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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In a move that will add to its offshore vessel building expertise and give it an edge over competition, ABG Shipyard, the country’s largest private sector shipyard, is looking at building sub-sea vessels, which can be employed underwater for exploration and production (E&P) activities. The shipyard is currently in talks with a Middle East company for strategic technology tie-up, and as a packaged deal, it is also looking to secure contracts for the vessels. The deal is expected to be finalised early next month.
ABG plans to build these specialised offshore vessels at its upcoming ultra-modern Dahej facility, which would have the capability of making rigs as well as large vessels. The value-add initiative would not require any major investment, barring $25 million for some equipment ABG does not have today.
Sub-sea vessels are employed for offshore construction, inspection, repairs and maintenance of new and existing oil and gas fields, below the ocean floors. ABG had built an undersea construction vessel, CCC Pioneer, for a Greek firm about five years back. Looking at the demand and current market levels, a new sub-sea vessel would cost $60-100 million and being technical in nature, take about three years to build. At present, these vessels are sourced from yards in Norway, Japan and Korea.
With E&P spend increasing, the strategy to enter sub-sea vessels would work well for ABG and it would be going one step ahead of their offshore vessels expertise. ABG’s plan to enter this segment comes at a good time, given the shortage of suitable specialist vessels and robust global demand for sub-sea intervention work in the oil and gas industry.
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Lupin Ltd‘s subsidiary in Japan, Kyowa Pharmaceutical Industry Co Ltd has received approvals for 10 products from the Ministry of Health & Labour Welfare, Japan (MHLW) and expects to launch these in July 2008. Lupin had acquired Kyowa in October 2007 and it is currently focusing on enriching its product basket and expanding its therapy width. These fresh approvals will strengthen Lupin's position in the worlds' second largest pharmaceutical market.
These newly registered molecules will significantly add to Kyowa's growth over the next few years. The company will get the advantage of an early entry in the progressive opening up of the generic Pharma market of Japan as it intends to rapidly introduce an array of generic therapies from its global portfolio.
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Hindustan Oil Exploration Company Ltd (HOEC) has conducted a drill stem test (DST) covering about 17 meters (in three Zones) out of a total of about 45 meters in eight gas bearing reservoir zones in Dirok-1 discovery well in block AAP-ON-94/1.
The DST has resulted in flow of natural gas at an initial rate of approximately 6 million standard cubic feet per day (mmscfd) in the aggregate from the three tested zones along with condensate at an initial rate of approximately 75 barrels per day through 6.35 mm bean, indicating discovery being of potential commercial interest.
The Company (the Operator), Indian Oil Corporation Ltd and Oil India Ltd presently have 40.323%, 43.548% and 16.129% participating interest respectively in the exploration phase. Oil India Ltd, the licensee of the block, has an option under the Production Sharing Contract to acquire additional 30% participating interest in the development and production phase. Should, Oil India Ltd exercise this option, the revised participating interest in the development and production phase shall be 26.882%, 29.032% and 44.086% for the Company, Indian Oil Corporation Ltd and Oil India Ltd respectively.
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ACC Machinery Company Ltd to HNG Group for a consideration of Rs 45 crore. “ACC Machinery has reported a net profit of Rs 9.75 crore for the year ended December 31, 2007, while sales and other income amounted to Rs 63.24 crore. The company announced a dividend of Rs 190 per share aggregating Rs 7.60 crore,” ACC said in a BSE announcement. The company last year sold ACC Nihon Castings unit for Rs 30 crore.
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UltraTech Cement, part of the Aditya Birla Group, has posted a rise of 29% in its net profit for the year ended March, 2008 at Rs 1,008 crore compared to Rs 782 crore in the previous financial year. The net sales of the company during FY08 grew to Rs 5,509 crore from Rs 4,911 crore, up 12.18%. EPS for FY08 was Rs 80.9 against Rs 62.8 last year. The company produced 15.1 million tonnes of cement with an effective capacity utilisation of 101%.
For the quarter ended March, the net profit rose by 22% to Rs 283 crore from Rs 232 crore in the previous corresponding quarter. The net sales during the quarter stood at Rs 1,602 crore against last year's Rs 1,465 crore.
In the last quarter, UltraTech commissioned its new clinkerisation unit in Andhra Pradesh where as the remaining capacity expansion in Andhra and the grinding unit in Karnataka are expected to go on stream in the first half of FY09. Once the cement making unit in Andhra Pradesh commissions, the company's overall capacity will shoot up to 23.1 million tonnes.
The company has issued cautious business outlook for the current year. It expects the overall cement demand in FY09 to grow by 9 per cent. However, continuous government intervention has resulted in uncertain price environment, which together with significant increase in input costs will have an adverse impact on margin going forward.
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Crisil has lowered its GDP growth forecast to 8.1% for FY09 from the earlier forecast of 8.5% on account of worsening inflation, interest rate and global growth outlook. Inflation, however, is expected to stabilise at 5.5%. On the other hand rating agency Moody’s expects India’s GDP growth to moderate from 8.9% in 2007 to 7.8% this year, while consumer price inflation will average under 6%.
Crisil said that though there would be some moderation, the overall growth scenario is expected to remain strong on sound investments. Domestic private consumption demand will also provide some support to the economy against slowing external demand. Sectoral forecasts for industry and services have also been adjusted downward to 8% and 9.8%, respectively. Assuming a normal monsoon this year, Crisil expects agriculture to grow at 3%.
Crisil’s earlier GDP forecast of 8.5% had assumed a cut in the policy interest rate by the central bank in response to the slowing economy. This is now ruled out since current inflation and inflationary expectations are way beyond the RBI’s comfort zone of 4.5-5%. This, coupled with the recent scaling down of global growth projections, has resulted in revising the growth projections downward for 2008-09. The growth is expected to be slower, but still a healthy 8.1%.
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The country’s largest drug maker, Ranbaxy Laboratories, has entered into strategic business alliance with the Chennai-based Orchid Chemicals. The pact involves multiple geographies and therapies for both finished dosage forms and active pharmaceutical ingredients (API) for several products. This alliance will give Ranbaxy access to Orchid’s product range, including cepholosporins and will allow Orchid to leverage Ranbaxy’s distribution network. The agreement will pave way for future co-operation between the two companies. The companies however refused to divulge details of the deal. The agreement will be mutually beneficial and synergistic, allowing both the companies to leverage each others’ inherent strengths.
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Foreign institutional investors (FIIs) bought shares worth net Rs 699 crore on Thursday, 17 April 2008, compared to their buying of Rs 3.80 crore on Wednesday, 16 April 2008.
FII inflow of Rs 699 crore on 17 April 2008 was a result of gross purchases Rs 4067.50 crore and gross sales Rs 3368.50 crore. Sensex rose 237.01 points or 1.46% at 16,481.20 on that day.
FII inflow in April 2008 totaled Rs 418.30 crore (till 17 April 2008). FII outflow in calendar year 2008 totaled Rs 11,014.40 crore (till 17 April 2008).
There are a total of 1,327 FIIs registered with the Securities & Exchange Board of India (Sebi).
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Reliance Industries Ltd’s fourth quarter net profit grew 24% on the back of higher refining margins. The company’s quarterly net profit was Rs 3,912 crore as against Rs 3,156 crore in the corresponding year-ago quarter. The net turnover was up 36 per cent, at Rs 37,286 crore as against Rs 27,448 crore. The Gross Refining Margin (GSM) for the quarter was $15.5 a barrel against $13 a year ago, and much higher than several global benchmarks.
Revenues from refining and marketing, its largest segment, rose 36 per cent, to Rs 28,686 crore, while the segment Earnings before Interest and Taxation (EBIT) rose 25 per cent, to Rs 2,839 crore. The EBIT margin for the quarter however, fell to Rs 9.9 per cent, from 10.3 per cent a year ago. It was lower because though the refining margin was a high $15.5 per barrel, the cost of crude per barrel was going up making the refining margin lower in proportion.
The petrochemicals segment continued to be dragged down by high feedstock prices, with polyester margins remaining flat primarily due to lower paraxylene margins. Petrochemical revenues were up 12 per cent (Rs 14,119 crore) and EBIT up 6 per cent (Rs 1,466 crore). The EBIT margin fell to 10.4 per cent from 11 per cent.
For fiscal 2007-08, RIL’s net profit rose 63% to Rs 19,458 crore as against Rs 11,943 crore in FY07. However excluding income from exceptional items of Rs 4,733 crore resulting from a stake sale in subsidiary RPL during the year, the net profit has risen by 28 per cent. Its turnover grew 18% at Rs 139,269 crore as against Rs 118,354 crore. The net operating margin, however, dropped to 17.5 per cent from 17.9 per cent. EPS for the full year excluding exceptional income stands at Rs 105. At CMP of Rs 2,642, the stock is trading at a PE of 25x its FY08 earnings.
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Axis Bank has reported a 70.6% increase in net profit during the fourth quarter of 2006-07 to Rs 361.4 crore mainly due to a steady rise in interest and fee income. The increase in profits during the fourth quarter is despite non-tax provisions more than doubling to Rs 164.2 crore on account of provision of Rs 72 crore for mark-to-market losses on six derivatives transactions and a Rs 20 crore provision for depreciation in its credit-linked notes portfolio. During 2007-08, the bank’s net profit rose 62.5 per cent to Rs 1,071.0 crore as against Rs 659.0 crore during the previous financial year. The private bank ended the last financial year with a capital adequacy ratio of 13.7% compared with 11.6% in 2006-07.
The bank’s interest income soared 89% to Rs 828.4 crore during the fourth quarter of 2007-08 as net interest margins went up to 3.9% during January-March this year compared with 2.9% in the same period last year. The rise was attributed to an increase in yield on advances and lower cost of funds, thanks to the focus on current and savings account (CASA) deposits. The bank’s total deposits rose 49% to Rs 87,626 crore, while CASA resources grew 71% to Rs 40,027 crore.
At a time when the industry saw 21% growth in advances, its net advances rose 62% to Rs 59,662 crore during 2007-08, with retail loans rising 52 per cent to Rs 13,592 crore at the end of March 2008. It has also announced a dividend of 60% for the year ended March 2008. The diluted earnings per share (EPS) were at Rs 31.3 compared with Rs 22.8 at the end of March 2007. At CMP of Rs 881, the stock trades a PE of 28x its FY08 earnings. We remain bullish on the bank’s growth prospects.
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Reliance Industries Ltd has posted a net profit of Rs 3,912 crore for the quarter ended March 31, 2008, an increase of 23.95% as compared with Rs 3,156 crore in the same quarter in 2007.
Total revenues for the quarter ended March 2008 has increased to Rs 37,575 crore from Rs 27,573 crore reported in the same period in 2007. For the year ended March 2008, the company has shown a net profit of Rs 19,458 crore, an increase of 62.90% as against Rs 11,943 crore for the year ended March 2007.
Total revenues for the year ended March 2008 has increased to Rs 1,34,338 crore from Rs 1,12,171 crore during the year ended March 2007. The board of directors at its meeting held today has recommended a dividend of Rs 13 per fully paid-up equity share of Rs 10/- each.
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Tata Consultancy Services (TCS), India`s biggest software exporter registered a Y-o-Y increase of 4.15% in earnings and a sequential decline of 6.17% in consolidated net profit to Rs 12,450 million in quarter ended March 2008. During the quarter, the company posted earnings of Rs 12.72 a share on consolidated basis, registering a sequential increase of 6.19%. Consolidated total revenues of the company grew 18.13% on Y-o-Y basis and a sequential rise of 2.95% during the quarter to Rs 60,980 million.
For the financial year 2008, TCS posted 19.31% increase in consolidated net profit to Rs 50,260 million over fiscal 2007. Consolidated total income for the year rose 23.45% to Rs 233,494.50 million compared with the prior year.
Commenting on the financial performance in FY 2008, S. Ramadorai, CEO and managing director said, ``We are extremely satisfied with our annual performance. Our full year results reflect a validation of our strategy and robust business model that has helped us deliver strong growth rates again on an ever increasing base and in a difficult and challenging environment.`` He added, ``We will deliver sustained, profitable growth in the next financial year helped by a new agile customer-centric organisation structure that adds value to our clients and employees.``
N. Chandrasekaran, chief operating officer and executive director said, ``TCS continues to gain traction for its superior full services capabilities backed by our global network delivery model. Our significant deal wins in the last few quarters across sectors and markets and a healthy deal pipeline will drive our ramp ups to deliver growth next year. In addition to the major markets, we are also well positioned to deliver new growth markets like Asia-Pacific, India, Middle-East and Latin America.`` Shares of the company declined Rs 1, or 0.1%, to settle at Rs 999.9. The total volume of shares traded was 129,595 at the BSE (Monday).
Other Highlights:
> 53 new clients added
> Gross employee addition at 6,921 and net employee additions at 3,299
> Closed 6 USD 50 million plus deals in Q4
> Rs 5 a share declared as final dividend in Q4
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Citigroup has suffered a second massive loss and is cutting 9,000 jobs as the credit crisis continues to take its toll on the biggest US bank.
It made a loss of $5.11bn (£2.7bn) in the first quarter, although this was smaller than the $9.8bn loss reported in the final three months of 2007.
The results included about $12bn of write-downs for sub-prime mortgages and other risky assets.
Citigroup employs about 369,000 people worldwide, including 11,000 in London.
The job cuts are on top of 4,200 layoffs announced in January.
Lenders worldwide have written off more than $200bn hit by the credit crisis.
"Our financial results reflect the continuation of the unprecedented market and credit environment," said Citigroup chief executive Vikram Pandit.
Only Switzerland's UBS has reported bigger write-downs and credit losses than Citigroup from the collapse of the sub-prime mortgage market.
'Cathartic quarter'
The loss was slightly deeper than many analysts had expected but European and US stock markets rose in relief there were no nasty surprises.
"It's a cathartic quarter," said Arthur Hogan, chief market analyst at Jefferies & Co in New York.
Citigroup shares climbed 4.5% in New York to finish at $25.11 - still about half what they were trading at last year.
"The market is shrugging it off. We knew there were going to be write-offs and [Citigroup] hasn't yet said anything far too negative," said Andrea Williams, head of European equities at Royal London Asset Management.
Earlier this week, Citigroup rival Merrill Lynch said it lost $1.96bn in the first quarter of 2008 and unveiled plans to cut about 4,000 jobs worldwide.
Merrill's results included about $4.5bn of sub-prime related write-downs.
Revenue halves
Citigroup's revenues plunged 48% to $13.2bn as the firm wrote-down the value of assets linked to sub-prime mortgages - those given to people with poor or patchy credit histories.
Of the write-downs, $6bn was directly related to the sub-prime market, with the remainder due to other assets and exposure affected by the credit crisis.
It also saw a $3.1bn increase in consumer credit costs due as people failed to keep up with payments on mortgages, unsecured personal loans, credit cards and auto loans.
Last year, investments and assets based on sub-prime loans quickly soured as higher interest rates pushed up mortgage payments and triggered a wave of defaults.
Banks became more reluctant to lend to each other as the scale of bad debts remained unknown, leading to a shortage of credit worldwide.
The credit crunch resulted in the collapse of US banking giant Bear Stearns and is being felt in the wider economy as consumers pare back debt-fuelled spending and grapple with higher mortgage payments.
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China's main share index fell 4% to a 12-month closing low on Friday, dragged down by a fall in PetroChina shares and growing concerns about the economy.
The Shanghai Composite share index dropped 3.97% to finish at 3,095 points on the Shanghai Stock Exchange.
Shares in PetroChina fell 5% to 16.02 yuan, below the price at which it first floated last October.
Investors are worried that higher oil prices will trim profits at the company's petrol operations.
As PetroChina is China's largest listed company, analysts said it was inevitable that its decline would hit wider market sentiment, dragging down other stocks.
Chinese investors are also said to be concerned at the government's continuing efforts to cool both inflation and growth at a time of global economic uncertainty.
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Easing inflationary trend helped banking and realty stocks to rally today. These sectors may continue their uptrend on Monday, also PSU banking sector will get more attention. That the crucial resistance of 5000 in Nifty can be broken on Monday. Crude oil price, which is on the rise, is a concern or we might have seen Nifty testing 5125 level on Thursday itself.
16,200 is a crucial level for Sensex and if markets sustains above this level for next few days then a new bullish trend would be seen and market may go up to 18,000 level. Markets are expected to continue to follow global cues on Monday morning which look positive given the fact that asian markets have opened on a higher note. Stocks to be watched out are GIPCL, Torrent power, Canara Bank, India Cements and Mcleod Russel India.
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Consulting and IT services provider Satyam Computer Services on Monday announced a 17.84 per cent jump in its January-March quarter profit after tax at Rs 468.45 crore.
The company had reported a PAT of Rs 397.51 crore for the fourth quarter ended March 31, 2007, the company said in a filing to the BSE.
The stand-alone total income increased to Rs 2,337.84 crore for the quarter ended March 2008 from Rs 1,778.40 crore in the year-ago period.
The board of directors declared a final dividend of Rs 2.50 on shares of Rs 2 each (125 per cent).
Accordingly, the total dividend recommended for the year is 175 per cent (Rs 3.50 on shares of Rs 2 each), including interim dividend of 50 per cent, the company added.
For the year ended March 31, the company posted a profit after tax of Rs 1,715.74 crore as against Rs 1,423.23 crore in the previous year. Total Income of the company increased to Rs 8,394.48 crore for the year ended March 2008, from Rs 6,410.08 crore a year ago.Shares of the company were trading at Rs 480.85, up 2.54 per cent on BSE in early morning trade.
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This is likely to drain out Rs185bn of liquidity from the system. Currently the liquidity in the system is comfortable as banks are parking money with RBI (average LAF absorption by RBI was Rs400bn during April 3-17, 2008 as against average daily injection of liquidity of Rs.274bn during March 17-31, 2008) hence liquidity wont be impacted significantly but after today’s run up in banking stocks some correction could be witnessed.
Year-on-year WPI inflation, which was 3.83 per cent on January 12, 2008, i.e., at the time of the announcement of Third Quarter Review, increased to 7.41 per cent on March 29, 2008 and remained at 7.14 per cent as on April 5, 2008 and its overall impact on inflation expectations requires to be monitored and moderated by RBI.
RBI in the third quarter review of monetary policy had stated that “liquidity management will continue to assume priority in the conduct of monetary policy. It was further stated that the liquidity conditions are being shaped by several underlying factors and their developments have implications for liquidity management going forward and warrant appropriate and timely action.” Taking the above factors into consideration RBI has taken the appropriate steps.
Our back of the envelope calculation suggests that NIMs are likely to be impacted by 2-4 bps and FY2009E PAT by 2-3%.
Banks currently don’t get interest on CRR hence the loss in income is due to funds that have to be set aside for CRR from excess liquidity parked in call money and other short term instruments. PSU banks could roll back PLR cuts announced in Feb 2008. However we feel all banks are likely to wait for the monetary policy to be over before taking any decision.
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We recently met the management of Bharat Forge (BFL) to get an update on its existing businesses as well as on some new initiatives and expansion plans announced by the company. On the existing business front, BFL has gained market share with Tata Motors – a key customer due to favorable change in Tata Motors’ product mix. This, and a strong growth in the non-automotive components business have mitigated the impact of a slowdown in CV sales in FY08.
Growth in exports too has been strong at 30%yoy (42%yoy adjusted for rupee appreciation) during 9mth FY08. Amongst BFL’s overseas subsidiaries, BFL America has seen a significant drop in business volumes in FY08 due to a slowdown in car and truck sales in North America.
On the new initiatives front, BFL’s upcoming non-automotive components facilities are likely to commence commercial operations in Q4FY09 and we expect material revenue contribution only from Q1FY10. These facilities are likely to operate at ~50% capacity utilization in FY10 and would have a revenue potential of Rs9-10bn at 100% utilization. BFL’s proposed JV with NTPC (51:49) would initially manufacture components for power equipment and would aim at manufacturing complete power plants by 2011-12 (initial capacity likely to 4500MW). Though BFL’s stake in the JV could be in for a significant dilution due to induction of a technology partner, it would remain a key component supplier to the JV with the obvious benefits of enhanced business opportunities.
BFL’s proposed Rs7.0bn fund raising plans (Rs4.0bn in debt and Rs3.0bn in preferential warrant issue to promoters) would be utilized for funding the proposed venture into the Capital Goods sector (which includes the JV with NTPC). We believe BFL would also need to plan a further expansion in its automotive components business as we estimate ~100% capacity utilization in this segment by FY10.
In our view the company’s target of 12% EBIDTA margin for its subsidiaries by FY10 (7.9% in 9mth FY08) appears stretched due to delays in achieving benefits of product rationalization and other synergies. BFL has re-iterated that escalations in steel prices are a pass through with most customers and hence would not impact margins materially. Going forward, we expect higher proportion of non-automotive components to lead to higher margins and consequently expect ~300bps margin expansion over FY08-10. This would lead to a strong 40% PAT CAGR for BFL over FY08-10. The stock trades at PER of 13.3x and EV/EBIDTA of 6.2x FY10 based on fully diluted equity capital. Maintain Outperformer.
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Anil Ambani group firm Reliance Money on Monday joined hands with the Bombay Stock Exchange and the Bombay Bullion Association to launch the country's first organised bullion trading platform.
The over-the-counter 'Bullion Spot Market' would be the first of its kind and would be operationalised within a month, the Anil Dhirubhai Ambani Group announced.
This would help India -- already the world's largest gold consumer -- to move from being a 'price taker' to a 'price maker' in the global gold market, Reliance Money CEO Sudip Bandyopadhyay said.
Currently, gold prices are governed by London Bullion market as a reference point.
While noting that BSM trading platform would be in line with London Bullion Market, Bandyopadhyay said that it would help jewellers monitor international price movements on real time basis and facilitate retail investors in purchase of gold coins and bars.
BSE, with its 25 per cent stake in NMCE, is already present in the commodity market and would provide domain expertise for the initiative. BBA, the country's largest bullion trading association that controls 75 per cent of domestic bullion trade, would help in setting the prices.
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Robust order book (up 48.1% YoY) to drive earnings growth: IVRCL’s current order backlog stands at Rs120b (+48.1% YoY, 3.5x FY08E revenue), which will drive revenue and earnings CAGR of 40.4% and 36.6% during FY08-FY10. We expect EBITDA margins to improve 70bp over FY08-FY10 driven by i) increasing proportion of buildings and power transmission in the order book and ii) operating leverage. Share of transportation projects to order book has reduced from 22% in March 2007 to 12% as at December 2007, which again is positive for margins. Given that ~93% of order book has price variation clauses, the impact of raw material price increases is limited.
Establishing a strong position in power T&D, buildings: IVRCL has been successful in building a strong presence in the power T&D segment (FY08 revenues Rs6.5-7b, v/s Rs3.6b in FY07). Also, share of buildings in order book has increased to 21% in December 2007 (v/s 12% in December 2006), wherein margins are relatively better. Both these segments are expected to be key growth drivers. IVRCL is also the largest construction companies in India in the ‘water management’ segment (50% of FY08 revenues).
Robust FY09 guidance: IVRCL reiterated revenues of Rs46-49b (up 35%-44% YoY), EBIDTA margin of 10.6-10.8% (up ~50bp YoY) and PAT of Rs2.9-3b (up 38-43% YoY). The company has comfortable net DER of 0.6x (March 2008), while incremental equity commitments towards BOT projects are negligible.
Valuation and view: We expect IVRCL to report net profit of Rs2b in FY08 (up 44.4% YoY), Rs2.7b in FY09 (up 34.4% YoY) and Rs3.8b in FY10 (up 38.8% YoY). At the CMP of Rs380/share, the stock trades at reported PER of 23.5x FY08E, 17.9x FY09E and 12.9x FY10E. Adjusted for BOT, real estate etc. the stock is trading at PER of 17.3x FY08E, 13.2x FY09E and 9.5x FY10E.
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Independent power producer and infrastructure player Lanco Infratech is preparing to join the great-Indian solar rush with plans to set up an end-to-end solar complex in Chennai. The company is working on the final details and will announce everything in a few days. It will deal with the entire gamut of solar technologies including conventional crystalline and thin film technologies. This move is in line with Reliance Industries’ plan to set up a plant in Jamnagar at a cost Rs 11,631 crore to make polysilicon, single and multi-crystalline ingots, solar grade wafers, SPV modules. The 1 gigawatt capacity plant is expected to create jobs for 11,000 workers.
The Union government has already received seven proposals worth $16 billion for setting up manufacturing facilities for polysilicon, single and multi-crystalline ingots, wafers, solar cells, photovoltaic moduels, LCDs, systems-on-chip and IC assembly units. While Reliance Industries is going for the entire value chain, Videocon, MoserBaer PV Technologies, Titan Energy Systems, KSK Energy Venture and Signet Solar are setting up units to manufacture solar components.
The rush of proposals has come in the wake of the incentives package announced by the government late last year offering 20% of capital expenditure in the first 10 years for semiconductor projects in special economic zones (SEZs) and 25% of capital expenditure for non-SEZ units including financial subsidies and equity participation.
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In its first overseas acquisition, JK Tyre & Industries has bought the privately-held Mexican tyre company Tornel for Rs 270 crore. The buyout is expected to close by May end. Earlier, in 1997, JK Tyres had acquired 51% stake in the domestic tyre company, Vikrant Tyres.
This acquisition will take JK Tyres’ annual capacity to 153 lakh tyres, of which Tornel will contribute 66 lakh. This will also make JK Tyres the largest tyre manufacturer in India. The four plants of JK Tyres together have a combined production capacity of 650 metric tonnes a day, while Tornel’s three plants have a production capacity of 290 metric tonnes a day from its 2,000 employees. Tornel’s annual turnover is around Rs 800 crore ($202 million in 2007), while JK Tyres turnover was in excess of Rs 3,200 crore in the last fiscal, of which Rs 500 crore was from exports. Tornel will be a fully-owned subsidiary of JK Tyres. JK Tyres will raise the money through internal accruals and debt, which will be structured though a SPV. JK Tyre shall bring a rights issue in the next few months, which will be in the ratio of 3:1, to help bridge the funds for the acquisition. The price of the issue will be determined at the time of offer.
This 100% acquisition will allow JK Tyre to gain access to North American markets through a range of free trade agreements (FTAs) that Mexico has with these countries. The company plans to continue the Tornel brand in Mexico, Brazil and other American markets, which will co-exist with its own JK Tyres. It will also utilise Tornel’s 241 distributors and 282 sales outlets to distribute its own brand.
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The Index of Industrial Production (IIP) rose 8.6% in February 2008, with capital goods growth rebounding to double-digit levels after falling to an inexplicable low of 2.1% in January, and consumer durables climbing out of negative territory. This comes as good news, as the IIP growth rate had dipped to 5.8% in January from 7.7% in December. Industrial growth at 8.6% in February 2008 is still lower than the 11% achieved in February 2007.
Capital goods growth, which, by falling to 2.1% in January, 2007-08, is back in double digit at 10.4% in February 2007-08. However, it is lower than 18% witnessed in February 2006-07. The story in consumer durable sector, which includes automobile and white goods, has also bettered. From a negative 3.1% in January, the growth in consumer durables sector bounced back with 3.3% growth in February 2007-08, and is near double of 1.8% in February 2006-07. The consumer non-durable sector, comprising largely FMCG products, grew by a whopping 11% in February 2007-08 compared with 9.3% in the same month in 2006-07. The sector’s performance is expected to better with customs duty cuts in edible oils and excise duty cuts in the budget start playing on the demand.
Basic goods and intermediate goods grew by 7.3% (10.7%) and 8.2% (13.3%), respectively, in the month under consideration. Manufacturing, which occupies the highest weightage of about 80% in the Index of Industrial Production, grew at 8.6% against 12% in February, 2007, much higher than 5.9% in January. In February, electricity generation grew by 9.8% from a low of 3.3% a year-ago while mining output managed to maintain the growth rate of 7.5% in February 2007-08. Mining and electricity had dropped to 1.8% and 3.3% in January 2007-08. As many as 15 out of the 17 industry groups showed positive growth in February 2007-08.
The February number reaffirms the belief that India’s growth story is very much on track. Although growth is a tad lower compared with previous months due to high base effect, cumulative growth for the April-December period indicates that investment-led growth is very much intact.
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Lanco Infratech Ltd (LITL) has won two super critical power projects with an installed capacity of 3300 MW in Uttar Pradesh. The bids were called by the Uttar Pradesh Government for development of the two thermal power projects viz., Prayagraj of 1980 MW (3x660 MW) and Sangam of 1320 MW (2x660 MW). As per the terms of the bids, while 90% of power generated through the projects must be sold to the Government of Uttar Pradesh, the remaining 10% could be sold by the successful bidder through the merchant market.
LITL has won both the projects by outbidding other top players like Reliance Power, NTPC and Jindal Steel & Power. The projects include all the required infrastructure linkages like road, water, fuel and rail. From among the four leading business houses that participated in the bid for the Prayagraj Power Project, LITL won the bid with a quote of Rs 2.88 per unit. The second lowest bidder Reliance Power quoted Rs 2.94 per unit, followed by NTPC's Rs 3.44 and Jindal Steel & Power's Rs 3.591. The Sangam Power project had five players in the fray - LITL, Reliance Power, JSW, Jindal Steel & Power and RPG. Here also LITL won the bid through a quote of Rs 2.838 per unit while Reliance Power's was Rs 3.051, CESE's Rs 3.389, JSPL's Rs 3.51 and JSW's Rs 3.545.
LITL will invest around Rs 14,000 crore for developing the two projects in Uttar Pradesh. With the addition of these two projects, Lanco would now have a total capacity of around 13,000 MW, covering both operational and those under implementation and development.
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