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Weekly newsletter

  1. 1. Top Headlines FDA bans another Ranbaxy plant from selling products in the US. Japan’s ARKRAY to buy IVD business of Span Diagnostics for $16M. Décor Aviation launching low-cost carrier Air Pegasus. Govt picks banks for managing Axis Bank stake sale worth over $900M. IndoSpace closes second industrial real estate fund at $330M. Govt may cancel licences for 41 coal blocks. Air Water completes acquisition of Ellenbarrie Industrial Gases for $17.3M. ASK Group marks first close of offshore realty fund at $50M. Singapore’s Wilmar may buy up to 25% stake in Shree Renuka Sugars. Consumer inflation eases to three-month low of 9.87% Indian Economy News The 30-share bellwether BSE Sensex lost for the first time in five days tracking loses from the Asian market.The Sensex lost 1.12%, or 240.1 points, to close at 21,133.56 points, while the National Stock Exchange’s (NSE’s) broader 50-share Nifty fell 1.24%, or 78.90 points, to 6,266.75 points. 1
  2. 2. The gainers included NTPC Ltd that jumped 0.50% to close at Rs.131.75 and Bajaj Auto Ltd that rose 0.2% to close at Rs.1,940.Among the losers, Bharat Heavy Electricals Ltd (BHEL) shares lost 3.74% to close at Rs.164.50 and Tata Motors Ltd fell 3.33% to Rs.370.25. Asian markets were trading down after China growth data. China’s gross domestic product (GDP) expanded 7.7% last year, data showed its slowest rate in 14 years at a time of concern about the strength of the world’s number two economy. The rupee marked its sharpest daily decline on Friday in about 10 weeks against the dollar on heavy demand for the US currency from oil firms, and bond yields surged on fears of tight monetary policy regime by the Reserve Bank of India (RBI) going ahead. Concerns of a tight monetary stance from the Reserve Bank of India (RBI)—if it chooses to accept retail inflation as the key price indicator for policy formulation as proposed by an expert panel—and fears of a stimulus roll-back by the US Federal Reserve, too, added to the pessimism, dealers said. The domestic currency ended at 62.685 to a dollar, down 1.2% from its previous close, the sharpest fall in a day since 11 November. The rupee has lost 1.41% so far this year. “There was heavy dollar demand towards the end of trade, which weakened the currency. Also, stoplosses were triggered towards the end, which added to the decline,” said N.S. Venkatesh, head of treasury at IDBI Bank Ltd. 2
  3. 3. Inside The Story FDA bans another Ranbaxy plant from selling products in the US. The US Food and Drug Administration (FDA) has prohibited Indian drug major Ranbaxy Laboratories Ltd from producing and selling active pharmaceutical ingredients for American markets from its Toansa facility in Punjab, citing manufacturing violations.The move follows an FDA inspection of the facility which identified significant violations of good manufacturing practices. Following this, the pharmaceutical firm voluntarily suspended API shipments from the facility to the US.With this, all Indian plants of the company have been banned from shipping products for sale in the US, the world’s largest drug market and key revenue generator for Indian generic pharma companies.Previously, US FDA had banned Ranbaxy from selling products made at its factories in Paonta Sahib, (Himachal Pradesh), Dewas (Madhya Pradesh) and Mohali (Punjab) over irregularities. Japan’s ARKRAY to buy IVD business of Span Diagnostics for $16M. Japanese medical technology major ARKRAY Group is buying the InVitro Diagnostic (IVD) business of Gujarat-based Span Diagnostics Ltd (Span), as per a stock market disclosure. The equity value of the deal is around Rs 73.4 crore ($12 million) while the enterprise value is pegged at around Rs 100 crore ($16 million).Span, a public listed manufacturer of diagnostic products and a major supplier of HIV test kits for the National AIDS Control Programme, has approved the sale of the IVD business undertaking to ARKRAY Healthcare Pvt Ltd, the Indian arm of ARKRAY Inc, it disclosed on Thursday. As per the agreement, two members of the promoter group, Pradip K Desai and Sujata V Desai, will join Arkray Healthcare. The existing chief of Span would continue to lead the organisation, with its remaining business. 3
  4. 4. Décor Aviation launching low-cost carrier Air Pegasus. Airport ground handling services firm Décor Aviation is setting up a new low-cost carrier which would start with regional flights in the south India under the banner of Air Pegasus. The carrier, which is expected to commence operations in the next two months, will have Bangalore as its hub, its promoter Shyson Thomas told.Thomas said the airlines would be funded with some $15 million coming from Décor Aviation and debt funding of $5 million from Canara Bank.Aviation is a capital intensive industry and the future expansion of the new carrier would depend on whether it can rope in a financial or strategic partner. The government had opened up the domestic aviation business. Govt picks banks for managing Axis Bank stake sale worth over $900M. India has chosen JPMorgan Chase & Co, Citigroup Inc and JM Financial Ltd to help sell half of the government's stake in Axis BankLtd (AXBK.NS) valued at $925 million, said three people involved in the process.The sale is part of a search for funds to narrow the government's fiscal deficit to 4.8 per cent of gross domestic product in the financial year ending March 2014 from 4.9 per cent a year earlier.The government aims to raise around $9 billion by selling shares but has managed just 3 per cent of that amount.Half of its 20.7 per cent stake in India's third-largest private-sector bank by assets is likely to be auctioned by the end of February, said the people, who declined to be identified as they were not authorised to speak to the media. 4
  5. 5. IndoSpace closes second industrial real estate fund at $330M IndoSpace Logistics Parks, a joint private equity investment platform floated by Everstone Capital and American investment group Realterm Global, has closed its second industrial real estate fund called IndoSpace Logistics Parks II (ILP II) at $330 million, the company said in a release.The new fund, which originally targeted $300 million, was oversubscribed. Bulk of the money was committed by its existing investors besides some new marquee investors. The fund’s investor base consists of leading endowments, foundations, sovereign and pension funds, it said on Tuesday. IndoSpace is developing around 32 million square feet of large-scale modern industrial and warehousing facilities across core industrial markets in India, including Mumbai, Pune, Bengaluru, Chennai, Delhi NCR, Ahmedabad and Kolkata. Its tenants include leading multinational companies and third-party logistics players such as DHL, P&G, Levi's and L'Oreal. Govt may cancel licences for 41 coal blocks The government has informed the Supreme Court that it will scrap as many as 41 coal blocks allocated to private companies between 1993 and 2009 if environment clearances for such blocks are not obtained in the next six weeks.This is reminiscent of the cancellation of telecom licences on the direction of the apex court two years ago in light of the massive scam unveiled in the sector.The blocks are awaiting environment and forests clearances at various stages and if the firms are not able to obtain the clearances in the mentioned time, the authorities will proceed with cancellation of the licences, the Attorney General Goolam E Vahanvati told reporters on Wednesday after a court hearing. 5
  6. 6. Air Water completes acquisition of Ellenbarrie Industrial Gases for $17.3M. Japanese industrial gas producer Air Water Inc has completed its acquisition of 51 per cent stake in Ellenbarrie Industrial Gases Ltd, a Calcutta Stock Exchange-listed company, for around Rs 106 crore ($17.28 million).Ellenbarrie has its manufacturing plants situated at Uluberia and Kalyani in West Bengal and Visakhapatnam in Andhra Pradesh. It maintains a fleet of cryogenic transport tankers and cylinders to deliver its supplies.The company has a diversified customer base and caters to different industries like steel, oil & gas, pharmaceutical, aerospace& defence, food & beverages, healthcare, etc. ASK Group marks first close of offshore realty fund at $50M ASK Group has announced the first close of its offshore real estate focused fund at $50 million. It got commitments from three investors— which include family offices, fund of funds and institutional funds—for the first close.The offshore fund, which has a target corpus of $200 million, is advised by ASK Property Investment Advisors (ASK PIA), the real estate private equity firm of Mumbai-based financial services group. It will invest in mid-segment residential realty projects in top five cities — Mumbai, Pune, Chennai, Bangalore and Delhi-NCR. Singapore’s Wilmar may buy up to 25% stake in Shree Renuka Sugars. Singapore-headquartered agribusiness major Wilmar International Ltd is in the final stage of negotiations to buy up to 25 per cent stake in India's largest sugar manufacturer Shree Renuka Sugars, The deal, which would help Wilmar expand its footprint in India and Brazil, will enable Shree Renuka Sugars to cut its debt pile. The company had loaded debt when it went about striking acquisitions in Brazil, the 6
  7. 7. world’s top sugar producing nation.Shree Renuka Sugars is expected to issue fresh shares through a preferential allotment which would be made at around Rs 30-35 per share, according to the news report. This would be a significant premium to the market price of the listed firm and at the rumoured issue price the deal would be valued over $100 million. Consumer inflation eases to three-month low of 9.87% NEW DELHI: Some moderation in vegetable and fruit prices eased December retail inflation to three-month low of 9.87 per cent, giving the Reserve Bank of India more leeway to manage interest rates.Inflation as measured by the consumer price index (CPI) for November has been revised marginally downwards to 11.16 per cent from preliminary estimate of 11.24 per cent.Vegetable prices on annual basis rose 38.76 per cent in December, a slower pace than 61.6 per cent recorded in the previous month, as per the official data released on Monday. 7