MA activity slows down in July: Grant Thornton

A report from data compiler Grant Thornton shows that the total value of deals made in July this year has been less than the value of deals in July 2011 and 2012. Raja Lahiri, partner - transaction advisory services at Grant Thornton spoke to CNBC-TV18 regarding the report, numbers and the key factors driving mergers and acquisitions in the country.

Also Read: Experts laud Cipla Q1 results; doubt Sun Pharma guidance

Below is the verbatim transcript of his interview on CNBC-TV18

Q: How do the numbers stack up and what were the key factors driving merger and acquisition (M&A) activity in July?

A: The first half of July has not been too bad in terms of the overall deal values. Specific to July we saw USD 2.3 billion deals. Private equity was USD 0.8 billion and USD 1.5 billion was M&A. However, overall deal momentum is showing signs of slowdown in terms of volumes but there are some large deals that have got struck this month.

Q: What are the big deals that we saw in July 2013?

A: The top was a restructuring done by Holcim, close to USD 585 million. It was more of an internal restructuring though where Ambuja Cements , Holcim and ACC pretty much there was an internal group restructuring done by where Ambuja will actually be a holding company of ACC and Holcim increasing its stake in Ambuja Cements . So, there was a pretty large restructuring done, the approvals are yet to come but that is a large one.

The second one is in the private equity, we saw Flipkart raising USD 200 million from Naspers and the existing investors. Blackstone has been very active, they have announced a USD 100 million plus transaction in the auto component space, another large deal.

In the outbound space we saw Cipla in the pharmaceutical space picking up the South African asset for more than USD 200 million. So, those were the kind of top deals in July.

Q: If I were to get sector specific, it seems the highest traction that we are seeing is in cement and pharma space?

A: Pharma, healthcare it's been a good sector. It is seeing activity and will continue to see activity. Pretty much medical devices, it is the sector we believe will see some strategic interest as well. Private equity is also pretty much hot on healthcare. So, that is a sector to watch out for.

We are slowly seeing signs of interest from the inbound side especially from Japan. Sectors like IT, retail, and consumer, pretty much inbound interest is coming up from Japan. So, some of these would be hopefully sectors to watch out for in the year to come.

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Reliance, IOC, ONGC bid for Guj terminal stake

Reliance Industries -BP combine, Indian Oil Corp (IOC), Oil and Natural Gas Corp (ONGC) and GAIL are among the 8 firms in race to buy 25 per cent stake in a LNG import terminal being planned at Mundra in Gujarat.      Reliance-BP have bid for the 25 per cent stake through their equal joint venture India Gas Solutions.

Gujarat State Petroleum Corp (GSPC) had invited expression of interest for the 25 per cent stake in the 5 million tonnes a year liquefied natural gas (LNG) terminal. Besides Reliance-BP, other firms expressing interest include state-owned ONGC, GAIL and IOC, Petronet LNG Ltd and Torrent Energy, industry sources said.

Japan's Mitsui & Co and Toyota Tsusho Corporation too are in fray. GSPC, a Gujarat company, would hold 50 per cent stake in the Rs 5,200 crore project while Adani Group would take 25 per cent. The project is to be financed in a debt to equity ratio of 70:30.

The terminal capacity would be expandable upto 10 million tonnes per annum. Sources said most of the companies that have expressed interest, want to import their own liquid gas (LNG) and sell it to consumers in the vastly energy deficit country.

GSPC has been scouting for a strategic investor for its LNG project, after Essar group - the third partner with a 25 per cent stake in the venture - exited from the terminal.

The LNG terminal will have two LNG storage tanks. It will have LNG receiving, re-gasification and gas evacuation facilities.

GSPC has awarded the front-end engineering and design (FEED) contract to Tractebel of Belgium. Mundra will be the third LNG import terminal in Gujarat, after Petronet' 10 million tonnes per annum capacity facility at Dahej and Shell's 3.6 million tonnes Hazira LNG terminal.

The terminal is expected to go on stream by first quarter of 2016, sources said. Gujarat is mulling another LNG terminal at Pipavav of 2.5 to 5 million tonnes capacity.

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Government hopeful of 5%-divestment in CIL

The coal ministry on Wednesday expressed hope of getting the go ahead for divestment of 5-percent stake in Coal India Ltd  (CIL) that could raise Rs 10,000 crore for the exchequer, despite a section of the trade unions opposing the decision.

"We are hopeful of resolving the issues with the unions of CIL," Coal minister Sriprakash Jaiswal said. "We have said that we will go in for 5 per cent disinvestment. I am aware of the situation. I am sure we will get everybody on board," he said.

Coal India's CITU-led All-India Coal Workers Federation (AICWF) served a three-day strike notice to protest against the proposed disinvestment of the Coal India stake. The union, which claims to have one-third membership of Coal India's 3.5 lakh workforce, has threatened to observe a strike from September 19 to 21 against the proposed divestment and restructuring of CIL.

Jaiswal had earlier claimed that the union had agreed to divestment for 5 per cent instead of the earlier proposal of 10 percent. The government holds 90 per cent stake in Coal India, valued at Rs 1,88,227 crore. The INTUC-led trade union general secretary SQ Zama said, "Though we are against disinvestment, we want to discuss further with the government before we decide on the strike as there are many other issues."

INTUC plans to discuss further on the matter with the government after August 15 to find a solution. Meanwhile, reacting to a question on the alleged coal scam, Jaiswal said no preference was given to anyone in coal block allocation.

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W Bengal awards land to Reliance Cements for Rs 600cr unit

Reliance Cements on Wednesday received land agreement document from West Bengal Chief Minister Mamata Banerjee for setting up a Rs 600-crore unit in Purulia district.

The three-million-tonne capacity cement project will be completed in two-and-a-half years on a 100-acre plot at Raghunathpur in the backward Purulia district, according to state commerce and industry minister, Partha Chatterjee, who was present during the hand-over of the agreement paper by the Chief Minister to Reliance Cements vice-chairman Sumit Banerjee.

Reliance Cements is an Anil Ambani-led Reliance group firm. Officials said that this was the first big ticket investment for the state after the Mamata Banerjee government took over in May, 2011. Sumit Banerjee later said, "We are happy with the state government's single-window clearance, transparency and positive outlook."

This also constituted the immediate outcome of Mamata Banerjee's recent meeting with industry heads in Mumbai where Banerjee had requested the Reliance Cements to expedite its investment plans for West Bengal.

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India Inc hails Rajan's appointment as RBI Governor

Hailing the announcement of Raghuram G Rajan as the new RBI Governor, India Inc today said the appointment of the former IMF Chief Economist will help bring the economy back on growth path.

"We are fortunate to have a leading economist like Raghuram Rajan as the RBI Governor," industry chamber Ficci said.

"He takes over at a time when the economy is in the midst of a difficult situation. While on one hand, the plunge in the rupee value has emerged as a critical challenge stoking fears about the already grave current account situation and on the other, the persistent slowdown in industrial growth continues to be a major concern," Ficci President Naina Lal Kidwai said.

Industrialist Adi Godrej and former CII president said Rajan's experience globally and as a Chief Economic Advisor in the government would stand him in good stead.

Describing Rajan a 'very good' choice, HDFC chairman, Deepak Parekh said, "he is the right person to handle our financial markets, he is likely to be innovative about the banking sector."

50-year old, Rajan, who as IMF economist had predicted the 2008 global crisis, was today appointed the new RBI Governor.

He will succeed D Subbarao, who by his hawkish policy stood his ground on continuing with a tight monetary policy despite repeated entreaties from the government to ease interest rates to boost growth.

Subbarao will demit office on September 4. Further, Ficci said, calibrating monetary policy amidst these multiple challenges would be a difficult task. "We hope that given Rajan's experience and knowledge of markets, we will see the RBI working in conjunction with the government in creating an environment that will foster growth, generate employment and keep inflation at moderate levels," Kidwai said.

Industry body Assocham said, "We extend full-cooperation and expects him to take bold steps needed for controlling inflation. The need of the hour is to create conducive monetary conditions that help build strong supply response in the economy."

EEPC chairman Aman Chadha expressed confidence that Rajan, with his vast experience, would effectively deal the issues like decline in value of rupee and high CAD.

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No magic wand to deal with economic woes: Rajan

Reserve Bank of India governor-designate Raghuram G Rajan on Tuesday said there is no magic wand to pull the country instantly out of challenges being faced by the economy.

"These are challenging times for the Indian economy... The government and the RBI are working together to address these challenges. We don't have a magic wand to make the problems disappear instantaneously. But I have absolutely no doubt, we will deal with them,"  he said.

After the announcement of his appointment as the new RBI governor, Rajan made a brief statement to reporters without taking any questions. He will be the 23rd governor of the Reserve Bank and will succeed Duvvuri Subbarao who demits office on September 4.

Rajan, who joined as the Chief Economic Advisor in the finance ministry in August 2012, said, "I look forward to working with many dedicated employees of the RBI to continue these traditions even though I will miss my colleagues in the finance ministry."

The RBI, he added, is a great institution with a tradition of great integrity, independence and professionalism. A former IMF chief economist Rajan joins the RBI at a time when the government is battling industrial slowdown, declining rupee, rising prices and all-time high current account deficit (CAD).

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BMW to hike prices by up to 5% across models from Aug 15

German luxury-car maker BMW Group on Monday said it will increase prices of its products across models, including the Mini, by up to 5 per cent amid higher import costs due to the declining rupee.

BMW Group India is announcing a price increase of up to 5 percent across the BMW and Mini product range effective August 15 2013, according to a company statement.

Also Read: BMW targets "meaningful" sales with electric i-series

"We are making price decisions with all due care and consideration, ensuring that they pay off in the long run," BMW Group India president Philipp von Sahr said. While the company did not specify the reasons for the price hike, industry experts have pointed out that import costs have gone up due to the falling rupee.

At present, BMW sells a range of vehicles in India, including sedans 3, 5, 6 and 7 Series, along with SUVs X1, X3, X5 and sports car M Series, which are priced between Rs 28.6 lakh and Rs 1.73 crore. The company's luxury compact car, the Mini series, is currently available between Rs 26.6 lakh and Rs 37.50 lakh. The company said the price hike is part of its strategy of "following a path of sustainable growth."

Mercedes-Benz India said it may also increase prices on account of the rupee's decline. "The weakening of the rupee is a concern and we have been monitoring the situation closely. However, we have not yet decided on a timeline or a quantum for increasing the prices, but it looks inevitable," Mercedes-Benz India managing director and CEO Eberhard Kern said.

German rival Audi hiked prices across models in India by up to 4 percent, a maximum of Rs 4.42 lakh on its R8 model, with effect from July 15 to offset the impact of rupee depreciation and rise in input costs.

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India, US complete 3 rounds of negotiations for BIT

India and the US have completed three rounds of negotiations for the proposed Bilateral Investment Treaty (BIT) that would help in enhancing economic ties between the countries.

Also Read: Pfizer, Boeing, other US cos lobbying hard on Indian issues

"The bilateral investment agreement discussion with the US started on August 11, 2009 and as of now three rounds have been held on various elements of bilateral investment treaty text of the US," minister of state for commerce and industry D Purandeswari said in a written reply to the Lok Sabha.

She said the recent visit of commerce and industry minister Anand Sharma to Washington has helped reinvigorate the dialogue between the countries. "Both sides have agreed to convene next meeting of the India-US Trade Policy Forum, a bilateral mechanism to resolve and expand bilateral trade and investment relations, this year in India," she added.

In July, Sharma had said that India is ready for talks with the US on the proposed treaty, which New Delhi calls Bilateral Investment Protection Agreement (BIPA). India has signed BIPAs with 82 countries. However, it has put a freeze on these agreements following a spate of suits from companies.

The bilateral trade between the countries stood at USD 60.49 billion in 2012-13. India has received FDI worth USD 11.27 billion from the US during April 2000 and April 2013.

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Voda may have to sell $1bn Bharti stake under licence rules

Vodafone Group may be forced to sell its 4.4 percent stake in India's top telecom services provider Bharti Airtel - worth about USD 1 billion - after rules published on Friday outlawed crossholdings in rival telecom companies.

Also Read: Govt unveils new telecom licence norms

Under the rules, no carrier can own a direct or indirect equity stake in another operating in the same of any of India's 22 telecom service areas. Bharti and Vodafone provide services in all of them.

The telecoms ministry's new licensing rules also say that no stakeholder other than the government, banks and financial institutions, which owns 10 percent or more in a carrier will be allowed to own a stake in any other carrier.

Companies must comply with the rules within a year from the date of grant of new licences, the ministry said. Applications for the licences may take months to process.

Vodafone, which owns a majority stake in Vodafone India - India's No. 2 phone carrier, has owned its Bharti stake for years. At Bharti's stock price of about Rs 345, the stake is worth roughly USD 1 billion.

Bharti declined to comment and Vodafone did not reply to an email seeking comment.

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Infosys EGM approves Narayana Murthy as executive chairman

Moneycontrol Bureau

Infosys shareholders today approved the appointment Narayana Murthy as executive chairman and whole-time director of the company, two months after it recalled the founder to arrest falling growth.

At the event, Murthy informed the shareholders that although outlook in its key market US was changing for better, it was too early to say whether tide is turning for IT sector.

Also read: Infosys may move to Rs 3300-3350: Rahul Mohindar

After several quarters of cautious commentaries, while announcing June quarter results Infosys' CEO SD Shibulal said that the company was cautiously optimistic for the rest of the year and maintained its dollar revenue guidance. Recovery in US markets and rupee depreciation is likely to improve earnings of IT companies going forward.

During the EGM, Murthy added that IT companies, which are adding 25 percent exports have more impetus to perform better.

After losing its bellwether position to Tata Consultancy Services ( TCS ), Infosys is hoping that Murthy's return will help the company to turn a new leaf.

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