the company. The issue would also mark the first instance of disinvestment since the Congress-led United Progressive Alliance (UPA) assumed office in May this year. The government hopes to raise Rs 4,000 crore through sale of its shares in NTPC and its residual equity in Balco and Maruti Udyog Ltd. At the upper level of the price band, the IPO is expected to raise Rs 5,369 crore, the second largest public offer after TCS, which garnered a record Rs 5,420 crore. This puts NTPC’s valuation at Rs 51,135 crore, making it the country’s third most-valuable firm after ONGC and Reliance, edging out Indian Oil from the third spot in terms of market capitalisation.

The price range for NTPC IPO is set at Rs. 52-62 per share

21st September 2004: A source close to the deal said, State-run National Thermal Power Corporation (NTPC) has set a price band of Rs 52-62 per share for its forthcoming initial public offering (IPO). "The IPO is expected to open in the first week of October," the source, which declined to be identified, told Reuters on Tuesday. The offer of 865.83 million shares is for 10.5% of NTPC's enlarged capital, potentially raising Rs 5,368 crore ($1.17 billion) at the top end of the price band. That pricing will value the company at $11.1 billion, making NTPC India's third-most valuable company by market capitalisation, alongside Indian Oil. NTPC's offer comes close on the heels of India's biggest ever IPO so far – the Tata Consultancy Services offer which concluded last month, raising $1.17 billion. After the issue, the government's stake in NTPC will reduce to 89.5 %.

Reliance MF has came up with IPO

20th September 2004: To tap into the growth potential for its media and entertainment sector fund, Reliance MF has come out with an initial public offer. Reliance MF said in a release today that the subscription for this fund, which is an open-ended scheme, would remain open up to September 27, 2004. The mass of the fund would be invested in equity, equity instruments and fixed income securities of media, entertainment and associated companies, the mutual fund said. It added that it would look at investment opportunities provided by various segments like print, television, radio, cinema, outdoor advertising and Internet. The mutual fund would not charge any entry and exit load during the IPO but will levy entry charge during continuous offer, after the IPO, it added. The assets under management of MF as on August 30, 2004 stood at Rs 11,500 crore.

THE STRATEGY OF UNITED INDIA IS TO ENTER LIFE INSURANCE SEGMENT

20th September 2004: According to the top company official, the United India Insurance (UII), a major participant in health care insurance, is planning to enter the personal life insurance segment by floating a subsidiary. The move was aimed at taking part in the present expansion of the sector and in tune with the entry of more and more operators, UII chairman-cum-managing director V Jaganathan told reporters. The Chennai-based UII would soon chalk out the modalities for setting up of the subsidiary.

On the company's new products in the pipeline, he said UII would launch an eye care policy in collaboration with the Sankara Nethralaya, a premier eye institute at Chennai, covering all ailments pertaining to ophthalmology. This policy would also meet all requirements of an individual on eye care, was in the final stages of framing and could be launched before December next, he said. He added that the premium had been tentatively fixed at Rs 140 per annum per individual.

During this fiscal year, UII was also in the process of establishing 400 'micro offices' in rural areas across the country. He said that there would be round-the-clock one-man offices to cater to the needs of customers. The 'unique' micro offices would be located in rural areas, small towns and cluster of villages where the total population was over 50,000, he said adding a few such offices opened in Tamil Nadu already had turned out to be a success. UII planned to add 200 more micro offices during 2005-06.

LIC possibly will reduce bonus on ‘with profit’ policies

18th September 2004: This financial, Life Insurance Corporation of India (LIC) may level down its bonus to policyholders. This is due to a decline in yields on government securities and high provisions towards solvency margins. The reduction is likely in most of the ‘with profit’ policies. Bonus is declared by LIC every September for those policyholders who have opted for policies ‘with profits’. Every year LIC evaluates its life fund and total liability towards policyholders. About 95% of the surplus is credited to the accounts of ‘with profit’ policyholders and 5% is paid to the government. However, the reduction will not affect those who have opted for policies with assured returns. Last year, the Corporation has reduced bonus by almost 10% due to falling interest rates.

Officials, however, say that returns on ‘with profits’ policies are still in line with other financial instruments. Besides falling interest rates, LIC’s bonus payment has been constrained by the IRDA requirement that the Corporation should maintain solvency margins that are prescribed for private insurers. While the burden is not much for private companies LIC has to set aside capital for all policies that have been sold over the last three decades and are still in force. This year LIC has set aside over Rs 2,000 crore towards solvency margin requirements. With this the total amount set aside for solvency margin requirement has touched Rs 16,807 crore which is 110% of the legal requirement. IRDA has asked insurers to maintain reserves at 150% of the legally required limit. Officials say that solvency margin requirements will be a drain on next year’s funds as well following, which the bonus announcements would stabilise.

The Corporation’s surplus this year has crossed Rs 10,000 crore despite the fall in government securities yields. In FY02, the surplus was Rs 8,637 crore which rose to Rs 9,733 crore in FY03. Senior officials said that the decline in yields has been to a large extent offset by equity profits. However, since equity comprises less than 10% of its investments the impact can’t be ignored. Even in fixed income securities the Corporation has managed a return of over 10% on the life fund by investing in state government paper with higher yield.

Tata Growth Fund has declared 8% dividend

18th September 2004: Tata Mutual Fund has declared an eight percent dividend (80 paise per unit) on face value of Rs 10, for its Tata Growth Fund. This is the second equity scheme of Tata Mutual Fund to pay a dividend this month, the earlier being Tata Equity Opportunities Fund which paid a dividend of seven per cent, the company said in a release yesterday. The record date for the dividend is September 16 and the Net Asset Value on that date is Rs 13.92.

HPL has appointed SBI Capital as IPO advisor

18th September 2004: Haldia Petrochemicals Ltd (HPL) has appointed SBI Capital Markets as advisors to its maiden public issue of shares, which is slated to hit the capital markets by December this year. The process of filing the red herring prospectus with Securities & Exchange Board of India will be done shortly, said the sources in the company. HPL is the subject of interest of two PSUs, Gail (India) Ltd and Indian Oil Corporation. It had been allowed to tap the capital market by corporate debt restructuring (CDR) cell headed by IDBI to improve the debt-equity ratio. The company was going in front with its IPO plans irrespective of whether Gail or IOC entered as an equity partner, sources added. Meanwhile, following the petroleum ministry's advice to the West Bengal government that IOC is a better candidate for an equity partnership in HPL than Gail, hectic discussions between HPL promoters have started.

IRDA the regulator is worried by mass failure of agents

17th September 2004: Fail your exams and force the school to lower the bar. This is exactly what the country’s insurance agents have done to the sector’s supervisory body. The Insurance Regulatory and Development Authority (IRDA) has given a comprehensive helping hand by lowering the passing percentage from 50 to 35. More on this help it has been done with retrospective effect. The reason: agents failing en masse on account of stricter observation in examinations and a change in the question paper.

Following a meeting of insurance training heads on August 2, the IRDA along with the Insurance Institute of India (III), which conducts the exams has lowered the passing marks to 35% with effect from July 1. In simple words, the agents who had got 35% in the exam have now crossed the hurdle. Online examinations are held five days a week while a sit-in exam facility is extended every alternate Sunday. The HR head of a private insurance company said, “The percentage of agents passing the exam fell drastically from 80-90% to as low as 25-30% since late June. In the case of exams conducted online, the percentage of agents who passed fell to a low of 10%.” Now with the lower bar, 80% of the agents taking the examination have passed.

            Senior officials said that lowering of the passing percentage is an temporary measure undertaken by the regulator, which will be rectified once the insurance companies submit a question bank. He added that the IRDA decided to crack the whip when it came across irregularities in conducting agents’ exams. Cheating and copying were rampant in many training institutes, and there was evidence of people sitting on behalf of candidates, who worried the regulator. The chief executive of a leading European insurance outfit, which trains and recruits around 3,000 agents a month said that the dramatic reduction in the number of agents undergoing the 100-hour training and passing the exam has affected the recruitment process. This has led to insurance companies failing to meet internal performance targets. However, on account of the revised syllabus and examination paper, “the percentage of our agents passing the exam has fallen to 60%”, he added.

            On an average, about 25,000-30,000 agents are recruited every month. Even if one were to take an average sale of one or two policies per agent in the initial months, this translates into about 60,000 policies sold for the industry as a whole. Shivaji Dam the chief executive of Kotak Mahindra Old Mutual Life Insurance said “There has been a slowdown in the number of agents recruited, but I think we will be able to meet our target.”

Insurance offshoring is gaining currency

17th September 2004: India has become one of the most well-liked targets for offshoring insurance processes. Top insurance companies in the US and Europe like Cox Insurance Holdings, Aviva Life Insurance, AXA Sun Life have moved their processes to India-based captive or third-party outsourcing firms. Fueled by the success of the US-based health care firm Aetna moving its claims adjudication process to India, many other organisations want to tread the same path. ValueNotes Outsourcing Practice has released Global Insurance Outsourcing report and according to which it looks at outsourcing, currently around 63% of India’s insurance outsourcing revenue comes from the US. Some of the top players in the insurance vertical are WNS, HTMT, EXL, ICICI OneSource and GTL.

            The report emphasis’s the potential for insurance outsourcing with over 1,500 property and casualty insurance companies and 1,300 health insurance companies in the US alone. Globally, the banking, financial services and insurance (BFSI) vertical are the fastest growing segment in outsourcing. ValueNotes stated that India’s BFSI outsourcing revenues in 2003 stood at $1.1 billion, constituting 2.5% of the global BFSI outsourcing. It has estimated that the Indian insurance outsourcing revenues are likely to grow to $790 million by 2007, from an estimated $367 million in 2003, reflecting a compounded average growth rate of 21%. Several large Indian service providers have, through organic growth or acquisitions, set up centers in the US, Canada and other places that qualify as “near-shore” outsourcing destinations and are therefore more acceptable to first time outsourcers. Nilesh Paranjape the senior research analyst of ValueNotes said “India has thus much to offer as an offshoring destination.” Insurance companies are forced to look at outsourcing/offshoring to improve efficiencies and to channalise resources towards the core functions of product development and innovation.

            This is fallout of September 11, which resulted in shrinking margins, higher claims disbursement and increasing competition in the sector. Several niche providers with relevant domain expertise are emerging, encouraging insurance companies to outsource more value-added services. The growth drivers, common to all verticals, essentially are cost saving, ability to focus on core processes of product development, innovation and marketing strategy as well as minimising risk through multiple delivery centers, the report added.

Indian Bank awaits Ministrys’ approval for IPO

16th September 2004: Indian Bank is waiting for the final approval from Finance Ministry for its initial public offering and said it is open to acquiring a bank. M B N Rao, the chairman of Indian Bank said, "We are in discussion with the Finance Ministry for an IPO in the near future." He declined to comment on the size and timing of the IPO as all the details are being worked out. The IPO will be in addition to the Rs 300 crore the bank raised through subordinated bonds to increase its Tier-II capital. The capital adequacy ratio of the bank increased to over 15% after the issue. However, Indian Bank would need more capital to increase its business and provide for market and operational risks as envisaged in the Basle-II norms coming into effect from 2006. He added that, "We need capital for business expansion. So, we will tap the market." The objective of the bank is to double its net profits to over Rs 800 crore by scaling up its business by as a minimum 22% to Rs 55,000 crore in this fiscal. Asked if the bank is scouting for acquisition of a bank, Rao said, "Government favour consolidation of banks by merging small banks with big and financially sound banks. We are one of the sound banks". Rao declined to reveal details, as it was a very market sensitive issue. "We will disclose it at an appropriate time if we decide to go for buying out of any bank," he said.

MM Financial is planning to raise Rs 130 Cr

16th September 2004: Merchant bankers said on Wednesday, Mahindra & Mahindra Financial Services Ltd. plans to raise Rs 130 crore by securitising some vehicle loan receivables. The receivables have a door-to-door maturity of 32 months with an average maturity of 13.2 months. The annualised yield is 5.85%. The issue will open and close on September 16. The arrangers to this issue are IDBI Capital Market Services and Bank of America. They have been rated 'AAA(SO)' or 'highest safety' by Crisil Ltd.

IDBI has raised Rs 800 Cr via omnibonds

14th September 2004: To fund its normal business operations, Industrial Development Bank of India has raised Rs 800 crore from the market through three-year omnibonds. Senior IDBI official said today "The omnibond issue for Rs 400 crore had greenshoe option for same amount which we have exercised." He added that the issue, which opened for subscription this morning, received a good response from mutual funds and primary dealers and closed at the end of business hours. He said that the coupon on the three-year bond would be 0.45% higher than the yield on one-year government paper. The official said, the funds raised from bonds, issued through private placement, would be used for normal business operations. In the current financial year, the financial institution has raised total Rs 2,400 crore from the market including Rs 1,600 crore through issuance of flexi bonds, he added.

FINMIN TO RE-EXAMINE THE TAX STRUCTURE

14th September 2004: There is good news for the taxpayers. The government is set to revisit direct tax rates in the ‘05-06 Budget to effect further moderation in the rate structure, if tax compliance improves in the coming months. If that sounds like velvet, here’s the iron fist couched inside: The government is very strong-minded to collect every paise of tax due to it. It has already launched a media campaign to bolster advance tax collections and recover arrears. Finance minister, P Chidambaram said “It will be a soft and friendly campaign, but backed by a determination to collect tax dues, including arrears.”

However, for the next fiscal, the government will look at a further moderation in the rates. Officials reckon that while the existing tax rates are moderate, there is scope for further moderation. One option is to re-adjust the existing income tax slabs. Personal income tax payers with an annual income of Rs 111,250 (taxable income up to Rs 109,000) have been given relief in this fiscal. But tax slabs were not tinkered with in the Budget. Corporate tax rates also remain unchanged. The tax rate on domestic companies is 35% and for foreign companies it is 40%. These companies have to pay an additional surcharge of 2.5% and an education cess of 2%.

Now, the focus is clearly on meeting the tax collection targets set forth in the Budget. Gross tax revenue is estimated at Rs 317,733 crore. Corporate tax collections are budgeted at Rs 50,929 crore and the income tax collections at Rs 88,436 crore. These include arrears of around Rs 6,000-7,000 crore in direct taxes. The ministry anticipates a surge in advance tax collections due by September 15, on the back of encouraging first quarter corporate results. As the Finance Bill has become act now, the government will also collect the 2% education cess with the direct taxes.

The message is that a soft campaign should not be misinterpreted for softness in the determination to collect taxes. The targets are stiff because the government requires resources to meet the CMP commitments. The Planning Commission has proposed hiking the gross budgetary support for 2004-05 from Rs 10,000 crore to Rs 12,000 crore for higher social sector allocations. Non-corporate assesses pay advance tax in three instalments, with the first instalment due by September 15, while the Corporates pay advance taxes in four instalments, and the second instalment is due by the same date.

GOVERNMENT’S TACTICS IS TO PENALISE MERCHANT BANKERS FOR MISLEADING IPO

14th September 2004: It may not be as easy to take the small investor for a ride. For the first time, the government has proposed to include merchant bankers managing IPOs in the list of ‘officers in default’ — more often than not employees of defaulting companies are been held responsible for Company Law violations. This will make negligent merchant bankers liable to punishment and imprisonment, just like promoters and managements, in case of fraudulent public offers. As of now, merchant bankers are not penalised for violations such as a misleading prospectuses and inappropriate vetting of shady floats, as existing provisions provide easy escape routes. For instance, simply appending a disclaimer at the end of a prospectus to the effect that the assessments are based on information supplied by the issuing company enables merchant bankers to transfer the entire responsibility for an IPO to the issuing company.

            The proposed change will, however, force them to undertake serious groundwork and verify the company’s credentials before vetting a public offer. Negligent merchant bankers could be booked under the provisions of the Companies Act. The change in the definition has been proposed in the concept paper to overhaul the Companies Act, 1956, that has been put out by the ministry of company affairs for public comments. Share transfer agents, registrars and bankers for public offers are also proposed to be covered under the new definition.

            If implemented, the proposal will bring relief to investors who have suffered due to irresponsible mishandling of public floats by intermediaries. In the past, several ‘vanishing companies’ and ‘fly by night operators’ have duped investors. By extending the proposal to registrars, the government may be able to prevent the recurrence of a share allotment fiasco like that of ONGC. Regulators will be able to use this provision to pin down registrars for faulty allotments and any sort of offences. A merchant banker said, “It is alright if they limit the provision to insider trading, illegal transferring of client money and such frauds. If they do not clearly specify this, IPO investors may expect merchant bankers to be booked for listing prices falling below the offer price and other such occurrences of discounts.”

IRDA CONCENTRATED EFFORT GIVES AGENTS A DIFFICULT TIME

13th September 2004: Insurance products are often bought on the advice of the lakhs of agents that market policies to a frequently ill-informed public. Interestingly, these advisors may be as ignorant as the rest of us. The Insurance Institute of India (III), which conducts the IRDA-required exams that all insurance agents must take, has found a startling fall — by nearly half — in the pass rates of over 30,000 agents that take the exam every month. In the past, the agent’s exam had a pass rate of over 90%. But since July this year, when the IRDA and Insurance Institute of India began a crackdown on the manner in which the exams were conducted, pass rates immediately plunged to 50-55%. In fact, in some centers, they are as low as 4-5%. SJ Gidwani the secretary general of Insurance Institute of India says, “We have no problems with the professional qualification exams that we conduct.”

            He explained that since III’s other exams like the licentiateship (a certificate level exam) and fellowship are taken for career advancement, they have found no misconduct. ”The agents exam, however, is a certificate that allows you to sell something,” he adds. Currently, there are over 12 lakh agents that work for various life and non-life insurance companies in the country.
Since its introduction in 2000, 1.5m agent exams have been carried out at the rate of 30,000-40,000 a month. The drastic fall in pass rates has been achieved by changing the syllabus and question bank for the exam. The process of conducting the exam has also been changed.

In the past, insurance companies were allowed to supervise the exams themselves, but this led to some undesirable practices. Hence, III changed the venues of the tests to about 125 schools and colleges across the country. III and IRDA also physically visit some testing centers. For online testing, III has now created its own examination server. Here, pass rates have plunged even more drastically to below 30%. Centers in Bihar, Uttar Pradesh, Madhya Pradesh and eastern and northern India have witnessed the greatest fall in pass rates. III is now working on ways to continuously replace and update question banks to make the testing system more robust.

BSE WILL LEVY PENALTY FOR VIOLATING TRADING LIMIT IN DERIVATIVE

13th September 2004: In an effort to introduce discipline in trading, the Bombay Stock Exchange has decided to levy a penalty of up to Rs 1 lakh on any broking member and his client for violating prescribed market wide position limit for individual securities in the derivative segment. A meeting held on September 9, the disciplinary action panel of the exchange has prescribed the penalty norm for violation of market-wide position limit on individual securities.

            BSE on its notification said on 12th September that the penalty would be 1% of the value of increased position subject to a minimum of Rs 5,000 and a maximum of Rs 1,00,000. At the end of the day, the exchange would test whether the market wide-open interest for any scrip exceeds 95 per cent of the market wide position limit for that scrip. If, the exchange finds that open position had breached the threshold, broking member would be allowed to trade next day only to decrease their positions through offsetting positions till the normal trading in the scrip was resumed. The penalty would be recovered from the clearing member affiliated with such trading members/clients on T+1 day before trading begins on the next day, it said.

SPECIAL MARGINS ON 44 STOCKS WOULD BE IMPOSED BY BSE

13th September 2004: The Bombay Stock Exchange would impose special margins on 44 stocks, including Kalyani Forge Ltd and TTK Prestige, from Monday. The rates of special margins have been revised keeping in view the closing price of the scrip on last trading day, BSE said in a communication to the broking members on Sunday. These margins would be imposed on the basis of member wise gross purchase or sales position, it said. Some of the other scripts that would attract the special margins include Tilaknagar Ind, Kolar Info, K Sera Sera, Kirloskar Bros, Pearl Organics, Geojit Securities, Cranes Software, it added.

JSPL IS IN PREPARATION TO RAISE $50m THROUGH ECB

13th September 2004: Navin Jindal, the controller of Jindal Steel and Power (JSPL), will raise $50m through external commercial borrowings (ECB). For this debt issue, Barclays Capital is authorized as the merchant banker. The proceeds from the ECB, amounting to Rs 230 crore, will be used for its Rs 1,400 crore capacity expansion plan at its Raighar works, in Chhattisgarh. The first phase of JSPL’s capacity expansion programme includes setting up an 8 lakh tonne per annum metcoke plant and a 12.5 lakh tonne sinter plant.

            The company will also set up a 10 lakh tonne per annum electric arc furnace unit and a 12.5 lakh tonne per annum blast furnace, which will take JSPL’s total steel production capacity to over 24 lakh tonnes by September ‘06. Part of the capacity expansion programme will be funded through internal accruals of Rs 560 crore. The remaining Rs 840 crore will be raised in the form of debt. Sushil Maroo, the director (finance) of JSPL, said the company has enough cash flows to fund the projects, and that a larger part of the debt will be required in the last quarter of next year. According to him, most of the debt is rupee denominated except for the funds brought in the form of ECBs.

BIRLA MF HAS LAUNCHED BIRLA DYNAMIC BOND FUND

11th September 2004: Birla Mutual Fund launched the Birla Dynamic Bond Fund. It is an active managed fund, which will invest in debt and money market instruments. The IPO is open for subscription on September 10, 04 and will close on September 24. The fund will employ active investment management strategy and try to optimise returns keeping in mind various scenarios like inflation, liquidity, monetary policy, government borrowing programme, economic outlook, fiscal policy etc. The minimum subscription for the bond is Rs 5000. The asset allocation and investment pattern for the fund is dynamically designed with no restriction on investing in any debt paper. So, the fund could invest in corporate papers, G-Secs, floating rate bond and interest rate derivatives. The maturity of portfolio will also be actively managed.

RELIANCE MF IS PLANNING TO LAUNCH SMALL SAVING SCHEMES

11th September 2004: Reliance Mutual Fund (RMF) plans to soon launch an open-ended fund Reliance Small Savings Scheme (RSSS). The fund will offer a growth plan with a debt, equity and hybrid option available, RMF said in its offer document filed with Securities and Exchange Board of India (SEBI). The MF entity is yet to finalise the offer period. The initial offer price will be Rs 10 per unit plus applicable entry load. The fund seeks to collect a minimum corpus of Rs one lakh. There would not be any maximum limit on the amount raised and the fund would make full and firm allotment against all valid applications. The minimum initial pay is of Rs 1,000 for resident investors and minimum of Rs 500 per month thereafter, it added.

DENA BANK IS PLANNING TO RAISE RS 80 Cr THROUGH PUBLIC ISSUE

11th September 2004: Anil Khandelwal the chairman and managing director said on Friday that Dena Bank is planning to raise Rs 80 crore through an public issue, which will bring down the government stake to 51%. He added to reporters on the sidelines of a banking seminar that the share issue is expected to strike the market in the third quarter of the fiscal year ending March 2005.

RENEWAL OF INSURANCE AGENCY LICENCE

10th September 2004: The insurance licence gets expired after every 3 years; hence every agent has to renew his agency licence. As per IRDA regulations, it is made mandatory to undergo training for the renewal of agency licence. If an agent has an agency of both Life & Non-Life companies, then he has to undergo the training programme. The total trainings hours are 50, which are divided in 25 hours each for each agency. If the agent has only 1 agency then he has to only undergo the training programme of 25 hours, which is conducted by that institute. While filling up the renewal form he has to attach the training certificates has given by the training institute. The nominal fee of for renewal of licence is Rs 250/-.

TO RAISE $600m, VEDANTA IS COMING UP WITH EURO BOND ISSUE

7th September 2004: Vedanta Resources, the diversified metals and mining group, will crash into the market with a Euro Bond issue by the end of this month. The London Stock Exchange-listed Company is looking at borrowing up to $600m through the bond issuance. This is likely to be the largest ever issuance by an India-related company. Most of Vedanta’s operations are located in India. The bigger bond issuance from India has been typically in the range of around $300m.

Moody’s and S&P, the global rating agencies are currently in the process of rating the issue and the size of the issue will be finalised after this exercise is over. ABN Amro Bank, Barclays Capital and Deutsche Bank are the lead managers for the issue.

The size of the issue will also be dependant on the pricing, which the company would be expecting from the market. The pricing goes up as the issue size increases. The issue is likely to hit the market at the end of this month or early next month. As the company is listed abroad, the limit on ECB borrowings of to $500m will not be applicable for Vedanta.

“Vedanta has not announced any plan to float a Euro bond issue,” said a Sterlite official in India. According to sources, a major portion of the issue is likely to be used for Vedanta’s 1.4m-tonne green field alumina refinery project in Orissa. Vedanta Alumina, a wholly owned subsidiary of Sterlite Industries India, is implementing the project. The Vedanta Alumina project is estimated to cost around $ 800m. The proceeds may also be used for Balco’s 2.5-lakh tone brown field aluminum smelter projects. A part of the money may also go to Sterlite, Balco and Hindustan Zinc for general corporate purposes and will be used for refinancing some of their foreign debts.

The company had mopped up $1bn through a public offering at LSE last year. This money is being used for its acquisitions, greenfield and brownfield expansion plans. Vedanta is also currently looking at mines in South Africa, Australia and South America. Vedanta recently acquired a 51% controlling stake in Konkola Copper Mines (KCM) in Zambia for a cash consideration of $48.2m. The estimated capital investment for Balco is has been estimated at $800m of which $335m is being infused, as equity while $465m will be in the form of debt. The project will also include a 540MW coal-based power plant.

HALDIA APPOINTS BANKERS TO MANAGE ITS IPO

7th Sept 2004: Industry sources said that the West Bengal-based petrochemicals complex, Haldia Petrochemicals has appointed three investment bankers to lead manage its proposed initial public offering, which is predictable to hit the market some time in December this year. Mumbai-based banks JP Morgan, DSP Merrill Lynch and Kotak Investment Banking will advise Haldia on its efforts to raise about Rs 450-500 crore from the capital market.

            The Industrial Development Bank of India recently approved a corporate restructuring package for the beleaguered, debt-ridden company. One of the conditions imposed was that the promoters should arrange another Rs 600 crore by December this year. Approximately Rs 457 crore is to be raised by a public offering.

            Industry sources said the offering would come at a time of soaring prices and rising profitability of petrochemical companies. Stocks of several companies have risen sharply on healthy performance and expectations of more growth in the future. With several companies raising about $1.5 billion through IPOs, the primary market is strong so far this year. Compared to just $1.5 billion over the last four years, around $5.4 billion was raised through share sales in 2004.

            The only concern could be Haldia’s debt burden that is about Rs 4,000 crore and the accumulated losses, which are estimated at about Rs 1,000 crore.

FOR THE DESIRE OF GOOD INVESTORS, IL&FS HAS HOLD BACK ITS IPO

7th Sept 2004: IL&FS Investmart, which was proposing to make a public offer of 35 lakh equity shares of Rs 10 each through book building process, has temporarily held it back for want of good investors. The investment company is looking out for good investors to offer the shareholding. Hemang Raja of IL&FS justified “We have put a temporary hold on the public offer and are looking out for investors. The issue would be by book building.”

            Overlapping with the public offering would be the offer for sale of 65 lakh equity shares of Rs 10 each held by the promoter — IL&FS and Orix Corporation of Japan. IL&FS proposes to sell 13.93% stake in the IL&FS Investmart comprising of 48.75 lakh equity shares, while ORIX proposes to sell 16.25 lakh shares comprising 4.84% of the issued, subscribed and paid-up capital of IL&FS Investmart.

Whereas looking for government approval for the public offering and offer for sale, IL&FS Investmart has said that bidders in the offer for sale would include foreign institutional investors (FIIs), non-resident Indians (NRIs), overseas corporate bodies (OCBs) and foreign venture capital investors registered with Sebi. The public offering was initially expected to hit the market in June. But with no clearness on the investor front, it could be delayed by some more months.

            IL&FS Investmart is one of the top domestic brokerage houses. It includes names like Kotak Securities, IndiaBulls, ICICI direct, IL&FS Investmart and Sharekhan or SSKI Securities. IL&FS Investmart operates in the areas of investment advisory and broking, merchant banking, project syndication, securities broking and distribution of financial products. The merger of the two companies — IL&FS Merchant Banking Services and DebtonNet India into IL&FS Investsmart further enhances IL&FS Investsmart’s service portfolio and market execution abilities.

INDIAN BANK IS PLANNING FOR IPO FOR ITS CAPITAL EXPANSION

6th September 2004: By the end of the current fiscal, Indian Bank is planning an initial public offer (IPO) to raise its capital base. Briefing the reporters, MBN Rao the CMD of Indian Bank said the bank intends to hit capital market by the end of the year. However, the size of the issue and premium part has not been decided yet. Mr. Rao added that the bank has increased its capital adequacy ratio (CAR) up to 15% after it raised Rs 300 crore through tier-II bond issue. Though we have comfortable CAR, we need further capital to meet our growth.

            Mr. Rao said the bank is also open for inorganic growth through acquisition route. “We will be looking at second-rung banks for acquisition if there is an opportunity,” he added. The Indian bank has emerged as strong brand in South after the recent ORG report, which rated it as a top service brand. “We want to leverage our strength while going for acquisition,” he added.

Regarding agriculture credit, Mr. Rao said the bank is targeting 35% growth per annum for the next three years and will achieve its target of doubling agriculture credit in next three years. While increasing its exposure to agriculture credit, the bank will continue to focus on retail lending. The bank wants to build 50% of its total loan portfolio through retail lending by ’07,” he added.

SEBI HAS FINED JM CAPITAL MANAGEMENT AND JM MUTUAL FUND, FOR VIOLATION OF MF REGULATIONS

4th September 2004: The Securities and Exchange Board of India (Sebi) has imposed a penalty of Rs 30 lakh on JM Capital Management and Rs 20 lakh on JM Mutual Fund for violation of Sebi MF regulations. According to Sebi’s annual report for ’03-04, the order was passed under section 15D(b) and section 15E of the Sebi Act, 1992, for violation of Sebi (MF) Regulations, 1996.
Sebi said adjudication proceedings have been initiated against Alliance Capital mutual fund and the AMC for late trading.

These proceedings have been initiated for processing two applications in Alliance Income Fund Scheme at the NAV applicable for September 29, ’03, even though these applications were received after the cut-off time. The report said that during ’03-04, it completed 152 investigation cases against 106 cases in the previous year, an increase of 42%. As of March 31, ’04, there were 31 cases pending for more than one year.

According to the Sebi annual report, the investigation of these cases was expedited so as to bring down pendency of cases to below one year. During 2003-04, 78%of cases pertained to market manipulation and price rigging against 76% such cases in last year. Other cases pertained to insider trading, takeover violations and irregularities in public issues. Additionally, the Surveillance Department referred 88 cases to SEs for detailed investigations. NSE completed investigations in 82 cases and BSE in 92 cases.

The Sebi report said that measures have been taken to expedite the process of investigation and enhance the quality and effectiveness of investigation. The report said, “To ensure objectivity, two internal committees comprising division chiefs deliberate on main findings of all investigation reports, evaluate evidence available and suggest appropriate course of action. A benchmark time limit has been set at four months for completion of preliminary investigations and eight months for completion of formal investigations.”

TAX WILL NOT BE MORE THAN THE ADDITIONAL INCOME EARNED OVER RS 1 LAKH

31st August 2004: There are numerous people with the income just above 1 lakh who may be in anticipation of a pay rise and are looking forward to the possibility of a larger income not being taxed in the outcome of the passage of the Finance Bill. However, there are several things they need to understand. It will be appropriate to be ready with your chequebook to pay some taxes. The benefit here is that you will not pay more than what you earn above the one-lakh mark. The additional relief, which is provided by the finance minister, needs to be understood in the right context as regards the exact benefit and its applicability.

            The first point is that the benefit of the rebate for income tax is for all those who have a total annual income of not more than Rs 1 lakh. It means that the figure for importance is total income and this has to be either less than Rs 1 lakh or even Rs 1 lakh. In such a case, the tax liability for the individual will turn out to be zero.

            When income crosses the Rs 1-lakh mark, the individual will be saddled with a tax burden that will have to be paid. This implies that the situation of not paying tax because of the rebate disappears. The benefit in the final version of the Finance Bill relates to this extra sum.

The good news is that the extra amount of tax will not be more than the additional amount of income that is earned. This change is necessary, because a normal calculation results in a tax burden that is more than the additional income. For example, if the income of the individual is Rs 1,01,000, with the new cess the tax amount payable comes to Rs 9,384. But this will actually leave him worse off than someone, who has earned, say, Rs 99,000. However, now the individual will pay a tax, which is restricted to Rs 1,000 in this case, as this is the figure by which the income exceeds Rs 1 lakh.

So, even though the amount of tax payable is limited, it is in no circumstances, eliminated. It effectively means that a person will end up in the same situation at the end if he earns Rs 1 lakh and if he earns Rs 1,10,000, because in the second of two case, the entire additional amount of Rs 10,000 will have to be paid as taxes, leaving the person with a net figure of Rs 1 lakh.

            Calculations show that the higher one goes the better will be the situation in terms of income coming home. For example, someone with a final income of Rs 1,15,000 will have a net income of Rs 1,02,760, which is just Rs 2,760 more than someone with Rs 1,00,000. Nonetheless, the person with an income of Rs 1,20,000 is better off by Rs 6,740 than the person with an income of 1,00,000. Thus, all those who manage to wrangle out some raises from their employers might not find their overall situation improving too much.

At the same time, there is also an option for reducing the tax burden further through the use of other rebates like Section 88. Therefore, all those who have just crossed the Rs 1,00,000 mark should look at other options to see whether they are cost-effective. However, calculation show that when this additional benefit is available, it will be senseless to try and save some bucks under a rebate like Section 88 as the cost-benefit ratio is extremely unfavorable for the individual.

Imagine the case of a person who nets an income of Rs 1,05,000. In his case, the tax payable comes to Rs 10,200. In order to save this element of tax, the Section 88 investment will have to be to the tune of Rs 51,000, which is extremely improbable on such a low level of income. On the other hand, the person can pay Rs 5,000 as tax and go home with the net income figure of Rs 1 lakh and plan other investments according to affordability.

Not only has the exemption limit not been raised, this benefit or rebate or marginal relief is also not applicable to everyone, as only those who fall into the specified range of income will be able to make use of the benefit. For the rest, tax will have to be paid normally.

SWEDISH MATCH’S APPEAL IN OPPOSITION TO SEBI ORDER WAS REJECTED BY SC

28th August 2004: On Wednesday, the Supreme Court turned down Swedish Match’s appeal against a Sebi order calling for an open offer to the shareholders of its Indian subsidiary, Wimco, along with interest payment. Post this ruling from the apex court, the company will now have to shell out at Rs 35 as open offer price plus it has to pay Rs 20 as interest (calculated at the rate of 15%) — per share to its shareholders.

Wimco closed at Rs 33.9 on the BSE after touching a high of Rs 37.5 in intra-day trading. The apex court, however, has waived the penalty, which could have been slapped by Sebi on Wimco for adjudication of the violation. In another order on Colour Chem (Clariant), which challenged the Sebi and Securities Appellate Tribunal (SAT) order on fixing the eligibility criteria for paying interests while making the open offer, the apex court has ruled in favour of the company.

            As per the order, the company will have to pay interests to only those shareholders who were holding the shares prior to the company violating the Sebi rule on takeovers. Moreover, the company will now have to pay the interest rate only at a reduced rate of 10% instead of the originally stipulated 15%. Through the three entities named Haravon Investments, Seed Trading and Swedish Match Singapore, Swedish Match possess a 74% stake in the company.

            In ’02, Sebi had directed Wimco’s Swedish parent to make an open offer to domestic shareholders of the company after issuing a show-cause notice for violating takeover code regulations when it acquired 21.89% of the Indian company in September ’00. Sebi also directed the company to pay 15% interest from January 27, ’01 till the actual payment is made to the investors. Thereafter, the SAT had dismissed the appeal of Swedish Match against the Sebi order. The tribunal said that companies couldn’t take cover from conducting an open offer under Regulations 12 of the takeover code, which deals with control. Swedish Match had appealed against the Sebi decision saying that under Regulation 12 of the takeover code there is no change in control after its acquisition of shares of its Indian subsidiary. Swedish Match had acquired 21.89% of Wimco’s equity, from AVP Trading and Plash Foods belonging to the Jatia group.

SASKEN COMMUNICATION TECHNOLOGIES IS PLANNING FOR IPO IN NEXT 6-12 MONTHS

28th August 2004: Bangalore-based telecom software vendor Sasken Communication Technologies is considering an IPO in the next 6 to 12 months to finance business expansion. Rajiv Mody, the Chairman & CEO of Sasken told that the company would wait for another 6 months before it achieves a sustainable q-o-q growth for its products business and raises money from the capital market. He added, “Though telecom software is doing well, it would take some time before the IPR (Intellectual Property Rights) business segment improves performance.” The firm has yet to freeze concrete plans for the IPO.

The size of Sasken’s offering could not be ascertained. Sasken provides software services for semiconductor, network equipment companies and global wireless handset developers. The customers of Sasken’s include telecom product firms and component manufacturers.

The company’s investors, apart from promoter and entrepreneur Rajiv Mody, his friends and relatives, include Intel’s venture capital and private investment arm, Intel Capital. The stake Sasken’s promoters are expected to offload is not known. Intel Capital will remain invested, Mr. Mody said.

Sasken posted a 52% revenue growth during the year ended 31st March 2004 at Rs 166.1 crore. After surviving the telecom downturn in 2002, it made a net profit of Rs 18.3 crore for the year, against Rs 12.7 crore in the previous year. Revenues from its products business constituted 26% of total revenues during the period. The services business grew at 21% q-o-q. It is expecting maximum growth from supplying software to mobile handset manufacturers, semiconductor and network equipment companies.

NES, Ericsson, Intel and Sharp are some of its customers. Sasken doubled its headcount from 851 to 1,437 people during ’03-04. By the end of the current year (’04), close to 2,000 people are expected to be on its payrolls.

THE REFUNDS OF IPO IS TO BE EXPECTED TO GET SETTLED ONLINE

27th August 2004: Electronic crediting of refunds from an IPO may become a reality after a Sebi task force called for such a facility to improve primary market facilities. Sebi set up the Securities Markets Infrastructure Leveraging Expert (SMILE) task force after the allotment fiasco during the recent PSU public issues, most notably the ONGC issue. The task force’s report says “It is desirable to make it mandatory for refunds from primary issues to be made by Electronic Clearing Services (ECS). The ECS facility is available in 45 cities, and RBI is proposing an increase in the number of locations.” As real time gross settlement (RTGS) gets extended to retail transactions, it is feasible for all refunds to be credited directly into NRI bank accounts in India through RTGS. The task force said better facilities should be given to NRIs investing in domestic IPOs. It noted that NRIs face logistic issues when participating in primary issues.

THE IPO OF INDIABULLS WILL STRIKE THE MARKET ON 6TH SEPT

27th August 2004: Indiabulls Financial Services Ltd. is coming up with a public issue of 2.71 crore shares at a price range of Rs 16-19 per share. This will raise funds between Rs 43.5 crore and 52 crore. The issue opens on September 6 and closes on September 10 and it will be 100% through book-building route.

            The Chairman and CEO, Sameer Gehlaut said that the issue of 2,71,87,519 equity shares of Rs two each constitutes 25 per cent of the fully diluted post issue paid-up capital of the company. He added that approximately 50% of the issue shall be allocated on a discretionary basis to qualified institutional buyers and 25% on a proportionate basis to non-institutional bidders and the remaining 25% to retail bidders. The proceeds of the public issue would be used to promote new business activities, upgrade fixed infrastructure and open new branches as well as for investments and acquisitions. He also said that Investors, including LNM India Internet Ventures Ltd, Transatlantic Corporation Ltd, Farallon Capital Partners LP and Infinity Technologies Truste Pvt Ltd, have invested about Rs 70 crore in Indiabulls.

            Indiabulls offers wide range of financial products and services and has a presence in equity, debt and derivatives broking, depository services and distribution of insurance, mutual funds and IPOs, he said, adding the company has recently ventured into commodities trading. SBI Capital Markets Ltd. and DSP Merrill Lynch Ltd. are the book running lead managers to the IPO.

FOR DELISTING ITS BPO ANCILLARY eSERVE, CITIGROUP WILL PAY Rs 975 PER SHARE

26th August 2004: Citigroup, the financial services massive will pay Rs 975 per share to delist its BPO subsidiary eServe, after the majority of the shareholders presented their bids at or below that price. Citi said, as part of the book building process it has received 53.2 lakh valid shares at or below the price of Rs 975 per share. E-Serve’s public shareholding is expected to fall below the stipulated 25% with Citi’s stake rising to 86% from 44%. Earlier Citi had set a floor price of Rs 735. All the shareholders, whose shares are being accepted, will be uniformly paid the exit price of Rs 975. On Monday, eServe shares gone up 4.1% to Rs 969, while the sensex knock down by 0.75%. From the time when Citi announced its buyout plans in April, the firm’s shares have risen 54%, while sensex has fallen 13%.

THE IPO OF NTPC IS PROBABLE TO OPEN ON SEPT. 23

25th August 2004: C.P. Jain the chairman of the company said on Tuesday that the initial public offering would open for subscription around September 23. National Thermal Power Corporation is the country’s top power producer. New Delhi-based NTPC plans to use the funds, estimated at around $1 billion, to finance expansion plans to provide for the growing demands of India's energy-starved economy.

M&M IS PLANNING TO RAISE FUNDS THROUGH IPO FOR THEIR BUSINESS EXPANSION

25th August 2004: Mahindra group is planning to promote its financial services, Mahindra & Mahindra Financial Services MMFSL, in an initial public offering that will raise funds for business expansion. According to company officials and industry sources, a final decision has not been taken and various options are being examined. A source close to company said, “There is no fixed plan. We could either go public or have a strategic investor. We are looking at options that generate the maximum value to the company.”

            Industry sources say the company is looking to raise money for expanding its product range and assertively targeting its potential auto buyer. No details are available as of now and sources said the company would finalise its plan over the next few months. The domestic public issue market is progressively more looking eye-catching and so far in 2004, several companies have already raised $1.6bn through initial public offerings. About $5.4bn has been raised in all share sales this year compared to $1.5bn over the past four years.

            The destiny of MMFSL, an NBFC, are dependent on the auto sector, as it provides hire purchase finance for utility vehicles and light commercial vehicles. Its focus is on the semi-urban and rural markets. Initially, the company funded vehicles — primarily of its parent company, M&M. The last few months have seen an increase in MMFSL financing non-M&M products.

            A company official said, “Initially, 90-95% of MMFSL resources were used to fund M&M products. Currently, 20-25% of our resources fund non-M&M products.” For the year ended March ’03, the total disbursements of the company were at Rs 1,609 crore; a 38% growth is been seen over the corresponding period in the previous year. The company’s operating income grew 30.5% to Rs 248.9 crore during the same period. Net profit was up 60% to Rs 44.4 crore. While the operating profit margin declined marginally, the net profit margin climbed steadily. The fine rates at which the company has accessed funds have enabled it to cut costs.

INDIABULLS PLANS TO RAISE UP TO Rs 51.5 Cr THROUGH IPO

24th August 2004: Indiabulls Financial Services has set a price for its upcoming initial public offering (IPO) in the range of Rs 16 to 19 per share, a senior company official said on Monday. Through the sale of 27.1 m shares, which symbolize about 25% of Indiabulls enlarged capital; the company would raise Rs 51.5 crore. Successfully completing the IPO, the worth of the company will be more than Rs 200 crore i.e. $44 million. The director of Indiabulls, Gagan Banga said, "It will be a 100 per cent book-built issue." This offer is likely to be open between 6 and 10 of September. The company offers online and traditional brokerage services and distributes financial services products.

RELIANCE MF HAS LAUNCHED THE IPO FOR ITS FLOATING RATE FUND

23rd August 2004: On Monday, Reliance Mutual Fund launched the initial public offering for its floating rate scheme to provide investors with a product to reduce the portfolio volatility and earn better risk-adjusted returns. Reliance Capital Asset Management Company said that the subscription to the issue would remain open till 27th August 2004. It added that the scheme would invest its corpus in fixed rated debt, including, floating rate securitised debt paper.

AROUND RS 600 CR IS RAISED BY MFs THROUGH IPO

23rd August 2004: In spite of a restrained equity market, domestic mutual funds have managed to mobilise over Rs 600 crore through IPOs of various new equity scheme which launched in the past two-and-half months. For illustration there are three equity IPOs open for subscription, including the Kotak opportunity fund, the ING Vysya domestic opportunities fund and ABN Amro equity fund. Unconnectedly from this, the SBI Mutual Fund and HDFC MF have announced new schemes will be open for subscription later this month.

            The Kotak opportunity fund is an aggressive scheme with a flexible investment style. Here, the fund manager has the freedom to invest a high proportion of his or her portfolio value in sectors he or she feels will outperform others over the short to medium term. HDFC MFs new fund will invest in stocks whose shares are quoting at prices below their true value. A mutual fund analyst said, “There may not be sharp movement in index or the broad market, but there are stocks, which could give good returns. The theme of most of these new funds is to invest in such stocks.” The SBI MFs new fund, ‘Emerging Businesses Fund’ will focus businesses in sectors showing promise, based on the growth potential arising out of export/outsourcing opportunities and global competitiveness.

            Since MFs are able to convince investors about the opportunities in the market, they continue to put money in these schemes. In June, MFs collected Rs 280 crore through new equity schemes, while in July the amount was Rs 123 crore. It is expected that the new launches could raise over Rs 300-Rs 400 crore in August.

43% OF eSERVE PROPOSAL WAS BIDED AT RS 975 PER SHARE

23rd August 2004: The open offer for eServe was closed on Thursday, disclosed substantial response from shareholders, as around 43.25% of the company’s equity of the non-promoters’ 55.62% shareholding was tendered. However, around 42.9% of the shares have been tendered at Rs 975, against the Rs 800 indicative price offered by Citi.

Citibank Overseas Investment Corporation (COIC) holds a 44.38% stake in eServe and wants to delist the company. COIC will take a final decision on whether to accept the open offer early next week. The company spokesperson said, “By early next week, COIC will inform the regulatory authorities and make necessary announcements.” The open offer has received wide-ranging bids from Rs 735 to Rs 2,000. The company also received offers for around 3.18 lakh at Rs 950. Less than 5% of the shareholders hold the scrip in physical form.

If Citi accepts the bid at Rs 975, it will have to keep a 15-day window open for physical shareholders to tender their shares. COIC will have to take a decision on whether to accept the bids, as it is much higher than the indicative price of Rs 800. Citigroup officials claimed that COIC wanted to delist eServe as it interfered with the smooth running of the company. eServe is the only operation which is not fully owned by the group, thus creating operational inefficiencies.

Mutual funds and UTI hold a 21.15% stake in the company. Alliance Capital, Templeton, Prudential ICICI and Kotak Mahindra Global India Scheme are some of the mutual funds holding the stock in their portfolio. Foreign institutional investors, including GMO Trust, ILF Mauritius and UBS Securities Asia, hold a 6.26% stake. Also, if Citi accepts the price of Rs 975, it will have to keep a window open for the remaining shareholders for six months post-delisting. However, these shareholders will have to pay a higher tax rate post-delisting. According to the new proposed tax guidelines, the long term capital gains tax for listed securities is nil and for unlisted securities it can go up to 20%.

JAIPRAKASH AND ICICI TOGETHER TO FLOAT THE IPO OF HYDRO-POWER PLANT

21st August 2004: Industry sources said that Jaiprakash Associates and ICICI would simultaneously sell a portion of their stake in Jaiprakash Hydropower through an Initial Public Offering. ICICI is the country’s second-largest bank. The IPO is expected to raise Rs 350-380 crore. A Company running a 300 MW hydroelectric power plant at Himachal Pradesh is anticipated to file a prospectus eventually in next month. ICICI Securities, JM Morgan Stanley and UTI Bank would be the lead managers for this issue.

            Sources said the exact proportion of the stake to be sold by Jaiprakash Associates and ICICI Bank is not yet finalised. It is predicted to be around 30-40% of the company’s equity, which may constitute around 190m shares. It is expected that the issue will be priced around Rs 20 per share. ICICI Bank holds just over 20% in Jaiprakash Hydropower and the promoters, the Jaiprakash group, holds the rest. ICICI has invested in this project in the early developmental phase and is now pursuing for a partial or complete exit.

            Sources said, “There is a very high probability of ICICI selling. The only question is whether they will get out fully or partially.” This issue is probably expected to tap the market sometime in the start of November, following the planned $1bn float by National Thermal Power Corporation, the country’s largest power company.

            Jaiprakash thus becomes the latest company to join the IPO craze. A number of companies including NTPC, Indiabulls and Shoppers’ Stop is planning to launch their IPOs over the next few months.

Finance Minister P Chidambaram to scrutinize the Shourie’s Centaur deal

21st August 2004: Due to the growing quarrel over the sale of Centaur Hotel at Juhu in Mumbai may put former disinvestment minister Arun Shourie in the dock, as finance minister P Chidambaram is prima facie convinced that the deal should be looked into.

While replying to a calling attention motion in Rajya Sabha on Thursday, the finance minister expressed reservation over the manner of divestment, especially since there was only one bidder for the prime property. The valuation of the hotel, too, leaves several questions unanswered. The deal will be looked into once the Comptroller & Auditor General (CAG) submits a report on the sale, which was executed during the NDA regime.

            Mr. Chidambaram is not convinced by the explanations offered by the NDA leaders, including Mr. Shourie, as several extensions were granted to the buyer to pay up his dues. Moreover, the final valuation of the property was put at Rs 134 crore, while the asset valuation report had given a “reinstatement valuation” of Rs 246 crore and “depreciation valuation” of Rs 214 crore. Apart from the Left parties, even the Shiv Sena — an ally of the BJP — had criticised the decision, building up the pressure for a full-fledged probe.

Mr. Chidambaram is of the view that the valuation methodology adopted by the disinvestment department does not seem to be entirely above board. The Supreme Court judgment in the Balco valuation case is specific to that company and cannot be considered the most appropriate method for all public sector units sold under the “strategic sale” route. The disinvestment department is now part of the finance ministry, which is headed by Mr. Chidambaram.

The finance minister in his comprehensive reply to the calling attention motion said, “So, I would only conclude by saying that as at present advised, I would wait for the report of the CAG and take further steps in the matter based on the report of the CAG, especially to address so discomforting aspects which I have mentioned.” While making it clear that he was not against privatisation per se, the finance minister highlighted several “aspects” of the sale process which led to doubts.

CIRCULAR ISSUED BY SEBI IN RESPECT OF ISSUE AND LISTING OF PRIVATELY PLACED DEBT SECURITIES – CIRCULAR NO: SEBI/MRD/Corp Debt/AT/7001/2004

Secondary Market for Corporate Debt Securities - The SEBI vide its circular No SEBI/MRD/SE/AT/46/2003 dated December 22, 2003 stipulated the conditions to be complied in respect of private placement of debt securities. The contents of this notice was brought to your notice vide Exchange circular No LIST/DEBT/SMG/PG/12-2003 dated December 29, 2003. SEBI has now vide its letter No. SEBI/MRD/Corp Debt/AT/7001/2004 dated April 8, 2004 explained the operational procedures to be followed for listing of privately placed corporate debt securities and the same are given below.

A.    For securities issued on or before 30-09-2003

The appointment of debenture trustee and obtaining a credit rating is mandatory for all issues including those which were made prior to 30/9/2003. In the case of those issuers who are not able to comply with these conditions, the Stock Exchange may consider taking an undertaking from such issuers stating, interalia, that they will fulfill the requirements before 30/6/04 and list such instruments based on the said undertaking. If any issuer fails to comply with the undertaking given to the exchange, the Stock Exchange shall take punitive actions including suspension of trading in such securities.

In case an issuer has made more than one issue prior to 30/9/2003, such issuers may be given the option of submitting a single initial disclosure document, with instrument specific annexures to the same.

The requirement of disclosures under chapter VI of SEBI (DIP Guidelines), 2000 shall be deemed to have been satisfied if the following provisions of SEBI (DIP Guidelines), 2000 are complied with:

6.7       Company, Management and projects

6.14           Outstanding litigations or defaults

6.16     Disclosure on Investor Grievances and Redressal System

6.18           Financial Information

B.    For securities issued after 30/09/2003

Issuers who make frequent private placements of debt securities may be permitted to file an umbrella offer document; The issuers may follow similar procedure as being followed for shelf prospectus for public issues in terms of material changes in the disclosure document.

All Companies are advised to take note of the above and ensure compliance.


In case you require any further clarifications in the matter, please contact Ms. Nishita Shah on (022) 2272 1233/34 Extn.8233

CIRCULAR ISSUED BY SEBI IN RESPECT OF ISSUE AND LISTING OF PRIVATELY PLACED DEBT SECURITIES – CIRCULAR NO: SEBI/MRD/SE/AT/46/2003

Secondary Market for Corporate Debt Securities – The SEBI vide its circular No SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 stipulated the conditions to be complied in respect of private placement of debt securities. The contents of the circular was brought to your notice vide Exchange letter No. CRD/GEN/2003/4 dated October 22, 2003.

SEBI has now vide their circular No SEBI/MRD/SE/AT/46/2003 dated December 22, 2003 issued further clarifications in the matter and the same are given below.

Applicability of the circular

i. Type of Issuer companies

a) The SEBI circular dated September 30, 2003 would be applicable to all listed companies which have any of their securities, either equity or debt, offered through an offer document, i.e., through a public issue and listed on a recognized stock exchange and also includes Public Sector Undertakings whose securities are listed on a recognized stock exchange.

b) Further, unlisted companies/statutory corporations/other entities, if they so desire, may get their privately placed debt securities listed in the stock exchanges, by complying with the relevant provisions of the said circular.

ii. Prospective and existing issues

a) The SEBI circular is applicable to all debt securities that have been and would be issued on a private placement basis on or after the date of the circular, i.e., September 30, 2003.

b) The circular would also apply to those issuer companies whose outstanding debt securities were issued prior to September 30, 2003. However, such issuer companies are required to comply with the provisions of the circular before March 31, 2004 for which transition time was provided vide press release dated November 25, 2003.

c) If, however, the issuer companies do not comply with the aforesaid conditions for listing of such securities before March 31, 2004, then such securities would remain unlisted and, would, therefore, not be permitted for trading in the Stock Exchange trading platform from April 01, 2004.

iii. Tenor of the debt instruments

The SEBI circular would not be applicable for private placement of debt securities having a maturity of less than 365 days.

Extent of disclosures and applicability of DIP Guidelines

a) As already stipulated in the circular dated September 30, 2003 the issuer companies shall make full disclosures (initial and continuing) in the manner prescribed in Schedule II of the Companies Act, 1956, Chapter VI of the SEBI (DIP) Guidelines, 2000 and the listing agreement with the stock exchanges.

b) Such disclosures may be made through the web site of the stock exchanges where the debt securities are sought to be listed if the privately placed debt securities are issued in the standard denomination of Rs. 10 lakhs.

c) The issuer companies which make frequent private placements of debt securities would be permitted to file an umbrella offer document on the lines of a "Shelf prospectus" as applicable for a public issue.

d) As regards financial disclosures, issuer companies which are not in a position, for genuine reasons, to disclose audited accounts upto a date not earlier than six months of the date of the offer document, in terms of provisions of Clause 6.18 of SEBI (DIP) Guidelines, 2000 may disclose the audited accounts for the last financial year and unaudited accounts for the subsequent quarters with a limited review by a practicing Chartered Accountant.

e) It is also being clarified that the provisions other than Chapter VI of SEBI (DIP) Guidelines, 2000 will not be applicable for privately placed debt securities.

Association of SEBI registered intermediaries, including merchant bankers

a) The appointment of intermediaries (other than debenture trustee) for private placement of debt securities is not mandatory.

b) Since engaging the services of an intermediary (other than debenture trustee) is not mandatory, the appointment of such an intermediary would be left to the discretion of the issuer Company, as it deems fit.

c) There is no prohibition on SEBI registered intermediaries to be associated with the privately placed unlisted debt securities. However, such intermediaries would be accountable for their activities. Further, they would be required to furnish periodical reports to SEBI in such format as specified by SEBI from time to time.

Vetting of offer document

There is no requirement of vetting of the offer document by SEBI.

Whether the requirement of 1% deposit with the stock exchange/s is mandatory

There is no requirement to deposit 1% of the issue size of the privately placed debt securities with the stock exchanges.

Applicability of minimum subscription clause as per DIP guidelines

This clause will not be applicable for privately placed debt securities.

Credit rating

The debt securities shall carry a credit rating from a Credit Rating Agency registered with SEBI.

Listing through a separate listing agreement

The separate Listing Agreement for listing the privately placed debt securities is being finalised. Till such time, the issuance process would be allowed and the securities may be listed on the basis of disclosures subject to the issuer company furnishing an undertaking to the Stock Exchanges stating, inter-alia, that the issuer company shall sign the Listing Agreement as soon as the same comes into force.

Denomination for issuance and market lot for trading

a) The privately placed debt securities need not necessarily be issued in denomination of Rs.10 Lakhs.

b) The securities shall be issued in Demat form.

c) However, if an investor is allotted securities of Rs.1 lakh or less, such securities may be issued in physical form at the option of the investor. It shall be disclosed by the issuer companies that such investors would not be able to trade in such securities through the stock exchange mechanism.

Trading of securities on the stock exchanges

a) The trading in the privately placed debt securities would be permitted in standard denomination of Rs. 10 lakhs in the anonymous, order driven system of the stock exchanges in a separate trading segment. The marketable lot would be Rs. 10 lakhs.

b) All class of investors would be permitted to trade subject to the said standard denomination/marketable lot.

c) The trades executed on spot basis shall be required to be reported to the stock exchange/s.

All Companies are advised to take note of the above and ensure compliance.

In order to facilitate early listing of debt securities on the Stock Exchange, Mumbai, it has been decided to waive the annual listing fee for the F.Y 2003-04, for debt instruments listed on the Exchange on or before March 31, 2004. However, the listing fee for the F.Y 2004-05 will have to be paid in advance at the time of listing. Companies are advised to make use of this offer and list all their debt securities on the Exchange.

The new schedule of listing fee applicable for privately placed debt securities is as under:

Initial Listing fee

NIL

Annual Listing Fee

 

Issue size up to Rs.5 Crores

Rs.2,500

 

Above Rs.5 Crores and up to Rs.10 Crores.

Rs.3,750

 

Above Rs.10 Crores and up to Rs.20 Crores.

Rs.7,500

 

Above Rs.10 Crores and up to Rs.20 Crores.

Additional fee of Rs.200/- for every increase of Rs.1 Crore or part thereof above Rs.20 Crores.
Subject to a maximum listing fee of Rs. 30,000/- per instrument.

 

Processing Fees

Rs.25,000/- for 10 issues

 

Cap on the annual listing fee for all privately placed debt instruments per issuer is Rs.5,00,000/- per annum.

 


In case you require any further clarifications in the matter, please contact Mr. Prateek Goyal on 22721233 Extn.8263 or at

CIRCULAR ISSUED BY SEBI IN RESPECT OF ISSUE AND LISTING OF PRIVATELY PLACED DEBT SECURITIES – CIRCULAR NO: SEBI/MRD/SE/AT/36/2003/30/09

Secondary Market for Corporate Debt Securities - SEBI vide their circular No SEBI/MRD/SE/AT/36/2003/30/09 dated September 30, 2003 has laid down the guidelines to be complied by listed companies making issue of debt securities on a private placement basis. Such companies are inter alia required to get their fresh issue of debt listed on the Exchange. The guidelines are as under:

Ř      The company shall make full disclosures (initial and continuing) in the manner prescribed in Schedule II of the Companies Act, 1956, SEBI (Disclosure and Investor Protection) Guidelines, 2000 and the Listing Agreement with the exchanges. However, if the privately placed debt securities are in standard denomination of Rs.10 Lakhs, such disclosures may be made only through web sites of the stock exchange where the debt securities are sought to be listed.

Ř      The debt securities shall carry a credit rating of not less than investment grade from a Credit Rating Agency registered with the Board.

Ř      The company shall appoint a debenture trustee registered with SEBI in respect of the issue of the debt securities.

Ř      The debt securities shall be issued and traded in demat form.

Ř      The company shall sign a separate listing agreement with the exchange in respect of debt securities and comply with the conditions of listing.

Ř      All trades with the exception of spot transactions, in a listed debt security, shall be executed only on the trading platform of a stock exchange.

Ř      The trading in privately placed debts shall only take place between Qualified Institutional Investors (QIBs) and High Networth Individuals (HNIs), in standard denomination of Rs.10 lakhs.

Ř      The requirement of Rule 19(2)(b) of the Securities Contract (Regulation) Rules, 1957 will not be applicable to listing of privately placed debt securities on exchanges, provided all the above requirements are complied with.

Ř      If the intermediaries registered with SEBI associate themselves with the issuance of private placement of unlisted debt securities, they will be held accountable for such issues. They will also be required to furnish periodical reports to SEBI in such format as may be decided by SEBI.

All companies are advised to take note of the above and ensure compliance. Further, the Listing fees applicable for listing of debt securities will be 25% of the fee applicable to listing of equity shares.

The Schedule of Listing Fees for debt segment is a under:

A

Initial Listing fees

Rs.5,000/-

B

Annual Listing Fee:

i)

Companies with paid-up capital upto Rs.5 crores

Rs.2,500

ii)

above Rs.5 crores and upto Rs.10 crores

Rs.3,750

iii)

above Rs.10 crores and upto Rs.20 crores

Rs.7,500

iv)

Companies, which have a paid-up capital of more than Rs.20 crores, pay additional fee of Rs.200/- for every increase of Rs.1 crore or part thereof.

 

eSERVE OPEN OFFER ATTRACTS PROPOSALS AT Rs 975, RATE IS UNCERTAIN

19th August 2004: The outcome of the open offer for Citigroup subsidiary eServe remains unknown as most of the bids have come in at a price of Rs 975, even as the indicative price offered by Citi was at Rs 800. Around 37.5% of the stock was attracted by the open offer. Citibank Overseas Investment Corporation (COIC) wants to delist eServe, they holds 44.4% stake in the company.

            Bids for 35% of the equity capital (46 lakh shares) — out of the 37.5% for which bids have been received — are at Rs 975. The open offer has received bids ranging from Rs 735 to Rs 2,000, of which around 43.9 lakh shares have been tendered at Rs 975 and 2.31 lakh shares at Rs 950. The indicative price offered by COIC was at Rs 800 and the floor price was at Rs 735. The scrip closed on the BSE at Rs 926.85. The open offer through the book-building route will close on Thursday.

            The Securities and Exchange Board of India (Sebi) has allowed Citigroup to delist if it gets 75% of the public shareholding. This was an exemption of sorts, as Sebi regulations state that promoters can initiate a delisting exercise if they own 90% stake in the company. COIC is to be expected to take a final view on the open offer next week.

            There is no maximum price indicated by the promoters for the open offer as price is to be discovered through the offer route. Citi can either accept the open offer or reject the bids. Nevertheless, the pricing of Rs 975 is seen to be too aggressive and Citi may reject the bids. Sources said, “When the open offer was made, the scrip was ruling at Rs 662. Subsequently, the sensex has fallen, but the scrip has gone up.”

            Mutual funds and UTI hold 21.2% stake in the company. Alliance Capital, Templeton, Prudential ICICI, and Kotak Mahindra Global India Scheme are some of the mutual funds that are holding stock in their portfolio. Foreign institutional investors including GMO Trust, ILF Mauritius and UBS Securities Asia hold 6.3% stake in the company.

            If Citi accepts the bid at Rs 975, it will have to keep a 15-day window open for the shareholders holding shares in the physical form to tender them. Also, post delisting, Citi will have to keep a window open for the remaining shareholders six months post delisting. Conversely, these shareholders will have to pay a higher tax rate after delisting, as the eServe scrip would then be unlisted securities. According to the new proposed tax guidelines, the long term capital gains tax for listed securities is nil; for unlisted securities, it can go up to 20%.

JAIPRAKASH HYDRO-POWER PLANS TO RAISE Rs 380 Cr THROUGH IPO

18th August 2004: An initial public offering (IPO) of shares in Jaiprakash Hydro-power is expected to raise up to Rs 380 crore ($82 million), a banker working on the deal said on Tuesday. "The filing is expected by next month," said the banker, speaking on the condition of anonymity, adding that the issue was likely to be priced in the range of Rs 15 to Rs 20 per share.

            A recent steady stream of Indian IPOs is seen as a vote of confidence in the stock market after the turbulence that followed a surprise national election win in May by the Communist-backed coalition led by the Congress. Bankers say the record $1.17 billion IPO of Tata Consultancy Services, the country’s top software services exporter, earlier this month has encouraged other companies to come to market.

Jaiprakash Hydro-power owns and operates a 300-megawatt (MW) hydroelectric project in Himachal Pradesh. Some 34% of its equity capital, or 191 million shares, will be floated, valuing the company at as much as Rs 1,100 crore. ICICI Bank, lead lender to the hydropower project, and founders Jaiprakash Associates are together set to sell the shares, the banker said. ICICI Securities, UTI Bank and JM Morgan Stanley are appointed by Jaiprakash Hydro-power to act as lead managers for the issue.

Shares in Jaiprakash Associates rose 6.5% to Rs 129.40 while ICICI Bank added 0.4% to close at Rs 276.40 in a flat Mumbai market. Jaiprakash Associates is part of the New Delhi-based Jaypee group, which has a turnover of $650 million and interests in cement, construction and hospitality.

THE IPO OF IL&FS IS STILL IN THE LIST

13th August 2004: Japan’s Softbank group possibly will buy 25% stake in IL&FS. The value of the deal is still not ascertained. A few months ago, IL&FS has filled a prospectus with Sebi, since the market turned unpredictable, decided not to proceed. Top officials said the IPO plans have not been put off. The company would cord with Softbank now and will go to public afterwards, probably after six or eight months. Sources said that IL&FS is also in talks with other investors, but Soft-bank appears to be ahead of the pack all. It is believed that SBI Capital Market will be advising IL&FS.

            Softbank’s portfolio includes names such as Yahoo, E*Trade and Morning Star Asset Management. It was founded by Masayashi Son, hailed by some to be Japan’s Bill Gates, and has revenues of over $2.5bn.

The dotcom bust saw the company scaling back some of its investments in Latin America and Europe and focusing on Asia. It invested in Satyam Infoway, the Nasdaq-listed subsidiary of Satyam Computer Services, India’s fourth-largest software services firm in ’02, through Softbank Asia Infrastructure Fund.

IL&FS Investsmart provides online broking, merchant banking, project syndication and other financial services. It is also a large distributor of financial products. Last year, it acquired Tata TD Water-house’s broking business after the joint venture between the Canadian giant and the Tata group broke up.

CHOLA MF HAS ANNOUNCED TO LAUNCH ITS FLOATING RATE FUND

18th August 2004: Chola mutual fund (MF) has publicized the launch of its Floating Rate Fund, an open-ended income scheme. The fund's portfolio will substationally comprise of floating rate debt instruments, money market instruments and fixed rate debt instruments swapped for floating rate return.

According to a company release, the IPO for the fund will open for subscription on 17 August '04 and will close on 19 August '04. Later, the fund will open for subscriptions and redemptions on an ongoing basis, the release said.

Chola MF chief executive Sashi Krishnan said, "Interest rate uncertainty in the system has increased. With the global interest rates and inflation moving up, yields in the domestic debt market have hardened. In such an environment, investors in a floating rate fund will be able to protect themselves from interest rate fluctuations."

Chola Floating Rate Fund will invest at least 65% of the fund's portfolio in debt instruments including securitised debt and up to 35 % in fixed rate debt instruments. Units will be offered at Rs 10 during the initial public offer. The minimum application amount during the initial offer has been fixed at Rs 25,000. The scheme will offer both dividend and cumulative options. Chola MF is promoted by Cholamandalam Investment & Finance - the financial services arm of the Rs 52 billion Murugappa group.

Cholamandalam has presence in mutual funds, vehicle financing, financial products distribution and general insurance. Cholamandalam AMC established in 1996, manages funds in excess of Rs 13 billion across 9 schemes with over 100,000 investors. The AMC offers the entire range of cash, debt and equity products. Chola AMC is present in over 17 locations and also has a strong distribution network in place.

CHOLA MF TO RAISE RS 100 CR THROUGH IPO

16th August 2004: Chola Mutual Fund targets to raise about Rs 100 crore through an initial public offering (IPO) for its floating rate fund which aims to provide stable income especially in the uncertain interest rate environment. Chief executive, Sashi Krishnan informed to reporters that the IPO would be open for subscription on 17th August and closes on 19th August, Cholamandalam Investment and Finance Ltd.

            He also said that the open-ended income scheme would be suitable for institutional investors, Corporates and high net worth individuals who have uncertain view of the interest rates. The scheme would invest at least 65% of portfolio in debt instruments including securitised paper and up to 35% in fixed rate debt instruments, he added. Chola MF, a Murugappa group entity, has nine schemes with its assets under management of over Rs 1,300 crore.

NTPC LIKELY TO DOUBLE ITS IPO SIZE TO $1bn

12th August 2004: Bankers said, National Thermal Power Corporation is going ahead with plans to double the size of its proposed IPO to $1 billion despite left-wing opposition to the enlarged sale. Merchant banking sources said they were awaiting final government clearances for the additional sale before submitting a revised set of documents to the market regulator by next week.

A banker working on the initial public offer said, "The filing could happen this week, provided we receive the final approvals." NTPC had announced in June plans to sell a 5.25 per cent stake. The new finance minister then said last month another 5.25 per cent would be sold, cutting the state holding to less than 90 per cent, and bankers said the new government's cabinet had already approved the enlarged sale. The original IPO was expected to bring in Rs 1700 crore to Rs 2000 crore ($370-$430 million). Bankers now expect the 10.5 per cent stake to be worth Rs 4500 crore to Rs 5000 crore. But there has been opposition from the coalition government's far-left supporters.

Prakash Karat, a senior member of the Communist Party of India (Marxist), the country's largest leftist group, said last month, "If they go ahead on ... NTPC, it (the government) will run into political difficulties."

GOVT DOES A RETHINK ON BPO, FOREIGN COS INCOME FROM ARMS MAY BE TAXED

10th August 2004: Taxation of business process outsourcing (BPO) units is back on the outline. A new CBDT draft circular seeks to tax the income of a foreign company with a BPO arm here, which qualifies as a permanent establishment (PE). The amount to be taxed is the BPO’s arm’s length income, that is, the BPO’s income had it been a separate enterprise, dealing independently with its head office. The finance ministry has invited public comments for this draft circular after withdrawing the controversial BPO circular issued on January 2, ’04. The earlier circular differentiated between ‘core’ and ‘incidental’ services for tax purposes.

Government officials pointed out that BPO units enjoying tax holidays under Section 10 A and 10 B of the Income-Tax Act — graded tax holiday on export profits of STP, SEZ, EHTP units — will continue to get tax benefit as long as the arms’ length principle is adhered to. According to Samir Gandhi, tax partner, Deloitte Haskins and Sells, the draft circular is in line with the working hypothesis suggested by the OECD on the attribution of income by a PE.

The activities of BPO units in India range from procurement of orders for sale of goods, provision of services or answering queries on services like software maintenance, debt collection, credit cards, etc. The draft circular makes it clear that the foreign company will be liable to tax in India only if the IT-enabled BPO unit constitutes its PE under the Double Taxation Avoidance Agreements (DTAA) entered into by India with different countries. A PE is formed if the foreign company carries on business in India through a branch or a sales office or through a dependent agent.

The draft circular says, “The profits to be attributed to the PE are those that the PE would have made if instead of dealing with the head office, it had been dealing with an entirely separate enterprise under conditions and at prices prevailing in the ordinary market. This corresponds to the arms’ length price.” So, in determining the profits attributable to an IT-enabled BPO unit constituting a PE, it will be necessary to determine the price of the services rendered by the PE to the head office or the head office to the PE on the basis of arms’ length price.

            Samir Gandhi said, “The draft circular lays emphasis on application of the transfer pricing principle, which is in accordance with international norms of zero profit approach. This means that as long as the attribution of income to the PE is on an arms’ length basis, no further income is to be attributed in the hands of the foreign company.”

            Transfer price is generally described as the price charged by one multinational company to an associated enterprise (AE) for an international transaction relating to supply of goods or services. The law mandates that any income accruing from an international transaction between associated enterprises should be calculated with regard to the arm’s length price. The intention is to prevent shifting out of profits by manipulating prices charged or paid on a transaction.

KOTAK MF LAUNCHES EQUITY GROWTH SCHEME

12th August 2004: Kotak Mahindra Mutual Fund on 9th August has announced the launch of Kotak Opportunities, an open-ended equity growth scheme. Kotak Opportunities is an aggressive scheme with a flexible investment style. The fund manager will have the freedom to invest a high proportion of the portfolio value in sectors he feels will outperform others over the short-medium term.

The fund can invest in both large-cap and mid-cap stocks to derive superior performance and will not have any cap on sectoral investment. Ajay Bagga, CEO, Kotak Mahindra AMC said “Often some sectors outperform others over a short to medium period due to various reasons. Kotak Opportunities fund will endevour to capture these opportunities for investors”. IPO will be open from July 27 to August 25, 04.

MINISTRY TO BE EXPECTED TO RECONSIDER SERVICE TAX ON RISK COVER

10th August 2004: The Budget proposal to levy service tax on the risk cover for life insurance may come under review, with the insurance regulator highlighting issues on implementation. SB Mathur the chairman of LIC and CS Rao the chairman of IRDA have understood to raise the issue at meetings with the Finance Minister P Chidambaram and the revenue secretary Vineeta Raj at this time on Saturday.

Due to its systems legacy and size, LIC would be the worst affected by the proposed tax. In any case the financial burden would be passed on the policyholder, which would not be very high. On the other hand, calculating the risk premium on every premium instalment would create operational problems. Officials say that although premium is collected in equated instalments, the risk premium varies from year to year rising progressively with the age of the insured.

The IRDA being the regulator has the responsibility of vetting the figures of the insurance companies. Besides, the insurance industry has also problems with the government’s move to levy service tax even on future premium instalments of existing life insurance policies. The impact of the proposed 10.2% service tax on the risk premium on life insurance will be felt by holders of over 14 crore policies issued by LIC. The policyholders will have to Budget for a higher premium on their existing cover. The increase could range from 10.2% on term insurance plans to a 0.7% - 2% increase on policies with savings.

STANDARD CHARTERED MF LAUNCHES IPO FOR ITS DEBT FUND

11th August 2004: Standard Chartered Mutual Fund (SCMF) has launched an IPO for the Standard Chartered All Seasons Bond Fund (SCASBF), a debt fund for all market conditions. It is more of a fund-of-funds in the debt segment. The public issue for SCASBF was open for subscription on 09th August ‘04 and will close on 27th August ‘04.

Mr. Naval Bir Kumar, Managing Director, Standard Chartered Mutual Fund said, “Standard Chartered All Seasons Bond Fund is a product for all interest rate conditions. The fund asset allocates amongst units of 100% debt-oriented MF schemes that are best suited for that interest rate trend.” By pro-actively switching amongst the various types of debt funds, it will attempt to generate optimal returns in all interest rate conditions.

COs ARE IN LINE UP TO RAISE Rs 10,000 Cr FROM PRIMARY MARKET

IPOs ARE LIKELY TO FLOW AS THE RAIN 10th August 2004: Its raining IPOs. New issues are expected to collect in at least Rs 10,000 crore this year. Debt is no longer fun what with inflation rising and yields falling. Look at the sky, there is a rainbow of attractive IPOs from established companies.

For over two months there was uncertainty over the pace and extent of economic reforms and monsoon worries. Now, investment advisers and fund managers are once again salivating over the prospect of reaping rich rewards from growing companies.

The response to the just-concluded TCS IPO has set the bells ringing. The technology company’s issue was oversubscribed 7.7 times. Analysts believe that the market may once again be ripe for another round of public offerings just as it was in February-March ’04. Some companies such as Shoppers’ Stop, which had planned an offering in May-June, but had turned cautious due to intense market volatility, are seriously rethinking options. Sources close to the Shoppers Stop IPO said, “We will decide in a few days. It (the issue) is not going to take as long as we once thought it would.”

Analysts believe that about Rs 10,000 crore would be raised from the market through IPOs and public offerings. The companies include NTPC, which is planning a float of about Rs 5,000 crore, Shoppers’ Stop, Bangalore-based Sasken Technologies, broking firm Indiabulls and the Indian arm of Hutchison Whampoa.

Close to Rs 9,000 crore has been raised through two large issues of ICICI Bank in April and TCS. The financial year 2003-04 saw Rs 17,821 crore being raised through new issues.

INCOME TAX DEPT TO ISSUE FORM 16

09th August 2004: Salaried employees will no longer have to chase their employers for Form 16 in June before filling their income-tax returns. Instead of the employer, the income-tax department will now issue a tax-deducted at source (TDS) certificate to the salaried class. The Finance Bill seeks to amend Section 200 of the Income Tax Act and states that any employer deducting TDS will have to file quarterly statement to the income-tax authorities. The taxman will then prepare and deliver a statement to every person whose income tax has been deducted. An advocate said the employer would not be in the picture and the onus would be on employees to ensure that they had the necessary TDS certificates to file their returns.

NOTICE FROM BSE

The Stock Exchage, Mumbai
1) The under mentioned scrips will be transferred to "T" Group and they would be traded and settled on Trade to Trade basis effective from August 16, 2004 i.e. w.e.f. S/No. 99/2004-2005.

Sr No

ScripCode

ScripName

1

500027

ATUL LTD.

2

500064

BIRLA GLOBAL FINANCE LTD.

3

500068

DISA INDIA LTD

4

500074

BPL LTD.

5

500133

ESAB INDIA LTD.

6

500214

ION EXCHANGE (I) LTD.

7

500223

JCT LTD

8

500245

KIRLOSKAR FERROUS INDUSTRIES LTD.

9

500254

LLOYDS STEEL INDUSTRIES LTD.

10

500259

LYKA LABS LTD.

11

500350

RAJASTHAN SPG. & WVG. MILLS LTD.

12

500404

SUNFLAG IRON & STEEL CO. LTD.

13

500460

MUKAND LTD.

14

500465

VARUN SHIPPING CO. LTD.

15

500500

HINDUSTAN MOTORS LTD.

16

500730

NATIONAL ORGANIC CHEMICALS INDS.LTD

17

500945

VIDEOCON APPLIANCE LTD

18

500950

WIMCO LTD.

19

504112

NELCO LTD.

20

504823

MAHINDRA UGINE STEEL CO. LTD.

21

505283

KIRLOSKAR PNEUMATIC COMPANY

22

505324

MANUGRAPH INDIA LTD.

23

512527

SUPER SALES AGENCIES LTD

24

512579

GUJARAT NRE COKE LTD.

25

513179

NATIONAL STEEL INDUSTRIES LTD.

26

513216

UTTAM GALVA STEELS LTD.

27

513269

MAN INDUSTRIES (INDIA) LTD.

28

514165

INDIAN ACRYLICS LTD

29

514234

SANGAM INDIA LTD

30

517166

SPEL SEMICONDUCTOR LTD

31

517380

IGARASHI MOTORS INDIA LTD.

32

517536

ONWARD TECHNOLOGIES LTD.

33

521180

SUPER SPINNING MILLS LTD.

34

522165

INDSIL ELECT SMELTS

35

522275

ALSTOM LTD.

36

523385

NILKAMAL PLASTICS LTD.

37

523610

ITI LTD.

38

524404

TASC PHARMACEUTICALS LTD.

39

526235

MERCATOR LINES LTD

40

526785

CREST COMMUNICATION LTD.

41

530199

THEMIS MEDICARE LTD.

42

530491

SOUTHERN IRON & STEEL CO LTD

43

531131

MASCON GLOBAL LTD

44

531492

PENTASOFT TECHNOLOGIES

45

531500

RAJESH EXPORTS LTD.

46

532033

JAIN STUDIOS LTD.

47

532047

K.C. BOKADIA FILMS LTD.

48

532385

AZTEC SOFTWARE & TECHNO.SERVICES LTD

49

532391

OPTO CIRCUITS (INDIA) LTD.

50

532416

MID-DAY MULTIMEDIA LTD.

51

532536

KOJAM FIN

2) The following scrip, which is in T-Group, will continue to be in T-Group and will be traded and settled on trade-to-trade basis until further notice as part of surveillance actions.

Sr No

ScripCode

ScripName

1

500161

GLOBAL TRUST BANK LTD.

3) The under mentioned scrips which are in T-Group and are traded and settled on trade to trade basis as part of surveillance measure will be shifted back to their original groups w.e.f. August 16, 2004 i.e. w.e.f. S/No. 99/2004-2005.

Sr No

ScripCode

ScripName

Group

1

532282

AMTEK INDIA LTD.

B1

2

512079

DOCTORS BIOTECH INDIA LTD

B2

3

532100

INDO-CITY INFOTECH LTD.

B2

4

507260

OUDH SUGAR MILLS LTD.

B2

5

530505

UPPER GANGES SUGAR & INDUS. LTD.

B1

NOTICE FROM NSE

Sub: Trade for Trade segment
Following securities will be shifted back from Trade for Trade segment (series: BE) to rolling segment (series: EQ) with effect from August 16, 2004 (Monday):

 

 

Sr No.

Symbol

Security Name

1

OUDHSUG

Oudh Sugar Mills Ltd   

2

UPERGANGES

Upper Ganges Sugar & Inds

3

MEDIAVIDEO

Media Video Ltd

 

 

 

  1. following security shall continue to be available for trading in Trade for Trade segment (series: BE):

 

Sr No.

Symbol

Security Name

1

GLOBLTRUST

Global Trust Bank Ltd

 

 

  1. Further, members may also note that the securities transferred to trade for trade vide our circular no. NSE/CMO/0043/2003 dated August 22, 2003 shall continue to be available for trading in Trade for Trade segment (series: BE):

 

Sr No.

Symbol

Security Name

1

PRAKASH

Prakash Industries Ltd

2

NEPCMICON

NEPC India Ltd

3

KRISHNAENG

Krishna Engineering Works Ltd

 

 

 

 


Following scrips will be available in Trade for Trade segment (series: BE) with effect from August 16, 2004 (Monday).

 Sr. No.

Symbol

Scrip Name

1

ATULPROD

Atul Ltd

2

AZTEC

Aztec Software Ltd

3

BGFL

Birla Global Finance Ltd

4

BPL

BPL Ltd

5

CGIGARSH

CG Igarshi Motors Ltd

6

CRESTCOMM

Crest Communication Ltd

7

ESABINDIA

Esab India Ltd

8

GUJNRECOKE

Gujarat N R E Coke Ltd

9

HINDMOTOR

Hindustan Motors Limited

10

ITI

ITI Ltd

11

JAINSTUDIO

Jain Studios Limited

12

KOJAMFIN

Kojam Fininvest Ltd

13

LLOYDSTEEL

Lloyd Steel Industries Ltd

14

LYKALABS

Lyka Labs Ltd

15

MAHINDUGIN

Mahindra Ugine Steel Co.

16

MID-DAY

Mid-Day Multimedia Ltd

17

MUKANDLTD

Mukand Ltd.

18

NATNLSTEEL

National Steel & Agro Ind

19

NELCO

Nelco Ltd

20

NILKAMPLST

Nilkamal Plastics Ltd.

21

NOCIL

Nocil

22

ONWARDTEC

Onward Technologies Ltd

23

OPTOCIRCUI

Opto Circuits (I) Ltd.

24

PENTACOMMU

Pentasoft Technologies Ltd

25

RAJASSPG

Rajasthan Spg & Wvg Mills

26

RAJESHEXPO

Rajesh Exports Ltd

27

SANGAMIND

Sangam (India) Ltd

28

SUPERSPIN

Super Spinning Mills Ltd

29

TASCPHARMA

Tasc Pharmaceuticals Ltd

30

UTTAMSTL

Uttam Galva Steels Ltd

31

VARUNSHIP

Varun Shipping Ltd

32

VDOCONAPPL

Videocon Appliances Ltd

33

WIMCO

Wimco Ltd

AIR DECCAN IS PLANNING FOR IPO

02nd August 2004: India's maiden low-cost airline's IPO is on the perspective. When the private equity funds come on board this year, Air Deccan will do an IPO. Depending on what is the existing stakeholders and future partners, private equity funds and institutions, want, the company could tap the capital market in the next one to three years, said Capt. G.R. Gopinath, the airline’s MD.

The IPO will be more of a brand enhancement exercise than just a pure fund raising effort For Air Deccan. According to Gopinath, the strategy is not just to make Air Deccan “a common-man's airline” but share its ownership with its customers, somewhat similar to the Virgin Blue model in Australia.

Over the next few months, Gopinath said, “the airline's operations will stabilise and reinforce the faith of existing as well as future investors in the company”. At this moment it is engaged in interacting with various international private funds and institutions to raise between $50-60 m by off-loading 20-30% of its equity. The airline is expecting to clock a takings of $124 m in the first full year of operation (2004-05).

SECTION 88 REBATES WILL NOT HELP TO REDUCE INCOME LIMITS

12th August 2004: Crossing the Rs 1 lakh income tax limit will result in loss of various benefits. To calculate the total income, for the salaried, there are the amounts received under various heads from their employer plus the value of any perquisites that may arise. From this amount, various deductions like standard deduction and professional tax are taken out to arrive at the remaining figure of the income from salary. Then in the situation of income from house property, people who are residing in their own houses bought with a loan and have interest payments, will have a negative figure, which can go on to reduce the total income of the person. Next is income from business, which gets added to the total income though one has to remember that losses from business cannot be adjusted against income from salary as per a new provision in this Budget. Capital gains as well as income from other sources are then added together and the total of all this is the gross total income.

Set-off of losses are undertaken at this stage and after that various deductions like the amount paid as premium for medical insurance and premium for pension payments, donations, repayment of education loan, 80L etc are reduced to arrive at the total income liable to tax. This term is often referred to as taxable income or taxable total income.

This is the concluding figure that one has to consider for the Rs 1 lakh benefit. One major thing to note that there are a slew of rebates available like Section 88, which provides for rebate at a certain percentage of the amounts invested in specified investments or a rebate of Rs 5,000 for women, which will not be considered for the purpose of total income. Hence investments in these avenues will not be helpful to investors in reducing the burden of the taxable income to bring them down below the Rs 1 lakh limit.

The next step is to check whether the total income figure so arrived at is below Rs 1 lakh. If yes the additional rebate of the tax payable will be applicable and the final tax to be paid for the individual will come to zero thus release them from any payment necessities.

EOUs, SEZs LIKELY TO BE EXEMPTED FROM 2% CESS

04th August 2004: The government is likely to exempt special economic zones (SEZs) and export oriented units (EOUs) from the 2% education cess. Government sources said that the concession is expected to be extended to software technology parks (STPs) and electronic hardware technology parks (EHTPs) too. On the basis of suggestions from the commerce department, the finance minister is considering this move.

At present, the cess is applicable on the domestic tariff area (DTA) sales of SEZs, EOUs, STPs and EHTPs. Sale in the domestic market by any SEZ unit attracts full custom duty whereas EOUs pay 50% of their custom duty or excise on the product; whichever is higher. After achieving net foreign exchange (NFE) criteria whereby their exports have to be higher than imports, EOUs are allowed to sell in the domestic market. The sources said, SEZ units and EOUs had demanded that they should be exempted from the 2% education cess and the commerce ministry has supported this view. The finance ministry has to take the final decision, is expected to provide the exemption before the 2004-05 Finance Bill is passed.

            Nearly 1,700 EOUs and more than 600 SEZ units will be benefited. To promote exports, the government has exempted SEZ units from import duties and income tax. The income-tax concession available to EOUs, however, is set to be phased out by 2009. While the government is drafting a new legislation for SEZs, the Kelkar committee on fiscal responsibility and budget management (FRBM) has suggested that the concession available to EOUs under Section 10 A and 10 B of the Income-Tax Act should be phased out in two years. Presently, the cess is applicable on all central levies including customs, excise and service tax, apart from income tax and corporate tax. The only exemptions are items on which the bound rate and the applied rate of customs duty are same and products on which a import duty ceiling has been imposed under bilateral or international agreements.

SECURITIES AND EXCHANGE BOARD OF INDIA (BUY-BACK OF SECURITIES) (AMENDMENT) REGULATIONS, 2004.

S.O. No. 745(E). In exercise of powers conferred by sub-section (1) of section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with clause (f) of sub-section (2) of Section 77A of the Companies Act, 1956 (1 of 1956) the Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998, namely: -

1.  (i) These regulations shall be called the Securities and Exchange Board of   India (Buy-Back of Securities) (Amendment) Regulations, 2004.

(ii) They shall come into force on the date of their publication in the Official Gazette.

2.  In the Securities and Exchange Board of India (Buy-Back of Securities) Regulations 1998,

(i) In regulation 2, in sub-regulation (1),

(a) in clause (e), for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(b) in clause (o), for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(ii) Regulation 3, shall be substituted by the following, namely-.
“Applicability

3. (1) These regulations shall be applicable to buy-back of shares or other specified securities of a company listed on a stock exchange.
    (2) Notwithstanding anything contained in sub-regulation (1), a company listed on a stock exchange shall not buy-back its shares or other specified securities so as to delist   its shares or other specified securities from the stock exchange.”

(iii)  In regulation 4,

(a)  in the heading, for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(b) in sub-regulations (1), (2) and (3), for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(iv)  In regulation 5, in sub-regulation (2), for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(v)  In regulation 5A, in sub-regulations (1) and (2), for the word "securities", wherever it appears, the words “shares or other specified securities” shall be substituted.

(vi)  In regulation 6, for the words "specified securities", the words “shares or other specified securities” shall be substituted.

(vii)  In regulation 7, for the words "specified securities" wherever they appear, the words “shares or other specified securities” shall be substituted.

(viii)   In regulation 8,

(a) in sub-regulation (1), for the words "specified securities", the words “shares or other specified securities” shall be substituted.

(b) for sub regulation (3) , the following shall be substituted, namely-

“3) The specified date shall not be later than thirty days from the date of the public announcement.”

(ix)   In regulation 9, in sub-regulations (4) and (5), for the words "specified   securities”, wherever they appear, the words “shares or other specified securities” shall be substituted.

(x)  In regulation 11, in sub-regulation (1), after the words “together with” and before the words “the amount”, the words “ninety per cent. of” Shall be inserted.

(xi)  In regulation 12,

(a) for sub-regulation (1), the following shall be substituted ,namely-

  “(1) The company shall extinguish and physically destroy the security certificates so bought back in the presence of a Registrar to issue or the Merchant Banker and the Statutory Auditor within fifteen days of the date of acceptance of the shares or other specified securities.
Provided that the company shall ensure that all the securities bought - back are extinguished within seven days of the last date of completion of buy – back.”

(b) in sub-regulation (2) for the words "specified securities", the words “shares or other specified securities” shall be substituted.

(c)  for sub-regulation (3), the following shall be substituted, namely : -

“(3) (a) The company shall, furnish a certificate to the Board certifying compliance as specified in sub-regulation (1) and
duly certified and verified  by -

(i) the registrar and whenever there is no registrar by the merchant banker;

(ii) two directors of the company one of whom shall be a managing director where there is one;

(iii) the statutory auditor of the company,

     (b) The certificate required under clause (a) shall be furnished to the Board on a monthly basis by the seventh day of the month succeeding the month in which the securities certificates are extinguished and destroyed.”

(d) for sub-regulation (4), the following shall be substituted, namely :
   “(4)The company shall furnish, the particulars of the security certificates extinguished and destroyed under sub-regulation (1), to the stock exchanges where the shares of the company are listed on a monthly basis by the seventh day of the month succeeding the  month in which the securities certificates are extinguished and destroyed .”

(xii)   In regulation 13, for the words "specified securities", the words “shares or other specified securities” shall be substituted.

(xiii)  In regulation 14, in sub-regulations (1) and (2), for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(xiv)  In regulation 15,

(a) in the opening sentence and in clauses (b) and (f) for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(b) for clause (g) , the following shall be substituted, namely-

“(g) The buy-back shall be made only on stock exchanges having nationwide trading terminals;”

(c) in clause (h) , for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(d) for clause (i) , the following shall be substituted, namely-

“(i) The company and the merchant banker shall submit  the information regarding the shares or other specified securities bought- back, to the stock exchange on a daily basis and publish the said information in a national daily on a fortnightly basis and every time when an additional five per cent of the buy -back has been completed.
Provided that where there is no buy back during a particular period the company and the merchant banker shall not be required to publish the details in a national daily.”

(xv)  In regulation 17, in the opening sentence and in sub-regulation (1), in clause (k), for the words "specified securities", the words “shares or other specified securities” shall be substituted.

(xvi)  In regulation 19, for the words "specified   securities", wherever they appear, the words “shares or other specified securities” shall be substituted.

(xvii)  In regulation 25 in sub-regulation (1), in clause (c), for the words "specified   securities", the words “shares or other specified securities” shall be substituted.

(xviii)  In Schedule I,

(a) in clause (vii), in sub-clause (b), for the words "equity shares", the words “shares or other specified securities” shall be substituted.

(b) in clause (viii), for the words "specified   securities", wherever they appear, the words “shares or other specified securities” shall be substituted.

( xix) In Schedule II,

(a)  in clause 18, for the words "equity shares", the words “shares or other specified securities” shall be substituted.
(b)  for clause 24, the following shall be substituted ,namely-

“24. The Public announcement shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.”

(xx)  In Schedule III,

(a) in clause 18, for the words "equity shares", the words “shares or other specified securities” shall be substituted.

(b) in clause 23,

(i) in para (1), for the words “ whole time directors” the words “directors of the company one of whom shall be a managing director where there is one’ shall be substituted.

(ii) in para (2) for the words “ whole time directors, one of whom shall be managing director” the words “directors of the company one of whom shall be a managing director where there is one’ shall be substituted.

(c)  for clause 26 , the following shall be substituted, namely-
 
“26. The letter of offer shall be dated and signed on behalf of the Board of Directors of the company by its manager or secretary, if any, and by not less than two directors of the company one of whom shall be a managing director where there is one.”

  

[F. No. SEBI/LAD/DOP/ 12752 /2004]

Footnote:
1. Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998, the principal regulations, were published in the Gazette of India on November 14, 1998; vide G.S.R No. 975 (E).
2. It was subsequently amended -
(a) on September 21, 1999 by SEBI (Buy-Back of Securities) (Amendment) Regulations, 1999 vide S.O. 776 (E).
(b) on November 28, 2001 by SEBI (Buy-Back of Securities) (Amendment) Regulations, 2001 vide S.O. 1181(E).

SECURITIES AND EXCHANGE BOARD OF INDIA (VENTURE CAPITAL FUNDS) (AMENDMENT) REGULATIONS, 2004

S.O.No. 468 (E) - In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996, namely: -

1. (i) These Regulations may be called the Securities and Exchange Board of India (Venture Capital Funds) (Amendment) Regulations, 2004.

(ii) They shall come into force on the date of their publication in the Official Gazette.

2. In the Securities and Exchange Board of India (Venture Capital Funds) Regulation, 1996: -

(i) In regulation 2, -

(a) in clause (ee), after the word, "compulsorily", the word, "or optionally", shall be inserted.

(b) in clause (m), in sub-clause (iii), the words, "in venture capital undertaking" shall be omitted.

(ii) In regulation 12, -

(a) in clause (d), -

(i) the words, "in the venture capital undertaking", shall be omitted.

(ii) in sub-clause (i), -

(1) for the figure, "75%", the figure, "66.67%", shall be substituted.

(2) the words, "of venture capital undertaking", shall be added after the words "equity linked instruments".

(iii) in sub-clause (ii),

(1) for the figure "25%", the figure "33.33%", shall be substituted."

(2) in clause (a), the words "subject to lock-in period of one year" shall be omitted.

(3) after clause (b), the following shall be inserted, namely; -

"(c) preferential allotment of equity shares of a listed company subject to lock in period of one year.

(d) the equity shares or equity linked instruments of a financially weak company or a sick industrial company whose shares are listed.

Explanation 1 - For the purpose of these regulations, a "financially weak company" means a company, which has at the end of the previous financial year accumulated losses, which has resulted in erosion of more than 50% but less than 100% of its networth as at the beginning of the previous financial year.

(e) Special Purpose Vehicles which are created by a venture capital fund for the purpose of facilitating or promoting investment in accordance with these Regulations.

Explanation - The investment conditions and restrictions stipulated in clause (d) of regulation 12 shall be achieved by the venture capital fund by the end of its life cycle."

(b) after clause (d), the following shall be added, namely; -

"(e) venture capital fund shall disclose the duration of life cycle of the fund."

(3) in regulation 24, after sub-regulation (2), the following sub-regulation, shall be inserted, namely; -

"(3) Notwithstanding anything contained in sub-regulation (2) and subject to the conditions, if any, contained in the placement memorandum or contribution agreement or subscription agreement, as the case may be, in-specie distribution of assets of the scheme, shall be made by the venture capital fund at any time, including on winding up of the scheme, as per the preference of investors, after obtaining approval of at least 75% of the investors of the scheme.

(4) In Third schedule, -

(a) clause 1, shall be omitted.

(b) in clause 2, the words, "excluding those Non-Banking Financial companies which are registered with Reserve Bank of India and have been categorized as Equipment Leasing or Hire Purchase companies", shall be inserted, after the words, "Non-banking Financial Services".

(c) in clause 3, the words, "excluding those companies which are engaged in gold financing for jewellery", shall be inserted, after the words, "gold financing".

 

Foot notes

1.       The Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996, the Principal Regulations were published in the Gazette of India on December 4, 1996 vide S.O. No.850(E).

(2) The Regulations was subsequently amended on:

(a) on January 5, 1998 by the SEBI (Venture Capital Funds) (Amendment) Regulations, 1998 vide S.O. No.19 (E).

(b) on November 17, 1999 by the SEBI (Venture Capital Funds) (Amendment) Regulations, 1999 vide S.O. No.1118 (E).

(c) on September 15, 2000 by the SEBI (Venture Capital Funds) (Amendment) Regulations, 2000 vide S.O. No.831 (E).

(d) on September 27, 2002 by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 vide S.O. No.1045 (E).

 

ING VYSYA MF AIMS TO RAISE RS 550 CR THROUGH NEW SCHEMES

06th August 2004: ING Vysya Mutual Fund is planning to raise around Rs 550 crore from the market through its two new plans. The plans are domestic opportunities fund and select debt fund.

            Santosh Kamat the director of ING Vysya MF said that the MF house is hopping to raise some Rs 400 crore from the debt fund and Rs 150 crore from the equity fund.

The funds equity oriented scheme named ING Vysya Domestic Opportunities Fund will primarily seek long-term capital appreciation from a portfolio that is invested in companies deriving a significant proportion of their revenues from the domestic economy. The open-ended ING Vysya Select Debt Fund will invest mostly in debt securities to generate regular income.

BENEFIT AT THE AGE OF 55 FOR THOSE WHO HAVE RETIRED UNDER VOLUNTARY OR SPECIAL VOLUNTARY SCHEME

4th August 2004: After the completion of age 55 the senior citizens who have taken voluntary retirement will be eligible to invest their funds in the 9% Senior Citizens Saving Scheme. The government yesterday lowered the minimum age for subscription to the scheme by 5 years (i.e. from 60 years to 55 years). This is for those who have retired under a voluntary or a special voluntary scheme, subject to specified conditions. This will benefit the salaried class who chooses for voluntary retirement. The minimum age limit for investment in the scheme will be 60 years for others not falling in this category.

This scheme will not be eligible for NRIs and HUFs to invest. Initially, the scheme will be available through post offices but may be offered through banks at a later date. Senior citizens will be offered a 9% annual return (taxable), which is 1% higher than the 8% return offered on other small saving instruments. Under the new scheme, senior citizens will be allowed to deposit a maximum of Rs 15 lakh for a minimum of 5 years, extendible by three more years. Interest will be paid at quarterly rests on a non-cumulative basis.

FM DETERMINE THE BPO TAX COMPLICATION

30th July 2004: P. Chidambaram, the finance minister has finally set on the argument over the taxation of business process outsourcing (BPO) units in India. The difference between core and non-core (incidental) activities performed by a BPO unit of a foreign company will be done away with. This should legally make parallel the Indian tax practice with international norms. And, from now on, tax will be attributed to a foreign company only if its dependant BPO outfit in India is paid less than the market price. An official statement will be made shortly.

            The difference between the market price (i.e. arm’s length price) and the actual price paid to the Indian company will be taxed in the hands of the foreign company. Mainly, the taxman will have no caution in determining what is core and non-core activity.

            Near the beginning of this year, government had threatened to tax the India-based captive BPO units of overseas MNCs. The concern was whether the work done by the captive unit in India enhanced the MNC headquarters’ profitability by intentionally keeping pricing low - or, in other words, whether the MNC paid a sub-market price to the captive Indian BPO to improve its global profitability.

The circular issued by CBDT in January this year had differentiated between the core and non-core activities for the tax purposes. Core activity characteristically considered when it contributes significantly to the overseas parent’s turnover or profits. For example, research and development work or even direct selling through callings from India is considered as a Core activity. Non-core activity typically referred to low-end work, such as payroll processing, which did not typically add to the bottomline. This created confusion as it was reckoned that tax authorities could use their discretion while defining core activities for tax purposes.

 Transfer pricing rightly used

According to Samir Gandhi, tax partner with Deloitte, Haskins and Sells, “This is a correct application of the transfer pricing principle where due weightage is given not only to services rendered in India by the BPO unit but also to the assets - brand name, customer relationship etc - deployed and business and economic risk taken by the foreign company.”

The profits of a non-resident or foreign company attributable to the business activities carried out in India become taxable under the Income Tax Act if the non-resident or foreign or foreign company is treated as having a business connection in India (under ITA section 9) or a permanent establishment (PE) under article 5 of a tax treaty.

            The CBDT circular held that the manner and extent of the attribution of profits resulting from BPO units will ultimately depend on the facts of each case and the nature of services provided by the BPO unit, as determined in accordance with the provisions of the relevant treaty and applicable domestic law.

MEANING OF TRANSACTION TAX

29th July 2004: Transaction tax is the charge that the stock exchange levies on every transaction in securities is listed on the exchange. It is the percentage of total value of the transaction and can be levied on either the buyer or seller, or seller, or both for every trade they undertake in securities. Many stock exchanges levy this fee as a charge for providing the trading facility to investors.

            This is meant for meeting the operational costs of the exchanges. Though, in some countries, the government levies a small tax on every stock market transaction as a revenue collection tool and in lieu of tax imposed on profits from such trades.

As a result, transaction tax goes to the government as part of its revenue collections and it is in addition to the fee levied by the exchanges as operational charges.

ESSAR STEEL PLANS TO RAISE $200m TO REPLACE DEBT

29th July 2004: Essar Steel is one of the largest iron producers in India. It is planning to raise $200m to replace its high cost debt and meet its working capital requirements. Though, the instrument to be used for raising the funds is yet to be finalised.

            According to sources, the company is expected to pass a resolution to this effect at its annual general meeting (AGM). The AGM is scheduled on August 7, ’04.

CBDT MAY REVISE BPO TAX NORMS

27th July 2004: The Finance Ministry has indicated that the Income-tax Department circular issued in January, 2004 on taxation of foreign entities outsourcing certain activities to the country may be revised.

The complexities involved in the BPO sector are much more intricate and the circular is inadequate to deal with the problems of taxation arising in that area. The board will take appropriate decisions after considering the representation and factoring in the recommendation made by the Emerging Issues Task Farce.

The CBDT had declared that a “considerable portion of the profits” derived by foreign entities from outsourcing of their core revenue generating business activities to India would be taxable under the Income–tax Act. If the Indian entity were to constitute a “permanent establishment (PE)” of the non-resident or foreign company in India. [Source: Business Line, May 22, 2004.]

TAX DEDUCTION AT SOURCE ON INCOME FROM DEEP DISCOUNT BONDS

27th July 2004: In Board’s Circular No. 2 of 2002, dated February 15, 2002 states the tax treatment on income from deep discount bonds. Thereafter, the Board has received various requests for a clarification regarding tax deduction at source under section 193 of the Income-tax Act from interest on deep discount bonds. The taxpayers have to face the difficulties in view of section 199 of the Income-tax Act, which provides that credit for tax deduction at source shall be allowed only in the year in which the corresponding income is declared.

            It is further simplified that only at the time of redemption of such bonds, irrelevance of whether the income from the bonds has been declared by the bonds-holders on accrual basis from year to year or is declared only in the year of redemption, tax is required to be deducted at source under section 193 or section 195, as the case may be.

            It is further clarified that a person will be entitled to make an application under section 197 of the Income-tax Act, requesting the Assessing officer to issue a certificate for no deduction of tax or deduction at a lower rate. It is for such a person who declares the Income from a deep discount bond on annual accrual basis during the term of the bond. In such a case, the assessee should furnish, along with the prescribed From No.13, details of the income offered for tax by him from year to year .In case the assessee is not the original subscriber, and has acquired the bonds from some other person, he shall furnish the relevant particulars including the name, address and PAN of such other person. If the Assessing Officer is satisfied that the applicant assessee, has declared his income from the bonds from year to year on accrual basis during the period the bond was held by him, he shall issue a certificate allowing the tax deduction at source at such reduced rate as is justified by the total income of the applicant in the year of redemption.

Similarly, an assessee being a resident individual, who is the original subscriber of a deep discount bond, may furnish a declaration in From No.15H in accordance with section 197A if the has been declaring income on the bond from year to year on accrual basis, and no tax is payable on his total income, including the interest accruing during that year, in the year of redemption. However, such a declaration cannot be filed by an individual, other than a senior citizen availing tax rebate under section 88B of the Income-tax Act, if the amount of a accumulated interest, being paid on redemption, exceeds the maximum amount not chargeable to tax in his case [Source: CBDT Circular No. 4 of 2004, dated May 13, 2004].

REVISED NORMS CREATES UNCERTAINTY FOR DELISTING OF e-SERVE

26th July 2004: Before proceeding with the open offer for Mumbai-based BPO firm e-Serve International, Citigroup is awaiting a clarification from capital market regulatory body SEBI. Since SEBI has revised the delisting norms, Citigroup wants to know the percentage of shareholding it needs to acquire to proceed with a delisting of the shares.

            According to the new norms for delisting, the promoter group can go for a voluntary delisting if their shareholding is more than 90% of the total. Previous norms indicated that a voluntary delisting could be carried out with 75% shareholding. e-Serve’s listing agreements mentions 75%, and it’s not clear if this has been superceded by the new guidelines. An industry source familiar with the matter said, “There is a genuine ambiguity and Citi does not want to see its holding reach, say, 85% and find that it can’t delist.”

            Sebi’s new delisting norms are much more severe than its earlier guidelines. Reacting to speedy delisting by several foreign companies from the stock exchange, the SEBI came out with the new guidelines. Around 44% stake in e-Serve is currently held by Citigroup. Citigroup has publicized on April 12 that it wanted to acquire all the outstanding shares in the company. The stock price of the company, which was moving downwards and had touched a 52-week-low of Rs. 510, started moving up after this announcement. The price was around Rs 600, at the end of March ’04.

SECURITY TRANSACTION TAX (STT) - RATES

24th July 2004: The finance minister has hold on to the 0.15% transaction tax on delivery-based trade in equity. The tax is to be share equally between the buyer and seller. This means that for every transaction worth Rs 100, the buyer and the seller will have to pay 7.5 paise each. The benefit of the new tax treatment on capital gains will be available when STT is paid.

The tax rate for day traders and arbitrageurs has been lowered to 1.5 basis points or 0.015%. This group is among the prime beneficiaries, since they will be allowed to take credit for STT, while paying income tax on business profits. The original proposal did not extend such a credit facility. It means that traders who pay tax on business income will not have an extra tax burden on account of STT. Those who don’t will now, not only pay a small amount of tax but also leave an audit trail for potential use by taxmen. For derivative traders, the tax rate has been cut to one basis point (0.01%) and they will also be allowed to take credit for STT against business tax on profits.

The rate changes have been proposed, based on a distinction between two sets of intermediaries in the capital market – one for those who pay capital gains tax and the other for those who pay income tax on business profits. Credit for STT will therefore be available even on delivery-based transaction in cases where they are declared as business profits.

            Unit holders of equity-oriented funds have now been given the benefit of the new capital gains tax treatment, as units will be treated as securities. But like any other equity traded on the stock exchange, they would now have to pay a STT of 0.15%.

PROVISIONS FOR DIVIDEND & BONUS STRIPPERS

13th July 2004: The provisions for anti-dividend stripping (buying securities prior to declaration of dividend/interest and selling them after receiving dividend/interest) are already contained in the Act. The Budget proposes to increase the time period between the record date for payment of dividend and sale of mutual fund units (not the stock and shares) from 3 to 9 months. Hence, units bought prior to 3 months from record date and sold within 9 months after the record date would attract dividend-stripping provision under section 94(7) of the Act.

Further, anti-bonus stripping (buying securities cum-bonus, receiving the bonus securities and thereafter selling the securities partly) provision are proposed to be inserted vide sub-section 8 to section 94 of the Act. Hence all purchases of stocks, shares and units 3 months prior to the record date of declaration of bonus and sale thereof with 3 months (for stocks and shares) or 9 months (for units) shall be covered and any loss arising on bonus stripping will not be allowed for tax purposes.

DEBT INSTRUMENTS

10th July 2004: The rate of interest has not been changed on small savings instrument like P.P.F., N.S.C., P.O. Schemes and government of India Relief Bonds (taxable), which currently offer 8%. It is intended to replace the issuance of LIC Varistha Pension Bima Yojana Policy with senior citizen saving scheme, which also offer 9% per annum.

The investment limit for FIIs in the debt funds is aimed to rise from $1 billion to $1.75 billion i.e. addition of approx. Rs 3,450 crore. However, it would remain to be seen that whether the FIIs will use the opportunity in the wake of the expectations of an increase in interest rates and the end of the debt party.

TCS DRIFT MAY DISTURB NTPC PROJECTION

23rd July2004: NTPC may have to revise its IPO schedule, given that it may be “far too close” to the Rs. 5,000–odd-crore TCS issue. NTPC was line up to begin its roadshows by the first week of August. NTPC may now have to push back its maiden issue by a few days.

On the other hand, this may turn out to be a devious issue, with Europe-based QIBs expected to be on leave from the second week of August till the first week of September. 432 crore rupees of issue (at face value of Rs.10 each) is expected to be offered at a premium of Rs. 50 each. The IPO is estimated to wipe up an additional Rs. 2,500 crore for the company.

The company has decided that 5% of its shares on float will be reserved for its employees. Though, there will be no discount on the shares offered to its employees. Sources said that the float would be offered on the mandated norms, whereby 50% will be reserved for the QIBs. While a minimum of 25% will be offered to retail investors, another 25% will be for the high networth investors and NRIs.

FOREIGN COS WITH AGENTS HERE HAVE TO FACE TAX

24th July 2004: To constitute a permanent establishment of foreign entity in India, the country manager in India, of a foreign entity, has been held by the Authority for Advance Rulings (AAR). The foreign entity will be taxable in India, but only to extend that profits can be attributed to Indian operations. A foreign entity can be taxed in India only if it has a permanent establishment (PE) in India. If a person acting on behalf of the company is held to be a dependent agent, a PE is constituted.

            Andhra Pradesh government has honored Sutron Corporation, headquartered in US by two contracts. Each contract consists of two parts – the first dealt with supply of goods to specimen remote stations and the on- the- spot training of personnel. The second part dealt with providing local material and services. For the second leg of the contract, the foreign entity entered into a separate agreement with a local Indian company.

Based on the facts presented, the AAR held that Naresh Goel, Sultron’s country manager in India was not an independent consultant. He was an employee of US Company, for which he was paid a fixed remuneration, in addition to various perks such as local conveyance and driver’s salary.

Mr. Goel, apart from various other activities, was authorised to submit bids and sign contracts with the AP government, thus, he was a dependent agent. His place of residence, from where the activities were carried out, was held by the ARR to be an office or permanent establishment of Sutron Corporation in India.

The AAR held that the profits under the contracts with the AP government for the sale of equipment, the installation and the service agreement would be deemed to accrue and arise in India. Only so much of the profits would be taxed in India, as can be attributed to the establishment. Typically, once a PE is held to exist in India, attribution of income, which can be subject to tax in India, becomes a tricky issue. In this case, while the contracts were executed in India, the goods were delivered in US to the carrier appointment by the buyer (AP government).

Dinesh Kanabar, partner, RSM & Co. said, “As regards attribution, courts have held in several instances that when goods are sold outside India, no income can accrue or arise in India.”

EQUITY MFs ARE EXEMPT FROM LONG TERM CAPITAL GAIN TAX

22nd July 2004: The changes in transaction tax give small investors a wider choise in selecting their portfolios. A small detail will, however, change the way in which they pay transaction tax. Since the tax will be split between the buyer and the seller, what this means for a small investor is that if the transaction tax to be paid at the time of purchase of a share is, say, Rs. 20, the buyer and seller would pay Rs 10 each.

After the new tax comes into force, this also means that any shares they sell now will bear a part of the levy. Against the benefit received on the capital gains front, this will be a minor sum to pay. However, investors will now look at mutual funds more favorably.

            The equity-oriented mutual fund units will be included under the term securities, which has been promised by the finance minister. It means that long-term capital gains in these units will be exempt from tax, while 10% short-term capital gains will apply. The only worry that seems over here for investors is that they could end up paying both sides of transaction tax because finally the amount paid by the fund will be reflect by the way of expenses which impact the net asset value (NAV).

            To the extent that their investments in debt funds are concerned, the existing tax treatment will continue, since debt securities are exempt from transaction tax. Dividends from mutual funds are continued to remain tax-exempt. Keeping these factors in mind, investors can plan their investments.

 

THE GUIDELINES OF ESOP AND ESPS HAS BEEN REVISED BY SEBI

23rd July 2004: The guidelines on employee stock option and purchase schemes (ESOP and ESPS) has been amended by the Securities and Exchange Board of India (Sebi) in respect to provide for mandatory disclosures, pricing and appointment of merchant bankers. The capital market regulator has received queries seeking clarification, subsequently for the changes in guidelines in June ’03. Sebi said in a notification that, the board has approved certain modifications to the guidelines, after considering the recommendations of the JR Verma panel on ESOP and public comments.

            As per the new norms, the market price would mean the latest available closing price, prior to the date of the board meeting in which options are granted or shares are issued. The exchange where there is highest trading volume on the said date should be considered when the shares are listed on more than one exchange.

PRIMARY MARKET MAY GAIN FOR NO TURNOVER TAX AND NO LONG-TERM CAPITAL GAIN TAX

20th July 2004: If the proposed turnover tax and the abolition of long term capital gains tax is implemented it will benefit the primary market investors. The turnover tax will not be applicable to securities allotted in new issues, due to this long-term investors can make tax-free gains. To attract investors towards the new issues, investors and merchant bankers will take this advantage.

            Mr. Ajit Sanghvi, a brokerage of MSS Securities said “Provisions of the turnover tax will not be applicable to new issues, as share are allotted directly by companies and are not bought through recognized stock exchanges. Investors can hold shares, which offer good-long – term investment opportunity, beyond one year and save on turnover tax as well as capital gain tax.”

            The turnover tax @ 0.15% has to be levied on the value of purchase transactions routed through recognized stock exchanges, which has been proposed by the Finance Minister. The turnover tax is charged as the tax on the long-term capital gains that have been scraped. The Finance Minister has reduced the percentage of tax charged on the short-term capital gain to 10% form 30 %.

            Mr. Valabh Bhanshali the chairman of Enam Financial Consultants has said that the proposal of turnover tax looks attractive from a primary investor’s point of view, but just to save a small amount of tax, we can’t expect people to put money in the new issues only.

            “The good news lies in the removal of the long-term capital gains tax and the reduction in short-term capital gains tax. For tax benefits, investors do not necessarily invest in IPOs” said Prithvi Haldea, chairman of Prime Database.

            The views of Day traders, who generally survive on small margins, feel that the turnover tax will take away their bread and butter and hence the Finance Minister should reconsider the proposal. The representatives of the broking community who met Mr. Chidambaram last week to express their views over implication of tax and it seems that the meeting turn out to be positive and the finance minister is likely to arrange some solution to the problem soon. Mr. Chidambaram is, expected to announce a lower rate for day traders in Lok Sabha on Monday. There will be changes in the tax rate of different classes of securities- equity, debt, mutual funds and derivatives.

THERE’S NO PART-TIME COMFORT FOR SALARIED

13th July 2004: There is shocking news for those salaried employees who do some part-time business to make extra money. The Finance Minister P. Chidambaram has played a clever trick against them. As per the amendments in the Finance Bill, which is passed by the Parliament, these taxpayers will not have an option of setting off their business losses against their income from salary.

At present, numerous taxpayers who deliver part-time services like consultancy and freelancing incur their expenses on telephone bills, depreciation on car, etc. They show such expenses as their business loss and such losses are set off against their salary incomes to lower their tax liability.

This clearly indicates that the taxpayers are taking advantage of the loophole in the I-T law.

EDUCATION TAX IS APPLICABLE WITH RETROSPECTIVE EFFECT

12th July 2004: The 2% education cess is levied on income and corporate tax is applicable from April 1, ’04. This would be an observant for India Inc and individual tax payers. The education tax is with retrospective effect – i.e. beginning April 1, ’04, it is dissimilar from the proposed securities transaction tax. The securities transaction tax is levied only after the government notifies an effective date. The 2% education cess is payable as additional surcharge under income tax.

            This means that the taxpayer has to factor in the 2% cess while, say, withholding tax at source or paying dividend distribution tax. Tax professional says, “Technically speaking, companies will be well advised to take the same into consideration. Though practically speaking the taxpayer can pay the cess on dividend distribution tax after the Finance Bill is passed.”

            Including 2% education cess, the tax rate for domestic companies is 36.6% and for foreign companies is 41.8%. Companies have paid their first installment of advance tax in June. Around 15% of their expected tax liability for the current fiscal is paid by the Corporates in their first installment. The cess cannot be legally enforced till the passage of the Finance Bill; therefore the proceedings will accrue later to the government.

            The government has budgeted receipts of Rs 4,910 crore from the education cess on direct and indirect taxes. Of this Rs 1,590 crore will be realised from corporation tax, Rs 920 crore from income tax, Rs 750 crore from custom, Rs 1,500 crore from excise and Rs 150 crore from service tax.

MALEGAM COMMITTEE HAS REDEFINED THE TERM ‘NET WORTH’ AND ‘PROMOTER’

19th July 2004: Malegam committee was appointed by Sebi, which came up with the restrictive norms for the companies that comes out with the public issue. This group has given the new definitions for the term ‘net worth’ and ‘promoter’.

            The report said that, the term ‘net worth’ means, “the aggregate of the paid-up share capital, share premium account and reserves and surplus (excluding revaluation reserve) as reduced by the aggregate of miscellaneous expenditure (to the extent not adjusted or written off) and the debit balance of the Profit and Loss Account”.

            The committee also prescribed that the ‘promoter group’ will include the promoter, an immediate relative of the promoter (spouse, parent, brother, sister or child of the person or of the spouse); and in case the promoter is company - a subsidiary or holding company of that company; any company in which the promoter holds 10% or more of the equity capital or which holds 10%or more of equity capital of the promoter.

            According to the definitions as prescribed by the committee of the term ‘promoter’, the person or persons, who are in overall control of the company, the person or persons who are instrumental in the formulation of a plan or programme pursuant to which the securities are offered to the public and the person or persons named in the prospectus will be treated as promoter(s).

            However, the director/officer of the company or person, if they are acting, ”as such merely in their professional capacity,” will not be included in the explanation.

            The committee said that promoters who have acquired equity in the company for consideration other than cash, and if revaluation of assets or capitalisation of intangible assets is involved in such transaction, in three preceding the filing of draft offer document, this will not be considered for computation of promoters’ contribution.

            This clause also holds good if the promoters’ equity has resulted from a bonus issue by capitalisation of revaluation reserves or reserves without accrual of cash resources. The report contains various suggestions relating to disclosure requirements in the offer document for a public issue.

Merchant bankers to an issue would be considered as ‘associates’ if there is a common director on the boards of the issuer and merchant banker. Nominee directors of the financial institution are exempt from this clause, according to the report.

          If there is no identifiable promoter, that fact shall be disclosed. In that event, disclosure shall be made of the shareholders who control individually or as a group, 10% or more of the voting rights.

COS CALLED OFF OR POSTPONED ECB PLANS

17th July 2004: A group of domestic corporates has either called off or postponed their ECB plans, since they were on verge of striking debt financial deals in the international market.

Due to depreciation in rupee along with a slight increase in interest rates for Indian debt papers in the international market have made the cost of raising debt abroad almost equal to the cost of raising funds in the domestic markets.

            The reason for calling off some of the ECB deals can be the restrictions on end use of commercial borrowings abroad. According to Industry sources, ECB deals which have been either temporarily deviated or postponed, run into around $1bn. The companies involved are public sector majors such as NTPC, NHPC, and Power Finance Corporation and private sector companies such as Idea Cellular, Jindal Stainless and Ballarpur Industries.

Majorities of these companies are now planning to capture the domestic bond and syndicate market for striking debt-financing deals at much finer rates. Some of the companies are taking a ’wait and watch’ approach before taking a final decision on their debt raising programme.

            Before, companies were also raising ECBs for their working capital requirements. Now RBI has restricted such borrowings only for their project financing.

            According to corporates, there is still confusion about the end use of ECBs and they are now trying to get clarifications on these issues.

ICAI to make the ‘fair value’ method to be use by companies for Esops

29th June 2004: The company for expensing employee stock options, stock appreciation rights and share offered under the employee stock purchase plans should adopt the ‘fair value method’ said the Indian Institute of Chartered Accountants (ICAI). These guidelines will be effective from April 1, ’05.

            Recently the Central council of the Institute cleared, a guidance note on accounting for ‘employee share-based payments’, which allow use of the intrinsic value method, provided the company makes extensive fair value disclosures. The note is likely to be issued soon.

            The Sebi guidelines for accounting the employee stock option plans (Esops) and employee stock purchase plans (ESPPs) allows the option to follow either the fair value method or the intrinsic value method with fair value disclosures. As of now, the listed companies are required to follow the guidelines prescribed by the Sebi.

            ICAI is currently in talks with Sebi to replace the stock markets regulator with that prescribed by the institute. Also the markets regulator has indicated their willingness to withdraw the 1999 Sebi (Esop and ESPP).

ESSAR OIL PLANS TO RAISE $166M THROUGH FCCB ISSUE

8th July 2004: Essar Oil is planning to issue foreign currency convertible bonds (FCCBs) on preferential basis for $166m with an option to issue additional FCCBs for $41m. $1,000 per bond is the denomination of the FCCB. The company informed BSE that the maturity of the bond would be on December 31, 2017. The FCCBs will be listed on the Luxembourg Stock Exchange.

KOTAK MUTUAL HAS LAUNCHED EQUITY FOF

2nd July 2004: Kotak Equity FOF, a fund of funds, which was launched on Tuesday by Kotak Mutual. It invests 75% of its assets in equity schemes of the other mutual fund houses.

This is the very first time that a fund of funds is investing in various schemes of MFs. The Kotak Equity FOF portfolio will include both large-cap and aggressive diversified equity schemes from across Indian MF houses. The initial public offer is open from July 1, 2004 to July 19, 2004.

            Kotak Securities will conduct the portfolio management process of the scheme as mentioned by the Kotak MF. While analyzing, on the basis of their performance, Kotak Securities will provide a list of recommendations, for both diversified large-cap and diversified equity schemes. As an alternative for maintaining different portfolio of schemes, investors have a choice to invest in several schemes by filling a single form.

            Around 20-25% of the portfolio will be invested in diversified equity schemes of Kotak MF and the rest will be invested in the scheme of other funds. The scheme will be charging an entry load of 2.25% and there is no exit load. In addition to the management fee charged by individual schemes, the fund will be charging 0.75% extra. The minimum investment is Rs 5,000.

CITI IN A JAM OVER eSERVE BUYBACK as SCRIPT TOPS OFFER PRICE

30th June 2004: eServe International is a BPO (Business Process Outsourcing) company, which has seen a spectacular rise in its market price, which might create problems for banking major. 44% of the shares of the company are in the possession of Citigroup, which has declare its intention of buying back the other shares and will delist the company.

The offer from Citigroup will open on July 12, 2004, way before commencement of the offer; the stock price has hit a high of Rs 864. The open offer is likely to be close by July 16.

Due to the stock price of the company, which was moving downwards and had reached 52-week low of Rs 510, Citigroup announced on April 12 that it wanted to acquire all the outstanding shares in the company. Consequently the announcement the stock price started moving up.

            By the end of March 31, 2004 the stock price was around Rs 600. The price of the stock rapidly reached Rs 800, after the open offer was set at Rs 800. The closing price was Rs 630 per share on April 8, 2004, which was the last day of trading before the offer was made to public. The share price of Rs 800 per share had reflected a premium of 27% on the closing price. This price was also higher than e-Serve’s highest closing price over the past three years.

Mutual Funds companies like UTI, Alliance, Templeton and Prudential combine   holds more than 25.6% of the equity stake in the company. Since the Citigroup showed its intention to delist the company, the institutional investors are demanding higher price for their stake in the company. The rise in stock price is due to the negotiating trick by some of these funds, which indicate that the intrinsic value of their stake is higher than Rs 800.

            This is not unusual and institutional investors are using the market price as a pointer for demanding more from the buyer, is said by the Merchant banking sources. In addition to the mutual funds and other institutional investors, the general public also holds a stake of 18.5% in the company.

HUTCH IS EYEING TO RAISE $2bn THROUGH IPO IN HK & NY

3rd July 2004: For its rising telecoms business, Hutchison Whampoa is planning for initial public offering (IPO) worth up to $2bn in Hong Kong and New York. in October.

            An avid trader of assets controlled by Asia’s richest businessman Li Ka-shing, Hutchison wants to generate one-time gains to offset start-up losses at its $22bn third-generation (3G) mobile business in Europe, Australia and Hong Kong.

            The company had hoped to list its newly formed Hutchison Telecommunications International (HTIL) unit in June before hitting regulatory catches.

            Sources said that it recently won a waiver from the Hong Kong bourse that will allow it to list its Indian cellular arm – the most prized part of HTIL – in a separate IPO. HTIL includes Hutchison’s fixed-line and second-generation mobile operations in Hong Kong, and cellular businesses in Israel, Thailand, Sri Lanka, Macau, Paraguay and Ghana.

GMR ENERGY PLANS TO RAISE RS 200 – 300 CR THROUGH IPO

1st July 2004: GMR Energy is part of the Hyderabad based Rs 2,500 crore GMR Group, which is an independent power producer. GMR Energy is likely to raise funds around Rs 200 to 300 crore through IPO. The planning for the IPO is in the preliminary stage.

Kotak Capital, Enam and SSKI are the three investments banks, which has been appointed by GMR Energy to advice on the proposed IPO, which is likely to consist of a fresh issue of shares. It is after a long time that a private power company is entering the primary market to raise its funds. The government owned Power Trading Corporation (PTC) had recently come up with a successful public offer.

            India Development Fund (IDF), an IDFC-managed fund for Rs 100 crore, has picked up 10% stake in the GMR Energy. The company operated two power projects – the 200 MW, naphta-fired Mangalore (Tannir Bavi) project, and the 200 MW LSHS-fired Chennai project. These projects supply power to the Karnataka Power Transmission Corporation (KPTCL) and the Tamil Nadu Electricity Board (TNEB), respectively.

            In Vemagiri, on the east coast of Andhra Pradesh, the company is in the process of setting up 370 MW gas-based power project. A deal with Gail and Reliance has been made for the supply of gas. It also plans to hike its capacity later.

            In a public-private partnership, the GMR Group is currently developing the New Hyderabad International Airport. It is also currently developing two road projects for National Highways Authority of India (NHAI).

INDIAN BANK TO RAISE RS 300 CR THROUGH BOND ISSUE

28th June 2004: The government owned Bank, Indian Bank that is present in the market with a private placement of its debt. The issue is coming with a volume of Rs 300 crore with an option to keep hold of over subscription money of Rs 100 crore.

The issue opened on June 23, 2004 and is closing on July 10, 2004. A.K. Capital and SBI Capital will be acting as the major arrangers to the issue.

Indian Bank has a huge network of 1,377 branches and over 22,000 staff. Indian Bank also has international branches, which are located at Singapore and Colombia. Approx 883 of its branches are computerised.

The credit rating to the bond is LAA that is given by ICRA and AA (ind) by Fitch. The bond has a minimum face value of Rs. 10 lakh, the instrument, is coming in the form of unsecured, redeemable, non-convertible subordinated bond. The minimum application size is one bond and further investments can be made in multiples of one bond.

There are two options to the bond. Under Option A, the period of the bond is seven years which carries interest of 6.15 % paid annually. Under Option B, the bond has a period of 10 years with an interest rate of 6.25%, which is also paid annually.

NTPC TO RAISE RS 2,500 CR THROUGH 5.25% OFFER IN IPO

23rd June 2004: The other super IPO is coming up, as the government owned National Thermal Power Corporation (NTPC) is filing a draft prospectus with Sebi to offer 5.25% of its equity to the public through the book-building route.

            NTPC is likely to mobilise funds from approx 1,500 to 2,500 cr by offering 432.9m shares of Rs 10 each. However Sebi has exempted NTPC the PSU power major from the compulsory requirement to offer 10% of its shares. Under Sebi’s IPO norms, companies entering in the primary market should offer a minimum of 10% to the public. In this public issue, out of 5.25% equity proposed, 0.25%of the equity i.e. 20.6m shares, would be offered to NTPC employees.

            As the result of this IPO, the government’s holding in NTPC would come down to 94.75% of the enhanced equity capital. ICICI Securities, Kotak Mahindra and Enam Financial are appointed by NTPC to act as lead managers for the book building IPO and CLSA India is appointed as the co-book running lead manager.

            The estimated value of NTPC is estimated at around Rs 35,000-40,000 crore. Its paid-up capital is Rs 7,812 crore, 5% of that comes to around Rs 1,500-2,000 crore. The issue will be priced at a premium to account for the substantial reserves built up by NTPC over the years.

LIC planning its IPO

29th May 2004: The Life Insurance Corporation of India (LIC) could be entering the market with an Initial Public Offering (IPO). The present Congress-led government plans to do away the Centre’s hold in Public Sector Undertakings (PSUs). LIC could be on the top most position of the list of PSUs that are going to enter the market. The government has in principle no problem in divesting up to 49 per cent of the equity of profit-making PSUs, provided it retains management control and remains the majority stakeholder. LICs accounts for the year 2003-04 have not been passed as yet. This Company does not follow the net profit concept but instead looks at its surplus to see its profitablility. LIC’s surplus was Rs 9,761.8 crore in 2002-2003, up from Rs 8,664.8 crore in the earlier year. On this, the government was paid a five per cent annual dividend, which amounted to Rs 488 crore in 2002-2003.

Sebi to restrict splitting shares before IPO

29th May 2004: The Securities and Exchange Board of India (Sebi) has stated that restrictions will be placed on splitting of shares before an Initial Public Offer (IPO). Greenshoe options are to be allowed for all IPOs whereas initially they were allowed only for the IPOs which went through the book- building route. The minimum share application size has been changed in terms of value of shares. For issue prices below Rs 500 per share, the face value of the share should be Rs 10 per share. If the issue price is Rs 500 or more, the minimum face value of a share should not go below Re 1. At present, the guidelines permit the issuer to determine the denomination of shares for public or rights issue and to change the standard denomination. Sebi has also amended the ‘Depositor and Investor Protection’ guidelines in respect of the minimum share application size. The retail investor is defined as “one who applies for a minimum amount of shares worth up to Rs 50,000”. A minimum application value of Rs 5,000 to Rs 7,000 has been introduced. Applications can be made in multiples of these values. The minimum application value shall be with reference to the issue price of the shares and not with reference to the amount payable on application. So in an issue priced at Rs 500, the application amount is Rs 100 and the remaining money has to be paid on allotments and calls. In such a case, the application value of Rs 5000-7000 will be arrived at with reference to the issue price of Rs 500 per share. As such, the minimum application size, to be stipulated in the offer document, will range from 10 shares to 14 shares and not 50 shares to 70 shares. The proportional allotment procedure has been changed. The shares should be allotted on a proportionate basis within specified groups. The minimum allotment will be the amount that is decided by the issuer. The existing guidelines state that if an issue is oversubscribed, the allotment is to be made in terms of the proportionate allotment procedure, which is subject to the determination of successful applicants by drawing lots and allotting a minimum of 100 shares per minimum tradable lot to successful applicants. The guidelines have been amended to permit reservation on a competitive basis. Now all pre-IPO shareholders and promoters who have more than 5% of shares are permitted to lend their shares for the greenshoe option. In the case of public issue of bonds by designated financial institutions, the guidelines have been amended to provide that once the issue size and oversubscription limits are disclosed in the shelf prospectus, issuers can raise and retain any amount through the tranche issues, subject to this being within the respective limits specified in the shelf prospectus and also subject to the condition that the issuer has to disclose the minimum amount proposed to be raised and the maximum oversubscription proposed to be retained in the shelf prospectus.

Parking funds in pension policies

24th May 2004: The Insurance and Regulatory Development Authority (IRDA) has made an announcement with respect to exposure of equities in unit-linked retirement plans. Earlier insurance companies were allowed to sell unit-linked retirement or pension policies that offered a 100% equity option (i.e.) the policyholder had an option to invest his premiums in a fund that had a 100% equity exposure. But on January 1 2004, the IRDA disallowed a 100% equity option in unit-linked retirement funds. The fear was that on the back of a strong past performance, insurance companies might miss-sell unit-linked equity funds at a time when the equity market was booming. This measure was meant to ensure consumer security. As a result companies like HDFC Std Life and Birla Sun Life were not allowed to float the 100% equity option. Further the IRDA asked these companies to withdraw the earlier floated group gratuity products with 100% equity fund option. But for investors this is an opportunity where they have all the range of choices present for them and can hence select what they feel is required to suit their particular needs. The caution that one must exercise is that only those who can take the risk of managing an equity fund option in a pension policy should make use of this gap. Others can use as much of equity that they are comfortable with by selecting the appropriate scheme as virtually the entire range is covered by the plans on offer. Experts say that equity provides the best returns in the long run but there is a very high amount of risk in the Indian markets. So if an investor starts planning for retirement at an early age, the strategy that he can adopt is to initially opt for a retirement plan with an equity option and switch at a later stage. Suppose his policy is for a 30-year period, then he may utilise the equity option for the first ten or fifteen years. By then, going by the rule that equities do better over longer periods, his corpus should have built to a fairly large sum. That done, he can then move to a capital preservation mode where he can switch from an equity fund to a debt fund or balanced fund. The good part about switching funds is that it is free. Most insurance companies don’t charge to switch between funds (up to a certain number of switches in the year). Further, like in mutual funds where capital gains tax is attracted, in case of insurance policies, no question of tax arises.

Sensex falls drastically, trading halted – Historic event

18th May 2004: The BSE Sensex fell by 842.37 points yesterday making it a black Monday for all investors. On Friday, the BSE Sensex had fallen by 330 points. Over Rupees one lakh crores were lost due to this. This is the second biggest fall of the Sensex in its lifetime. The 30-scrip Sensex basket had 29 losers, with only Zee Telefilms being the stable one, doing 6.44 per cent to Rs 120.65. The Nifty fell 193.61 points and closed at 1,388.75 points. The market capitalisation of BSE stocks fell below the Rs 10,00,000 crores mark for the first time in six months, dropping to Rs 9,49,978 crores. Tuesday morning saw a better beginning as the market rose by about 264 points within the first 20 minutes or so of trading. The ones that had fallen the most recovered. Within half an hour of trading, ONGC, which had recorded the steepest fall of up to 25 per cent on Monday, showed an appreciation of over 3 per cent at around Rs 650 a share. Reliance was up by around 8 per cent at Rs 435. There was improvement in prices of GAIL, Infosys and Wipro.

Indiabulls files prospectus for IPO

17th May 2004: Indiabulls, the financial services company, is planning its public issue comprising of 27.19 million equity shares. The Red Herring Prospectus of the company is filed with the SEBI. The issue is going to be priced through a book-building process and will include 25% of its post issue capital. Indiabulls has had a profit of RS. 19.35 crores last year. Its profit a year earlier was nearly four times and the revenue was up by three times at Rs 71.95 crores. The firm offers capital market broking services and sells insurance, mutual funds and public issues. This is the second financial services company to go public after IL&FS Investmart.

International Tractors plans IPO

4th May 2004: International Tractors (ITL), India’s fifth-biggest tractor maker, plans to come out with a public issue in the next 3-4 months. ITL, the flagship of the Rs 1,000-crore Sonalika group, is owned 80 per cent by the Mittal family and 20 per cent by Renault Agriculture of France. The company produces 25-60 hp tractors under the Sonalika brand at its plant in Hoshiarpur, Punjab. According to Mr. L D Mittal, chairman of ITL, critical issues like the pricing of the IPO, the stake to be offloaded etc are still being worked out. The money raised from the IPO would fund ITL’s investments in the near future. Mr. Mittal expects ITL to record a 25 per cent growth in tractor sales during this financial year to 20,000 units from 16,000 in 2002-03. Renault Agriculture had acquired a 20 per cent stake in ITL in 2000. As a part of the tie-up, Renault Agriculture, a wholly owned subsidiary of French auto major Renault, would soon start sourcing high-powered tractors from ITL for the overseas markets. These tractors would be powered with 70-120 horsepower engines and branded as Renault-Ceris products manufactured by ITL.

Banks might trade in exchange - traded derivatives

13th May 2004: The Reserve Bank of India (RBI) is considering the option of letting banks trade in exchange-traded derivatives. This would provide acceleration for re-launch of the instruments. It is also considering the issue of capital indexed bonds as part of the Government-borrowing Programme in order to help banks and long-term investors against uncertainty due to interest rate fluctuations. These bonds (or Government securities) would be associated with inflation through consumer rice index, or even the wholesale price index. The investors would benefit by saving on the principal in case the interest rate goes down. The Securities and Exchange Board of India has already issued clarifications allowing the usage of Yield to Maturity (YTM) model pricing of derivatives. Following this, the Bombay Stock Exchange is also understood to have obtained the approval from the Securities and Exchange Board of India for launching the product. The present market scenario has mostly buyers and only few sellers. However, a developed market with sufficient buyers and sellers is necessary for the success of the product.

RBI insists on screen-based trading for provident funds

13th May 2004: The Reserve Bank of India (RBI) has decided that Provident Funds (PFs) should deal under the screen-based trading framework. This is to ensure that no fund can enter into any suspicious deals with market brokers for buying corporate bonds. Screen-based trading will help the funds deal under the Negotiated Dealing Settlement (NDS) platform without entering into non-transparent deals with brokers. This step has been undertaken, as many PFs have entered into deals that led them to buy gilts at high prices. Screen-based trading will make easy buy-sell quotes at the prevailing market rates and deals could be finalized on the screen. In the past, various PFs used to buy high-yielding state government papers and corporate bonds that are below investment grade in off market deals with the brokers. The deals, at times, would not be registered in the exchanges and would be entered into without contract notes. The non-transparency of corporate bond deals was under a question mark when PFs were made to pay high rate of returns inspite of the interest rates in the market going down. Screen-based trading will make a record of the bonds and the prices at which they are bought. SEBI and RBI have taken many steps to clean up the private placement market, which till now was completely unregulated. The new guidelines have asked for rating and listing of all privately placed bond issues in various exchanges.

RBI may restrain foreign banks acquisitions

6th May 2004: Foreign Banks who have branches or subsidiaries in India and are making acquisition plans may undergo restrictions from the Reserve Bank of India (RBI). As per the proposal being discussed with the finance ministry, foreign banks operating in India cannot hold over 10 percent equity in another Indian bank. Currently, banks hold upto 30 percent stake in other banks. If the proposal passes then Foreign Banks will have to reduce their stakes in other Indian banks to 10 percent within a fixed time period. The proposal further envisages that the 10 per cent stake will be treated as FII (Foreign Institutional Investor) holding. This would encourage diversified holdings in private and Foreign Banks. The RBI is formulating guidelines for foreign banks setting up subsidiaries in India. The guidelines will also propose a minimum initial capital requirement of Rs 300 crores. Private Indian banks are given a three-year timeframe with the initial equity requirement of Rs 200 crores. Under the existing rules, RBI permission is required to open new branches. In its commitments to the World Trade Organisation, India is committed to allow opening of at least 12 new foreign bank branches a year.

Mutual Funds plan capital guaranteed funds

6th May 2004: Mutual funds are planning to come up with new investment schemes in the near future. MFs are looking to launch schemes that invest in commodity futures and real estate apart from those investing in global markets and equity derivative market. They are also seeking to come out with capital guaranteed funds. Once these products are launched, the Indian MF industry would be comparable to the fund industry in developed markets like the US, UK and Hong Kong. Most of these global markets enable investors to diversify into various asset classes including commodities and real estates. Initially, MFs had to seek SEBI’s permission to offer real estate schemes and other such schemes. Now SEBI has indicated to the finance ministry that real estate funds would be permitted during the year. Another new scheme that may be offered are capital guaranteed funds. These are quite popular in markets like the UK and Hong Kong where some funds are specialized in offering these kinds of schemes. There is also a move to come out with schemes, which invest in commodity futures with several new commodities exchanges like National Commodities and Derivatives Exchange Limited (NCDEX) and National Multi Commodities Exchange (MCX) seeing growing volumes in the recent past. The Association of Mutual Funds in India (AMFI) has recently set up a committee to work out the framework for introducing commodity future linked products. MFs have sought permission from SEBI to market global funds and are also trying to come out with schemes to channelize investments to global markets after the government allowed individuals to invest upto $25,000 per month.

Sebi plans rating of IPOs

5th May 2004: The Securities and Exchange Board of India (Sebi) is planning to introduce mandatory rating of initial public offerings (IPOs). This service is not available on any bourse across the world and would be the first of its kind service seen raising the image of the market. A Sebi official confirmed the move but declined to set a schedule because the service would depend on the time the domestic rating agencies, Crisil and Icra, need to devise the required mechanism. Compulsory initial public issue ratings would protect the local investors and also improve foreign investors’ image of the Indian capital market. Under the existing rules Sebi can defer an IPO but it cannot disqualify an issue. The move matches with the initiatives being taken by the market regulator for foreign companies raising funds through Indian Depository Receipts (IDRs). The market regulator is also working towards improving the infrastructure and enhancing the functioning of market intermediaries by appointing a committee to look into their software and hardware infrastructure. Sebi also plans to set up a National Securities Institute for upgradation of the skills of financial intermediaries.

RBI eases ESOP norms for MNCs

4th May 2004: The Reserve Bank of India (RBI) has stated that MNC employees in India can sell the shares received as ESOPs without RBI’s permission. However, the sale proceeds need to be sent to India. This would allow MNC employees to take advantage of any quick price movements in the scrip. In a notification, the central bank has also allowed MNCs to price stock options for their employees here at their discretion. Until now, any offer of foreign shares to Indian employees by a multinational under an employee stock option scheme had to be priced at a consessional rate. Now, companies have the flexibility to price ESOPs for Indian employees, in line with other markets. Initially the practise was to provide ESOPs at a lower price than the market price, but now the recent changes made in the US accounting practises have made it less practical to issue the ESOPs at a lesser rate. In its circular to banks, RBI said that a resident individual who is an employee or a director of an Indian office or branch of a foreign company in which the foreign holding is not less than 51%, is permitted to acquire foreign shares under ESOPs. RBI has asked banks to allow employees to send money overseas to acquire shares under ESOPs.

M&M raises $100m through FCCB issue

4th May 2004: Mahindra & Mahindra (M&M) the leading tractor and utility vehicle maker stated that it had mopped up $100m through the issue of foreign currency convertible bonds (FCCBs). The zero-coupon, five-year bonds would have a conversion price of Rs 647.05. The yield to maturity on the convertible bonds works out to 3.25%. If all the bonds are converted then the equity dilution works upto 6.8%. The company has the option to call the bonds after two years, if the share price is at 120% over the conversion price of Rs 647.05. ABN Amro Rothschild and Kotak Investment Banking were the joint book runners for the transaction. The issue has been oversubscribed and a decision will be taken in a few days whether the company has to retain the greenshoe option of 15%. The funds are to be utilized for research and product development in the current line of businesses, which include auto components.

Indian Bank considering IPO

4th May 2004: Public-sector Bank, Indian Bank is considering coming up with an initial public offer (IPO) scheme. The Bank has completed necessary conditions including earning net profits for the last three years. The bank has earned a record net profit of 405.75 crores against 188.83 crores during the previous year. The bank's deposits grew by 12.38 per cent last year. The net interest income went up by 36.16 per cent to Rs.1117 crores against Rs.820.39 crores. The bank proposed to computerize the operations in all it branches by this year-end and aims at rapid growth in the coming years.

DSP Merrill Lynch India T.I.G.E.R. Fund

30th April 2004: The DSP Merrill Lynch India TIGER Fund (The Infrastructure Growth and Economic Reforms Fund) is being launched for the individuals who seek to take advantage of the benefits from the infrastructure development by investing in companies that gain from increase in market capitalization. This is an open ended growth scheme whose primary investment objective is to generate capital appreciation, from a portfolio that is substantially constituted of equity securities of corporates, which could benefit from structural changes brought about by continuing liberalization in economic policies by the government and/or from continuing investments in infrastructure, both by public and private sector. The minimum application amount of the scheme is Rs. 1000 and in multiples of Rs. 1 thereafter. The Registrar to the Fund is Computer Age Management Services Pvt. Ltd. The Intial Offer Period is open from April 27, 2004 upto May 20, 2004.

IL&FS IPO by June 30

1st May 2004: The Initial Public Offer of IL&FS Investsmart, a leading financial services company, is slated to be out in the market around June 30. The company will offload 25% of the shares in the market, Mr. Ravi Parthasarathy, vice-chairman & MD, Infrastructure Leasing & Financial Services and chairman IL&FS Investsmart, said. The company plans to offload 90 – 100 lakhs shares in the market. At present, 78% of the shares of the company are with IL&FS while 22% with the ORIX Corporation of Japan. IL&FS Investsmart has 72 outlets in 32 cities. The company has plans to increase it to 150 in the next 12 months.

SEBI tightens corporate name rule

1st May 2004: The Securities and Exchange Board of India (SEBI) stated that the corporates would be allowed to change their name only after a gap of one year from the date of last name change. This move is part of the market regulator’s measures to tighten norms on changing of names by listed companies. According to Sebi, at least 50 percent of total revenues in the preceding year should come from the new activities suggested by new names. Sebi also said that the new name along with the old should be disclosed through the websites of the respective stock exchanges where the company is listed for one year from the date of the last name change. These new norms are in addition to existing rules making it necessary to disclose the turnover and income from such new activities separately.

Reserve Bank Of India revises FCCB guidelines

30th April 2004: External Commercial Borrowings (ECB) – Clarifications: The External Commercial Borrowings (ECB) guidelines were revised vide A.P. (DIR Series) Circular No.60 dated January 31, 2004. The Reserve Bank has been receiving a number of queries relating to various aspects of the ECB guidelines. Our clarifications on these issues are set out below: 2. End-use - Prior to February 1, 2004, eligible borrowers were permitted to raise ECB under the Automatic Route equivalent to USD 50 million per financial year for general corporate purpose. Under the revised ECB guidelines, however, end-uses of ECB for working capital, general corporate purpose and repayment of existing Rupee loans are not permitted. 3. Amount of ECB under the Automatic Route - It is clarified that the maximum amount of ECB which can be raised by an eligible borrower under the Automatic Route is USD 500 million or equivalent during a financial year. 4. Submission of ECB - 2 Return - Borrowers availing ECB since February 1, 2004 are required to submit ECB -2 Return on a monthly basis certified by the designated Authorised Dealer (AD) so as to reach the Director, Balance of Payments Statistics Division, Department of Statistical Analysis and Computer Services (DESACS), Reserve Bank of India, Bandra-Kurla Complex, Bandra (East), Mumbai – 400 051 within seven working days from the close of month to which it relates. It is clarified that all existing borrowers are also required to submit ECB -2 Return on a monthly basis from January 2004 onwards as mentioned above. 5. Compliance with ECB Guidelines - The primary responsibility to ensure that ECB raised/utilised are in conformity with the Reserve Bank instructions is that of the concerned borrower and any contravention of the ECB guidelines will be viewed seriously and may invite penal action. The designated AD is also required to ensure that raising/utilisation of ECB is in compliance with ECB guidelines at the time of certification. 6. ECB under erstwhile USD 5 Million Scheme - At present, borrowers, who had availed ECB under erstwhile USD 5 Million Scheme with specific approval of Reserve Bank, approach the Reserve Bank for elongation of repayment period. It has been decided to delegate general permission to the designated AD to approve such elongation provided there is a consent letter from the overseas lender for such reschedulement without any additional cost. Such approval with existing and revised repayment schedule along with the Loan Key/Loan Registration Number should be initially communicated to the Chief General Manager, Foreign Exchange Department, Reserve Bank of India, Central Office, ECB Division, Mumbai within seven days of approval and subsequently in ECB - 2. 7. Authorised Dealers may bring the contents of this Circular to the notice of their constituents concerned. 8. The directions contained in this circular have been issued under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999).

Reserve Bank Of India - FCCB guidelines

External Commercial Borrowings (ECB) 1. Preamble With a view to replace temporary measures relating to External Commercial Borrowings (ECB) announced on November 14, 2003 with more transparent and simplified policies and procedures, a review of the ECB guidelines has been undertaken. This review is based on the current macro-economic situation, challenges faced in external sector management and the experience gained so far in administering ECB policy. ECB are a key component of India’s overall external debt, which includes, inter alia, external assistance, buyers’ credit, suppliers’ credit, NRI deposits, short-term credit and Rupee debt. ECB guidelines, therefore, need to be assessed in the backdrop of various external debt sustainability indicators relevant to emerging economies in order to explore the head-room available for more external debt. An analysis of various indicators of external debt (e.g. short-term debt, debt to GDP ratio, debt servicing ratio, vis-ŕ-vis the proportion of debt to non-debt capital flows) indicates that there is some head-room for increase in the magnitude of debt especially for real investment activity. As a part of overall management of the external sector, there is a case for putting in place a liberalised ECB policy provided there is no bunching of residual maturity of ECB in any particular year and the option of restricting the capital flows in future, if need be, is kept open. ECB refer to commercial loans, [in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments (e.g. floating rate notes and fixed rate bonds)] availed from non-resident lenders with minimum average maturity of 3 years. Until November 14, 2003, any legal entity such as a corporate /financial intermediary was an eligible borrower. In view of its implication for potential systemic risks, ECB availed by financial intermediaries need to be distinguished from those availed by corporates. Furthermore, banks have the facility (i) to borrow from its head office or branch or correspondents outside India up to 25 per cent of its unimpaired Tier-I Capital or US$ 10 million, whichever is higher, (ii) to borrow from its head office or branch or correspondents outside India without limit for the purpose of replenishing Rupee resources (not for investment in call money or other markets) and (iii) to avail lines of credit from a bank / financial institution outside India without any limit for the purpose of granting pre-shipment / post-shipment credit to its constituents. 2. Accordingly, the revised ECB guidelines are set out below. ECB can be accessed under two routes, viz., (i) Automatic Route outlined in paragraph 2(A) and (ii) Approval Route indicated in paragraph 2(B). (A) AUTOMATIC ROUTE ECB for investment in real sector -industrial sector, especially infrastructure sector-in India, will be under Automatic Route, i.e. will not require RBI/Government approval. In case of doubt as regards eligibility to access Automatic Route, applicants may take recourse to the Approval Route. i) Eligible borrowers Corporates registered under the Companies Act except financial intermediaries (such as banks, financial institutions (FIs), housing finance companies and NBFCs) are eligible. ii) Recognised Lenders Borrowers can raise ECB from internationally recognised sources such as (i) international banks, international capital markets, multilateral financial institutions (such as IFC, ADB, CDC etc.,), (ii) export credit agencies and (iii) suppliers of equipment, foreign collaborators and foreign equity holders. iii) Amount and Maturity a) ECB up to USD 20 million or equivalent with minimum average maturity of three years b) ECB above USD 20 million and up to USD 500 million or equivalent with minimum average maturity of five years c) ECB up to USD 20 million can have call/put option provided the minimum average maturity of 3 years is complied before exercising call/put option. iv) All-in-cost ceilings All-in-cost includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees payable in Indian Rupees. Moreover, the payment of withholding tax in Indian Rupees is excluded for calculating the all-in-cost. The all-in-cost ceilings for ECB will be indicated from time to time. The following ceilings will have immediate effect and will be valid till reviewed. Minimum Average Maturity Period All-in-cost Ceilings over six month LIBOR* Three years and up to five years 200 basis points More than five years 350 basis points  for the respective currency of borrowing or applicable benchmark. v) End-use a) ECB can be raised only for investment (such as import of capital goods, new projects, modernization/expansion of existing production units) in real sector - industrial sector including small and medium enterprises (SME) and infrastructure sector - in India. Infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) ports, (vi) industrial parks and (vii) urban infrastructure (water supply, sanitation and sewage projects); b) Utilisation of ECB proceeds is permitted in the first stage acquisition of shares in the disinvestment process and also in the mandatory second stage offer to the public under the Government’s disinvestment programme of PSU shares. c) Utilisation of ECB proceeds is not permitted for on-lending or investment in capital market by corporates d) Utilisation of ECB proceeds is not permitted in real estate. The term ‘real estate’ excludes development of integrated township as defined by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, SIA (FC Division). vi) Guarantees Guarantee/standby letter of credit or letter of comfort by banks, financial institutions and NBFCs relating to ECB is not permitted. vii) Security The choice of security to be provided to the lender/supplier is left to the borrower. However, creation of charge over immovable assets and financial securities, such as shares, in favour of overseas lender is subject to Regulation 8 of Notification No. FEMA 21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000, dated May 3, 2000, respectively. viii) Parking of ECB proceeds overseas ECB proceeds should be parked overseas until actual requirement in India. ix) Prepayment Prepayment of ECB up to USD 100 million is permitted without prior approval of RBI, subject to compliance with the stipulated minimum average maturity period as applicable for the loan. x) Refinance of existing ECB Refinancing of existing ECB by raising fresh loans at lower cost is permitted subject to the condition that the outstanding maturity of the original loan is maintained. xi) Debt Servicing The designated Authorised Dealer (AD) has the general permission to make remittances of instalments of principal, interest and other charges in conformity with ECB guidelines issued by Government / RBI from time to time. xii) Procedure Borrower may enter into loan agreement with recognized overseas lender for raising ECB under Automatic Route without prior approval of RBI. The borrower may note to comply with the reporting arrangement under paragraph 2(C)(i). The primary responsibility to ensure that ECB raised / utilised are in conformity with the ECB guidelines and the Reserve Bank regulations/directions/circulars is that of the concerned borrower. (B) APPROVAL ROUTE The following types of proposals for ECB will be covered under the Approval Route. i) Eligible borrowers a) Financial institutions dealing exclusively with infrastructure or export finance such as IDFC, ILFS, Power Finance Corporation, Power Trading Corporation, IRCON and EXIM Bank will be considered on a case by case basis. b) Banks and financial institutions which had participated in the textile or steel sector restructuring package as approved by the Government will also be permitted to the extent of their investment in the package and assessment by RBI based on prudential norms. Any ECB availed for this purpose so far will be deducted from their entitlement. c) Cases falling outside the purview of the automatic route limits and maturity period indicated at paragraph 2 (A)(iii) (a) and 2 (A)(iii) (b). ii) Recognised Lenders Borrowers can raise ECB from internationally recognized sources such as (i) international banks, international capital markets, multilateral financial institutions (such as IFC, ADB, CDC etc.,), (ii) export credit agencies and (iii) suppliers of equipment, foreign collaborators and foreign equity holders. iii) All-in-cost ceilings All-in-cost includes rate of interest, other fees and expenses in foreign currency except commitment fee, pre-payment fee, and fees payable in Indian Rupees. Moreover, the payment of withholding tax in Indian Rupees is excluded for calculating the all-in-cost. The all-in-cost ceilings for ECB will be indicated from time to time. The following ceilings will have immediate effect and will be valid till reviewed. Minimum Average Maturity Period All-in-cost Ceilings over six month LIBOR* Three years and up to five years 200 basis points More than five years 350 basis points *for the respective currency of borrowing or applicable benchmark. iv) End-use a) ECB can be raised only for investment (such as import of capital goods, new projects, modernization/expansion of existing production units) in real sector-industrial sector including small and medium enterprises (SME) and infrastructure sector-in India. Infrastructure sector is defined as (i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) ports, (vi) industrial parks and (vii) urban infrastructure (water supply, sanitation and sewage projects); b) Utilisation of ECB proceeds is permitted in the first stage acquisition of shares in the disinvestment process and also in the mandatory second stage offer to the public under the Government’s disinvestm ent programme of PSU shares. c) Utilisation of ECB proceeds is not permitted for on-lending or investment in capital market by corporates except for banks and financial institutions eligible under paragraph 2(B)(i)(a) and 2(B)(i) (b); d) Utilisation of ECB proceeds is not permitted in real estate. The term ‘real estate’ excludes development of integrated township as defined by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, SIA (FC Division), v) Guarantees Guarantee/standby letter of credit or letter of comfort by banks, financial institutions and NBFCs relating to ECB is not normally permitted. Applications for providing guarantee/standby letter of credit or letter of comfort by banks, financial institutions relating to ECB in the case of SME will be considered on merit subject to prudential norms. vi) Security The choice of security to be provided to the lender/supplier is left to the borrower. However, creation of charge over immovable assets and financial securities, such as shares, in favour of overseas lender is subject to Regulation 8 of Notification No. FEMA 21/RB-2000 dated May 3, 2000 and Regulation 3 of Notification No. FEMA 20/RB-2000, dated May 3, 2000, respectively. vii) Parking of ECB proceeds overseas ECB proceeds should be parked overseas until actual requirement in India. viii) Prepayment Prepayment of ECB up to USD 100 million is permitted without prior approval of RBI, subject to compliance with the stipulated minimum average maturity period as applicable for the loan. ix) Refinance of existing ECB Refinancing of outstanding ECB by raising fresh loans at lower cost is permitted subject to the condition that the outstanding maturity of the original loan is maintained. x) Debt Servicing The designated AD has the general permission to make remittances of instalments of principal, interest and other charges in conformity with ECB guidelines issued by Government / RBI from time to time. xi) Procedure Applicants are required to submit an application in form ECB (format in Annex I) through designated AD to the Chief General Manager-in-Charge, Foreign Exchange Department, Reserve Bank of India, Central Office, External Commercial Borrowings Division, Mumbai – 400 001 along with necessary documents. xii) Empowered Committee RBI will set up an Empowered Committee to consider proposals coming under the approval route. (C) REPORTING ARRANGEMENTS AND DISSEMINATION OF INFORMATION i) Reporting Arrangements a) With a view to simplify the procedure, submission of copy of loan agreement is dispensed with. b) Borrowers are required to submit Form 83 (format in Annex II), in duplicate, certified by the Company Secretary (CS) or Chartered Accountant (CA) to the designated AD. One copy is to be forwarded by the designated AD to the Director, Balance of Payments Statistics Division, Department of Statistical Analysis and Computer Services (DESACS), Reserve Bank of India, Bandra-Kurla Complex, Mumbai – 400 051 for allotment of loan registration number. c) The borrower can draw-down the loan only after obtaining the loan registration number from DESACS, RBI. d) Borrowers are required to submit ECB-2 Return (format in Annex III) on monthly basis certified by the designated AD so as to reach DESACS, RBI within seven working days from the close of month to which it relates. ii) Dissemination of Information For providing greater transparency, information with regard to the name of the borrower, amount, purpose and maturity of ECB will be put on the RBI website by the next working day of the approval under Approval Route and on a monthly basis with a lag of one month to which it relates under Automatic Route. 3. Foreign Currency Convertible Bonds (FCCB) The liberalisation made for ECB is also extended to FCCB in all respects. 4. Necessary amendments to the Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated May 3, 2000 and the Foreign Exchange Management (Transfer or issue of any foreign security) Regulations, 2000 dated May 3, 2000 are being issued separately. 5. The above amendments to ECB Policy will come into force with effect from February 1, 2004. These instructions superseding earlier instructions on ECB issued by RBI would be reviewed from time to time. 6. Authorised Dealers may bring the contents of this Circular to the notice of their constituents concerned. 7. The directions contained in this circular have been issued under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999). External Commercial Borrowings (ECB) for Overseas Direct Investment/ Mergers and Acquisitions Authorized Dealers’ attention is invited to the revised External Commercial Borrowings (ECB) guidelines issued vide A.P. (DIR Series) Circular No.60 dated January 31, 2004. 2. With a view to enable Indian corporates to become global players by facilitating their overseas direct investment, permitted end-use for ECB is enlarged to include overseas direct investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS). This would facilitate corporates to undertake fresh investment or expansion of existing JV/WOS including mergers and acquisitions abroad by harnessing resources at globally competitive rates. 3. ECB for overseas direct investment shall be in conformity with other parameters of the ECB guidelines issued vide A.P. (DIR Series) Circular No.60 dated January 31, 2004 and the existing guidelines on Indian Direct Investment vide Master Circular No.2/2003-2004 dated July 1, 2003 on Indian Direct Investment in JVs/WOSs abroad read with A. P. (DIR Series) Circulars Nos. 41and 42 dated December 06, 2003 and No. 57 dated January 13, 2004. 4. It may be noted that the ECB proceeds should be parked overseas until its utilization for investment abroad. 5. The above amendments to ECB Policy will come into force with immediate effect. 6. Authorized Dealers may bring the contents of this Circular to the notice of their constituents concerned. 7. The directions contained in this circular have been issued under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999). External Commercial Borrowings (ECB) for Overseas Direct Investment/ Mergers and Acquisitions It has been decided to permit eligible resident corporates to raise external commercial borrowings (ECB) for overseas direct investment in Joint Ventures (JV) /Wholly Owned Subsidiaries (WOS). This will include mergers and acquisitions of overseas companies. 2. With a view to enable Indian corporates to become global players by facilitating their overseas direct investment, permitted end-use for ECB is enlarged to include overseas direct investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS). This would facilitate corporates to undertake fresh investment or expansion of existing JV/WOS including mergers and acquisitions abroad by harnessing resources at globally competitive rates. 3. Operational guidelines are being issued to Authorised Dealers.

Vishal Exports to come up with IPO

24th April 2004: Vishal Exports Overseas Ltd, a star export house, has commenced roadshow for the offer for sale of shares by a few existing investors in the company. The sale is for 60 lakhs shares of Rs 5 each being offered at a premium of Rs 40 each. The aggregate amount works out to Rs 27 crores. The offer would constitute 25 per cent of the paid-up capital of company, which stands at Rs 12 crores. The sale opens on April 29, 2004, and closes on May 7, 2004. The shares will be listed on the National Stock Exchange. Vishal Exports’ turnover grew by a compound annual rate of 87.17 per cent to Rs 1,412.49 crores in the financial year 2002-03 from Rs 9.39 crores in 1994-95. Net profit of the company shot up to Rs 23.59 crores from Rs 3.06 crores. SBI Capital Markets Ltd and Karvy Investor Services Ltd are the lead managers to the offer for sale. Vishal Exports was established in 1988 as a partnership firm. To strengthen its base in global trading, the partnership was converted into a public limited company. The firm achieved the status of ‘star trading house’ in 1995-96.

Shoppers' Stop plans IPO, may raise Rs 150 cr

24th April 2004: The Raheja group promoted retail chain Shoppers’ Stop is expected to complete its draft Red Herring prospectus within a week for the issue that market sources estimate is likely to raise around Rs 150 crores. Kotak Mahindra Capital, JM Morgan Stanley and Enam Securities have been given the mandate to manage the issue that is expected to provide an exit route to investors and also fund the ambitious expansion plans for the retail chain that will join other retail majors like Trent and Pantaloon Retail on the stock markets through the listing of its IPO. Mr. BS Nagesh, Managing Director and CEO said that the draft Red Herring prospectus would be completed in four to seven days and thereafter it would be filed with the Securities and Exchange Board of India (SEBI). ICICI, IL&FS and Zodiac Clothing have invested in the company with their combined shareholding reportedly at 18%, while the balance 82% is held by the CL Raheja group.

Birla Sun Life Mutual Fund comes up with Birla MIP – II

24th April 2004: Birla Sun Life Mutual Fund is coming up with a new scheme, Birla MIP – II. The initial offer opens on April 12, 2004 and closes on April 30, 2004. The offer is of units of Rs. 10 each for cash at par during the Initial Offer Period and at NAV based prices during the Continuous Offer. The Sponsors of the Mutual Fund are Birla Global Finance Ltd. part of the Aditya Birla Group, which is a premier conglomerate of businesses in India. The Birla MIP – II scheme is an open ended scheme with the primary objective of generating regular income so as to make monthly payments or distribution to unitholders with the secondary objective being growth of capital. Monthly income is not assured and is subject to the availability of distributable surplus. The scheme offers two plans with varying debt and equity proportions to suit the investors’ risk/return profile. Each plan will have Growth, Dividend and Monthly Payment option. The scheme will offer for repurchase, units at Net Asset Value (NAV) based prices on every business day on an ongoing basis, commencing not later than 30 days from the closure of Initial Offer Period. The first Net Asset Value of the scheme will be calculated and disclosed not later than 30 days from the closure of Initial Offer Period. Thereafter, the NAV will be calculated and disclosed at the close of every business day. The AMC will disclose details of the portfolio of the scheme on a quarterly basis.

Tata Motors completes 400 million US$ FCCB issue

21st April 2004: Tata Motors Ltd. the Indian Automobile Manufacturer giant completed 400 US million $ Foreign Currency Convertible Bonds (FCCB) issue. According to the available information despite the fact that the issue was launched when Asia was closed, the issue got an overwhelming response from other parts of the world. Tata Motors FCCB issue has two tranches. The FCCB is all for 7 years with a fixed coupon rate and a redemption premium. An investor, at a predetermined price can convert the FCCB, which is normally at premium over market price. According to available information conversion price is around 60% above the current market price of the share. The second tranche of the Tata Motors Pvt. Ltd. FCCB issue which is of around 200 US million $ is oversubscribed by around 2 billion US$ which is more than 10 times over subscription.

UTI Mutual Fund plans two offshore funds

20 April 2004: The Unit Trust of India Mutual Fund (UTIMF) is planning to launch two offshore funds by first week of June. One will invest 30-35 million in pharmaceutical firms, while the other will be an India Dedicated Debt Fund, which will invest 70-75 million in gilts, public sector bonds and short-term liquid instruments. While it is planned to market these funds in the UK, Europe and the Middle East, they are planning to step into the US market on a slightly selective basis. UTIMF operates in the Gulf through its Dubai branch office, which covers UAE, Oman, Kuwait, Saudi Arabia, Qatar and Bahrain and other countries. UTI International, a 100 per cent subsidiary of UTIMF registered in the island of Guernsey, administers and markets various offshore funds.

TRAI to push tax breaks for ISPs

20 April 2004: The Telecom Regulatory Authority of India is on the verge of recommending variety of opportunities to Internet Service Providers (ISPs) in order to promote internet and broadband services. A five- year service tax holiday is on top of the list while waiver of the entertainment tax on broadband subscription, removal of anti-dumping duty on recycled personal computers imported into India and 50 per cent reduction in income tax for web-hosting services for five years follows. TRAI has set a target of 18 million Internet users and 9 million broadband connections by 2007. The country now has 4 million Internet users and 125,000 broadband connections. The following suggestions are also going to be presented to the government: Ř Spectrum charges for the use of broadband and Internet services may also be brought down from 4 per cent to 1 per cent Ř TRAI is also expected to suggest delicensing of the 2.4 GHz, 2.48 GHz and 5.85 GHz frequency band, which will enable proliferation of wireless broadband services through technologies like wi-fi and wi-max.Ř Tax benefits on donated PCs and 100 per cent depreciation in the first year on a computer. (At present, only 60 per cent depreciation is allowed).Ř A two per cent reduction in licence fees for very small aperture terminal (V-SAT) and direct-to-home (DTH) television operators.

NDTV public issue to be priced at Rs 63-70

20th April 2004: New Delhi Television (NDTV), headed by television personality Prannoy Roy, is one of India's leading broadcasters and producers of news and current affairs programmes. It runs two news channels, NDTV 24x7 in English and NDTV India in Hindi. It is coming up with an initial public offer (IPO) of Rs 109 crores book-built public issue, in a price band of Rs 63-70 per share with a face value of Rs 4. Of Rs 109 crores, NDTV will net Rs 55 crores, after paying off the sellers offering their equity stake. Of this, Rs 20 crores will go into pre-payment of loans, Rs 20 crores would fund the company’s working capital requirements and the balance Rs 15 crores would be applied towards general corporate purposes. The issue opens on 21st April 2004 and closes on 28th April 2004.The issue size is equity shares of Rs 4 each, aggregating Rs 109 crores. The price band is set at Rs 63-Rs 70. The lead managers to the issue are JM Morgan Stanley, Kotak Mahindra Capital, ICICI Securities. Listing would be on BSE and NSE. In English news, NDTV is undeniably a leader with a market share of 37 per cent, with a reach of 19.58 million viewers. In Hindi, it is in the second position, with a market share of 17.3 per cent, trailing behind Aaj Tak, which commands a 31.5 per cent share. The company is strong on the programming side. In Hindi, however, NDTV lagged behind, with NDTV India having just one programme in the top 10 list and 64 in the top 200 list. Aaj Tak, the leader in Hindi news had nine out of top 10 and 98 out of top 200 to its credit. However, NDTV’s revenue numbers for the first nine months of fiscal 2004 do not reflect its leadership position as a news broadcaster as it recorded a net loss of Rs 46.41 crores, on a total income of Rs 37.14 crores. A number of external factors will determine NDTV's future performance. Firstly, ad spend as a proportion of GDP in India is just 0.44 per cent, which is lower than in most other developing countries. Secondly, the proportion of total ad spend on television has been increasing at the cost of print. Thirdly, subscription revenues, which are yet to pick up in India, should become a significant revenue stream some time in the future. So the debate is whether an investor should go by the huge business potential that exists for NDTV, or trust the published financial numbers, which portray a rather miserable picture. Things don’t look so bad if the fact that this is only the first year of NDTV as a broadcaster is considered. The company gets a fair share of revenues for its English channel. It is the Hindi channel that has not got its due till December 2003. According to sources the company has already seen a significant ramp up in its Hindi ratings. However, a cause of worry is the company's high employee cost at 40 per cent of total expenditure in the nine-month period. This could affect the company's profitability, particularly in bad times. Though considering that employees are the lifeblood of a media company, it might not be a bad strategy either. The company's attrition rate was only 6 per cent last year, perhaps the lowest in the industry. Some analysts are of the view that the fact that NDTV is not part of a larger group can be a disadvantage. NDTV is a broadcaster with just two news channels and its ability to offer a value proposition to customers by way of packing advertising options is limited. For FY05, analysts expect NDTV to record revenues of Rs 75 crores for 24x7 and about Rs 60 crores for NDTV India. Overall, they estimate the company to record sales of Rs 150 crores in FY05 and Rs 190 crores in FY06. The company is expected to get back into profits in FY05 with a net profit of Rs 25 crores. FY06 profits should surge to Rs 50 crores. Based on the company’s diluted equity, NDTV would command a market-cap of Rs 394 crores to Rs 425 crores (for price band Rs 63-70). Competitor TV Today currently commands a market cap of Rs 697 crores. Clearly NDTV looks significantly cheaper and its leadership position in English news, ramp up in its Hindi ratings, quality of its personnel and infrastructure and the credibility and leadership of Prannoy Roy add immensely to its lure.

Reliance Infocomm to offer ESOPs

19 April 2004: Reliance Infocomm has decided to issue stock options to all its employees. It has hired global HR consultant Hewitt Associates for advice on the offer. At a time when other corporate giants want to do away with Employee Stock Option Plan (ESOPs) because of various accounting problems, the telecom subsidiary of the Rs. 65,000-crores Reliance group is planning to offer stock options to its 18,000 strong staff, as well as to 10,000 people it employs across the country. Relaince Info’s IPO is expected sometime next year and therefore this employee stock offer is seen as a precursor to private placement of shares to foreign FIs. The firm intends to increase its subscribers from 7 million to 10 million by august. The Ambanis have invested close to 16,000 crores till date in Reliance Infocomm. It plans to recruit about 1 lakh people in 12-15 months to reach out its broadband services to corporates and homes. They will be hired from 4,100 towns that will be a part of Reliance Network by that time. The Network, at present, covers 1,100 towns and cities.

TDS rates might be reduced

19th April 2004: The government might ease tax liability for large sections of industry soon by reducing the rates at which various tax deduction at sources (TDS) are made. Falling interest rates in the economy has prompted the government to consider such a move. TDS is charged on the total receipts of an individual or a company and not on the actual income earned. Hence, at the current rates, the tax liability has grown disproportionately against the actual income earned by the entity. The reduction of TDS rates is expected to remove this irregularity. This step is major because over 50 per cent of the annual income tax revenue earned by the department is accounted for by TDS returns. After a decade the ministry has crossed its enhanced revised tax receipts estimate to mop-up Rs 1,04,287 crores as per the data available till April 15. This makes the ministry confident that in spite of the rationalisations it would not slip in meeting the tax mop-up target for 2004-05. Most of the TDS provisions from Section 193 to 197 of the Income Tax Act, 1961, were last changed in the mid nineties. But the rates of interest in the economy have come down considerably since then. As a result, the profitability conditions have changed and it is felt that the TDS rates on various economic activities are on the higher side.

RBI cuts interest rates on NRE deposits

19th April 2004: The Reserve Bank of India (RBI) cut the rate of interest on NRI deposits to slay arbitraging on interest rate difference between the US dollar and the Indian rupee and stalk the rise of rupee. This measure was announced after the central bank’s weekly data showed that the country’s foreign exchange reserves have gone up by $3.37 billion to $116.06 billion in the week ended April 9. The RBI said the interest rates on non-resident (external) rupee (NRE) deposits for one to three years from April 18 should not exceed the London Inter-bank offered rate (Libor)/Swap rates for the US dollar of equivalent maturity. Till now it was 25 basis points over Libor. Under the NRE scheme, deposits are received in foreign currency and converted into rupees, and converted back into foreign currency on maturity. The interest rates on NRE deposits were first linked to Libor/swap rates for the US dollar from July 17 last when the ceiling was fixed at 250 basis points. It was cut to 100 basis points on September 15 and was further lowered to 25 basis points above Libor/Swap rates on October 18. The fresh ceiling is effective from the close of business on April 17. The RBI also stated that rates offered on NRE savings deposits for expatriate Indians would not exceed the Libor/swap rates offered on the US dollar deposits with a six-month maturity. These deposits would now offer a return of just around 1.3 per cent compared with 3.5 per cent earlier. One year Libor is now gauged at around 1.6 per cent and six-month at 1.28 per cent.

Reliance Energy plans another overseas issue

17th April 2004: Reliance Energy is planning a second overseas equity issue and is looking at the option of floating an issue of American or global depository receipts or even a foreign currency convertible bond (FCCB). The board of Reliance Energy passed a resolution authorising the issue of 10 million new underlying shares. Reliance Energy (formerly BSES) had issued global depository receipts in 1995. This declaration comes at a time when the stake of foreign institutional investors stands at 20 per cent. Reliance Energy had raised around Rs 3,000 crores through a mix of instruments, including a zero-coupon convertible bond. Foreign institutional investors like Sloane and Capital International had picked up noteworthy stakes. The repeated rounds of capital infusion over the last three months has boosted Reliance Energy’s net worth to the Rs 6,500 crores. Reliance Energy has chalked out a Rs 20,000 crores investment plan over the next five years. It has earmarked around Rs 10,000 crores for the generation business, Rs 4,000 crores for transmission and Rs 6,000 crores for distribution.

Wipro gets the Rs 261-cr tax bill – section 10A controversy

13 April 2004:Wipro Technologies did not produce separate books of accounts for the units for which it had claimed tax benefit under Section 10A of the Income-Tax Act. The income tax department therefore has demanded a 261.4 crores tax payment. The Finance Ministry is still processing the software industry’s demand for clarification on the legal intent of Section 10 A which confers a tax holiday to new undertakings set up in software technology parks and commencing production after April 1, 1994. The Assessing Officer is understood to have held that the units for which tax benefits were being claimed were not independent units but expansion of existing units. The tax benefit was denied because separate books of accounts were not produced and profit figures could not be substantiated for the units for which the tax deductions were claimed. Wipro Technologies made a formal representation to the Central Board of Direct Taxes last week saying that it was eligible for a tax holiday. It has also sought a clarification on the legal intent of the income tax provision. The issue is now sub-judice as the matter is before the Commissioner of Income Tax (Appeals). Undertakings set up and commencing production after April 1, 1994 are entitled to a tax holiday under Section 10A. However, the existing income tax law says that the undertaking will not qualify for the benefit if it is formed as a result of splitting up or reconstruction of a business already in existence. It also says that the benefit will not be given if the undertaking is formed by the transfer of new business of machinery or plant previously used for any purpose. The assessing officer has mentioned the ruling of ITAT Hyderabad, where the tax deduction was disallowed to expansions since the original unit was set up before the tax concession was in force.

NDTV IPO opens on April 21

11th April 2004: New Delhi Television (NDTV) India Ltd, the news broadcaster, is coming up with an initial public offering (IPO) to raise about Rs 100 crores from the capital market. The issue will open on April 21 and would remain open for subscription for a week. After TV Today Ltd, NDTV is the second news company to go public. As per the draft prospectus for the IPO, the company plans to pre-pay loans to the extent of Rs 20 crores in the financial year 2005 from the funds to be raised through IPO. The company posted a net loss of Rs 47.37 crores for nine months ended December 2003. The outstanding term loans of the company stood at Rs 30 crores. About Rs 15 crores from net proceeds of IPO would be used for general corporate purpose expenses. The company has utilised working capital upto Rs 8 crores from Syndicate Bank. It would use Rs 20 crores raised from the IPO proceeds for the working capital needs arising from sundry debtors and credits given to advertisers.

RBI might allow banks to trade in derivatives

10th April 2004: The Reserve Bank of India (RBI) is considering ways of allowing banks to trade in equity derivatives and commodities, including commodity futures. According to sources, the RBI has proposed amendments to two key sections of the Banking Regulation Act to the government. The amendments will enable banks to trade in equity derivatives as well as commodities. Amendment to Section 6 of the Banking Regulation Act will deal with equity derivatives and changes to Section 8 will lead to the commodities market being opened to banks. Banks would be able to trade in commodities and commodity futures once the amendments are made. These amendments could be expected only after the new government is set up at the Centre. Presently, banks can invest up to 5 per cent of their net demand and time liabilities in the equity market. Banks are neither allowed to trade in equity market derivatives nor in commodities as per the current norms. Even if some banks are active in fixed-income derivatives, the contract notes entered into between players in the derivatives market have no legal sanctity and this has been one of the reasons why public sector banks have been keeping away from the derivatives market. Banks are now able to participate only in exchange-traded derivatives, with a legal cover due to the passing of the Securities Contract Regulation Act. Banks have been allowed to get into over-the-counter derivatives such as currency options but the legal validity of the contract notes is unclear. Among commodities, banks are allowed to deal in gold. Banks can participate as trading members on the commodities exchanges if the proposed amendments come through.

Sebi prohibits delisting after buyback

9th April 2004: The Securities and Exchange Board of India (Sebi) proposed to prohibit those companies from delisting their shares that have concluded a buyback of securities or made a preferential allotment. Further, Sebi’s proposed amendments state that no company can delist its shares within three years of listing its shares on any stock exchange or when it has any convertible instruments still outstanding. The proposed amendments also state that it would be assumed that the promoters have aborted the delisting process when they do not accept the “discovered price” in the reverse book-building route for delisting. As a result, if the public shareholding has fallen below 10 percent at the start of the bidding, the public holding would have to be brought up to 10 percent by issuing new shares or by an offer for sale. Sebi has clarified that in the case of voluntary delisting, the shares may be delisted from all the stock exchanges where they are listed or only from the stock exchange where they are listed, provided everyone is given an exit opportunity. No separate exit opportunity is required to be provided where the shares are still traded on any exchange. For delisting, the company would have to obtain the approval of its shareholders by introducing a special resolution and within one year of passing the resolution make an application to the stock exchanges. The company has to close the process of delisting within 45 days of receiving approval from the exchanges. Sebi has said that the company's promoters will have to deposit in an escrow account 100 percent of the estimated amount of consideration calculated on the basis of the floor price indicated and the number of securities required to be acquired. Sebi has already mentioned that delisting will be through the reverse book building method. For frequently traded shares the floor price for building purposes will be at the average of the weekly high and low of the closing prices for the preceding 26 weeks and where the trading is infrequent Sebi has set out three alternatives for arriving at the floor price. Sebi has specified that the offer would have to remain open for a period of 15 days.

ICICI Bank fixes issue price at Rs 280

8 April 2004: ICICI Bank's public issue of equity shares of Rs 3050 crores closed on April 07, 2004. According to a release issued to the BSE, the total demand received for the issue at various price levels in the price band of Rs 255 to Rs 295 per equity share is estimated at around Rs. 17900 crores implying a subscription of 5.8 times. The issue price has been fixed at Rs 280 per equity share and has been subscribed approximately 4.2 times at this price level. The determination of allocation to Qualified Institutional Buyer (QIB) bidders is in process. The issue has a Green Shoe Option of Rs 450 crores.

Datamatics IPO price set at Rs. 101-110

6th April 2004: The price for the public issue of Datamatics Technologies, consisting 10.3m shares has been set at Rs. 101-110. The issue will open on April 12 through the book-building route. The offer encompasses a fresh issue of 8.5m Rs.5 equity shares and an offer for sale of 1.8m shares of Rs.5 each. The equity shares on offer represent 25.4% of the fully diluted post-issue paid-up capital of the company. The offer for sale is being made by promoter Mr. Lalit Kanodia and his family. IL&FS had picked up 4% equity in the company a few months back. It would not be allowed to divest in the public issue as per Sebi guidelines. The proceeds of the issue would be used to invest in subsidiaries, retire existing debt and fund acquisitions. The company has allocated Rs. 14.6 crores for investment in its subsidiaries and Rs. 12.1 crores for repayment of existing debt. The investment will be for working capital and initial capital requirements. The company has three subsidiaries in the US, Germany and UK and plans to invest Rs. 11.5 crores in two companies in the US it acquired last year.

RBI tautens norms for raising ECB

5th April 2004: The Reserve Bank of India (RBI) stated that external commercial borrowings (ECBs) cannot be used for working capital, general corporate purpose or repayment of existing rupee loans and that this will be applicable for borrowings raised after the revised ECB guidelines that were issued on January 31. The central bank also stated that residents, who can otherwise invest $25000 overseas under the liberalised remittance regime, could not use the offshore banking unit route. Eligible borrowers were permitted to raise ECB under the automatic route equivalent to $50m per financial year for general corporate purpose before February 1, 2004. The revised guidelines however allow annual borrowings up to half a billion dollars under the automatic route. Also the borrowers going for ECB after February 2004 are required to submit returns on a monthly basis certified by the designated Authorised Dealer (AD) to RBI within seven working days from the month-end of the borrowing. The central bank has said that the concerned borrower and the authorised dealer have the responsibility to ensure that ECB raised/utilised are in conformity with the Reserve Bank instructions. RBI has allowed authorised dealers to approve extension of repayment periods for ECBs under the former $5m scheme provided that there is a consent letter from the overseas lender for such rearrangement without any additional cost.

PFC plans IPO

2nd April 2004: Power Finance Corporation (PFC) is planning to come up with an initial public offer (IPO) in the second quarter of the financial year 2004-05. PFC is one of the leading financing agencies in the power sector. The government holds 100% of PFC’s equity. The CMD of PFC, Mr. A.A. Khan stated that they had approached the government with a proposal to buyback 50% of its equity from the government. A reduced equity would improve the EPS of the company and thus strengthen its financial position. The IPO, which is expected to follow the buy-back, would offer about 5% to 10% of the equity in the IPO. PFC announced a 37% increase in net profit at Rs 1,601 crores during 2003-04.

Banks are now opting out of Mutual Funds in order to be on the safe side.

4th April, 2004 Estimates indicate banks have redeemed some Rs 12,000-14,000 crores worth of MF units during the past few weeks. Nationalized and private banks seem to be moving out of investments in mutual funds over the last few weeks. This is due to the fear that the markets are going to be facing a downslide. Both debt as well as equity schemes are believed to have been redeemed heavily during the period. Normally, investments in MF schemes are classified as non-SLR( statutory liquidity ratio) securities. Investment in non-SLR securities is risky and hence bankers shy away from investing in them. Since investments in non-SLR securities require provisioning for investment fluctuation reserves as per the Reserve Bank of India norms, banks redeem their MF units towards the end of the year, as per banking circles. While fund managers are claiming that when the market was stable, banks and Corporates have sold out their MF investments in order to book profits, some of them have sold their MF units in the last few weeks in order to spruce up their balance sheets.

Equity MFs to pay Dividend Tax

2nd April 2004: Equity-oriented Mutual Funds (MFs) including UTI AMC will now have to pay 12.5% dividend distribution tax. These funds were exempt from paying dividend tax for one year beginning April 1 2003 upto March 31 2004; companies undertaking R&D were entitled to a 100% deduction for ten years under Section 80 IB (8A). But from 01/04/04 this facility ceases to exist, exporters will also now have to pay income tax on their profits. With elections just around the corner, the finance minister, Jaswant Singh has given assurance to extend the benefit for another year if the BJP-led government comes to power, but this is possible only if relevant changes are made in the Income Tax Act. The government has also shown intention to extend the concession given to investors purchasing listed equities who enjoyed capital gains tax exemption. The finance minister went by the past precedents and refrained from tinkering with the sunset clauses, while presenting the vote on account. This was notwithstanding pressure from the export community, which protested against the phasing out of 80 HHC and 80 HHE. The new government, which comes into power at the Centre, can always restore the provisions with retrospective effect. This effects not only the exporters, but companies carrying out scientific research and development, mutual funds and investors.

RBI to issue stabilization bonds next week

3rd April 2004: The Reserve Bank of India has decided to issue Market Stabilization Bonds (MSBs) next week in order to phase out the Rs. 6500 crores gap in the money market. These bonds will be in nature of government securities (also known as Gilts) worth Rs. 5000 crores to be sold on 6th April, 04. They will be the 6.18% '05 bonds to be reissued through a multiple-price auction. The government will sell Rs.1500 crores worth Treasury Bills on April 7, 04. It will also hold a regular auction of treasury bills worth Rs. 500 crores and will sell 18000 crores worth of MSBs. Since the RBI's intervention in the Foreign Exchange Market has resulted in excess rupee liquidity, the market stabilization scheme is brought up to provide a platform to correct this deficit. The government will thus sell bonds and T-bills for upto Rs. 35500 crores in the first quarter upto June 30 leading to the issue of Rs. 60000 crores worth MSBs. The rupee touched a 47-week closing high of 43.65/70 on Wednesday and ended on Friday at 43.73/74 per dollar. The interest received on these MSB's will form a part of the government’s deficit. The bonds and T-bills issued under the scheme would have the same features as the Statutory Liquidity Ratio (SLR) instruments. These MSB's will be eligible for Statutory Liquidity Ratio, repo and Liquidity Adjustment Facility (LAF). This is a scheme, which is outside the regular borrowing of the government.

Equity diversified funds

22nd March 2004: Equity diversified funds have been the best performers among all categories beating the sensex by a huge margin. It has been argued that the long-run investment in equities always reaps good and above average returns. It is not possible for an individual investor to do his own stock picking and dream of making extraordinary returns. The reason being that retail investors don’t have the luxury of spending hours on researching stocks and constantly keeping track of them. This is why investments in mutual funds are advisable. It relieves the investor of taking a call on the markets and keeping track of investments on a daily basis. But before leaving the responsibility of handling your money to the fund manager, the investor needs to decide on a mutual fund category and then zero in on a scheme from that category. The three broad MF categories are equity, debt and liquid. And within these categories there are balanced funds, hybrid equity-oriented funds, hybrid debt-oriented funds, etc. Each category represents a different degree of risk and it is up to the individual to evaluate his or her risk appetite and then decide on a category. Another important factor that will influence this decision is the returns that the particular category has given over time. We take a look at the equity-diversified category, which has outperformed the sensex as well as all other mutual fund categories over different time periods. The study of performance of the equity diversified category vis-a-vis the sensex over different periods we see that this category has outperformed the sensex over the 1-month, 3-month, 6-month, 1-year and 5-year time periods. It is quite clear that the category has out-performed almost all the indices in the long run. However, investors should not be taken in by just the high returns that this category has delivered in the past. Investors should be ready to face volatility and a drastic fall in returns when the markets turn choppy, as witnessed over the past one month. The equity markets bled and this had a direct effect on the returns of equity-oriented funds. Investors should consider short-term returns before investing or disinvesting for that matter, they should keep in mind that equity markets are volatile and investments in this category should be done with a long-term view.

ICICI Bank public issue price band set at Rs. 255-295

26th March 2004: The book-building price band for India’s second largest bank, ICICI Bank’s Rs. 3500 crores public issue has been set at Rs. 255-295 per share. The issue will remain open from 2nd April to 7th April. The public issue will have a Green Shoe Option. The public issue of equity shares will be for cash aggregating Rs. 3050 crores and a green shoe option for cash aggregating Rs. 450 crores. The issue and green shoe option aggregate Rs. 3500 crores. The bank’s shareholders have approved the proposed public issue at an extraordinary general meeting and also cleared raising the bank’s authorized capital by 10%. The government of Singapore, together with its investment arm Temasek, hold 14.12% in ICICI Bank. The foreign holding in the bank, which is now at 71%, will stand reduced to 65% post-issue. This would create more headroom for foreign holding in private banks at 74%. ICICI Bank will earmark 25% of its issue for retail shareholders, another 25% for non-institutional shareholders (high networth individuals) and the balance 50% for qualified institutional buyers (QIBs). SEBI has cleared the proposal for allowing retail investors to pay 50% of the amount on application. The bank has also clarified that the new shares will be entitled for dividend. Retail bidders are those who have shares worth Rs. 50000 or less, while non-institutional bidders are those applying for shares more than this amount. ICICI Bank had applied to the Securities and Exchange Board of India (SEBI) for reserving 10% of its issue for the bank’s retail shareholders. The market regulator denied this. The regulator has also disallowed lead managers to bring in subscriptions through participatory note investments coming from their own vehicles. However, PN applications emanating from other brokerages are allowed.

Dishman sets IPO band at Rs 155-175

23rd March 2004: Dishman Pharmaceuticals and Chemicals has received Sebi clearance for its proposed IPO of 3,433,400 equity shares of face value of Rs 10. A price band of Rs 155-175 per equity share has been set. The issue will be through a 100% book-building route and will constitute 25.01% of the fully diluted post-issue paid-up capital. Dishman Pharma is expecting to raise between Rs 50-60 crores through the issue, which will open for bidding by the end of March 2003. Proceeds of the issue will be used primarily to finance capital expenditure on creating new facilities and expansion of old facilities. The company is setting a new active pharmaceutical ingredients (API) plant and an R&D center at Bavla near Ahmedabad. Net worth of the company as on September 30, 2003 is Rs 519.7 m (Rs 52 crores). Book value of the equity shares of the company as on September 30, 2003 is Rs 50.46 per equity share. The promoter and promoter group of the company currently hold 99.99 % of the present paid-up equity capital, which will decrease to 75% after the issue.

Data Access IPO to be priced at Rs 17-20

23rd March 2004: International long distance telephonic operator Data Access announced that the price band for its proposed initial public offering would be in the range of Rs 17-20 per share. The IPO is expected to raise around Rs 80-100 crore by offloading 25 percent to the public. Around Rs 40 crore of the amount raised will be used for debt repayment and another Rs 30 crore for expanding its network. The company has opted for 100 percent book-built method. The issue opens on March 29 and close on April 6. The stocks will be listed on the Bombay Stock Exchange and the National Stock Exchange.

13th March: Stan chart Mutual Fund:

Standard chartered mutual f und is launching Grindlays Fixed Maturity Plan- Annual and Quarterly Plan. The features of the fund are: 1) Tax-efficient returns a) Double Indexation Benefit in the Annual Plan b) Dividend Tax free in the hands of Investors 2) Investment in highly rated Corporate Bonds and debentures, Money market instruments 3) Stable returns with relatively low risk Grindlays Fixed Maturity Plan is a closed-end 100% debt fund investing in high quality corporate debt and Money Market Instruments in line with the duration of the plan/s. It is ideal for investors seeking stable returns over a fixed period, with the advantage of the returns being tax-efficient. Type of Scheme Close ended income scheme Issue Price Rs.10 Entry load Nil. (units for sale only in IPO) Maturity Date Quarterly Plan-July 08, 2004 and Annual Plan-April 11,2005*Quarterly redemptions possible in the Annual Plan subject to exit load. Exit load in Annual Plan Up to June 30,2004-1%, upto September 30,2004-0.75%, December 31,2004 onwards-.50% (on a quarterly basis before maturity). On maturity-Nil Minimum Amount Rs.10000 & in multiples of Re 1 thereafter Investment Objective The investment objective of the Scheme and Plan/(s) Transparency NAV Declaration-every Wednesday Portfolio Disclosure Half Yearly disclosure of portfolio /On Maturity INDICATIVE RETURN CALCULATION Bank FD Annual Plan Quarterly plan 1 year Dividend Growth Double Indexation Dividend Growth A Purchase Price 10 10 10 10 10 10 B Post Expenses Yield 5.00% 5.00% 5.00% 5.00% 4.75% 4.75% C Repurchase Price =A*(1+B) 10.5000 10.5000 10.5000 10.5000 10.1171 10.1171 D GAIN/INTEREST=C-A 0.5000 0.5000 0.5000 0.5000 0.1171 01171 E INDEXED COST =A*(1+IR%) NA NA NA 11.0000 NA NA F INDEXED GAIN= C-E NA NA NA -0.5000 NA NA G Tax Rate 33% 12.81% 11% 22% 12.81% 33% H TAX = G*D 0.1650 0.0641 0.0550 NIL 0.0150 0.0387 I POST TAX GAINS=D-H 0.3350 0.4360 0.4450 0.5000 0.1021 0.0785 J POST TAX ANNUALISED RETURNS-I/A 3.35% 4.36% 4.45% 5.00% 4.14% 3.18%

12th March 2004:Dada-dadi bonds

The going may be easy for senior citizens subscribing to dada-dadi bonds being launched from April 1. The government is looking at providing greater flexibility in terms of exit option, making the bonds transferable, tradeable in the secondary market and eligible as collateral for loans from banks and financial institutions. The government is also weighing the option of making the bonds taxable. The interest rate on these bonds may be fixed at or over 9% given that the taxable Varishta Bima Pension Yojana provides for an assured annual return of 9%. Strictly speaking, there cannot be any like-to-like comparison between these two schemes. The other option is to make the dada-dadi bonds tax free, in which case the effective yield from the bonds has to be over 8%, since public provident fund deposits offer 8% tax-free, equivalent to 11.4% taxable. Finance minister Jaswant Singh has given an assurance that the dada-dadi bonds will carry an interest higher than the prevailing rate of interest and all citizens above 60 years would be eligible to subscribe to these bonds. The expert committee set up to undertake comprehensive review of all small-savings interest rates and the structuring of these instruments is scheduled to meet on Friday to finalize the features of the dada-dadi scheme. RBI deputy governor Rakesh Mohan chairs the five-member committee, which includes expenditure secretary D Swarup. The government may provide a flexible exit option, keeping in mind the age factor. Currently, premature encashment option is not available in the 8% taxable (savings) bonds, which can be redeemed only after six years. There is, however a provision for premature encashment in the 6.5% tax-free bonds after a minimum lock in of three years. These bonds can be redeemed after five years. While the 8% taxable bonds are not transferable, the 6.5% tax-free bonds are transferable only by gift. Neither bonds are tradeable on the secondary market. They are also not eligible as collateral for loans. These features may not be replicated in the dada-dadi bonds as the government is looking at making them transferable and tradeable. The government could, however, have an investment ceiling on the dada-dadi bonds. The 6.5% tax-free and 8% taxable bonds do not have any investment ceiling. One of the suggestions made is to index the rate of interest on dadi bonds to inflation, as the idea is to protect the real income of senior citizens. But by promising an interest rate that is higher than the prevailing rate, the government is going against the basic philosophy of the Reddy Committee, which recommended benchmarking of the administered interest rates to the G-sec yields of similar maturity.

12th March 2004: Steel futures

The Multi Commodity Exchange (MCX) will be the first exchange-traded steel futures in the world. Though there are organized exchanges trading in other industrial commodities such as aluminium, copper etc but no contracts where there for steel. The London Metals Exchange (LME) failed to introduce a steel futures contract, which they were trying for the last three years. The steel market volatility has made the length of the bilateral contracts shrinking. Earlier it was possible to have 6-7 months contract but now due to rapid increase in steel prices it’s not possible to have contracts more than 2-3 months. The lack of organized market place also harms the interests both the buyers and the sellers. At present about Rs 75,000 crore of steel is traded annually in the cash market. MCX expects the steel futures market to be 10 times more at Rs 750,000 crore. A future contract is a forward contract, but one which is traded an exchange. The steel industry worldwide operates through similar bilateral forward contracts between buyers and sellers. The parties remain anonymous, while the exchange acts as counter party to both the buyer and seller. A steel futures contract would thus enables a user of steel – for example, an auto manufacturer- to know in advance the price he has to pay for his raw material (steel) at a future date. At the same time, a steel producer can lock in the price he receives for his production, before the product is out of the factory. For steel producers and buyers, the main concern is how the exchange will evolve a standardized futures product for a metal that is not strictly a commodity.

Cyber Media group plans IPO

8th March 2004: Cyber Media, India’s oldest information technology related publishing group, is planning an initial public offering (IPO) some time in May. Mr. Pradeep Gupta, chairman and managing director of the group confirmed the development and stated that in a week or so, they would be ready to talk about the issue size and other details. Cyber Media is a Rs.60 crores group that was set up in 1982. Cyber Media is entitled to obtain foreign direct investment (FDI) of up to 74 percent in view of being a technical publication and had been known to be looking for a foreign equity partner. It also filed an application with the information and broadcasting ministry seeking its consent to publish an Indian edition of the international business magazine, Business Week. It publishes nine IT print titles, including Data Quest and PC Quest and manages their websites. It also operates an IT portal – Cyber India Online with a strategic investment from Intel Capital and India’s oldest IT market research company IDC (India), an affiliate of IDC World Wide. Cyber Media also has IT Expositions Company Cyber Expo, which organises events such as IT.COM and NASSCOM-ICT; Cyber Multimedia, publishers and distributors of CD ROMs and Cyber TV that produces IT programs for television. The group also runs a training school offering content management services across various media platforms for young professionals. It is called the School of Convergence.

Investors must provide PAN and bank account numbers for investments of over Rs. 50000 on MFs

3rd March 2004: The Securities and Exchange Board of India (Sebi) has made declaration of the permanent account number (PAN) and bank account number being made mandatory for mutual fund (MF) investors to impart greater transparency as well as strengthen the ‘know your client’ guidelines for mutual funds. The Sebi circular states that application forms for total value of Rs.50000 or more must have the permanent account number and the bank account number of the applicant or applicants. It further states that if the applicant has not been allotted a PAN, he will have to mention the GIR number and the Income-tax circle/ward/district and in case both the PAN as well as the GIR number has not been allotted, the non-allotment should be clearly mentioned in the application form. The market regulator has asked mutual fund houses to reject application forms that do not have these details. The fund managers feels the new directive is unlikely to have an adverse impact on the MF inflows and only those investors who have been using MF schemes, as an instrument to convert their black money into white will stay away from investing in MF units. Top MF houses claim most of them have been requesting PAN and bank account numbers. But some investors are reluctant and make the task tedious, as they are unwilling to part with these details for reasons known to them, they added. Of course, investors can still elude the Sebi directive by stating applied for PAN in the application form.

Sun Pharma plans venture into biotech

4th March 2004: Sun Pharma, the domestic pharma company, is planning to enter into the biotech space and is likely to focus on products that are on the high end of the biotech spectrum. The company may collaborate with outside companies for biotechnology. The company has already bid for the state-owned pharma company Hindustan Antibiotics Limited (HAL) and is awaiting a decision on it. HAL is a pioneer in penicillin manufacturing in the country and also produces a range of biologicals like antibiotics and erythropoeitin, in addition to antituberculosis drugs, anti-bacteria, analgestics, cardiac drugs and vitamins. Sun Pharma is likely to focus more on high-end biotech products like monoclonal antibodies, an area that many leading companies are currently working on. Sun’s bid is to acquire all the existing businesses and infrastructure of HAL. HAL is currently in BIFR (Board for Financial and Industrial Reconstruction). Mr. Dilip Sanghvi, Sun Pharma’s chairman and MD said that the company would go ahead with its biotech plans irrespective of the outcome of the HAL bid. He further stated that the company also plans to use biotech as a research tool and are trying to build their ability in areas like gene expression.

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.

Sebi gives PN access only to regulated entities for ONGC issue

2nd March 2004: Sebi has told merchant bankers that they can issue participatory notes (PNs) only in case of regulated overseas entities. Several merchant bankers have been trying to put pressure on the government to relax this norm by either withdrawing or diluting it. The government has a big stake in the success of the forthcoming ONGC issue and the merchant bankers have been using this to say that such dilution of norms is required to ensure full subscription of the Rs.10000 crores sale of ONGC shares. The government today clarified that the lead managers to the ONGC public offer – Kotak Mahindra Capital Company, DSP Merrill Lynch and JM Morgan Stanley – would not be barred from issuing PNs to overseas investors. The issuer of the PN and the subscriber have to be regulated entities and that there is no change in Sebi’s policy on issuance of PNs. Participatory notes are offshore derivative instruments issued by foreign institutional investors and their sub-accounts against underlying Indian securities to overseas clients or investors. PNs enable the holders or investors to hide their identities while transacting in the market. Sebi had directed FIIs last month not to issue PNs to unregulated entities. Regulated entities include those entities regulated by a central bank like Bank of England, the Fed Reserve, US, the Monetary Authority of Singapore or the Financial Services Authority, UK, members of securities or futures exchanges or any entity incorporated in a jurisdiction that needs filing of constitutional and or other documents with a registrar of companies or comparable regulatory agency or body under the applicable companies legislation in that jurisdiction.

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.

1st March 2004:UTI Mutual Fund

UTI Mutual fund which has been set up as Trust under Indian Trust Act is going to issue an open-ended scheme UTI Master gain with an objective of investing at least 80% of its funds in equity and equity related instrutments with medium to high-risk profile and upto 20% in debt and money market instrutments with low to medium risk profile. The fund continues to remain positive on the pharma sector, where most of the stocks are poised for good growth prospects. The fund has also increased its exposure to the banking stocks, the fund is very positive on the prospects for the sector on account of increasing credit off take by the corporate sector and accelerated spending in the infrastructure sector. The fund is positive about FMGC, Oil and gas sectors. UTI Mastergain is only the name of the scheme/plan of the UTI Mutual fund and does not in any manner indicate the quality of the scheme/plan or the future prospects or returns.

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.

Offer price of GAIL

The floor price of Gail has been set at Rs.185 per share, which is at a discount of 5.6% to the closing price of the stock on NSE and BSE. The offer has been priced at the six-months average price of the share but at 16% discount to the three-months average. Retail investors would be entitled to a 5% discount on the final issue price. They are required to bid for a minimum of 30 shares and in multiples of 30. Government of India is reducing its stake by 10% to 56%. 5% shares has been reserved for the employees.

Change in Ownership can Upset Idea’s Public Issue

24th February 2004: The promoters of Idea Cellular may seek permission from the company’s lenders to transfer a sizeable block of shares in excess of 30% to a strategic partner. Idea officials said 51% of the company’s shares are pledged with its leaders as part of its financial closure agreement. Idea Cellular is also bound by non-disposal undertakings to its lender for an additional 25% shares. This means that 76% of Idea’s equity is blocked and cannot be transferred, either between existing shareholders or to new investors, without the lenders’ approval. Under present circumstances, Idea cellular has a 24% block of free shares that may be offloaded in equal measure by its three principal stakeholders in proportion to their respective 33% holdings. This means that the Tatas, AV Birla group and AT&T Wireless can offload roughly 8% (33% of 24%) each. The existing stakeholders in Idea or new investors also have the option to acquire the pledged shares if approved by the lenders. The latest developments come at a time when the DoT has just notified intra-circle merger guidelines for full-mobility players, and Idea Cellular is full of offers to offload equity to strategic investors.

Petronet in trouble over disclosures

25th February 2004: The proposed Initial Public Offer (IPO) of Petronet LNG is under the lens of SEBI for alleged violation of disclosure norms. SEBI has taken note of some additional disclosures made by the company, which were not part of the original prospectus submitted to it. SEBI has sent a letter to SBI caps, the lead manager to the Petronet LNG IPO, asking for an explanation on the company making additional disclosures outside its prospectus. SEBI questioned how the Company could give additional details to investors when they were not part of the offer document and if the facts were accurate, they should have formed part of the due diligence and included in the document. This is the second time Petronet LNG IPO is running into trouble. Prior to this there was a clash between the lead managers to the IPO and the Petronet LNG management on the price of the IPO. While the company management was pushing for a price band of Rs. 16-18 per share, the merchant bankers were of the opinion that anything above a price band of Rs. 10-12 would be risky. Subsequently, the company fixed a price band of 13-15 per share. Petronet will be issuing 26.1 crore shares, accounting for 34.8% of the company’s paid up capital, through the IPO. The issue will open on March 1 and will remain open till March 9.

Biocon opens IPO on March 11

Biocon is coming out with an initial public offer (IPO) through which the company is to raise between Rs. 270 and 315 crore. The IPO will open on March 11 and close on March 18. The IPO comprises a fresh issue of 10m equity shares of the face value of Rs. 5 each in a price band of Rs. 270 to Rs. 315. The company has opted for 100% book building. Biocon will list the shares on the National Stock Exchange and the Bombay Stock Exchange. The Managing Director, Biocon, has stated that the company would be focusing more on generic bio-pharma. The company is also working towards addressing cardiovascular, diabetes diseases in addition to focusing on immunosupressants for organ transplants. He further stated that their indigenously developed recombinant human insulin is currently undergoing clinical trials in India and that the company plans to introduce this product as a formulation under the brand name ‘Insugen’ in Indian market in the first half of 2004.

NDTV IPO

NDTV is going to have its initial public offering (IPO) either in April or May to raise over Rs. 100 crore. ICICI Securities, Kotak Mahindra Capital and JM Morgan Stanley are appointed as advisors. The issue size has not yet been decided but it will be between 100-150 crore which is similar to the issue size of the rival TV Today. NDTV offer could be a combination of fresh issue and offer for sale. The Indian primary market has emerged from the slump market after 3 years due to improvement in corporate profits and growing economy. The analysts believe that the growing investors appetite can help the promoters of the companies to raise Rs 15000-20000 crore in ’04.

TCIL plans for IPO:

Telecommunication Consultants India is coming out with its initial public offer to raise up to 200 crore. The funds from the IPO will be used for the new activities especially in the overseas market. The company has diversified into various new activities including construction of roads on a turnkey basis for the National Highways Authority of India (NHAI) and state highways departments. The value of projects handled by TCIL in the overseas markets during the current financial year is likely to go up by 38 percent to Rs 450 crore from Rs 327.15 crore in the previous financial year. The company had reported a turnover of Rs 500.

Lyka Labs board approves $6.5m GDR issue

Lyka Labs is to raise $6.5m through global depository receipts (GDR’s). The board had given the approval for the proposal. The funds raised through issuance of GDR’s will be partly used to finance the capital expenditure and working capital needs. For the approval of the proposal shareholders’ meeting is going to be held on March 20.

IPCL employees to get 5% stake:

The government plans to offload its remaining 5% holding in Indian Petrochemicals Corporation (IPCL) to its employees at one-third the final book-building price. The government has offered for sale, a 29% stake in IPCL from its holding of 34%. This 29% offer for sale includes the 5% offered to Reliance at a 5% discount to the floor price of Rs 170 per Rs 10 share. Reliance, which holds a 46% stake in IPCL, has decided against participating in the offer to increase preferring a wider spread of equity amongst investors

IBP opens its IPO:

The present offer is of 57,58,290 Equity Shares of Rs.10 each. The offer would constitute 26% of the paid-up capital of the Company. The IBP is a major marketing petroleum company in India. It has got a diversified portfolio of petroleum products including MS, HSD, SKO, lubricants, LPG, LDO, etc. The company believes in strong relationship in dealers. They have extensive retail dealership network. Their strategy is to increase profitability and improve their market position by increasing their customer service and strengthening their brand. The bid /offer is yet to be finalized

IPO offer of IPCL:

IPCL is going to have its Bid offer on February 20, 2004. The main object of the offer is to carry out the disinvestments of upto 59,438,774 equity shares of Rs.10 each in the Company through the Preliminary Sale Document. The size of the offer may be enhanced to the extent of up to 5% of the paid-up capital of the Company (upto 12,411,282 equity shares of Rs 10 each) on the terms and conditions as set out in the Preliminary Sale Document. In such an event the offer may be of up to 71,850,056 equity shares of Rs.10 each. The price for the Bid is Rs.170 per share.

Highlights of the Interim Budget

· 50% Dearness Allowance of the pay will be merged with basic salary of Central government employees · No change made to tax structure · Government committed to 2nd green revolution. · Govt to focus on jobs generation, poverty eradication and fiscal consolidation · GDP growth is expected to be 7.5 to 8 percent in the current fiscal year. Level of growth is matter of great satisfaction, says finance minister · Declining interest rates and buoyant capital markets have boosted the economy · First RBI forex report today · Six hospitals- one each in Andhra Pradesh, J&K, Tamil Nadu, West Bengal, Jharkhand and Uttraranchal- to be upgraded to the levels of AIIMS · All farmers will be eligible for credit cards by March 31, 2004 · Kisan Credit Cards to be made ATM-compatible · Committee to be set up for agriculture credit. · Tea growers to get loans up to Rs.200, 000 at 9% interest rate. · The loan limit on credit card for small- scale entrepreneurs to be raised from Rs.200, 000 to Rs.10, 00,000 · National Cattle Development Board to be set up · Non-lapsable defence modernization fund of Rs 25,000 crore being created · Accelerated drinking water projects for Banglore, Chennai, Hyderabad and Delhi to be implemented. · Additional innovative funding to be given to speedier execution of Indira Gandhi Canal project in Rajasthan. · Airport in Jaipur to be upgraded to an international airport. · IDBI’s role to be strengthen as a lead development financial institution. · Service tax procedures simplified · Long-term capital gains tax break extended by 3 years. · E filing of excise returns from June 30. · Income tax deduction, standard deduction to be revisited. · Rs 15,000 crore for co-operative sector · Stamp-duty cut up to 50% · Defence modernization fund of Rs 25,000 cr · I-T exemption on power projects extended · Tax burden reduced for shipping companies · Farm fund to give loans at 200 basis points below PLR · Task force to review desert development programmes. · Special package for tea, industry to be announced · Countervailing duty for power sector to be examined · Single return and registration for service tax payers · Rs 11,145 crore savings achieved in expenditure · Customs clearance to be on basis of self-assessment from June 30 · E-filing of excise returns to be introduced from June 30 · Net tax revenue pegged at Rs 1,87,539 crore · Non-tax revenue pegged at Rs75, 488 crore, an increase of Rs 5732 crore. · Fiscal deficit at 4.8% of GDP, revenue deficit at 3.2% · Singh promises to rein in inflation at 4.3%

Idea plans for IPO

IDEA cellular is looking to expand its operations via acquisitions. And, to finance these buys, it’s thinking of going in for an IPO. The company is eyeing contiguous circles that are operating in the 900Mhz range. The company recently announced its decision to buy Escotel- it provides services to Kerala, Haryana and UP (West). The funds raised through the IPO will be used for both new acquisitions and expansion of existing networks. Idea’s total revenue is Rs 1,300-1,400 crore. The proceeds of the proposed IPO may be used to finance the Escotel acquisition.

ICICI Bank plans IPO offer

ICICI Bank’s thinking of going in for an equity issue. The board will take a final decision on February 10. While the Bank refused to divulge issue details ahead of the board meet, the grapevine pegs the issue size at Rs 2,500-3,000 crore. ICICI Bank has a paid-up equity capital of Rs 615 crore. Of this, total foreign shareholding is 71.4%. The bank has a net worth of Rs 8,150 crore and capital adequacy ratio of 11.3%. Of this, Tier-I capital is 7.2%, while Tier-II capital is 4.1%. Given such a high foreign holding, the bank has a leeway of only 2.6% to raise capital from foreign sources. It has an FII holding of 45.3% and ADR holders account for 26%. According to analyst, the move will help the bank: 1) Raise Tier-I capital adequacy level, with international investors insisting on 8% against the current 7.2% 2) Given a 74% cap on foreign holding, a domestic issue will create more headroom for future FII investment as an enlarged equity base will dilute the foreign holding currently at 71.4% 3) Greater FII investment possibility will boost the scrip, which touched a new high of Rs 336 on Monday and moved up 4% to close at Rs 333.

IPO of Bank of Maharashtra

Bank of Maharashtra, wholly owned by Government of India is having its first Public issue of 10,00,00,000 Equity shares of Rs.10 each for cash at premium of Rs.13/- per share i.e of Rs.23 per share aggregating to Rs.230 crores. The issue opens on 25th February 2004. The Bank was registered on September 16, 1935 at Pune as a Public Limited Company in the name “ The Bank of Maharashtra Ltd”. Right from its inception the focus of the Bank has been to assist small business enterprises, traders, self-employed and other common men. The Bank has MOU with EXIM Bank of India in February 2000 for co-financing of project exports. The Bank has sponsored 3 Regional Rural Banks as a part of fulfillment of its social responsibilities towards the rural development and poverty alleviation. The Bank values its association with its customers and will endeavour to meet expectations from them. Bank will pursue a policy of service with friendly touch to increase customer base from 6.7 million at present to 10 million within a period of three years and to increase the number of branches in the rest of the country, especially in the northern and eastern states of India. Bank will use its large network of computerized branches and also implement the Rural Branch Mechanization Project from the year 2002-03 after which the comprehensive data relating to Bank’s business will be capture on the computers.

CMC offer opens on Feb 23

CMC which the government of India will divest its entire 26.25 percent stake in the company. The IPO will open on February 23 and end on February 28. The offer is for the sale of 39,76,374 equity shares of face value of Rs 10 each, which represents 26.25 percent of the fully diluted post offer paid-up capital of the company. The offer is being made through a 100 percent book building process wherein upto 50 percent of the offer shall be allocated to qualified institutional buyers on a discretionary basis. Further, not less than 25 percent offer will be available for allocation on a proportionate basis to non-institutional bidders and the remaining 25 % will be available to retail investors.

Petronet LNG prices IPO in Rs 13-15

PETRONET LNG has fixed price band of Rs 13-15 per share for its forthcoming IPO, which is slated to open on the 26th of this month. The issue will offer 26.1 crore shares representing 34.8% of the equity. Petronet LNG, the first to develop a LNG project in the country is tapping the market with an IPO to mobilize resources for the unsubscribed equity. The issue was initially slated to open on February 19 but has been delayed by a week following differences over the price issue. The IPO will now open on 26th of this month and will close on March 4. HPCL, which is the only oil marketing, which does not have stake in the LNG project, is keen to join the team as it could then supply gas to its customers who would switch from naphtha to gas. The employees of Petronet LNG and its promoters Indian Oil, ONGC, GAIL and Bharat Petroleum will have 10% shares set aside for them from the allocation for retail investors. Asian Development Bank recently acquired a stake in Petronet LNG at a premium of Rs 16 per share.

Gail public issue to commence on Feb 23

FRIDAY, JANUARY 23, 2004 Gail India, the gas major in which the government is selling 10% of its stake, will enter the capital market with its public issue on February 23. The issue will close on March 1. The Gail offering of 8.4 crore shares — 10% of government stake — will be offered in lots of 100. The company will file its draft Red Herring Prospectus with Sebi tomorrow. The Gail board met today to give the final touches to the draft prospectus. Speaking to ET on the proposed public issue, Gail CMD Proshanto Banerjee said: “We are filing the draft prospectus tomorrow and as per our estimates, the approval from Sebi should be in between January 27 and 30.” The company plans to offer the shares on a 50:50 ratio. While a maximum of 50% would be reserved for qualified institutional bidders — domestic FIs and FIIs — a minimum of 25% would be offered to the retail investors. However, since the government has informally directed them to broadbase the issue, retail investors may get a higher quota of shares if there is an appetite in the market. The merchant bankers, HSBC and ICICI, have recommended a reservation of 5% for Gail employees. A final decision is awaited from Sebi. “If the recommendation is accepted, we will offer the balance on the same 50:50 ratio,” Mr Banerjee said. The approved prospectus will then be filed with the Registrar of Companies (RoC) by February 6. Once the RoC approval is in, the company plans to launch its international roadshows by February 16. “We plan to take the roadshows to New York, Boston and Los Angeles in the USA . The other destinations in Europe and the Far East include Honk Kong, Singapore, London and Edinburgh,” Mr Banerjee said. Domestic roadshows will be taken to Mumbai, Kolkata, Chennai, Delhi, Hyderabad and Ahmedabad. While the government currently has a 67.34% stake in the company, ONGC and IOC together hold 9.65% of the equity. FIIs hold about 4.6% while domestic banks, FIs and insurance companies hold 3.7% of the stake. Equity shares of Gail are currently listed on the Delhi, Mumbai and the National Stock Exchange while the GDRs of Gail are listed on the London Stock Exchange.

National Savings Accrued Interest Table

Accrued Interest Table for NSC VIII issue purchased between 01.04.1989 to 31.12.1998. (Rate for Rs.1000/-) Year Rate Year Rate 1st 124 2nd 139 3rd 156 4th 175 5th 197 6th Not Eligible Accrued Interest Table for NSC VIII issue purchased between 01.01.1999 to 14.01.2000. (Rate for Rs.1000/-) Year Rate Year Rate 1st 118.30 2nd 132.30 3rd 148.00 4th 165.40 5th 185.10 6th Not Eligible Accrued Interest Table for NSC VIII issue purchased on or after 15.01.2000 to 28.02.2001 (Rate for Rs.1000/-) Year Rate Year Rate 1st 113.00 2nd 125.80 3rd 140.00 4th 155.80 5th 173.50 6th Not Eligible Accrued Interest Table for NSC VIII issue purchased on or after 01.03.2001. (Rate for Rs.1000/-) Year Rate Year Rate 1st 97.20 2nd 106.70 3rd 117.10 4th 128.50 5th 141.00 6th Not Eligible

TV Today share quotes at Rs. 220/- on first day of Listing.

16th january, 2004.In an otherwise volatile market, media firm TV Today made a sparkling debut on the bourses, but ended off highs on selling at higher levels. The TV Today stock opened firm at Rs 220 today morning. After touching the day’s high of Rs 225 earlier in the day, the stock came off to a low of Rs 179 on selling pressure, with investors making over 100% gains on listing. Eventually, the stock ended at Rs 181.35, 91% premium to its issue price of Rs 95 per share. Over 64.63 lakh TV Today shares were traded on BSE.

Shopper’s Stop IPO

7th January, 2004 Shoppers’ Stop is coming out with Rs. 100 – crore plus initial public offering (IPO) and is expected to hit the market later this year. Enam Securities will be the lead manager and Kotak Mahindra Capital and JM Morgan Stanley will be co-lead managers for the issue. The IPO is being floated to provide an exit route for venture capitalists (VCs) who hold stakes in the retail chain. The IPO will consists of a mixture of new shares as well as existing shares. The combined shareholding of ICICI, IL & FS and Zodiac Clothing in Shoppers’ Stop is 19% of the equity capital whereas the Raheja group holds 79%. Employees hold the balance. Shoppers’ Stop had issued warrants last year to its existing strategic investors which led to dilution in the promoters’ equity stake by 3.5%. The issue was completed in February 2003. The three VCs had subscribed to the warrants at a price of Rs. 130 per share. The warrants were not issued to employees, shareholders and the promoters. Shoppers’ Stop had a net profit of Rs. 10.6 crores on a turnover of Rs. 303 crores for the year ended March 31, 2003

ONGC’S IPO: THE LARGEST IPO BY AN INDIAN COMPANY

5th January, 2004 In the last week, the Central Government decided to sell 10% equity stake each in oil Exploration Company ONGC and the gas transmission entity Gail through the book – building route in the domestic market. This was a historical decision. ONGC IPO (Initial Public Offering) will be a landmark in the year 2004 as it might be the biggest issue in the world in the year 2004. The IPO will be of huge amount of $2 Billion at current market rates, which is even big on a global scale. In the year 2003, the largest IPO was of $3.4 Billion, which was by China Life. China Life made a global issue and raised money from the New York and Hong Kong markets. But ONGC is going for a domestic offering. The lead book runner of the Issue will be Kotak Mahindra Capital while the co–book runners will be DSP Merrill Lynch and JM Morgan Stanley.The IPO of Gail will be handled by ICICI Securities and HSBC securities and Capital markets. Before the end of current fiscal, the offerings are expected to open for the subscription. Such a big IPO by the ONGC would turn minnows in comparison of the past biggest issues by the Indian Companies. The Record for largest issue by an Indian Company is held by Reliance Petroleum, which raised Rs. 5,500 crores in the year 1992 which had made issue of convertible Debentures. As against this, ONGC is going to offer pure equity. Some of the other big issues of the past include the $527m GDR issue by VSNL, the $418m GDR issue of MTNL, the $300m secondary market ADR offering by Infosys and the $141m ADR issue by Satyam Computers. The other issues were made by the Car maker Maruti Udyog, which raised Rs. 990 crores in the year 2003 while Bharti Tele – Ventures had raised Rs. 834 crore in the year 2001.

Pension Plan: Plans your Retirement

Save Rs. 3000/- u/s 80CCC, regardless of your income.

 

 

Retirement Planning is based on the dictum that when you can’t earn money in your old age, let your money earn for itself.

 

A proper saving plan but in place in early stages in life can really go a long way in assuring a person a secured future when he may not be able to run around for making his living.

 

Many private players have come up with various plans, which provide regular income for retirement and also give you, tax benefit under section 80CCC. One can also opt for life cover under some of these plans.

 

ICICI Prudential has certain Retirement Solutions that combine the best of investment and insurance.

 

1.                  Life Time Pension: A regular premium linked deferred pension plan that gives you the freedom to choose the amount of premium, and invest in market-linked funds, to generate potentiality higher returns.

 

2.                  Secure Plus Pension: A regular premium deferred pension plan that gives you the flexibility to choose between 3 levels of sum assured for the same level of total annual contribution.

 

 

3.                  Life Link Pension: A single premium linked deferred pension plan that gives you the freedom to choose the amount of premium, and invest in market-linked funds, to generate potentially higher returns.

 

4.                  Forever Life: A regular premium deferred pension plan that helps you save for your retirement while providing you with life insurance protection.

 

Consider the 1st plan ie. Lifetime Pension: It is a flexible, unit-linked pension plan that gives you the advantage of reducing your tax burden along with safeguarding your post retirement years. If Sec. 88 is no longer applicable to you or you have exhausted this option, then it is imperative for you to look for alternate tax-saving benefits today!

 

Whatever your income, you can avail a deduction of up to Rs. 10,000  from your taxable income under section 80CCC(1)* on the premium paid. This way, you can save tax up to Rs. 3300*, every year, till your retirement.*

 

Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003

[PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART II, SECTION 3,  SUB-SECTION (i)]

 

MINISTRY OF FINANCE

(DEPARTMENT OF COMPANY AFFAIRS)

 

 

NOTIFICATION

 

New Delhi,  the 4th December, 2003

 

 

G.S.R.923(E). - In exercise of the powers conferred by proviso to sub-section (1) of section 79A of the Companies Act, 1956 (1 of 1956) read with sub-section (1) of section 642 of the said Act, the Central Government hereby makes the following rules, namely :-

 

1.         Short title and commencement.-

 

(1)  These Rules may be called the Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003.

 

(2)        They shall come into force on the date of their publication in the Official Gazette.

 

2.            Definitions.-

 

In these rules, unless otherwise defined,-

 

(i)    “Asset” means a resource controlled by the company and from which future economic benefits are expected to flow to the company;

 

(ii)                (ii)                “employee” means :-

 

a)      a)      a permanent employee of the company working in India or out of India; or

 

b) a director of the company, employed as a whole time director or executive director of a company;

 

 (iii)  “intangible Asset” means an identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes;

 

(iv)  “share price” means price of a share on a given date arrived on the net worth basis;

 

(v)   “value addition” means anticipated economic benefits derived by the enterprise from expert and/or professional for providing know-how or making available rights in the nature of intellectual property rights, by such person to whom sweat equity is issued for which the consideration is not paid or included in -

 

(a)      (a)      the normal remuneration payable under the contract of employment, in the case of an employee and/or

 

(b)     monetary consideration payable under any other contract, in the case of non-employee.

 

3.            Applicability.-

 

These Rules shall be applicable to issue of sweat equity shares by all unlisted companies.

 

4.         Special resolution.-

 

(1)   For the purpose of passing a special resolution under clause (a) of sub-section (1) of section 79A of the Companies Act, 1956 (1 of 1956), the explanatory statement to be annexed to the notice for the general meeting pursuant to section 173 of the said Act shall contain particulars as specified below.

 

(i)    the date of the meeting at which the proposal for issue of sweat equity shares was approved by the Board of Directors of the company;

 

(ii)   the reasons/justification for the issue;

 

(iii) the number of shares, consideration for such shares and the class or classes of persons to whom such equity shares are to be issued;

 

(iv) the value of the sweat equity shares alongwith valuation report/ basis of valuation and the price at the which the sweat equity shares will be issued;

 

(v)                (v)                the names of persons to whom the equity will be issued and the person’s relationship with the company;

 

(vi)              (vi)              ceiling on managerial remuneration, if any, which will be affected by issuance of such equity;

 

(vii)             (vii)             a statement to the effect that the company shall conform to the accounting policies specified by the Central Government; and

 

(viii)           (viii)           diluted earning per share pursuant to the issue of securities to be calculated in accordance with the Accounting Standards specified by the Institute of Chartered Accountants of India.

 

(2)   Approval of shareholders by way of separate resolution in the general meeting shall be obtained by the company in case of grant of shares to identified employees and promoters, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversion) of the company at the time of grant of the sweat equity shares.

 

5.            Register of shares.-

 

The company shall maintain a Register of Sweat Equity Shares issued under section 79A in the Form specified in Schedule annexed to these rules.

 

6.            Restriction on issue of sweat equity shares.-

 

The company shall not issue sweat equity shares for more than 15% of total paid up equity share capital in a year or shares of the value of 5 crores of rupees, whichever is higher except with the prior approval of the Central Government.

 

7.       Disclosure in the Directors’ Report.-

 

The Board of Directors, shall, inter alia, disclose either in the Directors’ Report or in the annexure to the Director’s Report, the following details of issue of sweat equity shares :-

 

            (a)            Number of shares to be issued to the employees or the directors;

            (b)            conditions for issue of sweat equity shares;

            (c)            the pricing formula;

(d)   (d)         the total number of shares arising as a result of issue of sweat equity shares;

(e)    (e)          money realised or benefit accrued to the company from the  

            issue of sweat equity shares;

 

          (f)          diluted Earnings Per Share (EPS) pursuant to issuance of sweat          equity shares.

 

8.         Pricing of Sweat Equity Shares.-

 

The price of sweat equity shares to be issued to employees and directors shall be at a fair price calculated by an independent valuer.

           

9.    Issue of Sweat Equity Shares for consideration other than cash.-

 

Where a company proposes to issue sweat equity shares for consideration other than cash, it shall comply with following :

 

(a)     The valuation of the intellectual property or of the know-how provided or other value addition to consideration at which sweat equity capital is issued, shall be carried out by a valuer;

 

(b)   the valuer shall consult such experts, as he may deem fit, having regard to the nature of the industry and the nature of the property or the value addition;

 

(c)   the valuer shall submit a valuation report to the company giving justification for the valuation;

 

(d)   a copy of the valuation report of the valuer shall be sent to the shareholders with the notice of the general meeting;

 

(e)    (e)    the company shall give justification for issue of sweat equity shares for consideration other than cash, which shall form part of the notice sent for the general meeting; and

 

(f)     (f)     the amount of Sweat Equity shares issued shall be treated as part of managerial remuneration for the purposes of sections 198, 309, 310, 311 and 387 of the Companies Act, 1956 if the following conditions are fulfilled:

 

 

(i)                  (i)                  the Sweat Equity shares are issued to any director or manager; and,

(ii)                (ii)                they are issued for non-cash consideration, which does not take the form of an asset which can be  carried to the balance sheet of the company in accordance with the relevant accounting standards.

 

10.       Lock-in of sweat equity shares.-

 

Sweat equity shares issued to employees or directors shall be locked in for a period of three years from the date of allotment.

 

11.            Certificate from auditors.-

 

In the case of every company that has allotted shares under these Rules, the Board of Directors shall at each annual general meeting place before the shareholders a certificate from the auditors of the company/ practising company secretary that sweat equity shares have been allotted in accordance with the resolution of the company in the general meeting and these Rules.

 

12.            Accounting policies.-

 

(1) Where the sweat equity shares are issued for a non-cash consideration, such non-cash consideration shall be treated in the following manner in the books of account of the company:

 

(a)       (a)       where the non-cash consideration takes the form of a depreciable or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the relevant accounting standards; or

(b)      (b)      where clause (a) is not applicable, it shall be expensed as provided in the relevant accounting standards.

 

(2)   In respect of sweat equity shares issued during accounting period, the accounting value of sweat equity shares shall be treated as another form of compensation to the employee or the director in the financial statement of the company.

 

 


SCHEDULE

 

REGISTER OF SWEAT EQUITY SHARES

(Pursuant to Rule 5)

 

The register of sweat equity shares issued by the company to be kept in the following format:

 

S.No.

Folio No. / certificate No.

Date of passing of resolution

Date of issue of sweat equity shares

1

2

3

4

 

Name of the allottee

Status of the allottee - whether director or employee

Reference to entry in register of members

Number of sweat equity shares issued

5

6

7

8

 

Face value of the share

Price at which shares issued

Total consideration paid by employee/director

Lock in period till which date

9

10

11

12

 

 

 

 

[File No: 1/4/2003-CL-V]

 

 

Rajiv Mehrishi, Jt. Secretary

Secondary Market for Corporate Debt Securities.

Deputy General Manager

Market Regulation Department – Policy

Email:-[email protected]

Tel : 22845355 Fax: 22845761

SEBI/MRD/SE/AT/36/2003/30/09

September 30, 2003

The Executive Directors/Managing Director/Administrators

Of All Stock Exchanges

Dear Sir/Madam,

Sub:     Secondary Market for Corporate Debt Securities.

1.      Companies have been issuing debt securities on private placement basis from time to time. In order to provide greater transparency to such issuances and to protect the interest of investors in such securities, it has been decided that any listed company making issue of debt securities  on a private placement basis and listed on a stock exchange shall be required to comply with the following:-

1.1.           The company shall make full disclosures (initial and continuing) in the manner prescribed in Schedule II of the Companies Act, 1956, SEBI (Disclosure and Investor Protection) Guidelines, 2000 and the Listing Agreement with the exchanges. However, if the privately placed debt securities are in standard denomination of Rs.10 Lakhs, such disclosures may be made only through web sites of the stock exchange where the debt securities are sought to be listed.

1.2.           The debt securities shall carry a credit rating of not less than investment grade from a Credit Rating Agency registered with the Board.

1.3.           The company shall appoint a debenture trustee registered with SEBI in respect of the issue of the debt securities.

1.4.           The debt securities shall be issued and traded in demat form.

1.5.           The company shall sign a separate listing agreement with the exchange in respect of debt securities and comply with the conditions of listing.

1.6.           All trades with the exception of spot transactions, in a listed debt security, shall be executed only on the trading platform of a stock exchange.

1.7.           The trading in privately placed debts shall only take place between Qualified Institutional Investors (QIBs) and High Networth Individuals (HNIs), in standard denomination of Rs.10 lakhs.

1.8.           The requirement of Rule 19(2)(b) of the Securities Contract (Regulation) Rules, 1957 will not be applicable to listing of privately placed debt securities on exchanges, provided all the above requirements are complied with.

1.9.           If the intermediaries registered with SEBI associate themselves with the issuance of private placement of unlisted debt securities, they will be held accountable for such issues. They will also be required to furnish periodical reports to SEBI in such format as may be decided by SEBI.

2.      The stock exchanges are directed to:

2.1       make necessary amendments to the listing agreement, bye-laws, rules and regulations for the implementation of the above decision immediately, as may be applicable.

2.2       bring the provisions of this circular to the notice of the listed companies/member brokers/clearing members of the Exchange and also to disseminate the same on the website for easy access to the investors; and

2.3       communicate to SEBI, the status of the implementation of the provisions of this circular in Section II, item no. 13 of the Monthly Development Report for the month of October 2003.

3.      This circular is being issued in exercise of powers conferred by section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with section 10 of the Securities Contracts (Regulation) Act 1956, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

Yours faithfully,

 

V S SUNDARESAN

 

 

 

 

Unlisted Public Companies (Preferential Allotment) Rules, 2003

[PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART II, SECTION 3, SUB-SECTION (i)]

MINISTRY OF FINANCE

(DEPARTMENT OF COMPANY AFFAIRS)

 

 

NOTIFICATION

 

New Delhi,  the 4th December, 2003


GSR_922(E). – In exercise of the powers conferred by sub-section (1A) of section 81 of the Companies Act, 1956 read with section 642 of the said Act, the Central Government hereby makes the following rules, namely:-

 

1. Short title and commencement.-

 

(1)   These rules may be called Unlisted Public Companies (Preferential Allotment) Rules, 2003

(2)   They shall come into force on the date of their publication in the official gazette.

 

2. Applicability.-

 

These rules shall be applicable to all unlisted public companies in respect of preferential issue of equity shares, fully convertible debentures, partly convertible debentures or any other financial instruments, which would be convertible into or exchanged with equity shares at a later date. 

 

3. Definitions.-

 

(1)  “Preferential Allotment” includes issue of shares on preferential basis and/or through private placement made by a company in pursuance of a resolution passed under sub-section (1A) of section 81 of the Companies Act, 1956 and issue of shares to the promoters and their relatives either in public issue or otherwise.

 

(2) “Promoter” means –

(a)        the person or persons who are in over-all control of the company; and

 

(b)        the person or persons who hold themselves as promoters.

 

Explanation: Where a promoter of a company is a body corporate, the promoters of that body corporate shall also be deemed to be promoters of the company.

 

(3)  “control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in any other manner.

 

4. Special Resolution.-

 

No issue of shares on a preferential basis can be made by a company unless authorized by its articles of association and unless a special resolution is passed by the members in a General Meeting authorizing the Board of Directors to issue the same.  The special resolution shall be acted upon within a period of 12 months.

 

5. Pricing.-

 

Where warrants are issued on a preferential basis with an option to apply for and get the shares allotted, the issuing company shall determine before hand the price of the resultant shares. 

 

6. Disclosures.-

 

The explanatory statement to the notice for the general meeting as required by section 173 of the Companies Act, 1956 shall contain the following particulars:

 

(a)    (a)    the price or price band at which the allotment is proposed;

(b)   (b)   the relevant date on the basis of which price has been arrived at;

(c)    (c)    the object/s of the issue through preferential offer;

(d)   (d)   the class or classes of persons to whom the allotment is proposed to be made;

(e)    (e)    intention of promoters/directors/key management persons to subscribe to the offer;

(f)     (f)     shareholding pattern of promoters and others classes of shares before and after the offer;

(g)    (g)    proposed time within which the allotment shall be completed;

(h)    (h)    whether a change in control is intended or expected. 

 

7. Audit Certificate.-

 

In case of every issue of shares/warrants/fully convertible debentures/partly convertible debentures or other financial instruments with conversion option, the statutory auditors of the issuing company / company secretary in practice shall certify that the issue of the said instruments is being made in accordance with these Rules.  Such certificate shall be laid before the meeting of the shareholders convened to consider the proposed issue.


[File No: 1/4/2003-CL-V]

Rajiv Mehrishi, Jt. Secretary

TV Today Network Ltd. Plans Public Issue

13th December, 2003 TV Today public issue is of 14,500,000 equity shares consisting of a fresh issue of 10,000,000 equity shares of Rs. 5 each and an offer for sale of 4,500,000 existing equity shares of Rs. 5 each. The issue is being made through 100% book building process wherein, up to 50% of the issue (7,250,000 shares) shall be allocated to qualified institutional buyers on a discretionary basis, 25% (3,625,000 shares) would be allocated to non-institutional investors and 25% (3,625,000 shares) would be allocated to retail investor on a proportionate basis, subject to valid bids being received from them at or above the issue price. Company Background: The company was incorporated on December 28, 1999 as a company with limited liability under the Companies Act, 1956. The company currently provides news through two news channels Aaj Tak and Headlines Today. The company is the first Indian broadcaster to uplink from India, a 24 hour Hindi news channel, Aaj Tak in December, 2000, followed by the launch of Headlines Today in March 2003. The consistent leadership position it enjoys is due to its editorial excellence, independent distribution and sales capabilities, customized state of the art technology and a motivated team of well-qualified professionals. Business Strategy: The company believes that it is well positioned to expand in the fast growing news broadcasting industry which is well positioned to achieve further growth as a result of increasing penetration, viewer preference to continuously stay informed and the growing number of advertisers in the news broadcasting genre. Capital Structure (Pre & Post Issue) Equity Shares outstanding prior to the Issue – 48,000,000 Equity Shares Capital Structure (Pre & Post Issue) Equity Shares outstanding after the Issue – 58,000,000 Equity Shares Key investment features Strong brand name of primary product Aaj Tak. The channel has bagged various awards for its superior performance including “Best news channel award” from the Indian Television Academy in 2001 and 2002. Aaj Tak is the market leader in the news broadcasting genre with approximately 41% market share in the Hindi news genre as per TAM viewership data for week ending September 27, 2003 and has been in that position since May 2001. Financial Review Year to (Rs m) 03/01 03/02 03/03 Total Income 118.8 516.9 1093.8 % yoy - 335.0 111.6 Net profit (150.8) 27.5 259.3 % yoy - (118.2) 843.2 EPS (3.6) 0.6 5.4 % yoy - (1163) 811.8 Equity 208.0 232.0 240.0 Capital employed 546.0 724.8 1204.3 PBIDT/Income (%) (94.4) 29.2 50.1 RONW (%) (64.5) 6.4 33.4 Debt – Equity (x) 1.6 0.8 0.5 Book NAV (Rs) 5.6 9.3 16.2 Valuation: The total income of the company has shown a growth of more than 100% in the last year. The company has had a track record of increasing growth and profitability. The operating margins of the company are impressive. The EPS for FY03 stands at Rs. 5.4 with scope for further increase. Investors should look forward to this issue, at a price of Rs. 50

Issue of Equity against ECBs

[PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART II, SECTION 3, SUB-SECTION (i)] MINISTRY OF FINANCE (DEPARTMENT OF COMPANY AFFAIRS) NOTIFICATION New Delhi, the 4th December, 2003 G.S.R.923(E). - In exercise of the powers conferred by proviso to sub-section (1) of section 79A of the Companies Act, 1956 (1 of 1956) read with sub-section (1) of section 642 of the said Act, the Central Government hereby makes the following rules, namely :- 1. Short title and commencement.- (1) These Rules may be called the Unlisted Companies (Issue of Sweat Equity Shares) Rules, 2003. (2) They shall come into force on the date of their publication in the Official Gazette. 2. Definitions.- In these rules, unless otherwise defined,- (i) “Asset” means a resource controlled by the company and from which future economic benefits are expected to flow to the company; (ii) “employee” means :- a) a permanent employee of the company working in India or out of India; or b) a director of the company, employed as a whole time director or executive director of a company; (iii) “intangible Asset” means an identifiable non-monetary asset, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes; (iv) “share price” means price of a share on a given date arrived on the net worth basis; (v) “value addition” means anticipated economic benefits derived by the enterprise from expert and/or professional for providing know-how or making available rights in the nature of intellectual property rights, by such person to whom sweat equity is issued for which the consideration is not paid or included in - (a) the normal remuneration payable under the contract of employment, in the case of an employee and/or (b) monetary consideration payable under any other contract, in the case of non-employee. 3. Applicability.- These Rules shall be applicable to issue of sweat equity shares by all unlisted companies. 4. Special resolution.- (1) For the purpose of passing a special resolution under clause (a) of sub-section (1) of section 79A of the Companies Act, 1956 (1 of 1956), the explanatory statement to be annexed to the notice for the general meeting pursuant to section 173 of the said Act shall contain particulars as specified below. (i) the date of the meeting at which the proposal for issue of sweat equity shares was approved by the Board of Directors of the company; (ii) the reasons/justification for the issue; (iii) the number of shares, consideration for such shares and the class or classes of persons to whom such equity shares are to be issued; (iv) the value of the sweat equity shares alongwith valuation report/ basis of valuation and the price at the which the sweat equity shares will be issued; (v) the names of persons to whom the equity will be issued and the person’s relationship with the company; (vi) ceiling on managerial remuneration, if any, which will be affected by issuance of such equity; (vii) a statement to the effect that the company shall conform to the accounting policies specified by the Central Government; and (viii) diluted earning per share pursuant to the issue of securities to be calculated in accordance with the Accounting Standards specified by the Institute of Chartered Accountants of India. (2) Approval of shareholders by way of separate resolution in the general meeting shall be obtained by the company in case of grant of shares to identified employees and promoters, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversion) of the company at the time of grant of the sweat equity shares. 5. Register of shares.- The company shall maintain a Register of Sweat Equity Shares issued under section 79A in the Form specified in Schedule annexed to these rules. 6. Restriction on issue of sweat equity shares.- The company shall not issue sweat equity shares for more than 15% of total paid up equity share capital in a year or shares of the value of 5 crores of rupees, whichever is higher except with the prior approval of the Central Government. 7. Disclosure in the Directors’ Report.- The Board of Directors, shall, inter alia, disclose either in the Directors’ Report or in the annexure to the Director’s Report, the following details of issue of sweat equity shares :- (a) Number of shares to be issued to the employees or the directors; (b) conditions for issue of sweat equity shares; (c) the pricing formula; (d) the total number of shares arising as a result of issue of sweat equity shares; (e) money realised or benefit accrued to the company from the issue of sweat equity shares; (f) diluted Earnings Per Share (EPS) pursuant to issuance of sweat equity shares. 8. Pricing of Sweat Equity Shares.- The price of sweat equity shares to be issued to employees and directors shall be at a fair price calculated by an independent valuer. 9. Issue of Sweat Equity Shares for consideration other than cash.- Where a company proposes to issue sweat equity shares for consideration other than cash, it shall comply with following : (a) The valuation of the intellectual property or of the know-how provided or other value addition to consideration at which sweat equity capital is issued, shall be carried out by a valuer; (b) the valuer shall consult such experts, as he may deem fit, having regard to the nature of the industry and the nature of the property or the value addition; (c) the valuer shall submit a valuation report to the company giving justification for the valuation; (d) a copy of the valuation report of the valuer shall be sent to the shareholders with the notice of the general meeting; (e) the company shall give justification for issue of sweat equity shares for consideration other than cash, which shall form part of the notice sent for the general meeting; and (f) the amount of Sweat Equity shares issued shall be treated as part of managerial remuneration for the purposes of sections 198, 309, 310, 311 and 387 of the Companies Act, 1956 if the following conditions are fulfilled: (i) the Sweat Equity shares are issued to any director or manager; and, (ii) they are issued for non-cash consideration, which does not take the form of an asset which can be carried to the balance sheet of the company in accordance with the relevant accounting standards. 10. Lock-in of sweat equity shares.- Sweat equity shares issued to employees or directors shall be locked in for a period of three years from the date of allotment. 11. Certificate from auditors.- In the case of every company that has allotted shares under these Rules, the Board of Directors shall at each annual general meeting place before the shareholders a certificate from the auditors of the company/ practising company secretary that sweat equity shares have been allotted in accordance with the resolution of the company in the general meeting and these Rules. 12. Accounting policies.- (1) Where the sweat equity shares are issued for a non-cash consideration, such non-cash consideration shall be treated in the following manner in the books of account of the company: (a) where the non-cash consideration takes the form of a depreciable or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the relevant accounting standards; or (b) where clause (a) is not applicable, it shall be expensed as provided in the relevant accounting standards. (2) In respect of sweat equity shares issued during accounting period, the accounting value of sweat equity shares shall be treated as another form of compensation to the employee or the director in the financial statement of the company. SCHEDULE REGISTER OF SWEAT EQUITY SHARES (Pursuant to Rule 5) The register of sweat equity shares issued by the company to be kept in the following format: S.No. Folio No. / certificate No. Date of passing of resolution Date of issue of sweat equity shares 1 2 3 4 Name of the allottee Status of the allottee - whether director or employee Reference to entry in register of members Number of sweat equity shares issued 5 6 7 8 Face value of the share Price at which shares issued Total consideration paid by employee/director Lock in period till which date 9 10 11 12 [File No: 1/4/2003-CL-V] Rajiv Mehrishi, Jt. Secretary

Surya Pharmaceuticals Ltd., plans to have its IPO

9th December 2003: Surya Pharmaceuticals Ltd., an India Pharma company, will enter the market with an initial public offering (IPO) of the size of Rs. 1350-1400 lacs in December 2003. The company, which has an equity capital of about Rs. 7.45 crore, will issue fresh shares to the tune of 30 lacs equity shares of Rs. 10 each at a premium of Rs. 35 per share and is set to float it in the primary market. The market is expecting Surya shares to be offered at a hefty premium as currently there is huge demand for pharma / biotech scrips. The IPO proceeds are expected to finance the company’s expansion plans, which include augmenting its required working capital and also create to infrastructure for company’s growth and to meet capital expenditure on Research and Development related to existing business. The issue opens on 18.12.2003 and closes on 22.12.2003.

No TDS on 8% RBI Bonds

10.12.2003-Designated banks on the RBI list, issuing 8% (taxable ) Bonds will not deduct Tax at source on the interest income earned in the near-term, as per the instructions of Reserve Bank of India(RBI) to keep the TDS provisions in abeyance. This notification clashes with the existing provisions of Deduction of tax at source from the interest income on non- cumulative bonds from time to time and on cumulative bonds at the time of maturity.

RBI Tax Saving Bonds

RBI in its realease as on 11.11.2003 has intimated that Sole holders of 6.5% RBI non-taxable Saving Bonds and 8% Rbi taxable saving Bonds may nominate an NRI as its nominee in respect of interest\redemption value of the investment in the bonds.

Tax exemption for over 5 lakh package

Tax exemption for over 5 lakh package

 

19th November, 2003: The commissioners of income tax (appeals) in Mysore, Mangalore and Hyderbad have ruled in separate cases that assessees can claim relief under Section 10(10 C) even if the assessable income is over Rs 5 lakh, if such payment is in the nature of compensation received by the assessee from his employer in connection with the termination of his employment”. The only rider is that the assessee must have been in continuous service for “ not less than 3 years”. Besides, the number of years of service remaining under the terms of employment should not be less than three years. Currently, the income-tax department taxes all income over Rs 5 lakh received as compensation for voluntary retirement.

 

Legal sources said employees of other industries could now claim income-tax relief too. The assessing officers’ contention was that relief under Section 10(10C) of with Income Tax Act, read with Rule 2BA, was permissible to the extent of Rs 5 lakh only in respect of exgratia payment received under voluntary retirement schemes. Further, they ruled that relief under Section 89(1) was allowed in respect of exgratia payment in excess of Rs 5 lakh, only if the Central Board of Direct Taxes deemed it fit. The appellant in the Mysore case pointed out that the Madras High Court had ruled in favour of an appellant who had claimed relief under Section 89(1) of the Income Tax Act.

 

New RBI bond norms for fresh issues

New RBI bond norms for fresh issues

 

13th November 2003: The revised norms of the Reserve Bank of India (RBI) for banks’ investment in corporate bonds would apply only to fresh issues. Though the final guidelines on non-statutory liquidity (SLR) ratio investment retained the 20 percent cap on banks’ investment in unlisted bonds, the limit has been bifurcated and there will now be a 10 percent limit for banks’ investment in unlisted bonds and another 10 percent limit on their investment in securities issued by special purpose vehicles for mortgage-backed securities, securitisation paper issued for infrastructure projects, bonds, debentures, security receipts or pass-through certificates. The debt securities will carry a credit rating of not less than investment grade from a credit rating agency registered with the Securities and Exchange Board of India.

 

The final guidelines cover banks’ investments in non – SLR securities issued by corporates, banks, FI’s, state and central government sponsored institutions, SPV’s etc and will apply to investments both in the primary market as well as the secondary market. The banks should also ensure that all spot transactions in listed and unlisted debt securities are reported on the negotiated delivery system and settled through the Clearing Corporation of India.

Rush for Unit-Linked Schemes...

Rush for Unit-Linked Schemes 

14th November 2003: Leveraging the current bull run, cash-rich policy holders are investing more than their annual premiums in unit linked insurance plans, there by topping up the investment portion of the policy. High net worth individuals would like to protect themselves from the market volatility and unit-linked plans offer a safety net unlike other investment products.

 Unit-linked plans are similar to mutual fund schemes, where the premium is invested in various funds in keeping with policy holder’s risk appetite. Some players allow for topping up the premium without affecting the sum assured (value of the base policy), allowing policyholders to purchase more units. Unlike traditional insurance products, unit-lined plans offer transparency in returns in terms of net asset value (NAV) and flexibility in investment options in debt, equity and a mix of both.

 Various Insurance funds are seeing an upward movement in their unit plans. Funds like Om Kotak Mahindra Life Insurance have grossed Rs25-50 lakh from its high net worth individuals for its unit-linked offering- Kotak Safe Investment Plan. ICICI Prudential Life has seen an 88 percent surge in the top- ups to its unit-linked policies in the second quarter. Birla Sun Life Insurance has also seen a 157 percent growth in its unit-linked plans wherein its unit-linked products have doubled to Rs 47 crore, or 93 percent of sales. The stock market has seen a surge in NAVs of various unit-linked schemes.

 

Biocon blazes bio-pharma trail, plans to have its first IPO

5th November 2003: Biocon India, India’s leading biopharmaceutical company, will enter the market with an initial public offering (IPO) of the size of Rs. 250-350 crore in the first quarter of 2004. The company, which has an equity capital of about Rs. 200 crore, will issue fresh shares to the tune of 10% of the equity and is set to float it in the primary market. The market is expecting Biocon shares to be offered at a hefty premium as currently there is huge demand for pharma / biotech scrips. The IPO proceeds are expected to finance the company’s expansion plans, which include a new biological plant and a big expansion of its subsidiary Synegene International, its wholly owned subsidiary.

 

Biocon’s IPO would be first in the country by a biopharmaceutical company and is likely to set the benchmark for further floats by companies in the sector. Biocon has appointed DSP Merrill Lynch and Kotak Mahindra Capital as the book running lead managers while HSBC Securities & Capital Markets will be the co-book running lead manager. Currently promoters hold 70% stake in Biocon, employees and ESOPs constitute another 15%. AIG’s stake is 10% while GW Capital owns 2.5%. Other independent shareholders hold the balance 2.5%. Post-IPO, promoters’ share is expected to decline to 63%. For the first half of this year, the company has posted sales of Rs. 259 crore, an increase of 102% over the year before. Net profits zoomed 253% to Rs. 60 crore and for the full year, Biocon is expected to make revenues of Rs. 520 crore and net profit of Rs. 120 crore.

 

Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003

Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003

Notification No. G.S.R. 830(E), dated 21-10-2003

In exercise of the powers conferred by clause (b) of sub‑section (1) of section 642 of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules to carry out the purpose of clause (g) of sub‑section (1) of section 274 of the said Act, namely :—

1. Short title, commencement and extent.

(1) These rules may be called the Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003.

(2) These rules shall come into force from the date of their notification in the Official Gazette.

(3) These rules shall apply to all public limited companies registered under the Companies Act, 1956.

2. Definitions.

In these rules, unless the context otherwise requires, ‑

(a) “disqualifying company” is the company in which the default has occurred on account of which a director stands disqualified;

(b) “appointing company” is the company in which an individual is seeking appointment as a director, including re-appointment as director.

3. Disqualifications under clause (g) of sub‑section (1) of section 274 of the Companies Act, 1956.

(a) Whenever a company fails to file the annual accounts and annual returns, as described in sub‑clause (A), of clause (g) of sub‑section (1) of section 274, persons who are directors on the last due date for filing the annual accounts and the annual returns for any continuous three financial years commencing on and after the first day of April 1999, shall be disqualified.

(b) If a company has failed to repay any deposit, irrespective of the enactment, rules or regulations under which the deposits have been accepted by the companies, or interest thereon, or redeem its debentures, or pay any dividend declared on the respective due dates, and if such failure continues for one year, as described in sub‑clause (B) of clause (g) of sub‑section (1) of section 274, then the directors of that company shall stand disqualified immediately on expiry of that one year from the respective due dates:

Provided that all the directors who have been directors in the relevant year, from the due date to the expiry of one year after the due date, will be disqualified:

Provided further that disqualification on account of the reasons cited under this Rule shall also apply to the reappointment as a director.

Explanation.‑ For the purpose of this rule, it is clarified that non‑payment of dividend referred to in sub‑clause (B) of clause (g) of sub‑section (1) of section 274 due to the reason of dividend not being claimed or kept in separate bank account as required under section 205A of Companies Act, 1956 or paid into investors Education & Protection Fund as required under section 205C of that Act shall not be deemed to be a failure to make payment of dividend.

4. Duty of Statutory Auditor to report on disqualification.

(a) It shall be the duty of statutory auditor of the appointing company as well as disqualifying company, as required under section 227(3)(f) to report to the members of the company whether any director is disqualified from being appointed as director under clause (g) of sub‑section (1) of section 274 and to furnish a certificate each year as to whether on the basis of his examination of the books and records of the company, any director of the company is disqualified for appointment as a director or not.

(b) It shall be the duty of the statutory auditors of the "disqualifying company" as required in section 227(3)(f) to report to tire members of the company whether any director in the company has been disqualified during the year from being re‑appointed as director, or being appointed as director in another company under clause (g), of sub‑section (1), of section 274.

5. Duty of company to intimate disqualification.

Whenever a company fails to file the annual accounts and returns, or fails to repay any deposit interest, dividend, or fails to redeem its debentures, as described in sub-clauses (A) and (B) of clause (g) of sub‑section (1) of section 274, the company shall immediately file a return in duplicate in Form ‘DD-B’, prescribed under these rules for this purpose, to the Registrar of Companies, furnishing therein the names and addresses of all the Directors of the company during the relevant financial years:

Provided that names of such directors who have been exempted from application of section 274(1)(g) by the Central Government, from time to time, shall be excluded.

Provided further that no unusual abbreviations or short forms shall be used in filling up the Form ‘DD-B’, which shall give such details as may be necessary to distinguish and identify each director without any ambiguity.

6. Failure to intimate disqualification shall render director as officer in default.

When a company fails to file the Form ‘DD‑B’ as above within 30 days of the failure that would attract disqualification under section 274(1)(g), officers of the company listed in section 5 of the Companies Act, 1956 shall be officers in default.

7. (a) Upon receipt of the form ‘DD‑B’ in duplicate under Rule 5, the Registrar of Companies shall immediately register the document and place one copy of it in the document file for public inspection.

(b) The Resistrar of Companies shall forward the other copy to the Central Government.

8. Names of the disqualified directors on the website etc.

(a) The Central Government shall place on the website of the Department of Company affairs the names and addresses and such other details including names and details of the companies concerned, as may be necessary, in respect of all the disqualified directors.

(b) The Central Government may also publicize the names of disqualified directors in such manner as it may consider appropriate.

(c) The Central Government shall take such steps as may be required to update its website to ensure that name of the person, in whose respect disqualification period has expired after 5 years is deleted from the website.

9. Duty of every director.

Every director in a public company registered under the Companies Act, 1956 shall file Form ‘DD-A’, prescribed under these Rules, before he is appointed or re-appointed.

10. If any question arises as to whether these rules are or are not applicable to a particular company, such question shall be decided by the Central Government.

11. Punishment for contravention of the rules.

If a company or any other person contravenes any provision of these rules for which no punishment is provided in the Companies Act, 1956, the company and every officer of the company who is in default or such other person shall be punishable with fine which may extend to five thousand rupees and where the contravention is a continuing one with a further fine which may extend to five hundred rupees for every day after the first, during which the contravention continues.

12. On the commencement of these rules, all rules, orders or directions in force in relation to any matter for which provision is made in, these Rules shall stand repealed, except as respects things done or omitted to be done before such repeal.

 

 

FORM ‘DD-A’

Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003

Intimation by Director

[Pursuant to Section 274(1)(g)]

 

Registration No. of Company ……………………………..

 

Nominal Capital Rs. ……………………………..

Paid‑up Capital Rs. ……………………………..

Name of Company ……………………………..

 

Address of its Registered Office ……………………………..

 

To

 

The Board of Directors

of …………………………………

 

 

I…………………son/daughter/wife of…………………resident of……………………director/managing director/manager in the company hereby give notice that I am/was a director in the following companies during the last 3 years:—

Name of the company

Date of Appointment

Date of Cessation

1. ……………………

 

 

2. ……………………

 

 

I further confirm that I have not incurred disqualification under section 274(1)(g) of the Companies Act, 1956 in any of the above companies, in the previous financial year and that I, at present, stand free from any disqualification from being a director.

or

I further confirm that I have incurred disqualifications under section 274(1)(g) of the Companies Act, 1956 in the following company(s) in the previous financial year, and that I, at present stand disqualified from being a director.

Name of the company

Date of Appointment

Date of Cessation

1. ……………………

 

 

2. ……………………

 

 

 

Signature

(Full Name)

Dated this…………..day of…………..

 

 

FORM ‘DD-B’

Report by a public company

[Pursuant to section 274(1)(g) read with rule 5 of Companies (Disqualification of Directors under section 274(1)(g) of the Companies Act, 1956) Rules, 2003]

Registration No. of Company…………………….

Nominal Capital Rs……………………………….

Name of Company ………………………………

Address of its Registered Office………………………

 

To

 

The Registrar of Companies,

 

It is hereby reported under section 274(1)(g) of Companies Act, 1956, that M/s……………………..have failed to (i) file the annual accounts and annual returns for the last three financial years, or (ii) repay deposits or interest thereon on due date being ……………or redeem its debentures on due date being…………………..or pay dividend declared by the company since………………or both. The period of one year has expired on …………………

 

The name and address of directors at the relevant period are as under:‑

(a) Director's name in full, without abbreviations

(b) Director's name as per company's records (abbreviations may be expanded and shown)

(c) Address of the Director : (i) Permanent

(ii) Present

(d) Positions held by the director in the last 5 years, prior to disqualification:

 

Signature

Designation*

 

Dated this …………………day of………………

*State whether Director, Managing Director, Manager or Secretary.

 

SEBI paper on digital certification

28th October 2003: Securities and Exchange Board of India (SEBI) has proposed to permit electronic filing of documents by market intermediaries, electronic maintenance of records and use of digital signatures. SEBI seeks to facilitate electronic filing of reports or draft offer documents of Mutual Funds (MF) and Collective Investment Schemes (CIS) and proposes to amend the mutual fund regulation of 1996 for permitting electronic filing by the asset management companies. It has also proposed to make changes in the broker-sub-broker regulations 1992 for electronic issuance of contract notes.

 

It has been proposed that this facility shall be available to the MF and CIS only where there is an express agreement to this effect with the particular unit holder. The annual report may be sent to unit holders, who have consented to receive them electronically, by sending it to the address intimated by the unit holder for this purpose. A number of the SEBI Regulations impose reporting or filing obligations on the intermediaries and other persons. Some intermediaries are also required to issue contract notes or enter agreements with clients or other intermediaries. Presently, these requirements have to be met by physically filing the required documents with SEBI or physical issue of contract note or entering into agreement physically.

 

Section 3 of the Information Technology Act, 2000 provides for authentication of electronic records and says that a person can authenticate any electronic record by affixing his digital signature. The identity of the person affixing the digital signature is authenticated by means of a private key – public key pair that is unique to him. Rule 3 further elaborates on the manner in which information can be authenticated by means of digital signature. Section 21 provides for licensing of Certifying Authorities who will be eligible to issue Digital Signature Certificates. Section 4 of the IT Act says that any information or other matter required by any law to be in writing can be in electronic form. In case of Foreign Institutional Investors, SEBI is already allowing direct uploading of daily reports through a secure network designed by the Information Systems Division of SEBI. A virtual private network (VPN) has been created through the Internet having safety features such as encryption. A terminal specific connectivity has been set up with many custodians who upload the data in respect of each FII as required by the Regulations.

 

In the US, the Securities Exchange Commission (SEC) requires electronic filings through the EDGAR system through the Internet. It seems that almost 1,10,000 filers use it. In the UK, the Financial Services Authority (FSA) requires filing of certain kinds of information through the ELS system using the FSA website.

 

To facilitate electronic filing of documents by intermediaries the documents, which are required to be filed, may have to be classified as follows:

 

a)      Reports or draft offer documents of schemes of Mutual Funds, Collective Investment Schemes or returns in respect of portfolio investments, annual accounts etc., filed by existing intermediaries who are few in number such as Mutual Funds to whom the present arrangement of (VPNs) can be extended and which can be integrated in the database maintained by the concerned Department; and,

 

b)      Statements to be filed by persons other than intermediaries such as filing of public announcements, exemption reports and draft letters of offer under the Takeover Regulations or Buyback Regulations for filing which through the internet, a system of digital signature certification can be provided. As SEBI is required to offer comments on draft offer documents, it may also insist for filing a physical copy to obviate the need for taking a print out for the purpose of offering comments or draft offer document.

 

c)      Application forms for registration by new applicants.

 

The documents at b) and c) require filing of such documents authenticated by digital signature as provided in the IT Act and Rules.

The SEBI Stock Broker regulations and the stock exchange byelaws require a broker to issue contract notes to clients. SEBI has already clarified that the brokers are allowed to issue contract notes authenticated by means of digital signature provided he has obtained digital signature certificate from the certifying authorities appointed under the IT Act, 2000. SEBI can lay down the regulation for electronic issue or filing of documents with it by intermediaries by making provision in the relevant regulations, within the general framework of the IT Act.

Under the SEBI (Mutual Funds) Regulations, 1996 as well as SEBI (Collective Investment Scheme) Regulations, 1999 certain documents are required to be sent to the unit holders. For example Regulation 56 of the Mutual Fund Regulations requires mailing of scheme wise annual report or an abridged summary thereof to all unit holders within a specified time. Though sections 3, 4 and 5 of the Information Technology Act give legal recognition to electronic records, in the absence of amendments, it is doubtful whether these sections enable a company/ mutual fund/ CIS to electronically transmit the annual report etc., as required under the Listing Agreement or the SEBI Regulations. In UK a provision has been made to publish the document on a website, instead of sending the entire document electronically, subject to certain conditions as follows:

  • There is an express agreement to this effect between the company and that person
  • The person is notified of such publication, address of the website etc.
  • The documents should be published on the website through out a period of 21 days before the date of the meeting

Address in relation to electronic communications includes any number or address used for the purpose of such communication by means of a telecommunication system or by any other means but in an electronic form.

It would be desirable to allow MF / CIS to electronically transmit documents that they are required to physically do under the SEBI Regulations. Such transmission of documents by companies is also desirable though it would require amendment in the Companies Act. In respect of statements to be mailed to unit holders under the MF or the CIS Regulations, provision for electronic transmission of records can be made by amending the Regulations. This facility shall be available to the MF / CIS only where there is express agreement to this effect with the particular unit holder and is suggested that publication in the website as an alternative need not be provided at this stage. 

 

Punjab & Sind Bank plans Rs. 100-cr IPO.

31st October 2003: The boom in the secondary market for banking stocks has prompted, Punjab and Sind Bank (PSB) to make it to the IPO market this year and is planning to come out with an IPO of Rs. 100 crore. After the IPO boom started by Punjab National Bank and Canara Bank, three more banks, UCO Bank, Indian Overseas Bank and Vijaya Bank, hit the IPO market in the current year Punjab and Sind Bank also eager to follow suit. It has a network that is heavily skewed towards rural areas with over 60% business exposure. The funds raised would cater to the needs of capital on account of higher provisioning and technological upgradation.

Vijaya Bank to implement GAAP prior to ADR float

27th October 2003: Vijaya Bank is planning an ADR issue and as a pre-requisite for the issue, the bank is implementing US GAAP Accounting. The bank has short-listed PricewaterhouseCoopers (PwC) for the execution of the US GAAP Accounting. Though the exact time of the launch of the ADR issue is not clear, the Board of Directors has approved the implementation of US GAAP and the process is likely to be completed by the end of November. The bank will then proceed for the necessary approvals from the Ministry of Finance (MoF) and Reserve Bank of India. As a result of the alliance with Principal Group of the US, the bank is now focusing on increasing its presence beyond national borders. The confidence of overseas investors has increased after the Bank joined hands with Principal Group for life insurance, pension and asset management. The Bank is likely to open representative offices in Dubai, China, Hong Kong and Singapore. The bank has also got permission to open branches in special economic zones (SEZ) along with three other banks – Union Bank of India, Bank of Baroda (BoB) and State Bank of India (SBI).

The recent public issue of Vijaya Bank got oversubscribed by almost 17.5 times. Even FIIs have invested in the primary market for acquiring Vijaya Bank stock. The bank got subscription of Rs. 4200 crore against a target of Rs. 240 crore from the primary market. Vijaya Bank has recorded a 154% jump in its net profit for the second quarter ended September 30, 2003 at Rs. 95.9 crore compared to Rs. 37.7 crore in the corresponding period last year. The bank’s total income, for the period under review, rose from Rs. 460 crore to Rs. 631.7 crore. Vijaya Bank’s share is currently quoted at Rs. 37.80 against the offer price of Rs. 24 in IPO.

Indraprastha Gas submits modified IPO plan to FIPB

27th October 2003: Indraprastha Gas (IGL) has modified its IPO proposal to the Foreign Investment Promotion Board (FIPB) and in the new proposal has dropped the earlier references to “persons resident outside India having existing tie-ups, collaborations or technical tie-ups in India in the same field as IGL” and instead has made the secondary transfer of equity through the initial public offer route to NRIs, FIIs registered with SEBI, foreign venture capital funds registered with SEBI and multi-lateral development financial institutions. It remains to be seen whether “Indian Public” have been included in the proposal as without that an IPO will not be possible. The number of shares offered has also been reduced from 41.43% of IGL’s paid-up equity share capital to 28.57%. IGL officials are expecting a clearance soon from the FIPB. However, the company may not be able to sell shares to multilateral institutions, such as the Asian Development Bank, since the latter are not allowed subscribing to shares under an IPO.

IGL’s IPO, of about Rs. 150 crore, is now slated to hit the market next month. Kotak Mahindra Capital and DSP Merrill Lynch are the lead managers to the issue. FIPB had rejected the proposal earlier because the categories of investors mentioned in it were not eligible to subscribe to an IPO. Industry sources say that the initial proposal which was rejected would have allowed IGL’s three financial investors to exit in favour of multinational gas company British Gas (BG).

Float bug bites Dena Bank too

17th October 2003: The Board of Directors of Dena Bank will be meeting on October 23, 2003 to consider a second public issue of shares to capitalize on the bull run in the market and investors’ interest for bank stocks. In a notice to the Bombay Stock Exchange the bank said that the proposed issue would be subject to clearance from the Government, which holds 71 per cent of the equity of the bank, and the Reserve Bank of India. A senior bank official stated that the Bank had only conveyed their intent to the exchange about the public issue and the details like how much to raise and the amount of dilution by the Centre would emerge after the government and RBI accord their approvals. Dena Bank wants to cash in on this opportunity as investors in the last few months, foreign institutional investors as well as retail have lapped up the initial public offers of Allahabad Bank, UCO Bank and Indian Overseas Bank (IOB). The highlight of the revival of the primary equity market is the participation of retail investors in a big way. Currently, Vijaya Bank is tapping the market with its Rs. 240 crores issue.

 

The Bank reported a net profit of Rs. 114.19 crores in the Financial year ended March 31, 2003, as against Rs. 11.36 crores in the previous Financial year. It is, however, weighed down by non-performing assets. In 2002-03, gross NPA’s and net NPS’s stood at Rs. 1616.58 crores (Rs. 1996.02 crore) and Rs. 997.28 crore (1227.25 crore) respectively. The gross NPA’s to gross advances ratio and the net NPA’s to net advances ratio stood at 17.86 per cent (24.11 per cent) and 11.83 per cent (16.31 per cent) respectively. In the first quarter, the bank reported a net profit of Rs.29.20 crore (Rs. 3.53 crore). It managed to show a capital adequacy ratio of 9.69 per cent as of June – end 2003 as it did not treat Deferred Tax Asset (DTA) as an intangible asset. If the bank had followed RBI guidelines on DTA, which were issued on March 29, 2003, its CAR would have been 6.81 per cent. Dena Bank’s shares ended up 3.62 per cent at Rs. 20.05 on the BSE.

 

 

Simplified Exit System not for major offences: Department of Company Affairs

11th October 2003: The Simplified Exit Scheme (SES) had been announced late March this year to enable companies that do not have adequate paid up capital to get their names removed from the register of companies. The department of company affairs (DCA) has now announced that prosecution against companies that are seeking to strike their names off the register of companies under SES can be withdrawn only if the offences committed are minor. The prosecutions would not be withdrawn if the offences committed were such that the penalty involves punishment by imprisonment. For minor offences such as non-filing of balance sheet and other documents, the department has said that the prosecution would be withdrawn after publication of a final notice in the official gazette for striking off the name of the company from the register. The DCA has further clarified to the queries from its field offices – regional directors and registrar of companies – that SES will be unavailable to companies that are under investigation or have been named in the list of vanishing companies or plantation companies and also to companies that are involved in any stock market scam. Section 205 companies, that is, companies set up for charity, would also not be allowed to seek exit under the SES.

SEC okays shareholder ‘proxy access’ plan

10th October 2003: US REGULATORS gave initial approval to a plan that would let shareholders nominate board directors using official company ballots in order to boost the power of investors in the boardroom. The Securities and Exchange Commission’s (SEC) decision drew criticism from big businesses and praise from investor activists who wanted to wrest control from CEO’s of weak boards like those that slept through the scandals at Enron and elsewhere. The SEC voted unanimously to send its proposed shareholder “proxy access” plan out for 60 days of public comment, with a final vote to follow by the five-member commission. Speaking for the Business Roundtable, a powerful Washington lobbying group for chief executives, Pfizer CEO Henry Mckinnell said the SEC proposal risks “special interest groups hijacking the director election process”. He further said that the roundtable is concerned that the SEC’s rules will lead to divisive boards.

 

 

PATNI likely to file for a Rs. 325-cr IPO

9th October 2003: Patni, a privately held software firm is expected to file the prospectus for initial public offer (IPO) with Securities and Exchange Board of India early next week. The pubic issue is likely to be sized in the range of Rs. 300 crore to Rs. 325 crore and is expected before the year-end.

 

The company’s public float will be around 15% of its equity capital which means that the company has been valued at around Rs. 2000 crore. 70% of issue will be domestic and remaining 30% will be through sale of existing shares. A valuation of Rs. 2000 crore would put Patni ahead of mid-sized software companies like HCL Technologies and Mphasis-BFL. I-flex, a company with comparable revenues, however, has a much higher market cap, at Rs. 5570 crore. Patni has roped in merchant bankers DSP Merill Lynch and Kotak Mahindra Capital to handle the issue, while Saloman Smith Barney will be co-book runners to the issue.

 

Patni clocked revenues of $188m (Rs. 914 crore) for the year ended December ’02, compared with $142m during ’01. The dollar revenues grew 32.5% on an yearly basis, they were up 37.3% on a quarter-on-quarter basis for the quarter ended December, ’02.

 

Patni has an active customer base of 150 and employs more than 6000 people. Other than GE, some of Patni’s customers include Guardian Life, Fidelity Investments, Motorola, Honeywell, Hitachi, Hewlett Packard and Oracle.

 

 

 

WEAL INFOTECH PUBLIC ISSUE OPENS ON 20TH OCTOBER, 2003.

12th October, 2003. The Hyderabad based weal Infotech Limited’s Public Issue of 1,39,00,000/- equity shares of Rs. 10/ each aggregating to Rs. 13, 90,00,000/- will open on 20th October, 2003. issue closing date is 27th October, 2003. Rs. 5/-is payable on Application. Minimum application has to be fro 200 Shares for an amount of Rs. 1000/. The Public issue is being lead managed by Aryaman Financial Services Limited. Registrar to the Issue are Aarthi Consultants Pvt. Ltd. Website address of the company is www.wealinfotech.com. According to Company’s website, they provide most advanced technology and tool. The Company provides call center solutions, business transaction processing and software development services including: New Customer Acquisition Technical Support Customer Service Back office transaction processing Telesales Software development. The Company is mainly into Business Process Outsourcing Services.

VIJAYA BANK’S PUBLIC ISSUE OPENS ON 9th OCTOBER, 2003

4th October, 2003 Mumbai The awaited Vijaya Banks IPO is all set to kick-off on 9th of October, 2003. The issue will be of 10 crore-equity shares of Rs. 10/- each at a premium of Rs. 14 (i.e. at a price of 24)per share , aggregating to Rs. 240 crores. The public issue will close on 17th October, 2003. According to experts, the price of Rs.24 per share is not much an incentive for the investors. However Company sources justify their view as price being appropriate. The existing Equity shares of Vijaya ank are listed on the Bangalore Stock Exchange, The Stock Exchange, Mumbai (being the designated Stock Exchange) and the National Stock Exchange of India Ltd. These stock exchanges have granted their “in-principle” approvals for listing of new shares of Vijaya Bank. SEBI and RBI have taken action against the Bank in the past for alleged violation of Bankers to the issue norms. RBI has taken action against the Bank in respect of the Bank’s alleged violation of PMS norms. The Bank had accumulated losses aggregating to Rs. 297.07 crores, which were adjusted from its paid-up capital during the financial year 1999-00. The yield on advances of the Bank decreased from 11.93% as in March 31,2002 to 11.34% as on March 31, 2003. The average rate of return on interest earning assets fell from 11.49% as at March 31, 2001 to 10.33% as at March 31, 2003. The yield o investments declined from 11.35% to 10.49% during the same period. Further, the operating expenses as a percentage of average working funds increased from 2.73% to 3.21% during financial year FY03. The Bank made a profit of Rs. 225.08 crores from the sale of investments (treasury income) during the FY03. Such profits from treasury may not be maintained in future years and this may impede the growth in net profits of the Bank going forward. As on March 31, 2003, the net NPAs of the Bank stood at 2.61% of its net advances amounting to Rs. 205.81 crores in absolute terms. In the event of non-recovery of these assets, the bank may have to provide for these NPAs in the future, which might affect the profitability of the Bank going forward. The Book Value per share as on March 31, 2003 for Rs. 10/- face value is Rs.22.22. Vijaya Bank’s email address is: - [email protected]

Primary Issue market heading for revival?

3rd October, 2003, Mumbai. There are good indications that primary issue market is reviving. After a dull IPO market for over 5 years, the primary market players have also become active. Recent public issues of a few banks have found overwhelming support. Leading IPO financiers and IPO financing banks have also become active. Inquiries from intermediaries to large financiers for IPO funding have substantially increased. The moot question is still that whether public issues of Private Sector will get good response or not? Most of the Issues , so far, in this year have come from Banks/public sector. A welcome relief is relaxation in listing guidelines by Bombay stock exchange and SEBI.This will encourage small and medium companies to tap the market. Upto now the minimum requirement of Post issue capital was Rs. 10 Crores, which was found to be quite high by small and medium companies.

SEBI INVESTOR EDUCATION PROGRAMME ON INVESTING ON MUTUAL FUNDS

 

SECURITIES AND EXCHANGE BOARD OF INDIA

 

SEBI INVESTOR EDUCATION PROGRAMME

(INVESTMENTS IN MUTUAL FUNDS)

 

 

Introduction

Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.

 

With an objective to make the investors aware of functioning of mutual funds, an attempt has been made to provide information in question-answer format which may help the investors in taking investment decisions.

What is a Mutual Fund?

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document.

 

Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unitholders.

 

The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.

 

What is the history of Mutual Funds in India and role of SEBI in mutual funds industry?

Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds.

 

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are – to protect the interest of investors in securities and to promote the development of and to regulate the securities market.

 

As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors.

All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type.

 

 

How is a mutual fund set up?

A mutual fund is set up in the form of a trust, which has sponsor, trustees, asset management company (AMC) and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unitholders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund.

 

SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme.

What is Net Asset Value (NAV) of a scheme?

The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV).

Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly - depending on the type of scheme.

 

What are the different types of mutual fund schemes?

 

Schemes according to Maturity Period:

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

 

Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity.

Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

 

Schemes according to Investment Objective:

A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

 

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

 

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40-60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods.

 

Gilt Fund

These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes.

 

Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme.

 

There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges.

What are sector specific funds/schemes?

These are the funds/schemes which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert.

 

What are Tax Saving Schemes?

These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government offers tax incentives for investment in specified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefits. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

 

What is a Load or no-load Fund?

A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is Rs.10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay Rs.10.10 and those who offer their units for repurchase to the mutual fund will get only Rs.9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads.

 

A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

 

Can a mutual fund impose fresh load or increase the load beyond the level mentioned in the offer documents?

Mutual funds cannot increase the load beyond the level mentioned in the offer document. Any change in the load will be applicable only to prospective investments and not to the original investments. In case of imposition of fresh loads or increase in existing loads, the mutual funds are required to amend their offer documents so that the new investors are aware of loads at the time of investments.

What is a sales or repurchase/redemption price?

The price or NAV a unitholder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable.

 

Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unitholders. It may include exit load, if applicable.

 

What is an assured return scheme?

Assured return schemes are those schemes that assure a specific return to the unitholders irrespective of performance of the scheme.

 

A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document.

 

Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. Some schemes assure returns one year at a time and they review and change it at the beginning of the next year.

Can a mutual fund change the asset allocation while deploying funds of investors?

Considering the market trends, any prudent fund managers can change the asset allocation i.e. he can invest higher or lower percentage of the fund in equity or debt instruments compared to what is disclosed in the offer document. It can be done on a short term basis on defensive considerations i.e. to protect the NAV. Hence the fund managers are allowed certain flexibility in altering the asset allocation considering the interest of the investors. In case the mutual fund wants to change the asset allocation on a permanent basis, they are required to inform the unitholders and giving them option to exit the scheme at prevailing NAV without any load.

How to invest in a scheme of a mutual fund?

Mutual funds normally come out with an advertisement in newspapers publishing the date of launch of the new schemes. Investors can also contact the agents and distributors of mutual funds who are spread all over the country for necessary information and application forms. Forms can be deposited with mutual funds through the agents and distributors who provide such services. Now a days, the post offices and banks also distribute the units of mutual funds. However, the investors may please note that the mutual funds schemes being marketed by banks and post offices should not be taken as their own schemes and no assurance of returns is given by them. The only role of banks and post offices is to help in distribution of mutual funds schemes to the investors.

 

Investors should not be carried away by commission/gifts given by agents/distributors for investing in a particular scheme. On the other hand they must consider the track record of the mutual fund and should take objective decisions.

 

Can non-resident Indians (NRIs) invest in mutual funds?

Yes, non-resident Indians can also invest in mutual funds. Necessary details in this respect are given in the offer documents of the schemes.

How much should one invest in debt or equity oriented schemes?

An investor should take into account his risk taking capacity, age factor, financial position, etc. As already mentioned, the schemes invest in different type of securities as disclosed in the offer documents and offer different returns and risks. Investors may also consult financial experts before taking decisions. Agents and distributors may also help in this regard.

 

How to fill up the application form of a mutual fund scheme?

An investor must mention clearly his name, address, number of units applied for and such other information as required in the application form. He must give his bank account number so as to avoid any fraudulent encashment of any cheque/draft issued by the mutual fund at a later date for the purpose of dividend or repurchase. Any changes in the address, bank account number, etc at a later date should be informed to the mutual fund immediately.

What should an investor look into an offer document?

An abridged offer document, which contains very useful information, is required to be given to the prospective investor by the mutual fund. The application form for subscription to a scheme is an integral part of the offer document. SEBI has prescribed minimum disclosures in the offer document. An investor, before investing in a scheme, should carefully read the offer document. Due care must be given to portions relating to main features of the scheme, risk factors, initial issue expenses and recurring expenses to be charged to the scheme, entry or exit loads, sponsor’s track record, educational qualification and work experience of key personnel including fund managers, performance of other schemes launched by the mutual fund in the past, pending litigations and penalties imposed, etc.

 

When will the investor get certificate or statement of account after investing in a mutual fund?

Mutual funds are required to despatch certificates or statements of accounts within six weeks from the date of closure of the initial subscription of the scheme. In case of close-ended schemes, the investors would get either a demat account statement or unit certificates as these are traded in the stock exchanges. In case of open-ended schemes, a statement of account is issued by the mutual fund within 30 days from the date of closure of initial public offer of the scheme. The procedure of repurchase is mentioned in the offer document.

 

How long will it take for transfer of units after purchase from stock markets in case of close-ended schemes?

According to SEBI Regulations, transfer of units is required to be done within thirty days from the date of lodgment of certificates with the mutual fund.

 

As a unitholder, how much time will it take to receive dividends/repurchase proceeds?

A mutual fund is required to despatch to the unitholders the dividend warrants within 30 days of the declaration of the dividend and the redemption or repurchase proceeds within 10 working days from the date of redemption or repurchase request made by the unitholder.

 

In case of failures to despatch the redemption/repurchase proceeds within the stipulated time period, Asset Management Company is liable to pay interest as specified by SEBI from time to time (15% at present).

 

Can a mutual fund change the nature of the scheme from the one specified in the offer document?

Yes. However, no change in the nature or terms of the scheme, known as fundamental attributes of the scheme e.g.structure, investment pattern, etc. can be carried out unless a written communication is sent to each unitholder and an advertisement is given in one English daily having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. The unitholders have the right to exit the scheme at the prevailing NAV without any exit load if they do not want to continue with the scheme. The mutual funds are also required to follow similar procedure while converting the scheme form close-ended to open-ended scheme and in case of change in sponsor.

How will an investor come to know about the changes, if any, which may occur in the mutual fund?

There may be changes from time to time in a mutual fund. The mutual funds are required to inform any material changes to their unitholders. Apart from it, many mutual funds send quarterly newsletters to their investors.

 

At present, offer documents are required to be revised and updated at least once in two years. In the meantime, new investors are informed about the material changes by way of addendum to the offer document till the time offer document is revised and reprinted.

How to know the performance of a mutual fund scheme?

The performance of a scheme is reflected in its net asset value (NAV) which is disclosed on daily basis in case of open-ended schemes and on weekly basis in case of close-ended schemes. The NAVs of mutual funds are required to be published in newspapers. The NAVs are also available on the web sites of mutual funds. All mutual funds are also required to put their NAVs on the web site of Association of Mutual Funds in India (AMFI) http://www.amfiindia.com/ and thus the investors can access NAVs of all mutual funds at one place

 

The mutual funds are also required to publish their performance in the form of half-yearly results which also include their returns/yields over a period of time i.e. last six months, 1 year, 3 years, 5 years and since inception of schemes. Investors can also look into other details like percentage of expenses of total assets as these have an affect on the yield and other useful information in the same half-yearly format.

 

The mutual funds are also required to send annual report or abridged annual report to the unitholders at the end of the year.

 

Various studies on mutual fund schemes including yields of different schemes are being published by the financial newspapers on a weekly basis. Apart from these, many research agencies also publish research reports on performance of mutual funds including the ranking of various schemes in terms of their performance. Investors should study these reports and keep themselves informed about the performance of various schemes of different mutual funds.

 

Investors can compare the performance of their schemes with those of other mutual funds under the same category. They can also compare the performance of equity oriented schemes with the benchmarks like BSE Sensitive Index, S&P CNX Nifty, etc.

 

On the basis of performance of the mutual funds, the investors should decide when to enter or exit from a mutual fund scheme.

 

How to know where the mutual fund scheme has invested money mobilised from the investors?

The mutual funds are required to disclose full portfolios of all of their schemes on half-yearly basis which are published in the newspapers. Some mutual funds send the portfolios to their unitholders.

 

The scheme portfolio shows investment made in each security i.e. equity, debentures, money market instruments, government securities, etc. and their quantity, market value and % to NAV. These portfolio statements also required to disclose illiquid securities in the portfolio, investment made in rated and unrated debt securities, non-performing assets (NPAs), etc.

Some of the mutual funds send newsletters to the unitholders on quarterly basis which also contain portfolios of the schemes.

Is there any difference between investing in a mutual fund and in an initial public offering (IPO) of a company?

Yes, there is a difference. IPOs of companies may open at lower or higher price than the issue price depending on market sentiment and perception of investors. However, in the case of mutual funds, the par value of the units may not rise or fall immediately after allotment. A mutual fund scheme takes some time to make investment in securities. NAV of the scheme depends on the value of securities in which the funds have been deployed.

If schemes in the same category of different mutual funds are available, should one choose a scheme with lower NAV?

Some of the investors have the tendency to prefer a scheme that is available at lower NAV compared to the one available at higher NAV. Sometimes, they prefer a new scheme which is issuing units at Rs. 10 whereas the existing schemes in the same category are available at much higher NAVs. Investors may please note that in case of mutual funds schemes, lower or higher NAVs of similar type schemes of different mutual funds have no relevance. On the other hand, investors should choose a scheme based on its merit considering performance track record of the mutual fund, service standards, professional management, etc. This is explained in an example given below.

 

Suppose scheme A is available at a NAV of Rs.15 and another scheme B at Rs.90. Both schemes are diversified equity oriented schemes. Investor has put Rs. 9,000 in each of the two schemes. He would get 600 units (9000/15) in scheme A and 100 units (9000/90) in scheme B. Assuming that the markets go up by 10 per cent and both the schemes perform equally good and it is reflected in their NAVs. NAV of scheme A would go up to Rs. 16.50 and that of scheme B to Rs. 99. Thus, the market value of investments would be Rs. 9,900 (600* 16.50) in scheme A and it would be the same amount of Rs. 9900 in scheme B (100*99). The investor would get the same return of 10% on his investment in each of the schemes. Thus, lower or higher NAV of the schemes and allotment of higher or lower number of units within the amount an investor is willing to invest, should not be the factors for making investment decision. Likewise, if a new equity oriented scheme is being offered at Rs.10 and an existing scheme is available for Rs. 90, should not be a factor for decision making by the investor. Similar is the case with income or debt-oriented schemes.

 

On the other hand, it is likely that the better managed scheme with higher NAV may give higher returns compared to a scheme which is available at lower NAV but is not managed efficiently. Similar is the case of fall in NAVs. Efficiently managed scheme at higher NAV may not fall as much as inefficiently managed scheme with lower NAV. Therefore, the investor should give more weightage to the professional management of a scheme instead of lower NAV of any scheme. He may get much higher number of units at lower NAV, but the scheme may not give higher returns if it is not managed efficiently.

 

How to choose a scheme for investment from a number of schemes available?

As already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look into the past track record of performance of the scheme or other schemes of the same mutual fund. They may also compare the performance with other schemes having similar investment objectives. Though past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future, this is one of the important factors for making investment decision. In case of debt oriented schemes, apart from looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts.

 

Are the companies having names like mutual benefit the same as mutual funds schemes?

Investors should not assume some companies having the name "mutual benefit" as mutual funds. These companies do not come under the purview of SEBI. On the other hand, mutual funds can mobilise funds from the investors by launching schemes only after getting registered with SEBI as mutual funds.

 

Is the higher net worth of the sponsor a guarantee for better returns?

In the offer document of any mutual fund scheme, financial performance including the net worth of the sponsor for a period of three years is required to be given. The only purpose is that the investors should know the track record of the company which has sponsored the mutual fund. However, higher net worth of the sponsor does not mean that the scheme would give better returns or the sponsor would compensate in case the NAV falls.

Where can an investor look out for information on mutual funds?

Almost all the mutual funds have their own web sites. Investors can also access the NAVs, half-yearly results and portfolios of all mutual funds at the web site of Association of mutual funds in India (AMFI) www.amfiindia.com. AMFI has also published useful literature for the investors.

 

Investors can log on to the web site of SEBI www.sebi.gov.in and go to "Mutual Funds" section for information on SEBI regulations and guidelines, data on mutual funds, draft offer documents filed by mutual funds, addresses of mutual funds, etc. Also, in the annual reports of SEBI available on the web site, a lot of information on mutual funds is given.

 

There are a number of other web sites which give a lot of information of various schemes of mutual funds including yields over a period of time. Many newspapers also publish useful information on mutual funds on daily and weekly basis. Investors may approach their agents and distributors to guide them in this regard.

 

If mutual fund scheme is wound up, what happens to money invested?

In case of winding up of a scheme, the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. Unitholders are entitled to receive a report on winding up from the mutual funds which gives all necessary details.

 

How can the investors redress their complaints?

Investors would find the name of contact person in the offer document of the mutual fund scheme whom they may approach in case of any query, complaints or grievances. Trustees of a mutual fund monitor the activities of the mutual fund. The names of the directors of asset management company and trustees are also given in the offer documents. Investors can also approach SEBI for redressal of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned mutual fund and follows up with them till the matter is resolved. Investors may send their complaints to:

 

 

Securities and Exchange Board of India

Mutual Funds Department

Mittal Court ‘B’ wing, First Floor,

224, Nariman Point,

Mumbai – 400 021.

 

Phone: 2850451-56, 2880962-70

 

 

*****

 

 

 

What is the procedure for registering a mutual fund with SEBI ?

 

An applicant proposing to sponsor a mutual fund in India must submit an application in Form A along with a fee of Rs.25,000. The application is examined and once the sponsor satisfies certain conditions such as being in the financial services business and possessing positive net worth for the last five years, having net profit in three out of the last five years and possessing the general reputation of fairness and integrity in all business transactions, it is required to complete the remaining formalities for setting up a mutual fund. These include inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board of trustees comprising two- thirds independent trustees, incorporating the asset management company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the registration certificate is issued subject to the payment of registration fees of Rs.25.00 lacs For details, see the SEBI (Mutual Funds) Regulations, 1996.

 

 

 

What is the procedure for redressal of investor grievances?

 

 

 

When investors send complaints to SEBI, SEBI takes up the matter with the concerned mutual funds and follows up with them till they are resolved.

 

In case of complaints, investors may write to :

Securites And Exchange Board of India,

Mutual Fund Dept.,

Mittal Court 'B' Wing,

Nariman Point,

Mumbai 400 021

 

SEBI issues Discussion Paper on Innovations in the Securities Market

SEBI has recently put-up on its website a Discussion paper on the subject of innovations in the securities market. The object of this Paper is to invite public comments on the concepts introduced in the Paper. Salient features of the Concepts covered in the Discussion Paper are given below. 1. Trading of Rights on the stock Exchanges. In Rights Issue of shares by a Company a choice is available to the Shareholders to apply for Additional shares. As per the Paper these Rights to buy Additional shares are Call Options and are being traded on OTC Stock Exchange. There is no obligation on the part of a shareholder to apply for shares. These rights to apply for Additional shares are presently offered in physical form and as per the Discussion Paper have poor liquidity, lack of price Discovery and movement of physical papers. The suggestion now is to issue these Rights in electronic form by crediting the demat account of the shareholders. These Rights would be listed and then traded on the stock exchanges for the limited period for which they are valid. This will mean a shift from OTC Exchange to Main stock exchanges and moving to electronic form which will reduce administrative cost and will also enable easy splitting of the Rights. Thus, renouncing of the Rights in favour of more than one persons would be very easy. Part purchase and part renouncing will also be easy. This will also give immediate liquidity to the shareholder since the Rights would be traded in T+2 segment of the Trading cycle. The proposal appears to be investor friendly and would definitely bring more liquidity in trading in Rights. Those shareholders who wish to avail of Rights in physical form will still get the same but they can not trade them on the exchange. 2. Put warrants approach to the Fixed Price Buy-back/ takeover Offers. This concept is to introduce a new Product known as “Put Warrant”. Put Warrants are proposed to be issued in the case of a Buy-back of Shares or Offer for purchase of shares during a Take over Offer . In the developed market of United States and other countries such Put Warrants are already in existence. In a Buyback or a Take Over Offer, an investor has a Right to sell his Shares, in full or in part, to the Company. However, Put Warrant has been proposed only when the Company is buying back shares at a fixed price from the shareholders directly and not when the Company proposes to buy-back the Shares from the Stock-exchange. The proposal is to issue warrants to shareholders which will enable them to tender the shares held by them in a Buy-back or a Tender Offer. These Put Warrants will be listed on the stock-exchange for the period of their validity. For shareholders holding their shares in de-mat form, their de-mat account will be credited by the Put warrants and physical shareholders will receive physical Put Warrants. For the Companies it will mean additional listing cost. For the stock exchanges this may mean additional burden of work. For Takeover Offer, the present time-schedule is so tight that listing of warrants may be very difficult, more so in case of a competitive bid by a rival bid. A rival bidder will also have to issue Put Warrants. The Companies may also have to amend their Articles of Association. The shareholders can sell these warrants with or without shares. The warrants will have separate ISIN numbers. Investors can buy additional warrants as well. But they should also have shares to surrender to the Company. Put Warrants are supposed to reduce price volatility in the shares of the Company during the time of a Buy-back/Take-over offer. A classic example of price volatility is Reliance’s Tender offer for IPCL Shares which was at Rs. 231/- at the time when IPCL share price was around Rs.50 in January, 2002. By August, 2002, IPCL share price went upto Rs. 150-160 and after the offer, the price came down to Rs. 70. With the introduction of Put Warrants, all these volatility may be reflected in warrant prices instead of Share prices. A question arises that in case of a Sensex Company or a BSE-500 company which is making a Buy-back/Tender Offer, whether prices of warrants would be taken into account or not? On the whole the proposal seems investor-friendly. Following are further concepts introduced in the SEBI’s Discussion Paper on Innovations in the Securities Market. Buy back of shares without payment in cash At present Buy back of shares from members by a Company is permitted only through cash. SEBI’s new proposal is to allow Buy back of shares in exchange of other securities or instruments. That means that an Investor who surrenders his shares in a Buy back Programme of a Company may get Debentures bearing interest instead of cash. However, those shareholders who want to receive cash will have an option to receive cash also. This proposal is welcome. As it is, many a times Investors who receive cash on surrender of shares do reinvest this money in other securities. The proposed concept will save the Investor and Company from a lot of hassles of repaying and reinvesting. To the Companies it will also give flexibility in restructuring its long term funds. As it is, Companies borrow or issue debentures to third parties for raising cash for payment to Shareholders under a Buy back scheme. Under Section 77A of Companies Act, a company is allowed to issue any kind of shares or securities other than (one kind which is being bought) to raise resources for a Buy back. The new proposal will also provide continuity of investment by the investor in the Company but in a different form. Investors will recall that some time back both ICICI and IDBI exercised their Call Option on their High Interest Deep Discount Bonds issued by them. Along with that, they also sent fixed deposit forms and arranged automatic transfer from Bonds to Fixed Deposits with the consent of the Investors. A question may arise that when a Company issues Debentures on Buy-back of Shares, will it mean that it has taken a loan without receiving actual cash? This is important to understand because under Section 269SS of Income Tax Act, no one can accept a loan for a sum of Rs. 20,000 or more otherwise than by way of an Account payee cheque and in the instant case, no Account payee cheque would be received from the Investor and instead only entries will be passed in his account in the books of the Company. Based on the spirit of this section and on certain court judgements it can be safely argued that there will be no violation of Section 269SS in the present case. Another question that may arise is when a Listed Company wants to issue Debentures to its Shareholders under a Buy-back scheme, will it have to get such Debentures listed on a Stock Exchange? A Company may be able to issue Fixed Deposit for buy back of its shares. An Investor may be able to trade on the Exchange his right to receive Debentures or other instrument on surrender of his shares in a buy back scheme. As per the concept paper, the new instrument to be offered by the Company under a Buy back will have to be of minimum investment Grade.This investment Grade will most probably be given by on credit rating agencies, however, if a Company issues Equity shares of one kind in exchange of another, kind or in exchange of Buy Back of Preference shares, such Equity shares cannot be rated as Equity shares are risk investments and presently not rated. When a Public offer is made by an Acquirer under Take Over Regulations he is allowed to acquire shares from Shareholders of the Company either in cash or through Approved Security. The concept of exchange of instrument under a Buy back is already prevalent abroad. Written by:-Shailesh Bathiya, Chartered Accountant.

SEBI PRIMARY MARKET ADVISORY COMMITTEE ON PREFERENTIAL ISSUES

By Shailesh Bathiya, Chartered Accountant. The Primary Market Advisory Committee of SEBI has recommended certain far-reaching amendments to the present Preferential Issues Guidelines. 1. Present preferential Issue Guidelines of SEBI are contained in Chapter XIII of SEBI (Disclosure and Investor Guidelines), 2000. Preferential Issue of shares are Issues of shares by a Company which are not through the Public Issue or the Rights Issue route. Preferential Issue of shares is done by a Company to a select group of persons through negotiations. Such issues are done under provisions of Section 81(1A) of the Companies Act which require approval of shareholders of a Company by a special Resolution. The Committee felt that in such special resolutions common shareholders are not able to participate as in many cases meetings are held at distant places. The committee has, therefore, recommended that preferential issues should be approved mandatorily by a Special Resolution passed through Postal Ballot, in case of listed Companies. This will allow all shareholders to participate in the process. However, I feel that in most cases, since promoters hold majority, even after such participation by small shareholders through postal Ballot, it will hardly serve any purpose. Besides, according to the current practices only the Result of a Postal Ballot has to be announced at a meeting of members and no discussion thereon is required so this will deprive even a discussion on the subject of Preferntial allotment An opportunity to members discuss such matters is very necessary. Indeed, some companies have so interpreted the Postal Ballot Regulations that even a meeting of the shareholders is not necessary to announce the result of a postal Ballot and mere publication of the result will suffice. This will certainly deprive shareholders of a discussion. In this connection it is important to note that the proposed amendment to section 81 through the Companies (Amendment ) Bill, 2003 presribes that no votes shall be cast by any person in favour of the special resolution for preferential allotment when shares are proposed to be offered to such person.. This provision may be of more help than the suggestion of a Postal Ballot. Here also there is a fear that since Promoter groups have many entities or companies within their fold, everytime allotment can be done to a new entity or a company. 2. Another suggestion has been made by the said Committee on Preferential Issues which are not listed by the stock exchanges. So many times it so happens that preferential issues are not listed by the stock exchanges for years due to certain non-compliances by the companies. The committee has suggested that SEBI should take-up this matter with the Department of Company Affairs to stipulate that if listing permission is not granted by the stock exchanges, such preferential issues should be treated void ab initio. That means such issues should be treated as cancelled. The committee has further suggested that SEBI should consider appointment of merchant Bankers for Preferential Allotment to ensure due diligence and avoid non-compliance of the guidelines. This is a welcome suggestion as many present preferential allotments do not comply with the Guidelines. 3. Another concern of stock exchanges is that in many cases of preferential issues actual funds are not received i.e. the funds are received through circular entries or Book entries. The committee has made a far reaching suggestion that the proposed allottees should bring in the funds in advance before the date of General meeting of members where the proposal of preferential issues is to be considered. These funds should be kept in an escrow account. In my opinion this will take away the flexibility from the genuine companies and the investors. If investors have to put in funds in advance without knowing that approval of members will come or not, than they may not be interested in locking their funds. Also presently they have an option “not to subscribe” in case the market price of the shares is below the preferential offer price. The committee also suggested that the present time limit of 90 days for making preferential allotment should be reduced to 30 days. This may be useful but will not address the problem of not receiving the funds. The solution is to track the enduse of the funds and verify current or fixed asset creation or repayment of liabilities, etc, as per stated objects through the company’s auditors or any other agency and also disclose the same to SEBI/Stock Exchanges and to the Shareholders. 4. Another suggestion of the committee is to lock in the shares issued by way of Preferential Issue for swap of shares. Under the present Guideline No.13.3.1( c), on Preferential issues, in case of swap of shares are not to be locked in. Swap of shares normally takes place when a company acquires any business or asset from any other company and , in consideration thereof, issues its shares to the shareholders of selling company in exchange of their shares in the selling company. 5. The committee has also recommended that SEBI should not allow Preferential Issues by way of Issue of shares other than cash. 6. The committee did not recommend any upper price limit for preferential issues.

KEN SOFTWARE TECHNOLOGIES LIMITED

PUBLIC ISSUE OF 63,01,667 EQUITY SHARES OF RS.10/- EACH FOR CASH AT A PREMIUM OF RS.5/- PER SHARE AGGREGATING TO RS. 945.25 LACS. OBJECT OF THE ISSUE 1. To set up a Development Center at Mumbai to execute BPO and Software projects. 2. To upgrade the Overseas Operations. 3. To meet the issue expenses. 4. To list the shares on the stock exchanges at Pune and Hyderabad. The company had initially during December 2000 filed its prospectus with SEBI for a project cost of Rs. 800 lacs to set up a Software Development Centre at Mumbai which was then refilled during February 2002. The promoters had already brought in an amount of Rs. 185.00 lacs towards the project which was spent on the project. Subsequently due to bad market conditions, the company had to deffer its public issue. The company in the meantime had also started BPO activities through outsourcing the same and now proposes to set up a 200 seater call centre in addition to the software development centre:

Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003

Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Markets) Regulations, 2003

Notification No. S.O. 816(E), dated 17-7-2003

In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations, namely:—

CHAPTER I

PRELIMINARY

Short title and commencement.

1.(1) These regulations may be called the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Markets) Regulations, 2003.

(2) They shall come into force on the date of their publication in the Official Gazette.

Definitions.

2. (1) In these regulations, unless the context otherwise requires,—

(a) “Act” means the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(b) “dealing in securities” includes an act of buying, selling or subscribing pursuant to any issue of any security or agreeing to buy, sell or subscribe to any issue of any security or otherwise transacting in any way in any security by any person as principal, agent or intermediary referred to in section 12 of the Act.

(c) “fraud” includes any act, expression, omission or concealment committed whether in a deceitful manner or not by a person or by any other person with his connivance or by his agent while dealing in securities in order to induce another person or his agent to deal in securities, whether or not there is any wrongful gain or avoidance of any loss, and shall also include-

(1) a knowing misrepresentation of the truth or concealment of material fact in order that another person may act to his detriment;

(2) a suggestion as to a fact which is not true by one who does not believe it to be true;

(3) an active concealment of a fact by a person having knowledge or belief of the fact;

(4) a promise made without any intention of performing it;

(5) a representation made in a reckless and careless manner whether it be true or false;

(6) any such act or omission as any other law specifically declares to be fraudulent,

(7) deceptive behaviour by a person depriving another of informed consent or full participation,

(8) a false statement made without reasonable ground for believing it to be true.

(9) the Act of an issuer of securities giving out misinformation that affects the market price of the security, resulting in investors being effectively misled eventhough they did not rely on the statement itself or anything derived from it other than the market price.

 

And "fraudulent" shall be construed accordingly;

Nothing contained in this clause shall apply to any general comments made in good faith in regard to-

 

(a) the economic policy of the Government

(b) the economic situation of the country

(c) trends in the securities market or

(d) any other matter of a like nature

whether such comments are made in public or in private.

(d) “Investigating Authority” means any officer of the Board not below the rank of Division Chief, authorized by the Board to undertake investigation under section 11C of the Act;

(e) “securities” means securities as defined in section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956).

(2) Words and expressions used and not defined in these regulations, but defined in the Act or in the rules or regulations made thereunder, shall have the meanings respectively assigned to them in the Act or rules or regulations made thereunder, as the case may be.

 

CHAPTER II

PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICES

RELATING TO THE SECURITIES MARKET

 

3. Prohibition of certain dealings in securities.

No person shall directly or indirectly-

(a)   buy, sell or otherwise deal in securities in a fraudulent manner;

(b)   use or employ, in connection with issue, purchase or sale of any security listed or proposed to be listed in a recognized stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of the Act or the rules or the regulations made thereunder;

(c)   employ any device, scheme or artifice to defraud in connection with dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange;

(d)   engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person in connection with any dealing in or issue of securities which are listed or proposed to be listed on a recognized stock exchange in contravention of the provisions of the Act or the rules and the regulations made thereunder.

4. Prohibition of manipulative, fraudulent and unfair trade practices.

(1)   Without prejudice to the provisions of regulation 3, no person shall indulge in a fraudulent or an unfair trade practice in securities.

(2)   Dealing in securities shall be deemed to be a fraudulent or an unfair trade practice if it involves fraud and may include all or any of the following, namely:-

(a) indulging in an act which creates false or misleading appearance of trading in the securities market;

(b) dealing in a security not intended to effect transfer of beneficial ownership but intended to operate only as a device to inflate, depress or cause fluctuations in the price of such security for wrongful gain or avoidance of loss;

(c) advancing or agreeing to advance any money to any person thereby inducing any other person to offer to buy any security in any issue only with the intention of securing the minimum subscription to such issue;

(d) paying, offering or agreeing to pay or offer, directly or indirectly, to any person any money or money's worth for inducing such person for dealing in any security with the object of inflating, depressing, maintaining or causing fluctuation in the price of such security;

(e) any act or omission amounting to manipulation of the price of a security;

(f) publishing or causing to publish or reporting or causing to report by a person dealing in securities any information which is not true or which he does not believe to be true prior to or in the course of dealing in securities;

(g) entering into a transaction in securities without intention of performing it or without intention of change of ownership of such security;

(h) selling, dealing or pledging of stolen or counterfeit security whether in physical or dematerialized form;

(i) an intermediary promising a certain price in respect of buying or selling of a security to a client and waiting till a discrepancy arises in the price of such security and retaining the difference in prices as profit for himself;

(j) an intermediary providing his clients with such information relating to a security as cannot be verified by the clients before their dealing in such security;

(k) an advertisement that is misleading or that contains information in a distorted manner and which may influence the decision of the investors;

(l) an intermediary reporting trading transactions to his clients entered into on their behalf in an inflated manner in order to increase his commission and brokerage;

(m) an intermediary not disclosing to his client transactions entered into on his behalf including taking an option position;

(n) circular transactions in respect of a security entered into between intermediaries in order to increase commission to provide a false appearance of trading in such security or to inflate, depress or cause fluctuations in the price of such security;

(o) encouraging the clients by an intermediary to deal in securities solely with the object of enhancing his brokerage or commission.

(p) an intermediary predating or otherwise falsifying records such as contract notes.

(q) an intermediary buying or selling securities in advance of a substantial client order or whereby a futures or option position is taken about an impending transaction in the same or related futures or options contract.

(r) planting false or misleading news which may induce sale or purchase of securities.

 

CHAPTER III

INVESTIGATION

 

Power of the Board to order investigation.

5. Where the Board, the Chairman, the member or the Executive Director (hereinafter referred to as "appointing authority") has reasonable ground to believe that –

(a) the transactions in securities are being dealt with in a manner detrimental to the investors or the securities market in violation of these regulations;

(b) any intermediary or any person associated with the securities market has violated any of the provisions of the Act or the rules or the regulations,

it may, at any time by order in writing, direct any officer not below the rank of Division Chief (hereinafter referred to as the "Investigating Authority") specified in the order to investigate the affairs of such intermediary or persons associated with the securities market or any other person and to report thereon to the Board in the manner provided in section 11C of the Act.

Powers of Investigating Authority.

6. Without prejudice to the powers conferred under the Act, the Investigating Authority shall have the following powers for the conduct of investigation, namely:-

(1) to call for information or records from any person specified in section 11(2)(i) of the Act;

(2) to undertake inspection of any book, or register, or other document or record of any listed public company or a public company (not being intermediaries referred to in section 12 of the Act) which intends to get its securities listed on any recognized stock exchange where the Investigating Authority has reasonable grounds to believe that such company has been conducting in violation of these regulations;

(3) to require any intermediary or any person associated with securities market in any manner to furnish such information to, or produce such books, or registers, or other documents, or record before him or any person authorized by him in this behalf as he may consider necessary if the furnishing of such information or the production of such books, or registers, or other documents, or record is relevant or necessary for the purposes of the investigation;

(4) to keep in his custody any books, registers, other documents and record produced under this regulation for a maximum period of one month which may be extended upto a period of six months by the Board:

Provided that the Investigating Authority may call for any book, register, other document or record if the same is needed again:

Provided further that if the person on whose behalf the books, registers, other documents and record are produced requires certified copies of the books, registers, other documents and record produced before the Investigating Authority, he shall give certified copies of such books, registers, other documents and record to such person or on whose behalf the books, registers, other documents and record were produced;

(5) to examine orally and to record the statement of the person concerned or any director, partner, member or employee of such person and to take notes of such oral examination to be used as an evidence against such person:

Provided that the said notes shall be read over to, or by, and signed by, the person so examined;

(6) to examine on oath any manager, managing director, officer or other employee of any intermediary or any person associated with securities market in any manner in relation to the affairs of his business and may administer an oath accordingly and for that purpose may require any of those persons to appear before him personally.

Power of the Investigating Authority to be exercised with prior approval.

7. The Investigating Authority may, after obtaining specific approval from the Chairman or Member also exercise all or any of the following powers, namely:-

(a) to call for information and record from any bank or any other authority or board or corporation established or constituted by or under any Central, State or Provincial Act in respect of any transaction in securities which are under investigation;

(b) to make an application to the Judicial Magistrate of the first class having jurisdiction for an order for the seizure of any books, registers, other documents and record, if in the course of investigation, the Investigating Authority has reasonable ground to believe that such books, registers, other documents and record of, or relating to, any intermediary or any person associated with securities market in any manner may be destroyed, mutilated, altered, falsified or secreted;

(c) to keep in his custody the books, registers, other documents and record seized under these regulations for such period not later than the conclusion of the investigation as he considers necessary and thereafter to return the same to the person, the company or the other body corporate, or, as the case may be, to the managing director or the manager or any other person from whose custody or power they were seized:

Provided that the Investigating Authority may, before returning such books, registers, other documents and record as aforesaid, place identification marks on them or any part thereof ;

(d) save as otherwise provided in this regulation, every search or seizure made under this regulation shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures made under that Code.

 

Duty to co‑operate, etc.

8. (1) It shall be the duty of every person in respect of whom an investigation has been ordered under regulation 7-

(a) to produce to the Investigating Authority or any person authorized by him such books, accounts and other documents and record in his custody or control and to furnish such statements and information as the Investigation Authority or the person so authorized by him may reasonably require for the purposes of the investigation;

 

(b) to appear before the Investigation Authority personally when required to do so by him under regulation 6 or regulation 7 to answer any question which is put to him by the Investigation Authority in pursuance of the powers under the said regulations.

 

(2) Without prejudice to the provisions of sections 235 to 241 of the Companies Act, 1956 (1 of 1956), it shall be the duty of every manager, managing director, officer and other employee of the company and every intermediary referred to in section 12 of the Act or every person associated with the securities market to preserve and to produce to the Investigating Authority or any person authorized by him in this behalf, all the books, registers, other documents and record of, or relating to, the company or, as the case may be, of or relating to, the intermediary or such person, which are in their custody or power.

 

(3) Without prejudice to the generality of the provisions of sub‑regulations (1) and (2), such person shall ‑

 

(a) allow the Investigating Authority to have access to the premises occupied by such person at all reasonable times for the purpose of investigation;

 

(b) extend to the Investigating Authority reasonable facilities for examining any books, accounts and other documents in his custody or control (whether kept manually or in computer or in any other form) reasonably required for the purposes of the investigation;

 

(c) provide to such investigating Authority any such books, accounts and records which, in the opinion of the Investigating Authority, are relevant to the investigation or, as the case may be, allow him to take out computer out‑prints thereof.

 

Submission of report to the Board.

9. The Investigating Authority shall, on completion of investigation, after taking into account all relevant facts, submit a report to the appointing authority:

 

Provided that the Investigating Authority may submit an interim report pending completion of investigations if he considers necessary in the interest of investors and the securities market or as directed by the appointing authority.

 

Enforcement by the Board.

10. The Board may, after consideration of the report referred to in regulation 9, if satisfied that there is a violation of these regulations and after giving a reasonable opportunity of hearing to the persons concerned, issue such directions or take such action as mentioned in regulation 11 and regulation 12:

 

Provided that the Board may, in the interest of investors and the securities market, pending the receipt of the report of the investigating authority referred to in regulation 9, issue directions under regulation 11:

 

Provided further that the Board may, in the interest of investors and securities market, dispense with the opportunity of pre‑decisional hearing by recording reasons in writing and shall give an opportunity of post‑decisional hearing to the persons concerned as expeditiously as possible.

 

11. (1) The Board may, without prejudice to the provisions contained in sub‑sections (1), (2), (2A) and (3) of section 11 and section 11B of the Act, by an order, for reasons to be recorded in writing, in the interests of investors and securities market, issue or take any of the following actions or directions, either pending investigation or enquiry or on completion of such investigation or enquiry, namely:-

 

(a) suspend the trading of the security found to be or prima facie found to be involved in fraudulent and unfair trade practice in a recognized stock exchange;

 

(b) restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities;

 

(c) suspend any office‑bearer of any stock exchange or self regulatory organization from holding such position;

(d) impound and retain the proceeds or securities in respect of any transaction which is in violation or prima facie in violation of these regulations;

 

(e) direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of a fraudulent and unfair transaction;

 

(f) require the person concerned to call upon any of its officers, other employees or representatives to refrain from dealing in securities in any particular manner;

 

(g) prohibit the person concerned from disposing of any of the securities acquired in contravention of these regulations;

 

(h) direct the person concerned to dispose of any such securities acquired in contravention of these regulations, in such manner as the Board may deem fit, for restoring the status quo ante;

 

(2) The Board shall issue a press release in respect of any final order passed under sub‑regulation (1) in atleast two newspapers of which one shall have nationwide circulation and shall also put the order on the website of the Board.

 

Suspension or cancellation of registration.

12. (1) The Board may, without prejudice to the provisions contained in sub‑sections (1), (2), (2A) and (3) of section 11 and section 11B of the Act, by an order, for reasons to be recorded in writing, in the interests of investors and securities market take the following action against an intermediary:

 

(a) Issue a warning or censure

(b) suspend the registration of the intermediary; or

(c) cancel of the registration of the intermediary

 

Provided that no final order of suspension or cancellation of an intermediary for violation of these regulations shall be passed unless the procedure specified in the regulations applicable to such intermediary under the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 is complied with.

 

Repeal and savings.

13. (1) The Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995 is hereby repealed.

 

(2) Notwithstanding repeal of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995, any violation of regulations 3, 4, 5 and 6 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 shall be investigated and proceeded against in accordance with the procedure laid down in these regulations.

(3) Notwithstanding repeal of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995, any investigation pending, at the commencement of these regulations shall be continued and disposed of in accordance with the procedure laid down in these regulations.

 

Bharat Petroleum Corporation Ltd (BPCL)

had early last month informed the Government that it was not willing to go through with the ADR issue unless the latter indemnified the board directors against any liabilities. A fall-out of this Act is that directors of companies listed on the American bourses could be sued and tried under American law for poor governance, even if they were of foreign origin

Maruti Udyog Limited’s Initial Public Offer Oversubscribed

14th June. 2003 On the second day of the offer Maruti Udyog’s Issue has been oversubscribed by 173 percent. The issue has received bids for 19.67 crore shares against the original size of the issue of 7.2 crore shares. Foreign investors have also keen interest in the offer with ABN Amro Bank bidding for 100 crore worth shares. The first disinvestment project of the year has lived up to its expectations

· Amendments to the SEBI (Disclosure and Investor Protection) Guidelines, 2000

Circular No. RMB (Compendium) Series Circular No.10 Dated 02.06.2003: I After the existing clause 17.2.1, the following has been inserted, namely: “17.2A Exemption 17.2A.1 The Board may grant exemption from the application of any particular Provisions of these guidelines: (a) on an application made by any listed company or intermediary connected with the issue; (b) of a technical violation or a possible technical violation; or, (c) on being satisfied that the violation was caused or may be caused due to factors beyond the control of the applicant.”

Patni Computers plans IPO

Patni Computer Systems plans for an initial public offer (IPO), the Rs. 914 crore software services company, by September, 2003. The main aim of the IPO is to increase visibility and transparency employees will also be benefited from the various stock schemes. The company expects the BPO business to account for up to 20 percent of its revenue over the next three years, The company has already acquired US-based Reference Inc to enhance its reach in the financial services industry Company has entered the BPO space earlier this year with an investment of $18 million. It set up two 500 seat facilities one in Noida and the other in Pune. It also set up a smaller centre in the US. The company has 52 percent of its entire business as fixed price contracts, where billings are not renegotiated under business cycles, and 70 percent are multi-year contract, The company recently acquired a $35 million order from Guardian Life Insurance Company of the US for new life and annuity products, while undertaking analysis and implementation of its systems. General Atlantic. GE is also a minority stake holder in the company.

Vijaya Bank is planning Rs. 100 Crore IPO

Vijaya Bank is planning a Rs. 100 crore equity issue at a premium in 2-3 months. Which will be rights cum public issue. Details of the issue has not yet finalise. The bank will be raising funds to an asset management company and it also plans to move into an insurance joint venture. Vijaya Bank jointly with the Punjab National Bank is planning to pick up stake in IDBI Principal Asset Management Co. The two banks have sought the Reserve Bank of India (RBI) approval. Also Vijaya Bank, Punjab National Bank (PNB), the Principal Financial Group of the US and a leading tyre co. will set up a life time insurance venture. The four have signed a (MOU).. Vijaya Bank will have a 12 percent stake in the insurance venture. The 36 per cent will be held by the corporate partner. . PNB and Principal will have 26 per cent stake each

Comapnies (Amendment) Bill, 2003 introduced in Rajya Sabha.

8th May,2003. The Companies (Amendment) Bill, 2003 was yesterday introduced in the Rajya Sabha. The Bill propses far-reaching amendments in the Companies Act, 1956, mainly in the areas of Investor Protection and Corporate Governance, in light of recent experience of corporate misbehaviour. Some of the salient features of the Bill are given below:- 1. Interim Dividends once declared can not be cancelled or changed. 2.Amendment to section 372A to restrict inter-corporate loans for stock-broking companies.This is a Provision to limit circular trading by Brokers. 3.AGMs can be held on Sundays for better participation by members. 4.Power to central Government to prescribe a ceiling on the number of investment companies an individual can float. 5.Identification of promoters and Directors to be compulsory at the time of incorporation. 6.Power to central Government to attach Bank Accounts of persons associated with securities market and their intermediaries for violation of the Companies Act provisions. 7.Harsh Penalty for fraudulently inducing persons to invest money in a company. 8.Harsh Penalty for making allotments when minimum subsciption is not received or when application money is not refunded within 6 months. 9.Vigorous penalties for Auditors and Companies if Auditors accept certain consultancy fees.Auditors can not accept from the auditee companies valuation services, accounting services,certain financial services,broking services, certain management sevices. 10.Application money received in IPOs in which minimum subscription has not been received, must be refunded within 8 days of cut-off date of determining whether minimum subscription has been received. 11.At least 25% of the nominal value of the security must be received instead of present 5% provision. 12. On delayed refunds of application money penal rate will have to be paid as may be prescribed by the Government.In addition to directors now the promoters will also be liable pay penal rate of interest.

Political donations likely to get tax deduction.

7th May 2003. Today in the Loksabha, a Bill known as "The Election and Other Related Laws (Amendment) Bill,2003, was introduced. The Bill provides that any person giving donations to political parties would get deduction under the Income-tax Act. There is no ceiling on amount of deduction for individuals, HUFs and partnership firms. Companies can contribute upto 5% of their profits.

AMENDMENTS TO SEBI (DIP) GUIDELINES, 2000

Chapter IV-Promoters Contribution and Lock-in Requirements

1. The existing Clause 4.16.1 shall be substituted by the following:

"4.16.1 Inter-se Transfer of Locked- in Securities

a.      Shares held by the person other than the promoters, prior to Initial Public Offering(IPO), which are locked in as per Clause 4.14 of these Guidelines, may be transferred to any other person holding shares which are locked in as per clause 4.14 of these Guidelines subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, as applicable.

b) Shares held by promoter(s) which are locked in as per the relevant provisions of this chapter, may be transferred to and amongst promoter/promoter group or to a new promoter or persons in control of the company, subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, as applicable.’

 

Chapter VI – Contents of Offer Document

1. In Clause 6.1, a new sub-clause 6.1.2 shall be inserted as following:

"6.1.2 The draft offer document and final offer document shall be approved by the Board of Directors of the issuer company and signed by all the Directors (including the Managing Director), Chief Executive Officer and Chief Financial Officer of the issuer company . They shall also certify that all the disclosures made in the offer document are true and correct. "

2 The existing Clause 6.13.1 shall be substituted by the following:

"6.13.1 Following information shall be disclosed for all issues irrespective of the issue price.

a.      Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital);

    1. P/E pre-issue
    2. average return on net worth in the last three years
    3. minimum return on increased net worth required to maintain pre-issue EPS;
    4. Net Asset Value per share based on last balance sheet;
    5. Net Asset Value per share after issue and comparison thereof with the issue price.

g. An illustrative format of disclosure in respect of basis for issue price is given in Schedule XV.

h. Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group ( i.e companies of comparable size in the same industry.( Indicate the source from which industry average and accounting ratios of the peer group has been taken)

Provided that the projected earnings shall not be used as a justification for the issue price in the offer document.

Provided further that the accounting ratios disclosed in the offer documents in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised."

3. The existing Clause 6.27(i) shall be substituted by the followings:

"6.27(i) Following information shall be disclosed for all issues irrespective of the issue price.

a.      Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital);

    1. P/E pre-issue
    2. average return on net worth in the last three years
    3. minimum return on increased net worth required to maintain pre-issue EPS;
    4. Net Asset Value per share based on last balance sheet;
    5. Net Asset Value per share after issue and comparison thereof with the issue price.
    6. Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group ( i.e companies of comparable size in the same industry.( Indicate the source from which industry average and accounting ratios of the peer group has been taken)

Provided that the projected earnings shall not be used as a justification for the issue price in the offer document.

Provided further that the accounting ratios disclosed in the offer documents in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised."

 

Chapter XIII – Guidelines for Preferential Issues

1. The existing clause 13.3.2 shall be substituted by the following:

‘13.3.2 These locked in shares/instruments may be transferred to and amongst promoter/promoter group or to a new promoter(s) or person(s) in control of the company, subject to continuation of lock-in in the hands of transferee(s) for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, as applicable.’

 

 

AMENDMENTS TO SEBI (DIP) GUIDELINES, 2000

Chapter IV-Promoters Contribution and Lock-in Requirements

1. The existing Clause 4.16.1 shall be substituted by the following:

"4.16.1 Inter-se Transfer of Locked- in Securities

a.      Shares held by the person other than the promoters, prior to Initial Public Offering(IPO), which are locked in as per Clause 4.14 of these Guidelines, may be transferred to any other person holding shares which are locked in as per clause 4.14 of these Guidelines subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, as applicable.

b) Shares held by promoter(s) which are locked in as per the relevant provisions of this chapter, may be transferred to and amongst promoter/promoter group or to a new promoter or persons in control of the company, subject to continuation of lock-in in the hands of transferees for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, as applicable.’

 

Chapter VI – Contents of Offer Document

1. In Clause 6.1, a new sub-clause 6.1.2 shall be inserted as following:

"6.1.2 The draft offer document and final offer document shall be approved by the Board of Directors of the issuer company and signed by all the Directors (including the Managing Director), Chief Executive Officer and Chief Financial Officer of the issuer company . They shall also certify that all the disclosures made in the offer document are true and correct. "

2 The existing Clause 6.13.1 shall be substituted by the following:

"6.13.1 Following information shall be disclosed for all issues irrespective of the issue price.

a.      Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital);

    1. P/E pre-issue
    2. average return on net worth in the last three years
    3. minimum return on increased net worth required to maintain pre-issue EPS;
    4. Net Asset Value per share based on last balance sheet;
    5. Net Asset Value per share after issue and comparison thereof with the issue price.

g. An illustrative format of disclosure in respect of basis for issue price is given in Schedule XV.

h. Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group ( i.e companies of comparable size in the same industry.( Indicate the source from which industry average and accounting ratios of the peer group has been taken)

Provided that the projected earnings shall not be used as a justification for the issue price in the offer document.

Provided further that the accounting ratios disclosed in the offer documents in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised."

3. The existing Clause 6.27(i) shall be substituted by the followings:

"6.27(i) Following information shall be disclosed for all issues irrespective of the issue price.

a.      Earnings per share i.e. EPS pre-issue for the last three years (as adjusted for changes in capital);

    1. P/E pre-issue
    2. average return on net worth in the last three years
    3. minimum return on increased net worth required to maintain pre-issue EPS;
    4. Net Asset Value per share based on last balance sheet;
    5. Net Asset Value per share after issue and comparison thereof with the issue price.
    6. Comparison of all the accounting ratios of the issuer company as mentioned above with the industry average and with the accounting ratios of the peer group ( i.e companies of comparable size in the same industry.( Indicate the source from which industry average and accounting ratios of the peer group has been taken)

Provided that the projected earnings shall not be used as a justification for the issue price in the offer document.

Provided further that the accounting ratios disclosed in the offer documents in support of basis of the issue price shall be calculated after giving effect to the consequent increase in capital on account of compulsory conversions outstanding, as well as on the assumption that the options outstanding, if any, to subscribe for additional capital will be exercised."

 

Chapter XIII – Guidelines for Preferential Issues

1. The existing clause 13.3.2 shall be substituted by the following:

‘13.3.2 These locked in shares/instruments may be transferred to and amongst promoter/promoter group or to a new promoter(s) or person(s) in control of the company, subject to continuation of lock-in in the hands of transferee(s) for the remaining period and compliance of Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997, as applicable.’

 

 

DCA introduces simplified exit scheme for defunct or non-operative Companies

2nd May, 2003. The Department of Company Affairs has recently annonced a simplified exit scheme for companies who are not carrying on any activites and who have no plans to carry on any activity in future. Such companies have to incur unnecessary expenditure for their maintenance-annual audit, secretarial work etc. or otherwise for their closure, they have to follow lengthy winding up procedure. Now , the DCA Scheme provides that any such Company who who wants to strike its name off the Register of Companies, should fill-up the prescribed form and submit the same alongwith a copy of Audited Balance Sheet and p & L Account and an affidavit as prescribed, indemnity bond in prescribed form and demand draft of Rs. 2000/- payable to concerned Registrar of Companies.The Scheme will remain in force till 31st December, 2003.companies can prepare their audited annual accounts upto 30th September, 2003 and file with ROC.No NOC from Banks, etc. would be required for closure of Companies. ROCs will advertise on a monthly basis in newspapers, a list of companies to be struck off.

Capital gains on transfer of Shares Purchased through IPOs to be exempt.

1st May, 2003.The Finance Minister has proposed an amendment to the Finance Bill, 2003. Long-term capital gains on transfer of Equity Shares purchased in an IPO made after 1st March, 2003 wii be fully exempt from tax. However, to be eligible, Shares must be listed before 1st March, 2004. It is not clear whether Public Issues of existing listed companies will be eligible or not. In the original proposal contained in the Bill,long-term capital gains on sale of Equity shares acquired after 1st march, 2003 but before 1st march, 2004 were to be exempt. This prompted many to think that they can acquire the Equity Shares by gift from near relatives and claim exemption. In the amendment now passed by Loksabha, the word "purchase" has been substituted for "acquire" so planning by Gifts is now ruled out. In another amendment, it is now stated that capital gains will be exempt only if the shares are purchased from a stock exchange. Thus private transfers will now not be eligible for exemption from capital gain tax.

Relief Bonds

Notification No. CO.DT. 13.01.272/H-2962/2002-03 Dated 28.02.2003 : It has been decided by the Government of India vide their Notification No.F.4(5)W&M/2002(1) dated February 28, 2003 that the issue of 8% Relief Bonds,2002 shall cease with effect from the close of business on February 28,2003. Government of India, vide their Notification F.4(5)-W&M/2002 dated February 28, 2003 had also notified withdrawal of post maturity interest payable on the matured but unencashed or maturing Relief Bonds pertaining to the Schemes announced earlier with effect from the close of business on February 28, 2003. Accordingly, offices are advised to refrain from accepting fresh applications in respect of the captioned Scheme with immediate effect. The existing interest rates will continue to apply on all Relief Bonds till their maturity. The post-maturity interest on the matured but unencashed bonds may be paid to the investors upto February 28, 2003 as per the extant instructions already issued in this regard.

Capital Gain exemption only to Equities purchased from Stock Exchanges.

1st May, 2003. The finance Minister has proposed and amendment to the Finance Bill, 2003. In the original proposal contained in the Bill,long-term capital gains on sale of Equity shares acquired after 1st march, 2003 but before 1st march, 2004 were to be exempt. This prompted many to think that they can acquire the Equity Shares by gift from near relatives and claim exemption. In the amendment now passed by Loksabha, the word "purchase" has been substituted for "acquire" so planning by Gifts is now ruled out. In another amendment, it is now stated that capital gains will be exempt only if the shares are purchased from a stock exchange. Thus private transfers will now not be eligible for exemption from capital gain tax.

INDIAN DEPOSITORY RECEIPTS (IDRs) ARE SOON TO BE REALITY

30th April, 2003.Securities and Exchange Board Of India (SEBI) has stated that the Indian Depository Receipts shall soon be allowed. The Government of India and SEBI are making the guidelines for IDRs and will allow foreign companies to list their shares and securities through IDRs on Indian stock exchanges. This will enable Indian shareholders to invest in foreign companies in Indian Rupees. Also the IDRs will have to be listed in India and, hence, would be governed by SEBI Regulations. IDRs are denominated in Rupees while foreign shares are denominated in foreign currencies. The instrument of IDRs enables it to be denominated in Rupees and Indian investors can purchase the shares in Rupees. This will soon herald in a new era on the stock exchanges. Indian citizens will also have much larger choices to invest.

Individuals and companies can now invest in overseas debts

30th April, 2003.In a significant development, Reserve Bank of India today allowed individuals and Indian Companies to invest in overseas debts i.e. foreign debts. Earlier individuals and others were allowed in a restricted manner to invest in Equity Shares of Foreign Companies. Now the Reserve Bank of India has also today announced that individuals and Individual companies will be able to invest in Foreign Debts also. The details of the scheme are not yet available. This was announced on 29th April, 2003 in the Monetary and Credit Policy for the year 2003-2004 by Mr. Bimal Jalan, Governor of Reserve Bank of India. At present Indian Corporates and Resident Individuals are permitted to invest in equities of listed companies abroad subject to certain conditions. It has now been proposed to extend this facility to debt instruments also. Thus, now Indian Corporates and Resident individuals will also be permitted to invest in rated bonds or fixed income securities of listed eligible companies abroad subject to certain conditions. Therefore perhaps now you can invest in say GE Capital or General Motors fixed rated instruments. In a another announcement the RBI granted general permission to Indian Bank to offer forward contracts to overseas investors to hatch their Foreign Direct Investment to the extent of Investment made in India. However, such Foreign Direct Investment inflows are not permitted to be sold forward to Banks. In order to provide greater flexibility to overseas investors and encourage flow of F.D.I. it is now proposed to allow overseas investors making long term investment to hatch their forex exposure in India, pending investment, by entering into forward sales contracts with Banks in India. It is also now proposed to allow Non-resident Indians and Overseas Corporate Bodies to book Cross Currency Forward Contracts to hedge the balances held in their FCNR(B) accounts. However, Contracts once cancelled can not to be recouped.

Indian Overseas Bank Plans an IPO

Mumbai,23rd April, 2003. IOB a veteran Bank is planning an IPO of around Rs. 100 crores. The price is likely to br around Rs. 16-18 per share. The issue is likely to hit the market in September/October, 2003. Merchant Bankers are not yet finalised. Government of India is holding 75% of Equity of the Bank which is likely to come down to 61% Post-IPO. The issue will meet capital adequacy requirement of the Bank.IOB's net profit was Rs. 117 Crores for the year ending on 31-3-2002.

SEBI ANNOUNCES DELISTING GUIDELINES.

Mumbai, 20th April, 2003. Sebi has recently announced SEBI (Delisting of Securities ) Guidelines, 2003. The Delisting Guidelines have come into operation with immediate effect With this announcement, earlier Sebi guidelines issued vide Circular no SMD/POLICY/CIR-14/98 dated April,29.1998, have become inoperative. · The refreshing feature of the Delisting Guidelines is that it recognizes delisting as a fact of life and not as something untouchable. · One novel feature of the desisting guidelines is that it has introduced a concept of Book building Process. · Under the Book-building Process, the shareholders of a company will be given an exit opportunity at an offer price. The offer price will be determined by a (Reverse) Book-building process. Under this process each shareholder will be entitled to offer his shares to the acquirers/promoters at whatever price he wants to offer full or part of his shares. The price at which the maximum number of shares has been offered by all the shareholders taken together, will be the final offer price. The acquirers shall have to accept offers upto and including the final price. The exit price cannot be less than the floor price. The floor price is the average price of the last 26 weeks’ traded prices prior to the Public Announcement for delisting. The promoters will have an option to acquire the shares at the exit price or not. If they do not wish to acquire, the company will continue to remain listed. · In a case when a company’s shares are listed on the National Stock Exchange or the Bombay stock Exchange or any other Stock Exchange having nationwide trading terminals and approved by SEBI, no exit offer is required to be provided for delisting its shares from any other stock exchanges, including regional stock exchange. This will save listing fees and considerable reporting requirements for the companies. · Earlier guidelines did not allow delisting from Regional stock exchanges. New guidelines permit delisting from Regional sock exchanges. This will definitely further reduce the already dwindling income of Regional stock exchanges · A company can delist its securities only if securities of the company have been listed for a minimum period of 3 years on any stock exchange. · Appointment of a merchant banker is compulsory for a delisting process.

Hindustan Ink Manufacturing Company is planning a Rights issue.

India’s leading printing Ink Manufacturing Company, Hindustan Ink Limited which is listed on the Bombay Stock Exchange is planning a Rights Issue of around Rs. 200 crore. The Share premium and the timing of the issue is not yet decided. According to the information, Kotak Mahindra has been appointed as advisors for the Issue. Hindustan Ink is a leading Company in printing ink manufacturing and is performing well. Although the size of the issue seems to be on the larger side, if the pricing is proper, issue ought to be fully subscribed. This will be one rights issue of this size after a long time in the Capital Market and primary Market observers will be keenly watching this rights issue.

SEBI Primary Market Advisory Committee recommends new IPO norms -Bombay 26th March, 2003.

The SEBI Primary Market Advisory Committee has recommended for approval the following points to SEBI.

Ř The company opting for IPO should have Net Worth of atleast Rs.1 Crore in each of proceeding 2 years
Ř In case of change of name within last one year, at least 50 % of the revenues for preceeding full year should be accounted for by the business for which change of name is suggested
Ř Size of IPO has to be < = 5 times the pre issue net worth. This is to restrict raising of larger amount during IPO.
Ř In case net tangible assets is at least Rs. 3 Crores in each of the immediately precutting two full years – Company can make IPO provided not more than 50% amount is held in Monetary Assets. In case more than 50% of the assets are in monetary form – commitment from company is to be obtained to deploy excess money in its business or project
Ř Minimum Post Issue Capital should be Rs. 10 Crores and there should be compulsory market making for at least 2 years from the date of listing, to ensure liquidity.
Ř For company to have wider holdings there should be at least 1000 allottees in the issue
Ř In case any of the abovementioned criteria is not made – company can come up with IPO only through book- building process and at least 40% of the issue should be allotted to QIBs as compared to current requirement of 60% allotment to QIBs.
Ř Alternatively, project should have 15% share by FIs and scheduled commercial banks out of which at least 10% should come from appraising Institution.

Whether the above recommendations will be accepted by SEBI or not is to be seen.

Now is the time for BPO firms to go Public

Daksh a Gugraon based business and process out sourcing company is said be planning an initial public offer. The size of the issue is estimate to be about 75 million dollars. The issue may come up any time between next 12 to 14 months. Daksh is a leading business process out sourcing service provider in India and has more than 2000 persons working for it. Daksh has plans to raise this capacity of people to 3000 and to acquire more BPO units. Kotak Mahindra Capital Company has been appointed for assisting Daksh in acquisitions of businesses

Corporate Debt Restructuring (CDR) System

DBOD. No. BP.BC.68 /21.04.132/2002-03nb February 5, 2003 1 Background 1.1 Inspite of their best efforts and intentions, sometimes corporates find themselves in financial difficulty because of factors beyond their control and also due to certain internal reasons. For the revival of the corporates as well as for the safety of the money lent by the banks and FIs, timely support through restructuring in genuine cases is called for. However, delay in agreement amongst different lending institutions often comes in the way of such endeavours. 1.2 Based on the experience in other countries like the U.K., Thailand, Korea, etc. of putting in place institutional mechanism for restructuring of corporate debt and need for a similar mechanism in India, a Corporate Debt Restructuring System was evolved, and detailed guidelines were issued vide circular DBOD No. BP.BC. 15/21.04.114/2000-01 dated August 23, 2001 for implementation by banks. Based on the recommendations made by the Working Group to make the operations of the CDR mechanism more efficient (Chairman: Shri Vepa Kamesam, Deputy Governor, RBI), which was constituted pursuant to the announcement made by the Finance Minister in the Union Budget 2002-2003, and consultations with the Government, the guidelines of Corporate Debt Restructuring system have since been revised and detailed hereunder for implementation by banks/ FIs. The revised guidelines are in supersession of the extant guidelines outlined in the aforesaid circular dated August 23, 2001. 1.3 One of the main features of the revised guidelines is the provision of two categories of debt restructuring under the CDR system. Accounts, which are classified as ‘standard’ and ‘sub-standard’ in the books of the lenders, will be restructured under the first category (Category 1). Accounts which are classified as ‘doubtful’ in the books of the lenders would be restructured under the second category (Category 2). The main features of the CDR system are given below: 2 Objective The objective of the Corporate Debt Restructuring (CDR) framework is to ensure timely and transparent mechanism for restructuring the corporate debts of viable entities facing problems, outside the purview of BIFR, DRT and other legal proceedings, for the benefit of all concerned. In particular, the framework will aim at preserving viable corporates that are affected by certain internal and external factors and minimize the losses to the creditors and other stakeholders through an orderly and coordinated restructuring programme. 3 Structure CDR system in the country will have a three tier structure: · CDR Standing Forum and its Core Group · CDR Empowered Group · CDR Cell 3.1 CDR Standing Forum 3.1.1 The CDR Standing Forum would be the representative general body of all financial institutions and banks participating in CDR system. All financial institutions and banks should participate in the system in their own interest. CDR Standing Forum will be a self- empowered body, which will lay down policies and guidelines, and monitor the progress of corporate debt restructuring. 3.1.2 The Forum will also provide an official platform for both the creditors and borrowers (by consultation) to amicably and collectively evolve policies and guidelines for working out debt restructuring plans in the interests of all concerned. 3.1.3 The CDR Standing Forum shall comprise of Chairman & Managing Director, Industrial Development Bank of India; Chairman, State Bank of India; Chairman, ICICI Bank Limited; Chairman, Indian Banks' Association and Executive Director, Reserve Bank of India as well as Chairmen and Managing Directors of all banks and financial institutions participating as permanent members in the system. Since institutions like Unit Trust of India, General Insurance Corporation, Life Insurance Corporation may have assumed exposures on certain borrowers, these institutions may participate in the CDR system. The Forum will elect its Chairman for a period of one year and the principle of rotation will be followed in the subsequent years. However, the Forum may decide to have a Working Chairman as a whole-time officer to guide and carry out the decisions of the CDR Standing Forum. 3.1.4 The CDR Standing Forum shall meet at least once every six months and would review and monitor the progress of corporate debt restructuring system. The Forum would also lay down the policies and guidelines to be followed by the CDR Empowered Group and CDR Cell for debt restructuring and would ensure their smooth functioning and adherence to the prescribed time schedules for debt restructuring. It can also review any individual decisions of the CDR Empowered Group and CDR Cell. The CDR Standing Forum may also formulate guidelines for dispensing special treatment to those cases which are complicated and are likely to be delayed beyond the time frame prescribed for processing. 3.1.5 A CDR Core Group will be carved out of the CDR Standing Forum to assist the Standing Forum in convening the meetings and taking decisions relating to policy, on behalf of the Standing Forum. The Core Group will consist of Chief Executives of IDBI, SBI, ICICI Bank Limited, Bank of Baroda, Bank of India, Punjab National Bank, Indian Banks' Association, Deputy Chairman of Indian Banks' Association representing foreign banks in India and a representative of Reserve Bank of India. 3.16 The CDR Core Group would lay down the policies and guidelines to be followed by the CDR Empowered Group and CDR Cell for debt restructuring. These guidelines shall also suitably address the operational difficulties experienced in the functioning of the CDR Empowered Group. The CDR Core Group shall also prescribe the PERT chart for processing of cases referred to the CDR system and decide on the modalities for enforcement of the time frame. The CDR Core Group shall also lay down guidelines to ensure that over-optimistic projections are not assumed while preparing / approving restructuring proposals especially with regard to capacity utilization, price of products, profit margin, demand, availability of raw materials, input-output ratio and likely impact of imports / international cost competitiveness. 3.2 CDR Empowered Group 3.2.1 The individual cases of corporate debt restructuring shall be decided by the CDR Empowered Group, consisting of ED level representatives of IDBI, ICICI Bank Ltd. and SBI as standing members, in addition to ED level representatives of financial institutions and banks who have an exposure to the concerned company. While the standing members will facilitate the conduct of the Group’s meetings, voting will be in proportion to the exposure of the lenders only. In order to make the CDR Empowered Group effective and broad based and operate efficiently and smoothly, it would have to be ensured that participating institutions / banks approve a panel of senior officers to represent them in the CDR Empowered Group and ensure that they depute officials only from among the panel to attend the meetings of CDR Empowered Group. Further, nominees who attend the meeting pertaining to one account should invariably attend all the meetings pertaining to that account instead of deputing their representatives. 3.2.2 The level of representation of banks/ financial institutions on the CDR Empowered Group should be at a sufficiently senior level to ensure that concerned bank / FI abides by the necessary commitments including sacrifices, made towards debt restructuring. There should be a general authorisation by the respective Boards of the participating institutions / banks in favour of their representatives on the CDR Empowered Group, authorising them to take decisions on behalf of their organization, regarding restructuring of debts of individual corporates. 3.2.3 The CDR Empowered Group will consider the preliminary report of all cases of requests of restructuring, submitted to it by the CDR Cell. After the Empowered Group decides that restructuring of the company is prima-facie feasible and the enterprise is potentially viable in terms of the policies and guidelines evolved by Standing Forum, the detailed restructuring package will be worked out by the CDR Cell in conjunction with the Lead Institution. However, if the lead institution faces difficulties in working out the detailed restructuring package, the participating banks / financial institutions should decide upon the alternate institution / bank which would work out the detailed restructuring package at the first meeting of the Empowered Group when the preliminary report of the CDR Cell comes up for consideration. 3.2.4 The CDR Empowered Group would be mandated to look into each case of debt restructuring, examine the viability and rehabilitation potential of the Company and approve the restructuring package within a specified time frame of 90 days, or at best within 180 days of reference to the Empowered Group. The CDR Empowered Group shall decide on the acceptable viability benchmark levels on the following illustrative parameters, which may be applied on a case-by-case basis, based on the merits of each case: · Return on Capital Employed (ROCE), · Debt Service Coverage Ratio (DSCR), · Gap between the Internal Rate of Return (IRR) and the Cost of Fund (CoF), · Extent of sacrifice. 3.2.5 The Boards of each bank / FI should authorise its Chief Executive Officer (CEO) and / or Executive Director (ED) to decide on the restructuring package in respect of cases referred to the CDR system, with the requisite requirements to meet the control needs. CDR Empowered Group will meet on two or three occasions in respect of each borrowal account. This will provide an opportunity to the participating members to seek proper authorisations from their CEO / ED, in case of need, in respect of those cases where the critical parameters of restructuring are beyond the authority delegated to him / her. 3.2.6 The decisions of the CDR Empowered Group shall be final. If restructuring of debt is found to be viable and feasible and approved by the Empowered Group, the company would be put on the restructuring mode. If restructuring is not found viable, the creditors would then be free to take necessary steps for immediate recovery of dues and / or liquidation or winding up of the company, collectively or individually. 3.3 CDR Cell 3.3.1 The CDR Standing Forum and the CDR Empowered Group will be assisted by a CDR Cell in all their functions. The CDR Cell will make the initial scrutiny of the proposals received from borrowers / lenders, by calling for proposed rehabilitation plan and other information and put up the matter before the CDR Empowered Group, within one month to decide whether rehabilitation is prima facie feasible. If found feasible, the CDR Cell will proceed to prepare detailed Rehabilitation Plan with the help of lenders and, if necessary, experts to be engaged from outside. If not found prima facie feasible, the lenders may start action for recovery of their dues. 3.3.2 All references for corporate debt restructuring by lenders or borrowers will be made to the CDR Cell. It shall be the responsibility of the lead institution / major stakeholder to the corporate, to work out a preliminary restructuring plan in consultation with other stakeholders and submit to the CDR Cell within one month. The CDR Cell will prepare the restructuring plan in terms of the general policies and guidelines approved by the CDR Standing Forum and place for consideration of the Empowered Group within 30 days for decision. The Empowered Group can approve or suggest modifications but ensure that a final decision is taken within a total period of 90 days. However, for sufficient reasons the period can be extended up to a maximum of 180 days from the date of reference to the CDR Cell. 3.4 The CDR Standing Forum, the CDR Empowered Group and CDR Cell shall be initially housed in IDBI and thereafter at a place as may be decided by the Standing Forum. The administrative and other costs shall be shared by all financial institutions and banks. The sharing pattern shall be as determined by the Standing Forum. 3.5 CDR Cell will have adequate members of staff deputed from banks and financial institutions. The CDR Cell may also take outside professional help. The initial cost in operating the CDR mechanism including CDR Cell will be met by IDBI initially for one year and then from contribution from the financial institutions and banks in the Core Group at the rate of Rs.50 lakh each and contribution from other institutions and banks at the rate of Rs.5 lakh each. 4 other features 4.1 Eligibility criteria 4.1.1 The scheme will not apply to accounts involving only one financial institution or one bank. The CDR mechanism will cover only multiple banking accounts / syndication / consortium accounts with outstanding exposure of Rs.20 crore and above by banks and institutions. 4.1.2 The Category 1 CDR system will be applicable only to accounts classified as 'standard' and 'sub-standard'. There may be a situation where a small portion of debt by a bank might be classified as doubtful. In that situation, if the account has been classified as ‘standard’/ ‘substandard’ in the books of at least 90% of lenders (by value), the same would be treated as standard / substandard, only for the purpose of judging the account as eligibile for CDR, in the books of the remaining 10% of lenders. There would be no requirement of the account / company being sick, NPA or being in default for a specified period before reference to the CDR system. However, potentially viable cases of NPAs will get priority. This approach would provide the necessary flexibility and facilitate timely intervention for debt restructuring. Prescribing any milestone(s) may not be necessary, since the debt restructuring exercise is being triggered by banks and financial institutions or with their consent. 4.1.3 In no case, the requests of any corporate indulging in wilful default, fraud or misfeasance, even in a single bank, will be considered for restructuring under CDR system. 4.1.4 The accounts where recovery suits have been filed by the lenders against the company, may be eligible for consideration under the CDR system provided, the initiative to resolve the case under the CDR system is taken by at least 75% of the lenders (by value). However, for restructuring of such accounts under the CDR system, it should be ensured that the account meets the basic criteria for becoming eligible under the CDR mechanism. 4.1.5 BIFR cases are not eligible for restructuring under the CDR system. However, large value BIFR cases, may be eligible for restructuring under the CDR system if specifically recommended by the CDR Core Group. The Core Group shall recommend exceptional BIFR cases on a case-to-case basis for consideration under the CDR system. It should be ensured that the lending institutions complete all the formalities in seeking the approval from BIFR before implementing the package. 4.2 Reference to CDR system 4.2.1 Reference to Corporate Debt Restructuring System could be triggered by (i) any or more of the creditor who have minimum 20% share in either working capital or term finance, or (ii) by the concerned corporate, if supported by a bank or financial institution having stake as in (i) above. 4.2.2 Though flexibility is available whereby the lenders could either consider restructuring outside the purview of the CDR system or even initiate legal proceedings where warranted, banks / FIs should review all eligible cases where the exposure of the financial system is more than Rs.100 crore and decide about referring the case to CDR system or to proceed under the new Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 or to file a suit in DRT etc. 4.3 Legal Basis 4.3.1 CDR will be a non-statutory mechanism which will be a voluntary system based on Debtor-Creditor Agreement (DCA) and Inter-Creditor Agreement (ICA). 4.3.2 The Debtor-Creditor Agreement (DCA) and the Inter-Creditor Agreement (ICA) shall provide the legal basis to the CDR mechanism. The debtors shall have to accede to the DCA, either at the time of original loan documentation (for future cases) or at the time of reference to Corporate Debt Restructuring Cell. Similarly, all participants in the CDR mechanism through their membership of the Standing Forum shall have to enter into a legally binding agreement, with necessary enforcement and penal clauses, to operate the System through laid-down policies and guidelines. The ICA signed by the creditors will be initially valid for a period of 3 years and subject to renewal for further periods of 3 years thereafter. The lenders in foreign currency outside the country are not a part of CDR system. Such lenders and also lenders like GIC, LIC, UTI, etc., and other third parties who have not joined the CDR system, could join CDR mechanism of a particular corporate by signing transaction to transaction ICA, wherever they have exposure to such corporate. 4.3.3 The Inter-Creditor Agreement would be a legally binding agreement amongst the creditors, with necessary enforcement and penal clauses, wherein the creditors would commit themselves to abide by the various elements of CDR system. Further, the creditors shall agree that if 75 per cent of creditors by value, agree to a restructuring package of an existing debt (i.e., debt outstanding), the same would be binding on the remaining creditors. Since Category 1 CDR Scheme covers only standard and sub-standard accounts, which in the opinion of 75 per cent of the creditors, are likely to become performing after introduction of the CDR package, it is expected that all other creditors (i.e., those outside the minimum 75 per cent) would be willing to participate in the entire CDR package, including the agreed additional financing. However, in case for any internal reason, any creditor (outside the minimum 75 per cent) does not wish to commit additional financing, that creditor will have the option. At the same time, in order to avoid the "free rider" problem, it is necessary to provide some disincentive to the creditor who wishes to exercise this option. Such creditor can either (a) arrange for his share of additional financing to be provided by a new or existing creditor, or (b) agree to deferment of the first year’s interest due to him after the CDR package becomes effective. The first year’s deferred interest as mentioned above, without compounding, will be payable along with the last instalment of the principal due to the creditor. 4.4 Stand-Still Clause 4.4.1 One of the most important elements of Debtor-Creditor Agreement would be 'stand still' agreement binding for 90 days, or 180 days by both sides. Under this clause, both the debtor and creditor(s) shall agree to a legally binding 'stand-still' whereby both the parties commit themselves not to taking recourse to any other legal action during the 'stand-still' period, this would be necessary for enabling the CDR System to undertake the necessary debt restructuring exercise without any outside intervention, judicial or otherwise. However, the stand-still clause will be applicable only to any civil action either by the borrower or any lender against the other party and will not cover any criminal action. Further, during the stand-still period, outstanding foreign exchange forward contracts, derivative products, etc., can be crystallised, provided the borrower is agreeable to such crystallisation. The borrower will additionally undertake that during the stand-still period the documents will stand extended for the purpose of limitation and also that he will not approach any other authority for any relief and the directors of the borrowing company will not resign from the Board of Directors during the stand-still period. 4.4.2 During pendency of the case with the CDR system, the usual asset classification norms would continue to apply. The process of reclassification of an asset should not stop merely because the case is referred to the CDR Cell. However, if restructuring under the CDR system takes place, the asset classification status should be restored to the position which existed when the reference to the Cell was made. Consequently, any additional provisions made by banks towards deterioration in the asset classification status during the pendency of the case with the CDR system may be reversed. 4.5 Additional finance 4.5.1 The providers of additional finance, whether existing lenders or new lenders, shall have a preferential claim, to be worked out under the restructuring package, over the providers of existing finance with respect to the cash flows out of recoveries, in respect of the additional exposure. 4.5.2 The additional finance extended to borrowers in terms of restructuring packages approved under the CDR system may be exempted from provisioning requirement for the specified period as defined at paragraph 5.2.3 below. 4.6 Exit Option 4.6.1 As mentioned in paragraph 4.3.3 above, the proposals for restructuring package should provide for option to a particular lender or lenders (outside the minimum 75 per cent who have agreed for restructuring) who for any internal reason, does/do not fully abide by the CDR Empowered Group's decision on restructuring. The lenders who wish to exit from the package would have the option to sell their existing share to either the existing lenders or fresh lenders, at an appropriate price, which would be decided mutually between the exiting lender and the taking over lender. The new lenders shall rank on par with the existing lenders for repayment and servicing of the dues since they have taken over the existing dues to the exiting lender. In addition, the 'exit option' will also be available to all other lenders within the minimum 75 per cent, provided the purchaser agrees to abide by the restructuring package approved by the Empowered Group. 4.6.2 The exiting lenders may be allowed to continue with their existing level of exposure to the borrower provided they tie up with either the existing lenders or fresh lenders for taking up their share of additional finance. 4.7 Conversion option 4.7.1 The CDR Empowered Group, while deciding the restructuring package, should decide on the issue regarding convertibility (into equity) option as a part of restructuring exercise whereby the banks / financial institutions shall have the right to convert a portion of the restructured amount into equity, keeping in view the statutory requirement under Section 19 of the Banking Regulation Act, 1949, (in the case of banks) and relevant SEBI regulations. 4.7.2 Exemptions from the capital market exposure ceilings prescribed by RBI in respect of such equity acquisitions should be obtained from RBI on a case-to-case basis by the concerned lenders. 4.8 Category 2 CDR System 4.8.1 There have been instances where the projects have been found to be viable by the lenders but the accounts could not be taken up for restructuring under the CDR system as they fell under ‘doubtful’ category. Hence, a second category of CDR is introduced for cases where the accounts have been classified as ‘doubtful’ in the books of lenders, and if a minimum of 75% (by value) of the lenders satisfy themselves of the viability of the account and consent for such restructuring, subject to the following conditions: i. It will not be binding on the creditors to take up additional financing worked out under the debt restructuring package and the decision to lend or not to lend will depend on each creditor bank / FI separately. In other words, under the proposed second category of the CDR mechanism, the existing loans will only be restructured and it would be up to the promoter to firm up additional financing arrangement with new or existing lenders individually. ii. All other norms under the CDR mechanism such as the standstill clause, asset classification status during the pendency of restructuring under CDR, etc., will continue to be applicable to this category also. 4.8.2 No individual case should be referred to RBI. CDR Core Group may take a final decision whether a particular case falls under the CDR guidelines or it does not. 4.8.3 All the other features of the CDR system as applicable to the First Category will also be applicable to cases restructured under the Second Category. 5 Accounting treatment for restructured accounts 5.1 The accounting treatment of accounts restructured under CDR system, including accounts classified as 'doubtful' under Category 2 CDR, would be governed by the prudential norms indicated in circular DBOD.BP.BC.98/21.04.048/2000-01 dated March 30, 2001. Restructuring of corporate debts under CDR system could take place in the following stages: a. before commencement of commercial production; b. after commencement of commercial production but before the asset has been classified as ‘sub-standard’; c. after commencement of commercial production and the asset has been classified as ‘sub-standard’ or ‘doubtful’. 5.2 The prudential treatment of the accounts, subjected to restructuring under CDR system, would be governed by the following norms: 5.2.1 Treatment of ‘standard’ accounts restructured under CDR a. A rescheduling of the instalments of principal alone, at any of the aforesaid first two stages [paragraph 5.1(a) and 5.1(b) above] would not cause a standard asset to be classified in the sub-standard category, provided the loan / credit facility is fully secured. b. A rescheduling of interest element at any of the foregoing first two stages would not cause an asset to be downgraded to sub-standard category subject to the condition that the amount of sacrifice, if any, in the element of interest, measured in present value terms, is either written off or provision is made to the extent of the sacrifice involved. For the purpose, the future interest due as per the original loan agreement in respect of an account should be discounted to the present value at a rate appropriate to the risk category of the borrower (i.e. current PLR + the appropriate credit risk premium for the borrower-category) and compared with the present value of the dues expected to be received under the restructuring package, discounted on the same basis. c. In case there is a sacrifice involved in the amount of interest in present value terms, as at (b) above, the amount of sacrifice should either be written off or provision made to the extent of the sacrifice involved. 5.2.2 Treatment of ‘sub-standard’ / ‘doubtful’ accounts restructured under CDR a. A rescheduling of the instalments of principal alone, would render a sub-standard / ‘doubtful’ asset eligible to be continued in the sub-standard / ‘doubtful’ category for the specified period, provided the loan / credit facility is fully secured. b. A rescheduling of interest element would render a sub-standard / ‘doubtful’ asset eligible to be continued to be classified in sub-standard / ‘doubtful’ category for the specified period subject to the condition that the amount of sacrifice, if any, in the element of interest, measured in present value terms, is either written off or provision is made to the extent of the sacrifice involved. For the purpose, the future interest due as per the original loan agreement in respect of an account should be discounted to the present value at a rate appropriate to the risk category of the borrower (i.e., current PLR + the appropriate credit risk premium for the borrower-category) and compared with the present value of the dues expected to be received under the restructuring package, discounted on the same basis. c. In case there is a sacrifice involved in the amount of interest in present value terms, as at (b) above, the amount of sacrifice should either be written off or provision made to the extent of the sacrifice involved. Even in cases where the sacrifice is by way of write off of the past interest dues, the asset should continue to be treated as sub-standard / ‘doubtful’. 5.2.3 The sub-standard / doubtful accounts at 5.2.2 (a), (b) and (c) above, which have been subjected to restructuring, etc. whether in respect of principal instalment or interest amount, by whatever modality, would be eligible to be upgraded to the standard category only after the specified period, i.e., a period of one year after the date when first payment of interest or of principal, whichever is earlier, falls due under the rescheduled terms, subject to satisfactory performance during the period. The amount of provision made earlier, net of the amount provided for the sacrifice in the interest amount in present value terms as aforesaid, could also be reversed after the one-year period. 5.2.4 During this one-year period, the sub-standard / doubtful asset will not deteriorate in its classification if satisfactory performance of the account is demonstrated during the period. In case, however, the satisfactory performance during the one year period is not evidenced, the asset classification of the restructured account would be governed as per the applicable prudential norms with reference to the pre-restructuring payment schedule. 5.2.5 The asset classification under CDR would continue to be bank-specific based on record of recovery of each bank, as per the existing prudential norms applicable to banks. 6 Disclosure 6.1 Banks / FIs should also disclose in their published annual Balance Sheets, under "Notes on Accounts", the following information in respect of corporate debt restructuring undertaken during the year: a. Total amount of loan assets subjected to restructuring under CDR. [(a) = (b)+(c)+(d)]b. The amount of standard assets subjected to CDR. c. The amount of sub-standard assets subjected to CDR. d. The amount of doubtful assets subjected to CDR. 7 IMPLEMENTATION OF THE REVISED GUIDELINES The above guidelines will be implemented with prospective effect. The ICA and DCA will have to be suitable amended for incorporating the changes introduced in the scheme. Back to top Section: Home , Notifications Date: Feb 05, 2003 Home | Site Map | About Us | What's New | Press Releases | Notifications | Financial Markets | Speeches | Regional Offices | Publications | Statistics | Currency | Forms | Other Links | FAQs | Tenders | Recruitment | Helpdesk | Search

General Circular 1/2003

General Circular No: 1/2003

No.17/75/2002-CL.V

Government of India

Ministry of Finance and Company Affairs

Department of Company Affairs

 

 

5th floor, `A’ Wing, Shastri Bhavan,

Dr. Rajendra Prasad Road, New Delhi-110 001.

 

Dated:    13thJanuary, 2003

 

To

All Regional Directors

All Registrars of Companies

 

Subject:-  Reopening/revision of annual accounts after their adoption in the annual general meeting.

………..

Sir,

 

            In partial modification of earlier view on re-opening/revision of annual accounts, this Department had clarified in 1987 that a company could reopen and revise its accounts even after their adoption in the annual general meeting in order to comply with technical requirements of taxation laws and further adopt the revised annual accounts in the subsequent annual general meeting and file with the Registrar of Companies. 

 

2.            Recently it has come to notice of the department that insurance companies, pursuant to directions for revision of accounts by Insurance Regulatory and Development Authority (IRDA) are required to reopen their accounts.

 

3.          It is hereby clarified that a company could reopen and revise its accounts even after their adoption in the annual general meeting and filing with the Registrar of Companies in order to comply with technical requirements of any other law to achieve the object of exhibiting true and fair view. The revised annual accounts would be required to be adopted either in the extraordinary general meeting or in the subsequent annual general meeting and filed with the Registrar of Companies.

 

 

Yours faithfully,

 

                                                                                                  (E. Selvaraj)

                                                                        Joint Director (T)

                                                                                    (Ph: 2338 3452 )

 

 

GEneral Circular 7/2003

 

General Circular No:  7/2003

 

No.2/5/2002-CL.V

Government of India

Ministry of Finance and Company Affairs

Department of Company Affairs

 

5th floor, `A’ Wing, Shastri Bhavan,

Dr. Rajendra Prasad Road, New Delhi-110 001.

 

Dated:     27th January, 2003

 

 

To

 

All Regional Directors

All Registrars of Companies

 

Subject:-  Refund of excess Registration Fees deposited by companies for Form No.5.

 

Sir,

 

            The Department had issued a notification No.S.O.419 (E) dated 27th April, 2000 revising Schedule X to the Companies Act, 1956 for filing a notice for increase in the nominal share capital of a Company.  In the said notification an anomaly had crept in, on arriving at the difference between the fees payable on the nominal share capital on the date of filing of the notice and the fees paid on the nominal share capital before the increase.  Therefore, by a further notification of No. S.O. 658(E) dated 12th July, 2000 effective from 12th July, 2000, the said anomaly was removed.  The notification had come to notice of the public after a few days and during the intervening period, a few Companies had paid fees calculated on the basis of the notification dated 27th April, 2000 and thereby they had paid excess fees for registration of Form No.5.

 

2.            Companies have approached the department and courts for refund of the excess registration fees paid by them on account of the said anomaly.

 

3.         The department has decided in consultation with Integrated Finance Division to refund the excess registration fees paid by Companies on or after 12.7.2000.  It is, hereby, clarified that Companies may seek refund by making a fresh request to the concerned Registrar of Companies (ROC) with proof of excess payment. It is further clarified that only the actual excess registration fees and interest, if any, charged by the ROC on late filing of Form No.5 would be refundable. The Companies will not claim any cost and interest.

  4.         ROC concerned will forward the claim of the Company duly certified by the concerned Pay & Accounts Officer to the department for issue of “Refund Sanction Order”.

 

5.         It is further clarified that no other notification other than notification No. S.O. 419(E) dated 27th April, 2000 and notification No. S.O. 658(E) dated 12th July, 2000 only are dealt with herein above.

 

6.         This issues with the concurrence of Integrated Finance Division vide their Diary No. 51/CA/03 dated 20.01.2003.

 

           

Yours faithfully,

 

 

 

                                                                                                (N.K. Vig)

                                                                        Under Secretary to the Govt. of India

                                                                                    (Ph: 2338 7174

General Circular No.5 of 2003

General Circular No. 5 of 2003

 

F.No. 2/5/2001-CL.V

Government of India

Ministry of Finance and Company Affairs

Department of Company Affairs

***********

5th Floor, `A’ Wing, Shastri Bhavan,

Dr. R.P. Road, New Delhi – 110 001.

Dated the 14th of January, 2003

 

 

To

 

All Regional Directors,

All Registrar of Companies

 

 

 

          Sub:  Disqualification of Directors under Section 274(1)(g) of the

                   Companies Act, 1956 – Clarification

 

 

Sir,

 

          In continuation of this Department’s Circular No. 8/2002 dated 22nd March, 2002, it is hereby clarified that default of privately placed bonds/ debentures/debt instruments by public financial institutions will not be considered as default to disqualify directors u/s 274(1)(g) of the Companies Act of 1956.

 

Yours faithfully,

 

 

( E. Selvaraj )

Joint Director(T)

 

 

 

Radaan Mediaworks Pvt. Ltd. Issue Opens On 05.02.03

Radaan Media Works India Ltd is coming out with a public issue of 27,12,000 Equity shares of Rs.10 each. The company is producing programs (mainly regional programs in the South Indian Languages) for Sun Television Network. The company is located at No.10, Paul Appasamy Street, T. Nagar, Chennai-600 017. The company has undertaken a project, which will be mainly funded by public issue. The company has proposed to issue equity shares with a cash premium of Rs. 30 each aggregating to Rs.1084.80 Lacs.

 

Any Bank or financial institution has not appraised the Cost of the Project for which funds are being raised and deployment of the funds would be at the sole discretion of the Management.

Introduction of Fund of Funds Schemes

Concept A fund of funds (FOF) scheme is a mutual fund scheme that invests in other mutual funds schemes instead of investing in securities. Such schemes are prevalent in international markets. These schemes can have different investment patterns and investment strategies as disclosed in offer documents. The investors may invest their funds in those FOF schemes which meet their investment objectives instead of investing in different schemes of a mutual fund and keeping track of their NAVs. Such FOF schemes may invest in other sector specific schemes or those schemes which have more weightage of certain stocks and can exit from those schemes when growth prospects of those sectors are not good. The investors putting their money in one sector specific scheme may not be able to decide when to exit. Regulatory Requirements At present clause 4 of Seventh Schedule of SEBI (Mutual Funds) Regulations restricts investment in other mutual fund scheme (under the same management or another mutual fund) up to 5% of the net assets of the mutual fund and prohibits charging of management fees on such investments. In view of these restrictions, a mutual fund cannot launch FOF scheme. Earlier, mutual funds had a small number of schemes and hence the concept of FOF was not much feasible. Over the years, all mutual funds have launched a number of schemes and it is now possible for them to launch such FOF schemes. It is also likely that a FOF scheme may like to invest in mutual funds schemes of other mutual funds subject to disclosures in the offer documents. Therefore, the aforesaid Regulations would need amendments so that Clause 4 of the Seventh Schedule of SEBI (Mutual Funds) Regulations is not made applicable to FOF schemes. As discussed with Association of Mutual Funds in India (AMFI), the following restrictions on FOF schemes are proposed: a) A FOF scheme shall not invest in other FOF scheme b) A FOF scheme shall invest its entire net assets in other mutual fund schemes, except the funds required for meeting the liquidity requirements for the purpose of repurchases, as disclosed in offer documents. c) A mutual fund scheme shall not invest in FOF scheme. Expenses and Management Fees Regarding recurring expenses and fees for FOF schemes, one suggestion is that the fees and other expenses charged by the other mutual fund scheme(s) (in which the FOF is investing) together with the management fee and expenses charged to the FOF scheme, should not exceed the total limits on expenses as prescribed under Regulation 52(6). The rationale behind this suggestion is that the mutual fund schemes in which FOF scheme invests, are already charging expenses and fees as specified under the Regulations. However, another suggestion from the mutual funds industry is that monitoring and keeping a track of expenses of FOF and other mutual funds schemes on daily basis would be very difficult. The view is that FOF scheme would have some expenses like marketing and distribution expenses and also would like to charge management fees as it is providing service to investors. It has been suggested that a maximum limit of 0.75% of expenses including management fees should be allowed in case of FOF schemes. Within this upper limit, the mutual funds can charge expenses depending on market forces. They would also disclose in offer documents and in advertisements for FOF schemes that the investors are bearing this expenditure in addition to expenses of other schemes in which FOF invests.

The Fastest Wealth Creators

According to “A Study on Wealth Creation (1997-2002)” prepared by Motilal Oswal Securities Ltd dated 16th January 2003 the following are the ……………… Top-10 Wealth Creators (1997-2002) The Fastest Wealth Creators ADJUSTED APPRECIATION RANK COMPANY MKT. CAP. (X) CAGR (%) 1 Wipro 133 68 2 Satyam Computer Services 122 54 3 E-Serve International 110 41 4 Infosys Technologies 97 30 5 Moser Baer (India) 83 21 6 Zee Telefilms 80 19 7 Sri Vishnu Cement 78 18 8 Aftek Infosys 75 16 9 CMC 73 16 10 Amtek Auto 70 14 The Biggest Wealth Creators WEALTH APPRECIATION RANK COMPANY CREATED (X) (RS CR) 1 Wipro 38,322 68 2 Hindustan Lever 27,111 2 3 Infosys Technologies 23,690 30 4 Oil & Natural Gas Corpn 9,568 1 5 Reliance Industries 8,401 2 6 ITC 8,294 2 7 Satyam Computer Services 7,523 54 8 Ranbaxy Laboratories 6,797 3 9 Dr. Reddy’s Laboratories 6,597 12 10 Hero Honda Motors 6,065 11 The report further states that Looking Ahead … “At all times, in all markets in all parts of world, the tiniest change in interest rates changes the value of every financial asset”. Ř The fall in the interest rates on long-term bonds will have a deep impact on the valuations of other financial assets, particularly stocks Ř Corporate earnings are likely to be positively impacted by the sustained drop in the interest rates – not only through own interest cost reduction but also through suppliers’ interest cost reduction Ř Value is, however, not immediately reflected in market prices as “Investors are habitually guided by recent experiences and extrapolate them into the future” Ř If viewed as a disguised bond, the BSE Sensex is a far superior compounding instrument than the 10-year Government bond

A FEW SIMPLE PRECAUTIONS FOR SAFE INVESTING IN STOCK MARKET

1. Deal with only SEBI registered broker/ sub-broker. 2. Fill in the Client Registration Form and enter into Broker Client Agreement. 3. Insist on obtaining a valid Contract Note or confirmation Memo from Broker within 24 hours of the execution of trade. 4. Ensure that the Contract Note contains (a) SEBI registration No. of the Broker (b) NSE / BSE computer generated Trade ID, Order No., Trade Time, (c) Trade price shown separately from the brokerage charged (d) signature of the authorised representative. 5. Ensure delivery of securities / payments of money to the broker immediately upon getting the Contract Note but in any case, before the prescribed Pay-in / Pay-out (Pay-in /Pay-out of securities, three days after the transaction date.) 6. The Broker should pay the money or securities to the investor within 48 hours of the Pay-out. Insist on the same. 7. Please understand properly the risks and rewards involved in equity investments. Select stocks on sound principles and knowledge. Select your investments depending your future financial needs. Use a judicious mix of different Shares, Bonds, Mutual funds etc. Keeping in mind your requirements of safety, security and liquidity. 8. Deal preferably in dematerialised securities. It is important that investors open Demat accounts for this purpose. 9. Keep a record of all instructions given to your broker. 10. When you are selling shares, confirm whether the delivery is in physical or Demat form, before sale. 11. Don’t fall to prey to promise of unrealistic returns, never believe in fixed returns assured in equities. 12. Use the investor’s grievance redressal mechanism of exchange to redress your grievances, if any.

Appointment of common agency for share registry work

The following is the text of the letter No. D&CC/FITTC/CIR-15/2002 dated December, 2002 issued by SEBI to all Stock Exchanges that is Circular No. 15 of Depositor and Custodian division of SEBI. In many cases the issuer companies are having an internal department or a division (by whatever name called) for handling of physical share work and an out side agency for handling the work of electronic connectivity. This kind of arrangement is leading to delay in dematerialisation, non-reconciliation of share holding due to lack of proper co-ordination among the concerned agencies or departments, which is adversely affecting the interest of the investors. It has therefore been decided that all the work related to share registry in terms of both physical and electronic should be maintained at single point i.e. either in-house by the company or by a SEBI registered R & T Agent. The above instructions should be implemented as early as possible, but in any case not later than February 01, 2003.

Major step towards Tata Consultancy IPO

Tata Sons Limited inched further towards initial public offering when in the last week it filed its application in the Bombay High Court for De-merging its software services division popularly known as Tata Consultancy Services. The IPO which is expected to hit the markets in the first half of the year 2003, will undoubtedly create sensation in the dull Indian Primary Market. The public issue size is expected to be around Rs. 3,000 crores to Rs. 4,000 crores by divestment /fresh issue of shares of about 10% of the new Company namely TCS post public issue capital size. Thus the offer price market capitalisation is likely to be Rs. 30,000 crores to Rs. 40,000 crores. The ultimate market capitalisation on listing may be even higher depending upon the premium at which the share may ultimately list on the exchanges. The post issue capital of the new resulting Company and the price at which the shares will be sold and other related details are not yet known. One major hurdle in the De-merger of Software Services division by Tata Suns Limited was that of transfer of undertaking in a De-merger and consequent dis-allowance of the tax free status for the new Company under Section 10A/10B of the Income Tax Act. However under a separate notification, Government has already clarified that the tax free status under these two sections will continue to be available to the new Company if majority beneficial ownership of the shares is not changed. Since Tata Sons will be holding majority of the beneficial ownership, this benefit is likely to be continued to the new Company. The another major hurdle would be Stamp Duty. Currently in Maharashtra, the Stamp Duty is 0.7% of the value of shares issued in De-merger or 7% of the value of immovable property situated in Maharashtra. The TCS IPO is expected to provide a much needed philip to the sagging Indian IPO Market. Mumbai, 25th December, 2002

SEBI obtains power to regulate or prohibit issue of Prospectus

With the passage of Securities and Exchange Board of India (Amendment) Act, 2002 which has amended SEBI Act, 1992, SEBI has now received powers to regulate or prohibit issue of prospectus, offer document or advertisement soliciting money for issue of securities. Section 11A of SEBI Act 1992 has been substituted by a new section 11A. The existing section 11A of SEBI Act was introduced in 1999 . This section related to matters to be disclosed by the Companies in the Prospectus. This section authorised SEBI Board, for the protection of investors, to specify, by way of Regulations the matters relating to issue of capital, transfer of Securities and other matters incidental thereto. This section further authorised SEBI to specify the manner in which such matters shall be disclosed by the companies. Under the new substituted section 11A these powers have been retained with SEBI and additionally now SEBI has been authorised, by general or special orders, to prohibit any Company from issue of Prospectus, any offer document, or advertisement soliciting money from the public for the issue of Securities. Further, SEBI is now authorised to specify the conditions subject to which the Prospectus, such offer document or advertisement, may be issued. It may be remembered that earlier SEBI had no power to prohibit any company from issuing Prospectus or offer document subsection (2) of section 11 further authorises SEBI to specify the requirements for listing and transfer of Securities and other matters incidental thereto. Under Section 21 of Securities Contracts (Regulation) Act, any Company whose securities are listed on any recognised Stock exchange has to comply with the conditions of the Listing Agreement with the Stock Exchange. Now without prejudice to the provisions of this section 21 of SCRA SEBI has got this independent power under SEBI Act. Mumbai, 25th December, 2002

Securities and Exchange Board of India (Amendment) Act,

Securities and Exchange Board of India (Amendment) Act, 2002

[59 of 2002]

An Act further to amend the Securities and Exchange Board of India Act, 1992

BE it enacted by Parliament in the Fifty-third Year of the Republic of India as follows :—

Short title and commencement.

1. (1) This Act may be called the Securities and Exchange Board of India (Amendment) Act, 2002.

(2) It shall be deemed to have come into force on the 29th day of October, 2002.

Amendment of section 2.

2. In section 2 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) (hereinafter referred to as the principal Act), in sub-section (1), after clause (h), the following clause shall be inserted, namely:—

‘(ha)“Reserve Bank” means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);’.

Amendment of section 4.

3. In section 4 of the principal Act,—

(a)  in sub-section (1),—

  (i)  in clause (b)

       (A) for the word “Ministries”, the word “Ministry” shall be substituted;

       (B) for the words “and Law”, the words and figures “and administration of the Companies Act, 1956 (1 of 1956)” shall be substituted;

(ii)  in clause (c), for the words and figures “the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934)”, the words “the Reserve Bank” shall be substituted;

(iii)  for clause (d), the following clause shall be substituted, namely:—

“(d)  five other members of whom at least three shall be the whole-time members,”;

(b)  in sub-section (4), for the words “Reserve Bank of India”, the words “Reserve Bank” shall be substituted.

Amendment of section 11.

4. In section 11 of the principal Act,—

(a)  in sub-section (2), after clause (i), the following clause shall be inserted, namely:—

“(ia)        calling for information and record from any bank or any other authority or board or corporation established or constituted by or under any Central, State or Provincial Act in respect of any transaction in securities which is under investigation or inquiry by the Board;”;

(b)  after sub-section (2), the following sub-section shall be inserted, namely:—

“(2A) Without prejudice to the provisions contained in sub-section (2), the Board may take measures to undertake inspection of any book, or register, or other document or record of any listed public company or a public company (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognised stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market.”;

  (c)  in sub-section (3),—

  (i)  in the opening portion, for the words, brackets, letter and figure “clause (i) of sub-section (2)”, the words, brackets, figures and letters “clause (i) or clause (ia) of sub-section (2) or sub-section (2A)” shall be substituted;

(ii)  after clause (iii), the following clauses shall be inserted at the end, namely :—

“(iv) inspection of any book, or register, or other document or record of the company referred to in sub-section (2A);

(v)  issuing commissions for the examination of witnesses or documents.”;

(d)  after sub-section (3), the following sub-section shall be inserted, namely:—

“(4) Without prejudice to the provisions contained in sub-sections (1), (2), (2A) and (3) and section 11B, the Board may, by an order, for reasons to be recorded in writing, in the interests of investors or securities market, take any of the following measures, either pending investigation or inquiry or on completion of such investigation or inquiry, namely:—

(a)  suspend the trading of any security in a recognised stock exchange;

(b)  restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities;

(c)  suspend any office-bearer of any stock exchange or self-regulatory organisation from holding such position;

(d)  impound and retain the proceeds or securities in respect of any transaction which is under investigation;

(e)  attach, after passing of an order on an application made for approval by the Judicial Magistrate of the first class having jurisdiction, for a period not exceeding one month, one or more bank account or accounts of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder :

       Provided that only the bank account or accounts or any transaction entered therein, so far as it relates to the proceeds actually involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder shall be allowed to be attached;

  (f)  direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation:

       Provided that the Board may, without prejudice to the provisions contained in sub-section (2) or sub-section (2A), take any of the measures specified in clause (d) or clause (e) or clause (f), in respect of any listed public company or a public company (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognised stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market :

       Provided further that the Board shall, either before or after passing such orders, give an opportunity of hearing to such intermediaries or persons concerned.”.

Substitution of new section for section 11A.

5. For section 11A of the principal Act, the following section shall be substituted, namely:—

“11A. Board to regulate or prohibit issue of prospectus, offer document or advertisement soliciting money for issue of securities.
(1) Without prejudice to the provisions of the Companies Act, 1956 (1 of 1956), the Board may, for the protection of investors,—

(a)  specify, by regulations—

  (i)  the matters relating to issue of capital, transfer of securities and other matters incidental thereto; and

(ii)  the manner in which such matters shall be disclosed by the companies;

(b)  by general or special orders—

  (i)  prohibit any company from issuing prospectus, any offer document, or advertisement soliciting money from the public for the issue of securities;

(ii)  specify the conditions subject to which the prospectus, such offer document or advertisement, if not prohibited, may be issued.

(2) Without prejudice to the provisions of section 21 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Board may specify the requirements for listing and transfer of securities and other matters incidental thereto.”.

Insertion of new sections 11C and 11D.

6. After section 11B of the principal Act, the following sections shall be inserted, namely:—

“11C. Investigation.—(1) Where the Board has reasonable ground to believe that—

(a)  the transactions in securities are being dealt with in a manner detrimental to the investors or the securities market; or

(b)  any intermediary or any person associated with the securities market has violated any of the provisions of this Act or the rules or the regulations made or directions issued by the Board thereunder,

it may, at any time by order in writing, direct any person (hereafter in this section referred to as the Investigating Authority) specified in the order to investigate the affairs of such intermediary or persons associated with the securities market and to report thereon to the Board.

(2) Without prejudice to the provisions of sections 235 to 241 of the Companies Act, 1956 (1 of 1956), it shall be the duty of every manager, managing director, officer and other employee of the company and every intermediary referred to in section 12 or every person associated with the securities market to preserve and to produce to the Investigating Authority or any person authorised by it in this behalf, all the books, registers, other documents and record of, or relating to, the company or, as the case may be, of or relating to, the intermediary or such person, which are in their custody or power.

(3) The Investigating Authority may require any intermediary or any person associated with securities market in any manner to furnish such information to, or produce such books, or registers, or other documents, or record before him or any person authorised by it in this behalf as it may consider necessary if the furnishing of such information or the production of such books, or registers, or other documents, or record is relevant or necessary for the purposes of its investigation.

(4) The Investigating Authority may keep in its custody any books, registers, other documents and record produced under sub-section (2) or sub-section (3) for six months and thereafter shall return the same to any intermediary or any person associated with securities market by whom or on whose behalf the books, registers, other documents and record are produced:

Provided that the Investigating Authority may call for any book, register, other document and record if they are needed again:

Provided further that if the person on whose behalf the books, registers, other documents and record are produced requires certified copies of the books, registers, other documents and record produced before the Investigating Authority, it shall give certified copies of such books, registers, other documents and record to such person or on whose behalf the books, registers, other documents and record were produced.

(5) Any person, directed to make an investigation under sub-section (1), may examine on oath, any manager, managing director, officer and other employee of any intermediary or any person associated with securities market in any manner, in relation to the affairs of his business and may administer an oath accordingly and for that purpose may require any of those persons to appear before it personally.

(6) If any person fails without reasonable cause or refuses—

(a)  to produce to the Investigating Authority or any person authorised by it in this behalf any book, register, other document and record which is his duty under sub-section (2) or sub-section (3) to produce; or

(b)  to furnish any information which is his duty under sub-section (3) to furnish; or

(c)  to appear before the Investigating Authority personally when required to do so under sub-section (5) or to answer any question which is put to him by the Investigating Authority in pursuance of that sub-section; or

(d)  to sign the notes of any examination referred to in sub-section (7),

he shall be punishable with imprisonment for a term which may extend to one year, or with fine, which may extend to one crore rupees, or with both, and also with a further fine which may extend to five lakh rupees for every day after the first during which the failure or refusal continues.

(7) Notes of any examination under sub-section (5) shall be taken down in writing and shall be read over to, or by, and signed by, the person examined, and may thereafter be used in evidence against him.

(8) Where in the course of investigation, the Investigating Authority has reasonable ground to believe that the books, registers, other documents and record of, or relating to, any intermediary or any person associated with securities market in any manner, may be destroyed, mutilated, altered, falsified or secreted, the Investigating Authority may make an application to the Judicial Magistrate of the first class having jurisdiction for an order for the seizure of such books, registers, other documents and record.

(9) After considering the application and hearing the Investigating Authority, if necessary, the Magistrate may, by order, authorise the Investigating Authority—

(a)  to enter, with such assistance, as may be required, the place or places where such books, registers, other documents and record are kept;

(b)  to search that place or those places in the manner specified in the order; and

(c)  to seize books, registers, other documents and record, it considers necessary for the purposes of the investigation:

Provided that the Magistrate shall not authorise seizure of books, registers, other documents and record, of any listed public company or a public company (not being the intermediaries specified under section 12) which intends to get its securities listed on any recognised stock exchange unless such company indulges in insider trading or market manipulation.

(10) The Investigating Authority shall keep in its custody the books, registers, other documents and record seized under this section for such period not later than the conclusion of the investigation as it considers necessary and thereafter shall return the same to the company or the other body corporate, or, as the case may be, to the managing director or the manager or any other person, from whose custody or power they were seized and inform the Magistrate of such return:

Provided that the Investigating Authority may, before returning such books, registers, other documents and record as aforesaid, place identification marks on them or any part thereof.

(11) Save as otherwise provided in this section, every search or seizure made under this section shall be carried out in accordance with the provisions of the Code Criminal Procedure, 1973 (2 of 1974) relating to searches or seizures made under that Code.

11D. Cease and desist proceedings.—If the Board finds, after causing an inquiry to be made, that any person has violated, or is likely to violate, any provisions of this Act, or any rules or regulations made thereunder, it may pass an order requiring such person to cease and desist from committing or causing such violation :

Provided that the Board shall not pass such order in respect of any listed public company or a public company (other than the intermediaries specified under section 12) which intends to get its securities listed on any recognised stock exchange unless the Board has reasonable grounds to believe that such company has indulged in insider trading or market manipulation.”.

Insertion of new Chapter VA.

7. After Chapter V of the principal Act, the following Chapter shall be inserted, namely:—

“Chapter VA

Prohibition of Manipulative and Deceptive Devices,
Insider Trading and Substantial Acquisition of
Securities or Control

12A. Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control.—No person shall directly or indirectly—

(a)  use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognised stock exchange, any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder;

(b)  employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed to be listed on a recognized stock exchange;

  (c)  engage in any act, practice, course of business which operates or would operate as fraud or deceit upon any person, in connection with the issue, dealing in securities which are listed or proposed to be listed on a recognized stock exchange, in contravention of the provisions of this Act or the rules or the regulations made thereunder;

(d)  engage in insider trading;

  (e)  deal in securities while in possession of material or non-public information or communicate such material or non-public information to any other person, in a manner which is in contravention of the provisions of this Act or the rules or the regulations made thereunder;

  (f)  acquire control of any company or securities more than the percentage of equity share capital of a company whose securities are listed or proposed to be listed on a recognized stock exchange in contravention of the regulations made under this Act.”.

Amendment of section 14.

8. In section 14 of the principal Act, in sub-section (1), clause (aa) shall be omitted.

Amendment of section 15A.

9. In section 15A of the principal Act,—

  (i)  in clause (a), for the words “a penalty not exceeding one lakh and fifty thousand rupees for each such failure”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted;

(ii)  in clause (b), for the words “a penalty not exceeding five thousand rupees for every day during which such failure continues”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted;

(iii)  in clause (c), for the words “a penalty not exceeding ten thousand rupees for every day during which the failure continues”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted.

Amendment of section 15B.

10. In section 15B of the principal Act, for the words “a penalty not exceeding five lakh rupees for every such failure”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted.

Substitution of new section for section 15C.

11. For section 15C of the principal Act, the following section shall be substituted, namely :—

“15C. Penalty for failure to redress investors’ grievances.—If any listed company or any person who is registered as an intermediary, after having been called upon by the Board in writing, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.”.

Amendment of section 15D.

12. In section 15D of the principal Act,—

  (i)  in clause (a), for the words “a penalty not exceeding ten thousand rupees for each day during which he carries on any such collective investment scheme including mutual funds, or ten lakh rupees, whichever is higher”, the words “a penalty of one lakh rupees for each day during which he sponsors or carries on any such collective investment scheme including mutual funds, or one crore rupees, whichever is less” shall be substituted;

(ii)  in clause (b), for the words “a penalty not exceeding ten thousand rupees for each day during which such failure continues or ten lakh rupees, whichever is higher”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted;

(iii)  in clause (c), for the words “a penalty not exceeding five thousand rupees for each day during which such failure continues or five lakh rupees, whichever is higher”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted;

(iv)  in clause (d), for the words “a penalty not exceeding one thousand rupees for each day during which such failure continues”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted;

(v)  in clause (e), for the words “a penalty not exceeding one thousand rupees for each day during which such failure continues”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted;

(vi)  in clause (f), for the words “a penalty not exceeding five lakh rupees for each such failure”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted.

Amendment of section 15E.

13. In section 15E of the principal Act, for the words “a penalty not exceeding five lakh rupees for each such failure”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted.

Amendment of section 15F.

14. In section 15F of the principal Act,—

  (i)  in clause (b), for the words “a penalty not exceeding five thousand rupees for each day during which such failure continues”, the words “a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less” shall be substituted;

(ii)  in clause (c), for the words “a penalty not exceeding five thousand rupees”, the words “a penalty of one lakh rupees” shall be substituted.

Amendment of section 15G.

15. In section 15G of the principal Act, for the words “not exceeding five lakh rupees”, the words “twenty-five crore rupees or three times the amount of profits made out of insider trading, whichever is higher” shall be substituted.

Amendment of section 15H.

16. In section 15H,—

(a)  after clause (ii), the following clauses shall be inserted, namely:—

“(iii)       make a public offer by sending letter of offer to the shareholders of the concerned company; or

(iv)  make payment of consideration to the shareholders who sold their shares pursuant to letter of offer,”;

(b)  for the words “not exceeding five lakh rupees”, the words “twenty-five crore rupees or three times the amount of profits made out of such failure, whichever is higher” shall be substituted.

Insertion of new sections 15HA and 15HB.

17. After section 15H of the principal Act, the following sections shall be inserted, namely:—

“15HA. Penalty for fraudulent and unfair trade practices.—If any person indulges in fraudulent and unfair trade practices relating to securities, he shall be liable to a penalty of twenty-five crore rupees or three times the amount of profits made out of such practices, whichever is higher.

15HB. Penalty for contravention where no separate penalty has been provided.—Whoever fails to comply with any provision of this Act, the rules or the regulations made or directions issued by the Board thereunder for which no separate penalty has been provided, shall be liable to a penalty which may extend to one crore rupees.”.

Amendment of section 15-I.

18. In section 15-I of the principal Act, in sub-section (1), for the word, figures and letter “and 15H”, the figures, letters and word “15H, 15HA and 15HB” shall be substituted.

Insertion of new section 15JA.

19. After section 15J of the principal Act, the following section shall be inserted, namely:—

“15JA. Crediting sums realised by way of penalties to Consolidated Fund of India.—All sums realised by way of penalties under this Act shall be credited to the Consolidated Fund of India.”.

Substitution of new sections for sections 15L and 15M.

20. For sections 15L and 15M of the principal Act, the following sections shall be substituted, namely:—

“15L. Composition of Securities Appellate Tribunal.—A Securities Appellate Tribunal shall consist of a Presiding Officer and two other members, to be appointed, by notification, by the Central Government :

Provided that the Securities Appellate Tribunal, consisting of one person only, established before the commencement of the Securities and Exchange Board of India (Amendment) Act, 2002, shall continue to exercise the jurisdiction, powers and authority conferred on it by or under this Act or any other law for the time being in force till two other Members are appointed under this section.

15M. Qualification for appointment as Presiding Officer or Member of Securities Appellate Tribunal.—(1) A person shall not be qualified for appointment as the Presiding Officer of a Securities Appellate Tribunal unless he is a sitting or retired Judge of the Supreme Court or a sitting or retired Chief Justice of a High Court :

Provided that the Presiding Officer of the Securities Appellate Tribunal shall be appointed by the Central Government in consultation with the Chief Justice of India or his nominee.

(2) A person shall not be qualified for appointment as member of a Securities Appellate Tribunal unless he is a person of ability, integrity and standing who has shown capacity in dealing with problems relating to securities market and has qualification and experience of corporate law, securities laws, finance, economics or accountancy :

Provided that a member of the Board or any person holding a post at senior management level equivalent to Executive Director in the Board shall not be appointed as Presiding Officer or Member of a Securities Appellate Tribunal during his service or tenure as such with the Board or within two years from the date on which he ceases to hold office as such in the Board.”.

Substitution of new section for section 15N.

21. For section 15N of the principal Act, the following section shall be substituted, namely :—

“15N. Tenure of office of Presiding Officer and other Members of Securities Appellate Tribunal.—The Presiding Officer and every other Member of a Securities Appellate Tribunal shall hold office for a term of five years from the date on which he enters upon his office and shall be eligible for re-appointment :

Provided that no person shall hold office as the Presiding Officer of the Securities Appellate Tribunal after he has attained the age of sixty-eight years :

Provided further that no person shall hold office as a Member of the Securities Appellate Tribunal after he has attained the age of sixty-two years.”.

Amendment of section 15-O.

22. In section 15-O of the principal Act,—

(a)  for the words “Presiding Officer of a Securities Appellate Tribunal”, the words “Presiding Officer and other Members of a Securities Appellate Tribunal” shall be substituted;

(b)  in the proviso, for the words “said Presiding Officers”, the words “Presiding Officer and other Members of a Securities Appellate Tribunal” shall be substituted.

Amendment of section 15P.

23. In section 15P of the principal Act, for the words “office of the Presiding Officer”, the words “the office of the Presiding Officer or any other Member,” shall be substituted.

Amendment of section 15Q.

24. In section 15Q of the principal Act,—

(a)  in sub-section (1),—

  (i)  for the words “Presiding Officer of a Securities Appellate Tribunal”, the words “the Presiding Officer or any other Member of a Securities Appellate Tribunal” shall be substituted;

(ii)  in the proviso, for the words “the said Presiding Officer”, the words “the Presiding Officer or any other Member” shall be substituted;

(b)  in sub-section (2), for the words “Presiding Officer” at both the places where they occur, the words “Presiding Officer or any other Member” shall be substituted;

  (c)  in sub-section (3), for the words “aforesaid Presiding Officer”, the words “the Presiding Officer or any other Member” shall be substituted.

Amendment of section 15R.

25. In section 15R of the principal Act, for the words “Presiding Officer”, the words “Presiding Officer or a Member” shall be substituted.

Substitution of new section for section 15X.

26. For section 15X of the principal Act, the following section shall be substituted, namely :—

“15X. Presiding Officer, Members and staff of Securities Appellate Tribunals to be public servants.—The Presiding Officer, Members and other officers and employees of a Securities Appellate Tribunal shall be deemed to be public servants within the meaning of section 21 of the Indian Penal Code (45 of 1860).”.

Substitution of new section for section 15Z.

27. For section 15Z of the principal Act, the following section shall be substituted, namely :—

“15Z. Appeal to Supreme Court.—Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of law arising out of such order :

Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days.”.

Amendment of section 24.

28. In section 24 of the principal Act,—

(a)  in sub-section (1), for the words “one year, or with fine, or with both” the words “ten years, or with fine, which may extend to twenty-five crore rupees or with both” shall be substituted;

(b)  in sub-section (2), for the words “three years or with fine which shall not be less than two thousand rupees but which may extend to ten thousand rupees or with both”, the words “ten years or with fine, which may extend to twenty-five crore rupees or with both” shall be substituted.

Insertion of new sections 24A and 24B.

29. After section 24 of the principal Act, the following sections shall be inserted, namely :—

“24A. Composition of certain offences.—Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), any offence punishable under this Act, not being an offence punishable with imprisonment only, or with imprisonment and also with fine, may either before or after the institution of any proceeding, be compounded by a Securities Appellate Tribunal or a court before which such proceedings are pending.

24B. Power to grant immunity.—(1) The Central Government may, on recommendation by the Board, if the Central Government is satisfied, that any person, who is alleged to have violated any of the provisions of this Act or the rules or the regulations made thereunder, has made a full and true disclosure in respect of the alleged violation, grant to such person, subject to such conditions as it may think fit to impose, immunity from prosecution for any offence under this Act, or the rules or the regulations made thereunder or also from the imposition of any penalty under this Act with respect to the alleged violation :

Provided that no such immunity shall be granted by the Central Government in cases where the proceedings for the prosecution for any such offence have been instituted before the date of receipt of application for grant of such immunity:

Provided further that recommendation of the Board under this sub-section shall not be binding upon the Central Government.

(2) An immunity granted to a person under sub-section (1) may, at any time, be withdrawn by the Central Government, if it is satisfied that such person had, in the course of the proceedings, not complied with the condition on which the immunity was granted or had given false evidence, and thereupon such person may be tried for the offence with respect to which the immunity was granted or for any other offence of which he appears to have been guilty in connection with the contravention and shall also become liable to the imposition of any penalty under this Act to which such person would have been liable, had not such immunity been granted.”.

Amendment of section 26.

30. In section 26 of the principal Act, in sub-section (2), for the words “a Metropolitan Magistrate or a Judicial Magistrate of the first class”, the words “a Court of Session” shall be substituted.

Amendment of section 29.

31. In section 29 of the principal Act, in sub-section (2),—

  (i)  in clause (db), for the words “Presiding Officers”, the words “Presiding Officers, Members” shall be substituted;

(ii)  in clause (dc), for the words “Presiding Officers”, the words “Presiding Officers, or other Members” shall be substituted.

Repeal and saving.

32. (1) The Securities and Exchange Board of India (Amendment) Ordinance, 2002 (Ord. 6 of 2002) is hereby repealed.

(2) Notwithstanding the repeal of the Securities and Exchange Board of India (Amendment) Ordinance, 2002 (Ord. 6 of 2002), anything done or any action taken under the principal Act as amended by the said Ordinance, shall be deemed to have been done or taken under the principal Act, as amended by this Act.

Resident Indians can open, hold and maintain Foreign Currency Accounts

In a important development the Reserve Bank of India has notified the Foreign Exchange Management (Foreign Currency Accounts by a Person Resident in India) (Fifth Amendment) Regulations 2002, and allowed that a person Resident in India may open, hold and maintain with an Authorised Dealer in India a foreign currency account to be known as Resident Foreign Currency (Domestic) Account out of foreign exchange acquired in the form of currency notes, bank notes and travellers cheques while on a visit to any place outside India by way of payment for services not arising from any business in or anything done in India, or from any person not resident in India and who is on a visit to India; as honorarium or gift or for services rendered or in settlement of any lawful obligation; or by way of honorarium or gift while on a visit to any place outside India; or represents the unspent amount of foreign exchange acquired by him from an authorised person for travel abroad. Debits to the account shall be for payments towards a current account transaction in accordance with the provisions of the Foreign Exchange Management (Current Account Transactions ) Rules, 2000 and towards a capital account transaction permissible under the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000. The account shall be maintained in the form of Current Account and shall not bear any interest. There shall be no ceiling on the balances in the account. (Source Notification No. FEMA 74/2002- RB, DATED 1-11-2002, Issued by Exchange Control Department, RBI)

SEBI eases rules for FII registration

The Securities and Exchange Board of India, with an eye on attracting portfolio inflows into India, said on Tuesday it was cutting the registration time and fee for foreign institutional investors. "We have simplified procedures for registration of FIIs. Secondly, what we have done is to bring down the time lag for registration," G N Bajpai, chairman of the market regulator, told Reuters during a trip to Hong Kong. "Earlier it used to be three to four weeks. Now it is fourteen days," Bajpai said. SEBI also reduced the registration fees for FIIs to $5,000 from $10,000. Asked when the changes come into effect, Bajpai said, "Immediately." The market watchdog's chief also said that all securities traded on domestic bourses will switch to a shorter settlement cycle of T+2 days from April 2003. Earlier this year, trading on Indian bourses moved to a T+3 basis, replacing the old five-day settlement cycle (T+5).

Preferential issues no longer exempt from Takeover Code

In a significant development, by way of amendment to Takeover Regulations notified by SEBI on 9th September, 2002, exemption to Preferential Allotments from Takeover Code has been removed by SEBI. From the inception of 1997 Takeover Code, Preferential Allotments /issues to promoters or any other group of persons were exempt from the provisions of Takeover Code if necessary disclosures required by SEBI were made in the Notice calling meeting of members in which the Preferential Allotment/ issue is to be considered and other SEBI guidelines are followed and application for exemption is filed with SEBI after the allotment. In other words, even when a group of persons acquire, 15% or more of voting share capital of a Company, the acquirers were not required to make a public offer to existing shareholders if the preferential Allotment / Issue guidelines were followed. Now as per the Amendment, to Regulation 3 (1)(c) of Takeover Code Preferential Allotments are no longer exempt from Takeover Code. Readers would recall that there were many instances of exempt Preferential Allotments pursuant to which promoters or other group of Acquirers had taken the advantage of Preferential Allotment during depressed market conditions. However, Companies can still seek advance exemption for Preferential Allotment from SEBI under Regulation 3(1) (l) of Takeover Code, on a case by case basis and by justifying their case for exemption. Mumbai, 4th December, 2002

Criteria/guidelines for the purpose of financial assistance from the Investor Education and Protection Fund

i) Any organisation/entity/person who has a viable project proposal on investors education and protection should be eligible for assistance from the Fund. (ii) The limit for each person/organisation for assistance from the Fund should be subject to 5% of the budget of IEPF during that financial year and not exceeding 50% of the amount to be spent on the proposed programme/activity. (iii) The associations or institutions or organisations already engaged in activities relating to investor awareness, education and protection and proposing to take up investors programmes, organising seminars, symposia etc. shall undertake projects for investor protection including research activities. (iv) The associations or institutions or organisations shall be registered under the Societies Registration Act or formed as Trusts or incorporated companies. (v) Associations or institutions or organisations, shall unless specific exemption has been made in this regard by the Committee on IEPF, be in existence for a minimum period of 2 years prior to its date of application for registration. (vi) Associations or institutions or organisations shall have a minimum of 20 Members and a proven record of 2 years. (vii) The association or institution or organisation shall have rules, regulations and or by-laws for the governance and management of the association or institution or organisation. These rules, regulations and or by-laws shall be in conformity with the conditions of registration. The association or institution or organisation shall be managed by a governing Board/management committee. (viii) No profit making association or institution or organisation shall be eligible for registration for the purposes of financial assistance from the fund. (ix) Notwithstanding the above the Committee on IEPF can give a project to any organisation. (x) The amount of grant assistance given from the Fund shall be subject to an audit by the Department of Company Affairs to ensure its proper utilization. (xi) While considering the proposals the Committee will take into account the audited accounts and the annual reports of the last three years of the organisation seeking assistance from the Fund.

Real Estate Mutual Fund soon to be a reality.

Mutual Fund Industry will soon have some more excitement as SEBI is likely to allow Real Estate Mutual Funds. Real Estate Mutual Funds are expected to be dedicated to invest in property and Real Estate. A SEBI's meeting to be held on Friday, 29th November, 2002 is expected to allow Mutual Funds to invest in Real Estate. Thereafter Regulations relating thereto are likely to be finalised. It appears that some leading Mutual Funds have already taken initiatives and approached SEBI for approval to invest in Real Estate. However, the approval was not forthcoming up to now. The move to allow Mutual Funds to invest in Real Estate is expected to push up Property Market and will bring large funds in the property market and will give one more avenue of investment to the Mutual Fund Industry which is very badly needed. The move will also augur well for the prospective buyers of houses.

FRANKLIN TEMPLETON LAUNCHES FUND FOR INVESTMENT IN US SECURITIES

For the first time in India, an investor will get the opportunity to invest in a portfolio of US Government Securities. Franklin India International Fund (FINTF) is an open end foreign securities income scheme which helps diversify portfolio risks across countries and currencies. Investors can now own US $ assets with their Indian rupee savings i.e. invest in United States of America with Franklin and give to their investment, dollar exposure.Franklin Templeton is one of the largest Mutual Fund in India with over US$ 1.91 billion in assets (Rs.9,200 crores) and close to 9 lakh shareholder accounts. FINTF is an open end foreign securities income scheme (investing 80-100% in Franklin US Government Fund (US Fund), 0-20% in Short Term Instruments in India) whose objective is to provide returns by investing predominantly in the units of the Franklin US Government Fund, which primarily invests in Ginnie Maes securities which have the full faith and Credit Guarantee of US Government. Ginnie Maes are mortgage backed securities which have a track record of delivering excellent risk-adjusted returns among their peer group. FINTF is a High Income and Low Price Volatility (S&P Volatility S2)without Credit Risk with excellent Risk –Adjusted Returns. Individuals and Institutions looking to diversify their fixed income portfolio across countries or who have a future dollar commitment (parents, importers etc.) can look forward to invest in FINTF. Exporters and Non-resident individuals who currently keep their forex earnings overseas can also consider to invest in this fund. The issue of FINTF opens on 2nd December,2002 and closes on 20th December,2002.

RBI allows Pro-rata Divestments of existing shares

In a very interesting development the Reserve Bank of India today allowed listed Indian Companies to sponsor ADR/GDR against divestment of existing shares held by its existing Shareholders at a price to be determined by a lead Manager. A Notification was issued to the Authorised foreign exchange dealers. An existing listed Company can sponsor divestment by its existing Shareholders in Foreign Markets by way of ADR/GDR issues. RBI has further said that the sponsoring Company would have to give an option to all Shareholders and indicate the amount of shares to be divested and inform them of the price determination mechanism. If the shares offered by all the existing Shareholders for divestment are more than the pre determined number by the Company, than the shares would be accepted in proportion of existing holding of the Shareholders. Thus, for the first time a mechanism for offloading shares of existing Indian Shareholders by way of ADR/GDR has opened up. Investors would recall that earlier in view of deprived market conditions Unit Trust of India had moved a proposal to Infosys Ltd. for offloading its take in Infosys by way of ADR/GDR issue and requested Infosys to sponsor the said issue. However, Infosys had expressed its inability to do the same as such an act would deprive other existing Shareholders of the Company including small shareholders who would not be able to divest their stake, in foreign market. In view of RBI Notification, such a handicap has been removed and all the Shareholders will be allowed to participate in the sale of their shares in ADR/GDR issue. Thus, for the first time a new opportunity for Indian Shareholders has come up. It is likely that price realisation in ADR/GDRs will be at a premium to existing market price. Alternatively the existing market price of eligible companies may go up. The Companies who desire to sponsor the divestment and existing shares of their stake holders are also allowed to sponsor their ADR/GDR with an Over Seas Depository. The Companies would have to comply with the provisions of Foreign Currency Convertible Boards and ordinary shares (through depository receipt mechanism) scheme, 1993 and the Guidelines issued by Central Government in this behalf for sponsoring the issues. The proceeds of issue will have to be represented into India within a period of one month of closer of ADR/GDR issue. The SEBI Takeover Code will also apply to such divestment if and when ADR/GDR are cancelled and shares are registered with the Company by the Shareholders. Such a divestment would be treated as a foreign direct investment and would also require clearance from foreign investment promotion board and other concerned agencies. Mumbai, 25th November, 2002.

Kelkar Committee Report has some good news for the Investors

While the discussion regarding recommendations of Kelkar Committee is becoming hotter day by day and Companies and Chambers of Commerce have started opposing to many of the proposals of the Kelkar Committee Report, there are some good news for individuals and other Investors. Some of the favourable recommendations of the Kelkar Committee, for Investors are given below:- (I) The Income Tax rates are being revised as follows: For Income below Rs. 1lakh - Tax payable Nil For Income between Rs. 1lakh to 4lakhs - 20% of the Income in excess of Rs. 1 lakh For Income above Rs. 4 lakhs - Rs. 60,000 + 30% of Income in excess of Rs. 4 lakhs. (II) Tax on dividends is proposed to be removed. This is one news which the Investors were eagerly waiting for. (III) Long term capital gains on Equity will be fully exempt. This is a shot in arm for the Investors. However, on the down side standard deduction for salaried persons is being removed. Also rebate for senior citizens and women tax payers are being eliminated. The deduction under Section 80-L for interest Income and dividend is proposed to be eliminated. Mumbai, 23rd November, 2002.

Securities And Exchange Board Of India (Issue of Sweat Equity) Regulations, 2002.

THE GAZETTE OF INDIA EXTRA - ORDINARY PART II – SECTION 3 – SUB-SECTION (ii) PUBLISHED BY AUTHORITY SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION MUMBAI, THE 24th DAY OF SEPTEMBER , 2002 SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF SWEAT EQUITY) REGULATIONS, 2002 S.O. No. 1031(E) In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992) read with clause (d) of sub-section (1) of Section 79A of the Companies Act, 1956 (1 of 1956) as inserted by Companies (Amendment) Act, 1999 (1 of 1999), the Board, hereby, makes the following regulations, namely :- CHAPTER I PRELIMINARY Short title and commencement. 1. (a) These regulations shall be called the Securities and Exchange Board of India ( Issue of Sweat Equity ) Regulations, 2002. These regulations shall come into force on the date of their publication in the Official Gazette. Definitions. 2. (1) In these regulations, unless the context otherwise requires :- ‘Act’ means the Securities and Exchange Board of India Act, 1992 ; ‘associate’ includes a person, who directly or indirectly by himself or in combination with relatives, exercises control over the company; or, whose employee, officer or director is also a director, officer or employee of another company; ‘Board’ means the Board as defined in clause (a) of sub-section (1) of section 2 of the Act ; ‘control’ shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders or voting agreements or in any other manner ; ‘company’ means a company as defined in the Companies Act, 1956; ‘director’ means, a director as defined in sub-section (13) of section 2 of the Companies Act, 1956 ; ‘employee’ means ; (i) a permanent employee of the company working in India or abroad or (ii) a director of the company, whether a whole time director or not. ‘ESOS’ means an Employees Stock Option Scheme as defined in Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 ; ‘insider’ means an insider as defined in clause (e) of regulation 2 of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992 ; ‘merchant banker’ means a merchant banker registered under section 12 of the Act ; ‘promoter’ means promoter as defined in clause (h) of sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Substantial Acquisition of shares and Takeovers) Regulations, 1997 ; ‘registrar’ means a registrar to an issue and includes a share transfer agent registered under section 12 of the Act ; ‘securities’ means securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; ‘statutory auditor’ means an auditor appointed by a company under section 224 of the Companies Act 1956 (1 of 1956) ; ‘Recognised Stock Exchange’ means a stock exchange which has been granted recognition under section 4 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) ; ‘sweat equity shares’ means sweat equity shares as defined in Explanation II of Sub-section (1) of Section 79A of the Companies Act, 1956 ; "Schedule" means a schedule to these Regulations ; ‘valuer’ means a Chartered Accountant or a merchant banker appointed to determine the value of the intellectual property rights or other value addition ; Words and expressions not defined in these regulations shall have the same meaning as have been assigned to them under the Act or the Securities Contracts (Regulation) Act, 1956 or the Companies Act, 1956, or any statutory modification or re-enactment thereof, as the case may be. Applicability . 3. Nothing contained in these regulations shall apply to an unlisted company. Provided the unlisted company coming out with initial public offering and seeking listing of its securities on the stock exchange, pursuant to issue of sweat equity shares, shall comply with the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000. CHAPTER II ISSUE OF SWEAT EQUITY BY A LISTED COMPANY Sweat equity shares may 4. A company whose equity shares are listed on a be issued to employee, recognised stock exchange may issue sweat promoter. equity shares in accordance with Section 79A of Companies Act, 1956 and these Regulations to its- Employees Directors Special Resolution. 5. (1)For the purposes of passing a special resolution under clause (a) of sub-section (1) of section 79A of the Companies Act, 1956 the explanatory statement to be annexed to the notice for the general meeting pursuant to section 173 of the Companies Act, 1956 shall contain disclosures as specified in the Schedule. (2) The issue of sweat equity shares to promoters shall be subject to the requirements specified in Regulation 6 of these Regulations. Issue of Sweat Equity 6 .(1) In case of issue of sweat equity shares to Shares to Promotors. promoters, the same shall also be approved by simple majority of the shareholders in General Meeting. Provided that for passing such resolution, voting through postal ballot as specified under Companies (Passing of the resolution by Postal Ballot) Rules 2001 shall also be adopted. Provided further that the promoters to whom such Sweat Equity Shares are proposed to be issued shall not participate in such resolution. Each transaction of issue of Sweat Equity shall be voted by a separate resolution. The resolution for issue of Sweat Equity shall be valid for a period of not more than twelve months from the date of passing of the resolution. (4) For the purposes of passing the resolution, the explanatory statement shall contain the disclosures as specified in the Schedule. Pricing of Sweat Equity 7.(1) The price of sweat equity shares shall not be Shares. less than the higher of the following :- The average of the weekly high and low of the closing prices of the related equity shares during last six months preceding the relevant date; or The average of the weekly high and low of the closing prices of the related equity shares during the two weeks preceding the relevant date. Explanation :- "relevant date" for this purpose means the date which is thirty days prior to the date on which the meeting of the General Body of the shareholders is convened, in terms of clause (a) of sub-section (1) of section 79A of the Companies Act. If the shares are listed on more than one stock exchange, but quoted only on one stock exchange on the given date, then the price on that stock exchange shall be considered. If the share price is quoted on more than one stock exchange, then the stock exchange where there is highest trading volume during that date shall be considered. If shares are not quoted on the given date, then the share price on the next trading day shall be considered. Valuation of intellectual 8.(1) The valuation of the intellectual property rights Property. or of the know-how provided or other value addition mentioned in Explanation II of sub-section (1) of Section 79A of the Companies Act, 1956 shall be carried out by a merchant banker. The merchant banker may consult such experts and valuers, as he may deem fit having regard to the nature of the industry and the nature of the property or other value addition. The merchant banker shall obtain a certificate from an independent Chartered Accountant that the valuation of the intellectual property or other value addition is in accordance with the relevant accounting standards. Accounting Treatment. 9. (1) Where the sweat equity shares are issued for a non – cash consideration, such non-cash consideration shall be treated in the following manner in the books of account of the company :- where the non-cash consideration takes the form of a depreciable or amortizable asset, it shall be carried to the balance sheet of the company in accordance with the relevant accounting standards; or where clause (a) is not applicable, it shall be expensed as provided in the relevant accounting standards. Placing of Auditors 10. In the general meeting subsequent to the Certificate Before issue of sweat equity, the Board of Directors Annual General shall place before the shareholders, a Meeting. certificate from the auditors of the company that the issue of sweat equity shares has been made in accordance with the Regulations and in accordance with the resolution passed by the company authorizing the issue of such Sweat Equity Shares. Ceiling on Managerial 11. The amount of Sweat Equity shares issued Remuneration. shall be treated as part of managerial remuneration for the purposes of sections 198, 309, 310, 311 and 387 of the Companies Act, 1956 if the following conditions are fulfilled : the Sweat Equity shares are issued to any director or manager; and, they are issued for non-cash consideration, which does not take the form of an asset which can be carried to the balance sheet of the company in accordance with the relevant accounting standards. Lock-in of sweat equity shares. 12. (1) The Sweat Equity shares shall be locked in for a period of three years from the date of allotment. The Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000, on public issue in terms of lock-in and computation of promoters’ contribution shall apply if a company makes a public issue after it has issued sweat equity. Listing. 13. The Sweat Equity issued by a listed company shall be eligible for listing only if such issue are in accordance with these regulations. Applicability of Takeover. 14. Any acquisition of Sweat Equity Shares shall be subject to the provision of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997. CHAPTER III GENERAL OBLIGATIONS Obligations of the Company. 15. (1) The company shall ensure that - The Explanatory Statement to the notice for general meeting shall contain certain disclosures as are specified under clause (b) of Sub-section (1) of Section 79A of the Companies Act, 1956 and sub-regulation (1) of Regulation 5. Auditor’s certificate as required under Regulation 10 shall be placed in the general meeting of shareholders. The company shall within seven days of the issue of sweat equity, issue or send statement to the recognized stock exchange, disclosing : (i) number of sweat equity shares ; (ii) price at which the sweat equity shares are issued ; (iii) total amount invested in sweat equity shares ; (iv) details of the persons to whom sweat equity shares are issued; and, (v) the consequent changes in the capital structure and the shareholding pattern after and before the issue of sweat equity. Action against intermediaries. 16. The Board may, on failure of the merchant banker to comply with the obligations under these regulations or failing to observe due diligence in respect of valuation of intellectual property or value addition, initiate action against the merchant banker in terms of Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992. CHAPTER IV PENALTIES AND PROCEDURE Power of the Board to order 17. (1) The Board may, suo-motu or upon inspection or investigation. information received by it, cause an inspection to be made of the books of account or other books and papers of any company or an investigation to be made in respect of the conduct and affairs of any person associated with the process of Sweat Equity, by appointing an officer of the Board. Provided that no such inspection or investigation shall be made except for the purposes specified in sub-regulation(2). The purposes referred to in sub-regulation (1) are the following, namely:- (a) to ascertain whether there are any circumstances which would render any person guilty of having contravened any of these regulations or any directions issued thereunder; (b) to investigate into any complaint of any contravention of the regulation, received from any investor, or any other person; (3) An order passed under the sub-regulation (1) shall be sufficient authority for the Inspecting or Investigating Officer to undertake the inspection or investigation, as the case may be and on production of an authenticated copy of the order, the person concerned shall be bound to carry out the duty imposed in Regulation 18. Duty to produce records, etc. 18. (1) It shall be the duty of every person in respect of whom an inspection or investigation has been ordered under regulation 17, to produce before the inspecting or the investigating Officer such book, accounts and other documents in his custody or control and furnish him with such statements and information as the said officer may require from the purposes of the inspection or investigation. (2) Without prejudice to the generality of the provisions of sub-regulation (1), such person shall – (a) extend to the Inspecting or Investigating Officer reasonable facilities for examining any books, accounts and other documents in his custody or control (whether kept manually or in computer or in any other form) reasonably required for the purposes of the inspection or investigation; (b) provide such Inspecting or Investigating Officer copies of such books, accounts and records which, in opinion of the Officer, are relevant to the inspection or investigation or, as the case may be, allow him to take out computer printouts thereof. (c) provide such assistance and co-operation as may be required in connection with the inspection or investigation and furnish information relevant to such inspection or investigation as may be sought by such officer. (3) The Inspecting or Investigating Officer shall for the purpose of inspection or investigation, have the full powers; (a) of summoning and enforcing the attendance of persons; (b) to examine orally and to record on oath the statement of the persons concerned, any director, partner, member or employee of such person. Submission of Report to the 19 (1) The Inspecting or Investigating Officer Board. shall, on completion of the inspection or Investigation after taking into account all relevant facts and circumstances, submit a report to the Board. On the receipt of report under sub- regulation (1), the Board may initiate such action as it may be deemed fit to do in the interests of investors and the securities market. Power of the Board to issue 20. The Board may in the interests of the directions. securities market and without prejudice to its right to initiate action including criminal prosecution under section 24 of the Act or Section 621 of Companies Act, 1956 give such directions as it deems fit including: - (a) directing the person concerned not to further deal in securities in any particular manner; (b) directing the person concerned to sell or divest the sweat equity shares acquired in violation of the provisions of these Regulations or any other law or regulations; (c) prohibiting the persons concerned, from accessing the securities market; (d) directing the disgorgement of any ill-gotten gains or profit or avoidance of loss. (e) restraining the company from making a further offer for sweat equity. [ F.No.SEBI/LE/ 22 / 02 / ] G.N.BAJPAI CHAIRMAN SECURITIES AND EXCHANGE BOARD OF INDIA SECURITIES AND EXCHANGE BOARD OF INDIA (Issue of Sweat Equity) Regulations, 2002 SCHEDULE [Under Regulation 6(4)] The explanatory statement to the notice and the resolution proposed to be passed in the general meeting for approving the issuance of sweat equity shall, inter alia, contain the following information : - The total number of shares to be issued as sweat equity. The current market price of the shares of the company. The value of the intellectual property rights or technical know how or other value addition to be received from the employee or director along with the valuation report / basis of valuation. The names of the employees or directors or promoters to whom the sweat equity shares shall be issued and their relationship with the company. The consideration to be paid for the sweat equity. The price at which the sweat equity shares shall be issued. Ceiling on managerial remuneration, if any, which will be affected by issuance of such sweat equity. A statement to the effect that the company shall conform to the accounting policies as specified by the Board. Diluted Earning Per Share pursuant to the issue of securities to be calculated in accordance with International Accounting Standards / standards specified by the Institute of Chartered Accountants of India. **************** Print this page Email this page Disclaimer | Acknowledgement All text and media on these pages are © Copyright, Securities and Exchange Board of India. 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SEBI COMMITTEE RECOMMENDATION ON PUBLIC ISSUES:

Securities and Exchange Board of India (SEBI)’s committee, headed by Mr. Y.H. Malegam, has recommended that Companies should not be allowed to make public/right issue of shares unless75% of the finance amount (other than equity capital) for the project is tied up. The Report of the Committee says that a Company should tie - up 75% of other sources of funds before raising funds from the public. Such partial financial closure would make the project more certain and thus investors’ interest would get protected. The existing SEBI guidelines do not impose any financial committments on Qualified Institutional Buyers (QIBs) participating in book building issues. However, the Committee has proposed (i) some financial committments for QIBs participating in book building process. (ii) that QIBs should not be allowed to withdraw bids made by them. (iii) that identity of QIBs participating for issue of shares should not be made public as this may influence the bidding sentiments of retail investors. The Committee also recommended : (i) That the draft offer document submitted to the SEBI should be signed and approved by the Board of Directors of the Company. (ii) That photographs of the promoters and proofs of their odentities like PAN number should be disclosed in the offer document. (iii) That the end use of the funds raised from the market should be disclosed. i.e.funds required for fixed assets or for working capital, etc. The panel also wants underwriting norms to be changed. Under the present guidelines, an underwriter could take maximum underwriting obligation of 20 times its networth. As the committee finds it too high it recommended that the underwriting obligation should be linked to net worth under different slabs such as: Rs. 1-5 crores 10 times their networth Rs. 5 crores and multiples 20 times their networth Mumbai, 18th November, 2002

SEBI COMMITTEE RECOMMENDATION ON PUBLIC ISSUES:

Securities and Exchange Board of India (SEBI)’s committee, headed by Mr. Y.H. Malegam, has recommended that Companies should not be allowed to make public/right issue of shares unless75% of the finance amount (other than equity capital) for the project is tied up. The Report of the Committee says that a Company should tie - up 75% of other sources of funds before raising funds from the public. Such partial financial closure would make the project more certain and thus investors’ interest would get protected. The existing SEBI guidelines do not impose any financial committments on Qualified Institutional Buyers (QIBs) participating in book building issues. However, the Committee has proposed (i) some financial committments for QIBs participating in book building process. (ii) that QIBs should not be allowed to withdraw bids made by them. (iii) that identity of QIBs participating for issue of shares should not be made public as this may influence the bidding sentiments of retail investors. The Committee also recommended : (i) That the draft offer document submitted to the SEBI should be signed and approved by the Board of Directors of the Company. (ii) That photographs of the promoters and proofs of their odentities like PAN number should be disclosed in the offer document. (iii) That the end use of the funds raised from the market should be disclosed. i.e.funds required for fixed assets or for working capital, etc. The panel also wants underwriting norms to be changed. Under the present guidelines, an underwriter could take maximum underwriting obligation of 20 times its networth. As the committee finds it too high it recommended that the underwriting obligation should be linked to net worth under different slabs such as: Rs. 1-5 crores 10 times their networth Rs. 5 crores and multiples 20 times their networth Mumbai – 18th November, 2002

Canara Bank Public issue opens on 18th November, 2002.

Bombay, 9th November, 2002 Canara Bank’s Public Issue will open on 18th November, 2002. The Bank is offering 11,00,00,000 Equity shares of Rs. 10/- each at a premium of Rs. 25 per share. The book value of Canara bank’s share is stated to be much higher than Rs. 25 per share. However, due to depressed primary market conditions the offer price has been kept at less than book value. Total issue size is Rs. 385 Crores.Canara Bank is a Sole Collecting Bank to the issue. Canara bank is also offering 1000 transferable equity shares per employee,to its employees. ICICI Securities, SBICAP, Kotak-Mahindra,JM Morgan and DSP Merrill Lynch are Lead Managers to the Issue. Canara Bank is a well-run, profit making Bank and is almost a household name for investors and should prove to be a good long-term investment.

SEBI approves setting-up of a Central Listing Agency.

Mumbai, 9th November, 2002. SEBI Board todau approved a proposal to set-up a Central Listing Agency(CLA). The present system of obtaining Listing approval from individual Stock-exchanges had many flaws and resulted into different procedures, duplication of efforts and chances of fraud. The Delisting Panel appointed by SEBI had, in its Report, recommended to the SEBI for setting-up of a Central Listing Agency.

Accounting for Emplyee Stock-options

Mumbai, 8th November,2002. Stock-options and its Accounting has come under increased spotlight recently more so due to huge options taken by some US companies and subsequent insider trading charges when these companies failed. In the USA companies have to account for compensation cost of employee stock options on the basis of fair value of options or intrinsic value of options.The value so arrived at is debited to the profit and loss account and thus reported earnings are reduced by that amount. However, the problem lies in the working of fair value of options on the grant date of option. fair value is worked out on the basis of many option pricing models available like Black-Scholes model.But these models may noe ne perfect nor do they meet all the situations.

MUHURAT TRADING OF SAMVAT 2058 STARTS WITH HOPE

Mumbai, 4th November, 2002. Although the Samvat Year that went by was disappointing for most investors and brokers, thr Muhurat trading today in Mumbai took off with optimism. The likely increase in India's weightage in MSCI index was a good news as also the gas find at Reliance Godavari fields.Microsoft's anti-trust settlement with the US Justice Department also cheered up the tech-investors. Half-yearly results of most major Indian companies were also good which improved the mood and optimism for the coming year.

Allahabad Bank IPO opens on Oct 23

The Kolkata based Allahabad Bank is coming out with a Rs.100 Crores public issue at par and is opening on October 23, 2002. It had filed a prospectus with SEBI on August 23, 2002. The bank proposes to list its equity shares at Calcutta Stock Exchange (CSE), The Stock Exchange, Mumbai and the National Stock Exchange of India Limited. Allahabad Bank is the third bank in this calendar year to come out with a public offering after Union Bank of India and Punjab National Bank. The net profit of the bank for the F.Y. 2002 was Rs. 80.22 Crores while the corresponding figure for F.Y. 2001 was Rs. 39.91 Crores. The rate of growth of 101% can be mainly attributed to treasury profit. As far as the provision for NPA’s are concerned, the absolute figure stands at Rs.1,160 Crores which is 10.57% of its net advances as on 31-3-2002. The same is conformity with RBI guidelines. The Capital Adequacy Ratio (CAR) as on 31-3-2002 was 10.6%, which is more than the minimum stipulated 9%. The Net worth (excluding Revaluation reserves) was Rs. 721.62 crores and the Book value of the share was Rs. 29.25 (face value: Rs.10) as on 31-3-2002. The EPS for the FY 2002 was Rs.4.24. In this present competitive environment and soft interest rate regime, the Bank has been able to bring down the cost of funds to 7.36% during 2001-02 from 7.62% during 2000-01. The Bank has a presence in the banking sector for more than 137 years. Allahabad Bank has a regional concentration in northern and eastern India. The bank had 1,914 branches and 138 extension counters as on 31-3-2002 with a presence in all states. The Bank had already installed 41 ATMs in 23 cities all over India and has planned to install another 40 ATMs during the current financial year. The Bank’s product portfolio includes trade finance, consumer loans, credit cards, Kisan cards, demat services, etc. Its treasury is capable of handling transactions in forex, debt and money markets. The Bank has also 32 specialized branches to cater to the need of industry finance, trade finance, personal banking, international banking and small-scale industries. Also, the Bank has training colleges at Kolkata and Lucknow to train its employees. The Bank released 1499 employees under the Voluntary Retirement Scheme 2002 for rightsizing its manpower position. SBI Capital Markets Limited, JM Morgan Stanley Private Limited, Kotak Mahindra Capital Company Limited, Bajaj Capital Limited and Allianz Securities Limited are the lead managers to the issue and M/s Karvy Consultants Limited is the registrar to the issue.

IndusInd Board approves merger of IndusInd Enterprises and Finance Ltd. (IEFL) with itself.

The Board of IndusInd Bank approved a share swap ratio of 1:1 for merging its finance arm IEFL with the Bank. SBI Capital Markets and A. F. Ferguson acted as advisors for IndusInd Bank and IEFL respectively, for recommendations, including the share swap ratio. It is understood that the parameters selected for making the recommendations include discounted cash flows, adjusted book values and average of the share prices of the bank in the preceding six months. The swap ratio is said to have been derived from the mean of the above parameters. Post-merger, the promoters holding will fall from 49.9% to 41.3%. However, the immediate reason for the proposed merger appears to satisfy the demand of around 39,000 shareholders of IEFL for a direct shareholding in the Bank. Those shareholders belong to the Sindhi Community. Presently, the promoter holding in the Bank comprises of offshore based, IIHL and IEFL. IIHL also holds 51% shareholding in IEHL. IIHL holds 25% shares in the Bank and IEFL hold 24.9% shares in the Bank. The Bank's share was trading at Rs 16 on 22nd August. IEFL has no debt funds. Due to current liberalised scenario and economic policies of the government, the businesses which were so far being carried out by NBFC's can now be carried out by Commercial banks as well. It is anticipated that post merger there will synergy in operations.

BONUS CUM RIGHTS ISSUE OF KARNATAKA BANK

The Karnataka Bank has announced a Bonus cum Rights issue in the ratio of 1:1. The Bank's Board approved the same on 22nd August. The Bonus issue amounts Rs. 13.5 Crores and Rights issue of another Rs.13.5 Crores taking the post issue capital base of the Bank from Rs.13.5 Crores to Rs. 40.5 Crores. The bonus issue will be made by capitalising the Share Premium account. The rights are priced at Rs. 25 per share, which means a premium of Rs. 15 per share. Pursuant to the issue the Bank's Net Worth will increase by Rs. 36 crores to Rs. 478 crores. Presently the Share Premium account stands at Rs. 72 crores which will be appropriately reduced. It is also said that the bonus-rights issue will boost the Capital Adequacy Ratio [CAR]. At present the CAR stands at 13%. The Bank's scrip rose 20% on the BSE after the announcement. The Bank is in the process of appointing a Merchant Banker and seek clearance from SEBI for the Bonus cum Rights issue.

INDIA DIRECT FUND DIVESTMENT

India Direct Fund (IDF), a private equity fund managed by International Equity Partners (IEP) has opted out of 3 Investments amongst the 10 Investments it has made in India so far. The three companies are Brain Gem, Alok Textiles and New World Application. IDF is said to have realised a cumulative return of $ 10 million on divestment against an original investment of $ 7.3 million. Next on the list is Secure Meters where the exit is being planned through the IPO route. The IPO will be managed by Enam Securities. The local advisors of IEP, Indian Direct Equity Advisors say that it has not been finalised whether IDF will make a full or partial exit. For the year ended 30th June 2002, Secure Meters reported a turnover of Rs 160 crores which is expected to reach Rs 200 crores in the current year. IDF expects to exit 50% of its current Investments. IDF has so far invested $28 million in 10 companies out of its corpus of $34 million. Presently the portfolio of Investment comprises companies such as Sun Earth Ceramics, Ecoboard Industries, Drish Shoes, United Studios, Time Packaging and Delta Innovative Enterprises. Though IDF prefers the IPO exit route it is now open to finding strategic buyers.

LIKELY POSTPONEMENT OF UPCOMING NALCO, MARUTI IPOs

The Current wave of negative sentiments which has engulfed the PSU Stocks is likely to have an adverse impact on the Disinvestment Ministry's proposals to sell stakes in National Aluminum Company Ltd. (NALCO) and Maruti Udyog Ltd. (MUL) This is particularly due to Cabinet Committee on Disinvestment's decision to postpone privatisation of oil majors HPCL and BPCL. The concerned government officials apprehend that NALCO and MUL IPOs may not sail through smoothly in present market conditions. Both the IPOs are planned for completion before March 2003. PSU Scrips have lost thousands of Crores of Rupees in market capitalisation. Among them the greatest downfall was suffered by HPCL and BPCL. In case of NALCO, the government had planned to sell 10% of its Equity in Domestic Markets and 20% in the United States through issue of ADR's. For MUL a sale of 25% of its equity in Domestic Markets was envisaged. The ADR issue for NALCO was planned after completion of the domestic sale. Thereafter invitation of bids for sale of strategic holdings was on the cards. It now seems that the timing of above offers may have to be revised in the light of present pessimistic market environment.

UNION BANK OF INDIA HAS PRICED ITS IPO AT RS.16

The Union Bank of India has piced its IPO at Rs. 16 which includes a premium of Rs. 6 on a share of Rs. 10. The aggregate size of the issue is Rs. 288 crore and the bank would be issuing 18 core equity shares, according to a statement issued on Thursday.

RELIANCE OPEN OFFER TO BUY IPCL SHARES

Reliance Petroinvestments Ltd. has dispatched its letter of offer to the Share Holders of IPCL Ltd. to acquire their shares at Rs. 231 per equity share. The offer opens on 24th July, 2002 and closes on 22nd August, 2002. The last date by which acceptance or rejection would be intimated and the payment for purchase of shares is 21st September, 2002. Reliance offer is to purchase upto 20% of the total shares of IPCL. According to the share holding pattern as on 31st March, 2002, filed with the Bombay Stock Exchange by IPCL, the promoters hold 60% and the public holds 40% of the total share capital. According to the letter of offer filed by Reliance, Reliance and Government of India both being promoters cannot participate in the Public Offer. The offer of 20% is applicable only to the public who holds 40%. Assuming that every Shareholder from Public submits the shares for purchase to Reliance atleast 50% of the shares have to be purchased by Reliance at 231 per equity share while the current ruling price is around Rs. 152 per equity share. Thus it may be a good investment for the Shareholders.

Insider Trading Regulations, 2002

AMENDMENTS TO INSIDER TRADING REGULATIONS.

                       -By Shailesh Bathiya, Chartered Accountant

 

The bane of insider trading has always inflicted stock markets. To curb this menace, Securities and Exchange Board of India (SEBI) framed Regulations in 1992 titled as SEBI (Insider Trading Regulations), 1992. Learning from experience and to improve the efficacy of present Regulations and to expand their scope in certain areas, SEBI has amended these Regulations in February, 2002. The Amendments to Regulations were notified in the Gazette of India Extra Ordinary on 20th February, 2002 and are effective from that day. These are titled as Securities and Exchange Board of India (Insider Trading) (Amendment) Regulations, 2002. following are some of the  salient features of these Amendments.

 

1   Change in title of Regulations:- By an amendment to the original title and  Regulation 1, now these Regulations will be called as SEBI (Prohibition of Insider Trading Regulations), 1992. Words “ prohibition of ’ have now been added in the name/title of the Regulations perhaps to designate its new focus on the prohibition of insider trading.

 

2   Amendments in Definitions: -

2.1      By an amendment to Regulation 2(c) which defines a “ connected person”, the words

 “ Whether temporary or permanent” have been inserted in the definition of connected person. Any person who occupies the position as an officer or an employee of the company or holds a position involving a professional or business relationship between himself and the company and who may reasonably be expected to have an access to unpublished price-sensitive information in relation to that company is considered a “connected person” [Regulation 2(C)]. By insertion of words “whether temporary or permanent” it is now specified that any such relationship may be even of a temporary nature to cover it under the definition of “connected person” A professional firm of lawyers or accountants or architects or a business associate who may have a temporary assignment with the company will also now be covered as a “Connected Person”.

 

2.2      By insertion of an Explanation after Regulation 2(c)(ii), the scope of the definition of the phrase “connected person” has been expanded to include any person who is a connected person six months prior to an act of insider trading. Thus, now a person would be guilty of insider trading even if he is not a connected person at the time of insider trading but was a connected person within a period of 6 months prior to an act of insider trading. Thus directors who may have resigned or retired from a company can still be treated as “connected persons” for a period of six months from the date of resignation/retirement.

 

2.3      The definition of phrase “dealing in securities “ [Regulation 2(d)] has been expanded to cover an act of “subscribing” to any securities. Old definition covered acts of buying, selling or agreeing to buy, sell or deal in any securities and thus did not cover explicitly an act of subscribing to new issues of shares. Similarly, agreeing to subscribe will also be covered as an act of dealing in securities.

 

2.4      Regulation 2(e), which defines an “insider”, has been amended by omission of words “ by virtue of such connection”. In the earlier definition, it was necessary to establish that an insider is a connected person and who is reasonably expected to have access, by virtue of such connection, to unpublished price-sensitive information. Now, it will not be necessary to establish that by virtue of a connection the insider is reasonably expected to have access to price-sensitive information. It will be sufficient to prove that a person is connected with the company and is reasonably expected to have access (whether by virtue of such connection or otherwise) to price-sensitive information.

 

2.5      The definition of a “person is deemed to be a connected person” has been amended to include all intermediaries as specified in Section12 of SEBI Act.  Section 12 of SEBI Act refers to a stock broker, a sub-broker, a share-transfer agent, a banker to the issue, a trustee of trust deed, a registrar to an issue, a merchant banker, an underwriter a portfolio manager, an investment advisor, a depository, a depository participant, a custodian of securities, a foreign Institution investor, a credit rating agency and such other intermediaries who may be associated with the securities market. Besides, a trustee company is also now included. Regulation 2(h) (iii) already covered some of these persons. Some new categories are now included like Bankers to an issue, an Underwriter, a depository, a depository participant, FII, Credit Rating Agency, etc. Additionally, directors of all the above-mentioned persons and officials of a clearing-house or corporation are also now included in this definition [Regulation 2(h)(ii)].

 

2.6      The definition of a “person is deemed to be a connected person” has been further expanded by insertion of Regulation 2(h)(viii) by which now relatives of the connected persons and a concern, firm, trust, HUF, company or association of persons in which the relatives of persons mentioned in Regulation 2(h)(vi),(vii) and (viii) have more than 10% of the holding or interest. This definition has a loop in itself as sub- clause (viii) also refers to relatives mentioned in sub-clause (viii). Thus, concern, firm, etc. of relatives of relatives will also now be covered.

 

2.7      Price sensitive information has now been defined in Regulation 2(ha). Earlier, unpublished price sensitive information was defined in Regulation 2(k). Price sensitive information means any information, which relates directly or indirectly to a company and which if published, is likely to materially affect the price of securities of a company. The Explanation also gives certain information, which are deemed to be price sensitive information. At the same time, Regulation 2(k) is now substituted and defines “unpublished” as information, which is not published by the company or its agents and is not specific in nature. Thus, unpublished information is one, which is not published and is not specific in nature. Thus, even if information is known in the market, if it is not published by the company, it will remain unpublished information under these Regulations. The Explanation to Regulation 2 (k) provides that speculative report in print or electronic media shall not be considered as published information. Thus a company/ insider cannot take shelter under the argument that the information was published speculatively in media and thus known to the market.

 

   3       Regulation 3 relating to prohibition on dealing, communicating or counseling on matters relating to insider trading has been amended. In Clause 3(i) in place of words ”on the basis of” the words “when in possession of” have been substituted. Thus now an insider cannot take shelter under the argument that it is to be proved by SEBI that he dealt in securities of a listed company on the basis of unpublished price-sensitive information. It will be sufficient if is established that he was in possession of such information and dealt in securities of that company.

 

4       New Regulation 3A has been inserted which specifies that no company shall deal in the securities   of another company or associate of that other company while in possession of any unpublished price-sensitive information. Thus, now, specifically companies are also prohibited from dealing in securities of another company while in possession of any unpublished price-sensitive information. It appears that unpublished price-sensitive information should be regarding Investee Company or its associates. It appears that unlisted companies can also not deal in the securities of a company if they are in possession price-sensitive information.

 

5       Power to make enquiries and inspection. A new Regulation 4A has been inserted for this purpose. Under the existing Regulations, SEBI has the powers to investigate on the basis of written information in its possession and if it is of the opinion that it is necessary to investigate and inspect the records of an Insider. Now, under the new Regulation 4A if the Board suspects that any person has violated any provision of Insider Trading Regulations it may make enquiries with such person or any other person mentioned in Section 11(2) as deemed fit to form a prima facie opinion as to whether there is any violation of insider trading regulations. The Board may appoint one or more officers to inspect the books and records of insiders or any other persons as mentioned in Clause 11(2)(i) fro the above purpose. Thus mere suspicion by the Board regarding violation is sufficient for making enquiries by the SEBI. After enquiries SEBI can form a prima facie opinion.

 

        6.1     Board’s right to investigate as prescribed in old Regulation 5 has been now amended to provide that instead of “ on the basis of written information in its possession is of the opinion” the Board can be of “prima facie opinion” to start investigation. Thus it is not necessary for SEBI now to have a considered opinion but a mere prima facie opinion will be sufficient.

 

        6.2     The amendment to Regulation 5 further provides that besides the insider, investigation can be carried out in respect of any other person mentioned in clause (i) of Sub-section (1) of Section 11 of SEBI Act. It appears that the correct reference should be Section 11(2)(i) as it refers to various categories of persons like Stock Exchanges, Mutual Funds and other persons associated with the securities market, intermediaries and self-regulatory oranisations in the securities market. Thus the scope of persons who can be investigated has been widened.

 

7            Obligations on Insider on Investigation by the Board. The obligation of the insider to produce to the investigating authority books etc. is now extended to cover other persons, besides insiders, against whom investigation can now be carried on as mentioned above. Additionally, it has been provided that besides the Insider any other person, against whom investigation can now be carried on, shall allow the investigating authority to have reasonable access to the premises. Similarly, investigating authority shall be entitled to examine or record statements of any such other person.

 

8            Time limit for submission of report of the investigating authority was earlier one month which can now  be given within reasonable time.

 

9            Under the old Regulation an opportunity of hearing was available to the insider before any action is taken by the Board on the findings of the investigating authority. Now, instead of an opportunity of hearing the person affected can reply within 21 days.

 

10        The auditor who may be appointed by the Board to investigate into books of accounts or the affairs of the insider, shall have the same powers of the inspecting authority as mentioned in Regulation 4A above, besides the existing power of inspecting authority under Regulation 5.

 

11        Directions by the Board. The old regulation specified that the board may initiate criminal prosecution and also give directions to protect the interest of investors and in the interest of securities market as it may deem fit for any of the following three purposes: -

 

    1. directing the insider not to deal in securities in any particular manner;
    2. prohibiting the insider from disposing of any of the securities acquired in violation of these Regulations;
    3. restraining the insider to communicate or counsel any person to deal in securities;

By the amendment it has been provided in a. and b. above that such directions or prohibition shall now also apply to such person as mentioned in clause (i) of sub-section (2) of section 11 of the Act. Further, the following clauses have now been added.

    1. declaring the transaction(s) in securities as null and void;
    2. directing the person who acquired the securities in violation of these regulations to deliver the securities back to the seller;

Provided that in case the buyer is not in a position to deliver such securities, the market price prevailing at the time of issuing of such directions or at the time of transactions whichever is higher, shall be paid to the seller.
 

f.    Directing the person who has dealt in securities in violation of these regulations to transfer an amount or proceeds equivalent to the cost price or market price of securities, whichever is higher to the investor protection fund of a Recognised Stock Exchange.

 

If the transactions are declared as null and void as mentioned in d. above they can create many complications in the market place. It remains to be seen how such a direction will be implemented in real life situations.

 

 

12        A new chapter IV has now been added namely POLICY ON DISCLOSURES AND INTERNAL PROCEDURE FOR PREVENTION OF INSIDER TRADING. This chapter contains new Regulations 12, 13 and 14.

 

 

12.1       New Regulation 12 has introduced a code of internal procedures and conducts for listed companies and entities.  The new Regulation requires that :-

All listed companies and oranisations associated with securities markets including:

a.               the intermediaries as mentioned in section 12 of the Act, asset management company and trustees of mutual funds;

b.               the self regulatory oranisations recognised or authorised by the Board;

c.               the recognised stock exchanges and clearing house or corporations;

d.               the public financial institutions as defined in Section 4A of the Companies Act, 1956; and

e.  the professional firms such as auditors, accountancy firms, law firms, analysts, consultants, etc., assisting or advising listed companies, shall frame a code of internal procedures and conduct as near there to the Model Code specified in Schedule I of these Regulations.[Regulation 12(1)] Thus professional firms advising listed company clients will now be required to frame a code of internal procedure and conduct and to have appropriate mechanisms and procedures to enforce this code. 

The entities mentioned above, shall abide by the Code of Corporate Disclosure Practices as specified in Schedule II of these Regulations.[ Regulation 12(2)]

All entities mentioned above, shall adopt appropriate mechanisms and procedures to enforce the codes specified under sub-regulations (1) and (2).

Action taken by the entities mentioned in sub-regulation (1) against any person for violation of the code under sub-regulation (3) shall not preclude the Board from initiating proceedings for violation of these Regulations."

Schedule I Part A contains Model Code of Conduct for prevention of Insider trading for listed companies which includes provisions relating to appointment of a Compliance officer, his reporting to M.D./C.E O, his duties, obligations of employees/directors to maintain confidentiality, handling of unpublished price-sensitive information on need to know basis, prevention of misuse of price-sensitive information, limited access to confidential information, trading window opening and closure requirements, pre-clearance of trades by directors/ officers/designated employees and time limit for their execution, reporting requirement for directors/employees for holdings and transactions, penalty for violation, etc.

Schedule I Part B contains Model Code of Conduct for prevention of Insider trading for other entities. This will include all professional firms advising listed companies.

Schedule II contains Code of Corporate Disclosure Practices  for prevention of insider trading which prescribes norms to be followed by listed companies for timely and adequate disclosure of price-sensitive information. This includes appointment of compliance officer, prompt disclosure, improvement in investor access to information, responding to rumours, timely reporting of shareholding and changes in it, guidelines for disclosure to analysts and institutional investors, medium of disclosure, and dissemination of information by stock exchanges. Etc.

13.  Regulation 13 provides for initial disclosures when a director or officer joins a listed company. such disclosure should be made within 4 working days of becoming a director or officer of a company stating number of shares held in the company. It also prescribes that any person who holds more than 5% shares or voting rights in any listed company shall disclose to the company, the number of shares or voting rights held by such person, on becoming such holder, within 4 working days of:-

      1. the receipt of intimation of allotment of shares; or
      2. the acquisition of shares or voting rights, as the case may be

Similarly Regulation 13 also provides for Continual Disclosures (subject to certain monetary and quantity limits) by abovementioned persons within 4 working days of

      1.  the receipt of intimation of allotment of shares, or
      2. the acquisition or sale of shares or voting rights, as the case may be."

As can be seen from above elaborate and far-reaching amendments have been made in Insider Trading Regulations and with proper implementation, the amended Regulations can be an effective tool to curb the menace of insider trading.

 

The Central Bank of India also plans a Public Issue.

After the successful issue of Punjab National Bank, many Public Sector Banks have started thinking about Public Issue. Central Bank of India is considering a Public Issue sometimes in September-October, 2002. The size of the issue, premium, other details, etc. are being worked out.

Maruti Udyog Ltd. will plan an IPO.

It appears that after the current dilution of the stake of Government of India by way of renunciation of Right Shares, Maruti Udyog Ltd. will plan a Public Issue at a high premium. This will be one of the few leading Public Issues expected during the year 2002-03. The Merchant Banker for the issue is being finalized. The Public Issue will mean further dilution of the stake of Government of India and increase in the share holding of Suzuki. This is because the IPO is by way of an offer for sale from the Government of India. Suzuki has already agreed to pay Rs.1,000 crore to the Government of India as a Control Premium.

TATA SONS PLANS TATA CONSULTANCY IPO?

It appears that Tata Sons Ltd. is seriously considering Initial Public Offer of Tata Consultancy Services. However, it appears that Tata Sons Limited will have to demerge Tata Consultancy Services business from Tata Sons Ltd. and will have to create a new separate Public Limited Co. for the business of Tata Consultancy Services. However, such demerger can bring stamp duty and Income Tax issues and Tata Sons will have to sort them out before separating the software business. According to a estimate the likely market capitalization of Tata Consultancy Services will be more than the combined market capitalization of both market leader Infosys and Wipro.

PSUs - The Best Bet !

Stock market works less on fundamentals and more on sentiments or perceptions of the investors. One can say that it is actually moved by market makers or in our language speculators. Speculation is the main interest of any stock market. That’s why prices of key pivotals remain firm on the bourses despite an over all different trend in the index movement. I always advise people to continuously track the stock, analyse the fundamentals, consider the future prospects and only then should they enter a specific stock. In the present scenario, I am bullish on four sectors – PSUs, Pharma, Biotech and Software. In the last few months, the market witnessed major activities, which were triggered by the PSU stocks. Albeit, the reigning uncertainty over disinvestment program cannot be ignored either. But once the political uncertainty subsides there will be a big rally of PSUs again. The latest disinvestment candidate IPCL will definitely give the necessary impetus to all the PSUs in the next three months. Certainly, PSUs are the best buy today, there is no reason of loosing money as once the private players take over, the returns would be more than just decent as is evident from the case of CMC and VSNL. This apart stocks like Engineers India, Shipping Corporation, Dredging Corporation, Neyveli lignite, Container Corporation, Bharat Earth movers, GMDC are some of the decent picks in PSU’s where government holding is more than 80% while the investors' 100% holding will get accepted in open offer. The Pharma sector has seen some activity too. Pharma companies have been gaining selective buying interest. I am particularly positive about Dr. Reddy’s, Sun Pharma and Unichem Laboratories. Dr. Reddy’s is likely to see solid earnings growth in future as a result of focused efforts in both the domestic formulations and the US generic business and product/company acquisitions (domestic and overseas). Sun Pharma is a good buy at present valuation. The US vehicle of the company, Caraco Pharma has trimmed losses on the back of sharp rise in sales, for the first quarter ending March’31, which was supposed to be a major concern for the company. Unichem Lab is another long-term buy. Over the last few years, Unichem undertook various operational restructuring efforts such as setting up of facilities approved by various international authorities, improving product-mix with increased thrust on the chronic segment, aggressive marketing efforts with increasing composition of field force in total employees and increasing focus on the international markets with the help of tie-ups and alliances. These steps are just in the right direction and are expected to provide growth momentum to the company. While in the Biotech sector Dr. Reddy, Jupiter Biotech and Syngenta are expected to give better performance in the future. With the IT sector reviving from its reverie, stocks like Infosys, Wipro and Satyam can prove to be valuable investment counters. As far as the derivative market is concerned, there is an obvious lack of depth at present. People have still not understood the concept of derivative market in totality. Once the actual delivery settlement starts, it will trigger volume and movement in the derivative market and only then there will be a proper reflection of cash market in derivative market, which is not the case at present. Global economy is still in recession, but there are many indicators of revival. Better economic conditions will definitely pay to the investors, just invest safely and with long term investment as an objective.

Red Herring Prospectus for Public Issue of St. Angelos Computers Limited

Bombay based St. Angelos Computers Limited is planning a Public Issue of Rs. 3,50,00,000/-. The Company has filed its Red Herring Prospectus with SEBI awaiting clearance. The Offer price for the Issue will be decided by the Book Building process. The company is engaged in the business of Computer Training. St. Angelos brand is famous in and around Mumbai. The company has over 25 training centers in Mumbai and proposes to expand its training center base in Western and Northern Mumbai. The company has been promoted by Mr.Angelorajesh N. Athaide who is also the Chairman and Managing Director. The company has taken over the existing running business of proprietary concern firm of the promoter on a slump sale basis for a consideration of Rs.525 lacs. The company has on its roles a trained faculty of over 130 individuals of which 24 hold professional qualification. The company has positioned itself as a one-stop shop for the entire spectrum of IT Education including Software, Hardware and Networking. Basic level to high-ended courses are offered which are of varying durations. The company has secured the prestigious computer-training contract for training Personnel of the Mumbai Police in association with Mumbai Police Academy since September 1999. Equity Offers The issue is lead managed by Brescon Corporate Advisors Limited.

Activity Chart for Postal Ballot Process

Sr. No.

Nature of Activity

Estimated

Time Required

No. of Days

1.

Advance Notice to Stock Exchange(s) (where listed) for consideration of certain business, if  required as per Listing Agreement

1

2

Board Meeting for deciding about prescribed businesses requiring approval through postal ballot, approval to Notice of member’s meeting, and authorising one of the functional directors and Company Secretary responsible for entire Postal Ballot process and appointment of Scrutinizer who can conduct the postal ballot process.

3

3.

Intimate Stock Exchange (s) (where listed) about Board’s decision for Postal Ballot and its Agenda.

1

4.

Filing of Calendar of events and Board resolution with Registrar Of Companies.

7

5.

Printing of Notice and preprinted Postal Ballot papers along with watermarks and prepaid self-addressed envelope.

15

6.

Posting of Notice either under Registered Post Acknowledgement Due or Under Certificate Posting to members and also forward 3 copies to Stock Exchange(s) (where listed) .

5

7.

Advertising in one leading English Newspaper and in one Vernacular Newspaper circulating in the State in which the Registered office of the Company is situated, about having dispatched the ballot papers . Also forward 3 copies of advertisement to Stock Exchange(s) (where listed) .

1

8.

Receipt of Postal Ballots from members.

30

9.

Submission of Final Report by the Scrutinizer.

3

10

Filing of Form No. 23 with Registrar of Companies if the Resolution is a special Resolution..

1

11

Signing of Minutes by the Chairman.

5

12.

Return of Ballot papers and other papers registered by the Scrutinizer to Chairman.

5

13

Intimate outcome of Poll to Stock Exchange(s) (where listed) and also by Advertisement (optional) to shareholders.

1

14

Handing over the ballot papers to designated authority.

1

Companies ( Acceptance of Deposits ) Third Amendment Rules,2001.

 
GOVERNMENT OF INDIA
MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS
DEPARTMENT OF COMPANY AFFAIRS
 NEW DELHI,                               THE   28th NOVEMBER, 2001
NOTIFICATION                                                    
G.S.R.873(E).-   In exercise of the powers conferred by section 58A read with section 642 of the Companies Act, 1956 ( 1 of 1956),  the Central Government, in consultation with the Reserve Bank of India, hereby makes the following rules further to amend the Companies ( Acceptance of Deposits ) Rules, 1975, namely :-
1.      (1)  These rules may be called the Companies ( Acceptance of Deposits ) Third   Amendment       
              Rules, 2001.
        (2)  They shall come into force on the date of their publication in the Official Gazette.
2.      In the  Companies ( Acceptance of Deposits ) Rules, 1975, --
 (              (a)    in rule 2, after clause (d ),   the following clause shall be inserted, namely :-
                      `(e)  “net owned fund”  has the same meaning as  assigned to it in the Reserve Bank of
                        India Act,1934 ( 2 of 1934);’;
         (b)    in rule 3, in sub-rule (1), after clause (d ),   the following clause shall be inserted, namely:-
                `(e) “no company with a net owned fund of less than rupees one crore shall invite public     
                       deposits;”  ’;  
         (c)   after rule 8, the following rule shall be inserted, namely:
 
   “8A Penal rate of interest.-    A penal rate of interest of eighteen per cent.  shall be paid for the overdue   period in case of public deposits matured and claimed but remaining unpaid.  In case of deposit made by a small depositor,  the penal rate of interest shall  be twenty  per cent. compoundable on an annual basis.
 
 
Explanation.-  For the purposes of this rule, the expression  “a small depositor” has the same meaning as assigned to it  in the explanation to Section 58AA of the Act.”
( No.1/17/2000-CL.V)
A. RAMASWAMY
Joint Secretary
 

Companies ( Acceptance of Deposits ) Third Amendment Rules,2001.

 
GOVERNMENT OF INDIA
MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS
DEPARTMENT OF COMPANY AFFAIRS
 NEW DELHI,                               THE   28th NOVEMBER, 2001
NOTIFICATION                                                    
G.S.R.873(E).-   In exercise of the powers conferred by section 58A read with section 642 of the Companies Act, 1956 ( 1 of 1956),  the Central Government, in consultation with the Reserve Bank of India, hereby makes the following rules further to amend the Companies ( Acceptance of Deposits ) Rules, 1975, namely :-
1.      (1)  These rules may be called the Companies ( Acceptance of Deposits ) Third   Amendment       
              Rules, 2001.
        (2)  They shall come into force on the date of their publication in the Official Gazette.
2.      In the  Companies ( Acceptance of Deposits ) Rules, 1975, --
 (              (a)    in rule 2, after clause (d ),   the following clause shall be inserted, namely :-
                      `(e)  “net owned fund”  has the same meaning as  assigned to it in the Reserve Bank of
                        India Act,1934 ( 2 of 1934);’;
         (b)    in rule 3, in sub-rule (1), after clause (d ),   the following clause shall be inserted, namely:-
                `(e) “no company with a net owned fund of less than rupees one crore shall invite public     
                       deposits;”  ’;  
         (c)   after rule 8, the following rule shall be inserted, namely:
 
   “8A Penal rate of interest.-    A penal rate of interest of eighteen per cent.  shall be paid for the overdue   period in case of public deposits matured and claimed but remaining unpaid.  In case of deposit made by a small depositor,  the penal rate of interest shall  be twenty  per cent. compoundable on an annual basis.
 
 
Explanation.-  For the purposes of this rule, the expression  “a small depositor” has the same meaning as assigned to it  in the explanation to Section 58AA of the Act.”
( No.1/17/2000-CL.V)
A. RAMASWAMY
Joint Secretary
 

Simultaneous but unlinked Public issue of Equity Shares and 14% FCDs of South Asian Petrochemicals Ltd.

The Proposed Public issue is of 50,00,000 Equity Shares of Rs. 10/- each for cash at par aggregating to Rs.5,00,00,000/- and 69,50,000 14% fully Convertible Debentures (FCDs)of Rs.100/- each for cash aggregating to Rs. 69,50,00,000/- opens on 20th December,2001.

Companies (passing of the resolution by postal ballot) Amendment Rules, 2001

PUBLISHED IN GAZETTE OF INDIA EXTRAORDINARY PART II
SECTION 3 SUB-SECTION (i) DATED 11 OCTOBER 2001
  
Government of India
Ministry of Law, Justice and Company Affairs
(Department of Company Affairs)
 
New Delhi, the 11th  October, 2001
 
NOTIFICATION
 
G.S.R. 773(E).- In exercise of the powers conferred by section 192A read with clauses (a) and (b) of sub-section (1) of section 642 of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules to amend the Companies (passing of the resolution by postal ballot) Rules, 2001 namely:-
 
1.   (1) These rules shall be called the Companies (passing of the resolution by postal ballot) Amendment Rules, 2001.
 
(2) They shall come into force on the date of their publication in  the Official Gazette.
 
2.   In the Companies (passing of the resolution by postal ballot) Rules, 2001,  (hereinafter referred to as the principal rules),-
 
(i) after rule 2, the following rule shall be inserted, namely:-
“2A. Method for sending notice,-
(a) The company may issue notices either,-
 
 (i) under Registered Post Acknowledgement Due; or
 (ii) under certificate of posting; and
 
(b) with an advertisement  published in a leading English Newspaper and in one vernacular Newspaper circulating in the State in which the registered office of the company is situated,  about having despatched the ballot papers.”
 
3.    In the principal rules, in rule 4, -
 
(i)  in the opening line,  for the words "may be", the words "shall be" shall be substituted;
 
(ii)   in item (b), the words “deletion or” shall be omitted;
 
(iii) for item (h), the following item shall be substituted, namely:-
 
“(h) election of a director under proviso to sub-section 
(1) of  section 252 of the  Act” ;
            
(iv) item (i)  shall be omitted.
 
4.   In the principal rules in rule 5,-
 
 (i) for item (c), the following item shall be substituted, namely:-
 
“(c) The scrutinizer shall submit his report as soon as possible after the last date of receipt of Postal Ballots.”;
 
 (ii) for item (f), the following item shall be substituted, namely:-
 
“(f) The consent or otherwise received after thirty days from the date of issue of notice shall be  treated as if  reply from the member has not been received.”
  
[F.No.1/15/2000-CL.V]
 
 (A. Ramaswamy)
Joint Secretary
 
 Note:- The principal rules were published in the Gazette of India vide number G.S.R. 337 (E) dated 10.5.2001.

Establishment of Investor Education and Protection Fund

No. 5/5/2000-CL.V
Government of India
Ministry of Law, Justice & Company Affairs
Department of Company Affairs 
5th floor, `A’ Wing, Shastri Bhavan,
Dr. R.P. Road, New Delhi.
Dated:  3rd October, 2001 

PRESS NOTE 6/2001

Subject: Establishment of Investor  Education and Protection    Fund.

           Pursuant to the provisions of section 205C of the Companies   Act, 1956, the Central Government has notified the establishment of a Fund called Investor Education & Protection Fund  with effect from 1.10.2001. The fund shall be credited with the following amounts :

(a)   amounts in unpaid dividends accounts of Companies;

(b)   the  application moneys received by companies for allotment  of any securities     and due for refund;

(c)   matured Deposits with companies;

(d)   matured Debentures with companies;

(e)   the interest accrued on the amounts referred to in   clauses (a) to (d) .

       

       The amounts referred to in clause (a) to (e) that shall form part of the  fund are such amounts that have  remained unclaimed and  unpaid for a period of seven years from the date they become due for   payment.

 

2.  The Central Government in exercise of its powers under section 642 have also notified rules     for      operationalising the Fund  called Investor Education and Protection  ( Awareness and     Protection       of Investors) Rules 2001. 

3.  The  Investor Education & Protection Fund shall be utilised for promotion of Investors’   awareness &  protection   of   the   interest   of Investors in accordance with Investor Education & Protection Fund Rules 2001. 

4.  The Rules provide for the modalities as to how the companies shall credit their unclaimed amounts to the Fund,  furnish details to the concerned  Registrar of Companies, the manner of accounting of the money received, constitution and function of the committee , expenses of the committee and audit of its accounts, the  powers  of the committee, the matters relating to meetings and how the Committee will register various voluntary agencies or Non-Government  Organisations engaged in the activities relating to Investors awareness & education and recommend the utilization of funds for  Education Programs, organising seminars and conducting projects for Investor protection including research activity, to them.

5.   It is hoped that the companies will duly comply with the legal requirements  of depositing the amounts to the Investor Education and Protection Fund for the benefit of investing community.

6.   A copy of this Press Note has also been placed at the Web page of the Department of Company affairs at the Internet Address http://www.nic.in/dca. 

(A. RAMASWAMY)
                                      Joint Secretary to the Government of India. 
Endt.No. 5/5/2000-CL.V     dated: 3rd October, 2001

Copy forwarded to Shri M.Y. Siddiqui, PIO, Press information Bureau, Shastri Bhavan, New Delhi with the request that the Press Note may kindly be given wide publicity.  

 (A. RAMASWAMY)
Joint Secretary to the Govt. of India
Ph: 338 1226  

 

Unique client code

SECURITIES AND EXCHANGE BOARD OF INDIA  
SECONDARY MARKET DEPARTMENT
Mittal Court, B Wing, First Floor,
224, Nariman Point, Mumbai 400 021

                                           SMDRP/Policy/CIR-39/2001
July 18, 2001

 The Executive Director / Managing Director
Of all the Stock Exchanges


Sir/Madam,

Sub:- Unique client code

Pursuant to the discussions in the meeting of the Group on Risk Management Systems for the Equity Markets held on May 02, 2001, it was decided that every investor should have a unique ID.

In this regard, it will be mandatory for all brokers to use unique client codes for all clients. For this purpose, brokers shall collect and maintain in their back office the Permanent Account Number (PAN) allotted by Income Tax Department for all their clients. Sub-brokers will similarly maintain for their clients. Where an individual client does not have PAN number, such a client shall be required to give a declaration to that effect. In such an event, until the PAN number is allotted such client shall furnish passport number and place & date of issue. Where the client does not have a PAN number or a passport, such client shall furnish driving licence number, place & date of issue. If none of the above are available, the client shall give his voter ID number. The above requirement shall be applicable for clients having order value of Rs.1 lakh or more and shall be enforced w.e.f. August 01,2001.

In the case of other entities, the following procedure shall be adopted :

1. For FIIs, (where FII, itself is the investing entity) and their sub-accounts, SEBI registration number for FIIs and sub-account shall be used until the PAN No. is allotted.

2. For tax paying body corporates, the unique registration number issued by the relevant regulatory authority shall be used till the time the PAN is allotted. Regulatory authorities may be Department of Company Affairs, Securities and Exchange Board of India, Reserve Bank of India, Insurance Regulatory Development Authority, etc.

3. For non-tax paying entities other that mutual funds, such as societies, charitable trusts etc. the unique registration no. allotted by the relevant regulating authority of these entities shall be used until the PAN number is allotted

4. For mutual funds SEBI would be issuing an ID no. for schemes both past one and the new ones. This number would be used in the schemes along with the mutual funds.

5. Brokers shall verify the documents with respect to the unique code and retain a copy of the document.

6. The brokers shall also be required to furnish the above particulars of their clients to the stock exchanges/clearing corporations and the same would be updated every quarter.

7. The stock exchanges shall be required to maintain a database of client details submitted by brokers. Historical records of all quarterly submissions shall be maintained for a period of seven years by the exchanges.

The Exchanges are advised to direct members to include a new clause no. 7 as given below in the format of the Member-Client Agreement prescribed by our earlier circular dated April 11, 1997 as given below:-

"The member hereby undertakes to maintain, the details of the client as mentioned in the client registration form or any other information pertaining to the client, in confidence and that he shall not disclose the same to any person / entity except as required under the law, with prior intimation to SEBI."

The Exchanges are also advised that the following clause be made a part of the bye-laws, rules, regulations of the Exchange:-

"The Stock Exchange shall maintain the details of the clients of the members in confidence and that it shall not disclose to any person / entity such details of the client as mentioned in the client registration form or any other information pertaining to the client except as required under the law or by any authority."

Further the brokers shall maintain and preserve for a period of seven years a mapping of client IDs used at the time of order entry in the trading system with those unique client IDs along with client name, address and other particulars given in the Know Your Client form.

The Stock Exchanges shall ensure that all the brokers comply with the above requirements.


Yours faithfully,
P K Kuriachen
General Manager
Secondary Market Depository,
Research & Publications Department
e-mail : [email protected]



Reporting of Venture Capital Activity

SECURITIES AND EXCHANGE BOARD OF INDIA
IES DEPARTMENT
VENTURE CAPITAL CELL
Mittal Court, B Wing, First Floor,
224, Nariman Point, Mumbai 400 021

IES/VCF/Cir-1/2001.
February 12, 2001.

To

All Venture Capital Funds.  

Sub: Reporting of Venture Capital Activity. 

All the Venture Capital Funds are requested to provide the information pertaining to their venture capital activity for every quarter starting from the quarter ending December 31, 2000 as per the format enclosed at Annexure-A. Information for the quarter ending December 31,2000 may be sent by February 28, 2001. Thereafter the information should be given within fifteen days of the end of each calendar quarter. The soft copy of the report should also be sent in Microsoft Excel Work Sheet.

This circular comes into force with immediate effect.  

Please acknowledge receipt.  

Yours sincerely, 

(L. K. SINGHVI)
SR. EXECUTIVE DIRECTOR.


Annexure A

Information regarding Venture Capital Activity for the quarter ended on

  1. Name of the Fund :
  2. Structure of the Fund : Trust/Company/Body Corporate
  3. Date of Registration & Registration Number:
  4. Trustee of the Fund / Scheme :
  5. Manager to the Fund / Scheme (if any):
  6. Corpus of the fund:
  7. Nature of the Fund / Scheme: Open-ended / Close-ended
  8. Tenure of the Fund / Scheme: _____ years (in case of close-ended funds / schemes).
  9. Date when Minimum corpus of the fund / Scheme was raised to Rs. 5 crores (only in the cases of funds registered after September 15, 2000):
  10.  Summary of Venture Capital Activity for the quarter ended -------

Corpus of the Fun d 

(Rs. Crores)

Funds raised during the quarter

(Rs. Crores)

 

Cumulative Funds raised upto the end of the quarter (Rs. Crores)

Funds Invested /disbursed to VCUs during the quarter

(Rs. crores)

Cumulative Funds Invested /

disbursed to VCUs 

(Rs. crores)

Investments liquidated during the quarter at cost (Rs. crores)

Cumulative Investments liquidated at cost (Rs. crores)

 

 

 

 

 

 

 

11.       Scheme/fund wise details of the Funds raised during the quarter as per the format given below :                                                                                                                              (Amount: Rs. Crores)

 

Funds raised during the quarter

Cumulative funds raised until the quarter

Investor Category

Amount

Amount

Number of Investors

% of total

Domestic

  1. Corporate
  2. Individuals
  3. Govt. Agencies
  4. Financial Institutions
  5. Banks
  6. Others

 

 

 

 

Overseas

  1. NRIs/OCBs
  2. Institutions
  3. FVCIs registered with SEBI
  4. Others

 

 

 

 

Total

 

 

 

 

  1. Scheme wise details of investments made for the quarter ended as per format given below (Amount in Crores)

 

A

B

C

 

Cumulative Investments in unlisted companies

(Reg. 12 (d) (i))

Cumulative Investments made other than A 

(Reg. 12 (d) (ii))

Total 

(A+B)

 

Equity or equity-linked instruments 

IPOs

Debt

Total

 

 

No. of Cos.

Amo 

Unt

No. of Cos.

Amount

No. of Cos.

Amount

No. of Cos.

Amount

No of Cos

Amount

Total

 

 

 

 

 

 

 

 

 

 

% of Investible Funds

 

 

 

 

 

 

 

 

 

 

13.               Sector-wise break-up of cumulative investments made for the quarter ended as per format given below                                                                                                                   (Amount in crores)

Industry

Amount

No: of companies

Information Technology

 

 

Telecommunication

 

 

Pharmaceuticals 

 

 

Biotechnology

 

 

Media/Entertainment

 

 

Services Sector

 

 

Industrial Products

 

 

Others (please specify)

 

 

14.               Stage-wise break-up of cumulative investments made for the quarter ended as per format given below:                                                                                                                              (Amount in crores)

Stages

Amount

No: of companies

Seed/R&D

 

 

Start-up/Early Stage

 

 

Mezzanine

 

 

Other (please specify)

 

 

 

15. Cumulative disinvestments made for the quarter ended as per format given below

Strategies

No. of Companies

Cost at the time of investment

Exit Value

Buyback by company/promoters

 

 

 

Secondary Market sales

 

 

 

Strategic buyout/acquisition

 

 

 

Merger

 

 

 

Write Off

 

 

 

Other (please specify)

 

 

 

Corporate Debt Restructuring (CDR)

Corporate Debt Restructuring (CDR)

 BP.BC.  15  /21.04.114/2000-01

 August 23, 2001

 All commercial banks

(excluding RRBs & LABs)

Dear Sir,

Corporate Debt Restructuring (CDR)

 As you are aware, the need for evolving an appropriate mechanism for corporate debt restructuring in the country, on the lines of similar mechanism prevalent in countries like the U.K., Thailand, Korea, Malaysia, etc. was engaging the attention of the Government of India, Reserve Bank of India, banks and financial institutions.  Based on the extensive discussions the Government of India and RBI had with banks and financial institutions, the scheme of Corporate Debt Restructuring has been finalised and the same is enclosed, for implementation by banks.

 2.        The objective of the CDR framework is to ensure a timely and transparent mechanism for restructuring of the corporate debts of viable corporate entities affected by internal or external factors, outside the purview of BIFR, DRT and other legal proceedings, for the benefit of all concerned.  CDR will apply only to multiple banking accounts/syndicates/consortium accounts with outstanding exposure of Rs.20 crore and above with the banks and financial institutions.

 3.        It would be observed that the CDR Empowered Group would examine the viability and rehabilitation potential of the corporate and approve the restructuring package. It is advised that banks should ensure that their representatives in the Empowered Group are at a sufficiently senior level, preferably Executive Director level, with necessary authorisations from their Boards to make commitments including sacrifices, on behalf of their banks towards debt restructuring.

 4.        A reference is also invited to paragraph 4.2 of the Annexure indicating the legal basis for the CDR system.  Since the debtor corporates will have to accede to the Debtor-Creditor Agreement, either at the time of original loan documentation (for future cases) or at the time of reference to CDR Cell, banks may ensure proper documentation for the purpose.

 5.        All standard and sub-standard accounts subjected to CDR process, would continue to be eligible for fresh financing of funding requirements, by the lenders as per their normal policy parameters and eligibility criteria.

 6.        This circular may please be put up before your Board of Directors at its next meeting.

 7.        Please acknowledge receipt.  

 Yours faithfully,

 (M.R. Srinivasan)
Chief General Manager-in-Charge

 Annexure

RESERVE BANK OF INDIA (RBI)

DEPARTMENT OF BANKING OPERATIONS AND DEVELOPMENT

Corporate Debt Restructuring (CDR) System

 1. Background

 1.1.     Inspite of their best efforts and intentions, sometimes corporates find themselves in financial difficulty because of factors beyond their control and also due to certain internal reasons. For the revival of the corporates as well as for the safety of the money lent by the banks and FIs, timely support through restructuring in genuine cases is called for. However, delay in agreement amongst different lending institutions often comes in the way of such endeavours.

 1.2      Based on the experience in other countries like the U.K., Thailand, Korea, etc. of putting in place institutional mechanism for restructuring of corporate debt and need for a similar mechanism in India, a Corporate Debt Restructuring System has been evolved, as under :

 2. Objective

The objective of the Corporate Debt Restructuring (CDR) framework is to ensure timely and transparent mechanism for restructuring of the corporate debts of viable entities facing problems, outside the purview of BIFR, DRT and other legal proceedings, for the benefit of all concerned. In particular, the framework will aim at preserving viable corporates that are affected by certain internal and external factors and minimize the losses to the creditors and other stakeholders through an orderly and coordinated restructuring programme.

 3. Structure

 CDR system in the country will have a three tier structure :

 

 3.1  CDR Standing Forum :

 3.1.1 The CDR Standing Forum would be the representative general body of all financial institutions and banks participating in CDR system. All financial institutions and banks should participate in the system in their own interest. CDR Standing Forum will be a self empowered body, which will lay down policies and guidelines, guide and monitor the progress of corporate debt restructuring.

 3.1.2 The Forum will also provide an official platform for both the creditors and borrowers (by consultation) to amicably and collectively evolve policies and guidelines for working out debt restructuring plans in the interests of all concerned.

 3.1.3 The CDR Standing Forum shall comprise Chairman& Managing Director, Industrial Development Bank of India; Managing Director, Industrial Credit & Investment Corporation of India Limited; Chairman, State Bank of India; Chairman, Indian Banks Association and Executive Director, Reserve Bank of India as well as Chairmen and Managing Directors of all banks and financial institutions participating as permanent members in the system. The Forum will elect its Chairman for a period of one year and the principle of rotation will be followed in the subsequent years. However, the Forum may decide to have a Working Chairman as a whole-time officer to guide and carry out the decisions of the CDR Standing Forum.

 3.1.4  A CDR Core Group will be  carved out of the CDR Standing Forum to assist the Standing Forum in convening the meetings and taking decisions relating to policy, on behalf of the Standing Forum. The Core Group will consist of Chief Executives of IDBI, ICICI, SBI, Bank of Baroda, Bank of India, Punjab National Bank, Indian Banks Association and a representative of Reserve Bank of India.

3.1.5 The CDR Standing Forum shall meet at least once every six months and would review and monitor the progress of corporate debt restructuring system. The Forum would also lay down the policies and guidelines to be followed by the CDR Empowered Group and CDR Cell for debt restructuring and would ensure their smooth functioning and adherence to the prescribed time schedules for debt restructuring. It can also review any individual decisions of the CDR Empowered Group and CDR Cell.

 3.1.6 The CDR Standing Forum, the CDR Empowered Group and CDR Cell (described in following paragraphs) shall be housed in IDBI. The administrative and other costs shall be shared by all financial institutions and banks. The sharing pattern shall be as determined by the Standing Forum.

 3.2   CDR  Empowered Group and CDR Cell

 3.2.1 The individual cases of corporate debt restructuring shall be decided by the CDR Empowered Group, consisting of ED level representatives of IDBI, ICICI Limited and SBI as standing members, in addition to ED level representatives of financial institutions and banks who have an exposure to the concerned company. In order to make the CDR Empowered Group effective and broad based and operate efficiently and smoothly, it would have to be ensured that each financial institution and bank, as participants of the CDR system, nominates a panel of two or three EDs, one of whom will participate in a specific meeting of the Empowered Group dealing with individual restructuring cases. Where, however, a bank / financial institution has only one Executive Director, the panel may consist of senior officials, duly authorized by its Board.  The level of representation of banks/ financial institutions on the CDR Empowered Group should be at a sufficiently senior level to ensure that concerned bank / FI abides by the necessary commitments including sacrifices, made towards debt restructuring.

 3.2.2 The Empowered Group will consider the preliminary report of all cases of requests of restructuring, submitted to it by the CDR Cell. After the Empowered Group decides that restructuring of the company is prima-facie feasible and the enterprise is potentially viable in terms of the policies and guidelines evolved by Standing Forum, the detailed restructuring package will be worked out by the CDR Cell in conjunction with the Lead Institution.

 3.2.3 The CDR Empowered Group would be mandated to look into each case of debt restructuring, examine the viability and rehabilitation potential of the Company and approve the restructuring package within a specified time frame of 90 days, or at best 180 days of reference to the Empowered Group.

 3.2.4 There should be a general authorisation by the respective Boards of the participating institutions / banks in favour of their representatives on the CDR Empowered Group, authorising them to take decisions on behalf of their organization, regarding restructuring of debts of individual corporates.

 3.2.5 The decisions of the CDR Empowered Group shall be final and action-reference point. If restructuring of debt is found viable and feasible and accepted by the Empowered Group, the company would be put on the restructuring mode. If, however, restructuring is not found viable, the creditors would then be free to take necessary steps for immediate recovery of dues and / or liquidation or winding up of the company, collectively or individually.

 3.3  CDR Cell

 3.3.1 The CDR Standing Forum and the CDR Empowered Group will be assisted by a CDR Cell in all their functions. The CDR Cell will make the initial scrutiny of the proposals received from borrowers / lenders, by calling for proposed rehabilitation plan and other information and put up the matter before the CDR Empowered Group, within one month to decide whether rehabilitation is prima facie feasible, if so, the CDR Cell will proceed to prepare detailed Rehabilitation Plan with the help of lenders and if necessary, experts to be engaged from outside. If not found prima facie feasible, the lenders may start action for recovery of their dues.

 3.3.2 To begin with, CDR Cell will be constituted  in IDBI, Mumbai and adequate members of staff for the Cell will be deputed from banks and financial institutions. The CDR Cell may also take outside professional help. The initial cost in operating the CDR mechanism including CDR Cell will be met by IDBI initially for one year and then from contribution from the financial institutions and banks in the Core Group at the rate of Rs.50 lakh each and contribution from other institutions and banks at the rate of Rs.5 lakh each.

 3.3.3 All references for corporate debt restructuring by lenders or borrowers will be made to the CDR Cell. It shall be the responsibility of the lead institution / major stakeholder to the corporate, to work out a preliminary restructuring plan in consultation with other stakeholders and submit to the CDR Cell within one month. The CDR Cell will prepare the restructuring plan in terms of the general policies and guidelines approved by the CDR Standing Forum and place for the consideration of the Empowered Group within 30 days for decision. The Empowered Group can approve or suggest modifications, so, however, that a final decision must be taken within a total period of 90 days. However, for sufficient reasons the period can be extended maximum upto 180 days from the date of reference to  the CDR Cell.

4. Other features:

 4.1  CDR will be a Non-statutory mechanism

4.1.1 CDR mechanism will be a voluntary system based on debtor-creditor agreement and inter-creditor agreement.

4.1.2 The scheme will not apply to accounts involving only one financial institution or one bank. The CDR mechanism will cover only multiple banking accounts / syndication / consortium accounts with outstanding exposure of Rs.20 crore and above by banks and institutions.

4.1.3 The CDR system will be applicable only to standard and sub-standard accounts. There would be no requirement of the account / company being sick, NPA or being in default for a specified period before reference to the CDR Group. However, potentially viable cases of NPAs will get priority. This approach would provide the necessary flexibility and facilitate timely intervention for debt restructuring. Prescribing any milestone(s) may not be necessary, since the debt restructuring exercise is being triggered by banks and financial institutions or with their consent. In no case, the requests of any corporate indulging in wilful default or misfeasance will be considered for restructuring under CDR.

4.1.4 Reference to Corporate Debt Restructuring System could be triggered by (i) any or more of the secured creditor who have minimum 20% share in either working capital or term finance, or (ii) by the concerned corporate, if supported by a bank or financial institution having stake as in (i) above.

4.2  Legal Basis

The legal basis to the CDR mechanism shall be provided by the Debtor-Creditor Agreement (DCA) and the Inter-Creditor Agreement. The debtors shall have to accede to the DCA, either at the time of original loan documentation (for future cases) or at the time of reference to Corporate Debt Restructuring Cell. Similarly, all participants in the CDR mechanism through their membership of the Standing Forum shall have to enter into a legally binding agreement, with necessary enforcement and penal clauses, to operate the System through laid-down policies and guidelines. 

 4.3  Stand-Still Clause

4.3.1 One of the most important elements of Debtor-Creditor Agreement would be 'stand still' agreement binding for 90 days, or 180 days by both sides. Under this clause, both the debtor and creditor(s) shall agree to a legally binding 'stand-still' whereby both the parties commit themselves not to taking recourse to any other legal action during the 'stand-still' period, this would be necessary for enabling the CDR System to undertake the necessary debt restructuring exercise without any outside intervention judicial or otherwise.

4.3.2 The Inter-Creditors Agreement would be a legally binding agreement amongst the secured creditors, with necessary enforcement and penal clauses, wherein the creditors would commit themselves to abide by the various elements of CDR system. Further , the creditors shall agree that if 75% of secured creditors by value, agree to a debt restructuring package, the same would be binding on the remaining secured creditors.

 5. Accounting treatment for restructured accounts

 The accounting treatment of accounts restructured under CDR would be governed by the prudential norms indicated in circular DBOD. BP. BC. 98 / 21.04.048 / 2000-01 dated March 30, 2001. Restructuring of corporate debts under CDR could take place in the following stages:

 (a) before commencement of commercial production;

(b)  after commencement of commercial production but before the asset has been classified as sub-standard;

(c)  after commencement of commercial production and the asset has been classified as sub-standard.

 6. The prudential treatment of the accounts, subjected to restructuring under CDR, would be governed by the following norms:

 6.1  Treatment of standard accounts restructured under CDR:

a)     A rescheduling of the instalments of principal alone, at any of the aforesaid first two stages [paragraph 5(a) and (b) above] would not cause a standard asset to be classified in the sub-standard category, provided the loan / credit facility is fully secured.

b)    A rescheduling of interest element at any of the foregoing first two stages would not cause an asset to be downgraded to sub-standard category subject to the condition that the amount of sacrifice, if any, in the element of interest, measured in present value terms, is either written off or provision is made to the extent of the sacrifice involved. For the purpose, the future interest due as per the original loan agreement in respect of an account should be discounted to the present value at a rate appropriate to the risk category of the borrower (i.e. current PLR + the appropriate credit risk premium for the borrower-category) and compared with the present value of the dues expected to be received under the restructuring package, discounted on the same basis.

c)     In case there is a sacrifice involved in the amount of interest in present value terms, as at (b) above, the amount of sacrifice should either be written off or provision made to the extent of the sacrifice involved.

 6.2 Treatment of sub-standard accounts restructured under CDR:

 a)     A rescheduling of the instalments of principal alone, would render a sub-standard asset eligible to be continued in the sub-standard category for the specified period, provided the loan / credit facility is fully secured.

b)    A rescheduling of interest element would render a sub-standard asset eligible to be continued to be classified in sub-standard category for the specified period subject to the condition that the amount of sacrifice, if any, in the element of interest, measured in present value terms, is either written off or provision is made to the extent of the sacrifice involved. For the purpose, the future interest due as per the original loan agreement in respect of an account should be discounted to the present value at a rate appropriate to the risk category of the borrower (i.e., current PLR + the appropriate credit risk premium for the borrower-category) and compared with the present value of the dues expected to be received under the restructuring package, discounted on the same basis.

c)     In case there is a sacrifice involved in the amount of interest in present value terms, as at (b) above, the  amount of sacrifice should either be written off or provision made to the extent of the sacrifice involved. Even in cases where the sacrifice is by way of write off of the past interest dues, the asset should continue to be treated as sub-standard.

The sub-standard accounts at  6.2 (a), (b) and (c)  above, which have been subjected to restructuring, etc. whether in respect of principal instalment or interest amount, by whatever modality, would be eligible to be upgraded to the standard category only after the specified period, i.e., a period of one year after the date when first payment of interest or of principal, whichever is earlier, falls due, subject to satisfactory performance during the period. The amount of provision made earlier, net of the amount provided for the sacrifice in the interest amount in present value terms as aforesaid, could also be reversed after the one-year period.

 6.3  During this one-year period, the sub-standard  asset will not deteriorate in its classification if satisfactory performance of the account is demonstrated during the period. In case, however, the satisfactory performance during the one year period is not evidenced, the asset classification of the restructured account would be governed as per the applicable prudential norms with reference to the pre-restructuring payment schedule.

 6.4  The asset classification under CDR would continue to be bank-specific based on record of recovery of each bank, as per the existing prudential norms applicable to banks.

 7.  Disclosure

 Banks should also disclose in their published Annual Accounts, under the “Notes on Accounts”, the following information in respect of CDR undertaken during the year :

·       Total amount of loan assets subjected to restructuring under CDR.

·       The amount of standard assets subjected to CDR.

·       The amount of sub-standard assets subjected to CDR.

 

Companies (passing of the resolution by postal ballot) Rules, 2001.

Government of India

Ministry of Law, Justice and Company Affairs

Department of Company Affairs

New Delhi –110001.

Dated 10-05-2001.

             G.S.R._337(E). – In exercise of the powers conferred by section 192A read with clauses (a) and (b) of sub-section (1) of section 642 of the Companies Act, 1956 (1 of  1956) the Government hereby makes the following rules, namely:-

 1.         Short title and commencement:-

(1)   These rules may be called the Companies (passing of the resolution by postal ballot) Rules, 2001.

(2)   They shall come into force on the date of their publication in the official gazette.

 2.            Definitions:-

             In these Rules unless the context otherwise requires:-

(a)    “Act” means the Companies Act, 1956,

(b)     “Postal Ballot” includes voting by share holders by postal or electronic mode  instead of voting personally by presenting for transacting businesses in a general meeting of the company,

(c)     “Requisite majority” with regard to Special Resolution means votes cast in favour of the business is three times more than the votes cast against,  with regard to ordinary resolution, votes cast in favour is more than the votes cast against.

 3.            Application:-

             These Rules shall be applicable to listed companies and in case of resolutions relating to such businesses as are specified under rule 4.

 4.                  List of businesses in which the resolutions may be passed through Postal Ballot.

(a)     alteration in the Object Clause of Memorandum;

(b)       alteration of Articles of Associations in relation to deletion or insertion of   provisions defining private company;    

(c)     buy-back of own shares by the company under sub-section (1) of section 77A;

(d)     issue of shares with differential voting rights as to voting or dividend or other wise under sub-clause (ii) of clause (a) of section 86;

            (e)     change in place of Registered Office out side local limits of any city, town or village as                   specified in sub-section (2) of section 146;

(f)     sale of whole or substantially the whole of undertaking of a company as specified under sub-clause (a) of sub-section (1) of section 293;

(g)    giving loans or extending guarantee or providing security in excess of the limit prescribed under sub-section (1) of section 372A;

(h)    election  of a director under sub-section (1) of section 252;

(i)      power to compromise or make arrangements with creditors and members as specified  under sub-section (2) of section 391;

(j)     variation in the rights attached to a class of shares or debentures or other securities as specified under section 106.

 5.                  Procedure to be followed for conducting business through Postal Ballot:-

(a)       The company may make a note below the notice of General Meeting for

         understanding of members that the transaction(s) at Sl. No.     requires

         consent  of shareholders through postal ballot;

(b)          The board of directors shall appoint one scrutinizer, who is not in employment of the company, may be a retired judge or any person of repute who, in the opinion of the board can conduct the postal ballot voting process in a fair and transparent manner;

(c)           The scrutinizer will be in position for 35 days (excluding holidays) from the date of issue of Notice for Annual General Meeting.  He is to submit his final report on or before the said period;

(d)          The scrutinizer will be willing to be appointed and he is available at the Registered Office of the company for the purpose of ascertaining the requisite majority;

(e)           The scrutinizer shall maintain a register to record the consent or otherwise received, including electronic media, mentioning the particulars of name, address, folio number, number of shares, nominal value of shares, whether the shares have voting, differential voting or non-voting rights and the Scrutinizer shall also maintain record for postal ballot which are received in defaced or mutilated form.  The Postal Ballot and all other papers relating to postal ballot will be under the safe custody of the Scrutinizer till the Chairman considers, approves and sign the minutes of the meeting. Thereafter, the Scrutinizer shall return the ballot papers and other related papers/register to the company so as to preserve such ballot papers and other related papers/register safely till the resolution is given effect to;

(f)            Consent or otherwise relating to issue mentioned in Notice for Annual General Meeting received after 35 days from the date of issue will be strictly treated as if the reply from the member has not been received.   

 

 

Reliance to trade only on BSE, NSE

Reliance Industries is planning to delist its shares from the Ahmedabad, Calcutta, Delhi, Uttar Pradesh, Pune, Chennai, Bangalore and Cochin stock exchanges as part of a cost-cutting drive. The company is introducing a special resolution at the annual general meeting in Mumbai on June 15 to seek shareholders' approval for delisting of the company's shares from "any and all" of these stock exchanges at an "appropriate time in the future". The notice to the shareholders says actual timing of the delisting will depend on the future developments, including the integration of stock exchanges across the country. The move follows the increase in online trading due to the extension of the Bombay and National Stock Exchanges terminals to other cities. The notice says the company's shares are mainly traded on BSE and NSE and volumes in other exchanges are much lower. RIL's securities are also traded on other exchanges in the permitted category. While BSE and NSE recorded average daily trading volumes of 52.01 lakh and 61.18 lakh, respectively, during the year ended March 31, 2001, other stock exchanges had negligible trading volumes, at least in comparative terms. For instance, Bangalore and and New Delhi Stock Exchanges recorded volumes 0.30 lakh and 0.14 lakh, respectively. Among other stock exchanges, Calcutta had a relatively high trading volume of 29.51 lakh, while Cochin's volumes were 18.09 lakh. Kanpur and Pune had daily trading volumes of 8.37 lakh and 5.85 lakh, respectively, in March 2001. Chennai did not see any trading in the Reliance scrip at all. The notice says the listing fee paid to the smaller exchanges are "disproportionately higher" and not commensurate with the trading volumes.

Bharti Mobile plans to raise Rs 265 crores through a structured debt issue with partial guarantee.

The proposed issue has a tenure of 10 years, comprising semi-annual interest and principal repayments, with the principal repayments commencing at the end 3rd year from the date of issue. BML is a company of the Bharti Group, one of the leading telecom players in the country, and is involved in the business of providing cellular mobile telephone services in Andhra Pradesh and Karnataka. The company was originally incorporated as JT Mobile, and subsequent to its acquisition by the Bharti Group, the name was changed to Bharti Mobile, where 74 per cent stake is owned by BTVL, the telecom services holding company of Bharti Group, and 26 per cent by Telia, AB, Sweden. The structured debt obligation has been assigned an AA +(so) by Crisil. The rating is based on the credit enhancement provided through cash collateral, part guarantee by Bharti Televentures and a partial guarantee by the International Finance Corporation, Washington, and supported by a structured payment mechanism. Bharti Televentures Limited has given an unconditional and irrevocable guarantee for the third interest payment. If Bharti Mobile Limited is unable to fund the SPRA by the due date for the third semi-annual interest payment and no funds are available in the cash collateral account to fund the SPRA, then the debenture trustee can call upon BTVL to fund the SPRA, said a press release. The partial guarantee extended by IFC, Washington, includes a rolling guarantee for one semi-annual interest payment for the payment periods four (4) through six (6) and a back-ended guarantee covering the entire principal and interest thereon during the last 14 semi-annual installments. The structured payment mechanism also stipulates that BML itself, would deposit, at the end of every month, 20 per cent of the amount equivalent to the next occurring semi-annual interest and/or principal payment on the instrument, into a designated SPRA, commencing from the date of allotment and ending on T minus 30 days (T being the due date of payment on the SDO). The structure provides the right for an early redemption of the SDO both to the trustee as well as IFC.

Gesco's Rs 90-cr bond issue opens

Great Eastern Shipping on Tuesday launched an issue of secured non-convertible debentures in a bid to raise Rs 90 crore .The bonds are rated "AAA" by Credit Rating Information Services of India, indicating highest safety. The bond will be redeemed in instalments every year over seven years with Rs 13 crore being redeemed each year for the first five years and Rs 12.5 crore each at the end of the sixth and seventh year. The coupon on the bonds is 10.25 per cent and is payable annually. The investor has three options, dealers said. An investor can invest in five-year bonds redeemable in five annual instalments. These bonds will be issued at a discounted price of Rs 99.92 with a yield-to-maturity of 10.28 per cent. The investor can also purchase bonds maturing in seven years maturing in two instalments at the end of the sixth and seventh years. These will be sold at a discounted price of Rs 96.975 giving a yield to maturity of 10.92 per cent. Under the third option the investor can buy seven-year bonds redeemable in seven annual instalments which will result in a yield to maturity of 10.55 per cent. The sole arranger to the issue is Citicorp Broking (India). The funds will be used to acquire a ship.

Accounting Standard (AS) 22 - ‘Accounting for Taxes on Income’

(In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the ‘Preface to the Statements of Accounting Standards’.)Accounting Standard (AS) 22, ‘Accounting for Taxes on Income’, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1-4-2001. It is mandatory in nature for:

The Guidance Note on Accounting for Taxes on Income, issued by the Institute of Chartered Accountants of India in 1991, stands withdrawn from 1.4.2001. The following is the text of the Accounting Standard.

Objective
The objective of this Statement is to prescribe accounting treatment for taxes on income. Taxes on income is one of the significant items in the statement of profit and loss of an enterprise. In accordance with the matching concept, taxes on income are accrued in the same period as the revenue and expenses to which they relate. Matching of such taxes against revenue for a period poses special problems arising from the fact that in a number of cases, taxable income may be significantly different from the accounting income. This divergence between taxable income and accounting income arises due to two main reasons. Firstly, there are differences between items of revenue and expenses as appearing in the statement of profit and loss and the items which are considered as revenue, expenses or deductions for tax purposes. Secondly, there are differences between the amount in respect of a particular item of revenue or expense as recognised in the statement of profit and loss and the corresponding amount which is recognised for the computation of taxable income.

Scope

  1. This Statement should be applied in accounting for taxes on income. This includes the determination of the amount of the expense or saving related to taxes on income in respect of an accounting period and the disclosure of such an amount in the financial statements.

  2. For the purposes of this Statement, taxes on income include all domestic and foreign taxes which are based on taxable income.

  3. This Statement does not specify when, or how, an enterprise should account for taxes that are payable on distribution of dividends and other distributions made by the enterprise

Definitions

  1. For the purpose of this Statement, the following terms are used with the meanings specified:

    Accounting income (loss) is the net profit or loss for a period, as reported in the statement of profit and loss, before deducting income tax expense or adding income tax saving.

    Taxable income (tax loss) is the amount of the income (loss) for a period, determined in accordance with the tax laws, based upon which income tax payable (recoverable) is determined.

    Tax expense (tax saving) is the aggregate of current tax and deferred tax charged or credited to the statement of profit and loss for the period.

    Current tax is the amount of income tax determined to be payable (recoverable) in respect of the taxable income (tax loss) for a period.

    Deferred tax is the tax effect of timing differences.

    Timing differences are the differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods.

    Permanent differences are the differences between taxable income and accounting income for a period that originate in one period and do not reverse subsequently.


  2. Taxable income is calculated in accordance with tax laws. In some circumstances, the requirements of these laws to compute taxable income differ from the accounting policies applied to determine accounting income. The effect of this difference is that the taxable income and accounting income may not be the same.

  3. The differences between taxable income and accounting income can be classified into permanent differences and timing differences. Permanent differences are those differences between taxable income and accounting income which originate in one period and do not reverse subsequently. For instance, if for the purpose of computing taxable income, the tax laws allow only a part of an item of expenditure, the disallowed amount would result in a permanent difference.

  4. Timing differences are those differences between taxable income and accounting income for a period that originate in one period and are capable of reversal in one or more subsequent periods. Timing differences arise because the period in which some items of revenue and expenses are included in taxable income do not coincide with the period in which such items of revenue and expenses are included or considered in arriving at accounting income. For example, machinery purchased for scientific research related to business is fully allowed as deduction in the first year for tax purposes whereas the same would be charged to the statement of profit and loss as depreciation over its useful life. The total depreciation charged on the machinery for accounting purposes and the amount allowed as deduction for tax purposes will ultimately be the same, but periods over which the depreciation is charged and the deduction is allowed will differ. Another example of timing difference is a situation where, for the purpose of computing taxable income, tax laws allow depreciation on the basis of the written down value method, whereas for accounting purposes, straight line method is used. Some other examples of timing differences arising under the Indian tax laws are given in Appendix 1.

  5. Unabsorbed depreciation and carry forward of losses which can be set-off against future taxable income are also considered as timing differences and result in deferred tax assets, subject to consideration of prudence (see paragraphs 15-18).

Recognition

  1. Tax expense for the period, comprising current tax and deferred tax, should be included in the determination of the net profit or loss for the period.

  2. Taxes on income are considered to be an expense incurred by the enterprise in earning income and are accrued in the same period as the revenue and expenses to which they relate. Such matching may result into timing differences. The tax effects of timing differences are included in the tax expense in the statement of profit and loss and as deferred tax assets (subject to the consideration of prudence as set out in paragraphs 15-18) or as deferred tax liabilities, in the balance sheet.

  3. An example of tax effect of a timing difference that results in a deferred tax asset is an expense provided in the statement of profit and loss but not allowed as a deduction under Section 43B of the Income-tax Act, 1961. This timing difference will reverse when the deduction of that expense is allowed under Section 43B in subsequent year(s). An example of tax effect of a timing difference resulting in a deferred tax liability is the higher charge of depreciation allowable under the Income-tax Act, 1961, compared to the depreciation provided in the statement of profit and loss. In subsequent years, the differential will reverse when comparatively lower depreciation will be allowed for tax purposes.

  4. Permanent differences do not result in deferred tax assets or deferred tax liabilities.

  5. Deferred tax should be recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets as set out in paragraphs 15-18.

  6. This Statement requires recognition of deferred tax for all the timing differences. This is based on the principle that the financial statements for a period should recognise the tax effect, whether current or deferred, of all the transactions occurring in that period.

  7. Except in the situations stated in paragraph 17, deferred tax assets should be recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised.

  8. While recognising the tax effect of timing differences, consideration of prudence cannot be ignored. Therefore, deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty of their realisation. This reasonable level of certainty would normally be achieved by examining the past record of the enterprise and by making realistic estimates of profits for the future.

  9. Where an enterprise has unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets should be recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realised.

  10. The existence of unabsorbed depreciation or carry forward of losses under tax laws is strong evidence that future taxable income may not be available. Therefore, when an enterprise has a history of recent losses, the enterprise recognises deferred tax assets only to the extent that it has timing differences the reversal of which will result in sufficient income or there is other convincing evidence that sufficient taxable income will be available against which such deferred tax assets can be realised. In such circumstances, the nature of the evidence supporting its recognition is disclosed.

Re-assessment of Unrecognised Deferred Tax Assets

  1. At each balance sheet date, an enterprise re-assesses unrecognised deferred tax assets. The enterprise recognises previously unrecognised deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be (see paragraphs 15 to 18), that sufficient future taxable income will be available against which such deferred tax assets can be realised. For example, an improvement in trading conditions may make it reasonably certain that the enterprise will be able to generate sufficient taxable income in the future.

Measurement

  1. Current tax should be measured at the amount expected to be paid to (recovered from) the taxation authorities, using the applicable tax rates and tax laws.

  2. Deferred tax assets and liabilities should be measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.

  3. Deferred tax assets and liabilities are usually measured using the tax rates and tax laws that have been enacted. However, certain announcements of tax rates and tax laws by the government may have the substantive effect of actual enactment. In these circumstances, deferred tax assets and liabilities are measured using such announced tax rate and tax laws.

  4. When different tax rates apply to different levels of taxable income, deferred tax assets and liabilities are measured using average rates.

  5. Deferred tax assets and liabilities should not be discounted to their present value.

  6. The reliable determination of deferred tax assets and liabilities on a discounted basis requires detailed scheduling of the timing of the reversal of each timing difference. In a number of cases such scheduling is impracticable or highly complex. Therefore, it is inappropriate to require discounting of deferred tax assets and liabilities. To permit, but not to require, discounting would result in deferred tax assets and liabilities which would not be comparable between enterprises. Therefore, this Statement does not require or permit the discounting of deferred tax assets and liabilities.

Review of Deferred Tax Assets

  1. The carrying amount of deferred tax assets should be reviewed at each balance sheet date. An enterprise should write-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be (see paragraphs 15 to 18), that sufficient future taxable income will be available against which deferred tax asset can be realised. Any such write-down may be reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be (see paragraphs 15 to 18), that sufficient future taxable income will be available.

Presentation and Disclosure

  1. An enterprise should offset assets and liabilities representing current tax if the enterprise:
    (a) has a legally enforceable right to set off the recognised amounts; and
    (b) intends to settle the asset and the liability on a net basis.

  2. An enterprise will normally have a legally enforceable right to set off an asset and liability representing current tax when they relate to income taxes levied under the same governing taxation laws and the taxation laws permit the enterprise to make or receive a single net payment.

  3. An enterprise should offset deferred tax assets and deferred tax liabilities if:
    (a) the enterprise has a legally enforceable right to set off assets against liabilities representing current tax; and
    (b) the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

  4. Deferred tax assets and liabilities should be distinguished from assets and liabilities representing current tax for the period. Deferred tax assets and liabilities should be disclosed under a separate heading in the balance sheet of the enterprise, separately from current assets and current liabilities.

  5. The break-up of deferred tax assets and deferred tax liabilities into major components of the respective balances should be disclosed in the notes to accounts.

  6. The nature of the evidence supporting the recognition of deferred tax assets should be disclosed, if an enterprise has unabsorbed depreciation or carry forward of losses under tax laws.

Transitional Provisions

  1. On the first occasion that the taxes on income are accounted for in accordance with this Statement, the enterprise should recognise, in the financial statements, the deferred tax balance that has accumulated prior to the adoption of this Statement as deferred tax asset/liability with a corresponding credit/charge to the revenue reserves, subject to the consideration of prudence in case of deferred tax assets (see paragraphs 15-18). The amount so credited/charged to the revenue reserves should be the same as that which would have resulted if this Statement had been in effect from the beginning.

  2. For the purpose of determining accumulated deferred tax in the period in which this Statement is applied for the first time, the opening balances of assets and liabilities for accounting purposes and for tax purposes are compared and the differences, if any, are determined. The tax effects of these differences, if any, should be recognised as deferred tax assets or liabilities, if these differences are timing differences. For example, in the year in which an enterprise adopts this Statement, the opening balance of a fixed asset is Rs. 100 for accounting purposes and Rs. 60 for tax purposes. The difference is because the enterprise applies written down value method of depreciation for calculating taxable income whereas for accounting purposes straight line method is used. This difference will reverse in future when depreciation for tax purposes will be lower as compared to the depreciation for accounting purposes. In the above case, assuming that enacted tax rate for the year is 40% and that there are no other timing differences, deferred tax liability of Rs. 16 [(Rs. 100 - Rs. 60) x 40%] would be recognised. Another example is an expenditure that has already been written off for accounting purposes in the year of its incurrance but is allowable for tax purposes over a period of time. In this case, the asset representing that expenditure would have a balance only for tax purposes but not for accounting purposes. The difference between balance of the asset for tax purposes and the balance (which is nil) for accounting purposes would be a timing difference which will reverse in future when this expenditure would be allowed for tax purposes. Therefore, a deferred tax asset would be recognised in respect of this difference subject to the consideration of prudence (see paragraphs 15 - 18)

Appendix 1

Examples of Timing Difference

Note: This appendix is illustrative only and does not form part of the Accounting Standard. The purpose of this appendix is to assist in clarifying the meaning of the Accounting Standard. The sections mentioned hereunder are references to sections in the Income-tax Act, 1961, as amended by the Finance Act, 2001.

  1. Expenses debited in the statement of profit and loss for accounting purposes but allowed for tax purposes in subsequent years, e.g.
    a) Expenditure of the nature mentioned in section 43B (e.g. taxes, duty, cess, fees, etc.) accrued in the statement of profit and loss on mercantile basis but allowed for tax purposes in subsequent years on payment basis.
    b) Payments to non-residents accrued in the statement of profit and loss on mercantile basis, but disallowed for tax purposes under section 40(a)(i) and allowed for tax purposes in subsequent years when relevant tax is deducted or paid.
    c) Provisions made in the statement of profit and loss in anticipation of liabilities where the relevant liabilities are allowed in subsequent years when they crystallize.

  2. Expenses amortized in the books over a period of years but are allowed for tax purposes wholly in the first year (e.g. substantial advertisement expenses to introduce a product, etc. treated as deferred revenue expenditure in the books) or if amortization for tax purposes is over a longer or shorter period (e.g. preliminary expenses under section 35D, expenses incurred for amalgamation under section 35DD, prospecting expenses under section 35E).

  3. Where book and tax depreciation differ. This could arise due to:
    a) Differences in depreciation rates.
    b) Differences in method of depreciation e.g. SLM or WDV.
    c) Differences in method of calculation e.g. calculation of depreciation with reference to individual assets in the books but on block basis for tax purposes and calculation with reference to time in the books but on the basis of full or half depreciation under the block basis for tax purposes.
    d) Differences in composition of actual cost of assets.

  4. Where a deduction is allowed in one year for tax purposes on the basis of a deposit made under a permitted deposit scheme (e.g. tea development account scheme under section 33AB or site restoration fund scheme under section 33ABA) and expenditure out of withdrawal from such deposit is debited in the statement of profit and loss in subsequent years.

  5. Income credited to the statement of profit and loss but taxed only in subsequent years e.g. conversion of capital assets into stock in trade.

  6. If for any reason the recognition of income is spread over a number of years in the accounts but the income is fully taxed in the year of receipt.

Appendix 2

Note: This appendix is illustrative only and does not form part of the Accounting Standard. The purpose of this appendix is to illustrate the application of the Accounting Standard. Extracts from statement of profit and loss are provided to show the effects of the transactions described below.

Illustration 1

A company, ABC Ltd., prepares its accounts annually on 31st March. On 1st April, 20x1, it purchases a machine at a cost of Rs. 1,50,000. The machine has a useful life of three years and an expected scrap value of zero. Although it is eligible for a 100% first year depreciation allowance for tax purposes, the straight-line method is considered appropriate for accounting purposes. ABC Ltd. has profits before depreciation and taxes of Rs. 2,00,000 each year and the corporate tax rate is 40 per cent each year.

The purchase of machine at a cost of Rs. 1,50,000 in 20x1 gives rise to a tax saving of Rs. 60,000. If the cost of the machine is spread over three years of its life for accounting purposes, the amount of the tax saving should also be spread over the same period as shown below:

Statement of Profit and Loss
(for the three years ending 31st March, 20x1, 20x2, 20x3)

(Rs in Thousands)

  20x1 20x2 20x3
Profit before depreciation and taxes

Less: Depreciation for accounting purposes

Profit before taxes

Less: Tax expense

Current tax

0.40 (200 - 150)

0.40 (200)

Deferred Tax

Tax effect of timing differences originating during the year 0.40 (150 - 50)

Tax effect of timing differences reversing during the year 0.40 (0 - 50)

Tax expense

Profit after tax

Net timing differences

Deferred tax liability
200

50

150





20





40



60

90

100

40
200

50

150







80





(20)

60

90

50

20
200

50

150







80





(20)

60

90

0

0

In 20x1, the amount of depreciation allowed for tax purposes exceeds the amount of depreciation charged for accounting purposes by Rs. 1,00,000 and, therefore, taxable income is lower than the accounting income. This gives rise to a deferred tax liability of Rs. 40,000. In 20x2 and 20x3, accounting income is lower than taxable income because the amount of depreciation charged for accounting purposes exceeds the amount of depreciation allowed for tax purposes by Rs. 50,000 each year. Accordingly, deferred tax liability is reduced by Rs. 20,000 each in both the years. As may be seen, tax expense is based on the accounting income of each period.

In 20x1, the profit and loss account is debited and deferred tax liability account is credited with the amount of tax on the originating timing difference of Rs. 1,00,000 while in each of the following two years, deferred tax liability account is debited and profit and loss account is credited with the amount of tax on the reversing timing difference of Rs. 50,000.

The following Journal entries will be passed

Year 20x1

Profit and Loss A/c Dr. 20,000

To Current tax A/c 20,000

(Being the amount of taxes payable for the year 20x1 provided for)

Profit and Loss A/c Dr. 40,000

To Deferred tax A/c 40,000

(Being the deferred tax liability created for originating timing difference of Rs. 1,00,000)

Year 20x2

Profit and Loss A/c Dr. 80,000

To Current tax A/c 80,000

(Being the amount of taxes payable for the year 20x2 provided for)

Deferred tax A/c Dr. 20,000

To Profit and Loss A/c 20,000

(Being the deferred tax liability adjusted for reversing timing difference of Rs. 50,000)

Year 20x3

Profit and Loss A/c Dr. 80,000

To Current tax A/c 80,000

(Being the amount of taxes payable for the year 20x3 provided for)

Deferred tax A/c Dr. 20,000

To Profit and Loss A/c 20,000

(Being the deferred tax liability adjusted for reversing timing difference of Rs. 50,000)

In year 20x1, the balance of deferred tax account i.e., Rs. 40,000 would be shown separately from the current tax payable for the year in terms of paragraph 30 of the Statement. In Year 20x2, the balance of deferred tax account would be Rs. 20,000 and be shown separately from the current tax payable for the year as in year 20x1. In Year 20x3, the balance of deferred tax liability account would be nil.

Illustration 2

In the above illustration, the corporate tax rate has been assumed to be same in each of the three years. If the rate of tax changes, it would be necessary for the enterprise to adjust the amount of deferred tax liability carried forward by applying the tax rate that has been enacted or substantively enacted by the balance sheet date on accumulated timing differences at the end of the accounting year (see paragraphs 21 and 22). For example, if in Illustration 1, the substantively enacted tax rates for 20x1, 20x2 and 20x3 are 40%, 35% and 38% respectively, the amount of deferred tax liability would be computed as follows:

The deferred tax liability carried forward each year would appear in the balance sheet as under:

31st March, 20x1 = 0.40 (1,00,000) = Rs. 40,000

31st March, 20x2 = 0.35 (50,000) = Rs. 17,500

31st March, 20x3 = 0.38 (Zero) = Rs. Zero

Accordingly, the amount debited/(credited) to the profit and loss account (with corresponding credit or debit to deferred tax liability) for each year would be as under:

31st March, 20x1 Debit = Rs. 40,000

31st March, 20x2 (Credit) = Rs. (22,500)

31st March, 20x3 (Credit) = Rs. (17,500)

Illustration 3

A company, ABC Ltd., prepares its accounts annually on 31st March. The company has incurred a loss of Rs. 1,00,000 in the year 20x1 and made profits of Rs. 50,000 and 60,000 in year 20x2 and year 20x3 respectively. It is assumed that under the tax laws, loss can be carried forward for 8 years and tax rate is 40% and at the end of year 20x1, it was virtually certain, supported by convincing evidence, that the company would have sufficient taxable income in the future years against which unabsorbed depreciation and carry forward of losses can be set-off. It is also assumed that there is no difference between taxable income and accounting income except that set-off of loss is allowed in years 20x2 and 20x3 for tax purposes.

Statement of Profit and Loss
(for the three years ending 31st March, 20x1, 20x2, 20x3)

(Rs in Thousands)

20x1 20x2 20x3
Profit (loss)

Less: Current tax

Deferred Tax:

Tax effect of timing differences originating during the year

Tax effect of timing differences reversing during the year

Profit (loss) after tax effect
(100)

---



40

---

(60)
50

---





(20)

30
60

(4)





(20)

36

Gujarat Ambuja Cements Ltd. likely to raise Rs 300cr through preferential allotment of its Equity shares

GACL is planning to raise further Rs. 300 crores through prefrential allotment to persons other than the promotrers The company's board will meet on May 18. The money, if raised, would be utilised for the Company's existing and new capex plans The company had obtained the approval of the shareholders for raising $200 million last year, the company actually raised $100 million through issue of foreign currency convertible bonds.

MP Chitale chosen to valuate UTI-ISL

UNIT Trust of India has appointed MP Chitale & Co to conduct a valuation of its 100 per cent subsidiary — UTI-Investor Services. The valuation would be a basis for negotiations with short-listed bidders who are to be offered a strategic stake in the company. Once this process is over, the company is to be taken public. "The board of trustees of UTI had approved the appointment of MP Chitale and Co for conducting an independent valuation of UTI-ISL. This is in addition to the internal valuation exercise conducted by UTI," said UTI executive director BS Pandit. It’s learnt that the internal valuation put UTI-ISL at Rs 2-3 higher per share than the independent valuation. While Pandit declined to comment on the valuation figure, UTI insiders put the figure at Rs 55 crore. The net worth of the company as of March 31, 2000, stood at Rs 9.90 crore with a paidup equity capital of Rs 10 crore. The valuation worked out by the charted accountancy firm would be on the basis of the discounted cash flow method of arriving at net present value of future profits. The country’s largest MF had short-listed three to four players, including Tata Consultancy Services and Satyam Computer Services, to off-load part of its stake in the company’s Rs 10 crore paid-up equity capital. This plan, however, has been delayed because it’s scheduled to coincide with the implementation of UTI’s business process re-engineering exercise. Source : The Economic Times Dated : 14 May, 2001

Amendment in listing agreement pertaining to Non-promoter holding on a continuous basis and minimum number of shareholders

SECURITIES AND EXCHANGE BOARD OF INDIA
SECONDARY MARKET DEPARTMENT
Mittal Court, B Wing, First Floor,
224, Nariman Point, Mumbai 400 021

SMDRP/POLICY/ CIR- 28/01
May 02, 2001

The Presidents/Executive Directors/
Managing Directors of all the Stock Exchanges
 

Dear Sir/Madam,

Sub: Non-promoter holding on a continuous basis and minimum number of shareholders

The matter of requirement of quantitative continuous listing conditions to be complied by the listed companies to maintain a minimum floating stock post listing was discussed in the meeting of the Secondary Market Advisory Committee. The recommendations of the Committee were considered by the SEBI Board in its meeting held on December 22, 2000. The Board approved the requirement of quantitative continuous listing conditions as a measure of investor protection as it would ensure availability of floating stock on a continuous basis. It was also decided to delete the requirement of minimum number of shareholders in proportion to capital offered.

Accordingly, the stock exchanges are directed to amend their Listing Agreement as under

  1. The existing clause 40A shall be substituted by following –

"40A – Conditions for continued listing

(i) The company agrees that in the event of the application for listing being granted by the Exchange, the company shall maintain on a continuous basis, the minimum level of non-promoter holding at the level of public shareholding as required at the time of listing.

  1. Where the non-promoter holding of an existing listed company as on April 01, 2001 is less than the limit of public shareholding as required at the time of initial listing, the company shall within one year raise the level of non-promoter holding to at least 10%. In case the company fails to do so, it shall buy back the public share holding in the manner provided in the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997.
  1. The company agrees that it shall not make preferential allotment or an offer to buy back its securities, if such allotment or offer result in reducing the non-promoter holding below the limit of public shareholding specified under the SEBI (Disclosure and Investor Protection) Guidelines, as applicable at the time of initial listing or the limit specified in sub-clause (ii) for the existing listed company, as the case may be.
  2. The conditions stipulated in sub-clauses (i), (ii) and (iii) shall not apply to the companies referred to BIFR.

(v) The company agrees that the following shall also be the condition for continued listing.

    1. When any person acquires or agrees to acquire 5% or more of the voting rights of any securities, the acquirer and the company shall comply with the relevant provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
    2. When any person acquires or agrees to acquire any securities exceeding 15% of the voting rights in any company or if any person who holds securities which in aggregate carries less than 15% of the voting rights of the company and seeks to acquire the securities exceeding 15% of the voting rights, such person shall not acquire any securities exceeding 15% of the voting rights of the company without complying with the relevant provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997."
  1. SEBI vide its circular No. SMD/RCG/JJ/1819/96 dated May 15, 1996 and circular No. SMDRP/POLICY/CIR-30/98 dated October 16, 1998 had introduced the requirement of at least 5 public shareholders for every Rs. 1 lakh capital issued. This requirement is being withdrawn.

You are advised to modify the listing agreement as above and monitor the level of non promoter holding on a half yearly basis from the returns submitted by the companies in specified formats.

SEs told to ensure 10% non-promoter holding

Almost five months after the Sebi board decided that non-promoter holdings must reach at least 10 per cent of a company equity capital within a year, the securities regulator has finally directed stock exchanges to make the necessary changes to the listing agreement with companies. The Sebi board endorsed these decisions at its meeting held on December 22. This was after a recommendation to this effect by the SS Tarapore committee on secondary markets. However, the Sebi issued its final guidelines on the subject only on May 2. Sebi executive director Pratip Kar was not available for comment as to why the regulator took five months to issue a directive on a decision already taken by the Sebi board. In cases where the non-promoter holding of an existing listed company as on April 1, 2001, is less than the limit of public shareholding as required at the time of initial listing, the company will within one year raise the level of non-promoter holding to at least 10 per cent, according to Sebi guidelines. In case the company fails to do so, it will have to buy back the public share holding in the manner provided in the Sebi (Substantial Acquisition of Shares and Takeovers) Regulations 1997. The company will not make preferential allotment or an offer to buy back its securities, if this leads to a reduction in the non-promoter holding below the limits prescribed by Sebi. Sebi’s listing norms make it mandatory on companies to make a public issue for at least 25 per cent of the equity capital. Source : The Economic Times Dated : 14 May, 2001

10,000 listed firms, but 1,500 trade daily

It’s a problem of plenty, though one which the Indian bourses wish they hadn’t had to cope with. At the end of March, Indian markets, including all the 23 stock regional exchanges, had close to 10,000 listed companies. India thus has the distinction of having the highest number of listed companies in the world, more than the combined total of US exchanges, Nasdaq, New York Stock Exchange and Amex. However, when it comes to actual trading, barely 1,500 managed to trade on a daily basis. The 'credit' for the highest number of primary listings went not to Mumbai but Calcutta Stock Exchange with 1,908 primary listed companies — each company has to specify one exchange as a primary exchange whose listing requirements it has to follow — followed by the BSE with 1,826. Overall, a total of 9,985 companies were listed on various stock exchanges in India on March 31, 2001, compared to 9,871 companies listed at the end of 1999-00, after adding the 114 IPOs during the course of the last fiscal. Of this, Calcutta Stock Exchange accounted for more than 19 per cent of the companies primarily listed on it followed by Bombay Stock Exchange which accounted for 18.2 per cent. DSE shared 17 per cent of the listed companies followed by Hyderabad Stock Exchange with 6.8 per cent. The number of companies listed at the Magadh Stock Exchange was only 33. A company can get listed at one or more exchanges but has to specify one exchange as its primary exchange, while other exchanges where it chooses to list are considered secondary. Source : The Economic Times Dated : 14 May, 2001

PUNJAB NATIONAL BANK plans to tap the equities market this fiscal to raise upto Rs 400 crore

PNB plans a Rs 400 cr IPO this year by offloading 26 per cent of the government stake, The Bank is planning to come out with an Initial Public Offer this fiscal year and has filed offer document with the Securities and Exchange Board of India, The size of the IPO would be about seven lakh shares priced at about Rs 40-50 a share ie. Rs 10 face value with a premium of about Rs 30-40 a share. The IPO is part of The Boston Consultancy Group’s recommendation for restructuring the bank.

Bill to protect investors for a powerful SEBI

THE DRAFT Investor Protection Bill, 2001 has called for search and seizure powers for Sebi, something which the government has till now opposed. The full report together with the draft Bill, prepared by the former National Law School director N L Mitra, was submitted to the finance ministry a week ago. The Bill also calls for creating standing committees on investor protection and capital market operations, each of which should have among others, a senior representative from the Central Bureau of Investigations. In the event of a financial fraud, it has fixed a fine of five times the damage caused to the market as well as imprisonment upto seven years. Prof Mitra, who was asked by the government to undertake a detailed study on investor protection and then submit a draft bill on the matter, met senior officials of Sebi and RBI last week. Interestingly, the proposed legislation calls for appointing market referees or inspectors which will monitor recording of contracts and preparation of documents as also the clearing and settlement system. These market referees would be appointed by Sebi or by stock exchanges in consultation with the regulator. Mitra has said that two standing committees should be set up, and the first should be on investors’ protection. This should primarily stipulate policy issues on investor protection and prescribe norms for best practices. This committee should be chaired by the Sebi chairman and include three members from an investor protection organisations, two Sebi board members, two independent experts nominated by the Department of Company Affairs, a nominee from the Reserve Bank of India not below the rank of chief general manager and a nominee of CBI not below the rank of joint director. Sebi’s executive director (legal) would be the member secretary. The second standing committee would be on capital market operations. This would among others, review the functioning of stock exchanges and stipulate policy issues on market operation. This committee would include presidents of NSE and BSE, two presidents of other stock exchanges, three independent experts, and a nominee each from RBI and CBI. The Bill also calls for powers to Sebi to prohibit the issue of any offer document by a company or an advertisement soliciting money from the general public for issue of securities and could specify the conditions subject to which any such offer document or advertisement should be issued. The draft Investor Protection Bill has also sought to confer investigating powers on Sebi. This would be done after permission from a magistrate having jurisdiction. The investigations could be launched under various sections of the Code of Criminal Procedure, 1973. After the investigation, Sebi would place the report to the magistrate concerned seeking permission for the prosecution of the person concerned. During the course of the investigations, Sebi should be empowered to search, seize and attach bank accounts and assets of any company, its promoters, directors or market intermediaries. If the securities regulator apprehends that the funds and assets are likely to be diverted or transferred unlawfully, then it could seize these and report the same to the magistrate within 24 hours. There is also a specific power incorporated to allow Sebi to disallow a person or entity from alienating any asset or transfer any funds, during the course of proceedings initiated against this person or entity. Financial frauds would include conducting unfair practice in the capital market, price rigging, noncompliance of market regulations, vanishing company, diversion of funds collected from shareholders, members or participants of any collective investment schemes and funds raised through a public issue without any intention of conducting the business for which the fund has been raised. A stiff penalty has also been suggested for violation of the listing agreement. Here again, the corporate would have to pay five times the claim of the affected investors, in the event of failing to comply with provisions of the listing agreement. The listing agreement is a very crucial document since through this Sebi regulates most corporates. So far, a violation of this agreement invited a minimal penalty of Rs 5,000.

Companies defaulting on loans to be called insolvent

A Stringent insolvency law is on the cards. The government is proposing to redefine industrial sickness. In the existing act, sickness is defined as the erosion of net worth for three consecutive years, for companies which have been in existence for five years. Under the proposed definition, the net worth erosion criteria is being brought down to 50 per cent instead of cent per cent, while default has also been included in the definition of sickness. Also, a company which has failed to pay a debt exceeding Rs 1 lakh would also be considered sick. The aim of these modifications is to detect sickness before it occurs and attempt revival. The underlying principle here is that under the existing Act, revival has failed because it has been attempted after the company has gone sick. The government attempted to introduce both these principles in the ‘97 amendments to SICA, but those amendments failed to go through in Parliament. The department of company affairs in its draft bill circulated to various ministries sometime ago had not considered the inclusion of default in the definition of sickness, but this had now been done in the final Bill. This Bill is now set to be taken to the Cabinet for approval and subsequent introduction. Considering that this Bill is being finalised in a more liberal atmosphere, when easy exit to the lenders is not being frowned upon, it has several unique features. In this Bill, employees have been placed on par with secured lenders. Under the existing Act, the secured lenders — government and then FIs, in that order — have the first lien, followed by depositors. Additionally, the new Bill proposes to encourage voluntary winding up of small companies. Only companies with a minimum capital of Rs 10 lakh would be required to submit winding-up petitions. A revival fund, paid for by companies — 0.1 per cent of turnover — would be set up for revival, rehabilitation and preservation/protection of the assets of companies. The winding up would be completed in within a two-year time-frame. Professionals would be appointed as liquidators. The administrative order procedure prevalent in UK would be adopted to expedite winding up. The main advantage of these changes according to the government is that the time taken to wind up companies would be drastically reduced from 20-25 years now to a two-year time period. Stripping of assets of sick companies would be avoided. The multiplicity of litigation before multiple courts would be reduced with since the jurisdiction of BIFR and the high courts would be subsumed under the new companies court called the National Company Law Tribunal.

Financial statements must recognise effect of investments in arms : ICAI

Consolidated financial statement (CFS) of corporate entities would have to recognize the effect of investment made by entities or groups in associates with effect form the next financial year. An exposure draft issued by the Institute of Chartered Accountants of India (ICAI) on “Accounting for investments in associates in consolidated financial statement” recommends that the effect of the investment on the group’s financial position and operating result would have to be reflected in the CPS. The exposure draft describes an “associate” as an enterprise in which the investing company has significant influence, and that which is neither a subsidiary or a joint venture of the investing entity. Significant influence, according to the draft, is the power to participate in the financial and/or operating policy decisions of the invest without control over those policies.The exposure draft issued here late Monday said that the investment should be accounted for under the equity method. Under the equity method of accounting, investment are required to be initially recorded at cost as reserve arising at the time of acquisition. The carrying amount is increased or decreased to recognise the investee after the date of acquisition. The exposure draft contends that as the investor has significant influence over the associate, the group has a measure of responsibility for the associate’s performance and, as a result the return on its investment. The investor accounts for this stewardship by extending the scope of its CFS to include its share of results of such an associate and so provides an analysis of earnings and investments. The application of the equity method in CFS would therefore provide more informative reporting of the net assets and net income of the investor. The idea is to give a true and fair value of the investment made by a company/group, ICAI sources said. The scope of the exposure draft would be limited to the preparation and presentation of consolidated financial statements only, it does not deal with accounting for such investment in preparation and presentation of the investor. The exposure draft further said that significant influence may be gained by share ownership statute or agreement. For the purpose of share ownership. If an investor holds 20 per cent or more of the voting power of the investee, if is presumed that the investor has significant influence. The 20 per cent of the voting power could be held directly by the investing company or indirectly through its substantial or majority ownership by another investor does not necessarily preclude an investor form having significant influence. The exposure draft goes on to say that significant influence by an investor would be evidenced through in representation on the board of directors or equivalent governing body of the invest participation in the policy making process Material transaction between the investor and the invest and interchange of managerial personnel and piovision of essential technical information. The ICAI draft exempts investment made for very sort periods and cases where associate operate under severe long-term restriction that impairs its ability method evaluation. The draft also requires disclosure of the list of associates the proportion of ownership interest and proportion of voting power held in the CFS. More over the investor’s share of the profits or losses if such investment are required to be disclosed separately in the consolidated statement of profit and loss. Source : The Economic Times Dated : May 2, 2001

Disclose all deals, traded, equity indices : ICAI note

A Guidance note issued by the Institute of Chartered Accountants of India (ICAI) on accounting treatment for Equity Index Futures requires disclosures of total number contracts entered into and gross number of units of equity index futures traded in the balance sheets of those entering into such futures contract. Persons or entities entering into such contracts, referred, to as a client in the trading parlance, would also be required to disclose the amount of bank guarantee, book value and market value of securities lodged for all outstanding contracts at the year end if initial margin money had been paid in form of bank guarantee or by way of lodging securities. The ICAI is currently working on a comprehensive accounting Standard covering various types of financial instruments includuig equity index futures. This guidance note is an interim measure to ensure certain norms are followed for accounting for gains or losses arising out of trading in equity index futures.The guidance note would be withdrawn once the accounting standard is introduced. The client would also be required to make disclosure of number of equity index futures that have not been settled, number of units of equity index futures pertaining to those contracts and daily settlement price as of the balance sheet date. Source : The Economic Times Dated : April 27, 2001

Debt beats equity in the primaries

 

 

Fund Mobilisation Through IPOs (Rs. Crore)

 

Equity

Debt

Total

1994-95

13,312

Nil

13,312

1995-96

8,882

2,940

11,822

1996-97

4,671

6,977

11,648

1997-98

1,132

1,929

3,061

1998-99

504

7,407

7,911

1999-00

2,975

4,698

7,673

2000-01

2,479

4,144

6,623

 

Capital gains status for Esops in unlisted cos

Capital gains treatment for Esops has been restored for unlisted companies in the amendments to the Finance Bill 2001, passed by the Parliament last week. Budget 2000 had shifted from perquisites to the capital gains approach for Esops. But Finance Bill 2001 had limited its scope to listed companies by specifying that the new tax treatment would be subject to the guidelines issued by the Securities and Exchange Board of India. Since Sebi regulates only listed companies, the budget amendments had created a furore, as they created an impression that the new Esop treatment would not be available to start-ups. Amendments to the Finance Bill 2001 last week have, however, corrected this anomaly. According to the amendments, the new tax treatment would be available to ``any Employees’ Stock Option Plan or Scheme of the company offered to such employees in accordance with the guidelines issued in this behalf by the Central government.’’ According to revenue department officials, the amendments will ensure that the new tax treatment is available to all companies, irrespective of whether they are listed or not. ``When we notify the guidelines, it will be specified that the unlisted companies are also eligible,’’ officials said. Following the introduction of the Finance Bill 2001, IT and other cutting-edge technology companies had represented to the government that they need Esops far more than the old economy companies to retain staff. They had pointed out that Esops were far more important for start-ups to attract and retain talent and to compensate the employees for the risk. It is on the basis of these representations that the amendments have been made. The income tax treatment for Esops has taken nearly three years to fine-tune. Originally, the Income Tax Act provided that Esops were to be treated as perquisites. This meant that they were taxed at the point of acquisition. Cash-strapped employees refused to participate in such Esop plans. The managements argued that such a tax treatment defeated the spirit of Esops. The revenue department shifted from perquisites to capital gains approach last year, but in budget 2001, it limited the scope of the new tax treatment to companies falling under Sebi’s purview. The main idea was to regulate Esops through Sebi, but that created an anomaly, which is now being corrected through the amendments made last week. Source : The Economic Times Dated : May 1, 2001

Govt announces fresh tax sops

IN FRESH tax sops, the government on Wednesday raised the standard deduction by Rs 5,000 for salaried income up to Rs 3 lakh and doubled the limit for TDS on interest income, slashed Customs Duty for textiles and IT equipment imports, but hiked it on imported cars to protect domestic industry. The raising of standard deduction limit alone would cost the exchequer Rs 1,000 crore, while other changes would be broadly revenue neutral. Moving the Finance Bill, 2001 in the Lok Sabha, finance minister Yashwant Sinha restored partially the limit of deduction of interest income under Section 80l to Rs 12,000 from the Rs 9,000 proposed in the budget. The additional deduction will cover interest rate on government securities. Even as readymade manufacturers were crying for relief from the 16 per cent excise duty on branded garments, he widened the net to include unbranded garments excluding clothing accessories, raincoats and undergarments to remove "distortions and manipulations". Sinha proposed to exempt plastic footwear costing up to Rs 125 per pair from the nominal 4 per cent excise duty. Keeping in view the difficulties of exporters, the finance minister proposed to re-phase the withdrawal provision by taxing export profits to the extent of 30 per cent against the proposed 40 per cent for the current year. The percentage of their taxable income will increase 50 per cent, 70 per cent and 100 per cent in the next three years instead of 60, 80 and 100 per cent. The changes in customs and excise duties proposed on Wednesday would be effective from Thursday, excepting those on garments which would be effective from May 1. In order to give relief to salary earners, Sinha proposed to raise the limit of standard deduction from Rs 25,000 to Rs 30,000 for income up to Rs 1,50,000 and from Rs 20,000 to Rs 25,000 for incomes between Rs 1,50,000 to Rs 3,00,000. Those having income from Rs 3 lakh to Rs 5 lakh will continue to enjoy the existing deduction of Rs 20,000. At present, for salaried taxpayers, standard deduction up to Rs 25,000 is available for incomes up to Rs 1 lakh. Modifying the proposals for tax deduction at source on interest payments, the minister raised the limit for TDS from Rs 2,500 to Rs 5,000. He also proposed to put funds enjoying exemption under Section 10(23c) on par with the charitable institutions claiming exemption under section 11 in respect of accumulation of their income. These funds like the charitable institutions will be allowed to accumulate 25 per cent of their income without any time limit. Accumulation of income beyond 25 per cent would be restricted to five years. He also proposed that due dates for filing of returns in respect of non-corporate taxpayers, whose accounts are to be statutorily audited, will also be October 31 in line with due dates for corporates. At present it is July 31. In deference to the commerce minister's suggestion for allaying apprehensions on imports of new cars and two-wheelers in the wake of lifting of quantitative restrictions, Sinha proposed to increase the basic customs duty on complete built units of cars and two-wheelers from 35 to 60 per cent. The countervailing duty of 16 per cent on 12 criticial items of textile machinery, including shuttleless looms is proposed to be abolished in order to promote capital investment and modernisation of textile mills. In order to prevent loss of production in the telecom equipment segment following equalisation of duty rates from 25 to 15 per cent, the minister decided to reduce the customs duty on specified parts of telecom equipment other than populated printed circuit boards to 5 per cent. As a fillip to it industry, he proposed to add 32 specified items in the list of machines and equipment that are allowed to be imported at a low rate of 5 per cent basic customs duty. As a special dispensation, Sinha said he proposed to exempt units producing ball and roller bearings up to Rs 25 lakh per annum from excise duty to help tiny units. In a bid to encourage indigenous shipping companies, he also proposed to abolish the 5 per cent customs duty on ships introduced in the budget. In a bid to encourage indigenous shipping companies, he also proposed to abolish the 5 per cent customs duty on ships introduced in the budget. The customs duty on metallurgical coke is proposed to be reduced to 5 per cent on actual user basis to steel plants to help improve their viability. The concessional rate of duty of 55 per cent for the import of crude palm oil by sick vanaspati units proposed in the budget will be abolished to avoid discrimination. (source: the Economic times)

Accounting Standard-21 (Consolidated Financial Statements )

 

 

           

Accounting Standard 21

Consolidated Financial Statements

(In this Accounting Standard, the standard portions have been set in bold italic type. These should be read in the context of the background material which has been set in normal type, and in the context of the ‘Preface to the Statements of Accounting Standards'.)

Accounting Standard (AS) 21, ‘Consolidated Financial Statements’, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1-4-2001. An enterprise that presents consolidated financial statements should prepare and present these statements in accordance with this Standard. The following is the text of the Accounting Standard.

Objective

The objective of this Statement is to lay down principles and procedures for preparation and presentation of consolidated financial statements. Consolidated financial statements are presented by a parent (also known as holding enterprise) to provide financial information about the economic activities of its group. These statements are intended to present financial information about a parent and its subsidiary(ies) as a single economic entity to show the economic resources controlled by the group, the obligations of the group and results the group achieves with its resources.

Scope

1. This Statement should be applied in the preparation and presentation of consolidated financial statements for a group of enterprises under the control of a parent.

2. This Statement should also be applied in accounting for investments in subsidiaries in the separate financial statements of a parent.

3.In the preparation of consolidated financial statements, other Accounting Standards also apply in the same manner as they apply to the separate financial statements.

4.This Statement does not deal with:

  1. methods of accounting for amalgamations and their effects on consolidation, including goodwill arising on amalgamation (see AS 14, Accounting for Amalgamations);
  2. accounting for investments in associates (at present governed by AS 13, Accounting for Investments); and
  3. accounting for investments in joint ventures (at present governed by AS 13, Accounting for Investments).

Definitions

5. For the purpose of this Statement, the following terms are used with the meanings specified:

Control:

(a) the ownership, directly or indirectly through subsidiary(ies), of more than one-half of the voting power of an enterprise; or

1. Attention is specifically drawn to paragraph 4.3 of the Preface, according to which accounting standards are intended to apply only to material items.

2. A separate accounting standard on 'Accounting for Investments in Associates', which is being formulated, will specify the requirements relating to accounting for investments in associates.

3. A separate accounting standard on 'Financial Reporting of Interests in Joint Ventures ', which is being formulated, will specify the requirements relating to accounting for investments in joint ventures.

(b) control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other enterprise so as to obtain economic benefits from its activities.

A subsidiary is an enterprise that is controlled by another enterprise (known as the parent).

A parent is an enterprise that has one or more subsidiaries.

A group is a parent and all its subsidiaries.

Consolidated financial statements are the financial statements of a group presented as those of a single enterprise.

Equity is the residual interest in the assets of an enterprise after deducting all its liabilities.

Minority interest is that part of the net results of operations and of the net assets of a subsidiary attributable to interests which are not owned, directly or indirectly through subsidiary(ies), by the parent.

6. Consolidated financial statements normally include consolidated balance sheet, consolidated statement of profit and loss, and notes, other statements and explanatory material that form an integral part thereof. Consolidated cash flow statement is presented in case a parent presents its own cash flow statement. The consolidated financial statements are presented, to the extent possible, in the same format as that adopted by the parent for its separate financial statements.

Presentation of Consolidated Financial Statements

7. A parent which presents consolidated financial statements should present these statements in addition to its separate financial statements.

8. Users of the financial statements of a parent are usually concerned with, and need to be informed about, the financial position and results of operations of not only the enterprise itself but also of the group as a whole. This need is served by providing the users -

  1. separate financial statements of the parent; and

b.       consolidated financial statements, which present financial information about the group as that of a single enterprise without regard to the legal boundaries of the separate legal entities.

Scope of Consolidated Financial Statements

9. A parent which presents consolidated financial statements should consolidate all subsidiaries, domestic as well as foreign, other than those referred to in paragraph 11.

10. The consolidated financial statements are prepared on the basis of financial statements of parent and all enterprises that are controlled by the parent, other than those subsidiaries excluded for the reasons set out in paragraph 11. Control exists when the parent owns, directly or indirectly through subsidiary(ies), more than one-half of the voting power of an enterprise. Control also exists when an enterprise controls the composition of the board of directors (in the case of a company) or of the corresponding governing body (in case of an enterprise not being a company) so as to obtain economic benefits from its activities. An enterprise may control the composition of the governing bodies of entities such as gratuity trust, provident fund trust etc. Since the objective of control over such entities is not to obtain economic benefits from their activities, these are not considered for the purpose of preparation of consolidated financial statements. For the purpose of this Statement, an enterprise is considered to control the composition of:

(i) the board of directors of a company, if it has the power, without the consent or concurrence of any other person, to appoint or remove all or a majority of directors of that company. An enterprise is deemed to have the power to appoint a director, if any of the following conditions is satisfied:

  1. a person cannot be appointed as director without the exercise in his favour by that enterprise of such a power as aforesaid; or
  2. a person’s appointment as director follows necessarily from his appointment to a position held by him in that enterprise; or
  3. the director is nominated by that enterprise or a subsidiary thereof.

(ii) the governing body of an enterprise that is not a company, if it has the power, without the consent or the concurrence of any other person, to appoint or remove all or a majority of members of the governing body of that other enterprise. An enterprise is deemed to have the power to appoint a member, if any of the following conditions is satisfied:

  1. a person cannot be appointed as member of the governing body without the exercise in his favour by that other enterprise of such a power as aforesaid; or
  2. a person’s appointment as member of the governing body follows necessarily from his appointment to a position held by him in that other enterprise; or
  3. the member of the governing body is nominated by that other enterprise.

11. A subsidiary should be excluded from consolidation when:

(a) control is intended to be temporary because the subsidiary is acquired and held exclusively with a view to its subsequent disposal in the near future; or

(b) it operates under severe long-term restrictions which significantly impair its ability to transfer funds to the parent.

In consolidated financial statements, investments in such subsidiaries should be accounted for in accordance with Accounting Standard (AS) 13, Accounting for Investments. The reasons for not consolidating a subsidiary should be disclosed in the consolidated financial statements.

12. Exclusion of a subsidiary from consolidation on the ground that its business activities are dissimilar from those of the other enterprises within the group is not justified because better information is provided by consolidating such subsidiaries and disclosing additional information in the consolidated financial statements about the different business activities of subsidiaries. For example, the disclosures required by Accounting Standard (AS) 17, Segment Reporting, help to explain the significance of different business activities within the group.

Consolidation Procedures

13. In preparing consolidated financial statements, the financial statements of the parent and its subsidiaries should be combined on a line by line basis by adding together like items of assets, liabilities, income and expenses. In order that the consolidated financial statements present financial information about the group as that of a single enterprise, the following steps should be taken:

(a) the cost to the parent of its investment in each subsidiary and the parent's portion of equity of each subsidiary, at the date on which investment in each subsidiary is made, should be eliminated;

(b) any excess of the cost to the parent of its investment in a subsidiary over the parent's portion of equity of the subsidiary, at the date on which investment in the subsidiary is made, should be described as goodwill to be recognised as an asset in the consolidated financial statements;

(c) when the cost to the parent of its investment in a subsidiary is less than the parent's portion of equity of the subsidiary, at the date on which investment in the subsidiary is made, the difference should be treated as a capital reserve in the consolidated financial statements;

(d) minority interests in the net income of consolidated subsidiaries for the reporting period should be identified and adjusted against the income of the group in order to arrive at the net income attributable to the owners of the parent; and

(e) minority interests in the net assets of consolidated subsidiaries should be identified and presented in the consolidated balance sheet separately from liabilities and the equity of the parent's shareholders. Minority interests in the net assets consist of:

Where the carrying amount of the investment in the subsidiary is different from its cost, the carrying amount is considered for the purpose of above computations.

14. The parent's portion of equity in a subsidiary, at the date on which investment is made, is determined on the basis of information contained in the financial statements of the subsidiary as on the date of investment. However, if the financial statements of a subsidiary, as on the date of investment, are not available and if it is impracticable to draw the financial statements of the subsidiary as on that date, financial statements of the subsidiary for the immediately preceding period are used as a basis for consolidation. Adjustments are made to these financial statements for the effects of significant transactions or other events that occur between the date of such financial statements and the date of investment in the subsidiary.

15. If an enterprise makes two or more investments in another enterprise at different dates and eventually obtains control of the other enterprise, the consolidated financial statements are presented only from the date on which holding-subsidiary relationship comes in existence. If two or more investments are made over a period of time, the equity of the subsidiary at the date of investment, for the purposes of paragraph 13 above, is generally determined on a step-by-step basis; however, if small investments are made over a period of time and then an investment is made that results in control, the date of the latest investment, as a practicable measure, may be considered as the date of investment.

16. Intragroup balances and intragroup transactions and resulting unrealised profits should be eliminated in full. Unrealised losses resulting from intragroup transactions should also be eliminated unless cost cannot be recovered.

17. Intragroup balances and intragroup transactions, including sales, expenses and dividends, are eliminated in full. Unrealised profits resulting from intragroup transactions that are included in the carrying amount of assets, such as inventory and fixed assets, are eliminated in full. Unrealised losses resulting from intragroup transactions that are deducted in arriving at the carrying amount of assets are also eliminated unless cost cannot be recovered.

18. The financial statements used in the consolidation should be drawn up to the same reporting date. If it is not practicable to draw up the financial statements of one or more subsidiaries to such date and, accordingly, those financial statements are drawn up to different reporting dates, adjustments should be made for the effects of significant transactions or other events that occur between those dates and the date of the parent's financial statements. In any case, the difference between reporting dates should not be more than six months.

19. The financial statements of the parent and its subsidiaries used in the preparation of the consolidated financial statements are usually drawn up to the same date. When the reporting dates are different, the subsidiary often prepares, for consolidation purposes, statements as at the same date as that of the parent. When it is impracticable to do this, financial statements drawn up to different reporting dates may be used provided the difference in reporting dates is not more than six months. The consistency principle requires that the length of the reporting periods and any difference in the reporting dates should be the same from period to period

20. Consolidated financial statements should be prepared using uniform accounting policies for like transactions and other events in similar circumstances. If it is not practicable to use uniform accounting policies in preparing the consolidated financial statements, that fact should be disclosed together with the proportions of the items in the consolidated financial statements to which the different accounting policies have been applied.

21. If a member of the group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements when they are used in preparing the consolidated financial statements.

22. The results of operations of a subsidiary are included in the consolidated financial statements as from the date on which parent-subsidiary relationship came in existence. The results of operations of a subsidiary with which parent-subsidiary relationship ceases to exist are included in the consolidated statement of profit and loss until the date of cessation of the relationship. The difference between the proceeds from the disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as of the date of disposal is recognised in the consolidated statement of profit and loss as the profit or loss on the disposal of the investment in the subsidiary. In order to ensure the comparability of the financial statements from one accounting period to the next, supplementary information is often provided about the effect of the acquisition and disposal of subsidiaries on the financial position at the reporting date and the results for the reporting period and on the corresponding amounts for the preceding period.

23. An investment in an enterprise should be accounted for in accordance with Accounting Standard (AS) 13, Accounting for Investments, from the date that the enterprise ceases to be a subsidiary and does not become an associate.

24. The carrying amount of the investment at the date that it ceases to be a subsidiary is regarded as cost thereafter.

25. Minority interests should be presented in the consolidated balance sheet separately from liabilities and the equity of the parent's shareholders. Minority interests in the income of the group should also be separately presented.

26. The losses applicable to the minority in a consolidated subsidiary may exceed the minority interest in the equity of the subsidiary. The excess, and any further losses applicable to the minority, are adjusted against the majority interest except to the extent that the minority has a binding obligation to, and is able to, make good the losses. If the subsidiary subsequently reports profits, all such profits are allocated to the majority interest until the minority's share of losses previously absorbed by the majority has been recovered.

27. If a subsidiary has outstanding cumulative preference shares which are held outside the group, the parent computes its share of profits or losses after adjusting for the subsidiary’s preference dividends, whether or not dividends have been declared.

Accounting for Investments in Subsidiaries in a Parent's Separate Financial Statements

28. In a parent's separate financial statements, investments in subsidiaries should be accounted for in accordance with Accounting Standard (AS) 13, Accounting for Investments.

Disclosure

29. In addition to disclosures required by paragraph 11 and 20, following disclosures should be made:

(a) in consolidated financial statements a list of all subsidiaries including the name, country of incorporation or residence, proportion of ownership interest and, if different, proportion of voting power held;

(b) in consolidated financial statements, where applicable:

  1. the nature of the relationship between the parent and a subsidiary, if the parent does not own, directly or indirectly through subsidiaries, more than one-half of the voting power of the subsidiary;
  2. the effect of the acquisition and disposal of subsidiaries on the financial position at the reporting date, the results for the reporting period and on the corresponding amounts for the preceding period; and
  3. the names of the subsidiary(ies) of which reporting date(s) is/are different from that of the parent and the difference in reporting dates.

A separate accounting standard on 'Accounting for Investments in Associates ', which is being formulated, will define the term ‘associate’ and specify the requirements relating to accounting for investments in associates. Until the aforesaid accounting standard comes into effect, AS 13 would continue to apply.

Transitional Provisions

30. On the first occasion that consolidated financial statements are presented, comparative figures for the previous period need not be presented. In all subsequent years full comparative figures for the previous period should be presented in the consolidated financial statements.

Source : The institute of Chartered Accountants of India  

SEBI asks TATA finance to disclose loss, on account of Depreciation in value of invetments, in its Rights issue offer document

SEBI has asked TATA finance to disclose in its rights offer documnet the loss on account of depreciation in value of its investments. The loss is estimated to the tune of Rs. 70-80 crores and is on account of fall in the value of shares of Global tele-systems and Vakarangee Software. SEBI has also asked the Company to given an option to investors who have already subscribeedthe offer to be able to withdraw from the same. SEBI has required the above disclosure since the quantum of erosion in the Market-value of these investmensts is significant as compared to the Company's profit before Tax of rs. 60 crores.

HDFC bank plans to raise Equity to Rs.450 crores

HDFC bank plans to raise fresh Equity capital by offering shares in Domestic as well as Global markets. The Company plans to raise its authourised Capital from Rs. 300 crores to rs. 450 Crores. The Company presently has an Equity capital of Rs. 243 crores and reserves of Rs. 670 crores.

PRIMARY MARKET LULL TAKES ITS TOLL ON RIGHTS ISSUES

The continuing lull in the primary market has taken its toll on equity issues, especially right issues, that has hit the market last year during the last fiscal, ’00-01. As many as four companies have been forced to refund the amounts garnered by way of application money because they failed to receive the minimum subscription from shareholders. Theses four companies were Centurion Bank (Rs. 128 crore), Antartica (11 crore), Principal Pharmaceuticals (6 crore) and Model Finance (Rs. 2 crore). In all these cases, it is understood that the companies have received subscription from existing shareholders (other than promoters) only to the extent of 10-30 per cent of the offerings to them. Centurion Bank, which closed its right issue recently, could mop up only Rs. 38 crore. In the case of two right issues – Ceat Financial Services (Rs. 117 crore) and Birla Corporation (42 crore) – the promoters, have bailed out the issues by bringing in their own funds in place of the unsubcribed portion. Dewan Housing Finance and DCW, the two other companies, were forced to extend their issue periods for lack of response in the initial issue period. These findings form part of a study conducted by Prime Database, a research firm tracking the primary market. A comparison with ’99-00 shows that mobilization of resources through rights issues has recorded a significant fall, according to the study. The rights issues launched during ’00-01 aggregating Rs. 729 crore and total funds mobilised through these issues stood at only Rs. 582 crore. This was against total funds mobilization of Rs. 1,560 crore through 28 issues during ’99-00. Of the rights issues that hit the market last year, the largest one was form Centurion Bank (Rs. 128 crore). Centurion Bank was followed by Ceat Financial (Rs. 111 crore), Tata Finance (91 crore), SREI international Finance (Rs. 54 crore) and Ashok Leyland Finance (51 crore). Interestingly, all these issues were from the financial sector. In fact, the financial sector dominated the year’s rights issues accounting for Rs. 454 crore. Source : The Economic Times Dated : 19th April, 2001

Takeover Code review panel wants 5% creeping limit relaxed

The Bhagwati Panel, set up by Sebi to review the 1997 Takeover Code Regulations, has recommended in its draft report that the creeping acquisition limit of five per cent per year for persons in control should be relaxed. Persons in control should be allowed to consolidate till they reach 51 per cent, after which they would have to make an open offer. However, acquisitions beyond five per cent per year would be subject to approval from the shareholders who are free to impose any conditions, including lock-in clauses. Also purchases would have to be from the open market. The draft report is expected to be finalised by the middle of April. The report’s rationale for relaxing the creeping acquisition limit is the need for Indian industry to restructure, primarily in view of greater competition facing Indian industry post WTO. However, the draft report says that the relaxation should apply only till the end of 2003. The relaxation in the creeping acquisition norms will not apply to companies with a widely dispersed shareholding where no identifiable promoter group exists. In such a case, any person or entity making an open offer for acquiring such a company has to aim for reaching a minimum 51 per cent stake in the company. The panel has decided to retain the existing provision by which the minimum offer size for an open offer under the provisions of the takeover code should not be less than 20 per cent of the company’s paid-up equity capital. This should be applicable even for companies where promoters hold 75 per cent or more of the equity, as in such cases any acquisition beyond 75 per cent gives the acquirer absolute control. The company also loses its character as a publicly listed company, said the draft report. In the case of transfer of equity holdings among promoters from joint to sole control or vice versa, the code recommends an exemption from making an open offer, provided shareholders approve of the move. However, in case of transfer of control from joint to sole ownership, the code stipulates that both parties should be in control of the company for at least three years prior to the change. The committee has also decided against giving the target company any advance notice of acquisition by the acquirer and has instead favoured a simultaneous announcement to all concerned. The draft code also recommends that Sebi should have the power to reschedule the date of opening/closure of the offer where it has become subjudice or involves some investigation by Sebi. The committee is not in favour of raising the minimum offer size beyond 20 per cent since 94 per cent of open offers so far have not elicited full acceptance and public funding for leveraged buy-outs is not easily available. The committee has also ruled against giving a 100 per cent exit option to small shareholders within the ambit of the 20 per cent open offer, as it felt that it would not be equitable and is likely to discriminate against MFs which act on behalf of small investors. Most open offers do not accept all the shares tendered by small investors, who then usually end up with odd lots. The draft report also recommends granting Sebi the power to seek an independent valuation of the target company’s shares where the justification provided by the acquirer is not appropriate. The report also recommends that the offer price be calculated with respect to an average of 13 weeks preceding the public announcement, rather than 26 weeks as currently prevalent. This has been done to reflect the market fluctuations just prior to the public announcement because of market expectations about an impending offer, said the report. However, some exceptions to the 13-week rule are envisaged in the draft report. If the acquirer has bought shares through negotiations or allotment in a public or rights issue during a period of 52 weeks prior to the open offer, then the price paid in that transaction should be taken into account for determining the minimum open offer price. This is being done to obviate the possibility of the acquirer entering into such deals earlier at a disproportionate price for a larger quantity, waiting for 26 weeks and then making a further offer under the takeover code. However, some members of the committee have raised concerns about the extension of the period for determining the open offer price to 52 weeks from 26 weeks, if the earlier transaction was for an insignificant quantity. The code further recommends that creeping acquisitions through negotiated purchases, within six months from the date of closure of the offer, should be made at a price not higher than the offer price. In response to the question as to whether the offer price should include any payments made towards non-compete agreements, the report suggests that non-compete fees amounting to not more than 25 per cent of total consideration paid may be permitted, if the agreement is registered with the MRTP. A payment in excess of 25 per cent or one not registered with Sebi would be considered as part of consideration paid while reckoning the offer price. Source : The Economic Times Date : 28 March, 2001

Companies (Issue of Share capital with differential voting Rights) Rules, 2001.

GOVERNMENT OF INDIA

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS

(DEPARTMENT OF COMPANY AFFAIRS)

 

NOTIFICATION

New Delhi,

Dated: 9-3-2001

 

G.S.R.167(E).- In exercise of the powers conferred by  sub-clause (ii) of clause (a) section 86 read with clauses (a) and (b) of sub-section (1) of section 642 of the Companies Act, 1956, the Central Government hereby makes the following rules, namely:-

 

1. Short title and commencement:

(1)    These rules may be called the Companies ((Issue of Share capital with differential voting Rights) Rules, 2001.

(2)    They shall come into force on the date of their publication in the Official Gazette.

 

2. Definitions:

(1)   In these rules, unless the contexts otherwise requires,-

(a)     “Act” means the Companies Act, 1956 (1 of 1956);

(b)    “differential voting rights” includes rights as to dividend or voting;

(c)     “financial year” means financial year as defined under clause (17) of  section 2 of the Act.

(2)   Words and expressions used and not defined in these rules but defined in the Companies Act, 1956 shall have the same meaning respectively assigned to them in that Act.

 

3.  Conditions:

 

Every company limited by shares may issue shares with differential rights as to dividend, voting or otherwise, if -

 

1.       The company has distributable profits in terms of Section 205 of the Companies Act, 1956 for preceding three financial years preceding the year in which it was decided to issue such shares.

2.       The company has not defaulted in filing annual accounts and annual returns for three financial years immediately preceding the financial year of the year in which it was decided to issue such share.

3.       the company has not failed to repay its deposits or interest thereon on due date or redeem its debentures on due date or pay dividend.

4.       The Articles of Association of the company  authorises the issue of shares with differential voting rights.

5.       The company has not been convicted of any offence arising  under, Securities Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, Foreign Exchange Management Act, 1999.

6.       The company has not defaulted in meeting investors’ grievances.

7.       The company has obtained the approval of share holders in General Meeting by passing resolution as required under the provision of sub-clause (a) of  sub-section (1) of section 94 read with sub-section (2) of the said section.

8.       the listed public company  obtained approval of share holders through Postal Ballot.

9.      The notice of the meeting at which resolution is proposed to be passed is accompanied by an explanatory statement stating –

(a)    the rate of voting rights which the equity share capital with differential voting right shall carry;

(b)   the scale or in proportion to which the voting rights of such class or type of shares will vary;

(c)    the company shall not convert its equity capital with voting rights into equity share capital with differential voting rights and the shares with differential voting rights into equity share capital with voting rights;

(d)   the shares with differential voting rights shall not exceed 25% of the total share capital issued;

(e)    that a member of the company holding any equity share with differential voting rights shall be entitled to bonus shares, right shares of the same class;

(f)     the holders of the equity shares with differential voting rights shall enjoy all others rights to which the holder is entitled to excepting right to vote as indicated in (a) above.

 

4.

  4.Register:

 

Every company referred to in rule 3  shall maintain a register as required under section 150 of the Act containing the particulars of differential rights to which the holder is entitled to.   

 

 ( F.No. 1/13/2000-CL.V)

  

A.     A.     RAMASWAMY

Joint Secretary to the Government of India.

Companies (Appointment of the Small Shareholders’ Director) Rules, 2001.

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS

(DEPARTMENT OF COMPANY AFFAIRS)

  NOTIFICATION  

New Delhi, the 9th March, 2001

G.S.R. 168(E). – In exercise of the powers conferred by section 642 read with section 252 of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following rules, namely:-  

1. Short title and Commencement:-

  (1)   These rules may be called the Companies (Appointment of the Small Shareholders’ Director) Rules, 2001.

  (2)   They shall come into force on the date of their publication in the Official Gazette.

 

2.  Definitions:-

In these rules unless the context otherwise requires -

(a)    “Act” means the Companies Act, 1956 (1 of 1956);

 (b)   “Small Shareholder” means a shareholder holding shares of nominal value of twenty thousand rupees or less in a public company to which section 252 of the Act applies.

  3.   Applications:-

 These rules shall apply to public companies having -

  (a)    paid-up capital of five crore rupees or more

  (b)   one thousand or more small shareholders

4.  Manner of election of small shareholders’ director:-

  (1) A company may act suo-moto to elect a small shareholders’ director from amongst small shareholders or upon the notice of small shareholders, who are not less than 1/10th of total small shareholders and have proposed name of a person who shall also be a small shareholder of the company.

  (2)   Small shareholders intending to propose a person shall leave a notice of their intention with the company at least 14 days before the meeting under the signature of at least 100 small shareholders specifying name, address, shares  held and folio number and particulars of share with differential rights as to dividend and voting, if any, of the  person whose name is being proposed for the post of director and of other small shareholders proposing such person as a candidate for the post of director or small shareholders.

  (3)   A person whose name has been proposed for the post of small shareholders’ director shall sign, and file with the company, his consent in writing to act as a director.

 (4)   The listed public company shall elect small shareholders nominee subject to sub-rules (1), (2) and (3) above through the postal ballot.

  (5)   The unlisted company may appoint such small shareholders’ nominee subject to above conditions if majority of  small shareholders recommend his candidature for the post of director in their meeting.

  (6)   Tenure of such small shareholders’ director shall be for a maximum period of 3 years subject to meeting the requirement of provisions of Companies Act except that he need not have to retire by rotation.

 (7)   On expiry of his tenure, the same person if so desired by small shareholders, may be elected for an another period of 3 years.

  (8)   Such director shall be treated as director for all other purposes except for appointment as whole time director or managing director.

5.   Disqualification:-

  A person shall not be capable of being appointed as small shareholders’   director of a company, if

  (i)   he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;

 (ii)     he is an undischarged insolvent;

 (iii)    he has applied to be adjudicated as an insolvent and his application is pending;

(iv)    he has been convicted by a Court of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for not less than six months, and a period of five years has not elapsed from the date of expiry of the sentence

(v)   he has not paid any call in respect of shares of the company held by him, whether alone or jointly with others, and six months have elapsed from the last day fixed for the payment of the call; or

 (vi)  an order disqualifying him for appointment as director has been passed by a Court in pursuance of section 203 and is in force, unless the leave of the Court has been obtained for his appointment in  pursuance of that section.

6. Vacation of office:-

A person appointed as small shareholders’ director shall have to vacate the office if -

  (i)   such person so elected, as director of small shareholders ceases to be a small shareholders’ director on and from such date on which he ceased to be a small shareholder;

 (ii)   he has been rendered disqualified by virtue of sub-rule (1) of rule (5);

 (iii) he fails to pay any call in respect of shares of the company held by him, whether alone or jointly with others, within six months from the last date fixed for the payment of the call;

(iv)   he absents himself from three consecutive meetings of the Board of directors, or from all meetings of the Board for a continuous period of three months, whichever is longer, without obtaining leave of absence from the Board;

(v)  he is a partner of any private company of which he is a director, accepts a loan, or any guarantee or security for a loan, from the company in contravention of section 295;

(vi)  he acts in contravention of section 299

(vii)   he becomes disqualified by an order of Court under section 203;

(viii) he is removed in pursuance of section 284;

7. Restriction on number of directorship:-

No person shall hold office at the same time as small shareholders’ director in more than two companies.

(F.No.1/19/2000-CL.V)

A.     A.     RAMASWAMY

Joint Secretary to the Government of India

Media IPOs prove a flop for primary market investors

FOR all those who thought of becoming a crorepati by putting money into media stocks, the losses have come chappad phaad ke. If investors in information technology stocks have suffered heavily in the secondary market, primary market investors have burnt their fingers investing in media IPOs. Since April 1999, 16 IPOs were issued, with six done at par. The current situation is that of the last 15 media issues listed, 14 are quoting below their issue prices with losses ranging from 50 to 87 per cent. All the scrips issued at par are quoting way below Rs 10. Leading the losers’ bandwagon is Cinevista Communications, down by 87 per cent from its issue price of Rs 300, followed by Pritish Nandy Communications, which is quoting at a discount of 85 per cent to its issue price of Rs 155. The only media company to maintain a premium in this scenario is Balaji Telefilms, which is trading at a premium of 20 per cent over its issue price. Interestingly, many of the smaller media issues, which are now languishing, were highly oversubscribed. For instance, Telephoto Entertainments was oversubscribed 36.7 times, Sibar Media 7.1 times and Padmalaya Tele 4.4 times. Even the book-built portion of Mukta Arts was oversubscribed 4.6 times. The fall in the prices of media scrips has taken a toll on the volumes too. For instance, Mukta Arts, which was listed at a huge premium with more than 10 lakh shares being traded in the initial days after listing, now barely manages to cross a lakh. Tips, which had an average daily volume of more than 3 lakh in December 2000, now trades just 50,000 shares on an average. For issues like Telephoto and Numero Uno, which are trading below par, the volumes are only a few thousands per day. It's quite evident that most of the issues were priced much above their actual worth, taking advantage of the booming market a year ago. A striking example is Creative Eye, which relaunched its IPO with a floor price 40 per cent lower than its earlier failed offer, which was as high as Rs 225. The price now stands at just Rs 18. IPOs from the entertainment industry are primarily from five sectors -— feature film production, TV channels, TV software production, music and studio facilities. The big-ticket film industry is represented by the Mukta Arts' IPO. As a consequence of the current slump, at least 40 other IPOs from the entertainment sector, which were set to hit the market, have now been stalled or delayed. Recently, UTV and Broadcast Worldwide announced deferring of their IPO plans. Some other forthcoming IPOs include Devgan Entertainment (Rs 60 crore), Magnasound, NDTV, News Television, Nimbus (Rs 100 crore), Sippy Films, Sony Entertainment and UTV. Source :The Economic Times Dated : 26 March, 2001

ICAI prescribes new norms for calculation of EPS

The Institute of Chartered Accountants of India (ICAI) has prescribed new standard for calculating earnings per share (EPS) Which it felt would enable improved comparison of performance of a company with that of other enterprise in a given period as well as among different accounting periods for the same company. The new standard, which would be refereed to as Accounting standard 20 defines how net profit and the number of shares to be considered should be calculated for the purpose of arriving at the EPS. In addition, the new standard calls for greater disclosure on methodology employed for calculating the net profit as well as number of shares considered for arriving at the figure for EPS. The standard further states that if the nominal value of share that if the nominal value of share as the result of a share split or consolidation, the calculation of EPS for previous periods should be adjusted accordingly to present a fair picture of earnings. The institute has stated that the new standard would apply to all enterprises whose equity shares or potential equity shares are listed on a recognised stock exchange in the Country. The Standard would also apply to all companies, which disclose their EPS even if the shares are not listed. The new standard requires companies to present basic as well as diluted EPS in the statement of profit and loss for each class of shares that has a different right to share in the net profit for period. So far companies had the option to present either of the EPS in their annual statements. Further, Companies will now have to present the EPS even if the amounts disclosed are in negative i.e. if it is a loss. The standard further prescribes that the weighted average number of equity shares should be taken into account for calculating the basic EPS. Also the net profit or loss taken into consideration should be the net profit for the period after deducting preference dividends and attributable tax for the period. The weighted average number of shares during a period, when calculating basic EPS, would reflect that the amount by which the share capital may have varied during the period for reasons such as issue of fresh shares or buy- back of some issued shares SOURCE : ECONOMIC TIMES DATED 17TH MARCH,2001

Finance Lease Agreements - Effect of Publication of Accounting Standard on allowability of depreciation

Circular No.2of2001 New Delhi F.No.225/86/2000/ITA.II dated February9,2000 Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes To ALL CCITs All DGITS Subject: - Finance Lease Agreements –Effect of publication of Accounting Standards on allowability of depreciation reg. 1. Under the Income Tax Act, in all leasing transactions, the owner of the asset is entitled to the depreciation of the same is used in the business under section 32 of the Income Tax. The ownership of the asset is determined by the terms of contract between the lessor and the lessee. 2. The Central Board of Direct Taxes vide Instruction No.1978 dated 31st December,1999 (F.No.255/190/98/ITA.II) has laid down the line of investigation in such cases. In cases where assets are factually non-existent, having been created by hawala transaction, the question of allowance of depreciation does not arise. In cases of sale and lease back of assets with out any alteration in the situation of assets and its working, the denial of depreciation claimed has to be considered keeping in view the principle laid down by the Supreme Court in the case of McDowell and company Limited. 3. It has come to the notice of Board that the New Accounting Standard on Leases issued by the Institute of Chartered Accountants of India require capitalization of the asset by the lessees in financial lease transaction. By itself, the accounting standard will have no implication the allowance of depreciation on assets under the provisions of the Income tax Act. 4. The contents of this Circular may be brought to the notice of all concerned.- (Kamlesh C.Varshney) Under Secretary to the Govt. of India.

Lender can now decide on change of company management

Lending banks or institutions representing over 70 percent of funded exposure to a unit will decide on the change of management of a company defaulting in its dues to lenders, according to a note prepared by the Reserve Bank of India (RBI). RBI has sought to prepare the ground rules for coordination between banks and financial institutions in consortium funding in the form of note. This note has been prepared based on the consensus arrived at following meetings of representative of financial institutions and banks. Banks and financial institutions have decided that in extreme cases, it may be worthwhile to effect change in management expeditiously, to create deterrents for the borrowing community. The note suggests chronic wilful default, loss of confidence in the management of a borrowing unit, non compliance with the time frame and quantum of committed contribution from the promoters and non-commencement of commercial production within one year from the date originally planned without assigning unavoidable reasons, as factors that could prompt a move to change management. Fraudulent actions and convictions under any law or any major penal action by a regulatory authority against the company management are also grounds to change management. RBI has identified the seven issues of common interest in projects jointly funded by banks and financial institutions. These include time-frame for the sanction of facilities; assets classification across consortium members, disciplining borrowers- change in management, levy of charges in problem accounts, group approach for borrowers, sharing of securities and cash flows and treatment of restructured accounts for assets classification purposes. Banks and FIs in the various meetings have arrived at consensus on the solution for all issues, except the treatment of restructured accounts for the purpose of asset classification. The proposed solutions have been circulated to banks and institutions in the form of a draft note. The note suggests time frames ranging from two months to 90 days, depending on the nature of the proposal, where lenders should convey their agreement or disagreement to sanction loans. SOURCE:ECONOMIC TIMES DATED 9TH MARCH,2001.

Panel to look into surveyors and loss assessors

The Insurance Development and Regulatory Authority (IRDA) has constituted the surveyors and Loss Assessors Committee. This is in keeping with the regulations relating to licencing and professionalising the body of surveyors, which was notified earlier. The IRDA, in an order issued last week named, prabodh Chander, officer onspecial duty at the IRDA; M.J Dhruv, surveyor and president of the Institute of Insurance Surveyors and Adjusters; N Velayutham, surveyors, Padmini, manager, National Insurance and Saikta Guha, Shanti Niketan, West Bengal as members of the Committee. In terms of the regulations notified by the IRDA, the committee would recommend the syllabus for examination and practical training requirement for persons to qualify as surveyors and loss assessors. For this purpose, the committee has been asked to co-ordinate with educational or other institutions, which have objectives similar to those of the profession of surveyors and loss assessors. The committee would also have the responsibility of improving and developing the status and standards of the profession of surveyors and loss assessors. This would mean that it would also have to look into the matters of professional misconduct, indscipline, and non-adherence to code of conduict by surveyors and loss assessors. According to the regulations issued by the IRDA surveyors will henceforth be licensed under three categories – A, B and C. The categorisation will be based on professional qualifications, training and experience. The regulations also provide for corporate licencing of surveyor firms. Earlier the IRDA had indicated that an independent Institute of Surveyors and Loss Adjusters would be developed in India, which would be in line with other professional institutes. The IRDA would also list them according to their specialistion so that consumers could choose make a choice. SOURCE : ECONOMIC TIMES DATED 9TH MARCH,2001

DCA willing, paychecks may swell

INDIA Inc may be given a freer hand to pay higher remuneration packages to its key personnel with the department of company affairs considering relaxation of certain provisions of the Companies Act, 1956 that places restrictions on the amount to be paid as salaries, perks and fees. The matter was before the government and a decision would be taken in the next few weeks, DCA sources said. Representatives of the industry as well as consultants may be invited to this meeting. Indian and multinational entities have been lobbying with the government for a removal of all restrictions on remuneration paid by profitable companies. Recently, a delegation of American businessmen had met law, justice and company affairs minister Arun Jaitley where the issue was taken up. Sources said the minister had assured the delegation that the government would look into the matter. Companies and business chambers have represented the government that the restrictions on remuneration were proving to be hurdle in attracting the best talent, local as well as expatriate. Under the Companies Act, profitable companies — public and subsidiaries of public companies — are allowed to pay a maximum of 11 per cent of their net profit in a financial year as managerial remuneration to directors and board level managerial personnel. The remuneration includes expenditure incurred by the company on perks such as rent-free accommodation, life insurance, pension, annuity, gratuity on the person concerned, spouse and children. However, this percentage does not include remuneration paid as fees to directors for attending board or committee meetings. The Companies Act further stipulates that remuneration paid to directors in whole-time employment of a company or a managing director may not be more than 5 per cent of the net profits without the prior permission of the DCA. If a company has more than one whole-time director, the total payout in the form of remuneration cannot exceed 10 per cent with prior clearance. Remuneration for part-time directors cannot exceed three per cent of the net profit. The Act states that a company can pay one per cent of net profit as remuneration to part time directors if the entity has a managing or a whole-time director. In other cases, it can go up to three per cent. The government had revised ceilings on remuneration paid by companies without adequate profit effective from March 2, 2000. Such companies were allowed to pay Rs 75,000 crore per month if it had an effective capital of Rs 1 crore. The limit for companies with an effective capital of more than Rs 1 crore but less than Rs 5 crore was raised to Rs 1 lakh, to Rs 1.25 lakh per month. Source : The Economic Times Dated : March 12, 2001

Margins on outstandings raised to 25%

In response to the bear hammering on the markets after the budget and to contain further volatility, the Securities and Exchange Board of India has asked stock exchanges to increase additional margins on net outstanding sales position to 25 per cent from 10 per cent. Sebi had imposed the 10 per cent margin on sales position on March 5. Sebi's decision follows the 400 points fall in the stockmarket in the last five trading sessions. The increase in the additional margins was among a series of measures announced by Sebi on Sunday. Sebi has also asked exchanges other than the Bombay Stock Exchange and the National Stock Exchange to limit the broker-wise end of the day outstanding position to Rs 50 crore with effect from March 12. The two exchanges have been excluded from the purview of this stipulation in view of the size of their trade and settlement guarantee fund. The regulator has also asked the exchanges to reduce the overall exposure of the brokers. Brokers on the NSE will be allowed to take exposure in stocks up to 10 times of their base capital and additional base capital compared to 12.5 times, earlier. Brokers on other exchanges will be allowed to take exposure of only 15 times their capital compared to 20 times, earlier. The regulator said as a temporary measure, banks would be allowed to provide collateralised funding in the carry forward schemes of the NSE and the BSE. Banks will be allowed to use NSE’s ALBM and BSE’s BLESS facilities to offer to lend money against share, these facilities are guaranteed by the trade and settlement funds of the clearing house and exchange, respectively. On Saturday Sebi had told RNI that a sudden clampdown on exposure by banks to the stockmarkets would further deepen the crisis. Sebi has also barred any lending of securities outside the ALBM and BLESS mechanisms. The securities that have been borrowed from custodians such as the Stock holding Corporation of India and banks like Deutsche Bank or HSBC will have to be returned to these authorised intermediaries by the close of the business on March 15, 2001. The trade guarantee fund set up by the stock exchanges will provide counter party guarantees for all transactions which take place on the stock exchanges and meet the payment obligations of the brokers without waiting to declare them as defaulters. At present, most exchanges barring the NSE offer counter-party guarantees to only settlements and not all transactions, according to a Sebi release. The Economic Times had reported on March 10 that Sebi was likely to ask stock exchanges to change the structure of their trade guarantee funds, so that it was not necessary to declare brokers as defaulters before meeting their payment obligations. This means that the settlement (pay-in and pay-out) will be effected immediately and investors will get their money immediately without any delay. In January 2000, when the stock prices were rising Sebi had imposed fresh margins. These margins were imposed after the regulatory body had met with the various exchanges and arrived at a consensus decision. Source : The Economic Times Dated : March 12, 2001

Two way fungibility only for those staying outside India

THE LEVEL-playing field created between Indian mutual funds and foreign institutional investors, in so far as investments in ADRs and GDRs of Indian companies listed overseas is concerned, has again been rendered uneven. Even as the Union Budget allows for conversion of ADRs and GDRs of Indian companies listed overseas into shares listed on the local stock exchanges and vice versa (two-way fungibility) subject to the overall size of the ADR/GDR issue not being exceeded, a recent RBI circular which lays down the modalities for such an exercise, allows two-way fungibility only for NRIs. This means that even those Indian MFs which have got permission from Sebi and RBI to invest in ADRs and GDRs, would not be allowed the benefits of two-way fungibility even though FIIs are allowed to do so. This is because MFs registered with Sebi are incorporated as trusts which are legal residents of India. Speaking to the Economic Times, senior Sebi officials said: "We will be taking up the matter of removal of this discrimination against MFs with the Reserve Bank of India." While conversion of ADRs/GDRs into underlying shares was allowed freely, the reverse process was not allowed. This had led to the queer situation of the ADRs/GDRs of some companies trading at a premium/discount to their domestic prices. By allowing for a two-way conversion, FIIs can now arbitrage between the two stockmarkets in cases where the premium or discount is substantial. Analysts feel that by disallowing MFs to do this, their investors are being denied the right to profit from such arbitration activity. So far the UTI, Prudential ICICI MF, Morgan Stanley MF, Reliance MF and Kothari Pioneer MF have been given permission to invest in overseas assets while a sixth Sun F&C MF has applied for the permission. Of the five fund houses, UTI has been granted permission for the highest possible amount of $50 million of investments, while others like Pru-ICICI have received approval for smaller amounts like $19.4 million. The ceiling for aggregate investments by all MFs abroad stands at $500 million. (Source: Economic Times dated 12th March,2001.)

Bench allows NBFCs to cut NPA provisions before tax

The Madras tribunal has ruled that NBFCs should be allowed to be deduct provisions for non-performing assets from profits before offering these for the purpose of taxes.This is a significant ruling and might give some relief to the trouble-torn leasing and hire-purchase industry. The ruling relates to provisions for NPAs that leasing and hire purchase companies are required to make as per the Reserve Bank of India rules. Tax laws have always maintained that a provision is not an Expense. However, there are specific provisions in the tax laws relating to provisioning by banks and financial institutions, though none for NBFCs. The Madras Tribunal directive now restores this imbalance. A word of caution, though. The NBFCs will be relieved only if the ruling of the Madras Tribunal is the final word on the law. For a long time now, finance companies have been imploring the Central Board of Direct Taxes for a level-playing field with banks and financial institutions. The tax authorities have yet to oblige. According to Vinod Kothari, an eminent leasing and hire purchase expert, this is an extremely important ruling and NBFCs must make the most of it. Though a ruling by Tribunal does not have a very persuasive force with tax officers other than those under the jurisdiction of the particular Tribunal, the case is worth trying, and the arguments given in this case are very strong indeed. So, till the tax authorities react, NBFCs can exult in this victory of sorts. In the case of Overseas Sanmar Financial Ltd, the Madras ITAT Bench C has held that provisioning against bad and doubtful debts by an NBFC, as per the norms of the Reserve Bank of India is deductible against the income of the company. It stated further that the RBI is only a wing of the finance ministry to which the CBDT is attached. If the RBI by its mandatory circulars or accounting standards requires an NBFC to make a certain provision, which it deems necessary for true and fair assessment of the profitability/assets of the company, the CBDT must give effect to it for tax purposes as well. Here is an important citation from the ruling: “The consequence is the share in the true income of the NBFC would have to be restrained to that part that is arrived at after allowing for provision for doubtful and non-performing assets. RBI’s directive to account for income on cash basis is an appreciation of the fact that it does not make sense to account the income on accrual basis giving no credence to the actual recovery and later allowing deduction for irrecoverable debts including debts that could not be recovered in full from the security provided because of erosion in the value of the security. The Department that is partner in income earned by companies and other persons to our mind should accept the concept of income as directed to be shown by the RBI and after deducting for provision for doubtful loans and advances from such income.”

Calcutta Stock Exchnage hit by Rs 96-cr payment default

The Calcutta Stock Exchange official payment for settlement number 148 has not gone through on Thursday. The final shortfall was estimated at Rs 96 crore, of an overall payment of Rs 350 crore. This is the first time ever that payment on the Number One account on the bourse has failed to go though on the appointed day. The entire shortfall is expected to be met on Friday when the CSE is open, despite Holi. The exchange is, however, adequately covered against the shortfall. The CSE is also the first casualty of the all-India payments crisis that originated with a coterie of bulls, allegedly led by Ketan Parekh taking an large exposure in certain IT stocks, particularly Himachal Futuristic, and finally succumbing to the vagaries of the market that they were not entirely able to control. The CSE's payment failure also exposed the hollowness of the claims made by Sebi and the finance ministry about the non-existence of payment problems in the country. The drama at the bourse witnessed top officials of the exchange up and awake till well past midnight, along with practically the entire governing board — trying to resolve the crisis

Biotech still a high risk business, feel consultants, VCs

BIOTECH may be the buzzword among new economy businesses but most consultants and venture capitalists still view investments in these projects as “high risk” due to the higher rates of research/product failure. This creates a piquant situation for entrepreneurs and startups since venture capital or private equity is a preferred source of finance at the early stages. Investment in the biotech sector has not taken off in India with the same velocity as infotech industry. This can be attributed to factors like weak intellectual property regulations and the skills required to handle original R&D which are very different from reverse engineering, besides restrictive government policies and slow pace of regulatory changes. According to ICICI Venture’s chief of incubator fund S P Narayanan, the company is looking at funding contract research, bioinformatics and clinical trial projects as they provide steady stream of work and get paid during various stages. “Biotech is a capital starved economy. Since developing a new molecule costs around $500 million to 1 billion, we provide about Rs 2-3 crore with gestation of around 2 to 4 years”, Narayanan said. Once the venture activity picks up it would be followed by largescale funding from stock markets for commercialisation of technologies. According to Benjamin, the growth areas in the Indian biotech sector are expected to be in sectors of agri biotech and human biotech (therapeutics and diagnostics). “The area of contract research is also expected to show significant growth. Driven by this market opportunity, one could expect to see an increase in entrepreneurial and venture capital activity in these areas,” he added. Many global pharmaceutical players are looking to outsource greater portions of their research to lower their overall research costs. With advantages of availability of highly skilled manpower at relatively low cost, Indian contract research organisations are well positioned to take advantage of the growing outsourced research market, he said. ICICI has so far given seed capital and hand held many IT companies to raise funds in the next round of funding. It has a similar plan for biotech startups provided they develop the skill-sets in relevant areas within the broad spectrum. Analysts say it is likely that most venture capitalists will invest in the biotech industry, with the exception of few sector-focused venture capitalists (such as those in the IT sector). Other venture capitalists who are likely to show interest in the biotech space include IL&FS ventures, GTV, AIG, Indocean Chase, and ICF ventures, among others.

ALBM rates zoom 100% on NSE

WITH many financiers on the National Stock Exchange withdrawing funds, the interest rates in the Automated Lending and Borrowing Mechanism on the NSE touched a record high of over 100 per cent for stocks like Himachal and Global Telesystems on Wednesday. On an average, ALBM rates remained in the region of 40 to 50 per cent, a sharp increase form their normal weekly average of 13-14 per cent. The sharp rise in ALBM rates has come in as a surprise to many marketmen despite the fall in their outstanding positions. Compared to this, the Bombay Stock Exchange saw a decline in badla rates to 9.5 per cent despite outstanding positions standing at Rs 2,552 crore as on March 1, 2000. Many financiers have pulled out money from the system fearing a payment crisis on the NSE, which has led to a sharp rise in rates. There were also rumours of it not being safe to finance the counters of a big operator who was allegedly facing problems in honoring his payment obligations.

W I Carr sees Mahindra British IPO at Rs 220-240

INDOSUEZ W I Carr said it expected software firm Mahindra British Telecom to offer shares at a price of Rs 220-240 at its initial public offering slated to hit the market soon, and sees a 40 per cent upside. MBT is 57 per cent owned by automobile group Mahindra & Mahindra, with the rest held by British Telecommunications. The IPO price will be decided through a book-building process where investors will be invited to bid for shares. In a pre-IPO report dated February 23, W I Carr which has recommended to investors to subscribe, said MBT was one of few Indian companies that was solely focused on the telecom software sector and was also protected from the US slowdown because unlike others it got most of its business from Europe. The key concern however was that British Telecom contributed about 75 per cent of MBT's income and MBT expected its revenue would be affected if business from BT reduced or stopped. British Telecom has promised to give MBT assured business of Ł35 million per annum for three years to March 2003. W I Carr also said MBT offered some of its services on a fixed price basis and these projects ran the risk of cost and time overruns (source: the Economic Times)

Sebi bans short sales

THE SECURITIES and Exchange Board of India has imposed restrictions on short sales effective March 8 to curb volatility in share prices. Sales of shares will have to be followed by deliveries, It means that sale positions cannot be carried forward. "Effective from tomorrow all sales transactions shall be backed by delivery, unless the sales position is preceded by a purchase of at least an equal amount, in the name of the same client in the same or any other exchange," Sebi officials said sales positions can be settled by borrowing securities. Sebi said the restrictions would be reviewed after a period of two weekly settlements. The measures come as Sebi is investigating various funds and brokers who allegedly played a role in causing a market slump.

STOCK Holding Corporation of India Limited (SHCIL) has put its initial public offering plans on hold

THE STOCK Holding Corporation of India has put its initial public offering plans on hold. The move follows the upheaval in the Indian bourses in the last couple of months. Managing director and chief executive officer, B Virupaksha Goud said: “The consultancy major Andersen (formerly Arthur Andersen) report will be ready soon. Even if the consultants indicate that we need to raise funds, the exact timing of the IPO will be decided by the SHCIL board depending on market sentiments.” Last year, SHCIL had requisitioned the services of Andersen to evolve a strategic business plan for the institution for the next three years. It is also looking at the financial requirement and suggest modalities for the proposed public offer. Speaking to mediapersons in Kolkata on Wednesday, Goud said the institution is exploring various options including a foray into the banking sector. It is open to all the options —have a `limited purpose’ bank or takeover some small banks. The institution is studying the balance sheets of few banks currently. He, however, declined to disclose the names. Goud was in city to launch a new product `Equibuy’ which facilitates its client investors to buy shares through a panel of brokers and get deliveries on time. This product also allows fund transfers through an exclusive fund account that the investor maintains with the custodian and the depository participant. The managing director stressed on his conviction of turning the institution into a one-stop-shop to meet the financial needs of his customers. “Bring in a whole gamut of new age financial products and innovations like insurance products, housing loans, SGL accounting and PF accounting services, purchase `n’ settle and arbitrage”, Goud added. It also offers the facility of clearing operations (source: the Economic Times)

NRIs may be allowed dividend repatriation

In a significant move which will make investment in India more attractive for non-resident Indians, the government has taken a positive view on conversion of non-repatriable shares held by NRIs into repatriable shares. Till now, the government has been taking a strict view on non-repatriable shares, not encouraging their conversion into repatriable shares since this would lead to outgo of foreign exchange. The Reserve Bank of India and Foreign Investment Promotion Board were following this norm strictly. A liberal view on this policy has been taken now following recent discussions over a proposal made by Cochin International Airport which runs India’s first greenfield airport project with private sector investments and public participation. The company has obtained permission, in a rare decision, from the FIPB to issue repatriable shares to NRIs who already hold non-repatriable shares and also to covert the non-repatriable shares into repatriable ones. The decision to relax the existing norms was made after detailed discussions and a similar policy would be followed in the case of similar proposals, officials said. Those holding repatriable shares are allowed to remit their dividends out of the country after payment of tax. Non-repatriable shares do not offer this facility. With the repatriation facilities, NRIs can also sell their shares if the norms under which they are issued do not prevent the sale. Liberalisation of the policy on conversion of non-repatriable NRI shares into repatriable shares will make the policy in this regard more attractive, officials feel. This will give more investors the confidence to pump in their money without worrying about repatriation. However, such proposals will be decided on case-to-case basis, depending on merits. This move, officials feel, will act as a safeguard to check flood of requests. Since the government has been according preference to non-repatriable shares, most NRI investments have been coming under this route. For example, in the Cochin International Airport case, the permission was was given after the civil aviation ministry argued that this was a infrastructure project which deserved this facility. Initially, the RBI had objected to the concession. Senior officials said the airport case came up for discussion since the company wanted to come up with a rights issue. The joint sector company’s initial equity capital of Rs 79 crore is being expanded through a rights issue which is expected to raise Rs 110 crore. The company said expansion of equity base was necessary since the company had borrowed Rs 210 crore to meet its project cost of Rs 320 crore and debt servicing was becoming difficult in view of insufficient revenue generation. Source : The Economic Times Dated : 5 March, 2001

HDFC Bank first to issue ADRs on existing shares

HDFC Bank could be among the first to use the relaxations announced in the Budget, enabling companies to come out with a primary issue of ADRs/GDRs against existing shares held by investors in India. The new private bank has firmed up plans for a $150-200-million American Depository Shares issue in the first quarter of 2001-02. The issue is likely to comprise $150m worth fresh equity (including premium) and an additional $50 million which would constitute ADRs which are based on shares held by existing investors. Confirming this, Deepak Parekh, chairman-promoter and principal shareholder of HDFC Bank, said: “HDFC will not sell any of its existing holding in the bank. But we will approach large shareholders to see if any of them are interested in selling their shares as a part of the ADR.” A combined ADR issue, comprising a fresh issue of shares and a secondary issue of existing shares, would help the bank increase the liquidity in the international markets without a substantial dilution of equity. At the same time it would give large investors an option to exit at a good price without disrupting the market price. According to market sources, Chase Capital Markets, one of the leading investors in the bank had been booking profits through sales in the domestic market. The issue will require the approval of shareholders in addition to the regulators. The issue would lead to a NYSE listing of the private bank and is aimed at funding its targeted growth rate of 25-30 per cent. In the Union Budget, the finance minister had announced new norms that will allow for a two-way fungibility of ADRs. In other words the new norms would permit companies to convert domestic shares into ADRs/GDRs as long as the number of shares converted into ADRs/GDRs do not exceed the number of ADR/GDRs converted into ordinary equity shares. At the same time the regulations permit companies to come out with an initial offering of ADRs/GDRs, comprising an offer of sale of existing shares held by domestic investors. Source : The Economic Times Dated : 5 March, 2001

Perquisites to be charged to tax at cost to Company

The finance Bill-2001 has brought about a change in method of taxing perquisites, which shall be taxable at cost to the Company as against pre-determined amount previously.The Amendment is likely to cause a higher tax burden on the executives receiving higer level of perquisities.

Surcharge on Income-Tax reduced to 2%

The Budget-2001 has reduced the efeective surcharge to 2% from the exisiting higher levy.The surcharge shall not be applicable in case of a person having income of Less than Rs. 60,000.

Long Term Capital Gains on sale of securities or units, when invested in Primary Market to be exempt from Capital Gains Tax

Budget 2001 has introduced a new Section 54ED which provides for tax exemption on long Term Capital Gains on sale of Securities or units Tax in case the whole or part of the gains is invested in Eligible equity shares. Eligible equity shares shall mean shares offered to the public for subscription. The quantum of deduction shall be on a proportinate basis, i.e. on the basis of Investment made and amount of Capital gains.

Sebi empowered to approve overseas funds

The Securities and Exchange Board of India (Sebi) has been empowered to grant approval to overseas funds promoted by financial instituions, mutual funds and banks. Earlier, the finance ministry was the nodal agency. A proposal to amend the necessary clauses has been moved in the Finance Bill 2001-2002. Under the existing provision in Section 115AB, the Central government has the powers to approve overseas fund promoted by domestic financial institutions, mutual funds or state-run banks. In order to simplify the procedure, Sebi has been given the mandate. "The change will not affect existing ventures, only new ventures will now have to get approval," Sebi senior executive director Pradeep Kar said. At present, the Unit Trust of India (UTI) and Canbank Mutual Fund have overseas funds. The bill has also sought to extend tax exemption to venture capital funds floated by the trust. Under the existing provision, venture funds set up by the trust are not eligible for I-T exemption as they do not come under the definition of venture funds. As per the regulation, venture capital has been defined as a fund operating under a trust deed registered under the provisions of The Registration Act 1908. However, such schemes promoted by the UTI did not come under this definition as the trust was set up under the Unit Trust of India Act, 1963. The proposed amendment now seeks to extend tax benefits to UTI-promoted venture funds, with retrospective effect from April 1 2001.

Bank rate cut to 7%

1st March, 2001. Reserve Bank of India governor Bimal Jalan today cut the benchmark bank rate by half a percentage point (50 basis points) to seven per cent today hours after the finance minister expressed the hope that his reform-oriented Budget would prompt the central bank to cut interest rates. This is the second bank rate cut in a fortnight. On February 16, the central bank had cut the bank rate as well as banks’ cash reserve ratio (CRR) by half a percentage point each in the run-up to the Union Budget, in which Sinha pared all administered interest rates on small savings schemes by between one and one and a half percentage point (100-150 basis points). Bank of Baroda cut its prime lending rate (PLR) and housing finance major Housing Develop- ment Finance Corporation (HDFC) cut its loan as well as deposit rates in immediate response to the latest rate cut by the RBI. Industrial Development Bank of India (IDBI) is expected to announce a rate cut on Friday while ICICI is adopting a wait and watch policy for the next few days. In the gilts market, long-term bonds’ prices zoomed by over a rupee while short-term bonds’ prices gained around 60 paise. The yield of the 10-year bond crashed to a historic low of 9.60 per cent. In the forex market, forward premiums softened. Bank of Baroda introduced a tenor-linked PLR and cut its short-term rate (up to 180 days) by two percentage points to 10 per cent, medium-term rate (181 days to less than one year) by one percentage point to 11 per cent and long-term rate (above one year) by half a percentage point to 11.5 per cent. HDFC chairman Deepak Parekh said the corporation had cut its lending and deposit rates by half a percentage point.“The loan rates have come down to 12.5 per cent. We have also introduced a new slab for small loans up to Rs 2 lakh, which is aggressively priced at 11.75 per cent for 15-year tenure,” Parekh said. State Bank of India chairman Janaki Ballabh said the bank would take stock of the changing situation when its asset liability committee (Alco) meets next week. The bank is expected to refrain from a further cut in the PLR but may pare its deposit rates. Bank of India's Alco is meeting over the weekend to decide on a rate cut."A PLR will be accompanied by a similar cut in the deposit rates as the bank will need to protect its spread," said a senior BoI official. Union Bank of India is expected to announce a rate cut tomorrow. Among the new private banks, the Centurion Bank's board is meeting next week to decide on a rate cut. "The rates may go down by 50-100 basis points," said Centurion Bank director VS Srinivasan.IndusInd Bank, which has already cut its PLR, might go for another rate cut, its managing director KR Maheshwari said. HDFC Bank will also take a decision on a rate cut next week. ICICI Bank, which cut its PLR as well as deposit rates yesterday, immediately after the Budget was presented, will not go for a second round of cuts."We had already factored in another rate cut when we changed our interest rates," the bank's senior executive vice-president, MN Shenoi, said. Global Trust Bank's executive vice-president, A Anchan, hinted at a rate cut in the next few days.

FIIs limits to be increased to 49%

Finance Minister Yashwant Sinha said that the FIIs limits have been increased . Progressive liberalization has taken place in the provisions relating to foreign investment. Foreign Institutional Investors (FIIs) can invest in a company under the portfolio investment route up to 24% of the paid up capital of the company. This can be increased to 40% with the approval of the General Body of the shareholders by a special resolution. I propose to increase this limit to 49%. Foreign Direct Investment (FDI) in Non-Banking Financial Companies (NBFCs) is permitted on a case by case basis upto 100% but with a condition that a minimum of 25 % of their holding is divested in the domestic market. This condition is being removed, provided the foreign investors bring in a minimum of US $50mn. FDI in NBFCs will now be put on the automatic route subject to RBI guidelines.

Distribution of dividends...tax reduced to 10%

The tax payable on the distribution of dividends of domestic companies and income in respect of Units of Mutual Funds and UTI was increased from 10% to 20% last year. To provide a stimulus to the growth of capital market, Sinha has reduced the tax to 10%. To help revive investor-interest in primary issues he proposed to exempt long-term capital gains arising from the sale of securities and units if such gains are reinvested in primary issues of shares of public companies

Budget has taken steps to curb investors from taking advantage of dividend stripping by investing in mutual funds for the short term (Dividend stripping).

The budget has indeed taken steps to curb investors from taking advantage of dividend stripping by investing in mutual funds for the short term. This was possible under Sec 94. But realizing that this results in "unintended benefit flows to the taxpayer", the government intends to introduce a new Sub-section (7) in the above section. "If a person buys or acquires securities or unit within a period of three months prior to the record date fixed for declaration of dividend or distribution of income and sells or transfers the same within a period of three months after such record date, and the dividend or income received or receivable is exempt, then, the loss, if any, arising from such purchase or sale shall be ignored to the extent such loss does not exceed the amount of such dividend or income, in the computation of the income, chargeable to tax, of such person". The finance ministry was expected to plug this loophole and they have done it

VRS outgo to be treated as capital expenditure

It's final. Voluntary retirement scheme expenditure will now be treated as 'capital expenditure' for taxation purpose. This means that such expenditure will be disallowed for the purpose of computing taxable income. The reasoning of the I-T authorities is that since such expenditure is expected to yield benefit in the long run, there is no need for allowing a deduction. In a circular dated January 23, the Central Board of Direct Taxes has clearly stated that any ex-gratia amount, which resulted into an 'enduring benefit' to assessees, should be treated as 'capital expenditure'. VRS expenditure was treated as 'revenue expenditure' and charged against profit and loss account of assessees. Consequently, the taxable net profit would come down sharply and thus assesses had to pay lower tax on the profit arrived after VRS payments. "In the event, the expenditure is laid out for acquiring or bringing into existence as asset or advantage for the enduring benefit of the business, it is properly attributable to capital and is of the nature of capital expenditure," the circular said. "If any such asset or advantage for enduring benefit of the business is thus acquired or brought into existence, it would be immaterial whether the source of payment was the capital or the income of the concern or whether payment was made once and for all or was made at instalments," it added. The move is most likely to hit public sector banks and some pharma companies which have resorted to VRS in order to restructure operations. Public sector banks who top the list of largest 100 tax payers, are certainly the major contributors to the tax kitty -- and this move is aimed at forestalling revenue loss. The CBDT directive would translate into an additional tax burden of around Rs 1,400 crore for public sector banks as they have resorted to huge VRS programmes in order to restructure operations, feel banking sources. Source : The Economic Times Dated : 22 February, 2001

Fast Track Scheme under Section 560 of the Companies Act – Extension of Scheme for the State of Gujarat till 31.3.2001

The last date for Fast Track Scheme under Section 560 of the Companies Act launched by the Department was 31.1.2001. However, keeping in view of the magnitude of the calamity that has unfortunately be-fallen on the State of Gujarat on 26-1-2001, causing massive loss to life and property in the State and so also the wide spread disruption of public services including posts, telegraph and communication along with the representations received from the concerned bodies the Government has extended the scheme under section 560 till 31-3-2001 for the State of Gujarat only.

Nasdaq opens India office, to help local firms

The Nasdaq stock exchange on Monday opened its Indian office in Bangalore and said it would help more Indian companies access low-cost funds. "We want to give the existing Nasdaq-listed Indian companies a very high level of service and see that they are properly presented to US investors," Nasdaq vice-chairman Alfred R Berkeley told a news conference in the southern city. "Secondly, we want to assist other companies looking to list on the Nasdaq," he said. "The intention is to open a window for Indian companies to access global funds." Nasdaq officials said the Bangalore office was the fourth outside the United States for the 30-year-old exchange after London, Tokyo and Brazil. Bangalore-based Infosys Technologies in 1999 became the first Indian company to list on the Nasdaq. Since then, internet firms Satyam Infoway and Rediff.com have also listed on the tech-laden exchange. Berkeley said that Indian firms aspiring to list on the Nasdaq exchange should use the present lull in the U.S. capital markets to do their homework on listing requirements. "Indian companies have to adopt US accounting standards, US (corporate) governance standards and disclosure norms," he said. "Some people see it as a burden but I think it is a small price to pay to access low-cost capital." Source : The Economic Times Dated : 13 February, 2001

Budget to rule if cost of earning tax-exempt income is a deduction.

The forthcoming Budget is expected to resolve the issue of whether expenditure incurred for earning income which is exempt from tax, is allowable as deduction or not. Since the law is uncertain on this issue at present, the government has been losing a few thousand crores on this count every year. This is one of the issues the finance ministry has been examining and it is likely that the Budget will contain a proposal amending the Income Tax Act which will allow tax authorities to disallow such expenditure. For example, if a party borrows money and invests that money in infrastructure bonds, or a similar investment, the income arising from such investments is exempt from tax. The issue at present is whether the interest payable on account of the borrowing is allowable as deduction or not. There are two Supreme Court judgments on this issue. The first one is in Orissa State Warehousing Corporation (1999) 237 ITR 589(SC). The apex court, in this case, had stated that such expenditure (in this case interest payable on account of borrowing) is not allowable as deduction. However, in a subsequent decision in the case of Rajasthan State Warehousing Corporation (2000) 242 ITR 450 (SC), the Supreme Court held that in an integrated business having taxable as well as non-taxable income, expenditure incurred for earning tax-exempt income can be allowed as deduction. It is however, understood that there was no reference to the previous Supreme Court decision during the course of hearing of this particular case. Since two Supreme Court decision expressed divergent views on the same issue, the law on this issue has become uncertain. The revenue authorities have also realised that they are also losing revenue as big financial institutions have started taking advantage of the situation by claiming exemption on the interest arising from investment and the expenditure incurred on borrowing the money. Now the finance ministry has taken notice of the inherent contradiction in this issue and contemplates amending the law. Source : The Economic Times Dated : 14 February, 2001

Old Economy revival improves rights issues market

Mobilisation by listed companies through rights issues is showing some signs of revival thanks to the improving fortunes of the Old Economy sector. This is visible from the fact that during the first two months of this year, as many as nine companies -- all belonging to the Old Economy -- have entered the rights market to collectively raise Rs 217 crore. These include the Rs 128-crore issue of Centurion Bank and a Rs 42-crore issue of Birla Corporation. Other companies in the fray are Arvind Remedies (Rs 15 crore), India Online Network (Rs 10 crore) and Bharti Healthcare (Rs 10 crore). According to Prithvi Haldea of Prime Database, "This trend compares favourably with a handful of 14 companies which came out with rights issues in the entire preceding nine month period from April to December 2000 for an aggregate mobilisation of Rs 380 crore. Given the state of the market, the future is likely to see some further improvement in the situation." Currently, there are already six companies who have applied for or obtained Sebi approval. These include Alok Textile (Rs 51 crore), Excel Glasses (Rs 5 crore), R.K.Ispat (Rs 3 crore), Tata Finance (Rs 91 crore), Techno Electric (Rs 8 crore) and Varun Shipping (Rs 36 crore). Interestingly, all these companies belong to the old economy. In addition, there are over 15 companies, again almost all from the old economy, who have in recent times announced their plans to tap the rights market. According to Prime, this includes 2 mega issues: Telco for Rs 1,382 crore and Essar Steel for Rs 267 crore. The others are Abbot Laboratories, Aurobindo Pharma, Birla Global Finance, Credence Sound, Dhanalaxmi Bank, Enkay Texofoods, Floatglass, Gammon India, Green Ply, Natco Pharma, Omax Autos, Radhika Spinning, Sahney Paris-Rhone and SBI. The current year will, however, is not comparable to 1992-93, when 488 companies raised Rs 12,630 crore, or even close to the Rs 1,560 crore which had been mobilised by 26 companies in the last fiscal, 1999-2000. Incidentally, in the April-December period of the previous fiscal, 22 companies had raised Rs 1,383 crore. This, according to Haldea, is primarily because of the dull conditions, which persisted through the first nine months of the current fiscal. The largest issue in this period was from Ceat Financial aggregating Rs 111 crore, followed by Rs 54 crore issue from SREI International Finance and Rs 51 crore issue from Ashok Leyland Finance. Significantly, the response to several issues was poor including that of Dewan Housing Finance, DCW, Model Financial Corporation and Principal Pharmaceuticals. Source : The Economic Times Dated : 17 February, 2001

Government disallows FII stake in Mid-Day Initial Public Offering (IPO)

The Mid-day FII project stands cancelled following the government's instruction to the Reserve Bank of India (RBI) to withdraw permission for foreign investment in the Mumbai eveninger. In a letter to RBI deputy governor Jagdish Kapoor on Thursday, the finance ministry said that foreign portfolio investment could not be permitted in companies which were engaged in activities where such investment per se was not allowed. ``It has been the government's stated policy that no foreign investment shall be allowed in the print media sector,'' GS Dutt, a joint secretary in the finance ministry, wrote to the RBI official referring to the Mid-day issue. He said this had been the government's policy since the Union Cabinet decision of 1955 with regard foreign investment in Indian publications. ``In keeping with the Cabinet decision, the ministry of information and broadcasting has been consistent in not allowing foreign investment of whatever kind in the print media sector,'' Dutt wrote. He said that despite the provisions of the Foreign Exchange Management Act (FEMA), such foreign institutional investment could in no way be envisaged. In this context, he recalled the information ministry's recent letter to finance minister Yashwant Sinha reiterating the old position. ``We advise you that no foreign investment of any kind is permitted in the print media,'' the finance ministry official wrote to the RBI. Information minister Sushma Swaraj later told newspersons that the finance ministry's letter to the RBI had brought to an end the controversy over the clearance for FII investments in Mid-day's multimedia project. ``With this letter the permission for FII in the publication stands cancelled,'' Swaraj said. Source : The Times of India Dated : 17 February, 2001

DCA to cut 17,000 firms' name

About 17,000 companies would cease to exist in the next few weeks when the Department of Company Affairs completes the process of striking off their names from the Register of Companies. These companies had opted for the department’s fast track deregistration scheme — Fast Track Section 560 — for defunct companies launched on September 28, 2000. The department, according to some estimates, expected at least 60,000 companies which are not carrying on any business operations to opt for voluntary deregistration, though the number of such entities, according to other estimates, is closer to 80,000. DCA sources said it had sold a little less than 26,000 forms over the four months the scheme was open. "We expect about 70 per cent of the companies which purchased the forms for fast track deregistration to wind up operations in the next few weeks," DCA sources said. The real picture will emerge in the next few weeks. In the first three months of the scheme, till December end, about 10,000 companies had opted for the scheme and 20,000 forms had been sold. In the last month — January 2001 — of the scheme, several more companies came forward to avail the scheme. The scheme assured companies deregistration within 37 days of application before the Registrar of Companies: seven days to process the application and 30 days to complete the striking off the name of a company from register of companies. The scheme had been planned as a simple exit route for companies which have no business. Maximum number of forms were sold in the southern region (8,698) followed very closely by the western region (8,077). A little more than 6,050 forms were sold in the northern region while just about 2,360 companies in the eastern region were considering the option of taking the fast track route for winding up. Source : The Economic Times Dated : 12 February, 2001

National Highway Authorities tax-free bonds issue opens

NHAI's privately placed tax-free tax-free bonds issue is opening on 16th February, 2001. Investors who made long-term capital gains were keenly awaiting for this issue as under the amended section 54EC of the Income-tax Act, there were hardly any investment avenues left for getting exemption from taxes on long-term capital gains. The bonds carry 9.25% interest rate payable annually and have been rated AAA by crisil. Also this time there is no limit on the amount to be raised unlike last September issue. There is also a put and a call option after Three years. the timing of the issue is perfect since it is closing on 24th March, 2001.DSP Merryl Lynch is the Arranger for the issue.

New officials appointed on Sebi board

Top level changes have been announced at the securities regulatory authority. While the government has appointed Rakesh Mohan, chief economic advisor and department of company affairs secretary V Govind Rajan as Sebi board members, the Sebi chairman has on Tuesday handed over the takeovers and primary market portfolios to board member J R Varma and the foreign institutional investors portfolio has gone to executive director C M Mehra. Mohan replaces Shankar Acharya, former chief economic advisor who represented the finance ministry on the Sebi board and Govind Rajan replaces Sanjeeva Reddy, the former DCA secretary. Reserve Bank of India deputy governor S P Talwar and Kumar Mangalam Birla are the other two board members in addition to Sebi chairman D R Mehta and full time board member J R Varma. In the internal changes at Sebi, Mehra will also handle the portfolio of the IOSCO (the international association of securities regulators of which Sebi is a prominent member) and vigilance. The crucial portfolio of coordinating with the high level committee on capital markets has been handed over to executive director Pratip Kar. These portfolios have fallen vacant after Sebi senior executive director O P Gahrotra's extension was turned down by the government and he was asked to report back to the Maharashtra cadre on February 8. Interestingly, Varma will directly take charge of the primary markets and takeovers departments unlike the other portfolios which he handles where he overlooks a portfolio already being handled by an executive director or senior executive director. Currently, Varma is responsible for mutual funds, derivatives, depositories and investor education. He is also taking care of risk management and corporate disclosures related issues. Mehra has so far been looking after administration at the securities regulator and will now take care of the high profile FIIs and IOSCO portfolios. Kar, on the other hand, handles depositories and secondary markets. Source : The Economic Times Dated : 14 February, 2001

Travel, telephone bills are not taxable

THOSE of you who may have been wondering whether those monthly tax free reimbursements for expenses on telephone calls and conveyance were in fact taxable can rest easy. You won’t be hit suddenly with massive tax demands because the Income-Tax Appellate Tribunal has ruled that they are not taxable, even if they are a fixed amount given to the employees along with the salary. The ITAT, a quasi judicial body which decides on the disputes between assessees and the I-T department, gave this order in an appeal filed by the I-T department against the order of a commissioner (Appeal). The assessing officer in this case has demanded interest from the assessee, namely, Merchant Marine Education & Research Centre, for not deducting taxes by way of deduction at source on the reimbursement of the conveyance and telephone charges given to its employees. The assesing officer’s point of view is this case was that the company has been giving conveyance as part of the salary and there was no precise record kept for the travelling and telephone charges. The AO has found out that reimbursement of conveyance allowance was made along with disbursement of salary at a fixed rate. Also, the claim of reimbursement of expenses were obtained from the employees, after the disbursement was made. The employees have also not furnished any journey details. The AO considered these reasons sufficient to consider it a part of the salary. According to him it was a fixed allowance in addition to the salary given to all the employees depending on their grade. In the AO’s opinion the company ought to have deducted tax at source in accordance with the provisions of sec 192 of I-T Act. According to the counsel for the assessee, the employees have given declaration regarding incurring of expenses though the amount has been given on fixed basis and even given during the leave period. He referred to the earlier decision of ITAT in ICICI Ltd vs 4th ITO. Since the company believes that the amount was given to its employees for traveling for official purpose, the amount does not come within the purview of “salary”. Accordingly no deduction was made. The ITAT bench comprising M A Bakshi and S V Mehrotra gave the order justifying the company’s decision not to deduct tax on account of the payment made on conveyance and telephone bills. The ITAT has observed that the staff were not paid a separate travel allowance even for travel from their residence to any other place of duty other than the fixed allowance. Source : The Economic Times Dated : 14 February, 2001

Centre slaps 2% direct tax surcharge

The Union Cabinet today approved the promulgation of an ordinance called Taxation Law Amendment Laws, 2001 to raise Rs 1,300 crore towards relief and rehabilitation of the Gujarat earthquake victims. The amount would be collected through the levy of a 2% surcharge on individuals and companies alike for the assessment year ’01 – ’02. ET had first front-paged the news about the government imposing an earthquake surcharge. This was dismissed by finance minister Yashwant Sinha as “speculation”. The levy would be in addition to the surcharge already imposed by the Finance Bill 2000. In case of individuals it would apply to persons with income above Rs 60,000 for assessment year ’01 – ’02. The effective reta of corporate tax has now become 39.2% for the assessment year ’01 – ’02, against 38.5% projected earlier. In case of a bill pending in Parliament to implement the eleventh Finance Commission’s recommendations also goes through, companies will have to pay another 1% surcharge for setting up a national calamity fund. In case of individuals, the effective rate of tax in the highest bracket (exceeding Rs 1.5 lakh per annum) works out to be 34.5% after today’s revision. Though the income tax rate is 30% in the highest bracket, individuals with incomes exceeding Rs 1.5 lakh are already subject to a 15% surcharge. In case of individuals with income between Rs 60,000 and Rs 1.5 lakh, the effective rate of tax now works out to 23.4% instead of 23% earlier. Individuals below Rs 60,000 would, however, not subject to the earthquake levy. Simultaneously, the Union Cabinet also cleared a slew of amendments to the IT law which would provide exemptions to those making contributions to the relief and rehabilitation effort Under the amendments cleared, 100% deduction would be permitted for donations made to charitable institutions for providing relief to earthquake victims of Gujarat. Earlier, this was available only to the prime minister’s and chief minister’s relief funds. Five conditions would, however, have to be met to quality for deductions. These include: · Deductions would be available only to institutions registered under Section 80G · The institutions would have to maintain a separate account of expenditure for providing relief to earthquake victims. · The exemption would be available to donation which are received on or before September 30, ’01. · The amount would have to be utilized before March 31, ’02 · If the amount is not utilized, the money would have to be given to the PM’s relief fund or the institution will have to pay the tax. Detailed accounts have to be filed with the CBDT before June 30. ’02. All materials, including construction material for earthquake relief, will also be exempt from import duty. Any material produced by indigenous industry including cement, steel, tents, etc which can be used for earthquake relief will not be subject to excise duty. Benefits under Section 35AC will be available to all assessee including corporate who wish to take up relief work. Source : The Economic Times Dated : 2 February 2001

Sebi to club petitions for allotment

The next time the primary market booms, you won’t have to take resource to multiple applications, in different combinations of names to get an allotment of an issue. In order to make the allotment process fair and transparent and to protect the interest of small investors, the Sebi has decided that all such applications would be clubbed and will be considered in the highest category at the time of finalizing the basis of allotment. Actual allotment of shares to each applicant too, would be made on pro-rata basis, said a Sebi communiqué issued here today. For this purpose, Sebi has defined, multiple applications in an issue as two or more applications made in single and/or joint names, wherein the first name of the applicant is one and the same. Such applicants would be required to make a declaration that they have made multiple applications and identify all such applications, said a release. In case of wrong/false declaration by the applicant to this effect, all applications would be compulsory rejected and the applications monies refunded, the release added. With regard to fictitious applications, the Sebi group headed by JR Varma which met today, recommended that, all fictitious applications should be detected before finalizations of the basis of allotment. Allotments to such applications would be completed and the dispatch of share certificates or crediting shares to the demat account would be kept in abeyance till the identity and genuineness of the applicants are established, said Sebi. Only after verification of the genuineness of the applicant, the share would be credited or released to the allottees. In the interim, investors would be given an option to sell the shares kept in abeyance. However, the proceeds of such a sale would remain frozen and would be released only after the completion of verification and identification of the applicants. Prosecutions under Section 68A of the Companies Act, should also be initiated where appropriate, said the release. The group also recommended doing away with the requirement of allotment in market lots for IPOs where allotment is in demat mode. However with a view to prevent fractional allotment and allotment s of minuscule value, it is decided that the minimum allotment would be the higher of one share or smallest integral number of share that have a value of Rs 1,000 calculated on the basis of issue price, said Sebi.The group recommended that applications for new issues can be made available through the internet, newspapers, photocopying, etc. To enable this, the requirement of pre-numbering of application forms would be dispended with and application numbers would be assigned by the collecting banker and/or registrar, the release added. Source : The Economic Times Dated : 3 February, 2001

Sebi to club petitions for allotment

The next time the primary market booms, you won’t have to take resource to multiple applications, in different combinations of names to get an allotment of an issue. In order to make the allotment process fair and transparent and to protect the interest of small investors, the Sebi has decided that all such applications would be clubbed and will be considered in the highest category at the time of finalizing the basis of allotment. Actual allotment of shares to each applicant too, would be made on pro-rata basis, said a Sebi communiqué issued here today. For this purpose, Sebi has defined, multiple applications in an issue as two or more applications made in single and/or joint names, wherein the first name of the applicant is one and the same. Such applicants would be required to make a declaration that they have made multiple applications and identify all such applications, said a release. In case of wrong/false declaration by the applicant to this effect, all applications would be compulsory rejected and the applications monies refunded, the release added. With regard to fictitious applications, the Sebi group headed by JR Varma which met today, recommended that, all fictitious applications should be detected before finalizations of the basis of allotment. Allotments to such applications would be completed and the dispatch of share certificates or crediting shares to the demat account would be kept in abeyance till the identity and genuineness of the applicants are established, said Sebi. Only after verification of the genuineness of the applicant, the share would be credited or released to the allottees. In the interim, investors would be given an option to sell the shares kept in abeyance. However, the proceeds of such a sale would remain frozen and would be released only after the completion of verification and identification of the applicants. Prosecutions under Section 68A of the Companies Act, should also be initiated where appropriate, said the release. The group also recommended doing away with the requirement of allotment in market lots for IPOs where allotment is in demat mode. However with a view to prevent fractional allotment and allotment s of minuscule value, it is decided that the minimum allotment would be the higher of one share or smallest integral number of share that have a value of Rs 1,000 calculated on the basis of issue price, said Sebi.The group recommended that applications for new issues can be made available through the internet, newspapers, photocopying, etc. To enable this, the requirement of pre-numbering of application forms would be dispended with and application numbers would be assigned by the collecting banker and/or registrar, the release added. Source : The Economic Times Dated : 3 February 2001

Preference issues’ policy to be reviewed

The Policy relating to the issue of non-convertible preference shares issued by Indian companies to foreign Investment Promotion Board (FIPB) by several ministries, particularly telecommunications. The department of telecommunications (DoT) secretary has pointed out to the FIPB that the possibility of a breach of the sectoral cap through an investment company has become stronger after the department of economic affairs (DEA) in the finance ministry relaxed guidelines relating to the issue of preference shares by taking them out of the sectoral cap. As a result, several companies have issued preference shares many times their paid-up capital, to the extent that it smacks of abuse of this provision. The DoT secretary has citied the example of Telecom Investment India (TIIL) whose paid up capital is about Rs. 5 crores. The company has issued preference shares to Hutchison Whampoa Group of Hong Kong to the tune of Rs. 570 crores. So far, no limits have been set on the quantum of non-convertible preference shares, which could be issued by a company. This is a because preference capital comes to the aid of capital-deficient Indian companies to raise capital without breaching the sectoral cap, at a slightly higher cost than normal equity. However, once companies leverage as much as 100 times their paid-up capital through preference capital, then their ability to service this capital becomes an issue. Monies raised through preference shares constitute high-cost capital, because investors have to be rewarded “additionally” for forgoing voting rights. It may be recalled that at one point, Indian companies were issuing preference capital to their foreign promoters at such high rates of return that ultimately, FIPB was forced to move in to limit the returns to 1 percent. Source : The Economic Times Dated : 6 February 2001

CBDT allows lessor to avail of depreciation

Though the institute of Chartered Accountants of India (ICAI) sought to change the rules of the game for the leasing industry by issuing a new accounting standard, the Income Tax Department has thought otherwise. In a circular issued by Central Board of Direct Taxes (CBDT) today, it has been clarified that depreciation would continue to be claimed by the lessor in its profits computed for income-tax purposes. However, in accordance with the accounting standard issued by Institute of Chartered Accountants of India, the lessor would not be able to provide for depreciation in its accountants with effect from financial year ’01-02. When ICAI issued exposure draft to its accounting standard couple of months back, exports had voiced concerns that CBDT may also follow suit in regard to claiming of depreciation by the lessee. CBDT had also made a proposal about five years back to bar lessors from claiming depreciation, but dropped it following vehement protests by leasing industry. Experts believe that if Central Board of Direct Taxes were to do so, it would have a far reaching impact on corporate finance and more particularly, for finance companies. It would have also sounded a death knell for the leasing industry. Central Board of Direct Taxes has now sought to allay these fears the circular states that ,”it has come to notice of the board that new accounting standard of Institute of Chartered Accountants of India requires capitalization of the asset by the lessees in financial lease transaction. By itself, the accounting standard will have no implication on the allowance of depreciation on assets under the provisions of the income Tax Act”. It may be interesting to note that leasing companies have filed a suit in the Madras High Court to stop ICAI from implementing its accounting standard is mandatory in nature from next fiscal. The Central Board of Direct Taxes circular goes on to clarify further that in case of sale and lease back of assets without any alteration in the situation of assets and its working, the denial of depreciation claimed has to be considered keeping in view principles laid down by the Supreme Court in case of McDowell and Company. In case where assets were factually non-existent, having been created though hawala transaction; the question of allowance of depreciation does not arise, it adds. Source : The Economic Times Dated : 10 February, 2001

Amount received on surrender of tenancy rights are not taxable

Money received on tenancy surrender not taxable: HC M Padmakshan MUMBAI IN A landmark decision, a division bench of the Bombay High Court has given relief to several thousands of tenants who were asked to pay tax on the amount they received on surrendering tenancy rights. The high court, in a recent decision on an appeal filed by Cadell Weaving Mill Co against a decision of the Income Tax Appellate Tribunal, has held that such income is not taxable. The decision will be applicable to all such transactions, carried out before April 1, ‘95. The high court order will help thousands of tenants who are fighting their cases at various stages of litigation. YP Trivedi, who appeared for the applicants, told ET, "This is a correct decision from the high court. The earlier decision by the ITAT has affected the poor and middle class people of this country." TP Ostwal, secretary of the Bombay Chapter of International Fiscal Association, told ET, "This is a correct order which puts an end to the thousands of cases filed against the order of the department." With this decision it is also clear that slum dwellers, who are given alternate accommodation, need not pay tax. The department has been claiming tax on the income arising from the surrender of slum dwellers’ tenancy rights. An amendment was made in the I-T Act to the effect that such income would attract capital gains tax at the rate of 20 per cent, from April 1, ‘95. The high court ruling will be applicable on all such transactions made before this date. The ruling was given by a division bench comprising Justice SH Kapadia and Justice VC Daga. The department argued that receipts on surrender of tenancy rights cannot be computed as capital gains tax. This is because cost of acquisition is the basis of ascertaining capital gains. In the case of tenancy rights there is no cost of acquisition. Hence, the department considered that such income can be computed as casual and non-recurring income and taxable. Cadell Weaving Mill had approached the high court against a decision by the Income-Tax Appellate Tribunal in ‘95, upholding this line of argument that income arising from the surrender of tenancy rights is "casual and non-recurring" income and taxable. Following this order, the I-T department has started issuing demand notices to many tenants who surrendered their tenancy rights for alternate premises. Besides, it has also re-opened several thousands of assessments, to tax the income related to surrender of tenancy rights. The background of the case is as follows: Cadell Weaving had obtained in ‘89 Rs 1.4 crore by surrendering the possession of its premises to the landlord. The profit and loss account maintained by the assessee disclosed this amount as profit but did not declare the amount for the purpose of taxation. Cadell Weaving defended its decision not to declare the amount for taxation on the basis of a Supreme Court judgement. The Supreme Court had held that tenancy rights are a capital asset and transfer of a capital asset yields capital gains. If, for some reason or other, the amount cannot be taxed under capital gains, it cannot be taxed under any other head. However, the assessing officer did not agree with the contention of Cadell Weaving. He treated this amount as casual and non-recurring income, under the head "income from other sources". The assessing officer held that under the scheme of I-T Act, whichever receipts fall within the natural meaning of income should be taken as income. The assessing officer’s decision was upheld by ITAT. Sinha declines comment on savings rate talk Mahajan opposes FM's bid to tax e-commerce MFs want dividend tax cut Tax breaks for SEZs to lure pvt funds on cards Plan panel in bid to finalise state outlays before Budget Big players want small textile units under excise net Budget won’t relay tremors after quake, feels industry Reforms must in consumption and production Expenses on earning income set to lose tax exempt status Small cars may lose excise advantage as govt rethinks Hindujas stay in A-I race, talk with airlines Electrical & electronics cos demand fair play Tour operators slugfest on Consumers apprehensive about employment BIFR asks govt to approve diversification of Bibcol Subterranean sounds may warn of earthquakes Amount received due to surrender of tenancy not taxable: HC Money received on tenancy surrender not taxable: HC Source:-The Economic Times 15-2-2001

Globsyn Technologies Limited to offer 37 Lakh shares at a premium of Rs.30.

Globsyn Technologies Limited plans to enter the capital market with an initial public offering of about 37 lakh equity shares of Rs.10/- each for cash at a premium of Rs.30/- per share aggregating to Rs 22 crore.

BIRLA-Tata-AT&T, the entity formed through the merger of of Birla, AT&T and Tata Cellular, will go in for an IPO this calendar year.

BIRLA-Tata-AT&T (Batata), the entity formed through the merger of of Birla, AT&T and Tata Cellular, will go in for an IPO of this calendar year. “Discussions are currently on and the final size of the issue will be based on the number of fourth operator cellular licences we get. The minimum size of the issue would be $125-150 m, maybe higher. The combined entity presently has an equity base of Rs 1,600 crore. The acquisition of the Madhya Pradesh circle from the RPG group will be funded out of the IPO proceeds, but in the interim, the financing will be done through a bridge loan. Batata has also put in a bid for acquiring a 49 per cent stake in RPG Cellular, one of the two cellular operators in the Chennai circle. Batata will also bid for fourth operator licences in six circles using the proceeds of the initial public offer. The company has set in place a three-member integration committee consisting of Mr Chaukar, Aditya Birla group director Saurabh Mishra and AT&T representative Edward `Ty’ Graham. The committee will have a rotating chairman, alternating between the Tatas and the Birlas. The promoters are yet to formalise the constitution of the board for the merged entity but it has been decided that the board would have equal representation from the three promoters.

ITC details stock option plan for top-level employees

ITC has unveiled the details of its proposed employee stock option (ESOP) scheme, which is being offered to the directors and senior managers of the company. The company is issuing 1,22,70,745 ordinary shares of Rs. 10 each to a select number of senior ranking employees. The company's top brass has maintained that since the stock option scheme is new in India, the intention now is to confine the coverage to directors and senior managers and those of its subsidiaries, numbering around 80 persons. However, based on the experience gained ESOP coverage could be extended to other levels of the management that the board may examine. Explaining the reason for extending this benefit to a select group of senior managers in ITC subsidiaries, the directors said: " A significant part of the company's assets are in the form of investments in its subsidiaries, where it is essential to retain talent and top quality personnel." Managing and whole-time directors and senior managers would be considered for the scheme. The options, which are equity shares of the company, are non-transferable, cannot be pledged,hypothecated, mortgaged or otherwise alienated in any manner. As per the scheme, the vesting of these shares would commence after a period of one year from the grant of ESOP and may extend up to three years. It could occur in tranches, subject to terms and conditions decided by the board. The pricing of the stock will be done on the basis of the company's share on NSE on the date of grant or a price which is lower than the average market price of the company's scrip on the preceding six months from the date of grant. The ITC board has also decided that no employee, who is considered for the scheme, will be offered a number exceeding 2,45,414 ordinary shares in a block of five years ( one per cent of issued and subscribed share capital), The aggregate of all such grants will not be allowed to exceed five per cent of the issued and subscribed capital of the company as on March 31, 2001. Source: The Economic Times Dated: 11th January, 2001

Punjab National Bank, Initial Public Offering to be at a premium of Rs. 50/-.

At a time when most of the nationalised banks are coming out with public issues at par and when the market position is said to be relatively bad for IPOs, Punjab National Bank will come out with IPO at a premium close to Rs 50. The corpus of the IPO will be close to Rs 100 crore and is expected to hit the market by May. Many of PSU banks have gone for IPOs recently. But all of these have been priced at par rather than a premium. While IOB and Vijaya Bank had gone to the market to cater to their increasing business, Andhra Bank had to meet the increased capital adequacy ratio requirement that had become inevitable after VRS outflow started.

Bombay Stock Exchange suspends trading in 499 Companiess

THE BOMBAY Stock Exchange has decided to suspend trading in as many as 499 companies until further notice. The companies have failed to pay listing fees to the exchange consistently for the last few years as a result of which had to take action against them. The list of 499 companies include relatively small companies belonging to B2 or Z Group. Z Group companies are those which have failed to fulfill several listing requirements. The BSE has classified these as Z Group companies in order to alert investors. The Z Group has around 1,500 companies of which very few are currently trading in the market. Most of the suspended companies are quoting at low prices and trading volumes are also insignificant, reflecting a lack of investor interest. Earlier, the BSE delisted several companies for nonpayment of listing fees. However, that practice has been discontinued now with Sebi banning permanent delisting to protect investor interest. Most of the suspended companies include those which had entered into the primary market during the 1994-95 boom and had success in mobilising funds with the help of false promises about their projects, according to market sources. Meanwhile, the BSE announced a list of companies against whom a large number of complaints were received last month. The exchange received a total of 3,011 complaints against 1,314 listed companies during January 2001. The complaints pertain to different issues like non-receipt of refund orders, allotment letters or stock invest, non-receipt of dividend or interest, non-receipt of shares or debentures after transfer conversion or bonus issue.

Sebi refuses for norms for valuing investments in unlisted Companies

THE SECURITIES and Exchange Board of India has rejected the demand of certain mutual funds to prescribe norms for valuation of investments by MFs in companies whose securities are not listed on any recognised Stock Exchanges. Sebi has norms in place for valuation of thinly-traded, illiquid and other listed securities. “Even the formula-based approach that we have prescribed for valuation of thinlytraded and illiquid securities is a departure from what regulators elsewhere do. It’s not the regulator’s job to prescribe detailed valuation formulae,” said Sebi board member Jayanth R Varma. The only norms that exist for valuation of unlisted investments — which are primarily shares — are that they should be valued on a good faith basis and in a fair and reasonable manner. listed investments are to be valued at the last-traded market price while an elaborate formula — involving market values, book values and price earning ratios — has been prescribed for valuation of thinly-traded and illiquid securities. “A formula-based approach like that prescribed for illiquid stocks, for instance, might require funds to mark down a dotcom investment to zero the day it was bought,” said Varma, explaining the problems associated with prescription of valuation norms for unlisted investments. A certain section of the MF industry had written to the Sebi asking to prescribe norms for valuation for these investments as there is no standard policy being followed by the fund houses. With unlisted investments ranging between 2 and 20 per cent of some scheme’s net assets for some of the popular MFs, the valuation of these investments has a material impact on the net asset values and the comparability between NAVs.

Market View for the Period 25th January 2001 to 2nd February 2001

Confusion prevailed in the US markets during the week as investors tried to digest the economic data and figure out the impact of the much anticipated rate cut. The jury is still out on whether the US economy will be entering into a short recession and is also debating the timing and impact of further cuts. Analysts feel that the second rate cut announced had already been factored into stock prices. The tragic earthquake in Gujarat and a Supreme Court ruling upholding SEBI's claim of a turnover tax put the brakes on the long rally in the domestic markets. But markets improved as players realized that the turnover tax is likely to affect the speculators and their brokers. The continuing FII inflows and the Government’s decision to divest its stake in VSNL and CMC further reinforced the optimism. Heavy purchases were made in PSU stocks after the Government’s announcement. Bond prices fell sharply during the start of the week on fears of the earthquake’s fiscal impact on the Indian economy. However, by midweek the sentiment improved as players realized that the economic cost would spread over a few quarters. The rate cut announced by the Fed also added to the optimism. Call rates continued to rule high and were in the range of 9.60%-9.70% during the week. KothariPioneer Views and Strategy TheUS markets should find direction in the coming days as some consensus is reachedon the state of economy and the timing of future rate cuts. The underlying tone seems to be positive asplayers hope further interest rate cuts from the Fed and President Bush'stax-cut package will combine to pull the economy out of its slump. The domesticmarkets seem all set to witness a broad-based rally driven by fundamentals. PSUstocks should continue to move up on hopes of further divestment by theGovernment in other bluechip PSUs. The market for top-tier software companiesstill looks vibrant if the recent bagging of a $200 million contract with NCR byHCL Tech is any indication. Thoughthe rupee slipped against the dollar due to month-end dollar demand from theimporters, we feel that it might rise further as a result of foreign inflows forearthquake relief. (source- Kothari Pioneer Newsletter)

Kothari Pioneer plans biotech fund

 Some of the well managed funds too under-perform the stock market index. Based on this premise Kothari Pioneer MF (KPMF) is planning to launch an index fund. It also has plan to launch a biotechnology fund at a later date.

"We have plans to launch an index fund, some of the studies have suggested that even the well managed funds sometime under-perform the index," Ajay Bagga, national sales and distribution head, KPMF, said. This apart, KPMF is also envisaging interest in biotechnology industry. " Unfortunately, there are only a few biotechnology companies in country. To launch a biotechnology fund we need to have at least 25 to 30 biotech companies," Mr Bgga said.

 KPMF has a huge retail investor base in Andhra Pradesh, accounting for over 12 per cent of company's retail investor base, which is about 6.5 lakh, nearly 75,000, are in the city alone, " Hyderabad is the sixth biggest market in the country," Mr Bagga said. Further, Mr Bagga said that Pension Funds must be allowed to invest in the stock markets. Amf) is lobbying wit the finance ministry for launching various pension funds in the country.

Sebi points to asset-liability glitch in Andhra Bank IPO.

The Securities and Exchange Board of India has, for the first time in the case of Bank's initial public offering, underscored the risk factor of asset-liability mismatch.

 

The capital markets watchdogs points out that 65.53 per cent of the term deposits of Andhra Bank (as on September 22), which is coming out with a Rs 150 crore public issue comprising 15 crore shares of Rs 10 each at par, are due to mature with in one year.

Sebi said if a significant portion of this is not rolled over by the depositors, an asset-liability mismatch could rise. The bank's float is slated to open on February 14 and close on February 23.

Andhra Bank officials counter this, saying a behavioral study conducted during June 2000 has indicated that on an average, 44 per cent of term deposits gets renewed or remain with the bank. Further, the bank's term deposits have increased by 38.82 per cent in financial year 2000 and 41.21 per cent in financial year 2001.

Another risk factor that has taken into account in the offer document is the fallout of securities scam in 1992-93.

According to the janakiraman Committee, transactions of Andhra Bank and its subsidiary constituted 3.28 per cent of the total transactions amounting to Rs. 12,85,549 crore. Andhra Bank's response to this was the cases have already been decided in favour of the bank by the competent authority and that Income Tax Department which the Bank is contesting.

The objectives of the issue is to augment the capital base of the bank to meet its future capital adequacy requirements and to augment the long term capital resources of the bank. While 1 per cent of the issue is being offered to employees and working directors on a competitive basis the remaining 13.5 crore shares are being offered to the public.

SEBI TO SLASH SECURITIES TRANSFER TIME FROM 15 TO 2 DAYS IN TWO PHASES

SEBI TO SLASH SECURITIES TRANSFER TIME FROM 15 TO 2 DAYS IN TWO PHASES

 In a far reaching move aimed at preventing misuse of the Securities pool account, the Securities and Exchange Board of India (Sebi) is reducing the time for transfer of securities from the pool accounts to the beneficiary account in two phases, from the current 15 days to two days, by April 2, 2001.

With effect from February 12, 2001, clearing members will be required to transfer the securities from their respective clearing member pool account to the respective beneficiary account of their clients within 6 days after the pay-out day, instead of the existing time limit of 15 days.

 Balances lying in the pool account beyond the specified period would not be eligible for delivery in the subsequent settlement and would also not be eligible for pledging or stock lending purpose.

 Further, the balances lying in the pool account beyond the above period would also attract a penalty at the rate of 6 basis points (0.06 per cent) per week on the value of securities lying in the clearing member's pool account.

The penalty collected will be used by the depository for spnding on investor education and awareness.

The sub-group constituted under the chairmanship of J R Varma, whole time member, Sebi, met on thusday to work out th modalities to introduce the system to ensure that settlement is made directly to the investors.

Intially the securities lying in the pool accounts beyond the time limit given, will beidentified based on first-in first-out basis.

However, with effect from March 5, 2001, securities will be identified based on the number basis. The clearing corporation/house shall provide the settlement-wise details of securities to the depositories and the depositories shall maintain the settlement-wise records for the purpose. The above decisions are not applicable to the securities lying in clearing member pool account maintained with clearing corporation/house for the purpose of Vyaj Badla or automated lending and borrowing transactions.

Loss-making firms to pay Rs 75,000 to managers

Loss-making firms to pay Rs 75,000 to managers

 THE GOVERNMENT said on Monday it has issued orders that companies with a capital of Rs 1 crore have to pay a minimum of Rs 75,000 monthly remuneration to a managerial personnel effective from March 2000, even if it is incurring losses.

The department of company affairs order intended to rationalise appointment of managerial personnel and payment of remuneration for companies earning inadequate or no profit, has fixed the minimum payment at Rs 1 lakh for companies with a capital ranging between Rs 1-5 crore.

Companies with a capital of more than Rs 5 crore and less than Rs 25 crore, have to pay a minimum package of rs 1.25 lakh while it is Rs 1.5 lakh for companies with capital ranging between Rs 25-100 crore.

Companies with capital base of more than Rs 100 crore have to pay Rs two lakh to their managers.

The move comes after requests by subsidiaries of public sector companies to appoint managers with a pay package more than the stipulated amount.

"Where a particular company intends to pay a remuneration higher than that prescribed in the Companies Act, an application may be made to the DCA giving details of the justification along with a copy of the resolution passed by the board," DCA said in a release

'Erring firms may see fall in share price'

KUMARMANGALAM Birla, who headed the Securities and Exchange Board of India committee on corporate governance, on Friday indicated that companies not complying with the code were likely to witness fall in their share prices. All companies specified by the Sebi were required to comply with the corporate governance code, and if there was non-compliance it would become apparent in their share prices, Birla told reporters on the sidelines of the international conference on corporate governance here. Speaking at the conference, the chairman of Aditya Birla Group said corporate governance was a soft issue, but hard headed investors were putting their money more in companies which were implementing it. Foreign investors place high value on companies which had sound corporate governance, he said. Corporate governance has to be backed by good management and sound strategies, he said, adding that the initial strategy should be to increase transparency. Although there were difficulties in implementing the code, he said it would lead to a higher valuation of company's share and deter takeover attempts by providing a "wall of defence" and allows companies to focus more on long term growth strategies, he said. Former chief justice A M Ahmedi said a corporate would be known better for its social commitments and how it managed its business and not just in terms of the hefty profit it earns. Lack of corporate governance, he said, lead to syphoning of funds and sickness in some section of the industry. Ahmedi said the large backlog of cases in courts was affecting the country's gross domestic product as revenue was blocked during the period when the matter was on the court. World quality council chairman Madhav Mehra said the company's board of directors had a role beyond the financial responsibility of corporate governance. "The country's economy depends on the drive and efficiency of the boards of management of its companies. The effectiveness with which their boards discharge their responsibility would determine India's competitive position," he added

Caltex deal among 49 FDI plans cleared

COMMERCE and industry minister Murasoli Maran on Friday cleared 49 foreign direct investment proposals worth Rs 769 crore, including those of Champagne Moet and Chandon of France to set up a 100 per cent subsidiary for bulk imports and exports of wines and spirits, fashion and leather goods, and other luxury items, and Caltex Lubricants India to acquire 100 per cent stake in Chennai-based Chemoleums Ltd. Modi Rubber’s proposal to transfer 40 per cent equity in the company to non resident Indians and overseas corporate bodies for Rs 10.02 crore has also been cleared. Taj Telephone and Cable Ltd of the UK has been permitted to rework its proposal to set up a 100 per cent owned holding company for further downstream ventures in telecom sector with investment of Rs 350 crore. The company proposes to lay dark fibre. It would also invest in other telecom services. Champagne Moet & Chandon will invest Rs 11.50 crore in the project while Caltex, the Indian subsidiary of the US gas and petro products major, is set to acquire Chemoleums for Rs 16.10 crore. Baker Norton International of Switzerland got nod to set up a 100 per cent unit for research and development of bulk drugs with an initial investment of Rs 4.65 crore. Gilat Satellite Networks (Holland) BV has been allowed to set up a 100 per cent subsidiary with initial investment of Rs 46 lakh to import, market, sell and licence hi-tech systems relating to satellite and VSAT technologies and auxiliary/ancillary equipment. Digicom Networks Business Solutions India as been allowed to be incorporated as a 100 per cent foreign-owned entity with investment of Rs 4.18 crore to operate internet services. Inprise Corporation of the US has been allowed to set up 100 per cent subsidiary with investment of Rs 46 crore to provide specialised after sales services, marketing and distribution of high technology software application and systems, software consultancy and solutions. Elbee Services has been allowed to convert outstanding interest into foreign equity. The proposal of Mail.Com BMS Holdings to set up a downstream subsidiary with investment of Rs 46.50 crore was also cleared. Customer Management Group Inc of the US has been permitted to set up to a fully- owned subsidiary with investment of Rs 92 crore to setting up call centres and data centres and undertake billing and billing information services. Taylor Nelson Sofres Asia Pacific has been allowed to convert the existing joint venture into a fully owned subsidiary while Publi Promotion Network Asia had been allowed to acquire 40 per cent stake in Mediascope Promotion Network (I) for Rs 3.60 crore.

Sebi to up vigil on broker-client link

THE SECURITIES and Exchange Board of India will step up implementation of provisions on client-broker relations to tighten control on margins charged to investors, board member J R Verma said on Friday. "The regulatory reforms have happened rapidly for the broker-stock exchange relations. Focus will be to ascertain if brokers and sub-brokers charged margins to the clients," Verma said at the annual financial services convention organised by Bombay Management Association here. He said, "regulating half-a-dozen active exchanges is a relatively easy task but implementing regulations for over 10,000 brokers and large number of sub-brokers is a complex one." Exchanges charged margins to brokers and that has brought in funds to protect investors however, it was difficult to know if the brokers asked clients to pay margins on the trades, he said. On the prompt payment to investors for trades, Verma said, "it is difficult to ensure delivery against payments for transactions. Dematerialisation of shares has ensured safety for the trade but the same is not true of funds settlement," he added. "The system has remained as it is for the last five years," he said adding the computer-based bank transactions will create pressure for prompt payments for the trades

Further amendment to companies Act to focus on insolvency of Company.

The government is in the process of formulating a third set of amendments in the company law pertaining to insolvency of listed companies. Speaking at the launch of Jaago Investor’s Abhiyan organized by the by the Investors Grievances Forum at the Bombay Stock Exchange (BSE), the minister of law, Arun Jaithly said “ the government has appointed a committee to look into the issue and some of the suggestions of the panel like time limit for liquidations are being seriously considered.” The move is aimed at simplifying and speeding up winding up procedures in case of insolvency. Meanwhile, the government-controlled investor’s protection fund is shortly expected to start operation. The funds, which being set up out of the monies remaining in unclaimed dividends of listed companies, will have active participation of investors and consumer organizations. The entire administration and character of the fund is being designed in such a manner so as to enhance investor awareness through education programmes, seminars etc,” Mr. Jaithly added. Besides the protection fund, the Union government is also setting up a Center of Corporate Excellence (CCE) in order to encourage better corporate governance and will institute awards for companies for the best investor-friendly practices. Apart from initiatives of non-government organizations and investor associations, the finance ministry has asked stock exchanges and regulators to strictly monitor that nobody takes investors for a ride. “ The market should not be run by a handful of people to mislead investors. Only, then investor faith will be sustained in the stock markets,” said finance minister, Yashwant Sinha. Source: The Economic Times Dated: 19 January 2001

Cellular IPOs in rough weather

Domestic celluar firms are taking a second look at their proposed initial public offerings ( IOPs) to raise more than Rs 4,500 crore following the decision of the Telecom Regulatory Authority of India (Trai) to allow limited mobility to basic telecom operators. The proposed revision in their strategy could include a reduction in the size of the IPOs and/or reduction in the proposed price of the offering. Merchant bankers said some cellular companies could even defer their listing plans till a clear picture emerged on the implications of Trai’s decision. Most of the major celluar companies including Birla-AT&T-Tata, the Sunil Mittal-promoted Bharti group, Rajeev Chandrasekhar’s BPL Communications Hutchison Max Telecom, Escotel and BK Modi-Spice, were planning to make their maiden offerings in 2001. Many mobile firms are uncertain about their IPO plans since the entry of the third (MTNL and BSNL) and forth operators and limited mobile services by basic operators are expected to have a significant negative impact on both, their topline and bottomline. The celluar companies were in the process of finalizing their IPO plans to part-fund expansion as well as existing ventures. The size of most of the proposed IPOs which were under various stages of discussion with merchant bankers was in the $ 150-250 million range. Fearing a drastic drop in the valuation of their exsting circles merchant bankers involved in the IPOs had advised the mobile firms caution in the face of the changing scenario, senior Spice Communications executives said. The Bharti group, which has diversified into basic services and Internet businesses, has postponed its overseas listing due to the uncertain market conditions, according to a top Bharti official. Though Hutchison Max Telecom has not announced the date and size of its issue, its investment plans and the valuation of its existing circles will be hit by the government policies. The merchant bankers of BPL Communications have already filed documents with the securities Exchange Commission (SEC) of the US, but are not sure about the timing and size of the IPO. The overseas IPOs of these companies will also face tough competition from foreign telecom majors, who are gearing up for IPOs in the next six months. Source: Business Standard Dated : 19 January 2001

MBT likely to get Sebi nod for IPO next week

MAHINDRA British Telecom, which has filed for an IPO with Sebi expects to receive its card by Monday, after which it will begin its pre-marketing effort. The IPO will offer 10 per cent of the company’s equity, of which only half will be a new issue, the balance being a dilution by existing promoters. Its paid up capital now comprises 10 crore shares of Rs 2 each, which will rise to a paid up capital of 10.6 crore shares of Rs 2 each, post IPO, Shantanu Rudra, recently appointed chief financial officer, MBT, said. Mahindra and Mahindra, which now holds 57 per cent in MBT, will hold 51.5 per cent, post IPO, and British Telecom which now holds 43 per cent, will hold 38.5 per cent, post IPO. Post-IPO, the holdings of the two promoters will be 90 per cent, the balance 10 per cent being held by the public. The pre-marketing is expected to help develop a floor price since MBT plans to offer 90 per cent of the total via the book building route. Of this, 30 per cent is likely to be offered to high net worth individuals. While company officials declined to speculate on the timing of the issue, they expect it to happen during the current fiscal. They also declined to comment on the pricing or other details of the IPO. Talking to the press here on Thursday, Kiran Deshpande, CEO, MBT, said the software developer is planning to set up a new development centre at Bangalore. "We have not yet finalised a location although there are several offers," he said. The centre will be operational in the next three to five months. He denied that the announcements of setting up development centres in Bangalore and in the US were timed to coincide with the IPO. He pointed to an internal logistics plan, drawn up in ‘97-98, which had suggested concentrating on growing in Mumbai and Pune and going to other centres only after a certain strength had been achieved. "Which, we believe, we have now done," Deshpande said. About a development centre in the US, he said this would done once the business there achieves a critical mass, justifying a centre. The Rs 8.5 crore proposed centre in Bangalore will be spread over 20,000 square feet and will seat 200 people in the first phase. MBT, which derives 75 per cent of its revenues from BT, plans to reduce this over a period of time. Deshpande said BT used to contribute over 90 per cent of revenues three years ago, is now reduced to 75 per cent. "We expect this trend to continue," he said. "MBT will focus on US geographies so that will logically see a reduction of BT’s share in our revenues," Deshpande further stated. The software services supplier is also looking at expanding its European presence. MBT expects its revenues from the US to grow from their current level of 20 per cent. "There is a large telecom market out there, which is our focus. And we have begun working for MCI, so a beginning has been made," Rudra said. Source:The Economic Times Dated: 19 January 2001

NEW SEBI RULE LETS INDIAN COS MANAGE OVERSEAS FUNDS

Indian portfolio managers will now be able manage raised overseas following a change in the Sebi (Forign Institutional Investors) Regulations 1995, which creates a level playing field for foreign and Indian portfolio managers. " The Indian portfolio managers will be granted a deemed FII status to allow them to manage assets raised from overseas investors," said Sebi chairman DR Mehta. However, these deemed FIIs will not be allowed to avail of benefits like convertibility with respect to their proprietary trading activities, he added. Indian portfolio managers and approved asset management companies who are registered portfolio managers can get a deemed foreign institutional investor (FII) status. The management of foreign funds would involve procurement of FEMA approval ( for convertibility of funds), appointment of domestic custodian and designated bank, daily reporting of transactions etc. As compared to deemed FIIs, FIIs can invest their own funds too, a facility not available to Indian portfolio managers. So far, Sebi has granted registration to four firms as deemed FIIs. These include Anand Rathi Securities, Munoth Financial Services, Reliance Capital Asset Management and first Global Stock Broking. Two mpre applications for the deemed FII status from UTI investment Research are currently under process, said a Sebi communiqué.

Sebi to proscribe transactions by SE chiefs, elected directors

Elected directors of stock exchanges (SEs) presidents and vice-presidents may soon have to disclose details of their proprietary transactions in securities to the governing board of SEs. The matter which is part of the proposed code of ethics for such personnel is likely to come up for discussion at the annual meting of the 23 SEs with Sebi on January 17. When contacted, Sebi senior executive director LK Singhvi confirmed that the draft code of ethics, which was finalised by a working group set up for this purpose earlier, was discussed at a meting of the inter-exchange surveillance group last week. " However, no conclusion was reached on this matter and we expected to take this up tomorrow". Sebi would ideally be speaking to such officials of the exchange to abstain from proprietary trading on their own account due to a potential conflict of interest situation. " Th ideal is to have restrictions of some kinds on people who have access to information," said Sebi chairman DR Mehta. In order to ensure that there is no conflict of interest whether real or perceived, Sebi has decided to develop a code of ethics. The code seeks to establish a minimum level of professional and business ethics to be followed by functionaries of the level of general manger an dabove. The code covers areas pertaining to exercising f due diligence i performance of duties, and avoidance of conflict of interest between directors, key functionaries and the interest of the exchange and the investors. The code recommends that the office bearers of SEs sets an example for other to follow by not using their positions to do or get favours from the exchange's executive or administrative staff, its suppliers or any listed company. " Elected directors and key functionaries will not commit any act hich will put the reputation of the exchange in jeopardy", said proposed code. Dealings in securities by key functionaries who have access to non-public price-sensitive iformation like margins and positions of other market participants, shall be subject to trading restrictions laid down in the Sebi Insider Trading Regulations. All transactions must be for investments only and securities purchased would have to be held for a minimum period to be determined by the exchange, recommends the draft code. These persons will also not be allowed to sell any security which has not been held by them for a minimum time period, in their name. No director or committee member of the exchange shall participate in decision making/adjudication in a case where he/she is an interested party.

PSU banks may tap equity markets for fresh capital

The new prudential norms being discussed by the Bank for International Settlements could force India’s state-run banks to tap equity markets for fresh capital, the RBI governor stated at the Bank Economist conference here today. Elaborating about the new BIS proposal, Mr Jalan said it requires regulators to ensure that banks’ capital positions are consistent with their overall risk profiles and strategies and a revised draft is presently under discussion in international fora. Fiscal and monetary constraints will prevent the federal government from providing fresh funding to the banks for tighter capital adequacy requirements. Mr, Jalan said at the Bank Economists’ Conference. The government had introduced a bill in Parliament last month aimed at cutting its stake in nationalised banks to 33 per cent from 51.

OTCEI plans to create unlisted equities market

The OTCEI can still spring a surprise. The stock exchange, which had tended to be written off by many, is in talks with international stock exchanges-Le Nouveau Marche, France, HK-GEM of Hong Kong and AIM of London for a strategic alliance to develop an unlisted equities market in the country. The exchange plans to kick off trading in unlisted securities in a web enabled environment. The ball has already been set to roll and a lot of spadework done. The exchange has already developed the trading technology software with the assistance of NSE. IT. Announcing the bourse's plans in Calcutta on Tuesday, OTCEI managing director, Praveen Mohnot said: " A strategic alliance with any one of the major stock exchanges with a strong domain knowledge of how to run the unlisted securities is imperative to position the product, before we decide to venture into this field." Unlisted securities market, Mr Mohnot explained, would provide an exit route to venture funds as well as foreign venture funds. Only qualified institutional buyers or QIBs who have an exposure in the companies, would be able to trade in the market. Key parameters relating to settlement cycle, eligibility for QIBs, listing norms and so on is yet to be outlined, said Mr Mohnot. The exchange already obtained the Securities & Exchange Board of India's (Sebi) permission for listing and trading and trading of unlisted securities. Issues like floating a subsidiary for the purpose is also being looked into. However, plans to launch the product would depend on the success of the after-hours trading session christened OTCEI Hi-Trade Market (OHM) session which will be launched from January 19. Elaborating on the OHM session at the member-dealers meet, Mr Mohnot said the exchange has decided to waive off all transaction charges for the first six months to give it the necessary impetus as well as create vibrancy. All the 500-odd topline stock comprise the A group scrips of the Bombay Stock Exchange as well as those on the National Stock Exchange. The exchange might even extend trading hours later once the OHM session proves to be a success. However, nothing has been decided about this as yet. " We have already received 15 new applications since the announcement. From the response of the brokers, we are sure many more applications are no the anvil. As of now, we intend to offer a broker one card for each V-SAT he has," Mr Mohnot said. The exchange hopes to have a daily turnover of Rs 300 crore in a year's time. Currently, the bourse has 990 member-dealers. The exchange is already under pressure from members not to issue fresh cards as it would not cards, hoverin around Rs 10 lakh Source: The Economic Times Dated: 11th January, 2001

Taxation Laws Bill notified by govt

TAXATION Laws (Amendment) Bill 2000 which paves way for increase in surcharge on corporate tax by one per cent has been notified by the government. Domestic companies will be required to pay eleven per cent surcharge on corporate tax for the assessment year 2001-02. The increased surcharge is intended to form corpus for the National Centre for Calamity Management which is being set up by the government on the recommendations of the Eleventh Finance Commission to monitor natural calamities relating to cyclone, drought, earthquakes, fire, flood and hailstorm. The Bill had been cleared by Parliament in the winter session. Assistance provided by the Centre to states in this regards will be financed by this additional levy of special surcharge on the central tax for a limited period. The Act come into force with immediate effect. The government has also notified Appropriation (No 5) Bill 2000 which seeks to appropriate Rs 2,639.09 crore out of the Consolidated Fund of India to meet the supplementary expenditure of the Central Government for the financial year 2000-01. The Appropriations (Railway) No 5 Bill 2000 which seeks to appropriate Rs 30,000 out of the Consolidated Fund of India to meet supplementary expenditure of the Central Government on Railways for the financial year 2000-01 has also been notified. Source: The Economic Times Dated: 12th January, 2001

Taxation Laws Bill notified by govt

TAXATION Laws (Amendment) Bill 2000 which paves way for increase in surcharge on corporate tax by one per cent has been notified by the government. Domestic companies will be required to pay eleven per cent surcharge on corporate tax for the assessment year 2001-02. The increased surcharge is intended to form corpus for the National Centre for Calamity Management which is being set up by the government on the recommendations of the Eleventh Finance Commission to monitor natural calamities relating to cyclone, drought, earthquakes, fire, flood and hailstorm. The Bill had been cleared by Parliament in the winter session. Assistance provided by the Centre to states in this regards will be financed by this additional levy of special surcharge on the central tax for a limited period. The Act come into force with immediate effect. The government has also notified Appropriation (No 5) Bill 2000 which seeks to appropriate Rs 2,639.09 crore out of the Consolidated Fund of India to meet the supplementary expenditure of the Central Government for the financial year 2000-01. The Appropriations (Railway) No 5 Bill 2000 which seeks to appropriate Rs 30,000 out of the Consolidated Fund of India to meet supplementary expenditure of the Central Government on Railways for the financial year 2000-01 has also been notified. Source: The Economic Times Dated: 12th January, 2001

IRDA clears Reliance, Tata insurance bid

THE INSURANCE Development and Regulatory Authority has cleared yet another batch of insurance venture proposals in its meeting on Thursday. Sources said that the Insurance Development and Regulatory Authority has cleared the proposals of Tata AIG General Insurance and Reliance Life Insurance. Both companies have received in-principle clearance from the regulator and are expected to receive final clearance after they capitalise their insurance companies. The other proposals which were taken up include the joint venture proposals from Tata AIG Life and ING Vysya Life Insurance. Insurance Development and Regulatory Authority has already cleared the proposals of seven companies. ICICI Prudential Life Insurance, HDFC Standard Life Insurance, Royal Sundaram Life Insurance, Reliance General Insurance, Max New York Life Insurance, Birla Sun Life Insurance and OM Kotak Mahindra Life Insurance. The joint ventures yet to submit applications include SBI’s joint venture with Cardif, Dabur’s life insurance proposal with CGNU, ICICI’s non-life venture with Lombard Insurance of Canada. So far HDFC Standard Life, ICICI Prudential Life Insurance and Royal Sundaram Alliance have already gone for a soft launch of their products. According to the new insurance companies, the main factor hindering their product distribution is the shortage of accredited training and examining institutions across the country. As per Insurance Development and Regulatory Authority guidelines agents have to compulsorily undergo 100 hours of training and undergo an examination before they can obtain a licence. Another inhibiting factor are the present guidelines on corporate agents which the Insurance Development and Regulatory Authority has promised to review. Under the present guidelines for corporate agents, all the directors of the corporate agency firm have to undergo the same qualifying requirement as individual agents. The Insurance Development and Regulatory Authority is also yet to come out with guidelines for brokerage firms. However, this will be taken up only after the government introduces the necessary amendments in the insurance legislations. Source: The Economic Times Dated: 12 January, 2001

Centurion Bank to offer rights issue in February

CENTURION Bank has decided to launch its proposed rights issue of equity shares in early February. The issue will allow shareholders to purchase seven equity shares of the bank, for every 10 shares held at a price of Rs 12 per share. Speaking to ET, Centurion Bank managing director MJ Subbaiah said: "The rights issue will open before February 10. All the clearances for the issue are in place." The private sector bank will issue 10.7 crore equity shares of Rs 10 each at a premium of Rs 2 per share aggregating to Rs 128.8 crore. The bank's board of directors has approved the rights in July 2000. The private sector bank will shortly file the final prospectus with the Securities & Exchange Board of India. The rights issue was cleared by Sebi in October last year. Centurion Bank plans to raise its paid-up capital from Rs 152.5 crore to Rs 259.2 crore, through the issue. The bank's reserves would stand increased by Rs 21.3 crore from the share premium received from the rights. Centurion's promoter TCFC Finance along with the Singapore-based foreign investor in the bank Keppel Tatlee Bank have decided to pick up the unsubscribed portion of the rights issue. The move is likely to allow TCFC Finance and Keppel to increase their respective stakes in the bank. Keppel owns the equity in the bank through its Mauritius-based subsidiary Kephinance Investments. TCFC Finance holds 23.1 per cent equity in the bank, Keppel Tatlee (17.7 per cent), Asian Development Bank (10.2 per cent), International Finance Corporation (8.4 per cent), corporate bodies (15.6 per cent), while public and others hold 25 per cent. The banks scrip at the Bombay Stock Exchange is at present ruling around Rs 18 per share. Centurion Bank was floated as a joint venture by the 20th Century Finance Corporation along with Keppel Bank in '94. The bank came out with a Rs 33.75-crore initial public offer in 1999. Source: The Economic Times Dated: 12 January, 2001

Hyundai India to plough back profit, puts off IPO plan

WITH a consistent cash flow and good profits, Hyundai Motor India has put on hold for the moment its disinvestments plan through an IPO or a private placement for funding the second phase of investments. HMI plans to invest about Rs 1,200-1,400 crores in the second phase to scale up capacity at its Chennai plant from 1.2 lakh cars per annum to two lakh. In the first phase, the company invested close to Rs 2,400 crore. Thanks to the Rs 59.3-crore profit after tax made by the company for the financial year ending March ’00 and the confidence to repeat the good show in the current year too, HMI believes it can meet the required investments with internal accruals and loans from FIs and banks. “We already have sanctioned credit limits from FIs and banks to the tune of Rs 800-900 crore. The rest could be met through internal accruals. Hence, we don't feel any need at the moment to go in for disinvestments,’’ A P Gandhi, president, HMI, told ET. The company posted a turnover of Rs 2,310 crore for the financial year ending March 2000. For the fiscal ending March 2001, it hopes to achieve a turnover of Rs 3,000 crore. HMI achieved more than 40 per cent growth in car sales during calendar year 2000 compared to the previous year and surpassed the target set for both Santro and Accent. As against the targeted 66,000 Santros and 12,000 Accents, HMI sold 68,606 Santros and 16,842 Accents in 2000. While the combined target of both the models was 78,000, HMI actually sold 85,448 cars. For the year 2001, HMI targets to sell 77,000 Santros and 17,000 Accents. Besides, it hopes to sell about 1,000 Sonatas, which is expected to be launched, in the Rs 12-14 lakh price range, sometime during 2001. “The year 1999, saw exponential growth in the Santro segment and in 2000, the growth was better in the Accent segment,’’ Gandhi said. As per prevailing market conditions, players in Indian passenger car industry see only a marginal and at times even negative growth in some quarters of 2001. “Irrespective of the market expectations, we feel we will have positive growth throughout the year and it will be much more than the market,’’ Gandhi said. Meanwhile, the company's thrust this year is more on increasing the number of authorised service centres in order to be as close to customer as possible. These centres will be in addition to the service outlets established by the company's about 100 dealers. ``We plan to have 150 authorised service centres across the country. While we already have 80-85 such centres, the rest will come up within the next few months,’’ he said. Source: The Economic Times Dated : 11 January 2001

Vijaya Bank scrip quotes below par on SEs after IPO

Bangalore based Vijaya Bank, which raised Rs 100 crores through its initial public offering (IPO) last month, saw its shares closing below par upon listing in the stock exchanges on Tuesday. The bank’s scrip which opened just above par at Rs. 10.45, closed at Rs 9 in the stock exchanges on Tuesday. On Wednesday, the stock opened at Rs 9 and touched a high of Rs. 9.7 and closed at Rs 9.5. Vijay Bank is the third nationalized bank, which has come out with an at par public issue in the recent past, to be quoted below the issue price. The other public sector banks which are quoting below par are Manipal-based Syndicate Bank and Chennai-based Indian Overseas Bank. The trend among the natioalised banks to be immediately listed below their issue price will make it difficult for the remaining nationalized banks to raise equity from the market. Among others Andhra Bank is scheduled to hit the market with its initial public offering of 15 crores equity shares of Rs 10 each, at par, aggregating Rs 150 crores in the present quarter. The government holding after the public issue will come down from 100 per cent to 66.7 per cent, after taking into account the proposed return of capital of Rs.48 crores. Other banks which have been holding back their public issue on account of the negative market sentiment include: Allahabad Bank, Punjab National Bank, Punjab and Sind Bank, and Canara Bank. According to banking analysts the reason for the poor show by the nationalized banks upon listing is that, these banks have sold their shares to their corporate customers, other banks and institutions. Source: The Economic Times Dated: 11 January 2001

Panel wants dotcoms to disclose accounting policies

The Sub-committee of the Malegam panel on disclosure and valuations for dotcoms has recommended that dotcoms will have to disclose their significant accounting policies. They will also have to disclose issues like revenue recognition, membership and subscription, merchandising activities, advertising services and services like web hosting, cintent selling, among others In addition, they will have to disclose recognition and measurement of associated costs, accounting for website development costs, rebate, discounts and other incentives. The Sub-committee has considered the draft Monograph on Accounting by Dotcoms prepared by Institute of Chartered Accountants of India (ICAI), and has given its suggestions to the ICAI. It has also requested to the ICAI to issue this monograph expeditiously. It has said that dotcoms should be required to give a declaration in the offer document, confirming their complete compliance with the recommendations contained in the monograph. The sub-committee felt that manufacturing companies that sell their products through Internet may not be classified as dotcoms. It has however, recommended that the disclosure requirements applicable4 to dotcoms should also be applicable to companies having a business segment in which internet is the principle distribution channel for delivery of products or services, and the concept of materiality shall be applied to classify a company or a business segment as dotcom or not. On treatment of membership fees, the sub-committee feels that if a dotcom incurs certain costs to provide services to its member-customers beyond a period of five years, it will not be appropriate for the company to recognize non-refundable fees as their revenues within initial period of five years only. The sub-committee suggested that any amount recognized as revenue in any year out of the non-refundable fees received from the member customers, for providing services for a period exceeding five years, should not exceeding annual fees charged. On treatment of shipping and handling charges, the sub-committee felt that the same basic accounting principles, which are applicable to all enterprises, should be applied And when the shipping and handling charges are not separately identifiable, it is appropriate to include them in the gross revenues, as there is no other alternative. On accounting for website development costs, the sub-committee has recommended that all website development costs an pre-operative expenses, incurred up to the opening of the first website, can be amortised over a period of two years as deferred revenue expenditure. The Sub-committee has recommended, for the sake of simplicity, the site development costs and other preoperative expenses incurred prior to the opening of the first website for the member-users, can be treated as preoperative expenditure and amortized over 2 years. The site development and other costs incurred after that shall be expensed as incurred. On accounting for rebates, discounts and other sales incentives, the sub-committee examined whether rebates, discounts, sales incentives and introductory offers at heavily discounted prices can be treated like deferred revenue expenditure, since advertising expenditure incurred on launch of products is generally treated as deferred revenue expenditure, and whether there is any justification to treat rebates by dotcoms differently. The Sub-committee has recommended that in view of the uncertainty of future benefits, the concept of deferred revenue should be given up and as customer loyalty is not certain in case of dotcoms, such expenditure should be expensed as incurred. It has also recommended that when a benefit in cash or kind is given to a specific customer on sale, it shall be treated as a rebate and it should be reduced from gross revenues. When such benefits are extended to all customers, it shall be treated as a selling expense. On treatment of equity-based consideration, the sub-committee felt in the case of related-party transactions, the contracted value mentioned in the transaction may not be the transactional fair value. The sub-committee also noted that as per Accounting standard 10 on accounting for fixed assets, issued by the ICAI, fixed assets acquired in exchange for shares should be recorded at their air value or the fair value of the shares issued, whichever is more clearly evident. It has recommended that when dotcoms use equity-based considerations to fund expenditure, the following principle shall be adopted: · For arm’s length transaction, the consideration mentioned in the contract shall be taken as fair value. · For transactions where the consideration mentioned in the contract, then if the fair value of the assets and services is determinable, the transaction shall be recorded at the same. If the fair value is not determinable, then the transaction should be recorded at the fair value of the shares issued. If value of shares and assets or services is not determinable then the transaction should be recorded at nominal value. Source: The Economic Times Dated: 20 December 2000

Sebi tries to get VCFs & scientific bodies together

The securities regulator is trying to don a new avatar in the new year. It has decided to turn matchmaker by providing a platform for India's scientific community to touch base with the leading venture capital funds (VCFs) of the world. The regulator, which looks at venture capital reforms as a big feather in its cap, is now setting up an advisory, which will include members of the scientific community and top venture capitalists from across the globe. " We want to adopt an integrated approach to developing this industry. There is a huge pool of scientific talent available in the country and we feel that a lot of these ideas can be commercialsed Members of the scientific community will form part of our advisory panel and we will also be calling top notch venture capitalists to be on the committee," said Sebi's senior executive director in charge of venture capital LK Singhvi. “ The aim would be to provide a platform for the two sides to interact. At times, some regulatory issues may also be thrown up and we will try and implement changes wherever required,” said Mr Singhvi. “ There are a large number of research institutes in the country who have not had access to venture funding. We have strongly believed that there are a number of areas apart from IT where venture funding could lend a big boost to the development of businesses in the country,” he added. In the past, Sebi has had KB Chandrashekhar of Exodus Communications fame on its committee which framed a new set of guidelines for the venture fund industry. These guidelines have been issued and most of the recommendations of the committee have been incorporated. “The pace of registrations is picking up by the day. Just last week, we have come close to giving registration to two more venture funds. The number of registered funds would go up to 35 now which is a big jump from 8 last year,” said Mr Singhvi. The Sebi chairman DR Mehta had recently told ET that the regulator is planning a series of road shows abroad to educate venture funds about the regulatory changes for the venture fund industry in India. The regulator also plans to send individual emails to all venture funds across the world on the new regulatory structure. Source: The Economic Times Dated: 8 January, 2001

Consolidated accounts for cos now accepted by ICAI

SEBI’s insistence on consolidated accounts by corporates has finally been accepted by the Institute of Chartered Accountants of India (ICAI). The onstitute has now come out with an exposure draft of the proposed accounting standards on consolidated financial statements. ICAI did not appear particularly keen on coming out with the draft of the standards. It is felt that certain members of ICAI were comfortable with the existing practices and Sebi’s insistence on consolidated statements would make things more complicated for them. On its part, Sebi didn’the seem impressed by ICAI’s alleged dilatory tactics. To show that it meant business, it threatened to adopt the international accounting standard on consolidated statements. It seems this threat worked and ICAI has now come out with own drafts standard. Sebi has prescribed that it will be compulsory for listed companies to present consolidated financial statements from April 1,2001. ICAI final draft is likely to be in palace by April or May this year, and as a result, would become applicable for companies closing their financial year in June’01 or later. The accounting standard for consolidated statements, to be made mandatory, proposes that an enterprise having one or more subsidiaries should present consolidated financial statements. The accounting standard will apply to all subsidiaries except in those cases where control of the parent on a subsidiary is intended to be temporary or where a subsidiary operates under severe long term restriction which significantly impairs it ability to transfer funds to the parent. The draft, while laying down the procedure to be followed for consolidating financial statements, states that the letter would be in addition to its separate financial statements. What would be of interest to the readers of balance sheet is that intra group[ balances and intra group transactions and resulting unrealized profits would need to be eliminated in full. Unrealised losses resulting from intra group transaction would also be need to be eliminated unless the cost can-not be recovered. The new standard, therefore, seeks to give the correct picture of financial statements of a group and eliminate several ill practices followed by Indian business houses. Source: The Economic Times Dated: 5th January 2001

Companies Act amendments notified

The amendments to the Companies Act, 1956, cleared both houses of parliament during the last week of November, have been notified. The amendments will become effective with the exception of clauses 7 and 75 of the bill. The president gave his assent to the amendments on December 14. The two clauses-- 7 and 75-- pertaining to the registration of firms with the Registrar of Companies (RoC), will be notified subsequently, Department of Company Affairs (DCA) sources said. Sources added that these clauses are not being notified just yet as the RoC offices have to be upgraded and computerized to be able to meet the rewuirements of the Companies Act. The government expects to complete the upgradation of all RoC offices by April 1,01. Clause 7 of the bill requires RoC to take on record request for changes in address of registered office within a month of an application being made to it. This deadline can be met only if all offices of RoC are computerized. The Companies (Second Amendment ) Bill, 2000 seeks to bring in greater transparency in corporate governance and provide protection to small investors. The bill allows for a 10-fold increase in penalties for non compliance with the provisions of the Act. It will make offense relating to acceptance of deposits cognizable under Code for Criminal Procedure. This amendments bill was tabled in the Lok Sabha last December and was subsequently referred to the standing committee on home affairs fo comments. Other provisions of the bill include appointment of small investors' nominee to the board of the company, issue of non-voting share, execution of a debenture trust deed by companies proposing to raise funds in form of debts, and introduction of postal and electronic voting on resolutions. The second amendments bill classifile all companies as private or public. The provision for deemed public company has been done way with. It further stipulates that all private companies shall have paid-up equiy base of Rs 1 lakh and every public company of Rs 5 lakh. Companies with equity base falling short of the new stipulation are required to enhance the paid-up capital to meet the new requirement within a period of two years, the new requirement within a period of two years from the date of notification of the amendment. To make companies more accountable and to secure small investors interests, the bill requires companies defaulting in making repayment of depositor money to intimate the Company Law Board (CLB) within 60 days of such default.

FIPB clearance no longer required for FIIs to invest in domestic COs

Foreign institutional investors (FIIs) will no longer be required to seek clearance from the Foreign Investment Promotion Board(FIPB) to invest in domestic Companies, provided such investments by them are within the sectoral caps and conform with the regulations of the Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI). The ministry for commerce and industry on Wednesday stated that FIIs, such as Asian Development Bank (ADB), International Finance Corporation (CDC), can use the automatic route to invest in Indian Companies. " The government has decided that the provisions of Press Note number 18 will not be applicable to investments made by these international institution in Indian Companies," a statement of the ministry said here. Press Note 18 of 1998 series of the ministry does not allow foreign investors-with an existing financial, technical or trademark collaboration in an existing domestic Company engaged in the same or allied activity-to come through the automatic route for new investment proposals. All such proposals are considered by the FIPB on merits. The exception has been made considering that these financial institution have been picking up equity stake in domestic companies from time to time, without an element of technical or trademark collaboration. Very often, these FIIs pick up 5-15 percent in sound Indian Companies purely for investment. The latest measure is in continuation of the government's policy to ease impediments to allow the unhindered inflow of foreign investment into the country. During the last one year, the government had allowed investments into various sectors through the automatic route. Last August, 100 per cent FDI was permitted through the automatic route for all but five manufacturing activities in the Special Economic Zones. 100 per cent FDI was also allowed through the automatic route in select telecommunications services, such as internet services and e-mails. Offshore venture capital funds and Companies are allowed to invest in domestic venture capital undertaking as well as all other Companies through the automatic route, subject only to Sebi regulations and sectoral caps. FDI inflows into the insurance sector was also allowed to the extent of 26 per cent through the automatic route, subject to the applicant obtaining a licence to operate from the Insurance Regulatory Authority of India.

I-T returns check on hold until'02

The recent decision of the Central Board of Direct Taxes (CBDT) not to scrutinies income-tax returns will continue for at least two years, it is learnt. When the decision to stop scrutiny was taken four months ago, the revenue authorities were not sure how long the department will continue accepting forms without scrutiny. However, it is now certain that the tax administration will require a two year time span for completing its cadre restructuring exercise and the first phase of computerisation. The decision to stop scrutiny of returns was taken to facilitate the smooth transition of the administration into a new system. Currently, only chief commissioners are vested with powers to order scrutiny of any return. They intervene only if the suspected concealment is massive, running into several crores of rupees or in cases where the concealment is apparent from the way returns have been filed. The CBDT wants total computerisation of tax administration to reduce direct interaction between I-Trustee officers and the assesses.

Tax LIC stock and policy holders differently: Panel

The Expert group on "Taxation oflife Insurance Sector' has suggested a new tax package for life Insurance Corporation (LIC). The package makes a distinction between the income of the shareholders of LIC and the income of policy-holders, and suggests different tax rates. According to the expert group's suggestions, shareholders surplus will now be taxed at the prevailing rate of tax applicable to corporates, which is 38.5 per cent, while the policy-holders surplus is proposed to be taxed at the rate of 7 per cent. LIC is currently taxed at 12.5 per cent and there is no segregation for tax purposes between shareholders and policy-holders.LIC sources, however, said the incidence of taxation will come down about 8.5 percent from the current rate of 12.5 per cent if the proposed package is implemented. The figure of 8.5 per cent will be a weighted average of the differential rates of taxation that has been proposed, ie 38.5 per cent on shreholders surplus and 7 per cent on policy-holders surplus. Shareholders surplus is calculated as 5 per cent of the actuarial surplus. Actuarial surplus is the surplus of LIC arrived at after estimating the current assets value, over what is required to meet long term liabilities. The rest of the surplus- the surplus after deducting shareholders surplus- is policy-holders surplus. For example, the actuarial surplus for the period' 98-99 amounted to Rs 5,300 crore. The I-Trustee demand payble by the LIC at the prevailing rate of 12.5 per cent of amounted to Rs.662.5 crore. However, under the proposed tax package, the tax leviable will be reduced to Rs 450 crore. When asked whether the government will implement the recommendation of this report, the minister of state for revenue, GN Ramchandran, told ET, " It is a policy decision taken at higher levels. Whatever decision we take will be reflected in the budget." HDFC chief Deepak Parekh, and a 11-member expert group said: "The proposed package, by distinguishing between the income of shareholders and policyholders, is correct. The distinction is necessary as they are different kinds of income." The reasoning given by the rxpert group-headed by former member of Central Board of Direct Taxes, VU Eradi- for a softer approach to the LIC, is that LIC is likely to have a comparative disadvantage when pitted against the new entrants in the insurance sector, who will not be paying tax as their expenditure will exceed their income for the initial years. The expert group further points out that the new entrants in this sector will be concentrating on higher profit-yielding single-premiumpolicies and urban and semiurban areas, while LIC will have to continue with its obligation of providing cover in the rural sector and weaker sections of the socity. Besides, the bulk of the investments made by LIC will be in government bonds. Any additional tax burden will make the LIC's functioning totally non-viable, the expert group points out. KVM Pai, chief commissioner, Income-tax, Mumbai said," I cannot say anything now. The report has not been submitted to the government so far." However, the suggestion to consider the investment of LIC- after deducting the management expenses- as taxable income, was not accepted by the expert group. This is known as income-expenditure (IE) method. Though this method is in vogue in countries like the UK, the expert group found it complicated and cited innumerable amendments required in the laws to implement this tax structure. The taxable income determined through such a tax structure will be nearly RS 9,000 crore. The expert group is of the opinion that strict control and supervision exercised by the IRDA and the fact that the surplus will be determined on the basis of accounts prepared by IRDA regulations, will reduce the possibility of suppression of income. The report says the possibility of suppression of income by inflating the expenditure is higher in the IE method. Source: The Economic Times Dated: 2 January 2001

Sebi wants cos to maintain at least 25% public holding

The Securities and Exchange Board of India (Sebi) board, which met recently, has taken an in-principle decision to ask existing listed companies to bring the public holding in these companies to levels of at least 25 per cent, within an unspecified time frame, if they had made their initial public floats for 25 per cent of the company's equity. Most Indian companies had come out with public issues amounting to 25 per cent of their total equity, but subsequently, the holding of promoters has gone up to levels as high as 90 per cent in some cases, and over 75 per cent in many others. This means that the floating stock of these companies has shrunk to levels even lower than 10 per cent and the securities regulator has now corrected the lacunae in the system. "We discussed the issue at our board meeting recently and the board was of the view that companies who had made issues for 25 per cent of their equity, must bring the non-promoter holding to that level. But while the board took an inprinciple decision on the need to do this, it was decided not to set a time frame at this point of time. We restricted ourselves to ensuring at least 10 per cent non-promoter holding within a year for existing companies," Sebi chairman DR Mehta told ET. The board has decided not to lay down a time frame for ensuring that companies bring the non-promoters holding to at least 25 per cent at this point of time, but has restricted itself to saying that all existing companies must have at least 10 per cent non-promoter holding within a year. Recently, some companies made public issues for 10 per cent of their equity, and for these companies, the minimum non-promoter holding requirement at all times would be 10 per cent. Currently there is no regulatory requirement to maintain a minimum floating stock post listing on a continuous basis. The Sebi board had also decided that there will be a requirement for all listed companies to maintain a minimum level of non-promoter holding on a continuous basis as a condition for listing. All new companies shall be required to maintain on a continuous basis the non-promoter holding, at the same level as applicable at the point of entry ( 10 per cent or 25 per cent) . For the existing listed companies, where the non-promoter holdings is less than the applicable limit at the point of entry, the companies will be given time up to one year to raise the level of non-promoter holding to at least 10 per cent. In case they fail to do so, they will be required to buy out the public shareholding in a manner similar to that provided in the sebi's takeover regulations. Existing listed companies, will not be allowed preferential allotment ad buy back if, as a result of this, the non-promoter holding falls below the ceilings permitted under the entry norms, either 10 per cent or 25 per cent. Source: The Economic Times Dated: 2 January 2001

DCA extends fast_tract 560 scheme by one month

Department of Company affairs (DCA) has extends the fast-tract 560 scheme by one month till January 31. The scheme was launched in september last year after the expiry of the Company law settlement scheme (CLSS), 2000, in order to give defunct Companies an opportunity ti get their names struck off the Registrar of Companies (RoCs) records. 11,000 Companies have already availed of the scheme. The Registrar of Companies offices across the country have also sold 21,000 forms to various Companies. DCA had set a target of 50,000-60,000 Companies under the scheme. Officials of the department are to the view that since a number of days in December were not working days, Companies could not avail of the scheme. Under the section 560 of the Companies Act, defunct Companies can be asked by the RoCs to wind up if they are convinced that the Companies have become non-functional. Meanwhile V Govindarajan, formerly additional secretary with the department of economic affairs in the ministry of finance took over from Dr P L Sanjeeva Reddy as secretary DCA today. Also DCA joint secretary A Ramaswamy told reporters that the Department's total receipts during the period June to November, 2000 stand at Rs 496.23 crore as compared to Rs 164.23 crore during the correponding period in 1999. Out of this, Rs 137 crore was collected by the department under the CLSS, Ramaswamy said. The remaining amount can be attributed to the higher rates of filing fee and statutory application fee that were revised this year after a period of ten years he added. Ramaswamy also said that since the Companies Amendment Act, 2000 has been notified and the fast track scheme has become more attractive for Companies that are not in a position to raise their paid-up capital to Rs one lakh or Rs five lakh. Source: Business Standard Dated: 2January 2001

MFs with diversified portfolio of liquid stocks less hit

As against expectations of an at least 50 percent return in six months from MFs, the tech sector meltdown has resulted in many funds giving negative returns even in the balanced funds category. "As opposed to tech sector funds, investors who opted for a systematic investment plan which they stuck to throughout the year have fared much better, at the very least losing less money," say fund managers.Debt funds investors were no better off. For the first time they awoke to the rude shock of negative returns in what were perceived as safe funds, when the RBI increased interest rates in July. And while the year may have ended with a rally in their returns,with 30-day annualized returns for some top funds rising to respectable levels of 15 percent and more, investors are playing it safe. They's much rather settle for a predictable return rather than higher but more volatile return, admit fund marketers. The year has also driven home the benefits of holding a diversified portfolio of liquid stocks. Funds which have stuck to their mandate and delivered on true diversification across sectors and stock have fallen less than their more concentrated peers. Of course, the usual retort is that these funds also appreciated les than their concentrated peers but, net-net , its these funds who have fewer and less bitter investors than their more volatile brethren. This is because the investors in these funds were not educated on the risks of the different schemes but were sold purely on the basis of returns. While MFs may be taking a numbers of service initiatives like web-based transaction comfirmation and acting on non-financial requests in one business day, the one question that's dogging not so gung ho investors, is where to put their money in '01. Clearly, the consensus amongst fund managers is that equity is going to be a volatile story, at least in the near terms. "If you're looking to invest for a three- to-five-year horizen, equities are still your best bet but if your investment horizon is much shorter than you may prefer to rethink your investment strategy," said HDFC AMC managing director Milind Barve. Translated simply, that means that unless you have the stomach for dealing with short-terms volatility with fluctuating NAVs you should opt for a less risky product. Match the balanced fund with your risk profile. This is because as '00 as shown, some balanced fund have actually fallen as much as or even more than some equity funds. When choosing a balanced fund check to see whether it's truly balanced (an ideal scenario is 51 percent equity and balance debt and cash) or haeavily skewed in favour of equity.Investors also need to check the composition of the balanced fund's equities portfolis. A large holding of small cap, mid cap or relatively illiquid and------- speculative stocks are likely to results in a far more ----- fund performance than others. What that means in simple terms for you, is that if ---- choose a fund which exhibits high volatility (---- by its standard deviation ), the timing of your ------- could impact the returns from your portfolio more than it would from lower volatility funds. So the question begging to be answered is what's the best place to invest for the new year? The answer, is a function of three variables: your time horizon, loss-bearing capacity and expected returns per annum.The answer to these three questions will enable you to match your risk -return and investment horizon with the intrinsic characteristics of MF schemes. Surprisingly, while returns in income funds have gone up, inflows from investors continue in the lower margin serial plans and to some extent in liquid funds. Investors prefers the certainty of the lower returns to the risk of a more volatile returns, it seems.But with a stable to bullish interest rate scenario over the next quarter, MFs feels that the income funds are a low risk and comparatively higher yielding investment avenue. Beside serial plans with concentrated investors holdings are likely to come under increasing pressure from Sebi (Securities and Exchange Board of india) which is upset at the back- door portfolio management services being provided for large investors.That is likely to actually benefit the MF industry because the asset earned on serial plans and liquid funds barely allow the fund houses to break even. The prospects for attracting equity inflows are closely tied to the fortunes of the stock markets. But with equity markets having a pall of gloom cast over them, at least in the near term, fund managers are not hopeful of significantly large inflows. So if you are a stock market investor where do you invest in '01? That's an important question for investors because as the table shows, even the top performing sector funds ranked numbers four and five respectively across sectors, gave negative returns for calender year '00. According to Prudential Corporation Asia MD( mutual funds) Ajay Srinivasan, "The market will continue to remain volatile.The days when sectors as a whole moved together are over, so investors are best advised to stay invested in diversified equity and balanced funds." Mr Srinivasan feels that the maximum value today lies front-line tech stocks which have been hit by "excessive pessimism". "These have been beaten down to valuation levels which have not been seen for a very long time," he said. Apart from the IT, media and FMCg sectors, Cholamandalam Cazenove AMC CEO Ved Prakesh Chatyrvedi feels that an infrastructure sector like highways is likely to pick up this year. "This could lead to a turnaround in the fortunes of telecom and power equipment providers in addition to construction companies and cement manufacturers, " he said. Amongest his favourite picks are Infy, Wipro, NIIT, Mukta Arts, ITC, Smithkline Beecham Consumer Healthcare, Bharat Heavy Electricals and L&T. Regardless of the fund management style however, almost all fund managers unlike, in the first quarter of the '00, recommend that investors stick to broad-based and truly diversified equity funds rather than dabble in sector funds. Explains, Jardine Fleming India Asset Management chief investment officer UIIaI Ravindra Bhat," A truly diversified and broad-based fund allows the fund manager to rotate the investments in the stocks and sectors which show maximum potential. By precluding the option via a sector fund, an investor is actually reducing the value addition that a fund manager ought to be contribution". According to Mr Bhat, the theme to watch out for in '01 are stocks witnessing corporate control battles, buy-backs and M&As. " The significant revamp in the banking too will throw up opportunities for investments; as will the opening of the US generics market for pharma companies that have established a marketing presence there," The FII fund house also expects selective stocks in the steel, cement, EPC and telecom spaces to throw up significant investment opportunities.

Active scrips on 3 regional SEs may be listed on OTCEI

Bourse also plans to launch after-market trading The Over The Counter Exchange Of India (OTCEI) is in talks with Bangalore, Hyderabad and Chennai stock exchanges to list the active scrips listed on these exchanges on the OTCEI and vice versa. Speaking to ET, OTCEI managing director Praveen Mohnot said: " The listing of a stock can be carried out automatically on all the four exchanges once a company is listed on any of these exchanges. Companies would have to pay listing fees only on the exchange where it was originally listed. "The compliance function is likely to be centralised at the exchange where the scrip was originally listed. "While the Chennai stock exchange is to take the matter to its board shortly, negotiation with the other two exchange are currently on," said Mr. Mohnot. The exchange is also finalising plans to launch after markets trading in OTCEI listed scrips and the top 500 NSE scrips traded on the OTCEI in the permitted segment, in early 2001. " The will be for a three-hour period on every business day between 4.30 and 7.30 p.m. and will provide a legal alternative to kerb traders who want to trade after seeing the mood on the Nasdaq for instance," Mr Mohnot added. Recently, a Member of parliament (MP) had also raised a question in the Lok Sabha as to whether the government had seriously thought of closing down the OTCEL However, in view of the revival plan drawn up by the exchange, the stock exchange division of the finance ministry had in its reply said that the echange has already seen a 25 per cent increase in active members to 100. The exchange has also received proposals from five or six members for transfer of the membership cards which suggest a revival in the exchange's fortunes. It was alleged that small investors who have invested in Companies listed on the OTCEI have lost heavily. However, in a communique to the ministry, Sebi has said that the total amount raised in IPOs by OTCEI- listed Companies since inception stood at Rs 344 crore. The total market capitalisation of Companies listed on the exchange on the other hand stands at nearly Rs 380 crore, showing that investors have not really lost money on a systematic level.

Foreign branch income to be taxed

FOREIGN branch income of the companies will be computed on the same basis as Indian income and will be subjected to tax, taking into account the provisions of DTAA (double tax avoidance agreement). However, in the case of foreign branch income, there is no case for a lower level of tax on the policy holders portion of the surplus. Besides, non-taxability of bonus or profit received by the policy holders in respect of life insurance policies should continue. The committee also recommends that there should be a system of regular consultation between the CBDT and IRD in all matters of tax policy on life insurance sector.

Mergers & Acquisitions amongs Mutual funds force MFs to give exit option to investors

GLOBAL mergers and acquisition in the mutual fund industry are having a ripple effect on their Indian associates who find themselves being forced to give an exit option to local investors without any penal charges. So far, three MFs in the recent past have had to give Indian investors an option to exit any schemes they have invested in, without payment of any exit load (i.e. they can exit at net asset value without penal charges), following a Sebi directive. Speaking to The Economic Times, a senior Sebi official said since global takeovers involved a change in the sponsor of the local mutual fund, investors in any of the schemes promoted by the local MF had to be given an option to exit the schemes at NAV. This follows an amendment to the MF regulations which disallowed any change in the fundamental attributes of a scheme to be carried out, unless three-fourths of eligible unit holders responded in the affirmative to the proposed changes. "Since the takeover of the sponsors constitutes a change in fundamental attributes of a scheme, fund houses are required by us to allow investors who do not want to stick with the new promoters to exit without payment of any penal sales charge," said the Sebi official. In the case of Kothari Pioneer MF, the Pioneer Group of the US, which is one of the sponsors of the MF, was acquired by UniCredito Italiano and merged into its asset management subsidiary, EuroPlus. Since this amounted to a change in control of the AMC and change in the sponsor, the fund house gave its investors an exit option. However, Kothari Pioneer MF officials reported that the number of repurchase applications as a result of the special time-bound offer, did not exceed the normal level of redemptions recorded by the MF. In the case of Jardine Fleming India AMC, the acquisition of its ultimate parent - Robert Fleming - by Chase Manhattan Bank, required it to give investors an exit option. According to Jardine Fleming India officials, the fund house saw redemptions of close to Rs 2 crore in its Jardine Fleming India Bond fund/Jardine Fleming India Personal Tax Saver 96 in the exit option period. In the case of ANZ Grindlays MF, the change in sponsor from ANZ Banking Corporation-Australia to Standard Chartered Bank, along with StanChart's acquisition of the controlling stake in ANZ Funds Management Pty, has led to the fund house filing its papers with Sebi for approval of change in sponsor, to be followed by an open offer for all of its investor to exit at NAV. However, while the exit option clause is triggered off in the case of a takeover of the sponsor by another company, a takeover by the sponsor in India of an international AMC who may not have an operation in India, does not attract the Sebi provisions, according to MF compliance officers. The increased pace of international consolidation amongst global asset managers, driven by the dis-intermediating force of the internet and the need to have product and style capability of a wide breadth, has kicked off a wave of consolidation the global asset management fraternity. Fund houses are, therefore, questioning the need to give unit-holders an exit option in the case of a global takeover when there is no change in the management or investment style of the local MF. However, investors are far more seriously concerned over a serious flaw in the exit option offer. Investors in open-end funds benefit from the possibility of an exit at zero load during such an offer. However, investors who have invested their long-term money in the schemes floated by such a fund house are denied the opportunity to exit the scheme though they may be uncomfortable with the new sponsors. This is due to a lock-in period that they agreed to when subscribing to the units. Sebi officials claim helplessness in allowing investors of tax-advantaged schemes of such MFs - like an equity-linked savings on tax scheme or in the Sections 54 EA or EB option of an open-end fund or pension plan - the ability to redeem their unit-holdings in the scheme. "The provisions of the Income-Tax Act which specifically state that such tax-advantaged investments are locked in override our exit option provisions," said a senior Sebi official. This, feel MF industry veterans, defeats the very purpose of such an open offer. Investors in an open-end fund in any case have the ability to enter - and exit - a scheme on payment of a nominal sales charge, at all times. "It's those locked in for a long period and who've invested their money because of the faith in a certain sponsor who need this exit option the most," say MF CEOs. "Sebi needs to work out a system whereby the investor in such a tax-advantaged scheme can shift his investments to a similar plan offered by another fund house without losing the tax benefits and sans payment of any load," said investor rights activists

Draft report of the accounting standards Sub-Committee on dotcoms

RAPID technological advancements have led to the emergence of what is known as the ‘new economy’ where electronic media is increasingly used for communication and executing transactions. In this new economy, business takes place at the "speed of thought". The internet has become an integral part of this business process. Dotcom companies are different from the traditional 'brick and mortar' companies in many ways specifically in terms of their rapidly changing and unpredictable business models as well as the composition of their assets which are predominately intangible. The investors’ need for adequate and timely information is critical than ever before. Quality information is the lifeblood of strong, vibrant markets. Without it, investor confidence erodes. Liquidity dries up. Fair and efficient markets simply cease to exist. As the quantity of information increases exponentially through the Internet and other technologies, the quality of that information must be a signal priority. The International Organization of Securities Commission , the International Accounting Standards Committee and the Financial Accounting Standards Board of the United States as well as national regulators like the United States Securities and Exchange Commission have discussed the significant issues relating to accounting, financial reporting and disclosure by Dotcom companies for quite some time now. In the recently concluded International Organisation of Securities Commission. Technical Committee meeting, concerns were raised towards the need to identify market and investment risks unique to the emerging new economy and to disclose these risks to investors in a manner that they understand them. This concern for investor protection in the era of new economy was highlighted by the Securities and Exchange Board of India at the IOSCO’s annual conference. At that conference, it was expressed that in the absence of any standardised set of accounting recognition, measurement and disclosure norms for Dotcom companies, investors wishing to invest in these dotcomcompanies would not be able to assess the appropriateness and adequacy of accounting principles adopted by doted companies. Further, the lack of adequate guidance could lead to accounting arbitrage that renders effective inter-firm comparison difficult. The situation is also complicated because: There appears to be a diversity in practice; The situation is not adequately addressed in current accounting literature; and Developing practices may be inappropriate under vgenerally accepted accounting principles. The Accounting Standards Committee of SEBI (the "Committee") in its meetings held on July 6, 2000 and August 3, 2000 had discussed the significant accounting, financial reporting and disclosure issues pertaining to Dotcom companies. The Committee was of the view that regulators need not determine whether a unit of a company’s equity is correctly priced or not, this being a matter that should be left to the individual investor to assess whether the valuation was fair or not. However, the Committee was of the view that our regulators need to address the difficulties encountered by investors in making well-informed decisions regarding their investments in Dotcom companies. These problems mainly arise due to the lack of proper guidance relating to financial accounting and reporting by dotcom companies, unavailability of adequate benchmark information for comparison purposes and inadequate disclosures regarding the critical elements and peculiar nature of the business of Dotcom companies. The Committee concluded that dotcom companies are often valued, based on estimates of future revenues or cash flows that would be generated by deploying their assets. These assets are mainly intangible in nature and therefore investors would need certain additional information to enable them to make an informed judgement of the qualitative factors related to a dotcom company’s business model such as the unique business idea, technology, quality of promoters and key managerial personnel, prime-mover advantage, etc. The Committee also believes that although fundamental accounting principles remain the same and are applicable to all entities, including dotcom companies. There is however a need for formulating specific accounting guidance applicable to Dotcom companies to avoid any irrational application of fundamental accounting principles, to facilitate meaningful inter-firm comparison between different Dotcom companies, and to provide investors with robust and reliable financial information that could be applied to a variety of business valuation models such as price multiples of revenues or net income, discounted cash flows, etc. The Committee constituted a Sub-Committee on Dotcom Companies (the "Sub-Committee") to examine the need for additional disclosures in the offer documents, additional disclosures under continuous disclosure requirements and accounting standards for Dotcom companies. Terms of reference of the Sub-Committee The terms of reference of the Sub-Committee is set out below. To examine and recommend additional disclosure requirements to be made in offer documents of Dotcom companies with the objective of providing sufficient information, both financial and non-financial, to potential investors to enable them to understand the business model of the Dotcom company and determine its fair value. To examine and recommend initial and continuous disclosure requirements for Dotcom companies including disclosures in their financial statements. To prescribe accounting and financial reporting guidance to be adopted by Dotcom companies and to identify and define critical items emerging due to the unique nature of business of Dotcom companies (such as the definition of revenue, principles of revenue recognition, treatment of expenses as pre-paid or intangible assets as opposed to their recognition as period costs, etc). Members of the Sub-Committee The Sub-Committee consists of the following members: Shri Y H Malegam – Chairman of the Sub-Committee Managing Partner – S B Billimoria & Co, Chartered Accountants Prof J R Varma - Board Member, Sebi T V Mohandas Pai – Director (Finance and Administration) and Chief Financial Officer, Infosys Technologies Shri Ravi Narain - Managing Director, National Stock Exchange of India Bhavana Doshi – Chairperson, Research Committee of the Institute of Chartered Accountants of India Pratip Kar - Executive Director, Sebi (Member Secretary) Need for special provisions for dotcom companies The Sub-Committee appreciated the fact that though the valuation of all companies including internet/Dotcom companies is generally performed by investors on a comparable company basis, using a discounted cash flows model (ie calculating the present value of expected future cash flows), forecasting future cash flows of dotcom companies is sometimes difficult when compared to traditional "brick and mortar" companies due to the following reasons: The business models of dotcom companies are unpredictable and rapidly changing. Currently, the earnings of many dotcom companies are negative. Valuations of these companies are often based on the assumption that these Dotcom companies will generate sustainable positive earnings in future. Absence of historical data as most of the Dotcom companies in a very early stage of their life cycle. Absence of comparable companies - Even if the companies operate in the same type of business they may not be comparable because of differences in the products/services provided, stages in their life cycles, size and scale of operations, etc. The "going-concern" assumption may not be valid for Dotcom companies. The continued ability of Dotcom companies to survive often depends on their future fund raising capabilities, through the issue of either debt/equity to meet their future financing requirements. The ability of the Dotcom company to raise funds from the public or private equity/debt markets depends on various factors including the background of the promoters, quality of senior managerial/technical personnel, the market’s perception of the viability and soundness of the business model of the Dotcom company, etc. A substantial portion of the assets of Dotcom companies are of an intangible nature and consequently a high degree of uncertainty surrounds their identification of intangible assets and estimated future economic benefits that can be derived from their use. Difficulties in estimating future growth in revenues because of business uncertainties. Lack of availability of customer and usage statistics. Lack of comparable and reliable financial and non-financial data – a variety of new valuation models such as price multiples of revenues or net income, discounted cash flows, etc are in use. When such valuation models are prepared with inaccurate underlying accounting and financial information, it may lead to wide distortions. Practice varies amongst Dotcom companies with respect to the definition of revenue, principles of revenue recognition, treatment of expenses as pre-paid or intangible assets as opposed to their recognition as period costs, etc. In view of the above difficulties encountered by the investors while forecasting the future cash flow of Dotcom companies, the Sub-Committee felt that certain additional disclosure requirements may be mandated for the dotcom companies in the offer documents and financial statements and also necessary accounting standards applicable to the Dotcom companies may be formulated. The Sub-Committee discussed at length the issue of the extent to which it should go in laying down separate disclosure standards for Dotcom companies. While recognizing that its terms of reference limit it to Dotcom companies, the Sub-Committee believed that some of its recommendations could have wider applicability. Accordingly, the Sub-Committee has classified its recommendations into three categories: Those that apply exclusively to Dotcom companies. Those that the sub committee recommends that the main committee extend to other high technology industries like biotechnology that have an uncertain business model. Those that the sub committee recommends that the main committee extend to all industries. Prof Varma was of the view that the internet is a source of fundamental uncertainty for all companies – Dotcom or otherwise. An example like Encyclopaedia Britannica demonstrates that even a century old industry leader can be destroyed within a short period of time by internet enabled competitors. As such, Prof Varma believes that the Sub-Committee should recommend to the main committee that all companies should be required to disclose their state of internet preparedness and the potential risks to their business models from e-rivals. Recommended additional disclosure in the offer document: The Sub-Committee reviewed the existing disclosure requirements prescribed under the Disclosure and Investor Protection Guidelines issued by Sebi and is of the view that certain additional disclosure requirements may be presented under the following heads: Business model: At present, the information to be furnished by the companies pertaining to the nature of products, marketing and capacity utilisation in the offer document is specified by the Sebi (Disclosure and Investor Protection) Guidelines, 2000 (annexed). The Sub-Committee believes that in view of the rapidly changing and unpredictable business model of Dotcom companies, the following additional disclosures may be mandated to enable potential investors to understand the business model of the Dotcom company and determine the continued ability of Dotcom companies to survive and deploy their assets, which are mainly of an intangible nature, to generate future cash flows: A description of the nature of the company’s operations and its principal activities, stating the nature of product sold and/or services provided for each of the last three financial years. If the company has been in existence for less than three-years, this information may be provided for such shorter period. Information may be presented on the same basis as that used to determine the company’s business segments under the same body of accounting principles used in preparing the company’s financial statements. [Note: The nature of the company’s operations could include internet portals, internet infrastructure, internet B2B software, internet commerce, internet consulting and application services, internet financial services, internet vertical portals, multi sector internet companies, internet direct marketing and advertising services, B2B commerce, B2C commerce etc in which the company will operate. The company should also disclose the percentage of composition of company’s revenue and capital employed in each of the sectors.] A description of the principal markets in which the company competes including a breakdown of total revenues by category of activity and geographic market for each of the last three financial years. If the company has been in existence for less than three years, this information may be provided for such shorter period. A description of the seasonality, if any, of the company’s main business Industry size and structure for each of the business segments in which the company will be operating. Data on industry size and structure must be supported by corroborative sources. This recommendation could be extended to all companies that provide data on industry size and structure; Uniqueness of the idea- The proposed action plan (including the management systems and expertise proposed to be put in place) to fulfill the commitments made within the stipulated time, cost and qualitative targets; The management of the company shall identify and disclose all relevant qualitative and quantitative business information including the following for each of the last three financial years: Qualitative information: Market position, competition and management’s assessment of the company’s prime-mover advantage. The basis for any statements made by the company regarding its competitive position should also be clearly disclosed; Description of the underlying technological processes including summary information regarding the extent to which the company is dependent, if at all, on patents or licenses and/or industrial or commercial contracts or new technological processes, where such factors are material to the company’s business or profitability; Terms of contracts and arrangements with customers and how revenue is earned on products sold and/or services provided to customers; Alliance and Partnerships; A description of the marketing channels used by the company including an explanation of any special sales methods employed by the company; Description of terms of contracts (generic and specific) entered into with customers and suppliers; Possibility to exploit opportunities such as charging fees for other products featured on the site, cross promotions, etc; Description of intangible assets and how they will be used to generate future cash flows; Multiple elements arrangements (like upgrades, maintenance, services, etc); Quantitative information: (Company management should determine the parameters on which the quantitative information is to be provided. The list given here should be regarded as illustrative.) Sources of revenue by business segment sub categorized as appropriate into heads including advertising income, subscription income and transaction income; Amounts, if any, of barter transactions recorded as a component of gross revenues and cost of revenues/selling and marketing expenses if such amounts exceed 5 per cent of either of total revenues or cost of revenues or selling and marketing expenses. Operational statistics: Number of portals Average number of daily visitors to each portal. Number of pages viewed. Number of minutes spent to view the web page. Quarter–on-quarter growth in the average number of daily visitors and pages viewed. Average number of daily impressions that are delivered ie number of times banner ads appear and click-throughs; Percentage of page hits that have historically translated into revenues by quarter. * Duration of advertisements, minimum guaranteed impressions, etc. * Recurring and non recurring items of revenue. * Cost of acquiring a customer and revenue per customer. * Customer loyalty and customer churn rate (ie proportion of number of customers lost to the total number of customers during the past three years); *Any other information that the company believes will be useful to an investor in assessing the performance of the company Risk factors in the offer document: The Sub-Committee was of the view that risk factors pertaining to Dotcom companies generally may be classified into four broad categories including global risks, general economic and political risks, risks attached to the industry and risks attached specifically to the company. Companies should be encouraged to list the risk factors in the order of their priority to the company. These risk factors include such factors that will make the offering speculative or one of risk. The management of the Dotcom company and the Lead Merchant Bankers may be made responsible for identifying these risk factors. Risk factors that are required to be disclosed by Dotcom companies may include the following: Global risks: (illustrative) * Risks due to technological changes and obsolescence· Absence of cross border entry barriers * Currency fluctuation risk * Interest rate risk * Impact of any global financial crises on the domestic market * Risks related to Intellectual Property Rights transfers Competitive industry where innovation is immediately copied and there is entry barrier Liability to third parties and liability for unlawful/fraudulent activities by users under the laws of foreign countries. General economic and political risks: (illustrative) * Changes in economic and trade policies of the Government. * Political instability or change in the Government. * Regional conflicts with our political neighbors. * Changes in fiscal policies of the government.v * Capital market timing risk. Risks attached to the internet industry: * Changes in government regulation relating to internet service companies * Industry associated timing risk. * High bandwidth costs of accessing the internet in India and other technical obstacles. * Limited installed personal computer base in India. * Limited internet connections in India. * Uncertainty regarding the growth and acceptance of online advertising and e-commerce in India. * High percentage of failures is common in internet market. * No comparable companies in the same segment with reasonable operating history for the purpose of bench marking. * Liabilities, if any, to third parties for information retrieved from web sites. * Liabilities for unlawful/fraudulent activities by web site users. * Liability to third parties for the products sold through electronic means. Computer viruses. * Year 2000 remediation risks. * Online commerce security risks. * Lack of protection of the intellectual property rights due to inadequate legal provisions in the statutes. Risks attached to the company: Risks related to the financial condition and existing business model of the company. The future prospects of the company will depend on the following factors: * Awareness of the company’s unique selling proposition; * Pricing models of competitor companies; * Expansion of content and services on the portal; * Ability of the company to attract and retain customers; * Ability of the company to attract a larger number of advertisers from a variety of industries; * Ability of the company to attract, maintain and motivate qualified staff; * Ability of the company to maintain strategic; * Relationships with business partners; * Ability of the company to respond effectively to competitive pressures; * Ability of the company to continue to develop and upgrade the technology; * Ability of the company to promptly address the challenges faced by early stage and rapidly growing businesses, which do not have an experience or performance base to draw on. Risks related to competition; Risks related to unproven business models; Details of accumulated past losses and estimated future losses; Risks related to the following reasons: * Timing of the expansion plans of the company. * Changes in pricing policies or product and service offerings. * Increases in personnel, marketing and other operating expenses to support the anticipated growth. * Seasonality in revenues due to certain factors such as festivals, etc * Failure of marketing campaign to establish brand recognition and loyalty for the brand. * Failure to manage the growth effectively. * Failure to cope with the intense competition in the internet business. * Failure of telecommunication and computer systems. * Failure to retain the existing key personnel and hire additional skilled employees including risks related to competitive labor markets. * Risks related to (sunk) investments in network infrastructure. * Termination of agreements with third parties to provide products and services to the customers and termination of strategic alliances. * Strain on managerial, operational and financial resources due to future acquisitions, investments, strategic partnerships or other ventures. * Failure to meet merchandising, inventory management and order fulfillment obligations for e-commerce business could disrupt the operations The number of shares offered to public will represent only __ percentage of the company’s paid up equity capital and, therefore, the share price of the company will be volatile in view of the low floating stock. Risks associated with impairment of intangible assets. Risks in forecasting future cash flows due to: * Difficulty in forecasting sales. * Difficulty in forecasting size of the market. * Difficulty in forecasting share of the market size. * Difficulty in forecasting costs. * Difficulty in forecasting re-investment needs. The company may not be able to pay dividend in the immediate future. The company may have to issue shares under Employees’ Stock Option Scheme in order to retain the skilled personnel which will dilute the holdings of the shareholders and limit returns. (The Sub Committee has requested T V Mohandas Pai, to draft the proposed additional disclosure requirements regarding the risk factors). Project cost, means of financing and deployment of funds in the project: At present, all the companies are required to furnish information regarding project cost, means of financing and deployment of funds in the project in the offer document as specified by SEBI (Disclosure and Investor Protection) Guidelines, 2000 (annexed). The Sub-Committee recommends that the following additional disclosure requirements may be prescribed for the Dotcom companies with regard to the estimated project cost and use of proceeds: The Company shall disclose the annual break up of expenditure to be incurred under the following heads, for the next three financial years: * Technological infrastructure. * Expenditure on hardware * Expenditure on software Other tangible assets. Brand building and marketing Financing present and future losses (The amount provided under this head must be adequate to ensure that the company has adequate funds for the purpose and in any case for a period of not less than 24 months. If the company proposes to finance this expenditure out of any further issues of capital the amount and the expected date of such issue shall be indicated). Working capital Any other item which is greater than the 5 per cent of the total cost of the project. Prof J R Varma, is of the opinion that if Dotcom companies are required to disclose the future losses for the next 24 months, the companies can use it as a tool to give projections regarding the future financial performance of the companies indirectly which is otherwise not permissible under the present guidelines. However, the other members of the Sub-Committee are of the view that it will amount to giving projections regarding future financial performance of the company only when companies are permitted to provide complete set of figures such as revenue, profit etc. Prof Varma was also of the view that it may actually be in the interest of investors that a company raise only a small amount of money initially and, thereby, subject itself to the ongoing discipline of the capital markets. The company would have to demonstrate continued performance to receive additional rounds of financing. Prof Varma believes that this would ensure that if the business model turned out to be un viable, only a smaller amount of investor money is lost. Key Managerial and Technical Personnel: At present, all the companies are required to furnish the information in the offer documents regarding the promoters and their background and key managerial personnel as specified by Sebi (Disclosures and Investor Protection) Guidelines, 2000 (annexed). The Sub-Committee felt that the ability of Dotcom companies to survive and raise capital depends not only on the background of the promoter and key managerial personnel but also on the quality of its key technical personnel and, therefore, Dotcom companies may be required to identify all key personnel (both managerial and technical) whose continuance may be vital for the existence and growth of the company. The Sub-Committee recommends that Dotcom companies may be required to comment on its key managerial and technical manpower, their equity holding in the company, the measures taken by the company to ensure their retention, the risks associated with their parting of the company and how it propose to address these risks. (The Sub Committee has requested Shri T V Mohandas Pai, to draft the proposed additional disclosure requirements in this regard). The purpose of this section is to provide information concerning the company's directors and managers as well as key technical personnel that will allow investors to assess such individuals experience, qualifications and levels of compensation, as well as their relationship with and dependency by the company. Directors and senior management. The following information shall be disclosed with respect to the company's directors and senior management, and any employees such as engineers, scientists or designers (i.e. key technical personnel) upon whose work the company is critically dependent: Name, business experience, functions and areas of experience in the company. In the case of key technical personnel, a clear description of their functional responsibilities and why they are considered critical to the company’s functioning, on an individual basis. Principal business activities performed outside the issuing company (including, in the case of directors, other principal directorships). Date of birth and age The nature of any family relationship between any of the persons named above. Any arrangement or understanding with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management. Plans formulated by the company to retain key technical personnel and description of contingency measures that will be adopted by the company should such personnel leave the employment of the company or their employment is terminated. Compensation. Provide the following information for the last full financial year for the company's directors and members of its administrative, supervisory or management bodies: The amount of compensation paid, and benefits in kind granted, to such persons by the company for services in all capacities to the company by any person. Disclosure of compensation is required on an individual basis. This also includes contingent or deferred compensation accrued for the year, even if the compensation is payable at a later date. If any portion of the compensation was paid (a) pursuant to a bonus or profit-sharing plan, provide a brief description of the plan and the basis upon which such persons participate in the plan; or (b) in the form of stock options, provide the title and amount of securities covered by the options, the exercise price, the purchase price (if any), the expiration date of the options, and the number of options that have vested and were exercised, vested and unexercised options and un vested options as of the most recent practicable date. The total amounts set aside or accrued by the company to provide pension, retirement or similar benefits to these personnel. Board practices. The following information for the company's last completed financial year shall be given with respect to the company's directors, and members of its administrative, supervisory or management bodies. Date of expiration of the current term of office, if applicable, and the period during which the person has served in that office. Details of directors' service contracts with the company providing for benefits upon termination of employment, or an appropriate negative statement. Details relating to the company's audit committee and remuneration committee, including the names of committee members and a summary of the terms of reference under which the committee operates. Employees. Provide either the number of employees at the end of the period or the average for the period for each of the past three financial years (and changes in such numbers, if material) and, if possible, a breakdown of persons employed by main category of activity and geographic location. Also disclose any significant change in the number of employees, and information regarding the relationship between management and labor unions. If the company employs a significant number of temporary employees, include disclosure of the number of temporary employees on an average during the three most recent financial years. Share ownership With respect to the persons listed in subsection B, above, provide information as to their share ownership in the company as of the most recent practicable date (including disclosure on an individual basis of the number of shares and percent of shares outstanding of that class, and whether they have different voting rights) held by the persons listed and options granted to them on the company's shares. Information regarding options shall include: the title and amount of securities called for by the options; the exercise price; the purchase price, if any; and the expiration date of the options. Describe any arrangements for involving the employees in the capital of the company, including any arrangement that involves the issue or grant of options or shares or securities of the company. Note to Item C: The term "plan" is used very broadly and includes any type of arrangement for compensation, even if the terms of the plan are not contained in a formal document. Note to Item.E: If (a) any of the persons listed in subsection 6.B beneficially owns less than one percent of the class of shares and (b) that person's individual share ownership previously has not been disclosed to shareholders or otherwise made public, indicate, by an asterisk and explanatory footnote or similar means, that the person beneficially owns less than one percent of the class, instead of providing that person's individual share ownership. Major shareholders and related party transactions The purpose of this section is to provide information regarding the major shareholders and others that control or may control the company. The section also provides information regarding transactions the company has entered into with persons affiliated with the company and whether the terms of such transactions are fair to the company. This section may require disclosure of related party transactions not required to be disclosed under the body of accounting principles used in preparing the financial statements. This section is not intended to address the thresholds at which shareholders are required, on a continuing basis, to disclose their beneficial ownership of securities. Major shareholders. The following information should be provided as of the most recent practicable date, with references to the number of shares held in the company including shares beneficially owned. The following information shall be provided regarding the company's major shareholders, which means shareholders that are the beneficial owners of 5% or more of each class of the company's voting securities: Provide the names of the major shareholders, and the number of shares and the percentage of outstanding shares of each class owned by each of them as of the most recent practicable date, or an appropriate negative statement if there are no major shareholders. Disclose any significant change in the percentage ownership held by any major shareholders during the past three financial years. Indicate whether the company's major shareholders have different voting rights, or an appropriate negative statement. To the extent known to the company, state whether the company is directly or indirectly owned or controlled by another corporation(s), by any foreign government or by any other natural or legal person(s) severally or jointly, and, if so, give the name(s) of such controlling corporation(s), government or other person(s), and briefly describe the nature of such control, including the amount and proportion of capital held giving a right to vote. Describe any arrangements, known to the company, the operation of which may at a subsequent date result in a change in control of the company. Related party transactions. Provide the information required below for the period since the beginning of the company's preceding three financial years up to the date of the document, with respect to transactions or loans between the company and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the company that gives them significant influence over the company, and close members of any such individual's family; (d) key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the company, including directors and senior management of companies and close members of such individuals' families; and (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. This includes enterprises owned by directors or major shareholders of the company and enterprises that have a member of key management in common with the company. Close members of an individual's family are those that may be expected to influence, or be influenced by, that person in their dealings with the company. An associate is an unconsolidated enterprise in which the company has a significant influence or which has significant influence over the company. Significant influence over an enterprise is the power to participate in the financial and operating policy decisions of the enterprise but is less than control over those policies. Shareholders beneficially owning a 10% interest in the voting power of the company are presumed to have a significant influence on the company. The nature and extent of any transactions or presently proposed transactions which are material to the company or the related party, or any transactions that are unusual in their nature or conditions, involving goods, services, or tangible or intangible assets, to which the company or any of its parent or subsidiaries was a party. The amount of outstanding loans (including guarantees of any kind) made by the company or any of its parent or subsidiaries to or for the benefit of any of the persons listed above. The information given should include the largest amount outstanding during the period covered, the amount outstanding as of the latest practicable date, the nature of the loan and the transaction in which it was incurred, and the interest rate on the loan. Interests of experts and counsel. If any of the named experts or counselors was employed on a contingent basis, owns an amount of shares in the company or its subsidiaries which is material to that person, or has a material, direct or indirect economic interest in the company or that depends on the success of the offering, provide a brief description of the nature and terms of such contingency or interest. Plant and Machinery At present, all the companies are required to furnish the information in the offer documents regarding plant and machinery, technology, process etc as specified by the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (annexed) The Sub-Committee is of the view that Dotcom companies may be required to mention the details regarding technology, software etc and the restrictions on the company to use or sell such intangible assets under the head Plant and Machinery. The Sub-Committee recommends that dotcom companies may be required to provide additional information in respect of technology, processes, patents, software & other intangible assets and a brief description of any restrictions on the use or marketability of such assets. Basis for issue price: At present, all the companies are required to furnish the information in the offer documents regarding basis for issue price as specified by the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (annexed) The Sub-Committee felt that because of peculiar nature of the revenue and income models of dotcom companies and their present negative earnings, the traditional valuation models such as price-earnings ratio are found to be inadequate for valuing dotcom companies and a variety of new surrogate valuation models such as price multiples of revenues or net income are being increasing used by investors. The Sub-Committee recommends that dotcom companies may be required to disclose additional information to enable the investors to use the following valuation models and ratios together with comparative data of comparable firms in India and abroad for last three years: * Market capitalization as a multiple of revenues. * Market capitalization as a multiple of net income. * Market capitalization/number of users or page views for ad views revenue per customer/user/subscriber. * Hit ratios/click through ratios. * Any other industry pricing models that are commonly used. * Market capitalization is the issue price multiplied by the number of shares at the relevant point of time. Analyst reports and information given to Qualified Institutional Buyers (“QIB”): The Sub-Committee is of the view that analyst reports would be of a great help in valuing dotcom companies. The Sub-Committee noted that in the United States of America, the valuation model prepared by the lead managers is made public after the issue. This valuation model normally contains information such as comparative company analysis ie comparison with the companies in the same space with similar business models, operating both in the domestic and international markets, multiplies of revenues, number of advertisers, number of page views & click throughs etc. The Sub-Committee felt that if analyst reports are made public prior to the issue it will be of great help to potential investors while making their investment decisions regarding Dotcom companies. The Sub-Committee recommends that in the Indian context, the analyst report prepared by the lead analyst of the lead merchant bankers may be disclosed to potential investors, as an annexure to the offer document, prior to the public offering. This recommendation is to be viewed as an interim measure till the market matures. The Sub-Committee also recommends that Dotcom companies may be required to disclose all the information given to QIBs at any point in time prior to the public offering as an annexure to the offer document. It must be clearly stated that in the offer document that the analyst report is not a part thereof and that it is not vetted by SEBI. Note: We discussed this issue with certain members of the investment banking community. They gave us the following information with respect to an ADR offering: The valuation basis is mentioned in the analyst research report at the beginning. The report sets out the investment argument/thesis – why to buy/invest in/hold/sell a particular company’s stock, etc. The investment thesis is prepared after the analyst “freezes” the earning model – considering the business outlook, business potential, positioning vis-ŕ-vis competition, sustainability and valuation models – comparable company analysis, discounted cash flows, fundamentals analysis, dividend discount model, etc. Pricing of an issue is at the discretion of the lead manager and the company. The prospectus is the responsibility of the company’s management. The company management drafts the prospectus with the help of the investment banker and legal counsel (the company is their client). On the other hand, the research report is prepared by analysts with inputs from the company management. Their clients are the investors. Some of these reports may be priced also, in which case they are not all publicly available. In an IPO situation, theoretical Chinese walls exist between the Investment Banker (“IB”) and the Investment Analyst (“IA”)– because of certain non-public information that only the IB has and not the IA. As a result of this, the IA is theoretically brought “over” this Chinese wall. Once the IA is over the Chinese wall, he/she cannot talk to fund managers or write about that company till the IPO is complete (effective date of filing). In the US, Canada and Japan the lead analyst’s pre-IPO research report is not distributed. It may be distributed elsewhere across the globe. During roadshows and presentations to investors, the valuation model (containing forecasts) prepared by the lead analyst is talked about to investors Copies are not circulated. In the US, there is a 21-30 day cooling period, during which there is a research blackout and no reports are published. Post the cooling period, the analyst initiates coverage on the company, at which time his valuation model is made public. We believe that there is a possibility that the analyst may be sued if any investor feels that information contained in the prospectus is misleading. They may therefore oppose any rule that would make their report public in the pre-IPO stage. Also, an institutional investor would not rely too much on a report prepared by the lead analyst of the lead manager as this report may be biased. They would look at other research reports on the company or conduct their own diligence prior to the investment. We recommend that the investment thesis may be attached as a part of the offer document with appropriate disclaimers stating that the investor should not base his investment decision purely on the analyst’s report. After the cooling period, the report prepared by the lead analyst may be made public by the company through means of a hyper-text link. The company can disclaim responsibility for this report through means of an appropriate statement. Issues relating to privity of contract between the analyst and the company would also need to be simultaneously addressed. This is for the consideration of the Sub-Committee. Accounting policies The Sub-Committee recommends that Dotcom companies shall disclose their significant accounting policies including the following, as applicable: Revenue recognition * Membership and subscription * Merchandising activities * Advertising services Other services like web hosting, content selling etc. Recognition and measurement of associated costs * Accounting for web site development costs. * Rebate, discounts and other sales incentives. * Point and loyalty programs. Assets acquired or services received against equity based consideration. The Sub-Committee has considered the Draft Monograph on Accounting by Dot-com Companies prepared by Institute of Chartered Accountants of India (“ICAI”) and has given its suggestions to the ICAI as detailed in paragraph no. 8 of this document. The Sub-Committee has also requested the ICAI to issue this monograph expeditiously. The Sub-Committee recommends that dotcom companies may be required to give a declaration in the offer document confirming their complete compliance with the recommendations contained in the Monograph on Accounting by Dot-com Companies issued by the ICAI. Recommended additional disclosures under the continuous disclosure requirements The Sub-Committee recommends the following additional disclosure requirements may be prescribed for Dotcom companies: * Annual Report (To be finalized by the Sub-Committee). * Quarterly Un-audited results Under Clause 41 of Listing Agreement (To be finalized by the Sub-Committee). Prof Varma was of the view that a company which does business at the speed of thought must not shy away from disclosure at the same speed. Prof Varma strongly believes that key quantitative particulars relating to customer and usage data as well as sales and billings must be disclosed on a daily basis for dotcom companies. In addition, Prof. Varma was of the view that revenue and gross profit data must be disclosed on a monthly basis. It would be sufficient to provide this daily and monthly disclosure on the company’s web site. Prof Varma was further of the view that given the preponderance of intangible assets in Dotcom companies, the “going concern” assumption on which accounting statements are conventionally prepared is inappropriate and fails to reveal the true and fair view of the state of the company. Prof Varma was, therefore, of the view that it should be made mandatory for dotcom companies to provide supplemental financial statements prepared on a failing concern basis disclosing clearly the estimated realizable value of the intangible assets. Classification of companies as Dotcom companies The Sub-Committee also discussed the issue of definition of dotcom company that may be required to make additional disclosures in the offer documents and under the continuous disclosure requirements. The Sub-Committee was of the view that manufacturing companies which sell their products through internet may not be classified as dotcom company. The Sub-Committee recommends that the disclosure requirements applicable to dotcom companies will also be applicable to the companies having a business segment in which internet is the principle distribution channel for delivery of products/services and the concept of materiality shall be applied to classify a company or a business segment as dotcom or not. Prof Varma was of the view that in many cases, a company may choose not to conform to disclosures prescribed for dotcom businesses on the grounds that its Dotcom business segment is not a material part of its business using the traditional yardstick of 10% of revenues, profits or assets. However, examples like Pirelli, etc demonstrate that a business segment which accounts for less than 1% of revenues, assets and profits could account for more than one half of the market capitalization of a company in an arms length transaction. Therefore, in cases where management does not conform to the disclosure norms for Dotcom businesses on the ground of immateriality, it should certify that in its opinion, the Dotcom business segments do not account for more than 10% of the company’s market capitalization. The Sub-Committee reiterated that though the fundamental accounting principles remain the same and are applicable to all entities including Dotcom companies, there is a need to formulate accounting standards applicable to dotcom companies in order to avoid irrational application of fundamental accounting principles and to ensure uniformity in accounting by all Dotcom companies for facilitating comparison between them. The Sub-Committee also noted that a study group constituted by the ICAI is examining the issues related to the identification, definition and accounting treatment of critical items emerging due to unique nature of business of dotcom companies. The Sub-Committee considered the Draft Monograph on Accounting by Dot-com Companies prepared by the Research Committee of the ICAI and made the following suggestions to the ICAI: Membership fees The Sub-Committee is of the view that if a dotcom company has to incur certain costs to provide services to its member-customers beyond a period of five years, it is not appropriate for the company to recognize non-refundable fees as revenues within an initial period of five years only, in order to ensure that the matching concept is followed. The Sub Committee suggested that any amounts recognized as revenues in any year out of the non-refundable fees received from member-customers for providing services for a period exceeding five years should not exceed any annual fees charged. Shipping and handling charges The Sub-Committee believes that the accounting treatment for shipping and handling charges shall be specified for dotcom companies in view of the fact that the valuation of dotcom companies is often based on their reported gross revenues. The Sub-Committee suggested that the same basic accounting principles, which are applicable to all enterprises, should be applied and when the shipping and handling charges are not separately identifiable it is appropriate to include them in gross revenues, as there is no other alternative. The Sub-Committee suggested that when the expenses are separately identifiable – If it is in the nature of reimbursement of actually incurred expenses, it shall be netted off against the related expenses. If it is not in the nature of reimbursement, it shall be shown as a component of revenue under the head "Other income". The Sub-Committe also suggested that the ICAI ensure that the accounting treatment proposed to be prescribed is not in conflict with any of the existing accounting standards and/or guidance notes already issued by the ICAI. Accounting for web site development costs The Sub-Committee believes that all web site development costs and pre-operative expenses incurred upto the opening of the first web site may be amortized over a period of two years as deferred revenue expenditure. The Sub-Committee also believes that after establishing commercial feasibility, dotcom companies may be permitted to treat web site development costs as deferred revenue expenditure and the concept of deferred revenue expenditure should not be applied to dotcom companies in view of the uncertainty of future benefits. The Sub-Committee is of the view that the opening of the first web site for the users may be considered as similar to the commencement of commercial operations. The costs incurred during the later stages of development can be treated as deferred revenue expenditure only when the future benefits are certain. The Sub-Committee is also of the view that the costs incurred towards web site development subsequent to making the web site public should be expensed as incurred. The Sub-Committee therefore recommended that web site development costs and other pre-operative expenses incurred by dotcom companies prior to the opening of the first web site for member-users be treated as pre-operative expenditure and amortized over a period of two years. Web site development and other costs incurred after the opening of the first web site shall be expensed as incurred. Accounting for rebates, discounts and other sales incentives. The Sub-Committee examined whether rebates, discounts, sales incentives and introductory offers at heavily discounted prices can be treated like deferred revenue expenditure as advertising expenditure incurred on launch of products is generally treated as deferred revenue expenditure and whether there is any justification to treat rebates or introductory offers given by dotcom companies differently. The Sub-Committee is of the view that in view of the uncertainty of future benefits, the concept of deferred revenue should be given up and as customer loyalty is not certain in case of dotcom companies, such expenditure should be expensed as incurred. The Sub-Committee also recommended that when a benefit in cash or in kind is given to a specific customer or sale, it shall be treated as a rebate that should be reduced from gross revenues. When such benefits are generally extended to all customers, it shall be treated as a selling expense. Point and loyalty programs The Sub-Committee is of the view that all costs incurred to earn the revenue should be recognized and recommended that At the time of effecting sale, a liability shall be created towards the cost of the point and loyalty programs; At the end of each accounting period, an actuarial valuation of the liability shall be performed to provide for the anticipated costs to be incurred towards the outstanding liability on point and loyalty programs; and If the company cannot estimate the cost of point and loyalty programs, the entire value (selling price) shall be provided for meeting the liability on account of point and loyalty programs. Equity based consideration The Sub-Committee examined the issue of equity based consideration used to fund expenditure by Dotcom companies and felt that in the case of related party transactions, the contracted value mentioned in the transaction may not be the transactional fair value. The Sub-Committee also noted that under Accounting Standard 10, Accounting for Fixed Assets, issued by the ICAI, fixed assets acquired in exchange for shares should be recorded at their fair value or the fair value of the shares issued whichever is more clearly evident. The Sub-Committee is, therefore, of the opinion that the transaction should be recorded at the fair value of the assets/services acquired in exchange for shares. The assets acquired should be tested for impairment in subsequent years. The Sub-Committee believes that two dotcom companies can boost their revenues and equity by exchanging shares for assets/services. The Sub Committee recommended that when Dotcom companies use equity based consideration to fund expenditure or acquisition of assets the following principles shall be adopted: In case of an arm’s length transaction, the consideration mentioned in the contract shall be taken as fair value. In case of transactions where the consideration is not stated in the contract then· If the fair value of the assets/services is determinable then the transaction shall be recorded at the same. If the fair value of assets/services is not determinable, then on the transaction should be recorded at the fair value of the shares issued; and If both the value of shares and assets/services are not determinable then the transaction should be recorded at nominal value. In the case of related party transactions, even if the consideration is stated in the contract it shall be ignored and criteria specified at (b) above shall be applied for determining the fair value. In case of a transaction involving equity based consideration, even if similar amounts of cash are exchanged through means of circular transactions, the transaction shall be recorded at the value determined in accordance with the principles stated above.

COME MARCH, INFOSYS WILL UNLOCK 105 CROREPATIS

The biggest vesting so far of a stock options scheme floated by an Indian software Company will take place in March, when 105 employees of Infosys Technologies will get the option to convert their notional wealth to hard currency. “It is the biggest vesting to take place since Infosys floated Esops for its employees,” a company spokesperson told Business Standard. These Esops, granted in 1996 to105 employees mature after a five-year lock-in period in March 2001. The shares issued to the 105 employees are worth rs.161.45 crore as per last week’s closing price on the Bombay Stock Exchange. According to Company sources, some of these 105 employees have been waiting for perhaps their biggest ever pay cheque and expect to use their new found wealth to spin off software ventures. “There could be few more Narayanmurthys in the offing,” they said. Unlike other schemes where employees can convert some of their grants into hard currency, Infosys employees under the 1996 Esop can convert their grants only in 2001. “All these shares would vest only during the financial year ending March 2001. These shares have not vested in the past 5 years,” the spokesperson said. In 1996, 2,57,200 warrants were transferred to 105 employees at a face value of Re.1 . Each warrant entitled the warrant holder a share of par value of Rs.10 at an exercise price of Rs.99. The stipulated lock-in period was 5 years. The warrants could be converted into shares by paying the exercise consideration anytime during the five years after the issue of warrants. The shares purchased by the warrant holders through the exercise of warrants had a lock-in period of five years from the date of issue of warrants and excluded the total number of bonus shares issued. As of June 30,2000, Infosys had 6,445 employees, 5,594of them software professionals. So far, 1922 employees have been offered stock options under the 1994, 1998 and 1999 plans. According to analysts, Infosys employees’ productivity is atleast 160 percent higher than the industry average, with the productivity per employee for the first quarter of 2000-01 touching Rs.24 lakh on an annualised basis. According to analysts, the productivity per Infosys employee was around Rs.16 Lakh for 1999-2000 compared to the industry average of around Rs.6 lakh per employee. Even the billing rate of Infosys employees has gone up. While the offshore billing per employee is around $60,900, for onsite, it has gone up to $115,000 per employee, which is around 11 percent higher than the previous quarter.

Small is not truly profitable: SEBI

There is a new problem that the securities regulator has to grapple with. It has come to light that a few companies with profits as low as Rs 10,000- Rs 15000 have staked a claim for a listing. The companies say they meet the three-year profit track record laid down by SEBI for listing but the regulator is clearly worried over the rather disturbing trend. What’s worse, some of these companies are meeting the minimum paid-up capital requirement by showing assets as equity while the actual cash component is abysmal. In fact, so worried is SEBI that it has decided to urgently call a meeting of the primary market advisory committee which had met recently and taken some key decisions on norms for primary issues. The regulator has also decided to call a meeting of its board shortly (which otherwise meets once in three months) after the meeting of primary market advisory committee, to bring changes in the law to plug what seems to be a loophole. SEBI chief DR Mehta admitted that he was concerned over the trend that had been brought to his notice over the past few days. Source: The Economic Times Dated: 26th December, 2000

SEBI RELAXES IPO NORMS, MUTUAL FUND REGULATIONS

The board of Securities and Exchange Board of India today took a slew of decisions including relaxation of IPO norms, continuous listing requirements for companies, amendments to mutual funds regulations and venture capital norms. The Sebi board at its meeting in New Delhi slashed the minimum stake a company must offload in an initial public share offering (IPO) and tightened rules for calculating mutual funds’ net asset values. The changes will take effect early in the New Year. In a move to create a level playing field, Sebi extended to all companies the right to offload just 10 per cent of their post-issue capital instead of the current minimum of 25 per cent. Earlier, only firms in the information, communication and entertainment sectors were allowed to offer 10 per cent. Sebi chairman DR Mehta said the rules were relaxed to avoid discrimination against firms. He warned against misuse of the new rules through price manipulation as a consequence of the reduced liquidity. The Sebi Primary Markets Advisory Committee had recommended a minimum offering size of Rs. 250 crore. The board, however, felt that such a high issue size will make very few companies in India eligible to avail this facility. The board, therefore, decided to reduce the limit to Rs 100 crore and retain the existing limit of minimum public offer of 20 lakh securities ( excluding reservations, firm allotment and promoters’ contribution). The board also decided that the issue should be made only through Book Building method with allocation of 60 per cent to Qualified Institutional Buyers (QIBs). These new guidelines would be applicable to all sectors and would replace the existing guidelines in this regard. The Board also removed the restriction of minimum public issue size of 25 crore in the case of an IPO through Book Building and allowed all companies to make issue through Book Building. However, if the track record criterion is satisfied, allocation to QIBs can be less than 60 per cent. Sebi has decided that there will be a requirement for all listed companies to maintain a minimum level of non-promoter holding on a continuous basis as a condition for listing. All new companies should be required to maintain on a continuous basis the non-promoter holding at the same level as applicable at the point of entry (i.e. 10 per cent of 25 per cent) For existing listed companies, where the non promoter holding is less than the applicable limit at the point of entry, the companies will be given time up to one year to raise the level of non-promoter holding to at least 10 per cent. In case they fail to do so, they will be required to buy out the public shareholding in a manner similar to that provided in the SEBI ( Substantial Acquisitions and Takeovers) regulations. No preferential allotment/ buy back of listed companies would be permitted if as its result the non promoter holding falls below the ceilings permitted under the SEBI (DIP) Guidelines applicable at the point of entry. These conditions will not be apply to BIFR companies. The stock exchanges will monitor the level of non- promoter holding on a half yearly basis from the returns to be submitted by companies in specified formats. The non-promoter holding will also be disclosed half yearly as part of half-yearly disclosures by the companies. Source: Business Standard Dated: 24th December, 2000

FIIs OFFLOAD SHARES WORTH Rs 498 CR.

The foreign institutional investors (FIIs) were net sellers in equities at Rs. 498.5 crore ($ 106.6 m) for the trading week ended December 22. According to the data available with the Securities and Exchange Board of India (Sebi), FIIs were net sellers also in debt to the tune of Rs.6.2 crore ($1.4m) for the week. FIIs were net buyers in equities at Rs.232.1 crore ($49.6m) and net sellers in debt at Rs.81.9 crore ($17.5m) in the previous week. On the equity front, the foreign funds were net buyers only on December18, the first trading day of the week, at Rs.27.7 crore ($5.9m) while they remained net sellers on all other days. The BSE sensitive index moved downwards to end the week at 3905.9 as against last weekend close of 4137.2, netting a huge fall of 231.3 points. The benchmark index saw a rise only on December 18 of 32.2 points. Source: The Economic Times Dated: 25th December, 2000

Non-promoters to hold 10-25% post-listing

The Securities & Exchange Board of India (Sebi) today carried out wide-ranging reforms, including prescribing a minimum floating stock after listing, easting of norms on minimum offer size in public issues, tightening the norms for determining NPAs in mutual funds and allowing for co-sponsors in depositories. In a board meeting held here today, sebi decided that all listed companies will be required to maintain a minimum level of non-promoter holding on a continuous basis as a condition for listing Sebi chairman, DR Mehta said that all new companies will be required to maintain on a continuous basis the non-promoter holding at the same level as applicable at the time of entry—10 per cent or 25 per cent, depending on the public issue route it chooses. Currently, firms are not required to maintain a minimum floating stock after listing. This matter was discussed by the Secondary Market Advisory Committee and it was approved as it would ensure availability of floating stock. For existing companies, where non-promoter holdings are less than the applicable limit at the point of entry, companies will be given up to one year to raise the level to at least 10 per cent. Source : The Economic Times Dated: 23 December, 2000

MERCHANT BANKS WANT TO KEEP IT PRIVATE

Look to circumvent amendments to debt issue rules, seek clarifications The amendment to Section 67 of the Companies Act, which has made public issue of debt mandatory if the issuer has invited 50 or more investors to subscribe, has led merchant bankers to look for ways to circumvent the norms. The purpose behind this is to allow the issuance to remain within the ambit of a private placement. Merchant Bankers are seeking clarification from the Securities & Exchange Board of India (Sebi), whether issuance of bonds could be made in separate tranches, so as to avoid the prospect of inviting 50 or more investors to the issue and thereby remain within the purview of private placement. Section 67 of the Companies Act was amended this month. The new legislation stipulates that if the debt issuer invites 50 or more investors to subscribe to a debt issue, it would no longer be a private placement, but become a public issue. In this situation, the issuer will be subject to Sebi’s norms. In the absence of clear guidelines on the matter in the past, issuers have preferred the private placement route, which is a contract between the issuer and the investors, without the regulatory formalities attached to a public issue. According to merchant bankers, though the investors will benefit through higher disclosures and regulation, issuers may have to bear higher costs for selling an issue. They feel that as a result of the legislation, the average intermediation cost for the issuer will rise from 20-25 basis points (bps) at present to 300-400 bps. Sebi had been demanding the amendment to Section 67 for the past few years. Sebi had recommended this to the Department of Company Affairs (DCA) that issuers falling under this category should file prospectus with it. In a private placement of bonds, the merchant banker to the issue invites bids from subscribers through an information of memorandum sent to them. The memorandum is marked “Strictly private and confidential—not for publication”, implying that it’s a pure bi-partite agreement between the bond issuer and investor. The legislation is expected to make issuers to observe higher standards on issues such as rating, disclosure of information, regulatory compliance and accountability. Due to the unregulated nature of the present private placement market, many bond issues specially from PSUs and state government undertakings are unrated. This does not give the investor a clear idea of the credit worthiness of the borrower. Source: The Economic Times Dated: 25th December, 2000

INDIAN dotcoms - even brick-and-mortar companies where a material part of the business is Net-driven - can get ready for a fresh dose of disclosures, both at the time of going public and then on a continuing basis.

The amendments to the Companies Act, 1956, cleared by both houses parliament during the last week of November, have been notified. The amendments will become effective with the exception of clauses 7 and 75 of the bill. The President gave his assent to the amendments on December 14. The two clauses _ 7 and 75 _ pertaining to the registration of firms with the Registrar of Companies (ROC), will be notified subsequently, Department of Company Affairs (DCA) sources said.Souces added that these clauses are not being notified just yet as the RoC offices have to be upgraded and Computerised to be able to meet to requirements of the Companies Act. The governments expects to complete the upgradation of all RoC offices by April 1,’01. Clauses 7 of the bill requires RoC to take on record request for changes in address of registered office within a month of an application being made to it. This deadline can be meet only if all offices of RoC are computerized. The Companies (Second Amendment ) Bill, 2000, seeks to bring in greater transparency in corporate governance and provide protection to small investors. The bill allows for a 10-fold increase in penalties for non compliance with the provisions of theAct. It will make offense relating to acceptance of deposits cognizable under Code for Criminal Procedure. This amendments bill was table in the Lok Sabha last December and was subsequently referred to the standing committee on home affairs for comments. Other provisions of the bill include appointment of small investors’ nominee to the board of the company, issue of non-voting shares, execution of a debenture trust deed by companies proposing to raise funds in form of debts, and introduction of postal and electronic voting on resolutions. The second amendments bill classifies all companies as private or public. The provision for deemed public company has been done away with. It further stipulates that all private companies shall have paid-up equity base of Rs. 1 lakh and every public company of Rs. 5 lakh. Companies with equity base falling short of the new stipulation are required to enhance the paid-up capital to meet the new requirement within a period of two years, from the date of notification of the amendment. To make companies more accountable and to secure small investors’ interests, the bill requires companies defaulting in making repayment of depositor money to intimate the Company Law Board (CLB) within 60 days of such default. Source: The Economic Times. Dated: 22 December 2000.

Dotcoms have to reveal much more in IPO offer documents

INDIAN dotcoms - even brick-and-mortar companies where a material part of the business is Net-driven - can get ready for a fresh dose of disclosures, both at the time of going public and then on a continuing basis. The sub-committee of the Malegam Committee on dotcom disclosures and valuations — set up to sew together a full report — is ready with its draft report. The draft report will be made public and placed before the entire Committee for finalisation. The final draft, with feedback from the public, will then be taken up for finalisation by the Committee. The sub-committee was headed by noted chartered accountant Y H Malegam himself and included Sebi board member J R Varma, Infosys Technologies chief financial officer T V Mohandas Pai, National Stock Exchange managing director Ravi Narain, chairperson of the Institute of Chartered Accountants of India Bhavana Doshi and Sebi executive director Pratip Kar, who is the member-secretary. The sub-committee has said dotcom companies are different from brick-and-mortar companies in many ways, specifically in terms of their rapidly-changing and unpredictable business models and as well as the composition of their assets which are predominately intangible. The investors’ need for adequate and timely information is, therefore, critical than ever before. It was felt that in the absence of any standardised set of accounting recognition, measurement and disclosure requirements for dotcoms, investors wanting to invest in these companies would have no benchmark to go by and would not be able to assess the appropriateness and adequacy of accounting principles adopted by these companies. The sub-committee has recommended additional disclosures in offer documents. On disclosure of business model, the sub-committee has said that a description of the nature of the company’s operations and its principal activities, stating the nature of product sold or services provided for each of the last three financial years, must be disclosed. If the company has been in existence for less than three years, this information may be provided for such shorter period. Information may be presented on the same basis as that used to determine the company’s business segments under the same body of accounting principles used in preparing the company’s financial statements. The nature of the company’s operations could include, description of the internet sector — that is, internet portals, internet infrastructure, internet infrastructure services, internet B2B software, internet commerce, internet consulting and application services, internet financial services, internet vertical portals, multi-sector internet companies, internet direct marketing and advertising services, B2B commerce, B2C commerce - in which the company is to operate. The company should also disclose the percentage of composition of company’s revenue and capital employed in each of the sectors. It must also disclose the description of the principal markets in which the company competes, including a breakdown of total revenues by category of activity and geographic market for each of the last three financial years. Here also, if the company has been around for less than three years, then information may be provided for such shorter period.

Sebi changes MF overseas investment norms

SEBI has changed the eligibility criteria for overseas investments by Indian mutual funds. It is expected to remove the $10-million floor that MFs have to stick to while investing abroad. Speaking to Economic Times, a senior Sebi official said, "We have decided to apportion the overall limit of overseas investments by MFs set at $ 500 million by the Government and the RBI, amongst Indian MFs on the basis of their net assets under management as of March 1999." Earlier MFs could invest in ADRs/GDRs provided the minimum investment across schemes was $10 million. Besides, it was laid down that the overseas investment could not exceed 10 per cent of the assets managed. However, the regulator has not changed the investment ceiling which remains unchanged at $50 million. This has been done to permit a larger number of MFs to invest in ADRs/Global depository receipts of Indian companies listed overseas. "If the March 2000 figures for assets under management were taken then the $ 500-milion cap would have been exhausted among10 MFs, as against nearly 40 odd MFs licensed to operate in the country," the official said. Sebi has now allowed MFs to invest up to a maximum of $50 million or 10 per cent of their net assets under management at market value as on March 1999, whichever is lower. "The permission to invest in overseas assets is subject to approval being taken from the board of directors of the AMC and trustees. The trustees also need to be satisfied that the AMC has the necessary expertise in managing such investments," said the Sebi official. As of now five MFs have been allowed permission to acquire such securities by RBI and Sebi. These are UTI, Prudential ICICI MF, Morgan Stanley MF, Reliance MF and Kothari Pioneer MF. Of the five fund houses, UTI has been granted permission for the highest possible amount of $ 50-million of investments, while others like Pru-ICICI have received approval for smaller amounts like $19.37 million. Of the MFs who have received permission, UTI has not made any investments as yet. "We feel the domestic market offers a greater potential," said a senior UTI official. On the other hand, KPMF, PruICICI and Morgan Stanley have already commenced investments in such securities. Reliance MF which has so far refrained from making any investment overseas securities, is understood to be stepping in. According to fund managers, this permission is helpful if for instance one wants to invest in stocks like Rediff or Sify which are not listed in India at all. "The ability of our schemes to invest in overseas assets can also serve as a marketing USP for domestic investors as they are themselves not allowed to buy/sell such securities," said the chief investment officer of one of the fund houses who has received the permission. MFs are also excited by the opportunity to arbitrage the price differentials on stocks between the two markets and the ability to trade in overseas listed stocks where price variations are quick and large. Said Prudential ICICI AMC chief investment officer Dileep Madgavkar: "We have invested between $1-1.5 mn in the ADR of Wipro. The permissions to invest in such assets help investors since many of these companies tend to command a premium on the market

ASSESSEES UNDER ’98 AMNESTY CAN STILL BE TAXED : HC

Many assessees who thought they had bought peace with the revenue authorities under ’98 amnesty scheme Kar Vivad Samadhan Scheme (KVSS), are now realizing there are miles to go before they can sleep peacefully. A recent Bombay High Court judgement says there are circumstances under which the I-T department can claim tax for the years for which the assessee has secured a KVSS certificate. The HC, in a recent decision ruled that the scheme would be applicable only for that part of income which was “determined” and not for the remaining income which would be taxed at the regular rate. The KVSS provisions stipulated that only “ determined income” could be brought under the scheme. The court gave this verdict in a petition filed by Killick Nixson. In this case, the Company had made declarations under KVSS and had mentioned that an appeal had been filed before the Income Tax Appellate Tribunal (ITAT) against the order of Commissioner (Appeal). The tax amount payable was worked out at Rs.26.5 lakh. There was income amounting to Rs.9.9 lakh under four heads and the CIT returned the assessment to the assessing officer for reassessment. Since the assessing officer had not reassessed on the issue of income and tax payable under these four heads, this part of income was construed as “ income not determined” . S.B.Dastur, who represented the company, consented that under the KVSS provision, the certificate was conclusive. He also urged that the scheme would be totally unworkable if the department’s contention was accepted. The division bench comprising Justice S.H.Kapadia and Justice V.C.Daga held the there is no merit in the argument of the company.

MAHINDRA BRITISH TELECOM PLANS IPO

MAHINDRA BRITISH Telecom (MBT), a 57:43 Telecom software JV between Mahindra & Mahindra (M&M) and British Telecom, is making an IPO of 53,18,633 equity shares of Rs.2 each. The issue price will be determined in accordance with SEBI guidelines as applicable to 100 percent book building route, M&M informed the BSE. MBT is also making an offer for sale of 63,82,267 shares of Rs.2 each held by Mahindra Information Technology Services and British Telecom plc. Of these shares, 10,63,700 shares have been reserved for M&M shareholders subject to SEBI approval.

Sebi to look into cos gaining backdoor listing via merger

THE MARKET regulator is now trying to plug the loophole in the system that allows an unlisted company not meeting the listing eligibility criteria, to get listed by merging a listed company with itself. Sebi is moving a proposal to seek changes in the Securities Contracts (Regulation) Act. The entire Sebi top brass was locked in a late-evening meeting with chiefs of leading stock exchanges on Thursday, and the issue may be addressed by the Sebi board in its meeting scheduled for December 27. According to top Sebi sources, some cases of misuse have been reported to the securities regulator, and it fears that this may snowball into a major issue and therefore wants to plug the loophole now. This is the problem in brief. If a listed company gets merged with an unlisted company, then the combined entity has two options. One, the unlisted, combined entity can seek a listing so that the shareholders of the listed company can continue to get an exit route. However, if the unlisted entity is not eligible for listing, then by merging with a listed company, it gets listed almost automatically and tantamounts to gaining listing through the backdoor. According to sources, a situation could arise (and has in some cases) where a small listed company is merged into an unlisted company, and as this merger has been approved by a court of law, an automatic listing is demanded by the merged entity. So far, Sebi has largely been approving the listing applications as it feels that since the courts have approved the merger, there is little that the regulator can do. The hurriedly-convened meeting on Thursday was attended by most executive directors and the heads of NSE and BSE. "We fear that there could be a misuse, and at the same time, want to ensure that the decision we take is in conjunction with the law of the land. The matter may be discussed by the board and a final decision would be taken by it," said a top Sebi source. The Sebi board is also taking up the issue of allowing all companies to make initial public offers for 10 per cent of their equity against 25 per cent now, and this too may call for a change in the SCRA. It has, therefore, decided to take up the issue of mergers of listed companies with unlisted companies as well. Source: The Economic Times Dated: 15th December 2000

Sebi allows public issues via stock exchange terminals

Sebi has allowed pubic issues through stock exchange terminals, a move which could lead to a sharp cut in the time taken for making an issue. Brokers will take the responsibility for their clients and the upfront payment would depend on the broker-client relationship. According to Sebi officials, the process would be like a secondary market transaction where the seller would be the company and buyers would be all investors. At the end of the period for which the issue is open, the exchanges would give details to the brokers on whether the shares have been allotted to them and accordingly the payment would be made by the brokers and delivery taken. "From 90 days now, an issue could be completed in a mere three weeks," said Sebi senior executive director, O P Gahrotra. Sebi issued the necessary guidelines on Friday. The guidelines will be applicable in respect of fixed-price issues as well as for the fixed price portion of book-built issues. The company making public issues of securities shall now have the option to issue securities through the existing banking channel. It would also benefit the issuers since the process would lead to quicker listing of the securities thereby enabling quicker access to the funds raised in the issue. The company will enter into an agreement with the stock exchanges which have the requisite system of on-line offer of securities. The agreement will also call for a dispute resolution mechanism between the company and the stock exchange. The stock exchange will appoint brokers of the exchange, who are registered with Sebi, for the purpose of accepting applications and placing orders with the company. The brokers will collect the money from their client for every order placed by them and in case the client fails to pay for shares allocated as per guidelines, the broker will pay the amount. The company and the Lead Manager will ensure that the broker with terminals are appointed in compliance with the requirement of mandatory collection centres. There will be no service fee levied on the client by the broker. During the period the issue is open to the public for subscription, the applicant may approach the brokers of the stock exchanges through which the securities are offered under on-line system, to place an order for subscribing to the securities. The broker will open a separate bank account with the clearing house bank for primary market issues and the amount collected by the broker from his clients as margin money will be deposited in this account. At the end of each day while the issue is open for subscription, the broker will download and forward the order data to the Registrar to the issue on a daily basis. This data will consist valid orders (excluding those that are cancelled). On the date of closure of the issue the final status of orders received shall be sent to the Registrar to the issue. After finalization of basis of allocation, the Registrar to the issue will send the computer file containing the allocation details to the stock exchange. The stock exchange will process and generate broker wise funds pay-in obligation and will send the file containing the allocation details to the brokers. The broker will immediately intimate the allocation details to the client. The broker will ensure that each successful client submits to him the application form, duly filled-in and signed, along with the amount payable towards the application money. Amount already paid by the applicant, as margin money shall be adjusted towards the total application money payable. The broker will refund the margin money collected earlier, within three days of receipt of basis of allocation to the applicants who did not receive allocation. Source: The Economic Times Dated: 2nd December 2000

Sebi to set norms for VCF exit

THE GOVERNING board of Sebi is meeting on December 27 to take up the issues of exit norms for venture funds and amendment of public issue norms for non-technology companies to offer only 10 per cent equity if the size of the float is Rs 250 crore. Sebi has decided to do away with the mandatory exit norm for divesting shares of listed companies within one year for tax benefits. "We are going to delete the current one-year exit norm for VCFs. The funds can hold the shares of listed companies for more than one year," Sebi chairman D R Mehta said during the FICCI seminar on VCFs. This was required in order to attract more funds in the VCF sector and allow them to run profitably, he said. Sebi is considering changes in listing norms to allow non-technology companies to offload only 10 per cent if the size of the issue is a minimum Rs 250 crore, as against the present mandatory norm of 25 per cent divestment. Only technology companies are allowed to divest 10 per cent stake. The move is expected to benefit companies, having a prospective high m-cap, to raise funds from the capital market by divesting a smaller 10 per cent stake rather than offload 25 per cent and witness decline in share values. The rule for compulsory offloading of 25 per cent would be for small companies, Mehta said. So far, about 31 VCFs have registered bringing in Rs 180 crore and another 0.5 billion dollars was expected to flow into india by the end of this fiscal. "VCF inflow is expected to go up substantially," Mehta said referring to 10 more VCFs that are in the process of getting clearances by this fiscal. The Sebi chief, however, ruled out any relaxation of norms allowing VCFs to get listed before three years. "We do not want the public to lose money on VCFs which takes three years to stabilise," he said. Apart from implementing the remaining recommendations of the K B Chandrashekhar committee by December 2000, Sebi would also form an advisory committee to assist the regulator in monitoring the growing sector, Mehta said. Mehta said Sebi was eager to take up with the government the issue of allowing pension and provident funds to flow into the venture capital industry despite strong resistance from some corners. "We can take up with banks and insurance companies to invest a portion of their funds in the sector," he said. Citing the $11.9 billion FII investment so far in the country, he said foreign funds could also be attracted in the VCF industry. In fact, Sebi was considering roadshows in Silicon Valley, Boston and New York as part of showcasing the prospect of VCFs in India. "We are discussing this, may be Nasscom could be involved in the process," he said. Source: The Economic Times Dated : 12th December 2000

PRIVATELY-PLACED DEBT WITH SINGLE RATING CAN GET LISTED

Good news for issuers of privately-placed. The capital markets regulator has clarified the doubt that has been bothering issues going for a listing on the stock exchange will not attract the provisions applicable to public debt floats, like two ratings of a minimum of investment grade for issues above Rs. 100 crore. “We cannot apply the public issue of debt guidelines retrospectively to privately-placed debt. However, once listed on the exchange all listing-related guidelines will have to be complied with,” Sebi board member Jayanth R Varma told ET. Several mega issues subscribed to by MFs had to be listed to ensure liquidity and the availability of a market quote which MFs could use to value other investments. This led to the confusion over whether the Sebi guidelines for public issues would also apply to privately-placed debt. But a section of debt market participants apprehend that as these securities by virtue of listing become de facto public securities and are available for sale and purchase by anyone with access to the exchange facilities, the Sebi public issue rules would be applicable. The Sebi clarification will save the cost of obtaining rating from more than one agency(0.10 per cent of issue size). Besides, the exchanges will not have to modify their listing guidelines to make a minimum of two credit rating mandatory for issuers seeking to list their debt securities on the exchange. “ We have also brought about changes in our guidelines for public issues of debt. For instance we allow infrastructure companies making a right issue to issue sub-investment grade rated debt instruments, provided they get a specific undertaking signed by each investor that they have understood the fact that these instrument are not considered fit for investment by an independent rating agency.” He said. Source: The Economic Times Dated: 11th December 2000.

Companies Act to ensure prompt debenture redemption

Here’s some hope for subscribers to debenture issues of companies. Following recent amendments to the Companies Act, 1956, debenture-holders can now be assured that their investment would be returned by the company when the instrument manners for redemption. Companies will no longer be allowed to issue prospectus or a letter of offer inviting subscription for its debentures unless it appoints one or more trustees for such debentures. What’s more, companies will be required to execute a debenture trust deed for a prescribed period as well as create a debenture amount credited to it from the profits every year until such debentures are redeemed. Any holder of the debenture can inspect the trust deed. The company would also be required to make available a copy of the trust deed, if a debenture holder so desires. Corporate law analyst feels the new provision will make debentures an attractive investment option now. During the last few years, with large number of companies defaulting in repayment of investor dues and more so after the collapse for several non-banking finance companies, small investors have shown a marked preference for bank and company fixed deposits and mutual funds as safer options to park their funds. The new provision, introduced through the second amendment bill and cleared by both houses of parliament in the last week of November, is now expected to change the trend. The new regulations stipulate that debenture trustee shall ensure that company and the guarantors of the issue have sufficient assets to discharge the principal amount of the debenture at all point in time. If the trustee comes to the conclusion that the assets of the company are insufficient to discharge the principal or is likely to become insufficient as and when the redemption becomes due, he is required to file a petition before the Company Law Board (CLB). The CLB can then, if required, restrain the company from incurring any further liability. “ The functions of the debenture trustee shall generally be to protect the interest of holders of debentures including creation of securities within and to redress the of the holders of debentures effectively,” State the Companies (Second Amendment) Bill 2000. The amendments further stipulare that the company shall not utilise the debenture redemption reserve for any purpose other than discharging its liability towards the debenture holders. If the company fails to redeem the debentures on the date of maturity, the CLB can order repayment along with the interest thereon. Failure to comply with imprisonment and hefty fines. Every officer of the company responsible for such default can be put behind bars for a period extending to three years and shall be liable to a fine Rs. 500 for everyday of the default. Source: The Economic Times Dated: 11th December 2000

VENTURE CAPITAL FINANCE AVAILABLE

· International Venture Capital firm seeks written business plans or proposals from Hi Tech Enterprises. · Candidate companies must be willing to list their shares for public trading in Europe / USA. · Public Finance expertise provided. · Principals successfully completing submission stage expected to travel to London, UK for preliminary interviews. · Full due diligence required. No application or fees of any type are required. · Submissions latest by February 21, 2001 to:

SEPARATE DISCLOSURE OF PAT & TURNOVER FROM NEXT Q1

Companies will have to disclose their profit after tax and turnover separately across their business segments from the first quarter of the next financial, June 01. Companies will also now be required to disclose all material developments immediately and decisions taken at board meeting within 15 minutes. The ban on disclosure of results and other information during trading hours will be lifted. In case, the accounting standards on consolidation of accounts and deferred taxes are not issued by ICAI by march 31, ‘01, the Sebi committee has recommeded that the listing agreement may be amended to make the International Accounting Standards on consolidation of accounts and deferred taxation mandatory for listed companies till such time as the final standards on these subjects are issued by ICAI. Companies have also been given the option to publish audited half yearly financial results within two months instead of publishing unaudited result within one month, followed by a limited review after two months. The Reserve Bank of India’s prescribed format for the declaration of quarterly and hlaf- yearly result, and the review report for banks is also to be made applicable under Clause 41 of the Listing Agreement for Banks. The Sebi-appointed accounting standards committee, headed by YH Malegam, which met on Thursday, also recommended that RBI be requested to recommend formats for quarterly and half-yearly results and review report for NBFC’s for the purposes of satisfying clause 41 of the listing agreement. A circular bringing these decisions into effect will be issued shortly. “ The norms for segment-wise reporting of results will come into effect from April 1 ,’01,” but these will be reflected only in the market would get to know only after March 31,’02”. W want the impact of the disclosures on segment-wise reporting to be felt much before and have hence taken a decision to direct companies to disclose some details like profit after tax and turnover, frmo the ned of the first quarter of the next fiscal itself,” said Sebi executive director Pratip Kar. The decision to ask companies to disclose result, segment wise, was taken by the Kumar Mangalam Birla committee on corporate governance. The ICAI has worked out the accounting standards, on segment reporting and related-party Transaction. The institute is likely to issue the final accounting standards on consolidation of account, deferred tax and earnings per share before March 31,’01 said a Sebi release. Sebi has also finalised its decision to ask companies to revert to disclosing results and other information immediately and not after trading hours only. It has been decided that all material information not emanating from a board meeting of the company should be made public immediately to minimise the possibility of insider trading. All material information emanating from a board meeting should however, be made public within 15 minutes of the board meeting. “The onus is on companies to disclose this information to the regional stock exchanges (RSEs), where they are listed and the RSE’s shall be responsible for instantaneously communicating the same to other stock exchanges where the securities of the company are listed,” said Mr Kar. The move aimed at placing responsibility on RSEs will also help the RSE’s to tone up their infrastructure and will expose any systemic problems at these exchanges, expect , market observers. Clause 41 of the listing agreement between companies and stock exchange, requires that all financial information on companies, like results, be declared only after trading hours while dividend announcements could be made within trading hours. “But dividend announcements are almost inevitably made along with result. So, to resolve this apparent conflict we have decided to harmonise the reporting standards for disclosure of material information,” Mr. Kar said. Sebi has also decided that the current disclosure requirement, which are prescribed under Schedule VI of the companies Act for unutilised monies of public Issues and the form in which such unutilised funds have been invested, may also be prescribed under clause 41 of the Listing Agreement, for companies which are yet to commence commercial production. Source: The Economic Times Dated : 8 December 2000

Companies Bill 2000 gets RS Nod

The Rajya Sabha today approved the Companies (Second Amendment) bill, 2000 which seeks to bring in greater transparency of corporate governance and provide protection to all investors. The Bill, which ran into controversy over the clause which allows appointment of minority shareholders’ nominee as a director, was cleared unanimously by the Upper House after objections raised by some members were withdrawn, The Bill had been cleared by the Lok Sabha on Monday after a four-hours debate. The Bill would now be sent to the president for assent. Government sources said that they expected the amendments to be notified early next week. The Bill, once notified, allows for a ten-fold increase in penalties for non-compliance with the provisions of the Act. It will make offences relating to acceptance of deposits cognizable under the Code for Criminal procedure. This amendment Bill was tabled in the Lok Sabha last December and was subsequently referred to the standing Committee on Home Affairs for comments. The Bill was taken up for discussion along with several changes on Monday. The second amendments Bill classifies ail companies as ‘ private’ or ‘ public ‘. The provision for a ‘ deemed public company ‘ has been done away with. It further stipulates that all private companies should have a paid up equity base of Rs 1 lakh and every public company Rs 5 lakh. Companies with equity base falling short of the new stipulation are required to enhance the paid up capital to meet the new requirement with in a period of two years from the date of notification of the amendment. The Bill also seeks to enhance participation of shareholders in decision making and therefore has allowed postal and electronic voting in resolutions. To make companies more accountable and to secure the small investors’ interests, the Bill requires companies defaulting in making repayment of depositor money to intimate the Company Law Board(CLB) within 60 days of such default. The Bill has further clarified that the intimation to CLB should be made on a monthly basis. The CLB is then required to pass an order within a period of 30 days. The Bill has also sought to delegate powers on issue and transfer of securities, and non-payment of dividend to the Securities and Exchanges Board of India. In the case of listed public companies and public companies intending to get their shares listed on a stock exchanges. Futher, the new law requires companies to make issues for any security in dematerialized form in the proposed mop-up target exceeds Rs. 10 crore.

UTI, PSU banks subscribe to 50% of Vijaya Bank’s IPO

Unit Trust of India (UTI) and a clutch of public sector banks have subscribed to half the issue size of Vijaya Bank’s initial public offer (IPO) of Rs. 100 crore. The IPO of the Bangalore- based state-owned bank, which closed on Tuesday, was over-subscribed one- and –a –half times the target amount. The Vijaya Bank IPO opened on November 25, Offering investors 10 crore equity shares at Rs. 10 each, Post-issue, the Centre’s holding in the bank will come down to 72.2 per cent from 100 per cent. Capital market sources told ET that UTI has subscribed to shares wroth Rs.15 crore, Andhra Bank (Rs 6 crore),State Bank of India, Indian Overseas Bank, State Bank of Hyderabad, Central Bank (Rs 5 crore each), Bank of Baroda (Rs 3 crore), UCO Bank (Rs 2 Crore), Canara Bank and Indian Bank (Rs 1 Crore each). The balance amount of Rs 2 crore was subscribed by other banks. Sources said the issue met with a good response in the south, where retail interest was strong for the issue. “ The bank utilised its large branch network in the south to sell the issue. The response in the other centers was not so encouraging,” said sources Ten per cent of the bank’s employees. The bank’s capital adequacy ratio at present is at 10.6 per cent. As on March 31, the bank’s net worth was around Rs. 356.2 crore. The bank wrote off Rs. 297.1 crore of its equity capital against accumulated losses, bringing down the paid-up capital to Rs 259.2 crore. The lead managers to the issue include SBI Capital Markets, DSP MerrillLynch, Kotak Mahindra Capital and JM Morgan Stanley Source : The Economic Times Dated: 6 December, 2000

B4U defers IPO, goes for pvt placement

Entertainment and music channel company, B4U Multimedia International is raising around Rs. 75 crore through a “ selective private placement of equity shares. The company is issuing shares at Rs. 400 each, which includes a premium of Rs. 390 per share. B4U is opting for the private placement route since the market conditions are not too conducive for an initial public offer. When contacted by ET, sources close to the company said that about 18.75 lakh shares are being offered as part of the private placement. The sources said that, unlike the usual private placement exercises where a large number of people are targeted, the company was planning to place the shares selectively with two to three institutions through one-on-one meeting. “ It is too small an issue to target a large number of investors,” they added. ICICI securities is handling the placement it is learnt. The company has already started marketing the issue. According to company source, one problem that it’s facing in marketing the issue is the one-year lock-in. The company had earlier planned an IPO of Rs. 250 crore, scheduled to hit the markets in November. As investor appetite for public issues has wanted following the vola , the company decided to defer IPO plans. The aource said that the IPO has been rescheduled for early next year, either in January end or April-May.” The IPO will be either before or after the budget, depending on the stock market conditions,” they exhlained Source: The Economic Times Dated: 25th November, 2000

Sebi unveils online public issue norms

In a move to bring the Indian stock market system on par with its global peers, the Securities and Exchange Board of India today issued guidelines for online issue of shares. The online system will not only reduce the time and cost of the IPO process, it will also lead to quicker listing of shares, thereby enabling faster access to funds. According to the guidelines, a Company will have to first enter into an agreement with a stock exchange for the online offer of securities. It will then have to appoint a registrar to the issue having electronic connectivity with the stock exchange through which the securities will be offered. The stock exchange, in turn will appoint Sebi-registered brokers for accepting applications and placing orders for shares. The broker will collect the money from client for every order placed by them, and in case the client fails to pay for the shares allocated, the broker has to cough up the amount. Every broker shall accept orders from all clients who place orders through him, directly send the application form along with the cheque/demand draft for the sum payable towards application money to the registrar to the issue, or place the order to subscribe through a broker under the online system. The exchanges are, however not allowed to use the settlement/trade guarantee fund of the exchange for honoring broker commitments in the case of failure of a broker to bring in the funds. In the event of a failure by a client to pay the application money the broker through whom the client placed the order will have to bring in the money. If the broker fails to pay up, he will be declared a defaulter. During the period the issue is open to the public for subscription, the applicants may approach the brokers of the stock exchange through which the securities are offered under the online system, to place an order for subscribing to the shares. In the case of public issues with Rs. 10 crore capital or more, the registrar to the issue shall open centers for collection of direct applications in New Delhi, Chennai, Calcutta and Mumbai. The broker shall open a separate bank account (escrow account) with the clearing house bank for primary market issues and the amount collected by the broker from his client as margin money shall be deposited in this account. Source: The Business Standard Dated: 3rd December, 2000

Plans Rs. 70 crore bond issue, IPO

The Bank of Maharashtra will offer between 20 to 30 percent of its Rs.330 crore equity in the market sometime in 01-02, making the issue a minimum size of Rs. 100 crore, not including premium. The bank, with a 'comfortable' 11.67 percent capital adequacy ratio (CAR), is expected to raise Rs.60 to 70 crore via a bond issue to strengthen its Tier II capital in the fourth quarter of the current financial year. "In the short-run, we want our CAR to be 12 percent, for which we need to raise up to Rs. 70 crore. We will issue bonds, the coupon rate for which will depend on the prevailing market rate," S. C. Basu, chairman and managing director, BoM, said. He was categorical that since the bank has a comfortable CAR position, they can wait for a favourable market, which will allow them to raise funds at the lowest rates. The bank has received clearances from the ministry of finance and the RBI, having applied over two months ago. The bond issue is a prelude to the IPO

Cos must have at least 10% floating stock

The Indian stock market is notorious for being thin in terms of the floating stock that the general investor has access to, so in a bid to ensure there are enough shares available on the market at all times, Sebi has mandated that the minimum holding by non-promoters in existing companies must touch at least 10 per cent witjin a year. The regulator has also decided not to allow preferential allotments or buyback of shares, if it leads to the non-promoters holding companies going 10 per cent in the case of TMT sector stock and below 25 per cent for other sectors. All new companies will have to ensure that the minimum public holding norms are adhered to , on a continuting basis. The SS Tarapore committee on secondary markets on Tuesday announced a series of reform-oriented measures, which have been endorsed by sebi. TopSebi officials and committee chairman SS Tarapore said that the decision have bentonite taken with the small investor in mind Companies that fail to raise non-promoter holdings to 10 per cent within a very will be asked to make an offer to shareholders to buy out the balance shares or delist.”Sebi executive director pratin Kar said. “ Not will any company be allowed to take its non-promoter holding below 10 per cent or 25 per cent through preferential allotments or buyback of shares,” he added, The move will impact a number of companies which have promoters shareholdings of over 90 per cent. This could lead to promoters being forced to either divest their shares or expand the equity base of the company and bring down their shareholding. This norm will not be applicable to BIFR companies, the regulator is also writing to the RBI and the Foreign Investment promotion Board (FIPB) to ensure that banks and foreign companies meet the public issue obligations which they accepted at the time of receiving approval Source: The Economic Times Dated: 29th November, 2000

Cos get 15 mins to disclose results

there is no requirement fro a physical contract note. The idea is to boost internet trading and allow brokers to do away with paperwork. The regulator has also received a clarification from the government to launch index options. Stock exchanges are expected to launch options on index by the end of the current year, and this is expected to give a leg up to the derivatives market, which currently has only index futures. Another decision is to cut the mandatory gap between any two book-closures down to 30 days. This will allow companies to issue, for instance, a rights issue and then follow it up with a bonus issue within 30 days. Currently a company has to wait for 90 days. Sebi chairman Dr. Mehta said that all recommendations of the committee, which do not require Sebi board approval, are deemed to have been accepted by the regulator. The committee has also recommended that all stock exchanges mandatorily put in place client codes by December 31, failing which they will not be allowed to offer carry-forward products. This will enable the regulator to keep a record of every investor transacting in the securities market. Sebi will take another look at the current “know your client” norms, to make it easier for small investors to trade in the markets. It will explore the option of a limited liability concept between a broker and his sub-broker, to encourage more sub-brokers to register. At present, there are about 7,000 sub-brokers across the country. The regulator will also take up with RBI the issue of allowing FIIs to park funds brought in to meet margin calls in derivatives, in instruments like call money or money market mutual funds. Sebi is also exploring the option of working on a code of corporate governance for share registrars. The committee also took stock of the progress made in rolling settlements and Mr. Mehta said that the regulator reiterated its commitment to introducing rolling settlements. Source : The Economics Times

Cos bill passed, small investors to get board seat

The Lok Sabha today passed the Companies (Second Amendment) Bill, 2000, with an enabling provision for appointment of small investors nominee on boards of companies. The provision was included under pressure from the Opposition and some members of the Treasury albeit in a diluted form. The Requirement will no longer be mandatory. According to official sources, the clause has been amended to substitute “shall appoint” to “ may appoint” a nominee of small shareholders. The modification had been made to appease both the corporate as well as small investors. Companies can now exercise a discretion on appointing a nominee of small investors on their boards. The clause on appointment of small investor’s nominee had come for server criticism from chambers of commerce and corporate houses when it was introduced in the second amendment bill introduced in the Lok Sabha last December, forcing the government to nearly drop the closed after a cabinet meeting in mid August this year. The standing comity of hundred affairs, said by Pranav Mukerjee, had favored inclusion of the clause at it was considered necessary to protect the interest of small investors. The bill also seeks to make default in repayment of investors’ money a cogaisable crime under Code of Criminal Procedure, 1973. The bill passed today further stated that a court shall not take cognizance of the offence unless a complaint has been made by the central government or any officer authorised by the government. Replying to discussion on the Companies ( Second Amendment) Bill, law, Justice and company affairs minister Arun Jaitley said under the bill, shareholders would be allowed to exercise their franchise through postal ballot so as to have “ participatory democracy”. Under the existing system, many shareholders were unable to cast their vote and this had led to a few people having control of the company. The move to have postal ballot was a step in the right direction to have participation democracy. Source: The Economic Times dated: 28 November,2000

Concept Bill suggests strict action against offenders

In keeping with the overall mood in the department of company affairs to impose off penalties for contravention of law, the Concept Bill on competition has recommended that penalties as high as Rs 1 crore for failures on the part of corporate to comply with the provision proposed in the legislation. Sample this: A false statement by a person party to a merger before the commission in the process of enquiry can be penalties with fine of Rs 50 lakh, Similarly a purposeful omission of material fact can also cost a party to investigation Rs 50 lakh. This amount could go up to Rs.1 crore as may be determined by the commission. Likewise, if a person who is required to furnish any document or information knowingly make a false statement or omits to state a fact to alters, suppers or destroys a document required to be furnished, he could be penalized to the extent of Rs. 10 lakh. In the case of a company conversing the provisions of the Competition Act, every person responsible for the company deemed to be guilty of such offences can be proceeded against and punished accordingly. Failure on the part of a person liable to notify a qualifying merger could be penalised with a fine of Rs.2 lakh for each day of the failure. This is subject to a person being issued a show cause notice by the commission. Penalty for disobeying the orders of the commission would be liable to be punished with a fine of Rs. 10 lakh. Further, the commission could also a person guilty order to civil imprisionment for a term extending to one year. Appeals against the commission’s order would lie with the Supreme Court. Appeals would have to be made with the consent of the parties involved within 30 days of the order/decision of the commission. In certain instances the Supreme Court may entertain an appeal after the expiry of 30 days period. Source : The Economic Times Dated: 15 November 2000.

VCs land in the Wireless Space to park their funds

This one’s the latest- now it’s the wireless space that is attracting the attention of entrepreneurs and venture funds. With poor wire line telephony infrastructure in the country, and wireless expected to grow quickly, this is where players see opportunities in terms of infrastructure, content, m-commerce plays and services companies. While there are no official figures about the potential size of the market available, a number of start-ups are getting into the sector. And there’s no shortage of venture funding. ITFinity, one of the first ventures to be formed in the wireless space, has consolidated its position and attracted investors like Rajat Gupta, head pf McKinsey. It is not only the VC community which is getting excited about the wireless space. Technology major, Hewlett Packard has earmarked a $35-m fund to invest in start-ups, primarily in the wireless space. There are several funds that have not yet entered India looking for investments in wireless Boston-based GSM Capital – a part of ArgoGlobal capital – one of the largest venture capital funds targeted exclusively at investing in wireless internet and telecommunications, has earmarked 10 per cent of it outlay for India. Consider 3Genesis, promoted by investment banker turned entrepreneur Gautam Patel, a services company with a focus on developing expertise in the wireless arena which intends to help enterprises in porting their existing applications into the mobile arena. EVentures and connect Capital have recently invested $2m in 3Genesis. According to Abhay Havaladar of Connect Capital, a Mumbai-based venture fund, the wireless space will attract more and more funding in the future and some companies will get funding by just being in the space Wall street has started looking at and rewarding “pure plays” in the wireless space, and this trend will come to India also, he says. Rajesh Jog of Eventures says, “ the wireless infrastructure in the country is poor and wireless penetration has reached a critical mass, therefore, there will be a number of opportunities in the space. Venture capitalists see huge growth potential in this arena and it also has the same cost advantage that tradition software services have. It is not only the services arena that is attracting the attention of entrepreneurs. Three graduates of the IIT Mumbai batch of 2000 have come together to start a product company in the wireless space called MyZus Infotech. Roshan D’Silva along with Sandeep Srivastava and Satish have formed MyZus Infotech services. They have developed a product that helps to deliver content on all mobile devices including personal Digital Assistants (PDAs) and mobile phones. Mr D’Silva said, “ There is tremendous scope for product companies like ours to build tools and products for mobile services providers and internet services providers.” The gateway developed by MyZus enables content on any site on the internet or on a private network to be accessed by both WAP phones and non WAP-enabled mobile phones. Wap is a communication wireless application protocol and it requires content to be written in WML(Wireless Markup Language) for content to be seen on mobile phone. MyZus gateway converts content written in HTML (Hyper Text Markup Language) into WML on the fly, this does not away with the requirement of converting internet content. Another feature of MyZus’ product is that is van be sent on phones that are not WAP enabled in the form of short Messaging Services (SMS). MyZus has an angel investor and is on the verge of closing its first major bund of funding. The scene is more active in Bangalore start ups like True Blue technologies, Jatayu Software and 4thpass, who are targeting the Wireless space. Puna based Ruksun technologies is also in the same field from the direction of developing content. The reason that there may be more start-up out of Bangalore in the Wireless arena is because Motorola, Hewlett Packard and Cisco have trained the local engineering population here for decades in the Wireless networking business. Source :- Economics Times

Sebi ties up with NIC for online corporate filing system

India’s desi online filing system for corporates, which is based on the popular Edgar system of the US, has moved a step forward with the securities regulator set to cut a deal with the National information Center (NIC), NIC has a 1400 VSAT network called NICNET and the state owned agency, set up in 77, today provides a host of services. It runs a website (www.nic.in) which is like a directory of government websites, Sebi executive director Pratip Kar said that NIC has agreed to provide the necessary platform for hosting the website, as well as address the safety issue. NIC would now be attending further meetings of the working group which is setting up the online filling system. The finer details of the agreement would be worked out in due course. The move to use NIC will save time for Sebi as otherwise it would have had to call for tenders to select a private sector partner. This is because the regulator itself does not have the required infrastructure to run a web enabled filling and retrieval system. We are now hopeful of starting with about 100 top companies from April 1, ’01. However, in the interim, we have to sort out a few issues pertaining to content and security, said Mr Kar . The group will meet later this month and NIC officials will be attending the meeting. A sub-group is already working on the content that companies need to provide in their online filings. If the deal goes through, NIC will provide the encryptions, digital signatures etc, they have also pointed out that bandwidth will not be an issue for they have direct satellite links, he added. The project is expected to bring about a major change to the method in which critical information on companies was made available to investors. Sebi is planning to make it mandatory on companies to disclose, on a quarterly basis, the shareholding pattern, the extent of debt on their books, net worth and asset details in online filings to the securities regulator. This is all in addition to the information they already provide to stock exchanges. The ideas is to pull all this together and make it available to investors through the internet. There is however, a security issue as the information being posted on the site would be highly price sensitive and it would be necessary to ensure that only authentic information is put up on the website. “This is more than just a website. It is a retrieval mechanism as well and a lot of issues need to be addressed, ’’said a Sebi official. Officials are, However, confident that they would be able to now launch the mechanism in the first half of next year. (Source : “The Economic Times)

BOLLYWOOD’S LATEST SUCCESS FORMULA : SOME IPO MASALA.

The IPO fever has caught the fancy of Bollywood bandwagon, which seems to be evident from the preparations of Ramanand Sagar group and well acclaimed film producer Manmohan Shetty to tap public funds. As a matter of fact, the Sagars have already approached the capital markets to finance their resorts project. The aim of these media stalwarts appears to utilise institutional credits which has so far eluded the film industry and thereby initiating the corporatisation process. It is believed that SBI Capital Markets is carrying out a due diligence exercise and a sizeable amount of funds could be expected from it by a certain entity in the media industry. Mr. Shetty of Adlabs, is vying to raise some 50 Crs. of public funds with his first visit to the capital market. The list does not stop here, the likes of Boney Kapoor and Sanjay Khan are known to come out with their own plans. The lure for public funds is so much that the even Televisions software producing Companies like Karnik Communications promoted by Reena Wadhwa, actress and wife of Chartered Accountant Ashok Wadhwa and Headline Entertainment promoted by Ajit Pal. These Companies are beginning to realise the need to invest in hardware equipment for post-production, recording and shooting purposes in order to provide content to TV channels which are increasing by leaps and bounds. Mr. Ajit Pal, of Headline Ent``12ertainment known for producing ads for Roopam, Room Milan, particularly ‘Catch me if you can’ series has roped in Vishnu Patel, who earlier headed the programming department at Zee TV. Other projects in the pipeline include one by Pais of Manipal and Teaauction.com, a portal of Calcutta based tea Companies believed to be in touch with merchant bankers.

IT&T ISSUE DEVOLVES 50% ON UNDERWRITERS

The Rs. 31.6 crore public issue of IT&T Limited has devolved on the underwriters, underwriters include JM Morgan Stanley and Enam Financial Consultants. Both these investment banks had underwritten to the extent of Rs. 24 core and about 50 per cent of the subscription has come through which means each of them has to bring in Rs. 6 cores. These underwriters are currently in the process of finding investors who would want to pick up shares in the New Delhi based IT&T which has claimed to be India “Fastest growing technology company”. The IT&T public issue was of 39,10,000 equity shares of face value of Rs. 5 each for cash at a price of Rs. 81 per share including premium of Rs. 76 per share aggregating Rs. 31.67 crore.

OTCEI allows parallel Listing

The Over the Counter Exchange India (OTCEI), has given permission for parallel listing of companies, which are listed on stock exchange, as part of of it mission activation programme. The proposal for parallel listing is cleared even if the trading done in the last six months does not exceed 50 per cent of total trading days. As per the previous guidelines, the listed companies on OTCEI could not be listed if they were listed on any other exchange, and for that reason the larger number of good companies got delisting from the OTCEI’s exchange once they grew bigger. In the words of Mr. Pravin Mohnot, managing director, “This move would provide an opportunity for arbitrage which would encourage trading volumes on OTCEI.” In another significant decision, OTCEI plans to scrap the concept of market making for initial public issues on the exchange, subject to the Securities and Exchange Board of India’s (Sebi) board decision. This move can remove a major hurdle for companies getting listing for OTCEI listed. In addition to these decisions, OTCEI is looking to increase opportunities such as providing an online initial public offering and book building exchange to the brokers. More than 300 terminals are expected to start off in the next three months, with OTCEI’s move to waive off pending dues of Rs.2 Lakhs for permitted fees and deferment of technology fees from brokers/members. Moreover, it has now decided to charge a flat fee of Rs 10,000 for transfer of cards.

Yet another Media Company Nimbus Communications Limited plans its IPO

Nimbus Communications Limited,a media company plans an issue of 43,31,250 equity shares. The Companys clientle includes Zee, sony, Star TV., MTV, Doordarshan amongst others.

Ampersand Software Applications Limited to raise Rs.24.75 to 28.28 crores.

Ampersand Software Applications Limited to raise Rs.24.75 to 28.28 crores through book-building at a price band of Rs. 175-200 per share. The Company is into the business of internet, intra-net and e-commerce applications. DSP merrill Lynch Ltd and Jardine Fleming India Limited are the lead Managers to the issue.

Radiant Software Limited to raise money for setting up training centres throughout the country

Radiant Software Limited plans to raise 26 crores from the market at a premium of Rs. 70 per share with a face value of Rs.5. The proceeds are to be utilised for setting up of training centres in India as well as abroad.The company's business comprises of high-end software training and software development. SBI capital Markets is the lead manager for the issues.

SEBI plans to make Stock-exchanges and depositories disclose their balancesheets

The stock-Exchanges and the Depositories may now be required to diclose their balancesheets in order to bring greater transperency. The idea behind such a requirement is to require the investors to have a greater information about their investments be it in mutual funds, depositories or exchanges.SEBI has made it mandatory for the AMCs to disclose their financial statements to the unit holders.

IDBI to spinoff its Venture Capital Division

IDBI may spin-off its Venture Capital division into a seperate concern and also has plans to enter into film financing.

UTI Bank and IDBI bank to offer ESOPS

In order to retain talents private Sector Banks are now in the process ofissuing stocks to its Employees.IDBI banks board and shareholders have already approved the issue of 1.4 crore shares to its employees of which 20% have already been issued. UTI bank is in the process of getting the approval from its shareholders.The ESOP scheme of IDBI shall have a vesting period of 3 years and the shares shall be issued at Rs.23.73. 40 % f ESOPs shall vest in the 1st year and 30% each in the Second and third year in case of IDBI. Meanwile Centurion Bank has also approved ESOP upto Rs.10 crores.

HDFC Standard Life first private sector Company in Indian to bag a licence for Life Insurance

HDFC Standard Life is the first Company in private sector to get a licence to enter into the Life insurance segment. The Company plans to issue its first policy by December.Besides HDF ICICI Prudential,Max NEwYork Life and IFFCO Tokio general have also received in-priciple approval,. Also Reliance General indurance Company Limited and Royal Sundaram Alliance Company Limited have received approval for its insurance businesses.

Elcat infoway Limited is to offer its shares at Rs. 20/-

Elcat infoway Limited is to issue 31,00,000 shares at Rs. 20/-. The Company business comprises of software development and placement of software professionals and is also carrying on the activities of software marketing . the company proposes to utilise its issue proceeds for the purposes of setting up an office abroad as well as to upgrade the exisiting facilities and meets its working capital requirements.

Divis Labratories Limited, a trading house recognised by DGFT to go public

Hyderabad based Divi Labratories to enter the markets with an IPO of 22,99,100 shares. The Company is a trading house recognised by Director General of Foreign Trade. The Company proposes to get its shares listed on the BSE and Hyderabad Stock Exhange.

SEBI cheif Mr. D.R. Mehta demands more power for the regulator

At the meeting of the ministry of finance standing committee, SEBI chief D.R.Mehta demamnded more powers for the regulator in order to enable it towith the non-serious players in the market as well as to enable it to tackle with the takeover cases more effectively, The SEBI chief also indicated at filing of a Public Interest Litigation (PIL) in order to enable it to get more powers.

ADS issue of Wipro oversubscribed

Inspite of tumling infotech stock prices at the Nasdaq, the ADS issue of Wipro got a tremendous response. The issue was almost oversubscribed twice.The management had revised the issue price downwards by 18% to $52.40 as $ 63 before.

Prosoft systems Limited to offer 61.60 Laks shares at Rs. 10.

Prosoft systems Limited to raise Rs. 6.16 crores from the market. the company is into the business of software development, placements, software education in ERP etc. The Company is also into the business of manpower placemenst and their training. The Company propose to utilise the funds for setting up 2 production units and diversify into medical transcription.

Vijaya Bank To join the IPO band wagon

After the Indian Overseas bank issue now its Vijaya Bank, another Nationalised Bank is planning an IPO.The Company is planning the IPO in order to meet its Capital Adequacy requirements. The company plans to raise Rs. 100 crores from the Markets.

Balaji Telefilms Book-Build portion oversubscribed twice, fixed portion of the issue to open on 27th October

Inspite of the instability and volatility of the stock markets and failure of a few initial public Offerings, Balaji Tele films Limited, a Company promoted by Jeetendra and His daughter Ekta Kapoor managed to get a good response from the public. The book-building porion whihc accounted for 90% of the issue size was oversubscribed twice. The balace 10% of shares shall be offered to the public at a floor price to be announced soon. the fixed portion of the issue is for 280,000 equity shares.In view of such a response from the public it apperars that media issues have not quite been completly written off by the public.

Creative Eye Limited revises its IPO size

Creative Eye Limited, which had initially planned an IPO of Rs. 56 crores has revised its IPO size to Rs. 35 crores only. The Company is looking at a 90% book-building as compared to 75% planed initially. The Company is issuing 50 lakhs shares at Rs.5 each. Also the base price which was fixed at Rs. 225/- earlier is likely to be revised to Rs.65-75.

Electronic registrations of the Companies to be a reality soon

Within days of commencment of the winter session of the parliament, the Companies amendment bill is expected to be cleared. All the Companies are to go online soon and details of all the Companies, whether private or public can be obtained from the registrars website. Also the Companies shall be alloted a corporate Index numbers and within a period of 6 months the ompanies shall be registered electronically.

Divestment in Sara Lee, by Godrej to be through the medium of an IPO

Godrej is all set to divest its stake in Sara lee Joint Venture through the medium of an IPO. The IPO for this purposes is expected around November. The Company is to divest 25% of its stake in The joint-Venture. The IPo will be through the book Building route and is necessary by the SEBI regulations. The face value of the share at present is Rs.4. Godrej has 49% of the stake in the company while the balance 51% id with Sara Lee.

HMA starware Limited, an assosiate of HMA Diebold a leader in ATM technology market to raise Rs. 12.50 ccrores from the market

HMA Starware Limited (HSL) plans an IPO of Rs. 12.50 crores. The company plans to offers shares at a premium of Rs. 40 per share. The shares are proposed to be listed on the BSE, NSE, Madras Stock Exchange. The Company plans to setup a software Development Centre at Chennai.

Hughes Tele.com Limited issue undersubscribed

Hughes Tele.com Limited, which received a tremendous response under its book-built portion failed to get a similar response for its public offering. The Company received only 27000 applications and the issue has now devolved upon the underwriters.

Defunct Companies to get a faster route to deregistration

The Department of Company affairs has proposed a fast-track procedure for deregistration of defunct Companies. The new procedure will enable the companies to get their names struck-off within a period of 2 months from the date of making the application to the ROC as against that of several months previously. The DCA is planning to dispense with the requirement of publication of the notice in the official gazette. The Act requires ROC to wait for a period of 3 months from the date of publication in the official gazeatte before striking of the name of the Company.

Sanjay Khan's Numero Uno Internatinonal Limited in talks with DSP Merrill Lynch for its IPO Plans

Numero Uno International Limited a television software Company, promoted by Mr. Sanjay Khan is in talks with DSP Merrill Lynch to finalise plans for its IPO. 23 % stake in the Company has already been acquired by mutual funds. The Company has plans to set-up new post-production studios as well as upgrade the exisiting ones.

I - Flex Solutions Limited (former Citicorp Information Technologies) to raise Rs.1000 crores

Former Citicorp Information Technologies Limited now I-flex Solutions Limited, which specialises in the production of financial sector software products and services is to raise Rs.1000 crores through an IPO. The funds raised will enable the Company for new product developments and finance its mergers and acquisitions.

Balaji Telefilms Limited, another media Issue to hit the Market

Balaji Telefilms limited, a production Company plans to get its shares Listed on the stock exchange. The Company is into the business of production of television serials and has produced programs for doordarshan as well as other private satellite channels. The company proposes to raise funds upto Rs. 54.70 crores for the purposes of expansion of its infrastructural facilities. The programs produced by the Company have featured among the top 50 programmes in the Country.

Pritish Nandy Communications Book -Built portion of the intial Public offer oversubscribed

The book built portion of the Intial Public offering of Pritish Nandy Communications Limited was oversubscribed around 3 times. the issue had a floor price of Rs.155/-. The major investors include foreign institutional investors, Financial institutions and high networth individuals.

Aztec Software and Technology Services Limited to hit the market to raise Rs.55 – 70 crores

Aztec Software and Technology Services Limited an e-engineering solutions provide to hit the market to raise Rs.55 – 70 crores. The Company also has a wholly owned subsidiary in USA by the name Aztec Software Inc. The Company also has plans to set up offices in Europe and other countries. The Company also is looking at Joint Ventures and strategic alliances

Mecklai financial Services , foreign exchange dealer also plans to go publi

Meckclai Financial and Commercial Services, foreign exchange dealers plan to go public by the year 2002, The Company is looking at setting up a clearing house for derivatives trading. The company also wants to focus on web-trading and has a website emecklai.com

TIPS issue gets a tremendous response from Bollywood

Bollywood stars turn major subscribers to the initial Public offering of TIPS Industries. stars like Salman Khan, Ajay Devgan, Govinda, Anil Kapoor were among the others who have subscribed heavily to the Issue. Also well-know producers and directors have subscribed to the issue under its book-built portion . The issue has seen bids of around 45-50 crore from the bollywood personalities. The public portion of the bid is to open on 26th September 2000.

Venture Capital Funds Must exit Companies within one year of the Companies IPO, says MoF

The Government has issued guideliness whereby it requires the registered Venture Capital Funds to exit from Companies within a period of One year after the Companies IPO. The ministry has also laid down that the VCFs must invest 75% of their investible funds in unlisted Companies and exit from them within a period of 12 months after the Company has gone public.

HCL Technologies makes investments in Five Venture Capital funds

HCL Technologies has invested in five venture capital funds which specialise in Technology areas. The funds include Viventure 2 , a venture Capital fund promoted by Vivendi group, Carlyle Internet partners Europe diamond head ventures fund and arena.

Oyzterbay manages to raise Rs. 8crores in first round of its Venture Capital Funding,

Oyzterbay.com, a clicks and jewellery venture is to set-up 15 stores in 10 cities across the country. The Company managed to raise Rs. 8 crores in first round of its Venture Capital Funding, the funds have been provided by ICF Ventures.

Ways India Limited is planning to hit the equity markets with an issue of Rs.119 crores

Ways India Limited plans to hit the Equity markets with an initial Public Offering.. The Company plans to raise 75% of its money through the book-building route. The Company's primary focus areas are development of customised software products.

Ontrack Systems Limited to raise Rs. 4.7 crores

Ontrack Systems Limited is comming out with an Public issue of 23,50,000 equity shares of Rs.10/- each for cash at a premium of Rs. 10/-. The Company's main business comprises of providing application softwares for domestic Companies.

Shantha Biotechnics Pvt. Ltd manages to raise Rs. 500 million

Shantha Biotechnics Pvt. Ltd manages to raise Rs. 500 million through placement of its Equity Shares. The Company has placed 6.9% of its Equity with institutional investors.

Banks to get higher limits to invest in IPOs

A joint committee of RBI and SEBI has recommended that Banks should be allowed to invest in IPOs to the extent of 5% of their Total outstanding Advances. Presently the limit is a maximum of 5% of previous year's incremental deposits. Under the old limits Banks can invest around Rs. 6000 crores. Under the new limits, based on an estimate of outstanding advances of Banks of around Rs.4,50,000 crores, they will be able to invest upto Rs.22500 crores,apx. which is significantly higher than the present limits. This is more important in light of the new SEBI gudelines that companies not having a certain trackrecord, will have to go through QIB route. Banks are one of the approved QIBs.However, the big question is whether the Banks will really start investing in equities? The answer is simply NO, at least in the short-run. Neither the banks have machinery nor the mindset to invest in Equities.Compare this also with recent decision of Bank of India to exit from mutual fund business and the woos of canara Bank and Indian Bank mutual fund businesses.

Hughes Tele.com Limited manages to raise Rs. 1000 crores under its Book-built portion.

Hughes Tele.com, Limited manages to raise Rs.1000 crores under its book built portion as against the total issue size of around 700 crores. The investment in the Company is also eligible for rebate under the Income–Tax act.The investment in the Company is also eligible for rebate under Section 88 of the Income–Tax act.This benefit has come at the right time for the Company and has helped it in roping in retail investors also. According to reliable sources, the Company has received about 26000 applications from retail investors in its book-building process which shows good retail response and among the highest in recent times. According to sources earlier during the year only PNB Gilt issue managed to get around 10000 retail applications that too after PNB used its clout and nationwide infrastrucure.Thus the primary market blues do not seem to be over yet.

Wipro’s $ 500 mn ADR/GDR approved by CCEA

The Cabinet Committee on Economic Affairs (CCEA) has cleared Wipro’s $500 mn ADR/GDR issue. The proposal was already approved by FIPB and was referred to CCEA for further approval. The Company also proposes the issue ADR/GDR linked Employees Stock Options.

Pritish Nandy Communications Limited lines up an IPO

Pritish Nandy Communications promoted by Mr.Pritish Nandy is coming out with its maiden IPO. The Company is offering shares through the book-building route at a floor price of Rs.155/- per share. The Company's business comprises of setting up theme centres, creation of television content etc. The main promoter Mr. Pritish Nandy himself owns 50% of the shares of the Company at present.The bid for Book-building opens on 4th September,2000 and closes on 11th September, 2000. Book-running Lead Manager is JM Morgan Stanley Limited. Syndicate Members are SMIFS, Sumedha Fiscal, Triumph International and UTI Bank.Book-built portion is of 23,55,300 Equity Shares.

DCA amends the method of calculation of Filing Fees on Increase in Authorised Share Capital of a company.

The Ministry of Law, Justice & Company Affairs, Department of Company Affairs has issued a Notification No.S.O. 658(E) dated 12th July, 2000 the effect of which is that Companies will now have to pay lesser Filing Fees on Increase in their Authorisd Share Capital. Earlier by way of a Notification No. S.O. 419(E) dated 27-4-2000, w.e.f.1-5-2000, Schedule X to the Companies Act was amended and thereby Filing Fees were substantially increased. When a Company increased its Authorised share Capital, it had to pay the difference between the amount of fees payable on the increased share capital and the amount of fees paid in past by the company on its authorised share capital. This meant that when a Company increased its Share Capital, it had to pay the difference of Filing Fees at the new higher rates even on the existing share Capital. Now with the new Notification the company which is increasing its Autorised Share Capital will have to pay the difference between the amount of fees payable on the increased share capital and the amount of fees payable on existing Authorised Share Capital at the rates prevailing on the date of filing the notice(Form No. 5) of increase in Authorised Share Capital.Delhi High-court strikes down Constitutional validity of DCA Circular of 1995 3-9-00. A Two-member Bench of Delhi High Court struck-down on 1-9-00 the constitutional validity of Department of Company Affairs Notification of 1995 which asked companies to pay fees at the higher increased rate of filing fees even on their existing Authorised Share Capital, when companies increased their Authorised Share capital. This was held in the case of Phoneix Lamps India vs. Union of India and the Registrar of Companies. Earlier Calcutta Highcourt had also granted a stay on recovery of such higher filing fees.DCA itself on 12th July,2000 (see above) by a new Notification accepted this position and reinstated the original position that the Companies have to pay fees only on the increased amount of their Authorised Share capital and not on the existing Authorised Share capital..A big question that arises is what happens to the companies who have paid higher filing fees during the period 1995 to 12th July,2000? Will they get refund? It is worth giving a try.

Mahindra British Telecom (MBT), gets a nod from its shareholders for its IPO

Mahindra British Telecom (MBT) a joint venture of Mahindra & Mahindra(M&M) and British Telecommunications(BT) has announced the approval of its shareholders to go ahead with its Public Issue. Also British telecommunications has committed a minimum assured business of around Rs.725 crores to MBT over a period of 3 years.

Automatic approval for ECB upto US$ 50mn to be permitted

The Government is set to announce guidelines for ECBs, whereby Companies can raise upto $50mn under automatic approval route. The debts are to be raised from registered global banks and institutions. Also raising of resources for stock market Investments and Real estate acquisitions/investments shall not be permitted under this window. The scheme is a part of the Governments efforts to boost the countries Dollar reserves. The raising of the resources shall be as per the terms and conditions laid in the guidelines to be issued by the Government

Tabassum International Limited (TIL) a Company promoted by Television Personality Tabassum to raise Rs. 4 crores

Tabassum International Limited a company promoted by television personality Tabassum is entering the Markets with an Initial Public Offering of40 lakh shares at Rs. 10/- each aggregating to Rs.4 crores. The Company currently produces Television serials, conducts stage shows and is into event management also.

Creative Eye Limited to reduce the face value of shares from Rs.10/- each to Rs.5/- ,files fresh Draft document with SEBI

Creative Eye Limited which had earlier priced its issue at Rs.225/- under book building has reduced the face value of shares from the previous Rs.10/- to Rs.5/- per share. This will increase the number of shares to be offered from 25.02 lakhs to 50.04 lakhs

Newgen Software Technologies Limited to raise Rs.30 crores.

Newgen Software Technologies Limited is offering 28.66 lakh shares of Rs.10/- each at a price between Rs.105/- to Rs. 125/- per share. The Company is into the business of providing Electronic Document Management Solutions (EDMS) and plans to expand the existing Activities.

Delhi based IT&T also plans to raise over Rs.30 crores

IT&T is planning to raise Rs.31.67 crores to Rs.37.93 crores by offering 39.10 lakh equity shares of Rs. 5/- each for cash at a price of Rs.81/- to Rs.97/-

Ceat Financial Services Rights Issue opens on 28th August 2000

Ceat Financial Services is offering right shares and the issue is set to open on 28th August 2000. The issue is scheduled to close on 26th September 2000, however the last date for receiving request for split forms is set at 11th Setptember 2000

Rider Software Limited plans an IPO.

20-8-00, Mumbai. Mumbai based Rider Software Limited is planning a public issue of Equity Shares. The Company has been promoted by Mr. Hemant Vora. The Company is active in the fields of digitisation, mapping, website development, etc. The Company also plans to foray in the field of GIS and related activities. The company proposes to setup a Software Development centre near New Bombay. The issue is planned at a price of around Rs. 60/-per Share. The shares of the Company are proposed to be listed at Pune Stock Exchange.Canara Bank and Taib Capital are Lead Managers of the Issue.

Western Outdoor Media Technologies plans a Public Issue

20-8-00 Sunday.Bombay based pre and post production house Western Outdoor Media Technologies Limited has obtained SEBI Acknowledgement card for its Prospectus for a Public Issue of 43,00,000 Equity Shares of Rs. 10/- each with a price band of Rs. 70 to Rs. 84 per Share, aggregating to Rs. 30 crores to Rs. 36 Crores apx. The company has been promoted by Mr. Suresh Nanavati who is a veteran in the field who promoted the company 34 years ago. The Company has been a profit making company since last 30 years and has seen steady income and decent returns. In view of large emerging opportunities in the field of entertainment, the company proposes to expand its Studio and production facilities in Mumbai at Mahalaxmi and at Andheri. Currently the company’s Studio facilities are located at Fort, Mumbai and at Vile-parle. Noted singer Jagjit Singh is also on the Board of Directors of the Company. The Company and its employees have received many performance awards. ICICI Securities Limited and ILFS are lead managing the Issue. The facilities of the Company are a preferred choice of many celebrities like Lata Mangeshkar, B. R. Chopra, etc. The company proposes to seek listing on Mumbai and National Stock Exchange.

TIPS Industries Limited plans an IPO in september

TIPS industries Limited (TIL) has decided to go Public. The Company proposes to offer 30 lakh shares at Rs. 10/- each. 90% of the issue is proposed through the Book-Building route.The shares of the Company are proposed to be listed on the BSE and NSE. TIL is one of the largest players in the domestic music market.The issue proceeds are proposed to be utilised for increasing the current casset manufacturing capacity and to set up a CD manufacturing plant and a recording studio.

Axes Technologies India Limited plans a public issue

Axes Technologies India Limited plans an IPO. a part of the offer will be an offer for sale from Venture capitals. The Company proposes to setup a new software development center at Banglore.

D-Link India plans a public issue

D-Link iNdia, a 100% subsidiary of D-Link Corporation plans a Public Issue in September. The proceeds are to be used for expansion of existing facilities and for acquiring new technology and other products and software development.

IPO on the web soon to be a reality.

14-08-00 Mumbai Want to make a share application from the comfort of your home???? Very soon time may come that you have no hassles to stand in a queue at a bank to fill up the IPO application form or to send a person to the bank. Sitting in your home you can read prospectus, fill up the IPO application forms, remit your money, and receive your share certificates all on the INTERNET !!!!!! SEBI Director Mr. J.R Verma was recently quoted as saying that SEBI is already seeing issues being made totally on the Internet as in the US. Although the realisation of this dream may take some time, the first steps may be taken just within 3 months. As it is some mutual funds like Kothari Pioneer have already been supplying application forms over their website. Investors can download the same. Bombay based Kotak Securities recently announced its plans to be ready to launch IPO’s online within 3 months. Many other players are understood to be gearing up for the same.envestindia.com also proposes to make available applications forms on its website. One problem facing the regulator was that each form should have a serial number as per current guidelines. It appears that this problem is being solved by allowing Registrars to the Issue/bankers to the Issue to give a serial number to the Application Form when they receive the same, which they do in any case. Imagine the savings in terms of paper cost, printing cost, wood cut, distribution cost and time saved. As it is, out of the Application Forms printed by the company hardly 1% or even lesser response comes by way of filled up Applications and the rest go to the raddiwalas!

Actor Sanjay Khan’s Numero Uno Company to go public.

14-08-00 Mumbai According to reliable sources popular cine actor Sanjay Khan is planning a public issue of his company Numero Uno soon. DSP Merrilynch appears to be one of the lead managers of the issue. The issue is likely to be priced above Rs.200 per share. The company owns the rights to popular TV Serial Jay Hanuman and has gross revenues of around Rs.33 crores and net profit of around Rs.6 Crores. The issue is being awaited keenly by bollywood.

Amendments in Schedule XIII of The Companies Act, 1956

THE GAZETTE OF INDIA EXTRAORDINAY PART II - SECTION 3 - SUB - SECTION (1) MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS (DEPARTMENT OF COMPANY AFFAIRS) NOTIFICATION New Delhi, the 2nd March, 2000 G.S.R. 215 (E) :- In exercise of the powers conferred by sub-section (1) of section 641 of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the following amendments in Schedule XIII to the said Act, namely :- In the said Schedule for para 1 of section II of PART II relating to remuneration and the entries related thereto, the following entries shall be substituted, namely: - "1. Notwithstanding anything contained in this part, where in any financial year during the currency of tenure of the managerial person a company has no profits or its profits are inadequate, it may pay remuneration to a managerial person by way of salary, dearness allowance, perquisites and any other allowances, not exceeding ceiling limit of Rs.24,00,000 per annum or Rs.2,00,000 per month calculated on the following scale: - Where the effective capital of Company is - Monthly remuneration payable shall not exceed - (i) Less than rupees 1 crore rupees 75,000 (ii) rupees 1 crore or more but less than rupees 5 crores rupees 1,00,000 (iii) rupees 5 crores or more but less than rupees 25 crores rupees 1,25,000 (iv) rupees 25 crores or more but less than rupees 100 crores rupees 1,50,000 (v) rupees 100 crores or more rupees 2,00,000" (File No. 5/4/2000 CL.V)

DCA circular for amendments in calculation of filing fees

9th August, 2000 TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART II – SECTION 3 – SUB-SECTION (ii) DATED GOVERNMENT OF INDIA MINISTRY OF LAW, JUSTICE & COMPANY AFFAIRS DEPARTMENT OF COMPANY AFFAIRS New Delhi, the 12th July, 2000 NOTIFICATION S.O. 658 (E) – In exercise of the powers conferred by sub-section (I) of section 641 of the Companies Act,1956 (1 of 1956), the Central Government hereby makes the following amendment to Schedule X of the said Act, namely:- 1. Under Schedule X, the existing paragraph I.3 shall be read as under: “For filing a notice of any increase in the nominal share capital of a Company, the difference between the fees payable on the increased share capital on the date of filing the notice for registration of company and the fees payable on existing authorised capital, at the rates prevailing on the date of filing the notice.” 2. This Notification shall come into force from the date of its publication in the Official Gazette. Foot Note: This Schedule was amended vide Notification No: SO419(E) dated 27.4.2000.

SEBI issues Circular amending the Disclosure and Investor Protection Guidelines, 2000

6-8-00, Mumbai. SEBI today issued a detailed Circular amending the SEBI (Disclosure and Investor Protection0 Guidelines, 2000. Earlier on 14th June, 2000 SEBI had issued a Press Release (for more details on this Press Release see SEBI section of envestindia.com) explaining the proposed amendments to the Guidelines. However, the detailed circular was not issued as SEBI wanted certain clarifications from its legal department. Now the Circular has been issued giving clause wise amendments to the Guidelines. The most eagerly awaited part by the issuers and the merchant bankers was who will be defined as Qualified Institutional Buyers (QIB) as for companies not having track record of 3 years profit and Rs.1 crore networth for last Two years and certain other companies, 60% of the Issue size will have to be allotted to this QIBs through Book-building process and only 40% of the issue size can be allotted to the public. And if this 60% condition is not fulfilled, then entire public issue money will have to be returned. As per the Circular following are the QIBs- a. public financial institution as defined in section 4A of the Companies Act, 1956. b. Scheduled commercial banks. c. Mutual funds. d. Foreign institutional investor registered with SEBI e. Multilateral and bilateral development financial institutions f. Venture capital funds registered with SEBI. The circular shall be applicable to the offer documents filed with SEBI on or after August 7, 2000. With this the requirement of the Appraisal of a Public Issue project by a Bank or Financial Institution is done away with. By adding a clause 13.3.1.(c) SEBI has directed lock-in of instruments allotted on preferential basis to any person (whether promoter or not) for a period of one year from the date of allotment except for allotments on preferential basis which involve swap of instruments for acquisition. The explanatory statement to the notice for the meeting for preferential allotment shall also contain certain disclosures and the Balance Sheet of the Company shall disclose under the appropriate head indicating the purpose for which such moneys have been utilised and the details of unutilised monies shall also be disclosed under a separate head in the balance Sheet indicating the form in such unutilised monies have been invested. “ Information Technology” activity has now been defined and shall also include computer education and training, computer maintenance, computer consultancy, e-commerce/internet related activities, besides production of computer software, IT services, manufacturing of hardware, communications and network products and peripherals and subsystems. The promoters’ contribution will now have to be kept in an escrow account with a Scheduled Commercial Bank and the said contribution/amount shall be released to the Company alongwith the public issue proceeds. When the promoters’ contribution has been brought before public issue and has already been deployed by the company, it shall give the cashflow statement in the offer document disclosing the use of such funds. Another interesting amendment is that the entire pre-assue share capital, other than that locked-in as promoters’ contribution shall be locked-in for a period of one year from the date of commencement of commercial production or the date of allotment in the public issue, whichever is later. For the full text of the Circular see SEBI section of envestindia.com

Mukta Arts IPO just oversubscribed

3-8-00, Mumbai According to preliminery reports available to us, Mukta Arts public issue is just oversubscribed. The final figures are awaited. Primary market responses have considerbly reduced. Leading merchant bankers have started advising their clients to go slow on launching of their IPOs.

Vishnu Organics Limited finalises IPO plans

5-8-00 According to market reports Vishnu Organics Limited proposes to launch its Public issue in 3rd or 4th week of August 2000, at a premium of Rs. 20/- per Share. This is a Baroda based Company. It will be interesting to see how much response a non-ICE (Information, Communication, Entertainment ) issue receives. More details on issue are awaited.

Telephoto Entertainment Limited public issue heavily oversubscribed

5-8-00 Saturday According to market reports Telephoto entertainment Limited’s Public issue of 27,50,0000 Equity shares of Rs. 10/- each offered at par, which opened on---- June,2000 has been oversubscribed around 45 times. However, in view of the small size of the issue, it may not give clear idea to other issuers about the real state of the primary market. It appears that investors are not averse to par issues or small premium issues. The real trouble is with larger issues or high premium issues. Hughes Tele.com is one proposed issue which merchant Bankers and other issuers are keenly watching about its timing and the response to it ,as the size of the Issue is above Rs. 700 Crores

SHCIL proposes a maiden Public Issue

Stock Holding Corporation of India Limited is in talks with international consultants like KPMG, Pricewaterhouse Coopers, Arthur Andersen for its proposed maiden Public Issue.Currently SHCIL shares are privately held by financial institutions like IDBI, ICICI, IFCI, UTI, LIC, GIC and IIBI. The Company has a paid up capital base of Rs.21 crores and a tangible networth of Rs. 100 crores.

L&T PLANS Rs.100 - CRORE DEBENTURE ISSUE

Larsen & Toubro (L&T) is going to hit the market with a Rs. 100 crore debenture issue. The Issue has secured with an AAA rating from Crisil which is a highest safety rating. The Company is also planning to improve its capital structure through various measures which may include part divestment of its stake in L& T Information Technology. Debenture proceeds will be used for capital expenditure and working capital requirements. The Company is looking at the possibility of selling part of the stake in L&T Information Technology on a private placement basis.

ONIDA BRAND VALUED AT RS. 550 - 600 CRORE

Pricewaterhouse Coopers values television major Mirc Electronics' Onida brand at Rs.550-600 crores. The company plans to assess the brand professionally on an annual basis. Chairman and Managing director of Mirc Electronics G. L. Mirchandani, however commented that the valuation doesn't entirely capture the value of its recent launch 'Candy' series of televisions. The valuation was done on the basis of the Excess Value Approach and the value so arrived at has been validated by the Marketing System Contribution Approach and the Market Royalty Approach. The Excess Value Approach is further assesses the Value of Mirc using the discounted cash flow approach. Mr. Mirchandani further added "Through sheer innovation and never-before models, we are looking at carving out a niche for our brands." Mirc Electronics is also planning to launch the Candy Duet 20 inch television and Onida KY Thunder 650 watts series very soon. The company had made a comeback since 1998 with the launch of its new models and the new look advertisements helped the company to capture further market. The Company is focusing more on innovation to command a strong position in the Market. Also the Company has hired Andersen Consulting for looking into the avenues of cost savings, supplier rationalisation, value engineering, standardisation and extended supply chain analysis.

FOREX LAW VIOLATORS NO LONGER CRIMINALS BUT CIVIL OFFENDERS, AS FEMA TAKESOVER FERA FROM 1ST JUNE, 2000

Foreign Exchange Regulation Act (FERA) will lapse into history from 1st June 2000, as Foreign Exchange Management Act (FEMA) takes its place. FERA was enacted by the parliament in 1973 in view of acute shortage of foreign exchange resources of in the country, FERA, was replaced by the government since it became incompatible with its proliberalisation policies. The most important change in FEMA being forex law offenders will no longer be criminals but civil offenders. For those dealing in Foreign Exchange Section 3 to 9 of FEMA lays down what to do and what not to do and also prescribes a maximum penalty of thrice the amount of money involved, in case of contravention of any of the provisions as against five times under FERA. In case of failure to pay the penalties, although no prosecution is attracted but the Enforcement department can approach the court and sent the offender to jail where they shall be treated as civil offenders who will have to pay charges for his stay in jail. Cases pending under FERA are required to be settled by 31st May 2001, thereafter they will lapse.

DIRECTORS TO GET Rs. 5,000 AS SITTING FEES.

The ceiling on directors' fees for attending meetings has been more than doubled from Rs. 2,000 to a relatively respectable Rs. 5,000. The central government has amended rule 10-B of the Companies (Central Government) General Rules and Forms, 1956. The revision takes effect from April 1, 2000. Sitting fees for attending board meetings have been hiked marginally. Indian Companies can now pay remuneration up to a maximum of Rs. 5,000 as against that of Rs.2000 previously. The Central government has amended rule 10-B of the Companies (Central Government) General Rules and Forms, 1956. The revision will be effective from April 1, this year. Also an amendment has been brought about in schedule XIII of the Companies Act. This amendment relates to the payment of managerial remuneration to, in case of inadequacy of profits of the company. The limits now range between Rs. 75,000 to Rs. 2,00,000 per month, depending upon the effective capital of the companies as against that of Rs.40,000 to Rs.87,500 previously. The buyback procedures for unlisted companies have also been revised. The Private Limited Company and Unlisted Public Limited Company (Buy-back of Securities) Rules, 1999,have been amended with effect from March 2, 2000. Even a private company or an unlisted public company going in for for buy-back of shares or other specified securities has to necessarily disclose its pre and post buy-back equity ratios, in the letter of offer filed with the Registrar of Companies.

BSE LAYS DOWN LISTING NORMS FOR COMPANYS ALREADY LISTED ON OTHER STOCK EXCHANGES.

THE Bombay Stock Exchange (BSE) has unveiled its listing norms for companies, which are already listed on any other stock exchanges and want to get listed on the BSE. Such norms are applicable only for companies having issued capital between Rs. 5 Crore and Rs.10 Crore. The Companies are required to fulfill the following in order to get listing on the BSE. The new companies should have profit-making track record for at least three years. The minimum market capitalization of such companies should be Rs. 20 Crore based on average price of the last six months. The companies have to adhere to certain trading criteria to become eligible for the listing on the exchange. The companies should have been traded for a minimum 50 percent of the total trading days during the last six months on any stock exchange. The average daily volume and trades should be minimum 1,000 shares and five trades during the last three months. The companies are required to keep minimum 25 per cent of issued capital with public including Bodies corporate. They also need to sign an agreement with CDSL and NSDL for dematerialised (demat) trading.

FINANCE MINISTER, MR. YASHWANT SINHA PROVIDES AN ASSURANCE FOR AMERICAN INVESTORS IN RELATION TO THEIR INVESTMENT IN INDIA.

While addressing the American investors, with regards to the investment in crucial sectors in India the finance minister also provided an assurance to the investors about safety of their investments made in India irrespective of the government in power, thereby potraying a stronger image of the country's economy and consensus among various parties for reforms. He also highlighted the governments determination to carry on with its reforms process and also hinted at the possibility of opening up other sectors on the Indian economy. Infrastructure, Telecommunications and Agriculture related activities were the important areas for investments he stressed upon. He also revealed the country's plan to build 13000 kms. of national highways and providing 75 million connections by 2005 and increasing the same to 175 million by 2010.

Cyberspace Multimedia Limited to raise Rs. 3.4 crores.

The Company Cyberspace Multimedia Limited is offering 34 Lakh equity shares for Rs. 10/- each aggregating to Rs 3.4 crores. The Company has plans of setting up offices in USA, Singapore and South Africa. The Company also plans to undertake activities such as developing of banking and financial software’s developing of Multilingual CD’s, webhositingand other web oriented products.

Comp-U-Learn Tech India Limited to raise Rs. 2.50 crores.

Comp-U-Learn is offering 25 lakh shares of Rs. 10/- each aggregating to Rs. 2.50 crores and utilise the same for setting up development offices in the USA and also to expand its Chennai located Development centre. The issue iwill remain open from 3rd July, 2000 to 7th July, 2000 .

Hyderabad based Tera soft plans to Raise Rs. 2 crores from the primary market.

Tera Software Limited plans to offer 20 lakh shares of Rs. 10/- each at par aggregating to Rs. 2 crores. The Company is into the business of providing software solutions. Also a part of the proceeds are to be used for part-financing the company’s project of expanding its operations and also for setting up overseas offices.

Aksh Optifibres issue opens on 28th June 2000

Aksh Optifibers is coming with a Public Issue of Rs. 32.78 Crores. The Business of the Company consists of manufacture of Optical fibers and cables. The Company plans to utilise the issue proceeds for expansion of its existing capacities and also to commence manufacture of quartz preforms. The issue closes on July 4 2000.

Orpine systems to raise Rs.2.71 crores through an Initial Public offering

The Public issue of Orpine systems opens on 26th June 2000. The Company is offering 27.10 lakh shares at Rs. 10 each/-. The issue proceeds will be utilised to set up a 100% EOU and to set up subsidiaries in the USA, Australia, Singapore. The issue closes on 30th June 2000.

Rs. 1.5 crore issue of Virtual Dynamics to open on 28th June,2000

Virtual Dynamics Software Limited is coming out with an Initial Public Offering of Rs.1.5 crores. The Company proposes to use the money raised through the Public issue for the purposes of expansion of Infrastructure, repay the term loans and also for setting up a subsidiary in the US. The offer closes on 1st July 2000.

Apar Infotech Plans a Rs.50 crores Intial Public Offering

Apar Infotech India, an e-commerce solutions provider is planning an initial public offering of Rs.50 crores Apar Infotech India is an wholly owned subsidiary of Apar Holding corporation limited, a global information and technology services and solutions provider. The Company mainly focuses on e-commerce and issue proceeds are proposede to be used for the purposes of setting up offshore development centers for software solutions in India..

E.star infotech to raise Rs.4 crores.

E.star infotech is planning to raise Rs. 4 crores by issue of 40, 00,000 equity shares of rs.10/- each. The Company plans to start operations in the fields of software and proceeds are proposed to be used for the purposes of software development and training. The issue is appraised by Bank of Rajasthan.

Online Mutimedia Limited, Public Issue to open on 19th June 2000

Online multimedia is planning to raise Rs.2.70 crores through its Public offer. The Company is planning to undertake activities like internet/; extranet network solutions, digital studios, software development. The issue proceeds are to be used for setting up basic infrastructure, purchase of equipment and setting up of international offices.

IPO of Chennai based, Telephoto enterprise Limited opens on 19th June 2000

Telephoto enterprises is coming out with an initial Public Offering of Rs.2.75 crores. The company plans to utilize the issue proceeds towards part-funding the establishment of an animation and post-production studio. The shares are proposed to be listed on The BSE and Chennai Stock Exchange. The issue has been appraised by Centurion Bank.

Web Development Company (WDC) planning to go public by March, 2001

WDC is into the areas of infotech training and development of corporate websites. WDC has also spun-off its three different portals into three separate companies.

Kirloskar Multimedia Limited issue opens on 12th June, 2000

The public issue of Kirloskar Multimedia Limited is to open on 12th June 2000. The Company is Issue size is of 3.65 crores and the Company plans to raise money for the purposes of Purchase of equipments, product development and marketing, To setup an international marketing office and to retire debts

Derivatives Trading on the National stock Exchange all set to start from 12th June 2000

The Index futures trading on the National Stock Exchange will start from 12th June, 2000. meanwhile the Bombay Stock Exchange.

Hughes tele.com to come out with an IPO of Rs.753 crores, as DoT gives a go ahead for equity addition of Rs.1000 crores

The Department of Telecom has given its nod to Hughes Tele.com to further raise its Capital by Rs.1000 crores. The Promoters will bring in Rs.138 crores and the Company plans an IPO of Rs. 753 crores. The company is awaiting FIPB approval for foreign Equity being brought in by promoters and approval from SEBI for its offer documents filed with SEBI. The Company proposes to raise funds for the purposes of creating a broadband network across Maharashtra. The Company has also signed a contract with Lucent Technologies to develop infrastructure for Internet services. The Company wishes to provide connectivity through high-speed optic fiber network and also provide access to the Internet. The Company is also planning to tap the markets through 100% book-building offer mode.

Price crash at the stock markets leads to deferment of preferential allotment of shares.

The recent crash at the stock market has led to many companies deferring their preferential allotments to a later date. Prominent among them being Sonata Software, Tata Finance, Moser Baer, Alok Textiles and others.These companies had proposed to raise over more than 1000 crores by way of such allotments. The main reason for deferment being, the companies have already calculated the price for such preferential issues as per SEBI norms and the prevailing market price of the companies is at a discount of around 50 to 60% of the price arrived at as per SEBI guidelines for preferential allotments. Like in case of Sonata Software the price as per SEBI guidelines for preferential allotment works out to Rs.1722 but its market price presently is around the range of Rs.845-850. The guidelines require approval from the members of the Company for preferential allotment and the allotments are to be made at the prices approved by the members, so in case the companies intend to revise the price they are required to recall the meeting of members as well as amend the already passed resolutions.

High Premium IPOs fail to live up to investors Expectations

The recent High priced and oversubscribed IPOs failed to live up to their expectations. These Companies turned out to be major losers on the BSE. Cadilla healthcare, Elder Pharma, Cinevesta communications, Ajanta Pharma being a few of them. The stocks have listed at a discount of around 2 to 60% of the prices at which they have been issued. Ajanta Pharma, which was initially issued for Rs.225/-, listed at Rs.180/-. Similarly Elder Pharma, which was offered at Rs.110/-, was trading around Rs.41/-. All of the above IPOs were oversubscribed several times like in case of Cadilla healthcare the book-building portion was oversubscribed around seven times. In advent of the volatile market conditions the investors in these scrip’s are opting to exit anticipating a further fall.

Padmalaya telefilms limited issue closed on 6th June 2000

Padmalaya telefilms Limited initial Public offering closed on 6th June 2000. The Company has offered 25 lacs equity shares of Rs. 10/- each for cash at a premium of Rs. 90/- aggregating to Rs. 25 crores. The Company is a fully integrated television software and content provider. The Company has tied up with In-House Production Limited for marketing of Television software. Similarly the Company has also tied up with Pentamedia for providing consultancy services and also software and training for its Hyderabad studio. Also the company has an agreement with Indiainfo.com for creation of WEB ads and portals.

Sark systems India limited’s initial Public Offer opens on 12th June 2000.

Hyderabad based Sark Systems India Limited is entering into the Capital markets with an Initial Public Offering to part finance its expansion plans of Rs.4.44 crores. The issue proceeds will be utilized towards construction of own software development center, overseas marketing offices in U.S. and to finance its existing software and hardware. Promoters contribution in the offer is to the extent of Rs.2.3 crores with a term loan of Rs.65 lacs and Rs.1.46 crores coming from the Initial Public offering of 14,65,000 equity shares of Rs.10/- each at par. The main activities of the Company include software development for internet, intranet and e-commerce applications, systems integration, Enterprise resource planning and computer planning.

Rediff.com India sets a price range of $10 to $12 for its ADS.

Rediff.com India has set a price range of $10 to $12 for its $75 Million American Depository Shares as reported by the Securities and Exchange Commission filing. Rediff will offer 4.6 million ADS representing 2.3 million Equity shares. The issues is being handled by Goldman Sachs, Credit Suisse, First Boston and Robert Fleming. Also the Company has backing from Intel Corporation and GE Capital services of General Electric Company. The proceeds of the ADS will be used to develop content for advertising and general corporate support.

Banglore based Infiniti Infotech plans an IPO

Infiniti Infotech is currently in talks to acquire Rs.15 crores for its working capital requirements and also plans an IPO. The company has also hired Price water house Coopers for making a valuation of the Company. The Company is also to float a dotcom shortly. The same may be a separate division or may be spun-off into a subsidiary Company with a different management. The Company currently has a revenue of Rs.3 crores and expects the same to grow around 5 times by 2000-2001.

MMTC plans IPOs to fund projects

PUBLIC sector trading company MMTC is planning to float two IPOs (initial public offers) for its steel and metallurgical coke projects which are scheduled to be commissioned by the end of this year.

Radiant Software Plans Rs. 21 cr. IPO in June 2000

Even as equity funds continue to wilt under bear assault, debt funds have come under severe redemption pressure from corporate investors in the month of March with an estimated outflow of Rs 2,600 crore. This translates into a little over one-fourth of the total assets of Rs 10,000 crore managed by open-ended, medium-term debt funds

Eased IPO norm for IT, media cos to benefit many

FUNDING requirements will now decide the size of public issues of media, entertainment and telecom companies, rather than regulators’ whims.

Mohandas Pai group lines up four IPOs

THE Manipal based Rs 1,500-crore, multi-business Mohandas Pai Group is planning a clutch of IPOs in the coming weeks to launch a Kannada television channel and to fuel the expansion plans of two group IT companies, Zeta Cyber Solutions and Zeta Infotech

Contrarian investors

If you think mutual funds have pulled 500 points off the BSE Sensex since March 1, then you are mistaken. The numbers speak otherwise. A quick analysis of the daily purchase and selling reveals that domestic funds have been net buyers to a tune of Rs 2.68 billion between March 1 and March 24, 2000

RBI move signals a lower interest-rate regime

The cut in CRR and bank rate will not only infuse more liquidity in the system, it will also give a boost to the net asset value of debt and gilt funds

Gilt, debt funds record sharp gains

Thanks to the cut in CRR and bank rate on Saturday, gilt and debt funds invested towards the long-end of the market have delivered stupendous returns. Debt securities recorded sharp gains on Saturday and Monday after the rate cut announcement by the apex bank with long-dated gilts gaining an average Rs 2 to 2.5