Showing posts with label Industrial News. Show all posts
Showing posts with label Industrial News. Show all posts
Monday, April 30, 2012
Cellphone maker Nokia is in talks to sell its UK luxury subsidiary Vertu, which hand makes some of the world’s most expensive mobile phones, a source familiar with the company’s strategy said on Monday.
Earlier the Financial Times reported that talks with private equity group Permira were at an advanced stage on a possible sale which would raise about €200 million ($265 million).
Vertu’s cellphones can feature crystal displays and sapphire keys, costing more than 200,000 pounds ($320,000) due to the precious metal components.
Nokia, which had its credit rating cut to “junk” status by Standard & Poor’s last week, first signalled its intention to sell Vertu in December, and recently said it plans to dispose of “non-core assets”.
Nokia, once the world’s dominant mobile phone provider, declined to comment, while Vertu and Permira were not available for comment.
The FT report, published on its website on Sunday, cited people familiar with the talks as saying Goldman Sachs was advising on the possible sale, but said the outcome was not yet certain.
EQT, the Northern European private equity group, has also been in talks about buying the company, although those close to the process, cited by the FT, say that these are not progressing at this stage.
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Sunday, February 12, 2012
The global telecommunications industry continues to expand as spending by consumers and businesses for wireless services fuels industry revenue growth, a market analysis report from the Insight Research Corp. says.
According to the report, "The 2012 Telecommunications Industry Review: An Anthology of Market Facts and Forecasts," telecommunications services revenue on a worldwide basis will grow from $2.1 trillion in 2012 to $2.7 trillion in 2017 at a combined average growth rate of 5.3%.
"Despite global economic uncertainty, the telecommunications industry is showing strong revenue growth, which is being driven by consumer Internet usage and business mobility solutions. These are enabling new applications," said Fran Caulfield, research director for Insight Research.
Wireless subscriber growth, particularly in Asia and other emerging markets, will raise wireless revenues 64% from current levels, while wireline revenues will show only modest growth, according to the report.
North America is expected to have the slowest CAGR, at less than 4% over the forecast period. From 2012 to 2017, the region’s carrier revenue will grow from $459 billion to $554 billion at a CAGR of 3.8%.
Europe, Middle East, and Africa will have stronger growth, primarily from developing countries. From 2012 to 2017, carrier revenue in the region will grow from $683 billion to $893 billion, a CAGR of 5.5%.
"Asia and the Pacific Rim (AP) and Latin America and the Caribbean (LA) are the fastest-growing regions, driven by the economies of China, Korea, Mexico and Brazil. Many of the countries in these regions have a combination of a rapidly expanding middle class and increased privatization of key industries. The resulting demand for telecommunications services, much of which is satisfied by wireless services, is reflected in their higher CAGR relative to the worldwide composite," the report said.
Carrier revenue in Latin America and the Caribbean will grow from $157 billion to $207 billion at a CAGR of 5.7% from 2012 to 2017, while carrier revenue in Asia and the Pacific Rim will growth from $775 billion to $1 trillion at a CAGR of 5.9%.
The report also states that most of the growth is expected to occur in broadband services, with wireless 3G and 4G broadband services projected to grow at a CAGR of 24% over the forecast period and wireline broadband services projected to grow at a CAGR of 13%.
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Tuesday, November 15, 2011
The European Union pushed ahead with its regulatory crackdown on Tuesday by giving the green light to curbs on trading sovereign-debt related derivatives at the heart of the euro zone crisis.
The bloc’s financial services chief Michel Barnier will also unveil a measure at 1400 GMT to inject competition into the credit ratings sector dominated by the Big Three: Standard & Poor’s, Moody’s and Fitch Ratings.
Many EU policymakers are keen to push ahead with the new rules, saying a ratings downgrade of Greek sovereign debt in 2010 made it more expensive and harder to mount the country’s first bailout package.
The mistaken downgrade by S&P of France’s banking industry system will reinforce the EU’s determination to regulate agencies more closely, Barnier said last week.
The draft law, part of a broad regulatory push prompted by the financial crisis, will propose a temporary “blackout” on sovereign debt ratings in exceptional circumstances.
The “blackouts” element has proved divisive, and Barnier was due to meet with fellow European commissioners at 1200 GMT to thrash out its scope in the draft law as member states like Britain mount a last - minute effort to scrap the provision.
EU states and the European Parliament, which is meeting in Strasbourg this week, will have the final say on the measure, with some changes likely.
Short-selling:
Parliament on Tuesday voted by 507 to 25 in favour of an EU law that restrict “naked” or uncovered selling of shares and sovereign debt. This refers to when a seller has made no prior arrangements to borrow the security.
EU states have already given the nod to the law, which was jointly agreed with parliament and is due to take effect within a year.
It also bans naked sovereign credit default swaps (CDS), where there is no ownership of the underlying government debt the CDS contract “insures” against default.
Policymakers want to crack down on what they see as speculation by hedge funds and others betting on falls in euro zone bond prices.
“The parliament has successfully fought for very strict conditions for short-selling to contain destructive speculation. The new transparency rules will help stabilise financial markets,” Markus Ferber, a German member of parliament’s centre-right party, said.
The draft law on ratings agencies, the EU’s third measure to regulate the industry since the financial crisis began in 2007, will avoid trying to create an EU answer to the US dominance of the sector.
Instead, it will seek to inject more competition by requiring users of ratings, such as companies and banks, to “rotate” or switch agencies on a regular basis so that some of the 10 or so smaller agencies registered in Europe, such as Euler Hermes, can pick up more business.
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Thursday, July 8, 2010
In efforts to play the role of a matchmaker, investment bankers are tracking some old pvt banks in the south. HDFC Bank Ltd, Kotak Mahindra Bank Ltd and IndusInd Bank Ltd. have set their eyes on acquisitions.
The Indian banking industry may see a few mergers and acquisitions (M&A) deals this year, ahead of the banking regulator releasing the licensing norms for new banks that are expected to open for business in the next two years.
At least three new generation private sector banks— HDFC Bank Ltd, Kotak Mahindra Bank Ltd and IndusInd Bank Ltd—have set their eyes on acquisitions.
It is not known whether they have given a mandate to investment bankers for such acquisitions, but some dealmakers are independently reaching out to potential acquirers with suggestions on possible targets.
At least one foreign bank is recommending stocks of some south India-based old private banks to its high networth clients for investment because it feels that the market value of these banks will substantially go up once they are actively wooed by the new generation banks for possible acquisitions.
Addressing shareholders at HDFC Bank’s annual general meeting last week, managing director and chief executive officer Aditya Puri said he would look for a merger with a bank in the southern part of the country.
Kotak Mahindra Bank has already created a war chest for acquisitions by selling 4.5% stake in the bank for $296 million (around Rs1,400 crore today) to Sumitomo Mitsui Financial Group Inc. Its vice-chairman and managing director Uday Kotak has previously said that he is “sniffing around” for acquisitions.
Kotak recently conducted due diligence on CitiFinancial Consumer Finance India Ltd (CitiFinancial) that gives home and personal loans to retail borrowers in the low income segment, but the deal did not go through. It is now looking closely at a south India-based old bank, an executive at another bank said, asking not to be identified.
There have been talks in investment banking circles that IndusInd Bank, too, is actively looking at some proposals.
Its managing director and chief executive officer Romesh Sobti told Mint his bank is “open to acquisitions as we now feel we have the financial muscle and required managerial skill to look at opportunities”, but declined to divulge details.
An official of the Hinduja group, of which IndusInd Bank is a part, speaking on condition of anonymity said the bank has not appointed any investment banker as yet, but had received a proposal from one investment bank. “We are open for inorganic growth options if we get the right opportunity at the right price,” he added.
IndusInd Bank had acquired Ashok Leyland Finance Ltd, also part of the same group, in April 2003.
Investment bankers are closely tracking some old private banks, such as City Union Bank Ltd, Karnataka Bank Ltd, Federal Bank Ltd, Karur Vysya Bank Ltd, South Indian Bank Ltd and the unlisted Catholic Syrian Bank Ltd. These may or may not be available for acquisitions, but investment bankers are talking to most of them in their efforts to play the role of a matchmaker. Federal Bank is the most valuable among them with a market capitalization of close to Rs6,000 crore.
Once the new banks open for business, competition will intensify and many of these banks may find it difficult to grow; new generation private banks are aggressively looking at opportunities to expand their branch network and widening their presence pan India.
ICICI Bank Ltd, India’s largest private sector lender, is in the process of acquiring Bank of Rajasthan Ltd for its 463 branches. ICICI Bank had earlier acquired Bank of Madura Ltd and Sangli Bank Ltd, again for their branches, and their presence in southern and western India, respectively.
HDFC Bank has acquired two banks in the past—Times Bank Ltd and Centurion Bank of Punjab Ltd.
“Most of the south-based private sector banks fit the bill in terms of providing scale and penetration,” said the MD and CEO of a private sector bank, speaking on condition of anonymity as his bank is also looking for possible acquisitions.
His bank is not one of the three banks named in the beginning of this story.
However, analysts and consultants said the task will not be easy as many of these banks have a dispersed ownership and active trade unions.
“The issue with some of the listed south-based banks is that they have a dispersed shareholding. In the presence of a dominant shareholder, negotiations becomes easier, but in cases where the holding is scattered, (getting) everybody on the (same) page becomes very difficult,” said Bobby Parikh, managing partner of tax consultancy BMR and Associates.
Unionized employees, typically, oppose any merger for fear of losing their jobs, but in most cases despite their opposition, the mergers go through. The employees of the erstwhile Lord Krishna Bank Ltd had opposed its merger with Centurion Bank of Punjab and delayed it by a year, but could not stall it. After this merger, Centurion Bank of Punjab was acquired by HDFC Bank.
G. Chokkalingam, director and head (research and strategy) at Barclays Wealth India, said there are seven-eight listed old generation private sector banks, which have grown rapidly in the last six-seven years and “they do not have any identifiable promoter”.
“The entity who gets the banking licence will take at least one-two years to set up shop. In anticipation, we can see some of the players acquiring strategic stake in some of these old private sector banks,” he added.
Some of the companies that aspire to float banks already hold stakes in some old private banks. For instance, Larsen and Toubro Capital Holding Ltd holds 4.81% stake in City Union Bank and 4.68% in Federal Bank. Tata Capital Ltd holds 3.29% stake in Development Credit Bank Ltd and Reliance Capital Trustee Co. Ltd holds 1.14% stake in Dhanalakhmi Bank Ltd.
“The latest acquisition in old private sector banking space (Bank of Rajasthan) has taken place at 5.5 times adjusted bookvalue. Whereas few high quality, fast growing banks in this space are available around two times their adjusted book value... We find this segment still quite attractive,” said Chokkalingam.
Analysts find these banks an attractive proposition for potential buyers as their customer focus is largely on small and medium enterprises, which will drive asset growth in the future.
Thursday, July 8, 2010 Comments
Sunday, July 4, 2010
RNRL shareholders, including the promoters, would get Reliance Power shares worth about Rs7,150 crore, as per the current market prices
New Delhi: In a mega Rs50,000-crore deal, Anil Ambani group on Sunday announced merger of RNRL with another group firm Reliance Power, which would now become a direct beneficiary of the gas deal signed with Mukesh Ambani- led Reliance Industries.
As part of the all-stock deal, Reliance Power will give one of its shares for every four held in RNRL.
RNRL shareholders, including the promoters, would get Reliance Power shares worth about Rs7,150 crore, as per the current market prices. Out of these, promoters would get shares worth over Rs3,600 crore.
The deal comes within days of RNRL signing a revised gas supply deal with Reliance Industries (RIL) for power projects, which are under the charge of Reliance Power.
Following the Supreme Court decision on 7 May, wherein its plea was rejected for cheaper gas from RIL, the Anil Ambani group firm RNRL had lost much of its relevance as a business entity.
Announcing the deal, the two companies said in a joint statement, “Reliance Power’s plans for setting up upto 10,000 MW gas-based power plants (would) be accelerated” and Reliance Power would “derive substantial benefit from RNRL’s Gas Supply Master Agreement with RIL”.
Ahead of Sunday’s board decision, RNRL shares closed at Rs63.65 a piece and Reliance Power at Rs175.15 on Friday.
Stating that RNRL shareholders holding 80% of its capital were also shareholders of Reliance Power, the joint statement said over 80% of shareholders in the former entity got their shares free on demerger with RIL following the family settlement between Ambani brothers.
RNRL was born out of demerger of Dhirubhai Ambani’s Reliance empire five years ago. The purpose of creation of RNRL was for sourcing, supply and transportation of fuels, primarily natural gas.
As per the demerger scheme, RNRL was to source natural gas from Reliance Industries and trade it to ADAG power plants, including the proposed mega 7,800-MW Dadri unit near here being set up by R-Power.
“RNRL shareholders will benefit from the proposed amalgamation, by participating in future growth prospects of Reliance Power’s diversified generation portfolio of 37,000 MW and its substantial coal reserves in India and abroad”, it said.
On the other hand, Reliance Power would reap benefits from RNRL’s coal bed methane blocks, and fuel supplies through the latter’s coal supply logistics and shipping business, it said, adding that combined entity would have over sixty lakh shareholders, the largest for any entity in the world.
Referring to the Gas Supplies Masters Agreement signed by RNRL with RIL, it said Reliance would drive “substantial benefit” from it. Besides, gas prospects from RNRL’s coal bed methane blocks as also its 10% share in an oil and gas block in Mizoram would be added advantage.
The combined entity would have a net worth of over Rs16,000 crore, including RNRL’s net worth of around Rs1,900, it said. The merger would be subject to approvals of the Bombay high court and other regulatory authorities, it added.
As part of the all-stock deal, Reliance Power will give one of its shares for every four held in RNRL.
RNRL shareholders, including the promoters, would get Reliance Power shares worth about Rs7,150 crore, as per the current market prices. Out of these, promoters would get shares worth over Rs3,600 crore.
The deal comes within days of RNRL signing a revised gas supply deal with Reliance Industries (RIL) for power projects, which are under the charge of Reliance Power.
Following the Supreme Court decision on 7 May, wherein its plea was rejected for cheaper gas from RIL, the Anil Ambani group firm RNRL had lost much of its relevance as a business entity.
Announcing the deal, the two companies said in a joint statement, “Reliance Power’s plans for setting up upto 10,000 MW gas-based power plants (would) be accelerated” and Reliance Power would “derive substantial benefit from RNRL’s Gas Supply Master Agreement with RIL”.
Ahead of Sunday’s board decision, RNRL shares closed at Rs63.65 a piece and Reliance Power at Rs175.15 on Friday.
Stating that RNRL shareholders holding 80% of its capital were also shareholders of Reliance Power, the joint statement said over 80% of shareholders in the former entity got their shares free on demerger with RIL following the family settlement between Ambani brothers.
RNRL was born out of demerger of Dhirubhai Ambani’s Reliance empire five years ago. The purpose of creation of RNRL was for sourcing, supply and transportation of fuels, primarily natural gas.
As per the demerger scheme, RNRL was to source natural gas from Reliance Industries and trade it to ADAG power plants, including the proposed mega 7,800-MW Dadri unit near here being set up by R-Power.
“RNRL shareholders will benefit from the proposed amalgamation, by participating in future growth prospects of Reliance Power’s diversified generation portfolio of 37,000 MW and its substantial coal reserves in India and abroad”, it said.
On the other hand, Reliance Power would reap benefits from RNRL’s coal bed methane blocks, and fuel supplies through the latter’s coal supply logistics and shipping business, it said, adding that combined entity would have over sixty lakh shareholders, the largest for any entity in the world.
Referring to the Gas Supplies Masters Agreement signed by RNRL with RIL, it said Reliance would drive “substantial benefit” from it. Besides, gas prospects from RNRL’s coal bed methane blocks as also its 10% share in an oil and gas block in Mizoram would be added advantage.
The combined entity would have a net worth of over Rs16,000 crore, including RNRL’s net worth of around Rs1,900, it said. The merger would be subject to approvals of the Bombay high court and other regulatory authorities, it added.
Sunday, July 4, 2010 Comments
Want to make money off India's infrastructure boom?No, you can't invest in the $11 billion fund which the government recently said it would set up to finance India's much-needed infrastructure development. That fund will be available only to large institutional investors like insurance companies, pension funds, and so on.
For individuals who want to participate in India's infrastructure growth story, the options are limited. The wealthy -- with 1,000,000 rupees or more to invest -- can buy directly into infrastructure projects through private equity and venture capital deals. For the rest of us, buying stocks of infrastructure companies is the best bet. Some infrastructure bonds are also expected to come to market over the next few months but their returns may be fixed and thus not be tied directly to infrastructure growth.
The case for investing in India's infrastructure is obvious: to keep the economy growing at a rate of 8% or more, we need to build roads, generate more electricity and provide more water to all of India. And we need to do all of this pretty quickly. So, barring some unforeseen economic setbacks, it's fair to expect that companies involved in the infrastructure space will grow at double-digits rates.
To get exposure to this growth, consider buying a mutual fund which invests solely in infrastructure-related stocks. A fund is a better bet than buying individual stocks because funds invest in a number of companies and thus reduce the risk that one company's failure could decimate your portfolio.
There are around a dozen infrastructure open-ended mutual funds in India, and the number is growing. The most recent entrant was Baroda Pioneer Infrastructure Fund, launched last month.
The definition of what sectors are included in infrastructure is loose but they typically include companies tied to transport such as roads, airports and ports, power and engineering companies, and also construction-related companies. Some money managers consider banks also as part of infrastructure because they provide financing to these projects.
Fund managers say in recent months more and more projects are being undertaken which should boost the earnings of these companies. Srividhya Rajesh, manager of the Sundaram BNP Paribas Capex Opportunities fund, says that some medium and small companies today have orders in hand which are three to five times their current year's sales, making them attractive investments.
The Sundaram fund has 5 billion rupees ($110 million) under management, and it has returned 8.8% annually for the three years ended Thursday, according to data firm Value Research India Pvt Ltd. In comparison, Bombay Stock Exchange's 30-share Sensex has gained 5.3% over the three years through Thursday.
Anand Shah, manager of the Canara Robeco Infrastructure fund, likes oil and gas companies, especially government-run oil marketing companies, because they will benefit from upcoming reforms. Mr. Shah believes that the government will, in some form, follow the recommendations of the Kirit Parikh Committee report which suggests that Indian oil companies be allowed to charge prices which are tied to international prices.
Mr. Shah's fund has 2.6 billion rupees ($58 million) under management, and it has earned around 12% over the last three years, according to Value Research.
The potential of infrastructure companies has not been overlooked by other investors, who've been piling into these stocks lately and pushing up their prices. "At current valuation, one needs to be cautious on infrastructure," says Mr. Shah.
Individuals would be best off investing in a "systematic investment plan" in which they periodically put small amounts of money into a mutual fund over a period of time. That way, investors capture any dips that may come in the broad stock market.
To be sure, infrastructure investing is not for everyone. Like other "sector" or "thematic" funds, infrastructure funds are more risky than a diversified fund because their fate is tied to a narrow sphere of companies. Typically, the fortunes of infrastructure companies are dependent on the economic cycle; they do well when the economy is expanding and vice versa. In 2008, when the Indian economy slowed due to a global crisis, infrastructure companies, and in turn the mutual funds which bought them, lost more than the broad market.
The bottom line: Investors need to approach this investment with a long-term mindset. "You might end up losing a lot of money if you don't stay through the cycle," says Mr. Shah.
Ideally, you want to allocate only 2% to 3% of your overall portfolio to a sector fund like this.
If you don't want to take the risk of investing in the stock market at all, you can watch out for some infrastructure bonds that are expected to be issued this year. Finance Minister Pranab Mukherjee announced earlier this year that investments of up to 20,000 rupees ($450) into some types of government-specified infrastructure bonds can be deducted from your taxable income.
While we have no further details about these bonds yet, based on some similar bonds issued in the past, financial advisers expect that they will require a lock-in of five years or more and could carry an interest rate which is one to two percentage points lower than the prevailing interest rate on comparable bonds or fixed deposit programs because of the tax benefit. Most likely, the government will issue these closer to the end of the year when people are thinking about tax-savings.
Vivek Rege, a financial planner in Mumbai, expects that these bonds will see a huge response but not necessarily because they are tied to infrastructure. People "will put blindly into anything which gives them a tax deduction," says Mr. Rege.
If that money can help get us better roads and ports, I'm not complaining!
Tuesday, June 29, 2010
Bangalore: Mahindra & Mahindra (M&M), the diversified business group with significant interest in automotive and information technology (IT), is looking at setting up an aircraft financing arm in Australia to boost the sale of aircraft being manufactured by Gippsland Aeronautics, which is now part of the Mahindra group.
The over-$6.3 billion diversified business group is mulling to use its non-banking financial arm Mahindra & Mahindra Financial Services (Mahindra Finance) to set up an independent or partly-owned financial services entity in Australia to finance the customers who want to buy aircraft built by Australian aircraft producer Gippsland Aeronautics that is part of Mahindra Aerospace.
In December last year, M&M, along with Kotak Private Equity, had acquired two Australian companies, including Gippsland Aeronautics and aerospace component maker Aerostaff Australia. These acquisitions were made by its under-subsidiary Mahindra Aerospace with a total commitment of $37.4 million over the next five years.
"Most aircraft in the world are financed by a financing company. Now that Mahindra Finance exists in India and helps the sale of tractors and SUVs, it is possible that Mahindra Finance can look at setting up something in Australia independently or as a minority or as a majority," said Hemant Luthra, president of Mahindra Systech, which looks after the aviation business of the company.
Gippsland, which produces two- to 20-seater aircraft, has sold 250 of its aircraft in 32 countries, a majority of them in Australia. M&M believes with a financing arm in place, the orderbook of Gippsland will improve dramatically, as easy finances can be made available to the customers.
Luthra said owing to its (smaller) size, Gippsland was not able to make financial arrangements earlier. "I think the order book will improve dramatically because so far they (Gippsland) could not get its own financing and financial arrangements. Now that they can make a financial arrangement on the back of the Mahindra ownership, they will become a very strong proposition," said Luthra, who is also a member of the management board of M&M.
Post the acquisition, M&M has also committed to infuse a working capital to the tune of Rs 200 crore for the running of Gippsland's business. It is quite possible that the company may set aside a part of this fund for the financing purpose, Luthra added.
According to the company, Gippsland's eight- to 10-seater aircraft, including the single engine GA8 Airvan, are in biggest demand among buyers in Australia and other countries. These aircraft, which are capable of landing and taking off from unpaved and short runways, can be used for disaster relief, pilgrimage, corporate travels, air surveillance at costs per seat kilometre that approach road transport and are half of jet travel.
After the acquisition of Gippsland, M&M is also infusing working capital to design and develop a 18-seater general aviation aircraft, which could not be done earlier because of unavailability of working capital.
With the acquisition, the necessary certification has been transferred from the Australian government to Mahindra Aerospace, which is now building a team of both Australian and Indian engineers to take up the programme. "Our estimate is that the 18-seater aircraft will be ready for take off in calendar 2012. We have to built four prototypes which will be destructively tested to test the ruggedness," said Luthra.
Meanwhile, M&M plans to transfer some aircraft designing works like wings, tanks and interior to the plant it has proposed to set up in India. The company said it could take at least three years for its plant in India to become fully-equipped to completely design and develop the aircraft. "It will happen step-by-step," said Luthra.
According to a study done by M&M in partnership with management consulting firm AT Kearney, about $5 billion of general aviation aircraft are being sold every year, out of which more than half are turboprop aircraft, like the ones being developed by Gippsland.
Business Standard
Tuesday, June 29, 2010 Comments
Sunday, June 13, 2010
Media baron boards SpiceJet with Rs 750 cr
Media baron Kalanithi Maran of Sun TV Network Ltd is close to signing an agreement to purchase a nearly 40% stake in India’s second largest low-fare carrier SpiceJet Ltd from its promoter Bhupendra (Bhulo) Kansagra and distressed-assets buyout specialist Wilbur L. Ross for around Rs800 crore, two investment bankers familiar with the development said.
This values the company at Rs2,000 crore against a market value of Rs1,400 crore going by Thursday’s closing price of SpiceJet shares.
Maran, who runs 20 television channels and two general newspapers in south India, will also make an open offer to SpiceJet’s minority shareholders to acquire an additional 20% stake. Under Indian takeover rules, any acquisition of 15% or more triggers an open offer and the acquirer needs to make an offer for at least another 20% of the target company. Edelweiss Capital Ltd is exclusive adviser to the deal.
The shares of SpiceJet fell 0.52% on the Bombay Stock Exchange on Thursday to close at Rs57.85 apiece even as the exchange’s bellwether Sensex index rose 1.59%.
Maran, elder brother of Union textiles minister Dayanidhi Maran, has been keen to enter the aviation industry and had even obtained a no-objection certificate from the ministry of civil aviation to run a non-scheduled air passenger service. Sun Network’s board had given a go-ahead for its future plans to enter civil aviation and import aeroplanes.
In December 2009, Maran held discussions with Star Aviation Pvt. Ltd, which owned a licence to start a regional airline in south India.
“As a first step, Ross will convert his foreign currency convertible bonds (FCCBs) into equity shares and will own 27.11% stake in the low-cost airline. At the second stage, both Ross and Kansagra will sell their 40% stake to Maran,” one of the bankers said. Ross had bought convertible bonds of SpiceJet in July 2008, which will be converted into equity at Rs25 a share, a price that ensures that his exit in favour of Maran will be a profitable one.
Kansagra owns 12.89% in the company through Royal Holding Services Ltd.
Among the other major shareholders, the Tata group owns 6% stake.
Despite repeated efforts, Mint could not reach out to Sun TV Network executives, Kansagra and India representatives of WL Ross for comments on this story.
“As a policy, we do not comment on market rumours and speculations,” said a SpiceJet spokeswoman, answering Mint’s query.
“Maran had held a series of discussions with SpiceJet promoters for months,” the second banker said.
Foreign direct investment (FDI) limit in Indian airlines is 49%. Currently, foreign ownership in SpiceJet is 27.5% and if Ross was to convert his FCCBs to equity, then the FDI limit will be breached.
“We have structured the deal in a way to take care the FDI limit is not violated,” said the first banker.
The airline’s other foreign shareholders—Istithmar PJSC, the investment arm of Dubai
World, and Goldman Sachs—can take part in the open offer, the banker said, adding that Maran is ready to shell out around Rs1,200 crore to own up to 60% stake.
Both Istithmar and Goldman Sachs own FCCBs that can be converted into equities.
In early February, Istithmar, an anchor investor in SpiceJet, sold a bulk of its 13.39% stake to a clutch of domestic funds, including DWS Invest BRIC Plus Fund, Reliance Mutual Fund and Birla Mutual Fund.
“A deal is in the works and could be concluded in a few days,” said the same banker who had worked with SpiceJet to raise $80 million (Rs376 crore today) from Ross through his eponymous private equity fund in July 2008, and persuaded investment bank Goldman Sachs to invest $20 million.
Industry peers believe the change in ownership will help SpiceJet expand operations.
“Till now, SpiceJet’s fragmented ownership has prevented the airline from expanding its fleet as there was always a sense of uncertainty in the ownership, with various promoters looking to exit and a new set of promoters wanting to come in,” said a senior executive with a leading rival private airline, who did not want to be named. “The delay for the next round of fleet acquisition comes at a time when its arch-rival IndiGo has obtained the government approval to buy 150 more planes in addition to 100 what they had ordered,” he added.
SpiceJet has plans to add four planes this fiscal year.
In April, SpiceJet had a market share of 12.6% among domestic carriers. IndiGo is the largest low-fare carrier with a market share of 15.7% in April.
Gurgaon-based SpiceJet had posted a Rs61.4 crore net profit in fiscal 2010. It had held roadshows to raise $75 million in April by selling new shares to domestic fund houses ahead of launching international flights. Its board has even cleared a proposal to tap the international market to raise capital.
“For SpiceJet, what is good is a well entrenched group of investors or a promoter who can further the strategic interests of the company. W.L. Ross is a turnaround specialist and, therefore, cannot be construed as a promoter. They are financial investors and will seek their exit when the turnaround is complete,” said Mahantesh Sabarad, senior vice-president (equity research) at domestic brokerage Fortune Equity Brokers (India) Ltd, who has been tracking the stock.
Referring to Maran’s business entity’s interest in SpiceJet, he said, “This appears to me only a financial interest and not a strategic interest in SpiceJet. This still means SpiceJet will not find a new promoter just as yet.”
“Any investor would be sinking his money in Indian low-fare carriers as they need to change their business models,” said Nawal Taneja, professor and chairman at department of aviation, Ohio State University.
“Copying a Western model need not be necessarily good for an Indian airline,” added Taneja, who has 40 years of experience in working and advising for international airlines, and is the author of six books on the global airlines industry.
Sunday, June 13, 2010 Comments
Friday, June 11, 2010
April industrial production grows 17.6% vs 13.5% (MoM)
THE COUNTRY’S industrial output rose for the seventh consecutive month in April at a much faster than expected rate of 17.6% from 13.5% a month earlier led by growth across all sectors. CNBC-TV18 had expected IIP to come in at 14%.
The manufacturing sector in April grew 19.4% as against 0.4%, while consumer durables surged to 37% versus 17.6%. The mining sector’s growth came in at 11.4% in the month versus 3.4%. There was strong growth in capital goods sector, which rose 72.8% from negative 5.9% on year-on-year basis and the consolidated non-durable jumped 6.6% as against negative 10.5%.
Finance Minister Pranab Mukherjee said that industrial growth was encouraging. However, economists said the data is unlikely to prompt any immediate policy action from the Reserve Bank as worries over Europe's debt crisis and the health of the global economic recovery are likely to prevent any policy tightening before the next scheduled quarterly review on July 27.
"From June onwards due to the strong base effect there is going to be some normalisation of growth rates," said Rupa Rege Nitsure, Chief Economist at Bank of Baroda.
Commenting on robust capital goods numbers, Jehangir Aziz Chief Economist at JPMorgan said, “If you would look at the numbers of last time on a seasonal adjustment basis, capital goods activity actually fell. So this (72.8% growth) is a good sign of the start of an investment cycle. This turnaround is earnest and I see momentum continuing in the month of May.”
Robust consumer demand
However the consumer durable numbers, according to Venugopal Dhoot Chairman and
Managing Director of Videocon, were not very surprising. “Since November the growth has been over 30%. In January it was 46% and now it is 37%. The consumer durable industry has taken good shape and credit goes to the stimulus package announced by the government in January 2009. Besides, the demand is good, interest rates are lucrative and the government has spent well on the below poverty line (BPL) bracket and people at the bottom of pyramid. We are seeing the impact last years budget where the government put money into the hands of the people. You will see that in July-August the growth in consumer durables will be similar to capital growth industry if there are good rains,” he reasoned.
Where are the figures headed?
On the outlook for FY11, Mridul Saggar, Chief Economist, Kotak Institutional Equities, said, “There is a possible upside considering that much growth in consumer durables has come from not much support from bank support to retailers. However, we need couple of more months to see if the actual investment activity has accelerated at grassroot level and to say if 10% growth will continue. But we are still skeptical about global scenario.”
"If investment growth picks up, then, for the year as a whole, IIP can be expected somewhere between 8.5-9% in FY11. This surely gives more elbow room to the Reserve Bank of India to pursue monetary tightening," Nitsure added.
(With inputs from Reuters)
Friday, June 11, 2010 Comments
Monday, June 7, 2010
Golden Rules For Investing :
1 Plan your trades. Trade your plan.
2 Keep records of your trading results.
3 Keep a positive attitude, no matter how much you lose.
4 Don't take the market home.
5 Forget your College degree and trust your instincts.
6 Successful traders buy into bad news and sell into good news.
7 Successful traders are not afraid to buy high and sell low.
8 Continually strive for patience, perseverance, determination, and rational action.
9 Limit your losses - use stops!
10 Never cancel a stop loss order after you have placed it!
11 Place the stop at the time you make your trade.
12 Never get into the market because you are anxious because of waiting.
13 Avoid getting in or out of the market too often.
14 The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
15 Always discipline yourself by following a pre-determined set of rules.
16 Remember that a bear market will give back in one month what a bull market has taken three months to build.
17 Don't ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
18 Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
19 Split your profits right down the middle and never risk more than 50% of them again in the market.
20 The key to successful trading is knowing yourself and your stress point.
21 The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding mistakes.
22 Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
23 Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
24 Accept failure as a step towards victory.
25 Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker!
2 Keep records of your trading results.
3 Keep a positive attitude, no matter how much you lose.
4 Don't take the market home.
5 Forget your College degree and trust your instincts.
6 Successful traders buy into bad news and sell into good news.
7 Successful traders are not afraid to buy high and sell low.
8 Continually strive for patience, perseverance, determination, and rational action.
9 Limit your losses - use stops!
10 Never cancel a stop loss order after you have placed it!
11 Place the stop at the time you make your trade.
12 Never get into the market because you are anxious because of waiting.
13 Avoid getting in or out of the market too often.
14 The most difficult task in speculation is not prediction but self-control. Successful trading is difficult and frustrating. You are the most important element in the equation for success.
15 Always discipline yourself by following a pre-determined set of rules.
16 Remember that a bear market will give back in one month what a bull market has taken three months to build.
17 Don't ever allow a big winning trade to turn into a loser. Stop yourself out if the market moves against you 20% from your peak profit point.
18 Expect and accept losses gracefully. Those who brood over losses always miss the next opportunity, which more than likely will be profitable.
19 Split your profits right down the middle and never risk more than 50% of them again in the market.
20 The key to successful trading is knowing yourself and your stress point.
21 The difference between winners and losers isn't so much native ability as it is discipline exercised in avoiding mistakes.
22 Speech may be silver but silence is golden. Traders with the golden touch do not talk about their success.
23 Dream big dreams and think tall. Very few people set goals too high. A man becomes what he thinks about all day long.
24 Accept failure as a step towards victory.
25 Have you taken a loss? Forget it quickly. Have you taken a profit? Forget it even quicker!
Monday, June 7, 2010 Comments
The Chairman and Managing Director of Reliance Industries LTD Mukesh Ambani has announced in Mumbai that oil production in D-6 Block of Krishan and Godavari Basin has stared from 17th September 2008. He told that plant is producing 5,000 barrel per day. It will be increase more then 550 thousand barrel oil per day in one and half year.
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