13th December 2004: Reliance Industries Ltd (RIL) has bagged the `Petrochemicals Company of the Year' award for 2004, instituted by Platts, a US-based energy information company. The award acknowledges the increasing importance of petrochemicals manufacturing and marketing as an integral part of energy complex, RIL said in a release today. RIL executive director H S Kohli received the award at a ceremony held in New York, it added.

11th December 2004: Vedanta Resources (Vedanta) the London-listed mineral resource company with large Indian operations, has raised $600m through a bond issue. Earlier, the company had planned to raise $500m. However, the overwhelming response to the issue has encouraged the company to accept another $100m worth of bonds as a green shoe option. This would be the single largest bond issue by an entity with manufacturing operations in India. The earlier record was a $400m bond offering by SBI. The bonds have been priced at Libor plus 275 bp. The six-month Libor is at 2.67%. The bond issue had attracted offers to the tune of over $1.5bn. The bonds will be listed on the London stock exchange.

Barclays Capital and Deutsche Bank were appointed joint lead managers and book runners for the proposed bond offering which will be sold into Asia, Europe and US, while ABN Amro Bank was the joint lead manager. The bonds are a pure debt issue with no equity conversions. S&P and Moody’s, the leading international rating agencies, have assigned India sovereign ratings to Vedanta which made it the first manufacturing group with Indian operations to secure a Baa3 rating from Moody’s. Only ICICI Bank and State Bank of India have a similar rating in India. The rating is equivalent to the ratings assigned to Indian treasury bonds. The ratings have been instrumental in securing fine rates for the company’s bonds. S&P and Moody’s have rated the bonds themselves BB/Ba2. The proceeds of the bond issue will be used for Vedanta’s 1mt per annum Alumina refinery project that is under construction in Orissa. The proceeds will also be used to expand Balco smelter capacity by 2.45 lakh tonnes per annum.

9th December 2004: Hindustan Motors is in preparation to hive off its Indore and Chennai plants into a separate company.  HM is also looking at roping in private equity investors. Temasek, Actis and Chrysallis Capital are in consultation to pick up stake of over 26% in the new company. The company, owned by the CK Birla group, has been considering some buying interest lately, on reports that the company may start a restructuring plan. The stock was at Rs 16.30 and clocked a volume of 13.87 lakh shares traded on the BSE. Whereas the Indore plant has been a profitable unit, the Chennai plant, which makes Lancers, has been nonviable, though, HM officials, refused to comment.

The company is looking up to encash the rising demand for engines and transmission equipment from both domestic and overseas auto manufacturers. By now, HM has entered into separate agreements with Ford India, General Motors and Mahindra & Mahindra for supply of engines and transmission products, which are being manufactured at its Pithampur plant. They are setting up to enter into similar alliances with other car majors as well. Apart from utilising spare capacity and widening its customer base, these arrangements will help the company to earn additional revenue.

Its Chennai plant, which manufactures the Lancers, is looking to bring in more Mitsubishi models in the country. Sources in the company said that stagnation in Lancer sales, with a price tag of Rs 8 lakh and manufactured under a technical licence from Mitsubishi of Japan, was threatening the viability of the Chennai plant, set up by HM at a cost of Rs 250 crore. With Lancer sales hovering at 350-400 cars per month, the company is now having discussions with Mitsubishi for introducing newer models either in the Rs 6-6.5 lakh or above Rs 10 lakh segment. It was not possible for HM to enter the small car segment, as it would require huge investment. Apart from the Pithampur unit that already manufactures auto components, the company is preparing out aggressive plans to manufacture auto components at its Uttarpara unit in West Bengal.

4th December 2004: France Telecom has offloaded its 26% stake in BPL Mobile’s Mumbai circle. According to the company’s website, “France Telecom has refocused on its core activities and on Europe. Several subsidiaries were divested in 2003, particularly Telecom Argentina, Wind, Casema, CTE Salvador and Eutelsat.” The exact price at which the stakes were sold is not known, but it’s estimated to be between Rs 350 crore and Rs 600 crore, based on the valuation of BPL Mobile’s Mumbai circle. While some analysts said the actual value of the deal could be lower, since France Telecom has probably made a “distress sale”, other analysts felt the price was possible since the Mumbai circle is one of the fastest growing markets.

BPL Mobile has a 1.2m subscriber base and is the second-largest operator in the city. It has reported average revenue per user (ARPU) of over Rs 360 per subscriber. Based on an EBITDA of Rs 250 crore and considering a multiple of 8-12, the enterprise valuation of the Mumbai circle works out to Rs 2,000-3,000 crore. The debt is to the tune of Rs 650 crore. Hence, the equity valuation works out to Rs 1,350-2,350 crore. The value of 26% of the equity works out to Rs 350-600 crore. With this, the last of the foreign ‘strategic’ investors has exited from BPL Mobile. France Telecom, which was one of the first joint ventures in the telecom field in India, had tied up with BPL Mobile in 1995. Despite the 26% stake, it was more of a financial investor than a strategic investor. “They did not bring in the brand, technology or the marketing advice. BPL Mobile was managing the show,” said a source.

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