MUMBAI: Talk of a stake sale in Suzlon’s European business is back. Global power equipment and wind turbine majors Alstom, Siemens and GE are negotiating with Suzlon Energy for a possible buyout of its German subsidiary REpower, said two people familiar with the ongoing negotiations. They said the talks were preliminary and may not even conclude in a deal. Even earlier, the company had tapped Gamesa, the Spanish wind power company, and Mitsubishi of Japan for exploring a similar divestment. Morgan Stanley was then involved as an advisor. German media reports yesterday said Alstom was eyeing REpower and was even willing to pay as much as euro 1.5 billion ($2 billion) for the asset. When asked, Alstom said it refused to comment on speculation; similarly, Suzlon’s spokesperson told Business Standard, “We do not respond to market speculation.” However, neither denied the development. Following the report, the Suzlon stock was down four per cent and closed at Rs 28.8 per share at the Bombay Stock Exchange on Thursday. Sector experts and analysts say it may not be a good idea for Suzlon to lose REpower, considered its ‘crown jewel’. (For details log on to : http://business-standard.com/india/news/global-majors-eye-suzlons-german-arm-repower/467949/)
SINGLE BID FOR GUJARAT GAS FROM PSU CONSORTIUM
MUMBAI: An extension of the deadline for potential suitors to give binding bids for BG subsidiary Gujarat Gas has not worked out. In fact, most players seem to have opted out. Three independent sources closely involved with the bidding process said only one bid for the PSU consortium came in till late this evening. British Gas (BG), which is in the process of divesting its 65.12 per cent controlling stake in Gujarat Gas, had earlier extended the bid deadline to March 15 from the earlier February 29 cut-off. The idea was to give more time to companies to discuss the matter with their boards and decide on the bidding process. The sources said so far, Gujarat State Petroleum Corporation, Oil India, Bharat Petroleum Corporation, Oil and Natural Gas Corporation have together bid as a part of one consortium. “We four companies have bid as a consortium,” said a senior official from Oil India. “If this acquisition comes through, it will help us mark our foray in downstream gas business.” (For details log on to : http://business-standard.com/india/news/single-bid-for-gujarat-gaspsu-consortium/467946/)
ANIL AMBANI’S PE FIRM PICKS UP 13.7% IN BUTTERFLY
CHENNAI: The Anil Ambani-led Reliance Alternative Investments Fund, managed by Reliance Equity Advisors, has picked up a 13.7 per cent stake in Butterfly Gandhimathi Appliances Ltd (GAL) for around Rs 100 crore. The Chennai-based company is the owner of Butterfly brand of cookwares. The PE firm will acquire around 2.4 million shares at a price of Rs 408 a share, including a premium of Rs 398. Post the fund raising, the promoter group’s shareholding in GAL will come down to 67 per cent from 78 per cent, said VM Seshadri, managing director, Butterfly Gandhimathi Appliances Ltd. Of the total Rs 100 crore, Rs 30 crore will be used to pay back long-term debt, Rs 40 crore towards capacity expansion and another Rs 30 crore towards margin for the working capital. Commenting on the expansion plan, he said, at present the company had manufacturing capacity of 900,000 pieces for pressure cookers, which will be increased to 2.5-3 million by 2014. Similarly, new capacity would be added, especially for cookers and non-stick. (For details log on to : http://business-standard.com/india/news/anil-ambanis-pe-firm-picks137-in-butterfly/467862/)
WADHAWAN TO SET UP 9 HOTELS, BOUQUET OF PE FUNDS
MUMBAI: After closing its grocery retail venture, Spinach, the Wadhawan Group is setting up new hotels. The city-based entity, which runs housing finance company DHFL, also plans to launch a bouquet of private equity funds and beef up its financial services operations. The group is planning to set up nine hotels, in four- and five-star categories, at an investment of Rs 1,000 crore in the next five years, according to Kapil Wadhawan, chairman of Wadhawan Holdings, the holding company of the group. Of the total outlay, 60 to 70 per cent will be funded through debt. The 1984-founded group has tied up with hospitality chain Minor International to run its hotels. The first of its two hotels, in Mysoreand Pune, will be up and running in the next two quarters, Wadhawan said. The rest of the hotels will come up in Wayanad in Kerala, Varanasiin Uttar Pradesh and Udaipurin Rajasthan, besides Tamil Nadu’s capital city of Chennai. That southern metropolis will carry a brand of Anantara Resort & Spa, while the Wayanad hotel will have the brand of Naladu. (For details log on to : http://business-standard.com/india/news/wadhawan-to-set9-hotels-bouquetpe-funds/467951/)
HOUSING & REAL ESTATE, TELECOM NEGATIVES PRESENT CHALLENGES
The Economic Survey, while recognising the importance of the services sector (it accounts for 59 per cent of gross domestic product), has raised concern over several components in it. Three months after the government rolled back its decision to allow 51 per cent foreign direct investment (FDI) in multi-brand retail, the survey referred to it as a major challenge before the sector. FDI in retail could begin in a phased manner in the metros, the survey suggested, a day ahead of the Budget. Though it did not specify the details, experts said the government document hinted at a low FDI cap, perhaps one of 26 per cent. It has also talked of “incentivising” mom-and-pop stores (kirana shops) “to modernise and compete effectively with retail shops, foreign or domestic”. While agricultural marketing could improve immensely with the growth in modern retail trade, the revenue to the government could also increase. Currently, the retail sector is largely unorganised and has low tax compliance, it argued. (For details log on to : http://business-standard.com/india/news/housingreal-estate-telecom-negatives-present-challenges/467903/)
PLUG SAVING-INVESTMENT GAP WITH FDIs
Since investment and savings rates are likely to be slow in the next financial year, too, the Economic Survey on Thursday called for fine-tuning of policies to attract foreign direct investments. After the Reserve Bank of India tightened the screws on borrowings to fight inflation, the resultant rose in interest rates dampened investment growth, which was estimated to fall to 5.8 per cent in 2011-12 (advance estimates) from 11.1 per cent last year, the survey said. The investment rate stood at just 35.1 per cent of GDP in 2010-11, against 36.6 per cent in 2009-10. This could be attributed to slowing global economy and domestic factors like increased cost of borrowing due to high interest rate to curb inflation. The investment rate in 2010-11 was the lowest since 2006-07 — except the 2008-09 crisis period when it fell to 34.3 per cent — the survey said. On the other hand, the savings rate declined from 33.8 per cent in 2009-10 to 32.3 per cent in 2010-11, due to a reduction in private savings — primarily household savings in financial assets, and slackening corporate savings. However, public savings registered an increase due to fiscal consolidation. (For details log on to : http://business-standard.com/india/news/plug-saving-investment-gapfdis/467923/)
US MAY IMPOSE SANCTIONS ON INDIA OVER IRAN OIL IMPORTS
Obama administration officials say they are concerned Indiamay run afoul of a new USlaw restricting payments for Iranian oil, forcing the White House to impose sanctions on one of its most important allies in Asia. So far this year, Indiais failing to cut back its purchases of Iranian oil, which may force President Barack Obama to impose penalties as early as June 28, according to several USofficials. The USlaw, which targets oil payments made through Iran’s central bank, applies in any country that doesn’t make a “significant” reduction in its Iranian crude oil purchases during the first half of this year. If Indiafails to sufficiently cut Iranian imports, Obama may be compelled to bar access to the USbanking system for any Indian bank processing oil payments through Iran’s central bank, the USofficials said. (For details log on to : http://www.financialexpress.com/news/us-may-impose-sanctions-on-india-over-iran-oil-imports-imimimportsfrom-iran/924494/)
INDIA INC ADVANCE TAX OUTGO MODEST; SBI, RIL LEAD PACK
NEW DELHI: The advance tax paid by corporates during the January-March period of the current fiscal has shown a mixed trend, with Reliance Industries, SBI and TCS paying more than the year-ago period while ICICI Bank, Mahindra & Mahindra and Tata Steel reporting decline in their payment. As per the initial data, country’s largest lender SBI paid 10% more at R1,650 crore in final installment and largest private company Reliance Industries’ outgo increased 7% to R1,130 crore. IT firm TCS has paid 175% more tax during the quarter at R550 crore. However, India’s largest private sector bank ICICI Bank’s tax payment declined. It paid R430 crore, a decrease of over 4% as compared to corresponding period last fiscal. The tax outgo of M&M dipped 33% to R200 crore, while it was over 5% less at R900 crore for Tata Steel. (For details log on to : http://www.financialexpress.com/news/india-inc-advance-tax-outgo-modest;-sbi-ril-lead-pack/924498/)
TATA STEEL, WIPRO IN MOST ETHICAL COMPANIES LIST
BOSTON: After a wave of scandals including wrongful foreclosures on UShome mortgages, worker suicides at a major Apple Inc supplier in Chinaand the $1.7-billion accounting fraud at Japan’s Olympus Corp, a New Yorkthink tank is calling out companies that take the high road. The Ethisphere Institute’s annual World’s Most Ethical companies list, released on Thursday, found 145 companies in countries including United States, Great Britain, Japan, Portugal and India stood out as setting a high standard for their employees’ behaviour. American Express Co, General Electric Co and Starbucks Corp — all of which have made the list six years running — are among the companies that stand out as encouraging employees to voice their concerns, said Alex Brigham, executive director of Ethisphere. “Do you not only know what you’re supposed to do, but if you have a concern around an ethical issue, will you be willing to report it?” Brigham said. “It’s the latter point which is so important.” (For details log on to : http://business-standard.com/india/news/tata-steel-wipro-in-most-ethical-companies-list/467943/)
KINGFISHER ROAD MAP IN 3 DAYS: MALLYA
NEW DELHI/HYDERABAD: Crisis-ridden Kingfisher Airlines would come up with a recovery road map in three days, chairman Vijay Mallya promised on Thursday. “We are working on a new plan and that will be announced in three days,” said Mallya after meeting pilots protesting delay in salary payments. “I heard their grievances and have assured them that their grievances will be addressed soon,” he said. However, there was no confirmation by pilots that they would return to work. They said they would meet soon to take a call on this. Mallya said the plan included bringing the airline back on the International Air Transport Association (IATA)’s clearing house. IATA suspended Kingfisher from its billing and settlement plan (BSP) because of non-payment of Rs 50 crore. The suspension can be revoked if the airline makes the payment. (For details log on to : http://business-standard.com/india/news/kingfisher-road-map-in-3-days-mallya/467945/)
QUALCOMM GETS BWA LICENCE AFTER 2-YEAR WAIT
NEW DELHI: After an 18-month delay, the department of telecommunications (DoT) has issued an internet service provider (ISP) licence to US-based chipmaker Qualco-mm, which will pave the way for the company to go ahead with the launch of broadband wireless access (BWA) services. Qualcomm had won BWA spectrum in four circles — Delhi, Mumbai, Haryana and Kerala — for about Rs 4,900 crore in the auction held by the government in June 2010. A senior DoT official confirmed the licence had been issued to Qualcomm and spectrum would be allotted as soon as the company applied. The decision came after the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) order, earlier this month, had directed DoT to award the licence and allot spectrum within a week of Qualcomm paying the dues of its Indian partner, Tulip Telecom. (For details log on to : http://business-standard.com/india/news/qualcomm-gets-bwa-licence-after-2-yr-wait/467944/)
S&P PLACES BB RATING WITH NEGATIVE IMPLICATIONS OVER AEGIS
MUMBAI: Standard & Poor’s Ratings Services said that it had placed its ‘BB-‘ long-term corporate credit rating on business process outsourcing (BPO) firm Aegis, an Essar Group company, on CreditWatch with negative implications. “We placed the ratings on CreditWatch due to Aegis’ weaker-than-expected operating performance and a significant delay in refinancing a large upcoming debt maturity,” said Standard & Poor’s credit analyst Abhishek Dangra. The company is in the advanced stages of tying up long-term loans to refinance the $190 million facility due in April 2012. “We believe the significant delay in refinancing may lead to tighter covenants. In case of further delays in the drawdown of the facility under negotiation, Aegis’ liquidity can become “weak”. In accordance with our criteria, we do not rate a company with weak liquidity above ‘B-‘,” said the note. The rating agency also added that Aegis reflects the company’s weak business profile, and lower margins and higher attrition rate compared with peers’ in the competitive BPO industry. (For details log on to : http://business-standard.com/india/news/sp-places-bb-ratingnegative-implications-over-aegis/467952/)
GOLBAL FUNDING VITAL TO TAKE ON CLIMATE CHANGE: SURVEY
NEW DELHI: Global funding is vital for countries like India to address concerns related to climate change as mitigation efforts ultimately involve costs, says the Economic Survey 2011-12, which for the first time has made a pointed reference to the challenge posed by climate change. “Global funding through the multilateral mechanism of the Convention will enhance domestic capacity to finance the mitigation efforts,” says the survey presented in Parliament today, suggesting that funding is key for developing nations to design and implement adaptation plans and projects. The survey, in which a Chapter on Sustainable Development and Climate Change has been introduced for the first time, suggests to make lower carbon sustainable growth a central element of our 12th Five-Year Plan commencing in April 2012. It reflects the growing challenges of sustainable development and climate change. It points out that India’s per capita CO2 emissions are much lower (1.52 CO2 tons) than those of the developed countries even if historical emissions are excluded. (For details log on to : http://business-standard.com/india/news/golbal-funding-vital-to-takeclimate-change-survey/160568/on)
SUBSIDIES A CONCERN, ACTION ON DIESEL PRICES REQUIRED
The Survey has warned of deteriorating fiscal health due to a mounting subsidy burden. The huge outgo over the past year has been largely on account of the global rally in crude oil prices, the fertiliser subsidy and state-controlled foodgrain prices, it said. It also blamed ‘coalition politics and federal considerations’ for holding up economic reforms on several fronts. Major subsidies extended by the government are likely to jump to Rs 1,34,411 crore during 2011-12 as compared to the Rs 1,31,212 crore of 2010-11. The government had projected the subsidy to GDP ratio to remain at 1.5 per cent. It had crossed two per cent in 2008-09 and 2009-10. These high subsidy levels could take a toll on the government’s intent to lower the fiscal deficit, the survey said. “Besides, higher oil prices entail higher than budgeted subsidy outgo, with attendant implications for the levels of deficit,” it noted. The survey recommends a policy of not tinkering with market prices and on direct cash transfers to keep the subsidy burden under control. (For details log on to : http://business-standard.com/india/news/subsidiesconcern-actiondiesel-prices-required/467914/)
BIOTECHNOLOGY SECTOR WORRIED OVER COMPULSORY LICENCE
CHENNAI/BANGALORE: The Association of Biotechnology-Led Enterprises — ABLE — has said Indiashould always keep in mind that a compulsory licence should not be invoked in an arbitrary manner as it will undermine the efforts of the industry and consequently, any investment in this sector. The body believes that Compulsory Licences should be used only when there is a national health crisis or when lifesaving drugs are priced out of reach of a common man, ie, under some exceptional circumstances. “The sovereign government of any country would be obliged to provide healthcare for all its citizens. Most of the time, a government invokes this only if drug companies do not consider purchasing power parity and per capita income of a country when they do a pricing strategy. In this case, Bayer has submitted before the Controller of Patents a cost of Rs 2,80,000 a month as against Rs 8,800 by Natco. Most multinational and Indian pharma companies spend millions of dollars and many manhours to save patients from life threatening diseases and, therefore, the intent of all these companies broadly is to alleviate suffering of people, ABLE said. (For details log on to : http://business-standard.com/india/news/biotechnology-sector-worried-over-compulsory-licence/467863/
INTRODUCE COMPETITION IN DOMESTIC COAL SECTOR: SURVEY
NEW DELHI: Competition needs to be ushered into the domestic coal sector as state-owned Coal India’s “near monopolistic” position impedes the sector’s growth. “Coal India Limited (CIL) dominates the domestic coal scenario. Its near monopolistic position has often resulted in supply bottlenecks, delays in development of new coal fields and, inadequate emphasis on cost reductions at operational levels,” the pre-budget survey said. “The gap between demand for coal and domestic availability is widening at a faster pace. There is perhaps need to introduce competition in this sector,” it added. The survey also stressed upon the need to adopt a “transparent” and “credible” coal pricing policy, which should be based on globally accepted norms. “Coal pricing is also a crucial issue. CIL being the dominant producer of coal in the country has to adopt pricing policy which is transparent, credible, and based on global norms,” the survey said. (For details log on to : http://business-standard.com/india/news/introduce-competition-in-domestic-coal-sector-survey/160555/on)
FEW POINTERS GIVEN FOR AUGMENTING ENERGY AVAILABILITY
NEW DELHI: The analysis of the energy sector in the Economic Survey offers little direction for the future. This is despite the 12th Five Year Plan having identified energy security as the critical component to make a growth rate of 9% per annum of GDP feasible. It says the sector has failed to measure up to the economy’s demand this fiscal, despite improved power and crude oil availability from a year ago, prompting the government to even explore import of shale gas supplies from the US. But while the survey paints a grim picture of the sector, it offers hardly any suggestions, only saying “one of the foremost challenges in the coming years is to meet the energy requirement”. There is a slight improvement in crude oil production this fiscal to 38 million tonne from a year ago, mainly due to Cairn India’s Rajasthan oil fields’ output. In the power sector, private sector capacity addition exceeded the target of 7,610 MW this fiscal. (For details log on to : http://www.financialexpress.com/news/few-pointers-given-for-augmenting-energy-availability/924483/)
EVERY SICK PERSON WILL COUNT, THANKS TO UID PROGRAMME
NEW DELHI: The unique identification number (UID) programme, or simply Aadhaar, promises to change the way the ‘ailing population’ would be counted in the country. And this will be done by ensuring that the real disease burden is reflected with accuracy so the government can promptly address the challenges in a more targeted and efficient manner. Today, the estimated number of diabetics, cardiovascular patients and those suffering from neurological disorders in the country are at best informed guesses. “An integrated routine health system that can capture and track population-level disease conditions by linking citizen IDs with hospitals or other medical facility records generated through facility visits can inform the public health system of the prevalence of various routine disease conditions and help prepare the health system to respond to unforeseen epidemics,” the Survey predicts, answering a very critical question on how the public health stands to benefit from the application of the UID. (For details log on to : http://www.financialexpress.com/news/every-sick-person-will-count-thanks-to-uid-programme/924468/)
NICHE PROGRAMMING SET TO BECOME MASS WITH DIGITISATION
MUMBAI: Niche programming on television is set to become mass as more broadcasters roll out special interest channels and content providers look to cater to special tastes of viewers. With mandatory digitisation in the broadcast space, niche content is expected to grow exponentially as broadcasters get greater bandwidth at their disposal. On the second day of Ficci Frames 2012 in Mumbai, a panel consisting of niche broadcasters agreed that niche channels are no longer ‘niche’ as they command 24% of TV viewership in India, second only after Hindi GECs (general entertainment channels) that take up 27% of the viewership pie and are dubbed ‘mass’. “Niche is a term used by media buyers and not broadcasters or consumers,” said Ajay Chacko, president of the A+E Networks & TV18 joint venture that launched History TV18 in October last year. “These are ideally special interest channels that cater to special viewer needs.” (For details log on to : http://www.financialexpress.com/news/niche-programming-set-to-become-mass-with-digitisation/924510/)
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