Bank bill passed in Lok Sabha

Bank bill passed in Lok Sabha August 23, 2006 NEW DELHI (Reuters) - The Lok Sabha passed a bill on Wednesday that seeks to allow state-run banks to raise funds through private placements and preferential shares. The banking companies bill, however, restricts banks from diluting the government's holding below 51 percent while selling shares, Finance Minister Palaniappan Chidambaram said in a debate in parliament. At the moment state-run banks in India are allowed to raise capital by selling shares to the public. Many are planning to raise more funds to meet stringent Basel-II regulations by March 2007 and to sustain high loan growth. The bill still has to pass in the Rajya Sabha and get presidential approval before it becomes law. It requires banks to have government and Reserve Bank of India (RBI) approval for private placements and preferential issue of shares. Banks would have to follow RBI guidelines on the amount and class of preference shares issued - perpetual, redeemable or irredeemable. It also seeks to restrict the powers of preference shareholders. A preference shareholder will not have voting rights of more than 1 percent of the total voting rights of all such shareholders. On appointment of directors to bank boards, the bill requires banks to have central bank clearance and gives the RBI power to lay down criteria for selecting directors in state-run banks. The bill also allows the government to appoint an administrator for up to one year if it considers the affairs of a bank have been conducted in a way which is detrimental to depositors. The bill also allows the government to dismiss the board of directors.

Tata Tea picks up 30% in US co

Tata Tea picks up 30% in US co THE ECONOMIC TIMES MUMBAI Tata Tea, India's second-largest tea maker, on Wednesday announced a bold move to expand its overseas operations with the largest foreign equity investment ever done by a private Indian company. The Kolkata-based maker of Tata Tea, Agni, Tetley and Gemini range of tea brands, said it will pay about $677m to buy 30% of US-based Energy Brands (EBI), which sells a range of nutrient-rich and flavoured water brands. The deal values EBI at $2.3b, or 6.4 times its sales, and is the largest ever acquisition by an Indian company, edging out Dr Reddy's $570m buyout of Germany's betapharm. Through this deal, Tata Tea, which bought another US brand, Eight O' Clock Coffee, some time ago, hopes to cash in on the fast growth of health-based, non-carbonated beverage market in the US. “We are looking at getting growth from the beverages market. The black tea market is not growing and we are looking at driving future growth through other options in the category. We are looking at a strong partnership with Glaceau initially which will be developed further over a period of time,” Krishna Kumar, vice-chairman of Tata Tea said. EBI, commonly known as Glaceau, markets brands like Vitaminwater, Smartwater, Fruitwater, etc. It had a turnover of $355m in '05 which is expected to doubled to $700m this year. The Glaceau line of bottled waters, marketed as being enhanced with electrolytes and other nutrients, sells at around $1.5 for a 20-ounce bottle in health food stores in more than 40 states. Energy Brands is partially owned by president J Darius Bikoff, who founded the company in '96. LV Capital, an investment arm of luxury goods maker LVMH and the Shansby Group also own stakes in the company. The acquisition expands Tata Tea's foothold in the American market and is aimed at consolidating the company's position in the global beverage industry. The buyout of Tetley for £271m in '00 gave the company a major presence in the UK and the US. This was followed by the June '06 purchase of Eight O' Clock Coffee for about $220m. Health-based water beverages are a fast growing category in the US as concerns over the impact of carbonated drinks such as Pepsi and Coca-Cola force consumers to look at alternatives. Tata Tea will finance the deal by investing $192m in Tata Tea GB, the UK-based subsidiary which owns Tetley. Tata Sons, the Tata group holding company, will chip in with $58m. the remaining $427m will be raised as debt by Tata Tea GB, Mr Krishna Kumar said. A look at Tata Tea's financials shows that the effort may not be a heavy burden. The firm's consolidated debt-equity ratio at the end of March '06 was 1:1, and it generated Rs 300 crore net cash from operating activities. But top industry analysts sounded sceptical saying that $677m for a 30% stake makes it a very expensive deal. “Branded water segment is clearly a growing market globally. The question is: can the company leverage the investment? Does the company have the option to buy out the rest of the stake in the long run? How much controlling rights would the management have with a 30% stake,” said an analyst in a leading foreign brokerage firm. The promoters and associates of EBI hold 50%. Venture capitalists such as LV Capital have sold 30% to Tata Tea, but continue to hold about 20%. Tata Tea also has the right to appoint the chairman and two directors on EBI's board. Commenting on the possibility of picking up further stake in EBI, top company officials said that it may consider an IPO option in the next couple of years. In the first phase, Tata Tea officials said they plan to support the promoters in consolidating the current business and perhaps even expanding to other markets beyond the US. Later they could look to grow the partnership, but the specific plans aren't yet clear at this stage.

ASEAN Agrees to Speed Up Economic Integration by Five Years

ASEAN Agrees to Speed Up Economic Integration by Five Years
By Ron Corben Bangkok 22 August 2006

Southeast Asian Nations have agreed to form an economic union by 2015 - five years ahead of plan. ASEAN officials say growing competition for investment by China and India has spurred their decision.

Trade ministers from the 10-member Association of Southeast Asian Nations - or ASEAN - made the decision to accelerate regional economic integration at a meeting in the Malaysia capital, Kuala Lumpur, Tuesday.

Malaysia Prime Minister Abdullah Ahmad Badawi delivers his opening remarks at the 38th ASEAN Economic Ministers (AEM) Meeting in Kuala Lumpur, Malaysia, Tuesday, Aug. 22, 2006

Malaysian Prime Minister Abdullah Badawi warned that unless ASEAN acted more quickly, it risked losing its position as a major investment destination.

"As the ASEAN community becomes increasingly integrated into the global economy, we need to monitor developments in other regional groupings and initiatives by ASEAN's major trading partners entering into various forms of trading arrangements with others," he said.

Foreign direct investment in ASEAN last year hit a record of $38 billion - but that is still far behind China.

ASEAN secretary general, Ong Keng Yong, says the group now aims to create a single economic market by 2015 instead of 2020 - to better compete with China and India.

ASEAN began liberalizing trade in 1993 but persistent projectionist policies have inhibited progress.

ASEAN is comprised of Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.