Deal Junction

Top banks, PNB, BOB, cut interest rates

2008-12-29T16:29:00.000+05:30

Come January 1 2009 and two leading public sector lenders Punjab National Bank and Bank of Baroda will reduce their prime lending rate by 50 and 75 basis points.

The BPLR of PNB would stand reduced to 12 per cent, from the existing 12.50 per cent, effective from January 1.PNB also announced a reduction in its peak deposit rate by 100 basis points to 8.5 per cent for deposits of one year to less than three years beginning new year.Earlier this month, the bank had reduced its peak deposit rate to 9.50 per cent from 10.5 per cent.

In a separate regulatory filing to the BSE, Bank of Baroda said "The bank has decided to reduce its Benchmark Prime Lending Rate (BPLR) by 75 basis points from existing 13.25 per cent to 12.50 per cent with effect from January 1, 2009."

LIC raises stake in HDFC Bank to over 5 per cent

2008-12-26T18:56:00.001+05:30

Country's largest insurer Life Insurance corporation of India has increased its stake in HDFC Bank to over five per cent following acquisition of shares from the open market.LIC purchased 1.6 lakh shares from the open market hiking its stake in
the company to 5.01 per cent.The equity holding of the insurer increased by 0.04 per cent from 4.97 per cent earlier.

As on June 2008, LIC holding in the bank stood at 2.15 per cent which went up to 4.7 per cent in September this year.Yesterday, LIC hiked its stake in Vijaya Bank to 9.53per cent by acquiring shares worth nearly Rs 30 crore from the open market.

Domestic institutional investor acquired over 94.29 lakh shares representing 2.18 per cent stake in the state-run lender.Before the acquisition, LIC held over 3.18 crore shares representing 7.38 per cent stake in the bank which subsequently increased to 9.53 per cent after the purchase.

Swiss Finance Corp raises its stake in Amtek Auto to 8%

2008-12-26T18:54:00.000+05:30

Mauritius-based Swiss Finance Corporation (SFC) has bought an additional 4% stake in Amtek Auto through open market purchases.The foreign investor acquired a total of 57.2 lakh shares for about Rs 31 crore on December 12 ‘08. Post-acquisitions, SFC’s
stake in the company has gone up to 8.2% of the equity, according to disclosures filed with the Bombay Stock Exchange.

The Amtek Auto stock has risen sharply by 52% in the past one month. Warburg Pincus, Citigroup, Credit Suisee Singapore, CLSA Mauritius and Sansar Capital Mauritius are among other major foreign institutional investors holding a substantial stake in the company.

Amtek Auto is part of Amtek Group, one of major players in automotive components industry with production facilities located across North America, Europe and Asia.

Petrol begins to flow from RPL's refinery

2008-12-26T18:50:00.002+05:30

Reliance Petroleum (RPL), a subsidiary of Reliance Industries, commissioned its 27-million tonne export refinery in Jamnagar on Thursday, putting to rest market speculation of a possible delay following a global demand slump for petroleum products.

The RPL refinery, which will be capable of processing 5,80,000 barrels of oil per day (bopd), has been developed in partnership with Chevron of US, which holds a 5% stake in the refinery. This is the second refinery from the Reliance stable in Jamnagar, which along with the existing 33-million metric tonne per annum (mmtpa) RIL refinery, is now the world’s largest refinery complex, with an aggregate refining capacity of 1.24 million bopd at a single location.

RIL and RPL, which would be exporting most of their products except LPG — which they sell to government-owned refineries — would be keenly watched by its rivals and analysts, as they seek to sell their products in the western markets.

Fortis Healthcare to raise Rs 1,000 crore through rights issue

2008-12-26T18:47:00.002+05:30

Fortis Healthcare CEO & MD Shivinder Singh on Christmas day announced plans to raise Rs 1,000 crore through a rights issue.

The money would be used to fund the company’s greenfield projects and restructure the balance sheet, besides being utilised for other investment opportunities.The share ratio and issue price of the rights issue would be finalised by February-end.

The company is setting up a medicity in Gurgaon and three new hospitals in Mumbai, West Delhi and Gurgaon. Fortis’.Last year, Fortis Healthcare raised Rs 496 crore through its maiden public issue and the promoters currently own 74.4% in the company. At present, Fortis Healthcare has 23 hospitals and plans to increase it to 40 hospitals by 2011.

Read more in

Cholamandalam DBS to raise Rs 300 cr via preference shares

2008-12-26T18:44:00.001+05:30

Cholamandalam DBS said its founders including EID Parry, Coromandel Fertiliser Ltd and DBS Bank would subscribe to 10 million convertible shares, to raise Rs 300 crore.

The preference shares will be issued at Rs 100 each at a premium of Rs 200 and shall be convertible into equity within 18 months, the financial services firm said in a statement to the stock exchange.

The firm had said on Oct 24 it will raise an additional Rs 50 lakh.

LIC's investment in MF's rises 3 folds

2008-12-10T16:40:00.002+05:30

After banks, it’s the country’s largest insurer Life Insurance Corporation of India (LIC) that has come to the aid of cash-strapped mutual funds (MFs), which are reeling under redemption pressure on liquid and fixed maturity plans (FMPs).The public-sector insurer has pumped in over Rs 14,000 crore into liquid funds of various fund houses. This is more than three times its investment of around Rs 4,500 crore in such instruments last year.

It could not be ascertained as to how much the corporation has invested in its own mutual fund arm, LIC Mutual Fund.
According to Irda norms, LIC can invest 50 per cent in government securities, 15 per cent in the infrastructure sector, and the remaining 35 per cent in other channels, including equity, mutual funds, fixed deposits, non-convertible debentures, certificate of deposits, and commercial papers.

Liquid or money market funds earn returns in the range of 10-12 per cent. LIC parks money in short- term liquid funds and FMPs, where the average tenure varies from two weeks to a month.

FT picks up major stake in African Bourse

2008-12-10T16:36:00.003+05:30

The Financial Technologies India (FTIL) group has inked a deal to acquire 60 per cent stake in Botswana-based Bourse Africa. The latter has been licensed by the Botswana government to set-up a spot and/or derivative multi-asset exchange for trading in commodities, currencies, bonds and diamonds.The remaining equity in Bourse Africa will be held by other African financial institutions, banks, global multi-lateral developmental ventures, exchanges and other strategic investors.

The exchange will have a pan-African presence through the hub-and-spoke model that will connect all major countries in Africa. Operating out of Botswana, Bourse Africa is accredited to the Botswana International Financial Services Centre (IFSC).Other financial services ecosystems that are planned to be set up include a Clearing Corporation, Warehouse Receipt Corporation and Depository services.

Read more in The Business Standard article.

Blackstone’s NCC stake-hike plan blocked

2008-12-10T16:33:00.002+05:30

The government has blocked private equity firm Blackstone’s plans to hike stake in Nagarjuna Construction Company (NCC) on the grounds that the construction firm has been operating as a ‘foreign-owned Indian holding company’ without prior permission from the Foreign Investment Promotion Board (FIPB).NCC has been asked to first pay a penalty to RBI and then seek a fresh permission from the FIPB to offload an additional 3.5% stake to US-based Blackstone.

The construction company had sought government permission to issue 91 lakh convertible share warrants to Blackstone at a conversion price of Rs 225 each, a deal size of Rs 205 crore. This was the second tranche of investment planned by the private equity firm in the company. In August 2007, Blackstone struck a deal to invest about Rs 616 crore to pick up a 12% stake. This was a two-tiered transaction in which it was to get convertible warrants in the second leg.

Blackstone, however, stands to benefit from the government’s decision to reject the proposed investment. NCC’s stock price has crashed and on Monday closed at Rs 68.55 on the BSE. The private equity firm would not like to pay more than a two-fold premium on the existing stock price while subscribing to the convertible warrants.

According to Press Note 9 guidelines, laid down by the Department of Industrial Policy and Promotion (DIPP), a foreign-owned Indian holding company is a domestic firm in which foreign investment is 51% or more. In NCC’s case, though, the total foreign stake is 30.83% as of August 2008. Of this, Blackstone holds 8.85% as a foreign institutional investor (FII). NCC has RBI’s permission to take FII investments up to 74%.

Read more in

Wockhardt in talks to raise $100 mn

2008-12-10T16:31:00.001+05:30

Mumbai-based drugmaker Wockhardt, country’s sixth-largest drug maker by revenue is in discussions with ICICI Venture, ChrysCapital and other private equity firms to divest a 15% stake to pay off investors in its $110-million foreign currency convertible bonds (FCCB) issue, which comes up for redemption next year.According to sources Wockhardt is looking to raise $100 million (around Rs 500 crore) from PE funds at nearly triple the premium over its current market price of Rs 96.45 per share.

The firm is looking to sell 15% stake, but is unlikely to get the kind of premium it is looking for. PE firms are looking for a more realistic valuation of the company. Under India’s takeover code, if a single investor buys 15% equity in a company, it has to make an open offer for buying an additional 20%. But if a clutch of investors together buy 15%, the open offer option does not get triggered.Wockhardt’s FCCB issue is due for redemption in October 2009 at a conversion price of Rs 486 per share.

Another option available to Wockhardt is to raise debt, including ECBs, for taking care of the liabilities arising out of FCCB conversion. But the company’s debt obligations are already in the region of Rs 2,800 crore, and with a debt-equity ratio of 2.3:1, its capacity to raise loans could be constrained.

Read more in The Economic Times article.

Railway hikes freight rates by 8% on cement, coal

2008-12-10T16:27:00.002+05:30

Indian Railways on Monday hiked the freight rates for cement, coal and coke by up to 8% per tonne. The Railways move would increase the input cost of housing, power and steel sectors that have been identified for special focus by the government. The hike came into effect immediately after the government announced a package to boost the economy.

According to a Railways notification, the classification of cement, coal and coke has moved upwards from class 140 to 150 for train load movement. This translates into higher freight depending on the distance travelled. Coal industry analysts suggest that the increase in freight will hit power generators hard, while for steel producers the increase will be offset by a global decline in coking coal prices. The coking coal is converted into coke for use in the blast furnace for generating liquid steel.

“Cost of thermal coal is less than the transportation cost for state power generators in the northern region, where coal may be transported from about 1,000 to 1,500 kms. Railways freight on coal, typically, costs about Re 1 per tonne per km, which can result up to Rs 1,500, whereas cost of coal is between Rs 500 and 750 (Grade F) thermal coal,” Puneet Goel of KPMG advisory services told ET.For cement industry, the move could lead to an average around Re 1 per bag increase in transportation cost of the construction material, thinning the relief to cement consumers that could result from 4% excise duty cut.

OVL to go ahead with the acquisition Imperial Energy

2008-12-09T19:58:00.003+05:30

The union cabinet has accorded its approval to ONGC Videsh Ltd, the overseas investment arm of ONGC, India's largest oil explorer, to go ahead with the acquisition of UK-listed Imperial Energy.

The cabinet committee on economic affirs met Tuesday morning to approve the deal. There is no official word on the government's decision as yet. People who are in the know of the deal said that the cabinet clearance was taken so that OVL could meet the Tuesday midnight deadline set by UK authorities.

This would pave the way for OVL to make the open offer to the UK listed shareholders. The $2.1 billion deal will be one of the bigger deals by ONGC in recent times Imperial Energy has oilfields in Russia. OVL had sought to delay making the open offer but the request was rejected by the Takeover panel on Monday.

Analysts say the deal works out to around $2 to $2.5 a barrel for OVL given Imperial's declared reserves of 900 million barrels and will help improve India's energy security. India meets almost 70% of its oil demand through imports.ONGC is being advised by Deutsche Bank. Merrill Lynch is advising Imperial.

Related story:

OVL may make ‘firm’ offer to Imperial soon
Imperial Energy has choosen OVL over Sinopec

Infrastructure India acquires 49% in Oriental Tollways

2008-12-09T19:46:00.003+05:30

Infrastructure India, a London-listed investment fund, is close to acquiring a 49% stake in Oriental Tollways for Rs 450 crore ($90 million).Oriental is part of New Delhi-based privately-owned Bakshi Enterprise.Dabur India vice-chairman Amit Burman is a shareholder in OSE in a personal capacity.

The specialist India-focussed fund will invest in Oriental Tollways through a Mauritius-based subsidiary.Infrastructure India’s mandate is to invest in Indian energy and transport infrastructure projects and comes out of its belief that the present time is appropriate to focus on infrastructure in India given the fast pace of change in its economy.The fund has already invested in Shree Maheswar Hydel Power Corporation, a 400-MW hydroelectric power project located in Madhya Pradesh, among others, in India.

Its investment, which will value Oriental Tollways at Rs 918 crore, comes against a gloomy backdrop for the Indian infrastructure sector, which has, in the past, been hobbled by bureaucratic delays and is now a victim of tight funding conditions amid a global credit crunch, on the whole.

Read more in The Economic Times article.

Merrill Lynch sells stake in Religare

2008-12-09T19:32:00.003+05:30

Merrill Lynch has sold its nearly 5% stake in financial services company Religare Enterprises,promoted by Malvinder and Shivinder Singh for an undisclosed sum.Last November Merrill Lynh had bought a 5.56% stake in Religare as part of a pre-initial public offering (IPO) placement.

The one-year lock-in period expired last month, and Merrill Lynch has since sold its post-IPO stake of 4.97%. The buyers of the stake or the price at which it changed hands were not immediately known, although a Religare official said the sale happened last week.

Based on Religare’s average stock price of Rs 299 last week, Merrill Lynch could have cashed out for Rs 113.6 crore, generating a return of 87.5% in one year. Merrill had acquired 5.56% stake in Religare for Rs 60.6 crore last October through its wholly-owned subsidiary Indopark Holdings.

Despite the stock market crash, the scrip is trading much above its IPO issue price of Rs 185. The stock had shot up after listing to touch Rs 729 on the NSE. Promoters currently hold 54% stake in the company.

Stimulus effect: Auto makers slash prices

2008-12-09T19:20:00.004+05:30

With government announcing a 4% cut in CENVAT across the board, the Auto industry today announced price cuts across various models and segments. The cut has been in the range of Rs.2000 to Rs.50,000. Rate cut comes as a blessing for the auto industry which has been hit hard by the global recession and a slowdown in the India economy.

Pune-based Bajaj Auto today announced cut in prices of its vehicles by up to Rs 4,400 on account of four per cent reduction in CENVAT.The prices of two-wheelers have been reduced by up to Rs 2,100, while that of three-wheelers have been cut by up to Rs 4,400, Bajaj Auto Ltd (BAL).

Maruti Suzuki said in a statement that the price of its top-end SX4 sedan will go down by Rs.23,000 to Rs.760,542, while the small car Maruti-800 will be cheaper by Rs.6,500 at Rs.193,561. Hyundai Motor, the second largest car maker in the country, has cut the prices of its flagship model Santro (GL) by Rs.8,834 (non AC), while the top-end luxury car Sonata will see a drop of Rs.44,792.The company's new sensation i10 will be cheaper by Rs.11,247 and Rs.18,381 depending on its models.

Toyota Kirloskar said the price of its popular multi-purpose vehicle would be reduced by up to Rs.32,780, while high-end models like Corolla would be cheaper by Rs.40,750.

After Rbi's rate cut, banks announce cut in deposit rates

2008-12-07T18:15:00.004+05:30

After Saturdays announcement by RBI of cutting the repo and reverse repo by a 100 basis point, some private sector banks have announced cuts in the deposit rates offered by them.HDFC Bank, the second-largest private bank, has slashed interest rates on deposits.on some of its flagship products, with the reduction being steep for short maturities. The rates for deposits with a maturity of six months and 15 days have been reduced from 10.5% to 8.25%. For nine months and 15 days, the rates are from 10.5% to 9% while for one year and 15 days, they are now 10% from 10.5% earlier. The bank has also slashed the rates for two years and 15 days from 10.5% to 9.5%, making it the first private bank to cut deposit rates after some of the PSU banks cut rates a couple of weeks before. HDFC Bank has also slashed rates on its bulk deposits.

ICICI Bank is yet to take a final decision on rate cuts. Axis Bank is carrying out a review and may take a decision soon.IndusInd Bank’s will review its decision to cut deposit rates next week. For the past few weeks, it has been offering 11% for 200 days, 400 days and 1,000 days.Yes Bank on Saturday said that it has reduced its prime lending rate by 0.50 per cent with effect from December 8.The bank's PLR accordingly stands reduced to 16.5 per cent from the earlier 17 per cent.

The State Bank of India on Friday said it will consider rate cut after the Reserve Bank of India announces reduction in benchmark rates.SBI has already reduced benchmark lending rate by 75 basis points to 13 per cent, beginning last month. Most PSU banks have slashed deposit rates from December 1. They have done away with the special offer of 10.5% on deposits. The country’s largest bank, State Bank of India, offers 10% for 1,000 days. Corporation Bank has decided to offer a maximum rate of 9.5% for 1-3 years, Union Bank will offer a maximum rate of 10.05% for seven years and 9.5% for one-seven years.

Govt announces the much awaited fiscal stimulus package

2008-12-07T18:04:00.002+05:30

Indian government today announced the much awaited fiscal stimulus package for the economy.

The following are the highlights of the fiscal stimulus package unveiled by the government Sunday to contain the impact of global
financial crisis on the Indian economy:

- Plan, non-plan expenditure of Rs.300,000 crore (Rs.3,000 billion/$60 billion) in four months

- Parliament nod to be sought for Rs.20,000 crore more toward plan expenditure

- Across-the-board cut of four percent in the ad valorem central value-added tax

- Interest subvention of two percent on export credit for labour intensive sectors

- Additional allocations for export incentive schemes

- Full refund of service tax paid by exporters to foreign agents

- Incentives for loans on housing for up to Rs.500,000, and up to Rs.2 million

- Limits under the credit guarantee scheme for small enterprises doubled

- Lock-in period for loans to small firms under credit guarantee scheme reduced

- India Infrastructure Finance Co allowed to raise Rs.100 billion through tax-free bonds

- Norms for government departments to replace vehicles relaxed

- Import duty on naphtha for use by the power sector is being reduced to zero

- Export duty on iron ore fines eliminated

- Export duty on lumps for steel industry reduced to five percent

RBI cuts Repo and Reverse Repo

2008-12-07T17:50:00.003+05:30

RBI on saturday cut its repo and reverse repo rate by 100 bps to 5% and 6.5%, signaling banks to cut their lending rates.
Following are some of the key take aways from the RBI's announcement on Saturday

Ø RBI cuts reverse repo and repo rates by 100 bps

Ø SIDBI and NHB are being given liquidity support to the extent of Rs.7000 crore and Rs.4000 crore to provide liquidity support both SME segment as well as Housing Finance companies

Ø FCCBs are now being allowed to be bought back by Indian corporates, basically issuers out of their own dollar resources raised through ECB or FCCB

Ø Loans granted to HFCs to fund less than Rs 20 lakhs of housing dwelling units, would be classified under the priority sector lending

ØDecided to extend exceptional/ concessional treatment to the commercial real estate exposures which are restructured up to June 30, 2009

Ø Second restructuring done by banks of exposures (other than exposures to commercial real estate, capital market exposures and personal/ consumer loans) up to June 30, 2009, will also be eligible for exceptional regulatory treatment.

Sources:GE India to acquire Indo Tech transformers

2008-12-03T15:54:00.002+05:30

Indo Tech Transformers, part of the Rs 240 crore Indo Tech group, is soon t be acquired by General Electric India for an undisclosed sum. The buy will help GE, known to acquire to grow in its important markets, strengthen its manufacturing presence in the power sector.

Indo-Tech has a good profit track record. In the first half of this year, it clocked a 43% rise in net profit at Rs 24.63 crore against Rs 17.14 crore in the same period last year. Net sales increased to Rs 119.38 crore ( Rs 90.75 crore). During 2007-08, it reported a net profit of Rs 39 crore on net sales of Rs 189.86 crore.As on March 31, 2008, it has reserves and surplus of Rs 112 crore on a thin equity of Rs 10.62 crore in which the promoters hold 54.34%, institutions 18% and public the rest.

In the last one month, the company's share price soared by 34.69% from Rs 184.95 on November 1st to the current price of Rs 249.10. According to the company's stock archive on the BSE, the total number of trades for the months from July to October 2008 was over 15,000. But in the month of November alone, the stock was traded 15,000times.

Read more in The Economic Times article.

Germany's MAN to be 50:50 partner in Force Motors JV

2008-12-03T15:53:00.001+05:30

Force Motors Ltd today announced that it would sell up to 14.50 per cent stake in its auto components joint venture with German truckmaker MAN for about 3 bn rupees, sending the former's shares up.MAN would acquire additional equity in the joint venture to increase its stake to 50 percent, via a rights issue for up to 2.5 bn rupees.

Force Motors currently holds 70 percent stake in the JV, MAN Force Trucks Pvt Ltd, while the German firm holds the rest.The joint venture would start designing and make trucks and bus chassis over the next few months to widen its footprint in the Indian market.

Force Motors will reduce its stake in the heavy commercial vehicle joint venture with MAN Nutzfahrzeuge to 50% from the current 70%.Force will sell 14.2% stake to MAN for Rs 300 crore. Later, MAN will infuse Euro 40 million (around Rs 250 crore) in the JV through subscription of a rights issue. Force will refrain from subscribing to the issue. As a result, MAN’s stake will go up to 50% from the current 30%.

The transaction, which is to be completed over the next few weeks, will peg the enterprise value of the JV at Rs 2,000 crore. Both the parties have signed the deal on Tuesday in Munich.

Hedge funds lose $170 billion in third quarter

2008-12-02T19:37:00.001+05:30

The hede fund industry lost nearly a tenth of its size as it was caught between biggest outflows since 2005 and worst performance in 10 years. Global hedge fund assets shrunk 8.8% to $1.63 trillion on September 30, 2008, from $1.8 trillion on June 30. The size of the industry is further expected to shrink to $1 trillion.

Tough times for the hedge fund industry began with the unravelling of the short financials and long commodities trade, where in the hedge funds sold US financial stocks and bought commodities.Changes in margin requirements and other trading rules by US regulators triggered the unwinding of this trade which saw crude prices drop from $ 148 levels to below $100 in a flash causing serious dent in assets of many hedge funds.

The industry had received inflows in the first two quarters of the year, though the inflows have been falling gradually over the previous four quarters.In the quarter ending June, $4.03 billion came into hedge funds.However the reversal in the third quarter has taken the overall flows for the year into negative for the first time in three years. At nearly $12 billion, the outflows in 2008 is already threefold larger than the last negative reading in December 2005, with three months to spare.

RBI eases lending norms for urban co-op banks

2008-12-02T19:35:00.001+05:30

The Reserve Bank of India (RBI) has relaxed lending norms for tier-II urban co-operative banks (UCBs), making it easier for them to lend to commercial real estate and non-banking finance firms (NBFCs).The central bank has rationalised and reduced the standard asset provisioning requirements for tier-II UCBs from 1 to 2 per cent earlier to 0.40 per cent across sectors. It has also slashed risk weights on lending to various sectors.

The provisioning norm in case of direct advances to agriculture and SME sectors, however, is kept unchanged at 0.25 per cent.
According to a central bank circular today, loans and advances to commercial real estate will now attract a risk weight of 100 per cent as against the earlier 150 per cent.

The banking sector regulator has allowed UCBs to fund only asset-financing NBFCs and the risk weight on exposure to such companies remains unchanged at 100 per cent.For tier-I UCBs, the general provision norms on all their standard assets have been kept unchanged at 0.25 per cent.

On November 15, RBI had reduced the standard asset provisioning requirements of banks lending to NBFCs to 0.40 per cent from 2 per cent, except in the case of direct advances to agriculture and SME sectors, where the provisioning requirement remains at 0.25 per cent.Similarly, the central bank had also reduced banks’ risk provisioning for commercial real estate loans to 100 per cent from 150 per cent.

Actis to pump in $1 bn in India in 3-4 yrs

2008-12-01T18:34:00.002+05:30

Despite the terror attacks in Mumbai on 26th November 2008, Actis is going ahead with its plan of investing Rs.5000 crore in the next 3-4 years. The firm continues to be positive on the India's growth potential.

A pioneer in management buyouts, Actis has been a consistent private equity investor in India for over 10 years.Over this period Actis has worked in partnership with a number of promoters and management teams to create tremendous value for their businesses.Actis has successfully closed its 2.9 billion dollar PE fund - Actis Emerging Markets 3 (AEM3)- which exceeded the target of 2.5 billion dollar. AEM3 included commitments from a diversified group of 100 investors from across the globe, including a number of first time investors in emerging markets.

Read more in The Economic Times article.

Auto sales for November down

2008-12-01T18:17:00.003+05:30

Economic slowdown seems to have taken a toll on the Auto sector as well. Auto companies today reported their monthly sales figure, with all the top auto makers reporting disappointing set of figures.

India's leading car maker Maruti Suzuki sales declined 24.3 per cent in November this year compared to sales in the same month last year.The company sold 52,711 vehicles in November this year as compared to 69,699 in the like period a year ago.

Company's volumes in the domestic sedan segment, called the A3 segment, which comprises SX4, Esteem and Swift D'zire models, grew by 40.3 per cent from 4,260 cars in November last year to 5,975 this year.

The sales in the high-end small car segment, called the A2 segment, comprising Alto, Wagon-R, Zen, Swift, and A-Star models declined 26.6 percent from 47,641 in 2007 to 34,976 this year.

Tractor major Mahindra and Mahindra too announced that it will it could cut down productions and temporarily shut plants due to slowdown in sales in domestic as well as overseas markets.

The economic turmoil has cast its spell on country's oldest automobile company Hindustan Motors too, with sales of Ambassador cars dipping by more than 33 per cent in the past few months.A company official told reporters that Amby sales which were in the region of 900 cars per month have come down to 600 units now.

74 cos in BSE 500 have FCCBs outstanding of $10.9 bn

2008-12-01T18:13:00.002+05:30

The Economic Times quoted a recent Edelweiss report which highlights that at the end of Sep 30, 2008, 74 companies in the BSE 500 Index had FCCBs outstanding aggregating
$10.9 billion.

The brokerage house estimates that for 61 companies (including Ashok Leyland and India Cements) the probability of FCCBs being converted into equity is low, given the gap between current stock prices and effective conversion price.

Edelweiss also pointed out that currently, most companies do not charge redemption premium to the Profit & Loss account on the assumption that bonds will finally be converted into equity shares. Hence, in the event of non conversion, a significant cost is kept off the P&L and profits are overstated to that extent.

HDFC plans to raise yen loan

2008-11-19T22:16:00.002+05:30

HDFC, the country’s largest housing finance company (HFCs), has said that it is keen to raise funds overseas and is awaiting further details of the Reserve Bank
of India’s (RBI) guidelines.On Saturday, RBI had said that it would allow HFCs to raise short-term borrowings overseas as a temporary measure.

Although RBI has reduced the CRR and brought down the repo rate, thereby bringing down the cost of funds for banks, none of these measures have brought down the cost of funds for HDFC. The corporation continues to pay double-digit interest rates to banks. With interest rates ruling high, fixed deposits, which offer returns up to 10.9%, have once again become the mainstay of HDFC’s borrowings, accounting for over 20% of funds.

In the past, HDFC had raised overseas funds in various currencies, including yen. According to bankers, since the funds are anyway converted into rupees and hedged, the currency does not matter. What is crucial for HDFC will be RBI guidelines on the tenure and cost. Since all its liabilities are long-term with an average loan tenure of seven years, HDFC will require long-term funds.

Even from the cost perspective, a foreign currency borrowing has to have a tenure of at least three years to justify the fixed cost of fund raising, including fees paid to bankers. The guidelines on foreign borrowings are expected to be out within the next couple of days.

Along with guidelines on foreign currency borrowings, HFCs are awaiting an easing of capital requirements in line with the relaxations allowed for banks. National Housing Bank — NHB usually follows the prudential norms on home loans prescribed by RBI.

Lloyds shareholders approve HBOS takeover

2008-11-19T22:08:00.002+05:30

Shareholders of British bank Lloyds TSB on Wednesday backed the takeover of troubled rival HBOS and a recapitalisation that will hand the British government a key stake. Lloyds TSB investors, holding an extraordinary general meeting in Glasgow, Scotland, voted almost 96 percent in favour of the HBOS takeover.

They also voted by a similar majority to approve plans to raise 5.5 bn pounds (6.5 bn euros, 8.3 bn dollars) of new capital. Under the recapitalisation plan, Lloyds will issue 1.0 bn pounds of preference shares to the British government and 4.5 bn pounds in new ordinary shares.

At the same time, HBOS also plans to raise 11.5 bn pounds of fresh capital with support from the state.Lloyds TSB Chairman Sir Victor Blank said the vote was an "important milestone" in the history of the group.

Lloyds TSB agreed in September to buy HBOS in a deal worth 9.8 billion pounds after its target was left facing collapse due to massive exposure to the US subprime mortgage crisis. Competition rules have been waived to allow the takeover to go ahead. HBOS shareholders will vote on the deal in December.

Kingfisher plans 25% stake sale

2008-11-17T16:18:00.002+05:30

Vijay Mallya's Kingfisher Airlines is believed to be discussing stake sale with three foreign airlines — British Airways, Singapore Airlines and Virgin — as a strategic investment is expected to fetch better valuation compared to the numbers indicated by PE investors.

The airline is holding exploratory talks with international carriers for diluting up to 25% stake. The move comes as the Centre is reportedly planning a policy change to allow foreign airlines to invest in domestic carriers with a cap of just below 26%.

The civil aviation ministry had met the airlines on October 30 to discuss key policy changes including allowing foreign airlines to pick up stake in domestic carriers. This meeting has triggered expectation that the government may allow the foreign carriers to buy equity in Indian companies. It must be mentioned that while foreign airlines are not allowed to pick up equity in aviation companies, other institutions and foreign investors are free to hold up to 49% stake.

Read more in The Economic Times article.

PE's pick up 80% stake in GEAR

2008-11-17T16:17:00.000+05:30

Two private equity firms — US-based Berggruen Holdings and UK-based Cycladic Capital — have picked up close to 80% stake in construction equipment service provider Gemini Equipment and Rentals (GEAR) for around $15 million (nearly Rs 74 crore).

“This is part of the first round capital-raising programme. The proceeds will be utilised for expansion,” said GEAR managing director Rajiv Sethi. The construction equipment industry is growing at the rate of 35% and is likely to expand fivefold by 2015. The critical role of the industry in the infrastructure development has opened huge opportunity for entrepreneurs to enter the construction equipment rental business.

Currently, GEAR has an asset fleet of 200. The company has presence in Ahmedabad, Bhopal, Bhubaneshwar, Lucknow, New Delhi, Bangalore, Kolkata and Secunderabad. It aims to have 500 equipment assets by the end of this fiscal and additional 250 in the year 2009-10.

Religare ties-up with Karur Vysya for equity trading services

2008-11-17T16:14:00.002+05:30

Financial services provider, Religare, and Karur Vysya Bank,announced their tie-up offering Religare's equity trading services to the bank's customers.The new alliance is in line with Religare's strategy of increasing its reach and penetration across the country.The arrangement with Religare will provide the three in one facility of demat account, bank account and trading account to Karur Vysya's customers.

The equity trading service would be part of value -added offering for the bank's savings account customers. Religare would map its own branch network with the network of the bank to service the bank's clients.Pre-trading account opening activity would be done at the bank branch and post-trading account opening of the clients would be served by Religare-designated branches.The partnership is a step forward to further strengthen the bancinvest channel created by Religare, which already includes tie-ups with IndusInd Bank, Tamilnad Mercantile Bank, Corporation Bank and Bank of Rajasthan, among others.

HM mulling components business.

2008-11-17T16:10:00.002+05:30

Hindustan Motors is moving ahead to become more of an automobile component manufacturer than developer of new models."The key to our revival will be our components business comprising forgings, castings and stampings produced at our Uttarpara factory near Kolkata," company Chairman C.K. Birla said.

As long as the Ambassador remained the car of choice for all Indian government purchases, whether at the federal or the state level, the company managed to stay in the green even as other manufacturers aggressively attacked the rapidly growing Indian automobiles market.

Hindustan Motors refused to move away from the Ambassador. But when government orders began drying up in 2004, the company, once India's largest carmaker, was hit hard; it has been ailing ever since.

Read more in The Economic Times article.

CII for removal of interest rate cap on NRE deposits

2008-11-17T16:08:00.000+05:30

Pressing for removal of interest rate cap on non-resident (NR) deposits to deal with the problem of forex liquidity in the system,industry chamber CII said RBI decision to relax external sector norm will give right signals to the industry.

"The problem is of sentiments overtaking events and therefore the RBI's response to the emerging market needs of industry sends out the right signals," CII President K V Kamath said in a statement.He added, "CII had suggested that the interest rate cap on FCNR (B) and NRE deposits be removed and the banks be allowed to decide these rates...we feel that the removal of the cap is what is called at this juncture."

CII said the central bank's move to allow housing finance companies to avail of foreign currency borrowings and buy-back and pre-payment of foreign currency convertible bonds would be very useful for the real estate sector.The Reserve Bank yesterday announced a slew of measures, including permission to housing finance firms to raise funds from overseas markets and raising the interest rate ceiling on foreign currency deposits.

Cement companies keen on JV with NTPC

2008-11-12T16:56:00.001+05:30

The country’s largest power generation company, National Thermal Power Corporation’s (NTPC), move to foray into cement making in a joint venture has aroused interest among the domestic cement players.NTPC last week said that it has invited expressions of interest (EoI) from companies to partner the state-owned company in setting up four plants to manufacture cement using fly ash generated from its power stations.North-based Shree Cements, which has plans to set up a grinding unit in a joint venture with NTPC, has already submitted an EoI.

“The location of our grinding unit, which will have a capacity of around 1 million tonnes per annum, could be in Haryana, Uttar Pradesh or Rajasthan, close to Delhi’s Badarpur unit of NTPC,” said Bangur, who is also the president of Cement Manufacturers’ Association. “We will supply clinker and NTPC will provide fly ash,” he added.

Read more in The Business Standard article.

Zydus Cadila buys Dutch firm Etna Biotech

2008-11-12T16:55:00.000+05:30

Ahmedabad-based pharma major Zydus Cadila on Tuesday said it has acquired Etna Biotech, a subsidiary of the Dutch biopharma company,Crucell. This is the sixth foreign acquisition by Zydus in the last five years. The company has not divulged the details of the deal.

In an official statement issued by the Zydus Cadila CMD Pankaj Patel said: “This acquisition will help us to be in the forefront in the innovation for vaccine research and development. The deal marks company’s first acquisition in the research space and offers the group a highly evolved research platform for developing new vaccines and technology.”

Zydus, the Rs 2,300-crore company is striving for a strong foot-hold in the lucrative vaccines market. The global vaccine industry is expected to grow by 18% by 2010, which is roughly three times the growth of the global pharmaceutical industry. The company would look at scaling up its vaccine products, as the newly-acquired research oriented company will provide cost advantage, sources said.

Last month, the group received WHO accreditation for rabies vaccine. So far Zydus had only a few products in vaccines segment through collaborations which were more for marketing other vaccines. The only vaccine that the company owned is the rabies vaccine - Lyssavac N.

OVL may make ‘firm’ offer to Imperial soon

2008-11-12T16:53:00.000+05:30

ONGC Videsh (OVL) — the foreign arm of government-owned Oil & Natural Gas Corporation (ONGC) — is set to make a ‘firm’ offer to shareholders of the UK-based Imperial Energy within 28 days.On Monday, the Russian Federal Anti-Monopoly Service (FAS) gave OVL a clean chit on anti-monopoly regulations, the other mandatory pre-condition for making a formal offer paving way for the $2.5 bn acquisition.

Imperial, incorporated in 2004, has oil and gas assets principally in the Tomsk region of western Siberia and the Kostanai region in north central Kazakhstan.It has about 920 mn barrels of oil equivalent (boe) independently estimated proven and probable hydrocarbon reserves (2P) and around 3.4 bn boe of independently estimated proven plus probable plus possible hydrocarbon reserves (3P). The company plans to produce 25,000 barrels of oil per day (bopd) by December this year and 35,000 bopd by the end of 2009.

Read more in The Economic Times article.

IDBI in talks to buy 25% stake in GE arm

2008-11-12T16:52:00.001+05:30

Industrial Development Bank of India (IDBI) is learnt to be in talks with GE Commercial Finance (GE), the financial arm of GE, to pick up around 25% stake in the latter’s construction equipment finance business in India. Infrastructure Development Finance Company (IDFC) will also hold around 35% stake in it.

Sources close to the development confirmed the move and said GE is all set to hive off its construction equipment finance business into a separate Rs 650-800 crore joint venture company and is in talks with IDFC and IDBI for the same.“Talks were initiated in the beginning of this year but global market slowdown and the current turmoil in the financial services sector led to the delay in the agreement. It may take some time for the final deal to come through,” said a source.

Globally, GE Commercial Finance has assets of over $335 bn. It caters to industries including healthcare, manufacturing, construction, infrastructure and equipment, among others.The company’s real estate portfolio spans across all market segments — from industrial, commercial and office space to residential and recreational developments.

DoCoMo to buy 26% of Tata Tele for $2.7 bn

2008-11-12T16:47:00.002+05:30

Japanese business daily the Nikkei Wi-fi wireless networks today reported that DoCoMo will buy a stake of about 26 per cent in Tata Teleservices Ltd for 260 billion yen ($2.7 billion). This would be the latest of a series of overseas acquisitions by DoCoMo and follows $350 million investment in Bangladesh's No.3 cellphone carrier.In September DoCoMo was in talks to buy a stake in Tata, part of the Tata Group conglomerate and parent of Tata Teleservices (Maharashtra) Ltd.

The deal would add to a record value of overseas acquisitions by Japanese firms this year as companies increasingly snap up competitors abroad, taking advantage of tumbling global stock markets and the yen's recent surge.

DoCoMo spent nearly 1.9 trillion yen in the late 1990s and early 2000s to buy small stakes in operators around the world to promote use of its i-mode mobile Internet technology and ensure the adoption of 3G networks on the same W-CDMA standard that it uses.But it saw its investments sour, and pulled out of AT&T Wireless Services Inc, Dutch operator KPN Mobile N.V. and Hutchison 3G UK Holdings after incurring heavy losses.

SKS Microfinance mops up Rs 366 cr

2008-11-11T16:35:00.002+05:30

SKS Microfinance on Monday announced that it has raised $75 million (Rs 366 crore) from a host of investors including Sandstone Capital, SKS investors, Kismet Capital and SVB India Capital Partners (an affiliate of Silicon Valley Bank).This was the fourth round of fund raising by the Hyderabad-based micro-finance firm. Edelweiss Capital was the advisor to SKS.

SKS has provided micro-loans of Rs 4,729 crore to 3.3 million poor households across 18 states in 50,000 villages and urban slums of India. Its members have maintained a 99% repayment rate. The new equity investment will help SKS expand its reach to 8 million members over the next two years.

Vikram Akula, founder and CEO of SKS Microfinance, said: “The fact that this investment has come during the global economic meltdown is proof of the confidence that investors have in SKS.” In February, it had raised Rs 124 crore from UNITUS, Vinod Khosla, Infocom Ventures, SKS Capital, Sidbi, Tejas Ventures, Sequoia Capital, Yatish Trading, SVB India and Columbia Pacific.Prior to that, it had collected Rs 53 crore in March 2007 and Rs 14 crore in March 2006. Last month, Swadhaar, a Mumbai-based micro-finance institution has raised $3 million from Michael and Susan Dell Foundation, Accion and Unit Equity Fund.

Circuit City files for bankruptcy

2008-11-11T16:34:00.001+05:30

Circuit city Stores, the No 2 US consumer electronics retailer, filed for bankruptcy protection on Monday, falling victim to tighter credit terms from vendors and a loss of market share to Best Buy, Wal-Mart Stores and other rivals.The retailer and 17 affiliates filed for Chapter 11 protection from creditors with the US bankruptcy court in Richmond, Virginia.

Circuit City filed a week after saying it would close 155 stores, or more than one-fifth of its retail base, and eliminate 17% of its US workforce. It also said it was considering all options to restructure. The company had lost money in five of the last six quarters.

In recent weeks, suppliers pinched by the global credit crunch have tightened terms, sometimes requiring up-front payments before shipping goods. Best Buy has said it might take over stores that distressed rivals close. According to the filing, Circuit City had $3.4 bn of assets and $2.32 bn of debts as of August 31, and more than 100,000 creditors.Among the company’s largest unsecured creditors are HP, Samsung and Sony, the filing shows. The largest shareholders include HBK Master Fund and First Pacific Advisors.

Wells Fargo set to buy Wachovia

2008-11-11T16:32:00.000+05:30

US bank Wells Fargo said Monday it had raised 12.6 billion dollars in a stock offering in preparation for its acquisition of rival bank Wachovia.

The bank offered 407.5 million shares and sold an additional 61 million shares due to demand.Wells Fargo, which needs financing to buy Wachovia, fixed the share offering at 27 dollars in early November, a modest discount to its share price at the time of 28.77 dollars.

"The enthusiastic response to this offering in a very difficult market demonstrates broad investor confidence in Wells Fargo's long-term growth potential and our time-tested vision and diversified business model," said Wells Fargo's chief financial officer Howard Atkins.

Wells Fargo also has received 25 billion dollars from the US Treasury as part of the Treasury's 700 billion dollar bailout of the troubled financial sector.

After hefty payout, BSE shareholders to get 12:1 bonus

2008-11-11T16:30:00.001+05:30

After pocketing a hefty 3000% dividend in 2007-08, shareholders of the Bombay Stock Exchange (BSE) are being treated to some more largesse — this time in the form of a bonus issue. According to reliable sources, the BSE board at its meeting on Saturday has decided to offer 12 bonus shares for very share held by shareholders.

Though the bonus issue is in line with brokers’ expectations, the move is seen as the first step towards eventual listing of the exchange’s shares. BSE is required to enhance its capital base significantly from the current level for listing purpose.
Post-bonus, the exchange’s equity capital would increase from the current Rs 78 lakh to Rs 10 crore, which is the limit applicable to companies seeking listing on the National Stock Exchange (NSE). The minimum paid-up capital requirement for BSE listing is Rs 3 crore.

Fannie Mae posts $29 bn in losses

2008-11-11T16:28:00.002+05:30

US mortgage finance giant Fannie Mae posted a record $29 billion in losses in the third quarter. The company's net worth fell to $9.4 billion at the end of September from $44.1 billion at the end of last year.Fannie Mae said it might have to tap the government's $100-billion funding as early as next year.

Fannie Mae and Freddie Mac, which own or guarantee around half of US home loans, were seized by federal regulators in early September.The US government was to inject up to $100 billion in each company in exchange for ownership stakes of almost 80 percent.

Reliance Retail’s JV with UK logistics co Wincanton falls through

2008-11-03T18:26:00.004+05:30

The high profile joint venture between Reliance Retail and the UK-based supply chain powerhouse Wincanton which was to manage RRL’s transportation, warehouses and inventory have been called off. According to The Economic Times report, the reason cited for the fall off was that RRL was unlikely to meet its initial growth projections and generate expected volumes.

RRL and Wincanton had signed an MoU and negotiations had reached advanced stages. The talks, however, were derailed after Wincanton saw a gap emerging between its expectation and what was being rolled out on the ground in terms of RRL’s expansion. In November 2006, India’s largest conglomerate Reliance Industries announced its foray into consumer retail with Rs 26,000-crore investment.

The company has also initiated a slew of measures to tide over the current crisis, perpetuated by a slowdown in Indian retail consumption and global financial turmoil. The company has recently reduced the size of its Ahmedabad hypermarket by two-thirds and initiated several cost-cutting measures. A senior source pointed out that some tough measures are on the anvil yet again.

Emami gets board's approval to hive off realty biz

2008-11-03T18:20:00.001+05:30

FMCG major Emami Group has got its Board's approval to hive off its real estate arm into an independent entity.The Kolkata-based company, which recently acquired a controlling stake in Zandu Pharmaceuticals, is planning to focus more on its core FMCG business while letting Emami Realty chart its course as a completely separate firm.

Asked if Emami was planning to exit from the realty business after spinning off the arms, Emami Director Aditya Agarwal replied in the negative and said Emami Realty would continue working on the various projects that it has started. '

On the source of funding of the projects, he said: "It is too early to talk (about it) at the moment." Emami Realty's 10 projects comprise four IT parks, three shopping malls and three residential complexes in Kolkata, Coimbatore and Hyderabad, involving a construction area of over 50,00,000 sq ft. The projects are likely to be completed by 2010-11.

Global investors pull out $480 mn from India funds in October

2008-11-03T18:13:00.002+05:30

Global investors have pulled out a whopping over $480 million from India-focused funds last month, with as much as $120 million flowing out in the last week, amid the meltdown in the equity markets.

India-focused funds have witnessed the highest outflows among all the Asian funds in the last four weeks, followed by China funds, which saw redemptions of over $286 million, as per data compiled by global fund tracking firm EPFR.

India-focused country funds saw an outflow of $119.7 million in the last week of October, while for the past four weeks the toll has been as much as $482.2 million.
However, so far this year, the total redemptions from India-dedicated funds have been the second highest, of over two billion dollars, while China-focused funds have witnessed the highest outflows of $2.8 billion in 2008 so far.

The Indian benchmark index Sensex dropped over 3,000 points from over 13,000 to below 10,000 in October, while China's Shanghai SE Composite Index had fallen from over 2,100 to below 1,700 in the last month.

Asian equity funds excluding Japan extended their losing streak to the eighth week in a row and recorded net outflows of USD one billion in October. In the last week of October they suffered an outflow of over 386 million dollars.

Britannia clears stock option plan

2008-10-31T16:09:00.000+05:30

Biscuits major Britannia Industries has approved an employee stock option scheme, fixing the exercise price at Rs 1,125.30, Tuesday’s closing price.An exercise price is the price at which options can be converted into shares. The remuneration panel of the company’s board on Wednesday also approved to grant 15,000 options, convertible into an equal number of shares, to managing director Vinita Bali.

In July, shareholders had approved a proposal to issue a maximum of one lakh shares to senior management, whole-time directors and executive directors.The vesting period will be a minimum of one year from the date of grant and the exercise period will commence from the date of vesting and expire not later than three years from the date of vesting.A previous employee stock option plan okayed by the board about two years ago did not see the light of day.

Anand Jain’s firm buys 10% stake in Gokaldas Exports

2008-10-31T16:08:00.000+05:30

Anand Jain, chairman of Jai Corp and a confidante of Reliance Industries chairman Mukesh Ambani, has picked up nearly 10% equity stake in Gokaldas Exports, a leading player in the readymade garment industry.Mr Jain’s acquisition coincides with Reliance Industries’ attempt to revive ‘Only Vimal’ and other textile brands. Reliance Industries, which started as a textile company in 1979, now earns less than 1% of its revenues from the textile business.

Blackstone had acquired a 50% stake in Gokaldas from its promoters last year. The deal was pegged at Rs 275 a share, 20% higher than the ruling market rate at that time, making it the country’s largest management buyout in the textile industry. It was followed by the mandatory open offer to shareholders which increased Blackstone’s stake to 68%.
The US-based PE giant Blackstone is the largest shareholder in Gokaldas, with a 68% holding. The Hinduja family, the original promoters of the company, now holds 20%.

NTPC to form JV with NPCIL

2008-10-31T16:03:00.002+05:30

State-run power producer NTPC today said that it would form a joint venture with Nuclear Power Corporation of India Ltd for setting up a nuclear power project."NTPC board has approved the formation of a joint venture company with Nuclear Power Corporation of India Ltd (NPCIL) to set up a nuclear power project," company said in a statement to the Bombay Stock Exchange.NTPC would hold 49 per cent of the stake in the joint venture company and 51 per cent would be held by NPCIL.

The company plans to raise up to Rs 4,500 crore from domestic as well as international markets for meeting its expansion plans in the current financial year.NTPC posted a net profit of Rs 2,110 crore for the second quarter ended September 30, a jump of 9.60 per cent from Rs 1,925 crore in the second quarter of last fiscal.Total income rose by 18.94 per cent to Rs 10,406 crore for the quarter under review, from Rs 8,749 crore in the same period last fiscal.The company's net sales rose to Rs 19,201 crore in the first half of the current fiscal, from Rs 16,976 crore in the year-ago period.

Kuwait's Global Investment buys 11% in MAPE

2008-10-22T19:36:00.002+05:30

Kuwait-based Global Investment House (Global) has picked up an 11.11% equity stake in MAPE Advisory Group, a boutique investment bank, for about $10 million (about Rs 48 crore), valuing the firm at $90 million. MAPE has offered the stake to Global by way of a fresh issue of shares.The funds raised through this transaction would be utilised by MAPE as working capital to boost its institutional broking business.

Post stake sale, Mr Mathew and Mr M Ramprasad, the promoters of MAPE, will own roughly 70% of the company’s equity.MAPE, which was founded in 2001, focuses on M&As, private equity fund raising, debt syndication, cross border advisory services and institutional broking.

It has closed over 60 transactions — the recent ones being Mahindra's acquisition of Kinetic Motors, CVCI's investments into Mumbai-based broking firm Sharekhan and ICICI Ventures, and Baring's investments into Karvy Stock Broking — across various sectors.

The total value of these deals add up to nearly $1.9 billion. MAPE currently employs around 60 professionals across its offices in India and the United States.
This strategic alliance finally gives Global a toehold in India. It may be recalled that the Kuwait-based firm was a strong contender for UTI Securities, which was eventually lapped up by Standard Chartered bank.Global is one of the leading mid-sized investment banks in the Gulf and has registered itself as a foreign institutional investor (FII) with SEBI.

Nifty ends 5% lower on weak global sentiments

2008-10-22T19:29:00.003+05:30

Weakness in global markets and lack of investor confidence saw the Indian stock market benchmarks wipe off gains made in last two trading sessions on Wednesday.Markets opened sharply lower, in line with the Asian peers, on concerns of global economic slowdown. Expectations of further cooling in inflation rate failed to cheer the market. Inflation rate for the week ended Oct 11 is seen at 11.35 per cent, lower from 11.44 per cent previous week.

Bombay Stock Exchange’s Sensex ended at 10,169.90, down 513.49 points or 4.81 per cent from Tuesday’s close. The index touched a low of 10,128.22 and high of 10,484.85. National Stock Exchange’s Nifty closed at 3065.15, down 5.25 per cent or 169.75 points. The broader index touched a low of 3051.80 and a high of 3235.75.

Among frontline stocks, Tata Steel (-12.04%), Sterlite Industries (-10.04%), Reliance Communications (-8.79%), ICICI Bank (10.04%), Jaiprakash Associates (-7.88%) and Tata Motors (-7.87%) were the worst hit.ITC (1.04%) and Hindustan Unilever (0.5%) were the only gainers in the 30-share index.Market breadth remained weak through the day, with 1,733 declines and 778 advances on BSE.

TCS to buy Citigroup Global Services for $505mn

2008-10-08T18:35:00.001+05:30

Tata Consultancy Services (TCS) signed an agreement with Citigroup Inc to acquire its captive BPO-Citigroup Global Services (CGSL) for $505 million (around Rs 2,424 crore) in an all-cash transaction. In addition to the sale, Citi has signed an agreement with TCS to provide, through CGSL, process outsourcing services to Citi and its affiliates in an aggregate amount of $2.5 billion over a period of 9.5 years.

The acquisition broadens TCS’s portfolio of end-to-end IT and BPO services in the global Banking and Financial Services (BFS) sector.TCS has provided IT services to Citi since 1992 and is currently one of the largest IT services partners for Citi, delivering IT and business processing outsourcing services to Citi across its operations in North America, Europe, India, Japan, Singapore and the rest of Asia Pacific.The parties expect to close the transaction in the fourth quarter of 2008. Merrill Lynch acted as advisors to TCS in this transaction.

Nomura to buy Lehman's Indian operations

2008-10-06T17:50:00.002+05:30

Japan's top broker Nomura Holdings today announced that it had agreed to acquire Lehman Brothers' operations in India, giving jobs to 3,000 more workers from the bankrupt Wall Street giant.Nomura, which is already buying Lehman's operations in the Asia-Pacific, the Middle East and Europe, will take on the failed US bank's India-based back office and IT support businesses for an undisclosed sum.The subsidiaries, based in the financial hub of Mumbai, were not included in the earlier deal because they were under the wing of Lehman's North American business, which is being bought by the British bank Barclays.

L&T buys 4.2% stake in Kalindee Rail

2008-10-06T17:48:00.002+05:30

The country’s largest engineering firm Larsen & Toubro (L&T) has picked up 4.2% stake in Delhi-based Kalindee Rail Nirman Engineers from open market. L&T Capital, a subsidiary of L&T, on Friday bought 4.5 lakh shares of Kalindee at an average cost of Rs 121.21 a piece, according to statistics with BSE.Blackstone Asia was the possible seller.

KRNL is a significant beneficiary of aggressive capex plans of Indian Railways and makes a strategic fit with L&T’s future plans. The company has proven skills in tracks, signalling and telecommunications.KRNL has a strong relationship with the Indian Railways and qualifies for required technical specification and safety norms by it. It has also entered into various tie-ups and JVs with leading international players to keep pace with technology.

Some of the other shareholders in the company include Quantum, HDFC Trustee Company, JPMorgan, Sundaram BNP Paribas, Morgan Stanley who along with others hold about 44% in the firm as per the shareholding patter as of June 2008. Promoters currently hold 24.66% stake in the company.

Provogue sells further stake in realty unit

2008-10-06T17:46:00.002+05:30

Apparel retailer Provogue (India) Ltd announced today that UK's LTG International Ltd will invest 569.7 mn rupees to pick up 3.36 per cent stake in a unit of real estate arm Prozone Enterprises Pvt Ltd.LTG is founded by Lewis Trust Group of UK and Prozone is a joint venture between Provogue and Liberty International Plc.

In April, Provogue sold 27 per cent stake in the unit for 4.57 bn rupees to Triangle India Real Estate Fund, founded by Old Mutual Investment and ICS Realty.

Private players can participate in N-power projects: FICCI

2008-10-03T18:30:00.002+05:30

A day after the US Senate gave a resounding 86-13 approval to the historic India-US nuclear deal, the Federation of Indian Chambers of Commerce and Industry (FICCI) on Thursday urged the government to immediately initiate the next steps for building nuclear power generation capacity in a big way.

According to the FICCI, the Indian private sector has already acquired capabilities for participating in nuclear power projects.This will boost private investment in nuclear power sector.The country has the potential to generate 60,000 MW of nuclear power over the next 25 years, which needs an investment of over $100 billion.The government is already vetting 10 nuclear power projects.

Companies like National Thermal Power Corp (NTPC), Reliance Energy, Tata Power, Larsen and Toubro, and Bharat Heavy Electricals Ltd can now look forward to working as partners with international companies like General Electric, Westinghouse, Areva and Atomstroy in the field of nuclear energy generation.

LIC hikes stake in select blue chips beyond 10%

2008-10-03T18:28:00.001+05:30

Domestic insurance giant Life Insurance Corporation (LIC) has raised its stake beyond 10% in a few blue chip companies even after the insurance regulator IRDA decided to impose a cap of 10% on the institution’s investment in a single company.LIC has made fresh investments in companies like Siemens, PTC India, Tata Power and Cipla in which it now holds more than 10% stake each. Based on Wednesday’s closing, the combined value of the institution’s additional investments in these companies amounted to nearly Rs 800 crore.

According to disclosures filed with BSE, LIC bought 97,34,113 shares of Siemens between February 6 and September 5, 2008, resulting in a hike in its stake from 7.7% as on December 31, 2007 to the current 11.3%. The company’s shares have tanked nearly 30% in the past one month.PTC India and Tata Power are the two other notable examples where LIC now holds a little over 10% after acquiring additional shares in September. The stocks of these companies have lost 18% and 12% respectively in one month.

Following is a list of companies where LIC holds 10%-plus stake:
Tata Motors
Tata Steel
Corporation Bank
Ranbaxy
Cipla
M&M
Maruti Suzuki
Dr Reddy’s Labs
MTNL
HPCL
Oriental Bank
Reliance Infrastructure

RIL to sell crude at $5 discount

2008-10-01T17:00:00.002+05:30

Reliance Industries (RIL), the country’s largest company by market capitalisation, will sell its Krishna-Godavari (KG) basin oil at a discount of around $5 per barrel to Brent crude oil, the global benchmark.At present, Brent crude oil, which is produced primarily from oil fields in the North Sea near Norway, is trading at around $100-105 per barrel.

The company, which had reported sales of Rs 41,579 crore in the first quarter of the current financial year ended June 2008, may add around $300 million (Rs 1,400 crore) to its turnover in the October-December quarter as it begins sale of the KG oil to Indian refiners.RIL will produce around 35,000 barrels of crude oil per day from the field at peak rate. This is around 5 per cent of the total crude oil produced in India. The company will initially produce around 10,000 barrels per day and increase it to peak rate in a month’s time.

As per the terms of the agreement, the government will earn profit from the sale of oil only after Reliance Industries recovers its $2 billion investment made towards producing the oil.

Read more in The Business Standard article.

Reliance Money gets nod to acquire 10 pc stake in NMCE

2008-10-01T16:56:00.002+05:30

Financial services firm Reliance Money has obtained approval from Ministry of Consumer Affairs to acquire a 10 per cent stake in the National Multi-Commodity Exchange of India (NMCE) Board.Reliance Money had proposed to acquire a total of up to 26 per cent stake in NMCE in two phases. NMCE had accordingly applied for necessary approvals from the regulator Forward Markets Commission (FMC), which in turn, recommended the acquisition to the Ministry of Consumer Affairs.

The Anil Ambani-led Reliance ADAG is the first large business group to get into the commodity exchange space in India.

US institutions plan to sell off assets in India

2008-10-01T16:14:00.001+05:30

Large institutions such as AIG, Morgan Stanley, Wachovia and others are planning to liquidate some of the Indian assets in which they had invested their proprietary capital.Investment banking sources and PE funds have confirmed that a number of such deals have been available in the market for the last few weeks.Some of these institutions are highly leveraged and their mortgage related assets in the US are getting marked down. There is a need to liquidate some of the assets they bought with their proprietary capital to get cash and strengthen their balance sheet.

Most of these large institutions have been investing in real estate in India through both managed and proprietary capital. Wachovia does not have a fund and has been investing from its proprietary books for the last two years, though at the moment they are looking at investing selectively from their proprietary books in India.Market sources though confirm that there are a few of Wachovia's real estate deals that are being looked at closely. Interestingly, Merrill Lynch had merged its proprietary book with its third-party fund early this year so they are safe on that front after the recent events. DSP Merrill Lynch has made proprietary investments of $500 million in the real estate segment.

Jet Air to sell 10% stake to global funds

2008-09-30T16:38:00.002+05:30

Naresh Goyal who holds close to 80% stake in Jet Airways, today announced plans to dilute 10% equity to international funds. He however did not disclose the identity of the fund, nor the timing or price. Jet Airways is country’s largest private airline and controls one-third of the domestic market share. It also runs JetLite, a low-cost airline.

At the current stock price, a 10% dilution may bring in Rs 340 crore to the struggling airline.This is over and above the company’s plans to raise up to $800 million through a qualified institutional placement of equity shares and $400 million through a rights issue.The company also is raising $1 bn through debts to finance the delivery of five A330 Airbus and three Boeing 777.

Read more in The Economic Times article.

Actis Biologics taps PE firms to raise Rs 125 cr

2008-09-30T16:37:00.000+05:30

Actis Biologics (India) is close to finalising a deal with private equity (PE) players to sell 15% stake. The company is in advanced stages of discussions with three foreign players to raise Rs 125 crore through issue of fresh shares, said Actis Biologics CEO Sanjeev Saxena.

Actis Biologics had recently purchased a technology ‘Liv1’ and is looking to set up an office in the US, for which these funds would be used. Actis has already invested $10 million in its R&D lab in Mumbai. The company plans to launch its new technology ‘VFF2’ in 8-10 months.

RNRL mulls Rs 12,000 cr capex for cement, shipping foray

2008-09-30T16:18:00.001+05:30

Anil Ambani-controlled Reliance Natural Resources plans to enter cement manufacturing and shipping activities with an investment of Rs 12,000 crore.Earlier at the meeting, RNRL Chairman Anil Ambani said that "we are actively considering entering into cement manufacturing with 20-million tonnes capacity".

For supporting its ambitious cement business, RNRL is looking to run a shipping service. It will help the company in transporting raw materials and finished products. At present, RNRL is engaged in sourcing, supply and transportation of various fuels along with exploration, production and distribution of gas.

Asia jittery after US bailout reject

2008-09-30T16:16:00.000+05:30

Even before the vote by US lawmakers on the $700 billion bailout plan, Asian and European markets had fallen on fears the crisis was spreading, while US regional lender Wachovia became the latest big bank to succumb to the crisis.Retail investors from Tokyo to Melbourne kept nervous vigil over their investments and some dumped shares on Tuesday following the shock rejection of the US bailout plan, which sent global equity markets tumbling.

In Japan, the Nikkei fell more than four percent to a new low for the year, following a rout in the US, Latin American and European stock markets earlier, as investors sought refuge in cash and safer investments, such as gold and government bonds.
In Australia, stocks fell more than five percent in early trade as brokerages scrambled to deal with spooked investors looking to cut their losses given the bleak outlook.

Bank of America to buy Merrill for $50 bn

2008-09-15T16:37:00.002+05:30

Bank of America Corp said it agreed to buy Merrill Lynch & Co Inc in an all-stock deal worth $50 billion, snagging the world's largest retail brokerage after one of the worst-ever weekends on Wall Street.Bank of America now has one of the best and largest retail brokerages in the country, one of the top investment banks in the world, and a large stake in one of the best investment managers in the world.

The bank is buying about $44 billion of Merrill's common shares, as well as $6 billion of options, convertibles, and restricted stock units.Bank of America agreed to pay 0.8595 shares of Bank of America common stock for each Merrill Lynch share. The price is 1.8 times stated tangible book value.The bank also said it expects to achieve $7 billion in pretax expense savings, fully realized by 2012, and expects the deal to be accretive to earnings by 2010. The transaction is expected to close in the first quarter of next year.

The price, which comes to about $29 per share, represents a 70 percent premium to Merrill's share price on Friday, although Merrill's shares were trading at $50 in May and over $90 at the beginning of January 2007.The deal has been approved by directors of both companies. Three Merrill directors will join the Bank of America board.

Read more in The Economic Times article.
Chronology: History of Merrill Lynch

Lehman to file for bankruptcy, plans to sell units

2008-09-15T16:27:00.002+05:30

Lehman Brothers Holdings Inc said it plans to file for bankruptcy protection, but the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman.Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.

Bankruptcy represents the end of a 158-year old company that survived world wars and the collapse of Long-Term Capital Management but could not survive the global credit crunch.Investors in recent weeks had grown increasingly jittery about Lehman's $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital.

Edelweiss plans to set up asset reconstruction unit

2008-09-12T18:14:00.001+05:30

Financial services firm Edelweiss Capital Ltd plans to set up an asset reconstruction firm and apply for regulatory approval in the next six months, a top official said on Friday.

Asset reconstruction firms buy bad loans in a pool format at a discount and recover the money from the borrowers subsequently. Loan growth of nearly 30 percent in India over the past few years has resulted in creation of non-performing assets, an opportunity which is luring several state-run and private sector banks as well as financial institutions.

Under the deal, Edelweiss would offer advisory services on wealth management products to customers of the bank with an average net worth of over 1 million rupees each, Shah said. Several banks such as ICICI Bank, HDFC Bank , ABN Amro and Kotak Mahindra Bank have increased their focus on wealth management as wealthy Indians demand specialised advisory services.

Governmet re-starts attempts to see IFCI stake

2008-09-11T16:05:00.002+05:30

Goverment has revived its effort to sell 26% stake in IFCI, plans of which were shelved in December last year.The stake sale process is expected to begin next quarter.Differences, however, persist over whether the new partner should be given management control. This was what had caused the IFCI board to cancel the process last year after the lone bidder, the Sterlite Industries-Morgan Stanley-led consortium, demanded management control.

The bidding process last year was fraught with problems after the board set a minimum reserve price of Rs 107, which was considered too steep. As a result, most prospective bidders withdrew. Of the three bids, two were for less than Rs 107 per share and were disqualified.

Read more in The Business Standard article.

Related Stories:
IFCI to sell 26% stake to strategic investor
IFCI raises bar for strategic investor
IFCI stake sale called off !

DoCoMo may buy stake in Tata Tele

2008-09-11T16:03:00.002+05:30

NTT DoCoMo, Japan's biggest mobile phone operator, is in talks to buy a stake in India's Tata Teleservices in a deal that may exceed $933 million, company sources said. The news boosted shares in a unit of Tata Teleservices, Tata Teleservices (Maharashtra), by as much as 4% in Indian market.

DoCoMo is increasingly expanding its overseas presence as growth in the Japanese market slows, and the Tata deal would follow its $350 million investment in Bangladesh's No. 3 cellphone carrier TM International (Bangladesh) Ltd. The sources said DoCoMo's investment would likely only amount to a minority stake and it was unclear if the Japanese firm would clinch the deal as other carriers were keen to take a stake in sixth-largest player Tata Teleservices, part of the Tata Group conglomerate. DoCoMo, which competes with KDDI Corp and Softbank Corp, said in June it would seek more acquisitions overseas and particularly in Asia, and it will look into China and India if the chance arose.

India is the second-biggest market in the world after China, and the market is growing some 50% annually as only 23% of the population are now carrying cellphone. Demand for data communication is expected to show explosive growth after 2009 when 3G services starts, enabling faster transmission.

Orchid plans to sell 15-20% stake in research unit

2008-09-11T16:02:00.000+05:30

Orchid Chemicals & Pharmaceuticals (Orchid) is considering selling stake in its research subsidiary by next year.A strategic investor may also be considered for Orchid Research Laboratories.However, before the fund-raising, Orchid plans value addition through work on molecules.

Orchid Research operates in four therapeutic areas — diabetes, pain, oncology and infectious diseases — at its two R&D centres at Sholinganallur and Irungattukottai in Chennai.The therapeutic areas have lead molecules which will go into trials by next year.

This would be the value-add after which Orchid Research would look at generating funds to meet the demands of the molecules, Rao said.Hence, putting a number on the amount of funds raised would be premature now.
The company currently invests 5-6% of its revenue every year for research and development, which was Rs 60 crore last year.

Essar Oil to raise $5 bn loan from 4 banks

2008-09-11T16:00:00.001+05:30

Oil refiner Essar Oil is close to raising $5 billion in loans underwritten by four banks to fund the expansion of its refinery in western India, three bankers with knowledge of the deal said on Thursday.

Essar will raise $3.5 billion in 12-year, rupee-denominated loans underwritten by top lender State Bank of India, ICICI Bank and IDBI Bank, the bankers said.

It will also raise $1.5 billion in foreign currency loan from Standard Chartered and ICICI Bank, they said. "A couple of us have already signed the underwriters agreement. The other two will do it soon," said one banker, who declined to be identified because he was not authorised to speak to the media.

Essar is spending $6 billion to expand its 210,000 barrels a day refinery in western Gujarat state to 1 million barrels a day within three years. The bankers said the company's founders would bring in about $2 billion in equity for the expansion and working capital.

SBI to fund Tatas' bid for Singapore co

2008-09-01T15:21:00.002+05:30

India’s largest bank, State Bank of India (SBI), will offer Tata Power $1 billion to help it acquire Senoko Power, Singapore’s largest-power utility.In the past, SBI had extended a $1.2 billion loan for the Corus acquisition and about $500 million for financing the buy out of Jaguar and Land Rover( SBI, others to raise $3 bn for Tata Motors
). For the Senoko bid, SBI Capital Market has been appointed as the lead arranger for funds. SBI has agreed to provide a loan for 18-24 months. The loan is pegged 350 basis points over Libor.

Temasek Holdings had put Senoko Power on the block in early August, in a deal which is expected to raise close to $3 billion. Temasek is expected to shortlist bidders in the first week of September after which those shortlisted will be allowed to carry out a due-diligence exercise. The entire sale is expected to be concluded by the end of 2009.

Suzlon to buy Martifer's REpower stake early

2008-09-01T15:17:00.000+05:30

Suzlon Energy Ltd announced today that it has signed an agreement with Martifer for an early acquisition of the Portuguese conglomerate's stake in REpower Systems for 270 million euros ($396 million).

The agreement to buy Martifer's stake of about 22.48 per cent in REpower will be completed by December 15, taking Suzlon's holding in the REpower to around 90 per cent, the firm, the world's fourth-largest wind turbine maker.

Reliance abandons stake transfer of gas-rich D-6 block

2008-09-01T15:15:00.001+05:30

Reliance Industries Ltd has abandoned a plan to transfer an 80 percent stake in a deepwater block to its subsidiaries as it has raised the money it needs for the block, the company said in a statement today.

Reliance, which owns 90 percent in the gas-rich D-6 block in the Krishna Godavari basin off east coast, said last week it had sent a proposal for the transfer of the stake to four fully-owned subsidiaries and was awaiting government approval.There were no details of the amount of funding it had raised.

Canada's Niko Resources owns the remainder in the D-6 block where huge gas discoveries have been made.Reliance aims to pump gas from D-6 from October and oil from September.

M&M arm buys assets of AGS Hotels

2008-08-26T15:19:00.001+05:30

Mahindra Holidays and Resorts, part of the $4.5 billion Mahindra & Mahindra Group has expanded its footprints further, with the acquisition of assets of AGS Hotels in Tamil Nadu's most popular tourist destination - Ooty.

According to sources, Mahindras has signed the deal for around Rs 30 crore for the 100 room resort, in the heart of Udhagamandalam (popularly called Ooty), overlooking the race course. AGS Hotels, a subsidiary of erstwhile SSI Ltd, purchased this property from the Dasaprakash Group.In subsequent transactions, PVP Ventures, acquired SSI Ltd and consequently AGS Hotels came under its belt.

NTPC approaches govt to raise ECBs worth $25 bn

2008-08-26T15:13:00.001+05:30

State-run power company NTPC has approached the government for free access to external capital markets for raising debt of around Rs 1.05 lakh crore (about 25 billion dollar) in order to become a 50,000 MW company by 2012.The ECB would include Rs 60,300 crore in foreign currency and Rs 45,200 crore in rupee term.

Countries largest power producer NTPC wants to raise money in foreign as well as domestic currency without any ceiling.In the present scenario, the companies can raise up to 500 million dollar per annum through ECBs under the automatic route for import of equipments. Apart from this an additional 250 million dollar can be raised for the said purpose with the approval of RBI.

NTPC is pursuing this matter with the power minister to achieve its ultimate objective of becoming a 50,000 MW company by 2012 and a 75,000 MW company by 2017.For achieving these targets, the company is required to invest around Rs 1.6 lakh crore during the XI plan period.The debt requirement is around Rs 1. 05 lakh crore with 70:30 debt equity ratio

Imperial Energy has choosen OVL over Sinopec

2008-08-26T15:09:00.003+05:30

UK-listed Imperial Energy today said it has chosen ONGC Videsh Ltd over Chinese competitor Sinopec to discuss a possible sale to the Indian company and an announcement is likely shortly. OVL, through its wholly owned subsidiary Jarpeno Ltd, has made a 12.50 pounds per share takeover offer.

OVL, the overseas investment arm of state-run Oil and Natural Gas Corp (ONGC), had made a takeover offer last month and earlier this month China Petroleum and Chemical Corp (Sinopec) made a counter offer.Imperial, a relatively small British oil and gas company based in Leeds in UK, has oil producing blocks in Tomsk region of western Siberia in Russia and Kastanai in north-central Kazakhstan.It produced about 10,000 barrels of oil per day in December 2007 and is targeting to raise this amount to 80,000 barrels per day (4 million tons a year) by year-end 2011.

Read more in The Economic Times article.

PEs zeroing in on distressed firms

2008-08-25T16:24:00.002+05:30

Private equity(PE) firms who have been largely focused on providing growth capital in India are now eyeing distressed firms, which has been a domain of the Asset Reconstruction Companies (ARCs). While some of the PE players such as Vision Global, Eight Capital and ClearWater have specialised funds, which are targeting distressed assets, other PE firms are also looking to invest in such companies during these troubled times.

Vision Global, which recently entered India, is looking to invest out of it $200-million Asian fund. Independent estimates peg the total value of the country’s distressed assets at around $60 billion.

While fund managers say there is still lot of opportunity to invest in growing companies besides distressed firms, the slowdown in the Indian economy coupled with stock market crash early this year has already affected PE deal activity in the country. There has been a decline of more than 50% in the value of PE deals in India with only 46 PE deals worth $1.8 billion so far this year as compared to $6.9 billion in the corresponding period last year.

Read more in The Economic Times article.

Shemaroo looking to raise Rs 100 cr through pvt equity route

2008-08-25T16:20:00.003+05:30

Entertainment major, Shemaroo Entertainment, is in talks with private equity players to raise Rs 100 crore for fuelling its expansion programme, a top company official said.Shemaroo hopes to seal transactions within the next six months.The company is mulling over diluting a portion of its equity to raise funds from private equity players.

Shemaroo, an integrated film production, post-production, distribution and animation player, would utilise the funds raised to enhance and strengthen its existing verticals.Shemaroo also plans to expand its films acquisition and distribution rights business.

SEBI to fine 7 i-bankers

2008-08-12T16:15:00.002+05:30

The regulator’s Market Intermediaries Regulation and Supervision Department (MIRSD) has uncovered serious shortcomings in the due diligence process for initial public and rights offerings, besides open offers, carried out by seven investment bankers — Kotak, Enam, DSP Merrill Lynch, SBI Caps, HSBC, Keynote and Aryaman Financial.

According to sources,the arbitration proceedings against Enam and Kotak pertain to YES Bank and IDFC IPOs dating back to 2006. A SEBI probe had revealed a scam involving manipulation of retail category in these IPOs. DSP Merrill Lynch was also rapped by SEBI for the YES Bank IPO as the regulator’s inspection showed that the details of the promoters as mentioned in the IPO document were different from the one filed with the Reserve Bank of India.

Read mor4e in
The Economic Times article.

SBI rejects rumours of JV with SG

2008-08-11T16:15:00.002+05:30

State Bank of India (India) today rejectd rumours of its proposed joint venture with French financial services major Societe Generale. The bank said it has not received any official communication from the regulators.

SBI had entered into an agreement with Societe Generale Securities Services (SGSS), a division of Societe Generale Group in June this year to provide a range of security services like reporting, corporate actions, dividends collection and distribution, tax reclaim services amongst others.Following the signing of the pact, SBI is presently waiting for the Reserve Bank of India approval while Societe Generale's proposal is pending with the Foreign Investment promotion Board (FIPB).

Chaturvedi Panel for sharp increase in oil prices

2008-08-11T16:10:00.002+05:30

The high-level Chaturvedi Committee has recommended raising petrol prices by Rs 2.50 a litre per month till March 2009 and diesel prices by Rs 0.75 per litre till 2010 to eliminate subsidies on the two fuels.The three-member panel, headed by Planning Commission member B K Chaturvedi also suggested levying a 'Metro Extra' tax of Rs 2 per litre on diesel, in four installments in large cities where the fuel was being used in expensive cars.

Besides suggesting freeing auto fuel pricing from government control, the commitee also recommended changes in distribution of domestic LPG by restricting only six refills per connection a year.The Committee also suggested slashing import duty on petrol and diesel to zero (from 2.5 per cent) as has been done in the case of crude oil, domestic kerosene and LPG.

Read more in The Economic Times article.

BSNL IPO hits roadblock!

2008-08-08T16:23:00.003+05:30

The much awaited $10 billion BSNL IPO has hit a road block before even taking-off. Communications minister A Raja's offer to give all the 3 lakh employees 500 shares at Rs 10 each has been rejected by the Union. This would have fetched each employee a minimum of Rs 1.5-2 lakh at the time of BSNL’s listing on the bourses.

If the share were to list somewhere between Rs300-400, it would give BSNL valuation of $37-45 billion which is way lower than $100 billion what the company has been claiming since January.According to analysts, the $37-45 billion valuation is a fair one. BSNL has about 81 million subscribers, 10 million more than the country’s largest private operator, Bharti Airtel, which is valued just over $38 billion. However, a top BSNL official said that this was only the book value of the company and did not include its asset value.

Read more in The Economic Times article.

VCs may not get to invest in listed cos

2008-08-08T16:20:00.001+05:30

The new guidelines, being drafted by the finance ministry and the capital market regulator SEBI, may not allow VCs to invest in listed companies and restrict them only to startups.The guidelines will also seek to remove the differences in the treatment of foreign and domestic VC funds. One of the aspects being reviewed is the minimum capital required for VCs to set up shop in India. Currently, domestic VCs need to have a minimum capital of Rs 5 crore to operate, while foreign VCs don’t have any such requirement.The new guidelines will attempt to provide a level playing field for domestic and foreign funds. The government is studying norms in other countries, where mere commitments to provide capital to a VC fund would be sufficient.

VCs, who are currently exempt from SEBI’s takeover code or lock-in period for shares held would be allowed to enjoy this exemption only if they invested in “genuine new ventures.” The government feels that VCs should provide capital to new ventures and not invest in established listed companies.

On another count, while domestic VCs can get a tax exemption only if they invest in high-risk areas like biotechnology or nanotechnology, foreign VCs escape taxes altogether as they normally operate from offices established abroad. Most foreign VCs do not have to pay any tax, as they have no permanent establishment in India. The differences in tax treatment between domestic and foreign VCs is also under review.

The government is also understood to be looking at redefining the investments that are more risky instead of categorising certain sectors such as biotechnology as risky. The government’s intention is to have a new classification of risky areas of funding irrespective of the sectors.

Govt approves Daiichi-Ranbaxy deal

2008-08-07T15:55:00.002+05:30

India has approved Daiichi Sankyo's stake purchase in the country's top drug maker by sales, Ranbaxy Laboratories, the finance ministry said in a statement on Wednesday.

Japan's Daiichi has agreed to buy a 34.8 per cent stake in Ranbaxy and aims to take up to 20 per cent more from the open market in deals worth up to $4.6 billion. The Japanese drug maker will also make an open offer to buy up to 20 per cent of shares in another Indian firm, Zenotech Laboratories, which is 47-per cent owned by Ranbaxy.

Bharat Forge NTPC in a JV

2008-08-07T15:54:00.001+05:30

Bharat Forge-NTPC JV called Bharat Forge NTPC Energy Systems which finally has been finalised, is now scouting for a location in Maharashtra, which it expects to finalise in the next couple of months.Bharat Forge and NTPC have a participation of 51:49 in the new venture.

Chairman and MD, Bharat Forge told shareholders at the company’s 47th annual general meeting that should the Indo-US nuclear deal go through, Bharat Forge will be “one of the prime suppliers” for nuclear power plants since forgings comprise 60-70% of a nuclear reactor.

Read more in The Economic Times article.

TPC in race for Singapore power co

2008-08-06T16:24:00.001+05:30

Investment arm of Government of Singapore,Temasek Holdings has shortlisted Tata Power (TPC) to bid for the city state’s power generating company, Senoko Power.The successful bidder may need to fork out $3 billion to bag Senoko.Tata Power will have to compete with global giants like Japan’s Marubeni and Mitsubishi, France’s GDF Suez, Malaysia’s YTL Power and the OneEnergy-CLP Holdings combine

The sale of Senoko will involve a two-stage process with interested companies initially submitting a non-binding expression of interest. Later, the shortlisted companies will be allowed to conduct due diligence before making their binding offers.

In the last financial year, Senoko Power generated revenues of $2.5 billion and an operating profit of $245 million. Credit Suisse and Morgan Stanley are advising Temasek on the sale of all the three power generating companies.

Read more in The Economic Times artcile.

Dr. Reddys to increase its stake in the company

2008-08-06T16:05:00.002+05:30

Domestic pharma major Dr Reddy's Labs has said that a promoter group firm Dr Reddy's Laboratories Holdings Pvt Ltd has increased its stake in the company to 22.82 per cent through open market purchase.Dr Reddy's Holdings Pvt Ltd acquired 1,95,348 equity shares representing 0.11 per cent stake in the company through open market transactions, Dr Reddy's Labs said in a disclosure to the Bombay Stock Exchange.

The market purchase of shares, for an amount of about Rs 11.36 crore, was conducted through DSP Merrill Lynch.However DSP Merrill Lynch has no stake in Dr Reddy's Holdings Pvt Ltd.

Pursuant to the acquisition, the holding company's stake in Dr Reddy's Labs has increased to 22.82 per cent.At the end of June, Dr Reddy's Holdings held 22.46 per cent stake in the company.

Swaps the way to go!!

2008-08-06T16:04:00.000+05:30

Equity swaps seems to be the preffered route for those foreign investors, who prefer to stay away from the regulatory glare, tapping other routes for investment in the local market. In the past few months, these investors, including global hedge funds, have been increasingly using the equity swap — an unregulated over-the-counter (OTC) derivative contract — to take exposure to the Indian market.

Hedge funds have been using this route, especially to gain exposure to India’s futures and options market, where trading through participatory notes have been completely banned since last October.An equity swap is an arrangement where a series of future cash flows are made by two counterparties to each other. The pre-determined set of payments, which is based on a notional principal amount, may be determined by returns on stocks or indices or a fixed or floating rate.

Balaji in talks with investors to buy Star's stake:Report

2008-08-06T16:01:00.002+05:30

Television content provider Balaji Telefilms Ltd is in talks with a consortium of investors to buy the 25.99 percent stake held by a unit of Rupert Murdoch's Star group, a newpaper reported on Tuesday.

The stake is owned by Dubai-based Asian Broadcasting FZ-LLC and was bought for 1.23 billion rupees in 2004, the paper said. Balaji will float another joint venture company with these investors to launch a bouquet of regional television channels, the paper said.

While Star was "very close" to ending its relationship with Balaji, the formalities were yet to be completed, the paper cited an unnamed official as saying. On Monday, News Corp chief Rupert Murdoch said the US media conglomerate plans to invest $100 million in six regional language channels in India, where it is a leading broadcaster.

Officials at Balaji Telefilms could not be immediately reached for comment. Murdoch on Monday declined to comment on speculation Star and Balaji were ending their venture.

RBI may raise rates tomorrow

2008-07-28T16:46:00.001+05:30

RBI is expected to raise its key lending rate by 25 or 50 basis at its policy review to cool inflation from near 12 per cent, and further rises are also expected, a poll showed.Seven out of 11 analysts polled expected the Reserve Bank of India (RBI) to raise the repo rate from 8.50 per cent on July 29.

In June, the central bank raised the repo rate by 75 basis points in two steps and announced a 50 basis point increase in the cash reserve ratio (CRR) to 8.75 per cent. None of the analysts expected any change to the reverse repo rate, at which the central bank absorbs excess funds from the money market. It stands at 6.0 per cent, unchanged since July 2006.

Red more in The Economic Times article.

Rel Infra, China co in $3 bn deal

2008-07-28T16:45:00.002+05:30

Anil Ambani-controlled Reliance Infrastructure Ltd is joining hands with Shanghai Electric Power Co, China’s second biggest equipment manufacturer, to build power equipment in India.This will be the first time a domestic power utility is inking a power equipment-manufacturing joint venture with a Chinese company.

Under the JV, a facility with an initial capacity of up to 10,000 mw would be set up. This may be scaled up later. The facility is likely to go on stream by 2010.

The agreement, which is to be signed today, will see an investment of $3 billion. The JV would also offer third-party services, including engineering, procurement and construction work, to power companies. Shanghai Electric will offer technical and design support, operations and maintenance, setting up of power equipment and after-sales service as part of the third-party services.

Both Reliance and Shanghai Electric would hold 50% in the company.It would also cater to orders from abroad, especially from neighbouring countries.

NTPC plans 2,000 mw N-power unit

2008-07-28T16:43:00.001+05:30

Joining the growing list of companies trying to tap the opportunity that is bound to arise out of a possible Indo-US nuclear deal, NTPC has drawn up plans to enter nuclear power generation by setting up a 2,000 megawatt (mw) project.
In a report submitted to the Ministry of Power, NTPC, which has one-fourth of India’s installed power capacity, said it would operationalise the project within the next decade in two phases of 1,000 mw each.

The company has initiated discussions with the Atomic Energy Commission (AEC) for identifying nuclear fuel availability. Thereafter, NTPC would locate the nuclear plant.

RJ Corp takes 100% in ice-cream venture Cream Bell

2008-07-23T18:55:00.001+05:30

Having acquired part-owner CK Jaipuria’s share in Cream Bell,RJ Corp-owned Devyani Food Industries now control 100% of the entity.

The Cream Bell business is valued at around Rs 450-550 crore.The firm has subsequently multiplied about four-five times with capacity expansion and increase in Cream Bell’s market share.The historical valuation of Cream Bell, carried out by private investment firm International Finance Corporation (IFC) a year ago, was about Rs 120 crore.

The Cream Bell business was originally floated as Universal Dairy Products as a 50:50 venture between Ravi Jaipuria and his brother CK Jaipuria. But after mutual discussions, it was decided that CKJ exit this business. The process of the share transfer was kicked off some months back.

With the new plant set-up in Goa, Cream Bell will cater to the western and southern regions. Cream Bell has been till now largely focused in the northern region. The plant at Goa, the second for Cream Bell, is expected to have a capacity of 6-million litres. The existing plant in Baddi, also with a similar production capacity, caters to the northern markets. RJ Corp is hoping to leverage its bottling network in Goa to establish the ice-cream business in the region.

Read more in The Economic Times article.

India’s first silver ETF in the offing

2008-07-23T18:54:00.000+05:30

Benchmark Asset Management plans to launch India’s first exchange-traded fund (ETF) tracking silver as part of a strategy to expand its bouquet of passively managed funds.

Sebi regulations restrict mutual funds from investing in commodities other than gold. But they can invest in global funds tracking any commodity, a path that Benchmark hopes to follow. The fund house filed initial papers with the Sebi to launch Silver Benchmark Exchange-Traded Scheme, which will invest at least 90 per cent of its assets in units of overseas mutual funds tracking silver.

In February, Benchmark sought the regulator’s nod to launch four fund of funds that would mainly invest in foreign exchange-traded funds (ETFs) tracking clean energy, private equity, commodities and water indices.

RPL to start production ahead of schedule

2008-07-23T18:53:00.001+05:30

Reliance Petroleum Limited (RPL) on Tuesday said it would commission its refinery ahead of schedule. The company said nearly 94 per cent of the project has been completed.

RPL had raised Rs 8,100 crore from the primary market to part-finance the refinery with an annual capacity of 27 mmtpa (million metric tonnes per annum). The most of the remaining fund was borrowed while Chevron chipped in fund against its acquisition of a 5 per cent stake in the company.

Till June 30, the company has invested Rs 25,515 crore in the refinery. This is higher than the projected investment of Rs 24,125 crore as the company made an advance payment to the contractors in order to ensure speedy implementation of the project, the company informed the stock exchanges.

Tata Power acquires 26 pc in Bhutan hydro project

2008-07-22T14:06:00.000+05:30

Tata Power on Monday announced that it has acquired 26 per cent stake in 114 MW hydro-power project and will deliver the generated power at the India-Bhutan border.The company has bought 26 per cent stake in the project, while Tata Power trading has negotiated to purchase all the power generated from the project.

Tata Power has entered into a partnership with the Royal Government of Bhutan through Druk Green Power Corp (DGPC) for developing the said project.The project would be executed by the Special Purpose Vehicle Dagachhu Hydro Power Corp.
However, the financial details and the terms of the partnership were not disclosed.

The power is expected to be evacuated through the Tala Transmission Link into India's Eastern Region Grid.

Tata Comm readies $2bn capex

2008-07-21T17:15:00.001+05:30

Tata Communications, a global voice and data telecom provider with annual revenues of $2 billion, has identified ‘20 top emerging markets’ that will drive its next phase of growth. The firm earns two-third of its revenues from overseas businesses. In the last six years, it invested about $1 billion to fund acquisitions (Tele Globe, a stake in Tata Teleservices) and setting up of new submarine cable.

The growth strategy going forward revolves around regions where global multinational companies are setting up operations. That includes countries in Latin America, Africa and South East Asia and Central and Eastern Europe. VSNL will set up infrastructure that will support various telecom enterprise solutions, including tele-presence, manage data services, messaging etc.

Between 2009 and 2011, the company has charted a 12-15% compounded annual growth rate. This means, it will double its revenues to $4 billion and ebitda will grow 20% to about $800 million by 2011-12.Tata Communications, meanwhile, is also investing in a major way in India. It has earmarked a $2 billion capex over three years, its most ambitious plan in its history.For setting up fresh capacities in submarine cable undersea, the company will spend $500 million, Wimax for broadband connectivity for a captive market of 30 million potential subscribers will entail an expenditure of $500 million. Another billion dollars will go for setting up data centres and expansion of its fibre network.

Read more in The DNA Money article.

JP Morgan,Goldman Sachs propose to buy stake in GHC

2008-07-21T17:13:00.000+05:30

Private equity firms including J P Morgan and Goldman Sachs and telecom majors Nokia, Ericsson, Huawei and ZTE have proposed to pick up 22 per cent stake in Global Holding Corporation (GHC), which has two listed firms GTL Ltd and GTL Infrastructure and three unlisted entities.GHC has two other wholly-owned subsidiaries, Global Projects and Global Innovsource and 90 per cent stake in tower manufacturing arm Global Towers.

According to sources, in October last year, GHC diluted eight per cent stake for $150million to Technology Infrastructure, an offshore fund. Now it intends to dilute additional 22 per cent stake to raise around $700 million.

The market capitalisation of the two listed entities was $1.7 billion as on June 31, 2008. The Group recorded in excess of $600 million revenue last fiscal. The company had early this year said that promoters intend to dilute anywhere between nine to 30 per cent stake in GHC to raise $150-$500 million for increasing promoters stake in the listed firms.

GHC currently holds 44 per cent in GTL Ltd and 23 per cent in GTL Infrastructure. GTL Ltd in turn owns 41 per cent in GTL Infrastructure. GHC promoters have infused $101.76 million since March 2006 to enhance their stake in GTL Ltd through creeping acquisition from 26 per cent earlier. Promoters intend to increase GHCs stake in GTL Ltd to 69 per cent and to 51 per cent in GTL Infrastructure directly.

India's first cinema VC fund all set for debut

2008-06-03T15:38:00.003+05:30

Cinema Capital Venture Fund, (CCVF) reckoned to be India's first regulated entertainment venture capital fund, promises to provide the Indian investor a unique investment opportunity in the fast growing film entertainment sector.The fund will be launched shortly with a corpus of Rs 500-700 crore.

CCVF will be a close-ended fund and will look to invest in a broader spectrum of the entertainment industry and not restrict itself to financing just films.Ernst & Young, which has structured the deal is confident of the fund’s showing.

There are a couple of funds in the business such as The Indian Film Company, that raised $110 million from the Alternative Investment Market (AIM) of London Stock Exchange and Pyramid Saimira said to be raising a $150 million entertainment fund soon. Ranbaxy promoters led financial services business Religare Enterprises.

Read more in The Economic Times article.

Management issue may upset IFCI sale again

2008-06-02T15:38:00.006+05:30

On May 29, the board of IFCI announced that it would be making a second attempt to sell 26% in the term-lending institution. However lack of clarity on management control may once again dampen interest among investors who are seeking to bid for the strategic stake in IFCI.

Less than six months ago, IFCI was forced to call off its plans to sell stake after talks with Sterlite and Morgan Stanley — the consortium selected among bidders — failed. The bone of contention then was that of management control.

Sources said investors were unhappy with the uncertainty over management control. After having acquired 26% stake, the successful buyer would have had to make an open offer for 20%, which would raise their stake to 46% — making them majority shareholder. But even at this position, they were not guaranteed full management control.

Yet another bone of contention was the bonds worth Rs 923 crore held by the government. There is uncertainty on whether or not they would be converted into shares. A conversion of government stake would widen the equity base and bring down the stake held by the strategic investor.

Read more in The Economic Times article.

Related Stories:
IFCI to sell 26% stake to strategic investor
IFCI board may discuss stake sale on Apr 29
IFCI stake sale called off !