IFCI the golden pick of 2008

Nobody can steal the credit from us for IFCI discovery at Rs.11 where the entire world has failed to find this hidden jewel.

When the IFCI stake sell was called off, lot of speculation deliberated in IFCI which we consider as part of the market strategy especially in Govt PSU stocks. We can’t just brush aside the 4 year old memories of BPCL and HPCL disinvestment chronicle. These very stocks are now riding in the Bull phase and becoming the star performers. IFCI is no exception. IFCI will ride the Bull wave the timing could be just the matter.

We broke the price of bidding even before the process started and even never imagined debt conversion story by India’s leading financial institutions. It was like predicting RBI transferring SBI stake to Govt at least 6 months before the event happened.

Last month the stock price of IFCI crashed from Rs.120 to Rs.73 on the news of only one bidder Sterlite consortium stipulating the bid with rider. Though Govt reportedly was ready to pass the management control the price was not acceptable to the bidder and hence the deal was called off. It was off but not dormant for sure. And the share price bounced back very smartly close to its base price of Rs 107.

Very soon the Hon’ble Finance Minister indicated that the process of bidding will start once again though the timing was not made known. This made it one point clear that that process will re start and therefore there will not be any compromise on the price.

In order to counter the corporate raid Govt decided straight to take head with the CORPORATE HONCHO to revalue IFCI and determined to send a clear message that we are here to oblige you by giving some stake at our valuation and you will be better off but if you fail to seize this opportunity then better luck next time but the price is off course 25% more. Yes, Govt played their cards simultaneously by asking IFCI to call bids for selling stakes in cos and allowing FII to corner 74% stake in the co.

We have reached the valuation of listed and unlisted firms to determine the Networth of IFCI which is discussed herein below. FII holds 26% stake in the co and it is Hobson’s choice that FII will try to raise its stake in IFCI a debt free co to at least 49%. Which 26% you will corner then…..? And with scattered holding of FII’s Govt would control even with 26% stake and you will lose the chance of getting the management control for ever.

It can’t be brushed aside that LIC who is holding 14% stake in IFCI could have sought the management control of IFCI at even 145. If LIC has never hesitated to convert its 4 year debt into equity at Rs.107 with it only remaining as a strategic investor, it could not really mind to offer Rs.145 to take the management control of IFCI in toto. However the fact remains IFCI management as well as the FIN MIN is not in favour of handing over IFCI management control to the other Govt agency.

This entire thinking gives rise to the rationale that Govt is decided to part with IFCI management control only at Rs.145 or even higher price in next round of re bidding and for that Govt is instilling the value in IFCI stock through cash realization. This makes us to have a look as to how much cash could be added to IFCI Balance Sheet.

The details of major quoted and unquoted investments are as under:

Cost of Preference shares held Rs.423.70 crs

Cost of Debentures held Rs.1020.63 crs

Cost of Mutual Fund units held Rs.131.40 crs

Cost of Government Securities Rs.400.01 crs

Cost of Unquoted Securities Rs.192.15 crs*

Aggregate value of unquoted investments is Rs 2166 crs. ………A

Quoted (Rs in Crs)	Holding above 10crs
Investment Company Name	No of Eq. Shares	CMP	Current Price
Bank of Baroda	7.40	467.50	34.60
Bharat Immunolog	26.10	70.80	18.48
Chambal Fert.	31.00	85.75	26.58
Energy Devlop.Co	11.00	308.85	33.97
Essar Oil	52.63	336.55	177.13
GHCL	6.95	172.05	11.96
GIC Housing Fin	93.00	98.60	91.70
Graphite India	89.00	85.75	76.32
I D B I	47.00	174.90	82.20
ICICI Bank	0.27	1363.90	3.68
Indo Rama Synth.	27.80	68.75	19.11
Ispat Inds.	131.00	74.30	97.33
ITC	6.24	231.10	14.42
Jayaswals Neco	54.31	62.90	34.16
Jaypee Hotels	6.84	243.40	16.65
JCT	263.90	19.70	51.99
Jhagadia Co	49.00	25.20	12.35
JK Lakshmi	18.19	200.80	36.53
JSW Steel	12.82	1296.00	166.15
Kirl. Ferrous	39.69	90.50	35.92
Lloyd Steel Inds	46.32	31.70	14.68
Nag. Fert & Chem	49.10	80.45	39.50
Noida Tollbridge	36.00	78.20	28.15
PTC	15.00	179.65	26.95
Reliance Capital	4.00	2750.00	110.00
Reliance Communi	6.50	790.00	51.35
Reliance Energy	0.70	2584.00	18.09
Reliance Inds.	6.12	3015.00	184.52
Sr. Rayal. Alka.	180.50	27.50	49.64
SRF	5.84	194.85	11.38
St Bk of India	2.00	2402.95	48.06
STC	4.00	1411.00	56.44
Tata Power Co.	12.95	1612.45	208.81
Tour. Fin. Corp.	145.00	50.30	72.94
Welspun Guj.Stah	42.29	465.00	196.65
Welspun India	60.34	100.80	60.82
Welspun Syntex	318.91	17.76	56.64
I P C L	8.40	483.00	40.57
Ruchi Strips	55.69	23.95	13.34
XL Telecom	5.00	463.10	23.16
Infra.Devlp.Fin	138.95	224.70	312.22
Total			2665.11

Aggregate value of quoted investments above Rs 10 crs per scrip is Rs 2665 crs as of 7^TH Jan 2008.whereas the total comes to Rs 2900 crs …B

The value of unquoted investment includes following major stocks….

NSE------------------------------------ 25 lac shares

Stockholding Corp----------------- 357 lac shares

IFCI Venture------------------------ 60 lacs

IFCI Financial Services----------- 69 lac shares

Malvika Steel------------------------ 31 lac shares

Essar Power------------------------- 450 lac shares

Pratibha Syntex-------------------- 175 lac shares

Discount and Finance corp -------47 lac shares

Asset Core Enterprise-------------- 16 lac shares

Others not discussed not being major holdings as on this date and would review when becomes valuable assets ……

As per the fair valuation of each investment it is expected that IFCI could fetch nothing less than Rs 8000 crs for investments in unlisted firms……C

IFCI is still holding 25 lac shares and the latest price discovery it will be done at Rs 3200 per share which gives value of Rs 800crs.

Stockholding Corp has enterprise value of Rs 9000 crs and IFCI holds 17% stake in Stockholding Corp.

The basis of estimated E V of Stockholding Corp is that it holds stake in NSE worth Rs 1700 crs, it has broking outfit valued at Rs 1500 crs, it has stamp vending contract all over India which is valued close to Rs 3500 crs, other biz such as depository and realty is worth Rs 2300 crs which sum in parts gives E V of at least Rs 9000 crs and 17% stake by IFCI is valued at Rs 1500 crs.

Essar Power just recently announced to sell 10% stake for 600 mn USD to General Atlantic. Essar Power has equity of 598 crs and Networth of Rs 990 crs. It is proposing to expand its 1250 MW power capacity to 3600 MW power capacity for which it is investing 4 bn USD. At this stage the E V is 6 bn SUD and IFCI holds 7.52% stake in the co and by the time Essar Power goes for listing and unlock value the E V will become at least 15 bn USD which means IFCI value in Essar Power is close to Rs 4480 crs.

Pratibha Syntex and few other IFCI babies along with all other petty investments are worth Rs 1300 crs on most conservative basis.

The sum of 800 + 1500 + 4480 + 1300 works out to Rs 8000 crs.

Apart from the same IFCI has 3 hot properties one IFCI House worth Rs 1000 crs Housing Complex in Paschim Vihar worth Rs 1700 crs and others worth Rs 300 crs giving close to Rs 3000 crs as is where is basis. ….D

The sum of parts ( A+B+C+D) is Rs 16100 crs and on the diluted equity is Rs 820 crs it gives a fair price of investment of IFCI at Rs 196 per share.

This price of Rs 196 should be considered a rock bottom justifying the price announced by Govt (heard from market sources) of Rs 145 for management control. It simply carries indirect ownership of NSE Stockholding Corp and Essar Power in the unlisted segment which are set to rise at least 4 time post listing.

We had been successful on IFCI call ever since Rs 11 and would continue to believe that it is still under valued and in view of the fact that Govt has given passage to enter this stock through FII route till 74% whether the management stake is sold or not the value in the co will remain at Rs 196 per share. This makes a clear case of re bidding at Rs 145 at least to give upside of at least 50%.

Consensus call....

Market really was volatile but the fact was clearly written on the wall that the Bull Run is on. Yesterday Nifty was hammered to 6210 and today too was hammered to begin with but the gap started narrowing and Nifty got consolidated 6250 and 6260 levels which made us to spring back in action to get out of Nifty and after our call Nifty crossed even 6335 in no time.

However few bears who are not comfortable with market at 6300 decided to take on Nifty and sold heavily the selling was so huge that Nifty vertically collapsed from 6335 to 6230 levels in no time. Bulls digested entire selling because they are aware that Infosys results are set to bring cheers in the market though it may be short living. Huge short covering in oversold Infosys could set Sensex on fire. Meanwhile fresh buying has started in R Com and RIL which might pull Nifty to 6690 levels very easily in this vallan.

Generally market volatility is good from Bulls perspective because at new Sensex every 50 points drop means end of the Bull Run and every entry in new orbit means fresh entry of speculators. The only hindrance which I see is that market regulators has to expand the limits in futures and options otherwise retail and small investors will lose their shirt and pants every next day. This is so important even from the point of view that FII will start selling short from FEB 1 and with current market scenario of getting stocks limit full every second day will add the cause of the market woes.

Last time when these limits were revised the OI was Rs 65000 crs and now it is Rs 130000 crs and hence the revision is must. This fact has been used every now and then by big muscles to screw small traders. E g RPL came out of BAN when it was Rs 190 and re entered ban today when it was Rs 255 yesterday and stock corrected to Rs 230 simply because it went into BAN period forcing small traders to square off positions at huge losses due to mark to mark. This needs to be stopped once for all. It is not giving either healthy picture of the much talked and improved world class capital markets. Correction and rise should be left to market alone on fundamentals instead of these factors governing. Any way, those who trade in Futures have to be prepared to this kind of manhandling.

Ispat Industries last time was in Bull charge at Rs 88 when the news of promoters selling its Peddar Road premises at Rs 83000 psf hit the street which did not appeal to us because the stock was hugely run up. It is the same stock which we had picked up at Rs 10 a year back with virgin buy call. Now having corrected from Rs 88 to Rs 68 that too again on the back BAN in futures, it provided an ideal value in this stock which made us select for delivery instead of trading. It is learnt from reliable sources that Ispat is spinning off its energy biz like all others and selling 25% stake to PE at Rs 700 crs. This could spark huge upside in this stock and we expect a rocket like movement from tomorrow in this stock.

There is a sense of insecurity in traders as well as investors and most of them are factoring big fall from Jan 15 then Feb and prefer to sit on huge cash and not ready to bet on. We interact with most of the centers in India and the consensus is in favour of stay away. So long as consensus does not come in buying mode which had happened in May 2006 market will not reverse for sure though small intermittent corrections may come and go. Today’s reaction was mid cap is correcting and therefore feeling sad…? Dear, mid cap had huge run up and some rest is required and hence this is happening. Who has told you to buy mid cap stocks at their peak….? The GURU mantra of making money is only enter the stock when it is young and book sizable profit when it becomes adult. Therefore in my opinion there is no need to panic and stay invested. It should be always remembered that…..

History may be divided into three movements: what moves rapidly, what moves slowly and what appears not to move at all. This illusory moves may change colour like the LIFE.

Pahela Padav paar kar diya...

Market did cross 21K which has made few investors to book profit and it is always evident that when Funds want to exit, the exit has to happen at lower levels. Hence market corrected but the same will recover by tomorrow afternoon and it will travel back into new territory. Another reason for correction is that yesterday global markets were down traders picked up the call and went short therefore there was short covering. Today exactly opposite has happened. Market opened 250 points plus on global clues which made traders to jump on the bandwagon. Squaring off will wipe lot of gains and before they come for squaring off market drivers threw some positions….

Please do not draw conclusion from Nifty sell call that market has completed its bull run…No way just wait till tomorrow afternoon.

Barring this technical problem there is nothing wrong in the market. One fact which is driving Nifty lower is unwinding of retail positions which are solely attributed to withdrawal for margin funds by broking for diverting the same to REL power issue. Retail out means Sensex bottomed at higher level. It is so pity that this happens in this country again and again which is worst than the Australian cricket. The genius market makers must see that retail earns because retail is the backbone of this country and we must be proud to make Indian’s richer what matters if some GORA loses ground. If we see the history late Mr Dhirubhai Ambani never left his investors in lurch and yes that is the reason the age old shareholders of RIL are still not ready to sell RIL shares irrespective of the fact the said stock has become 10 bagger in just 3 years. History helps create future but investors need to be loyal with that group in particular. I am one of the stronger follower of RIL gr policies and have no shame in admitting in this forum. To the best of my knowledge this stock will remain worth even at Rs 10000 and nobody would be able to call their day on this stock. The respectability of this gr is so visible that the late Dhirubhai was one of the visionaries who could sell a 100 year YANKEE Bond in his times. I will not be surprised if RIL gr announces doubling capacity of RPL soon after it starts commercial production which will keep all who have given sell call in RPL high and dry. At Rs 400 these very firung will come and re rate this stock.

If retail investors show character they will earn wealth. At I Develop, we have helped investors amass huge wealth without the instrument called wealth management. Now a day’s new buzz has started i e wealth management but I am not sure whether it is meant really to manage the wealth or access the wealth. I think in India this scheme must be introduced with strict compliance and compulsory insurance so that the capital of investors will be protected.

RPL, RIL, IDBI and IFCI will remain our top picks apart from Punj Llyodd. We have initiated buy call on Landmarc Leisure once again but this time it has become adult story and not penny stock. Co has huge hidden value in the forms of existing mall as well as integrated module of inserting another 10 such malls. S Kumar has gone on record to spin off realty from S Kumar Ltd which was picked by I Develop at Rs 13 and already 15 bagger is set to use the de-merged land for the aforesaid purpose. There is a possibility of placement at Rs 17 which means stock has upside of at least 3 times before the real value unlocking story starts. We have vested interest in the stock and may buy and sell in the open market and hence members are advised to do their due diligence before act on this stock.

My comments are strictly for our paid members and hence any outsider acting on my comments which are circulated illegally may be doing so at their own risk and without any liability of I DEVELOP.

If you devote your life to seeking revenge, first dig two graves.

SBI associates banking on SBS merger provisions
Tuesday, January 08, 2008


The proposal for merger of State Bank of Saurashtra (SBS) with the State Bank of India (SBI) will be taken up by the Cabinet on January 10.

“Once the Cabinet approves the terms and conditions for the SBS merger with SBI, it will set the tone for merger of the rest of the associates with the parent. Internally, it is envisaged the merger with all the subsidiaries will be completed by 2008 end. There are HR issues but they are not intractable,” a top official of the SBI group told.

The merger of SBS with SBI will be completed on January 27. Meanwhile, it is expected that top officials from the six associate banks will meet on January 25 to pass an in-principle resolution for merger with SBI.

Like SBS, State Bank of Hyderabad (SBH) and State Bank of Patiala (SBP) are fully owned by SBI. The parent bank holds 98% in State Bank of Indore, 92% in State Bank of Mysore (SBM), and 76% in State Bank of Bikaner & Jaipur (SBBJ) and State Bank of Travancore (SBT). “With limited public holding in most associates, approvals will be easy. The modalities for the merger including swap ratios for retail investors are yet to be worked out,” the source said.

The ministry of finance had indicated it wanted SBI to first unlock value in its unlisted subsidiaries which could drive up valuation for the parent bank. “The average capital adequacy ratio (CAR) for associate banks is 12%. With combined reserves of Rs 11,800 crore, the subsidiaries could use the funds for superannuation business.

There may not be an immediate need to raise capital,” he said. In case the banks need capital, hybrid instruments and other options are available.

The SBI-associates merger will entail providing for pension benefits for all employees. At present, employees have only two benefits: gratuity, and pension or PF. However, SBI provides all three benefits to its employees. “There is unlikely to be a major burden on the parent bank to provide the third benefit. It is a windfall for the associates’ employees who will now enjoy the third benefit,” a top official in the SBI group said.

SBI will have to factor in changes in the accounting standards (AS-15) that mandate a provision for pension liabilities going forward. Banks have sought to stagger the provision over a period of five years starting April 2008.

Market ready to test missile

All stocks practically doubled and are looking vulnerable to correction any time in B gr though wherever strong operators are present they will pull their prices whether fundamentally justified or not. They have married to the stock and they are there to stay for 3 years whether stock price go up or go down. But for you it is just impossible to stick to few ideas for 3 years and you require every day a red rose.

Certain stocks which have rose 10 times and 5 times in less than 6 months where profit booking is required because when the reversal starts these stocks will get most affected. Whereas you must enter stock like S S Duncan a MNC co belonging to GATES USA with 30 bn top line which is available at 3 PE X 09. So far the the biggest question mark before quality investors was the scalability though integrity was not at stake. Overnight scalability has been added by transfer of BRAZIL unit of the same gr to India co for which co has announced to raise funds.

Whenever a co announces to raise funds it is a clear signal of the co meeting in private with few large investors who can fund their expansions and also drive the price. No sane investor would like to acquire shares from open market. This exercise is generally done before the placement to match the placement price and after the placement for personal gains. The investor never enters for 10 or 20% return in such cases and for sure the returns could be nothing less than 1000%. For price management professional team of jobbers are hired who acquire shares on their own name and then transfer to the concerned funds and bisect the disclosure norms of exchanges so that the ultimate buyers name is always kept in wrap.

SS Duncan is sitting on virtual gold as its replacement price of the 4 factories itself could mean Rs 2500 crs plus the brand valuations of US co though we are not ready to give market cap of even Rs 126 crs which is less than even shade less plants in India. This can happen only in India. Now is that the game is set for reverse merger of GATES INDIA into SS Duncan, the stock could really fire. Once the price crosses Rs 1 K you will see all happening in this stock...stock split, reverse merger more brands launching and finally an open offer. This is predictably should happen in next 12 to 18 months and as usual CNI will be ahead of market to prove the same.

My call is a very simple arithmetic. You have earned 100% in stocks like R M, Kemrock, Network, Netowrth, Mastertrust and so on whereas S S Duncan is still available at Rs 340 which is just 25% of 200 DMA which means the stock has not moved with veracity so far. The change from existing portfolio to this stock could ensure your profit booking much sought after stocks and replace your capital in very safe and golden stock which will give at least 10 time returns from here in coming 3 years.

We have vested interest in the stock which please be noted.

Coming back to market, Big brother has done the trick and both RIL and RPL stocks fired. Lot of steam is left in RPL and we are sure it may test Rs 500 before March 2008. The best of cream broking houses now started recommending IDBI for stunning returns though our target of Rs 700 is still intact. At these levels you are still in a position to trade in this stock. Can you now enter to dare LANCO though you may know that the target is Rs3000 in next 2 years? You may buy a small qty for delivery but nothing beyond this. Same thing will happen with IDBI when it will cross Rs 350. PNB, OBC and Indian Bank are the classical examples. The dream run of IDBI has yet to come. Very soon IDBI will rise 20% in a one single day and it will become out of reach from all of you like Bombay Dyeing…Now only one question is heard ….”YEH bhav me”. Nothing changes in life only the value changes. Traders will die for its 2% pie and when get trapped has to pay 20% penalty.

We at CNI have the best filters in the world. Rather our technique is the world class to protect small traders and investors and hence we always suggest sell 80% on 20% rise and expand your capital. We shall welcome the member who has not really been able to expand his capital in last 3 years and will guide personally if that be the case.

Market mood is intact and Funds and merchant bankers will have to keep the market tempo on fire if they need to make the IPO’s a great success. Hence market closed 300 points plus. From Monday fresh funds will start flowing because of allocation and stocks where triggers are surfacing will see huge buying. Hindustan Motors, Punjab tractor and HMT all three stocks which are in the probable list of F & O were CNI picks to prove once again SABSE TEZ aur SABSE AAGE CNI….. HMT is being accumulated by 2 big houses of INDIA and will continue to spate till Rs 500 not because the stock is coming in F & O but because HMT has got permission from the Govt to sell its excess land at Banglore for development. Well, wait Rs 350 to 400; market will talk this. Similar is the case with ITI which is on dream run till Rs 250.

Wit is a treacherous dart. It is perhaps the only weapon with which it is possible to stab oneself in one's own back.

National Integrity at stake

Whole world was crying foul play by the de famed Australians did yesterday by de morale cricket game in the world as far as market was concerned many started giving sell call. We at Cni stood like a ROCK again to see that market takes U turn from 200 points weaker opening only to come in plus 125 points at the end of the day. Market will cross 21 K tomorrow and set to roar further till 18^th Jan as first target which is very close to my prediction of correction on 21^st and 22^nd Jan for roll over.

In this column I had written earlier that GURU G Chappel was inserted by Australian Board into Indian cricket to wreck the back of the biggest enemy of Australia which he has done by divide and rule. We fail to detect the same and yet again Rajasthan Govt deployed him proving that GORA is always our weakness. This time THEY realized that bookies can’t book Indian’s and there is no way to stall the Indian team from marching and hence probably they hired umpires to the job in collusion with bookies. This was visible when umpires consulted Ponting for giving out…? Also if Buckner has become old not to hear then the same mistakes should have happened on either side which is not the case.

I think it is high time to bring this in public domain that umpires were booked to be biased with India and Ponting who has lost cricketing wisdom has done acts which even a prostitute could shy at…?

The height of the fact is that BCCI will continue the series because their stake involved personally or otherwise is greater than NATIONAL integrity. How can a Board get a right to fiddle with COUNTRY's SOVEREIGN PRIDE proprietary gains and at least one country from this sub continent must rise to the occasion and BAN playing cricket with the World champions….? If we need to create records then it is better we play 20 test matches against Zimbabwe and create records for that matters.

The one absolutely certain way of bringing this nation to ruin, of preventing all possibility of its continuing to be a nation at all, would be to permit it to become a tangle of squabbling nationalities .

Coming back to the market, REL Power could get oversubscribed by at least 100 times because most of the merchant bankers have set aside 4K to 5K for this issue and I have no doubt in my mind that it will start its debut in 4 digit. In fact, REL is almost close to our target of Rs 2700 yet sources close to management bet of Rs 3700 price by 18^th Jan 2008.

Yet we will not draw call on this stock having run up very sharply. If market fails to sustain the momentum then these stocks may get hammered first. Similar is buzz heard in Grasim but again we will restrain to only few calls at our end. Instead of Grasim and REL, IDBI and IFCI will offer more returns. IFCI is holding 3.57 cr shares of Essar Power which is close to 6% stake and with General Atalanta having acquired 10% stake in the 1250 MW power co Essar Power for 600 mn USD the E V of Essar Power has been sealed at 6bnUSD pre IPO. CO is coming out with IPO and promoters are infusing 4 bn USD for capacity expansion from 1250 MW to 3600 MW which clearly means the post IPO IFCI will have close to 1 bn USD valuation of Essar Power which is cool Rs 55 per share. NSE, Stockholding, shares of quoted cos. Govt Bonds etc are over and above this Rs 55 per share and hence IFCI is free at Rs 98 per share. This makes very clear that Govt was justified to reject Sterlite offer. Whereas IDBI is a safe bet as the stock is under immense accumulation. In fact, when market opened 200 points down I thought IDBI will open at Rs 170 but surprisingly it has shown the strength never shown before. IDBI is just waiting for one trigger to brace towards Rs 210 in very short span of time.

RNRL was sparkling the way we had projected and RPL too was going great guns. Now RPL has the last leg of consolidation left from Rs 255 to 280 which should happen in next 3 trading session then only it could see Rs 330 or 350 on REL P issue date.

In cash segment we have initiated buy call on Rainbow Paper and Sirpur Paper. In both of these stocks we have vested interest. The former has completed huge capacity expansion and the later is fundamental story the details of which will be spelled by us very shortly. Since we have vested interest in both these stocks and we may buy or sell we request all the members to due their full due diligence in these 2 stocks before you enter.

ADAG in talks with NACC Tuesday, January 08, 2008

Anil Dhirubhai Ambani Group (ADAG) is entering into a strategic alliance with the largest lignite miner of the US, North American Coal Corporation (NACC), to ensure fuel supply to its 28,200 mw projects. The strategic tie-up could be in the form of joint venture company (JVC) and the two partners would undertake coal mining activities both in India and abroad.

“The group is looking at a strategic tie-up NACC to get the necessary expertise in the area of mining coal. The strategic association could take shape of a joint venture mining company or could be restricted to contract based mining. Details are being worked out,” a source said. It is understood that ADAG has identified the American miner due to its technical superiority and low cost mining operation.

The coal strategy would be implemented by Reliance Natural Resources (RNRL), the fuel company of the ADAG stable that plans to manage the fuel requirements for the power plants. The company would also source and produce gas and liquid fuel besides mining of coal.

It is understood that NACC would initially support RNRL to develop domestic coal mines for Sasan ultra mega power project (UMPP). Reliance Power has already been assured three captive coal mines for its Sasan project that would require about 16 mt of coal per annum.

Cigarette stocks up on FDI buzz

Cigarette stocks were up Monday on market expectations that the Government may soon review policy on FDI in cigarettes.

The Sensex component ITC, which even after diversification continues to be predominantly a tobacco play, moved up 5.5 per cent to Rs 231. Godfrey Philips shot up over 19 per cent and GTC finished with a gain of 9.64 per cent. Two smaller players, VST Industries and RDB Industries, however, closed lower 4.5 per cent and 5 per cent respectively. Godfrey Philips, jointly promoted by Phillip Morris and family of Mr KK Modi, has moved up most (32 per cent)in the past one week, while ITC, the biggest of the pack, recorded a weekly gain of around 10 per cent. In anticipation of a strong Q 3 results, Credit Suisse has revised ITC price target upwards to Rs 242. Market talk was that Philip Morris, which is currently restructuring its international business into two broad geographical entities – one located in the US and the other in Switzerland, and RJ Reynolds (known as Japan Tobacco Company outside the US), are eager to increase their presence in India. Philips Morris holds 35.89 per cent in Godfrey Philips. RJR has a miniscule presence in India through JT International and has a 50:50 joint venture — Modi RJR. Industry sources, however, presented conflicting views regarding the possibility of a deregulation of the tobacco sector.

UTI, LIC & SBI to gain as govt defines PSU MF

The government today said public sector mutual funds are those where the government along with other Central Public Sector Enterprises (CPSEs) holds 50 per cent or above, clearing the haze over the definition of PSU MF.

Industry players said the definition will help UTI, LIC, SBI and Canara Bank Mutual Funds qualify for the proposed investments by public sector undertakings (PSUs) in mutual fund schemes.

As per clause 619 of the Company Law, only those companies in which government holding is 50 per cent and above are called PSUs.

The government had in August 2007 allowed CPSEs to invest their surplus cash in mutual funds owned by public sector AMCs. However, CPSEs wanted a clarification on the definition of a public sector mutual fund.

Currently, the government has nil or very little holding in MFs promoted by CPSEs, which include asset management companies of LIC, UTI, Punjab National Bank and State Bank of India.

The current total surplus of CPSEs is estimated at over Rs 3,00,000 crore. Navratna and mini-Navratna CPSEs account for a lion’s share of this money.

LIC, SBI, BoB and PNB hold 25 per cent stake each in UTI Mutual Fund. In CanBank MF, the Canara Bank holds 51 per cent while the remaining is held by Robeco, the Dutch financial services company.

Bajaj Hind forays into infrastructure

Bids for Ganga Expressway with DS Construction, Apollo Group.

Bajaj Hindusthan (BHL), the country’s largest sugar producer, is likely to foray into the infrastructure sector in a bid to diversify and secure the company from the cyclical nature of the sugar business.

The company is also toying with the idea of developing real estate projects.

The Shishir Bajaj-owned company has recently bid for two phases of the Uttar Pradesh government’s 1,047-km Ganga Expressway Project in association with DS Construction and the Apollo Group. The consortium has been shortlisted for the two phases and the financial bid is scheduled to open on January 13.

The two phases are Greater Noida to Fatehgarh, including the Farrukhabad Link (253 km), involving an investment of Rs 7,631 crore, and Fatehgarh to Dalmau (Rae Bareli), including the Lucknow link (305 km), at an investment of Rs 8,012 crore.

On December 27, BHL informed the Bombay Stock Exchange that its board had approved the company’s participation in the project.

The company has also diversified into the production of particle-board and medium-density fibre-board from bagasse, a byproduct of sugar. It has also ventured into value-added products such as ethanol and power.

Sugar, the company’s main business, is highly cyclical in nature and the company has posted huge losses in the last few quarters due to a downturn in the sugar sector.

The country saw a record sugar production of 28.4 million tonnes last year, which is expected to be higher this year. Consequently, sugar prices have crashed by 30-35 per cent in the last one year and are expected to remain under pressure in the near future.

“We are the technical partner, while BHL and Apollo are the financial partners. The consortium’s activity is currently limited to this project,” said an official at DS Construction.

The expressway, the biggest road project by a state government in recent times, has attracted big companies such as GMR, Jaiprakash Associates, Punj Lloyd and L&T, because it includes land development and revenue-raising rights through tolls over a 35-year concession period.

The state government, which will oversee the administration of the project, plans to start construction of the expressway from April 2008.

State Bank of India Will Consider Rights Offer

State Bank of India, the nation's biggest bank by assets, said it will consider selling stock to shareholders in a rights offer that may raise up to $4.2 billion.

The board will consider the offer at a meeting Jan. 14, when it will also examine whether to sell shares to employees, the bank said in a statement to the Bombay Stock Exchange today. It did not say when the sale may take place or the price of the shares.

The state-owned bank plans to raise 167 billion rupees ($4.2 billion) from stakeholders, a government spokesman said in New Delhi on condition of anonymity on Nov. 30. The Ministry of Finance will contribute 100 billion rupees to retain its 59.73 percent stake, the official said.

The 200-year-old bank has hired six investment banks, including Merrill Lynch & Co. and CLSA Ltd., to manage its share sale, three people familiar with the matter said on Dec. 20.

State Bank's closest rival, ICICI Bank Ltd., led Indian companies in 2007 in a record year for share sales as lenders raised funds to meet accelerating credit demand in the world's fastest-growing major economy after China.

Indian companies raised almost $20 billion in 2007 in share sales in the Indian market, including rights sales, according to data compiled .

Asian Stocks Gain
Asian stocks rose for the first time in four days, led by Hong Kong developers, on mounting speculation interest-rate cuts will spur demand for real estate.

Suzlon bags order from Spain for supplying 42.5 MW turbine
World's fifth largest wind turbine maker Suzlon Energy today said its European and Latin American marketing arm Suzlon Wind Energy A/S has bagged an order from Spain.

Suzlon Wind Energy A/S, Denmark, has bagged an order for supplying 42.5 MW wind turbines from Eolia Renovables SRC SA and Iniciativas Energticas SA.

"We are very pleased to partner with Eolia Renovables SRC and Iniciativas Energticas SA. We have a winning combination with Suzlon's EPC experience and the clients' considerable experience in the Spanish energy market," Suzlon Wind Energy A/S CEO Erik Winter Pedersen said in a statement.

Suzlon would start executing the contract for turn-key erection of a wind farm Jerez (42.5 MW) by installing 22 units of Suzlon's S88 2.1 MW turbines, it said.

Suzlon Group CEO Andre Horbach said: "Its vital for us to be present in one of the largest markets for renewable energy in the world."

Spain has an installed capacity exceeding 11,000 MW and is estimated to have yearly installations of around 2,000 MW from 2008-2011.

GMR Infrastructure - Updates

With reference to the earlier announcement dated November 27, 2007, GMR Infrastructure Ltd has informed that GMR Energy Ltd, the Company's 100% Subsidiary Company has acquired 80% stake of a Himtal Hydro Power Co. (P) Ltd. having its registered office at Block No. 33, Kel Tote, Chiwani, Kathmandu — 27, Nepal ("Himtal") on January 02, 2008. Himtal have subsisting Survey Licence issued by the Department of Electricity Development, Govt. of Nepal for undertaking the Feasibility Study and Environmental Impact Assessment Study for setting up a 250 MW Upper Marsyangdi—2, Hydro Power Project, located in Upper Marsyangdi, Nepal.

Further the Company has informed that, the necessary approval has been obtained from
Investment Promotion Board, Department of Industries of Government of Nepal and GMR Energy Ltd being the majority shareholder has nominated Directors on the Board of Himtal.

PM alarmed by rise in crude prices, to consider fuel price hike
Prime Minister Manmohan Singh on Monday expressed concern at the rise in international oil prices and said that all possible options, including a fuel price hike and duty cuts, will be considered to deal with the situation.

"We have to look at all possibilities existing. I would not like to comment on it," he told reporters when asked if petrol and diesel prices are set to be raised.

"Steep rise in crude oil prices is a cause of concern. We have to look at various options open to us," he said after new CAG Vinod Rai took oath of office at Rashtrapati Bhawan.

A Group of Ministers on fuel prices headed by External Affairs Minister Pranab Mukherjee will meet on January 17, the first ever meeting after its constitution by the Prime Minister in November 2007, to consider a response to crude prices touching $100 a barrel.