Mumbai: Aditya Birla Nuvo (ABNL), part of the $35-billion Aditya Birla group, said on Monday it would purchase a majority stake in Future Group’s Pantaloons Format, which houses the apparel and fashion businesses of Pantaloon Retail, for for R800 crore.
The move will allow Aditya Birla group company Madura Garments gain access to a wide range of apparel from women’s to kidswear, and help Pantaloon Retail India reduce debt by R1,600 crore.
The diversified Aditya Birla group has interests in financial services to food and fashion, and telecommunications.
Pantaloon Retail had a consolidated debt of around R7,800 crore, and standalone debt of R3,000 crore as on December 2011, analysts tracking the company said.
“The proposed acquisition is in line with our strategic intent to be on the top of the league and to create the largest integrated branded fashion player in the country through an extension into the value segment,” says Kumar Mangalam Birla, chairman, Aditya Birla Nuvo.
“This acquisition will catapult ABNL to the pole position in the branded fashion space in all the segments with a pan-India presence.”
The deal will be completed in five stages in the next 10 months. In the first step, ABNL will subscribe to convertible debentures worth R800 crore issued by Pantaloon Retail; in the second, Pantaloon Retail will demerge its Pantaloons Format and transfer its R800 crore each of debt and debentures into a new entity.
In the third stage, Pantaloons Format will be listed on the bourses and in the fourth, ABNL will convert these debentures into equity shares.
In the last, it will make an open offer for 26% stake to the shareholders of the Pantaloons Format and end up owning a minimum of 50.01%, making it a subsidiary of Aditya Birla Nuvo which clocks R2,145 crore sales now. Investment bank JM Financial was the exclusive advisor to the deal.
Existing Pantaloon Retail shareholders along with its promoters Biyanis will own stake in the company, a Future group release said, without mentioning the quantity of stake.
“This is a good strategic deal for both companies.” says Arvind Singhal, chairman Technopak Advisors, a retail consultancy. “It will de-leverage Pantaloon by a great extent and also give Madura a wider retail footprint at one go.”
On Monday, Pantaloon stocks rose 9.25% to close at Rs 187.75 on the BSE, while ABNL shares rose marginally by 0.26% to end at Rs 933.
Biyani, Future group founder and group chief executive, has been trying to cut down debt by selling off some of its business for a while. “It was unlikely that Biyani could have got a foreign investor for his fashion business which wasn’t doing too well,” says an analyst from a foreign brokerage. “His debt kept spiraling every quarter and reached unmanageable levels.” But, he said it made more sense for Aditya Birla group’s food retail chain More to purchase Pantaloon Retail’s food retail chain Food Bazaar.
“This may be a good strategic fit for Madura, with more mass and mid-mass brands at their disposal, but overall, it won’t make any huge difference to them,” says the analyst.
Madura Garments, primarily a menswear seller with brands like Van Heusen, Allen Sollly and Louis Phillipe, will now have an additional 65 stores in 35 cities along with the logistics chain Pantaloons Factory Outlet with 21 stores, adding 2.05 million retail square feet to 3.65 m square feet.
This marks a unique coming together of brands and enterprise that will create significant value for customers, suppliers and all stakeholders.” Biyani said.
Aditya Birla started selling apparel in late 90s by purchasing Madura Garments for Rs 230 crore and had been looking to acquire a mass retail apparel retail chain to sell kids, women and sports wear. The purchase will give them access to multiple brands, store formats and a complete range across categories – casual wear, ethnic wear, formal wear, party wear and sports wear for men, women and kids.
“Madura Garments is primarily concentrated in high-end menswear and this partnership with Future Group will broaden their spectrum both in categories and positioning, says Singhal of Technopark. “They can have brands from luxury and high-end to mid-mass and lower-end segments.”
WIPRO TO BUY ANALYTICS FIRM PROMAX FOR $36 MILLION
BANGALORE: Information technology (IT) services provider Wipro on Monday announced it had signed an agreement to acquire Australian analytics company Promax Applications Group (PAG) for A$35 million (around $36.5 million or Rs 192 crore). It expects the all-cash deal to be closed this quarter, though its “impact on its revenues during the quarter will be negligible”. The newly formed entity will be called Wipro Promax Analytics Solutions Pty Ltd. Promax derives its revenues by licensing software products and solutions in trade promotion planning, management and optimisation. Founded in 1989, the New South Wales-headquartered company employs 71 people across the globe. The company, which boasts of companies such as Johnson & Johnson, L’Oreal, Kraft, Kimberly Clark and Henkel as its customers, is estimated to close its accounting year ending July 30 with A$ $15-16 million in revenues. (For details log on to : http://www.business-standard.com/india/news/wipro-to-buy-analytics-firm-promax-for-36-mn/473059/)
PEs LIKE BLACKSTONE, KKR IN TALKS TO BUY VIJAY MALLYA’S OFFICE TOWERS FOR RS 650 CRORE
BANGALORE/ MUMBAI: Beleaguered billionaire Vijay Mallya’s investment holding company UB Holdings is in talks with Blackstone and KKR to unlock value of its office spaces, including the iconic head office UB Tower, said banking sources briefed on the matter. PE investor may acquire Mallya’s office real estate, part of the UB City development in the heart of Bangalore, through a structured equity deal for roughly Rs 650 crore. UB Holdings is also the parent of the debt-laden kingfisher Airlines. UB Group CFO Ravi Nedungadi offered “no comments” in reply to a texted query. A group spokesperson quoting Mallya denied that UB Tower was for sale. He did not elaborate. The discussions with the competing PE investors are centered around a sale and lease back model, with UB Holdings having the right to buyback after a fixed period. “So it may not be sale technically,” said one of the sources mentioned earlier. (For details log on to : http://economictimes.indiatimes.com/markets/real-estate/news-/pes-like-blackstone-kkr-in-talks-to-buy-vijay-mallyas-office-towers-for-rs-650-crore/articleshow/12945227.cms)
HLL LIFECARE FLOATS ARM TO SET UP R594-CRORE VACCINE COMPLEX
NEW DELHI: HLL Lifecare, a public sector enterprise and the market leader in contraceptives, has floated a wholly-owned subsidiary, HLL Biotech, to set up an integrated vaccine complex in Tamil Nadu with an investment of R594 crore. The complex is expected to be commissioned in three years. With an annual capacity of 585 million doses, it will manufacture pentavalent combination (DPT plus Hep B plus Hib), BCG, measles, Hepatitis B, Human Rabies, Hib and Japanese Encephalitis (JE) vaccines in the first phase, said company’s CMD M Ayyappan. Of the total cost, R28 crore has already been released by the government and preliminary work on the 100-acre site has started, said Ayappan. In the first phase, expected to be completed in the next three years, the integrated vaccine complex will have a capacity to produce 100 million doses each of pentavalent, measles, Hib, and BCG vaccines. (For details log on to : http://www.financialexpress.com/news/hll-lifecare-floats-arm-to-set-up-r594cr-vaccine-complex/943838/)
ACCEL PARTNERS, IDG VENTURES TO INVEST $5 MILLION IN FORUS HEALTH
BANGALORE: Two marquee venture capital firms, Accel Partners and IDG Ventures, are backing a two-year-old medical devices maker, underscoring the rising interest in healthcare ventures amongst risk capital investors. The two firms will together invest $5 million in Forus Health which has developed a low-cost portable ophthalmology device, called ‘3nethra’. The device priced at one-sixth the cost of other comparable devices can identify multiple diseases such as cataract, glaucoma, diabetic retina and refraction said K Chandrasekhar, chief executive officer of Forus, who plans to use the funding to hire talent and expand marketing across emerging markets such as Africa, Latin America as well as the United States. “Once such a device gets good traction in India, it can easily go after the global markets,” said Anand Daniel, principal at Accel Partners, India. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/healthcare/accel-partners-idg-ventures-to-invest-5-million-in-forus-health/articleshow/12944168.cms)
INDIA-JAPAN TIES REACH UNPRECEDENTED HEIGHTS
NEW DELHI: Indiaand Japanbroke all records today with an extraordinary interaction between their two establishments consisting of four dialogues across the economic and political spectrum, for which as many as seven Japanese ministers had flown in from Tokyoto meet their Indian counterparts. Japan’s Foreign Minister Koichiro Gemba and India’s External Affairs Minister S M Krishna launched their first bilateral economic dialogue this morning—which is believed to have caused Commerce and Industry Minister Anand Sharma serious heartburn— that not only took stock of the gamut of the India-Japan relationship, but also is intended to integrate the variously active strands in the relationship. This economic dialogue was attended by all seven visiting Japanese ministers, besides Gemba, the all-powerful Minister for Economy, Trade and Industry (METI) Yukio Edano, Minister for Financial Services Shozaburo Jimi, Senior Vice-Minister for Internal Affairs Kimiaki Matsuzaki, Senior Vice-Minister for Land, Infrastructure, Transport and Tourism Ken Okuda, Senior Vice-Minister for Finance Fumihiko Igarashi and Parliamentary Secretary Satoshi Takayama. (For details log on to : http://www.business-standard.com/india/news/india-japan-ties-reach-unprecedented-heights/473050/)
PANEL SETS ITS FACE AGAINST TRAIL PROPOSALS
NEW DELHI: Offering a glimmer of hope to telecom operators, the sector’s highest decision-making body has refused to endorse regulator Trai’s controversial proposals that included a 13-fold increase in the base price for spectrum auctions. The Telecom Commission on Monday said it will soon seek clarity from Trai on four of its key recommendations. “We will write to Trai no later than May 2 on four issues,” Telecom Secretary R Chandrashekhar said. “The first relates to its recommendations to auction only 5 MHz of airwaves that restricts the sale process to just one slot. We also want the regulator to clarify how it arrived at the base price for the spectrum auctions and its impact on tariffs,” he said. The commission will also ask Trai to explain its proposals of mandating rollout obligations (setting up towers in certain number of locations) and refarming (distribution of airwaves in the 900 MHz band that is largely held by incumbents). Under the Trai Act, the regulator is required to revisit its recommendations and come back to the government within two weeks, Chandrasekhar said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/telecom/telecom-commission-to-seek-clarity-from-trai-on-key-recommendations/articleshow/12944082.cms)
ALL-AROUND SLOWDOWN DRAGS MARCH CORE SECTOR GROWTH TO 2 PER CENT
NEW DELHI: India’s key infrastructure industries grew at a sluggish pace in March, weighed down by a contraction in output of natural gas and crude oil, suggesting that broader industrial growth may remain muted. Output at eight core industries-coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity-grew at an annual rate of 2% in March against a 6.9% rise in the previous month, data released on Monday showed. These industries have a 38% weight in the index of industrial production or IIP. “It is a bad number, but not a surprise,” said Madan Sabnavis, chief economist at CARE Ratings. IIP had risen 4.1% in February. The reading for March will be released on May 11. (For details log on to : http://economictimes.indiatimes.com/news/economy/indicators/slowdown-drags-march-core-sector-growth-to-2-per-cent/articleshow/12945618.cms)
ICVL MAY COME UNDER STEEL MINISTRY FOLD
NEW DELHI: International Coal Ventures Ltd (ICVL), a consortium of state-run firms with the mandate of acquiring coal assets abroad, may come under the jurisdiction of steel ministry after NTPC expressed its desire to opt out of the venture. “There is a question mark on the shape of ICVL. That is on what will be the partnership and how they will continue. NTPC has opted out. We need to see whether we go together in the form of several PSUs forming a JV or whether the steel ministry needs to go it alone,” Zohra Chatterjee, Additional Secretary, Ministry of Coal, told reporters here. ICVL is currently not under any ministry’s fold since it is a joint venture between companies under different ministries. SAIL, RINL and NMDC are under the jurisdiction of the Steel ministry, CIL is under the Coal ministry while NTPC is under Power ministry. At the initiative of steel ministry, ICVL was set up in 2009 as a joint venture with SAIL, CIL, RINL, NMDC and NTPC as promoter companies for securing coal assets abroad. It aimed to own 500 million tonnes of coal reserves by fiscal 2019-2020. (For details log on to : http://www.business-standard.com/india/news/icvl-may-come-under-steel-ministry-fold/163994/on)
COAL SHORTAGE TO TRIGGER POWER TARIFF HIKE
NAGPUR: Shortage of coal in various plants, providing power to MSEDCL, and wet coal problem in 2011 will prove costly for power consumers this year. MSEDCL had purchased electricity from the two power exchanges to make up for the reduction in generation in Mahagenco and NTPC plants. The cost of this power was higher than that produced by the regular sources. The extra burden will be passed on to consumers. Maharashtra Electricity Regulatory Commission (MERC) has conditionally approved its demand to recover the additional amount and stating that it would examine the power purchases before clearing them. MSEDCL had filed a petition in February stating that the short term power purchases of MERC had to be relaxed for 2011-12 due to sharp decline in power availability from regular sources. The power distributor has cited eight reasons for this. (For details log on to : http://timesofindia.indiatimes.com/city/nagpur/Coal-shortage-to-trigger-power-tariff-hike/articleshow/12944502.cms)
ADIDAS ADMITS TO INDIA IRREGULARITIES, SAYS MAY TAKE EURO 125-MILLION HIT
MUMBAI: Global sportswear major Adidas on Monday admitted to “commercial irregularities” at the Indian unit of Reebok, its most popular and the leading sportswear brand in the country. The admission came a month after managing director Subhinder Singh Prem and chief operating officer (COO) Vishnu Bhagat stepped down after long stints. Adidas said on Monday the situation in Indiacould result in a pre-tax impact of up to euro 125 million (Rs 871 crore), while further restructuring could cost up to euro 70 million (Rs 488 crore) in 2012. “The situation in India, although unfortunate, will allow us to now accelerate plans to improve a specific underperforming part of our business,” Chief Executive Herbert Hainer said in a statement. (For details log on to : http://www.business-standard.com/india/news/adidas-admits-to-india-irregularities-says-may-take-euro-125-mn-hit/473058/)
MULTI-SYSTEM OPERATORS TO FIX CARRIAGE FEE: TRAI
NEW DELHI: Taking note of investments being made by multi-system operators (MSOs) to put in place Digital Addressable Cable TV Systems and expenses involved in carriage of channels, the Telecom Regulatory Authority of India (Trai) on Monday authorised MSOs to determine carriage fee. The fee, Trai held, could not be revised upwards for two years. These would have to be levied in a uniform, non-discriminatory and transparent manner. If the rates determined by MSOs are deemed unreasonable, Trai would intervene. Trai said from July 1, television viewers in Delhi, Mumbai, Chennai and Kolkata should have the option of choosing a minimum of 100 free to air channels at a maximum retail price of Rs 100. The orders are according to new tariff rules for cable TV announced by Trai on Monday. These rules will also come into force in line with the digitalisation of the cable television sector by December 2014. (For details log on to : http://www.business-standard.com/india/news/multi-system-operators-to-fix-carriage-fee-trai/473061/)
BIYANI BOOKS TO GET BIRLA BREATHER
MUMBAI: The Kishore Biyani-led Pantaloon Retail’s deal with the Aditya Birla Group is expected to give it a breather on interest outgo and resultant negative cash flow and fall in profits. Pantaloon, which had consolidated debt of Rs 7,800 crore and core retail debt of Rs 5,800 crore, paid 61 per cent of earnings before interest, tax, depreciation and amortisation (Ebitda) as interest charges in the December quarter, against 45 per cent in the previous corresponding quarter. The company, the country’s largest retailer, was paying as much as Rs 120-130 crore as interest every quarter. This was expected to further rise, to as much as Rs 150-160 crore a quarter. The high outgo also ate into the profits, with net profit dropping 71 per cent year-on-year (y-o-y) in the December quarter of 2011-12. Brokerage house Prabhudas Lilladher expects Pantaloon to report a 2011-12 bottom line of Rs 120 crore, about 37 per cent lower than the previous year. At over two times, Pantaloons also had one of the highest debt to equity ratios among retail companies. (For details log on to : http://www.business-standard.com/india/news/biyani-books-to-get-birla-breather/473081/)
TELENOR SETS STAGE FOR LIKELY INDIA PULL-OUT
NEW DELHI: Norwegian telecom major Telenor today wrote off its remaining fixed and intangible assets in Indiaworth 3.9 billion Norwegian krone (Rs 3,583 crore). And, the company said it was likely to quit the country if the Telecom Regulatory Authority of India (Trai) recommendations of a steep base price for re-auction of 2G band spectrum were accepted by the government. With this, Telenor, which holds 67 per cent stake in Unitech Wireless, has written down investments to the tune of 8.1 billion NOK (Rs 7,403 crore) in two tranches in its Indian mobile arm. following the Supreme Court’s order cancelling 122 of the 2G licences in February this year. Earlier, it had written down 4.2 billion NOK. Blaming its decision on the uncertainty clouding the sector after the cancellation of licences by the SC and subsequent re-auction recommendations of Trai, it said, in a statement: “As a precautionary measure, Telenor ASA has decided to write down the remaining fixed and intangible assets in India, amounting to NOK 3.9 billion (NOK 2.6 billion after non-controlling interests).” The write down will be included in Telenor’s results for the first quarter of 2012, to be presented on May 8. (For details log on to : http://www.business-standard.com/india/news/telenor-sets-stage-for-likely-india-pull-out/473078/)
START-UPS LOOKING TO THE CROWD FOR FUNDING
When Eric Migicovsky, an engineer, wanted to develop a line of wristwatches that could display information from an iPhone — like caller ID and text messages — he went the traditional route of asking venture capitalists to finance his company. But he couldn’t even get a foot in the door, let alone secure any money for what he called the Pebble watch. So he turned to Kickstarter, a site where ordinary people back creative projects. Backers could pledge $99 and were promised a Pebble watch in return. Less than two hours after the project went up on the site, Migicovsky and his partners hit their goal of $100,000. “By that night, we were at $600,000,” said Migicovsky, who is 25 and a recent engineering graduate of the Universityof Waterloo. “We went out for a beer to celebrate, went home and slept, and when we woke up, we were at a million dollars.” (For details log on to : http://www.financialexpress.com/news/startups-looking-to-the-crowd-for-funding/943882/)
DABUR CONSOLIDATED PROFIT UP 16%
NEW DELHI: Dabur Indiaon Monday reported a 16% jump in consolidated profit to R170 crore during the January-March quarter, while its sales surged 23% to R1,363 crore. The company’s annual turnover topped $1 billion for the first time during the fiscal 2011-12. Dabur said its turnover surged through a spike in the sale of various categories, including hair-oil, health supplements, food and home care. The hair-care business grew by a robust 20.2%, followed by 19.4% jump in digestive category, while the skin-care division clocked a 18% gain during the quarter. Packaged juices spearheaded the company’s strong show in the overall 30% gain in the food business, the company said in a statement. (For details log on to : http://www.financialexpress.com/news/dabur-consolidated-profit-up-16/943835/)
GOVERNMENT ALLOWS FRESH COTTON EXPORT REGISTRATION
NEW DELHI: The government decided to lift a ban on fresh cotton export registration on Monday to benefit farmers and it would review domestic supplies of the fibre in two weeks, commerce and textile minister Anand Sharma said. “We have accepted the agriculture ministry’s data on cotton production. Based on the revised estimates of the Cotton Advisory Board as well as the agriculture ministry, we have decided to remove suspension on registration of cotton exports,” Sharma said after meeting agriculture minister Sharad Pawar, hours before a scheduled meeting with Prime Minister Manmohan Singh on farm exports. Singh has called the meeting, to be attended by Mukherjee, Pawar, Sharma and food minister KV Thomas, on late Monday to defuse tension over the farm minister’s letter to him earlier this month, attacking the government’s restrictions on cotton and sugar exports despite a spike in cost of production. Earlier this month, state-backed Cotton Advisory Board (CAB) estimated production at 34.7 million bales for 2011-12, while the agriculture ministry has projected higher output at 35.2 million bales. However, the CAB estimated that year-ending stocks of 2.5 million bales — sufficient for domestic consumption of just over one month — even if no fresh shipment is allowed. (For details log on to : http://www.financialexpress.com/news/government-allows-fresh-cotton-export-registration/943573/)
IT, REFINERY STOCKS PUSH MARKET TO 1-WEEK HIGH; SENSEX UP 131 POINTS
MUMBAI: Led by a rally in IT and refinery stocks, the BSE benchmark Sensex continued its upward sprint for the third day today to settle 131.47 points higher at 17,318.81 amid a weak rupee and hopes of more stimulus from US Federal Reserve. The 30-share barometer traded in positive terrain throughout the day and ended at 17,318.81 — its one-week high — showing a rise of 0.76%. The country’s biggest software exporter, TCS, was up by 3.49% while the second biggest, Infosys, gained 2.75% in the process together adding over 65 points to the Sensex’s gains. In the oil & gas sector, Sensex heavyweight RIL gained nearly 1% while ONGC rose by over 2%. “Both TCS and Infy were amongst the top gainers in today’s trade, backed by weaker rupee and hopes for more stimulus from US fed after US GDP slowed more than forecast,” said Milan Bavishi, head research, Inventure Growth & Securities. (For details log on to : http://www.financialexpress.com/news/it-refinery-stocks-push-market-to-1wk-high;-sensex-up-131-pts/943597/)