Weekly newsletter 02 june2012
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The document summarizes top business headlines and provides more context on some of the stories: 1. India's economic growth slowed to 5.3% for the last quarter and 6.5% for the full fiscal year, prompting downgrades from analysts. 2. The cabinet approved reforms to India's telecom policy that will separate licenses from spectrum and review the TRAI Act. 3. Tata Motors posted strong earnings growth for the last quarter but investors were disappointed by lower margins at Jaguar Land Rover.
Weekly newsletter 02 june2012
- 1. Top Headlines PE-backed Azure Power may get $70M from US Exim Bank Former Reliance Trends chief's lifestyle e-store gets funding from Lightspeed, Helion Essar Ports raises $31M from Antwerp Port Authority Dubai firm to buy BCCL's TimesofMoney Rating company CRISIL to buy UK-based analytics firm Coalition for $44.8M PE-backed Shriram EPC to raise up to $26.4M; Gets Bessemer’s Vishal Gupta on board. Google to make product search a paid service Weekly Executive Summary The big news of the week was the fall in India’s economic growth. New fourth quarter GDP numbers out on Thursday were worse than most expectations. GDP growth for the three months to March was a meager 5.3%. That brings the overall GDP growth for the full fiscal to a mere 6.5%. The poor GDP numbers were caused primarily by a dismal performance from manufacturing. That sector saw a 0.3% contraction for the quarter. Other sectors also fared badly, with electricity growing just 4.9% and construction going up by 4.8%. Agriculture did worse, with a growth of just 1.7%. And the plunge in economic growth has prompted several downgrades of India. Morgan Stanly has cut its GDP forecast to 5.7% from 6.3%. And Standard Chartered has slashed its forecast to 6.2% from 7.1%. The slowdown has also heightened expectations of a rate cut when the Reserve Bank meets on18 June. And in other news, India’s telecom industry could be up for an overhaul. On Thursday the cabinet approved the National Telecom Policy. The new policy will separate licenses from spectrum. And the government 1
- 2. Plans to review the Trai Act and retain the policymaking function. Also, the policy authorizes the Department of Telecommunications to finalise the Unified Licensing Regime. Moving to earnings, Tata Motors has ended a lucrative year with a bang. On Tuesday the company posted bumper earnings for the fourth quarter. Net profit for the three months to March raced ahead 136% to 6,234 crores. And revenue climbed 44% to 50,907. Tata Motors benefited from a deferment of tax assets. But the company also got a boost thanks to its UK arm, Jaguar Land Rover, which saw robust sales in emerging markets. But despite the impressive volume growth, investors were disappointed with JLR’s profitability. The unit’s fourth quarter margins fell to less than 15% from about 20 in the previous quarter. Inside The Story PE-backed Azure Power may get $70M from US Exim Bank Export-Import Bank of the US may provide long-term finance of Rs 395.9 crore ($70.35 million) to solar power producer Azure Power India Pvt Ltd for its solar power plant at Nagaur in Rajasthan.The plant is an expansion of the firm’s existing 5 MW Nagaur photo-voltaic facility, and will ensure a total output of 40 MW, making it the largest solar power plant to be developed at a single location under the National Solar Mission. The current project started in January this year.“With this project, we are committed to working towards meeting the grid parity objective of the National Solar Mission in India,” said Inderpreet Wadhwa, CEO of Azure Power. Former Reliance Trends chief's lifestyle e-store gets funding from Lightspeed, Helion Arun Sirdeshmukh, former chief executive of Reliance Trends, has teamed up with Darpan Munjal (former CTO of Times Internet Ltd who 2
- 3. had also worked at the e-commerce unit of US retail giant Sears) to launch an online fashion and lifestyle store called Fashionara. For a starter, Fashionara is offering apparel, footwear and accessories for men, women and kids but it will also foray into other related product categories.The Bangalore-based startup has also received an undisclosed amount of funding from Helion Venture Partners and Lightspeed Venture Partners. Refusing to quote the exact amount, Sirdeshmukh said, “We have got a substantial amount of funding, which is required to grow and consolidate a strong e-commerce business. We May look for a fresh round of funding after 18-24 months.”The money raised will be used to scale up the supply chain, logistics, technology- building, branding and marketing. Right now a team of 36, the firm will also hire to take up the number to 50 by August this year. Essar Ports raises $31M from Antwerp Port Authority Belgium’s Port of Antwerp International (PAI), an investing and consulting arm of Antwerp Port Authority, has invested Rs 175 crore ($31 million) in public-listed Essar Ports, one of India’s largest port operators involved in port and terminal services for liquid, dry bulk, break bulk and general cargo. The investment is done through the issue of GDRs at Rs 100 per share, translating into around 4 per cent stake of the diluted equity base.Essar Ports’ scrip declined marginally to close at Rs 89.3 a share on the BSE in a weak Mumbai market. The partnership is aimed at technical assistance for port planning and process improvement besides quality and productivity enhancement. Jan Adam, the CFO of Port of Antwerp, has joined the board of Essar Ports Ltd as a non-executive director. Dubai firm to buy BCCL's TimesofMoney Dubai based Network International LCC, one of the largest of payment solutions providers, was set to buy TimesofMoney, the digital payment services provider and remittance company of Bennett, Coleman and Co Ltd (BCCL), India’s largest media house and popularly known as the Times group. The talks have been on for a while and the formal 3
- 4. Announcement is due within the next fortnight. The business is currently valued at around Rs 700 crore and BCCL is exiting at a premium of close to Rs 800-1,000 crore. Rating company CRISIL to buy UK-based analytics firm Coalition for $44.8M Credit Rating Information Services of India Ltd (CRISIL) will acquire 100 per cent equity shares of the UK-based analytics firm Coalition Development Ltd, along with its subsidiaries, for Rs 250 crore ($44.8 million approx.) in an all-cash deal.“The all-cash transaction has a maximum payout of £29 million or Rs 250 crore with earn outs over two years. It will add to CRISIL’s earnings per share from the first year,” a company statement said. PE-backed Shriram EPC to raise up to $26.4M; Gets Bessemer’s Vishal Gupta on board. Engineering procurement & construction firm Shriram EPC, backed by Bessemer Venture Partners and others, is planning to raise funding up to $26.4 million (Rs 150 crore).The funding could be done through rights issue of equity shares or QIPs, ADRs, GDRs, FCCBs or any other securities convertible into equity shares.According to a BSE filing, the company has also appointed Vishal Vijay Gupta of Bessemer Venture Partners as its nominee director after RS Chandra (also from Bessemer) resigned from Shriram EPC’s board.The venture capital firm holds 23.6 per cent in Shriram EPC, as of December 2011. Other investors in the firm include New Vernon Private Equity, Argonaut Ventures and Ascent India Fund. Google to make product search a paid service Google's free 'product search' would soon be a paid service in the US under which merchants and retailers will have to pay for listings of products. "We are starting to transition Google Product Search in the US to a purely commercial model built on Product Listing Ads. This new 4
- 5. Product discovery experience will be called Google Shopping and the transition will be complete this fall," Google Shopping Vice President (Product Management) Sameer Samat said in his blog on Thursday. The new initiative seen as a step to boost company's revenue will in addition provide the customers a higher quality shopping experience. 5