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Fundamentals May 9, 2013

Nik's Diary
The Indian markets opened positive today tracking strong cues from SGX Nifty. Meanwhile, the major Asian markets are up in early trading except for Hang Seng. After recovering from an early move to the downside, US stocks moved mostly higher over the course of the trading day on Wednesday. The markets extended the upward trend that has been seen since a brief pullback in mid-April. With the gains on the day, the Dow and the S&P 500 reached new record closing highs, while the Nasdaq set another new twelve-year high. The European markets also moved higher on Wednesday, extending gains from the previous trading session. The markets got off to a positive start thanks to the better than expected trade data released by China. The unexpected increase in Germany industrial production, coupled with yesterday's factory orders growth, also provided a boost to investor sentiment. Meanwhile, Indian shares continued to rise Wednesday to close at 3 month highs with the BSE index closing just shy of 20,000 as FII inflows continue to drive the market. 

Bombay High Court approves JSW Steel-JSW Ispat merger
The merger of JSW Ispat Steel into JSW Steel has been approved by the Bombay High Court last week, paving the way for the company to become second largest steel producer in the country after SAIL. The two companies -- JSW Steel and JSW Ispat Steel -- said in two separate filings to the Bombay Stock Exchange (BSE) that the Composite Scheme of Amalgamation and Arrangement amongst the two companies and their shareholders and creditors was sanctioned by the Bombay High Court on May 3, 2013. According to the Scheme, shareholders of JSW Ispat will get one JSW Steel share for every 72 shares they hold. Moreover, JSW Ispat will transfer its Kalmeshwar undertaking and JSW Steel will transfer its downstream undertaking to JSW Steel Coated Products. Besides, JSW Building Systems will also be merged with JSW Steel. The two companies said that the order has been uploaded on High Court's website on May 7 but "the certified copy of the order sanctioning the Scheme is awaited". "The Scheme will become effective only upon receipt of the certified copy of the order of the High Court and on compliance with the requisite formalities," they added. Shareholders and creditors of the two companies had approved the merger on January 30. Post completion of formalities, JSW Steel's annual production capacity will increase to 14.3 million tonnes (MT) from existing 11 MT and it will become second largest domestic producer after SAIL. Post-merger, promoters of JSW Steel will hold 35.12 per cent in the merged entity, while company's second largest shareholder JFE Steel holding will come down to 14.92 per cent. JFE had about 15 per cent stake in JSW Steel till the time of merger announcement in September last year. JSW Steel had acquired 41 per cent stake in debt-ridden Ispat Industries from Pramod and Vinod Mittal, brothers of the steel czar L N Mittal, in December 2010 for about Rs. 2,157 crore. Ispat Industries was subsequently named as JSW Ispat. Later, it increased its stake to 46.75 per cent in JSW Ispat and is the single-largest shareholder of the company. Through merger, JSW Steel is aiming at various benefits, including synergy in operations and reducing the borrowing cost of JSW Ispat by Rs. 250 crore. The merger would also help JSW Steel in laying claim on deferred tax benefits available to JSW Ispat of over Rs. 2,088 crore as Ispat has started making profits since April-June quarter of 2012. Source: NDTV

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