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Tuesday, July 28, 2009
Reliance Life seeks govt nod for floating early IPO
Wishing to hit the market with
an initial public offer for its life insurance business, an
Anil Ambani group firm has approached the government to waive
off the ten year clause for an insurer to go public.
Reliance Life has requested the Finance Ministry to allow
it to launch IPO before completion of the 10-year operation
clause, official sources said.
The 6AA provision of the Insurance Act, specifies that
Indian promoters having more than 26 per cent shareholding
shall after 10 years reduce it in some appropriate manner or
within such period the central government may decide.
Citing the above provision, the insurance sector
regulator IRDA has already shot down the proposal of the
Reliance Life to hit the capital market.
"They (Reliance Life) had come to the regulator to seek
the permission and we have found that we are not empowered to accord any such thing before 10 years," IRDA Chairman J Hari Narayan had said.
When contacted Reliance Capital spokesperson declined to
comment on the matter.
Reliance Capital, the holding company of Reliance Life,
last week said that it plans to come up with an initial public
offer for its life insurance business or go in for a strategic
stake sale.
At Reliance Capital's Annual General Meeting recently,
ADA Group Chairman Anil Ambani said he was considering various
options to unlock value of the life insurance business-- "from
a potential IPO to strategic or financial stake sale, or even
a combination of both-- subject to necessary approvals."
"A final decision in this matter will be taken shortly,
driven by the sole objective of maximising returns for our
shareholders," he had said.
Since the past four years the company's life insurance
business has grown rapidly, and has emerged amongst the top
four private life insurance players in India.
Reliance Life Insurance registered 65 per cent growth of
policy-holders' funds under management to Rs 5,895 crore in
2008-09 from Rs 3,555 crore in FY'08.
During FY'09, eight new life insurance policies were launched by the company.
an initial public offer for its life insurance business, an
Anil Ambani group firm has approached the government to waive
off the ten year clause for an insurer to go public.
Reliance Life has requested the Finance Ministry to allow
it to launch IPO before completion of the 10-year operation
clause, official sources said.
The 6AA provision of the Insurance Act, specifies that
Indian promoters having more than 26 per cent shareholding
shall after 10 years reduce it in some appropriate manner or
within such period the central government may decide.
Citing the above provision, the insurance sector
regulator IRDA has already shot down the proposal of the
Reliance Life to hit the capital market.
"They (Reliance Life) had come to the regulator to seek
the permission and we have found that we are not empowered to accord any such thing before 10 years," IRDA Chairman J Hari Narayan had said.
When contacted Reliance Capital spokesperson declined to
comment on the matter.
Reliance Capital, the holding company of Reliance Life,
last week said that it plans to come up with an initial public
offer for its life insurance business or go in for a strategic
stake sale.
At Reliance Capital's Annual General Meeting recently,
ADA Group Chairman Anil Ambani said he was considering various
options to unlock value of the life insurance business-- "from
a potential IPO to strategic or financial stake sale, or even
a combination of both-- subject to necessary approvals."
"A final decision in this matter will be taken shortly,
driven by the sole objective of maximising returns for our
shareholders," he had said.
Since the past four years the company's life insurance
business has grown rapidly, and has emerged amongst the top
four private life insurance players in India.
Reliance Life Insurance registered 65 per cent growth of
policy-holders' funds under management to Rs 5,895 crore in
2008-09 from Rs 3,555 crore in FY'08.
During FY'09, eight new life insurance policies were launched by the company.
Sprint to buy Virgin Mobile USA
NEW YORK (Reuters) - Sprint Nextel Corp said it will buy Virgin Mobile USA in a deal that values the equity of the small wireless carrier at $483 million, including Sprint's current 13.1 percent stake.
Sprint, the No. 3 U.S. mobile service, also agreed to retire all of Virgin Mobile USA's outstanding debt when the deal closes, which is expected in the fourth quarter of 2009 or in early 2010. It said it expects Virgin Mobile's debt to be no more than $205 million net of cash and cash equivalents by Sept. 30.
Virgin Mobile's public shareholders will receive Sprint shares equivalent to $5.50 per Virgin Mobile share, subject to a collar of 1.0630 to 1.3668 Sprint shares per Virgin Mobile share. The price is a 31 percent premium over Virgin Mobile's closing price of $4.21 on Monday.
Virgin Mobile shares jumped to $5.20 in premarket trading on Tuesday. Sprint shares rose to $4.60 from their close at $4.55.
Sprint, the No. 3 U.S. mobile service, also agreed to retire all of Virgin Mobile USA's outstanding debt when the deal closes, which is expected in the fourth quarter of 2009 or in early 2010. It said it expects Virgin Mobile's debt to be no more than $205 million net of cash and cash equivalents by Sept. 30.
Virgin Mobile's public shareholders will receive Sprint shares equivalent to $5.50 per Virgin Mobile share, subject to a collar of 1.0630 to 1.3668 Sprint shares per Virgin Mobile share. The price is a 31 percent premium over Virgin Mobile's closing price of $4.21 on Monday.
Virgin Mobile shares jumped to $5.20 in premarket trading on Tuesday. Sprint shares rose to $4.60 from their close at $4.55.
IBM to buy SPSS for $1.2 billion in cash
International Business Machines Corp plans to buy technology services company SPSS Inc for about $1.2 billion in cash, the companies said on Tuesday.
SPSS shareholders will receive $50 a share, a 42 percent premium to Monday's closing price of $35.09 on Nasdaq.
Chicago-based SPSS provides predictive analytics software and services. Predictive analytics are used by companies to forecast future trends and spot shifts in consumer patterns, helping them control costs and use resources more wisely.
IBM said the deal will help expand its Information on Demand software portfolio and business analytics capabilities.
Shares of SPSS jumped 41 percent in premarket trade to about $49.50. The shares had already enjoyed a gain of about 30 percent this year.
The deal values SPSS at about 25 times analysts' estimated 2010 earnings per share, and the $50 per share price represents an all-time high for the stock, topping its previous all-time top of $47.87.
The deal is subject to SPSS shareholder approval and regulatory clearances, and is expected to close later in the second half of 2009, the companies said.
Separately, IBM said it has acquired closely-held Ounce Labs Inc, whose software helps companies reduce the risks and costs associated with security and compliance concerns. Financial terms were not disclosed.
Back in May, IBM's chief financial officer, Mark Loughridge, told the Reuters Technology Summit that the valuations of potential acquisition targets were attractive. IBM has spent $20 billion buying more than 100 companies since 2000, paying prices that range from as little as $50 million to as much as $5 billion.
SPSS shareholders will receive $50 a share, a 42 percent premium to Monday's closing price of $35.09 on Nasdaq.
Chicago-based SPSS provides predictive analytics software and services. Predictive analytics are used by companies to forecast future trends and spot shifts in consumer patterns, helping them control costs and use resources more wisely.
IBM said the deal will help expand its Information on Demand software portfolio and business analytics capabilities.
Shares of SPSS jumped 41 percent in premarket trade to about $49.50. The shares had already enjoyed a gain of about 30 percent this year.
The deal values SPSS at about 25 times analysts' estimated 2010 earnings per share, and the $50 per share price represents an all-time high for the stock, topping its previous all-time top of $47.87.
The deal is subject to SPSS shareholder approval and regulatory clearances, and is expected to close later in the second half of 2009, the companies said.
Separately, IBM said it has acquired closely-held Ounce Labs Inc, whose software helps companies reduce the risks and costs associated with security and compliance concerns. Financial terms were not disclosed.
Back in May, IBM's chief financial officer, Mark Loughridge, told the Reuters Technology Summit that the valuations of potential acquisition targets were attractive. IBM has spent $20 billion buying more than 100 companies since 2000, paying prices that range from as little as $50 million to as much as $5 billion.
J&K CM Omar Abdullah resigns over sex scandal
PDP leader alleges J-K CM involved in Srinagar sex scandal
Srinagar: Jammu and Kashmir Chief Minister Omar Abdullah on Tuesday offered to resign from the post after a senior PDP leader alleged that he was involved in last year's sex scandal.
"I know it is a false allegation. But I want to resign till I am cleared of this false allegation. I cannot work till I am proved innocent. It is a blot on my character,” Abdullah said.
"Any amount of investigation by the home department will not help. Till I am able to prove my innocence, I am going to give my resignation to the Governor," Abdullah told the State Assembly, a statement that shocked his party MLAs and Ministers.
The MLAs and Ministers physically restrained the Chief Minister from leaving the Assembly but Abdullah walked out.
He was virtually forced to take his seat by the ruffled members but he got up to shout at them saying "allow me to take this first step".
The whole drama began when PDP leader and former Deputy Chief Minister Muzaffar Beig levelled the allegation that Abduallah was involved in the infamous Srinagar sex scandal.
He claimed he had a list of people involved in the scandal in which Abdullah's name figured.
Congress in-charge of state Prithviraj Chavan has spoken to Omar Abdullah asking him not to resign as it was a trap to get him out of office, party sources said.
Chavan has also spoken to Omar's father Farooq Abdullah so that he stops him from resigning, they said.
Congress President Sonia Gandhi and her political secretary Ahmed Patel are also likely to talk to Omar to urge him not to go ahead with his threat to quit, the sources said.
Srinagar: Jammu and Kashmir Chief Minister Omar Abdullah on Tuesday offered to resign from the post after a senior PDP leader alleged that he was involved in last year's sex scandal.
"I know it is a false allegation. But I want to resign till I am cleared of this false allegation. I cannot work till I am proved innocent. It is a blot on my character,” Abdullah said.
"Any amount of investigation by the home department will not help. Till I am able to prove my innocence, I am going to give my resignation to the Governor," Abdullah told the State Assembly, a statement that shocked his party MLAs and Ministers.
The MLAs and Ministers physically restrained the Chief Minister from leaving the Assembly but Abdullah walked out.
He was virtually forced to take his seat by the ruffled members but he got up to shout at them saying "allow me to take this first step".
The whole drama began when PDP leader and former Deputy Chief Minister Muzaffar Beig levelled the allegation that Abduallah was involved in the infamous Srinagar sex scandal.
He claimed he had a list of people involved in the scandal in which Abdullah's name figured.
Congress in-charge of state Prithviraj Chavan has spoken to Omar Abdullah asking him not to resign as it was a trap to get him out of office, party sources said.
Chavan has also spoken to Omar's father Farooq Abdullah so that he stops him from resigning, they said.
Congress President Sonia Gandhi and her political secretary Ahmed Patel are also likely to talk to Omar to urge him not to go ahead with his threat to quit, the sources said.
Maruti produces 1 lakh KB-series cars in 10 months
Maruti drives out one lakh KB-series cars in 10 months
Within 10 months of starting production of its KB-series engines, the country's largest car maker, Maruti Suzuki has rolled out over one lakh of these units that power the two small cars, A-Star and Ritz.
Riding on the success of this new fuel-efficient technology, Maruti Suzuki India (MSI) has planned to incorporate KB-series engines in other existing as well as new models.
"The company's Gurgaon plant has produced over one lakh KB-series engines, which are installed in the two small cars A-Star and Ritz since its commercial production began in October last year," a company spokesperson said.
When asked about MSI's future strategy to roll out more KB-series engine cars, the official said, "We have definite plans to gradually introduce this next generation light-weight fuel efficient engine series in other models over a period of next 3-5 years."
He, however, declined to name the model next in line after A-star and Ritz which will be powered by the KB-series engine.
The company produces Bharat Stage-III, Bharat Stage-IV and Euro-V emission norms compliant KB-series engines. It produces two different petrol engines, 1 litre (A-Star) and 1.2 litre (Ritz), from the fully integrated engine manufacturing facility, located at MSI's Gurgaon plant.
According to the Automotive Research Association of India (ARAI), A-Star gives a mileage of 19.6 km per litre, while Ritz runs 17.7 km for every litre of petrol.
MSI has so far exported over 50,000 units of Euro-V compliant A-Star, sold as Suzuki Alto in Europe. It also supplies A-Star to another Japanese car maker Nissan under a contract manufacturing agreement with Suzuki. Nissan sells the car in Europe as Pixo.
The engine facility with a production capacity of 2.4 lakh units per annum was a part of the Rs 9,000 crore investment plan announced in 2007 by Suzuki Motor Corp, MSI's parent.
Within 10 months of starting production of its KB-series engines, the country's largest car maker, Maruti Suzuki has rolled out over one lakh of these units that power the two small cars, A-Star and Ritz.
Riding on the success of this new fuel-efficient technology, Maruti Suzuki India (MSI) has planned to incorporate KB-series engines in other existing as well as new models.
"The company's Gurgaon plant has produced over one lakh KB-series engines, which are installed in the two small cars A-Star and Ritz since its commercial production began in October last year," a company spokesperson said.
When asked about MSI's future strategy to roll out more KB-series engine cars, the official said, "We have definite plans to gradually introduce this next generation light-weight fuel efficient engine series in other models over a period of next 3-5 years."
He, however, declined to name the model next in line after A-star and Ritz which will be powered by the KB-series engine.
The company produces Bharat Stage-III, Bharat Stage-IV and Euro-V emission norms compliant KB-series engines. It produces two different petrol engines, 1 litre (A-Star) and 1.2 litre (Ritz), from the fully integrated engine manufacturing facility, located at MSI's Gurgaon plant.
According to the Automotive Research Association of India (ARAI), A-Star gives a mileage of 19.6 km per litre, while Ritz runs 17.7 km for every litre of petrol.
MSI has so far exported over 50,000 units of Euro-V compliant A-Star, sold as Suzuki Alto in Europe. It also supplies A-Star to another Japanese car maker Nissan under a contract manufacturing agreement with Suzuki. Nissan sells the car in Europe as Pixo.
The engine facility with a production capacity of 2.4 lakh units per annum was a part of the Rs 9,000 crore investment plan announced in 2007 by Suzuki Motor Corp, MSI's parent.
Air India sold 21 aircraft for $452 mn: Patel
Air India sold 21 aircraft for $451.88 million during 2007 to 2009, Union Civil Aviation Minister Praful Patel said today.
"Seventeen aircraft were sold on 'sale and lease back' basis whereas, four aircraft were sold on 'as is where is' basis," Patel said in a written reply to a Rajya Sabha query.
He said that the national carrier has leased 46 different types of aircraft from various companies across the globe and was paying a monthly rent of $18.945 million.
Air India's leased aircraft fleet includes different types of Boeing and Airbus airplanes.
"The average monthly expenditure of Air India before depreciation and obsolescence is about Rs 1,500 crore," the minister said replying to another question.
Patel said that Air India was taking various steps such as rationalising of routes, return of leased aircraft, reduction of contractual employment and employees at foreign offices and establishing international advisory boards to cut down its overhead costs.
In reply to another query, he said that 304 bird hit cases were reported during 2008.
"Seventeen aircraft were sold on 'sale and lease back' basis whereas, four aircraft were sold on 'as is where is' basis," Patel said in a written reply to a Rajya Sabha query.
He said that the national carrier has leased 46 different types of aircraft from various companies across the globe and was paying a monthly rent of $18.945 million.
Air India's leased aircraft fleet includes different types of Boeing and Airbus airplanes.
"The average monthly expenditure of Air India before depreciation and obsolescence is about Rs 1,500 crore," the minister said replying to another question.
Patel said that Air India was taking various steps such as rationalising of routes, return of leased aircraft, reduction of contractual employment and employees at foreign offices and establishing international advisory boards to cut down its overhead costs.
In reply to another query, he said that 304 bird hit cases were reported during 2008.
Shriram Transport NCD issue subscribed over 8 times
The non-convertible debentures (NCDs) issue of Shriram Transport Finance has received a good response from the investors and mopped up nearly Rs 4,500 crore in just a day's time.
According to market sources, the NCD issue received good response from qualified institutional buyers and the high net worth individuals with both the segments getting over subscribed.
The public issue of NCDs, which started yesterday for raising Rs 500 crore with an option to retain over-subscription of up to Rs 500 crore would close on August 14.
Shriram Transport Finance, a leading asset financing NBFC, would use the funds raised for its capital expenditure, working capital requirements, or repay its existing loans, and for various financing activities, including lending and investments, subject to regulations.
The company is a part of the Shriram conglomerate that has a significant presence in financial services. The group is also present in non-financial services business such as property development, engineering projects and information technology.
According to market sources, the NCD issue received good response from qualified institutional buyers and the high net worth individuals with both the segments getting over subscribed.
The public issue of NCDs, which started yesterday for raising Rs 500 crore with an option to retain over-subscription of up to Rs 500 crore would close on August 14.
Shriram Transport Finance, a leading asset financing NBFC, would use the funds raised for its capital expenditure, working capital requirements, or repay its existing loans, and for various financing activities, including lending and investments, subject to regulations.
The company is a part of the Shriram conglomerate that has a significant presence in financial services. The group is also present in non-financial services business such as property development, engineering projects and information technology.
Over 250 irrigation projects worth Rs 1.5 lakh cr pending
Over 250 irrigation projects worth Rs 1.5 lakh cr pending
More than 250 irrigation projects in the country worth over Rs 1.5 lakh crore, some of them initiated more than five decades ago during the Second Five Year Plan, are yet to be completed.
Hundred major and 156 medium irrigation projects have been tagged as "delayed" in the 11th Five Year Plan, Ministry of Water Resources said.
"The total latest estimated cost of the projects is Rs 1,55,469.93 crore of which Rs 98,442.18 has been incurred till 10th Plan (anticipated)," the ministry said in reply to an RTI application by Mumbai-based activist Chetan Kothari.
Normal gestation period for completion of projects is taken as 15 to 20 years for major projects and 5 to 10 years for medium projects, the ministry said.
"Accordingly, the major projects started during or before 8th Plan which have been continuing as ongoing in 11th Plan may be considered as delayed projects," the ministry said in its reply.
The data provided by the ministry shows two major projects to be continuing since Second Five Year Plan (1956-61) while seven projects, six major and one medium, started during the Third Five Year Plan (1961-66) are also pending.
The data shows 37 major and 32 medium projects were started during Fifth Five Year Plan (1974-78) while 27 major and 27 medium ones that started between 1980 and 1985 are also pending.
The reply said more than 3,000 centrally assisted minor irrigation projects are yet to be completed.
"Central Loan Assistance under Accelerated Irrigation Benefit Programme (AIBP) was introduced in 1996 to provide financial assistance to the states to expedite completion of surface water major and medium projects. From 1999-2000 the scope of AIBP was extended to include minor irrigation schemes also," the reply said.
"Since inception of AIBP for minor irrigation projects, a total number of 9,863 minor irrigation schemes with a combined total estimated cost of Rs 7264.088 crore have been taken up in the states up to April 28 of which 6,615 minor irrigation schemes have been completed up to March 31. Thus 3348 MI are ongoing schemes," it said.
In India, irrigation projects are classified as major (covering culturable command area more than 10,000 hectare), medium (CCA between 2,000 and 10,000 ha), and minor (CCA below 2,000 ha).
The source of water in major and medium schemes is surface water while the dominant source in minor schemes is ground water.
More than 250 irrigation projects in the country worth over Rs 1.5 lakh crore, some of them initiated more than five decades ago during the Second Five Year Plan, are yet to be completed.
Hundred major and 156 medium irrigation projects have been tagged as "delayed" in the 11th Five Year Plan, Ministry of Water Resources said.
"The total latest estimated cost of the projects is Rs 1,55,469.93 crore of which Rs 98,442.18 has been incurred till 10th Plan (anticipated)," the ministry said in reply to an RTI application by Mumbai-based activist Chetan Kothari.
Normal gestation period for completion of projects is taken as 15 to 20 years for major projects and 5 to 10 years for medium projects, the ministry said.
"Accordingly, the major projects started during or before 8th Plan which have been continuing as ongoing in 11th Plan may be considered as delayed projects," the ministry said in its reply.
The data provided by the ministry shows two major projects to be continuing since Second Five Year Plan (1956-61) while seven projects, six major and one medium, started during the Third Five Year Plan (1961-66) are also pending.
The data shows 37 major and 32 medium projects were started during Fifth Five Year Plan (1974-78) while 27 major and 27 medium ones that started between 1980 and 1985 are also pending.
The reply said more than 3,000 centrally assisted minor irrigation projects are yet to be completed.
"Central Loan Assistance under Accelerated Irrigation Benefit Programme (AIBP) was introduced in 1996 to provide financial assistance to the states to expedite completion of surface water major and medium projects. From 1999-2000 the scope of AIBP was extended to include minor irrigation schemes also," the reply said.
"Since inception of AIBP for minor irrigation projects, a total number of 9,863 minor irrigation schemes with a combined total estimated cost of Rs 7264.088 crore have been taken up in the states up to April 28 of which 6,615 minor irrigation schemes have been completed up to March 31. Thus 3348 MI are ongoing schemes," it said.
In India, irrigation projects are classified as major (covering culturable command area more than 10,000 hectare), medium (CCA between 2,000 and 10,000 ha), and minor (CCA below 2,000 ha).
The source of water in major and medium schemes is surface water while the dominant source in minor schemes is ground water.
NHPC IPO: First issue of state-run firm in 17 months
State-run power company NHPC today said it plans to raise up to Rs 6,048 crore through sale of shares in a price-band of Rs 30-36 in an IPO — the first by a PSU after the UPA assumed office for a second term.
This is also the first stake sale by a state-run company in 17 months after REC went public in February 2008 to raise over Rs 1,600 crore.
"We have decided a price band of Rs 32-36 for the IPO," NHPC Chairman and Managing Director S K Garg told a news channel.
The issue will open on August seven and close on August 11. The company would sell 168 crore shares comprising of five per cent stake divestment of the government and infusion of 10 per cent fresh equity.
The company plans to raise between Rs 5,040 crore and Rs 6,048 crore from its IPO.
The public issue is also the by a government-run entity since the September 2008 global financial meltdown. There have, however, been five issues by private sector companies.
This is also the first stake sale by a state-run company in 17 months after REC went public in February 2008 to raise over Rs 1,600 crore.
"We have decided a price band of Rs 32-36 for the IPO," NHPC Chairman and Managing Director S K Garg told a news channel.
The issue will open on August seven and close on August 11. The company would sell 168 crore shares comprising of five per cent stake divestment of the government and infusion of 10 per cent fresh equity.
The company plans to raise between Rs 5,040 crore and Rs 6,048 crore from its IPO.
The public issue is also the by a government-run entity since the September 2008 global financial meltdown. There have, however, been five issues by private sector companies.
Adani Power IPO over subscribed 4 times in an hour
The initial public offer of Adani Power got subscribed nearly four times the shares on offer within an hour of start of the book building process today.
The issue received bids for over 94.91 crore shares against 24.87 crore shares on offer, as per the data available on the National Stock Exchange. The company has fixed a price band of Rs 90-100 per share and most of the bids came in at Rs 95.
Adani Power, the electricity generating unit of Adani Enterprises, plans to raise Rs 3,610 crore at the upper end of the price band and Rs 2,715 crore at the lower end. This is the first issue wherein anchor investors, strategic investors for whom biddi ng process is carried out one day before the issue opens, have participated. As many as 13 anchor investors, including Credit Suisse, Sundaram BNP Paribas, T Rowe Price and CLSA, subscribed to the IPO at Rs 95 per share, the data showed.
Market regulator SEBI last month allowed new class of entity -- anchor investors -- to pick up a maximum of 15 per cent of the total IPO size.
The issue received bids for over 94.91 crore shares against 24.87 crore shares on offer, as per the data available on the National Stock Exchange. The company has fixed a price band of Rs 90-100 per share and most of the bids came in at Rs 95.
Adani Power, the electricity generating unit of Adani Enterprises, plans to raise Rs 3,610 crore at the upper end of the price band and Rs 2,715 crore at the lower end. This is the first issue wherein anchor investors, strategic investors for whom biddi ng process is carried out one day before the issue opens, have participated. As many as 13 anchor investors, including Credit Suisse, Sundaram BNP Paribas, T Rowe Price and CLSA, subscribed to the IPO at Rs 95 per share, the data showed.
Market regulator SEBI last month allowed new class of entity -- anchor investors -- to pick up a maximum of 15 per cent of the total IPO size.
Reliance Power to raise over Rs 20k cr to fund projects
Anil Ambani group company Reliance Power plans to raise over Rs 20,000 crore in the current fiscal to finance various projects, including the 4,000 MW Krishnapatnam ultra mega power project (UMPP).
"We are on course to raise Rs 20,000 crore of debt this
fiscal, having made significant progress in getting appraisals and sanctions for our Krishnapatnam UMPP," Reliance Power Chairman Anil Ambani told shareholders at the company's annual general meeting held here today.
The company had raised a similar amount of debt in FY'09
as well.
"We will continue to focus on identifying and participating in bids (to develop more projects)," he said.
Reliance Power would expedite the commissioning of its
projects ahead of schedule, Ambani said, adding that "we are
seeking to advance the commissioning of the Sasan project by
almost three-years."
The power from the Sasan project would be sold to consumers at a levelised tariff of Rs 1.19 per kwh for 25 years, he said.
Reliance Power has bagged three of four contracts for
developing UMPPs in the country.
"Our present portfolio of over 33,000 MW in the next
seven to eight years averages to almost 5,000 MW every year.
Of this, we propose to commission nearly 3,000 MW by 2012. The pace of commissioning will pick up considerably after that and we should be on course to bring on-stream the remainder of our thermal projects by the middle of the 12th Plan," Ambani said.
On the Rosa project, Ambani said that the 600 MW Phase
I of the project (located in Uttar Pradesh) is running ahead
of schedule. "We expect to finish it before end-this year."
"This means that we will commission the project in
less than three years time," he said.
With respect to the implementation of Rosa Phase II,
Ambani said that the company expected it to be up and running before the end of the 11th Plan.
On the 4,000 MW Chitrangi project in Madhya Pradesh,
Ambani said, "We have secured bid to supply 1,200 MW of power to the Madhya Pradesh Power Trading Company Ltd at a levelised tariff of Rs 2.45 per unit of electricity.
"As for the balance, we will tie-up a portion of the
capacity through long-term PPAs while reserving a substantial part for merchant sale."
On hydro power, Ambani said that the actual capacity
created so far was only 37,000 MW or 25 per cent of the
country's total installed capacity.
The company has bagged four hydro power projects, he
said.
"We have bagged four hydro power projects -- Mulin,
Emini, Mihundon and Kalai with a total capacity of 2,500 MW
from the Arunachal Pradesh Government. We now have over 4,000 MW of hydro projects in our portfolio -- these will bring jobs and development to the North-East," Ambani said.
"We are on course to raise Rs 20,000 crore of debt this
fiscal, having made significant progress in getting appraisals and sanctions for our Krishnapatnam UMPP," Reliance Power Chairman Anil Ambani told shareholders at the company's annual general meeting held here today.
The company had raised a similar amount of debt in FY'09
as well.
"We will continue to focus on identifying and participating in bids (to develop more projects)," he said.
Reliance Power would expedite the commissioning of its
projects ahead of schedule, Ambani said, adding that "we are
seeking to advance the commissioning of the Sasan project by
almost three-years."
The power from the Sasan project would be sold to consumers at a levelised tariff of Rs 1.19 per kwh for 25 years, he said.
Reliance Power has bagged three of four contracts for
developing UMPPs in the country.
"Our present portfolio of over 33,000 MW in the next
seven to eight years averages to almost 5,000 MW every year.
Of this, we propose to commission nearly 3,000 MW by 2012. The pace of commissioning will pick up considerably after that and we should be on course to bring on-stream the remainder of our thermal projects by the middle of the 12th Plan," Ambani said.
On the Rosa project, Ambani said that the 600 MW Phase
I of the project (located in Uttar Pradesh) is running ahead
of schedule. "We expect to finish it before end-this year."
"This means that we will commission the project in
less than three years time," he said.
With respect to the implementation of Rosa Phase II,
Ambani said that the company expected it to be up and running before the end of the 11th Plan.
On the 4,000 MW Chitrangi project in Madhya Pradesh,
Ambani said, "We have secured bid to supply 1,200 MW of power to the Madhya Pradesh Power Trading Company Ltd at a levelised tariff of Rs 2.45 per unit of electricity.
"As for the balance, we will tie-up a portion of the
capacity through long-term PPAs while reserving a substantial part for merchant sale."
On hydro power, Ambani said that the actual capacity
created so far was only 37,000 MW or 25 per cent of the
country's total installed capacity.
The company has bagged four hydro power projects, he
said.
"We have bagged four hydro power projects -- Mulin,
Emini, Mihundon and Kalai with a total capacity of 2,500 MW
from the Arunachal Pradesh Government. We now have over 4,000 MW of hydro projects in our portfolio -- these will bring jobs and development to the North-East," Ambani said.
BPCL posts Q1 net profit at Rs 614 cr
State-run Bharat Petroleum Corporation Ltd today reported a net profit of Rs 614.12 crore for the first quarter ended June 30, 2009.
The company had a net loss of Rs 1,066.7 crore in the
same quarter last year, BPCL said in a filing to the Bombay
Stock Exchange (BSE).
The total income has decreased to Rs 26,195.6 crore in
the latest quarter, against Rs 3,9297.7 crore in the same
period last year.
Shares of BPCL were trading at Rs 459 on the BSE, up 1.91
per cent from the previous close.
The company had a net loss of Rs 1,066.7 crore in the
same quarter last year, BPCL said in a filing to the Bombay
Stock Exchange (BSE).
The total income has decreased to Rs 26,195.6 crore in
the latest quarter, against Rs 3,9297.7 crore in the same
period last year.
Shares of BPCL were trading at Rs 459 on the BSE, up 1.91
per cent from the previous close.
Grasim Q1 net up 110% at Rs 1,080 cr
Grasim Q1 net profit up 110% at Rs 1,080 cr
Grasim has announced its first quarter FY09 results. The company's net profit was up 110% at Rs 1,080 crore versus Rs 514.2 crore. This includes gain of Rs 336 crore from sponge iron sale.
Its net sales were at Rs 5080 crore versus Rs 4395 crore.
According to estimates, the company's standalone PAT (profit after tax) was seen going up 3% at Rs 530.2 crore from Rs 514.19 crore. Standalone revenues were expected to go up 12% at Rs 2,894.3 crore versus Rs 2,592.33 crore.
Grasim has announced its first quarter FY09 results. The company's net profit was up 110% at Rs 1,080 crore versus Rs 514.2 crore. This includes gain of Rs 336 crore from sponge iron sale.
Its net sales were at Rs 5080 crore versus Rs 4395 crore.
According to estimates, the company's standalone PAT (profit after tax) was seen going up 3% at Rs 530.2 crore from Rs 514.19 crore. Standalone revenues were expected to go up 12% at Rs 2,894.3 crore versus Rs 2,592.33 crore.
HUL Q1 net down nearly 3% at Rs 543.19 cr
FMCG major Hindustan Unilever Ltd (HUL) on Tuesday reported a fall of 2.69 per cent in its first quarter net profit at Rs 543.19 crore as against Rs 558.18 crore during the corresponding period last fiscal.
The company, however, reported a growth of 7.77 per cent in its net sales at Rs 4,475.68 crore during the quarter ended June 30, 2009 as compared with Rs 4,152.84 crore during the same period last year.
The company's domestic FMCG business grew by 12.80 per cent during the period under review to Rs 4,148.66 crore as against Rs 3,677.92 crore during the first quarter last year.
HUL's home and personal care segment reported sales of Rs 3,405.82 crore during the first quarter, registering growth of 11.87 per cent over the figure of Rs 3,044.53 crore reported during the same period of last fiscal. Its foods segment business jumpe d by 17.28 per cent to Rs 742.84 crore during the quarter ended June 30, 2009 compared with Rs 633.39 crore reported during the corresponding period last fiscal.
In the exports segment, the company registered a significant fall of 34.72 per cent to Rs 255.58 crore for the first quarter as against Rs 391.51 crore during the same quarter of 2008-09. HUL's other income also fell by 14.35 per cent to Rs 71.44 crore during Q1 of this fiscal compared with Rs 83.41 crore during the same period of last fiscal.
The company, however, reported a growth of 7.77 per cent in its net sales at Rs 4,475.68 crore during the quarter ended June 30, 2009 as compared with Rs 4,152.84 crore during the same period last year.
The company's domestic FMCG business grew by 12.80 per cent during the period under review to Rs 4,148.66 crore as against Rs 3,677.92 crore during the first quarter last year.
HUL's home and personal care segment reported sales of Rs 3,405.82 crore during the first quarter, registering growth of 11.87 per cent over the figure of Rs 3,044.53 crore reported during the same period of last fiscal. Its foods segment business jumpe d by 17.28 per cent to Rs 742.84 crore during the quarter ended June 30, 2009 compared with Rs 633.39 crore reported during the corresponding period last fiscal.
In the exports segment, the company registered a significant fall of 34.72 per cent to Rs 255.58 crore for the first quarter as against Rs 391.51 crore during the same quarter of 2008-09. HUL's other income also fell by 14.35 per cent to Rs 71.44 crore during Q1 of this fiscal compared with Rs 83.41 crore during the same period of last fiscal.
TCS loses Rs 250 cr UGC e-governance project
UGC cancels Rs 250 cr E-governance project bagged by TCS
University Grants Commission cancels the Rs 250 crore E-governance project bagged by TCS in March. Project was to make UGC processes paperless.
This move as we learn was due to funding and internal conflicts in UGC. Now the project is to be broken in phases- Rs 40-50 crore per phase.
Various IT companies to be called for bidding. TCS, HCL, Wipro and Patni most likely contenders
TCS says UGC has sent communication on re-tendering of contract. TCS will bid for individual projects once tender is open
University Grants Commission cancels the Rs 250 crore E-governance project bagged by TCS in March. Project was to make UGC processes paperless.
This move as we learn was due to funding and internal conflicts in UGC. Now the project is to be broken in phases- Rs 40-50 crore per phase.
Various IT companies to be called for bidding. TCS, HCL, Wipro and Patni most likely contenders
TCS says UGC has sent communication on re-tendering of contract. TCS will bid for individual projects once tender is open
Delhi Metro mishap: Gammon India faces ban
The Delhi Metro Rail Corporation’s Action Taken Report was submitted to Urban Development Minister Jaipal Reddy on Tuesday.
The report, by a four-member expert committee probing Delhi Metro Rail Corporation's worst accident on July 12, which killed six people, says construction giant Gammon India faces a two-year ban from construction for two years and a show cause notice has been slapped on them.
If Gammon fails to reply to the notice, it will be blacklisted.
The report also says three DMRC engineers have been suspended and the design consultants have been blacklisted for five years.
Structural design engineers Tandon Constructions have been barred for three years.
DMRC says independent consultants will be hired for further construction.
“Design consultants will be blacklisted for five years, Tandon Consultants, the structural consultants to be debarred for two years. M/s Gammon India will be given a show cause to be blacklisted for two years,” Reddy said in Parliament.
Gammon has refused to comment, says will react only after going through the DMRC report.
The metro rail deadline remains 2010.
The committee headed by A K Nagpal of the Indian Institute of Technology-Delhi probed the collapse of an under-construction beam meant to support the elevated rail track connecting central Delhi to Badarpur in the south of the Capital.
In the last 10 years, more than 69 people have lost their lives in various metro accidents but none of them have received compensation packages as per the Workmans' Compensation Act of 1923.
The DMRC set up a labour welfare fund in 2003, but lawyers say it seems that this was done to evade civil liability.
Till date, the DMRC has been lauded for completing most projects before stipulated deadlines but statistics show that it needs to do a lot more to uphold the safety and concerns of its employees.
The report, by a four-member expert committee probing Delhi Metro Rail Corporation's worst accident on July 12, which killed six people, says construction giant Gammon India faces a two-year ban from construction for two years and a show cause notice has been slapped on them.
If Gammon fails to reply to the notice, it will be blacklisted.
The report also says three DMRC engineers have been suspended and the design consultants have been blacklisted for five years.
Structural design engineers Tandon Constructions have been barred for three years.
DMRC says independent consultants will be hired for further construction.
“Design consultants will be blacklisted for five years, Tandon Consultants, the structural consultants to be debarred for two years. M/s Gammon India will be given a show cause to be blacklisted for two years,” Reddy said in Parliament.
Gammon has refused to comment, says will react only after going through the DMRC report.
The metro rail deadline remains 2010.
The committee headed by A K Nagpal of the Indian Institute of Technology-Delhi probed the collapse of an under-construction beam meant to support the elevated rail track connecting central Delhi to Badarpur in the south of the Capital.
In the last 10 years, more than 69 people have lost their lives in various metro accidents but none of them have received compensation packages as per the Workmans' Compensation Act of 1923.
The DMRC set up a labour welfare fund in 2003, but lawyers say it seems that this was done to evade civil liability.
Till date, the DMRC has been lauded for completing most projects before stipulated deadlines but statistics show that it needs to do a lot more to uphold the safety and concerns of its employees.
Investment Strategy: Buy JK Lakshmi Cement Ltd.- Price Target: Rs 158
We are recommending a Buy on JK Lakshmi cement with a price target of Rs.158.
Investment Highlights
Topline up by 30.20%: Net sales for the Q1FY10 increased by 30.20% to
Rs. 350.81 Cr compared to Rs. 269.43Cr during the corresponding quarter
previous year. This is on the back of 11% increase in production and 14 %
growth in despatches.
Net profit increased by 102.87%: The company posted a robust growth
in its profit to Rs.78.49 Crores for Q1FY10 an increase of 103% (YoY).
This is mainly on the back of higher realizations.
Increase in operating margin: The operating margin of the company
improved to 34% in Q1FY10 from 24% in Q1FY09. Lower fuel, power cost
and higher realizations resulted in improved operating margins.
Full year performance: For the full year FY09 the company saw a 10%
growth in its topline to Rs.1223.90crores (YoY). The bottomline of the
company saw a decline of 25% to Rs.175.27 Crores due to increase in
input cost particularly in fuel cost.
Capacity addition to drive volumes: The production capacity of the
company increased from 3.65 million tpa to 4.75 million tpa in FY09, an
increase of over 30%. The full capacity will be on stream during FY10,
which will add to the higher volumes.
Greenfield expansion: The company is setting up a green field cement
plant at durg in the state of chattisgarh, with an annual capacity of 2.7
million tonnes and is expected to be commissioned by 2011.
Captive power plant to save cost: The company is setting up a waste
heat recovery power plant with an estimated outlay of Rs. 125 crore. The
project is aimed to generate 12 mw of power and it will be commissioned
by March 2011.Further the company is also planning to set up 18 mw
power plant at sirohi. Both the above-mentioned capacity along with
existing capacity will take the total capacity of the company to 66mw.This
will minimize cost for the company.
Valuation
We expect a stronger topline and bottomline growth on the back of improved
demand, higher price realization, capacity expansion and savings from captive
power plant. At the CMP of Rs. 131.55, JK Lakshmi is trading at 3.03x its TTM
earnings. We recommend a BUY on the stock with a (3-6 month) price target of
Rs.158.
Industry: Cement
Price Data
Current Price (Rs) 131.55
52 wk range (Rs) 133.00-31.00
Stock Data
Mkt Cap (Rs Cr) 804.82
No. of shares o/s(Cr) 6.118
Free float (%) 54.49
Key Indicators
TTM EPS (Rs) 43.39
PAT Margin (%) 22.37%
Code
NSE JKLAKSHMI
BSE 500380
Reuters JKCR.BO
Bloomberg JKLC.IN
Investment Highlights
Topline up by 30.20%: Net sales for the Q1FY10 increased by 30.20% to
Rs. 350.81 Cr compared to Rs. 269.43Cr during the corresponding quarter
previous year. This is on the back of 11% increase in production and 14 %
growth in despatches.
Net profit increased by 102.87%: The company posted a robust growth
in its profit to Rs.78.49 Crores for Q1FY10 an increase of 103% (YoY).
This is mainly on the back of higher realizations.
Increase in operating margin: The operating margin of the company
improved to 34% in Q1FY10 from 24% in Q1FY09. Lower fuel, power cost
and higher realizations resulted in improved operating margins.
Full year performance: For the full year FY09 the company saw a 10%
growth in its topline to Rs.1223.90crores (YoY). The bottomline of the
company saw a decline of 25% to Rs.175.27 Crores due to increase in
input cost particularly in fuel cost.
Capacity addition to drive volumes: The production capacity of the
company increased from 3.65 million tpa to 4.75 million tpa in FY09, an
increase of over 30%. The full capacity will be on stream during FY10,
which will add to the higher volumes.
Greenfield expansion: The company is setting up a green field cement
plant at durg in the state of chattisgarh, with an annual capacity of 2.7
million tonnes and is expected to be commissioned by 2011.
Captive power plant to save cost: The company is setting up a waste
heat recovery power plant with an estimated outlay of Rs. 125 crore. The
project is aimed to generate 12 mw of power and it will be commissioned
by March 2011.Further the company is also planning to set up 18 mw
power plant at sirohi. Both the above-mentioned capacity along with
existing capacity will take the total capacity of the company to 66mw.This
will minimize cost for the company.
Valuation
We expect a stronger topline and bottomline growth on the back of improved
demand, higher price realization, capacity expansion and savings from captive
power plant. At the CMP of Rs. 131.55, JK Lakshmi is trading at 3.03x its TTM
earnings. We recommend a BUY on the stock with a (3-6 month) price target of
Rs.158.
Industry: Cement
Price Data
Current Price (Rs) 131.55
52 wk range (Rs) 133.00-31.00
Stock Data
Mkt Cap (Rs Cr) 804.82
No. of shares o/s(Cr) 6.118
Free float (%) 54.49
Key Indicators
TTM EPS (Rs) 43.39
PAT Margin (%) 22.37%
Code
NSE JKLAKSHMI
BSE 500380
Reuters JKCR.BO
Bloomberg JKLC.IN
SECTOR REPORT - SUGAR INDUSTRY
INDUSTRY OVERVIEW
Sugar Industry in 2008-09 witnessed a rapid shift in Sugar cycle signifying reversal of
high supply - low prices scenario. With the trend reflecting falling production in the
current and next Sugar year, sugar prices firmed up in the second half of the year.
The country's sugar production declined from 26.3 mn MT in 2007-08 to 15 mn MT in
2008-09. Consumption of sugar in India is likely to increase by 1.4 mn MT during 2008-
2009. This mismatch between supply & demand resulted in Sugar deficit.
FACTORS THAT LED TO LOWER SUGAR PRODUCTION ARE AS FOLLOWS
Shrinkage in the area under sugarcane led to lesser availability of sugarcane
and in turn lower sugar production. Data released by the Ministry of Agriculture
shows 9.8 % shrinkage in area under sugarcane in 2008 – 2009.
Increasing sugarcane arrears to farmers from sugar mills and the dispute
between sugar mills and some of the State Governments regarding cane
pricing are likely to further reduce the availability of sugarcane for the
manufacture of sugar.
Alternative crops are more remunerative than sugarcane in major sugarcane
producing states. Farmers therefore appear to be shifting to alternatives. This
year, the higher price offered by jaggery manufacturers, also led to a significant
drop in sugarcane supply to mills.
The cane prices have increased significantly over last 10 years, while sugar
prices have remained volatile resulting in declining spread for the sugar
companies.
Sugarcane and sugar production in India typically follows a 6 to 8 year cycle,
wherein 3 to 4 years of higher production are followed by 2 to 3 years of lower
production.
ATTRACTIVE INDUSTRY DYNAMICS
The increasing demand for Sugar, co-generation and Ethanol favor the sugar industry.
Deregulation of sugar business in developed countries lead to reduction of import
restriction. Migration of people to urban areas results in increase in per capita
consumption. Global environmental concerns favor renewable fuels like ethanol.
Consolidation of mills leads to increase in scale and lower production cost. Finally, ever
growing demand for energy creates opportunity for biomass power generation.
All the above said points result in
Significant sugar export opportunities
Potentially higher international price
Strengthen Indian industry's financial performance
Additional and stable revenue from co-generation and Ethanol
SUGAR PRODUCTION OUTLOOK
After two consecutive years of decline in sugar production, and the consequent
increase in sugar and sugarcane prices, Indian sugar production is set to recover in
marketing year (MY) 2009/10 (October/September). India’s total sugar production in
MY 2009/10 is forecast at 20.8 million tons from 15 million tones in MY2008/09
estimate on improved sugarcane supplies due to expected higher cane planting and
yields.
Strong sugar prices during 2008/09, resulted in high cane prices and timely cane price
payment mills encouraged farmers to plant more cane this season. Relatively strong
sugarcane prices vis-Ã -vis competing food crops (rice, wheat, maize, pulses) also
supported cane planting. Consequently, 2009/10-cane area is forecast to increase by
9 % to 4.8 million hectares.
CONSUMPTION
The recent slowdown in economy and expected strong sugar prices due to forecast
tight supplies should contain any growth in consumption in MY 2009/10 to 23.0 million
tons, unchanged from last year. Bulk consumers such as bakeries, makers of candy
and local sweets, and soft-drink manufacturers account for about 60 percent of mill
sugar demand.
TRADE
After a gap of 3 years, India has emerged as a net sugar importer in 2008/09. Due to
the forecast tight domestic supplies, imports of sugar in 2009/10 is estimated to
increase to a record 2.5 million tons as the government is expected to continue with
the relaxed import policy. Most of the exports should be raw sugar for further
processing to white sugar for sale in the domestic market. However, there may be
some imports of white sugar in the first half of the season as the government may
allow duty free sugar imports by the private trade. Forecast tight domestic supplies
preclude any significant commercial exports of sugar in the near future, and 2009/10
exports will be limited to quota countries. The 2008/09-import estimate is revised
higher to 1.8 million tons; exports are lowered to 140,000 tons based on information
from the industry sources.
PRICES AND STOCKS
Due to tight domestic supplies, sugar prices have been on the rise since July 2008.
Prices have flared up significantly since December 2008 after the shortage of
sugarcane and sugar became more evident.
Sugar prices are expected to gain in the coming months and remain firm during MY
2009/10. However, international prices and policy measures to be taken by the
government could impact future domestic price movements.
INTERNATIONAL MARKET
World sugar production for the 2009/10 marketing year is forecast at 159.9 million
tons, raw value, up 11.2 million from the revised 2008/09 estimate. Consumption is
forecast at 159 million tons, up 1.5 million from a year earlier. Exports are forecast at
51.3 million tons, up 3 million; and ending stocks are forecast at 31.2 million tons,
down 800,000 tons.
Forecast changes in 2009/10-world production and trade are highlighted by higher
production in Brazil, at 36.9 million tons, up 4.5 million. Brazil accounts for 23 percent
of world production, but Asia accounts for 37 percent. Forecasted production in Asia
is up by 5.8 million tons to total 59.2 million. Production in India for 2009/10 is
forecast at 20.8 million tons, up 4 million, China at 14.5 million tons, up one million,
and Thailand at 7.5 million tons, down 300,000. Production in the EU-27 is forecast
at 17 million tons slightly above last year’s output. In 2009/10, the EU is forecast to
be the world’s largest net sugar importer at 3 million tons.
Exports from Brazil for 2009/10 are forecast at 24.3 million tons, up 4 million from
2008/09. Brazilian exports during the last year were off from expected levels due to
relatively low prices, in relation to production costs, high freight rates, early year
competition from India in Near East markets, high oil prices, and high domestic
ethanol demand and India may import 2.5 million tons, up 700,000 from last year.
Sugar Industry in 2008-09 witnessed a rapid shift in Sugar cycle signifying reversal of
high supply - low prices scenario. With the trend reflecting falling production in the
current and next Sugar year, sugar prices firmed up in the second half of the year.
The country's sugar production declined from 26.3 mn MT in 2007-08 to 15 mn MT in
2008-09. Consumption of sugar in India is likely to increase by 1.4 mn MT during 2008-
2009. This mismatch between supply & demand resulted in Sugar deficit.
FACTORS THAT LED TO LOWER SUGAR PRODUCTION ARE AS FOLLOWS
Shrinkage in the area under sugarcane led to lesser availability of sugarcane
and in turn lower sugar production. Data released by the Ministry of Agriculture
shows 9.8 % shrinkage in area under sugarcane in 2008 – 2009.
Increasing sugarcane arrears to farmers from sugar mills and the dispute
between sugar mills and some of the State Governments regarding cane
pricing are likely to further reduce the availability of sugarcane for the
manufacture of sugar.
Alternative crops are more remunerative than sugarcane in major sugarcane
producing states. Farmers therefore appear to be shifting to alternatives. This
year, the higher price offered by jaggery manufacturers, also led to a significant
drop in sugarcane supply to mills.
The cane prices have increased significantly over last 10 years, while sugar
prices have remained volatile resulting in declining spread for the sugar
companies.
Sugarcane and sugar production in India typically follows a 6 to 8 year cycle,
wherein 3 to 4 years of higher production are followed by 2 to 3 years of lower
production.
ATTRACTIVE INDUSTRY DYNAMICS
The increasing demand for Sugar, co-generation and Ethanol favor the sugar industry.
Deregulation of sugar business in developed countries lead to reduction of import
restriction. Migration of people to urban areas results in increase in per capita
consumption. Global environmental concerns favor renewable fuels like ethanol.
Consolidation of mills leads to increase in scale and lower production cost. Finally, ever
growing demand for energy creates opportunity for biomass power generation.
All the above said points result in
Significant sugar export opportunities
Potentially higher international price
Strengthen Indian industry's financial performance
Additional and stable revenue from co-generation and Ethanol
SUGAR PRODUCTION OUTLOOK
After two consecutive years of decline in sugar production, and the consequent
increase in sugar and sugarcane prices, Indian sugar production is set to recover in
marketing year (MY) 2009/10 (October/September). India’s total sugar production in
MY 2009/10 is forecast at 20.8 million tons from 15 million tones in MY2008/09
estimate on improved sugarcane supplies due to expected higher cane planting and
yields.
Strong sugar prices during 2008/09, resulted in high cane prices and timely cane price
payment mills encouraged farmers to plant more cane this season. Relatively strong
sugarcane prices vis-Ã -vis competing food crops (rice, wheat, maize, pulses) also
supported cane planting. Consequently, 2009/10-cane area is forecast to increase by
9 % to 4.8 million hectares.
CONSUMPTION
The recent slowdown in economy and expected strong sugar prices due to forecast
tight supplies should contain any growth in consumption in MY 2009/10 to 23.0 million
tons, unchanged from last year. Bulk consumers such as bakeries, makers of candy
and local sweets, and soft-drink manufacturers account for about 60 percent of mill
sugar demand.
TRADE
After a gap of 3 years, India has emerged as a net sugar importer in 2008/09. Due to
the forecast tight domestic supplies, imports of sugar in 2009/10 is estimated to
increase to a record 2.5 million tons as the government is expected to continue with
the relaxed import policy. Most of the exports should be raw sugar for further
processing to white sugar for sale in the domestic market. However, there may be
some imports of white sugar in the first half of the season as the government may
allow duty free sugar imports by the private trade. Forecast tight domestic supplies
preclude any significant commercial exports of sugar in the near future, and 2009/10
exports will be limited to quota countries. The 2008/09-import estimate is revised
higher to 1.8 million tons; exports are lowered to 140,000 tons based on information
from the industry sources.
PRICES AND STOCKS
Due to tight domestic supplies, sugar prices have been on the rise since July 2008.
Prices have flared up significantly since December 2008 after the shortage of
sugarcane and sugar became more evident.
Sugar prices are expected to gain in the coming months and remain firm during MY
2009/10. However, international prices and policy measures to be taken by the
government could impact future domestic price movements.
INTERNATIONAL MARKET
World sugar production for the 2009/10 marketing year is forecast at 159.9 million
tons, raw value, up 11.2 million from the revised 2008/09 estimate. Consumption is
forecast at 159 million tons, up 1.5 million from a year earlier. Exports are forecast at
51.3 million tons, up 3 million; and ending stocks are forecast at 31.2 million tons,
down 800,000 tons.
Forecast changes in 2009/10-world production and trade are highlighted by higher
production in Brazil, at 36.9 million tons, up 4.5 million. Brazil accounts for 23 percent
of world production, but Asia accounts for 37 percent. Forecasted production in Asia
is up by 5.8 million tons to total 59.2 million. Production in India for 2009/10 is
forecast at 20.8 million tons, up 4 million, China at 14.5 million tons, up one million,
and Thailand at 7.5 million tons, down 300,000. Production in the EU-27 is forecast
at 17 million tons slightly above last year’s output. In 2009/10, the EU is forecast to
be the world’s largest net sugar importer at 3 million tons.
Exports from Brazil for 2009/10 are forecast at 24.3 million tons, up 4 million from
2008/09. Brazilian exports during the last year were off from expected levels due to
relatively low prices, in relation to production costs, high freight rates, early year
competition from India in Near East markets, high oil prices, and high domestic
ethanol demand and India may import 2.5 million tons, up 700,000 from last year.
Adani Power Ltd
Company Profile
Adani Power Limited (APL) is a power project development company. It operates and
maintains power projects across India and it is a part of Adani Group, a leading
business group in India.
APL has four thermal power projects under various stages of development, with a
combined installed capacity of 6,600 MW. In addition they are also planning to
develop two thermal power projects at Dahej and Kawai with a combined installed
capacity of 3,300 MW.
It proposes to implement 2640 MW Coal based Thermal Power Project at Mundra,
Dist. Kutch, and Gujarat, India. It also proposes to implement 1320 MW Coal based
Thermal Power Project at Tiroda, through its 100% subsidiary, Adani Power
Maharashtra Ltd. (APML). APL is also actively planning to implement other Thermal
Power Stations at various locations in India, totaling to about 10000 MW in the coming
years.
Objective Of The Issue
Particulars
To part finance the construction and development of Mundra Phase IV Power Project, for
1,980 MW
Funding equity contribution in its subsidiary Adani Power Maharashtra Limited to part finance
the construction and development cost of power project for 1,980 MW at Tiroda, Maharashtra
General Corporate Purposes
Investment Rationale
Increasing Industry Demand: India is a power deficit country. The gap
between demand and supply is increasing, leading to increase in power
shortage. The peak deficit in western region of India is at 26.5% of peak
demand requirement. According to the 17th Electric Power Survey, India’s
peak demand will reach approximately 152,746 MW with an energy
requirement of approximately 968 billion units by fiscal year 2012. By the
fiscal year 2017, peak demand is expected to reach 218,209 MW with an
energy requirement of 1,392 billion units.
It has secured supply of fuel for many of its power projects: One of the
critical success factors for any power generation project is the availability of
cost-effective fuel sources throughout the lifetime of the power project. Its
Mundra power projects are located along the coast and will utilize imported
coal as primary fuel for its operations. Further it entered into long-term coal
supply arrangements for coal with Adani Enterprises Limited (AEL) for
Mundra power projects.
Location Advantage: All its power projects under development are located in
Western India, where according to the CEA, the peak deficit was 7,086 MW
for the period between April 2008 and March 2009. Higher deficit will increase
the demand for the power and to boost the top line of the company in the long
run.
Entered into long term Off-take aggrement:: It entered into two off-take
agreements with Gujarat Urja Vikas Nigam Limited for the supply of 1,000
MW of power produced from the Mundra Phase I and II Power Project, and
for the supply of 1,000 MW of power produced from the Mundra Phase III
Power Project. This agreement will help the company to sell power produced
in excess and to mitigate off-take risk, while enabling to sell the residual
power at market determined rates.
Investment Concern
APL does not have a revenue stream, which shall flow when it is able to
successfully execute its projects. Further power projects require long
gestation period to execute the projects.
The companies rely mainly on Chinese equipment for setting up the power
plants. There have been instances in India of power generation players facing
intermittent problems with Chinese equipment.
Valuation
The company does not have any past earnings records; hence relative valuation with
peers is not possible. The valuation of the company is possible only when it starts its
operation as power projects takes long gestation period. Considering company can
perform well in the long run, we recommend investor with long-term investment
horizon to subscribe the issue.
Industry:
Power Generation & Supply
Issue details:
Price Range: Rs.90-100
Issue Period: 28th July’09 to
31st July’09
Issue Type: 100% book building
Issue Size: 30.16 crore shares
Pre-Issue Equity: 187.83 crore shares
Post-Issue Equity: 218.00 crore shares
Lead managers
1. Enam Securities Private Limited
2. IDFC - SSKI Limited
3. JM Financial Consultants Private Ltd
4. Kotak Mahindra Capital Company Ltd
5. Morgan Stanley India Company Pvt Ltd
6. ICICI Securities Limited
7. SBI Capital Markets Limited
Adani Power Limited (APL) is a power project development company. It operates and
maintains power projects across India and it is a part of Adani Group, a leading
business group in India.
APL has four thermal power projects under various stages of development, with a
combined installed capacity of 6,600 MW. In addition they are also planning to
develop two thermal power projects at Dahej and Kawai with a combined installed
capacity of 3,300 MW.
It proposes to implement 2640 MW Coal based Thermal Power Project at Mundra,
Dist. Kutch, and Gujarat, India. It also proposes to implement 1320 MW Coal based
Thermal Power Project at Tiroda, through its 100% subsidiary, Adani Power
Maharashtra Ltd. (APML). APL is also actively planning to implement other Thermal
Power Stations at various locations in India, totaling to about 10000 MW in the coming
years.
Objective Of The Issue
Particulars
To part finance the construction and development of Mundra Phase IV Power Project, for
1,980 MW
Funding equity contribution in its subsidiary Adani Power Maharashtra Limited to part finance
the construction and development cost of power project for 1,980 MW at Tiroda, Maharashtra
General Corporate Purposes
Investment Rationale
Increasing Industry Demand: India is a power deficit country. The gap
between demand and supply is increasing, leading to increase in power
shortage. The peak deficit in western region of India is at 26.5% of peak
demand requirement. According to the 17th Electric Power Survey, India’s
peak demand will reach approximately 152,746 MW with an energy
requirement of approximately 968 billion units by fiscal year 2012. By the
fiscal year 2017, peak demand is expected to reach 218,209 MW with an
energy requirement of 1,392 billion units.
It has secured supply of fuel for many of its power projects: One of the
critical success factors for any power generation project is the availability of
cost-effective fuel sources throughout the lifetime of the power project. Its
Mundra power projects are located along the coast and will utilize imported
coal as primary fuel for its operations. Further it entered into long-term coal
supply arrangements for coal with Adani Enterprises Limited (AEL) for
Mundra power projects.
Location Advantage: All its power projects under development are located in
Western India, where according to the CEA, the peak deficit was 7,086 MW
for the period between April 2008 and March 2009. Higher deficit will increase
the demand for the power and to boost the top line of the company in the long
run.
Entered into long term Off-take aggrement:: It entered into two off-take
agreements with Gujarat Urja Vikas Nigam Limited for the supply of 1,000
MW of power produced from the Mundra Phase I and II Power Project, and
for the supply of 1,000 MW of power produced from the Mundra Phase III
Power Project. This agreement will help the company to sell power produced
in excess and to mitigate off-take risk, while enabling to sell the residual
power at market determined rates.
Investment Concern
APL does not have a revenue stream, which shall flow when it is able to
successfully execute its projects. Further power projects require long
gestation period to execute the projects.
The companies rely mainly on Chinese equipment for setting up the power
plants. There have been instances in India of power generation players facing
intermittent problems with Chinese equipment.
Valuation
The company does not have any past earnings records; hence relative valuation with
peers is not possible. The valuation of the company is possible only when it starts its
operation as power projects takes long gestation period. Considering company can
perform well in the long run, we recommend investor with long-term investment
horizon to subscribe the issue.
Industry:
Power Generation & Supply
Issue details:
Price Range: Rs.90-100
Issue Period: 28th July’09 to
31st July’09
Issue Type: 100% book building
Issue Size: 30.16 crore shares
Pre-Issue Equity: 187.83 crore shares
Post-Issue Equity: 218.00 crore shares
Lead managers
1. Enam Securities Private Limited
2. IDFC - SSKI Limited
3. JM Financial Consultants Private Ltd
4. Kotak Mahindra Capital Company Ltd
5. Morgan Stanley India Company Pvt Ltd
6. ICICI Securities Limited
7. SBI Capital Markets Limited
Buy sugar stocks on dips: Sukhani
Technical Analyst, Sudarshan Sukhani is of the opinion that momentum traders can buy sugar stocks on dips.
Sukhani told , "Shree Renuka is touching all time highs so that is certainly the leader in this pack. Balrampur Chini has a better chart because it corrected much less as compared to Bajaj Hindusthan, but beyond that, probably Bajaj Hindusthan had run up more than it was justified. So essentially the message is that sugar is a buying opportunity for momentum traders, I don’t know about investing in this sector, it’s difficult to make that judgment, but this is all about momentum. So in sugar you go long and if you buy it on the dips you are going to make some money on these stocks."
Sukhani told , "Shree Renuka is touching all time highs so that is certainly the leader in this pack. Balrampur Chini has a better chart because it corrected much less as compared to Bajaj Hindusthan, but beyond that, probably Bajaj Hindusthan had run up more than it was justified. So essentially the message is that sugar is a buying opportunity for momentum traders, I don’t know about investing in this sector, it’s difficult to make that judgment, but this is all about momentum. So in sugar you go long and if you buy it on the dips you are going to make some money on these stocks."
Gammon India plunges 14%
Gammon India touched an intraday high of Rs 146.45 and an intraday low of Rs 121.25. At 12:18 pm, the share was quoting at Rs 122.25, down Rs 20, or 14.06%.
It was trading with volumes of 149,320 shares. Yesterday the share closed down 2% or Rs 2.90 at Rs 142.25.
It was trading with volumes of 149,320 shares. Yesterday the share closed down 2% or Rs 2.90 at Rs 142.25.
RBI credit policy: No change in rates but change in stance
The Reserve Bank of India (RB) has left key interest rates unchanged. Inline with a poll, it has maintained status quo on the credit reserve ratio (5%), repo (4.75%) and reverse repo (3.25%) rates.
However, there is a change in its dovish stance seen earlier. It has increased its growth projections. FY10 GDP has now been maintained at 6% with an upward bias.
Inflation continues to be higher on RBI's radar. It is now projected at 5% from the earlier 4%.
The pall of gloom still hangs over the economy. That seemed to be the RBI Governor D Subbarao undelying mesage. In the report, he said the overall macro scenario is still uncertain. "Export demand remains weak. The services sector is sluggish on lagged impact of weak industry growth."
He hoped the government's monetary, fiscal steps would boost domestic demand. "The domestic, external financing environment has improved since H2 FY09. The business outlook has turned positive. RBI will continue to keep its eye on credit growth in the system"
How do experts rate the policy?
Sonal Varma, India Economist, Nomura Financial Advisories & Securities, feels today status quo from RBI suggests they are done with what they had to do on the policy front. "The key question going forward will be how long will it maintain this sort of accommodative or neutral policy environment. There are three key factors that RBI will be looking out for. One is on the growth outlook and how that pans out. Second is the government borrowing programme and third is the credit growth. The government and RBI have already front-loaded a large part of the borrowing programme. By the end of this calendar year, much of the borrowing programme will be through. Yesterday, RBI did mention that they are seeing nascent signs of credit growth picking up. The upward bias on the RBI’s growth projection clearly shows that once the monsoon situation is clear, there will be an increase in RBI’s GDP growth estimate also."
Nilesh Shah, Deputy MD, ICICI Prudential AMC, said the policy was in line with the expectations. Applauding the central bank's efforts, he said, "RBI has been managing the tough economic environment well. It is a policy which is trying to take away the accommodative stance and bring it to neutral gear by letting market forces play out and let the economy gain its own momentum."
Hemant Mishr, Head Global Markets South Asia, Standard Chartered Bank, feels RBI's commitment towards liquidity is comforting.
Jehangir Aziz, Chief Economist, JP Morgan, said the policy is fairly neutral. But was quick to add that one has to make sure that the neutrality is implemented in reality between this and in the next policy stance. "The economy still needs easy liquidity and monetary conditions. RBI is trying to present a balanced view about its concerns with growth as well as concerns with inflation."
Sanjiv Bajaj, MD, Bajaj Finserv & Investments, cheers RBI's move of encouraging banks to cut rates. "But I don’t think they can tell banks to lend more. That does not mean lend recklessly. If you have to see consistent growth coming, we have to see more consumer going out there because that will spur demand, that will cause corporates to start producing more raising capacity."
Where are interest rates headed?
Sunil Kalra, Director Head-Trading Fixed Income and Currencies, Citibank India, expects RBI to maintain a neutral stance going forward from its easing bias until now. He believes a large part of the previous rate hikes have already been priced in. Any rate hike by RBI, Kalra said, will be much quicker than what the market is expecting. "The market does expect some amount of rate hikes given that the one-year swap is currently around 4.2%."
Varma sees credit growth picking up around September-October, which will continue into early 2010. “This is when we should start seeing RBI move liquidity from the current accommodative excess to a more normal levels before it actually moves into rate hiking cycle next year."
According to Bajaj, there is a feeling in the market that money supply could get tighter six-nine months down the line.
The bond market reaction to the Credit Policy has been tempered. The benchmark yield remains below 7%. What is the road ahead for bond markets?
Shah feels yields may have to face the rising trend of inflation. "Open market operations by RBI will have a higher impact on yields. Hence we expect yields to be rangebound." He advises investors to invest in short-term bond funds, liquid plus, and liquid kind of fund as there will be no adverse impact of rising interest rates. "If there are people who can take a little bit of volatility on their side, then there is opportunity in income and gilt fund."
Kalra too shares Shah’s views on inflation impacting yields in the longer-term. “The inflation bet is a bit hawkish and there could be a pressure in the longer end. One could see the bond curve steepened a bit more from what it is.”
He does not expect any major reactions to today's policy as participants were factoring a status quo. He also expects sanity in the market as there is Rs 1,25,000 crore which is currently in the system. "This has been the big reason why bond market yields are where they are. This will continue to ensure that it does not fly off the handle."
How should one play banking stocks now?
According to Shah, news from the policy has already been discounted into the market. He feels the behaviour of banking stocks will depend on what happens to net interest margins, rather than yield movements.
However, there is a change in its dovish stance seen earlier. It has increased its growth projections. FY10 GDP has now been maintained at 6% with an upward bias.
Inflation continues to be higher on RBI's radar. It is now projected at 5% from the earlier 4%.
The pall of gloom still hangs over the economy. That seemed to be the RBI Governor D Subbarao undelying mesage. In the report, he said the overall macro scenario is still uncertain. "Export demand remains weak. The services sector is sluggish on lagged impact of weak industry growth."
He hoped the government's monetary, fiscal steps would boost domestic demand. "The domestic, external financing environment has improved since H2 FY09. The business outlook has turned positive. RBI will continue to keep its eye on credit growth in the system"
How do experts rate the policy?
Sonal Varma, India Economist, Nomura Financial Advisories & Securities, feels today status quo from RBI suggests they are done with what they had to do on the policy front. "The key question going forward will be how long will it maintain this sort of accommodative or neutral policy environment. There are three key factors that RBI will be looking out for. One is on the growth outlook and how that pans out. Second is the government borrowing programme and third is the credit growth. The government and RBI have already front-loaded a large part of the borrowing programme. By the end of this calendar year, much of the borrowing programme will be through. Yesterday, RBI did mention that they are seeing nascent signs of credit growth picking up. The upward bias on the RBI’s growth projection clearly shows that once the monsoon situation is clear, there will be an increase in RBI’s GDP growth estimate also."
Nilesh Shah, Deputy MD, ICICI Prudential AMC, said the policy was in line with the expectations. Applauding the central bank's efforts, he said, "RBI has been managing the tough economic environment well. It is a policy which is trying to take away the accommodative stance and bring it to neutral gear by letting market forces play out and let the economy gain its own momentum."
Hemant Mishr, Head Global Markets South Asia, Standard Chartered Bank, feels RBI's commitment towards liquidity is comforting.
Jehangir Aziz, Chief Economist, JP Morgan, said the policy is fairly neutral. But was quick to add that one has to make sure that the neutrality is implemented in reality between this and in the next policy stance. "The economy still needs easy liquidity and monetary conditions. RBI is trying to present a balanced view about its concerns with growth as well as concerns with inflation."
Sanjiv Bajaj, MD, Bajaj Finserv & Investments, cheers RBI's move of encouraging banks to cut rates. "But I don’t think they can tell banks to lend more. That does not mean lend recklessly. If you have to see consistent growth coming, we have to see more consumer going out there because that will spur demand, that will cause corporates to start producing more raising capacity."
Where are interest rates headed?
Sunil Kalra, Director Head-Trading Fixed Income and Currencies, Citibank India, expects RBI to maintain a neutral stance going forward from its easing bias until now. He believes a large part of the previous rate hikes have already been priced in. Any rate hike by RBI, Kalra said, will be much quicker than what the market is expecting. "The market does expect some amount of rate hikes given that the one-year swap is currently around 4.2%."
Varma sees credit growth picking up around September-October, which will continue into early 2010. “This is when we should start seeing RBI move liquidity from the current accommodative excess to a more normal levels before it actually moves into rate hiking cycle next year."
According to Bajaj, there is a feeling in the market that money supply could get tighter six-nine months down the line.
The bond market reaction to the Credit Policy has been tempered. The benchmark yield remains below 7%. What is the road ahead for bond markets?
Shah feels yields may have to face the rising trend of inflation. "Open market operations by RBI will have a higher impact on yields. Hence we expect yields to be rangebound." He advises investors to invest in short-term bond funds, liquid plus, and liquid kind of fund as there will be no adverse impact of rising interest rates. "If there are people who can take a little bit of volatility on their side, then there is opportunity in income and gilt fund."
Kalra too shares Shah’s views on inflation impacting yields in the longer-term. “The inflation bet is a bit hawkish and there could be a pressure in the longer end. One could see the bond curve steepened a bit more from what it is.”
He does not expect any major reactions to today's policy as participants were factoring a status quo. He also expects sanity in the market as there is Rs 1,25,000 crore which is currently in the system. "This has been the big reason why bond market yields are where they are. This will continue to ensure that it does not fly off the handle."
How should one play banking stocks now?
According to Shah, news from the policy has already been discounted into the market. He feels the behaviour of banking stocks will depend on what happens to net interest margins, rather than yield movements.
Adani Power IPO subscribed 3.8 times; most bids at Rs 100
The initial public offering of Adani Power has seen huge investor interest and was subscribed 3.8 times within the first few minutes of its opening, quoting sources. Maximum bids for the initial public offering of 301,652,031 shares were at Rs 100 a share.
Confirming this development, Ameet Desai, Director, Adani Power, said most bids had indeed come in at Rs 100 per share. He said the company will take a decision on pricing during the closing of the IPO.
According to Desai, the largest anchor investor allocation is to T Rowe Price.
The company, he said, is likely to list its shares around August 20.
Here is a verbatim transcript of the exclusive interview with Ameet Desai
Q: How much has the issue done so far in the first 45 minutes of opening?
A: It’s about 3.5 times over the subscriptions which we have received in first one hour and most of these are large bids from large investors.
Q: And at what prices has this 3.5 times book made?
A: Most of the bids except one are all at Rs 100 is what I have been told by the advisors, I am actually currently engrossed doing the road shows.
Q: Even if the hits are mostly towards Rs 100 per share will the management look favourably at leaving something on the table and perhaps pricing it to the lower end of the band?
A: Pricing is something on which we will take a decision on the close of that issue, I just want to say that this is an extremely gratifying experience with investors posing their full confidence in India story and in Adani power as a power opportunity. We are certainly feeling extremely overwhelmed and thankful to the investors so I am sure like all our decisions we will take the decision and the room for the upside.
Q: What kind of feedback are you getting at these road shows because you are referring from some investors that there is a concern on the valuations for the Adani Power IPO, I know it’s many times oversubscribed and even though people feel that on the valuations front its been priced at a little on the premium side?
A: Of several investors that we have met over the last one week leaving a handful, not more people have really expressed concern on valuations and the story has been extremely well received and we are seeing that investors are actually waiting to participate in Indian infrastructure story and in Indian power sector.
Q: Can you confirm the name of anchored investors who bought at Rs 95?
A: Some of the names like Sundaram MF etc on the local side and then we have Ecofin, T Rowe Price, Legg Mason, AIC of Canada and a couple of more investors and even this participation has clearly come with an understanding that whatever is the final pricing, they are willing to go to that level and 5.2 crore shares which are allocable and we have the demand of 9.4 crore shares.
Q: It was all done at Rs 95 pending the final price of the issue?
A: Yes it has done with Rs 95 with clearly instructions on the depositary side that if the price moves to Rs 100 then this will move to Rs 100.
Q: Who has the largest allocation being done to amongst the anchor investors?
A: T Rowe Price.
Q: of the 3.5 times book which has been done already in the first one hour of trade, can you give some sense of a retail response and whether its come in, because retail typically comes in on the last day but have you seen any initial signs of nibbling from retail?
A: Not yet, and as you said, its too early for retail people to come to the market but what we hear from the distribution channels of the broking houses and the brokers the response for participation seems to be on a very positive side.
Q: Given your calculations of how long it will take to process, have you come up with a rough date of listing, even a ballpark date of when the stock may list?
A: This should be around August 20.
Confirming this development, Ameet Desai, Director, Adani Power, said most bids had indeed come in at Rs 100 per share. He said the company will take a decision on pricing during the closing of the IPO.
According to Desai, the largest anchor investor allocation is to T Rowe Price.
The company, he said, is likely to list its shares around August 20.
Here is a verbatim transcript of the exclusive interview with Ameet Desai
Q: How much has the issue done so far in the first 45 minutes of opening?
A: It’s about 3.5 times over the subscriptions which we have received in first one hour and most of these are large bids from large investors.
Q: And at what prices has this 3.5 times book made?
A: Most of the bids except one are all at Rs 100 is what I have been told by the advisors, I am actually currently engrossed doing the road shows.
Q: Even if the hits are mostly towards Rs 100 per share will the management look favourably at leaving something on the table and perhaps pricing it to the lower end of the band?
A: Pricing is something on which we will take a decision on the close of that issue, I just want to say that this is an extremely gratifying experience with investors posing their full confidence in India story and in Adani power as a power opportunity. We are certainly feeling extremely overwhelmed and thankful to the investors so I am sure like all our decisions we will take the decision and the room for the upside.
Q: What kind of feedback are you getting at these road shows because you are referring from some investors that there is a concern on the valuations for the Adani Power IPO, I know it’s many times oversubscribed and even though people feel that on the valuations front its been priced at a little on the premium side?
A: Of several investors that we have met over the last one week leaving a handful, not more people have really expressed concern on valuations and the story has been extremely well received and we are seeing that investors are actually waiting to participate in Indian infrastructure story and in Indian power sector.
Q: Can you confirm the name of anchored investors who bought at Rs 95?
A: Some of the names like Sundaram MF etc on the local side and then we have Ecofin, T Rowe Price, Legg Mason, AIC of Canada and a couple of more investors and even this participation has clearly come with an understanding that whatever is the final pricing, they are willing to go to that level and 5.2 crore shares which are allocable and we have the demand of 9.4 crore shares.
Q: It was all done at Rs 95 pending the final price of the issue?
A: Yes it has done with Rs 95 with clearly instructions on the depositary side that if the price moves to Rs 100 then this will move to Rs 100.
Q: Who has the largest allocation being done to amongst the anchor investors?
A: T Rowe Price.
Q: of the 3.5 times book which has been done already in the first one hour of trade, can you give some sense of a retail response and whether its come in, because retail typically comes in on the last day but have you seen any initial signs of nibbling from retail?
A: Not yet, and as you said, its too early for retail people to come to the market but what we hear from the distribution channels of the broking houses and the brokers the response for participation seems to be on a very positive side.
Q: Given your calculations of how long it will take to process, have you come up with a rough date of listing, even a ballpark date of when the stock may list?
A: This should be around August 20.
Monetary Policy review –First quarter FY10
Highlights:
Bank Rate kept unchanged at 6%.
Repo rate and Reverse Repo Rate kept unchanged at 4.75%& 3.25%
respectively.
Cash Reserve Ratio (CRR) kept unchanged at 5%.
Real GDP growth projection for FY10 is placed at 6.0%.
WPI inflation is projected at around 5% by end-March 2010 vs. 4.0%
projected earlier. The base effect, which is generating negative inflation is
projected to completely wear off by October 2009.
Macroeconomic and Monetary Developments
The Real Economy
The Indian economy grew by 6.7% in 2008-09 according to the revised estimates of
the Central Statistical Organisation (CSO) lower than the growth of 9.0 %in 2007-08.
The deceleration in GDP growth was largely due to the adverse impact of the global
economic crisis.
Price Situation
The WPI inflation, which was on a path of sharp decline from the high peak level of
August 2008, turned negative in June 2009, and since then the negative inflation
continues (-1.17 per cent as on July 11, 2009). The decline in the year-on-year
inflation essentially reflects the statistical factor of high base that emanated from
sharp increases in commodities prices during the first half of 2008-09.
Financial Markets
During 2009-10 so far, the domestic equity markets have been on the rise reflecting
the global trend and increased optimism regarding the Indian economy. FII’s have
made net investment of US$ 7.8 billion in 2009-10 (up to July 22, 2009) as against net
disinvestments of US$ 4.0 billion during the corresponding period of 2008-09.
(Source:RBI)
Events Ahead
The Second Quarter Review of Monetary Policy for 2009-10 will be undertaken on
October 27, 2009.
Policy Rates
Bank Rate 6%
Reverse Repo Rate 3.25%
Repo rate 4.75%
Reserve Ratio
CRR 5%
Bank Rate kept unchanged at 6%.
Repo rate and Reverse Repo Rate kept unchanged at 4.75%& 3.25%
respectively.
Cash Reserve Ratio (CRR) kept unchanged at 5%.
Real GDP growth projection for FY10 is placed at 6.0%.
WPI inflation is projected at around 5% by end-March 2010 vs. 4.0%
projected earlier. The base effect, which is generating negative inflation is
projected to completely wear off by October 2009.
Macroeconomic and Monetary Developments
The Real Economy
The Indian economy grew by 6.7% in 2008-09 according to the revised estimates of
the Central Statistical Organisation (CSO) lower than the growth of 9.0 %in 2007-08.
The deceleration in GDP growth was largely due to the adverse impact of the global
economic crisis.
Price Situation
The WPI inflation, which was on a path of sharp decline from the high peak level of
August 2008, turned negative in June 2009, and since then the negative inflation
continues (-1.17 per cent as on July 11, 2009). The decline in the year-on-year
inflation essentially reflects the statistical factor of high base that emanated from
sharp increases in commodities prices during the first half of 2008-09.
Financial Markets
During 2009-10 so far, the domestic equity markets have been on the rise reflecting
the global trend and increased optimism regarding the Indian economy. FII’s have
made net investment of US$ 7.8 billion in 2009-10 (up to July 22, 2009) as against net
disinvestments of US$ 4.0 billion during the corresponding period of 2008-09.
(Source:RBI)
Events Ahead
The Second Quarter Review of Monetary Policy for 2009-10 will be undertaken on
October 27, 2009.
Policy Rates
Bank Rate 6%
Reverse Repo Rate 3.25%
Repo rate 4.75%
Reserve Ratio
CRR 5%
Indian mkts to grow at 15% CAGR in next 5 yrs: Amansa Cap
The stock market has been topsy-turvy since the Union Budget. A big one-week sell-off followed by a big one-week comeback and the Nifty is perched again near the 4,500 mark.
In an interview , Akash Prakash, Fund Manager and CEO, Amansa Capital discussed the future outlook for the stock markets. He said he was a little cautious on the global markets. “I still feel that the US and Organization of Economic Cooperation and Development (OECD) economies have serious economic problems and again the investors are getting a little complacent in those markets. I think the markets will stabilise or remain rangebound for sometime,” he said.
In an interview , Akash Prakash, Fund Manager and CEO, Amansa Capital discussed the future outlook for the stock markets. He said he was a little cautious on the global markets. “I still feel that the US and Organization of Economic Cooperation and Development (OECD) economies have serious economic problems and again the investors are getting a little complacent in those markets. I think the markets will stabilise or remain rangebound for sometime,” he said.
Calls for the 28th july
RESEARCH-Nifty(FUT) R-4615/4655/4740 S-4570/4530/4485 ;Sensex(CASH)
R-15480/15590/15820 S-15355/15245/15120 ;MARKET
OUTLOOK:VOLATILE(08.55A)
R-15480/15590/15820 S-15355/15245/15120 ;MARKET
OUTLOOK:VOLATILE(08.55A)
--
RESEARCH: MARKET OUTLOOK: For the day, market would remain highly volatile on positive side ahead of F&O market expiry 30th July 2009. If NIFTY stays above 4601, NIFTY could move towards 4636 and 4693 levels. On the downside, NIFTY is likely to find support at 4554 and 4528. If it moves below, it may come down to 4505 levels. RBI's monetary policy announcement scheduled today would dictate the trend of the market.
9:39 AM 7/28 RESEARCH-Global Market (in %): DOW JONES (+0.17%), S&P 500 (+0.30%), NASDAQ (+0.10%), FTSE (+0.21%), DAX (+0.42%), NIKKEI(-0.29%), HANG SENG (+0.54%) & SGX NIFTY (+8.5 POINTS)
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