I really Salute SEBI for going in right direction especially from Retail Investors point of view

Sebi bars HBJ Capital from acting as investment advisors

Sebi logo

Capital market regulator the Securities and Exchange Board of India (Sebi) has barred HBJ Capital Services and its directors from acting as investment advisors andalternative investment fund for providing unauthorised investment tips to investors.

The regulator said HBJ Capital Services and its promoters/directors have been acting as providing investment advisory services to their clients/investors without obtaining registration from Sebi to act as such and, thereby, have violated norms.

In an order passed  on Tuesday, Sebi said HBJ Capital Services and its directors “cease and desist from acting as an investment advisor and alternative investment fund and cease to solicit or undertake such activities or any other unregistered activities in the securities market directly or indirectly, any manner whatsoever”.

HBJ Capital Services and its directors have solicited and induced investors to deal in securities on the basis of their investment advices and stock trade tips among others through mail, SMS, web-login,  among others.

It was observed that investors at large could be misled and the moneys invested by the investors are at risk on account of such unauthorised activities of unregistered entities.

HBJ Capital Services has been directed to immediately withdraw and remove all advertisements, publications, documents, websites, in relation to those schemes/activities or any unregistered activity in the securities market.

Sebi also directed "not to divert any funds raised from investors, kept in bank account(s) and/or in the custody of HBJ Capital or its directors and HBJ Capital LLP and its designated partners."

This order would come into force with immediate effect.

Source : Press Trust of India; http://www.business-standard.com

Heard of Nandan Denim? Here’s why you should

Heard of Nandan Denim? Here’s why you should

With a planned expansion to 110 million metres a year by June, the Gujarat-based firm is set to become Asia’s largest denim manufacturer

Nandan Denim Ltd, India’s second largest and the world’s fifth largest denim fabric company is set to become Asia’s biggest denim fabric maker by June this year when the company completes its Rs 621-crore capacity expansion programme.

At present, Nandan’s capacity is 99 million meter per annum (MMPA), putting it at the second spot behind Arvind Ltd, whose capacity is 108 MMPA. In four months, the Gujarat-based Nandan claims, its capacity will rise to 110 MMPA, making it India’s and indeed Asia’s largest denim maker.

“We are at an advanced stage of completing our expansion,” Deepak Chiripal, CEO, Nandan Denim, told The Hindu in an interview. “The denim industry in India is growing at 15 to 18 per cent a year.” Mr Chiripal added that several international players have begun to source denim from India “due to raw material and other input advantages” apart from stable economic and political environment.

“India needs to double its denim manufacturing capacity in next three to four years due to exploding global demand,” he added.

Arvind and Nandan Denim are both based in Ahmedabad, Gujarat. While Nandan Denim was set up in 2004 and is a part of the Chiripal Group established in 1972, Arvind Ltd was founded in 1931 as part of the Lalbhai Group, whose first manufacturing unit, Saraspur Manufacturing Company, was set up in 1897 to produce cotton yarn.

Interestingly, it was Arvind’s success in the denim business that prompted the Chiripals to enter the segment. Nandan’s original capacity was only 6 MMPA, and it has gradually scaled up in the wake of growing Indian and global demand. Nandan officials said the company exports denim to 28 countries and has 3,000 employees at its facility in Gujarat.

Govind Sharda, President, Nandan Denim told The Hindu , “We always wanted to make denim for different segments of buyers, and never wanted to confine to any specific segment like our competitors. We also focused on catering to the requirement of both local and global brands at different price points. This created demand for our fabric and helped us add capacity.”

In India, the current per capita consumption of denim is at 0.3 pairs per person as compared to 2 pairs in China and 8/9 pairs in UK/US. “This leaves scope for expansion by all players in this segment,” officials said.

The installed denim capacity in India is 1.2 billion metres per annum (BMPA). Production capacity is approximately 1 BMPA, taking into account 85-90 per cent capacity utilisation. “Of this, we had a capacity of 99 MMPA on September 30, 2015 giving us almost 10 per cent of the market share of the Indian denim industry,” Mr Sharda said.

Industry estimates put the current domestic consumption of denim at between 700-800 MMPA, while 200-300 million metres are exported. Assuming the domestic market grows at a compounded annual growth rate of 15-18 per cent (the current growth rate), that demand would reach 2 billion metres by 2020.

At the close of BSE on Tuesday, Nandan Denim was trading at Rs 130.40 a share, down Rs 3 from the previous close.

Source : http://www.thehindu.com; Nandan Denim

Reliance Infrastructure acquires management control of Pipavav Defence

Pipavav’s board will be reconstituted and the firm will be renamed Reliance Defence and Engineering Ltd

R-Infra had in March bought 18% stake in Pipavav Defence for Rs.819 crore and had announced an open offer.

Reliance Infrastructure Ltd (R-Infra) has acquired management control in defence ship maker Pipavav Defence and Offshore Engineering Co. Ltd, with the Anil Ambani-led company closing the open offer period for acquiring the controlling stake.

In a statement on Wednesday, R-Infra, with its wholly-owned subsidiary, Reliance Defence Systems Pvt. Ltd, announced the closure of the open offer period and said that it will acquire sole management control of Pipavav Defence following the completion of applicable formalities.

The board of Pipavav Defence will be reconstituted and the firm will be renamed Reliance Defence and Engineering Ltd.

“The payment for validly tendered shares, subject to scrutiny and processing, will be completed by 31 December 2015,” R-Infra said.

R-Infra had in March bought 18% stake in Pipavav Defence for Rs.819 crore and had announced an open offer.

A person close to the development said R-Infra has managed to get around 17% stake through the open offer, which sought 26% of share capital.

Post the offer, R-Infra will own approximately 35% stake in the shipbuilding firm and acquire management control.

“Majority of the institutional investors have not opted for this open offer and have decided to stay invested in the company,” the person quoted above added.

Strengthening its entry in the defence sector, R-Infra has applied for 16 more licences covering a wide range of land and naval systems.

Last month, Reliance Defence secured 12 in-principle industrial licence approvals from the Department of Industrial Policy and Promotion for manufacturing aircraft, helicopters, all-terrain combat vehicles, unmanned aerial vehicles, night-vision devices, sensors, navigation and surveillance equipment, propulsion systems and simulators.

On 4 November, the R-Infra board said that new high-growth opportunities in the defence sector, arising from Make in India and Skill India initiatives serve vital national priorities and have several attractive features.

The board said these include relatively low capital intensity, a lower gestation period, minimal regulatory uncertainties, higher job creation and the potential for better return on equity.

On Wednesday,shares of Pipavav Defence and Offshore Engineering Ltd gained 16.70% to close at Rs.76.50 apiece on BSE, while benchmark Sensex gained 0.69% to close at 25494.37 points

R-infra gained 3.23% to close at Rs.436.85 per share.

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

Source : P.R. Sanjai; http://www.livemint.com

Roiled by debt, is it back to the roots for Jaypee Group?

Jaypee Group has sold its cash-generating assets to pare Rs75,000 crore in debt but EPC may hold key to its future

Manoj Gaur, executive chairman and chief executive of Jaypee Group. Photo: Pradeep Gaur/Mint

Jaypee Group traces its roots to a civil construction project it undertook in Mongrol, Rajasthan, in 1958. That laid the foundation for a long and successful record it went on to build in the engineering, procurement and construction (EPC) business in the subsequent years and decades.

As Jaypee struggles under the burden of Rs.75,000 crore of debt, as of March 2015, EPC may well hold the key to the future of the conglomerate led by Manoj Gaur.

EPC is a contract awarded in the engineering and construction industry. The contractor designs the project, procures the necessary equipment and materials to build it and delivers a finished asset to the client.

A revival looks difficult for Jaypee Group through its power, cement and highway units, unless there’s a dramatic change in the operating environment, said a senior investment banker who advised the Jaypee Group.

“The Jaypee Group has to go to its roots to survive,” he said on condition of anonymity.

The group based in Noida is thinking along similar lines and revived its focus on the EPC unit, said a person close to the group.

“Jaypee has a huge focus on the engineering and construction business. That was always the core for Jaypee. The group is revitalizing the EPC business to stage a revival. Jaypee Group may not be able to restore lost glory through the EPC vertical, but it can at least keep its head above the water,” said this person, requesting anonymity.

In the past two years, Jaypee Group, with interests in power, real estate, cement, highways, fertilizer, hospitality, healthcare and sports, has been pushed by creditors to sell some of its best assets, transfer ownership of land parcels and even hand over the keys to the group’s headquarters in Noida to pare debt.

The Jaypee Group has so far over Rs.26,000 crore of cement and power assets.

An email sent to a group spokesperson on Friday seeking comment on its strategy for its remaining businesses went unanswered.

In a statement issued on 31 March, the day the Jaypee Group sold 21.20 million tonnes in cement capacity to UltraTech Cement Ltd, Jaypee Group said it is “determined to leverage its expertise in the fields of engineering and construction, real estate and project execution, in a committed manner”.

At present, the group’s EPC division, housed under the flagship Jaiprakash Associates Ltd, is executing works worth Rs.37,256 crore, according to the firm’s annual report for 2014-15.

Of this, Rs.30,000 crore is the value of the 1,047km-long Ganga Expressway project, connecting Greater Noida and Balia in Uttar Pradesh, which has been indefinitely delayed.

Experts say the EPC business has potential to grow, but the group would need to strengthen its financial position to win projects coming up for bidding.

“EPC is re-emerging as a prominent business driver. The volume of activity is growing and the contract terms are more balanced now, thanks to the past experience. Many groups see EPC as a clear growth option. However, EPC entails considerable working capital needs. Companies that moved early to divest assets or shed loss-making projects are financially better placed to bid for upcoming EPC contracts,” said Kameswara Rao, leader (energy, utilities and mining) at PricewaterhouseCoopers, a consulting firm.

Jaypee Group has four projects under execution, including the Sardar Sarovar (Narmada) Project in Gujarat, 900 megawatts (MW) Baglihar Hydroelectric Projects in Jammu and Kashmir, Alimineti Madhav Reddy Project in Andhra Pradesh and 990 MW Punatsangchhu II Hydroelectric Project in Bhutan.

Asset sales

In September 2015, Jaiprakash Power Ventures Ltd sold two of its hydro assets for Rs.9,200 crore to JSW Energy Ltd. The company now operates three thermal power plants and one hydro power plant, most of which are facing fuel supply constraints or weak demand.

Jaiprakash Power also signed a memorandum of understanding with JSW Energy to sell its 500 MW Bina thermal power plant in September 2015 but is yet to announce a definitive deal.

The sale of these projects will help bring down debt of the power division by close to 30% but the division’s Ebit (earnings before interest and tax) would come down at a higher 59%, Credit Suisse said in its House of Debt report in October.

In the cement segment Jaiprakash Associates in March signed a definitive agreement to sell 21.20 million tonnes of cement assets to UltraTech for Rs.15,900 crore. After the deal, the group would be left with 10 million tonnes of cement capacity. That, too, may eventually be sold, said the second person cited above.

The sale of the cement units, while generating cash to pay debt, will also hit earnings. In fiscal year 2015, cement contributed 53.7% of Jaiprakash Associates’ revenue; the cement unit reported a profit before tax of Rs.237 crore. Overall, Jaiprakash Associates reported a loss of Rs.1,831.99 crore for the year.

Once the asset sales are completed, the Jaypee Group would be left with 2,880 MW in operational power capacity, the 160km Yamuna Expressway, land development rights for 25 million sq. metres, three realty projects, one hospital, five hotels, a sports division, one fertilizer plant and its EPC division.

The second person cited earlier in the story noted that since most of the group’s remaining assets are under stress, focussing on the EPC business is logical.

“Jaypee Group has already sold its best and cash-generating assets in the power and cement sectors. Whatever left is either damaged or yet to get raw material linkage,” said this person.

Fate of non-core ventures

As cash-generating assets dwindle, the fate of new but non-core business ventures that the group entered into also remains uncertain.

Before it hit a rough patch, Jaypee Group diversified into non-infrastructure businesses such as healthcare, hospitality and fertilizer.

Whether the group chooses to exit these businesses will depend on their ability to generate cash flows.

The hospitality business, for instance, is generating cash flows for the group, explained the second person cited above. “At present, the group is not contemplating sale of the hotels considering the cash flows,” this person said.

In contrast, the group’s plans in healthcare are a drain on the resources, and any plans to expand that business are at a standstill, said the second person. “Originally, Jaypee Group had ambitious plans for expanding its hospital chain. However, the group had put the plan on hold citing slowing economy and debt woes,” he said.

Jaypee Healthcare Ltd, a subsidiary of Jaypee Infratech Ltd at present runs a 504-bed hospital in Noida.

Real estate

Apart from reviving the EPC business, the group still has real estate to fall back on.

The company’s infrastructure subsidiary Jaypee Infratech Ltd holds various land parcels and the Yamuna Expressway project —a sale for which could help the firm access some cash flows. On 23 December, Mint reported that the company had come around to the idea of selling its entire holding in the expressway after an attempt to sell a partial stake failed.

“Jaypee Group has good highway assets considering the real estate attached with the highway projects. These can fetch a decent valuation with road sector deals being struck at a premium,” said a third person familiar with the company’s plans.

“However, the Jaypee Group may not able to address the debt problem entirely through the road assets, considering the size of debt,” this person added, requesting anonymity.

Jaypee Infratech has a right to develop 25 million sq.mt. of land along the expressway, according to its 2014-2015 annual report. Some parts of this land has already been transferred to the banks.

In addition to these land holdings, Jaiprakash Associates is also executing three large-scale real estate projects in Noida. This, however, may end up being more of a burden than a boon.

The Indian real estate sector has taken a hit due to the rising inventories and a slowdown in demand. According to Liases Foras Real Estate Rating and Research Pvt. Ltd, unsold stock across eight main cities will take 43 months to clear at the current sales rate.

As such, generating cash from real estate sales may be challenging for the group until the real estate sector sees a revival.

Source : http://www.livemint.com; UltraTech Cement Ltd