Pantaloon Retail - Venturing Into Insurance Biz

Pantaloon - Enters Insurance via JV

Pantaloon Retail India, a textiles and retailing company, is foraying into insurance business in joint venture with Italy’s Generali Group. Generali is one of the largest insurance groups in the world. Pantaloon and Generali will set up a joint venture, which will set up separate entities for life insurance and general insurance businesses. Generali will have a 26 per cent stake in the joint venture and the balance will be held by Pantaloon and its associates.

Pantaloon Retail’s associate company Pantaloon Industries will set up two special purpose vehicles (SPVs) to invest in the insurance businesses. Pantaloon Industries will invest Rs 25 crore in the two SPVs. Generali operates across 40 countries through 107 companies. It ranks 22 in the list of Fortune 500 companies and is the largest corporation in Italy with an asset base of over euro 300 billion. Generali has in other parts of the world successfully tied-up with retail groups for distribution of insurance and other financial products. Apart from insurance, Generali has significant presence in real estate and asset management businesses in Europe.

Pantaloon, in a notice to the Bombay Stock Exchange, said as part of its vision to expand its portfolio of retail products, Pantaloon has tied-up with Generali for its foray into insurance business. The proposed joint venture would look to distribute insurance products utilizing the vast distribution network of the company along with other conventional formats of insurance distribution presently prevailing in India.

History In The Making

Well ! Friends we have seen History in the making for both Up & Down directions in the Market.

At these levels .... do you need any recommendation ?

I see value in most of the stocks and according to Mr. Vallabh Bhansali (Enam)... Markets are at MOUTHWATERING Levels.

There's no change in Economy overnight and there's no need to panic.... perhaps you will not see such levels again in near future. Those who are new to market should start building their portfolio slowly and steadily. You will notice that your most favourite stocks are available at a discounted price of 30% or more within a week's time. So, go on bargain hunting and enjoy because there is always a bright sunny day after dark and stormy nights.

Elder Pharma - Was Up Almost 20 % Today

Elder Pharma - Enters Into Medical Enviro Security Products

Elder Pharmaceuticals has entered into an inlicensing deal with Swedish drug company Sterisol AB to develop, manufacture and market advanced medical enviro security products in India. With this tie-up, Elder plans to establish the markets for Sterisol's pharma preparations, disinfectants and advanced medical enviro security products in the medical, veterinary, environmental and government sectors in the country.

Sterisol AB is part of GePe, the SEK 6 billion Swedish group that comprises 16 companies in eight countries. Sterisol has the Nordic environmental label in addition to approved international quality compliances. Following the manufacturing and marketing agreement, Elder will initially market Sterisol's infection-control products.

Earlier in the year, Elder had formed a similar tie-up with Medichem International of the UK and launched a precautionary spray – Trigene – which is a bio-security product against the potential risk from H5N1 Avian flu virus. In India, the Rs 850-crore medico enviro security segment is witnessing a growth of 18 per cent, higher than the pharmaceutical market growth of 8.6 per cent. "We are upbeat about this sector as we expect demand to surge in the coming years in view of the growth in the number of private hospitals, which are more stringent about hygiene, the scare created by bird flu and the rise in medical tourism necessitating better hygiene," said Alok Saxena, director, Elder Pharmaceuticals.

Punj Lloyd - Going To Saudi Arabia

Punj Lloyd - Buy And Forget

Punj Lloyd has bagged a contract of over Rs 138 crore from Gas Authority of India (Gail) for construction of a pipeline project. According to a company release issued today, the contract involves construction of spread I Dahej-Uran pipeline project and is expected to be completed by February 2007. "This is a prestigious project for us and represent another step forward in meeting company's strategic growth objectives," Atul Punj, chairman and managing director of Punj Lloyd, said.

Earlier, engineering construction major, Punj Lloyd (PLL) has announced a joint venture with His Royal Highness Prince Khalid Bin Bandar Bin Sultan (KBS), Kingdom of Saudi Arabia. The jointly owned company with the share capital of 2 million Saudi Riyals would be named ‘Dayim-Punj Lloyd Engineering Limited’ in which PLL would hold 49%, while KBS would hold 51% stake. Dayim-Punj Lloyd Engineering Ltd will operate in engineering, procurement, construction, commissioning of onshore and offshore projects for the hydrocarbon sector, power, chemical, water and sewage sector, civil infrastructure and industrial projects in the Kingdom of Saudi Arabia.

HRH Prince Khalid Bin Bandar Bin Sultan will be the Chairman of Dayim-Punj Lloyd. PLL would provide engineering, design, construction and project management expertise, apart from selecting, hiring the requisite manpower and assisting the JV in identifying and selecting suppliers for equipment. KBS role would be to identify commercial opportunities for the JV in Saudi Arabia and to liaise with various governmental and regulatory authorities besides organizing banking facilities for the JV.

Commenting on the announcement of JV, Chairman and Managing Director of Punj Lloyd Limited, Mr. Atul Punj said, “This JV will help PLL identify new business opportunities in Saudi Arabia. This joint venture will be a powerful vehicle for both companies to expand roles in Saudi Arabia by offering the best of each company's expertise along with a dedicated service and support organization. We have been looking forward to increase our market presence in Saudi Arabia for many years. HRH Prince Khalid Bin Bandar Bin Sultan is well-recognized and respected in Saudi Arabia with strong capabilities in identifying commercial opportunities. The formation of this 49:51 joint venture provides PLL a greater opportunity to participate in the mainstream of the Saudi Arabia market”.

Shasun Chemical - Marching Ahead

Shasun - Promoter To Take 11% In Top US Biotech Firm

LifeCell, one of the leading stem cell research and therapeutic companies in India , set up by the promoter of Shasun Chemicals & Drugs, will pick up an 11 per cent stake in the leading US biopharma research company, Saneron CCELL Therapeutics Inc. This is being done through a swap deal. LifeCell recently floated an outfit, Saneron India, in which Saneron CCELL holds a 20 per cent stake. However, the US company has not brought any funds to pick up the stake. Instead, it is offering an 11 per cent stake to LifeCell.

“Saneron CCELL will invest in research and development. Besides, it will also bring in the technology,” said Abhay Kumar, promoter of Shasun Chemicals and vice-chairman of LifeCell. This is the first instance of an Indian company engaged in stem cell-based therapeutic research picking up a significant stake in a global company. Saneron CCEL is an established player in the area of readily available cellular therapies and has patented technology relating to umbilical cord blood and sertoli cells. It has about 100 patents in its fold.

Florida-based stem cell research and therapy company Saneron CCEL Therapeutics is one of the top biotechnology R&D companies in the US. The company focuses on neurological and cardiac cell therapy for the early intervention and treatment of several deadly diseases which lack adequate treatment options.

Blow Plast - Initiating Coverage

Blow Plast & VIP Boards Approve Merger Plan

The board of directors of VIP Industries and Blow Plast have approved the merger of the two companies. The merger is proposed to be effective from April 1, 2006. The companies have also approved a share exchange ratio of 1:1, that is, one equity share of VIP Industries for every one equity share of Blow Plast.

VIP Industries is Asia's largest luggage manufacturer, while Blow Plast has extensive marketing and distribution reach for luggage products. The combined entity would be an integrated luggage company with significant presence in all the value chains. The merger would see synergies owing to integration in operations from manufacturing to marketing.

Explaining the rationale behind the merger, Dilip Piramal, chairman, VIP Industries said, that "We would achieve optimum utilisation of various infrastructure and service facilities and integrate our management activities, thus achieving reduction and better control of costs. The merged entity would emerge as a leader in the global luggage industry, leveraging on innovation and a strong marketing strategy." Post merger, the combined entity’s worth would be about Rs 500 crore. VIP Industries reported a total income of Rs 335.12 crore and net profit of Rs 8.78 crore for the financial year ended March 31, 2006. Blow Plast has reported total income of Rs. 259.28 crore and net profit of Rs 6.74 crore for the year ended March 31, 2006.

Further, the merged entity would have exclusive showrooms and will operate in over 50 countries with manufacturing operations in Uttranchal and Nashik in India. The proposed share exchange ratio has been approved based on a valuation exercise conducted by PriceWaterhouseCoopers. Sudhir Jatia, managing director, Blow Plast said, "There will be better resource mobilisation and financial consolidation to withstand competition from domestic as well as overseas markets. Also, consequent to launch of commercial production from Uttaranchal factory, profitability of the merged entity will improve on account of exemptions from excise and Income Tax." Blow Plast has a 60 per cent share in the organised market for luggage in India. It has 8,000 retail outlets across the country.

I feel that the merger will unlock value and Blow Plast is a good buy at current levels.

Jain Irrigation - Outperformer

My recommendation in Jain Irrigation has been reinforced by an Outperformer rating given by SSKI.

SSKI has given a target of Rs. 400 on Jain Irrigation.

Click Here To Download SSKI Report.

News You Can Use

Zicom Electronic - Forays Into Retailing

Zicom Electronic Security Systems (ZESS), an electronic security solutions provider, has forayed into the retail segment. It is set to open 600 retail outlets in 100 cities across India by 2009. The initiative will help the company strengthen its distribution and service system in the country. Of these, 200 outlets, under the name Zicom stores, will be in the states of Maharashtra, Madhya Pradesh, Gujarat and Goa. The cities in these states where the company will venture with its outlets include Mumbai, Nashik, Nagpur, Pune, Ahmedabad, Indore, Baroda and Rajkot. The stores will be operated on the franchisee basis with Zicom remaining the owner.

Manohar Bidaye, chairman, ZESS, said, "We have a project cost of Rs 35 crore for the first phase ending March 2007. And for the period we are expecting a turnover of Rs 100 crore through these retail outlets." He further said in the phases to come, the company will invest around Rs 80-90 crore in the project. These outlets will act as customer care locations and, at the same time, one would be able to buy the security appliances from it. Apart from the western cities, the first phase is targeting 24 cities including Vizag, Hyderabad, Chandigarh, Lucknow and Jaipur. The second phase and third phase will target 29 and 47 cities respectively.


Punj Lloyd - Close To Acquiring Singapore Firm

Engineering construction major Punj Lloyd is close to acquiring the Singapore-based SembCorp Engineers and Constructors (SembE&C). Punj Lloyd, along with the Essar Global, were in the race for acquiring SembE&C last year. Essar has opted out of the race. According to sources close to the development, Punj Lloyd may close the deal soon. The cost of the acquisition is not known. Punj Lloyd had announced its plan to float $125 million foreign currency convertible bonds (FCCBs) in March. The proceeds from this offering were to be used primarily to finance the company’s acquisitions outside India and other ongoing capital expenditure, the company had indicated in its notice to the Bombay Stock Exchange in March. Punj Lloyd had a cash reserve of Rs 444 crore on March 31, 2005.


NIIT Technologies - More ROOM To Play

NIIT Technologies on Monday announced the acquisition of UK-based insurance solution provider ROOM Solutions for $25 million in an all-cash deal. The IT solutions provider said it has acquired 51% stake and would buy the remaining 49% over the next 18 months. “The final cost of the acquisition would not exceed one time sale of ROOM,” the official said, indicating that the acquisition bill would be under $25 million.

ROOM Solutions is a 120-people, $25-million company, a senior NIIT official informed. It is focused on the commercial insurance market including IT solutions for customers of Lloyd’s, the largest reinsurance market in the UK. Over a quarter of Lloyd’s business is processed on the core policy administration platform ‘Subscribe’, which has been developed by ROOM Solutions. “ROOM is a profitable company, both at the operating level as well as at the PAT (profit after tax) level. The move would strengthen our presence in the insurance vertical. While we are largely in the life and pension area, ROOM has a strong presence in the general insurance space and has a strong IPR (intellectual property right) platform,” the official said. The company would become a fully-owned subsidiary of NIIT Technologies, which plans to fund the acquisition through debt and internal accruals.

ROOM also has a $18 million line of credit from banks, Arvind Thakur, chief executive officer of NIIT Technologies pointed out. “We will acquire companies that strengthen our base in industry verticals,” he said. "NIIT Technologies' expertise in providing technology-based solutions in the insurance space will expand our service offerings to the Room customer base and improve our value proposition through the established global delivery model of NIIT Technologies," Room Solutions Founder Marcus Broome said. In the immediate term, NIIT would expand its offerings in the IT and BPO space using ROOM's product.


Usha Martin - Its Also A Carbon Credit Candidate

Leading speciality steel and wire rope maker Usha Martin Ltd has planned a major capacity expansion entailing an outlay of Rs 464 crore. P Bhattacharya, managing director, said, the company intends to increase its steel production capacity to over half a million tonne. The expansion proposal involves backward integration in coal mines in order to enable cost reduction along with an increase in value-added steel and steel production capacity, he said, adding, “These projects are moving on schedule and will be completed by September 2008.” According to Bhattacharya, the company had acquired land and a building in Houston, US, during 2005-06 for setting up a wire rope manufacturing facility. This will become operational by end-October.

The company completed successful acquisition and integration of the wire and wire rope plant from JCT Ltd at Hoshiarpur in Punjab last fiscal. For the financial year ended March 31, 2006, gross sales of Usha Martin, excluding its subsidiaries, registered a growth of 18.02% at Rs 401.51 crore from Rs 340.18 crore the previous year. “Profit before tax rose to Rs 31.88 crore from Rs 17.22 crore, registering a growth of 85.13% and the profit after tax increased 35.23% to Rs 20.38 crore from Rs 15.07 crore,” Bhattacharya informed. The Usha Martin board is learnt to have recommended a dividend of 55% on the equity shares of the company for 2005-2006. The company expects an increase in demand and improvement in domestic and overseas realisation in the near future, Bhattacharya added.

Patel Engineering - What An FPO

Patel Engg - FPO Subscribed 27 Times

The Rs 425 crore follow-on public offer of Patel Engineering has been subscribed more than 27.2 times. The issue, which closed today, has mopped more than Rs 10,000 crore.

The QIB portion of the issue has been oversubscribed more than 52 times. Foreign institutional investors such as Lehmann Brothers, Citi Group, Fidelity and Templeton along with a few other domestic asset management companies have subscribed to the follow-on public offering, investment banking sources said. The high networth investors' portion of the issue has been oversubscribed by more than 4.5 times and the retail portion of the issue has been oversubscribed 4.8 times. Overall, the issue received 1.22 lakh applications. The price band for the FPO was fixed between Rs 400 and Rs 440.

The proceeds of the issue would be used for the company's expansion through organic and inorganic means. The company intends to bid for infrastructure projects and invest in subsidiaries and joint ventures within and outside the country.

Currently Patel is on upward circuit quoting at Rs. 550.00

Sangam India - Rise Of The Profit

Sangam India - There's More To Come

Rajasthan-based Sangam (India), the largest polyester-viscose dyed yarn manufacturer in India, has posted a 123.46 per cent rise in net profit at Rs 14.48 crore for the fourth quarter ended March 31, 2006 as compared to Rs 6.48 crore in the previous year's corresponding quarter. Net sales rose 35.86 per cent to Rs 107.89 crore compared to Rs 79.41 crore during the same quarter in the previous year. Operating profit margins improved substantially to 21.01 per cent from 16.66 per cent. Exports sales during the quarter jumped by 240 per cent to Rs 40.58 crore from Rs 11.93 crore during the corresponding quarter last year.

The company's board of directors has approved the scheme of amalgamation of SPBL into Sangam (India). The board also approved the swap ratio of 1:4, that is, one share of Sangam (India) for every four shares of SPBL Ltd. The appointed date of amalgamation was April 01, 2006. Further, the board has recommended a dividend of 15% (Rs 1.50 per equity shares of Rs 10 each) for shareholders. Commenting on the merger, Mr R P Soni, chairman, said, "The merger of SPBL is part of our business synergy and should improve our operating margins by 200-300 basis points for fabric division. Further, the merger will give us an additional flock base home furnishing product with well established brand Laurel."

Meanwhile, the company has registered a 76.30 per cent increase in net profit at Rs 24.77 crore for the financial year ended March 31, 2006 compared to Rs 14.05 crore last financial year. Net sales increased by 19.75 per cent to Rs 346.78 crore compared to Rs 289.58 crore in the corresponding period last year. Operating profit margins improved to 17.11 per cent from 14.73 per cent. During the year, the company's export sales rose by 112 per cent to Rs 86.29 crore compared to Rs 40.69 crore in the previous year.

The company's on-going expansion plan of Rs 541 crore has progressed as per schedule with 20,400 cotton spindles and 90 weaving machines having become operational in March 2006. The revenue from these operations will be evident from next quarter onwards. The project will be financed through a mix of debt and equity. The company has tied up with banks for term loan to fund the expansion. Sangam India will get a five per cent interest subsidy on the loan amount under the Technology Upgrade Fund Scheme (TUFS) of the Government of India.

Promoted by first-generation entrepreneurs R P Soni and S N Modani Sangam India has, at present, 64,032 spindles of polyester-viscose dyed yarn installed in Bhilwara along with 127 weaving machines and a 10 MW thermal power plant. The company also has a strong presence in the Indian synthetic blended fabric segment with brands like Anmol and Sangam. The company has an established client base, that includes Raymond, Reid & Taylor, Siyaram and Grasim. Its fabric is marketed through a network of 100 dealers and 1,000 retailers.

Hotel Leela - Good Prospects Ahead

Hotel Leela Venture - Buy And Wait For Two Years

Hotel Leelaventure Ltd has posted a net profit of Rs 100.81 crore for the year ended March 31, 2006, thus growing at close to 119 per cent. The company is also planning to invest close to Rs 1,200 crore in expansion and to spread its footprint across the country. It plans to raise close to Rs 220 crore out of this through private equity, about Rs 320 crore through foreign currency convertible bonds and the rest through long-term loans. “We plan to spread our wings across the country. Our Chennai, Hyderabad, Pune and Delhi projects will ensure the same,” said chairman C.P. Krishnan Nair.

Total revenue stood at Rs 343.69 crore, a growth of 27 per cent compared with Rs 271.33 crore in fiscal 2005. The company expects its profit to touch Rs 200 crore next year. “The industry has grown at 20-25 per cent this year. We expect to double that growth,” said Vivek Nair, vice-chairman and MD, Leela Group. Leela is also looking at ventures in Jaipur and Calcutta, Nair added.

Meanwhile, Board of directors of Hotel Leela Venture Ltd has approved the purchase of additional land in Bangalore to expand its facilities. This will enable ‘Hotel Leela Palace’ to add another 30 rooms to the new wing and the expansion is expected to be completed by October 2006, the company said in a release. According to C P Krishnan Nair, chairman, Leela Palaces and Resorts, the Bangalore property is set to add another 144 rooms and an international restaurant to the existing hotel.

The construction of an additional wing to house the new rooms commenced in May 2005 and will be operational by October 2006. The investment planned is to the tune of Rs 40 crore. The expansion is in response to the market demand, if the buoyant traffic inflow of the business traveller is any indicator. Our expansion is well in place to cater to the demands of tomorrow, he added.

Presently, the Leela Palace has six floors of 256 rooms and suites. Commenting on the expansion programme, the company’s president, Peter Leitgeb, said, “With the strategic investment in expansion, we will enhance the hotel’s appeal and position not only in Bangalore but in the country as well. Our effort is to increase the scope and scale of the ‘Essence of India’ through a larger and luxurious Leela Palace, Bangalore.”

Hotel Leela Venture is also eyeing the lucrative business of managing hotel properties abroad. The group has now set its eyes on West Asia, London and Singapore. Peter Leitgeb, group president, however, made clear that the group is not interested in equity participation. “We will only look at management contracts,” he told DNA Money. In the West Asia region, the group is concentrating on Abu Dhabi, Dubai and Bahrain, which are key source markets for the Leela Goa and the more recently acquired Leela Kovalam Beach in Thiruvananthapuram.

In fact, Leela is pulling out all stops to make the brand a recognised one in West Asia. Kempinski of Germany, which is managing the Emirates Palace hotel in Abu Dhabi, is already a well-established name there. All future Leela properties in India will also have the Kempinski affiliation, making it easier for West Asian customers to connect to the brand. The company is already in talks with two property developers in Dubai, Leitgeb said, adding, “It will be a superior deluxe hotel in Dubai under the Leela brand name.” The group is scouting for partners in London, where it is setting up a marketing office. It will also enter into a management contract in Singapore “provided we get the right partner,” said Leitgeb.

Patel Engineering - Plans Realty Foray

Patel Engg - FPO Involves High Risk But Worth Applying

Patel Engineering is planning to foray into real estate development business by acquiring the Rs 250 crore, Mumbai-based construction company, Michigan Engineering. Patel Engineering undertakes civil engineering works including construction and design of hydroelectric projects, micro-tunnels, irrigation and highway projects. “We are in acquisition talks with Michigan. If talks materialise, the acquisition would be concluded in a couple of months,” said Pravin Patel, non-executive chairman, Patel Engineering. Patel Engineering is also in talks with four other Indian and foreign infrastructure engineering companies. According to Rupen Patel, managing director, the inorganic growth plan would help Patel Engineering to acquire niche technologies, which no other engineering company possesses, thereby gaining competitive advantage. Besides, it accelerates sales growth, compared to an organic expansion, he added.

Patel Engineering had acquired the US-based ASI and had brought the roller compacted concrete (RCC) technology used in dam constructions to India. The technology has reduced the construction time to 12-18 months from the earlier four years period. The company had also acquired the US-based Westcon Microtunneling Inc and introduced micro-tunnelling technology in India. Micro-tunnelling is the process by which tunnels are dug using machines operated from outside. Patel Engineering has completed 7,000 mw of hydroelectric projects in the country till now, which is 22 per cent of the total hydroelectric projects completed so far, Pael said. “In the immediate future, we would be working on hydropower projects in Greece, Turkey, Libya and the US,” he added.

Jain Irrigation - Pioneering Turnkey Projects

Jain Irrigation - Buys US Firm

The Mumbai-based Jain Irrigation Systems has acquired US-based drip irrigation company, Chapin Watermatics Inc, through its subsidiary Jain Americas Inc for $6 million in cash and debt with deferred payment terms. The company will use funds raised through a foreign currency conversion bond (FCCB) for the acquisition. The acquisition would significantly enhance Jain Irrigation’s ability to participate in turnkey projects in developing markets while providing a strategic brand fit in matured markets of the US and Europe.

Further, the buyout would enable Jain Irrigation to make complete product range suitable for all types of crops in various geographies for small and large farm holdings across the world. Irrigation markets worldwide are witnessing huge growth owing to ever-growing problem of water scarcity. Marketing subsidiaries of Jain Irrigation in US, Europe and Africa and their warehousing facilities would provide additional marketing and logistic support to Chapin Watermatics.

Anil Jain, managing director, said after signing the deal in the US, “The focused marketing efforts that Jain brings to the deal will complement the products of Chapin and the acquisition will catapult Jain Irrigation and Chapin Watermatics to the forefront in growing global markets for irrigation equipment.” Jain Irrigation is the producer of drip irrigation system including PVC & PE pipes, PVC & PE fittings, polytubes, emitting pipes and fittings, emitters, spray heads and jets, filtration and fertigation equipment, and green houses. It also undertakes projects on turnkey basis for transformation of wasteland through watershed planning and development.

News You Can Use

Alps Industries - Bonus Declared

Alps Industries Limited has reported an increase of 51 per cent in the net profit at Rs 8.01 crore for the fourth quarter ended March 31, 2006. Net profit for the quarter in the last fiscal stood at Rs 5.32 crore, a company statement said here. Its income grew 69 per cent to touch Rs 84.58 crore during the quarter as compared to Rs 50.05 crore in the corresponding quarter lasy year, it said. Net profit for the year ended March 31, 2006, stood at Rs 24.46 crore, up 73 per cent. "We will continue our efforts to develop and provide world class interior infrastructure products," managing director Alps Industries Ltd Sandeep Agarwal said. The company has also announced the bonus issue in the ratio of 1:1 for its shareholders.

Rajshree Sugar - Expanding Capacity

Coimbatore-based Rajshree Sugars & Chemicals Limited has acquired entire equity shares of Trident Sugars Limited, a privately held 2,500 TCD (tonnes crushed per day) company based in Zaheerabad (Andhra Pradesh) for a consideration of Rs 62 crore in all cash deal. An aggreement to this effect was signed between the company and B G Lohia, chairman of Trident Sugars Limited recently to acquire the latter’s 2,500 TCD capacity plant at Zaheerabad. When contacted, Rajshree Pathy, chairman and managing director of Rajshree Sugars, told FE: "We are on an agressive growth strategy. We are looking to grow both organically as well as inorganically and the company will continue to look for acquisitions to cash in on the increased demand for sugar." "Following the acquisition, the company’s overall capacity has gone up to 10,000 TCD," she said adding "the capacity of the Zaheerabad plant can be increased by 1,000 tonnes to 3,500 TCD and we will decide on the same soon." According to her, "the acquisition is expected to add Rs 100 crore to the topline and proportionately to the bottomline in the current fiscal."

Two Stocks For Two Years

1. Hotel Leela Venture
2. Electrosteel Casting

Both the stocks have potential to appreciate by 100 % in two years. Details will be posted later.

Magma Leasing - Initiating Coverage

Magma Leasing - Growth Ahead

Magma Leasing Ltd, a retail finance company, is planning to expand into new product categories across different geographies. Competing in the over Rs 50,000 crore car and commercial vehicle retail finance segment, Magma has set focus on the used commercial vehicle finance and strategic construction equipment finance to drive its major business this fiscal.

The company, which has 67 branches, will be expanding into Maharashtra and Gujarat in a big way, by opening up its branches in these states this year. Thereafter, it will expand into the southern states. Plans are afoot to open up 15-odd branches. Also into fee-based business, Magma will be looking at increasing its portfolio of fee-based income, including insurance and personal loans.

“The target is to reach Rs 2,500 crore of lending in the current financial year. We estimate to finance Rs 700-800 crore for commercial vehicles and used vehicles. We are betting big on the strategic construction equipment finance market, where the potential is huge,” Sanjay Chamria, managing director, Magma Leasing, said.

Magma, which declared its year-end results on Friday, saw a 44% increase in its net profit at Rs 20.17 crore and it registered a 31% rise in profit before tax at Rs 30.58 crore in 2005-06. It registered a 54% increase in its net income at Rs 151.58 crore. Total assets of the company touched Rs 3,300 crore as on March 31, 2006. Almost 70% of the company’s business came from rural and semi-urban areas. Out of the new loans disbursed in 2005-06, which amounted to Rs 1,820 crore, the eastern and the northern states contributed to 31% and 45% respectively.

“Going against the sluggish growth of 8% in car finance, Magma recorded a high growth of 39%, disbursing Rs 451 crore in 2005-06. This came largely from financing in semi-urban and rural areas and mainly in the multi utility vehicle category, which comprises almost 35% of our total car finance portfolio,” Chamria said. “Used commercial vehicles is a new area and we already have set in place a dedicated team for this segment. Out of Rs 104 crore in this category, we did Rs 55 crore of financing in the last quarter,” he added.

Those who are not averse to taking risk can buy at Rs.165 now with a one year target of Rs. 230.

Pantaloon Retail - Expecting Breakout

Pantaloon - Expanding Aggresively

Close on the heels of the quick deployment of the Kshitij real estate fund (KVC) Fund 1, the Pantaloon group-promoted Future Capital Holdings is planning to set up Kshitij 2, another real estate fund, to focus on several upcoming projects in Tier-III cities. The first Kshitij fund, which closed in the middle of last year, focuses primarily on projects in the metro cities. The group is contemplating a corpus of around Rs 300-500 crore for Kshitij 2, it is learnt. Yet another fund, Horizons, which has a lot of foreign investors, closed recently at $ 263m, sources said. Horizons, which has a lot of foreign investors, focuses on areas of more than 50,000 sq ft. Kshitij 1 closed last year at around $350m.

Confirming these plans, Shishir Baijal CEO & MD of Kshitij and Horizon funds, said the group is planning a fund to tap the growing real estate in the smaller cities. “Kshitij 1 is already fully committed and we are just planning another one to focus on smaller projects.” Kshitij 1 is understood to have invested in projects around Tier-II cities like Ahmedabad, Baroda University, Cochin, Jaipur and Trivandrum. Horizon International Fund is aimed at foreign direct investors coming to India under the new 100% FDI norms.

The Horizon Fund has already identified four potential investments in Mumbai, Chennai, Bangalore and Kolkata, with an approximate total retail GFA (gross floor area) of 4.1m sq ft and an estimated total project cost of $330m. These properties are to be completed by ’08-09.

Further, Big Bazaar, the hypermarket from the Pantaloons Retail (India) Ltd is expanding in the east, and it is the tier-II towns where most of the expansion will take place. Haldia in West Bengal will get its Big Bazaar by June-July this year, while the one in Barddhaman will open some time in September or October 2006, according to Manish Agarwal, regional head (east), of Pantaloons Retail. In the next two years, Big Bazaars will also reach Kharagpur and Siliguri in West Bengal, as also Ranchi in Jharkhand, Agartala in Tripura and Patna in Bihar.

The mall in Haldia will be spread over 40,000 square feet and will be located in a shopping complex on Durga Chowk, while in Bardhaman, it will be situated in the Dhiraj Promoters' retail-cum-entertainment project being built on Jailkhana More. In Kharagpur and Siliguri, the Big Bazaars will be part of the malls being developed by Kshitij, the asset-management venture of Pantaloons. A Big Bazaar has been operational at the Durgapur City Centre for over a year, and according to Agarwal, has been doing very well. With footfalls of 3,000 on weekdays going up to 5,000 on weekends, a conversion rate of 60 per cent and average billing of around Rs 500, the Durgapur store compares quite favourably with the two stores in Kolkata with conversions of 55 per cent and average billing of Rs 625.

"There is tremendous potential in these cities," says Agarwal. According to Rajan Malhotra, head of Big Bazaar category management (apparels), the company has plans to increase the presence of all its formats -- Pantaloons, Big Bazaar, Food Bazaar and other speciality formats -- to 40 or 50 stores in the region. A number of these will be in and around Kolkata itself, a city where the company began its journey with the first Pantaloon store in Gariahat. Pantaloons will stamp its presence on all the new malls coming up all over the city, including the Riverside Mall, the South City Mall and the Calcutta Central mall, to name a few.

For Pantaloon Retail, the ‘Blue Sky' is not the limit. It is considering increasing this stand-alone retail format for watches and sunglasses to 35 by 2007 from 13 currently. The company will open two Blue Sky stores in Mumbai and Ahmedabad. Blue Sky stores are mostly shop-in-shop counters and only four stores- in Baroda, Lucknow, Ahmedabad and Bangalore - will be modelled on the stand-alone format.

"There are lots of opportunities in the branded watches and sunglasses space in India. Thus, we are seriously looking at standalone Blue Sky stores in the future," Jaydeep Shetty, chief of new business, told DNA Money. About 90% of watches sold in India are in the price points below Rs 1,000. Blue Sky operates in the mass-to-premium space, strictly keeping luxury brands like Tag Heuer and Dior out of its ambit. The brands that typically find shelf space at Blue Sky are mid-market labels like Swatch, Q&Q, Fossil, etc with price points ranging from Rs 599-10,000. In sunglasses, the range varies from Rs 499-8,000.

Though sunglasses are a rapidly expanding segment in India, with some of the stores witnessing almost 100% growth in sales volumes, branded watches are moving at a more conservative 15% clip. The total market for watches in India is pegged at 30 million units. Organised retail market comprises 10% of the total demand. The sunglasses market is pegged at Rs 600 crore, of which the branded segment comprises 20%. The company will invest around Rs 1.4 crore for expanding its Blue Sky stores. The cost on each store will be around Rs 40-50 lakh, including inventory, said Shetty.