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4 Corporates w w w. f i n a n c i a l e x p re s s .

c o m Thursday, January 27, 2011, New Delhi

Quick view
Mahindra Navistar puts
Start-ups go for
roll-out plans on fast track
In order to capitalise on the sharp revival in
the Indian commercial vehicles market and
to become one of the major players in the CV
SpiceJet plans to shift to energy efficiency
to woo investors
hub-and-spoke model
industry, Mahindra Navistar Automotives
Limited (MNAL), a joint venture between
M&M and Navistar of the US, is gearing up to Ajay Sukumaran &
roll out complete range of products over the Debojyoti Ghosh IN THE CLEAN TECH
next one year. It will also well spread its SECTOR, ABOUT
wings across the country through 100 Bangalore, Jan 26: With the $790 MILLION HAS
dealerships, besides setting up large Nirbhay Kumar clean technology space in In-
number of service points and road side dia attracting major funding
assistant points. New Delhi, Jan 26: The divid- in 2010, more start-ups are PRIVATE EQUITY
ing line between the operating looking at energy efficiency AND VENTURE
Trimex plans $850 million models of full-service and low- applications and waste man- CAPITAL FIRMS
cost airlines seem to be blur- agement as a business model ACROSS 18 DEALS
titanium unit in Indonesia ring. The country’s second to woo investors into this
Trimex Sands, a part of the Trimex group largest budget carrier SpiceJet space.Inthecleantechsector,
which has presence across India, UAE, Dubai plans to operate on a hub-and- about $790 million has been
and a leading international conglomerate spokemodelwiththeinduction invested by private equity ing a critical mass of 100 mw
with a focus on heavy minerals, has signed of Bombardier regional jets be- and venture capital firms with greenfield projects as
an MoU with the Indonesian government to ginning June this year. across 18 deals during 2010 well as acquisitions,” said
set up a world-class integrated titanium Most of the low-cost air- alone, according to data from Tejwani, the focus being on
project worth $850 million. Leveraging heavy lines worldwide maintain a VCC-Edge,aprivatefirmthat scalability.
mineral resources in Indonesia, the company single-type fleet and offer tracks investments. In power deficit India, en-
will identify the project’s site in accordance point-to-point connectivity. The investor community ergy companies have attract-
with the location of titanium resources in the SpiceJet currently maintains sees opportunities in clean ed the maximum investment
country and will enable the authorities to a fleet of 25 B737 aircraft but is The airline's CEO Neil Mills hub and spoke and maintains growing but still not sufficient technology either in big-tick- in 2010 with 34 investments
advance lesser-developed regions of planning to induct 15 Bom- could not be contacted for com- bigger network there are tomakepoint-pointconnectivi- etdealstofundmegaprojects, worth about $2,141 million,
Indonesia. The company will invest in three bardier Q400 turbojets by the mentonthedevelopment.Atext chances of missing flights and ty commercially viable. or in early stage deals where according to research firm
phases over the next 10 years. end of next year. message sent to him did not elic- baggages thus inconvenienc- "Pure point-to-pont some- companies raise capital to Venture Intelligence. Indus-
“We are in the process of itanyresponse. ing passengers. times does not make sense. build technology platforms. try experts say the renewable
Medfort ties up with taking a decision on hub-and- Among the full service air- An airline source said that Since bulk of the traffic is still According to the ministry energy sector is poised for
spoke model. There are sever- lines, the largest private carrier SpiceJetwasindiscussionwith on metro routes low-cost air- of science and technology, growth with the govern-
Ras Al Khaimah al routes where this could bymarketshareJetAirwayshas the operators of Hyderabad lines may not find it commer- the number of clean-tech ment's initiatives such as the
Medfort Hospitals, a healthcare delivery work well,” a SpiceJet official alreadyintroducedall-economy and Bangalore airports to hub cially viable to operate direct start-ups in the 60 incubators National Solar Mission and
organisation has floated a joint venture with told FE. The official said that flights to put a break on shift of partof theiroperatinginsouth- flightstosmallercities,"KPMG across the country it sup- incentives for renewable en-
Ras Al Khaimah Hospital, UAE and in the airline would get the deliv- customers from its network to ern part of the country. director (aerospace and de- ports is increasing. ergy installations.
association with LV Prasad Eye Institute ery of upto seven aircraft by budgetairlines. Someindustryexperts,how- fence) Amber Dubey said. The Indian Renewable En- “The investor is more con-
(LVPEI) for setting up of a Centre for the end of this year. SpiceJet Low-costairlinesofferpoint- ever feel that low-cost airlines Nearly 45% of the country's ergy Development Agency cerned when the govern-
Excellence for eyecare. The joint venture was had in December last year to-point connectivity to bring could have to go for hub and 50millionairtrafficisonDelhi- (IREDA), which provides fi- ment is going to pull the plug.
announced recently at Ras Al Khaimah, UAE. placed firm order to buy 15 efficiency in its operation. As spoke in a particular region as Mumbai route alone. demand nancial support to renewable Any investor who is going to
Medfort is an associate of the largest Bombardier Q400 valued at against this in case of full-ser- the demand for air traffic from on small city pairs is growing energy projects, financed come in will have this view,”
integrated healthcare organisation in India, about $446 million. vice carriers which operate on smaller towns and cities are fast though on lower base. 1,921 projects with a loan said Anmol Jaggi, whose
founded by GSK Velu (founder and managing commitment amounts total- start-up Gensol Consultants
director of Trivitron Healthcare). ing over Rs 12,180 crore as of received funding of upto $6
March 31, 2010. million from US-based India
Zuari pre-tax profit
up 9% at Rs 208 crore
Fertilizer maker Zuari Industries has reported
Indigo can grow capacity: Experts “The scope for invest-
ments in this sector are vast.
However, in depth analysis
needs to be carried out to
Venture Partners in 2010 .
“When you come to the VC
stage, the bet is on the tech-
nology,” said Jaggi whose
an 8.9% rise in profit before tax at Rs 208 crore Shaheen Mansuri Sushi Shyamal, partner in- gantic order. The carrier had in Boeingfor29B737s,deliveriesof source profitable business carbon trade consultancy
in the third quarter on higher sales in plant frastructure practice at Ernst & 2009 and 2010 deferred deliver- which will commence from modelsandavoidonesthatdo had about 50 clients at the
nutrients and pesticides. Turnover rose 39% Mumbai, Jan 26: Delhi-based Young, said, “Indigo has earlier ies as it was already reeling un- 2012, and 10 B787 Dreamliners not prove to be beneficial in time of the funding.
in the December quarter to Rs 1,524 crore low-cost carrier Indigo, which ordered 100 aircraft and cur- der huge debt of around Rs duefordeliveriesfrom2015.The the long term,” said Harshal “With the development of
from the previous corresponding period. In signed an ambitious deal with rently has a fleet of 34 aircraft 16,000 crore plus losses of over Naresh Goyal-led airline has al- J.Shah,CEOof RelianceVen- the carbon service platform,
the first nine months of the fiscal, turnover European aircraft manufac- withhighutilisationlevels.The Rs 5,000 crore. The carrier con- so firmed up plans for 10 A330s tures Asset Management, the business can really scale
jumped 49% to Rs 4,556 crore, the company turer Airbus recently to buy airline has replicated the same sistently made efforts to reduce to be taken on lease. Kingfisher which this month invested in all areas of energy con-
stated. The enhanced performance was 180 aircraft worth $15.6 billion strategy this time.” He further expenses and streamline its ex- Airlines which will receive ap- $12 million along with GE En- sulting and lead to develop-
primarily on account of higher fertilizer sales (Rs 702,00 crore), is well posi- said that though other carriers isting fleet. The airline in 2010 proximately67aircraftbetween ergy in Bangalore-based ment of clean energy pro-
volumes, which at 1.745 million tonnes, tioned to grow its capacity at haveplacedaircraftorderswith had also floated tenders for its 2010-2016 from Airbus, has also start-up AllGreen Energy. jects as well,” said Navneet
recorded a growth of 40% over the 1.244 a time when competing air- either Boeing or Airbus, none three aircraft to be given on not enhanced its fleet order of For Kamlesh Tejwani, Gosal, advisor, India Ven-
million tonnes achieved in the nine month lines have not made such has placed this big an order. lease. The national carrier is late. The carrier, which has a founder of AllGreen, there ture Partners, explaining
period ending December 2009. moves, say experts. While national carrier Air now implementing a 3-year re- debt of over Rs 6,000 crore, is had been ‘a lot of interest' that they invested in Gensol
The Indian aviation sector, India has already placed orders vival plan which began in Au- completely focussed on its debt fromprivateequityplayersin after tracking the firm for
Accel Frontline revenue growing at a rate of 15% year on for 111 aircraft, 63 from Boeing gust 2009. recast plan which will increase his firm which plans to build over a year.
year, will need over 1,000 air- and 43 from Airbus, it still falls Similarly, the country’s its moratorium period and an a 6.4 MW biomass power It will take another 2-3
up 36% at Rs 91.7 crore craft in the next 20 years, com- short of 69 aircraft when com- largest private carrier Jet Air- interest reduction amongst oth- plant in Tamil Nadu by the years for exits in the clean-
Accel Frontline (AFL), a key player in IT pared to 420 as of now. pared with Indigo’s recent gi- ways has placed an order with er benefits. year-end. “We plan on reach- tech sector, he added.
infrastructure services posted a
consolidated revenue of Rs 91.7 crore for
the third quarter, clocking a rise of 36%
over the corresponding quarter previous
fiscal. AFL’s profit after tax has increased to
Rs 2.4 crore from Rs 1.2 crore. The company
had a sequential growth of 9% in turnover
Banks account for 46% of corporate borrowings Shipping
sector still
and 472% in profits as compared to the
quarter ended September 30, 2010. The ■ Reliance, REC, Indian Oil, NTPC and PowerGrid top five borrowers in choppy
company had an order intake of Rs 154
crore for various system integration Pradip Kumar Dey panies increasedto42.65%dur- 55,948 crore, Indian Oil Corpo- waters: Fitch
projects such as data centre integration, Borrowing spree ing the financial year 2008-09 ration Limited (IOCL) at Rs fe Bureau
network management and managed Mumbai, Jan 26: With the re- (Rs Crore) from 39% during the financial 44,566 crore, National Thermal
services, said a release. vival of investment sentiments Items 2009-10 2008-09 2007-08 year 2007-08. However, in the fi- Power Corporation (NTPC) at Chennai, Jan 26: Backed by
aftertheglobaleconomicdown- Banks 425513 436924 296964 nancial year 2009-10 the per- Rs 37,797 crore and Power Grid expectations that freight rates
Maruti crosses 1 million turn, Corporate India was on a
Deb. & Bonds 222728 162539 110062
centage of borrowings as per- Corporation amounting to Rs will continue to remain de-
fund-raising spree and banks centage of capital employed 34,417 crore. Notably, the high- pressed due to the demand-
sales mark in 10 months were the largest source of bor- FC Loans 118161 113873 95243
was lower at 40.16%. est increase in borrowings dur- supply imbalance caused by a
The country’s largest carmaker Maruti rowings in 2009-10, followed by FI 37719 34555 32122 Overall, 36% companies ing the financial was for Power net increase in capacity ex-
Suzuki India, which became the first debt and debentures. Comm.Paper 14876 8231 5251 from the sample showed an in- Grid Corporation at 20.9%. ceeding demand, Fitch Rat-
company in India to sell one million units in a A FE study on the funding Deposits 11681 8464 5063 crease in the ratio of borrow- However, a downward trend ings said the 2011 outlook for
single year last fiscal, has already crossed pattern of 365 corporates in Total(Incl.others) 931912 859850 616751 ings as a percentage of capital in the ratio of borrowings as a shipping industry is negative.
the milestone in just ten months this 2009-10 shows that about 46% of employed in the financial year percentageof capitalemployed Inarecentlypublishedreport,
Note; Data relates to 365 major companies
financial year. During the April-December the total corporate borrowing 2009-10. was seen for companies like it said that companies with a
this fiscal the company sold a total of came from banks and around The top five borrowers in SpiceJet, DishTV, Jubilant greater proportion of their
9,27,655 units, which includes both domestic 24% from the domestic debt followed by debentures/bonds borrowings from financial in- 2009-10fromthesamplestudied Food, Unitech, DB Corporation shipsonlong-termchartersal-
sales and exports. “As on January 25, market through debentures to the tune of Rs 2.23 lakh crore. stitutions amounted to about were Reliance Industries Lim- and Radico Khaitan. For exam- so cannot expect to be com-
domestic wholesales is at 73,874 and bonds. Of the total borrow- The share of foreign currency 4%. The study also shows that ited (RIL) amounting to Rs ple, the ratio for DishTV de- pletely protected against the
units, while the export figures will be ingsof Rs9.31lakhcrore,banks loans in the total borrowings borrowings as percentage of 62,495 crore, Rural Electrifica- creased from 223% during 2008- prevailinglowcharterratesas
compiled at the end of the month. Even then, accountedforRs4.25lakhcrore amounted to 12.67%. The share capitalemployedbymajorcom- tion Corporation (REC) at Rs 09 to 69.63% during 2009-10. most contracts have a tenor of
we have already crossed the one million one year and contract rates
mark for this fiscal," a senior Maruti Suzuki will be reset at prevailing low
rates upon renegotiation.
India (MSI) official said.
INTERVIEW: MOTOO MORIMOTO Leverage will continue to re-
Tata Steel targets 10 m M A N A G I N G D I R E C T O R , H I T A C H I I N D I A mainhighasdebtislikelytobe
tonne capacity in 2011 ing cash flows. The rating

We will hike prices of all products by 4%

Tata Steel's Managing Director H M Nerurkar agencyexpectsallsegmentsof
on Tuesday said 2011 will be challenging for the shipping industry to face
the company as they will be completing the low freight rates in 2011. As at
ongoing expansion programme to achieve 10 end-2010,theglobalorderbook
million tonnes capacity. “Following the Motoo Morimoto, managing ven are split air-conditioners launch washing machines in market share is 12%. We ex- positionfornewbuildsasaper-
expansion, the official capacity will be 9.7 director,HitachiIndiadiscusses and refrigerators. another 1-2 years and are in pect it to grow to 15% in the centage of existing capacity
million tonnes, but we are confident to excel with FE's Neha Pal about talks with the Hitachi team in next fiscal year 2011-12. was46%fordrybulksegment,
the target and achieve 10 million tonnes," the company’s distribution Are you planning to hike the Thailand. Wehadstoppedsell- 28% for tankers and 26% for
Nerurkar said. However, the strategy, expansion plans and prices of your products to ing washing machines in In- What is your distribution containercarriers.
commissioning and operation following the the impact of increasing raw minimise the impact of in- dia as their capacity was 7 kg strategy at present? How With these, additional ca-
expansion will be a challenging task before material costs. creasing raw material plus which was not as per the many outlets do you have in pacities are expected to come
the employees, he said. costs? Indian requirement which is India and what are the new on stream over 2011-2013 peri-
How much is India’s share Yes, we are hiking prices of between5-5.5kg.Thecompany expansion plans? od and the global shipping in-
Cauveryassetcrosses in the overall global rev- our entire range of products is planning to roll back the Hitachi is planning to dustry over the next three
enues of Hitachi and which by 4%. The prices of copper washing machine segment double its outlets from 1,500 yearswillcontinuetowitness
1milliontonneoutput verticals are more revenue andsteelhavegoneupwhichis sinceIndianrequirementsare to 3,000. overcapacity and depressed
It will be a race to the finish for state-run oil driven? why the company cannot ab- changing. At present, Hitachi is pre- freight rates. In the dry bulk
and gas firm ONGC's Cauvery Asset to India’s contribution to the sorb it and will have to pass it sent mainly in Tier 1 and some segment,ratesareexpectedto
meet its production target for the XI Five- global revenues is 5% but In- on to the customers. What is your market share parts of Tier 2 cities. The com- be range bound, given the
Year Plan (2007-12), with cumulative output dia is considered as a strate- in the air-condition space in pany is going to expand to 317 volatility in demand for iron
crossing the 1-million metric tonnes mark gic market globally and we Is Hitachi planning to foray India and what is the future towns this year from the pre- ore from China. China's over-
recently, a top company official said on are very bullish about our in some new product catego- target? sent236andisplan- all steel production is expect-
Wednesday. The company was set a target growth here. The verticals ry? The AC market size is Rs ning to employ ed to go up by 7%-9% in 2011
for production of 1.113 MMT of crude oil which are more revenue dri- We are planning to re- 5,500 crore and our present 1,000 people. and 5%-7% in 2012 and ineffi-
from the Cauvery Asset in the XI Plan. cientsteelplantsareexpected
to close down.