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Sunday,
August 3, 2003, Chandigarh, India  
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PTL may fall into unsafe hands New Delhi, August 2 The offloading of the 23.5 per cent stake of the PSIDC in Punjab Tractors to CDC can set a precedent that may well hold out dangerous portends for the country’s disinvestment programme.
Anil opposes decision to sell Escorts Heart stake
Reprieve for Rathi Steel
Aviation notes |
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Forex reserves soar to $84.9b 
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PTL may fall into unsafe hands
New Delhi, August 2 Merchant banking sources tracking India’s disinvestment programme told The Tribune that post-disinvestment, the management control of the tractor major will pass on entirely to banks and financial institutions (FIIs) — something which has never happened in the country before. They said the exit of tractor manufacturing majors from the bidding process of PTL leaves a few unanswered questions. One of the basic premise of adopting the strategic sale methodology in lieu of others such as IPO is that it will bring technical, marketing, financial, managerial expertise of the buyer to the company. The merchant bankers said in the case of the PTL-CDC deal, it remains to be seen whether this objective gets fulfilled as management and operational control will entirely pass on to FIIs and not to any existing tractor manufacturer, with proven technical competence. Analysts said the very fact that tractor majors such as Mahindra and Mahindra, New Holland India, Eicher, etc backed out at the eleventh hour on reported grounds of “lack of clarity on the management control.” It perhaps, reflected a situation that the target investor with “strategic fit and techno-economic credentials” were not clearly defined by the Punjab Government. Another issue that has not been clearly spelt out is whether the Securities Exchange Board of India (SEBI) has actually not categorised PTL as a PSU or whether CDC has been exempted by SEBI from making an open offer. The merchant banking sources said Friday’s confusion over the open offer by CDC on PTL shares have only highlighted the fact that PTL may eventually be hostage to hostility among the stakeholder FIIs to gain management control. They said since the power of nominating the chairman was not yet decided in the shareholder’s agreement, the successful bidder (CDC in this case) will have to gain absolute control on the board for managerial and operational purposes. This can be difficult to achieve in the current shareholding structure. Prior to disinvestment, the Secretary (Industries), Punjab, was the ex-officio Chairman. However, post-divestment, confusion prevails about who will be at the helm of affairs. According to analysts, although the shareholders’ agreement specifies that the post of the Chairman will be decided by the Board, it is not entirely devoid of ambiguity. “For instance how will decisions on expansion programmes be taken and by whom? If these are to be taken by the Board, where the majority stakeholder has only two members in a total strength of 12, then will it not tantamount to curbing operational freedom?” a merchant banker asked. The PSIDC was the majority stakeholder of the company with equity stake of 23.49 per cent. Other shareholders include the UTI (18.18 per cent), the IDBI (9.06 per cent), mutual funds (2.28 per cent), the LIC (10.22 per cent), FIIs (12.86 per cent) and public including employees (18.08 per cent). |
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Anil opposes decision to sell Escorts Heart stake New Delhi, August 2 “I am exploring all options,” he told PTI when asked if he would take recourse to challenging the decision taken by the Board of the the Escorts Ltd to sell its 17.1 per cent of the company’s total 80 per cent stake in the Escort Heart Institute and
Research Centre (EHIRC). The clash between the two brothers came out in open when Anil wrote to members of the Escorts Board questioning the unanimity of the decision and showcasing the opinion from Supreme Court lawyers to question the legality of the move. Recalling that the EHIRC was set up by his father H.P. Nanda as a charitable trust, Anil opposed commercialisation of the good work for profiteering while criticising group chairman Rajan for misleading Escorts’ Board members by being in collusion with those of the heart institute. Rajan rejected the charges saying he wanted to internationalise the institution to really serve the purpose for which it was created. “There is collusion between the board of Directors of Escorts and the EHIRC. The sale of a 17.1 per cent Escorts Ltd stake in the EHIRC was never approved at the Board meeting,” Anil said. Escorts Heart is a closely held company with 80 per cent of its equity resting with Escorts Limited, and 10 per cent each with Rajan Nanda and heart specialist Naresh Trehan. After the Escorts’ Board meeting on June 27, Anil Nanda sent a dissent note to the remaining members, opposing the sale of Escorts’ equity in the heart institute. “The company secretary’s letter on July 24 and the minutes circulated for the confirmation of the Board meeting held on June 27 state that the divestment of 3,42,051 equity shares held by Escorts Ltd in the EHIRC at a total price of Rs 65.40 crore to Merilon India Fund has been approved unanimously. This is totally incorrect, since no such decision was taken,” Anil said in the letter. Having clarified that the stake sale was not cleared by the Escorts Ltd Board, Anil further said “in the light of the above opinion, I strongly recommend against this divestment and would like my dissent to be recorded. “At the board meeting.....a presentation was made regarding the restructuring of the EHIRC in which it was decided that equity shares of Escorts Hospital held by ICICI Bank and Escorts Ltd should be acquired by the EHIRC,” he added. —
PTI |
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Reprieve for Rathi Steel New Delhi, August 2 The business and reputation of Rathi Steel will suffer if an interim injunction is not issued in favour of it and there is apprehension that substandard goods produced by the other company may be passed on to the consumers as goods produced by the former, Mr Justice R.C. Chopra observed. Unsuspecting consumers might be misled to purchase the steel goods produced by Golden Rathi Star Industries Ltd believing that the same had been produced by Rathi Steel, the court said. |
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Aviation notes Concerned and disappointed at the lethargic approach of the Airports Authority of India (AAI) in developing world-class airports in Delhi and Mumbai, the Deputy Prime Minister, Mr L.K. Advani, in an unusual move, summoned for a ‘review’ meeting on Saturday last. The government’s concern was legitimate. The Deputy Prime Minster had demanded the review because as much as Rs 2,000 crore for the Indira Gandhi International Airport (IGIA) and Rs 1,500 crore for the Sahar Airport had remained virtually unutilised. Since the sanction of the amount in March, not a brick has been laid for constructing a new terminal II and runway although the land is available and engineers and technicians are in a position to start work on the mammoth project. In the review meeting, the AAI and other officials played safe. Instead of submitting details as to what measures have been taken in constructing a new international terminal building at Delhi, the officials talked about ‘beautification and renovation’ of the existing terminal II, which has reached a saturation point. There is no scope for expansion or renovation except pulling out a few huge paintings and installing new ones. The core matters were not discussed at the crucial meeting. Someone at the meeting pointed out that the work had not begun because sanction from the Planning Committee had not yet come about. This is more a myth than a reality because where is the difficulty for the government to get this formality completed. As nothing worthwhile has happened in all these months, aviation experts now feel that this state of congestion and inefficiency at the airport will continue for a while as elections are shortly scheduled in Delhi. The IGIA needs modernisation on a war footing. It is not necessary to have modern architecture or high-tech equipment for the international terminal but friendly ambience so that the flow of incoming and outgoing traffic is maintained without any
hindrance. The tourists visit this country to enjoy their holidays at different centres and not necessarily to appreciate huge paintings of M.F. Hussain. Despite several impediments, air traffic continued to rise in 2002-2003. More than four million persons travelled through Delhi instead of the targeted capacity of 3.9 million. This being the reality, expansion is not possible. The AAI should now settle for new terminal without losing any time. Its policy should be to serve users instead of raising funds. It has already surplus of about 2,500 crore. |
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