NEW DELHI: Japan’s Mitsui Sumitomo Insurance Company agreed to buy out New York Life’s 26% stake in its life insurance joint venture with Max India, valuing the insurer at about Rs 10,000 crore, nearly double the market cap of the listed holding company.
The 2,731-crore, two-leg, all-cash deal values Max’s 70% holding in the insurer at 7,000 crore. In contrast, the market capitalisation of Max itself stands at 5,395 crore. Max India shares surged 8.3% to 203.95.
ET had reported about New York Life’s plan to exit the insurance venture in its edition dated February 15.
The valuation of Max New York at about three times the so-called embedded value – net assets plus the present value of future profits – is lower than the 3.5 times that Nippon Life paid last year for a stake in Reliance Life.
But it is still nearly double that of Chinese peers.
New York Life will sell 16.6% of the stake directly to the Japanese company, and 9.37% to Max, which in turn will sell it to Mitsui.
That structure will lead to an immediate profit of 802 crore for the Indian company led by Analjit Singh.
Citigroup advised Mitsui on the deal.
“Max New York is the best possible life insurance company that we could have partnered with,” said Yasuyoshi Karasawa, president & chief executive officer at Mitsui Sumitomo Insurance Company.
“A balanced distribution and product mix” will help in exploiting India’s “high growth, high savings” market, Karasawa said.
International insurance companies such as New York Life and ING are exiting the Indian market due to problems in their home markets and the delay in lifting the cap on foreign investments in local insurance ventures.
Also, valuations are shrinking due to falling growth rates with various regulations on policies such as unit-linked insurance plans, or ULIPs.
But the valuation for Max New York Life is still nearly double of what listed peers in China or South Korea command, partly due to the growth potential, holding promise for Indian insurers headed for stock exchanges.
China Life and Ping An are valued at around 1.7 times their embedded value despite larger potential market size, say analysts.
But valuation of Indian insurers could fall further if the government does not make it attractive by raising the foreign investment limit from 26% amid falling growth rates.
IVRCL TO SELL 37.5% STAKE IN IOT UTKAL ENERGY SERVICES
MUMBAI: Hyderabad-based road and real estate developer IVRCL, which is under a takeover threat from Subhash Chandra-promoted Essel Group, is looking to sell 37.5% stake in IOT Utkal Energy Services, a special purpose vehicle that is building a storage terminal for IndianOil’s upcoming refinery at Paradip, Orissa, for R3,000 crore. Analysts say IVRCL chairman Sudhir Reddy may receive roughly R400 crore from the sale as the terminal will be ready by October 2012. IOT Infrastructure & Energy Services, a joint venture between IndianOil and Germany’s Oiltanking, owns 52.5% in IOT Utkal Energy Services, while Oiltanking, the world’s second largest terminalling company, holds the remaining 10%. IOT Infrastructure & Energy Services, which has the first right of refusal for the IVRCL stake, is keen to pick up the stake and a deal is likely to be signed by July, people familiar with the development said. (For details log on to : http://www.financialexpress.com/news/ivrcl-to-sell-37.5-stake-in-iot-utkal-energy-services/936193/)
TRAFIGURA TO BUY UP TO 24% STAKE IN NOCL REFINERY FOR $130 M
NEW DELHI: Trafigura Beheer, the world’s third-biggest oil trader, on Thursday said it will buy up to 24% stake in Nagarjuna Oil Corp’s (NOCL) Cuddalore refinery for about $130 million. The 6-milion-tonne-a-year refinery would be Singapore-based Trafigura’s first investment in Asian refining assets. Trafigura, a wholly-owned subsidiary of Trafigura Beheer, will invest a further $120 million in the construction of storage facilities and associated infrastructure at the site, the company said in a statement. The $120 million investment would be in tanks that could hold about 300,000 to 500,000 cubic metres of oil and refined fuels at the refinery site. These would be in addition to the 500,000-cubic-metre storage facility associated with the refinery under construction. Hyderabad-based NOCL holds majority stake in the refinery at Cuddalore, 180-km south of Chennai on the east coast. “Commissioning work at the refinery is expected to start this year with commercial operations scheduled to begin during the first half of 2013,” it said. (For details log on to : http://www.financialexpress.com/news/trafigura-to-buy-up-to-24-stake-in-nocl-refinery-for-130-m/936198/)
UK BASED SERCO BRINGS ALL BPO ASSETS UNDER ONE ROOF
MUMBAI: Nearly 10 months after it acquired Indian back-office services provider Intelenet Global Services, UK-based Serco Plc has brought all its business process outsourcing (BPO) assets together to create a new entity, which is expected to close the calendar year with revenues of over $1 billion. The new entity, called Serco Global Services, will have around 50,000 employees, a majority from erstwhile Intelenet and The Listening Company (TLC), a UK-based contact centre company, which Serco acquired a little before Intelenet and which has now been brought under the BPO arm, in addition to some from Serco. The new division also includes BPO capability brought in from a small acquisition in Australia, Excelior, made a few months ago, and Infovision, a BPO with local Indiaoperations, which Serco acquired a few years ago. (For details log on to : http://economictimes.indiatimes.com/tech/ites/uk-based-serco-brings-all-bpo-assets-under-one-roof/articleshow/12644332.cms)
GSK, TEVA IN TALKS TO BUY MICRO LABS’ INDIA BUSINESS
MUMBAI: Multinational drug majors, who are leaving no stone unturned in their efforts to strengthen their Indiapresence, are back in the buyout market, scouting for the next big M&A opportunity. Pharma giant Glaxosmithkline (GSK) and generic player Teva Pharma, are in separate discussions to acquire the domestic business of Bangalore-based Micro Labs. Micro Labs’ domestic sales are about Rs 1,100 crore. Investment banking sources said Micro Labs promoters had asked Nomura to help find suitors. According to sources, though both players are interested, a valuation mismatch may play spoilsport. Though company promoter Dilip Surana is looking for a valuation of seven-eight times sales, which would be about Rs 8,800 crore, the potential buyers are unwilling to pay such a premium. According to experts, Micro Labs is a good buyout target due to its strong domestic presence across speciality segments. It has a strong presence in cardiology, neurology, neuro psychiatry, orthopaedics, gynaecology and diabetics. The privately held company has a revenue of about Rs 2,800 crore. (For details log on to : http://www.business-standard.com/india/news/gsk-teva-in-talks-to-buy-micro-labs-india-business/471181/)
ASIA MOTOR WORKS PLANS TO RAISE $100 MILLION FOR EXPANSION
MUMBAI: Asia Motor Works Ltd (AMW), India’s third-largest heavy truck maker, plans to raise $100 million to fund its expansion in the next two to three years through a mix of debt and private equity. The funds will enable the company to build capacity to make new cabs, next generation trucks and expand manufacturing. The truck maker proposes to produce cabins locally, which were so far imported and assembled. “We are a growing company, and we are in the phase of growth capital. We are exploring various options, including selling stake to a PE player. If we get a good value we may sell a minor stake, if not, we are open to raising debt as well,” Aniruddh Bhuwalka, MDof AMW, told ET. Considered by experts as one of the dark horses in the Indian trucking market, AMW is the one of fastest growing brands in the heavy truck segment. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/auto/automobiles/asia-motor-works-plans-to-raise-100-million-for-expansion/articleshow/12644293.cms)
EON ELECTRIC TO INVEST RS 400 CRORE IN EXPANSION
NEW DELHI: Eon Electric (formerly Indo Asian Fusegear Ltd.) is eyeing the deepening mobile market, to bring in the next phase of growth. The company has decided on an investment of Rs 400 crore for the next two to three years. The company is setting up the first-ever lithium-ion battery manufacturing plant in Indiaby the end of the current fiscal. Lithium-ion batteries are mainly used in mobile handsets. The plant will come up either in the Delhi-NCR or in Uttarakhand. Eon is in talks with leading mobile handset manufacturers for a long-term business proposition. “We are yet to finalise the location but the technology to be used will be sourced from a Japanese firm. We could either buy the technology, or pay royalty or get into a technology partnership,” Mr V.P Mahendru, Chairman and Managing Director, Eon Electric Limited, said. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3308386.ece)
MAX HEALTHCARE TO ADD 600 OPERATIONAL BEDS IN FY 2013
NEW DELHI: Max Healthcare today said it will have another 600 operational beds at its hospitals by the end of this fiscal, taking the total to over 1,700. Max has a strength of 1,100 beds at present. “We will add up to 600 operational beds to our present strength by the end of this fiscal year,” Max Healthcare Chief Executive Officer Ajay Bakshi told PTI. He said as these beds will be in the existing hospitals there will not be any new investments on them. “Rs 250 crore to Rs 350 crore has been spent on adding to the bed strength over a period of last two to three years,” he added. The beds will be mainly in the hospitals which have been opened in FY 12, Bakshi said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/healthcare/max-healthcare-to-add-600-operational-beds-in-fy-2013/articleshow/12635442.cms)
COAL MINISTRY WILL HAVE POWER OVER REGULATOR
NEW DELHI: Coal ministry will have powers to overrule the proposed independent coal regulator that will decide price of the fuel, allot mining licences, monitor quality and adherence of rules by mining companies. Though the coal ministry has maintained that it will surrender all its powers to the regulator, the proposed law says the government can issue necessary policy directives to increase fuel supply, equitable distribution and sustain friendly international relations. According to the Coal Regulatory Authority Bill the central government’s decisions will be binding on the authority. “Without prejudice to the foregoing provision, the central government may, if it deems necessary or expedient so to do in public interest… issue policy directives to the authority…” the bill says. The decision of the central government on whether a question is one of the policy or not shall be final,” it says. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/indl-goods-/-svs/metals-mining/coal-ministry-will-have-power-over-regulator/articleshow/12643397.cms)
COAL, LIGNITE TO COST MORE AS ROYALTY ON MARKET VALUE GETS NOD
NEW DELHI: Coal and lignite will cost more as the Cabinet Committee on Economic Affairs (CCEA) has approved a proposal to charge royalty on ad-valorem basis or based on the market value of the mineral. Coal will now attract a royalty of 14% and lignite will be charged at 6% of the basic price of the commodity instead of present mixed royalty structure comprising both ad-valorem and specific duty component. As a result of this revision, the coal producing states will earn R6,980 crore as coal royalty over the present earnings of R5,950 crore. However, the revision will raise the price of domestic coal by about 5%, thereby impacting power sector companies who would be forced to pass this increase to electricity consumers. At present, royalty for both minerals is calculated through a formula consisting of ad-valorem and a fixed component. The latter depends on the grade of coal and varies between R45-R180 per tonne, while the ad-valorem is calculated at 5% of the basic pit-head price of coal. (For details log on to : http://www.financialexpress.com/news/coal-lignite-to-cost-more-as-royalty-on-mkt-value-gets-nod/936200/)
OIL BETTER-SUPPLIED FOR FIRST TIME SINCE 2009, SAYS IEA
Oil markets are better-supplied for the first time since 2009 as “sluggish” demand and Opec output at more than a three-year peak eased inventory depletion, according to the International Energy Agency. Global oil inventories may have increased by more than 1 million barrels in the first quarter, the Paris-based IEA said in its monthly oil market report on Thursday. The agency kept its world demand estimate for 2012 little changed at 89.9 million barrels a day. Iranian output may tumble more than 20% by mid-summer as international sanctions take effect, it said. “The cycle of repeatedly tightening fundamentals evident since 2009 has been broken for now,” said the IEA, which advises 28 nations on energy policy. “The earlier tide of remorseless market tightening looks to have turned.” (For details log on to : http://www.financialexpress.com/news/oil-bettersupplied-for-first-time-since-2009-says-iea/936104/)
COAL COST TO GO UP, SO WILL POWER BILLS
NEW DELHI: Coal and lignite are set to become dearer as the Government has approved revision in royalty rates to a flat 14 per cent and 6 per cent of the prices respectively. The new rates are likely to come into effect in about a month after the revision is notified. Companies such as Coal Indiaand Singareni Collieries are expected to pass on the royalty hike to consumers. The Cabinet Committee on Economic Affairs on Thursday approved a proposal to charge royalty based on the market value of the minerals, excluding taxes, levies and other charges (ad-valorem). The royalty hike applicable to both state-run mining companies and captive mine owners will result in electricity bills shooting up for the consumers. Power producers said it will add to the price of power. Since it is in cost-plus regulated tariff, this shall be part of variable cost, that is, fuel cost, they said. (For details log on to : http://www.thehindubusinessline.com/todays-paper/article3308423.ece)
MOODY’S DOWNGRADES ONGC, GAIL LOCAL CURRENCY RATING
MUMBAI: Moody’s Investors Service has downgraded the local currency rating of ONGC and GAIL. However, it retained stable outlook for these companies. ONGC has been downgraded to Baa1 from A2 and GAIL to Baa2 from A3. The rating reflects Moody’s view that both ONGC and GAIL cannot be completely de-linked from the credit quality of the Government (Baa3, stable), and thus their ratings need to reflect the risk that they share with the sovereign. The rating agency said that there has been no deterioration in the intrinsic credit quality in ONGC and GAIL. Both companies are still viewed as Government-related issuers. However, a weaker sovereign has the potential to create a ratings drag and, therefore, it is appropriate to limit the extent to which these issuers are rated. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-markets/article3308362.ece)
MOST POWER PLANTS LEFT WITH JUST FOUR DAYS OF COAL SUPPLY
NEW DELHI: Be prepared for power outages ahead as coal supplies to 30 out of India’s 95 thermal power plants have reached alarming levels. Out of these 30 power stations that produce 26,320 mega-watt (mw) of power, 25 plants are running on less than four days of coal stocks, according to data available with the power ministry’s advisory wing, Central Electricity Authority (CEA). Of the 25, five are from National Thermal Power Corp (NTPC) – in Delhi(Badarpur), Uttar Pradesh (Dadri and Unchahar), Andhra Pradesh (Simadhari), Bihar(Kahalgaon). “Any sudden disruption in coal supplies can affect power availability in a big way,” said a senior power ministry official. (For details log on to : http://www.hindustantimes.com/India-news/NewDelhi/Most-power-plants-left-with-just-four-days-of-coal-supply/Article1-839669.aspx)
TURNER BROADCASTING TO SHUT IMAGINE TV
MUMBAI: Turner Asia Pacific Ventures (TAPV), a wholly-owned subsidiary of American media conglomerate Time Warner’s Turner Broadcasting System, has decided to shut its Hindi general entertainment channel (GEC) ‘Imagine TV’, as it failed to attract advertisers. It will also stop the channel’s international feed ‘Imagine Dil Se’. “Imagine TV has not performed as expected. While some programmes delivered satisfactory ratings, overall, the channel was unable to achieve the ratings consistency needed to sustain the business and support continued investment,” said Siddharth Jain, managing director (South Asia) at Turner International India. “We will use our best endeavours to make this as smooth a transition as possible for them.” Turner India, however, continues to operate its other channels HBO, CNN, Cartoon Network, Pogo, Warner Bros, TCM and Boomerang. (For details log on to : http://www.financialexpress.com/news/turner-broadcasting-to-shut-imagine-tv/936206/)
WEF: GLOBAL ECONOMIC CONFIDENCE HIGHEST IN 4 QUARTERS
NEW DELHI: Confidence in the state of the global economy over the coming 12 months has climbed to its highest level in the last four quarters, a survey by World Economic Forum has revealed. According to the World Economic Forum Global Confidence Index, one-third of global experts from business, government and civil society say they are confident or very confident in the state of the economy over the coming 12 months, up from 13% of respondents in the previous quarter. Meanwhile, one-third of the 273 respondents are not confident in the state of the global economy; but the percentage has fallen significantly over last year when it was as high as 61% and the remaining third have taken a neutral stance. “The survey results do not signal a cautious optimism returning, but merely caution as the global economy remains fragile,” World Economic Forum managing director Lee Howell, also responsible for the Forum’s Global Risks 2012 report said. (For details log on to : http://www.financialexpress.com/news/wef-global-economic-confidence-highest-in-4-quarters/936181/)
RURAL INDIA TO DRIVE TELECOM GROWTH IN 2012: REPORT
NEW DELHI: Rural areas of the country will lead the growth in the telecom sector, while the growth of the supporting ecosystem in tier 2 cities will boost the IT sector in 2012, consultancy company Deloitte said today. “The next wave of telecom growth will emerge from rural Indiaand operators will increasingly use the voice platform as well as localised content to ensure relevance and widespread adoption in rural zones,” Deloitte said in Technology, Media and Telecommunications (TMT) predictions India 2012 report. Deloitte forecasted that by end of this year, over 500 million smartphones with a price tag of USD 100 or less will be in use worldwide and a high proportion will come from India. “Growing sales of $ 100 smartphones are likely to cause downward pressure on prices for the whole supply chain,” the report said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/telecom/rural-india-to-drive-telecom-growth-in-2012-report/articleshow/12640813.cms)
DIESEL CONSUMPTION GROWS 11.9% IN FY12
NEW DELHI: The country’s diesel consumption rose a massive 11.9 per cent in 2011-12, leading to an expected 4.9 per cent growth in the sale of petroleum products in the just-ended financial year. That will mark a four-year-high growth, which is significantly above 2.9 per cent in 2010-11. The government’s projection for FY12 was 4.58 per cent. Riding on a double-digit growth in diesel consumption, growth in the consumption of petroleum products in the last financial year is expected to touch a four-year high of 4.9 per cent. This is significantly higher than the growth of 2.9 per cent in 2010-11 and the government’s projection of 4.58 per cent. The Petroleum Products Planning and Analysis Cell (PPAC) termed the high diesel growth as “disturbing”, as this fuel constituted about 70 per cent of the overall growth in petroleum products in February. “This trend is likely to continue, with diesel price remaining lower compared to other competing fuels like furnace oil,” said an official of the PPAC, which functions under the petroleum ministry. (For details log on to : http://www.business-standard.com/india/news/diesel-consumption-grows-119-in-fy12/471189/)
APPLIANCE RETAILERS RESIST SAMSUNG ON MARGINS
MUMBAI: A tug-of-war between retailers and manufacturers over margins has resurfaced. Samsung, the consumer durables maker, is looking to rationalise payouts to channel partners by as much as six to seven percentage points, in a bid to reduce the price differential between retailers of home appliances. The Korean giant has been looking at ways to get all its trade partners — small retailers, large-format stores, regional and national chains — under one pricing structure. That is, the margins it is willing to pass on would be uniform for all. The categories where it is targeting a uniform pricing structure include air conditioners, washing machines, refrigerators and microwaves. Audio-visual products, information technology and mobile phones are not part of this move. Samsung is keen to bring margins to 17-18 per cent across formats. This has not gone down well with regional and national chains, since these enjoy margins of about 24 per cent. A small retailer’s margins are 12-14 per cent; a large-format store, basically a large neighbourhood electronics showroom, enjoys margins of 16-17 per cent. (For details log on to : http://www.business-standard.com/india/news/appliance-retailers-resist-samsungmargins/471204/)