Market finds Budget too disappointing

The market was hammered post the Budget, as it turned out to be a big disappointment for India Inc., which did not have second thoughts in giving it a thumbs down. Let us not forget that today's steep fall was amid extremely high volatility.

The 30-shares BSE Sensex tumbled 540.74 points, to settle at 12,938.09, on heavy selling across the board. The barometer Sensex moved in a range of approximately 500 points; 13,298.52 on the higher side and 12,800.91 on the lower.

In the F&O segment, the Sensex Futures settled at 12,920, down 574.35 points, and at a discount to the spot closing of 12,938.09.

The S&P CNX Nifty was down 155.80 points, to 3,738.10.

The total turnover on BSE amounted to Rs 5809.65 crore. On Tuesday, the turnover was Rs 4019 crore.The market-breadth was weak. There were close to four losers for every single gainer. On the BSE, 1,968 shares declined compared to 594 that advanced. Just 37 scrips remained unchanged.

All except one of the 30-members Sensex pack ended in red.

Satyam Computers was the top loser, down 8.38% to Rs 412.70, on a volume of 15.66 lakh shares.

Gujarat Ambuja Cements (down 7.48% to Rs 116.30), Wipro (down 7.15% to Rs 562) and ACC (down 6.25% to Rs 901) were the other losers.

Maruti Udyog flopped 5.59% to Rs 838, after the dream about the finance minister cutting excise duty on cars turned sour. The Maruti Udyog (MUL) stock had come off the lower level over the past two days on Budget eve on expectations that excise duty on all cars will be brought down from 24% to 16%. In the previous Budget, excise duty was cut to 16% from 24% only on small cars.

Index heavyweight Reliance Industries (RIL) was down 3.65% to Rs 1353.80 on a volume of 23.76 lakh shares.

ITC was the star of the day's trading session, and was the top gainer among the BSE Sensex pack. The scrip rose 3.21% to Rs 170.50, on huge volumes of 48.89 lakh shares, under the reckoning that makers will be able to pass on the 5% hike in excise duty announced on cigarettes to customers.

The worst fears of the market were that cigarettes will be brought under value added tax with 12.5% VAT, spawning concerns that higher tax may lead to a shift in tobacco consumption, to low-end products such as bidis and chewing tobacco. The stock had also surged to a high of Rs 179.90, in intra-day trade.

Finance Minister P Chidambaram today proposed a complete exemption of excise duty on all instant food mixes and biscuits, whose retail price does not exceed Rs 50 a kilo. Besides being the top cigarette maker, ITC also makes biscuits and ready-to-eat food. Relief from excise duty for biscuits and ready-to-eat foods augurs well for the company. The Budget also proposed a cut in duty on food processing machinery to 5%.

SMS Pharmaceuticals, which debuted on BSE at Rs 349.90, settled at Rs 357.85 compared to its IPO price of Rs 380 per share. The counter clocked 34.57 lakh shares on BSE. It also struck a high of Rs 390, and fell to a low of Rs 285.30. The face value per share is Rs 10. The paid-up equity capital of the company is Rs 10 crore.

IT pivotals, which were down after the government brought employee stock option plans under fringe benefit tax, had recovered. The BSE IT Index slipped 5.85%, and was the biggest loser among BSE's sectoral indices.

Infosys was down 5.25% to Rs 2073, off a session’s low of Rs 2053. Satyam Computer was down 8.38% to Rs 412.70, off a session’s low of Rs 404. Wipro was down 7.15% to Rs 562, off a session’s low of Rs 536.55, while TCS lost 5.94% to Rs 1190. TCS had slipped to a low of Rs 1170.

Among small-mid size IT firms, NIIT Tech plunged 16.26% to Rs 404, Polaris down 13.15% to Rs 172, Geodesic Information lost 5.5% to Rs 255, Aftek Infosys shed 9.89% to Rs 63.35 and KPIT Cummins Infosystems shed 5.85% to Rs 139.90.

The scope of minimum alternate tax has been widened, which will raise tax burden for IT firms. Currently, tax exemption under section 10A is available for units set up in software technology parks (STP). The market was expecting an extension of section 10 A benefit for another 5 - 10 years, which did not materialise. The benefit under this sector expires in 2009.

The outlook for the IT sectors remains strong with strong demand for offshore outsourcing. Indian IT firms are increasingly getting large outsourcing deals. The IT services industry is expected to achieve 31% growth in FY 2007. Of these, exports are expected to grow by more than 33% to $31 billion.

Cement makers were hammered after excise duty was hiked to Rs 350 per MT on cement sold for less than Rs 190. Higher duty will be levied for more expensive varieties of cement.

Gujarat Ambuja Cements (down 7.48%), ACC (down 6.25%), Grasim (down 5.87%), UltraTech Cement Company (down 5.43%) and Shree Cements (down 6.50%) were the major losers in this sector.

Bank shares were under pressure as no there was no budgetary provision to make term deposits attractive. The BSE Bankex lost 4.28%.

Punjab National Bank (down 5.98%), Oriental Bank of Commerce (down 4.54%), Bank of India (down 4.51%), Canara Bank (down 4.21%), UTI Bank (down 6.06%), ICICI Bank (down 5.67%) and HDFC Bank (down 4.02%) declined.

The government announcing measures like restoration of tax deduction on interest income up to Rs 15000 under section 80L and reduction in the lock-in period for savings under section 80C, from the stipulated five years, to lure more term deposits for banks was expected. A hike in FII-ceiling for state-run banks from 20% to 24% was also anticipated. These, however, did not come true.

State-run Gail (India) managed to buck the weak trend. The scrip was up 2.53% to Rs 283, after reports that it is in talks for a stake in Algerian exploration assets of China's Sinopec.

A deal for a 30% stake in two blocks that Sinopec acquired in 2004 would be the latest sign of cooperation between state-run companies from Asia's fastest-growing oil consumers, both intent on limiting their dependence on imports. A deal will depend on the price asked by Sinopec. However, the deal value is not known.

The blocks 416a and 417 are 75% owned by Sinopec's international upstream subsidiary, while Algeria's state oil firm Sonatrach owns the rest. If the Algerian deal materialises, it will be Gail's first overseas tie-up with Sinopec.

IFCI saw huge volumes of 3.48 crore shares on BSE. The stock was down 10.41% to Rs 27.10.

Hindustan Motors climbed 4.30% to Rs 40.15, as the company expects to earn Rs 295 crore in five tranches, spread over the next 10 quarters, as well as a non-compete fee equal to 4% of sale proceeds from an integrated IT township and auto park it is developing on 314 acres in West Bengal, specifically identified for this purpose.

Drug maker Abbott India gained 2.10% to Rs 553, in an overall weak market, after the company decided to proceed with its plan to buy back shares after getting regulatory approval. The current market price of Rs 558.50, discounts the buy-back price of Rs 650 per share by Rs 91.50 per share.

Credit ratings firm Crisil declined 5% to Rs 2780.75. It announced a surge in net profit for FY-2006 to Rs 13.4 crore (Rs 4.8 crore). Total income for FY-2006 increased to Rs 85 crore (Rs 52 crore).

Iron ore exporter Sesa Goa plunged 8.10% to Rs 1790, after the government imposed export duty of Rs 300 per tonne on iron ore.

Oil refiner Chennai Petroleum Corporation (CPCL) rose 2.4% to Rs 194.90. The stock rose after the government today cut the ad valorem component of excise duty on petrol and diesel from 8% to 6%.

Reactions from a section of the market raise concerns on lack of measures to increase productivity, and a lost opportunity to provide relief to the corporate sector.

"This Budget is disappointing. There are no steps taken to increase productivity in agriculture, electricity and other sectors, which are not performing as is their potential," R Sesashayee, CII President said.

He feels since revenues from peak customs and excise were increasing, this could have been a time to reduce excise duty to 20%, if not 15% overall, in line with the Kelkar Committee Report.

FICCI President Habil Khorakiwala said a wrong signal has gone out to the corporate world, as the government has increased cess and dividend distribution tax.

Increase in dividend distribution tax impacted trading on the bourses, and the market tumbled soon after the announcement. The dividend distribution tax for corporates has been raised to 15% from 12.5%. There has been no change in corporate tax. The 10% surcharge for firms with a taxable income of Rs 1 crore, or less has been removed. The market was expecting abolition of 10% surcharge for all corporates.

On the flip side, there is no increase in the securities transaction tax (STT), on short-term capital gain tax and on long-term capital gains tax on sale of shares. Long-term capital gains tax remains zero. The market also expected an increase in STT. Marketmen also had apprehension of an increase in short-term capital gains tax to 12.5- 15% from 10%.

The finance minister also said that measures would be taken to allow short-selling by institutional investors, which will have to be backed by delivery.

With regard to personal income tax, there is some relief to the taxpayers as exemption limit has gone up to Rs 1,10,000 from Rs 1,00,000.

Markets across the globe were reeling under selling pressure. However, the Chinese market has bounced back smartly, plunging 8.84%, erasing about $140 billion of value in their biggest fall for a decade, amid fears that authorities would crack down on the speculation that had driven shares to record highs on Tuesday (27 December).

The tumble came a day after the main index jumped to an all-time high, cutting its gains for 2007 to 14%. Marketmen attributed the plunge in China to speculation. Chinese Shanghai today composite was up 109.28 (3.94%), to 2881.07. In the morning, markets were extremely weak.

Hong Kong’s Hang Seng Index was down 2.26%, while Japan's Nikkei 225 Index slipped 2.85%.

The market had a bumpy ride to the day of the Budget. Lack of inflows at higher levels, high valuations, inflation and rising interest rates, fears of an earnings slowdown in coming quarters, and profit taking at higher levels returned to haunt the market. From an all-time high of 14,723.88 struck on 9 February 2007, the BSE Sensex had already tumbled 1,245 points, to 13,478.83 by 27 February 2007, a day before the Budget. The defeat of the Congress in Uttarakhand and Punjab also did not help.

US stocks tumbled on Tuesday (27 February 2007), driving the Dow Jones industrial average down; its worst slide since the aftermath of the 9/11 attacks on the World Trade Centre, New York, as a sell-off in China's stock market raised concerns that equity valuations may be too high.

A US Government report showing a bigger-than-expected drop in January's new orders for US-made durable goods, added to investors' concerns about the outlook for economic growth and corporate profits. Those worries added more fuel to the sell-off, and helped contribute to a loss of about $600 billion in market value for the day.

The Dow Jones industrial average slid 416.02 points, or 3.29%, to end at 12,216.24. The Standard & Poor's 500 Index dropped 50.33 points, or 3.47%, to finish at 1,399.04. The Nasdaq Composite Index sank 96.65 points, or 3.86%, to close at 2,407.87.

As per provisional data, FIIs were net sellers to the tune of Rs 503 crore on Tuesday (27 February 2007), the day when the Sensex lost 171 points. FIIs were net sellers to the tune of Rs 688 crore in index-based futures on that day. They were net sellers to the tune of Rs 40 crore in individual stock futures. Nifty March futures settled at 3886.65 on Tuesday, a discount of 7.25 points over the spot Nifty closing of 3,893.90.

Disappointment creeps into trade

With no favourable reform being announced so far, the BSE Sensex once again began cracking. After striking an intra-day high of 13,224.73, the Sensex has drifted lower as selling resumed.

At 11:38 IST the BSE Sensex was down 373. 86 points, at 13,104.97.It had opened with a yawning downward gap, at 13,045.12, and tumbled to a low of 12,800.91.Interestingly, the BSE Sensex futures were down sharply by 394.35 points (3.01%), to 13,100.The market has experienced high volatility, as the battle between bulls and bears rages while the FM reads out his Budget speech.

Aptech, Educomp Solution jump
Aptech and Educomp Solutions gained after the finance minister proposed a national means-cum-merit scholarship programme to check drop-outs from schools.

However, by 11:48 IST, the Aptech stock was down 0.20% to Rs 219.50. It rose 2.29% to Rs 225, immediately after the annoucement of the programme.

Meanwhile, Educomp Solution edged up 2.10% to Rs 920.Aptech clocked a volume of Rs 10.46 lakh shares, while Educomp Solution clocked 56,798 shares on the BSE.

The finance minster (FM), in his Budget speech, has announced a Rs 6000 per year scholarship for students studying in classes 9, 10, 11 and 12. The national means-cum-merit scholarship will be allotted according to the means available with the student. Further, the FM has allocated Rs 3794 crore for secondary school education.

Educomp Solutions was offered a project worth Rs 18 crore from DSERT, Government of Karnataka, to implement ICT-based education under the Ict@schools project in 264 government high schools of the state. The project has to be completed within five years.

Educomp is a technology-driven e-learning solutions provider specialising in creation, management and delivery of learning content. The company has 27 offices in India, a wholly-owned subsidiary in the US, and employs over 1,000 personnel.

Educomp Solutions offers computer-aided learning solutions to private as well as government schools like smart class programmes, ICT@ schools programme and professional development programme.

Aptech, the IT education service provider, has a strong focus on industry-related training and introduction of customised courses. It derives substantial revenues from international operations. The company also has a presence in Latin America, South East Asia, the Middle East, and SAARC.

Allocation for AIDS excites Cupid
Condoms maker Cupid rose 2.29% to Rs 37.90 after the finance minister said the Indian government will spend Rs 969 crore in 2007/08 to control AIDS.The finance minister is reading the Budget speech in Parliament.The counter clocked a volume of 21,240 shares on the BSE.

At the current market price of Rs 37.90, Cupid trades at 6.96 times its Q3 December 2006 annualized EPS of Rs 5.44.

In November 2006, Cupid was awarded an order for 15 million pieces of condoms (Masti) from the Ministry of Health and Family Welfare, Government of India, aggregating Rs 1.92 crore.Cupid is a leading manufacturer and distributor of condoms.

Cupid registered a net profit growth of 922.20% to Rs 0.92 crore (Rs 0.09 crore) in Q3 December 2006. Net sales for the December quarter rose 649.30% to Rs 5.47 crore from Rs 0.73 crore in the year ago quarter.

Sensex recovers on value-buying

The BSE Sensex, which had tumbled to a low of 12,800.91, in opening trade, managed to recover on bargain-hunting. The Sensex had even struck a fresh high of 13,166.10, just a little while ago.

With moments left before the finance minister presents the Union Budget 2007-08, investors chose to sit on the sidelines, overtly cautious.

The BSE Sensex tumbled in the opening session, led by a sharp fall across global markets. At 10:43 IST the 30-shares BSE Sensex was down 312.75 points, at 13,166.10. It had opened with a yawning downward gap, at 13,045.12, and tumbled to a low of 12,800.91, as selling intensified.The market-breadth was also quite weak. Against 1,1588 shares declining on BSE, just 398 rose. Just 47 shares were unchanged.The BSE clocked a turnover of Rs 1193 crore.

Cement scrips being sold ahead of Budget speech
Cement shares came under renewed selling pressure just a short while before the start of the Budget speech began.ACC was down 4.5% to Rs 917, Gujarat Ambuja Cements was down 3% to Rs 121.90 and Grasim was down nearly 3% at Rs 2264.

Cement shares had fallen sharply over the last few days amid concerns that the government may ban exports, and also on concerns that existing excise structure/excise duties may be tinkered with. From this low, the cement producers have recovered over the past two days on bargain-hunting, which was partly triggered by a cut in freight rates on limestone, a key input for cement, by 6%. However, analysts feel that the benefit of the freight cut on limestone may not be much given that cement units, anyway, are located in proximity to limestone deposits.

From Rs 915.65 on 23 February 2007, ACC had surged in two days to Rs 961.05 on 27 February 2007. Earlier, it had tumbled from a recent peak of Rs 1115.80 on 22 January 2007. Grasim had risen 3% to Rs 2341.15 on 26 February 2007 from Rs 2271.10 on 23 February 2007. It had slipped to Rs 2332.20 the next day. Earlier, Grasim had tumbled to Rs 2271.10 from a recent peak of Rs 2874.60 on 7 February 2007.

A ban of exports will hardly have any impact on domestic prices as exports account for but a small portion of the total production.In late-January 2007, the Centre scrapped 12.5% import duty on cement to rein in domestic prices.

Hindustan Motors firms up on property development plan
Hindustan Motor climbed 8.05% to Rs 41.60, after the company is expected to earn Rs 295 crore from an integrated IT township and auto park it is developing on its surplus land in West Bengal.The counter clocked a huge volume of 29.97 lakh shares in the counter on the BSE.

The Hindustan Motors scrip is on the decline since early-February 2007, after having surged from mid-December 2006. From Rs 33.20 on 13 December 2006, it surged to Rs 44.15 by 8 February 2007, only to slip back to Rs 38.50 by 27 February 2007.

Hindustan Motors has finalised an arrangement with Shriram Properties of Bangalore for the development of 'an integrated IT township and auto park' in 314 acres specifically identified for this purpose . The company expects to receive about Rs 295 crore in five tranches, spread over the next 10 quarters, as well as a non-compete fee equal to 4% of sale proceeds.

In September 2006, Hindustan Motors had said that it was planning to develop automotive forgings, automotive castings & automotive stampings business by cost effectively leveraging existing facilities & infrastructure. Hindustan Motors has been ramping up production of automobile components for other carmakers at its 63-year-old Uttarpara (Kolkata) factory using facilities like foundries, which had become a drag on it.

Meanwhile, Hindustan Motors has received clearance from the West Bengal Government to develop land at its plant near Kolkata. Hindustan Motors plans to develop a residential township, auto parts cluster and an information technology (IT) hub in 314 acres, of the 700 acres it owns near Kolkata.

Hindustan Motors (HM) makes Mitsubishi (Lancer) cars since 1998 under a tie-up with Mitsubishi Motor Corporation, Japan. Recently, the company launched premium sports utility, Montero, which is being imported as a completely built unit from Mitsubishi, Japan.

HM also plans to launch a range of Mitsubishi cars in India next year, and is entering into a special partnership for their exclusive marketing.

Punjab Tractors edges up as FM says agriculture a priority
Punjab Tractors rose almost 1% to Rs 324, in an otherwise weak market, after the finance minister announced a number of provisions to boost agriculture.

Agriculture must top the agenda of policy makers, the finance minister said. Farm supply imbalances can upset growth, he added. Additional irrigation potential of 24 lakh hectares will be implemented, including nine lakh hectares under Accelerated Irrigation Benefit Programme, the finance minister informed.

Farmers' credit likely to reach Rs 1,90,000 crore against the targeted Rs 175,000 crore during 2006-07, he said.

Currently private equity investor, Actis, is in the process of divesting its 29% stake in Punjab Tractors, the north-based tractor firm. As per reports, Ashok Leyland, the Tatas and Italian tractor major SAME Deutz-Fahr have emerged as major contenders for acquiring the stake.

Sensex tumbles in opening session

With less than an hour left for the Finance Minister's presentation of the Union Budget 2007-08, investors chose to sit on the sidelines, overtly cautious.

The BSE Sensex tumbled in the opening session led by a sharp fall across global markets. At 10:02 IST the 30-shares BSE Sensex was down 457.72 points, at 13,011.25. It had opened with a yawning downward gap, at 13,045.12, and tumbled to a low of 12,800.91, as selling intensified. Its high for the day was at 13,072.67.All 30 constitutents of the Sensex pack were under pressure.

No respite for Moser Baer India desite supply deal
Moser Baer India slipped 3.57% to Rs 354.90, in an overall weak market, despite the company's tie-up with Germany's Deutsche Solar for supplying silicon wafers.As many as 54,912 shares were traded in the counter on the BSE.

The Moser Baer stock has been moving up since hitting the level of Rs 230.45 on 12 December 2006. Here, the stock started surging to Rs 390.50 by 6 February 2007, only to slip to Rs 319.85 by 12 February 2007. Again, the Moser Baer scrip began rising, to settle at Rs 368.05 by 27 February 2007.

At the current market price of Rs 354.90, Moser Baer trades at 105.31 times its Q3 December 2006 annualized EPS of Rs 3.37.

The December 2006 quarter results of Moser Baer India were exceptionally good. The net profit for the December 2006 quarter grew 188.3% to Rs 37.62 crore over the corresponding previous year numbers. The sales for the December 2006 quarter stand at Rs 501.52 crore, a modest 19% growth over the year ago period.

Moser Baer India’s wholly-owned subsidiary, Moser Baer Photo Voltaic, has tied up with Deutsche Solar, a leading global silicon wafer manufacturer in Germany, for supplying silicon wafers. Deutsche Solar is part of the German Solar World AG Group.

Recently, Moser Baer forayed into the Karnataka home video market by launching content distribution in Bengaluru. Earlier, in December 2006, Moser Baer announced a foray into the Tamil home video market, and on 31 January 2007 entered the Malayalam market with 101 Malayalam titles. The company is in final negotiations to acquire copyrights / exclusive license of more than 7000 titles in all major Indian languages.

Moser Baer India had entered into a definitive agreement with Philips, to acquire OM&T, a technology company for optical R&D, a 100% subsidiary of Philips. The acquired company, OM& T, has done pioneering work in Blu-ray and is the only company outside Japan, shipping Blu-ray discs. The acquisition will help Moser Baer find a place among the few manufacturers of Blu-ray discs.

Moser Baer claims to hold the second position in the global optical media market. The global oversupply situation in the optical media business has eased by now, and hence Moser Baer will explore an option of having a research and development, as well as manufacturing set-up outside India, for proximity to the US and European markets.

In January 2007, Moser Baer India inked an agreement with Baba Arts to manufacture, market and distribute VCDs and DVDs of over 450 Telugu movie titles. Moser Baer will market the VCDs and DVDs of these titles in India. It will pay Baba Arts a minimum guarantee (MG) of Rs 2.5 crore for eight years in return for the rights. Post recovery of the minimum guarantee, both companies will share the profit in a 50:50 ratio for 8 years. Currently, Baba Arts is the sole copyright holder of 450 Telugu titles.

Moser Baer also launched a new initiative in content distribution in Cochin, marking the extension of the company's maiden foray into the entertainment industry. Its step is aimed at tapping the home video market in Kerala.

The newly launched division of Moser Baer is also in final negotiations to acquire copyrights / exclusive license of more than 7,000 titles in all major Indian languages, which comprise a third of all movies produced till date in India.

Over four scips ceding ground for every gainer on BSE
Even as Sensex regained the 13,000 level after an initial fall to 12,800.91, the feeble market-breadth was evidence of the panic that had crept in.Against 1,571 shares declining on BSE, 347 rose. Just 37 shares were unchanged. Losers outpaced gainers by a ratio of 4.5:1.

This was in contrast to Tuesday (27 February 2007), when select buying ahead of the Budget kept the breadth positive, while the key indices declined following the Congress’ electoral defeat in Punjab and Uttarakhand. Tuesday's fall was also due to Asian markets, which also finished weak.

Some of the major losers among the small-cap and mid-cap space were ICSA (down 9% to Rs 968), Shree Cement (down 8.9% to Rs 1125), Mahindra Gesco Developers (down 7.9% to Rs 592), Goetze India (down 6% to Rs 309), Rallis India (down 5.8% to Rs 264), and Polaris Software (down 6% to Rs 185.90).

At 10:34 IST the Sensex was down 351 points, at 13,127.Along with large-caps, small-cap and mid-cap shares too have come down after a strong rally during mid-December 2006 to early-February 2007.

Abbott India climbs on regulatory okay to buyback plan
Drug maker Abbott India surged 3.09% to Rs 558.50, in an overall weak market, after the company decided to proceed with its plan to buy back shares after getting regulatory approval.The current market price of Rs 558.50, discounts the buy back price of Rs 650 per share by Rs 91.50 per share.A very thin volume of 7,624 shares were traded on the BSE.

The Abbott India stock had declined steadily since mid-October 2006. From Rs 588.50 on 19 October 2006, it dropped gradually to Rs 521 by 25 January 2007, only to surge to Rs 567.10 by 31 January 2007. Here, Abbott India dropped again, to close at Rs 541.75 by 27 February 2007.

At the current market price of Rs 558.50, Abbott India trades at 55.18 times its Q3 December 2006 annualized EPS of Rs 10.12.

Drug maker Abbott India said on Tuesday it will proceed with buying back shares at Rs 650 each, a plan that was put on hold earlier as the company awaited regulatory approvals. The offer opens on March 7 and closes on 22 March 2007. The company plans to buyback around 8 lakh shares (5.5%) of its equity, hiking its stake from 61.70% to 65.10%.

Abbott India derives most of its revenues from insulin and related products. Apart from diabetes care, Abbott also focusses on niche therapeutic segments in CNS products and pain-management. The company’s pharma products like Brufen, and Digene are leaders in their respective segments in India.

Abbott India has a paid-up equity share capital of Rs 15.28 crore, of which parent, Abbott Laboratories, US, holds 61.70%. The public holding in the Indian company is 23%.

The company has posted a net profit growth of 1.20% to Rs 15.47 crore (Rs 15.29 crore) in Q4 November 2006. Net sales for the quarter rose 10.70% to Rs 130 crore from Rs 117.48 crore in the year ago quarter.

Select stocks surge amid broader weakness on Budget eve

The market extended the few days old correction to one more session, as a defeat in the state polls stares the Congress in the face and weakness in Asian markets embittered sentiment in the Indian market. Nevertheless, select stocks edged up in a weak market, as investors bet on sector-specific budget sops.

The 30-share BSE Sensex lost 170.69 points (1.2%), to 13,478.83. It had bounced back after an initial fall in the morning. From 13,538.67, a drop of 110.85 points for the day, the Sensex surged to 13,689 by 11:20 IST. The recovery, however, proved short-lived. Volatility kept marketmen on tenterhooks for the second day in a row today. The barometer Sensex swung 294.85 points, between a low of 13,408.56 and a high of 13,703.41.

The S&P CNX Nifty lost 48.10 points (1.2%), to 3,893.90. The Nifty March futures were at 3,872 compared to the spot Nifty closing of 3,893.90.

The BSE clocked a turnover of Rs 4007 crore compared to Monday’s Rs 3957 crore.

The incumbent Congress party is set to demit power in Punjab and Uttarakhand. The counting for assembly elections in the three states, including Manipur, began early today. The results in Punjab and Uttarakhand are seen as a barometer of voters' concerns about inflation and economic reforms. However, the results will in anyway not jeopardise the Congress-led UPA Government at the Centre.

The finance minister today also presented the annual economic survey to the Parliament. The pre-Budget Economic Survey 2006-07 on Tuesday expressed concern at rising prices and advised 'calibrated' measures to contain inflation while sustaining high growth - an indication that Wednesday's (28 Feb 2007) Budget may continue the overall trend of moderating taxes.

Weak Asian stocks weighed on domestic markets today. Stocks in China, which topped 3,000 points for the first time on Monday (26 February 2007), plunged almost 9% on Tuesday, their biggest drop in 10 years. China Minsheng Banking Corp led the decline in moneylenders, as the central bank raised the reserve ratio this week for the fifth time in eight months, to cut lendable resources for banks.

Stocks in South Korea, Australia and Singapore fell from record highs on concerns about stronger oil. Shares in Japan also dropped. The BSE Small-Cap Index rose 23.84 points (0.35%), to 6,918.29, and the BSE Mid-Cap Index added 9.69 points (0.17%), to 5,706.40.

All sectoral indices of BSE ended in the red today. The BSE FMCG Index was the biggest loser in percentage terms, shedding 34.88 points (1.9%), to 1,777.38.

Cigarette major ITC lost 3% to Rs 165.25. The key trigger for the ITC scrip, in the near term, is developments pertaining to value added tax (VAT) on cigarettes. A 12.5% VAT on cigarettes will lead to a steep hike in cigarette prices, which may impact volumes. The concern for the cigarette industry is higher taxes may lead to a shift in tobacco consumption, to low-end products such as bidis and chewing tobacco.

The BSE Auto Index shed 60.65 points (1.1%), to 5,305.07. Weakness was conspicuous in two-wheeler shares. Hero Honda dropped 4% to Rs 677, and Bajaj Auto dropped almost 4% to Rs 2702.90. Car major Maruti Udyog advanced expecting cuts in excise duty on cars. The car major gained 1.6% to Rs 888.90. The expectation is that excise duty on all cars will be brought down to 16% from 24%. In the last budget, the excise duty was cut to 16% from 24% only on small cars.

Banking sector benchmark, the BSE Bankex, lost 107.63 points (1.5%), to 6,694.82. The banking sector's budget expectations centre around measures like restoration of tax deduction on interest income up to Rs 15000 under section 80L and reduction in the lock-in period for savings under section 80C from the stipulated five years. Such steps will lure more term deposits for banks. There are also expectations that FII-ceiling for state-run banks may be raised from 20% to 24%.

The BSE IT Index lost 73.02 points (1.3%), to settle at 5,172.40. With regard to the IT sector, the key thing to watch out for is whether tax exemption under section 10A for units set up in software technology parks (STP) is extended beyond 2009. The benefit under this sector expires in 2009.

The BSE Healthcare Index lost 9.23 points (0.25%), to 3,613.07. The pharma sector expects that 150% weighted deduction on expenditure incurred on R&D, a sop available till 31 March 2007, may be extended for another 5 - 10 years.

Construction shares surged as the sector is seen benefiting from an increased thrust on infrastructure development. Nagarjuna Construction jumped 5% to Rs 189.90, Tantia Construction rose 6.7% to Rs 124.75, Patel Engineering gained 5% to Rs 385, Pratibha Industries gained 5% to Rs 188.90, Hindustan Construction rose 4.5% to Rs 122.25 and Jaiprakash Associates rose 2.2% to Rs 594. Market men also expect tax benefits available to build, operate and transfer (BOT) projects and power projects under sector 80 IA to be extended to other infrastructure projects.

Select cement shares edged higher. ACC rose 1.7% to Rs 962, UltraTech Cement gained 4% to Rs 943, Madras Cement rose 2% to Rs 3100 and Birla Corporation advanced 2.7% to Rs 265. With regard to the cement sector, a ban on exports is being expected from the budget. Changes are also expected in the excise duty on cement, which is currently pegged at Rs 408 per tonne.

Oil exploration major, ONGC, dropped even as global crude oil held firm. The stock was down 2.4%, to Rs 814.90.

Gujarat Ambuja Cements lost 2.3% to Rs 124.50, after the cement maker said it sold 11% stake in Ambuja Cements India to Swiss cement maker, Holcim, for Rs 527 crore.

Index heavyweight Reliance Industries (RIL) shed 0.2% to Rs 1401. The stock moved between a low of Rs 1390.15 and a high of 1414.40. A newspaper report on Tuesday said the company aims to acquire a global petrochemical giant, or a 300,000 barrels per day US refinery.

The annual economic survey warned that the monetary policies aimed at containing inflation were also behind hardening rates of interest. In the current year, the survey speculates, pressure on inflation may persist due to a mismatch in supply and demand for some primary articles and firm international prices.

The expectations of higher corporate investment and earnings, robust GDP growth and government's commitment to carry forward economic reforms are also expected to scale up foreign institutional investors interest to retain India as one of the preferred destinations, the economic survey states.

High volatility has made Indian stock markets more 'uncertain' than their counterparts in developed economies like the US and South Korea, and the government should firm up regulatory mechanisms to usher in stability, the finance ministry's survey said on Tuesday. The survey also called for regulatory and other necessary steps to further facilitate enhanced institutional investment in equity markets, pointing out that this would counter-balance and cushion the impact of swings in stock prices. The price-to-earnings ratio, which partly reflects the investors' expectations of future corporate earnings, was higher than 20% at end-2006, compared to 17-18% a year ago, it said.

Fears of nasty surprises in the Union Budget 2007-08, have caused a sharp correction on the bourses in the past few days. The fall has also been due to concerns that rising interest rates may impact equity valuations and big IPO pipeline may suck out liquidity from secondary market. At current 13,478.83, Sensex is off 8% from the lifetime high of 14,652.09 attained on 8 February 2007. It is down 2.2% in calendar 2007 so far.

Marketmen fear that short-term capital gains tax on the sale of shares may be hiked from 10% to between 12.5%-15% in the Budget. The securities transaction tax (STT) may also go up further. The STT was raised in the previous budget. The removal of 10% corporate surcharge may be offset by removal of certain open-ended exemptions. On the flip side, analysts also expect the finance minister to give a big impetus to agriculture and infrastructure in the budget

Earnings growth for India Inc remains strong. Growth in recent years has hovered near the breakneck pace of more than 20%. The long term India story remains intact. India’s long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation.

The Securities & Exchange Board of India (Sebi) said on Tuesday it had raised the amount of foreign portfolio investment inflow into India so far in 2007 by Rs 3430.75 crore ($773.91 million) due to capturing of fresh data under the new reporting system. The restatement led to the revision of net inflow into equities this year to Rs 8729.50 crore ($1.96 billion), data on Sebi website showed on Tuesday. The adjustments reflected on the data for Monday (26 February 2007), showed net inflows by foreign funds on that day at Rs 4287.20 crore ($967.10 million).

Weakness persists

The market remained weak in mid-afternoon trade. The Congress hurtling towards defeat in the state polls, and weakness in Asian markets weighed on the sentiment. The incumbent Congress party is set to lose power in Punjab and Uttarakhand. The counting for assembly elections in the three states, including Manipur, began early today.

Results of Punjab and Uttarakhand elections are seen as a barometer of voters' concerns about inflation and economic reforms. However, the results will in anyway not jeopardise the Congress-led UPA Government at the Centre. The finance minister today also presented the annual economic survey to the Parliament on Tuesday.

At 14:41 IST the Sensex was down 167 points, at 13,482. It had recovered from a lower level after plunging as much as 215.12 points, to 13,434.40 by 14:30 IST.

Bombay Rayon Fashions firms up on British buy
Bombay Rayon Fashions gained 1.10% to Rs 189.50, on acquiring UK's DPJ Clothing for a consideration of £ 1.54 million.

With this acquisition, DPJ Clothing has become a foreign subsidiary of Bombay Rayon Fashions(BRFL). The acquisition, through the purchase of 420 ordinary shares (70% of total capital) in DPJ Clothing, was approved by the board of directors of BRFL in a meeting held on 22 February 2007.

DPJ Clothing is in the business of wholesale marketing and distribution of clothing products, and has been incorporated under English Companies Act 1985, with the place of business and registered office at Birmingham.

Bombay Rayon will be able to expand its customer base for its designer garments into the European region with this acquisition, BRFL Managing Director, Prashant Agrawal, informed in a statement to the bourses. The takeover also helps the company make headway for outsourcing and distributing related products in Europe, Agarwal informs further.

BRFL is a multi divisional textile company manufacturing fabrics and garments. The company exports garments, while supplying fabrics to the domestic garment exporters. The company’s 140 weaving machines are spread at three locations -- village Sonale in Thane district, Navi Mumbai and Silvassa -- producing approximately 10.9 million meters of fabric per annum. Two other facilities in Bangalore produce around 6,000 garments per day.

For Q3 December 2006, BRFL reported 145.30% spurt in net profit to Rs 13.76 crore compared to Rs 5.61 crore in Q3 December 2005. Net sales for the quarter jumped 139.60% to Rs 131.62 crore (Rs 54.93 crore).

The latest equity share capital of BRFL is Rs 63 crore, of which promoters hold 55%.

Hindoostan Spinning and Weaving Mills spurts on being declared fit
Hindoostan Spinning and Weaving Mills jumped 5% to Rs 48.65, after being declared fit by the Board for Industrial and Financial Reconstruction.The board (BIFR) has discharged the company from the purview of SICA / BIFR with immediate effect.

The Hindoostan Spinning stock trades in the trade-to-trade group, also popularly called ‘T’ group. The scrip posted volumes of 4,383 shares on BSE, with pending buy orders of 19,745 shares at the maximum limit on BSE.

The stock plunged sharply in the past few weeks under heavy selling. From Rs 64.65 on 7 February 2007, Hindoostan Spinning and Weaving dived to Rs 44.45 by 23 February 2007. Here, it found support and started moving higher, to reach Rs 46.35 by 26 February 2007.

Hindoostan Spinning and Weaving Mills posted a net loss of Rs 0.27 crore for Q1 December 2006 compared to a net loss of Rs 0.13 crore for Q1 December 2005. Net sales for Q1 December 2006 slipped 19.80% to Rs 12.02 crore (Rs 14.98 crore).

Hindoostan Spinning and Weaving Mills is a textile manufacturer.

In July 2006, ICICI Bank sold the Mahalakshmi (Mumbai) property of Hindoostan Spinning & Weaving Mills to an entity controlled by the Mukesh Dhirubhai Ambani Group for an undisclosed amount. The proceeds, along with some other divestments made by the private bank, will reflect in its first and second quarter results.

The deal also reflects ICICI Bank's efforts to cash in on the realty boom, which it feels may not last long.

Market cedes more ground

The market weakened further in the afternoon, after the finance minister presented the annual economic survey to the Parliament on Tuesday. Weak Asian markets also weighed on the sentiment on domestic bourses. At 13:45 IST the Sensex was down 170 points, at 13,479.

Stocks in China, which topped 3,000 points for the first time on Monday (26 February 2007), plunged almost 9% on Tuesday, their biggest drop in 10 years. China Minsheng Banking Corp led the decline in moneylenders as the central bank raised the reserve ratio this week for the fifth time in eight months, to cut lendable resources for banks.

Stocks in South Korea, Australia and Singapore fell from record highs on concerns about a stronger oil. Shares in Japan also dropped.

The market had bounced back after an initial fall in the morning. From 13,538.67, a drop of 110.85 points for the day, the Sensex had surged to 13,689 by 11:20 IST. Early weakness in the market was on early trends in the counting of votes for three state elections, which showed the ruling Congress party trailing in at least two (Punjab and Uttarakhand).

Although the market-breadth was positive, it had weakened since earlier in the day. Against 1,338 shares rising on BSE, 1,141 declined. A total of 87 shares did not change. Gainers outpaced losers by a ratio of 1.17:1. The advance-decline ratio was a robust 2.2:1 in mid-morning trade.

India's pace of economic growth is sustainable, inflation remains a challenge, and no scope for faint-heartedness about the rapid rate of expansion, the finance ministry in the annual economic survey presented to Parliament on Tuesday.

The survey comes one day ahead of India's 2007/08 Budget and said fiscal reforms will help rein in federal deficit up to 3.6% of GDP this fiscal year to 31 March 2007, from 4.1% in 2005/06 and lower than a 3.8% target. But it said the government must curb wasteful spending to sustain the process.

The survey said the impact of recent fiscal and monetary measures would be visible in days to come. The government, nervous about rising prices at a time it faces polls in key states, has cut a series of import duties, an the Reserve Bank of India has tightened monetary policy several times in the past three months.

Ahluwalia Contracts plunges as price movement under Sebi scanner
Construction firm Ahluwalia Contracts plunged 9.10% to Rs 436.50, amid reports that Sebi was probing the price movement of the scrip since listing on 22 February 2007.

Ahluwalia Contracts, which was already listed on regional bourses, had a dream start on the BSE, opening at Rs 101.5, and soaring to a high of Rs 611.9, before settling at Rs 577.8. As many as 7.21 lakh shares changed hands on the day of its debut on BSE.On the day of listing, circuit filters are relaxed to allow the market to arrive at what they see as a fair value for the stock.

The Ahluwalia Contracts stock was very volatile on the next day, touched a high of Rs 620, and slipped to Rs 462.2, the lower circuit limit, before closing at Rs 529.55. The market capitalisation of the company, on Friday’s closing price, adds up to Rs 670 crore.

The stock of Ahluwalia Contracts lost more ground on Monday (26 February 2007) to Rs 480.

The market regulator is checking if there was any deliberate attempt by a group of market participants to ramp up the stock price, like in the case of Nissan Copper and Atlanta recently. The regulator is also verifying as to whether the exchange had exercised necessary due diligence.

The equity shares of Ahluwalia Contracts are listed on the Delhi, Kolkata and Jaipur stock exchanges since 1996.

The regulator had recently put in place a new software named Integrated Market Surveillance System, allowing it to integrate at the end of the day market transactions across stock exchanges. With this software, the regulator does not have to depend on the market participants to furnish the data for whatever investigations it chooses to undertake. This software is likely to be used in scrutinising all the bulk and block deals that were struck in the counter on the two days since its listing.

Reports say that Sebi is looking into the prices of several other recent scrips listed recently. Other companies that were listed on smaller/ regional exchanges and have opted for a BSE listing in the recent past include Tanla Solutions and Tantia Construction.

Ahluwalia Contracts offers construction services, and specialises in executing turnkey projects involving civil construction, electrical works, plumbing and fire-fighting. The company was planning a follow-on offer of approximately Rs 120 crore in 2006, but the plan came unstuck.

Ahluwalia Contracts plans to invest Rs 200 crore in the next two years for becoming a standalone real estate sector and infrastructure development player. To begin with, Ahluwalia Contracts will focus on developing high-end real estate projects in north India, besides undertaking build, operate and transfer (BOT) infrastructure projects.

Ahluwalia Contracts has already acquired land in some parts of north India and Kolkata.

The company, with a turnover of Rs 400 crore, expects to generate business worth Rs 100 crore in 2006-07 from real estate, besides taking the total turnover to Rs 600 crore in the next fiscal. It would initially concentrate on B-class cities of north Indian states for developing townships, commercial malls, SEZs, for which Ahluwalia Contracts has identified land as well.

Economic survey paves way for weakness

The market weakened again in afternoon trade soon after the release of the annual economic survey. Banking, IT and two-wheeler scrips had edged lower.

At 12:31 IST the Sensex was down 105 points, at 13,544. It declined after a solid intra-day rebound in early trade. From 13,538.67, a drop of 110.85 points for the day, the Sensex had surged to 13,689 by 11:20 IST. Early weakness in the market was on early trends in the counting of votes for three state elections, which showed the ruling Congress party trailing in at least two.

India needs to improve its creaky infrastructure, reform labour laws and upgrade skills of workers to sustain a double-digit industrial growth during 2007/12, the finance ministry's annual survey said on Tuesday. The economic survey for 2006/07, presented by Finance Minister P Chidambaram in Parliament, also says more investment was needed to expand factory capacities.

The survey said ensuring high growth, without high inflation, was a priority and capacity addition could avert problems of capacity constraints.A federal compensation package for state governments is critical for phasing out Central Sales Tax (CST) in the next few years, the annual survey said on Tuesday.

Block deal props up Nestle India
Nestle India jumped 4.81% to Rs 980, after a block deal was executed in the counter at Rs 930 per share on BSE.A deal for 4.35 lakh shares was struck in the counter on BSE at Rs 930 per share in opening trade.The Nestle counter notched up cumulative volumes of 4.47 lakh shares on BSE.

The Nestle stock declined sharply from Rs 1243.75 on 11 January 2007 to Rs 935.10 by 26 February 2007. The maxim - buy on rumour, sell on news - appears to have suited Nestle to a tee. The stock climbed sharply from Rs 1042.30 on 18 December 2006 to Rs 1,245 by 12 January 2007 on expectations that the company will return surplus funds to shareholders; the company had called a board meeting on 15 January 2007 to consider the proposal.

However, the actual announcement suggests that the market was a trifle hasty in marking up the stock price. The company has confirmed the move, but placed the surplus funds to be returned to shareholders at about Rs 86 crore.

Based on this number, the quantum of special dividend to be distributed may be no more than Rs 9 per share. This is not extra ordinary, considering that Nestle India has already been paying dividends of about Rs 25 per share over the past couple of years.

With Nestle’s current equity at Rs 96.42 crore, with Swiss food giant Nestle's holding 61% stake in the company, about Rs 52 crore out of the proposed sum to be distributed will go into the parent's kitty. Nestle has, in the past, used the buyback route (through open market share purchases) to return cash to shareholders.

Nestle India posted a moderate set of numbers for the quarter ended September 2006. Net sales of the company grew 16% to Rs 722.66 crore while profit-after-tax (PAT) improved 11% to Rs 82.98 crore. PAT before considering extraordinary items rose 10% to Rs 87.18 crore.

Budget 2006-2007 turned out to be a largesse for Nestle. While the excise duty on ready-to-eat packaged foods was reduced from 16% to 8%, the excise duty on milk products was abolished last year. Earlier, the excise duty on milk products was 16%.

The market is expecting similar sops in this year's budget as well.

Max India upbeat on members consent for stock-split
Max India gained 2.35% to Rs 1070, after its members approved a stock-split proposal on Monday.Max India said that members had consented to breaking up 9.20 crore equity shares, with a face value of Rs 10 each, into 46 crore equity shares of Rs 2 each (5-for-1 split).As many as 7,240 shares were traded in the counter on BSE.

Stock-splits are generally resorted to boost liquidity in the counter. Max India’s average yearly volume is 5,133 shares, when taken on daily basis on BSE.The stock had declined in the past few days; from Rs 1166.65 on 19 February, it had fallen to Rs 1045.40 by 26 February 2007.Recently, Max India’s board approved raising the limit for foreign investment up to 49%. Current FII-holding in the counter is 25%.

In November 2006, Max New York Life Insurance, a joint venture between Max and New York Life, was planning to enter the general insurance market. The joint venture plans to raise the paid-up capital to Rs 1,000 crore in the next year, and by another Rs 500 crore by 2007-08. Max will put in additional capital over the next two-three years. The company is already in talks with a few players for entering the general insurance space.

Max India had posted a net profit growth of 59.10% to Rs 3.85 crore (Rs 2.42 crore) in Q3 December 2006. Net sales for the December 2006 quarter rose 14.50% to Rs 40.04 crore from Rs 34.97 crore in the year ago quarter.

Sanghvi Movers advances on spate of orders
Sanghvi Movers gained 3.65% to Rs 753, after it bagged orders aggregating Rs 50 crore.The orders are for hiring 10 new cranes and 10 support cranes from Reliance Industries, Suzlon and Enercon. The contract period ranges from 12 months to 26 months.The Sanghvi Movers counter clocked merely 637 shares on BSE.

The Sanghvi Movers stock had declined sharply in the past few weeks, after it came out with a poor set of results. From Rs 838.90 on 23 January 2007, the stock slipped to Rs 699.85 by 13 February 2007 on heavy selling after the results. The scrip lost 19.85% during this period. Here, Sanghvi Movers recovered to Rs 726.50 by 26 February 2007 on renewed buying.

The trading of Sanghvi Movers' equity shares also began on the National Stock Exchange (NSE) from 24 January 2007.

For Q3 December 2006, Sanghvi Movers reported 30.90% fall in net profit to Rs 8.40 crore (Rs 12.15 crore). Total income for the December 2006 quarter also declined 12.50% to Rs 39.14 crore (Rs 44.74 crore).

Sanghvi Movers allotted 8.80 lakh equity shares to Goldpeak at Rs 825 per share, aggregating Rs 72.60 crore, at the board meeting on 22 January 2007. The funds will be utilised towards capital expenditure, and for other business purposes. The company had completed expansion worth Rs 118.84 crore up to December 2006.

Sanghvi Movers (SML), the flagship of the Sanghvi Group, is one of the largest crane hiring companies in Asia. SML operates a fleet of around 200 medium to large-sized, heavy-duty hydraulic and crawler cranes with a capacity ranging from 20 tonne to 800 tonne.

Market-breadth going strong

The market came off the lower level in range-bound, mid-morning trade. Select side-counters surged. The market had declined in early trade due to the Congress party's poor showing as per early trends in counting of votes, which began in Punjab, Manipur and Uttarakhand today. Results of Punjab and Uttarakhand assembly elections are seen as a barometer of voters' concerns about inflation and economic reforms. However, the results will in anyway not jeopardise the Congress-led UPA Government at the Centre.

Cement, steel shares, car makers, construction, real estate firms and second line IT shares edged higher. Even Reliance Industries (RIL) recovered from the lower level.
The market-breadth was strong. Against 1,527 shares rising on BSE, 689 declined. Just 53 shares were unchanged. Gainers outpaced losers by a ratio of 2.2:1.

At 11:28 IST the Sensex was down 7 points, at 13,642. From 13,538.67, a drop of 110.85 points for the day, the Sensex had surged to 13,689 by 11:20 IST. At 13,689, the Sensex had risen 39.48 points for the day.The BSE clocked a turnover of Rs 1523 crore.

Thomas Cook India in a tizzy as board okays stock-split
Thomas Cook India jumped 10% to Rs 514.95, after its board approved a 10-for-1 stock-split proposal.With this, the number of shares of Thomas Cook India will increase to 34.58 crore. However, the paid-up capital of the company stands unchanged at Rs 16.07 crore.A total of 2,529 shares were traded in the counter on BSE with pending buy orders for 2,127 shares at the maximum limit.

Commenting on Thomas Cook India's decision to split shares, Madhavan Menon, Managing Director, said "The decision to sub-divide shares would further increase the floating stock available in the market. We are confident that with this split, the liquidity of the stock will increase and benefit shareholders."

The Thomas Cook India stock has an average yearly volume of 2,792 shares, when taken on a daily basis on BSE. Thus the scrip is relatively low traded.

The Thomas Cook India stock has slowly and steadily declined in the past few months. From Rs 578.10 on 4 December 2006, it declined to Rs 468.15 by 26 February 2007, an erosion of 23.48% during this period.

In December 2006, Thomas Cook India acquired TCI in an all-cash-deal for Rs 182.45 crore. The TCI acquisition was aimed at boosting the inbound travel services segment of Thomas Cook India's offerings. TCI has 11 offices abroad.

TCI would become a wholly-owned unit of Thomas Cook, but function as a separate entity.

Thomas Cook said the acquisition will result in a platform of almost 200 branches and outlets, making the combination the largest travel organisation in India in terms of distribution capability.

Thomas Cook also announced in December 2006, the acquisition of 76% in visa services firm TT Enterprises for Rs 16.91 crore. The acquisition of TT Enterprises marked Thomas Cook India’s first major expansion into the visa services business. At present, Thomas Cook offers visa services only as an add-on to its ticketing and holiday customers.

Thomas Cook India operates in the foreign exchange, leisure travel, corporate travel management and travel insurance segments.

In the travel business, Thomas Cook India intends to focus on inbound and outbound travel, corporate travel and the MICE (meetings, incentives, conventions, exhibitions) segments. The company, recently, launched 100% Holidays, a premium holiday's brand.

For Q4 October 2006, Thomas Cook India reported 61.20% fall in net profit to Rs 3.09 crore compared to Rs 7.96 crore in Q4 October 2005. Net sales for the October 2006 quarter rose 35.40% to Rs 38.04 crore (Rs 28.10 crore).

Market gives way after firm start

Volatility dogged the market for the second day in a row, and it weakened today after a firm start. Early weakness stemmed from Congress party's poor showing as per early trends in counting of votes, which began in Punjab, Manipur and Uttarakhand today. Results of Punjab and Uttarakhand assembly elections are seen as a barometer of voters' concerns about inflation and economic reforms. However, the results will in anyway not jeopardise the Congress-led UPA Government at the Centre.

At 10:26 IST the Sensex was down 53 points, at 13,596. It came off the lower level after plunging as many as 110.85 points, to 13,538.67. Earlier, the market had started firm with the Sensex up 53.89 points, to 13,703.41.

Banking, two-wheeler and telecom shares edged lower. Cement shares extended gains for the second day in a row.The market-breath was strong. Against 1,105 shares rising on BSE, 618 declined. Just 45 shares were unchanged. Gainers outpaced losers by a ratio of 1.78:1.A report on the Indian economy, the economic survey, will be tabled in Parliament by noon today.

HOV Services gains on US acquisition
Back-office and debt collection services firm HOV Services surged 5% to Rs 294.70, after the company signed a merger pact with US-based Lason, to make it a wholly-owned subsidiary.There were outstanding buy orders for 30,521 shares at the 5% upper limit. As many as 41,759 shares changed hands in the counter on BSE.

The stock had surged nearly 5% to Rs 280.70, on Monday (26 February 2007), after the company said it was considering acquisitions. The announcement of the acquisition of Lason was made after trading hours on Monday.

With this merger, HOV Services and its global workforce of more than 11,000 employees will serve more than 50% of the Fortune 100 companies, including more than 4,000 customers in North America. The two companies, together, have an annual revenue rate of more than $200 million, HOV said in a statement on Monday.

The company's client's will benefit from having delivery capability from over 49 locations located in the US, Canada, India, China, and Mexico delivering end-to-end integrated solutions including document-centric applications workflow management, finance and accounting, electronic publishing and knowledge processing services.

As per the merger agreement, HOV's wholly-owned subsidiary in the US, will acquire 100% of the outstanding equity of Lason in a transaction valued at $148 million. HOV raised $188 million of new capital from leading global institutions, $63 million in equity and a debt facility of $125 million. Upon closing, the company will have over $85 million in equity.

HOV Services provides business process outsourcing (BPO) services in the finance and accounting business sector with operations in India and the US. The company services US-based corporate clients through three main operating business divisions: Accounts Receivable Management (ARM), Enterprise Management Tools and Services (EMTS) and Insurance and Tax Services (ITS). Its clients are companies in the healthcare, telecommunications, banking and finance and insurance industries.

In late-December 2006, HOV Services acquired 30% stake in TRAC Holdings and SAM Holdings from US-based private-equity firm HandsOn Ventures for $3.74 million.

HOV Services registered 28.91% increase in its consolidated net profit for the quarter ended 31 December 2006, to Rs 4.28 crore (Rs 3.32 crore). Net sales for the quarter rose 19% to Rs 41.66 crore (Rs 34.98 crore).

Alfa Laval India jumps as parent launches open offer
Alfa Laval India surged 8% to Rs 882, after engineering group Alfa Laval made an open offer for acquiring 25.89% stake in the Indian subsidiary for Rs 875 per share.
The offer opens on 19 April and will close on 8 May 2007.

Alfa Laval has made an open offer worth about 700 million Swedish crowns ($99.2 million) to buy most of the remaining shares in its Indian subsidiary, Alfa Laval India. The planned purchase at Rs 875 per share, will lift the parent's stake in Alfa Laval India from 64% to 90%. Alfa Laval expects the bid process to be concluded in June 2007.

A total of 3,487 shares were traded in the counter on BSE. The stock had also surged to a high of Rs 897.50 in early trade.

The Alfa Laval India stock has declined in the past few days. From Rs 835.35 on 22 February 2007, it has dropped to Rs 816.05 by 26 February 2007.

Alfa Laval India has supplied more than 200 evaporation plants in India for varied applications. The company is a leading name in evaporation technology in the India's paper industries, distilleries and pharma industries.

Alfa Laval India is a market-leader in most of its product and process solutions.

Alfa Laval India posted a net profit of Rs 18.01 crore for the quarter ended September 2006 compared to Rs 16.37 crore for the quarter ended September 2005. Net sales for the quarter ended September 2006 rose 8.90% to Rs 147.46 crore (Rs 135.44 crore).

Market ekes out nominal gains amid volatility

The market pulled off an almost incredible rebound after a steep intra-day fall in mid-afternoon trade. The sharp fall came soon after the railway minister completed his budget speech in Parliament. Cement, banking, auto and steel shares were behind the Sensex’s rebound. The rise in cement and steel shares was due to a cut in rail freight rate on key raw materials in their manufacture. Index heavyweight, Reliance Industries (RIL), also recovered.

The 30-share BSE Sensex advanced 16.99 points (0.12%), to 13,649.52. It had come off the lower level after plunging 248.65 points, to 13,383.88, by 14:15 IST. The S&P CNX Nifty gained 3.05 points (0.08%), to 3,942. The Nifty March 2006 futures were at 3,969 compared to the spot Nifty closing of 3,942. On Friday (23 February), Nifty March futures had settled at a discount of 5.20 points.

The market was extremely volatile. The Sensex swung 1000 points, between some of the vital intra-day tops and bottoms of the day. The barometer index also swung 339.52 points between a low of 13,383.88 and a high of 13,723.40.

Railway Minister Lalu Prasad Yadav today announced a 5% cut in freight transportation rates for diesel-petrol, and a 6% reduction for all minerals, including iron ore and limestone. The lowering of freight rates is part of the rationalisation of tariffs announced by the minister even as he refrained from announcing any across the board increase in freight rates.

Lalu Yadav also introduced a commodity-based tariff policy, which will take effect from 1 April 2007, on an experimental basis for major commodities to provide a stronger base to the Railways' competitive capabilities. "We will introduce this new policy through an exclusive package for cement," he said.

The market-breadth evened out by the end of trading. Against 1,287 shares rising on BSE, 1,279 declined. Just 48 scrips were unchanged. In mid-afternoon trade, the ratio of losers to gainers was 1.8:1. The BSE Small-Cap Index lost 9.98 points (0.14%), to 6,894.45, while the BSE Mid-Cap Index advanced 31.82 points (0.5%), to 5,696.71.

The BSE Metal Index was the biggest gainer in percentage terms among BSE’s sectoral indices. It rose 201.61 points (2.2%), to 9,000.54. The BSE FMCG Index advanced 25.98 points (1.4%), to settle at 1,812.26. The BSE’s banking sector Index, the Bankex, advanced 42.87 points (0.6%), to 6,802.45. The BSE IT Index lost 16.42 points (0.3%), to 5,245.42.

The turnover on BSE was Rs 3793 crore, compared to Friday’s Rs 4552 crore.

Fears of nasty surprises in the Union Budget 2007-08, have caused a sharp correction on the bourses in the past few days. It plunged 723 points last week (week ended 23 February). At 13,649.52, it is off 6.8% from the lifetime high of 14,652.09 of 8 February 2007. It is down about 1% in calendar 2007 thus far.

Market men fear that short-term capital gains tax on the sale of shares may be hiked from 10% to between 12.5%-15% in the budget. The securities transaction tax (STT) may also go up further. The STT was raised in the previous budget. The removal of 10% corporate surcharge may be offset by removal of certain open-ended exemptions. On the flip side, analysts also expect the finance minister to give a big impetus to agriculture and infrastructure in the budget.

FIIs have resorted to profit-taking over the past two days. Their net outflow was Rs 225.20 crore on Thursday (22 February) compared to an outflow of Rs 40.20 crore on Wednesday (21 February 2007). An intermittent surge in inflow has been witnessed this month following an upgrade in India’s rating to investment grade by foreign rating agency, Standard & Poor's, late in January 2007. The cumulative FII inflow for February 2007 stands at Rs 3950.20 crore (till 22 February) compared to their purchases of Rs 492 crore in January 2007.

Earnings growth for India Inc remains strong. Growth in recent years has hovered near the breakneck pace of more than 20%. The long term India growth story remains intact. India’s long-term growth drivers are a favourable demography (large share of young population), robust domestic consumption and acceleration in infrastructure creation.

In today’s trade, battered cement shares edged higher on bargain-hunting. ACC jumped 4% to Rs 952, Grasim gained 3.6% to Rs 2354 and Gujarat Ambuja Cements advanced 4.5% to Rs 128.40. Cement shares had tumbled over the past few days with the government keeping a close watch on cement prices. In late-January 2007, the Centre scrapped 12.5% import duty on cement to rein in domestic prices. The recovery in cement shares was also due to reduction in freight rate on limestone – a key input in cement making by 6%.

Buying was conspicuous in PSU banks after the Reserve Bank of India (RBI) said it will resume paying interest on eligible cash reserve ratio (CRR) balances it held. State Bank of India gained 4.4% to Rs 1105, Punjab National Bank gained 5.5% to Rs 459, Bank of India gained 5% to Rs 166, Canara Bank rose 3.9% to Rs 218, and Bank of Baroda rose 2.5% to Rs 219.

Auto shares recovered on expectations of an excise duty cut on cars. Tata Motors gained 3.8% to Rs 846, and Maruti Udyog rose 3% to Rs 889.50. Market expects excise duty on cars to be brought down to 16% from 24% in the Union Budget 2007-08. In the last budget, the government had slashed excise duty on small cars to 16% from 24%.

Steel shares were in demand on expectations that steel makers will raise prices by Rs 1000 per tonne after the budget due to firm global prices. Tata Steel rose 2.5% to Rs 470.95, while Steel Authority of India (Sail) gained 2% to Rs 114. The upmove in steel shares was also due to reduction in freight rate on iron ore – a key input in steel making by 6%.

Reliance Industries shed 0.7% to Rs 1402.20. The stock recovered from the lower level after losing as much as 2.7%, to Rs 1373.50, by 14:09 IST. Reliance Industries (RIL) on Saturday (24 February 2007) unveiled a plan for an integrated cracker and petrochemicals complex, with a total capacity of 2 million metric tonnes per annum in the special economic zone (SEZ) at Jamnagar.

RIL’s board also approved a preferential issue of 12 crore warrants, exercisable into equal number of equity shares of Rs 10 each, to promoters as per SEBI guidelines for preferential issues. On exercise of the rights, the paid-up capital of RIL will increase from Rs 1393 crore to Rs 1513 crore.

Iron ore exporter Sesa Goa jumped nearly 7% to Rs 2012, after freight rate on transport of iron ore was cut by 6% in the Railway Budget.

IT bellwether ended 0.2% to Rs 2232. The stock was quite volatile. It moved between a low of Rs 2161.10 and a high of Rs 2248.70. Satyam Computer Services gained 2.8% to Rs 461.45 on market talk that the company may soon announce a large outsourcing deal.

C & C Constructions settled at Rs 239.90. The stock today debuted at Rs 350 compared to the IPO price of Rs 291.

Copper producer Sterlite Industries rose 1.5% to Rs 508.05, after Shanghai futures rose by their 4% limit on Monday, following sharp gains in the metal on the London Metal Exchange (LME).

Hindustan Zinc jumped nearly 8% to Rs 668, after the company raised zinc prices by 4.2% Saturday (24 February 2007) onwards.

Gas transporter, Gujarat Gas Company, ended flat at Rs 1300. The company said on Friday its net profit jumped 67% to Rs 18.23 crore (Rs 10.90 crore). Net sales for the same quarter surged 46.5% to Rs 234.49 crore (Rs 159.96 crore).

Indiabulls Financial Services ended flat at Rs 438. The company said on Friday three Merrill Lynch units acquired 2.93 million shares in the company, raising its stake to 5.13%.

Sugar shares edged higher following reports that some sugar companies have started hedging their risks in the futures market at a time when sugar prices are falling. Bajaj Hindustan jumped nearly 6% to Rs 169.75, and Balrampur Chini Mills gained 2.3% to Rs 57.80.

IFCI rose 1.2% to Rs 28.15. Volumes in the stock were a huge 1.3 crore shares on BSE. The stock has been consistently clocking huge volumes over the past few days.

Power Finance Corporation jumped 5% to Rs 117.15. The stock debuted at Rs 105 on Friday (23 February 2007) compared to the IPO price of Rs 85.

Civil engineering firm, McNally Bharat Engineering, jumped 5% to Rs 168.90 after the company said on Monday it had secured a Rs 556 crore order from Rashtriya Ispat Nigam, to construct a new sinter plant at Visakhapatnam.

Cement, steel, RIL pull Sensex out of mire

Volatility on the bourses refuses to fade today. The Sensex staged a solid rebound from the lower level in late trading after having tumbled near 250 points by mid-afternoon. The rebound came about as cement shares firmed up again in late trading. Auto and banking shares also firmed up, while index heavyweight, Reliance Industries (RIL), staged a remarkable intra-day recovery.

Railway Minister Lalu Prasad on Monday announced a 5% cut in freight transportation rates for diesel and petrol and a 6% reduction in all minerals, including for iron ores and limestone. The lowering of freight rates is part of the rationalisation of tariffs announced by the minister even as he refrained from announcing any across the board increase in freight rates.

Lalu Yadav also introduced a commodity-based tariff policy, which will take effect from 1 April 2007, on an experimental basis for major commodities to provide a stronger base to the Railways' competitive capabilities. "We will introduce this new policy through an exclusive package for cement," he said.

At 15:12 IST the Sensex was down just 11 points, at 13,621. It had come off the lower level, a fall of 248.65 points to 13,383.88, by 14:15 IST.

Sesa Goa benefits as iron ore transportation to get cheaper
Iron ore exporter Sesa Goa surged 4.40% to Rs 1966.80, after the announcement of a 6% cut in rate for transportation of iron ore.Railway Minister Lalu Prasad Yadav informed about the development while presenting his Railway Budget in Parliament.

For the third quarter ended December 2006, the cost for inland transportation increased (as percentage of sales net of stock adjustment) by 210 basis points to 19.60%.

As many as 2.72 lakh shares were traded in the counter on the BSE.The Sesa Goa scrip has been bullish since late-December 2006. From Rs 1186.35 on 20 December 2006, it surged to Rs 1946.55 by 29 January 2007, only to slip to Rs 1883.90 by 23 February 2007.

At the current market price of Rs 1966.80, Sesa Goa trades at 10.15 times its Q3 December 2006 annualized EPS of Rs 193.67.Recently, Sesa Goa increased the prices of all grades of iron ore for its Japanese customers for FY-2007/08. The decision was taken in the wake of Japanese Steel Mills accepting an increase in the price of Australian iron ore for the year 2007-08.

Sesa Goa had been planning to start negotiations on annual price contracts with major global customers in February 2007. Reports in early-January 2007 had then speculated that Sesa Goa was likely to ask for a 9.5% increase in iron ore prices on annual supply contracts.

It may be recalled that Brazil's CVRD, the world's biggest iron ore producer, had in December 2006, struck an agreement with Chinese steel mills for a 9.5% upward benchmark (iron ore fines) price revision for 2007-08 (April-March). The ore price had increased by 18% in 2004-05 and a record hike of 71% was extracted by exporters from steelmakers for 2005-06.

As per reports in early-February, Anglo American, the world's second largest mining and natural resources company, had submitted its bid with five others for Mitsui’s 51% stake in Sesa Goa. It was also reported that steel giants Arcelor-Mittal and Rio Tinto had bid at over Rs 2,100 per share for Mitsui Corp's 51% stake in Sesa Goa.

Sesa Goa supplies iron ore to China, Japan and Europe, and is also the sole supplier of ore to Pakistan Steel Mill, Pakistan’s only steel manufacturing unit. The company’s annual exports amount to around 5 million tonnes out of Marmagao, Chennai and Paradip ports.

Sesa Goa reported a net profit growth of 23% to Rs 194.94 crore for Q3 December 2006, versus Rs 157.85 crore in Q3 December 2005. Net sales for the quarter rose 15% to Rs 587.89 crore (Rs 510.37 crore).

Rayban Sun Optics India jumps
Rayban Sun Optics India 3.20% to Rs 88.90, after it received a proposal from Italy's Luxottica to set up wholly-owned subsidiaries in India.The Rayban Sun Optics India (Rayban) stock had clocked 4.46 lakh shares on BSE.The Rayban stock slipped ahead of its results in the past few days. From Rs 96.35 on 19 February 2007, it slipped to Rs 91.80 by 23 February 2007.

Rayban Sun Optics India informed BSE that its board of directors received a proposal from Luxottica Group S.p.A, Italy, (Luxottica) indicating their intention to set up wholly-owned subsidiaries in India for wholesale distribution of various luxury & fashion brands in the eyewear industry, including the distribution of spectacle frames and sunglasses. Luxottica Group S.p.A, has requested a no-objection certificate from the company for this purpose.

The proposal indicates that subject to setting up of a wholly-owned subsidiary in India for undertaking wholesale cash-and-carry business in luxury & fashion eyewear other than the RayBan brand, Luxottica proposes to grant a five-year exclusive license for manufacturing and distributing frames and sunglasses under the trademark 'RayBan'.

For Q4 December 2006, Rayban Sun Optics India registered an 8.30% fall in net profit to Rs 3.33 crore compared to Rs 3.63 crore in Q4 December 2005. Net sales for the quarter ended December 2006 rose 18.30% to Rs 17.21 crore (Rs 14.55 crore).

However, for FY ended December 2006, Rayban’s net profit rose 17.60% to Rs 11.94 crore compared to Rs 10.15 crore during FY ended December 2005. Net sales for FY-2006 rose 29.30% to Rs 62.98 crore (Rs 48.71 crore).

Ray-Ban commands nearly 50% of the Rs 150 crore eyecare market in India.

Luxottica gained control over 44% stake in Rayban through a 1999 takeover of Bausch & Lomb of the US. However, it did not follow up the takeover with an open offer. However, after the intervention of Sebi, Luxottica had made an open offer to the shareholders for acquiring 20% stake in the company at Rs 104.30 per share.

The Italy-based eyewear giant, Luxottica, is a global leader in premium eyeglass frames and owns several well-known brands such as Giorgio Armani, Ferragamo and Vogue.

As on December 2006, public and institutions held 40% and 5% stake in the company, respectively, while promoters held 44% stake.

Sensex trims losses; down 170 points

The market came off the lower level after it had witnessed a sharp fall, which materialised after Railway Minister, Lalu Prasad Yadav, presented his Railway Budget in Parliament, where he cut passenger fares across the board while keeping freight rates for most categories unchanged.

At 14:29 IST the Sensex was down 170 points, at 13,462. It came off the lower level after having tanked as many as 248.65 points, to 13,383.88, by 14:15 IST.The market-breath was quite weak. Against 1,619 shares declining on BSE, 886 rose. Just 61 shares were unchanged. Losers outpaced gainers by a ratio of 1.8:1.Telecom shares came under pressure in mid-afternoon trade. Reliance Communications dropped 4% to Rs 414, while Bharti Airtel shed 4.7% to Rs 720.

Plethico Pharma buoyant on board's nod to FCCB issue
Plethico Pharmaceuticals surged 7.26% to Rs 338.20, after the company’s board approved raising $ 75 million through an issue of FCCBs to part finance acquisitions.
As many as 14,420 shares were traded in the counter on BSE.

The Plethico Pharmaceuticals' scrip has been declining since early-January 2007. From Rs 389.80 on 2 January 2007, it dropped to Rs 302.80 by 21 February 2007 only to appreciate to Rs 314.20 by 23 February 2007.

At the current market price of Rs 338.20, Plethico Pharmaceuticals trades at 14.60 times its Q3 December 2006 annualized EPS of Rs 23.16.

The board of Plethico Pharmaceuticals (Plethico) approved raising $75 million through an issue of foreign currency convertible bonds to finance the acquisition of a retail pharmacy chain and/or manufacturing unit and/or OTC brand and/or marketing firms in the US.

To board also agreed to utilize the remaining portion of the IPO-proceeds (Rs 35 crore) for the same purpose.

As per reports in January 2007, Plethico Pharmaceuticals is acquiring two US firms, including a contract manufacturing player and a retail pharmacy chain. The Rs 328-crore Mumbai-based firm is expected to sign the buyout deals before April. The retail chain that Plethico plans to acquire has around 50 outlets across the US with annual sales of $45 million and a core earnings margin of 10%. The second acquisition target had a drug manufacturing plant, and an annual revenue of $20 million. Plethico will be paying around $65-70 million for the buyouts. The money will be raised through qualified institutional placement, or through convertible bonds.

Plethico Pharmaceuticals (PPL) manufactures branded formulations for domestic and non-regulated export markets. The products of PPL fall under anti-diabetic, anti-rheumatic, hepato-protective, anti-lipidemic and rejuvenating agents.

PPL is going to launch sugar free lozenges in 2007. The company has developed herbal vegetarian capsules for the first time in India for exporting to Russia.

Currently, PPL operates three strategic business units (SBUs) in the over-the-counter (OTC) segment: neutriscience (sports nutrition and supplements), confectionery and OTC drugs.

At present, PPL does not operate in regulated markets like Europe and the US. The upgradation of the Kalaria (Indore) plant will help PPL to foray into the UK generics and herbal markets, and giving thrust to existing markets in CIS, Russia and Africa.

The company is also setting up a plant in Jammu and Kashmir (J&K), which is WHO GMP compliant, at an investment of Rs 30.90 crore. PPL plans to start organic farming in J&K to support its herbal products. The company will keep Rs 28 crore for any acquisition opportunities in the OTC, domestic herbal and nutraceuticals space in India.

Plethico Pharmaceuticals is a drug maker and earns substantial revenue (around 68%) from exports, of which around 70% are realised from selling herbal products.

PPL has posted a net profit growth of 6.40% to Rs 19.73 crore (Rs 18.54 crore) for Q1 December 2006. Net sales for the quarter ended December 2006 rose 28.80% to Rs 81.26 crore from Rs 63.09 crore in the year ago quarter.

Autoline Ind extends its bad patch
Auto ancillary firm Autoline Industries was down 10% to Rs 326.90, despite having entered into an agreement with Stokota for merging both companies.The MoU was executed with the intent of merging both companies, where in Autoline will acquire 51% stake in Stokota's global operations for approximately Rs 66.8 crore in cash, and in equity.The Autoline Industries counter clocked 1.64 lakh shares, with pending sell orders of 58,115 shares at the lower limit.

The stock has slipped sharply from Rs 420.85 on 21 February 2007, to Rs 363.20 by 23 February 2007, after the market regulator took action against companies whose stocks had rallied astronomically. Earlier, the Autoline stock had surged from Rs 250.20 on 1 February to Rs 420.85 by 21 February 2007.

Stokota is a renowned MNC with operations in Belgium, France, Poland, China, and India. Stokota has partnerships in over 16 European Union and Eastern European countries, and has over the last 40 years established its brand worldwide as a leader in providing road transport solutions. Stokota's road transportation solutions cater to the building & construction, fuel & energy, waste & cleaning, agriculture & food as well as on-site logistics industry sectors.

Stokota NV manufactures special purpose vehicles (SPV) including tippers, tipper trailers, flatbed and skeleton trailers, cement bulkers, fuel tankers, LPG tankers, bitumen tankers, chemical tankers, vacuum tanks, high pressure jetting units, road and urban sweepers, garbage handling systems and more.

Stokota is the largest manufacturer of aluminum tankers in Europe and is a leader in the market for steel and stainless steel tankers. It also commands high market acceptance in tippers, tip trailers, trailers, bulkers, sophisticated jetting units and road sweepers. It is recognized as a reliable source of road transportation solutions for reputed original equipment manufacturers (OEMs) and large fleet operators in Europe, China and South Fast Asia.

Stokota's current customers include end users of Volvo, Scania, MAN, Iveco, Renault, DAF in Europe and FAW and Deng Fong in China.

The potential investment by Autoline is to help effect a merger of Stokota MV, Stokota China and Stokota India to integrate its global strategy, and form, with itself, a conglomerate that will be a global leader in high-value, low-cost automotive components and transportation solutions.

In a board meeting held on 21 February 2007, the board approved to issue 40 lakh optionally convertible share warrants of Rs 10 each at Rs 400, including a premium of Rs 390 to promoters, promoter companies, directors and other eligible entities including strategic investors on a preferential basis.

Meanwhile, the Autoline board also approved the acquisition of remaining 49% stake in Autoline Dimensions Software, (51% existing subsidiary - the Design Engineering Services arm), and making it a fully-owned subsidiary.

On 6 February 2007, Autoline Industries had made a modest debut at Rs 261.15 on BSE on 31 January 2007, compared to the IPO price of Rs 225. It had settled at Rs 257.95 on the very first day on the bourses.

Autoline’s IPO was subscribed 17.36 times. The company had priced the IPO at the upper end of the Rs 200 - Rs 225 price band. Qualified institutional bidders (QIBs) applied for 3,04,93,900 shares compared to 18.75 lakh reserved for this segment. Among QIBs, FIIs applied for 1,74,31,425 shares, while domestic financial institutions bid for 90,28,550 and mutual funds for 40,29,775 equity shares.

Autoline Industries is a design engineering and manufacturing solutions provider focussed on sheet metal assemblies and formed tubular products, with integrated engineering, tool design and manufacturing facilities, in Pune, India.

Autoline Industries supplies complex sheet metal assemblies and sub-assemblies to Tata Motors, Bajaj Auto, Kinetic Engineering, Mahindra & Mahindra, Walker Exhaust and Fiat India. Tata Motors, which buys components for passenger cars and commercial vehicles, is Autoline's largest customer accounting for about 85% of revenues in FY 2006 (year ended 31 March 2006).

Funds raised through the IPO will be used to upgrade and expand Autoline's Chakan facility in Pune; set up another manufacturing facility at the same location; relocate and consolidate a couple of smaller units; establish a corporate office; fund acquisitions, and provide long-term working-capital resources.

Autoline has tried to diversify operations. The company is expanding the capabilities of its design-engineering unit for offshore development and manufacturing (ODM) services for foreign companies. Autoline registered a net profit of Rs 7.48 crore on sales of Rs 118.28 crore during April-November 2006.

The post-issue equity capital of Autoline Industries is Rs 10.36 crore.

Market down over 130 points

The market edged lower amid volatility as cement and steel scrips pared gains after the Railway Minister Lalu Prasad Yadav kept freight rate unchanged for most commodities. While freight rates were cut on petrol, diesel and iron ore, passenger fares were cut across the board.

At 13:29 IST the Sensex was down 136 points, at 13,496, at its lowest level for the day. It had surged 80 points, to 12,713, by 12:09 IST just as Yadav's speech began.
The market-breadth turned negative from positive. Against 1,334 shares declining on BSE, 1,087 rose. Just 54 shares were unchanged. Losers outpaced gainers by a ratio of 1.22:1.

Indian Railways plan to invest massively in container operations over the next five years. It also plans revamping the rail infrastructure. Yadav also proposed to increase container traffic five fold to 100 million tonnes by 2011/12.

HOV Services gains ahead of board meet to consider takeovers
HOV Services advanced 1.65% to Rs 272.05, as its board meets today to consider proposals for acquisitions.As many as 11,029 shares changed hands in the counter on BSE. The HOV Services stock had also touched an intra-day high of Rs 277.90.The stock has declined consistently from Rs 301 on 8 February 2007 to Rs 267.65 by 23 February 2007.

Earlier this month, HOV Services informed that one of the world’s largest telecom organisations had decided to use its transaction management software, OASIS, to manage and audit accounts receivables assigned to collection agencies and attorneys servicing bad debt throughout the US.

OASIS provides end-to-end transaction management and includes sophisticated modules to strategically distribute accounts to internal departments, or to vendors. OASIS also includes tools to work, manage, audit and dynamically analyze inventory.

In January 2007, HOV Services received a mandate to collect accounts receivable worth $700 million in the healthcare sector. HOV Services, at that time, said the total debt assigned to the company for collections in the accounts receivable management (ARM) vertical was over $ 3.25 billion.

HOV Services provides business process outsourcing (BPO) services in the finance and accounting business sector, with operations spread over India and the US. The company services US-based corporate clients through three main operating business divisions: Accounts Receivable Management (ARM), Enterprise Management Tools and Services (EMTS) and Insurance and Tax Services (ITS). HOV Services' clients are companies in the healthcare, telecommunications, banking and finance and insurance industries.

In late-December 2006, HOV Services acquired 30% stake in TRAC Holdings and SAM Holdings from US-based private-equity firm, HandsOn Ventures, for $3.74 million. Both companies combined are expected to deliver in excess of $17 million profitable revenues for FY 2008, according to HOV.

HOV Services registered 28.91% increase in its consolidated net profit for the quarter ended 31 December 2006, to Rs 4.28 crore (Rs 3.32 crore). Net sales for the quarter ended December 2006 rose 19% to Rs 41.66 crore (Rs 34.98 crore).

The latest equity share capital of the company is Rs 12.55 crore, the face value being Rs 10. Promoters hold 55% stake in HOV Services.

Sensex pares gain

The market had pared gains in afternoon trade while Railway Minister Lalu Prasad Yadav continued presenting the Railway Budget to Parliament. Cement shares, although in the positive zone, had pared gains. Cement shares had surged just on the eve of the rail budget on expecting cuts in freight rates in the Railway Budget. There was no announcement so far with regard to changes in freight rate and passenger fare.

The market-breadth remained positive. Against 1,293 shares rising on BSE, 1,066 declined. A total of 61 shares remained unchanged. Gainers outpaced losers by a ratio of 1.2:1.At 12:46 IST the Sensex was up just 9 points, at 13,461. It had surged 80 points, to 12,713, by 12:09 IST just as Yadav's speech began.

Bank shares rebound as RBI to pay interest on CRR holdings
Bank shares were on fire today, after a two-day slump, following the central bank's decision to resume paying interest on eligible cash reserve ratio balances held by it.

The Reserve Bank of India had recently raised the cash reserve ratio (CRR) to 6% in two stages. The first phase of the hike came into effect last week, with CRR going from 5.50% to 5.75%. This monetary tightening was aimed at curtailing credit growth, and to rein in inflation, which for the 12-months ended 3 February 2007, stands at 6.63%.

A higher CRR requirement will deprive banks of lendable resources to that extent, by sucking out Rs 14,000 crore from the banking system. Banks do not earn any interest on CRR funds kept with the Reserve Bank of India. However, the RBI had announced that it will pay interest on eligible CRR balances held by it.

The Bankex has surged 0.45% to 6,808.75. Among private banks, South Indian Bank climbed 5.61% to Rs 104.50 followed by Dhanalakshmi Bank (up 3.02% to Rs 61.50), Bank of Rajasthan (up 2.29% to Rs 38), Centurion Bank (up 1.50% to Rs 37.15), UTI Bank (up 1.60% to Rs 499), ICICI Bank (up 0.45 to Rs 912), HDFC Bank (up 0.32% to Rs 960.50), and Yes Bank (up 1.20% to Rs 152.25).

Among PSU banks, State Bank of Mysore topped with a gain of 6.76% to Rs 6299 followed by Dena Bank (up 3.98% to Rs 35.30), Indian Overseas (up 3.68% to Rs 108.55), Punjab National Bank (up 3.24% to Rs 449), Canara Bank ( up 1.98% to Rs 213.90), Bank of India (up 1.87% to Rs 160.55), and State Bank of India (up 0.43% to Rs 1063.70).

Banks had recovered from the lower level in the last few days, as a number of them raised their prime lending rates (PLRs), in response to a hike in their cash reserve ratio (CRR) requirement by 50 basis points. From 6,976.88 on 14 February 2007, the Bankex had surged to 7,289.10 on 19 February 2007. From this high, the Bankex had slipped again to 6,759.58 by 23 February 2007.

Bank shares had tumbled ahead of the CRR hike. From a recent high of 7,594.83 on 8 February 2007, the Bankex lost 328.09 points (4.3%), to 7,266.74 by 13 February 2007.

Leading state-run banks like State Bank of India, Bank of India, Bank of Baroda and Punjab National Bank have raised their PLRs by a steep 50 basis points each, in the past few days. The hike in lending rates will help banks protect their margins in the current rising interest rate scenario. Strong credit growth, in a booming Indian economy, has pushed up both lending and deposit rates of banks in the past few years.

Bank credit has been growing at a robust pace but recently slowed in some segments like home loans. Non-food credit grew 30.2% year-on-year up to 2 February 2007, against a growth of 33.2% a year ago, while aggregate deposits expanded 23.2% year-on-year to 2 February, over and above 17.5% a year ago.

Block deal spurs EID Parry
EID Parry rose 2.74% to Rs 131.40, after a block deal was struck in the counter on BSE.The counter clocked cumulative volumes of 3.18 lakh shares on BSE, of which 3 lakh were traded in a block deal struck at Rs 127.75 per share at 10:40 IST.

The EI Parry stock had fallen sharply over the past few months as a major factor for the company’s profitability is sugar, which has largely, under-performed the market on concerns of falling prices. The stock lost 14.05% to Rs 127.90 on 23 February from Rs 150 on 23 November 2007.

EID Parry reported a 72.40% fall in Q3 December 2006 net profit to Rs 3.53 crore from Rs 12.80 crore for Q3 December 2005. Net sales for the December 2006 quarter slipped 28.20% to Rs 150.85 crore (Rs 210.16 crore).

EID Parry has targeted a turnover of Rs 1500 crore by 2009. The company is in the process of increasing its crushing capacity from the current 14,300 TCD to 24,500 TCD, alcohol capacity from the current 12 million litres to 72 million litres and co-generation capacity from 24.5 MW to 127 Mw. The total cost of the project is estimated to be around Rs 850 crore, and will be funded through a mix of internal accruals, debt and the sugar development fund.

In late-April 2006, EID Parry and Cargill International entered into a tie-up to set up a port-based sugar refinery in Kakinada, Andhra Pradesh, with an investment of Rs 325 crore, to tap the export market. EID Parry will hold 51 % stake and Cargill 49 % in the project.

The Kakinada facility, which will be an export-oriented unit, or will be located in a special economic zone (SEZ), will start operations by December 2007 with an initial capacity of 6 lakh tonnes a year. It will be expanded to 10 lakh tonnes. This sugar refining unit will be the largest of its kind in South Asia, a major market it hopes to tap. The unit will import raw sugar from markets such as Brazil, South Africa and Thailand. With the European Union obliged to cut down on subsidy-driven sugar exports, there is a deficit of over 6 million tonnes in the export market. In markets that can be reached from India alone, there is a three-million tonne deficit.

EID Parry recently transferred its Parryware business to its 50:50 joint venture with Roca of Spain.

Market firms up as presentation of Railway Budget starts

The market firmed up in the early afternoon, just as Railway Minister Lalu Prasad Yadav started presenting the Railway Budget. IT bellwether Infosys had pared losses, but RIL remained subdued. Battered cement pivotals recovered, while FMCG pivotals edged higher.

The market-breadth turned positive from negative. Against 1,268 shares rising on BSE, 1,025 declined. Just 62 shares were unchanged. Gainers outpaced losers by a ratio of 1.23:1.At 12:07 IST the Sensex was up 66 points, at 13,698, down from 14,614 of 11:16 IST. Earlier, the market had swung wildly and the Sensex had slipped into the red after a firm opening, only to come off the lower level.

McNally Bharat Engg spurts on winning fresh project
McNally Bharat Engineering Company surged 5% to Rs 168.90, after its consortium with Tyazpromex Port (TPE), Russia, secured a contract worth Rs 688 crore.

The contract is for the construction of a third sinter plant by Rashtriya Ispat Nigam (RINL) at their Visakhapatnam. Under the project, the value of the McNally Bharat Engineering (MBE)'s portion is Rs 555.67 crore.

As many as 40,611 shares changed hands in the counter on BSE, with pending buy orders for 4,584 shares at the maximum limit.The MBE stock has slowly but steadily declined to Rs 160.90 by 23 February 2007, from Rs 180.85 on 5 February 2007.

In December 2006, McNally Bharat Engineering Company had received a Rs 39.92 crore order from Vedanta Aluminium.

McNally Bharat Engineering is a joint venture between the BM Khaitan and CK Birla groups. The company is into turnkey projects, and banks heavily on capacity expansion works of steel companies.

McNally Bharat Engineering is also into manufacturing of material handling and mineral processing equipment and pumps, thickeners and floatation cells. It has two plants at Kumardhubi in Jharkhand and at Bangalore.

MBE is planning to foray into production of industrial gear-boxes in technical and financial collaboration with a foreign player.In October 2006, Mcnally Bharat Engineering Company had announced completion of a $10-million FCCB issue. The bonds are convertible at a minimum price of Rs 143 per share.The MBE’s current equity base is Rs 26.78 crore.