Two years after it ended joint venture talks with the Bharti group, the UK’s largest retailer Tesco today announced it was going solo in the Rs 1,500-crore cash-and-carry sector in the country. The firm would invest nearly Rs 485 crore in the next two years. Tesco is also simultaneously signing an exclusive franchise agreement with Trent, the retailing arm of the Tatas. The agreement will give Trent’s hypermarket chain, Star Bazaar, access to Tesco’s supply chain, computer systems and inventory and infrastructure management. Trent will pay a “nominal fee” to Tesco for using its services.
Tesco unveiled its plan a year after Wal-Mart, the world’s biggest retailer, signed on Bharti for a wholesale joint venture. Wal-Mart and Bharti aim to have their first outlet in business by the end of this year to meet a goal of opening 10 to 15 wholesale stores in seven years. Tesco will set up its wholesale stores first in Mumbai and then in cities such as Delhi and Bangalore and use a “hub-and-spoke” model to expand its distribution network. However, Tesco will not supply to other hypermarkets apart from Trent.
Trent currently has four hypermarkets — larger version of supermarkets — with plans to grow to 50 stores over the next five years. In September 2007, Trent inked a deal with Benetton of Italy, under which Trent would be the exclusive franchisee for one of Benetton’s premium brands Sisley. Sisley has seven stores in the country. For Trent, which also runs Westside, an apparel chain, and Landmark Books and Music, the tie-up is expected to boost the expansion plans of Star Bazaar. For Tesco, the entry is expected to add to its existing sourcing capabilities in the country. Tesco already sources over £170 million worth of Indian products each year, with sourcing offices in Delhi, Bangalore and Tirupur. It also employs nearly 3,000 Indian staff at its Hindustan Service centre in Bangalore, providing IT, financial and business services to the entire Tesco group.
The UK company has shops in emerging markets from Turkey to Malaysia and generates more than 25 percent of sales outside Britain. Trent surged Rs 41.95, or 8.4 per cent, to Rs 541.20 on the Bombay Stock Exchange today. The gain was the biggest in more than seven months. Tesco shares also rose in London. Germany’s retail giant Metro has opened its wholesale store in Bangalore and Mumbai and announced other stores in the north and eastern parts of the country. Carrefour, the world’s second-largest retailer based in France, is also planning its Indian foray in 2009 from metros such as New Delhi, Mumbai, Bangalore and Chennai.
Carrefour is said to be talking to many Indian companies, including Delhi-based Parsvnath, and is expected to announce a tie-up soon. The sector has seen the entry of domestic retailers such as Future Group, Reliance, Wadhawan Group among others, in recent times.
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Crude oil was little changed as Russia called off military action in Georgia and the dollar dropped from a 5 1/2-month high against the euro, curbing the appeal of commodities as an inflation hedge. Crude oil for September delivery fell to $112.31 a barrel on the New York Mercantile Exchange at the time of going to the Press. Futures touched $112.48 earlier on Tuesday, the lowest since May 2. Prices are up 60 per cent from a year ago.
Prices rebounded after Russian President Dmitry Medvedev announced the end to the five-day offensive in Georgia, a country that connects the oil-rich Caspian Sea region with world markets. BP stopped pumping oil into a pipeline from Azerbaijan to the Black Sea coast because of concern over security. The dollar declined 0.1 per cent to $1.4923 per euro at 9:02 am in New York, from $1.4909 yesterday. It touched $1.4816, the strongest since February 26.
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Reliance Communications expected to start nationwide commercial operations of its DTH service from August 15. ‘Big Digital TV DTH’, a subsidiary of RCOM, is betting big on the huge potential of home entertainment in the Indian households. It is estimated that India has over 124 million TV households, with roughly 80 million using the conventional cable delivery platform.
DTH operators in the country, Tata Sky, DishTV and Sun are estimated to have a user base of around 7-8 million. Big Digital TV DTH would announce its tariff plans in the next few days before the launch of services. When contacted company spokesperson refused to comment. Sources, however, said Big Digital TV DTH would unleash an aggressive launch plan with an aim to become the largest DTH operator in the country in the first year of operation.
The company is believed to have placed order for 5 million Set Top Boxes with Korean and Taiwanese vendors to meet its requirements in the first year, they said, adding Big Digital TV is targeting to capture a substantial share of the DTH market that is projected to cross 25-million user base in the next three years. The company has already completed trial runs across 2,400 towns and the service is currently available for customers of other Reliance ADAG group companies for Rs 1,000.
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The rupee closed about 13 paise lower against the dollar due to dollar buying by oil companies and news of Iran going ahead with its nuclear programme. The rupee opened at 42.45/46 and touched a high of 42.34. However, following this, the rupee moved down continuously and closed at 42.48/49, lower from the previous close of 42.35/36.
A forex dealer with a public sector bank said that there was heavy demand from oil companies. The stock market going into negative territory for some part of the day also resulted in dollar buying, he added. The rupee’s movement will track the oil price and is unlikely to cross 42.25, the dealer said. The forward premia also moved lower with the six-month closing at 4.22 per cent (4.6 per cent) and the 12-month closing at 3.54 per cent (3.88 per cent).
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Aditya Birla Nuvo reported a 130 per cent dip in its consolidated net profit for the quarter ended June 30, 2008, mostly on account of higher losses in its life insurance business and investments in its BPO and garment retail businesses. The company reported a consolidated net loss of Rs 28.3 crore during the quarter, as against a profit of Rs 94.7 crore in the corresponding period last fiscal.
Its life insurance business reported a net loss of Rs 146.8 crore during the quarter from Rs 33.6 crore in the year-ago period, which was largely due to the growing share of new business premium. “The new business is fully profitable – however, income from it will accrue over the policy period, as is the case with the nature of this business. Higher spends on intensification of distribution network also affected profitability,” the company said.
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NTPC Ltd, Asian Development Bank (ADB), GE Energy Financial Services, Kyushu Electric Power Co and Brookfield Renewable Power will form a joint venture company to undertake renewable power generation.
The companies on Tuesday signed a Memorandum of Understanding (MoU) to form a joint venture company for generating renewable power. NTPC would hold a 40 per cent stake in the company while the remaining would be equally shared by other entities. The joi nt venture company would develop greenfield and under-utilised potential sites to establish 500 MW of renewable power generation sources in the country.
The company would seek to develop projects in the country and may consider investing abroad in the near future. Initially, the company would concentrate on wind power, mini and micro-hydro electric power. The Chairman of the joint venture entity would b e nominated by NTPC.
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On 29 July 2008, the Reserve Bank of India increased the repo rate by 50 basis points to 9 per cent. It also hiked the cash reserve ratio (CRR) by 25 basis points to 9 per cent beginning 30 August 2008.
While the repo rate hike is expected to make overnight funds costlier for banks, the CRR hike is expected to marginally reduce the lendable funds of banks.
Banks are aggressively using the repo facility of the RBI since the beginning of July. They borrowed almost Rs.38,900 crore per day from the RBI through its liquidity adjustment facility. Therefore the hike in the repo rate by the RBI will surely put some pressure on the cost of funds of banks.
The 25 basis points hike in the cash reserve ratio will suck out about Rs.8,000-8,500 crore of liquidity from the banking system. This will reduce the lendable resources of banks and, coupled with the repo rate hike, will bring the net interest margins of banks a bit under pressure.
Surplus liquidity in the banking system stood at a robust Rs.1,37,215 lakh crore as on 18 July 2008. About Rs.1,30,000 of this surplus liquidity comprises long term securities issued under the market stabilisation scheme. None of these securities are maturing before April 2009.
In this context, it may be noted that demand for credit remains high with credit growth well outpacing deposit growth. SCB credit is growing at around 25-26 per cent while SCB deposits are growing by around 21-22 per cent. According the disaggregated data from the monetary authority's quarterly review, growth in credit to industry accelerated further from 26.4 per cent a year ago to 26.9 per cent as on 23 May 2008. Growth in credit to small scale industries accelerated sharply from 29.5 per cent to 52.1 per cent during this period. However, the continuous rise in interest rates over the past one year did take its toll on personal loans. Growth in personal loans slowed from 23.9 per cent a year ago to 15.9 per cent as on 23 May 2008.
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TATA Steel Limited has announced the following audited results for the year ended March 31st 2008
TATA Steel has posted a net profit of INR 46870.30 million for the year ended March 31st 2008 up by 11% YoY as compared to INR 42221.50 million for the year ended March 31st 2007. Total income has increased from INR 179847.60 million for the year ended March 31st 2007 to INR 200282.80 million for the year ended March 31st 2008, registering a growth of 11.3% YoY.
The consolidated results are as follows
TATA Steel has posted a profit after minority interest & share of profits of associates of INR 123499.80 million for the year ended March 31st 2008 up by 195.6% YoY as compared to INR 41772.70 million for the year ended March 31st 2007. Total income has increased from INR 256504.50 million for the year ended March 31st 2007 to INR 1321100.90 million for the year ended March 31st 2008, registering a growth of 415% YoY.
Addressing the media, Mr B Muthuraman MD of TATA Steel said that the TATA Steel group vision was to set a global benchmark in value creation and to increase the return on capital invested to 30% by 2012. He added that "Our aspiration in due course is to become a 50 million tonne plus steel company. Our bearings and tubular divisions are working on products for the TATA Nano."
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Here follows the commercial & technical aspects relating to this AgreementWhat is 123 Agreement?
This is called 123 Agreement because this comes under USA's Atomic Power Act Section 123.Let's see how India's (Indians?) Sovereinty & Independence are pledged..
(1) After this Agreement USA will supply all fuel, machinery / equipment & technology to India for producing Nuclear Power.
(2) India currently produces power from 22 Nuclear Power Plants. It's a top secret as of now that from where which is produced, how much is produced, where it issupplied, what research is being done with that, etc. But... if we sign this Agreement, we have to disclose these secrets and also agree to 14 of our Nuclear Power Plants to be under the scanner of International Atomic Power Organisation.
(3) The fuel utilised to produce Atomic Power can be recycled for reuse and this recycling plant will also be under the direct supervision of IAPO.If India does nuclear test, this agreement gets cancelled. But not so easy!!
* USA will take back all the machinery / equipments / technology supplied to India thus far.
* Those 14 plants will continue to be under scanner irrespective of the status of the agreement.
* On the other hand, if any of the commitments given by USA is breached by them, then there is no clause for cancelling this agreement.
The agreement is apparently like this... USA can either hug India or slap India. India will not ask why are we hugged or why are we slapped.On the other hand, India cannot hug or slap USA for breach of agreement.
This is only in its capsule form so that it is easy to read and digest.
Subject: India Pledged.... Part 2
Requirement of PowerThe most important requirement for India's Economic Growth in the coming years will be the power & infrastructure. The argument put forth favouring the 123 Agreement says that we need Nuclear Power Production to be increased to meet the demand.Power Production in IndiaPresently following are the figures:
Thermal Power 66%
Hydel Power 26%
Solar & Wind Power 5% -
Presently Rs.600 Crores are spent for producing this power.
Nuclear Power 3% -
If this is to be increased to 6%, it requires additional Rs.50,000 Crores.
Naturally it will be wise to increase other 3 modes of power production rather than the expensive & dangerous Nuclear Power.
Why dangerous?
Whether power is produced or Bomb is produced, using Atomic power without spoiling the infrastructure and without allowing the radiation is always under threat. Moreover preserving the wastes coming out of Atomic Power Plants is expensive & unsafe. There was an accident in Three Miles Island in USA. To close this plant nearly USD 200 Crores spent with tons & tons of concrete but yet to be fully closed. In an another accident at Soviet Union's Serbia Plant, even the next generation children are affected due to the radiation. It will be very very expensive to defuse & close down an Atomic Power Plant than its construction cost.
URANIUM
We used to import Uranium from various other countries. After the Pokhran Test, we are not getting it. To augment the supply, we need to sign the 123 Agreement to get Uranium from USA. But we will have to declare to USA from which power plant India takes raw material for producing Atom Bomb. Other study reveals that Uranium is available in India in plenty. Only hurdle is the acquisition of land. To produce Atomic Power & Bomb in the next 40 years, the requirement of Uranium is 25,000 MT whereas the availability is 78,000 MT across India.
PLUTONIUM
Presently 35% of Plutonium is used to produce Atomic Bombs. After signing the Agreement, we will be allowed to use only 10%. Signing the agreement will enable them to restrict the usage of our natural resources!! That is though you are capable of cooking & eating 10 idlis as your breakfast, you are allowed only 3 idlis henceforth.THORIUMAs told by Dr.APJ Abdul Kalam, we have abundant Thorium. In fact we are the 2nd largest producer of Thorium next only to Australia. India has to explore this further for producing power. For your information, in South India - particularly around Kanyakumari, the availability of Thorium is abundant.INDIA-IRAN-CHINAUSA does not like the amicable relationship between India-Iran and also India-China. If India-China relationship gets stronger, then both these can rule the Eastern Part of the Globe, which USA wants to break as per the old divide & rule.By signing this agreement, USA wants India to depend on it for producing power which is going to be a crucial factor in future. There is a talk of bringing Natural Gas from Iran to India with a big pipeline project. USA doesn't like this proposal.FranceFrance has got 56 Nuclear Power stations producing 73% of the country's total power requirement. They are catching up the problem of eliminating the wastes / emissions from out of those plants at the same time increase the power production capacity. Government of France is now thinking how to reduce the power consumption in the country.ConclusionIn view of the above danger, rather than signing the agreement and pledging India to USA, it will be prudent to increase the Solar & Wind Energy and more importantly Hyder Power Production can be increased by linking all rivers across India and by constructing DAMS.The whole process of this Agreement started in the year 2005 when Manmohan visited USA. In a span of just 2 years a major decision of signing this agreement has taken place with political motive. On the contrary, neither this Government nor any other earlier Central Government could not amend the Constitution thereby nationalise the rivers across the country thereby effectively utilise the water resources for both Agriculture purpose and producing Hydel Power.
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Ranbaxy Laboratories gained over 3 per cent after the pharmaceutical major announced the launch of a generic version of an ulcer pill Prilosec in the United States under an agreement with AstraZeneca. Omeprazole is the generic name of Prilosec. Prilosec 40 mg had sales of $204.2 million in the US market, Ranbaxy said in a statement citing IMS March 2008 data.
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Oil prices rise due to Anglo-Dutch energy giant Royal Dutch Shell cut output in Nigeria after militants sabotaged at least one of its pipelines supplying crude. Prices also climbed as the market tracked developments over a disputed nuclear programme being run by Iran, a major exporter of oil. Brent North Sea crude for September delivery climbed 42 cents to $124.94 a barrel, though off earlier highs of above $126 as profit-taking set in. New York's main contract, light sweet crude for September, advanced by 36 cents to $123.62 a barrel.
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Larsen & Toubro net profit rise up to 5 per cent after the capital goods major posted a 33 per cent rise in quarterly net profit, beating forecasts, helped by strong demand from the engineering and construction sector. Larsen & Toubro has been riding a construction boom as the country revamps crumbling infrastructure such as airports, roads, ports and power plants. L&T, which has operations ranging from manufacturing to software services, reported a net profit of Rs 502 crore in the fiscal first quarter ended June, compared with Rs 377 crore reported a year ago.
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The Sensex is likely to close below 14,000 and Nifty should breach the 4,300 mark before the expiry of the derivatives contract. Recent records suggest that indices close below their previous month’s levels on the derivatives expiry date if the preceding Friday witnesses bearish sentiment, as was the case today. Profit-booking dragged the benchmark indices near its support level of 4,300 today.
There was call selling at 4300 and 4400 strike prices and put buying at the strike price of 4400. The benchmark indices are unlikely to maintain those levels as the options traders are willing to pay a premium for in-the-money call and at-the-money put options.There was net buying in index futures and net sales in index options on July 24, going by the derivatives trading data for the day. The FIIs wrote calls at 4300 and 4400 strike prices and bought puts at the strike price of 4400.
The Nifty is likely to find support between 4200 and 4300. The put call ratio (PCR) at the strike price of 4200 is 2:1, while the PCR at the 4300 strike price is 1:1, suggesting support at these levels.The Nifty July and August futures contracts closed at a premium, indicating long rollovers at lower levels. The intra-day short positions in Nifty July futures were squared off and rollovers in August futures came down by 0.5 million shares in the after-trade session. With the July futures to expire in four days, the Nifty August futures witnessed an open interest build-up of 9.5 million shares. This is marginally higher from 9.1 million shares seen during the same time last month.
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Trades between FIIs generated a volume of Rs 111 crore on the BSE Friday-an increase of 68.12% from Rs 66 crore clocked on Thursday. As many as 7 stocks witnessed trades of 12 lakh shares on Friday.
Oriental Bank of Commerce was traded at highest premium of 3.48% on BSE with 62,900 shares changing hands at Rs 163.50 as against the spot price of Rs 158. Grasim Industries was traded at second highest premium of 3.10% on the BSE with 60,729 shares changing hands at Rs 1,900 as against the spot price of Rs 1,842.95.
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IDBI Bank today reported a 4 per cent rise in net profit to Rs 160 crore for the first quarter this year as against Rs 153 crore during the previous comparable period. The total income for the reporting quarter rose 24.94 per cent to Rs 2,740 crore from Rs 2,193 crore in the first quarter of 2007-08. Interest income grew 34.85 per cent to Rs 2,418 crore during the quarter ended June 2008, compared to Rs 1,793 crore the first quarter last year.
Interest expenses too grew at around the same pace, rising 34.45 per cent to Rs 2,326 crore. The bank's net interest income was up by 31 per cent at Rs 92 crore. While other banks are reporting a steep rise in provisions mainly for mark-to-market losses on their investment portfolio, IDBI Bank said that provisions and contingencies fell 76.81 per cent to Rs 19.88 crore during the first quarter of the current financial year, compared to Rs 85.73 crore during the corresponding period last year. It, however, reported a loss of Rs 34 crore on treasury operations, compared to a profit of Rs 85.73 crore.
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Reliance Industries Ltd (RIL) has reported a 13 per cent increase in net profit for the first quarter ended June 2008, as it was able to sell its products at higher prices and also because of doubling of export sales.
The Mukesh Ambani-owned flagship firm has reported a net profit of Rs 4,110 crore or earnings per share (EPS) of Rs 28.3 for the quarter ended June 2008, against Rs 3,630 crore, or EPS of Rs 25, in the year-ago period. Turnover in the first quarter of fiscal 2009 increased 41 per cent to touch Rs 41,805 crore against Rs 29,721 crore in April-June 2007.
Nearly 95 per cent of the increase in turnover was due to increase in prices, with volume increases accounting for the rest, said a press release from the company. One of the primary reasons it was able to export more was due to the company's decision to shut down 1,432 petrol pumps it owned in India after it could not compete with state-owned oil marketing companies supported by government subsidy.
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Reliance Natural Resources Ltd (RNRL)'s a net profit of Rs 16 crore for the first quarter ended June 30, a 6.67 per cent growth from that in the corresponding period a year-ago. The firm had a net profit of Rs 15 crore in the first quarter of FY'08, RNRL said in a filing to the Bombay Stock Exchange. The total income rose 42 per cent to Rs 93 crore in the latest quarter, from Rs 65 crore in the same period last fiscal. However, the company's cash profit dipped by Rs 1 crore to Rs 16 crore during the quarter.
Reliance Natural Resources Ltd (RNRL)'s net worth stood at Rs 1,746 crore, while the earnings per share was at Rs 0.10 per piece, the filing added. The board has appointed Mr Anil Singhvi as an additional Director and Vice-Chairman of the company, the filing said.Shares of RNRL closed at Rs 95.50, down 3.34 per cent on the BSE.
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India's annual inflation rate is expected to have risen to 11.63 per cent in the week ended June 21, Indian media said on Friday.This would put the wholesale price index at 237.1 points, up from 236.1 points a week earlier.
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The government has rolled out an expanded farm debt waiver scheme, which will cost the exchequer a whopping Rs 71,600 crore, 20% higher than the initial estimate of Rs 60,000 crore. The scheme will now include more than four crore farmers and will also cover those with land holdings in excess of two hectares.
The expanded loan waiver scheme, which was announced in the Union Budget 2008-09, will now include farmers engaged in allied activities such as poultry, dairy farming. Direct agricultural loans taken under a Kisan Credit Card, as well as loans of self-help and joint-liability groups would also be covered. Farmers in drought-prone areas covered under the Prime Minister’s relief plan have also been included in the scheme. While small and marginal farmers are eligible for debt waiver, others are eligible for a one-time settlement (OTS) scheme. The government has also decided to waive off restructured loans, including those under the Vidharba package and calamity relief, whether or not they were overdue.
In a separate development, RBI has asked banks to take necessary steps to complete the debt waiver scheme by June 30.
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Reliance Communications (RCOM) is all set to acquire UK-based global mobile virtual network operator (MVNO) Vanco. According to sources, RCOM is learnt to have emerged as the highest bidder and both the companies have already finalised 100% buyout deal, in which, RCOM may also take over Vanco’s £123-million debt. Earlier this month its CEO and founder Allen Timpany parted ways with the company, after it came out with a major profit warning, it was put on the block. Trading in the shares was also suspended earlier this month. RCOM will have to pay a very small sum for the troubled telco, which was at its peak (about two years ago) and had a market cap of close to $800 million. The deal is likely to be inked today, sources added. Like in earlier acquisitions, RCOM is expected to retain the workforce including the top management of Vanco.
Vanco is among the leading MVNOs in the world with its services available in over 200 countries.
An MVNO does not own any network assets, but leases infrastructure and bandwidth from others to serve its customers. This acquisition would bring under RCOM’s fold a virtual network in 230 countries across the world with over 800 new product offerings that Vanco has developed over the last 20 years. The ailing telco also has over $650 million worth of secure long-term contracts from its customers that would be accrued over the next 3-5 years.
With Vanco’s business model revolving around virtual networks, RCOM would be able to cut significant costs through routing the traffic on its own network which will result in considerable enhancement in EBIDTA of its global business, which has been looking towards forging alliances with regional and domestic carriers. Vanco has alliances with 700 carriers across the world. The acquisition is also in line with RCom's strategy of becoming one of the world's top five data communications players.
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As global auto majors go for more intelligent cars, the benefits are being reaped back in India by Tata Elxsi, which has the automobile sector as a key vertical in its product design services domain. The research and development of a number of path-breaking features that mark new vehicles are being developed at the company’s development centres, which presently have staff strength of roughly 700. Typically, the high-end cars of the world have as many as 70 little computers, or electronic control units (ECUs), which also mean that about 60% of the cost of automobiles are contributed by the electronics that they feature. This is in contrast to 10 ECUs in high end Indian cars at present.
The company is engaged in some of the cutting-edge work including bending the beam of vehicle lights while taking curves, night vision, elevating or dipping the beam as required and adaptive front lighting system (AFLS) which enabled drivers to prevent light from vehicles coming in the opposite direction blinding them temporarily. Some of the product designs undergoing development included censors that would automatically measure body temperature and pulse of the driver and accordingly adjust air-conditioning in the vehicle, adjust air-conditioning levels according to personal comfort levels of each passenger, and airbags that would open to the levels required for passengers of different weights.
Tata Elxsi has seven global development centers in the country, besides one centre in Japan. The centre here is targeted to have strength of 2,000 software professionals within the next two years. The increasing electronics constituent in automobiles means more business for Tata Elxsi, which has a strong presence in the automobile vertical.
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RCom is believed to have initiated talks with MTN Group, South Africa's largest telecom operator, even as Bharti Airtel decided to pull out of the negotiations citing differences with the management. Reliance is among the four telcom companies that have shown an interest in MTN. Russian telcom company Vimpel Communications, European major Deutsche Telecom and UAE telecom giant Etisalat are the other suitors that have announced their interest in bidding for the South African company. This is the second attempt by RCom to acquire MTN Group. RCom Chairman Anil Ambani had met Nhleko last year, but the talks were not successful.
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Housing Development and Infrastructure Ltd (HDIL), India’s third-largest realty player, is diversifying into the oil and gas sector. The company will bid for 10 of the 57 hydrocarbon blocks on offer in the seventh round of the New Exploration Licensing Policy (Nelp VII). The gambit is to offset softening growth in the real estate sector. HDIL is likely to bid with a foreign partner as it lacks the experience in oil exploration. However this was not confirmed by the management.
Meanwhile, as part of its airport slum rehabilitation project, HDIL has acquired 110 acres of the 170 acres that it needs to relocate 85,000 families. The average cost of the acquisition is Rs 22 crore per acre. The acquisition includes 53 acres in Kurla, where the Premier Automobiles car factory was once located. IL&FS sold the land for Rs 1,900 crore.
HDIL is expected to relocate 20,000 families to this place in the first phase of the rehab project. HDIL’s airport project is moving on schedule. This can unlock a lot of capital in the next two years. The company will get around Rs 10,000 crores from the project. HDIL’s current revenues are around Rs 17,000 crore, with a net profit of around Rs 1,301 crore.
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In a boost to the domestic tea vending industry, the Government has allowed export-oriented units (EoUs) to sell more ‘instant tea’ in the domestic market to meet the growing demand in the country. There is a strong demand for instant tea due to increased consumer preference for convenient, instant food and beverage products.
The Commerce Ministry has now increased the cap on EoU sales of ‘instant tea’ in the domestic tariff area (DTA) from the existing 20 per cent of free-on-board value of exports to 30 per cent. This will improve availability of ‘instant tea’ for tea vending industry, which has been importing (instant tea) from Sri Lanka and other foreign markets, say industry players. The domestic tea vending industry, valued at about Rs 400 crore, has been growing at 35 per cent compounded annual growth rate (CAGR) in the recent years, say industry observers.
This is a progressive welcome step. The cap should have been raised to 50 per cent as available for a number of products. Generally at present, EoUs are permitted to sell up to 50 per cent of their free-on-board (f.o.b.) value of exports in the DTA. Government has taken this supply side measure to control domestic inflation in food and food products. This will give Tea companies the flexibility in selling its products in the market which fetches highest price.
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State-run Bharat Heavy Electricals Ltd (BHEL) has bagged a Rs 1,150 crore turnkey contract for setting up an energy-efficient 153-MW captive power plant at the upcoming Guru Gobind Singh Refinery at Bhatinda in Punjab. The Rs 1,150 crore order has been placed on the company by HMEL, a joint venture of HPCL and Mittal Energy Ltd.
The company won the contract under international competitive bidding (ICB). The designing, engineering, manufacturing, supply, erection and commissioning work of the captive power plant in addition to complete civil works would be done by BHEL. The 153-MW gas turbine-based combined cycle power plant to be commissioned in a period of 30 months would meet the power and process steam requirement of the upcoming refinery.
The equipments for the project would be supplied by BHEL’s plants in Tiruchi, Ranipet, Bhopal, Jhansi and the Electronics Division in Bangalore. The civil works, erection and commissioning of the plant would be carried out by BHEL’s Power Sector-Northern Region. BHEL has so far supplied and commissioned more than 700 steam turbine and gas turbine-based plant for industries such as metal, paper, sugar, cement and process industries like refineries, petrochemicals, fertiliser in both domestic and overseas market.
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RIL is set to be the first oil and gas private major to develop an oil and gas market in the country. It will be inviting price quotes from oil refining companies. This would also set the first benchmark for market-driven prices in the crude oil sector. RIL has had initial round of talks with refinery companies such as Hindustan Petroleum Corp for its Vizag refinery, Mangalore Refinery & Petrochemicals and Chennai Petroleum Corp, to name a few.
RIL would float the tender in a few days when the company would set an indicative benchmarked price based on the quality of the crude. Initial tests have shown the crude to be sweet and light in nature, which is a premium crude. Refinery companies bidding for the crude oil will have to quote a price that is a discount or a premium to the indicative price. Although a final decision is yet to be taken, RIL which has two refineries, including the one being developed by Reliance Petroleum will not bid for the crude. This is aimed at keeping the price discovery process as fair and transparent as possible.
The company is planning to produce 40,000 barrels of oil from the MA field, which is a part of RIL’s D6 block. The government has approved $2.2-billion field development plan (FDP) of the MA field. The production is likely to commence in the second half of 2008.
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India's largest bank State Bank of India revised upwards interest rates on deposits of two years and more with effect from June 1. The deposits for the duration - two years to less than three years will now earn an interest of 8.75 per cent. Also, interest rate on deposits of three years to less than five years has been increased to 8.85 per cent from 8.5 per cent. Interest rates on deposits of five years and up to 10 years will be 9 per cent as against 8.5 per cent at present.
For senior citizens, the deposit of two years and up to 10 years has been bifurcated into two categories of deposits of three years to less than five years and 5 years to 10 years. The interest rates on the new buckets will be 9.35 per cent and 9.5 per cent as against 9 per cent earlier. Interest rates on senior citizen deposits of one year to less than two years will continue to be 9.25 per cent.
The counter-intuitive move to offer higher deposit rates, and crunch its spreads in times of dormant credit off take and rising inflation was not expected at this moment. However, long term loans are seeing growth as there is demand of loans from infrastructure projects, and to manage these, the bank may have hiked deposit rates.
However, SBI says that their move to raise rates is to realign them with that offered by the peers. Besides, the bank is looking at raising long term loans in the early part of the year in order to reduce any pressure on deposit mobilisation at the end of the year. It may also be recalled that SBI had decided to increase its market share in deposit market by 0.25% every quarter.
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Reliance Communications, is gearing up to launch videoconferencing services across 1,100 cities in 113 countries, including the US, Europe, Japan and Middle East nations. The company has also initiated talks with global telecom operators to set up backbones and provide bandwidth for the operations.
The company planning its global videoconferencing foray through its 100% subsidiary Reliance Globalcom, which already has Internet protocol-enabled optical fibre network across the globe. The company is looking at hosting over 2 million simultaneous videoconferences across 70 countries covering 6 continents. RCom, which is already providing videoconferencing services in over 105 cities in the country, is also expanding its presence. The group had earlier entered into tie-ups with over 1,000 corporates, who are using the facility from Reliance World Stores. The company is also providing managed videoconferencing services to customers in the country.
The fast growing global potential of videoconference services provides interesting opportunities to expand its service portfolio using the fully-IP enabled 65,000 fibre Kms undersea cable network connecting 40 top business centers of the world. The present size of global videoconferencing industry is estimated to be around $11 billion (Rs 44,000 crore). In India, the videoconferencing market is growing at over 50 per cent on a year-on-year basis.
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Homegrown pharma major Ranbaxy Laboratories Ltd has commenced Yemen operations in collaboration with local Pharma Ltd. With this it has strengthened its presence in the Middle-East. Ranbaxy has now become the first Indian pharma company to have a strong presence in the Middle-East with operations in 11 countries.
The company has a strong productline with over 160 approvals so far in Yemen. It has commenced operation by introducing products to more than 350 doctors in the country. Ranbaxy would focus more on therapeutic areas such as anti-infectives, gastro-intestine, cholesterol lowering and anti-allergic in the country. It has also become the first company to be registered in Saudi Arabia and to receive the centralised GCC registration.
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GMR Infrastructure has posted 129% growth in net profit after tax and minority interest at Rs 50.0 crore for the quarter ended March 31, 2008 as compared to Rs 21.9 crore for the quarter ended March 31, 2007. Net Revenues have increased 43% from Rs 619.6 crore for the quarter ended March 31, 2007 to Rs 885.3 crore for the quarter ended March 31, 2008.
For the year ended March 31, 2008, the company has posted a jump of 20% in net profit after tax and minority interest at Rs 210.1 crore for the year ended March 31, 2008 as compared to Rs 174.4 crore for the year ended March 31, 2007. Net Revenues have increased from Rs 1,696.7 crore for the year ended March 31, 2007 to Rs 2,294.8 crore for the year ended March 31, 2008.
GMR Infrastructure plans to invest Rs 2,400 crore this fiscal in various road projects. The company expects to commission four important road projects - two in Andhra Pradesh, one in Tamil Nadu and one in Ambala, by the end of the year.
Further GMR Infrastructure’s unit GMR Energy Ltd has acquired a 5% stake in South Africa’s Homeland Mining and Energy SA (Pty) Ltd, a unit of Canada’s Homeland Energy Group Ltd. It also has an option to buy additional 45% stake in the company.
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Bharti Airtel has signed a $35 million, three-year outsourcing agreement with BPO services provider Firstsource Solutions, which will offer both voice and backoffice services in areas such as customer accounting, VAS provisioning, fraud and credit monitoring, customer service, collections and customer retention to Airtel. While company officials declined to provide financial details, sources said the deal was valued at around $35 million.
In August 2005, Bharti had announced a Rs 1,000-crore deal with BPO firms IBM Daksh, MphasiS, TeleTech and Hinduja TMT to outsource its call centre operations. The Firstsource deal is another instance of the company's strategy to focus on its core areas of product innovation, marketing, brand building. Airtel has already outsourced its IT requirements to IBM and cellular networking operations of Nokia and Ericsson. However, the contract with Firstsource is more comprehensive as it includes mobile collection, welcome calling, VAS provisioning besides other services.
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Dr Reddy’s Laboratories (DRL) suffered a 68% fall in Q4 net profit ended March 2008, after writing down the intangible value of the products of its buyouts in Mexico and Germany, besides products in Spain. Fall in the revenues from generic drugs and pricing pressures from the US and Germany also pulled down revenues for the quarter by 15% year on year.
Net profit fell to Rs 102.8 crore in Q4FY08 from Rs 325.2 crore in the corresponding period of FY07 when it was aided by 180-day exclusivity for the generic version of a drug Zofran. In the period under review, revenues dropped to Rs 1,325.2 crore from Rs 1,557.3 crore. DRL is targeting a revenue growth of 25% in this fiscal. The focus will be to strengthen its global generics business in US and Europe, to build on the momentum in Active Pharma Ingredients and Organic Custom Pharma Services (CPS) business, and accelerate pipeline development and infrastructure in the innovation business.
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Rcom has announced the roadmap for launching competitively priced direct-to-home (DTH) services in 4,000 towns in the next few weeks. The company has already completed trial runs across 2,400 towns and the service, under the brand name, Big TV DTH. The service is currently available for customers of other DTH operators for just Rs 1,000 as compared to nearly Rs 4,000 being charged by existing DTH operators.
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In what could mark its foray into the real estate and hospitality sectors, Reliance Industries has sealed a $1-billion joint venture with the New York Stock Exchange-listed Vornado Realty Trust to set up a real estate fund that will develop a network of mega malls and highway shopping centres in India, not just for Reliance Retail (RRL) but also others. The joint venture with Vornado is Reliance’s fifth global partnership in three monthsthe other four being with Marks & Spencer, Vision Express, Miss Sixty and Office Depot. However, the latest partnership is important as it would deal with real estate acquisition and management, which is crucial for the viability of any retail company.
Reliance, which was averse to global partnerships in the past, has now adopted a more pragmatic approach to form joint ventures with the world’s best to capitalise on their domain expertise and brand power. Since the group is a green horn in retail and has never dealt with a consumer business on such a large scale, it wants to learn the systems and processes from experienced global companies so that it can apply them on its own retail venture. So, Reliance didn’t think too much when it had to relent majority control to global apparel and food company Marks & Spencer. Even in its JV with Vornado, Reliance may be a minority player, but the shareholding structure could not be confirmed.
Now the real estate assets of Reliance Retail will be parked with this realty fund, thus transferring a high cost base from the retail company’s balance sheet. With this, the fund becomes the official real estate supplier to RRL. Vornado, the $14-billion market cap company, develops and manages retail properties and office spaces in Washington and New York. In India, it is likely to give the much-needed push to RRL’s expansion plans, which have slowed down in recent months. It will also develop seamless malls, which will house global brands with which RRL is signing up joint ventures.
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Rcom may further dilute ~5% of Reliance Infratel through its subsidiary Reliance telecommunications infrastructure Ltd or Reliance telecom infrastructure holdings Ltd. in pre-IPO placement to a clutch of American and European investors, a deal that values the company at nearly Rs 50,000 crore, according to sources. The earlier 5% stake dilution that Reliance Infratel had made, valued the company at nearly Rs 28,000 crore. Earlier last week, Sebi cleared the initial public offering of Reliance Infratel.
Reliance Infratel, the telecom infrastructure division of Reliance Communications, would offer 10% equity to the public valued at Rs 5,000-6,000 crore. The issue proceeds are proposed to be utilised towards funding development of passive infrastructure and general corporate purposes. The re-rating in the valuation of Reliance Infratel should get reflected in the valuation of Reliance Communications going forward.
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In what is seen as one of the most significant milestones in its history, Bartronics India Ltd, a leading provider of solutions based on ATDC technologies in India, has emerged as the lowest bidder in the Bhamashah Financial Empowerment Scheme of Rajasthan Government. The bids for which were opened on May 16.
Under the scheme, the government intends covering about 50 lakh families through biometrically identifiable smart cards, and provides them financial relief. The project valued at about Rs 150 crore is one in a series of financial inclusion initiatives announced by the Finance Minister during his recent budget speech. Similar initiatives are underway in West Bengal, Bihar and some other states across the country.
While the confirmation of this order is awaited, this is seen as a major breakthrough as far as government projects are concerned. Apart from the financial inclusion project, we expect the demand to pick up further with smart cards expected to be used for variety of other applications namely driving licenses; transport application cards e.g. railway cards, PDS cards (Ration cards), MNIC (multi-purpose national ID Cards) & banking cards. With the company having garnered a major market share in the smart cards segment, BIL stands the biggest beneficiary in terms of awarding of these contracts.
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Shipping companies world over are looking to diversify to hedge against the cyclicality of their core business. But Mercator Lines has taken a deeper path into coal mining. The country’s second-largest private sector shipping company has entered the business through its second subsidiary in Singapore. It has secured mining licences for two coal blocks in Indonesia and one in Mozambique.
Mercator has secured 50% rights in two coal blocks in Indonesia, which have reserves of 15 million tonnes of decent to good quality coal. The company would start production of coal in July this year and expects the two mines to contribute one million tonne of coal in the first year. However, the coal block in Mozambique where Mercator Lines has 85% rights is still under development. The coal reserves there have been estimated to be around three billion tonnes and the company anticipates a wait of another two to three years before they can start production.
The operating cost of producing one tonne of coal is $25. This also includes production tax and 9% royalty that the company needs to pay the Indonesian government. Thermal coal, on the other hand is currently sold at $45-50 per tonne. While, doing a forward calculation, one million tonne of coal for Mercator would translate into $50 million of revenue and a $25 million profit. Having 50% rights in the Indonesian mines, Mercator is set to draw a profit of $11-12 per tonne of coal that they produce or about $12 million profit.
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In spite of a credit crunch and slowdown in the US, both Indian and global IT services companies have seen strong business growth in 2007. Worldwide IT services revenue totalled $748 billion in 2007, 10.5 per cent higher than $677 billion reported in 2006, according to research from Gartner Inc. In the same period, the top six Indian IT companies TCS, Infosys, Wipro, Satyam, HCL and Cognizant increased their collective market share in the global IT service arena to 2.4 per cent against 1.9 per cent in the previous fiscal.
Even though Indian IT companies have collectively improved their revenues in 2007, they are still laggards when compared with US-based vendors, who dominated the IT services pie with 55.4 per cent market share. Indian IT companies account only for 4.1 per cent of the global IT services revenue tracked. On the global front, IBM and Accenture delivered strong growth rates of 12.2 per cent and 19.7 per cent, respectively.
However, domestic IT services business in the country also seems to have come of age. The Indian domestic IT services market has been outpacing the overall Asia Pacific growth, as it grew by 18 per cent in 2007. While cost remains a key consideration for users in the outsourcing services market in India, operational efficiency and business agility are driving most of the IT services engagements.
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Freight rate for iron ore is set to come down further with the Railways deciding to remove the 30% port congestion surcharge levied on the mineral meant for domestic use. The move is set to benefit steel companies such as Essar Steel, Ispat Industries and Vikram Ispat which do not have captive mines. These companies depend mainly on rail transport for moving raw material to their steel plants. A fortnight ago, the Railways had shifted iron ore from class 180 to 170. The reclassification had resulted in freight cut of ore by 4-5%. However, the port congestion surcharge on iron ore meant for exports would continue to remain at 100%.
The proposed changes follow a series of high-level government meetings over finalising a steel package to contain inflation. Iron ore constitutes an important cost element in the entire process of steel making. With iron ore prices rising 100% in a year and expected to rise further, the Railways’ initiative is expected to reduce cost pressure on the steel sector.
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Bharti Airtel is set to partner IT and telecoms hardware major Cisco for enhancing its managed services portfolio. With falling tariffs and reduced average revenue per user (ARPUs), all major telcos, are now looking at managed services which combines IT services with telecom offerings. According to a recent report by Gartner, network IT services is set to become a $7 billion market by 2011. Telcos are, therefore, looking to bundle end-to-end managed servicesinstallation of the hardware at the customer premises, providing customised software solutions, managing and maintaining both IT and hardware platform.
Airtel is collaborating with Cisco to launch managed Multi Protocol Label Switching (MPLS) services. With Cisco’s Tier I certification for the CISCO Managed Serviced Channel Partnership programme, Airtel will now be able to offer Indian enterprises end to end Managed VPN Services including last mile and Customer premise equipment (CPE) management, network design, installation, configuration, and 24X7 monitoring and maintenance support. Bharti Airtel expects to grow their MPLS business by 50-60 % in this financial year. The company, which has more than 400 customers on its MPLS network, intends to increase its customer base by at least 30% in the next one year. Bharti-Cisco combine would look at partnering other service providers and IT players from time-to-time depending on the specific requirements of their customers.
The Bharti move has come within a day of French-US equipment firm Alcatel-Lucent forming a JV with Reliance Communications (RCOM) to offer managed network services to domestic as well as international telecom operators. Managed services helps telcos move up the value chain and increase revenues as Indian telcos extend their footprint both within the country and globally.
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Patni Computer, the Mumbai-based IT services provider, is about to close an over $50 million deal with a top telecom carrier in India to provide a proprietary service delivery framework. It is learnt that Patni will provide Telecom-in-a-box (TIAB), a service framework that will ease the process of delivery of various services such as multimedia content, IPTV by telecom carriers to their customers.
Meanwhile, Patni is also in talks with some IT service providers and telecom carriers to provide niche technology driven telecom services. For Patni the focus on India is part of its effort to bolster its Asia-Pacific revenue from 5% of its total revenues to 9% in the next financial year. Moreover, it is also looking at the second largest market for IT services i.e Japan. Business from Europe contributes about 13% of Patni’s revenue while the rest comes from the US.
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''The said news item is purely of speculative nature,'' company said in a statement. The media has reported that M&M is in talks to acquire Kinetic Motors. The Pune-based company Kinetic said it is exploring various alternatives to raise funds for its two wheeler business.
However, no definitive agreement has been entered with any investor or Mahindra & Mahindra Ltd, it added.
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A poor performance by mining, manufacturing and electricity sectors resulted in a dismal industrial production growth of 3 per cent during March 2008, as against 14.8 per cent in the same month of the previous year. Data released by Central Statistical Organization revealed that the production in manufacturing sector, which has an 80 per cent share in the Index of Industrial Production, grew by 2.9 per cent as against a robust 16 per cent in the same month of the previous year.
In the month under consideration, electricity production grew by 3.7 per cent as against 7.9 per cent in March 2007. Mining production growth also slumped to 3.8 per cent in March 2008 as against 8 per cent in the corresponding month of the previous year. Consumer durables production in March dipped by 2.1 per cent as against a growth of 3.8 per cent in March 2007. Capital goods production in March grew by 8.6 per cent as against 18.1 per cent in the same month of the previous year.
There is a silver lining, though. Part of the drop appears to be because of the base effect of the industrial growth in March 2007, the base for calculating growth in March 2008, which was unusually high. If we look at the numbers month-on-month (M-o-M) and look at March over February, we will notice a 23-point increase in the general index, which will translate to a growth of nearly 8.5%. Basically, in March 2007, growth had been 37 points over a base of 250, so that was a huge increase.
Thus considering the base effect and the M-o-M figures, there is really no signs of slowing down yet. The higher sequential growth (March over February), which had turned negative in February 2008, does underscore the point. However IIP figures for the coming months would be keenly watched to see whether there are actual signs of slowing down on account of prevailing higher interest rates and rising input costs.
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Ratan Jindal-led Jindal Stainless has entered into an agreement with Indonesian mining and metals firm PT Antam to form a $700-million joint venture to develop a nickel smelting and stainless steel facility in North Konawe, Southeast Sulawesi (Indonesia). While PT Antam will have a 55% stake in the JV, Jindal Stainless will hold the balance 45%.
The new venture would entail an investment of $700 million (Rs 2,900 crore approx), of which 30% would be raised through equity and the balance would be in the form of debt. The new plant will have a capacity of close to 20,000 tonne per annum (tpa) of contained nickel in the form of ferro-nickel and 2.5 lakh tpa of stainless steel. The facility will also have its own coal-based captive power plant and water-treatment plant, besides residential facilities for its employees.
While the construction work would begin from early next year, the plant would be commissioned by mid-2011. Under the terms of the agreement, while PT Antam will share its expertise in mining and nickel processing, Jindal Stainless will provide expertise in stainless steel processing and marketing. With Jindal Stainless already having a stainless steel plant in Indonesia, the new venture would strengthen its presence in the global stainless steel industry.
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Ranbaxy Laboratories has signed a strategic product development agreement with German pharma major Merck for drug discovery and clinical development collaboration in the anti-infectives field. As per the deal, the two partners will work together to develop clinically validated anti-bacterial and anti-fungal drug candidates. The agreement is in line with Ranbaxy’s recent overtures for collaborative research in various segments with other pharma companies both in India and abroad.
Under the terms of the agreement, Ranbaxy will receive an undisclosed upfront payment, in addition to potential payments totalling more than $100 million associated with the achievement of various research, development and regulatory approval milestones for each target included in the collaboration. This apart, Ranbaxy will also be eligible to receive significant royalties on worldwide net sales of any products commercialised under the agreement.
Ranbaxy will carry out drug discovery and clinical development through Phase II of clinical trials. Merck will then develop and commercialise the drug candidates. The collaboration, beginning this year, will have an initial term of five years and can be extended mutually. This deal could be similar in nature to Ranbaxy’s existing relationship with GlaxoSmithKline. The two had struck an alliance in 2003 under which Ranbaxy conducted the optimisation chemistry required to progress drug leads to the stage of candidate selection.
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Reliance Communications (RCom) has entered into a joint venture pact with global infrastructure provider Alcatel-Lucent to provide managed network services (MNS) to telecom service providers in the country. This is the first time two major firms have come together to jointly tap the emerging potential of MNS, a nascent sector in the country. The companies will float a new entity, which will kick off operations by providing services to RCom's CDMA and GSM networks. The new entity will initially focus on providing services to 12 circles in northern and western India. The JV firm will also help RCom's expansion plans outside the country and provide services to other firms across the world.
An MNS provider installs the infrastructure and equipment and manages it for the telecom service provider. Though data pertaining to the size of the MNS industry is not available, industry experts expect the sector to grow to about Rs 100 crore in the next couple of years. The JV will help RCom concentrate on its core competencies i.e. telecom services, while Alcatel-Lucent takes care of the infrastructure. After hiving off its passive infrastructure business of telecom towers this is a second move by Reliance Communications Ltd to outsource a core activity.
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The company announced the results during trading hours today, 7 May 2008.
Meanwhile, the BSE Sensex was down 31.86 points, or 0.18%, to 17,341.15.
On BSE, 31,328 lakh shares were traded in the counter. The scrip had an average daily volume of 12,764 shares in the past one quarter.
The stock hit a high of Rs 271 and a low of Rs 255 so far during the day. The stock had a 52-week high of Rs 382.70 on 4 January 2008 and a 52-week low of Rs 183.15 on 8 November 2007.
The mid-cap scrip had outperformed the market over the past one month till 6 May 2008, gaining 16.78% compared to the Sensex`s return of 10.26%. It had underperformed the market in the past one quarter, declining 4.39% compared to Sensex`s decline of 4.23%.
The company`s current equity is Rs 60.76 crore. Face value per share is Rs 10.
The current price of Rs 260 discounts its Q3 December 2007 annualised EPS of Rs 16.72, by a PE multiple of 15.55.
However, Punjab Tractors` net profit fell 16.43% to Rs 65.17 crore on 1.82% rise in total income to Rs 971.98 crore in the year ended March 2008 over the year ended March 2007.
The company is engaged in manufacturing, marketing and servicing of tractors. The products include agricultural tractors, self-propelled harvester combines, rice transplanters, forklifts, tractor drawn agricultural implements, gears, spare parts, casting and accessories.
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The BSE Sensex was down 29.80 points, or 0.17%, to 17,344.43
On BSE, 68.73 lakh shares were traded in the counter. The scrip had an average daily volume of 13.74 lakh shares in the past one quarter.
The stock hit a high of Rs 283.50, which is also its all time high on BSE. The stock touched a low of Rs 261 so far during the day. The stock had hit a 52-week low of Rs 128 on 9 May 2007.
The large-cap scrip had outperformed the market over the past one month till 6 May 2008, gaining 14.65% compared to the Sensex`s return of 10.26%. It also outperformed the market in the past one quarter, advancing 23.79% compared to Sensex`s decline of 4.23%.
The company`s current equity is Rs 1892.19 crore. Face value per share is Rs 10.
On 6 May 2008, Cairn India rose 1.67% to Rs 260.75 after Goldman Sachs Group Inc. raised the stock`s price estimate by 14% to Rs 325 per share.
Cairn India reported higher net loss of Rs 24.31 crore in Q1 March 2008 as compared to net loss of Rs 8.54 crore in Q1 March 2007. Total income rose 79.80% to Rs 22.66 crore in Q1 March 2008 over Q1 March 2007.
Cairn India`s principal activity is to explore, develop and produce crude oil and natural gas.
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Meanwhile the BSE Sensex was down 87.49 points or 0.50% to 17,285.52
India`s second largest software exporter by sales TCS was the top gainer from Sensex pack. The stock surged 3.22% to Rs 968.05 on 4.46 lakh shares.
Other Infosys Technologies (up 1.36% to Rs 1846), Wipro (up 0.30% to Rs 499.80), and Satyam Computers (up 0.20% to Rs 496.20), advanced.
The BSE IT sector outperformed the market over the past one month till 6 May 2008, gaining 18.87% compared to the Sensex`s return of 10.26%. It also outperformed the market in the past one quarter, advancing 14.93% compared to Sensex`s decline of 4.23%.
A firm dollar augurs well for IT pivotals as they derive majority of revenue from exports. The Indian rupee fell further sharply by 19 paise to Rs 41.13/14 against the American dollar as oil companies stepped up dollar buying after the global crude oil hit yet another high amid weakness in local stock.
IT pivotals had advanced steadily after India`s second largest software exporter by sales Infosys Technologies issued decent guidance for the year ending March 2009. Infosys has given guidance of a between 16.3% to 18.3% growth in earnings per share (EPS) to between Rs 92.32 to Rs 93.92 for the year ending March 2009 (FY 2009) over the year ending March 2008. It has given guidance of a between 19.2% to 21.1% growth in revenue to between Rs 19894 crore to Rs 20214 crore for the year ending March 2009 over the year ending March 2008
As per US GAAP, Infosys has given guidance of a 16.7% to 18.7% growth in earnings per American Depository Shares at between $2.31 to $2.35 for the year ending March 2009 over the year ending March 2008. It has given guidance of a between 19% to 21% growth in revenue as per US GAAP to between $4.97 billion to $5.05 billion for the year ending March 2009 over the year ending March 2008
The company sees significant growth opportunities in the medium to long term. It, however, may face short-term challenges due to global economic uncertainties
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National Aluminium Company (Nalco) is exploring the possibility of setting up a greenfield aluminium smelter and captive power plant near Jharsuguda, western Orissa at an investment of more than Rs 14,000 crore. The capacity of the proposed smelter is pegged at 5 lakh tonnes per annum with a captive generation facility of 1,250 MW. The alumina required for the project is likely to be sourced from Nalco's existing refinery at Damanjodi.
Engineer's India (EIL), which has been appointed the consultant, has found the project technically feasible. Jharsuguda is being chosen as the possible site for the plant as it is in the vicinity of the IB valley coal reserves. While the company has the required technology, land acquisition is expected to be trouble-free as most part of the identified patch is government land and barren. The state-owned Industrial Promotion and Investment Corporation of Orissa (Ipicol) has forwarded the company's application for water from IB River to the water resources department.
Besides, the company is weighing various options for setting up smelter plants in countries like South Africa and Iran depending upon the availability of cheap power. It has recently entered into a MoU with the Kerman Development Organisation for setting up a smelter and subsequently a gas-based power plant in Iran in a joint venture. The capacity of the proposed smelter will be 3.1 lakh tonnes which will come up in two phases.
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Our meeting with the management of Reliance Infrastructure Ltd. (REL Infra, earlier Reliance Energy Ltd.), on its Analyst Day reinforces our positive view on the stock. REL Infra has reorganized its holding structure to create separate SPVs for each different line of business, which we believe enables the company to unlock value in the EPC and BOT businesses over the medium term.
The company continues to focus on integrating its power distribution business with generation through Reliance Power Ltd. and transmission projects through Reliance Power Transmission Ltd. Moreover, REL infra is looking to scale up its EPC business (Rs90bn order backlog) through bidding for EPC contracts of RPL’s generation projects and other third party projects. The company has reported progress as per schedule in its five road and two metro rail BOTs. Further, Reliance Power (RPL), the power generation SPV of REL Infra, has acquired three coal mine concessions in Indonesia, with estimated reserves of 2bn tons having average GCV of 4,000-4,500Kcal with 30% moisture.
The total reserves are sufficient for 10,000MW of power capacity, including the 4,000MW Krishnapatnam UMPP and 1,200MW Shahpur thermal power plant. RPL has added another 4,000MW of projects to its portfolio, taking the total capacity under development to ~32,000MW. We continue to like REL Infra’s business model of integration across the value chain of power coupled with strong presence in EPC and BOT segments.
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The country's third largest steel producer, JSW Steel, has clocked a net profit rise of 11% at Rs 461 crore in the fourth quarter ending March 31, 2008 as against Rs 413 crore in Q4FY07. The quarter saw the amalgamation of the full years' result of Southern Iron and Steel Company (Siscol) with that of the quarter of JSW Steel following the approval of the amalgamation by the Bombay High Court.
Net sales of JSW for the quarter was up 68% at Rs 4,189 crore as compared to Rs 2,486 crore posted in the corresponding quarter of the previous year. Siscol reported a net turnover (included in JSW's net sales for Q4) of Rs 1,064 crore for the year. Despite a robust growth in JSW's net turnover during the quarter, price reduction in the market in an effort to ease general inflationary pressure, led to a nominal increase in the company's bottom line.
Standalone net profit of the company for the year stood at Rs 1,728 crore, up 33% as compared to Rs 1,292 crore posted in the previous year. Net sales for the same period was at Rs 11,420 crore as against Rs 8,699 crore. Due to duties levied by the government on exports to cool-off high domestic steel prices, JSW would bring down its exports by as much 10-15 per cent of total sales from 26 per cent currently or 948,000 tonne.
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ICICI Securities, the investment banking arm of ICICI Bank, will come out with initial public offer in due course, said CEO of the country’s largest private sector bank K V Kamath. According to him, the bank has not decided on the size of the IPO and when the market conditions are favourable, the bank will consider the IPO.
In January, the board of ICICI Securities had approved the initial public offer and private placement of shares to one or more institutional investors. Soon after the decision, ICICI Bank joint managing director and CFO Chanda Kochhar had said that the shares of ICICI Securities will be listed on the bourses in about six months.
The board had decided to offload 15% of its shares to retail or institutional investors. ICICI Securities, having an equity capital of Rs 61 crore, is a major player in retail broking and has posted revenues of Rs 527 crore during the first nine months of the current fiscal while profits were at Rs108 crore in the same period.
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Public sector Uco Bank posted a 177.4% rise in net profit at Rs 86 crore during the fourth quarter of the fiscal ended March 31, 2008. For the financial year 2007-08, net profit of the bank increased by 30.4% to Rs 412 crore. The bank had to provide for Rs 130 crore for depreciation of securities - mark-to-market losses - in the last few days of the fiscal. The bank achieved a total business of Rs 1.35 lakh crore, up by 20.7% from the previous financial year. Total deposits increased 23.2% to Rs 79,909 crore, while advances grew 17.2% to Rs 55,627 crore. Its non-performing assets were at 1.98%. Increase in yield on advances and return on assets, apart from robust recovery were the main drivers for growth.
The finance ministry is expected to approve the conversion of Rs 300 crore of equity into preference shares. Once this comes through, its capital will come down from 800 crore at present to Rs 500 crore. Additional capital of Rs 100 crore will be raised through a Follow on Public Offer in the third quarter of current fiscal. Meanwhile it is also planning to raise Rs 325 crore through perpetual non-cumulative preference shares by June.
The bank has a capital adequacy ratio of 10.09%, which has made itself Basel -II compliant during the year. As per Basel-II, the capital adequacy was 11.02%. The bank is looking for a 22% and 20% growth in deposits and advances in the current year.
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In what may turn out to be the largest ever acquisition by an Indian company, the country’s biggest private telecom player Bharti Airtel said it was in talks to acquire South Africa’s MTN. This is the first time that both companies have officially confirmed that they have entered into discussions for a possible stake sale. The board of MTN, South Africa’s largest telcom, is learnt to have met on Monday to discuss the potential buyout from Bharti.
MTN has operations in 21 countries in Africa and the Middle East like Nigeria, Republic of Congo, Rwanda, South Africa, Uganda, Zambia, Iran, Afghanistan, Ghana, Sudan, Syria, Yemen and other countries. The Indian model of low tariffs and high volumes can easily be replicated in the nations where demand for cellular services is high and volumes are related to tariffs. MTN has more than 68 million customers, which is just about a little larger than the customer base of Bharti Airtel. MTN has a market cap of more than more than $35 billion, while Bharti is valued about $45 billion. Discussions between Bharti Airtel and MTN Group of South Africa are still at an early stage, and exploratory in nature that may or may not lead to any transaction. Accordingly, investors are advised to exercise caution when dealing in the company’s securities until a further announcement is made.
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SBI posted a net profit of Rs 1,883 crore in the fourth quarter as against Rs 1,493 crore in the corresponding period last year, showing a growth of 26.1%. Its operating profit grew to Rs 4,373 crore as against Rs 3,969 crore, posting a growth of 10.2%. Total interest income was at Rs 13,577 crore as against Rs 10,518 crore showing a growth of 29.1% and non-interest income at Rs 2,817 crore as against Rs 2,668 crore showing a growth of 5.6%. The net interest income was at Rs 4,801 crore as against Rs 4,547 crore showing a growth of 5.6 per cent. The bank had booked no loss on account of exposure of derivatives in the Indian market. But for overseas exposure, the bank had taken a hit of $20 million. SBI had made a provision of $10 million in this regard.
For the whole year ended 2007-08, State Bank of India posted 48.2% growth in net profit at Rs 6,729 crore in 2007-08 as against Rs 4,541 crore in 2006-07 and 31.1% in operating profit at Rs 13,107 crore as against Rs 10,000 crore. Total interest income was at Rs 48,950 crore as against Rs 37,242 crore showing a growth of 31.4%, non-interest income at Rs 8,695 crore as against Rs 6,765 crore, a growth of 28.5% while net interest income stood at Rs 17,021 crore, a growth of 13.1%. The provisions during the year amounted to Rs 2,668 crore (Rs 2,410 crore), a growth of 10.7%.
Total business growth during the year under review amounted to Rs 181,000 crore. The deposit growth was Rs 101,885 crore, a 23.4% growth to touch Rs 537,406 crore and advances were up by Rs 79,949 crore or a growth of 23.4% to touch to Rs 422,181 crore. The market share in deposits increased from 14.8% to 15.4%, driven by low-cost deposits where market share increased from 13.9% to 17.4%. Mid-corporate advances grew by 24.4%, SME advances by 26.3%, agriculture advances by 24.6%, home loans by 18.7% and international advances on year-to-year basis by 50.4%. The total NPAs amounted to Rs 12,837 crore. The gross NPA ratio was 3.04% (2.92%) and net NPA ratio 1.78% (1.56%).
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Power Company PTC India Ltd has reported over three-fold increase in profit after tax to Rs 19.2 crore for the quarter ended March 31, 2008 compared to Rs 5.8 crore in the corresponding period a year ago. The company has reported a 39% increase in profit after tax for whole fiscal at Rs 48.7 crore against Rs 35.1 crore in the previous fiscal. However total income of the company during the quarter under review dipped 6.5% to Rs 566.0 crore from Rs 605.4 crore in the corresponding period of 2006-07. PTC's income for 2007-08 stood at Rs 3,949.0 crore, registering a growth of 4.31 per cent over the last fiscal.
The company has made its foray into wind energy generation by commissioning its first 6mw wind farm project in Maharashtra. During the January-March quarter, PTC raised Rs 1,200 crore through the QIP route and would use the proceeds for enhancing capital adequacy, capitalisation of PTC Financial Services and investment in fuel intermediation. During the quarter, PTC signed two MoUs for sale of power aggregating to 325 MW.
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The board of Spice Mobiles has recommended to increase the authorised share capital of the company from Rs 30 crore to Rs 51 crore.
The board has approved the rights issue of 37319000 equity shares of face value of Rs 3 each in the ratio of 1:2.
The board has approved preferential issue of 37319000 equity shares to any select group of persons including strategic investors on private placement basis.
This was approved at the board meeting held on 30 April 2008.
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Reliance Energy has posted a 35 per cent growth in profit after tax (PAT) at Rs 1,085 crore for the year ended March 31, 2008 (FY08), as compared with Rs 801.4 crore in FY07. Total income grew 14 per cent to Rs 7,501 crore, as against Rs 6,575 crore in FY07. In the fourth quarter ended March 31, the net profit grew 31 per cent to Rs 311 crore from Rs 237 crore in the corresponding period a year ago.
Aggregate sales of electricity stood at 9,292 million units in FY08, an increase of 6 per cent as compared with 8,766 million units in the previous year. Revenues from energy sales during FY08 stood at Rs 4,920 crore as against Rs 3,611 crore in 2006-07. During FY08, the customer base in the Mumbai increased by 0.13 million to 2.63 million. Its Dahanu Thermal Power Station achieved a plant load factor (PLF) of 101.5 per cent. The company gained about Rs 1 crore from its exposure to derivatives. The engineering, procurement and construction division has orders worth Rs 7,850 crore, an increase of 50 per cent over the previous year. The company has cash and cash equivalents of Rs 9,596 crore. Company has renamed itself Reliance Infrastructure.
We expect Reliance Infrastructure to perform well in the years ahead since it is currently executing infrastructure projects worth about Rs 16,000 crore in two years besides various Reliance Power projects. The company is developing two metro rail projects in Mumbai and Delhi, five road projects in Tamil Nadu, two SEZs and a business district in Hyderabad.
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Infrastructure Development Finance Company Ltd (IDFC) has posted over 60 per cent increase in net profit at Rs 149.4 crore for the quarter ended March 31, 2008 as compared to Rs 92.9 crore for the quarter ended March 31, 2007. Total income increased by 80.8 per cent to Rs 773.4 crore for January-March period of 2007-08 from Rs 427.7 crore for the corresponding period in 2006-07.
For the year ended March 31, IDFC has posted a 47 per cent increase in net profit at Rs 742.1 crore as compared to Rs 503.9 crore for the year ended March 31, 2007. Total income has increased by 78 per cent to Rs 2,804.5 crore for 2007-08 from Rs 1571.3 crore for 2006-07.
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Cement demand outlook this fiscal is expected to remain healthy, driven by rising investment in construction and real estate sectors, according to Centre for Monitoring Indian Economy (CMIE). CMIE expects cement production to grow 11.5 per cent and cement consumption 12 per cent during FY09.
The total annual installed capacity of the cement sector increased by about 22 million tonnes during FY08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on-stream in FY09. Northern region, which has seen additional capacity of around 15 million tonnes in FY08, will see an addition of another 7-8 million tonnes in 2009. Western and Eastern regions would continue to face a deficit. However, surplus volumes from the North are expected to meet demand in other regions. Sales volumes would drive the sectors growth during the fiscal. With limited year-on-year rise in realisations, the measures to improve cost efficiencies would play a significant role in determining the sectors profitability.
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Nirma reported net profit of Rs 37.87 crore in the quarter ended March 2008 as against net loss of Rs 93.45 crore during the previous quarter ended March 2007. Sales declined 1.10% to Rs 629.48 crore in the quarter ended March 2008 as against Rs 636.49 crore during the previous quarter ended March 2007.
For the full year, net profit rose 106.56% to Rs 223.93 crore in the yearended March 2008 as against Rs 108.41 crore during the previous year ended March 2007. Sales rose 3.05% to Rs 2312.69 crore in the year ended March 2008 as against Rs 2244.28 crore during the previous year ended March 2007.
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SEBI has issued final guidelines on real estate mutual funds (REMFs). The schemes can be launched by existing mutual fund houses or firms that have been operating in the real estate space for at least five years. In addition to the dedicated infrastructure funds and real estate investment trusts, REMFs would be the third product for mutual funds in the real estate category. While the draft guidelines had been put on all the three, the closed-ended REMFs are the first ones to see the final guidelines coming in.
Besides directly investing in real estate, SEBI has also permitted investments in mortgage-backed securities, securities of companies engaged in dealing in real estate assets or in undertaking real estate development projects and other securities. However, it has mandated that at least 35% of net assets of the scheme should be invested directly in real estate assets. Taken together, investments in real estate assets, real estate-related securities, including mortgage-backed securities, shall not be less than 75% of net assets of the scheme. Caps will be imposed on investments in a single city (not more than 30%), single project (15%), equity or debentures issued by unlisted real estate companies (15% across all schemes and 25% of issued capital in a single scheme). The assets held by one scheme cannot be transferred to another.
However, REMFs cannot invest in vacant land, deserted land or land earmarked for agricultural use. The guidelines also suggest that the assets of real estate schemes be valued every quarter by two valuers. With this move, retail investors can invest in real estate as an asset class, which has a low correlation with equity and bonds, and enjoy the benefits of asset class diversification.
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Moderate provisioning and lower deposit growth helped the country’s second largest bank, ICICI Bank post a 39% rise in net profit for the fourth quarter ended March 31, 2008. The net profit rose to Rs 1,148.8 crore from Rs 825.1 crore in the comparable period. The bank’s net interest income for the fourth quarter grew by 29% to Rs 2,080 crore as against Rs 1,609 crore in the year-ago period. Non-interest income, which comprises both fee income and income from treasury operations, rose marginally by 12% to Rs 2,361 crore.
Rising interest rates seems to be taking a toll on the bank’s retail operations on both the assets and liabilities’ side. While deposits in the March quarter have grown by just 6% to Rs 244,431 crore, advances rose by around 15% to Rs 225,616 crore. Retail advances rose 3% to Rs 131,663 crore. The average net interest margin for the fourth quarter was at 2.4% as against 2.3% the previous year.
The net profit for the year rose 33% to Rs 4,157 crore as compared to Rs 3,110 crore in FY07. The bank has taken Rs 680 crore hit for the year on accounts of its overseas books. Following the $5bn raised in ‘07-08, the bank has managed to improve its credit-deposit ratio to 92% from 85% last year.
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Public sector National Aluminium Company Ltd (Nalco) has lined up a $1 billion investment to put up smelters (1.55 lakh tonne smelter in the first phase and another identical capacity smelter in the second phase) and a power plant (750MW gas based captive power plant) in Iran. This will be implemented in joint venture with Kerman Development Organisation, Iran. Nalco will have majority stake in the project along with management control.
Meanwhile, the metal refiner will complete its Rs 5,100 crore expansion of its domestic production facilities by end of current calendar. It would then ramp up bauxite mining capacity from 48 lakh tonne to 63 lakh tonne, alumina refinery to 21 lakh tonne from 15.75 lakh tonne, and metal production to 4.6 lakh tonne from 3.45 lakh tonne. It is estimated that, even after meeting the requirement of its smelters at home, Nalco will be left with a surplus of 1.2 million tonne of alumina for the export market. This surplus alumina would be sufficient to produce around 5 lakh tonnes of metal.
Nalco’s overseas investments are part of its strategic plan to convert its surplus alumina production into metal in geographies with lower energy costs. It has already signed a deal with the Indonesian government to invest $3.4 billion in setting up a 5 lakh tonne smelter in two phases and a 1,250 MW power plant. Investments in South Africa are also currently under consideration.
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Swiss cement giant Holcim has decided to take complete control of Ambuja Cements India (ACIL), the local company through which it controls ACC, India’s largest cement major. Holcim will buy 11% from Ambuja Cement (ACL), formerly Gujarat Ambuja, for Rs 589 crore. Ambuja Cement, which created ACIL in 2000 and offered stakes to the Government of Singapore and American International Group (AIG) in what was then the country’s largest private equity transaction, will now completely exit the company.
The move will enable Holcim to own 100% of an entity that owns stakes in two of India’s largest cement players. ACIL controls 42.88% in ACC, India’s largest cement maker with a 13% market share. ACIL also owns 9.9% in Ambuja Cement, the third-biggest cement-maker with a 10% market share. Holcim directly owns 36% in Ambuja Cement.
In 1999, Ambuja Cement (ACL) stunned corporate India by buying the Tata Group’s 14% stake in ACC. The audacious move clearly signaled the company’s ambition in dominating the cement market. Two years later, in order to lessen the cost of the acquisition, Ambuja transferred its 14.5% stake in ACC to Ambuja Cement India (ACIL) and brought in the Government of Singapore and AIG as investors.
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Reliance Industries Ltd (RIL) is set to acquire majority stake in an oil block in Peru. The company is understood to have recently inked an agreement with Pan Andean for acquiring stake in Block 141 in Peru. The company is presently seeking necessary approvals from authorities in Peru. Pan Andean Resources explores and produces oil and gas in South America and the Gulf of Mexico.
Indications are that RIL is likely to acquire 90 per cent stake. Block 141 in the Lake Titicaca area of Peru is a large oil exploration play. RIL has been pursuing contracts for farm-in activities in two oil blocks in Peru. (Under Farm In practice, a company does not acquire the property directly, but rather develops the oil and natural gas properties by taking participating interest in the block)
Reliance already has 11 overseas oil and gas assets, with the latest being a block in Australia. With the Peru block, the number would go up to 12. The company is further looking at opportunities in Africa, Latin America and West Asia.
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Tata Power (TPC) has announced the financial closure of its 4,000 MW ultra mega power project (UMPP) at Mundra in Gujarat. The financial agreements have been signed under the company’s special purpose vehicle (SPV), Coastal Gujarat Power Ltd (CGPL).
The project cost is estimated at Rs 17,000 crore. The project is financed through equity of Rs 4,250 crore, external commercial borrowings (ECB) of around $1.8 billion (about Rs 7,200 crore) and rupee loans of up to Rs 5,550 crore. SBI Caps are the financial advisors and mandated lead arranger for rupee loans.
The first of the five units is expected to be commissioned by September 2011 and the entire plant is expected to be commissioned by end-2012. The project consists of 5 units, each of 800 MW which will generate saleable power of 3800 MW to be supplied to five states namely Gujarat, Maharashtra, Rajasthan, Haryana and Punjab.
The signing of the financing agreements for Mundra UMPP is an important milestone. The terms of debt financing provides TPC a long tenure of loans, supporting its competitive bid price assumptions. The good response demonstrates the faith of the lenders in its execution capabilities and expertise to complete the project in time.
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Private sector lender HDFC Bank has posted a net profit of Rs 471.1 crore for the quarter ended March 31, 2008, up by 37.1% from the corresponding quarter last year. The bank has earned a net profit of Rs 343.6 crore a year ago. Total income was Rs 3,505.5 crore for the quarter against Rs 2,321.0 crore in the same period last year, an increase of 51.2%.
For FY08, the net profit stood at Rs 1,590.2 crore compared with Rs 1,141.5 crore, up by 39.3%. Total income for the year stood at Rs 12,398.2 crore against Rs 8,164.2 crore in the previous year.
The net interest income for the fourth quarter increased by 55.7% to Rs 1,642.1 crore driven by average asset growth of 50.3% and a core net interest margin of around 4.4%. Other income of the bank grew 39.3% from Rs 394.4 crore to Rs 549.3 crore, comprising Rs 490.4 crore from fee and commissions alone. Provisions and contingencies for the quarter almost doubled to Rs 465.1 crore from Rs 267.1 crore in the corresponding quarter last year. The provisioning comprises Rs 293 crore for non-performing assets and general provisions for standard assets and Rs 172.7 crore for tax, legal and other contingencies.
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Ambuja Cements, part of the Holcim group, is planning to double its capacity to 35 million tonnes (mt) in the next five years. Currently, the company has an installed capacity of 18.5 mt and is undergoing grinding capacity additions at Dadri (UP), Nalagarh in Himachal Pradesh, Sanad in Gujarat and Barh in Bihar.
These projects are stipulated to be completed by 2010 after which the company will be having a capacity of 27 mt. By FY2012, the company plans to reach around 35 mt capacity. At a time when other comparatively smaller players are doubling and even tripling their capacities in the next few years, it is crucial for Ambuja to maintain its presence in the domestic market.
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Soaring depreciation costs combined with currency derivatives loss have led Maruti Suzuki to post a decline in its net profit for the fourth quarter ended March 2008, even as its net sales grew. However, for the fiscal 2007-08, the company recorded a healthy increase in its profits as well as sales.
The newly adopted depreciation policy since April 1, 2007, under which the company made an additional provision of Rs 212 crore for fiscal 2007-08, impacted the profit figures for the quarter. The depreciation policy has brought down the lifecycle of its tools and equipment to eight years instead of 13 years and for dies four years instead of five. The primary reason for changing the depreciation policy is because the lifecycle of various products is now getting shortened.
During the quarter, Maruti's net loss on account of its forex cover stood at Rs 50.4 crore, computed on a marked-to-market basis on various derivative instruments. The company's increased expenditure was due to higher royalty payments, surge in power and fuel costs and currency exchange loss. During fiscal 2007-08, Maruti Suzuki sold 764,842 vehicles, up 13.3%. The company's exports at 53,024 units grew at the fastest pace of 34.9 per cent during the year.
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Anil Ambani-promoted Reliance Globalcom, a subsidiary of Reliance Communications Ltd (RCL), has acquired 90% stake in eWave World, a UK-based telecom company engaged in offering wireless telephony services using WiMAX technology. However, Reliance refused to divulge the exact amount of the acquisition.
Reliance Globalcom would invest about $500 million (Rs.20 billion) over next two-three years to build and acquire WiMAX networks in emerging markets in Asia, Europe, Latin America and Africa. The acquisition would be funded internally.
The acquisition of eWave is a significant deal for RCL as it would help the company reach out to millions of customers in over 50 countries and offer broadband service. With the backing of Reliance Globalcom, eWave World will deliver broad band services to business and residential customers in numerous emerging markets.
eWave World holds WiMAX licenses and has received spectrum to commence WiMAX service in several countries. The 4G WiMAX network in 50 countries would enable Reliance Globalcom to offer services to over 75 percent of global population in combination with Reliance Globalcom's 115,000 km IP (internet protocol) enabled network spread across six continents.
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Bharti Airtel reported a 39.28% growth in its fourth-quarter earnings at Rs 17,923 million compared with Rs 12,868.40 million in the corresponding quarter, a year ago.
Net sales rose 42.06% to Rs 74,137.30 million for the fourth quarter ended Mar. 31, 2008 as against Rs 52,187.30 million in the corresponding quarter, a year ago. Total income also rose 41.82% to Rs 74,468.20 million, up from Rs 52,507.70 million in the fourth quarter, a year ago.
The basic EPS after extraordinary items stood at Rs 9.44 for the quarter ended March 2008.
Annual Results:
Bharti Airtel reported 54.82% increase in net profit to Rs 62,442 million for the year ended March 2008 as against Rs 40,332.20 million, a year ago. Net sales rose 44.45% to Rs 257,035.10 million for the year ended Mar. 31, 2008 as against Rs 177,944.30 million in the previous year.
Total income also rose 45.01% to Rs 259,393.70 million as against Rs 178,879.90 million in the last year.
The basic EPS after extraordinary items stood at Rs 32.91 for the year ended March 2008.
Commenting on the results and performance, Sunil Bharti Mittal, Chairman and Managing Director, Bharti Airtel, said, This has been another year of record growth for the telecom industry and Bharti Airtel. The Indian telecom story is now entering the second wave of growth, which will come from rural India. The coming year will be an exciting one for the company as we launch our services in new segments such as DTH and go live with our operations in Sri Lanka. Going forward, we see another year of strong demand in all business segments and we will continue to build on our organisational strengths. Shares of the company were last trading up Rs 62.8, or 7.44%, at Rs 907. The total volume of shares traded at the BSE was 638,983. (10.26 a.m., Friday)
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Goldman Sachs acquired 8.16% stake in New Delhi Television (NDTV), last week, reports Business Lines.
The global firm has acquired the stake when an open offer by the company is going to start shortly. It was scheduled to start on February 12 and close on Mar. 3, 2008 but has been delayed.
At the end of last year, Prannoy Roy and his wife Radhika Roy, promoters of NDTV, announced an open offer to acquire 20% equity stake of the company for Rs 438.98 a share, worth Rs 5.50 billion.
The open offer followed the promoters` acquisition of 7.73% stake from GA Global Investments in December. Prannoy Roy bought the stake of 4,836,000 shares from the PE Fund. This increased the stake of the promoters to 61% from 53.3% the company.
Shares of NDTV declined Rs 4.25, or 1.01%, to end at Rs 416.5. The total volume of shares traded was 33,270 at the BSE. (Thursday)
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To introduce a range of premium kitchen products. Lighting products and appliances maker Bajaj Electricals is targeting the premium Indian home appliances market. The company has entered into a strategic alliance with Italy-based Nardi Elettrodomestici Spa to launch Bajaj Nardi brand of home appliances in India.
The association will enable Bajaj Electricals to widen its product basket to premium kitchen products, address the growing built-in appliances and modular kitchen market in India. With presence in 80 countries, Nardi has 40 per cent market share of the competitive Italian home appliances market.R Ramkrishnan, executive director, Bajaj Electricals, said, “Nardi’s technological expertise and insights of the international markets will help Bajaj in expanding the offering. The company will introduce customised products for the Indian market that will be manufactured in Italy in the first phase.”
Initially, Bajaj Nardi will launch the range of hobs, cooktops and chimneys followed by built-in ovens, dish washers amongst others. Marco Nardi, chairman, Nardi Elettrodomestici Spa said, “India has potential to become double than the European market. Our main objective will be the modular kitchen and product ranges like hobs and hoots.” Ramkrishnan said that Bajaj Nardi is eyeing 25 per cent market share of the premium gas hobs and chimney market. According to the company executives, the Indian home appliances market is pegged at Rs 4,000 crore with brown goods segment largely dominated by the unorganised players.
The company plans to distribute Bajaj Nardi brand through about 8,000 out of 25,000 of its existing distribution dealers and make its presence in the specialised retail stores. The Nardi partnership is estimated to boost the topline of the Bajaj’s appliances business. Last year, the company’s appliances operations registered a turnover of Rs 375 crore and is expected to touch Rs 501 crore in FY2009.
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Its sovereign wealth fund now has $90 billion to spend on assets abroad. China's $200 billion sovereign wealth fund now has as much as $90 billion to spend on assets abroad, an increase of more than 30 per cent on its original allocation, its president and chief investment officer told western bankers in Beijing on Wednesday.
The China Investment Corporation initially had about $66 billion for investment offshore but Gao Xiqing said it had changed that after the government decided less would be needed to restructure Agricultural Bank of China, China Development Bank and other struggling state-owned financial institutions. Gao said most of CIC’s enlarged offshore allocation would be given to external managers to invest in non-renminbi-denominated equities, fixed-income products and alternative investments including private equity funds, hedge funds and possibly commodities.
The fund has already chosen a number of global fund managers through an open bidding process to invest in offshore equities on its behalf but has not yet released their names as it is still negotiating contract terms. CIC emerged in May last year when it invested $3 billion in a pre-IPO stake in US private equity firm Blackstone — before the fund was even formally established. It has since invested a little over $5 billion for a 9.9 per cent stake in Morgan Stanley, $200 million in Visa’s IPO and $100 million in the Hong Kong IPO of China Railway Group.
In the case of Blackstone, the fund’s investment has lost more than a third of its value. Its Morgan Stanley stake has lost about 5 per cent. Both of CIC’s smaller investments have risen significantly.
When CIC was established, it was given $200 billion with a mandate to invest in roughly three equal parts — one-third to take over Central Huijin Investment, the entity that holds most of the government’s stakes in large state-owned banks and brokers; one-third for overseas investments; and a third to bail out the unreformed state banks.
At the end of last year, CIC recapitalised China Development Bank with $20 billion as part of the process of transforming it from a policy arm of the government into a commercially run bank. The reallocation of CIC funds suggests the government intends to restructure Agricultural Bank with a far smaller amount than earlier estimates, which went as high as $50 billion.
CIC has recently become more cautious in the face of intense domestic criticism over its investment record and a frosty reception from foreign governments because of a perceived lack of transparency and questions over political motivation. Fund officials have said the United Kingdom is the only major western power that has consistently welcomed CIC. Lou Jiwei, CIC’s chairman, has likened the fund to a Beijing taxi driver who wakes up each morning knowing he must make Rmb300 million that day to cover his expenses.
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Educomp Solutions Ltd's profit and revenue could likely double in 2008/09, as more schools adopt its teaching aids, its managing director told investors late on Wednesday.Rising household income and demand for quality education from India's fast-growing middle class have created a lucrative market for multimedia teaching-aids and computer-education programmes that Educomp offers to schools.
Smart Class is Educomp's interactive education-aid which contributes nearly half of the firm's revenue. Orders for computer-aided-education programmes from government-run schools add another third. Educomp's stand-alone net profit is seen rising to 1.35-1.4 billion rupees in the year to March 2009, up from 700.7 million rupees a year ago, Prakash said. Revenue will rise to 5.4-5.5 billion rupees from 2.62 billion rupees in 2007/08, he said.
With little competition and high entry barriers for its largest businesses, Educomp trades at nearly 98 times its 2007/08 earnings. Prakash said 1,700 schools would use Smart Class in 2008/09, up from 933 currently. The firm also expects 12,000-15,000 schools to order computer-aided-education programmes in the year, with the government hiking spending on elementary education.
The order value from the 933 schools stands at 5.92 billion rupees over 3-5 years, he said. Educomp's capital expenditure in the current year will be 3 billion rupees, up from 1.75 billion a year ago, Chief Financial Officer Sangeeta Gulati said on the call.
Educomp's board on Wednesday approved raising up to $500 million overseas, $150 million of which would be used to set up 150 schools over four years. Prakash said he expected to have 25 schools by the end of the financial year.Educomp has a tie-up with Ansal Properties & Infrastructure Ltd to lease out and manage schools in townships built by the real-estate developer. It is also in talks with other developers for similar agreements. The firm has no immediate plans for using the remaining $350 million, Prakash said. Educomp shares were up 1 percent at 4,031 rupees at 10:57 a.m. in a flat Mumbai market.
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