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[Contrarian]

Corus is a moment of fulfillment for India: Ratan Tata

MUMBAI: Exuberant after a thriller deal to acquire Anglo-Dutch steel giant Corus for 11.3 billion dollars, Tata Group chief Ratan Tata on Wednesday dubbed the victory as “a moment of fulfillment for India.”

“This will prove to be a visionary move...,” Tata told reporters within hours of Tata Steel making a winning bid of 608 pence a share for Corus to trump Brazilian CSN that would elevate the group company to the world's fifth largest steel entity.

At the same time, he took a dig at critics, saying: “When we launched the bid for Corus, many thought it was an audacious move, because an Indian company taking over an European company much larger in size has not happened before.”

Tata Steel would become a global scale player with footprint in Europe to become “the fifth largest steelmaker in the world,” while announcing that the present management would be retained and Corus would be integrated with Tata Steel.

This has demonstrated that India Inc can step outside of India in the international market as a global player, he said.

“I have always believed that if you want to become a global company, you have to dismiss your notion of being a single nationality," Tata said.

On Tata Steel share prices taking a hit on Wednesday, Ratan Tata said the market was “taking both a short-term and a harsh view. We often damn a company when it makes loss in a year...hopefully in future it (market) will look back and say it (acquisition) was a right move.”

Tata Steel Managing Director B Muthuraman termed the acquisition as part of the company's strategic planning, saying it planned for greenfield capacity where raw materials were available, while looking for acquisitions where there was market like it did in taking over NatSteel and Millennium in Singapore and Thailand, respectively.

He agreed that nine times the EBIDTA margin quoted by Tata for Corus was a bit higher by industry standards, but the company would benefit from significant synergies although it would take three years to fructify.

The company was looking at a synergy of 300-350 million dollars a year, he added.

 

[Contrarian]

We couldn't buy Tata, they bought us: Corus

LONDON: Tata Steel's hard-fought, early Wednesday morning 6.2-billion-pound acquisition of Corus, the seven-year-old Anglo-Dutch company formerly known as the mighty British Steel, has created the world's fifth largest steelmaker, the second most global steel company and dramatically put India on the corporate world's takeover map.

It is the largest overseas acquisition by an Indian company ever. Decision-makers and opinion-makers in Western capitals said Tata's victory over its aggressive Brazilian rival CSN in the eight-hour auction for Corus was a sign of the times.

Both bidders for Corus belonged to countries classified as "emerging economies". Tata's final offer for Corus was 608 pence per share. CSN did not bid higher than 603 p.

The auction and Tata's victory was also a first, officials of the UK Takeover Panel told TOI because Tuesday night's format of a marathon nine rounds of continuous bidding was the first time a company has been auctioned in less than half a day.

On Wednesday, the admittedly sleep-deprived but exuberant Corus chairman Jim Leng told this paper his company's new owner represented the future.

"We couldn't buy Tata; Tata bought us...this is a global industry. We (Corus) couldn't lock ourselves in Europe, Tata couldn't lock itself in India. Tata wanted to go West, we wanted to go East. Tata has shown great foresight because it wants to be a global player", Leng said.

He said the deal was likely to be inked and the new merged entity a force in the global marketplace by mid-March.

TOI has learnt that the nine rounds of bidding, which Leng described as "going very smoothly...we were just observers... both parties behaved in an exemplary fashion", tailed off when CSN was unwilling to top its final offer of 603 pence per share.

The auction format laid out by the Takeover Panel allowed each company eight "fixed price" bids in eight rounds. The ninth and final round, however, allowed both bidders to offer a "formula price", ie a maximum reserve price. According to sources, CSN was unable to top Tata's 608p-per-share offer.

Unlike Indian ministers, European politicians refrained from public comment but said, sotto voce, that Tata's acquisition of a European steel champion underlined the soaring buying power of companies from India, one of the world's fastest growing economies.

Even as NRIs, including budding steel tycoon Aditya Mittal, Britain's prominent ennobled Indian businessmen Swaraj Paul and Ghulam Noon hailed Tata's triumph as a sign of "India really shining", steel experts in European capitals said the Tata buy-out finally underlined the significance of an 'India Poised' to fashion a new world order.

Patrick Flockhart of the influential trade journal 'Steel Business Briefing', said it was time to appreciate the irony that both the world's most global steel companies are owned by Indians, with Tata Corus following the consolidation and acquisition trail controversially blazed by Lakshmi Mittal when he merged with Arcelor last year.

Prophesying further acquisitions by a Tata joined to Corus, Flockhart added, "The steel industry is (still) very fragmented and I actually think this new company (Tata Corus) will actually go forward and make further acquisitions itself and there will be other consolidation elsewhere in the sector."

But steel experts said the Tata-Corus deal may, in some ways, be more significant by far than Mittal's Arcelor takeover because Tata is firmly Indian, based in India and "using Indian money" to pay for its goal of setting a global footprint.

Mittal's son Aditya told this paper the morning after Tata triumphed over CSN with a five-pence higher bid of 608 p per Corus share, "Congratulations to Tata Steel. This is an important milestone for India's globalisation and is a strong signal that Indian companies are ready to compete on a global arena. "

In an indication of the views of his father, who was out of London on Wednesday and unavailable for comment, Aditya added that "For the industry more broadly this is a very positive development and Arcelor Mittal has long been a champion in the benefits of consolidation for the industry as we believe it will help create a more sustainable industry".

R Seshasayee, president of the Confederation of Indian industry (CII) said Tata's triumph "is a statement of Indian industry's coming of age and takes our mergers and acquisition levels to a different paradigm. This is a testimony of the confidence and competence of Indian industry."

But London and European markets expressed deep surprise at Tata's final offer for Corus, which represents at least 30 per cent more than it had offered in October and allegedly "grossly overvalues" the company. Several steel experts told this paper (On Wednesday) "was it pride (that led Tata to pay this price) or something else?"

But Corus's Leng joined with Caparo Steel founder Lord Swaraj Paul to insist that Tata had done what it saw fit and paid the right price at the right time for the right goal.

Rationalised Leng, "When you buy a steel company, you buy an asset of 40 years or longer...Tata is resolved to build on growth, expectations and the next 10 or 20 years".

Added Paul, "What overpayment? It was only five pence more than your competitor (CSN) was prepared to pay. This is a global combination in a global market and I am delighted India is playing a role".

Meanwhile, in an indication Tata may have a rough ride in its newest, most ambitious, foray abroad, Britain's steelworkers' union Community, reacted to news of the buy-out with the grouchy assurance that it would oppose restructuring and job cuts tooth and nail.

Corus has nearly 30,000 workers in England and Wales and Leng, who significantly failed to rule out job cuts under Tata ownership, admitted "change always brings challenges...no company can give assurances there will be no cutbacks".

Even so, the mid-week shocker of a deal did not stop the City, London's financial district, from giving Corus shares their head on news that it had won the bitter three-month battle for the steelmaker. Even as Britain's benchmark share index fell into the red on Wednesday, with commodities losing ground on weaker oil and metal prices, Corus added as much as seven per cent to its hare value.

Martin Slaney, head of spread-betting at GFT Global Markets said the Tata deal "is obviously a dream result for Corus shareholders. There is no reason why this offer should not be accepted. This auction process, organized by the Takeover Panel in a rare attempt to bring the bid battle to an end, seems to have played right into Corus shareholders' hands."

Tata's takeover of Corus rockets the company to the top of the pile of key global players. Last year, it was ranked just 56th in the list of world steelmakers.

 

[Contrarian]

Tata-Corus exemplifies aggressive Indian biz: PC

NEW DELHI: Terming the Tata Group's successful bid for acquiring Anglo-Dutch steel company Corus as an example of aggressive Indian businesses, Finance Minister P Chidambaram on Wednesday said the government would be ready to help the industrial house to complete the deal.

“Government will be ready to help Tatas if they have any request to complete the transaction,” the Finance Minister said, while briefing reporters in the Capital.

“Although Tatas have not made any requests so far, the government will consider providing every help, or help it in getting clearances, say from RBI or Sebi,” he said.

Expressing happiness on Tatas clinching the deal, he said: “It is a good example of aggressive, forward looking Indian businesses. We could have never expected such bids a few years ago.”

Today, India Inc has the confidence to bid for businesses abroad, to raise funds for the purpose and manage the business.

Meanwhile, union steel minister Ram Vilas Paswan welcomed the acquisition of the Anglo-Dutch steelmaker Corus.

“This acquisition is welcome news and it exhibits the growing importance of Indian steelmakers abroad. We hope they continue to consolidate the industry,” Paswan said.

 

[Contrarian]

S&P raises India's sovereign rating

MUMBAI: International rating agency Standard and Poor's (S&P) on Tuesday finally acknowledged what everybody else across the world already seems to know. India is worth investing in.

S&P, which took 15 years to raise the country's sovereign rating from speculative to investment grade, said: "The upgrade reflects the country's strong economic prospects, external balance sheet, and its deep capital market, which supports a weak, but improving, fiscal position."

Moody's, another globally-known rating agency, raised India to investment grade in 2004; Fitch followed suit in August last year. S&P had downgraded India from investment grade in May 1991 when the country's foreign currency reserves had eroded to such an extent that it had just about enough to meet import bills for two weeks and was staring at a balance of payments crisis. The rating agency explained that it had considered India below investment grade until now because of the poor state of its public finances.

However, the combined fiscal deficit of the state and central governments at about 7.5% of GDP was still a tad too high for comfort, S&P added. Even now, total debt is equal to 85% of annual output and 35% of revenues are used to pay interest on loans.

The economic reforms flagged off in 1991 did address some of these issues but progress tapered off from the mid-nineties. It was only after 2000 that governments have managed to rein in profligacy and bring some order to borrowing and spending.

"Fiscal vulnerabilities are now being addressed structurally," Ping Chew, S&P's managing director of corporate and government ratings for Asia, said. "We are a little more sure that these (fiscal consolidation) trends are more entrenched, both from a policy and economic growth angle. It is only in the last few years that India's finances have been fixed," Chew said.

The Indian economy has grown at an average rate of over 8% in the past three years, fuelled by demand for goods and services from an increasingly affluent middle class and booming industry. S&P expects the $854 billion (latest IMF estimates) economy to become the third fastest growing in Asia Pacific this year. It is currently the fourth-largest behind Japan, China and Korea.

Global investment banker Goldman Sachs had last week raised its own forecast of India's growth. It now expects the country to grow at over 8% until at least 2020 and become the second largest economy, ahead of the US and behind China by 2050.

The upgrade in sovereign rating will boost India's chances to attract much needed investments into highways, ports, education and healthcare. The country has been a lucrative destination for portfolio investors who have poured in over $8 billion into Indian shares and bonds this financial year. The S&P re-rating will likely remove doubts in the minds of those investors who take credit rating as the last word.

For the record, S&P itself has been a keen investor in the fast-growing rating and advisory business in India for several years now. The agency, however, warns that the ratings on India remain constrained by the country's weak fiscal profile, especially its high government debt burden and deficit, which is still one of the worst among all rated sovereigns.

"Further rating improvements will depend on sustained prudent fiscal policy that leads to a decline in government debt and interest burden, and further reforms that lift the growth prospects and income levels," Chew said.

 

[Contrarian]

Singapore shores closer for ICICI, SBI

MUMBAI: Standard and Poor's upgrading India's rating to investment grade should give the country's trade pact with Singapore, and consequently, Indian banks' overseas expansion plans, a shot in the arm.

Plans of India's largest commercial bank State Bank of India (SBI) and private sector leader ICICI Bank, which were thwarted in their Singapore foray because the city-state has strict rating norms, will now get a boost. Applications of these banks for a QFB (qualified full banks) status were held up because the Monetary Authority of Singapore (MAS) requires the country rating from which the bank is applying to be investment grade. A QFB licence permits banks to access the retail market in Singapore. So far, India's 'speculative' rating was considered to be a major disqualification from these banks getting QFB status in Singapore.

SBI deputy managing director and group executive international banking S K Hariharan said that this was one of the criteria holding back SBI's upgrade to QFB. However, he refused to comment if this rating action would enable them to get the status. "This will definitely enable us bring down our cost of borrowing," added Hariharan.

A source said SBI was planning to sell bonds worth $1.5 billion in the international market in February.

SBI, managing director Tarashankar Bhattacharya said, "The rating action will give a fillip to both corporates' as well as banks' overseas borrowing programmes. Prior to the upgrade also we have seen corporates and banks accessing the overseas market in abundance. The investment grade status will now enable smaller banks and infrastructure companies to tap the overseas market."

Some analysts, however, shrugged off the news. "This is a peripheral event. The market had already factored in this upgrade and the borrowing rates have been reflecting this market perception. This will benefit the small and medium enterprises looking to tap the overseas market. The rating action will benefit corporates looking at raising debt in unconventional currencies like Malaysian Ringgit among others. It would also enable those foreign institutions whose investment decisions depend on sovereign ratings, in particular, pension funds in the US," said Abheek Barua, chief economist, ABN Amro Bank.

 

[Contrarian]

Govt can cash in on improved rating

NEW DELHI: Standard & Poor's rating upgrade for India — which puts it in the league of investment grade economies — is already raising hopes of a government float overseas.

While officials say, the rating upgrade, though belated, is unlikely to make the government issue bonds in foreign markets, bankers are of the opinion that it makes sense for the Centre to tap overseas investors now.

With investment grade rating, the government can hope not just to raise funds at cheaper coupons, but also see much more interest than what it would have received when the rating was lower.

"There are many funds which stipulate a minimum investment grade rating for investment. If India decides to tap overseas investors to meet a part of its borrowing requirements, it will get better interest than what it has ever received," said the treasury head at a state-owned bank.

"In fact, the yield on the Indian paper in the Singapore market has already went down by three to six basis points," said Rajiv Ahuja of Citi group. He said that upgradation of India in the investment grade would make many conservative institutional investors like pension funds — who were not investing in India's debt instrument because of its poor sovereign ratings — will now be able to invest.

Though Moody's and Fitch had already upgraded India to the investment grade, but many market players were waiting for the Standard and Poor's also to upgrade to invest in the Indian debt instruments.

The upgrade is also expected to result in the better run public sector companies, especially the Navratnas, rising a one-notch, which can encash the new found confidence to raise funds cheaper. Along with the change in sovereign ratings, S&P also upgraded Exim Bank, Power Finance Corporation and IRFC and brought it line with the sovereign rating.

A senior banker said that many banks are planning to raise long term debt from the international market. The S&P's decision would help banks to raise funds at the competitive rate. A source said that after the S&P's upgradation, the interest rate would fall by at least a quarter of a percentage point on the long term paper. "The market was already expecting this to happen post budget. But, this is a pleasant surprise for the Indian companies planning to raise funds abroad."

In the equity market also, a senior official of a foreign bank said, this would infuse confidence among the investors. "Till a country is not included in the investment grade by all the rating agencies, fund managers do not take risk to invest there because if the fund grows, it is good for him and the investor, but if something goes wrong, he is held liable," he said. "After this, it would lead to further increase the foreign fund flow in the Indian equity market," he added.

For the moment, however, S&P's decision is unlikely to have much impact on government's borrowings since bulk of the resources are generated in the domestic markets with banks subscribing to government securities.

While the S&P statement is bound to cheer up international investors — both institutional players (FIIs) as well as those investing directly (FDI) — the $3.2 billion ceiling on FII exposure to government securities would mean that the impact would be limited.

If the government decides to tap international markets, it will ease the pressure on liquidity in domestic markets, a good news to those fearing further hardening of interest rates.

 

[Contrarian]

Indian dollar dreams may come true

MUMBAI: Sure, Standard & Poor's decision to upgrade India to 'investment grade' must have reinforced the country's middle class' faith in the India Poised story. However, as the celebration comes to an end, many would be asking what does it means to an Indian citizen. What are the benefits one can expect from the new rating?

"On the citizens of this country, there will not be any direct impact," says AK Sridhar, chief investment officer, UTI mutual fund. "However, they will benefit indirectly from the changing perception about India. There will be more foreign investment coming into the country. Companies will be able to borrow funds overseas at finer rates."

Sanjiv Shah, executive director, Benchmark mutual fund, agrees. "This will alter companies' capability to borrow from abroad dramatically. It will have an impact on your portfolio."

That means, you will have more happy news coming from the stock market. More foreign inflows into the market would drive stock prices further up. "The new rating could lead to more foreign capital inflows into the stock market. It is crucial for countries and funds, which strictly go by the investment rating. It may bring in money from pension funds abroad," says a stock market analyst.

You could also indirectly benefit from the companies', especially the medium-sized ones', ability to raise money cheaper from the overseas market. "The rating would also help the not-so-well-known companies raise money cheaper. It would have an impact on their profit margins and investors would benefit from it," says the analyst.

Globe-trotters also have a reason to rejoice. The upgrade may boost the rupee's value against foreign currencies. That means, you can buy more with the Indian currency while you are travelling abroad. "More foreign inflows could lead to appreciation of the currency. A strong rupee is a mixed bag for investors, as it could hit companies which earn most of their revenues from abroad," says a fund manager.

Will it have any impact on the interest rates in the country? Most market players don't believe so. "The Reserve Bank is likely to consider the local scene before changing its monetary stance. Considering the present inflationary pressure in the economy, the RBI is likely to raise its policy rates further," says a money market dealer.

 

[Janbaz]

Indian software, services exports may hit $75bn

NEW DELHI: India’s software and services exports could climb to $75 billion by 2010 if they keep growing at over 30 per cent annually, the industry’s top body said on Thursday.

The National Association of Software and Services Companies, or Nasscom, said it was sticking to its official forecast of achieving $60 billion in exports by 2010.

But “if we continue to grow at these levels, that number can be much higher” and would reach the top end of the group’s forecast band of $60 billion to $75 billion by 2010, NASSCOM chairman Ramalinga Raju told reporters.

Last week, the group estimated software and service exports would grow by 32.6 per cent to over $31 billion for the fiscal ear ending in March 2007.

It said there was “more headroom for growth through large unaddressed areas and the possible unbundling of IT-BPO (business process outsourcing) mega-deals.”

The latest exports assessment came as the group unveiled a report by global consultancy McKinsey which said “operational excellence” was crucial to India achieving its potential in the software and services offshoring.

The report entitled, “Operational Excellence: The Next Frontier in Offshoring,” found that 80 per cent of customers are satisfied with the performance of their offshore units.

But the report said that improvements were needed to ensure continued high-level export growth and to cut costs.

“Customers are highly satisfied with remote centres and as a result are ramping up operations in India (but) it is also clear that their expectations are rising,” said Raju, releasing the report.

The industry needs to focus on improving performance and consistency across six areas including “solution design and training.”

India holds over 50 per cent of the global market in offshore services but to stay ahead of the curve we have to keep raising the (performance) bar,” said Nasscom president Kiran Karnik.

India has become the world’s back office, as Western firms set up call centres, number-crunching and software development outlets.

Companies routinely cut costs by shifting their work to India to tap its pool of English-speaking, computer-savvy graduates at lower salaries than counterparts abroad.

The Indian information technology industry has grown its overall revenues 10-fold in the past decade to 47.8 billion in 2006-07 from just $4.8 billion 1997-98, NASSCOM has said.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=41188.

 

[Janbaz]

India, Japan talk free trade

NEW DELHI: India and Japan have launched a first round of discussions to lay down the groundwork for a comprehensive free trade deal within two years, Tokyo’s embassy said Thursday.

Three days of talks were to end on Friday and pave the way for lower tariffs and increased trade between the two countries that have drawn closer politically in recent years.

“There will be discussions on the framework of the negotiations, including the scope and modalities of the negotiations,” said a statement from the Japanese embassy.

“The participants will also exchange opinions on major areas for negotiations, such as trade in goods, trade in services and investment.”

Japanese deputy minister for foreign affairs Masaharu Kono and Indian commerce secretary Gopal Krishna Pillai were leading the talks, the statement said.

The negotiations follow an agreement in Tokyo in December between Indian Prime Minister Manmohan Singh and his Japanese counterpart Shinzo Abe to conclude free-trade talks within two years.

Abe has attached a top priority to forging closer ties with fellow democracy India to compensate for frequent tensions with China.

In a gesture of goodwill, Japan last June lifted a ban on the import of mangoes from India, a long-standing demand.

But bilateral trade between Japan and India hovers at only six billion dollars, tiny compared with the more than $170bn of trade between Japan and China.

The News.
http://thenews.jang.com.pk/daily_detail.asp?id=41191.

 

[Neo]

Indian retail to exceed $22 bn by 2010: Assocham
Friday, February 02, 2007

Size of organised retail in India will exceed $22 billion by 2010 from the current level of $4 billion, says an industry report.

Requirement of space for the retail is also going to touch a whopping 220 million sq ft, according to the Associated Chambers of Commerce and Industry of India (Assocham).

Currently, within the organised retail sector about 40 million sq ft of space is generating a revenue of almost $4 billion.

The total size of retail in India is $16 billion of which 25 percent is in organised sector, the report said.

According to Assocham, smaller towns will experience a retail boom of 50-60 percent where over 1,000 malls are expected to come up due to availability of land and increase in purchasing capability of people.

However, growth level in metros will remain less than 30 percent, where 600 malls are in the pipeline, mainly due to scarcity of space.

'India's vast middle-class and its almost untapped retail industry are key attractions for global retail giants wanting to enter newer markets and India provides for the ideal locations,' said Assocham president Venugopal N. Dhoot.

According to the report, some of the key areas in which retail boom will prevail are food items, consumer goods, grocery, sportswear, outerwear, tailored clothing, eyewear, watches, footwear and accessories.

http://www.indiaenews.com/india/20070202/37930.htm

 

[Contrarian]

NHPC, Bhel ink Rs 402-cr pact for Himachal project

NEW DELHI: State-owned National Hydroelectric Power Corporation has roped in heavy engineering and equipment manufacturer Bhel for completing electrical and mechanical work of the 520 mw third stage of the Parbati hydel project in Kullu district of Himachal Pradesh.

The two firms have signed an agreement to this affect and the deal is worth Rs 402 crore. The package includes designing, manufacturing, transportation to site, handling erection, testing and commissioning of turbines, generators and other related and support equipment. The agreement was signed by NHPC executive director M K Raina, and his Bhel counterpart S C Vig.

The Parbati project is being executed by NHPC as a Central sector project at a cost of Rs. 2,304.56 crore and a debt-equity ratio of 70:30. The equity is being given by the Centre in the form of budgetary support and the balance amount is being arranged by NHPC from the market, financial institutions and internal resources.

 

[Contrarian]

REL joins Tata Power in hunt for Indonesian coal

NEW DELHI: Anil Ambani's Reliance Energy Ltd (REL) and Tata Power are going to slug it out to acquire a 30% stake in Bumi Resources, Indonesia's largest coal producer and exporter.

Anil Ambani's Reliance Energy Ltd (REL) and Tata Power are going to slug it out to acquire a 30% stake in Bumi Resources, Indonesia's largest coal producer and exporter.

And, they have to face competition from international players, including Mitsubishi Corporation, South Korean power company Kepco and a Glencore subsidiary.

Sources said the five players have been shortlisted for the final round of bidding where the reserve price has been fixed at close to $1 billion. REL decided to join the fray to fire its coal-powered electricity generation units.

At present, Reliance Energy Ltd imports around 1 million tonnes of coal for its 500 MW power plant at Dahanu in Maharashtra.

Besides, it needs the fuel for its 4,000 MW Shahpur project, which is a multi-fuel unit. But given problems with gas supply, it is looking at starting with a 2,000 mw coal plant.

In addition, like Tata Power, REL too aspires to get into the business of setting up 4,000 MW ultra-mega power plants and has lined up thermal projects in Uttar Pradesh and Orissa.

Sources said REL was looking at tying up supplies of 20 million tonnes of coal to meet its ambitions. "There are a lot of synergies and Reliance is very much in the race and is undertaking due diligence,"said a source.

Tata Power, which won the 4,000 mw Mundra project, is exploring the possibility of buying coal mines overseas. The company would need to import around 12 million tonnes of coal annually starting 2012 for the project.

Acquiring coal mines would help the companies in assured fuel supplies. Moreover, Indonesian coal has lower ash content and higher calorific value than Indian coal, resulting in higher power generation with less fuel.

 

[Contrarian]

BCCL buys stake in SatNav Tech

HYDERABAD: Bennett, Coleman & Co Ltd (BCCL) has acquired a stake in city-based SatNav Technologies, an IT products company that pioneered products in the areas of navigation, telematics and business infrastructure management.

SatNav aims to be India's largest and most successful IT products company, a space that it believes has great potential and has not been fully tapped by other players.

The Hyderabad-headquartered company was founded in 2000 under the Satyam Entrepreneur Incubation Programme focusing on both services and products.

In 2004, SatNav Technologies took over the products developed by Satyam Navigation and today is an independent venture run by ex-Satyamites.

Amit Prasad, founder MD & CEO, SatNav Technologies said: "While we are already having majority market share in all product areas, we will now focus on enhancing the volume of sales with better brand recognition."

 

[Contrarian]

Dabur set to move out of non-core business

NEW DELHI: Dabur Pharma has announced the sale of its non-oncology formulation business to Alembic for Rs 159 crore.

The annualised revenue of the division is Rs 80 crore. The move is in line with Dabur Pharma's strategy to focus on its core oncology business and exit other non-core businesses, says a company statement.

The non-oncology formulation business is mainly into high growth life style segments like cardiovascular, diabetic and gastrointestinal, gynaecology, with brands including Cycloset for the treatment of menorrhagia, Revas and Atecard for cardio-vascular disorders, Glisen for diabetes and Ulgel antacid.

The transaction is likely to be completed in about two months time. The business had net sales of Rs 62 crore for nine months ended December 31, 2006 and is expected to post sales of Rs 80 crore for the full year.

Over and above the consideration, the transaction will involve an additional networking capital of Rs 5-8 crore.

"While the non-oncology formulations have been a growing business for us, this divestiture would allow us to increase our focus and investment in building a world class global oncology business which we believe offers greater long-term value for Dabur Pharma's shareholders", said Anand Burman, chairman, Dabur Pharma.

Chirayu Amin, CMD Alembic Ltd said, "Alembic is augmenting its presence in the international as well as domestic pharma space. This strategic acquisition is to enhance our domestic market share by entering prospective therapy segments. Alembic will aggressively pursue its strategic goals through organic and inorganic initiatives in the near future."

"This acquisition will be funded through a combination of internal accruals and debt. Option of dilution of small equity is also not ruled out. We will be leveraging the company's strong financial position for fuelling further growth" said RK Baheti, director and president, finance.

 

[Contrarian]

Kribhco sole applicant for container licence

NEW DELHI: Railway minister Lalu Yadav may have less to crow about in this February's Railway Budget, with just one fresh application for a container licence trickling in on Wednesday, the last date for receipt of licence fees. This year, the Railways expected to rope in at least 14 new licencees.

According to sources, Kribhco is the sole applicant and has paid a licence fee of Rs 50 crore. No other firms applied, despite an extension of deadline from 5 pm to 11 pm.

When contacted, officer on Special Duty, Sudhir Kumar said the number of applications were still being counted. Kribhco's entry in the sector comes as much as a surpise as Reliance Industries Ltd (RIL) and shipping lines NYK and Mitsui's decision not to participate, admit Railway sources.

It is learnt that NMDC and Gammon India Ltd had also shown interest in securing a licence.

Last January, when rail-based container services were opened to private players, the Railways expected a flood of 25 applications but attracted just 14, earning Rs 540 crore in licence fees.

Sources say invitations to participate were sent to 300 firms, with roughly 70 of these, including RIL, GE Infrastructure Ltd, Shipping Corporation of India, Blue Dart Express Ltd, Gati Ltd and Zim Integrated Shipping Services Ltd, attending a meeting at Rail Bhavan,.

Experts point to two main reasons for the poor turnout. Capacity constraint remains a huge bottleneck. For example, Delhi-Mumbai, the most lucrative route, does an average of 8 freight trains/day, going up to a peak of 10 trains/day.

This can be stretched to an additional 5 trains/day, to be shared by 14 operators. Clearly, more players are neither welcome nor viable.

There is also a shortage of railway sidings for cargo loading and unloading and the building of this infrastructure by operators appears fraught with complexities.

The Railways reserving the right to restrict transportation of any commodity, (especially lucrative ones) at any time or charge substantially higher haulage rates from container operators is another disincentive.