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Top stories this week…

Jun 30, 2001

Another diversification?
Indian Rayon, the Aditya Birla Group Company, has entered into a definitive agreement to acquire a 50.4 percent controlling stake from Groupe Bull France in PSI Data Systems Ltd (PSI) in an all cash deal aggregating Rs 710 million (US$ 15 million). Indian Rayon will make an open offer to acquire a further 20 percent stake from public shareholders at the price of Rs 187 per share (US$ 3.9). This will take the total shareholding of Indian Rayon in PSI to 70.4 percent, for a final consideration of Rs 992 million (US$ 21 million). Read more… Slow down takes its toll…
Goodlass Nerolac, the second largest Indian paint company, has reported a 24.7 percent drop in net profits for 2001 to Rs 226 million (US$ 4.8 million). The slowdown in the economy and subdued auto demand in the second half of 2001 has taken its toll on the company. The impact is more pronounced in the fourth quarter of 2001 with net profits dropping by a sharp 88.3 percent to Rs 12 million (US$ 0.3 million). However, for the full year, the erosion in margins is not significant as the company managed to improve margins in the first half of 2001. Read more…

Fiscal targets under cloud…
Customs revenue collections have dropped by around Rs 15 billion (US$ 319 million) in the first two months of the current year. As a result, as against the budgeted 15 percent growth in customs by the government, the actual collections have dipped by a sharp 15 percent. If this trend continues, then the finance ministry will not be able to achieve the revenue targets, which could eventually increase the country’s fiscal deficit. Given the fact that the imports of capital goods have been on the decline despite various incentives, the prospects seem bleak in light of cut back on expansion plans by the manufacturing sector. Read more…

New strategy in place…
Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) are toying with an idea of forming a separate entity to buy-out AV Birla’s 37 percent stake in Mangalore Refinery Petrochemical Limited (MRPL). HPCL currently holds around 37 percent stake in MRPL. On acquisition of the stake, a new partner will be inducted in the company, who would be holding 26 percent stake in MRPL. Read more…

Cellular ‘shake-hands’ continues…
Birla-AT&T-Tata (Batata) and BPL Cellular, the two Indian cellular majors, have entered into a joint venture whose enterprise value is estimated to be around US$ 2 billion. While Batata would have a 50.7 percent stake in the company, BPL Cellular will hold the remaining stake. As a result of this merger, the combined entity would hold around one fourth of the total subscriber base in India. With the merged entity having bid for the fourth cellular license, Bharti, Hutchison and Reliance will have to contend with this formidable cellular major. Read more…

The power woes…
BSES has declared a marginal 4.7 percent growth in bottomline for 2001 to Rs 3,214 million (US$ 69 million) despite a 15 percent jump in its overall turnover to Rs 21 billion (US$ 69 million). A 43 percent jump in cost of electrical energy purchased to Rs 10 billion (US$ 212 million) was largely responsible for the sluggish bottomline growth. BSES buys almost half of its electricity requirement from Tata Power Company, which has seen its fuel costs escalate by 44 percent in 2001. Read more…

BOB records loss…
Bank of Baroda (BOB) has posted a 45 percent drop in 2001 profits to Rs 2.7 billion (US$ 57 million). However, this was primarily on account of writing off Rs 1.7 billion (US$ 36 million) voluntary retirement expenses. Its topline rose by a marginal 10 percent. The interest income growth of the bank was adversely affected in the fourth quarter due to the slowdown in the economic activity. Read more…

Has it bottomed out?
The Indian automobile sector is going through a torrid time. Tractor sales for April 2001 have fallen by 14 percent to 12,611 units, the first decline in seven years. The less than average monsoon in four key states resulted in subdued demand in the fiscal year 2001. The slowdown in the economy as a result seems to have aggravated tractor manufacturers woes. However, majority of the industry is expecting tractor demand to gain momentum in the second half of the current year. Read more…

Consumption slows down…
The domestic pharma industry has reported a growth in sales of 8.1 percent for the two months ended April-May 2001 as against an 8.3 growth in the corresponding period of the previous year. The anti-infective segment has shown a 5 percent decline in sales in the same period thus adversely affecting key players like Glaxo and Ranbaxy. Industry experts are of the view that if the current trend sustains, the pharma industry might grow only by 6 to 7 percent as against 9 percent in 2001. However, Sun Pharma, Cipla and Alchem have registered a growth rate of 23 percent, 18 percent and 14 percent respectively in the aforesaid period. Read more…

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