|Interest in MMTC on currency futures foray
|Market buzz on promoterís creeping acquisition, settlement of family dispute, unitís stake-sale denial, and order win
MMTC: MMTC spurted 114.02% to Rs 20,146.40 in a month to 2 January 2009 on entering
into partnership to create a fourth entity for currency futures trading. On 25 December
2008, the countrys largest public sector trading agency proposed to pick up to 15%
equity in the United Stock Exchange of India (STOX) for Rs 22.50 crore. MMTC expects
Indian foreign exchange market to grow to a great extent with the proposed exchange likely
to get membership from corporate, commercial and co-operative banks, asset management
companies and money transfer agents gradually.
Volumes showed an uptick as the MMTC stock rallied. Average daily traded volumes jumped
to 1,023 shares in the month to 2 January 2009 compared with 637 in the quarter. State-run
MMTC has a tiny 0.67% floating stock, with 99.33% owned by government of India.
MMTCs rise of 1.26% in three months to 2 January 2009 beat its gauge the BSE PSU
indexs slide of 13.19%. Despite the recent rally, the MMTC stock is down 51.22% from
its 52-week high of Rs 41,307.10 on 7 January 2008, but off 120.78% from its 52-week low
of Rs 9,125 on 3 December 2008.
Currency futures will enable importers and exporters of commodities to hedge against
bank rate fluctuations. MMTC is planning to hedge its own foreign currency exposure on the
exchange. A currency future is a contract to exchange one currency for another at a
specified date in the future at a price (exchange rate) that is fixed on the purchase
date. The price can be different from that is quoted in the spot foreign exchange markets.
Investors can use these futures contracts to hedge against foreign exchange risk.
STOX is a special purpose vehicle created by the New Delhi-based Jaypee Capital
Services for setting up the currency futures exchange. Jaypee Capital, formed by Jaypee
Commodities, will be the single-largest shareholder in the proposed exchange. Reportedly,
the proposed exchange will be set up with a networth of Rs 150 crore and 49% equity in the
bourse will be with the public sector. As per Sebi guidelines, the trading member for the
currency derivatives exchange should have minimum networth of Rs 1 crore (on the
balance-sheet), while the clearing member should have a networth of Rs 10 crore.
Apart from MMTC, other public sector firms that are likely to hold stake in the
exchange include Bank of India, Bank of Baroda, Oriental Bank of Commerce, Indian Overseas
Bank and Canara Bank. Among private companies to have stake in the new currency futures
player include Federal Bank, TCS, STCI and Standard Chartered Bank. As per market
regulator Sebi guidelines, the currency futures exchange has to have a minimum of 50
Trading on the new exchange is tipped to begin end January 2009 or latest by the end of
the current financial year and is expecting in-principle approval from Sebi soon. Currency
futures were first launched by the National Stock Exchange (NSE) on 29 August 2008,
followed by the Bombay Stock Exchange (BSE) on 1 October 2008 and the Multi Commodity
Exchange (MCX) on 7 October 2008.
MMTC (formerly Minerals and Metals Trading Corporation of India), is a leading
international trading company. It trades in diverse fields like minerals, engineering,
agro, marine, textiles, leather and gems & jewellery.
GMR Infrastructure: GMR Infrastructure surged 62.98% to Rs 85.40 in a month to 2
January 2009 on sustained creeping acquisition by promoter. Promoter and holding company
GMR Holdings bought 3.87 lakh equity shares of Rs 2 each in the Bangalore-based
infrastructure firm through open market purchase on 24 December 2008, powering a 26.05%
rally in a week to 2 January 2009. Consequent to the latest acquisition, GMR
Holdings stake in GMR Infrastructure rose to 74.06%.
Earlier GMR Holdings collectively mopped up 92.07 lakh shares in GMR Infrastructure
through open market purchases between 3 and 23 December 2008 respectively. GMR
Infrastructure rebounded by a sharp 87.28% from its a 52-week low of Rs 45.60 on 27
October 2008 as a sustained hike in stake by promoters boosted sentiment at a time when
investors appetite for risky investment including equities is waning. The stock is 67.26%
off its 52-week high of Rs 260.90 on 4 January 2008.
Total promoter holding in GMR Infrastructure stood at 73.28%, of which a majority
73.25% was held by GMR Holdings end September 2008. Foreign and institutional holding in
the stock stood at 8.83% and 7.89%, respectively.
The recent buying spree by promoters follows the Securities and Exchange Board of India
(Sebis) relaxation in the takeover code in October 2008, extending creeping
acquisition limit from 55% to upto 75%, by buying 5% equity every year, if done on the
floor of the stock exchange.
GMR Infrastructure is the holding company of the GMR group, engaged in the development
of power and infrastructure projects.
Bajaj Hindusthan: Bajaj Hindusthan spurted 80.47% to Rs 72.55 in a month to 2
January 2009 on putting to an end a six-year-long family dispute. As a part of the family
truce, Bajaj Group chairman Rahul Bajaj bought 3.99 crore shares, or 28.2%, of sugar
producer in two block deals transacted on the BSE on 30 December 2008. Family investment
firms Bachhraj Company and Jamanalal & Sons sold 3.47 crore shares at Rs 64 and 0.52
crore shares at Rs 66, respectively, as part of inter-se transfer among the promoters.
In a separate transaction, Rahul Bajaj bought 14 lakh shares of Bajaj Hindustan through
a bulk deal on the BSE, taking his total purchases to 4.13 crore shares, or 29.2%, of the
The series of bulk deals resulted in a spike in average daily traded volumes to 1.04
crore shares in the week to 2 January 2009 from 18.36 lakh shares in three months.
On 22 December 2008, Bajaj Hindusthan told the stock exchanges, Rahul Bajaj will
acquire around 29.2% of the companys equity from group investment firms and other
Bajaj family members at the market price as on 30 December 2008. As part of a family
settlement, Rahul Bajaj would later transfer the stake along with his 0.4% stake to his
brother Shishir Bajaj for zero consideration thus giving Shishir full control over the
sugar firm. After the transfer, Shishir Bajajs stake will rise to 32.47% from 2.85%
The next step will involve Shishir offloading his stake in Bajaj Auto and other group
companies controlled by Rahul Bajaj and his cousins, Niraj, Shekhar and Madhur. This would
be between the Bajaj family members through off-market block deals.
The Bajaj Hindusthan stock eroded a sharp 81.83% from its 52-week high of Rs 399.50 on
9 January 2008 as commodity prices headed south, only to rebound 89.67% from its 52-week
low of Rs 38.25 on 21 November 2008.
The Bajaj family drama sprouted in June 2003, when Shishir Bajaj who manages
Bajaj Hindusthan and Bajaj Consumercare expressed a desire to offload his equity
holding in other group companies, including Bajaj Auto, and consolidate his holding in the
two companies managed by him. Things got murkier after a dispute over the valuation of
Shishirs holding in Bajaj Auto.
Bajaj Hindusthan manufactures sugar and ethanol. The company has ten sugar plants,
which are all located in the northern Indian state of Uttar Pradesh (UP).
Himachal Futuristic Communications: Himachal Futuristic Communications (HFCL)
jumped 45.83% to Rs 12.60 in a week to 2 January 2009 on reports the Datacom partners are
working on a solution to end their corporate battle. Datacom is among the nine companies
securing pan-India telecom licences in early 2008 and was supposed to launch the mobile
services service on 15 August 2008. The launch, however, was delayed by a clash between
the shareholders. The Dhoots of Videocon Group have a 64% stake in Datacom, while the
Nahatas of HFCL own 36%. The partners are fighting over some aspects of the joint venture
agreement, investments being made by them, and the valuation of Datacom for a possible
sale to strategic investors.
Riding on back of such reports the HFCL stock was frozen at the 20% upper circuit
filter on 31 December 2008 and 1 January 2009. Even HFCLs denial on 1 January 2009
about entering into any agreement with Videocon on Datacom Solutions failed to put a brake
on the stocks rally.
Hopes of an amicable solution soon over the promoter spat propelled an 87.50% and
15.28% surge in the HFCL stock over a month and three months respectively, to 2 January
2008, outperforming the BSE Small-Cap indexs 19% rise and 30.97% fall. The stock is
off 79.87% from its 52-week high of Rs 62.60 on 8 January 2008 but 111.76% above its
52-week low of Rs 5.95 on 27 October 2008.
Volumes on the counter bulged as the stock soared. Average daily traded volumes jumped
to 23.11 lakh shares in the fortnight to 2 January 2009 from 11.73 lakh shares in the
Reports said that a solution to this feud might solely depend on pricing. Nahata is
open to exiting Datacom if the Dhoots pay him Rs 2,116 crore for his stake. Simulatenously
Nahata is also exploring the possibility of buying out the Dhoots and was looking to raise
funds for the same.
Another set of reports hinted that HFCLs telecom business in the Punjab circle
may be merged with Datacom even as the Dhoots are likely to agree to buy out Nahatas
36% equity stake in Datacom. Datacom was initially owned by Nahata-promoted Jumbo Techno
Services. But when Videocon failed to get a licence from the Government, it picked up 64%
stake in Datacom.
The dispute between the two promoters began when Nahata accused the Dhoots for failing
to adhere to the investment agreement of bringing equity capital of US$ 901 million into
Datacom. Nahata also alleged that the Dhoots were trying to invest in the form of a loan
and later recover the money by selling stake to foreign players. The promoter standoff has
not only delayed the launch of Datacoms cellular services by at least four months
but also driven away prospective international investors from picking up a stake in the
company. UAEs Etisalat and Norways Telenor had earlier shown interest in
Public holding in HFCL was a sizeable 68.16% end September 2008, rising from 54.31% end
September 2007. During the same period, non-promoter corporate holding dipped to 27.20%
from 31.19%. However, promoter holding remained unchanged at 2.10%.
HFCL provides global solutions for telecom networking, telecom solutions, optical
transmission products, wireless transmission and wireless access.
ABG Infralogistics: ABG Infralogistics galloped a little under 20% in intra-day
trade on 24 December 2008 only to slide the following day as reports of a French major
eyeing a 49% stake in ABGs bulk port handling business was denied.
After surging as much as 19.74% in intra-day trade to Rs 175 on 24 December 2008, the
ABG Infralogistics settled with a 15.43% surge to Rs 168.70, buoyed by reports the
shipping unit of diversified French conglomerate Groupe Louis Dreyfus SA is set to buy 49%
in Indias biggest crane rental firms bulk port handling business for Rs 90
crore. Louis Dreyfus Armateurs SA builds and operates vessels able to load dry bulk
Such reports propelled volumes on the counter, which surged to 9,884 shares on the
counter on 24 December 2008, sharply higher than the average daily traded volumes of 3,937
shares in the three months to 2 January 2009.
However, the ABG Infralogistics stock corrected 1.24% to Rs 166.60 on 26 December 2008
after the company a clarified it was not contemplating bulk port handling business stake
sale. The stock eased to Rs 163 on 2 January 2009 in subsequent days. The scrip is off
80.82% from its 52-week high of Rs 849.90 on 3 January 2008 but above 54.86% from its
52-week low of Rs 105.25 on 31 October 2008.
Declining 1.21% in a month to 2 January 2009, the ABG Shipyard scrip underperformed the
BSE Small-Cap indexs 19% rise on concerns the ongoing global financial crises may
impact the companys profitability. Net profit plunged 57.80% to Rs 3.26 crore in Q2
September 2008 over Q2 September 2007, after seeing rise in the previous three quarters.
In 2008, ABG Infralogistics sold an 11.8% stake in the firm to PSA International Pte,
the worlds second biggest container port operator owned by Temasek Holdings Pte,
investment arm of the Singapore government. The Singapore firm also invested about Rs 350
crore for buying a 49% stake each in ABG Kandla Container Terminal and ABG Kolkata
Container Terminal, the entities floated by ABG Infralogistics to run the two container
handling facilities at Kandla and Kolkata ports, respectively.
Foreign holding in ABG Infralogistics rose to 16.15% end September 2008 from 13.83% end
September 2007. During the same period, public holding slipped to 8.14% from 10.20%.
However promoter ownership remained unchanged at 60.15%.
ABG Infralogistics provides services for execution of turnkey projects, including plant
erection; hire of cranes, ports infrastructure development, heavy goods lifting and
Accentia Technologies: Accentia Technologies jumped 57.60% to Rs 156.65 in a
month to 2 January 2009 on an order win in the healthcare receivables cycle management
(HRCM) arena. The software and business process outsourcing service provider was frozen in
the 5% upper circuit filter on 18 December 2008 after it bagged a $22-million order
service a chain of hospitals in the US to be executed in 2009-10.
However, the rise in stock failed to lift volumes. Average daily traded volumes dipped
to 10,949 shares in the month to 2 January 2009 from 14,517 in the quarter.
Despite spurting 109.71% from its 52-week low of Rs 74.70 on 27 October 2008, the
Accentia Technologies stock is 41.65 away from its 52-week high of Rs 268.50 on 15 January
2008. The stock is, however, up 2.02% in three months to 2 January 2009, outperforming the
BSE Small-Cap indexs 30.97% fall, after the company disclosed it is hunting for more
On 23 August 2008, Accentia Technologies completed the purchase of an outsourcing
services provider Thunga Software in an all-cash deal. On 1 April 2008, the Mumbai-based
company acquired a 51% stake in Oak Technologies Inc (OTI), US, in an all cash deal. OTI
is an integrated services provider in of healthcare receivables management, operating from
the US and several locations in India. The company also has strategic alliance with
Bangalore-based Asscent Infoserve for using their infrastructure facilities of 7,000
square feet for BPO services.
Accentia Technologies provides business process management solutions for the
healthcare, financial, and insurance sectors. It offers various business process outsource
management solutions, which primarily include professional transcription to medical
providers and non-medical companies globally.
ABM Knowledgeware: ABM Knowledgeware galloped 66.98% to Rs 19.82 in the week to
2 January 2009 buoyed by a large order win for supplying software solutions to the Mumbai
The stock galloped 20% each on 1 and 2 January 2009 on securing an e-government
contract worth Rs 116 crore from the largest municipal corporation in Asia: Municipal
Corporation of Greater Mumbai. The company announced the contract win after trading hours
on 31 December 2008. Interestingly the stock spiraled 23.27% to Rs 13.77 in two trading
sessions to 31 December 2008 as marketmen might have got a whiff of the mega order.
The Mumbai-headquartered e-governance and systems integration solutions provider would
supply and implement software solutions for payroll of the municipal corporations
employees till year 2011.
Spurting 83.52% in the month to 2 January 2009, aided by the mega order win, the ABM
Knowledgeware stock outperformed the BSE Small-Cap indexs 19% rise. The stock is off
71.50% from its 52-week high of Rs 69.55 on 8 January 2008 but 113.12% above its 52-week
low of Rs 9.30 on 2 December 2008.
Average daily traded volumes on the counter jumped to 2,362 shares in the week to 2
January 2009 compared with 2,799 shares in the past one quarter.
Promoter holding in ABM Knowledgement stood at 60.03% end September 2008 with foreign
and public holding pegged at 13.40% and 13.81% respectively.
Cholamandalam DBS Finance: Cholamandalam DBS Finance jumped 29.66% to Rs 40 in a
month to 2 January 2009 after the company said promoters would subscribe to its
convertible preference shares. The stock was locked at the 10% upper circuit filter to Rs
40.95 on 26 December 2008 after promoters EID Parry (India), Coromandel Fertiliser, Tube
Investments of India, DBS Bank and Carborundum Universal said they would subscribe to one
crore zero coupon fully convertible preference shares to raise Rs 300 crore.
Cholamandalam DBS Finance will issue 10 lakh preference shares to EID Parry (India), 10
lakh shares Coromandel Fertilisers, 26.67 lakh shares to Tube Investments of India, 5 lakh
shares to DBS Bank and 3.33 lakh shares to Carborundum Universal. The preference shares of
Rs 100 each at a premium of Rs 200 shall be convertible into equity shares within 18
months. The price at which the convertible preference share would be issued is at a hefty
7.5-time premium to its ruling market price. However, the conversion ratio was not
disclosed. Promoters held 74.96% stake end September 2008.
The Chalomandalam DBS stocks rise was complemented by rise in average daily
traded volumes as well which vaulted to 8,738 shares in the month to 2 January 2009 from
7,670 shares in three months.
Shares of the small-cap financial services provider had crashed 89.70% from its 52-week
high of Rs 389.50 on 2 January 2008 on concerns the global financial crises will impact
profitability. However, the stock recovered 48.18% thereafter from its 52-week low of Rs
27 on 25 November 2008.
Cholamandalam DBS Finance, a non-banking financial company, is a joint venture between
Murugappa Group and DBS Bank of Singapore. It offers personal loans, vehicle finance,
corporate finance, capital market finance and home equity loans.