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News roundup: Subhiksha’s Financial Woes Pile Up

21 January, 2009

IIFCL Plans to Raise Rs 5,000 Crore Through Tax-Free Bonds – India Infrastructure Finance Company (IIFCL) is planning to raise more than Rs 5,000 crore through tax-free bonds, which opened on January 19 and will close tomorrow. IIFCL has come out with a Rs 2,500-crore issue on a private placement basis with an option to retain an oversubscription of Rs 10,000 crore. The bond has been guaranteed by the government and will give a 6.85% tax-free return to investors and have a maturity period of five years. IIFCL appointed nine merchant bankers to sell the bonds, including IDBI Capital, ICICI Securities, Axis Bank, Allianz, AK Capital, HSBC, Standard Chartered, Citi and Trust Capital. (Business Standard)

Fiat to Take a 35% Stake in Chrysler LLC – Italy’s largest car maker, Fiat SpA will take a 35% stake in Chrysler LLC. This will lead to an expansion of the worlds biggest auto market and give the US company access to its small-car technology. Turin-based Fiat and Cerberus Capital Management LP, the controlling shareholder in Auburn Hills, Michigan-based Chrysler, the third-largest US automaker, signed a non-binding agreement on an alliance. Chrysler still needs $4 billion in federal loans intended to save it from bankruptcy and the US Treasury will need to approve the deal. Fiat, which said it won’t make a cash payment and isn’t committing to future funding, will provide platforms to produce fuel-efficient and small cars to be produced by Chrysler. (Business Standard)

Power Sector Ties Up Rs 2,24,000 Crore – The power sector has tied up Rs 2,24,000 crore worth of investments to build power plants with 70,000 Mw aggregate capacity in the next three years. India has added 12,000 Mw capacity at an investment of Rs 48,000 crore in the 11th Five-Year Plan (2007-12) so far and has tied up funds to complete the projects under execution. (Business Standard)

CSB- Federal Bank Merger Opposed by CSB Employees – The employees of the Catholic Syrian Bank Ltd. have strongly opposed the move to merge the bank with Federal Bank as this would result in job losses. The merger would result in several CSB employees losing their jobs as both Kerala-based banks have branches in same centres. Federal Bank had acquired 4.99% equity stake in CSB recently at the rate of Rs 300 per share when the Thailand-based NRIs Chawlas reduced their stake to 10% from 38%. The Catholic Archbishop of Thrissur and his associates have acquired a sizeable number of CSB’s shares and they have also joined hands with the employees unions to oppose the merge. (The Economic Times)

UCO Bank to Disburse Rs 7,000-8,000 Crore – UCO Bank is planning to disburse Rs 7,000-8,000 crore during January to March 2009. The bank is putting a major thrust on auto-loan financing, followed by the agriculture, housing and infrastructure sectors. UCO Bank plans to disburse Rs 2,200 crore to new car and commercial vehicle owners in the period. It has proposed to offer Rs 1,500 crore each to infrastructure and housing sectors and Rs 2,000 crore to the agriculture sector. The bank is also working on a plan to fund a few hotels in Delhi in a consortium with other banks. (The Economic Times)

Air India- India Airlines Merger May Get Delayed – The merger of national carriers Air India and Indian Airlines may get delayed by 12-15 months as the integration of the airlines has hit a major roadblock with regard to the setting up of a common reservation platform for inventory sales. The two airlines had been merged in 2007. The carriers currently have distinct platforms powered by IT service providers Unisys (Air India) and IBM (Indian Airlines). Getting onto a common platform is one of the key requirements for integration which would give them a common airline code – AI, apart from an effective management of inventory and network planning. (Business Standard)

Subhiksha to Renegotiate Rentals with Real Estate Players – Subhiksha Trading Services will renegotiate rentals with real estate players, amid allegations of default in rent payment by some property owners. A group of property owners in Noida have claimed that Subhiksha has been defaulting on rent payments for the last five months. Subhiksha is also considering relocation of some of its stores from the 1,600-odd total, across the country due to low sales volume and high rentals. Over 80 stores are being considered for relocation. (The Economic Times)

DBS to Raise Headcount by 20-25% in India – Despite laying off over 500 employees in Singapore and Hong Kong, Singapore-based DBS Bank is going to ramp up headcount by 20-25% in India. DBS plans to recruit around 100 people in the entry- and middle-level management in India by the end of 2009. The bank is looking to focus on building a strong deposit base for strengthening its retail portfolio in India. (The Economic Times)

HDFC May Raise $300-500 Million – Housing Development and Finance Corporation (HDFC) plans to raise funds from the international market once liquidity improves and interest rates slide. As the liquidity wouldimprove in the next 3-4 months, HDFC will consider raising around $300-500 million. The company will raise money from abroad only when the costs are equal to or lower than the domestic market on a fully hedged basis. In November it raised Rs 800 crore at 11.95% from the domestic market. (DNA Money)

Radico Khaitan May Sell Stake – Radico Khaitan (RKL), India’s second largest spirits company is looking for a strategic partner to take the business forward. Khaitan family is working with an investment banker to kick off a formal process shortly. Reports suggest that the company is looking at selling around 26% stake in RKL. Alternatively, the family may explore hiving off the branded business into a separate company to divest a substantial stake. Radico is the manufacturer of 8PM whisky and Magic Moments vodka. (The Economic Times)

Twinstar Holdings Propose to Buy Residual 20% Stake in Malco – Twinstar Holdings which already holds 80% stake in Madras Aluminum Company (Malco), has proposed to buy the remaining 20% stake in the Aluminum Major.  The shares of Malco hit the upper circuit of 4.97% and stayed there to close the day at Rs 59.15 on the Twinstar’s buyout proposal. (Business Standard)

Amrapali Group And Intercontinental Hotel Group Enter Into JV – With the government’s approval of external commercial borrowing (ECB), Amrapali Group and Intercontinental Hotel Group India have entered into a joint venture. Amrapali Group with Intercontinental Hotel, India is coming up with a new project under the brand name of `Crown Plaza’ in Udaipur, Rajasthan. This is the first joint venture of any real estate company after the government’s ECB nod. (The Times of India)  


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News roundup: Subhiksha’s Financial Woes Pile Up

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