Mahindra plans 2 Wheeler ride with Kinetic

Mahindra & Mahindra Ltd. (M&M), one of India's leading automotive companies, announced that its Board of Directors has approved the acquisition of business assets of Pune-based Kinetic Motor Company Ltd. (KMCL). The acquisition will
be done through a New Company to be formed. (New Co). The consideration for the acquisition is a sum of Rs. 110 crores (subject to closing due diligence) plus 20 percent stake to KMCL in the New Co. M&M will hold the balance 80 per cent of the equity.

Kinetic Motor Co. Ltd. to retain 20 per cent stake in new company. The acquisition of business assets of KMCL is a defining moment in the history of Mahindra as it will give us an opportunity to emerge as a full range player with a presence in almost every segment of the automobile industry. KMCL is a strategic fit with our overall two-wheeler strategy. The strong in-house design and development competencies provided by Mahindra Engineering Services (MES) and the recent acquisition of Italy-based design house, Engines Engineering, coupled with KMCL's expertise will enable us to assume a significant position in the rapidly growing Indian and global two-wheeler market. I am also delighted to announce that Mr. Anoop Mathur, President Designate, Two-Wheeler Sector, will spearhead this new venture" said Mr. Anand Mahindra, Vice Chairman and Managing Director, Mahindra Group.
Ms. Sulajja Firodia Motwani will be a Non-Executive Director in the new company. The deal will enable Mahindra to design and market a range of scooters, value engineered motorcycles and high-end motorcycles for the Indian and global markets, helping it establish a robust, end-to-end two-wheeler business in every segment of the industry.

"KMCL is a company with a rich heritage spanning more than three decades. Over the years, we have introduced several new concepts such as the Luna and India's first gearless scooter which have revolutionized the two-wheeler industry. Hence, we are delighted to associate with Mahindra, another pioneering automobile company with a rich legacy which will add long term value to the business and take it to greater heights,” said Ms. Sulajja Firodia Motwani, Managing Director, Kinetic Motor.

Within the overall two-wheeler strategy, scooters will form M&M's entry point into the Indian market and will be an important part of the company's overall two-wheeler product portfolio. There are several macro environmental trends which make the scooter market especially attractive to Mahindra. These include a younger, more affluent customer base with a significant number of empowered women and increased scooter demand in tier-2 cities and small towns. M&M is strongly positioned to cater to this demand, given the company's significant presence and brand equity in these markets.

For Mahindra, two-wheelers are an additional touch-point for consumers to interact and bond with the ever expanding universe of Mahindra products and services. Within the automotive space, it allows M&M to engage and build relationships with customers at a relatively early stage of the 'personal transport solutions' value chain. This will give an opportunity to place Mahindra in every household, given M&M’s dominant presence in the rural and semi-urban segments and Mahindra Finance’s extensive reach in these markets.

Moreover, the focus on more inclusive growth and improvement in rural transport infrastructure will only expand the demand footprint and increase two-wheeler penetration in semi-urban and rural areas as well.

India is the second largest producer of two-wheelers in the world. The two-wheeler industry has grown from 3 million in the Financial Year 1998 to 8 million in the Financial Year 2008. Domestic sales, which comprise 93% of total two-wheeler sales, have grown from 3 million in the Financial Year 1998 to 7.2 million in the Financial Year 2008, a CAGR of 9.2%. Despite recent market turbulence and volume decline due to tight credit situation, fundamental demand drivers for two-wheelers in the country remain strong. With growing GDP, higher disposable household incomes and increased discretionary expenditure on personal transportation, outlook for the two-wheeler business in India remains positive. Also, penetration at 25% of households in the country is still low and augurs well for increased “consumption”.

With sharply rising environmental concerns and favourable consumer attitudes in the West towards “green” vehicles, two-wheelers provide cleaner, quieter, more fuel efficient transport solutions. While this presents excellent opportunities in the overseas market, the trend is expected in India and other emerging markets as well.

Founded in 1970, Kinetic has a rich history of innovation and has introduced several new concepts over the years that have revolutionized the two-wheeler industry. Kinetic, in fact, brought the concept of personalized transport to India with the launch of the moped Luna in 1972. In 1984, it launched India's first gearless scooter which has come to symbolize comfort, convenience and universal appeal. Kinetic has also introduced new technologies to India including four valve engines, electric start on scooters and motorcycles, v- twin engines, USD forks, etc. It is also the only company to offer top-end world class bikes, Comet and Aquila, to Indian bike enthusiasts.

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Videocon Plans to Acquire Motorola's Mobile Handset Business

This time After Tatas, the Acquisition turn to Videocon Industries, Now Motorola's Mobile Handset Business is in its radar. The world’s third-largest handset maker had announced on March 26 its intention to hive off the mobile devices business into a separate company in the wake of sustained pressure from Its Key investor Carl Icahn, who wants the company to sell the business.

For Videocon, an attempt to shore up its planned Mobile services business in India through its telecom arm Datacom, one of the world’s fastest-growing mobile markets. Datacom has already received licences to offer mobile services throughout India ( All 23 Circles ) and is awaiting allotment of spectrum to launch commercial operations.

Videocon has already announced an initial investment of Rs 6,000 crore for its telecom operations and eyeing 25 million customers in the next three years. Videocom expect handset business will be an added advantage as the company can bundle attractive offers with mobiles.

As per the estimates, Motorola’s handset business at $3.8 billion. Motorola’s market share in India at 14% in December 2006 which has now slipped to 6.5%. Its worldwide market share has also dropped from 22% to 12%. Last Year it sold over 159 million mobile phones globally.

The failure to replace the popular Razr model has been the main cause of decline. Motorola’s Indian market share is not available, even though industry experts say it is behind Nokia and Samsung.

Motorola also has a handset manufacturing facility in India ( Chennai ) that makes both CDMA and GSM Mobile Phones.

“We have hired one of the world’s top three investment bankers who will convey our interest to buy out the mobile handset business of the US company,” Group Chairman Venugopal Dhoot told to Media. “The Indian market for mobile phones is around 120 million units a year and we have our own retail chain stories that we can leverage. Also, we can transfer the manufacturing plant to India to leverage cheap labour in the country,” added Dhoot.

India is adding over 8 million subscribers every month. With a tele-density of 25% in a country of 113 crore people, there remains immense room for growth. The acquisition, if it comes through, will give a boost to Videocon’s plans to become a pan-India player.

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» Videocon's Global acquisitions are Thomson SA’s television glass tube business and Electrolux’s Indian operations. It recently failed to acquire Daewoo Electronics, for which it bid $711 million.

» In domestic through its retail chain, NEXT has acquired Planet M, the music and entertainment retail arm of media house Bennett, Coleman & Co. (owner of The Times of India, The Economic Times), for Rs 200 crore. Planet M has 150 stores across 42 cities in India and is mainly into organised music retail and home entertainment business.

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Merger of HDFC & CBoP Banks

The boards of directors of HDFC Bank and Centurion Bank of Punjab (CBoP) today separately gave their in-principle approvals for merger of the two banks. HDFC Bank is expected to pay Rs 10,000-Rs 12,000 crore in shares for absorbing CBoP.

Independent firms — Dalal & Shah and Ernst & Young — appointed by the two banks would work over the weekend to prepare their reports on the valuation of CBoP in time for boards of the two banks to consider when they meet again on Monday (February 25) to consider the swap
ratio for the all-stock deal.

HDFC Bank will jump to the 7th position from 10th after
the merger in terms of Total Assets.

The boards of both banks will meet on February 25 to consider the swap ratio and on February 28, to consider the draft scheme of amalgamation and any other matters as required. Consulting firm KPMG is the advisor to HDFC Bank and investment bank Ambit Corporate Finance to Centurion Bank.

“ The swap ratio is expected to be around 1:25-30,” said a banking source. The merger will make HDFC Bank the country’s seventh largest bank after Bank of India (BoI) and ahead of IDBI Bank, from the current 10th position. The merger talks between the two banks began in January 2008 after the principal shareholders of CBoP – Bank Muscat with 14.02 per cent
stake, Sabre Capital with 3.48 per cent stake and Kephinance Investment (Mauritius) with 6.13 per cent — decided to exit.

The three had signed a shareholders’ agreement in 2003, which provided that any decision to sell the stake would be taken together. HDFC Bank is hopeful of completing the integration process in about five to seven months. The merged entity will not offer home loans as this would lead to a conflict of interest with HDFC Bank’s parent, Housing Development Finance Corporation (HDFC). HDFC Bank will have the option to sell the home loan portfolio of CBoP to HDFC.

HDFC holds 23.28 per cent stake in HDFC Bank. Its holding is expected to fall below 20 per cent after the merger. Banking sources said HDFC would approach RBI to allow HDFC to maintain its stake at 20 per cent. HDFC Bank, like in the past, could make a preferential offer to HDFC, which had earlier indicated that it would want to hold at least 20 per cent stake in the bank at all times.

A senior HDFC Bank official indicated that Rana Talwar, the chairman of Centurion, will have no role to play in the merged entity. Shailendra Bhandari, the managing director and CEO of Centurion will be appointed as a member of the merged bank and will have no role in the day-to-day operations of the bank. Bhandari will help in the process of integrating the two entities.” The official added, “There is no scope for appointment of a deputy managing director (in the merged entity).”

HDFC will continue to have two representatives on the board of the merged entity.” The merger will be a win-win situation for HDFC Bank as it would acquire around 400 branches and skilled personnel. The branch acquisitions will boost the presence of HDFC Bank in the northern and the southern regions.

CBoP has close to 170 branches in the north and around 140 branches in the south. While HDFC Bank has nearly 250 branches in the north and nearly150 branches in southern India. CBoP has a concentrated presence in the southern state of Kerala, where HDFC would have to consider reorganisation.

“We will also acquire a strong SME (small and medium enterprises) portfolio from CBoP. There is no overlapping of HDFC Bank and CBoP customers,” the HDFC Bank official said. The integration will be a challenge for HDFC Bank. Though the cultures of Centurion Bank employees would match with HDFC Bank but the culture of employees of Lord Krishna Bank and Bank of Punjab will definitely not be very similar to HDFC Banks.

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Sterling Info Buys Norwegian Co

Sterling Info Now ready to Sail : The 100 per cent stake acquisition was completed over the weekend said V Srinivasan, CEO, Siva Ventures.
Chennai-based Sterling is likely to hold stake in all the three divisions of the conglomerate’s key business arm – J B Ugland Shipping Group – and its subsidiaries, J B Ugland Shipping, J B Ugland Dry Bulk and J B Ugland Shipping Singapore

As a part of its foray into the bulk shipping industry, the C Sivasankaran-promoted Sterling group has acquired the shipping business of Norwegian conglomerate JB Ugland for $300 million (Rs 1,200 crore). V Srinivasan, the group chief executive officer of Sterling group subsidiary Siva Ventures, said the 100 per cent stake acquisition in JB Ugland’s shipping business was completed over the weekend.

“Shipping holds a strong growth potential for the Sterling group, with the demand for freights increasing in the coming years,” Srinivasan added. With this, Chennai-based Sterling is likely to hold stake in all the three divisions of the conglomerate’s key business arm — JB Ugland Shipping Group and its subsidiaries, JB Ugland Shipping, JB Ugland Dry Bulk and JB Ugland Shipping Singapore.

Siva Ventures is present in the telecom and renewable energy sectors and has diversified its investments into the shipping industry. Besides shipping and port infrastructure maintenance businesses, JB Ugland Holding has diversified interests in the timber and construction sectors.

JB Ugland, formerly AS Uglands Rederi, was formed as a result of two splits — first in 1995 and then in 2000. In 1995, the two brothers, Johan Jorgen Ugland and Andreas K L Ugland, split Uglands Rederi into two separate entities.

Andreas Ugland & Sons, the company which already controlled several shipping assets of the group, took over approximately 50 per cent of the assets after the demerger. In 2000, Andreas K L Ugland and his three sons, Johan Benad, Andreas Ove and Knut Axel, split the company into three units. JB Ugland Holding currently manages the operational activity of the group.

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Ambani Eyes Capgemini

Anil Ambani-led Reliance Communications is looking for a possible takeover of French IT services group Capgemini, a report in the online edition of The Times on Thursday said. When contacted by media, a Reliance Communications spokesperson declined to comment. The report said that Reliance Communications has held early-stage talks with Capgemini. Quoting sources, the report said, "Times Online can reveal the French-based group has met with Reliance Communications, the technology and telecoms arm of Anil Ambani's Reliance ADAG group in recent months." "The initial discussions failed to make progress after the parties could not agree on a price," it added. According to the report, Reliance Communication's interest confirms Ambani's hopes to build a significant IT business. "A move on Capgemini would give it access to a client base in continental Europe and catapult it among the world's top ten IT groups by market share," it said.

In recent months, there were also reports that Capgemini had held talks with India's leading IT firms Wipro and Infosys on a possible takeover. However, the rumours were denied by Wipro and Infosys later. On its part, Capgemini CEO Paul Hermelin in an e-mailed statement to media also denied the rumours. "As Capgemini has already stated a number of times, these rumours are without any merit and have been fully denied." "They have been exclusively and systematically targeted at Capgemini, at the precise time where we have demonstrated our strength and ability to successfully compete for additional market share and talents," he said.

Sources: ET

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Sona Forged ThyssenKrupp Assets

In what could be one of the biggest acquisitions in the auto component space by an Indian firm, Kapur family-promoted Sona Okegawa today said it will acquire the precision forging business of Germany’s ThyssenKrupp, which has a turnover of Rs 1,740 crore.While the Sona Group company did not disclose the value of transaction, it said the acquisition of ThyssenKrupp Prazisionsschmiede (TPG) would make it the biggest precision forgings maker in the world.

“The precision forging business of ThyssenKrupp group has revenues in access of Rs 1,740 crore with 24 per cent market share globally. With this acquisition, Sona Okegawa will now control the biggest precision forging business in the world,” Sona Group Chairman Surinder Kapur told reporters.He said, post the acquisition, which is expected to be completed by end of this month, the German firm would operate as Sona Okegawa’s wholly-owned subsidiary.

The ¤ 291 million precision forging business of ThyssenKrupp is nearly 10 times the size of Sona Okegawa, which has revenues of about Rs 180 crore.It operates out of four plants globally, three in Germany and one in the US, and employs over 1,700 people.Sona Okegawa, which was earlier mulling to set up a plant in the US, has shelved its plans after the takeover deal.“The plans for a greenfield facility in the US have been shelved as we will get access to the market through ThyssenKrupp’s facility there,” Kapur said.

Also, the acquisition would give us direct access to many of the global manufacturers, which are TPG’s clients. Kapur said the company plans to fund the deal through a mix of debt and equity and is presently working out the details for the funding.“The deal is a cash-free and debt transaction. The amount will be raised in the overseas markets and will not have any recourse on Sona Okegawa’s Indian operations,” Kapur said.

Last year, the Sona group had raised the equity capital of Sona Okegawa by infusing Rs 100 crore.Sona Okegawa is a joint venture between India’s Sona Group and Mitshubishi Materials of Japan. Sona Group holds 75 per cent stake in the venture, while the remaining is held by the Japanese partner.

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