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Friday, June 25, 2010

the daily economic update

June 24, 2010

Top stories

1. LANDMARK TERMINAL 3 TO BEGIN OPERATION IN IGIA: the landmark terminal 3 will begin operation on July 14 at the indira Gandhi international airport. They airport can handle a capacity of 34 million passengers in a year and is pegged to be the world’s sixth-largest airport terminal.

2. KHAZANAH MAY HAVE TO SWEETEN PARKWAY OFFER: the Malaysian fund khazanah has its eyes set on the Singapore based hospital chain parkway holdings and wants to increase its stake in it from 23.8% to 51.5%. However MORGAN STANLEY, independent advisors to directors of parkway holdings made a recommendation that though the offer made by khazanah seems reasonable it is not compelling. This recommendation hints khazanah to sweeten its offer made to parkway holdings. Fortis India also is a major stakeholder in parkway with 25.4% holding. Though they refuse to comment on the recommendation Fortis has previously issued a statement hinting at raising finances of up to 2750 crore through equity and increasing borrowing limit to 6000 crore.

3. MAULED BOLLYWOOD SEEKS SCRIP CHANGE: with two big bollywood productions KITES and RAAVAN tanking at the box-office the Indian film industry is beginning to consider changes in its business model. Both these films were bought by ADAG company big pictures for around 180-200 crore. The cold response towards these films brings to fore the fragility in the “acquisition” model. The tide is now shifting towards “co-production”. While acquisition means an outright purchase, a co-production would mean finance, responsibility of marketing, distributing the film and working out syndication rights on completion of the film. While acquisition turns out to be a high risk, high reward proposition, co-production seems more of a safer bet as they spread risk better( but somewhat temper returns )

4. TATA MOTORS SET TO MOP UP Ts 2500 CRORE TO PARE DEBT: Tata motors have decided to raise around 2500 crore equity or foreign currency convertible bonds in order to pare debt and improve the debt-equity ratio. Analysts also feel that the company would now like to shift the character of the debt from short to long term.

5. COAL India WOULD NOT ADHERE TO 25% PUBLIC FLOAT NORM: There seems to be a lot of disagreement between various wings of the govt. On the minimum public float norm for listing, the latest being coal India ltd (CIL). CIL is reluctant to sell more than 10% of its stake. Coal minister Mr. Sriprakash jaiswal maintains that the disinvestment in CIL can not exceed 10%, which was to be done only to get CIL navratna status.

6. INFRA BONDS FOR STATE BANKS, FIs ONLY: the plan to fund infrastructure project by tapping into household saving announced by finance minister pranob mukhrjee for budget 2010-11 would be limited to public sector banks and state owned financial institutions. The revenue loss that the government will have to bear due to tax free bonds will now be mitigated if the funds straight away flow to public sector companies. These bonds were earlier proposed for private as well as public sector banks, financial institutions and NBFCs.

7. Sensex up by .04% to close at 17755.94 on Wednesday.

8. Nifty up by .12% to close at 5323.15 on Wednesday.


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