Ranbaxy: Prescription for growth

Indian drug firms are looking at ways to unlock value for shareholders as also bring down R&D costs. Close on the heels of Sun Pharma, the Rs 4,366 crore Ranbaxy plans to demerge its new drug discovery research unit, Ranbaxy Life Science Research (RLSRL).

Shareholders will get one share of RLSRL for every four held in Ranbaxy. In CY 07, Ranbaxy's R & D costs at Rs 416 crore, were higher by about 8 per cent than that in the previous year. In CY06, however, the R&D spend actually fell over that in CY05.

However, as a percentage of total operational income, R & D costs remained at more or less the same level of 9.5 per cent in both years. The annual savings for Ranbaxy, post the demerger could be about Rs 100 crore.

Meanwhile, the next 18 months should see Ranbaxy ramp up overseas sales. That’s because it has managed to acquire permission to exclusively sell certain drugs that treat benign prostatic hyperplasia and herpes. Typically these exclusivity periods last for six months.

Besides, the management has said it will increase focus on some geographies. In CY07, overseas sales contributed 72.5 per cent Ranbaxy’s top line. Over the past one year, Ranbaxy has gained 32 per cent as compared to a 38 per cent rise in the Sensex.

Sun Pharma’s research subsidiary SPARC, trades at Rs 99, and has gained about 14 per cent since listing. At Rs 445, Ranbaxy trades at 19 times estimated CY 08 earnings, estimated at 23 levels, with a seven per cent upside coming in from the savings on R&D.

Sun, at Rs 1259, trades at a slightly lower multiple of 18 times estimated FY 09 earnings and both stocks are likely to be outperformers.

Hyundai, Maruti, GM to cut prices

Hyundai reducing prices in the range of Rs 8,700 – Rs 20,000.

Maruti small segment cars will be cheaper by Rs 6,500- Rs 18,000.

GM price cuts will range from Rs 7,500 to Rs 14,000 on Spark, U-VA.

Car makers have been quick in responding to the announcement in the Union Budget of reduction in excise duty on small cars. Enthused by the excise duty cut, most car makers have announced reduction in the prices of their small cars to pass on the cost benefits to customers.

A short while after the Budget announcement, Hyundai Motor India said that it would reduce the prices on Getz, i10 and Santro. Hyundai announced reduction in prices in the range of Rs 8,730- Rs 13,278 on its flagship model Santro, Rs 11,047- Rs 16,324 on its newly launched premium compact car i-10 and from Rs 13,169- Rs 19,419 on its hatchback Getz.
A major boost

“At a time when the industry sales seemed to be tapering off, this has come as major boost and it will help the industry maintain its growth rate. Today, 75 per cent of the car sales are in the compact segment and this cut in excise duty will benefit manufacturers and customers alike,” said Mr Arvind Saxena, Senior Vice-President, Sales and Marketing, Hyundai.

Maruti Suzuki will also slash prices on all its six models that qualify for lower excise benefit including Maruti 800, Omni, Zen, Wagon R, Swift Diesel and Alto. The reduction would range between Rs 6,500 for Maruti 800 to Rs 18,030 for Swift Diesel (ex-showroom Delhi).

General Motors said it would reduce prices in the range of Rs 7,500 –Rs 14,000 on its best selling Spark and U-VA. “The reduction in duty would make the compact car segment more competitive, apart from boosting sales,” said Mr P Balendran, Vice President, General Motors.

“Tata Motors will lower prices of its small cars and commercial vehicles including buses, bus chassis and bus body in view of the reduction of excise duties announced in the Union Budget. The new applicable prices will be announced in the next few days, after the company has studied the details of the policy changes,” a company statement said.

Budget STT-umps markets

The budget proposals were a dampener for the stock markets. The Finance Minister hiked the short-term capital gains tax from 10% to 15% in order to encourage investors to stay invested for a longer-term but market players termed it as a sentiment-spoiler.

"What it does is that it makes the perceived sentiment of investing in equity markets less attractive," Anoop Bhaskar, chief investment officer, UTI Mutual Fund, said.

It was the other proposal of the Finance Minister-- securities transaction tax (STT) to be set off as a business expense rather than against other taxes paid which was the case earlier-- that hogged the limelight.

According to the proposal, the amount of STT paid by the broker will be allowed as deduction under Section 36 of the Income Tax Act only if the income from these transactions is included under the head "profits and gains of business or profession". The amendment will take effect from April 1, 2008, and will apply in relation to assessment year 2009-10 and subsequent assessment years. The rebate will not be allowed in or after assessment year beginning April 1, 2009.

Brokerage houses, who trade in proprietary accounts, jobbing and arbitage, would be hit since the tax set-off is now likely to be only a third of that (since the tax rate is about 34%). "We did not expect this at all," said Nirmal Agarwal, president, Association of National Stock Exchange Markets of India (ANMI). ANMI is planning to make a representation to the Finance Minister over this issue on March 6 at a convention of brokers.

The Finance Minister has also proposed to bring stock markets, commodity exchanges and clearing houses under the service tax net. As per the proposal, the service tax would be charged by stock exchanges on the exchange transaction fees, listing fees, data discrimination charges (data provided to brokers by exchanges for fees) and on property rent if any being received by the stock exchanges. The service tax would be passed on to the stock brokers, which they would set off with the service tax on brokerage.

A long-standing demand of brokers has been met with the proposal to charge STT only on the premium of the options trades and this will be collected from the seller. In case of exercised options, it will be charged from the buyer. The amendment comes into effect from June 1, 2008.

Earning Rs 5 lakh? Save up to Rs 45,000

Income tax payers will feel happier after this Budget. Presenting the Union Budget for 2008-09 in the Lok Sabha, Finance Minister P Chidambaram today raised the basic exemption limit from Rs 1.1 lakh to 1.5 lakh for all male assesses. Also, the limit for women assessees has been hiked from Rs 1.45 lakh to 1.80 lakh and for senior citizens from 1.95 lakh to 2.25 lakh.

The reason: tax collections have been going up in the last few years. And the numbers speak for themselves. The tax to gross domestic product (GDP) has risen from 9.2% in 2003-04 to 12.5% in 2007-08.

The rise in the exemption limit basically implies that a person who was paying a tax of Rs 4,120 annually on his income of Rs 1.5 lakh will not be paying anything at all. Similarly, women assessees would save Rs 6,695 and senior citizens would save Rs 6,180 on income of Rs 1.8 lakh and 2.25 lakh, respectively.

Though this may sound like a small relief, when one goes through the numbers, income earners up to Rs 5 lakh are likely to save between Rs 40,000-45,000. However, the incremental saving over Rs 5 lakh income is just another Rs 5,000. For instance, an individual earning Rs 25 lakh, the savings is Rs 49, 852, Rs 49, 286 and Rs 43,621 for male, female and senior citizen, respectively.

Interestingly, Indian taxpayers will now be better off than those in the US. Says Kaushik Mukerjee, executive director, PricewaterhouseCoopers, "The finance minister has increased the threshold for personal tax exemption by about 35%, which is about $4,000. This is more than the basic threshold in the US where the ceiling is $3,400. However, we are yet to reach the levels of Australia ($5,500), UK ($11,000) or Singapore ($15,000). We were ahead of China already where the annual threshold in China is about $ 1400." Though this hike is substantial in relative terms, Mukherjee feels that it may take some time to catch up with countries like Australia, UK and Singapore.

Many also expected that the education cess of 3% should have also gone, but the FM did not announce any such moves. Also, the surcharge of 10% on the individual income of over Rs 10 lakh stays.

Also, the much-awaited relief on banking transaction tax will now be removed from April, 2009. This tax, 0.1% on transactions of Rs 25,000 on a single day, was introduced in the 2005-06 Budget. This created quite a stir among the consumers who felt that they were being tax again on the same income.

On the whole, the idea of FM seems to be to put more money in the hands of the consumer, which would give them more spending power. Given that there are worries of a slowdown in the two-wheelers and car segment, a little more cash at hand would definitely help consumers.

The new IT slabs, effective from the next fiscal year, would be as follows:


10% on income of Rs. 1.50 lakh to Rs 3 lakh;


20% on income of Rs 3 to Rs 5 lakh; and


30% on income of Rs 5 lakh onwards.

Citi India arms feel sub-prime pinch

May close branches, bank relocates ATMs.

The sub-prime loss-hit Citigroup is on a cost-cutting exercise in its Indian operations.

CitiFinancial, its consumer finance unit, which is also reeling under the burden of rising bad loans, is considering closing about 100 of its 450 branches in India.

Meanwhile, Citibank, the commercial banking arm, has begun shifting its ATMs from prime locations to less expensive ones. Banking sources said private sector banks like Yes Bank and HDFC Bank have bought some of the locations.

“In terms of cost-cutting, the bank is relocating ATMs. Citibank is relocating around 30 ATMs from high-cost locations to low-cost areas,” said banking sources.

These steps are in tune with Citigroup’s global efforts at substantially reducing costs according to plans drawn up by Vikram Pandit, who took charge as CEO of the world’s largest financial services group after Chuck Prince exited following a $17.4 billion write-down on sub-prime related exposures.

In response to a mail sent by Business Standard, a Citigroup India spokesperson preferred not to comment on the closure of branches,

“CitiFinancial is not exiting the consumer finance business. We are committed to growing it further by adding new products to its portfolio. To service customers better, we are in the process of relocating some branches in select geographic locations,” the response said.

The spokesperson added that CitiFinancial has not sold any ATM locations. “We have relocated some ATM premises, which is an ongoing process to better serve larger numbers of customers. We will continue to operate 480 ATMs across the country.”

CitiFinancial India saw a 64 per cent drop in net profit in the first half of 2007-08. For the whole of 2006-07, CitiFinancial’s net profit was at Rs 220 crore against Rs 170 crore in 2005-06.

In its rating rationale, rating agency CRISIL has said the decline in CitiFinancial’s net profit in the first half of 2007-08 was largely due to higher delinquencies in the unsecured personal loans segment.

Spreads have also been under pressure due to increased borrowing costs and a shift in its loan portfolio towards a higher proportion of mortgage products, which have a lower yield than unsecured personal loans.

To contain credit costs in the unsecured personal loan segment, CitiFinancial is shifting focus to customers with better credit profiles but lower yields.

It is also increasing its focus on fee-based income through insurance distribution. However, the rating agency said the initiatives will benefit the company in the medium term and the pressure on profitability will continue in the near future.

According to reports, Citigroup is also in the process of closing its CitiFinancial unit in Japan and scaling down operations of the consumer lending arm in Mexico. CitiFinancial Japan has already reduced its branches to 51 from 324 in 2006.

Recently, GE Money, another US-based consumer lender, expressed its intentions to exit the personal loans and housing loans business in India.

Anil Ambani-promoted Reliance Capital, Kishore Biyani’s Future Capital, Birla Group and Fullerton are believed to be potential buyers. Private equity players like JP Morgan and Goldman Sachs are also in the race. HDFC Bank, which has set up its own non-bank finance company, is also keen to acquire the business.

GE Money had exited the consumer durable and auto loan business in India earlier.

Sun Pharma challenges J&J`s drug patent

Mumbai-based Sun Pharmaceuticals has filed a post-grant opposition with the Mumbai patent office against a product patent granted to the extended release version of Johnson and Johnson’s (J&J) blockbuster drug Risperdal, used in the treatment of psychological disorders and schizophrenia.

Risperdal, with the molecular name risperidone, is the second-largest selling drug of Johnson and Johnson with over $4.5 billion worldwide sales in tablet, injection, syrup and orally dispensable forms. It is also one among the largest selling psychiatric drugs, according to sources.

Sun Pharma has been marketing a generic version of this drug for the last few years in India under the brand name Sizodone, according to company sources.

The patent on Risperdal, granted in February 1986, will expire in the US on June 29, 2008. The Indian patent was for an extended release version and this had not been patented in the US, said patent experts having knowledge of the development.

Patent wars
Swiss drug maker Roche’s anti-cancer drug, Pegasys, was given a patent in India in 2006 and this was challenged by Wockhardt and a Mumbai-based non-governmental organisation, Sankalp.

Generic drugmaker Cipla is battling in the Supreme Court to revoke a patent granted in February 2007 to Roche’s cancer drug Tarceva.

Another patent granted to Roche’s anti-HIV drug, Valganciclovir, is also being challenged in the court by Lawyers Collective, a Mumbai-based NGO, and Cipla.

According to the Indian Patent Act, which was amended in 2005, a product patent that bars other companies from copying the drug for generics, can be challenged within one year.

The Mumbai patent office granted a patent to Janssen Pharmaceutica, a group company of Johnson and Johnson, on July 20, 2007, with patent number 208191, against its mail box application number 188AL/1995. The patent related to sustained-release particles of risperidone, said sources. Company sources declined to reveal the sales figures for the drug in India.

“We don’t comment on litigations and patent-related issues as a matter of policy,” said a Sun Pharma spokesperson.

Interestingly, Dr Reddy’s Laboratories and US-based Mylan Laboratories were among the first to challenge the patent on Risperdal in the US, where the drug has sales of over $2 billion, said sources.

“Since the product patent regime was introduced in India in 2005, we estimate that more than 150 product patents have been granted and over 90 per cent of this is for multinational pharmaceutical companies. So far, very few products have been opposed by Indian companies, according to our knowledge,” said Varun Chonkar, a patent expert.

He said the Indian patent office was yet to officially announce data on the number of patents granted and challenged in India.

Apollo to set up Rs 280 cr hospital in Mauritius

Forms JV with British American Investment Company.

Apollo Group of Hospitals and British American Investment Co, a business conglomerate in Mauritius, have formed a joint venture (JV) company, British American Hospitals Enterprise, to set up and manage a tertiary care hospital in Mauritius.

The Apollo Bramwell Hospital in Mauritius, set up at an investment of $70 million (Rs 280 crore) with a debt equity ratio of 1.25:1, will provide advance healthcare across 50 specialties and super-specialties.

Apollo Hospitals is investing 26 per cent in equity in the joint venture. Apollo will provide technical consultancy services during the project implementation stage. Once the project is completed, it will be responsible for the operations of the facility.

Announcing this here on Thursday, Prathap C Reddy, group chairman, said the construction of the Mauritius hospital was currently under way and it was expected to be operational by mid January 2009.

Stating that the hospital would contribute to the upgradation of medical services across the region and be a major training hub for medical and para-medical personnel, Reddy said the facility would be manned by 200 doctors and paramedics.

Apollo Bramwell Hospital would have 200 beds, with a scope to expand this to 350 beds. It will be targeting patients from Madagascar, Seychelles and African countries, he added.

Rising euro cheers exporters

Traders book forward deals to benefit from bullish European currency.

A sharp appreciation of the euro against the dollar has led exporters, invoicing their receivable in the European currency, to strike short-term forward contracts.

Exporters, who had invoiced their receivable in the euro, are getting good value for their proceeds by booking the euro receivable in the forward market. Incidentally, the rupee has depreciated against the euro, falling from Rs 58.48 to Rs 60.12 this week.

The dollar was trading at a record low against the euro at $1.5103 on Thursday. It had breached the crucial barrier of $1.50 early this week.

A rise in the euro against the dollar has also led to a sharp appreciation of the rupee against the euro. This is because the rupee has been depreciating against the dollar following a strong demand for dollars in the domestic market.

Following a sharp depreciation of the dollar against all major currencies globally, exporters, who have businesses in Europe, had shifted from invoicing in the dollar to the euro. This was in line with all other currencies as the dollar also lost against the rupee over a year by 9-10 per cent.

By booking euro receivable, exporters are selling euros and buying dollars and with the dollars, they are buying rupees. Eventually an exporter is selling euros against rupees. Since the deal involves buying of dollars in one lag and selling in another, dollar gets cancelled.

Dealers said usually the rupee moved in tandem with the euro and the pound against the dollar. However, the extent of appreciation of the euro to the dollar has been very sharp and the rupee depreciated against the dollar in the domestic foreign exchange market.

A strong dollar demand from importers and a lack of fresh inflows from portfolio investors (foreign institutional investors) have led to deprecation of the rupee against the dollar.

According to market sources, most of the exporters had shifted to invoicing their export proceeds in non-dollar currencies such as the euro and the pound.

Tyre firms, dealers trade charges on price hike

Domestic tyre manufacturers and dealers are at loggerheads over the hike in tyre prices. Dealers alleged that manufacturers were using the raw material cost increase as an excuse to book huge profits.

The All-India Tyre Dealers’ Federation (AITDF), the apex body of dealers, said the price hike did not match the prices of raw materials such as natural rubber and others.

Rubber constitutes 50 per cent of the cost of a tyre. Unlike in the West, Indian companies use more natural rubber than synthetics. Forty-three per cent of a tyre is made of natural rubber and 3 per cent synthetic rubber, according to the Automotive Tyre Manufacturers’ Association (ATMA).

“During February-June 2006, when natural rubber prices touched a five-year high of Rs 111 a kg, tyre prices were increased by 17-28 per cent by leading tyre makers,” said a AITDF release.

“However, rubber prices came down in the following months and reached Rs 92 a kg, which was the average of last year,” said a senior office-bearer of AITDF. He alleged that manufacturers did not pass this benefit to consumers.

On the other hand, tyre makers said while rubber prices stabilised, the prices of other raw materials such crude oil and carbon black went up. Hence, they were not in a position to reduce the price, said an executive of a leading tyre company.

On the same note, K J Rao, CFO, Ceat Tyres, said, “Although prices of natural rubber steadied, the prices crude oil and carbon black went up. So, the hike was justifiable.”

The dealers’ body further said Apollo, Ceat, MRF and JK Tyres were already in the process of announcing another price hike.

This will counter the possible excise duty cut on tyres expected in the Union Budget. The prices are expected to see a fall after the excise duty on them is brought down to 14 per cent from 16 per cent.

A AITDF letter said: “The domestic tyre majors effected several price hikes in 2006 in all categories. The increase was based on the price of natural rubber at Rs 111 a kg. Tyre makers benefited from the reduction in natural rubber prices for the entire year of 2007, but failed to reduce prices accordingly.”

According to the last quarter results of major tyre makers, the percentage cost of raw materials during the last quarter as that of total sales has shown a decline for the tyre-producing companies.

India’s fourth largest tyre-making company JK Tyres, for example, had a raw material consumption of 68.1 per cent of net sales as compared with 77.7 per cent in the corresponding quarter of the previous year.

“This helped all the leading tyre companies post robust third quarter results,” AITDF has alleged.

Apollo Tyres reported a net profit growth of 77 per cent at Rs 62 crore as against Rs 35 crore. MRF Tyres’ profit grew 76 per cent at Rs 51 crore from Rs 29 crore, JK Tyres posted 162 per cent growth at Rs 21 crore as compared with Rs 8 crore and Ceat reported 73 per cent growth at Rs 19 crore from Rs 11 crore, the dealers’ body further noted. (All quarterly net profits of the current year are compared with the comparable quarter of the previous year).

Indian oil basket hits a new high

The basket of crude oil that Indian refiners buy hit a new high of $96 per barrel on Wednesday, the latest day for which data are available.

The basket, which comprises Oman-Dubai sour (high sulphur) grade crude oil and Brent dated sweet (low sulphur) crude oil in a 61.4:38.6 ratio, has averaged $91.91 per barrel this month compared with $89.52 per barrel in January and $87.92 in December.

The price of the Indian basket of crude oil has been reflecting the soaring futures price of oil in the New York Mercantile Exchange, which hit an all-time high of $102.08 per barrel on Wednesday, before falling to below $100 per barrel at the end of the day.

US light sweet oil for April delivery was trading at just over $99 per barrel in New York on Thursday.

The price of Brent crude oil, the global benchmark primarily produced from the North Sea, has also been trading at over $99 per barrel in London.

Aban Offshore arm gets contract from Myanmar co

Aban Offshore Ltd has informed the BSE that a subsidiary of the company has received a Letter of Award from PTTEP International Ltd for a three-well contract offshore Myanmar, for the jack-up drilling rig Deep Driller 5, with an estimated duratio n of four months.

This contract will be in continuation of the current contract with Cairn Energy Sangu Field Ltd. The estimated contract value is approximately $25 million.

NTPC signs jt venture pact with UPRVUNL

National Thermal Power Corporation Ltd (NTPC) has informed the BSE that it has signed a joint venture agreement with UPRVUNL, on Thursday for implementation of 2x660 MW coal based thermal power project at Meja in Allahabad in Uttar Pradesh.

The project would be implemented by the proposed joint venture company on build, own and operate basis.

Parsvnath Developers starts construction of group housing project

Parsvnath Developers Ltd on February 28 announced the start of construction of 'Parsvnath Preston' a high-end group housing residential project, in Sonepat, Haryana. The expected realization from the project is over Rs 500 crore in next 3 years. The project is spread over a saleable area of 2.2 million sq. ft.

NIIT Technologies buys German firm

NIIT Technologies will buy 100% stake in Softec GmbH, a German company providing IT solutions and services in airlines revenue accounting. NIIT did not disclose the value of the deal.

According to a release issued by the company to the BSE today, the company has signed a Share Purchase Agreement with the shareholders of Softec GmbH for acquiring 100% of share capital.

Softec GmbH has a major market share of about 40 small to medium airlines within Europe, Africa and Asia.

Matrix to foucs on Mylan, may sell Docpharma

Hyderabad-based pharmaceutical major, Matrix Laboratories, is
pursuing strategic alternatives for Docpharma, including a possible divestiture of the Docpharma business.

Docpharma, a leading marketer and distributor of generic pharmaceuticals in Belgium, the Netherlands and Luxemburg (Benelux countries), was acquired by Matrix in 2005.

Shortly following the acquisition of Docpharma, Matrix underwent significant activity including the acquisition of a 71.5% controlling interest by Mylan, a US-based generics pharmaceutical company. Since then, Matrix has realigned its strategic focus with Mylan to yield greater value for shareholders.

In light of Mylan's acquisition of Merck Generics, Matrix will further refocus its business to reflect the importance of strategic arrangements with Mylan in support of its enlarged global platform, the company stated in a press release issued to the BSE on Thursday.

Strategic alternatives for Docpharma, up to and including divestiture, is yet to be approved by the company's shareholders. Further details will be announced once the company has reached a definitive agreement, it added.

“After careful review and upon recommendation from its senior management team, Matrix has decided to explore strategic alternatives for Docpharma including a potential sale. We believe our determination represents better growth in shareholder value for our shareholders. As it has continued to realign itself to predominantly serve Mylan’s global generics business, Matrix will also continue to focus on its core active pharmaceutical ingredient (API) business and finished dosage form development as well as on the continued growth of its antiretroviral business. Docpharma offers a strong platform for the marketing and distribution of generic pharmaceuticals in the Benelux countries. We believe that Docpharma will be better situated in an organisation that is compatible with its core competencies,” said Robert J Coury, non-executive chairman of Matrix.

Indiabulls Real to buy Dev Prop for Rs1,092cr

Indiabulls Real Estate (IBREL) plans to acquire Dev Property Development, a entity listed on Alternate Investment Market of London Stock Exchange.

According to a release issued by IBREL to the BSE today, the company's board has approved a proposal to buy 100% stake in Dev Property by issuing new shares represented by Global Depository Receipts (GDRs).

Indiabulls has valued Dev Property at GBP 138 million (approximately Rs 1,091.85 crore) and share at 100 pence based on the closing price of IBREL at Rs 654.40 yesterday (currency exchange rate of Rs 79.12 for each Pound Sterling).

Meanwhile, Indiabulls Real Estate also plans to raise upto GBP 150 miilion through international offering for business purpose.

Dev Property focuses on investment in commercial real estate developments (including the the Information Technology (IT) and Information Technology Enabled Services (ITES) and residential real estate developments in Tier 1 cities in India such as Mumbai. The AIM listed entity also has plans to make investments in Special Economic Zones (SEZs).

IDBI submits capital revamp plan to govt

Public sector Industrial Development Bank of India (IDBI Bank) has submitted a proposal to the government to revamp its capital base.

The government nod for the revamp plan will help it pave the way to raise resources through rights and public offering to support business growth.

Currently, the bank has a comfortable capital adequacy ratio of 13.3 per cent (December 2007) with core capital (tier I) of 8.57 per cent. “We may need capital next year,” Chairman and Managing Director Yogesh Agarwal told reporters after inking a pact with Motilal Oswal Securities for online trading facility.

IDBI Bank entered into a strategic alliance with one of the country’s largest brokerage houses to facilitate online trading for the bank’s 2.5 million customers. A MoU to this effect was signed by O V Bundellu, deputy managing director, IDBI, and Motilal Oswal, CMD, MOSL, in the presence of Agarwal.

“The revamp involves conversion of part of long-term loans into equity. It is too early to issue a time plan as we submitted the proposal only recently,” an official said.

Agarwal said even while raising funds through rights and follow-on issue, care would be taken that government holding remains as it is. The government holding in the public sector bank at the end of December 2007 stood at 52.68 per cent.

Referring to the tie-up with Motilal Oswal Securities for equity trading, he said this arrangement with not be done at the cost of existing alliance with IDBI Capital Market through latter’s trading platform “idbipaisabuilder.com.”

Auto part firms thrive on sourcing deals

The multi-billion dollar auto component sourcing industry in India has brought relief to many domestic component suppliers in the form of improved margins and long-term supply contracts.

Global auto majors such as Daimler, General Motors, Ford, Volkswagen, Renault, Nissan and Honda have been buying higher quantities of components from India, which has resulted in the margins of component firms improving 8-10 per cent.

As of the last financial year, auto component sourcing has touched $3 billion in India and is expected to double by next financial year-end. Many such auto majors have set up an India purchase office, which buys inexpensive Indian components to cater to their huge overseas plants.

Such sourcing has provided Indian players with the opportunity to charge a premium that varies between 5 and 10 per cent. Many foreign car makers prefer to make engineering changes to the components before incorporating them in their engines and other parts.

Some of the more common components sourced include axle bar, propeller shaft, crank shaft, cylinder heads, bearings and cylinder blocks. Foreign firms get a 25-30 per cent cost advantage through such deals.

M Radhakrishnan, joint managing director, Autoline Industries, said, “We are supplying original equipment makers (OEM) such as GM, Ford, Nissan and Honda. Not only have the margins improved due to premium pricing, but volumes have grown significantly, too. These players get a benefit of 20 per cent cost reduction for our products.”

According to projections made by the Auto Components Manufacturers Association, global sourcing from India will increase to $20 billion by 2014.

Daimler India sourced components worth $2.2 billion from India last year and this year the figure is expected to swell by 20 per cent or $440 million.

Many component manufacturers say that though there are servicing (fabrication) costs involved, which tend to raise the overall cost, it is compensated through premium settlements by OEMs.

Praveen Gupta, chief executive, auto and engineering business, Yash Birla Group, said, “Direct supplies to tier I players do involve high margins, stable demand and volume. We are looking to expand our reach beyond our tier II customers such as Cummins.”

Experts believe that strong negotiations on component prices by Tata Motors for the Nano, which lead to a squeeze on margins for suppliers, will be tackled through sourcing deals.

FCI may buy 13.5mn tonne wheat in 08-09

Citing reports of higher output this year, Food Corporation of India (FCI) is expecting to lift at least 13.5 million tonne wheat in 2008-09 - up by 2.3 million tonne over the current fiscal.

"This year (2008-09), wheat procurement from across the country by FCI is expected to be between 13.5-15 million tonne which is quite high as compared to the procurement done in earlier years," Alok Sinha, chairman and managing director, FCI, told reporters today.

"The major factors behind the increase in lifting would be higher minimum support price (MSP), good crop in Punjab, Haryana, Northern Rajasthan and Western Uttar Pradesh, and low interest of private buyers," he added.

FCI procured 9.2 million tonne wheat in 2006-07 followed by 11.2 million tonne in 2007-08.

With the procurement of 13.5 million tonne, wheat stock of the country would reach 18.8 million tonne. "From April 1 this year, we will have a stock of 5.3 million tonne. If we add the figure of expected lifting, it will reach 18.8 million tonne," Sinha said.

Crude oil price moves above $102/bl

Crude oil price moved above $102 per barrel as the dollar fell to an all-time low against the euro, according to a report on the website of Bloomberg.

Crude oil for April delivery rose as much as $1.20 (1.2%) to $102.08 per barrel in electronic trading on the New York Mercantile Exchange. The contract was traded at $101.90 in early trades in London.

The dollar weakened to 1.5055 per euro - the lowest since the European single currency was introduced in 1999.

Brent crude for April settlement climbed as much as $1.06 (1.1%) to $100.53 per barrel on London's ICE Futures Europe exchange - the highest since trading began in 1988, the report added.

SC asks UP sugar mills to clear dues

Sugar mill owners in Uttar Pradesh will have to pay cane growers between Rs 115 and Rs 123 per quintal, depending upon the quality, the Supreme Court said today in an interim order while fixing the price for the crushing season 2006-07.

A bench, headed by Justice Arijit Pasayat, directed that the dues have to be paid within six weeks.

The court passed the order on a bunch of petitions filed by sugarcane farmers and the Uttar Pradesh government challenging the Allahabad High Court's order that had quashed the government's decision to fix the price of sugarcane at Rs 125-130 per quintal.

The court said the lowest quality cane, which falls in the category of "suitable variety", would command a price of Rs 115 per quintal while the "general variety" would get Rs 118 per quintal and the "early variety" would get Rs 123 per quintal.

The bench, also including Justice P Sathasivam, however, made it clear that if the payment had been done above the fixed price then no recovery would be made by the mill owners and also no interest would be paid to the farmers for the delay in payment.

The petitioners had appealed against the December 19 order of the High Court quashing the state advised price (SAP) of sugarcane fixed by Uttar Pradesh for crushing season 2006-07 and directing its revision within three months.

The high court had also suggested the constitution of an expert committee, including representatives of cane unions, the union Government and other agencies.

The high court order was passed on petitions filed by several private sugar mills, challenging fixation of SAP, alleging that the price was fixed arbitrarily without any guidelines or norms.

Posco worried over delays in Orissa project

Korean steel giant Posco has expressed concern over the slow progress in obtaining prospecting licence for iron ore and acquisition of land for the Orissa project.

The company has proposed setting up a 12 million tonne integrated steel plant in Orissa at a cost of Rs 52,000 crore, and signed an MoU with the state in June 2005.

Chango-ho Kwag, director of Posco Research Institute in Delhi, told PTI that securing prospecting licence and land acquisition were the two major issues worrying Posco officials in Korea.

Kwag, who is closely associated with the Orissa project, said although the company had applied for prospecting licence for iron ore mining in November 2005 there was not much progress in this regard.

The application, which was sent to the Orissa government for forwarding it to the union ministry of mines, was sent back as the state had skipped the procedure of public hearing. "Now, the public hearing is taking place," Kwag said.

The other factor worrying Posco was land acquisition. The project requires nearly 4,000 acre land, but the company has been able to get only 300 acre. Out of the total land requirement, 90% belonged to the state government and the rest was to be purchased from the people.

Kwag said the company was willing to pay compensation to those who had encroached on government land. "We are hoping to resolve the issue in a couple of months," he said.

He said Posco was committed to the project as of now, and is also pursuing similar projects in other countries. "Posco has sufficient human and financial resources to undertake such mega projects," Kwag said.

BGR Energy gets Rs 793cr order from APGenco

BGR Energy Systems has won a contract worth Rs 793 crore from Andhra Pradesh Power Generation Corporation (APGenco) for design, engineering, manufacture, procurement, supply and commissioning of balance of plant for the 500 Mw Kothagudem Stage -VI (1 x 500 Mw) - Unit XI.

According to a release issued by BGR to the BSE today, the contract will be executed over 26 months.

"The company is currently executing three balance of plant contracts for 500 Mw coal-based power projects. The current order book of the company stands at Rs 3,715 crore," the release added.

D E Shaw invests Rs 1,000cr in HDIL unit

International hedge fund D E Shaw Composite Investments (Mauritius) has invested $250 million (approximately Rs 1,000 crore) in Mack Star Marketing - a group company of Mumbai-based real estate firm HDIL.

Mack Star Marketing is developing a commercial complex of about 54,000 sq. mtrs. (built up) in Andheri, Mumbai. The development rights were granted by HDIL.

HDIL, earlier this year, had bagged a rehabilitation project from the Maharashtra government covering over 276 acre around the Mumbai airport.

Cement, steel stocks gain on freight rate cut

Shares of cement, steel, and oil companies were among the gainers on Tuesday backed by positive signals from the Railway Budget. Proposals of large investments for railway modernisation have boosted the market sentiments, said a stock trader.

Sensex touched the day’s high of 17,860 points soon after the Budget proposals were announced, but ended the day lower at 17,806 with a gain of 155 points or 0.88 per cent. Nifty gained 1.33 per cent.

The 14 per cent cut in freight rate for fly ash gave a boost to the cement companies. Major gainers included Grasim Industries (5.06 per cent), ACC (1.53 per cent) and Ambuja Cement (0.65 per cent).

“Fly ash constitutes 25 per cent of the input in cement manufacturing and the freight reduction will definitely give a fillip to the cement industry,” said Mr Hitesh Agrawal, Head of Research, Angel Broking. Other gainers included Ultratech (0.78 per cent), India Cements (4.77 per cent), Binani (3.09 per cent), Madras Cement (2.04 per cent) and Burnpur Cement (4.55 per cent).

According to Mr J. Mehra, CEO, Essar Steel Holdings, the proposed increase in investments on new railway lines and addition of 20,000 new wagons to the railway fleet augurs well for the steel industry.

Shares of Jindal Stainless’, which enjoys 40-45 per cent of the stainless steel market, went up by 7.19 per cent.

Other steel companies scrips also went up: SAIL (2.57 per cent), Jindal Steel (4.16 per cent) and Bhusan Steel (4.04 per cent). However, Tata Steel closed flat. The much-battered public sector oil retailing companies gained after the Railway Minister announced five per cent cut in freight rate for petrol and diesel. Indian Oil gained 4.17 per cent; BPCL gained 5.38 per cent and HPCL went up 4.75 per cent.

Rail Budget: Highlights, announcements

Review of Performance : 2007-08

·Double digit growth in traffic earnings maintained in first nine months.
·Growth in passenger earnings 14%.
·Expected growth in goods earnings 14%.
·Gross Traffic Revenues 16% higher than the previous year and 2% higher than the Budget Estimates.
·Operating Ratio likely to improve from the budgeted 79.6 to 76.3 per cent – best in last four decades.
·Return on Capital – an all time high of 21 per cent.
·Cash Surplus before dividend expected to be a record Rs.25,000 cr.
·Net Revenue expected at Rs. 18,416 cr and surplus after payment of dividend expected at Rs.13,534 cr.


Budget Estimates 2008-09


·Freight loading target: 850 million tones.
·Revenues in Freight earnings to be Rs.52,700 cr; Passenger earnings to be Rs.21,681 cr.
·Gross Traffic Receipts to be Rs.81,901 cr – an increase of 12.6 per cent over RE.
·Cash surplus before Dividend to be Rs.24,783 cr after making an ad-hoc provision of nearly Rs.5000 cr for anticipated recommendations of the VI Central Pay Commission.

Annual Plan 2008-09

·The Annual Plan of Rs.37,500 cr is the largest ever Annual Plan so far.
·Thrust areas include enhancement of high density network routes, improvement and expansion of traffic facility and network, construction of flyovers, bypasses and upgradation of goods-sheds.
·New Lines - Rs.1,730 cr, Gauge conversion - Rs.2,489 cr, Electrification - Rs.626 cr, Metropolitan Transport Projects - Rs.650 cr.
·Track renewal - Rs.3,600 cr, Bridges - Rs. 600 cr, Signal & Telecommunication works -Rs.1,520 cr, Road over/under bridges - Rs. 700 cr and manning of unmanned level crossings - Rs.600 cr.
·Passenger amenities - Rs. 852 cr, the highest so far.
·Targets : New Lines - 350 kms, Gauge conversion - 2,150 kms, Doubling - 1000 kms.


Passenger Services


Trains
·10 new Garib Raths to be introduced.
·53 pairs of new trains.
·Extension of trains : 16 pairs.
·Increase in frequency : 11 pairs.
·300 additional services in Mumbai suburban.
·Special train from Anandpur Sahib and Patna Sahib to Gurudwara Sachkhand Sahib during tercentenary function of Shri Guru Granth Sahib of Gurta Gaddi.
·Special train between Pune and Delhi for Commonwealth Youth Games being held in Pune from 12th-18th October this year.


Amenities
·Provision of on-line coach indication display board; on-line train arrival departure information board; on-line reservation availability information board.
·Provision of discharge-free green toilets in all 36,000 coaches in XI Plan period at a cost of about Rs.4,000 cr.
·LHB design coaches for all Rajdhani and Shatabdi trains over next few years.
·Provision of LHB coaches with stainless steel bogies in Mail/Express trains.

Concessions
·Senior citizen concession for women enhanced to 50% from existing 30%.
·Free Monthly Seasonal Ticket to girl students up to graduation level in place of 12th standard and for boys up to 12th standard in place of 10th standard.

Improvements in ticketing
·Termination of queues at ticket counters targeted in two years.
·Ticket booking on mobile phones; E-ticket for waitlisted passengers.
·Increase in Unreserved Ticketing Systems counters to 15,000 and ATVMs to 6000.


Reduction in passenger fares
·One rupee discount per passenger for fares up to Rs.50 in non suburban Second Class (ordinary and mail/express)
·5% discount across the board for passenger fares beyond Rs.50 for all non suburban Second Class (ordinary and mail/express).
·Increase in discount for travel in new design high capacity reserved coaches.
·Reduction in fare - AC-I : 7%; and AC-II : 4% (the reduction will be half for popular trains and during peak period).


Freight Business


Reductions & Concessions
·5% reduction in freight rates for Petrol and Diesel.
·14% reduction in freight rate of Fly-ash.
·Liberalisation of Traditional Empty Flow direction incentive scheme
-30% discount on entire traffic in place of incremental traffic booked from goods shed.
-Increase in discount on incremental traffic booked from private sidings from 30% to 40%.
·6% freight concession for traffic booked from other States for stations in North Eastern States.


New Initiatives
·Target for loading fixed at 850 MT in 2008-09.
·Blue - Print prepared for High Density Network.
·Top priority being given to port rail connectivity projects.
·New and dedicated iron ore routes to be upgraded/constructed.
·Work on Eastern freight corridor from Ludhiana to Dankuni (Kolkata) and Western freight corridor from Delhi to JNPT to start in 2008-09.
·Procurement of Rolling Stock: All time high of 20,000 wagons, 250 diesel and 220 electric locomotives to be manufactured.
·New Wagon Leasing Policy and Wagon Investment Scheme formulated to increase availability of wagons in the system.
·Discounts for development of bulk and non-bulk goods terminals.


Safety & Security
·Multi-pronged scheme to strengthen railway safety through various automatic devices like anti-collision device etc.
·Rail accidents have reduced remarkably despite substantial increase in gross traffic volumes.
·Fire resistant material to be used in coaches.
·Unmanned level crossings at busy sections to be manned on a fast track basis.
·Integrated security plan drawn up through installation of CCTVs, metal detectors etc.


Welfare Measures


Social Welfare
·99%backlog vacancies for SCs/STs filled up in special campaign launched since 2004.
·Appointment of candidates from SCs/STs/OBCs exceeded their respective quotas in Group D appointments.
·Minorities welfare cells to be opened at Railway Board and Zonal Railways.
·One time exercise of appointing Railway Porters as gangmen and to other Group D posts.
·Mother-Child Health Express to be run on a pilot basis at concessional fares in collaboration with Rajiv Gandhi Foundation for providing medical facilities to mother and child.

Staff Welfare
·Per-capita contribution to Staff Benefit Fund to be increased by ten times from Rs.35 to Rs.350 for 2008-09.
·Northern Railway Central Hospital at Delhi to be made centrally air-conditioned.
·Two divisional hospitals at Jaipur and Hubli to be upgraded to central hospitals.
·A new divisional hospital at Ranchi and an OPD block at Integral Coach Factory to be constructed.
·Employees who joined Railways from other agencies/PSUs etc and are eligible for pensionary benefits, would now be eligible for post retirement complimentary passes as per the norms being set.


Future Vision
·Vision 2025 document aims at setting the roadmap for coming 17 years - customer-centric and market responsive strategic initiatives.
·Information Technology Vision 2012 aims at radical changes in IT applications on a common platform with focus on improvement in operational efficiency, transparency in working ad better services to the customers.
·Multi-Departmental Innovation Promotion Group at Apex Level.
·Public-Private Partnership schemes to be launched for attracting an investment of Rs.1,00,000 cr over the next five years for developing world class stations, rolling stock ad other logistics.
·Commercial use of Railway land by Rail Land Development Authority to give a boost to Railway Revenues.

Other Important Announcements
·A new rail coach factory to be set up in Kerala.
·A new wagon re-construction unit to be set up at Garkha in Chapra District.
·Modernisation and development of Workshops at Jamalpur, Lilluah, Perambur and Ajmer.
·Taking over of Mokama and Muzaffarpur wagon factories.
·Setting up of a 1000 MW thermal power plant, a joint venture of Indian Rail Bijli Company Ltd. with NTPC, at Nabinagar District of Auragabad, Bihar.

HDFC Bank, CBoP seal largest banking merger

HDFC Bank on Monday approved the acquisition of Centurion Bank of Punjab (CBoP) for Rs 9,510 crore in the largest merger in the financial sector in India. However, the merged entity would still be two-fifth the size of the country’s second largest lender, ICICI Bank.

CBoP shareholders will get one share of HDFC Bank for every 29 shares held by them.

The two banks did not comment on the price at which the shares were valued for the purpose of the swap ratio. The valuation arrived at is based on HDFC Bank’s closing share price of 1,474.95 last Friday and the total outstanding shares of CBoP.

HDFC Bank shares fell 3.54 per cent on the Bombay Stock Exchange on Monday to close at Rs 1,422.70 a share as investors felt the acquisition was a little costlier, while CBoP shares were down 14.45 per cent to Rs 48.25 a share as the price got aligned with the share-swap ratio.

The swap ratio was based on the recommendations made by joint valuers Dalal & Shah, a chartered accounting firm, and Ernst & Young, a consulting firm.

The merger will affect the performance parameters of the merged entity, which is compared to HDFC Bank now, as the productivity at CBoP was comparatively lower.

The boards of the two banks will meet again on February 28 to consider the draft scheme of amalgamation, which will be subject to regulatory approvals.

The HDFC Bank board will also consider making a preferential offer to its promoter, Housing Development Finance Corporation (HDFC), to enable it to maintain its shareholding in the merged entity.

HDFC held 23.28 per cent in HDFC Bank at the end of December 31, 2007. HDFC will need about Rs 3,900 crore to raise its shareholding after it falls to around 19 per cent after the merger.

CBoP’s Non-Executive Chairman Rana Talwar will be appointed the non-executive director of the merged entity, while its Managing Director and CEO Shailendra Bhandari will join the board as executive director.

Rana Talwar's Sabre Capital would hold less than 1 per cent stake in the merged entity from 3.48 in CBoP, while Bank Muscat's holding will decline to less than 4 per cent from over 14 per cent in CBoP.

TCL expands global VPN service to China

Tata Communications (TCL), formerly known as VSNL, today announced the expansion of its Global VPN service to China through an NNI (Network to Network Interface) agreement with China Enterprise Netcom Corporation, a value-added telecommunication services and intgrated IT solutions provider and subsidiary of CITIC (China International Trust and Investment Corporation).

Through this NNI, TCL and China Entercom have interconnected their respective MPLS (Multi- Protocol Label Switching) infrastructures, allowing TCL' MNC customers VPN connectivity reach beyond the existing 120 cities in India and 19 major business centers across North America, Asia, and Europe to now also include 347 cities throughout China.

Additionally customers can connect with dual PoP locations in tier-one cities including Beijing, Shanghai, Guangzhou and Shenzhen.

"Our agreement with China Entercom allows us to serve our many global and India MNC customers who require a single scalable and reliable global VPN with deep reach into both India and China, and broad reach around the world," said Vinod Kumar, President, Global Data & Mobility Services, TCL.

TCL is the leading service provider, offering a Global VPN on-net solution with four classes of service options which provides a deep and broad reach across India as well as to major cities across the world.

BHEL gets Rs 1,075cr order from Gujarat

Power equipment supplier Bharat Heavy Electricals (BHEL) has bagged a Rs 1,075 crore order from Gujarat State Energy Generation.

The order for setting up a 350 Mw combined cycle power plant at Hazira in Gujarat, and is scheduled for completion in 27 months.

Nicholas R&D starts trials in The Netherlands

NPIL Research and Deveopment (NRDL), which was recently demerged from Nicholas Piramal India, has commenced Phase-1 studies of a new experimental drug molecule, P1 201-07, in The Netherlands.

The company had submitted the clinical trial application (CTA) for P1201-07 to the central committee on research involving human subjects (CCMO), the regulatory authority of The Netherlands and the independent ethics committee of the foundation Evaluation Of Ethics in Biomedical Research (BEBO), Assen, The Netherlands. Both the bodies have approved the company's application to initiate Phase-I study of P1201-07.

"This is our fourth new drug to enter the clinic and the first from the research collaboration with pharma major Eli Lilly. The drug development timeline is on schedule. We in-licensed this molecule from Lilly in January 2007, and it has gone to the clinic in just a year," said Dr. Swati Piramal, director, strategic alliances & communications, NPIL.

ADB may exit Petronet LNG by year end

Asian Development Bank is likely to exit Petronet LNG by selling its 5.2% holding in the country's biggest liquefied natural gas importer possibly to promoters or billionaire Lakshmi Mittal.

ADB and German Development Bank KfW had recently approved a loan of $169 million to Petronet for its expansion projects at Dahej and new terminal at Kochi, but the multilateral lending agency's internal norms prohibit it from having both debt and equity exposure in a given company.

"In 2004, ADB had sanctioned $75 million loan to Petronet. But once it took 5.2% stake for less than $8 million, ADB could not disburse the balance due to its internal regulations," Petronet CEO and Managing Director Prosad Dasgupta told PTI here.

ADB norms also stipulate it to divest its equity holding in a company three years from the date of the company going public. Petronet's IPO came in 2004 and ADB was supposed to exit Petronet in 2007, but was persuaded to stay on for a year.

Now with fresh debt, for which ADB and KfW have signed financing agreements, the Manila-based lending agency may exit Petronet by year end, he said. "Who they sell it to is none of our business."

Though Dasgupta refused to say if Mittal was interested in ADB stake in Petronet, industry sources say Mittal was keen but would first want company promoters GAIL India, Indian Oil, Bharat Petroleum and ONGC to waive their pre-emption rights.

The four state-run firms who have 12.5% stake each along with 10% partner GdF of France hold first right of refusal over ADB stake. Even though GAIL and IOC are keen to pick up ADB stake, they may not be allowed to do so by the Petroleum Ministry.

Pfizer launches anti-smoking drug

Pfizer India today launched an anti-smoking drug Champix.

Champix, a smoking-cessation drug had a global sales of around $1 billion and is currently available in 45 countries.

Pfizer India is launching this drug in 17 cities initially and is priced at Rs 9,500 for a 12- week treatment regime.

Pfizer, the world's largest pharmaceutical company spends more than $7 billion a year ($7.6 billion in 2006) in R&D, and plans to spend a significant portion of this investment in countries like India, China and Singapore in the years ahead.

Reliance Energy plans share buyback

The board of directors of Reliance Energy (REL) will meet on March 5 to consider a proposal for buy back of equity shares. This was announced in a release issued by the company to the BSE today.

Reliance makes another gas discovery

Reliance Industries (RIL), the country’s largest company by market capitalisation, has discovered gas in a new well in its NEC-25 block in the Mahanadi basin off the coast of Orissa.

This is the company's eight discovery in the block, which it had won in the first round of the New Exploration and Licensing Policy (NELP-I) in 1999. The block is reported to have recoverable reserves of around 1.1 trillion cubic feet (tcf) of gas, which the Mukesh Ambani-promoted company hopes to develop at an investment of around $1.13 billion.

The rate of production of gas from the block is expected to be 35-40 million cubic metres per day (mcmd).

The latest discovery in the Mahanadi shallow-water block, named Dhirubhai-40, has been notified to Directorate General of Hydrocarbons (DGH). "RIL is currently evaluating the potential commercial interest of the discovery through additional data collection and analysis," the company said in a statement. Canada-based Niko Resources holds 10% stake in the block.

The NEC-25 block lies to the north of RIL’s D6 block in the Krishna-Godavari block from which the company plans to begin production later this year. At a peak rate, the gas would be produced at 80 mcmd, which is almost equal to the total gas availability in the country. The company is developing the field at an investment of $5.2 billion.

RIL owns 90% stake and Niko 10% in the D6 block, which holds gas reserves of nearly 11.2 tcf. The D-6 block would be RIL’s first producing block in India.

The company had earlier also discovered both oil and gas in an offshore block in the Cauvery basin off Tamil Nadu’s coast.

Reliance currently has stakes in 34 oil and gas blocks in the country, and has made about 34 discoveries (both commercial and non-commercial) in India with a success ratio of almost 60%.

GHCL to bring sourcing under one roof

In an effort of becoming the biggest sourcing company in home textiles and accessories within two years, newly-incorporated GHCL Global Sourcing has set a target of conducting business worth $1 billion (Rs 4,000 crore) in financial year 2008-09.

Set up as a 100 per cent subsidiary of GHCL, the company incorporates its parent's sourcing activities under one roof.

"We have just started operations for GHCL Global Sourcing, which will cater to our overseas and Indian retail chains. To attract better clientele we will be renaming the company," said Sanjay Dalmia, chairman of GHCL.

The incorporation of GHCL Global Sourcing, Dalmia feels, would result in tremendous savings in procurement as well as logistics costs for its front-end companies in the US such as Dan River, Best

Textiles and HW Baker, which cater to direct business segments such as retailers, speciality stores, hospitals and hotels.

Recently, GHCL had announced that its subsidiary Rosebys will be listed on the Indian bourses. Similarly, the company is open to listing the sourcing subsidiary "at an appropriate time".

To begin with, GHCL Global Sourcing will supply merchandise to Rosebys, even as the company expects fresh orders early next quarter.

"We are already on the lookout for new customers and will begin talks with other retail chains in home textiles for sourcing merchandise," Dalmia said.

GHCL has manufacturing facilities in India, Cambodia and Mexico and over a period of time has built up a strong global sourcing competence in India, Pakistan and China.

The company acquired three firms in US namely, Dan River, Best Textiles and HW Baker apart from retail giant Rosebys in the UK.

Alok eyes Rs 1,100 cr exports in FY08

Achieves earnings target despite rupee appreciation.

Alok Industries, the Rs 1,824-crore textile company, plans to ramp up its export earnings. It is targetting revenues of Rs 1,100 crore from the segment this financial year. According to a senior manager, it is eyeing Rs 1,500 crore in FY09.

The company has already achieved its export turnover worth Rs 640.4 crore out of its total turnover of Rs 1,434.4 crore in the first nine months of this financial year, a rise of 66.2 per cent on a year-on-year (y-o-y) basis.

The official, however, did not answer questions pertaining to weakening demand from the key US market and its potential impact on achieving its exports target over the next few quarters.

Despite 11-12 per cent y-o-y appreciation of the rupee, the company has shown a strong growth in its export turnover in the first nine months of FY08.

According to Dilip Jiwrajka, managing director, Alok Industries, "We were able to withstand the impact of a strengthening rupee via expanding sales of higher value products across our product segment, that includes home furnishings, men and women's clothing."

In addition, the company's growth in sales in the European market was derived from their earlier Czech-based acquisition Mileta, which provided them manufacturing and marketing capabilities in the region.

The company's other key export markets are in Latin America. In December 2007 quarter, its operating profit grew 22.3 per cent y-o-y to Rs 134.8 crore, while its net sales rose 14.75 per cent to Rs 550.78 crore.

Meanwhile, in the domestic market, Alok Industries is ramping up its retail network from 20 stores to 125 stores by the end of December 2008.

Its retail store network is branded as H&A. Also, Alok Industries is expecting to bring on stream its terry towel expansion project in Vapi by May 2008, which involves a capital expenditure of Rs 100 crore.

Gati signs deal with Amsterdam-based GLS

Gati has entered into a strategic alliance with Amsterdam-based General Logistics Systems (GLS), one of the three largest parcel service providers in Europe. Gati, which covers 594 out of 604 districts in India, will act as the strategic partner of GLS in India.

GLS will act as a strategic partner for Gati in Europe providing easy access for Gati's customers in Europe.

GLS had reported revenue of 1.6 billion euros for FY2007. GLS handled around 311 million parcels for 222,000 customers in 36 European states through 17,800 vehicles and 32 trans-shipments points, 655 depots and 12,000 employees.

Pfizer FY07 net up over 200% at Rs 340cr

Pfizer today reported a 220% increase in consolidated net profit at Rs 340 crore for the year ended November 30, 2007 when compared with Rs 106.33 crore in FY06.

According to a release issued to the BSE today, total income increased to Rs 1,019.76 crore for the year ended November 30, 2007 from Rs 726.39 crore for the year ended November 30, 2006.

The company, on a stand-alone basis, posted a net profit of Rs 22.06 crore for the quarter ended November 30, 2007 when compared with Rs 17 crore for the quarter ended November 30, 2006. Total income increased from Rs 182.90 crore for the quarter ended November 30, 2006 to Rs 199.66 crore for the quarter ended November 30, 2007.

The company posted a net profit of Rs 338.93 crore for the year ended November 30, 2007 as against Rs 105.73 crore for the year ended November 30, 2006. Total income has increased from Rs 721.88 crore to Rs 1,015.36 crore.

The board has recommended a total dividend of 275% i.e Rs 27.50 per equity share of Rs 10 each for the financial year ended November 30, 2007 including a normal dividend of Rs 12.50 (125%) per share and an additional dividend of Rs 15 (150%) per share in view of the sale of four consumer healthcare brands to Johnson & Johnson.

Dish TV not to issue shares to Indivision

Dish TV has called off plans to issue equity shares and warrants to Indivision India Partners (IIP) because of the change in deal structure desired by IIP.

The board of directors of Dish TV had earlier approved a preferential allotment of 12.5 million equity shares of Re 1 each at Rs 100 per share and 9.62 million warrants, convertible into 9.62 million equity shares at Rs 130 per warrant within 18 months from the date of issue of warrants, to IIP.

"Due to the recent volatility in the stock markets, IIP wanted to drop taking the warrants. The board of Dish TV felt that since the promoters are fully backing the project and the growth of customer acquisition is robust, we should not accept the change in the deal structure," said Jawahar Goel, MD, Dish TV.

Subhash Chandra, chairman, Dish TV, said: "We reiterate our commitment to Dish TV, and are confident of its growth prospects. The promoters have, in the past, infused finds into the business as and when required, and would continue to support in the near future."

Opto Circuits to buy US firm for Rs 280cr

Opto Circuits India has signed a definitive agreement to buy US-based Criticare Systems.

According to a release issued by Opto to the BSE today, the deal is valued at Rs 280 crore ($70 million).

Criticare Systems is in the business of manufacturing vital sign monitors, anesthesia monitors and pulse oximeters, the release added.

Essar Shipping to raise $1 bn

The board of directors of Essar Shipping has approved a proposal to raise up to $1 billion via FCCBs/GDRs to fund existing and upcoming projects.

According to a release issued by the company to the BSE today, the board has also approved a proposal to change the company name from Essar Shipping to Essar Ports & Logistics.

Sical Logistics breaks ground for airport terminal project

Sical Logistics Ltd has initiated work on the Nagpur Sical Gupta Road Terminal with the groundbreaking ceremony at the road terminal site at the Multimodal International Hub Airport at Nagpur (MIHAN).

A special purpose vehicle, Nagpur Sical Gupta Road Terminal Ltd (NSGRTL), comprising of Sical with 51% stake, MADC with 26% stake and Gupta Coal with 23% stake, will build, operate and manage the road terminal.

The total project cost is estimated to be Rs 119.3 crore, with a debt equity ratio of about 1:1. The road terminal will stretch across a 60 hectare plot and have parking facilities for 1,150 vehicles including multi-axle vehicles, warehousing space of 0. 5 million sq ft, 15 hectares of open plots and 45000 sqft of cold storage area.

Southern Iron to merge with JSW Steel

Southern Iron & Steel Company Ltd said that the High Court of Judicature at Mumbai has sanctioned the scheme of amalgamation of Southern Iron & Steel Co. Ltd with JSW Steel Ltd. The Order sanctioning the scheme was pronounced in the Court on Febr uary 22, 2008.

Omaxe to develop theme township in Naya Raipur

Omaxe Ltd has said that the company has emerged the highest bidder and has won the bid from Naya Raipur Development Authority, Chhattisgarh for development of the theme township with 18 Hole Golf Course on over 400 acres at Naya Raipur, the capit al city of Chhattisgarh. The project value is Rs 1200 Crore, which shall include the development of residential and commercial buildings, the golf villas and a hotel.

IRB Infrastructure wins highway project

The National Highways Authority of India (NHAI) has accepted IRB Infrastructure Developers Ltd's price bid for the Surat - Dahisar BOT project involving the six-laning of the existing four-lane Swat - Dahisar section of NH 8 from k.m. 263 to k.m. 502 (an aggregate length of 239 k.m.)

The company is required to confirm its acceptance of the letter of acceptance (LoA) within seven days from the date of issue of the LoA. Thereafter, the company is required to execute the concession agreement for the project within 45 days from the date of issue of the LoA.

HDFC Bank, CBoP merger ratio at 1:29

HDFC Bank today announced the merger ratio of Centurion Bank of Punjab (CBoP) with itself at 1:29.

According to a release issued by HDFC Bank to the BSE today, based on the joint valuation report submitted by Ernst & Young and Dalal & Shah, the board today approved the share swap ratio of 1 equity share of Rs 10 each of HDFC Bank for every 29 equity shares of Re 1 each held in Centurion Bank of Punjab. This share swap ratio is subject to due diligence to be conducted in this regard.

The bank's board observed that in the event of the merger of Centurion Bank of Punjab with HDFC Bank being approved at its meeting on February 28, 2008, it would consider making a preferential offer to its promoter Housing Development Finance Corporation (HDFC) to enable HDFC to maintain its shareholding percentage in the Bank, the release added.

Rel Power announces 3:5 bonus ratio

In an unprecedented move, Anil Ambani Group company Reliance Power will give free bonus shares in the ratio of 3:5 to all its shareholders to compensate the losses they suffered when the company was listed a fortnight ago.

Reliance Power today announced a bonus isse in the ratio of 3:5., i.e three free shares for every five shares held by a shareholder.

The company's board had last Sunday announced its plans to issue bonus shares to all shareholders excluding the promoters.

The company had recently issued shares at Rs 450 while giving a discount Rs 20 a share to retail investors.

Karuturi seeks nod to sell units, raise capital

Karuturi Networks, the Bangalore-based floriculture firm, has sought shareholders’ approval by way of postal ballot to empower company’s board of directors to lease, sell or dispose off of its various units — agriculture, floriculture, retail flower and ISP business.

The company has also sought approval to increase its borrowing limit upto Rs 1,500 crore and change its name from ‘Karuturi Networks Ltd’ to ‘Karuturi Global Ltd’.

Karuturi Networks, in a release, to exchanges, has said: “Leasing, selling or disposing off the business units is considered in the best interest of the company and that the board be empowered to take such other steps as may be deemed expedient and necessary, in the best interest of the company.”

In addition to these resolutions, the authorised share capital of the company comprising of 60 million equity shares aggregating to Rs 60 crore with a face value of Rs 10 is being sub-divided into 600 million equity shares of Re 1 each aggregating to Rs 60 crore and consequential amendments in the Memorandum and Articles of Association of the company.

The company, early this year, acquired Africa-based rose exporter for around $50 million.

Nalco`s Rs 9K cr project gets Andhra nod

The decks have been cleared for National Aluminium Company’s (Nalco) 1.5 million tonne aluminum refinery and a 2.57 lakh tonne smelter in Andhra Pradesh.

While inaugurating a three -day seminar-cum-exhibition titled Aluminium India 2008, Minister of State for Mines Subbarami Reddy said that the state government has cleared the project.

The Rs 9,000 crore project was struggling to progress in the last two years due to a row between Andhra Pradesh Mineral Development Corporation and Nalco on the issue of bauxite mining leases.

Now, according to Reddy, the Andhra Pradesh government has offered two mining blocks to Nalco, one each in Gudden and R K Konda with a combined reserves of 80 million tonnes.

The state government has also assured the company that additional mining leases would be granted if it meets the required parameters and work under suitable environment.

The company is likely to start activities on the project to commence commercial production in one year.

Glaxo ready to roll out four drugs in 4 months

GSK Pharmaceuticals, the Indian arm of the global drug major GlaxoSmithKline PLC, plans to launch four drugs in India within the second quarter of calendar year 2008.

This will include two in-licensed drugs - Rotarix, a rotavirus vaccine, and breast cancer drug Tykerb from its parent stable.

“We are in the process of in licensing two major drugs in the cardiovascular and critical care segments for the domestic market. We are not in a position to give more details as the deals are yet to be closed,” said Hasit Joshipura, managing director, GSK Pharmaceuticals.

He said the company would launch Rotarix, which helps prevent the rotavirus diseases. Rotavirus causes diarrhoea in infants.

A group of US Food and Drug Administration (USFDA) vaccine experts cleared the vaccine yesterday. USFDA will decide on approval for the drug in the US by April 3.

Tykerb (lapatinib), the other drug slated for launch in India soon, is indicated for some forms of breast cancer and was approved by USFDA in March last year. Globally, Tykerb is expected to post sales of over $1 billion by 2010, according to analysts.

GSK also plans to launch Cervarix, GSK’s much touted cervical cancer vaccine, by next year in India. The vaccine provides immunisation against the human papilloma virus (HPV).

“Another drug that is in the pipeline is a streptococcus pneumonia vaccine to be launched by 2010,” said Hasit Joshipura.

He said vaccines currently contribute about 10 per cent to GSK’s business and with the new launches, the business would grow substantially. The firm also hopes to launch more biological products from the parent company’s stable, he said.

GSK is currently conducting about 14 clinical trials in India as part of its global program. “India will continue to be a major research and development centre for GSK’s global activities,” Joshipura said.

Renault, Nissan seal JV for Rs 4,500 cr TN unit

Sign MoU with state govt for greenfield facility.

Months after Mahindra & Mahindra (M&M) exited a joint venture with Renault and Nissan Motor, the French and Japanese auto firms have got their car project back on the road, signing an MoU today with the Tamil Nadu government for a greenfield facility near Chennai.

Renault and Nissan will invest Rs 4,500 crore for the 50:50 joint venture unit, which is planned on 670 acres at Oragadam, near Chennai. The first car is expected to roll out from here in 2010.

The unit will have a capacity of 400,000 vehicles per annum. Most of this will be for the domestic market. Exports will commence four months after production starts.

Both companies refrained from giving any details about the vehicles they will make at the facility, but it is widely believed that Renault plans to roll out its small car together with Bajaj from here.

The MoU was signed with state government officials by Patrick Pelata, executive vice-president (products, plan and programmes), Renault, and Carlos Tavares, executive vice-president (corporate and product planning), Nissan Motor.

Nissan and Renault executives said in separate statements that the facility will produce compact cars for Nissan in line with Nissan’s goal to start off with higher volumes.

The plant will employ between 3,000 and 4,000 people initially. Both companies will have separate assembly lines and powertrain assemblies.

The alliance will also open the Renault-Nissan Technical and Business Centre India (RNTBCI) in Chennai by March. It will focus on product and manufacturing R&D, as well as purchase planning and design for the Renault-Nissan joint venture.

“Nissan is proud to bring its skills and passion to India and we will look for suppliers who share that passion,” Tavares said.

The Renault-Nissan alliance, launched in 1999, has grown from strength to strength, grossing combined sales of 6 million cars in 2005. Renault holds a 44.4 per cent stake in Nissan, but the companies have remained separate, autonomous units.

Nissan’s Kimura to head operations

NISSAN Motor has said that Shohei Kimura, now the company’s corporate vice-president, will head the new Nissan-Renault facility near Chennai.

Kimura will relocate to Chennai in a few months to take charge as managing director and CEO of the Chennai operations.

Bajaj Hindusthan`s Rs 150 cr stock seized

As the company failed to pay last season's cane price to farmers.

The Uttar Pradesh government has seized stocks from three sugar mills owned by Bajaj Hindusthan, the country’s largest sugar producer, for non-payment of last season’s sugarcane price to farmers.

Of Rs 580 crore that sugar mills in the state owe cane-growers for the last season (October-September), Bajaj accounts for almost Rs 300 crore.

The three mills from which stocks have been seized are located in Kinauni in the Meerut district, Gola (Lakhimpur Kheri) and Barkheda (Pilibhit). The stocks in these units are valued at Rs 50 crore each.

“The company cannot sell any quantity from these three mills. The district magistrates in each of the three districts will sell these stocks and use the money to clear the company’s dues,” said a state official.

This action by the state government follows the issue of recovery certificates (RC) against these three units last month. Bajaj runs 14 sugar mills in the state. This is the first time the company’s stocks have been seized.

A company official declined to comment. Bajaj Hindusthan’s share price at the Bombay Stock Exchange today closed at Rs 259.40, down 5.26 per cent from the previous close.

The seizure follows several court order. In an order on December 19, the Allahabad High Court had quashed the state’s 2006-07 state advised price (SAP) of Rs 125 to Rs 130 a quintal. The state government was directed to reassess the SAP “backed by reasons giving adequate outlines of norms, criteria or guidelines”.

Pending the new SAP, mills were obliged to pay only the Centre’s statutory minimum price (SMP), which is in the range of Rs 85 to Rs 90 per quintal for 2006-07.

Following this, Bajaj Hindusthan had adjusted its balance sheet using SMP instead of SAP for accounting purposes and reported a net profit of Rs 45.65 crore for the year ended September 30, 2007.

However, the Supreme Court last month passed a stay order on the high court’s order quashing the 2006-07 SAP, after which the state government issued RCs against these units.

The Supreme Court, in its hearing yesterday, asked the state government not to take coercive action against the state mills. “We will not take further action against the mills, but the status quo will be maintained,” the official added.

Arrears to cane farmers have grown principally because of record sugar production in the 2006-07 season that saw prices crash about 35 per cent and impacted sugar companies’ profitability.

The six-month-long export ban imposed by the government in June 2006 to control inflation rate depressed domestic sugar prices further. This led to a slump in the sugar cycle and leading companies began incurring huge losses and, therefore, delayed paying farmers their dues.

The UP sugar mills also delayed their crushing by a month in the current season owing to their differences with the state government over sugarcane prices.

The delay had forced many farmers to dump their sugarcane at jaggery units at throwaway prices in a bid to vacate fields for sowing wheat. Mills agreed to run only after the high court intervened and announced an interim cane price of Rs 110 a quintal against the SAP of Rs 125-130.

HDFC Bank to buy CBoP in all-stock deal

HDFC Bank, India’s third largest bank, is all set to buy Centurion Bank of Punjab in an all-stock deal.

The boards of both the banks will meet on Saturday to finalise the contours of the deal, which will be the biggest banking merger in India.

The banks’ top brass have been involved in marathon meetings in the past two days to work out the details of the proposed merger.

The swap ratio will be decided later. Initial calculations suggest that a Centurion shareholder will get one share of HDFC Bank for every 20 shares, according to sources familiar with the development.

However, the exact ratio will be arrived at after a consensus, said an HDFC executive. Post the deal, HDFC Bank will get around 400 branches and thus surpass ICICI Bank in terms of branch presence.

More importantly, the bank’s presence in the north and south will receive a boost. Centurion has nearly 170 branches in the north and around 140 branches in the south, whereas HDFC Bank has 250 branches in the north and 150 in southern India.

“We will also acquire a strong small and medium enterprises portfolio from Centurion,” the executive added. HDFC Bank has almost 10 million customers compared with Centurion’s 2.5 million.

The proposed merger has been spearheaded by Housing and Development Finance Corporation chairman Deepak Parekh, Centurion Bank of Punjab chairman Rana Talwar and Ambit CEO Ashok Wadhwa, said a senior HDFC Bank executive.

The shares of Centurion, which rose sharply yesterday due to the merger buzz, declined today by 1.14 per cent to end at Rs 56.40 on the Bombay Stock Exchange. The HDFC Bank scrip closed lower by 4.40 per cent to Rs 1474.95.

Sakthi Sugars subsidiary buys Swedish firm

Sakthi Sugars Ltd's European subsidiary, Orlandofin BV, has acquired a Swedish Company 'Arvika Gjuteri AB'. It has facilities to produce 28,000 MTs per annum of castings for buses, trucks, and heavy off-road vehicles, and a machine shop.

PNB, Vijaya may exit Principal JVs

Contract skewed in favour of US major cited reason for parting ways.

Punjab National Bank (PNB) and Vijaya Bank have begun the process of exiting their joint ventures (JVs) with the US-based Principal Financial Group.

According to the agreement signed by the shareholders when forming the JV companies, the first right of refusal would be exercised by the shareholders if any partner decides to exit.

That means any partner who decides to exit should first offer his stake to the other shareholders in the JVs. If the current shareholders do not want to buy out, only then can the stake be offered to outside parties.

“We (PNB) are well protected. The agreements have several provisions to protect our interests. We have sent letters to all the shareholders, expressing our intent to exit the insurance broking, life insurance and financial planning company along with an offer to buy out our stake. We have not decided to exit from the asset management company,” said a PNB official, who did not want to be identified. Vijaya Bank officials declined to comment.

According to a banking source, since the joint venture companies are not listed, the two banks would not get the market value for their stakes, compelling them to sell at a discount.

“Whether the other shareholders will agree to buy or not or whether they will approve the new partners is too premature to talk,” said the PNB official.

An industry source said, “The entire contract is in favour of Principal and now the banks want to unwind it. Both the banks may end up selling their stakes to Principal Financial. However, after the banks exit, it will be a loss-making proposition to Principal as the customer base is from the banks.”

PNB and Vijaya Bank have three functional joint ventures with Principal Financial - Principal PNB Asset Management Company, PNB Principal Financial Planners and Principal PNB Insurance Advisory Company, an insurance broking firm.

The equity holding is similar in PNB Principal Financial Planners and Principal PNB Asset Management, where PNB owns 30 per cent stake, Principal 65 per cent stake and Vijaya Bank the remaining 5 per cent.

However, in the Principal PNB Insurance Advisory, PNB holds 30 per cent equity, with Principal holding 26 per cent, Berger Paints 25 per cent and Vijaya Bank 19 per cent.

In 2004, the plans of PNB, Vijaya Bank, Principal Financial and Berger Paints to form a life insurance company did not materialise as Principal Financial changed its plans and decided to offer pension products in India. This was in sync with their global strategy to concentrate on the pensions business.

Due to their differences, the shareholders did not revert to the Insurance Regulatory and Development Authority (Irda), which had raised queries while screening their “R1” (initial) application.

Principal Financial is the largest pension company across the world and is the seventh largest life insurer in the US.

The two banks had formed Principal PNB Insurance Advisory Company in 2005. According to insurance norms, a shareholder in an insurance broking company cannot earn profit as a corporate agent.

The issues became severe when Irda sent a letter last year barring the employees of the two banks from selling insurance policies to the banks’ customers as sub-brokers. In 2004, Irda had raised objections to PNB and Vijaya Bank acting as corporate agents for National Insurance Company.

A few months ago, Vijaya Bank Chairman Prakash P Mallya had announced his intention of exiting all the JVs and also the proposed life insurance venture, as the stakes did not or would not make any significant additions to its revenues.

Avestha, Cipla plan Rs 600 cr expansion

Avesta Biotherapeutics and Research (ABRPL), the 50:50 joint venture between Cipla group company Meditab Specialities and Bangalore-based Avestha Gengraine Technologies (Avesthagen), plans to invest over Rs 600 crore to create facilities at Bangalore and Hyderabad in three phases to manufacture biotech drugs.

The four-year-old joint venture is developing 11 biotech drugs, mainly cancer medications. These include biosimilars for cancer (copycat versions of existing biotech drugs), which are not currently available in the market.

ABRPL hopes to launch the first product by the end of 2009, Villoo Morawala Patell, chairman and managing director, Avesthagen, told Business Standard.

"We are setting up a Rs 150-crore 200 litre manufacturing facility at Bangalore and this will be commissioned by June. Another facility will be built at Bangalore within 2-3 years at an investment of Rs 300 crore and with a capacity of about 2,500 litre " she said today on the sidelines of a press meet in Mumbai to launch seven new preventive healthcare food supplements.

ABRPL is also planning to set up a larger facility of about 5,000-litre capacity at Shapoorji Pallonji Biotech Park at Hyderabad in the third phase.

"We have received the pre-clinical approval from the review committee on genetic manipulation of the Department of Biotechnology for the first product and it will move to the clinical trial stage," added Patell.

Both Cipla and Avesthagen would share the expenditure as per the joint venture agreement, she said.

A few months back, ABPRL had acquired Siegfried Biologics GmbH, a 10-year-old company based in Berlin with experience in the development of biologics (biotech drugs) from cell line generation, upstream process development and for scaling up manufacturing to global standards.

Samaresh Parida, chief operating officer of Avesthagen, said the company would approach capital markets by the last quarter of 2008 with an initial public offering (IPO) to fund its expansion plans.

Avesthagen today launched seven new botanical 'bioactives' under the Avesta brand, aimed at promoting wellness through the prevention of specific degenerative conditions such as diabetes, bone loss and cardiovascular diseases. The products will be available as dietary supplements, cereal bars and crackers.

Avesthagen uses two of its patented technologies, Adept and MetaGrid, to develop bioactives which can be used in various food products.

The products include Aspand and Teestar to control blood sugar, Cincata to maintain blood glucose levels, Bonapure for promoting bone growth, Phytosse for inhibiting cartilage degradation, Smartchol to control the cholesterol levels and Xanomax with antioxidant (substances that protect cells against the effects of free radicals) properties.

The company will market the products through the outlets of its health food arm, Good Earth, which it acquired two years ago, and through pharmacies.

Avesthagen also plans to launch the products in the international market and conduct human trials to prove their efficacy, said company sources.

Kalyani to have Rs 6,500-cr unit in Bengal

Integrated steel, power project will have capacity of 1 million tonne and 500 mw respectively.

Kalyani Steels, a part of the Rs 8,000 crore Kalyani group that has diverse businesses such as engineering steel, forgings and auto components, today signed a memorandum of understanding (MoU) with state industry and minerals officials for a Rs 6,500 crore integrated steel and power project in West Bengal.

The steel plant will have a capacity of one million tonnes and the power plant is planned for 500 mw, along with downstream operations.

The agreement was signed with the West Bengal Industrial Development Corporation (WBIDC) and West Bengal Mineral Development & Trading Corporation (WBMDTC).

Amit B Kalyani, executive director, Kalyani Steels, said that the plant would essentially produce long products. For the downstream project, Kalyani group’s flagship company Bharat Forge may look at setting up a unit.

Kalyani said the group deliberated with the Bengal investment issue for a year and a half, before reaching an understanding on the nature of the project.

A detailed project report would be ready within a year. “We will definitely work within a shorter timeframe,” Kalyani said.

The project will be completed within 36 to 45 months from the commencement of work.

The next step would be to identify land for the project.

West Bengal minister for commerce and industry, Nirupam Sen, said, the company would be shown land in West Medinipur, near Salboni where JSW has a mega steel plant. Durgapur could be an alternative location.

The Bengal facility will be the third for the Kalyanis. The group has integrated steel plants at Ginigera in Karnataka and Tadipatri in Andhra Pradesh.

The group also has bigger plans for West Bengal. Kalyani said the group is in discussions with WBIDC for a high-end manufacturing cluster.

The minister said several companies were looking to invest in West Bengal as they have realised that a lot of investment is happening in the metals, metallurgy and automobile space in the state.

He said a high-end manufacturing park would also be set up and the association with the Kalyani group would help the state government attract other investors.

The Kalyani group was already setting up a similar project, though larger in size, in Maharashtra. Kalyani said the Maharashtra project would be completed in three years.

Also, Kalyani Thermal Systems, another group company, will make forgings for the Nano, the Rs 1 lakh car from the Tatas that is being manufactured at Singur in West Bengal. The company could look at setting up a unit in the state.