India Opens Aviation Industry to Overseas Investors

By Abhijit Roy Chowdhury and Bibhudatta Pradhan - Sep 15, 2012

India threw open its retail and aviation industries to foreign investment as a newly assertive government bids to shake off a sense of crisis over the slowing economy and a stalled agenda, risking a political backlash.
In the biggest policy push of Prime Minister Manmohan Singh’s second term, proposals to allow overseas retailers like Wal-Mart Stores Inc. (WMT) and Carrefour SA (CA) to own 51 percent of supermarket chains, shelved last year after alliance partners threatened to revolt, have been enforced, Commerce Minister Anand Sharma said yesterday. Overseas airlines are allowed to own 49 percent of Indian carriers, he said.
The measures “will help change the perception about the government that it doesn’t have the ability to take decisions,” said Samiran Chakraborty, a Mumbai-based economist at Standard Chartered Plc. “If this changes the perception that investors have about India, this could be positive for inflows, equities and for the currency.”
Singh and his ruling Congress party have just 18 months to reverse shrinking support and restore confidence in their economic management before the next general election. The changes in ownership rules don’t require approval by parliament.
Together with a Sept. 13 deficit-reducing 14 percent increase in diesel prices, the decisions announced by Sharma in New Delhi mark a sustained effort to ease criticism of Singh’s administration. The government has been assailed by two years of corruption allegations, while its agenda has been stymied by opposition parties and coalition allies alike.

Olive Branch

Offering an olive branch to regional leaders who have said they’ll oppose the arrival of large overseas retail chains over concerns they will put millions of small shopkeepers out of work, Sharma said it will be up to state governments to decide if they want to adopt the policy. Indian airlines, which have delayed salaries and defaulted on payments to airports and fuel suppliers because of cash shortages, will now be free to seek foreign investors.
“These steps will help strengthen our growth process and generate employment in these difficult times,” Singh said in comments posted by his office on his Twitter Inc. account.
India’s growth target was lowered to 8.2 percent for the 12th five-year plan started Apr. 1 from an earlier estimate of 9 percent given the state of the global economy, Singh said today while addressing the Planning Commission.
Growth could easily slow to 5 percent annually if the worst case scenario of a policy logjam persists, he said.

Deadline to Reverse

The higher fuel prices brought calls for a rollback from Singh’s allies, pressure he has in the past responded to by lowering the size of the increases. He may face even stiffer opposition to the biggest change to foreign investment caps since the government was re-elected in 2009.
Allies such as Mamata Banerjee, the chief minister of West Bengal state, have said they will continue to oppose moves to allow overseas companies Wal-Mart and others into the country. Banerjee’s party yesterday gave the government 72 hours to reverse the policy changes, Press Trust of India reported.
“There seems to be agreement among policy makers that growth is taking a huge hit,” N.R. Bhanumurthy, an economist at the National Institute of Public Finance and Policy in New Delhi, said yesterday before the foreign investment announcement. “If you don’t take policy measures you’re not going to be able to control the slide.”

Stocks Climb

Indian stocks climbed to their highest level in 14 months after the diesel-price increase and before the foreign investment decisions, boosted by the U.S. Federal Reserve announcement of a third round of stimulus measures.
The BSE India Sensitive Index (SENSEX), or Sensex, rose 2.5 percent yesterday to 18,464.27, its highest close since July 26, 2011. The rupee gained the most since June on expectations the fuel move would help achieve the government’s deficit-narrowing target.
The American depositary receipts of ICICI Bank Ltd. (IBN) jumped 5 percent in New York yesterday, while Sterlite Industries Ltd. (SLT) climbed 7.7 percent to $7.68, according to data compiled by Bloomberg.
Singh’s bid to implement policies to revive investment amid a rating agencies downgrade threat have been derailed by his fractious ruling coalition and graft allegations that paralyzed parliament during its last session. Inflation near 7 percent has limited room for interest-rate cuts in an economy growing at near its slowest pace in three years.

‘Rare Victory’

In the latest sign of the frustration felt by voters toward Congress, only 38 percent of Indians said they were satisfied with the country’s direction, according to a Pew Research Center survey. That was down from 51 percent a year earlier, and was the largest drop among the 17 countries in the survey, including China, the U.S. and Brazil.
Estimated major subsidies in the current fiscal year will amount to 2.4 percent of GDP, Finance Minister P. Chidambaram said today. That misses the goal of less than 2 percent set out in the March budget. The decline to 1.2 percent by 2016-2017 projected in the five-year plan may be “over-optimistic,” he said. Chidambaram also called for measures to accelerate the implementation of infrastructure projects.
The diesel price increase “comes as a rare victory for the Prime Minister and Chidambaram against the ingrained populism” of the ruling alliance, David Sloan, an analyst at New York- based Eurasia Group, said in an e-mailed analysis yesterday. “The price hike lends sorely needed credibility to their unfulfilled pledges to bolster the economy while working towards fiscal consolidation.”

Slowing Growth

Sloan and other analysts caution that proposals requiring parliamentary approval, such as raising the foreign investment cap in insurance from 26 percent to 49 percent “remain political non-starters” as Singh’s Congress party-led bloc has been unable to end a standoff with the opposition over alleged losses to the exchequer from an award of coal resources.
Amid the political gridlock, India’s economic growth potential may have fallen to 6 percent to 6.5 percent a year, below the Reserve Bank of India’s 7.5 percent estimate, JPMorgan Chase & Co. (JPM) said. Foreign direct investment fell 67 percent to $4.43 billion in the three months ended June from a year earlier, government data show.
India’s benchmark wholesale-price index, which has remained above the central bank’s 5 percent comfort level since December 2009, accelerated to 7.55 percent in August, data released yesterday showed. The increase exceeded all 35 estimates in a Bloomberg News survey. RBI Governor Duvvuri Subbarao will leave interest rates at 8 percent for a third meeting next week, 32 of 35 economists said in another Bloomberg survey, as the diesel price rise fans costs.

Deficit Target

Singh, the architect of India’s 1990s economic opening who has been prime minister since 2004, is targeting a budget deficit of 5.1 percent of gross domestic product in the year ending March from 5.8 percent a year earlier. Asia’s third- largest economy grew 5.5 percent in the three months ended June 30 after expanding 5.3 percent in the previous quarter, the least in three years.
The budget shortfall and a deficit in the current account, the broadest measure of trade, led Standard & Poor’s and Fitch Ratings to say earlier this year that they may strip India of its investment-grade credit rating.

Rating Outlook

S&P on April 25 lowered the outlook on India’s sovereign credit rating to negative from stable, saying the move reflects a one-in-three likelihood of a ratings downgrade to junk status because of slower investment and economic growth. Fitch Ratings cut its outlook on June 18, citing limited progress in paring the budget deficit. Both companies rank India’s debt BBB-, the lowest investment grade.
India has been planning the policy change for its airlines for more than three years as Kingfisher Airlines Ltd. (KAIR), controlled by billionaire Vijay Mallya, and state-owned Air India Ltd. (BHARTI) delayed salaries and defaulted on payments to airports and fuel suppliers because of cash shortage.
Jet Airways, India’s biggest carrier, has also been planning to raise funds through a rights offer for more than two years. The carrier and Kingfisher plunged more than 65 percent in 2011. Jet said last month that it plans to sell and lease back some planes to pare debt by about $400 million.
To contact the reporters on this story: Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net; Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net
To contact the editors responsible for this story: Stephanie Phang at sphang@bloomberg.net; Hari Govind at hgovind@bloomberg.net

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Indian ADRs Surge to Five-Month High on Investment Rules By Sridhar Natarajan - Sep 14, 2012

Indian shares traded in New York gained to the highest level in five months and ICICI Bank Ltd. (ICICIBC) surged the most since June after the Indian government approved measures to open up foreign direct investment in the retail and aviation sectors.
The Bank of New York Mellon India ADR Index climbed 3.4 percent to 1,037.36 by 12:02 p.m. in New York, the highest since April 12. ICICI, the biggest private lender, and Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, led gains.
India ended a ban on local airlines selling stakes to overseas carriers, opening a new possible source of funding for operators struggling to turn rising travel demand into profits. The government also allowed overseas retailers like Wal-Mart Stores Inc. (WMT) and Carrefour SA (CA) to own 51 percent of supermarket chains, a move shelved last year after alliance partners threatened to revolt.
“The positive moves by the Indian government on reforms and the easing of financial conditions globally are the main reasons responsible for this gain,” Walter Rossini, a fund manager with Aletti Gestielle SGR SpA, said by phone from Milan. “The real issue is not the announcement but the implementation of this policy. We have seen this noise in the past but maybe this time it is different.”
ICICI (IBN) Bank gained 6.3 percent to $38.66 in New York, the highest since Feb 21. Tata Motors (TTM) increased 5.9 percent, the most in three months, to $25.38. Sterlite Industries India Ltd. (SLT) surged the most since January, jumping 8 percent to $7.70.
The iPath MSCI India Index ETN, an exchange-traded note that tracks India’s equity market, gained 3.8 percent to $56.46, the highest since April 12. India’s benchmark BSE India Sensitive Index (SENSEX), or Sensex, rose 2.5 percent to 18,464.27, its highest close since July 26, 2011.
To contact the reporter on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net
To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

India Raises Diesel Price to Cut Refiners Burden by $3.7 Billion By Rakteem Katakey and Abhijit Roy Chowdhury - Sep 13, 2012

India increased diesel tariff for the first time in more than a year to reduce the burden of capping fuel prices and help refiners cut revenue losses by 203 billion rupees ($3.7 billion).
The price of diesel was raised 14 percent to about 47 rupees a liter in New Delhi, the oil ministry said in an e- mailed statement. That’s the first increase since June 25, 2011, according to data on refiner Indian Oil Corp.’s website. Gasoline and kerosene were left unchanged, while the number of subsidized cooking gas bottles for each buyer was limited to six a year.
Higher fuel tariffs will reduce record losses at the three state refiners and ease the government’s subsidy costs as it seeks to curb spending. Prime Minister Manmohan Singh is trying to cut a budget deficit amid high inflation, slowing economic growth and the threat of a rating downgrade.
“This is going to be inflationary in the short term, but the extent of savings on the fiscal side doesn’t seem to be substantial,” said Sonal Varma, an economist at Nomura Holdings Inc. in Mumbai. “It will provide some relief to refiners sulking under massive losses.”
The new diesel price includes a 1.50 rupee-a-liter increase in excise duty, according to the statement e-mailed yesterday after a meeting of a cabinet panel in New Delhi.
Excise duty on gasoline was reduced by 5.30 rupees a liter and the benefit won’t be passed to customers. Gasoline currently costs 68.46 rupees a liter in New Delhi and was last revised in May.

Cash Shortfall

The price and tax changes will help the three state-run refiners including Indian Oil cut the cash shortfall from below- cost fuel sales to 1.67 trillion rupees, the ministry said. Indian Oil (IOCL) posted a loss of 224.5 billion rupees in the quarter ended June 30, the biggest in the nation’s corporate history, as the government failed to compensate the company.
Indian Oil shares rose 0.6 percent to 254.60 rupees at the close in Mumbai, before the price changes, compared with a 0.1 percent increase in the benchmark Sensitive Index. Bharat Petroleum Corp. gained 2.1 percent and Hindustan Petroleum (HPCL) advanced 0.6 percent.
The refiners sell diesel, cooking gas and kerosene at controlled prices to curb inflation, while they are free to set gasoline rates. They are partly compensated by cash payments from the government and discounts on crude oil by state explorers.

Budget Deficit

India plans to trim its subsidy bill for food, fuel and fertilizer by 12 percent to 1.9 trillion rupees, or 2 percent of gross domestic product, this financial year.
Singh is targetting a budget deficit of 5.1 percent of gross domestic product in the year ending March from 5.8 percent a year earlier. Asia’s third-largest economy grew 5.5 percent in the three months ended June 30 after expanding 5.3 percent in the previous quarter, the least in three years.
Standard & Poor’s and Fitch Ratings this year cut the India’s sovereign credit outlook to negative, a step closer to non-investment grade rating, citing widening budget deficit.
The price increase shows “the government is committed to contain the fiscal deficit at the level indicated in the budget,” C. Rangarajan, an adviser to the prime minister, said in an interview to Bloomberg TV India yesterday. “The important thing to note is that the government is willing to act.”
India’s benchmark wholesale-price index, which has remained above the central bank’s 5 percent comfort level since December 2009, probably accelerated to 7.1 percent in August, according to a Bloomberg survey of 39 economists before data due today. The Reserve Bank of India will keep borrowing costs at the highest level among major Asian economies at its Sept. 17 policy review, a separate Bloomberg survey showed.

Political Issue

Fuel pricing is a sensitive political issue in India. Diesel is used to power generators in farms and by trucks that transport food. Nomura’s Varma estimates the increase in diesel prices may have a direct impact of about 65 basis points on inflation.
The rupee has weakened 14 percent against the U.S. dollar in the past year, the worst performance among the 11 major Asian currencies tracked by Bloomberg. The rupee fell 0.3 percent to 55.42 a dollar yesterday.
The weaker currency has increased costs for Indian refiners, which buy about 80 percent of their oil requirements from overseas. Brent crude oil’s 20 percent surge this quarter has added to the cost of producing fuels.
India’s crude oil import bill accounted for 32 percent of the country’s $489 billion import expense in the year ended March. The refiners were paid 835 billion rupees in the year ended March 31 as compensation, the oil ministry said May 22 in a statement in parliament. That’s 60 percent of the loss of 1.38 trillion rupees incurred in the period.
The three state refiners lost 5.5 billion rupees daily on diesel, kerosene and cooking gas sales as of yesterday, according to oil ministry data. Gasoline was freed from government control in June 2010.
To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net; Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net
To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

Roadbuilders Stall on Bottlenecks: Corporate India By Sharang Limaye - Sep 12, 2012

Indian builders of roads are struggling to revive flagging sales as regulatory bottlenecks and the highest borrowing costs in Asia prevent them from bidding for new projects.
Ramky Infrastructure Ltd. (RMKY), a company based in the southern city of Hyderabad, expects no growth in revenue in the year ending March 31, Chairman Ayodhya Rami Reddy said in an interview. Madhucon Projects Ltd. (MDHPJ)’s finance director S. Vaikuntanathan said it is a “bad time” for the industry as delays in land acquisitions and environmental clearances have stalled development.
“Our priority right now is to protect our bottom line from rising interest costs even if it is at the expense of growth,” Reddy said. “Unless there is an improvement in the business environment in the country, we would like to go easy on bidding for some time.”
A slump in road and highway construction may hinder Prime Minister Manmohan Singh’s efforts to upgrade the nation’s public utilities, crucial to turning around Asia’s third-biggest economy from the slowest pace of expansion in three years. McKinsey & Co. estimates poor amenities may shave off 1.1 percentage points from gross domestic product growth, or $200 billion in 2017. India’s infrastructure is ranked below Kazakhstan and Guatemala by the World Economic Forum.

Maoist Rebellions

Ramky Infrastructure’s shares have tumbled 79 percent since the company’s initial public offering at 450 rupees apiece in September, 2010. Sales rose 22 percent to 38.5 billion rupees ($698 million) in the year ended March 31, slowing from a 54 percent gain in the previous 12 months, according to data compiled by Bloomberg. Total debt surged sixfold in four years to 19.4 billion rupees as of March 31.
Singh’s government, dealing with graft probes and coalition allies unwilling to back proposals to open up the economy, is attempting to rewrite a century-old land acquisition law that may help speed up road projects.
Abuse of the colonial-era law that allows the state to seize land at cheap rates has led to clashes between farmers and local authorities, and fueled Maoist rebellions in some mineral- rich provinces. Singh is struggling to win approval for the bill, first presented to parliament about a year ago.

Behind Schedule

A daily average of 4.5 kilometers (2.8 miles) of roads was added in 2011, according to estimates by PricewaterhouseCoopers LLP, falling short of the government’s 2009 target of 20 kilometers a day. A quarter of 226 highways commissioned by the National Highways Authority of India are behind schedule because of challenges in acquiring land, according to Road Transport Minister C.P. Joshi.
“This is a bad time for the infrastructure sector,” Madhucon’s Vaikuntanathan says. “For road builders, the biggest challenge is land acquisition. With the government not turning words into action, funds are stuck in projects that are not going anywhere as land is not available.”
Sales growth at Madhucon slowed to 5 percent last financial year, from an average 32 percent in the previous three years, data compiled by Bloomberg show. Total debt has quadrupled from four years ago to 8.2 billion rupees as of June 30.
Builders are also reeling from borrowing costs that are the highest among investment-grade economies. An inflation rate that has remained above the central bank’s comfort level has prompted the monetary authority to raise its benchmark interest rate 13 times in 2010 and 2011, cooling growth.

Shrinking Output

GDP rose 5.5 percent last quarter, following a 5.3 percent gain in the previous three months, which was the smallest rate of expansion since 2009, according to the Central Statistical Office. Factory output shrank three months this year, and grew 0.1 percent in July, the government said yesterday.
Reserve Bank of India Governor Duvvuri Subbarao cut the repurchase rate for the first time in three years in April, signaling no further reductions until inflation slows. The benchmark rate of 8 percent is the highest among the 10 biggest economies in Asia.
Five-year bond yields for AAA rated Indian companies have risen 2.16 percentage points to 9.43 percent from a three-year low touched on April 22, 2009.
“Road builders are in for some tough times,” said Mangesh Bhadang, an analyst at Quant Broking Pvt. in Mumbai. “They are essentially facing longer working capital cycles and execution delays. A way out for these companies would be to monetize their assets and free up some capital.”

‘Hard Bargain’

Some companies are already doing that to fund projects after exhausting bank credit limits. Larsen & Toubro Ltd. (LT), Asia’s largest engineering company by market value, is reducing its holding in a unit to raise cash, while Reliance Infrastructure Ltd. (RELI) said in its annual report that it plans to offer as much as 25 percent of its shares. Punj Lloyd Ltd. (PUNJ) will sell assets, including property, early next year, Director of Corporate Affairs Luv Chhabra said Aug. 8.
The value of assets owned by construction companies has been going down even as debt on their books has been rising, which may lead to debt servicing issues for some, GVK Power & Infrastructure Ltd. (GVKP)’s Chief Financial Officer Isaac George said in an interview.
“Though selling a stake in projects may seem the obvious way out, the problem is the valuations aren’t encouraging,” Sudhir Reddy, chairman of Hyderabad-based IVRCL Ltd. (IVRC) said in an interview. “Buyers are driving a hard bargain as there are lots of choices available in the market, with many companies trying to hive off stakes in their projects.”

On a Break

Reddy told reporters on Sept. 10 that IVRCL is on a “temporary holiday” from bidding for highway projects. The builder has total debt of 50 billion rupees and expects to reduce it by 10 billion rupees by March.
Ramky Infrastructure’s Reddy said his company is looking at expanding its operations outside India and offering other services to help tide over the challenges in road construction.
Ramky will be bidding for more contracts in West Africa after winning an order for a special economic zone in Gabon, he said. It will also consider bolstering its waste management business as growing awareness of environmental issues spurs demand for such services, Reddy said.
“We can’t put all our eggs in one basket, especially in the present scenario,” he said. “What is happening in the infrastructure sector is just the tip of the iceberg. The worst is yet to come.”
To contact the reporter on this story: Sharang Limaye in Hyderabad at slimaye@bloomberg.net
To contact the editor responsible for this story: Arijit Ghosh at aghosh@bloomberg.net

Sewage Drives Water Plant-Builder’s Estimates: Corporate India By Natalie Obiko Pearson - Sep 11, 2012

VA Tech Wabag Ltd., (VATW) India’s biggest builder of water-treatment plants, expects sales to beat forecasts by rising as much as 20 percent annually as growing cities overwhelmed by sewage drive government contracts.
The Chennai-based company, a former unit of Siemens AG, has surged 36 percent this year on orders to construct water- cleaning plants for French cities, a solar polysilicon factory in Qatar and a petrochemical plant owned by Reliance Industries Ltd. That tops gains of 16 percent by India’s benchmark Sensitive Index (SENSEX) and 13 percent by the 49-member S&P Global Water Index (SPGTAQD) for the same period.
India is leading sector growth due to contracts from municipalities struggling with clean water shortages and an inundation of sewage, Managing Director Rajiv Mittal said in an interview this week. Domestic sales jumped 35 percent in the 12 months through March, a trend that may extend over the next few years, he said.
The second-most populous nation is set to embark on decades of investment in sewage infrastructure because of an “acute shortage of water and growing needs,” Mittal said. India’s demand for clean water by 2030 may exceed supply by 50 percent while pollution is making what’s available unfit for human consumption, industrial or agricultural use, according to McKinsey & Co. forecasts and a government report.
“In India, infrastructure always follows the demand,” Mittal said by phone. Analyst estimates compiled by Bloomberg forecast group revenue to rise 14 percent this financial year. Mittal puts it at 15 to 20 percent. “We’re absolutely on target for that kind of growth.”

‘Not Drop’

India’s population of 1.2 billion is growing about 1.3 percent annually, according to U.S. Census Bureau data. It’s set to overtake China as the most populous nation by 2025, according to United Nations forecasts.
“The top line will always be driven by municipal demand in India just because there’s so much need,” Mittal said.
Mumbai, the nation’s financial hub, itself will require $1 billion of investment to build eight planned sewage plants, he said.
“In Mumbai, not a drop of sewage is getting treated,” releasing pathogens and waste into coastal waters, he said. Most of India outside of the biggest cities doesn’t even have a wastewater collection system. “We have to start right from the basics. That will take a couple decades.”
The industry may get a boost after the government issued a draft National Water Policy in July that encourages industries to use recycled water though stops short of requiring that, Mittal said. In India, water is managed at the state level and the latest draft follows efforts to devise a nationwide legal framework for regulating the resource.

Definite ‘Risk’

VA Tech’s dependence on government contracts may pose a pitfall with India facing a record current account deficit and a history of state electricity utilities defaulting or delaying payments for lack of funds. India plans to restructure about $35 billion of loans held by utilities to boost their ability to pay.
“It is a risk definitely,” said G.V. Giri, vice president at IIFL Capital Ltd. in Mumbai. “However, water supply is more than just an economic input, it’s a social and physical necessity. We haven’t seen too much of a slowdown because the government’s priority is to keep these projects going.”

Desalination Potential

The falling cost of desalination, which makes freshwater from the sea, is opening a market in urban areas plagued by shortages and contamination concerns, Mittal said.
Technology improvements have cut the cost of desalination by about 75 percent in the last 10 years to less than $1 for 1,000 liters, he said. Treated seawater now costs about 5 paise a liter (0.09 cents) compared with 15 paise for water delivered by private tankers, a practice common across Indian cities where the municipal system can’t provide enough.
“You don’t know where that tanker fellow fills his truck,” Mittal said. “You don’t know the quality and origin while desalinated water is all piped in completely sealed pipes.”
Global desalination equipment orders are forecast to triple to a record $17 billion in 2016 driven by breakthroughs in energy savings and demand by cities and industry, according to Global Water Intelligence. Leaders in the industry include France’s Veolia Environnement SA (VIE), the biggest water company, IDE Technologies Ltd. of Israel and Hyflux Ltd. (HYF) of Singapore.
India has eight desalination plants operating, another partly in service and two on the way, according to Bloomberg New Energy Finance. In 2010, Spain’s Abengoa SA (ABG) started a 100,000- cubic-meter desalination plant in Chennai.

Agriculture, India

While agriculture accounts for at least 85 percent of India’s water consumption according to Mittal and the government compared with 70 percent worldwide, industrial demand is growing at twice the pace of municipal or farm use, McKinsey said.
VA Tech’s industrial customers include Reliance Industries, Essar Group, Adani Group and Indian Oil Corp. (IOCL), which require clean water to run steel, power and refining plants. VA Tech has also built about six projects for refineries and municipalities, allowing them to sell their wastewater to power plants needing water for cooling, he said.
Water shortages can cripple power generation by depriving plants of the cooling fluids they need when burning coal and natural gas or reducing output at hydropower utilities.

‘Absolutely Interlinked’

“The power sector cannot work without water, they’re absolutely interlinked,” Mittal said.
That could drive demand for more desalination plants as utilities including Tata Power Co. (TPWR) and NTPC Ltd. increasingly build coal plants on the coast for easy access to fuel imports.
“The moment you go to the coast, you have no choice but to put up a desalination plant,” Mittal said.
VA Tech Wabag’s management and a unit of ICICI Bank Ltd. bought out Siemen’s stake in 2005, according to the company’s website. Two years later, Siemens sold its Austrian water treatment unit to VA Tech. The company has installed at least 500 plants worldwide since 2000.
To contact the reporter on this story: Natalie Obiko Pearson in London at npearson7@bloomberg.net
To contact the editor responsible for this story: Randall Hackley at rhackley@bloomberg.net

Billionaire Chandra Said to Seek $500 Million: Corporate India By Ruth David and George Smith Alexander - Sep 10, 2012

Indian billionaire Subhash Chandra’s Essel Group is seeking to raise as much as $500 million to fund expansion and pay debt at some of its companies, said two people with knowledge of the matter.
The group may use the funds for satellite television service Dish TV India Ltd. (DITV), cable operator Siti Cable Network Ltd. (WNW) and schools operator Zee Learn Ltd. (ZLL), one person said, asking not to be identified as the information is private.
Essel joins Indian media companies including Network 18 Group and Living Media India Pvt. in seeking capital. Essel has approached private equity firms, the person said. Dish TV, India’s biggest provider of direct-to-home services, and Siti Cable are expanding as the nation makes digital television services mandatory. Advertisement and subscription revenue is forecast by G2Mi Research to increase 87 percent by 2015.
“There is a heightened interest among investors in two media segments, broadcaster and cable companies, owing to a structural change that’s anticipated in the country through digitization,” said Vivekanand Subbaraman, an analyst at MF Global Sify Securities India Pvt. in Mumbai.
Essel isn’t in “active dialog” with buyout firms, said Himanshu Mody, group head for finance and strategy at Essel Group. “We from time to time keep raising expansion capital for various entities within the group.”
Dish TV, which has gained 23 percent this year, fell 1.2 percent to 72.40 rupees in Mumbai yesterday. Siti Cable, formerly known as Wire & Wireless India Ltd., has more than tripled this year. It dropped 2 percent to 20 rupees yesterday.

Murdoch’s Partner

The money raised wouldn’t be used for Zee Entertainment Enterprises Ltd. (Z), Essel’s largest publicly traded unit, the people said. With a market capitalization of 164.3 billion rupees ($3 billion), Zee Entertainment had 3.3 billion rupees in cash at the end of March, data compiled by Bloomberg show.
Chandra, 61, a former rice trader, partnered with News Corp.’s Rupert Murdoch soon after he started Zee TV, a Hindi entertainment channel in 1992, to produce and distribute content. The partnership ended in 2000.
Apart from its television business, Essel manages firms that build roads, runs a newspaper and makes packaging for toothpaste and food companies.
Dish TV had total debt of 12.1 billion rupees as of March 31 and Siti Cable, which sells cable services to about 10 million households in India, had 3.5 billion rupees of debt at the time, data compiled by Bloomberg show.
Siti Cable plans to raise 3.2 billion rupees selling warrants convertible into equity to its owners including Essel, according to a filing to exchanges on Sept. 6.

‘Key Beneficiaries’

TV18 Broadcast Ltd. (TV18) and Network 18 Media & Investments Ltd. (NETM) said in January they would raise as much as 27 billion rupees each from Reliance Industries Ltd. (RIL) to fund the acquisition of 12 regional television channels and to reduce debt.
In May, the Aditya Birla Group said it would buy a 27.5 percent stake in Living Media, which runs the India Today magazine and television channels including Aaj Tak.
Subscribers in India’s four largest cities of New Delhi, Mumbai, Kolkata and Chennai will only get digital broadcast services from Nov. 1 with the rest of the world’s second-most populated nation switching over to the service in phases by 2014.
“Dish TV shall be one of the key beneficiaries of mandatory digitization,” Ashish Upganlawar, an analyst at Spark Capital Advisors, said in a note to clients on Sept. 4. The company has about 4 billion rupees of cash, which will increase as it adds subscribers, according to Upganlawar.

‘Landmark Opportunity’

India’s television industry is the third largest in the world, with an estimated 148 million TV households, according to G2Mi Research.
Advertising and subscription revenue is forecast to rise to 618 billion rupees by 2015 from 330 billion rupees in 2011, while TV households may increase 18 percent to 175 million in the period, according to the U.K.-based research firm.
The mandatory digitization “is truly a landmark opportunity for all digital television distribution platforms,” Chandra, chairman of Dish TV, said in the company’s latest annual report.
To contact the reporters on this story: Ruth David in Mumbai at rdavid9@bloomberg.net; George Smith Alexander in Mumbai at galexander11@bloomberg.net
To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net