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that was up N N from a year earlier even though orders for the first nine months of N were down N N from the comparable N period |
$ N |
$ N |
$ N |
$ N |
in <unk> stock market circles the <unk> is <unk> |
at least N companies are coming to the capital market to raise $ N billion an amount never thought possible in india |
when they talk mega-issues they 're truly talking <unk> says s.a. dave chairman of the securities and exchange board of india |
the capital market is booming |
but the mega-issues are raising <unk> about the rapidly <unk> indian capital market |
one is whether there is enough money to fund the new issues without <unk> stock trading |
moreover in the relatively <unk> indian stock markets investors frequently do n't know what they are getting when they subscribe to an issue |
a prospectus in india does n't always tell a potential investor much |
some of the large amounts are being raised by small firms |
in addition once money is raised investors usually have no way of knowing how it is spent |
some analysts are concerned that the mega-issues in such an <unk> environment could lead to a <unk> |
the rate of failures will be much more than the rate of successes in the <unk> says <unk> patel a former chairman of the giant <unk> mutual fund the unit trust of india |
they 're going to have <unk> |
the indian stock markets have been on a five-year high with <unk> and <unk> since prime minister <unk> gandhi started <unk> industry |
but the last stock market boom in N seems small compared with the current rush to market |
the $ N billion that some N companies are looking to raise in the year ending march N compares with only $ N billion raised on the capital market in the previous fiscal year |
in fiscal N before mr. gandhi came to power only $ N million was raised |
this year 's biggest issue $ N million of convertible debentures by engineering company larsen & toubro ltd. is the largest in indian history |
and it is n't the only giant issue together the top four issues will raise $ N billion |
convertible debentures bonds that can later be converted into equity shares are the most popular instrument this year though many companies are also selling <unk> bonds or equity shares |
these mega-issues are being propelled by two factors economic and political |
in the past the socialist policies of the government strictly limited the size of new steel mills petrochemical plants car factories and other industrial concerns to <unk> resources and restrict the profits businessmen could make |
as a result industry operated out of small expensive highly inefficient industrial units |
when mr. gandhi came to power he <unk> in new rules for business |
he said industry should build plants on the same scale as those outside india and benefit from economies of scale |
if the output was too great for the domestic market he said companies should export |
india 's <unk> businessmen had to be persuaded but they have started to think big |
some of the projects being funded by the new issues are the first <unk> of mr. gandhi 's policy and they require more capital than the smaller industrial units built in the past |
the industrial revolution has produced an explosion in the capital market which is a far cheaper source of funds than <unk> banks where interest rates for prime borrowers are around N N |
the second factor spurring mega-issues is political |
mr. gandhi has called general elections for november and many businessmen fear that he and his congress i party will lose |
some companies are raising money in anticipation of a government less predictable than mr. gandhi 's and possibly more restrictive |
the <unk> <unk> rumor mill also says that some of the money raised in the current spate of issues will be used as campaign donations before the elections |
no one admits to anything but india 's <unk> have a history of making <unk> campaign donations |
so far the mega-issues are a hit with investors |
earlier this year <unk> iron & steel co. 's offer of $ N million of convertible debentures was oversubscribed |
<unk> <unk> ltd. a marine construction company had similar success with a slightly smaller issue |
larsen & toubro started accepting applications for its giant issue earlier this month bankers and analysts expect it to be oversubscribed |
still to come are big issues by <unk> <unk> <unk> ltd. a petrochemical and <unk> company and <unk> <unk> corp india a semiconductor maker |
while many investors are selling parts of their portfolios to buy the new issues prices on india 's N stock exchanges are holding up so far |
i do n't think it will lead to any chaos in the secondary market says mr. patel only a sagging tendency |
says <unk> <unk> chairman of the unit trust of india the markets are headed for growth <unk> of and <unk> before |
but with growth come growing <unk> and never has this been <unk> on the indian capital market than now |
in the past the government controlled the markets indirectly through its tight grip on industry itself |
various ministries decided the products businessmen could produce and how much and government-owned banks controlled the financing of projects and monitored whether companies came through on promised plans |
the government has been content with this far-reaching <unk> form of control exercised on a <unk> basis with no clear rules or guidelines |
but now with large amounts being raised from investors the government 's <unk> on regulation and disclosure requirements has a more dangerous aspect |
the securities and exchange board of india was set up earlier this year along the lines of the u.s. securities and exchange commission but new <unk> has n't pushed the legislation to make it operational |
mr. dave its head acts <unk> and patient but he makes no <unk> about the need to get to work |
<unk> or <unk> we feel the prospectus standards need to be considerably improved he says |
disclosures are very poor in india |
he says the big questions do you really need this much money to put up these investments have you told investors what is happening in your sector what about your track record are n't asked of companies coming to market |
instead he says most investors have to rely on the <unk> indian press |
an example is the biggest offering of them all larsen & toubro 's $ N million bond issue |
the engineering company was acquired in a takeover earlier this year by the giant reliance textile group |
although larsen & toubro had n't raised money from the public in N years its new owners frequently raise funds on the local market |
reliance <unk> a $ N million petrochemical company in N that was at the time the largest public issue in indian history |
the media has raised questions about larsen & toubro 's issue pointing out that it exceeds the company 's annual sales and its market capitalization |
even <unk> is the case of <unk> <unk> a semiconductor company with N sales of $ N million that 's raising $ N million to build an iron plant |
once the money is raised it is n't always certain how it is used |
larsen & toubro for example says it 's raising $ N million to use as supplier credit on large engineering jobs |
unlike other companies it has n't <unk> specific projects for the funds |
and even when specific projects are described in <unk> the money often is used elsewhere according to analysts |
someone must monitor where the funds are deployed says mr. dave |
mr. patel agrees there is no proper monitoring and <unk> of the use of these funds |
they 're trying to plug the various <unk> but they 're totally <unk> for this |
because of the large amounts of money being raised the loose disclosure requirements and the casual monitoring of how the money is used some analysts fear that there could be a few <unk> which could hurt market confidence far more than the small <unk> that followed the boom of N |
the government insists that such a possibility is low |
it says that despite loose regulation of the market itself its longstanding regulation of industry will prevent such crashes |
<unk> <unk> <unk> contributed to this article |
lion nathan ltd. a new zealand brewing and retail concern said friday that bond corp holdings ltd. is committed to a transaction <unk> lion nathan would acquire N N of bond 's australian brewing assets |
lion nathan issued a statement saying it is applying to australia 's national companies & securities commission the nation 's corporate <unk> agency for a <unk> to takeover regulations similar to that obtained by s.a. brewing holdings ltd |
<unk> brewing an australian brewer last thursday was given approval to acquire an option for up to N N of bell resources ltd. a unit of bond corp |
bell resources is acquiring bond 's brewing businesses for N billion australian dollars us$ N billion |
s.a. brewing would make a takeover offer for all of bell resources if it exercises the option according to the commission |
bond corp. a brewing property media and resources company is selling many of its assets to reduce its debts |
lion nathan has a concluded contract with bond and bell resources said douglas <unk> chief executive of lion nathan |
finnair finland 's state-owned airline joined the wave of global airline alliances and signed a <unk> cooperation agreement with archrival <unk> airlines system |
under the accord finnair agreed to coordinate flights marketing and other functions with <unk> the <unk> airline of <unk> norway and sweden |
the pact also calls for coordination between finnair and switzerland 's national carrier <unk> with which <unk> entered a similar alliance last month |
finnair and <unk> said they plan to swap stakes in each other |
neither disclosed details pending board meetings next month |
officials hinted however that <unk> would take a stake of at least N N in finnair valued at about $ N million at current market prices |
finnair would receive <unk> shares valued at the same amount officials said |
general motors corp. and ford motor co. are now going head to head in the markets for shares of jaguar plc as gm got early clearance from the federal trade commission to boost its stake in the british luxury car maker |
gm confirmed friday that it received permission late thursday from u.s. antitrust regulators to increase its jaguar holdings past the $ N million level |
ford got a similar <unk> earlier in october and on friday jaguar announced that the no. N u.s. auto maker had raised its stake to N N or N million shares from N N earlier in the week |
a spokesman for gm the no. N auto maker declined to say how many jaguar shares that company owns |
in late trading friday jaguar shares <unk> the downward tide in london 's stock market and rose five pence to N pence $ N |
trading volume was a moderately heavy N million shares |
in the u.s. jaguar 's american depositary receipts were among the most active issues friday in national over-the-counter trading where they closed at $ N each up N cents |
analysts expect that the two u.s. auto giants will move quickly to buy up N N stakes in jaguar setting up a potential bidding war for the prestigious jaguar brand |
british government restrictions prevent any single shareholder from going beyond N N before the end of N without government permission |
the british government which owned jaguar until N still holds a controlling golden share in the company |
with the golden share as protection jaguar officials have rebuffed ford 's <unk> and moved instead to forge an alliance with gm |
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