Subex - Moneta™ 2.6

Subex Ltd on March 31, 2008 has announced the immediate availability of Moneta™ 2.6, a major new edition of the telecom industry’s leading Revenue Assurance solution for IP-centric networks, cable, wireless and wireline operators. "Content-based services are critical to boosting bottom-line revenue and gaining a competitive advantage within extremely tight market conditions," said Mark Nicholson, Subex’s CTO. "This new version of Moneta addresses the growing need to monitor and monetize content-based services, and it includes several additional features that greatly improve the usability and value of automated Revenue Assurance technology." Other new features of Moneta 2.6 include: - Enhanced capabilities to analyse data from IP-systems for data, voice and value added services. Moneta can process and analyse any data from systems compliant with IPDR v3.5.1 specification, helping operators to quickly integrate the system with content and IP based systems. - Advanced trending capabilities with historic and multiple analysis capabilities that captures unique network and service usage activity for quick detection of Revenue Assurance issues. - As operators add new services and products, there is an increasing challenge of dealing with new Revenue Assurance issues. Moneta V2.6 provides powerful multi-dimensional analysis capabilities to support dynamic Revenue Assurance environments. - Moneta now provides solution templates specific to each type of business that ensures quick deployment and ROI. - Moneta now provides enhanced data integrity checks, enhanced manageability and increased automation to manage more complex Revenue Assurance environments. A component of the Subex suite of Revenue Maximization solutions, Moneta is the leading choice for telecom operators looking to improve the health and vitality of the entire revenue chain. It helps tackle critical Revenue Assurance challenges across the enterprise and provides unprecedented automated correction capabilities to improve bottom-line results and provide a quick return-on-investment. Moneta includes pre-configured solution templates that address Revenue Assurance issues across areas such as service fulfillment, usage integrity, retail billing/ interconnect/ wholesale billing and content settlement. Subex is the market leader in Revenue Management solutions, enabling service providers to dramatically reduce risks to the revenue chain by controlling multiple causes of revenue leakage, promoting operational efficiency and hence higher profitability.

Wockhardt - Buy - Business Line

From 2008 onwards, Wockhardt will see organic growth as it is well placed to benefit from synergies arising from acquisitions.

Investors with an appetite for risk can add the stock of Wockhardt, a unique drug formulations player drawing over 50 per cent revenues from Europe, to their portfolio with a two-year perspective. Wockhardt booked a 53 per cent rise in revenues on the back of a 60 per cent growth in net profits in 2007, riding high on inorganic growth through a host of acquisitions in the past two years (including Negma Lerads in France and Morton Grove in US).

The year 2008 will reflect organic growth, as Wockhardt seems well placed to benefit from synergies leading to cost rationalisation and an enhanced product basket spread over both specialised generics and biotech drugs. In this light, the management guidance of 30-35 per cent sales growth does not appear over-stretched if execution risks are mitigated at Wockhardt, which is aiming for revenues of $1 billion by 2009.

Reiterate ‘buy’


We reiterate our ‘buy’ on Wockhardt (read Investment World dated January 6, 2008) even though the stock has undergone considerable correction, in line with broad markets. The likelihood of redemption of outstanding $108 million FCCBs (due September 2009) or 8-9 per cent equity dilution at Rs 486/share, if converted, has also been a factor in the stock’s decline.

However, at the current market price of Rs 267, the stock trades at a modest valuation of seven times its likely 2008 earnings per share. Wockhardt’s leveraged balance-sheet (debt-to-equity ratio of over two times) indicates that odds are in favour for further equity-dilative measures to be adopted in future. Recent reports of significant foreign currency losses sustained by the company have been denied. Wockhardt’s net debt (excluding FCCBs) is denominated in dollar/euro total $592 million. Presently, the company hedged against currency movements for its 2008 and 2009 loan payments. The company has a policy of hedging 25 per cent of forex loans (including interest cost) that are due in the next three years against adverse currency movements.

Given Wockhardt’s record in turning around acquired businesses, growing presence in US injectables and speciality generic market (niche) and sustainable growth business in the UK, Germany, France and Ireland, the company’s earning prospects seem tidy. Recent trends in quarterly results indicate a firmer grip. Wockhardt’s volume-based Indian business has grown at over 15 per cent last year driven by formulations, Dumex acquisition (having nutritional brands Protinex and Farex) and in-licensed products. Further, the re-introduction of recombinant insulin (Wosulin) has also helped.

Year of positives


After adjusting for inorganic contribution, Wockhardt’s sales for the full year have grown by 14 per cent on a like-to-like basis amidst overseas acquisitions and pressure on the generics business worldwide. The company, till recently, did not have major presence in the US generic market. With the acquisition in the US of Morton Grove, though the buy-out maybe margin-depletive/neutral in the short-term, it will definitely play out well in future like Negma Lerads (in France). Wockhardt also has access to 31 products through Morton that will help boost market share.

In the US, Wockhardt received 13 generic drug approvals and has applied for 25 more; the product pipeline which consists of complex products, may give the company a foothold in less competitive drugs. The company recognises drug-filing costs on receipt of approval. Development costs being written off at one go may hurt short term profitability; but may help margins as benefits from the launch begin to flow in.

Wockhardt is the largest Indian pharma company in Europe, having clocked an annual turnover of 240 million euros in 2007. With all four businesses doubling growth rates, Wockhardt has taken on a cost rationalisation move, whereby manufacturing of some products have been moved into India while others have been shifted to Ireland. The full benefits would be realised in next 12-18 months and may help profitability.

Lastly, on the biopharmaceutical front, Wockhardt is targeting a $10 billion generic and analogue insulin market by 2014 with four products already off-patent in key markets such as the US, EU and Japan. The company has filed for a new drug application for Insulin in the US while the EU filing is expected shortly. If the regulatory pathways evolve as expected, Wockhardt might launch biogeneric products in EU as early as 2009.


Link to the article: http://www.thehindubusinessline.com/iw/2008/03/30/stories/2008033050761100.htm

Alok - Bids for 3 more NTC mills

NTC expects an investment of Rs600 crore—Rs50 crore for each—to be made in the 12 mills. All of this amount will come from the private sector.
Sunil Khandelwal, chief financial officer of Alok Industries, which has bid for three of the 12 mills this time, said: “These joint ventures are a win-win situation for both NTC and the private partner. There are no liabilities when the mill is handed over to us and it’s a profitable venture for companies like us.” Alok Industries is already developing two mills along with NTC where it is setting up garment units in Mumbai and Aurangabad. This time it has bid for one mill in Coimbatore and two in West Bengal.

Alok - Alok Infra to raise $100 million PE money

Alok Infrastructure has acquired a 50% stake in Ashford Infotech, which would develop a million sq ft of space for Rs 400 crore.

Alok Infrastructure, a wholly-owned subsidiary of Mumbai-based textile company Alok Industries, is negotiating with private equity players to raise $100 million, according to a source. It could not be immediately known the size of the stake the promoters would dilute through this deal, reported the media. Alok Industries didn't comment on the stake dilution or the quantum of money being raised through the PE deal, but said: "Alok's team of merchant bankers is in talks with private equity players and investment bankers and is confident of achieving closing by the end of April 2008." Alok Infrastructure has acquired a 50% stake in Ashford Infotech, which would develop a million sq ft of space for Rs 400 crore. Ashford Infotech, 50% owned by Ashford group, recently purchased a 6.92-acre plot from CEAT in a Mumbai suburb for Rs 130 crore. Alok Infrastructure also plans to build hotels in different segments. In addition, Alok Infrastructure is developing a 180-acre textile SEZ at Silvassa in the union territory of Dadra & Nagar Haveli. The SEZ obtained the formal approval from the government December last year. Around 20% of the SEZ space is likely to be utilised by Alok Industries, which plans to set up textile and apparel units there. Alok has been negotiating with major textile players so that they set up shop in its SEZ. Alok Industries already has some textile manufacturing facilities at Silvassa. Alok Industries reported net sales of Rs 550 crore in the December quarter. The net profit for the period was Rs 48 crore.

Link to the article: http://www.indiainfoline.com/news/innernews.asp?storyId=62760&lmn=1

IVRCL - Religare maintains buy on IVRCL, target price Rs 537

Religare Securities has maintained ‘buy’ on IVRCL with a revised target price of Rs 537. IVRCL is trading at P/E of 19 times and 13 times 1-year and 2-year forward respectively. The company witnessed a sharp 37 per cent correction in stock price in past couple of months. For non-core operations, the company is now available at 14.5 times and 10 times FY09E and FY10E earnings respectively. Religare believes this steep undervaluation is unwarranted considering the company’s strong fundamentals and projected earnings growth of 44 per cent in two years. The current market price is Rs 363.

Religare maintains the core valuations at Rs 415 and while other ventures at Rs 122. It reiterates conviction in company’s new ventures and believes these would evolve into cash cows that aid the extension of the core business, offering long-term value creation for shareholders. This includes a value of Rs 81 per share for IVR Prime. IVR Prime’s stock price has corrected by 67 per cent to Rs 167 from a high of Rs 510. The brokeage maintains NAV valuation at Rs 540 per share and have factored in a holding company discount of 30 per cent for IVRCL.

In the last five months, the company has bagged orders valued at Rs 25 billion; its current order book stands to Rs 110 billion. Of these, a significant proportion, at 76 per cent, flows from the water and irrigation segment. Religare expects the company’s order book to grow 43 per cent CAGR over FY07-FY09 with water comprising the majority share at 60 per cent.

Under the Bharat Nirman program, an irrigation potential of 10 million hectare acres is to be created over FY05-FY09. Considering an annual addition of 2.2 mha, it is estimated that 11 mha of new potential can be added during 11th five year plan, with a proposed investment of Rs 2 trillion. IVRCL accounts 50 per cent of its revenue.

Apart from its core operations, Religare reiterates conviction in the company’s new ventures like real estate, BOT projects and Hindustan Dorr Olivier (52% subsidiary). The company has four BOT projects which are in progress. Three will be completed in November 2008. National Highways Development Project plans for development and upgradation of 47,087 km of roadways across India over 2007-2015 with an investment of Rs 2.3 trillion.

IVRCL has outperformed in last two to three years with a 52 per cent CAGR in sales over FY05-FY08E. During 9mFY08, sales have grown at 76 per cent, margins have improved by 50 basis points to 9.7 per cent, and the order book has swelled significantly.


Link to the article: http://economictimes.indiatimes.com/Analysis/Religare_maintains_buy_on_IVRCL_target_price_Rs_537/articleshow/2904081.cms

Alok - Alok Inds announces final financing plans

Alok Industries Limited has informed the Exchange that : "Alok Industries Limited, flagship company of the Alok group with interests in textiles and infrastructure is on stream with financing plans for its infrastructure ventures. Alok's team of merchant bankers are in talks with private equity players and investment bankers and are confident of achieving closing in the near future. Company officials have also informed that the few forex trades that the company has entered into are mainly capital hedge trades and they are comfortable with the present positions on this account. These trades are in line with the company's stated policy for forex risk management to primarily hedge its payables and receivables."

Alok had recently taken a 50 per cent stake in Ashford Infotech to develop a million square feet of office space at a cost of 4 billion rupees on land it bought in the Mumbai suburb. Alok Infrastructure, which is an equal partner in the JV, invested 650 million rupees in the JV to fund the acquisition

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

ICICI Bank has entered into a Rs 1,150-crore equity-cum-debt deal with Jaypee Infratech, which is to build and operate the 165-km six lane Taj Expressway linking Noida with Agra. The bank has decided to pick up 1% stake in Jaypee Infratech for Rs 250 crore, pegging the valuation of the company at Rs 25,000 crore. In addition, the bank will provide Rs 900 crore as long-term loan to the company.

Last year, ICICI Bank’s private equity arm had been in discussions with Jaypee Infratech to pick up a stake in the company. A senior Jaypee official confirmed that negotiations had taken place with ICICI Venture to buy a 1% direct stake and an additional 9% through convertible debentures. “However, once the discussions broke down we were able to quickly enter into a deal with the parent company,” said the executive.

In addition to ICICI Bank’s 1% shareholding, a Jaypee employee trust holds 1% in Jaypee Infratech. In addition, the company plans to shortly place another 3% equity with other investors. The parent company Jaiprakash Associates will hold the remaining 95% for the time being. A source said the company will go public at the appropriate time.

Jaypee Infratech has the rights of development of 25 million sq meters of land at five or more locations along the proposed Taj Expressway. The land could be used for commercial, amusement, industrial, institutional and residential purposes.

Meanwhile, Jaiprakash Associates on Sunday also signed the concession agreement with UP authorities for the Rs 40,000-crore Ganga Expressway project and deposited Rs 1,491 crore as bank guarantee for this. Jaypee Ganga Infrastructure Corporation will implement the 1,047 km-long six lane access controlled Ganga Expressway, which will link Greater Noida with Ballia in eastern UP.

Jaiprakash Associates won the contract to build the Ganga expressway on the basis of its bid, which was the lowest at 14,000 hectares. The project, which was floated by UP chief minister Mayawati soon after returning to power last year, attracted bids from 19 bidders, including Reliance Energy, Unitech and Gammon. The winner is supposed to manage the construction cost through toll collection and the land given to it at a concessional rate by the government for private development.

Land acquisition for the project is likely to be completed in the next two years, following which the construction will start.

The expressway is expected to be completed in five years from now. Jaiprakash Associates will acquire land for development at six locations across the expressway: Secunderabad, Etah, Rae Bareilly, Pratapgarh, Mirzapur and Varanasi.

Link to the article: http://economictimes.indiatimes.com/News/News_By_Industry/ICICI_Jaypee_Infra_ink_Rs_1150-cr_deal/articleshow/2896629.cms

IVRCL - bags Rs 79cr contract

IVRCL Infrastructures & Projects has bagged a Rs 78.85 crore contract from Andhra Pradesh Industrial Infrastructure Corporation for construction of a 5.75 lakh square feet research complex and 2.86 lakh square feet staff quarters for the Indira Gandhi Centre for Advanced Research on Livestock (IGCARL).

The Rs 400 crore IGCARL is coming up over 650 acres of land in Pulivendula of Kadapa district in Andhra Pradesh. The project, to be implemented over a period of three years, is the first-of-its-kind facility for livestock research and vaccine production in the country initiated by the state government.

IVRCL stated in a press release that the project was intended for conservation of indigenous germ plasm, development of feed and fodder resources, improvement of animal reproduction, development of cost-effective vaccines and disease diagnostic tools and on-farm validation and transfer of the developed technologies.

Link to the article: http://www.business-standard.com/common/storypage_c_online.php?leftnm=10&bKeyFlag=IN&autono=34864

Wockhardt - No loss from derivatives: Wockhardt

The release said that there have been no losses whatsoever because of business related hedging activities

India’s fifth largest drug maker by revenue, Wockhardt Ltd, said in a statement on Thursday it will “neither incur any losses arising out of the derivatives-hit scenario in the current quarter, nor will there be a situation of such losses to occur subsequently.”
The release notes that in the last one year, there has been considerable currency fluctuation and “in such situations, it is normal practice to protect the company from such currency fluctuations”.
“Wockhardt has a highly professional and expert team that undertakes normal business related to hedging for the past few years. In addition, our record of the last few years clearly demonstrates that there have been no losses whatsoever because of business related hedging activities,” added the release.
The release comes on the heels of a Page 1 story in Mint on 20 March that cited several unnamed bankers and risk management experts as saying the firm has taken a “significant” hit from exposure to complex cross-currency options and structured products.
Mint had sent a questionnaire listing what these unnamed bankers and risk management experts were saying about the company’s potential losses on Monday but the company didn’t respond prior to the story appearing. Several attempts to elicit comments from Wockhardt, over the phone and in person, prior to the Mint article appearing, were also unsuccessful.
The release also included a report prepared by Morgan Stanley on the firm’s derivatives exposure. The report quoted the company’s chief financial officer as saying that Wockhardt hasn’t swapped its dollar/euro liabilities (totalling $700 million, or Rs2,835 crore) into other currencies such as yen and Swiss francs. It also says Wockhardt uses rupee/dollar and rupee/euro forward cover as hedge (and not exotic currency options), and hence “has not incurred any losses on forex transactions.” Indian markets were closed on Thursday so there was no trading in Wockhardt’s shares.

Link to the article: http://www.livemint.com/2008/03/21004735/No-loss-from-derivatives-Wock.html

Wockhardt - Bankers claim derivatives-hit Wockhardt books losses

Wockhardt Ltd, India’s fifth largest drug maker by revenue, has taken a significant hit from exposure to complex cross-currency options and structured products, say several bankers and risk management experts. These people, none of whom wanted to be identified, said the drug maker’s paper losses, because of the dollar’s continued weakness against global currencies, are “substantial” and could result in Wockhardt swinging to a loss when it reports first quarter results, especially if the greenback continues to be weak.Despite repeated attempts all week by Mint to obtain a response, a Wockhardt spokesperson declined to comment. A detailed questionnaire listing what these unnamed bankers and risk management experts were saying about the company’s potential losses, remained unanswered since Monday, when it was sent to Wockhardt. The bankers who spoke to Mint didn’t specify a loss amount other than saying it was “substantial”. Indian accounting rules are not very clear on whether firms need to book these notional losses, known as mark-to-market (MTM) losses. The Accounting Standard (AS) 30, which deals with a firm’s MTM losses from the derivatives business, will only come into effect from 2011, but some of the experts whom Mint spoke to said if the losses are on account of speculation and not genuine hedging, a company would need to book them. According to the same bankers, Wockhardt has been in the derivatives market for the past few years and has a dedicated risk management team. Mint had reported on 7 March that several Indian companies that have incurred similar losses in the derivatives market, are exploring legal options against their banks. It is unclear whether Wockhardt has considered any such legal moves, especially given the firm has an internal risk management team that would have weighed in before such transactions were entered into, said one foreign exchange consultant familiar with the matter. Wockhardt gets some 60% of its revenues from overseas markets. It posted a net profit of Rs213.9 crore in 2007 in a year when its “other income”, which includes income from treasury operations, dropped by around half to Rs11 crore compared with 2006. Wockhardt had Rs513.62 crore worth of deposits, including unused funds of Rs421.47 crore raised through foreign currency convertible bonds (FCCBs), with banks in December 2006, the last period for which such data is available. The company had raised around $110 million (Rs445.5 crore) through such bonds in 2004 for overseas acquisitions. While it has a growing presence in overseas markets, especially in Europe, Wockhardt had raised FCCB for potentially funding acquisitions in the US. According to the same bankers, a significant portion of this fund has possibly been used to buy structured derivatives products. Wockhardt’s 2006 annual report notes that the company has derivative instruments and unhedged foreign currency exposure, not unusual for many companies that do the same. It says: “The company enters into forward exchange contracts being derivative instruments, which are not intended for trading, or speculative purposes, but for hedge purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.” In December 2006, Wockhardt had two contracts on outstanding currency swaps, in addition to forward exchange contracts, to hedge against fluctuations in changes in exchange rate and interest rate changes, one with a notional principal of 4,158million yen (Rs166.32 crore then) and the other with a notional principal of Rs154.87 crore. During 2006, Wockhardt had foreign currency exposure to the tune of Rs1,367 crore, which had not been hedged. Wockhardt’s shares fell 4.8% to Rs260.55 a share on the National Stock Exchange on Wednesday. It is trading 42.28% below its 52-week high of Rs450.05 a share.

Link to the article: http://www.livemint.com/2008/03/20000354/Bankers-claim-derivativeshit.html

Subex - leading mobile communications provider in Poland is implementing its Nikira™ Fraud Management system

Subex Ltd on March 19, 2008 announced that a leading mobile communications provider in Poland is implementing its Nikira™ Fraud Management system. The service provider, with a user base of over 11 million GSM, 3G and mobile IP access customers, was looking to replace its existing Fraud Management system in order to support its fast-growing customer base and meet the requirements of emerging next-generation IP and content services. Following a highly-competitive tender, the contract was awarded to Subex along with its system integrator partner, Alcatel-Lucent. A key differentiator was the ability to implement a proof of concept within a short deadline. The new Fraud Management deployment will help the service provider to automatically deliver content based services over one IP infrastructure, ensuring maximised revenues at minimised cost. Sudeesh Yezhuvath, COO, Subex Ltd, said, "Detecting and preventing fraud is a very important issue for telecoms operators, particularly those in fast-growing deregulated markets. This implementation is a great endorsement of the Nikira product and our partnership with Alcatel-Lucent." Nikira uses flexible rules-based alarms and artificial-intelligence driven advanced analytics to identify likely fraudulent behavior, helping operators to detect known fraud types and patterns of unusual behavior in all telecoms environments — wireline, wireless and across all services. Leading service providers around the world turn to Subex to combat fraud, conduct revenue assurance, correct configuration and interconnect billing errors, and manage third-party relationships to maximize margins and adopt lean operations.

Sensex hasn't got its valuation it deserves

The long-term trend is pointing towards under valuation of the Indian equity market. The market, as measured by Price-to-earning ratio (PE) of the Sensex has just about pierced the long-term trend line.

At the current valuation, it is quoting at a one-year forward of 16, little less than the earnings growth rate that Sensex companies have managed since 1991. If the theory of market returns chasing earnings growth is to be believed, this is just about time for accumulation for those looking at the longer haul. Since 1991, while the Sensex has grown at CAGR of 15.5%, its earnings grew at a rapid 16.6% per annum.

In the past two years, the market went up partially on the back of ‘PE expansion’. It meant PE of the Sensex was getting priced higher than usual, since the market expected faster growth in earnings. But with the current correction, while valuations have been ‘cleansed’ of such expectations, there are probably returns to be made if investors were to take a leaf out of historical happenings.

After all, Indian economy has been growing at a brisk pace ever since liberalisation. And during that period, the rate of earnings growth of the Sensex has grown higher than the nominal GDP growth rate (current prices) of the economy.

While Sensex earnings averaged 15.5%, it was 13% for the economy. While the January IIP growth figures (5.4%) weren’t encouraging, even matching the long-term averages could mean getting 16% returns from the Sensex.

Arguably, there have been four equity market cycles that India has witnessed ever since economic liberalisaion. It witnessed a peak in 1992, followed by one in 1996, 2000 and then the 20,000 plus levels that it witnessed recently. And if one were to analyse the Sensex earnings and its returns since the past peak of April 2000, it seems the Sensex has not got its valuation it deserves.

Since April 2000, the Sensex has multiplied 2.7 times while its earnings multiplied 3.6 times. While the market obviously gazes into the immediate future to give current valuations, it is a million dollar question whether it is missing the big picture.

Link to the article: http://economictimes.indiatimes.com/articleshow/2875880.cms

Jaiprakash - Jaypee leads race for ICICI’s 45% stake in Prize Petro

The race among corporate giants including LN Mittal group, Larsen & Toubro, Jaypee group and Essar Oil for acquiring ICICI’s 45% equity stake in exploration firm Prize Petroleum has entered the final lap.

Sources in the know said at present the Jaypee group is leading the race, although there is no official word on it as yet. The prospective partner would eventually acquire HDFC’s 5% stake in Prize Petroleum to raise its shareholding to match its current promoter’s stake.

Prize Petroleum is an upstream exploration and production (E&P) company being controlled by public sector HPCL in which it has a 50% stake now.

Sources close to the development said the deal is likely to be formalised with Jaypee group within a week. The value of ICICI’s 45% equity stake could not be ascertained. Attempts to contact officials in HPCL and its prospective partner Jaypee group did not succeed.

Jaypee has already made a beginning in hydrocarbon exploration by winning the South Rewa block with Prize Petroleum under the sixth round of the New Exploration Licensing Policy (Nelp-VI).

HPCL has been keen on raising the equity capital of Prize Petroleum to meet the growing fund requirements. Currently, Prize Petroleum has authorised capital of Rs 20 crore. The company would need around Rs 135 crore for the next two years to fulfil the commitments as per the contractual obligations, a source said.

ICICI, one of the joint venture partners, has already said it would renounce its rights shares in favour of a third party. Officials in HPCL confirmed that ICICI was willing to renounce its rights shares in favour of a third party, which is yet to be identified.

The prospective buyer would be selected based on a transparent process which is acceptable to HPCL, a company source said. The E&P arm of HPCL, which had made a humble beginning in E&P sector, has over a period of time acquired the status of an independent operator.

Recently, the company has been awarded a contract for development of offshore marginal fields in cluster seven near Mumbai High offshore fields in partnership with HPCL and M3 Energy.

It has been awarded contracts for operations of marginal fields of ONGC at Hirapur, West Bechraji and Khambel. It has also acquired 50% share in Sanganpur oilfield. The consortium of Prize Petroleum with GSPC, Jubilant Empro and Geoglobal Resources has been awarded the Block CB-ONN-2002/3 in the Cambay Area.

Link to the article: http://economictimes.indiatimes.com/News_by_Industry/Jaypee_leads_race_for_ICICIs_45_stake_in_Prize_Petro/articleshow/2879747.cms

Real estate: How real is the estate...

There has been too much brouhaha in recent times over the nature of capital controls to be exercised in the real estate sector. Many people argue that capital controls will help deflate the real estate bubble and thus lead to more affordable housing. Let's have a look at some fallacies and facts:

• Real estate is an `asset class' - It is argued that there is not enough land in an overpopulated country. Therefore, as the population grows, demand for real estate only goes up. Astronomical prices of real estate in India encourage holding real estate assets in anticipation of future profits. The fact is that, there is enough dwelling land available. A simple calculation will help clarify this. Assuming 4 people per household, a population of 1.08 billion requires 270 million dwellings. Also assuming that an average dwelling is of 1000 square feet (much more than the present) therefore a total built-up area of 270 billion square feet is required. Suppose the FSI is 1. Then, the built-up area to house all of India works out to 25,092 square km or only 0.76% of India's land area. If the average dwelling area is lowered, the land area needed for housing drops even further. If land isn't that scarce, then the cost of built-up housing isn't much; it's just the cost of construction material. To think of it as an asset class would be thus a fallacy.
• Real estate bubble is a result of foreign speculators - It is claimed that foreign speculators have foreseen a price rise in the future, bought houses in India in anticipation of profits thus, resulting in the real estate bubble. In the process, they have created excess demand and pushed up prices. As the price levels have grown very sharply, this is a bubble. The fact is that, demand for housing is a function of rising incomes of Indian households. Results of one of the recent surveys conducted by ValueNotes indicate that real estate is the most preferred investment instrument by IT sector professionals. In a fast growing economy the real issue is that demand is far greater than supply, which provides room for speculators to influence prices.
• Curtailing the demand will curtail prices - This policy framework has been tried in other countries and failed. With a GDP growth rate of 9% and sharp rise in incomes the demand is bound to outstrip the supply. The demand control policy does not give people more and bigger house. The fact is that house prices can only be brought back to affordability by increasing supply as fast as possible. Greater investment in housing is the key to increasing the supply of houses. Another fact is that, politicians and existing house-owners often do not like supply-augmenting policies because that brings down housing prices. Also, when the municipality keeps floor-area restrictions tight, it has power over developers. This power can easily translate into corrupt practices.

However, there is some good news on the front. The ULCA has been repealed and many firms are now accessing public markets to obtain capital. Foreign capital and foreign firms are being allowed 100% FDI and have therefore started investing in Indian real estate sector. The CMIE executive summary for this sector shows a growth in total assets from Rs.22,156 crore in 2004-05 to Rs.53,522 crore in 2006-07. The market capitalization of listed firms on NSE in this sector is Rs.3,13,981 crore, and the high valuations given by the market will attract entry. There are about 80 firms in this sector. These are all still small numbers compared with the size of India, but it looks like serious firms are finally coming together. All of the above factors coupled with removal of controls on purchase and use of land, might be able to pull off a supply response and lead to affordable housing.

Link to the article: http://www.valuenotes.com/namrata/namrata_realestate_17Mar08.asp?ArtCd=131481&Cat=I&Id=

Subex - Subex to miss revised earnings forecast

Reduced spending by a client and the costs of integrating Syndesis Ltd continue to be a drag on operations this fiscal

Bangalore: Telecom software maker Subex Ltd will miss its revised earnings forecast for the current fiscal and report losses, as reduced spending by a key client and the costs of integrating Syndesis Ltd, a Canadian firm it bought in January 2007, continue to be a drag on operations this fiscal year.

Subex, which provides clients such as British Telecom Plc. and T-Mobile Systems solutions to improve productivity and respond faster to their customers, had initially forecast its fiscal 2008 revenues from its product business at around Rs615 crore and net profits at Rs155 crore at the beginning of the current fiscal.

Following a squeeze in revenues from a top client, AT&T Inc. in the US, which postponed capital spending, Subex revised its annual product revenue forecast to Rs520 crore and net profit to Rs104 crore in the September quarter.

But Subash Menon, founder chairman, managing director and chief executive officer of Subex, who described fiscal 2008 as “a terrible year”, said Subex would not even be able to meet the revised forecast and would end the year with losses. “That’s (meeting earnings forecast) not happening this year. We are focused on how to get back to a normal situation next year,” Menon said, without predicting losses.

For the nine months ended December 2007, Subex reported a consolidated net loss of Rs17.5 crore on revenues of Rs434.3 crore as against a net profit of Rs39.9 crore on revenue of Rs260 crore in the same months the previous year. Product sales for first nine months of fiscal 2008 accounted for Rs283.2 crore with some Rs93.5 crore coming from telecom maintenance and support services the Bangalore-headquartered company also provides. The remaining Rs57 crore is other income.

The firm plans to spin off its services division into a separate company—Subex Technologies Ltd—and exit it likely next fiscal year.

Subex had acquired Toronto-based Syndesis in a $164.5 million (Rs726.43 crore then) deal in January 2007, and completed the integration recently. “We underestimated the cost and efforts involved in the complexities of transitioning the business and there was some duplication of costs after we had to shift people from one business unit to another,” Menon said.

Subex has orders worth $330 million in hand which means that it is likely to start next fiscal year with an order backlog of $90-95 million. With the telecom sector largely untouched by the current recession in the US, it expects to bounce back in fiscal 2009. However, Menon cautioned that if consumption is affected broadly, as in other industries, demand for telecom services, too, could get affected.

“Investors perceive this (not meeting revised revenue forecast) as exceptionally negative,” said R. Ravi, equity analyst at Karvy Stock Broking Ltd, who tracks Subex. “Revising the revenue forecast multiple times during a year and not meeting it will make investors lose confidence in the company in the long term.”

Shares of Subex ended Friday at Rs191.55 each on the Bombay Stock Exchange (BSE), close to its 52-week low of Rs183. The Subex scrip has shed close to 31% in its value over the past month on BSE.

With the dropping share price, Menon agreed, an issue of foreign currency convertible bonds for $180 million that Subex made last year was “a big overhang”, adding there was no immediate redemption pressure. “The redemptions will happen in 2012 and the company has already factored in the interest outgo which amounts to $4 million per year,” he said.

Subex, which counted the Syndesis buyout its seventh acquisition in as many years, earlier bought the UK’s Azure Solutions Ltd in an April 2006 $140 million stock deal.

Two other key buyouts in the past include a fraud management services unit of Alcatel-Lightbridge in 2004 and Canada’s Magardi three years earlier.

Link to the article: http://www.livemint.com/2008/03/16231759/Subex-to-miss-revised-earnings.html

Jaiprakash - Update

Jaiprakash Infratech, wholly owned subsidiary of Jaiprakash Associates is set to raise around Rs 1,000 crore through private placement to ICICI Venture, repirts The Hindustan Times. The realty venture of Jaiprakash Associates that owns Taj Expressways and around 3000 acres of land along the expressway starting from Noida, is likely to values around Rs 25,000 crore.

Link to the article: http://economictimes.indiatimes.com/articleshow/2856969.cms

Wockhardt - Citi Update

Citi India Conference 2008: Day 1 Takeaways

• Conference takeaways — Wockhardt spoke with investors at the Citi India Investor Conference 2008. Here are some of the highlights of that presentation
• Morton Grove on course — The restructuring effort of Morton grove is on course and it has turned in an EBITDA of US$1-2m for 4Q07 vs. EBITDA losses in
• 2007. The company also indicated that it is in the process of addressing the issue of the warning letter on Lindane.
• US generics — Wockhardt is expecting FDA approval for a nasal product with limited generic competition (3-4 players). Overall pipeline for the US remains strong with more than 40 ANDAs pending at the FDA. About 30% of these are “difficult to make” or niche generics.
• Bio-generic — Wockhardt IND for insulin was filed in Feb 08 for the EU and has got approval in the US. For the rest of the world market, Wockhardt will be a key player in the bio generic opportunity with about 75 registrations.
• NCE R&D — Wockhardt is contemplating a de-merger of it NCE R&D effort. Wockhardt may spend cRs800m on NCE R&D in 2008 (vs. Rs600m in 2007). It expects NCE R&D to jump significantly in 2009 as one of its lead molecule WCK 771 progresses further in the clinics. More clarity over the structure of the demerger is expected in 2H CY08.
• Guidance — It re-iterated its revenue growth guidance of 32-35% in 08 and indicated it was on target for a US$1bn revenue and >15% net margin by 09.

Buy/High Risk 1H
Price (11 Mar 08) Rs303.95
Target price Rs550.00
Expected share price return 81.0%
Expected dividend yield 2.3%
Expected total return 83.3%
Market Cap Rs33,263M
US$823M

Alok - BSE

Alok Industries Ltd has informed BSE that the Company has taken a 50% stake in Ashford Infotech Pvt Ltd, a part of the Ashford Group, through a wholly owned subsidiary, Alok Infrastructure Pvt Ltd for the joint development of realty projects. Ashford Infotech Pvt Ltd, now a joint venture Company between the Alok Group and the Ashford Group, has recently purchased the Bhandup land of CEAT Ltd, admeasuring around 6.92 acres for around Rs 130 crores and is proposed to be the first property to be taken up for development under the above mentioned joint venture.

Subex - BSE

Source: BSE - Subex Ltd on March 11, 2008 has announced that it secured 21 new North American OSS deals during the past 11 months. The majority of North American new business came from Tier-One providers who selected Subex to satisfy a mix of Fulfillment Assurance and Revenue Management needs. "We continue to realize many synergies with the integration of the Syndesis Fulfillment products as we deliver OSS transformation solutions to many of the world's largest and most sophisticated service providers - including Service Provisioning, Order Management, Revenue Assurance, Fraud Management, Interparty and Cost Assurance, and Data Integrity Management deployments," said Greg LeNeveu, President - Americas, Subex Ltd. "This momentum and continued market traction positions Subex as an essential supplier of OSS solutions that deliver on the promise of operational dexterity." Subex offers the industry's broadest range of OSS software solutions for world-class Revenue Maximization and Service Fulfillment programs. It is the market leader in Revenue Management solutions, enabling service providers to dramatically reduce risks to the revenue chain by controlling multipe causes of revenue leakage, promoting operational efficiency and, hence, higher profitability. Through its award-winning Syndesis Service Fulfillment solutions, Subex enables service providers to quickly and easily define, create and activate new, high-margin services, resulting in sustained competitive advantage through enhanced service agility. The Company also has pioneered the concept of the Revenue Operations Center (ROC), which empowers a service provider to understand how operations and process performance directly affect its margins and to take action to ensure competitive advantage. Subex attributes its latest success to several factors, including its ever-increasing refinement of OSS best practices that are based on production-proven implementations and the growth of the Revenue Management and Service Fulfillment 0SS sectors. In addition, service providers have moved from a healthy awareness of Revenue Assurance programs, for example, to a commitment to developing full teams and initiatives aimed at maximizing revenues. The Company also points to its ability to identify and adapt to the unique needs of its diverse, global customer base as a distinct advantage. "Some of our customers want the ability to customize our solutions to their specific needs and manage them internally, while others prefer to take advantage of our managed service offerings," LeNeveu explained. Through its acquisitions of Azure Solutions and Syndesis, Subex offers a pragmatic and production-proven path to operations transformation, offering a lower-risk approach to automating key processes and migrating to next-generation services. Leading service providers around the world turn to Subex to transform operations, adopt lean and agile operating principles and achieve sustainable profitability. "The growth and momentum we have achieved during the past year in North America is a testament to all Subexians and our partner customers that are working together to spur innovation and positive change within their organizations," said Subash Menon, Founder Chairman, Managing Director & CEO, Subex Ltd. "The drive for OSS transformation is having a profound impact for telecom operators and the growth in deal flow illustrates the industry-wide commitment to becoming more streamlined, agile and efficient."

Jaiprakash - Hold Jaiprakash Associates, says A Jain

Anu Jain of Omniscient Securities is of the view that one can hold Jaiprakash Associates.

Jain told CNBC-TV18, "Jaiprakash Associates made a high of Rs 510, it was the favorite of the market and then suddenly there were some rumors and it became a do not touch and everybody just wanted it off and it came down to about Rs 196 levels. Now Rs 198 to Rs 202 are quite strong support zones for this particular stock. If it breaks that, it would go down to Rs 174, but the way it held on to that just sub Rs 200 levels, showed that it was a very good support level for it. Yesterday it is bouncing up right up to Rs 230, and the fact remains that there is no real resistance from here to Rs 280 on the charts. It can scale up to Rs 280 at this particular jump up or bounce back, which we can see, not to say that the script has been showing any great strength right now. But after such a drastic fall, a bounce back is very much on the cards and about Rs 280; it shows where it will probably scale up to if the market remains benign. That level is where it will go over its 10 DMA, 20 DMA and the chart should substantially get better."

She further added, "How it consolidates at that level and moves ahead from that would be really important. Once if it can go over that then, the next resistance is Rs 320. So given the current set of circumstances, I don’t see that this chart, would stay to be weaker, it would probably go up to Rs 350, consolidate there after to the Rs 280 level once the market settles down. So it’s going to take time, its going to take patience but I think one should hold on to the stock."

Link to the article: http://www.moneycontrol.com/india/news/stocks-views/hold-jaiprakash-associates,-says-a-jain/329863

Jaiprakash - Remain invested in JP Associates: Tulsian

Investment Advisor SP Tulsian advices to remain invested in Jaiprakash Associates.

Tulsian told CNBC-TV18, "The pessimism got built up in JP Associates that the company JP Associates has reduced their stake in JP Infratech, which is the reality company, from 100% to 55%. In spite of clarifications, coming from the management about 10 days back that the company still continues to hold about 100%, and except for maybe the placement of a strategic investor, there wont be any equity dilution by JP Associates who is the parent company, the stock hasn’t been able to recover."

He further added, "If one take a call right now, the market cap of about Rs 30,000 crore, very much justifies is existing business of contracting cement divisions and the Taj Corridor of about 180 km, coupled with the huge realty of more than 500 acres of land available for development, and the Ganga Expressway; taking all these, I don’t think that the stock really is in any way expensive if you compare them with GVK Power and GMR Infra, Punj Lloyd and so many other stocks having corrected in this last 15 days or so. Right now at Rs 30,000 crore or less than that, the market cap, the share is bound to show a rise from these levels, may not reach to its old level of Rs 500 plus but definitely can regain to the extent of 30-35% from these levels. So those who are holding the stock are advised to remain invested."

Link to the article: http://www.moneycontrol.com/india/news/stocks-views/remain-investedjp-associates-tulsian/17/45/329864

Jaiprakash - JP Asso might bounce back as it looks oversold

CNBC-TV18’s Executive Editor, Udayan Mukherjee – JP Associates (to replace Bajaj Auto in Sensex) comes as a bit of a surprised I must have made because of all the turbulence, which is happened in JP Associates. These Index inclusions that tend to happen in and what is perceived as stocks which are above water and float above water, no tarnishing in their image etc.

So after the kind of corporate governance question marks, which have been on JP Associates for which the stock has got derated, suddenly it gets included into the Sensex. It started bottoming out, it’s fallen such a lot; lost about 60% plus of its marketcap. This will give it a bit of a short covering fillip, maybe around Rs 200 and the stock might bounce back because it looks the most oversold in the infrastructure space. Sometimes these Index inclusions have a habit of lending a little bit of credibility to stocks, which have a bit of a corporate governance hangover.

So maybe people will take it that light and say it’s not all bad if it gets into the Sensex. How bad can it get? People may think like that and therefore it might lead to some kind of short covering. It’s being a bitten down stock, so frankly it comes as a bit of a surprise out of the blue and might lead the stock up a bit.

Link to the article: http://www.moneycontrol.com/mccode/news/article/news_article.php?autono=329652&special=today

Alok - Aloks realty design has some JV cuts

Alok Industries, the Rs 2,500 crore textile firm, is sewing up an ambitious real estate design through its realty venture, Alok Infrastructure.

An industry source said Alok Infrastructure has initiated talks with a few real estate developers and builders in Navi Mumbai’s Panvel area for joint ventures(JVs).

The company is also talking to mid-size builders in Navi Mumbai whose projects have been stalled due to funds crunch. The game plan is to form JVs with such builders and take the work forward.

Sunil Khandelwal, chief financial office, Alok Industries told DNA Money, “Talks are at a very nascent stage with a few players in Navi Mumbai, but there is nothing much to share at this stage. As and when things take shape, we shall inform the exchanges.”

About media reports of Alok’s JV with Welspun, Khandelwal categorically denied any such move.

Real estate projects in Navi Mumbai are booming. Recently, L&T outbid real estate giants DLF and Indiabulls to emerge as the highest bidder at Rs1,809 crore for a commercial complex at Seawoods railway station.

As earlier reported, Alok Industries is also looking to offload 20% in Alok Infrastructure to a private equity player to raise about Rs 600 crore, which is likely to be sealed by May. While it has not yet identified any PE firm, Ernst & Young is doing the valuation of the subsidiary

Link to the article: http://sify.com/finance/fullstory.php?id=14618867

Subex - Update - new version of its Route Optimization system Optima™ 4.5

Subex Ltd on March 05, 2008 has announced the launch of Optima™ 4.5, a new version of its Route Optimization system designed to help telecom operators better manage network cost information, analyze the impact of current operator tariffs and provide forecasts on future operator tariffs. The key new feature in this latest version of Optima is the support of Oracle Database 10g, one of the most widely deployed enterprise databases in the telecom industry. With the product currently supporting SQL, the new Optima version offers service providers with increased options when choosing among the two leading database systems. "With service provider rates changing constantly - and often at short notice - it's important to provide a solution that responds quickly to such shifting market conditions so that our customers' subscribers can benefit from a high quality of service at competitive rates," said Anuradha, Senior VP - Engineering, Subex Ltd. "Oracle 10g helps providers reduce costs and speed the time to market for new services, so offering the ability to support Oracle 10g was a top priority for this rollout as it helps us better serve our customers and expand our reach of this important product." Optima is part of the Rocware suite of solutions, supporting the concept of the Revenue Operations Center (ROC) - a consolidated framework of systems that enables advanced revenue management, cost control and profit enhancement. Optima is designed as a modular system enabling service providers to invest in only those software elements required for their specific needs. This reduces the initial system cast and allows additional modules to be easily added at a later date if the business demands it. As with all solutions in the Subex Revenue Maximization product suite, Optima helps service providers optimize their margins and promote lean operating principles.

Panacea Biotec - Duty cut will make drug prices affordable

Rajesh Jain, Joint MD, Panacea Biotec, said the cut in excise and custom duty will make drug prices more affordable. "The duty cuts will be passed on to consumers, so consumers will be benefited rather than the pharma industry."

There is no mechanism in the Budget to mitigate concerns for an appreciating rupee, he told CNBC-TV18. A 125% weighted deduction on outsourced R&D will be beneficial in the long run, he added.

Link to the article: http://www.moneycontrol.com/india/news/budget-interviews/duty-cut-will-make-drug-prices-affordable:-panacea-biotec/328878

IVRCL Infra bags Rs 478 Cr order

IVRCL Infrastructures & Projects Ltd has informed BSE that the Company bagged irrigation works of the value of Rs 478.48 Crores from Narmada Valley Development Authority, Bhopal for execution of "Canal system of Indira Sagar Project Phase-III, Sanawad District, Madhya Pradesh, for a total length of 46 Kms of the canal and 5 Kms of tunnels including distribution network upto 40 ha chak for irrigation culturable command area of about 20700 ha on turn key basis comprising the work of survey, planning, design, estimation, reparation of land acquisition cases, forest case and its clearance, shifting of H.T. and L.T, electric lines. Construction of canal by excavation / earth work, cement concrete lining with paver machine, all inline concrete structures like V.R.B / D.R.B / N.H.B/ S.H.B/ C.D. WORKS. Aqueducts, super passages, falls, head / cross regulators, escapes, outlets etc, wherever required and commissioning of canal system. The above project is expected to be completed over a period of 48 months.