IFCI, which invited expressions of interest (EoIs) from foreign and domestic investors last month for a strategic 26% stake sale, may find itself cut out of the next Rs 1,300-crore tranche of the government’s approved restructuring package.

“IFCI’s recent turnaround and its decision to rope in a strategic investor has led the government to believe that it does not require further grants and can be self sufficient,” senior IFCI sources told FE on condition of anonymity. Other sources close to IFCI said the government had indicated that it was clearly uncomfortable bailing out an organisation that could have an international bank as a sizeable shareholder.

The government had outlined a revival package worth Rs 5,220 crore for IFCI when it was ailing in the late 1990s, of which it has already disbursed Rs 2,409 crore in several tranches between 2004 and 2007.

The EoI document to hive off 26% in IFCI states that the company expects a grant of Rs 1,300 crore in 2008. “If the government decides to withhold this aid, it could have serious implications on the valuation of its sale because suitors are definitely factoring in this money,” said a representative of one of the possible bidders. Investment bankers say IFCI can expect a valuation of well over 0 million from some bidders, primarily on account of its rich real estate assets.

Interestingly, the EoI document also states that while IFCI’s capital adequacy ratio (CAR) is 14.04%, that includes the deferred tax assets carried on the balance sheet. “In case the deferred tax assets carried on the balance sheet are deducted from the Tier-I capital as per RBI guidelines for banks (sic), the CAR will stand negative,” the document states.

Citigroup, Barclays, Standard Chartered Bank, Merrill Lynch and Lehman Brothers figure among the possible foreign suitors. Investment bankers say IFCI’s term lending ability will be a significant value-add for the foreign banks, all of who see a possibility in the project finance business but are strapped for an asset-liability mismatch on their balance sheet for long-term paper.

Selling its stake in the NSE and Icra substantially contributed to IFCI’s cash flow situation. While the last date for EoIs is September 14, IFCI is expected to shortlist candidates from the list of bidders by September 25, while the selection process will be completed by January 2008.

Stocks Up:

Ispat Ind
Stock up 5.3%;del vol of 33.3%
NSE vol of 59 lakh shares Vs 10-day avg of 12.7 lakh

Mindtree
Stock up 2.3%;del vol of 26.6%
NSE vol of 2.5 lakh shares Vs 10-day avg of 1.2 lakh

EIH
Stock up 2.4%;del vol of 97.9%
NSE vol of 17.2 lakh shares Vs 10-day avg of 71 thousand



Stocks Down:

IVRCL Infra
Stock down 11.8%;del vol of 57%
NSE vol of 21.4 lakh shares Vs 10-day avg of 14 lakh

Tata Steel
Stock down 10.2%;del vol of 58.6%
NSE vol of 60.9 lakh shares Vs 10-day avg of 16.3 lakh

Orbit Corp
Stock down 7.3%;del vol of 13.7%
NSE vol of 18.5 lakh shares Vs 10-day avg of 45.3 lakh

Union Bank
Stock down 10.1%;del vol of 41.6%
NSE vol of 17.4 lakh shares Vs 10-day avg of 12.6 lakh

India Infoline
Stock down 9.5%;del vol of 36.6%
NSE vol of 7.1 lakh shares Vs 10-day avg of 7.5 lakh

Lanco Infra
Stock down 9.4%;del vol of 28%
NSE vol of 25.8lakh shares Vs 10-day avg of 31.8 lakh

Reliance Cap
Stock down 9.2%;del vol of 48.7%
NSE vol of 32.4 lakh shares Vs 10-day avg of 14.7 lakh

Parsvanath
Stock down 8.4%;del vol of 44.6%
NSE vol of 12.44 lakh shares Vs 10-day avg of 8.7 lakh

The government has decided to extend the in-principle approval by a year to Reliance Industries Ltd.'s proposed Maha Mumbai special economic zone, with a reduced land size of 5,000 ha. "We will extend the in-principle approval to RIL's Maha Mumbai SEZ by halving the land size from the proposed 10,000 ha," Commerce Secretary G.K. Pillai said after a meeting of the Board of Approvals.

He said the in-principle approval is being granted on the condition that Reliance acquires all the land by consensus. "All the other proposals which have clearances for land size beyond 5,000 ha will also be scaled down," Pillai said. Earlier this year, the government had imposed a limit of 5,000 ha on the size of SEZs following widespread protests in different parts of the country against acquisition of agricultural land for setting up SEZs.

The government had also put the onus of land acquisition on the companies concerned, rather than the state governments. Last month, the Board of Approvals had given conditional clearance for RIL's 1,250 ha multi-product SEZ in Navi Mumbai. The government had said the units in the Navi Mumbai SEZ can only come up when the contiguity is completed, Pillai said.

NEW SEZ APPROVALS
The Board of Approvals today gave an in-principle approval to four new SEZ proposals and final consent to two others. The proposals given in-principle nod today include two information technology SEZs of Infosys Technologies Ltd. in Andhra Pradesh and Ispat Industries Ltd.'s multi-product SEZ in Maharashtra. Genpact India's proposed information technology SEZ in Rajasthan got final approval.

Co will invest over bn to lay 1,400 km Andhra-Gujarat pipeline

Mumbai, August 5 Oil and gas major Reliance Industries Ltd (RIL) on Saturday announced a -billion investment plan for its oil exploration and production (E&P) business and laying transportation pipelines. According to Subhash C Varma, president, development and production, RIL, “Reliance Industries is likely to invest the amount in next two to three years. The company will invest over billion for laying the 1,400 km East-West pipeline.”

Varma added that the investment also included some of the company’s overseas activities. It intends to invest Rs 23,000 crore in the next one to two years in various oil and gas development projects. “We also plan to create a national gas grid,” he said.

The 1,440-km East-West pipeline project from Kakinada in Andhra Pradesh to Ahmedabad in Gujarat will entail an investment of billion. The project is expected to be completed in June 2008 when RIL is expected to start commercial production of gas from the KG basin. Gas Transmission Infrastructure (RGTIL) is executing the pipeline project for RIL.

Varma said RIL would also participate in the seventh round of auctions of oil and gas blocks under the NELP-VII, which is expected to start in November this year.

Reliance also plans to drill over 100 wells in the next 3-4 years and would procure seven rigs. Of these, six rigs would be in deepwater and one in shallow water. Currently, it has contracted three rigs, of which two are in deepwater and one in mid-water. Twelve supply vessels have been currently contracted to support the drilling operations and the company plans to add two more by next year.

According to a Morgan Stanley report, during the last quarter, RIL spent Rs 3,860 crore in E&P business. Of this, Rs 100 crore was spent on petrochemicals, Rs 2,460 crore on exploration-related capital and Rs 410 crore on the rollout of gas station network.

Stung by the lukewarm response to its earlier open offer to buy i-flex shares, US-based Oracle has maintained it has no plans to come out with additional open offers for i-flex shareholders for at least the next five years, reports the Business Standard. In a recent filing with the US Securities and Exchange Commission, however, it added a rider stating it may think of an open offer if the share price is below Rs 2,100 per share — its offer price of December 7, 2006.

Oracle holds 83% of i-flex’s shares and has been consistently trying to acquire the rest in a bid to delist i-flex from the Indian bourses. It would require a little over 90 per cent of shares to do so. The move will help it to integrate i-flex with its business worldwide.

Under current norms, if the minority shareholders do not surrender shares willingly to the new promoter, the Securities and Exchange Board of India’s (Sebi’s) takeover code requires the new promoter to come out with a proposal to buy back the rest of the shares from the minority shareholders under a proposal to delist the company.

The buy-back price is decided on the basis of the market price under the reverse book building process. Reverse book-building requires generating offers from sellers.

However, since its open offers received a tepid response, the US-based firm has reportedly been lobbying the Indian government for over a year to amend the Sebi takeover code. The amendment was aimed at compelling the minority shareholders to surrender the shares of i-flex in favour of Oracle, a government source said.

The amendment was suggested on the lines of the “minority squeeze-out norms” of the US under which minority shareholders of an acquired company are compelled to surrender their shares in favour of the new promoter that has acquired a majority stake. Official sources close to the development said the Indian government did not agree to amend the code.

Commenting on an email query sent by Business Standard, an Oracle Inc spokesperson denied the development. “To be clear, Oracle has not been advised by the government of India to come out with a proposal to delist i-flex and fix the price for buying the remaining 17 per cent shares from Indian shareholders following reverse book building norms,” the spokesperson said.

The cost of acquiring the full 17% at the current share price of Rs 2,169 (as on August 3, 2007) would be close to Rs 3,132 crore (around $ 770 million). Oracle’s cumulative investment in i-flex on May 31, 2007 was approximately $ 2.1 billion, which consisted of $ 2,039 million of cash paid for common stock and $ 30 million in transaction costs and other expenses.

How Oracle Acquired I-Flex

Nov 2005: Oracle obtained 42.8%; in i-flex solutions for $ 593 million

Mar-Jun 2006: The company made additional purchases of i-flex common stock through ordinary brokerage transactions

Aug 14, 2006: i-flex board of directors approved a preferential allotment of 4.45 million shares at Rs 1,307.5 per share. Shares issued on September 14 cost Oracle approximately $ 126 million and increased its ownership to 55%

Sept 12, 2006: Oracle notified public shareholders of i-flex of intention to make an open offer to buy up to 20% i-flex equity at Rs 1,475 a share

Dec 7, 06: Price of the open offer increased by 42% to Rs 2,100 per share

Jan 6, 2007: Oracle accepted the 23 million shares tendered in the offer for approximately $ 1.1 billion

Reliance Industries Ltd, India's most valued firm, may become the first in the country to achieve a market capitalisation of $100 billion, international brokerage and equity research major Morgan Stanley said on Tuesday.

Morgan Stanley's India-based analysts said in a research note sent to the firm's institutional clients that they were raising the consolidated earnings forecasts for RIL in the current and next fiscals.

They also revised upward their one-year price target for RIL shares, while projecting a 35 per cent surge from the current levels in its 'base case' scenario.

Morgan Stanley further said in 'bull case' scenario, the shares could rise by about 37 per cent, which when translated into market capitalisation would amount to over $100 billion.

RIL's market cap currently stands at about $64 billion, the highest for any listed entity in the country.

However, this pales in comparison to the US, where the most valued listed entity ExxonMobil, which is also into the energy business, has a market value of close to $485 billion.

None of the Indian companies have ever achieved this mark, even though at least 30 companies in the US have a market capitalisation of more than $100 billion.

These include tobacco giant Altria Group, insurance major AIG, telecom firm AT&T, Coca-Cola, General Electric, Google, Hewlett Packard, IBM, Intel, JP Morgan, Johnson and Johnson, Merck, Microsoft, Procter and Gamble, Verizon Communications and Wal-Mart.

The combined market cap of all the 30 constituents of the Dow Jones Industrial Average, the benchmark index of the US market, is more than four trillion dollars, which is over four times the entire market capitalisation of all the listed entities here in India.

In comparison, the cumulative market cap of the 30 companies present on Sensex, the Indian market's benchmark index, is less than $500 billion.

Morgan Stanley said the key value drivers for RIL going ahead were the increased reserve base for the company's exploration and production business, robust performance in refinery business, signing gas contracts with various consumers, higher global refining margins and the setting up of pan-India retail network.

However, it also noted reduction in import tariffs and the rupee appreciation versus the US dollar and potential delays in the execution of the company's business plan as some potential key risks.

Morgan Stanley noted that RIL has reported strong first quarter results with a 28 per cent net profit growth, which was 8 per cent ahead of expectations.

India's largest private company and index heavy weight Reliance posted higher than expected profit & sales in results decalred late Saturday evening. Both net profit and sales were above expectations. While the bottom line was up 28%. Reliance industries Q1 FY08 Net profit is up 28% at Rs 3,264 crore while Net sales are up 14.4% at Rs 28,056 crore.

Reliance industries Q1 Gross Refining margin stood at .40/bbl vs. /bbl (QoQ).Its refining margin is at 11.2% vs. 9.8%, petro chemical margin at 13.7% vs. 11.1%. Revenues were driven by 3% price hike, 10% volume growth; it has completed 65% of RPL project.

Mukesh Ambani, CMD of Reliance Industries says our world-class manufacturing facilities have demonstrated a high operating leverage. We continue to make rapid strides in our new initiatives including oil & gas, organized retailing and the new refinery at RPL. Our new initiatives provide us a platform to deliver superior shareholder returns in the future.

Meanwhile the FE reports that Reliance Industries may consider abandoning its $ 5.2 billion project for producing gas from the D6 block in the Krishna Godavari basin if the government does not approve the price formula by August end. The company had submitted the price formula to the petroleum and natural gas ministry on May 16. With no signs of any immediate decision on the issue, RIL has decided to do some tough talking with the government in the coming days.

Government officials said Mukesh Ambani, chairman, Reliance Industries Limited, was scheduled to meet petroleum minister Murli Deora on Monday to seek a specific timeline for approving the pricing formula for the D6 project. While the petroleum and natural gas ministry had cleared the formula, some other sections within the government including the department of fertilisers and the power ministry had raised objections demanding a much lower price for the user industries. As per RIL’s pricing formula, while the base gas price works out to $ 4.33 per million British thermal units (mmbtu), the delivered price ranges between $ 6 and $ 6.2 mmbtu.

A committee of secretaries (CoS) has been discussing the issue for over a month. The officials said the government was now planning to put in place a gas utilisation and a gas allocation policy (for fertiliser and power sectors) before the pricing formula is approved. This, they said, may take anywhere between four and six months. RIL plans to start gas production from the D6 block by June 2008. A delay in the approval of the pricing formula would definitely force the company to postpone its production plans. This, according to RIL was being perceived as a major risk by its international vendors and suppliers and lenders to the D6 project. The company has already communicated to the government that it was not correct to frame new policies at this stage of the contract.

When contacted, CEO and President (Oil and Gas) PMS Prasad said, “The government can raise any number of questions on the cost estimates, appoint external auditors or even ask CAG but it cannot hold back our sale price formula.”

"Our vendors and suppliers, who have committed their manufacturing facilities to us, doubt if the project would be implemented as per schedule," Prasad added. Unfortunately for RIL, there is no timeline specified for the government to approve the pricing formula since its production sharing contract is of NELP-I vintage. From NELP-2 round onwards, the government is required to clear the formula within 60 days.

Hindustan Unilever Q2 net profit stood at Rs 493.08 crore vs.. Rs 380.6 crore. Net profit includes exceptional income of Rs 21.17 crore. Net sales at Rs 3,481.40 crore vs. Rs 3,083.2 crore CNBC-TV18 poll saw net profit at Rs 437.6 crore, and net sales at Rs 3,469.3 crore.

It has announced buyback at Rs 230/sh. Buyback works out to 1.3% equity. Operating margin at 14.7% vs.. 13.4% (YoY) vs.. 11.4% (QoQ). Its PBIT stood at Rs 506.1 crore vs. Rs 420.5 crore (YoY) while EPS at Rs 2.23 vs.. Rs 1.73.

Operating margin stood at 14.7% vs. 13.4% (YoY) vs. 11.4% (QoQ). Net profit includes exceptional income of Rs 21.97 crore. Soaps & detergent revenue were at Rs 1,669 crore vs. Rs 1,456 crore, Soaps & detergent margins stood at 16.1% vs.14.3% (YoY), vs. 12.1% (QoQ). Personal product revenue is at Rs 898 crore vs. Rs 846.7 crore. Personal products margin is at 29.3% vs. 28.5% (YoY), vs. 24.7% (QoQ).

The board of directors of Hindustan Unilever have also approved a buyback plan at Rs 230 a share, aggregating a total of Rs 630 crore. It will be placed before company shareholders through a postal ballot notice. The board will also seek shareholder approval to buy back up to 25 per cent of the company’s shares.

The budget of Rs 630 crore can accommodate a little more than 27 million shares. With the more than 2.2 billion shares making up its paid-up equity and a market capitalisation of Rs 43,000 crore, the first round of buyback is aiming to pick up a little more than 1% of the shares.

The company’s shares closed on Bombay Stock Exchange on Friday at Rs 196.45. Its 52-week high was Rs 262.50 in September 2006. The company statement said it would acquire these shares through open market purchases on the Bombay Stock Exchange and National Stock Exchange “from time to time”.

“The maximum price is at a premium of 17 per cent over the closing price of the company’s share on July 27, 2007. The average closing price of the Hindustan Unilever share on the Bombay Stock Exchange over the last six months is Rs 196. The buyback is proposed to effectively utilise the surplus cash and make the balance sheet leaner and more efficient to improve returns,” the company said.

Hindustan Unilever has around 410,000 shareholders in India. The promoters, Unilever Plc, hold 51.42 per cent in the company. Foreign institutional investors hold another 12 per cent and resident individual shareholders hold more than 17 per cent.

Life Insurance Corporation of India is the largest Indian institutional shareholder in the company with a 7.47 per cent stake and the general insurance companies New India Assurance and National Insurance Company hold 1.06 per cent and 1.52 per cent, respectively. Consequently, the government indirectly owns around 10 per cent of the company’s shares.

Bharti Airtel, India’s largest mobile-phone operator, will spend $1 billion this year to develop its wireless infrastructure company, after its closest rival sold part of its tower unit to global investors.

Bharti Airtel, India’s most valuable wireless company, will consider selling a stake in the fully owned tower subsidiary, Chief Executive Officer Manoj Kohli said, claiming the unit will grow to be the world’s biggest this year. The time of the sale has yet to be decided, he said.

“We’re thinking about it,’’ Kohli said today in an interview. “We can’t specify, but we’ll definitely plan that at an appropriate time.’’

Bharti and Reliance Communications, India’s second- largest wireless company, are separating their towers, shelters, generators and battery back-ups into independent units to share equipment and cost with rivals. Reliance valued its tower assets at Rs 270 billion ($6.7 billion) when it sold 5 percent of the unit to seven international investors for about $338 million.

“A separate tower company gets a much better valuation than a single entity,’’ said Mahesh Patil, who helps manage the equivalent of $1.5 billion in equity assets at Birla Sun Life Asset Management in Mumbai. The incremental value creation in Bharti’s case could be as much as $12 billion, said Patil, who has Bharti as his largest holding.

India’s government is encouraging carriers to share their infrastructure to expand coverage in rural areas. Bharti’s tower spending is part of a plan to spend as much as $3.5 billion this year on network expansion to maintain its lead over Reliance and Hutchison Essar.

Bharti, about a third owned by Singapore Telecommunications, aims to have more than 65,000 towers by the end of March, from about 45,000 now, Kohli said. The company will share them with Hutchison Essar, controlled by Vodafone Group Plc, and Idea Cellular Ltd., owned by billionaire Kumar Mangalam Birla.

The legal process to set up an independent tower company would be completed by the end of October, Kohli said. The focus would be to cut energy costs, he added.

The sharing of towers would result in the greater spread of mobile phone services and lower costs for users as carriers pass on cost benefits to customers, a unit of UBS AG said.

UBS Securities analysts Suresh Mahadevan and Lydia Chan revised their forecast for wireless penetration in India to 65 percent by March 2016 from 52 percent, mainly on account of the sharing of passive infrastructure by rival carriers.

“This is likely to result in making the mobile services more affordable and available to end consumers,’’ Mahadevan and Chan said in a note released in April.

On December 18, 2006, the Hyderabad-based Lanco Group partnered with UK-based Globeleq to emerge as a successful bidder for the 4,000-mw ultra mega power project at Sasan in Madya Pradesh. It had quoted Rs 119.6 per unit as against Rs 129.6 by Reliance Energy and Rs 141.2 by Tata Power. This power project was the first in the series of seven ultra mega power projects being planned by Centre.

Soon after, Globeleq Singapore sold its 70% stake in the joint venture to Lanco Infratech and Jindal Steel & Power after winning the bid. However, other bidders like Reliance Energy Generation and NTPC raised objections to the bid as the lead bidding company or Globeleq Singapore had sold off its stake to others.

To settle this issue, the government appointed an Empowered Group of Ministers (EGoM) to decide on the controversial bidding process. The panel found the Globeleq-Lanco bid null and void.

The Lanco Infratech scrip is trading down 17.4 points, or 7.44%, at 216.6 on the BSE.

So, what’s lies ahead for Lanco Infratech? It can approach the courts but the chances are slim. We asked analysts tracking the sector whether they would re-rate this stock post Sasan.

Deven Choksey of KR Choksey Securities is unsure how bad has the Sasan news affected the company. “The news is disappointing and at the same time one cannot be sure of how exactly it will impact the company in the immediate term. One will have to wait-and-watch and calculate thereafter. Some more clarifications are also required on this subject. Going forward, what would be the way as far as this project is concerned. One will have to get some clarification from the management,” he said.

Oil and Natural Gas Corporation (ONGC) was able to report an improved performance in the June 2007 quarter thanks to a fall in its subsidy burden on a y-o-y basis. However, an appreciating rupee curtailed growth in its top line and bottom line.

As a result, operating profit (excluding other income) declined 2.3 per cent y-o-y to Rs 7922.3 crore in the last quarter, while net sales declined 6.3 per cent to Rs 13687.7 crore. The company highlighted that the rupee appreciation affected its top line by Rs 1,500 crore in the last quarter, while net profit was hit by Rs 900 crore.

Meanwhile, crude oil production was 6.88 million tonne in Q1 FY08 compared with 6.93 million tonne a year earlier. It is understood that the company had to grapple with processing problems at its Nawagam desalter plant, which affected production from Mehsana and Ahmedabad oil fields.

In addition, its gross realisation (prior to subsidy sharing) was $71.77 a barrel in the last quarter compared with $71.39 a year earlier. Of crucial importance is that the company s subsidy burden was Rs 3649 crore in Q1 FY08, compared with Rs 5120 crore a year earlier. As a result, operating profit margin grew 240 basis points y-o-y to 57.9 per cent in the June 2007 quarter. The stock rose nearly 2 per cent to Rs 934 on Wednesday.

In contrast, in the March 2007 quarter, the subsidy burden jumped 37 per cent y-o-y, which resulted in its operating margin declining 2090 basis points y-o-y to 35.6 per cent.

Going forward, the underlying concern for the company remains the uncertainty in the size of the subsidy sharing burden. As a result, the stock gets a discounting of 9.5 times estimated FY08 earnings.

ITC has touched an intra day high of Rs 163.45 and an intra day low of Rs 152. Currently, the share is quoting at Rs 163.45, up Rs 11.20, or 7.36%. It is trading with volumes of 2,409,804 shares, compared to its 5-day average of 915,047 shares, an increase of 163.35%. Yesterday the share closed down 0.65% or Rs 1.00 at Rs 152.25.

Credit Suisse has initiated coverage on the stock with price target of Rs 188. Credit Suisse says that ITC has underperformed the markets by 41% in last 12 months. ITC is likely to surprise positively in cigarette profit growth. Also another reputed brokerage CLSA has upped ITC price target to Rs 184 and upgraded it to Buy from Underperform.

Our 12-m target price of Rs184/sh (earlier Rs150) is based on sum of parts. The key reason for the target price upgrade is the 6% increase in earnings and upward revision in our target cigarette business PE to 17x, due to more confidence on cigarette volume trend. Cigarette business accounts for 70% of sum of parts. With the target price offering 20% upside we upgrade the stock to BUY, says CLSA.

ITC also plans to enter home and personal care segment, besides scaling up its FMCG business in an apparent move to reduce dependence on the cigarette business, which it forecasts to face stiff challenges in the future, news reports had indicated.

Without setting any time-frame for venturing into the home and personal care segments, the company plans to sell such products through a network of 6,400 web kiosks and 18 supermarkets. The company would aggressively scale up its activities in the FMCG sector, in which it aims to be a leading player. Bullish on the FMCG sector, the company said the key demand drivers would be the rising disposable incomes, relatively low levels of per capita consumption, growing urbanisation, favourable demographic profile and the increased penetration of organised retail.

For the reorganisation of the capital of the Company, Ballarpur Industries is to provide for a stock split and a simultaneous buyback of 40% of the paid up capital of the Company. In addition, small shareholders holding 1000 equity shares or less, of the Company, prior to the stock split under the scheme, shall have the option to sell the shares in entirety.

Under the scheme, it is proposed that the Appointed Date be fixed as July 01, 2007. The Record Date for determining the shareholders of the Company as on a particular date is referenced to 30 days from the Effective Date of the Scheme. Within 45 days from the Effective Date, the Company shall undertake the stock split.

A single share of the Company shall be split into 5 shares of the face value of Rs 2 each. The non-split share has been valued at Rs 125 which is higher than the closing price of the shares of the Company on July 23, 2007. The 6 - months - average market price of equity shares and the 2 - weeks - average market price of equity shares from the Board meeting were Rs 114.33 and Rs 118.61 respectively on the National Stock Exchange of India Ltd. The buy back price for the share of the face value of Rs 2/- for purchasing 40% of the paid up capital to be bought has been fixed at Rs 25/- per share.

Simultaneous with the stock split, 40% of the post-split stock from the paid up capital of the Company, shall be subject to a buy back by the Company in accordance with the approved Scheme. Two shares of the face value of Rs 2, shall be bought back by the Company for the purchase price of Rs 50.

Both the stock split and the buyback shall be undertaken, only if the Scheme is approved and sanctioned by the High Court.

RIL is planning to build the biggest greenfield fertiliser capacity in the country. The company has submitted proposal to the fertiliser ministry to set up a manufacturing plant of global scale (up to 4 million tonne). RIL has proposed to use some of the Krishna-Godavari gas as feedstock bought at market prices. RIL has been facing a huge backlash from fertiliser and power companies over the gas price it is offering them. Now, plans are afoot to take up the challenge by becoming a player itself.

RIL recently invited bids from fertiliser and power companies for gas from its KG find. It has argued that subsidies in the fertiliser sector can be brought down by almost Rs 4,000 crore if fertiliser companies anually switched to natural gas from naphtha. The delivered price for KG gas is expected to be marginally above per Million British Thermal Units (mmbtu).

Confirming the development, a senior RIL official said that the proposed plant would play on the economies of scale to build a world-class facility. “We are confident that we can build the plant 30-40% lower costs,” he said. RIL, which is carrying out a feasibility study, has asked the fertiliser ministry to provide some clarifications on the upcoming fertiliser policy and the pricing structure.

“We are given to understand that fertiliser companies would be allowed to sell the products at import parity prices. In other words, pricing controls on fertilisers may be removed. Instead, fertiliser subsidies for the farm sector will be given directly to farmers and not to fertiliser companies,” he said.

The government is reviewing the pricing policy which should throw some light on the future pricing trends for fertilisers. India is currently facing a huge shortage in fertilisers, importing nearly 5 million tonnes every year.

India had made moves to set up fertiliser capacities in gas-producing countries like Oman to take advantage of fuel availability there. Now, with abundant gas reserves in the KG basin, RIL would have an edge over others with large reserves at its disposal. RIL has also sought clarifications from the government on the tax sops that would be available for companies seeking to invest in the fertiliser sector.

According to the fertiliser ministry, the total installed production capacity for fertilisers in 2003 was 121.10 lakh MT of nitrogen (inclusive of an installed capacity of 208.42 lakh MT of urea after reassessment of capacity) and 53.60 lakh MT of phosphatic nutrient, making India the third-largest fertiliser producer in the world.

There are 57 large fertiliser plants in the country, manufacturing a range of nitrogenous, phosphatic and complex fertilisers. Out of these, 29 produce urea, 20 produce DAP and complex fertilisers, 7 produce low analysis straight nitrogenous fertilisers and 9 manufacture ammonium sulphate as a by-product.

Consultancy firm Mckinsey is suing both Reliance Industries and Reliance Communications for non-payment of dues amounting to Rs 27 crore. According to a petition filed by Mckinsey, Reliance Industries refused to pay the dues after Reliance Communications shifted to Anil Ambani.

As per Mckinsey’s petition, RIL, Reliance Communication owe $ 5.2 million for consulting work to Mckinsey which it did for Reliance Infocom in 2002, 2003. Reliance Infocom was to pay $ 3,25,000/month for consulting work. Bill was supposed to be settled after Reliance Infocom achieved revenue target of Rs 10,000 crore, the petition further says.

However, a letter from Reliance Comm. on April 18 said agreement with Mckinsey was illegal, uncertain and open ended.

Mckinsey further says RIL, Reliance Communication managements are mismanaging their companies and are unable to pay debts. RIL, Reliance Communication should be wound up and court should appoint official liquidator, Mckinsey demands.

“Company has neither reached timely target nor ended up using deliverables as envisaged,” Reliance Communications had said in their letter on January 2.

The slow and steady P&G India has entered the booming skincare market. After a year of speculation, the company has finally launched its $ 2 billion brand, Olay.

To catch them young will be P&G India's challenge as it debuts in skincare market. A range of four products from the iconic Olay stable will be available soon. While that includes a fairness cream, moisturizer and cleanser its Total Effects the anti-age solution that will be the flag bearer of the Olay brand in India. With this the company has entered the Rs 2100 crore skin care market and focused on the Rs 450 crore premium end. The Olay range will be imported from Thailand. At Rs 399 for the 50 ml bottle price will have an important role to play.

Sumeet Vohra, Marketing Head, Procter & Gamble India said, “it makes sense from an economic standpoint and more and more women…”

P&G will have to counter brands like HUL's Ponds, L'Oreal and Kaya. But with skincare growing at 16% and the anti-aging segment doubling in the last three years, there may be something for everybody. The growth of modern trade outlets will also come help. In its over 20year long innings in India, P&G has launched only 9 brands from its stable of 100 odd brands worldwide. But does the Olay launch signal that P&G will finally shed its slow and steady tack in India?

Sumeet Vohra further said, “In current business, there is lot of unfinished business and there is room for growth. We cannot shrink from responsibility and there needs to be a balance.”

14 years post launch, P&G's detergents have a combined market share of 12.3% and shampoos at 25%. Analysts believe that the low-profile fast moving consumer goods may just be looking to speed things up.

Sarang Wadhwan of HDIL says that the company expects to complete 8-9 m sq ft of projects this year. All of the FY 08 earnings of the company will come from the Mumbai Metropolitan region. On the expected fall in property prices after their large run-up, Wadhwan says that any slowdown in property prices will hit Mumbai last. They don't foresee any large slippage in Mumbai property prices.

Almost 15% of the total portfolio from Slum Rehabilitation Scheme (SRS) projects. SRS margins stood at 60-75%, of which Bandra SRS has the higher margins. The company also has good land bank in the Vasai-Virara belt. Vasai, Virar rates are at Rs 2,000-2,500/sq ft. Wadhwan adds that it is not a low quality land bank. He feels that Vasai will continue to grow.

Real Estate Developer Housing Development and Infrastructure (HDIL) listed on the bourses today at Rs 550. The issue price was fixed at Rs 500 per share. HDIL also started trading in F&O and the lot size will be of 400 shares. Analysts say that the stock is expected to list at around Rs 535-550 band. The company had come with an IPO of 29.70 million shares at a price band of Rs 430-500. The issue was subscribed 6.6 times.

As on May 31, the company's developable land reserve was 112.20 million sq ft, of which the company itself owns 78.30 million sq ft. However, 82.8% of land reserves are in Mumbai Metropolitan region alone. The company's revenue for 2006-07 (Apr-Mar) stood at 12.04 bln rupees and profit for the year was Rs 5.48 billion.

The company has nearly 45.5 million sq ft under construction and an additional 66.6 million sq ft in various stages of planning. Much of this developable area has come from the company's slum rehabilitation activities, under which a builder gets to build additional space in return for the free housing given to slum dwellers. The company derives nearly 15% of its business from the slum rehabilitation schemes.

Kotak Mahindra Capital., Enam Financial Consultants Pvt Ltd, and ICICI Securities are lead managers to the issue.

FMCG giant Hindustan Unilever Limited, or HUL, wants to buy back its listed shares from the public. It plans to seek an in-principle approval for share buyback from its board, when the board meets, on July 29.

What will this mean for its investors?

It may not mean much because, in the near term, the stock might move up, as buy backs tend to excite people. If HUL chooses to go to a limit of 25% of its networth, it won’t set the stock on fire but it will move up.

HUL networth as on December 2006 stood close to Rs 2,724 crore, so 25% of that would be about Rs 681 crore. When this news was anounced, the maximum number of shares that HUL could have bought was 3.5 crore on its total equity base of 221 crore shares outstanding. So in terms of equity value, HUL's buy-back is not substantial and more of probably a sentiment booster for the stock.

In the near-term, it my lead the stock by Rs 10-15, but longer-term investors may be disappointed.

It is generally taken as a measure of confidence by the management in buying back its own stock, because it considered itself undervalued. The Unilever management feels the stock is undervalued and they believe in the prospects of the Indian FMCG story. Which is why they may be willing to buy-back some of their own stock to create wealth for shareholders.

But, what could be pointed out here is that if Lever is sitting on cash, why would they buy its own stock back? The company has struggled for growth for the last 2-3 years and if there is cash in the bank, it could be used for acquisitions and to grow the business. If they have Rs 700-800 crore of cash to spend, why do they not instead buy Mountain Everest Mineral Water like Tata Tea did a few weeks back, opening up another business for them.

What do analysts say?

Theoretically, aggressive managements, positioned in a market like India, should rather want to grow the business, rather than want to return cash to shareholders. If they find nothing new to put into the business, it may by itself be a negative sign.

Ajay Srivastava of Dimensions Consulting, on his part, lauds it as a sensible move. He doesn’t think there is any operational trigger to the company and that the buy-back would be the only trigger. So he advises, “If you are a short-term player and want to arbitrage on the buyback, the answer is good. But one should remember to get out of it post the buyback.” Because, whatever buyback shares are taken in, the balance share still comes back to the market and your portfolio. So it is a good short-term buy.

DSP ML has maintained a sell on HUL, although they expect a near-term upside on the buy-back plans. According to DSP ML, buy-back is likely to be EPS neutral.

Today at 10:01 AM, Hindustan Unilever is quoting at Rs 203, up Rs 8.75, or 4.50%. It has touched an intraday high of Rs 204.80 and an intraday low of Rs 197.50.

It is trading with volumes of 42,076 shares. On Friday the share closed down 1.82% or Rs 3.60 at Rs 194.25.

United Breweries (Holdings) is planning to sell about 20% stake in its consolidated aviation business—comprising Kingfisher Airlines and Air Deccan—to private equity investors, ET report says. It hopes to raise around $ 250 million through the equity dilution. Four private equity giants, including Cerberus Capital, TPG and Blackstone, have initiated talks. Cerberus is believed to be the front-runner.

The stake is being sold in a subsidiary of UB (Holdings), which owns 83% of Kingfisher Airlines and 100% of Kingfisher Radio. Kingfisher Radio, in turn, holds 26% in Deccan Aviation, the parent of the low-cost airline. The proposed open offer, if successful, will take Kingfisher Radio’s stake in Deccan Aviation to 46%.

The UB Group denied any immediate plan to induct a financial investor. The group insisted that “it was not in a tearing hurry” to bring in a financial investor, adding that de-leveraging could be done in 18-24-months.

Edelweiss, currently managing the open offer on behalf of Kingfisher Radio, is believed to have got the mandate for scouting for PE investors as well. Around 55% of UB (Holdings) is held by Vijay Mallya and his investment companies, 25% by foreign institutional investors and 10% by the public.

On Friday, UB Holdings shares rose 1.4% to Rs 675. The stock has gained around 16% over the last month from Rs 580 on June 21, and its market-cap is hovering around $ 1 billion.

Once the open offer is successfully completed, valuations of UB (Holdings) would shoot up considerably, over $ 1.5 billion. The subsidiary then will be valued over $ 1 billion, 20% of which, along with premium, would come to 0 million.

The UB Group has already raised Rs 550 crore as debt from IDFC, HDFC and IL&FS for its purchase of Deccan Aviation. It is currently in the process of raising another Rs 430 crore to fund the open offer.

This will take its debt to around Rs 1,000 crore. The plan is to pay back the expensive debt through private equity funds. UB is waiting for Sebi’s clearance for the open offer at Rs 155 per share. The group is confident of getting participation from major shareholders, including ICICI Bank and Capital One.

UB (Holdings), the umbrella investment holding entity of the group, has been funding Kingfisher Airlines’ operations and losses since its inception two years ago. The airline has reportedly made a cumulative loss of over Rs 500 crore till date. It is believed that the seed money for the airline business was unlocked from the group’s substantial real estate holdings in Bangalore.

Auto majors Tata Motors and Mahindra & Mahindra have submitted “preliminary” bids for Ford Motor Company’s Brit brands on the block — Jaguar and Land Rover, ET report says. Both companies have submitted their bids, which are “nothing more than initial expression of interest”. M&M will also likely to partner with private equity players for the bid. However, M&M Vice-Chairman Anand Mahindra refused to comment. The Tata group may partner either with PE players or with Italian ally Fiat.

Fiat, on its own, had reportedly turned down Ford’s offer for the two brands, although it was very interested in Land Rover and its American distribution footprint. Apart from the Indian auto companies, private equity players Cerberus Capital Management, Ripplewood Holdings and One Equity Partners are the other likely bidders.

These bids aren’t binding and Ford will likely disclose further plans for the two brands next week. Ford has already established contact with the bidders, including Tata Motors and M&M, and kicked off discussions. International media reported that no decision has been taken yet.

Last month Ford announced that it was working with financial advisors on various options for its Premier Automotive Group division, which includes Volvo, Jaguar and Land Rover. PAG lost $ 327 million last year and around $ 1.15 billion over three years.

Analysts have valued the two British brands at around $ 1.5 billion, though most of the valuation is driven by Land Rover whose products are doing well and whose distribution network is attractive to investors.

Analysts also say that Ford has clubbed the two brands because on its own Jaguar, which hasn’t made any profit in close to two decades, will not attract too much investor interest.

Thanks to some big-ticket deals by Indian companies, including the Corus deal by the Tata group and more recently the Whyte and Mackay deal by UB, Indian companies are now routinely sounded out every time an international asset is on the block. Both Tata Motors and M&M see considerable brand value in the two Ford companies including access to developed markets and top-end vehicle technology.