Sadbhav Engineering unit to raise Rs400 crore from Norwest Venture and Xander

Sadbhav Engineering Ltd's subsidiary Sadbhav Infrastructure Project (SIPL) has signed a binding agreement to receive Rs400 crore from Norwest Venture Partners (NVP) and The Xander Group (Xander)-the global investors.

SIPL will use the capital to continue to fund its existing road development projects in India and bid for new road development projects under various national and state highway development programmes, as well as other infrastructure development projects.

On Thursday, Sadbhav Engineering shares gained 3.7% to Rs1,582 on the Bombay Stock Exchange, while the benchmark Sensex closed 1.1% up to 18,454 points.


ONGC may have to pay $13 billion for Rajasthan block

New Delhi: State-owned Oil and Natural Gas Corporation (ONGC) may have to pay over $13 billion if it were to exercise its pre-emption or right of first refusal (RoFR) to buy Cairn India in the giant Rajasthan block, reports PTI.

Cairn India holds 70% operator interest in the 6.5 billion barrels Rajasthan block that is at the centre of its parent, Cairn Energy Plc's $8.48 billion deal to sell its majority stake in the company to Vedanta Resources.

At Rs355 a share (the price at which Vedanta is acquiring Cairn Energy shares), Cairn India is valued at over Rs67,355 crore or $14.6 billion. Almost 90% of this value is because of the Rajasthan block that can produce 240,000 barrels of oil per day (12 million tonnes per annum).

"Cairn India's stake in Rajasthan block will be valued at $13 billion," a source involved in the process said.

ONGC believes that by virtue of holding 30% in the Rajasthan block, it has the pre-emption or ROFR to buy Cairn India in case the company's ownership changed.

If it has objections to the Cairn Energy-Vedanta deal, it will have to seek to buyout Cairn India in the Rajasthan block by making a higher offer that would work out to $13 billion, he said.

But ONGC will have to make up its mind fast as it has time only till 7th September to decide. Vedanta's open offer to minority shareholders of Cairn India for acquisition of 20% shares puts 7th September as the cut off date for any rival offer, the source said.

Also, as per UK takeover rules, Cairn Energy Plc has to seek shareholders' nod and other regulatory approvals for the sale before Vedanta's open offer opens on 11th October.

"That means, it will have to publish a prospectus for the sale by mid-September and call Extraordinary General Meeting (EGM) of shareholders by end September or early October," he said.

A rival offer or a competitive bid like the one from ONGC would have to be made before the EGM so that it can then approach the Securities and Exchange Board of India (SEBI) to stop Vedanta's open offer, the source said.

"To buy Cairn India's stake in Rajasthan block, it has to seek Board approval, appoint merchant bankers, seek Cabinet nod and make rival offer all in a month's time," he said.

The source said the best deal for ONGC would be to seek operatorship or management control of the Rajasthan block in lieu of giving a go-ahead to the Cairn-Vedanta deal.

The Production Sharing Contract (PSC), which Cairn has signed with the government, for the Rajasthan block, provides for explicit government approval only in case of a party selling its interest in the block, but does not make the nod mandatory in case of change of ownership at corporate level.

The Joint Operating Agreement, between Cairn India and ONGC, gives partners pre-emption rights in case of sale of interest by either parties but not in case of corporate ownership change.


ADB may raise India's growth and inflation forecast

New Delhi: Multilateral lending agency Asian Development Bank (ADB) today said it is likely to revise upwards by the September-end India's growth and inflation forecast, which is 8.2% and 5% respectively for the current fiscal, reports PTI.

"After seeing the high inflation in the first half of the fiscal, we plan to revise upwards the inflation forecast above 5% in our next Economic Outlook slated for September 28," ADB chief economist Jong-Wha Lee said here.

Mr Lee said inflation in India is coming primarily from the supply side and the double-digit food inflation is impacting the lower middle class the maximum as their share of income on food and beverages is high.

The economist was speaking to reporters after the launch of ADB's flagship annual statistical publication, Key Indicators: For Asia and the Pacific 2010, with a special chapter on 'The Rise of Asia's Middle Class'.

Without hinting at the direction India's growth outlook will be revised, Mr Lee said India was doing well in reducing poverty and nurturing middle class for sustainable growth, and must focus on providing quality education and infrastructure.

On the Reserve Bank of India's (RBI) stance on checking inflation, he said that "tight monetary policy is the right step" but warned of excessive hike in rates "as raising rates would also attract more capital inflows" and related problems.

Besides, he said growth should also be a concern for RBI while trying to contain inflation. He contested the view that high inflation is unavoidable during high growth, which was recently ascribed to by finance minister Pranab Mukherjee.

According to Mr Lee, if Indian economy grows continuously improvement in agricultural productivity and building the country's infrastructure could result in lowering inflation and with a sustainable economic growth.

Further, he said India's fiscal and budget deficits are high and should press for fiscal consolidation.

"Withdrawal of fiscal stimulus is the right direction ahead ... it's only a matter of timing and speed," Mr Lee said.


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