Finmin awaits law ministry advice on SBI-SBS merger

The board of SBI and State Bank of Saurashtra had already given their nod for the proposed merger in August last year despite opposition from a section of bank employees.The proposed merger would be the first of its kind among public sector banks.The finance ministry has sought the law ministry’s advice on the merger which is yet to come. Once the advice comes, the proposal would go to the Cabinet for approval

Speaking on the merger, SBI chairman OP Bhat had earlier said “other formalities regarding the merger have been completed and only the government approval remains.” Since State Bank of Saurashtra was a 100% subsidiary of SBI, the merger was only a technical process, he had said.

SBI also convened a meeting to consider merger proposal with other associate banks in January but was postponed later following opposition from the unions.

Mother Dairy, Dhara get set to merge

National Dairy Development Board (NDDB) has kickstarted the process of merging two of its wholly-owned subsidiary companies - Mother Dairy Fruit & Vegetable (MDFVL) and Dhara Vegetable Oil & Foods Company (DOFCO) - as part of an internal restructuring exercise. NDDB says the move is aimed at consolidating operations and synergising efficiencies of both the subsidiaries.

DOFCO was set up in 2000 for marketing the Dhara brand of edible oils and bulk trading of agri-commodities. However, for close to five years now, it’s MDFVL that has been selling, distributing and marketing Dhara.

Read more in
The Economic Times article.

Govt considering proposal to merge SBI, SBS

Government is considering a proposal for merger of State Bank of India and State Bank of Saurashtra as the boards and unions of the two have approved the move.This was stated by Minister of State for Finance Pawan Kumar Bansal in Rajya Sabha today.The boards of directors of SBI and State Bank of Saurashtra have approved merger to "allow economies of scale in terms of network, manpower and other resources besides entailing better management of risks," he said.

He said the Government would not put pressure on banks to merge although the Narasimham committee on banking sector had recommended consolidation in the banking sector so that Indian banks are equipped to compete at the global level.

Read more in


The Economic Times article.

3 Ahemadabad ITcompanies to merge

In a first-of-its kind merger in Gujarat, three Ahmedabad-based IT companies are gearing up to launch a new company to cater to three different verticals – software, hardware and IT education – they specialise in individually.

The companies – Cubit Computers, Dev Information Technology and ACT Computer Education – are in advanced stages of merging into a new entity, which will receive funding from a US-based private equity firm.

The team from Cubit Computers, one of the pioneers in launching the tablet PC in the country, will head the hardware services vertical.

Dev Information Technology, which has undertaken a number of government projects in Gujarat, will head the software business, while ACT will spearhead the computer education services segment for the new entity.

Read more in The Business Standard article.

Deccan, Kingfisher to merge in 3:7 ratio

The Deccan Aviation board, at a meeting held today, appointed April 1, 2008 as the date for merger with Kingfisher Airlines.Subsequently, Deccan Aviation will be known as Kingfisher Airlines.

"Deccan Aviation shall allot shares in the ratio of three fully paid equity shares of face value Rs 10 each for seven equity shares of Rs 10 each held in Kingfisher Airlines," Deccan's release to the Bombay Stock Exchange said today.

The share entitlement ratio has been determined based on the recommendation of independent valuers KPMG India and Dalal & Shah.Deccan's charter business would be sold to an entity to be jointly owned by Captain Gopinath and the UB Group, the release added.

SBI to absorb 6 associates by Mar ’09

SBI chairman O P Bhatt, who had convened the meeting of six associate banks of SBI at its Nariman Point office, made it clear that he wanted nothing less than a “bullet” merger — all the six associates, three of which are listed entities, should be fused into the mothership in one shot, before March 31, 2009.

He was insistent because separate integration exercises — as was done in the case of State Bank of Saurashtra, which ceases to be an entity on January 26, 2008, — would be extremely cumbersome, gargantuan and mind-numbing considering the complexity of manoeuvres needed to keep the 3.3 lakh combined employees happy.

The boards of the SBI and the six associates will now hold a meeting on January 25 to give their in-principle nod to the merger.The finance ministry and the Reserve Bank of India are expected to give their green signals.The goal is to have a common balance-sheet as on March 31, 2009, said an SBI official in the know.

That’s important because India will open its doors fully to foreign banks by then. The size of operations of the foreign banks could dwarf the domestic players, which is why the government has been at pains to encourage consolidation.

Read more in The DNA Money article.

Shaw Wallace to merge with UB Group

The Rs 4,000 crore United Spirits will be merging Shaw Wallace with itself. United Spirits, a part of the UB Group, had acquired Shaw Wallace for around Rs 1,300 crore in mid-2005 .

UB Group President and Chief Financial Officer Ravi Nedungadi said that the merger would begin soon. The move will add another Rs 60 crore to United Spirits’ bottomline of close to Rs 500 crore and around Rs 350 crore to the topline.He also said that Whyte & Mackay, which was recently acquired for around $1.2 billion, would stay on as a subsidiary.

United Spirits is currently the third-largest distiller in the world with sales of over 66 million cases powered by 15 millionaire brands. Brands from Shaw Wallace, which operate in the volume segment, have contributed to this growth.

Read more in The Business Standard article.

Air India expected to unload 15% stake in IPO

State-owned Air India will likely unload 15 per cent of its equity in an initial public offer (IPO) when its merger with domestic counterpart Indian Airlines is completed. The government has said it is merging the two airlines in a bid to create a "world-class airline" that can compete globally and domestically. Singapore Airlines and Emirates have already expanded into India's booming travel market.

The IPO would be staged once the merger of Air India and Indian Airlines was finished and both airlines' operations were fully integrated.Air India is the nation's biggest international carrier and Indian Airlines is the second-largest domestic airline after privately run Jet Airlines.

The merged airline will fly under the brand of Air India domestically and internationally with a combined fleet size of more than 112 aicraft - comparable to the best airlines in the Asian region.

Read more in The Economic Times article.

Centre postpones national airline IPO

The Centre has decided not to proceed with an IPO for the national carrier till the company formed by merging Air India and Indian Airlines is able to deliver a good financial performance and attract a good price. While IA has been making losses for years, AI has not been able to touch the record profit level of Rs 333 crore of 1992. In the past five years, the Maharaja has been making profits in the range of Rs 110 crore and Rs 14 crore on an equity base of Rs 153 crore.

So in the interim, the government has decided to offer a 5% to 7% equity to employees as ESOPs. The ministry is going to move for Cabinet approval for this in coming weeks. “The merger has left some employees unhappy. By making them feel as owners of the new carrier, we want to enlist their full support in the proposed turnaround of AI,” said the official. Meanwhile, National Aviation Company of India Ltd (NACIL) (formed by merging AI and IA) is hoping for major savings with proposed route rationalisation.

Read more in The Economic Times article.

RBI approves merger of Lord Krishna Bank with Centurion Bank

Reserve Bank of India has approved the scheme of amalgamation of Lord Krishna Bank with Centurion Bank of Punjab. The merger is effective August 29, 2007.Under the scheme of amalgamation, Centurion Bank of Punjab will issue up to 13.22 crore shares of Re 1 each to the shareholders of Lord Krishna Bank in the ratio of seven shares for every five held.

The Kerala High Court last week paved the way for the merger after it dismissed a petition by an LKB shareholder, ruling that there was no reason for ordering a probe by the government or any of its agencies into the affairs of the bank.

The shareholder, Umesh Kumar Pai, had filed a petition against LKB’s decisions at the annual general meeting on September 30, 2006 and sought an investigation into the bank’s affairs.

DoT rules out BSNL-MTNL merger

The Department of Telecom (DoT) has ruled out the possibility of merging the two PSUs - BSNL and MTNL - on the grounds that MTNL is listed entity.Telecom Minister A Raja was recently apprised by DoT officials of this decision which says MTNL has private stakeholders who may not favour a merger with BSNL, official sources said.

While the government has 100% ownership in BSNL, MTNL has 56.25% government stake. MTNL is listed in the domestic market as well as on the New York Stock Exchange.The merger plan was first floated by late communications minister Pramod Mahajan and it was revived later by former minister Dayanidhi Maran.MTNL has minority shareholders/ADR holders whose approval for the merger decision is crucial.

After I-Sec submitted its report, the government was exploring the financial pros and cons of a reverse merger of BSNL with MTNL to take care of the private shareholders' interests.

A merger mode would necessitate a mandatory delisting of MTNL for a subsequent relisting of the combined BSNL-MTNL entity which would have been a complicated process for DoT to handle.

ETC Network to merge with Zee Interactive

ETC Network Ltd has considered and approved the scheme of amalgamation with Zee Interactive Learning Systems Ltd.

The scheme envisages amalgamation of ETC Network with Zee Interactive with effect from April 1, 2007. The exchange ratio is 1 share of Zee Interactive for 2 shares of ETC.
ETC Network is into broadcasting television channels, ETC Music and ETC Punjabi. Zee Interactive is a diversified education company.

Post amalgamation, the combined entity would be named ETC Networks Ltd and would be listed on the stock exchanges.

Dabur to merge foods biz with FMCG

Homegrown FMCG major Dabur India Limited (DIL) on Wednesday said it will merge its wholly-owned subsidiary Dabur Foods Limited (DFL) with itself.The Board of Directors of DIL approved the merger with retrospective effect from April 1, a company statement said.

"We believe this merger is a unique opportunity to combine the strengths of a foods company with those of a growing and profitable FMCG business to create an extraordinarily strong and rapidly growing global competitor in the health and wellness space," Dabur India CEO Sunil Duggal said.

He said DFL is an intrinsic part of DIL's growth strategy and has been one of the fastest growing businesses, reporting a 35 per cent CAGR for the past five years.Through the merger, DIL is looking to extract synergies and unlock operational efficiencies for DFL sharpen focus on the high growth business of foods and beverages, and enter newer product categories in this space, it added.

Merger to make Mahindra Forgings No. 2 player

Mahindra Forgings Ltd said on 7 June 2007 the proposed merger of its three subsidiaries with the company will propel it to the position of second largest forging player in the Indian market.

Post merger the combined turnover of all the entities is estimated to be in the region of Rs2,000 crore based on 2006-07 financials, making it the second largest forging player in the Indian market, Mahindra Forgings said in a communique to BSE.
As per the proposed merger, Mahindra Forgings would amalgamate Mahindra Stokes Holding Company Ltd (MSCHL), Mahindra Forgings Overseas Ltd (MFOL) and Mahindra Forgings Mauritius Ltd (MFML) with itself.

The merger plan involves merging the three entities — MFOL, which owns 100% of Jeco Holdings AG; MFML that owns 100% in Schoneweiss & Co GmbH; and MSCHL, which owns 99.8% of Stokes Group Ltd, into Mahindra Forgings Ltd.

After the merger — approved by the company’s board on 5 June — Jeco Holdings AG, Schoneweiss and Co GmbH and Stokes Group Ltd, would become close to 100% subsidiaries of Mahindra Forgings.

Read more in The Livemint article.

Mahindra Forgings merges three firms with self

Shares of Mahindra Forgings were down 0.47% at Rs 234.95 after the board approved the scheme of amalgamation envisaging the merger of the Mahindra Stokes Holding Company Ltd, Mahindra Forgings Overseas Ltd and Mahindra Forgings Mauritius Ltd with the company with effect from April 01.

The Board has also accepted the share swap ratio recommended for the scheme. The company will issue 20 equity shares of Rs 10 each to the equity shareholders of MSHCL, MFOL and MFML.

The shares will be allotted at par for every 103 equity shares of Rs 10 each in MSHCL, 49 equity shares of €1 each in MFOL and 73 equity shares of €1 each in MFML.

Once the scheme comes into effect, the resulting shareholding of Mahindra & Mahindra Ltd is expected to be around 60.56%.

Spice awaits IPO before deciding on merger with Idea

It is learnt that Spice Telecom may be in talks for a possible merger with Idea Cellular. Spice Telecom has revenues of Rs 1000 crore and has been valued between Rs 4500-5000 crore.

Spice Tele has 2.8 million shareholders and operates in two circles - Punjab and Karnataka.

At this point of time, it might make sense for Idea to make the move, as it is a nine-circle operator and might want to expand its India footprint. Also, getting new spectrum might take longer. So, the move makes perfect sense and is the fastest way for Idea to expand.

BK Modi, Chairman of Spice Tele said that at this point they were not in merger talks, but confirmed that there was a proposal for a merger with Idea. Currently, they were concentrating on their IPO, after which merger talks might resume. Meanwhile, Sanjeev Aga, Managing Director, Idea Cellular said that he had "no comment" to make.

Spice Tele's IPO was to float in June-July this year.

Spicy deal: Spice, Idea now talk merger

A major consolidation in the telecom sector could be on the cards. Discussions have just begun between Spice Telecom and Idea Cellular for a possible merger, whose outcome can go either way.

According to top sources, the option of both Spice buying out Idea Cellular as well as the Birlas-owned Idea Cellular buying out Spice are being considered. However, with talks being in the preliminary stages, a source said it would take anywhere between 8 and 12 months before anything could be finalised.

Adding a new dimension, sources told ET that Telekom Malaysia, which holds 49% in Spice Telecom (the BK Modi group holds 51%) is keen to expand its footprint in India and make some acquisitions to expand Spice’s operations. This is because Spice, at present, is limited to just two telecom circles, Punjab and Karnataka.

Last year, Telekom Malaysia had acquired 49% in Spice for $179 million (Rs 733 crore). In June 2005, Telekom Malaysia and Singapore Technologies Telemedia had opted out of the agreement for acquiring a 47.7% stake in Idea Cellular for about $390 million as the government did not clear the deal.

Read more in The Economic Times article.

Air India-Indian combine may hit market next year

The government on Tuesday said the merged national carrier, Air India, would wear a new look and logo. The merged company would go in for an initial public offer in 2008.

Giving details on how the merged entity between Air India and Indian would look, civil aviation minister Praful Patel said the brand, Air India, has been retained for its global and national recognition. “It will use the Maharaja as its mascot and a combined logo of the two merged airlines,” he said. The logo of the new airline is a combination of the flying swan from Air India and the ‘Konark chakra’ from Indian’s logo.

The design components of the new logo and livery have been drawn after merging some of the current features of both Air India and Indian. Mr Patel said the merged entity would start combined operations from July. The new company, National Aviation Company, would have its registered office in Delhi, while its corporate office would be located in Mumbai.

The merged airline would have a fleet size of over 100 aircraft. The minister said the new entity would add 25 new aircraft over next year, starting July this year. The new planes would have in-flight services comparable to international airlines, with the latest entertainment systems on board.

Read more in The Economic Times article.

LKB merger in doldrums

The merger of Kochi based Lord Krishna Bank (LKB) with the Centurion Bank of Punjab (CboP) is in doldrums, as the case pending with the Kerala High Court is likely to prolong further.

Umesh Pai, a shareholder of LKB and the original petitioner, had challenged the resolutions and proceedings of the bank’s annual general meeting before the High Court. Justice M N Krishnan has posted the case for further hearing on 25th May.

Meanwhile, the scheme of amalgamation approved by the boards of both the banks and the AGM will expire by 30th April, 2007. The boards recently extended the scheme for a further period of 3 months effective from 1st May, 2007.

Legal sources have opined that the extension would not be valid unless approved by a fresh AGM. But sources at the bank said that the last AGM had given prior approval to extend the scheme unless it were not to be in effect by the deadline.

Since the merger issue is under judicial scrutiny, RBI has not responded to the Kerala chief minister, V.S Achuthanandan’s letter citing serious concerns about the merger of LKB with CboP.

IPCL merger with RIL from April 1

Reliance Industries (RIL) on Saturday approved the amalgamation of Indian Petrochemicals Corporation Ltd (IPCL) with itself, with the share swap ratio pegged at 1:5.

It means shareholders of IPCL will get one RIL share for every five shares they hold. The board of IPCL has also approved the merger with RIL. The merger will be effective from April 1, 2007, an RIL release said.

Read more inThe Times of India article.