Burman family acquires strategic stake in DMI Finance

The Burman family, promoters of consumer goods company Dabur, today announced acquisition of a strategic stake in DMI Finance. DMI Finance is a Non-Banking Financial Company (NBFC) specialising in senior-secured lending.

As a result of the investment, Gaurav Burman -- who has 20 years of experience in the financial services industry -- will join the board of DMI Finance. However, the deal size and quantum of stake picked up by the Burman family was not disclosed.

Gaurav Burman is the youngest son of Dabur India chairman Emeritus V C Burman. Established in 2009, DMI Finance was founded by Yuvraj C Singh and Shivashish Chatterjee, both former senior executives of Citigroup, with the aim of participating in the growth of debt markets in India, DMI Finance said in a statement.

Over period of four years the company has built an equity capital base of USD 100 million. DMI Finance acquired an equity stake in Alchemist Asset Reconstruction Company last year and has also recently received a Housing Finance Company licence from the National Housing Board.

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States expected to strengthen fiscal position in FY13: RBI

With reduction in states' fiscal deficit-GDP ratio, state governments are expected to strengthen their fiscal position in 2012-13 broadly in line with the fiscal roadmap, the Reserve Bank said today.

Also read: Govt to infuse Rs 12,200 cr in banks; will sell 10% in EIL

"The improvement is reflected in the continued increase in surpluses in the revenue account of the majority of states, reduction in the fiscal deficit-GDP ratio and a declining trend in the debt-GDP ratio," RBI said in its report on State Finances : A Study of Budgets of 2012-13.

It said higher capital outlay budgeted for the year in many of the revenue surplus states indicates that the quality of expenditure is not being compromised in attaining the deficit targets.

"While some comfort can be drawn from the fiscal position of the state governments, states may have to exploit their potential for raising revenues and move towards convergence of tax rates in preparation for the shift to the goods and services tax regime."

During 2012-13, consolidated debt-GDP ratio of the states is expected to decline further and remain below the 13th Finance Commission recommended benchmark.

"The consolidated state government debt-GDP ratio...isbudgeted to further decline to 21.9 per cent by end-March 2013," the report said.

The debt-GDP ratio has been declining since March 2004 and was at 22.6 per cent as per the revised estimate of the budget. The debt-GDP ratio is lower than 13th Finance Commission's recommended benchmark for the year as well as the medium-term target of 24.3 percent for 2014-15.

Further it said, the consolidated revenue surplus is budgeted to increase to 0.4 per cent of GDP in 2012-13 from 0.1 percent in 2011-12(RE).

Referring to tax efforts by the states, RBI said the proposed goods and services tax (GST) regime would reduce their flexibility in determining the rates for taxes that will get subsumed in the GST.

"Raising tax revenues then would depend more on improving eficiency and compliance by tightening vigilance and increasing the use of information technology for tax collections," it added.

Also it said the quality of expenditure needs to be improved by cutting down non-productive expenditure while increasing expenditure that would impart counter cyclical growth impulses to the economy.

As per the report, the state governments have been formulating policies to improve the delivery mechanism of government services and to make the government-citizen interface more friendly and transparent.
 
It further said, state governments have been accumulating large surplus cash balances since 2004-05.

Given that states have ample surplus cash balances and the GFD-GSDP ratio is envisaged to decline in the coming years, RBI said, it is essential that states adopt a need-based approach to their market borrowings.

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IRDA brings in paint of vehicle under depreciable part

Insurance sector regulator IRDA today included vehicle paint under the purview of depreciable part and fixed rate of depreciation for the same. "In case of painting, the depreciation rate of 50 per cent shall be applied only on the material cost of the total painting charges," Insurance Regulatory and Development Authority (IRDA) said in a statement.

In case of a consolidated bill for painting charges, the material component shall be considered as 25 per cent of painting charges for the purpose of applying the depreciation, it said.

The changes have been brought in as it was observed that there were no uniform practice prevailing in the market for depreciation on painting, it said. The change shall be applicable to all motor package policies whose risk inception date falls on or after February 1, 2013, it said.

To this effect, IRDA has advised all the insurers writing motor insurance policies to make the proposed changes so that policyholders are made aware and there are minimal grievances/complaints.

At the moment, several companies don't deduct the depreciation element from the painting charges, and painting-related claims are fully reimbursed. IRDA is of the view that paint is manufactured from polymer, it should be included in the group of plastic parts. The regulator has fixed 50 per cent rate of depreciation on vehicle older than 10 years.

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Growth in utility vehicle to help auto industry: SIAM

The Society of Indian Automobile Manufacturers (SIAM) has lowered its annual growth forecast for car sales. SIAM now predicts sales growth of between zero and 1.0 percent.

In an interview to CNBC-TV18, SIAM's president S Sandilya says the forecast has been moderated. "If you look at it from the last quarter, third quarter beginning forecast for the year and the currently forecast for FY13 are not significantly different. We said one to three percent, now we are talking about zero to one percent. It is marginally lower," he elaborates.

Also read: Auto exports dip 3 percent in April-December

However, he says, the utility vehicle segment has got a significant growth. "This segment has done exceedingly well. The rural demand has also gone up for the utility vehicles. So, I think that will help the auto industry overall," he asserts.

Below is the edited transcript of his interview on CNBC-TV18.

Q. Car sales forecast now down to one percent for the fiscal. Is this the lowest that one has seen in many-many years?

A: Probably it will be one of the lowest. But I don't have the statistics readily available. The forecast has been moderated. If you look at it from the last quarter, third quarter beginning forecast for the year and the currently forecast for FY13 are not significantly different. We said one to three percent, now we are talking about zero to one percent. It is marginally lower.

Quarter after quarter, the market has been slowing down because the factors, which are impacting the overall auto industry, have not changed, whether it is interest rates or fuel prices or overall sentiment in economic growth. These things have not changed. Infact they have been going down. The country's economic forecast is also going down from 6.5 percent to 6 percent to 5.5 percent now. People even question 5.5 percent now. Given the overall change in scenario, there is no wonder why the auto industry's, particularly the passenger car industry's forecast is going down.

If you see the passenger car segment, the overall picture, the utility vehicle segment has got a significant growth. That has grown at 50-60 percent consistently over the last three quarters. For the year forecast, we have talked about a significant growth. That is the function of the new models having been launched by many companies. They have launched models at attractive prices.

The passenger buying sentiments have changed. The buying behaviour has changed from buying small vehicles to larger vehicles in terms of utility vehicles. That has augured well for the industry. The rural demand has also gone up for the utility vehicles. So, overall put together this segment has done exceedingly well. So, I think that will help the auto industry overall.

Q. With the overall anti-diesel environment, many feel that it's not if, but when the government will hike diesel prices. Infact, the oil ministry has moved that note on the hike. In that case how do you see sport utility vehicle (SUV) and utility vehicle (UV) sales going forward since the bulk run on diesel?

A: These are two different issues. The diesel anti-sentiment is in terms of taxes being raised on diesel cars. However, diesel price increases are not anti-diesel. SIAM has been always saying that diesel prices must be deregulated, which means the diesel prices should be market led, they should go up and the gap between the petrol and the diesel prices should come down. That is a stand SIAM is been taking time after time and we continue and are consistent with our argument on this.

However, diesel cars being taxed separately by the way of excise duty is a retrograde step for the simple reason that the consumption by these cars of diesel in the overall diesel consumption is a very minuscule percentage. It doesn't at all call for increase in taxes. If you look at diesel prices being deregulated, the prices go up and it will have an impact on the diesel car sales.

Customers will look at the total cost of ownership. We believe that it is not going to have a significant impact on the overall economy. It is a good step and we must take it faster not necessarily in terms of per month increase. Whichever way it is done per month or at one stage it needs to be increased, deregulated, and ensured that it is market led.

Q: The budget is around the corner. What is the auto sector hoping for this time around? The Finance Minister is fiscally constrained, what are you hoping to do?

A: Our Budget wish list is on multiple fronts. Firstly, on the excise duty front, we have asked for rationalisation of excise duty. Reducing excise duty on small cars and large cars, the excise should be rationalised and brought down from the earlier levels. In case of  commercial vehicles also, the excise duty on chasis that was increased last year by 3 percentage points and subsequently reduced by 1 percentage point must be scrapped and brought back to the original levels. This is from the excise duty perspective.

Secondly we do expect the goods and service tax (GST) implementation announcement effective from April 1. The states may have problems to accept it. The same thing happened when we implemented value added tax (VAT). There were few states which were not wanting to implement, but ultimately when implemented, every state has benefited and the overall revenues have gone up.

I hope the government will take up other policy initiatives in the next three months so that in FY14, we are able to look at much better economic growth and much better growth for the auto industry as a whole.

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PVR acquires controlling stake in Cinemax India

Multiplex chain operator PVR said it has completed acquisition of a controlling stake in Cinemax India for Rs 395 crore. "PVR, through Cine Hospitality, has purchased controlling stake in the share capital of Cinemax India through a block deal executed on the floor of the stock exchange on January 8, 2012," PVR said in a filing on the BSE.

In November 2012, PVR had said its wholly-owned subsidiary Cine Hospitality would acquire 69.27 per cent stake owned by the promoter group of Cinemax at a price of Rs 203.65 in an all cash consideration of Rs 395 crore. As per SEBI rules, this will be followed by an open offer for an additional 26 per cent (up to 72.80 lakh equity shares) at Rs 203.65 per share, taking the total deal size to about Rs 543 crore.

Ajay Bijli and Sanjeev Kumar will join Cinemax board as non-independent directors, while Sanjay Khanna will be an indepedent director, according to a filing by Cinemax. PVR shares closed 10.45 per cent higher at Rs 308.10, from the previous close on BSE.

However, Cinemax India shares closed at Rs 198.40 apiece, down 1.12 per cent from the previous close. PVR has become the country's largest mutiplex operator with a combined strength of 351 screens at 85 locations. PVR, one of the largest multiplex companies in the country, had 46 operational properties, with 213 screens and a seating capacity of 50,655 seats. Cinemax had 39 operational properties, with 138 screens and a seating capacity of 33,535 seats.

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LIC picked up half of Hind Copper shares on offer

State-run LIC picked up nearly half of Hindustan Copper's shares put on offer for sale in November last year, stock exchange data revealed. LIC picked up 2.25 crore shares, or 2.43 per cent stake, of the total 5.16 crore shares put on offer. The Hindustan Copper FPO marked the government's disinvestment process for the current fiscal.

There were five more insurers that took part in the process, but their combined shareholding, as on December-end, is not more than 0.51 per cent. The OFS got lukewarm response in the initial trading hours of the day, but share sale picked up towards the end of the day.

As per the stock exchange data, as much as ten financial institutions participated in the share sale and they picked up a total 80.93 lakh shares or 0.87 per cent stake. Only three Foreign Institutional Investors (FIIs) bought a total 0.01 per cent stake in the copper producer.

Individuals have bought 1.69 crore shares or 1.83 per cent stake in Hindustan Copper. This includes participation from 57,465 small investors' and their combined holding of 1.07 per cent stake. Corporates also shied away from making big investments in the offer as the data revealed 1,559 corporate bodies now have 59.89 lakh shares or 0.65 per cent holding.

Following the FPO, Government's stake in the company has now come down to 94.01 per cent from 99.59 per cent earlier. The government had sold 5.58 per cent stake in Hindustan Copper for about Rs 808 crore at an average price of Rs 156.56 apiece. It had planned to dilute its stake by 4 per cent in the copper major through offer-for-sale route, with an option of selling an additional 5.9 per cent.

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PM pitches for phased rationalisation of energy prices

Prime Minister Manmohan Singh today pushed for phased rationalisation of energy prices to bring them in line with international prices to meet the targeted rapid inclusive and sustainable growth.

Energy remained under-priced in the country with coal, petroluem products and natural gas prices remaining well below international prices, he said laying the foundation stone for the Rs 14,225 crore BPCL -Kochi Refinery's Integrated Refinery Expansion Project at nearby Ambalamugal.

"To meet our target of rapid inclusive and sustainable growth, we must undertake a phased rationalistion of engery prices," Singh said.

The Prime Minister said the central and state governments must work together to create awareness among the public on the need for curbing energy subsidies.

"To achieve our target of rapid growth, we need adequate supply of energy at affordable price. Oil and gas will continue to meet a very large part of our energy requirements for many years to come," he said.

Pointing out that India remained dependent on imports for meeting a major portion of its crude oil requirements, he said "it is for this reason, we will require largescale investments in the field of exploration for oil and gas."

He said the government remained committed to encouraging companies to undertake domestic explorations for oil and gas.

"Our public sector companies are also looking at opportunities abroad. I am happy to know that BPCL has made significant successes in the upstream exploration and production sectors, particularly in Mozambique and Brazil," Singh said.

The BPCL-Kochi refinery project, expected to be completed by December 2015, aims at meeting the country's growing energy needs and make auto fuels more environment-friendly.

It envisages increasing the refining capacity of the Kochi refinery from the present 9.5 million metric tonnes per annum (MMTPA) to 15.5 MMTPA. 

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Sahara fails to deposit 2nd installment of payment to Sebi

The deadline set up Supreme Court to repay investors is over and Sahara has not yet deposited second installment of payment with market regulator Sebi. Sahara was required to submit Rs 10,000 crore by January first week, reports CNBC-TV18's Sajeet Manghat quoting sources.

The Supreme Court in its December judgement gave Sahara a relief wherein Sahara was supposed to submit the entire amount in three installments, the first installment being the Rs 5,120 crore which it has already paid to Sebi. The second one was Rs 10,000 crore which was supposed to be paid in the first week of January and the remaining amount by the first week of February.

Sources add that the second installment has not been deposited with Sebi and Sahara's review petition is pending at the Supreme Court. This is expected to come up tomorrow afternoon and Sahara would be appealing against the order of Supreme Court which is the August order of Supreme Court.

Sebi may approach SC if Sahara fails to repay on Jan 5

It is also learnt Sahara will be seeking a relief. According to it,  Sahara had already paid up all the investors and paying again or depositing the entire amount to Sebi would amount to paying the investors twice. Hence, Sahara is willing to give bank guarantees to that effect. However, it is not willing to submit the cash to Sebi.

Meanwhile in December, Sahara had submitted some of the documents which includes application forms of 3.5 crore investors and vouchers which amount to nearly Rs 2.5 crore. Though the entire voucher has not been submitted to Sebi the application forms of all the 3.5 crore investors have been submitted to Sebi.

The case now comes up tomorrow where Sebi also has a case in Supreme Court as far as contempt proceeding is concerned.

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Mahindra plans to launch 'Mojo' next fiscal

Domestic auto maker Mahindra & Mahindra plans to launch its 300 cc bike 'Mojo' next fiscal and said it will also roll out variants of its scooter series.

"We are going through testing protocols right now for the engine. We are hopeful of its launch in the next fiscal," president of two-wheeler sector and member of the group executive board, Mahindra & Mahindra, Anoop Mathur, said here after the preview of 110CC bikes.

The company is taking all possible steps to make sure that the engine, vehicle and composite are duly tested and validated before it hits the road, he said.

Mahindra 2 Wheelers also plans to roll out a new model of its scooters portfolio by third quarter of next fiscal, Mathur said adding within the next fortnight, a variant of 'Rodeo' scooter is set to be launched.

"We want our presence across segments and ranges. Our plan is to come out with new models of scooters and motor cycle at frequent intervals over the next three to five years," Mathur said.

The company, which has forayed into 110 cc motorcycle segment with the unveiling of two models, 'Pantero' and 'Centuro' last Friday, is working on the bikes exports, which could commence before March, 2013.

"It is our strategic plan to have a significant presence in the motor cycle exports market. We hope to start shipping out our bikes within this fiscal," Mathur said.

The company has earlier said that its two models, 'Pantero' and 'Centuro' were designed completely in-house at the Mahindra R&D centre in Pune and powered by the MCi-5 engine manufactured at the company's Pithampur facility in Madhya Pradesh.

The company has invested Rs 100 crore in the research and development of the products.

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Dr Reddy's acquires 80% shares in OctoPlus

Dr Reddy's Laboratories , which is in the process of acquiring Netherlands-based specialty pharmaceutical company OctoPlus NV for about 27.4 million euros, has so far managed to get nearly 80 per cent shares in its favour.

According to a latest statement issued by DRL, it has acquired 15.9 per cent shares (83,59,858 shares) through open market and 63.5 per cent shares (3,34,48,839 shares) were committed by certain members of the OctoPlus Board and other shareholder though irrevocable undertaking.

The total put together comes to 79.4 per cent shares of Octoplus.

Taking forward the acquisition process, the city-based drug-maker on December 14, 2012 said it made a public officer starting from that day to acquire all shares of the Netherlands-based pharma company.

On October 22, the Indian drug major announced that it has decided to acquire OctoPlus NV, for about 27.4 million euros (about Rs 193 crore).

"The Offer Period commences on December 14, 2012 at 09:00 CET and ends on February 08, 2013 at 18:00 CET, unless extended," a statement from DRL had said.

The transaction is expected to be completed by the end of the current financial year, G V Prasad, vice chairman and chief executive officer, DRL had said earlier.

As per the agreement DRL made an open offer to purchase all outstanding shares of OctoPlus at an offer price of 0.52 euro in cash for each share.

An Extraordinary General Meeting of Shareholders of OctoPlus has been called to be held on January 15 at OctoPlus' headquarters in Leiden.

"At the EGM, the Offer will be discussed in accordance with Section 18, paragraph 1 of the Decree and certain governance related resolutions in connection with the Offer will be proposed to be adopted."

"In addition, the measures that were taken by OctoPlus in respect of the decrease of its equity will be discussed during the EGM in accordance with Section 2:108a of the Dutch Civil Code (Burgerlijk Wetboek, the "DCC")," a statement from Octoplus said.

As independent advisor ABN AMRO Bank NV has issued a fairness opinion to the Boards, stating that the Offer Price is fair to the Shareholders from a financial point of view, according to Octoplus.

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