WEEKLY NEWSfrom 15th Nov. to 21st Nov.

By: Mandeep Singh Jaggi

RCOM set to raise $500m abroad

Flag Telecom, a part of its international network arm Reliance Globalcom, could raise at least $500 million by selling bonds to European investors, said a number of investment banking sources.

RCOM has appointed Deutsche Bank’s investment banking arm to spearhead the latest fund-raising effort. If successful, the funds will be used to meet debt obligations, including $200 million worth of convertible bonds held by overseas investors, due May 2011

The company has another $900 million of foreign currency convertible bonds, or FCCBs, maturing February 2012. The company has a current net outstanding debt—which rose over 700 crore between July and September this year—exceeding 30,000 crore. Failed attempts to sell assets 

The company reported a 40% plunge in profits in the second quarter of this fiscal to Rs 446 crore—its fifth-straight quarter of profit fall.

Reliance Communications acquired Flag Telecom, the undersea cable business, in 2003 for about $207 million. After a recent restructuring, the company’s Indian enterprise business has been added toRelianceGlobalcom.  

Dabur buys US hair care co for $100 m

(Pramugdha Mamgain NEW DELHI,  SECOND FOREIGN BUY IN 3 MTHS) DABUR India has bought US-based haircare

company Namaste Laboratories and its three subsidiaries for $100 million ( 446 crore) in an all-cash deal as Indian consumer product companies continue their global acquisition spree. 

Its second overseas acquisition in less than three months will help Dabur enter the fastgrowing $1.5-billion ethnic haircare product market in Africa, besides serving as a gateway to the US market for its products. 

Dabur India chairman Anand Burman said as following:-“Namaste’s hair straightening lotions and

hair oils are hugely popular with African Americans in the US and sell well in Africa and Nigeria too,”

“The acquisition of Hobi Kozmetick and Namaste Laboratories along with our existing businesses overseas will contribute nearly 25% to Dabur’s consolidated revenue in 2010-11,” Dabur India group director PD Narang said. Dabur recorded a revenue of Rs 3,400 crore in 2009-10 of which 20% came from sales in international markets.

CAG calls Raja’s bluff on 2G licence allocationCAG says telecom ministry had 'flouted every

canon of financial propriety, rules and procedures' .ARaja disregarded advice of PM, who had stressed need for 'fair and transparent allocation policy' 

He did not follow Trai recommendations, ignored law ministry's advice & turned down finmin's demand that EGoM decide spectrum price. He did not take the approval of Telecom Commission Pan-Indian licences were awarded at Rs 1,651 crore each, a price fixed in 2001, causing a loss of 1.40 lakh crore to exchequer.

Raja issued licences to ineligible applicants: 85 of 122 licences issued in 2008 were illegal as these cos had disclosed incomplete information, submitted fictitious documents and used fraudulent means to get permits 

•Raja's ministry doled out additional airwaves to existing telcos such as Bharti Airtel, Vodafone Essar, BSNL, among others, beyond what they were entitled to, causing an additional loss of nearly Rs 37,000 crore to the exchequer • DoT arbitrarily changed cut-off date for mobile permits to Sept 25, 2007, resulting in select Indian companies such as Swan, Unitech, Loop, Datacom and Shyam getting licences Losses pegged at Rs 1,76,645 crore 

•A Raja in 2G spectrum allocation scam. The Prime Minister referred the first two complaints of Swamy for examination to the concerned official within two days, third complaint within four days, the fourth one in a day from the date of its receiving, said PMO in its 11-page affidavit filed by its director, V Vidyavati. According to the PMO, it had received two more communications from Swamy which were looked into.

Axis wins Enam, buys its best for 2,067 crEnam exits with handsome gains while

deal will pay off for Axis in long term given strengths & profitability of investment banking & institutional broking units Snaps Up Investment Banking, Institutional & Retail Broking Our Bureau MUMBAI 

Axis, led by CEO Shikha Sharma, a former ICICI Bank director, will acquire Enam Securities’ key businesses such as investment banking, institutional and retail broking, and distribution of financial products in an allstock deal worth 2,067 crore. 

Enam is expected to have a profit after tax of Rs 100 crore for the full year. So, 2,000-odd crore for the full stake looks all right,” For the seven months between April 1 and October 20, the Enam arm recorded a pre-tax profit of 77 crore against a turnover of 182 crore. 

“With Axis bank’s distribution platform of almost 1,100 branches and Enam’s retail network, the combined entity will have an opportunity to build a dominant retail franchise as well,”

The Bellwether Of Scams(Bells palsy:Trai annuls 62 licences for

rollout delays)The government to cancel 62 of the 122 licences

issued by former telecom minister A Raja under controversial circumstances in 2008 to new companies, including joint ventures of international operators such as Telenor ASA, Emirates Telecommunications Corp and Sistema JSFC, because they had not been able to launch services in time. 

Telecom Regulatory Authority of India—which claims that its views were ignored by Mr Raja—strengthen the possibility of several licences issued in 2008 being revoked.

 CAG had slammed the telecom ministry for not recovering Rs 679 crore as penalty.

“If there are some consequences on our licences, then the Indian regulatory environment will be questioned by all foreign investors. Because, here comes Telenor, a well-known operator with a presence in Asia for 15 years, and it would be very strange if the government were to now set aside investments from our side after they have already been made,” Telenor Group president & CEO Jon Fredrik Baksaas had told ETlast week. 

Under new minister Kapil Sibal, decided to seek legal opinion on the validity of the telecom licences dished out by Mr Raja after the country’s national auditor said 70% of these mobile permits were obtained through fraudulent means, an official aware of the development told ET. 

Comptroller and Auditor General of India, or CAG, in its report on Tuesday said 85 of the 122 licences given to six companies, notably Uninor, Videocon, Loop Telecom, S Tel, Etisalat and Allianz Infratech, were illegal as these firms were not eligible to obtain them.

DoT can fine companies Rs 5 lakh a week per circle for the first 13 weeks of delay. The fine goes up to Rs 10 lakh each for the next 13 weeks, and to Rs 20 lakh for delays up to 26 weeks. 

Mkts tank on political cloud, China cautionRumours of PM’s resignation, 2G tangle and

China hiking reserve ratio precipitate slide“Sentiment turned nervous because of

fears about political instability in addition to fears about the impact of events in China,”-“Sentiment turned nervous because of fears about political instability in addition to fears about the impact of events in China,”

China raises reserve bar for banks Li Yanping BEIJING MONEY TALK: RESERVE RATIO INCREASED TO 50 BPS TO TAME INFLATION 

‘Rate hike may prove insufficient’ 

 The 30-share Sensex dropped 345.20 points, or 1.7%, to 19,585.44. NSE’s 50-share Nifty shed 108.50 points, or 1.8%, to 5890.30. Losers outnumbered gainers 2289: 695 on BSE. Foreign investors bought Indian shares worth 367.91 crore on Friday, extending their purchases to 1.30 lakh crore ($28 billion) so far this year. Both indices have fallen 6.7% in the last two weeks. 

PREVENTIVE MEASURES:•China aims to step up liquidity management and “appropriately control” credit and loans