TCS allays layoff fears: No pink slips for employees

Year 2014 has been a mixed year for India's largest software company with first half growth rates of 17 percent and cross currency headwinds ahead, TCS is now winding up the year having to battle rumors of layoffs within its massive work force of 300,000 plus.


There are no mass layoffs being planned at  Tata Consultancy Services (TCS) - that's the firm and clear word coming from India's largest IT company as it denies reports of pink slips being handed out to a section of employees. Year 2014 has been a mixed year for India's largest software company with first half growth rates of 17 percent and cross currency headwinds ahead, TCS is now winding up the year having to battle rumors of layoffs within its massive work force of 300,000 plus. The company firmly denies reports which had claimed that a substantial number of employees will face the axe as part of a restructuring exercise. TCS has confirmed to CNBC-TV18 that it is on track to hire 55,000 employees in the coming financial year. According to a statement by the company, as a performance driven company, workforce optimisation is a continuous process which happens throughout the year taking into account employee performance, business needs, and people aspirations. This leads to some amount of involuntary attrition in the company. This is nothing out of the ordinary or a special situation for us to comment about.     Sources say that like every year, 1-1.5 percent of the total work force, which works out to about 3,000 employees, have been asked to go as a part of involuntary attrition. TCS watchers point out that there is nothing unusual about these numbers as most of these terminations are linked to performance. Meanwhile, as it calms rumours around pink slips being handed out, TCS CEO N Chandrasekaran, has written a letter to employees highlighting the companies achievements in 2014, assuring them of continue growth. In the letter, Chandrasekharan says: “This has been another exceptional year for us in many ways. We continued to post industry leading growth rates and deepen our footprint in our key markets. Our businesses continued scaling in size and market prominence. Several of our business units which have crossed the USD 1 billion mark in annual revenues are now sizeable with revenues in multi-billions of dollars.” With big US banks looking at doing away with the practice of earmarking large annual IT budgets, 2015 may be a year that sees the Indian IT sector shift gears in the way it operates. While that may throw up its challenges, Chandrasekharan believes newer technologies, innovation and a more agile organisation structure will see the industry and his company through this transformation.

Cos raise Rs 39,127 cr in 2014; down 14% from 2013: PRIME

Saving grace came in the form of the 33 QIPs this calendar year, which saw Rs 31,684 crore being raised from institutional investors, the highest in 5 years, accounting for 81 percent of the total amount mobilized this year, says Pranav Haldea, managing director, PRIME Database.


Companies raised Rs 39,127 crore through the equity market in 2014, down 14 percent from Rs 45,440 crore raised in the preceding year, according to Pranav Haldea, managing director, PRIME Database. The latest figure is well below the highest amount ever raised at Rs 99,022 crore in 2010. The biggest disappointment and the reason behind the poor show were the continuous deferment of several PSU offerings, says PRIME Database. The saving grace was the 33 QIPs this calendar year, which saw Rs 31,684 crore being raised from institutional investors, the highest in 5 years, accounting for 81 percent of the total amount mobilized this year, says Haldea. Also Read: Fund mop-up by private cos from debt placement rises 36%     The largest QIP of 2014 was the  State Bank of India QIP in January 2014 raising Rs 8,032 crore. The other form of fund raising, Offers For Sale (OFS) - one of the major routes used in the last two years - saw a huge drop to just Rs 5,000 crore from Rs 23, 964 crore raised last year. It is used primarily for helping promoters of already-listed companies in complying with the minimum public shareholding (MPS) requirement.  Even discounting the deferred PSU offerings or divestments by the government, IPOs or the lack of it were a huge disappointment. Only six main IPOs came into the market - Sharda Cropchem , Monte Carlo Fashions , Snowman Logistics , Wonderla Holidays ,  Shemaroo Entertainment and NCML Industries, collectively raising just Rs 1,261 crore, lowest in 13 years. Of the six IPOs, three received good response from the public - Sharda Cropchem at 51 times, Snowman Logistics at 46 times and Wonderla Holidays at 32 times. According to Haldea: "The pipeline is looking much stronger with seven companies wanting to raise Rs 2,965 crore already holding Sebi approval and another 12 companies wanting to raise Rs 5,362 crore awaiting the approval of the market regulator." The year, however, witnessed a flurry of activity on the SME platform with as many as 40 SME IPOs which collected a total of Rs 267 crore, against 35 IPOs raising Rs 335 crore in the previous year. 2014 continues to highlight the dismal state of fund raising through IPO route by unlisted companies in the last four years. According to PRIME, 2014 saw just one FPO of  Engineers India at Rs 497 crore and one IPP of  Muthoot Finance at Rs 418 crore.  On an overall basis, PSUs raised just Rs 2,277 crore or 6 percent of the total equity mobilisation (Engineers India FPO and OFS of SAIL ,  Nalco and NTPC ). This was much lower than Rs 25,354 crore which had been raised in 2013.  

L&T Hydrocarbon bags Rs 894 cr offshore contract from ONGC

The company's fully-owned subsidiary L&T Hydrocarbon Engineering (LTHE) has bagged the contract on complete turnkey basis from ONGC to improve recovery factor of Vasai East field where production started in 2008, and it is scheduled to be completed by April 2016

Larsen & Toubro  (L&T) today said it has bagged an offshore contract worth Rs 894 crore from  Oil & Natural Gas Corporation (ONGC) for additional development of the Vasai East project. The company's fully-owned subsidiary L&T Hydrocarbon Engineering (LTHE) has bagged the contract on complete turnkey basis from ONGC to improve recovery factor of Vasai East field where production started in 2008, and it is scheduled to be completed by April 2016, a release issued here said. "The contract includes total engineering, procurement, construction and installation of two wellhead platforms, subsea pipelines and modification of existing facilities in Heera-Panna-Bassein block of Mumbai offshore," it said. The Rs 2,500 crore project will result in incremental oil production of 1.83 million metric tonne (MMT) and incremental gas production of 1.971 billion cubic metres (BCM) by 2030. "This contract reiterates the long-term association of ONGC with L&T in the development of offshore fields in India," the company said.


Larsen stock price On December 29, 2014,

 Larsen and Toubro closed at Rs 1492.30, up Rs 2.25, or 0.15 percent. The 52-week high of the share was Rs 1774.70 and the 52-week low was Rs 951.60. The company's trailing 12-month (TTM) EPS was at Rs 63.52 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 23.49. The latest book value of the company is Rs 362.41 per share. At current value, the price-to-book value of the company is 4.12.

Culture shift biggest challenge for Infosys in '15: Sikka

Infosys   is charting out its plans for 2015 and CEO, Vishal Sikka has given analysts a glimpse of what to expect. He says the biggest challenge facing the software major in 2015 will be bringing a cultural shift. Sikka believes Infy will be a service company that uses software in a big way. “We have not become a product company,” he adds. He also says that Infosys will need to change the mindset, focus on innovation. The company is also planning to focus on reusability of components and capabilities.     


Infosys stock price On December 29, 2014,

 Infosys closed at Rs 1959.80, up Rs 9.45, or 0.48 percent. The 52-week high of the share was Rs 4401.00 and the 52-week low was Rs 1447.00. The company's trailing 12-month (TTM) EPS was at Rs 101.90 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 19.23. The latest book value of the company is Rs 366.51 per share. At current value, the price-to-book value of the company is 5.35.

Dec 29, 2014, 03.07 PM IST | Source: Moneycontrol.com Sesa Sterlite up 5% on Kotak upgrade; metal stocks in focus

Shares of  Sesa Sterlite  surged 5 percent intraday on Monday after Kotak upgraded it to buy from a reduce rating. The brokerage has set a target price of Rs 250 on the stock, stating that Sesa Sterlite is likely to gain most from the coal mining auctions. According to Kotak, key triggers that can drive the stock include strong zinc pricing outlook from mine closures and also expects some asset sweating now from aluminum investments that are idle for long. Meanwhile, other metal stocks like  Hindalco  and  Tata Steel  are also up 2-3 percent with the index gaining 2.4 percent. The new found love for metal stocks is because the cabinet is likely to take up Land and Mining ordinances this week which may give Centre few discretionary powers over states. According to CNBC-TV18 exclusive, the mining ordinance may give the Central government discretionary powers over states incase they take too long to renew or give licences for mining and introduce strong penalties in case of any wrongdoings. The mining ordinance is to do with amendments to MMRDA Act.

See rate cut post Budget; lower lending rate in '15: HDF

According to Keki Mistry of HDFC, though inflation is low, RBI will wait for the Budget – see the fiscal deficit number and the Budget fineprint – before lowering rates. Lower rates, in turn, may lead to a pick up in housing loan demand in metros, he adds.

With 70 percent of its lending coming from the individual segment, Keki Mistry, vice-chairman and CEO,  HDFC says there was no decline in lending over the past three years despite economic slowdown. However, non-individual segment lending saw slowdown over the same period. But on the brighter side, there has been a mild pick-up in incremental lending in the last few months on the non-individual side, he adds. According to him, though inflation is low, the Reserve Bank of India will wait for the Budget – see the fiscal deficit number and the Budget fineprint – before lowering rates. Lower rates, in turn, may lead to a pick up in housing loan demand in metros, says Mistry, while adding that growth has mainly been coming from tier II and tier III cities. He also sees the cost of money coming down in the coming quarters. 2015, according to him, will also see lower borrowing and hence lower lending rates. On the recent insurance ordinance, he believes FIIs do not need to wait for the actual Bill to be passed for putting in money as the ruling party may just call for a joint session of the Parliament in case of hurdles and pass the Bill.

However, he does not see too many insurance companies needing capital. "HDFC's insurance arm doesn’t need capital now unless it goes in for acquisitions," says Mistry.

It is the turn of the New Year, what is the sense you are getting? Is demand for loans already picking up?

A: Fortunately for us, as far as our individual lending is concerned, even in the last three years when the economy was slowing down so much, we did not see any decline in lending and the opportunities to lend were huge. So last year for example, in the year-ended March, we grew 26 percent in individual loans, year before last we had grown 31 percent, and year before that 27 percent. So the growth numbers had never changed. 70 percent of our lending is to individuals, 30 percent is to non-individuals. The non-individual segment did see a slowdown in the last three years. We had in the first -- I am not going to get into Q3 numbers but if you look at the first six months of the year, we had seen a little bit of a pick up. Is that indicative of a massive change? Very difficult to say, but yes, we did see a bit of a pick up because if you look at incremental lending as against a situation where a year ago non-individual lending was less than 10 percent of incremental lending in the first six months, it was 19 percent though on a book basis, it is about 29 percent.

:When are you expecting the first rate cut from the Reserve Bank of India (RBI) and what would that do to demand for home loans?

A: My sense is and this is what I said earlier also that not withstanding the fact that inflation is now still extremely low, I personally believe that RBI will wait for the Budget, see what kind of fiscal deficit is left, see what kind of Budget is presented and then look at rate cuts in March. That is my personal view though I would of course be happier if the rate cuts happen earlier but I think RBI will wait.Having tackled inflation so very well over the last couple of years, they are not going to let it slip by just pre-empting it and doing the rate cuts one-two months earlier. What will it do to demand? My sense is that growth that we have been seeing has largely been coming from tier II and tier III, tier IV towns and cities. If you look at the hearts of big cities, expensive properties, those have not grown or those have seen the slowdown in the last two-three years for obvious reasons, one is property prices are high, interest rates are high and so on and so forth. So my sense is when interest rates start coming down, there will be possibly a little bit of a pick up in demand for housing loans in metros, in the hearts of big metros.

What about the cost of money? It must have already fallen for you, how do you see it in the next quarter?

A: Yes, market rates have fallen but I am saying as I said, RBI cutting rates is something I would say would happen only in March. So I would say if you look at 2015 and if I was to look at it today, 2015 will clearly see lower borrowing rates and therefore lower lending rates compared to what we saw in 2014. But if you are a home loan customer and for example, you have taken a floating rate loan then you will get the benefit of falling rates in 2015 when rates come down.



I wanted your view on the latest news that the government is using this ordinance route to push the insurance reform, the opinion that we got is that foreign investors may not be very confident putting money if it is an ordinance versus if it was a bill. What is your own assessment of what the interest would look like?

A: Very honestly this ordinance was passed just late last week. So we have not spoken to our partners as yet. This is Christmas and New Year time. So we will talk to them in the New Year and we will get a sense of what they are feeling and how they want to go about it. My personal view and this is without speaking to them and this is again based on what I have heard from experts is that any decision that is taken now or any investment that comes in now will be valid even theoretically and this is purely theoretical that the Bill fails and is not passed in Parliament in the next six months, this is my understanding. Also the government having pushed through the Bill through a legislation, through an ordinance, I am sure if for whatever reason it is not passed in the Upper House, they would probably call a joint session of parliament and get the bill through. So it would obviously give more comfort to foreign investors if the bill was actually passed but the ordinance to my mind will be good enough to get people thinking and some of them can even start putting in money.

The Azim Premji trust bought that one percent stake in HDFC Standard Life last week. Do you see any more such deals happening?

Unlikely in my view. Now that the foreign ownership limits in insurance have been opened, we will now sit with Standard Life and take a call on whether to do an IPO, when to do an IPO, how much Standard Life will increase their stake, when they will increase their stake and so on and so forth. So until we have a discussion with them, it will be a bit premature to talk about what we will do but the sense is that clearly both Standard Life and HDFC want the company to do an IPO. Timing of that IPO however is a different issue altogether but I don’t think there will be more stake sales.


More interesting conversation lies with HDFC Bank. They have taken an enabling provision for Rs 10,000 crore of capital, which would be about 5 percent of their equity, will HDFC choose not to apply if and when it is a rights issue and if and when they have a chance?

A: I think if we were to have a chance, we would like to apply for sure.

But you will block FIIs.


A: That is what I am saying. We recognise also the fact that we are considered as foreign which is very honestly very unfortunate because we are totally Indian, we have only Indian employees, we have only Indian directors, we are only listed in India, we have not issued shares directly to foreigners, we have issued all our shares in the local market in India but for whatever reason because foreigners have bought shares in the local market, we are considered foreign. So it is something we need to discuss with the bank. At this point of time if it is a 5 percent dilution, 5 percent brings us down from 23 percent to 22 percent. 22 percent still doesn’t change things significantly for us but we would definitely not let our stake fall below 20 percent because 20 percent gives us the ability to equity account the profit. If we go below 20 percent, my understanding is that under international accounting standards, we would not or we may not be able to do equity account profits. So it is a call we will have to take, we will discuss with the bank but we continue to lobby with the government to say that we are not foreign and we are domestic which is what we are.

Any progress on the proposed merger between HDFC and HDFC Bank? The last time when we checked with you, you said that there were some constraints, have those issues been ironed out and any timeline that we can expect?

A: I don’t think we can give a timeline on something like this. We have always said, all of us have said that a merger makes a lot of sense in the long-term. However, having said that there are certain regulatory costs associated with the merger, some of those regulatory costs have come down by virtue of these circulars which RBI issued in July where they permitted affordable housing loans as part of infrastructure lending and therefore they said that if we borrow seven year money and use that for giving certain categories of loans, Rs 40-50 lakh worth of loans then those loans will not qualify as cash reserve ratio/statutory liquidity ratio (CRR/SLR) in priority sector lending requirement but that by itself is enough to force the merger is something we need to evaluate and sort of keep discussing but at this point of time, if the bank is looking at doing capital issue, I would say we would go ahead with the capital issue then we would address this issue.

Sun's margins may reduce to 30-32% post merger: Surajit Pal

As 2014 comes to an end, Surajit Pal of Prabhudas Lilladher shares his outlook on the year that was and the possible trends for 2015.

The Indian pharmaceutical industry witnessed a mixed year in 2014. Even as the USFDA kept the entire sector on its toes, the Sun Pharma  - Ranbaxy deal changed the dynamics of the market forever. As 2014 comes to an end, Surajit Pal of Prabhudas Lilladher shares his outlook on the year that was and the possible trends for 2015. Although Sun-Ranbaxy pact will see rationalisation of workforce, Sun Pharma's margins could reduce to 30-32 percent post its merger, he says in an interview with CNBC-TV18’s Sonia Shenoy and Ekta Batra. According to him, in the second half of 2015, number of patents may reduce for Lupin  .     Meanwhile, the plunge in Russian rouble may impact companies such as DRL  and Glenmark   from the pharmaceutical space.


The CCI has given its go ahead to the the Sun-Ranbaxy integration, contingent on the divestment of those certain products plus the US FTC approval is expected to be around the corner as well. In your sense given all things are positive for Sun-Ranbaxy in terms of the approvals what will the integration process look like for the two companies?


A: I think internally if you look at that, first of all what they have to do is that rationalisation of workforce; that is one. Given the kind of manufacturing activity in the company I think they need to rationalise that. Second is that there might be some overlaps in domestic market sales force because in lifestyle therapy, Sun Pharma is better placed than Ranbaxy whereas Sun Pharma will have a better foothold in acute therapy through Ranbaxy. So, that will be the benefit or synergy for them. As far as export market is concerned, I think they will get direct access to Ranbaxy’s quite strong sales force as well as product profile in US. So, what they have to do is that or which is the ongoing process in Ranbaxy about the rationalisation of their presence in rest-of-the-world (RoW) market which could be beneficial for Sun Pharma. That is where they also need to see the commercial ability vis-à-vis the investment already Ranbaxy has made. There is a lot of scope in terms of rationalising their product force as well as sales force in those risk areas like Latin or Russia.

The biggest performer in this year has been Lupin from the pharma space, up almost about 60 percent. There are many reports doing the rounds about various acquisitions that Lupin is looking at to bolster its presence in the global market. Would you still buy the stock at these elevated levels or would you recommend buying the stock now?

A: If you keep that question of acquisition out, I think definitely company has prospect in FY16. However, the question is that whether they will have a similar 60 percent run up or not. I believe that FY16 second half will be bit tough for almost all the companies given the kind of product which is about to be off patent and the size of the product. So, I think for last three or four months when number of approvals has been slower, that might help first half of FY16 and Q4 of FY15. However, second half onwards we could start feeling the pinch. Number of patent will come down slowly so big product opportunity will be limited. So, we could see some bit of rationalising the growth both in topline as well as margin.

One of the key issues about the integration is that Sun’s elevated margins that they enjoy right now could come down simply because Ranbaxy has single digit margins. On a consolidated basis where do you expect Sun Pharma’s margins to come in and by when, will it be in the second half of the fiscal that we will see Sun Pharma reduce its margins?

A: If I assume that their integration will start from Q1 beginning of FY16 then definitely it will directly impact Sun Pharma’s quite an attractive margin which is already 40 percent plus.

Q: What will it come down to according to you by and to how much?

A: Initially it could be around say 32-35 percent level because I think Diovan will give them quite a good opportunity initially and after that when Diovan opportunity will be gone then the reality of 10-12 percent would be coming into picture. However, it all again depends on how far Sun Pharma could rationalise their cost in terms of Ranbaxy’s plant level or operation level as well as introducing some of the products.

What is the trigger for Cipla, that stock has not performed much compared to the rest of the pack but in 2015 what could the trigger be and what is the target price that you have ascribed?
A: I think what management indicated in Q1, FY15 is that they are waiting for quite a good number of approvals particularly one product approval in Europe which could be one of the trigger in near to medium-term. I think going forward slowly and gradually when they are getting more and more approval in Seretide generics or other inhaler generics into those markets, I think that will be the trigger point. When we will see exactly in terms of number reflecting both in topline growth and the margin growth because what I understood is that the Seretide is not directly substituted. So, what it means is that they have to go for promoting their drug both in formularies as well as medical practitioners as well as the end users; that will take some time.

Sun Pharma stock price On December 29, 2014

 Sun Pharmaceutical Industries closed at Rs 820.25, up Rs 9.05, or 1.12 percent. The 52-week high of the share was Rs 932.00 and the 52-week low was Rs 552.50. The latest book value of the company is Rs 35.77 per share. At current value, the price-to-book value of the company was 22.93.

Dec 29, 2014, 11.18 AM IST | Source: PTI Airtel drops plans to charge extra for VoIP calls

The operator had earlier decided to charge VoIP calls on pay as you go basis, at standard data rates of 4 paise per 10 KB on 3G network and 10 paise per 10 KB on 2G network. Besides, it had also announced special VoIP packs.



Buckling under pressure, leading telecom player  Bharti Airtel has dropped its plans to charge extra for internet voice calls or VoIP service available through apps like Skype and Viber. "In view of the news reports that a consultation paper will be issued shortly by TRAI on issues relating to services offered by OTT (over the top content) players including VoIP, we have decided not to implement our proposed launch of VoIP packs," Bharti Airtel said in a statement today. The operator had earlier decided to charge VoIP calls on pay as you go basis, at standard data rates of 4 paise per 10 KB on 3G network and 10 paise per 10 KB on 2G network. Besides, it had also announced special VoIP packs. "We have no doubt that as a result of the consultation process a balanced outcome would emerge that would not only protect the interests of all stakeholders and viability of this important sector but would also encourage much needed investments in spectrum and roll out of data networks to fulfil the objective of digital India," Airtel said. The government had earlier said it would look into the company's plans to charge for such services, which have been free, while Airtel has been facing a huge public outcry on social media networks for past few days.

Top buzzing midcap stocks to trade on December 26

Top buzzing midcap stocks to trade on December 26 


Here are few top buzzing midcap stocks picked by CNBC-TV18's analysts in trade today. We have Kalpataru Power, MTNL, Zensar Technologies, State Bank of India (SBI), Punjab National Bank (PNB), SpiceJet, Future Retail DVR, Future Consumer, JK Paper and Alphageo India.

RCF to commission Talcher unit by 2016, stk up 4%

Coal India board has given an `in-principle' approval to two joint ventures with GAIL   and  Rashtriya Chemicals & Fertilisers (RCF) to set up an integrated coal gasification and fertiliser and ammonium nitrate complex respectively at Talcher in Odisha for an investment of Rs 9000 crore. The project is aimed at producing fertiliser from coal, thereby cutting down dependency on imports for the fuel The first JV would take up upstream coal gasification and gas purification for an estimated investment of Rs 3000 crore, while the RCF led second JV, requiring an investment of Rs 6000 crore, will be responsible for setting up ammonia-urea, nitric acid-ammonium nitrate plants.  RCF’s share in investment stands at Rs 1000 crore, says company CMD RG Rajan adding that the Talcher unit will be commissioned in 2016. Shares of RCF jumped 4 percent intraday on Friday. Rajan also informed that the company is yet to receive Rs 2000 crore subsidy for this year from the government. However, it received Rs 3000 crore subsidy for fiscal 2014 and 15 so far. In October 2014, the government had okayed Fertiliser Ministry's proposal to provide Rs 14,500-crore subsidy to the cash starved fertiliser industry via a special banking arrangement (SBA) route.



Rashtriya Chem stock price On December 26, 2014, at 14:45 hrs Rashtriya Chemicals and Fertilisers was quoting at Rs 68.80, up Rs 1.00, or 1.47 percent. The 52-week high of the share was Rs 73.00 and the 52-week low was Rs 30.15. The company's trailing 12-month (TTM) EPS was at Rs 6.65 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 10.35. The latest book value of the company is Rs 45.47 per share. At current value, the price-to-book value of the company is 1.51.

Rivals may ape Bharti Airtel higher net call charges:

Romal Shetty does not expect Bharti's move to raise VoIP prices to ensue a pricing war between operators because over the last few years they had decided not to play the price game and have in fact tried to improve pricing.

With an unexpected move by  Bharti Airtel to take the data usage for the Voice Over Internet Protocol (VoIP) calls outside the data allowance under the bulk data packs, Romal Shetty, national leader telecom, KPMG thinks other operators could follow suit because most of them are loosing money on services like Whatsapp, Viber etc., which have minimal charges. According to Bharti’s website – “All Internet/data packs or plans (through which customer can avail discounted rate) shall only be valid for internet browsing and will exclude VoIP (both incoming/ outgoing). VoIP over data connectivity would be charged at standard data rates of 4p / 10 KB (3G service) and 10p / 10 KB (2G service).” Shetty does not expect this move to ensue a pricing war between operators because over the last few years they had decided not to play the price game and have in fact tried to improve pricing. The expected big competition from new entrants like Reliance Jio would surely come in but may not be related to pricing, feels Shetty. Shetty says the intent of the move seems to be to mitigate the risk of serious voice revenue cannibalisation.

What do you think the repercussions would be for Bharti’s moves and do you think other service providers like Idea, Vodafone etc could follow suit? 

A: Firstly, this concept today of Whats App or Viber can basically provide a service without any charges, it is not free because there is still a data charge but it is at a very low. So to give you an example, I might give a call to US for about maybe Rs 8-10 whereas in this probably it will be twenty five paisa or even less than that. So the telecom companies are losing money on every call made and there is a cannibalization of their international or their other services revenue and Whats App and Viber are not paying any money to Airtel or Idea or anybody. So the whole idea of this is to ensure that they are losing a lot of revenues to now have some kind of charges, which compensate for the loss of revenue. So that is the first thing. Telecom companies are going to lose money and they are going to lose more money as these services become more and more popular. So I think beyond a point of time, other carriers will follow suit because you suddenly cannot have international revenues coming down by 50-60 percent. It is just that the magnitude of the rise in prices would be different for each operator.

What are the chances that one of the competitors doesn’t pull because you just want to conserve your customers, once you get angry with your service provider and walk out, winning back that customer maybe tough. So one of them could play a spoilsport? 

A: It is possible but over the last three years, at least the large operator have consciously said that we will not play too many price games and have decided to consciously improve prices. If you see the increase in prices, it has happened slowly over the last two-three years. more to come 

Bharti Airtel stock price On December 26, 2014, at 14:25 hrs Bharti Airtel was quoting at Rs 354.50, up Rs 0.30, or 0.08 percent. The 52-week high of the share was Rs 419.90 and the 52-week low was Rs 282.10. The company's trailing 12-month (TTM) EPS was at Rs 27.40 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 12.94. The latest book value of the company is Rs 166.93 per share. At current value, the price-to-book value of the company is 2.12.

CIL gets board nod for two JVs to revive Talcher urea plant

Taking forward Rs 8,000 crore revival process for FCIL's Talcher urea plant in Odisha, Coal India will form two joint ventures - one with PSU major GAIL  and the other with Rashtriya Chemicals and Fertilisers  (RCF). The board of directors of Coal India Ltd  (CIL) has given its in-principle approval for these JVs, the company said in a regulatory filing today. A consortium of RCF, GAIL, CIL and Fertiliser Corporation of India Ltd (FCIL) have agreed to invest Rs 8,000 crore for the revival of this urea plant with a production capacity of 1.2 million tonnes per annum. An MoU has been earlier signed to form two separate joint ventures to revive this plant and also build a power plant and coal washery facility at the site. The first JV would be for upstream coal gasification with GAIL having a majority stake. The second JV would be for urea-cum-ammonia nitrate complex with RCF and CIL being major stakeholders. "The company will form two joint ventures... JV 1 for Coal Gasification with GAIL as a major partner (and) JV 2 - for fertiliser (Ammonium Nitrate) plants, coal mine, coal washery, power plant & utilities with RCF and CIL as major stakeholder," CIL said in its filing. The revival of this plant is being seen as crucial as urea production in the country has not been sufficient to meet the demand.

CIL gets board nod for two JVs to revive Talcher urea plant

The board of directors of Coal India Ltd (CIL) has given its in-principle approval for these JVs, the company said in a regulatory filing today.



Taking forward Rs 8,000 crore revival process for FCIL's Talcher urea plant in Odisha, Coal India will form two joint ventures - one with PSU major GAIL  and the other with Rashtriya Chemicals and Fertilisers  (RCF). The board of directors of Coal India Ltd  (CIL) has given its in-principle approval for these JVs, the company said in a regulatory filing today. A consortium of RCF, GAIL, CIL and Fertiliser Corporation of India Ltd (FCIL) have agreed to invest Rs 8,000 crore for the revival of this urea plant with a production capacity of 1.2 million tonnes per annum. An MoU has been earlier signed to form two separate joint ventures to revive this plant and also build a power plant and coal washery facility at the site. The first JV would be for upstream coal gasification with GAIL having a majority stake. The second JV would be for urea-cum-ammonia nitrate complex with RCF and CIL being major stakeholders. "The company will form two joint ventures... JV 1 for Coal Gasification with GAIL as a major partner (and) JV 2 - for fertiliser (Ammonium Nitrate) plants, coal mine, coal washery, power plant & utilities with RCF and CIL as major stakeholder," CIL said in its filing. The revival of this plant is being seen as crucial as urea production in the country has not been sufficient to meet the demand.

GAIL stock price

 On December 22, 2014, GAIL India closed at Rs 447.65, up Rs 1.15, or 0.26 percent. The 52-week high of the share was Rs 551.35 and the 52-week low was Rs 332.30. The company's trailing 12-month (TTM) EPS was at Rs 36.07 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 12.41. The latest book value of the company is Rs 213.42 per share. At current value, the price-to-book value of the company is 2.10.

Cipla gains 2%, arm bags order from South Africa Govt

"Cipla Medpro, the third largest pharmaceutical company in South Africa, received R2 billion share of the South African Government’s 2015-17 National ARV tender," said the company in its filing to exchange.




Shares of  Cipla  gained nearly 2 percent on Tuesday after its subsidiary received three-year contract from South Africa Government. "Cipla Medpro, the third largest pharmaceutical company in South Africa, received R2 billion share of the South African Government’s 2015-17 National ARV tender," said the company in its filing to exchange. The contract is effective from April 1, 2015 and will run for a period of three years. "Cipla is proud to have been recognised once again as a preferred partner of the State in the national fight against HIV and Aids," said Paul Miller, CEO of Cipla Medpro. Cipla also went further and made this triple combination available in the world’s first 3-in-1 combination ARV, he adds. This Government tender win was the third in the last year for the pharmaceutical company. Earlier Cipla Medpro won a R280 million state therapeutic drug tender in August 2014 and a R345 million national respiratory tender in June 2014. The medication will be produced at the plant Cipla Medpro Manufacturing (CMM) based in Kwazulu-Natal, the company said. The scrip of Cipla closed at Rs 629.65, up Rs 11.25, or 1.82 percent on the Bombay Stock Exchange.

Aim to sell 2.2 lk bikes/ month, increase mkt share: Bajaj

Rajiv Bajaj, managing director of Bajaj Auto believes that the company should not have communicated Discover as a 100cc brand. It was always positioned as a 125cc motorcycle.



Bajaj Auto has recently won a fresh order of 1.25 lakh 125cc Discover bikes from the government of Sri Lanka. The company plans to execute the order from Sri Lanka itself in 3-4 months. But the bigger news here is it won a repeat order via the Sri Lankan distributor, says Rajiv Bajaj, managing director of Bajaj Auto. The domestic motorcycle market size currently is at nine lakh. Bajaj is targeting 2.2 lakh motorcycle sales every month. He plans to increase market share to 24 percent next year against 18 percent now, while adding that the company’s market share will rise to 24 percent in six months from now. The company is looking at 70,000 Discover motorcycle sales and 80,000 Platina unit sales per month. It is also developing two new brands which do not currently exist and introduce two products under existing brands – Platina and Pulsar. On Discover 125cc, Bajaj says the issue was with how the company communicated or promoted the brand. It was always positioned as a 125cc motorcycle. He adds that the company should not have positioned Discover as a 100cc brand, while adding that the 150cc Discover is doing very well. On the company’s financials, he says Bajaj Auto managed to stay in the 20 percent EBITDA zone for five years and despite its issues with the Discover brand, the company has a robust strategy. Going ahead, he does not see higher advertising and marketing spends impacting margins.


One thing which a lot of analysts said they were pleased about was that Bajaj Auto has admitted that some of the brands in different positioning are confusing the market, is that something that we are likely to see a change in the stands of Bajaj Auto from now to say next six months or so?


A: I don’t know what exactly they meant because in matters like this - what one says and what one hears can sometimes be a little different but I don’t think we made any such admission from what I understand from what you are saying right now. In fact in terms of our motorcycle business and I assume you are referring to the domestic motorcycle business essentially shared our plans with them towards the purpose of first taking our market share up to about 24 percent sometime over the next year and then we would like to go on further from there. So, that was the objective we shared with them. In terms of the means towards that end simplistically I can put it into two parts and this is what we said to them, one, the new products that we would introduce under two of our existing brands, one the Platina and the other is the Pulsar and we actually showed them the new Platina that we have not showed outside so far. We also showed them four Pulsar’s two of which have not been shown to the public so far. So we showed them total of five new models under these two brands, so, in fact rightly or wrongly we showed them more and more products so I don’t know how they can say that we were actually thinking of pulling back on that. The other thing we shared with them was the fact that we are in the process of developing two new brands which don’t exist in the domestic market today and these would be introduced over the next 12 months. So, we tried to convey as best as we could the basis for all of this.

I was reading a report from Kotak which said that the company believes that the key reason for failure of Discover 100cc and 125cc was confused positioning. My follow-up question on that is that Sonia tells me that Discover 150cc is doing quite well why would you then launch a 100cc variant again, Discover 100cc; wouldn’t that be confusing, isn’t that something that is hurting Bajaj Auto?

A: Let us talk specifically about that because I think this needs to be clarified. Time and again before people can understand what we are saying; whether they agree with us or no is a different matter. What we have said that day in terms of Discover is that Discover was always positioned as a 125cc motorcycle that offered more than just A to B commuting. It was not just a mileage bike it was a mileage bike that was also fun to ride and this served us very well from the first time it was introduced in 2004. It is also a reality that the Discover 100cc has been in the marketplace since 2005 and if you were to only look at the numbers since 2005 you would see that it has done exceptionally well as well. What we said on that day with respect to Discover as a brand and this I have said on your channel before is that where we have held is in not producing a 100cc or not; that is not the issue, the issue has been how we have communicated the brand. In recent years we had spent too much of advertising money trying to promote Discover as a 100cc brand. In hindsight as a result of that it  has taken some of the sheen off that brand because its USP, its differentiation in the marketplace was that it is not a 100cc brand, it offers something more than a 100cc. So in effect what I am trying to say is the issue is not how many stock keeping unit (SKUs) are there in the leadership. I have said this before in fact to Sonia in more than one conversation that look at the Splendor, look at the Pulsar, look at the Activa – there are so many SKUs under each of these brands. Try buying a TV or a mobile phone, the showrooms are flooded with SKUs. The issue is not sales, the issue is marketing. Discover as a brand was marketed as being something superior to the 100cc. I think where we have gone wrong with the Discover is to put the 100cc upfront and we have corrected that now by going to market with a 150cc Discover which you are very right in suggesting has taken off well, is doing well. It is only a matter of time before we restore Discover to its intended original position of being a commuter bike that is much more than just mileage. So, that process is underway and we are seeing the early benefits.

If you are targeting a 6 percent increase in your market share in the coming year, give us a sense in terms of how this would translate in terms of average volumes or a run rate among all of your brands in the coming, what are you targeting internally?

A: The domestic motorcycle market size is a little more than 900,000 motorcycles and we have between 18 percent and 19 percent share. If we wish to get to 24 percent market share we need to clock about 2,20,000 motorcycles every month. So, this is how we are looking at it. We expect that with the launch of the new Platina which is now just about four to six weeks away, we can see ourselves growing Platina volumes to a level of about 80,000 motorcycles a month - let us say two months after launch. So, if we were to be speaking in April and if our confidence is misplaced we should be up to that kind of a volume in the Platina segment. So, that is about 80,000 bikes a month. On the Discover segment we are seeing ourselves at about 70,000 motorcycles a month thanks to the new 150cc. So, that is about 150,000 bikes and finally on the Pulsar segment where we do currently in the domestic market about 65,000 motorcycles a month, we expect to grow that also to about 75,000 motorcycles a month on the back of the new Pulsar that we showed. These will also be introduced progressively over the next quarter. That is why we would like to believe that six months from now we should be around that 24 percent target.

Let us get back to the M1 segment again; two points one is that 50 percent of the market was already self start so do you think you were a bit late in that and b) why are you moving away from your own stated strategy of moving up the value chain or moving customers up the value chain by introducing two bikes in this particular segment? 

A: The strategy is unchanged because today if you were to simply divide the market into 100cc and greater than 100cc, you have a 60-40 split. 60 percent of the people are still buying the 100cc motorcycle but 40 percent are willing to move up. For the 40 percent that are willing to move up we already have a Pulsar and a Discover and as I just mentioned and as we mentioned that day to the people who were here that we are in the process of developing another brand for that end of the market. In other words for 40 percent of the market Bajaj will now have not just two brands but three very soon. In the balance 60 percent of the market which is the 100cc market we have as of now just one brand which is Platina. We have always focused on the higher end of the market, always given it priority because that is what is good for topline and bottomline. Having said that if 60 percent of the people are still buying a 100cc motorcycle and in three years time let us say this will be 50 percent I don’t think Bajaj will get to the 30 percent plus market share it wants to in the domestic marketplace on the back of just one brand which is the Platina. Ultimately every brand stands for a given attribute, a given USP in the marketplace. In our view the USP for the Platina is its mileage. However, there might be customers who are looking for another USP and I am not going to say what that is right now; that would be saying too much but on that basis, on the basis of that USP if you were to introduce a second brand into the marketplace I think that is going to help us have a better impact and a better presence in the market which today is 60 percent of the industry size.

Based on the repositioning that you are undertaking at this point in time and maybe the higher advertising that we could see or more aggressive advertising we could see if that is the case will that impact your margins in any way and how would you even sustain your margins if in case you have to invest more in repositioning?


A: First let me make the point that it is about five years now that we had our own share of ups and downs. There are things that have worked for us and every now and then we have initiative like the Xceed or more recently trouble with brand like Discover that doesn't work for us. Despite all of that for the last five years now and I think that is a considerable period of time we have managed to stay in the 20 percent EBITDA zone more or less; we have not stayed very far from there. So, I feel it is about time you give it to us that our business strategy is so robust and this is what I tell to my own colleagues at Bajaj Auto that it is true that while everything else is working for us, both domestic and export market, it is true that we have a bit of a problem with the Discover. However, we are still a company which is growing, and that is recording a 20 percent EBITDA. So, it just shows how robust the strategy is. Just because one pillar is a little shaky, the whole building doesn't shake. On that basis I would say that when we go forward and we put in new brands we are going to do it with the same approach, with the same strategy that we have created Pulsar, Discover and Platina so far which is quite simply in marketing lingo creating not just new products but creating products that creates categories in the marketplace. When you do that two things happen, one, you have pricing power and that is why a Pulsar, Discover or a Platina is sold at par with its relevant competition in the marketplace in terms of price. Two you don't have to spend a lot of money in advertising or promotions and stuff like that. So, I don't see any issue for the bottomline going forward, any inimical effect to the bottomline at all. The marketing spends will go up but then so also will the topline. So, in percentage terms I don’t see any change being anticipated.

Just a word on one more brand extension, the Pulsar 400cc. Do you think by extending the Pulsar brand you can compete with Royal Enfield in the premium category? We have seen a big rerating in Eicher Motors stock because of what has happened with Royal Enfield, do you think that is a market in which you have a footing or you can get a footing? 

A: Yes and no to be very honest because I don’t think that people buy cc's. So, just because the Pulsar is a 400cc somebody who buys a 350cc or a 500cc Royal Enfield will necessarily come over; I think that is too simplistic. However, on the other hand if there are 25,000 or 30,000 people buying Royal Enfield out there I am equally unconvinced that all of them buy it because it's a retro or a slapstick looking motorcycle that as my good friend Siddhartha says offers easy riding. I don’t think that is the case either. I just see a bunch of people there for example living out of Pune, I see a lot of college students who are very proud to ride a Royal Enfield. Now, some of them undoubtedly would want to stay with that but some of them maybe doing that because they had no other choice; what is the choice in the marketplace a) Yamaha R15 or a Honda CBR 150. That just doesn't cut it, that is too pedestrian for them. So, if people were to come across a choice of the motorcycle we showed at the auto expo which were the Super Sports 400 (SS400) and the Cruiser Sports 400 (CS400) some of them would say instead of this for a similar price I am willing to move to that. Now, whether that will be 5 percent of Royal Enfield or 50 percent of Royal Enfield only time will tell

Tell us about this order from Sri Lanka for your export market. You said in your management meet as well that exports are on a strong footing. It is going to be may be stronger in the next 3-5 years. Tell us about the Sri Lankan order in specific and what can we expect in FY15 in terms of percentage growth from the export market for Bajaj?
A: The Sri Lankan order is less important of the two issues here in the sense that we have already received and executed a order of about 50000 motorcycles. They were all Discover 125. So, at least the Sri Lankan's love the Discover so far. Second part is more gratifying which is that we have a repeat order of about 100000 or 125000 I am not exactly sure which we will be executing in the next few months. So, that is very nice. We appreciate that business. Having said that it is a one time thing. So, we will execute that by April but what is more important is the kind of growth we are seeing in all our major export markets. I will share with you the summary that we put forth that day with our guests which is that we have entered 29 new markets over the last 12 months or so for our motorcycles and our three wheelers - 15 for the motorcycles and 14 for three wheelers. We have started shipments to all these markets. So, we are very hopeful whether it is the markets of Argentina and Mexico in motorcycles or other markets for three wheelers like the Philippines, we are very hopeful that these are going to be the new growth avenues for exports going into the future and that is why we said to them that in a 4-5 year timeframe we expect to double our exports from the very high base at which it is already. 

What is the latest update from Nigeria, were you able to pass on the impact because of the currency devaluation? This is important because this may impact some more countries as well given the way the dollar has been behaving off late? 


A: As I had spoken aloud if I may say so that day some of this was to be passed on in terms of a retail price, that has been already done. Some of it was to be absorbed by the distributors, that has been done. Some of it was to be absorbed by Bajaj in terms of a reduction in FOB but we were fortunate we did not have to do anything. So, I can confirm to you that the FOB price of a motorcycle and three wheeler remains unchanged.



That hasn't impacted your market share at all?

I can't say anything so far because the price has been increased just about 10 days back, for me to give you an accurate answer I must wait at least a month to see if there has been an impact. However so far there is no visible impac

Bajaj Auto stock price

 On December 22, 2014, Bajaj Auto closed at Rs 2522.35, up Rs 49.15, or 1.99 percent. The 52-week high of the share was Rs 2690.00 and the 52-week low was Rs 1796.00. The company's trailing 12-month (TTM) EPS was at Rs 103.65 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 24.34. The latest book value of the company is Rs 332.04 per share. At current value, the price-to-book value of the company is 7.60.

Sensex

27506.46

-195.33

(-0.71%)

Company Name	Industry	Last Price	Change	%Chg	Mkt Cap         ( Rs cr)

Axis Bank

Banks - Private Sector

493.95

-3.35

-0.67

116,703.9

Bajaj Auto

Auto - 2 & Wheelers

2,522.35

49.15

1.99

72,988.49

Bharti Airtel

Tele- Communication

355.15

5.90

1.69

141,967.66

BHEL

Infrastructure - General

261.80

-3.95

-1.49

64,078.17

Cipla

Pharmaceuticals

629.65

11.25

1.82

50,555.94

Coal India

Mining/Minerals

383.60

-6.55

-1.68

242,295.74

Dr Reddys Labs	Pharmaceuticals	3,205.25	-41.15	-1.27	54,606.51
GAIL	Oil Drilling And Exploration	447.65	1.15	0.26	56,783.39

HDFC	Finance - Housing	1,124.35	-21.95	-1.91	176,721.19
HDFC Bank	Banks - Private Sector	959.50	-3.75	-0.39	231,830.24
Hero Motocorp	Auto - 2 & 3 Wheelers	3,140.10	24.50	0.79	62,703.87
Hindalco	Aluminium	153.20	-2.60	-1.67	31,637.29
HUL	Personal Care	765.95	-1.05	-0.14	165,692.71
ICICI Bank	Banks - Private Sector	353.05	-5.80	-1.62	204,496.01
Infosys	Computers - Software	1,971.10	25.90	-1.30	226,375.38
ITC	Cigarettes	374.85	0.35	0.09	299,666.80

Larsen	Infrastructure - General	1,497.60	-26.25	-1.72	139,104.46
M&M	Auto - Cars & Jeeps	1,268.45	6.55	0.52	78,782.46
Maruti Suzuki	Auto - Cars & Jeeps	3,398.60	4.75	0.14	102,664.93
NTPC	Power - Generation/Distribution	142.80	4.00	2.88	117,745.23
ONGC	Oil Drilling And Exploration	352.10	-4.80	-1.34	301,238.81
Reliance	Refineries	893.90	-10.60	-1.17	289,182.90
SBI	Banks - Public Sector	307.05	-0.60	-0.20	229,235.27
Sesa Sterlite	Mining/Minerals	204.15	-6.65	-3.15	60,524.13
Sun Pharma	Pharmaceuticals	813.05	-1.65	-0.20	168,395.98

Tata Motors	Auto - LCVs/HCVs	487.90	-6.40	-1.29	157,038.68
Tata Power	Power - Generation/Distribution	81.45	-2.60	-3.09	22,029.17
Tata Steel	Steel - Large	395.15	-8.70	-2.15	38,377.58
TCS	Computers - Software	2,517.05	4.05	0.16	493,021.63
Wipro	Computers - Software	552.60	-2.70	-0.49	136,420.13