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The reason for the possible dilution of Satyam Computer Services has become clear now. Satyam’s promoter has said that the entire stake held by SRSR Holding Pvt Ltd (a promoter group holding company) has been pledged to institutional lenders. Since the share price has been declining, these lenders have been selling shares to cover the margin shortfall.
Taro Pharmaceutical Industries has rejected Sun Pharmaceutical’s revised offer price (disclosed yesterday by Sun Pharma) as too low. It has said that Sun Pharma rejected its offer of a face to face meeting, made on December 30, and instead chose to go public with the offers, which were to be confidential. Apparently, Sun Pharma refused to meet unless Taro made a counter offer first.
On Friday, January 2, 2008 the RBI relaxed prudential norms for recognition of bad loans by banks. The move will allow banks to hide their bad loans for a much longer time, even as they hope that the borrowers’ economic condition improves and they pay back or recover their dues through other means.
Wind power company Suzlon Energy’s is selling part of its 71.3% stake in Hansen Transmissions, a gearbox maker for wind turbines. Ecofin, a London-based investment company that claims to specialise in global utility and infrastructure sectors, will buy a 10% stake in Hansen from AE-Rotor Holding BV, a subsidiary of Suzlon. It will now have an 11.62% voting and economic interest in Hansen, indicating it had a small stake earlier too.
The government is readying for elections. It has announced the final round of its fiscal stimulus package. With no signs of the measures taken till now leading to a recovery, the government is throwing everything it can at the slowdown. And, then it will leave the next government to clean up the mess –falling tax revenues, growing fiscal deficit and an economy that refuses to be kickstarted.
Enough money has been thrown at banks, industry and consumers. But none of them are showing any interest in it. The RBI has given Rs 300,000 crore in additional liquidity to the banking system, which seems like a lot that has achieved very little other than preventing a financial sector crisis. But now that banks are safe, what’s the guarantee one more round of lollies will force demand out of its hiding?
December has been a good month for fertiliser companies. Earlier this month, the government had issued 7% bonds worth Rs 10,000 crore to 23 companies. Now the government has released another tranche of 6.2% bonds worth Rs 4,000 crore to 16 companies. These bonds are not eligible to be kept with banks as SLR but can be bought by insurance companies, in the ‘other approved securities’ list and as special bonds by PF/Gratuity/Superannuation funds.
Continue ReadingIndian companies are struggling with a decline in demand which is affecting production, a fact visible in the December’08 quarter. If October’08 saw a marginal decline in industrial production after more than a decade of continuous growth, November’08 threatens to be worse. Investors should brace themselves for nasty surprises when the quarterly results are announced.
Suzlon Energy has rescheduled its payment to Martifer, the Portuguese construction, energy and distribution company, for its 22.7% stake in Repower. Suzlon will now pay €65mn in December 2008, €30mn in April 2009 and the remaining €175mn in May 2009. The agreement will see Suzlon take control of Repower much later than scheduled but also gives it way out of a messy situation.
India’s industry is in trouble, with the index of industrial production declining by 0.4% in October 2008. Recent months have seen a distinct slowdown of production but this is the first time that there has been a decline. The main cause is a 1.2% decline in the manufacturing index even as the mining and electricity indices grew a bit.