MUMBAI: The Aditya Birla group, which built the world’s seventh-largest cement business largely through acquisitions, is in talks to buy north-eastern cement maker Adhunik MSP Cement’s Meghalaya plant for over Rs 700 crore.
Group firm UltraTech Cement wants to buy the 1.5-million-tonne unit and bolster its presence in the fast-growing but largely untapped market in the North-East. Due diligence for the unit located at the limestone-rich Jaintia Hills has been completed and the fate of the deal hinges on the availability of some statutory no-objection certificates as mining leases and environmental clearances are prerequisites for any large manufacturing transactions in the North-East, a person familiar with the transaction said.
It also hinges on the plans of a multinational company that is believed to be in talks to buy the unit. While the name of the company could not be ascertained, MNCs, including French giant Lafarge, have been trying to make deeper inroads into the North-East. Lafarge’s plan to set up a 1.1-million-tonne cement unit at Jaintia Hills is facing some environmental opposition and the firm may want to buy a readymade unit.
The joint venture company, promoted by Kolkata-based Adhunik and MSP group, set up the unit at a total cost of Rs 700 crore in 2010.
Adhunik Cement sells portland cement, which is one of the major products of UltraTech.
“We are aways looking at acquistions as part of our growth strategy. We have not firmed up anything as of now,” said OP Puranmalka, whole-time director, UltraTech Cement. An email sent to Adhunik MSP Cement Managing Director Mahesh Agarwal and HR head Priyanka Dastidar went unanswered.
Cement companies are rushing to build up capacities in the north-eastern region to cash in on the anticipated surge in demand triggered by the rising number of hydroelectric projects and road constructions. The government has firmed up an investment of over Rs 84,000 crore for setting up hydel projects in the North-East by 2020, which will produce 14,000 mw of electricity.
“If you are competitively placed in a structurally deficit region, it makes strategic sense to build capacities,” said Ajith Motwani, analyst at Emkay Global Securities.
None of the major cement companies, with the exception of Lafarge, has a presence in the North-East.
While large players such as UltraTech Cement are marketing their products from other states, Cement Manufacturing Company’s Star Cement is one of the largest brands in the North-East. The Dalmia group is now setting up a 2.5-million-tonne plant in the region. Little-known players like Meghalaya Cement are also present in the market.
UltraTech Cement Limited has an annual capacity of 52 million tonnes, making it among the top 10 producers of cement globally.
PROMOTERS OF GODREJ PROPERTIES TO SELL STAKE THROUGH IPP ROUTE
MUMBAI: After a lukewarm response to the offer for sale (OFS) route for offloading equity stake in companies, promoters of Mumbai-based Godrej Properties have decided to test the institutional placement programme (IPP) route to sell a 10.6 per cent stake in the company. Both OFS and IPP were introduced by the Securities and Exchange Board of India (Sebi) this year to allow promoters to bring their stakes to the stipulated limit. The regulator has fixed June 2013 as the deadline for promoters to ensure a minimum public shareholding of 25 per cent in their companies. The founders of Godrej Properties, who own around 84 per cent in the company, plan to sell 7.4 million shares on March 22. Godrej has set a price band of Rs 575-620, with the share sale expected to raise between Rs 425-460 crore. The scrip closed at Rs 640 on the Bombay Stock Exchange on Wednesday. (For details log on to : http://www.business-standard.com/india/news/promotersgodrej-properties-to-sell-stake-through-ipp-route/468585/)
TECHM, MAHINDRA SATYAM TO MERGE, 1:8.5 SWAP SET
MUMBAI: Three years after it acquired India’s fourth largest information technology services firm, Satyam Computer Services, Tech Mahindra on Wednesday announced their merger. With a share swap ratio of 2:17 (two shares of Tech Mahindra will get 17 shares of Mahindra Satyam), the merged entity will be a $2.4-billion IT services company, headquartered here. The merger is effective April 1, 2011. The merger, subject to approval by the Bombay High Court and the Andhra Pradesh High Court including shareholders and lenders, will make an entity that would be the second largest revenue contributor in the Mahindra & Mahindra group. Analysts tracking the firm said the share swap ratio was neutral for Tech Mahindra and slightly positive for Mahindra Satyam. Stock prices of both firms rallied after the announcement. Tech Mahindra’s stock closed at Rs 683.9 a share, up 5.5 per cent from the previous close. Mahindra Satyam’s stock closed at Rs 77.5, up 4.6 per cent. (For details log on to : http://www.business-standard.com/india/news/techm-mahindra-satyam-to-merge-185-swap-set/468618/)
UNITECH AGREES TO SELL ITS UNINOR STAKE AT FAIR VALUE
MEW DELHI: The Unitech Group has agreed in principle to sell its stake in Uninor to joint venture partner Telenor at a fair value. The proposal was made before the Company Law Board (CLB) by Unitech lawyers on Monday in a closed-door meeting, according to people close to the development. Both sides declined to comment on the proposal. The next hearing is scheduled for Friday. The CLB had last week asked Unitech to decide by March 19 if it wanted to buy Telenor’s 67 per cent stake in Uninor or sell its 33 per cent stake to the Norwegian partner. Both Unitech and Telenor had moved CLB separately against each other, to protect their investments and rights. In another development, Unitech has filed an application before the Supreme Court, asking it to direct the government to conduct the 2G spectrum auction by June 2. Telenor’s 22 licences in Indiawere among the 122 ordered cancelled by the court on February 2. (For details log on to: http://www.business-standard.com/india/news/unitech-agrees-to-sell-its-uninor-stake-at-fair-value/468619/)
ICVL TO SOON BUY COAL ASSET IN AUSTRALIA FOR OVER R1,500 CRORE
NEW DELHI: International Coal Ventures Ltd (ICVL) is within a striking distance of acquiring its maiden coking coal asset abroad in Australia’s BowenBasinfor about R 1,500 crore, a top official said. ‘‘This (the acquisition in Australia) is going to happen very soon. All necessary formalities have been completed. Our board has approved it. We are taking the necessary approvals from the competent authority and going ahead,’’ ICVL Chairman CS Verma told reporters on Wednesday. ICVL is a JV company of SAIL, Coal India, Rashtriya Ispat Nigam and NMDC. SAIL is the lead partner of ICVL. NTPC was also a member of the special purpose vehicle, but later it quit the joint venture. ‘‘We are very much going ahead with the acquisition. My power is up to R 1,500 crore and naturally, when we have sought for approval of the competent authority, it (the cost of acquisition) should be beyond R1,500 crore,’’ Verma said. (For details log on to : http://www.financialexpress.com/news/icvl-to-soon-buy-coal-asset-in-australia-for-over-r1-500-cr/926660/)
STAKE SALE IN BALCO, HINDUSTAN ZINC REFERRED TO EGOM
NEW DELHI: A panel of secretaries on Wednesday referred the issue of residual government stake sale in Balco and Hindustan Zinc to Vedanta Group to an Empowered Group of Ministers (EGoM), which will meet soon to take a decision. “The CoS (Committee of Secretaries), which met today, has reservations over the valuation of Balco as it found the offer conservative, while it also discussed the offer for stake buy in Hindustan Zinc (HZL). The matter has now been referred to EGoM,” a source said. In January, Vedanta had offered to buy remaining stake of the government in the two firms for over R17,000 crore. While HZL’s stake was valued at about R15,500 crore, Balco was about R1,800 crore. (For details log on to : http://www.financialexpress.com/news/stake-sale-in-balco-hindustan-zinc-referred-to-egom/926683/)
GAIL MAY TRANSPORT LNG TO PAKISTAN
NEW DELHI: After fuel, Indiais offering to export natural gas to Pakistanto help it tide over a gas crisis. State-owned GAIL’s just-commissioned natural gas pipeline from the West coast to Bhatinda in Punjab is barely 25 km away from the Pakistanborder and the gas utility is proposing that the line can be extended to Lahorein no time, sources with knowledge of the development said. GAIL plans to import liquefied natural gas (LNG) at Dahej or Hazira import terminals in Gujarat. It plans to move this gas through the Dahej-Vijaipur-Dadri-Bawana-Nangal-Bhatinda pipeline into Pakistan. LNG is natural gas that has been liquefied at sub-zero temperature and shipped in cryogenic vessels. But before a formal proposal is made to the Pakistani side, it needs the blessing of the ministry of external affairs, sources said. (For details log on to : http://www.financialexpress.com/news/gail-may-transport-lng-to-pak/926645/)
NISSAN WORKS ON LOW-COST CARS FOR INDIAN MARKET
MUMBAI: In a bid to aggressively compete against the top three Indian car makers, Maruti Suzuki, Tata Motors and Hyundai, Nissan is working on a slew of small car projects to be introduced in Indiaunder a new brand Datsun, starting 2014. These low-cost cars from Datsun will fight for space in the price bracket of Rs 2-4 lakh, where the country’s highest selling model, Maruti Suzuki Alto, currently sells. Hyundai’s entry level car, Eon, and Tata Motors’ Indica also sell in the space. Nissan says the company is on course to launch two such models in 2014, and will progressively look at adding products at similar price points later. Datsun products will utilise Nissan and Renault’s installed capacity at Chennai. Nissan, the second largest automotive brand in Japan, is the second such company in Indiaafter Volkswagen to have refrained from entering into the low-cost segment using its own brand. Nissan-badged vehicles will sell above the Rs 4 lakh price tag in India. (For details log on to : http://www.business-standard.com/india/news/nissan-workslow-cost-cars-for-indian-market/468663/)
KOTAK REALTY TO INVEST RS 120 CRORE IN PARSVNATH DEVELOPERS
BANGALORE | NEW DELHI: Parsvnath Developers is raising Rs 120 crore from Kotak Realty Fund for a new 100-acre integrated township project on Sohna Road in Gurgaon. Kotak Realty fund will get a 20% stake in the special purpose vehicle that will develop the yet unnamed project, more than one person in the know of the deal said. The project will be largely residential in nature with some commercial and retail developments, and will be launched in the next two months. “The land for the project has been aggregated by Parsvnath over many years and at approvals are being taken to launch the project,” said the person. A senior executive at Parsvnath who did not want to be named confirmed that talks were on. A Kotak Realty Fund spokesperson declined to comment on the deal. Parsvnath Developers has sold stakes in many of its residential and office projects to private equity funds in the past. Last year, JP Morgan had invested $30 million in Parsvnath’s residential project La Tropicana in Civil Lines area of north Delhi, which was used to give an exit to Red Fort Capital that had invested 115 crore in the project in 2009. (For details log on to : http://economictimes.indiatimes.com/markets/real-estate/news/kotak-realty-to-invest-rs-120-crore-in-parsvnath-developers/articleshow/12360625.cms)
LAFARGE BANKS ON INNOVATION, EXPANSION FOR INDIA GROWTH
MUMBAI: Lafarge Indiahas achieved a production capacity of eight million tonnes per annum. It recently commissioned two integrated cement plants of one mtpa each in Chattisgarh. The company’s capacity was at 6.5 mtpa in FY’10. Mr Bruno Lafont, Chairman and CEO, Lafarge, said the company will continue to invest in brownfield expansion (“internal development”) and innovation in India. He said the French building material company, which laid off employees recently due to shut down of a kiln in North America, is not afraid with issues of delays and environmental clearances and will also consider greenfield expansions. Lafarge recently enhanced capacity through new production lines in Jharkhand and West Bengal. It has four greenfieldprojects in Rajasthan, Karnataka, Meghalaya and Himachal Pradesh that are in different stages of completion. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-corporate/article3026036.ece)
POST-BUDGET PESSIMISM ON INVESTOR INTEREST IN SEZs
NEW DELHI: In the wake of the Union Budget proposals, developers of Special Economic Zones (SEZs) say the scheme is heading for an end, with investors’ interest certain to reduce drastically. Developers of SEZs were expecting some positive announcement in the Budget over removal of the Minimum Alternate Tax (MAT) and Dividend Distribution Tax (DDT). However, their hopes were belied. According to an expert on the sector, this is going to deal a big blow, especially to service sector SEZs — manufacturing SEZs might still survive, due to sheer scale of investment and capital intensiveness. Total exports from SEZs in 2010-2011 increased 43 per cent to Rs 3,15,868 crore over 2009-2010. In the present financial year, SEZ exports till December 31 were Rs 2,60,973 crore. Exports from SEZz are 34 per cent of the country’s total exports. As on December 2011, investments worth Rs 2,77,259 crore have been made in SEZs and direct employment of 732,839 persons generated in these enclaves. (For details log on to : http://www.business-standard.com/india/news/post-budget-pessimisminvestor-interest-in-sezs/468656/)
PAKISTAN NOTIFIES NEGATIVE LIST FOR TRADE WITH INDIA
NEW DELHI/ISLAMABAD: The Pakistangovernment on Wednesday issued a notification for switching over to a negative list regime for trade with India, where the number of products facing a bar on import from the eastern neighbour will come down to 1,209. The Commerce Ministry in Islamabadissued a Statutory Regulatory Order for trade with New Delhiunder the negative list regime, officials said. According to the notification, 1,209 items have been included in the negative list and will not be importable from India. Of the importable items from India, 137 products can be brought in from Indiathrough the Wagah land border crossing. Last month, Pakistanhad announced that it would be shifting from a positive list regime to a smaller negative list for trade with Indiain order to normalise bilateral trading relations. This technically means that the moment Pakistannotifies the decision, Indiawould be allowed to export the remaining around 6,000 items to Pakistan. (For details log on to : http://www.business-standard.com/india/news/pak-notifies-negative-list-for-tradeindia/468650/)
POOR RETURNS MAY FORCE TELECOM COMPANIES TO GO EASY ON SPECTRUM AUCTIONS
NEW DELHI: Hyper-competition, rock-bottom tariffs and huge payouts for 3G spectrum have hammered telecom companies’ return on capital employed (ROCE), limiting their capacity for aggressive bidding in spectrum auctions and upsetting the government’s revenue calculations. Consequently, the Budget target to raise R40,000 crore from spectrum auctions this fiscal may come a cropper, just like last fiscal’s ambitious target for PSU disinvestment that ended in a botched ONGC auction. Bharti Airtel, India’s largest mobile operator by subscriber base and revenues, has seen a steady fall in ROCE: From 24.10% in Q3 of FY10 to 11.20% in Q3 of FY11 to a paltry 7.30% in Q3 of FY12. The ROCE of Reliance Communications, which was in low single digits three years ago, has fallen further. However, Idea Cellular has made a marginal improvement over its Q3 FY10 numbers after witnessing a decline in FY11. Bharti, RCom and Idea are the top three listed telecom firms in the country. (For details log on to : http://www.financialexpress.com/news/poor-returns-may-force-telcos-to-go-easy-on-spectrum-auctions/926814/)
OUTLOOK GRIM FOR PE INVESTMENTS AS INSTABILITY, POLICY PARALYSIS HURT
New Delhi: The prevailing macroeconomic conditions in the country are definitely hurting private equity investments. Policy paralysis, global uncertainties, volatile markets, and a depreciating rupee are dampening new investments. If the past three months are any indicators, here’s a lowdown. December 2011 clocked investments worth $567 million, January 2012 raked in $692 million and February 2012 saw investments worth $529 million. Compare these to the preceding three months and the investment dip story is evident enough. November 2011 saw investments worth $952 million, October recorded investments of $1,640 million and September witnessed deals worth $1,076 million. And that’s not it. The deal size, too, is shrinking. As per VCCEdge data, private equity deals under $50 million accounted for 79% of total deal volume in February 2012, with the maximum deals struck in the $5-25 million space. The sole $50-million deal was Warburg Pincus India’s $50 million investment in Au Financiers (India), a Jaipur-based non-banking financial company, clocking the biggest private equity deal of February. It was followed by the $40.29 million investment (for a 20% stake) by Fidelity Growth Partners India, along with existing investors in Hyderabad-based Aptuit Laurus. (For details log on to : http://www.financialexpress.com/news/outlook-grim-for-pe-investments-as-instability-policy-paralysis-hurt/926733/)
130 B-SCHOOLS FACE CLOSURE
NEW DELHI: The business of running business schools isn’t easy. Around 130 management institutes or 4% of all B-schools in Indiaare expected to close shop this year, twice as many as last year, thanks to faculty shortage, lack of students, substandard curriculum and poor infrastructure. Topping the list of states whose business schools have applied to wind up is Andhra Pradesh with 36 such institutes, followed by Rajasthan with 25 and Uttar Pradesh with 18. Total seat capacity of all these institutes is almost 10,000. Recently, the MumbaiBusinessSchoolwound up after three years of operation due to lack of students. It provided a one-year full-time programme in management, similar to the one offered by the Hyderabad-based IndianSchoolof Business. “Closure of management institutes is more common than engineering institutes because of relatively lower investments and the present soft market for management education. All these institutes will continue to operate for their existing batches but fresh admissions have been stopped,” said a senior official from the human resource development ministry. (For details log on to : http://www.financialexpress.com/news/130-bschools-face-closure/926822/)
DEMAND BOOST FOR PETRONET LNG
MUMBAI: Petronet LNG, India’s biggest gas importer, is in a sweet spot, thanks to the rising Liquified Natural Gas (LNG) demand prospects, as well as the easing global LNG prices. Also, the exemption of customs duty, along with the measures for gas transmission and storage facilities proposed in the Budget, will benefit the company, believe analysts. In their recent report, analysts at Emkay Global say, “Petronet LNG is the best gas play in the overall oil and gas space due to the demand-supply mismatch, low cost of operations from incumbent re-gasification terminals and timely expansions.” Most analysts are positive about the prospects and expect healthy earnings’ growth in the next three years. They expect earnings to grow 10 per cent next financial year, with acceleration expected in FY14 and FY15, led by the commissioning of new capacities. (For details log on to : http://www.business-standard.com/india/news/demand-boost-for-petronet-lng/468593/)
NEGATIVE LIST WON’T ADD MUCH TO GOVT’S REVENUE
NEW DELHI: A negative list of taxation services, touted as “sound economics and prudent fiscal management” in the Budget speech, may not add significantly to the government’s revenue in 2012-13, thanks to a huge exemption list of 34 categories of services, besides the 17 services proposed in the negative list. Experts say most services with good revenue potential are already taxed, and meeting this target would not be easy for the government. S K Goel, chairman, Central Board of Excise and Customs (CBEC), said, “The negative list would not give us substantial revenue because the exemption list is large. Also, it would take three to four months to come into effect. We are going on this path very slowly and carefully.” In due course, some exemptions could be withdrawn to widen the tax net, he added. The finance ministry has set an ambitious target of 30 per cent growth in service tax revenue in 2012-13, compared to the revised estimate of Rs 95,000 crore for the current financial year. (For details log on to : http://www.business-standard.com/india/news/negative-list-wont-add-much-to-govts-revenue/468653/)
WORLD BANK: INDIA CAN GROW AT 7% BY EXPEDITING REFORMS
MUMBAI: India’s gross domestic product (GDP) can grow at seven per cent or more, provided the process of reforms is expedited, the World Bank has said. Speaking to Business Standard, R Zaga, country director, said the country needed to effectively tackle six structural challenges — energy, population, agricultural productivity, integration of the domestic market, urbanisation and the legal and regulatory framework. “Indiaand Chinahave grown faster than the global economy. Despite the slowdown, Indiahas, so far, achieved a growth rate of 6.9 per cent, and has the potential to achieve GDP growth of seven per cent or more.” He added the Reserve Bank of Indiahad accumulated $290 billion in foreign reserves. With imports and external financing requirements rapidly rising, the reserve cover is declining. “A policy of continuing reserve additions would reduce external vulnerabilities, while at the same time support the external competitiveness of the industry. However, now, Indian policymakers are in a weaker position to face another global crisis than in 2008,as the fiscal space is limited and inflation is still high, which limits monetary policy room,” he said. (For details log on to : http://www.business-standard.com/india/news/world-bank-india-can-grow-at-7-by-expediting-reforms/468606/)
RETAIL PARTICIPATION IN DIVESTMENT LIKELY
NEW DELHI: In a development that may lead to the opening of a dedicated window for retail investors, the department of disinvestment is considering a separate offer for sale meant for them. The proposal is significant in the light of a view expressed in the context of the recent ONGC share auction that the process was not conducive to retail participation. A senior department official told Business Standard, “A suggestion has come that once you do an auction, you give a discount and offer it to retail investors immediately or after some time”. He, however, said it would have its own implications, as those willing to bid aggressively in an auction might be affected by the knowledge that the same quantity would be available at a discounted price. (For details log on to : http://www.business-standard.com/india/news/retail-participation-in-divestment-likely/468605/)
DIESEL PRICE DECONTROL LIKELY TO DEBUT WITH CASH SUBSIDY TRANSFER TO FARMERS
NEW DELHI: The proposed diesel price decontrol may come sooner than expected with a special scheme to insulate farmers from its adverse impact through a cash subsidy. Initially, state governments will be responsible for delivery of the subsidy, the cost of which will be borne by the Centre. When the Aadhaar technology platform becomes operational, it will be used for transferring the subsidy. The UPA government is acutely aware of the need to make the diesel price decontrol palatable to allies like the Trinamool Congress and the Samajwadi Party. At the same time, there is a view that differential pricing of diesel could lead to market distortions and hence the move to provide farmers a fixed amount of cash subsidy instead. Achieving the Centre’s fiscal deficit target of 5.1% of GDP for 2012-13 is heavily dependent on diesel price decontrol and building a political consensus for this is high on the government’s agenda. (For details log on to : http://www.financialexpress.com/news/diesel-price-decontrol-likely-to-debut-with-cash-subsidy-transfer-to-farmers/926820/)
INDIA NOT EXEMPT FROM US CURBS OVER IRAN OIL
WASHINGTON: Virtually putting Indiaand 11 other countries on notice, the United Stateshas asked them to significantly reduce by June 28 the purchase of Iranian oil to avoid sanctions, as it announced a list of nations that will be exempted from the curbs. Secretary of state Hillary Clinton announced on Tuesday night that 11 countries, mostly from Europe, would not be subjected to USsanctions regarding Iran. Japanis the only Asian country among the nations exempted from the sanctions. Later, a senior State Department official urged 12 other countries, including India, Chinaand South Korea, to follow the example of those exempted from the curbs. Citing the case of Japan, which has decreased its import of Iranian crude oil between 15% and 22%, the official told reporters that this exception applies only to countries that have significantly reduced the volume of crude purchase from Iran. (For details log on to : http://www.financialexpress.com/news/india-not-exempt-from-us-curbs-over-iran-oil/926641/)
NTPC, RPOWER TOP GAINERS FROM ECB TAX SOPS
NEW DELHI: Power sector majors NTPC and Reliance Power will be the biggest gainers from the tax sops on external commercial borrowings (ECB) proposed by finance minister Pranab Mukherjee in Budget 2012-13. The two companies together are the largest users of overseas loans in the sector and expect that changes proposed by Mukherjee would aid in further increasing their exposure to external debt. The finance minister has reduced withholding tax rate on interest payment for ECB loans from 20% to 5% in the Budget, a move that should help power companies make commensurate savings on account of loans raised in the overseas market. For example, a company that has taken a seven-year, $1-billion loan at the interest rate of 4% will save as much as $42 million in interest payment. Withholding tax is used as a tool by the government to tax interest payment on overseas loans raised by domestic companies. So far, NTPC and Reliance Power have tied up ECB loans of about $3 billion each for drawing down over a three to five-year period. (For details log on to : http://www.financialexpress.com/news/ntpc-rpower-top-gainers-from-ecb-tax-sops/926680/)