ONGC, RIL, Essar announce new finds
After a protracted drought, Oil and Natural Gas Corp. Ltd. (ONGC) seems to have struck gold. The public sector oil & gas explorer reportedly found a huge gas reserve in the Krishna-Godavari basin, with a potential reserve of 21 trillion cubic feet (tcf). Separately, ONGC found gas in the Mahanadi basin, off the Orissa coast, and oil in Assam. Reliance Industries Ltd. (RIL) reportedly discovered oil in the D6 block, off the country's east coast, the company's Canadian partner Niko Resources said. "The MA-2 well has encountered the thickest hydrocarbon column discovered to date in D6," Niko said. Essar Oil too reportedly made an oil discovery in its onshore Mehsana block in Gujarat. Oil and associated gas has been found in Prospect B in the Block CB1/3.
Bush clears Indo-US nuke deal
The much-hyped Indo-US civilian nuclear deal has finally become a law. President George W. Bush signed on the dotted line, allowing India to buy American nuclear technology for the first time in three decades. However, the bill must still be approved by the Nuclear Suppliers Group (NSG), the International Atomic Energy Agency (IAEA), and for the second time by the US congress. It was approved overwhelmingly by the Congress on Dec. 9. The act will allow the two countries to share civilian nuclear technology and bring India's civilian nuclear programme under the safeguards of IAEA. But, critics of the agreement believe that the pact undermines American efforts to curb the spread of nuclear weapons and will fuel an arms race between India, Pakistan and perhaps even China.
SEBI bans Gammon India for a year
The Securities and Exchange Board of India (SEBI) banned Gammon India Ltd. and its chief promoter Abhijit Rajan from accessing the capital markets for one year for alleged misuse of company funds for its 2001 Rights Issue and failure to make certain mandatory disclosures. The capital market watchdog also barred Gammon India from selling the shares of its subsidiary, Gammon Infrastructure Projects Ltd. (GIPL) for a period of three years. Nikhita Estate Developers and Devyani Estate & Properties, companies owned by Rajan, have also been banned from the capital markets for a year. SEBI charged Gammon India promoters of diverting funds from the rights issue to increase their stake in the company. However, subsequent to the order, the fate of the GIPL IPO, which Gammon India wanted to list next year, is not yet clear. Gammon India said the company would challenge the order in the Securities Appellate Tribunal (SAT). SEBI also barred Reliance Silicones from accessing the capital market for a year, as it allegedly acted as fronts for siphoning of funds for increasing the promoters' stake in Gammon India.
Govt eases restriction on sugar exports
Sugar mill owners across the country can finally afford to smile with the Government partially lifting a ban on sugar export. The Union Cabinet allowed companies that had imported raw sugar under the advance license scheme to re-export up to one million tons of refined sugar. Only mills that imported raw sugar duty-free last year to meet a shortage have been permitted to export. Sugar mills bought 3mn tons of raw sugar in the last two years under the advance license scheme that allows companies to import raw sugar duty-free provided they re-export an equivalent amount at a later date. Sakthi Sugars, Shree Renuka Sugars, Simbhaoli Sugar Mills and EID Parry hold advance license for exports. Separately, the Government raised the benchmark price of sugarcane to help farmers. Sugar mills will pay Rs81.18 for 100 kilograms of cane in the year starting in October 2007, compared with Rs80.25 in the current year, Finance Minister P. Chidambaram said. Sugar mills pay a statutory minimum price fixed by the Government to the farmers. The guaranteed prices are meant to shield farmers, a powerful voting block, from losses.
Govt unveils gas pipeline policy; clears Maruti sale
The Government announced the natural gas pipeline policy and framework for setting up of city gas distribution network. "No gas pipeline or local gas distribution network will be laid, built, operated or expanded without the authorisation of the sector regulator," Petroleum Minister Murli Deora said. The policy stipulates that pipelines will have at least 33% more capacity than what is required by the operator. The extra capacity will be available for use on common carrier basis by any third party. The entity authorised to lay, build, operate or expand a city gas distribution network will get five-year period of exclusivity, but will have to fulfill marketing service obligations.
The Government cleared the proposal for selling its residual stake of 10.27% in Maruti Udyog Ltd. The decision as taken at the meeting of the Cabinet Committee on Economic Affairs (CCEA). The stake may be offloaded to domestic Financial Institutions (FIs) and Banks, according to reports. The Government equity in the country's top carmaker may fetch around Rs28-30bn depending on the timing of the stake sale.
The Government deferred the decision to hike the FDI limit in telecom to 74% from 49% by three months. "It came up for discussion," Finance Minister P. Chidambaram said after a Cabinet meeting. "Broadly, it has been approved. We still have to redraft the revised guidelines and the matter will come up for formal approval," he said. Operators, having up to 74% FDI, were earlier required to abide by the guidelines by January 2, 2007. A revision of the telecom rules, originally laid down on Nov. 3, 2005, may allow expatriates to head a local telephone company and disallow the local partner's right to veto the overseas company's nominee for CEO or other key positions.
Economy on a roll
India’s merchandise exports jumped 34% to US$9.8bn in November. If the current trend continues, the country will top the annual target of US$125bn. The government has set a target of US$150bn in exports by 2008-09. Imports in the month surged by 42.9% to US$15.88bn. As a result, the trade gap for the month stood at US$6.2bn versus Rs3.87bn in the same month last year. Exports during April-Nov 2006 rose 39% to US$79.59bn. Imports rose 43% to US$115bn during April-Nov 2006. The trade deficit for the period widened to US$36.04bn from US$27.64bn a year ago.
Foreign Direct Investment (FDI) into India quadrupled in October to US$1.7bn from US$0.412bn in the same month last year, raising expectations that annual inflows will reach a new record by March 2007. During April-October 2006, FDI inflows touched US$6.1bn compared to US$2.6bn in the first eight months of the previous fiscal year, showing a growth of 134%, Commerce Minister Kamal Nath said.
The Government’s advance tax collections grew by 38.5% in April-December 18, 2006. Total direct tax collections grew 42.5% against the Budget growth target of 27.5%. Corporate advance tax collections were Rs593.93bn during April-December 18, 2006, up 38.5% over last year’s collection of Rs428.81bn. In fact, the corporate advance tax collections in December 2006 (up to 18th) grew by 46.4%. The net direct tax collections till December 18 were Rs1.33 trillion, up 42.5% over last year. The budgetary estimate for direct taxes is Rs2.1 trillion for FY07.
Tata Power, Lanco win bids for Mundra, Sasan UMPPs
Tata Power Company Ltd. and Lanco Infratech Ltd. won the bids for the first two Ultra Mega Power Projects (UMPP) worth 4,000 MW each. Tata Power emerged the lowest bidder for the Mundra project in Gujarat while Lanco got the Sasan plant in Madhya Pradesh. With a tariff of Rs 2.26 per unit, Tata Power outbid Reliance Energy, Larsen & Toubro, Essar Power, Sterlite Industries and Adani Exports for the imported coal-based plant. Meanwhile, Lanco outbid its nearest rivals Reliance Energy and Tata Power as well as seven other suitors. The Lanco-Globoleq combine quoted a bid of Rs1.196 per unit for the coal-fired project. The Government wants to build at least four UMPP of 4,000 MW each to meet the rising demand in Asia's fourth largest economy. The plants will begin production by 2012 and full output will start by 2013.
Stalemate over Corus deal may end soon
The deadlock over the acquisition of Corus Group Plc could end soon, with the British takeover regulator giving six weeks to India's Tata Steel Ltd. and Brazil's CSN for submitting revised offers. The UK Takeover Panel said that Corus would be put to an auction if the offers are still outstanding before January 30. Should a competitive situation continue to exist shortly before Jan. 30, the panel may require any revised offers to be published in accordance with an auction procedure, it said. Corus said in a separate statement that a planned Extraordinary General Meeting (EGM) of its shareholders has been adjourned. According to analysts, the ruling by the UK Takeover Panel will result in a clear winner by Jan. 30.
Mega deals for IT majors
Tech Mahindra announced the signing of a five year deal to provide BT with strategic sourcing services. This contract is expected to create new revenue for Tech Mahindra in excess of US$1bn over this period. Tech Mahindra will support BT's planned growth of managed services to business customers around the globe and continue to provide ongoing services related to BT's internal systems, processes and re-usable platforms. HCL Technologies Ltd. said that it has won a US$200mn, multi-service, five-year contract from Skandia UK, a leading independent provider of long-term savings solutions. As part of the agreement, 250 Skandia employees will be transferred to HCL Technologies to ensure a smooth transition. The contract will be executed by one of the company's leading offshore insurance industry delivery centres based in Chennai. Satyam Computer Services Ltd. said that Nipuna Services Ltd., its BPO subsidiary, has signed a US$25mn edutainment deal. Nipuna is partnering 4K Animation Ltd., UK for the execution and delivery of these projects. Nipuna will work with the 4K Animation team for 15 months on two European animation projects.
JVs galore for India Inc
Tata Motors Ltd. entered into an Joint Venture (JV) agreement with Thailand's Thonburi Automotive Assembly Plant Co. to manufacture, assemble and market pickup trucks. Tata Motors will hold a 70% equity stake in the JV while Thonburi will own the remaining 30%. Tata Motors will get vehicles manufactured in Thonburi's manufacturing facility. It will go on stream in a year's time.
Welspun-Gujarat Stahl Rohren Ltd. entered into a definitive agreement to form a Joint Venture (JV) with US$1.4bn Lone Star Technologies, Inc. (USA). The JV will manufacture Spiral Welded Tubular Products for the oil & gas industry in North America. The new facility will be located in South West USA.
Dishman Pharmaceuticals & Chemicals Ltd. announced the second Joint Venture in Saudi Arabia to manufacture hospital disinfectant formulations, anti-cancer drug formulations and dry powder inhaler (DPI). The company signed an agreement with Takamul Investments Holding Co. (Takamul), a group company of Capital Advisory Group.
Primary market buzz
Cairn India set Rs160 as the issue price for its IPO after a lukewarm response to the mega issue. The Indian unit of London-listed Cairn Energy Plc would raise US$1.9bn at the lower end of the price band of Rs160-190 per share. Cairn India is now valued at US$6.32bn, instead of US$7.5bn if it was priced at Rs190. The IPO was subscribed by just 1.14 times, owing to concerns over high valuation and uncertainties over the transportation of the crude. Tanla Solutions Ltd., a provider of integrated telecom solutions and products for the wireless market, fixed the issue price at Rs265 per share of Rs2 each. This is the higher end of the price band of Rs230 to Rs265 per share. Shares will be listed on the BSE and NSE before January 10. The IPO of Pyramid Saimira Theatre Ltd., the Chennai-based digital theatre chain operator, has been subscribed more than 16 times. The IPO of Shree Ashtavinayak Cine Vision Ltd. has been subscribed 6 times.
Deals keep rolling in
As part of its efforts to boost the auto parts business, Mahindra & Mahindra Ltd. (M&M) announced that it would acquire a 90.47% stake in Schoeneweiss & Co. GmbH. The Mumbai-based company has acquired Schoeneweiss through its subsidiaries. A leading company in the forgings sector in Germany, Schoeneweiss is one of the top five axle beam manufacturers in the world and specializes in suspension, power train and engine parts. Reliance Life Sciences announced that it will acquire a majority stake in UK-based biopharmaceuticals company GeneMedix Plc. Reliance Life Sciences would also invest £32.1mn over the next five years in order to take the company's bio-similars for launch in the EU and the US. GHCL Ltd. said its step down US subsidiary, Dan River Inc. has acquired assets of HW Baker Lenin Co. for US$6.75mn. HW Baker Lenin has a turnover of US$70mn. It is a leading supplier of textile products covering Sheets, Terry Lenin, Blanket, Pillow and Pillow Cases, to leading hotels and motels.
Mitsui & Co., Japan's second-biggest trading firm, is reportedly planning an exit from its Indian iron ore business. Mitsui plans to sell its 51% stake in Sesa Goa Ltd., Indian iron ore exporter, says a New Delhi-based national daily. The Marico Group announced that it had acquired the HairCode brand from Cairo-based Pyramids Group. HairCode is a leading brand in the Egyptian hair care market and its range includes hair creams and hair gels. The two parties expect to grow the brand’s turnover from its current base to over Egyptian Pounds 50mn in the next financial year. Gitanjali Gems announced that it had acquired Samuels Jewelers, Inc., the 10th largest jewellery chain in the United States. The company has acquired 97% stake in the US specialty retailer, which operates 97 stores across 18 states with current revenues of Rs4.5bn.
Ranbaxy gets mixed ruling on Lipitor
Ranbaxy Laboratories Ltd. announced that a court in Australia has awarded a mixed ruling in a case involving Pfizer's blockbuster cholesterol lowering drug Atorvastatin, sold under the brand name Lipitor. Justice Neil Young of the Federal Court of Australia ruled that one of Pfizer’s patents is invalid for false suggestion and misrepresentation in obtaining the Australian patent 628198. However, Young also said that Ranbaxy's Atorvastatin product infringes another Pfizer patent. Separately, Ranbaxy received an approval from the US Food and Drug Administration (USFDA) to manufacture and market Simvastatin Tablets USP, 5 mg, 10mg, 20mg and 40mg in the US. Cadila Healthcare Ltd. and Aurobindo Pharma Ltd. also secured an approval each from the USFDA for selling Simvastatin Tablets in strengths of 5 mg, 10 mg, 20 mg, 40 mg and 80 mg. Cadila launched the Simvastatin Tablets in the US market on the very first day of receiving the approval.
Moser Baer forays into home video market
Moser Baer India announced its maiden foray into the entertainment industry through the Indian home video market. The company will release video content on DVD and Video CD formats using its proprietary and patented technology. The new division is in final negotiations to acquire copyrights/exclusive license of more than 7,000 titles in all major Indian languages. Moser Baer will offer high quality titles at very attractive price points between Rs28 - Rs34 for VCD/DVD.
Arcelor Mittal signs MoU for Orissa project
Arcelor Mittal signed a Memorandum of Understanding (MoU) with the Government of Orissa for setting up a steel making operation in the Keonijhar District. The project is expected to entail an investment of about Rs400bn (about US$9bn). The intention is to build an integrated steel plant with a total annual capacity of 12mn tons. The project would be developed in two phases of 6mn tons each. The first phase would be completed within 48 months from the date of the submission of the DPR and the second phase within a further 54 months after the completion of Phase 1. JSW Steel Ltd. is reportedly considering building a 3mn tons a year hot strip mill in Karnataka to convert slabs into high-value steel products for automobiles and consumer durables industries. India's fourth- biggest steelmaker plans to spend Rs20bn (US$450mn) on the plant.
BOJ leaves rates unchanged
As expected, the Bank of Japan (BOJ) kept its benchmark interest rates unchanged as it awaits more data on the strength of the world's second-largest economy. However, majority of the economists expect the Japanese central bank to hike rates at its January 18 policy meeting. Central bank Governor Toshihiko Fukui and his policy board kept the key overnight lending rate at 0.25%, the central bank said in a statement released in Tokyo. The decision, which was unanimous, was in line with expectations.
Gazprom wrests control of Sakhalin-2
Gazprom agreed to buy half of Sakhalin-2 oil and gas project from Royal Dutch Shell and partners for US$7.45bn, handing President Vladimir Putin another victory in his drive to control Russia's energy industry. Shell, Mitsui Co. and Mitsubishi Corp. will each sell half of their stakes in the project to Moscow-based Gazprom. Hague-based Shell and its partners have invested US$12bn in the venture, which will be the first to produce liquefied natural gas in Russia. "We as the main shareholder of the project will do everything to launch it as soon as possible," Gazprom Chief Executive Alexei Miller told reporters after meeting President Vladimir Putin. Shell will continue to contribute to management and act as technical adviser on Sakhalin-2, which will honour its existing contracts to sell liquefied natural gas to Japan, South Korea and the United States according to the agreed schedule, with the first shipment due in the summer of 2008.
Toyota set to overtake GM next year
Toyota expects demand for its fuel-efficient cars in the US, Asia and Europe to increase vehicle sales by 6% in 2007. If the forecast turns out to be right, the Japanese giant could well upstage General Motors from the position of the world's largest carmaker after 81 years. Toyota passed Ford as the world's second-largest carmaker in 2003. Toyota and its affiliates will probably sell 9.34mn vehicles next year, up from 8.8mn in 2006, the company said in a statement. Production next year will rise 4% to 9.42mn vehicles. Toyota shares, which have gained 27% this year, rose 1.6% to a record 7,800 yen at the end of trading in Tokyo, giving the company a market value more than 14 times the size of General Motors.
Goldman gives out record bonus to CEO
Goldman Sachs gave its CEO, Lloyd Blankfein US $53.4mn bonus, eclipsing a record set by Morgan Stanley, who paid CEO John Mack US $40mn in stock and options on Dec. 14. The bonanza for Blankfein included a cash bonus of US $27.3mn, with the rest paid in stock and options. He took the helm of the investment bank in June after President Bush nominated Henry Paulson to be Treasury secretary. Mack, who is 62, rejoined Morgan Stanley 18 months ago to turn around the company after the ouster of Philip Purcell. Mack's short-lived record bested one set in 2005 by Goldman's Paulson, who was given US $38.3mn. Blankfein's bonus reflects the street's very profitable results this year. Other than Blankfein, 11 other senior Goldman executives as a group were granted slightly more than US$150mn in shares and stock options. Goldman said last week it had set aside a total of US $16.5bn this year for salaries, bonuses and benefits. On average, this would translate to US $622,000 per employee. The bonuses come after Goldman reported last week that it had earned the highest yearly profit in the history of Wall Street. Net profit rose 70% to US $9.4bn on revenue of US $37.67bn. Goldman and other firms have benefited from a surging market for takeovers and a strong stock market.
NYSE, Euronext shareholders approve merger
The New York Stock Exchange (NYSE) said that its shareholders overwhelmingly approved a planned US $14.3bn acquisition of Paris-based Euronext, in a deal that would create the first trans-Atlantic financial market. The cash-and-stock deal was endorsed by about 99.7% of shareholders who voted. More than 75% of eligible shareholders voted, NYSE said. The vote came one day after the European exchange operator's shareholders comfortably approved the deal. The shareholder votes set the stage for NYSE Euronext to receive final regulatory approval early next year to become the world's largest stock market. The deal comes amid a slew of M&A activity among global stock markets. Nasdaq Stock Market has launched a hostile bid to acquire the rest of the London Stock Exchange in a deal that values that exchange at US$5.3bn. It owns 28.75% of the London exchange. The NYSE and Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon stock exchanges, expect to complete their deal in the first quarter of 2007.
Delta spurns US Airways' offer
Delta Air Lines rejected the hostile offer from US Airways, saying that it wanted to emerge from the bankruptcy as a stand-alone entity. But, US Airways' said he was more determined than ever to push ahead with his company's hostile bid to buy Delta. The latest remarks from both the airlines intensifies the war of words that started when US Airways disclosed its US$8.4bn offer to buy Delta on Nov. 15. Parker said Delta's projection that it will be worth as much as US$12bn when it emerges from bankruptcy as a stand-alone airline is way out of whack. He said his company's analysis of Delta's stand-alone plan values the airline at US$5.5bn to US$6.9bn. He also said that, while US Airways generally agrees with Delta's profit projections for 2007, his company believes Delta's projections beyond that are too rosy. Parker also said that his company strongly believes that its offer to buy Atlanta-based Delta will pass regulatory scrutiny.