Mumbai, September 12
The RBI today announced a draft scheme of amalgamation of United Western Bank (UWB) with the Industrial Development Bank of India Ltd (IDBI).

An RBI press release said the bank had placed in public domain a draft scheme of amalgamation of the UWB with the IDBI. The draft scheme has also been sent to both banks and the apex bank had invited suggestions and objections on the draft scheme from members of the public, including the banks’ shareholders, depositors and creditors.

Both banks have been given time up to September 27 this year to consider the draft scheme. The RBI will take a view on the future setup of the UWB soon thereafter.

As per the draft scheme, IDBI will have to make an upfront payment in cash of Rs 28 per share in respect of every fully paid-up share in UWB to investors as on prescribed date, which will be decided by the government later.

Market sources said IDBI would have to pay Rs 150.50 crore to UWB shareholders. The payment made to UWB investors will be considered as provision for bad debt, the scheme says.

Meanwhile, UWB executive members are meeting at the headquarters of the bank in Satara, Maharashtra, to discuss the draft scheme, a bank source said.

IDBI Chairman V P Shetty said, "We will be getting a strong branch network belonging to the UWB," but did not comment on other aspects of the draft amalgamation scheme.

It may be recalled that UWB was placed under an order of moratorium on September 2. The order is effective up to December 1, 2006, or an earlier date if alternative arrangements are in place.

The RBI received expression of interest from 17 entities for taking over/restructuring the UWB. The only restructuring proposal was from the UWB, which envisaged help of the Government of Maharashtra and other investors. — Agencies

New Delhi, September 12
The latest amendments to the Finance Act, 2006, will pave the way for an end to PF trusts, forcing the employers to contribute provident fund of their employees to the Employees Provident Fund Organisaton (EPFO), which is already facing difficulty in paying interest to employees, said Ms Sushma Berlia, President, PHDCCI.

“In India, under the Income Tax Act, 1961, any sum paid by an employer to a recognised provident fund is allowed as a deduction from business income. If a PF trust ceases to be recognised under the Act, deductions will no longer be allowed from the business income,” she said.

The PHDCCI chief said with the latest amendments, all these trusts would be in trouble due to the insertion of a new clause in the IT Act in Rule 4 of Schedule IV Part A. Trusts have to obtain exemption by 31st March 2007 under the EPF Act. If they failed to do so, they would forgo the recognition granted to them under the IT Act, she maintained.

Provident funds are covered by the EPF & MP Act 1952. If this act is not applicable, approval under the IT Act is obtained. Under the EPF Act, an establishment may be exempted under certain conditions and have its private trust or may be unexempted whereby the PF contributions are deposited with the EPFO.

One fourth of the funds are actually awaiting exemption but are “deemed relaxed” under para 79 of the EPF Act. The “deemed relaxed” trusts could number over 700 as per the latest figures.

Besides, there are Provident Funds to which the EPF & MP Act is not applicable. These are the “Excluded Trusts” and enjoy recognition by the IT Act. However, with the new amendment, it is unclear whether these significant number of trusts will also require to get exemption under the EPF Act which is not applicable to them.

Also affected are the funds created under the Acts of Parliament. These are funds of PSUs and organisations like ICAI, Indian Railways, ONGC and NHPC, which serve a large number of members. Again, it is unclear in what way the recent amendment will affect them. 

London, September 12
UK-based SABMiller plc, one of the world’s leading brewers, today announced that it had acquired Foster’s India, belonging to Australian drinks giant Foster’s, for $120 million on a cash-free debt-free basis.

Foster’s India currently operates one brewery based in Aurangabad in Maharashtra with a licensed annual capacity of 350,000 hectolitres. The company produces, distributes and supports Foster’s Lager, Amberro Mild and Amberro Strong beer brands in the Indian market.

Under the terms of the agreement, UK-based SABMiller will assume ownership of all Foster’s assets in India, including Foster’s brand in the territory.

SABMiller India, the subcontinent’s second largest brewer, makes Royal Challenge, Haywards 5000, Castle and the recently launched Haywards Black, India’s first stout beer.

The brewer said it would extend Foster’s Lager beer through its national network of breweries and seek significant cost benefits from brewing and distributing the brand locally.

“SABMiller India’s extensive footprint throughout the subcontinent, complemented by Foster’s share of Maharashtra and the important Mumbai market, India remains a principal growth market for SABMiller,” Mr Andrew Parker, Managing Director of SABMiller Africa and Asia, said.

India is the third largest market for the Foster’s brand globally, with presence in 19 states and a substantial share of the mild beer segment in Maharashtra

SABMiller plc is one of the world’s largest brewers with brewing interests in over 60 countries across five continents. — PTI 

New Delhi, September 12
Consumer electronics major Videocon has acquired South Korea’s Daewoo Electronics in a deal which is reported to be worth around $700 million (nearly Rs 3,220 crore).

Videocon Chairman and Managing Director Venugopal Dhoot refused to confirm industry reports that the deal was inked this morning, citing a non-disclosure agreement signed between the two parties a few days ago in Mumbai.

Videocon had jointly bid with US-based equity fund Ripplewood for the debt-burdened Daewoo Electronics, which was put on the block by its lenders. The consortium reportedly offered $700 million for a 97.5 per cent stake held by the creditors.

According to reports from Seoul, the consortium is 50.1 per cent owned by Videocon and the rest held by Ripplewood.

An AFP report quoting a statement from Daewoo Electronics said that the takeover was the “only realistic option” to save the country’s third largest electronics group, now in the seventh year of a debt workout programme.

Expressing strong support for the takeover led by Videocon, Daewoo President Lee Seung-Chng said the reason for actively pushing for a merger and acquisition was the company’s desperate need for investment in technology development.

The deal marks Videocon’s third purchase in the past one year after Thompson’s global picture tube business for $240 million euros (about Rs 1,260 crore) and loss-making Indian subsidiary of AB Electrolux, Sweden.

Videocon had taken over Electrolux Kelvinator India in a cashless transaction, wherein AB Electrolux agreed to subscribe to Videocon’s GDR worth about Rs 406 crore as part of the deal.— PTI 

New Delhi, September 12
The Prime Minister’s Office has asked the Power Ministry not to go ahead with the sale of 5 per cent government shares in the Power Finance Corporation (PFC) and come up with a fresh proposal for the company’s maiden public offer.

“The PMO has told the Power Ministry that the government would not like to sell its shares in the PFC but the company should be allowed to go ahead with its IPO plans,” senior officials said.

The Power Ministry would now have to draft a fresh Cabinet note for the IPO to raise its equity base by 10 per cent, which amounts to 10.3 crore shares.

Power Ministry sources said the process had already been initiated for getting fresh Cabinet approval.

Before the disinvestment process was halted due to opposition from the supporting Left parties and the DMK, the UPA Government had decided to piggy ride on the PFC public offer and sell its 5 per cent shares in the market as part of disinvestment.

The company had even filed the draft prospectus with the Securities and Exchange Board of India. The SEBI approval came on July 16 and it had three months to hit the market.

However, with plans changing, the entire process would have to be repeated. The PFC was offering 15.45 crore equity shares of Rs 10 each. — PTI

Chandigarh, September 12
Public sector banks are trying to match their performance with those in the private sector. In this context, these banks have now started outsourcing many of their services.

Outsourcing is no longer restricted to security services at bank premises and ATMs, or transfer of cash from currency chests to the bank branches. Other services like replenishing of cash in off-site ATMs, clearing of cheques, getting MICR bands on cheques, inter- branch reconciliation of accounts, evaluation of property pledged by loanees under the Securitisation Act are now being outsourced to private agencies.

A top official in the Central Bank of India said many banks had started outsourcing the sorting of cheques for clearance. “The agencies hired for the purpose are handed over the cheques in the afternoon, which return these after sorting by the evening. Besides, most of the technology- based services in the public sector banks are also being outsourced,” he said.

Banks that recently financed applicants for various HUDA housing schemes in Haryana had outsourced the processing of applications. Many PSBs have also outsourced the work of checking credentials of applicants for credit cards offered by them.

Though most private banks have been outsourcing a majority of their services for quite some time, the public sector ones had been reluctant to follow suit. Recently, the RBI had suggested that the PSBs outsource work for issuance of drafts, cash withdrawal, sanction and disbursement of loans and opening of bank accounts. However, various bank unions had rejected these suggestions on the pretext that “it was an effort to privatise the banks”. 

New Delhi, September 12
ONGC has sought calibration of cess on domestic crude oil to international oil prices so that the government revenue moves in tandem with the subsidy requirement.

The government currently levies Rs 2,500 per tonne cess on crude oil produced by ONGC and Oil India Ltd (OIL). But, ONGC wants it to move in tandem with international oil prices, rising by Rs 200 per tonne with every dollar increase in crude prices and falling by the same proportion with every decline.

Sources said ONGC in a recent communication to the government presented a proposal where no cess was to be levied on crude if prices remain up to $35 per barrel.

A cess of Rs 500 per tonne is proposed to be levied if crude prices range between $35 and $40 per barrel, Rs 1,000 per tonne for price between $40 to $45 per barrel, Rs 1,500 per tonne for price falling between $45 to $50 per barrel and Rs 2,000 per tonne for crude price ruling between $50 to $54.99 per barrel. At $55 per barrel crude price, a cess of Rs 2,400 per tonne may be levied, the ONGC proposal said. 
— PTI

New Delhi, September 12
BSNL today reduced international long-distance (ILD) tariff for Sri Lanka by 40 per cent and to West Asian countries by 20 per cent from October 1 to spur in competition in the international calls market.

As per the new tariff for Sri Lanka, the pulse rate has been changed from 6 seconds to 10 seconds and the charges have been reduced to Rs 7.20 per minute as against Rs 12 per minute.

For countries like Kuwait, Bahrain, UAE, Oman and Qatar, the rates have been reduced from existing Rs 12 per minute to Rs 9.60 per minute and the pulse rate has been increased from existing 6 seconds to 7.5 seconds.

BSNL said the revised tariff would apply to all calls originating from fixed, cellular and WLL (mobile) phones of BSNL and also applicable to trunk calls and PCOs as well.

London, September 12
India is scouting for the latest technology to improve blast furnace efficiency of its steel plants in order to increase the annual steel output to 65 million tonnes from the current 42 million tonnes by 2012.

In this connection, a high-level delegation led by Steel Minister Ram Vilas Paswan held detailed discussions here yesterday with Philippe Varin, Chief Executive of Corus, an international company which is into steel and aluminium products.

Earlier in the day, the delegation had a separate meeting with NRI steel tycoon Lakshmi Mittal who stated his intention to invest in India but sought "facilitations" from the Centre and state governments of Orissa and Jharkhand and some kind of linkages to ensure availability of natural resources.

According to Mr Paswan, Mr Mittal suggested that India should ban export of high-quality iron ore as in the years to come it might find shortages. India has a reserve of 23 billion tonnes of iron ore, of which about 1 billion tonnes was of high quality ore.

Concurring with him, the minister said the ministry had already written to the Prime Minister to take necessary steps in that connection.

During the discussion with the Corus Group, Mr Paswan said India proposed to invest $60 billion to increase its steel production to 110 million tonnes by 2019.

He said the steel plants in the country, both in public and private sectors were currently on an expansion mode and "they are taking this opportunity to look at the best options available."

The Corus CEO said there was clear potential for investment in India and said his company was looking forward to such links with India. Later, the delegation left for Luxembourg.— PTI

New Delhi, September 12
Finance Minister P. Chidambaram said today Rs 14,150 crore worth of oil bonds meant for oil-marketing companies would be issued this month but ruled out statutory liquidity ratio (SLR) status for oil bonds.

It implies that banks will not be able to subscribe to the bonds as part of the requirement that they invest 25 per cent of their liabilities in approved securities, among other things.

The Government has approved the issue of the first tranche of oil bonds worth of Rs 14,150 crore out of total of Rs 28,300 crore to state-owned oil-marketing companies to compensate them for the losses on retail sale of petrol and diesel.

Last year, oil bonds worth Rs 11,500 crore were issued to the oil companies with maturity of three, six and nine years at the respective coupon rates of 7.33 per cent, 7.47 per cent and 7.61 per cent.

The Finance Minister also said high industrial growth would not put pressure on rates while maintaining that the mining and power sectors had picked up sharply in July. According to him, there is ample liquidity in the banking system. The Finance Minister expects robust growth momentum to continue.

New Delhi, September 12
NIIT today announced a public-private partnership with three Indian Institutes of Management (IIMs), with the launch of a new institute — 'NIIT Imperia', which will provide management education to working executives using synchronous learning technology.

Synchronous learning technology enables remote classrooms to be connected live with the faculty teaching at the IIM institutes, which will use broadband with two-way audio video and special software.

As per the agreement, the content, teaching and certification and domain knowledge will be from one of the IIMs located at Ahmedabad, Kolkata and Indore, while the technology, synchronous classrooms across the country and the management of the distributed education system will be provided by NIIT.