Vodafone wins Hutch Essar bid
Arun Sarin, the high-profile CEO of Vodafone, managed to edge out local rivals Reliance Communications and the Hindujas in the race for acquiring Hutchison Essar. He is paying US$11.1bn for the 67% stake held by Hutchison Telecommunications International Ltd. (HTIL) in the No.4 wireless operator. Essar, which has a 33% stake in Hutch Essar and was also in the fray, welcomed the deal as did Bharti Airtel and Reliance Communications. But, the Hindujas were an aggrieved lot as they lost out despite quoting a higher price. Almost immediately, Sarin hit the ground running to ensure that the deal goes through smoothly. Vodafone said it will share its infrastructure with Bharti Airtel to slash costs. The UK-based firm also sold its 5.6% in Bharti Airtel while retaining the remaining 4.4% without a Board seat and rights. Vodafone said it will invest US$2bn in India over the next few years and was planning to capture 100mn subscribers by 2010. With the big telecom markets of the country reaching saturation point Sarin is looking at tapping the rural markets. In line with this strategy, Vodafone ties up with China's ZTE Corp. to manufacture low-cost handsets. On Essar, Sarin said he hoped it would continue in Hutch Essar, adding that the group had the option of selling its 33%. He also said that Essar doesn't have a right of first refusal. He also announced that Hutch Essar CEO Asim Ghosh will continue to lead the management post acquisition. Ghosh is one of HTIL's existing local partners who have control of 15% of Hutch Essar, while HTIL's direct stake is 52%. Another partner, Analjit Singh, said on Wednesday that he did not want to dilute his holding.
Hindalco to buy Novelis
Hindalco Industries Ltd. announced it would acquire North American aluminium sheet manufacturer Novelis Inc. for US$3.4bn in cash. The Aditya Birla Group's flagship company would also assume US$2.4bn of Novelis' debt and would complete the deal in the second quarter, Chairman Kumar Mangalam Birla said at a press conference in Mumbai. Hindalco would pay US$44.93 per share for the Atlanta-based Novelis. The Board of Novelis has recommended to the company's shareholders that they accept the Hindalco offer. The price is 17% more than the closing price on Feb. 9. But, as with Tata Steel's takeover of Corus, the stock market frowned upon the ambitious deal, citing near-term strain on the company's balance sheet. The stock lost 12.5% during the truncated week. It was down 20% in the first two days but recovered some ground in the last two sessions. Meanwhile, unconfirmed reports indicated that Russia’s aluminium giant Rusal was considering bidding for Novelis. But, Rusal denied the reports, saying that it was not interested in getting into value-added aluminium products. Credit rating agencies CRISIL and Fitch placed Hindalco's rating under 'ratings watch' due to the highly leveraged nature of the takeover.
Industrial production grows by 11.1% yoy
The Indian economy, especially the industry side, remains on firm footing despite the series of interest rate hikes by the central bank. India's industrial production grew by 11.1% in December as against 5.7% in the same month a year earlier. However, this is significantly lower than the upwardly revised growth rate of 15.4% in November versus 14.4% earlier. During the first nine months of the current fiscal year, the Index of Industrial Production (IIP) was at 10.8% compared to 8% in the corresponding period of the last financial year. The driving force behind the buoyancy in the industrial sector, manufacturing grew by 11.9% in December as against just 6.4% in the same month a year earlier.
January car sales up 24% yoy
India's domestic car sales grew by 24% to 104,488 units in January versus 84,235 units in the same month a year earlier, data released by the Society of Indian Automobile Manufacturers (SIAM) showed. Exports climbed by 26% to 77,243 in January 2007 from 61,274 in January 2006. Local sales of commercial vehicles (trucks & buses) were up 38.9% at 47,276 as against 34,043 units in the corresponding month last year. Sales of motorcycles and scooters combined stood at 677,390 units compared to 608,011 units in the year-ago month.
Apr-Jan indirect tax mop up rises 17% yoy
The Government's revenues from indirect taxes like customs and excise duties grew by 16.8% to Rs1.6 trillion in the first 10 months of the current fiscal year from Rs1.38 trillion a year earlier, the Finance Ministry said. The Centre collected Rs708bn from customs duties in the ten-month period ended January 31, 2007, up 34.3% from a year earlier. The Government raised Rs906.8bn from excise duties, or 6% more from the year-ago period. India's total indirect tax collections, including taxes from services, in the nine months ended Dec. 31 rose 22.4% to Rs1.7 trillion from Rs1.38 trillion, the Government said.
German exchange buys 5% in BSE
Deutsche Boerse AG bought a 5% stake in the Bombay Stock Exchange Ltd. (BSE) for Rs1.89bn. The Frankfurt-based company bought the stake in BSE at Rs5,200 per share, valuing Asia's oldest stock exchange at Rs37.77bn (US$854mn). At present, broker shareholders hold the entire 100% stake in BSE. This will be reduced to 49% to convert BSE into a demutualised exchange. BSE plans to reduce the stake held by its brokers by offering 26% to strategic investors and a further 25% through an IPO. According to current government rules, foreign investors can buy up to 49% equity, including 26% FDI in a local stock exchange. However, no single investor can hold beyond 5% in a stock exchange. The issue of shares to Deutsche Boerse is subject to relevant regulatory and shareholder approvals. Kotak Investment Banking advised BSE on the transaction.
TCS wins multi-million dollar deal from China
Tata Consultancy Services Ltd. (TCS) announced it had won a significant multi-million dollar contract to implement a comprehensive international trading system for China Foreign Exchange Trade System (CFETS), which is a sub-institution of the People's Bank of China. The company also announced the inauguration of TCS China at a new premises inside the Z-Park in Beijing along with its Chinese partners, supported by the National Development and Reforms Commission (NDRC). TCS Asia Pacific owns the majority of the joint venture with a 65% stake. The three Chinese partners, supported by NDRC hold 25% with Microsoft expected to take up the remaining 10%.
Sasan UMPP...Globeleq exits; Jindal Steel enters
Lanco Infratech Ltd. announced that Princestone Investments Ltd., its Mauritius based holding company, and Jindal Steel & Power Ltd. (JSPL) had acquired Globeleq Singapore Pte. Ltd., the Singapore based subsidiary of UK's Globeleq Ltd. Princestone will hold 60% while Jindal Steel will own the balance 40%. Jindal Steel is a pre-qualified bidder for the Sasan Ultra Mega Power Project (UMPP). With this acquisition, Globeleq Singapore has become an affiliate of Jindal Steel & Power. Globeleq Singapore will retain its interest in the Sasan UMPP under the new ownership structure, according to Lanco Infratech. Going forward it will execute the project with financial and technical support from Jindal Steel & Power, Lanco Infratech and its affiliates. The development comes close on the heels of Globeleq's plans to sell its power generation assets across the world and confirms media reports that it was walking out of the Sasan UMPP.
Tata Motors to make Fiat pick-up in Argentina
Tata Motors Ltd. said it had formed a joint venture with Italy's Fiat to make pick-up trucks in Argentina. Tata Motors will build the pick-up vehicle under the Fiat brand at Cordoba, Argentina. The first vehicle will roll off the Cordoba assembly lines during 2008. Annual production is slated at around 20,000 units. Total planned investment in the project is around US$80mn. Tata Motors also signed a Memorandum of Understanding (MoU) with Iveco, part of the Fiat Group to analyse the feasibility of co-operation, across markets, in the area of Commercial Vehicles. The MoU would encompass a number of potential developments in engineering, manufacturing, sourcing and distribution of products, aggregates and components. A financial daily reported that Tata motors' ambitious global truck project, all set to debut in August 2008, will be based on design specifications provided by Iveco.
ONGC and Eni swap oil blocks
Eni SpA in exchange for a stake in a deepwater exploration block in India. The two companies signed two parallel agreements in Mumbai, for the swap of participating interests in exploration blocks.
Eni acquires a 34% stake in the MN-DWN-2002/1 block, a 10,000 square kilometre area located off the coast of Eastern India and with a maximum water depth of more than 2,000 meters. This block lies in an area with high exploration potential. ONGC Videsh Ltd., the overseas arm of ONGC, has acquired from Eni a 20% participating interest in the MTPN exploration block, operated by Eni, located in the deepwater offshore of Congo Brazzaville.
Bharti, RCom cut roaming rates
In line with the order of the Telecom Regulatory Authority of India (TRAI), Bharti Airtel Ltd. on Wednesday announced a reduction in roaming tariffs that are at par with existing local call tariffs. With effect from Feb. 15, Airtel mobile users can avail significant lower roaming tariffs. All local calls while roaming will be charged at Rs 1.40 per minute, STD calls at Rs 2.40 a minute and incoming calls while roaming will be charged at Rs 1.75 per minute. While on Post-paid, Roaming rentals have been completely done away with, subscribers on Pre-paid can now enjoy upto 44% lower rates while roaming. Reliance Communications announced a matching offer. Local outgoing calls while roaming on-net mobile and on-net fixed will be Rs 1.40. The Inter circle outgoing calls while roaming on mobile and fixed have been reduced to Rs2.40. The incoming calls while roaming would be charged at Rs 1.75.
Jain Irrigation buys Aquarius Brands
Jain Irrigation Systems Ltd. said it will acquire Aquarius Brands Inc., a designer and maker of drip-irrigation systems, from Habasit Holding Inc for US$21.5mn cash. Aquarius is a debt free company. With this acquisition, the company will become second largest drip irrigation company in the world, Jain Irrigation said. The deal is expected to be closed immediately and will be done through Jain Irrigation's wholly-owned subsidiary in the US. Aquarius is a leading designer and manufacturer of micro-irrigation systems for agriculture, landscape and nursery applications. It has manufacturing facilities in Ontario and Fresno, California and Winter Haven, Florida. It has network of more than 1000 dealers for product distribution.
Gitanjali Gems acquires Tri-Star
Gitanjali Gems, India’s largest integrated diamond jewellery manufacturer and retailer, announced that it had purchased a majority interest in Tri-Star Worldwide, the New York-based proprietor and marketer of Canadia branded diamonds and diamond jewellery. TriStar is also a BHP Billiton direct customer and a licensee of CANADMARK. Along with Tri-Star founding partner Beny Sofer & Sons, Gitanjali plans to expand Tri-Star and the Canadia brand.
IPOs...MindTree, Idea shine
The Initial Public Offering (IPO) of MindTree Consulting Ltd. received a tremendous response from all category of investors despite the recent crash in the secondary market. The issue, which opened on Feb 9, was subscribed by 103 times. The issue closed for subscription on Feb 14. The QIB portion was subscribed by a whopping 157 times while the non-institutional segment was subscribed 135 times. The retail portion too received a strong response and was subscribed 30 times. The employee section was subscribed 2.78 times. The Business Associates part was the one which received a poor response.
Meanwhile, the IPO of Idea Cellular was subscribed 31 times, while that of Euro Ceramics 3 times and Mudra Lifestyle by 4.6 times. The IPO of Broadcast Initiatives was subscribed 2.7 times. Indus Fila's issue was subscribed 1.4 times. The public issue of Oriental Trimex barely scrapped through, with subscription of just over 1 time the issue size. The IPO of Evinix Accessories was undersubscribed. The issue closed for subscription on Thursday and is likely to be extended. The company may also have to slash its price band. The public issue of Vijayeswari Textiles was also extended as the company failed to get full subscription. Book Running Lead Manager to the issue informed the exchanges that the issue will close on Feb. 19 instead of the earlier closing day of Feb. 13. Further, the price band was revised from Rs115 to Rs130 per share to Rs100 to Rs115 a share.
New Listings...Redington, Cinemax rally
Shares of House of Pearl Fashions Ltd. tumbled in their stock market debut on Thursday as investors felt that the stock was priced quite aggressively in the Initial Public Offering (IPO). The stock opened at Rs500 as against the issue price of Rs550. The scrip shut shop at Rs469.4 after touching a low of Rs445 and a high of Rs580. Shares of Redington India Ltd., distributors of IT products and providers of logistics, supply chain management and other support services in India, Middle East and Africa, climbed on listing. The stock opened at Rs140 compared to the issue price of Rs113. It ended at Rs163 after hitting a high of Rs174.45 and a low of Rs125 with 26.47mn shares changing hands on BSE. Shares of Cinemax India Ltd. ended flat on listing day but jumped on the next day. The scrip closed at Rs152 on its debut as against the issue price of Rs155. But, on Thursday it surged by 20% to closed the week at Rs182.8.
Syngenta to delist Indian arm
Syngenta India Ltd. said it had received a proposal from its Switzerland-based parent to delist the equity shares of the company from the Bombay Stock Exchange (BSE). Syngenta South Asia AG (SSAAG), a subsidiary of Syngenta AG, together with its affiliate Syngenta Participations AG holds 84% in the Indian subsidiary. Institutions hold 5% in Syngenta India and the remaining 11% is owned by individuals and trusts. SSAAG requested the Board of Syngenta India to obtain consent of the shareholders for the proposed delisting. The Board of Syngenta India decided to seek the consent of the shareholders by calling an EGM on March 15. Separately, Syngenta India posted a net profit of Rs137.1mn for the quarter ended Dec. 31, 2006 compared to Rs358mn for the quarter ended Dec. 31, 2005. For the reporting quarter, total income (net of excise) is Rs2.92bn versus Rs2.63bn in the same quarter a year earlier. For the year ended Dec. 31, 2006, the company has posted a net profit of Rs631.7mn compared to Rs802.3mn for the year ended Dec. 31, 2005. Total income (net of excise) has increased to Rs8.39bn from Rs7.76bn in the previous financial year.
N Korea agrees to shut nuclear plant
North Korea said it will end its controversial nuclear weapons programme. Under an agreement reached in Beijing, North Korea will shut down its Yongbyon nuclear reactor within 60 days, during which time it will receive economic assistance the equivalent of 50,000 tons of heavy fuel oil and a further 950,000 tons if Kim Jong II's regime disables the plant. Separately, North Korea and South Korea agreed to resume talks on trade and aid this month. Ministers from the two governments will hold discussions from Feb. 27 to March 2, according to a joint statement from Gaeseong, North Korea, where officials met. The meeting may pave the way for South Korea to resume food and fertilizer aid to North Korea. The South Korean government has given 400,000 to 500,000 metric tons of rice and other food assistance to North Korea every year since 2000. It halted shipments in July last year when North Korea test-fired seven missiles and maintained the suspension when the North Koreans detonated their first nuclear bomb Oct. 9.
US trade gap hits new record
The US trade deficit set a record for a fifth straight year, and the imbalance with China soared to an all-time high as well. The gap between US exports and imports rose to a record US$763.6bn last year, up 6.5% from the previous record of US$716.7bn in 2005, the Commerce Department reported. For December, the deficit jumped a bigger-than-expected 5.3% to US$61.2bn. The new trade report showed the US deficit with China shot up 15.4% last year to US$232.5bn, the largest imbalance ever recorded with any country. Bush administration officials said the wider deficits were primarily a factor of faster growth in the US and warned against pursuing policies that would erect protectionist trade barriers in this country. The Democrats urged Bush to pursue more cases against unfair trade practices including a challenge before the WTO against currency practices of both China and Japan. Meanwhile, China's trade surplus widened to US$15.9bn in January as exports gained by the most in 17 months, adding pressure on the government to let the yuan rise faster. The gap swelled by 65% from a year earlier. It was the fifth highest on record, exceeding the US$15.5bn median estimate. Exports rose 33% from a year earlier. Imports jumped 27.5%, more than double December's gain. The surplus declined from the previous month's US$21bn.
Japan GDP accelerates
There is more pressure on Bank of Japan (BOJ) to up the ante on interest rates. The latest Government data shows that the Japanese economy grew at its fastest pace in nearly three years. In the October to December period, the GDP expanded by 1.2% from the previous quarter, much stronger than a consensus forecast of a 0.9% gain. This translated into an annualised growth rate of 4.8%, exceeding the 3.8% median estimate. The yen rose on speculation that the central bank may raise interest rates. Earlier, the yen fell to a record low against the euro after the Group of Seven (G7) industrial nations stopped short of saying its weakness is a threat to the global economy. The GDP figures also boosted Japanese stocks, sending the Nikkei 225 Stock Average towards a fresh seven-year high. The Cabinet Office also revised the third-quarter growth to 0.3% from 0.8%. The data also increased the chance that the central bank will hike rates next week. According to Credit Suisse, the chance of a rate hike rose to 54%, from 40% yesterday. BOJ Governor Toshihiko Fukui cited weak consumer spending and slow inflation for leaving borrowing costs at 0.25% at its last two meetings. The BOJ is scheduled to hold its next meeting on Feb. 20- 21. At the G7 meeting in Germany last weekend, Fukui said that recent economic reports were mixed and that the central bank needed to closely examine ensuing indicators. The central bank has said that it will raise rates if the economy and prices keep expanding gradually in line with its expectations.
Italy boosts eurozone growth
Economic growth in the countries that use the euro as common currency jumped last year and reached its highest annual rate in six years. The EU statistics office Eurostat now estimates that the GDP expanded by 2.7% in 2006. That is nearly double the 1.4% seen in 2005. The European Commission has already said it will probably raise its current forecast of 2.1% growth in 2007. Growth rebounded in the final three months of 2006 and reached 0.9%, or up 3.3% annually. That puts the European economy nearly on par with the 3.4% growth recorded in the US during the same time frame. The euro-area grew at a 2.7% annualized rate in the third quarter. Germany enjoyed 2.7% growth last year compared with 0.9% in 2005. France rose from 1.2% to 2%. The big surprise to economists was the 2.9% annual growth posted by Italy. The euro-zone's third-largest economy only grew 1.7% in the third quarter.
Chrysler on sale?
Detroit continues to bleed. After General Motors and Ford, its now the turn of Chrysler. The company announced its long-awaited restructuring, which included a 16% reduction in its workforce, shift cuts and a plant closing. The move was seen as a precursor to a possible split of DaimlerChrysler. The Chrysler plan calls for closing the company's Newark, Del., assembly plant, and reducing shifts at plants in Warren, Mich., and St. Louis. A parts distribution center near Cleveland also will be closed, and reductions could occur at other plants that make components for those facilities. Chrysler blamed the brutal restructuring on poor sales after a shift in consumer taste from SUVs and trucks to more fuel-efficient vehicles, but workers blamed management. Meanwhile, Chrysler's German parent, DaimlerChrysler AG said it was looking at all options to revive its fortunes, including partners for the troubled Chrysler. Its chairman said he wouldn't rule out a possible sale of the US operation.
BHP, Rio Tinto looking at Alcoa: report
Shares of US-based Alcoa Inc. jumped after The Times of London reported that mining giants BHP Billiton and Rio Tinto were considering separate bids for the Pittsburgh-based aluminum producer. The Times newspaper reported, citing unnamed sources, that BHP and Rio Tinto were independently considering an approach for Alcoa and had drawn up feasibility studies, but hadn't approached Alcoa's board. BHP Billiton and Rio Tinto declined to comment on the speculation. Meanwhile Australia's said today that it knew nothing about speculation of a possible takeover bid for its joint venture partner Alcoa by either Rio Tinto or BHP. Analysts said the likelihood of a bid is high and that if Alcoa is successfully taken over, Alumina will also become a target for the successful buyer. Alumina holds 40% of the Alcoa World Alumina and Chemicals joint venture with US-based Alcoa holding the remaining 60%.