Companies & Sectors
Dr Reddy’s expects to launch open offer for OctoPlus in December

Dr Reddy’s currently holds an irrevocable commitment from shareholders representing over 50% of OctoPlus’ issued and outstanding shares

New Delhi:  Pharma major Dr Reddy’s Laboratories today said it expects to launch a public offer in December to acquire all outstanding shares of Netherlands-based OctoPlus, reports PTI.
“It is currently expected that the offer will be launched mid December 2012. If launched, the offer period will run for at least eight weeks and no more than ten weeks,” Dr Reddy’s Laboratories (DRL) said in a filing to the BSE today.
Closing of the transaction is expected to occur in first quarter of 2013, it said.
It may be recalled that last month, in a statement, the company had said: “Dr Reddy’s currently holds an irrevocable commitment from shareholders representing over 50% of OctoPlus’ issued and outstanding shares. Further the executive board and the supervisory board of OctoPlus have unanimously recommended the offer to the remaining shareholders”.
The Hyderabad-based firm had also announced in October that it will acquire OctoPlus NV, a speciality pharmaceutical company, for about 27.4 million euros (about Rs193 crore).
As part of the deal, the companies agreed that DRL or a wholly-owned subsidiary of DRL will make a public offer for all issued and outstanding ordinary shares in the capital of OctoPlus at an offer price of euro 0.52 in cash per share.
The companies today said, in a joint statement, that the preparations for the offer were going on as planned.
“Dr Reddy’s and OctoPlus hereby announce that preparations for the offer, including preparations in respect of the offer memorandum and obtaining approval from the Netherlands Authority for the financial markets for the offer are proceeding as planned,” the companies said.


Enforcement Directorate to issue notices in Wal-Mart investments probe

The investigations are being conducted to probe allegations that Wal-Mart put money into the domestic multi-brand retail chain despite a ban on foreign direct investment in the sector

New Delhi” The Enforcement Directorate (ED) will soon issue notices to American retail giant Wal-Mart as part of its probe against the company’s investment in an Indian firm for alleged violations of forex laws, reports PTI.


“The agency has received a communication from the Reserve Bank of India (RBI) to probe the investments in this regard. Notices for want of documents with regard to financial investments and remittances will be issued by the Bangalore office of the agency,” a source privy to the development said.


The agency, which has registered a case under the Foreign Exchange Management Act (FEMA), will also ask the commerce and industry ministry to furnish it with clearances that were given to the company to route the investment in 2010 in a subsidiary of Bharti ventures via a Mauritian arm, the source said.


The investigations are being conducted to probe allegations that Wal-Mart put money into the domestic multi-brand retail chain despite a ban on foreign direct investment in the sector.


Bharti Enterprises has, however, rejected the allegations that it had violated any rule in this regard. The company had said all the procedures were as per the “law of the land”.


The Rs455.8 crore investment by Wal-Mart in Cedar Support Services, a subsidiary of Bharti Ventures, had come under attack from CPI Rajya Sabha member MP Achuthan, who wrote to Indian prime minister Manmohan Singh earlier, saying it was ‘illegal’ and flouted FDI rules.


The ED, a central investigative agency mandated to probe violations under the FEMA and Prevention of Money Laundering Act (PMLA), was asked by the RBI to check the alleged violations made by the US-based retail giant in an official communication earlier this month.


In a letter dated 30th October, the Department of Industrial Policy and Promotion (DIPP) had asked that RBI may take action as appropriate as per provisions of FEMA rules and regulations.


The DIPP deals with all the FDI related matters.


“...there is a need to examine/investigate as to whether illegal investments have been made by Wal-Mart/Cedar in FDI prohibited sectors. Accordingly, the matter is being referred to the ED for further investigation and appropriate action, if necessary, in consultation with the government in accordance with the provisions of FEMA upon noticing violations if any,” a source said.


In a letter to the prime minister, Mr Achuthan, who is also a member of the Standing Committee of Parliament on IT, earlier this year had alleged that “the entire FDI has been diverted and illegally invested by Cedar in its 100% subsidiary Bharti Retail, which is carrying out multi-brand retail operations.”


RBI will not give banking licences without legal backing: Subbarao

According to the RBI Governor it will take at least eight-nine months to issue the first new bank licence if the Act is amended in the Winter Session of the Parliament

Pune: A day after Finance Minister P Chidambaram asked the Reserve Bank of India (RBI) to speed up the process of issuing new bank licences, Governor D Subbarao on Friday said it would be not possible without fulfilling the enabling conditions for the same, reports PTI.
"We have been preparing for launching this process (of issuing new bank licences) but all the ground work, all the enabling conditions for launching this work have to be fulfilled," he told reporters on the sidelines of a function.
Yesterday, Chidambaram had said he had asked RBI to finalise the guidelines for new bank licences and start accepting applications for the same pending passage of the Banking Laws (Amendment) Bill.
"We have written to RBI recently urging them to proceed to finalise the guidelines and proceed to receive applications for new banking licences in anticipation of the amendment in the Banking Regulation Act," the Finance Minister had said.
"We hope that RBI will pick up the thread and finalise the guidelines and start receiving the application." 
The Minister had said that "the power or the authority" which RBI wants is already available in the other provisions of the law and with the central bank's own regulations and guidelines for new banking licences.
The last time RBI allowed new private banks was in 2002, prior to which it allowed new players in the mid-90s.
The RBI issued the final guidelines in August 2011 for entry of new banks, including those floated by corporates, but is waiting for the necessary legal powers before it proceeds further. The bank licences were initially slated to be issued way back in 2008-09.
The Governor was talking to reporters in Pune after inaugurating an RBI conference on 'Leveraging Cooperative Advantage'. 
"We are only formalising them by amending the Banking Regulation Act. And I have assured RBI that the Act will indeed be amended, hopefully in the Winter Session of Parliament, and if not in the Winter session then in the Budget session," Chidambaram had said in Delhi.
The Minister had said if RBI proceeded to receive application and process them, even then the first banking licence was not likely to be issued in the next six-eight months.
"So by the time the licence is issued and the banks come to existence, the Act would have been amended." 
The Finance Ministry wants RBI to speed up the process under the provisions of the Companies Act in its effort to create positive sentiment among investors and industry.
The Governor today said it will take at least eight-nine months to issue the first new bank licence if the Act is amended in the Winter Session which begins on 22nd November.
The amendments to the Act will invest RBI with supervisory powers over private companies that would enter the banking sector. Specifically, RBI wants legal powers to supersede the board of any new banking player in case of irregularities.
At the October 30 credit policy announcement also, Subbarao ruled out any short cuts when it comes to issuing new bank licences. "We believed, we believe and we still believe that we need these powers to move forward.
"An amendment to the Banking Regulation Act is pending in Parliament for giving us the necessary powers, authority and dispensation to deal with corporates entering the banking sector," he had said.
The demands of the RBI include authorisation for superseding a bank's board and powers to authorise acquisition of shares beyond 5 per cent, among others.
As per the RBI's draft norms released in August 2011, private entities or groups owned and controlled by domestic promoters, with diversified ownership, sound credentials and integrity, and having successful track record of at least 10 years, would be eligible to promote banks.




5 years ago

If FM feels that an amendment is not necessary to ‘give’ the powers sought by RBI(which include powers to supersede the board, to authorize the acquisition of shares beyond five per cent as well as powers for consolidated supervision and dispensation necessary to deal with companies that entered the banking sector), why not convince RBI about the position? During October, reports were there that FM had asked RBI officials whether the banking regulator could be given these powers without an amendment to the Banking Regulation Act. RBI Governor said in an interview on October 31 that RBI could not offer an informed response to this query from FM, because RBI believed that it needed those powers. North Block seems to have ignored the message in Dr Subbarao’s comment. The message was, RBI would be happy if the powers come through legislative amendment. The powers ‘given’ outside the Act provisions could be with stings and can also be taken back in a different situation through the same process(without legislative process). Statutory bodies like RBI should not be at the mercy of officials in ministries for the powers they are expected to exercise. RBI has burnt fingers on such issues relating to banks and even in internal issues like pension updation earlier due to blurred clarity in communication.

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