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.
Wednesday, December 3, 2008
Germany's MAN to be 50:50 partner in Force Motors JV
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.
Tuesday, December 2, 2008
Hedge funds lose $170 billion in third quarter
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.
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
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.
Monday, December 1, 2008
Actis to pump in $1 bn in India in 3-4 yrs
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.
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
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.
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
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.
$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.
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