Britannia clears stock option plan

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

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

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

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

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

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

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

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

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

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%

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

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

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

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.