|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.
KPMG director (advisory services) Manish Mohnot said the change seems be focused on bringing 'more depth in the derivative market.'
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.
|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:
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 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.
|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.
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.
VALUATIONConsidering 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
NON-INSTITUTIONAL CATEGORY: - 57.59 TIMESTENTATIVELY 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 KarvyBroking 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 isneed not worry about shifting their DP accounts.”
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.
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.
|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.
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.
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.
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...
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
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.
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.
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).
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.
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.
This section allows you to claim a deduction for interest on loans taken for pursing higher education.
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.
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.
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.
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.
If however, you do not file returns before March 31, then a penalty of Rs 5,000 will be levied on you.
ConclusionSign 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.
• 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.
Stock Market InformationThe 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 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%.
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
|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 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.
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 systemGo 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 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.
· 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 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 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:
Detailed circulars are being issued separately.
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.
|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 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 fo