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Ambanis bury the hatchet
Airbus, Boeing hint at patchup
SEBI pulls up mutual funds
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PC rules out privatisation of public sector banks
Aviva awaits opening up of pension sector
Power tariff hike blow to industry
Nod to SEZ in Gurgaon district
JP Morgan to pay $ 2.2 b to Enron shareholders
Kingfisher signs contract for A380
Aiyar meets PM on petro prices today
Corporate
news
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Ambanis bury the hatchet
New Delhi, June 15 Reliance group Chairman Mukesh and his younger brother, Anil, met last week as part of efforts to hammer out a settlement, under which flagship company Reliance Industries and IPCL would be retained by Mukesh while Anil would get Reliance Energy Ltd, Reliance Capital and Reliance Infocomm, knowledgable sources said today. Day-to-day talks are being held between the two sides to work out details based on which a formal announcement could be made on July 6 to end the fiercest battle in the corporate history of India. The settlement is based on the formula suggested by ICICI Chairman and Ambani’s family friend K.V. Kamath, who preferred IPCL and RIL going to one brother instead of splitting the companies. Being keenly watched by the government, the settlement process had gained speed during the past one month, knowledgeable sources said. As part of the speeding up progress, Kokilaben, widow of the founder Chairman of Reliance, Dhirubhai Ambani, is meeting the two brothers separately almost on a daily basis, they said. Contrary to media reports about the confusion over who would get Reliance Capital, the sources indicated that the company operating in the market is set to go to Anil along with Reliance Energy and Reliance Infocomm, headed by Mukesh. As per the broad understanding, new businesses of the Reliance group that came into existence in the past few years would go to younger brother Anil while the parent company, RIL, and petrochemical venture IPCL would be retained by Mukesh. Possibilities of a merger between RIL and IPCL in future could also not be ruled out. Keenly watching the progress on the largest corporate house in the country, Finance Minister P. Chidambaram said last month that the two Ambani brothers were moving towards settlement and there was no need for any government intervention in the family dispute. Along with the Finance Ministry, the Ministry of Company Affairs has been keeping a tight watch on developments, with the sources saying the two brothers have communicated to the government their willingness to put behind their past. Even as the negotiations are in full swing, the movement of top executives within the group has already started. Some of the close lieutenants of Mukesh Ambani, including Manoj Modi, have already moved away from Reliance Infocomm. Most of the executives who had opted to work with Mukesh Ambani, both in Delhi and Mumbai, have been absorbed in the parent company RIL’s new oil and gas business, the sources said. In his report evaluating the group companies and family assets, Mr Kamath, aided by investment banker Nimesh Kampani of J.M. Morgan Stanley, is reported to have fixed a value of about Rs 25,000 crore for Infocomm and up to Rs 800 a share for RIL equity, an issue that dominated the negotiation process.
— PTI
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Airbus, Boeing hint at patchup
Le Bourget, France, June 15 Airbus said the reason it had delayed its A350 model was to calm tensions and Boeing Co. said negotiations were the best way forward. Washington’s clash with the European Union at the WTO involves accusations of improper state subsidies to the largest aerospace company on each side. In a conciliatory sign from the European side, Airbus Chief Executive Noel Forgeard for the first time on Tuesday said a delay in plans to launch the industrial phase of its new A350 model was intended to help clear the atmosphere. “The fact that we are trying to reach an amicable settlement doesn’t mean we will compromise on our conditions for a settlement. Boeing is receiving huge government money.” Airbus first announced the launch a new mid-sized cruiser, the A350, last year but has been forced to redesign it in the face of tough competition from Boeing’s similar 787
Dreamliner. While technical glitches and a shortage of engineering resources are also seen pushing back the start of work on the A350, Forgeard’s suggestion of compromise was a fresh nuance in a transatlantic war of words that has lasted more than a year. Mr Thomas Pickering, a former influential US Ambassador, who now serves as Boeing’s senior vice-president for international relations, also held out hopes for a negotiated settlement in an interview with Reuters. “The idea is not to punish Airbus, it is to get future trade where we can compete on equal terms,” Mr Pickering said. “Based on what’s been in the media, Airbus look willing to give up launch aid in return for putting a consideration of indirect subsidies on the table, and that’s been our position forever,” he said.
— Reuters
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Mumbai, June 15 “Some of the mutual fund houses are using term initial public offering (IPO) or at par issue for their new schemes to lure investors. This is an attempt to lure investors to subscribe to their issues by misleading them,” SEBI Chairman M Damodaran said addressing a mutual fund summit organised by the CII here today. He said issues like miscommunication and excessive churning of portfolios had been taken up with the AMFI and mutual fund companies would have to change the way they marketed their new schemes. Expressing concern over investor unfriendly practices, he said rebates and incentive to distributors were being used to drive the new schemes, at times at the cost of investor interest. The asset management companies should not focus on short-term gains but promote the image among investors that mutual funds can provide resonable returns over a period of time. — PTI
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PC rules out privatisation of public sector banks
New Delhi, June 15 “There should be no fear that we will privatise PSU banks.The UPA will not privatise PSU banks,” Finance Minister P Chidambaram said after launching 201 ATMs of Bank of Baroda simultaneously here today. The Finance Minister said the government was in favour of “large and strong banks” but made it clear that government equity in public sector banks would not come below 51 per cent. On the issue of granting more autonomy to banks, he said that the government was “willing to give banks more autonomy” but will have to come with better accountability. The Finance Minister also said that bigger and stronger banks would be in a better position to enhance credit growth. “Bank credit has to expand rapidly for which banks’ capital has to expand rapidly. That is why we are asking banks to grow in size,” Mr Chidambaram said. He also asked banks to expand their network in the country instead of remaining concentrated in certain geographical areas.
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Aviva awaits opening up of pension sector
Istanbul (Turkey), June 15 Mr Stuart Purdy, Managing Director, Aviva Life Insurance Company India Pvt Ltd, told visiting mediapersons: “During the last three years, we have focussed on building a well-trained direct sales force. The company will now be doubling it.” The insurance conglomerate expects its Indian operations to contribute at least 10 per cent of its global operations in the next 10 years. Aviva has no plans to enter the general insurance space in India. “However, we would enter the pension sector as and when it is opened up,” he said. The insurer currently enjoys a market share of 4.3 per cent in India and is ranked ninth among all private insurers in the country. Aviva, which currently manages assets worth $ 500-billion worldwide, has also been working on entering into the emerging markets in the Asia-Pacific region such as Malaysia, Taiwan and Sri Lanka. Meanwhile, Aviva in a bid to promote insurance education and research in India has signed an MoU with IIM, Ahmedabad, to set up an insurance research centre. The company will provide research for a period of three years. Aviva also announced the launch of a new single premium unit-linked scheme, Life-Bond Plus and a group gratuity scheme.
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Power tariff hike blow to industry
Ludhiana, June 15 “Since power constitutes two-thirds of the total cost of production in induction furnace units, the increase in tariff has led to a jump in the prices of steel by Rs 500 per MT, which will also hit the steel consumers of Punjab,” Mr Rattan Paul Bhatia, Zonal Chairman, Steel Re-rolling Mills Association of India, said. Frequent power cuts have already played havoc with the state’s steel industry, which produces three million tonnes per annum, and now the power tariff hike has put another question mark over the viability of the sector in Punjab, industry experts said. “It will directly hit the profitability of a steel consuming unit, which is already reeling under stiff competition. As a result, the growth of units would come to a standstill,” said Mr S.C. Ralhan, Regional Chairman, Engineering Export Promotion Council (EEPC).
— PTI
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Nod to SEZ in Gurgaon district
Chandigarh, June 15 The Haryana’s Commissioner and Principal Secretary, Industries, Mr P.K. Chaudhry, said here today that a decision to this effect was taken in a meeting held by senior officers of the state government with Additional Secretary of Union Ministry of Commerce, Mr Gopal K. Pillai in New Delhi yesterday. Mr Chaudhry said that this significant decision was a sequel to the new Industrial Policy announced by the Chief Minister Bhupinder Singh Hooda on June 6. He said that the SEZ would be developed in two phases at an estimated expenditure of Rs 2,060 crore. It would be set up by the Haryana State Industrial Development Corporation (HSIDC) and help in accelerating the pace of development and promote Foreign Direct Investment (FDI) and resultant exports. He said that 1,715 acres of land for the first phase of this project was in an advanced stage of acquisition.
— PTI
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JP Morgan to pay $ 2.2 b to Enron shareholders
New York, June 15 JP Morgan Chase, the No 3 US bank, announced its settlement just four days after Citigroup Inc. said it would pay $ 2 billion to Enron stock and bond investors who accused the banks of helping Enron in a huge accounting fraud. The Citigroup settlement with lead plaintiff, the Board of Regents of the University of California, had been expected to trigger settlements from some of the other 11 financial firms involved with Enron, which collapsed in December, 2001. “The noose is tightening around the necks of the other defendants. Stay tuned,” Mr William Lerach, the lawyer representing the University of California, told Reuters. He expected the final figure to exceed $ 6.1 billion that over 12 Wall Street banks agreed to pay to settle allegations they didn’t adequately examine WorldCom Inc.’s financial health when they sold securities in 2000 and 2001.
— Reuters
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Kingfisher signs contract for A380
New Delhi, June 15 Kingfisher Airlines order is for five A-350-800s plus five A-380s for intercontinental services, and five A330-200s for regional routes. The airlines said that the deliveries for A-330s are due to begin in the third quarter of 2007, those of the double-decker A-380s in 2010, and those of the A-350s in 2012. Kingfisher Airlines has already ordered 10 A-320s and three A-319s, and has options on a further 20 single-aisle aircraft.
— TNS
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Aiyar meets PM on petro prices today
New Delhi, June 15 Based on the average of June 1 to 15 fortnight, petrol prices ought to be raised by over Rs 4.50 per litre and diesel by more than Rs 5 per litre. The government may decide to effect a moderate increase in prices, official sources said adding while the increase in petrol could be between Rs 1.50-2.00 a litre, diesel price rise could be by between Rs 1 and Rs 1.25 a litre.
— PTI
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Corporate
news
Hyderabad, June 15 The merger of Philips arms in India — Philips India Ltd, Philips Software and Philips Medical Systems — will be completed within a couple of weeks to form a single entity. “While consumer electronics continues to be our forte, we are actively looking at further expansion in health and lifestyle segments,” Philips India Ltd Chief Executive Officer and Managing Director K. Ramachandran told reporters after inauguration of green product display at the CII-Godrej Green Business Centre here today. In association with ISRO, Apollo Hospitals and Dhan Foundation, Philips India is currently running an experiment in transferring diagnostic procedures from urban to rural areas with the aid of satellites, Mr Ramachandran said. Philips International Vice-President (Corporate Sustainability) Henk de Bruin said there would be more demand for eco-friendly products globally. “Our concept of corporate sustainability envisages a business for present generations without destroying resources for future generations,” he said. Wipro partnership IT major Wipro Ltd’s contract processing arm, E-OPS has signed an exclusive partnership agreement with the company’s loan processing unit, Wipro BPO for 24/7 offshore mortgage processing service. The service is conducted in a paperless fashion, with originators either faxing, uploading or entering data into the E-OPS web-based system and offshore processors handling all processing tasks required prior to closing, Wipro informed The Stock Exchange, Mumbai (BSE) here today. TeleVital to invest TeleVital, a telemedicine and eHealth technology solutions firm plans to invest $ 10 million in India over the next few years to increase focus on building applications for the telemedicine market. TeleVital, promoted by US-based technocrat Kumar Malavalli, has deployed its solutions at over 180 locations in India, US and Japan among other nations, Malavalli, the Chairman of TeleVital told reporters in Bangalore today. TCS-HAL tie-up IT company Tata Consultancy Services Ltd (TCS) and aircraft design company Hindustan Aeronautics Ltd (HAL) have entered into a strategic partnership to provide engineering solutions for the global aerospace industry. The TCS and HAL have commenced collaboration to provide end-to-end engineering solutions and services to global customers, TCS and HAL said in a joint press note in Mumbai today. Pharma plant closure Pharma firm RPG Life Sciences Ltd today said in Delhi it will close operations at its manufacturing facility in Pimpri, Pune, due to high operational costs. It said it had decided to close all manufacturing processes at the plant with immediate effect due to a steep decline in international prices of Spironolactone and Vitamin B12, and very high cost of manufacturing. Patni plans ADR Patni Computer Systems Ltd is planning to issue American Depository Receipts (ADRs) upto $ 150 million, including a green-shoe option. The 27th Annual General Meeting (AGM) has approved the resolution of ADR issue, the company informed The Stock Exchange, Mumbai (BSE) here today. — Agencies
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Auto scene
Mumbai, June 15 Bolero DI and Bolero XL vehicles in turbo version offer benefits like superior power and fuel efficiency up to 15 km per litre, M&M Executive Vice-President (Sales and Marketing) Rajesh Jejurikar said here. HM eyes components outsourcing Hindustan Motors said today it was in talks with a host of foreign carmakers, including Germany’s Volkswagen, to supply components and was eyeing an over Rs 300 crore business from component outsourcing in the next three years. “Volkswagen is in talks with us for panels and we are also talking to other carmakers like Peugot and Mitsubishi,” Hindustan Motors Executive Vice-President Ashwani Dubey said in New Delhi.
— PTI
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