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DLF promoters to sell 40 per cent stake in rental arm for Rs 14,000 crore (08-10-2015)

DLf

DLF promoters KP Singh family will sell their 40 per cent stake in the company’s rental arm DLF Cyber City Developers for an estimated Rs 14,000 crore to institutional investors. (Photo: PTI)

DLF promoters KP Singh family will sell their 40 per cent stake in the company’s rental arm DLF Cyber City Developers for an estimated Rs 14,000 crore to institutional investors.

The promoters will re-invest a significant part of the amount realised from the sale in DLF Ltd.

The decision was taken by the DLF’s board of directors in its meeting held here today based on the recommendation by the audit committee, which was set up last year to suggest ways to drive the growth of rental business.

According to market sources, the valuation of promoters’ 40 per stake in DLF Cyber City Developers Ltd (DCCDL) could be around Rs 12,000-14,000 crore.

In late 2009, DLF had announced merger of its subsidiary DCCDL with promoters’ firm Caraf Builders and Constructions.

DCCDL had then issued CCPS (compulsorily convertible preference shares) worth Rs 1,597 crore to promoters. Post— conversion, promoters would have 40 per cent stake in DCCDL, which holds bulk of the DLF’s commercial assets.

“With this proposed transaction, DLF will be able to achieve three of its main objectives — removal of conflict of interest, creation of a rental platform with large financial investors and reducing substantial portion of debt. It’s killing three birds with one stone,” DLF Senior Executive Director Finance Saurav Chawla told PTI.

DLF would be able to create REITs in the capital market in partnership with the long term financial investors, he added.

The promoters stake in DLF, which stands at 75 per cent, could increase post this investment, sources said.

To resolve the issue of CCPS held by promoters in DCCDL DLF in a filing to the BSE said that the board approved the recommendations made by the audit committee to sell promoters’ stake in DCCDL to institutional investors.

The filing did not give any valuation of the promoters’ equity stake in DCCDL. “The audit committee today evaluated several options available to the company to reduce the conflict of interest with the CCPS Holders in relation to the rental business and after deliberations, recommended to the Board to consider the proposal that CCPS Holders sell the CCPS to unrelated third party institutional investor(s),” DLF said.

The panel suggested DLF to finalise the strategic terms of transaction including selection of third party institutional investor(s) and also oversee and facilitate the transaction, in consultation with promoters.

It also recommended DLF to appoint bankers, transaction advisors, tax and legal advisors etc to assist in the transaction.

Promoters should invest back in the company, a substantial amount (net of taxes/other charges) of the consideration received from the sale of CCPS, the panel said.

“After deliberation and upon the CCPS holders conveying their consent, the Board accorded its approval for the transaction. Upon completion of the proposed transaction, the company will continue to hold 60 per cent equity interest in DCCDL, on a fully diluted basis,” the filing said. India’s largest realty firm DLF earns an annual rental income of Rs 2,400 crore by leasing its commercial properties, including office and shopping malls comprising 30 million sq ft of area.

As promoters stake could increase post re-investment of amount realised from proposed sale of their 40 per stake in DCCDL, DLF said it would take required steps to adhere to the minimum public shareholding requirements of 25 per cent.

Investment by the promoters in DLF would help the realty major to reduce its debt, which stood at Rs 21,600 crore at the end of the first quarter of this fiscal.

DLF’s promoters in March this year decided to defer till March next year conversion of CCPS into equity shares and also slashed the coupon rate from 9 per cent to 0.01 per cent. The deadline to convert CCPS into shares was 19 March this year.

The Board authorised the audit committee to finalise strategic terms of proposed transaction including selection of institutional investors in consultation with CCPS Holders, to finalise the transaction documents and also to facilitate the transaction, the filing said.

With real estate market facing huge slowdown from last 2-3 years, DLF has been selling its non-core assets to boost its cash flow and reduce debt.

The company has exited from hotel, insurance, wind power and cinema businesses besides selling non-core land parcels. It has raised more than Rs 10,000 crore through this process.

Recently, the company sold about 50 per cent stake in its housing project at central Delhi for about Rs 2,000 crore.

DLF has a land bank of nearly 300 million sq ft, of which about 50 million sq ft is under construction.

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RBI restricts NRIs to buy shares in Shyam Telecom (08-10-2015)

RBI on shyam telecom

Reserve Bank of India has put Shyam Telecom under the caution list and said further purchase of equity shares of the company by Non-Resident Indians would be allowed only after its approval.(Photo: Reuters)

Reserve Bank of India has put Shyam Telecom under the caution list and said further purchase of equity shares of the company by Non-Resident Indians would be allowed only after its approval.

The foreign shareholding through Non-Resident Indians (NRIs) in Shyam Telecom Limited has reached the trigger limit, the RBI said in a notification today.

“Hence further purchases of equity shares of this company would be allowed only after obtaining prior approval of the RBI,” it said.

As per data available on the BSE, promoters held 66.22 per cent in the company as of quarter ended June 2015.

While, the shareholding by Foreign Institutional Investors (FIIs) was nil, others held 33.78 per cent stake in the company.

FIIs, NRIs and PIOs (Persons of Indian Origins) can invest in primary and secondary capital markets in India through Portfoliop Investment Scheme (PIS).

The RBI monitors the ceilings on FII/NRI/PIO investments in Indian companies on a daily basis and has fixed the cut-off points two percentage points lower than the actual ceiling.

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Reliance Industries shares down nearly 3%; top loser on Sensex (08-10-2015)

reliance industries

Shares of Reliance Industries Ltd fell nearly 3 per cent, wiping out Rs 7,817.22 crore from its market valuation today, amid reports that the probe in its dispute over natural gas with state-owned ONGC was seen turning against the company.

Shares of Reliance Industries Ltd fell nearly 3 per cent, wiping out Rs 7,817.22 crore from its market valuation today, amid reports that the probe in its dispute over natural gas with state-owned ONGC was seen turning against the company.

RIL’s stock was down 2.70 per cent to settle at Rs 889.15 on BSE. During the day, it fell 2.98 per cent to Rs 886.60.

The stock was the worst performer among the 30-Sensex components.

At NSE, shares of the company ended at Rs 889.10, down 2.7 per cent.

Weakness in the stock pulled down the company’s market valuation by Rs 7,817.22 crore to Rs 2,87,944.78 crore.

On the volume front, 2.94 lakh shares of the company changed hands on BSE and over 24 lakh shares were traded at NSE during the day.

“Shares of market bluechip Reliance Industries were in news today after the ongoing probe in its dispute with ONGC was seen turning against RIL,” said Achin Goel, Head: Wealth Management & Financial Planning, Bonanza Portfolio Ltd.

A reputed international consultant D&M is believed to have opined that some natural gas from ONGC’s idling Bay of Bengal gas fields may have flown out through the adjoining, connected KG-D6 fields of Reliance Industries.

DeGolyer and MacNaughton (D&M) in its preliminary observations stated that ONGC’s Godavari Block (known as G-4) is contiguous to RIL-operated Block KG-DWN-98/3 (KG-D6), sources privy to the development said.

The reservoir in the two neighbouring blocks is connected, which means there exists one big gas resource several meters below sea bed and does not recognise man-made boundaries that demarcate blocks of ONGC and RIL.

Sources said D&M, which was jointly appointed by ONGC and RIL to find if the neighbouring fields are connected, is of the opinion that there is no unconnected area in G-4 — i.e there exists no independent gas reservoir in the ONGC block and all the resources are shared with KG-D6.

ONGC had in 2013 claimed that RIL had deliberately drilled wells close to the common boundary of the blocks and that some gas it pumped out was from its adjoining block.

RIL has maintained that it had followed the Production Sharing Contract (PSC) in letter and spirit and done no wrong. It has drilled all wells within its boundary walls.

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Tribhovandas Bhimji Zaveri shares surge on Snapdeal tie-up (08-10-2015)

Sensex Tribhovandas Bhimji Zaveri

Shares of Tribhovandas Bhimji Zaveri jumped as much as 17 per cent intraday on Thursday after the company informed BSE that it has tied up with Snapdeal (Photo: Reuters)

Shares of Tribhovandas Bhimji Zaveri jumped as much as 17 per cent intraday on Thursday after the company informed BSE that it has tied up with Snapdeal, India’s leading online marketplace, to offer consumers TBZ – The Original’s diamond jewellery and gold coins on Snapdeal’s online marketplace.

At 2.36 pm, the share price of the company was up 10.33 per cent at Rs 135.70 on BSE. The scrip opened at Rs 123.50 and had touched a high and low of Rs 144 and Rs 122, in trade, so far. Sensex was down 0.95 per cent at 26,786.

The Company presents an exquisite range of diamond jewellery and gold coins on Snapdeal. TBZ – The Original’s diamond jewellery range of rings, earrings, pendants, bracelets and gold coins will be available and accessible to discerning buyers on Snapdeal at affordable prices.

The share price of Tribhovandas Bhimji Zaveri fell 20.75 per cent in the past one year till October 7. On the other hand, Sensex jumped 2.91 per cent during the same period.

For the quarter ended June 2015, the company posted net profit of Rs 2.72 crore, up 420.50 per cent, against Rs 0.52 crore in the corresponding quarte a year ago.

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Tata Steel gains as UK arm’s deficit in pension scheme falls (08-10-2015)

Tata Steel

The residual deficit of Tata Steel UK Ltd (TSUK), an indirect subsidiary of Tata Steel, stood at around 550 million pound (over $842 million) for the period ended March 31, 2011. (Photo: Reuters)

Shares of Tata Steel rose by 2.5 per cent on Thursday after the company said its UK arm has concluded the actuarial valuation of British Steel Pension Scheme (BSPS) and the deficit in the scheme has reduced to 90 million pound (around $138 million) as on March 31, 2014.

The stock gained 2.36 per cent to Rs 242.40 at BSE. On NSE, it went up by 2.49 per cent to Rs 242.70.

The residual deficit of Tata Steel UK Ltd (TSUK), an indirect subsidiary of Tata Steel, stood at around 550 million pound (over $842 million) for the period ended March 31, 2011.

Trustee of BSPS and TSUK have concluded the triennial actuarial valuation of the scheme as of March 31, 2014, the company had said in a regulatory filing.

“As a result of measures agreed between the Trustee and TSUK and benefit changes implemented following consultation between TSUK, its employees and their representatives, the on-going residual deficit has been reduced from around 550 million pound as on March 31, 2011 to 90 million pound as on March 31, 2014,” it added.

BSPS is the largest defined benefit scheme within Tata Steel Europe’s portfolio. On account of low interest rates in the UK, the valuation placed on the scheme’s liabilities increased significantly since the last actuarial valuation in 2011 leading to a greatly increased funding deficit.

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Moody’s assigns lowest investment grade rating to Mahindra & Mahindra (08-10-2015)

Mahindra & Mahindra

An upgrade of Mahindra &Mahindra’s rating will require continued strong operational and financial performance and a further diversification in its businesses, Moody’s said. (Reuters)

Moody’s today assigned lowest investment grade rating, Baa3, to homegrown auto major Mahindra & Mahindra, although with a stable outlook.

The declining profitability of its automotive business — mainly because of the weak performance of its Korea-based subsidiary Ssangyong Motor and the limited geographic diversification of the group’s non-IT businesses constrain the ratings, it said.

Elaborating on the first time issuer rating to M&M, Moody’s Vice-President and Senior Analyst Kaustubh Chaubal said: “The rating reflects M&M’s long track record of operations and, at the same time, its adoption of strong corporate governance practices and a prudent approach to management, as well as its close operational oversight of its group companies”.

The rating takes into account the group’s diversified business profile across many areas, including farm equipment, automotive, IT, financial services, hospitality and real estate, Moody’s said in a statement.

“Furthermore, M&M’s credit profile is supported by its strong financial flexibility across listed but group- controlled companies — based on the market value of its investments and which show substantial unrealised value,” said Chaubal, who is also Moody’s lead analyst for M&M.

Moody’s said the rating also factored M&M’s leading market position in India in farm equipment and light commercial vehicle (LCV) goods carriers.

“At the same time, although the group’s leading, albeit declining, market position in utility vehicles (UVs) is a strength, increasing competition in the UV segment is a concern,” it added.

The ratings agency further said: “The stable outlook reflects our expectation that M&M will retain its diversified business profile, while maintaining its leading market position in its core farm equipment and automotive businesses in India.”

The outlook also anticipates that the company will preserve its very solid balance sheet and modest financial leverage.

An upgrade of M&M’s rating will require continued strong operational and financial performance and a further diversification in its businesses, Moody’s said.

The Baa3 rating could come under pressure if M&M’s business profile weakens because of a sustained loss of market share in its key operating segments of tractors, utility vehicles and light commercial vehicles in India, or if Ssangyong Motors continues to report losses, it said.

It could also be under pressure if the company undertakes large debt-funded acquisitions that materially weaken its financial profile, Moody’s said.

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CARE lowers rating for Hindalco NCDs (08-10-2015)

Hindalco

CARE noted that as captive coal mines are expected to cater only about a quarter of Hindalco’s requirement, it will remain exposed to market risk for the remaining need. (PTI)

Two months after rating CRISIL lowered its rating of the long-term debt instruments of Hindalco industries, CARE ratings on Wednesday downgraded its rating of the metal player’s non-convertible debentures.

The agency revised the ratings for Hindalco’s NCDs worth Rs 6,000 crore to ‘AA’ from ‘AA+’ citing moderation in profitability and debt protection parameters from expected levels.

“Besides continued trend of lower LME (London Metal Exchange) aluminium prices have exerted pressure on the profitability margins of HIL combined with increased debt levels due to substantial debt in Novelis and term debt availed for the greenfield projects in HIL are other key rating concerns,” added CARE ratings.

It said that the lower rating also factors in increased cost of production for Aditya Birla group’s flagship business, due to the premium paid for acquiring captive coal mines in auctions held in February this year.

CARE noted that as captive coal mines are expected to cater only about a quarter of Hindalco’s requirement, it will remain exposed to market risk for the remaining need.

“While the rating factors the proactive steps taken by the management to replace part of its term loans with a longer maturity profile which is expected to reduce the stress on the cash flows in medium term, it notes that the amortization of such loans has spread beyond the earlier envisaged schedule,” added the agency.

CARE ratings also assigned ‘AA’ grade to Rs 18,445.6 crore of long-term debt facilities of Hindalco and said that the rating continues to derive strength from stable performance of the copper division with increased margins in FY15.

Amidst plunge in global base metal prices and slower pick-up in demand, Hindalco has seen a decline in its earnings profile in last three quarters. Benchmark global copper and aluminium prices on London Metals Exchange have declined by 18% and 13% respectively in 2015 so far.

While its standalone earnings have witnessed negative to flat yoy growth in each of the quarters since three months to September 2014, its consolidated profit for fiscal 2014-15 fell by 61% to Rs 854.2 crore. The aluminium and copper producer which carries total debt of Rs 68467.5 crore on its balance sheet as of March 2015 also reported a yoy decline of 10% in its operating cash flow for the period.

Analysts are predicting metal companies including Hindalco to sustain weak financial performance in the upcoming earnings season. According to Kotak Institutional Equities, Hindalco may report net loss for its standalone operations during Q2FY16.

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MAN Industries shares surge over 7% on bagging orders worth Rs 700 crore (08-10-2015)

MAN Industries

MAN Industries shares surged over 7 per cent in the morning trade on Thursday after the company informed BSE on Wednesday post market hours that it has received orders worth approximately Rs 700 crore from international and domestic customers for supply of pipes for Oil, Gas and Water sector projects. (Photo: PTI)

MAN Industries shares surged over 7 per cent in the morning trade on Thursday after the company informed BSE on Wednesday post market hours that it has received orders worth approximately Rs 700 crore from international and domestic customers for supply of pipes for Oil, Gas and Water sector projects.

At 9.35 am, MAN Industries shares were trading 7 per cent up at Rs 111.80 apiece. It opened at Rs 110.60 and had touched a high and low of Rs 113.90 and Rs 110.60, in trade, so far. Sensex was down 0.30 per cent at 26,954.56.

In a BSE filing, the company said, “With these new orders the outstanding order book as on date stands at approximately Rs 1,300 crore to be executed over a period of 6 to 8 months, this will result in significant improvement in the coming quarters.”

The company has upgraded its Pithampur plant with the enhanced capabilities to become pioneer to produce Pipes up to 3600 mm dia metere with coating facilities. The company has outstanding bids around $ 1.5 billion at various stages of evaluation for several Oil, Gas and Water projects in India and abroad. The company therefore expects good order inflow in near future from the outstanding bids which are at various levels of evaluation by the clients.

Man Industries (India) is engaged in manufacturing of LSAW Line Pipes, Hsaw Line Pipes and Aluminium Extruded Products. The company has received various certifications such as API, ISO-9001, ISO-9002, ISO-14001, and ISO-18001 for its quality management.

The BSE group ‘B’ stock of face value Rs 5 has touched a 52 week high of Rs 128.40 on 20 August 2015 and a 52 week low of Rs 44.40 on 31 March 2015.

Last one week high and low of the scrip stood at Rs 113.90 and Rs 103, respectively. The current market cap of the company is Rs 637 crore.

The promoters holding in the company stood at 54.47 per cent while institutions and non-institutions held 7.77 per cent and 37.76 per cent, respectively.

For the quarter ended June 2015, the company posted net profit of Rs 17.71 crore, up 460.44 per cent, against Rs 3.16 crore in the corresponding quarter a year ago.

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Stocks in focus today: Tata Steel, Cairn India and more (08-10-2015)

Stocks in focus

Cairn India stocks will be in focus as it has asked government to cut the cess levied on crude oil produced from its Rajasthan fields as the levy was taking away nearly a fifth of revenue at a time when oil prices have halved. (Reuters)

The BSE Sensex turned flat after opening over 80 points up on Thursday. NSE Nifty opened above 8,170. At 9.22 am, Sensex was down 33.47 points at 27,002.38. Similarly, Nifty was down 10.20 points at 8,167.20 during the same time.

Below are the stocks that will be in focus today

Tata Steel: Private steel major Tata Steel will pay Rs 154.72 crore to its eligible employees as annual bonus for 2014-15.

Cairn India: The company has asked government to cut the cess levied on crude oil produced from its Rajasthan fields as the levy was taking away nearly a fifth of revenue at a time when oil prices have halved.

Cipla: Drug major has inked a pact with Biopharma SPA for establishing a joint venture company in Algeria to manufacture and market respiratory products.

NMDC: Country’s top iron ore miner said it has incorporated a wholly-owned subsidiary company for developing a steel plant in Jharkhand through the Special Purpose Vehicle.

Corporation Bank: The bank on Wednesday further revised its benchmark lending rate by 0.05 per cent to 9.65 per cent.

MAN Industries: The company’s stocks  surged over 6 per cent in the morning trade after it said that it has received orders worth approximately Rs 700 crore from international and domestic customers for supply of pipes for Oil, Gas and Water sector projects.

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Coffee Day fixes IPO price band of Rs 316-328; eyes Rs 1,150 cr (08-10-2015)

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Coffee Day Enterprises, which runs Cafe Coffee Day (CCD), said it has fixed the price band of its Rs 1,150 crore initial public offer (IPO) at Rs 316-328 per share and it will open on October 14.

Coffee Day Enterprises, which runs Cafe Coffee Day (CCD), on Wednesday said it has fixed the price band of its Rs 1,150 crore initial public offer at Rs 316-328 per share and it will open on October 14.

The issue, which closes on October 16, comprises a net issue to the public and a reservation of Rs 15 crore worth equity shares for subscription by eligible employees.

The minimum bid lot is 45 equity shares and in multiples of 45 shares therein.

Kotak Investment Banking, Citigroup, Morgan Stanley, Axis Capital, Edelweiss and YES Bank are handling the IPO.

“Of the money raised, Rs 635 crore will go into reducing the debt in the holding company, while we have committed to our investors, Rs 290 crore over the next 18 months will go towards expansion of coffee business. The surplus of Rs 125 crore will also go towards the coffee business,” V G Siddhartha, chairman of Coffee Day Enterprises said here.

“We will open 135 new stores every year,” he added.

Siddhartha, who is the main promoter as well as chairman and managing director, holds 54.78 per cent stake in the company while all promoters together have 92.74 per cent holding in the company.

In March, Coffee Day raised Rs 100 crore in a pre-IPO funding from Nandan Nilekani and Rare Enterprises (owned by Rakesh Jhunujunwala and Ramesh Damani) among others. Private equity major, KKR has also invested in Coffee Day.

In addition to having the largest chain of cafes in India, it operates a fully-integrated coffee business ranging from procuring, processing and roasting of coffee beans to retailing of coffee products across various formats.

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