Andhranews

Hyderabad, Aug. 22: In a day of swift developments on the cola controversy on Tuesday, the Union government gave a clean chit to the cola manufacturers over pesticide residues in their products, even as The Coca-Cola Company and PepsiCo India Holdings re-iterated their commitment to continued investments in India.

The Centre for Science and Environment, the NGO which raised questions about the level of pesticide residues in the soft drinks manufactured by Coca-Cola and Pepsi, reacted sharply to the Union health ministry;s clean bill of health to the cola companies. “The minister of health is clearly more concerned with industrial health — and not people’s health,” CSE director Sunita Narain said in a statement. Both the companies said on Tuesday that their long-term investment plans for India were intact and would not be scaled down, days after the US government said foreign investment inflows could be hit due to the controversy.

Mr Rajeev Bakshi, chairman of PepsiCo India, said in New Delhi: “Our investment plans will not be affected in any way.” Echoing similar sentiments, a spokesperson for Coca-Cola in India said: “In the last 13 years, we have invested $1 billion in India. We are committed to our plans.” Interestingly, US Under-Secretary for International Trade Franklin Lavin had said the action against cola giants by some State governments, including a ban on cola production and sale in Kerala, was a “setback” for the Indian economy.

Responding to a question on “pesticides in soft drinks”, Union minister for health and family welfare Anbumani Ramadoss, told Parliament, “A total of 57 soft drink samples of 11 brands (seven brands of PepsiCo and four brands of Coca Cola) were tested for 15 organochlorine pesticides and 13 organophosphorus pesticides. The range of concentration of total pesticides (organochlorines and organophosphorus) was 2.65 ppb (parts per billion) to 31.55 ppb in all 57 samples.

Dr Ramadoss said following the CSE’s report earlier this month on “pesticide residues in soft drinks”, the ministry had set up an expert committee which reviewed all aspects contained in the CSE report including the methodology adopted by CSE. “The conclusion of the expert committee is that the report of the CSE does not provide conclusive evidence for presence of different pesticides in the concentration reported. The report does not provide details required for the confirmatory interpretation of quantum results. The residue data reported based on GV-mass confirmation is inconclusive.”

New Delhi, Aug. 22: Differences still persist between Rahul Bajaj, his brother Shishir Bajaj and others on the issue of transfer of shares for finalising the split of the Bajaj group, the Company Law Board (CLB) has been informed by the lawyers. “Documents are still not ready for signature,” counsels appearing for Rahul and Shishir Bajaj said.

CLB chairman N. Balasubramanian, after hearing the arguments, asked both parties to try to implement the settlement package and report it by mid-September. The memorandum of understanding regarding the split in the group is ready following the suggestions made by the chartered accountant D.S. Mehta and differences on the shares transfers would be sorted out soon, counsels said.

“Several meetings (close to 18 to 20) have been held by the parties to sort out the differences,” counsels informed the Board. “It is now just question of adding finality,” they said. During the proceedings, Mr Shishir Bajaj’s counsel requested the board for not setting any time frame as “some new points were raised by both sides”. This was bitterly opposed by senior counsel Ashok Desai, appearing on behalf of Mr Rahul Bajaj, saying that D.S. Mehta formula should be implemented.

Hyderabad, Aug. 22: Bharti AXA Life Insurance Company, the 16th player to join the Indian life insurance industry, on Tuesday kickstarted its national operations form Hyderabad with its first branch office, two unit-linked life products and an intention to have a presence in 30 cities by December, 2007.

The 74:26 life insurance joint venture between the Bharti group and AXA Asia Pacific Holdings Ltd., a unit of France’s Axa SA, is eyeing a slice of the Rs 1,00,000 crore Indian life insurance market, growing annually at 43 per cent. On the strategy of the company, Mr Nitin Chopra, CEO of Bharti AXA Life, said, “Our target is to achieve a place among the top five market positions following a multi-distribution and multi-product model.”

Bharti AXA Life is banking on the 25 million customer base of Airtel, owned by the Bharti group, to sell its products apart from leveraging the popular bancassurance model. “We are in talks with a couple of banks for bancassurance tie-ups and we should finalise it by the last quarter of this year or by the first quarter of next year,” Mr Chopra told this newspaper.

With an investment of Rs 101 crore in the insurance JV, and a proposal to ramp it up to Rs 500 crore in phases, Bharti AXA Life wants to have a presence in the tier II and upcountry markets, besides having a firm foothold in the metros and mini-metros. This strategy would primarily be driven by what Mr Chopra puts across as “we will play to the mass, not the premium market.”

The company launched two unit-linked insurance products — Future Confident and Wealth Confident and has filed for four other products with the IRDA. Mr Mark Pearson, regional chief executive of AXA Asia Pacific Holdings Ltd said, “We do have plans for entering the pensions and mutual funds business. But right now we are waiting for the regulatory nod for the MF entry and are keen on partnering Bharti for the pensions sector. However, nothing has been finalised yet.” Mr Pearson said the company would set up AXA Academy, an inhouse training facility, to train professionals for the company.

Mumbai, Aug 22: Tata Steel KZN (Pty) Ltd on Tuesday started the construction of its rand 670 million ferrochrome plant at Richards Bay, South Africa, with a ground-breaking ceremony in the Industrial Development Zone, at Alton North Area, in the port city KwaZulu-Natal.

The company in a press release said that it would double the size of the plant from two furnaces to four, after the first year of operation. If the second phase expansion is approved, it would result in additional investment of possibly rand 400 million, the release said.

“South Africa had been selected from an initial list of eight countries. The final choice was between sites in South Africa and Australia, with South Africa winning because of factors such as power costs skilled technological base and manpower, developed infrastructure/ logistics arrangements, and its strong financial institutions,” said Mr Muthuraman, MD, Tata Steel.

New Delhi, Aug. 22: The government on Tuesday cleared 46 new Special Economic Zones (SEZs) including two multi-product SEZs spread over 2,000 hectares by Essar in Jamnagar and Andhra Pradesh Industrial Infrastructure Corporation in Vishakapatnam.
While the SEZ promoted by Essar would have an area of 2,470 hectares, the APIIC project would be spread over 2,309 hectares, according to a release issued here.
Apart from a multiple product SEZ, APIIC’s 111 hectare SEZ for electronic hardware has also been approved by commerce minister Kamal Nath.

The next big SEZ approved for Andhra Pradesh has been promoted by Brandix over an area of 404 hectares. The $400m Brandix group is Sri Lanka’s largest exporter, which signed an MoU with the State government in July, 2005 for setting up India’s largest integrated textile factory at Atchyuthapuram in Visakhapatnam district.

The factory will be set up in a 1,000-acre apparel park. The Andhra Pradesh government has picked 20 per cent stake in the project, which will generate substantial employment in the region. Brandix plans to supply to international clothing majors like Reebok, Gap, Nike, To-mmy Hilfiger, Victoria’s Secret, and chains like M&S, Tesco’s, and Wal-Mart. Tuesday’s approval takes the number of approvals to 150, as 104 SEZs had been cleared earlier.

Of these 46 SEZs, as many as nine are from Maharashtra, seven from Andhra Pradesh, five from Karnataka and four each from West Bengal and Tamil Nadu. Three proposals of SEZs from Gujarat and Haryana have also been cleared while two SEZs have been given the go ahead, in Uttar Pradesh, Kerala, Punjab and Uttaranchal.

One SEZ each has been cleared in Rajasthan, Goa and Pondicherry. In Uttaranchal, the State Development Corporation would set up a 440 hectare SEZ. The biggest SEZ in Maharashtra would be developed by Viraj Profiles, which will be on 235 hectares of land. In Karnataka the largest SEZ will be developed by KIADB over 202 hectares while in Haryana two of the SEZs will have an area of more than 100 hectares.

Some merchant bankers don’t seem to have learnt many lessons even after several scams and action taken by Sebi in the most recent IPO demat scam. They still continue to abdicate the responsibilities entrusted to them by the Securities and Exchange Board of India to see that there are no misleading and wrong statements in the prospectuses issued by companies going in for IPOs.

Offer document flawed

The Midas Touch Investors Association based in Kanpur has written to SEBI complaining about the misleading statements made in the draft red herring prospectus of the real estate company DLF Universal Limited. Virendra Jain, honorary secretary of Midas alleges that “the merchant bankers to this issue have not seen to it that the company has made correct disclosures and there is complete abuse of the IPO process and the rules made for it.” He said that the trust reposed by SEBI in merchant bankers to “diligently carry out their responsibilities in preparing the offer document, in order to protect investors’ interest, has been belied in the DRHP of DLF."

Banking on projections

So what’s Mr Jain's grouse on behalf of investors? He said that when Midas made their first representation to Sebi, DLF was aiming at a premium of Rs 600 on a share of Rs 2 face value. The company allegedly justified this valuation by giving their assets as Rs 80,000 crores whereas on March 31,2006 they had declared their assets as Rs 2,400 crores.

The merchant bankers to this proposed IPO are Kotak Mahindra Capital, DSP Merril Lynch, Citi Group Global Markets India, Enam Financial Consultants, JM Morgan Stanley and UBS Securities India Pvt Ltd. The co-book running lead manager is SBI Capital Markets — an entire galaxy of merchant bankers of the country. One can only hope that they are not all wrong or that they all missed the allegedly misleading information in the DLF prospectus. Such information of projections as has been done by DLF is against Sebi guidelines. And if Jain is right, one hopes that the merchant bankers will see that the facts are restated correctly.

Sebi guidelines

Para 6.9.2.2 (a) (ii) of SEBI DIP Guidelines states that “No forecast of projections relating to financial performance of the issuer company shall be given in the prospectus”. Further, Para 6.8.4.11 (a) (ix) of SEBI DIP Guidelines, under the heading “Basis for Issue Price” states “that the projected earnings shall not be used as a justification for the issue price in the prospectus”.

Yet the company, Mr Jain says, annexed and used the financials of the valuation reports of several property consultants. Cushman & Wakefield quoted in the prospectus opines that the net value of these properties is between Rs 96,500 crores and Rs 1,06,600 crores and after deducting the notional developer profit of 20 per cent, the land value is between Rs 77,200 crores and Rs 85,300 crores.

Another property consultant, Jones Lang LaSalle, has opined that the net value of these properties as achievable by the company is approximately Rs 1,08,100 crores and, after certain other deductions, the land value is approximately Rs 85,300 crores.
The above statements give an impression, to a common person, that the properties valued are owned by the issuer company. He is likely to miss the point that these figures are merely projections says Jain.

The actual position

The consolidated stock of properties of DLF Universal Limited as on March 31, 2006 was approximately Rs 2,389.5 crores (Capital work in progress + Stocks on page 290 of the DRHP). Within a span of five weeks, these properties have been revalued between Rs 1,06,600 crores and Rs 1,08,100 crores. The merchant bankers have reportedly been made aware of these allegedly misleading inaccuracies and one expects to hear their reaction soon, since Sebi has yet to give the IPO the green signal.

Despite the rapidly increasing consumer acceptance of mobile video and music multimedia services from wireless carriers, it is streaming music that still has the edge. This is because streaming music offers many marketing benefits because it is most like familiar and successful mobile consumer services, according to In-Stat, a market research firm. One plus for carriers is that streaming is not subject to the same Digital Rights Management issues involved with music file sharing.

“Streaming music, which could be marketed like satellite radio services, such as XM and Sirius, holds the most interest of all mobile multimedia for consumers, and it may be easier to deliver than video,” says the research firm. In-Stat says its research found that consumer interest in mobile video is increasing, albeit not as quickly as interest in mobile music. In 2006, 14.2 per cent of respondents could be considered likely adopters of mobile video. “In the mobile multimedia consumer survey, 44 per cent of respondents who own music-playing handsets have not added any music files to their phones,” it says.

EDGE phones

Mobile handsets with EDGE (Enhanced Data GSM Environment) — a faster version of GSM wireless service — have never attracted the same levels of attention that “sexier” technologies such as WCDMA and HSDPA have enjoyed. In fact EDGE can best be described as the Cinderella of the cellular handset world. However, recent forecasts from ABI Research indicate that the worldwide EDGE handset market will reach 148 million shipments in 2006, representing 14 per cent of the total mobile phone market. EDGE enables data to be delivered at rates up to 384 Kbps on a broadband.

The standard is based on the GSM standard and uses TDMA multiplexing technology. “EDGE is downplayed in the market because it cannot really provide a mobile broadband experience and is therefore not seen as being at the cutting edge of cellular handset evolution; it is viewed purely as an evolutionary step on the GSM ladder, and industry attention is very much focused on the newer technologies such as W-CDMA and HSDPA.

That view is further compounded by the fact that operators do not actively report EDGE numbers in the public domain,” the research firm says. “However, this lack of general market attention belies the real importance of the role EDGE plays in delivering mobile services today and will play in the effective delivery of content in the network of tomorrow,” it says.

New Delhi, Aug. 22: Finance minister P. Chidambaram on Tuesday reiterated that public sector banks will retain their PSU character and government’s holding in these banks will not fall below 51 per cent.“We reject the (previous) National Democratic Alliance government’s proposal to cut down government’s holding in PSU banks below 51 percent,” Mr Chidambaram said while replying on a discussion on the Banking Companies (Acquisition and Transfer of Undertakings) and Financial Institution Laws (Amendment) Bill, 2005, in the Lok Sabha.

“We shall retain 51 per cent or above holding in PSU banks,” he said. The NDA government had proposed to reduce government's equity in PSU banks to 33 per cent from 51 per cent. The bill to amend the two legislations, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and 1980, was first introduced by the NDA government in Dec 2000.

However, owing to dissolution of the 13th Lok Sabha, the bill had lapsed. Among the current amendments, the bill seeks to empower the government to supersede the board of a PSU bank on the recommendation of Reserve Bank of India. The bill is likely to be passed by Lok Sabha on Wednesday. Chidambaram said he expects PSU banks to remain dominant players in the sector in the distant future. “PSU banks are becoming more and more efficient. PSU banks are profitable with stronger management, and with higher productivity,” he said.

The finance minister said he also expects consolidation among PSU banks though the government will not force these banks to merge. “Support for consolidation has to come from managements and employees of PSU banks,” the finance minister said. The Reserve Bank of India has given public sector banks time till 2009 to raise their operational efficiency and consolidate before India opens up its financial sector to greater foreign participation. Post-2009, India is likely to allow foreign banks to compete with domestic players on an equal footing. Mr Chidambaram said he expects all PSU banks to meet Basel II norms on capital adequacy.

New Delhi, Aug. 22: India Inc. is likely to witness a continuing surge in merger and acquisition (M&A) activities after a record number of deals in the first half of 2006 — aggregating to more than $25 billion.

On the back of upswing in both inbound and outbound cross-boarder mergers, M&A deals worth $25.6 billion were executed in first half of 2006, outsizing the M&A deals recorded in the entire 2005, global consultancy major PricewaterhouseCoopers said in a report. Indian companies had recorded M&A deals worth $8 billion in the first half of 2005 and $23.6 billion in the entire 2005.

According to the 10th edition of PWC Asia-Pacific M&A Bulletin, India has overtaken China and South Korea in the Asia Pacific region and lags only behind Japan and Australia in terms of the size of M&A deals. Total M&A deals worth $64.2 billion were recorded in Japan, followed by Australia at $33.2 billion. South Korea recorded deals worth $25.2 billion, followed by Chinese companies with deals worth $21 billion. Hong Kong, Mal-aysia, Singapore, Thailand, recorded M&A deals worth $17.1 billion, $9.1 billion and $8.2 billion respectively.

New Delhi, Aug. 22: Health care, biotechnology, education, entertainment, tourism, manufacture and retail are some of the prime areas for Indo-US bilateral trade relations, according to industry chamber FICCI, which is leading a large business delegation to the on-going US-India investment meet and business expo in California.

Over 200 top companies from California participated in the first day of the conference yesterday and 75 Indian business leaders led by the FICCI president, Mr Saroj Poddar, interacted with each other.

The two-day conference is being organised by the US-Asia business forum and supported by FICCI. Partnering the conference were the City of Los Angeles, US Department of Commerce and the Los Angeles Chamber of Commerce.

A first ever study of Indian investments into the United States, conducted by FICCI and Ernst & Young was released at the investment meet jointly by Mr Subodh Kant Sahai, minister of state for food processing industries, the Mayor of LA and the Lt governor of California.

In the meet, FICCI president, Poddar has also said that with across-the-board low cost base, a favourable demographic profile, a rule based system and a vibrant democracy, India has emerged as an attractive location for companies from different parts of the world.

Mumbai, Aug. 22: The net mobilisation of resources by all mutual funds (MFs) was Rs 52,779 crores, the highest ever in a single year. As on March 31, 2006 the total Assets Under Management (AUM) for all mutual funds was Rs 2,31,862 crores, a rise of 55 per cent over the previous year and there were 592 MF schemes.

This was revealed in the annual report of the Securities and Exchange Board of India (Sebi) for the year 2005-06. The report in the segment on the capital market said that during ’05-’06, 139 companies accessed the primary market and mobilised Rs 27,382 crores. The turnover in the cash segment was Rs 23,90,103 crores a rise of 43.4 per cent over the previous year while the market capitalisation to GDP ratio was 85.6 per cent.

The net investment by FIls in equity was Rs 48,801 crores, the highest ever in a single year. Two hundred and twenty-four new FIls were registered with Sebi during the year. On the investigation front the regulator took up 165 new cases for investigation and 81 cases were completed. 411 orders were passed/reports submitted, hearings for 196 cases were conducted and 247 showcauses were issued to different entities.

During the year the BSE Sensex and S&P CNX Nifty appreciated by 73.7 per cent and 67.1 per cent respectively over March 31, 2005. The number of brokers registered with Sebi was 9,335 and the number of FIIs registered was 882. There were 38 MFs registered with Sebi. The number of indigenous venture capital funds increased to 80 and the number of companies signed up for dematerialisation at the NSDL was 6,022 and at CDSL was 5,479.

The report said that further to the finance minister’s budget speech for ’05-’06, authorising Sebi to set up a National Institute of Securities Markets (NISM), for teaching and training intermediaries in the securities market, land measuring more than 60 acres has been purchased at Patalganga, near Panvel, Mumbai to build infrastructure.

Chennai, Aug. 22: Unisys Global Services India (UGSI) is planning to increase its headcount by 1,500 from the present 1,000 by the end of this year and it will further strengthen to 4,000 by 2008.“Our second development centre will be ready in the next two months in Bangalore. We are also planning to set up a third development centre for which we scouting for real estate in Chennai, Hyderabad and Pune,” said Mukul Agrawal, the company’s managing director said on Tuesday.

The $5.6 billion Unisys’ first development centre UGSI was established in Bangalore in 2004. The company had announced it would invest $180 million in India in five years.
Mr Agrawal said the company’s investments were on track and would continue to expand the Indian operations.

UGSI has software development centre, BPO and remote infrastructure service at its Bangalore centre. “We are servicing 12 global centres from the Indian operations. With the opening of the new development centre we will be serving more clients,” Mr. Agrawal said.
He said the company had recently got CMM1 level certification and is planning to move towards the level-5 by the next year.

Hyderabad, Aug. 22: AppLabs Technologies, a software testing and development services company, on Tuesday said it has expanded its presence in India, by setting up a new office in Hyderabad to augment its growing business and demand for new services.
AppLabs is also planning to increase its headcount by adding an additional 600 employees by the year end.

The new facility can accommodate about 500 people, an AppLabs release said. This brings the total square footage of office space leased by AppLabs in Hyderabad to 120,000 and the total seating capacity to 1,500. “The global software testing services market is on growth curve, and AppLabs is strongly positioned to capture a substantial portion of this opportunity. The latest expansion is in line with the strategic focus we are taking to meet the growing business,” Sashi P. Reddi, founder and Chief Executive Officer of Applabs Technologies said. AppLabs employs over 1,000 employees globally.