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Thursday, September 27, 2007

EIH ends brand alliance with Hilton

EIH Ltd, a member of the Oberoi Group, has decided to terminate its strategic alliance with Hilton International Co for marketing and co-branding the Trident Hilton brand in the country.

According to Mr P.R.S. Oberoi, Chairman of EIH Ltd, the company today sent out a notice to Hilton of its decision, which will take effect from March 31, 2008.

Mr S.S.Mukherji, Managing Director of EIH Ltd, told Business Line that it was purely a business decision, as the company had too much at stake (some 1,300) in terms of additional rooms under the Trident brand in the next three years.

According to Mr Oberoi, consequently, the existing Trident Hilton hotels in Gurgaon, Agra, Jaipur, Udaipur, Bhubaneshwar, Chennai and Kochi will be re-branded Trident Hotels, effective from April 1, 2008.

He clarified that The Hilton Towers in Mumbai will also be re-branded as Trident Towers effective from April next.Outlining the underlying strategy behind the move, Mr Oberoi said that EIH wished to independently pursue the development of its Trident brand in the country. “The outlook for our Trident brand is excellent. We are very confident that our Trident Hotels will continue to expand successfully.”
Market leadership

He said the Trident in Gurgaon has enjoyed a position of market leadership in Delhi from the day it opened. “Our 440-room Trident, located at Bandra Kurla in Mumbai, will open in 2008 and is expected to be a market leader in north Mumbai.”

EIH now had new Trident hotel projects committed at the new international airport in Bangalore and at the Hitech City in Hyderabad. “We have a number of opportunities for new Trident Hotels in other cities which we are pursuing.” The Oberois, as announced, have already lined up investments of nearly Rs 1,000 crore in new hotel projects.

Hilton is already pursuing a joint venture with the DLF Group for both the Hilton and the Hilton Garden Inn (lower end) hotels. According to Mr Mukherji, at some future date, there may be too much confusion in the minds of customers with many types of Hilton hotels in the country.

Suzlon bags order from Turkish utility major

Wind energy major Suzlon on Thursday entered the Turkish market by securing an order for 31.5 MW of wind turbine capacity from utility major Ayen Enerji Co Inc.

The contract with Ayen Enerji will be supplied through 15 units of Suzlon's S88-2.1 MW turbine, a company release said here.

Ayen Enerji is a new entrant in wind energy with a principal focus on production, transmission, distribution and sale of electricity.

Together with its subsidiaries, the company has three hydroelectric and one natural gas power plants with total annual capacity of nearly 1.2 billion kWh.

Speaking on the order, Suzlon Wind Energy A/S' CEO Erik Winter Pedersen said "this is an exciting opportunity and we are very pleased to partner with Ayen Enerji."

"We have a winning combination with Suzlon's experience in large, successful wind projects around the world and Ayen's considerable experience in Turkey's energy market."

Ayen Energy General Manager Fahrettin Arman said "we are happy to co-operate with Suzlon in this project. Our investments will continue within developing wind energy sector of Turkey so we intend to co-operate with Suzlon in our future projects."

Wednesday, September 26, 2007

DLF, Indiabulls & Shyam in tele rush

It's a gold rush gone out of control. A day after the government said its doors would close for applicants for fresh telecom licences on October 1, three companies DLF, Indiabulls Real Estate (IREL) and Shyam Telelink made a dash for pan India mobile licences on Wednesday, taking the count of applications upwards of 200 or an average of 10 applicants per circle.

DLF, the country's largest real estate developer, is the fourth real estate firm rumored to be placing serious bets on the lucrative telecom market after Parsvnath, Unitech and IREL. However, only Parsvnath, Unitech and IREL's applications have been filed with DoT.

Shyam Telelink, which offers wireless and wireline services in Rajasthan, has applied for UAS licences in 21 circles. Government sources admit that the large number of companies queuing up for telecom spectrum is a signal of a myopic policy going very wrong rather than a cause for celebration.

DoT has fallen prey to its own inertia by refusing to delink spectrum allocation from licences and continuing with a first-come-first-served spectrum allocation policy designed as far back as 2001.

According to Trai data, in 2001, India had a mere 4 million mobile subscribers. In sharp contrast, the country now adds near this number to its mobile subscriber base every three weeks. A paltry Rs 1,600 crore entry fee for nationwide pan India licences along with spectrum is clearly an irresistible steal of a deal. While applicants are rightly smug about their business acumen and imminent fortunes, dreaming of soon joining India's list of telecom billionaires, DoT's economic sense fails to inspire.

The first sign that DoT is at its wits end came on Monday, with a sudden announcement that no more applications would be entertained after October 1. This was followed by reports on Wednesday that a two-stage selection criterion is being contemplated.

DLF to invest Rs700cr for 2nd Kolkata IT park

Real estate firm DLF has said it will set up its second IT park here with an investment of Rs 700 crore.

The park, spread on 25 acres, would have 2.5 million square feet of IT and ITeS workspace.

The company informed the BSE that the project would entail an investment of Rs 700 crore and will be developed in phases.

The first phase would be operational by the end of this year or early next year.

DLF said that the IT park would cater to the domestic and foreign IT-ITeS companies.

The IT park was expected to generate 40,000 jobs, directly and indirectly, the company said in the release.

BHEL bags USD 190 mn order

Under international competitive bidding (ICB), engineering major Bharat Heavy Electricals bagged USD 190 million, or Rs 7.65 billion order, from SAIL for the expansion project of its IISCO Steel Plant at Burnpur in West Bengal. The project is expected to be complete in the next 26 months.

The company`s scope of work in the project envisages design, engineering, manufacture, supply, erection and commissioning of the captive power plant, in addition to complete civil works.

This is one of the largest-value single orders secured by BHEL`s industry sector business segment. So far, the company has supplied and commissioned more than 700 steam turbine and gas turbine-based plants for a host of industries like metal, paper, sugar, cement and process industries like refineries, petrochemicals, fertiliser etc, in domestic and overseas markets.

Earlier this month, company received an order of Rs 19.90 billion for supplying steam generators and turbine packages for the upcoming 1,000-MW thermal power project at Vallur, Tamil Nadu. The PSU firm won the contract by outbidding European equipment suppliers.

Indiabulls Real Estate plans Rs 2,322 cr preference issue

Indiabulls Real Estate Ltd has informed the BSE that the board of directors, at a meeting on September 25, decided to obtain the approval of the members of the company through postal ballot for issue of up to 4.3 crore fully convertible warrants to the promoters and directors of the company on a preferential basis for a sum of Rs 2,322 crore.

Upon conversion of these warrants, the holders would be entitled to acquire 4.3 crore equity shares of face value Rs 2 each at a conversion price of Rs 540 per equity share. Sameer Gehlaut, Chairman, will invest Rs 1,080 crore and will be allotted two crore warrants.

Russia's Sistema buys 10% stake in Shyam Telelink

Russian telecom firm Sistema today acquired 10 per cent stake in Shyam Telelink, a service operator in Rajasthan which has now applied for nation-wide telecom licenses.

The company has plans to expand service throughout the country and has sold 10 per cent stake to Russian firm as part of this, sources in Shyam Telelink said.

The deal value could not be immediately ascertained. Shyam Telelink, a group firm of Shyam Telecom, is a basic telecom service licensee for Rajasthan. It offers both wireless as well as wireline services. Sources said the company has also applied for getting Unified Services Access (UAS) licences to start operations in 21 circles.

Shyam Telecom shares on the Bombay Stock Exchange surged nearly 20 per cent today to Rs 96.45.

Shyam Telelink offers only CDMA-based service in Rajasthan under the brand name "Rainbow". It was earlier offering GSM-based services as well, but sold it to Bharti Airtel about four years ago.

Although the FDI policy allows foreign companies to buy up to 74 stake in Indian firms, the Russian company has picked up only 10 per cent stake.

Praj Industries promoters sell 8% to Tatas

Biofuel technology company Praj Industries’ stock rose 1.11% on news of its promoter selling 8% stake in a block deal to Tata Sons.

The company’s promoter Pramod Chaudhary and his family members have sold 8% stake, or 13.42 million shares, to the Tata group’s holding company.

The company’s share price touched an intra-day high of Rs 255, registering an increase of around 2%, from the opening price of Rs 250 per share.

On Tuesday, the company’s share price closed at Rs 248.25, up by 5.41%.

Crorepati investor and stock trader Rakesh Jhunjhunwala holds a 10.4% stake in the company.

Friday, September 21, 2007

GMR Industries to relist new securities on bourses

GMR Industries will relist its new securities on the bourses on September 24, pursuant to the demerger of its ferro alloys division.

"The new securities of GMR Industries Ltd will be listed and permitted for trading on both BSE and NSE with effect from September 24," a company release said.

The board of directors of the company in its meeting held on August, 2006 has approved the proposal entailing the demerger of the ferro alloys division to a separate company GMR Ferro Alloys & Industries Ltd, subject to necessary approvals.

The scheme of arrangement was approved by the Andhra Pradesh High Court by its order dated April 19, 2007.

As per the scheme, in lieu of every 100 shares held by the shareholders in GMR Industries, 62 new shares in GMR Industries Ltd, (the demerged company) and 38 shares in GMR Ferro Alloys & Industries Ltd were allotted.

The issued equity capital of the company before the scheme of arrangement was Rs 32.19 crore which increased to Rs 19.96 crore.

GIDL is engaged in sugar production and has a plant at Srikakulam district of Andhra Pradesh.

BoB opens office in Sydney

Bank of Baroda has opened a representative office in Sydney, becoming only the second Indian bank to establish a presence in Australia.

State Bank of India had opened a branch in Australia on April 21, 2004, becoming the first Indian bank to have a presence in this country.

PTC India soars over 8% on power exchange stake buy

Shares of PTC India climbed over 8 per cent on the company picking up 26 per cent stake in the country’s first power exchange - Indian Energy Exchange, which recently got regulatory approval.

Corporates like Tata Power, Reliance Energy, Rural Electrification Corporation, Adani Enterprises and IDFC are other stake holders in the exchange.

Indian Energy Exchange, set up by Financial Technologies (India) and Multi Commodity Exchange, will be a pan-India neutral and transparent electronic demutualized exchange for efficient price discovery in the electricity market.

The power exchange will benefit market participants such as generators, distribution licensees, open access users, trading licensees, industrial consumers, system operators and bankers in many ways.

Unitech plans foray into telecom services

The beeline for new cellular licence has just got longer. Real estate developer Unitech Ltd on Friday said it plans to apply for licences to provide telecom services across the country.

The company proposes to put in its application through eight different subsidiaries for unified access licence in 22 circles. This will take the total number of applications to nearly 200 from over a dozen companies.

“The continuous rapid growth in India’s telephone services business indicates the enormous potential for future growth in this business. Further, it would help boost the group’s telecom and transmission tower manufacturing business,” Unitech said in a statement to the National Stock Exchange. Existing mobile operators added nearly 8 million new wireless subscribers in August making it the largest telecom market in the world.

Earlier, another real estate major Parsvnath had also put in its application for new licences. The past few months has seen a host of other companies applying for new licences, including Ruias promoted BPL, Spice, Datacom, Swan, ByCell and STel. While HFCL, Idea Cellular, Spice and Tata Teleservices are existing mobile operators wanting to expand their network to all the 23 circles in the country, Parsvnath has floated a special purpose vehicle in partnership with a foreign player to foray into telecom services. Swan and Cheetah are subsidiaries of Reliance Communication.

Apart from being attracted by the exponential growth in cellular subscriber base, the rush for new licence has also been largely due to high valuations that cellular operators are getting in the country. TRAI has also recommended giving 3G spectrum to only existing operators and these companies could also be lining up for such an eventuality.

The Department of Telecom has set up an internal committee to evaluate these applications and also to formulate a formula for allocating spectrum. Existing pan India operators, meanwhile, have claimed first right to the available spectrum and have even sent a legal notice to the Government urging immediate release of radio frequency before new applications are considered.

Thursday, September 20, 2007

Titan to market Hugo Boss watches

Watch major Titan Industries has entered into an arrangement for exclusive marketing cum distribution of Hugo Boss watches in India.

Hugo Boss is one of the most widely known international brands and Titan Industries will be the sole and exclusive distributor for the Hugo Boss watches in India.

To begin with, Titan will market Hugo Boss' The Boss Black Collection, comprising watches for both men and women, with a price range of Rs 13,495-Rs 49,995.

The watches would be available at a number of high-end multi-branded watch stores and well-known department stores like Shoppers Stop and Lifestyle, and at select World of Titan showrooms across the country.

Morepen inks deel with Avenue, to raise Rs 140cr

Morepen Laboratories today said it will raise Rs 140 crore through the issue of equity shares and warrants to US-based Avenue Capital Group and its promoters.


"The entire Rs 140 crore being brought in by the company as fresh capital will be utilised for repayment to banks under Corporate Debt Restructuring (CDR) scheme for which a settlement has already been arrived at," the company informed BSE.

"Morepen Laboratories today announced the signing of a deal with Avenue Capital through its subsidiary G L India Mauritius III for a 14.99% stake in the company," it added.

As per share subscription agreement signed today, Avenue Capital is subscribing 3.85 crore shares at Rs 20 each for Rs 77.06 crore. In addition to this, the US fund would also subscribe to warrants up to 5% of the enhanced capital base for Rs 27.04 crore.

Besides, promoters would subscribe to warrants that can be converted into 10 crore equity shares, for Rs 60 crore.

Post subscription the promoter's stake in the company would stand at 46%, G L India Mauritius (Avenue Capital) would hold 14% and the public holding would be 38%.

Wednesday, September 19, 2007

Moser Baer expands product range to IT peripherals

Moser Baer has ventured into the IT peripheral products. The company has tied up with F1 Support and Services to ensure after sales service.

Moser Baer will leverage F1’s existing reach of 30 services centers and 14 of its associate service partners across India.

F1 will provide repair, replacement and onsite, return to base on Moser Baer product line of optical drives, pen drives, keyboards, mouse, LCD, speakers, headphones and other IT products.

Moser Baer is a leader in the development and manufacture of removable data storage media.

KEC bags Rs 317cr deal in Afghanistan

KEC International has bagged a Rs 317 crore contract from Afghanistan's Ministry of Energy and Water for the construction of 2X110 KV transmission lines totaling over l00 kms, four sub-stations, and eight power distribution systems of 20 KV each.

The project will be executed in two lots - in the North and Eastern regions of Afghanistan - and will be funded by Asian Development Bank.

"With this win, the total value of orders, under execution in Afghanistan, is over Rs 500 crore. KEC has also just completed two important Asian Development Bank-funded projects there," Ramesh Chandak, managing director, KEC International, said.

The company has also been awarded a Rs 91 crore contract by Rajasthan Rajya Vidyut Prasaran Nigam for the supply and construction of 400kv double circuit transmission line, and the project is scheduled to be completed by February 2009.

Tuesday, September 18, 2007

Maruti Udyog Ltd Changes Its Name To ‘Maruti Suzuki India Ltd’

In a filing to the BSE, Maruti Udyog stated that the registrar of companies sanctioned the name change on Monday (September 17).

The company’s directors had okayed ‘Maruti Suzuki India Ltd’ as its new name in July, whereas the stockholders gave their permission at the Annual General Conference on September 6.

The company has said that ‘Maruti’ continues to have the predominant place in the new name as it is one of the most substantial corporate brand names in the nation, in terms of awareness, recall, faith and customer care, whereas ‘Suzuki’ adds up an international dimension. ‘India’ in the corporate name, conveys the location of the company and its facilities and also distinguishes the rising significance of the country all-through the world.

Trent ties up with Benetton to promote Sisley brand

Tata group company Trent Ltd on Tuesday said it has entered into a strategic partnership with Benetton Group for commercial expansion of Sisley brand in the country.

"The partnership with the Benetton Group gives us the opportunity to tap the burgeoning premium segment of consumers. We believe that Sisley has high potential for growth and we will leverage our experience to optimise the tremendous opportunity," Trent Managing Director Noel Tata said in a filing to BSE.

Under the agreement, Trent would open and manage a number of Sisley stores in the country's major cities. The first few shops would open over the next couple of months in Hyderabad and Bangalore.

The new partnership would enable the Benetton Group to boost its presence in India, where it has been operating for over 15 years and has over 141 United Colors of Benetton shops, Trent added.

The agreement comes only a few months after the launch of Sisley's first three pilot stores in Delhi which were an immediate success with Indian customers. These three shops would be directly managed by Trent. Sisley has more than 850 stores around the world and offers a wide choice of clothes for men and women.

Trent has over a decade of experience in the Indian retail industry and has an existing portfolio of 39 stores across three formats targeting the value or mid-market segment. It operates the Westside departmental stores, Landmark, books and music retail chain and Star Bazaar, its chain of hypermarkets.

Monday, September 17, 2007

Indian Hotel buys 10% in Orient-Express

Indian Hotel Company (IHCL), the owner of the Taj chain of hotels, has acquired a 10 per cent stake in the NYSE-listed Orient-Express Hotels for nearly Rs 850 crore through open market operations.

This acquisition may be a precursor to an association with Orient-Express, which owns or part-owns and manages 35 hotels in 25 countries.

The Tata group company has also written a letter to James B Hurlock, chairman of the Orient-Express board, seeking an appointment to discuss a possible alliance with the company.

IHCL Vice-Chairman R K Krishna Kumar said: “This move is in line with our plans to grow the Taj brand internationally and we look forward to pursuing a possible association between IHCL and Orient-Express Hotels. Over the past few years, we have been pursuing alliances and relationships with leading hotel groups that have not yet set up their presence in India, but have secured leadership positions in various geographies.”

Sources in the know of the development said IHCL might scale up its stake in Orient-Express, depending on the outcome of the meeting. Samsara Properties, an IHCL subsidiary which has bought the shares of Orient-Express, has borrowed enough funds to scale up holding.

Orient-Express has announced realigning its management structure “to serve the needs of the business as it pursues its expansion plans”, the company said in a Press release. Last month, the company appointed Paul White as president and CEO of Orient-Express.

Subex Azure plunges to a 52-week low

Potential revenue loss from one its largest cross border customer – AT&T, plunged telecom software maker Subex Azure Ltd to a 52-week low on Monday.

Subex shares opened low on the BSE at Rs 475 and touched a 52-week low of Rs 416.25 in the intra-day trade, before recovering to close at Rs 445.10, a loss of 12.66 per cent over previous close.

Subex shares saw a loss of 17 per cent over the past one month and some 30 per cent since January 2007.

Subex lowered its revenue guidance for current financial year last Friday following the postponement of near-term capital expenditure commitments by a large North American client.

As a result, contracts to the tune of $20 million that Subex was to book from the client during the year would be postponed.

Subex did not disclose the client details, but market sources confirmed it was AT&T.

Telecom research firm Ovum RHK said in August that the North American wireline capital spending in the first half of 2007 was down nearly seven per cent compared to last year largely due to the AT&T spending cuts resulting from its merger with BellSouth.

Ovum RHK expects capital spending growth remain stalled through the rest of 2007 and into 2008

Terming the development as a one-off incident and was not a macro trend, Mr Subash Menon, CEO, Subex Azure, said adding the company saw good traction with its other customers.

Subex now expects a revenue of Rs 520 crore and a profit after tax of Rs 104 crore from its products business for 2007-08 as against the earlier projected revenue and profit after tax of Rs 615 crore and Rs 155 crore respectively.

Moser Baer to set up Rs 2000 cr Chennai unit

Just a few days after the Centre announced its investment guidelines for the Indian semiconductor industry, New Delhi-based leading optical storage media manufacturer Moser Baer (India) has chosen Chennai to set up a Rs 2,000 crore solar photovoltaic fabrication facility.

This signals a new era in the state’s emergence as an electronics manufacturing hub.

Photovoltaics (PVs) produce electricity from a light source — sunlight, for instance. A basic photovoltaic, also known as a solar cell, is made by materials such as silicon and thin filaments, commonly used in the micro-electronics industry. Solar cells that are connected together mounted on a frame or platform are called PV modules. Moser Baer makes both solar cells as well as modules.

The solar PV facility is expected to come up on 120 acres at the Oragadam-Sriperumbudur SIPCOT SEZ. However, the company has sought about 250 acres for its Chennai unit, provisioning for future expansion. The plant will be developed in two stages. In the first stage, a single thin-film solar fabrication facility will be set up in 15-18 months following the land acquisition process, according to Moser Baer officials.

In the initial phase, the plant would create around 4,000 jobs, including for engineers and research scientists, said Deepak Puri, managing director, Moser Baer India, while addressing the CII’s Connect 2007 here today. The company expects to fund its Chennai expansion through internal growth accruals. The plant is expected to generate revenues to the tune of $1 billion over the next 3-5 years.

Puri said Moser Baer had decided to move into Tamil Nadu due to the support of a progressive government, efficient administration and investor-friendly policies followed by the state. Shaktikanta Das, secretary, industries, government of Tamil Nadu, said the Moser Baer project was the first of its kind in India, which would lay the foundation for a semiconductor manufacturing eco-system and widen the parameters of electronic manufacturing in the state.

The global photovoltaic market is on a high growth curve, with sales expected to grow over six times to $40 billion by 2010. Moser Baer recently announced the shipment of its PV cells and claims to have orders and MoUs exceeding $100 million (around Rs 410 crore). It also has plans to set up a unit in Andhra Pradesh and, reportedly, is in talks with other state governments for its expansion plans.

The company is also working on the “thin-film” technology to make solar cells. It had announced an investment of $250 million (around Rs 1,110 crore) over the next three years to set up the largest thin-film solar fabrication (fab) facility in the world.

Thin-film solar modules are ideal for energy farms, rural applications and building integrated photovoltaic markets.

Bajaj Auto sees big rise in Q3 sales

With the festive season round the corner, Bajaj Auto Ltd (BAL) expects sharp sales growth in the third quarter of 2007-08. To achieve this, the company plans to roll out new two-wheeler models on Indian roads and come up with a slew of attractive offers for customers in the coming months.

Bajaj Auto, which is a major player in the national two/three-wheeler space, has registered a progressive decline in sales in the first five months this fiscal. Sales plummeted by 10% during April-August due to high inflation coupled with a rising interest rate. The company sold 9,53,188 units of vehicles in the first five months of 2007-08 compared to 1,057,480 units of vehicles sold in the earlier corresponding period.

Talking to ET, BAL vice-chairman Madhur Bajaj said: “The festival season should bring good news. Diwali is the time when we generally witness strong sales. We are confident of witnessing growth in third quarter sales. We will offer new models in coming months. To beef up sales, we are likely to come up with exciting offers for Indian consumers.”

Mr Bajaj is also hopeful there will be a correction in interest rate in the coming months which will help the auto industry to grow. “The inflation has also eased to 3.25%. This is a positive sign for the overall economy. This will have an impact on the interest rate as well,” he added.

For the ensuing festive season, the company has recently launched 125cc DTS-Si motorcycle. It aims to sell 20,000 units of this new model this month. It hopes to reach a sales of 50,000 units of this model in the next two months.
On the company’s Akurdi plant in Pune, Mr Bajaj said: “We have to pay salaries to 1,500 workers at our Akurdi plant even though they are sitting idle. We’ve stopped manufacturing auto units there. But auto component manufacturing is going on.”

It is well known that BAL recently stopped production of vehicles at its Akurdi plant. On the company’s move to stop production of vehicles at the facility, Mr Bajaj said: “The high rate of octroi was increasing our production cost by Rs 7,000-8,000 per vehicle. Such high-cost of production was hurting our revenues at a time when the auto industry is going through a slump.”

BAL is working on three options for these 1,500 workers. “There are three options that we may consider. We can have a voluntary retirement scheme (VRS) for these people. We may also involve them in some other activities in the Akurdi plant itself. We may transfer some of these workers to our dealers,” Mr Bajaj said.

Bajaj Auto rolls out ‘XCD’

Bajaj Auto, on Monday, introduced its new 125-cc motorbike, XCD, here. Addressing a press conference, Vimal Sumbly, National Sales Manager, Bajaj Auto, said the bike was equipped with a ‘Digital Twin Spark - Swirl induction’ (DTS-Si) engine and would cost Rs. 41,000 ex-showroom Chennai. The product had been launched in Goa on September 9, Mr. Sumbly said. He said the XCD had the ‘features of a 150-cc bike,’ such as a digital speedometer and twin prismatic pilot lamps. It would give 109 kilometres per litre, he said. The Sales Manager said that the model would initially be produced at the company’s plant in Waluj, Aurangabad, and subsequently at its new plant in Pantnagar, Uttar Pradesh.

Bajaj Auto hoped to sell around 20,000 units this month, and 50,000 by November, including 7,000-8,000 in Chennai, Mr. Sumbly said. “52 per cent of the total two-wheeler market growth in 2006-07 was achieved by Bajaj,” he said, adding that the company’s market share growth rate went from 32 per cent to 35 per cent during the same period.

A television commercial endorsing the product was also unveiled. It would go on air in around a week, Mr. Sumbly said. The company would spend around Rs. 11 crore for the media promotion of the new bike, he said.

De Beers eyes 51% in Rajesh Exports

Sourced From: Economic Times

New Delhi, 17 Sep, 2007: Another big-ticket buyout could be on the cards. A US-based buyout fund and diamond industry giant De Beers are learnt to have evinced interest in jewellery maker and retailer Rajesh Exports for acquiring 51% stake from its promoters.

According to industry sources, while the suitors are yet to make a formal bid, the separate offer by both parties will be to acquire majority control at a premium to the current market price of the listed firm.

The market capitalisation of Rajesh Exports is currently at Rs 2,650 crore. The share price of the company went up by 12.4% last week to close at Rs 729.50 on BSE on Friday. An acquisition of 51%, if it goes through, will also trigger a mandatory open offer for an additional 20% of the company.

It remains to be seen whether the promoters, who hold 61.5% in the company, agree to sell. When contacted by ET, Rajesh Exports’ chairman Rajesh Mehta said: “I have no comments to make on any such offers. I can only say that we recently attended an investors’ conference in the US and there is a lot of interest from FIIs in the company.”

Despite repeated attempts, De Beers India country head Rajiv Bhandari could not be contacted for comments and an email query sent to him failed to elicit any response. The media contact person for De Beers Diamond Jewellery was unavailable for comment.

An industry source said the De Beers move is linked to its interests in jewellery retailing in India. While De Beers is primarily known for the diamond business, Rajesh Exports is predominantly into gold jewellery and is just about entering the diamond space. “The fact is, India is more of a gold market and any serious jewellery player cannot expect to be big by concentrating only on diamonds,” a source said.

The Bangalore-based Rajesh Exports shot into the limelight in 2004 when its revenues jumped more than 13 times in a single year to close at about Rs 3,000 crore.

This was due to the commissioning of its new Bangalore-based manufacturing unit, the world’s largest jewellery making unit. The market capitalisation of the company too has shot up from just about Rs 43 crore in FY03 to Rs 2,650 crore now.

A reason for rising valuations of the company is linked to the forward integration in the jewellery business. Traditionally, the company has been a wholesale gold jewellery maker and exporter, which is a low-margin business.

While exports continue to comprise a substantial part of the revenues, the company has also recently moved into the front end with its jewellery retailing business. It has opened a chain of 30 stores under the Laabh brand in the metros. In addition, the company is in the process of unveiling a jewellery chain under the Shubh brand, which would be located in smaller cities and towns.

No plans to merge PNB Gilts with self: PNB

Punjab National Bank, or PNB, has said that they have no plans to merge PNB Gilts with itself reports Newswire 18.

Earlier, there were newspaper reports that PNB, which was looking at offloading its stake in PNB Gilts, has not been able to find a buyer and it is now looking at merging PNB Gilts with itself.

PNB Gilts is a primary dealer in government securities and a subsidiary of PNB. The third largest public sector bank currently holds 75% in PNB Gilts and the rest is with retail investors.

Saturday, September 15, 2007

Buy Aban Offshore, target Rs 3530: Citigroup

Citigroup is bullish on Aban Offshore and has maintained buy rating on the stock with target price of Rs 3530.



Citigroup research report on Aban Offshore

Purchases rig for USD 211million

Aban has announced today that it has entered into an agreement to purchase a semi-submersible rig, Bulford Dolphin from Fred Olsen Energy ASA for a total consideration of USD 211million. The rig is expected to be delivered by 4QCY07.

Good asset, prima facie positive move

The 1250' water depth rig is a 1977 build that was upgraded in 2003, hence obviating the need for any immediate refurbishment, in our view. Its earlier contract with Equator Exploration in offshore Nigeria ended in Jul-07; the day rate for the contract, which commenced in Nov-05, was reported to be USD180-190K.


Expected payback of approx 3.5 years

Offshore day rates have moved significantly higher since the rig's last contract, and while it is yet to be contracted out, a day rate upwards of USD300K could possibly be achieved, yielding approx 3.5 years payback for Aban's investment. The Essar Wildcat, a similar spec semi-sub, was reportedly awarded a 2yr contract by GSPC in Jan-07 at over USD320K day rate.


Possible upside to earnings

Our back-of-the-envelope calculation suggests that there could be a possible 10-14% upside to consolidated FY09E earnings.

Maintain Buy (1M)

We retain our Buy (1M) rating with a TP of Rs3530. The outlook for the sector remains solid, with steadily rising long-term oil price expectations. Though the asset acquisition strategy appears positive, Aban's high financial leverage remains a risk, and the potential listing of the Singapore subsidiary would be key to help pay down its large debt.

Investment thesis

Our target price of Rs3530 is based on 8x fully evolved earnings and in line with average target P/E multiples for its global peer group. We believe that Aban should trade in line with its peers despite the company being smaller in size as a part of its existing fleet is locked into long-term contracts, which provides high visibility to the company’s volume-led earnings growth prospects.

Consolidated with Sinvest, Aban is a material play on the global offshore services industry with a pipeline of 7 assets (1 refurbished drillship, 5 new jackups, and 1 refurbished jack-up) which will come on stream over CY07-09 (adding to an existing fleet of 13 offshore assets). This well-timed fleet expansion will help Aban capitalize on the strong cyclical uptrend in the offshore drilling industry. Strong operational cash flows will help Aban service and pay-down part of its large debt over the next three years. We see growth in earnings as a key share-price driver.

Valuation

Our target price for Aban of Rs3530 is based on 8x fully evolved consolidated earnings, which we expect to be achieved by FY10E, discounted back by one year. The target multiple is in line with global peers as we believe that Aban should trade in line with these companies. Although it is smaller in size, it has a long and good track record in the offshore space and of managing new acquisitions and deploying them. As a cross-check, the stock would trade at a price/cash earnings of 6x FY10E on our target price, in line with the target multiples of global peers.

Risks

We rate Aban at Medium Risk, in line with our quantitative risk-rating system, which tracks 260-day historical share-price volatility. Key risks that could prevent the shares reaching our target are: E&P activity decline; long-term day rates which vary with the demand-supply scenario in the rest of the world; delay in completing shipyard work could result in jack-ups going on day rates later than expected, which could result in lower than expected earnings; higher-thananticipated shipyard costs; and currency fluctuations.

Wockhardt eyes $1 billion sales next fiscal

Pharmaceutical manufacturer Wockhardt is expecting a $600 million (Rs 2400 crore approx) turnover in 2007-08. By 2008-09, the company envisages a turnover of $1 billion. Wockhardt Hospitals, which has already filed the draft red herring prospectus with SEBI, expects to float an initial public offer (IPO) by the end 2007-08.

“As much as 50% of the turnover is slated to be contributed by the company’s European operations. With the recent acquisition of a French pharma company Negma Lerads, Wockhardt now owns five companies in Europe. These will help achieve a $600 million turnover in 2007-08 and $1 billion by 2008-09. We are in the process of consolidating our European business where a total 1,000 people are employed,” Mr Habil F Khorakiwala, chairman Wockhardt, told reporters in Kolkata on Friday. He was here to attend the National Executive Committee meeting in the city organised by Federation of Indian Chambers of Commerce & Industry.

Wockhardt Hospitals, the company that manages the hospitals for the Wockhardt group, as part of its expansion plan, is also looking at setting up hospitals in tier-II cities. “We are looking at the eastern region for setting up hospitals in Orissa, Bihar and North East,” he said.

IOB mulls alliance with foreign, pvt banks

Chennai-based Indian Overseas Bank (IOB) is considering forging an alliance with foreign and private banks to reach markets outside its network and venture into the sophisticated structured products market.

The alliance could be a precursor to a possible consolidation in the future.

“We are thinking of entering into an alliance with banks, which will help us to expand our reach in regions where our presence is small and give us the knowledge and expertise in areas such as derivatives and structured products,” chairman and managing director S A Bhat told reporters on the sidelines of IBA-FICCI banking conference.

The public sector bank expects to crystalise plans for a tie-up by end of the financial year. “We have a small presence in Maharashtra and Gujarat and will like to step up our reach”, he added.

While admitting that some banks had approached IOB for an alliance, Bhat emphasised that nothing had been finalised. The idea was to form an alliance on lines of the partnership between Oriental Bank of Commerce, Indian Bank and Corporation Bank.

The three public sector banks had signed an agreement over a year ago, but the alliance did not take off. Two of the banks, Indian Bank and Oriental Bank, have undergone changes at the helm.

“This (alliance) could be a step towards merger and acquisitions, when the Indian financial sector is opened up further”, Bhat concluded.

Turnaround specialist Wilbur L Ross joins IFCI race

Stressed-assets buyer, Wilbur L Ross has sensed an opportunity in the country’s oldest development finance institution — Industrial Finance Corporation of India (IFCI) — that has Rs 6,000 crore worth of bad assets.

Not surprising, considering Mr Ross is known to be betting on troubled companies and making a fortune there. He is part of the consortium comprising Standard Chartered Bank, Goldman Sachs and HDFC, which jumped into the fray on Friday evening, before the submission of bids closed. Bids will be opened on Saturday.

Mr Ross has been acquiring companies in industries like coal, steel, textiles, cleaning up balance sheets, shaping up managements and selling them off for profit. He has struck gold in these old economy sectors, which are in sync with the IFCI balance sheet as far as traditional lending goes. For someone who wanted to be a writer, Mr Ross scripted a phenomenal growth story in dying companies. He has been hailed as the King of Bankruptcy for being involved in restructuring of assets worth $200 billion across the world.

A few years ago, IFCI had been left for dead. It was struggling under the weight loans that had gone bad. Today, IFCI’s value derives from its financial investments such as those in NSE, standard assets worth Rs 6,500 crore and improved NPA recoveries. The accumulated losses of IFCI, which were Rs 4,772 crore at one point, have come down to Rs 800 crore, as on March 31, 2007.

The IFCI scrip has gained around 10% per month since January 2007 when it was around Rs 12. It closed at Rs 77.30 on Friday on the NSE. If this consortium wins the bid, it will further strengthen Mr Ross’ engagement with India. In 2004, he sold his International Steel Group (ISG) for $4.5 billion to Mittal Steel which made LN Mittal the number one steel maker in the world. Furthermore, Mr Ross has tied up with HDFC to form a fund for investing in Indian corporate turnarounds and restructuring.

Sources at IFCI said the final bidders will be short-listed “after balancing competing objectives”. On Mr Ross evincing interest in the lender, an official said “we are open to specialised investors”. Among others who are likely to have put in bids for the 26% stake in IFCI are Blackstone, Citigroup, Reliance Capital, Barclays and Cargill, among others.

It is understood that domestic institutions such as Punjab National Bank, IDFC are also likely to have submitted expression of interest (EoI). PNB has put in a bid with Japan’s Shinsei Bank and JC Flowers. It is understood that there have been some 10 bidders, largely foreign investors. IFCI will follow a two-stage process for the selection of a strategic investor by the end of January 2008. The names of the short-listed candidates from among those responding to the EoI will be announced by September 25.

Following this, the company would hold a pre-bid conference and then issue requests for proposal (RFP) on October 3. According to qualification parameters for making bids, a potential suitor needs to have an asset book of Rs 10,000 crore or a net worth of more than Rs 4,000 crore or a fund with average assets of more than Rs 10,000 crore.

In case of a consortium, investors need to have a lead investor and hold at least 26% stake. The total number of members in a consortium should not be more than four. The IFCI board recently decided to appoint investment bankers for due diligence advisors.

There will also be a lock-in period of three years for the entity or the consortium which would be selected as the new shareholder. IFCI has said the bidder should be in the business of financial services. Foreign investors, including Morgan Stanley (2.5%), Goldman Sachs (3.3%), Citigroup (2.5%) and Deutsche Securities (4.61%), already have equity interest in IFCI. As many as 11 financial institutions, domestic as well as overseas, together held 34.8% stake in the company as on March 31, which includes 8.4% stake owned by LIC and 5.01% by IDBI.

Satyam readies $1 bn war chest for buyouts

Hyderabad-based Satyam Computers has set aside $1 billion (around Rs 4,100 crore) to buy companies which it finds attractive.

“Any acquisition we make should have a lot of synergy with what we are doing,” B Ramalinga Raju, founder and chairman, told Business Standard .

So far, the Indian IT services provider has done just a couple of acquisitions — the last one being almost two years ago — while its rivals, especially Wipro, have done a series of acquisitions to gain scale.

Chairman Ramalinga Raju Satyam, the fourth largest IT company in India, is also planning to ramp up its business process outsourcing (BPO) arm, Nipuna Services, which too is looking at inorganic growth.

Venkatesh Roddam, CEO, Nipuna Services, said: “We are well-positioned in the market and are quite specific about what we want to acquire. While we are looking at acquisitions, the focus is to acquire either for domain expertise or reach."

The company wants to strengthen its horizontal offering in segments like procurement, finance, accounting and HR. It plans to increase its focus on verticals like the media and entertainment, energy utilities and retail.

It will also increase its concentration on getting large deals while looking for inorganic and organic growth. There's a strong market buzz that it is one of the contenders for the $125 million deal from the Dutch ING group.

Nipuna currently serves verticals like telecom, manufacturing, animation, healthcare and insurance as well as banking and finance with a revenue contribution of 30, 30, 20, 15 and 5 per cent, respectively. The US contributes 80 per cent of its revenues, and Europe 20 per cent.

"We are looking at the European markets as well. After the IT services the BPO segment will also be accepted in the region," adds Roddam.

The Satyam group, according to Raju, is also increasing its presence through building its global delivery centres. While it recently announced setting up its Malaysian operations with 300 people, it is also looking at expansions in other geographies.

Recently, Satyam had announced that its Global Solutions Centre (GSC) at Cyberjaya in Malaysia was fully operational — thus marking the first phase of the rollout of its Global Delivery Campus in Malaysia. The facility is expected to become the company's largest software hub outside India.

"The GSC is already staffed by 300 (mostly Malaysian) IT engineers, who support Satyam's Asean, West Asian and US customers," said Raju.

He added that the facility was expected to create more than 500 jobs for Malaysian graduates over the next 12 months, with the number increasing to 2,000 in the next few years.

"Our strategy has been to follow our customers and we will be in geographies which call for supporting our customers. Eastern Europe, the Asia-Pacific and South America are a few regions that we are looking at. Even Vietnam has good access to talent," he said.

Satyam's development and delivery centres in the United States, Canada, Britain, Hungary, Egypt, the United Arab Emirates, India, China, Malaysia, Singapore and Australia serve 570 clients, including one-third of the US Fortune 500 companies.

Jet given rights to connect Gulf region with India

The government on Friday decided to open the lucrative Gulf routes to private Indian carriers with the granting of permission to Jet Airways to fly to four of the six destinations they had applied for in the Gulf to the ministry of civil aviation on July 18 this year.

According to analysts, around 40% of all international air traffic from India is on the Gulf routes. While Indian carriers’ capacity utilisation on these routes is significantly higher, it is less than 50% globally.

The Middle East is the most revenue-generating sector for Air India after the US. It earned a revenue of Rs 2,865 crore in 2005-06 from the India-US route, while the India-Gulf sector contributed about Rs 2,023 crore in 2004-05 and Rs 1,591 crore in 2005-06.

Till now, only the public sector carrier Air India was allowed by government decision to operate on the West Asia routes till the end of 2007 and has monopoly of the routes till the end of this year. The decision to extend the date for opening the Gulf to scheduled Indian private airlines was up for renewal. Jet has been granted traffic rights on the Gulf and Middle East routes to fly to Kuwait, Muscat, Oman and Doha from January 1 of next year at a meeting of the Directorate General of Civil Aviation last evening. The airline is expected to deploy its Airbus 737-800s and 330-200s on these routes on a daily basis.

Jet has been permitted to carry 3,682 passengers to Kuwait per week from three destinations in India. Of these, 1,582 passengers will be to and from Delhi while another 1,050 have been allowed to and from Trivandrum and 1,050 passengers for Kochi route, a statement from the ministry of civil aviation said. Jet can also fly 3,150 passengers to Oman per week on three routes connecting Kochi, Trivandrum and Calicut with Muscat.

Jet Airways also has permission to connect Calicut and Mumbai to Qatar's capital Doha, where it can ferry a maximum of 2,100 passengers per week.

Similarly, Jet can ferry 2,100 passengers to Bahrain, of which 1,050 can be on the Mumbai to Bahrain flight while another 1,050 can fly on the Kochi to Bahrain route.

The ministry statement also said the Jet's application to connect India to the more lucrative Dubai and Abu Dhabi was still being considered. As is with most bilateral agreements, India was entitled

to carry as many passengers as the other nation's airline was allowed to carry from India. Indian carriers on the Gulf routes at present are entitled to a total of 85,481 seats per week, of which 21,950 seats are for Dubai, 7,420 for Abu Dhabi, 10,206 for Sharjah, 8,000 for Kuwait, 10,892 for Qatar, 7,546 for Oman, 10,967 for Bahrain and 8,500 for Saudi Arabia.

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