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According to the minority shareholder, the orders issued by BIFR for merger of India Foils with Ess Dee are beyond the powers of the reconstruction board
Nagpur-based Laxmi Girish Jalan has requested the Securities & Exchange Board of India (SEBI) to initiate action against orders passed by the Board for Industrial and Financial Reconstruction (BIFR) in the India Foils case as these orders are beyond the powers and authority (ultra vires) of BIFR. Mrs Jalan, in a notice sent through her counsel Sandeep Jalan, also said that she may approach the Bombay High Court, in case SEBI fails to respond.
In what appears to be another case of absolute apathy and discrimination, minority shareholders have been crying foul about the merger deal between India Foils and Ess Dee Aluminium as they feel the acquirer has put a ridiculously low valuation.
Earlier in September 2010, the BIFR sanctioned and approved the merger of India Foils with Ess Dee in terms of the modified rehabilitation scheme. According to the scheme, India Foils’ shareholders were offered a share-swap ratio of 1285:1. This also meant that India Foils’ shareholders would surrender their 1,285 shares to get a single share of Ess Dee. Apparently, Mumbai-based chartered accountant firm, MP Chitale & Co, did this incredible valuation for the merger.
In November 2008, Ess Dee bought a majority stake in India Foils for Rs130 crore from the Anil Agrawal-led Vedanta Group as part of the rehabilitation scheme approved by the BIFR. However, advocate Mr Jalan has objected to the scheme of rehabilitation saying that BIFR cannot change ownership of a company. “According to Section 18 of the Sick Industrial Company (SIC) Act, among other things, the proposed scheme may provide for financial reconstruction, change or appointment of new board of directors, etc. While looking at, all the provisions of section 18 of SIC Act, 1985, it is nowhere provided that the ownership of the sick industrial company can be changed, save, by way of amalgamation,” he said in the notice, a copy of which is with Moneylife.
Mr Jalan said, the amalgamation ordered between India Foils and Ess Dee was ‘absolutely unwarranted’ and there was no ‘cause of action’ for the BIFR to exercise its jurisdiction. “The clause of SIC Act, 1985 does not contemplate the nature of amalgamation effected between sick India Foils and Ess Dee and the said amalgamation, in particularly frustrates the mandate of Section 18(3)(a) of the SIC Act, 1985 and Regulation 30 of BIFR Regulations 1987,” the notice said.
Some years ago, Kumar Mangalam Birla, who controls Hindustan Aluminium, almost bought India Foils, the Kolkata-based aluminium foil-maker. His team took a close look at the books of the company and balked. Then a more intrepid and ambitious businessman jumped in—Anil Agarwal of Sterlite. He is more adept at wading through the mess and fixing it—or so he thought. But even he gave up. Finally, it was left to the local boy who had made it good in Mumbai to come back and invest in his home state. Sudip Datta of Ess Dee Aluminium took over India Foils, a sick company, from Anil Agarwal for Rs130 crore.
After relisting it in June 2009, India Foils’ shares last traded on the Bombay Stock Exchange on 22nd October at Rs5.12 apiece.
The apex court also directed release of Reliance ADAG managing director Gautam Doshi, Sanjay Chandra, Vinod Goenka, on furnishing two surities of Rs5 lakh each
The Supreme Court on Wednesday granted bails to five corporate executives who were arrested for their roles in the second-generation (2G) spectrum allocation scam allegedly involving former telecom minister A Raja and Tamil Nadu chief minister M Karunanidhi's MP daughter Kanimozhi. This is the first bail the 2G spectrum case granted by the apex court.
A bench comprising Justices GS Singhvi and HL Dattu directed release of accused from Tihar Jail including Reliance ADAG managing director (MD) Gautam Doshi, Hari Nair and Surendra Pipara, Unitech MD Sanjay Chandra and Swan Telcom's director Vinod Goenka, on furnishing two sureties of Rs5 lakh each.
The accused had moved the apex court challenging Delhi High Court and trial court orders turning down their bail pleas. The Central Bureau of Investigations (CBI) had opposed their release on bail saying they could approach the trial court for relief.
The bail plea of Ms Kanimozhi and four others is due to come up for hearing before the Delhi High Court on 1st December. Other accused in the case include Mr Raja's private secretary RK Chandolia, who is a suspended IRS officer, and former Telecom Secretary Siddhartha Behura. Swan Telecom promoter Shahid Usman Balwa, his cousin Asif Balwa and their colleague Rajeev Agarwal, besides DMK-run Kalaignar TV MD Sharad Kumar and Mumbai filmmaker Karim Morani are the other accused arrested in the 2G spectrum case.
The CBI chargesheeted 14 persons in the 2G scam, with Mr. Raja being the first to be arrested on 2 February 2011, along with Mr Behura. Three telecom companies, Reliance Telecom Ltd, Swan Telecom and Unitech (Tamil Nadu) Wireless Ltd too have been listed as accused in the CBI charge sheet.
The prices are crashing due to excess Kharif supply and poor export off take; prices are expected to come down further
Excess supply and poor off-take by the exporters has taken a toll on the prices of onions. In the wholesale market of Lasalgaon, Nashik, the country’s largest onion producing area, prices are crashing down, leaving the farmers to bear the losses. Experts are cautious about the situation in anticipation of a further fall in prices.
The boost in the Kharif production and lower exports due to higher minimum export price (MEP) has resulted in the commodity being flooded in the domestic market.
“In the Lasalgaon market, the prices are between Rs500-900 per quintal while the total production is 5%-10% more compared to last year. The Kharif crop is adding to current production. Prices are further expected to fall in the month of December. Meanwhile, farmers are burdened with losses,” says RP Gupta, director, National Horticultural Research and Development Foundation.
On Monday, wholesale prices of onion in the Lasalgaon market were in the range of Rs331-Rs1,161 per quintal. Surprisingly, in Mumbai market the prices are stable between Rs800-Rs1,200 per quintal. “Prices are stable in Vashi market, with around Rs8-Rs10 per kg (retail),” says a trader from the Agriculture Product Market Committee (APMC) market at Vashi.
According to a media report, following the fall in the onion prices in Karnataka, last week farmers from staged protested at Amargol APMC and blocked the Hubli-Dharwad road.
“Everyone in the cycle—from production till the time the produce reaches the retail market—except farmers, at some point are benefitting either from the falling or rising prices. When price falls, consumers are happy, when it rises, traders cheer. But unfortunately, farmers continue with losses in both situations. There are instances where produce was thrown away by onion growers due to lower prices. But nothing is been done to address the issue and safeguard the interest of farmers who can’t even recover his production cost,” says a professor of media studies.
The government reduced the MEP to $350 per tonne from the earlier $475 per tonne, to encourage exports. Indian onion faced a dip in exports in the international market due to higher MEP.
“Higher MEP resulted in poor export offtake. Now they have reduced it, I think it should encourage exports. But still the current MEP should also be brought to around $250 per tonne,” Mr Gupta said.