This is the second round of such delisting trend which was observed around 8-10 years ago when the markets had tanked. New Delhi : -->
A number of multinational firms whose Indian susbsidiaries are listed on the local stock exchanges are in the process of delisting. This is the second round of such delisting trend which was observed around 8-10 years ago when the markets had tanked and numerous MNCs found an opportunity to exit from the Indian bourse. But the rise in the stock market could make such delisting offers unsuccessful.
The firms who have over the last few months announced delisting offers or buyback offers which would ultimately lead to delisting include names like South Korean confectionery maker Lotte India, drug maker Novartis, Mylan owned Matrix Labs.
US generics drugmaker Mylan is the latest to offer to buy back 24.8% of Matrix Laboratories at an indicative price of Rs 150 which is the same level at which it is trading currently at the stock exchange. Matrix Labs scrip has moved up 30% since the time Mylan first indicated that it is coming up with a delisting offer. On the day Matrix Labs informed the stock exchange about the offer from Mylan to buyout the minority shareholders, the stock opened 20% up compared to the previous days closing and has moved up further 8% to Rs 152 as against the indicative offer price of Rs 150/share. Mylan holds 71.2% in Matrix and Indian founder of the firm N Prasad hold around 5% in the company.
Korean FMCG firm Lotte came up with a revised offer last month. It had last year rejected the price of Rs 825 determined by the reverse book building process(through which such delisting is to be implemented) as it considered it too high. The new ‘indicative’ offer price is pegged at Rs 370/share. Given that the ruling price is Rs 504 this offer is unlikely to muster any share either.
The latest trend began sometime in 2007 when the markets were still up and has only gathered steam since then. Some of the MNC arms which got delisted over the last 1-2 years include Bosch Chassis Systems, GE Capital Transport, Panasonic AVC, Wartsila and Ray Ban.
Now many others are trying to take that route to get rid of stringent listing norms which require numerous disclosures. MNCs had listed their Indian arms due to a government policy which required them to dilute a part of holding to local investors. Overtime the quantum of equity to be owned by local investors were relaxed and eventually as the economy opened up many MNCs started buying out the investors in these companies.
Stringent Listing Norms; Disclosures Not Go Down Well With MNC's
While the exit of MNCs from the bourses faced some criticism, they had a strong argument against listed. The key reason for someone going public is to raise funds but given their parents backing they didn’t require to raise funds in India. In addition the listing requirements added to costs and also required country specific disclosures which MNCs are not very comfortable with. Given a chance they would like to have just one firm which is the parent firm to be listed in the home market.
As a result a number of MNCs such as Philips, Cadbury, Otis, Carrier, Reckitt Benckiser to name a few delisted themselves around a decade back. That was also the time when the market was at a low and the MNCs found ready takers to sell out shares.
When the market was in a bull run such delisting offers almost dried up and barring a few exceptions there were not many delisting offers. This was because of two reasons-- rising cost of buying out the shares and less probability of successful open offer as many investors tend to expect the share price to go up and look for a significant premium to the ruling stock price.
Infact some investors (largely punters) usually do not participate in open offers expecting the MNC to keep raising offer price. As a result in many companies --even those who have got delisted-- have some public shareholders who refuse to sell out and ask for ever higher premium to tender their shares.
Over the last one year some MNCs have found an innovative way to get round the problem of unsuccessful buyout offers. They were also helped by the market crash which forced many punters to look at selling out at a reasonable price.
As per the strategy, first used by Bosch Chassis Systems and GE Capital Transport, MNCs started disclosing the maximum ‘acceptable’ price for delisting. Although, some firms in the past have given an indicative price for delisting higher than the floor price these two were probably the first where they have given the maximum acceptable price. While the shareholders are still free to ask for a higher price, in these cases, the maximum acceptable price disclosed by the acquirers has become the final discovered price by default.
Delisting Norms
The delisting norms require acquirers to follow a price discovery mechanism through the reverse book building route. As per this all minority shareholders tender their shares asking for a price without any ceiling. The acquirers discloses the ‘floor’ price which is determined as the average of the preceding 26 weeks traded price quoted on the stock exchange where the equity shares are most frequently traded. The price at which the maximum number of shares are tendered becomes the exit or discovered price for delisting. It is upto the acquirers to accept or reject this discovered price. If they reject the price than the company stays listed.
In both Bosch Chassis and GE Capital Transport, the maximum acceptable price disclosed by the acquirers eventually became the final discovered price. It is argued that minority investors figure out that the premium that they are going to get over the existing market price may not be available if the acquirer rejects a price which is above its ‘acceptable’ price. As a result most shareholders tender their shares at that price even as they are free to ask for a higher price.
US showing first signs of recovery, says Wipro chief Premji
India's third largest software company Wipro on Thursday said they are hopeful of some signs of recovery in the second half for the IT outsourcing services sector.
"We are seeing the first signs of stability in the US," Azim Premji, chairman of the $5 billion company, said agreeing that the second half of the present fiscal will be better than the first.Wipro on Thursday inaugurated a product qualification and compliance facility in Bangalore which was inaugurated by former President A P J Abdul Kalam. Owing to the global financial meltdown, most clients have already cut the IT budgets which has affected the Indian IT outsourcing industry.According to Wipro, the second half of the fiscal is expected to see some kind of a recovery. Girish Paranjpe, joint CEO of Wipro's IT business, said he was expecting no further cuts in the IT budgets of clients unless any drastic development took place.Regarding the pricing pressure, Paranjpe said, "We should complete our pricing discussion with clients by the end of this quarter, after which things will be clear. The product qualification and compliance facility named Tarang is equipped with capabilities of product design centres and manufacturing organisations across the globe. With an investment of around $8.5 million, the facility will offer consultancy, pre-compliance testing and certification services for various geographies in mechanical, thermal, acoustic, safety and reliability. "Wipro's agenda to make innovation more purposeful and customer-centric just got stronger with the launch of Tarang. We are confident this new facility will further enhance our ability to provide fully-integrated product development solutions for our customers," said Paranjpe.
"We are seeing the first signs of stability in the US," Azim Premji, chairman of the $5 billion company, said agreeing that the second half of the present fiscal will be better than the first.Wipro on Thursday inaugurated a product qualification and compliance facility in Bangalore which was inaugurated by former President A P J Abdul Kalam. Owing to the global financial meltdown, most clients have already cut the IT budgets which has affected the Indian IT outsourcing industry.According to Wipro, the second half of the fiscal is expected to see some kind of a recovery. Girish Paranjpe, joint CEO of Wipro's IT business, said he was expecting no further cuts in the IT budgets of clients unless any drastic development took place.Regarding the pricing pressure, Paranjpe said, "We should complete our pricing discussion with clients by the end of this quarter, after which things will be clear. The product qualification and compliance facility named Tarang is equipped with capabilities of product design centres and manufacturing organisations across the globe. With an investment of around $8.5 million, the facility will offer consultancy, pre-compliance testing and certification services for various geographies in mechanical, thermal, acoustic, safety and reliability. "Wipro's agenda to make innovation more purposeful and customer-centric just got stronger with the launch of Tarang. We are confident this new facility will further enhance our ability to provide fully-integrated product development solutions for our customers," said Paranjpe.
Oil prices may get reduced further
ONE MORE good news before the Lok Sabha election. The rate of diesel may be reduced by Rs 2 soon. The latest effort by the Union government would certainly help it get more votes in the coming Lok Sabha election.
A cut in diesel prices would also reduce the prices of essential commodities like rice, edible oil, fruits, vegetables, eggs, milk, etc.
While speaking to the media, a government official on condition of anonymity said, “Political pressure is mounting on the government to reduce the auto fuel price in the next couple of days before the model code of conduct gets effective. There is a margin to reduce diesel price further but till now there is no such move by the petroleum ministry.
The final authority lies with the Cabinet, which is expected to meet anytime this week.”
The public sector oil companies are presently making a profit of Rs 4.44 a litre on diesel. The Union government reduced fuel prices twice in less than two months. The retail rate of petrol was reduced by Rs 5 a litre, diesel by Rs 2 a litre and cooking gas by Rs 25 for a 14.2 kg cylinder on January 28, 2009. The prices of petrol and diesel were cut off by Rs 5 a litre and Rs 2 a litre, respectively, in December, 2008.
While speaking to the media, a government spokesperson said, “In December last year, the Cabinet had in-principle favoured deregulating petrol and diesel prices and that proposal has not been abandoned.”
A cut in diesel prices would also reduce the prices of essential commodities like rice, edible oil, fruits, vegetables, eggs, milk, etc.
While speaking to the media, a government official on condition of anonymity said, “Political pressure is mounting on the government to reduce the auto fuel price in the next couple of days before the model code of conduct gets effective. There is a margin to reduce diesel price further but till now there is no such move by the petroleum ministry.
The final authority lies with the Cabinet, which is expected to meet anytime this week.”
The public sector oil companies are presently making a profit of Rs 4.44 a litre on diesel. The Union government reduced fuel prices twice in less than two months. The retail rate of petrol was reduced by Rs 5 a litre, diesel by Rs 2 a litre and cooking gas by Rs 25 for a 14.2 kg cylinder on January 28, 2009. The prices of petrol and diesel were cut off by Rs 5 a litre and Rs 2 a litre, respectively, in December, 2008.
While speaking to the media, a government spokesperson said, “In December last year, the Cabinet had in-principle favoured deregulating petrol and diesel prices and that proposal has not been abandoned.”
Oil prices may get reduced further
ONE MORE good news before the Lok Sabha election. The rate of diesel may be reduced by Rs 2 soon. The latest effort by the Union government would certainly help it get more votes in the coming Lok Sabha election.
A cut in diesel prices would also reduce the prices of essential commodities like rice, edible oil, fruits, vegetables, eggs, milk, etc.
While speaking to the media, a government official on condition of anonymity said, “Political pressure is mounting on the government to reduce the auto fuel price in the next couple of days before the model code of conduct gets effective. There is a margin to reduce diesel price further but till now there is no such move by the petroleum ministry.
The final authority lies with the Cabinet, which is expected to meet anytime this week.”
The public sector oil companies are presently making a profit of Rs 4.44 a litre on diesel. The Union government reduced fuel prices twice in less than two months. The retail rate of petrol was reduced by Rs 5 a litre, diesel by Rs 2 a litre and cooking gas by Rs 25 for a 14.2 kg cylinder on January 28, 2009. The prices of petrol and diesel were cut off by Rs 5 a litre and Rs 2 a litre, respectively, in December, 2008.
While speaking to the media, a government spokesperson said, “In December last year, the Cabinet had in-principle favoured deregulating petrol and diesel prices and that proposal has not been abandoned.”
A cut in diesel prices would also reduce the prices of essential commodities like rice, edible oil, fruits, vegetables, eggs, milk, etc.
While speaking to the media, a government official on condition of anonymity said, “Political pressure is mounting on the government to reduce the auto fuel price in the next couple of days before the model code of conduct gets effective. There is a margin to reduce diesel price further but till now there is no such move by the petroleum ministry.
The final authority lies with the Cabinet, which is expected to meet anytime this week.”
The public sector oil companies are presently making a profit of Rs 4.44 a litre on diesel. The Union government reduced fuel prices twice in less than two months. The retail rate of petrol was reduced by Rs 5 a litre, diesel by Rs 2 a litre and cooking gas by Rs 25 for a 14.2 kg cylinder on January 28, 2009. The prices of petrol and diesel were cut off by Rs 5 a litre and Rs 2 a litre, respectively, in December, 2008.
While speaking to the media, a government spokesperson said, “In December last year, the Cabinet had in-principle favoured deregulating petrol and diesel prices and that proposal has not been abandoned.”
Global outsourcing benefited US firms: Nasscom
Bangalore (IANS): Indian IT industry body Nasscom has reacted cautiously to US President Barack Obama’s remarks on outsourcing, saying global outsourcing had benefited US firms that generate over 50 per cent of their business overseas.
“American companies generate more than 50 per cent of their business outside the US. Their workforce is global. To be globally competitive, they also depend on globally shared services,” Nasscom president Som Mittal told IANS on phone from the US.
Welcoming Obama’s observations on protectionism, Mittal said late Wednesday that the US president’s statement would have a positive effect on his country’s economy that is going through a recession after a long time.
“Obama has, in fact, supported the need to avoid protectionism. We have to see how he would prevent job losses without resorting to protectionist measures,” Mittal pointed out.
Citing the latest US state department data on employment, Mittal said job losses in construction, retail and manufacturing were more than in services, especially in the IT space.
“Compared to other sectors, job losses in the US tech sector were 2.2 per cent as against the overall unemployment rate of 7.2 percent. The US administration will not do anything that would harm its industry or economy, which is driven by the technology leadership its companies enjoy,” Mittal noted.
Asked what impact Obama’s statement on outsourcing would have on the Indian IT and BPO (business process outsourcing) industry, which has been reeling under global recession and financial meltdown in the US, Mittal said he had not seen any specific proposal to the contrary.
“We have not seen any specific proposals to the contrary. The people here (in the US) are more concerned about healthcare, energy, saving jobs and economic recovery than outsourcing, on which Obama used only nine words,” said Mittal.
Admitting that the economic downturn had created turmoil worldwide impacting businesses and job creation, Mittal said global sourcing had helped (US) companies gain the vital competitive edge — time-to-market, transformation of businesses, integration of processes, reduce costs and enhance efficiency, which were key drivers for economic revival, worldwide.
In his first address to the joint session of the US Congress in Washington Tuesday, Obama said there would be no tax breaks to US companies that outsource their jobs abroad.
Earlier, in a statement from New Delhi, Nasscom said it was heartening to note that Obama had supported the need to "avoid protectionism" in his speech.
“This is not the time for protectionism but for global collaboration, if the world is to come out of this economic downturn quickly. We hope that all other countries would support this and continue to be proponents of free trade,” Nasscom said.
Countries the world over have been promoting local investment through tax incentives for job creation while supporting international trade.
Quoting reports by leading analysts, Nasscom said job losses in the tech sector was the lowest in the US, as compared to unemployment in the manufacturing, retail and construction sectors.
“The technology sector is a part of the global value chain and while affected by the downturn, is still expected to grow,” Nasscom added.
“American companies generate more than 50 per cent of their business outside the US. Their workforce is global. To be globally competitive, they also depend on globally shared services,” Nasscom president Som Mittal told IANS on phone from the US.
Welcoming Obama’s observations on protectionism, Mittal said late Wednesday that the US president’s statement would have a positive effect on his country’s economy that is going through a recession after a long time.
“Obama has, in fact, supported the need to avoid protectionism. We have to see how he would prevent job losses without resorting to protectionist measures,” Mittal pointed out.
Citing the latest US state department data on employment, Mittal said job losses in construction, retail and manufacturing were more than in services, especially in the IT space.
“Compared to other sectors, job losses in the US tech sector were 2.2 per cent as against the overall unemployment rate of 7.2 percent. The US administration will not do anything that would harm its industry or economy, which is driven by the technology leadership its companies enjoy,” Mittal noted.
Asked what impact Obama’s statement on outsourcing would have on the Indian IT and BPO (business process outsourcing) industry, which has been reeling under global recession and financial meltdown in the US, Mittal said he had not seen any specific proposal to the contrary.
“We have not seen any specific proposals to the contrary. The people here (in the US) are more concerned about healthcare, energy, saving jobs and economic recovery than outsourcing, on which Obama used only nine words,” said Mittal.
Admitting that the economic downturn had created turmoil worldwide impacting businesses and job creation, Mittal said global sourcing had helped (US) companies gain the vital competitive edge — time-to-market, transformation of businesses, integration of processes, reduce costs and enhance efficiency, which were key drivers for economic revival, worldwide.
In his first address to the joint session of the US Congress in Washington Tuesday, Obama said there would be no tax breaks to US companies that outsource their jobs abroad.
Earlier, in a statement from New Delhi, Nasscom said it was heartening to note that Obama had supported the need to "avoid protectionism" in his speech.
“This is not the time for protectionism but for global collaboration, if the world is to come out of this economic downturn quickly. We hope that all other countries would support this and continue to be proponents of free trade,” Nasscom said.
Countries the world over have been promoting local investment through tax incentives for job creation while supporting international trade.
Quoting reports by leading analysts, Nasscom said job losses in the tech sector was the lowest in the US, as compared to unemployment in the manufacturing, retail and construction sectors.
“The technology sector is a part of the global value chain and while affected by the downturn, is still expected to grow,” Nasscom added.
IIM-A placements: Dull start
It seems the global meltdown will have an impact on placements at the Indian Institute of Management, Ahmedabad (IIM-A) this year, too. There was a general air of disappointment at the institute on Wednesday - Day Zero of final placements for 2009 - as only 9 companies had turned up for recruitment.
Sources said this was 16 companies less than the number that had turned up for recruitment at IIMA on the first day of placements last year. Placement officials at the institute, however, declined to confirm or deny the figures.
Last year, 25 companies had arrived on Day Zero and 65% (i.e., 161 students) of the graduating batch had either received job offers or opted out by the end of the day.
More importantly, this year no investment bank turned up on the first day and the main recruiters were consultancies and marketing companies. The total number of jobs offered to IIMA students on Wednesday was 20.
The mood on the campus was sullen. Sources said that not only were there very few new offers, those made earlier were also now being withdrawn. Moreover, the companies which had arrived on Wednesday did not have more than one job to offer. Talking about the placements, a student said that the situation could not be worse than this.
Dayananda Meitei/ DNA-Daily News & Analysis Source: 3D Syndication
Sources said this was 16 companies less than the number that had turned up for recruitment at IIMA on the first day of placements last year. Placement officials at the institute, however, declined to confirm or deny the figures.
Last year, 25 companies had arrived on Day Zero and 65% (i.e., 161 students) of the graduating batch had either received job offers or opted out by the end of the day.
More importantly, this year no investment bank turned up on the first day and the main recruiters were consultancies and marketing companies. The total number of jobs offered to IIMA students on Wednesday was 20.
The mood on the campus was sullen. Sources said that not only were there very few new offers, those made earlier were also now being withdrawn. Moreover, the companies which had arrived on Wednesday did not have more than one job to offer. Talking about the placements, a student said that the situation could not be worse than this.
Dayananda Meitei/ DNA-Daily News & Analysis Source: 3D Syndication
India's inflation rate falls further to 3.36 pc
India's annual rate of inflation fell further in the week ended February 14 to 3.36 per cent from 3.92 per cent the week before, official data showed Thursday.
The inflation rate, based on the official wholesale price index (WPI), stood at 5.66 per cent in the corresponding week of the previous fiscal, statistics released by the industry ministry here showed.
The WPI for all commodities declined 0.1 per cent to 227.8 (provisional) from 228 (provisional) the week before.
The index for primary articles rose 0.1 per cent to 248.1 (provisional) from 248 (provisional) for the previous week, while that for manufactured products declined 0.1 per cent to 199.5 (provisional) from 199.7 (provisional) the week before.
The index for fuel, power, light and lubricants, however, remained unchanged at its previous week's level of 323.5 (provisional).
The inflation rate, based on the official wholesale price index (WPI), stood at 5.66 per cent in the corresponding week of the previous fiscal, statistics released by the industry ministry here showed.
The WPI for all commodities declined 0.1 per cent to 227.8 (provisional) from 228 (provisional) the week before.
The index for primary articles rose 0.1 per cent to 248.1 (provisional) from 248 (provisional) for the previous week, while that for manufactured products declined 0.1 per cent to 199.5 (provisional) from 199.7 (provisional) the week before.
The index for fuel, power, light and lubricants, however, remained unchanged at its previous week's level of 323.5 (provisional).
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