Companies & Sectors
Reliance MediaWorks to delist from BSE, NSE

The ADA group company hits its 52-week high on the BSE at Rs57.50 on Thursday. Two of its promoter group entities are buying additional 26.7% stake and offered to delist the RMW

Reliance Land Pvt Ltd and Reliance Capital, the two promoter group entities of Reliance MediaWorks Ltd (RMW) have offered to buy additional 26.7% stake and then delist the entertainment company from BSE and National Stock Exchange (NSE). On Thursday, the Anil Dhirubhai Ambani (ADA) group company recorded its 52-week high at Rs57.50 on the BSE.
 

In a regulatory filing, both Reliance Land and Reliance Capital, which together hold 73.3% stake in RMW said, it would buy additional 26.7% shares in the company.
 

“The company will seek to voluntarily delist the equity shares from BSE and NSE in accordance with the delisting regulations consequent to the delisting offer. As the combined shareholding of the promoter group of the company, including that of the acquirers, reaching a minimum of 90% of the equity capital and fulfilment of other conditions stipulated under the delisting regulations,” the regulatory filing said.
 

Dispatch of bid forms to public shareholders will start on 8th March, and bids will be open from 20th to 26th March and the promoter group entities would make further public announcement of discovered price or exit price on 9 April 2014.
 

The board of directors or RMW on 20 January 2014, approved the proposal to initiate the delisting offer. The same day, RMW shares surged 20% at Rs55.65 to hit its upper circuit limit on the BSE. A special resolution has been passed by the shareholders of the company through postal ballot. On 28 February 2014, Reliance Media declared results of the resolution passed by shareholders through postal ballot and said in its regulatory filing that, voluntary delisting of the company approved by 99.11% votes cast by non-promoter group shareholders.
 

RMW shares closed Friday marginally up at Rs56.55 on the BSE while the 30-share Sensex ended 1.9% higher at 21,919.

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Services industry emerges as a strong performer in GDP growth in Q3 FY14

Divergence between the PMI indices for manufacturing and services, and the actual data (growth rates) and IIP figures will continue since the nature of these indicators is different

The Purchasing Managers’ Index (PMI) for manufacturing in the month of February is at a year high of 52.5 compared with 51 in April ‘13. On the other hand, the GDP estimates released last week suggested that the manufacturing industry slowed down by -1.9% in Q3 FY14 compared with the growth of 2.5% in the corresponding quarter of last fiscal.
Likewise, the PMI services index for the month of February stands at a low of 48.8 maintaining its deterioration for the eighth consecutive month. However, the services industry emerged as one of the strong performers in the recent estimate of GDP growth in Q3 FY14, points out a research note.

 

Are we today facing severe stagnation or are we facing a contradiction due to the indicators selected for analysis? This is the dilemma for analysts of the Indian economy. According to CARE Ratings, divergence between the PMI indices for manufacturing and services and the actual data (growth rates) released under the GDP estimates and IIP figures will continue since the nature of these indicators is different. The PMI captures in a way the level of confidence or perception based on a comparison over the immediate previous period, while growth rates are over the same period of the previous year thus adjusting to an extent the seasonal component. Each of these concepts has their own uses but the PMI may not be taken to be reflective of the growth in the concerned sector.

 

Growth in the services sector is high, as revealed in the quarterly estimates of GDP. Please see table below:
 

 

According to the research note, the PMI services index has remained below 50 from July 2013 onwards. The index has fallen from 50.7 in April ’13 to 48.8 in February 2014. The index below 50 indicates that the services sector has witnessed negative growth based on the responses by the private companies. Please see chart below:
 

 

In contrast, there is stagnation in the manufacturing sector, as can be seen from the charts below:


 

 

The sluggish growth in FY14 is a result of weak consumer demand, and low investments partly due to the high interest rates maintained by RBI (Reserve Bank of India) in its bid to fight inflation. Further, manufacturing sector having recorded negative growth for the last three consecutive months vis-à-vis the same time window in FY13 is indicative of the stagnation the manufacturing industry is currently encountering.

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