According to sources, Reliance Industries (RIL) has initiated talks with global majors to offload upto 10% stake in its D-6 block in the Krishna Godavari (KG) basin. RIL owns 90% of its D6 Block located in the Krishna-Godavari, or KG, basin off the Bay of Bengal. RIL is likely to spin off its KG assets into a new company and then offer close to 10% stake to a strategic partner. This is to ensure that the partner does not get a stake in RIL. This deal, if it goes through, will help RIL’s plans, as a lot of capital expenditure required for the gas production and transmission can be done through this deal.
The gas output from RIL’s D-6 block in the KG basin may rise another 50% to 120 mmscmd after eight new discoveries. With the gas projection from KG basin being increased to 120 mmscmd and commercial production just a quarter away, the valuation of the field will go up by 50%. This strategic move will create additional share holder value, if done after resolving its gas sales dispute with Reliance Natural Resources (RNRL).
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After seven straight years of growth, the Indian automobile industry declined 4.7% to 96.48 lakh units in 2007-08 against 1.01 crore units in the previous financial year. The automobile industry, which was plagued by high interest rates affecting local consumer demand, credit squeeze and rising input costs, interestingly reported a robust growth in exports (22.3% growth to 12.37 lakh units in FY08 as against 10.11 lakh units in last fiscal.) According to figures released by the Society of Indian Automobile Manufacturers (SIAM) yesterday, the total production declined 2.29% to 1.08 crore units against 1.11 crore units in FY07 as demand remained low.
The industry was largely impacted by the steep decline in two-wheeler sales, which reduced 7.92% to 72.48 lakh units in FY08 against 78.72 lakh units the previous year. Motorcycles proved to be the biggest dampener. It declined 11.90% to 57.68 lakh units in FY08 as against 65.47 lakh units of the previous year. Scooter sales, however, remained positive and grew 11.64% to 10.50 lakh units in FY08. Mopeds, on a slightly lower base, grew 16.63% to 4.13 lakh units in FY08 against 3.54 lakh units of the previous year.
Passenger cars sales, increased by 12.17% to 15.47 lakh units last year against 13.79 lakh units clocked in FY07. More than 50 new cars launched in the last fiscal pushed sales as the mid-size cars segment Maruti SX4, Tata Motors Indigo, Hyundai Verna grew the highest at 14.6% to 2,25,719 units while the B segment Maruti Swift & WagonR, Hyundai Santro & i10, Tata Motors Indica grew 14.1% to 8,59,137 units. More than 60 new cars and models are expected to hit the market in current year, which is likely to keep the sales momentum going.
The commercial vehicle market posted positive sales on the back of strong sales growth in light commercial vehicles (LCV) and buses. The total LCV market grew 12.29% to 2,15,823 units last fiscal and buses grew 34.72% to 38,655 units.
The industry is fighting the credit squeeze problem in the market, which has affected much more than the prevailing high interest rates. The lack of finance in semi-urban and rural areas and the rising fuel cost are worrisome trends and are likely to hit the industry in the current fiscal too.
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India’s largest private sector steel maker Tata Steel is forming a special purpose vehicle (SPV) with state-owned MMTC for acquiring gold and diamond mining businesses abroad. MMTC would hold 26% stake in the proposed venture, leaving 76% to the Tata Steel.
The venture is likely to start operations by acquiring mining rights for diamond in Angola and Namibia before venturing in other African markets. The SPV would also explore business opportunities in iron ore and coal mining abroad through acquisitions or fresh mining rights. India is the world’s largest importer of diamond and gold with imports to the tune of $10 billion in each category. The joint venture between Tata Steel and MMTC would aim at acquiring mining rights for these minerals mainly in African markets with the aim of reducing country’s import dependence. While African markets would be the prime focus of the venture, it would also explore mineral rights in Australia, Brazil, Russia and Indonesia.
While MMTC is likely to bring its expertise in mineral trading and mining into the venture, Tatas would infuse cash to help the SPV to place aggressive bids for mining rights. The joint sector SPV is being conceived on the lines of a coal SPV formed in collaboration with five PSUs including SAIL and NTPC.
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Power equipment maker Areva T&D (India), which is investing Rs 700 crore to put up three greenfield manufacturing plants, is eyeing to double its sales turnover in the next two to three years. Indian subsidiary of the French major, had recorded a sales turnover of Rs 2,000 crore in the last year, up by 24.9 per cent over 2006. It has eight existing manufacturing facilities in India. Its greenfield projects are coming up at Hosur, Baroda and Padappai. The company has upwardly revised its investment plans in these plants to Rs 700 crore from Rs 500 crore earlier.
The transmission and distribution business in India will continue to grow since modernisation of grids & interconnections and new generation capacity are taking place in the country. Transmission contributes 60 per cent of Areva T&D’s total business.
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Yes Bank, one of the new-generation private banks, net profit increased by 109% in the fourth quarter ended March 2008. The bank has so far not faced any delinquency on its derivatives exposure and has therefore made no provisions for such transactions.
The bank’s advances grew 50 per cent to Rs 9,430 crore as on March 31, 2008, from Rs. 6,290 crore in the corresponding period last year. The deposit base rose 61.5 per cent to Rs.13,273 crore, from Rs. 8,220 crore earlier. Its Net interest income went up at Rs 389 crore versus Rs 202 crore. Its total income was up 75.9 per cent to Rs 494.3 crore, compared to Rs 281.09 crore. Its provisions and contingencies rose 80.1 per cent to Rs 22.8 crore, compared to Rs 12.7 crore during January-March 2007. Consequently its net profit went up 108.7 per cent to Rs 64.5 crore. Its Net interest margin is at 3.06 per cent, as against to 2.6 per cent in the fourth quarter of 2006-07. Its cost of funds stood at 8.4 per cent, while capital adequacy ratio was 13.64 per cent. Of the total advances, retail constitutes one per cent, while corporate lending was the major chunk of the loan book.
Of the total deposits current and saving account base, the low-cost source of funds, is about 8.5 per cent. The bank has invested in building the infrastructure to build the retail business and now will focus on growing its retail book. The bank has a target to have 117 branches by end FY09 and 150 by 2010.
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Larsen & Toubro (L&T) has bagged four orders worth Rs 1,687 crore from the government of Rajasthan, Bhushan Steel, SAIL and Damodar Valley Corporation (DVC). The orders are for water supply projects, sinter plant and cold roll mill and a coal handling plant.
The construction division of Larsen & Toubro has secured an EPC contract worth Rs 635 crore from the government of Rajasthan for design, supply, build and commissioning of water supply project. When completed, the project will provide safe drinking water to the people of Jaisalmer and Barmer including army bases. L&T, in consortium with Outotec GmbH, has bagged Rs 555 crore sinter plant order from Bhushan Steel (BSL). Apart from these two orders, L&T's ECC has bagged Rs 272 crore order from the Bokaro plant of SAIL for the construction of civil works for a new cold roll mill.
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A consortium comprising Reliance Industries (RIL) has made a significant oil discovery in Yemen. The discovery in Block 9 in Qarn Qaymah 2 well is learnt to be significant, and RIL is in process of evaluating the potential commercial interest. This was confirmed by RIL’s president for international business Atul Chandra.
Block 9 has an output of 10,000 barrels of oil per day (bopd), operated by Calvalley Petroleum of Canada holding a 50% stake. Hood Oil, subsidiary of the Yemen-based business group, Hayel Saeed Anam Group (HSA) owns 25% in this block and balance 25% with RIL. Now, Qarn Qaymah 2 has encountered excellent hydrocarbon indications while drilling and, depending on the test results, may be the first hydrocarbon discovery within the granite basement zone of Block 9. The basement is a large structural high and could have significant potential, Calvalley Petroleum had said in March. However more details of the said discovery were not available at present stage due to regulatory issues.
Globally, besides Block 9, RIL has acquired stake in two onshore oil blocks, 34 and 37, in Yemen where it is partnering Hood Oil. Both blocks measure 7,500 sq km each and are located along the border with Oman. RIL’s other global exploration assets comprise of two blocks each in Oman and Columbia and one each in East Timor and Australia covering an area of about 38,000 sq km.
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Netherlands-based district court in Hague has upheld an order by the arbitration tribunal of the International Chamber of Commerce in 2006 directing Videsh Sanchar Nigam Ltd (VSNL, now Tata Communications) to permit Reliance Globalcom (formerly Flag Telecom) to upgrade its bandwidth capacity at the cable landing station in Mumbai.
The district court has also ordered the Tata group company to pay proceeding charges of euro 13,092 plus euro 12,844 for legal representation to ADAG. The decision comes just ahead of a final verdict on the dispute in which Flag Telecom has separately sought $400 million (Rs 1,600 crore) in damages. Hearings for this issue have ended.
Under an agreement with VSNL, Flag terminated its undersea cable at the Tata group company’s landing station at Mumbai. This meant Flag also required VSNL’s permission to upgrade cable capacity. In 2004, VSNL denied Flag this permission on various technical grounds. ADAG filed for arbitration with the international tribunal in December 2004 against Tata Communications on two accounts. One, it had asked for directions to allow the company to upgrade the capacity of the Indian leg of the cable. Two, it demanded compensation for the business opportunity it had lost due to its inability to upgrade the capacity.
This significant development will pave the way for further expansion and will result in reduced costs for RCom and improvement in services to RCom’s customers. The group has already announced laying of cable at the cost of $400 million connecting 14 countries in West Asia to India and seamlessly integrated with Flag Global Network. Currently, the cable connects 39 countries across four continents. The company had recently announced a $1.5 billion project under which it would be laying 50,000 km of fresh optic fibre, bringing in over 65 countries across six continents within its network.
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Reliance Industries (RIL) and Bhel are in talks to form a joint venture (JV) for setting up solar fab units. RIL has plans to invest over Rs 30,000 crore in the chip manufacturing business. While RIL is scouting for partners for setting up two fab units, Bhel is looking for a strategic partner to venture into equipment manufacturing for solar power.
BHEL has received a communication from the Prime Minister’s Office (PMO) in this regard and may go in for a JV with Reliance Industries. The proposed JV is likely to venture into manufacturing of other small and medium equipment for solar power apart from the solar photo voltaic (SPV) cells. The JV would also look for small and mid-sized acquisitions in the international market for solar power.
The partners-in-waiting have not finalised the financial and technical details for the proposed JV and would firm up the plans in the next couple of months. The JV Company would be eligible for capital subsidies and tax concessions for the solar fab units, a cost of Rs 11,631 crore. The solar fab unit is proposed to be set up at Jamnagar in Gujarat, while the company is in talks with the state government of Maharashtra, Andhra Pradesh and Haryana to finalise the site for the semiconductor fab, according to details available with the government.
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Forgings major Bharat Forge is believed to have acquired an 89% stake in French forgings company Groupe Sifcor (Society of Industrial and Financial Courcelles). The acquisition will give Bharat Forge an entry into the French automotive sector and access to big Sifcor clients like PSA Citroen and Renault. Groupe Sifcor had posted euro 172 million (about Rs 1,152 crore) revenues last year. Last week, news about a possible acquisition appeared in a French newspaper. However the company officials at this stage declined to comment on the same.
Groupe Sifcor has five manufacturing sites in Europe. It employs 1,280 people and spends 3% of its turnover on R&D. In 2007, the company produced 48,000 tonne of high-grade steel. Family-owned Groupe Sifcor was formed in the 1880s and is comprised of three subsidiaries for hot-die forging, warm extrusion and cast forgings.
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Larsen & Toubro, the country’s biggest engineering conglomerate, is bridging a ‘missing link’ in its portfolio. It is setting up a facility for manufacturing heavy-duty forgings. The initial investment for the unit would be to the tune of Rs150 crore.
Very few companies in the world make heavy-duty, single-piece forgings weighing 50-100 tonnes or more. L&T’s forgings division will be to heavy engineering sector, what Bharat Forge is to the automobile sector. L&T has so far depended on external vendors for heavy tonnage forgings. As a result, the forgings often took more time to be delivered than the rest of the equipment, which the company fabricated in-house. With an in-house forging unit, the company will be able to control its delivery schedules better and avoid project execution delays.
The conglomerate’s future plans include making Oman a manufacturing base, with capacities mirroring its massive Hazira complex. Oman currently helps it serve firms in the Middle East, besides the home-grown ONGC.
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Reliance Industries the country's largest private sector company is mulling an entry into the rig manufacturing business but the final decision is yet to be taken. The company plans to enter into rig manufacturing by the end of this year or the beginning of next year and is looking for a suitable partner for this business.
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Private equity firms invested about $3.3 billion across 97 deals in January March quarter 2008. The investment was higher compared to the same quarter a year ago, where it was $2.7 billion from 101 deals. However this investment was lower than the preceding quarter which saw 131 deals worth $5 billion.
The largest investment reported in the Jan March quarter 2008 was $ 395 million raised by Sofia Power Company, a part of India bulls group. Telecom continued to attract investor’s interest with KKR and Morgan Stanley investing in tower infrastructure firms like Bharti Infratel and Tower Vision. Other companies that raised $100 Million plus during the quarter were Cairn India and Ballarpur Paper Holdings amongst others.
Despite the turmoil in the global financial markets, PE investments during January to March 2008 registered growth over the corresponding period in 2007. This indicates that PE firms are still bullish on India story going ahead.
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Bharat Heavy Electricals Ltd will sign a memorandum of agreement today with Nuclear Power Corporation of India to float a joint venture for manufacturing equipment for nuclear power plants. The joint venture would also take up engineering, procurement and construction activities for nuclear power projects in India and abroad. BHEL expects to spend a sum of over Rs 4,000 crore in the proposed joint venture, which would be funded through internal accruals.
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The country’s top steel producers, including Tata Steel, SAIL and Jindal Steel have decided to roll back the prices of long steel products, including construction-grade TMT bars by Rs 2,000 per tonne. The price cuts would be implemented immediately. This reduction in prices of long products is part of the package brokered by the steel ministry with main steel producers with the aim of providing relief to the common man by lowering prices of steel products directly used by him. Accordingly, the steel companies have also agreed reduce the price of galvanised corrugated (GC) sheets use as roofing material for low-cost housing.
The steel companies have also agreed to address the issue of supply constraints resulting in higher prices of steel. The main steel producers would now import the requirement of intermediate products like hot-rolled (HR) coils under advance licensing scheme for producing high-grade steel and GPGC sheets, colour coated steel and cold-rolled (CR) coils. This is expected to unlock an additional two million tonnes of HR coils in the domestic market that would other wise have gone into producing high grade steel meant for exports.
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Reliance Industries (RIL) has proposed to invest around Rs 30,000 crore over 10 years in setting up two plants for semiconductor fabrication and manufacturing solar grade wafers and polysilicon etc. The RIL proposals are among the seven applications received for establishing semiconductor fab facilities. The government had announced the guidelines for the seminconductor policy in September 2007. The total investment expected from the seven proposed facilities for setting up solar fabs is to the tune of Rs 65,000 crore. Besides RIL, the other proposals are from Videocon, Moser Baer, Titan Energy System, KSK Energy Ventures Pvt Ltd and Signet Solar.
RIL is yet to decide the location for its semiconductor fab that will be set up at an estimated outlay of Rs 18,521 crore. The choice is between Navi Mumbai, Hyderabad, Mysore and Haryana. The final decision on the location would be taken based on RIL’s negotiations with the state governments on incentives. RIL’s second proposed plant, at an expected cost of Rs 11,631 crore, would be set up at Jamnagar in Gujarat, once it gets the government clearance. This plant would manufacture polysilicon, single crystal/multi-crystalline ingots, solar grade wafers, SPV modules with a capacity of 1 giga watt. RIL has sought a subsidy of Rs 3,394.6 crore from the government for its first semiconductor plant, and Rs 2,326.2 crore for the second one.
India needed a big player in the chip manufacturing space, while the smaller assembly, test, marking and packaging (ATMP), and solar photovoltaic segment, which is less complex is well set. This will put India on semiconductor map of the world and yet another diversification for Reliance Industries.
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American Tower Company (ATC) is believed to be the frontrunner among the bidders for investing in the tower firm of Tata Teleservices. Boston-headquartered ATC is a publicly-held company owning and operating over 23,000 sites in the US, Mexico and Brazil. According to sources, Tata Teleservices and ATC are in talks over the valuation of the tower entity of the telco.
Recently, Tata Teleservices managing director Anil Sardana had said that the task of divesting stake in its tower company would be concluded by the end of May. Tata Tele wants to divest anything between 26% and 49%. According to the company, around 15 strategic investors were shortlisted for picking up a stake in the hived-off tower entity of Tata Tele. At present, Tata Teleservices Ltd (TTSL) has 10,000 towers, and Tata Teleservices Maharashtra Ltd (TTML) 3,500 towers.
The equity dilution model works very well in the tower business as this is a capital-intensive business. While financial investors offer capital for the infrastructure needed in the business, strategic investors can help in the actual operation of tower companies.
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The Indian Railways has increased the freight rate on iron-ore transportation by 5-6% by reclassifying it into ‘class-180’ from ‘class-170’. The change in the rate of freight is effective from April 1. The Railways has also announced some changes in the surcharge rates. While the surcharge on iron ore transported to ports for export has been increased to 100% from 60%, the surcharge on ore meant for domestic use has been reduced to 30% from 60%. The change in surcharges will be effective from April 15.
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American Tower Company (ATC) is believed to be the frontrunner among the bidders for investing in the tower firm of Tata Teleservices. Boston-headquartered ATC is a publicly-held company owning and operating over 23,000 sites in the US, Mexico and Brazil. According to sources, Tata Teleservices and ATC are in talks over the valuation of the tower entity of the telco.
Recently, Tata Teleservices managing director Anil Sardana had said that the task of divesting stake in its tower company would be concluded by the end of May. Tata Tele wants to divest anything between 26% and 49%. According to the company, around 15 strategic investors were shortlisted for picking up a stake in the hived-off tower entity of Tata Tele. At present, Tata Teleservices Ltd (TTSL) has 10,000 towers, and Tata Teleservices Maharashtra Ltd (TTML) 3,500 towers.
The equity dilution model works very well in the tower business as this is a capital-intensive business. While financial investors offer capital for the infrastructure needed in the business, strategic investors can help in the actual operation of tower companies.
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JSW Steel Ltd has announced that following the merger of Southern Iron & Steel Company Ltd (SISCOL) with JSW Steel Ltd, the Company posted a growth of 37% in Crude steel production for the year ended March 2008 over the previous year. The Company has also shown on comparable basis a 20% growth in volume of Crude steel production even after excluding 4.55 lakh tons of Crude steel produced by the erstwhile SISCOL. The Hot Strip mill recorded a highest ever production of 27.15 lakh tons during the financial year showing a capacity utilization of 108%.
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A consortium of Mahindra & Mahindra Ltd (M&M) and ICICI Venture Funds Managements Ltd, has signed a definitive agreement agreeing to acquire 100% stake in Metalcastello S.p.A, a leading Italian independent gear manufacturer. However, the company has not disclosed the cost of the acquisition.
Mahindra Forgings (MFL) has already created one of the leading forging Companies in the world. Together with Metalcastello S.p.A, the Company intends to replicate in the gear vertical what MFL has achieved in the forgings space. The customer base of both MFL and Metalcastello is complimentary and will enhance the synergies that Mahindra is already harvesting.
Metalcastello has revenues of around $100 million. The Company was originally founded in 1952 and is among the top gear manufacturers in Europe, focused primarily on the Off-Highway segment. The Company's product portfolio includes complex gears & shafts for use in vehicle transmissions and drivelines. Its Customer portfolio includes most of the global OEMs in the tractor, off highway & construction equipment space.
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Reliance Industries (RIL) has once again struck gas in exploratory block KG-DWN-2003/1of Krishna basin. This is the second consecutive gas discovery in this block in less then two months. This discovery has been christened as Dhirubhai 41 and has been notified to government and the upstream regulator, the Directorate General of Hydrocarbons (DGH). The potential commercial interest of the discovery is being ascertained through more data gathering and analysis.
RIL holds 90% participating interest (PI) in the block and Hardy Exploration and Production India holds the remaining 10%. This deepwater block, which was awarded to RIL in NELP-V, is situated 45 kms away from the coast and covers an area of 3,288 sq kms.
In the last quarter of this financial year (2007-08), RIL has made four discoveries, two in Krishna Basin deep waters, one in shallow waters of Krishna Basin and one in Mahanadi Basin. The commercial production of RIL’s gas from Krishna Godavari basin is likely to start in third quarter of the 2008 fiscal.
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Consumer durables heavyweight Videocon has put in a bid to acquire the loss-making handset business of Motorola as part of an attempt to shore up its planned wireless services business in India, one of the world’s fastest-growing mobile markets. Videocon’s interest has stunned industry watchers at a time when other top probable candidates like LG, Nokia, Samsung and Sony-Ericsson have declined to show similar interest.
Videocon Industries chairman Venugopal Dhoot confirmed his interest in bidding for the mobile devices business of Motorola. The world’s third-largest handset maker had announced on March 26 its intention to hive off the mobile devices business into a separate company. the deal will be financed through a combination of around Rs 1,800 crore of cash reserves and long-term loans raised in the global market. Motorola’s mobile business is expected to be valued at between $3.5 billion and $4 billion. Motorola also has a handset manufacturing facility in Chennai that makes both CDMA and GSM mobile phones.
Videocon’s telecom subsidiary Datacom has already received licences to offer mobile services throughout India and is awaiting allotment of spectrum to launch commercial operations. Videocon has already announced an initial investment of Rs 6,000 crore for its telecom operations in 23 circles of the country and is eyeing 25 million customers in the next three years. Its handset business will be an added advantage as the company can bundle attractive offers with mobiles.
The handset business is growing rapidly in India as the demand for mobile services is scorching. The Indian market for mobile phones is around 120 million units a year. Videocon already has a strong distribution network that will help the company in garnering market share in short time. With a tele-density of 25% in a country of 113 crore people, there remains immense room for growth. The acquisition, if it comes through, will give a boost to Videocon’s plans to become a pan-India player.
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Tata Motors has reported a 5.92 per cent jump in its total vehicle sales (including exports) during March to 66,495 units, against 62,779 units in the same month previous year.
Sales of passenger vehicles in the domestic market during March fell 4.04 per cent to 24,760 units compared to 25,760 units in the corresponding month a year ago. The company sold 13,042 units of Indica, down 14.7 per cent over same month previous year. The Indigo family comprising Sedan Indigo and station wagon Indigo Marina reported sales of 5,135 units, down 6 per cent. Sumo and Safari sales were marginally up during March at 6,560 units. Sales of commercial vehicles during the month were, however, up by 17.16 per cent to 35,993 units against 30,720 units in March last year. Exports in March stood at 5,765 units, down 8.48 per cent, against 6,299 units in March 2007.
For the April-March period of 2007-08, Tata Motor's total sales increased marginally to 5,82,401 units, against 5,78,862 units in fiscal 2006-07. In the passenger vehicle segment, the company sold 2,14,758 units in the domestic market, a decline of 5 per cent over the previous year. The cumulative sales of Indica were 1,35,642 units and the Indigo family posted a sale of 31,416 units. The SUVs Sumo and Safari accounted for sales of 47,700 units.
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At a time when the government is looking at addressing the issue of supply constraint in the steel sector to rein in inflation, public sector SAIL yesterday announced that it has achieved a record production of 13.04 million tonne of saleable steel and 14 mt of crude steel in 2007-08. SAIL accounts for nearly 33% of the total steel produced in the country. Any increase in production is bound to improve the supply situation in the market. There is a small demand-supply gap of 2-mt of steel in the domestic market after accounting for exports and imports.
SAIL registered a growth of 30% in production of special steel and value-added steel items, totalling 3.7 mt. The highest level of production was recorded for rails at 9,11,000 tonne. The company achieved the highest-ever domestic sales of 11.9 mt during 2007-08. Sale of rails grew 54%, plates 8%, hot rolled coils 7%, TMT bars 53% and medium structural steel 15%.
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GAIL has signed a contract with the producers of gas from the consortium of RIL, the BG Group and ONGC for buying the entire quantity of 17.3 million metric standard cubic metre per day (MMSCMD) gas produced from the Panna-Mukta-Tapti (PMT) fields. GAIL will buy the gas at $5.73 per million British thermal unit (mBtu) for Panna field and $5.57 per mBtu of the Tapti field.
Subsequent agreements were also reached regarding the supplies to consumers. GAIL signed a term-sheet to supply, 3.6 MMSCMD of natural gas to RIL and 2.13 MMSCMD of gas to Gujarat Gas Company. It has also inked a short-term term-sheet for 15 days with Gujarat State Petroleum Corporation (GSPC) for the supply of natural gas.
GAIL has signed the contracts to purchase and sell the entire volume of PMT gas. Marketing the entire 17 million cubic meters per day (mcmd) of gas from the PMT fields will increase GAIL’s marketing margin by Rs 100 crore annually, while transportation revenues will go up by Rs 450 crore annually.
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Equipment major Bharat Heavy Electricals Ltd (BHEL) has bagged Rs 550-crore export order for supply of boilers. The order has been received from Koniambo Nickel SAS. The contract envisages supply of 2x135 MW environment-friendly Circulating Fluidised Bed Combustion Boilers and auxiliaries. The equipment to be supplied against the order would be fully compliant with global standards. BHEL is targeting a six-fold increase in its physical exports by 2012.
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Mahindra, which earlier this year, pulled out of a planned venture with Renault and Nissan Motor, would start operations at Chakan, near Pune, in two years to make 300,000 medium and heavy commercial vehicles. It will invest $1 billion (Rs 1,500 crore) in a new plant as it steps up capacity to take on increasing competition. Mahindra, aims to double domestic sales and quadruple exports by 2010.
Tata Motors would invest Rs 6,000 crore over four-five years to increase capacity at its Pune plant, add new products and build vehicle testing facilities. The investment will increase capacity at its Pune plant by about 40% to more than 600,000 units a year. Tata Motors, which last week announced a $2.3-billion deal to buy Jaguar and Land Rover from Ford, has announced it will raise $4 billion for its local and overseas expansion plans.
Due to competition, things are getting harder, and the only way to offset it is by creating excitement around new products. Both the companies have lined up a range of products for the coming fiscal year with hopes to better the performance.
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Engineering and construction company Larsen & Toubro has been awarded Rs 576-crore order for a 2-lakh-tonne per annum lube oil base stock plant by Hindustan Petroleum Corporation Ltd. The plant will consist of a raffinate hydrotreating unit, mobil selective dewaxing unit and a hydro finishing unit. This is to enable HPCL to produce high quality group II & III lube oils, which are higher value-added petroleum products. HPCL, which operates one of its largest refineries in Mahul, Mumbai, intends to set up the plant as a part of its quality up-gradation project.
The scope of work includes residual process design, detailed engineering, procurement, supply, transportation, storage, fabrication and commissioning. L&T’s E&C division’s refinery projects business unit secured the order.
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The Board of Directors of Great Offshore Ltd has approved the buy back of the Company's equity shares at a price not exceeding Rs 750/- per equity share, and up to an aggregate amount of Rs 55.24 Crore, which doesn't exceed 10% of the total paid-up capital and free reserves, as per the audited Balance Sheet, as at March 31, 2007.
The Company proposes to buy back shares on the BSE and NSE, through open market purchases, from time to time. The number of equity shares to be bought back would depend upon the average price paid for the equity shares bought back and the aggregate consideration paid for such equity shares. The share buy back will be made from the cash and bank balance of the Company.
The maximum price is at a premium of 17% over the closing price of the Company's share, as on March 31, 2008. The buy back is proposed to improve the earnings per equity share, improvement of return on net worth, financial ratios and other performance criteria of the Company.
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Indian Oil Corporation Ltd (IOC) is studying various options for becoming an ethanol producer from being just a buyer. The company would be looking at both organic and inorganic prospects for expanding its business in the bio-fuel category. The company has already amended its memorandum of association to get into agri-related activities, particularly bio-crops that would enable it to carry out business in bio-fuels and allied products. Currently, to sell the five per cent ethanol-blended petrol, IOC has been procuring ethanol from other suppliers.
The Government has already made five per cent blending of ethanol mandatory in notified States and Union Territories and 10 per cent blending is to become effective from October this year. The purchase price of ethanol has been fixed at Rs 21.50 per litre ex-factory on a uniform basis for three years from October 2007. Total requirement of ethanol by oil marketing companies for five per cent ethanol-blended petrol programme implementation is 0.6 million kilo litres per year and for 10 per cent, 1.20 million kilo litres per year for the notified States and Union Territories.
Recently, Reliance Industries Ltd and public sector oil company Hindustan Petroleum Corporation Ltd (HPCL) were among the companies which were awarded financial contracts for the revival of State-run sugar mills in Bihar. However, IOC had not participated in the bids.
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The EPC (engineering, procurement and construction) division of Reliance Energy has bagged two contracts worth Rs 1,200 crore for transmission projects of another group company Reliance Power Transmission (RPTL). The EPC division of REL came up with the best offer on both price and the timely completion among a group of three to four companies. It has agreed to complete the work on over 1,500-km transmission line by 2009 end.
REL’s EPC division undertakes engineering, design, construction and execution of industrial projects in generation, transmission and distribution of power. The current project is, however, its first in the transmission area.
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Auto parts-maker Amtek Auto has joined a growing list of Indian companies that are sitting on notional losses on account of their exposure to foreign exchange derivatives. The company has informed that it could potentially make a loss of up to $18 million (Rs 72.18 crore) in the next two years on its exposure to currency hedges and swaps. A Rs 72-crore loss is 30 per cent of Amtek’s standalone net profits of Rs 236 crore on sales of Rs 1,196 crore during the year ended at the end of May 2007 (the company follows a June-to-May financial year). However, the promoters of the company have undertaken to bring in the matching amount to meet the obligation in the form of a 10-year, interest-free non-convertible debentures or preference shares.
About half a dozen other companies have also taken their banks to court alleging that they were sold exotic derivative contracts for speculative purposes. Earlier, software major Hexaware reported Rs 81-crore loss for the quarter ended December. Stationery maker Sundaram Multi Pap Ltd has sued ICICI Bank for its losses on forex derivatives. Coimbatore-based Rajshree Sugars and Chemicals have filed a case against Axis Bank. Sundaram Brake Linings is also involved in a legal dispute with Kotak Mahindra Bank. It is estimated that India Inc’s losses on account of their exposure to foreign exchange derivatives are at Rs 12,000 crore to Rs 20,000 crore. The losses may hog the headlines for the next few quarters as many of the currency swaps are likely to mature after March.
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Surge in prices of metal and food items pushed inflation rate growth by 6.68 per cent, the highest ever in the past one year, dashing hopes of a softer interest rate regime in the near future. After remaining close to 4 per cent in recent months, inflation has begun moving upwards, and surged by 0.76 per cent during the week ended March 15. It was 5.92 per cent in the previous week and 6.56 per cent in the corresponding period last year.
In line with the global trends, metal prices continued to be more expensive. While joist and rolls rose by a whopping 34 per cent, heavy light structural were up by 32 per cent, bright bars by 24 per cent, basic pig iron and foundry pig iron by 17 per cent each and steel sheets, plates and strips by 13 per cent each. Food items, like vegetables, rape seeds and mustard oil also turned costlier.
Announcement of Sixth Pay Commission recommendations, and provisions for enhanced expenditure on social sectors in the Budget 2008-09 coupled with rising crude oil prices have also raised expectations about high inflation. The rise in inflation may not let RBI to go for a soft monetary stance and the central bank is expected to continue the tight interest rate policy.
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The Indian tyre market may become more competitive as State-run MMTC Ltd has finalised plans to market Chinese truck-bus tyres in India. Cross-ply and radial tyres both are to be imported from April 2008 onwards. MMTC is planning to grab 15-20 per cent share of the 1.2-lakh-import market for bus tyres in the country. Apart from directly marketing to large fleet-owners including the State transport corporations, MMTC is also setting up its own dealer network for retail sales.
At present, 35-odd small players dominate tyre import trade. MMTC is set to emerge as the first major outfit to start importing tyres in India. The entry of MMTC will help in consolidation of the trade. Also there would be resistance on increase in prices of tyres by local companies going forward.
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Long-distance telecom (STD) tariffs are set to become cheaper with regulator Trai announcing on Thursday that access deficit charge (ADC) on domestic calls will be eliminated from April. International calls to India will also be cheaper as Trai has halved their ADC to 50 paise per minute from April 1 to September-end, after which it will be phased out. However this reduction of charges on incoming long distance calls will have no benefit for Indian consumers, but will help consumers in other countries like NRI’s to call their relatives back home at rates lower by 50 paise for every minute of the call. This will also help reduce the grey market calls in the international telephony market due to lower arbitration margins.
Currently, all telcos pay 0.75% of total revenues towards ADC, which is used to support state-owned BSNL’s unviable fixed-line operations in rural India. Private operators who were bearing the burden of paying the charges till now stand to collectively save about Rs 750 crore, for individual subscribers this move will translate into a reduction of about 0.75 per cent on their monthly bills. For example if a mobile user spends Rs 200 a month he will now have to pay Rs 1.50 less. The Cellular Operators Association of India also said that the savings will be passed on to the consumers though it may not result in any significant decrease in tariffs when distributed among 300 million subscribers. Within hours of the Trai announcement, all telcos said they would pass on the savings to subscribers.
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Tata Chem raises Rs 3,400 cr for acquiring US based General Chemical Industrial Products for $1 billion (about Rs 4,000 crore) early this year. The acquisition of General Chemical will make Tata Chemicals the second largest maker of soda ash in the world. Tata Chemicals would raise $850 million (about Rs 3,400 crore) in debt to fund the acquisitions.
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After nine months of negotiation, Tata Motors has finally signed a deal to buy luxury brands Jaguar and Land Rover (JLR) from Ford Motor for $2.3 billion in cash, the largest acquisition by an Indian company in the automobile business. The purchase price is less than half what Ford paid ($2.5 billion each) to acquire the two brands. Ford bought Jaguar in 1989 and Land Rover from BMW in 2000.
There are about 16000 employees on rolls of JLR. Hence, Ford will contribute about US$ 600 million towards Jaguar Land Rover pension plans. The definite agreement brings brands, plants and Intellectual property rights of JLR. The agreement provides for Ford to continue to supply Jaguar Land Rover for differing periods with powertrains, stampings and other vehicle components.
Ford will also supply a variety of technologies, such as environmental and platform technologies. It has committed to provide engineering support, including research and development, plus information technology, accounting and other services. As a transition arrangement, Ford Motor Credit Company will continue to provide financing for Jaguar and Land Rover dealers and customers during a transitional period, which can vary by market, of up to 12 months.
The deal is a fulfillment of Mr Tata’s personal vision and is intended to catapult Tata Motors into the global big league of auto majors. It will also reinforce the global perception of India Inc as a leader in international business, and not just in IT. The acquisition also marks Tata Motor’s leap forward into the global higher end luxury car segment.
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Religare Enterprises, a Ranbaxy-promoted group company, is looking at buying yet another London-based broking firm, for around Rs 700 crore. However the name of the firm could not be established at present. This move comes close on the heels of Religare’s 100 per cent acquisition of London-based investment banking firm Hichens, Harrison & Co for about Rs 400 crore through its subsidiary Religare Capital Markets Ltd. According to a company official, Hichens acquisition is the first in the series of several other ventures in the pipeline.
Indian brokerages have been buying assets overseas to acquire technology, learn new business practices and expand their reach. This acquisition will give Religare firm foothold in the extremely competitive international equity capital markets and will increase the scope of its institutional broking business.
Earlier, Kochi-based Geojit Securities had acquired a significant stake in Aloula, a Saudi Arabia-based broking firm, and had also set up a joint venture company in Dubai in which it holds 49 per cent. The acquisitions are expected to gather pace with cheaper available assets overseas and will make it easier to secure private equity funds and offer share placements overseas.
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Simplex Infrastructures Ltd. bagged projects worth Rs 653 crore from different segments. The orders include civil and structural construction work of Hotel Ritz Carlton, Bangalore worth Rs 139 crore; cement plant - Chandra Cement Works, Maharashtra worth Rs 116 crore from ACC; sewerage system and allied works worth Rs 175 crore from Indore Municipal Corporation; thermal power plants worth Rs 207 crore and piling works worth Rs 16 crore. The above orders have taken the total order book to around Rs 10,100 crore.
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Indian Steel Alliance (ISA), an organization of key primary steel producers in India, has agreed to halt steel exports with immediate effect to ensure domestic supplies. ISA members include Steel Authority of India, Essar Steel, JSW Steel, Ispat Industries and Jindal Steel & Power. Tata Steel is not a member of ISA. Similarly, Cold Rolled Steel Manufacturers Association (CORSMA) is also not a part of the statement made by ISA.
However halting exports may not bring in great supplies in the domestic market, but will, in turn, is an indirect move to reduce domestic prices. As halting exports is a voluntary measure and does not tantamount to a ban, all existing orders will be honored but fresh exports will be restrained. Further, long-term contracts and export commitments against machinery imported under the EPCG scheme will be met.
With brownfield expansions yet to be commissioned and greenfield projects yet to take off, the demand-supply situation has worsened, and India has turned net importer of steel during the recent quarters. The move by ISA will give much needed respite to the domestic steel users. The immediate effect of this move is that steel prices in Gobindgadh Punjab has come down by 1000 -2,000 per metric ton (MT). The prices of ingot have come down to Rs 38,500 per MT from Rs 39,800 per MT within a day. Similarly, the rates of Round (Saria) have fallen down to Rs 43,000 per MT from Rs 45,000 per MT.
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Only Stock Market Prediction has predicted Indian Stock Market start recovering after 17th March 2008 on 8th March 2008 in Post When will Stock Market Recover ?
The Bombay Stock Exchange on 25th March 2008, Tuesday rose by 928.09 points, or 6.07 per cent, at 16,217.49 while the Nifty closed above 4850 levels. Both Sensex and Nifty up 6% each. This is the second biggest gain for the barometer this year. It was the second biggest single day point gain for Sensex. Heavy buying was seen in scrips across sectors.
Sensex closed up 928.09 points or 6.07% at 16217.49, and the Nifty up 267.65 points or 5.81% at 4877.50. Top gainers on the Sensex are ICICI Bank at Rs 880.00 up 9.38%, HDFC at Rs 2,586.00 up 8.47% and Infosys at Rs 1,460.05 up 7.25%. Top gainers on the Nifty are HDFC at Rs 2,616.00 up 9.93%, Unitech at Rs 276.35 up 9.16% and Tata Power at Rs 1,191.00 up 8.83%. Most active shares on BSE are Axis Bank, HDFC and GSS America Inf.
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The D-day is inching closer for Tata Motors. According to sources close to the development, India’s largest commercial vehicle company is likely to ink the Jaguar-Land Rover deal with Ford on March 26. Ford is scheduled to make the announcement on engines, pensions and other long-term agreements on that day, the sources said, adding that completion of the agreement, however, is scheduled to take two to three months as it is bound by regulatory approvals. However, since Jaguar and Land Rover workers are on an extended Easter holiday, the announcement on the agreement would be made only on Wednesday.
A Tata Motor spokesperson said discussions are still going on and refused to put a date on the announcement. Tata Motors chairman Ratan Tata will lead the Tata delegation and Lewis Booth, executive V-P of Ford, will head the UK team to sign the deal. As part of the agreement, Tata Motors has agreed to retain the two UK manufacturing plants and the 16,000 odd employees. Ford has also entered into a long-term agreement, which will go beyond 2011, to supply Jaguar and Land Rover engines to Tata Motors.
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Metal pipe manufacturer Welspun-Gujarat Stahl Rohren (WGSRL) has bagged a Rs 1,075-crore order for the supply of pipes in Northern Africa. The firm's new pipeline order has taken its order book position to over Rs 5,900 crore. Welspun's accreditation's from oil and gas firms across the world has resulted in bagging new orders which has further reinstated its position as one of the largest and premium line pipe company in the world.
The company has recently started a trial production of its Plate-cum-coil mill (backward integration) for producing widest plate of 4.5 meters in Gujarat. The plate mill would have an annual capacity of 1.5 metric tonnes per annum (MTPA) and is likely to commence commercial operations in Q1FY09. Further its 300,000 tonne pipe mill project in US is likely to be commissioned by August 2008.
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Leading Indian pharma companies such as Ranbaxy Laboratories, Cipla and Aurobindo Pharmaceuticals are submitting bids for the $200-million South African government tender to supply anti-HIV drugs. The contract will be to supply 10 anti-Aids drugs to the SA government and is expected to be finalised in May. It is not clear if the tender will go to a single company or will be split to more than one company. South Africa has the highest number of HIV patients in the world with as estimated 5.5 million people infected with the virus.
Ranbaxy Laboratories is expected to put the bid through its South African JV Senko Pharmaceutical which presently markets its range of ARV drugs in South Africa and other African countries. Aurobindo Pharmaceutical has the largest basket of ARV drugs and hopes to get the maximum benefit from the tender.
Indian companies are integrated drug makers and can sell drugs at a much lower cost. The quality of the drugs is high and anti-ARV drugs manufactured by Indian companies have WHO and USFDA approvals. Also, as the tender regulations will provide preference points to companies which have local manufacturing capacities, Indian companies such as Ranbaxy Laboratories, Cipla and Matrix which have tie-up with local companies there will get some benefit.
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Aptech, the largest information technology training companies in India, is planning to unlock the value of its equal joint venture in China by transferring its share to a holding company and listing it in US. Post listing, Aptech would hold 22% stake in the holding company.
Within seven years of entering China, Aptech has gone a long way, and today its revenues and margins are higher than India operations. It entered China in 2000 through a 50:50 joint venture with a local partner Beijing Jade Bird to set up Beijing Aptech Beida Jade Bird Information Technology Co. The JV has set up 250 centres and has cornered ~33% of the market share. At Rs 170-180 crore of revenues, Chinese operation contributes 40% to Aptech’s consolidated revenues. Operating margins in China is 40% and in India is 20%.
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Reliance Communications (RCom) is planning to set up WiMax networks across 50 countries in the next three years. To get a head start, RCom is planning to acquire a European WiMax operator that has WiMax licences in 20 countries across Eastern Europe, Africa and Latin America, in a $300-400 million (Rs 1,200-1,600 crore) deal.
The acquisition of the European company will enable RCom set up fresh WiMax network in these countries and scale up the existing network. This would be company’s second acquisition in the WiMax space. In February, the company had acquired a significant stake in a French WiMax chip manufacturer Sequans Communications. The worldwide interoperability for microwave access (WiMax) is a telecommunications technology that provides wireless data over long distances in a variety of ways.
RCom has set up WiMax networks in 18 cities in the country. As per RCom’s `Vision 2012’, the company intends to use undersea cables and WiMax-enabled last mile access in a similar number of geographies. It intends to provide highspeed broadband services, voice, video and data suite and 4G services, in the global market. The company intends to connect over 2.5 billion individuals over WiMax networks by then.
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The Federal Reserve on Tuesday slashed a key interest rate by three-fourths of a percentage point, moving aggressively to contain a credit crisis threatening to push the country into a severe recession. The latest action brought the federal funds rate -- the interest that banks charge each other -- down to 2.25 percent, the lowest point since late 2004. It marked the second back-to-back cuts of three-fourths of a percentage point. It is the sixth cut in the past six months and comes at a time when the Fed is trying to keep the economy from slipping into recession - although many think it's already entered one.
The Fed cited a weakening labor market and a slowdown in spending by consumers, as well as a continued crisis in financial markets and tight availability of credit to justify the cut. The Fed acknowledged in its statement that inflation pressures have grown more than expected. However it still believed that the greater risk to the economy was that of slowing growth, not a spike in prices.
The reduction in the funds rate was designed to lower borrowing costs and boost spending by consumers and businesses and thus increase economic activity. Economic growth slowed to a near standstill in the final three months of this year as the economy was hit by a series of blows including the credit crunch, a prolonged housing slump, rising unemployment and surging energy prices.
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The Q4 advance tax figures, a bellwether of corporate profitability, announced yesterday indicate that the growth momentum is likely to continue amidst the global concerns looming in the backdrop. Expected slowdown in economic growth has not yet impacted corporate bottom line. It may be noted that the companies are required to pay the tax in four quarterly installments, the last being on March 15 every year.
Two companies saw the highest growth in terms of advance tax payout. Financial Services Company HDFC more than trebled its payout, while diversified conglomerate Reliance Industries saw the tax outgo nearly treble for the quarter.
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