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VOL. 1 ISSUE 32 News Making The Headlines 29th March, 2008

--Lady Stella Reading

Creating history, India’s top corporate Tatas on Wednesday acquired luxury auto brands -- Jaguar and Land Rover -- from Ford Motor for $2.3 billion, stamping their authority as a takeover tycoon. Beating compatriot Mahindra and Mahindra for the prestigious brands, just a year after acquiring steel giant Corus for $12.1 billion dollar, Tatas on Wednesday announced the deal they signed with Ford, which on its part would chip in $600 million towards JLR’s pension plan. “We are very pleased at the prospect of Jaguar and Land Rover being a significant part of our automotive business,” Group Chairman Ratan Tata said after making the deal public. “We have enormous respect for the two brands and will endeavour to preserve and build on their heritage and competitiveness, keeping their identities intact,” he said. As soon as the announcement was made, reactions from across the auto industry flowed in. Understandably some were positive, while some negative. On being asked whether Maruti would have closed such a deal, to that Mr. Khattar said, “We won’t have taken it, I am sure my Japanese (partner) won’t have taken it. But India is an evolving market, our automobile industry is evolving.” Kant said managements of Jaguar and Land Rover had put forward five-year business plans which included the launch of new models of luxury cars. “I think they both have strong product plans and the companies should do quite well.” He said he believed strongly the deal was “a good price” and the timing was right as Ford wanted to sell the firms. “Shortly, the sales outside will be more than the sales of inside businesses because the turnover of Jaguar and Land Rover is more than the turnover of Tata Motors,” he added. On possible downgrades by rating agencies due to the heavy debt burden, he said it was a source of worry. “Certainly, we are concerned

Weekly Change

16401 1406 4951 377
The inflation figure was way beyond the market expectations at 6.68% for the week ended March 15 Vs. 5.92% in the last week. Inflation hit its 59 week high with vegetables prices up by 2.5% and basic metal for foundary and castings up by 10.9%.

with that. But I think they have to understand that we are not taking this just for two or three quarters. So we have to see the value of this transfer for the very long term.” India’s Tata Motors on Wednesday became the world’s only vehicle maker that offers a choice of cars ranging from Rs 1 lakh to over Rs 1 crore following the acquisition of Ford’s luxury car brand Jaguar, along with Land Rover. The Jaguar marque sells worldwide for the equivalent of anything between Rs 50 lakh and above and could cost up to Rs 1 crore when imported to India and would drive its new owner into the select club of luxury car makers like BMW and Audi. For long haul, “the Tata-JLR deal would be a value accretive proposition for the investors. The deal will create a landmark achievement for Tata Motors as it will not only own two of the world’s most renowned luxury brands but also mark its presence beyond Asia,” said Piyush Parag, auto analyst, Religare.

Do you Know?

Between its opening in 1889 and 2005, 222,904,612 people visited the Eiffel Tower. The monument currently receives around 5.5 million visitors a year.

Following are some of the major acquisitions by the Tata Group in recent years.

         

Jan 2008 Tata Chemicals acquires US-based General Chemical Industrial Products for $1.01 bn Jun 2007 TRF acquires control of Singapore’s York Transport Equipment Jun 2007 Tata Power picks 30% stake in Indonesia’s PT Kaltim Prima Coal and PT Arutmin Apr 2007 Tata Tea acquires Poland’s Vitax and Flosana Apr 2007 Indian Hotels acquires Campton Place Hotel in USfor $58 mn Apr 2007 VSNL acquires Transtel Telecoms of South Africa Mar 2007 Tata Power picks stake in Indonesia’s PT Bumi Resources for $1.3 bn Jan 2007 Tata Steel acquires Anglo-Dutch steel maker Corusfor $12.1 bn, essaying the largest overseas takeover by an Indian company Aug 2006 Tata Tea acquires 30% in US’ Glaceau (Energy Brands) for $677 mn. Later sells it to CocaCola for $1.2 bn Jun 2006 - Tata Tea acquires US-based Eight’O Clock coffee company for $220 mn




Who was the only person to feature in ads of both rival cola Thums Up and Pepsi?

Tickle Your Brain

a. Sunil Gavaskar

b. Kapil Dev

c. Ravi Shastri

‘Deccan’ soon to go off from the skies’:
The ‘Deccan’ brand is likely to be extinguished once the merger of Deccan Aviation and Kingfisher Airlines is completed, quite in reversal of what was last said on the matter. “Deccan will cease to exist as the merger process is about to be completed,” Mr Vijay Mallya, Chairman of United Breweries’ group-owned Kingfisher Airlines, said on Thursday. A meeting was held in the ministry of civil aviation on March 17 where it was clarified that Deccan will be eligible to fly abroad and that if Kingfisher merges with Deccan, it can also fly abroad by fulfilling legal formalities. It may be recalled that in December last year at the time of the approval of merger by the boards of both companies; Capt Gopinath, Deccan Aviation’s Chairman had said that brand Deccan would continue to remain even after the merger with Kingfisher Airlines.

News bite

Indians rank third in brand consciousness:
A growing economy and the resultant increase in purchasing power has made Indians more fashion conscious. In a luxury brands survey conducted by The Nielsen Company, a global information and media research company, India ranked third after Greece and Hong Kong in the list of most brand conscious countries in the world. Over 35% of Indian respondents agreed they spend money on luxury brands. The survey found that while the most bought luxury brand was Calvin Klein with over 34% surveyed having purchased it at some point, Gucci ranked as the most coveted brand for Indians, if money was not the constricting factor. Other brands that Indian consumers spend most on are Gucci, Diesel, Christian Dior and DKNY. The survey shows that India is among the top ten markets for some of these brands. The country ranks as the third most important market for Gucci. Similarly, India shows up as the sixth most important market globally for Calvin Klein, ninth for Diesel, and tenth for Fendi. The increased brand consciousness among Indians is not reserved for foreign brands alone as over 40% of respondents confirmed that they also purchase Indian designer brands, putting India among the top six countries that buy local brands. Although 73% of Indians still perceive designer brands to be overpriced, the study found that Indians are among the top eight countries to believe that designer brands are of a better quality than unbranded ones. The survey was conducted in November 2007, polling about 26,312 internet users in 48 markets in Europe, Asia Pacific, North America and the Middle East. In India, 500 people took part in the survey.

Street Talks
What is the market gossip? There are heavy rumors going on that the market is NOT in its recovery phase, but we may very soon witness the major fall. The rumor for this fall’s figure varies from 1500 to 2000 points from Sensex. This is the view of an insider. But at the same time, experts and technical advisor are of the view that the recent recovery in the market signifies the strenth in the market. All the negative factors have being taken care of. Be it recession in USA, liquidity crunch, inflation figures etc. Baring the major set back effecting fundamentals of the industry, the downfall should not be expected. In such diverse views, what should be the approach of the trader and investor? The experienced players are of view that our approach should be, ‘BOOK PROFIT’ at all oppurtunities. The profit booking will keep your liquidity high and at the same time keep you in possitive side. Stay invested in ‘A’ group scripts as the market is bound to go up. But in this case one has to consider bigger time frame. So, take care, happy profit taking.


Talks of the US slowdown turned to recessionary fears and we thought this would not really impact India’s growth momentum. Speculations of a global slowdown were also not enough to dampen our bullishness about India’s prospects. But, Mr. P Chidambaram’s latest comments shook us out of our euphoria.
India’s Finance Minister said during a speech at the Lee Kuan Yew School of Public Policy in Singapore on Wednesday that the nation’s ability to sustain record growth may be affected by a slowdown in the global economy. India’s exports have been under pressure for some time now, with the US being one of the most important markets and the greenback having plummeted against the rupee. Exports are not the only area that is affected. Given the clear signs of a slowdown in the world economy, global investors are being dissuaded from making investments in developing countries, Mr. Chidambaram explained. Global investors are adopting a “wait and watch” policy, deferring their plans to invest in India. At a little over $900 billion, India is Asia’s third-largest economy. The country has been able to sustain high GDP growth over the past five years. The Finance Minister said India’s economic growth is likely to be close to 9% in the fiscal year ending March 31, 2008. “Global slowdown, rising inflation and subdued interest in investment make for a combination that can have only negative consequences for developing countries,” the Finance Minister said. Meanwhile, Citigroup has cut its forecast for India’s 2008 economic growth to 7.7%, from its earlier projection of 8.3%. Citing the “recent rapid deterioration in economic and financial conditions” in the US, Citigroup trimmed Asia’s economic growth outlook for the year from 8.2% to 7.6%. JPMorgan has cut its forecast for India’s economic growth in the fiscal year starting April 1 to 7%, from its earlier projection of 7.5%. This would mark India’s slowest growth rate in six years. Any slowdown in economic growth would have a direct impact on the already-troubled stock markets. India is facing high food prices, rising commodity prices and soaring oil prices. Against this backdrop, there is unlikely to be any rate cut announcement. Moreover, India’s industrial production figures were unsupportive. The stock market should definitely see significant volatility in the upcoming weeks.

Disclaimer: This document is not for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. Investing or trading in stock markets is a high risk activity. Those who cannot afford to risk their money should refrain from dealing in stocks. The author has no vested interest in any of the stocks mentioned. He and/or his close associates may or may not be having positions at the time of preparing this document. It is to be understood clearly that the articles have been written purely for informative purposes only and the author cannot take any responsibility whatsoever for transactions, if any, entered into by the reader. The author does not guarantee that the projected targets will be achieved.


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