Andhranews

New Delhi, Aug. 6: A latest World Bank study points out the sharp divide among the “performing” and the “lagging” States in terms of their contribution to India’s economic growth. The study titled, “Inclusive Growth and Service Delivery” points out that the seven “lagging” States, which are essentially also poor States, are increasingly lagging behind the rest of the country in investment, manufacturing and income generation. These seven States are Bihar, Chattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh.

In contrast to this are the top economic growth-generating states of Maharashtra, Tamil Nadu, Karnataka, Gujarat and Delhi. The report points out that these five States accounted for as much as 72 per cent of foreign direct investment (FDI) in the year 2003. Interestingly, the report says that the gaps across States are widening in India, not because growth in the lagging States has decelerated, but because growth in the middle-income States have accelerated.

Karnataka, Kerala and West Bengal are prime examples of middle-income States. Added to these States, the States of Andhra Pradesh and Punjab were on the list of the performing States, as observed by the World Bank. The study observes that the increased disparity in growth rates is not so much a failure as it is success of policy.

The World Bank study concludes that the most straightforward way to address disparities across regions within a country is to ensure that there is a nationally integrated market in assets, goods and labour. It says that policies that fragment markets, such as border taxes, can make it difficult for lagging states to attract job-creating investment.

The poor economic governance, characterised by red tape and regulatory hassles, is particularly severe in the lagging states the study says. It observes that a key challenge for the lagging States is to introduce reforms to streamline clearances and approvals. The report also points out that the problems that firms in India’s lagging States face in accessing reliable power at reasonable cost is among the most significant factors constraining business and profitability and this is a key factor in reducing the attractiveness of these States as investment destinations.

WORLD BANK STUDY

* The top economic growth-generating states are Maharashtra, Tamil Nadu, Karnataka, Gujarat and Delhi.
* States such as Bihar, Chattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan and Uttar Pradesh are lagging behind.

New Delhi, Aug. 6: The government has said it would shortly expand the list of annual information returns (AIRs), which help the tax authorities to keep a tab on high spenders.
Finance minister P. Chidambaram is keen to prescribe a few more transactions to be reported in AIRs, ministry sources said, adding the new transactions would be prescribed shortly.

At present, there are seven transactions which are reported in the AIRs — investment of at least Rs 2 lakhs in mutual funds, Rs 5 lakhs of investment in RBI bonds, cash deposits with banks exceeding Rs 10 lakhs, credit card payments exceeding Rs 2 lakhs annually, investments in bonds and debentures exceeding Rs 5 lakhs, investment in shares over Rs 1 lakh, sale and purchase of property beyond Rs 30 lakhs.

Finance minister P. Chidambaram had earlier said 17,52,652 high-value transactions have been reported under AIR for the period 2004-05. Of 6,60,000 separate parties reported, only 1,84,980 parties have quoted pan numbers, he had said. Of this, the total number of high transactions in mutual funds was 6,42,415 amounting to Rs 7,76,158 crores, while RBI bonds drew 74,330 transactions to the tune of Rs 3,16,307 crores.

AIRs relating to financial year 2005-06 is due by August 31. During 2005-06, the transactions contained in the AIRs have been collated party-wise and the information has been utilised to select cases for scrutiny through a computerised selection process, they said.

Mumbai, Aug. 6: UTI Bank has announced that it has became the first Indian bank to raise $150 million (about Rs 690 crores) hybrid capital from the international market, to shore up its capital base to make provisions for market risk and support business growth.

The bank mobilised $150 million through 15-year subordinated upper Tier II bonds from the overseas market on August 4, said market sources. Under Basel II norms, Indian banks would need to shore up their capital on account of providing for market risk, as well as to support the expansion of their balance sheet.

The bonds maturing on August 12, 2006, carry a fixed rate of interest of 7.25 per cent (231.5 bps over the 10-year US treasury). The bonds have a call option after 10 years, which if it not exercised, the bank will pay 331.5 bps over then current 5-year US treasury. The foreign currency hybrid capital issue was oversubscribed six times.

New Delhi, Aug. 6: Terming as “premature and unfortunate” the government’s decision to reject the gas price agreement bet-ween RIL and his group company RNRL, Anil Ambani on Sunday said the petroleum ministry should have referred the issue to an expert committee for evaluation.

“Rejection of the RIL-RNRL gas price by ministry of petroleum is premature and unfortunate,” Mr Anil Ambani said while committing himself to the completion of the Rs 25,000 crore gas-based power project at Dadri. Mr Anil Ambani said that the gas supply agreement was arrived at in 2004 between the two companies, a claim disputed by RIL, headed by his elder brother Mr Mukesh Ambani.

“Apart from the gas sale arrangement made in January, 2006 no other gas sale agreement from the KG basin has been entered into between RIL and RNRL at any time,” RIL said. Mr Anil Ambani’s statement comes within days of his unsuccessful attempt for a review of the gas price proposal rejected by petroleum ministry.

Markets continued their good run during the week ended with both the Sensex and the Nifty logging gains of over 1.5 per cent. On the BSE, the Sensex after testing 11,000 levels on two consecutive days closed at 10,866 and the Nifty on the NSE flirted with the 3,200 mark to end at 3,176.

High crude prices, the finance minister’s statement that PSU banks should take government approval before hiking interest rates and jitters over next week’s US Fed meet outcome have kept the sentiment subdued. Domestic funds and big market players were seen pressing sales at higher levels. However, renewed buying from FIIs kept the sentiment positive. Markets may move up sharply next week if the US Fed defers the interest rate hike and the geo-political scene in West Asia improves.

Barring any negative developments on the home front, markets may dance to global cues for the next few weeks. Chartists predict a trading band of 10,600-11,200 for the Sensex and 3,090-3,280 for the Nifty. Resistances for the Sensex and the Nifty on the upside are at 10,940 and 11,080 and 3,210 and 3,280. Strong supports for the Sensex and the Nifty are 10,620 and 10,360 and 3,090 and 3,000. Avoid fresh positions if the Sensex and the Nifty trade below 10,800 and 3,160. Initiate fresh long positions only if the Sensex closes above 11,000 with good volumes. Trade only in active markets. Keep out of slow, dead ones.

F&O SEGMENT
Activity in the F&O segment has become stock specific with traders churning positions after the end of results season. Sentiment indicators like the put/call ratio, implied volatility and open interest indicate range-bound market in the short-term with a positive bias. Discount between Nifty futures and spot has narrowed down to just 10 points.

Adopt strangle strategy by buying Nifty3,300 call and Nifty3100 put options to take advantage of change in trend. Among the actively traded stock, futures buying is advised in Infosys, Titan Inds, SBI, ONGC, Tata Motors, Tata Steel, SRF, Dr Reddy’s, NDTV, Patni Comp and IPCL with a stop loss at Rs 1,625, Rs 600, Rs 770, Rs 1,130, Rs 710, Rs 485, Rs 188, Rs 1,380, Rs 150, Rs 316 and Rs 240.

Banking counters are likely to stage a comeback after clarity over the FM’s statement. Buy low-priced PSU bank counters on sharp dips. Capital goods and engineering counters have started showing strength again. Stay invested for further gains. Cement and pharma counters have attracted spirited buying at lower levels.

Stay overweight in the sectors for concrete and healthy returns. Full position in side counters like JP Hydro and Rel Petro; and renewed activity in SRF, Titan, Century, Polaris and others indicate that some operators are betting on markets moving up sharply in the near-term. Punters tip Strides Arcolabs, Arvind Mills, KTK Bank, GNFC and Orchid for surprising gains. Avoid uncertainty.

SATTA GUPCHUP
* With the emergence of India as a growth capital market global heavyweights in private equity like KKR, Actis, Temasek, Warburg Pincus and others are pumping in money as never before. Going by the track record of their success in listed counters like Matrix, Bharti, I-Flex, Suzlon and many others, small inv-estors would do well to keep track of big-ticket investments by private equity players. Keep a tab on Phoenix Lamps, Allsec, Spentex Inds, Kale Consultants, Infomedia, Vaibhav Gems, Bajaj Auto Finance and Glenmark Pharma.

* The entry of Reliance and Bharti into retail spells good times for organised agro and food firms. Look out for buys in counters like Kohinoor Foods and Lakshmi Energy and others.

C. Kutumba Rao is a Hyderabad-based stock market analyst. The views expressed and the recommendations made are those of the author. Readers are recommended to consult their financial advisors before making any financial investments. This newspaper is not liable for investment decisions made on the basis of recommendations in these columns.

Mergers and acquisitions activity in the technology sector has gathered pace and is likely to continue though this year, according to Boston Corporate Finance, Inc., an investment bank.

According to BCF, the IT services, enterprise software, security and storage segments are likely to see a lot more action. It says that during the first six months of this year, BOCF recorded 1,993 transactions for IT companies, up 15.6 per cent from January through June in the prior year. It estimates that there were 3,449 IT M&A transactions last year.

“We’ll probably see an increase of about 20 per cent this year,” Boston Corporate Fin-ance CEO Murray Beach was quoted as saying by TechWeb. “The number of transactions demonstrates the general health of the industry.”

Citing numbers from Capital IQ, a Standard & Poor’s division, BCF says there were more than 450 M&A transactions during the second quarter in IT services, enterprise software, security and storage of which 76 disclosed deals totalled more than $14.7 billion. BCF also said that in the same quarter, companies disclosed 210 M&A deals in the enterprise software space totalling $7.4 billion. Numbers tallied for April through June 2006 indicate the market endured its third busiest M&A quarter since the first quarter in 2000.

Magnetic chips
Meanwhile, in news from the world of nanotechnology, a team from the University of Iowa, the University of Illinois at Urbana-Champaign and Princeton University, all in the US, has inserted atoms of manganese at desired locations in the semiconductor gallium arsenide using a scanning tunnelling microscope. The resulting magnetic semiconductor material could find a use in spintronic devices, creating chips that can both manipulate and store data.

“The ability to tailor semiconductors on the atomic scale is the holy grail of electronics and this method may be the approach that is needed,” says Ali Yazdani of Princeton University. “Up until now, we have not had a way to control how the manganese sits in the gallium arsenide substrate. We could not specify, for example, how large the bits of manganese would be or how far apart they would be located.”

Previously, manganese-doped GaAs has had a ferromagnetic transition temperature of 88º Celsius. But if the material is to be useful in electronics applications it must remain magnetic at room temperature. By studying the effect of introducing the manganese atoms at specific locations the researchers hope to optimise the material’s properties. “The important thing technically was that we could incorporate the manganese into the underlying crystal lattice,” said Dr Yazdani.

New Delhi, Aug. 6: India needs to invest $330 billion in infrastructure over the next five years to sustain an average annual growth rate of 8 per cent, says a study conducted by CII. According to the study conducted by the CII Infrastructure Council, the investment in India’s infrastructure would need to rise from a level of $47 billion in 2006-07 to a level of $84 billion by 2010-2011.

This calls for a total investment of $331 billion in the country’s infrastructure over the next 5 years to sustain the current economic growth rate that has averaged 8.1 per cent annually over the past three years.

The study founded that India was lagging behind the other east and southeast Asian economies, in its levels of infrastructure spending as a proportion of GDP. While China spent 10.6 per cent of GDP, India’s capital spend on infrastructure was below 4 per cent in 2003. The disparity was even more stark in absolute figure terms, with China spending $150 billion on infrastructure in 2003, against India’s $21 billion.

Mumbai, Aug. 6: Large institutional investors seem to have reposed their faith in initial public offerings with the huge oversubcriptions witnessed last week by the two public issues — Tech Mahindra and GMR Infrastructure.

However, the smaller investors are still in a cautious mood after the mauling witnessed by a number of IPOs that came after Reliance Petroleum’s public issue in April this year and this was evident from the relatively weak resp-onse that GMR and Tech Mahindra recieved from retail investors.

Tech Mahindra IPO was oversubcribed by over 72 times, only around eight times for the shares res-erved for retail investors. n case of GMR Infrastructure, the retail portion was not even fully subscribed, although the issue was oversubscribed by nearly seven times in total.

The retail portion of the Tech Mahindra issue was oversubscribed by 7.84 times while the retail investor portion of GMR got bids for 52 per cent of the offer. However, both the IPOs received robust response from the Qualified Institutional Buyers (QIBs), particularly the foreign investors.

Sushil Handa is founder and CEO of the Ahmedabad-based Claris LifeSciences, a manufacturer and marketer of sterile parenteral preparations, life-saving medicines and hospital products and focuses on delivery systems for treatment of critical diseases.

A first-generation entrepreneur and management graduate with a finance background, Mr Handa launched Core Healthcare, the biggest manufacturer of intravenous fluid in the country in the late 80s and 90s. At its peak Core had a market capitalisation of Rs 1,500 crore. However, Core was declared sick in the mid-90s and ultimately sold to the Nirma Group.

Mr Handa set up Claris six years ago. With the Carlyle Group, a private equity firm, investing $20 million as equity in the company earlier this year, Claris has drawn up a two-year plan to double revenues and increase its presence in the international markets with distribution and marketing alliances.

Apart from the equity boost that Claris got from Carlyle, how do you see the venture capital major assisting you in your growth plans?
With the Carlyle partnership, Claris would have networking advantage in ex-ploring new markets.

For example, since Carlyle has a presence in Japan and China among other countries and is well-equipped with local knowledge in terms of market environment, Claris sees it as a facilitator for expanding its operations on a global stage.

What are the plans that Claris has drawn up in the near-term?
Expansion of capacity with the setting up of a third unit to produce erythropoietin in Ahmedabad is underway at a cost of Rs 235 crore. Carlyle chipped in with Rs 90 crore and another Rs 90 crore would be raised as debt, with the remaining coming from internal accruals. We are a Rs 400 crores company at this point in time and by the end of this year we expect revenues to touch Rs 450 crores. Further, Claris has a presence in 65 countries right now which would be extended to 85 by next year.

What are the roadblocks to reach the targets. Moreover, what have you learnt from the mistakes made by Core?
For the next growth stage we need to expand our product basket and install an efficient supply chain management linking our global subsidiaries and offices in 65 countries.
As far as Core was concerned, we definitely have learnt from the pitfalls and its sharp rise. Therefore we are not repeating the strategy of banking on a single product and a single market.

What is the strategy for this year?
We are working keeping in mind that 2008 would kickstart the big year period. To prepare for that, this year we see the regulated markets with a special focus as the action for the pharma industry lies there.

By 2007 we expect to be present in all regulated markets such as the United States, Europe and Japan once the US FDA inspection is over at our facilities by 2006-end.
Claris has entered the regulated markets — worth $11 billion — of Australia and New Zealand and tied up with Mayne Pharma and Sandoz for marketing injectable products.
By mid-August we would also announce another licensing agreement with an international pharma major for marketing Claris’s products.

What about new products and new growth areas that Claris is looking into and what is the market size of generics injectibles?
We will launch products in the cardio and oncology space through injectibles. Currently the market for generics injectibles is worth $100 billion out of the total $650 billion global pharmaceutical market.

Other growth areas would be: nutrition, antibiotics and kidney transplants. Although the market for EPO — a $12 billion product globally — in India is small, it is growing at a good rate. We are now the third biggest player in the EPO market in the country. Once the third manufacturing facility at Ahmedabad is ready, we will submit registrations in developing countries where we have a strong marketing network for our pharmaceutical products. Elsewhere, we have developed expertise in liposomal drug delivery systems through which there are five to eight drugs in the pipeline, although at a nascent level right now.

What is the break-up of revenues generated from the international markets and the local market?
Almost 55 per cent of our business comes from the global markets and in the short-tern we want to scale that figure to 65-70 per cent as margins and pricing look attractive.

What are the interests that you pursue in leisure?
Most of the time is spent in travelling. The little time that’s left, I spend in adventure sports and reading history.

Sobha Developers Limited, a Bangalore-based and one of the leading real estate developer and construction company in India with a focus on residential and contractual projects, has filed its Draft Red Herring Prospectus (DRHP) with the Sebi.

The company has proposed to offer 9,476,800 equity shares of Rs 10 each, for cash at a premium to be decided through the book-built process. The issue would constitute 13 per cent of the fully diluted post issue paid-up capital of the company.

The company has reserved up to 9,47,680 equity shares to be offered to eligible employees. Thus the net offer to public would stand at 8,529,120 equity shares. Sobha Developers is entering the capital market to raise capital to fund more land acquisition, its on-going and forthcoming projects and repay certain debts.

Pyramid Saimira on expansion path:
Pyramid Saimira Theatre Ltd (PSTL) will soon be going public to part finance the first phase expansion of the company’s mega digital theatre chain project, which will take the total presence of the company to 355 screens. The company has filed prospectus with the Sebi for issue of equity shares on a 100 per cent book building method for an amount aggregating to Rs 84.44 crores. PSTL is India’s largest theatre chain company with over 100 theatres in operation.

Navjot Sidhu to promote Visa:
Visa International has roped in former cricketer and television personality Navjot Singh Sindhu to promote the credit card’s sponsorship of the ICC Cricket Tournament. Sidhu will play a key role in Visa’s marketing and consumer initiatives beginning with hosting the Visa Clean Bol Contest. The tournament is being played by all nations in the South Asian region including Bangladesh, Pakistan and Sri Lanka.

BSNL to hire agencies to advertise services:
Bharat Sanchar Nigam Ltd is reviewing its creative and media duties and has already shortlisted agencies, who will be confirmed in a week’s time. Agencies shortlisted include Euro RSCG, Grey Worldwide, RK Swa-my/BBDO, Pressman, MPG, Mediacom and Media Direction. BSNL provides a comprehensive range of telecom services and plans to expand its customer base from 47 million to 125 million by 2007.

Blokzijl is head of Air Deccan flight operations:
Air Deccan has appointed Cor Blokzijl as vice-president of its flight operations. In his new assignment Mr Blokzijl will be responsible for flight operations which include flight tracking, scheduling, fuel management, safety management, crew control among other aspects of the airline’s operations. Mr Blokzijl has more than 19,000 flying hours and an experience of over 10 years with Airbus.

More directors on Exim board:
The Export-Import Bank of India has announced the appointment of two executive directors S.R. Rao and N. Shankar. The incumbents were chief general managers of the bank prior to their present appointment. Mr Rao has handled a wide range of duties including those of corporate affairs, information technology, export services and human resources at the bank;s headquarters in Mumbai. Mr Shankar was in charge of the bank’s corporate finance group and is a certified associate of the Indian Institute of Bankers with three decades of experience in the financial sector.

Chatterjee is CEO of TruMart:
Upamanyu Chatterjee is the new chief executive of TruMart, an arm of Piramyd Retail Limited which is part of the Ashok Piramal Group. Mr Chatterjee has a varied experience of over a decade in the retail and other allied sectors and has worked with Shopper’s Stop, Sony Music Entertainment and Rediff. Prior to this assignment, Mr Chatterjee was the business head of Sangam Direct, a retail venture of HLL.

Malhotra to head Home Shopping Network:
Television Eighteen has appointed Sundeep Malhotra as the chief executive of its Home Shopping Network. Mr Malhotra joins his new role after having served for 5 years as the executive vice-president (sales) at Pepsi India.