Ashok Leyland signs JV with Alteams, Finland; Ashok Leyland to invest Rs 350 Cr in JV

Ashok Leyland has entered into a joint venture with the Alteams Group, Finland to manufacture High Pressure Die Casting (HPDC) aluminum products predominantly for the automotive and telecommunications sectors, subject to various corporate and statutory approvals as may be required.

The 50:50 JV will synergize the Company's experience and expertise in the automotive sector with Alteams' Know-how of HPDC and their insights into telecommunications sector.

"Apart from a fusion of the respective strengthen of both the partners, the JV reflects the expansion of Ashok Leyland Group's presence in the auto components sector to take advantage of rapidly growing opportunities both in India and abroad," said Mr. R Seshasayee, Managing Director of the Company. "We are already present in the foundry business through Ennore Foundries. This JV broadens our portfolio to meet the demand of castings from the automotive and telecommunications sectors," he added.

The JV will commence activities in 2007 and Phase I will be completed by 2008 at an investment of over Rs 1.75 billion. At the completion of Phase II in about 5-6 years which will overlay and extend beyond Phase I, the JV will achieve a turnover of Rs 6.5 billion with a total investment of Rs 3.35 billon and will generate employment, directly and indirectly, in excess of 1,000.

The JV is well-placed to benefit from the robust growth in both the telecommunications and automotive sectors. Components through The HPDC technology are increasingly being favoured thanks to their high quality, capability for complex geometry and weight efficiency as also economy at higher volumes.

The manufacturing facility in Phase I has been planned in Tamil Nadu and the JV will produce components for the telecommunications sector such as those fitted in the transmission and receiving equipment. It will also partly meet the Company's captive requirements for components for engines and gearboxes. In Phase II, the JV will enhance its product portfolio with HPDC components for automotive sectors including passenger cars and for non-automotive applications as well the target markets will extend beyond India.

R Sheshayee from Ashok Leyland said we felt that we both have good opportunity going forward. We will be using this tie up to open gates of some of the other sectors of business, particularly telecom sector. This JV will introduce us into the telecom industry.

Ashok Leyland, the flagship of the Hinduja Group in India, has entered into a joint venture with the Alteams Group, Finland to manufacture High Pressure Die Casting (HPDC) aluminum products predominantly for the automotive and telecommunications sectors, subject to various corporate and statutory approvals as may be required.

The 50:50 JV will synergize Ashok Leyland’s experience and expertise in the automotive sector with Alteams’ know-how of HPDC and their insights into telecommunications sector.

The JV will commence activities in 2007 and Phase I will be completed by 2008 at an investment of over Rs 1.75 billion. At the completion of Phase II in about 5~6 years which will overlay and extend beyond Phase I, the JV will achieve a turnover of Rs 6.5 billion with a total investment of Rs 3.35 billion and will generate employment, directly and indirectly, in excess of 1,000.

The JV is well-placed to benefit from the robust growth in both the telecommunications and automotive sectors. Components through the HPDC technology are increasingly being favoured thanks to their high quality, capability for complex geometry and weight efficiency as also economy at higher volumes.

The manufacturing facility in Phase I has been planned in Tamil Nadu and the JV will produce components for the telecommunications sector such as those fitted in the transmission and receiving equipment. It will also partly meet Ashok Leyland’s captive requirements for components for engines and gearboxes. In Phase II, the JV will enhance its product portfolio with HPDC components for automotive sectors including passenger cars and for non-automotive applications as well. The target markets will extend beyond India.

About the Alteams Group

Alteams Group’s core business is manufacturing of cast light metal components including related services like design of castings and tooling as well as further processing into assembly-ready components. Alteams’ customers are within the telecom, automotive, electronics, manufacturing as well as meditech industries. The Alteams Group has production units in Finland, Sweden, Russia, Estonia and China, with sales offices in Denmark, France and the USA.

Alteams Group is one of the biggest light metal foundries in Europe. The Net sales of the Alteams Group is over € 130 million with a personnel of over 1500. Globally, Alteams Group is the biggest supplier of cast light metal components to the telecommunication industry.

Alteams is owned by Kuusakoski Group. Kuusakoski is an international recycling services company. In addition to being the leading recycler of metal-based products in the Northern Europe, Kuusakoski is also recognised as one of the largest suppliers and refiners of recycled metals in the world. The Group is reaching turnover US $ 1.4 billion this year and employs over 3000 persons.





Hope to go ahead with IVR Prime IPO by month-end, looking to raise Rs 700 cr: IVRCL

Sudhir Reddy, CMD, IVRCL, said we will soon finalise date for IVR Prime. We are looking at July end for the IPO. The company is looking to raise Rs 700 crore from this IPO.

He said that the valuation of the land bank currently with the company is at Rs 3200. The company has close to 2500 acres of land. Currently,the company has no plans to get partners on board for their Real Estate arm.

IVRCL could look at getting a strategic investor later on in real estate, he further said. The company is expected to grow at 45-50% in coming years.





Patni acquires Europe-based Logan-Orviss International, Logan-Orviss clocked revenue of Euro 11.8 Mn in 2006

Patni Computer Systems has announced acquisition of Europe-based Logan-Orviss International (LOI), a leading independent specialist telecommunications consulting services company.

The consideration includes an upfront cash payment on completion of the transaction as well as performance-linked incentive payments on achieving financial targets over a three year period. Logan-Orviss ended profitable year with revenues of Euro 11.8 Million in 2006.

The acquisition strengthens Patni's capability in communications and media practice providing operators thought leadership and operational transformation consulting for mission critical IT initiatives.

Logan-Orviss International will become Patni's Telecommunications Consulting & Advisory practice, and will be led by Brendan Logan and Colin Orviss, the firm's co-founders.

Commenting on the acquisition, Neeraj Gupta, Executive Vice President of Patni said, "The LOI acquisition underscores our commitment to global telecommunications and media customers. With this, Patni adds further depth to our pool of telecoms specialists enabling us to provide the best of world-class consulting and global delivery."

Meanwhile, private equity and strategic investors looking to buy into Patni Computer Systems may find that only 10-12% stake is available as against 44% earlier. Industry sources say Ashok and Gajendra Patni, the two promoters who were reportedly looking to completely exit the company by selling the 14% stake held by each, are now looking to sell only 5-6% each. This would also mean that the two brothers will remain invested in the company, which they started along with their brother Narendra Patni.

PE investor General Atlantic Partners, which was earlier looking to sell its entire 16% stake in the company, is now said to be in two minds regarding divesting its stake. This potentially leaves only a minority stake of 10-12% that strategic and PE investors can buy. Pivate equity buyout fund Apax Partners, which was earlier interested in buying the entire 44% stake that was on the block, has reportedly decided to drop out of the race due to this clause.

“Earlier there was a sizeable stake that was available, but now with 10-12% stake in Patni being for sale, Apax is not interested in the transaction,” said a source close to the fund. “Patni Computer Systems has not been informed by any of its large investors of their intent to offload any stake in Patni. As a policy, the company does not comment on market speculations,” said a Patni spokesperson.

UK-based PE major Apax Partners, which set shop in India last year, was keen to buy the entire stake of the two Patni brothers and PE fund General Atlantic, which together stands at 44% and is valued at nearly $ 800 million. The fund was looking to make the proposed investment out of its $ 15 billion global fund. Besides Apax, US-based buyout major Carlyle was the only other PE investor interested in the transaction.

Apax Partners, which is yet to announce its first deal in India, was reportedly evaluating two deals - Patni Computer Systems and Reliance Communications tower business RTL. The fund has also dropped out of the race for RTL. Besides the two PE investors, a minority stake is unlikely to find favour with IT companies like IBM which were earlier said to be in the race for Patni.

Patni Computers, one of the top 10 software exporters in India, was founded by three brothers, who together own 44% in the company. While two brothers, Ashok and Gajendra, are keen on selling their stake in the company, Narendra Patni will remain invested in the company. In fact, Narendra Patni has the first right of refusal, which means that if PE funds bid for the stake held by Ashok and Gajendra Patni, Narendra Patni will have the option to match the bid. Patni was one of the pioneers in the Indian software market.

But over the years, it has been overtaken by swifter rivals, including Infosys Technologies. Despite being an early mover, its performance has lagged behind its peers. For fiscal 2006, the company had revenues of $ 579 million and logged a net profit of $ 59 million. With a market capitalisation of $ 1.77 billion, it is valued at 28.4 times its earnings.





Sagar Cements to invest Rs 295 Cr to expand capacity, to up cement capacity to 2.5 MT vs 0.7 MT per year

Sagar Cements is planning to invest Rs 295 crore to expand capacity. The company is planning to up cement capacity to 2.5 million tonne per year vs 0.7 million tonne. Sagar Cements has tied up Rs 195 crore debt for expansion.

The company will complete capacity expansion by June 2008. It is in talks for private placement of equity. It has also sought $ 19 million loan from IFC.





Danone confirms in talks with Kraft, reports said Kraft Foods eyeing Danone’s biscuit business, Wadias may be forced to match Kraft’s offer to buyback 25.1% stake

Danone has confirmed that it is in talks with Kraft. Earlier there were reports saying the Wadia-Danone slugfest turned more intriguing with speculations about US giant Kraft Foods launching an imminent bid for Danone’s biscuit business gaining momentum on Monday. French foods major Danone, which with the Wadias equally controls Britannia Industries, has been in exit mode from the Indian company after its ties with its local partner soured lately.

If the worldwide biscuit leader Kraft Foods goes ahead with a Euro 3.5 billion bid for Danone’s biscuits operations — with Britannia being a significant part, it could force the Wadia Group to match the US giant’s offer to buy back 25.1% stake in the Indian company. The Wadias and Danone almost equally own just under 51% stake in Britannia through the holding company ABIH.

It was last week had reported that Danone could look at offloading Britannia stake to an outsider if it failed to reach a consensus with the Wadias over price. It is believed that the Wadias have the right of first refusal (RoFR) in the event of Danone seeking exit. Danone will sell stake only at a certain price.

The boardroom maneuvering between Wadias and Danone could get even more complex if Kraft Foods tables a bid. Meanwhile, latest media reports said Danone has started talking to trade unions about a possible change within its biscuit division, indicating that a deal could be imminent.

The biscuit unit, with brands like LU and Tuc, accounts for around 15% (Euro 2.1 billion) of Danone’s top line revenue as the French group narrows focus on health foods. In fact, Danone has been shedding the biscuit business in parts, with the sale of majority interest in Latin America being the latest. Danone has exited the pasta and beer categories after it identified health foods, namely fresh dairy and beverages, as its core business driver for the future.

For the India story, Kraft Foods’ talks with Groupe Danone assumes importance. The American biscuit major, like all other MNCs, is desperate to enter India and tap the consumer boom.

Interestingly, Kraft’s international business (other than the US) is led by Sanjay Khosla, a former Unilever and New Zealand’s Fonterra executive who would like Kraft to enter India under his guidance. Khosla was also with Fonterra Co-operative Group between 2004-07, a multinational dairy company based in New Zealand with which the Wadias entered into a joint venture to sell its diary items.

However, if Kraft were to buy Danone’s biscuits globally (including its 25% stake in India), it will be a formidable partner for the Wadia Group as it will not be a sleeping partner like Danone. In that context, it remains to be seen whether the Wadias will allow the US biscuit company to enter Britannia. What Wadia would want now is a comfortable partner, and not a strong partner like Kraft. However, biscuits are set to become tough cookies in future with competition building up from ITC. So the Wadia Group may even be willing to partner Kraft, as that would mean less competition.

Meanwhile, some analysts explored the possibility of Kraft running into competition authorities, especially in the US. But this may not be a hurdle if Kraft is interested in Danone’s biscuit operations in Europe and emerging markets like India, analysts added.




Bellary Steels sees Rs 800 mln net profit and Rs 630 Cr sale in Ist yr post debt rejig; Company seeks Rs 1400 Cr debt waiver

Bellary Steels sees Rs 80 crore net profit and Rs 630 crore sale in Ist yr post debt rejig. The company posted net loss of Rs 106 crore in FY07.
The company is planning 72MW captive power unit. For this, the compnay hasacquired 1,150 acres for expansion. The expansion cost is estimated at Rs 820 crore.

It is expected that the company may get UN nod for 48,000 CER carbon credit.

The company has sought Rs 1400 crore debt waiver. The current accumulated debt of the company is at Rs 1900 crore.




Maruti: Sales outlook should improve once festive season begins; Higher volumes will bring down costs, elevate margins

Jagdish Khattar, MD of Maruti Udyog says that the sales outlook of the company should improve once the festive season begins. He says that the higher volumes will bring down the costs and elevate the margins. Currently,it is better to have lower margins & higher volumes. Khattar adds that the base effect has been a factor in bigh June sales. New models do not contribute significantly to June sales, Khattar adds.

They have sold 2,500 units of SX4, 7,500 units of Swift. Khattar adds that they may have to struggle for another month or two.




Govt mulls hike in Petrol, Diesel prices; Mulls Rs 2/l hike in petrol, Re 1/l in diesel
The government is mulling ways such as increasing petrol and diesel prices for tackling the spurt in international crude oil prices that have resulted in oil companies losing Rs 170 crore a day.

A Rs 2 hike in petrol and a Re 1 increase in diesel prices is being considered as Indian basket of crude oil crossed $ 69 a barrel mark.

Public sector oil firms are losing over Rs 5.3 a litre on petrol and Rs 4.40 on diesel as Indian basket of crude oil has risen 12% since February 15, when petrol and diesel prices were slashed by Rs 2 and Re 1 a litre respectively.

Oil companies are also losing 14.67 a litre on kerosene and Rs 167 on per cylinder of domestic LPG.

Total under-realisation on petrol, diesel, LPG and kerosene for the full fiscal is estimated at Rs 50,700 crore.

As per the equitable burden-sharing formula, if and when the ministry gets the Cabinet nod for raising prices, the Rs 5 a litre burden will be borne by the consumers; the government which will issue bonds or tweak taxes; and the oil companies such as ONGC which will contribute from their income from crude and gas sales to cover the losses.




Teva sues Ranbaxy, Dr Reddy’s, Orchid Chem., Cadila & Wanbury for alleged infringement of its patent for carvedilol

Teva Pharmaceuticals, the world’s largest generic drug manufacturer, has sued Ranbaxy, Dr Reddy’s Labs, Lupin, Orchid, Cadila Pharmaceuticals, USV Ltd and Wanbury Ltd, for alleged infringement of its patent for carvedilol active pharmaceutical ingredient (API), the main constituent in Coreg, GlaxoSmithkline’s (GSK’s) cardiac drug.

In separate cases filed on June 21 and 22 with the US district court of New Jersey against the Indian carvedilol API manufacturers, as well as Coreg generic drug manufacturers, Teva, which owns various patents on carvedilol API, informed the court that the defendants had not provided it with samples of their carvedilol API or furnished information regarding the processes by which carvedilol API is made, despite Teva’s offer of confidentiality.

The US FDA has granted nine companies—including Teva, Dr Reddy’s, Ranbaxy, Zydus Pharma USA and Caraco Pharma—tentative approval to manufacture copycat versions of Coreg. The companies may get final approval on September 5, 2007, when GSK’s pediatric exclusivity for Coreg ends.

KG Rajendran, head, knowledge cell, USV Ltd, said, “We received Teva’s notification two days ago and are yet to take a decision on it.” Other companies refused to respond to queries.

On May 8, 2007, Teva notified all defendants of its patents on carvedilol API and sought information allowing it to ascertain whether their API fell within the scope of one or more of the patents. But the companies refused to provide the required data. Teva says, “Without the requested information, we are unable to determine whether the defendants’ API infringes our patents in suits. In the absence of sufficient response, we have no choice but to resort to the judicial process.” Teva further says, “We request the court to declare that our various patents on carvedilol are valid. Hence, the defendants will infringe the patents.”





Bombay Rayon eyes Leela Laces

Hospitality major Leela Group is expected to sell controlling stake in its garment business, Leela Scottish Lace, to Bombay Rayon Fashions Ltd (BRFL) for around Rs 450 crore. Marquee names like Ann Taylor, Banana Republic and Gap count among Leela Scottish Lace’s clients, but it’s retail giant Wal-Mart that accounts for nearly 50% of the company’s revenue.

Informed sources said the deal will be finalised on Tuesday followed by a formal announcement. Rabobank would finance the deal for BRFL.It was first reported that there is a possibility of hotel magnate Captain C P Krishnan Nair selling stake in his original business Leela Scottish Lace on September 15, 2006. Leela Scottish Lace has a turnover of around Rs 400-450 crore. The company has a workforce of 20,000-22,000 across Bangalore, Chennai and Thiruvananthapuram. Mr Nair confirmed that his group was roping in a strategic partner who will take over the production. “It has been a great human endeavour to build a business that employees over 20,000 people. Now, we feel it is time to bring in a partner,” he added.

However, on its possible deal with BRFL, a spokesperson of Leela Lace said: “We have been receiving inquiries regarding a possible buyout of Leela Lace. We would like to put on record that these are only rumours. However, discussions are on with companies for utilisation of Leela Lace’s production facilities.” Bombay Rayon MD Prashant Aggarwal said: “We are not against acquisitions, if an opportunity arose.”

BRFL, which clocked close to Rs 500 crore turnover in FY’07, has set a target of Rs 1,100 crore this year. In February, it acquired 70% stake in the UK-based DPJ Clothing, a design and marketing company, for over Rs 13 crore. BRFL’s client list includes names like Tom Tailor, DKNY, Next and Burton’s. As a prelude to the impending transaction, the Leela Group is seen segregating the real estate assets locked up in the garment, which could be utilised for hospitality related ventures in the future. For instance, sources said Leela’s garment operations would move out of the current facility at Ambattur in Chennai, which will then be used for real estate development. Money raised from stake sale is likely to be utilised for Leela group’s expansion in hospitality business.

Leela Scottish Lace precedes Mr Nair’s core hospitality business, as he logged on to the contract garment exports way back in the 60s. However, the group later identified hospitality, real estate and infrastructure as its core sectors, and was looking to sell stake in the garment business for a while.




IVRCL plans to raise Rs 2000 cr via IVR Prime IPO

IVRCL Infrastructures & Projects Ltd, the Hyderabad-based infrastructure company, plans to go in for an initial public offering (IPO) for its real estate subsidiary IVR Prime Urban Developers Ltd to raise Rs 2,000 crore, in continuation of a trend of real estate firms tapping the capital market—DLF Ltd’s Rs 9,187 crore IPO, in early June, was oversubscribed 3.5 times. Another developer, Housing Development and Infrastructure Ltd, is seeking to raise Rs 1,485 crore through an IPO that is already oversubscribed and which closes on Tuesday.

“We plan to raise around Rs2,000 crore. It will be through book-building,” said S. Ramachandran, deputy director of development and corporate strategy, IVRCL.

IVR Prime is in the business of constructing urban infrastructure, typically residential apartments and hotels. “We have certain plans for our real estate arm. In order to realize those plans, we have to raise money,” added Ramachandran. IVRCL Infrastructures, which has an 80% stake in IVR Prime, plans to dilute 20% of its holding in the IPO; the balance 20% is held by the family of the company’s promoter, Sudhir Reddy. Foreign institutional investors such as Citigroup, HSBC, Merrill Lynch, Goldman Sachs and UBS Securities together hold a majority 87.5% stake in IVRCL Infrastructures.

“The dilution of 20% stake held by IVRCL in IVR Prime Urban will help unlock part of the value of IVR Prime Urban for IVRCL shareholders. Given the promoter background and the fact that real estate IPOs are getting sold easily again, the IPO could perform well,” said Nitin A. Khandkar, senior vice-president (research) at the Mumbai-based Keynote Capitals Ltd.

He added that IVR Prime “is a smaller player compared with the likes of DLF or Unitech, with a land bank of just 2,298 acres and a saleable area of 56.63 million sq. ft, located in five cities.” IVRCL ended 2006-07 with revenues of Rs 2,518 crore and a net profit of Rs168.90 crore. “We plan to become a $ 1 billion (Rs 4,100 crore) company by 2007-08,” said Ramachandran.
In an unrelated development, IVRCL proposes to erect power transmission lines in Algeria and Sudan. “In (the) power sector, we basically implement contracts in transmission lines, substations and rural electrification. We are now looking at setting up power transmission line projects in West Asia,” said Ramachandran.

It is also considering setting up a new subsidiary company called IVRCL Power in order to take care of its power business, taking the total number of subsidiary companies to five. IVRCL has already set up a power transmission tower manufacturing plant in Nagpur at an investment of Rs 16 crore and hopes to commission it by August this year.

IVRCL’s shares closed at a high of Rs 381.30 per share on the Bombay Stock Exchange on Monday, gaining 6.32% over the previous day’s close. The exchange’s benchmark 30-stock index Sensex rose 0.09% to 14,664.26 points.




Kraft likely to bid for Danone biscuit biz

The Wadia-Danone slugfest turned more intriguing with speculations about US giant Kraft Foods launching an imminent bid for Danone’s biscuit business gaining momentum on Monday, according to an ET report. French foods major Danone, which with the Wadias equally controls Britannia Industries, has been in exit mode from the Indian company after its ties with its local partner soured lately.

If the worldwide biscuit leader Kraft Foods goes ahead with a e3.5-billion bid for Danone’s biscuits operations — with Britannia being a significant part, it could force the Wadia Group to match the US giant’s offer to buy back 25.1% stake in the Indian company. The Wadias and Danone almost equally own just under 51% stake in Britannia through the holding company ABIH.

Incidentally, ET last week had reported that Danone could look at offloading Britannia stake to an outsider if it failed to reach a consensus with the Wadias over price. It is believed that the Wadias have the right of first refusal (RoFR) in the event of Danone seeking exit. Both companies declined to detail the exact contours of this clause. Sources close to the deal said Danone will sell stake only at a certain price. A questionnaire to the Wadia Group remained unanswered at the time of going to press.

The boardroom manoeuvring between Wadias and Danone could get even more complex if Kraft Foods tables a bid. Meanwhile, latest media reports said Danone has started talking to trade unions about a possible change within its biscuit division, indicating that a deal could be imminent.

The biscuit unit, with brands like LU and Tuc, accounts for around 15% (e2.1 billion) of Danone’s topline revenue as the French group narrows focus on health foods. In fact, Danone has been shedding the biscuit business in parts, with the sale of majority interest in Latin America being the latest. Danone has exited the pasta and beer categories after it identified health foods, namely fresh dairy and beverages, as its core business driver for the future.
For the India story, Kraft Foods’ talks with Groupe Danone assumes importance. The American biscuit major, like all other MNCs, is desperate to enter India and tap the consumer boom.

Interestingly, Kraft’s international business (other than the US) is led by Sanjay Khosla, a former Unilever and New Zealand’s Fonterra executive who would like Kraft to enter India under his guidance. Mr Khosla was also with Fonterra Co-operative Group between 2004-07, a multinational dairy company based in New Zealand with which the Wadias entered into a joint venture to sell its diary items.

However, if Kraft were to buy Danone’s biscuits globally (including its 25% stake in India), it will be a formidable partner for the Wadia Group as it will not be a sleeping partner like Danone. In that context, it remains to be seen whether the Wadias will allow the US biscuit company to enter Britannia. “What Wadia would want now is a comfortable partner, and not a strong partner like Kraft,” said a source close to the development. However, biscuits are set to become tough cookies in future with competition building up from ITC. “So the Wadia Group may even be willing to partner Kraft as that would mean less competition,” said another industry source.

Meanwhile, some analysts explored the possibility of Kraft running into competition authorities, especially in the US. But this may not be a hurdle if Kraft is interested in Danone’s biscuit operations in Europe and emerging markets like India, analysts added.



Citicorp Venture takes 25% stake in Subhash Projects; Co bags Rs 267 Cr order in Rajasthan

Citicorp Venture Capital (CVC) has acquired a 24.6% stake in engineering and construction firm Subhash Projects & Marketing Ltd for Rs 250 crore. The company has decided to issue 81,63,816 equity shares of Rs 2 each at Rs 245 and 20,40,816 warrants convertible in 18 months at an exercise price of Rs 245 aggregating to Rs 250 crore.

After the private placement, the promoters' stake in the company will decline to 56.21 per cent from the current level of 74.68 per cent. The placement has pegged the company's market capitalization at Rs 1,013 crore. The funds raised will enable investments in group projects and working capital expansion. Currently, the company share price is trading at Rs 247 per share.

Commenting on the results Subhash Sethi, Vice Chairman, SPML, said, “The company is in a high growth phase with the opening up of opportunities in infrastructure. Our growth strategy is to focus on building on our core competencies in water and power and expanding our portfolio of services in environmental engineering. SPML aims to achieve a turnover of Rs. 1,200 crore in FY 2007-08 and is constantly capitalizing on untapped areas and opportunities to drive the next level of growth.”

The company has also bagged a Rs 267 cr order in Rajasthan.