Nandigram violence sets WB on fire
West Bengal is burning, literally. The 12-hour bandh called by Trinamool Congress and other opposition parties in protest against March 14's police firing at Nandigram has thrown normal life completely out of gear in the state. All three transport services - rail, road and air - were disrupted badly. As a precautionary measure, the West Bengal Higher Secondary Board exams for Class XII, which were to start on March 16, were postponed to Monday. Nearly 4 lakh students were hit by the move. The ICSE exams for Class X and ISC exams for Class XII were also postponed but no fresh dates were announced. This affected over 30,000 students in the state. The bandh was in protest against the police firing at Nandigram that left 15 people dead and several others injured. The Trinamool Congress, Congress and SUCI called a 12-hour strike from 6:00 am, while the BJP called a 24-hour bandh. Angry mob set several state-owned buses on fire. The protestors also set CPM and CITU offices on fire in Ranihati of Howrah district. A mob was lathi-charged outside Bhawanipur police station. There were also reports of clashes between police and protestors in different parts of Kolkata. The Congress and Trinamool Congress also decided to boycott the presentation of the West Bengal budget by the state Finance Minister in the Assembly. The emergency Left Front meeting that was called on March 15 ended inconclusively and another meeting has now been called on March 17.
RIL to team up with Dow
Shares of Dow Chemical got a boost on a report that it was close to signing a joint venture agreement with Reliance Industries Ltd. A leading financial daily stated that an announcement from Dow and Reliance Industries could come by the end of the week. There also has been speculation of late that the company could be a takeover target. On Feb. 26, Dow's shares hit a new 52-week high after the Daily Express, a British tabloid, reported that the company may be on the verge of selling itself to a group of private equity investors for US$54bn. Reliance Industries, which has been talking to Dow Chemicals has inched closer to signing an MoU with the US company, The Economic Times stated in its March 16 edition. The paper added that Reliance Industries chairman Mukesh Ambani, along with top officials, including Nikhil Meswani, Kamal P Nanavaty, Alok Agarwal and Haresh Shah, was scheduled to meet Dow CEO Andrew N Liveris for the final round of negotiations. However, Reliance Industries official spokesperson denied the news. Dow Chemical’s media relations leader Andrew Wood said it was Dow’s policy not to comment on rumours.
Banking Regulation Bill passed
A bill seeking to give greater powers to the Reserve Bank of India (RBI) in managing monetary policy was cleared in the Lok Sabha. Finance Minister P. Chidambaram introduced the legislation in the Lok Sabha and it was approved by a voice vote. The Banking Regulation (Amendment) Bill, 2007 would replace an ordinance promulgated in January. It seeks to amend Section 24 of the Banking Regulation Act, 1949 and allows the RBI to fix the Statutory Liquidity Ratio (SLR) without a floor limit. At present banks are required to invest a minimum of 25% of their deposits in government securities, as dictated by SLR. A possible reduction in SLR would enable banks to sell government bonds and free up cash for lending to companies and consumers. The overall ceiling of 40% for SLR would remain.
Areva trumps Suzlon bid for REpower
The bidding battle between French energy major Areva SA and India's Suzlon Energy Ltd. for German wind-turbine maker REpower Systems AG escalated. Areva hiked its offer for REpower, from €105 per share to €140. The new bid by Areva is about 11% higher than Suzlon's offer of €126 per share of REpower and values the German firm at €1.14bn. Areva is bidding for an additional 30% equity stake in REpower. It already owns 29% in REPower and is the single largest shareholder. The new Areva offer closes on April 20. Incidentally, Suzlon's offer (in partnership with Martifer) also ends on the same day. Martifer, a unit of Mota Engil SGPS, is the second largest shareholder in REpower with a 25% stake. Suzlon said that it will take a decision on a higher offer after examining the Areva bid. Reports said the Tulsi Tanti-promoted company was in talks with its merchant bankers and may announce an offer close to €160 per share.
Vodafone reaches deal with Essar
Vodafone Group Plc and the Essar Group reached an agreement on their new partnership following the British cellular major's acquisition of a majority stake in Hutchison Essar. As per the new shareholders' agreement between the two partners, Vodafone gets control over the day-to-day operation of Hutch Essar, India's fourth-largest wireless telecom operator based in Mumbai. Essar would continue to hold its present 33% stake in Hutch Essar, which would be renamed Vodafone Essar. In the meantime, the JV will market its products and services under the Vodafone brand. The Essar Group has the option to sell its entire stake to Vodafone for US$5bn between third and fourth year of operation. In addition, it can sell shares worth between US$1bn and US$5bn to Vodafone at an independently-appraised fair value. Vodafone CEO Arun Sarin was named vice chairman while Essar Group Vice Chairman Ravi Ruia would become the Chairman of Vodafone Essar. The reconstituted Board of the JV will have 12 members. Vodafone will have seven members, including existing CEO Asim Ghosh and Max India Chairman Analjit Singh. Essar would have four members on the JV's Board in addition to Ravi Ruia. Separately, HTIL said it will pay Essar as much as US$415mn for cooperation in the sale of its 67% stake to Vodafone. Hong Kong-based HTIL will pay Essar US$373.5mn on completion of the US$11.1bn sale in Hutch Essar, and a further US$41.5mn in two years. HTIL expects to complete the sale of its Hutch Essar stake to Vodafone during the second quarter.
Ranbaxy shortlisted for Merck's generic biz
Ranbaxy Laboratories Ltd. was short-listed for acquiring the generic pharmaceutical business of Germany's Merck KGaA. Cipla, which also submitted a bid in partnership with a consortium of private equity firms, was not selected. Others in the fray include the likes of Israel's Teva Pharma, Iceland's Actavis and US-based Mylan Labs, said a financial daily. Germany's third-largest generic drug firm Stada and Barr Pharma had also bid, but have not been selected by Merck's merchant bankers, it added. Meanwhile, Novartis' generic subsidiary Sandoz did not submit a bid. India's Dr. Reddy's also stayed away from the auction citing high valuations and improper timing as the main reasons. Merck's generic unit has been valued at US$5bn by merchant bankers. Merck has decided to sell its generic business to concentrate on its core business. The Merck unit had US$2.6bn in sales in 2006 and accounted for about 30% of the company's total revenue. It employs about 5,000 people worldwide.
Maruti hikes prices across models
Maruti Udyog Ltd. announced that it was revising car prices effective immediately following the increased education cess announced in the Union Budget 2007-08. The increase ranges, between Rs258 and Rs1017 (Ex-showroom Delhi) and is effective across all models and cities. While the higher education cess came into effect from March 1, the company decided to maintain its ex-showroom prices at pre-budget levels for a fortnight, Maruti said. This was keeping in mind customers who had postponed their purchases in anticipation of certain tax concessions in the Budget, it added. Hyundai Motor India Ltd. (HMIL) increased prices of all its car models in range of Rs 362 to Rs 2,816 on account of the increased cess announced in this year's budget.
Havell's sets pace on deal street
Havell's India Ltd. announced that its Dutch subsidiary Havell's Netherlands BV had signed an agreement with SLI Holdings Inc., to acquire SLI Sylvania's lighting business for US$300mn (Rs13.26bn). The acquisition is expected to be financed with non-recourse debt facilities of US$160mn and recourse facilities of US$105mn by way of loans / equity through Havell's subsidiaries (Recourse Borrowers) guaranteed by the company. Havell's recently raised around US$150mn (Rs6.75bn) through an overseas issue, and had raised its borrowing limit to Rs25bn.
Khazanah Nasional Berhad, the investment arm of the Malaysian Government, bought a 8.97% stake in Infrastructure Development Finance Co. Ltd. (IDFC) for Rs8.48bn. In a block deal done on the NSE, Sipadan Investments, part of Khazanah, bought about 10.09 crore IDFC shares at Rs 84 apiece from UBS Securities, which sold the shares on behalf of Mauritius-based Swiss Finance Corp.
Geojit Financial Services Ltd. announced that BNP Paribas SA had picked up a 27.18% stake in the company through a preferential allotment of shares and warrants. The share of BNP Paribas will increase up to a minimum of 34.35% in the coming few weeks. Geojit said it issued 56.8mn shares to BNP Paribas at Rs26 apiece. It also issued 22.8mn warrants to the French bank. The warrants are convertible into equity shares at the same price. Post conversion of warrants, BNP Paribas' stake in Geojit will be 34.35%. BNP Paribas became the largest shareholder of Geojit. The name of the Kochi-based company will change to "Geojit BNP Paribas Financial Services Ltd."
Cadila Healthcare Ltd. announced that it had acquired Mumbai-based Live Healthcare, a mid-sized pharma company with a dermatology-focused product portfolio. Cadila acquired 97.5% stake in the privately-held Live Healthcare. The all cash transaction will be funded through cash accruals and debt. With this strategic acquisition, the company establishes its presence in the Rs15bn dermatology segment, which is the 7th largest therapeutic segment in India, Cadila said.
Rain Commodities sues Great Lakes Carbon
Rain Commodities Inc., the 100% subsidiary of Rain Commodities Ltd., sued Great Lakes Carbon Income Fund for accepting a higher offer from Oxbow Carbon & Minerals Holdings Inc. Great Lakes Carbon said on March 14 that Rain Commodities was seeking to overturn the finding by the trust's board that the Oxbow bid was a superior proposal. On March 12, Oxbow raised its offer to C$13.50 per unit, a day after Rain Commodities boosted its bid to C$13.25 per unit. Rain Commodities has until March 20 to match the Oxbow bid. Oxbow's offer values Great Lakes Carbon at C$657mn, more than Rain Commodities' first offer of C$437mn made public on Feb. 5. The decision on the case is scheduled at a Toronto Superior Court of Justice on March 19. Rain Commodities shares lost 2.75% on the week at Rs115.10.
ICRA fixes IPO price band of Rs275-330
ICRA, a leading provider of investment information and credit rating services in India, is entering capital market with an IPO of 25.81 lakh shares. ICRA has set a price band of Rs275-330 per share for the public issue. The equity shares are proposed to be listed on the NSE and the BSE. About 26% of ICRA is being sold by current shareholders, and significant portion of it would be from IFCI. The state-run term lender will be selling around 18.6 lakh shares.
The Adani Group promoted Mundra Port and Special Economic Zone Ltd. is planning an IPO of equity shares. The company has already filed the Draft Red Herring Prospectus (DRHP) with capital market regulator SEBI for the same. Media reports said Mundra Port plans to raise around Rs18bn (over US$400mn) through the public issue in order to fund the construction and development of the basic infrastructure for the proposed SEZ at Mundra, Gujarat. The IPO proceeds would be used for setting up cargo terminals besides other logistics facilities. The IPO is expected to hit the capital market between last week of May and first week of June. The issue, based on a 100% book-building process, would constitute 10.01% of the fully diluted post-issue paid-up capital of Mundra Port.
Orbit Corporation Ltd. real estate company, is entering the capital markets with an IPO of 9,100,000 shares of Rs10 each for cash between a price band of Rs108 and Rs117 per share along with one detachable warrant per share. The issue opens on March 20 and closes for subscription on March 23. The shares of the company are proposed to be listed on the BSE and the NSE.
Page, Raj TV down on debut
Shares of Page Industries Ltd. tumbled on March 16 as the exclusive licensee of Jockey International Inc. in India, Sri Lanka, Nepal, Bangladesh and Maldives, got listed on the Indian bourses. The stock opened at Rs341.90 on BSE compared to the issue price of Rs360. It touched a low of Rs272 and closed the maiden trading day and the week at Rs282.10 with traded volume of 5.1mn shares. Page Industries came out with an IPO of 2,804,000 shares of Rs10 each. The issue was subscribed 1.44 times.
Shares of Raj Television Network Ltd. slumped on its stock market debut on March 16 as investors, rattled by the recent crash in the market, continued to punish new entrants with relatively weak fundamentals. The regional broadcaster's stock opened at Rs275 on BSE as against the issue price of Rs257. However, shortly after the higher opening, the counter faced selling pressure. The stock declined to a low of Rs207 and finished its first trading day at Rs225.95 with 9.48mn shares changing hands. Raj Television entered the capital market with an IPO of 35,68,250 equity shares of Rs10 each. The issue was subscribed just three times.
Japanese economy accelerates
Japan's economy grew at the fastest pace in three yeas in the last quarter of 2006, the Government said. Solid growth in exports prompted companies to step up investments even as consumer spending remained lackluster. The Cabinet Office said that October-December quarter GDP grew by 1.3% from the previous quarter, bigger than the preliminary estimate of a 1.2% growth, or by an annualized 5.5% against the initial estimate of 4.8%. The pace of growth was the fastest since the October-December quarter of 2003, when real GDP grew by 1.5% sequentially or an annualized rate of 6.3%. In the quarter ended September 2006, Japan's GDP had grown by 0.1% quarter-on-quarter or at annualized rate of 0.5%. Deflationary pressure continued to ease. The GDP deflator, which measures the degree of deflation, was down by 0.5% year-on-year in the October-December quarter, the smallest fall since the fourth quarter 2004, when the deflator registered a drop of 0.3%. But economists believe that the solid growth in the October- December quarter is not likely to give the Bank of Japan any further leeway in considering another rate increase. Last month, the central bank hiked its benchmark overnight call rate by 25 basis points to 0.5%. Bank of Japan Governor Toshihiko Fukui has said that the central bank needs to gradually raise borrowing costs as the economy expands and prices rise.
China pledges slew of financial reforms
China will pursue gradual reform in the foreign exchange market this year and was aiming to keep the currency basically stable, the People's Bank of China said. The central bank also said that while it was willing to accelerate financial reforms it needed more time to reduce its trade surplus. China will strengthen controls on the money supply and maintain a stable monetary policy in 2007, the People's Bank of China said in a statement. China may introduce over-the-counter yuan derivatives and interbank yuan futures, the central bank said, adding that it would use open market operations and changes in banks' required reserves besides other tools to manage liquidity. It would also ease pressure on money supply by adjusting its own lending and discounting policies. The central bank said it would keep credit in check by guiding commercial banks concerning the sectors that they should lend to. The People's Bank of China added that it would earnestly apply policies to keep the country's property sector sound and healthy. The Chinese central bank said it would improve management of its foreign exchange reserves, without giving details. Meanwhile, Prime Minister Jiabao said that China's economic expansion was unstable and environmentally unsustainable. "China's investment growth is too high, lending growth too fast, liquidity excessive and trade and international payments very imbalanced, he said at a press conference in Beijing on March 16. Energy efficiency and environmental protection issues haven't been properly resolved, Jiabao said.
Consumer prices up 0.4% in Feb
US consumer prices rose 0.4% last month, paced by gains in fuel, food and medical care, underlining the Federal Reserve's concerns over inflation in the world's largest economy. The increase in the CPI followed a 0.2% January rise, the Labor Department said. Core prices, which exclude food and energy, rose 0.2% and were 2.7% higher than a year earlier. Combined with last month's jump in wholesale prices, the data make it tougher for the Fed to slash rates should the mortgage crisis snowball into a larger problem. Fed policy makers are forecast to leave their benchmark interest rate unchanged for a sixth time when they meet next week. Economists had forecast that CPI would rise 0.3%. Estimates ranged from increases of 0.1% to 0.5%. Core prices were projected to rise 0.2%. Overall prices were up 2.4% from the same time last year, compared with a 2.1% gain in January. The January year-over-year increase in core prices was also 2.7%. The CPI is the government's broadest gauge of costs because it includes goods and services. Other inflation reports this week showed wholesale prices jumped 1.3% in February, the most in three months, while prices of US imports rose less than forecast.
OPEC keeps output targets unchanged
The Organization of Petroleum Exporting Countries (OPEC) agreed to leave its targets for production unchanged, after pledging last year to lower crude supply by 1.7mn barrels a day to keep stockpiles from growing and prices from falling. The cartel, which pumps about 40% of the world's oil, raised its forecast for this year's oil demand by about 130,000 barrels a day to an average 85.5mn barrels a day, up from the previous estimate. Meanwhile, crude oil rose on expectations that demand for fuel will grow as the summer driving season approaches in the US, the world's largest energy consumer. Crude oil for April delivery rose as much as 25 cents to US$57.80 a barrel in after-hours electronic trading on the New York Mercantile Exchange and traded at US$57.69 at 11:54 a.m. in London. Brent crude oil for May settlement fell 8 cents to US$60.60 a barrel in electronic trading on the ICE Futures exchange in London.
Arcelor Mittal eyeing Posco: report
The Korea Economic Daily reported that Arcelor Mittal could be interested in making a hostile takeover of South Korean steel maker POSCO. The paper reported that a senior Arcelor Mittal executive expressed interest in POSCO's M&A strategy when he visited Seoul last month to meet POSCO chief executive Lee Ku-taek. "That means that Arcelor Mittal has put POSCO on its M&A target list," the POSCO executive told the newspaper. However, POSCO denied the newspaper report. Roland Junck, a member of Arcelor Mittal's management board, met POSCO Ku-taek last month, but M&A issues were not discussed, POSCO said at the time. "There was no discussion on issues related to M&A when the Mittal executive met POSCO CEO last month," an official from the world's third-largest steelmaker reiterated.
Ghosn gives up US ops after Nissan cuts forecast
Nissan Motor CEO Carlos Ghosn will give up oversight of North American operations after Japan's third-largest carmaker missed its profit forecast for the first time in seven years. Ghosn, who heads both Nissan and Renault, will hand over responsibility for operations in the Americas to Executive Vice President Hiroto Saikawa, who is also in charge of purchasing, the carmaker said in a statement. Handing over day-to-day control of North American operations will give Ghosn more time to focus on a plan to be announced next month that will tackle what he's called a crisis. Nissan cut its earnings forecast for the current year in February due to weaker-than-expected sales in the US and Japan. The company also plans to cut production at two of its factories in Japan from April 2 until the end of June because of weaker domestic demand. Nissan's COO Toshiyuki Shiga will focus on Japan and shift responsibility for general overseas markets to Senior Vice President Colin Dodge. From April, Ghosn will directly oversee the company's treasury, which had been overseen by Shiga. Ghosn will continue to spend half of his time at Nissan and the other half at Renault, Nissan said.
Citigroup ups takeover offer for Nikko Cordial
Citigroup Inc., the largest bank in the US, raised its takeover offer for scandal-tainted Nikko Cordial by 26% in a deal worth up to US$13.35bn after the Japanese brokerage's largest shareholders rejected the initial price as too low. The boards of the two companies agreed to raise the tender offer price for Nikko Cordial to 1,700 yen (US$14.40) a share from last week's initial 1,350 yen (US$11.44) a share offer. It would be the biggest foreign acquisition of a Japanese securities company. Citigroup aims to raise its stake to up to 100% from the 4.9% it held at the end of December 2006 in an acquisition that is expected to cost the US financial group US $13.35bn. Citigroup said it will begin an all-cash tender offer for Nikko Cordial stock "as soon as practicable." Citigroup also raised the offer price after the Tokyo Stock Exchange announced that it would keep Nikko Cordial's shares listed despite an accounting scandal last year. The Japanese brokerage was fined 500mn yen (US$4.3mn) on charges of falsifying financial statements, the largest fine ever levied by Japan's financial authorities.