Bharati Shipyard buys out UK-based shipyard company Swan Hunter

India’s second-largest private sector shipbuilder Bharati Shipyard is acquiring UK-based Swan Hunter Shipyard for an undisclosed amount. The entire machinery and equipment from Swan Hunter will be dismantled and brought to India over six months to be re-built at Bharati’s shipyards. The acquisition might be one of the biggest deals till date in the domestic shipbuilding industry. A comparable new shipyard would have cost Rs. 200-250 crores.

Swan Hunter is a 130-year old shipyard engaged in shipbuilding, ship conversion and construction of offshore structures. It has built over 1600 ships of various types, including more than 400 naval vessels, which includes two aircraft carriers. Swan Hunter has the capacity to build vessels of up to 100,000 dead weight tonnes (DWT).

Through this acquisition, Bharati Shipyard is expected to have fully automated panel line, quayside traveling gantry cranes of up to 180-tonne capacity, 30 overhead traveling cranes of up to 60-tonne capacity, plate rolls, bending presses, robotic profiling machines, and digitally fed plasma burning equipment. This will enable Bharati to build ships and vessels with the capacity of up to 60,000 DWT. Bharati will also acquire the 20,000-ton lift capacity floating dock of Swan Hunter, which will add a lot of value to its existing operation.

Read more in the Business Standard article.

Mumbai-based machine engineering firm makes Canadian acquisition

Mumbai-based machine tool and engineering company Batliboi Limited has acquired Canadian firm Quickmill, Inc. for an estimated Rs. 22 crores.

This is Batliboi’s first acquisition, the logic behind it being leveraging on Quickmill’s distribution network and research and development capabilities. The acquisition will help Batliboi to establish its presence in North-America where Quickmill enjoys around 75% market share in the heat exchanger segment. The company plans to use Quickmill's distribution network in North America, and utilize its strong R&D capabilities and in turn, conduct detailed engineering for Quickmill's machinery equipment, heat exchangers, aerospace dies and moulds, bridge-building machinery and other Quickmill products in India.

Batliboi primarily manufactures machine tools, specialized machines, textile air engineering machines and air conditioners at its Surat and Bangalore facilities. The company's clients include textile manufacturers, automobile manufacturers and power equipment makers, besides hotels which use its air conditioners and refrigerators.

Read the article in The Economic Times.

ICICI Ventures invests Rs. 82 crores in engineering firm Electrotherm

ICICI Ventures has invested Rs. 82 crores in engineering company Electrotherm India Limited, for an undisclosed stake. The investment will part-fund the second phase of Electrotherm’s expansion plans of Rs. 400 crores. In addition to the investment made by ICICI Ventures, the promoters would bring in Rs. 58 crores to meet the equity portion. Terms loans worth Rs. 200 crores and internal accruals of Rs. 60 crores would meet the balance funding requirements of the proposed expansion plans. The term loans have been sanctioned and disbursed and the Company has already invested Rs. 300 crores out of the total planned expenditure of Rs. 400 crores. KPMG Corporate Finance was the sole advisor for the transaction.

Electrotherm is an engineering and manufacturing company with major strength in power electronics. Leveraging its core strength in power electronics, the Company through its in house R&D facilities developed a battery-operated scooter, which has been a commercial success in Gujarat, and has also seen good response from other customers as well.

For more on Electrotherm, read the article on Equitybulls.com.

Reliance Industries in JV talks with US-based Nova Chemicals

Apart from Dow Chemicals, it is learnt that Reliance Industries is said to be in advanced stage of discussions with North American plastics and petrochemicals major Nova Chemicals as part of its bid to spread wings to foreign shores. The possible alliance could include product swaps, infrastructure sharing as well as joint exploration of business growth opportunities.

Nova Chemicals has a market capitalization of about $2.5 bn, and has seven manufacturing facilities in the US, six in Canada and two others in South America, while it is also present in Europe through various joint ventures. It has an annual turnover of over $6.5 bn.

Read more in the Business Standard article.
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Reliance Industries giving shape to global ambitions; in talks with Carrefour, Dow Chemicals for strategic alliances

Reliance Industries giving shape to global ambitions; in talks with Carrefour, Dow Chemicals for strategic alliances

Reliance Industries is reportedly in talks with French retail major Carrefour as well as other global players for acquiring controlling stake in these companies to reach out to international consumers with its basket of Indian food produce.

Reliance has created a war-chest of Rs. 100,000 crores and is looking to create international business arms for accessing global markets by leveraging on its supply chain that was put in place as part of the farm-to-fork project. Besides Carrefour, Reliance is also talking to Tier-2 companies like Salisbury and Marks and Spencer for food business.

Carrefour on its part has denied any sort of discussions with Reliance for either a controlling stake in the former or a joint venture. In a related development, Reliance is also in talks with Dow Chemicals and is expected to form a petrochemical JV.

Reliance Industries likely to buy stake in Welspun Gujarat Stahl Rohren

Metal pipes manufacturer Welspun Gujarat Stahl Rohren Limited, the flagship company of the $1 bn-Welspun Group, may reportedly dilute its stake to Reliance Industries.

Reliance Industries wanted to have control in one of the steel pipe-making companies due to its larger interest in oil and gas where pipe companies have a larger role to play. The company recently has made two new natural gas discoveries in its east coast blocks in the Krishna-Godavari and Mahanadi basins. Moreover, the current global boom in oil and gas and spurt of investments in oil companies has sent pipeline demand skyrocketing across the world.

In December, ABN-AMRO picked up 0.67% stake by acquiring 900,000 equity shares of Welspun at a price of Rs. 93 each.

Meanwhile, Welspun Gujarat Stahl Rohren has earmarked an investment of Rs. 1300 crores funded through a mix of equity, overseas and domestic debt to set up a captive steel plant and plate mill. Its manufacturing facilities are located near Dahej in Gujarat.

In the global markets, Welspun Gujarat supplied pipes to oil and gas majors such as British Gas, Exxon Mobil, Shell and Saudi Aramco and in domestic front, it supplies to Gas Authority of India, Indian Oil, ONGC and Bharat Petroleum.

Read more in the DNA Money article.

GIC and IDFC Private Equity buy 31% stake in Quipo Infrastructure for Rs. 150 crores to fund growth plans

GIC Special Investments, Singapore and IDFC Private Equity have picked up around 15.5% share each, totaling 31%, in Quipo Infrastructure Equipment Limited (QIEL) for Rs. 150 crores.

Quipo has been promoted by the SREI Group, one of the largest equipment retail companies in the country. It will use the funds to part-finance a capital expenditure plan of over Rs. 3400 crores over the next two years. Following this, the paid-up equity capital of the company is estimated to be around Rs. 90 crores with a total net worth around Rs. 225 crores. SREI’s shareholding in Quipo has come down to 15.5% from 22%. Dutch FMO and SwedFund hold around 22%, while other shareholders like Ingersoll Rand and other venture capital funds hold the balance.

Apart from internal cash generation, the company plans to go in for various debt options to fund its capex plans. Around Rs. 1200 crores of debt will be raised next fiscal. A large part of the capital expenditure of almost Rs. 2000 crores will go towards building almost 6000 telecom towers across the country. Quipo, through its subsidiary has been involved in the renting of towers to leading telecom operators.

The company is expected to gross a turnover of around Rs. 200 crores in the current fiscal and the new business is likely to double revenues from next year.

Read the article in DNA Money.

Fidelity buys 5% in pharma packaging company Ess Dee Aluminium

Mutual fund house Fidelity International has picked up 5% equity in Ess Dee Aluminium, India’s largest provider of pharma packaging solutions, in an open market transaction. The fund has invested close to Rs. 40 crores in the company’s stock that pegs its enterprise value at around Rs. 800 crores. Ess Dee also has been approached by other private equity funds, including Blackstone, for investment opportunities.

The ICICI Group and famous Asian financial commentator Marc Faber already hold around 3.5% and 4% equity, respectively, in Ess Dee. Other investors include Nimesh Kampani of the JM Financial Group and Jagdish Master of Enam.

For more, read The Economic Times article.

Indian Oil to buy French company Maurel & Prom’s assets in Congo for $1.5 bn

Indian Oil Corporation is likely to acquire French company Maurel & Prom's stake in oilfields in Congo for about $1.5 bn.

Maurel & Prom had announced sale of its interest in the producing fields of M'Boundi and Kouakouala and other exploration areas in Congo to Eni of Italy for $1.434 bn. Maurel & Prom had announced sale of its 48.6% interest in the M'Boundi oil field and 66 % in the Kouakouala A oilfield to Eni. Besides, it was selling 50% in Kouakouala B, C, D exploration blocks and 50% Kouilou exploration permit. But the transaction was subject to waiver of pre-emption right by partner Burren Energy of UK. The British firm has time till the end of March to exercise its pre-emption right. Indian Oil and its partner Oil India Limited are in advanced stage of discussions with Burren Energy for possible takeover of Maurel & Prom's interest in Congo.

Burren Energy wants operatorship of the fields in Congo. By exercising its pre-emption right, it will first acquire Maurel & Prom's interest in the fields and through a back-to-back agreement sell most of it to Indian Oil-Oil India combine. Burren Energy has 31.5% interest in M'Boundi field and 25% interest in Kouakouala. If the acquisition goes through, IOC-OIL will get 17,000 barrels of oil per day from M'Boundi field in 2007. This will increase to 28,000 barrels per day in 2010.

Read The Economic Times article.

Reliance Industries to merge IPCL with itself

Reliance Industries is considering merging group firm Indian Petrochemicals Corporation Limited with itself. The boards of both the companies will meet on March 10 to consider the plan. The merger, if approved, would add more than Rs. 11,000 crores to Reliance’s balance sheet and Rs. 1163 crores to its profits, based on IPCL’s fiscal 2006 financials.

Reliance Chairman Mukesh Ambani and his associates will hold nearly 53% stake in the merged entity after the conversion of preferential warrants. The promoters are in the process of subscribing to preferential warrants to scale up their stake by 4% from 50.4%. Reliance had paid Rs. 1491 crores to the NDA government in 2002 to take over 26% of IPCL’s equity. It came out with an open offer and increased its stake to 46%. The government now holds 0.35% in the company.

Post-merger, Reliance would offer end-to-end product solutions, which would give it a pan-Indian and perhaps Asian dominance. The merger could also result in substantial tax savings for the merged entity as Reliance buys certain products from IPCL and vice-versa. The merger may help Reliance increase its revenue from chemicals by as much as 4% to 48% of the total. IPCL uses naphtha made at the parent’s refinery as feedstock to make chemicals.

Read the Business Standard article.
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Reliance Industries to form separate holding company for offshore oil assets

Bharat Petroleum to raise stake in Petronet CCK by 26%

Bharat Petroleum Corporation Limited (BPCL) will increase its stake in Petronet CCK by 26%. BPCL has accepted the offer to buy the stake from Petronet India Limited, which is winding up its operations. After the deal, BPCL stake in Petronet CCK will go up to 52%. Once the 26% stake in Petronet CCK is bought, BPCL will have the option of completely buying out Petronet CCK and merging it with itself. In Petronet CCK, the other investors are Kochi Refineries (23%), a BPCL subsidiary, State Bank of India (4.99%), IDFC (19.97%) and IL&FS (0.04%). PricewaterhouseCoopers has completed the valuation of Petronet CCK and the report has been submitted to BPCL. Petronet India’s board has approved the stake sale and an offer has been made to BPCL. The 26% stake is estimated at around Rs. 13.53 crores.

Petronet CCK operates a 292 km petroleum product pipeline from BPCL’s Kochi refinery to the company’s oil terminal at Karur in Tamil Nadu. The company was set up under the aegis of Petronet India to construct and operate the pipeline from Kochi to Karur, with a tap-off point at Coimbatore. BPCL already has an agreement with Petronet CCK for transporting refinery products from the Kochi refinery till 2012-13.

Petronet India is a financial holding company in which Indian Oil Corporation, Hindustan Petroleum and BPCL jointly hold 50% of the equity stake. Private sector companies Essar Oil, Reliance Petroleum and other investors hold the balance equity. Petronet India was to build pipelines on the common carrier principle. However, most of the companies that were to benefit from the projects did not agree on signing take-or-pay agreements with Petronet India. With the government granting companies the freedom to set up their own pipelines, the need for Petronet India diminished leading to its plans for liquidation.

Read the article in Business Standard.

Reliance Industries to form separate holding company for offshore oil assets

Reliance Industries Limited will transfer all its overseas oil assets to a new company to be called as Reliance Exploration and Production DMCC, to be headquartered in Dubai. The subsidiary will first take over the assets Reliance has secured in the West Asian countries. Modeled on ONGC’s ONGC Videsh, the investment arm for ONGC’s overseas oil assets, the new Reliance subsidiary will be the holding company for all overseas upstream assets in oil and gas. This restructuring is being done to reduce the risks on Reliance’s balance sheet as many of these oil assets are in politically risk-prone areas.

Reliance earlier had confined itself mainly to exploration and production within India, but has now taken up overseas expansion in a major way. Armed with its success in the Krishna Godavari deep waters (KG basin), the company has been looking at opportunities in oil-rich nations including Russia and Central Asian countries. The political risks in these countries are huge and exposing Reliance to such uncertainties could impact valuations. The subsidiary was floated in the third quarter of 2006-07.

Reliance has interests in exploration of overseas blocks in Yemen and Oman. It has already made oil discoveries in the onshore Malik 9 block in Yemen. The development plan for the block has been approved by the Republic of Yemen and test production commenced in December 2005. In the Oman offshore block, where RIL is the operator, the existing seismic data has been collected and 2D reprocessing of data is underway.

Read The Economic Times article.

Engineering company Greaves Cotton buys German firm Bukh-Farymann

Greaves Cotton, an engineering company and part of the Thapar Group has acquired 100% stake in Bukh-Farymann, a German firm through its wholly-owned subsidiary Greaves Cotton Netherlands BV for an enterprise value of approximately of €4.24 mn. Bukh-Farymann is a profit making company and engaged in the manufacture and marketing of Farymann diesel engines and components. The German subsidiary was incorporated recently. The acquisition includes existing debt of approximately €1.59 mn. Greaves expects the acquisition to facilitate its global plans and also boost export initiatives.

Read the Business Standard article.

Packaging firm Arrow Coated bids for UK-based Adept Polymers

Mid-sized packaging firm Arrow Coated Products is looking to acquire Adept Polymers, a subsidiary of the UK-based Stanelco, a leading packaging specialist that makes bio-degradable plastics. Arrow Coated submitted a bid for Adept Polymers through Arrow Coated UK, its UK arm, last week.

The process is likely to be finalized by March-end. Adept Polymers is a developer and manufacturer of fully biodegradable plastics that combine water-soluble and non-toxic properties with much of the versatility and functionality of its traditional counterparts.

Arrow Coated has a marketing tie-up with Stanelco to market the latter’s product in the Indian market. Adept Polymers has been valued at over Rs. 20 crores.

Stanelco has decided to hive off Adept as the UK packaging firm is planning to focus on radio frequency welding technology. Besides Arrow UK, packaging companies from France, US and UK are bidding for Adept.

Last year, Bilcare, one of the leading pharma packaging companies in India, had acquired the UK-based clinical trials services provider DHP. Bilcare had acquired the US-based packaging and research firm ProClinical in 2005.

Read The Economic Times article.

Austrian company RHI picks up 51% stake in Clasil Refractories

The €1.3 bn-Austrian refractories company RHI has picked up a 51% stake in Clasil Refractories for an undisclosed price. RHI was, until now, the largest importer of refractories in India and supplier to steelmakers without any local production capacities. It imported material worth €40 mn annually. The stake acquisition now brings a local production centre under its fund. The consideration would be used for expansions currently under way, at the RHI-Clasil plant at Venkatapura in Andhra Pradesh. The plant capacity will reach about 40,000 tonnes with sales revenue of €15 mn per year.

Read The Economic Times article for more details.

LN Mittal to buy 49% stake in HPCL’s Bathinda refinery for Rs. 3300 crores

Indian-born British steel magnate LN Mittal will pick up a 49% stake in the Rs. 16,700 crore-greenfield refinery project at Bathinda in Punjab with an investment of around Rs. 3300 crores. The refinery is being set up by Hindustan Petroleum Corporation Limited (HPCL). This is the first foreign direct investment in the refinery sector. HPCL will sign a JV with Luxembourg-based Mittal Investments for the 9 mmtpa Guru Gobind Singh Refinery project and allied facilities at Bathinda. Mittal Investments is wholly owned by the Mittal family and is registered in Luxembourg. It holds 38% in Mittal Steel Company.

Earlier, on two occasions, HPCL failed to forge alliances with British Petroleum of the UK and Saudi Aramco of Saudi Arabia. HPCL and Mittal Investments will hold 49% equity each in the project, while the balance 2% will be held by financial institutions. It is expected that a formal agreement between the two partners will be signed during the proposed visit of Mr. Mittal on March 2. Public sector Oil India (OIL) may also join the project at a later date and may get a 10-15% stake in the project out of HPCL’s 49%. The HPCL board had cleared the JV proposal on Monday. The project is expected to be commissioned by 2010.

Read The Economic Times article.

Russia’s Rusal may counter-bid for Novelis

Hindalco’s bid for Novelis may see competition from Russian steel major Rusal. Rusal is the world’s largest aluminium and alumina producer. Hindalco will pay the shareholders of Novelis $44.93 per share, or $6 bn, to buyout the US-based company.

Hindalco’s offer has been cleared by the Novelis’ board but is yet to be approved by shareholders. Novelis was spun off Canadian aluminium major Alcan but incorporated in Atlanta in the US. Under Canadian laws, any new bidder would have to pay a break-fee and also better the existing offer. Other potential bidders, such as private equity firm Texas Pacific Group, are also considering mounting a counter-bid for Novelis. Texas Pacific Group controls US-based Aleris.

Regulations stipulate a $100 mn break-fee payable to Hindalco, if a competing bid is made and if in the event, the deal is derailed. As per terms agreed between the Hindalco and Novelis boards, about 66.66% of Novelis shareholders present and voting must tender their shares for Hindalco to go ahead with the deal.

Rusal recently created a three-way merger with Russia’s Sual group and Switzerland’s Glencore International to become the world’s largest aluminum and alumina producer. The annual production would total 4 mn tonnes of aluminum and 11 mn tonnes of alumina, accounting for about 12.5% of global aluminum and 16% of the global alumina market.

Read more in The Economic Times article.

Lanco Infrastructure and Jindal Steel & Power buy Globeleq Singapore

Lanco Infrastructure and Jindal Steel & Power Limited (JSPL) have acquired Globeleq’s Indian assets by acquiring Globeleq Singapore. Lanco and JSPL will now implement the Rs. 16,000 crore-Ultra Mega Power Project (UMPP) in Sasan. Lanco and JSPL have purchased 60% and 40% shareholding, respectively, in the Singapore-based subsidiary of the investment arm of Department for International Development, the development agency of the British government. The consideration for the buyout has not been disclosed; Lanco management says that it is nominal.

Lanco has roped in Jindal Steel to address the concerns of the government over the successful completion of the project in the light of Globeleq’s exit from the consortium. Around two months ago, the Lanco-Globeleq consortium had emerged as the winning bidder of the Sasan project. Lanco had 30% stake, while Globeleq had 70% stake in the consortium. With the acquisition of Globeleq’s stake, Lanco will have 72% interest, direct and indirect, over the Sasan project while JSPL will have 28% stake. JSPL reserves the right to scale up its holding to 49% in the project in five years. The shareholders will chip in Rs. 3200 crores as equity contribution towards the project while the remaining Rs. 16,000 crores will be generated through debts. Lanco may also look at other assets of Globeleq which have been put up for sale.

Read the Business Standard article.
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CLB tells West Bengal to sell out of Haldia Petrochemicals to The Chatterjee Group

The Company Law Board has directed the West Bengal government to transfer 155 mn shares of Haldia Petrochemicals Limited (HPL) to The Chatterjee Group (TCG) at Rs. 10 a share agreed upon earlier by the West Bengal and TCG, and another lot of 520 mn shares at Rs. 28.80 or a price determined by an independent valuer. Following the stake transfer, TCG would hold 52% (760 mn shares) stake in HPL, which has a paid-up equity of Rs. 1460 crores (1.46 bn shares of Rs. 10). The increased stake would bring TCG closer to taking over the management control of HPL after a prolonged legal battle with the West Bengal government.

TCG holds its stake in HPL mainly through Chatterjee Petroleum (Mauritius) and India Trade (Mauritius). The 155 mn shares was earlier issued to Chatterjee Petroleum India (CPIL) but was not confirmed.

West Bengal industry minister Nirupam Sen told reporters at the sidelines of a seminar organized by Bengal National Chamber of Commerce that the order was not acceptable for the state and indicated that it would move the Supreme Court against the order.

Read the Business Standard article.

Trinity Capital buys 10.43% in Pipavav Shipyard

Trinity Capital has bought a 10.43% stake in Pipavav Shipyard Limited for Rs. 104 crores. Pipavav Shipyard has been promoted by Nikhil Gandhi-backed Sea King Infrastructure. IL&FS and EXIM Bank are the existing investors in Pipavav Shipyard; they have a majority 51% stake in the company. As part of the transaction, Trinity will build a 150 acre-township in the vicinity of the shipyard. This will provide housing, recreational facilities, schools, hospitals and commercial offices.

Pipavav Shipyard plans to build the largest integrated ship building yard in India, near the Pipavav port in Gujarat. The yard will also be the fifth largest in the world. It will have a capacity of 300,000 tonnes (dead weight tonnage). The Pipavav port was developed by the Nikhil Gandhi Group and is now handled by Maersk. The 175-acre shipyard will have the capability to build ships and vessel types ranging from aircraft carriers and luxury liners to oil tankers. It will have the capacity to build 12 large ships simultaneously. The project is likely to see investments of Rs. 8000 crores over the next 7 years. The shipyard will be strategically located between the two busy ports of Kandla and Mumbai. It will also be the only major shipyard between Dubai and Singapore.

Read the article in Business Standard.
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