Breaking News & Stocks

Rel Power bonus issue cuts shareholders' losses by 40%
24 Feb, 2008, 2110 hrs IST.................MUMBAI: Anil Ambani-promoted Reliance Power shareholders, who were battered on the listing day of the scrip, effectively reduced their losses by as much as 40% over the IPO price after the company announced the bonus issue on Sunday.

The board of directors at its meeting considered and approved a bonus issue, excluding promoters, wherein three shares would be allotted for every five held by the non-promoter shareholders.

"This move would effectively reduce the cost of Reliance Power shares from the IPO price," Reliance Power Chairman Anil Ambani said. Retail investors were allotted the shares at Rs 430 while institutional investors got it at Rs 450.

India Cements up cargo vessel buy
28 Feb, 2008, 1336 hrs IST...............MUMBAI: India Cements has acquired a second bulk cargo carrier with capacity of 38,002 DWT from Essar Shipping. Earlier the company had purchased a vessel of capacity 41,824 DWT, from Cyprus' Markbright Marine. At 1:18 pm, India Cements shares were up 1.97 per cent at Rs 215 while that of Essar shipping were down 0.63 per cent at Rs 204.50 on BSE

Pakistani stocks marginally up; consolidation likely
28 Feb, 2008, 1111 hrs IST

Pakistani stocks were marginally up early on Thursday, but dealers said they expected some consolidation in a market that looked set to post further gains going forward.

Out-of-the-box Nano loans!
28 Feb, 2008, 0105 hrs .................It's the car that dominated the Auto Expo this year. The Tata Nano, due for launch in October, has created unprecedented interest in a segment that was so far non-existent, not just in India but across the world. But just what kind of financing options will the Rs 1 lakh people's car get? Will this out-of-the-box product from Tata Motors also attract out-of-the-box financing schemes?

When the Nano was unveiled mid-January, car financiers had indicated that the Nano would attract higher rates of interest because the risk profile of its customers would be higher. But now, as its customer profile gets more and more varied, the Nano's financing options too are getting more innovative. And diverse.

According to top financiers, the Nano could attract customized packages depending on the risk profile of the individual customer. Says ICICI's head- vehicle loans NR Narayanan, "Along with the two-wheeler upgraders and multiple car households, there are three types of people who will also likely buy the Nano."

His take is that three more segments will be common among Nano customers. These are those in the 40-45 years age group who have never owned a vehicle before and don't like two-wheelers because they think they aren't safe enough.

Those who own a two-wheeler but now have more disposable income to upgrade and were earlier looking at a second hand car but find that the Nano fits both their aspirations and their budget. And those who already own a car and earlier wanted a two-wheeler for shorter errands or for use by college-going kids for which they will now go for the Nano which they think is safer.

The risk profile of all three as indeed the multiple car households are different. Which calls for some innovative thinking.

The running cost of the Nano will be more than its EMI so the real factor in deciding the interest rates will be the former not the latter, says another top financier.

A two-wheeler's running cost is Rs 750 per month while the Nano's will be Rs 2500-2700. Even if the Nano is financed at current Maruti 800 rates (around 13-13.5%), the EMI works out to Rs 3200 per month for three years, Rs 2500 per month for five years and Rs 1700 per month for seven years.

Even for two-wheeler upgraders, that Rs 3200 isn't a big deal. The combined tally of running cost plus EMI which works out to around Rs 6000!

While ICICI may look at "profile based pricing" even that should not change the EMI equation too much. There could be three slabs ranging from the two-wheeler rates (20-22%) to small cars (13-13.5%). When the customer's loan profile is known and established, the rates will be lower. For first timers, the rates could be much higher.

But given that the jump from 13% to 20% will mean an addition of just Rs 250 to the EMI, the different rate slabs would not make too much of a difference. Particularly since the second hand market rates are also competitive at around 16-17%.

Of course Narayanan says it's too early to hazard a guess about just how the financiers will package the Nano given that it's still another eight months before the car is launched.

That's also something others like Ashok Khanna, head -retail loans, HDFC and Sumit Bali, CEO, Kotak Mahindra Bank agree with. "It's too early to predict a rate for the Nano because the profile is mixed," says Khanna. "We haven't understood the profile clearly so it's wait and watch for us." Also since the cycle is 13-13.5%, the RBI can revise rates by the time the car is launched. In which case the financing rates would reflect that as well. And, he says, the Nano will command more cash customers than any segment in the car market. Currently 80% of the cars are financed but with the Nano about 50% will be cash payments.

"Which means the creamy layer of Nano buyers may also be cash customers in which case the financiers will be left with high-risk customers," says Khanna. The rates may also reflect that trend.

Bali seconds that saying that the two-wheeler market faced a lot of problems of loan delinquency which is something the financiers will have to factor in for the Nano. Also, he says, "the Nano will attract upgrades from another new segment - three-wheelers. It is cheaper than three-wheelers though a lot more expensive than bikes so the former could look for an upgrade. That's yet another profile of customers." With their own set of risk profiles. And if the Nano is put to commercial use, the rates could reflect that as well.

Which is why financiers may look to "segment their borrowers with risk-based pricing" with the Nano as they are trying with the rest of the car industry.

But all of those factors will become clearer closer to the launch date. So for now, it's wait-and-watch for financiers.

Clearly the car that broke all the rules of the game with its design, production and development, is all set to do an encore with its financing as well.

NIIT acquires German company
28 Feb, 2008, ..................New Delhi: NIIT Technologies Limited, the global IT solutions organization, today announced that it has acquired German-based SofTec GmbH, a specialist in providing IT solutions and services in the Airline revenue accounting and operations space.

The acquisition will further strengthen NIIT Technologies' presence in the Travel, Transportation and Logistics vertical. The new company would be a wholly owned subsidiary of NIIT Technologies Ltd, India.

“I am delighted that NIIT Technologies has chosen SofTec for its centre of excellence for airline systems” Mr. Peter Oncken, Managing Director of Softec said. SofTec's state-of-the-art financial and operations solutions have been implemented by more than 40 airlines mainly in Europe.
“SofTec's industry specialization and access to the complete portfolio of NIIT Technologies' services will enhance value to our customer base”, Mr. Oncken further stated.

“The individual strengths of NIIT Technologies and SofTec are complementary. The acquisition will strengthen our domain leadership to reinforce our position in the Travel, Transportation and Logistics space.” said Mr. Arvind Thakur, Chief Executive Officer of NIIT Technologies.

NIIT Technologies has a strong presence in the Travel, Transportation and Logistics domain through its association with the industry leaders like British Airways, Sabre, DB Systel, Emirates and SATS.

Budget airlines plan to cut fares by 10% this summer
28 Feb, 2008,..............................NEW DELHI: If you are planning a holiday this summer, you will definitely love it. Your domestic trip might not be as expensive as it was last year.

Come April and airfares usually increase, as the holiday season sets in. However, this year in April-June, airfares for domestic sectors offered by budget carriers will be 10% cheaper than last year. Besides overcapacity in the domestic market, a bid to boost aircraft yields is forcing companies to offer competitive rates, lower than what they were last summer.

For instance, Mumbai-based GoAir is offering flat fare of Rs 1,075 (including surcharges and taxes) on the Delhi-Jaipur sector. It has also tied up with Cleartrip to offer a return airfare of Rs 599 on all sectors (excluding surcharges).

“We will also be offering innovative products during the coming holiday season,” Edgardo Badiali, CEO, GoAir, told ET. GoSurprises — a new scheme from the carrier — will include attractive fares, loyalty programme and also other customer service initiatives. Other low-cost carriers are likely to follow suit.

Gammon Infrastructure files IPO papeMUMBAI: Gammon Infrastructure Projects, a subsidiary of Gammon India has filed papers for the initial public offer of 1,65,50,000 equity shares of face value Rs 10 each.

The issue comprises 1,48,95,000 shares to the public and a reservation of 16,55,000 shares to eligible employees.

The IPO is being made on 100 per cent book building proces, with the price band of Rs 167- 200. The issue will remain open from March 10, 2008 to March 13, 2008.

On Thursday, Gammon India shares closed down 0.17 per cent at Rs 504.75


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L&T drops plan for Infotech IPO
25 Feb, 2008................................MUMBAI: Larsen and Toubro on Monday said it is not going ahead with its IPO plan for its IT company, L&T Infotech, because of the volatile global market condition.

"We are dropping plans of an IPO for Infotech in 2008 because the markets are volatile," L&T CMD A M Naik told reporters.

Earlier, L&T officials had said Infotech would be listed in 2008. However, the heavy engineering major would look for an Infotech IPO in 2009, he said. "If we go now for an IPO, we won't get better valuation," Naik said.

Two major companies have withdrawn their IPOs earlier this month because of undersubscription. They are Emaar MGF and Wockhardt Hospitals. Emaar planned to raise Rs 6,400 crore and Wockhardt Hospitals Rs 640 crore.

Dell Profit Misses Estimates, Shares Fall
Dell, the world's second-largest personal computer maker, on Thursday posted a lower-than-expected quarterly profit and cautioned that customers may rein in spending, sending its shares 4 percent lower.