Month: July 2008

The Tanti Group, promoters of Suzlon Energy have bought Honiton Energy Holdings plc (Honiton) which develops and operates wind farms in China with an installed capacity of 50MW. The deal is routed through Singapore-based holding company (Colossus Holding), in JV partnership with Arcapita Bank, Bahrain.

Honiton’s acquisition is not routed via Suzlon’s books of account. Honiton’s 50 MW wind farm is composed of 40 units of Suzlon’s 1.25MW turbine Honiton also owns 16.65% interest in REpower North (China) Ltd., a JV with REpower Systems AG (50.01% stake) and North Heavy Industrial Corp (33.34% stake) licensed to manufacture & supply 2MW wind turbines to wind developers in North China, including Honiton.

Tanti Group’s ownership in Honiton (which plans to ramp up capacity to 1650MW by 2012) could potentially provide captive orderbook for Suzlon in future.

The Squabbling between the Ambani brothers which was off for few years is all set to take the center stage again. Guess, Mukesh Ambani shot himself into his foot by unnecessarily dragging Anil Ambani into a new controversy surrounding Reliance Communications and MTN deal. Mukesh who had to part with Reliance’s Telecom venture to Anil after the family division was jealous of Anil’s success had the latter been able to takeover MTN of South Africa which would give the combined entity [RCOM + MTN] higher EBITDA than RIL – Mukesh’s cash cow.

This time around Anil Ambani was very lucky and made the right move at the right time to influence the Government of India led by the Prime Minister Dr. Singh and Congress President Sonia Gandhi through his trusted lieutenant – Amar Singh.

Amar Singh has raised the issue of Reliance Petroleum enjoying EOU benefits when India as a nation is in deep Oil crisis. The Government under pressure from various other parties is seriously considering to levy a Tax / Duty on such refineries [Reliance Ind, Cairn and Essar] to offset for the losses incurred by PSU refineries and Oil companies. This led to unloading of RIL stock on the Mumbai Stock Exchange and the stock has hit a day’s low of Rs 1,997 breaking the psychological Rs 2,000 support level.

Instead of fighting over family business and supremacy, get into the wonderful world of R&D and innovation and sky is the limit to your business.

For the Indian Banks, this quarter is expected to be a leg down in net profits with 2.7% YoY growth for the sector. headline numbers is likely to be hurt, but keep an eye on deterioration in asset quality which will be the key operational parameter. Pre-provisioning profit growth should, however, remain relatively stable at 26.6%, driven by 25% loan growth, reasonable fee growth (23% YoY) and capital support for margins.

This quarter will be a test of the banks’ operational performance in the face of further rise in interest rates leading to lower growth and higher asset quality risks. Additionally, the impact of farm loan waivers shall also be seen in PSU banks.

In the private banking sector, profit growth is likely to be sharply lower at 17.2% YoY on slower capital market related fees, sustained cost pressures and loan loss provisions. Net interest margins should be supported by the sheer weight of capital and should drive pre-provisioning profit growth of 35% YoY.

Indian Brokerage houses are highly likely to report a decline in net profits QoQ. High pressure is seen in the following segments, retail brokerage (vs institutional); b) primary markets (vs secondary); and c) margin finance
portfolio (vs asset based lending). Retail volumes have shown a sharp decline – overall volumes down 54% from peak (-60% in derivatives). Cash volumes have fared better YoY (+40% vs +25% for derivatives) while QoQ they are relatively similar with declines of 16.8% vs 16.6%, respectively.

Brokerage and investment banking related fees to decline 18% QoQ due to the
weaker environment, both in the secondary and primary markets. Mutual Fund and other product distribution fees will also witness a decline.