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Weekly newsletter

  1. 1. Top Headlines Crompton Greaves acquires smart grid automation firm ZIV Group for $185M Ambit Pragma acquires 74% stake in Mumbai- based frozen food logistics firm Bus ticketing portal TicketGoose raises Rs 4.5Cr angel funding. Mumbai-based Edubridge Learning secures Rs 1.5Cr from Acumen Fund. Oman India Joint Investment Fund to invest $13M in Solar Industries Educomp Solutions raises $155 million to redeem foreign currency convertible bonds Future bags 54% Deccan Chronicle stake. Sify sells stake in MF Global Sify Securities India for $25M Executive Summary It was a disappointing week for anyone looking for a rate cut. The Reserve Bank decided not to loosen its monetary stance during its latest review on Tuesday. This is the second straight time in which RBI has abstained from major cuts. Governor D. Subbarao said reducing policy rates would only worsen inflationary pressures without spurring growth. RBI’s actions effectively put the onus for controlling inflation on the government. At present, the repo rate stands at 8%. And the cash reserve ratio remains at 4.75%. 1
  2. 2. Though largely considered as a symbolic move, RBI slashed thestatutory liquidity ratio or SLR. It’s down one percentage point to 23%.SLR represents the amount of sovereign bonds banks need to hold. Thereduction is unlikely to make much of a difference as the ratio ofholdings for most Indian banks is much higher than 23%.There are also indications that RBI expects the fight against inflation tobe long and difficult. It has increased its inflation forecast for the fiscalto 7% from the earlier 6.5%. RBI has also brought its growth forecastdown to 6.5% from 7.3%.While economic prospects still look poor, there’s a new man at the helmof the finance ministry. P. Chidambaram is returning for his third stintas finance minister. His appointment has boosted hopes of a revival inreforms. The new cabinet announcement coincided with large swathesof India being left without electricity for hours on Monday and Tuesday,as power grids collapsed. Some three hundred million Indians were leftwithout electricity in the early hours of Monday after a power gridfailure at around 2:30 am. Essential services like the railways were onlyrestored by 8 am.Everything seemed to be back to normal on Tuesday, but not for long. Atabout 1:05 pm, electric supplies broke down across much of north andeast of the country. This time 12 states ranging from Assam to Rajasthanwere blacked out- and some 700 million people were affected. In Delhi,the metro stopped services, forcing crowds of commuters out onto thestreets looking for other modes of transport. Power was eventuallyrestored to railway lines and major cities by Tuesday evening. While theimmediate cause of the failures is thought to be overdrawing by someother states, India’s power utilities have long been struggling with lowcapacity, antiquated grids and chronic fuel shortages.Some observers have pointed out that a poor monsoon may have causedthe overdrawing of electricity, because farmers were using their waterpumps more often. And going by the met department’s latest forecast,those pumps are likely to remain busy. On Thursday the IndianMeteorological Department said monsoon rains were expected to be 2
  3. 3. Below 90% of the normal level this year. The projection effectivelymeans India is facing a drought, possibly the worst in a decade.It’s been a good week for India’s struggling airline industry. Two majorprivate airlines reported better than expected first quarter earnings. OnFriday, the country’s biggest carrier Jet Airways posted a profit of Rs25crore compared to a loss of Rs123 crore in the same period last year.Earlier, smaller rival SpiceJet had reported a profit of Rs56 crorecompared to a loss of Rs72 crore. Both airlines have broken a losingstreak of five quarters with their latest results. They’ve benefitted fromthe troubles of Kingfisher and Air India, which have had to scale backtheir operations in recent months. Inside The StoryCrompton Greaves acquires smart grid automationfirm ZIV Group for $185MCrompton Greaves Ltd, the flagship company of Gautam Thapar-promoted Avantha Group, has acquired Spain’s ZIV Group for anenterprise valuation of €150 million ($185 million or Rs 1,015 crore) inyet another overseas acquisition of the capital goods maker.Thisacquisition expands the company’s portfolio for power systemautomation and protection, and will create a strong platform for thefirm in the smart grid arena, as per a BSE filing.Set up in July 1993, ZIVGroup focuses on smart grid and automatic solutions, and manufacturesdigital equipment and systems for industrial and utilities companies. Itoperates across 50-plus countries with key operations in Brazil (Rio deJaneiro), India (Bangalore), Spain (Barcelona, Bilbao, Madrid) and theUS (Chicago). The company has installed more than 1.4 millionintelligent electrical devices (IEDs) for utilities and industries across theworld. 3
  4. 4. Ambit Pragma acquires 74% stake in Mumbai-basedfrozen food logistics firmPrivate equity investor Ambit Pragma Ventures has acquired 74% stakein Mehta Frozen Foods Carrier Pvt Ltd for an undisclosed amount, in asmall-mid market buyout deal.Mehta Frozen Foods Carrier is involvedin transportation of frozen food products like ice-cream, yeast,floriculture, medicines, meat products and dairy products. The firm,which started its business with four trucks, has now grown it to sixty 11feet to 40 feet trucks with a container capacity of 3-26 tonnes.Started in1996, Mehta frozen Foods is a MRL Group company, headed by MansurMehta -- a third generation member of the group whose core businessrevolves around transport.The investment was made through the $150million Ambit Pragma Fund II. This is a small cap buyout and growthcapital fund, focusing on five high growth sectors such as entertainment,healthcare, FMCG, logistics and infrastructure services. The averageinvestment size is $15 million in companies with revenues between $ 5-15 million.Bus ticketing portal TicketGoose raises Rs 4.5Cr angelfundingBus ticketing portal TicketGoose.com, run by Chennai-based EfficsysInfotech India Pvt Ltd, has raised $800,000 (approx. Rs 4.5 crore) fromunnamed US-based angel investors. The funding will enable thecompany to strengthen its B2B positioning and help streamline itscustomer acquisition plans for B2C offering, according to astatement.Set up in 2007 by Karthi Easwaramoorthy, Arun Athiappanand Vasu Ramasamy, TicketGoose offers online booking facility, as wellas information on pricing and availability, and covers around 4,500destinations across southern India. The company posted a turnover ofaround Rs 50 crore in FY12 and is targeting Rs 125 crore for FY13 4
  5. 5. Mumbai-based Edubridge Learning secures Rs 1.5Crfrom Acumen Fund.Acumen Fund, a non-profit global venture fund which focuses onpoverty alleviation across Africa and South Asia, has put in Rs 1.5 crore($300,000) in Mumbai-based education services provider EdubridgeLearning Pvt Ltd. Although based in Mumbai, Edubridge providesvocational training for low-income youth across Maharashtra, TamilNadu, Karnataka and Chhattisgarh.The investment is part of AcumenFund’s education portfolio, which aims to support private sectorinitiatives that increase access to low-cost, high-quality learning andemployability services for the poor.Oman India Joint Investment Fund to invest $13M inSolar IndustriesIndustrial explosives maker Solar Industries India Ltd (SIIL) has strucka deal to raise Rs 72 crore ($13 million) from Oman India JointInvestment Fund through a preferential allotment. Oman India JointInvestment Fund, a private equity fund sponsored by Oman’s sovereignwealth fund and India’s largest lender State Bank of India, will pick up4.28 per cent of the expanded capital of the public-listed SolarIndustries.The investment firm will subscribe to 7,74,195 equity sharesof Solar Industries at Rs 930 a unit, marginally higher than the closingprice of Rs 927.65 a share on Monday. Solar Industries scrip has risen40 per cent over the past seven months and hit a new high of Rs 955 ashare on Tuesday before paring some of the gains. Currently, the firm isvalued at Rs 1,614 crore. 5
  6. 6. Educomp Solutions raises $155 million to redeem foreigncurrency convertible bondsEducation services provider Educomp Solutions has raised around $155million (Rs 856 crore) through a mix of debt and equity from investorslike International Finance Corporation, Proparco, Mount Kellett andpromoters. The fund will be used to redeem foreign currencyconvertible bonds (FCCBs) worth around $111 million (Rs 613 crore)and the balance will be deployed to meet the companys capitalexpenditure and strengthen its balance sheet.Future bags 54% Deccan Chronicle stakeDeccan Chronicle Holdings Ltd, which owns English daily DeccanChronicle, today said its promoters have pledged their majority ofshareholding to Future Capital. In a filing with bourses, DeccanChronicle Holdings Ltd said its promoters - T Venkattram Reddy, TVinayak Ravi Reddy and PK Iyer - together have pledged 54 per cent oftheir holding (11,28,51,000 shares) in the company on July 26. Whilethe company did not elaborate on the financial details of the transaction,based on the closing share price of Rs 22.9 apiece on July 26 at BSE, thepromoters are estimated to have raised Rs 258.43 crore.Sify sells stake in MF Global Sify Securities India for$25MNASDAQ-listed Indian Internet and IT firm Sify Technologies Ltd said ithas completed the sale of its entire stake in MF Global Sify SecuritiesIndia Pvt Ltd for Rs 139 crore ($25 million) in cash.The firm hadannounced it is selling the stake in March this year, but had notdisclosed the deal value. The firm said it has now received regulatoryand statutory ‘no objection approvals’.It had struck the deal to sell off itsstake in MF Global Sify Securities India Pvt Ltd in an all-cash deal toSingapore-based financial services company, PhillipCapital Group.Sify 6
  7. 7. held 29.85 per cent of stake in the joint venture with MF Global, which isengaged in providing online and offline equity and derivatives tradingfor retail clients, besides other clearing services for financialinstitutions. 7