1. K E Y N O T E
Keynote Capitals Institutional Research - Industry Monitor October 10, 2011
Industries covered
• Banks
• Cement
• Infrastructure
• IT
• Media & Entertainment
Executive Summary
Moody's downgrade SBI ratings, spoils stock market sentiment
Global ratings firm Moody's downgraded its rating of SBI's financial strength by one notch to 'D+' on
account of the lender's low Tier-I capital ratio and deteriorating asset quality. An unexpected ratings
downgrade of SBI on October 4, 2011 trumped stock markets, already battered by worries of a debt
default by Greece and its impact on the global financial system. The Sensex fell 286.59 points, or
1.77%, to end at 15,864.86 while Nifty fell 77.35 points, or 1.60%, and settled at 4772.15. The BSE's
bank index, Bankex fell 3.1% with SBI dipping 4.1% to `1,787.
Mixed trend for cement sales in September
The cement manufacturers have started increasing prices across the country after the monsoons,
failing to bring cheer to festival-season monthly production and despatch numbers. UltraTech Cement
posted lower sales and production numbers last month. The company’s despatches for September
2011 stood at 2.76mn tonnes, as compared to 2.85mn tonnes during the corresponding period last
year - a 3.16% drop. Dispatches of Ambuja Cements were flat as the company managed to sell its
earlier inventory, thereby despatching 1.55mn tonnes as compared to 1.52mn tonnes last year.
Jaiprakash Associates and ACC bucked the trends. Dispatches of Jaiprakash Associates increased to
1.35mn tonnes, a jump of 17%. Its new capacities have started trial production, thus helping it post
higher numbers. The entity is going to increase its cement capacity to 35mn tonne by the end of this
financial year. ACC’s despatches increased from 1.58mn tonnes in the corresponding quarter last
year -- to 1.73mn tonne. That is a jump of 9.5%.
Infra Sector Weekly Update
The Sector has underperformed 0.76%, 0.48%, -1.01% and 0.51% over Sensex, BSE500, Nifty and
CNX500 respectively. However, RPower is the top performer by 6.87%, 7.16%, 6.91% and 7.42%
whereas JP Infra was the worst performer by 8.04%, 7.77%, 8.81% and 8.31% over Sensex,
BSE500, Nifty and CNX500 respectively.
IT index down, ahead of result season
BSE IT index closed at 5241.28, down 0.64% during the last week vis-à-vis its previous week. The
looser on the BSE IT index were Infosys, Wipro and HCL tech, down 1.06%, 2.03% and 0.33%,
respectively. TCS was the only gainer in the BSE IT index. Infosys is going to announce its 2nd
Quarter result on Oct 12, 2011. It is expected that due to uncertainty in the global economic
environment could have some impact on the Indian IT companies but on the other hand Rupee
depreciation may help companies to maintain its margins going forward.
Cabinet approves proposal for amendment in uplinking / downlinking policy for TV channels
Union Cabinet has approved the proposal of the Ministry of Information and Broadcasting to recast
the existing ‘Policy Guidelines for Uplinking and Downlinking of TV channels’ was the main highlight
of the Media & Entertainment (M&E) Industry. The other highlights of the Industry are, CBI looks into
spectrum to Telecom companies in DTH business, PVR to set up six entertainment cities with an
investment of `580Cr, UTV Software to acquire 30% stake in Indiagames, Dish TV announces range
of their festive season packs and NDTV and Kasturi & Sons plans to sell respective stake in
Metronation Chennai Television.

2. K E Y N O T E
Weightages in major indices
Sectors Sensex Nifty BSE 500 CNX 500
Banks 23.91% 24.13% 23.41% 22.35%
Cement 0.64% 1.83% 1.97% 1.97%
Infrastructure 8.96% 9.03% 7.78% 7.83%
Information & Technology 13.90% 12.44% 9.60% 9.60%
Media & Entertainment 0.79% 0.79%
Banking Industry Monitor
Banking Industry and its contribution to Indian equities
Banking and other Finance firms together have the highest weightage in the Sensex and BSE 500
with 23.91% and 23.41%, respectively. The major players in BANKEX index are the private banks
namely ICICI Bank (27.61%), which is the second largest bank in India, and HDFC Bank (24.41%).
Other banks include SBI (14.55%), Axis Bank (8.02%) and Kotak Bank (5.27%). The sector’s
weightage in CNX Nifty is 24.13% and in CNX 500 is 22.35%.
Moody's downgrade puts SBI on par with its peers
Global ratings firm Moody's on October 4, 2011 downgraded its credit rating of the country's largest
lender State Bank of India (SBI) on concerns over its asset quality and a weak capital base amid
rising interest rates. The bank's financial strength rating (BFSR), or stand-alone rating, is downgraded
to D+ from C- .This is an investment grade rating with a stable outlook. While the rating for the bank's
senior debt or secured debt has not changed, the rating for hybrid debt or unsecured debt has been
downgraded. This means that the bank may have to pay more for unsecured borrowings. Following
this rating action, SBI's rating will now be on par with that of its public sector peers. However, the
rating action assumes systemic significance, given the bank accounts for about 18% of banking
business in India.
The government has asked SBI to give a report on the reasons behind the downgrade by global
ratings firm Moody's. "D+ maps to Baa3 which is still investment grade. Bank of Baroda, Punjab
National Bank, Bank of India are also at D+. We were the only exception so far. The present rating of
SBI is same as government of India.'' said SBI Chairman, Pratip Chaudhuri.
Mr. Chaudhuri also said that SBI’s rights issue will restore the bank's rating. According to Moody's if
SBI's proposed `23,000Cr rights issue goes through, the Tier-I, or the core capital ratio, would go up
to approximately 9.30%. However, if the capital is deployed for loan growth, assuming 15% p.a. for
the next three fiscal years, then it will cause this ratio to fall below 8%, thereby necessitating another
capital exercise.
Government set to provide `8Cr to SBI
SBI has been seeking to raise `20,000Cr via a rights issue and given the government's holding of
over 59%, its share in the fund raising would have amounted to around `12,000Cr. The finance
ministry was, however, reluctant to part with funds during the current financial year due to the tight
fiscal situation. Besides, it said that the bank only needed funds in 2013-14, especially when business
was slowing down due to weak global economic environment. After waiting for over three years, the
government has finally relented, although partially, and is likely to provide a `8,000Cr lifeline to SBI.
This will enable the country's largest lender to strengthen its capital base and push for rapid
expansion of its loan book.
The need for providing immediate funding to SBI has also gained momentum as the bank's Tier-I
capital adequacy ratio is estimated at 7.6% compared to the 8% benchmark for government banks.
Even at the existing capital adequacy ratio, SBI is above the regulatory requirement. The bank's
capital base was eroded as it provided funds for bad debts as well as meeting pension requirements.

3. K E Y N O T E
Dena Bank further reduces interest rates on home, auto loans by 25 bps under festive offer
State-run Dena Bank has further reduced the interest rates on new housing loans and car loans by 25
basis points in the floating rate category, as a part of the festival offer. The benefit under festival offer
will be effective from October 10, 2011 to December 31, 2011. For auto loans up to three years, its
interest rate is 13.25% and for those above three years, it is 13.75%, the official said, adding that the
25 bps discount will be applicable on these rates.
Dena Bank's base rate stands at 10.70%. A bank official said the rebate depends on the quantum and
tenure of the loan. Its prevailing lending rate varies from 11.20% - 12.75% in case of floating home
loans, while for the fixed rate loans it varies from 11.50% - 12.75%.
SBI all set to meet its target in UP, much before the deadline
The State Bank of India (SBI), Lucknow Circle would be achieving 100% financial inclusion in districts
and villages entrusted to it by 15 November, 2011 were the initial target of was covering 1408 villages
by March 2012 but the deadline was later preponed to December 2011. "We have already covered
900 odd villages and are hopeful of providing banking services in the remaining villages allotted to us
by 15 November, well before the deadline approaches" said Chief General Manager, SBI, Lucknow
Circle, Abhay Kumar Singh. He also said that while brick and mortar branches are being opened
wherever viable in semi urban and rural areas, they are also deputing bank correspondents in all
villages, which have a population of more than 2,000 people. Besides about 35 bank branches would
also be opened in semi urban areas this year.
Banks want RBI to keep rates steady
The meeting on October 4, 2011 of the Governor of the RBI, D Subbarao with several bank CEOs
made out a strong case for a pause on the rate action front saying that another rate increase at this
juncture would hurt not only industry but also the business of banks. Indian banks have told RBI which
has raised rates 13 times since February 2010 to cool the inflation, to change course and keep
interest rates steady as they fear asset quality will be further impaired with high interest rates and a
slowdown in growth. Banks are struggling to boost loan growth and also to protect their margins with
the level of bad loans on the rise.
The RBI will review its monetary policy in the last week of October.
Canara Bank sets up base for Gulf operations in Bahrain
Canara Bank has launched a wholesale branch in Bahrain, which is likely to become a stepping stone
for the bank's operations in the Gulf Cooperation Council (GCC) region. The bank will offer a range of
products for Indian corporations and the new branch will also be the base for its expansion plans in
the GCC region comprising Qatar, Bahrain, Kuwait, the UAE, Saudi Arabia and Oman a Bahrain
Economic Development Board (EDB). "I am delighted that Canara Bank has chosen Bahrain as the
location from which to access the trillion dollar Gulf market and the wider Middle East," said Shaikh
Mohammed bin Essa Al-Khalifa, the Chief Executive of the Bahrain EDB.

4. K E Y N O T E
Cement Industry Monitor
CREDAI urges CCI to probe artificial shortage of cement
The apex body for realty sector, CREDAI, today said it has approached Competition Commission of
India (CCI) seeking enquiry against artificial shortage of cement and exorbitant price hike by leading
manufacturers.
"The Confederation of Real Estate Developers Association of India (CREDAI) has reached out to
Competition Commission of India (CCI) to intervene against exorbitant price hike by leading cement
manufacturers," CREDAI said in a statement.
"We have filed a written complaint with CCI seeking enquiry against sudden shortage and
unprecedented hike of nearly `100 per bag in last one month," CREDAI Vice President (National)
Geetamber Anand, who was part of the delegation, said.
The prices have gone up to `270-280 per bag of 50 kg from ` 170-180 a month ago, Anand said.
Cement prices surge by ` 5-10 per 50-kg bag
The cement industry, which had been reeling under price pressure through monsoon, has raised
prices across the country from October 1. Prices have shot up by `5-10 per 50-kg bag.
A senior member of the Cement Stockists and Dealers Association in Mumbai, said “cement prices in
Mumbai have risen by `5, while the rest of Maharashtra and Gujarat witnessed a rise of `10 per 50-kg
bag.”
Cement prices in Mumbai have escalated to `276 per bag for wholesale buyers and retail prices have
increased to `280-282 per bag. In Kolkata prices increased by `10 per bag to `300 per bag for the
retail buyers and for wholesale buyers prices are in the range of `295-296 per 50-kg bag.
Prices in Delhi have increased to ` 270 and in Uttar Pradesh to `290 from earlier `280 in the
wholesale segment. In the central region too prices have increased to ` 280 per bag.

5. K E Y N O T E
Infrastructure Industry Monitor
The Sector has underperformed 0.76%, 0.48%, -1.01% and 0.51% over Sensex, BSE500, Nifty and
CNX500 respectively. However, RPower is the top performer by 6.87%, 7.16%, 6.91% and 7.42%
whereas JP Infra was the worst performer by 8.04%, 7.77%, 8.81% and 8.31% over Sensex,
BSE500, Nifty and CNX500 respectively.
Suzlon’s subsidiary bags wind sector orders worth `200Cr
The company has bagged major new orders from the wind sector totaling over `200Cr. The company
has bagged two major third-party orders - the first is of `120Cr from one of the top three independent
wind turbine tower manufacturers for tower flanges, and the second of `80Crs from one of the world's
top five wind energy players for castings.
Tata Power likely to sell non-core assets for funding
The company aims to raise funds by offloading a minority stake in core investments as well as the
sale of non-core investments. The company plans to finance its future projects with these funds. For
raising funds the company will also look at various other avenues, including the overseas bond
market, external commercial borrowings (ECB) and the rupee loan/bond market. The company eyes
to raise low cost funds, while maintaining leverage ratios at target levels. The source of equity for
funding future projects will include the sale of non-core investments, a minority stake sale in core
investments and equity infusion at the parent level.
IL&FS Transportation Networks bags LoA from NGS for order worth `161Cr
The company has received the Letter of Award (LoA) in regard to its bid submitted with the National
Games Secretariat ('NGS') for the development of Outdoor Stadium at Karyavattom,
Thiruvananthapuram, Kerala. The project, which is bagged on annuity basis with a concession period
of 15 years including a construction period of 24 months, has an estimated cost of `161Cr.
JSPL to build 2,640 megawatt coal-fired power plant in Mozambique
The company a steel maker and power generator, has received an approval from Mozambique
government to build a 2640W coal-fired power plant in the northern province of Tete, home to some of
the world's largest untapped coal reserves. The estimate cost of plant will be $3 billion and it would
start operating in 2015. The power generated from the plant will be sold domestically and to the rest
of southern Africa. Recently, the company was likely to spend about `100000Cr in Jharkhand to set
up two steel plants of 11mn tonnes annual capacity by 2016. The company also planned to set up
6600MW power plants in Jharkhand.
BHEL bags `3800Cr order from Dainik Bhaskar Power
The company has secured `3800Cr order from Dainik Bhaskar Power (DBPL) for setting up a
1320MW thermal power plant in Madhya Pradesh. The order is for DBPL's upcoming coal-based
supercritical thermal power project in Singrauli district of Madhya Pradesh.
Ramky Infrastructure expects to bag $400 million worth of projects in Gabon
Ramky Infrastructure expects to bag $400 million worth of projects in Gabon, out of the $1 billion
worth projects that the company has bid. The company is currently executing $120-million worth
projects in Gabon, a country in west central Africa, which is looking to diversify its economy amid
declining oil production. Ramky's projects there include construction of Gabon Special Economic
Zone, an industrial park in capital Libreville. Ramky Infrastructure has bagged orders worth `1006Cr
across buildings, industrial, water and waste water, road and power sectors from various states in
India.

6. K E Y N O T E
IT Industry Monitor
IT Industry and its contribution to Indian equities
IT sector has weightage of 9.60% in BSE 500 and CNX 500 with major stocks are Infosys, TCS and
Wipro. The sector is also represented through BSE IT and CNX IT indices. IT sector companies also
constitute major portion of Sensex and Nifty with weightages of 13.90% and 12.44%.
IT growth could be affected due to US and Europe crisis: Mr. S Ramadorai
Mr. S Ramadorai is the vice-chairman of TCS. He said ‘the situation in the West, both in the US and
Europe, is worrisome. Though the margins are likely to remain untouched, the slowdown and delay in
the spending might impact growth of the IT sector going forward. The implication so far has been a
cautious watch and to see how the spending of money or how the clients are going to behave.
TCS plans to increase its investment in China
TCS plans to triple its investment in China during the coming three years. TCS plans to hire 70,000
people globally this year, with the number of workers in China reaching 5,000 in two and half years.
Besides serving its multinational customers, the company is entering the domestic market with an eye
on large State-owned enterprises, financial institutions and city governments. There are seven banks
in China using the TCS proprietary core banking system, including Bank of China Ltd, Huaxia Bank
Co Ltd, and the Guangdong Rural Credit Cooperative. Shanghai's Foreign Exchange Center uses a
newly developed trading system built by TCS. Building IT architecture and applications platforms for
newly developed "intelligent" cities amid the country's fast-growing urbanization process is a new
growth engine for TCS in China. The company will be investing $6mn to establish a lab in Singapore
to fuel research and development in intelligent city applications, where cloud-based technologies will
be introduced to improve the city's operational efficiency and save money.
India’s top IT companies to hire big
India's top three IT services firms are entering a new phase of development, hiring heavily and
bringing in more non-Indians to better serve its US and Europe clients. TCS, Infosys and Wipro are
planning to hire more than 119,000 employees combined this year and not just computer
programmers and software engineers. The companies are recruiting in areas such as mobility, data
analytics, cloud computing, product management and business analysis.
India's postal department has rejected the bids of four companies
India's postal department has rejected the bids of four companies - HCL Comnet, Wipro, Dimension
Data and UTL to build an IT network that connects 30,000 post offices across the country, citing the
obsolete equipment' being provided by Cisco, the technology partner for these bidders. After the
disqualifications, the department has shortlisted HP, IBM, TCS and Sify for its `1,300cr project aimed
at modernisation of the IT infrastructure of post offices. The contract will be awarded after the financial
bids of these companies are examined.
Persistent systems launched eMee for SMEs
Persistent launched eMee, an employee engagement platform, specifically developed for SME (small
and medium enterprise) and large enterprises with a distributed workforce. eMee, designed and
developed using gaming and social networking concepts, helps redefine employee engagement, by
offering an intuitive and user friendly platform for interacting with colleagues and peers throughout the
organisation. eMee encourages social networking in the workplace and harnesses the power of
collaboration to the fullest, boosting morale, team spirit and camaraderie.
Dassault Systemes Partnered with Persistent Systems
Dassault Systèmes partnered with Persistent Systems, the leader in outsourced software product
development services to offer integrated Dassault Systemes solutions based services to customers in
key sectors such as Energy, Telecommunications, EPC (Engineering Procurement & Construction),
Banking & Finance, Pharmaceutical and Healthcare. As part of the partnership, Dassault Systemes
will be working with Persistent Systems to target some of India’s most technology savvy companies,
leveraging upon Persistent Systems domain expertise in verticals. Persistent Systems will look at
empowering customers and organisations with a paperless 3D world through a key DS brand.

7. K E Y N O T E
NIIT's schools program empowers 10 Million students across India
NIIT achieved a significant milestone in its mission to take computer proficiency to the grass root
levels, by imparting computer-based learning to 10 million students across India. NIIT offers computer
education in Government and private schools. Its computer education movement, introduced for the
first time in 371 Government schools in Tamil Nadu in 1999 through the Public Private Partnership
model now covers nearly 16,600 educational institutions across 18 States in the country. From
Keylong (Himachal Pradesh), to Rameswaram (Tamil Nadu), and from Vandh (Gujarat) to Agartala
(Tripura) the program spans the length and the breath of the country, reaching out to the students in
the remotest corners of India.

8. K E Y N O T E
Media Industry Monitor
Major listed Media & Entertainment companies included in BSE 500 and CNX 500 indices are Zee
Entertainment Enterprises, Dish TV India, Sun TV Network, Jagran Prakashan and UTV Software
Communications, while the sector's weight age is 0.79% in both the indices.
Cabinet approves proposal for amendment in uplinking / downlinking policy for TV channels
Union Cabinet has approved the proposal of the Ministry of Information and Broadcasting to recast
the existing ‘Policy Guidelines for Uplinking and Downlinking of TV channels’. Ministry of Information
and Broadcasting (I&B) has proposed to carry out various amendments in the existing policy to reflect
the fast evolving electronic media landscape in the country.
These amendments were proposed based on an extensive consultation with TRAI. The amendments
envisage, inter-alia, significant changes in the eligibility criteria of companies seeking to operate TV
channels in India in order to ensure that only serious and credible operators are permitted to operate
such channels and the electronic media landscape is not unnecessarily crowded by non-serious
players.
Cabinet has taken following decisions in this regard:
• Net worth criteria for Uplinking of `Non-News and Current Affairs` channels and Downlinking of
foreign channels has been revised from `1.5Cr to `5Cr for the first channel and `2.5Cr for each
additional channel.
• For uplinking of `News and Current Affairs` channels the net worth / criteria has been increased
from `3Cr to `20Cr for the first channel and `5Cr for each additional channel.
• For Teleports the net worth criteria would be uniform irrespective of channel capacity. The net
worth criteria would remain `3Cr for the first teleport and `1Cr for every additional teleport.
• All TV channels would be required to operationalize their TV channels within a time frame of one
year from the date of permission, for which Non-News and current Affairs channels will have to
sign a Performance Bank Guarantee (PBG) of `1Cr whereas News and Current Affairs channels
will have to give a Performance Bank Guarantee for `2Cr.
• The period of permission/registration for uplinking/downlinking of channels will be uniform at 10
years.
• One of the persons occupying the top management position in the applicant company should
have a minimum of 3 years of prior experience in a Media company, for both News and Non-
News channels.
• Proposals of merger, demerger and amalgamation will be allowed under the provisions of
Companies Act, after obtaining the permissions of the Ministry of I&B as per procedure.
• The channels operating in India and uplinked from India but meant only for foreign viewership
should be required to ensure compliance of the rules and regulations of the target country for
which content is being produced and uplinked.
CBI looks into spectrum to Telecom companies in DTH business
Widening its probe in the 2G scam, the CBI has now turned to investigate spectrum allocation made
to direct-to-home (DTH) broadcasters by seeking details of sanction of bandwidth. The decision to
probe the DTH broadcasters was taken after agency sleuths found that some of the telecom
companies, under probe in the 2G scam, were also broadcasters of the service. The CBI had sought
details including the original files containing applications for assigning of spectrum and wireless
operating licence for DTH services.
PVR to set up six entertainment cities
PVR has announced to set up six entertainment cities and to add 350 screens to its existing 154
across the country over the next three years with an investment of `580Cr.

9. K E Y N O T E
UTV Software to acquire 30% stake in Indiagames
UTV Software Communications, which holds 56% of the fully diluted equity share capital of
Indiagames, has announced that it has entered into definitive agreements with the founder promoters
and employee shareholders of Indiagames to acquire further 30.02% of the fully diluted equity shares
of Indiagames for a purchase consideration of `94.6Cr. The acquisition, when completed will entail
the Company increasing its stake in Indiagames from 56% to 86.02% on a fully diluted basis.
Dish TV announces range of their festive season packs
Dish TV India announced a range of their festive season packs to match the joyous mood of its
subscribers this season. With the introduction of these festive packs, Dish TV has made digital
entertainment far more affordable ensuring customers are not left out to enjoy in best of
entertainment.
NDTV and Kasturi & Sons plans to sell respective stake in Metronation Chennai Television
NDTV has announced that NDTV and Kasturi and Sons Ltd. (KSL) have entered into an agreement to
sell their respective stake in Metronation Chennai Television Ltd. (MNC) to Educational Trustee
Company Pvt. Ltd. (ETCPL), promoters of the leading Tamil Daily Dina Thanthi. The total sale
consideration payable by ETCPL is `15Cr. On the completion of above mentioned transaction, MNC
shall become a 100% subsidiary of ETCPL.

10. K E Y N O T E
KEYNOTE CAPITALS LTD.
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