BS: Airtel, TTSL may have to pay Rs 15,000 cr to get DoT approval for merger

12 March 2019: The merger of loss-making telecom firm Tata Teleservices (TTSL) with Bharti Airtel, which got the NCLT’s green signal in January, has one more hurdle to cross before it is cleared by the Department of Telecom (DoT). And this one will pinch since it’s a bill for unpaid dues of around Rs 15,000 crore.

“Airtel and TTSL have to pay around Rs 10,000 crore and Rs 2,800 crore, respectively, as SUC [spectrum usage charge],” a DoT official told The Economic Times. “Then there is another Rs 2,000 crore of OTSC [one-time spectrum charge] that transferee firm Airtel will have to pay in the form of bank guarantees to the government.”

For instance, Vodafone had to pay OTSC of around Rs 3,900 crore for completing merger with Idea Cellular. The DoT had also asked Idea Cellular to furnish a combined bank guarantee of Rs 3,342 crore before taking merger on record.

In SUC and OTSC, licence fees will get also tacked on and this will be another big amount that the telcos have to cough up. The buzz is that demand letter will be sent out shortly.

In October 2017, Sunil Mittal-led Airtel and TTSL announced their merger on a no-debt, no-cash basis. In other words, Airtel would not take over TTSL’s around Rs 40,000 crore debt and would neither pay any cash. However, according to a statement, as part of the agreement Airtel would assume a small portion of the unpaid spectrum liability of TTSL towards DoT, which would be paid on deferred basis. According to the daily, TTSL is expected to bankroll most of the dues even if Airtel formally assumes the responsibility to clear the dues.

The sources added that, going by historical precedence, DoT is expecting Airtel and TTSL to legally challenge the OTSC charges.

Last month, telecom tribunal TDSAT had quashed a government decision to charge for additional spectrum allocated to RCom and had asked DoT to return bank guarantees worth Rs 2,000 crore to the Anil Ambani-led firm.

The DoT and telecom firms have long been at loggerheads over the scope and definition of Adjusted Gross Revenue, on which licence fees and other charges like SUC – two key revenue streams for the government – are calculated. Telcos have historically stymied DoT’s efforts to recover such dues on the grounds that the definition of AGR was still disputed in court.

Typically, a telecom operator shells out 8% of AGR as licence fee and around 5% as SUC. As for OTSC dues, as per DoT rules, telcos have to pay for holding spectrum above 6.2 MHz/circle retrospectively from July 2008 to end-December 2012, based on market determined price decided in auction. Besides, for airwave holdings beyond 4.4 MHz/circle, the telcos would have to pay for the remaining period of their licences starting January 1, 2013.

Last September, the telecom department moved the Supreme Court for approval to secure dues worth almost Rs 33,000 crore from all operators. This development came against the backdrop of lower revenue from licence fees and SUC for the government. Union telecom minister Manoj Sinha informed the Parliament in February that the government’s revenue mop-up from the telecom sector fell by about 22% in the 2017-18 fiscal.

Earlier this month, Vodafone Idea, Bharti Airtel and Reliance Jio paid the government about Rs 6,000 crore in spectrum dues but a huge amount is still stuck in legal disputes between telcos and DoT. Hence, the rulings of the various courts and tribunals will have a bearing on the DoT’s future earnings.

The Business Standard reported

DNA: Airtel to raise Rs 32,000 crore in fight against RJio

1 March 2019: Facing unabated competition from Reliance Jio, telecom firm Airtel plans to raise up to Rs 32,000 crore, including through a rights issue.

The Board of Directors of the company on Thursday approved the fund raising of up to Rs 32,000 crore through rights issuance of up to Rs 25,000 crore and perpetual bond with equity credit up to Rs 7,000 crore.

The terms of the rights issue cleared by the Board include price of Rs 220 per fully paid equity share (a premium of Rs 215 per fully paid equity share over the face value of Rs 5 per share); and a rights entitlement ratio of 19 shares for every 67 shares held by eligible shareholders, the statement said.

The perpetual bond of up to $1 billion (about Rs 7,000 crore) denominated in foreign currency is subject to price, market conditions and other terms and conditions as acceptable, and with conditions allowing for full accounting equity credit and subject to all applicable laws, Airtel said in a communication to the stock exchanges. The timings of the issue and other technicalities will be decided by the special committee of directors set up for the fundraising.

With tariffs at the lowest level, incumbents such as Airtel and Vodafone Idea have been struggling to sustain themselves with profits and margins on a constant decline.

The telecom sector has been reeling under financial constraints since the entry of Reliance Jio. The shock waves are still being felt even after over two years of Jio’s entry. In the third quarter of this fiscal, Vodafone Idea posted a loss of about Rs 5,005 crore, while Airtel posted a 72% decline in profits and Reliance Communications knocked the doors of NCLT for insolvency, the second telecom firm to do so in recent times. However, Reliance Jio has managed to turn profitable in just two years of its operations.

Vodafone Idea has also announced plans to raise Rs 25,000 crore through a rights issue.

The cumulative debt of the industry remains high at Rs 7 lakh crore. Continuous investment in their networks has become difficult for Airtel as well Vodafone Idea, which is still in the process of integrating the two networks.

The fundraising will help Airtel to invest at a faster pace in 4G expansion.

The ‘Special Committee of Directors for Fund Raising’ has been authorised by the Board to proceed with rights issue and determine its terms and conditions including setting the record date, finalisation of the Letter of Offer and other details, and also authorised the ‘Committee of Directors’ to decide, assess and conclude on the issuance of the perpetual bond.

A BIG CALL

  1. The company plans a rights issuance of up to Rs 25,000 crore and perpetual bond with equity credit up to Rs 7,000 crore  
  1. The rights issue includes price of Rs 220 per fully paid equity share (a premium of Rs 215 per fully paid equity share over the face value of Rs 5 per share)

DNA reported

BTVI: Moody’s Downgrades Bharti Airtel Credit Rating To ‘Ba1’; Outlook Negative

5 February 2019: Moody’s Investors Service on Tuesday downgraded the credit rating of telecom operator Bharti Airtel and the backed senior unsecured notes issued by the telco’s Africa arm on account of uncertainty around the company’s profitability, cash flow situations and debt levels.

“Moody’s Investors Service (“Moody’s”) has downgraded to Ba1 from Baa3 the senior unsecured rating for Bharti Airtel Ltd. (Bharti) as well as the backed senior unsecured notes issued by Bharti’s wholly-owned subsidiary, Bharti Airtel Int’l (Netherlands) B.V.,” the agency said in statement.

Credit ratings reflect the company’s calibre to repay debt and raise funds. Ratings range between Aaa, which means best, to lowest category C.

Ba1 rating means obligations are judged to have speculative elements and are subject to substantial credit risk, but have a superior ability to repay short-term debt obligations.

“At the same time, Moody’s has assigned a Ba1 corporate family rating (CFR) to Bharti and withdrawn the company’s Baa3 issuer rating. The ratings outlook is negative,” Moody’s report said.

The negative outlook indicates possibility of further downgrade of rating.

“The downgrade reflects uncertainty as to whether or not the company’s profitability, cash flow situation and debt levels can improve sustainably and materially, given the competitive dynamics in the Indian telco market,” Moody’s Vice President and Senior Credit Officer, Annalisa DiChiara said.

The report said that Bharti Airtel reported EBITDA (cash flow indicator) of Rs 26,500 crore for the 12 months ending December 31, representing a 15.5 per cent year over-year contraction and the profitability of its core Indian mobile segment — which contributes around 37 per cent of EBITDA – remained low, generating just Rs 9,800 crore over the same period.

Bharti Airtel, last week, reported a 72 per cent drop in consolidated net income for the three months ended December 2018 at about Rs 86 crore, amid market turbulence triggered by cut-throat competition in India business.

Change in accounting structure with respect to Airtel Payments Bank brought an exceptional gain of Rs 1,017 crore for Bharti Airtel and bolstered the company’s financials.

“After accounting for gain of Rs 1,017 crore towards exceptional items (net of tax), the resultant net income for the quarter ended December 31, 2018, came in at Rs 86.2 crore,” Airtel said in a statement.

Its net income stood at Rs 306 crore in the same period of the previous year.

While rival Reliance Jio posted a 22 per cent rise in profit at Rs 831 crore on a year-on-year basis in the home turf, Airtel’s losses from India operations (before exceptional items) stood at Rs 971.9 crore, compared to a net income of Rs 373.5 crore in the year ago period.

Among telecom service business arm, only Airtel Africa recorded increase in the profit.

Moody’s, BTVI reported

BHARTI AIRTEL DOWNGRADED BY CREDIT SUISSE

Bharti Airtel – Credit Suisse is the latest brokerage firm to downgrade the stock citing increasing competition from Reliance Infotel in the wireless voice market could hurt Bharti’s profits. The stock was downgraded to under perform from neutral with a price target of INR 220. (Moneycontrol)

Stock price down 2.80 percent at INR 251.40 on the BSE.

DAILY MARKET REPORT – 8 AUGUST 2012

A flat day of trade amid Airtel’s results and lower forecasts of India’s GDP. The Nifty ended flat in trade on no particular market moving event. Global cues also did not help much in today’s trading session.

The Sensex closed 1.22 points lower at 17600.56 in trade after touching a high of 5377.60 and a low of 5331.90 today. the Nifty closed 1.30 points higher at 5338 with highs of 5377.60 and lows of 5331.90. Nothing much happened today apart from lower numbers by Bharti Airtel. Its disappointing results saw the co.’s stock decline 6 percent in trade and is now being replaced by ICICI bank in the top 10 firms by market cap.

On the sectoral indices on the BSE, the Midcap Index was down 0.18 percent and the BSE Smallcap Index also declined 0.40 percent.  The Realty Index was down 2 percent, the Captial Goods Index saw a decline of 0.65 percent lower and the Bankex ended 0.57 percent lower. The Auto Index gained 1.13 percent and the Metal Index rose 0.78 percent.

Veritas downgraded Indiabulls Finance. Mahindra & Mahindra saw its shares rise 4 percent on better than expected results. Hindalco rose in trade by 2 percent.

On the currency front, the Rupee hovered at 55.18 to the Dollar.

Kindly check the Market Summary tab for further information on stock-related data.

(Economic Times, Moneycontrol ,Business Standard)

WEEKEND EQUITY UPDATE: 4 AUGUST 2012 TO 5 AUGUST 2012

INDIA

FII’s investing through the Mauritius route has exited their holdings in about 24 Indian companies in FY12 on a YTD basis. Co.’s such as Yes Bank, Axis Bank, Bajaj Hindustan all saw selling pressure from the FII’s who have exited their positions from these companies. The total value of the sale of shares is about INR 3000 cr. (NDTV Profit)

According to the Centre for Monitoring Indian Economy (CMIE), an economic research organization, profits of Indian firms are expected to rise by around 25 percent in the FY13 period on lower commodity prices and stable interest rates. FY12 saw profits decline by 0.6 percent. The organization also stated that firms would have incorporated the impact of the fluctuation in the Rupee as well as compared to the previous fiscal. (NDTV Profit)

Indian foreign exchange reserves increased by USD 1.3b to USD 288b over the week ended 27 July. Foreign currency assets at USD 256b, gold reserves 25.7b, drawing at USD 4.3b and reserve position at the IMF at USD 2.1b. (Business Standard)

The top eight companies on the Sensex saw their market capitalization rise by INR 35,882 cr for week ended 3 August 2012. NTPC gained the most by adding INR 10,926 cr with Reliance Industries following the firm. SBI, Infosys, ONGC also rose but Coal India and Bharti Airtel saw a decline in their values. (Economic Times)

Coal India Ltd – Co. has entered into a fuel supply agreement with 29 power plants in India to supply these firms with fuels for power generation, based on a directive from the Indian Government. The co. will also import around 20 m tonnes of coal to meet the supply shortage gap. (Economic Times)

Jindal Steel and Power – Co. is in advanced talks to plan an investment of INR 100,000 cr to expand output at its plants in Raigarh and construct new plants in Odisha and Jharkhand in India. The total expected output by 2020 is about 20 m tonnes per annum, as stated by Chairman Navin Jindal. (Economic Times)

Emami – FMCG firm has voiced concerns that rising costs of raw materials and a higher inflation could affect the firm in FY12-13 period. However, the co. plans to implement certain cost efficient measures and strengthen its distributor network to overcome these challenges. (Economic Times)

NTPC – India’s power producer would conduct capital expenditures of INR 138,000 cr on various power projects to increase its power output to 27,000 megawatts. A total of INR 95,965 cr would be funded from issuing debt securities. (Economic Times)

Maruti Suzuki – According to Haryana Chief Minister Bupinder Singh Hooda, expected co.’s Manesar plant to resume production shortly. However he did not provide a time-line for the plant to resume its activities. (Financial Express)

Jet Airways – FII holdings in co. increased from 6.70 per cent to 7.12 per cent during the 1Q12-13. (Economic Times/PTI)

Kingfisher Airlines – FII holdings in co. increased from 0.34 per cent to 0.98 per cent during the 1Q12-13. In others news, Airport Authority of India (AAI) has refused aircraft lessors to take back their aircrafts leased to co., as co. owes INR 300cr to AAI.  (Economic Times/PTI/The Hindu Business Line))

SpiceJet – FII holdings in co. increased from 2.61 per cent to 3.59 per cent during the 1Q12-13. (Economic Times/PTI)

EUROPE

According to Italian Prime Minister Mario Monti, the Italian Government did not require German cash to recover from its current situation. (Reuters)

The Spanish finance minister Luis de Guindos, the Spain had covered 70 per cent of its 2012 financing need and will wait for clearer guidelines from ECB, before requesting for aid. (FoxBusiness DowJones Newswire)

Yields on Spanish two-year notes declined 1.35 percent to 3.96 percent and 10 yr bonds fell below 7 percent on speculative news of the ECB buying short-term bonds to calm the bond markets. Spain’s bonds returned -6.3 percent while German debt provided returns of 4.5 percent and Italy with 6.5 percent. (Bloomberg)

According to the inspectors from IMF, the European Commission and the European Central Bank said that, Greece had made some progress in finding budget cuts needed to continue its bailout programme. However the international inspectors said that, not all work had been done and inspectors will return early September for a final verdict. Greece has a EUR 3.2b bond maturing in August. (The Telegraph UK)

Standard and Poor’s downgraded Slovenia’s long term credit rating to ‘A’ from ‘A+’; short term rating affirmed at ‘A-1’. Outlook: negative. (Economic Times/AFP)

Marks & Spencer – According to an Sunday Times reports, Bank of America Merrill Lynch have been assessing possibilities of providing debt financing for a speculative bid for co. Co. is been viewed as a GBP 6b bid target, as shares in co. have tumbled 50 per cent since 2007. (FoxBusiness/Sunday Times)

NORTH AMERICA

U.S Trade Deficit for June is expected to have lowered as the nation imported less oil  and slower growth reduced demand for U.S made goods abroad. Data due on 9 August forecasts deficit to come in at USD 47.5 b vs USD 48.7 b in May. Lower outlay on imports are due to lower prices of crude oil and lower exports due to slowing economies in Asia and Europe exhibiting lower demand for U.S made goods. (Bloomberg)

Boeing Co. – Airplane manufacturer secured orders to conduct the sale of 94 single-aisle 737 airplanes to Asian airline firms including 54 jet deal with Singapore Airlines Ltd. The deals are expected to touch USD 8.4 b. (Bloomberg)

 

 

EQUITY UPDATE: 1 AUGUST 2012

ASIA

China’s steel factories saw a 96 percent decline in profits for the 1HY12 period on economic slowdown lowering demand. The China Iron and Steel Association revealed that profits came in at RMB 2.39 b (GBP 376 m) on rising costs and lower demand. (Financial Times)

INDIA

FIIs saw net buying of INR 879.97 cr in trade today on a provisional basis with gross purchases of INR 2940.75 cr and gross sales of INR 2060.79 cr. DIIs became net sellers of INR 493.48 cr on gross purchases of INR 827.81 cr and gross sales of INR 1,321.29 cr. (Business Standard)

The Reserve Bank of India relaxed foreign exchange retention rules, by allowing corporate and exporters to keep entire foreign exchange earnings in respective currencies for a limited period versus a existing provision of 50 per cent conversion to Indian rupee. In other news, RBI lowered India’s growth forecast for the current financial year to 6.5 per cent versus previous estimate of 7.5 per cent. (MoneyControl/BBC)

Reliance Power – Co. is set to utilize USD 800 m as four international banks sanctioned its loan for its power project in Sasan, India. (Business Standard)

Maruti Suzuki – Rating agency ICRA will scrutinize around 14 auto parts suppliers to Maruti Suzuki India on account of the ongoings at the co.’s Manesar plant. Violence at its factory in Manesar has severely affected the co.’s production, thus affecting its suppliers. (Economic Times)

Tata Steel – Co. is stated to have lowered its operating capacity on account of power outages in the northern region of India. (Economic Times)

Bharti Airtel – Co. is exploring options of issuing new shares to raise funds, citing two people aware of the situation. (Business Standard/Reuters)

Tata Motors – Jaguar Land Rover is recalling 2,229 Freelander 2 SUV’s in China due to a potential perforation in power steering hose. (The Hindu Business Line)

Power Co.’s – According to the rating agency Fitch, the outlook on domestic power sector was stable, due to some progress in availability in fuel and a possibility of debt restructuring of SEBs. In related news Coal India agreed to supply at least 80 per cent of coal requirements for new power projects.  (Financial Express/Money Control)

INDIAN EARNINGS

IDBI Bank – Co. reported 1Q12-13 net profit at INR 427.34cr vs. previous INR 335.10cr in 1Q11-12. Total income at INR 6,786.81cr vs. previous 6,059.83cr. (The Hindu Business Line)

Cipla – Co.reported 1Q12-13 net profit at INR 400.76cr vs. previous 1Q11-12 net profit at INR 253.34cr. Net sales at INR 1,917.34cr vs. previous INR 1,550.33cr. (Financial Exprees)

Petronet LNG – Co. reported 1Q12-13 net profit at INR 270.85cr vs. previous INR 256.71cr. Turnover up 52 per cent to INR 7,030.41cr. (The Hindu Business Line/PTI)

Bhushan Steel – Co. reported 1Q12-13 net profit at INR 205.97cr vs. previous INR 209.96cr. Net sales at INR 2747.34cr vs. previous INR 2165.85cr. (Business Standard/PTI)

Titan Group – Co. reported 1Q12-13 net profit at INR 156.09cr vs. previous INR 143.51cr. Net income at INR 2,205.81cr vs. previous INR 2020.60cr. (Business Standard/PTI)

Karur Vysya Bank – Co. reported 1Q12-13 net profit at INR 145.95cr vs. previous INR 116.70cr. Total income at INR 1,109.81cr vs. previous INR 768.72cr. (Business Standard)

Jaiprakash Associates – Co. reported 1Q12-13 net profit at INR 138.84cr vs. previous net profit at INR 184.06cr. Net sales at INR 2,963.57cr vs. previous INR 2,902.30cr. (Business Standard/PTI)

EID Parry – Co. reported 1Q12-13 net profit at INR 22.47cr vs. previous net loss of INR 7.18cr. Total income at INR 578cr vs. previous INR 398.49cr. (Financial Express)

GTL – Co. reported 1Q12-13 net loss of INR 203.95cr vs. previous 1Q11-12 net profit of INR 12.93cr. Revenue at INR 615.98cr vs. previous INR 820.62cr. (The Hindu Business Line)

Man Industries – Co. reported 1Q12-13 net profit at INR 26cr vs. previous INR 24cr in 1Q11-12. Net Sales at INR 326cr vs. previous INR 466cr. (The Hindu Business Line)

Shoopers Stop – Co. reported 1Q12-13 net profit at INR 50 lac vs. previous INR 11.7cr. Gross retail revenue at INR 516.9cr vs. previous INR 448.5cr. (Business Standard/PTI)

Muthoot Capital Services – Co. reported 1Q12-13 net profit at INR 4.93cr vs. previous INR 2.35cr. Revenue at INR 22.17cr vs. previous INR 12.23cr. (Business Standard/PTI)

EUROPE

Italian PM Mario Monti, stated that the timely assistance from the ECB and the bailout funds could slowly help the country return to stability, ahead of his tour to Helsinki, Madrid and Paris this week. Italy is faced by rising government bond yields and surveys indicate that around more than half of the public believe that Monti would not be able to achieve the target of lowering the country’s fiscal deficit. (Financial Times)

ECB’s plans of staging a bailout program for troubled European economies, hit a resistance. As according to a Bundesbank source, most troubled European economies faced a fiscal problems and which should be addressed using fiscal instruments. (CNBC)

EU unemployment rate for the 17 country block rose to 11.2 percent or 17.8 m unemployed people in July vs. 10.2 percent in June 2011. Youth unemployment, the under-25 age group, rose to 22.4 percent. The results were affected mostly by Spain and Greece where the rates were 24.8 percent and 22.5 percent respectively. Germany, was more stable as the rate declined to 5.4 percent vs 5.5 percent previously. The data would weigh on the ECB meet this Thursday when it decides on its monetary policy and interest rates. (Financial Times)

Euro zone inflation for June was stubbornly stuck at 2.4 percent in July, similar for the last three months. The data, combined with the rising unemployment rates, could weigh in on the ECB meet this Thursday. (Financial Times)

Italian unemployment rate at 10.8 per cent in June versus 10.6 per cent in May. (Economic Times)

Moody’s lowered U.K’s GDP forecast to 0.4 percent for FY12 and 1.8 percent growth in FY13. However, the agency did not alter its AAA rating and its outlook on it. The agency stated that policies such as asset purchases, the government’s ability to reduce debt without hampering growth all prompted for the forecast. (Financial Times)

According to Fathom consulting, a Eurozone break-up could force UK into a deep recession, force governments to nationalise banks and trigger a GBP 1tr of QE. (Telegraph UK)

Deutsche Bank – Co. admitted that some of their staff was involved in LIBOR rate-rigging scandal. However an internal inquiry has cleared senior management. In other news, co. to cut 1,900 staff, mostly outside Germany, due to the European economic downturn. (BBC)

Tesco – Standard and Poor’s cut co.’s outlook to ‘negative’, warned on weakening profits. The rating agency has suggested that co. should sell off businesses. (Telegraph UK)

EUROPEAN EARNINGS

BBVA – Spanish bank saw its 2Q12 profit decline to EUR 505 m vs expectations of EUR 700 m. Profits declined 58 percent y/y on its property loan delinquencies. Net interest income rose 16 percent to EUR 3.74 b. The co. set aside EUR 1.43 b of the reqd. EUR 4.6 b to comply with Spanish regulatory laws. The bank’s Latin American division saw revenues rise to EUR 1.02 b vs EUR 774 m on stronger demand for loans and rise in deposits. (Financial Times)

British Petroleum plc – Co. saw its 2Q12 profits decline to USD 3.7 b vs USD 5.7 b a year ago, a 35 percent decline on lower production, higher writedowns on its shale gas unit and a tax charge in Russia. The numbers came in below estimates as lower crude oil and nat gas prices weighed on its earnings. The charges on its Deepwater rig oil spill could still weigh on profitability as it appeased shareholders with its strategy of delivering a 50 percent increase in cash flows by 2014. The co. was also affected by the sale of its Russian JV with TNK where income was lower by USD 700 m on a y/y basis. Lower output also hampered its operations. (Financial Times)

NORTH AMERICA

US consumer confidence for July at 65.9 versus estimated 61.5 versus previous 62.7 ; revised from 62. (FXStreet)

NORTH AMERICAN EARNINGS

Pfizer – Pharma co. saw its profits rise to USD 3.25 b, a 25 percent y/y rise on cost cutting vs USD 2.61 b previously. EPS came in at 43 cents vs 33 cents a year ago. EPS excl costs came in at 62 cents vs expectations of 54 cents. Overheads declined 17 percent with R&D expenses lowered by 24 percent. Revenues declined 9 percent to USD 15.1 b, declining 9 percent y/y on a 53 percent fall in the sale of Lipitor, its anti cholesterol drug, whose patent expired. The co. plans to sell its nutrition and animal health units to raise USD 3.0 b through 20 percent divestment to offset declining revenues of Lipitor. It reaffirmed its FY2012 earnings at USD 2.14 – 2.24 a share. (Financial Times)

 

 

WEEKEND EQUITY UPDATE – 14 JULY 2012 TO 15 JULY 2012

ASIA

According to Chinese Premier Wen Jiabao the current economic growth remained in the expected target range set earlier this year and saw the effectiveness of the stabilization policies. However he added that the economy had not formed a stable recovery and economic difficulties may continue for some time. He stated that the government will do its utmost to generate employment and support industries through tax breaks and capital provision which face a slowdown in exports. China currently faced slower GDP expansion and its woes were compounded with a slowdown in China’s traditional markets such as US and Europe.  (Economic Times/AP)

China plans to reduce taxes on the profits of overseas co.’s operating in China by upto 50 percent to encourage more investment into the country. The government would also include dividends paid by Chinese Co.’s to overseas shareholders. (Financial Times)

INDIA

The cumulative market capitalization of top five co.’s in the Sensex declined by INR 26,287 cr for week ended 13 July on earnings and other economic data. Infosys, which came out with dismal numbers, led the decline by INR 12,406 cr. Bharti Airtel, SBI, Reliance Industries and NTPC also saw their market values decline. TCS, ONGC, Coal Indian, HDFC Bank and ITC saw gains in their market share for the similar period. (Economic Times)

According to ICICI Securities June inflation is likely to be at 7.82 per cent versus 7.55 per cent in May, a unlikely scenario for a rate cut. (Economic Times/PTI)

Mining/Metals co.’s – Indian governments signs a bilateral security co-operation agreement with Mozambique as part of the effort to strengthen ties. (Economic Times/PTI)

According to the Indian Meteorological Department, the impact of a lower than expected monsoon could have a maximum impact of 0.25 percent on the country’s GDP.  (Business Standard)

ONGC – Co. is looking to invite bidders for sale of gas from its Gamij field in Gujarat, India through an e-bidding process. The oil field has an average output of 15,000 standard cubic meters per day (SCMD) on the basis of availability for a five year period. ONGC expects the field to generate revenues of INR 5.5 cr on an annual basis. (Economic Times)

Nalco – Co. is in talks to acquire an Indonesia-based firm Ashan Aluminum for around INR 8000 cr. Nalco primarily would gain from Ashan’s plant which has a capacity of 2.1 lakh tonnes. Ashan, which is owned by a Japanese consortium, would see its operating license expire at the end of 2013, which is portion Nalco would acquire. The rest of the stake in the co. is held by the Indonesian government. (Economic Times)

DLF – Co. plans to reduce its INR 23,000cr debt to INR 17,000cr at the end of the fiscal by the sale of non-core assets. (The Hindu Business Line)

SAIL/Coal India/RINL/NMDC/NTPC – ICVL is on a lookout to acquire coal mines in Australia and New Zealand as coking coal prices drop and valuation become favourable, according to management. (Business Standard/PTI)

Reliance Communications – Co. was downgraded by ICRA from ‘stable’ to ‘negative’, citing elevated levels of debt at INR 37,000cr at the end of last year. (The Hindu Business Line)

Essar Oil – Co. to invest INR 2000cr at its coal-bed methane facility in Ranigunj; West Bengal. (Business Standard)

Kingfisher Airlines – A sections of co.’s pilot are contemplating to drag the management to the labout court, according to sources. (Economic Times/PTI)

EUROPE

The German Chancellor Angela Merkel on Sunday said that she was confident that a majority of German lawmakers would back the Spanish banking aid pack of up to EUR 100b. In regards to Greece chancellor said that she would wait for the report from ‘troika’ before deciding on further steps. As Greece is seeking to renegotiate the terms of its EUR 130b rescue fund. (Reuters)

Italian Finance Minister Vittorio Grilli stated that Italy plans to reduce its public debt by 20 percent until FY2018. The nation would plan to sell public assets for about EUR 20 b (USD 24.5 b) on an annual basis for the next five years. The minister also stated that GDP would contract less than 2 percent in FY2012 vs the government’s forecast of a decline of 1.2 percent. (Bloomberg)

According to a official documents Spanish government will slash EUR 56.4b from the public deficit in the next two and a half years. The remaining EUR 8.6b shortfall will be filled by new tax measures. (FirstPost/Reuters)

GlaxoSmithKline – Co. in talks with Human Genome Sciences to acquire it for around USD 2.6b, according to sources. (Economic Times/Reuters)

BHP Billiton – Co. to put up its iron ore project in Guinea for sale, as the co. looks to dispose off non-core assets as global demand for commodities flattens. (Reuters)

Deutsche Bank – Co. has approached the ECB and Swiss authorities in order to co-operate in the Libor fixing investigation in return of leniency. (Fox Business – Dow Jones Newswires)

British Petroleum – Co. nears a USD 15b settlement deal over the Gulf oil spill. (Fox Business – Dow Jones Newswires)

NORTH AMERICA

US Retail Sales are projected to have increased by 0.2 percent in June vs -0.2 percent in May following a pickup in demand for automobiles offsetting expenditure on other goods. Median forecasts show optimism in spending by consumers increased with data to be released today. (Bloomberg)

Research in Motion – Co. has been ordered by Canadian jury to pay USD 147.2m in damages for patent infringement.  (The Financial Express)

Facebook – According to analysts co. is expected to post a net loss of USD 350.6m versus USD 137m profit in 1Q12. Co. reports its earnings on Thursday. (The Financial Express)

GLOBAL

According to a report by NPD Display Search, a research firm, shipments of LCD televisions over the globe would rise at a slower pace as compared to the previous year. Shipments are forecast to fall 1.4 percent for the 2012 period to 245 m units. Lower discretionary spending by consumers in Europe and Asia, including India, contributed to the lower shipments. Prices of LCD’s would also decline 4 percent in 2012 vs 6 percent in 2011. (Economic Times)

WEEKEND EQUITY COVERAGE – 7 JULY 2012 TO 8 JULY 2012

ASIA

According to China’s Premier Wen Jiabao, the country’s economy was currently in a stable state; however the economy faced downward pressures to growth.  The premier has called for aggressive steps to keep growth on track. (Telegraph UK)

According to Hong Kong’s Financial Secretary John Tsang, the government could revise its GDP forecast for FY2012 in the next month on deterioration in global economy. Slowdown in Hong Kong’s traditional markets, the U.S and Europe coupled with a slowdown in Asian markets could lead to the country revising its outlook. (Bloomberg)

INDIA

Private Equity deals during the 1HY12 period declined 39 percent to USD 3.6 b in India. During the same period a year ago, deals were valued at USD 5.9 b. The report by Ernst & Young (E&Y) attributed the decline to regulatory hurdles, taxation policies for investments in India. No major transaction or deals took place in India. Infrastructure sector saw the highest investment in 2012 till the period ended June at USD 533 m. Retail and Consumer products saw inflows at USD 529 m. (Economic Times)

Market capitalization of top 5 companies by volume declined by INR 20,600 cr for the week ended 6 June 2012. TCS saw its value decline by INR 6136 cr, Infosys lost INR 3370 cr, ONGC’s value was lower by INR 5176 cr. On the other hand, Bharti Airtel’s capitalization rose by INR 6266 cr followed by HDFC Bank at INR 4959 cr and SBI also gaining INR 3949 cr. (Economic Times)

According to officials at the Central Electricity Authority, delay in signing agreements to procure coal supply for short-term use has affected around 6000 megawatts worth of projects in India. It was also pointed out that around 14 power units across various states in India were affected by the delay in supplies. As per regulations of the Coal Ministry of India, coal co’s are directed to supply coal to power plants until 31March 2012 and those commissioned during 2012-13 period. But only 2000 MW of projects out of the proposed 8800 MW have been signed so far. (Business standard)

According to a report by Macquarie India, corporate loans worth INR 19,000 cr were part of the loans referred for restructuring in 1Q12 period, leading to a 30 percent rise in such cases.  The biggest loan restructuring activities were of co’s such as Visa Steel (INR 3000 cr), Tayal Group (INR 2811 cr) and Indu Projects (INR 2800 cr). The report also states that iron, steel and textile sectors saw the biggest restructuring activity. Rating agencies are of the opinion that debt restructuring activity could rise by a further 6 – 7 percent in 2012-13 period. SME’s and mid-sized co.’s have been the most affected by deteriorating loans. (NDTV Profit)

According to RBI data Indian companies raised USD 3.37b from overseas markets in May versus USD 2.73b in April. (The Hindu Business Line)

Indian foreign exchange reserves grew by USD 1.36b (vs. a previous decrease of USD 0.76b) to USD 289.992b (vs. previous USD 288.62b) for the week ended 29 June 2012. (Yahoo/Reuters)

India’s Chief Economic Advisor to the Ministry of Finance Dr. Kaushik Basu, is of a opinion that Indian inflation could come down below 7 per cent in September from present 7.5 per cent. He also expects the rupee to stabilise around the 50 mark. (The Hindu Business Line)

Steel Co.’s – According to the Steel Ministry report steel consumption for June quarter grew by 18.195 million tonnes versus the consumption of 16.72 million tonnes last year, registering a 1.5 per cent growth.

  • Finished steel production for the June quarter at 18.87 million tonnes versus 18 million tonnes in the previous year.
  • Finished steel imports at 1.99 million toned in the June quarter versus 1.41 million tonnes last year.
  • Exports at 1 million tonnes versus 1.18 million tonnes last year.

According to Sushim Banerjee the director-general of Institute for Steel Development and Growth (INSDAG) expects the offtakes for long products at 10 per cent and for flat products at 5 per cent. Further according to the chairman of SAIL, the Indian market has not been impacted by the fall in global steel prices and expects demand to be reasonable during the year.  (The Hindu Business Line)

Engineers India Ltd – Co. won INR 720cr contract from Bharat Petroleum to provided engineering consulting services. (Economic Times/PTI)

Natco Pharma – Co. begins sales of generic version of Nexavar in India. The generic version to cost INR 8,880 for a pack of 120 tablets versus INR 2.8 lakhs for original drug manufactured by Bayer. The co. is expected to add about INR 15cr of revenue from the product initially. (The Hindu Business Line)

EUROPE

Italian GDP to shrink around 2 per cent this year versus the previous forecast of around 1.5 per cent as forecasted by the Italian Central bank.  The Italian Central bank expects 2012 to be negative. (Economic Times/AFP)

Vedanta plc – Co. has expressed its interest in acquiring a stake in Cairn India’s refinery in Rajasthan. The Chairman Anil Agarwal discussed the matter with various government officials including Prime Minister Manmohan Singh to increase output at the Barmer oilfield in Rajasthan. (Business Standard)

Total SA – Co. has anchored an invest of USD 20b (vs. USD 22b in 2011) this and more in 2013 at the oil price of USD 100 a barrel, according to the co.’s CEO. (Business Standard/Bloomberg)

British Petroleum plc – Co. signed an agreement with JBF Petrochemicals, a subsidiary of JBF Industries, to supply purified terepthalic acid technology. JBF would utilize the technology in its 1.25 metric tonne plant in Bangalore, India. (Business Standard)

BAE Systems – According to the co.’s management, co. has emerged as frontrunner in supplying the US Air Force with 350 training jets. The contract is estimated to be worth more than USD 11b. (Telegraph UK)

NORTH AMERICA

The U.S Trade data is to be released on 11 July by the Commerce Department in the U.S. Economists polled by Bloomberg predict the trade deficit in May to narrow on cheaper prices of crude oil and lower demand, both of which contributed to reductions in imports. Forecasts are polled at the gap to decline to USD 48.5 b vs USD 50.1 b for April 2012. (Bloomberg)

Yields on 10 yr Treasury notes declined 10 basis points to 1.55 percent for week ended 8 July vs 1.65 percent a week ago. The decline is attributed to slowdown in the labour markets with lower than forecast employment growth which could prompt the U.S Fed to conduct quantitative easing. (Bloomberg)

According to Peter Schiff the CEO of Euro Pacific Capital, expects stock markets to collapse to the worst levels than previously seen in 2008. Schiff is of an opinion that US economy is in the middle of a phoney recovery and the US dollar and the Treasury securities were not as safe as conceived by the markets.  Further Schiff believes that increasing interest rates is a painful but realistic solution to the ongoing situation. (Economic Times/PTI)

Boeing – According to Co.’s CEO, co. is expected to do better as compared to Airbus, in the current year or the coming years.  In addition industry analysts expect co.’s 737 Max airplanes to be a tough competitor for the Airbus A320neo airplane, Airbus admitted early this year that it could keep up with the momentum for the A320neo.  (FirstPost/Reuters)

Heibei Iron & Steel Group – Co. received approval from regulatory authorities to invest in Canadian iron ore firm Alderon Iron Ore Corp. Heibei is expected to acquire a 20 percent stake in the co. for CAD 194 m (USD 195 m) in its plant located in Canada. (Reuters)

COMMODITIES

According to the head of Iranian oil exporters union Hassan Khosrojerdi, Iran reached an agreement with European refiners to sell some of its oil through a private consortium.  In accordance to the agreement around 20 per cent of Iranian oil is expected to go through the private consortium. (Business Standard/Reuters)

GEOPOLITICAL

The US Navy has increased its presence in the Gulf by deploying USS Ponce to help in the mine-clearing operations. USS Ponce will aid the four US minesweepers stationed in the Gulf that will ensure the safety of the oil shipping route. (MoneyControl/Reuters)

GLOBAL

According to a report by research firm Prequin, activity in the private equity deals rose for the April – June quarter in 2012 on a global scale. Deals rose to USD 48.5 b spanning over 145 PE fund investments vs USD 33.7 b over the previous quarter. On an average, the time taken by firms to close out a deal declined by 2 months over the 2011 period. PE markets remain constrained by the economic scenario while some sections of the industry have been successful in attracting funds. (Economic Times)