DO YOU KNOW?

As you must be aware that Karuturi Global Ltd, agreed with the Ministry of Agriculture (MoA), Ethiopian government to grow wheat on 300 thousand hectares of fertile land. 

However, Karuturi Global Ltd failed to repay a 65 million birr (a little over $3 million) loan extended via overdraft facility from the state-owned Commercial Bank of Ethiopia (CBE); though the company immediately settled the minimum, 25% of the debt. Karuturi is known for borrowing from CBE, Dashen and Zemen banks. The loan extended to the company exceeds 170 million birr (~$8 million). 

Recently there were media reports that the deposed Indian flower firm is planning a major comeback to Kenya, after entering a debt deal that would enable it retake its vast farms currently under control of its creditor CFC Stanbic Bank. 

Managing Director Ram Karuturi last month told an Indian investment analyst that his board had successfully restructured the company’s debt to pave way for the retake of the Kenyan business.

According to the CEO, the company has around $70 million worth of machinery in Ethiopia---the company is selling out the surplus of machineries, equipments and other accessories it had in the farms. Though the company did not officially mention, what it would do with the fund, but it is widely believed that a major part of the money would go, for the settlement of the outstanding debts. 

In this circumstance, it would be prudent for high-risk-taking-investors to buy the scrip of Karuturi Global Ltd in Bulk at Rs.1.70 and keep holding. 

Foreign fund inflows cross Rs.81,000 crore mark in 2015

Photo: Business Today

NEW DELHI, 12 Apr, 2015: With overseas investors pumping in over Rs.2,000 crore in the Indian capital markets so far this month, total foreign fund inflows have crossed the Rs.81,000 crore mark since the beginning of the year. 

Analysts expect the inflows to accelerate further going ahead, helped by clearance of reform bills for insurance, coal and mining, as also on assurances on controversial issues like General Anti Avoidance Rules (GAAR). 

Foreign Portfolio Investors (FPIs) have bought shares worth Rs.2,392 crore till April 10 this month, while they pulled out Rs.337 crore from the debt markets, taking their net investment to Rs.2,054 crore ($ 329 million), as per the data compiled by Central Depository Services Ltd. 

This has taken their total net investment in the country's capital markets (equity and debt segments) so far in 2015 to Rs.81,030 crore (about $ 13 billion). 

Market participants attributed the robust inflows to positive investor sentiment driven by several reform measures announcement by the government. 

Finance Minister Arun Jaitley announced a slew of measures to attract overseas investment in the country in the his Budget for 2015-16. 

Besides, he has deferred the controversial GAAR by two years to soothe investors' nerves, saying its immediate applicability can create "panic" in markets. 

The net inflows by overseas investors in debt markets stood at Rs.1.59 lakh crore in last year 2014, while the same for equities was Rs.97,054 crore. 

Overall, the net investment by foreign investors stood at Rs.2.56 lakh crore last year. 

Courtesy: The Economic Times

DO YOU KNOW?

There are media reports that Cameco Corp, Canada’s biggest uranium producer, would reap a revenue windfall once a sales agreement is finalized with India, while boosting employment in its home province.

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A deal would be “huge,” yielding hundreds of millions in revenue and supporting jobs in the mining sector, Saskatchewan Premier Brad Wall said in an interview with Bloomberg News on Friday. He was asked to comment on a possible agreement by Saskatchewan-based Cameco to provide uranium for nuclear power.

“It’ll mean tax revenue, it’ll mean job retention, it’ll mean new jobs, if in fact there is an agreement here with India,” Wall said by telephone. “Depending on all the specifics, you’re going to be talking about hundreds of millions of dollars worth of sales over some period of time.”

Narendra Modi, went to Canada to give them benefit or India? It is true that India currently requires three times as much uranium as it produces to fuel its reactors; but then without getting a reciprocal benefit, why is he signing such a huge deal which will basically benefit the Canadians more than Indians? 

Day by day, Modi-nomics is turning out to be disastrous for Indian economy. While there is no money (or shortage of resources) for public welfare schemes in India, Narendra Modi is on a "Shopping Blitzkrieg" hopping from one country to another, funded by poor tax payers money. 

It is to be noted that India has recently signed a multi-billion-dollar deal to buy 36 fighter jets from France; while the country is running a high FD and CAD. These kinds of whimsical-economic-decisions  are putting pressure on some sectors like Gems and Jewelry. Also, there are no efforts to curb the dumping of steel, from China, Russia, Japan, etc. 

I am asking: Narendra Modi government is preparing for which "WAR", that it is going hammer and tongs, as far as the purchase of defense equipments are concerned? Normally when diplomacy fails, a war breaks out, Isn't it?

The truth is that, it is only due to industry and hard work of India Inc, that we are witness some improvement in the IIP numbers, otherwise, there is little help from the NDA government to shore up the Indian economy; with an amateur Finance Minister at the helm.  

Those who rooted for Narendra Modi as the Prime Minister of India, might be the most disappointed ones. 

GMR Infrastructure Ltd: Hold

CMP: Rs.18.8

There are recent media reports that the two financial institutions have released 13.5 crore shares in diversified GMR Infrastructure Ltd, that were pledged by the company's promoter GMR Holdings.

Around 7.45 crore shares were released by JM Financial Products on April 9 and 6 crore shares were released by SICOM Ltd on April 10, GMR Infrastructure said in a regulatory filing.

The 13.5 crore shares that were released translated into a 3.08% stake.

The value of 7.45 crore shares, based on April 10 closing price of Rs.18.80 a piece, is estimated at Rs 140.06 crore. While 6 crore shares are worth Rs 103.8 crore based on April 9 closing price of Rs 17.30.

Recently, a consortium led by GMR Infrastructure Limited was issued Letters of Award for construction of 417 Km long Eastern Dedicated Freight Corridor railway project at a cost of Rs.5,080 crore on EPC (engineering, procurement and construction) basis. The project is to be executed in two phases—first involving a 180 km stretch between Mughalsarai and Karchana (near Allahabad) and second involving a 237 km stretch between Karchana and Bhaupur (near Kanpur).

Meanwhile, GMR Infrastructure Ltd's rights issue which closed last week, was a tad oversubscribed. The company was expected to raise close to Rs.1,402 crore but have got Rs.1450 crore.

Jaiprakash Power Ventures Ltd: Buy in Bulk

CMP: Rs.10.65

You must be aware that Jaiprakash Power Ventures Ltd is selling some of its plants to bring its debt to some manageable levels. JSW Energy Ltd will acquire (100 per cent stake) two hydro-electric projects of Jaiprakash Power Ventures in Himachal Pradesh for about Rs.9,700 crore.

Earlier, Sanjay Sagar, joint managing director & chief executive officer,  JSW Energy Ltd said that the company’s deal with  JP Power will be completed by March 31 or early April  (2015)--this was their timetable. This means we are just near the final lap of this crucial deal. Meanwhile, the Competition Commission of India (CCI) approved the sale of two of Jaiprakash Power Venture Ltd’s hydropower assets to JSW Energy Ltd in February, 2015. JSW Energy Ltd had approached anti-trust regulator seeking clearance to complete the Rs.9,700 crore deal with Jaiprakash Power Ventures Ltd (JPVL). Debt for Jaiprakash Power Ventures stood at Rs.17,888 crore at the end of the September quarter.

The stock continues to be a buy on dips, as there are large upsides from interest rates in longer time frame. 

JPVL acquired Bina Power Supply Company Limited (BPSCL) from Aditya Birla Group. BPSCL was set up by the Aditya Birla Group to set up a coal fired Thermal Power Plant at Bina in the state of Madhya Pradesh.

Commissioning:

• Unit 1 commissioned in August, 2012
• Unit 2 commissioned in April, 2013

Besides, Jaypee Nigrie Super Thermal Power Project comprising 2 x 660 MW Super-critical Unit is likely to be the only plant to make reasonable ROE for JPVL. 

The investors should therefore, do well to buy the scrip of the company at the CMP of Rs.10.65 (Book Value: Rs.21.54 and Market Cap: Rs.3,137.79 Cr) and wait for its to close above Rs.15.50, for some scintillating returns going forward. 

Gold Regains R. 27,000 on Global Cues, Buying by Jewellers

[Editor: The gold as expected has started to move up. My recommended Gitanjali Gems Ltd (Rs.46.60) and Renaissance Jewelry Ltd (Rs.99.25) has already reached my first targets. Gitanjali Gems Ltd, this time is expected to cross Rs.100 and hence do not sell in a hurry. Moreover, Renaissance Jewelry Ltd touched Rs.104.80, intra-day on last Friday. 
Meanwhile, there are media reports that Indian Prime Minister, Narendra Modi wants to get his hands on the temple gold, estimated to be about 3,000 tonnes, more than two thirds of the gold held in the US bullion depository at Fort Knox, Kentucky, to help tackle India's chronic trade imbalance.Modi's government is planning to launch a scheme in May that would encourage temples to deposit their gold with banks in return for interest payments] 

11 Apr, 2015: Gold regains Rs 27,000 on global cues, buying by jewellers NEW DELHI: Gold prices rose for the second straight day and reclaimed the psychologically important Rs 27,000-mark, surging by Rs 280 to trade at Rs 27,080 per 10 grams at the bullion market today amid a firming global trend.

Besides, increased buying by jewellers to meet wedding season demand helped the precious metal to recapture the crucial level.

Silver also advanced by Rs 150 at Rs 36,900 per kg on increased offtake by industrial units and coin makers.

Bullion traders said besides a firming trend overseas, increased buying by jewellers mainly led to the rise in gold prices.

Gold in New York, which normally sets price trend on the domestic front, shot up by 1.16 per cent to USD 1,207.30 an ounce and silver by 2.07 per cent to USD 16.49 an ounce in yesterday's trade. 

In the national capital, gold of 99.9 and 99.5 per cent purity rose by Rs 280 each to Rs 27,080 and Rs 26,930 per 10 grams, respectively. It had gained Rs 50 yesterday.

However, Sovereign remained flat at Rs 23,700 per piece of eight grams in scattered deals.

In a similar fashion, silver ready rose further by Rs 150 at Rs 36,900 per kg and weekly-based delivery by Rs 310 at Rs 36,710 per kg. 

On the other hand, silver coins, however, traded at last level of Rs 55,000 for buying and Rs 56,000 for selling of 100 pieces. 

Courtesy: The Economic Times

WINNING STROKES: THINK DIFFERENT

Nifty reached my short term target of 8600 few days back. Now with today's close above 8700, we can look for higher targets as the trend for the short, medium and long term are only up. The Premium Members might have taken long positions on Nifty during the day. 

Today a buy call was initiated on Bhusan Steel Ltd at Rs.63.50--63.80, for a target of Rs.82. The stock touched Rs.73.85 intra-day before closing at Rs.70.60. What is the buzz in the counter? Join the Paid Group to get such scintillating calls. 

Yesterday's call Gitanjali Gems Ltd today flared up and reached Rs.46.25 in the BSE intra-day, before closing at Rs.45.25, up 3.76%. My another recommendation in the same space Renaissance Jewelry Ltd today moved to Rs.97.50 before cloisng at Rs.91.65, up 10.69%. And my favourite in this space P C Jeweler Ltd also shone well in the bourses today as the scrip closed at Rs.349, up 4.24%. With the inflation tiger lurking behind, the gold jewelry stocks are expected to do well in the coming days. One buy these scrips on all declines. 

My recommended Rasoya Proteins Ltd today hit another buyer freeze in the BSE. At BSE it closed at Re.0.67 up 4.69% and in NSE it closed at Re.0.70. The short term target for the scrip remains at Rs.1.20. 
My recommended Jindal Saw Ltd today moved to Rs.72.75, intra-day before closing at Rs.70.25. The Saw pipe making companies are expected to do well in the coming days.
My repeatedly recommended Jaiprakash Power Ventures Ltd today moved to R.10.44 intra-day before closing at Rs.10.34. The company would be one of the biggest beneficiaries of the coal auction. Jaiprakash Power Ventures recently bagged the Amelia (North) mine in Madhya Pradesh quoting Rs.712 per tonne, the highest among 11 firms including Adani Power, BALCO and Essar Power.
PSL Ltd hit another buyer freeze today at Rs.11.69. The name of the scrip was mentioned in this blog, few days back. 
My recommended Jindal Saw Ltd today moved to Rs.72.75, intra-day before closing atg Rs.70.25. The saw pipe making companies are likely to do well in the coming days. The next target for the scrip is Rs.82.
GMR Infrastructure Ltd today moved to Rs.18, before closing at Rs.17.40. There were recent media reports that GMR Infrastructure-led consortium bagged Rs.5,080 crore railway project. I had already given a target of Rs.22, for the scrip. Today, Ashish Maheshwari also came out with a similar target.  

Diamond Sector to Gain an Advantage From India's Foreign Trade Policy

Apr 7, 2015: The Union Minister of State for the Ministry of Commerce and Industry of India unveiled the Foreign Trade Policy (FTP) that will be in effect for the next five year term, 2015 to 2020. Diamond industry experts expressed their satisfaction with the policy, concluding that it was aimed at supporting services and exports and it would  boost the "Make in India" initiative, which is a cornerstone of the new government under the leadership of Prime Minister Narendra Modi.

The Gems & Jewellery Export Promotion Council (GJEPC), representing  one of the significant trade sectors in India, added that the policy provides the impetus to boost exports and offers a critical regulatory framework for the proposed Special Notified Zone (SNZ). The SNZ will  have a taxation regime that encourages global mining companies to sell rough diamonds directly in India and once it is operating, mining companies may bring rough diamonds, on a consignment basis, to display and sell to local buyers.

According to the GJEPC, these initiatives will provide India's diamond industry with a strong competitive advantage against other diamond trading centers, while ensuring a steady supply of rough diamonds.

There is a large segment of India's gem and jewelry sector that is MSME, or micro-, small and medium enterprises, many of whom are experiencing financial constraints and tight liquidity. The GJEPC explained that there is already a long period of time before MSMEs can record value from their foreign trade transactions, so export credit plays a significant role in facilitating business. As part of the new trade policy, there is a program for providing interest subvention on identified sectors for a period of three years and budget allocation was made available for the 2015/2016 fiscal year.

The council is the Nodal Agency for the gem sector and approves laboratories for the certification, grading and re-importing of cut and polished diamonds. So far, the agencies that have been permitted to certify and grade diamonds without  import duty to re-export include the Indian Diamond Institute Surat and the International Institute of Diamond and Grading and Research India Pvt. Ltd. Surat.

On a separate note, with the Union Cabinet approving the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which budgeted $193 million (Rs.1,500 crore) for youth skills training,  the Gems and Jewellery Skill Council of India (GJSCI) plans to train youth -- and especially those with physical or mental disabilities -- in diamond polishing and sorting. 

The GJSCI has  arranged a meeting with diamond manufacturers in the SEEPZ on April 20 to share its vision and aligns with the terms of Recognition to Prior Learning (RPL). 

Courtesy: Diamond.Net

GMR Infrastructure-led Consortium Bags Rs.5,080 Cr Railway Project 

06 Apr, 2015: GMR Infrastructure (GIL) has received letter of award (LoI) for construction of 417 Km long Eastern Dedicated Freight Corridor railway project at a cost of Rs 50.80 billion on EPC (engineering, procurement and construction) basis.

GMR Group is not required to provide significant investment for the project since it is implemented on EPC basis. Earlier in November 2014, GMR led consortium emerged lowest amongst five other bidders for the project through an international competitive bidding process.

The project funded by World Bank is divided into 2 packages i.e., from Mughalsarai to Karchana (near Allahabad) for 180 km and from Karchana to Bhaupur (near Kanpur) for 237 km in the state of Uttar Pradesh. The project involves design and construction of civil, structures and track works for double line railway on design-build lump sum basis and shall be completed in 45 months. The Eastern and Western rail freight corridor projects are expected to be game changers in the country by creating the much required rail transportation capacity.

Courtesy: www.myiris.com

Gitanjali Gems Ltd: Buy in Bulk
CMP: Rs.43.5

It is hoped that the Union Finance Minister, Mr.Arun Jaitley will soon address the important issue of reduction of import duty on gold which has given rise, to the creation of a parallel economy through gold smuggling. 

The FY 2015 CAD / GDP ratio is presently around 0.9% and is estimated to reduce to 0.3% in the next year. Therefore, a reduction in gold import duty is imminent. 

The investors are suggested to buy the scrip in bulk and keep holding, as apart from government initiatives, the company itself has taken a number of measures to boost its sales and EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortization.). 

Rajan keeps policy rate unchanged on fears of food inflation

Photo: Cravebits

Mumbai  April 7, 2015: Reserve Bank Governor Raghuram Rajan today kept policy rate unchanged awaiting clarity on impact of unseasonal rains on food inflation even as he wanted banks to pass on benefits of previous two rate cuts. 

The repo rate, at which RBI lends to the banking system, will continue to be at 7.5 per cent and the cash reserve ratio, which is the amount of deposits parked with the central bank, will remain at 4 per cent. 

"Transmission of policy rates to lending rates has not taken place so far despite weak credit off take and front loading of two rate cuts. With little transmission, and the possibility that incoming data will provide more clarity on the balance of risks on inflation, the Reserve Bank will maintain status quo," he said in the first bi-monthly policy review for 2015-16. 

Unseasonal rains and hailstorm have impacted rabi crops across North and Western India, raising fears of spike in food prices. 

Rajan, who has surprised with two rate cuts of 0.25 per cent each outside the scheduled review meetings this year, however, affirmed his commitment to the accommodative stance, but added that policy moves will be shaped by incoming data and added that transmission of rate cuts by banks will be his top-most priority. 

Apart from the transmission, other factors like food prices will also be monitored closely, he said, adding that the impact of the recent unseasonal rains will also be monitored closely. 

"Reserve Bank stays vigilant to any threats to the disinflation that is underway," he said, expecting that the price rise situation has so far faired according to its estimates.

Courtesy: Business Standard

DO YOU KNOW?

The Indian gem and jewellery sector may be encouraged with procuring finances, if ABN AMRO Bank’s proposal to set up a wholly-owned subsidiary in India, materializes. The Bank has applied to the Reserve Bank of India for setting up its operation in India, and has received an in-principle’ approval for the same, reports say. The Bank intends to primarily serve the Indian gem and jewellery sector with this office, reports add.

If this happens some of the listed entities in this space, viz: Gitanjali Gems Ltd (Rs.43.20), P C Jewelers Ltd (Rs.330.60), Renaissance Jewelry Ltd (Rs.81.60), etc would be one of the greatest beneficiaries. 

Besides, on going marriage season and upcoming festive season is likely to boost the sales of the Jewelry companies. 

Also, there were recent media reports that, India’s organised gems and jewellery retail market has started to grow at a much faster pace in recent years; than the unorganised one, since gold trade was liberalised with the scrapping of the gold control Act in 1990.

While the overall retail gems and jewellery sector is growing 10% annually, the organised retail segment is expanding 30-40% in recent years, said Balram Garg, managing director at PC Jeweller, citing an internal study. Gold jewellery makes up for 80% of the Rs.3,00,000-crore gems and jewellery market of the country. Currently, the organised segment accounts for 22%, while the unorganised one, primarily comprising local and independent stores, makes up for 78% of the retail gems and jewellery market.

Meanwhile, Gitanjali Gems reported 17-fold jump in its net profit at Rs.39.43 crore for the quarter ended December 31, 2014 as compared to Rs.2.31 crore for the same quarter in the previous year. Total income of the company increased by 48.07% at Rs.1872.41 crore for Q3FY15 as compared Rs.1264.54 crore for the corresponding quarter previous year.

On the consolidated basis the company’s net profit rose 90.27% to Rs.96.01 crore for the Q3FY15, as compared to Rs.50.46 crore in Q3FY14. The total income increased 30.62% to Rs.3604.69 crore in the quarter under review as compared to Rs.2759.6 crore in the corresponding quarter previous year.

The promoters holding in the company stood at 35.27% while Institutions and Non-Institutions held 14.04% and 50.70% respectively

On the other hand if the food inflation starts to move up then the stocks of agri-commodities could benefit. Unseasonal rains and hailstorm have impacted "Rabi Crops" across North and Western India, raising fears of spike in food prices. 

I have already recommended the speculative counter, Genera Agri Ltd (Rs.4.50) with a target of Rs.10 and Jain Irrigation Systems Ltd (Rs.63.65) for a target of Rs.71.

Now if the food inflation starts to push up the CPI or WPI then also Jewelry stocks would gain. 

Top 10 QIPs in FY15 

Relative transparency in QIP valuation, however, doesn't eliminate chances of a loss for investors. About a quarter of the QIPs issued in FY15 are underwater, with the issuer (company) stock price below the issue price. 

This ratio is about half if the issues are considered on the basis of the funds raised. Of about Rs.29,000 crore raised by India Inc through QIPs in FY15, about Rs.15,000 crore worth of issues are trading below the issue price. The biggest losses for investors were in the infrastructure sector.

Some of the best bets for QIP investors are J Kumar Infra (stock price up 127% from the issue price), ITD Cementation (up 119%), Ashok Leyland (up 106%), YES Bank (54%) and Idea Cellular (up 41.2%).

Experts blame this on opportunistic fund raising by many companies. "Last financial year, two kinds of companies raised capital - those that were highly indebted and needed capital to sustain operations and those with a good track record, which used the rally to raise capital to fund growth. The first group disappointed investors, while latter offered a win-win to all," says Nitin Jain, head (capital markets), Edelweiss Financial Services.


Infrastructure developers such as Jaiprakash Associates, GMR Infra, KSK Power Ventures, Jyoti Structures and Supreme Infra fell in the first category. They took advantage of the market euphoria about infrastructure growth, following the National Democratic Alliance government coming to power at the Centre in May last year. But the euphoria gave way to losses when growth and earnings growth fell short of expectations. The stock prices fell sharply, as investors moved to quality stocks.

Source: Business Standard

DO YOU KNOW?

IVRCL Ltd pledged 100% of promoter holdings, while others like Alok Industries have pledged 99.77% of promoter holdings, and 99.72% of promoter holding in Essar Ports has been pledged. According to a report published by the Business Standard Research Bureau promoters of 13 companies pledged more than 90% of their holdings in the December, 2014 quarter.

According to Kotak Institutional Equities, the highest increase in promoters’ pledged holdings was seen in IVRCL Ltd, Edelweiss Financial Services, Reliance Infrastructure, IL&FS Transportation, Sadbhav Engineering and Rasoya Proteins. 

Promoters who decreased their pledged holdings included Orchid Chemicals, Ballarpur Industries, Gati, Strides Arcolab, Lakshmi Vilas Bank, Radico Khaitan and Jyothy Laboratories.

Promoters of Stride Arcolab completely revoked their pledged holdings during the quarter. 

Sebi slaps Rs 30 cr fine on PVP Ventures, its director

[Editor: ......but I feel it will be of no use, as this unscrupulous CMD, will siphon the same fund from PVP Ventures Ltd creating further problems for the shareholders. SEBI should have some other mechanism to stall this wanton loot. Now, while PVP Ventures Ltd has performed very badly in the bourses (and also in terms of Balance sheet) even in this raging BULL Market; in between PVP Square Mall came up in Vijayawada funded by some of the promoters of PVP Ventures Ltd. Doesn't it look a bit strange?]

Photo: First Post

Market regulator Sebi on Friday slapped a fine of over Rs 30 crore on PVP Global Ventures  and its promoter and director Prasad V Potluri for allegedly indulging in insider trading and not complying with disclosure norms. 

The Securities and Exchange Board of India (Sebi), in its order, has imposed a penalty of Rs 15.15 crore each on PVP Global Ventures (formerly known as PVP Energy) and Potluri. PVP Global Ventures, a wholly owned subsidiary of PVP Ventures, and Potluri (who is also Chairman and Managing Director of PVP Ventures) indulged in insider trading activities. 

It was alleged that Potluri had traded in the scrip of PVP Ventures on behalf of PVP Global Ventures, while in possession of Unpublished Price Sensitive Information (UPSI) pertaining to negative financial results. PVP Global Ventures failed to make disclosure regarding sale of more than two percent stake in PVP Ventures to the company and stock exchanges within two days of transaction, thereby violating SAST (Substantial Acquisition of Shares and Takeovers) Regulation. Potluri, in charge and responsible for the conduct of PVP Global Ventures, failed to get the company to make disclosure regarding the transaction. 

In a separate order, Sebi has slapped a total fine of Rs 8 lakh on nine entities --Jagat Mohan Aggarwal and Bharat Bhushan Agarwal, Pradeep Aggarwal, Ram Piari, Ajay Kumar Goel, Kiran Goel, Saru Aggarwal, Suchita Aggarwal and Bharat Bhushan Aggarwal- HUF--for violating Takeover Regulations in the matter of Pioneer Agro Extracts Ltd . 

Courtesy: Moneycontrol.com

Energy segment would provide a big delta: GMR Infrastructure

Photo: Live Mint

03 Apr, 2015:  "The energy segment would provide a big delta since 3000 MW of coal based assets would be operational in FY16 and onwards. Also, Gas based projects would re-start and would provide fillip to profitability," GMR Infra official said in an interview with myiris.com.

Excerpt from interview Myiris had with the company management:

1. Recently CCEA approved import gas to fuel idle power plants in the country. How big and important this announcement is for GMR Infrastructure (Q,N,C,F)* and overall industry?

The Policy is a welcome step for the industry and for GMR infrastructure. This would result into ~1400 MW of the gas based projects becoming operational with a PLF of atleast 30%. For the company, it would be beneficial as this would make the operational two projects profitable and the third project would be able to service its debt and fixed expenses.

2. GMR Infrastructure announced Rs 14.02 billion Rights issue program. In January, Delhi International Airport has raised USD 289 million via bond issue. Could you through some light on how the funds will be used for the company's operations? What are benefits the company expects from new funding? 

Rights Issue is another step to deleverage balance sheet where in ~90% of the issue proceeds would be utilized to reduce corporate debt. The fund raised through the bond issue in Delhi Airport was utilized to replace the existing External Commercial Borrowings (ECB). This benefitted the company through lower interest cost and annual repayments will be replaced by a bullet maturity after 7 years.

3.  GMR Airports recently picked up additional 10% stake in DIAL for USD 79 million from Malaysia Airports Holdings Berhad (MAHB). Why this acquisition is important for GMR? Do you have any plan to increase stake in DIAL further? 

The Company has a long relationship with Malaysian Airport Holdings Berhad in our airport business. The acquisition has largely been precipitated by the desire of MAHB to exit and our intent of consolidation of stake in the prime airport of India. The acquisition is subject to approval of Airports Authority of India (AAI) and other customary approvals. GAL currently holds 54% equity stake in DIAL and post proposed acquisition of the entire stake of Malaysia Airports, the stake will increase to 64%.

4. GMR Infrastructure operates in three broad segments - Airports, Power and EPC. According to you, which segment will be the key driver for the company in the next couple of years? 

The Energy Segment would provide a big delta since 3000 MW of coal based assets would be operational in FY16 and onwards. Also, Gas based projects would re-start and would provide fillip to profitability. 

5. Narendra Modi led Indian government has announced several initiatives and policy measures to boost economy over past 10 months. Have you seen any positive changes on the ground that could help the company in the couple of years?

In the last few months, the government has taken a lot of welcome steps to improve the performance of the infrastructure sector. Some of the policy measures benefiting the company are the (a) recently completed coal block auctions in which the company won 2 coal mines, (b) recently approved policy to import gas to fuel idle gas based power plants and (c) Southward movement of interest rates consequent to fall in inflation.

6. Fiscal 2015 will be closed in next few days. Could you walk us through your journey over last one year?

> Raised Rs 15 bn through QIP and allotted 180 million warrants to promoters 

> Rights Issue at GMR Infra  -  to raise ~Rs 14 billion by issuing additional 93.46 crore shares at Rs 15 a share.

>  Delhi Airport raised ~USD 289 million through a bond issue. The issue was oversubscribed by ~16 times

> Won the fully operational Talabira coal mine (Schedule - 2) and Ganeshpur coal mine (Schedule - 3)

> EMCO - Refinancing of project loan completed. Would lead to lower interest rate and higher moratorium, thereby aligning project Cash Flow to debt repayment

> Taken over the Mactan-Cebu international airport in Phillipines in JV with Megawide Construction Corporation

> Male Airport arbitration - Tribunal has summarily rejected all arguments made by GoM, and has now declared its ruling that the unilateral termination of the concession agreement by GoM was illegal and repudiatory. Company has filed for compensation worth USD 803 million apart from damages for loss of reputation.

> Operationalised Kamalanga fully.

> Completed 95% of Chattisgarh project 

7. For financial year 2016, how do you see company's performance in terms of revenues and profit on both consolidated and segment to segment basis? 

We do not provide any guidance on the financial numbers.

Source: IRIS

Jaiprakash Power gets RBI nod for rescheduling bonds worth $200 mn 

Earlier this year, the company had informed its bondholders that it will not be able to meet repayment obligations for the bonds maturing on 13 February.

March 31 2015; Debt-laden Jaiprakash Power Ventures Ltd has delayed repayment of foreign currency convertible bonds (FCCBs) worth of $200 million by a year, following approvals from bondholders and the Reserve Bank of India (RBI). 

Earlier this year, the company had informed its bondholders that it will not be able to meet repayment obligations for the bonds maturing on 13 February. On 12 February, the company entered into a so-called interim standstill and voting agreement with some of its bondholders up to 27 February to get more time to formalize a rescheduled payment agreement. 

This agreement was later extended and would be effective till 30 April. 

Following these agreements, Jaiprakash Power convened a meeting of bondholders on 30 March in Singapore to consider the rescheduling of the company’s redemption obligaitons in respect of bonds including the extension of maturity (rescheduling) date. 

“The terms of the rescheduling were put to a vote at the meeting (in Singapore) and approved by bondholders holding 93.48% of the outstanding principal amount of the bonds,” Jaiprakash Power said in a statement. 

The central bank approved the rescheduling on Tuesday, Jaiprakash Power said. 

Further to the approval of bondholders, Jaiprakash said a so-called supplemental trust deed was executed on 31 March 2015 to give effect to the rescheduling, “including extending the maturity date of the bonds to 13 February, 2016 and putting in place an instalment-based redemption during the extended tenor, including that the company will pay $25 million on 31 March, 2015 and will pay a further $75 million upon receipt of the proceeds of the sale of its Baspa-ll power project and Karcham power project. 

In November, JSW Energy Ltd agreed to buy Jaiprakash Power Ventures’ two hydropower assets, Baspa-II Hydro-electric project and Karcham Wangtoo Hydroelectric project for Rs.9,700 crore. Debt for the Jaypee group is seen at around Rs.60,000 crore, of which Jaiprakash Power Ventures alone had debt of Rs.17,887.72 crore at the end of the September quarter. 

In the last two years, the group has been selling assets to reduce debt. In a recent deal, Aditya Birla Group’s Ultratech Cement Ltd agreed to buy Jaiprakash Associates’s two cement plants in Madhya Pradesh for Rs.5,400 crore. 

India’s banking system was weighed down by Rs.2.69 trillion of bad loans as of 30 September as two years of sub-5% economic growth, coupled with delays in securing statutory approvals and completing land acquisition stalled many big-ticket projects, hurting companies’ ability to generate cash flows and repay loans on time. 

Many corporate borrowers sought to restructure their debt, which typically means longer repayment cycles and lower interest rates and creditors sacrificing a part of the principal amount. 

As of 30 September, RBI’s corporate debt restructuring cell had approved restructuring of Rs.3.67 trillion of corporate debt since it was formed in the early 2000s. 

Of this amount, Rs.2.62 trillion of debt was still being actively recast; the rest was owed by borrowers who had either completed their CDR exercises successfully or had failed to do so.

Courtesy: Live Mint

GMR Infrastructure Ltd: Rights Issue

GMR INFRASTRUCTURE LIMITED informed about Rights Issue of Equity Shares, the details of which are given below:

• Ex-Date: 11-03-2015
• Record Date: 12-03-2015
• Ratio: 3:14 @ Rs.15/- per share
• Last Date of Application: 07-04-2015 (before 3:00 P.M)

GMR Infrastructure Ltd in order to raise  Rs.1,400 crore came out with a rights issue, the subscription for which kicked off on 24.03.2015 & will continue till 08.04.2015.  Eligible equity shareholders will get three equity shares for every 14 equity shares held in the company as on March 12, 2015. 

The offer price is fixed at  Rs.15 which is 12-13% discount to its last closing price of Rs.16.85. It has already secured Rs.1,250-crore funding from its parent company GMR Holding. 

Meanwhile, there were media reports that GMR Infrastructure will acquire shares from investors in its subsidiary GMR Airports as the company looks to consolidate its holdings.

GMR is a diversified group with presence in airports, power and other sectors.

In a regulatory filing, GMR Infrastructure said it has "decided to exercise the Call Option requiring the respective investors to transfer the Compulsorily Convertible Preference Shares (CCPS) of GMR Airports Ltd to the company".

Valuation: The company's trailing 12-month (TTM) EPS was at Rs.0.23 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio is 73.24. The latest book value of the company is Rs.16.45 per share. At current value, the price-to-book value of the company is 1.02.

GMR Infrastructure’s consolidated debt as on March 31, 2014 was Rs.45,000 crore. It will come down as 90% of the rights issue proceeds will be used to repay debt.

The promoters have already secured funds to subscribe to their share of the rights issue. With the capex phase behind and the last large power project (1.4 Gw Chhattisgarh power plant) to be operational shortly, GMR’s cash flow is set to improve in the coming days.

Over the past few years, GMR has been focusing on strengthening its balance sheet. It began with hiving off assets and it is now infusing equity.

According to analysts, such de-leveraging will bolster operational improvement through commissioning of under-construction projects.

In the past 18 months, through strategic divestment, the company has released equity worth Rs.3,834 crore and reduced its liabilities by Rs.6,180 crore. The company’s capex is now close to end and its assets have now moved from construction to operational phase.

There were also recent media reports that GMR Infrastructure plans to raise Rs.4,000 crore over the next one year through divestment of assets and share sale to reduce debt and ease cash flow.


The loss-making infrastructure company plans to divest projects, monetise land assets and sell stake at holding company level to raise funds. It has put a freeze on capital expenditure for the next 2-3 years. 

The lead bankers for the rights issue are JM Financial, Axis Capital Holdings, ICICI Securities and SBI Capital Markets.

WINNING STROKES: THINK DIFFERENT

Yesterdays' recommendation Jindal Saw Ltd today moved to Rs.66.40 in the BSE before closing at Rs.65.95 up 11.87%. The stock is heading towards Rs.72-76 in the coming days. 
Gotanjali Gems Ltd today moved to Rs.41.75 intra-day before closing at Rs.41.30 in the BSE up 4.42%. India's gems and jewelry sector has been one of the fastest growing industries globally. The sector has contributed 6 - 7% to India's GDP and provides gainful employment to around 2.5 million people. 

Today GMR Infrastructure Ltd closed above Rs.15.70, which is positive for the bulls. Meanwhile, the company recently announced that GMR Airports Limited (“GAL”), a subsidiary of GMR Infrastructure Limited, on March 24, 2015 entered into an agreement to acquire 24,50,00,000 shares of face value of Rs.10 each, representing 10% equity stake in Delhi International Airport Private Limited (“DIAL”) from Malaysia Airports (Mauritius) Private Limited (“Malaysia Airports”) for a consideration of USD 79 million. DIAL is a special purpose vehicle formed to carry out development, operation and management of Indira Gandhi International Airport, Delhi (“Delhi Airport”). GAL currently holds 54% equity stake in DIAL and post proposed acquisition of the entire stake of Malaysia Airports, the stake will increase to 64%.  The scrip will slowly move towards Rs.22 in the coming days. 

Karuturi Global Ltd (Rs.1.63) is consolidating around Rs.1.59--1.70, before taking a major stride. According to my close sources, there would be an improvement in both its topline and bottomlines in the next 12 months. 

Jaiprakash Power Ventues Ltd which closed at Rs.10.22, should cross Rs.14-15, in the next 3-4 months time frame. It is a must buy for every investor. 

Today a buy (call) was given on Nifty, to the Paid Group members with a target of 8600. The Sensex closed with a gain of 517.22 points, while the Nifty closed at  8,492.30 up 150.90 points.  Today, DIIs were net of buyers of Rs.651.67 Cr of shares, while FIIs shares worth worth Rs.240.34 Cr. Those who have not sold their Nifty futures' open positions, can keep holding with a SL at 8410. 

DO YOU KNOW?

A well known investment weekly has given a buy recommendation on Jindal Steel and Power Ltd at Rs.157. This makes a case to buy the shares of Jindal Saw Ltd (Rs.58.95) as both the shares, move in rhythm. 

Moreover, the said publication, also recommended Srikalahasthi Pipes Ltd, the erstwhile, Lanco Industries Ltd, the pig iron,  iron casting & spun pipes and cement manufacturing company at Rs.131; in this week's edition.

Meanwhile, there were recent media reports that Jindal Tubular (India) Ltd, a wholly owned subsidiary of Jindal Saw Ltd has agreed to operate and maintain certain identified facilities of PSL Limited--this is a short term arrangement for one year which may be extended or modified, based on meeting of certain covenants and mutual acceptance at the appropriate time.

Besides, Jindal Saw Ltd has recently sent a press release that Jindal ITF Limited, a wholly owned subsidiary of the Company (i.e. Jindal Saw Limited) has approved an internal re-structuring of its operations by way of demerger and vesting of its infrastructure business undertaking into JITF Urban Infrastructure Services Ltd, another wholly owned subsidiary of the Company and its waterways business undertaking into Jindal Shipyards Limited, again a wholly owned subsidiary of the Company by way of court sanctioned composite scheme of arrangement U/s 391, 394 and other applicable provisions of the Companies Act, 1956 and under applicable provisions of the Companies Act, 2013. The effectiveness of the scheme is subject to requisite approval by the shareholders, secured and unsecured creditors and sanction by the Hon'ble High Court of Judicature at Allahabad. 

Last week, the shares of Jindal Steel and Power jumped over 6% to hit intraday high of Rs.160 on the Bombay Stock Exchange after the Delhi High Court said that government's decision to cancel the bid of Jindal Power Ltd (JPL) for two Chhattisgarh coal mines by annulling the tender process and allotting them to Coal India Ltd (CIL) is "prima facie wrong".

"This does not smack of fairness. Prima facie we feel that it is wrong," a bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva said in response to Additional Solicitor General (ASG) P S Narasimha's argument that the Coal Ministry had the right to take the decision.

"The more we look into it, the more we feel there should be an interim order. We are not impressed," the court said in response to the ASG's arguments opposing any interim order.

The court also gave adverse observations on one of the reasons given by the Coal Ministry to annul the tender process that comparing the price fetched in auction of other mines for power sector, the highest bid for Gare Palma IV/2 and IV/3 in Chhattisgarh did not reflect fair value.

"This is like comparing apples to oranges," the bench said in response to the argument and added that the Ministry's decision to annul the tender and then allot mines to CIL "does not leave a good taste in the mouth".