Indian Stock Market

Bharat Sanchar Nigam (BSNL) has signed an agreement with Nokia Siemens Networks (NSN) to expand its broadband coverage to 25,000 villages.

BSNL will deploy NSN’s multi-play solutions to offer high-speed Internet, virtual private networks (VPNs) and connectivity to community service centres (CSCs).

Kuldeep Goyal, chairman and managing director, BSNL, said: “BSNL is a pioneer in providing affordable, high-quality communications services to its customers, and this mega broadband expansion initiative is another step in that direction. Partnering with NSN would give BSNL an edge over other broadband services providers as it would be the first to cover rural areas on such a wide scale.”

Power Grid Corporation has raised close to $1 billion (Rs 4,000 crore) via loans from Asian Development Bank (ADB) and The World Bank.

According to a release issued by Power Grid to the BSE today, the company has signed a loan agreement with ADB, Manila for $400 million. The loan is part of ADB’s newly introduced loan facility called Multi-tranche Financing Facility (MFF), which is based on time-sliced approach.

It has also signed an agreement with The World Bank for $600 million. The loan will be utilised to fund a basket of transmission projects during the 11th Plan

Larsen & Toubro Ltd (L&T) has announced that the Company has been awarded a Rs 576 crore order by Hindustan Petroleum Corporation Ltd (HPCL).

HPCL has awarded L&T a large project order of 200,000 Tonnes per annum Lube Oil Base Stock (LOBS) Plant consisting of Raffinate Hydrotreating Unit (RHT), Mobil Selective Dewaxing Unit (MSDW) & Hydro Finishing Unit (HF). This would enable HPCL to produce high quality Group II & III Lube Oils, which are higher value-added petroleum products.

HPCL, which operates one of its biggest refineries located at Mahul, Mumbai in the state of Maharashtra, India, intends to set up this LOBS Plant as a part of their Quality Upgradation project and have awarded the order on Lumpsum Turnkey (LSTK) basis to L&T. Jacobs Engineering India Pvt Ltd has been retained by HPCL to provide services for Project Management Consultancy (PMC) and ExxonMobil Research and Engineering (USA) is the process licensor.

The scope of work for this prestigious LSTK order, valued at INR 576 Crore, includes Residual Process Design, Detailed Engineering, Procurement, Supply, Transportation, Storage, Fabrication, Inspection, Construction, Installation, Testing, Mechanical Completion, Pre-Commissioning, Commissioning and Performance Guarantee Test Runs for the said Project.

The order was bagged by L&T’s E&C Division’s Refinery Projects Business Unit against keen competition on the strength of its track record of having executed several high operating pressure refinery projects, meeting exacting refinery quality requirements and conforming to stringent delivery schedules

Bharat Oman Refineries, an equal joint venture between state-owned Bharat Petroleum Corporation (BPCL) and Oman Oil Company (OMCL), is set raise Rs 2,400 crore from the primary market. The company on Friday filed the draft red herring prospectus with the market regulator Sebi for the proposed IPO.

The proceeds of the issue, which also includes a pre-IPO sale, will be utilised to part finance the six million tonnes per annum refinery at Bina, Madhya Pradesh, that BPCL initially planned decades ago. The delay in implementation has resulted in cost overrun of Rs 10,400 crore, more than double that of the original estimate. The timing of the issue in a turbulent market has surprised the analysts. But the company thinks this is the best time to hit the market, riding on record refinery margins.

“The refining margin cycle is good right now. So it makes sense for BORL to raise money from the public at this point of time,” DM Naik Bengre, senior vice-president (finance) of BORL told ET.

The company has already tied up for Rs 6,400 crore as debt from a consortium of lenders. Post the IPO, the company’s debt equity ratio will stand at 1.6:1. The remaining Rs 1,600 crore will come from BPCL, OMCL and the Madhya Pradesh government as their equity contribution.

Post the book-built issue, BPCL will hold 48% stake, OMCL 5% and Madhya Pradesh government 2%. The financial investors and public shareholding would be 45%.

As on February 15, 2008, nearly 49.50% of the project was completed. The refinery is expected to commence commercial operations by January 2010, BORL prospectus shows.

The refinery is designed to have a crude oil processing capacity of 6-million metric tonnes per annum and a higher complexity factor of 9.1, as measured by using the Nelson Complexity Index. The project also includes a crude oil importing and storage system in Vadinar, Gujarat, consisting of a single-point mooring facility that can receive crude oil shipments from very large crude carriers of up to 320,000 dead weight tonnage and a crude oil terminal with a capacity of 480,000 cubic meters.

The crude oil terminal will be connected to the refinery through an approximately 935 kilometre long crude oil supply pipeline. The project also includes a 99 MW megawatt captive co-generation power plant that will meet the power and steam requirements of the refinery. Petroleum coke produced by the refinery will be utilised towards the fuel requirements for this power plant

elReliance Power, the flagship company of the Reliance Anil Dhirubhai Ambani (ADA) Group, will place orders worth Rs 10,000 crore for 12 boiler, turbine and generators (BTGs) for its power plants in a few days. This will be the largest ever such order worldwide to be placed with a power equipment manufacturer.

Five international boiler and turbine manufacturers – Ansaldo from Italy, Doosan from Korea, Toshiba of Japan, Shanghai Electric of China and Power Machines from Russia are in the fray to bag this mammoth order. The order would be for 8,000 mw capacity, said sources.

Senior executives of these global majors are now camping in Mumbai and the final round of negotiations are on. Reliance Power was likely to place the order with one of these manufacturers with details to be announced within a few days, said sources.

The equipments have to be supplied in 4-5 years as per the terms of the contract, they added. They said the orders were mainly for the Rs 18,300 crore Sasan Ultra Mega Power Project (UMPP) and the 4,000 mw Krishnapatanam UMPP, coming up in Andhra.

As reported two days ago, Reliance Power is fast-tracking the 3,960 mw Sasan project to commission it ahead of the earlier deadline for the first phase in 2012.

The first phase of the 600 mw Rosa power project is also scheduled for commissioning in 2009-10. Reliance Power intends to become the largest private sector power generator in the country with 13 power projects (capacity 28,200 mw).

Reliance Power would utilise a major portion of its initial public offering (IPO) and raise debt to fund the order. In January, the company had raised about Rs 12,000 crore through the country’s largest ever IPO.

A Reliance spokesperson declined to comment on the development. Sources said BHEL, the country’s only power equipment maker in the public sector, is not in the race.

This is because its 10,000 mw power equivalent manufacturing capacity is already booked. Further, the capacity addition for another 5,000 mw will take off only by 2009-10

Liquor tycoon Vijay Mallya is open to buying back Heineken’s 37.5% stake in United Breweries (UB), in which he holds an equal stake, at the prevailing market price. “If you ask me whether I would buy them back, my answer is at today’s price, sure, I am a buyer,” Mr Mallya told ET. But Heineken sources said the Dutch brewer has no plan to sell its stake.

Heineken will inherit stake in UB from Scottish & Newcastle (S&N) after the completion of a worldwide takeover of the British brewer. The Heineken-Carlsberg combine announced S&N’s acquisition for $15.4 billion in January. The acquisition process is still on. At the current price, UB’s market cap is pegged at Rs 3,800 crore, down almost 50% from January’s peak. Mr Mallya will have to show up with Rs 1,425 crore if he were to buy back at the prevailing rate. The UB scrip closed flat at Rs 176 on BSE on Thursday.

A Heineken spokesperson said: “Heineken looks forward to a potential co-operation with Mr Mallya and we are in discussion with him and with our partner in Asia (APB). It is, however, too early to say more.” Mr Mallya said Heineken is not yet a shareholder in UB as the global transaction is yet to be completed. “My business agreement was with S&N, and Heineken will have to renegotiate a charter of rights. I cannot speculate on the outcome of our discussions,” he added

A fortnight ago, he had said talks with Heineken would gain momentum once it formally completes the S&N takeover, which is expected by April-end. A UB Group official said there is no immediate trigger to approach Heineken with a buyback offer. He also clarified that UB has no first right of refusal in S&N’s stake sale to Heineken.

Earlier on Thursday, while talking to media at the opening ceremony of his Four Seasons Winery at Baramati, Mr Mallya said: “They (Heineken) have beer business in India, which has a conflict of interest as Kingfisher is the largest beer brand in the country. I am ready to buy back their shares.”

UB has communicated to Heineken that it cannot operate competing structures in India. Heineken is the leading shareholder in Singapore-based Asia Pacific Breweries (APB), makers of Tiger beer, which is present in the Indian market. What if Heineken does not want to sell its stake in United Breweries? A banker close to the development said S&N had a business charter agreement with UB Group, which will not be automatically transferred to Heineken. “Now, Heineken will have to sign a fresh agreement with Mr Mallya. He can flex his muscle when Heineken comes to him,” he added

The United Spirits winery in Baramati is ready to take up its first ever harvest of the 2008 vintage. The company will be launching six varieties of wines this year with a target of 5 million bottles in five years.

Built over a plot of 300 acre, the crushing at the winery has begun and the bottling will begin by April. The winery will be fully ready by October 2008 and will then release wines made from grape varieties grown in Sahayadri valley of Maharashtra.

The company had recently launched its first Indian made wine – Zinzi, under the banner of Four Seasons Wines – a joint venture between USL (51%) and the Pawar family and the local farmers (49%) of Baramati, near Pune.  The oak-barrelled wines will be launched by Four Seasons Wines in November 2008 while the sparkling wines will be launched by 2009. The crushing was officially inaugurated by UB group chairman Vijay Mallya and Union Minister Sharad Pawar yesterday.

Besides 300 hundred acres of its own vineyards, Four Seasons Wines will enter into long term contractual agreements with local farmers for a further 1,000 acres of vineyards for its annual requirement. Besides, the company will also share its technical expertise with local farmers of Baramati and help in their viticulture

100% payment by QIBs in IPOs and shorter time between IPO closing & listing.

The Securities and Exchange Board of India (Sebi) is expected to take two decisions simultaneously in July.

The first is to introduce a shorter time-frame between the closure of an IPO for subscription and its listing.

The second is asking all classes of investors, including qualified institutional buyers (QIBs), to make full payment while applying for an IPO.

Currently, QIBs have to pay a margin (around 10 per cent of the book-building price-band) when applying for subscription. But retail investors have to pay the entire amount, which is refunded within 15 days of the closure of the IPO if shares are not allotted.

Institutional investors, including foreign institutions, are known as QIBs.

Sources familiar with the developments said Sebi wants to fast-track these two decisions but a final decision can be taken only around July as a great deal of paperwork still needs to be completed and proper market feedback taken on board before a final decision. “The decision should be taken by July,” they said.

Sebi Chairman C B Bhave had recently said at a conference in Singapore that the regulator wants to change the norms for QIB investments in IPOs.

Sources said the feedback from QIBs is that most of them invest money collected from the public and full payment upfront in IPOs will be possible only if the share allotment and listing process is shortened in India. This has prompted the regulator to hasten the listing process of all Indian companies.

Sebi’s primary market committee, which will address the issue of reducing the gap between the closing of an IPO and its listing, is expected to meet in early April.

The draft consultative paper will then be put up for discussion, following which a final decision will be taken by the Sebi board.

The move will effectively put QIBs and the small retail investors on a level field when it comes to IPO applications.

The sources said the 10 per cent margin payment by QIBs often results in huge over-subscriptions but presents a distorted picture of an IPO’s success

Gammon Infrastructure Projects IPO Allotment status is out and allocation details can be checked here…

 Gammon Infra IPO Allotment

Retail investors can get good allotment .Comment on your Expected Listing price here.

The Deccan brand, once synonymous with low cost flying in India, will cease to exist after its merger with the Vijay Mallya promoted Kingfisher Airlines, which will takeoff for international destinations by August.

“Deccan will cease to exist because after the merger there will be only one company and that will be Kingfisher Airlines,” UB Group chief and Kingfisher Airlines Chairman Vijay Mallya told reporters here.

He said the Karnataka High court convened meeting for the merger of Kingfisher Airlines (KA) and Deccan would be held on on April 17, following which it would gear up to fly abroad.

“On March 17, the Director General of Civil Aviation has given Kingfisher approval to fly abroad from August 28,” Mallya said.

KA had acquired 26 per cent stake in Capt Gopinath promoted Air Deccan for Rs 550 crore last year and made an open offer for 20 per cent stake taking its holding to 46 per cent.

Mallya’s latest statement comes contrary to earlier position maintained by Gopinath, who said the two airlines would operate as separate entities even when the two were merged.

After the takeover by Kingfisher, Deccan had rebranded itself as ‘Simplifly Deccan’ and surrendered major metro routes for the full service sister concern

Titagarh Wagons IPO subscribed 1.71 times

The initial public offering of Titagarh Wagons was subscribed 1.71 times as at 12:00 pm, on the last day of the issue, according to data available on the NSE.

So far 40,67,030 bids have been submitted against 23,83,768 shares on offer. Around 55,550 bids were received at the cut off price.

Qualified institutional buyers have bid 1.5915 times the 14,21,261 shares allocated for allotment, non-institutional investors have so far subscribed their allocation of 2,36,877 around 0.17 times. Retail investors have bid 0.072 times the 7,10,630 shares on offer.

The issue opened on Monday in the price band of Rs 540-610 per share.

The issue consists of a net issue of 23,68,768 shares and reservation of up to 15,000 shares for employees

Maruti likely to increase introductory price of Swift DZire

Maruti Suzuki India on Thursday said it is likely to raise in the next few weeks, the price of its entry level sedan Swift DZire to offset high input costs.

“The company is likely to revise the introductory prices in the next few weeks due to high cost of raw materials, but nothing has been decided so far,” Maruti Suzuki’s Managing Director Shinzo Nakanishi said on the sidelines of the launch of DZire here.

“Prices of not only steel, but aluminium copper are rising and it is affecting the margins of car makers,” he said.

Based on the Swift platform, Maruti has priced this entry level Sedan in Mumbai from Rs 4.70 lakh for petrol and at Rs 5.60 lakh for diesel (ex-showroom), he added.

“With the high cost of manufacturing prices, we may have to revise the introductory prices in the next few weeks,” he said.

The interest rates are high, financing is difficult, raw material costs are going up and the Sensex is bearish, in such a situation one has to find some alternative to sustain, he said.

“The company aims to cut costs and increase the volume productivity to take advantage of economies of scale,” he added.

“Many of our customers are not able to get an entry level sedan. The year 2007-08 will be the best year as Maruti will become a leader in the A3 segment,” he said

Pepsi will be the official beverage of the lucrative Indian Premier League (IPL) for five years and the deal with the soft drink giant has been struck at $12.5 million.

Well-placed sources in the IPL said only the eight franchise owners would benefit from the deal.

Pepsi, which has a long association with Indian cricket, has been the main sponsor of India’s domestic tournaments for several years and has also been associated with the International Cricket Council (ICC) as its global sponsor.

A significant part of the deal is that the eight franchises – Mumbai, Delhi, Kolkata, Bangalore, Chennai, Mohali, Jaipur and Hyderabad – will be the direct beneficiaries of the money accruing from the sponsorship

“Pepsi will pay $2.5 million each year and, importantly, the entire income from this deal will go to the eight franchise owners,” according to the IPL sources who did not wish to be identified.

In other words, each franchisee stands richer by $312,500 per year.

The team owners benefiting from this deal are Mukesh Ambani’s Reliance, which bought Mumbai team for $111.9 million, Deccan Chronicle (Hyderabad, $107.01 million), Vijay Mallya’s UB Group (Bangalore, $106 million), India Cements (Chennai, $91 million), GMR Holdings (Delhi, $84 million), a consortium led by Preity Zinta (Mohali, $76 million), Shah Rukh Khan’s Red Chillies (Kolkata, $75.09 million) and Emerging Media (Jaipur, $67 million).

The Twenty20 tournament, comprising 59 matches, will be played over 45 days starting April 18. Matches will be telecast live on SET Max, which along with World Sports Group paid $1.026 billion to get the television rights for 10 years

Care has come out with research report on AVON Weighing Systems (AWSL). It has assigned ‘IPO Grade 2’ to the company’s IPO. The company proposes an IPO of 98,36,400 equity shares of face value Rs10 each, amounting to Rs 9.84 crore.

Care report on AVON Weighing Systems IPO

CARE has assigned ‘CARE IPO Grade 2’ to the proposed IPO (initial public offer) of AVON Weighing Systems Limited (AWSL). CARE IPO Grade 2 indicates below average fundamentals.

AWSL proposes an IPO of 98,36,400 equity shares, of face value of Rs.10 each, amounting to Rs.9.84 crore.

The grading factors in good track record of the promoters in trading operations, long relationship with Tanita Corporation and A&D Company Ltd. (A&D), stable profitability margins with growing operations and favourable prospects of the digital and mechanical weighing scales. However, the grading is constrained by AWSL’s small size of operations, high contribution of export earnings, high working capital requirements resulting into high overall gearing, excessive reliance on Tanita Corporation for setting up new manufacturing plant and lack of promoter’s experience in manufacturing.

AWSL, engaged in trading of mechanical and digital weighing systems, procures the products from A&D and Tanita. The product range of the company caters to wide range of industries such as – pharmaceuticals, chemicals, gems & jewellery, healthcare, retail etc. Apart from trading, AWSL also provides consultancy services, software development services, after sales services and assembly work, as per client’s requirement. As on date, exports constitute majority portion of the total revenue of the company. However, AWSL enjoys a natural hedge against currency fluctuations due to imports.

Development of software and technological innovations in manufacturing activities has changed the face of the weighing balance industry in India. Post economic development, electronic balances have become the norm in India. This industry is moving towards developing integrated weighing solutions, instead of standalone weighing balances.

In order to participate in the government tenders, which provide high volumes but require bidding companies to have their manufacturing facilities in India, and to improve margins, AWSL proposes to enter into manufacturing of mechanical and digital weighing system, with technical help from Tanita. The company also proposes to open four new showrooms and additional office space in Mumbai. The total cost of the project is Rs.17.30 crore to be funded from the mix of promoters equity (Rs.4.36 crore), IPO (Rs.9.84 crore), long-term debt (Rs.2.60 crore) and internal accruals (Rs.0.50 crore).

On the back of export order of Rs 97 crore, received during FY06, AWSL posted compounded growth of about 69% and 90% in the total income and PBILDT, respectively, for last four years. During FY07, the company borrowed Rs.4.80 crore towards working capital which resulted into an increase of about 280%, in the interest expense. As a result of working capital intensive nature of the operations, the overall gearing, for the last four years, has shown an increasing trend. During FY07, the equity share capital increased by Rs 1.45 crore, as a result of issuance of bonus shares and promoter contribution of Rs 0.47 crore towards new project.