SBI, BoB seek treatment of gold deposits as part of CRR/SLR

The country's two biggest state-run lenders today pitched for treating a portion of their gold deposits as part of the mandatory cash reserve ratio (CRR) or statutory liquidity ratio (SLR), both of which banks consider as non-productive.

"Is it possible that the regulator can treat a little bit of our gold deposits as CRR or SLR? After all, gold is also a store of value," State Bank of India Chairperson Arundhati Bhattacharya said at a Gem & Jewellery Export Promotion Council banking summit.

With gold imports having pressurised the current account gap in the recent past, there is a greater need to make use of gold available in the country and make it more liquid, she stressed.

She claimed that SBI  is the largest player in the gold deposit scheme segment and is struggling to deploy the entire deposits in productive assets. "We also find that we are not able to deploy the entire gold that we get. There is really no incentive for us to go ahead and get more of these deposits now so as to make gold more liquid," she said, reiterating her demand.

CRR, at 4 percent now, is the portion of deposits parked by banks with the Reserve Bank of India that earns no interest, while SLR, at 22.5 percent, is the amount of deposits to be mandatorily invested in recognised securities such as government bonds and other liquid assets.

Also read:  SBI's Budget wishlist: Target job creation, MSMEs, infra

However, the average SLR holding in the system is 27 percent as banks make treasury play a source of boosting bottom lines when there is poor growth in advances or bad loans rise.

Concurring with Bhattacharya, Bank of Baroda  Chairman and Managing Director S S Mundra said it "makes sense" to treat a part of banks' gold deposits as CRR and SLR. "When banks are holding gold, it is of value. I think it makes sense to bring under CRR/SLR. It also fits the larger pattern that ultimately we are talking about unearthing the gold and bringing it to productive sectors in the economy as a whole. The gold that is readily available can be brought under recognition," Mundra told reporters.

Data on the gold deposits held by the two banks was not immediately available.

Successive chiefs of SBI, the country's largest lender, have been targeting the zero-interest yielding CRR component. Bhattacharya's predecessor Pratip Chaudhuri had waged a spirited public fight to abolish CRR.

Speaking at the event, Financial Services Secretary GS Sandhu acknowledged that the ministry has received several representations on ways to better utilise gold deposits and it is actively looking into the matter.

He stressed the need to monetise gold held by the public to help reduce imports of the yellow metal, which can be a drain on the nation's foreign-exchange resources and lead to a wider current account deficit (CAD).

Curbs on gold imports helped narrow the CAD to 1.7 percent of GDP at USD 32.4 billion in 2013-14 from 4.7 percent at USD 87.8 billion in 2012-13.

"So much gold is lying idle. In some ways if we can monetise this, may be our imports will come down drastically. Something in that direction we will have to think of," Sandhu said.

SBI stock price

On June 27, 2014, State Bank of India closed at Rs 2636.75, down Rs 18.75, or 0.71 percent. The 52-week high of the share was Rs 2833.85 and the 52-week low was Rs 1452.90.

The company's trailing 12-month (TTM) EPS was at Rs 145.88 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 18.07. The latest book value of the company is Rs 1584.34 per share. At current value, the price-to-book value of the company is 1.66.

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CCI imposes Rs 1 cr fine on Thomas Cook, Sterling Holidays

Fine has also been imposed on Thomas Cook Insurance Services (India) Ltd, a party to the deal. The Rs 870 crore-deal involving merger of Sterling Holiday Resorts (India) with travel firm Thomas Cook (India) has already been cleared by Competition Commission of India.

The Competition Commission has imposed Rs 1 crore penalty on three entities, including  Thomas Cook and Sterling Holiday Resorts , for carrying out certain market purchases related to their deal before seeking the fair trade watchdog's approval.

The imposition of penalty by CCI was disclosed by Thomas Cook (India) in a regulatory filing today. Fine has also been imposed on Thomas Cook Insurance Services (India) Ltd, a party to the deal. The Rs 870 crore-deal involving merger of Sterling Holiday Resorts (India) with travel firm Thomas Cook (India) has already been cleared by Competition Commission of India.

However, the fine relates to market purchases carried out as part of the deal between February 10 and 12 this year. CCI had issued a show cause notice to all the three entities stating that "market purchases, being part of the composite combination (under the competition regulations), were consummated before giving notice to the Commission and as such invited penalty under the (Competition) Act".

Also Read: Competition Commission slaps Rs 3cr penalty on Tesco

Through these purchases, Thomas Cook Insurance Services (India) Ltd acquired more than 90.26 lakh shares, representing 9.93 per cent stake of Sterling Holiday Resorts (India) Ltd. The entities had filed notice seeking CCI nod for the deal on February 14, two days after the purchases. According to a regulatory filing by Thomas Cook (India) today, CCI was of the opinion that the facts suggested that the conduct of the parties was not such that attracts severe penalty.

"Considering the facts and circumstances of the case, the Commission...considered it appropriate to impose a relatively nominal penalty of Rs 1 crore on the parties," Thomas Cook said in the filing to the BSE. In March this year, CCI had approved the multi-structured deal saying it was not likely to have an adverse impact on competition in the country.

Under the deal, Chennai-based Sterling Holiday Resorts' (India) resorts and some other business would be transferred to Thomas Cook Insurance Services, a subsidiary of Thomas Cook (India). Further, Thomas Cook would issue certain equity shares of the subsidiary to Sterling Holiday's shareholders. Besides Sterling Holiday, with its residual business, would merge into Thomas Cook (India). In lieu, certain amount of shares of the travel firm would be issued to shareholders of Sterling Holiday, as per the ratio set out.

Among others, CCI had observed that "the business of hotel services across India is relatively fragmented and there are different channels for availing the hotel services along with the presence of large number of big players as well as intermediaries/agents".

Thomas Cook stock price

On June 27, 2014, Thomas Cook (India) closed at Rs 114.50, up Rs 0.10, or 0.09 percent. The 52-week high of the share was Rs 128.95 and the 52-week low was Rs 48.15.

The company's trailing 12-month (TTM) EPS was at Rs 1.46 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 78.42. The latest book value of the company is Rs 24.08 per share. At current value, the price-to-book value of the company is 4.75.

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US pharma companies want dialogue with India on IPRs

Arguing that global pharma companies share the same goal of "patient first" with that of the Government of India, corporate executives attending the day-long "US-India BioPharma and Healthcare Summit" organised by the USA-India Chamber of Commerce said they should not be considered as adversaries by New Delhi.

Top executives of American pharma companies favour "dialogue" with India and "not confrontation" to address their concerns on key issues like the protection of intellectual property (IP) and clinical trials.

Arguing that global pharma companies share the same goal of "patient first" with that of the Government of India, corporate executives attending the day-long "US-India BioPharma and Healthcare Summit" organised by the USA-India Chamber of Commerce said they should not be considered as adversaries by New Delhi.

While asserting there can be no compromise on IP protection issues, executives from top US pharma companies said that they are willing to work with India like - tier pricing - to come out with a solution, which is acceptable to the both the parties.

"We can sit around a table and have a dialogue. We need to move from seeing the industry as adversary to work together to help patients. The only way we can do it is by having collaboration and actually a dialogue," Bahija Jallal, executive Vice President of MedImmune, a prominent bio-tech company, told PTI.

Also read:  GDUFA fee: 86 generic drug approvals voluntarily withdrawn  

"We want to work together with the Indian Government. But we can't right now, go (to India) in a meaningful way if there is no IP protection," she Jallal adding that New Delhi's compulsory licensing policies would force pharma companies to go to some other countries.

"The Government has to understand, the first thing that we care about is the patient. We can have a dialogue. Every country that we go to, we understand the different layers that exists economically," she said.
 
Dr Robert Langer, David J Koch Institute Professor at the prestigious Massachusetts Institute of Technology (MIT), argued that not protecting intellectual property would destroy innovation in the long term.
 
Patents system, he said, is very important for encouraging many aspects of innovation. "Having investment capital, having laws that encourages investment into innovation is important," Langer said.

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PNC Infratech bags Rs 441 crore contract

The contract involves rehabilitation and upgradation of the 80 kilometre road stretch of Sonauli-Gorakhapur Section of National Highway 29 in Uttar Pradesh on EPC (engineering, procurement, construction) Basis, the company said in a statement.

PNC Infratech Limited has bagged a Rs 441 crore contract from the Ministry of Road Transport and Highways for rehabilitation and upgradation of the 80 KM road on the National Highway connecting Uttar Pradesh.

Also Read: IRB Infra inks Rs 2,300 cr pact with NHAI for Haryana road

The contract involves rehabilitation and upgradation of the 80 kilometre road stretch of Sonauli-Gorakhapur Section of National Highway 29 in Uttar Pradesh on EPC (engineering, procurement, construction) Basis, the company said in a statement.

The project cost is estimated at Rs 441 Crore and is slated to be completed in two years, the company said.

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IFC bets on NCDs in debt financing for NBFCs

IFC was holding talks with Magma Fincorp and Cholamandalam for subscribing to NCDs of these NBFCs, he said. "Microfinance institutions (MFIs) will also get benefit of this," Agarwal said.

Non Convertible Debentures (NCDs) have recently become the preferred route of investment for multilateral agency International Finance Corporation (IFC) in debt for non banking financial companies (NBFCs).

"Recently we have started debt financing through NCDs to NBFCs. The first one is AU financiers, a Rajasthan-based NBFC of USD 25 million. We are looking at more opportunities through this route," IFC senior investment officer A K Agarwal said here today on the sidelines of a financial markets conclave by CII.

IFC was holding talks with Magma Fincorp and Cholamandalam for subscribing to NCDs of these NBFCs, he said. "Microfinance institutions (MFIs) will also get benefit of this," Agarwal said.

Asked about the reason for NCDs as the new preferred route for debt financing, Agarwal said this instrument was an option due to restrictions on ECBs for NBFCs. "As per ECB guidelines, NBFCs were not allowed to raise Dollars. IFC can only invest in Dollars as we do not have an India balance sheet. But under the NCD guidelines Dollars can be converted in spot market and can be invested in rupee lending as FIIs," Agarwal said.

He said IFC remained committed to MFIs and will continue to invest in the sector. Agarwal declined to comment on whether the agency was planning any hike in its stake in the MFI Bandhan once it was converted to a bank.

Bandhan, a city based MFI had received in-principal approval for a banking licence and IFC had close to 11 percent stake. Total exposure of IFC in India was roughly USD 4.5 billion. Of that around 1/3 was equity and 2/3 debt. Financial sector exposure is estimated to be around 30-35 per cent. "We have been investing more than a billion dollar year-on-year," Agarwal added.

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Gas leak, blast at ship breaking yard in Bhavnagar, 5 dead

The incident comes a day after a similar blast in a GAIL gas pipeline in the East Godavari district of Andhra Pradesh. The blast in the GAIL pipeline left 14 people dead and many others injured on Friday.

Five persons were killed and ten others injured after an explosion occurred at the Alang ship breaking yard in Bhavnagar district in Gujarat.

The blast was triggered by a gas leak at plot no 140, where ship breaking working was in progress.

The injured labourers have been shifted to a hospital.

The incident comes a day after a similar blast in a  GAIL gas pipeline in the East Godavari district of Andhra Pradesh. The blast in the GAIL pipeline left 14 people dead and many others injured on Friday .

The fire in the incident had also hit nearby houses, shops and coconut plantations.

GAIL stock price

On June 27, 2014, GAIL India closed at Rs 456.10, down Rs 3.65, or 0.79 percent. The 52-week high of the share was Rs 469.55 and the 52-week low was Rs 273.00.

The company's trailing 12-month (TTM) EPS was at Rs 34.49 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 13.22. The latest book value of the company is Rs 225.49 per share. At current value, the price-to-book value of the company is 2.02.

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SBI, BoB seek treatment of gold deposits as part of CRR/SLR

The country's two biggest state-run lenders today pitched for treating a portion of their gold deposits as part of the mandatory cash reserve ratio (CRR) or statutory liquidity ratio (SLR), both of which banks consider as non-productive.

"Is it possible that the regulator can treat a little bit of our gold deposits as CRR or SLR? After all, gold is also a store of value," State Bank of India Chairperson Arundhati Bhattacharya said at a Gem & Jewellery Export Promotion Council banking summit.

With gold imports having pressurised the current account gap in the recent past, there is a greater need to make use of gold available in the country and make it more liquid, she stressed.

She claimed that SBI  is the largest player in the gold deposit scheme segment and is struggling to deploy the entire deposits in productive assets. "We also find that we are not able to deploy the entire gold that we get. There is really no incentive for us to go ahead and get more of these deposits now so as to make gold more liquid," she said, reiterating her demand.

CRR, at 4 percent now, is the portion of deposits parked by banks with the Reserve Bank of India that earns no interest, while SLR, at 22.5 percent, is the amount of deposits to be mandatorily invested in recognised securities such as government bonds and other liquid assets.

Also read:  SBI's Budget wishlist: Target job creation, MSMEs, infra

However, the average SLR holding in the system is 27 percent as banks make treasury play a source of boosting bottom lines when there is poor growth in advances or bad loans rise.

Concurring with Bhattacharya, Bank of Baroda  Chairman and Managing Director S S Mundra said it "makes sense" to treat a part of banks' gold deposits as CRR and SLR. "When banks are holding gold, it is of value. I think it makes sense to bring under CRR/SLR. It also fits the larger pattern that ultimately we are talking about unearthing the gold and bringing it to productive sectors in the economy as a whole. The gold that is readily available can be brought under recognition," Mundra told reporters.

Data on the gold deposits held by the two banks was not immediately available.

Successive chiefs of SBI, the country's largest lender, have been targeting the zero-interest yielding CRR component. Bhattacharya's predecessor Pratip Chaudhuri had waged a spirited public fight to abolish CRR.

Speaking at the event, Financial Services Secretary GS Sandhu acknowledged that the ministry has received several representations on ways to better utilise gold deposits and it is actively looking into the matter.

He stressed the need to monetise gold held by the public to help reduce imports of the yellow metal, which can be a drain on the nation's foreign-exchange resources and lead to a wider current account deficit (CAD).

Curbs on gold imports helped narrow the CAD to 1.7 percent of GDP at USD 32.4 billion in 2013-14 from 4.7 percent at USD 87.8 billion in 2012-13.

"So much gold is lying idle. In some ways if we can monetise this, may be our imports will come down drastically. Something in that direction we will have to think of," Sandhu said.

SBI stock price

On June 27, 2014, State Bank of India closed at Rs 2636.75, down Rs 18.75, or 0.71 percent. The 52-week high of the share was Rs 2833.85 and the 52-week low was Rs 1452.90.

The company's trailing 12-month (TTM) EPS was at Rs 145.88 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 18.07. The latest book value of the company is Rs 1584.34 per share. At current value, the price-to-book value of the company is 1.66.

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PNC Infratech bags Rs 441 crore contract

The contract involves rehabilitation and upgradation of the 80 kilometre road stretch of Sonauli-Gorakhapur Section of National Highway 29 in Uttar Pradesh on EPC (engineering, procurement, construction) Basis, the company said in a statement.

PNC Infratech Limited has bagged a Rs 441 crore contract from the Ministry of Road Transport and Highways for rehabilitation and upgradation of the 80 KM road on the National Highway connecting Uttar Pradesh.

Also Read: IRB Infra inks Rs 2,300 cr pact with NHAI for Haryana road

The contract involves rehabilitation and upgradation of the 80 kilometre road stretch of Sonauli-Gorakhapur Section of National Highway 29 in Uttar Pradesh on EPC (engineering, procurement, construction) Basis, the company said in a statement.

The project cost is estimated at Rs 441 Crore and is slated to be completed in two years, the company said.

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US pharma companies want dialogue with India on IPRs

Arguing that global pharma companies share the same goal of "patient first" with that of the Government of India, corporate executives attending the day-long "US-India BioPharma and Healthcare Summit" organised by the USA-India Chamber of Commerce said they should not be considered as adversaries by New Delhi.

Top executives of American pharma companies favour "dialogue" with India and "not confrontation" to address their concerns on key issues like the protection of intellectual property (IP) and clinical trials.

Arguing that global pharma companies share the same goal of "patient first" with that of the Government of India, corporate executives attending the day-long "US-India BioPharma and Healthcare Summit" organised by the USA-India Chamber of Commerce said they should not be considered as adversaries by New Delhi.

While asserting there can be no compromise on IP protection issues, executives from top US pharma companies said that they are willing to work with India like - tier pricing - to come out with a solution, which is acceptable to the both the parties.

"We can sit around a table and have a dialogue. We need to move from seeing the industry as adversary to work together to help patients. The only way we can do it is by having collaboration and actually a dialogue," Bahija Jallal, executive Vice President of MedImmune, a prominent bio-tech company, told PTI.

Also read:  GDUFA fee: 86 generic drug approvals voluntarily withdrawn  

"We want to work together with the Indian Government. But we can't right now, go (to India) in a meaningful way if there is no IP protection," she Jallal adding that New Delhi's compulsory licensing policies would force pharma companies to go to some other countries.

"The Government has to understand, the first thing that we care about is the patient. We can have a dialogue. Every country that we go to, we understand the different layers that exists economically," she said.
 
Dr Robert Langer, David J Koch Institute Professor at the prestigious Massachusetts Institute of Technology (MIT), argued that not protecting intellectual property would destroy innovation in the long term.
 
Patents system, he said, is very important for encouraging many aspects of innovation. "Having investment capital, having laws that encourages investment into innovation is important," Langer said.

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CCI imposes Rs 1 cr fine on Thomas Cook, Sterling Holidays

Fine has also been imposed on Thomas Cook Insurance Services (India) Ltd, a party to the deal. The Rs 870 crore-deal involving merger of Sterling Holiday Resorts (India) with travel firm Thomas Cook (India) has already been cleared by Competition Commission of India.

The Competition Commission has imposed Rs 1 crore penalty on three entities, including  Thomas Cook and Sterling Holiday Resorts , for carrying out certain market purchases related to their deal before seeking the fair trade watchdog's approval.

The imposition of penalty by CCI was disclosed by Thomas Cook (India) in a regulatory filing today. Fine has also been imposed on Thomas Cook Insurance Services (India) Ltd, a party to the deal. The Rs 870 crore-deal involving merger of Sterling Holiday Resorts (India) with travel firm Thomas Cook (India) has already been cleared by Competition Commission of India.

However, the fine relates to market purchases carried out as part of the deal between February 10 and 12 this year. CCI had issued a show cause notice to all the three entities stating that "market purchases, being part of the composite combination (under the competition regulations), were consummated before giving notice to the Commission and as such invited penalty under the (Competition) Act".

Also Read: Competition Commission slaps Rs 3cr penalty on Tesco

Through these purchases, Thomas Cook Insurance Services (India) Ltd acquired more than 90.26 lakh shares, representing 9.93 per cent stake of Sterling Holiday Resorts (India) Ltd. The entities had filed notice seeking CCI nod for the deal on February 14, two days after the purchases. According to a regulatory filing by Thomas Cook (India) today, CCI was of the opinion that the facts suggested that the conduct of the parties was not such that attracts severe penalty.

"Considering the facts and circumstances of the case, the Commission...considered it appropriate to impose a relatively nominal penalty of Rs 1 crore on the parties," Thomas Cook said in the filing to the BSE. In March this year, CCI had approved the multi-structured deal saying it was not likely to have an adverse impact on competition in the country.

Under the deal, Chennai-based Sterling Holiday Resorts' (India) resorts and some other business would be transferred to Thomas Cook Insurance Services, a subsidiary of Thomas Cook (India). Further, Thomas Cook would issue certain equity shares of the subsidiary to Sterling Holiday's shareholders. Besides Sterling Holiday, with its residual business, would merge into Thomas Cook (India). In lieu, certain amount of shares of the travel firm would be issued to shareholders of Sterling Holiday, as per the ratio set out.

Among others, CCI had observed that "the business of hotel services across India is relatively fragmented and there are different channels for availing the hotel services along with the presence of large number of big players as well as intermediaries/agents".

Thomas Cook stock price

On June 27, 2014, Thomas Cook (India) closed at Rs 115.00, up Rs 0.60, or 0.52 percent. The 52-week high of the share was Rs 128.95 and the 52-week low was Rs 48.15.

The company's trailing 12-month (TTM) EPS was at Rs 1.46 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 78.77. The latest book value of the company is Rs 24.08 per share. At current value, the price-to-book value of the company is 4.78.

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IFC bets on NCDs in debt financing for NBFCs

IFC was holding talks with Magma Fincorp and Cholamandalam for subscribing to NCDs of these NBFCs, he said. "Microfinance institutions (MFIs) will also get benefit of this," Agarwal said.

Non Convertible Debentures (NCDs) have recently become the preferred route of investment for multilateral agency International Finance Corporation (IFC) in debt for non banking financial companies (NBFCs).

"Recently we have started debt financing through NCDs to NBFCs. The first one is AU financiers, a Rajasthan-based NBFC of USD 25 million. We are looking at more opportunities through this route," IFC senior investment officer A K Agarwal said here today on the sidelines of a financial markets conclave by CII.

IFC was holding talks with Magma Fincorp and Cholamandalam for subscribing to NCDs of these NBFCs, he said. "Microfinance institutions (MFIs) will also get benefit of this," Agarwal said.

Asked about the reason for NCDs as the new preferred route for debt financing, Agarwal said this instrument was an option due to restrictions on ECBs for NBFCs. "As per ECB guidelines, NBFCs were not allowed to raise Dollars. IFC can only invest in Dollars as we do not have an India balance sheet. But under the NCD guidelines Dollars can be converted in spot market and can be invested in rupee lending as FIIs," Agarwal said.

He said IFC remained committed to MFIs and will continue to invest in the sector. Agarwal declined to comment on whether the agency was planning any hike in its stake in the MFI Bandhan once it was converted to a bank.

Bandhan, a city based MFI had received in-principal approval for a banking licence and IFC had close to 11 percent stake. Total exposure of IFC in India was roughly USD 4.5 billion. Of that around 1/3 was equity and 2/3 debt. Financial sector exposure is estimated to be around 30-35 per cent. "We have been investing more than a billion dollar year-on-year," Agarwal added.

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Gas leak, blast at ship breaking yard in Bhavnagar, 5 dead

The incident comes a day after a similar blast in a GAIL gas pipeline in the East Godavari district of Andhra Pradesh. The blast in the GAIL pipeline left 14 people dead and many others injured on Friday.

Five persons were killed and ten others injured after an explosion occurred at the Alang ship breaking yard in Bhavnagar district in Gujarat.

The blast was triggered by a gas leak at plot no 140, where ship breaking working was in progress.

The injured labourers have been shifted to a hospital.

The incident comes a day after a similar blast in a  GAIL gas pipeline in the East Godavari district of Andhra Pradesh. The blast in the GAIL pipeline left 14 people dead and many others injured on Friday .

The fire in the incident had also hit nearby houses, shops and coconut plantations.

GAIL stock price

On June 16, 2014, GAIL India closed at Rs 433.25, up Rs 16.45, or 3.95 percent. The 52-week high of the share was Rs 439.00 and the 52-week low was Rs 273.00.

The company's trailing 12-month (TTM) EPS was at Rs 34.49 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 12.56. The latest book value of the company is Rs 225.49 per share. At current value, the price-to-book value of the company is 1.92.

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IOB proposal to raise Rs 1,200 cr through QIP gets nod

The shareholders approved the proposal during the 14th Annual General Meeting of the bank, a bank statement said.

Shareholders of the public sector  Indian Overseas Bank   today approved its proposal to raise Rs 1,200 crore through qualified institutional placements (QIP).

The shareholders approved the proposal during the 14th Annual General Meeting of the bank held here, a bank statement said.

Also read: IOB seeks Rs 3,500 crore capital support from govt

"...the shareholders approved the proposal for raising of capital by way of QIP up to Rs 1,200 crore, including share premium, subject to regulatory approvals," it said. In his address, bank Chairman and Managing Director M Narendra said: "there will be increased attention on reduction of NPAs through intensive recovery measures throughout the year and ensuring maintenance of asset quality".

IOB stock price

On June 27, 2014, Indian Overseas Bank closed at Rs 76.40, down Rs 1.8, or 2.3 percent. The 52-week high of the share was Rs 89.90 and the 52-week low was Rs 37.15.

The company's trailing 12-month (TTM) EPS was at Rs 4.87 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 15.69. The latest book value of the company is Rs 130.90 per share. At current value, the price-to-book value of the company is 0.58.

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India's future bright, prosperous under Modi: Cisco Systems

Cisco Systems is also looking at investing in electronic manufacturing sector in India. Speaking after the meeting, John Chambers said that India has a bright and prosperous future under the Narendra Modi government.

Foreign investors are brimming with optimism with a new government at the helm. Cisco Systems chairman and CEO, John Chambers met the Department of Industrial Policy and Promotion (DIPP) secretary Friday to discus participation in smart cities and industrial corridors.

Cisco Systems is also looking at investing in electronic manufacturing sector in India. Speaking after the meeting, Chambers said that India has a bright and prosperous future under the Narendra Modi government.

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See FY15 rev top Rs 1.5Kcr; 30% jump in vols: Maha Seamless

Maharashtra Seamless  expects a 30-40 percent jump in volumes and revenues above Rs 1500 crores in FY15 and above Rs 2000 crore for FY16. The company saw hike in production, which in turn lead to lower manufactguring costs per tonne and higher profits said CFO, RK Gupta in an interview to CNBC-TV18's Nigel D'Souza and Reema Tendulkar.

With regards to safeguard duty, he said the industry has made a representation to the Directorate General of Safeguard for imposition of the duty and his hopeful of the safeguard duty being imposed by August 15.

Moreover, he is bullish on the outlook for the company and said the order book remains healthy and covers the production for the  next two-three months.

Below is the transcript of RK Gupta's interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.

Nigel: There has been a lot of talk of safeguard duty imposed on seamless pipes given that imports from China were hitting your business? Can you please elaborate?

A: There has been a sudden surge of imports into India especially because of dumping by the Chinese and also other manufacturers. So the industry had put a representation to the Directorate General of Safeguard for imposition of safeguard duty. The DG Safeguard has recommended imposition of 25 percent duty to the government and it is now under consideration of the Commerce Ministry. So their special committee would be reviewing it and making a final recommendation to government.

We as industry are pretty hopeful that it should go through because that's the need of hour. We have put substantial amount of investment into the country for selling these pipes into India and not for exports, though we are also exporting substantial part of our production.

We see no reason why this duty should not come through which would be in the larger interest of the country because it is providing a lot of employment plus it would be safe valuable foreign exchange also.

Nigel: How long will it take for this safeguard duty to come into being?

A: It is already delayed and we understand that this committee would be meeting shortly and taking a decision. We are pretty hopeful that the committee should give its recommendation by July end and the duty should be in force by August 15.

Reema: Have you seen a pickup in your sales volumes or in your capacity utilisation and currently what is the targeted level for FY15?

A: We do not give any guidance for production but we were doing about 270,000 when we had single plant and last year we did about 153,000 metric tonne, so this year we should see a 30-40 percent jump and next year we should again see a 30-40 percent jump vis-à-vis level that we do in the current year once the sales get restored.

Reema: Will all this result into better margins given that in the last quarter they had dipped to 5 percent?

A: Absolutely because once the production level goes up our manufacturing cost per tonne will get lower and that would mean higher profitability for the company.

Nigel: What about your order book. Take us through that with regard to your global as well as your domestic business?

A: We are getting orders for line pipe but for the oil country tubular goods (OCTG) because of the final investigation report the orders are slow. Those orders will come once the final determination is done. Of course nothing is anticipated but the customers are waiting for the final order. But the book remains healthy in the sense that we are covered for next two-three months production though on the OCTG side the order book is little slow.

Reema: In FY13 you did revenues of close to about Rs 1,700 crore but last year it was down to sub Rs 1300 crore. What is the revenue guidance for FY15?

A: It should be in excess of Rs 1,500 crores for this year and next year we would like to do in excess of Rs 2,000 crores.

Mah Seamless stock price

On June 27, 2014, Maharashtra Seamless closed at Rs 296.80, up Rs 10.15, or 3.54 percent. The 52-week high of the share was Rs 346.65 and the 52-week low was Rs 151.05.

The company's trailing 12-month (TTM) EPS was at Rs 14.50 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 20.47. The latest book value of the company is Rs 435.54 per share. At current value, the price-to-book value of the company is 0.68.

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Cipla unit gets 345 mn rand contract from South Africa

Under the contract, which will run from July 2014 to April 2017, the company will supply drugs including Beclate 100, Becalate 200 and Asthavent 200.

Drug major  Cipla has got a contract worth 345 million rand (Rs 195 crore) from the South African government.

Cipla Medpro, the South African subsidiary of the Indian firm, has been awarded a 345 million rand share of the South African government's national respiratory tender, the company said in a statement.

Under the contract, which will run from July 2014 to April 2017, the company will supply drugs including Beclate 100, Becalate 200 and Asthavent 200.

"This is the second-largest government tender awarded to Cipla in the last three years," the company said.

Cipla Medpro CEO Paul Miller said patients across South Africa will benefit from increased access to Cipla's respiratory programmes and products.

"This successful tender is yet again testament to the Cipla team's commitment to excellence and quality and the company ethos of advancing healthcare for all," he added.

Last year, Mumbai-based Cipla completed the buyout of Cipla Medpro for an aggregate consideration of Rs 2,707 crore. Cipla Medpro is the third-largest South African pharmaceutical company founded in 1993.

Cipla stock price

On June 16, 2014, Cipla closed at Rs 413.60, down Rs 0.5, or 0.12 percent. The 52-week high of the share was Rs 450.00 and the 52-week low was Rs 366.70.

The company's trailing 12-month (TTM) EPS was at Rs 17.29 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 23.92. The latest book value of the company is Rs 127.76 per share. At current value, the price-to-book value of the company is 3.24.

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ONGC to invest Rs 5,700 cr in Mumbai High North development

The project will yield an incremental 6.997 million tonnes of crude oil and 5.253 billion cubic metres of gas by 2030, the company said in a statement here

State-owned  Oil and Natural Gas Corp (ONGC) today said it will invest over Rs 5,700 crore in redevelopment of its giant Mumbai High (North) oil and gas field off the west coast.

The project will yield an incremental 6.997 million tonnes of crude oil and 5.253 billion cubic metres of gas by 2030, the company said in a statement here.

"The board of ONGC approved the proposal for redevelopment of its giant offshore field - Mumbai High (North) involving a capital investment of Rs 5,706.47 crore, including foreign exchange component of Rs 4,421.76 crore (USD 743.15 million at exchange rate of Rs 59.50 to a US dollar)," it said.

The project is designed to carry forward the success of the previous two editions of redevelopment projects of the fields that were discovered four decades ago. This will give a new lease of life to the giant field.

The project cost includes Rs 2,586.42 crore in creation of surface facilities, Rs 1,992.11 crore in new oil and gas wells and Rs 1,127.94 crore in sidetracking of existing wells. "The facilities envisaged under the project are installation of five well platforms, one clamp-on facility for wells at an existing platform, associated pipelines and modifications at 13 platforms, drilling of 52 new wells and 24 sidetrack wells," according to the statement.

The facility parts under the project are scheduled to be installed by April 2016, while drilling of wells and the overall project completion is scheduled for May 2017. ONGC said the Mumbai High North Re-Development (MHNRD Phase-III) envisages further development of LI, LII, S1 and other minor reservoirs along with the major LIII reservoir and the integration of required inputs.

Separately, the company announced an oil and gas discovery at Gandhar in Gujarat. "This new pool discovery in GS-6B sand in the south western part of Gandhar field opens up the sector for further field growth," it said.

Exploratory well Gandhar #699 was drilled to a depth of 2,904 meters. During conventional testing, it produced oil at the rate of 38 cubic meters per day and gas at 20,069 standard cubic meters a day.
 
With this, ONGC has notified five discoveries during the financial year 2014-15.

ONGC stock price

On June 27, 2014, Oil and Natural Gas Corporation closed at Rs 411.05, down Rs 0.05, or 0.01 percent. The 52-week high of the share was Rs 472.00 and the 52-week low was Rs 234.40.

The company's trailing 12-month (TTM) EPS was at Rs 25.83 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 15.91. The latest book value of the company is Rs 171.29 per share. At current value, the price-to-book value of the company is 2.40.

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Here are the key takeaways from TCS AGM on Friday

India's number one tech company Tata Consultancy Services ( TCS ) is optimistic on the road ahead. The firm held its annual general meeting today. The chairman of Tata Sons Cyrus Mistry was in attendance and was upbeat about the company's growth prospects.

Here are the highlights from the TCS AGM:

- Revitalisation of the global economy continued this year

 - Growth momentum to be carry forward in FY15

 - Indian industry grew at 8.8% in dollar terms

 - TCS delivered growth of 16% in dollar terms in FY14

 - Total dividend of FY14 is Rs 32/ share

 - New service lines growing at a faster pace

 - Consulting srvcs , digital & engineering service showing traction

 - Discretionary projects from India got delayed due to elections

 - Economy doing well; both in India and overseas

 - Dividend has been reasonably generous this year

 - Income from sale of software licences decreased due to SI biz

 - Alti acquisition will help expand significantly in France

 - Attrition rate has increased in overseas subsidiaries

 - Overseas attrition rates are however still within control

 - Assets of TCS Morocco are under liquidation

  - Acquisitions will depend on independent  requirements in new geographies

 - Remain confident that FY15 will bring greater growth opportunities

 - TCS working to bring a diff to customers

 - Mobility, big data, cloud computing & robotics will change the IT paradigm

 - Invested in these new growing businesses

 - Performance over the last decade shows ability of co to adapt to change

 - Expanded our delivery centres this year

 - Launched new campus of 10,000 ppl in Gandhinagar

 - Continued growth momentum in terms of revenues & profits

 - Implemented growth across mkts, industries & srvc lines

 - Deepened its performance and relationship with all strategic customers

 - Number of customers giving repeat business has increased

 - Co strategy of full services is deeply appreciated by clients

 - Biggest investment going in the area of digital

 - See huge shift towards digital tech in next few years

 - Constantly working to adapt to changing customer needs

 - Digital re-imagination is our cos offering to customers & governments

 - TCS stands 6th in revenue in global IT industry

 - TCS stands 2nd in mkt cap in global IT industry

 - TCS Morocco being liquidated since co wasn't showing growth

 - Needed to meet loan obligations & hence liquidated co

 - Latin America, Africa, APAC key new growth mkts

 - De-merging subsidiaries is an on going process

 - No immediate plans to de-merge any subsidiary

 - Committee within he company decides hedging policy

 - No major change in hedging policy

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SAT verdict in RIL insider-trading case on Jun 30

Reliance has been fighting against market watchdog Sebi in the alleged insider-trading case since December 2010 and since last year the regulator's exclusion of the company from the new consent mechanism.

A full bench of the Securities Appellate Tribunal (SAT), headed by presiding officer JP Devdhar, today concluded the hearing on the nearly four-year-long insider trading case against  Reliance Industries and said it will pronounce the order on June 30.

Reliance has been fighting against market watchdog Sebi in the alleged insider-trading case since December 2010 and since last year the regulator's exclusion of the company from the new consent mechanism.

Also read: Deferment of gas price revision to impact PSU oil cos more: Moily

The case dates back to 2008, when Sebi alleged insider trading against RIL while merging its subsidiary Reliance Petroleum (RPL) with itself in 2007, and the Mukesh Ambani-led company challenged the Sebi charges at the SAT in December 2010.

The case also involves Reliance challenging the maintainability of the Sebi decision's to exclude it from the consent mechanism under the new norms issued for the same in January 2013.

Reliance stock price

On June 16, 2014, Reliance Industries closed at Rs 1064.50, down Rs 17.45, or 1.61 percent. The 52-week high of the share was Rs 1142.50 and the 52-week low was Rs 765.00.

The company's trailing 12-month (TTM) EPS was at Rs 68.00 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 15.65. The latest book value of the company is Rs 609.63 per share. At current value, the price-to-book value of the company is 1.75.

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Flipkart launches 7-inch calling tablet for Rs 9,999

After e-commerce, Flipkart has jumped into the fiercely competitive smart device market in India by launching its calling tablet for Rs 9,999. The seven-inch tablet branded Digiflip Pro is expected to help the domestic online marketplace increase revenue and expand its presence in the multi-billion dollar electronics business.

Bangalore-based Flipkart already sells headphones, speakers and pen drives under its DigiFlip range. "We are the first e-commerce marketplace in India to launch our own device through Digiflip Pro. With this, we have taken another step in our goal towards building an entire e-commerce ecosystem in India," Flipkart VP Retail and Head (Brand Alliances) Michael Adnani said.

Also read:  On expansion mode, Flipkart to hire 12,000 people this yr  

According to industry body MAIT, the tablet market in India grew at a "muted" 76 per cent in 2013-14 compared with triple-digit growth over the previous two years. Companies such as Samsung, Micromax, Apple and Datawind sold about 3.35 million tablets in 2013-14. Industry watchers expect growth to ease further as customers prefer smartphones with bigger screen sizes.

Amazon, the world's biggest online retailer, launched its Fire Phone last week, becoming the first to enter the smart device segment. The Digiflip Pro XT 712 is available in black and white variants, has dual SIM, a 1.3 GHz quad core Cortex A7 processor coupled with 1 GB DDR3 RAM and 3G calling feature.

The retailer will offer shopping benefits worth over Rs 5,000 and free eBooks worth more than Rs 2,000 while using the Flipkart mobile app that is pre-installed on the tablet. "Our research on what Flipkart users expect for their tablet shows that consumers are looking at an ultimate device experience at an affordable price," Flipkart Director Retail (Tablets) Pradeep Dodle told PTI.

He said added there are "almost no good tablet brands" in the Rs 10,000-category (entry-level), while those with features that customers look for are priced higher. Asked if Flipkart was late entering the tablet market, Dodle said the segment is currently "evolving", with players offering various features at multiple price points but it will regain momentum soon as the market consolidates.

"Earlier, there were some 150-odd tablet brands, but after the BIS certification mandate, around 30 brands are left. We feel this year will be a defining year for tablets and next year on, good growth should come in," he added.

Dodle said the after-sales service for the device will be handled through a network of over 120 centres in more than 100 cities.

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Oil Minister approves appointment of new IOC Chairman

B Ashok, Executive Director (Retail Sales) at Indian Oil Corp (IOC), was on October 9, 2013, chosen to head the company by government headhunters Public Enterprise Selection Board (PESB), but the previous UPA government could not appoint him before its tenure ended.

Petroleum Minister Dharmendra Pradhan has approved appointment of B Ashok as the head of India's largest oil firm, IOC, in what will be the first top level appointment by the new government.

B Ashok, Executive Director (Retail Sales) at  Indian Oil Corp (IOC), was on October 9, 2013, chosen to head the company by government headhunters Public Enterprise Selection Board (PESB), but the previous UPA government could not appoint him before its tenure ended.

The Prime Minister's Office, where Ashok's appointment file was pending since last month, had sought Pradhan's comments on the issue. "The Minister has consented to Ashok's appointment and
the file has been sent to the Department of Personnel and Training (DoPT) for processing," a ministry official said.

Once approved the Appointments Committee of the Cabinet (ACC) headed by Prime Minister Narendra Modi, formal appointment orders will be issued. Ashok, 57, was to succeed R S Butola who retired from service on May 31 on attaining superannuation age of 60 years. 

Since a full-time chairman was not appointed in time, R K Malhotra, Director (R&D) and senior most director on IOC board, has been given additional charge for the time-being. This would be the first appointment by the new government on IOC board, where all directors are retiring this fiscal.

Malhotra, who is acting chairman, is due to retire by the month end. And if by then Ashok is not appointed, the additional charge will be given to the next senior most director, AMK Sinha, Director for Business Development.

Sinha will retire by July end and P K Goyal, Director (Finance), in the following month.  R K Ghosh, Director (Refineries) too will retire by month end while Director (Marketing) M Nene would demit office by end of December. Director (HRD) post is vacant and V S Okhde, the only the functional director on company board, will superannuate on January 31, 2015.

IOC stock price

On June 26, 2014, Indian Oil Corporation closed at Rs 328.30, down Rs 13.65, or 3.99 percent. The 52-week high of the share was Rs 385.35 and the 52-week low was Rs 186.20.

The company's trailing 12-month (TTM) EPS was at Rs 28.91 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 11.36. The latest book value of the company is Rs 280.66 per share. At current value, the price-to-book value of the company is 1.17.

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BMW rolls out diesel variant of X5 at Rs 70.9 lakh

Initial deliveries of the all-new BMW X5 in India will commence by June as an overwhelming demand for the vehicle in the market has pushed the waiting period to three months, BMW said in a statement.

German luxury carmaker BMW today rolled out a diesel variant of its locally manufactured Sports Utility Vehicle X5, from its Chennai plant at an ex-showroom price of Rs 70.9 lakh.

Initial deliveries of the all-new BMW X5 in India will commence by June as an overwhelming demand for the vehicle in the market has pushed the waiting period to three months, BMW said in a statement.

The diesel variant of the BMW X5 xDrive30d model, which was launched last month, is being locally produced at BMW's plant in Chennai.

Also read:  Jaitley extends excise cut for auto, cap goods till Dec 31

"The third generation BMW X5 has received tremendous customer response and excitement since it was first displayed at the Delhi Auto Expo 2014," BMW Group India President Philipp von Sahr said. The company might also consider ramping up the production to meet the huge demand in the Indian market, he added.

"The team at the facility will build the all-new BMW X5 with uncompromising engineering. We are confident that the BMW X5 produced in Chennai will further increase our momentum in the Indian luxury car segment," said Robert Frittrang, Managing Director of BMW's Chennai plant.

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Brokerages react negatively to gas price hike deferral

Brokerages have reacted negatively to the government's move to defer a hike in gas prices. They are in agreement that the deferral will be a negative for sentiment in the near-term. CNBC-TV18's Ushang Sheth gets the breakdown of the different views.

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Will 'Spiceflex' scheme help Spicejet turnaround in black?

Spicejet is trying every trick in the book to return to profitability. Recently, the airline became the first LCC to offer 'premium economy' seats on its aircraft with larger leg space of 36 inches and now, in an effort to boost bookings from corporate passengers and frequent flyers

Air Asia India may have unleashed a fare-war with super-cheap tickets but Spicejet has decided to take the battle for the skies a notch higher reports Firstpost's Sindhu Bhattacharya.

Today, the airlin announced 'Spiceflex' - A scheme that offers 'business class' comforts to passengers at a discounted rate . So, will such measures help India's second largest low cost carrier (LCC) to fly back into the black?

Spicejet is trying every trick in the book to return to profitability. Recently, the airline became the first LCC to offer 'premium economy' seats on its aircraft with larger leg space of 36 inches and now, in an effort to boost bookings from corporate passengers and frequent flyers.

Spiceflex offer is valid for the front half of the aircraft where passengers can avail of multiple add-on services like meals, priority check-in, preferred seating etc for Rs 1500,which is a 50% discount to the amount payable if all these services were to be booked separately.

Moreover, starting today, the airline is also introducing a three-day offer where a passenger can choose to upgrade to Spiceflex at a further discounted price of Rs 749 extra. This offer is applicable for bookings made between June 26 and June 29, 2014 for travel between June 26 and September 2014.

However, considering that Spicejet posted a record net loss of Rs 1003 crore for FY14. So, now the question is will these frequent fare discounts and special offers help the airline turn around?

Promoters of Spicejet have been regularly helping it with funds but that may not be enough. Avaition consultancy Capa estimates a fund requirement of Rs 1200cr for the airline to stay operational, it has been launching frequent discounted fares and other promotional schemes that may help loads, but does it help the airline trim its losses; especially now that AirAsia has also entered the market.

In the past the airline has been in talks with several strategic investors but no investment has materialised till now.

However, for now Spicejet is the one grabbing headlines and all eyes on other LCCs as to whether they too will follow suit with similar offerings. So far, a Goair spokesperson said the airline already offers similar add-on services to its 'business class' passengers for Rs 3500.

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AMW Motors ties up with LT Finance for vehicle loans

The agreement will help provide loans for the entire range of AMW vehicles such as tippers, the new AMW haulage range and other special purpose vehicles, AMW Motors said in a statement.

Commercial vehicles maker AMW Motors today has tied up with  L&T Finance to provide retail financing options for its range of medium and heavy haulage vehicles and tippers, the company said today.

The agreement will help provide loans for the entire range of AMW vehicles such as tippers, the new AMW haulage range and other special purpose vehicles, AMW Motors said in a statement.

Also Read: L&T Finance offer for sale over-subscribed

"We are privileged to be associated with L&T Finance and are confident that this tie-up will generate increased volumes for AMW and better overall productivity for customers," AMW Motors President A Ramasubramanian said. L&T Finance COO GC Rangan said the strategic tie-up with AMW will give transport community a real boost.

"It is our continuous endeavour to make availability of finance more convenient and customer friendly and with this partnership, we believe, we will be able to help people in buying their choice of commercial vehicle," he added. AMW sells trucks ranging from 16 to 49 tonnes.

L&T Finance stock price

On June 25, 2014, L&T Finance Holdings closed at Rs 73.35, up Rs 0.30, or 0.41 percent. The 52-week high of the share was Rs 88.35 and the 52-week low was Rs 53.00.

The company's trailing 12-month (TTM) EPS was at Rs 1.14 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 64.34. The latest book value of the company is Rs 20.55 per share. At current value, the price-to-book value of the company is 3.57.

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Dr Reddy's launches generic Paricalcitol capsules in US mkt

The company has launched paricalcitol capsules in the US market in the strengths of 1 mcg, 2 mcg and 4 mcg on June 24 after getting approval from the United States Food and Drug Administration (USFDA), Dr Reddy's said in a statement.

Drug firm  Dr Reddy's Laboratories has launched generic Paricalcitol capsules used for treating secondary hyperparathyroidism associated with chronic kidney disease in the American market, following approval by the US health regulator.

The company has launched paricalcitol capsules in the US market in the strengths of 1 mcg, 2 mcg and 4 mcg on June 24 after getting approval from the United States Food and Drug Administration (USFDA), Dr Reddy's said in a statement.

The product is generic version of AbbVie Inc's Zemplar capsules, it added.

"The Zemplar brand and generic had US sales of approximately USD 109.6 million MAT for the most recent twelve months ending in March 2014 according to IMS Health," Dr Reddy's said.

The company's capsules in three strengths of 1 mcg, 2 mcg and 4 mcg are available in bottle counts of 30, it added.

Shares of Dr Reddy's Laboratories were trading 0.23 percent up at Rs 2,466.40 per scrip on the BSE in morning trade today.

Dr Reddys Labs stock price

On June 25, 2014, Dr Reddys Laboratories closed at Rs 2479.35, up Rs 18.50, or 0.75 percent. The 52-week high of the share was Rs 2939.80 and the 52-week low was Rs 2025.00.

The company's trailing 12-month (TTM) EPS was at Rs 113.51 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 21.84. The latest book value of the company is Rs 570.62 per share. At current value, the price-to-book value of the company is 4.35.

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Prime Focus will continue to hold 80% in new co: Founder

Prime Focus  stock was buzzing in trade today after the board approved merger of its creative services subsidiary Prime Focus World with Double Negative which is one of the world's foremost visual effects companies. Prime Focus World contributes nearly 65 percent of revenues to Prime Focus.

In a conversation to CNBC-TV18, Namit Malhotra, founder, Prime Focus says the merger of Prime Focus World with Double Negative will create a consolidated group of visual effects services, 2D to 3D conversions and animation services.

Prime Focus will continue to hold 80 percent in the new entity post merger. The company currently holds nearly 94 percent in Prime Focus World.

Below is the transcript of Namit Malhotra's interview with Menaka Doshi, Senthil Chegalvarayan and Varinder Bansal of CNBC-TV18.

Menaka: If you could just take us through the details of the deal first. What exactly are you selling, how and for how much?

A: This is not a sale. This is clearly a merger of our international visual effects business which is traded under the name of Prime Focus World which is a subsidiary of the listed company in India. We are looking at merging our visual effects business with Double Negative which is one the worlds foremost visual effects companies to create what will be a consolidated group of visual effects services, 2D to 3D conversions and animation services. That would form part of this new enlarged entity.

Senthil: What percentage of revenues comes from Prime Focus World?

A: Almost 65 percent.

Menaka: What are you getting in exchange for merging this business, cash, shares or what?

A: This is going to be a stock swap. There will be a consideration paid to the current holders of Double Negative and their stock will then be merged into Prime Focus World.

Q: What exactly is the merger ratio, who will be managing that combined company? Right now it is not clear on whether they are buying out your business and merging it and your using your arm to sort of takeover their business?

A: The visual effects business that we own in the international sector is being merged. That currently trades as part of our global operations, so there is no sale from Prime Focus's standpoint. It will continue to be almost 80-85 percent subsidiary of the parent company which is listed here. There will be cash and stock consideration paid to the current holders of Double Negative.

The new trading name will be traded under Double Negative as part of our international operations and that is basically the construct of this deal. It is not like we are selling out or exiting that business in any shape or form.

Q: Will the revenue of the merged company now flow back into Prime Focus, the Indian listed company?

A: Yes.

Varinder: How much are you valuing the company at Prime Focus World, in this transaction?

A: Prime Focus World has bench mark valuation from last year when we have done financing with Macquarie Capital at USD 253 million and that continues to be consistent with the current deal.

Varinder: What could be the share holding pattern of Prime Focus World post the merger with Double Negative?

A: We would continue to hold about 80 percent of company.

Varinder: Down from 94 percent?

A: Yes.

Senthil: Is there any cash outflow from Prime Focus World?

A: Yes, there will be a cash and stock consideration that has been made as part of the overall financing and the details of which we are under firm negotiations and so, we will be able to disclose that shortly.

Menaka: What are the combined valuations? What will be the burden on Prime Focus World in the process of merging this arm with Double Negative?

A: This merger is being contemplated on the basis of new equity and debt being financed across all our current investors and we are literally at the last stage of closing.

Menaka: New equity and debt being financed all our investors, can you just simplify that?

A: Our current investors such as Standard Chartered Private Equity and other stakeholders would be putting in additional equity into this overall transaction and we would be raising some amount of debt as part of this overall financing.

Menaka: What would putting in additional equity into this overall transaction exactly mean?

A: Into Prime Focus World, into the subsidiary.

Menaka: So they are likely to put in more money, invest more money. Is that what you are looking at?

A: Yes, there will be some amount of cash, stock and earn out structure over the course of next few years.

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Jaitley extends excise cut for auto, cap goods till Dec 31

Finance Minister Arun Jaitley said the revenue loss will be made up in the long run. In the Interim Budget, his former counterpart P Chidambaram had slashed the excise duty on automobiles, mobile phones, electronic items, capital goods and soaps for a period ending June 30.

Finance Minister Arun Jaitley on Wednesday afternoon announced the decision to continue with low excise duty for six months till December 31 for auto, consumer durables and capital goods sector. The declaration spiked auto shares in the last 10 minutes of trade with Maruti and  Bajaj Auto closing the day with near 3 percent gains.

Also Read: Experts hail FM's decision to control food prices

Addressing the press, Jaitley said the revenue loss will be made up in the long run. "Revenue loss is a small issue compared to the benefit to economy," he said.

In the Interim Budget presented in February, his former counterpart P Chidambaram had slashed the excise duty on automobiles, mobile phones, electronic items, capital goods and soaps for a period ending June 30.

Excise duty on commercial vehicles and two-wheelers was cut to 8 percent from 12 percent and on SUV's it was reduced to 24 percent from 30 percent. The excise duty on large and mid-segment cars was slashed to 24 percent from 27 percent.

This is definitely a good news for the auto industry, said Prayesh Jain of IIFL. "The situation on the ground has not been encouraging yet. We expect the recovery to happen in the second half. So this will definitely help the automakers to bring in a sustain price cut that they had taken in March and will help in boosting sentiments," he said.

V Parthasarthy, CFO, M&M, said the industry was actually looking whether the new FM extends the date or not. "The excise duty cut was expiring on June 30 and the Union Budget is on July 10. We hope that it gets extended in the Budget because then it can provide us the much-needed relief during these tough conditions," he said.

Moreover, this is a good news for consumers as there is no roll back and thus current prices can continue, he added.

Arvind Saxena, President and Managing Director, GM India, in a statement said: "It's a welcome decision and we hope the government will extend it for the full year in the Budget as the sector continues to be sluggish. We also expect the government to announce other measures in the Budget to revive growth." 

Meanwhile, the Society of Indian Automobile Manufacturers (SIAM) also welcomed the government's decision to extend lower excise duty and believed it would improve buyer sentiment.

According to SIAM the lower excise duty will help bring sustained recovery for the auto sector and will go a long way in bringing back growth to the industry. It may also bring investments in said SIAM.

Maruti Suzuki stock price

On June 16, 2014, Maruti Suzuki India closed at Rs 2376.90, down Rs 27.1, or 1.13 percent. The 52-week high of the share was Rs 2505.30 and the 52-week low was Rs 1217.00.

The company's trailing 12-month (TTM) EPS was at Rs 92.13 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 25.8. The latest book value of the company is Rs 707.16 per share. At current value, the price-to-book value of the company is 3.36.

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Etihad to acquire 49% of Alitalia airline: joint statement

Alitalia is weighed down by huge debt. Dealing with this is believed to have been a big sticking point in the negotiations which began at the end of last year.

Emirates airline Etihad Airways is to acquire 49.0 percent of Alitalia, the two companies said on today, concluding months of tough negotiations and following years of financial crises at the Italian airline.

Alitalia is weighed down by huge debt. Dealing with this is believed to have been a big sticking point in the negotiations which began at the end of last year.

Another problem is cuts in the Alitalia workforce of 12,800 which will be needed. It is believed that about 2,200 jobs will have to be axed.

Etihad Airways has expanded rapidly in recent years, largely on a rise of air travel in the Gulf region of the Middle East.

In a joint statement, which provided no details, the two airlines said they had agreed the "terms and conditions of a proposed transaction whereby Etihad Airways will acquire a 49 percent equity stake in Alitalia."

They said they would tie up the deal as soon as possible subject to approval from regulators.

Also read:  Lowering ATF, better connectivity on Aviation Min's agenda

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Do not expect excise sops to expire in December 2014: SIAM

Vikram Kirloskar, President, SIAM and Vice Chairman, Toyota Kirloskar Motor in an interview with CNBC-TV18s Shereen Bhan gave his reactions to the auto excise cut.

The uncertainty looming over excise duty structure for the auto sector is finally over. The government on Wednesday decided to extend excise duty cut for the auto sector by six months indicating the concession set to end on the 30th of June, will be now applicable till the end of this year. The excise duty concession is also applicable for capital goods and consumer goods.        

Vikram Kirloskar, President, SIAM and Vice Chairman, Toyota Kirloskar Motor in an interview with CNBC-TV18s Shereen Bhan gave his reactions to the news.

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IHCL fixes rights issue price at Rs 55 per CCD

The committee has also decided on the entitlement ratio of 9 CCDs for every 40 equity shares of the company, IHCL said.

Tata group firm Indian Hotels Company , which plans to raise Rs 1,000 crore by way of rights issue, today fixed the price at Rs 55 per compulsory convertible debenture (CCD).

The Rights Issue Committee of the Company has finalized the terms and conditions of the CCDs to be issued in the rights issue and has decided on a issue price of 'Rs 55 per CCD of the face value of Rs 55 each', Indian Hotels Company Ltd (IHCL) said in a filing to BSE.

The CCDs are to be issued to the existing shareholders of the company for an 'amount not exceeding Rs 1,000 crore', it added.

The committee has also decided on the entitlement ratio of 9 CCDs for every 40 equity shares of the company, IHCL said.

"1 CCDs of the face value of Rs 55 each will be automatically and compulsorily converted into 1 equity share fully paid up of Re 1 each at a premium of Rs 54 after 18 months from the date of allotment of CCDs (the conversion date)...," it added.

Earlier the hospitality major had sought market regulator Sebi's approval to raise Rs 1,000 crore through issue of debentures on rights basis.

IHCL intends to utilise part of the proceeds from the issue towards capital expenditure proposed to be incurred by the company for construction of Vivanta by Taj in Guwahati.

Besides, the firm would use the funds for repayment or pre-payment of certain borrowings, funding of capital expenditure related to renovation proposed to be undertaken at some of its hotels as well as for general corporate purposes.

Indian Hotels stock price

On June 24, 2014, Indian Hotels Company closed at Rs 105.65, up Rs 3.50, or 3.43 percent. The 52-week high of the share was Rs 106.25 and the 52-week low was Rs 37.55.

The latest book value of the company is Rs 33.65 per share. At current value, the price-to-book value of the company was 3.14.

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Anand Mahindra sells entire stake in Mahindra Ugine Steel

Mahindra Ugine Steel is a subsidiary of Mahindra CIE Automotive, earlier known as Mahindra Forgings. Shareholders of Mahindra CIE Automotive had on June 20 approved merger of five subsidiaries with itself including Mahindra Ugine Steel.

Mahindra Ugine Steel  today said its Chairman Anand Mahindra Tuesday sold all his 13,617 shares in the company for over Rs 58 lakh.

Mahindra sold 13,617 shares, or 0.04 percent stake, in Mahindra Ugine Steel for Rs 58,46,088 through open market on the Natioal Stock Exchange, the company said in a communique to stock exchanges.

Following the transaction, Mahindra has no shares in the Mahindra Ugine Steel, a speciality steel producer.

Mahindra Ugine Steel is a subsidiary of Mahindra CIE Automotive, earlier known as Mahindra Forgings. Shareholders of Mahindra CIE Automotive had on June 20 approved merger of five subsidiaries with itself including Mahindra Ugine Steel.

Anand Mahindra started off at Mahindra in 1981 when he joined Mahindra Ugine Steel Co as executive assistant to the Finance Director. In 1989, he was appointed President and Deputy Managing Director of the company.

Mahindra Ugine stock price

On June 24, 2014, Mahindra Ugine Steel Company closed at Rs 428.05, up Rs 68.50, or 19.05 percent. The 52-week high of the share was Rs 431.45 and the 52-week low was Rs 65.80.

The company's trailing 12-month (TTM) EPS was at Rs 57.59 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 7.43. The latest book value of the company is Rs 109.09 per share. At current value, the price-to-book value of the company is 3.92.

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Confident of achieving 20% growth ahead: Somany Ceramics

Abhishek Somany, Joint MD of Somany Ceramics , said though the industry continues to remain buoyant, it is yet to see the pick up in momentum post elections.

"This industry has seen a decent uptake even in the bad years, the last two-three years. So we have been growing at about 12-13 percent as an industry," he said, adding that the company has been growing at about 24 percent compounded annual growth rate (CAGR) for the last six years, with last year being at about 20 percent.

Also Read: Growth momentum continues for Somany Ceramics: CRISIL

Somany Ceramics has seen an improvement in demand for its value-added products and is confident of achieving 19-20 percent growth ahead, said its Joint MD.

Below is the transcript of Abhishek Somany's interview with Nigel D'Souza and Reema Tendulkar on CNBC-TV18.

Reema: What kind of momentum are you seeing for your business led by incremental demand from housing construction and the shift towards organized segment?

A: If you are referring to the momentum which is there after the elections, that is yet to come. Other than that, the industry has been fairly buoyant considering that 31 percent of India has urbanised and this is only increasing. So every percent is a huge number of millions of people being urbanised. From that point of view, this industry has seen a good decent uptake even in the bad years, the last two-three years. So we have been growing at about 12-13 percent as an industry.

As a company, we have been beating those estimates and we have been growing at about 24 percent compounded annual growth rate (CAGR) for the last six years, last year being at about 20 percent. So the momentum is fairly good and I think the momentum what you are referring to from the expectation from the new government that would take probably another nine-eighteen months to start showing results on ground. The number of cities, which are planned, the number of highways, which are planned, so that is something which is yet to come. From an organised to unorganised point of view, the organised sector keeps getting more advantage because with the disposable income going up and the affiliation to a brand going up, from that point of view, the organised sector considering that more people want value added products is only going up. So the organised sector -- the proof of the pudding is the sector is about 21,000 crore and divided 50-50 between the organised and the unorganised -- within the organised, the top two-three players which contribute about 55 percent of this Rs 10,000 crore. So clearly the top two-three players have been growing at 23-24 percent CAGR.

Nigel: Analysts expect around 19-20 percent growth over the next couple of years. Do you think you will be able to achieve the same and also what is your expectation looking at the current market scenario in terms of volume growth as well as realisations?

A: I think the 19-20 percent growth going forward between 14 and 16 is a given. We would definitely achieve that with the current situation but if the government had to increase or give any boost to the housing sector, this could only improve. On the volume front, we have been growing 50-50 in terms of volumes, let us say if it is a 20 percent growth, we would grow on one-year maybe 10-12 percent on volume and the other year 10-12 percent on value. So I think it will be a fair 50-50 kind of a scenario. As far as the absolute volume is concerned, we currently have access to 44 million sq meters and we would go up to achieve this growth, to maintain this growth we would have to scale this up to between 55 million sq meters and 57 million sq meters, which we are ready to.

Reema: Since you are expecting things to improve, the demand to improve, would you be considering adding on to your capacity? We know you doubled your capacity from FY11 to FY14, but what about incremental capacities?

A: There are two kinds of capacities which are coming in. One is for the tile business which is 95 percent of our revenue and also for the sanitary ware business. For the tile, we have access to 45 million sq meters and to maintain the 20 percent growth year-on-year (Y-o-Y) or maybe better, we would have to keep adding 5-7 million sq meters every year. Therefore, up till 2016 we expect the capacity to be anywhere between 55 and 57 million sq meters.

In terms of sanitary ware, we are currently at 0.5 million pieces per annum and we are expanding this within the next 12 to 15 months to 1.5 million pieces per annum.

Somany Ceramics stock price

On June 16, 2014, Somany Ceramics closed at Rs 253.00, up Rs 0.40, or 0.16 percent. The 52-week high of the share was Rs 294.00 and the 52-week low was Rs 65.30.

The company's trailing 12-month (TTM) EPS was at Rs 7.22 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 35.04. The latest book value of the company is Rs 46.25 per share. At current value, the price-to-book value of the company is 5.47.

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RINL may hike steel prices

The company may undertake a hike in the price range of Rs 500- 1,000 per tonne, the official said. "Price hike is necessary to meet the additional expenditure. We cannot say when we are going to increase the price. We will take a decision once our CMD is back," the official said.

Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Visakhapatnam Steel Plant is mulling increasing prices of its product following hike in railway freight charges, a senior company official said.

The official said though it is necessary to hike steel prices, the quantum of hike and when to effect the increase has not been decided as the pricing committee of the PSU is expected to meet the CMD P Madhusudhan after he returns from abroad.

The company may undertake a hike in the price range of Rs 500- 1,000 per tonne, the official said. "Price hike is necessary to meet the additional expenditure. We cannot say when we are going to increase the price. We will take a decision once our CMD is back," the official said.

In a pre-budget move, cash-strapped Indian Railways recently hiked 14.2 percent in passenger fares in all classes and a 6.5 percent increase in freight rates to garner Rs 8,000 crore a year .

Federation of Indian Mineral Industries (FIMI) recently said the hike in freight rates was bound to impact consumers as iron ore is a key steel making raw material, transported through rail by almost all steel companies.

RINL is currently paying nearly Rs 1,500 crore towards freight charges to Railways and the current hike may lead to an additional burden of Rs 100 crore on the steel maker, the RINL official said.

The PSU, on an average, gets 5.7 million tonnes of iron ore from Bailadila and Kirandul in Chhattisgarh and around three million tonnes of other material such as coal and lime from other parts of the country through Rail.

Prices of Vizag Steel range between Rs 28,000- 48,000 per tonne depending on the product and quality.

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CCI orders fresh probe against DLF

The case pertains to the DLF's commercial office space in 'Corporate Greens project at Sector 74A' in Gurgaon and the CCI has asked its Director General (DG) to initiate an investigation against DLF Universal Limited.

Fair trade regulator CCI has ordered a probe against a DLF group company for allegedly imposing unfair and unreasonable conditions on office buyers at one of its commercial projects in Gurgaon.

Some other group entities of the real estate major have already faced probe by the Competition Commission of India (CCI) with regard to various other cases of anti-competitive practices. CCI had also imposed a fine of Rs 630 crore against  DLF for abuse of its dominant market position a residential real estate case, but the company had challenged the same.

The latest probe would be carried out against DLF Universal, upon a complaint that alleged the realty company of imposing certain anti-competitive clauses in the 'Commercial Office Space Buyers Agreements'.

The case pertains to the DLF's commercial office space in 'Corporate Greens project at Sector 74A' in Gurgaon and the CCI has asked its Director General (DG) to initiate an investigation against DLF Universal Limited.

After looking into the complaint, CCI said in a 11-page order that it is "of the prima facie opinion that despite the presence of other developer in commercial real estate space in Gurgaon such as, Emmar MGF Land Ltd, Unitech, Spaze Towers Pvt Ltd, Vatika Ltd, Bestech Indian Pvt Ltd, JMD Ltd, DLF Group appears to be dominant in the relevant market".

"Having examined the clauses of the agreement, it appears that some of them are unilateral, one sided and loaded in favour of the opposite party (DLF Universal)," CCI said in an order dated June 23.

The fair trade regulator added that "the conduct of DLF Group, emanating from its dominant position in the relevant market, prima facie, amounts to imposition of unfair terms and conditions on the commercial office buyers which is anti-competitive...".

Accordingly, CCI has directed its investigation arm, the Director General, to carry out an investigation into the matter and to complete the same within a period of 60 days.

The Director General has also been asked to investigate the role of the DLF Universal's offcials who were in charge and their involvement with respect to the firm's alleged conduct.

The complaint had alleged that DLF group being a dominant player in commercial and residential real estate sector in Gurgaon, had been abusing its dominant position by imposing unfair condition under buyers.

DLF stock price

On June 24, 2014, DLF closed at Rs 219.25, up Rs 9.75, or 4.65 percent. The 52-week high of the share was Rs 242.80 and the 52-week low was Rs 120.25.

The company's trailing 12-month (TTM) EPS was at Rs 2.41 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 90.98. The latest book value of the company is Rs 67.20 per share. At current value, the price-to-book value of the company is 3.26.

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Power sector faces $27 bn in annual losses: World Bank

Prime Minister Narendra Modi has pledged to bring electricity to the 300 million Indians who still lack power and improve the reliability of supplies, one of the biggest complaints of companies doing business in the country.

India's power sector faces annual losses of USD 27 billion by 2017 unless sweeping reforms are taken to tackle inefficient subsidies, theft and political meddling in utility companies, the World Bank said on Tuesday.

Prime Minister Narendra Modi has pledged to bring electricity to the 300 million Indians who still lack power and improve the reliability of supplies, one of the biggest complaints of companies doing business in the country.

Blackouts this summer have underlined the scale of that task, with large parts of north India suffering from severe power cuts after a rise in temperatures triggered a jump in demand that suppliers and an antiquated transmission system failed to meet.

Launching its report into the sector, the World Bank said that despite the gains made in the past decade, when 280 million Indians gained access to electricity, India would struggle to make further progress unless it gave its utilities the freedom to improve their performance.

These largely state-owned companies should be able to raise tariffs in line with their costs, receive more compensation for the subsidies they provide to rural users, and improve their accountability to regulators and consumers, the World Bank said.

"Two decades after the initiation of reforms, an inefficient, loss-making distribution segment and inadequate and unreliable power supply are major constraints to India's aspirations for growth," said Onno Ruhl, World Bank country director in India.

"Revitalising the power sector, by improving the performance of distribution utilities, and ensuring that players in the sector are subjected to financial discipline is the need of the hour."

The World Bank estimates that 15,000 hospitals and 123,000 schools could have been developed in 2011 if the states had not been required to pump money into utilities to keep them afloat.

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Young Turks meets Kailash Katkar, Founder of Quick Heal

Young Turks caught up with Kailash Katkar the Founder of Quick Heal at the EY World Entrepreneur Summit in Monte Carlo who set up his Pune-based anti-virus company back in 1993.

Young Turks caught up with Kailash Katkar the Founder of Quick Heal at the EY World Entrepreneur Summit in Monte Carlo who setup his Pune based anti-virus company back in 1993. Today the brand is one to reckon with globally and the venture is looking at the possibility of an IPO with a reported valuation of between Rs 2500 crore and Rs 3000 crore. We also found out about the early years of competing against global players and Quick Heal's entry into the developed markets and the mobile space.

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After Lodha group, the London bug bites Indiabulls too

The London bug has bitten Indiabulls. After the Lodha group made two marquee purchases, Indiabulls has now thrown its hat into the ring with a Rs 1,500 crore purchase. So, what is it about London that is attracting Indian realtors? CNBC-TV18's Sanjay Suri tries to find out.

The London bug has bitten Indiabulls . After the Lodha group made two marquee purchases, Indiabulls has now thrown its hat into the ring with a Rs 1,500 crore purchase. So, what is it about London that is attracting Indian realtors? CNBC-TV18's Sanjay Suri tries to find out.

For more: How Indiabulls plans to rake in moolah via London deal

Indiabulls Real stock price

On June 20, 2014, Indiabulls Real Estate closed at Rs 92.50, up Rs 0.30, or 0.33 percent. The 52-week high of the share was Rs 109.45 and the 52-week low was Rs 45.10.

The company's trailing 12-month (TTM) EPS was at Rs 3.40 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 27.21. The latest book value of the company is Rs 137.36 per share. At current value, the price-to-book value of the company is 0.67.

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Naidu woos Hero MotoCorp to set up plant in Andhra Pradesh

Hero MotoCorp had this week announced that it was planning to set up its sixth manufacturing plant in South India to cater to the domestic market and take its overall annual capacity to 12 million units.

Andhra Pradesh government is wooing country's largest two-wheeler maker  Hero MotoCorp to
set up a plant in the state.

N Chandrababu Naidu, the newly-elected Chief Minister of the residuary state of Andhra Pradesh, has called Hero MotoCorp MD & CEO Pawan Munjal to set up their new proposed South India plant in the state.

Also Read: Columbia a big mkt in Latin America after Brazil: Hero Moto

The Industry Secretary would explore the opportunity, he said on the micro blogging site twitter.
"Spoke to Pawan Munjal, MD&CEO, Hero MotoCorp, to set up their plant in AP. Our industries secretary &their team will explore the opportunity," Naidu had yesterday tweeted.

Hero MotoCorp had this week announced that it was planning to set up its sixth manufacturing plant in South India to cater to the domestic market and take its overall annual capacity to 12 million units.

"We are looking to set up a plant in South India. It will be utilised to service the market there. We are scouting for land at the moment," Pawan Munjal had told PTI. He, however, did not share details regarding the timeline for the completion as well as the location of the plant.

At present, Hero MotoCorp has three manufacturing facilities -- at Gurgaon and Daruhera in Haryana and Haridwar in Uttarakhand -- with a total capacity of 6.9 million units annually.

It is set to commission the fourth facility at Neemrana in Rajasthan with an investment of around Rs 400 crore, thereby taking its total installed capacity to over 7.65 million units. The company, which sold 6.25 million two-wheelers in 2013-14, is also in the process of building its fifth facility in Halol, Gujarat at an investment of Rs 1,100 crore. The Gujarat plant is envisaged to have an annual capacity of 1.8 million units and is expected to go on-stream by 2015-16.

Hero Motocorp stock price

On June 20, 2014, Hero Motocorp closed at Rs 2520.00, down Rs 17.85, or 0.7 percent. The 52-week high of the share was Rs 2775.05 and the 52-week low was Rs 1565.95.

The company's trailing 12-month (TTM) EPS was at Rs 105.62 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 23.86. The latest book value of the company is Rs 356.32 per share. At current value, the price-to-book value of the company is 7.07.

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Flipkart to tie-up with different manufacturing clusters

Flipkart has about 3,000 sellers, most of them from SMEs. The company intends to grow the seller base to 12,000 by the end of this fiscal.

Flipkart, the largest e-commerce marketplace in India, on Friday said it is holding talks to tie-up with manufacturing clusters such as Tirupur and Ludhiana as part of bringing more sellers on-board to meet the strong growth in demand.

"We are targeting manufacturing clusters and would sign up partnerships with Surat, Agra and Ludhiana, where synthetic apparels and leather items are manufactured," Ankit Nagori,Vice President, marketplace, Flipkart, said.

Also Read: E-tailers growth ensnared in India's logistics jungle

Stating that the company was in talks with entrepreneurs in Agra and already have more than 100 sellers in Surat onboard, he said Flipkart has about 3,000 sellers, most of them from Small and Medium Enterprises. The company, which has already tied-up with the Federation of Indian Micro, Small and Medium Enterprises and National Centre for Design and Product Development, will grow the seller base to 12,000 by the end of this fiscal, he said.

Ankit and his team, who were here to hold talks with local trade bodies and entrepreneurs on how online marketplaces can help MSMEs expand their business and brand nationwide, said Flipkart aimed to increase its market-share in the clothing segment to 70 percent from the present 50 percent.

While the largest Chinese e-commerce marketplace alibaba.com has about 20 lakh SMEs on-board, it is less than20,000 in India, Ankit said Flipkart has 18 million registered users and online retail was expected to touch Rs 50,000 crore by 2016.It was projected to grow at a whopping 50-55 percent per annum for the next three years, he claimed.

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The economics of affordable housing

Affordable Housing is the new buzz in the real estate sector, companies are looking closely at this model to ensure higher margins, given the new emphasis by the Modi government to provide housing to all citizens.

The New Model in Town:

Affordable housing is the new buzz word, especially after the new government in Delhi has spelt out a vision of housing for every citizen. The word 'Affordable Housing' is loosely used by all and no one really understands what actually is affordable housing. It is also most commonly confused with Low Cost Housing. No, one in the industry is talking about low-cost housing, but all are talking of affordable housing. And affordability differs from city to city and town to town. People residing in Metros may find a Rs 50 lakh home affordable, but unfortunately, he may not find one in the Metro. 

HDFC Chairman, Deepak Parekh in his address to the shareholders raised the opportunity affordable housing will provide. He says, "developers must provide more affordable housing in the price range of Rs 15 to 40 lakh. They need to focus not on the high-end luxury segment, but on building more one and two-bedroom apartments, which is where the real need is. Even though margins may be lower, the turnaround time is much faster in the affordable housing segment. Affordable housing is a volume game, which is why the speed of obtaining approvals becomes more compelling."

For affordable housing to be successful, speed is the essence. And Deepak Parekh is right that it is a volumes game, and speed in providing approvals could reduce cost by 20 percent and improve margins – infact, many believe that ROEs could be as high as 25 percent.

And that is evident from the statement of Mahindra Group Chairman, Anand Mahindra who believes, "The fact is that it is a 150 billion dollar opportunity for private enterprise and the only point I want to make today is that what we call shared value projects such as these, which will enable the broad vision of this government to become a new reality. Shared value simply means that you can do well and do good at the same time. SO it's not CSR, this is not being driven only by purpose without profit.'

But even though it may be a shared value, the margins that could be earned will be much higher than traditional real estate activity.

Don't confuse it with Low Income Housing:

Low Income housing is often confused with Affordable housing.  Low Income Housing involves flats with less than 500 sq ft and cost between Rs 5 lakhs to Rs 15 lakhs. There are tier-2 and tier-3 cities where many are making low income housing projects. These projects may not have all the accessories but are bare skeleton flats. The Reserve Bank so far recognises housing loans of up to Rs 25 lakhs in metros and Rs 15 lakhs in other cities.  HFCs and banks hardly find any projects in metros that fit the Rs 25 lakhs bill. And with urbanisation expanding its geography, there is a call to enhance this limit to Rs 40 lakhs.

The Salary Income Maths:

Firstly, anyone earning less than Rs 30,000 per month cannot afford the so called affordable housing. That's because, a 500 sq ft of apartment would be sold for atleast Rs 3000 per square feet, making the cost of the apartment at a minimum of Rs 15 lakhs. For a salaried individual, earning a take home salary of Rs 30,000 - Rs 1 lakh per month. The available income to pay EMI for the home mortgage is between Rs 15000 to Rs 50000 per month. At this EMI the loan available to a person is between Rs 15 to 50 lakhs. It is important to note that the average free cash that one is assuming is 50 percent of the take-home. Which is not always the case? Given Savings rate has fallen in the last 5 years, and inflation has forced individuals to tap into their free-cash and savings to meet the cost of living. So an affordable housing project has to be in the region of Rs 15 lakhs to Rs 40 lakhs and should satisfy the return economics.

The Infrastructure Link:

For the affordable housing model to be successful, it has to have a credible infrastructure linkage. Affordable Housing projects can only be successful if satellite towns are constructed around Metros & tier 1 cities. These cities should have excellent connectivity to these satellite towns, thereby allowing expansion of the city and migration of urbanites from core of the city to suburbs. Infrastructure will also play a important role in ensuring that distance is not a deterrent for affordable housing.

Affordable Economics:

The affordable model is likely to work only if the sales price of the apartment is between Rs 3000 – Rs 7000 per square feet. Now, one might not be able to find any houses in cities like Mumbai, but there is enough potential for this price range across other cities. The land cost for these projects vary from Rs 500 to Rs 2000 per square feet.  The model will work when land cost is financed via equity and development cost is financed using pre-sales and debt. This is another place where a huge opportunity exists for Private Equity to step in, which will finance land cost via equity and development via mezzanine debt. In fact, many PEs are already following this model. HDFC Chairman, Deepak Parekh wants RBI to allow banks and HFCs to fund land transactions. Since the returns expected from these projects are much higher than traditional infrastructure projects and gestation period is at maximum of 3 years. Land cost as percentage of total cost may be between 70-80 percent in metro cities like Mumbai, but in smaller cities & towns in varies between 25-40 percent.

Sales Price/ sq ft	3000	7000
Cost of Land or Equity per sq ft	500	2000
Approval Cost per sq ft	100	200
Cost of Construction per sq ft	1500	2500
Construction Finance per sq ft	750	1250
Interest Cost for 3 yrs per sq ft	550	1450
Total Cost per sq ft	1900	4900
Return per sq ft	1100	2100
* Rough figures

 

These projects currently also face approval cost which ranges from Rs 100 to rs 200 per square feet. These approval cost currently are with respect to municipality or municipal corporation approvals or speed money to expedite the approvals. Construction cost varies from Rs 1500 per square feet for a Ground + 3 storied building to Rs 2500 per square feet for a Ground + 15 storied building.

Typically, developer fund development cost of the project using 50 percent debt and 50 percent pre-sales fund flows.  The volumes and price is factor that will play an important role in how fast the developer is able to sell the project to the investors. The project will require debt in the range of Rs 750 to Rs 1250 per sq ft.

The cost of financing the debt typically ranges between 12-15 percent for real estate developers. And hence the interest cost of Rs 550 to Rs 1450 per square feet over a 3 year period. The total cost of the project so far including the cost of equity and debt comes to Rs 1900 to Rs 4900 per square feet. In the end the developer ends up with a return of Rs 1100 square feet on a sales price of Rs 3000 and Rs 2100 on a sales price of Rs 7000 per square feet.

Obviously, the success of the model depends extensively on cost of land. Developers who get the land at significantly lower rates will be able to make handsome returns in the model. A land cost of Rs 1 crore per acre translates in to Rs 230 per square feet. Thereby, any land cost above 5-8 crores will reduce the return one can make from the affordable housing model. As the cost of land escalates the returns of the affordable model declines and developers will need to migrate to a luxury housing project model to maintain same margins. 

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