Amtek Auto jumps 11% as Mahindra CIE in race for co's German biz -:- Equity Research

Amtek Auto shares rose more than 11 percent intraday Tuesday after sources told CNBC-TV18 that Mahindra CIE may also be interested in company's German business. Amtek Auto has also been talking to other players in the market to sell some of its stake in overseas companies, non-core assets and real estate as it is desperately looking for a buyer to pare its Rs 15,000-crore debt, according to people privy to the two companies. The management of Amtek Auto said sale of its European assets has been delayed by a month. The company expects to close the sale of German subsidiary Neumayer Tekfor by end of October. The debt-ridden auto ancillary company has been in trouble since August 2015, especially after it started posting losses in Q1FY16. Amtek has been posting losses for every quarter since then while on other side, interest cost has also been rising due to high debt. In the quarter ended June 2016, it had posted a loss of Rs 320 crore against loss of Rs 529 crore in preceding quarter while interest cost jumped to Rs 328 crore from Rs 290 crore in same period. In order to cut down huge debts, loss making Amtek Auto in last year had appointed Morgan Stanley as advisors to assist in the group’s debt reduction plan.

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RBI cuts repo rate by 25 bps to 6.25% -:- Equity Research

The Reserve Bank of India (RBI) on Tuesday cut its key lending—the repo rate—by 25 basis points to 6.25 percent, as a newly set up panel felt that inflation levels were low enough to reduce loan rates. The decision of the monetary policy committee (MPC), headed by new RBI governor Urjit Patel, will likely cheer business leaders and households as cheaper loans will aid investment and spending. The six member panel, which brainstormed over two days, unanimously agreed that inflation was unlikely to gallop past the tolerance threshold of 6 percent in the near future. The MPC expects retail inflation rates to hover around 5 percent by March 2017, the RBI said in a statement, which is well within the comfort zone. A lower repo rate—the rate at which banks borrow from RBI--would mean households may expect cheaper bank loans to buy houses and goods such as cars, which peak during the festival shopping season in October and November. The BSE Sensex rose 85 points to 28,328 mirroring the stock markets’ heightened expectations about lower rates. Since January 2015, the RBI has cut the repo rate six times. India’s retail inflation has touched a five-month low of 5.05 percent in August, triggering hopes of a rate cut. “The MPC expects that the strong improvement in sowing, along with supply management measures, will improve the food inflation outlook,” the RBI said in a statement. The drop in overall inflation rates has been primarily aided by continuous drop inflation in food inflation. The committee credited the drop in food inflation to recent efforts by the government to keep price growth in check including measures to tame prices of pulses, a common source of protein for most Indians. “Food inflation holds the key to future inflation outcomes,” the RBI statement said. “The government has announced several measures to cool food inflation pressures, especially with regard to pulses. These measures should help in moderating the momentum of food inflation in the months ahead,” it said. India’s economy grew 7.1% during April to June, the slowest in 6 quarters, but the RBI and the MPC expect a revival in the coming months boosted by good rains, a pay bonanza for government employees and festive season buying. The RBI retained its earlier growth projection of 7.6 percent for 2016-17. “The momentum of growth is expected to quicken with a normal monsoon raising agricultural growth and rural demand, as well as by the stimulus to the urban consumption spending from the pay commission’s award,” the RBI statement said. Besides, banks appear to be awash with funds and well equipped to deal with rise in loan growth demand to aid new investments. “The accommodative stance of monetary policy and comfortable liquidity conditions should support a revival of credit to the productive sectors,” the statement said. The spurt in demand could, however, potential push inflation. “The Committee took note of potential cost push pressures that may emerge, including the 7th pay commission award on house rent allowances, and the increase in minimum wages with possible spillovers through minimum support prices. The fuller play of these factors will need vigilance to prevent a generalised cost spiral from taking root,” it said. The RBI and the government have set a retail inflation target of 4 per cent for the next five years with an upper tolerance level of 6 percent and lower limit of 2 per cent.

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Canadian pension fund picks up 20% in Edelweiss ARC -:- Equity Research

North America's largest pension fund managers Caisse de depot et placement du Quebec (CDPQ) and Edelweiss Group signed a long-term agreement to invest USD 600-700 million (Rs 5,000 crore) over the next four years in stressed assets and private debt opportunities here. Under the agreement, CDPQ, which already pumped in around USD 1.5 billion in various domestic companies, will be acquiring a 20 percent stake in Edelweiss Asset Reconstruction Company, which is the largest in the space with around Rs 30,000 crore of assets under management. "Across our whole organisation, one of our top priorities is India as it has growth potential and strong fundamentals. Today, we are making an initial commitment of USD 300 million to this partnership," CDPQ president and chief executive Michael Sabia told reporters here today. "Our goal is to keep growing our relationship and to do that we are ready to invest between USD 600-700 million over the next four years. In other words, roughly double the initial commitment that we are announcing today," he added. Sabia said his fund sees two big opportunities in this partnership. "First, by expanding credit opportunities, access to credit for Indian companies and by building with Edelweiss, a large and a growing platform to take on an important work of asset reconstruction," Sabia said. Edelweiss Group chairman Rashesh Shah said: "We collectively aim to channelise Rs 12,000-14,000 crore, which includes Rs 5,000 crore from CDPQ over the next four years and investments from us and other institutional investors into the private debt and restructuring of stressed assets." He said as part of this partnership, CDPQ will be acquiring a 20 percent stake in Edelweiss ARC. But he did not disclose the value of the 20 percent equity sale to the Canadian fund. In addition to CDPQ's proposed 20 percent stake, other shareholders in Edelweiss ARC will be a Scandinavian insurance company with a 4 percent stake, 16 percent by domestic investors and the balance by the Edelweiss Group. The acquisition and shareholding are subject to approval by regulatory authorities. Sabia said CDPQ had in the past invested in Indian companies somewhere around USD 1.5 billion and is further looking at buying equity stake in more companies.

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IOC lines up Rs 18,000 cr to raise Panipat refinery capacity -:- Equity Research

Indian Oil Corporation , the nation's largest oil firm, plans to invest Rs 18,000 crore to raise capacity of its Panipat refinery in Haryana to 25 million tonnes (mt) by 2020, larger than previously planned. IOC had previously planned to raise capacity of Panipat refinery from 15 mt to 20.2 mt, but now it is looking at raising the capacity straightway to 25 mt, its Director (Refineries) Sanjiv Singh said here. "We have land at Panipat refinery site and so we are looking at going straight to 25 million tonnes," he said. "We have to look at the capacity of the pipeline, which carries crude oil from west coast to the refinery before finalising if the capacity should be expanded to 20.2 million tonnes as planned earlier or go straight to 25 million tonnes." IOC owns and operates 11 out of India's 23 refineries with a combined refining capacity of 80.7 mt per annum. Singh said the company board will shortly take up investment approval for the Panipat expansion as well as that of capacity upgrade at Koyali refinery in Gujarat and Mathura unit in Uttar Pradesh. It is looking to scale up its Koyali refinery capacity to 18 mt from 13.7 mt currently while a 3-mtpa capacity addition is planned at Mathura. "We have land at both Koyali and Mathura, so the expansion would not be a problem," he said. The IOC board had only last week approved over Rs 9,800 crore investment in expansion of its Barauni refinery in Bihar and setting up a petrochemical unit at the Panipat refinery complex. The board, in its meeting on Thursday, approved expansion of the Barauni refinery to 9 mtpa from 6 mtpa. The expansion along with downstream polypropylene unit will cost Rs 8,287 crore, Singh said. "We have three small crude distillation units at Barauni currently. We plan to pull them down and build new crude processing units. The options before us are to set up one big unit of 9 mt or two units of 6 mt and 3 mt," he said. The Barauni expansion will be completed by 2021-22. The expansion would meet rising demand in eastern India, particularly  in Bihar, Jharkhand and eastern Uttar Pradesh, he said. Also, the board accorded "in-principle" approval for implementation of Olefin recovery project along with expansion of existing naphtha cracker unit, MEG (monoethylene glycol) revamp and benzene expansion unit modifications at Panipat at an estimated cost of Rs 1,527 crore", he said. The Panipat refinery was commissioned in 1998 with a capacity of 6 mtpa. The refining capacity was doubled to 12 mtpa in 2006 and then raised to 15 mtpa in 2010. Once expanded, this will cater to fuel needs of north and western India. "We are working on raising fuel quality specifications to meet Euro-VI standards at our refineries and so, the Panipat expansion too is being reconfigured to meet the new specifications," he said.

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Bhushan Steel shareholders approve raising up to Rs 1,155 crore -:- Equity Research

Debt-laden Bhushan Steel today said its shareholders have approved the company's proposal to raise up to Rs 1,155 crore through issue of redeemable cumulative preference shares. The firms shareholders approved the special resolution at its annual general meeting held last month, it said in a regulatory filing. "... approval of the members is hereby accorded to authorise the board to create, offer, issue and allot 38,50,000 redeemable cumulative preference shares of Rs 100 each to be issued at such rate not exceeding Rs 3,000 per share (including maximum premium of Rs 2,900 per share) for an aggregate amount not exceeding Rs 1,155 crore...," it added. dividend not exceeding 12 per cent per annum and the shares shall rank for dividend in priority to the equity shares for the time being of the company, it said. "At the option of board, at any time within 10 years from the date of allotment, the said preference shares shall be redeemed at a premium not exceeding Rs 2,900 per share," Bhushan Steel said in the filing. The shareholders also approved the special resolution of reclassification of status of Sanjiv Garg and Rajiv Garg from promoters to public shareholders. This is being done "...as they are neither related to the promoters nor exercising, directly or indirectly, any control over the affairs of the company... they have no other responsibility or association with the company and they have given their consent in writing for change of status", it added.

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BHEL bags two R&M hydropower orders worth Rs 430 cr-:- Equity Research

State-owned power equipment maker BHEL has bagged two renovation and modernisation (R&M) orders of hydropower plants worth Rs 430 crore, including one from NHPC . "BHEL has secured R&M contracts of hydro electric plants (HEPs). The company has won orders worth around Rs 430 crore, for the R&M of the 6x60 MW Balimela HEP of Odisha Hydro Power Corp Ltd (OHPC) and the 3x60 MW Bairasiul HEP of National NHPC Ltd," the company said in a statement. According to a statement, the units at both Balimela and Bairasiul have been in operation for over 35 years and the R&M of these units will result in restoration of output capacity, improvement in efficiency and reduction in auxiliary power consumption, in addition to leading to better plant availability. BHEL's scope of work for the job orders envisages design, engineering, manufacturing, supply, dismantling, setting up, testing and commissioning of critical parts of turbines, generators, governors, controls and instrumentation, protection and balance of plant (BoP). Major equipment for these contracts will be manufactured and supplied by BHEL's plants in Bhopal, Jhansi and Bengaluru. The normal life expectancy of an HEP is considered to be 30-35 years. In the current scenario of resource constraints, renovation and modernisation of existing HEPs is considered as the best option as this is cost effective and requires much lesser time than setting up of greenfield projects. BHEL's footprint in hydropower accounts for 23 GW of hydro sets commissioned and 6 GW of hydro sets under execution in India and abroad. These sets, aggregating more than 500 at 200 different power stations in India and abroad, are delivering customised solutions in the most challenging of terrains - from the Himalayas in India and Bhutan to faraway lands of New Zealand, South-East Asian countries and Africa.

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Targeting 10-15% volume growth this fiscal-:- Equity Research

After the government cut gas prices to USD 2.50 per MMBTU on Friday, Gujarat Gas says it will try to maximise the benefit of the price cut that can be passed on to the customers. Gujarat Gas is working on gas pricing and will try and pass on benefits as much as possible to customers and will likely revise prices by Monday evening, said Nitin Patil, Chief Executive of the company. Patil said the company expects a volume growth from the revised prices and is targeting 10-15 percent volume growth in FY17. He added that Gujarat Gas has started working on its projects like Dahej and Thane and volumes from such projects will start kicking in from next quarter onwards.

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