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Monday, July 29, 2013
Daily News Roundup - July 29 2013
Emami Ltd is scouting for acquisitions to strengthen its market position, for which it is ready to use cash reserves of Rs3bn and leverage its borrowing potential, according to company Managing Director Sushil K Goenka. (ET)
Woodland is aiming to take its turnover to Rs10bn this fiscal as it expands its retail presence in the country and adds more products to its portfolio. (ET)
Dena Bank said it has sought Rs20bn capital infusion from the Central government to support its future loan growth as the tier-I capital of the Bank fell below 8 % by the end of June quarter, a top official said. (ET)
Tata Power has sought "certain waivers" from lenders to ensure further disbursements of loans to the 4,000 MW Mundra plant, the country's first operational ultra mega power project. (ET)
Tata Steel, has set its sights on the Indian iron ore assets of one of Britain's largest independent steel trading companies - Stemcor. (ET)
After securing approval of the Madras High Court, Vedanta Resources is now hoping to complete the much-delayed merger of Sesa Goa and Sterlite Industries within a month after getting a favourable verdict from the Bombay High Court as well, a senior company official said (ET)
The consortium of 27 banks has deferred plans to recast Rs 70bn loan extended to the troubled Electrosteel Steels due to differences over terms of the proposal, including fresh capital infusion and corporate guarantee that promoters are supposed to bring to the table. (ET)
Walmart has stopped its lobbying with US lawmakers on India-specific issues, after continuously seeking their support for about five years to facilitate its entry into the high-growth Indian market. (BS)
SpiceJet is in advanced stage of discussion with a potential investor for stake sale and expects the negotiations to be concluded soon. (BS)
The Odisha Power Generation Corporation (OPGC), a joint venture between the Odisha government and the US based utility major AES, has kick started its 2 X 660 Mw expansion project, comprising unit 3 and 4 of its 420 Mw Ib Valley power complex, with the issue of work order in favour of BHEL and BGR Energy Systems ltd. (BS)
The Securities and Exchange Board of India has said that Jet Airways and Etihad Airways should enter into a Commercial Cooperation Agreement only after culmination of the Shareholder Agreement as the former appears to give an "upper hand" to Etihad on commercial matters and was also one of the conditions for making investments. (BL)
Sundram Fasteners, plans to spend Rs1bn this year on expanding capacities and developing new products. (BL)
Lack of demand for electricity may impact viability of the upcoming 2X300 MW Chandrapur thermal power station of CESC Ltd. (BL)
Economy Snippets
The government has received a Rs17.7bn investment proposal from a domestic company for the manufacturing of telecom products.(ET)
Production of pulses might reach another record in 2013-14, as sowing of the crop this kharif season has been 80 % more than in the same period last year.(BS)
Caution ahead of policy; weak start
"A policy is a temporary creed liable to be changed, but while it holds good it has got to be pursued with apostolic zeal." - Mahatma Gandhi
The market will look more at what the central bankers have to say in the coming days not just in India but in many parts of the world. The RBI will meet with bankers and announce its First Quarter Review of Monetary Policy Statement tomorrow.
The Federal Open Market Committee is expected to release a statement on Wednesday after a two-day meeting. The European Central Bank and Bank of England also meet this week.
The opening is set to be weak to begin with. The market may trade in a range ahead of the policy meet. Investors will be keen to hear about when some of the measures taken by RBI may be reversed. There are no indications of these happening in a hurry given the mixed data emerging on the economic front.
Besides results like Sesa Goa and Colgate Palmolive which will be announced today, Wipro and HUL will also be in focus. Wipro announced a PAT of Rs16.23bn, up 3% QoQ. The net sales for the quarter is at Rs97.33bn.
A lot of attention could be on the FIPB meet which will consider 32 FDI proposals, including Jet-Etihad deal. Jet is also set to take off on reports of the deal going through. Meanwhile, Sebi has reportedly stated that Jet Airways and Etihad Airways should enter into a Commercial Cooperation Agreement only after culmination of the Shareholder Agreement as the former appears to give an "upper hand" to Etihad on commercial matters and was also one of the conditions for making investments.
US stocks ended marginally higher on Friday. Asian markets are weak. Japan's Nikkei 225 is down over 2% while Hong Kong's Hang Seng index is 0.7% lower. South Korea's Kospi index is marginally down while China's Shanghai index was trading over a percent lower.
Emami Ltd could be in action on reports that it is scouting for acquisitions to strengthen its market position.
Samsung Electronics Co Ltd sold 76 mn smartphones in the second quarter, according to Strategy Analytics.
Results watch: Sesa Goa, Colgate Palmolive, Ajanta Pharma, MCX, Merck, IDFC, Network18 Media, 3I Infotech, ESHAMEDIA, Bharti Infratel, Allahabad Bank, Arvind, ASM Tech, Ahmedabad Steel, Banco Products, City Union Bank, Indian Bank, Gujarat Auto, JPINFRATEC, Jay Shree Tea, MAH HOLIDAY, Madras Cements, Jindal South, Geometric, Marksans Pharma, Morarjee Tex, NEPC Textiles, Patspin India, Prestige Estates, Ramco Systems, Sakuma Exports, Shantivijay Jew, Soma Textiles, Syndicate Bank, Subros, TECIL Chemicals, Tinplate Co, TV18 Broadcast, Ushdev Intl, Welcure Drugs, Zenith Fibres, Zuari Agro, Ushdev Intl.
Trends in FII flows: The FIIs were net buyers of Rs2.78bn in the cash segment on Friday, while the domestic institutional investors (DIIs) were net sellers of Rs4.89bn, as per the provisional figures released by the NSE.
The foreign funds were net buyers of Rs3.68bn in the cash segment on Thursday, according to the SEBI figures.
Global Data Watch: Bank of Japan Governor Kuroda Speech JPY, BoJ's Governor Toshihiko Fukui Speech JPY, Business Confidence (Jul) EUR, M4 Money Supply (MoM) (Jun) GBP GBP, M4 Money Supply (YoY) (Jun) GBP, Mortgage Approvals (Jun) GBP, Net Lending to Individuals (MoM) (Jun) GBP, Consumer Credit (Jun) GBP, Producer Price Index (YoY) (Jun) EUR, Wage Inflation (MoM) EUR, Wage Inflation (YoY) EUR, CBI Distributive Trades Survey - Realized (MoM) (Jul) GBP, Pending Home Sales (MoM) (Jun) USD, Pending Home Sales (YoY) (Jun) USD, Dallas Fed Manufacturing Business Index (Jul) USD, Loan Officer Survey USD, 3-Month Bill Auction USD, 6-Month Bill Auction USD, Building Permits s.a. (MoM) (Jun) NZD, Jobs/applicants ratio (Jun) JPY, Unemployment Rate (Jun) JPY, Overall Household Spending (YoY) (Jun) JPY, Industrial Production (MoM) (Jun)Preliminar JPY, Industrial Production (YoY) (Jun)Preliminar JPY
In other news in the media:
Woodland is aiming to take its turnover to Rs10bn this fiscal as it expands its retail presence in the country and adds more products to its portfolio. (ET)
Dena Bank said it has sought Rs20bn capital infusion from the Central government to support its future loan growth as the tier-I capital of the Bank fell below 8 % by the end of June quarter, a top official said. (ET)
Tata Power has sought "certain waivers" from lenders to ensure further disbursements of loans to the 4,000 MW Mundra plant, the country's first operational ultra mega power project. (ET)
Tata Steel, has set its sights on the Indian iron ore assets of one of Britain's largest independent steel trading companies - Stemcor. (ET)
After securing approval of the Madras High Court, Vedanta Resources is now hoping to complete the much-delayed merger of Sesa Goa and Sterlite Industries within a month after getting a favourable verdict from the Bombay High Court as well, a senior company official said (ET)
The consortium of 27 banks has deferred plans to recast Rs 70bn loan extended to the troubled Electrosteel Steels due to differences over terms of the proposal, including fresh capital infusion and corporate guarantee that promoters are supposed to bring to the table. (ET)
Walmart has stopped its lobbying with US lawmakers on India-specific issues, after continuously seeking their support for about five years to facilitate its entry into the high-growth Indian market. (BS)
SpiceJet is in advanced stage of discussion with a potential investor for stake sale and expects the negotiations to be concluded soon. (BS)
The Odisha Power Generation Corporation (OPGC), a joint venture between the Odisha government and the US based utility major AES, has kick started its 2 X 660 Mw expansion project, comprising unit 3 and 4 of its 420 Mw Ib Valley power complex, with the issue of work order in favour of BHEL and BGR Energy Systems ltd. (BS)
Sundram Fasteners, plans to spend Rs1bn this year on expanding capacities and developing new products. (BL)
Lack of demand for electricity may impact viability of the upcoming 2X300 MW Chandrapur thermal power station of CESC Ltd. (BL)
The government has received a Rs17.7bn investment proposal from a domestic company for the manufacturing of telecom products.(ET)
Production of pulses might reach another record in 2013-14, as sowing of the crop this kharif season has been 80% more than in the same period last year.(BS)
Market may open flat
Trading of CNX Nifty futures on the Singapore stock exchange indicates a flat opening on the domestic bourses today, 29 July 2013. Jaiprakash Associates, IDFC, Sesa Goa, and UltraTech Cement unveil April-June 2013 quarter results today, 29 July 2013.
Reliance Industries (RIL) said on Saturday, 27 July 2013, that it has inked a memorandum of understanding (MoU) with ONGC to explore the possibility of sharing RIL's infrastructure facility in the East Coast. The MoU aims at working out the modalities for sharing of infrastructure, identifying additional requirements as well as firming up the commercial terms. This shall not only minimise ONGC's initial capital expenditure but also expedite its field development, resulting in early monetization of its deep water fields adjacent to the fields of RIL. The companies intend to enter into a definitive agreement after concluding a joint study which will be spread over the next nine months, RIL said in a statement.
Wipro's consolidated net profit rose 3% to Rs 1623.30 crore on 1% growth in revenue to Rs 9734.60 crore in Q1 June 2013 over Q4 March 2013. The results are as per International Financial Reporting Standards. The results are after adjusting for the spinoff of its non-technology businesses, completed in April.
IT services revenue rose 0.2% to $1.58 billion in Q1 June 2013 over Q4 March 2013. Non-GAAP constant currency IT services revenue in dollar terms was $1.60 billion, which was within the company's guidance range of $1.575 billion to $1.61 billion.
Wipro said that the pricing environment was largely stable during the quarter, and the growth was largely volume led. Effective from 1 June 2013, Wipro gave annual wage hike of between 6-8% for offshore employees and 2-3% for onsite employees.
Wipro expects 1.99% to 3.88% growth in revenue from IT services business at between $1.62 billion to $1.65 billion in Q2 September 2013 over Q1 June 2013.
Wipro added 28 new customers in Q1 June 2013.
Commenting on the first quarter results, Wipro Chairman Azim Premji said: "We are seeing higher confidence among our clients on the backdrop of positive macroeconomic developments, particularly in the US."
T K Kurien, Executive Director & Chief Executive Officer of Wipro said: "We are seeing a pickup in large deal closures which has reflected in strong order book in the current quarter. Our clients look to technology to pursue growth and profitability and increase organizational agility."
Suresh Senapaty, Executive Director & Chief Financial Officer of Wipro, said: "Our investments in client mining have shown benefits with strong growth in our top clients. We have given wage hikes for both onsite and offshore employees effective June 2013, which has impacted our operating margins in the quarter."
TCS turns ex-dividend today, 29 July 2013, for interim dividend of Rs 4 per share for the year ended 31 March 2013 (FY 2013).
Shares of state-run coal miner Coal India (CIL), state-run power generation major NTPC and other power generation companies will be in focus after the Ministry of Coal on Friday, 26 July 2013, said that CIL has signed 82 fuel supply agreements (FSAs) until 25 July 2013 with power stations with a capacity of 34,793 megawatts (MW). This includes 16 power stations belonging to NTPC and its joint venture companies (JVs). Eleven more FSAs are ready to be signed shortly with NTPC or its JVs, while another 23 FSAs with state and private sector entities are in the pipeline, the coal ministry said. These FSAs were part of the 131 FSAs for a capacity of 60,678 MW which CIL was directed to sign in February 2012. This will substantially increase the power generation during the current and subsequent years, the coal ministry said.
In yet another fillip to the power sector, the Ministry of Coal has issued another Presidential Directive to CIL on 17 July 2013 for signing of FSAs for a capacity of 78,000 MW, higher than the earlier 60,678 MW. This will not only increase the power generation further but will also fast track several power projects which are under development, the coal ministry said.
FMCG and agri-sector stocks will be in focus after the latest data showed a further pick-up in sowing of kharif crops. The Centre on Friday, 26 July 2013, said that as per reports received from state governments, the total sown area in the country stands at 747.78 lakh hectare (lh) as on 26 July 2013, compared with 635.05 lh at this time last year. FMCG firms derive substantial sales from rural India.
Area coverage under oilseeds, particularly in groundnut and soybean, is higher compared to the previous kharif season due to timely onset of monsoon and widespread distribution of rainfall in oilseeds growing regions. Pulses sown area has increase by 90% compared to last year.
Dr Reddys Laboratories announced on Saturday, 27 July 2013, that it has launched a drug for the treatment of dementia of the Alzheimer's type. The drug is a therapeutic equivalent generic version of ARICEPT. ARICEPT had US sales of approximately $92.6 million for twelve months ended May 2013, according to IMS Health data.
Lupin turns ex-dividend today, 29 July 2013, for dividend of Rs 4 per share for the year ended 31 March 2013 (FY 2013).
Lanco Infratech said it has initiated the process of Corporate Debt Restructuring (CDR) prescribed under the Reserve Bank of India (RBI) guidelines by way of reference to CDR Cell. The proposal is only for Lanco Infratech on standalone basis and not for any of its subsidiaries. CDR is a mechanism adopted in India which permits viable companies additional time to meet debt obligations, subject to certain terms and conditions.
Nestle India's net profit rose 10.3% to Rs 271.38 crore on 11.4% growth in net sales to Rs 2213.21 crore in Q2 June 2013 over Q2 June 2012. The result was announced after market hours on Friday, 26 July 2013.
Nestle India's net domestic sales rose 9.2% year on year (YoY) in Q2 June 2013, mainly on account of net realisations and volume growth in certain product categories. Export sales grew 46.9% mainly due to exports to affiliates. Net profit during the quarter was impacted due to the rise in depreciation costs over a year ago due to expansion in production capacities over the last year and amortization of capitalised borrowing costs. Depreciation costs surged 31.7% to Rs 88.66 crore in Q2 June 2013 over Q2 June 2012. Finance costs have reduced over last year mainly due to a Government notification effective September 2012 that treats all exchange differences on long term foreign currency borrowings for fixed assets as capital expenditure (capex). Interest costs declined 38.7% to Rs 8.51 crore YoY in Q2 June 2013. Tax expense rose 23% YoY during the quarter to Rs 133.42 crore, mainly due to the change in income-tax surcharge from 5% to 10% effective 1 April 2013.
During the quarter, there was no additional drawdown of loan from Nestle SA under the external commercial borrowing (ECB) approval from Reserve Bank of India (RBI). The total amount outstanding on this account continues to be $192 million since June 2012. Its annualised cost over the loan period since inception, including interest and unrealised exchange difference is 19%, Nestle India said.
Commenting on the company's Q2 results, Mr. A Helio Waszyk, CMD, Nestle India said: "I am satisfied that we have yet another quarter of double digit growth with healthy profitability. Key businesses including Noodles, Coffees, and Nutrition are doing well and the launch of ALPINO is an additional step in the premiumisation of our portfolio. Given the challenging environment, there is more work to be done in some businesses and I am confident that the team is well aligned and capable of delivering growth consistent with the economic environment".
Nestle India's board of directors at a meeting held on Friday, 26 July 2013, declared interim dividend of Rs 18 per share for the year ending 31 December 2013.
Prime Minister Dr. Manmohan Singh will meet the captains of Indian industry today, 29 July 2013, to review steps to revive the economy. The discussion will cover measures to correct the Current Account Deficit, measures to revive industrial growth, depreciation of the rupee and its impact on trade and industry, skill development and ways of accelerating it and development of the Delhi-Mumbai Industrial Corridor (DMIC), the Chennai-Bangalore Industrial Corridor (CBIC), and the Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC).
Key benchmark indices edged lower in volatile trade on Friday, 26 July 2013, after the latest batch of Q1 results disappointed investors. The S&P BSE Sensex lost 56.57 points or 0.29% to settle at 19,748.19 on that day, its lowest closing level since 11 July 2013.
Foreign institutional investors (FIIs) bought shares worth a net Rs 278.04 crore on Friday, 26 July 2013, as per provisional data from the stock exchanges.
Asian stocks fell on Monday before a speech by Bank of Japan Governor Haruhiko Kuroda and monetary policy reviews from the US to Europe this week. Key benchmark indices in South Korea, Singapore, Indonesia, Taiwan and Japan were off 0.3% to 2.26%
Mainland Chinese and Hong Kong stocks retreated amid lingering economic worries, with sentiment weighed by official data released over the weekend showing profits at Chinese industrial firms slowed in June. The Shanghai Composite index was off 1.38. In Hong Kong, the Hang Seng was off 0.55%. Data released over the weekend by the National Bureau of Statistics showed profits at industrial companies rose 6.3% in June from the year-earlier month, slowing sharply from a 15.5% increase in May, according to reports.
Japanese retail sales rose 1.6% from a year earlier in June, figures today showed, which was below the market expectations.
US stocks inched higher on Friday, 26 July 2013, to end the week virtually flat, as investors digested earnings reports and prepared for a busy economic calendar in the week ahead.
On the economic front, US consumer confidence unexpectedly rose at the end of this month, according to the Thomson-Reuters/University of Michigan's consumer-sentiment index.
The Federal Open Market Committee (FOMC) holds a two-day policy meeting on Tuesday (30 July 2013) and Wednesday (31 July 2013), after which it will release a statement on central bank policy. In his two-day testimony to Congress, which concluded on 18 July 2013, Federal Reserve Chairman Ben Bernanke said plans to taper asset purchases were not on a preset path and stressed intentions to be very responsive to data. Additionally, Bernanke said recent data have been "mixed" and it was "way too early" to make a judgment on when the central bank will slow down the pace of its asset purchases. The Fed currently buys $85 billion a month in government and mortgage bonds in an effort to keep interest rates low and stimulate economic growth.
The European Central Bank (ECB) and the Bank of England (BoE) will announce their policy decisions on Thursday, 1 August 2013.
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