Fiscal deficit till July touches 87% of Budget target

India's fiscal deficit until July reached 87% of the full fiscal year target, marginally higher than 85.7% in the same period last year. The fiscal deficit for the April-July 2008 stood at Rs 1,15,980 crore on account of higher plan expenditure, data released by the Controller General of Accounts showed on Friday.

The government would be able contain the deficit within the target of budget 2008-09, finance minister P Chidambaram said in Mumbai on Friday before the release of deficit figures.

The Centre’s revenue deficit too rose sharply to 181.6% of the budget estimate by end of July to total Rs 1,00,213 crore. It stood at 115.3% of the budget estimate in the same period last year.

The deficit is usually higher in the earlier part of the fiscal year as allocations are made in the beginning and major chunk of taxes are received at the end of the fiscal year.

Deficit is the excess of government's expenditure over its revenue and a higher deficit means government need to borrow more. Crisil principal economist DK Joshi said it was too early to draw any conclusions from the data till July.

However, bringing some joy to the Exchequer, deposits to the National Small Saving Fund (NSSF) has exceeded its budget estimate of Rs 53.27 crore to amount to a whopping Rs 3613.95 crore within the first four months of this fiscal. This translates into 6784% of the BE, up sharply from a negative 1000% of the budget estimate. With stock markets continuing to be shaky, investments into public provident funds till July 2008 rose to Rs 5052.97 crore or 41% of that estimated in the budget.

Total revenue of the Centre was up at Rs 1,18,740 crore, or 19.2% of the budget estimate, higher than 18.6% in the previous year. Revenue receipts amounted to Rs 1,17,869 crore, or 19.5% of the budget estimate.

The government's expenditure amounted to 31.3% of the budget estimate, at Rs 2,34,720 crore, down from 33.5% of the estimated expenses in the same period last year. The interesting aspect of the expenses is that the plan expenditure rose whereas the non plan expenditure declined.

The government's confidence to meet the fiscal deficit target stems from higher tax collections, money from auction of 3G spectrum, dividend payment by the RBI as well as adoption of austerity measures.

The finance minister said the Fiscal Responsibility and Budget Management (FRBM) target of reducing fiscal deficit by 0.3% will be met this fiscal.

In Budget 2008-09, the Finance Minister has targeted to bring down the fiscal deficit to 2.5% of GDP, although analysts argue the government may overshoot this target due to expenses on account of civil servant’s salary hikes, farm loan waiver, higher spend on national rural employment guarantee scheme, among others.

 

http://www.financialexpress.com/news/Fiscal-deficit-till-July-touches-87-of-Budget-target/354994/

 

 

 

 

 

Tech Mahindra acquires 17.28% in UK's Servista

Indian software firm, Tech Mahindra on Thursday said that it would acquire a stake of 17.28% in European systems integrator, Servista for an undisclosed amount and would be the latter’s delivery arm for a period of three years. Private equity firms HarbourVest Partners and Arts Alliance hold major stake of the privately held company, Servista.

It is headquartered in London and provides managed IT services on an offshore basis with core offerings in operating and business systems such as CRM, billing, operational workflow, IT systems transformation and testing.

Tech Mahindra shares fell 5.22% on the BSE on Thursday to close at Rs 736.50, owing to media reports saying that IT and telecom major BT Group is mulling sale of its 31% stake in the firm for an estimated Rs 8,300 crore.

As a part of the deal, Tech Mahindra will also assist Servista in securing more large scale technology offshoring business in Europe, the firm said in a statement, adding that it will also nominate a member on Servista’s board. Atul Kunwar, chief business development officer, told FE, “We have been working with Servista for three years now and its consulting and sales model will help Tech Mahindra to have exposure to continental Europe where Servista has a strong presence.” Servista has presence in France, Italy, Spain, Germany and UK. Kumar adds that the firm wants to concentrate on the telecom vertical in these geographies and Servista’s expertise in customer relationship management and billing will be helpful.

Source: Business Standard

 

Price-earnings ratio of Sensex companies decline in ayear

Most Sensex companies have shown lower price-earnings (P/E) ratio on
August 26,’08 as compared to august 27, ‘07 levels, an in-house study
has revealed.

The average P/E of the 30 companies listed on the Sensex decreased
from 20.05 times on August 27 last year to 17.90 times on August 26
this year. P/E for all BSE companies taken together was down from
22.13 times last year to 16.99 times on this August 26.

P/E ratio of a company depicts the multiple of earnings at which stock
sells on the exchanges. It is calculated by dividing the price of a
stock by its trailing annual earnings per share (EPS). The higher the
P/E ratio, the more the market is willing to pay for each rupee of
annual earnings. Companies with high P/E ratios are more likely
considered “risky” investments than those with low P/E ratios, since a
high P/E ratio signifies high expectations.

Sector-wise P/E ratios for BSE companies show that firms in tra ding,
retailing, textiles, oil drilling, food processing, shipping,
aluminium, pharmaceuticals, oil and gas, cigarettes, and electricity
sectors have performed well during the period (Aug 27, ‘07 to Aug 26,
‘08). The average P/E ratio of 37 companies in the trading sector
registered a considerable rise, up from 70.89 times on August 27, ‘07
to 158.66 times on August 26, ‘08. Market cap (M-cap) of the above
companies increased by 294.5% to Rs 1,38,610 crore as compared to Rs
35,135 crore last year. The trailing four quarters net profit of these
companies increased by 76.2% during the same period. In case of the
retailing sector, average P/E ratio of 6 companies increased from
97.10 times to 158.21 times this year. Total M-Cap of this group
decreased by 24.2% to Rs 10,079 crore and the trailing net profit
decreased by 53.5% to Rs 64 crore.

Similarly in case of the textiles sector, average P/E ratio increased
from 16.23 t o 25.97 during the study period. Total M-Cap of 250
textile companies decreased by 17.9% to Rs 40,246 crore on August 26,
‘08 from Rs 49,051 crore on August 27, ‘07.

The trailing four quarters net profit decreased by 48.7% during the
same period. Among the 35 major industry groups, top five industries
according P/E ratio on August 26, ‘08 were trading (158.66), retailing
(158.21), sugar (50.16), entertainment (45.98) and telecommunications
(27.35). The line-up of top five industries based on P/E ratio on
August 27, ‘07 was as follows: retailing (97.10), trading (70.89),
sugar (63.23), media (51.37) and entertainment (48.09). Media,
retailing, entertainment and trading are common for both the periods.

The lowest P/E ratio during the study period was seen in the case of
paper (6.5) and tyres (7.0). Out of 35 industries, 13 industries’ P/E
ratio increased during the period.


Financial Express

Number of poor in India has gone up: World Bank

 

 

NEW DELHI: The shrinking power of the dollar has made more Indians poor, a World Bank report released on Tuesday said.

According to the survey, the actual number of poor in India has gone up over the years if the new poverty line benchmark - a daily income of $1.25 - is taken into consideration.

However, if one were to consider the decades-old poverty line of daily income less than $1 or around Rs 40, the number of Indians living below the poverty line has gone down in the past three decades.

"The new estimates, which reflect improvements in internationally comparable price data, offer a much more accurate picture of the cost of living in developing countries and set a new poverty line of $1.25 a day," the report said.

The new poverty line is based on the results of the 2005 International Comparison Program (ICP), which was released earlier this year.

As per the revised estimates for India, the percentage of people living below $1.25 a day decreased from 60 percent in 1981 to 42 percent in 2005.

At $1 a day (2005 prices), poverty has declined from 42 percent to 24 percent over the same period.

In sheer numbers, the estimated poverty rates correspond to 267 million people living below a dollar a day in 2005, down from 296 million in 1981.

However, the number of poor living under $1.25 a day has increased from 421 million in 1981 to 456 million in 2005.

The difference in poverty estimates between that of World Bank and the government data stems from the use of different poverty lines. To assess global poverty on comparable terms, the World Bank uses an average of the national poverty lines of the world's 15 poorest countries to determine the international poverty line at $1.25 per day at 2005 purchasing power parity (PPP) prices.

India, on the other hand, measures its poverty according to its own national poverty line, which, in 2005 PPP, translates to $1.02 per day.

The report however praised India's growing economic might and increasing GDP which has considerably lowered down the number of poor according to the earlier definition but added that increasing equality and distribution of wealth is the need of the hour.

"High GDP growth in India has reduced poverty. However, to achieve a higher rate of poverty reduction, India will also need to address inequalities in opportunities that impede the poor from participating in the growth process," the report stated.

In a new paper titled 'The developing world is poorer than we thought but no less successful in the fight against poverty' Martin Ravallion and Shaohua Chen revise estimates of poverty since 1981, finding that 1.4 billion people (one in four) in the developing world were living below $1.25 a day in 2005, down from 1.9 billion (one in two) in 1981.

 

http://economictimes.indiatimes.com/News/Economy/Indicators/Number_of_poor_in_India_has_gone_up_World_Bank/articleshow/3409142.cms

 

 

$10 bn ready to make India entry through FVCIs

MUMBAI: Lack of clarity over foreign venture capital investments (FVCIs) in India has led to 83 applications from foreign venture capital firms piling up with the Reserve Bank of India for approval.

Of these, about 28 venture funds (non-real estate funds) which have sought approval have committed close to $10 billion to India, according to lawyers involved with the registration process. Most of these foreign private equity firms have given an undertaking that they would not invest in the real estate sector or in related activities.

According to sources close to the development, policymakers and financial sector regulators are working towards harmonising the regulations related to foreign venture capital investment, foreign direct investment and domestic venture capital investment.

�RBI is looking into a broad-based policy issue with regard to the foreign venture capital investments in the country,� said Akil Hirani of law firm Majmudar & Co, who is also advising a couple of foreign venture capital funds p lanning to register themselves with SEBI.

Although policy makers have been wary of venture funds investing in the real-estate sector, regulators have moved on to scrutinise many other applications in order to track the investors behind these funds. Because they believe that these investors are more focused on the returns they earn.

Regulators are concerned about issues such as whether these funds are beneficial for the real economy or even for the companies they seek to invest. RBI�s concerns also relate to impact of large capital inflows into the country especially into the real estate sector, which could fuel an asset price bubble. However, according to market participants, considering that a regime is already established and operational, any policy hiccups ought to be dealt with rather than keeping the proposals of PE funds on hold.

Poli cymakers are also looking at creating a level-playing field between foreign and domestic venture capital funds by ensuring that same tax rule is applicable to both. Foreign private equity funds now have an edge over their domestic counterparts under the existing tax system of the country as foreign funds registered in Mauritius and Cyprus enjoy the benefits of the double tax avoidance treaty.

Some of the FVCI applications pending RBI approval under the Foreign Exchange Management Act (Fema) includes Apax Mauritius, Baring PE Asia, DE Shaw Composite Investments, Fidelity India Ventures, Goldman Sachs, JP Morgan, Sabre Abraaj Infrastructure and TPG Ventures.

According to the data compiled by SEBI, total investments by domestic and foreign venture capital investors amounted to Rs 31,682 crore as on March 31, 2008, of which Rs 16,705 crore comprises FVCI.

The real estate sector saw the highest amount of fund inflow considering it as one of the high-growth areas.

In 2004, SEBIhad removed the real es tate sector from the negative list, an incentive given by the market regulator to encourage PE funds to register as FVCI.

 

http://economictimes.indiatimes.com/10_bn_to_make_India_entry_through_FVCIs/rssarticleshow/3409483.cms

 

 

Reliance Retail to axe 3,000 jobs

Barely two years after the launch of the country’s most ambitious
retail venture, the Rs 25,000-crore Reliance Retail seems to be
revamping its business model. The first step in this mid-course
correction is rightsizing: the company is in the process of
retrenching around 3,000 employees, nearly one-fifth of its total
employee strength of around 20,000 across the country.

The company is also planning joint ventures with foreign players for
all its future and existing retail verticals, a process that is
expected to be completed by the end of 2009. Reliance Retail has
deferred plans to hive off its verticals as separate business entities
and to tap the capital market by year-end. This is because its store
rollout hasn’t matched initial targets. The company has 650 stores
across the country. Its competitor, Aditya Birla’ s More, has around
600. Company sources said persistent inflation added to Reliance
Retail’s pressures .

Of the 3,000 employees to be eased out of the retail business, around
1,000 are IT professionals, while the rest are consultants and
employees on short-term contract.

Up until now, retail was viewed as a separate initiative of the parent
company, Reliance Industries Ltd (RIL). But now, the overall
restructuring plan of the retail venture will see it aligned in terms
of salary structure and other practices more closely with RIL.

For instance, the retail business had hired people from other retail
companies at high salaries at all levels. Henceforth, such hiring is
expected to come down considerably and recruitments will be in tandem
with the parent company.

Reliance Retail has also entered into JVs with a string of foreign
retailers like Boots, Hamleys Toys, Marks & Spencers and Pearl Group.
It is expected to strike deals with more foreign partners for almost
all of its verticals, reversing its earlier insiste nce of going it
alone. Sources told FE that the JVs too require the retail company to
restructure its employee strength.

When contacted about the retrenchment, a company spokesperson said,
“Let me categorically deny this. We would like to further clarify and
reiterate that there has been no realignment of our business strategy
in any way. We continue to learn from our experience and sharpen our
customer offerings. Our overall retail strategy and joint ventures are
completely aligned with what our chairman stated in his AGM speech:
that we will aggressively pursue partnerships wherever appropriate,
which give us access to world-class scale in the supply chain end
and...

Source: Financial Express

Four global telcos in race for Datacom

MUMBAI: The lure of having a strong foothold in the fastest growing telecom market in the world has drawn at least four global telecom majors-from three different continents-in race to buy an up to 51% sta ke in Datacom Solutions. The company, majority held by consumer electronics major Videocon, is one of the five new telecom majors that have regulatory nod to start telecom services in India.

Dubai-based Etisalat, Turkish telecom major Turkcell, and another unnamed European giant are competing with Mexican Tycoon Carlos Slim�s America Movil for a majority stake in Datacom, market sources said. All the four players in the race are pegging the valuation of the company at around $3 billion (around Rs 13,000 crore).

When contacted Datacom Solutions CEO Ravi Sharma confirmed that the company was talking to a host of prospective partners, but declined to give further details, including the names of the global players.. �Among other things like selecting the network partner, IT vendor and the creative agency for Datacom , we are also in discussion with various telecom players who could become our prospective partner,�� Sharma said.

While Slim�s America Movil, Turkcell and the other player are still very much in the race, talks with Etisalat could be heading for a deadend.

Etisalat was proposing to take a 51% stake in Datacom through the preferential offer route and infuse the money into the company. On the other hand, some of the existing shareholders wanted to exit. Additionally, Etisalat also wanted an exclusive negotiation clause for buying the majority stake in Datacom.

Since the parties could not agree to any of these arrangements , Etisalat might start looking at the other new telecom players, a merchant banking source said. As of now, while the Videocon group holds 64% stake in Datacom, Mahendra Nahata, earlier with Himachal Futuristic Communications (HFCL), holds 36% stake. Although Datacom was originally promoted by Nahata, later on he had sold the majority stake to the Dhoots of Videocon.

At present, the arrangement being discussed with Datacom�s prospective partners ensures continuity of the existing management with the new partner getting a large number of board seats.

 

http://economictimes.indiatimes.com/Four_global_telcos_in_race_for_Datacom/rssarticleshow/3409873.cms

 

 

Your IP address now to be traced !

 

Wired, but insecure: The hack attack
============================

Every computer has an IP (Internet Protocol) address. A DSL or cable
modem connection keeps the IP address ‘always on’ . A dial-up
account’s IP address is turned off by the service provider after a
certain amount of inactivity. Dial-up accounts get a different IP
address each time they are on Common methods for finding your IP
address are through chatrooms, looking up domain names on a domain
name registrar site, or running programs that can create a log of all
valid IP addresses.

In a chatroom, all a hacker has to do is right click on your chat ID
and get your IP address. A domain registrar can yield a website’s
employees’ names, phone numbers, fax numbers, physical addresses and
IP addresses In ‘social engineering’ , a hacker verbally chats you up
and gets your IP address and other important information.

The hacking
=========

With your IP address, a hacker can send programs to your PC to test
your system for vulnerabilities. He can find bugs, or holes in
software File- and print-sharing options allow him to access your hard
drive, load any program on the drive and delete/change any file on
your PC He may use ‘trojans’ , which pretend to do useful tasks â€" like
playing a video or greeting â€" but actually help him access info on
your comp and/or even take it over Programs that allow the hacker
‘backdoor’ entry to your comp are commonly available.

They are used daily and legitimately by systems administrators for
remote systems Hackers change the names of their programs to make them
look like legitimate system programs. Or they create a hidden folder
on your comp to keep programs. The most common way that viruses are
spread is through e-mail . Usually, the virus is not in the e-mail
itself, but an attachment.

Cracking passwords
========= ======
Hackers use programs to crack passwords . Even a password-protected
computer can be broken into and other passwords then cracked.

A cracker dictionary has common computer terms and phrases, names,
slang and jargon, easily typed key sequences (like ‘qwerty’ ), and
phrases you might commonly use as a password.

Programs to crack passwords are handed out with copies of these
dictionaries.

A common method for cracking passwords is to get a copy of a system’s
password file. It lists all encrypted passwords on the system.

Security breached
==============

A hacker can steal and delete files, load dangerous programs on your
PC, involve you in computer crime. He can get your home, office or
bank passwords.

A hacker can see your screen as you see it, watch every move of your
mouse, see every word you type Proxy problems.

Often, the hacker is not interested in the hacked system. He just
wants to hack into larger systems or send e-mails A hacker can load a
program onto hundreds of hacked PCs and then direct the PCs to bomb a
particular firm’s server with junk mail or problem messages.

Securing your computer
==================

Basic security

Turn off your comp when not using it Use a firewall and anti-virus
Turn off file and print sharing Be up-to-date . Hackers count on the
public’s ignorance.

Specific measures

Don’t visit chat rooms unless they are closed and you know the
administrator Almost never open an attachment that ends in .DLL
or .EXE, even if the email is from your best friend. The only time you
can open such attachments is if you know what’s in them To outwit
script-based viruses , ask an expert how you can open scripts in
Notepad (or Wordpad). Then get someone who knows Visual Basic to look
at it If you’re not on your PC, but see its modem lights flash, a
hacker could be t esting for vulnerabilities.

Password protection

A good password is easily remembered , but not easily guessable. It
should be kept a secret, never written down, never saved in a file
When a website asks if a password should be saved, say no A password
must have at least six or more letters, numbers or punctuations. The
letters should be capitals and lowercase . It should not have four or
more letters found consecutively in the dictionary . Reversing the
letters won’t help.

Legal means

The government could make it mandatory for PC and laptop owners and
ISPs to use security measures.

--
Sources

BSNL's special plan for rural areas customers

BSNL has launched a special scheme of reduced fixed charges for
landline customers in rural areas, where the capacity of telephone
exchange is less than 1,000 lines and spare capacity is available.

BSNL to start 3G services by Dec; places orders for equipment

The scheme comprises of two options. Under the first option, the
customer has been given the freedom from paying monthly fixed charges
for 24 months by paying a lump sum amount of Rs 250. There are no free
calls and all the calls are charged at the rate of Re 1 per unit
inclusive of the service tax.

BSNL hopeful of winning union nod for IPO

Under the second option, monthly fixed charges have been reduced from
Rs 50 to Rs 20 per month and the number of free calls allowed are 20.

All the additional calls will be charged at the rate of Re 1 per unit
inclusive of the service tax.

All STD calls will be charged R e 1 per unit including service tax.

Installation charges have been reduced from Rs 300 to Rs 200. Besides,
the security deposit for local and STD has been reduced by 50%.

All BSNL customers (landline, WLL and mobile) would automatically get
a personal accident insurance coverage of Rs 50,000

Bengal CM says cannot return land Singur farmers

Bengal CM says cannot return land Singur farmers
Tuesday, Aug 26

KOLKATA - Bengal chief minister Buddhadeb Bhattacharjee today said it is not possible to return 400 acres of land to farmers of Singur who have denied compensation.

"We have to make the project successful and it can't be done by returning the land," Bhattacharjee told members of Associated Chambers of Commerce in Kolkata today.

Tata Motors is slated to roll out its 100,000-rupee car Nano in October from the Singur plant.

The Bengal chief minister also ruled out negotiating directly with the farmers whose land has been acquired for the plant.

Trinamool Congress chief Mamata Banerjee is currently holding an indefinite dharna near Tata Motors's Nano plant in Singur demanding the return of 400 acres of land to those farmers who have refused compensation.

"Firstly around 13,000 families are involved, and secondly many don't reside in the country," Bhattacharjee said to a question put by former Exide Industries managing director S.B. Ganguly.

"I hope that sense should prevail upon the Opposition party and they should call off their agitation," he said.

RIL says given proposal to transfer part of D6 Blockstake to arms

RIL says given proposal to transfer part of D6 Block stake to arms
, Tuesday, Aug 26


NEW DELHI - Reliance Industries Ltd. today said it has submitted a proposal to the government for transferring part of its participatory interest in gas-rich D6 Block in offshore Krishna-Godavari Basin to its wholly-owned subsidiaries.

"We have submitted a proposal (on D6 interest transfer) to petroleum ministry. A decision on this is still awaited. As all subsidiaries are owned by RIL, it will have no bearing on the company's shareholders," a Reliance Industries spokesperson told NewsWire18.

A newspaper report had today said RIL has proposed to transfer 80% of its interest in D6 Block to its four unlisted subsidiaries--Reliance KG Exploration and Development Pvt. Ltd., Reliance KG D6 E&P, Reliance KG Basin and Reliance E&P KG.

India Inc's staff cost rises 30% in Q1

Monday , August 25, 2008 at 01:26 hrs
Updated On: Monday , August 25, 2008 at 01:26 hrs

India Inc has been paying 30% more as salaries this year; still the share of staff cost in total expenditure has been coming down.

Despite pressure on their bottom lines, the staff cost of companies rose by 30.1% in April-June 2008 to Rs 35,971 crore, from Rs 27,644 crore in April-June 2007. But the increase in net profits was a modest 5%.

Paradoxically, the share of staff cost in total expenditure fell marginally to 6.30% from 6.92%. This happened because the total expenditure of 1,684 companies rose by 42.9%â€"to Rs 5.71 lakh crore from Rs 3.99 lakh crore. Their staff cost to sales ratio also declined to 5.46% in April-June 2008 from 5.84% in April-June 2007.

A study, based on a sample of 1,684 companies, finds that 87% of these companies have increased their staff costs during April-June 2008 compared to the same period in the previous year. The total staff cost of the sample companies grew by 30.1% against a 39.1% increase in aggregate sales and 42.9% rise in total expenditure.

The top five companies by staff cost were SAIL (Rs 2,215 crore),Wipro (Rs 2,199 crore), TCS (Rs 1,747 crore), Indian Oil (Rs 1,560 crore) and Satyam Computer (Rs 1,469 crore). Among these, the highest increase in staff cost was registered by Indian Oil (128.2%).

Of the 1,684 companies, 894 did better with a decline in staff cost to total expenditure ratio, while 790 saw a rise. Many of them, particularly those in human resource intensive sectors like IT, tea, telecommunications, power and construction, showed a high staff cost to total expenditure ratio, meaning they spent more on staff per unit of total expenditure. For example, Sonata Software spent Rs 61 on staff for every Rs 100 spent on total expenditure during April-June 2008.

Companies that have reduced their staff cost share in total expenditure significantly were Engineers India (from 67.61% to 44.84%), GTL Infra (34.6% to 18.31%), Jay Shree Tea (47.3% to 34.23%), Neyveli Lignite (43.02% to 30.80%) and TCS (51.97% to 44.46%). Among the industries, refineries (102.4%), construction (46.9%), entertainment (44.4%), electric equipment (42.5%), steel (39.6%), fertilizers (37%) and solvent extraction (32.3%) showed a significant increase in their staff cost.

 

http://www.financialexpress.com/news/India-Incs-staff-cost-rises-30-in-Q1/352995/

ICICI Venture closes in on US buy

 ICICI Venture-controlled RFCL (formerly Ranbaxy Fine Chemicals) has emerged as a strong contender to buy the speciality chemicals business of Mallinckrodt Baker, a division of healthcare giant Covidien, in a deal which could be valued at around $450 million, industry sources said. The transaction is in the final stages of due diligence and could be finalised in about two weeks.

This comes after speculation that RFCL was on the trail of a large US acquisition. If the transaction goes through it will be the biggest overseas M&A play for ICICI Ventures, which acquired RFCL around four years ago from Ranbaxy Labs for Rs 125 crore. A business TV channel had earlier reported that the deal was in the works.

The international deal is over four times RFCL’s current size. The transaction could make the Indian company a critical player in the consolidating global fine chemicals industry, especially in the laboratory products space. RFCL has three divisions â€" animal healthcare, fine chemicals and the diagnostics business.

“I am unable to confirm anything now,” ICICI Ventures MD Renuka Ramnath said. Another official with India’s largest domestic private equity fund said Mallinckrodt Baker was one of the targets on RFCL’s radar. In February this year, the $10-billion Covidien, formerly Tyco Healthcare, unveiled plans to divest its speciality chemicals business in a bid to stay focused on medical devices and imaging solutions. Commenting on Covidien’s divestment plans, analysts said Mallinckrodt Baker was an attractive fine chemicals business with “a steady operating margin and limited ongoing investment requirement”.

Mallinckrodt Baker Chemicals, which reported annualised revenue of $422 million in FY07, has ove r 2,000 employees with four plants in the US, the Netherlands, Mexico and Malaysia. It supplies chemicals for laboratory research, microelectronics devices, pharmaceuticals and biotechnology therapeutics.

Incidentally, in 2003, RFCL and Mallinckrodt Baker had entered into a marketing alliance for scientific laboratory products in the Indian market. It is believed that RFCL has been chasing a few acquisition targets in the US, with YES Bank roped in as an advisor for potential transactions. Speculation in recent weeks also linked it to another smaller entity, AIM Fine Chemicals, which is controlled by private equity fund Jina Capital. However, ICICI Venture had distanced itself from the rumour.

The timing of RFCL’s big-ticket buyout is not lost on industry observers. “With already four years behind it, ICICI Ventures is now pushing for global scale in a sector with few Goliaths. That may be the best bet for a blockbuster exit,” an analyst, who did not wish to be named, said.

However, what exit mode ICICI Ventures might take from a unique sector like fine chemicals is not very clear, he added. A slowdown in manufacturing â€" speciality chemical companies supply high value-added chemicals used in the manufacture of a wide variety of products â€" might be a concern for the private equity fund.

RFCL has strung up a slew of small acquisitions last year, starting with the buyout of Wipro BioMed, Godrej Diagnostics, and Alved Pharma & Foods in veterinary healthcare.

 

http://economictimes.indiatimes.com/News_by_Industry/ICICI_Venture_closes_in_on_US_buy/articleshow/3400600.cms

 

 

ICICI Venture closes in on US buy

 ICICI Venture-controlled RFCL (formerly Ranbaxy Fine Chemicals) has emerged as a strong contender to buy the speciality chemicals business of Mallinckrodt Baker, a division of healthcare giant Covidien, in a deal which could be valued at around $450 million, industry sources said. The transaction is in the final stages of due diligence and could be finalised in about two weeks.

This comes after speculation that RFCL was on the trail of a large US acquisition. If the transaction goes through it will be the biggest overseas M&A play for ICICI Ventures, which acquired RFCL around four years ago from Ranbaxy Labs for Rs 125 crore. A business TV channel had earlier reported that the deal was in the works.

The international deal is over four times RFCL’s current size. The transaction could make the Indian company a critical player in the consolidating global fine chemicals industry, especially in the laboratory products space. RFCL has three divisions â€" animal healthcare, fine chemicals and the diagnostics business.

“I am unable to confirm anything now,” ICICI Ventures MD Renuka Ramnath said. Another official with India’s largest domestic private equity fund said Mallinckrodt Baker was one of the targets on RFCL’s radar. In February this year, the $10-billion Covidien, formerly Tyco Healthcare, unveiled plans to divest its speciality chemicals business in a bid to stay focused on medical devices and imaging solutions. Commenting on Covidien’s divestment plans, analysts said Mallinckrodt Baker was an attractive fine chemicals business with “a steady operating margin and limited ongoing investment requirement”.

Mallinckrodt Baker Chemicals, which reported annualised revenue of $422 million in FY07, has ove r 2,000 employees with four plants in the US, the Netherlands, Mexico and Malaysia. It supplies chemicals for laboratory research, microelectronics devices, pharmaceuticals and biotechnology therapeutics.

Incidentally, in 2003, RFCL and Mallinckrodt Baker had entered into a marketing alliance for scientific laboratory products in the Indian market. It is believed that RFCL has been chasing a few acquisition targets in the US, with YES Bank roped in as an advisor for potential transactions. Speculation in recent weeks also linked it to another smaller entity, AIM Fine Chemicals, which is controlled by private equity fund Jina Capital. However, ICICI Venture had distanced itself from the rumour.

The timing of RFCL’s big-ticket buyout is not lost on industry observers. “With already four years behind it, ICICI Ventures is now pushing for global scale in a sector with few Goliaths. That may be the best bet for a blockbuster exit,” an analyst, who did not wish to be named, said.

However, what exit mode ICICI Ventures might take from a unique sector like fine chemicals is not very clear, he added. A slowdown in manufacturing â€" speciality chemical companies supply high value-added chemicals used in the manufacture of a wide variety of products â€" might be a concern for the private equity fund.

RFCL has strung up a slew of small acquisitions last year, starting with the buyout of Wipro BioMed, Godrej Diagnostics, and Alved Pharma & Foods in veterinary healthcare.

 

http://economictimes.indiatimes.com/News_by_Industry/ICICI_Venture_closes_in_on_US_buy/articleshow/3400600.cms

 

 

Ratan Tata's words of inspiration

Ratan Tata's words of inspiration

Ratan Naval Tata has been called many things. Quiet. Reticent. Humble.
A businessman par excellence. Tenacious. And a tiger, when pushed to
the wall.

As we all witnessed when it looked like the controversy about Singur,
where the Tata Nano was to be manufactured, looked like escalating
instead of dying down.

The 70-year-old roared, "If people say that that we will protect our
investments irrespective of anything then they are wrong. I will not
bring in my employees to Singur if there is threat of them being
beaten up. Tata will do whatever necessary to protect its employees."

It was a statement, not a threat -- a statement that Ratan Tata will
not hesitate to execute.

Here are some more inspirational words of wisdom from a titan of
India's business world.