SBI: FPO not likely before December, Govt to buy RBI's stake in SBI at Rs 1,030/shr, Valuation of SBI Life seen at $ 7 bln

SBI Chairman OP Bhatt said the bank's FPO would not be before December. They would start 7-8 new businesses by FY08. It would offer financial planning, custodial services. Bhat added that SBI's net interest margins are not likely to fall below 3.2%. He sees the valuation of SBI life insurance co seen $ 7 billion.

SBI is mulling consolidation of overseas network and also it is mulling mobilising more retail resources abroad, he added.

SBI Act amendment would give option of issuing preference shares. We are waiting for Act amendment to finalise capital mop-up. SBI will need Rs 15000 crore capital FY08. SBI has already raised Rs 5000 crore capital via Tier-II, he further said.

Govt would buy RBI's stake in SBI at Rs 1,030/share. Stake sale by RBI to Govt would take place on June 29. Valuation of life insurance business is seen at $ 7 billion, Bhatt informed.




FY08 net profit seen over Rs 55 Cr, looking at product acquisitions in US, Brazil, Mexico: Meghmani Org

Jayanti Patel, CMD, Meghmani Organics said that company has set some targets and is ambitious to cross Rs 55 crore net profit in this year. Company has some great plans for the future. The company is listed in Singapore and it is exporting the products to almost 58 countries, he added.

Mr Patel said that the company has four manufacturing sites, two of which are agro chemical and two are pigment divisions.

About furture plans, he said that they are talking to number of companies and are looking at acquiring product registration in US, Brazil and Mexico. He also said that the company is having some plans for mergers and acquisitions and the company is looking at South American countries and USA. The company is also looking for product licensing and is coming out with higher performance pigments, that will increase the bottomline because those are the pigments going for high-end applications for paints and plastics.

The company is having 441 registrations in pipeline.Company has achieved 96 registrations already and once our registration will be through, then this we will use to increase our bottomline, he said.




ONGC likely to offload 34% in Dahej project, in talks with Mitsui & Mitsubishi

ONGC is likely to offload 34% equity in its special purpose vehicle ONGC Petro-additions (OPaL) formed for the upcoming Rs 13,500-crore petrochemical project at Dahej. The company has started talks with Japanese majors Mitsui and Mitsubishi that have expressed an interest in the project. ONGC is keen to have both the Japanese firms as partners in the project.

ONGC currently holds 95% stake in OPaL, with Gujarat State Petroleum Corporation (GSPC) holding the remaining 5% stake. The company may also offload part of its stake through the IPO route.

The debt-equity ratio of the Dahej project has been set at 2.55:1. The higher debt portion has helped ONGC to plan the Rs 13,500-crore project, with a small contribution from its own kitty. The public hearing for the petrochemicals project is slated for the third week of July.

The ethane, propane and butane (C2, C3 and C4) for the Dahej petrochemical project will be provided by Petronet LNG, and naphtha will come from ONGC’s Hazira complex. The use of naphtha as feedstock would help ONGC to curtail the distress sale of naphtha in the open market. However, the high amount of volatility in naphtha prices, coupled with a sharp movement in crude prices worldwide, is likely to pose a challenge for ONGC.

The use of LNG as feedstock may also become a challenging task for ONGC. The company will have to chalk out a long-term strategy for the supply of LNG at competitive prices.





B K Birla reworks succession plan, decides to handover Kesoram Industries to Kumar Mangalam Birla

Basant Kumar Birla, Chairman of the Rs 8,000 crore B K Birla group, has altered his succession plan. Birla told after the annual general meeting of Century Enka that he would bequeath all major companies of his group, including Rs 2500 crore Kesoram industries, to his grandson Kumar Mangalam Birla.

Under the earlier plan, Kesoram was supposed to go to his younger daughter, Manjushree Khaitan. It is believed that the reason for the change is the synergies between the cement businesses. Century Textiles had seen a fresh lease of life after a similar announcement by BK Birla and a similar reaction has been seen in the Kesoram stock today.





JP Associates buys out Malvika Steel plant for Rs 207 Cr, to invest Rs 1200 Cr to revamp plant, to foray into steel

Jaiprakash Group, the cement, infrastructure construction, power and real estate conglomerate, is making an entry into steel with an investment of Rs 1,407 crore. Suren Jain, Director (Corporate) of Jaiprakash Associate, told that the company had acquired Malvika Steel assets for Rs 207 crore and plans to invest Rs 1,200 crore on the “run down” plant, locate d at Jagdishpur in Uttar Pradesh’s Sultanpur district.

The Debt Recovery Tribunal (DRT) on Tuesday declared Jaiprakash Associate as the successful bidder. SAIL was the other bidder at the auction sale for the mortgaged property of Malvika, including land, buildings, plant and equipment. The asset transfer would be done free of any liability, Jain clarified.

The company official said that the financing for the steel foray would be through a mix of internal resources and borrowings. It has so far paid 25 per cent of the consideration for the assets to DRT. “The rest would be paid within a fortnight,” the official added.

Jain said the company has chalked out a plan to commission a 5.5 lakh tonne per annum pig iron facility at Jagdishpur by March 2009 and production of longs would begin by March 2010.

Vinay Rai-controlled Usha group floated Malvika Steel in 1998-99. However, the proposed project ran into trouble and could not be implemented. Over the years, borrowing arrears piled up via-a-vis financial institutions. A consortium of institutions, led by IFCI, had taken over the management control of Malvika Steel in September 2001. DRT recently had placed Malvika Steel assets on auction.

The plant, which remained shut for about 8 years, has 739.65 acres of land. A Jaiprakash team would soon visit the location to start the reopening process.

The Jaiprakash group’s captive requirement of construction steel could largely be met by the revamped unit, company sources said.




It's real - real estate prices have already come down by 10-15%, says Deepak Parekh, Chmn HDFC

Housing mortgage veteran Deepak Parekh feels interest rates have stabilised or peaked. And this, he says, have resulted in realty prices cooling down.

Deepak Parekh, Chairman, HDFC said,” I see softening of real estate prices in some parts of the country - particularly in areas where there is heavy construction going on. In Whitefield’s in Bangalore prices have certainly come down by 10-15%. I can assure you that in Gurgaon prices have come down by 10%. There are many such areas, location-wise where prices are coming down because of quantity of construction that is there is so huge. My view has always been that these prices are not sustainable.”

Parekh also spoke about the rule that should govern how indirect holding is interpreted in insurance companies. 477 different entities own 80% of HDFC, while HDFC itself owns 80% in its insurance JV. However, standard life will soon be raising its stake in the insurance JV to 26%.

When asked if this will tantamount to breaching of the 26% foreign investment limit in insurance companies, Parekh said, “ I think this direct and indirect will be there, if in the indirect holding, the strategic partner buys the indirect. Then there will be an impact. In our case, standard life's equity holding today is only 18%. This is because they held HDFC shares. Now they've sold the HDFC shares so they're legally entitled to go up to 26%.”

Parekh also commended the RBI and the government for plugging indirect ways in which foreign debt was crowding into real estate.

“A large amount of funds have come into the real estate sector from overseas market. If you see my Chairman Statement I have said that many funds have sent money as debt in the garb of equity. So there were lots of loopholes of foreign investments in India because you could do optional convertible debentures, optional convertible preference shares. These are the all debt instruments in the garb of equity. So they did not require any approvals. As a result we have seen $ 4-5 billion come but the RBI has blocked all the loopholes so you can only invest ion pure equity FDI compliant real estate projects”, he added.