April exports jump 31.5% yoy
India's merchandise exports grew by 31.5% in April to US$14.4bn while imports surged 36.6% in the same month to US$24.3bn, resulting in a trade gap of US$9.87bn as against US$6.81bn in the same month last year. In rupee terms, India's exports grew by 24.8% in April while imports were up 29.7% over the same period of last year. Oil imports in April soared 46.2% to US$8.03bn, while non-oil imports jumped 32.3% to US$16.2bn. The Government has set a target of more than tripling India's share of world trade to 5% by the year 2020 from the current 1.5%.
Manufacturing still on strong wicket: PMI
India's manufacturing sector remained in a healthy state last month despite a key gauge falling to the weakest in the past 10 months, according to ABN AMRO Bank's Purchasing Managers' Index (PMI). The PMI stood at 57.4 in May compared with 57.5 in April. A reading above 50 indicates factory output gained. May data for the Indian manufacturing industry remained, on the whole, very positive. Output, total new orders, quantity of purchases and stocks of purchases all increased at marked rates, the ABN AMRO report said.
RBI bans Sahara from raising deposits
The Reserve Bank of India (RBI) banned Sahara India Financial Corporation - one of the country's biggest deposit-taking NBFCs - from raising fresh money from the public with immediate effect. The central bank said the decision was taken in public interest and to protect the interest of the depositors. In its response, Sahara India Financial obtained a stay on the RBI's order from the Lucknow bench of the Allahabad High Court. The case is scheduled to come up for hearing in the last week of July. The court also issued a notice to the Central Government in the matter. But, the central bank went one step ahead, and approached the Supreme Court, challenging the Allahabad High Court's stay on its order. The two sides now look to be heading towards a protracted legal battle.
Govt clears 23 SEZ proposals
The Board of Approval for Special Economic Zones (SEZs) considered 27 proposals for setting up of SEZs, including 4 for conversion of In-Principle approval to Formal Approval. The Board recommended grant of 21 formal approvals and 2 conversion of In-Principle Approval to Formal Approval. The SEZs that got formal clearance included L&T's IT SEZ in Gujarat and Bangalore International Airport's airport-based SEZ. Meanwhile, the Government said it will take a final decision on the Goa's four formally approved SEZs in July after getting the state government's comments on submissions made by the developers. Commerce Secretary GK Pillai, who is Chairman of the Board of Approval (BoA) for SEZs, heard views of developers of the four zones in the wake of the state government's recommendations to cancel the tax-free enclaves. The BoA could not take a final view on the fate of four SEZs as there was no representation from the state government at the meeting of the board.
TRAI unveils revised norms for satellite radio
Telecom and media regulator TRAI revised its recommendations on satellite radio, capping the ceiling for FDI in the segment at 74% and directing 4% revenue sharing with the Government. According to a financial newspaper, the Information & Broadcasting Ministry accepted TRAI's revised recommendations on satellite radio. World Space is the only player offering satellite radio services in the country right now. On implementation of the new TRAI policy, World Space will have to offload a 26% stake to a local partner. TRAI stated that there be no cap on the number of players in the satellite radio service, depending on the availability of satellites and spectrum for this platform. However, the regulator added that the Government may consult the Department of Telecommunications (DoT) and ISRO on this issue.
Jet, Kingfisher raise fuel surcharge
Jet Airways along with the Kingfisher-Deccan combine, raised fuel surcharge by Rs300 to Rs550 to recover higher fuel costs. Jet and its low-cost unit JetLite raised the levy by Rs300 on flights of up to 750 kilometers and Rs550 beyond that. The move followed Air India's decision to hike fuel surcharge last weekend after the state-run oil marketing companies hiked ATF prices by a whopping 18.5%. However, the same was cut by over 4% after the Government trimmed customs duty on ATF by 5%. Singapore Airlines, Cathay Pacific and other Asian carriers increased fuel surcharge as the price of jet fuel has almost doubled in the past year. Civil Aviation Minister Praful Patel was reportedly planning to meet Prime Minister Dr. Manmohan Singh over the issue of surging aviation fuel prices. Airlines in the country suffered a loss of Rs40bn last fiscal and the figure may double this year depending on the oil price movement. Domestic airlines told the Civil Aviation Ministry that they might go for a 20% reduction in the overall capacity. Airlines were also likely to take a decision on cutting down operations on some unviable sectors. Meanwhile, the Government set up a 10-member group to look into the complaints made by airlines after new private airports levied certain charges.
Tata Motors completes JLR deal
Tata Motors completed the acquisition of the Jaguar Land Rover (JLR) businesses from Ford Motor Co. for a net consideration of US$2.3bn, as announced on March 26, in all-cash transaction. Ford contributed about US$600mn to the Jaguar Land Rover pension plans. Tata Motors confirmed that David Smith, the acting CEO of JLR, would be the new CEO of the business. Smith has 25 years of experience with JLR and Ford. Before recently returning to JLR as CFO, he was Director Finance and Business Strategy for Premier Auto Group (PAG) and Ford Europe.
Indiabulls extends Singapore IPO
Shares of Indiabulls Real Estate rose the most in seven weeks after investors bid for all the shares offered in a delayed sale by its property trust in Singapore. The sale received bids for 1.8 times the number of shares offered to institutional investors, allaying concern that a decline in land prices and sell-off in property stocks would deter buyers. Earlier, Indiabulls Real Estate extended closing of the issue by one day. The public issue of Indiabulls Properties Investment Trust opened on June 2 and was originally scheduled to close on Thursday. Indiabulls Properties Investment Trust is seeking to raise up to S$389mn through the initial public offer (IPO) in Singapore. It plans to sell 353mn units at S$1 (US$0.73) to S$1.10 apiece in the Real Estate Investment Trust (REIT). An investment arm of NRI billionaire Lakshmi Mittal family has already agreed to purchase 91mn shares in the trust at the IPO price, amounting to a 3.9% stake. The company had filed an IPO prospectus for listing its property trust in Singapore last month.
Panna and Mukta fields shut after explosion
Oil & Natural Gas Corp. (ONGC) said it shut the Panna and Mukta fields off the west coast after an explosion. A third of the gas production has been affected, Sudhir Vasudeva, executive director at ONGC said. "There was minor damage in the equipment at Panna and that has forced us to shut gas and oil production," Vasudeva said. Gas production at the fields has been cut to 13.6mn cubic meters a day from the daily average of 17.3mn cubic meters. Output of 40,000 barrels a day of oil has also been hit. The fields are jointly operated by BG Group, Reliance Industries and ONGC. BG and Reliance each own 30% in the fields and ONGC holds the rest. The companies have declared force majeure. It is a legal clause that allows a company to miss contracted deliveries because of circumstances beyond its control. One person working for a contractor on Panna's process platform died in the accident, which took place late in the evening on June 3. The fields produce 20% of India's gas supply of 85mn cubic meters a day, including imported LNG. The blast also cut down 6% of India's total crude oil output or 40,000 barrels per day. If normal production is not restored, the country may have to import to make to for the shortfall.
India Inc steps up buying binge...
Anil Ambani, chairman of the Reliance-Anil Dhirubhai Ambani Group (ADAG), is planning to enter into the troubled world of aviation. According to reports, the younger of the two Ambani scions has initiated talks with Gurgaon-based low-cost carrier SpiceJet. Shares of SpiceJet rose as much as 23.4% after a business daily reported that Anil Ambani was in the race to buy a majority stake in the no-frills airline. According to the newspaper, Anil Ambani is competing with Jet Airways and Kingfisher Airlines. SpiceJet has hired NM Rothschild & Sons as an adviser to raise funds, according to the paper.
Sterlite Industries agreed to buy assets of bankrupt Asarco LLC for US$2.6bn in its first acquisition in North America. The company will use debt and cash to buy three open-pit mines and a smelter in Arizona, a copper-refiner, rod and cake unit and a precious metals plant in Texas. Asarco, the third-largest copper producer in the US, owns mines that hold about 5mn metric tons of copper resources. The 100-year-old company produced 235,000 tons of refined metal last year and had revenue of US$1.9bn. But, the deal may be challenged by Grupo Mexico SA, which controlled Asarco before it filed for bankruptcy protection in 2005.
Suzlon Energy has acquired Areva's 30% stake in German wind turbine maker REpower Systems. This acquisition will consolidate the company's total holding in REpower to about 66%, Suzlon said. With this acquisition and through voting pooling agreement with Martifer of Portugal - another major shareholder of REpower - Suzlon enjoys voting rights of about 89% in REpower, subject to certain minority protection and other rights. Areva said the sale of its stake in RE power has generated a capital gain of more than 350 million euros.
Telekom Malaysia is reportedly increasing its stake in Spice Communications. According to reports, Telekom Malaysia is likely to hike its stake in Spice to 51%, from the current 39%. At the same time, reports say that Idea Cellular may pick up a stake in Spice and will eventually merge the BK Modi company with itself. Promoters may either exit completely from Spice or retain marginal stake, the reports add. BK Modi had said in the AGM on Monday that Telekom Malaysia was considering raising its stake in Spice up to 74%.
Mahindra & Mahindra (M&M) signed an agreement with Engines Engineering SpA., agreeing to acquire 100% stake in Engines Engineering S.r.l, the new legal entity which will be formed by transferring the business of Engines Engineering SpA. The transaction is subject to receipt of necessary approvals. Engines Engineering’s revenues are about US$12mn. It is in the business of two wheels design and developing of motorcycle prototype.
Punj Lloyd acquired a strategic 74% stake in Technodyne International, UK for an undisclosed amount. Technodyne is a specialist engineering, design and consultancy company specializing in large scale cryogenic and high pressure tanks. Technodyne also has track record in designing of test rigs. Punj Lloyd said the acquisition is a strategic fit and further strengthens it's existing tankage & terminal business.
PVR said that JP Morgan Mauritius Holding IV Ltd. and ICICI Venture Funds Management Co. Ltd. have agreed, in-principle to invest Rs600mn each in the company's wholly owned subsidiary i.e. PVR Pictures Ltd. PVR Pictures is engaged in film production and distribution. It is planning to undertake significant expansion plans.