Growth in credit demand from industries slowed down to 12.2% in February 2014

The growth in credit demand from industries slowed down to 12.2% to 19,970 crore in the month of February as compared to 18.9% growth in the same month of previous year. Prevailing economic slowdown coupled with political uncertainty associated with an election year have made corporates reluctant to launch any greenfield projects, resulting in declining credit demand from industrial sector. Slow credit flow to industrial sector has been adversely impacting domestic banks which are now pushing retail credit to boost credit growth. High borrowing cost and delays in environmental clearances for industrial and infrastructure projects has forced the big infrastructure players to defer their investment decisions. Indian large infrastructure companies such as HCC, Lanco and Gammon India are struggling with high debt and have restructured them to avoid loan default. The gross non-performing assets (NPAs) of banks would rise to 4.2-4.4% by March, from 4.1% reported in December 2013. Rising NPA levels have become an issue for growth of the banking industry, which is the most dominant segment of the financial sector and plays an important role in the economic development of the country. Banks help to channel savings into investments and encourage economic growth by allocating savings to investments that have potential to yield higher returns. Meanwhile, risk appetite of industrial firms is likely to improve after the formation of new government, which could provide a boost to credit growth.

Sun Pharma to acquire Ranbaxy in $4 billion deal

Sun Pharmaceutical Industries Ltd is to acquire 100 per cent of Ranbaxy Laboratories Ltd in an all-stock transaction, the companies announced on Monday.Their combination would create India’s largest pharmaceutical company and the world’s fifth-largest speciality and generics drugs company, according to a statement from Ranbaxy.The combined entity’s revenues are estimated at $4.2 billion.Ranbaxy shareholders will receive 0.8 shares in Sun Pharma for each Ranbaxy share.

Japan’s pharmaceutical Daiichi Sankyo Co, which has a majority stake in Ranbaxy, would become a significant shareholder of Sun Pharma after the transaction.Daiichi would also have the right to nominate one director to Sun Pharma’s board of directors.Ranbaxy, one of India’s largest drugs majors, has faced a string of problems recently with US drugs authorities.In January, the US Food and Drug Administration banned imports from a Ranbaxy unit in India due to quality control violations.In May 2013, an US subsidiary had to pay the drugs administrator $500 million in penalties for sale of below-quality drugs.

Crompton Greaves up 2% on USD 29 mn order in Indonesia

Shares of  Crompton Greaves jumped over 2 percent intraday on Friday as its power transformer plant at Indonesia bagged order worth USD 29 million. As part of the order, it will supply extra high voltage transformers for PT PLN‘s Indonesian electricity transmission network. “The order involves supply of 500kV, 275kV and 150kV power transformers, which will be installed across PT PLN’s transmission network in Java and Sumatra islands,” the company said.  The Indonesian plant will cater to markets such as Australia, New Zealand, Malaysia and South America. PT PLN (Perusahaan Listrik Negara) is the sole Indonesian government-owned corporation in electricity generation, transmission and distribution in Indonesia. The company informs that manufacturing of the new orders will done at its factory located in Bogor, Indonesia. The facility is equipped to design, manufacture and test transformers up to 550kV class locally in Indonesia.

Internal factors play larger role in dragging India’s growth: IMF

The International Monetary Fund (IMF) on Thursday reiterated that internal factors played a much larger role in pulling down India's economic growth, which slumped to a decade-low level of 4.5% in 2012-13, than external ones. The international organization in its ‘World Economic Outlook’ rather pointed that pullback in growth for some emerging market economies since 2012 was mostly attributable to internal factors for relatively large or closed economies such as China, India and Indonesia. The WEO chapter on emerging economies highlighted that in case of India, internal factors reduced growth from 2011 until the third quarter of 2012, but their contribution increased since late 2012. Also, giving credence to the argument that UPA-2 hampered India’s growth story, IMF underscored that the United Progressive Alliance’s rule during the last five years has been marked by multitude of scams, delay in decision making, resulting in a policy paralysis. India's economic growth, which touched 8.9% in 2010-11 slowed down to 6.7% in the following year and touched a decade-low of 4.5% in 2012-13. As for the 2013-14, the Central Statistics Office (CSO) has pegged it at 4.9%. However, as per the projection of ADB and RBI, the growth in the current fiscal is likely to increase to 5.5%.

Currency trading turnover on USE falls 96% in 2 days

Turnover on the currency futures platform of the United Stock Exchange tumbled sharply in the last two days as the exchange gears up to sort out various issues.The exchange, which recorded an average daily turnover of ₹3,691 crore in March, saw turnover plunge 96 per cent to ₹146 crore on Wednesday. It dipped further to ₹145 crore on Thursday.Arindam Saha, Director (business development), USE, said the exchange had been planning to upgrade technology since December, but it was postponed twice and it would now be rolled out in June.“So participants may have turned a little sceptical and they probably want to wait and watch. We also have other issues. We do not have a clearing corporation of our own. The exchange is working on the problematic areas and we expect things to be normal soon,” he said.

Turnover on other currency trading platforms of the BSE, the NSE and the MCX Stock Exchange has also fallen, but not to the extent of the USE.On Thursday, turnover at the BSE fell to ₹3,867 crore, down from ₹4,586 crore registered on Wednesday. The exchange recorded an average daily turnover of ₹5,759 crore in March.Similarly, on the NSE, the largest among currency futures exchanges, turnover was down 7 per cent at ₹9,117 crore, on Thursday. In March, it registered an average daily turnover of ₹9,855 crore.

In contrast, MCX-SE, rattled by the ₹5,600-crore scam in its subsidiary National Spot Exchange, saw its turnover stabilise at ₹3,324 crore against ₹3,039 crore on Wednesday. However, the turnover was lower compared to the March average of ₹4,394 crore.

NMDC’s capex in 2013-14 higher at Rs 2,518 cr

NMDC has incurred its highest capital investment in a single year at Rs 2,518 crore in 2013-14 on various expansions and modernisation plans.“Pursuing its capital investment schemes, as against an envisaged target of Rs 2,720 crore for 2013—14, the company has incurred Rs 2,518 crore for its various expansion and diversification projects,” NMDC said in a statement.The company spent Rs 1,607 crore capital investment in the previous fiscal. In current fiscal, it plans to spend Rs 4,345 crore.

NMDC is developing two new mines — Deposit—11B iron ore project and Kumaraswamy iron ore mine — as part of its ongoing expansion programme.It is also setting up a three million tonnes per annum (mtpa) greenfield steel plant at Nagarnar in Chhattisgarh. All are at various stages of execution.

Meanwhile, production of the company during 2013—14 also touched a record at 30.18 mtpa, 11 per cent more than the previous year. Sales also grew by 16 per cent to 30.50 mtpa.The production of diamonds from the Panna mine in Madhya Pradesh also registered a 17 per cent growth at 37,047 carats in 2013—14 over 31,533 carats a year ago.

Torrent Pharma up 4% as PE Chryscap picks up 3% stake in co

Investors are buying shares of  Torrent Pharmaceuticals after a media report suggests that private equity firm ChrysCapital has invested around USD 40 million in company. The stock gained as much as 4 percent intraday Thursday. "ChrysCapital, which has over USD 2.5 billion assets under management in India, will hold the largest non-promoter stake of around 3 percent in the drug firm," report said quoting unnamed sources. The promoter and promoter group held 71.51 percent stake in the company as of December 2013 while in non-promoter group, Lavender Investments and Franklin Templeton Investment Funds held 3.31 percent equity shareholding. Torrent is a dominant player in the therapeutic areas of cardiovascular (CV), central nervous system (CNS), gastro-intestinal, diabetology, anti-infectives and pain management.

PE firms invest $2,273 mn across 89 deals in Jan-March quarter: Report

 

Private equity firms in India invested about $2,273 million across 89 deals during January-March quarter.According to Venture Intelligence, a research service focused on private company financials, transactions and valuations in India, the investments were almost twice of what was invested in the same period last year.

During January-March quarter last year, $1,179 million was invested across 103 transactions.These figures do not include PE investments made in the real estate sector, the report said, adding that there were five PE investments worth $100 million or more during the first quarter of 2014, compared to just one such transaction in the same period last year.

The top two PE transactions during January-March period this year involve Canadian and Middle Eastern investors teaming up to invest into infrastructure operating companies in India.Other major transactions were from the IT & ITES industry, including the $260-million buyout of Aditya Birla Group’s BPO unit Minacs by CX Partners and Capital Square Partners; the $143 million raised by e-commerce firm Snapdeal.com and General Atlantic’s $100-million commitment to healthcare software firm Citius IT.eBay again teamed up with existing PE/VC investors to provide $90 million in follow-on financing to online classified services firm Quikr.

While IT & ITES companies accounted for $895 million at the top slot, energy and engineering & construction companies vaulted to the second and third favourite positions, attracting $414 million and $324 million, respectively, it added.

IDFC soars 9% as it gears up to start banking operations

Shares of  IDFC  soared 9 percent intraday on Thursday as it got Reserve Bank of India’s in-principle nod for a bank licence . Among a list of 25 hopefuls, the infrastructure finance company IDFC and Kolkata-based microfinance firm Bandhan obtained the much-eyed licence.

 As per the norms, the “in-principle” approval is valid for a period of 18 months during which the applicant has to comply with the requirements under the RBI guidelines. Speaking to CNBC-TV18 , IDFC Executive Chairman Rajiv Lall said IDFC already has 21 percent Tier-1 capital and he believes it ‘will be the best capitalised start-up bank in India’. 

The RBI originally received 27 applications in July 2013, after which Tata Sons and Videocon Group withdrew, leaving 25 contenders in the fray. Nitin Kumar, banking & financials analyst, Quant Capital feels the company may now see a reduction in FII shareholding and its ROE (return on equity) may reduce in the days to come. “The fact that only two candidates have got the license and IDFC has been one of the chosen one, that should lead to more buying. However, on a longer-term basis, over the next 18 months we may see further reduction in Foreign Institutional Investors (FIIs) holdings in the stock,” he adds.

Commercial vehicle sales drop sharply in March

Commercial vehicle sales dropped steeply in March 2014.

Tata Motors' sales of commercial vehicles dropped 41 per cent, while Ashok Leyland reported a 27 per cent drop in commercial vehicle sales when compared to the same period in the previous year.

For both companies, the most affected segment was the light commercial vehicles (LCVs). Ashok Leyland reported a 41 per cent drop with sales of 2,563 LCVs, while Tata Motors dropped more steeply by 50 per cent to 20,938 LCVs.

For the full fiscal, Tata Motors sold 1,10,231 medium and heavy commercial vehicles and 2,68,117 light commercial vehicles. Sales were down by about 30 per cent for the full year.

During the same period, Ashok Leyland sold 60,437 medium and heavy commercial vehicles and 28,995 light commercial vehicles. Sales for the full fiscal were down 22 per cent.