Weekly News - Dec 6 2008

Air-India, Jet cut fuel surcharge by Rs400

Air India said that it will cut its fuel surcharge for all domestic flights by Rs400 from Dec. 2 after public sector oil marketing companies lowered jet fuel prices for the sixth time in three months. The fuel-surcharge is currently Rs2,350 for sectors below 750 kilometres and Rs3,100 for sectors over 750 kms, the national carrier said. The reduction in fuel surcharge is expected to stimulate the domestic air travel market during the winter peak season, Air India said. "Although crude prices are still volatile, we hope it will stabilize at the current levels, so that there is a short to medium term relief in ATF costs," Air India chairman Raghu Menon said. Separately, Jet Airways too announced a reduction of Rs400 in fuel surcharge across distances.

Arvind to demerge brands and retail businesses

The Board of Arvind Ltd., in it's meeting held on the Nov. 28th announced plans for the demerger of its branded apparel business and the retail business into wholly owned subsidiaries with effect from April 1, 2009. The branded apparel business, which markets apparels and accessories under the brands Arrow, Flying Machine, Newport and Excalibur will be demerged into Arvind Lifestyle Brands Ltd. Retail business, under the Megamart banner operating about 150 stores across country along with the license for the world’s largest value brand Cherokee will be demerged into Arvind Retail Ltd. The demerger will be done with effect from April 1, 2009 through a court approved scheme and the company would be filing the requisite documents with appropriate authorities at the earliest.

Tata Motors to shut Pune plant for 3 days

Tata Motors said it will shut its commercial vehicle plant in Pune for three days from Dec. 5 as it tries to avoid a build-up in unsold stock amid falling sales. The plant was also closed for six days last month, and the company has closed other plants on a short-term basis to manage inventory levels. The Pune plant would be shut again for three days beginning Dec 26. Demand for commercial vehicles has been severely hit by a lack of vehicle financing, rising interest rates, higher input costs and weak demand, adds report.

Force Motors alters JV with Germany's MAN

Force Motors said it would sell up to 14.5% stake in its joint venture with MAN Nutzfahrzeuge for about Rs3bn, enabling the German auto firm to raise its stake in the JV to 50%. The proposed change in the equity structure of the JV would take place in two steps. First, Force will sell 14.2% stake to MAN for Rs3bn. Later, MAN will infuse Euro 40mn (around Rs2.5bn) in the JV through subscription of a rights issue. Force will refrain from subscribing to the issue. As a result, MAN's stake will go up to 50% from the current 30%. The transaction, which is to be completed over the next few weeks, will peg the enterprise value of the JV at Rs20bn. The JV, which was announced in 2005, is to manufacture HCVs in the 20-40 tonne range. It is located at Pithampur, near Indore, in Madhya Pradesh.

L&T wins order worth Rs14.5bn

L&T's newly formed Buildings and Factories Operating Company, part of its construction division, has bagged orders worth Rs14.5bn in the third quarter of 2008-09 for the construction of IT and office space buildings including add on orders from on going works at its airport projects. The orders for construction of IT and office space buildings has been received from major players around the country including TCS and Godrej Developers.

BHEL wins order worth Rs20bn

BHEL announced that it won a contract that would be worth Rs20bn from Oman for supplying and setting up gas turbine generator packages. The contract for 126MW units for power projects planned by Petroleum Development Oman covers an initial six-year period, with the option to renew for another three years, company said.

Punj Lloyd gets Singapore S$250mn order

Sembawang Engineers and Constructors, a wholly-owned subsidiary of Punj Lloyd, signed an agreement associated with pre-engineering activities necessary to build a thin-film solar module manufacturing plant in Brunei. Thin-film solar modules convert the sun’s irradiation into electricity. A preliminary works agreement for initial project analysis, design and pre-construction works of the thin-film solar module manufacturing plant was signed with Hamidjojo Development Sdn Bhd (HDSB), a Brunei-based industrial developer. This will be the first such thin-film solar project for both Sembawang and HDSB, and the first in Brunei. The full development cost is estimated at S$250mn.

Corus to reduce work hours in the Netherlands: report

Corus has reportedly sought financial aid from the Netherlands government to temporarily reduce the work hours of 4,600 employees to cope with the global economic slowdown. Corus employs 11,300 workers in the Netherlands. News agency ANP reported on Monday that, under the terms of the government support, if approved, Corus workers in the Netherlands would be paid 70% of their wage via unemployment benefits, while the UK company would pay the other 30% over a period of six weeks, starting January. The arrangement can be extended up to three times, for a total period of 24 weeks and to qualify for the scheme, companies must have reported a 30% decline in sales in the past two months. Dutch trade union De Unie said on its website that Corus planned to apply for the government financial assistance and that it had reached an agreement with unions.

Indo Tech up as GE mulls acquisition

Shares of Indo Tech Transformers rallied by over 16% after reports stated that GE India may acquire a majority stake in the Chennai-based company. However, the company denied that it was in talks with GE India to sell promoters' stake. Indo Tech is part of the Rs2.4bn Indo Tech Group. The company gets significant portion of revenues by supplying distribution and power transformers to state electricity boards. The stock rallied by Rs39 to Rs276 after touching an intra-day high of Rs289.90.



RIL asked to supply gas to Dabhol plant

The Government asked Reliance Industries Ltd. (RIL) to supply natural gas from the company's D-6 fields to Ratnagiri Gas & Power (erstwhile Dabhol power plant), to boost electricity generation in energy starved Maharashtra. The price at which RIL can sell natural gas from its largest field to all its customers was fixed at US$4.2 per million British thermal units (mmbtu) for crude oil equal to or more than US$60 a barrel, the Petroleum Ministry said. The Petroleum Ministry said that gas to Ratnagiri Gas would be within the overall allocation of 18 mmscmd for the power sector. "It has been decided that Ratnagiri Gas be supplied 1.4 mmscmd during January to March 2009 and 2.7 mmscmd during April to September 2009, subject to commencement of production, within the overall allocation of power sector (18 mmscmd)," the ministry said.

Actis raises US$2.9bn fund for emerging markets

Private equity major Actis raised a US$2.9bn private equity fund, Actis Emerging Markets 3 (AEM3) for emerging markets of Africa, China, India, Latin America and south-east Asia. This is one of the largest dedicated emerging markets private equity funds closed this year and doubles the amount raised by Actis in 2004. The new fund will invest around US$1bn in India over a period of 3-4 years. AEM3 includes commitments from a group of 100 investors from across the globe, including a number of first time investors in emerging markets. The fund will invest a minimum of US$50mn in buyout and growth transactions.