Indian IPO

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Thursday, December 28, 2006

Nitin Fire Protection files DRHP with Sebi

Nitin Fire Protection Industries is broadly focused in two areas one is fire protection, safety and security, including intelligent building management systems and second one High Pressure Seamless Cylinders and Refueling Systems. The company has filed its draft red herring prospectus, DRHP with the Securities & Exchange Board of India, Sebi to enter the capital market with its initial public offering of equity shares, as per press release.

The company proposes to issue 38,50,000 equity shares o Rs 10 each for cash at a premium to be decided through the book-building process. Of this, the company has proposed to reserve 1,50,000 equity shares for allotment to eligible employees and the net offer to public would thus be reduced to 37,00,000 equity shares.

The net issue will constitute 29.37% of the post-issue paid-up capital of the company.

Of the net issue to public, upto 50% shall be allotted to qualified institutional bidders, of which upto 5% shall be reserved for allotment to mutual funds only. Further, upto 15% of the offer shall be reserved for allocation to non institutional bidders and atleast 35% shall be available for allocation to retail individual bidders.

Karvy Investor Services and UTI Securities are the book running lead managers to the issue

Wednesday, December 27, 2006

Central Bank chairman says IPO on schedule

Central Bank of India, a leading public sector bank of India, will come out with its initial public offering, IPO within three months.

The bank’s chairman and managing director, HA Daruwalla, has said in no uncertain terms that the IPO would come by March, 2007, even as her visit to the city on Friday met with protests from the bank’s union, which is opposing the CMD and her policy on internal transfers.

“The company cannot tolerate any move by the union which hinders the institution’s progress,” Daruwalla is learnt to have told a meeting of over 200 Central Bank officials.

She was in the city on occasion of the bank’s 96th year of formation. Union members resorted to slogan shouting, protesting various policies, including that of transfers.

The bank has been facing hurdles from the union since 1999, sources said. When contacted, a union leader declined to comment.

“Only those who are underperforming need to be afraid of transfers,” Daruwalla is believed to have told the meeting. She also urged the officials to work towards regaining the lost glory of the bank, reports DNA.

Daruwalla took the reins of the bank as CMD 18 months ago and the bank has been transforming itself under her leadership. The bank is aiming to increase the number of branches under the core banking solution, CBS platform from the existing 251 to 700 by March 2007, an official said. The bank will also increase its ATMs from 230 to 300, sources said.

Central Bank is preparing a new balance sheet for the quarter ending December after which it will file a prospectus with Sebi for the IPO, sources said.

Central Bank has been ranked number one in customer service recently by a foreign organisation, Daruwalla said.

The company’s financial performance has improved with net profits almost doubling from Rs 108 crore in the second quarter of 2005 to Rs 215 crore in the corresponding period this year, sources said.

Central Bank aims to increase its profit to Rs 652 crore by March 2007, sources said.

The chairman has asked us to stick together to regain the bank’s past glory, an official present at the meeting said. The company has about 41,000 employees currently

Shapoorji Pallonji readies IPO for arm

The skylines of cities worldwide are dotted with constructions of Shapoorji Pallonji Group, be it the cricket stadium in Guyana for the 2007 World Cup or the Barakhamba underground station in New Delhi. The group, best known for being the single largest private shareholder in Tata Sons with an 18.5% stake, is quietly preparing to take one of its group company — Afcons Infrastructure — public. If it does, it would be the first time that the low-profile group would be inviting investors to acquire a share in its company, reports The Times of India.

Forbes Gokak is the only group company whose shares are publicly traded, but the diversified textiles-to-consumer durables firm was already listed when group patriarch Pallonji Shapoorji Mistry bought it from the Tatas.

A source said Afcons (formerly known as Asia Foundation & Construction Company) has appointed Enam Financial Consultants as an advisor to the transaction. The company may offer shares to the public in the first quarter of 2007. Like its chairman Pallonji Shapoorji Mistry, the fifth richest Indian, the group too has always maintained a low profile and its business ventures have stayed private.

Afcons, with a turnover of Rs 700 crore, undertakes large civil engineering projects in India and abroad focussing on jetties, docks, harbours, roads, bridges and special foundations. The group holds 98% stake in Afcons and the balance 2% is held by employees. Afcons became a part of the SP group in 2000 following the acquisition of ICICI Bank's 30% stake. It later hiked its stake in the company by buying out the employees' holdings.

In the 90s, Afcons was not in the best of financial health as a general economic slowdown and capital shortage hit its businesses. The company underwent a debt restructuring with ICICI Bank converting its debt into equity. With the Shapoorji Pallonji group coming into the picture, Afcons' revenue has surged. Its turnover and net worth has increased from Rs 295 crore and Rs 115 crore in 1999-2000 to Rs 549 crore and Rs 191 crore in 2004-05, respectively.

In a couple of years, Afcons may surpass group flagship Shapoorji Pallonji & Company in terms of revenues, thanks to its bulging Rs 3,000 crore order-book.

Paras enters healthcare, to invest Rs 400 crore

It’s a story from health to health. After milk, Paras group has forayed into healthcare.

With one fully functional hospital in Gurgaon, the group now plans to invest another Rs 400 crore to set up new hospitals as well as make acquisitions in the national capital region. The company has plans to set up two super-speciality hospitals with an investment of Rs 150 crore each.

“We have already made land acquisition for our green-field project in Noida and are in the process of finalising the plan,” the managing director Paras Hospitals Dr Dharmendra Nagar said. Another hospital is expected to come up in Shahdara, he added. Both these hospitals will have a capacity of 250 beds. The company is also looking at acquiring two hospitals in Delhi. This will need an investment of Rs 60-70 crore per hospital, the MD said, reports The Economic Times.

Through our brownfield projects we want to cater those areas where medical health facility is still unavailable. “In the case of Gurgaon we found that there was no big hospital to cater to the needs of the region and that is how we set up the hospital there with an investment of Rs 100 crore,” the MD said.

As far as funding of these projects is concerned Paras group has tied up with KPMG as consultant. They are also looking at funds from private equity investors in the near future and are expected to float an IPO by the first half of next year, according to Dr Dharmendra Nagar.

House of Pearls Fashions makes pre IPO placement

House of Pearls Fashions, HOPF has made a pre IPO placement to Lesing Mauritius. Lesing is led by investment from UK based multi millionaire of Indian origin Tom Singh.

The deal, which is worth a modest Rs 9 crore, is a part of the fund raising programme of the ready-to-wear apparel company, reports The Economic Times.

Lesing would be picking about 1.35 lakh shares at a price of Rs 660 per share. Pursuant to the pre IPO deal the number of equity shares to be issued to the public in the IPO would get reduced from the proposed issue size.

As per the draft filed with Sebi the company was to issue 61.2 lakh shares constituting 34.21% of fully diluted post issue equity share capital of the company assuming the green shoe option is fully exercised.

The lead investor in Lesing is Tom Singh, one of the wealthiest businessman in Britain, who founded New Look chain of high street shops. It operates more than 750 stores in Europe spread across UK and France among other markets. It is primarily known of retailing clothing, lingerie and shoes.

Applabs Tech eyes buyouts, plans IPO

Applabs Technologies, a global software testing and development services company, is scouting for acquisitions and also considering the initial public offer, IPO route to fund these acquisitions.

"If we maintain this momentum of growth then it is conducive to think on these line. We would be making a few decisions very shortly as our focus has been growth through acquisitions and for that you need funds," says Sashi Reddi, CEO, Applabs Technologies.

Despite a disappointing end to its merger plans with VisualSoft and eSolutions early this year, the company (expecting to touch USD 70 million by March 2007) made news with the acquisition of the UK-based IS Integration for USD 37 million (Rs 170 crore), reports Business Standard.

With this acquisition, Applabs acquired foothold in the UK. Till then, it had a strong presence in the US and India.

Additionally, following the transition AppLabs now has an increased portfolio of services, encompassing; product testing, product development, offshore testing and banking, insurance and financial services; retail; utilities; public sector; technology and telecommunications sector expertise.

The software testing market is estimated to be around USD 13 billion out of which the outsourced part is USD 3 billion with India's share being about a billion.

"Of this billion dollar market players such as Infosys, TCS, Wipro and the likes take the chunk of it whereas third party players such as Applabs have eyes on USD 300 million. Applabs has about 7% share of this segment," says Reddi.

Despite this the company is undeterred about the competition and Reddi has reasons to be confident. "What we have seen in the US and UK is that customers do not prefer to give development and testing work to the same company," he says. India too is following the trend.

A case to point out is Bombay Stock Exchange. While the software was developed by CMC, the testing part was done by Applabs. Similarly, in case of Pantaloon, Applabs did the testing for their security software whereas it was developed by some other company.

Reddi reasons that a third party role in the testing makes sense as there is someone from the customer side who would certify on the product.

Thursday, December 21, 2006

Alpa Labs files DRHP with Sebi; plans 9.5mn shares IPO

Alpa Laboratories, a pharmaceuticals formulations company, has filed a draft prospectus with Sebi to enter the capital market with an IPO of 95 lakh equity shares of Rs 10 each through a 100% book building process, reports The Hindu Business Line.

Of the shares on offer, 2.50 lakh shares will be reserved for employees and the net offer to the public will be 92.50 lakh shares.

50% is being reserved for qualified institutional bidders and 15% for non-institutional investors.

The remaining 35% is reserved for allotment to retail investors on a proportionate basis.

The issue will constitute 44.06% of the fully diluted post-issue equity capital of the company.

The lead manager for the issue is Allianz Securities and the registrar will be Bigshare Services.

The company is also expanding its existing production capacity and widening its product range by entering into segments such as probiotics, prebiotics and pre-filled syringes.

For the proposed expansion, the company is setting up a new plant at Pigdamber, Indore in Madhya Pradesh at a cost of Rs 42.35 crore.

Wednesday, December 20, 2006

PFC public float in February

State-owned Power Finance Corporation's proposed initial public offering, IPO is likely to be launched by February, the Power Secretary, R.V Shahi, said, reports The Hindu Business Line.

PFC plans to sell 10.22% of its post issue capital of 117 million shares to the public through the IPO. The Government currently holds 100% equity in PFC. The Union Cabinet earlier gave its go-ahead to Rural Electrification Corporation, REC, National Hydroelectric Power Corporation, NHPC and Power Grid Corporation of India, PGCIL, besides PFC, to tap the market to raise capital for expansion. "IPOs of other three companies will take place in March-April," Shahi told reporters at the sidelines of an energy seminar here.

He also said that North Eastern Electric Power Company, NEEPCO, which is also completely owned by the government, is also planning to launch an IPO.

"We have sent the proposal to the Cabinet for approval," he said. NEEPCO, which executes power projects in the country's North Eastern States, would offer 10% fresh equity in the market, he added.

Cambridge Technology Enterprise IPO opens on December 29

Cambridge Technology Enterprise, a technology solutions provider for mid-sized companies in the US, is entering the capital market with a public issue of 63.15 lakh equity shares of Rs 10 each for cash at a price of Rs 38 per share (including premium of Rs 28) aggregating Rs 24 crore, reports The Hindu Business Line.

The issue opens on December 29 and closes on January 9, 2007. While the promoters would be contributing about Rs 8.58 crore and allotted 22.57 lakh shares at Rs 38, Centrum Capital is being allotted 5,000 shares.

Centrum Capital is the lead manager for the issue and Bigshare Services is registrar.

The IPO has been graded Care IPO Grade 2 by CARE.

A SEI CMM Level 5 company Cambridge provides solutions and services and helps enterprises transform their business. This it does through a services oriented architecture and has clientele in verticals such as energy, utilities, insurance, financial services, logistics among others.

Bharat Oman plans Rs 1000cr public offer

Bharat Oman Refineries will make its initial public offering, IPO of Rs 1,000 crore in 2007 to raise money for the Bina Refinery in Madhya Pradesh, Ashok Sinha, chairman and managing director of BPCL, has said at a news conference here.

Bharat Oman was earlier an equal joint venture between BPCL and Oman Oil Company. Currently, Oman Oil holds only 2% stake in the venture. BPCL will offload 25% stake through the IPO, said Sinha.

Sinha said that the greenfield refinery project would cost about Rs 10,378 crore; a loan of Rs 6,400 crore has already been tied up with a consortium of 20 banks led by the State Bank of India. The equity component would be brought in over the next 12 months. This would include equity infusion by BPCL, strategic investors, as well as the funds raised through the IPO.

Scaling up capacity

Sinha said the refinery would have six million tonnes, MT per year capacity, which can be scaled up to nine MT per year. It will produce Euro IV compliant products and is expected to be operational by end of 2009, he said.

Sinha said that 4% of the Bina refinery project has been completed. For the refinery, a 1,000 km-long pipeline from Wadinar in Gujarat to Madhya Pradesh is being constructed, he said. The Madhya Pradesh Government has given local sales tax concessions of Rs 250 crore per annum, along with waiver of central sales tax for a period of 15 years to the refinery project.

He said that currently BPCL and all its group companies have a refining capacity of 20 MT; by 2009 this is expected to increase to 30 MT. The increase in the refining capacity will come through expansion of the Kochi Refinery from 7.5 MT to 9 MT and also through the new refinery in Bina, he said.

Sinha pointed out that the Mumbai Refinery in the current year attained full capacity utilisation of 12 MT. The Mumbai-New Delhi pipeline is also now completed; the pipeline would be operational by New Year.

Thursday, December 14, 2006

Subhiksha's float in second half of 2007

Discount retailer Subhiksha Trading Services is planning its initial public offering, IPO in the second half of 2007, reports Business Standard.

While announcing its plans to open 1,000 outlets across 10 states in the country by 2007 with a total outlay of Rs 500 crore, Subhiksha MD R Subramanian said, “The IPO is more for listing than raising money. It is to give liquidity to the shareholders.”

Subhiksha plans to open 180 stores across eight cities in Maharashtra at an investment of over Rs 100 crore. It will open as many as 80 outlets in Mumbai to be operational in the next four weeks.

Other cities where the company start its stores are Pune, Kolhapur, Sholapur, Sangli, Nashik, Aurangabad and Nagpur.

Subramaniam said, “With Maharashtra we will complete the final leg of our phase I (Rs 300 crore) expansion plan, meeting our 600-store target. We will shortly undertake our phase 2 expansion debuting in five states – Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal – and also in Chandigarh. We hope to hit the 1000-store mark during 2007.”

At present, Subhiksha has over 450 stores in five states with over 1 million sq ft of retail space.

The retail chain operates in four verticals – fruits and vegetables, pharmaceuticals, FMCG and telecom. Its direct supply arrangements with manufactures helps it reduce the supply-chain costs, in turn helping it keep prices of all products much lower than the market levels.

Commenting on the recent industry speculation that other retailers were in the lookout for acquiring Subhiksha, Subramanian said, “We categorically deny any discussions with any company. Speculation or claims in this regard are baseless. We have no intention to sell the company. On the contrary, constantly expanding, we are not averse to buying anything suitable.”

The MD said Subhiksha expected to more than double its revenues in 2006-07 – to Rs 750 crore from Rs 330 crore – in the year ending March 2007.

Tuesday, December 12, 2006

Omaxe plans to raise Rs 15bn via IPO

After the good performance of Parsvnath Developers in the capital market, Omaxe is planning to raise Rs 10-15 billion with an initial public offering, IPO, reports Business Standard.

The company has plans to file the prospectus for its IPO with the Securities & Exchange Board of India, Sebi in the next 10 days.

Omaxe seems to have reversed its priorities of raising USD 100 million of private equity followed by an IPO. The company is keen on its expansion with the IPO.

The burgeoning appetite for realty stocks in the country is evident from recent reports of real estate companies raising over USD 4 billion by March 2007 from listings in India and overseas.

Arvind Parakh, Omaxe`s chief executive officer said, `In the last two months we have raised over Rs 3 billion as debt from banks and financial institutions. We are also looking to raise onshore and offshore debt through structured instruments, for which talks are on.’

He added that a combination of debt and equity would tie up the company’s long term expansion plans.

Besides, Omaxe will also be looking at project specific joint ventures with foreign partners. Recently, it forged a 50:50 joint venture with Azorim International, an Israeli company, for a 20-acre township near Surajkund, Haryana.

Based on the current market rates, Azorim has paid the first instalment of Rs 1,212 million for its share in the land that Omaxe had purchased earlier.

The starting price for apartments, penthouses and bungalows - the size of which will vary between 4,000 and 8,000 square feet is Rs 15 million. The entire cost of the project is likely to be Rs 8500-9500 million.

MindTree Consulting files DRHP with Sebi

MindTree Consulting, an international IT and R&D services company that delivers business and technology solutions through global software development, has filed its draft red herring prospectus, DRHP with Securities & Exchange Board of India, Sebi to enter the capital market with an initial public offering, IPO of equity shares, as per press release.

The company proposes to offer 55,93,300 equity shares of Rs 10 each. The issue comprises of a net issue of 49,40,740 equity shares of Rs 10 each to the public and up to 3,72,900 equity shares of Rs 10 each will be reserved for subscription by eligible employees and upto 279,660 equity shares of Rs 10 each will be reserved for subscription by business associates.

The issue is being made through the 100% book building method in accordance with the Sebi. The issue will constitute 15% of the post-issue capital of the company and the net issue will constitute 13.25% of the post-issue capital of the company.

Of the net issue, 60% is being reserved for allotment to qualified institutional buyers, of which 5% will be reserved for allotment to mutual funds. A further up to 10% will be allotted to non-institutional investors and the balance up to 30% will be allotted to retail investors.

Kotak Mahindra Capital Company and JM Morgan Stanley are the book running lead managers, J P Morgan India is a co - book running lead manager and Macquarie India Advisory Services is a lead manager to the issue.

Monday, December 11, 2006

Fortis plans Rs 2250cr expansion by 2010

Ranbaxy Group company, Fortis Healthcare is planning a mega expansion, including through acquisitions, a move that can entail an investment of over Rs 2,250 crore by 2010, reports agencies.

The Delhi-based healthcare firm, which has sought the help of global consulting firm McKinsey for its expansion plans, is looking to have a total of 35 to 40 hospitals in north, south and west India in the next four years, an industry source said.

"The expansion will include both organic and inorganic route and by the end of it the healthcare firm is likely to have a total bed capacity of 6000-8000, as against the current 2000 beds," the source said.

As per the plans, Fortis is planning to have at least 20 hospitals in North India and another 15-20 in South and West Indian regions, the source added.

When contacted Fortis Healthcare managing director Shivinder Mohan Singh declined to comment on the future plans stating the company was currently under the IPO process and it could not make statements beyond what has been stated in the prospectus filed with Sebi.

The company is planning to raise about Rs 730 crore from its upcoming IPO to retire debt incurred while acquiring Escorts Heart Institute and Research Centre as well as funding of its three ongoing projects in north India.

The source, however, said Fortis is actively pursuing expansion of its hub and spoke model along with its La Femme facilities, which provide comprehensive healthcare facility to women.

Friday, December 08, 2006

SBI may float follow-on equity public issue next fiscal

State Bank of India, SBI may come out with a follow-on public issue of shares in 2007-08 (Apr-Mar), chairman O P Bhatt said, reports CMW.

"The Reserve Bank of India, RBI is currently holding 59.7% in the bank, and norms provide that it cannot fall below 55%. Going by that, we can get so much more capital (by diluting upto 4%) from the market. We are looking at public float next year," Bhatt told reporters on the sidelines of a conference on globalisation.

Bhatt also said the bank will raise Rs 20 billion via Tier-II capital by March.

The central bank had proposed to transfer its 59.7% stake in State Bank to the government, as per the recommendations of Narasimhan Committee report on banking sector reforms. The Narasimhan Committee had suggested that a regulator should not be the owner of a bank. The stake transfer, likely to take place in June, is expected to be cash neutral.

Parliament is also scheduled to discuss an amendment to the SBI Act, which will enable reduction in the central bank's stake in SBI to 51%. Besides reducing the floor on RBI holding in India's largest commercial bank, the amendments will allow State Bank to issue preference shares, split ordinary stock, issue bonus shares as well as increase its authorised share capital.

The amendments may be taken up in the current session of parliament that ends on December 19.

ONGC's objection may hit Cairn's IPO

Oil major ONGC, a 30% equity partner with Cairn Energy in the Barmer oil blocks, has shot off a letter to the market regulator Sebi objecting to some of the disclosures made in the draft red hearing prospectus, DRHP filed by Cairn India for its forthcoming public issue, reports The Economic Times.

ONGC has written to Sebi, objecting to what it describes as “partial disclosure of facts” which it says is impacting the credibility of its subsidiary MRPL.

ONGC CMD R S Sharma said: “We have drawn the attention of Sebi and have asked for full disclosures instead of partial facts which is impacting MRPL’s credibility.” The Cairn India IPO is set to open on December 11 and it remains to be seen what happens over the next few days, given the objections raised by ONGC.

“The DRHP states that Cairn’s production schedules for crude may get delayed due to MRPL’s failure to keep its commitment on building the pipeline. But this does not represent all the facts,” he said. “MRPL is under no liability to build the pipeline. We had offered to build it provided we could recover the cost through the discounts,” he said. Moreover, the DRHP does not mention that Cairn and MRPL had signed a joint letter dated June 30, 2005, to build a well-head refinery at Barmer.

“The DRHP has failed to make full disclosures and putting out only a part of the facts has an impact on MRPL’s image and credibility. We would like this to be amended at the earliest before the IPO opens,” Mr Sharma said.

The controversy over the crude offtake has been going on for some time. While Cairn, as the operator of the field, has maintained that it is ready to offer its crude to any company nominated by the government.

MRPL, had been designated as the nominated company, which would offtake the crude from these fields. However, ONGC has maintained that it would be ready to buy the crude from Barmer only if it is economically feasible.

Cairn Energy, which is now floating its Indian subsidiary, is in the last leg of its public issue. Out of total offer of 30.35% equity, the company has made a pre-IPO private placement of around 12% or 20.96 crore shares at Rs 176.80 per share to Petronas, Videocon, Black Rock, Petro Drill and Citibank for approximately Rs 3,700 crore (USD 823 million).

Idea Cellular files DRHP with Sebi

Idea Cellular, an Aditya Birla Group company, has filed its draft red herring prospectus, DRHP with the Securities and Exchange Board of India, Sebi for a proposed initial public offer, IPO of equity shares of Rs 10 each for cash at a premium to be decided through a 100% book-building process aggregating to Rs 25,000 million, as per press release.

The company proposes to reserve equity shares amounting to Rs 500 million for allotment to eligible employees of the company with the balance of Rs 24,500 million to be available for allotment to public.

Of the total net issue, the company proposes to reserve 60% to be allotted on a proportionate basis to qualified institutional buyers (as such term is defined under applicable Indian laws and regulations), QIBs, of which 5% will be allotted to mutual funds (as defined under applicable Indian laws and regulations). A further 10% will be reserved for allotment to non-institutional buyers and the balance 30% will be reserved for allotment to retail investors.

The company proposes a green shoe option not exceeding Rs 3,750 million in excess of the equity shares that are included in the issue of Rs 25,000 million.

The company is considering a pre-IPO placement of equity shares not exceeding 15% of the total issue of Rs 25,000 million. The net issue would be reduced to the extent of any pre-IPO placement.

The company is one of the leading mobile operators in India and currently operates in 11 Circles comprised of one metropolitan Circle, three category A Circles, six category B Circles and one category C Circle. The company ranks amongst the top three operators in six of its 11 Circles.

Cabinet OKs National Hydroelectric Power's IPO

The Cabinet Committee on Economic Affairs approved the initial public offer, IPO of shares of National Hydroelectric Power Corporation, NHPC, reports CMW.

"The IPO would not exceed 24% of NHPC's share capital," Priya Ranjan Dasmunsi, minister for information and broadcasting, told reporters.

"The IPO will be in tranches from domestic/external markets," he said. Dasmunsi said the IPO would help NHPC to raise the resources to meet power generation capacity targets.

NHPC currently has an authorised capital of Rs 150 billion and paid-up capital of Rs 103.5 billion. The government currently owns 100% stake in NHPC.

Last month, the government had approved the IPOs of three other state-run power companies - Power Grid Corp., Power Finance Corp., and Rural Electrification Corp.

Saturday, December 02, 2006

Kovilpatti Lakshmi Flour Mills to float IPO

Kovilpatti Lakshmi Roller Flour Mills is coming up with a public issue.

Suresh Jagannathan, Managing Director of Kovilpatti Lakshmi Roller Flour Mills says that haivng acquired Eltex in August 2006, they have already started preliminary trials and basic production. The company plans to raise about Rs 14.3 crore through public issues.

“We are hoping that the ramp up would be complete and we would be able to achieve our full capacity by March 2007,” he enthuses.

Apart from that they are also planning to go in for value added manufacture of sub-assemblies and components, both for the auto industry as well as the general engineering industry.

“Currently half our revenues are from the flour millling division and the other half come from textile division while the sheet metal unit is a very small contributor. We feel that upgrading our engineering units would help us for the future,” he analyses

Idea, AV Birla to divest Rs 2000cr

With the explosive growth of their subscriber base, telecom companies are all looking at capital markets to mop up funds to fuel their expansion plan, reports Hindustan Times.

Idea Cellular, the fifth largest operator in the country and the flagship telecom venture of AV Birla Group, has decided to enter the capital market to mop up between Rs 1700 and Rs 2000 crore.

The company has appointed JM Morgan Stanley, Merrill Lynch among others as book-runners for the proposed initial public offer, IPO, which is expected to be ready by January end. The company will file the draft red herring prospects, DRHP in the first fortnight of December.

Since, under Sebi norms, the minimum float size is 10%, the company will divest between 10% and 12%, said a highly placed investment banking source.

“The last private placement made the promoters is at a market capitalisation of Rs 15,000 crore (Rs 150 billion). The proposed float is expected to be at 10% to 20% premium of the private placement price,” he added. AV Birla Group recently divested 35% stake in the company to a clutch of private equity firms.

However, this is a fresh issue of shares, where the proceeds will be utilized by Ideal Cellular for capital expenditure. After the proposed issues, the promoters stake will come down to around 58%.

Besides strengthening the existing networks, the proceeds from the proposed IPO will be used to roll out Idea Cellular's GSM network in Mumbai and Bihar, said a senior company official.

Since subscriber base growing very rapidly, the company needs to have a strong network in the existing circles as well as a foot print across the country.

Idea Cellular has a subscriber base of 11 million. In the last financial year, the company posted revenues of around Rs 4000 crore (Rs 40 billion) with a earning before interest depreciation, and tax amortization, EBITDA of 35%.

In comparison, industry leader Bharti Airtel has a market cap of Rs 1,17,729 crore (Rs 1,177.29 billion), reported revenues of Rs 11,660 crore (Rs 116.60 billion) in the last financial year, and registered EBIDTA of 37.4%.

The second largest listed telecom venture - Reliance Communication, has a subscriber base of 27.6-lakh and market cap of Rs 86,344 crore (Rs 863.44 billion).

Macquarie Research, one of the leading research firms, has revised its projection for India's wireless subscriber base. Its latest report says India’s wireless subscriber number will reach 400 million by March 2010. Its earlier estimate was 350 million during the same phase. The current subscriber base is of around 140 million.

According to report, the increase is being driven by better coverage by operators, a further reduction in handset price, and easing of spectrum constraints by first half of 2007 on new 3G spectrum and additional 2G and 2.5G spectrum allocation.

PFC to file DRHP by mid-December

State-run Power Finance Corporation, PFC will file a new draft red herring prospectus, DRHP with the Securities and Exchange Board of India, Sebi by the middle of December for its initial public offer, IPO of 10.22% post-issue capital. This was necessitated after following the last week’s cabinet decision, reports The Financial Express.

The corporation had filed a prospectus with Sebi in June with for 10% IPO, and 5% disinvestments.

However, following strong objections raised by the Left parties, the Centre put on hold the company’s IPO and disinvestments in other government undertakings. Sources said, “PFC CMD VK Garg on Thursday met Sebi officials and said the company will file new a DRHP once it receives the government’s order.”

Sources said, according to a Cabinet decision, the entire proceeds from the proposed IPO would go to the PFC and not to the government.

According to sources, “the PFC desires to go to the public before the end of current fiscal. However, a decision in this regard will be taken only after taking into account the market apptite and various IPOs in the market.”

Meanwhile, Garg said the corporation alone would provide finance worth USD 30-35 billion for the proposed capacity addition of 66,463 MW during the 11th Plan period.

The PFC’s disbursement will increase to USD 6-7 billion by 2012 from USD 2.5 billion in 2005-06. In the current fiscal, the total disbursement will increase to USD 3.5 billion.

From 2012 onwards, the PFC’s annual disbursement would be USD 6-7 billion, he added.

Garg was speaking at the US-India business summit jointly organised by the Centre, the US department of commerce, FICCI and CII. Garg said financing India’s power sector would not be an issue as an adequate payment security mechanism comprising letter of credit, escrow agreement and open access had been provided for.

Talking about the present position on the development of ultra-mega power projects, Garg said the PFC would open bids for Sasan and Mundra projects on December 7, while price bids would be opened on December 14.

The PFC has been roped in by the power ministry as a nodal agency to implement the ultra-mega power project programme.