Annual interest outgo seen Rs 540 cr post CDR: Gammon India

Like most infrastructure companies,  Gammon India has been impacted by slower economic growth and project delays. The company's board on Wednesday approved a proposal to increase its authorise share capital from Rs 176 crore to Rs 15,047 crore, as banks that have lent to the company have been given the option to convert their loan into equity shares. Should the banks choose to do so, Gammon will issue up to 168 crore shares at Rs 27.05 apiece to the CDR lenders on a preferential basis. Banks have so far loaned the company around Rs 4500 crore. 

Also Read: Gammon India to monetise Mumbai property to cut debt

Gammon CFO Girish Bhat however says the entire CDR of the company has been approved and insists that it is only an enabling resolution. "It is not that lenders are converting this into equity shares; this is only an enabling resolution that if any event happens after 10 years, and the company is unable to repay its debt then we have got the right to convert it into equity," he told CNBC-TV18. He says debt on the book as on September 30 is Rs 4,290 crore.

The installments of the debt payment will start from April 15, 2015, and the interest rate for all funds has been reduced to an extent of almost 1 percentage point. The overall CDR package will be spread over 10 years. He expects yearly interest outgo to be Rs 540 crore going forward.

Below is the verbatim transcript of Girish Bhat's interview on CNBC-TV18

Q: Will the lenders be willing to convert their money into shares at Rs 27? The going price of your share is not even half that, so will they be willing?

A: Just to clarify, first of all we are in the CDR process. Our entire CDR of the company has been approved and this is the enabling resolution. It is not that lenders are converting this into equity shares, this is only an enabling resolution that if any event happens after 10 years, and company is unable to repay its debt then we have got a right to convert it into equity. So it is not that we are converting our debts into an equity. It is only an enabling resolution to increase the authorized capital of the company.

The shares which have been issued are basically out of the total Rs 14,500 crore of our banking limit, we have got a funding limits where the banks are funding Rs 4,500 crore. Balance is non-fund base limit so that fund base limit was the conversion any time in the future, it gets converted because of our default in a ten years period then the price has been fixed at Rs 27.05 only for 100 days.

Q: Can you tell us what is the debt on your books and what are the key features of the CDR package?

A: Debt on the book as on September 30 is Rs 4,290 crore. The overall CDR package indicates that we have been given a breather in terms of repayment amortization funding for the repayment of the debt, there is a moratorium for one and a half years. So the reinstallments of payment of the debt will start only from April 15, 2015, and the interest rate for all our funds has been reduced to an extent of almost around 1 percentage point. The overall CDR package is spread over 10 years. We started from July 1, 2013. Therefore it starts from that date and it extends to an extent of around 10 years and the first repayment of the debt will start from April 2015.

Q: Can you take us through the final shareholding structure of the company post the issue of fresh shares what will the promoters' stake stand at because currently they hold about 35 percent?

A: I think we have to rework it because it will be converted because promoters have contributed around Rs 100 crore as part of this CDR package. It has to be converted into equity share based on the price prevailing. So as per the Securities and Exchange Board of India (SEBI) guidelines, this will be converted as we go forward into an equity holding. I am not sure how exactly the effective end position of the promoters' contribution will lead to an end result of the promoters shareholding, but I am sure it will be definitely higher than 51 percent.

Gammon India stock price

On November 28, 2013, at 14:09 hrs Gammon India was quoting at Rs 13.60, up Rs 0.28, or 2.10 percent. The 52-week high of the share was Rs 43.20 and the 52-week low was Rs 8.15.

The latest book value of the company is Rs 125.60 per share. At current value, the price-to-book value of the company was 0.11.

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Expect substantial improvement in margins FY15 onwards: KEC

EPC player KEC International expects to see a substantial improvement in its margins from FY15 onwards, managing director Ramesh Chandak said in an interview to CNBC-TV18.

The company reported a consolidated net profit of Rs 22.1 crore in Q2FY14, up 34 percent, versus Rs 16.5 crore year-on-year (YoY). Total income stood at Rs 1,778 crore, up 6.6 percent, versus Rs 1,668 crore (YoY). Its EBITDA rose up 30.4 percent at Rs 112 crore compared to Rs 85.8 crore (YoY).

However, it is unlikely to see double digit margins , he added.

Chandak further highlighted that the second quarter is a seasonally weak quarter for infrastructure companies due to monsoon and the company is not facing any execution problems.

Meanwhile, KEC International hopes to clock 14-16 percent growth in sales for FY14.

Below is the edited transcript of Ramesh Chandak's interview with CNBC-TV18

Q: One thing that the street is quite positive is that they expect your operating margins to improve going forward. They improved quite a bit in Q2 and you have also indicated that your low margin legacy orders will also soon get completed, so overall in FY14 what is the expectation, how much the EBITDA margins can improve?

A: We are expecting EBITDA margins to be about 1 percent more than last year. Going forward, FY15 onwards, there will be a substantial improvement in the margin. This time we have some legacy contracts, which will get over by this year. In spite of that, our EBITDA margin should be about 1 percent more than last year.

Q: Revenue growth was muted last quarter. Our average has been about 22 percent but last quarter was only about 7 percent was that a one-off and will that be addressed as we go forward?

A: Quarter-to-quarter execution might change, but we are expecting around 14-16 percent growth and that should come according to us.

Q: You said that in FY14 margins will improve by 1 percent and FY15 it will be substantially higher, can they even touch the double-digit mark, your operating margins, in FY15?

A: No, I don't think so. They will not be double digit, but they will be in the range of 8-9 percent.

Q: Just to go back to Q2, did you have some execution problems and was that a bit of a one of in that case?

A: It is not a question of execution problem. It is a cycle of how you are executing, which contracts are coming to execution and because of the rainy season this year rainy season got extended not much work can be done. That impact is there.

KEC Intl stock price

On November 28, 2013, at 14:10 hrs KEC International was quoting at Rs 43.20, up Rs 0.35, or 0.82 percent. The 52-week high of the share was Rs 74.45 and the 52-week low was Rs 23.25.

The latest book value of the company is Rs 37.99 per share. At current value, the price-to-book value of the company was 1.14.

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Wockhardt hit by FDA alert on Chikalthana plant

The US Food and Drug Administration has imposed an "import alert", effectively a ban, on the Chikalthana plant operated by Indian generic drugmaker Wockhardt Ltd , the regulator said in a notice on its website, sending the company's shares down as much as 13.5 percent.

An "import alert" results in the detention without physical examination of drugs from firms that have not met so-called good manufacturing practices, according to the FDA website.

A spokesman for Wockhardt was not available for comment.

The latest FDA action against Wockhardt comes amid a slew of regulatory rebukes this year. Its factory in Chikalthana in western India was last month hit by the British drug regulator's curb on imports from the plant over manufacturing deficiencies.

Indian firms, which make nearly 40 percent of generic and over-the-counter drugs for the US market, are facing more regulatory woes, including a record fine for Ranbaxy Laboratories , amid increased scrutiny by overseas regulators.

Wockhardt stock price

On November 27, 2013, at 14:10 hrs Wockhardt was quoting at Rs 427.95, down Rs 44.05, or 9.33 percent. The 52-week high of the share was Rs 2166.05 and the 52-week low was Rs 344.15.

The company's trailing 12-month (TTM) EPS was at Rs 32.23 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 13.28. The latest book value of the company is Rs 74.56 per share. At current value, the price-to-book value of the company is 5.74.

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Gas price hike to add Rs 4,400cr to profit: ONGC

The proposed doubling of gas price to USD 8.4 mmbtu from April 1 next year should add roughly Rs 4000 crore to annual profit,  ONGC chairman and managing director Sudhir Vasudeva said in an interview to CNBC-TV18.

Oil minister Veerappa Moily Tuesday reiterated the government's commitment to raise gas prices and said the revised gas price would be notified shortly.

"What came as music to our ears yesterday was that very categorically it was told that we will be given the producer price and as regards the subsidy to be given to fertilizer and power sectors, that would be decided between the finance ministry and the concerned ministry," Vasudeva said.

Vasudeva is hoping that the government will allow ONGC to retain much of the profits from the higher gas prices, as the company was bleeding cash from selling oil at subsidized prices.

Vasudeva is doubtful if the under-recovery on diesel can be eliminated in six months, because the 50 paise per litre monthly increase in diesel price is not enough to bridge the Rs 9 per litre under-recovery.

He has warned that unless the government acted decisively on resolving the oil subsidy issue, ONGC's cash reserves would be drained in the next couple of years to fund its capex programme. The company's 12th plan outlay is Rs 1,65,000 crore, which works out to around Rs 35,000 crore annually.

"There is no threat but if we don't address this subsidy burden this will start affecting us because our outlay for this year is about Rs 35000 crore and since we don't get any extra budgetary support, all this we have to generate through our revenues," he said.

He said at current level of net realization, the company would not be able to generate Rs 35,000 crore

"So we will have to draw down about Rs 5000 crore this year and our projection is that in case the prices do not change and we continue getting same prices of about USD 43-44 we might need another Rs 5000 crore next year as well," he said.

"That means in next two years we would finish our cash, then we will have to go to the market to either raise that and if we don't do that then we will have to curtail our activities," he said.

Next Page: Full interview transcript

ONGC stock price

On November 27, 2013, at 14:15 hrs Oil and Natural Gas Corporation was quoting at Rs 291.30, up Rs 4.50, or 1.57 percent. The 52-week high of the share was Rs 354.10 and the 52-week low was Rs 234.40.

The company's trailing 12-month (TTM) EPS was at Rs 22.24 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 13.1. The latest book value of the company is Rs 145.47 per share. At current value, the price-to-book value of the company is 2.00.

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Devising strategy to get most out of rural demand: Marico

The second quarter displayed a mixed set of numbers from companies in the fast moving consumer goods sector which were battling a slowdown in urban spending. But FMCG major Marico is confident of securing decent growth going ahead on the back of robust rural demand.

Speaking to CNBC-TV18, Saugata Gupta, CEO, said the company is counting on significant improvement in volume growth over the next few quarters. The company is embarking on a strategy of direct distribution and focussing on right cost structure and right price points for consumption to tick in.

Also Read: Positive on Dabur, Marico, Bata and Emami, says CIMB  

Below is the verbatim transcript of the interview

Q: Give us an idea of consumption trends and themes in India. On the volume front, Q2 results for all fast moving consumer goods (FMCG) companies were mixed at best. Are those ghosts of slowdown in urban discretionary spending still haunting you? Which segments and categories are showing the impact most?

A: The slowdown started last year when there was a slowdown in the discretionary food items especially packaged foods. Then it flew down into top-end personal care, which is discretionary and that slowdown is happening mostly in urban India. However, I believe strongly that the worst is over because the base correction would start coming in sometime during December-January because that was the time last year when the sector started slowing down.

Q: We spoke about rural demand as the next big growth driver a few months back because of the good monsoon but have the strong monsoon already translated into higher rural spending? Is it playing out in the second half or is it a bit of a dampener?

A: There was no significant slowdown in rural India except in certain areas which had significant drought last year, for example Maharashtra. We believe that in the next few months the rural growth will continue to have a certain degree of momentum and one might not see significant upside because there was no slowing down that happened. However the rural growth will continue to be robust and I believe the sector will continue to grow higher at a faster rate in rural than in urban over the next couple of quarters.

Q: Now that rural and mid tier India is where the next wave companies will ride on, how are consumer companies gearing to address this market? What is the change and strategy and how are companies like yourself going to tap the potential which rural markets have to offer?

A: Two things; First, much more focus on direct distribution and therefore investments behind go-to-market in technology, in people and other infrastructure. Second is in terms of portfolio. I think what has changed in the last five-ten years is that earlier, ten years ago, they would have been looking at a different portfolio for rural and urban but people wanting the same brand, the aspirations are the same. It is a question of getting the right pack size, getting the right cost structure so that you develop a right price points for consumption to tick in.

Marico stock price

On November 27, 2013, at 14:10 hrs Marico was quoting at Rs 209.50, up Rs 3.20, or 1.55 percent. The 52-week high of the share was Rs 251.10 and the 52-week low was Rs 190.50.

The company's trailing 12-month (TTM) EPS was at Rs 7.43 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 28.2. The latest book value of the company is Rs 30.88 per share. At current value, the price-to-book value of the company is 6.78.

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Won't sell USL shares; hope to recover KFA investment: SREI

SREI Infra is still optimistic on recovering its investment in cash-strapped Kingfisher Airlines (KFA), CMD of the non-banking finance company Hemant Kanoria said in an interview to CNBC-TV18.

A debt fund operated by the Kolkata-based Srei Infrastructure had bought out the entire exposure of ICICI Bank in KFA, worth around Rs 430 crore in July this year.

He further added that the company has no plans to liquidate the shares of United Spirits in the near-term. Its fund management arm Srei AMC had acquired 49 lakh shares of United Spirits.

"At this a particular juncture we have not yet decided that we will be liquidating the shares to get the money because we don't see that it is in an unsafe zone," he elaboarted.

Also Read: Profitability to improve in Q3; rise in NPA unlikely, says SREI

Below is the verbatim transcript of Hemant Kanoria's interview with CNBC-TV18

Q: What is happening to the shares that you hold in United Spirits? Yesterday also we had a block deal; there was a buzz that SREI Infrastructure was the seller but it came out that that was not the case. What is your plan with those shares?

A: Our plan is very clear which we have been articulating since the last one year now. Since we have made an investment that this is the security which we have of United Spirits (USL) share is against the loan which we have given and which was novated from ICICI Bank. So, therefore till the time did we see that there is a threat that the loan will not come back we don't have to go and liquidate the shares.

So, at this a particular juncture we have not yet decided that we will be liquidating the shares to get the money because we don't see that it is in an unsafe zone. So, we are happy our business is to lend and this has been invested through a fund so therefore there other investors also.

No one is at present panicking that they need to get their money. So, therefore the fund, when it takes a decision of getting the money from the borrowers and if it does not in the event that it does not get then only it will go into liquidate the shares. Before that there is no reason why we should panic.

Q: United Spirits stock in itself is doubled since you have got it on account of your loan. The internal rate of return (IRRs) as well on this would be much high than what you would have earlier anticipated. So, is it not a consideration that given the kind of money that you made on it that you would look to liquidate it and cash out?

A: As a matter of fact, it is like the fund has taken the loan and SREI is a fund manager. So, therefore it is taking a classical example that someone has borrowed against their house and if they do not pay then only the lender will go and liquidate the property. Just because the fact that the property prices are appreciating, the lender will not go and liquidate it and make a profit out of it.

The lenders business is to lend and earn an interest; the security value increases which is good for the lenders. The similar position is for us where the fund is concerned. So, the fund has lent the money and today the security is appreciated so it is good from the security perspective for the fund.

Q: You still have hopes of recovering money from Kingfisher in that case?

A: Definitely, we have good security so therefore there is nothing to get concerned about it. In the event that we do not get the money then we will go into liquidate the security. However, at this particular juncture that situation has not risen.

Q: Is there any timeline that you have decided in principle that by when will you see if the money is coming or at least there is some indication of money coming back before you take the step of liquidating the collateral?

A: The fund investors at present are comfortable. As soon as the investors say that they want to get their money back or they would like to liquidate then we will have to take a call accordingly. It is through the fund so the fund investors have to take the decision.

SREI Infra stock price

On November 27, 2013, at 14:12 hrs SREI Infrastructure Finance was quoting at Rs 22.05, up Rs 0.05, or 0.23 percent. The 52-week high of the share was Rs 51.50 and the 52-week low was Rs 17.45.

The company's trailing 12-month (TTM) EPS was at Rs 1.35 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 16.33. The latest book value of the company is Rs 52.62 per share. At current value, the price-to-book value of the company is 0.42.

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To market Roche's cancer drug clone from FY14 end: Biocon

Biocon has received approval to market Roche's cancer drug clone. Roche, the Swiss innovator firm, markets Trastuzumab in India under the name Herceptin.

Kiran Mazumdar Shaw, CMD, Biocon says the nod is for India marketing rights but opens up huge opportunities as the cancer drug has a market of USD 6 billion worldwide. Biocon is developing this biosimilar in partnership with Mylan and expects to begin marketing the cancer drug clone by FY 2014-end.

Shaw insisted that the company's growth is dependent on all its verticals and insulin, small molecules and research services businesses are seeing robust growth.

Below is the edited transcript of the interview on CNBC-TV18:

Q: We want to speak to you about this cancer drug for which you have now got the central drug regulator's nod. Roche also has not applied for extending its patent on that, does this open up a very big opportunity for you in terms of money? What does this mean and when can you benefit from this cancer drug?

A: I should explain this particular approval to you. What we have got the nod for India marketing rights and I think this is a very important milestone for us because it does open up many other markets or rest of the world markets because you can leverage this data and approval to market in other markets. But the main focus and target of this particular biosimilar Trastuzumab or which is otherwise known as Herceptin is Roche's very important and high profile drug for breast cancer, which currently has a market of about USD 6 billion globally. Of course we are focusing on the US, European approvals. And as we speak, there are ongoing global trials for the same drug and the good news is that the protocol that we used in India was identical to that which is ongoing globally. We have done this trial in India in compliance with various international regulatory guidelines which seek data for safety efficacy and immunogenicity and we have met these particular non-inferiority criteria. I think that is what the big news is and that is the milestone that we are very pleased to have achieved.

Q: When does it actually come to market in India and therefore is it in the FY14 profit and loss (P&L) that we will see the gains?

A: Yes, we definitely expect to market this in FY14. This is a partner drug with Mylan. So I think both partners are looking at marketing this particular drug under their respective brand names in the Indian market to begin with.

Q: In terms of revenue potential or revenue gains, what kind of ballpark figures are we looking at in FY14?

A: FY14 will not have a significant impact because we will just be entering the market. The Indian market per se is expected to reach around Rs 300 crore for this drug. So we obviously expect to capture a sizeable part of this market share. Having said that, I think what is also important is that the rest of the world (ROW) markets themselves are estimated to be about a billion dollars for this drug. It is a very important drug. That is where interesting opportunities are. So I think Biocon is going to do pretty well out of this drug as is going to be Mylan and the big opportunities are post 2016 in US and Europe.

Biocon stock price

On November 25, 2013, at 14:10 hrs Biocon was quoting at Rs 371.10, down Rs 0.2, or 0.05 percent. The 52-week high of the share was Rs 386.80 and the 52-week low was Rs 255.00.

The company's trailing 12-month (TTM) EPS was at Rs 15.02 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 24.71. The latest book value of the company is Rs 110.34 per share. At current value, the price-to-book value of the company is 3.36.

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CBI lodges case against SBI Dy MD, 2 others in graft case

A Deputy Managing Director of State Bank of India, a former AGM of the bank and a businessman have been named by CBI in a case of alleged graft in disbursal of loan of above Rs 400 crore.

CBI sources said its Economic Offences Wing in Mumbai has registered a case against Deputy MD of SBI Shyamal Acharya who is also the head of Mid-Corporate wing of the Bank, former SBI official K K Kumarah and Chairman of Worlds Window Group Piyoosh Goyal for alleged graft.

The sources said Goyal had allegedly applied for over Rs 400 crore of corporate loan from SBI but only Rs 75 crore was approved.

Kumarah, who had joined Worlds Window Group after leaving SBI as an advisor, allegedly tried to get loans cleared for the company using his contacts in the bank, the sources said.

They said an arrangement was reached between Kumarah and Goyal under which he had to get Rs 25 lakh for his services and Rs 15 lakh for Acharya.

Kumarah allegedly purchased two high-end rolex watches worth about Rs 8 lakh to be given to Acharya for his alleged favours, the sources said. Meanwhile, the agency came to know about this deal and laid down a trap.

Kumarah who was coming out from the residence of Acharya after allegedly giving him watches was nabbed by the CBI team. The remaining cash of around Rs 7 lakh was also recovered from him, the sources claimed. Kumarah has been sent to CBI custody till November 27. CBI later carried out searches at the residence of Goyal, Acharya and Kumarah from where "incriminating" documents have been recovered, it claimed.

A senior State Bank of India official said the bank was assessing the situation and would comment only after getting complete facts. Worlds Window Group did not respond to email seeking their reaction on the development.

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L'Oreal India expects 10-15% growth in local market

L'Oreal India, part of the euro 21 billion L'Oreal SA, today said it expects 10-15 percent growth in the Indian market.

"Our turnover stood at Rs 1,600 crore in 2012. We expect double digit growth of 10-15 percent in the Indian market," L'Oreal India Head, Professional Products Division, Aseem Kaushik told PTI.

The company sees good potential for growth in the domestic cosmetics market. The market size for professional skin and hair care is estimated to be at Rs 2,500 crore in urban India and it is growing at about 15 percent Y-o-Y basis, he said.

L'Oreal Professional Products category offers various brands in skincare, Kerastase, and Matrix. These have about 400 products in total, which are sold through salons. Under the skincare brands category it offers luxury brand - Keraskin and the recently acquired Cheryl's brand. Cheryl's Cosmeceuticals had a distribution network spanning over 10,000 salons in India and a turnover of approximately Rs 20 crore in 2012. It has a very wide product range under its umbrella from skincare, body care, lip care and anti-acne products to waxes, facial kits, sunscreen and fairness creams.

"Following the acquisition, Cheryl's, a homegrown brand, will soon be available not only at L'Oreal's 35,000 salons in India, but also in Sri Lanka, Nepal and Bangladesh," Kaushik said. L'Oreal trains about 1,25,000 hair-dressers every year at its salons and at 60 of its academies and studios across the country, he revealed.

Kaushik pointed out that the biggest challenge in the Cheryl's rollout was training people to use the products as it is a professional cosmetics range.

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Indian carriers hit air pocket, losses mount

As the airlines struggle to stay profitable, domestic capacity is rapidly shifting to the low-cost model. But it seems that charging for meals and baggage aren't enough to offset higher fuel prices and a depreciating rupee.

Cuckoo Paul/ Forbes India

As two foreign airlines girdle up for new launches in India, the five incumbent carriers in the Indian skies are battling tough times. The two biggest carriers by fleet size, Jet Airways and Air India, are bleeding the most. Jet has lost Rs 1,400 crore in the first two quarters of 2013-14, more than it has earned in the past 10 years.

The national carrier, on the other hand, has projected losses of Rs 4,000 crore for the year, while SpiceJet has lost Rs 609 crore in the first six months of the fiscal. The two others, market-leader IndiGo and GoAir, are unlisted and don't report quarterly numbers.

As the airlines struggle to stay profitable, domestic capacity is rapidly shifting to the low-cost model. But it seems that charging for meals and baggage aren't enough to offset higher fuel prices and a depreciating rupee.

The only silver lining: The December quarter is traditionally the best time of the year for airlines. All the five carriers are reporting better revenues and higher margins. Other than GoAir, all the others are launching new foreign routes that will bring in higher dollar earnings. This is good news as it offers a natural hedge against the volatile rupee and fuel is also cheaper overseas. 

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Tata Motors launches new CNG version of Indigo, Indica cars

Tata Motors today launched CNG versions of mid sized sedan Tata Indigo and compact car Tata Indica under its emax series priced up to Rs 5.27 lakh (ex-showroom Delhi).

The new Tata Indigo emax price starts at Rs 4.99 lakh and goes upto Rs 5.27 lakh (ex-showroom Delhi), while the new Tata Indica emax is priced between Rs 3.99 lakh and Rs 4.26 lakh (ex-showroom Delhi), the company said in a statement.     

The new emax range has CNG and Petrol bi-fuel system options, it added.     

Commenting on the launch, Tata Motors Senior vice president, Passenger Vehicle Business Unit (Commercial), Ankush Arora said: "CNG is gaining momentum in the Indian automobile market and we are happy to announce expansion of our CNG portfolio."     

Also Read: Jaguar Land Rover global sales up 35% in Oct

The introduction of the new variants comes as an essential step that underlines the company's commitment to be a sustainable automotive player, he added.     

The two new variants have been introduced in six markets across India and will now be available in Delhi, Maharashtra, Gujarat, Uttar Pradesh, Andhra Pradesh and Tripura, the company said.     

Tata Motors had showcased its emax range at the 'Horizonext' event, held in Pune, in June 2013, with a commitment to launch its CNG range in a phased manner in FY 14. The Nano emax was the first in the range.

Tata Motors stock price

On November 22, 2013, Tata Motors closed at Rs 373.25, down Rs 9.3, or 2.43 percent. The 52-week high of the share was Rs 400.70 and the 52-week low was Rs 252.10.

The latest book value of the company is Rs 59.47 per share. At current value, the price-to-book value of the company was 6.28.

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Ambuja-Holcim deal: Merger would've been better, says IIAS

Despite a strong "no" from Indian proxy advisory firms, IIAS, SES and InGovern,  Ambuja shareholders voted in favour of the company's restructuring plans that consumes most of the companies cash in buying parent Holcim's stake in ACC .

Even though domestic institutional investors such as LIC who are reportedly against the restructuring the proposals received 68 percent approval from minority shareholders, that is non-promoter shareholders. Word on the street is that FIIs voted in favour of the deal heeding the advice of foreign proxy firms ISS and Glass Lewis.

When the deal received negative press in India, the Ambuja managing director had said that Indian investors are emotional about cash.

However, Anil Singhvi, Founder, IIAS feels there is nothing wrong in being "emotional" with your investments. "When you look at the shareholding of Ambuja, 51 percent is held by Holcim, 31 percent is held by foreign institutional investors (FIIs) and about 11 percent is held by DIIs or domestic institutions and just about 8 percent is held by the retail investors," he told CNBC-TV18 in an interview.

He says it was a very high voting percentage. "If you look at the institutional shareholders including the DIIs it was 87 percent who voted. So, I am very encouraged by the fact that this being the first transaction of majority of minority and you have 87 percent people voting, which is very favourable and very encouraging aspect," he says.

Moreover, he feels ISS somewhere have erred. "I have seen their report. They have flawed in their whole analysis of this transaction and most FIIs have gone by ISS recommendation. This is the thing which we have been working on that how do we make FIIs those who participate in Indian markets to look at the Indian report rather than ISS. ISS really doesn't have any presence in Indian market," he says.

He feels there should have been a complete full blown merger of Ambuja and ACC . "There would not have been any cash and that is how the synergies would have been captured," he says. 

However, investment advisor SP Tulsian is not all that negative. "You can always advocate for the merger. The same argument could have been done incase of Grasim and Ultratech also; what is the logic of existence of Grasim as a holding company? That is a subjective analysis. I agree that there are various options available. You can go for merger also; I am not disputing that. May be five years down the line the same thing can happen with ACC-Ambuja, same thing can happen with Grasim and Ultratech," he told the CNBC-TV18.

ACC stock price

On November 22, 2013, ACC closed at Rs 1049.90, up Rs 19.10, or 1.85 percent. The 52-week high of the share was Rs 1454.00 and the 52-week low was Rs 912.05.

The company's trailing 12-month (TTM) EPS was at Rs 56.23 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 18.67. The latest book value of the company is Rs 392.81 per share. At current value, the price-to-book value of the company is 2.67.

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Gas price hike positive; Chakan expansion likely: GE

GE continues to be bullish on India and is infact going to spend additional USD 200-300 million dollars in its new Chakan facility which should come online by April 2014.

John Rice, Vice Chairman of GE while welcoming government's decision of hiking gas prices said it is not just a big positive for the company but also for the sector as a whole.

He also believes foreign direct investment (FDI) would start to come in on account of this decision.

The company is also looking at expansion plans for their Chakan facility. We are already thinking about phase II of that significant investment because the foundation for the premise under which we initiated it, is solid," he added.

Also read: Starbucks taking Indian Coffee to its outlets across globe

Excerpt of his exclusive interview with CNBC-TV18's Shereen Bhan

Q: Do you see FDI start to come in soon?

A: It is certainly a positive and there are number of projects which are moving forward on that basis. So, that is encouraging.

The other part that is encouraging that has occurred since the last time I was here is the prime minister's creation of a cabinet group that is going to really try to move infrastructure projects along in the system and try to make decisions a little bit more quickly and that is really important too. Whether they happen before the election or quickly after the election, we are in the stands cheering for those decisions to be made.

Q: To continue our conversation specifically as far as the oil and gas sector is concerned - what is the outlook for you particularly for this sector because as I pointed out gas prices are likely to move up come April 2014. We have seen partial diesel deregulation take place, the power sector is looking better as well today. Power, oil and gas - how is that business in India looking for you?

A: It looks promising. There are significant investments that are ready to be made and projects that are ready to be launched if the pricing mechanism is established the way it is anticipated. It will be that can flow through to the power sector because there has to be electricity pricing that attracts those investments too.

So, we are encouraged but there are few things that have to happen over the next 12 months in order for the flow to start in an unimpeded way.

Q: What is the feedback that you are getting from your team in India? At USD 8.34 mbtu which is what the gas price is likely to be coming April 2014, are we going to see significant investments coming into the sector?

A: We think that will be good enough to get something started.

Q: How are you looking at the elections? GE has been around in India for over a 100 years, you have seen governments come and go and regimes change, how are you looking at the elections?

A: We do deal with new governments; we have been through government transitions in many countries in the last 12-24 months. So, it is part of what we do. We have to be able to operate regardless of what government is in power. We want to be a citizen that any government wants to have in their country.

Q: We are almost at the end of calendar year 2013. You have already made significant investments in your manufacturing facility in Chakan which is the largest outside of the US for GE. What more can we really expect from GE in terms of investments in manufacturing specifically?

A: We are already thinking about phase II of that significant investment because the foundation for the premise under which we initiated it, is solid. The opportunity we have is not just to contribute our Indian operation from that facility but to export is enormous and so we are thinking about our expansion plans.

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NHPC's Rs 2,368 cr share buyback to begin from Nov 29

Nov 22, 2013, 10.50 PM IST

"The (buyback) process will commence on November 29 and will be concluded on December 12," said a source. The company plans to buyback up to 123,00,74,277 fully paid up equity shares of Rs 10 each at a price of Rs 19.25 apiece aggregating Rs 2,368 crore from the open market.

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NHPC's Rs 2,368 cr share buyback to begin from Nov 29

"The (buyback) process will commence on November 29 and will be concluded on December 12," said a source. The company plans to buyback up to 123,00,74,277 fully paid up equity shares of Rs 10 each at a price of Rs 19.25 apiece aggregating Rs 2,368 crore from the open market.

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NHPC's Rs 2,368 cr share buyback to begin from Nov 29

"The (buyback) process will commence on November 29 and will be concluded on December 12," said a source. The company plans to buyback up to 123,00,74,277 fully paid up equity shares of Rs 10 each at a price of Rs 19.25 apiece aggregating Rs 2,368 crore from the open market.

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State-owned NHPC , the country's largest hydel power producer, will commence the buyback of shares worth up to Rs 2,368 crore from November 29.

"The (buyback) process will commence on November 29 and will be concluded on December 12," said a source. The company plans to buyback up to 123,00,74,277 fully paid up equity shares of Rs 10 each at a price of Rs 19.25 apiece aggregating Rs 2,368 crore from the open market.

Government holds 86.36 percent stake in NHPC. The company got listed on bourses in 2009 after the government divested 5 percent stake. It has also issued 10 percent fresh equity. Overall, the government plans to raise Rs 40,000 crore in the current financial year (2013-14) through disinvestment.

Also read: Expect to restart Dhauliganga project by FY14-end: NHPC

NHPC generates 5,702 MW electricity from 17 hydel stations in the country. As many as seven power stations totalling 4,095 MW capacity are under construction.

The company's scrip closed at Rs 17.65, down 1.67 percent, on the BSE.

NHPC stock price

On November 22, 2013, NHPC closed at Rs 17.65, down Rs 0.3, or 1.67 percent. The 52-week high of the share was Rs 29.40 and the 52-week low was Rs 14.80.

The company's trailing 12-month (TTM) EPS was at Rs 1.89 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 9.34. The latest book value of the company is Rs 22.63 per share. At current value, the price-to-book value of the company is 0.78.

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IFC's bond issue successful; over-subscribed twice

The International Finance Corporation's first tranche of USD 1 billion rupee linked bond issue has been successful. The first tranche of the 3-year bonds, amounting to USD 161 million was over subscribed two times.

In an exclusive conversation with CNBC-TV18's Aakansha Sethi, Karin Finkelston, VP - Asia Pacific, at IFC says the over-subscription of the rupee linked bond shows, that the investors have a lot of confidence in the Indian currency.

IFC will now figure out if they can stretch the tenders out which would again demonstrate confidence. "At the same time we want to come onshore. Issue an onshore long-term bond and then see if we can use that money productively for infrastructure and other projects," says Finkelston.

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Marriott International eyes 100 hotels in India by 2017-18

It has been busy two months for hotel giant Marriott International. In Bengaluru, it opened three hotels: the country's first Ritz Carlton, a corporate Hotel Fairfield Inn and a JW Marriott. And on Thursday, the company launched the JW Marriott in New Delhi's aerocity, thereby becoming the first hotel to start operations in the hospitality district of the airport.

In a CNBC-TV18 exclusive, Simon Cooper, president and MD - Asia Pacific, Marriott International said he will participate in Taj Mansingh's auction only with a partner in real estate. The hotel giant has already opened 23 hotels in India and plans to get to 1 list of 100 hotels by 2017-2018, adds Cooper.

Also Read: Ritz Carlton enters India, considers it great opportunity

Below is the verbatim transcript of Simon Cooper's interview on CNBC-TV18

Q: Taj Mansingh is an iconic hotel, you don't get opportunities like that everyday, you are not even considering the auction?

A: I agree, they will never let it go.

Q: But if it is auctioned, would you participate?

A: If we did participate it would be a partner. We would go in with a partner who is in the business of real estate. We are just not in the business of real estate in India or China.

Q: You would not want to put the money down, you would want a partner who puts the money down for you, that is what you are saying?

A: Yes, we are in the business of global hospitality. We are not in the business of global real estate. So, we try to find partners everywhere we go who's business is real estate, they understand real estate.

Q: In case this iconic property was on auction, whom would you partner with, don't tell me the names if you don't want to?

A: I won't tell you any names but it would not be unusual for us when we know a good opportunity is coming up to be partnered.

Q: What is your expansion plan for India, how many new hotels, how many new rooms are you looking at?

A: We have opened 23 hotels, we have about plan for 50 under construction and have published a number of trying to get to a 100 hotels by about 2017-2018. A number of those will be the Fairfield brand because we have also invested in the Fairfield brand. We have a joint venture with SAMHI where Marriott International invests and we don't do that very often because we are not really real estate players. We try to be asset light. We think there is a strong market potential in India for the Fairfield brand for a very crisp, clean corporate hotel that also works well for leisure on the weekends.

Q: Out of the 100 properties that you are going to have in India, how many will be Fairfield?

A: Somewhere around 40 would be Fairfield.

Q: Is there scope for a second Ritz-Carlton in India?

A: There is definitely scope for a second Ritz-Carlton in India. We need to be in Mumbai and we need to be in Delhi.

Q: Are you going to have at least two more?

A: We have at least two more.

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Expect to beat Nasscom guidance on $ rev growth: Persistent

Persistent Systems reported strong numbers in the September quarter, after a weak June quarter. Rohit Kamat, company CFO expects to report good growth in revenue and margins in the second half of the fiscal, subject to vacation time and currency impact.

Also Read: Persistent Q2 net rises 36% to Rs 61 cr on strong IP biz

In terms of dollar revenue growth, he expects to do better than last year and beat the Nasscom guidance.

Below is the verbatim transcript of Rohit Kamat's interview on CNBC-TV18

Q: It was a very solid quarter for you, the quarter gone by because of good margin expansion that you have seen, can you tell us whether the second half of the year will see an equally good performance, sustenance of these margins and if yes, what would be the triggers that would lead to that?

A: The second half also we are expecting good growth of revenue and growth of margins but typically we would have some impact of vacations coming in and currency also we could see some adverse impact. Subject to that we should be able to maintain the growth and margins.

Q: EBIT level can we pencil in 20 percent?

A: Difficult to say that because there are various moving parts like currency, last time the IP revenue has helped us so IP revenues are typically seasonal, could be variable quarter-on-quarter (Q-o-Q).

Q: What is the IP led business as a percentage of your total sales and what will it be in the second half?

A: Last quarter it was around 20 percent and we have always said that IP revenues would be lumpy in nature so they could range between 18-20 percent in this quarter.

Q: In the first half of the year you have done a dollar revenue growth of about 14.5 percent which is higher than what the Nasscom guidance is, for the full year what kind of growth do you think you will be able to do on the topline?

A: We should be able to do better than that. We have not given a formal guidance but on full year basis, we should be able to do better than last year as well as the number which Nasscom has indicated.

Persistent stock price

On November 22, 2013, at 14:14 hrs Persistent Systems was quoting at Rs 871.05, up Rs 26.15, or 3.10 percent. The 52-week high of the share was Rs 876.50 and the 52-week low was Rs 461.50.

The company's trailing 12-month (TTM) EPS was at Rs 57.52 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 15.14. The latest book value of the company is Rs 251.51 per share. At current value, the price-to-book value of the company is 3.46.

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Singapore think tank, Brookings India signs MoU

The Institute of South Asian Studies (ISAS) has signed a MoU with Brookings India, one of South Asia's leading think tanks.

The MoU, signed at the South Asian Diaspora Convention, would have ISAS and Brookings India work collaboratively on areas such as international trade and economics, India-China comparative studies, international relations and India's energy security options. These initiatives would include faculty exchanges in various fields, said ISAS, a Singapore think tank in the National University of Singapore.

The two organisations would also work together on bilateral seminars, symposiums and panel discussions on regional and global issues of mutual interest. "Our partnerships with Brookings India will build significant relationships across South Asia for ISAS, providing our researchers opportunities to develop deeper insights on the social, political and economic trends of the South Asian region," said ISAS Director Professor Tan Tai Yong.

"The collective strength and strong reputations of our organisations will also create greater visibility for our publications and drive greater awareness and understanding of the region as a whole," he said.

The MoU follows swiftly on the heels of ISAS' recent partnership with the South Asian Archive, which provides access to culturally and historically significant literary materials produced in and around the South Asia region. The Archive, a digital resource that spans the humanities and social sciences, offers instant access to over 4.5 million pages of original source material.

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Bajaj's KTM eyeing global market via India

Nov 20, 2013, 10.20 PM IST

In an exclusive interview with CNBC-TV18's Ronojoy Banerjee, KTM's CEO Stefan Pierer said that the company is also eying setting up new assembly lines in Columbia and Thailand as it seeks to hit total sales of 200,000 units globally in the coming three-four years

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Bajaj's KTM eyeing global market via India

In an exclusive interview with CNBC-TV18's Ronojoy Banerjee, KTM's CEO Stefan Pierer said that the company is also eying setting up new assembly lines in Columbia and Thailand as it seeks to hit total sales of 200,000 units globally in the coming three-four years

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Bajaj's KTM eyeing global market via India

In an exclusive interview with CNBC-TV18's Ronojoy Banerjee, KTM's CEO Stefan Pierer said that the company is also eying setting up new assembly lines in Columbia and Thailand as it seeks to hit total sales of 200,000 units globally in the coming three-four years

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Bajaj Auto 's Austrian partner KTM is eyeing increasing production out of India by over three-fold to 100,000 units as it seeks to position India as an important export market. In an exclusive interview with CNBC-TV18's Ronojoy Banerjee, KTM's CEO Stefan Pierer said that the company is also eying setting up new assembly lines in Columbia and Thailand as it seeks to hit total sales of 200,000 units globally in the coming three-four years.

Pierer says there are two platforms. One is the smaller engine platform, 125cc upto 200cc and then it is the platform 250cc upto 390cc. "We have four different displacements. Based on those four different displacements naked bike already is there, it is the Duke, the second one is the RC family, it is the full faired and the third one is also in the pipeline it is the Enduro dual purpose," he adds.

Pierer also mentions that the KTM activities are all around the world. "We have one in Malaysia, Thailand is in the pipeline, Columbia. So, it is more than an exporting hub," he adds.

Bajaj Auto stock price

On November 21, 2013, at 14:15 hrs Bajaj Auto was quoting at Rs 1947.00, down Rs 28.3, or 1.43 percent. The 52-week high of the share was Rs 2228.95 and the 52-week low was Rs 1657.50.

The company's trailing 12-month (TTM) EPS was at Rs 109.18 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 17.83. The latest book value of the company is Rs 273.08 per share. At current value, the price-to-book value of the company is 7.13.

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Petrovietnam, ONGC Videsh sign oil exploration pact

Nov 21, 2013, 08.41 AM IST

The exploration pact between Petrovietnam and ONGC Videsh Ltd would allow activities in Vietnam, India as well as in a third country.

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Petrovietnam, ONGC Videsh sign oil exploration pact

The exploration pact between Petrovietnam and ONGC Videsh Ltd would allow activities in Vietnam, India as well as in a third country.

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Petrovietnam, ONGC Videsh sign oil exploration pact

The exploration pact between Petrovietnam and ONGC Videsh Ltd would allow activities in Vietnam, India as well as in a third country.

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State oil group Petrovietnam and the overseas unit of state explorer Oil and Natural Gas Corp have signed a memorandum on joint exploration of crude oil, the Vietnam News Agency reported on Thursday.

The exploration pact between Petrovietnam and ONGC Videsh Ltd would allow activities in Vietnam, India as well as in a third country.

Vietnam's Industry and Trade Ministry also signed a memorandum with Tata Power Company Ltd on the construction of a USD 1.8 billion thermal power plant in Vietnam's southern province of Soc Trang, the agency said.

The pacts were signed on Wednesday during a visit to India by Vietnam's Communist Party General Secretary Nguyen Phu Trong, the report said.

ONGC stock price

On November 21, 2013, at 14:14 hrs Oil and Natural Gas Corporation was quoting at Rs 272.60, down Rs 4.2, or 1.52 percent. The 52-week high of the share was Rs 354.10 and the 52-week low was Rs 234.40.

The company's trailing 12-month (TTM) EPS was at Rs 22.24 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 12.26. The latest book value of the company is Rs 145.47 per share. At current value, the price-to-book value of the company is 1.87.

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May import 16 MT coal in FY14: NTPC

Country's largest power producer, NTPC , sees demand for electricity going up as few states prepare for Assembly elections in next few weeks. Currently, NTPC has a capacity of nearly 42,000 MW and targets to add about 14,000 MW to its total capacity by the end of 2016-17. 

NTPC chairman Arup Roy Choudhury told CNBC-TV18 that in the second half of FY14, availability of fuel will see substantial improvement. The company is likely to import 16 million tonne of coal this fiscal.

NTPC has recently sought market regulator Sebi's approval to raise up to Rs 1,750 crore through tax free bonds in the current financial year to fund capital expenditure and refinancing for meeting the debt requirement in on-going projects.

The company is also open to buying out distressed assets.

Below is the verbatim transcript of his interview on CNBC-TV18

Q: In terms of demand, there was a tapering of electricity demand especially because the prices started rising. How is the current demand trend?

A: Demand has been increase so we are generating 100 million units more than what we were doing a month ago. Going forward we think demand will increase much more because of elections. But as chairman of NTPC, my plants are available, so doesn't matter if there is a demand or not my business model is on making plants available. They are available much more than they were available for the corresponding period last year.

Q: The bright side in Q2 for you was improvement in fuel availability, plant availability factor (PAF). Do you expect your PAF to improve further in Q3, now that you are arranging for imports and regular supply from Coal India  (CIL)?

A: Yes we have planned well. This year our imports are going to be almost 16 million tonnes. We have committed to improve our availability factor more than last year. CIL has supplied more to us maybe because of poor health of SEBs. So I can only say we are going to have more availability going forward.

Q: Can you guide us as to what could be the P-A-F percentage in the current quarter, will it be more than 85.9?
 
A: Yes that is all I can say.

Q: You have got a substantial amount of greenfield projects relying on coal blocks awarded to you in July 2013. By when do you think you will be able to tap this coal?

A: My expansion as of today - 20000 MW is under execution and our 12 plant target is 14000MW. 4000 MW we have already achieved so in the twelfth plan we only have to do 10000 MW out of the 20,000 MW. Therefore in 12 th plan we will do much more than we have targeted .But for the expansion plans which are linked to these coal mines will happen in next 4-5 years. That is the time we will be mining 100 mt of coal ourselves from our own mines.

Q: Do you expect tapping of those coal blocks in Chattisgarh and Odisha to get delayed for any reason probably because of delays in securing clearances or land acquisition?

A: I do not know. There were so many uncertainties in coal mining and support of state government is very important. There are problems all the time but we should be prepared to solve them, talk to people, and settle it.

I can only say that state government have realised that opening up these mines, putting up industries only increases industrial output, employment etc. So they are also coming on board with us and so with state government with us we should be able to do it very successfully

Q: Can you give us a time line as to when you will be able to mine from those coal mines in Chattisgarh and Odisha?

A: We are now talking of having mine developer-cum-operator (MDOs). So therefore we are targeting between 3-5 years from coal to start from these blocks.

NTPC stock price

On November 21, 2013, at 14:10 hrs NTPC was quoting at Rs 149.90, down Rs 4.25, or 2.76 percent. The 52-week high of the share was Rs 169.20 and the 52-week low was Rs 122.65.

The company's trailing 12-month (TTM) EPS was at Rs 14.55 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 10.3. The latest book value of the company is Rs 97.49 per share. At current value, the price-to-book value of the company is 1.54.

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We monitor local, global mkts for price arbitrage: Ceat

Ceat shares have nearly doubled over the last month as investors see the company's profits rising due to low rubber prices. The company some time back had decided to import natural rubber to gain from cheaper prices. This year so far, the company has imported roughly half its rubber requirements. A Subba Rao, CFO says he is flexible on this strategy and it would be driven by cost advantages.

Also Read: Expect coming quarters to be stable: Ceat

Rao says tyre companies abroad don't see too much volatility in profit margins even if rubber prices fluctuate sharply. Indian companies too will have to learn to overcome these raw material cost increases and maintain profit margins.

Rao sees second half earnings and margins to be in line with those seen in the first half.

Around 30 percent of Ceat 's revenues come from vehicle manufacturers, and the rest from the replacement market. "Auto industry has been going through one of its worst periods in the last decade; commercial vehicle growth there is a negative growth of 25 percent for the second successive year, so passenger car sales is just at the breakeven level as compared to last year," he says. Rao doesn't expect any substantial improvement in demand from the OEM side, but he is trying to get new customers from the OEM segment.  

Below is the verbatim transcript of A Subba Rao's interview on CNBC-TV18

Q: The one big reason why you have seen operational gains is because you took a decision to import natural rubber in order to take advantage of lower prices, a couple of quarters ago. Can you tell us as a percentage of your total rubber needs, how much will the import of natural rubber be and going ahead how much will that help your margins improve further from 13.5 percent level you have clocked in?

A: There is no static percentage year-on-year as to how much we would import from overseas markets, but this year it has been averaging approximately about 50 percent of the imported rubber and 50 percent of the domestic rubber. It depends upon the price arbitrage and even Rs 1 difference makes a substantial cost difference to the ultimate cost management of the product. So, we continuously keep watching the markets both international and domestic and take appropriate decision at that point of time whether domestic rubber purchase is better or international rubber purchase is better.

Q: In terms of future performance of margins, what we want to know is your future perception of your raw material cost, are there further downsides and within even the current prices will you be able to squeeze more increases in margins?

A: Regarding future prices I wish I were in a position to answer, but what we have been building so there has to be some fundamental DNA changes; every industry has to learn the art of overcoming raw material cost increases and unfortunately the tyre industry in the country has been perceived, its prosperity is associated with rubber price movement but internationally tyre industry does not go through the same volatility, margins and profits as the rubber prices go through.

So, Indian industry also has to learn through this and that is what we have been working on, this kind of enabling situation and when you increase your competency on the shop floor to the top floor. So, this is what we have to do it. So, we have to introduce best practices of the management right from the shop floor to the top floor. So, this will give a sustainable improvement in our margins and profitability regardless of what happens to raw material prices, of course when raw material prices fluctuate, I am not saying that there would not be any volatility in the profitability, but the volatility gets contained provided we have the best practices and that is what we are trying to do.

So, competency improvement across the entire value chain that we have been focusing, the shop floor improvement is taking place, the office improvement is taking place, the management practices are changing, the planning practices are changing, the strategies are changing. So, these are some DNA changes that we have been working on that will give durability to whatever we are doing.

Q: Since you have just come to the helm of Ceat, what do you think the second half will bring about in terms of an increase in operational performance? In the first half your EBITDA jumped by 70 percent, in the second half what do you think you will do?

A: Without getting into numbers which would amount to forward looking statements, I would that the rest of the year could at least be inline with first half of the year, would be able to manage the margins that we had, managed the kind of profitability we had but I will not be able to give number for the rest of the year.

Q: Talking about the demand side equation, how are you seeing demand from original equipment manufacturers (OEMs), demands from replacements? We heard of a lot of bad news in the automobile sector but how is the second half looking in terms of demand and therefore in terms of projected sales growth?

A: Seventy percent of the demand comes from the replacement market and 30 percent demand comes from the OEM market. However, OEM market - auto industry has been going through one of its worst periods in the last decade; commercial vehicle growth there is a negative growth of 25 percent for the second successive year, so passenger car sales is just at the breakeven level as compared to the last year. So, this is the kind of situation. We do not expect any substantial improvement of demand from the OEM side but we have been making deeper inroads of getting new customers from the OEM segment. That is what would generate additional demand for us on the OEM side.

On the replacement, it has been stable and that is why we have been able to grow ahead of the industry, almost about 8-9 percent. So, despite the gloomy situation in the market we expect the same kind of growth to continue and the last quarter of the year that is January to March is always an exceptional quarter and as per the historical track we expect that to be an exceptional quarter in the current year also. For the second half of the year we expect demand to be better than the first half. So, that's what our expectation of the market demand would be.

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Expect 100% under recovery compensation, higher GRMs: BPCL

After a stellar Q2, oil marketing company BPCL is confident of logging similar strong numbers in the days to come.

Speaking to CNBC-TV18, S Varadrajan, chairman and managing director, BPCL says the company is likely to post Gross Refining Margins in the range of USD 4.5-5.5 per barrel.

Also read: Govt has to shift part of oil bill to next year: Fitch

But what aided good numbers was the 95 percent under recovery compensation paid by the government and upstream companies.

"Fortunately we got upstream compensation of almost around 53 percent and also had the government step-in with a contribution of almost 42 percent. So, we still absorbed around 5 percent of under recovery which translates to 760 crore," he adds.

Varadrajan is hopeful of a 100 percent under-recovery compensation in the days to come too.

Below is the edited transcript of Varadrajan's interview to CNBC-TV18.

Q: Could you talk about the operational performance, in Q2 your GRMs at USD 4.6 per bbl rising quarter-on-quarter and came in better-than-expected. Can you give us an indication of whether these GRMs are sustainable in the second half of the year and what the trend could be?

A: Gross refinery margins (GRM) is a number which is difficult to predict granted that over the past five-six quarters, we have been having a consistent level as far as the GRMs are concerned, somewhere in the region of USD 4.5 to 5.5 per bbl. For half year also we have reported a similar trend. However, going forward the spreads, if they are where they are today and if it more or less sustains at the same levels over the next two quarters, then we would see margins of similar nature going forward at this point in time.

Q: Besides the margins where you stood out was primarily you are a profit making company whereas your peers have not been able to do that given the subsidy burden or the under recovery burden. You do not slip up from that, you do not have those fears at all?

A: We were fortunate that we had some excellent numbers for the quarter end, for the half year. We did show a profit around Rs 1,081 crore in the first half year but also we had gross under-recovery of almost around 15,000 crore for BPCL in the first half.

Fortunately we got upstream compensation of almost around 53 percent and we also had the government step-in with a contribution of almost 42 persent. So, we still absorbed around 5 percent of under recovery which translates to 760 crore. Inspite of that absorption, we still manage to show bottomline numbers which are positive and we need to wait and see at the end of the year how the entire compensation is addressed and what would be the number which would emanate there.

Q: There are no threats that you may slip in from a profit to a loss making company like some of your peers because of circumstances beyond your control because of fiscal reasons?

A: I think the performance has been fairly steady on the refining front and market sales have been fairly steady at the same level. Costs have been under control, inventories have been kept under check. For the last couple of years with high levels of under recoveries for the industry as a whole, we have always managed to get almost 100 percent compensation at the end of the year. We are hoping that with 100 percent compensation in the current year we should turn in robust numbers.

Q: You said that your refining business is progressing smoothly; your refinery throughput has also increased this time to 6 million metric tonne (MMT), which was a growth of around 7-8 percent on a quarter on quarter basis. How much of an incremental growth are you expecting in refinery throughput in the next couple of quarters?

A: As far as refinery throughput is concerned we would be close to 23-23.5 million tonne which is a steady state at this point in time. We do not see any major changes going forward other than the routine shutdowns which would happen in different units at different points in time.

The throughput would be fairly steady at that level. However, we are going through a major expansion in Cochin refinery, where we are adding 6 million tonne of capacity. That would get completed by the Q1 of 2016 and then one would see a significant increase in the throughput adding on another 6-6.5 million tonne at that point in time.

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Provide loans to women self help groups at 7%: RBI to PSBs

The Raghuram Rajan-led Reserve Bank of India (RBI) today directed public sector banks (PSBs) to provide loans to women self help groups at a rate of 7 per cent per annum so as to get the benefit of interest rate subvention scheme under the Swarnajayanti Gram Swarozgar Yojana-Aajeevika (SGSY) scheme.

"PSBs will be subvented to the extent of difference between the Weighted Average Interest charged and 7 per cent subject to the maximum limit of 5.5 per cent, for the FY-2014.

"This subvention will be available to all the PSBs on the condition that they make SHG (self help group) credit available at 7 per cent in the 150 districts," the RBI said in a notification.

Likewise, the regional rural banks (RRBs) will be subvented to the extent of difference between the lending rates and 7 per cent for the FY-2014 on the condition they make SHG credit available at 7 per cent, it added.

The SGSY scheme comes under the Ministry of Rural Development which launched National Rural Livelihood Mission on April 1, 2013 to reduce poverty by building strong institutions of the poor, particularly women.

It aims to enable these institutions to access a range of financial services and livelihoods services.

The RBI further said that SHGs will be given an additional 3 per cent subvention on prompt repayment of loan.

For all loans up to Rs 3 lakh, sanctioned to women SHGs on or after December 1, 2013, banks must charge an interest rate of 7 per cent.

However, for loans extended between April 1, 2013 and November 30, 2013, banks should convert the rate of interest to 7 per cent for all the existing loan accounts of the SHGs with effect from April 1, 2013.

Banks should submit their claims on a half-yearly basis as at September 30, 2013 and March 31, 2014, RBI said.
While for additional subvention of 3 per cent, banks may submit one-time consolidated claims during the entire year 2013-14 latest by April 30, 2014.

The RBI further said that the limit of subvention for the next financial year will be communicated separately.

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Sales may pick up post 12-17% price correction: Orbit Corp

Ramashrya Yadav, Joint CEO, Orbit Corporation says there seems to be some green shoots for the sector. Sales are seen slowly inching up and there is demand offtake in low-priced properties.

Prices on an average have corrected between 12-17%, he adds.

"The threshold of the price correction is somewhere between 18-20 percent, which is more or less achieved in most of the areas and where it has not happened yet, would happen over a period of time. So at these prices demand would offtake," says Yadav.

He further adds the sales in October-November put together were better than September, which is more to do with price correction.

Yadav feels cash flow issues for the sector continue because the ability to leverage capital for buyers is quite dented on account of higher interest rates.

Also read: When realty takes a low income, high growth turn

Below is the verbatim transcript of his interview on CNBC-TV18

Q: Since the last time we spoke when the mood was fairly low in the sector have things improved at all or is the situation still very tough?

A: Last time I had said that there are some green shoots that we can see, slowly the sales are inching up given the fact that the prices have moderated and also there is some amount of adjustment in the specification of the inventory which was earlier there in the industry.

If I bifurcate the problem in two parts; one is the problem with the developers and their balance sheet and another is the problem with the overall market. As far as the developers and their balance sheets are concerned it may take time to really correct whatever has gone bad in last three years. But as far as the market is concerned, there is a slow demand offtake happening at the lower prices. By lower prices I mean - the threshold of the price correction is somewhere between 18-20 percent which is more or less achieved in most of the areas and where it has not happened yet, would happen over a period of time. So at these prices demand would offtake.

However, the reduction in interest rates is something which has been long awaited and buyers' ability of leveraging their capital is quite dented at this point of time.

So, while sales will pick up, the buyers' capital would still be quite moderate in coming. Therefore, cash flow issues may exist for some more time.

Q: Where October or November sales better?

A: Looking at an average, both put together October and November have been better than September. It is more to do with the price correction. So, wherever the price correction has happened the volumes are slowly inching up.

Q: How much have prices fallen in the last three-four months?

A: On an average between 12-17 percent the price correction is across but 20 percent is the threshold, so somewhere the markets will stabiles at this level. 

Orbit Corp stock price

On November 20, 2013, at 14:15 hrs Orbit Corporation was quoting at Rs 16.15, up Rs 0.50, or 3.19 percent. The 52-week high of the share was Rs 62.90 and the 52-week low was Rs 10.10.

The latest book value of the company is Rs 82.50 per share. At current value, the price-to-book value of the company was 0.20.

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Won't shy away from exiting non-profitable ventures: Diageo

Nov 20, 2013, 02.06 PM IST

Gilbert Ghostine, president- Asia-Pacific, Diageo, also indicated that the company will not shy away from exiting any kind of mass brands which are not making them any money. Remember United Spirits had exited its direct operations from the Tamil Nadu market because they were facing huge volume pressures there.

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Won't shy away from exiting non-profitable ventures: Diageo

Gilbert Ghostine, president- Asia-Pacific, Diageo, also indicated that the company will not shy away from exiting any kind of mass brands which are not making them any money. Remember United Spirits had exited its direct operations from the Tamil Nadu market because they were facing huge volume pressures there.

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Won't shy away from exiting non-profitable ventures: Diageo

Gilbert Ghostine, president- Asia-Pacific, Diageo, also indicated that the company will not shy away from exiting any kind of mass brands which are not making them any money. Remember United Spirits had exited its direct operations from the Tamil Nadu market because they were facing huge volume pressures there.

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World's largest spirit maker Diageo Plc, which owns majority stake in United Spirits , has questioned Indian brokerage community's bullishness on the Indian liquor company. Diageo has made eight acquisitions in emerging markets over the past three years, spending about 3 billion pounds

Also read: United Spirits Q2 net soars 2.4 times to Rs 94.27cr

Gilbert Ghostine, president- Asia-Pacific, Diageo said that scale is something that the company enjoys in a lot of emerging markets (EMs) but not in India. It is because of the regulatory pressures and the regulatory nature of the business that they do not enjoy it (scale) as an advantage here. He said EMs are definitely starting to slow down and India is not immune to it and competition is huge risk for them at this point in time.

Ghostine also indicated that Diageo will not shy away from exiting any kind of mass brands which are not making them any money. United Spirits had exited its direct operations from the Tamil Nadu market because they were facing huge volume pressures there.

There are also murmurs that the company is not making any money in the Uttar Pradesh market. While Ghostine said the possibility of a spill over at this point of time is less, but it cannot be completely ruled out.

He further added that the sell side assumptions on the EBITDA margin expansion, at least in the next two years, are also very aggressive. Several brands of the company like McDowell require huge brand investments which the company will focus on. Therefore, the kind of EBITDA margin expansion that brokers are talking about is not likely to come by.

Another key takeaway from the meet was the complete refusal of the company being in talks with anyone as far as the Whyte & Mackay sale is concerned.

United Spirits stock price

On November 20, 2013, at 14:10 hrs United Spirits was quoting at Rs 2518.00, up Rs 39.55, or 1.60 percent. The 52-week high of the share was Rs 2815.00 and the 52-week low was Rs 1708.20.

The company's trailing 12-month (TTM) EPS was at Rs 24.01 per share as per the quarter ended June 2013. The stock's price-to-earnings (P/E) ratio was 104.87. The latest book value of the company is Rs 440.83 per share. At current value, the price-to-book value of the company is 5.71.

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New advertisement print rates to boost revenues: DB Corp

Pradeep Dwivedi, DB Corp is confident of delivering the projected quarter-on-quarter revenue guidance of 15-20 percent in the coming quarters too.

According to him, the increased Department of Audio Visual Publicity (DAVP) rates are sure to boost ad revenues for the company and would start to accrue in Q4. They had expected much more of a hike since it has came after a gap of three years but any rate hike is welcome, adds Dwivedi

The government has hiked the rates at which DAVP releases its advertisements to newspapers and publications by 19 percent for an interim period till the new rate structure committee (RSC) appointed by it, finalises new rates.

The Navratri-Diwali festive period has not been as exciting as expected but Dwivedi hopes that Christmas- New Year phase will see brand promotions and increased advertising spends.

DB Corp gets nearly 5% of the Rs 410 crore ads released by DAVP annually, states Dwivedi.

Also read: FT sells S'pore arm for $150 mn, to repay FX loan

Below is the verbatim transcript of his interview on CNBC-TV18

Q: Directorate of Advertising & Visual Publicity (DAVP) raised print media rates by about 19 percent. Does that mean that you will get 19 percent more on the ads that you get from the government? How much of a quantum would that be?

A: This rate hike is coming after a gap of almost over three years. The last rate hike was in October 15, 2010, so at the outset while we welcome the 19 percent increase that has been announced on the DAVP advertisements, which roughly is about Rs 400 crore worth of advertising across the industry, we really had expected a lot more.

Earlier, in May this year a new Rate Structure Committee (RSC) has been formed and its recommendations are not yet know. We had actually expected a price correction to the tune of about 65-70 percent at the barest minimum, which would have offset the cost increases that we have seen over the last couple of years and would have really put at par with the commercial rates both on costs and revenue side that we incur in this business.

Q: What will this rate hike actually mean for you in terms of your operational performance?

A: It is an upside that we should start accruing to us in Q4. Today on our ad sales revenue base, about 12 percent of our revenues actually accrue from government advertising which constitutes the DAVP advertising, the DAVP rate based state government's Department of Information and Public Relations (DIPR) advertising and some PSUs that advertise using those rates are reference rate. So, as an amalgamated or weighted average mix, we should expect anywhere between 15-20 percent increase above 10 percent of our revenue base as a consequence of this increase and to that extent it is certainly welcome.

However, we are really hopeful that before the next general elections are announced in the next 3-4 months the government is really able to review the recommendations of the 7th RSC and give us the actual relief in terms of viable commercial pricing and help the sector grow and serve the government as well.

Q: You said Rs 410 crore of annual market. How much of that goes to DB Corp? This being an election year would that Rs 400 crore go up this year?

A: Out of this Rs 400 crore about 5 percent of that is something that accrues to us give or take a few basis points here or there.

In spite of this being an election year we are not seeing any substantial increase in volumes, hence to that extent any rate hike is certainly welcome.

Q: In the quarter gone by you did about Rs 330 crore as ad revenues. What could the quarterly run rate look like in Q3 and Q4?

A: In the last call that we had after the Q2 results have been released and after Q3 as well, we remain reasonably hopeful of meeting the growth aspirations that we had projected for ourselves. There is obviously some level of softening that is now being baked into our projections simply because the festive season that has just gone by, the entire Navratri to post-Diwali period has not been as exciting as we had hoped it would be simply because some of the advertisers have been a little cautious with ad spends overall and not just on print spends.

We do believe that as the year end, the Christmas-New-Year phase approaches there will be some rethink in terms of promoting brands and increase in advertising.

We had projected a sustained revenue growth Quarter-on-Quarter and Year-on-Year at about 15-20 percent which we have delivered for the first two quarters. At this point of time, we are reasonably set to deliver a similar performance band in this quarter as well.

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Vedanta commissions world's first red mud powder plant

Vedanta Aluminium Ltd (VAL) has commissioned a red mud powder producing unit at Lanjigarh refinery in Odisha, describing it as first of its kind in alumina industry tackling major environmental hazards.

"The unique project of producing red mud powder has been commissioned in a fully mechanised and automatic plant. The system has been developed in-house after continuous research for more than three years," a senior company official said in a statement today.

Giving details of the project, Mukesh Kumar, president and COO of VAL said the project which was commissioned last week is the first of its kind in the world and has been set up with a capital expenditure of around Rs 50 crore.

This will have advantages like savings in caustic consumption by 10-15 kg per tonne of alumina, minimising land requirement by 50 to 60 per cent, and doing away with wet red mud storage thereby eliminating environmental hazards, he said.

The powdery red mud can easily be utilised in cement industry as well as in other Industries, Kumar said. Red mud is a waste from alumina industry and its disposal and utilisation has always been a matter of concern for environmentalists as well as alumina industry.

Also read: Vedanta aims to triple capacity despite alumina shortage
   
Although, the alumina technology is more than 100 years old but no solution could be evolved by the industry to avoid storage of red mud slurry, sources said. As the slurry is alkaline in nature and its generation is nearly one and a half times of alumina, world over millions of tonnes of red mud is lying in various red mud ponds except in some countries where it is discharged into the sea.

In any alumina refinery, a major portion of land is used for handling this waste. Although, red mud is rich in iron and titanium, no use could be made till now mainly due to presence of caustic soda.

Looking into the serious nature of hazard such red mud ponds may have, MoEF has formed a special project only few months back as National Mission for Red Mud to sponsor and promote research in red mud utilisation, sources said.

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BHEL bags Rs 1,300 cr NTPC contract

State-run  BHEL today said it has bagged a Rs 1,300 crore order from NTPC for supplying equipment to the electricity generator's Unchahar plant in Uttar Pradesh besides installation work.

"BHEL has bagged main plant package contract for 500 MW thermal power plant of NTPC ," the company said in a statement.

The Rs 1,300 crore order includes supply and installation of the main plant package for the upcoming 500 MW Feroze Gandhi Unchahar Thermal Power Project in UP.

The order has been received from NTPC BHEL Power Projects Private Limited (NBPPL), a joint venture between NTPC and BHEL, the statement said.

BHEL's scope of work in the contract envisages design, engineering, manufacture, supply and erection and commissioning of Steam Generator, Steam Turbine Generator and their auxiliaries.

It also includes Electrics and Switchyard with associated Civil Works along with Controls & Instrumentation (C&I).

On commissioning of the unit, 12 million units of electricity will be added to the grid, every day.

The key equipment for the project will be manufactured at BHEL's Trichy, Ranipet, Haridwar, Hyderabad, Bangalore and Bhopal Plants, while the company's Power Sector Northern Region will be responsible for erection and commissioning of the equipment.

BHEL has established the capability to deliver power plant equipment of 20,000 MW per annum.

Shares of BHEL were quoting at Rs 141.65, apiece in the afternoon trade on the BSE, up 1.29 per cent from the previous close.

BHEL stock price

On November 19, 2013, at 14:14 hrs Bharat Heavy Electricals was quoting at Rs 141.00, up Rs 1.15, or 0.82 percent. The 52-week high of the share was Rs 247.50 and the 52-week low was Rs 100.35.

The company's trailing 12-month (TTM) EPS was at Rs 21.82 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 6.46. The latest book value of the company is Rs 124.38 per share. At current value, the price-to-book value of the company is 1.13.

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Holcim-Ambuja deal likely to get shareholders nod: Sources

Nov 19, 2013, 02.09 PM IST

The deal was structured at an EV per tonne of USD 115 which was fair, but all the cash from Ambuja's books- nearly 90 percent plus, that is around Rs 3,500 crore- was going to be drained and in addition to this there were also shares that were going to be issued to the parent Holcim.

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Holcim-Ambuja deal likely to get shareholders nod: Sources

The deal was structured at an EV per tonne of USD 115 which was fair, but all the cash from Ambuja's books- nearly 90 percent plus, that is around Rs 3,500 crore- was going to be drained and in addition to this there were also shares that were going to be issued to the parent Holcim.

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Holcim-Ambuja deal likely to get shareholders nod: Sources

The deal was structured at an EV per tonne of USD 115 which was fair, but all the cash from Ambuja's books- nearly 90 percent plus, that is around Rs 3,500 crore- was going to be drained and in addition to this there were also shares that were going to be issued to the parent Holcim.

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The Holcim- Ambuja - ACC deal has entered the final rounds of shareholders' approval, voting of which ends today. Ambuja has been correcting since the deal announcement as it will be draining all its cash, reports CNBC-TV18's Nigel Dsouza.

Also read: Holcim's India operation restructuring plan gets FIPB nod

The deal was structured at an EV per tonne of USD 115 which was fair, but all the cash from Ambuja's books- nearly 90 percent plus, that is around Rs 3,500 crore- was going to be drained and in addition to this there were also shares that were going to be issued to the parent Holcim.

Broadly speaking, Holcim was going to gain and Ambuja really would be drained of all its cash. That is why the market really gave Ambuja a thumbs down post the deal being announced.

The voting for this particular deal closes today. The promoters (Holcim) hold nearly 50 percent of the company. Domestic Institutional Investors (DII) and Foreign Institutional Investors (FII) together hold nearly 40 percent stake of which Life Insurance Corporation (LIC) is the major shareholder because it owns nearly 6 percent.

Sources have indicated that the vote is likely to be in favour of the deal. In that case, more than 25 percent of the remaining shareholders (including most of the minority shareholders) are likely to vote in favour of this deal. If it gets the shareholders' nod, the deal progresses to the next stage.

The counting would be done in Gujarat in Ambujanagar and the results will be out in the next two days odd. Proxy advisor ISS believes post the deal Ambuja Cements would be net cash positive despite draining roughly Rs 3,500 crore because they will also get access to ACC's Rs 3,000 crore odd.

Besides, the entity would also benefit because of the synergies between the two companies. 

On the other hand IIAS has recommended voting against the deal. It believes that Holcim did not deserve to receive all this cash that was in Ambuja's books. They have further stated that from the time Holcim has taken over, the company's progress really has been halted in comparison to how it was doing before.

Ambuja Cements stock price

On November 19, 2013, at 14:12 hrs Ambuja Cements was quoting at Rs 179.15, down Rs 0.05, or 0.03 percent. The 52-week high of the share was Rs 214.45 and the 52-week low was Rs 147.55.

The company's trailing 12-month (TTM) EPS was at Rs 7.70 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 23.27. The latest book value of the company is Rs 56.99 per share. At current value, the price-to-book value of the company is 3.14.

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