BUSINESS THIS WEEK - India Strategies for your Success this week 02 march 2010.pdfShree Renuka Sugars acquired 51% stake in the ... (Tamil Nadu) and Nashik (Maharashtra), in the near

© 2010 ARC Financial Services Private Limited, All rights reserved. Nishant Rustagi: [email protected] I www.arc-fs.com

Strategies for your Success

Stock Markets: Welcoming the budget for the FY’11 and lower fiscal deficit

projection, BSE Sensex gained 1.5% over the last week close to end at 16,430 and the

NSE gained 1.6% or 77 points during the week to end at 4,922

Biggest loser and Gainer:

Hindalco was the top gainer for the week with a gain of 7.7%

While ITC was the top loser for the week with a loss of 6.5%

Foreign Exchange Reserves: India's foreign exchange reserves fell by $528M for the

week ended 19 Feb’10 to $278.7B as compared to $279.2B in the previous week

Inflation: Annual food price inflation fell to 17.58% for the week ended 13

Feb’10, partially lower than the 17.97% recorded in the previous week

Crude oil: Crude Oil jumped nearly 2% on 26 Feb’10 toward $80 a barrel, marking a

more than 9%rise for the month. On a monthly basis, NYMEX crude rose $6.77, or 9.3%

from Jan’10, garnering the biggest monthly percentage gain since May’09. Crude Oil for

Apr’10 delivery for the week ended at $79.66 a barrel

Gold: US gold futures for Apr’10 delivery on the COMEX division of NYMEX settled at

$1,118.90 an ounce. On a monthly basis Gold rises 2% in Feb’10. Silver ended at $16.44

an ounce and Platinum ended at $1,537.50 an ounce

16,237

16,28616,256

16,254

16,430

22 Feb 23 Feb 24 Feb 25 Feb 26 Feb

BSE Sensex

10,383

10,282

10,374

10,321

10,325


Dow Jones

20,377

20,623

20,46820,400

20,609


Hang Seng

BSE Sensex P/E

BUSINESS THIS WEEK - India


19.9420.00 19.97

19.93

20.15

1

Index Closing

26 Feb’10

Absolute

Change%

Change

BSE Sensex 16,430 238 1.5%

NSE Nifty 4,922 77 1.6%

Dow Jones 10,325 (77) (0.7%)

S&P 500 1,105 (4) (0.4%)

NASDAQ 2,238 (6) (0.3%)

FTSE 100 5,355 (4) (0.1%)

Nikkei 10,126 2 0.0%

Hang Seng 20,609 715 3.6%

02 March 2010



Mergers, Acquisitions and Joint Ventures


2

Telecom, Media & Technology:

Meltwater Group, which provides media monitoring

services, acquired BuzzGain Inc., a social media monitoring

company for $4M

Post this transaction, BuzzGain's technology will provide

platform to Meltwater to enhance its existing social media

monitoring service

BuzzGain has its offices in Bangalore

Transcend Infrastructure Ltd (TIL), a subsidiary of

American Tower Corporation, acquired Essar Telecom

Infrastructure Private Limited (ETIPL) in an all cash deal

The transaction values ETIPL at an enterprise value of ~INR

20B

The deal is subject to certain post closing adjustments and is

expected to be completed in approximately three months

Earlier, ATC acquired two companies to expand its tower

portfolio

– Transcend Infrastructure for a sum of INR 950M in oct’09

– XCEL Telecom Pvt. Ltd. for INR 8B in May’09

Reliance ADAG intends to increase stake in Fame to 75%

from 12%

The biggest multiplex chain Reliance ADAG is looking to

increase its stake in Fame movie chain to 75%

Reliance ADAG already holds a little over 12% in Fame that it

has purchased through open market purchases over the last

three weeks

Consumer Goods & Retail:

Shree Renuka Sugars acquired 51% stake in the

Brazil’s seventh largest sugar producer Equipav S.A.

Acucar e Alcool (Equipav) in Brazil for INR 15.3B

The deal will help the company to become third biggest

sugar company in the world and a clear number one

sugar firm in India (as against close rival Bajaj Hindustan)

The company is funding the deal without any debt

As per the deal, Shree Renuka Sugars will use INR 5B

raised recently through a QIPs, besides promoters'

contribution of INR 1.85B (through conversion of

warrants) with the balance money being met through

internal accruals

This is the second acquisition by the company in Brazil

– Last November, it bought Vale Do Ivai SA for $82M

Education:

Edserv Softsystems Ltd, acquired SchoolMate, a

Hyderabad-based firm offering CRM & ERP for

educational institutes, for an undisclosed sum

Post this acquisition, Edserv plans to adopt, run, and

manage around 250 schools in the next 12 months

Earlier in Oct’09, Edserv Softsystems acquired online

education portal 2tion.com

Edserv expects over INR 400M revenue from school

services in the next 12 months

02 March 2010



Mergers, Acquisitions and Joint Ventures


3

Industrials:

Baroda-based Banco Products India Ltd, an auto

ancillary firm, acquired privately held Dutch firm

Nederlandse Radiateuren Fabriek BV for €17.7M (over

INR 1.07B)

Under the agreement, Banco will purchase all the equity

shares of its shareholders

Banco is engaged in the manufacturing of gaskets and

radiators, used in sealing and cooling applications in

automotive and industrial engines. It currently has four

manufacturing plants in Baroda

02 March 2010


Strategies for your SuccessBUSINESS THIS WEEK - India

Capital Raising (PE, VC, Right Issue)

4

Consumer Goods & Retail:

Siva backed firms ups stake in Ruchi Soya from 3.8% to

6.4%

Sivasankaran firms hiked stake in the Indore-based

company, Ruchi Soya from 3.8% to 6.4% over the last one

month through a mix of market and off market purchases

Global Franchise Architects (GFA), the franchisor of

specialty retail brands, plans to raise PE funding to fund its

expansion plans in India

The company plans to make India the largest market by 2011

The company is scouting for corporate and master

franchisees for expansion in the west and north India

In India, the company runs 70 stores under four brands, Pizza

Corner, Coffee World, The Donut Baker and The Cream &

Fudge Factory

02 March 2010

Education:

Manipal Universal Learning, the corporate education arm

of the education-cum-healthcare Manipal Group, raised

INR 2B ($43.3M) PE investment from PremjiInvest

The company will use the funds in project works such as

building a new campus in Dubai, second phase of campus in

Antigua, investments related to addition of a dental stream in

Malaysia and expansion in Nepal

PremjiInvest along with other PEs would hold a minority stake

in the education company

Telecom, Media & Technology:

DQ Entertainment raised INR 256.9M through pre IPO

placement by selling ~5.97% stake

The company sold ~5.97% diluted equity to a group of

investors led by IDFC Investment Advisors Limited (IDFC) for

INR 256.9M

The company had also filed its prospectus for IPO of 16M

shares few months back with SEBI

Earlier, the company had raised PE funding from India Value

Fund and Peepul Capital in 2007

Healthcare & Life sciences:

Apollo Hospitals Enterprise Ltd., plans to raise ~$30M in

PE funding for its Apollo Reach initiative

Under the Apollo Reach, Apollo is planning to set up hospitals

in eight towns like Nellore (Andhra Pradesh), Bhubaneshwar

(Orissa), Karaikudi (Tamil Nadu) and Nashik (Maharashtra), in

the near future

Earlier in 2007, the company raised PE funding from Apax

Partners, which currently holds around 14%

Famy Care may get funding from Baring PE

Baring PE is most likely to buy 15% stake for $40M (INR

1.85B) in Mumbai based drugmaker Famy Care

The PE is looking forward to invest $150M (INR 7B) in the

pharma sector in next few months

Currently, the PE firm is in talks with 3-4 drug contract

manufacturing companies, with each deal ranging between

$35M and $50M



Capital Raising (PE, VC, Right Issue)

5

02 March 2010

Energy & Power:

International Finance Corporation (IFC), the private

investment arm of the World Bank, plans to invest up to

$10M in Auro Mira Energy Company Private Ltd (AME), a

Chennai-based company in renewable energy space

With this investment, IFC will pick a substantial minority

stake in an 18-MW biomass project being developed by

Auro Mira Bio Systems Kanyakumari Pvt. Ltd., a wholly

owned subsidiary of AME

IFC had already committed a debt investment of ~$6.25M

in the company

IFC’s earlier investments in energy space include $82M

(debt-cum-equity) investment in Bhilwara Energy Limited

and $10M in Azure Power, a New Delhi-based solar

energy services provider

Outsourcing:

B2R gets funding from Aavishkaar Micro capital

Aavishkaar fund has invested an undisclosed amount in rural

BPO firm B2r technologies

The company plans to scale up to 100, 50-seater delivery

centers in 7 years

Earlier in last 8 months, Aavishkaar has closed many deals

with companies in water purification, organic cotton

trading, naturopathy clinic and hospitals and sanitation

solutions

Banking, Financial Services & Insurance:

Religare Enterprises Ltd, picked up a majority stake in

California-based PE firm Northgate Capital

The deal will mark Religare’s big-bang entry into the fund-of-

funds business

The deal is expected to be closed by the first half of 2010

Rights Issue:

SBI plans to raise INR 200B through rights issue

The Bank is planning to raise INR 200B through the rights

issue to invest in technology

In 2008, SBI raised INR 167.4B



6

IPOs Listing

Year IPOs*

2010 YTD 13

2009 17

2008 37

2007 103

2006 75

2005 39

Date of Filling Company Name Industry

25 Feb’10 Gyscoal Alloys industrial

26 Feb’10 Career Point Infosystems Education

23 Feb’10 Mittal Corp Industrial

23 Feb’10 Inventure Growth & Securities BFSI**

Company Issue Price

(INR)

Issue Size (INR) Listing Price (INR)

Hathway Cable & Datacom Ltd. 240 6.7B 246.00

Emmbi Polyarns 45 430.8M 45.50

DB Realty 468 15B 430.00

Aqua Logistics 220 1.5B 219.40

IPOs Closed

Company Issue Price (INR) Price Band (INR) Issue Size Subscription

United Bank of India NA 60-66 INR 3.30 B 33.38x

Future Plans

Company Issue Size (INR) Shares Issue Opens Issue Closes Rating Price Band (INR)

Kalpataru Properties 10B NA NA NA NA NA

DRHP Filled

IPOs Listed

02 March 2010

*On the basis of Listing, **Banking, Financial Services & Insurance



7

In Focus

Government offers 10% stake in IOC refinery to Saudi Aramco

The government has offered a 10% stake in the upcoming Paradip refinery of state-run Indian Oil Corp to Saudi Aramco for

~$650M

The govt. has also offered stakes to Saudi Basic Industries Corp (SABIC) in petrochemical projects to be set up by Oil and

Natural Gas Corp in the western Gujarat state and in the southern Karnataka state

Disinvestment

The government has upped the revenue target from sale of government equity in PSUs at INR 400B in FY’11 from the INR

250B targeted in the current fiscal

Foreign Direct Investment

India received Foreign Direct Investment (FDI) equity inflows of $20.9B during Apr’09 – Dec’09

02 March 2010



Union Budget 2010-11

Taxation:

Goods and Service Tax (GST) and Direct Tax Code (DTC)

• Implementation of GST and DTC by Apr’11

Individual

Additional INR 20,000 tax benefit on Infrastructure bonds under

section 80C

Enhance tax audit limits for professionals to INR 1.5M

Corporate

The surcharge on corporate taxes has been reduced from 10%

to 7.5%

Service Tax remains unchanged at 10%

Central Excise Duty increased from 8% to 10%

Weighted deduction from 150% to 200% for in-house R&D

Limits for turnover for purpose of presumptive taxation of small

business enhanced to INR 6M

MAT

Minimum Alternate Tax increased from 15% to 18%

02 March 2010

Banking, Financial Services & Insurance:

Bank licenses – Proposal to give banking licenses to new private

players and NBFCs in-line with RBI policies

Sets aside INR 165B for PSU banks to get minimum 8% tier 1

capital by Mar’11

Farm loan waiver extended by 6 months to Jun’10

Interest subvention for new farm loans from 1% to 2%

To provide 2% loan subsidy to farmers

Proposes to increase subvention to 5% in repayment of farmer

loans

IIFCL disbursements at INR 90 B by Mar’10

Allocates INR 1B for new pension scheme, to benefit 0.1M low

income citizens

All villages with 2,000+ population to get banking facilities by 2012

Housing loan: 1% interest subvention scheme extended to

Mar’11, allocation INR 7B

Income (INR M)Men (%) Women (%)

Old New Old New

Up to 0.16 Nil Nil Nil Nil

0.16 - 0.19 10 10 Nil Nil

0.19 - 0.3 10 10 10 10

0.3 - 0.5 20 10 20 10

0.5 – 0.8 30 20 30 20

Above 0.8 30 30 30 30

Income Tax Slabs

Fiscal Deficit:

Fiscal deficit to be at 5.5 % for FY’11, 4.8% for FY’12 and

4.1% in FY’13

Fiscal deficit at INR 3,810B in FY’11

Government Borrowing – INR 3,450B less than

expectation of INR 3,690B

Debt-GDP targeted at 68% from 82% in FY’09 to meet

FRBM targets by FY’15

Divestment target increased to INR 400B in FY’11 vs. INR

250B in FY’10

In addition, 3G auction expected at INR 360B

Subsidies capped at INR1,160M

8



Union Budget 2010-1102 March 2010

Agriculture:

To provide INR 4B to extend green revolution to eastern India

Sets aside INR 2B for a new agricultural initiative

Allocates INR 12 B for drought mitigation

Agri credit flow target for FY’11 increased to INR 3,750B from INR

3,250B last year

To set up 5 more mega food park projects

INR 3B for Rashtriya Krishi Yojna

INR 1B allocated for women farmers

External commercial borrowing will be available for food storage

industries

To provide subsidy in cash instead of bonds to fertilizers

companies

Allocated INR 3 B for Rashtriya Krishi Yojna

Infrastructure & Engineering:

46% of total plan outlay allocated to infrastructure

INR 1,736B for infrastructure

Increase infra investments to 9% of GDP

Road – Allocation increased by ~13% to INR 198.9B from

INR 175.2B

Rail – INR 165B, increase of INR 9.5B YoY

IIFCL – Disbursement INR 90B by Mar’10 and INR 200B

by Mar’11. Refinance bank lending – INR 30B by Mar’’10

& INR 60B by Mar’11

Proposal for infra bonds positive for Infrastructure

companies

Delhi - Mumbai industrial corridor taken up for development

IT/ITES:

UID authority given INR 19B

Commitment to SEZs to promote exports

Social Spending:

NREGA – INR 401B vs. INR 390B

Bharat Nirman – up 20% to INR 480B

Rural development – INR 661B

Education – INR 310B (up 16%) from INR 268B

Unit cost under Indira Awas Yojana increased to INR 450B

in the plain areas and to INR 485B in the hilly areas.

Allocation for this scheme increased to INR 100B

Allocation to Backward Region Grant Fund enhanced by

26% from INR 58B in FY’10 to INR 73B in FY’11

Additional central assistance of INR 12B provided for

drought mitigation in the Bundelkhand region

Oil & Gas:

Petroleum products: basic duty of 5% crude , 7.5% on diesel &

petrol; 10% on refined products

Extra Excise duty of INR1 per litter will be charged on petrol and

diesel

To provide subsidy in cash instead of bonds to oil companies

9



Union Budget 2010-1102 March 2010

PSU:

Divestment target increased to INR 400B in Fy’11 vs. INR 250B in

Fy’10

1.2M houses for weaker sections to be constructed under Indira

Awaas Yojana

Textile:

Extends interest subvention of 2% for exports of

handlooms, handicrafts and SMEs for 1 year

Exclusive skill development program in textile and garment

sector

Khadi institutes get INR 4B

Signed $150M deal with ADB for implementing Khadi

program

One time grant of INR 2B to Tamil Nadu for textiles

Telecom:

Mobile accessories market to get tax breaks

Defence:

INR 1,417B for defense

Tourism:

To boost tourism investment, offers investment linked tax

deductions

Power:

To facilitate 20,000 MW of solar power by 2022

To have a coal regulator for allocation of coal blocks

To levy clean energy cess on imported coal

Funds for power allocation raised from INR 22.32B to INR

51.32B

Propose to hike allotment for renewable energy by 61%

For solar mission, solar power generating units rates are to

be reduced by 5%

10



ARC Financial Services Private Limited

311, Ansals Majestic Tower

PVR Complex, Block G, VikasPuri

New Delhi – 110018

India

Tel: +91 11 4560 1622

Tel: +91 11 4562 2127

Website: www.arc-fs.com

Email: [email protected]



This Programme by ARC Academia – WST India, provides the delegates with an in-depth and practical overview of financial

analysis and forecasting techniques. During the 4 days training programme the delegates will learn:

Valuation of a company using different valuation techniques

Financial modeling techniques in excel

Forecasting the financial statements

Calculation and analysis of WACC and FCF

Day 1 - Basic Concepts Day 2 - Relative Valuation Day 3 - Financial Modeling Day 4 - Financial Modeling

Introduction to MS Excel

Different Company Filings

Financial Statement

Analysis

Minority Interest

Ratio Analysis

Enterprise Value

Diluted Shares

Trailing Twelve Months

Choosing right set of peers

Adjusted / Clean numbers

EV Based Multiples

Trading Multiples

Application of multiples

Introductory Model

Projection of Financials

Free Cash Flows

Cost of Capital (WACC)

Terminal Value

Intrinsic Value per share

Sensitivity Analysis

Fee: USD 225 / INR 10,000

Dates: 17, 18, 24, 25 April 2010

Time: 10 a.m. to 5 p.m.

Venue: Hotel Spice Art, Prabhat Kiran Building,

Rajendra Place, New Delhi

* USD 200 / INR 9,000 for registration before 1st April 2010

“We Bridge the

gap between:

“What is

available in the

market, And, Wh

at Corporate

Houses look for”

4 Days Corporate Valuation & Financial Modeling Programme(Starting 17th April 2010 Programme runs from 1000 hrs to 1700 hrs)

India office of

Training the Capital Markets Aspirants and Participants®

Documents

BUSINESS THIS WEEK - India Strategies for your Success this week 02 march 2010.pdfShree Renuka Sugars acquired 51% stake in the ... (Tamil Nadu) and Nashik (Maharashtra), in the near