MUMBAI: US private equity giant Warburg Pincus has agreed to buy a controlling stake in financial services firm Future Capital Holdings for about Rs 800 crore. The move is part of its strategy to tap opportunities in India’s capital-starved micro, small and medium enterprises sector.
Warburg will pay 162 a share to buy 66% stake, valuing the non-banking finance company at Rs 1,050 crore. In addition, Warburg will infuse Rs 100-crore worth of fresh equity, taking the total investment to 793 crore. Future Capital Holdings is currently part of the Kishore Biyani-led Future Group.
The deal involves a three-way transaction, including a primary issue of preference shares. Warburg will buy 40% from Future Value Retail and Pantaloon Retail, both part of the Future Group, which will be left with the residual 13.6% stake. Warburg will then make an open offer for 26% stake. If the offer fails to get Warburg shares equivalent to 26%, the Future Group will make up for the shortfall by selling part of its stake.
The $40-billion buyout firm will simultaneously infuse 100 crore into Future Capital by subscribing to cumulative convertible preference shares, helping the NBFC ramp up operations. After the three-way transaction gets over, Warburg will hold 70% stake in Future Capital. FCH plans to focus on mortgages given directly to SMEs and two-wheeler financing.
“This gives us an opportunity to back best in class management team to address under served section of the market,” said Vishal Mahadevia, managing director, Warburg Pincus. “We will have a strongly capitalised company that can provide financial service. What we can bring as Warburg Pincus is patient capital.”
VVaidyanathan, vice-chairman and managing director of FCH, will be elevated as chairman and managing director. Warburg will have two representatives on the board, including its managing director Mahadevia.
The deal also involves a lock-in clause under which Vaidyanathan will remain in the saddle for up to a period of five years. Although Warburg joined the race for FCH two months ago, it quickly completed the deal as it was satisfied with the processes crucial for NBFCs to succeed.
“It’s a deal of serendipity. I was seated next to a Warburg executive in a Delhi-Mumbai flight. That’s when we started talking. We managed to complete everything in two months,” said Vaidyanathan.
The deal will add one more non-banking finance company to Warburg’s portfolio at a time when the sector is being squeezed by new rules imposed by a concerned regulator, the Reserve Bank of India. In March, Warburg bought a stake in AU Financial, a Rajasthan-based NBFC.
The deal will probably mark the successful end to Future Group chairman Kishore Biyani’s efforts to extricate Pantaloon from a morass of high debt and poor cash flows. Investors had criticised Biyani for focusing on finance at the expense of the core retail business.
The group has been trying to find a partner or a buyer for finance and some of its other businesses, and though there were offers for Future Capital last year, the retail deal involving Pantaloon’s fashion business was sealed a month ago. In May, Pantaloon Retail agreed to transfer its apparel fashion business to a joint venture with the Aditya Birla Group.
“This transaction is in line with our stated intention to exit from non-core businesses of Pantaloon Retail and is aimed at deleveraging and further strengthening the balance sheet of the company,” Biyani said.
OPG POWER TO INVEST RS 3K CR IN TAMIL NADU, GUJARAT
CHENNAI/MUMBAI: LondonStock Exchange-listed OPG Power Ventures is planning to increase its power capacity to 750 megawatt (Mw) from the current 112 Mw. The company will set up three new power plants — an 80-Mw and a 160-Mw power plants in Chennai and a 300-Mw power plant in Kutch, Gujarat. The AIM-listed company will invest Rs 3,000 crore, which is funded 30 per cent from equity and the remaining from debt. The company has already raised debt of around Rs 2,100 crore from a consortium of nine banks. This investment comes at a time when many power sector companies are freezing their plans for incremental investments. GMR, Tata Power, GVK and Adani Power said they would go slow on newer investments. Lack of domestic coal and higher price of international coal, besides slower pace of land acquisition and approvals, have hindered their expansion plans. (For details log on to : http://www.business-standard.com/india/news/opg-power-to-invest-rs-3k-cr-in-tamil-nadu-gujarat/476339/)
VIDEOCON GROUP PLANS TO INVEST RS 350 CRORE IN KERALA
THIRUVANANTHAPURAM: The diversified Videocon Group, which is into oil & gas, telecom, DTH and consumer electronics, is planning to invest Rs 350 crore in Kerala. Videocon Group’s top official Anirudh Dhoot today said they planned to set up a Rs 250 crore manufacuring unit. The group is also planning an IT unit in the state entailing an investment of Rs 100 crore, he added. The location for company’s units would be announced at the Global Investor Meet (GIM) which would be held from September 12-14 in Kochi. Meanwhile, Dhoot also released a study ‘Kerala: Roadmap for inclusive growth 2012’ as Chairman of Kerala Development Council of ASSOCHAM. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/cons-products/electronics/videocon-group-plans-to-invest-rs-350-crore-in-kerala/articleshow/13825558.cms)
COFFEE CHAINS TO PRE-EMPT STARBUCKS SUCCESS STRATEGY
NEW DELHI: Besides loads of coffee brewed at their own shops, guess one factor that could be keeping the reigning coffee chains — Café Coffee Day, Barista Lavazza, Costa Coffee, Coffee World, The Coffee Bean & Tea Leaf — awake at night. The onslaught of Starbucks. Although the big players who have grown deep roots here are not fretting and sweating over the arrival of Starbucks, they are intensely studying the models Starbucks adopted in different geographies, anticipating and pre-empting some of the strategies that the US coffee behemoth may employ here. Of special interest to these companies is Starbucks’ explosive success in China, primarily a nation of tea drinkers like India, which is all set to become the company’s second-largest market outside of the US. (For details log on to : http://www.financialexpress.com/news/coffee-chains-to-preempt-starbucks-success-strategy/957993/)
HERO TO INVEST R2,500 CRORE IN PRODUCTION, R&D UNITS
NEW DELHI: Country’s largest two-wheeler maker Hero MotoCorp on Monday announced its plans to invest around R2,500 crore to set up two new manufacturing plants in Gujaratand Rajasthan and a research and development (R&D) centre by 2013-14. Last year in August, while announcing a new brand identity, the company had said the total investments in the country by Hero alone would exceed Hero Honda’s overall investment in the last 27 years which stood at $10 billion. “We have huge investment plans in various parts of the organisation. We will be setting up our fourth plant at Neemrana in Rajasthan,” Hero MotoCorp MD and CEO Pawan Munjal said. The company will invest R400 crore for the Neemrana plant, which will have an installed capacity of 7.5 lakh units per annum. This plant will be commissioned in the first quarter of 2014 fiscal, he added. (For details log on to : http://www.financialexpress.com/news/hero-to-invest-r2-500-cr-in-production-r&d-units/957965/)
TUPPERWARE PLANS MORE PRODUCTS TO SUIT LOCAL NEEDS
HYDERABAD: Direct selling company Tupperware plans to introduce more products from its global stable localising them to suit Indian consumers. Just as it brought out multi-cook with idli keeper and multi- masala, both thoroughly Indian and that too South-centric, more such products may head India. “The company, which has more than 4,000 products, sells about 300 of them in India. Given the promise and the potential in India, we plan to bring in more products but only after localising and customising them to suit requirements,” said Mr Anshu Bagai, Marketing Director of Tupperware. The research and development teams based in Orlando, Florida, work closely on what suits Indian requirements and accordingly, Tupperware introduces new products. To bring out products such as the one for idli and masala, it is necessary to work with researchers and design teams. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3491288.ece)
EASIER FDI NORMS SOON FOR SINGLE-BRAND RETAIL BUSINESS
NEW DELHI: The government is drawing up plans to ease the foreign direct investment norms for single-brand retail, including the condition that global firms will have to source 30% of their requirements from local small firms and artisans. This is seen as a clear sign that the Centre is paying heed to the criticism by business that restrictive policy environment is hurting India’s image as a global investment destination. The department of industrial policy and promotion (DIPP), piloting the policy, has begun discussions with other ministries, especially the ministry of small and medium enterprises (MSME), to ease the sourcing clause, sources told HT. A minister told HT: “It is likely that the matter will be taken to the cabinet in June itself.” Another government source said the move to ease norms for single-brand retail might mark the beginning of a flurry of moves to be unveiled during the monsoon session of Parliament in July and August after the presidential elections get over. (For details log on to : http://www.hindustantimes.com/business-news/WorldEconomy/Easier-FDI-norms-soon-for-single-brand-retail-business/Article1-866108.aspx)
INCUMBENTS MUST PAY NEW 2G PRICE: DOT
NEW DELHI: India’s beleaguered mobile phone companies are set for a Rs. 1,20,000-crore shocker. A Cabinet note prepared by the telecom department proposes to make it compulsory for all operators to match the auction-determined price for their existing 2G airwaves for the remaining period of their licences. Industry calculations show if the Cabinet approves the telecom department’s proposal, the government can garner a minimum of Rs. 1,20,000 crore from existing operators such as Bharti Airtel, Vodafone, Reliance Communications and Tata Teleservices. The proposal has been sharply criticised by AUSPI, the industry body that represents dual-technology operators, which says it will impact its members such as RCOM and Tata Teleservices far more than GSM operators such as Bharti and Vodafone. “Our calculations show that on an average, each of the seven pan-India operators will have to shell out about Rs. 15,000 crore at the Trai-prescribed base reserve price to match the auction prices. Dual-technology players such as RCOM and Tatas will have to pay a higher amount because they hold second-generation airwaves for both GSM and CDMA services,” said a telecom industry executive. (For details log on to : http://economictimes.indiatimes.com/articleshow/13828232.cms)
POWERMIN FOCUSES ON SUPER-CRITICAL TECHNOLOGY AS FUTURE MAINSTAY
NEW DELHI: After succeeding in generating power beyond the set targets in the last few years, the Power Ministry is eying supercritical technology as next mainstay to ensure greater efficiency in coal fired plants. The Ministry is in the process of considering 14 super-critical power projects in the country to lessen the coal usage while producing power amid a host of other advantages of the technology. “We are currently considering 14 such projects all over the country to make sure that the dependence on the coal for such projects in minimal, the supercritical technology for sure is the next focus for the electricity generation.” a Power Ministry official said. The official however, refused to divulge further details on the capacity and the cost involved. (For details log on to : http://dailypioneer.com/business/70534-powermin-focuses-on-super-critical-technology-as-future-mainstay.html)
CIL TELLS ARMS TO INK FUEL PACTS WITH NEW PLANTS
NEW DELHI: State-owned Coal Indiahas directed its subsidiaries to enter into fuel supply pacts with power units that are coming up between January 2012 and March 2015, bringing a respite to fuel-starved power companies. The development comes in the wake of the coal ministry, last month, directing the public sector company to enter into pacts with power units which will be commissioned during the period. “Last week, Coal India (CIL) wrote to its subsidiaries asking them to enter into fuel supply agreements (FSAs) with power units to be commissioning between January 1, 2012 and March 31, 2015,” a source close to the development said. Coal Indiahas nine subsidiaries, including Mahanadi Coalfields Ltd and Eastern Coalfields Ltd. Earlier, the media had reported that CIL will seek advice from Prime Minister’s Office (PMO) through the Coal Ministry on how to go about signing FSAs with power plants for three years. The PMO had asked CIL to sign FSAs with plants that have come up after April, 2009 and will be set up till March, 2015 by March 2012. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/coal-india-asks-arms-to-sign-fsa-with-power-units-coming-up-by-2015/articleshow/13811397.cms)
CORPORATE INDIA REMAINS HOT ON CLIMATE CHANGE
NEW DELHI: If you thought that interest in climate change has tapered off, think again. Companies in Indiahave increasingly become aware of the impact of climate change, environmental and social factors on their businesses and have taken action on critical environmental challenges like green house gas (GHG) emissions, water use and waste management. The efforts on managing GHG emissions and energy use are starting to show results, according to the fourth edition of the FE-EVI Green Business Survey. Overall, GHG intensities have decreased at an annual rate of 3%. The growth rate of absolute emissions has declined from 4.11% last year to 3.7% this year. The FE-EVI Green Business Survey & Leadership Awards is an initiative launched by The Financial Express, a business daily from The Express Group, and Emergent Ventures, a carbon consultancy, to map the greening of corporate Indiaand to felicitate green leaders. The Green Business Awards aims to recognise businesses and organisations in Indiawhich successfully operate with environmentally sustainable practices. The awards will be presented by corporate affairs minister Veerappa Moily at a function in the capital on Tuesday. (For details log on to : http://www.financialexpress.com/news/corporate-india-remains-hot-on-climate-change/957984/)
PM INITIATES STEPS TO BOOST SAGGING ECONOMY
NEW DELHI: aced with difficult times, the government today took a few more steps to soothe investors and “stay course”, with Prime Minister Manmohan Singh stepping in to form a ministers’ panel to thrash out problems in the coal sector and convening a meeting on Wednesday to review the big-ticket infrastructure projects. Joining the government, the Reserve Bank of Indiasent assuring signals to the market by indicating that it may further cut interest rates later this month. While addressing the Congress Working Committee (CWC) meeting here, the Prime Minister said the country should “stay course” in difficult times, Finance Minister Pranab Mukherjee listed positives in the falling crude oil prices and expectations of a normal monsoon. The markets reacted well to these remarks even as global stocks came under pressure. After plunging over 200 points to its lowest level in five months, the Sensex closed 23.24 points higher. (For details log on to : http://www.business-standard.com/india/news/pm-initiates-steps-to-boost-sagging-economy/476359/)
POWER GENERATION CAPACITY TO BE INCREASED BY 1800 MW THIS YEAR
BHOPAL: Concrete steps are being taken continuously for increasing power generation in Madhya Pradesh. The MoUs signed for generation of power in the private sector have started yielding results. A coal-based private sector thermal power plant in Narsinghpur district has started commercial generation of 45 megawatt power from April this year. It is supplying power to the state. Besides, various projects will be completed in phases till the year 2012-13 through which additional power generation capacity of 1800 MW power will be created. One 1200 MW capacity unit of Shri Singaji thermal power extension plant will start generation from March 2013. It will provided 600 MW power to the state. Similarly, 250 MW unit No. 10 of 2×250 MW Satpura thermal power extension plant will start generation from December 2012. It will provide 250 MW power. (For details log on to : http://www.centralchronicle.com/power-generation-capacity-to-be-increased-by-1800-mw-this-year.html)
PRICE POOLING FOR POWER SECTOR: GAS PRODUCERS MAY HAVE TO SELL ENTIRE OUTPUT TO GAIL
CHENNAI/NEW DELHI: Gas producers marketing their output directly to domestic power plants may no longer have the option of choosing the buyer in the near future. The Government is considering a proposal for allocation of all domestic gas, besides imported gas (R-LNG) intended for supply to power producers, to public sector GAIL (India) for the purpose of price pooling. It has already received a green signal on the proposal from the Department of Legal Affairs. The Department has opined that “since the proposal for gas price pooling through GAIL is a matter of policy, for the best utilisation of the natural resources vested in the Union Government and for ensuring uniformity with regard to canalising the natural gas produced under different Production Sharing Contracts, there appears to be no legal objection.” (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3491280.ece)
POWER EXCHANGES BEGIN TRADING OF SOLAR ENERGY CERTIFICATES
HYDERABAD: Power trading exchanges Indian Energy Exchange (IEX) and Power Exchange India Ltd. (PXIL) commenced trading of solar Renewable Energy Certificates. This comes in the backdrop of keen interest within the power sector as it opens new revenue source apart from sale of energy generated. The trading of these certificates makes it easy for several entities that may be required to purchase a certain quantum in either green power or RECs. M and B Switchgears Ltd has become the first solar power producer in Indiato be issued 249 Solar RECs by the National Load Dispatch Centre in New Delhi. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3491287.ece)
INDIA INC WANTS POLICY SUPPORT TO BET ON WIND, SOLAR ENERGY
NEW DELHI: India’s green energy initiatives, which aim to boost solar power capacity to 20,000 mw in a decade, and expand windmills, have made rapid progress but entrepreneurs want supportive policies to sustain growth. Indiaaims to meet 15% of its power needs, or 80,000 mw, from renewable sources by 2020, with an investment of Rs 1.5 lakh crore. This has boosted investment in the sector by 54% in just one year, and solar power capacity has leaped to 905 megawatts from a negligible 8 mw three years ago, making Indiaone of the top 10 global destinations for investments. “The sector is highly optimistic. Between the national solar mission projects and the state sponsored projects, the total demand is more than 1 gw over the next year,” said Rajiv Arya, CEO of Moser Baer Solar. Solar power rates have plunged to Rs 7.49 per unit. “From a sector that was almost non-existent in 2008, today has over 400 companies bidding for power projects across the country,” said Inderpreet Wadhwa, CEO of Azure Power. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/india-inc-wants-policy-support-to-bet-on-wind-solar-energy/articleshow/13832790.cms)
INDIA EYEING AFGHANISTAN OIL & GAS BLOCKS SANS BIDS
NEW DELHI: Indiais hoping to secure oil and gas exploration blocks in Afghanistanon the basis of its goodwill with the country, while it may also participate in the upcoming auction of six blocks to the north of Mazar-i-Sharif, officials said. An Indian delegation, including officials from state-run explorer Oil & Natural Gas Corp, is expected to visit Afghanistansoon on invitation from its mines minister, two Indian officials said on condition of anonymity. Officials said they were hoping to get some prospective blocks in Afghanistanwithout participating in the bidding process because of the goodwill that Indiahas generated in the country. It is also expected that Indian firms will commit investments in Afghanistanto get blocks on nomination basis, they added. India, one of the largest aid donors to war-ravaged Afghanistan, has lagged behind Chinain the race for acquiring oil and gas assets in the region. Last year, Chinabagged three energy blocks in the Amu Daryabasin after promising to invest in a refinery there. (For details log on to: http://timesofindia.indiatimes.com/business/india-business/India-eyeing-Afghanistan-oil-gas-blocks-sans-bids/articleshow/13835605.cms)
PUBLIC ACCOUNTS COMMITTEE MAY LOOK AT PUBLIC-PRIVATE PARTNERSHIP PROJECTS, TOO
NEW DELHI: The Public Accounts Committee (PAC) wants to expand its ambit by going beyond the Comptroller and Auditor General’s (CAG) reports. The Parliament’s financial watchdog, which is entrusted with overseeing Government spending, wants to also look into government expenditure in all its forms. “This panel can look at the government expenditure in any form. There are suggestions to look at various public private partnership (PPP) projects, like airport modernisation and building of roads etc. Some members also wanted to have a look at the impact of the decision to decontrol petrol on public sector oil companies,” a member of the panel said. The first meeting of this year’s PAC, which was held here on Friday, entrusted the Chairman, Dr Murli Manohar Joshi, the task of finding new subjects for the panel. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-others/tp-variety/article3491261.ece)
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