The Indian market opened flat with a negative bias, mirroring SGX Nifty which is trading marginally lower in the opening trade. Major Asian indices - Hang Seng and Shanghai are flat, while Nikkei is trading lower by 1.3%. Meanwhile in the US, key benchmark indices ended lower on Thursday, although they staged a strong recovery from the lows of the day. The weakness in US markets was partly due to uncertainty about the financial situation in Europe following comments by European Central Bank President Mario Draghi. Major European indices such as FTSE 100 and CAC 40 too ended the day lower by 1.06% and 1.15% respectively. The Indian markets continued to slide due to macro-economic concerns, with the Central Statistics Office (CSO) projecting India’s growth rate for 2012-13 to be at a decade low of 5% (vs 6.2% in 2011-12). The CSO’s estimates are much lower than even the RBI’s estimates of 5.5%.
Govt. Pegs real GDP for FY3013 at 5.0%
Belying hopes of recovery, India's economic growth rate is estimated to slip to a decade's low of 5 percent in 2012-13, pulled down by poor performance of manufacturing, agriculture and services sectors. Releasing the first official estimate of growth for the current financial year, the Central Statistical Organisation (CSO) said it would decline from 6.2 percent in 2011-12 to 5 percent, much lower than the projections of the Reserve Bank and other agencies. Noting that the growth estimates, which are based on data for April-November, were below expectations, Finance Ministry said that it will continue efforts to revive economic growth and hoped that final figures would show better results. "Since then, leading indicators have turned up, suggesting some hope that we will end the year on a better note. Also, sectors such as trade and transport, which are related to industry, would also tend to get revised upwards, if growth outcomes are better," the ministry said in a statement. It further added: "We are keeping a watch on the situation. We have taken and will continue to take appropriate measures to revive growth." Describing the growth numbers as astonishingly low, India Inc demanded that the government and the Reserve Bank should take all possible measures to arrest declining growth. The previous low at 4 percent was recorded in 2002-03. Since then the Indian economy has been expanding at over 6 percent, the highest rate being 9.6 percent in 2006-07. CSO's advance estimate lowered the growth in agriculture and allied activities to 1.8 percent in 2012-13, compared to 3.6 percent 2011-12. Manufacturing growth is also expected to drop to 1.9 percent in this fiscal, from 2.7 percent last year. While the Reserve Bank has projected growth rate of 5.5 percent for the current financial year, the International Monetary Fund (IMF) has pegged it at 5.4 percent. The Finance Ministry had earlier reduced the growth projection for the current fiscal to 5.7-5.9 percent from the original estimate of 7.6 percent. With a view to promoting growth, the RBI in its quarterly policy review last month lowered the key lending rate by 0.25 percent and reduced the Cash Reserve Ratio (CRR) by the same margin, releasing Rs 18,000 crore or primary liquidity into the system. When asked about the possibility of further lowering of interest rate to boost growth, RBI Governor D Subbarao, who is in Guwahati for board meeting, said: "We got to know about the CSO projection. We will take that into account as and when we make our next policy... I am unable to comment on rate cuts at this forum". The latest estimate of 5 percent for the entire fiscal means that the pace of economic expansion has slowed sharply in the second half of 2012-13, given that GDP growth in the April-September period stood at 5.4 percent. This estimation, however, has been objected by Planning Commission Deputy Chairman Montek Singh Ahluwalia who said: "I am not certain that whether they (CSO) have done it in a correct way. In the past also, the quarterly (GDP) data was very frequently adjusted." According to Ahluwalia, the CSO ignored the uptrend in growth towards the second half of the fiscal while computing the data for the whole financial year. The data suggests that services sector including finance, insurance, real estate and business services sectors are likely to grow by 8.6 per cent this fiscal, against 11.7 per cent last fiscal. On the positive side, mining and quarrying is likely be slightly better at 0.4 percent, compared to contraction of growth of 0.6 per cent a year ago. Growth in construction is also likely to be 5.9 percent in 2012-13, against 5.6 percent last year.Source: Zeenews
Bharat Forge forms a JV to supply artillery systems
Bharat Forge has entered into a joint venture agreement with Elbit Systems Ltd, an Israeli company, for joint manufacture of artillery, mortars and advanced guns. Subject to government and regulatory approvals, the joint venture company will offer solutions in the artillery guns & mortars segment. The JVC will bring together Elbit Systems’ technology and system integration capabilities and Bharat Forge’s advanced capabilities in the areas of design, engineering, manufacturing, testing and validation, the companies announced in a joint statement today. “The strategic cooperation between Elbit Systems and Bharat Forge, and specifically the JVC, will address Indian defence requirements with operationally proven systems from Elbit Systems that have been customised and adapted for Indian conditions,” said Baba Kalyani, chairman and managing director of Bharat Forge Limited. According to a report by Centrum Broking, the Indian government is expected to increase its defence capex to Rs 1,54,200 crore by FY17 from Rs 69,200 crore this fiscal. The report said around Rs 4,23,000 crore worth of opportunity will be created for private players during FY12-FY22 in the defence space. "The private sector should see an increase in its participation in the defence market in the upcoming years, primarily due to two factors - the Government has created an increasingly favourable policy-environment and taken several concrete steps to level the playing field between them (private firms) and the PSUs," the report said.Source: Business Standard
Japanese major sniffs Indian market through John Distilleries stake
John Distilleries (JDL), maker of leading whisky brand Original Choice, is seeing high interest from foreign liquor majors for acquiring a stake. According to sources, Suntory Liquors Ltd, the alcoholic beverages division of Suntory Holdings, the $23-billion Japanese beverages major, is interested in buying a significant minority stake in the Rs 500-crore JDL. JDL, founded in 1992 by Paul John, is in the process of raising funds to meet the expansion plan by roping in a partner. According to sources, the company is in the process of appointing an advisor for the fundraising and talks are on with Morgan Stanley for giving the sell mandate. Details of company valuation and size of proposed fund are not yet known. JDL, which sells about 11 million cases, has a five per cent share in the 260-million-cases Indian Made Foreign Liquor (IMFL) market. According to industry sources, Suntory has been looking to set up a presence in the Indian alcoholic drinks sector through an acquisition and to engage in discussions with a few regional players. Last year, Suntory had acquired controlling stake in Narang Connect, subsidiary of Narang Group, to enter the non-alcoholic beverages sector in India. Presently, Suntory's two whisky brands — Yamazaki 12 YO single malt whiskey and Hibiki 17 YO blended whisky are sold in India through an exclusive marketing tie-up with Radico Khaitan.The products are priced at Rs 6,500 for a 700-ml bottle. Its single malt brands, Yamazaki 18 Year Old and Hakushu 25 Year Old, are popular worldwide. Last year, John Distilleries had launched its first single malt whisky — Paul John Single Cask 161 — in the UK market. The company has plans to launch the product across the globe, along with introducing other premium products. JDL's Original Choice Whisky is the seventh largest-selling liquor brand in India and among the 20 largest selling brands globally, with sales of 10.7 million cases annually. Apart from Original Choice, the company sells other brands such as Mônt Castlé French Grape Brandy, Grand Duke Whisky and Big Banyan Wines. When contacted, Sridhar Pongur, joint managing director & chief operation officer, refused to comment on the matter. A mail sent to a Suntory spokesperson did not elicit any response. At present, private equity investor Gaja Capital holds about 30 per cent stake in John Distilleries. According to a recent report by Anand Rathi research, foreign brands, even if launched in India, are likely to have limited success, as brand creation is extremely challenging. According to the report, South India accounts for 59 per cent of liquor consumption in India while the north and west hold 15 per cent each. Source: Business Standard
SEBI saves Nalco offer by changing rule
The Securities and Exchange Board of India (Sebi) has saved the Rs 1,500-crore offer for sale (OFS) of state-owned National Aluminium (Nalco) from going bust by altering a key criterion in the regulatory framework. Nalco is one of the important candidates identified for the Union government's Rs 30,000-crore disinvestment programme for 2012-13. The Centre plans to sell 12.5 per cent in the Odisha-based mining company and has appointed Enam Securities, SBI Caps and IDFC to conduct the OFS. An OFS on the stock exchange is a new method of divestment introduced by Sebi to enable promoters and promoter-group shareholders to sell their shares to the public. It has emerged as a quick and efficient mechanism over the past year. However, not all companies could opt for this route. The regulatory framework allowed only the top 100 companies by market capitalisation to do so. Among the rest, only those which had to meet the minimum public shareholding norms were allowed. When the disinvestment plan was cleared by the Union Cabinet, Nalco was the 83rd largest company by market capitalisation and was eligible for an OFS. Between the end of September and early November, however, the stock fell a little over 12 per cent, to around Rs 45. It remained at these levels till early December before recovering. For the quarter-ended December, the shares lost around four per cent, when the broader market represented by the Sensex gained 3.5 per cent. This, in turn, dragged down the average market capitalisation and it was no longer a company in the top 100. Since Nalco had already complied with the minimum public shareholding norm, with the government holding less than 90 per cent, it became ineligible to sell shares through OFS. But, taking other divestment routes such as a follow-on public offering would have entailed fresh Request For Proposals, offer documents and Sebi approvals. Time was not on the issue’s side, as the divestment calendar practically closes with the Union Budget in late February. As North Block scampered to save the issue, Sebi came into play. A board meeting on January 18 cleared a proposal to relax the eligibility criteria for OFS. In a circular dated January 25, it said, “All promoters/promoter group entities of the top 100 companies by market capitalisation in any of the last four completed quarters, market capitalisation being calculated as average market capitalisation in a quarter,” would be eligible to sell shares through OFS. As it was in the top 100 list in the previous three quarters, the Nalco OFS, in suspended animation for well over two months, sprang to life after this move. An investment banker, who didn’t wish to be named, confirmed the change in calculation criteria for the top 100 was done to aid the Nalco offering. “The issue was supposed to take place in the third quarter; however, the government decided to postpone it to the fourth quarter. In January, the department of disinvestment and merchant bankers realised the company had slipped below the top 100 and, hence, doesn’t qualify for OFS. Accordingly, feedback was given to Sebi, which found a way out,” he said. An email seeking comments, sent to Sebi yesterday, did not elicit any response. Along with Nalco, nine other companies will benefit by this relaxation. Four of these companies are state-controlled – MRPL, Bharat Electronics and Petronet LNG. Since Nalco had already complied with the minimum public shareholding norm, with the government holding less than 90 per cent, it became ineligible to sell shares through OFS. But, taking other divestment routes such as a follow-on public offering would have entailed fresh Request For Proposals, offer documents and Sebi approvals. Time was not on the issue’s side, as the divestment calendar practically closes with the Union Budget in late February. As North Block scampered to save the issue, Sebi came into play. A board meeting on January 18 cleared a proposal to relax the eligibility criteria for OFS. In a circular dated January 25, it said, “All promoters/promoter group entities of the top 100 companies by market capitalisation in any of the last four completed quarters, market capitalisation being calculated as average market capitalisation in a quarter,” would be eligible to sell shares through OFS. As it was in the top 100 list in the previous three quarters, the Nalco OFS, in suspended animation for well over two months, sprang to life after this move. An investment banker, who didn’t wish to be named, confirmed the change in calculation criteria for the top 100 was done to aid the Nalco offering. “The issue was supposed to take place in the third quarter; however, the government decided to postpone it to the fourth quarter. In January, the department of disinvestment and merchant bankers realised the company had slipped below the top 100 and, hence, doesn’t qualify for OFS. Accordingly, feedback was given to Sebi, which found a way out,” he said. An email seeking comments, sent to Sebi yesterday, did not elicit any response. Along with Nalco, nine other companies will benefit by this relaxation. Four of these companies are state-controlled – MRPL, Bharat Electronics and Petronet LNG. Source: Business Standard
Comments
Post a Comment