Companies & Sectors
Jindal Steel to buy Canada’s CIC Energy for over Rs600 crore

As per the agreement, CIC will be merged with JSPL's subsidiary, Jindal BVI and its existing shareholders would get CAD 2 per share

New Delhi: Jindal Steel and Power (JSPL) said it entered into a binding merger agreement to acquire Canadian coal firm CIC Energy for Canadian dollar (CAD) 116 million (over Rs600 crore) in an all cash deal, reports PTI.


As per the agreement, CIC will be merged with JSPL's wholly-owned subsidiary, Jindal BVI Ltd and its existing shareholders would get CAD 2 per share for their outstanding shares in the Canadian firm.


“The consideration values the total equity of CIC Energy at approximately CAD 116 million on 58 million shares (including all common shares and excluding all options and all unvested warrants),” the Canadian company said in a filing to the Toronto Stock Exchange (TSX).


Commenting on the deal, CIC's Chairman and CEO Warren Newfield said, “In the current challenging economic and capital markets environment, we believe that this offer provides fair value for CIC Energy shareholders.”


However, a JSPL spokesperson declined to comment on the deal.


The deal would provide the Naveen Jindal-led firm access to CIC's 2.6 billion tonnes of high quality thermal coal in Botswana, which will ensure long-term fuel security to JSPL's power ventures, including that of subsidiary Jindal Power.


Following the announcement, JSPL shares were up 0.76% at Rs417.35 apiece on the BSE in the late afternoon trade.


Stating that its Board has recommended the deal to company shareholders, CIC said that it will convene a meeting of its shareholders on or before 28 August 2012 to consider and approve the merger.


The price offered by JSPL at CAD 2 per share to CIC shareholders is a premium of 65% to the volume-weighted average trading price of the Canadian firm's shares on TSX for last one month.


“The merger agreement provides for an outside date of 9 October 2012 for the completion of the merger,” CIC said, adding that completion of the deal is subject regulatory approvals, including from government of Botswana -- where it operates the coal mine.


Shares of CIC has shot up by over 11% to CAD 1.570 per share on the TSX since 18 July 2012, when the Canadian firm had confirmed that it was in talks with JSPL for selling a controlling stake.


The Canadian firm has a mining-cum-power complex called Mmamabula Energy Complex in Botswana, Africa and its Mmamubala coal field is estimated to hold 2.6 billion tonnes of high thermal coal, mostly above 6,000 kcal/kg of calorific value.


According to the company website, CIC is working to begin production in next 3-4 years and thereafter, it will export up to 24 million tonnes of coal per year from the Mmamabula coal field.


Sensex, Nifty will move sideways to down: Tuesday Closing Report

The market has to rally in the next couple of days or it will sink much lower.

Today the Asian indices had a mixed opening while back home both the Sensex and the Nifty opened in the positive. The Sensex opened at 16,908 while the Nifty opened at 5,129. The market was listless throughout the day. We had mentioned yesterday that if the Nifty closes below today’s low, the next support would be 5,060. We continue to maintain the stance. The National Stock Exchange (NSE) saw a higher volume of 54.82 crore shares


HSBC's Flash China manufacturing purchasing managers index (PMI) rose to 49.5 in July from 48.2 in June, rising close to the 50 level that divides expansion from contraction. The increase was driven by a jump in the output sub-index to 51.2 - the best showing since October 2011.


After Post European markets opened, the domestic indices went into the red, after a report that Germany's manufacturing sector contracted at its fastest pace in three years in July. The Markit PMI index tracking the manufacturing sector slid to 43.3 from 45.0 last month, well under the 50 mark that separates growth from contraction. Both the Sensex and the Nifty hit a lower low of 16,840 and 5,103 respectively. But the indices closed marginally higher, breaking the two day of fall. The Sensex rose 41 points higher (0.24% up) to close at 16,918 while the Nifty rose 10 points (0.20% up) to close at 5129.


On the political front, Sharad Pawar-led Nationalist Congress Party (NCP) deferred its decision on whether to withdraw from the Manmohan Singh government by a couple of days. Congress president Sonia Gandhi also pitched in to help, when she told NCP leader Praful Patel at a tea party in Parliament to “do something” for ending the stalemate. In yet another move to keep the ally onboard, Prime Minister Manmohan Singh named Pawar as the chairman of the coal-mining Group of Ministers despite the party's boycott. Meanwhile, the NCP's Working Committee met at Pawar's residence on Monday to discuss its future strategy. However, Patel said the discussions would continue, and a final decision would be taken “no later than” Wednesday


The concern about the Europe's debt crisis is worsening after Moody's Investors Service cut outlooks for Germany, the Netherlands and Luxembourg to negative.  The Markit preliminary composite purchasing managers index reading for the 17-nation euro zone was unchanged at 46.4 in July, signaling a sixth straight month of shrinking private-sector activity across the region.


The Asian indices had a mixed closing. The European indices and the US Future indices were almost flat at the time of writing.


Back home, the advance-decline ratio on the NSE was negative at 764:902.


Among the broader indices, the BSE Mid-cap index closed 0.16% higher and the BSE Small-cap index rose 0.16%.


Among sectoral indices, the top five gainers were BSE FMCG (up 1.91%); BSE Consumer durable (up 1.16%); BSE Oil & Gas (up 0.84%); BSE Health Care (up 0.36%); BSE PSU (up 0.30%). The losers were BSE Capital goods (down 1.09%); BSE IT (down 0.67%); BSE TecK (down 0.30%); BSE Auto (down 0.11%).


Among the Sensex stocks, the top five gainers were Hindustan Unilever (up 7.50%); Sterlite Industries (up 2.56%); Maruti Suzuki (up 2.34%); Bharti Airtel (up 1.42%); ONGC (up 1.19%). Among the bottom five were, Wipro (down 2.93%); Larsen & Toubro (down 1.45%); Sun Pharmaceutical (down 1.38%); BHEL (down 0.96%) and Mahindra & Mahindra (down 0.90%).


The top two A Group gainers on the BSE were- Hindustan Unilever (up 7.50%) and Tata Global Beverages (up 6.79%). The top two A Group losers on the BSE were- HDIL (down 4.66%) and IRB Infrastructure (down 3.67%).


The top two B Group gainers on the BSE were- India Motor Parts & Accessories  (up 20%) and Cupid (up 19.98%). The top two B Group losers on the BSE were- Yuken India (down 16.13%) and Maestros Mediline Systems (down 11.05%).


The gainers on the Nifty were Hindustan Unilever (up 7.57%); Ranbaxy Laboratories (up 3.03%); Sterlite Industries (up 2.71%); Maruti Suzuki (up 2.23%); Sesa Goa (up 1.66%) while the losers were Wipro (down 3.07%); SAIL (down 2.80%); Larsen & Toubro (down 1.75%); Kotak Mahindra Bank (down 1.48%); Sun Pharmaceutical (down 1.41%).


Wipro today announced that it acquired premium personal care brand Yardley's businesses in the UK and other select European nations for an undisclosed amount. Wipro may also acquire the 'Woods of Windsor' business, another heritage brand in the UK, which is well-known for its floral fragrance led portfolio in personal care segment. Wipro fell 2.93% to close at Rs346 on the BSE.


United Phosphorous informed the stock exchanges that the Competition Appellate Tribunal (COMPAT) had granted a stay against the Competition Commission of India order. However, the company is required to deposit 10% of the penalty amount with the Registrar of COMPAT within eight weeks. The Commission had earlier levied a penalty of Rs 252 crore on United Phosphorous against charges of violations of section 3 (3) (b) [that prohibits agreements that limit production or control of products] and section 3 (3) (d) [that prohibits collusive bidding], of the Competition Act, 2002. The stock rose 1.98% to close at Rs123.90 on the BSE.  


Insider trading in LIC Housing Finance?

LIC Housing Finance announced subdued results, with its net profits declining 11% year-on-year on Tuesday. But why did the share price of this scam-ridden company fall severely one day in advance of the bad results? Could it be insider trading?

LIC Housing Finance Ltd (LIC HF) has reported poor first quarter results for the 2012-13 fiscal. The company has posted a decline of 11% net profit of Rs227.75 crore for the quarter ended 30 June 2012 when compared to Rs256.50 crore it recorded for the corresponding quarter last year. However, what is pertinent to note here that there was a sharp decline in its share price yesterday, one full day before the results was announced. Is there anything amiss?

On Monday, LIC HF’s share fell sharply by 4.2%, to Rs248.35, on the Bombay Stock Exchange, one day before the company was due to announce its first quarter results. It had also declined in the previous three trading sessions as well (-1.75%). However, despite lacklustre results, today LIC HF’s  stock price is up 1.1% and it closed at Rs251.05. Frenzied volumes were seen between 1pm and 2pm which pushed the stock price up.

It is also pertinent to note that the share price has trended up despite its operating profits tanking 10%, year-on-year, for the current quarter when compared to the same period last year. What is more, it is far less than its preceding three quarter y-o-y growth rates of 52%. Its net profits has also declined over the last three quarters, from Rs305 crore in December 2011 quarter to Rs 227 crore for the current quarter.

Earlier, LIC Housing Finance Ltd was involved in the Money Matters Financial Services scam, back in November 2010, when some of its officials were accused for taking kickbacks to provide loans that ran into crore, while bypassing rules and regulations. We had covered it before over here: Mystery behind the sudden rise of Money Matters stock


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