IFC to lend Rs 1,800 crore to Tata's power project

International Finance Corporation (IFC) on Wednesday said it will lend $ 450 million (Rs 1,800 crore) to Tata Power for setting up the 4,000 MW Ultra Mega Power Project at Mundra in Gujarat.

IFC, which is a member of the World Bank Group, received the approval of its board to advance the amount for the $ 4.2 billion coal-fired power project that will supply electricity in five states of western and northern India.

In addition to supplying electricity to industrial and agricultural users, Tata's Mundra project will serve 1.6 crore domestic consumers, said an IFC release.

The first of the power plant's 800-MW units is expected to be commissioned in mid-2011, while the other units would be launched at intervals of four months each.

The ultra mega power project, which Tata's won through a competitive bidding process, will create 5,000 jobs during construction and 700 jobs once it becomes operational.

Of the total project cost of USD 4.2 billion, IFC will provide $ 450 million with a repayment of period 20 years, the release said, adding that long-term financing will improve the risk profile of the project and will facilitate funding from local banks of around 15 years maturity.

Other lenders to the project include Asian Development Bank ($ 450 million), Korean ECA ($ 800 million) and local banks ($ 1.5 billion), besides an equity component of $ one billion.

Complimenting India for using super-critical technology for coal-fired projects, IFC Director Rashad Kaldany said, "The project will encourage other developing countries to make responsible choices, using best available technologies and applying higher environmental and social standards."

BSE speeds up its IPO plans

The country's leading bourse Bombay Stock Exchange (BSE), is speeding up its initial public offer plans. Asia's iconic exchange believes that it is not about money but more about providing liquidity to its investors.
The trading of shares will start once BSE gets listed on its own platform.
NDTV has learnt that the guidelines for a listing would come out in 4-5 months from SEBI, and BSE is upbeat about it.
“There are certain models by global players; we are working in tandem with SEBI for guidelines,” said Rajnikant Patel, MD & CEO, BSE.
This listing can prove to be unique in many ways as BSE will list without offering any new shares to retail investors through an IPO. It is sitting on enough cash reserves to fund its capex needs.
“Our listing plan is to provide liquidity to investors. We have enough cash reserves,” said Patel.
The Bombay Stock Exchange on Friday launched trading of Sensitive Index-based Futures on the US Futures Exchange (USFE) in Chicago.

"The IPO process might be completed very soon if everything goes smoothly”, Patel said.

BSE speeds up its IPO plans

The country's leading bourse Bombay Stock Exchange (BSE), is speeding up its initial public offer plans. Asia's iconic exchange believes that it is not about money but more about providing liquidity to its investors.
The trading of shares will start once BSE gets listed on its own platform.
NDTV has learnt that the guidelines for a listing would come out in 4-5 months from SEBI, and BSE is upbeat about it.
“There are certain models by global players; we are working in tandem with SEBI for guidelines,” said Rajnikant Patel, MD & CEO, BSE.
This listing can prove to be unique in many ways as BSE will list without offering any new shares to retail investors through an IPO. It is sitting on enough cash reserves to fund its capex needs.
“Our listing plan is to provide liquidity to investors. We have enough cash reserves,” said Patel.
The Bombay Stock Exchange on Friday launched trading of Sensitive Index-based Futures on the US Futures Exchange (USFE) in Chicago.

"The IPO process might be completed very soon if everything goes smoothly”, Patel said.

Religare takes a different route

Domestic brokerage firms that have thrived thus far in the retail segment are now chasing the institutional segment aggressively. Some players such as India Infoline Ltd and Anand Rathi Securities Ltd have hired key people from foreign stock broking houses CLSA Asia-Pacific Markets and Citigroup to build their institutional businesses. Religare Enterprises Ltd has taken a different approach. It has decided to buy Hichens Harrison and Co. Plc., a London-based broking firm, and the company says it is part of an exercise to build the institutional side of its business.

Religare’s shares have been among the worst hit in the market correction that started in January. At current levels, it’s almost exactly halved from its peak of Rs729 in January. The market’s concern is understandable. Religare’s growth thus far has come from a rapidly expanding retail broking distribution network and from a thriving margin funding business. Both segments have been hit as a result of the correction and the resultant drop in volumes.

Under margin funding, a client normally has to pay only 40-50% of the total value of purchase of each scrip, with the rest being provided by the broker. The investor has to pay an interest charge on the money brought in by the broker, which variesbetween 12% and 16% a year. If the investor is unable to meet the ongoing, or maintenance, margin requirement, the broker has the right to sell the scrip.

The institutional business is generally more stable (not that it doesn’t get affected), and the addition of Hichens Harrison will result in a well-needed diversification. In fact, the company had already told analysts and investors more than six weeks ago that it was looking to acquire a UK-based broking firm to augment its institutional business.

Yet, that’s not all Hichens Harrison brings to the table. The company is an approved nomad in the Alternative Investment Market (AIM) of London, or a broker which is allowed to introduce firms to list on the exchange. Companies that wish to list on AIM have no choice but to go through a nomad. Since many Indian companies use the AIM market to raise funds, having Hichens Harrison in its portfolio will help Religare tap this segment in the country. Further, Hichens Harrison has established offices in six emerging markets and had plans to open new offices in Qatar and Singapore in January.

The deal will give Religare a vast reach and help tap clients in each of these countries who want to invest in India. What’s more, the deal doesn’t look expensive, at about 13 times of past earnings. Interestingly, the markets have been lukewarm to it, with the Religare stock up less than 1% in the past week. But it reflects more of the mood the markets are in currently. A few months ago, this would have led to a surge in its shares.

Also note that the deal is still not a given. There could still be a counterbid. Trading in shares of Hichens Harrison had practically stopped since the deal became public, with an average traded volume of 13,000 shares with the shares not trading at all in one trading session. But last Friday, volumes soared to 940,00 shares, the highest in at least a year. With so many shares changing hands close to Religare’s offer price, it seems a section in the market is hopeful that a higher bid would soon arise.

Buying growth at Nitin Fire Protection

The shares of Nitin Fire Protection Industries Ltd (NFPIL), that manufactures, erects and commissions fire protection and security systems, moved up 4% on Monday on news of it acquiring Dubai-based New AgeCo. Llc.. The terms of the deal haven’t been disclosed, but the stock went up on the reasoning that it expands NFPIL’s footprint in a part of the world that benefits from high fuel prices and will hopefully be immune to slowdown worries.

However, the acquisition is not the main reason for the bullishness in the company’s stock. Reports say New Age’s revenues in fiscal 2008 was just Rs44 crore, around a third of NFPIL’s estimated turnover for the year. But that turnover will get a big boost this fiscal year, thanks to NFPIL’s CNG (compressed natural gas) cylinder manufacturing plant at Visakhapatnam in Andhra Pradesh that began production last February and which analysts say will stabilize in the current month.

Analysts estimate that the company’s turnover could triple in financial year 2009, largely because the firm diversified into manufacturing CNG cylinders.

Moreover, since the margins on these cylinders is higher than on fire protection systems, overall margins will increase and operating profit growth will be even higher than the growth in revenues.

Of course, the expansion is old news and the market had pushed up the stock to a high of Rs666 last January on the strength of that. Although it has corrected significantly since then, it has fallen far less than the Bombay Stock Exchange’sSmall Cap index. NFPIL currently trades at around Rs460, which is a valuation of around 12 times last fiscal year’s earnings, not taking the acquisition into account.

Demand for CNG cylinders is expected to grow robustly in countries such as Iran and Pakistan and that should help to absorb any increase in raw material costs. The icing on the cake is provided by the lower effective tax rates since the Visakhapatnam plant is located at a special economic zone, and is eligible for tax benefits.

Market Cues

Market cues:

• FIIs net buy $ 338.3 mn in equity on Apr 4
• Provisional figure was net sell of $212 m
• MFs net sell Rs 162.5 cr in equity on Apr 4
• NSE F&O Open Int up by Rs 1,096 crore at Rs 54,385 cror

F&O cues:

• Futures Open Interest up by Rs 651 crore and Options Open Interest up by Rs 445 crore
• Nifty Futures shed 15 lakh shares in OI, at 3-pt premium
• Nifty Open Int PCR at 1.22 Vs 1.12
• Nifty Puts add 11 lakh shares in Open Interest
• Nifty Calls shed 3 lakh shares in Open Interest
• Nifty 4700 Put adds 2.5 lakh shares in Open Interest
• Nifty 4600 Put adds 2.3 lakh shares in Open Interest
• Nifty 4800 Put adds 2 lakh shares in Open Interest
• Nifty 5200 Call adds 1 lakh shares in Open Interest
• Nifty 5000 Call sheds 2.8 lakh shares in Open Interest
• Nifty 4800 Call sheds 1.6 lakh shares in Open Interest
• Stock Futures add 1.2 cr shares in Open Interest