Category: Economy, Markets and Macro Views

On 13 March 2007, Dabur India had announced its plans to enter the organized retail market in India, through its wholly-owned subsidiary, H&B Stores (under incorporation). The Burman Family sold their stake in Punjab Tractors Ltd to pump cash into the retail venture.

The company will invest Rs 140 crores by 2010 to enter the retail market in India with a chain of stores on the Health & Beauty format. The company plans to establish stores ranging from 1,500 sq ft to 6,000 sq ft in size, offering international quality store environment and product range.

Three senior professionals and experts from the global retail industry have been roped in to drive the company’s retail foray. This venture is also synergistic with the company’s current portfolio of Ayurvedic & Herbal products and would add significantly to the company’s distribution footprint.

Torrent Cables is a leader in high-tension power cables. Its integrated manufacturing is equipped with the most advanced and well-accepted technology for the manufacture of XLPE-insulated cables up to 66 KV.

Major customers of TCL consist of private players engaged in the distribution of power, industrial houses, engineering, procurement and contractor (EPC) construction and state electricity boards (SEBs).

Of its various listed competitors (Universal Cables, Industrial Cables, Cable Corporation of India, Nicco Corporation, Fort Gloater Industries, RPG Cables, Polycab Wires, and Uniflex Cables), TCL is the most preferred and financially sound. Private sector power distributors — TCL’s main clients — are performing well and they are expected to maintain a similar trend. Public sector companies are also going private and working very hard to cut their T&D losses to improve their bottom line.

Insulated power cables are very safe means to transmit and distribute power among a large numbers of customers, eliminating power theft and reducer transmission and distribution losses considerably. Liberalization in the power sector is expected to create competition among distribution companies and the pressure to perform better will result in higher demand for insulated power cables. Overall, the entire sector is expected to do well in future.

TCL bravely faced rough weather in the recent past. During the turbulent times, TCL undertook a program for massive optimisation of its operations and reduction in cost. The company adopted the policy of cost-consciousness, waste reduction and improving competitiveness. Infusion of Rs 20-crore interest-free funds by the promoters in FY 2004 significantly supported the company’s efforts into reduce interest expenses. Today, TCL is one of fastest-growing and its products are perceived in the market as one of the highest quality yet available at competitive prices. Besides, unlike most others, the company is meeting all its delivery commitments on time.

Besides, the government’s initiatives on power sector reforms have resulted in an increase in demand for power-related products, including cables. Presently, India faces a 10-12% gap in supply of and demand for power. A rural electrification programme has been initiated to ensure electrification of all villages by 2009. There has also been a continued effort to upgrade and modernise the power distribution network. With all these developments, the power industry would attract increased investment. This means more demand for power cables. With this in mind, the cable industry is also working towards increasing its capacities.

TCL’s sales rose 55% to Rs 50.73 crore and net profit was up 66% to Rs 7.02 crore in the quarter ended December 2006 over the quarter ended December 2005. In FY 2007, we expect TCL to register sales and net profit of Rs 186.88 crore and Rs 18.95 crore, respectively. On an equity of Rs 7.48 crore and face value of Rs 10 per share, EPS works out to Rs 25.3. At Rs 179, PE is just 7.1. Long Term Investors can BUY Torent Cables.

The 300 KTPA plant, due to start up in the first quarter of 2010, is to be built at Saudi Kayan Petrochemical Company’s petrochemical complex at Al-Jubail Industrial City, Kingdom of Saudi Arabia, and will incorporate technology from Basell GmbH.

The letter of intent is on the basis of a fixed price for contractor’s services and a conversion to a lump sum Engineering, Procurement, Construction (EPC) price, once detailed engineering is sufficiently defined.

Simon Carves is a petrochemical giant with as many as 125 years of experience in successfully delivering plants safely, on time and within budget, to international customers. This project is the 39th high pressure polyethylene plant of to be executed by Simon Carves, Punj Lloyd’s subsidiary.

Recently, Punj Lloyd, along with its offshore engineering arm, PT Sempec Indonesia, a wholly-owned subsidiary, secured an offshore platform project – Heera Redevelopment Project – on an engineering, procurement, construction (EPC) basis from ONGC. The Heera field is located about 80 km west of Mumbai, in the Arabian Sea. The project is scheduled to be completed within 16 months.

The order backlog for the group stands at Rs 11,201.74 crore, and is representative of unexecuted orders till 30 September 2006, as well as all new orders received till date. The company was also awarded a letter of intent for 2,66,000 cb phase III expansion of the bulk liquid products terminals by Horizon Terminals, UAE. The value of the project is Singapore $ 49.65 million.

Punj Lloyd had fixed 6 April 2007 as a record date for splitting the existing shares of Rs 10 each into five equity shares of Rs 2 each.

Punj Lloyd also set up a new engineering services outsourcing firm, Simon Carves India, as a wholly-owned subsidiary. It will initially cater to the group’s engineering requirements. Gradually, the subsidiary will also compete for outsourcing contracts from other companies. Engineering Services Outsourcing (ESO) holds tremendous potential because of robust growth across Europe, Asia and US, leading to significant development in the engineering services sector, the company said.

Reports indicate that India has the potential to garner around 25% of the global ESO pie, worth around $50 billion by 2020. Currently, the ESO market is worth around $15 billion, with India garnering a healthy 12% share, the report added. We have a BUY rating on Punj Lloyd with a price target of Rs 1,400.

You already know about Anil Ambani’s media ventures from the past one year. His journey began by acquiring controlling stake in AdLabs. Additionally, Anil Ambani bought Rs 1,000 crore worth of SHARES OF TV BROADCASTERS – 10% IN AAJ TAK[TV Today Network] and 6% stake in CNN-IBN shortly after listing.

Today, Mukesh Ambani announced his plans to invest $300 Million in setting up 8-10 TV channels under the leadership of former Star TV CEO, Peter Mukerjea.

It makes strategic sense for Anil Ambani being in the communications business and will very soon step into Dish TV offering. But why is Mukesh Ambani interested in the Media business is every body’s guess and both the brothers no longer care for the Non Compete Agreement they signed ?

Tags: Invest India, Media India , India TV, TV

Many Indian companies like ICICI, Bajaj Auto, HDFC, Aditya Birla Nuvo etc ventured into Life and General insurance business incorporating a wholly owned subsidiary to grow beyond their core business. Withn 3-5 years of operations, subsidiaries are now ready to be hived off as individual business entities. The insurance industry is expected to grow at 21% CAGR between 2007 and 2011 and private operators are all set to grab a big slice.

1. ICICI Ltd
ICICI Prudential is the market leader amongst the private life insurers with a market
share of 9.5% the second largest life insurer after LIC. It is the largest private operator with a market share of 30% amongst private companies. It has PAN India presence with 472 branches and 176,000 advisors. Per share value of life insurance for ICICI Bank, INR 219.

2.Bajaj Auto Ltd
Bajaj Allianz is the second largest private insurance company in India with a total market share of 5.3% and 17% amongst private operators. It has 900 offices in India and derives 70% of its business from agents while the other 30% from alternative channels like GE Money, Syndicate Bank etc. Valuation of Bajaj Allianz is pegged at Rs143 billion. This amounts to an estimated Rs686 per share or 25% of Bajaj Auto’s current market value.

3.HDFC
HDFC has tied up with Standard Life and has conservatively operated till now. It is the third largest operator amongst private players. It has around 500 offices for sales leads and 52,000 financial advisors to promote various insurance products. HDFC Standard Life Insurance Co. is valued at Rs83bn or US$1.9bn on a 12-months forward basis implying Rs149 per share of its parent HDFC.

With a thumbs down to the infrastructure sector and unthoughtful measures of taxation trigerred the post-budget sell off into a blood bath on Dalal Street.

At 11:00AM, the Sensex is down 500 points at 12,385. Indian markets were overheated. Adding to its woes, Slow dose of Interest Rate hike, Thumbs down to infrastructure companies and the broken promise about tax holiday for IT companies trigerred the massive sell off in Indian markets.

FIIs have pressed substantial sales over the past few days in contrast to an intermittent surge in inflow in February 2007. As per provisional data, FIIs were net sellers to the tune of Rs 613 crore on Friday (2 March 2007), the day when the Sensex had lost 273 points. Their net outflow was worth Rs 3080.80 crore in four trading sessions, from 26 February 2007 to 1 March 2007.

What Fund Managers are Saying ?
From a life closing high of 14,652.09 on 8 February 2007, the Sensex has lost 14.8%. Deutsche Bank in a post-Budget report states that BHEL, Infosys Technologies, Punjab National Bank and Grasim (a high-risk, high-return play) are its top picks.

UBS shares a similar view. ‘Post the recent correction, relative valuations don’t appear as expensive as they used to be. India is now the fourth most-expensive market in Asia compared to the most expensive status tag it had about a month back.