1. K E Y N O T E
Keynote Capitals Institutional Research - Industry Monitor September 26, 2011
Industries covered
• Banks
• Cement
• Infrastructure
• IT
• Media & Entertainment
Executive Summary
RBI lifts restriction on FII investment in two banks.
The Reserve Bank of India has lifted restrictions on the purchase of shares by foreign investors in
Union Bank of India and Karur Vysya Bank as FII holding in the lenders had fallen below the
prescribed trigger limit.
CCI’s proceedings, hike in cement prices.
News that Competitive Commission has initiated proceedings against India's top cement companies
for abuse of market dominance and cartelization based on the report by the Serious Fraud
Investigation Office was the major highlight for the week. If the charge is upheld, the Competition
Commission of India may impose penalty to the companies such as UltraTech Cement, Ambuja
Cement and ACC. However, in anticipation of the end of the monsoon and pick up in demand during
the festive season, cement companies raised cement prices by an average of `4-5 for a 50kg bag in
the previous week.
Reduction in coal output to affect utilization of the power companies.
The decline in coal production by India’s largest coal producer Coal India, will adversely affect the
capacity utilization of the power projects. The private companies will be affected more and it is
expected that the utilization may come down to 50-60% levels whereas the average utilization
currently is 75% there by affecting the revenues of the company. On the other hand, spending on
Infra targets $1trn for the 12th Five year plan, where the participation from private sector would be
50%. The government has also taken number of steps to increase foreign investment.
Fed speech negative on US outlook.
BSE IT index closed 4985.55 down 2.28% during the last week vis-à-vis its previous week, IT stocks
were major losers in the main index with Infosys and Tata Consultancy Services dropped 2.23% and
3.67% and Wipro fell 0.29%, respectively. All the major indices fell on Thursday after disappointing
news from the Federal Reserve. Federal Reserve said that there is a significant downside risks to the
US economy, though it plans to buy $400bn of bonds.
Print media expected to grow at 9-10%
The main highlight of the Media & Entertainment (M&E) Industry is the report by AIFMP, in which it
mentioned that the print media is expected to grow at 9-10% during 2011-15 on the back of 8-9%
growth in Indian economy and increase in advertising expenditures across media platforms. The other
highlights of the Industry are, Sun TV Network is planning to invest `3bn in the current fiscal year,
DQE signs co-production deal with Imira Ent., Enne Ent. and TVE, Eros International has tied-up to
produce Punjabi films and Bloomberg UTV introduces Rising Stars a segment in the flagship show.
Weightages in major indices
Sectors Sensex Nifty BSE 500 CNX 500
Banks 24.53% 25.26% 23.80% 22.69%
Cement 0.59% 1.80% 1.94% 1.96%
Infrastructure 9.29% 9.43% 8.62% 8.64%
Information & Technology 13% 11.94% 9.03% 9.07%
Media & Entertainment 0.78% 0.78%

2. K E Y N O T E
Banking Industry Monitor
Banking Industry and its contribution to Indian equities
Banking and other Finance firms together have the highest weightage in the Sensex and BSE 500
with 24.53% and 23.80%, respectively. The major players in BANKEX Indices are the private banks
namely ICICI Bank (27.21%), which is the second largest bank in India with HDFC Bank (23.89%).
Other banks include SBI (15.62%), Axis Bank (8.15%) and Kotak Bank (5.15%). The sector’s
weightage in CNX Nifty is 25.26% and in CNX 500 is 22.69%.
Dhanlaxmi Bank raises base rate, BPLR
Private lender Dhanlaxmi Bank has increased its base rate and benchmark prime lending rate by 25
and 50 bps respectively. Its base rate now stands at 11% while benchmark prime lending rate is at
20.75%. Early last month, the bank had raised these rates by 50 and 100 bps respectively.
SBI extended 25 bps concessional home loan scheme till December 2011
The country's largest lender State Bank of India (SBI) has extended 25 bps discounts on interest rates
on its card rate across the tenor of a floating home loan after facing a stiff competition from its rivals
offering dual interest home loan products. The scheme will open on October 31, 2011, has now been
extended till December 31, 2011. The card rate is calculated according to the slabs as a premium
above the bank's base rate or the minimum rate of lending, which now stands at a competitive 10%. A
borrower will now be charged an interest of 10.50% as against the earlier 10.75% on loans up to `30
lakh. Similarly, a loan above `30 lakh, but up to `75 lakh, will have an interest of 10.75%.
NHB to soon abolish pre-payment penalty on home loan
National Housing Bank (NHB) regulates 54 housing finance companies, has proposed that it will soon
come out with a directive to abolish penalty on pre-payment charges on floating loans. In a release
issued in October, 2010, the regulator had said, "The issue of levying pre-payment penalty or pre-
payment charges by housing finance companies on pre closure of housing loans by the borrowers out
of their own sources has been considered by the National Housing Bank and it has been decided that
housing finance companies should not charge prepayment levy or penalty in such cases."
At the same time, NHB has also tightened norms for housing finance companies (HFCs) with regard
to provisioning. It has raised the provisioning requirement for doubtful assets of up to 100% and has
directed HFCs, to set aside 0.4% of the total outstanding "standard" loans as a buffer.
Standard Chartered India plans to double private bank assets by 2014
Standard Chartered expects assets under management at its Indian private banking business to
double by 2014, helped by a rapidly increasing number of wealthy people at a very fast pace in Asia's
third-largest economy. The population of high net worth individuals with more than $1 million in
investable assets rose nearly 21% in India to 153,000 in 2010 making it the 12th largest such market,
according to a report by Capgemini and Merrill Lynch.
ICICI Securities tied up an alliance with the US-based Oppenheimer's Asian for institutional
broking and investment banking
Indian investment bank ICICI Securities or I-Sec brokerage and investment arm of the largest private
sector lender ICICI Bank, has signed an agreement to form a strategic alliance with U.S. based
Oppenheimer & Co Inc for business opportunities to introduce Indian companies into the U.S.
securities market. Oppenheimer & Co, which offers broking and investment banking services, is a unit
of New York-listed Oppenheimer Holdings Inc. The alliance between the two companies would
include a wide range of equity trading as well as debt instruments, corporate investment advisory,
private equity transactions and wealth management. I-Sec Managing Director and Chief Executive
Anup Bagchi said, "This is non-exclusive alliance and involves no equity participation. In fact, we have
been dealing with Oppenheimer for quite some time now and today's deal is a formalization of our
growing ties with them."

3. K E Y N O T E
Cement Industry Monitor
CCI to start proceedings against top cement firms in India
India's competition authority will start proceedings against India's top cement companies for abuse of
market dominance and cartelization based on the report by the Serious Fraud Investigation Office,
according to a leading business daily of India. If the charge is upheld the Competition Commission of
India may impose penalty. SFIO, the nodal investigation wing of the Ministry of Corporate Affairs has
submitted its report to the ministry stating clearly that UltraTech Cement, Ambuja Cement and ACC
have been colluding to keep the price within a band. Coal scenario doesn’t look pretty. Planning
Commission’s projection of a requirement of 250mn tones of coal may push global coal prices higher,
according to Coal Secretary while Coal India said that it can’t rule out possibilities of hiking coal prices
in December if wage hike become unavoidable.
Cement companies hiked prices
Cement companies recently hiked prices on an average by `4-5 for a 50 kg bag with the central and
northern region seeing the highest rise of `12 a bag and `9 a bag. The sharp increase in cement
prices was attributed to demand from large dealers who were stocking up in anticipation of pick up in
demand during the festive season. A lot of new real estate projects are launched during Navratri and
Diwali with builders offering attractive discounts to woo home buyers, who were put off by the rising
interest rates. Dealers expect cement sales to improve with the monsoon close to an end. The
demand in the rural areas is set to improve as good monsoon will better farmers' earnings. Besides,
farmers' realisation for their produce will also be higher compared to last year as the Government had
marked up minimum support price for most commodities.
Plan panel's coal import projection could push prices
The Planning Commission's projection of importing 250mn tonnes of coal in the 12th Five Year Plan
to meet the domestic demand-supply gap could further increase international coal prices.
"The Planning Commission predicts that India needs to import 250mn tonnes (MT) of coal to bridge
the demand-supply gap. However, this figure needs a lot of analysis and introspection," Coal
Secretary Alok Perti said at a national seminar on "Energy Security for the Future-Challenges Ahead".
"Today total import market of coal roughly amounts to 800 to 900mn tonnes and if we add this Indian
demand of 250 MT, we are looking at roughly a 40% rise in trade of coal over the next five years," he
said.
Coal India may increase prices by December
Coal India (CIL) may revise prices of black fuel in December 2011. “If there is a wage increase, then
we will have to raise prices (of coal) also. This (wage revision) is not decided over one meeting. We
will have several meetings to decide wage hike,” CIL chairman NC Jha told reporters.
Jha said that quantum of hike in coal prices cannot be determined now. Earlier, CIL had revised
prices in February this year. During that time, prices of premium grade A and B coal have been linked
to international coal prices. The coal is offered at 15 per cent discount of international spot price.
Prices of other varieties of coal were revised by 30%. Prior to the increase of prices in February 2011,
CIL had revised prices in October 2009. CIL contributes nearly 80% of coal mined in India. Revision in
coal prices would impact bottom lines of companies in power, cement, sponge iron and fertiliser
sectors.

4. K E Y N O T E
Infrastructure Industry Monitor
Infra Sector Weekly Update
In the volatile markets, the performance of infra stocks was mixed bag. The Sector has Outperformed
0.6% & 0.2% over Sensex & Nifty whereas underperformed 0.30% & 0.35% over BSE500 & CNX500
respectively. However, CCCL outperformed by 12.21, 11.29%, 9.88% and 9.35% whereas IVRCL Ltd
underperformed by 10.47%, 11.39%, 10.67% and 11.20% over Sensex, BSE500, Nifty and CNX500
respectively.
BGR Energy to tie up with Flagsol to enter into solar power industry
The company is about to close a deal for entering into the solar power industry, with Flagsol, a
subsidiary of Solar Millennium of Germany. It is reported that the Indian partner will hold 60% stake in
the joint venture that would be created. The joint venture is looking to set up a 50-MW concentrated
solar power (CSP) plant in Rajasthan. The plant of that size would call for an investment of about
`650Cr. Recently, the company emerged as the lowest bidder in the tender called by NTPC for supply
of nine units of 800 MW steam turbine and generator units for a value of about `3500Cr. The
company now awaits the completion of entire technical and commercial details of bids in this regard.
BHEL likely to achieve 20,000 MW capacity by FY12
Bharat Heavy Electricals (BHEL), country's largest power equipment-maker is likely to ramp up its
manufacturing capacity to 20,000 MW by March 2012. BHEL's capacity addition strategy for the
current financial year also envisages an improvement in product cost-competitiveness and quality.
The company is well on track to becoming a 20,000-MW company by March 2012. The company
aims diversifying into the emerging business areas like R&D and people management. The company
has secured orders for seven boilers and nine turbine generators with supercritical parameters from
public as well as private sector utilities during the fiscal. Recently, BHEL bagged an order worth
`2500-3000Cr from Singareni Collieries, a state-owned mining company. The company has bagged
order to supply two 600 MW boiler turbine generators on September 12.
GVK in talks with Kideco for divestment of coal mines stake
GVK Power & Infra, part of GVK group is in talks with Indonesia's PT Kideco Jaya Agung for divesting
part of its stake in the coal mines that it bought last week from Australia's Hancock Group for $1.26
billion. GVK decided to pay $1.26 billion for a majority stake in three Australian coal mines and a port
and rail project owned by Hancock Group to secure long-term coal supplies for the Indian group's
power projects. Kideco is demanding MDO [mine development operatorship] along with acquiring
minority stakes. GVK will need the financial support and technical expertise of partners to develop the
mines, and the rail and port projects, with the overall investment required in the first phase pegged at
$10 billion.
IVRCL Group bags total order worth `2229Cr
The company has been awarded a contract worth `1486Cr by Government. The Ministry shall provide
a cash support of `1004Cr to the concessionaire to implement the project. The concession period for
the project is 17 years from the appointed date and the project is slated to be completed within a 4 1/2
years period. Further, IVRCL's Power, Buildings, Transportation, Water and Mining Divisions have
also bagged orders. The Power Division, Building Division, Transportation Division, Water Division
and Mining Divisions had bagged order worth `108Cr, `235Cr, `104Cr, `263Cr and `32Cr
respectively.
VA Tech Wabag bags total order worth EUR 12.9mn
The company has bagged first order worth EUR 8 million for Andermatt Waste water treatment plant.
The plant is to be extended using advanced WABAG fine sieving, FLUOPUR and WABAG filtration,
three of WABAG's innovative technologies. The company has also bagged other orders worth EUR
4.9 million for Lake Neuchatel WTP, Mannedorf Waste Water Treatment Plant and contracts from
Raron and Rheintal. The other contracts received by the company is for design and supply of two de-
acidification filters in Raron, Swiss and the supply of filtration plant for Swiss Rheintal.

5. K E Y N O T E
IT Industry Monitor
IT Industry and its contribution to Indian equities
IT sector has weightage of 9.03% and 9.07% in BSE 500 and CNX 500, respectively with major
stocks are Infosys, TCS and Wipro. The sector is also represented through BSE IT and CNX IT
indices. IT sector companies also constitute major portion of Sensex and Nifty with weightages of
13.00% and 11.94%.
TCS and Infosys are core banking leaders
Gartner Magic Quadrant for International Retail Core Banking report for September 2011 has named
IT bellwethers TCS and Infosys as leaders in the core banking magic quadrant. The report also
highlighted some trends in the banking industry in 2011, including the importance of SOA-compliant
core systems (SOA or service-oriented architecture is designed to provide interoperable services).
TCS launched BaNCS core banking version 12.
TCS launched BaNCS core banking version 12 for banks. This version continues to build on
industry’s leading functionality, flexibility and scalability for which the product has come to associated
globally.
Volatility of currency movement is a concern: Nasscom
The volatility of currency movement is a concern for the Indian IT companies, because that needs to
be tackled since it hinders the planning process for IT companies, according to Nasscom.
Infosys and Wipro to collaborate on entry into new sectors and markets.
The two companies may explore collaboration to develop software products and aim to jointly
leverage other’s strengths to go to the market. Their talks revolve around exploring possible areas of
partnership and IT majors are in talks with global system integrators for partnerships.
HCL Tech to create 10k jobs in US & EU
The company will create 10,000 jobs in the US and the EU in the next 5 years. HCL Tech has
announced setting up of a development centre in Redmond, US and another one in Dublin, Ireland.
While the US centre will have 350 seats, the Irish centre will have 80. The company will go to
campuses in these countries to hire for the first time during this placement season. Among the
universities which have been shortlisted includes, University of Washington (Bothell and Tacoma
campuses), Seattle University and Seattle Pacific University.
HCL to implement CRM application at SMUD
HCL Technologies will help to support the Sacramento Municipal Utility District's (SMUD) smart grid
initiatives through a customer service and billing upgrade. HCL has begun implementation of its SAP
customer relationship management (SAP CRM) application and an upgrade of SAP for utilities at
SMUD. HCL will help to integrate more than 150 customer business processes and provide an
implementation of SAP CRM for the smart grid.
Result Calendar
Company Result Date
Infosys Second quarter 12 Oct,2011

6. K E Y N O T E
Media Industry Monitor
Major listed Media & Entertainment companies included in BSE 500 and CNX 500 indices are Zee
Entertainment Enterprises, Dish TV India, Sun TV Network, Jagran Prakashan and UTV Software
Communications, while the sector's weight age is 0.78% in both the indices.
AIFMP: Print media expected to grow at 9-10%
According to All India Federation of Master Printers (AIFMP), the print media is expected to grow at 9-
10% during 2011-15 on the back of 8-9% growth in Indian economy and increase in advertising
expenditures across media platforms. The print classifieds market is worth $300mn and the liberalized
foreign investment policy had given the industry leverage to expand further. AIFMP also indicates that
the paper consumption is expected to reach 13.95 million ton by 2015-16 making India as world's
fastest growing market.
Sun TV plans to invest `3bn in the current fiscal year
Sun TV Network plans to invest over `3bn, including an investment of around `80 in Sun Pictures
during the current fiscal. The company has lined up around `75-80Cr towards purchasing of
equipment for Sun TV and another around ` 800mn to distribute movies, through Sun Pictures.
The company is also planning to launch five more channels during the current fiscal.
DQE signs co-production deal with Imira Ent., Enne Ent. and TVE
DQ Entertainment, the Global entertainment production and distribution company has announced that
Imira Entertainment, has sigh a co-production deal with Spain’s leading production and distribution
company specialising in youth programming, Enne Entertainment Studios and Spanish broadcaster
TVE for production of new 3D animated series Escape Hockey.
DQ Entertainment has also signed licensing and distribution deal with SMC Entertainment Inc., a
division of Sun-Mate Corporation Inc., USA for "The Jungle Book" Season One.
Eros International has tied-up to produce Punjabi films
Leading film production company, Eros International which is expanding its presence in the regional
film market has announced a collaboration with actor Jimmy Shergill's company 'Jimmy Shergill
Productions' for producing four Punjabi films.
Sunil Lulla, Managing Director, Eros International said that the partnering with 'Jimmy Shergill
Production’ is a part of its expansion plans in the regional film markets.
Bloomberg UTV introduces Rising Stars a segment in the flagship show
Bloomberg UTV – India’s premier Business news channel has introduced, ‘RISING STAR’, a segment
in the flagship show LOGO, which caters to Marketing, Branding and Advertising professionals. The
core objective of Rising Star is to give the budding young marketers, copywriters, art directors and
film makers an opportunity to showcase their talent in a free spirit and their individual interpretations
of the brief.

7. K E Y N O T E
KEYNOTE CAPITALS LTD.
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