Weekly Indian MArket Newsletter

1. Top Headlines
 Eredene Capital Makes Partial Exit From Sattva CFS
 Gati Going for CDR North of Rs 300Cr
 Future Group, Lifestyle and Woodland clock record sales as
Republic Day discounts help retailers bounce back
 Face book Said to Hire Morgan Stanley for IPO
 Sai Security Printers Secures $7M Funding From Aureos
Capital
 Sebi slaps Rs 1 cr fine on 10 for fraud
 American online retail giant Amazon enters India with
Junglee.com, an online shopping site
 Sovereign Funds Of Abu Dhabi & Singapore Bet Over
$650M On HDFC Bank
 Sidbi gives Rs.100 crore loan to SKS
 GIC Real Estate to invest $100 million in Godrej Properties
office project
 Tata Capital Files Winding Up Petition against Lilliput
Kidswear
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2. Weekly Economic Review
Government-run telecom firm BSNL is planning to outsource some of its
operations in an effort to cut costs. The firm is planning to outsource
operation of its telecom towers. BSNL has some 60,000 telecom towers across
India.
And in corporate news, India’s largest private lender, ICICI Bank has beaten
forecasts and reported strong third quarter earnings. The bank posted a 20%
rise in net profit to R1, 728 crore. That came along with a 17% increase in net
interest income. Net interest margin meanwhile, rose to 2.7% from 2.63% in
the same period last year.
The Supreme Court surprised observers by issuing a strong decision on the
allocation of 2G spectrum. It cancelled all 122 licenses allotted to nine
companies on or after 10 January 2008. The Supreme Court also ordered
telecom regulator Trai to make fresh recommendations for 2G spectrum
allocation. Trai will have two months to complete this task. The licenses in
question were all issued during the time of former telecom minister A. Raja,
who’s currently under trial in the 2G case.
Another good week for the market, with key indices gaining more than 2%
over last Friday. Second line shares–mid as well as small caps—once again
outperformed their large cap counterparts, as institutional investors kept at
their purchases and there were no nasty surprises from Euro zone. Quarterly
earnings continued to be a key theme with the market rewarding the
performers and punishing the underperformers. Telecom stocks were in
action on Thursday and Friday after the Supreme Court cancelled 122 telecom
licenses issued after January 2008.
The rupee strengthened above 49 to the dollar, driven by strong foreign fund
flows, and also the weakening of the dollar relative to other currencies.
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3. Inside The Story
Eredene Capital Makes Partial Exit from Sattva CFS
Eredene Capital PLC, a London-based AIM-listed investor in Indian
infrastructure, has made a partial exit from a container freight station
(CFS) with returns of 5.9 xs. Eredene Capital said in a statement that it
had sold 10 per cent stake in Sattva CFS & Logistics Pvt Ltd for £1.1
Million (Rs 8.6 crore or $1.72 million), fetching an IRR of 49 per cent.
The stake was sold to the promoters of the Sattva Business Group and
would bring Eredene’s stake down to 39 per cent. The deal is a debut
exit for Eredene Capital.Sattva CFS & Logistics is located near Chennai
and provides services like bonded warehousing, secured and paved
stacking areas, on-site assembly, computer-driven tracking systems and
office facilities.
Gati Going for CDR North Of Rs 300Cr
Logistics firm Gati Ltd is looking to restructure debt worth over Rs 300
crore in a corporate debt restructuring (CDR) process. Debt resolution
firm Brescon Corporate Advisors, is advising the publicly listed express
logistics company on the CDR exercise. In December, Gati raised $22.18
million through a fresh issue of FCCBs to refinance the existing foreign
Currency convertible bonds (FCCBs) aggregating to $22 million due for
redemption on December 6, 2011.
Future Group, Lifestyle and Woodland clock record sales as
Republic Day discounts help retailers bounce back
India's largest retailer Future Group posted its highest weekly sales last
week while others such as department store chain Lifestyle and
footwear maker Woodland reported high sales growth as heavy
discounts helped retailers bounce back after a sales slump in the past
two months. Future Group reported national combined retail sales of Rs
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4. 650 crore between Monday and Sunday (January 23-29), 25-30% higher
than last year, as its 210 Big Bazaar and Food Bazaar outlets ran the
'Sabse Saste 5 Din' promotion offer and apparel and home products
chain Central offered a flat 50% discount on 100 brands.
Face book Said to Hire Morgan Stanley for IPO
Facebook Inc., the world’s largest social-networking service, chose
Morgan Stanley (MS) to take the lead on its planned initial public
offering. That designation usually means a larger share of the fees
collected by a securities firm. Facebook will file plans with regulators
tomorrow to raise $5 billion. Getting picked for the IPO is a coup for
Morgan Stanley and Michael Grimes, the global co-head of the bank’s
technology investment banking unit. Taking the lead on Facebook may
catapult the New York-based bank to the top of the U.S. IPO league table
for a third year running.
Sai Security Printers Secures $7M Funding From Aureos
Capital
Aureos South Asia Fund has invested $7 million or Rs 35 crore in Sai
Security Printers Pvt Ltd, a paper packaging company based in
Faridabad and Bangalore. The fund is managed by Aureos South Asia
Managers Ltd, a subsidiary of the emerging markets PE fund manager
Aureos Capital, which has $1.3 billion under management.“Sai will use
the funds to build on its already strong production and technology
capabilities, and will work towards moving into new markets, adding
new customers and providing end-to-end packaging and printing
solutions while increasingly focusing on high-margin business,” said
Vijay Raghavan, managing director of Sai Security Printers.
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5. Sebi slaps Rs 1 cr fine on 10 for fraud
Capital market regulator Sebi has imposed penalties totalling Rs 1 crore
on 10 individuals for involvement in fraudulent trade practices in
dealing with shares of Platinum Corporation Ltd. The Securities and
Exchange Board of India conducted investigation into the irregularity in
the trading in the company's shares during 2007 and 2008 and into the
possible violation of the provisions of Sebi Act, 1992. The investigation
Was focused on change in promoter's shareholding and how it got
reduced from 11.63 per cent to zero during the quarter December 2007.
It was found that the trading details at BSE did not reflect any sale of
shares by the promoters and the details available with the depositories
did not contain any off-market debit transactions executed by the
promoters.
American online retail giant Amazon enters India with
Junglee.com, an online shopping site
American online retail giant Amazon.com has made an entry into the
Indian market with Junglee.com, an online shopping site powered by the
$ 48 billion company. The site which went live on Thursday morning
says that it’s an online shopping service by Amazon "which enables
customers to find and discover products from online and offline retailers
in India and from Amazon.com." With e-commerce picking up in India,
the third largest Internet market after US and China, the online retailer
has been rumored to enter the country for some time now. Customers
can find over 1.2 crore products and 14,000 brands, the website claims.
The company is set to make an announcement on Thursday.
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6. Sovereign Funds of Abu Dhabi & Singapore Bet Over
$650M On HDFC Bank
World’s largest sovereign wealth fund Abu Dhabi Investment Authority
(ADIA) has quietly acquired close to 2 per cent stake in HDFC Bank Ltd,
the country’s most valued private lender, in what could have cost it
around Rs 2,000 crore ($400 million), ADIA did not figure among HDFC
Bank’s shareholders owning over 1 per cent stake as of September
2011, but held 1.94 per cent as on December 31, 2011. Although it could
have acquired around half of its stake before October without having to
make a disclosure, it might have made the bulk of its purchase during
The last quarter when the average share price of HDFC Bank was in the
range of Rs 400-Rs 500 a share.
Sidbi gives Rs.100 crore loan to SKS
Small Industries Development Bank of India (Sidbi), the apex lender to
small firms, has issued a Rs.100 crore term loan to the country’s lone
listed micro lender, SKS Microfinance Ltd.This is the first major bank
loan given to any micro lender based in Andhra Pradesh since banks
stopped lending to microfinance institutions (MFIs) after a state law
triggered a crisis in the sector in October 2010. MFIs give small loans to
poor borrowers at interest rates between 24% and 36%.Sidbi has given
the three-year loan at 13.5% to the cash-strapped MFI, which had
posted an Rs.428 crore loss in the third quarter, largely because of huge
loan write-offs in the southern state. The rate is 100-150 basis points
higher than the interest rate at which banks typically lend to MFIs. One
basis point is one-hundredth of a percentage point.
GIC Real Estate to invest $100 million in Godrej Properties
office project
GIC Real Estate, a part of Singapore government's sovereign fund GIC, is
investing over $100 million in a Godrej Properties office project in
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7. Mumbai's Bandra Kurla Complex. The project is being developed on a
2.5-acre land, for which Godrej Properties had signed a joint
development agreement with Jet Airways. Godrej's move to sell stake in
the special purpose vehicle set up for this project is aimed at easing its
debt-equity ratio that currently stands around 2 times, said people
familiar with the development. Apart from direct equity dilution in this
SPV, both GIC and Godrej are also considering another option of forward
sale of the entire commercial project.
Tata Capital Files Winding Up Petition against Lilliput Kids
wear
After falling out with its private equity investors Bain Capital and TPG
over alleged inappropriate accounting practices, apparel retailer Lilliput
Kids wear Ltd is now facing trouble on another front. One of its lenders,
Tata Capital, has filed a winding up petition in the Delhi High Court to
recover the outstanding debt amounting to Rs 10 crore.Lilliput had
apparently defaulted on the loan last October, following which rating
agency ICRA downgraded the long-term debt note of the company. Bank
of India is another lender to Lilliput. The legal counsel of Tata Capital
submitted to the court that Lilliput had failed to redeem the commercial
paper and had defaulted in repaying the maturity value of Rs 10 crore.
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