Indian Finance Blog Finance News Blog from India

ICICI Bank, India’s largest private sector bank, has tied up with UAE Xchange to promote travel card through the latter’s branches in the country. The bank is targeting a business of 250 million dollars from travel card, its commercial and premium card manager Vinayak Prasad said recently.

The ICICI Bank Travel Card is a pre-paid card that customers can buy using Indian currency, and withdraw in any local currency around the world. Travelers can load this pre-paid card with foreign currency in India and use it to withdraw cash in the local currency from over 1 million VISA ATMs and shops at over 14 million merchant establishments accepting VISA Flag cards.

Available in six currencies, including US, Australian and Canadian dollars, Euros and Pound Sterling, Swiss Francs, the ICICI Bank Travel card offers international travelers the widest choices, the bank said in a press release. ICICI Bank travel card has also several other unique features that cover every aspect of the traveler, which include round-the-clock medical assistance to comprehensive travel and accident insurance, it said. Prasad stated that there are incredible opportunities in the travel card business and at present the bank looks at the travellers cheques as the biggest competitor in the field.

V George Antony, Country Manager of UAE Xchange, has said the tie-up was the beginning of a great association. The firm will review, improve and increase the basket of products and sell across its counters in 206 branches. UAE Xchange, part of the MNC group, the prestigious business conglomerates in UAE, is one of the leading exchange houses in the Middle East. It primarily focuses on money transfers and money exchange.

ICICI Bank, formerly Industrial Credit and Investment Corporation of India, is India’s largest private sector bank in market capitalization and second largest overall in terms of assets. It has total assets of about US $ 79 billion (end-March 2007). At present, it has over 950 branches and offices, about 3600 ATMs and 24 million customers as of end July 2007.  The bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management.

One of India’s leading petroleum products retailers Hindustan Petroleum Corporation Limited (HPCL) is planning to enter the petrochemicals business. The state-owned firm will mark its foray in this sector by acquiring a “strategic stake” in Andhra Petrochemicals Limited (APL). It will reduce HPCL’s dependence on the refining and fuel retailing business.Though HPCL officials have declined to comment about the plan, a top APL official has been quoted as saying that HPCL is looking for a strategic alliance. Plans are at a preliminary stage and HPCL has only collected data and nothing is through yet, the official said.

The APL official said HPCL could buy some stake in the company. There has been no decision on whether HPCL would acquire a minority or majority stake. Options could be anything, but as of now nothing has been finalized either way. Besides, present promoters will not divest their entire holding in APL, he added.

Commenting on it, a market analyst said it will be basically a vertical integration for the refinery companies to get into petrochemical business. The petrochemicals business has a margin of $400-600 (Rs15,720-23,580) per tonne while the refining business has a margin of $5-15 per barrel.
HPCL has a 9.24 million metric tonne per annum (mmtpa) capacity refinery in Visakhapatnam in the southern Indian state of Andhra Pradesh and it already supplies naphtha to APL’s petrochemical plant in that city. The firm has another refinery in Mumbai and together the two refineries have a total capacity of 16.66 mmtpa, a 12% share in the domestic refining capacity of the country. Naphtha is one of the products of refineries apart from petrol, diesel and kerosene.

HPCL is a Fortune 500 company with an annual turnover of over Rs 91,448 crore (US $20892 million as per fiscal 2006-07). It has a 16% refining and marketing share in India and a strong market infrastructure.

HPCL also holds an equity stake of 16.95% in Mangalore Refinery and Petrochemicals Limited, a state-of-the-art refinery at Mangalore with a capacity of 9 MMTPA. Besides, it is progressing towards setting up of a refinery in the northern state of Punjab in the joint sector.

HPCL also owns and operates the largest Lube Refinery in India producing Lube Base Oils of international standards. The corporation’s turnover rose from Rs. 2687 crore in 1984-85 to an impressive Rs 91,448 crore in 2006-07.

India’s top utility vehicle maker Mahindra & Mahindra (M&M) has announced the launch of the Mahindra Scorpio SUV and its Pik-Up range in Brazil, in partnership with Bramont-Montadora Industrial e Comercial de Veiculos Limited.

A special facility has been set up to assemble the vehicles with an annual capacity of 5,000. The body assembly would be undertaken by Usiparts — a Usiminas System company, while the chassis, engine and suspension would be assembled by Bramont, at its plant in Manaus.

The models introduced in the Brazilian market are equipped with the 2.6-liter Mahindra common rail engine that delivers 110 horse powers. The vehicles are available with 4X2 and 4X4 electronic shift on the fly and the engine conforms to Euro III emission norms. Mahindra vehicles will be offered with a Euro IV compliant engine from 2009.

The US $6 billion M&M comprises the automotive sector, the farm equipment sector and the systems & technologies Sector. It is a leading manufacturer of multi-utility vehicles (MUV) and tractors. It is the only Indian company among the top three tractor manufacturers in the world. "Mahindra has carved a distinct niche for itself in markets across the globe with its unique combination of rugged utility and style," said Pravin Shah, executive vice president, international operations, M&M.

The Brazilian economy and automobile industry is highly evolved and has strategic importance for Mahindra. This is the first assembly facility in South America for the Mahindra Scorpio platform and helps consolidate its presence in the Mercosur region. Our partner Bramont has a professionally managed network of dealers which will ensure our success in the Brazilian market, Shah said.

On Bramont’s association with M&M in the Scorpio launch in Brazil, Eduardo de Castro, chairman, Bramont said, "It is an honour for us to represent Mahindra in the fifth largest market in the world. Launching the Mahindra Scorpio in the Brazilian market is in tune with our objective of offering the customer world-class vehicles. We believe that the Mahindra Scorpio offers a strong value proposition that will make it a preferred vehicle in this market."

M&M also has a leading presence in key sectors of the Indian economy, including the financial services, automotive components, trade and logistics, information technology, and infrastructure development. With over 62 years of manufacturing experience, the Mahindra Group has built a strong base in engineering, technology, marketing and distribution which are vital to its evolution as a customer-centric organization.

The past few days witnessed investors reeling under the pressure of a slump in the stock exchange market due to a sharp fall in the price of shares. However, Wednesday was a good day for investors as the prices of shares soared again and the market opened on a positive note with a gap of 864.13 points with 17,594 after the cut off of 75 points by the US Federal Reserve. After the dreadful events that took place during the past few days in the stock market, this is a welcome respite for investors as the overall condition of the market saw stability throughout the day.

The Sensex saw a record gain of more than 1200 points and at the end of the day the stock market saw substantial gains. Sectors like realty, metal, gas, power and oil saw a boost along with midcaps and banking stocks that reacted favorably to the US Federal Reserve’s new policy. It seems that the US monetary policy has worked as a saving grace for the Indian Sensex market as it showed improvement and stability. On Wednesday, Nifty ended with 304.10 points and closed at 5203.40 points. BSE saw an increase of 1376 shares where 1586 shares saw a decline and 39 shares remained stable without any change. The BSE madcap saw an increase of 8.15% and closed at 7789.31 and smallcap saw a rise of 3.96% and closed at 10,425.34. With the improved market condition, major companies such as MRF, Ashok Leyland, Punjab Tractors along with big players such as Satyam, SBI, BHEL, and Reliance Industries reinforced their position in the market.

Some of the Index movers who saw a strong position in the market include big names such as Reliance Energy that saw an increase of 16% and closed at Rs. 1990. Satyam saw a gain of 11% and closed at Rs. 393. For BHEL, it was a gain of 8% and ended with Rs. 2146, Bajaj Auto made a strong hold with an increase of 7.5% and closed at Rs.2215. Both ITC and Mahindra and Mahindra saw an increase of 5% and closed at Rs.193 and Rs.641, respectively. Cipla, Tata Steel and ACC saw a surge of 4% and closed at Rs.182, Rs.697 and Rs.750, respectively.

Gaining in terms of value, Reliance Natural Resources surged ahead with a strong turnover of Rs.466 crore. Some of the other top gainers include Reliance (Rs.332.20 crore), Reliance Petroleum (Rs. 356.80 crore), Reliance Energy (Rs. 231.10 crore) and ICICI Banks (Rs. 256.80 crore).

January 21, 2008 has been the black day of the year for Indian stock market and will always be remembered in the history of stock market. The sudden fall of the stock market by 1430 points on Monday afternoon was a terrible disaster that took whole of the Dalal street into the state of great shock. This unexpected fall showed investors and brokers that stock market is no one way game and you can’t expect certainty from this market.

Experts and stock markets researchers feel that such a drastic fall in the stock market world is due to the sudden change in the global economy, and it can also be due to the impact of American economy going into recession. Once the global economy gets settled down, stock market will also get stabilized since Asian economies are strong enough to counter this effect. It is also being considered that the stock market is facing crashes since Sebi (Securities and Exchange Board of India) has announced the change in the policies for the purchase of shares and bonds in Indian companies.

The trading had been suspended for at least one hour at Bombay Stock Exchange and there are chances of falling of stock market further by 10-15% in near future as analyzed on NDTV Profit by Adrian Mowat of JP Morgan.

The 10 biggest falls in the Indian stock market history till date that made a tremendous impact in lowering down the Indian economy include:

• Indian stock market witnessed its biggest loss at the very onset of the New Year 2008. On Monday, Jan 21 the Sensex plunged down with loss of 1,408 points at the end of the stock session. It was about to get recovered by closing at 17,605.40 after it fall down 16,963.96 at a rapid rate. The reasons so far have been ascribed to the recession of US economy and changes in global economy.
• The Sensex witnessed the fall of 826 points (6.76%) to close at 11,391 resulting into heavy sells by FIIs, retail investors and weak global market economy on May 18, 2006. The nifty was crashed this year by496.50 points (8.70%) with closing to 5,208.80 points.
• On December 17, 2007 the Sensex ended that day with the huge loss of 769 points (3.8%) at 19,261.
• On October 18 2007, there was no great trading till noon and by the end of the day when the selling intensity increased, the index had already tumbled own to very low.
• January 18, 2008 witnessed the index tumbling down to a low of 18,930 points.
• November 21 2007 had shown the weakness of Asian market by showing heavy loss by 678 points.
• On August 16 2007, the Sensex fell down by 643 points.
• On April 2 2007, the Sensex fell down by 617 points.
• On August 1 2007, Sensex fell by 615 points.
• On April 28 1992, Sensex witnessed downfall of 570 points.

Well, what we can say about the share market? Someone said it right that it is unpredictable and unanticipated. In one moment it moves up suddenly offering huge profits and dividends with the increase in the price of shares but on the other hand, it can mar your prospects by crashing your investments. However, such ups and downs make the real scenario of stock market. It is a highly volatile sector that can lead to sudden increase or a slump within moments. Similar rise and fall was recently witnessed in the Bombay Stock Exchange (BSE) on Monday when the sensex had a downfall of 1,408.35 points. This is considered as the biggest turn of fortunes for many big players in the stock market industry.

Eyes were glued to the sensex screens when big names faced high slumps on their market positions. It has come as a rude shock for the business organizations and investors. Some of the affected companies of the recent sensex fall include Reliance Communications, HDFC and NTPC. Reliance saw a slump of 13% as its shares closed at Rs.612.90 whereas HDFC got a fall of 4% and closed at Rs.2698.85. NTPC had to suffer the major downfall of 14% and closed at Rs.205.65. Another worst hit organization includes DLF that lost around 10% and closed at Rs.903.70.

However, in this scenario, trade analysts asked the investors to keep patience and look for other opportunities. They recommended that the best bet in such circumstances is to hold on with the existing shares and incase the investors have a good amount of liquidity; they should try to use it judiciously as there are chances of volatility in the market. The best way to trade is to look for earning motive rather than investment purposes. However, in this case, one should be discretionary while mobilizing his stocks in the IT sector and FMGC sector. According to the financial advisors, there is no need to panic and worry over the market slump and the downfall of the sensex as the stock market will certainly recover its value within the next six months in order to provide the leverage.

Well, one has to wait and watch in order to see how the Bombay Stock Exchange (BSE) shapes up in the future. Would it be actually able to recover the loss of investors, is the matter of real concern? However, given the fickle nature of market, it is difficult to make a strong commitment at this point of time, and waiting for the period of over six months is an unpredictable forecasting.

State-owned telecommunications company, BSNL (Bharat Sanchar Nigam Ltd) announced on Monday, 14 January 2008, its plans to launch India’s biggest IPO aimed at raising about Rs 40,000 crore, that is over $ 10 billion.

BSNL Finance Director, S K Saxena said that this telco giant is valued at well over $ 100 billion. The company is planning to offload up to 10% of its equity stake to fund expansion plans. BSNL’s immediate investment plan is to expand its GSM mobile network across the country, for which it requires Rs 15,000 crore. Going by the valuation of the company, a mere 10% dilution may give the PSU up to Rs 20,000 crore, which will be sufficient to take care of its immediate investment requirements.

When enquired about this move, telecom Minister A Raja told reporters that the government is considering an IPO. The Department of Telecom (DoT) will discuss the issue and take a final decision soon.

BSNL has an equity base of Rs 5,000 crore, which means a huge share holding structure of 500 crore shares at a face value of Rs 10 each. BSNL executives said that this is not a disinvestment move, but a mere dilution of the stake by issue of fresh shares. The officials further clarified that the proposed move has been planned because the company’s authorized capital is less than its subscribed capital.

The largest public offer made till date by an Indian company is by Anil Ambani’s Reliance Power, which will hit the market this week. Reliance Power aims to raise over Rs 11, 000 crore from the markets by way of this offer.

BSNL is India’s largest telco, both in terms of revenues and subscriber numbers. The PSU had revenue of Rs 39, 750 crore in 2006-07, with a net profit of Rs 7,805 crore. BSNL plans to invest Rs 15,000 crore during this financial year to extend its mobile and broadband networks across the country, especially in the rural areas where private operators have shied away from setting up operations. The company has also committed to investing about Rs 60,000 crore by year 2010 to enlarge its telecom infrastructure and operations.

If BSNL manages to raise Rs 40,000 crore by selling its 10% stake, the company’s market valuation would reach a whopping Rs 400, 000 crore, which means much more than $100 billion. This would put BSNL way ahead of competitors, Bharti-Airtel and Reliance Communications in terms of market valuation.

 

Microsoft Corp, the world’s largest software maker, has posted a 79 per cent rise in net income in the second-quarter and surpassed analysts’ estimates on its profits and sales of its Xbox 360 game console and Windows-based personal computers.

For the three-month ended December 31, its profit rose $4.71 billion or 50 cents a share, from $2.63 billion or 26 cents a share in the corresponding period last fiscal. Its sales went up 30 per cent to $16.4 billion, exceeding prediction of $15.95 billion in sales. Analysts had predicted a profit of 46 cents per share.

Headquartered in Redmond, Washington, USA, Microsoft manufactures, develops, licenses and supports a wide range of software products for computing devices. Its best selling products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software.

Microsoft has also ventured in other markets besides operating systems and office suites, with assets like the MSNBC cable television network, the MSN Internet portal, and the Microsoft Encarta multimedia encyclopedia. It also markets both computer hardware products like the Microsoft mouse and home entertainment products such as the Xbox, Xbox 360, Zune and MSN TV.

Personal computer sales and profit in the Xbox unit helped Microsoft beat predictions for the second quarter in a row. Holiday purchases of exclusive Xbox 360 video-games such as “Halo 3” fueled revenue growth and led to more console sales. Chief Executive Officer Steve Ballmer has increased the annual sales projection to $60.5 billion, signaling it can withstand a slowdown in the US economy.

Sales in its business division, which includes the Office applications and Exchange and SharePoint server software for corporate clients, climbed 37 per cent to $4.81 billion. UBS AG analyst Heather Bellini in New York had estimated $4.61 billion sales in Microsoft’s business division.

Its client division, responsible for Vista, reported a 68 per cent rise in sales to $4.34 billion. Personal computers shipments rose 15.5 per cent in the quarter. The company said it has sold 100 million copies of Vista since its January 2007 launch.

Revenue from Microsoft’s online services business, comprised mainly of online advertising sales, rose 38 per cent, but the division widened its loss in the quarter to $245 million, from $118 million a year ago.

Well, what more can one say about the latest Reliance Power Initial Public Offering (IPO)? The numbers itself speaks volumes!

Reliance Initial Public Offering attracted a lucrative bid of Rs. 2.45 trillion along with 27 lakh applicants: a staggering record of application for a new venture. It seems Anil Ambani is on a dream run of records. Anil Ambani’s RPower saw an amazing start in the history of Initial Public offering as Anil’s RPower has broken the previous best record of his elder bother Mukesh Ambani’s Reliance Petroleum Ltd. (RPL) that saw 19.5 lakhs applications in the year 2006.

For investors, RPower is a golden opportunity to invest money in an amazing venture that has a promising start and thriving future. Given the volatility of the share market, the investor’s faith in Anil Ambani’s RPower is a glaring example of the kind of faith and importance it holds in the public imagination. However, Anil Ambani’s RPower was not the only IPO that saw the light of the day as there where many other ventures such as Special Economic Zone Limited and Mudra Port that received bids worth Rs. 2,03,700 crore in comparison of its IPO that was oversubscribed last year by 115 times. Apart from Reliance RPower, some of the other IPOs were Power Grid Corporation with Rs. 1,93,423 crore, Ideal Cellular with Rs. 1,20929 crore and  Reliance Petroleum with Rs. 1,37,241 crore.

It was Anil Ambani’s RPower that saw the highest number of applications. Some of the other IPO that also saw a high order of applications were NTPC with 14.4 lakh, Future Capital with 11.7 lakh and Power Grid Corporation with 12.7 lakh. However, according to latest data by stock exchange, the total number of bids that RPower received were 539.99 crore against the issue of 22.8 crore shares. Indeed, it is a phenomenal success for RPower and Anil Ambani as the shares were subscribed with an increase of 23.69 times. The retail portion was 6 times the total number of subscription. However, for retail investors, 6.84 crore of shares have already been reserved. It is estimated that more than 10 times will be the subscription of retail portion by investors. Amidst all this, RPower has fixed its share price at Rs. 405 to 450. For those interested in investing, it is a golden opportunity to get the IPO as soon as possible so as to bask in the glory of high stocks. For investors, it really seems that Reliance is striving hard to prove their envisioning punch line that says “Power On, India On”. For latest updates about RPower IPO’s, visit www.magazines.weebly.com.

Caparo is a fast growing group with business interests predominantly in the manufacture of steel, automotive and general engineering products. The Group’s wider activities include materials testing service, hotels, film distribution and private equity investment. Headquartered in London, the company’s operations are spread over different parts of the UK, North America, Spain and India. A joint venture with Maruti Udyog, India’s largest car manufacturer marked Caparo’s foray into the Indian automotive market.

The Caparo Group under the stewardship of Swaraj Paul said that it plans to invest Rs 1000 crore in the Indian market over the next three years to become the largest automotive technology company in the country. Caparo India CEO, Angad Paul addressing reporters and media persons at the 9^th Auto Expo in New Delhi said, “The company will invest Rs 1000 crore over the next two to three years time. We plan to rake in USD 500 million sales from the country by then.”

The Group has already invested Rs 1000 crore in India towards the establishment of manufacturing units in different parts of the country, including Pune, Chennai and Singur in West Bengal. Mr. Paul said that further investments would be made in setting up manufacturing facilities in close proximity to the existing ones at Chennai and Singur and in expanding capacity at the unit in Pune. He also added that the company would review the investment figures periodically to decide about the need for future investments.

Currently, the Caparo Group rakes in about USD 1.5 billion in revenue a year. A major chunk of this revenue comes from the UK and US. India accounts for USD 150 million. Mr. Paul said that going forward, the Group looks to an equal share of revenue from all three regions, i.e., the UK, US and India. This is a clear indication of the company’s high expectations from Indian markets.

Caparo also plans to launch a novel compact car concept in India. Answering questions regarding the proposed compact car project, Mr. Paul said that the Group is in the process of introducing a “city car” concept in Europe by the year-end. This launch would offer a forum where Caparo would provide the design and assembling services to carmakers. He further added that the Group is open to bringing the concept to the Indian market as well. He said that the company would like to provide the basic design services for the car, which would target the mid-segment profile.