weekly indian economy review,

1. Top Headlines
 Max India in talks to sell polypropylene business.
 SBI to cut vehicle, SME loan rates.
 DHFL Snaps Out Of Talks To Buy Milestone Capital.
 Tano Capital To Invest In Kalpataru Power Subsidiary.
 Chernin Group Secures $200M In Private Equity
 Xander’s PE Arm Invests $40M In Chennai’s Appaswamy
Realty Project.
 Eros To Buy Out Remaining 76% In B4U For $53.1M
 ChrysCapital Invests $56.2M In Intas Pharmaceuticals
 Rabobank Part-exits Yes Bank; Sells Stake For $86.2M
Weekly Economic Review
India’s biggest software company, Tata Consultancy Services, has posted
quarterly numbers in line with market estimates. Net profit for the
fourth quarter rose 3.3% quarter on quarter to Rs2, 895crore. And
revenues increased a modest 0.4% to reach $10.17 billion. The rise in
revenues may be modest, but it’s also a milestone. TCS is now the first
Indian IT firm to have quarterly revenues greater than $10 billion. And
while TCS reported its numbers after market hours, its shares dropped
2.77% on the BSE to 1059.25 on a day the Sensex lost 1.6%.
The Reserve Bank may have cut its repo rate last week. On
Monday,chairman Pratip Chaudhuri said the cash reserve ratio or CRR
was more significant than the repo when it came to costs. RBI had
already cut the CRR by 125 basis points since January, but got no
concrete response from banks. Also, its 50 basis points cut in the repo
last week only managed to prompt a handful of lenders to reduce their
base rates.
India’s biggest bank has finally agreed to cut the rates on some of its
loans.On Tuesday,Pratip Chaudhuri, the chairman of State Bank of India
announced it was making its loans to small and medium enterprises
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2. Cheaper. Loan rates to SMEs will now be cut by 1.5-2 percentage points.
Banks have been reluctant to make loans cheaper despite the Reserve
Bank’s 50 basis points cut in policy rates last week.
Authorities may have to complete their auction for 2G spectrums much
earlier than anticipated. On Tuesday, the Supreme Court gave the
government another three months to auction 2G spectrum that was
freed after 122 licenses were cancelled. The court has rejected a plea
from the department of telecommunications asking for 400 days. The
Supreme Court’s decision will actually provide some relief for the
telecom firms that lost their 2G licenses in February. Tuesday’s decision
will allow them to operate until 7 September without new licenses.
Their previous deadline was 2 June.
India has just got a downgrade. Fiscal challenges at home and slow
growth abroad have prompted a major ratings agency to cut the outlook
for the country. On Wednesday Standard and Poor’s slashed India’s
outlook to “negative” from the earlier “stable”. On the bright side, it kept
the country’s long-term sovereign rating of BBB-. But S&P also warned
that a further downgrade was possible in the next three years. That
move would bring India into the ‘junk’ category. The downgrade could
weaken the rupee and make overseas loans more expensive for Indian
companies. Finance minister Pranab Mukherjee described the
downgrade as a timely warning, but added that India had already taken
steps towards fiscal consolidation. The country’s fiscal deficit for 2011-
12 is estimated to have been 5.9% of GDP. The target for this year is
5.1%.
Inside The Story
Max India in talks to sell polypropylene business
Insurance and hospitals group Max India (MAXI.NS) is looking to divest
its polypropylene business for an enterprise value of about 8 billion
rupees as part of plans to exit its non-core business. The Delhi-based
company is in advanced negotiations with at least two overseas firms in
Europe and the United States to sell its polypropylene films
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3. business."The transaction is expected to close sometime this quarter," it
said, citing one official.
SBI to cut vehicle, SME loan rates
The country's largest lender, State Bank of India (SBI), will reduce
interest rates on vehicle and SME loans in the coming one or two days.
An SBI official said the decision was taken during a meeting held by the
bank late on Friday. Auto loan rates are expected to come down by 50
bps, but there was no clarity on the extent to which SME loan rates will
be cut. The official, however, added that no decision has been taken on
the broader base rate and benchmark prime lending rate as yet, and a
final decision on this could be taken in the coming week.
DHFL Snaps Out Of Talks To Buy Milestone Capital.
Dewan Housing Finance Ltd (DHFL) has once again walked out of the
negotiations to buy Milestone Capital Advisors Ltd, one of the largest
Home grown alternate assets management firms, according to a source
privy to the development.In March this year, Milestone Capital had re-
entered negotiations with DHFL for a sell-off, eyeing a deal worth Rs
200-220 crore ($40-45 million).“DHFL had gone through the due
diligence process but the transaction is not happening due to
differences over valuation. In fact, DHFL is not looking at buying others’
assets anymore and will focus on its own fundraising”
Tano Capital To Invest In Kalpataru Power Subsidiary
Private equity firm Tano Capital is investing in Shree Shubham Logistics
Ltd (SSLL), a group company of Kalpataru Power Transmission
Ltd.While the investment amount could not be immediately ascertained,
it is believed that the PE firm is putting up to $15 million into the
company.An e-mail query sent to Hetal Gandhi, managing director of
Tano India Advisors Ltd, did not elicit any response till the time of
writing this article. A spokesperson of Kalpataru Power did not
comment officially till the time of writing this article.
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4. Chernin Group Secures $200M In Private Equity
The Chernin Group, the entertainment and digital media company Peter
Chernin founded after leaving News Corp in 2009, has secured about
$200m in new funds from a group of investors led by Providence Equity
Partners, one of the sector’s most prominent private equity groups.Mr
Chernin, who spent 12 years as Rupert Murdoch’s closest lieutenant,
said the new partnership would have the resources to pursue “any deal
of any size” around the world, from making multibillion-dollar bids to
incubating start-ups. Its first potential deals were “very close” and could
be announced within weeks, he said.
Xander’s PE Arm Invests $40M In Chennai’s Appaswamy
Realty Project
The private equity arm of the global investment firm Xander Inc has
invested $40 million in a pre-leased IT Park of the Chennai-based
developer Appaswamy Real Estates Ltd (AREL).A source privy to the
transaction said, “Xander’s private equity arm will hold 100 per cent
equity stake in the project. The investment has come in AREL’s project
called Futura, located on Old Mahabalipuram Road in Chennai. The
project was granted approval by the Software Technology Parks of India
(STPI) and it is a ready property with tenants in place.”PayPal and eBay
are the anchor tenants at the facility, spread across 0.56 million sq. ft.
and boasting twin towers.According to market sources, Xander is
looking at an internal rate of return of 11.5-12 per cent from this
investment.
Eros To Buy Out Remaining 76% In B4U For $53.1M
Bollywood films producer and distributor Eros International Plc is
acquiring the remaining 76 per cent stake it does not own in the digital
broadcasting firm B4U Television Network in a cash-plus-stock deal
worth $53.1 million (Rs 270 crore). Eros International Plc, which is
promoted by the Lulla family, is listed on London’s AIM exchange and is
the parent firm of the Indian public company Eros International Media
Ltd.B4U was formed as a media joint venture between billionaire steel
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5. baron Lakshmi Mittal, Gokul Binani and the Lulla family. Currently, the
Mittals and the Binanis are reportedly the majority stakeholders.
ChrysCapital Invests $56.2M In Intas Pharmaceuticals
Private equity major ChrysCapital is investing Rs 300 crore ($56.2
million) in Ahmedabad-based Intas Pharmaceuticals Ltd, increasing its
existing stake of 11.2 per cent in the fast-growing pharma company.
With this investment in place, Intas has deferred its initial public
offering (IPO) where it planned to raise Rs 425 crore in fresh capital
besides a secondary sale.“The company has deferred its listing plan for
the time being and intends to re-file for an IPO once market conditions
stabilise,” a statement said. ChrysCapital, which invested Rs 48 crore for
11.2 per cent stake in 2005, had plans to make a partial exit from Intas
in the IPO.
Rabobank Part-exits Yes Bank; Sells Stake For $86.2M
Netherland's Rabobank sold three-fourth of its 4.7 per cent stake in
Indian private lender Yes Bank for about Rs 453 crore ($86.2 million)
on Thursday. A group of Indian financial institutions, including Bajaj
Allianz Life Insurance and Citigroup Global Markets, among others,
bought the shares.The shares were sold at around Rs 357.03 a piece, at
2.54 per cent discount to Yes Bank's last traded price on
Wednesday.“This is part of Rabo’s monetization plan. It spotted an exit
opportunity after Yes Bank’s results yesterday. The bank has a small
stake remaining in Yes Bank and it will exit that too at the next
opportunity,” a Source said.
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