Indian Cos Mergers and acquisitions at 4 year low

(Indian Economy Updates) - Mergers and acquisitions involving Indian firms in 2009 so far have been the lowest in four years for comparable periods, touching just $7.4 billions, thanks to the global economic slowdown.

M&A volume of $7.4 billion represents a massive 51 per cent decline from the corresponding period a year ago, global deal tracking firm Dealogic said.

Also Read :
-America's Top 20 CEO's ever list
-How Infosys managed to increase YoY profit
-Effect of Recession on Indian Economy
-Economies hit by recession
-Plan for World Economy Revival
-World's Strongest economies list
-US Economic recession-how it started

Out of $7.4-billion M&A deals involving Indian firms, inbound deals amounted to $1.6 billion where foreign firms bought stake in Indian companies.

"Inbound cross-border M&A fell to $1.6 billion via 70 deals so far this year, down 77 per cent from last year. The US remained the biggest investor in Indian firms with $483 million via 21 deals," Dealogic added.

Outbound M&A activity fell drastically to just $334 million through 34 deals, a 96 per cent fall from the same period last year. The US was the most targeted nation as M&As worth $157 million were carried out through 10 deals, compared to $1.6 billion via 29 deals last year to date.

Also Read :
-America's Top 20 CEO's ever list
-How Infosys managed to increase YoY profit
-Effect of Recession on Indian Economy
-Economies hit by recession
-Plan for World Economy Revival
-World's Strongest economies list
-US Economic recession-how it started

The oil and gas sector was the most active segment this year. The space cornered as many as six deals worth $2.1 billion. Besides the largest M&A transaction -- Reliance Industries' open offer to acquire the remaining 25 per cent of Reliance Petroleum for $1.7 billion also happened in this section.

The all-share merger deal valued at about Rs 8,500 crore between the two Mukesh Ambani group firms RIL and RPL has become probably the 10th-biggest ever for the country and the first billion-dollar deal this year.

According to Dealogic, Citi emerged as the top adviser on Indian M&A with $3.2 billion via three deals. Kotak Mahindra Bank followed suit with $2.3 billion through two deals and Morgan Stanley is in the third place with $2 billion via two transactions.

The top two India targeted deals were Reliance Industries' 25 per cent stake acquisition in Reliance Petroleum for $1,688 million and Quippo Telecom Infrastructure's 49 per cent stake acquisition in Wireless II Infoservices for $1296 million.

Indian economy not likely to slowdown - Lehman Brothers

Anti-inflationary measures are unlikely to turn India into a slow growing economy, while other Asian nations could face the situation of rising prices and economic stagnation, a latest report says. "We do not believe that India would be affected significantly in a stagflation scenario and growth would remain strong in relative terms...," global research firm Lehman Brothers said in a recent research report.

However, even as the economic growth is projected to remain strong, interest-rate sensitive stocks could be adversely impacted during stagflation situation in Asia. Stagflation refers to a situation when inflation is rising and the economic growth is simultaneously slowing down. The negative impact is likely be felt by interest rate-sensitive stocks or by companies that are not in a position to pass on cost pressures to consumers, Lehman said.

Further, investment spending is unlikely to witness a substantial slowdown primarily on account of significant shortages in key sectors such as steel and power. The report pointed out that risks out of a stagflation scenario would be high for the banking sector, infrastructure, automobile and cement firms. "The risks are significant for part of the banking sector, companies with a high proportion of fixed-price contracts and companies with high energy usage without the ability to pass on increased costs," it said.

Lehman noted that in India inflation would remain on the higher side for some more time due to the base effect -- which relates to the inflation data of the corresponding week in the previous year. Given particular prices in the current week, inflation would turn out to be higher, if it was a small number in the previous year, but would be less, if it was high a year ago. In addition, the report said that inflationary headwinds would lead to increased fiscal deficit and negatively impact the country's expansion plans. "One of the major reasons for India's premium expansion has been the reduction in fiscal deficit, a process which could be derailed in the short term due to inflationary headwinds," it added.

The government has initiated fiscal and monetary measures to lessen the effects of inflation on consumers. However, according to the report, some of these measures does not reflect the "true market economics." "If the inflation period is prolonged, we expect the government to start passing on some of the suppressed price increases (especially those relating to crude oil and fertilisers) in small doses. However, we do not expect this anytime soon, given the proximity of the elections, the report pointed out.

- economic times

Economy of India | Indian Economy Developments

A major factor that contributed to the second most-populous nation on the planet achieving this milestone, in April, was the sharp appreciation of the Indian rupee against the U.S. dollar. Whereas Indian currency has been gradually appreciating against the U.S. greenback over the last few years, what took many by surprise was the sudden and sharp appreciation during the months of March and April when the exchange rate came down drastically, from just under Rs 45 to the U.S. dollar to less than Rs 41 to the dollar or a change of roughly 8.5 percent in less than 40 working days.

By way of contrast, the rupee had appreciated by only 2.3 percent vis-a-vis the dollar between Apr. 1, 2006 and Mar. 31, 2007 (the Indian financial year). In this period, the Indian currency gained 2.7 percent against the Japanese yen but depreciated by 6.8 percent against the euro and by 9 percent against the British pound. The appreciation of the rupee has made Indian exports more expensive in markets where transactions are designated in U.S. dollars while making imports relatively inexpensive.

Analysts are of the view that the Reserve Bank of India (RBI), the country's central bank and apex monetary authority, has consciously allowed the rupee to strengthen as part of a package of policies aimed at controlling domestic inflation. In recent months, inflation in India, as measured by the official wholesale price index, had threatened to cross the 7 percent mark and is currently hovering in the region of 6 percent. The Indian economy is currently one of the fastest growing in the world --it has grown by an annual rate of over 9 percent for two successive years and by an average of over 8 percent over the last four years, both for the first time since the country became politically independent 60 years ago.

At the same time, this growth has not been inclusive because it has bypassed large sections of the population and swathes of territory, mainly in the east and the north. One out of four of the 1.1 billion citizens of India live on less than one U.S. dollar a day. "The reason why the RBI is not intervening in the currency markets to depreciate the value of the rupee is because it wishes to cushion the economy from the imported variety of inflation at a time when international prices of crude oil are in the region of 65 dollars a barrel," explains Amitendu Palit, visiting fellow at the Indian Council for Research on International Economic Relations, a New Delhi-based think tank. India currently imports roughly three-fourths of its requirement of crude oil.

Palit told IPS that part of the reason why the rupee has strengthened against the dollar is because the U.S. currency has itself steadily weakened against hard currencies like the yen, the euro and the pound. He said that if the RBI purchased more dollars to keep its price up, it would increase domestic money supply and add to inflationary pressures. Palit is of the view that a strong rupee would have a negative short-term impact on the growth of "price-elastic' exports such as computer software, IT-enabled services (or business process outsourcing), garments and textiles. During financial 2006-07, India's merchandise exports touched 125 billion dollars, implying an annual growth of nearly 23 percent. Imports grew at a faster 25 percent with crude oil accounting for close to one-third of the total value of imports during the year.

Exports have doubled over the last three years. India's share of world trade, however, still remains negligible, growing from 0.76 percent in 2003-04 to over one percent at present. During this period, inflows of foreign direct investment have jumped from 2.2 billion dollars to 16 billion dollars (and this amount excludes retained earnings that have been reinvested). "I expect the rupee to continue to appreciate gradually, not suddenly, over the next year or so and the dollar to go below the level of Rs 40," says Manoj Pant, professor of economics at New Delhi's prestigious Jawaharlal Nehru University. He told IPS in an interview that the government and the RBI wanted to "send a clear message to exporters that they could not expect to continue receiving preferential treatment".

While there is considerable concern among economists that the Indian economy is "over-heating" and that the benefits of economic growth have not been evenly distributed among all sections of the population, others are optimistic about the country's "growth story". A report prepared by Credit Suisse bank pointed out that over a year after their economies crossed the one trillion dollar mark, eight out of ten countries witnessed bullish trends in their stock markets.

The report added that the combined wealth of the estimated 20 million non-resident Indians is currently more than one trillion dollars, which is the gross domestic product of the entire Indian economy. The recent rise in the rate of growth of the Indian economy has been fuelled by a sharp rise in manufacturing output and the services sector. Among the services that have been growing very fast are IT-enabled services and computer software. These are the segments of the economy that are now likely to be adversely impacted by the appreciation of the rupee.

"Companies that were exporting software and IT-enabled services were shocked by the sudden rise in the value of the rupee vis-à-vis the dollar because the bulk of their business was designated in dollars," points out D.K. Joshi, director and principal economist, CRISIL Ltd. (earlier known as Credit Research and Investment Services of India Ltd.). In an interview with IPS, Joshi added that the "profit margins of companies exporting IT services would be squeezed and they would certainly fight back by increasing their billing rates in dollar terms." Even if the rate of growth of computer software and IT services exporting firms slows down, analysts IPS spoke with were reasonably optimistic that the deceleration brought about by the sudden strengthening of the rupee in relation to the dollar would be a passing phenomenon.

India's commerce minister Kamal Nath has set ambitious export targets of 160 billion dollars and 200 billion dollars respectively for the country over the next two years. He told journalists on Apr. 19 that the Indian government had taken into account the likely slowdown in the U.S. economy while setting these targets. India's trade basket, he said, was quite wide, claiming that the expected slowdown in the U.S. economy would not have a major impact on the country's exports.

Crude Price on all time high

Global crude oil prices are on a all time high of US $ 125 per barrel and is adversly effecting the balance sheet of indian economy, probably it is also a reason of depreciating value of indian rupee when compared with US $ .

Crude prices could reach higher levels over the next few months as the winter season in the northern hemisphere gets under way.
Although the price of the basket of crude relevant for India is ruling at a much lower level than $55, the effect of higher crude prices is bound to affect the profitability of a swathe of companies, especially in the manufacturing sector, as costs of energy, fuel and transportation could start to spiral.

Even if the Government decides to limit the price increases by seeking recourse to further cuts in excise and customs duties, and requiring oil companies to bear an even greater part of the burden, profitability and growth rates could be affected as growth rate of the global and the Indian economy slows down. Market sentiment could also be influenced in a negative manner if liquidity in global markets dries up and a flight to safe assets and safer currencies set in.
Investors as such should consider adopting a cautious approach to buying equities, by staggering investments over a period of time, and partial profit booking on deep-in-the-money positions, may be appropriate. This could mitigate any downside risk that could envelop the markets due to the bullish trend in crude prices that is driven by a combination of robust demand and speculative activity.

The positive aspect of the crude prices story is the likely boom in construction activity in the Gulf countries. This could be an opportunity for companies such as Larsen & Toubro and Voltas, which have executed several projects in the region that could serve as a reference point for bagging more orders, and Gujarat Ambuja Cements, which appears well set to capitalise on the sharp spurt in cement prices in export markets.

The latter's earnings numbers for the July-September quarter have been buoyant with a fillip from exports as well as higher domestic prices, and there could be a further scaling up over the next few quarters. There are others that could benefit from the anticipated construction boom.
For now, we prefer the stocks of these companies, which have an established presence, higher efficiency levels that could compensate partially for rise in input costs and limited downside risks as large-cap stocks. Stock-specific recommendations of Business Line, however, will take precedence over this broad-investment strategy.
- Hindu Business line

Banking / Finance Sector Latest Updates

Banking and finance sector are very crucial sectors of indian economy and alight downtrend in these sectors can see a slowdown in Indian economy as well. also update yourself with latest updates from Auto Sector Updates Jobs Sector Updates Energy Sector Updates Media sector Updates Entertainment Sector Updates Telecom Sector Updates Banking Sector Updates Finance Sector Updates Healthcare Sector Updates Biotech Sector Updates Pharmaceuticals Sector Updates - and get the comprehensive news about growth of indian economy.

Latest Updates from Banking and Finance Sector:

April 2008 Banking Sector Updates:

• SBI's clients may take a Rs 700-cr derivatives hit - (24/4/2008)
• BoJ may drop call for higher rates as growth slows - (24/4/2008)
• JWT Bangalore bags ING Vysya Bank's creative account - (23/4/2008)
• State Bank to provision $10 million for subprime - (23/4/2008)
• HDFC Bank plans mobile banks for microfinance - (23/4/2008)
• Banks see lower credit growth in FY09 - (23/4/2008)
• SBBJ to focus on retail segment - (22/4/2008)
• HDFC bank to start mobile banking ATM - (22/4/2008)
• ICICI Bank to scale down promotions, increments - (22/4/2008)
• PNB Gilts records 4-fold jump in PBT - (22/4/2008)
• South Indian, City Union save Dhanalakshmi's rights issue - (22/4/2008)
• RBI rejects IFC plan to invest in Karnataka Bank - (22/4/2008)
• Axis Bank net jumps 71% in Q4 - (22/4/2008)
• Punjab National Bank to start Bhutan JV by year-end - (20/4/2008)
• Deutsche to invest Rs 685-cr for its NBFC business - (20/4/2008)
• IOB to take over assets & liabilities of Shree Suvarna - (19/4/2008)
• SBI wants to move to global IFRS a/c standards, invites bids - (19/4/2008)
• CRR hike to impact profitability: Kamath - (19/4/2008)
• Citigroup posts $5.1 bn loss, to cut 9,000 jobs - (19/4/2008)
• No hike in interest rates at least till Apr 29: Bankers - (18/4/2008)
• CRR hike to affect profitability of banks: Kamath - (18/4/2008)
• Banks cancel undrawn loan limits to firms - (18/4/2008)
• PSU banks retain lead play in bank credit - (18/4/2008)
• RBI wants deposit taking limited to banks - (18/4/2008)
• ICICI Bank to offer Visa eMarketplace - (17/4/2008)
• PSU banks may post poor result in Q4; pvt sector may do better - (17/4/2008)
• PNB sees loan growth of 20 pc - (17/4/2008)
• Corporation Bank launches reverse mortgage loan scheme - (17/4/2008)
• Interest rate decision only after RBI policy: K V Kamath - (17/4/2008)
• ICICI Bank not in hurry to list broking arm - (17/4/2008)
• Bank of Baroda launches new health scheme in Oman - (17/4/2008)
• SBI, Macquarie line up $1-bn fund for core play - (17/4/2008)
• ICICI a/cs must’ve Rs 10k min balance - (17/4/2008)
• StanChart pumps in $250-mn fresh funds - (17/4/2008)
• Corp Bank launches NEFT through ATMs - (16/4/2008)
• Stanchart keen to spread wings in rural India - (16/4/2008)
• Bank of India sees 25 pc credit growth in Apr-Jun - (16/4/2008)
• Volatility to sustain for few months: Peter Sands - (16/4/2008)
• Axis Bank opens branch in Madurai - (16/4/2008)
• State Bank, Macquarie plan India infrastructure fund - (16/4/2008)
• ICICI Bank invests more in ICICI Prudential - (16/4/2008)
• India Inc should focus on corporate governance standards: Kotak - (16/4/2008)
• HDFC Bank inks pact with two carbon-credit firms - (15/4/2008)
• Kotak Mahindra Bank rolls out credit cards - (15/4/2008)
• SBI to launch mobile banking service soon - (15/4/2008)
• Grievances against private banks rise 33% - (15/4/2008)
• Smart cards enter rural, urban poor big time - (15/4/2008)
• Banks open wallets as IIM aspirants fret over fee hikes - (15/4/2008)
• Bankers say lending rates may go up post credit policy - (14/4/2008)
• PNB expects 20 pc rise in net profit during 2008-09 - (14/4/2008)
• Yes Bank mulling QIP to raise $300 mn by December - (14/4/2008)
• JKSCB aims disbursing Rs 100-cr loans this fiscal - (13/4/2008)
• HDFC Bank to enter Bahrain by the middle of the year - (13/4/2008)
• Bank of Rajasthan's business crosses Rs 21,000 crore - (11/4/2008)
• RBI bought $3.88 billion in February - (11/4/2008)
• Yes Bank eyes two private sector banks for acquisition - (11/4/2008)
• Germany's Dresdner Bank to open branch in India in 2009 - (10/4/2008)
• Vijaya Bank signs pact with Fitch Ratings - (10/4/2008)
• Vijaya Bank signs MoU with FITCH Ratings - (10/4/2008)
• No immediate plans for merger: DCB - (10/4/2008)
• Development Credit Bank plans asset management foray - (10/4/2008)
• ICICI Bank expects SME business to grow by 50% in FY'09 - (9/4/2008)
• TCI Cyprus Holdings buys 3.45 per cent in IOB - (9/4/2008)
• Banks can't take stocks as security - (9/4/2008)
• Born-again IndusInd to focus on core growth - (8/4/2008)
• Open up banking sector
• PNB to enter credit card business on its own by Sept
• BoM scouting for partner in general insurance JV
• UBI offers reverse mortgage at 10%
• ICICI awaits RBI move on rates: Kamath
• ICICI Bank to focus more on wealth management, mobile banking
• Union Bank launches Reverse Mortgage scheme
• NABARD credit to West Bengal touches Rs 1,309 cr
• RBI delay forces PNB to go solo in credit cards
• RBI seeks fresh bank loan exposure data
• NABARD extended Rs 3,871 crore in credit support to AP
• Govt rules out diluting stake in public sector banks
• PNB revises interest rates on non-resident deposits
• Citi woos expatriates in India to expand customer base
• Bank of Canada injects C$835 million into market
• ICRA inks MoU with State Bank of Indore for rating services
• Citibank launches services for expatriate Indians
• BoB revises foreign currency deposit rates
• Bank deposits in Gujarat rise 5% in third quarter
• UBS' India plan seen intact despite global writedown
• J&K Co-operative Bank posts business of Rs 2,000 cr in FY08
• Banks' hopes of treasury gains vanish as bond prices decline
• Citigroup rejigs global operations on geographical lines
• Barclays to set up private bank in India
• Firms revisit derivative bets to clean books

April 2008 Finance Sector Updates:

• UTI Ventures exits Excelsoft, earns 50 times its investment - (24/4/2008)
• Morgan Stanley has a May 1 date with private equity play - (24/4/2008)
• Oriental Insurance to provide cover to Mundra project - (23/4/2008)
• IDFC raising $700 million India infrastructure fund - (23/4/2008)
• IFCI stake sale not imminent-source - (23/4/2008)
• Short-term debt yields rise as RBI dislike for 'surplus grows - (23/4/2008)
• PEs invest $4 bn in first quarter of 2008 - (23/4/2008)
• Central undertakings told to stopinviting bids for bulk deposits - (22/4/2008)
• Bajaj FinServ eyes asset management - (22/4/2008)
• Premji launches $1 bn PE fund - (19/4/2008)
• RBI to encourage microfinance to curb money-lenders - (16/4/2008)
• DHFL opens representative office in London - (16/4/2008)
• Vision Global plans $200-million distressed debt fund - (16/4/2008)
• SBI weighs merger of GTF with SBI Factors - (16/4/2008)
• Private equity activity strongest in October-December quarter - (16/4/2008)
• Singapore fund kicks off India ops with i-Flapp Tech - (16/4/2008)
• ICRA assigns high rating to L&T Infrastructure - (15/4/2008)
• Bidders see less value in GE units - (15/4/2008)
• Unitech Realty to float 2 funds of $650 million - (14/4/2008)
• Cramped for room, small brokerages look for exit - (14/4/2008)
• Modern India in talks with PEs to dilute promoters' stake - (14/4/2008)
• PE deals hit the road again, but M&As dry up - (14/4/2008)
• HC asks Axis not to enforce Rajshree Sugars contract - (12/4/2008)
• IDBI not to cut prime lending rate following inflation spiral - (11/4/2008)
• Canara Robeco to merge equity funds - (12/4/2008)
• Chidambaram to inaugurate British branch of IIFC - (10/4/2008)
• Religare to buy UK's oldest broking firm Hichens Harrison - (9/4/2008)
• Broadening finance access - (9/4/2008)
• $1 billion infrastructure fund on anvil - (8/4/2008)
• BankAm trader moves to JPMorgan in India - (7/4/2008)
• Citi Venture, AIG scrap Akruti investment plan
• Reliance Money plans 20,000 outlets by fiscal end
• IDFC PE invests Rs 40 cr in Emergent Ventures
• Ask plans PE fund with initial corpus of $100 mn
• UK fund manager ties up with Tata for India equity fund
• Reliance Money launches loyalty card for customers
• SREI Infrastructure enters JV with BNP Paribas
• RBI appeals not to deface currency notes
• Darby Asia Mezzanine Fund invests in Coffee Day
• Reliance Money brings Canadian partner in broking biz

MArch 2008 Banking / Finance Sector Updates:
- SREI Infrastructure enters JV with BNP Paribas

- RBI appeals not to deface currency notes

- Subprime fallout: RBI wants lenders to play counsellor

- RBI delay forces PNB to go solo in credit cards

- RBI seeks fresh bank loan exposure data

- NABARD extended Rs 3,871 crore in credit support to AP

- Govt rules out diluting stake in public sector banks

- PNB revises interest rates on non-resident deposits

- Citi woos expatriates in India to expand customer base

- Bank of Canada injects C$835 million into market

- Banks' hopes of treasury gains vanish as bond prices decline

- Citigroup rejigs global operations on geographical lines

- Barclays to set up private bank in India

- Firms revisit derivative bets to clean books

- ICRA signs MoU with State Bank of Indore to rate loans

- Vijaya Bank exceeds business target for 2007-08

- Oriental Bank to review interest rates in next 10 days

- Union Bank ties-up with Alankit to provide services

- Canara Bank inaugurates Retail Asset hub

- Bank of Maharashtra to merge 2 regional rural banks

- JM Financial unit to buy out ASK Sec's stake in JV

- Reliance Money gets approval to operate in Oman

- IDBI puts key rate cut decision on hold

- Indian Overseas Bank to take over Pune bank

- Mumbai accounts for 80 pc of bank deposits in Maharashtra

- Syndicate Bank releases Rs 1010 cr annual credit plan

- Canara Bank launches basket of products

- Federal Bank reaching out to NRIs

- RBI lets 2 Singapore banks open account in India

- State Bank of India gets Singapore full bank license

- Demand draft's bounce on stop payment order

- Axis Bank opens two new branches

- Banks may gain from bond holdings as yields plunge

- HSBC arm raises stake in Yes Bank by 4%

- Bank of India to roll out mobile phone banking

- Singapore's DBS bank to expand in India

- Union Bank sees lower FY08 credit growth

- State Bank of India buys 91% in factoring firm

- Federal Bank to open its 600th branch on 26/3/2008

- ICICI, Jaypee Infra ink Rs 1,150-cr deal

- Banks twist RBI's rules to sell leveraged products to corporate clients

- Bank credit slowdown reflects fading growth

- Bank of India plans to open full-fledged branch in Beijing

- SBI looking at alternate channels for rural penetration

- Religare to acquire UK broking co for $100 million

- Cholamandalam DBS to raise Rs 4,500 cr through private placement

- Fidelity plans Indian securities fund