USFDA enforcements to push up costs for Indian pharma

The companies have little choice but to invest in bringing compliance processes up to speed, it said, adding that the cost of not doing so (warning letters/import alerts may impact both current revenues and future pipeline) will be far higher.

Stricter norms by American drugs regulator USFDA will lead to higher compliance costs for Indian pharma, although these enforcements are not country specific but more on account of "cultural differences", said a report by global credit rating agency Crisil.

The companies have little choice but to invest in bringing compliance processes up to speed, it said, adding that the cost of not doing so (warning letters/import alerts may impact both current revenues and future pipeline) will be far higher.

In general, the cost of compliance of drug makers has doubled over the past 5 years. About 30 per cent - or USD 4 billion worth - of India's pharma exports are to the US.

India remains a location of significant importance to the FDA as it has the largest number of FDA-approved drug- manufacturing plants with over 150 formulation facilities and is also the second-largest pharmaceutical supplier to the US market in terms of volume of generic drugs.

The enforcements by US Food and Drug Administration over Indian pharma companies, though not country specific, are mainly on account of issues such as cultural differences and
attitude of employees, it said.

However, going forward, Crisil said it expects the cost of compliance to rise as drug makers adapt to a stricter regime. This will include costs of hiring personnel and consultants, apart from investments in upgrading facilities to GMP standards.

It added: "While the ratio of enforcements to manufacturing bases is lower in India compared with elsewhere, the enforcements in India have been clearly due to cultural differences, attitude of employees, inadequate interpretation/ understanding, and absence of due process and systems.

"Most of the enforcements of the last 2 years were related to differences in interpretation or understanding."

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Railway Budget 2014: Here is how the aam aadmi is rating team Modi's rail Budget

Archana Shukla of CNBC-TV18 finds out how the aam aadmi is rating team Modi's rail budget.

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ONGC makes largest overseas bond sale; raises USD 2.2 bn

The issue involved USD 1.5 billion of dollar money and 525 million in euros (USD 714 million at current exchange rate), merchant bankers said.

Nation's largest oil explorer ONGC  Tuesday raised a whopping USD 2.214 billion -- the largest bond sale from the country -- through dual tranche money to fund its overseas arm OVL's Mozambique asset purchase.

Also Read: Govt wants ONGC to focus on core business, exit Petchem

The issue involved USD 1.5 billion of dollar money and 525 million in euros (USD 714 million at current exchange rate), merchant bankers told PTI.

They said this is the largest dual currency RegS issuance from Asia, apart from being the first-ever euro issuance from a quasi-sovereign corporate. It is also the first dual currency RegS issuance from the country.

The RegS issue (which is not sold to resident American investors) has three tenures -- USD 750 million of 5-year money and the rest is of 10-year tenor, while the euro issue is a 7-year money, said the merchant bankers, which include RBS, Deutsche Bank, BNP Paribas, Standard Chartered and Citigroup.

The company could not be immediately reached for comments. The issue is also said to have got one of the tightest spreads for issuance across 5-year dollar and 7-year euro issue.

While the dollar issue got an over-subscription of over USD 6 billion, the euro issue got demands worth 1.8 billion more than the platter.

While the 5-year dollar issue got priced at US treasury plus 160 bps (against a guidance of 180 bps), the 10-year issue is priced at T plus 207 bps. The 7-year euro tranche is priced at MS+180 bps.

The effective coupon for these tenures works out to 3.25 percent for the 5 year tranche, 4.625 percent for the 10-year tranche and 2.75 percent for the euro issue. While 55 percent of the 5-year dollar issue are Asians, the rest 45 percent are European investors, for the 10-year money was lapped up by Europeans (45 percent) and 47 percent by Asians. As much as 78 percent of the euro money was lapped by Europeans and 21 percent by Asians.

ONGC Videsh is the overseas arm of the state-owned ONGC and the money raised will be used to fund its acquisition of 10 percent stake in a giant Mozambique gas field, which it had bought last August for USD 2.6 billion from the US energy major Anadarko Corp. 

ONGC stock price

On July 08, 2014, Oil and Natural Gas Corporation closed at Rs 397.60, down Rs 17.55, or 4.23 percent. The 52-week high of the share was Rs 472.00 and the 52-week low was Rs 234.40.

The company's trailing 12-month (TTM) EPS was at Rs 25.83 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 15.39. The latest book value of the company is Rs 171.29 per share. At current value, the price-to-book value of the company is 2.32.

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Govt to sell 5% stake in ONGC; to fetch Rs 17,000 cr

At the current market price, a 5 percent stake sale or over 42 crore would fetch about Rs 17,000 crore to the exchequer. The government currently holds 68.94 percent stake in ONGC.

Finance Ministry is considering to sell 5 percent stake in  ONGC in the current fiscal, which could garner about Rs 17,000 crore to the exchequer. "ONGC is proposed for 5 percent stake sale," a government official said.

Shares of ONGC today closed at Rs 397.60, down 4.23 percent over previous close on the BSE.

Also Read: ONGC makes largest overseas bond sale; raises USD 2.2 bn

At the current market price, a 5 percent stake sale or over 42 crore would fetch about Rs 17,000 crore to the exchequer. The government currently holds 68.94 percent stake in ONGC.

Sources said the government feels the market sentiments are positive for ONGC stake sale and it is time to encash on the bull run in the markets. The stock markets have rallied over 21 percent so far this year.

The Department of Disinvestment is understood to have floated a Cabinet note for inter-ministerial consultation to take forward the ONGC stake sale. The interim budget had proposed to raise Rs 36,925 crore from stake sale in public sector undertakings. The full budget for 2014-15 to be tabled in Lok Sabha on July 10 is likely to revise upwards the target.

The government had sold 5 percent stake in ONGC in 2012 for Rs 14,000 crore. Country's largest insurer LIC had then come to the rescue putting in over Rs 12,000 crore and picking up 95 percent of the total shares on the block.

ONGC stock price

On July 08, 2014, Oil and Natural Gas Corporation closed at Rs 411.50, down Rs 3.65, or 0.88 percent. The 52-week high of the share was Rs 472.00 and the 52-week low was Rs 234.40.

The company's trailing 12-month (TTM) EPS was at Rs 25.83 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 15.93. The latest book value of the company is Rs 171.29 per share. At current value, the price-to-book value of the company is 2.40.

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'Rail budget is positive and in line with expectations'

Nalin Jain, President and CEO, South Asia, GE Transportation and Aviation, feels the rail budget is positive and in line with expectations

Nalin Jain, President and CEO, South Asia, GE Transportation and Aviation, shares with us his views on the Railway Budget.

1. What are your first thoughts on the Rail Budget?
The rail budget announced by the new government today is positive and in line with expectations from Modi government. For the first time, we heard a Railway Minister balancing social and commercial requirements, and giving enough prominence to commercial.

2. What according to you are the highlights of the Budget?
The focus on execution and delivering short term goals is the highlight of this budget. In all these years, we have had new policies and vision statements, but not much of it got implemented and delivered. The openness of this government towards private participation, developing PPP model and FDI inclusion will bring-in more resources which are currently lacking with railways. The overall theme is to make railways a commercially viable organization. Moreover, safety and comfort measures announced today are very encouraging and will enthuse travelers.

3. The Railway Minister talks about Indian Railways becoming the number one freight carrier in the world. Do you see this as being achievable, and what do you think needs to be done to get there?
It is definitely achievable provided the government creates an ecosystem. There are steps taken already and now is the time to unlock projects which are in final stages or stuck in pipeline and enable infrastructure to support freight movement across regions. These include rolling stock investments – like the proposed locomotive factories in Bihar, introduction of new signaling technologies and speedy execution of DFC projects.

4. Do you see bullet trains becoming a reality in India anytime soon?
Mumbai-Ahmedabad corridor has been in contention for bullet train for some time now. Japanese and French companies have visited the location in the past for feasibility checks. It is realistic and doable for the chosen corridor given the volume of business travel that takes place between Mumbai and Ahmedabad – however business model and financial viability needs to be established.

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Competition Commission slaps Rs 25.67cr fine on Adani Gas

The penalty amount translates to four percent of averageof Adani Gas's turnover for the last three financial years.

Fair trade watchdog CCI has imposed a penalty of more than Rs 25 crore on Adani Gas for violating competition norms by abusing its dominant market position. Adani Gas is a subsidiary of Adani Enterprises , which is part of diversified Adani Group . The Competition Commission of India's (CCI) ruling has come on a case related to supply and distribution of natural gas by Adani Gas Ltd in Faridabad.

A fine of Rs 25.67 crore has been imposed on Adani Gas for abusing dominant position, the regulator said in a statement today. The penalty amount translates to four percent of averageof Adani Gas's turnover for the last three financial years. Adani Group did not immediately comment on the matter.

Besides directing Adani Gas to cease and desist from unfair practices, the CCI has asked the company to modify the Gas Sales Agreements (GSAs). The case was taken up by CCI following information filed by Faridabad Industries Association and the final order was passed on July 3. The CCI found that Adani Gas to be in "dominant position in the relevant market of supply and distribution of natural gas to industrial consumers in the district Faridabad, Haryana", according to the release.

The watchdog has held that Adani Gas violated competition norms by imposing "unfair conditions upon the buyers under Gas GSA". "Apart from issuing a cease and desist order against Adani Gas Ltd, the CCI directed modification of GSAs in light of the findings and observations recorded in the order," the statement said.

Adani Enterpris stock price

On July 07, 2014, Adani Enterprises closed at Rs 497.60, down Rs 1.3, or 0.26 percent. The 52-week high of the share was Rs 585.00 and the 52-week low was Rs 126.05.

The latest book value of the company is Rs 92.64 per share. At current value, the price-to-book value of the company was 5.37.

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Mahindra Holidays to buy stake in Holiday Club of Finland

The initial acquisition will be completed in a month's time subject to required regulatory approvals, it said. "The acquisition of Holiday Club Resorts will elevate Mahindra Holidays to a global leader in the vacation ownership industry.

Mahindra Holidays  will acquire 18.8 percent stake in European vacation ownership firm Holiday Club Resorts Oy of Finland for euros 18 million. Mahindra Holidays & Resorts India Ltd has signed definitive agreements with the shareholders of Holiday Club Resorts Oy of Finland to initially acquire 18.8 per of its shares with a right to increase its ownership over a period of two years, the company said today in a filing to BSE.

The initial acquisition will be completed in a month's time subject to required regulatory approvals, it said. "The acquisition of Holiday Club Resorts will elevate Mahindra Holidays to a global leader in the vacation ownership industry.

This timely acquisition not only provides access to European assets, technology and processes, but more importantly, provides a springboard to Mahindra Holidays for growth in Europe and other international destinations," Mahindra Group Chairman Anand Mahindra said in the statement.

Holiday Club has a membership base of over 50,000 families and is a leading leisure brand in Europe, it said, adding, once full ownership is achieved, the combined entity has the potential to become the largest vacation ownership company in the world, outside the United States.

It has an efficient sales and marketing organisation in addition to strong core competencies in the design of holiday homes and apartments, spa hotels and resort management, it said. Holiday Club Resorts Oy (Holiday Club) has 32 resorts, of which 24 are located in Finland, two in Sweden and six in Spain. Seven of these resorts have spa hotels with indoor water parks, the statement said.

Besides, the Holiday Club has also recently started selling fractional membership, a concept that has been well received by its European clients. "This acquisition is part of a larger vision to widen our international footprint. We are excited at the prospect of expanding in Europe and the Middle East along with Holiday Club. We are confident that synergies from this acquisition will fuel and propel our future growth," Mahindra Holidays chairman Arun Nanda said.

"We are excited about the various development opportunities and synergies that the collaboration of two market leaders will bring about. We look forward to prospecting new opportunities to expand further in Europe," Holiday Club CEO Vesa Tengman said.

The proposed acquisition will enable Mahindra Holidays to make significant inroads into the European markets and to leverage Holiday Club's expertise in the vacation ownership model, as well as its strong technology platform and talent pool, the company said.

Mahindra Holida stock price

On July 07, 2014, Mahindra Holidays and Resorts India closed at Rs 329.25, up Rs 9.50, or 2.97 percent. The 52-week high of the share was Rs 334.70 and the 52-week low was Rs 206.00.

The company's trailing 12-month (TTM) EPS was at Rs 10.65 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 30.92. The latest book value of the company is Rs 82.65 per share. At current value, the price-to-book value of the company is 3.98.

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Abu Dhabi Investment Auth sells Rs 420-cr Kotak Bank shares

The Canada Pension Plan Investment Board had picked up 2.5 crore shares or 3.24 percent stake at Rs 880 per share.

Abu Dhabi Investment Authority (ADIA), one of the world's biggest sovereign wealth funds, today offloaded over 48 lakh shares of  Kotak Mahindra Bank for an estimated Rs 420 crore. According to information available with the stock exchanges, Abu Dhabi Investment Authority sold a total of 48,09,184 shares of the bank through open market route.

The shares were offloaded on an average price of Rs 874.55 valuing the transaction at Rs 420.58 crore. However, the buyer (s) of the shares could not be ascertained immediately.

On May 30, the private sector lender Kotak Mahindra Bank had said that a promoter group entity has sold 3.24 percent stake to a Canadian pension fund for Rs 2,200 crore. The Canada Pension Plan Investment Board had picked up 2.5 crore shares or 3.24 percent stake at Rs 880 per share. The stake sale by Kotak Trustee Company had reduced the promoter shareholding to 40.33 per cent, which is slightly above the 40 percent mark recommended by RBI to be achieved by September this year.

Shares of Kotak Mahindra Bank today fell by 1.22 percent to close at Rs 873.65 apiece on the BSE.

Also Read: Want bank with right size & value for takeover, says Kochhar

Kotak Mahindra stock price

On July 07, 2014, Kotak Mahindra Bank closed at Rs 873.65, down Rs 10.8, or 1.22 percent. The 52-week high of the share was Rs 971.80 and the 52-week low was Rs 588.00.

The company's trailing 12-month (TTM) EPS was at Rs 19.50 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 44.8. The latest book value of the company is Rs 159.32 per share. At current value, the price-to-book value of the company is 5.48.

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Vedanta mulls steel unit at Bellary; may invest Rs 30k cr

NRI billionaire Anil Agarwal-led Vedanta Resources is mulling a 5 million tonnes per annum (mtpa) steel plant in Karnataka which may entail an investment of Rs 30,000 crore.

The mining and metals conglomerate has already initiated a feasibility study for its proposed foray into the steel sector through a joint venture, but is yet to commence talks with a potential partner, said a source.

"The company is looking at all opportunities to grow in iron and steel sector. As far as steel-making is concerned, it looks very serious about development of Bellary Steel. It owns 700 acres and is looking at a stage-wise increase and may put up a five mtpa steel plant," he said.

Agarwal is likely to announce the plan at the company's Annual General Meeting slated for August 1 in London. A senior official, when contacted, declined to comment on the issue.

India's largest iron ore producer and maker of various non-ferrous metals such as aluminium and zinc, Vedanta had in 2011 acquired the assets of Bellary Steel and Alloys (BSAL) for Rs 220 crore through a competitive bidding process.

Iron ore is one of the key raw materials for steel-making and having a captive source helps a company remain competitive.

Headquartered in Bangalore, BSAL had embarked on setting up an integrated steel plant, with five lakh tonnes per annum capacity and a provision of taking it to 2 mtpa at Bellary. It however, could not complete the project and ran into debt.

The source said the company understood to be open to joint venture and "all kinds of collaborations because it believes that mining expert should do mining and steel expert should do steel making".

He added however that Vedanta is "not known to be speaking to any company at the moment".

On the costs, industry sources said that it generally takes USD 1 billion (around Rs 6,000 crore) investment to create 1 mtpa steel-making capacity.

Vedanta has already commenced the feasibility study for the project and is expected to get the report "very soon".

Agarwal had in 2010 announced the company's plan to foray into steel-making in partnership with Larsen and Toubro by setting up a 5 mtpa plant in Odisha.

The company had signed a Memorandum of Understanding with the state government to set up the plant at Palasponga in Keonjhar district in two phases.

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Jignesh Shah's bail hearing at Bombay HC adjourned

Jignesh Shah's bail hearing at the Bombay High Court scheduled for today was adjourned due to the unavailability of Justice Thipsey. As per the Bombay High Court website, the next hearing has been scheduled for July 10.

Jignesh Shah had applied for bail in the High Court after the Mumbai Sessions Court rejected his bail plea on June 24 while granting bail to his close aide, Shreekant Javalgekar. Shah and Javalgekar had been arrested by the Economic Offences Wing of the Mumbai Police on May 9 in connection with the Rs. 5,600 crore payment crisis at NSEL.

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