Companies & Sectors
BT begins sale of part stake in Tech Mahindra

BT has been looking at part-sale of its stake in Tech Mahindra for quite some time, but has been waiting for right market conditions to go ahead

 
New Delhi: Global player British Telecom (BT) today began sale of a part of its over 23% stake in IT major Tech Mahindra in the open market, reports PTI.
 
Shares of Tech Mahindra came under pressure on the BSE as well as the NSE as they were being sold at a discount to the prevailing market price, according to the investment bankers handling the deal.
 
While BT may sell as much as 5%-10% stake, within the first hour of trade this morning, shares worth over Rs600 crore—accounting for close to 6% equity in the company had changed hands. However, it could not be ascertained as to how much of this has been sold by BT.
 
Investment bankers said they were open to the idea of continuing the stake sale tomorrow as well.
 
Tech Mahindra shares fell 3.72% to Rs804.50 on the BSE in noon trade. The stock was trading at Rs784.90, down 5.99% on the NSE at the same time. The company commands a market capitalisation of around Rs10,000 crore. The group is in the process of merging another IT firm Mahindra Satyam with Tech Mahindra.
 
Sources have said that BT has been looking at part-sale of its stake in Tech Mahindra for quite some time, but has been waiting for right market conditions to go ahead.
 
At the end of last quarter, the total promoter holding in Tech Mahindra stood at 70.78%, which included 47.57% with Mahindra & Mahindra, 23.16% with BT Plc and 0.05% with Mahindra BT Investment Company Mauritius.
 
BT is also a major customer for Tech Mahindra.
 
In the fiscal ended March 2012, the BT Group purchased services worth 253 million British pounds (over Rs2,000 crore) from Tech Mahindra, which it terms as a principal associate in India.
 
The net value of services purchased in the fiscal ended March 2011 was 258 million pounds and 301 million pounds in the year prior to that.
 
The amount outstanding and payable for services at 31 March 2012 to Tech Mahindra was 51 million pounds (about Rs500 crore).
 
In 2010 a cash payment of 127 million pounds (over Rs1,100 crore) was made to Tech Mahindra for the renegotiation of certain supply contracts as part of the rationalisation of procurement channels within BT Global Services.
 

User

IRDA’s senior citizen initiatives: On the track or off it?

As per an RTI reply by the ministry of finance, IRDA has taken several initiatives for senior citizens, but has it made the life of senior citizens any easier?


The reply of the ministry of finance to an RTI query by MV Ruparelia gives details of recommendations by the Sastry Committee and the action taken by the Insurance Regulatory and Development Authority (IRDA) for issues faced by senior citizens as far as health insurance is concerned. While some have been implemented, few are in the draft stage and may get into the final guidelines, while the rest have been rejected citing various reasons. Even though IRDA has taken steps in the right direction, the ground situation for senior citizens is far from easy.
 

Following are the recommendations made by the Sastry Committee and action taken by IRDA:

  1. Committee’s recommendation: Health insurance should be accessible to senior citizen up to 65 years of age

IRDA’s response: Accepted vide circular dated 25 May 2009

 

Ground reality: While mediclaim does offer entry up to 65 years of age and health insurance draft reiterates the same, some insurers are reluctant to underwrite customers above 45 years of age. The “Right to Underwrite” is freely used by insurers to deny mediclaim policy.

  1. Committee’s recommendation: No exit age limit on renewal of health insurance policies

IRDA’s response: Accepted vide circular dated 7 March 2009, 25 May 2009 and 31 March 2009.
 

Ground reality: Has not been effective yet—many mediclaim policies end at age 70, 75 or 80 years; few offer lifelong renewal, although health insurance draft guidelines do specify lifelong renewal. Many senior citizens do not receive renewal notice and have to chase the insurance company to accept the premium payment cheque.

  1. Committee’s recommendation: The price of health insurance should be fixed at Rs3,000 for sum insured of Rs1 lakh.

IRDA’s response: This wasn’t accepted completely because in a de-tariffed market, fixing the price is not appropriate. IRDA has issued a circular which restricts insurers to increase premium beyond 75% at the time of renewal of policies for senior citizens.
 

Ground reality: While it is understandable that premium cannot be fixed in an open market, allowing 75% increase in premium at the time of renewal is a major increase. Moreover, premium is hiked every year, which means that the premium can shoot sky high for senior citizens especially for those already suffering from some disease. Claims based loading is still prevalent in mediclaim policies.

  1. Committee’s recommendation: Senior citizens should be able to opt for change of TPA, and settlement of claim should be done within 30 days from the date of receipt of claim and seven days from date of acceptance of offer.

IRDA’s response: Accepted.
 

Ground reality: While change of TPA may be allowed, many senior citizens do not want services of a TPA and ask for reduction of premium equivalent to the 6% paid to TPA. This is not allowed by most insurers. Also, settlement of claims within 30 days from the date of receipt does not happen in reality. The health insurance draft guideline specifies the settlement of claims should be within 30 day from the date of receipt of all claims documents. This is a vague statement as “all claims document” is subjective. Insurer/TPA keep raising queries to ask for frivolous documentations, which leads to an enormous delay in settlement of claims. Many a times, the claims file is closed on the pretext of incomplete documentation from the hospital, and the insurance company/TPA does not even take the trouble of informing the same to the insured. It takes a lot of persuasion to get the file reopened, which agonises the insured, despite him not being at fault.

  1. Committee’s recommendation: The cost for medical tests at the time of issuance of a policy to senior citizens should be shared equally by the insured and the insurer and also the insurers should establish a separate grievance channel to address complaints from senior citizens.

IRDA’s response: Both these points are still in the draft stage and hence not yet implemented.
 

Ground reality: Intimation to TPA/insurer within 24 hours of hospitalisation and claims filing with seven days has led to mechanical rejection of claims.Some claims are rejected even when the insured follows the timelines. No standard processes of confirming intimation from the TPA exist, and the TPA may refuse receipt of intimation by email or assert that the fax was illegible. Government insurers offer an incentive to TPAs for keeping the claims ratio low, which is in direct conflict of interest with the insured and can hamper genuine claims.

  1. Committee’s recommendation: Adequate regulations of hospitals. 

IRDA’s response: Not within the purview of IRDA. However, MOHF (ministry of health and family welfare), GOI (Government of India) was requested to look into this recommendation.
 

Ground reality: IRDA has completely washed its hands off on hospital pricing even though the Air Force Medical College (AFMC) submitted its report on hospital pricing to IRDA after a detailed study. Cashless feature was removed by government insurers in July 2010 without informing the insured about the move, leaving policyholders in lurch—IRDA did not get involved in settling of the issue. Few hospitals are added to Preferred-Provider-Network (PPN) of government insurers, and majority of high-end hospitals are not willing to be part of PPN.

 

User

COMMENTS

SATISH BHATIA

4 years ago

My concern is about Bank Insurance policies. as now a days almost all the Public Sector and few pvt sector banks are providing Mediclaim polices upto age 80 yrs without Medical tests. with very low premium.

Will these policies be continued even after the break up between Banks and ins. cos.?

If Yes, then what are T&C.?? Banks does not provide such guidelines.

As up to 80yrs without Med test, this is for sure after 4 yrs. claim will be huge. So will the insurer continue this plan with the same premium.
Or is it a eye wash, that Insurance cos. will pull their hands back and leave the client on their own fate..??

Mathai

4 years ago

To Moneylife: Please consider promoting the concept of universal insurance coverage an uniform premium rate. It should be mandatory for all persons earning above a minimum level to have medical insurance just like we pay income tax. Also, people of all ages, irrespective of having taxable income or not, should bd able to pay the same universal premium rate and have medical coverage upto the same uniform level. This would mean an element of cross subsidy by ypung of old. This is similar to taking the rich more and giving subsidies that benefit the poor. When most of the population is covered by insurance, the premium required for insurance will be less, as there will be many healthy individuals who are forced to participate, who may not do so now, as they may see the need. If people who go for insurance are mostly the less healthy, the premium will be higher, as is the case now. This may sound idealistic but may be the way forward for India. This will also enable India to reach the high insurance coverage that some other countries have reached. Some countries have reached high coverage because of the practice that people without insurance are charged 3 times the bill versus an uncovered person, e.g. USA (all insurance companies have negotiated major discounted rates) and hence people are forced to take insurance by these market forces.

REPLY

raj

In Reply to Mathai 4 years ago

Thanks for your feedback

Mathai

In Reply to raj 4 years ago

To Mr. Raj Pradhan. Your article is very informative. Thanks. There were several typos in my earlier comments. My regrets. I am giving below the rectified comments:
Please consider promoting the concept of universal insurance coverage at a uniform premium rate. It should be mandatory for all persons earning above a minimum level to have medical insurance just like we pay income tax. Also, people of all ages, irrespective of having taxable income or not, should be able to pay the same universal premium rate and have medical coverage upto the same uniform level. Some slabs may also be defined. This would mean an element of cross subsidy by young of old and by healthy to the less healthy. This is similar to taxing the rich more and giving subsidies that benefit the poor more. When most of the population is covered by insurance, the premium required for insurance will be less, as there will be many healthy individuals who are forced to participate, who may not do so now, as they may not see the need. If people who go for insurance are mostly the less healthy, the premium will be higher, as is the case now. This solution may sound idealistic but may be the way forward for India. This will also enable India to reach the high insurance coverage that some other countries have reached. Some countries have reached high coverage because of the practice that people without insurance, are charged 3 times the bill versus a person covered by medical insurance, e.g. in USA (all insurance companies have negotiated substantially discounted rates) and hence people are forced to take insurance by these market forces to avoid high medical bills.

vijai pratap

4 years ago

verry well analysed and posted too. however, there is nothing an individual can do about it. sad, sad, sad.....

GOVIND GOPAL SHANBHAG

4 years ago

RAJ PRADHAN Jee - do something for senior citizens. My father died at the age of 84 -10 years ago he had a fall broke his hip bone. In fact he had broken the hip of his left leg, we got it operated, spent nearly Rs.1.25 lacs but did not feel the pinch as my employer had reimbursed 75% of expenses. Now I can not take insurance for my mother, who is now 85. Although she is healthy, shame senior citizens like us now, independent but we are not allowing her to move out much as I am now retired, not getting reimbursement from my employer. Moreover, myself and my wife (63/62 years) have policy of Rs.7.00 lacs from my employer, I can not take policy for myself/mother (touchwood - healthy without any complications) my wife (with BP, little cholestrol and sugar other wise healthy). If possible I would be too happy to cover all three of us for
Rs.15.00 to Rs.20.00 lacs = Is there any way????

REPLY

raj

In Reply to GOVIND GOPAL SHANBHAG 4 years ago

There are products today that allow no limit for entry and exit age. One is Max Bupa regular mediclaim policy and other is Apollo Munich new senior citizen mediclaim. The premium may be high for your mother (age 85) and they may or may not underwrite. It is worth applying.

Orchid Chemicals to sell some assets to US-based Hospira in $200 million deal

As per the business transfer agreement, Orchid will transfer its Aurangabad API facility, an associated Chennai-based R&D facility and Penicillin and Penem API business to US-based Hospira, the proceeds of which would be used to de-leverage its debt position
 

New Delhi: Orchid Chemicals & Pharmaceuticals (Orchid) on Wednesday said it will sell various assets including active pharmaceutical ingredients (API) business and a R&D facility to the US-based Hospira Inc for $200 million (nearly Rs1,112 crore), reports PTI.

 

The Chennai-based firm’s business transfer agreement (BTA) with Hospira includes sale and transfer of its Aurangabad API facility, an associated Chennai-based R&D facility and Penicillin and Penem API business.

 

“The proceeds from this business transfer will be utilised for de-leveraging Orchid’s debt position and also pave the entry for the company's foray into newer product verticals,” Orchid Chemicals said in a statement.

 

As on date, Orchid’s debt stood at Rs2,200 crore.

 

As part of the deal, nearly 830 employees of Orchid would be transferred to Hospira, it said.

 

“...This business transfer agreement with Hospira will help us fast-track our future growth while maintaining a healthy debt profile in our balance sheet,” Orchid Chemicals & Pharmaceuticals CMD K Raghavendra Rao said.

 

On getting necessary approvals, the transaction is expected to be completed in the third quarter of Orchid’s 2012-13 fiscal year, corresponding to the fourth quarter (October-December) of the calendar year 2012.

 

An active ingredient is the substance in a pharmaceutical drug that is biologically active.

 

Given the current scenario, it is a prudent decision for Orchid to monetise these verticals and bring in cash to de-leverage its debt position and fund newer growth horizons, he added.

 

Orchid said it would continue to supply its cephalosporin APIs to Hospira in accordance with the long-term supply contract.

 

Further, Hospira would supply certain ingredients from the Aurangabad facility to Orchid under a long-term agreement that both companies have entered into, Orchid said.

 

“This agreement builds on the existing product development and commercialisation relationship between Hospira and Orchid,” it added.

 

“Our decision to acquire Orchid's world-class API facility demonstrates Hospira’s continued dedication to the antibiotics space, enhancing cost-competitiveness and ensuring continuity of supply,” Hospira India MD C Bhaktavatsala Rao said.

 

Latham & Watkins LLP acted as the international legal advisor and Amarchand, Mangaldas & Co acted as the Indian legal advisor to Orchid.

 

Orchid Chemicals & Pharmaceuticals develops, manufactures and markets various bulk actives, formulations and nutraceuticals.

 

Lake Forest-headquartered Hospira Inc is one the world’s leading provider of injectable drugs. In India, the company has a wholly-owned subsidiary— Hospira Healthcare India.

 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)