Describing BJP as pro-reforms, its president Rajnath Singh has defended the party’s decision to oppose FDI in multi-brand retail
Bhartiya Janata Party (BJP) president Rajnath Singh, while asserting his party's readiness for more foreign direct investment (FDI) in India, has said that FDI in multi-brand retail would aggravate the unemployment problem in the country.
Singh, who is on a visit to the US, told reporters, “We believe that retail trade is a traditional sector, which provides employment to 50 million people. They have traditional skill in retail trade. So bringing in FDI in multi-brand retail would result in unemployment problem in the country. So we have reservations related to FDI in multi-brand retail sector."
Singh refuted the allegations that the Congress-led UPA Government cannot carry on major economic reform ahead of the next year’s general elections because the main opposition parties like the BJP are not letting the Parliament function.
“It is not the case that Parliament has not functioned in the past nine years,” he said in response to a question.
During his stay in Washington, Singh met a host of leaders of the US corporate sector and listened to their concerns about India.
In his meetings, Singh raised the concerns of Indian IT industry sector on certain provisions, in particular those related to the H-1B and L1 visas in the comprehensive immigration bill.
Despite a 10% decline in vehicle sales, Maruti Suzuki reported 49% higher net profit in June quarter on lower raw material cost and favourable yen
Maruti Suzuki India Ltd, the country's largest carmaker on Thursday reported a 49% growth in its first quarter net profit mainly on better realizations coupled with lower raw material cost, favourable yen and higher other income.
For the quarter to end-June, the carmaker said its net profit rose 49% to Rs631.6 crore while its total revenues, including sales, declined 5.1% to Rs10,441.64 crore from Rs10,890.5 crore, same period last year.
However, the company, a unit of Japanese Suzuki Motor Corp, said, "The increase (in net profit) was due to focussed cost reduction efforts undertaken by the company, favourable foreign exchange rates and the benefit from the merger of Suzuki Powertrain India Ltd with the company last fiscal".
During the June quarter, the company's sold 2.66 lakh units of vehicles, down 10% compared with 2.95 lakh units during the corresponding quarter a year ago. Exports also fell to 21,088 units from 32,632 units in first quarter of FY2013.
The fall in unit sales was in line with the overall industry, and the company was able to maintain its market share, Maruti Suzuki said.
Maruti Suzuki shares closed Thursday marginally down at Rs1,414 on the BSE, while the 30-share benchmark index ended 1.4% down at 19804.7.
Holcim, through its complex rejig deal, has restricted minority shareholders' choice by using Ambuja Cement’s cash for transferring stake in ACC
The multi-layered deal announced by Swiss cement maker Holcim to rejig its Indian operations by way of merger and acquisition between ACC, Ambuja Cement and Holcim India is detrimental to minority shareholder of Ambuja Cement, feels analysts.
Several experts are also slamming the complex deal. In an interview to CNBC-TV18, Anil Singhvi, former managing director and chief executive of Ambuja Cement and chairman of Ican Investment Advisors, has criticised the rejig of Indian operation by Holcim. "The Rs3,500-crore reserve of cash sitting out on the balance sheet of Ambuja has been taken out by paying a premium. This is not a merger, there is no synergy and there is no advantage. In fact, Ambuja will dilute its shareholding by almost 30% and it cannot be earnings per share (EPS) accretive. According to me, this is nothing short of a fraud played out on the minority shareholders in India," he said.
In a research report, Emkay Global Financial Services said, "Prima facie the restructuring is detrimental to minority shareholder of Ambuja Cement as Ambuja Cement will be parting away with its huge cash balance of Rs3,500 crore, which is more than 90% of its CY12 cash on books, without any EPS accretion."
While downgrading Ambuja Cement to 'sell' with a reduced target price of Rs175 (from Rs195) Religare Capital Markets Ltd, in a research note, said, "We believe the acquisition would put Ambuja Cement's minority shareholders at risk as they would now be stakeholders in a less-efficient company, ACC."
As per the rejig plan, Holcim India would be merged with Ambuja Cement. Holcim India then transfers its 50.01% stake in ACC to Ambuja Cement. This would make Ambuja Cement the holding company of ACC. Post the complex merger plan, Holcim (the parent) would hold 61.39% stake in Ambuja Cement while Ambuja Cement would hold 50.01% stake in ACC.
In the first step, Ambuja Cement would acquire 24% stake in Holcim India for Rs3,500 crore cash. Ambuja Cement then would issue its 584 million shares to its parent for the balance 76% stake in Holcim India. Eventually, Holcim India’s 9.8% stake in Ambuja Cement will be cancelled.
According to Motilal Oswal Securities Ltd, the deal is marginally earning per share (EPS) and return on capital employed (RoCE) accretive for Ambuja Cement. "The merger will be EPS/RoCE accretive for shareholders of Ambuja Cement as the company would deploy the idle cash of Rs3,500 crore (earning 6-8% yield), on acquiring ACC’s assets at attractive valuations of about $110 per ton, which is at a steep discount to current market transaction value (recent M&A) and Greenfield capex cost," the brokerage said in a report.
Shares of ACC Ltd and Ambuja Cement fell sharply on Thursday following major restructuring announcement by Holcim, the parent company of both these cement producers. Ambuja was the worst hit as its shares fell over 10.5% to an intra-day low of Rs163.2 narrowly missing its 52-week low of Rs162.5 on the BSE. Ambuja Cement ended the day 10.5% down at Rs171 on the BSE. ACC, on the other hand, hit an intra-day low of Rs1,155. Despite making a recovery later, ACC closed the day 3% down at Rs1,194 on the BSE, while the benchmark Sensex ended 1.42% down At 19,804.7.