Wednesday, July 28, 2010

NEWS THAT YOU SHOULD KNOW

INDIAN ECONOMY
GSPC strikes huge gas reserve in Cambay basin
Gujarat State Petroleum Corporation (GSPC) is learnt to have struck a huge cache of gas in the Cambay basin of Gujarat. GSPC, in a joint venture with Australian exploration & production (E&P ) company Oilex,has found around 20-22 trillion cubic feet natural gas reserve, probably the biggest onshore gas find to date, sources in the Gujarat government told ET. "The logs from data collected by drilling wells in the block show that we have probably run into 20-22 tcf of natural gas entrapped in the Cambay basin. However, it is geologically trapped gas in tight formation (difficult to extract commercially), "a state government official said on condition of anonymity. However, the corporation is not going to town with the discovery. A major reason behind the subdued excitement among the GSPC brass is the highly low recovery factor of its latest find. An industry expert said: "It being tight gas,the operational expenses to recover this gas would be higher. Also,the quantity recoverable could be much lower. GSPC-Oilex would be more than happy to commercially recover even 2 tcf of this find."

DoT amends telecom licence rules
In view of national security concerns, the Directorate of Telecommunications(DoT) has made it mandatory for equipment suppliers to share design, development and supply chain details, besides allowing inspection of their manufacturing facility by the Indian government or concerned certification agencies. According to the amendments to the telecom licence agreement — the unified access service license (UASL) — the equipment providers have to give access to their hardware and software for examination at the time of procurement of equipment. The process would be repeated every year and an inspection would be carried out every two years. The software code would be kept in the escrow account in an encrypted form and would be used in case of security emergency. 

World Economy
UK open to outsourcing, says Cameron
On his first visit to India as the British Prime Minister,conservative leader David Cameron allayed fears of any curbs on the IT outsourcing by the country's government departments,even as he asked Indian companies to create more jobs in the UK. Cameron, who will meet Prime Minister Manmohan Singh in Delhi on Thursday, started his India trip by addressing executives and government officials at Infosys Technologies sprawling Bangalore campus on Wednesday. The gathering included Wipros billionaire chairman Azim Premji and Infosys founder NR Narayana Murthy. You will find Britain one of the most open and progressive countries in terms of being open to outsourcing, said Cameron when asked about whether his government would curb offshoring contracts with Indian IT companies such as Tata Consultancy Services (TCS). Cameron,who leads UKs Conservative-Liberal Democrat coalition government,which has imposed 100-million cap on all government IT contracts,started his India trip by visiting the country's second biggest outsourcing firm Infosys and said his government is still reviewing the contracts 

Telefonica to buy vivo stake for $9.8 billion
Telefonica SA agreed to buy Portugal TelecomSGPS SA's stake in Vivo Participacoes SA, Brazil's largest wireless company, after raising its bid for a third time to 7.5 billion euros ($9.8 billion). Telefonica will initially pay 4.5 billion euros in the all- cashdeal, followed by 1 billion euros at the end of the year and the rest in 2011, the company said in a statement. Separately, Portugal Telecom agreed to pay 8.44 billion reais ($4.8 billion) for 22.4 per cent stake in Brazil's biggest phone operator Telemar Norte Leste, known as Oi. The Vivo accord ends almost three months of wrangling during which the Portuguese company's board sought more money and the country's government blocked the deal calling the stake "strategic". 

Corporate News
Unitech to buy back AIM-listed group firm
The country's second-largest real estate firm, Unitech, plans to buy its Londons AIM- listed group firm Unitech Corporate Parks (UCP).The deal may cost it over Rs 750 crore. Unitech has made an approach and is in discussions with the independent directors of UCP about a possible offer from the Unitech Group, it said in a filing to the BSE. The deal is proposed to be at 31 pence per share. UCP share traded at 30 pence at AIM exchange,up 13.2% over the previous day after the proposed transaction was announced. Unitech scrip dropped 2.6% to close at Rs 82.40 at BSE on Wednesday. Unitech Ltd already owns 4.52% in UCP while its promoters hold another 0.22% in it. UCPs top shareholders include ABN Amro, HSBC and Roveda Holdings. UCP was formed in late 2006 by Unitech to invest in the commercial real estate sector across the country. It has interests in corporate park assets in which Unitech Group firms act as project manager, investment manager and investment adviser. UCB raised about 360 million through AIM exchange in December 2006.

ABB buys 23% in Indian subsidiary at $965 mn
ABB, a global power and automation technology group, has successfully increased its stake, through an open offer, from 52.11 to 75 per cent in its Indian subsidiary. During the three-week offer period, which closed on Tuesday, shareholders of ABB India tendered approximately 23 per cent of the outstanding shares. ABB will acquire the shares on a proportionate basis since the offer has been oversubscribed by around 1.5 per cent. The offer of Rs 900 per share, which was announced on May 17, valued the transaction at $965 million (based on foreign exchange rates at the time of the announcement). The final payment and credit of shares tendered is expected on or before August 10, 2010. A post-offer public announcement, in accordance with local requirements, with details of the shares tendered in the open offer, will be published once the acquisition of shares has been completed. 

HAL in 700m deals with BAE, Rolls-Royce
Hindustan Aeronautics Ltd (HAL) signed contracts worth 700 million with British defence and aerospace major BAE Systems and Rolls-Royce for 57 Hawk advanced jet trainers for its Air Force as well as the Navy. The contracts, worth 500 million for BAE Systems and 200 million for Rolls-Royce, were signed in the presence of British Prime Minister David Cameron,during his overnight visit to Bangalore Under the deal with BAE Systems, all 57 advanced jet trainers will be manufactured under licence by HAL at its Bangalore facility, with BAE providing the necessary specialist engineering services, raw materials and equipment required for airframe production. "We have given a permanent licence to HAL to build the Hawk, "Andrew Gallagher, managing director and chief executive of BAE Systems in India, said. BAE, the biggest defence contractor in Europe, will supply 40 trainer jets to Indian Air Force (IAF) and the remainder to the Navy. HAL's latest deal with BAE follows its 2004 contract for the supply of 66 Hawk advanced jet trainers for IAF, which had been dogged by charges of equipment defects and assembly jigs not meeting requirements amongst others.

Opto Circuits buys US co for $9.7 m
Bangalore-based developer and manufacturer of patient monitoring systems and interventional products, Opto Circuits,acquired US-based Unetixs Vascular on Tuesday for $9.7 million. Unetixs Vascular designs, develops and markets non- invasive vascular diagnostic systems and accessories. The money was raised through internal accruals, a company statement said. Opto Circuits India chairman and managing director, Vinod Ramnani said: This acquisition will help us to strengthen our foothold in USA and since Unetixs Vasculars market is not a wide one,we would become a platform for their products for other markets as well. Ramani added that in the invasive category they are looking at organic growth, while in the non invasive segment they would be eyeing more acquisitions. We would be looking at firms that produce equipment for patient monitoring in ICUs and operation theatres. The firms previous acquisition record includes US-based Mediaid, Criticare Systems and Germany-based Eurocor. Unetixs Vascular holds 14 patents and its work done include detection of peripheral arterial disease (PAD), which is a growing healthcare concern and would therefore be of key importance to Optics.

MakeMyTrip to raise $100m in US
Online travel services company Make-MyTrip plans to raise up to $100 million through an initial public offer on US stock exchange Nasdaq, it informed the capital markets regulator Securities & Exchange Commission (SEC). The Gurgaon-based firm intends to use the proceeds of the share sale to expand its operations by acquiring or investing in strategic assets that complement its services and product offering. The company also plans to use the money to enhance technology and for meeting working capital needs. Private equity firm SAIF Partners owns 51.32% while Tiger Global Private Investment Partners holds 12.14% stake. The companys promoter and co-founder Deep Kalra owns about 14.45% in the company. Other investors include Helion Ventures (11.97%) and Sierra Ventures (7.98%). The company began operations ten years ago offering travel services to non-resident Indians in the US and by 2005 started offering travel services to domestic travellers. At present it offers air tickets, customised holiday packages,hotel room booking, rail tickets and car hire besides facilitating access to travel insurance. 

Market
Buyers return as gold melts to 3-mth low 
Indian consumers have begun buying gold even before the traditional festival season,which is barely two weeks away, as greater confidence in the global economy whacks gold to a three-month low. Their buying spree could continue beyond Diwali as speculators are betting gold prices could drop further in the coming weeks. Though the current price of 1,775 per gm is 25% higher than last summer,metros are seeing the first rush of business in a long while, say excited jewellers. They are already re- doubling promotions and marketing schemes to tempt buyers into extending their budgets. India is the worlds largest gold consumer. Mehul Choksi, managing director of jewellery retail chain Gitanjali Gems, says,Since gold prices have fallen,we see huge traction in demand in the festive season. We see 15-20 % growth in sales volume in October-November over the previous year. As far as price is concerned,it will remain on the lower side,except for once when demand will be at its peak. The 6,500-crore Gitanjali Gems owns brands like Nakshatra,Gili and Asmi. 

NSE plans to list Nifty in London
The options contract of India's top equity benchmark index –S&P CNX Nifty of the National Stock Exchange (NSE) – could soon be listed on one of Europe's largest stock exchange, the London Stock Exchange (LSE). The managements of the two bourses today signed a deal to evaluate future business opportunities between them. Outside India, Nifty futures contracts are traded on the Chicago Mercantile Exchange (CME) and the Singapore Stock Exchange (SGX). The benchmark index of NSE's rival, the Bombay Stock Exchange's Sensex, is already slated to be listed on the Deutsche Bourse and will start trading from October. The Sensex comprises 30 companies. Sources in the exchange said it is in talks to list the Sensex on other European exchanges, too.

Soros eyes a bigger India share
Billionaire financier George Soros is in advanced talks to buy a 4% stake in the Bombay Stock Exchange (BSE) for $35-40 million from a Dubai Holding unit, two sources with direct knowledge said. Soros Fund Management will buy the stake in Asias oldest stock exchange from Dubai Financial, part of sovereign fund Dubai Holding, the sources told Reuters on Wednesday. The sources declined to be named as they were not authorised to speak to the media. A spokeswoman for Dubai Holding refused to comment on the possible stake sale plan. Officials at Soros Fund in the United States and the BSE in Mumbai could not be reached by Reuters for comment. Dubai Financial has been looking to sell its about 4% stake for quite some time now, said one source. The talks with Soros are now in almost final stages and a formal transaction is expected shortly. In May, Canadian fund manager Urbana Corp bought 331,000 shares of BSE, the owner of Indias Sensex stock index, at 370 per share, raising its stake to 2.6% in the unlisted Indian exchange. 
Banking
Banks take RBI cue to hike deposit rates up to 75 bps
HDFC Bank, Lakshmi Vilas Bank and Central Bank set off a round of deposit rate hikes to attract funds to meet accelerating investment and consumption, but lending rates may stay where they are, at least for now, as banks high profitability provides a cushion. Rates are being raised between 25 basis points and 75 basis points across maturities. A basis point is 0.01 percentage point. The increases come a day after the Reserve Bank of India raised key policy rates and sent signals that it is on course to keep it going until it manages to temper the demand pull price increase, which forced it to raise inflation forecast for the year to 6% from 5.5%. Considering that liquidity in the system has moved into a negative terrain and that there is a strong potential for loan growth, we think it is the appropriate time to raise deposit rates, said Paresh Sukthankar, executive director at HDFC Bank. The transmission to base rate will take a few weeks. Base rate is the minimum at which a bank can lend. The second-largest private bank said it will pay 25 basis points more for two-year deposits at 7.5%,and 7% for one year. These are effective July 30.The sharpest increase of 75 basis points,to 5.25%,is for six months,where temporary factors may keep the market tight. 

YES Bank to raise 500 cr by September from bonds
To fund business growth, private sector lender YES Bank intends to raise 500 crore from bonds by September. We have plans to raise 500 crore from Tier-II bonds during the current quarter, YES Bank managing director Rana Kapoor said here on Wednesday. He said every quarter, the bank would raise capital and plans to raise 1,500 crore by March 2011.The money will be raised for funding infrastructure growth and agri growth, Mr Kapoor said, adding that it would also provide an opportunity to the bank to provide long-term loans to infrastructure companies. Asked about the impact of RBI monetary action on interest rate, Mr Kapoor said: Under the present circumstance, it doesn't warrant base rate change but we have to decide as a team in ALCO (Asset Liability Committee). 

Exim Bank to open London branch
Exim Bank is setting up a branch in London to conduct wholesale banking,for which it has obtained the licence from Financial Services Authority (FSA,) UK. The announcement was made by UKs Chancellor to the exchequer George Osborne during his visit to Mumbai on Wednesday. IPO
Makemytrip to raise Rs 470 cr in US IPO
Online travel company Makemytrip is going to raise $100 million (Rs 470 crore) on the Nasdaq Stock Market. Makemytrip would be the first Indian company in four years to hold its initial public offering (IPO) inUS. According to Bloomberg data, Makemytrip is the first to list in the US after Mumbai-based Back-office services provider WNS Holdings Ltd raised $255 million in July 2006. Makemytrip has filed a registration statement with the Securities and Exchange Commission of the US for the proposed IPO. Morgan Stanley will be the sole book running manager. Oppenheimer and Pacific Crest Securities LLC will be co-managers. 


Source: Economic Times and Business Standard)

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