MUMBAI: Investment bankers plan to approach the Securities and Exchange Board of India (Sebi), for relaxation of rules relating to the the institutional placement programme (IPP) and offer for sale (OFS) to achieve next year’s public shareholding deadline.
Bankers will ask Sebi to relax certain norms like the 100 per cent upfront margin requirement, time gap between two IPPs and some norms on issue pricing and disclosures.
Currently, investors are required to cough up the entire investment amount, which according to bankers is a deterrent. “The 100 per cent cash margin is draconian. It’s unfair as there is a currency risk involved and allotments are not guaranteed. The regulator should look at a more practical approach for taking payments from investors,” said S Ramesh, chief operating officer, Kotak Investment Banking ,at a conference hosted by The Institute of Company Secretaries of India.
Bankers will also ask Sebi to take another look at the rule which seeks a company to have a minimum 12-week gap between two IPPs. According to bankers, the time gap should be reduced to three or four weeks as the deadline is less than 14 months away.
The market regulator is expected to have considered the recommendations made by bankers. “Sebi is aware of the difficulties faced by intermediaries. We are looking into aspects to make it more market-friendly and also more board-based to increase investor participation,” said a senior Sebi official.
Bankers also want Sebi to extend the option of price bands for OFS. At present, under the OFS route, companies have to announce a floor price a few days in advance, while the IPP route gives an option of either announcing a floor price or a price band.
According to bankers, whenever a company announces a floor price, the secondary market price tends to fall, which makes the issue unattractive. This was seen during the ONGC share sale. Shares of ONGC had dropped below the floor price in the secondary market, which kept many investors away and, eventually, the issue had to be bailed out by state-run Life Insurance Corp. Investment bankers say the floor price announcement should be allowed on the day of issue. They are asking Sebi to reconsider minimum investor criteria.
An IPP issue needs to have a minimum of 10 investors and allotment to one investor cannot exceed 25 per cent.
The requests are based on operational difficulties faced by bankers while conducting the share sale of ONGC, Wipro and Godrej Properties — the three companies which have used the new routes so far.
In January, the market regulator had introduced these two new mechanisms for share-sale to aid listed companies in complying with public shareholding norms. The new routes were introduced as fast-track ways to carry out share sales. For paring promoter holdings companies earlier only had the option of follow-on public offering (FPO), which takes an average of more than three months to complete. Meanwhile, the OFS and IPP process can be completed in three weeks and one week respectively.
Currently, there are about 180 private companies that have promoter holding of more than 75 per cent, who will have to offload shares worth Rs 27,000 crore. While there are another 16 PSUs with government holding of more than 90 per cent which will have to sell securities worth Rs 12,000 crore to meet the shareholding requirement. Sebi has set a deadline of June 2013 for all private sector companies and August 2013 for all PSUs to meet these norms.
NESTLE ACQUIRES PFIZER BABY FOOD UNIT FOR $11.85 BILLION
ZURICH: Swiss food group Nestle is to buy USdrugmaker Pfizer’s baby food business for $11.85 billion, beating French rival Danone in the battle for dominance of fast-growing emerging markets. The world’s biggest food company had to dig deeper than expected into its ample pockets to win the high-stakes fight for Pfizer Nutrition, which makes 85 per cent of its sales in emerging markets. “The price tag is high. However Nestle is securing a high growth/margin business with high exposure in the emerging markets,” said Vontobel analyst Jean-Philippe Bertschy. Nestle said the deal would add to earnings per share from the first year, and would allow cost synergies of $160 million. Bertschy estimated the deal would add about 0.5 per cent to earnings per share in the first year and 1.5 per cent in the following years. Nestle shares, which hit an all-time high of 57.50 francs ahead of solid first-quarter results last week, fell 2.19 per cent, compared with a 0.96 per cent weaker European food and beverage index. (For details log on to : http://www.business-standard.com/india/news/nestle-acquires-pfizer-baby-food-unit-for-1185-bn/472435/)
COROMANDEL CLOSE TO BUYING UB STAKE IN MANGALORE CHEMICALS
HYDERABAD: Fertiliser maker Coromandel International is close to snapping up the Vijay Mallya-led UB Group’s 30.4 per cent stake in Mangalore Chemicals and Fertilisers Ltd (MCFL), according to reliable sources. Coromandel, part of the Rs 17,000-crore Murugappa Group, is ahead of its competitors Zuari Industries and Chambal Fertilisers & Chemicals in acquiring the UB Group’s stake in MCFL. The company could make an announcement in the next few weeks, sources familiar with the matter said. Mr Vijay Mallya, who heads cash-famished Kingfisher Airlines, has been looking at exiting the fertiliser business, after it was approached by fertiliser players for buying out UB Group’s holding in MCFL. The UB Group’s stake in MCFL is estimated to be worth about Rs 150 crore. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3346833.ece)
TATAS EYE RS 2,000-CRORE REVENUE BY E-TAILING ELECTRONICS
MUMBAI: Tata Sons-owned Infiniti Retail, which runs electronics and durable stores under the Croma brand, is expecting a turnover of Rs 2,000 crore from its newly launched online venture in two years. Cromaretail.com, the chain’s e-retail venture, on Monday went live in 319 cities across 24 states. “Since the launch of Croma five years ago, we have seen the retail industry evolve into being an integral part of our consumers’ lives and the launch of our e-commerce venture is a natural progression towards delivering growth and trusted service to our users,” said R K Krishna Kumar, chairman of Infiniti Retail. “What we took five years to achieve (turnover of Rs 2,000 crore) in the bricks and mortar model, we believe we will achieve that in online in one-and-a-half to two years due to growing internet penetration and changing buying habits,” said Ajit Joshi, chief executive officer and managing director of Infiniti Retail. (For details log onto : http://www.business-standard.com/india/news/tatas-eye-rs-2000-cr-revenue-by-e-tailing-electronics/472410/)
PRIMEX GROUP TO RAISE $5 MILLION TO EXPAND BIZ
CHENNAI: Primex Group, which recently roped in Agnivesh Agarwal , member of the founding family of the Vedanta Group, as an investor, is now scouting for private equity or venture capital funding to expand its scans and labs business. The group has already initiated the process and is currently in talks with four potential investors, according to a senior official from the group. It may be noted that Agnivesh Agarwal, son of Anil Agarwal who founded the Vedanta Group, has picked up a 60 per cent stake in Primex Healthcare earlier this week. This will be his first investment in the growing healthcare industry in India. The investment was made in his personal capacity. Anand Mahadevan, founder and chief executive officer of Primex Group said, “We are in talks with private equity and venture capital companies to raise around $5 million (approximately Rs 26 crore) to expand our scans and labs business.” He, however, declined to spell out the names of the potential investors. (For details log on to : http://www.business-standard.com/india/news/primex-group-to-raise-5-mn-to-expand-biz/472355/)
PATANJALI AYURVED MAKES SOUTH INDIA FORAY
CHENNAI/HYDERABAD: Baba Ramdev-promoted Patanjali Ayurved Limited forayed into south Indiawith the launch of over 100 ‘open market’ products, including cosmetics, toiletries, vitality and spices, in Andhra Pradesh on Monday. “Our idea is to have a pan-India presence by the end of this year. We have already covered the northern market, and will be entering Karnataka tomorrow with plans to wrap up the entire southern region in a month’s time,” Balakrishna, managing director of Patanjali Ayurved, told mediapersons here. The company’s products are cheaper by 30 per cent, as compared to the once being sold by multinationals (MNCs), because it sources raw materials directly from farmers and hence overhead costs are low, he said, adding that they were contemplating sourcing herbs and other ingredients from farmers down south in a phased manner. (For details log on to : http://www.business-standard.com/india/news/patanjali-ayurved-makes-south-india-foray/472354/)
M&M PLANS UNMANNED SEA SURVEILLANCE VESSELS
Mahindra & Mahindra (M&M), India’s biggest sport-utility vehicle maker, plans to build unmanned coastal surveillance vessels as the nation boosts security along its coastline following the 2008 Mumbai terrorist attack. The company’s newly formed joint venture with Israel’s Rafael Advanced Defense Systems will assemble the vessel at a facility in Pune, western India, “in a phased manner” after initially importing models from its partner, KA Hai, chief executive officer of Mahindra’s defense unit, said in an e-mail reply to Bloomberg questions. He didn’t give a timeframe. “Unmanned patrol vessels will be needed in large numbers to protect from infiltration by terrorists, protect our offshore assets and patrol vital coastal assets such as nuclear plants,” Hai said April 18. (For details log on to : http://www.financialexpress.com/news/m&m-plans-unmanned-sea-surveillance-vessels/940598/)
AVIATION FDI: CAUTIOUS, CENTRE SET TO TAKE ALLIES ON BOARD
NEW DELHI: Once bitten, twice shy. Stung by the strong attack from its allies after the Cabinet had cleared foreign direct investment (FDI) in multi-brand retail, the government has now decided to first bring about consensus among its allies before allowing foreign carriers to invest in domestic ones. The government has decided to consult allies like the Trinamool Congress (TC) and the Dravida Munnetra Kazhagam (DMK) before any resolution on extending the ambit of FDI to aviation by allowing foreign carriers to buy stakes in Indian ones. “Civil Aviation Minister Ajit Singh will meet TC chief Mamata Banerjee on May 5, when she would be in New Delhito attend a meeting on the National Counter-Terror Centre. A meeting with DMK would also he held soon. A decision has been taken to not move any proposal without taking the allies on board,” said a senior minister, on the condition of anonymity. (For details log on to : http://www.business-standard.com/india/news/aviation-fdi-cautious-centre-set-to-take-alliesboard/472426/)
TELECOM COMPANIES BLAST TRAI MOVE TO SET 2G BASE PRICE UNREALISTICALLY HIGH
NEW DELHI: Four years and three months after former telecom minister A Raja gave away pan-India GSM mobile spectrum at R1,658 crore, the Telecom Regulatory Authority of India (Trai) on Monday fixed the auction reserve prices for the same spectrum ten times higher. Trai has set a steep reserve price at R3,622.18 crore for auction of per MHz spectrum in the 1,800 Mhz (GSM services) band. If the price is accepted by the government, a new operator would have to spend R18,110 crore for 5 MHz spectrum. This is higher than the R3,500 crore reserve price the government set for auctioning per 5 MHz of 3G spectrum in 2010, which was in a more efficient band of 2.1 GHz. This is higher than the auction discovered price of R16,750.58 crore for 5 MHz 3G spectrum in 2.1 GHz band. Simply put, as per the Trai’s recommendations, the value of 1 MHz 2G spectrum is higher than 5 Mhz of 3G spectrum. (For details log on to : http://www.financialexpress.com/news/telcos-blast-trai-move-to-set-2g-base-price-unrealistically-high/940758/)
PARLIAMENT LIKELY TO TAKE UP NEW COMPANIES BILL THIS SESSION, SAYS VEERAPPA MOILY
MUMBAI: The much-awaited Companies Bill 2011 is likely to be taken up in this parliamentary session, said Union minister for corporate affairs M Veerappa Moily. The new Companies Bill, which will replace a half-a-century-old Act, has made provisions for class action suit and corporate social responsibility. It also has listed that dissenting shareholders should be given an opportunity to exit by promoters and shareholders having control in accordance with regulations that will be specified by market regulator Sebi. Moily said he would like to see the new Companies Bill to be passed in the current session of Parliament, he said while addressing the ICSI Capital Markets Conference here on Monday. (For details log on to : http://economictimes.indiatimes.com/news/politics/nation/parliament-likely-to-take-up-new-companies-bill-this-session-says-veerappa-moily/articleshow/12845366.cms)
NO AUCTION OF COAL BLOCKS FOR POWER SECTOR: SOURCE
NEW DELHI: Indiawill not auction new coal mining blocks to the power sector and will instead allocate them to companies that offer to sell electricity cheapest, a government source said on Monday. The country is introducing a new system that will put an end to allocation of captive blocks to power plants at the government’s discretion, as done in most cases in the past, and will help bring transparency at a time when the government is being buffeted by corruption scandals. Power companies will be vying for about 16 of 54 coal blocks that the government has earmarked for allocation through bidding expected to take place by the year-end. “Auctioning of blocks will happen for cement and steel companies. But for power it will be through competitive tariff-based bidding,” a senior coal ministry source said on condition of anonymity as the matter is still under discussion. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/no-auction-of-coal-blocks-for-power-sector-source/articleshow/12840719.cms)
CUSTOMS DUTY ON POWER EQUIPMENT PUT ON HOLD
NEW DELHI: The government has put on hold its plan to levy duty on import of power equipment by all developers to protect the interest of domestic firms, such as BHEL and L&T. A note proposing a 5% customs duty on electrical equipment imported by mega power projects was moved by the power ministry in February, but it has since failed to get approval of the Cabinet due to inter-ministerial differences and strong opposition from power sector companies. Meanwhile, the depreciation of rupee has also added to the cost of imports, thereby negating the need to levy 5% basic customs duty. “The final note proposing the duty has been withdrawn for making a few changes, but it is likely to be kept in abeyance for the time-being,” said a top government source involved in the preparation of the note. (For details log on to : http://www.financialexpress.com/news/customs-duty-on-power-equipment-put-on-hold/940500/)
RIL-BP ALLOWED TO SURVEY 12 KG-D6 FIELDS
NEW DELHI: A regulatory panel has allowed Reliance Industries to carry out surveys on 12 satellite fields in the deep water D6 block in the east coast, subject to the condition that this expense would become eligible for recovery only if a subsequent field development plan is approved by the authorities. The management committee overseeing the performance of the D6 block in the Krishna Godavari basin decided last Friday that RIL could make investments in geophysical and geo-technical surveys and other studies in the R series fields (D34) at its own cost. The RIL-BP-NIKO consortium has to bear the risk involved in making this investment. Sources said RIL would be able to make savings in its expenditure if surveys are done in these 12 fields, along with the other four fields D2, D6, D19 and D22, where such surveys were approved in February. (For details log on to : http://www.financialexpress.com/news/rilbp-allowed-to-survey-12-kgd6-fields/940502/)
EXCHANGES FORCED TO SELL POWER AT LOWER RATES: DEO
KOLKATA: Power exchanges will have to sell power at low prices since state distribution companies will not be able to purchase high-priced power, Central Electricity Regulatory Commission (CERC) chairman Pramod Deo said on Monday. Deo, at an interactive session organised by the Merchants’ Chamber of Commerce, said power has been traded at prices between R2.96 and R4.00 per kilowatt hour not due to low demands but because the state distribution companies would not be able to buy power if it was sold at higher margins. Trading rates were supposed to be volatile given the condition of fuel supply and the increase in generation cost. “But exchanges were forced to trade at lower margins to keep itself afloat,” Deo said, adding that long-term contracts would help the exchanges trade in larger volume. (For details log on to : http://www.financialexpress.com/news/exchanges-forced-to-sell-power-at-lower-rates-deo/940578/0)
MOEF NOD FOR PARALLEL PROCESSING OF ECO CLEARANCES
MUMBAI: The Union Ministry of Environment and Forests (MoEF) has accepted coal-based power producers’ demand for a parallel processing of environment and forest clearances, instead of sequential clearances. This would help power producers secure these clearances early. The MoEF’s decision, made last week, is expected to fast-track clearances to complete the proposed power capacity addition of 62,000 Mw of the total 75,000 Mw based on coal during the 12th five-year plan. The ministry’s April 19 office memorandum also comes at a time when Coal Indiahas agreed to sign a fuel supply agreement with power producers. As for the issue relating to the status of environment clearance (EC)/forest clearance for linked coal mines, MoEF clarified the case for EC of thermal power projects would be processed based on the status furnished by the proponent. This must be in line with the parallel processing being adopted for granting ECs of projects where forestry clearance is also required, having convergency at the last step. “However, EC would be issued only after stage-1 forestry clearance for linked mine,” it added. (For details log on to : http://www.business-standard.com/india/news/moef-nod-for-parallel-processingeco-clearances/472414/)
POLICY ON ANVIL FOR THERMAL POWER PLANTS
KOLKATA/BHUBANESWAR: The Odisha government is in the process of formulating a comprehensive policy for coal-based thermal power projects and captive power plants (CPPs) in the state. The proposed policy is likely to have a clause at the MoU (Memorandum of Understanding) level which will make it mandatory for all upcoming power plants to share 25 per cent free power with the state. “The state will have an integrated policy which will cover coal-fired plants with independent power producer (IPPs) status and CPPs. The state government had policies for such power plants at different periods of time but they need to be streamlined,” said Chief Secretary B K Patnaik. Asked if the policy will contain provisions for free power, Patnaik said, “The state Chief Minister had earlier written to the Centre on sharing of 33 per cent free power by power plants based on coal washery rejects. We will see what provisions pertaining to free power can be incorporated in the policy.” (For details log on to : http://www.business-standard.com/india/news/policyanvil-for-thermal-power-plants/472358/)
INDONESIA BETS ON TAX INCENTIVE TO ATTRACT INVESTMENTS FROM INDIA
CHENNAI: The Indonesian government is betting on a tax incentive for export of value-added products from the country and attract more investments from India. The country expects that the tax incentive, compared to the higher tax structure for trading of raw coal and crude palm oil from Indonesiato India, would lead the Indian importers of these products to think of setting up refineries and factories in Indonesia, said Indonesian ambassador to India, Andi M Ghalib. “Indiais importing a lot of natural resources from Indonesia. If they refine these products there itself, it would support the local people,” he said. Indiacurrently imports coal, minings, crude palm oil, wood and rubber, among others, from Indonesia. Under a new tax structure, the Indonesian government has increased the tax for export of raw natural resources from the country to 18-20 per cent. However, it has a provision through which the taxation for value-added products would be almost half, at 9 per cent, compared to the original tax. (For details log on to : http://www.business-standard.com/india/news/indonesia-betstax-incentive-to-attract-investmentsindia/472356/)
ONE IN THREE PLANTS RUNNING ON CRITICALLY LOW COAL SUPPLY
NEW DELHI: More than one-third of India’s coal-based thermal power plants are running on critically low levels of fuel stocks, according to the latest data released by the Central Electricity Authority (CEA) on Monday. Figures posted on the CEA website on Monday show that, as of 19 April, 32 of 89 thermal power units across 16 states had “critical” coal stocks—seven days or less. Of these, at least 19 had stocks of four days or less. The normative coal stock requirement for these plants is usually 20-30 days of stock. The eastern region comprising the states of Bihar, Jharkhand, Orissa and West Bengalwere the worst hit, with 13 of 23 units facing critically low levels of stock. In the southern states of Andhra Pradesh, Tamil Nadu and Karnataka, six of 11 units were running below seven days of stock. (For details log on to : http://www.livemint.com/2012/04/23214008/One-in-three-plants-running-on.html)
TCS BEATS $10-BILLION REVENUE MARK IN FY12
MUMBAI: For India’s largest IT services firm Tata Consultancy Services (TCS), the fourth-quarter and annual results for financial year 2012 were about setting milestones. TCS became the first IT services company in the country to cross the $10-billion mark (according to IFRS) in revenues for the year ended March 31. By reporting a 22.6 per cent increase in its net profit on a year-on-year basis for the fourth quarter ended March, TCS gave an upbeat outlook and reiterated it was better placed to manage growth compared to its peers, especially Infosys.The better than expected numbers also put to rest some of the concerns over the demand environment for IT services. “We have good momentum. We have a good pipeline and the traction in business is positive. We do see a good year ahead and we are sure growth for the next fiscal will be even across quarters,” said CEO & MD N Chandrasekaran. Though the company does not give any guidance, Chandrasekaran said it would do better than the Nasscom prediction of growth for the industry at 11-14 per cent. (For details log on to : http://www.business-standard.com/india/news/tcs-beats-10-bn-revenue-mark-in-fy12/472437/)
HOLCIM DOES BETTER THAN ULTRATECH IN 2011-12
MUMBAI: Swiss cement major Holcim’s Indiaarm has beaten domestic giant UltraTech, once again, in financial year 2011-12. At a time when the Indian cement sector managed to slightly better its overall growth, Holcim’s growth was more than double the Aditya Birla Group company. In 2011-12, while UltraTech Cement, India’s largest in the sector, posted growth of 3.5 per cent in its sales, Holcim’s was 8.3 per cent (the industry’s was 6.5 per cent). Holcim sold close to 46 million tonnes of the building commodity and UltraTech a little less than 40 mt. “Holcim’s high trajectory growth is mainly on account of ACC’s strong comeback, as it added capacities which got stabilised and commissioned fully,” said vice president (research) at a domestic brokerage firm. ACC is part of the Holcim group of companies,with a capacity of 30 million tonnes per annum. The company was termed an under-performer by analysts due to its slow ramping up of capacities. However, once these went on stream, the scenario changed. (For details log on to : http://www.business-standard.com/india/news/holcim-does-better-than-ultratech-in-2011-12/472409/)
INDO-PAK TRADE THROUGH LAND ROUTE UP 44% IN FY12
CHANDIGARH: Trade between Indiaand Pakistanthrough the land route soared 44% in 2011-12 to R2,341 crore. Though the balance of trade is still in India’s favour, imports from Pakistan through land route rose by over 100% to R965 crore in 2011-12 against R453 crore in the previous fiscal, a customs department official said. Exports from Indiato Pakistangrew 18% to R1,376 crore against R1,170 crore in 2010-11, the official added. In 2009-10 and 2010-11, bilateral trade via Attari-Wagah land route stood at R1,194 crore and R1,170 crore, respectively. The volume of trade in terms of trucks also grew manifold with the number of trucks crossing over to Pakistanincreasing from 32,000 in 2010-11 to 39,000 in 2011-12. In 2009-10, the number of trucks that exported items to Pakistanwas just 17,000. (For details log on to : http://www.financialexpress.com/news/indopak-trade-through-land-route-up-44-in-fy12/940506/)
INFOSYS UNDER US HOMELAND SECURITY SCANNER
BANGALORE: The USdepartment of homeland security has put spotlight on Infosys, India’s second largest IT exporter, for likely errors in employer eligibility documents of its employees working in the US, prolonging its season of woes. Infosys, on Monday, said it is confident that it will come out unscathed in this case as there was no discrepancy. “The USdepartment of homeland security (DHS) is undertaking a review of our employer eligibility verifications on Form I-9 with respect to our employees working in the US,” Infosys said in its filing to the US Securities and Exchange Commission on April 18. “In connection with this review, we have been advised that the DHS has found errors in a significant percentage of our Forms I-9 that it has reviewed,” the company said adding that if the DHS finds errors it will be subjected to fines and penalties. (For details log on to : http://www.financialexpress.com/news/infosys-under-us-homeland-security-scanner/940609/)