The reserve bank of India's July 24 moratorium on global trust Bank may have caught its depositors unawares, but hardly industry watchers. For, more than two years now, the Ramesh Gelli-promoted bank had been teetering on the edge of a precipice, waiting to come crashing down. Bad loans-to stockmarket scamster Ketan Parikh, among others-had eroded the bank's capital, but GTB led its shareholders and depositors to believe otherwise. In fact, GTB's audited annual report for March 31, 2002 showed a positive networth of Rs 394 crore, but RBI's own investigations revealed a negative networth. (GTB was then audited by Lovelock & Lewes.) GTB hasn't yet put out its 2003-04 results. Last month, there were reports of NewBridge Capital, a private equity firm, picking up stake in GTB, but before the deal could make any headway, the RBI announced a three-month moratorium on GTB, barring its depositors from withdrawing more than Rs 10,000 from their accounts (except for emergency purposes). Two days later, on July 26, even as panic-striken depositors queued up outside GTB branches, the central bank announced that GTB would be merged with the Oriental Bank of Commerce. Will the merger help? It should. OBC, which is largely a North-centric bank, gets a footprint in South and West India. Strategically, the merger is a coup of sorts for OBC, coming as it does at a time when the RBI has issued restrictive guidelines on M&A in the banking industry. For example, in its draft guidelines issued recently, the central bank has restricted ownership in other banks to between 5 and 10 per cent. Post-merger, GTB investors may get zilch because the merger does not involve any stock swap, but the depositors have the RBI's assurance. Not surprising-for another reason. After all, it was pm Manmohan Singh who, back in 1994 as the finance minister, had inaugurated the ill-fated bank.

-E. Kumar Sharma

COMPENSATION
Box-O Benefit

The man above, Aamir Khan, pictured in his Mangal Pandey avatar (that's the character he plays in Ketan Mehta's historical motion pic, The Rising), must be praying the film does well at the UK box office. That's because his contract guarantees him 10 per cent of the UK box office revenues, provided the total crosses a certain mark; he has also been paid Rs 7 crore, but the cut could exceed that amount. The UK, after all, is a market hungry for Indian films, and The Rising is about The Sepoy Mutiny.

He isn't alone. Anil Kapoor gets a proportion of the takings (he gets paid nothing up front), of K. Sera Sera Productions' Murder In Shri Krishna Building. Ash Pamani, the New York-based Chairman of the company says he is also discussing similar ventures with Saif Ali Khan and Ajay Devgan. The trend, says Komal Nahata, the Editor of Film Information, a trade journal, is unlikely to catch on. The risk is too high, he explains, and there's little transparency in the business. Still, actors daring to take this route can take heart from the fact that Alec Guiness (for Star Wars) and Jack Nicholson (for Batman) have done this and how!

-Swati Prasad

The Next M&A
It's Tyco Global Network.

Ratan Tata: In the M&A mode

The telecom business is set to see another mega overseas acquisition (the last one being Reliance's buyout of FLAG Telecom). This time around, VSNL and Reliance Infocomm have emerged the most serious contenders for Tyco Global Network (TGN), the undersea cable business owned by Tyco Telecom, a division of the $10-billion Tyco International (that's right, the same Tyco once headed by The Kozlowski). TQN is reportedly valued at about $200 million. The process has been rolling for "a good part of three months now and likely to close anytime", according to an investment banker. The Mumbai-based investment bank DSP-Merrill Lynch is understood to be representing VSNL, but execs at the firm were not willing to comment on the deal. Other suitors for TGN include Singapore Technologies and private equity firms Trinity Ventures and Pivotal Private Equity. For VSNL and Reliance Infocomm, the bid is clearly an indication that it makes sense to buy, not build. "It would cost much more than $200 million to build capacity from Chennai to the US through Singapore," says an executive at a telco. "TGN already has most of this capacity in place." Tata Indicom already has the Chennai-Singapore capacity in place and this acquisition would complete the rest of the route at one shot. For Reliance Infocomm, the acquisition would mean capacity on the Pacific route. The Atlantic route (read: where FLAG operates) is overcrowded with SEAMEWE2 and SAFE, both of which have landing points on India's West coast. TGN's capacity on the Pacific route (it would land on India's East coast) will enable both players to cater to the lucrative tech and BPO markets of Chennai, Bangalore, and Hyderabad.

-Priya Srinivasan