Kingfisher in $1 bn deal with Airbus for 5 jets
Kingfisher Airlines signed a deal with Airbus to buy five 340-500-passenger aircraft worth $1 billion for non-stop flights to the US at the Hannover fair on Monday.
The Airlines is expecting the government to shorten the waiting period for new domestic airlines to start international operations. The aircraft will be delivered in 2008 through a fully vendor-financed deal.
"Once the planes are received in 2008, we will fly the world's longest non-stop flight, direct from Bangalore to San Francisco. Another flight will go from Mumbai to New York direct. These long-range four-engine planes will seat around 225 people," Kingfisher Airlines Chairman and Managing Director Vijay Mallya said.
Currently, an airline needs at least five years of continuous operation and a fleet of 20 aircraft to start flying on international routes.
As a result, only Jet Airways and Air Sahara among Indian carriers can fly abroad. However, the government is considering a proposal to allow airlines with less than five years of flying experience in the domestic market to operate on international routes. Kingfisher started its operations last year.
If the government waters down its current norms, it will throw open lucrative international routes to domestic carriers such as Kingfisher, SpiceJet and Air Deccan, which have been operating domestic routes for some time now.
Kingfisher has been working towards the possibility of flying to the US for a while. Last year, it set up an airline in the US to connect American cities with those in India. Mallya has been one of the strongest supporters of opening up international routes to newer airlines.
Mallya's steps in this direction have been opposed by the older domestic carriers.
Chinese firms not to be screened
It may soon become a lot easier for Chinese companies to invest in India as the government is planning to waive the condition imposed on them of obtaining a lengthy security clearance from the home ministry.
The background check on the promoters and key functionaries of Chinese companies wanting to invest in India is also likely to be cast aside. In the case of companies from other countries, this is done only if the investment proposal pertains to sensitive sectors in which such a check is laid down by the investment norms.
As India tries to attract more investment from China, the government is considering a proposal to treat Chinese companies on a par with companies from other countries. This will clear the air over the proposal of Huawei Telecommunications, which had sought permission to set up a manufacturing unit in India about two years ago. Its application is still hanging fire.
Similarly, the proposal by Hutchison to invest in setting up port infrastructure in India has not yet got the government's clearance.
As a part of the government strategy, the Chinese companies may even get fast-track clearances for investments in sectors in which the government allows 100 per cent foreign investment. For sectors with sectoral caps, the normal course of clearances will have to be taken. Till now, even in sectors in which foreign investment was allowed through the automatic route, Chinese companies had to wait long for approvals.
Even for consumer durables and electronics companies like Haier and TCL, it was not easy to set up shop in India. The Indian government took longer to permit them. According to government officials, this would be a thing of the past.
"Chinese companies feel that there is a lot of resistance from India towards investments in India. There is a move from us to ease the investment climate for them," said Nalin Surie, Indian Ambassador to China.
Expectedly, investments by Chinese companies in India have not been robust. There is also a yawning gap between approvals and investments. According to government data, the actual investment by Chinese companies in India is just $0.63 million against an approved investment of $231.6 million during the year to March 2004.
Biocon to sell human insulin in Europe
Biotech major Biocon is betting big on its recombinant human insulin in FY07 and is preparing a detailed European marketing plan for it.
Kiran Mazumdar Shaw, chairman and managing director, Biocon, said, "Since Europe is progressive in accepting bio-similar (generics) products, we plan to enter this market earlier than the other regulated markets such as the United States and Japan this year."
For this purpose, the company plans to build a network of marketing partnerships in Europe. A similar strategy for the US and Japan will follow, she added.
The company expects insulin, its other branded formulations and research services to drive growth.
Talking about the road ahead for the company, she said, "Biocon is rapidly transforming itself from a generics active pharmaceutical ingredient (API) manufacturer to an innovator developing a robust pipeline of new molecules."
She said, "Despite a fiercely competitive environment, the company has been able to sustain a healthy 30 per cent operating margin for the year."
The company plans to enter the oncology market soon with its antibody product, Biomab-EGFR, for the treatment of cancer of head and neck.
"The year ahead will also continue to be challenging due to uncertainties in the market conditions and the impact of depreciation at our new facilities at the Biocon Park," she said, adding, "It is important to reiterate that the biotech sector needs to be evaluated on a medium to long-term basis, given the gestational nature of R&D investments and regulatory timeframe," she added.
Indian Hotels to develop 3 hotels in S Africa
Indian Hotels Company, which runs the Taj chain of hotels, will increase its presence in South Africa by developing one luxury hotel each in Johannesburg, Durban and Cape Town.
The total cost of the projects, which will add 550 rooms to the hotel chain in the African continent, is estimated at $180 million. IHCL has formed a 50:50 joint venture with Tata Africa, Taj International (SA) Pty. The joint venture will invest in individual hotel projects with local developers.
"Indian Hotels will manage the five-star hotels which will bear the Taj brand. The company is only finalising the projects with our core developers," said Tata Africa General Manager (New Business Development) Sunil Kapur.
The projects are likely to be over in 18 to 24 months. The joint venture is expected to invest about $20 million in equity. The financial closure for these projects is under finalisation. The company has already a hotel in Lusaka, Zambia named Pamodzi Hotel.
According to analysts, foreign arrivals in South Africa are over six million per annum. However, there is a dearth of luxury accommodation in the country, they pointed out.
Indian Hotels and Developer Eurocape Investments Ltd will jointly develop the luxury hotel at Mandela Rhodes, Cape Town. The project will have 200 rooms and options for residences. The site is a historical building and is next to Parliament and Mandela Rhodes Foundation. The proposed hotel in Durban Film City will have 200 guest rooms with 40 serviced residences.
"We could develop this project with VideoVision Entertainment. The proposed site is in close proximity to the International Convention Centre, the Cricket, football and rugby stadia," Kapur said.
IHCL has recently signed a memorandum of understanding with Melrose Arch Development Company to jointly develop high-end five-star hotel in Johannesburg.
"The location of the proposed project is strategic in nature, midway through Johannesburg Central Business District and Sandton city," Kapur added.
NSE hikes derivatives exposure margin again
Probably sensing that stocks are getting into riskier territory, the National Stock Exchange on Monday announced another round of increase in the derivatives exposure margin.
Brokers said this would impact sentiment significantly. The rapid rise in margin levels could compel retail traders to cut derivatives positions as they may not be in a situation to afford the new margin requirements immediately.
The margin is for brokers only and they will have to use their discretion on whether to pass them on to their clients.
The exposure margin on index products has been raised from the current 4.5 to 6 per cent. For stock products, the exposure margin will be 10 per cent, or 1.5 times the standard deviation of daily logarithmic returns of the stock price in the last six months.
Currently, the exposure margin on stock products is 7.5 per cent. Adding to this, the Span margin, which is determined on the 'value at risk', the total margin for the Nifty works out to 12 per cent and 20 to 25 per cent on average for stock products. With the recent hike in the exposure margin, the total margin will rise further.
"There is a feeling that the markets are over leveraged and that is why the exchanges are raising margin levels. This would impact market sentiment," said Naresh Kothari, sales head, Edelweiss Securities.
Market sources said currently, several brokers are heavily leveraged funding even their initial margins through line of credit with banks and other lending institutions.
"The high margins in equities is compelling smaller players to exit the derivatives segment. Since the markets are no longer showing definitive trends, it has become more difficult to make money in derivatives," said Vijay Bhambwani, CEO, BSPL India.
This is the second round of margin increase effected within a month. The last announcement made on April 8, came into effect on April 17.
Brokers said this would impact sentiment significantly and could force smaller retail players to cut out of the derivatives margin as they could face cash crunch. The change will come into effect from April 28, the NSE circular issued on Monday said.
"In continuance of surveillance review and pursuant to the meeting with Sebi, with a view to ensure market safety and safeguard the interest of investors, the Clearing Corporation has decided to take the following action," the NSE circular said.
The revised applicable exposure margin will be applicable in respect of 117 securities.
Cities in reform rush, pitch for makeover
Fed up of living in an overgrown slum? Does your city have no footpaths, no gardens, no streetlights and a municipal corporation that just does not care? All that will change soon.
In less than seven years, the faces of at least 23 cities are going to be transformed. Indian cities are going to be more orderly, cleaner and better governed.
The announcement of the Jawaharlal Nehru National Urban Renewal Mission by the Manmohan Singh government in December 2005 has had an electrifying effect on state governments.
In four months, 23 cities have come forward to tell the ministry of urban development that not only are they ready to press forward with the reforms that are mandatory for the award of funds, but also that they would follow the time limits to put the reforms in place.
Officers in the ministry say with quiet confidence if all states follow suit, 63 cities selected under the mission in its first phase will undergo a complete makeover.
The objective of the mission is to create efficient, equitable and responsive cities by encouraging the cities themselves to improve existing service levels in a financially sustainable manner. Recognising urban disparities, a separate budget for the urban poor was put aside. The Centre has a budget of Rs 50,000 crore (Rs 500 billion) for the states that pick up the gauntlet of painful, deep and wide urban reform. If reform stops, so does the money.
The 23 cities that have agreed to crush urban vested interests and have submitted city development plans and signed memoranda of agreement are: Hyderabad, Vijayawada, Visakhapatnam, Chandigarh, Raipur, Ahmedabad, Rajkot, Vadodara, Surat, Bhopal, Indore, Jabalpur, Ujjain, Greater Mumbai, Nagpur, Pune, Kohima, Ajmer Pushkar, Jaipur, Coimbatore, Madurai, Asansol and Kolkata (elections were declared in the last four, so the MOA will be signed after May).
What does this mean? Different state government have set different timetables to implement the promise they have made to the Centre.
Andhra Pradesh, for instance, has said in the three cities that have been selected under the mission, city planning and transfer of municipal services will be done within three years of signing the MoA (ie 2009). Stamp duty will be reduced to five per cent by 2010.
In Hyderabad, operations and management costs will be recovered fully by 2013, while in Vijayawada, reform of property tax will be completed and 90 per cent of the collections will be made by 2007.
Most states have put off the recovery of operations and management costs to the end, 2013, on the assumption that those who use the services will be so satisfied with the changes in the cities where they live that they will be happy to pay a small sum as user charges.
The Centre too, on its part, is moving fast. Officials in the urban development ministry say in several cases, money has already been released. For Hyderabad, for a flyover at Greenlands Junction which is currently one of the most congested traffic spots in the city, the first instalment of Rs 151 crore (Rs 1.51 billion) has already been released against a total project cost of Rs 1,727 crore (Rs 17.27 billion).
For expansion and upgrade of the water supply network in Nagpur city, Rs 474 crore (Rs 4.74 billion) has been released, against a total project cost of Rs 3,793 crore (Rs 37.93 billion). For water-starved Rajkot, a project has been approved that will cost Rs 8,562 crore (Rs 85.62 billion). Of this, Rs 1,070 crore (Rs 10.7 billion) was released in March.
"We want a movement to build up so that citizens hold their governments accountable for urban renewal", said a ministry official.
TCS plans Rs 1,000cr capex
Tata Consultancy Services has planned a capex of Rs 1,000 crore (Rs 10 billion) for the current financial year.
This includes investment on both technology and infrastructure. The company's aim is to become one of the top 10 companies globally by 2010.
Addressing mediapersons, S Ramadorai , chief executive officer and managing director, TCS, said, "We have outlined a capital expenditure of Rs 1,000 crore this year. We will be expanding at current locations and are looking at destinations such as Chandigarh , Bhubaneswar, Kochi, Coimbatore, Nagpur, Indore and Visakhapatnam as well."
TCS employs more than 60,000 people and will be adding more than 30,000 this year. Taking attrition into account, this will amount to net addition of around 25,000 employees.
"We will be adding around 4,000 international associates," Ramadorai said. The company plans to increase its headcount in Hyderabad to 10,000 by 2010 from over 4,200.
"Today, we are at the 12th position in the world in terms of revenues. We are looking at being a part of the league of top 10 by 2010," Ramadorai said. TCS was the sixth in the world in terms of profits and fifth in terms of market capitalisation, Ramadorai said.
While admitting countries such as China , Russia, Philippines, Vietnam and Indonesia as potential competitors, Ramadorai said Indian companies and institutions had the potential to innovate and succeed.
On overseas listing, he said a call would be taken at the right time.
On reservations, he made it clear merit continues to be important for TCS and it would rather see alternative models for benefiting the backward classes than reservations.
IOC in hinterland retail expansion
Indian Oil Corporation expects to commission 15,247 of its retail outlets in urban and metropolitan locations across the country based on the performance and viability of each outlet during 2006-07.
In the current financial year, the state-owned oil company would focus on the rural market, as it plans to add 1,000 new outlets to its existing 557-station rural network.
N G Kannan, director (marketing), said before the company plans to roll out any more retail outlets in the urban and metropolitan cities, the company will take stock of the financial performance of existing outlets.
He was speaking at the sidelines of a convocation ceremony of the Institute for Technology and Management in Chennai last weekend.
In a consolidation effort and to improve sales, each retail outlet will be quantified for a threshold level of sales, and those which fall below the threshold, will be asked to sell more branded fuels, loyalty cards and improve customer services, he added.
He said the rationalisation on commissioning the outlets has been prempt from the fact that more number of retail outlets have resulted in lower volumes, which leads to adulteration and low performance.
Kannan also said the corporation had taken a conscious decision to increase its retail presence in the last two years, rapidly adding outlets at prime locations so that it would be sort of an entry barrier for private players to set up outlets.
IOC's decision to increase its presence and reach in rural markets, can be considered as a move to reap the benefits of being the first player in these virgin markets and, also, the per pump throughout has been falling and increasing stiff competition in urban and metropolitan cities in the last two years.
Kannan said unavailability of fuel in rural areas is forcing people to access fuel from nearest towns or use adulterated fuel.
He said the rural retail outlets will largely be company-owned as private dealers may not be willing to set up outlets in these markets.
The cost of setting up a retail outlet is estimated at Rs 500,000 to 800,000, which means IOC will be investing Rs 50 crore (Rs 500 million) to 80 crore (Rs 800 million) on this initiative.
EID, Cargill form sugar refinery JV
EID Parry India, part of the Rs 6,500-crore (Rs 65-billion) Murugappa group, has entered into an agreement with US-based Cargill International SA to set up a sugar refinery in Kakinada at Andhra Pradesh for an investment of Rs 325 crore (Rs 3.25 billion).
Addressing a press conference A Vellayan, vice-chairman, EID Parry, said the project will see import of raw sugar which will be processed in the refinery and exported.
The sugar refinery will have a capacity of 6 lakh tonne per annum and eventually be expanded to 1 million tonne per annum and is expected to be commissioned by December 2007.
The standalone refinery will have cogeneration unit and is expected to be set up in an export oriented unit or a special economic zone.
In the yet-to-be-named joint venture, EID Parry will hold 51 per cent and Cargill will hold 49 per cent. The project is expected to be funded by 50 per cent of equity and the remaining by debt and internal accruals.
Vellayan said the cash received from 50 per cent stake sell of Parryware Glamourooms for euro50 million (about Rs 2.75 billion) will be reinvested into EID Parry India.
Vellayan said Cargill was a dominant player in the world sugar market in sourcing, marketing and international trading besides extensive expertise and networks which will bring the technolgical expertise, while EID Parry has the ability to run the infrastructure operations at Kakinada.
Davdi Lelijveld, project manager, Cargill SA, said demand for refined sugar was about three million from neighbouring Bangladesh, Sri Lanka and others, which will be catered to by the new sugar refinery.
Mobile newspapers rock in China
Chinese office-goers who often spend hours caught up in traffic jams have a new way to utilise their time -- reading mobile phone editions of their newspapers.
"I needn't idle in the crowded carriage, watch advertisements or look at other passengers since I subscribed to mobile news," says Wang Xin, who spends one-and-a-half hours on the metro and bus every day.
"I know every top news before I reach office and home," Wang, a 27-year-old salesman, said.
Two newspaper groups in China's eastern metropolis, Shanghai, launched their mobile newspaper services in the past months.
The mobile news services may be the next hot spot in the thumb economy in China, following short text messages and customised ringtone services, Shanghai Daily reported.
Two types of mobile news exist in China now.
Under the first type, operators regularly send edited and shortened news through multimedia messages every day. Subscribers, who pay 3 yuan to 8 yuan (approximately Rs 18 to Rs 64) every month, can read the mobile news offline.
The second type of service allows users to read complete news content (compared with print media) through WAP (wireless application protocol) technology and people have to pay for network access fees.
In Shanghai, Wenhui-Xinmin United Press Group and Jiefang Daily Group adopted the first format.
"The two kinds of service aim at different target groups. Most people will choose the headline news due to the hardware limit, like (the handset's) screen size," said Hou Tao, an analyst at iResearch Inc, a Shanghai-based IT consulting firm.
Wenhui-Xinmin launched four mobile newspapers last month under the News365 brand. They covered news, finance, sport and entertainment.
Jiefang Daily kicked off iNews mobile newspaper earlier this year. Each of the media group sends users multimedia messages 2 or 3 times a day.
"The standard of our news choice is important, interesting and related to readers as well as eye-catching pictures," said Chen Ying, a full-time editor of News365.
On average, every multimedia message includes three pictures and 20 text messages, each of them of 100 characters long.
"The content of news not only includes stories in our group's media but all the sources we can access, including Internet," Chen said.
The cooperation with local media groups will help Shanghai Mobile to develop mobile media and expand business, the city's biggest mobile carrier said.
India plans new window in retail trade
India would soon open a new window in retail trade aimed at wooing new investors, Commerce and Industry Minister Kamal Nath said on the sidelines of the ongoing Hannover Messe trade fair.
"We will open another window in a month's time for retail trade to further open up the sector," he said.
Though the minister did not give any details, it is believed that the opening up of another window will be a step towards eventually more liberal retail trade norms.
Nath's remarks came even as German Federal Chancellor Angela Merkel told business leaders, "I request the Indian government that any attempt towards protectionism should be staved off, be it the European Union or other countries. Isolation is not the right path to pursue. We must face the challenges of change. Indian companies are more than welcome to come to Germany."
Merkel made the remark during her address at the Indo-German Business Forum at the fair. Prime Minister Manmohan Singh was also present on the occasion where he used the opportunity to invite German companies to invest in India.
Seen in the context of the Mittal-Arcelor controversy, which has seen France raise protectionist barriers to a cross-border investment proposal, Merkel's remarks were interpreted by many as an indication to the openness of a country that is Europe's largest economy.
Merkel will visit India next year with a large delegation of German business leaders, especially from the small and medium enterprise segment. Singh said his government would create an enabling environment conducive to such a step.
Meanwhile, Indian officials said talks between Germany and India had progressed well. "This (the German visit) has been one of the best meetings. India can partner Germany in many areas, especially the crucial energy sector," an official said.
Indian officials are also enthused by the positive signals emerging from the German side on the path to civil nuclear cooperation. With Germany looking at the nuclear option in the light of sky-high oil prices, India has received feelers from German companies like Siemens for supplying nuclear equipment.
Doha deadline will be missed, says Nath
The April 30 deadline for completing modalities in agriculture and industrial tariffs are unlikely to be met. A new deadline in the on-going Doha round of WTO negotiations would be set, Commerce Minister Kamal Nath said.
"The April 30 deadline is not happening. We will have to set a new work programme," he said.
The minister added that trade negotiators are struggling with difficult issues. The deadline for agriculture and industrial tariffs (non-agricultural market access) was set at the Hong Kong WTO Ministerial conference in December last year.
Nath added that the failure to meet the April 30 deadline would not derail the Doha round of talks. "These are not simple matters," he said. Nath is leaving Hannover on Monday night for Geneva to attend a meeting relating to trade talks and the deadline.
SBI to hike home loan rates
State Bank of India may hike home loan rates by 25-50 basis points, chairman AK Purwar said on Monday.
He said SBI was reviewing home loan rates but no time frame has been decided on hiking them.
"We are reviewing our home loan portfolio, and both fixed and floating rates will be looked into," Purwar said after a meeting with Finance Minister P Chidambaram.
"It is difficult to give a timeframe (on increasing home loan rates) or the quantum, but looking at market conditions it may be 25-50 basis points," he said.
In its annual policy on April 18, the Reserve Bank of India had raised risk weight on commercial property loans to 150 per cent from 125 per cent and provisioning on housing loans above Rs 2 million to 1 per cent from 0.4 per cent.
This is likely to force banks, including SBI, to raise home loan rates. India's largest housing finance company, Housing Development Finance Corp, would take a decision this week on hiking interest rates on retail and bulk home loans.
26 bidders in fray for Jaipur township
Twenty six international and national firms have evinced interest in the Jaipur Development Authority's township project, to be developed on Jaipur-Delhi national highway.
The township is to be developed in Gunawata village on national highway-8, for which 304 bighas of land has been reserved by the JDA.
Executives of interested firms, which include Dubai-based Business Development ETA Star Property Developers, Delhi-based Omaxe Construction Ltd, Ice Reality India Pvt Ltd of Mumbai, Kolkata-based Bengal Ambuja Housing Development, Ansal Townships, Raheja Universal, KGK Concern, Entertainment World Developers, IVRCL Infrastructure, and over a dozen other firms have been camping in the city for past several days.
These executives are not only taking the aerial view of the proposed site but are also scouting for more such suitable locations through their charter planes and helicopters for coming up with the private township schemes.
"What attracted these developers was the location of the proposed site at Gunawata Village, 22 km away from the city. Owing to the strings of the hotels on the highway the entire area has huge potential for emerging as a tourist and business hub," a JDA spokesperson said.
Besides this, the recent announcement by the government to come up with the six lane road in the area also attracted the developers.
JDA is expecting a revenue of Rs 150 crore (Rs 1.5 billion) from the township. The township shall feature group housing scheme, resorts, clubs and residential colonies.
The scheme would also offer office space and multipurpose commercial area to investors and buyers. Schools, community centres and hospital will also be included.
Onspec Tech plans 30 more centres
Onspec Technology Solutions Private Limited, a subsidiary of US-based Onspec Technologies, opened its 23rd ELMAQ.edu software training centre in India at Visakhapatnam on Saturday.
The company plans to open 30 more such centres across the country this fiscal.
SV Vasudevan, director (business relations), said that the company was contemplating setting up 30 more ELMAQ.edu centres across the country during the 2006-07 financial year, with the majority of them planned for the southern states including Kerala.
"Depending on the location, our partners will invest Rs 10-20 lakh in each centre," he said. Onspec currently operates 23 ELMAQ.edu centres in Karnataka, Tamil Nadu and Andhra Pradesh on a franchisee model.
Vasudevan said the company was expecting to garner Rs 7 crore (Rs 70 million) revenues from software training this fiscal, as compared to Rs 2.6 crore (Rs 26 million) earned in 2005-06.
"We have signed MoUs with about 25 major IT companies including Infosys, Satyam and Wipro. So, most of our trained students will get placements in major companies," he said.
He said that around 4,000 students were trained in the ELMAQ.edu centres in the last two years and 75 per cent of them got placements in different organisations.
"We offer both short-term and long-term courses. This year, around 5,000 students are expected to get admission in our centres," he said.
West Bengal's towns see realty boom
The real estate boom in Kolkata and its suburbs is gradually extending to the rest of West Bengal. Modern townships with all the amenities and luxuries you can dream of are set to become a reality in the state's tier II cities.
The latest to get off the runway is Bengal Shrachi Housing Development, which has signed a deal with the Bardhaman Development Authority to develop a new township on 257 acres in Goda, adjoining Bardhaman city.
If the masterplan is any indication, besides the usual malls and multiplexes, it will have large water bodies - and condominiums, row houses, duplexes, mullti-storied apartment blocks and bungalows overlooking these water bodies.
On similar lines, Asansal Durgapur Development Authority has tied up with Bengal Shristi Infrastructure Development to develop the region, which comes under the Bardhaman district.
Durgapur City Centre, an urban plaza with commercial, retail, residential and entertainment amenities, is already functional, and construction has started on Shristinagar, an 88-acre township project (for which Sembcorp of Singapore is the engineering and management consultant).
Other than these two, Bengal Ambuja Housing Development has come up with two large-scale residential projects - Urvashi in Durgapur and Ulhas in Bardhaman - for which it has tied up with Bardhaman Zilla Parishad.
The company is also developing Uttorayan in Siliguri, which is a 400-acre development spread out over undulating landscape on both sides of National Highway 31.
Private sector developers are looking beyond Kolkata as industrial activity is picking up in these areas, and the government is helping development with its own projects.
There's a 48-acre Export Promotion Industrial Park coming up and a Software Technology Park in ADDA territory. There is an STP planned in Siliguri, and the BDA proposes to get private participation for an 11.5-acre IT park.
While government departments like ADDA and BDA are happy to get private sector funds and expertise for development, developers are happy to tap the new market opportunity that smaller cities present.
India Inc to cash in on their plans
India Inc is using cash and bank balance of over Rs 1,00,000 crore (Rs 1000 billion) for expansion, diversification and acquisition.
According to Capitaline Plus data, 365 firms had cash worth Rs 1,00,000 crore as of March 2005. Announcements made by companies during 2005-06 reveal that all front line companies have drawn up their capital expenditure plans based on their cash pile.
Dr Reddy's Labs, Ranbaxy Labs, Sun Pharma, Jubilant Organosys, Torrent Pharma, Dishman Pharma, Jet Airways, Satyam Computer, Maruti Udyog, VSNL, Tata Chemicals, Amtek Auto, Tata Motors, Mahindra & Mahindra, Aban Lloyd and Jain Irrigation have already used their war chest for acquisitions. Infosys Technologies, TCS, GSK Pharma and a few others, on the other hand, are using the cash to paying out hefty dividends.
Public sector undertakings such as Neyveli Lignite, Steel Authority of India, NTPC, GAIL, Bharat Heavy Electronics and National Aluminium Company are planning expansion and modernisation of their plants. In the private sector, Reliance Industries, Tata Motors, Maruti Udyog, Mahindra & Mahindra, Tata Power, Larsen & Toubro, Ashok Leyland, Jaiprakash Associates and many others are planning expansion by setting up new units in India and overseas. Dr Reddy's went for a major overseas acquisition of German generic drug maker Betapharm for Rs 2,550 crore (Rs 25.5 billion).
Notable among other pharmaceutical deals are Ranbaxy's acquisition of Ethimed NV in Belgium and Romanian pharma company Terapia for $324 million and Sun Pharma's acquisition of a stake in a Hungary-based pharmaceuticals company.
Among other overseas deals are Satyam Computer's acquisition of Knowledge Dynamics Pte and Bharat Forge's buyout of Imatra Kilsta AB and Federal Forge Inc, USA.
Tata Motors acquired 92.5 per cent of INCAT International Plc for Rs 380 crore (Rs 3.8 billion). On the domestic turf, Jet Airways agreed to purchase Air Sahara at a consideration of Rs 2,217 crore (Rs 22.17 billion). Apart from these, ONGC has sealed a deal for buying up Spic Petro for around Rs 1,200 crore (Rs 12 billion).
Among major expansion plans are Tata Motors' proposal to invest Rs 2,500 crore (Rs 25 billion) in a plant in Uttaranchal to make its fast-selling light commercial vehicles.
GE Shipping has contracted to buy 110000 DWT Aframax crude carrier, estimated to cost around Rs 300 crore (Rs 3 billion), and Tata Power is spending Rs 860 crore (Rs 8.6 billion) or a new 250 mw coal-based unit at Trombay thermal station.
Public sector steel giant SAIL has plans to invest Rs 800 crore (Rs 8 billion) in developing coal mine and another Rs 667 crore (Rs 6.67 billion) to revive Iisco and modernise Rourkela Steel.
Russia favours Iran-Pak-India pipeline
Russia has supported the proposed Iran-Pakistan-India gas pipeline project, saying it would help ease risks to global energy security.
"Major projects lead to a variety of reactions in the beginning, but once they are launched the reactions become positive. Infrastructure is a key part of energy security," Viktor Khristenko, Russia's Minister for Industry and Energy said in Doha.
"We welcome opportunities to go across our own borders and see it as growing possibilities for our companies. It is an opportunity to decrease risk to global energy security," he was quoted as saying in Peninsula newspaper.
Russia is moving out of its energy insularity and now open to welcoming foreign partners. In 2005 Russia produced 417 million tonnes of oil, an increase of 2.4 per cent over the preceding year.
Expected production for the current year will be 480-485 million tonnes, a two per cent increase over 2005. "That is hardly worse than average but we are not satisfied with that," he said.
RayBan's Polo Ralph brand in India
RayBan Sun Optics India Ltd on Tuesday said it would launch the designer Polo Ralph Lauren brand of sunglasses next year.
The company will also introduce 100 models across its inhouse brands this year.
"As a policy, we roll out brands which our parent company Luxottica either gets a license for marketing or acquire. They have just signed a licence agreement with Polo Ralph Lauren, which we are looking to introduce in India in the first quarter of next year," RayBan Sun Optics India managing director Harsh Chopra said.
This will be the 16th brand the company markets in India, which includes three in-house brands Ray-Ban, Vogue and Arnette.
Commenting on the plans for this year, Chopra said the company was looking at introducing about 100 models from its three inhouse brands, of which 43 new models would be from the sports brand Arnette.
He said the company was looking to consolidate its share in the Rs 200-crore (Rs 2-billion) premium eyewear market.
"Last year we achieved a turnover of Rs 51.6 crore (Rs 516 million), which was about 50 per cent of the market share. The industry grew by 15 to 20 per cent and we expect ourselves to match the industry growth," he said.
He said the company expected to retain all of its dealerships numbering up to 1,000 across 150 cities in India.
On Tuesday, the company launched its new spring-summer collection, 2006 from its three in-house brands, priced between Rs 2,390 and Rs 4,900.
RIL may invest Rs 5000 cr in gas projects
Reliance Industries Ltd plans to invest over Rs 5,000 crore (Rs 50 billion) in setting up City Gas Distribution projects in eight cities in Maharashtra and Andhra Pradesh for supply of natural gas to households, industries and automobiles.
Reliance wants to set up CGD networks in Visakhapatnam, Kakinada, Vijayawada, Nalgonda and Hyderabad in Andhra Pradesh and Sholapur, Pune and Thane in Maharashtra to supply natural gas through pipes to households for use as cooking fuel, the company said in a proposal to the petroleum ministry.
It also plans to supply gas, sourced from its gigantic field in Bay of Bengal, to commercial consumers likes hotels, restaurants and hospitals and industries and automobiles (in the form of Compressed Natural Gas or CNG).
The company said Dhirubhai-1 and Dhirubhai-3 discoveries in KG-DWN-98/3 (or KG-D6) block off the Andhra coast would produce 40 milion standard cubic meters per day from mid-2008 and CGD projects, once allocated to Reliance, would begin rolling out from 2008-09 fiscal end.
Reliance has received approval for the East-West pipeline -- Kakinada-Hyderabad-Uran-Ahmedabad pipeline -- to transport the KG-D6 gas.
Reliance plans to supply 8 million standard cubic meters of gas per day to Visakhapatnam, Kakinada (0.4 mmscmd), Vijayawada (0.8 mmscmd), Nalgonda (0.3 mmscmd) and Hyderabad (1.2 mmscmd) in Andhra Pradesh and Sholapur (0.4 mmscmd), Pune (1 mmscmd) and Thane (3 mmscmed) in Maharashtra, the proposal said.
Spur lines connecting East-West pipeline to eight cities proposed for CGD would cost about Rs 900 crore (Rs 9 billion), Reliance said, adding the total cost of City Gas Distribution project in these cities was likely to be in the range of Rs 5,000 crore (Rs 50 billion).
Spur lines of 145-km to Visakhapatnam, 40-km to Kakinada, 39-km to Vijayawada, 26-km to Nalgonda, 15-km to Hyderabad, 60-km to Sholapur, 20-km to Pune and 32-km to Thane are planned from the East-West pipeline.
"The transmission pipeline from Kakinada to Ahmedabad for supply of gas would be laid in synchronisation with production from KG-D6 which is scheduled from mid 2008," the company said. Spur lines would be laid by 2008-09.
"The city gas projects have longer gestation period. However, supply of gas could be introduced in the city by 2008-09 from basic grid to industrial consumers and Mother CNG stations.
Distribution network may take 3 to 5 years to cover the area including domestic/commercial consumers," the proposal said.
Reliance was keen to supply gas to bulk consumers in core sectors like power and fertiliser by laying dedicated
spur lines to these plants.
