The two year-old dispute between the Tata Industries and the A.V. Birla Group over Idea Cellular took a fresh turn on Wednesday with the Supreme Court deciding to set up an arbitrator to resolve the issue.
The apex court’s decision is in favour of the Tatas’ plea seeking arbitration on the dispute, wherein it had alleged that the Birla Group had violated the shareholders’ agreement.
If the arbitration is settled in Tata Group’s favour, it will have the right to buy out Birla’s stake in Idea Cellular.
Govt rules
The dispute dates back to 2006 when the Tata Group was holding 48.14 per cent stake in Idea Cellular.
However since the Tatas were also having another mobile venture under Tata Teleservices, the Birla Group sought the Government intervention in getting the Tatas to exit from Idea Cellular.
The Birlas claimed that the Tata Group was not allowing Idea Cellular to grow and was more focused on Tata Teleservices.
The Tatas had to finally exit Idea Cellular because the Government rules do not allow a company to hold more than 10 per cent stake in two different telecom companies offering services in the same area.
The Aditya Birla Group acquired the entire 48.14 per cent stake of the Tata group in Idea Cellular for Rs 4,406 crore.
Two notices
However, the confrontation between the two companies did not end; before selling its stake in Idea Cellular, the Tatas served two termination notices to the Birla Group citing violation of the shareholders agreement.
In the first case, the Tatas took the Birlas to court claiming that the latter had violated the shareholders’ agreement by disclosing sensitive information relating to Idea Cellular on the A.V. Birla Group Web site.
Tata Industries served another notice to the Birla Group for applying for a telecom licence for offering mobile services in Mumbai.
The Tatas claimed that as per the shareholders agreement between the two companies, any new licences should be taken through Idea Cellular, and in case the Birla Group wanted to apply for a licence on its own, it should have taken the clearance from the Tatas.
The Tatas have claimed that as per the shareholders’ agreement, they can buy out Birla’s stake in Idea Cellular for the alleged violation.
Tatas’ plea
While the Tatas had sought arbitration on the issue, the Birlas had taken a stance that there was no offence committed that needs an arbitrator.
Based on the Tatas’ plea, the Supreme Court has now appointed former Chief Justice, Mr A. S. Anand, former Supreme Court judges Mr Arun Kumar and Mr P. K. Balasubramanian as arbitrators.
Thursday, July 10, 2008
NUCLEAR POWER IN INDIA
India has 14 reactors in commercial operation and nine under construction
Nuclear power supplies about 3% of India's electricity
By 2050, nuclear power is expected to provide 25% of the country's electricity
India has limited coal and uranium reserves
Its huge thorium reserves - about 25% of the world's total - are expected to fuel its nuclear power programme long-term
Source: Uranium Information Center
Nuclear power supplies about 3% of India's electricity
By 2050, nuclear power is expected to provide 25% of the country's electricity
India has limited coal and uranium reserves
Its huge thorium reserves - about 25% of the world's total - are expected to fuel its nuclear power programme long-term
Source: Uranium Information Center
India gives nuclear plans to IAEA
India has submitted its plans for safeguarding its civilian nuclear facilities to the world nuclear regulatory body.
The International Atomic Energy Agency's (IAEA) approval of the plan is a key condition for putting into effect a nuclear deal between India and US.
Left-wing parties in India have pulled out of the governing coalition in protest against the deal.
The government says it is needed to meet soaring energy demands.
India is under pressure from Washington to sign the accord before the US presidential elections in November.
Reports say a restricted draft of India's plans for safeguarding nuclear facilities has been given to IAEA's 35 member nations ahead of a meeting to approve the agreement.
'Big problem'
Daryl Kimball of the Washington-based Arms Control Association told Reuters news agency that there were several points in the draft that appear to restrict international monitoring of India's atomic programme.
He said the draft says India may "take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies".
Fuel supplies could be disrupted only if India were to resume testing nuclear weapons, experts say.
"Does this mean that India intends to withdraw from what are supposed to be permanent safeguards if it tests and other states decide to terminate fuel supplies?" Mr Kimball said.
"If so, that is a big problem and the Indian government has not clarified what it means."
The US had restricted nuclear co-operation with India - which has not signed the 1972 Non-Proliferation Treaty (NPT) - since it first tested a nuclear weapon in 1974.
Under the terms of the nuclear accord, India would get access to US civilian nuclear technology and fuel.
In return, Delhi would open its civilian nuclear facilities to inspection - but its nuclear weapons sites would remain off-limits.
US President George W Bush has spoken again of the importance of the deal in talks with Indian PM Manmohan Singh on the sidelines of the G8 summit in Japan on Wednesday.
Critics of the deal fear assistance to India's civil programme could free-up additional radioactive material for bomb-making purposes.
The deal now needs to be approved by the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), as well as by the 45-nation Nuclear Suppliers Group, which regulates global civilian nuclear trade.
Separately, Mr Singh is due to meet the Indian president to discuss political developments arising out of the left-wing parties' withdrawal of support to the government.
The communists, who command 59 seats in the lower house of parliament, formally withdrew support for the government on Wednesday after it vowed to press ahead with the agreement.
The Congress-led government is hoping that a regional party will help them survive a vote of confidence and fend off early elections.
The International Atomic Energy Agency's (IAEA) approval of the plan is a key condition for putting into effect a nuclear deal between India and US.
Left-wing parties in India have pulled out of the governing coalition in protest against the deal.
The government says it is needed to meet soaring energy demands.
India is under pressure from Washington to sign the accord before the US presidential elections in November.
Reports say a restricted draft of India's plans for safeguarding nuclear facilities has been given to IAEA's 35 member nations ahead of a meeting to approve the agreement.
'Big problem'
Daryl Kimball of the Washington-based Arms Control Association told Reuters news agency that there were several points in the draft that appear to restrict international monitoring of India's atomic programme.
He said the draft says India may "take corrective measures to ensure uninterrupted operation of its civilian nuclear reactors in the event of disruption of foreign fuel supplies".
Fuel supplies could be disrupted only if India were to resume testing nuclear weapons, experts say.
"Does this mean that India intends to withdraw from what are supposed to be permanent safeguards if it tests and other states decide to terminate fuel supplies?" Mr Kimball said.
"If so, that is a big problem and the Indian government has not clarified what it means."
The US had restricted nuclear co-operation with India - which has not signed the 1972 Non-Proliferation Treaty (NPT) - since it first tested a nuclear weapon in 1974.
Under the terms of the nuclear accord, India would get access to US civilian nuclear technology and fuel.
In return, Delhi would open its civilian nuclear facilities to inspection - but its nuclear weapons sites would remain off-limits.
US President George W Bush has spoken again of the importance of the deal in talks with Indian PM Manmohan Singh on the sidelines of the G8 summit in Japan on Wednesday.
Critics of the deal fear assistance to India's civil programme could free-up additional radioactive material for bomb-making purposes.
The deal now needs to be approved by the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), as well as by the 45-nation Nuclear Suppliers Group, which regulates global civilian nuclear trade.
Separately, Mr Singh is due to meet the Indian president to discuss political developments arising out of the left-wing parties' withdrawal of support to the government.
The communists, who command 59 seats in the lower house of parliament, formally withdrew support for the government on Wednesday after it vowed to press ahead with the agreement.
The Congress-led government is hoping that a regional party will help them survive a vote of confidence and fend off early elections.
President Patil to meet Manmohan over confidence vote
President Pratibha Patil will meet Prime Minister Manmohan Singh on Thursday, with a confidence vote expected to be the main topic after the government's left allies withdrew support to protest a nuclear deal with the United States.
The withdrawal means Singh's four-year-old government needs the support of other parties. The government has secured backing of the key regional Samajwadi Party but it is still unclear if the ruling coalition has enough votes for a parliamentary majority.
On Wednesday evening, President Patil issued a statement saying she would meet Singh on Thursday "to have his views on these developments", referring to the left's exit.
"Possibly a special session of parliament to seek a confidence vote will come up in the meeting," said a government official, who asked not to be named.
The meeting is due to start at 7:30 p.m.
India has submitted a draft nuclear safeguards accord to the International Atomic Energy Agency governors for approval, a crucial step to finalising a deal first agreed in 2005 between Singh and U.S. President George W. Bush.
Dates for both the confidence vote and an IAEA board of governors meeting to consider India's nuclear document were unclear. Both were expected, though, later this month.
A defeat for the government in parliament would trigger an early election, probably destroying chances of the nuclear pact going ahead and sparking political uncertainty just as the country struggles with record inflation and rising interest rates.
The pact's approval would be a victory for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West as it seeks energy sources for its booming, trillion-dollar economy.
But first the government must win the confidence vote.
It still needs several votes from other smaller parties, and must hope there is no rebellion within the ranks of the Samajwadi Party against the nuclear deal, which critics say gives the United States too much influence over India.
India's 543-member house includes scores of small parties from dozens of ethnic groups and castes, making it unclear whether the government has the necessary support.
The IAEA announcement that India had submitted the nuclear accord came despite Foreign Minister Pranab Mukherjee saying on Tuesday that India would seek approval from the nuclear watchdog only after the vote of confidence.
Critics say the deal reverses 30 years of U.S. policy opposing nuclear cooperation with India after it developed nuclear weapons.
But time is running out if it is to be passed by the U.S. Congress before President Bush leaves office.
After the IAEA, India still needs to seek approval for the deal from the 45-nation Nuclear Suppliers Group, where there is doubt because India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
The withdrawal means Singh's four-year-old government needs the support of other parties. The government has secured backing of the key regional Samajwadi Party but it is still unclear if the ruling coalition has enough votes for a parliamentary majority.
On Wednesday evening, President Patil issued a statement saying she would meet Singh on Thursday "to have his views on these developments", referring to the left's exit.
"Possibly a special session of parliament to seek a confidence vote will come up in the meeting," said a government official, who asked not to be named.
The meeting is due to start at 7:30 p.m.
India has submitted a draft nuclear safeguards accord to the International Atomic Energy Agency governors for approval, a crucial step to finalising a deal first agreed in 2005 between Singh and U.S. President George W. Bush.
Dates for both the confidence vote and an IAEA board of governors meeting to consider India's nuclear document were unclear. Both were expected, though, later this month.
A defeat for the government in parliament would trigger an early election, probably destroying chances of the nuclear pact going ahead and sparking political uncertainty just as the country struggles with record inflation and rising interest rates.
The pact's approval would be a victory for Singh, giving India access to U.S. nuclear fuel and technology and moving the Asian giant's trade and diplomatic relations closer to the West as it seeks energy sources for its booming, trillion-dollar economy.
But first the government must win the confidence vote.
It still needs several votes from other smaller parties, and must hope there is no rebellion within the ranks of the Samajwadi Party against the nuclear deal, which critics say gives the United States too much influence over India.
India's 543-member house includes scores of small parties from dozens of ethnic groups and castes, making it unclear whether the government has the necessary support.
The IAEA announcement that India had submitted the nuclear accord came despite Foreign Minister Pranab Mukherjee saying on Tuesday that India would seek approval from the nuclear watchdog only after the vote of confidence.
Critics say the deal reverses 30 years of U.S. policy opposing nuclear cooperation with India after it developed nuclear weapons.
But time is running out if it is to be passed by the U.S. Congress before President Bush leaves office.
After the IAEA, India still needs to seek approval for the deal from the 45-nation Nuclear Suppliers Group, where there is doubt because India is outside the Non-Proliferation Treaty, and finally ratification by the U.S. Congress.
Bidders line up for SpiceJet, deal likely by month-end
Bidders are queueing up for a stake in SpiceJet. Apart from Vijay Mallya-promoted UB Group, the airline, is also negotiating US-based distress fund owner Wilbur Ross. But differences in valuation have not led to much headway with either of them and the airline could end up in different hands, said market sources.
Airline promoters, who helped build one of the most efficient low-cost carrier (LCC) that today enjoys a 10% market share, are looking for a good value. The Anil Ambani-led ADAG has been keen on entering the airline sector and tried its luck with Air Deccan last year. If SpiceJet promoters don't lock the deal with Mallya or Ross, they may end up with ADAG or some other big players with deep pockets. The deal is likely to come through by this month-end.
But why is everyone so desperate for SpiceJet in these tough times when aviation is a loss-making business? "Today Kingfisher-Deccan and Jet-JetLite combines are neck-and-neck with almost 30% market share each. Getting SpiceJet's 10% and then some other small acquisitions like a GoAir will make the successful bidder the clear and undisputed market leader. He can dictate the fares in the market. That's why Mallya wants SpiceJet and other players are trying to ensure it doesn't land in his lap," said a top industry player.
According to the top player, Mallya had almost clinched the deal last week when things changed suddenly. "It could have been either difference in valuation or some other player's intervention," said the player. At the current share price, the airline is valued at over Rs 600 crore and acquiring the 26% stake that's held by two promoters would mean paying up nearly Rs 155 crore.
Airline promoters, who helped build one of the most efficient low-cost carrier (LCC) that today enjoys a 10% market share, are looking for a good value. The Anil Ambani-led ADAG has been keen on entering the airline sector and tried its luck with Air Deccan last year. If SpiceJet promoters don't lock the deal with Mallya or Ross, they may end up with ADAG or some other big players with deep pockets. The deal is likely to come through by this month-end.
But why is everyone so desperate for SpiceJet in these tough times when aviation is a loss-making business? "Today Kingfisher-Deccan and Jet-JetLite combines are neck-and-neck with almost 30% market share each. Getting SpiceJet's 10% and then some other small acquisitions like a GoAir will make the successful bidder the clear and undisputed market leader. He can dictate the fares in the market. That's why Mallya wants SpiceJet and other players are trying to ensure it doesn't land in his lap," said a top industry player.
According to the top player, Mallya had almost clinched the deal last week when things changed suddenly. "It could have been either difference in valuation or some other player's intervention," said the player. At the current share price, the airline is valued at over Rs 600 crore and acquiring the 26% stake that's held by two promoters would mean paying up nearly Rs 155 crore.
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