Tech Mahindra bags Satyam: Samir Arora, Forrester react

After three months of the new board taking over Satyam, Tech Mahindra finally won the high profile race for Satyam. The company bid Rs 58 per share, beating rivals engineering major Larsen & Toubro and private equity (PE) major Wilbur Ross. Tech Mahindra will have to pay Rs 1,757 crore to buy the 31% stake in Satyam. The total acquisition cost will rise upto Rs 2,890 crore once it gets the mandated 51% stake.

Satyam's government-appointed board clarified that Tech Mahindra will take control only when the Company Law Board (CLB) gives its nod for the sale process. They also admitted that the crucial process of restatement of accounts would take a few more months.

Samir Arora, Fund Manager, Helios Capital, feels the model which the government adopted for Satyam could be an operating model for future scams in India. He credits the government for handling the situation deftly and swiftly without loss of jobs, confidence, or clients.

Arora feels the risk going forward will be on Tech Mahindra financing the deal.

However, JR Varma, Former Member, SEBI, said the deal has gone very well for everyone except Satyam's shareholder. "A preferential allotment to Tech Mahindra means the old shareholders of Satyam will receive less. Other than the open offer that is going to be there, they are not going to receive any money. It is not very clear whether they will benefit from the ongoing business as well."

Sudin Apte, Senior Analyst, Forrester, feels questions still persist on how the integration process will pan out. Clients, he feels, are also wondering how a company specializing in telecom will be able to service them. "Also, it is not exactly present in the domain and the lines of services of Satyam." He feels a Tier-I Indian company or a multinational could have been a better option to take over approximately a USD 2 billion company when this fiasco opened up. "I wish there was one top company who was trying to buy this company as it would have been much better for clients." According to Apte, there is going to be a possible 5-6% rationalization of staff at Satyam based on how its clients ramp up.

Also Read:

Restatement of co's accounts will take few months: Satyam

Continued on next page…

Thanks to http://www.moneycontrol.com

Sensex cheered by global mood amid local slump

Industrial production may be in a slump but not investor sentiment. The return of foreign institutional investors (FIIs) into the Indian markets and an improving global financial environment have been the key factors behind a stocks rally that has seen the benchmark Sensex climb 32 per cent - or 2,643 points - in the past one month.

It gained 7.6 per cent in the current week ahead of Good Friday to close at a six-month high of 10,803. That spirit contrasts some ground realities.

The Index of Industrial Production (IIP) has contracted on the year, while GDP growth projections have been lowered, with a matching shrinkage in expectations of corporate profitability. But then, there is also a "no news is good news" mood on the external front and positive announcements at the G-20 summit of elite economies.

"Overall, risk aversion has eased and investors are moving from secure assets to riskier assets," said Aseem Dhru, chief executive officer, HDFC Securities. While market discounted all the bad news on economic and corporate front, FIIs emerged as strong buyers with net equity purchases of Rs 4,042 crore since March 9.

"FII purchase in a beaten down market over the last one year has built in a positive investor sentiment," said Divyesh Shah, CEO, Indiabulls Securities. Experts, nevertheless, remain cautious, "I expect sensex to rally between 9,000 and 11,000,' said Dhru.

"Some profit booking is expected," added Shah. However, they see clarity emerging within three months.

Thanks to http://in.news.yahoo.com

Vodafone CEO sees potential in emerging mkts - paper

Vodafone Group's chief executive told a German newspaper that while emerging markets were not unscathed by the global economic crisis, they still offered opportunities to mobile phone operators.

"I'm assuming that growth will slow down in emerging markets but they still offer us vast potential," Vittorio Colao told Welt am Sonntag in an interview to be published on Sunday.

Two thirds of the world's cell phone subscriptions are in developing nations, with the highest growth rate in Africa, a United Nations agency said last month.

Other companies that have invested heavily in emerging markets include India's Bharti Airtel, Norway's Telenor, South Africa's MTN and Egypt's Orascom Telecom.

Colao also told Welt am Sonntag it was definitely time for consolidation among mobile phone operators, but declined to say whether and how Vodafone would participate in the process.

Thanks to http://in.news.yahoo.com

Sensex ends in negative; M&M plummets 7.93%

The Sensex ended in the negative terrain led by banking, metal and consumer goods stocks. Sustained selling was seen across board.

Equities opened on a flat note with negative bias tracking global cues. The 30-share index, BSE Sensex opened with a loss of 9.69 points, at 8,804.15 on Friday. After few minutes of trading, Sensex moved up into the postive to trade on a flat note touching a high of 8,858.84 amid volatility. Later the index fell back into the negative and slipped further on intense selling witnessed in frontliners touching a low of 8,631.60. Banking, realty and metal sectors were the major draggers.

BSE Midcap and Smallcap index declined 1.56% and 1.50% respectively.

Among the sectoral indices, BSE Bankex tumbled 4.16%, Metal plunged 3.35%, Consumer goods shed 2.87% and Realty declined 2.45%.

Asian stocks declined after losses at Sony Corp. and Samsung Electronics Co. showed the global recession is eroding the profits.

The Sensex ended the day with a loss of 139.49 points, or 1.58% at 8,674.35 after touching a high of 8,858.84 and a low of 8,631.60. The broad-based NSE Nifty fell 35.25 points, or 1.30% at 2,678.55 after hitting a high of 2,765.55 and a low of 2,661.65.

Biggest gainers in the 30-share index were Tata Motors (1.81%), Reliance Industries (1.78%), Ranbaxy Laboratories (0.75%), and NTPC (0.28%).

On the other hand, Mahindra & Mahindra (7.93%), Tata Steel (7.17%), Jaiprakash Associates (6.95%), Reliance Communications (4.50%), State Bank Of India (4.34%), and ICICI Bank (3.71%) were the major losers in the Sensex.

Overall market breadth was extremely negative. Out of the total 2,501 stocks traded at BSE, 808 advanced, 1,600 declined while 93 remained unchanged.

Results :

JK Tyre and Industries, swung to loss for the quarter ended December 2008 on account of severe impact in the demand due to the unprecedented global economic slowdown affecting the automobile sector in no small measure.

Zee News, primarily a media company registered a rise of 18.40% in the consolidated net profit in the quarter ended December 2008.

Union Bank of India, one of the largest public sector banks reported a phenomenal rise in standalone net profit for the quarter ended December 2008 due to rise in interest income.

Edelweiss Capital, a diversified Indian financial services company registered a fall of 17.13% in the consolidated net profit in the quarter ended December 2008


Indices Trend
Sensex Nifty
Period Value % Change Value % Change
1 Week 9,046.74 (4.12) 2,736.70 (2.12)
1 Month 9,686.75 (10.45) 2,968.65 (9.77)
3 Months 8,701.07 (0.31) 2,584.00 3.66
6 Months 14,274.94 (39.23) 4,311.85 (37.88)
1 Year 18,152.78 (52.21) 5,274.10 (49.21)


Thanks to www.myiris.com

US Offers $6 Billion to Support Auto Lender GMAC

The Bush administration on Monday expanded its bailout of the U.S. auto industry, saying it was buying $5 billion in equity in auto and mortgage finance company GMAC and increasing a loan to General Motors by $1 billion.
CNBC.com
The action was the latest in a lengthy series of emergency government moves aimed at easing the worst credit crisis since the 1930s and limiting the severity of a year-long recession.
The Treasury Department said it would buy $5 billion in senior preferred equity with an 8 percent dividend from GMAC as part of an effort to ensure the solvency of a company considered crucial to GM's survival.
It also said it would lend up to $1 billion to fund GM's purchase of equity in support of GMAC's reorganization as a bank holding company. That loan would come on top of assistance extended to the No. 1 U.S. automaker earlier this month. Sales Decline
The government agreed on Dec. 19 to rescue GM and Chrysler LLC with up to $17.4 billion in loans to stave off a collapse that would have cost hundreds of thousands of jobs and dealt a severe blow to an economy already in recession. Of that amount, $13.4 billion was earmarked for GM.
President George W. Bush said at the time that it would be irresponsible to let the automakers die. The White House moved on its own after Republicans in the Democratic-controlled Congress blocked a deal to provide emergency funds.
U.S. auto sales have plunged to 25-year lows in recent months and are not expected to recover substantially until after 2009 under the most optimistic of outlooks. The recent steep drop in sales, which automakers and analysts have linked to the credit crisis that took hold in September, has pushed both GM and its smaller rival Chrysler to the brink of collapse.
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The Treasury said it was dipping into a $700 billion financial bailout fund approved by Congress in early October to buy the equity in GMAC and extend the loan to GM.
GMAC won Federal Reserve approval to become a bank holding company last week, a move intended to give it freer access to emergency government funds and help it avoid bankruptcy. GMAC has had to raise additional capital to achieve bank holding company status.
The company, co-owned by GM
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and private equity firm Cerberus, has lost $7.9 billion over the last five quarters as the credit crunch raised its borrowing costs sharply and the value of many of its assets plunged. Dividend Restrictions
GMAC agreed to restrictions on dividend payments and executive pay as part of the equity injection. The bonus pool available to the top 25 executives was cut by 40 percent from 2007 levels, a Treasury official told reporters on a conference call.
GMAC said in a statement that GM and a Cerberus management affiliate have agreed to buy $1.25 billion in new GMAC shares. Previously announced separate exchange and cash tender offers have been satisfied, it said.
Representatives of GM and Cerberus could not be reached for comment.