Category Archives: News

Industries: Looking back and ahead

As the year 2010 coming to an end, reports on various industries appeared across the news papers. Here are the links to those reports on the sectors related to our investments.


The pharma story: A decade of transition

The last 10 years were a crucial transition period for the Indian pharmaceutical industry. The next 10 years will be more crucial, predict industry experts. The period between 2000 and 2010 witnessed India’s top 10 drug companies growing from sales turnovers, ranging between Rs 500-Rs 800 crore, to professionally-run multinational generic companies with turnovers ranging from Rs 3,500 crore to over Rs 7,000 crore. If most of these companies earlier relied on bulk drug supplies, small exports to unregulated markets in Africa and Asia and formulation sales in the domestic market, the last 10 years saw them aggressively tapping regulated markets of the US and Europe and penetrating into newer and emerging markets. If the Indian industry had filed only three marketing applications with the US Food and Drug Administration (FDA) in 1998, that number swelled to 148 in 2009.

Pharma: Walking the tightrope between affordability, profits

It could well turn out to be a significant year for the over Rs 1-lakh-crore pharmaceutical industry, if clarity dawns on contentious issues facing the sector. Be it implementation of intellectual property laws, signing of free-trade agreements (FTAs), policy of price control on medicines or spate of mergers and acquisitions (M&A) – 2011 will have stake-holders looking to the Government for direction. It all boils down to how the Centre walks the fine line in balancing access to affordable medicines with encouraging industry to maintain healthy bottom-lines.

YEAR 2010: Acquisitions spurred Pharma, healthcare expansion

Looking healthier on booster dose of global alliances, the Indian pharma and healthcare sectors repeatedly hit headlines this year on account of M&As, but inbound buyouts by MNCs raised concerns over availability of low-cost drugs. Be it Sun Pharma’s victory in acquiring Israel’s Taro after a long drawn battle, or Piramal’s selling off its domestic formulations business to Abbott, or Biocon’s marketing deal with Pfizer, Indian drug makers sought strength from global play.

Pharma: On a healthy wicket

The Indian pharmaceutical sector closed 2010 on a high note, what with an impressive stock market performance, driven largely by earnings growth and bettering prospects. And if the sector undercurrents are to be relied upon, good times are likely to continue this year as well. Strong demand growth in the US market, increasing generic penetration worldwide besides a robust domestic market, promise to keep the Indian drug makers in good health in 2011 too.


2010 saw fastest FMCG launches, relaunches

2010 could well figure in the fast moving consumer goods (FMCG) annals as the year of product launches and relaunches. Indeed, the year saw almost every major player launching or relaunching as many as 10-30 products or their variants, either under existing brands or under altogether new brands and categories.

In demand: Iconic consumer brands

Good old brands are finding their way into the portfolios of some of the top FMCG companies in the country. They may be small but that hasn’t prevented them from finding their way into the product portfolios of some of the top fast moving consumer goods (FMCG) companies in the country. Iconic consumer brands are much in demand today.

Spate of price hikes spells good fortune for FMCG industry

FMCG players seem to be regaining their pricing power, with Hindustan Unilever taking price increases of 5-8 per cent in soaps and detergents, Dabur India hiking prices by 3-4 per cent and Britannia Industries 5-10 per cent on select brands of biscuits over the past six months. After dealing with rampant inflation, bruising competition and parsimonious consumers in 2009 and 2010, listed players in the fast-moving consumer goods (FMCG) segment can now look forward to an easier year ahead.


Car industry: Great hopes for 2011

The Indian car industry is looking forward to another promising year, even as the global car market struggles to find its feet after the economic slowdown. With car sales rising over 30 per cent in 2010, the momentum is expected to continue into 2011 on the back of new launches, rising income levels, and the continued availability of cheap finance.

Indian car makers likely to see slower growth in the new year

Even as global peers struggled with the after-effects of the 2008-09 economic slowdown, Indian car makers enjoyed double digit growth this year and saw their share prices outpace the benchmark market index. But as they enter 2011, they may have to get used to a new normal—slower growth and fiercer competition.

2000-2010: A decade of growth in the auto sector

The noughties or 2000-2010 will be remembered for the rise of Indian auto as a strong and lucrative domestic market. During this period, Indian manufacturers became bold and aggressive with global ambitions to boot in the in the second half. Read more at:


Buoyant Indian IT industry rebounds but remains cautious

Recovering from global tech meltdown, the resilient Indian IT industry returned to high growth during a tumultuous 2010 but is cautiously optimistic about 2011 in view of the economic uncertainty in Europe and the US, which account for 80-85 per cent of its export revenue from software services and back office operations.

Mid-size IT companies set to join the party in 2011

The demand for IT services remains strong due to better offshoring sentiment and increased spending by clients . A revival in discretionary projects, together with stable pricing, is likely to continue in the New Year as well. But experts caution that demand visibility has narrowed to only three-six months, given the uncertain economic scenario.

Infotech looks ahead to high growth, innovation

It’s been a happy 2010 for the tech industry. It ushered in glimpses of recovery, while the second half of the year brought in growth, hiring and resilience , pumping in a sense of confidence back to the markets which were shattered by the global economic meltdown. The highlight was the revival and the resilience it showed. IT companies posted good numbers clearly signalling that the risk of a double dip recession emerging and disrupting growth are now behind us. Besides, hiring plans and increments were back on board, demonstrating the feel good in the sector. So while 2010 was characterized by restructuring , consolidation, pragmatic learning and smart budgeting , 2011 will continue to build on that and move ahead, say industry experts. Read more:


Cement industry will be weighed down by excess supply

2011 could be a challenging year for cement manufacturers. Though demand for cement will reach higher double-digit growth, it will be insufficient to absorb the entire supply. Rising input prices and excess capacity (and resultant pricing pressures) will continue to depress margins for cement manufacturers. A higher growth in despatches (versus 7 per cent growth this year) will follow good housing demand and the Government’s thrust on infrastructure projects as the eleventh Five Year Plan comes to an end. With GDP growth estimates for 2011 coming at around 8.8 per cent, the cement industry can be expected to report a 10-11 per cent growth in consumption.


Power companies seen strengthening foundations for big plans in 2010

From disinvestment to cementing nuclear energy pacts, 2010 saw India’s power sector strengthen its foundations for the massive capacity expansion required to meet the growing needs of the energy-starved nation. The year also saw a shift in the process for awarding power projects to a tariff-based bidding system. These developments augur well for the sector, as India — which is eyeing a GDP growth rate in excess of 9 per cent — aims to add 1,00,000 MW of electricity during the XII Five-Year Plan (2012-17), with the major contribution expected to come from private power producers.


Hunt for overseas coal assets to intensify

With the Indian economy back on the track after the slowdown, merger and acquisition (M&A) activities in the resource sector are likely to pick up momentum in the coming year. After establishing a foothold in the global oil and gas asset market, India now eyes coal assets. Meanwhile, the Indian government has proposed key changes in the existing mines and minerals development act (MMDR to allow trading of exploration and mining concessions to attract foreign investors. If the these legislative changes are approved, Indian mining sector, especially coal, might see a flurry of M&A activities.

Weekly News Round-up: 04 December 2010

Here is a quick look on the news of the last week that have a bearing on the stocks that is mentioned in the good buys watch list in my weekly portfolio review. A snapshot with link of some interesting reports is appended at the bottom. Hope it will be useful to you if you follow my wathclist.

News Update

Honda Motor Co plans to sell its stake in India’s top-ranked motorcycle maker, Hero Honda Motors , and instead focus on its wholly owned subsidiary in the country, a news report said on Saturday. The Japanese automaker may earn some 100 billion yen (1.2 billion dollars) from the sale of its shares in Hero Honda, founded in 1984 with India’s Hero Group, the Nikkei business daily said. Honda and the Hero Group reached a basic accord this week to dissolve their partnership, Nikkei said, adding that they will seek final approval from their respective boards of directors later this month for the break-up. – The Economic Times, Dec 4, 2010

India’s top motorcycle maker, Hero Honda, has agreed to increase its royalty payments to Honda Motor Co to 8 percent of annual sales in return for a technology makeover and a stake sale by the Japanese firm in the venture, the Business Standard reported. The newspaper cited unnamed industry sources as saying that Honda had agreed to cut stake in the joint venture with India’s Hero Group to 20 percent from 26 percent now, and to sell the balance to Hero Group at a discount to the current market price. – The Economic Times, Dec 2, 2010

The country’s largest two-wheeler maker Hero Honda today posted sale of 4,21,366 units for November, registering a jump of 10.48 per cent over the same month last year. The company had sold 3,81,378 units in the same month last year, Hero Honda said in a statement.  – The Indian Express, Dec 1, 2010

Auto major Mahindra and Mahindra said it will launch two SUV models — Kornado and Rexton — from its Ssangyong Motor Company Limited (SYMC) portfolio by next year. The company recently announced that it has signed a definitive agreement with SYMC to acquire 70 per cent stake in the ailing South Korean auto maker for USD 463 million (about Rs 2105 crore).  – The Indian Express, Dec 3, 2010

Auto maker Mahindra & Mahindra today (M&M) reported an 18-per cent jump in its total sales in November at 26,666 units. The company had sold 22,589 units in the corresponding month last year, M&M said in a statement.  – Business Standard, Dec 1, 2010

Mahindra & Mahindra will launch the compressed natural gas-powered variant of its Logan car at around Rs 5.20 lakh, in an attempt to spruce sales of the entry-level sedan. The car, to cost Rs 56,000 more than the traditional petrol model, will be made available in only two cities, Mumbai and Delhi initially, but will be distributed in other cities such as Kanpur, Surat and Ahmedabad at later stages. – Business Standard, Dec 1, 2010

Medical equipment-maker Opto Circuits today said it will conclude the merger of US-based Cardiac Science Corp with itself in the next few days. In October, India-based Opto Circuits had announced that it would snap up cardiology device-maker Cardiac Science at a price tag of around $85 million (about Rs 375 crore). – Business Standard, Dec 2, 2010

Bharti Airtel Ltd.’s Nigerian unit cut its mobile-phone call rate by 50 percent in a bid to attract customers from rivals six months after entering Africa’s biggest telecommunications market. The move is in line with the company’s policy to reduce costs for customers, Rajan Swaroop, chief executive officer of Airtel Nigeria, said in an e-mailed statement late yesterday. The rate was cut to 12 naira ($0.08) a minute from 24 naira, according to information on its website. – Bloomberg, Dec 2, 2010

Country’s largest power producer NTPC has tied up with a Singapore-based bank for a $300 million loan for funding its financial plans in this fiscal, a senior company official said today. The loan is for seven-year period, Mr. Singhal added.  – The Hindu, Dec 1, 2010

NTPC Ltd., India’s biggest power producer, plans to place orders for generators worth at least 328.5 billion rupees ($7.2 billion) by March 31 as it accelerates capacity addition to help reduce blackouts.  The utility will buy nine generators of 660 megawatts each and the same number of 800-megawatt units, Chairman Arup Roy Choudhury said in an interview at his office in New Delhi Nov. 26. The equipment cost per megawatt is 25 million to 30 million rupees, he said. – Bloomberg, Nov 29, 2010

State-owned BHEL has bagged an order to supply the country’s first super critical 700-MW coal fire unit by Karnataka Power Corporation Ltd (KPCL) for its thermal power station (TPS) at Bellary. The order is valued at Rs 3,700 crore, BHEL said in a press release today. – The Economic Times, Nov 30, 2010

Indian technology outsourcing firm Tech Mahindra Ltd. is looking for potential acquisitions in Latin America jointly with its software outsourcing unit Satyam Computer Services Ltd. in a bid to bolster the two companies’ foothold in the region and cater to global customers. – The Wall Street Journal, Nov 30, 2010

India’s software services company Geometric Ltd is in price negotiations with a German firm for buyout and has earmarked $20-30 million for acquisitions over next three years, a top official told Reuters on Monday. – The Economic Times, Nov 30, 2010

Interesting Read

Mid-tier IT firms look to shore up onsite presence

A revival in information technology spends, rising demand and the lure of larger contracts are prompting mid-size software service firms to step up their onsite presence, especially in the United States, industry watchers said. Increasing resources at overseas locations could also shield IT companies from any potential protectionist moves by governments, while better positioning them to tap into gradually reviving IT budgets.

Rally in cement shares seems premature

Cement prices have weakened due to oversupply in most regions. Cement prices, up nearly 20% from April until August, fell sharply thereafter. In November, they dipped by an average of Rs.15-20/bag over August across the country, barring the eastern region. As if defying industry fundamentals, share prices of most cement firms have appreciated in the past three months. Output, too, has declined. November despatches of some pan-India players such as Ambuja Cements Ltd and UltraTech Cement Ltd are not very encouraging. They declined by 9-10% over the year-ago period. However, despatches from ACC Ltdand Jaiprakash Associates Ltd rose 5% and 13%, respectively, due to capacity addition. Demand growth, too, has been weak, partly due to the high base effect of fiscal 2010 and partly due to poor offtake from real estate and slower infrastructure growth.

MphasiS bets on software products for next billion

The newest entrant into the billion-dollar club of Indian IT services companies, MphasiS, is looking at software products as a growth engine that could take it closer to the next billion. The firm has already incubated two products and is currently refining its go-to-market strategy. Executives from the company said the firm is “testing out” a hospital information management (HIM) product, designed and developed entirely for small to medium-sized hospitals in emerging geographies. According to industry watchers, hospital information system is globally a $20 billion market; the Asian market, including Japan, may be worth $4 billion.

Past issues

Crompton Greaves – update

Crompton Greaves: Buyouts, strong cash position offer comfort – Economic Times

Crompton Greaves posted another impressive quarterly performance for March 2010. Its consolidated profits grew by 40%, despite a modest sales growth…

… The outlook for the company remains strong, as its expansion strategy through acquisition has paid off, backed by a strong cash position. It has also managed its input prices well, which dented the profits of most engineering companies. While the lack of growth in international markets is a drag on topline, Crompton Greaves has used this to its advantage though buyouts, as the targets were available at more attractive prices. Clearly, there isn’t much for the company to worry, for now.

Crompton Greaves: Global concerns emerge – Business Standard

Crompton Greaves’ consolidated financial performance in the March 2010 quarter was disappointing, as revenue grew marginally at 2 per cent to Rs 2,508 crore, compared to the same period a year ago. The domestic market, which grew at 19 per cent, supported the revenue stream…

… Moreover, there are concerns over the fate of its international business, as the Eruozone crisis might take a toll on revenue growth. The stock, like its peers in the engineering and capital goods space, looks expensive at 17 times and 15 times price to estimated earnings for FY11 and FY12, respectively. Attractive acquisitions, faster recovery in developed key markets, and unlocking value from listing of its 32 per cent group power generation company Avantha power will reinforce positive outlook and lead to further re-rating.

“I SAVE & I WIN” promotion from National Bonds

The new promotion ‘I save, I win’ announced by National Bonds gives away exciting prizes including Blackberrys,  iPhone,  iPads, Gold Coins and Gold Bars with a grand draw for 1 Kilo gold in addition to the regular weekly draws for bonds which is cashable immediately . National Bonds is the sharia compliant national savings scheme of the UAE that provides a profit based annual returns besides weekly prize draws!

The promotion runs from 5th May to 31st July 2010. There will be three draws for this promotion prizes on 29th May  and 26th June  and 31st July 2010. The grand draw for 1 kilo of gold will be on 31st July 2010. There will be a total of 163 prizes comprising Blackberry 9700 (30 numbers), iPhone  16GB (30 numbers), iPad – 16GB (60),  30 grams gold coins (30) and 100 grams Gold Bars (12) to be given away in three draws plus 1 kilo gold in grand draw.

To be eligible for the draw for Blackberry and iPhone, there should have a minimum savings in bonds of AED 1,000, for iPad AED 5,000, for 30 grams gold coins AED 10,000 and for 100 grams gold Bars AED 15,000 and for the grand draw of 1 kilo gold, minimum savings required is AED 25,000.

Prizes can be exchanged for National Bonds Savings certificates at the same value of the prizes.

Related Link:

Save with National Bonds

More on Savings

Pharma may log modest growth in Q4

The pharma sector is expected to log a modest performance for the quarter ended March 2010. Mid-sized pharma companies like Cadila Healthcare, Lupin, Piramal Healthcare, Biocon, Glenmark Pharma are likely to outperform sector biggies like Cipla and Ranbaxy. – A report in Economic Times says.

Aggressive product launches in the US, growth registered in the emerging markets and revival in contract manufacturing are likely to trigger this growth. Though rupee appreciation is negative for export oriented companies, the companies with foreign debts will benefit.

Read complete report of Economic Times

Related Link

Biocon | Cadila Healthcare | Glenmark Pharma | Pharma

Hero Honda 4th Quarter result

Hero Honda Motors Ltd., India’s biggest motorcycle maker, reported a better-than-estimated 49 percent increase in fourth-quarter net income as sales climbed. Profit totalled 5.99 billion rupees in the three months ended in March from 4 billion rupees a year earlier, the company said in a statement today. The company’s operating profit margin  was 17.2 percent in the quarter, according to the statement.

For the entire 2009-10 financial year, the profit soared by 74.1 per cent to Rs 2,231.83 crore. The total turnover in the last fiscal stood at Rs 15,860.51 crore, up 28.1 per cent compared to that in 2008-09. During FY 2010, the company’s total sales increased by 23.6 per cent to 46,00,130 units. The company, which had set a target of selling 40 lakh units in 2009-10, had launched nine new models and variants across segments in last fiscal.

Hero Honda will pay a final dividend of 30 rupees a share.

Related Links:

Hero Honda’s Net Income Gains 49% on Indian Motorcycle Sales: Business Week

Hero Honda’s profit up 50 per cent in Q4: Hindustan Times

More updates

Hero Honda’s Net Income Gains 49% on Indian Motorcycle Sales

Consolidation bells to ring in telecom sector

Times of India
MUMBAI: The world’s fastest growing telecom market is all set to witness big-ticket investments and consolidation post the Bharti Airtel’s purchase of Zain’s African assets. Weaker firms are bound to scramble and seek out stronger partners in a bid to take cover from intense competition for market share. Consolidation would soon be the name of the game.

REpower, RWE Innogy ink 295 MW offshore wind farm pact

REpower Systems, in which Suzlon Energy is majority shareholder with 90.71 holding and  RWE project company for “Nordsee Ost“ have concluded a contract on the delivery of 48 offshore wind turbines.

via Myiris news – Live News – REpower, RWE Innogy ink 295 MW offshore wind farm pact.

Related link:

Drops Savings and Investments recommends investments in Suzlon Energy with a long term perspective

Suzlon net rises 14%

Jan. 30 (Bloomberg) — Suzlon Energy Ltd., India’s biggest maker of wind-turbine generators, reported an unexpected profit in the third quarter after selling a stake in a unit.

Net income, including that of subsidiaries, was 141 million rupees ($3.05 million) in the three months ended Dec. 31, compared with a 648.7 million-rupee loss in the year-earlier period. The median estimate of nine analysts compiled by Bloomberg was for a loss of 389 million rupees.