MUMBAI: Jonathan Sandler, Christian Planck and Shalin Shah are unknown names in India, but it is this team based out of Boston that has been responsible for helping Ajay Piramal, chairman of Mumbai-based Piramal Enterprises, pull off two transactions worth about 3,600 crore in the pharma space over the past 30 days.
Sandler, who spent 20 years in boutique investment banks Finvest and Kessler Capital, leads the efforts of a firm called IndUS Growth Partners, which is focused on identifying strategic investments for the Ajay Piramal Group outside India.
IndUS Growth was responsible for Piramal Healthcare’s purchase of DRG, a provider of proprietary research on healthcare trends, for 3,300 crore in a deal announced on Wednesday. IndUS Growth was also responsible for an earlier transaction in which a portfolio of early stage drugs to treat cancer and Alzheimer’s, was acquired by Piramal from pharma giant Bayer.
IndUS Growth Partners is one of the four entities that Piramal has created to identify opportunities for M&A across sectors such as pharma, life sciences and real estate, as well as opportunistic acquisitions that come his way, such as the recent acquisition of a small stake in the Indian arm of Vodafone.
Peter DeYoung, Ajay Piramal’s son-in-law, heads another team that scours the market for deals in the pharma and life sciences segment while yet another team led by his son Anand Piramal and Khushru Jijina, hunts for real estate deals.
The real estate team has notched up some recent successes with two deals in Mumbai. The Pirmal Group snapped up seven acres in Byculla put on sale by the Mafatlal family and more recently it bought Gulita, prime property on Worli Sea Face in Mumbai belonging to FMCG giant Hindustan Unilever.
The elder Piramal alludes that more are in the offing, as Abbott Laboratories still owes Piramal Enterprises about 6,000 crore as milestone payments for buying out their formulations business in 2010.
A fourth team, which is looking for opportunities for structured investments is headed by former E&Y veteran Jayesh Desai. Rajesh Laddha, the CFO of Piramal Enterprises, is involved in the structuring and legal aspects of virtually all deals.
“We have a certain criteria in mind. We can throw out (some deal proposals) immediately. We have different groups that are evaluating several at a time and almost every day a deal comes to our table,” Ajay Piramal told ET in an interview after he signed the deal to acquire Decision Resources Group.
Piramal – who has an unhurried conversation style, punctuating every sentence with “so” as he gathers his thoughts – built his pharma formulations business largely through acquisitions. The deal in which he sold the formulation business to Abbot was consummated in Dubai with the final offer price being arrived at, through a back-of-the-envelope calculation.
Piramal says he prefers to do his own deals, dispensing with the services of investment banks unless they add value. “My major issue with investment bankers is that they are not on the side of the client. They are only on the side of doing a deal. How’s an investment banker incentivised. If they do a deal, they will get the incentives. So there’s no alignment between the client’s interests and the bankers. If there was an alignment I am happy to do it (deal with them).”
Piramal’s confidence to operate alone stems from what he terms as the “domain knowledge” and “relationships” which his team members bring to the table. A contrarian when it comes to real estate in Mumbai, Piramal is blueprinting a plan to make Gulita a premium residential complex.
“It is a good time to buy property. We are Mumbai focused. From the highs of 2010, property rates have come down, particularly land prices are much more rational.” Besides the $1.2 billion owned by Abbot Laboratories, which will come at the stipulated time, Piramal plans to exit the Vodafone stake in a few years. That should keep his four M&A teams busy.
PANCHSHIL REALTY BUYS BACK PE FIRMS’ STAKES IN 3 PROJECTS FOR OVER RS 720 CR
BANGALORE|MUMBAI: Pune-based Panchshil Realty has bought back private equity firms Merrill Lynch and IREO’s stakes in three of its projects for over Rs 720 crore, at least three persons familiar with the development said. Panchshil has acquired IREO’s 50% stake in two projects – EON SEZ at Kharadi and a high-end residential project at Hadapsar for Rs 480 crore. These transactions have been executed through its subsidiaries Eon Kharadi Infrastructure and Eon Hadapsar Infrastructure. During late 2005, IREO Real Estate, the first organised private equity fund for India’s real estate sector, had invested Rs 180 crore for a 50% stake each in these two projects. Of the total 4 million square feet development at EON Special Economic Zone, around 3 million sq ft is ready and has been leased out. IREO clocked in a return of about 2.7 times on its initial investments. Panchshil arranged for this funding with a mix of internal accruals and debt arranged by Standard Chartered Bank, the sources said. Panchshil has also paid Bank of America-Merrill Lynch Rs 300 crore as exit price and Rs 60 crore as dividend to exit from its IT park project at Yerwada in Pune. (For details log on to : http://economictimes.indiatimes.com/markets/real-estate/news/panchshil-realty-buys-back-pe-firms-stakes-in-3-projects-for-over-rs-720-cr/articleshow/13237379.cms)
WIPRO CLOSE TO BAGGING RS 960-CR CONTRACT FROM IAF
BANGALORE: Wipro, India’s third-largest information technology (IT) services company, is likely to bag a contract worth Rs 960 crore from the Indian Air Force (IAF) to automate its maintenance management system. The city-based soap-to-software maker has emerged as the lowest bidder for the contract, according to sources with direct knowledge of the development. Wipro is understood to have quoted Rs 960 crore for the project, while the second- and third-lowest bidders have quoted over Rs 1,000 crore. The defence ministry had issued the request for proposals (RFP) in 2008. Around 14 Indian and global IT companies, including Tata Consultancy Services (TCS), Infosys, Wipro and HCL, were said to be in the fray. The sources said Wipro had bid for the contract as a system integrator for the project, with IBM as the original equipment manufacturer. Wipro will be responsible for the supply, installation, integration and maintenance of servers, and storage for the project, while IBM will supply the necessary hardware. (For details log on to: http://www.business-standard.com/india/news/wipro-close-to-bagging-rs-960-cr-contractiaf/474686/)
EMAAR-MGF TARGETS DELIVERY OF OLD PROJECTS IN FY13
NEW DELHI: Emaar-MGF, a joint venture between Dubai-based real estate developer Emaar Properties and India’s MGF Development Ltd, is looking at fast completion of its existing projects in the current financial year rather than launching new projects. Sources said the company’s primary focus is business consolidation in the financial year, as several of its projects are running behind the schedule and the developer is reeling from a heavy debt burden. Although company officials said some new projects would be launched in 2012-13, the key focus will remain on execution and delivery of the launched projects. Emaar-MGF may also explore the option of selling a few land parcels if it gets good valuation. The company has a net debt of around Rs 4,100 crore. (For details log on to : http://www.business-standard.com/india/news/emaar-mgf-targets-deliveryold-projects-in-fy13/474684/)
VOLKSWAGEN PUTS ON HOLD R2,000-CRORE INVESTMENT IN INDIA
NEW DELHI: German auto major Volkswagen AG said on Thursday it has put on hold the proposed R2,000-crore investment plan in Indiaas the VAT refund issue with the Maharashtragovernment remains unresolved. “The normal investments required for usual operations of the company is going on but the big plans for the future have been put on hold at the moment,” Volkswagen Group chief representative India John Chacko told PTI. He was responding to a query on whether the ongoing issue with the Maharashtragovernment over the change in policy regarding VAT refund has impacted the group’s expansion plans, including the R2,000-crore investment announced in January. Earlier, to woo investors, the state government used to refund VAT paid on all vehicles sold by companies that have factories in the state. It was, however, modified last year and the state government said it would refund VAT only on vehicles sold within the state. (For details log onto : http://www.financialexpress.com/news/volkswagen-puts-on-hold-r2-000crore-investment-in-india/950846/)
PARLIAMENT PANEL TIGHTENS AMBIT OF LAND TAKEOVER BILL
NEW DELHI: Parliament’s standing committee report on the government’s land acquisition Bill has sought a thorough tightening of the provisions to ensure involvement of local institutions and an “informed and transparent process”. Tabled in Parliament on Thursday, it comes down heavily on the provisions allowing the government to acquire land for the private sector for “public goods and services” and in case of public-private partnerships. The panel asks the private sector to fend for itself on acquiring land. Nowhere in the world, it has said, does the government acquire land for private parties for any purpose. It recommends that ‘public purpose’ in the Bill “be limited to linear infrastructure and irrigation, including multipurpose dams, and social sector infrastructure such as schools, hospitals and drinking water/sanitation projects constructed at state expense”. The panel notes the Bill confines Gram Sabhas’ role to consultation. It has recommended the Preamble itself be amended to read, “A Bill to ensure in concert with local institutions of self-government and Gram Sabhas established under the Constitution a humane, participative, informed, consultative, and transparent process for land acquisition…” (For details log onto : http://www.business-standard.com/india/news/parliament-panel-tightens-ambitland-takeover-bill/474690/)
SOPS LIKELY ON EXPORTS TO NEW MARKETS
NEW DELHI: The government is likely to offer incentives on exports of labour-intensive items and reward exporters who diversify into new markets as part of a slew of measures to revive the country’s flailing export sector. The sops, which will particularly benefit sectors such as textiles, handloom, leather and carpets, are expected to be part of the foreign trade policy for 2012-13 to be announced on June 5. “The government will try to do everything feasible, given the pressure of resources, to maintain India’s export momentum,” commerce and industry minister Anand Sharma had promised exporters on Thursday. Slow rate of export growth has resulted in a record trade deficit of over $180 billion in 2011-12. With the rupee in a free fall against the dollar, India’s current account deficit could worsen to 4% of GDP. (For details log on to : http://economictimes.indiatimes.com/news/economy/policy/government-may-offer-incentives-on-exports-of-textiles-handloom-and-leather-products/articleshow/13237458.cms)
CABINET CLEARS SIGNING OF PACT FOR BUYING GAS FROM TURKMENISTAN
NEW DELHI: In what could prove to be a major corridor for energy sourcing in the future, the Union Cabinet, on Thursday, approved the signing of the agreement for buying gas from Turkmenistanthrough the $7.6 billion Turkmenistan-Aghanistan-Pakistan-India (TAPI) pipeline. The approval has given a concrete shape to the pipeline which could prove to be a big boost to the relations between Indiaand Pakistanand bring good news to the region. The contentious issue of transit fee was also resolved with Indiaagreeing to pay both Afghanistanand Pakistana transit fee of $0.50 per million metric British thermal unit (mmBtu) for allowing passage of gas through their respective territories. This was one of the major points that had been a bone of contention between the three neighbouring countries. The Cabinet approved signing of the Gas Sale and Purchase Agreement (GSPA), officials in the Petroleum and Natural Gas Ministry said. (For details log on to : http://www.thehindu.com/todays-paper/tp-business/article3430743.ece)
CHEAPER PRICE INDEX FOR TURKMAN GAS
NEW DELHI: Indiawill buy gas from Turkmenistanat a price indexed to fuel oil, a cheap byproduct of oil refining, instead of crude that makes imports costlier than domestic supplies. The Cabinet on Thursday approved the model agreement for buying the Turkman gas that would be wheeled across Afghanistanand Pakistanthrough a $7.6-billion pipeline. Oil minister S Jaipal Reddy would join his counterparts from the participating countries to witness the signing of the gas sale purchase agreement in Turkman capital Ashgabat on May 23 and 24. At present fuel oil prices, Turkman gas would cost $10-$12 per unit in India, including transit fee and transportation charge, against an average of $16 for liquid gas imported in ships and $4.2 for supplies from domestic sources. The transit fee has been set at 50 cents per unit and would be same for Afghanistanand Pakistan. The transportation charge would be decided after a consortium is in place and operational details of the pipeline are worked out. Indiaformally joined the project in December, 2010. Gas is scheduled to flow from 2016. (For details log on to : http://timesofindia.indiatimes.com/business/india-business/Cheaper-price-index-for-Turkman-gas/articleshow/13230008.cms)
HECTIC TALKS ON OVER KISHENGANGA PROJECT
NEW DELHI: The Indian government is making all efforts to save the strategic Rs. 4,000-crore Kishenganga hydro-electric project on the Kishenganga River (known as the Neelum River in Pakistan), as it readies to file a rejoinder on Pakistan’s reply before the International Court of Arbitration (COA) at The Hague by May 21, 2012. Hectic talks are on between the the ministry of external affairs (MEA) and power to salvage the project that is in very advance stage of construction and on which Rs. 2,500 crore has already been expended. The 330-MW project is located in the Bandipora district of J&K and is a run-of-the-river scheme, involving transfer of Kishenganga water in Gurez valley to Bonar Madmati nallah near Bandipora in Kashmirvalley. Pakistan, which is also building a hydropower project (called the Neelum-Jhelum project) on the same river, has objected to the Kishenganga project contending that its construction of will adversely impact their development. (For details log on to : http://www.hindustantimes.com/News-Feed/Business/Hectic-talks-on-over-Kishenganga-project/Article1-857390.aspx)
WE ARE CREATING LEVEL-PLAYING FIELD FOR ALL STAKEHOLDERS: SHINDE
NEW DELHI: Giving free electricity to 1.75 crore below poverty line households is not easy. And who would know this better than the Power Minister, Mr Sushil Kumar Shinde. Fuel supply constraints coupled with poor equipment availability has been a major challenge for his Ministry. Sharing his thoughts with Business Line on six years of his journey in the Ministry, Mr Shinde said that offering a level-playing field for all stakeholders is the mandate set by him. The country’s power equipment manufacturing capacity was very low, thus we were not able to meet targets. BHEL alone was not able to meet the demands. On the Ministry’s initiatives, six new joint venture companies — L&T-MHI, Bharat Forge-Alstom, Ansaldo-GB Power, Toshiba-JSW, Thermax-Babcock & Wilcox, and BGR with Hitachi – are setting up their base in India. Doosan is also putting up a facility in Indiawith 100 per cent FDI. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-economy/article3430186.ece)
RELIANCE POWER ASKS CAG TO DROP ‘UNDUE GAINS’ REMARK
NEW DELHI: After the government recently reaffirmed its earlier decision to allow Reliance Power Ltd (R-Power) to divert surplus coal from its Sasan project in Madhya Pradesh for a nearby project, the company has asked the Comptroller and Auditor General (CAG) to drop its observations of “undue benefit” in a draft audit report. The final report is expected to be tabled in Parliament in the current session. “In view of the action taken by the power ministry to review Sasan coal permission at the highest levels of the government as recommended by CAG and the decision of the EGoM (empowered group of ministers) that the surplus coal permission for Tilaiya would be governed by a comprehensive policy, we would request you to kindly consider dropping the para on undue benefits,” R-Power said in a letter written to CAG last week. A draft report of CAG on coal allocation had alleged undue benefits to the tune of Rs 15,849 crore, extended by the government to R-Power by way of surplus coal allocation for two of its ultra mega power projects (UMPPs). The report pegged benefit to R-Power from surplus allocation for Sasan UMPP at Rs 4,875 crore. Another Rs 10,974 crore “may accrue” from the Tilaiya UMPP, it said. (For details log on to : http://www.business-standard.com/india/news/reliance-power-asks-cag-to-drop-undue-gains-remark/474658/)
CPI-BASED INFLATION DATA: A GOOD START, BUT A LONG ROAD TO STABILISATION
NEW DELHI: In its annual policy, the Reserve Bank of India (RBI) had taken cognisance of the recently-released inflation numbers based on the consumer price index (CPI). However, it would take three to five years for the new series to stabilise. The CPI data for April is scheduled to be released tomorrow. The CPI inflation series is much wider in scope than the one based on the wholesale price index (WPI), as it has both rural and urban figures, besides state-wise data. The new series, with 2010 as the base year, also includes services, which is not the case with the WPI series. Though currently there are three separate CPI index-based inflation rates, these are segmented, catering to rural labourers, agricultural labourers and industrial workers. (For details log on to : http://www.business-standard.com/india/news/cpi-based-inflation-datagood-start-butlong-road-to-stabilisation/474674/)
COAL BLOCK ALLOCATION WAS FAIR AND TRANSPARENT: COAL MINISTRY
NEW DELHI: Amid allegations of favouritism in allotment of captive coal blocks, the Coal Ministry today said fair and transparent procedure was followed while allocating mines between 1993-2009. “Fair and transparent procedure was followed (in allocation of coal blocks between 1993-2009) which was devoid of any bias,” Coal Ministry said on its website. The statement comes in the wake of the Comptroller and Auditor General (CAG) estimating a Rs 10.6 lakh crore loss to the exchequer on account of allotment of coal blocks without auction to companies. The ministry also said that as the demand for coal grew, it was felt that Coal India alone would not be able to meet it. As a result, “the option of giving a bigger role to the private sector was explored,” it said. (For details log on to : http://www.business-standard.com/india/news/coal-block-allocation-was-fairtransparent-coal-ministry/165317/on)
POWER WILL COST MORE AS MINISTRY DECIDES TO ALLOW FUEL PRICE PASS ON
NEW DELHI: Get ready for higher electricity bills. The Power Ministry will soon allow developers to pass on the volatility in fuel prices to customers. The Power Minister, Mr Sushilkumar Shinde, told Business Line that the Government will make this provision as part of the soon-to-be released bidding documents. All projects under the 12th Plan will have this benefit. Till now, only NTPC was allowed to do so, as it operates under a regulated regime. Private players have been acquiring projects through tariff-based competitive bidding. But they have been crying foul over volatility in fuel prices. If benefits are not given, no developer would enter this country, Mr Shinde said, adding “Why should they invest their money?” On electricity pricing, he said, “at the moment, I think we will have to see the overall picture. It is the duty of the regulator to fix the price.” (For details log on to : http://www.thehindubusinessline.com/industry-and-economy/article3429538.ece?homepage=true&ref=wl_home)
3G TARIFF WAR IMMINENT AS BHARTI CUTS RATES UP TO 70 PER CENT
NEW DELHI/MUMBAI: In an aggressive bid to improve the slow uptake of 3G services, the country’s largest mobile operator, Bharti Airtel, on Thursday slashed tariffs in various plans by as much as 70 per cent across circles. The move is expected to kick off a price war, with other operators working out their plans of action. A senior executive of Idea Cellular says, “We will have to look at the new tariffs, review them and take a decision based on the local competition, wherever we are in the same market. There are lots of markets where we offer services, along with Vodafone. The decision depends on how strong we are in a circle as well.” Idea had over 2.6 million active 3G subscribers in March this year. These subscribers contributed to the incremental average revenue per user of Rs 90, besides voice and value-added service usage. Bharti has about eight million 3G users. (For details log on to : http://www.business-standard.com/india/news/3g-tariff-war-imminent-as-bharti-cuts-ratesto-70/474689/)
PANEL OPPOSES FARMLAND USE FOR INDUSTRIAL PURPOSE
NEW DELHI: To ensure food security in the coming years, a parliamentary panel on Thursday recommended that the government refrain from acquiring agricultural land for industrial purpose. It also said the government should not acquire land for private businesses and stressed on a clearer definition of ‘public purpose’ in the Land Acquisition, Rehabilitation and Resettlement Bill (LARR), 2011. As reported by FE earlier, the standing committee on rural development in its report also said land acquisition for various purposes including infrastructure projects should be brought under the purview of this legislation, which currently excludes land acquired under 16 Acts listed in the Fourth Schedule from its ambit. The report said that “multi-cropped irrigated land to be acquired only as a last resort, food security cannot only be limited to rice and wheat.” (For details log on to : http://www.financialexpress.com/news/panel-opposes-farmland-use-for-industrial-purpose/950866/)
PUBLIC HEALTH GROUPS TO MEET PAWAR, URGE TO RETAIN DRUG PRICING METHOD
NEW DELHI: Public health groups scheduled for meeting Sharad Pawar-led group of ministers (GoM) on Friday over pharma pricing will urge him to reconsider the price-fixing mechanism of essential drugs. They will ask the minister to continue with the the existing method of fixing prices based on costs or to fix prices at a rate at which the states procure bulk drugs. All India Drugs Action Network (AIDAN) and Jan Swasthya Abhiyan (JSA), both networks of non-profit civil society organisations, would persuade the GoM to continue with the existing cost-based pricing mechanism, which they dub as the standard practice in government-controlled areas, for instance, in case of electricity. MP Jyoti Mirdha, who is also expected to make a presentation to GoM, may insist on cost-based formula to continue. (For details log on to : http://www.financialexpress.com/news/public-health-groups-to-meet-pawar-urge-to-retain-drug-pricing-method/950888/)