Sahara counters market cop move

The Sahara group claimed it had strong legal opinion that buttressed its argument that market regulator Sebi had no jurisdiction over unlisted entities and was, therefore, wrong to debar Sahara group founder Subrata Roy and two group entities from accessing the capital markets.

On Wednesday, Sebi had taken the extreme step after it detected serious lapses in the draft red herring prospectus of Sahara Prime City.

The action was taken in response to complaints that two group entities —Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) — had issued convertible bonds to a select class of investors which wasn’t disclosed in Sahara Prime City’s prospectus.

While SIRECL had issued optionally fully convertible debentures (OFCDs) in April 2008, SHICL had floated the same instrument in November 2009. The Sahara group has claimed the issue of these bonds by unlisted companies warranted no disclosures in Sahara Prime City’s offer document. It also argued that Sebi had no jurisdiction over unlisted entities and their flotations, which came within the ambit of the ministry of corporate affairs.

The group said its strong body of legal opinion, including former Chief Justice A.M.

Ahmadi, former presiding officer of the Securities Appellate Tribunal C. Achuthan and a former Supreme Court judge, supported this stand.

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China fear fells stocks

Stock markets today witnessed their steepest fall in about six months, with the sensex nosediving about 445 points to close below the psychological 20000 mark. Hectic selling was seen across blue-chips, including Reliance Industries and Sterlite Industries, on negative cues from China and Europe.

China's benchmark index Shanghai fell four per cent.That dragged down the Bombay Stock Exchange 30-share barometer by 444.55 points, or 2.19 per cent, to settle at 19865.14. On May 25, the BSE benchmark had seen a record fall of 447 points. The last time the sensex closed below the 20000 mark was on October 28. The sensex had opened on a promising note but soon lost ground as investors were cautious and preferred remaining on the sidelines.

The National Stock Exchange's wide-based Nifty saw a steep decline of 132.90 points, to close below the 6000mark at 5988.70. Marketmen said negative global cues and the strengthening dollar weighed heavily on the market. "The continuing weakness in the rupee against the dollar and the rate hike concerns in China is leading the fall on the domestic bourses and the stock markets are likely to remain choppy for the coming few sessions," Rajesh Jain, executive vice-president and head of retail research of Religare Securities, said. Metal counters were the worst hit with copper producer Sterlite Industries plunging the most. The counter shed 5.4 per cent to close at Rs 172.60, while aluminium producer Hindalco and steel giant Jindal Steel declined 5.21 per cent and 1.13 per cent, respectively. Tata Steel also erased its last session's gains to settle with a loss of 1.91 per cent.

Reliance Industries and Larsen & Toubro contributed the most to the overall sensex loss. While RIL plummeted 2.24 per cent, L&T tumbled 2.53 per cent on the BSE. Bharti Airtel was the only counter that emerged as a winner in the falling market with a gain of 1.16 per cent. Global markets were subdued, with Asian stocks ending in red. Europe was also trading weak in the afternoon. 

Source: http://www.telegraphindia.com

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Falcon profit up 41%

Falcon Tyre, the flagship company of city-based Ruia Group, has reported a 41.4 per cent growth in net profit for the July-September quarter at Rs 17.22 crore against Rs 12.17 crore in the same period last year. 

The company, which makes two and three-wheeler tyres under the Dunlop brand, posted robust growth in sales.  Income from operations went up 55.9 per cent to Rs 221.02 crore compared with Rs 141.71 crore in the year-ago period.  On a standalone basis, net profit for the year rose 71 percent to Rs 51.63 crore from Rs 30.23 crore last year. Falcon follows the October to September fiscal calendar. 

Net sales stood at Rs 788.1 crore compared with Rs 551.07 crore in the previous fiscal, recording a 43 per cent rise. The company announced a 50 per cent dividend for the year. Pawan K. Ruia, chairman of Ruia Group, attributed the performance to capacity augmentation, better realisation because of increased presence in the replacement market, effective cost control and reduction in wastage.

He said further capacity of 500,000 tyres per month was being added to the Mysore plant. It is expected to be ready by mid-2011. A new plant at Hardwar, Uttarakhand, with a monthly capacity of 500,000 tyres is also expected to be operational next year.

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SBI plans to make a buy in Indonesia

The State Bank of India is on the lookout for a bank in Indonesia in a cash deal not exceeding $100 million (about Rs 450 crore). 

Indonesia provides high growth potential, and the SBI has identified two to three banks for the acquisition, a senior official of SBI said. “We are not in favour of giving cash more than $100 million,” the official said.  At present, the SBI has a subsidiary in Indonesia called PT Bank SBI Indonesia having six branches. Last year, PT Bank IndoMonex was renamed PT Bank SBI Indonesia.  Increasing the branch network will take time, the official said, adding that inorganic growth is easier and a quicker way to expand. 

According to Indonesian law, an entity cannot run two banks simultaneously. The acquirer has to take over only those banks where the owner or majority holders exit completely and the entity is merged.  The country’s largest bank has 125 foreign offices in 23 countries, including Singapore, the US, Canada and Mauritius. For the second quarter ended September, the SBI’s net profit grew merely 0.4 per cent to Rs 2,501.3 crore from Rs 2,490 crore in the corresponding period a year ago owing to higher provisioning for bad assets.  Bank growth Domestic banks will have to scale up their asset size five times over the next five years if they want to cope with demand for capital from an economy that is clipping at near double digits, says a report by McKinsey & Company .

The No. 1 bank in the country -the report did not name the SBI -will have to scale up its asset size to $800900 billion by 2015 from the current size of $200 billion (March 2009), the report said. The No. 10 bank will have to grow to $90-100 billion by then. The No. 1 Chinese lender will have to grow its size to $4,000-4,500 billion by 2015, up $1,700 billion in 2009.

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Bharti Airtel net dips 27%

Bhart Airtel today reported a 27 per cent fall in net profit for the July-September quarter because of high interest cost and intense competition. Bharti, the country’s largest mobile company in terms of users, registered a net profit of Rs 1,661 crore during the quarter compared with Rs 2,263 crore in the year-ago period. 

Revenue rose about 47 per cent to Rs 15,215 crore from Rs 10,379 crore in the same period last year, on the back of the acquisition of Zain’s telecom operations in 15 African countries in June. “Bharti Airtel continues to maintain its leadership position in India and generate healthy free cash flows. We are also redefining the accessibility and affordability level across Africa through innovative business models,” said Sunil Mittal, chief of Bharti Enterprises. Bharti had interest costs of Rs 502 crore in the July-September period compared with Rs 133 crore a year ago, mainly on account of the debt it took to fund the $9-billion acquisition in Africa. It had also borrowed funds to pay over Rs 12,000 crore to buy spectrum for third-generation mobile and wireless broadband services. 

Monthly average revenue per user (ARPU) — a key indicator of profitability —  dropped 6 per cent to Rs 202 from Rs 215 in the last quarter, despite an environment of stable pricing. Bharti, about 32 per cent owned by Singapore Telecom, has operations in India, Africa, Seychelles, Bangladesh and Sri Lanka. It has 194.8 million subscribers, including 150.41 million in India and 40.1 million in Africa. Airtel today said it might list its telecom tower subsidiary Bharti Infratel, which owns around 32,000 towers in 11 circles. Infratel also holds a 42 per cent stake in Indus Towers — a joint venture with Vodafone and Idea. According to analysts, the listing can help Airtel generate cash. The company is in the process of launching 3G services in the 13 circles where it has bagged spectrum through an auction held recently and rest of the country through roaming pacts. 

Source: http://www.telegraphindia.com

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Tata Motors profit takes a big leap

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Tata Motors the country's largest automobile company, streaked way ahead of Street estimates by posting a consolidated net profit of Rs 2,223 crore in the three months ended September 30 compared with a mere Rs 22 crore in the corresponding quarter of last year.

Consolidated net revenues grew 36.5 per cent to Rs 28,782 crore in the second quarter of this fiscal from Rs 21,088 crore in the three months ended September 30, 2009. The company witnessed a strong volume growth across both domestic and international markets. Jaguar Land Rover, the British luxury brands that the company has successfully turned around, fared well, especially in China. "The Jaguar Land Rover business continued to show strong profitability with healthy volumes in the second quarter and a profit after tax of Rs 1,715 crore," said a statement by Tata Motors. "Both wholesale and retail volumes improved favorably compared with the corresponding quarter in the prior year on the back of improved market conditions and a continued overwhelming response," it added.

On a standalone basis, Tata Motors' revenues in the second quarter grew 44 per cent to Rs 11,504 crore from Rs 7,978 crore in the corresponding period of the last year. However, anticipated cost pressures and supply chain bottlenecks triggered a 9.7 per cent dip in operating margins. Standalone profit after tax or this quarter was Rs 433 crore compared with Rs 729 crore last year. However, in the corresponding quarter of the ast year, the company had booked a profit of Rs 370 crore on sale of investments that were not subject to tax.

In India, favorable economic conditions, a good monsoon and easy availability of financing contributed to the high demand and subsequent y higher volumes. Commercial vehicle sales -where the company has a 61 per cent market share -grew 23.4 per cent year on year. Passenger vehicles, which include Fiat and luxury brands Jaguar and Land Rover, grew 35.5 per cent year on year. The Tata Motors scrip reached a new high ahead of the results and closed at Rs 1,270.55, an increase of 0.20 per cent on the Bombay Stock Exchange today. 

Source: http://www.telegraphindia.com

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PowerGrid price band at Rs 85-90

The government today fixed state-run Power Grid Corporation's follow-on public offering (FPO) at Rs 85-90 a share, which could fetch up to Rs 7,600 crore. The follow-on offer of 20 per cent of its capital will see the power transmission firm selling a little over 84 crore shares with a face value of Rs 10 each at a premium of Rs 7580 apiece. Retail investors will get a discount of 5 per cent on the issue price.

"We think it will be a good success story. The offering is at a discount to the market price," power ministry officials said. The cabinet committee of economic affairs had given its nod for the FPO a fortnight ago. The share, which had been rising since then, closed at Rs 102 on Diwali. At Rs 102, the stock trades at 17.2 times its estimated 20102011 earnings, and analysts expect it to trade up further in the years to come, but do not see any remarkable spurts. The follow-on offer will hit the market on Tuesday .

Bids will close on Thursday for institutional investors and on Friday for retail buyers. Half of the offering will be in the form of government shares and the rest will be fresh shares issued to the public by the company to raise funds for expansion. After the FPO, the government holding will come down to 69.4 per cent. The company had hit the capital market in October 2007 with its maiden public offer. The government had divested 5 per cent of its stake at that time. PowerGrid plans to spend up to Rs 58,000 crore on ex panding and strengthening transmission network.  Officials said the money would go towards increasing the transmission network by 18,711 circuit km. The company will build nine high-capacity transmission corridors.

For the first half of the fiscal ended September, Powergrid's profits grew 34 per cent. The government raised around Rs 15,200 crore through the Coal India IPO last month and about Rs 2,000 crore from two smaller offers. Though the government has set a target of Rs 40,000 crore from divestments this fiscal, it may actually end up raising as much as Rs 58,000 crore. thanks to the buoyant stock market.

An initial public offer by Manganese Ore India in early December and a follow-on offer by Hindustan Copper are on the cards.Offerings of big state-run firms such as Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC) and Steel Authority of India Ltd (SAIL) are expected by January-March. Officials said IOC's issue would be around Rs 19,00020,000 crore, ONGC's Rs 15,000 crore and SAILs' Rs 18,000 crore.

Source: http://www.telegraphindia.com/

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Apex bank gears up to tackle inflation irritant

The Reserve Bank of India has once again raised the red flag on inflation even as it sounded optimistic about the country's economic growth prospects.

Releasing a document titled "Macroeconomic and Monetary Developments in the Second Quarter of 2010-11", the central bank today said GDP growth was consolidating around the current trend level of 8.5 per cent, but headline inflation remained a source of worry. The document will serve as the backdrop for the monetary policy review here tomorrow. Two RBI surveys -one of professional financial forecasters and the other of industry players -gave a clear indication of the opportunities and the challenges that the country now faces.

Image Courtesy: telegraphindia.com

The financial forecasters upped their median GDP growth target for 2010-11 to 8.5 per cent from 8.4 per cent. However, the RBI's industrial outlook survey warned that the index of industrial production (IIP) -which has recorded a double-digit growth on the back of a robust inventory build-up in the two quarters -could start to flag in the days ahead. "Part of the IIP growth was the result of inventory build-up, which may not persist, going forward," the RBI warned even though it said manufacturers were upbeat about growth and hiring trends.

However, in an indication that it may raise key short-term rates tomorrow, the RBI said though the WPI inflation had shown some de cline in recent months, it still remained significantly high. The central bank has raised key rates five times this year to tackle inflationary pressures. Most pundits are betting on a 25-basis-point hike in the reverse repo and repo rates, which will be the sixth interest rate hike this year and make the RBI almost as aggressive as Brazil's central bank in its policy rate action. "Overall, the inflationary process, which originated from supply shocks, and then turned increasingly generalized, seems to have moderated but remains elevated at beyond the comfort level," the apex bank observed.

According to the RBI, there are both domestic and global factors responsible for higher prices. Detailing the inflation picture, the report said the key commodities, which contributed significantly to headline inflation, were mineral oils, food articles such as milk, egg, fish and meat, minerals and textiles.

"At present, an important concern from the point of view of inflation management is the downward rigidity in primary food article prices even after a good monsoon. With a normal monsoon, it was expected that food prices would moderate substantially. However, food inflation continues to remain in double digits.
 

It needs to be emphasized that with the increase in income levels, the consumption basket is getting diversified more in favor of non-cereal items such as milk, vegetables, fruits, meat, poultry and fish, which are important from the nutritional angle," it pointed out. 

Source: http://www.telegraphindia.com/

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