'2009 was a good year, next will be brighter'

'2009 was a good year, next will be brighter'

Q&A: Vedika Bhandarkar, MD & Head of Investment Banking, J P Morgan
Abhineet Kumar & Sidhartha / Mumbai December 23, 2009, 0:36 IST

Investment banking shifted focus in 2009, as capital raising dominated over mergers and acquisitions (M&As) advisory. US-based J P Morgan led this shift globally. Vedika Bhandarkar, managing director & head of investment banking, tells how even in a supposedly bad year, banks raised about Rs 1,00,000 crore. In an interview, she tells Abhineet Kumar and Sidhartha that this signals hope for the advisory business to pick up in 2010, after a year when J P Morgan was missing from the top of the league table. Excerpts:

So, is it the end of a bad year?

No. A good year is now coming to an end. In 2008, things really slowed down. Till January-February (2009), the equity and debt capital markets were pretty much shut and only M&As announced earlier were concluded. So, 2008 was pretty weak. On the contrary, 2009 has been good. When we went into the calendar year, it did not look like it would be a good year. The first four months were quiet, but we have seen a spate of capital issuances since May. It started with deleveraging, but now we are seeing a little bit of growth capital. Things are not back to normal on the M&A front, but there are enough signs that the activity will pick up in 2010.

Despite a lot of growth in capital markets, bank lendings are growing slowly?

Bank borrowings always lag the recovery in capital markets. Companies in most sectors are optimistic about 2010. A lot of profit growth has come from cost reduction. Companies want sustainable growth for a couple of quarters before they start dusting out old expansion plans. We expect bank borrowings will pick up in the second half of 2010.

In the first quarter of 2008, there were certain public issues that drained out liquidity and forced others to shelve their plans. The next quarter will be a busy one with a large number of issues lined up. Do you again anticipate liquidity issues?

In 2008, the market was not affected because of a few issues. The global crisis had started and money stopped flowing in. Domestic liquidity also started getting tight. The amount of capital raised this year is just under $20 billion (around Rs 93,000 crore). In our best year, which was 2007, the capital raised was $35 billion. So, there is still a fair way to go. Global liquidity is quite high and the flow into equity and emerging market funds will continue. On the domestic side, insurance had a tough 2008, but the situation is better now. There are a lot of prospectuses that have been filed with the Securities and Exchange Board of India (Sebi), there are companies which have raised capital and will come back next year. Besides, there are very few mid-caps that have raised capital this year. There will be a lot of supply, but we are not sure if there will be enough demand for all the issues.

Will the government’s disinvestment programme crowd out private sector issues?

From the numbers announced so far, it does not look so. But if the government wants to bring 10 or 15 more issues, then may be.

How will rising valuations affect M&As, especially inbound deals?

Ideally, M&As should peak when valuations are low. But in practice, it is the other way round. That’s because companies, the buyers and the sellers, are not confident during tough times. Now companies in the US are shifting focus from survival to growth. People have started talking about M&As, which was not the case six months ago. But with strong equity markets, valuations have started emerging as a concern.

Where do you expect to see more activity?

In traditional sectors such as healthcare, information technology services, telecom and general manufacturing.

Are telecom companies getting desperate to expand overseas at a time when consolidation talks are gaining strength here?

There is no desperation. In India, Bharti got some good operating lessons in one of the lowest tariff environments. It has been looking out at markets with similar characteristics. Consolidation in the Indian telecom sector is a given, but we do not know if it will happen in the next 12, 24 or 36 months. Consolidation is bound to happen with tariffs falling and so many players.

The banking sector is also crowded and there is talk of consolidation…

It is completely linked to the government, which accounts for 70 per cent of the banking sector business. We are much more bullish on telecom consolidation happening sooner.

In terms of financing, will there be more of structured finance in coming days?

The market has come out of a major crisis. Right now vanilla financing seems good. Experimenting is on the margin. In private transactions, structuring is back, but not on the public side.On M&As, it was a bad year for the industry as a whole.

How would you rate it for J P Morgan?

The focus for the company this year was on equity fund raising, and we are ranked number one there (in the global league table). In terms of M&As, there have been very few large completed transactions in India. We closed the DoCoMo transaction earlier this year.

Equity market harvest seen at new high

Equity market harvest seen at new high
Abhineet Kumar / Mumbai December 18, 2009, 0:26 IST

Companies plan to benefit from the high inflow of foreign funds.

The equity capital market is set to see its highest quarterly fund raising ever in January-March next year as public and private sector companies plan to tap investors to benefit from the high inflow of foreign funds.
The figure next quarter, according to Citi Global Markets, may be as high as Rs 70,000 crore, though the projections of fellow investment bank Kotak Mahindra Capital Company and research house Prime Database are more tempered at Rs 33,000 crore and Rs 30,000 crore, respectively.
The previous highest equity and equity-linked fund raising – initial public offers (IPOs), follow-on public offers (FPOs) and qualified institutional placements (QIPs) — in a quarter was Rs 26,123 crore in April-June 2007, according to Prime Database.

POSITIVE OUTLOOK

HIGHEST QUARTERLY FUND RAISING SO FAR
April-June 2007 Rs 26,123 crore
This year so far Rs 53,080 crore

ESTIMATES FOR JANUARY-MARCH 2010
Prime Data Base
Rs 30,000 crore
Kotak Mahindra Capital Company
Rs 33,000 crore
Citi Global Markets
Rs 70,000 crore

“The state of the secondary markets, the government’s resolve to speed up divestment at the right price, and timely approval of offer documents may lead to a record quarter in the Indian capital markets,” said Prithvi Haldea, Prime’s chairman and managing director.
Foreign institutional funds, which posted a net outflow of $3 billion in the first three months of 2009, saw net inflow of $17 billion in the following months as stimulus packages by governments around the world increased liquidity.
“We are in sweet spot today as capital is available to Indian companies across products, markets and formats,” said Ravi Kapoor, managing director and head of South Asia, Capital Markets Origination, at Citi Global Markets, explaining how abundant liquidity was helping companies raise capital at attractive interest rates through equity, equity-linked products, and local and international bonds. “Globally, stimulus packages may get phased out over a period of time which could impact liquidity,” he said, underlining the need for companies to assess their capital needs and plan raising of funds.
Citi Global Markets was involved in 23.9 per cent – more than anyone else — of the Rs 53,080 crore raised by Indian companies this year through IPOs and QIPs, according to data compiled by Bloomberg. The investment bank says a large amount of capital is planned to be raised by real estate and power generating companies. And there is also the Rs 25,000 crore that the Indian government plans to raise by selling equity in public sector units.?
“Given that interest rates overseas are likely to remain low and the dollar under pressure, foreign flows are expected to continue in our markets in the coming quarter,” said Kapoor.?
According to Prime, 60 companies have already filed applications with capital markets regulator the Securities and Exchange Board of India (SEBI) to raise Rs 40,000 crore through IPOs and FPOs. Another 100 have announced plans to raise Rs1,00,000 crore through QIPs. This will be spread over many months, but the next quarter may account for a large chunk of it.
“We are already witnessing multiple issuances in a week,” said S Ramesh, chief operating officer, Kotak Mahindra Capital Company, which advised Godrej Properties, JSW Energy and DB Corp for their IPOs of Rs 498 core, Rs 2,700 crore and Rs 385 crore – all three of which closed this week. He attributed his comparatively conservative estimate of Rs 33,000 crore to be raised in the next quarter to the fact that pricing was the key to large issues.
The issuance window in the domestic capital markets has been active since May this year. In spite of this, the secondary market has performed well. “Still, it would not rock the boat but have only a small impact on the secondary market,” said Ramesh.
This year funds were raised mostly to reduce debt on balance sheets. The fund raising in the near future, on the other hand, will be intended to raise growth capital.
Ends

India Inc takes swap route to beat FCCB redemption blues

India Inc takes swap route to beat FCCB redemption blues
Abhineet Kumar / Mumbai November 21, 2009, 0:43 IST

Indian companies have discovered a new path to beat the redemption pressure on their Foreign Currency Convertible Bonds (FCCBs). They are swapping the old FCCBs, which had high conversion premium, with new bonds at a much lower rate.
FCCBs worth $12.7 billion, issued by 185 companies during the bull run of 2004-2007, are due for maturity in the next three years. The stock prices of 138 of these companies are currently below their fixed conversion price.
Early this week, India’s largest steelmaker Tata Steel concluded what merchant bankers call an exchange scheme for $875 million FCCBs due for maturity in 2012. The company got 56 per cent acceptance to its exchange offer, as $493 million of the old FCCBs were exchanged with new ones worth $546 million due to mature in 2014.

EXCHANGE OFFER

Company Announcement FCCB Exchange
Suzlon 21-Jul $93.8 million
Amtek Auto 11-Sep $65 million
Subex Azure* 3-Nov $98.7 million
Tata Steel 20-Nov $546 million
* Approved by the board

Suzlon and Amtek Auto also took this route in the recent past. Both exchanged their old FCCBs with new ones worth $160 million. Subex Azure has taken board approval for exchange of $98.7 million FCCBs. Experts said more companies will take this route.
FCCB is a hybrid instrument that enables a buyer to convert bonds into equity before maturity at a predetermined price. With share prices crashing much below the conversion price, companies came under redemption pressure. This prompted the Reserve Bank of India to open the window for buyback of FCCBs in December last year.
In all, 33 Indian companies bought back bonds worth $643 million using the special window. The companies raised fresh funds or dipped into reserves to use the opportunity of buyback as the converts were available at a discount. The window is going to be closed next month.
“During the height of the credit crisis, convertibles as an asset class were oversold by holders as many of them went into distress. So, FCCBs were selling at a discount,” said
S Ramesh, chief operating officer, Kotak Mahindra Capital Company, a leading domestic investment bank. “Since then, the global credit markets and the general investor situation have improved, leading to a recovery in the convertible bond prices and the consequent reduction of the discount levels,” he said.
Kotak has a collaboration with KBC Financial Products, a market leader in convertible bonds with a global presence. Tanushree Bagrodia, director, KBC Financial Products, said, “While earlier it was mainly companies under stress who were looking to exchange their FCCBs, today more companies are proactively looking to exchange their old convertible bonds with new ones and take advantage of better coupon and conversion rates besides extended tenor.” Investors too prefer this proactive approach as there is a good possibility of the bonds getting converted into equity.
Tata Steel, whose exchange offer for the FCCB got over on Friday, was able to issue new FCCBs at a premium of 15 per cent over the current market price. The new bonds have a coupon of 4.5 per cent. “The lower conversion premium makes the exchange bonds more equity-like, which is in line with the company’s overall deleveraging strategy,” said Koushik Chatterjee, group chief financial officer, Tata Steel.
But the other three companies had to make the exchange offers in distress as their conversion prices were lower than the prevailing stock price, market players said.

http://www.business-standard.com/india/news/india-inc-takes-swap-route-to-beat-fccb-redemption-blues/377139/

Investment bankers' bonuses to rise

Investment bankers' bonuses to rise
Abhineet Kumar / Mumbai November 18, 2009, 0:23 IST

Lower transaction fee will not deter companies from going the extra mile to retain talent.
Despite lower fee income from mergers and acquisitions (M&A) advisory business this year, investment bankers can hope for a rise in bonuses as banks try to retain talent.
While headhunters said the average compensation package, which includes a fixed component and a bonus, could swell to 35 per cent over last year’s level, the overall payout could be lower than in 2007, when fund-raising and M&A activity was at record levels.
“Bonuses as a whole are expected to be up 20-30 per cent, but certain top producers or ‘the hitters’ will receive the 2007-level pay in what remains an extremely competitive hiring market,” Options Group, a New York-based global executive search firm, said in a report last week. Bonus payments will be finalised next month.
This is striking as fewer deals have taken place in 2009. According to Bloomberg data, up to November 16, there were 275 M&A deals in India worth $50.9 billion. In the corresponding period last year, there were 557 deals worth $114.7 billion.
However, there were 65 capital market transactions worth Rs 57,300 crore till November 16 this year as against 50 deals worth Rs 22,700 crore in the corresponding period last year.
Along with public issues from private companies, a host of issues by public sector companies are expected to hit the market over the coming months.
Besides, there is expectation of hectic M&A activity in the coming months as companies have deleveraged their balance sheet and are now looking at acquisitions.
“Industry will continue to see top-level churn early next year as M&A advisory and primary market offerings are expected to pick up,” said Saket Jain, managing partner at Vito India, a specialised executive search firm for the investment banking and financial services industry.
“Senior investment banking community in India is a finite pool and banks will do everything to retain top talent, which is pushing compensation levels,” he said.
Last year, investment bankers received 30 per cent of their fixed pay as bonus. Headhunters estimate that this will touch 70 per cent this year. In 2007, some bankers had got nearly 300 per cent of the fixed component as bonuses.
A director-level employee with a global investment banker with over 10 years of experience earned Rs 1 crore fixed compensation and Rs 3 crore bonus in 2007. In 2008, he would have earned about Rs 1.3 crore. This year, he could hope to earn around Rs 1.7 crore, said industry players.
Sourabh Chattopadhyay, executive director at Options Group, said, “The payment of bonus could be top heavy with the bulk going to top producers.” Directors and managing directors are top revenue generators and some of them could touch the bonus level of 2007.
“Business heads would like to keep their teams intact as the industry builds up for good times,” he said.
But R Suresh, managing director, Stanton Chase International, a global executive search firm, cautions. “Despite excellent India performance, the global performance of a bank is going to weigh heavily on the total compensation,” he said.
“Banks are trying to protect their turf, doing everything such as offering mid-year bonuses from next year onwards to make it difficult for other firms to poach their employees,” said Manisha Deva, client partner, global finance practice for Korn Ferry International.

http://www.business-standard.com/india/news/investment-bankers/-bonuses-to-rise/376757/

Foreign bond market hums again as spreads decline

Foreign bond market hums again as spreads decline

Abhineet Kumar / Mumbai October 16, 2009, 0:10 IST
The 18-month drought is about to end, with several Indian companies and financial institutions planning to tap the foreign bond markets, now that spreads have declined 200 to 300 basis points.
Spreads are the rate that is paid over the benchmark Libor (London Inter Bank Offered Rate) as the cost of borrowing for overseas bonds.
According to Prime Database, a Delhi-based firm providing data for capital markets, six entities including Tata Group’s holding company, Tata Sons, and four banks plan to raise over $12 billion (around Rs 55,000 crore) through various instruments like issuance of bonds in the foreign markets.
The last such issue was by State Bank of India (SBI) in April 2008 to raise Rs 467 crore. It was the only issue in that year after the liquidity crunch pushed spreads to 600 to 700 basis points over Libor for five-year bonds. Before the credit crunch in 2007, the spread for five-year bonds were 60 to 70 basis points. Indian companies raised Rs 35,185 crore from the foreign market that year.
Investment bankers say SBI is now planning to raise $1 billion (about Rs 4,700 crore) by issuing bonds in the foreign market at the rate of 200 basis points over Libor. The road show for the issue will start this week.
Banks such as HDFC Bank, ICICI Bank, Bank of Baroda are also firming up their plans to tap the foreign bond market along with SBI. The other entity includes non-banking finance company, India Infrastructure Finance Company.
“Traditionally, dollar funds have been cheaper than rupee funds,” said Prakash Subramanian K V, managing director, capital markets, Standard Chartered Bank. “But the credit crisis resulted in rising spreads on Indian credits, making it difficult for them to raise dollar funds. Over the last quarter, the dollar markets have shown signs of interest in Indian credits and spreads have also come off substantially,” he added.
Ravi Kapoor, managing director, capital markets at Citi Global Markets India, said spreads had tightened substantially, making the foreign bonds market attractive again. “Companies and banks also need to diversify their funding base,” he said.
“Foreign bonds are also popular for raising resources for over 10-year period,” said Prithvi Haldea, chairman and managing director, Prime Database.

Investment banks in hiring mode

Investment banks in hiring mode
Abhineet Kumar / Mumbai October 10, 2009, 0:56 IST

Demand zooms for expertise in equity, infrastructure & telecom.

Till a few months ago, hiring was a strict no-no for investment banks. On the contrary, they were scaling back staffing plans in India given the dearth of merger and acquisition activity and stagnant capital markets.
That is changing rapidly with a rising number of deals fuelled by strong growth in the markets and an improving economic environment.
As a result, the talent hunt has been resumed, especially for people with expertise in equity markets, infrastructure and telecom. For instance, Citi Global Markets recently hired Bhavna Thakur as head of transactions, capital markets, from Morgan Stanley. Merrill Lynch has selectively started hiring for mid-level positions and Goldman Sachs is recruiting at associate and senior associate levels.
Japan's financial powerhouse, Nomura, which bought 35 per cent in LIC Mutual Fund in July, already employs over 2,600 people in India. It surprised many by issuing half-page advertisements expressing its intent to recruit in large numbers. Many banks have moved to reallocate senior staff from other regions to India.
Apart from the global banks, domestic firms such as Edelweiss filled four positions at vice-president and senior vice-president levels. Yes Bank filled one vice-president position this month.
“The hiring has started very selectively,” confirmed Aditya Sanghi, co-founder and managing director investment banking at Yes Bank.
“Further recruitment may take place with M&A activity gaining momentum,” he added.
“Investment banks have started building their teams in expectation of the deal market picking up," says Ranu Vohra, managing director, Avendus Advisor, a home-grown investment bank.
Avendus has been hiring throughout the year for its new functions such as equity research, but it recently recruited a senior person in the equity markets side and is filling up a leadership-level position for its M&A advisory this month.
Saket Jain, managing partner at Vito India, a specialised head hunting firm for the industry, says investment banks are currently looking for mid- to senior-level executives especially for infrastructure, telecom and financial institution groups.
Indian companies raised about Rs 13,000 crore through initial public offers in the June-September period this year, including those from Adani Power, Oil India and NHPC.
Merchant bankers are expecting over Rs 50,000 crore to be raised in the second half of the current financial year. This has created a lot of demand for the equity capital market function for which Citi hired the transaction head.
The tempo of hiring is expected to pick up from January. Global banks follow the calendar year and top-level hiring for various vertical heads are expected to take off in the January-March period.
http://www.business-standard.com/india/news/investment-banks-in-hiring-mode/372817/

It's the festive season for initial offers, too

It's the festive season for initial offers, too
Abhineet Kumar / Mumbai October 6, 2009, 0:16 IST

September saw 30 companies file prospectuses

The mad rush of 2006 may still be a distant memory, but India Inc is trying hard to make up for lost time as far as raising money from the capital market is concerned.
Last month saw 30 companies filing their draft red herring prospectuses (DRHPs) with the market regulator for initial public offers (IPOs), a sharp increase from six in August and three in July this year. The Securities and Exchange Board of India received eight filings in September last year, the month the Lehman Brothers meltdown brought the world economy to its knees.
Prime Database Managing Director Prithvi Haldea says this year, the September rush is even greater than earlier years because companies are returning to the primary market after a year’s gap.
Enam Securities alone has filed DRHPs on behalf of 10 companies in the last two weeks of September this year. Pankaj Jaju, senior vice-president at Enam Securities, said, “There was almost no activity till June. With the Sensex moving up sharply, there has been a clubbing of DRHPs by all those who have been waiting in the wings for a long time.”
Real estate and infrastructure companies lead the list with nine IPO applications.
These were from companies such as Emmar MGF Land (over Rs 3,500 crore), Sahara Prime City and Lodha Developers. Telecommunication infrastructure provider Reliance InfraTel has announced plans to raise Rs 5,000 crore from the primary markets.
“Overall IPO activity is good now. We can also expect a rush in December,” said Anil Ladha, head, capital markets, ICICI Securities.
Indian companies raised about Rs 13,000 crore through initial public offers in the June- to-September period of this year, including those from Adani Power, Oil India and NHPC. Merchant bankers are expecting over Rs 50,000 crore to be raised in the second half of the current financial year.
Power companies such as GMR Energy, Indiabulls Power and JSW Energy are expected to lead the charge along with public sector companies such as Bharat Heavy Electricals and NTPC.
A Prime Database study found that public sector companies benefit a great deal when they are listed on the stock markets. Four of them — Power Finance Corporation, Power Grid Corporation, Rural Electrification Corporation and NTPC — made valuation gains of up to four times after they were listed.
There are, however, some worry signals. For example, most of the IPOs so far received enthusiastic response, but the stocks’ performance has been lacklustre after listing.
Several of these are trading at a discount to the issue price, raising concerns over whether the issues were priced right.
The encouraging response to the Oil India listing has, however, removed some of those uncertainties.

http://www.business-standard.com/india/news/it/sfestive-season-for-initial-offers-too/372327/

UltraTech's plan for FPO

UltraTech plans public offer to fund expansion

Abhineet Kumar & Chandan Kishore Kant / Mumbai October 4, 2009, 0:51 IST

UltraTech is planning a follow-on public offer to fund the expansion of its cement business. The fund-raising exercise is likely once the restructuring of the business, announced today, is over.
The company has an investment plan of Rs 15,000 crore over the next five years to add about 25 million tonnes of capacity.
“The idea of the restructuring is to create a platform which will help in raising funds through a follow on public offer,” said D Muthukumaran, head (group corporate finance), AV Birla Group. “Grasim can bring down its holding to 51 per cent in the follow-on public offer. But it will take time.”
The cement business of the group is currently valued at a discount of 10 to 15 per cent to its peers such as ACC and Ambuja, which are owned by Holcim of Switzerland, because of the risks related to Grasim’s other businesses such as viscose staple fibre.
“Once the cement business comes under one entity, we will bridge the gap in valuation,” said Raj Balakrishnan, MD (M&A), DSP Merrill Lynch.

http://www.business-standard.com/india/news/ultratech-plans-public-offer-to-fund-expansion/372135/

FCCBs regain currency; 4 firms raise $702 mn in four days

FCCBs regain currency; 4 firms raise $702 mn in four days

Abhineet Kumar & Deepak Korgaonkar / Mumbai September 26, 2009, 0:38 IST

After a year’s lull, foreign currency convertible bonds (FCCBs) are regaining currency. In the past four days, four companies have announced plans to raise $702 million (around Rs 3,370 crore) through FCCBs.
If Amtek Auto’s $65 million FCCB issue on September 11 is taken into account, the amount for September would be much higher. Before Amtek Auto, the last FCCB issue took place in August 2008 when Temptation Foods raised $200 million. But the global credit crisis and the liquidity crunch spoilt the party.

FCCB is a hybrid instrument that enables a buyer to convert bonds into equity before maturity at a pre-determined price. With share prices crashing, Indian companies were forced to buy back the bonds even if some of them had to raise fresh funds or dip into reserves. In all, 17 Indian companies bought back bonds worth $472 million using the special window opened by the Reserve Bank of India in December last year.
According to CLSA estimates, around 185 companies had issued FCCBs worth $20 billion (over Rs 95,000 crore) between 2004-05 and 2007-08. Of this, around $15 billion (around 72,000 crore) was outstanding, while the balance has been converted into equity. Most of the FCCBs are due for maturity over the next three years.
There were fears that the fall in equity markets would make the FCCB-issuing companies repay the debt. But with abundant liquidity in the global financial system and share prices rising in the domestic market, Indian issuers are back in the market.
“Investors expect the Indian stock markets to move up from current levels. So, they are looking at the incentive to convert the bonds into equity as prices rise,” said an executive at Welspun Gujarat. The company placed its $130 million issue with European and Asian investors.
Over the last three months, Indian companies have raised around $5 billion (Rs 24,000 crore) through external commercial borrowings, but most of these have been credit lines from parents, export credit agencies or Indian bank branches overseas. By offering conversion into equity as a sweetener, Indian companies are now trying to get overseas investors to shed their reluctance following last year's credit crisis.
Although investment bankers expect FCCB activity to pick up in the coming months, they warned companies to be careful. “Issuers of such bonds have to learn to manage liabilities; they need to provide for such bonds for risk management purpose and consider the outstanding bonds for calculating debt-equity ratio,” said Ravi Kapoor, managing director, capital markets for Citigroup Global Markets India.
The FCCB markets have, however, changed in terms of buyers and the coupon and premium available. Hedge funds, which were the largest subscribers earlier, have limited their participation. The largest participants are outright convert buyers who predominantly trade in FCCBs.
“Credit spreads have fallen dramatically in the last three to four months which is helping companies place FCCBs at much lower coupons,” said Vedika Bhandarkar, managing director, at J P Morgan India, the investment bank that was the sole book runner for the transaction of Welspun Gujarat.
Some FCCBs by overseas companies were placed at a coupon of 7 to 8 per cent early this year. Now the companies are able to place FCCBs at a coupon of 4 to 4.5 per cent. “The premium has also been rationalised and the days of 50 per cent premium are over,” she added. The bank was able to place the issue of Welspun Gujarat at premium of 20 per cent.

CURRENT ACCOUNT Name Date* Amt ($ mn)
Amtek Auto 11-Sep 65
Guj NRE Coke 22-Sep 60
Sujana Towers 22-Sep 12
Sesa Goa 24-Sep 500
Welspun Gujarat 25-Sep 130
*Date of announcements

http://www.business-standard.com/india/news/fccbs-regain-currency-4-firms-raise-702-mn-in-four-days/371331/

M&M may buy Kirloskar's stake in Swaraj Engines

M&M may buy Kirloskar's stake in Swaraj Engines
Abhineet Kumar / Mumbai September 25, 2009, 0:51 IST

The company plans to expand its diesel engine business.

Mahindra & Mahindra (M&M), India’s largest tractor maker, is planning to consolidate its stake in Swaraj Engines, as part of a plan to expand the disel engine business. M&M acquired a 33.2 per cent stake in Swaraj Engines and a 14 per cent stake in Swaraj Mazda through its acquisition of Punjab Tractors in 2007.
Swaraj Engines, 23 years old, provides diesel engines for Swaraj Tractors. The company was formed in technical collaboration with Kirloskar Oil Engines (KOE), which currently holds a 17.39 per cent stake in the company. M&M is in talks with KOE to buy out this stake.
“M&M has a bigger plan for the engine business and this acquisition would help the group leverage Swaraj Engines for that,” said an investment banker familiar with the development. “M&M has already had talks with Kirloskar Oil and the deal is most likely to happen soon.”
“As a policy we do not comment on market speculation,” said a M&M spokesperson. A mail sent to KOE did not get any response.
On Thursday’s stock price of Rs 310 a share, Swaraj Engines’ market capitalisation is Rs 385 crore and KOE’s stake in the company is valued at Rs 67 crore at this price. But an acquisition of the 17.39 per cent stake by M&M would trigger an open offer. Sebi’s guidelines makes it mandatory to give an open offer to buy an additional 20 per cent stake in case of acquisition of any 15 per cent stake in a company. At the current market price, a 37.39 per cent stake is valued at Rs 144 crore.
“The sale of stake by KOE would help it focus on its own business,” said another banker familiar with the talks.
M&M early this year sold its 14 per cent stake in light commercial vehicle maker Swaraj Mazda to Japanese co-promoter Sumitomo for Rs 40 crore. With this acquisition, Sumitomo’s stake increased to 53.5 per cent from 39.5 per cent earlier. The company sold the stake as it has a plan to develop commercial vehicles in a joint venture with US truck major International Truck & Engine Corporation.


http://www.business-standard.com/india/news/mm-may-buy-kirloskar/s-stake-in-swaraj-engines/371223/

India Inc settles for smaller M&A deals

India Inc settles for smaller M&A deals

Abhineet Kumar / Mumbai September 17, 2009, 0:14 IST

ICICI Bank’s Global Head (Investment Banking) Kalpesh Kikani says the time for multi-billion dollar deals is over. “India Inc’s appetite for large deals has gone down. In any case, financing such deals would be tough,” he says.
Kikani should know; his bank achieved the highest $434 million value of deals in the mid-size segment in the first half of 2009.
M&As are back on the radar for Indian companies, but with two vital changes. First, the average size of the deals are much smaller compared to the earlier years; and second, overseas acquisitions have taken a backseat.
In July and August this year, for example, Indian companies were involved in 34 domestic deals worth $543 million, with an average size of just $16 million. Outbound deals have shrunk to $90 million against $4.9 billion in the corresponding period of the previous year, according to data provided by Grant Thornton.
Consider the Tata Group, which set a scorching pace on acquisitions in 2007 and 2008 — the $12.2 billion Corus deal happened in 2007 and the $2.3 billion Jaguar Land Rover deal in 2008. In 2009, the group’s only acquisition is that of Sea Rock hotel in Mumbai by its group company, Indian Hotels, for Rs 680 crore ($142 million).
Experts see many reasons that deal sizes and overseas acquisitions have fallen drastically. The big boost to overseas acquisitions by Indian companies was access to easy credit from banks before the credit crisis.
“We are coming from an era of excesses when leveraging norms went for a six,” says Saurabh Agrawal, managing director and head of investment bank at DSP Merrill Lynch. Companies leveraged their balance sheet seven to eight times of the operating profit as there was excess liquidity available in the system at that point of time, explained Agrawal.
Now with banks getting cautious, leveraging levels have come down. This has led companies to using their internal accruals. So large-tickets deals such as the proposed $ 23 billion Bharti Airtel and MTN deal can only be an exception now.
“Risk management has become more important now,” says B R Jaju, who as chief financial officer was involved in many acquisitions by Crompton Greaves in the last couple of years. One of those included French company Sonomatra in 2008. He moved out of the company this month to join Welspun Gujarat as director and chief financial officer. “We can’t expect the earlier aggression for large-size deals at least for the next one year,” he says.
Experts say most of the acquisitions by Indian companies in the past were heavily leveraged and now a majority of these predators are struggling to service the loans for acquisitions. The big Indian companies now realise that it is not easy to integrate large facilities bought from outside owing to serious cultural and regulatory issues in moving production to India.
Instead, domestic companies are looking at lower-risk risk small acquisitions like the recent deals of Lupin and brand buy-outs to boost business.
Sujay Shetty, associate director of PricewaterhouseCoopers, says “Now, large loans for acquisitions have dried up for Indian companies. Thankfully, wisdom prevails in most boardrooms than simply jumping into acquisitions without proper homework.”


http://www.business-standard.com/india/news/india-inc-settles-for-smaller-ma-deals/370347/

'Appetite is coming back for M&A deals'

'Appetite is coming back for M&A deals'

Q&A: Saurabh Agrawal, Head of Investment Banking, DSP Merrill Lynch
Abhineet Kumar & Sidhartha / Mumbai September 16, 2009, 0:19 IST

With the economic situation improving, merger and acquisitions (M&As) are back on the radar as companies look to gain size. Though companies are still cautious, given the experience over the last few months, DSP Merrill Lynch Managing Director and Head of Investment Banking Saurabh Agrawal tells Abhineet Kumar and Sidhartha the appetite for M&As will improve in the coming days. Excerpts:

Many Indian companies, which had acquired firms overseas in the last three-four years, are going through a rough phase. What does this mean for overseas acquisitions?
The acquisitions made during 2005 to 2008 would have made Indian companies wiser in their segments and helped them to understand the dynamics and nuances of M&As. Most of these companies are going through a restructuring phase. They have been focusing on reducing leverage either by issuing additional equity or through cutting cost. Once the restructuring gets over, we will see a strong foundation for the next round of growth.
What will drive the outbound deals now?
We expect more manufacturing-driven deals for companies to scale up. In telecom, the scope is very limited. In the forging space, when the situation settles down globally, we will see the appetite coming back.
The last round of overseas acquisitions came on the back of availability of cheap finances. With the cost equation changing, will there be an impact on the M&A appetite?Basically, we are coming from an era of excesses, which took place way back in 2006 and 2007 when leveraging norms went through the roof. In some cases, leveraging was equivalent to seven-eight times of Ebitda (operating profit). There was an excess of liquidity in the system. There were clubbing of a lot of things resulting in a crisis in 2008. But right now, the appetite is coming back for good deals. While people are still cautious, money is available for such deals. People are more focused on the kind of assets a company is buying.
On the domestic front, which sectors are ripe for consolidation and where are enquiries coming from?
There is interest in pharmaceuticals, IT and media. My guess is that these sectors will interest foreign players. In case of media and telecom, there are so many players that consolidation has to take place.
Did private equity (PE) firms, which were complaining of high valuations last year, missed out when the valuation hit a low?
It takes time for PE deals to be come. What we saw was a very good rebound that took place in the capital markets. If the market had not come back, it would have been a PE-driven market. Private equity is always competing with the capital markets as a source of capital.
Recent experiences show that companies which have tapped the market through initial public offers have not performed well on listing. Should we expect that pricing will be more sober in the coming days?
The days of 25 to 30 per cent returns on listing are over. Now issues get priced optimally and it is primarily led by institutions. So, today the roadshow has to discover the demand and what should be the pricing, and then there is book building. Pretty much the system has moved up to optimal pricing.
But the response in the retail segment was not really enthusiastic?
The retail segment is going to be under pressure. Fund raising in the primary market is being driven more and more through institutions. When institutions are investing, they are doing it for the long term.
Has the Merrill Lynch India’s strategy changed following its acquisition by Bank of America (BofA) last year and what is the status on restructuring of its operations?
We were a pure investment bank prior to the merger. Now with BofA taking over, we are more of an end-to-end financial powerhouse. We have many more products and a large balance sheet. As Merrill Lynch India, we always had the ambition of getting a banking licence and now we have that. The integration is pretty much done. Just a few more formalities have to be completed.
http://www.business-standard.com/india/news/appetite-is-coming-back-for-ma-deals/370189/

Patni brothers revive stake sale talks

Patni brothers revive stake sale talks
Abhineet Kumar / Mumbai September 14, 2009, 0:16 IST

The promoters of Patni Computer Systems and private equity firm General Atlantic have revived consultations with potential buyers to sell a part of their stake in the company.
Promoters Narendra Patni and his younger brothers Gajendra and Ashok hold equal stakes totalling 48.3 per cent in India’s sixth largest software exporter. PE firm General Atlantic holds about 18 per cent. An attempt by the two younger brothers and the PE firm to sell a part of their stake failed two years ago because Narendra Patni, who was the executive chairman, was not ready to give up operational control.
That issue is no longer relevant since Narendra Patni has become non-executive chairman after appointing Jeya Kumar as the chief executive officer in February this year. “This will facilitate the whole process since the acquirer can now have management control,” sources familiar with the development said.
“The consultation process for potential buyers has once again started,” said a person close to the promoters’ family, confirming the interest of the two brothers and the PE firm to monetise a part of their stake.
“In the last six months, the valuation of the company has jumped almost to the level it was about two years back,” said an investment banker familiar with the consultations initiated by the promoters.
Asked about the talks, Surjeet Singh, Patni's chief financial officer, said, "Patni does not comment on speculation."
The Patni stock has gained significantly from an all-time low of Rs 94 a share on March 2 this year to Rs 463 a share on August 26. The stock closed at Rs 395 a share on Friday, giving it a market capitalisation Rs 5,069 crore.
In 2007, the company had an average share price of Rs 436 a share. The low for the year was Rs 300 and it achieved an all-time high of Rs 566 a share on speculation that the promoters would sell their sales. PE firms Apax Partners and Tech Pacific Group were interested in buying the stake on offer in 2007, when the two brothers were offering their 12 per cent stakes in addition to about 12.9 per cent stake offered by General Atlantic.
Narendra Patni is also interested in increasing his stake because his 32-year-old son Anirudh Patni is a senior vice- president in the company and a larger stake could help his son succeed him.

http://www.business-standard.com/india/news/patni-brothers-revive-stake-sale-talks/370014/

'Rationale for IT deals remains compelling'

'Rationale for IT deals remains compelling'
Q&A: Prahlad Shantigram

Abhineet Kumar / Mumbai September 9, 2009, 0:20 IST

The downturn in the global economy affected most investment bankers and Standard Chartered, with virtually no significant deals achieved in this financial year so far, is no exception. However, the UK-based bank, which has a special focus on Asian markets, is working on two deals that could make it the top deal-maker at the end of the year. The bank is co-advisor to Bharti Airtel in its merger talks with South Africa’s MTN Group. Besides, it is a sale-side co-advisor for Aircel’s plan to sell telecom towers. Prahlad Shantigram, global head of mergers and acquisitions (M&As) at the bank, talks about the changed environment for M&As in an interview with and email response to Abhineet Kumar. Excerpts:
Can we expect further domestic consolidation due to over-leveraging by some companies?We do expect a pick-up in M&A activity, not just as a result of overleveraging necessarily. With the economy coming back on track, the overleveraging impact will get mitigated to an extent. Coupled with this is the return-of-risk appetite, which is a key driver of acquisitions. Also, remember that equity markets have improved and companies can raise capital efficiently now to counter any leverage issue.
Unlike overseas acquisitions, funding for domestic deals is costlier as banks are not allowed to lend for buying equity. Do we have enough financial support to accelerate pure domestic deals?Significant regulatory and structural challenges remain for acquisition financing for domestic deals through debt. This leaves these to be essentially funded by equity — whether the acquirers’ own cash or private and public equity issuances.
Has the tide of Indian companies looking for overseas acquisitions turned back?Indian corporates have definitely become more careful about looking at international transactions, but no, the tide has not turned back. The global economy is far from convincingly being out of the woods. This naturally increases the threshold of strategic necessity that any deal has to clear for it to be a ‘must-do.’ Add to this the relative lower availability of financing for deals (which, by the way, is changing) and you have a fall in this kind of deal flow. As the economic situation improves, we do expect more activity.
How has the cost of acquisition finance for cross-border deals changed vis-à-vis the last year’s peak?The spreads for cross-border acquisition finance have tightened significantly recently as liquidity comes back. You must remember that the benchmark itself has fallen significantly. So, the overall costs may not be that much different.
Access to financing has improved for cross-border deals, but how far have things changed for leveraged buyouts?You are right — access has improved. I suspect that you will not see the kind of “covenant lite”-type financing or even the leverage levels that you saw globally in the recent boom come back in a hurry. We must be careful not to confuse this with debt financing for well-structured strategic transactions, for which the appetite is still there.
Apart from Bharti Airtel, can we expect that more Indian telecom companies will look for overseas acquisitions, especially in Africa?Without getting into details, let me say that if you were a telecom company looking for growth and low-penetrated markets, Africa is an obvious choice.
What is your view on the potential for domestic and cross-border deals within the IT industry?The fundamental rationale for IT deals, both inbound and outbound, remains compelling. Indian players will continue to buy specific competencies and market access in the rest of the world while overseas companies will continue to value India’s offshore capabilities. In addition, significant ownership in this with financial sponsors with limited investment horizon will further drive M&A activity

http://www.business-standard.com/india/news/rationale-for-it-deals-remains-compelling/369486/

'IPO market should be active in near term'

'IPO market should be active in near term'
Q&A: Anshul Krishan

Abhineet Kumar / Mumbai August 28, 2009, 0:32 IST

About two months back, Goldman Sachs expected India Inc to raise $13 billion through sale of shares in the current financial year. Since then, over $7 billion has been raised through qualified institutional placements (QIPs) and some large initial public offers (IPOs). However, concerns over inflation and monsoon are building. Anshul Krishan, head of India financing group at Goldman Sachs, tells ABHINEET KUMAR that equity issues are going to continue and companies are most likely to achieve the target. Edited excerpts
Inflationary pressures are building up. Prices of oil and other commodities are surging. How are these going to impact the profitability of companies and in turn the performance of stock markets?This has become a topical question. Bear in mind that the price of oil, for example, has been hovering over $60 for a while now. The capital markets’ reaction does not suggest that this issue in itself is being given primary weightage when it comes to the expected impact on the bottom line of companies. As long as the surge in commodity prices is seen to be fairly reflecting the expected pick-up in demand through an uptick in overall economic activity, it is the latter point that is getting greater market attention.
Do you see any severe impact of monsoon on stock markets and in turn on fund-raising plans of companies?I think there is a significant level of data around this year’s monsoon that is now known broadly. There is definitely a higher degree of gravity that people have had to come to grips with over the past few weeks. And as you would recall, there were days on which this was reflected by India underperforming the region. But in terms of overall economic direction, the market seems to be taking this aspect in stride. In a wider context, once again, what appears to be really driving the capital markets is an overarching macro view about the relative outperformance of economies such as India’s and Asia’s and the trickle of evidence that the global economic malaise might have bottomed out.
To evaluate with a glass half-empty view, yes there is risk from factors such as commodity prices and inflation, from events such as an unusually weak monsoon, etc. Once any such data point starts overwhelming the broader aspects of demand and expectations of macro stability, the risk-reward trade-off starts looking quite different. Right now, most market participants are quite willing to give the benefit of doubt to the right-side risk.
IPOs are getting aggressively priced. The Adani Power IPO has not benefited investors in terms of listing gains. Will this dampen investor enthusiasm, especially in the retail segment?It is premature to draw conclusions on the Adani IPO and its impact on investor enthusiasm. That aspect of the primary market is yet to play out fully. We have had only two-three notable IPO candidates go live in this latest phase of activity. Even during much stronger market conditions, much lower over-subscription levels in the retail tranche were not unusual. Institutional activity, therefore, continues to be the primary driver. Will flat to weak after-market performance of one or two high-profile IPOs make it harder to get more retail or HNI (high networth individual) interest? Probably yes, but that doesn’t necessarily mean that a wave of IPOs cannot not get executed successfully.
Yes, pricing considerations will adjust and thresholds of acceptability may tighten but the fact is that there is fundamental appetite for new and credible stories. I personally believe that the IPO market should be quite active over the near term.
Which sectors do you expect to drive the IPO market?The power sector is clearly a highly-emphasised aspect of the Indian economic equation. It doesn’t take much to observe that the power sector story in the economy and in the capital markets is bound to continue to develop. The other sector where companies are in the wings to access the IPO market is real estate. In the same way that listed real estate companies dominated QIP issuance, the several private real estate companies that were shut out from the public market since early 2008 are now expected to revisit this option. These two sectors are therefore fairly identifiable.
In to the medium term, there are expectations that business sectors such as insurance could also see some companies try to assume a public life. There are also several attractive private candidates in telecom and related infrastructure segment. Some would be driven by regulatory factors and others by the time taken to evolve into IPO-ready candidates.
Fortis recently announced acquisition of Wockhardt hospitals. Do we expect more merger and acquisition (M&A) deals due to excess leveraging by companies?By most measures, the access to capital that an average company in India has today is better than it was nine to 12 months ago. Now, if the same company that was highly levered then has been able to navigate the environment, owing to a combination of factors — from successfully renegotiating bank covenants or maturities to sale of non-core assets — its ability today to capitalise its balance sheet and improve leverage should in theory be a lot less challenging. But yes, investors are discerning today and there are bound to be examples of companies not able to raise equity efficiently. Strategic options would therefore remain a part of the toolkit. That said, when you are talking generally about sell-side M&A being driven by virtue of being a last resort option, I expect those situations to arise but certainly not become the norm.


http://www.business-standard.com/india/news//ipo-market-should-be-active-in-near-term//368298/

New MAT provisions to cost large firms over Rs 11,500 cr

New MAT provisions to cost large firms over Rs 11,500 cr

Abhineet Kumar & B G Shirsat / Mumbai August 22, 2009, 0:55 IST

267 firms with gross assets of over Rs 500 crore will feel the heat.
Large, capital-intensive companies will have to cough up over Rs 11,500 crore as additional tax in 2010-11 if the government enacts the proposed Direct Taxes Code in its present form.
In a big blow for such firms, the draft code says companies will have to pay the higher of a 25 per cent corporation tax and a minimum alternate tax (MAT) of 2 per cent on their gross assets. Second, the basis for computing MAT has changed from book profits (15 per cent of the book profits at present) to gross assets. Third, MAT will have to be paid in even loss-making years, with no set-off against future profits.
Capitaline data shows that there are 267 large companies (with gross assets of over Rs 500 crore) that will have to pay MAT of 2 per cent of their gross assets as that would be higher than the levy of 25 per cent corporation tax. These companies paid Rs 13,897 crore as tax last year. In 2010-11, when the code is expected to come into effect, they will have to pay around Rs 25,400 crore, at the current level of profit and gross assets.
“MAT will be an additional burden, which would make sustainability difficult, especially in recessionary periods,” Akil Hirani, managing partner, Majmudar & Co, a Mumbai-based corporate law firm, said.
Uday Ved, head of tax at KPMG India, said while the service sector companies would not be affected, the new provisions would seriously impact large capital-intensive companies in infrastructure, oil and gas, telecom, pharmaceuticals, real estate etc. What’s worse that companies which would make losses in the initial years would have to pay MAT. The code also takes away the carry-forward and MAT credit facility.
The impact on companies like Reliance Communications would be large. The country’s third largest mobile service provider will have to pay Rs 644 crore tax in 2010-11 at the same level of profit and assets against Rs 12.4 crore it paid last year.
Similarly, the additional tax liability for Infosys Technologies would be Rs 557 crore, for Hindalco (Rs 395 crore), for Bharti (Rs 384 crore) and for Tata Consultancy Services (Rs 329 crore).
“A levy on gross assets artificially tries to infuse productivity which may not be possible,” Hirani said.
The proposal to apply MAT on gross assets instead of book profit has also come under heavy criticism from industry because it is not a tax on income, which direct tax should ideally be, but a tax on capital or assets.There is a separate provision of capital gains tax if a company makes profit out of assets. But the government has argued in the code that this will help check tax evasion by companies through various deductions. Tax experts said the step would be tough for companies implementing projects with high gestation periods.“MAT would prove to be regressive for capital-intensive companies,” Mukesh Butani, head, tax practice at BMR & Associates, said. “And there is not going to be escape from MAT for any firm,” he added.

http://www.business-standard.com/india/news/new-mat-provisions-to-cost-large-firms-over-rs-11500-cr/367790/

Yes Bank not to hive off investment banking

Yes Bank not to hive off i-banking arm

Abhineet Kumar / Mumbai August 13, 2009, 0:10 IST

Yes Bank, the home-grown lender that started operations five years ago, has put on hold its plan to hive off its investment banking (i-banking) division. It now plans to first start a brokerage business and consolidate its operations.
The lender had earlier planned to hive off the division to rope in some investors. “The hive-off may or may not take place in the near term,” said Aditya Sanghi, co founder and managing director, investment banking, Yes Bank. “It is not even under contemplation at this stage,” he said.
In the last five years, the bank has conducted more than 80 transactions in mergers and acquisitions, private equity syndication and capital market fund-raising.
Suzlon Energy’s acquisition of REPower and United Phosphorus’s acquisition of French firm Cerexagiri were some of the large deals that the bank’s investment banking arm worked on.
The brokerage has been a missing link and will help the bank get better valuation as and when it decides to divest.
“We, as a management team, have our strengths in execution and, like all our other businesses, are looking to build the brokerage business from scratch,” said Sanghi. The bank, he said, expected to start the business in the current financial year.
The bank did not disclose the money it planned to invest in the brokerage business. The lender, which rode piggy-back on Indian corporates’ overseas expansion in the last four-five years, now sees opportunity in inbound deals.
“That trend I would say has reversed. We now see a lot more foreign buyers looking at assets in India,” he said
There are foreign buyers who have operated in countries with 0-5 per cent growth rates for the last many years. So, their operating efficiencies are high and they sit on large unleveraged balance sheets and are fairly cash rich.
“They are the ones who recognise that their home markets will remain slow and they need to have a bigger presence in growth markets like India,” said Sanghi.
Given that valuations in India were subdued in comparison with what they were in 2006 and 2007, the potential buyers found reasonably attractive targets, he said.


http://www.business-standard.com/india/news/yes-bank-not-to-hive-off-i-banking-arm/366774/

Aditya Birla Nuvo in talks with PE

Aditya Birla Nuvo in talks with global PE investors

Abhineet Kumar / Mumbai August 14, 2009, 0:16 IST

Aditya Birla Nuvo is in talks with global private equity players Blackstone, Carlyle and KKR to sell shareholding in its proposed holding firm for its financial services business. The financial services holding company will house its asset management, insurance, stock broking, wealth management and private equity businesses.
Nuvo, in a joint venture with Canada's Sun Life, holds 74 per cent in its life insurance and 50 per cent in its asset management company under Birla Sun Life. It recently acquired Apollo Sindhoori from the Chennai-based Reddy family to scale up its stockbroking business. It also increased its stake in the distribution and wealth management company Birla Sun Life Distribution by buying Sun Life’s 50 per cent stake.
“The company needs equity infusion to sustain the growth momentum for the insurance, asset management and other financial services businesses,” said a leading PE player who did not wish to be identified. “The talks have been initiated but it will take at least three to four months before anything concrete comes up,” he added.
An A V Birla spokesperson said, “We do not comment on market speculation.”
The life insurance venture — Birla Sun Life — saw operating losses rise 57 per cent to Rs 686.56 crore during the year-ended March 2009, against Rs 437.60 crore in 2007-08. The market share of the fifth largest private life insurer went up to 10.4 per cent in the last financial year from 7.8 per cent in the previous year. The company is focusing on the life insurance business as it expects over half the revenue to come from this sector by the end of 2010-11, the year when Birla Sun Life Insurance is expected to break even.
The company had earlier said that the group had lined up capital expenditure of around Rs 1,000 crore during the current financial year for the business, while another Rs 800 crore will be required in 2010-11.
“The company earlier expected relaxation on the foreign direct investment norms for the insurance business to raise equity; but since it is not expected in the near term, it is looking at an alternative route for the capital infusion,” said another PE player, who confirmed the initiation of talks with the PE firms.
The company requires equity to expand because its debt is already high. At the end of the last financial year, it had Rs 4,300 crore of debt against a net worth was Rs 3,744 core. The company also had a treasury surplus of Rs 800 crore, which gives it a net gearing of 0.93. This gives Aditya Birla Nuvo little room to raise fresh debt.

http://www.business-standard.com/india/news/aditya-birla-nuvo-in-talksglobal-pe-investors/366949/