India’s Nifty Futures Fall as Technology Shares May be Active By Rajhkumar K Shaaw - Apr 10, 2014

Indian stock-index futures dropped after the benchmark index climbed to a record yesterday.
SGX CNX Nifty Index futures for April delivery fell 0.4 percent to 6,788.5 at 10:05 a.m. in Singapore. The underlying CNX Nifty Index on the National Stock Exchange of India was little changed at a record 6,796.40 yesterday. The S&P BSE Sensex (SENSEX) gained less than 0.1 percent to 22,715.33, an all-time high. The Bank of New York Mellon India ADR Index of U.S.-traded shares fell 2.2 percent to 1,220.20.
Infosys Ltd. and Tata Consultancy Services Ltd. may be active after U.S. technology stocks tumbled yesterday amid speculation that valuations are too high. Indian elections began this week, with opinion polls indicating the main opposition Bharatiya Janata Party will secure the most seats. Overseas investors have pumped $11 billion into local stocks and bonds this year amid speculation the elections will produce a BJP administration with the mandate to tackle corruption and lift economic growth from a decade low.
“The rally has been too fast, too soon,” Arun Kejriwal, a director at Kejriwal Research & Investment Pvt., said by phone from Mumbai yesterday. “We can see some consolidation at current levels. But the bias remains upward as the foreign inflows have been very strong.”
India is scheduled to report industrial production figures today. The Sensex has climbed 7.3 percent this year and trades at 14.3 times projected 12-month profits, compared with the average multiple of 14.5 over the past five years. The MSCI Emerging Markets Index has risen 1.3 percent in 2014 and is valued at 10.3 times.
India is prepared for potential financial fallout if the Federal Reserve increases interest rates before April 2015, Reserve Bank of India Governor Raghuram Rajan said yesterday in Washington.
“Nobody is prepared for every eventuality, but for most eventualities, we are prepared,” Rajan said in an interview with Bloomberg News after an event in Washington. “For us, the specific timing matters less than that it should happen when U.S. growth is strong.”
To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net
To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Chan Tien Hin

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Indian Rupee Advances Most This Month as Inflows Seen Increasing

By Divya Patil - Apr 9, 2014

India’s rupee strengthened the most this month on optimism Asia’s relatively fast economic growth will attract capital inflows.
Global funds pumped $10.3 billion into local stocks and bonds this year, exchange data show. Developing Asian economies are forecast to grow 6.7 percent this year, outpacing an estimated 2.8 percent expansion for the U.S., the International Monetary Fund said in a report yesterday. The Bloomberg-JPMorgan Asia Dollar Index (ADXY), which tracks the region’s 10 most-active currencies excluding the yen, touched a seven-week high.
“The IMF report is a positive as growth in emerging markets is likely to be higher, which supports the case of continued foreign inflows into the region,” said Amogh Moghe, a foreign-exchange trader at Mumbai-based brokerage Mecklai & Mecklai Ltd. “The dollar’s weakness against most Asian currencies is also boosting the rupee.”
The rupee rose 0.2 percent from its April 7 close to 60.0050 per dollar as of 9:46 a.m. in Mumbai, according to prices from local banks compiled by Bloomberg. Financial markets in India were shut yesterday for a local holiday.
“There are some bunched-up inflows after yesterday’s holiday, which too are supporting the currency,” said Moghe.
The rupee gained 3.2 percent in the first quarter, the biggest advance since the three months through September 2012, and touched an eight-month high of 59.60 per dollar on April 2 as policies aimed at containing inflation and the current-account deficit buoyed confidence.

Rupee Forecasts

Gains in the rupee will halt as the winner of elections in the world’s largest democracy needs to build consensus for policies to revive the economy, according to the most accurate forecaster for the currency.

India’s Sun Pharma to Buy Ranbaxy in $4 Billion Deal By David Welch and Kanoko Matsuyama - Apr 6, 2014

Sun Pharmaceutical Industries Ltd. (SUNP), India’s largest drugmaker by market value, agreed to buy Ranbaxy Laboratories Ltd. (RBXY) in a $4 billion stock transaction, the biggest purchase by an Indian company in two years.

Ranbaxy investors will get 0.8 share in Sun for every one of their shares, the two companies said today in a statement. That’s equal to about 457 rupees a share, or about 24.3 percent higher than the 60-day average, according to the statement. Ranbaxy rose 8.2 percent to 459.55 rupees on April 4.

Sun, maker of generic drugs including copies of Eli Lilly & Co.’s Cymbalta and Johnson & Johnson’s Doxil, expects $250 million in revenue and reduced costs by the third year after the completion of the deal, according to the statement. Since Daiichi Sankyo bought control of Ranbaxy in 2008, four of its Indian plants have been banned from exporting to the U.S. for failing to meet standards.

“It is a long-term positive for Sun Pharma because it adds emerging-markets facilities,” said Prakash Agarwal, an analyst at CIMB Securities India Pvt. in Mumbai. “Ranbaxy’s consent decree will be resolved in a few years’ time, so they should be out of the woods in terms of the FDA issues.”

Daiichi Sankyo Co. (4568), which owns 63.5 percent of Gurgaon, India-based Ranbaxy, said it planned to vote in favor of the deal. The transaction will help Daiichi Sankyo’s earnings, Takashi Akahane, a health-care analyst at Tokai Tokyo Research Center Co. in Tokyo, said by telephone. “Daiichi Sankyo seems to have backed off from directly getting involved with business in India and left it to a local company.”

Ranbaxy Surge

Daiichi Sankyo surged as much as 5.1 percent, the biggest intraday gain in more than nine months, to 1,844 yen in Tokyo trading today. The stock traded at 1,821 yen, up by 3.8 percent, at 11:27 a.m. local time.

Ranbaxy shares rose 8.2 percent to 459.55 rupees in Mumbai trading on April 4. That took its gain for last week to 26 percent, the largest weekly advance since August.

The transaction has an equity value of about $3.2 billion, according to the statement.

Ranbaxy recently received a subpoena from the U.S. Attorney for the District of New Jersey requesting certain documents relating to issues previously raised by the FDA on its Toansa facility in north India, Sun Pharma said in the statement. The FDA in January said Ranbaxy can no longer make or distribute drug ingredients from that plant to the U.S.

FDA Rules

FDA officials have said they plan to tighten rules on how they regulate the generic-drug industry as a way to convince American consumers that safeguards are in place.

In March, the Food and Drug Administration said Ranbaxy was recalling some batches of its generic cholesterol-lowering medicine.

India’s pharmaceutical industry exported $14.6 billion worth of products in the year ended March 2013, according to data from the Ministry of Commerce. India is the second-largest supplier of over-the-counter and prescription drugs to the U.S., behind Canada.

Sun Pharma was advised by Citigroup Inc. and Evercore Partners Inc. Ranbaxy hired ICICI Securities as its financial adviser and Goldman Sachs Group Inc. advised Daiichi Sankyo.

Sun Pharma’s legal advisers are Shearman & Sterling LLP, Crawford Bayley & Co and S. H. Bathiya & Associates, while Ranbaxy’s advisors are Luthra & Luthra Law Offices, Amarchand & Mangaldas & Suresh A Shroff & Co. Daiichi Sankyo hired Davis Polk & Wardwell LLP and Amarchand & Mangaldas & Suresh A Shroff & Co, it said.

To contact the reporters on this story: David Welch in New York at dwelch12@bloomberg.net; Kanoko Matsuyama in Tokyo atkmatsuyama2@bloomberg.net

To contact the editors responsible for this story: Anjali Cordeiro at acordeiro2@bloomberg.net Anjali Cordeiro, Frank Longid

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India’s Sensex Declines for Second Day, Erasing Weekly Advance By Rajhkumar K Shaaw - Apr 4, 2014

India’s benchmark stock index declined for a second day as some investors judged recent gains to all-time highs as excessive.

Bharat Heavy Electricals Ltd. (BHEL), India’s biggest power-equipment maker, retreated for a fifth day. NTPC Ltd., India’s largest power producer, tumbled the most in five weeks. Tata Motors Ltd. (TTMT), the owner of Jaguar Land Rover, fell the most in two weeks.

The S&P BSE Sensex (SENSEX) lost 0.7 percent to 22,359.50 at the close in Mumbai, almost erasing a weekly gain. The CNX Nifty index declined 0.6 percent. The Nifty climbed to records for eight straight days through April 2 as international investors extended Asia’s largest stock-market inflows amid cooling inflation, shrinking deficits and a strengthening rupee. India holds a national election starting April 7, with opinion polls indicating the main opposition Bharatiya Janata Party will win the most seats, ending the Congress Party’s decade-long rule.

“It’s a good sign that market has run up ahead of the elections and there is some healthy correction, which will give an opportunity for more investors to participate,” Vikram Kotak, chief investment officer for equities at Deutsche Asset Management (India) Pvt., which manages $3 billion in assets, said in a Bloomberg TV India interview today. “I am pretty optimistic.”

Election Outlook

Prime Minister Manmohan Singh’s Congress party may be headed for its worst-ever electoral performance as voters punish the government for a series of graft scandals, Asia’s fastest consumer inflation and slowing growth. The BJP is favored by investors seeking change to revive an economy expanding at the slowest pace in a decade. Results will be announced on May 16.

Asia’s third-biggest economy probably grew 4.7 percent in the year ended March 31, according to a central-bank survey of forecasters published April 1, compared with a decade-low 4.5 percent expansion the previous year. The $1.8 trillion economy is expected to expand 5.5 percent in the current fiscal year that started April 1, according to the survey.

Reserve Bank of India Governor Raghuram Rajan held the benchmark borrowing rate at 8 percent on April 1 after consumer-price inflation eased to a two-year low in February and wholesale-price gains slowed to the least in nine months.

Shrinking Deficits

The current-account deficit will be kept below $40 billion this fiscal year, compared with a record $88 billion in the previous 12 months, and the budget gap will narrow to 4.6 percent of gross domestic product from 4.9 percent, according to Finance Minister Palaniappan Chidambaram.

“This rally is not happening only due to the hope around a political party coming to power,” Kotak said. “India’s economy has bottomed out and that’s contributing.”

Bharat Heavy Electricals tumbled 2.1 percent, extending this week’s loss to 8.3 percent, the most on the Sensex. NTPC declined 2.2 percent, the most since Feb. 28. The S&P BSE India Capital Goods index declined 1.2 percent this week after a 16 percent advance last month.

Tata Motors decreased 1.4 percent, the biggest loss since March 18. Wipro Ltd. (WPRO), the third-biggest software services provider, slid 1.4 percent.

The Sensex has climbed 5.6 percent this year and trades at 14.1 times projected 12-month earnings, compared with the MSCI Emerging MarketsIndex’s 10.4 times. The Indian gauge’s valuation was 18 times in November 2010, when the Sensex set its previous high.

“The index is at an all-time high but the valuations are not at an all-time high,” Deutsche Asset’s Kotak said. “Opportunities-wise, there is scarcity in the world and India is one of the very preferred destinations.”

Overseas investors bought a net $187.2 million of Indian shares on April 1 and April 2, extending this year’s purchases to $4.27 billion, the most among eight Asian markets tracked by Bloomberg.

To contact the reporter on this story: Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Matthew Oakley, Phani Varahabhotla

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Tata Offers First Car Buyback as Sales Plummet: Corporate India

By Siddharth Philip - Mar 5, 2013

Tata Motors Ltd. (TTMT), India’s biggest automaker, has a new strategy to revive car sales from a decade low: the company is promising to buy back your Manza sedan.
The Mumbai-based carmaker said it will guarantee customers 60 percent of the purchase price after 3 years on cars they buy in the next two months, according to an e-mail response from the company. Tata Motors, led by Chairman Cyrus Mistry, also cut prices for some of its cars this week by as much as 50,000 rupees ($912). The Manza model will be about 8 percent cheaper.
The plan to repurchase cars shows the owner of Jaguar and Land Rover is “desperate” as it has lost market share in Asia’s third-largest car market to Toyota Motor Corp. (7203) and Mahindra & Mahindra Ltd. (MM), according to Deepesh Rathore, the India managing director of IHS Automotive. Passenger vehicle sales at the company plunged 70 percent last month to the lowest in a decade.
“Tata Motors has a big problem in the local car business,” said Juergen Maier, a Vienna-based fund manager at Raiffeisen Capital Management, which oversees about $1.1 billion in emerging-market assets. “Tata Motors needs to get its quality and design right.”
India’s automakers’ association in January lowered its full-year domestic car sales forecast for the third time in six months as slowing economic growth and high interest rates continue to keep buyers from showrooms. February passenger car sales at Tata dropped to 10,613 from 34,832 a year earlier. Deliveries at Maruti Suzuki India Ltd. (MSIL), the nation’s biggest carmaker, fell 9 percent to 97,955.

Indica Hatchback

Former Chairman Ratan Tata hired Karl Slym as managing director to revive vehicle sales. Slym last month said he plans to build a diesel version of the Nano, the world’s cheapest car, as well as the Indica hatchback.
Tata Motors’ shares, which have gained 10 percent in the past year, rose 3.7 percent to 300.50 rupees in Mumbai, making it the best performer on the Bloomberg Asia Pacific Auto Manufacturer (BPRAUTM) index yesterday as Indian stocks had their biggest jump in more than three months.
Sales of the company’s trucks, buses and cars at home accounted for 36 percent of group revenue of 1.66 trillion rupees ($30.2 billion) in the year ended March 31, down from 43 percent in 2010, according to data compiled by Bloomberg.
Profit at the Jaguar Land Rover unit, which contributed 74 percent of Tata Motors’ operating income in the year ended March 31, declined 25 percent to 296 million pounds ($449 million) in the three months to Dec. 31. Tata Motors reported a loss of 4.6 billion rupees for its Indian business as sales at home dropped 21 percent to 105.3 billion rupees.

Maruti Sales

Tata sold 7,485 units of the Indigo and Indigo Manza sedans in the 10 months to January. That’s 6 percent of Maruti’s DZire sales in the same period.
Maruti sold 131,177 units of its DZire, according to data from the Society of Indian Automobile Manufacturers. Toyota’s sales including utility vehicles rose 6.4 percent to 133,296 in the 10 months to January.
“I doubt Tata Motors will be able to improve their market share,” Surjit Singh Arora, an analyst at Prabhudas Lilladher Pvt. in Mumbai. “Unless they upgrade their platforms, it looks difficult for Tata Motors.”
Maruti has seven versions, including gasoline and diesel options, of its DZire, while Tata sells 17 variants of the Indigo and more than 20 for the Indica, according to the companies’ websites.

‘Dead Cat Bounce’

“Tata continues to sell old generation models with the new. This is bad strategy,” said Mahantesh Sabarad, an analyst at Fortune Equity Brokers India Ltd. in Mumbai. When Honda Motor Co. or Maruti “introduces a new generation, they phase out the old ones.”
The company’s buyback offer will be valid for cars which haven’t had a major accident and carry a valid insurance policy, according to the e-mail from Tata Motors. The automaker doesn’t plan to extend the repurchase plan, which it says “will surely boost sales,” to other models.
The plan may help Tata see a “dead cat bounce in sales,” Sabarad said. “I don’t expect market share to increase.”
To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

®2013 BLOOMBERG L.P. ALL RIGHTS RESERVED.

Birla Mulls U.S. Purchase Driven by Shale Gas: Corporate India

By Rakteem Katakey and Abhishek Shanker - Mar 4, 2013

Indian billionaire Kumar Mangalam Birla is considering buying his first fertilizer plant in the U.S. to benefit from a 55 percent drop in prices of natural gas used to fuel the factories.
His Aditya Birla Group (ABNL) is seeking a “mid-size acquisition” which has access to technology that can be used in the conglomerate’s operations, Birla said in an interview. The U.S. boom from hydraulic fracturing, or fracking, which uses pressurized water to drive gas and oil from shale rock has depressed energy prices, while an intelligence advisory panel said in December that the world’s biggest economy may achieve energy independence in as little as 10 years.
“There’s going to be a huge geopolitical shift with shale gas in America,” Birla told Bloomberg TV India. “This is an interesting opportunity, given the fact that we have a large exposure to manufacturing. I see companies in chemicals and fertilizer space or companies that give technology for the group’s business.”
Birla, 45, who controls India’s biggest cement producer Ultratech Ltd. (UTCEM) and the world’s largest rolled aluminum maker Novelis Inc., is joining other Indian companies including Welspun Corp., which is close to starting a $100 million pipe factory in the U.S. targeting shale gas clients. The American Chemistry Council estimates low-cost natural gas may generate $72 billion in capital investment as petrochemical companies relocate or boost spending in the U.S.

Revenue Goal

The Aditya Birla Group is targeting a 63 percent increase in revenue to $65 billion by 2016, and is also looking for acquisitions in Brazil, Thailand and Indonesia, Birla said. Half of the group’s current $40 billion turnover comes from overseas, he said.
A slump in local gas production is forcing Indian companies, including power stations and fertilizer makers, to import the fuel, which is more expensive. The government also controls prices of fertilizers, making use of costly fuel unviable.
“Energy cost would be about 60 percent of the total cost and it makes an obvious choice to have a U.S. presence,” said P.D. Samudra, executive director at Uhde India Pvt., a unit of ThyssenKrupp Uhde GmbH that undertakes projects for industries including fertilizers, petrochemicals and polymers. “In India, we also have subsidy issues.”
Shares of Aditya Birla Nuvo Ltd., a group company that produces fertilizer, rose as much as 1.1 percent to 1,057.95 rupees and traded at 1,056 rupees as of 9:42 a.m. in Mumbai. The stock has gained 21 percent in the past year, compared with a 9.5 percent rise in the benchmark Sensitive Index.

No Addition

India hasn’t added any urea manufacturing capacity since 1999, according to the fertilizer ministry’s annual report.
Aditya Birla Nuvo can produce 1.1 million metric tons annually at Jagdishpur in the state of Uttar Pradesh. The company’s fertilizer business earns about 20 billion rupees ($364 million) in revenue from sales in the eastern states of Bihar, Jharkhand and West Bengal, according to a corporate presentation on its website.
Natural gas production at Asia’s second-biggest energy consumer declined 14 percent to 34.6 billion cubic meters in the 10 months ended Jan. 31, according to data compiled by Bloomberg. Output has declined every month compared with a year earlier since November 2010, as the nation’s biggest field operated by Reliance Industries Ltd. slumps.
In the U.S., a surge in gas production from shale rocks from Texas to West Virginia made it the world’s biggest producer of the fuel in 2009, beating Russia. Gas futures reached a decade low of $1.91 per million British thermal units in April in New York trading. They’ve slid 55 percent since Jan. 1, 2008.

Expanding Abroad

“Lower energy costs will attract companies to the U.S. and the Aditya Birla group will look to take advantage of cheaper gas,” said Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd. at Kochi in southern India. “There’s a dearth of gas in India and imported gas is expensive.”
Gas in New York trading may reach $3.95 per million British thermal units by the end of this year, according to the median of 20 analyst estimates compiled by Bloomberg. Prices were at $3.55 per million Btu as of 12:12 p.m. in Singapore.
Birla has spent more than $1.5 billion in acquiring assets overseas in the past two years. Since January 2011, the group bought four companies in the chemical industry, including three overseas.
It agreed to buy Columbian Chemicals Co., a Georgia, U.S.- based carbon black maker, for $875 million on Jan. 31, 2011. Three months later, it bought Sweden’s Domsjo Fabriker AB for $340 million and followed it up in July with the purchase of Terrace Bay Pulp Inc., a paper pulp mill in Canada, to secure raw material supplies for its viscose staple fiber business.

Country Risk

Birla would rather invest in countries including Brazil and Indonesia than back home as frequent policy changes in India discourage companies from spending in Asia’s third-biggest economy, he said in the interview.
India slipped three levels in the 2013 World Economic Forum’s Global Competitiveness Index from a year earlier, to 59. Brazil was ranked 48, while Indonesia was in the 50th position.
“Country risk for India just now is pretty elevated and chances are that for deployment of capital, you would look to see if there is an asset overseas rather than in India,” Birla said. “We are in 36 countries around the world. We haven’t seen such uncertainty and lack of transparency in policy anywhere.”
A report on Feb. 28 showed India’s $1.8 trillion economy rose 4.5 percent in the three months to Dec. 31 from a year earlier, lower than forecast and the weakest pace in almost four years, as cooling investment, a drop in exports and government spending cuts sapped growth.

Net Worth

Birla has a net worth of $8.7 billion, according to the Bloomberg Billionaires Index. His wealth has declined 4.5 percent this year.
Birla’s plans to invest in the U.S. follows announcements by Austrian steelmaker Voestalpine AG to Singapore-based Indorama Group, which are hoping to benefit from cheap gas. Nucor Corp. (NUE), the biggest U.S. steelmaker, plans to start up a $750 million Louisiana project in mid-2013. This is among at least five U.S. plants under consideration or being built that would use gas instead of coal.
Indorama Group, a polyester maker operating in more than 20 nations, plans to spend $4 billion on chemical plants in gas- producing countries, including the U.S.
“A lot of manufacturing will come back into North America,” Birla said. The U.S. looks very attractive from a manufacturing point of view, he said.
To contact the reporters on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net; Abhishek Shanker in Mumbai at ashanker1@bloomberg.net
To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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Biggest Fund Manager Jain Sees Value in Banks: Corporate India

By Anto Antony and Santanu Chakraborty - Mar 3, 2013

Prashant Jain, chief investment officer at India’s biggest money manager, said he sees value in some of the nation’s biggest lenders amid prospects of a reduction in bad loans that have made them Asia’s worst- performing banking stocks in the past year.
Jain, who manages $18.6 billion at HDFC Asset Management Co., also runs HDFC Top 200 (ITCT200), India’s largest equity fund. Banks account for about 29 percent of HDFC Top 200’s assets, according to data compiled by Bloomberg. The fund owns state-run Canara Bank, Bank of Baroda (BOB) and Bank of India (BOI), the three worst performers on the 88-company MSCI AC Asia Banks Index (MXAS0BK) in the past 12 months.
Finance Minister Palaniappan Chidambaram’s budget pledge to add 140 billion rupees ($2.6 billion) to boost capital at banks will help state-run lenders increase credit and revive Asia’s third-largest economy forecast to expand at the slowest pace in a decade in the year ending March 31. A drop in delinquent debt from a five-year high will lure investors to the nation’s lenders, according to Diwakar Gupta, chief financial officer at State Bank of India (SBIN), the country’s biggest financial services company.
“At some point non-performing assets have to moderate,” Jain, 45, said in an interview to Bloomberg TV India. “Last quarter was better than the previous quarter and there is expectation this quarter will again be better than the last.”
HDFC Top 200 is India’s best performing large-cap fund in the past decade. It has returned 28 percent annually compared with the 21 percent gain at the S&P BSE Sensex index in the same period.

‘Punished Enough’