Govt announces key policy decisions
The Group of Ministers (GoM) gave its green signal for the merger of Air India and Indian (erstwhile Indian Airlines) to create an airline giant that can take on the private carriers, both local and foreign. "We want to see a big, strong national carrier, this is our intention," Civil Aviation Minister Praful Patel told reporters in New Delhi after the GoM meeting. "We intend to complete the government process by March 31." The proposal will now be sent to Cabinet for approval, he said.
The Government invited bids for selling its remaining stake in Maruti Udyog Ltd. Public sector financial institutions, banks and mutual funds have been asked to submit initial offers for the Government's 10.27% stake in Maruti. The bids must be for a minimum Rs100mn and submitted by March 9. The stake sale is likely to fetch as much as Rs26.7bn (about US$600mn).
In a bid to attract mega investments in the semiconductor sector, the Government announced on Thursday that it will offer financial incentives to chip manufacturers such as Intel Corp. The proposed sops include tax breaks and interest free loans totaling between 20% and 25% of the capital expenditure for chip fabrication plants in the first 10 years, IT Minister Dayanidhi Maran told reporters in New Delhi. A minimum investment of Rs25bn will be required to obtain incentives meant for chip making plants. The limit is Rs10bn for manufacturing other products, including plasma display panels, Maran said after a Cabinet meeting.
Apr-Dec fiscal deficit down 12.4% yoy
Fiscal deficit during April-December 2006-07 was lower by 12.4% over the corresponding period last year while revenue deficit during the first nine months of the current fiscal year was down 16.2% over year-ago period. Data released by the Government shows that fiscal deficit, the excess of Government expenses over receipts after taking into account borrowings, declined from Rs1.08 trillion to Rs948.54bn. Revenue deficit, the excess of revenue expenditure over revenue receipts, fell from Rs796.81bn to Rs667.77bn.
Wal-Mart checks out India
Despite opposition against the company's formal entry into India, a delegation from Wal-Mart Stores Inc. landed in the country to examine the market and hold talks with people in the business. The Wal-Mart team, led by Vice Chairman Michael Duke, looked at existing retail formats in Mumbai. "It is a routine business visit to check out the market and meet people," a spokesperson for the Bentonville, Arkansas-based company said without divulging details. Duke was also expected to meet top Government officials besides executives from joint venture partner Bharti Enterprises. The visit of the Wal-Mart team to India came amid protests by mom-and-pop shopkeepers, who fear that the entry of MNC retail giants like Wal-Mart will have an adverse impact on their business. Separately, Bharti Enterprises announced it would invest up to US$2.5bn by 2015 in the front-end of its retail business. The group's partner Wal-Mart will look after the back-end operations, including logistics, supply chain and cash & carry. Mittal said the group would open multi-format retail outlets in all cities with a population of about one million. "We are looking at 10mn sq.ft. of retail space," he said, adding that the joint venture will employ 60,000 people in the next few years. Bharti expects revenues of Rs200bn (US$4.5bn) by 2015.
JM Financial to part ways with Morgan Stanley
Nimesh Kampani, one of the pioneers in the Indian capital market space is snapping ties with its US partner Morgan Stanley. Kampani's JM Financial is seeking to pat ways with Morgan Stanley, sending the stock sharply up on the bourses. The deal is likely to be completed by the end of Q1 FY08, according to reports. At present, JM Financial has two Joint Ventures (JV) with Morgan Stanley. One is JM Morgan Stanley Pvt Ltd, which has interests in investment banking, retail distribution, private wealth management and fixed income securities. JM Financial holds 51% in JM Morgan Stanley while 49% is being held by Morgan Stanley.
Second is JM Morgan Stanley Securities Pvt Ltd with operations in institutional equity sales and trading. Morgan Stanley owns 51% in JM Morgan Stanley Securities while the balance 49% is with JM Financial. Under the deal, JM Financial is to buy out the JV partner in JM Morgan Stanley at Book Value for a consideration of US$20mn. At the same time, JM Financial will sell its 49% stake in JM Morgan Stanley Securities to Morgan Stanley for US$445mn, valuing the securities business at nearly $900mn. Post the transaction, JM Financial will become a full fledged investment bank, says Kampani. JM Financial will focus on NBFC, Asset Management and Capital Market businesses, adds Kampani. Morgan Stanley will apply for a fresh merchant banking license.
Mittal to buy 49% in HPCL refinery
Lakshmi Niwas Mittal is enhancing his ties with home country. After unveiling mega investments in the steel sector, the steel baron is now training its guns on India's energy sector. As part of this strategy, he picked up a 49% stake in the Guru Gobind Singh Refinery of state-run HPCL. The deal is part of the revival of the Rs160bn refinery-cum-petrochemical project at Bhatinda, Punjab. HPCL had signed an agreement with BP for the Bhatinda project. But, in March 2006 the British oil & gas major later pulled out of the project, citing the non-viability of the project. Earlier, Saudi Aramco of Saudi Arabia exited the project in 1998. Separately, agency reports said that HPCL will offer a stake in the expansion of its Vishakhapatnam refinery to Oil India Ltd. HPCL also hopes to rope in France's Total and Kuwait Petroleum International for the expansion, the report added. HPCL plans to ramp up annual capacity at Vishakhapatnam to 330,000 barrels a day by 2011, from the current 150,000 bpd, after an investment of Rs 100bn.
Nissan to join Renault, M&M for India plant
Nissan Motor Co. will reportedly build a car plant in Chennai in partnership with Renault SA and Mahindra & Mahindra Ltd. (M&M) as the Japanese auto giant seeks to tap the rapidly growing Indian automobile market. According to agency reports, the three companies will jointly own the factory, with initial annual output capacity of up to 350,000 units in 2009. M&M, India's biggest maker of utility vehicles and tractors, will own 50% of the venture. Nissan and Renault will each hold 25%. An official announcement on the Chennai venture is expected to be made on Monday. Chennai has been a hotbed for auto and auto parts makers. Among the leading companies who have set up plants here include Hyundai Motor Co., Ford Motor Co. and BMW AG. Nissan currently sells only the imported X-Trail SUV in India, with sales there totaling just 190 units last year.
RIL finds more gas in KG basin
The boom in India's hydrocarbon story, especially on the east cost of the country, continues unabated. Leading the way is none other than private sector giant Reliance Industries Ltd. (RIL). The Mukesh Ambani owned company has found more gas in the D6 block of the Krishna Godavari basin, the company's minority partner Niko Resources said on Feb. 19. "The deepwater frontier drilling rig has now completed drilling of an exploratory well, AA-1, which has resulted in discovery of a new high potential natural gas zone," Niko, which holds a 10% stake in the block, said in a statement. Separately, the Director General of Hydrocarbon (DGH) rejected ONGC's mega gas discovery in the KG Basin, blaming the method adopted by the company for evaluating the find. The public sector oil giant responded by saying that the method used by them for notifying the discovery was acceptable and the abandonment of wells was a standard industry practice. ONGC said it will not withdraw the notice for potential commerciality. The total reserve size reported by the company is in the range of 5-15 trillion cubic feet (TCF).
Zensar to buy ThoughtDigital LLC
Zensar Technologies Ltd. said its 100% US subsidiary Zensar Technologies Inc. had signed an agreement to acquire ThoughtDigital LLC, a Delaware-based company and its holding company SOA Software Inc. A Special Purpose Vehicle (SPV) called Zensar TD LLC has been set up to acquire, own and operate the whole business of ThoughtDigital LLC. Zensar Technologies Inc. would acquire 100% equity stake in Zensar TD LLC. As a result of the proposed acquisition, Zensar Technologies Ltd. will get an indirect 100% ownership in Zensar TD LLC. ICI India Ltd. announced it had signed a definitive agreement to divest a portion of its Auto Refinish Paints Business, comprising Advanced Refinish (2K), to its technology partner for this segment, PPG Industries Inc., USA, for about Rs520mn, subject to certain agreed adjustments. The company's 2K business will be transferred as a going concern to Asian PPG Industries Ltd., a 50:50 Joint Venture between Asian Paints Ltd. and PPG Industries, over the next few weeks, ICI India said. The 2K business has about 60 employees and had revenues of about Rs500mn in the financial year ended March 31, 2006, ICI said.
Sun TV gets nod to sell 20% in DTH arm
The Government cleared the proposal by Mauritius-based South Asia Entertainment Holdings Ltd. (SAHEL) to pick up a 20% stake in Sun Direct TV, the DTH arm of Sun TV Ltd. The Cabinet Committee on Economic Affairs (CCEA) gave its approval for issuance of equity shares to SAHEL, totaling about US$150mn (approximately Rs6.75bn) from time to time. The approval would be subject to guidelines issued by the Ministry of Information & Broadcasting. In January, Sun Direct TV had sought the permission of the Foreign Investment Promotion Board (FIPB) to offer 20% foreign equity to SAHEL. The company has licence to run a DTH satellite television service in India. SAEHL is a wholly owned subsidiary of ASTRO Overseas Ltd., which in turn is 100% owned by ASTRO All Asia Network Plc (AAAN). AAAN is a company incorporated in England and Wales and is registered as a foreign company in Malaysia.
Jindal Saw, L&T win mega orders
Jindal Saw Ltd. announced it had bagged its single largest order totaling about US$355mn (approximately Rs15.6bn) from a large corporation in the United States. The order involves supply of 42" Submerged Arc Welded pipes (L Saw Pipes). The order is for about 360 miles, including double jointing and coating. The order, which is scheduled to be executed by March 2008, has been received from an existing large client of the company, Jindal Saw said. The order has been bagged through a competitive bidding process and will be executed out of US operations, it added. With this order, the company's present order book exceeds US$1.5bn (approx. Rs66bn). These orders are scheduled to be completed by March / April 2008. Larsen & Toubro Ltd. (L&T) announced it had won a contract worth US$250mn from Maersk Oil Qatar for its Block 5 development in Qatar, consisting of two new offshore platform top-sides, a flare platform and interconnecting bridge. Maersk Oil Qatar is developing the field under a production-sharing agreement with Qatar Petroleum. To be executed in 28 months, the Block 5 Package 14 project consists mainly of two 2300-tonne topsides with facilities for oil production and export.
MindTree, Idea fix issue price
MindTree Consulting, an international IT and R&D Services company that delivers business and technology solutions through global software development, has fixed the issue price at Rs 425 for the IPO of 5,593,300 equity shares of Rs 10 each issued at a pre-IPO price band of Rs 365 to Rs 425 per equity share through the 100% book building process. The issue closed for subscription on Feb. 14 and was subscribed 103.28 times. Meanwhile, Idea Cellular Ltd. priced its IPO at Rs75 per share, the top end of its price band. The company, a part of the diversified Aditya Birla Group, would raise Rs21.25bn through the public issue. The IPO of Idea Cellular has been subscribed nearly 50 times.
Atlanta probe...promoters, 15 others barred from trading
Shares of Atlanta Ltd. plunged on Feb. 23 after the capital market regulator banned 16 entities, including the company's promoters for alleged price manipulation post listing. Rajoo Barot, Managing Director of Atlanta; Sachin Jain, Company Secretary and Manish Marwah, a prominent stock market player, feature in the list of companies/people restrained from buying, selling or dealing in Atlanta shares, till further directions.Shares of Atlanta, which were listed on Sept. 25, 2006, rose from its offer price of Rs150 to Rs1,446 on Jan. 17, a whopping gain of 681% in just 55 trading days. The stock fell by the 10% lower circuit to Rs972.70. It is down 21% in a month and 11% in a week's time. "It appears that the company promoters, their strategic investors and other related entities of Marwah/Nabera group have abused the stock exchange mechanism, the listing agreement and regulations to unfairly maximise their wealth at the cost of lay investors. Prima facie findings show its promoters and entities seem to have violated the Sebi regulations," the order said. SEBI is further investigating the matter. Meanwhile, SEBI also slapped a Rs10mn fine on DLF Commercial Developers and the promoters of Bhoruka Financial Services (BSFL), for violating norms while trading in the shares of BFSL on the Magadh Stock Exchange (MSE). DLF Commercial Developers is a subsidiary of DLF Universal. "The violation of the nature like above, needs to be dealt firmly," SEBI said.
PFC, Firstsource shine on stock market debut
Shares of Firstsource Solutions Ltd. (formerly ICICI OneSource Ltd.) surged on the stock market debut on Feb. 22 as investors expect the Mumbai-based BPO firm to deliver strong growth going forward. The scrip opened its maiden trading day at Rs75.1 on the BSE as against the issue price of Rs64 per share. This translates into a premium of 17.3%. The stock finished the week at Rs80 after touching a peak of Rs88.90 and a low of Rs75.10. Shares of state-run Power Finance Corporation (PFC), which raised nearly Rs10bn from an IPO, jumped on Feb. 23 as investors remained upbeat on the prospect of the power sector going ahead. The stock opened at Rs104 on the Bombay Stock Exchange (BSE) as against the issue price of Rs85 per share. This translates into a premium of 22.3%. The scrip closed at Rs111.50 after being as high as Rs117 and a low of Rs103.50 with 40.67mn shares changing hands on the counter.
BOJ votes in favour of rate hike
The Bank of Japan (BOJ) announced that it had raised its key interest rate by 25 basis points as the world's second-largest economy expands though inflation remains benign. BOJ Governor Toshihiko Fukui and his policy board colleagues voted 8-1 to increase the overnight lending rate to 0.50%, the central bank said in a statement in Tokyo. The benchmark remains the lowest among the G7 economies. Deputy Governor Kazumasa Iwata voted against the increase. The Japanese benchmark rates are now the highest in more than a decade. The BOJ said the Japanese economy was likely to continue growing and that it would make further rate adjustments gradually. The central bank said that prolonging a low-interest-rate policy could hamper economic growth. The rate increase will help stabilize prices and sustain economic growth, the central bank said. The market had been divided over whether the BOJ would go ahead with a rate increase amid growing opposition from the Government. Many politicians had expressed concern about the Japanese economy. The latest rate hike marks the third major policy move by the BOJ in less than a year. Last March, the Japanese central bank ended its so-called quantitative easing policy of pumping excess money into the banking system. In July it raised the benchmark rate to 0.25% from virtually zero, the first such move in six years.
HTIL EGM on March 9 to mull Hutch saleHutchison Telecommunications International Ltd. (HTIL) announced that it will seek shareholders' approval on March 9 for the proposed sale of its stake in its Indian joint venture to Vodafone Group Plc. The company, controlled by billionaire Li Ka-shing, is selling its 67% stake in Hutch to Vodafone for US$11.1bn. HTIL also said that it had made a profit in the nine months ended Sept. 30, 2006 compared with a loss a year earlier. HTIL's net profit (excluding minority interest) for the nine months ended Sept. 30 was HK$109mn, compared with a loss of HK$209mn a year earlier, the company said. Sales rose 37% to HK$24bn, it added. Including minority interest, net income in the period was HK$1.13bn, compared with a net loss of HK$128mn a year earlier. Separately, HTIL said it had entered into a three-year non-compete agreement with Vodafone. HTIL Board said the company would not carry on any business in competition to Hutch Essar in India in the next three years. Also, HTIL cannot offer jobs to any key employees of Hutch Essar within six months after completion of the sale. The deal is expected to be completed in early April or the sixth business day after the last conditions have been satisfied for the deal, whichever is later, HTIL said.
Arcelor Mittal profit down in 2006
Arcelor Mittal said its 2006 net profit fell 3.5% because of higher tax. Reporting full-year figures for the first time since Mittal Steel's acquisition of Arcelor last year, the group said net income fell to US$7.97bn, or US$5.76 a share, from US$8.26bn, or US$5.97 a share last year. Sales for the year were up at US$88.6bn versus US$80.2bn in 2005. The Luxembourg-based company posted a core profit of US$15.3bn, slightly below market expectations but in line with its own forecast. Analysts had forecast 2006 EBITDA of US$15.4bn. The steel giant had previously projected core earnings of between US$15.2bn and 15.4bn. Arcelor Mittal also announced plans to hand over US$2.4bn to shareholders. The company will buy back US$590mn of stock and pay a US$1.8bn dividend, it said. Arcelor Mittal announced it had signed various agreements with the State of Senegal in West Africa to develop iron ore mining in the Faleme region. The project is expected to entail an investment of about US$2.2bn. The total estimated reserves are approximately 750mn tons, located in 4 locations in the Faleme region and comprising both haemetite and magnetite deposits.
Microsoft asked to pay US$1.5bn to Alcatel-Lucent
A federal jury said that Microsoft Corp. must pay Alcatel-Lucent US$1.5bn for using digital music technology without permission. Microsoft violated two Alcatel-Lucent patents with its Windows Media Player, including the version in the new Vista operating system, the jury said. Microsoft said it will appeal the verdict. The decision allows Alcatel-Lucent, the world's biggest maker of telecom equipment, to seek an order barring Microsoft from using the patented technology. The verdict could also clear the way for legal actions against hundreds of companies that rely on MP3, the standard for playing music and sound files on a computer, mobile phone or digital-music player. "The damages award seems particularly outrageous when you consider we paid Fraunhofer only US $16mn to license this technology," said Microsoft's deputy general counsel, Tom Burt. The damage award is "not particularly material in our opinion when considered with the amount of cash on Microsoft's balance sheet and substantial free cash flow generation of about US $1bn per month," Goldman Sachs analyst Rick Sherlund wrote in a note to clients. Meanwhile, Google encroached further into Microsoft's territory by offering businesses a new set of web-based word-processing and spreadsheet services. The internet company released a similar package to consumers last year. Google also announced it will start selling e-mail, calendar and personalized home pages to businesses over the Web.
iPhone name...Apple, Cisco kiss and make up
Apple and Cisco Systems agreed to share the iPhone name, putting an end to a dispute that threatened the June launch of Apple's highly anticipated multimedia phone. The deal ends a six-week legal trademark tussle that began Jan. 10, a day after Apple CEO Steve Jobs introduced his company's iPhone. Cisco currently sells a line of Linksys VoIP devices under the iPhone label. Apple and Cisco said they are both "free to use the iPhone trademark on their products throughout the world." All pending legal action will be dismissed. The two companies will also explore opportunities for interoperability in the areas of security and consumer and enterprise communications.
EU slaps heavy fine on Otis, 4 others
European Union (EU) regulators fined Otis Elevator and four other elevator makers US $1.3bn for operating cartels for the installation and maintenance of elevators and escalators. The union’s competition commissioner, Neelie Kroes, said the costs of buildings and hospitals were artificially bloated by these cartels. Jonathan Todd, a union spokesman, said the fines represented the largest ever for price fixing in the EU. The authorities said the cartel operated from at least 1995 until 2004 in Germany, Belgium, Luxembourg and the Netherlands. The companies fined were Otis, a unit of United Technologies of Hartford; the German conglomerate ThyssenKrupp; Kone of Finland; Schindler Holding of Switzerland; and subsidiaries of Mitsubishi Elevator Europe, a unit of Mitsubishi Electric of Japan. George David, CEO of United Technologies, said that company officials were disappointed by the conduct revealed through the commission’s and UTC’s own investigations. He said nine Otis employees were dismissed over the matter. Otis and United Technologies disclosed the investigation in 2004 and have cooperated with the European Commission, David said. Nevertheless, he said, Otis will appeal the decision to a European court. Otis was fined 225mn euros (US$296mn).
TSE, LSE announce tie-up
The Tokyo Stock Exchange (TSE) and the London Stock Exchange (LSE) said they will to develop jointly-traded products and encourage access by member companies to each other's markets. The alliance is similar to a deal TSE signed recently with the New York Stock Exchange. A task force of senior members from both exchanges will begin discussions on areas of cooperation shortly, the TSE said. "Taking into consideration the environment surrounding market operators, it is critical for us to explore the possibility for satisfying the exchange's various stakeholders,'' Taizo Nishimuro, president of TSE said. The pact is part of TSE's strategy to gain a greater presence internationally as it prepares to sell shares to the public by 2009. Both bourses will share information on technology to introduce new systems into their markets. The eventual aim is to provide a round-the-clock trading environment for member firms of both markets, the TSE said in the statement. Meanwhile, Nikkei Sangyo Shimbun business daily reported that Citigroup plans to list on TSE later in the year. The New York-based financial services company has already began preparations for the listing, which will increase the company’s expansion plans in Japan.