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19 December 2007

IFCI sale falls through on management control : ET

IFCI sale falls through on management control
IFCI calls off stake sale process
The Economic Times

NEW DELHI: It's official now. The IFCI board on Monday called off the sale of 26% of its equity to its only bidder — Sterlite and Morgan Stanley — over irreconcilable differences regarding the degree of management control. The way forward is still not clear for IFCI, which had planned to rope in a strategic partner to fund its future business. India’s oldest development financial institution is facing a resource crunch.

On the future course of action, Atul Rai, CMD IFCI conceded that there is need for capital for IFCI. “There is no possibility for a re-bid in this format. There has to be a certain time lapse before the system can gear up for a re-bid. This proposition has not made sense to 10 of the best bidders in the world; it will not change substantially very soon.” This comes even as the Wilbur Ross consortium is understood to be making efforts to renegotiate with IFCI to put in a bid. But officials maintain, legally, IFCI cannot entertain any offers from this process.

The consortium headed by Mr Ross comprised of Standard Chartered bank, Goldman Sachs and HDFC, and did not put in its bid after conducting due diligence. Said Mr Rai: “There is disappointment that the entire effort that lasted six months did not translate into a deal. But the board was not agreeable to the conditional offer made by the only bidder. From the perspective of the investor, they had a certain set of conditions and they are answerable to their shareholders, but it could not be accommodated by IFCI since it changed the nature of the transaction.”

While IFCI offered two seats on the eight-member board, the bidder wanted three. Sterlite also wanted to replace the CEO — a non-negotiable condition. Sources said, Sterlite wanted far greater control for the 26% sale in return for paying more than $1 billion, at Rs 110 a share. “Rights of minority shareholders could have been jeopardised in the long term. The exclusivity of control that they sought was unacceptable to the board.

If the board had spelt out these additional conditions in the Request for Proposal (RFP) stage, IFCI could have attracted more bidders at a higher price.” “We have made our best offer for IFCI to achieve the objective, such as making IFCI a world class institution, retaining existing talent, bringing in new talent and more expertise. We respect the government’s decision not to go ahead with the strategic sale,” an official statement from Sterlite said.

A senior government official, however, said there was no direct intervention from the government. “IFCI is a quasi-government institution and government guidelines apply to it. Under the Chief Vigilance Commission’s (CVC) guideline, a single bidder with a conditional offer cannot be appointed as an investor. Several conditions made by Sterlite were non-negotiable.” He also said that government was open to supporting IFCI in future.

The process that was kicked off earlier this year helped boost IFCI’s stock price from Rs 12 in January to Rs 121 earlier this week. The sale was fraught with uncertainties till the last minute with respect to capital structure and regulatory issues, among others. Detractors were crying hoarse on the non-transparency of the process. During the entire course of events, rumours were rife that the sale would never take place. Along the way, IFCI allowed creditor banks to convert their debt worth Rs 1,479 crore into equity. There was no clarity on the status of the government’s loan to IFCI before the bids closed.

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How will IFCI fare once market opens?
Moneycontrol.com

IFCI has said that it has scrapped the entire plan to sell 26% stake. IFCI will not pursue its stake sale talks with any bidders. Atul Rai of IFCI told CNBC-TV18 he was disappointed with the outcome but not surprised. The management of Sterlite said it respects IFCI board decision.CNBC-TV18's Sajeet Manghat analyses the implication of this move on the stock.
According to Manghat, one needs to look at it from two aspects. IFCI converted nearly Rs 1,300 crore of debt, which was held between financial institutions like LIC, GIC and some of the public sector banks into equity. The conversion price was Rs 107 per share, as per the Sebi convergent formula.

Now, post the stake sale being put off, we are going to see a fall in share price tomorrow. Grey market sources said that the stock is quoting somewhere around Rs 75-80, added Manghat.

People are willing to sell at that price but there are no buyers to take that stock at Rs 75-80. But the bigger loss would be for the banks and financial institutions, who will be converting their equity at a higher price of Rs 107 and get stuck with the equity, because the stock price would come down tomorrow, he commented.

Source: http://www.theeconomictimes.com and www.moneycontrol.com . We thank (will be grateful to) the owners of the above articles/sites/sources/Govts for allowing/referring this. We are just providing the link/information of business updates from the leading sources for the benefit of readers. Viewers are strictly advised to take own decision in Stock buying and make verification about the information. Blog is not responsible for any faulty information.

Kingfisher Airlines, Deccan to merge

Kingfisher Airlines, Deccan to merge
Sify.Com

Bangalore: Low-cost carrier Deccan and Vijay Mallya-led Kingfisher Airlines on Wednesday decided to merge and create a single corporate entity to cut down operational costs and accelerate their journey to profitability. The Boards of the two private airlines at a joint meeting unanimously decided after management consulting firm Accenture in its report recommended their merger for greater operational and marketing synergies.
Details of Deccan-Kingfisher merger, valuations and swap ratio will be worked out by accountancy firm KPMG.

For more news, analysis click here>>

Liquor barron Mallya's UB Group had earlier this year acquired 46 per cent stake in Deccan Aviation Ltd, becoming its single largest shareholder. Air Deccan will continue to be listed incorporating the businesses of both Kingfisher Airlines and Deccan itself but the listed entity's name will be changed to Kingfisher Airlines," UB Group Chairman Vijay Mallya said on Wednesday night. He said details of the merger, valuations and swap ratio would be done by KPMG, while Dalal & Shah were appointed to "very quickly" come up with valuations and recommend merger structure.

The listed entity (which would be Kingfisher) would offer low fare service under the Deccan brand and premium services under Kingfisher brand. "Hopefully, at the start of next year (April 2008), we should have one listed entity." Mallya said the charter business of Kingfisher and Deccan would be independent in a separate entity.

Mallya would be the chairman and CEO of the merged entity, while executive chairman of Deccan, Captain G R Gopinath would be the vice-chairman. UB Holdings held a 46 per cent stake in Deccan prior to the merger decision, and Mallya said the merged entity would be majority-owned by UB Holdings. Gopinath said Accenture was commissioned to come up with a comprehensive report on what needs to be done to get the operational and marketing synergies, bring down the cost of two airlines and give strategic and tactical inputs.

Mallya said the report highlighted how the two airlines can save a lot of money, bring down the cost of operation and accelerate the route to profitability by merging into a single entity.
"It (Deccan and Kingfisher) will be one company, and eligible to fly (internationally) in 2008," Mallya said. He said one of the key elements of the Accenture report is route rationalisation between the two airlines. "It's not going to one (airline) at the cost of another," he said.

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Kingfisher, Deccan agree to talk merger
The Economic Times

BANGALORE: The consolidation momentum in the Indian aviation sector has started rolling again with Deccan Aviation and Kingfisher deciding on an “in-principle” merger talks. This decision has wide ranging ramifications not just for the airlines but also for the entire industry. The move ends a long speculation of a possible merger after UB emerged as the single largest shareholder in Deccan Aviation. UB Holdings, the parent of Kingfisher, which holds 46% stake in Deccan Aviation, might float a new company to operate the merged entity. Emerging from the Deccan Aviation AGM here on Wednesday, UB Group chairman Vijay Mallya said there was “in-principle” agreement on the merger.

He was hopeful of pushing the matter through at the ensuing Deccan Aviation board meeting. It is learnt that Accenture, which was roped to suggest ways of maximising synergies between the carriers, also suggested a merger. The merged entity is likely to see the Mallya-led UB Holdings having a clear majority interest with the absolute quantum to be decided on swap ratio. Though the caveat being that both Deccan Aviation and Kingfisher would operate as separate brands in the skies. Captain Gopinath very categorically remarked that there would not be a single airline brand as both had different value proposition. UB Group CFO Ravi Nedungadi hinted at the possibility of a reverse merger for taking the listed Deccan into the privately-held Kingfisher.
“There is a possibility of forming a separate entity under UB Holdings to manage the merged operations...UB group has enough experience in handling merger situations”. Mr Nedungadi said the combined entity will have accumulated losses of around Rs 2,000 crore, with Kingfisher and Deccan contributing Rs 1,200 crore and Rs 800 crore, respectively.

“Losses of airlines are available for future set-offs against profits,” he added, while claiming that both airlines were expected to break even next financial year. The modalities of the merger are likely to be worked out by a financial consultant to be appointed by the two carriers. The merged entity will have an operating fleet of 75 aircraft with a marketshare of around 30%, placing it ahead of Jet-Jetlite combine and Indian. The merger could also smoothen the process for Kingfisher to start its international operations to the US and the UK by mid next year, as Deccan Aviation would complete five years of service, complying with the regulatory requirement. The Deccan Aviation scrip closed the day at Rs 295.45 on NSE, showing a fall of 6.44% while UB Holdings gained 1.4% to close at Rs 1,084 on the BSE.

Source: http://www.theeconomictimes.com and www.sify.com . We thank (will be grateful to) the owners of the above articles/sites/sources/Govts for allowing/referring this. We are just providing the link/information of business updates from the leading sources for the benefit of readers. Viewers are strictly advised to take own decision in Stock buying and make verification about the information. Blog is not responsible for any faulty information.

Sensex, Nifty end with marginal gains : Sify Finance

Sensex, Nifty end with marginal gains
Sensex ends marginally up; REL soars 4%
Sensex up marginally
Sensex ends flat

NSE 5751.15 8.85

BSE 19091.96 12.32

Taking cues from strong global markets, equities opened on a high note this morning, and, notwithstanding a few spells of selling stayed on in the positive territory till a little past noon. Stocks cutting across sectors were seen trading firm. So widespread was the interest that all the sectoral indices moved up sharply in morning trade.

However, as participants turned a bit cautious past noon, prices of several blue chip stocks began to swing in a highly volatile manner. A severe bout of selling pressure then sent the indices crashing deep down into the red. The Sensex, which had spurted to 19,397.76 in early trade after opening with a positive gap of over 275 points at 19,255.39, nosedived to 18,886.40, suffering a big loss of around 190 points.

Finally, thanks to a smart rally in select old and new economy stocks, the Sensex bounced back into the positive territory and ended the day at 19,091.96 with a small gain of 12.32 points. The Nifty, which touched a high of 5840.80 in opening trade, settled at 5751.15 with a gain of 8.85 points. In late afternoon trade, the Nifty crashed to a low of 5676.70.

With two trading holidays ahead and the expiry date of December series derivatives contracts not far away, the market witnessed immense volatility right through the session today. Though a few blue chip stocks held firm, several large and midcap stocks were seen struggling for support in afternoon trade.

Reliance Energy rallied smartly and posted a sharp gain of 4.15% on the back of reports that the company is planning to foray into Africa. It is reported that the company is in talks with the governments of Botswana, Tanzania and Zambia for setting up generation capacities of over 1,000 megawatt (MW). The company is also likely to bid for a 1,200 MW greenfield project at Yanbu in Saudi Arabia.

ONGC ended stronger by 2.65%. ICICI Bank (1.8%) and Infosys Technologies (1.1%) remained firm right through the session. Tata Consultancy Services, Tata Steel, ITC, Mahindra & Mahindra (the stock had a bright spell this afternoon), Larsen & Toubro and Ranbaxy Laboratories gained 0.5% - 1%.

Hindustan Unilever, DLF and BHEL ended with marginal gains. Ambuja Cements, HDFC Bank, Wipro, Cipla and Satyam Computer Services ended flat. ACC (down 3.4%), HDFC (down 2.4%), Maruti Suzuki (down 2.35%), State Bank of India (down 1.95%), Grasim Industries (down 1.65%), Tata Motors (down 1.55%), NTPC (down 1.25%), Reliance Industries (down 0.85%), Bajaj Auto (down 0.65%) and Hindalco (down 0.65%) ended on a weak note. Telecom majors Bharti Airtel and Reliance Communications also closed in the negative territory.

VSNL zoomed to Rs 738 in brisk afternoon trade at the counter and despite ending the session well off that mark, at Rs 716.25, posted a hefty gain of 18.4%. Nalco, Suzlon Energy, Sun Pharmaceuticals, HCL Technologies, Unitech, BPCL, Tata Power, Zee Entertainment and GlaxoSmithKline Pharma also finished on a firm note. GAIL India, ABB, Dr. Reddy's Laboratories, Punjab National Bank and Siemens ended with sharp losses.

Alok Industries, Gillette, Ispat Industries, Lupin, Rashtriya Chemicals & Fertilizers, Mastek, Indian Bank, Torrent Pharma, Jaiprakash Associates, Adani Enterprises, FDC, Arvind Mills, Jindal Saw, Gujarat Industries & Power and Indian Cements surged higher on strong buying support.

HCL Infosys, Lanco Infratech, Jet Airways, Moser Baer, Indian Overseas Bank, Alstom Projects, Union Bank of India, Rolta India, Bharat Earth Movers, Sun TV Network, EIH Limited and Godrej Consumer Products closed with sharp losses.

The market breadth was positive. Out of 2941 stocks traded on BSE, 1883 stocks ended with gains. 1030 stocks closed in the negative territory and 28 stocks ended unchanged from their previous closing levels.

18 December 2007

The Economic Times Stories

http://economictimes.indiatimes.com/

Investors go with high-flying firms
Asia bright for investment bankers
Direct tax mop-up rises 42.5%
Maruti announces savings up to Rs 57,500 for its customers
---------------------------------------------------------
ECB walks the talk, pumps in $500 bn
REL to bid for projects in three African countries
In video: Interview with Krishna Bharat Google News creator
Google News: Newspapers should love us
Tata bids over $2.05-bn for Jaguar-Land Rover; M&M at $1.9 bn
SBI, CEOs of associates to meet in Jan to discuss merger
Pricing wrinkles remain in IFCI stake sale

ONGC 1st Indian to enter 'World's Most Admired Companies' list
Essar Oil to tie-up funds for refinery expansion by Jan-end
Reliance Steel opens new Shanghai plant
HDIL to enter entertainment sector, invest Rs 1000 cr
Tata Power to enter shipping biz, raise Rs 4,000 cr
PM panel reviews Re impact on exports
India among 5 nations sharing half of world production

SEBI suggests mini contracts in equity derivatives
Buy Tata Chemicals with target of Rs 444: Asit C. Mehta
Stocks you can buy: Wipro, Lupin, NALCO, JBF Industries
Heard on the street
IDFC Private to invest 25% of its funds in fast-growing sectors
RCF smells a goldmine, plans to sell Mumbai land
Marketers who dominate the market

Source: http://economictimes.indiatimes.com/headlines.cms . We thank (will be grateful to) the owners of the above articles/sites/sources/Govts for allowing/referring this. We are just providing the link/information of business updates from the leading sources for the benefit of readers. Viewers are strictly advised to take own decision in Stock buying and make verification about the information. Blog is not responsible for any faulty information.

Jyothy Labs likely to lists around Rs 1000 : MC Article

Jyothy Labs likely to lists around Rs 1000

After an excellent response to the public issue, Jyothy Laboratories will list on the bourses on December 19, 2007. The offer price has been fixed at Rs 690 per share.
R S Iyer of K R Choksey Securities told Moneycontrol.com, "Jyothy Labs is expected to list around Rs 1000. One, who has a capacity to hold stock till Rs 1200, can hold. Above Rs 1200, one should book profits."

The company had entered capital market with an initial public offering (IPO) of 44.30 lakh shares of Rs 5 each at a price band between Rs 620 and Rs 690 per equity share and raised Rs 305.67 crore from the issue. The issue had subscribed 45.83 times.

Jyothy Labs' promoters stake stood at 69.47%. Its investors including Canzone Limited, ICICI Bank Canada, ICICI Bank UK PLC, South Asia Regional Fund and CDC Investment Holdings have sold their stakes through this offer.FMCG company is in the fabric care, household insecticide, surface cleaning, personal care and air care segments of the Indian market. It offers branded products including fabric whitener, mosquito repellent, dishwashing, bath and incense products.

Enam Securities Pvt Ltd and Kotak Mahindra Capita Company Ltd are book running lead managers and Intime Spectrum Registry Limited is the registrar to the issue.

Other IPO news:
Apply for Precision Pipes IPO: Prabhudas L
Subscribe to Manaksia with long term view: Keynote

Source: http://www.moneycontrol.com . We thank (will be grateful to) the owners of the above articles/sites/sources/Govts for allowing/referring this. We are just providing the link/information of business updates from the leading sources for the benefit of readers. Viewers are strictly advised to take own decision in Stock buying and make verification about the information. Blog is not responsible for any faulty information.

ECB injects $500 bn into banking system : Moneycontrol.com

ECB injects $500 bn into banking system

ECB has injected USD 500 billion into the banking system, reports CNBC-TV18.
Agencies also reported that money market rates tumbled after ECB fund injection.

The rates charged by banks for two-week loans are down a record 50 bps at 4.45%. US stock-index futures have risen 0.75% after the cost of borrowing euros crashed.

The European Central Bank has injected an unprecedented USD 500 billion into the banking system as part of a global effort to ease the gridlock in the credit market. The amount banks charge each other for two-week loans in euros dropped a record 50 basis points to 4.45%, after climbing 83 basis points in the past two weeks.

This unprecedented infusion of cash is because normally the cash that is infused is only an overnight tenure and these are called repos because they are normally for temporary mismatches that banks might face. This is a 16-day loan, which means that the loan given today will have to be repaid on January the fourth which is the 16 working day loan that the ECB is giving. The commercial banks in Europe and in the US usually don’t want to lend over the year-end. This is normal phenomenon at the quarter end or the year-end and there is a hesitation to lend loans because you will have to find extra capital.

The move is to restore confidence in the money markets after the US subprime crisis. Central banks, led by the Federal Reserve, are seeking to restore confidence to money markets, after the collapse of the US subprime-mortgage market. The ECB loaned a greater than anticipated USD 501 billion for two weeks at 4.21% today.

Capital is a rare commodity or scarce commodity in the global central banks because their assets have eroded really badly because of the subprime crisis. So more capital is needed to sure up the same amount of loans. At such a juncture, people are simply not willing to lend year-end loans because if they lend loans now they have to find more capital to back up those loans.

So loans are simply not being lent. There is just no transaction and therefore if there is any odd commercial bank, which wants money, it has to pay higher and higher rates. This is the reason why the money market rates over the last one-week was rising by nearly 83-bps- which is 1 percentage point higher for just a two-week loan or a three-week loan.

The long-term effect will be next to nothing because all these loans mature in two-weeks and in the case of the Fed, they mature in a month or so. So there will be no impact on inflation at all because of this higher liquidity. This is clearly only to break a year-end gridlock that banks normally face in this particular year.

Source: http://www.moneycontrol.com . We thank (will be grateful to) the owners of the above articles/sites/sources/Govts for allowing/referring this. We are just providing the link/information of business updates from the leading sources for the benefit of readers. Viewers are strictly advised to take own decision in Stock buying and make verification about the information. Blog is not responsible for any faulty information.

Discover Stock Market India Nifty Bank Nifty Technicals Analysis & India Business Stories

19 December 2007

The Economic Times Corporate Stories

VC, PE updates from VCCircle.com, Indiape.com

Moneycontrol, Myiris Stories

IFCI sale falls through on management control : ET

Kingfisher Airlines, Deccan to merge

Sensex, Nifty end with marginal gains : Sify Finance

18 December 2007

The Economic Times Stories

Jyothy Labs likely to lists around Rs 1000 : MC Article

ECB injects $500 bn into banking system : Moneycontrol.com

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