Worms Digest - 29 May 2013

Good Morning !!! 

Sensex 20160 (+0.65%) Nifty 6111 (+0.46%)

Dow 15409 (+0.69%) S&P500 1660 (+0.63%)

Nikkei 14325 (+0.1%)

• DoT has threatened to cancel 3G spectrum of telecom companies on the ground that the 3G roaming arrangements amounts to breach of contract for the giver of the spectrum. A big negative for telecom companies as I) it will slowdown the new 3G subscriber acquisition II) there could be hefty penalties even if license didn't get cancelled III) it brings back the regulatory concerns and uncertainties to the sector just when it appeared to be getting over IV) Payback for 3G investment would get even elongated if roaming is not allowed and could also lead to material asset impairment and valuation of these companies...not to mention the unnecessary diversion of management time, energy and money which could be otherwise focused on the business issues.
•  Honda Motorcycle and Scooter India (HMSI) has increased its two-wheeler production capacity by 15 per cent to 46 lakh units.  The company’s new plant in Narsapur, Karnataka will have a 12 lakh units production capacity in Phase I and further 6 lakh units in phase II. With the addition of the Narsapur plant, Honda will have a total of three plants including Manesar (Haryana) and Tapukara (Rajasthan).The Narsapur plant will produce Dream Yuga motor cycles and Activa scooters. 
• Gold Loan financing restrictions - Reacting to the bank’s circular, the Association of Gold Loan Companies (AGLOC) said gold loan NBFCs lend against jewellery of households only.Therefore, the move to forbid NBFCs from lending against gold coins, bullion, primary gold would have no impact on gold loan NBFCs, George Alexander Muthoot, President, AGLOC, said in a statement.
• SBI & associate bank merger - On merger of associate banks, Pratip Chowdhary, SBI chairman said that  the bank was actively pursuing the matter now as its capital has improved. He, however, did not reveal the identify the target for merger but said that he expects to consummate merger with one of the associate banks during the second quarter.
• Mahindra Satyam is planning to hire about 2,000 freshers during FY14. Beyond that, company will hire on just in time basis. The company has almost put a cap on the traditional campus hirings to take freshers in large numbers. The company employs 36,067 people as of March 31, 2013, a net addition of 2,714 when compared to the same period last year. But it is down by about 1,000 when compared to the figure in quarter ended December 31, 2012. The company is going to increase its investments on capacity expansion. “We spent Rs 122 crore in the quarter (fourth quarter) and added 500 seats. We are planning to spend Rs 500 crore this year to build 1,000-1,500 seats,” Vasanth Krishnan, Chief Financial Officer, said.
• Coal prices hike to boost Coal India revenues by Rs.2500 but consumers to feel pinch...captive to get hurt most - CIL has rationalised prices of thermal coal used in power generation. Prices of two premium grade (G-3 and G-4) coal were reduced by 12 per cent. The price of G-5 grade remains unchanged. And, prices of all inferior grades from G-6 to G-17 (2200-5800 kilo calorie per pg) were raised by 10 per cent, on an average.Captive power generation in steel, cement, aluminium and many other energy intensive sectors will get costlier, as thermal coal is sold at 35 per cent higher price (when compared to the regulated power sector) to sectors enjoying the benefit of market determined product pricing. According to Subhasri Nandi, Secretary General of Coal Consumers’ Association of India (CCAI), a quick estimate suggests generation cost of captive power units may go up by as much as 22 paise a unit. “Power consumers by and large using the inferior quality of coal will be adversely affected by such revision… It would affect specially the non-power utilities, already paying 35 per cent more (price for fuel) than the power sector,” she said.
• Management change at CESC - Sanjiv Goenka, Chairman of the RP-Sanjiv Goenka Group, was appointed as the new Chairman of CESC. Sanjiv, previously the Vice-Chairman of the company, succeeds his father, late R.P. Goenka. Sumantra Banerjee, Managing Director of CESC since 1992, will step down with effect from July 31. He will be replaced by Aniruddha Basu, who will take over on August 1. Basu is currently the Executive Director (Distribution Services). The first unit of the 2 X 300 MW Chandrapur (Maharashtra) project, Goenka said, will be on-stream next month. The second phase is expected to be operational in October. The 2 X 300 MW Haldia unit is under construction. The project will be operational between September and December 2014.With a 40 MW wind energy project operational in Jaisalmer (Rajasthan), CESC is looking for more opportunities in the wind-farm sector in Gujarat and Rajasthan. Spencer will be de-merged into a separate retail entity through a “mirror-level de-merger” followed by an initial public offering (IPO)
• American Tower Corporation to acquire Tower Vision who owns 8000 telecom towers for Rs 3,200 crore, a transaction that will enable the US company to significantly scale up its presence in India. ATC is offering Rs 40 lakh per tower, marginally lower than the Rs 46 lakh per tower GTL Infrastructure paid for acquiring Aircel's tower business. 
• Sun Pharmaceutical expects revenue growth of 18-20 per cent for FY14 and would spend 800crs on capex. Company would be filing 25 generic drug applications in US during FY14.

In this game, the market has to keep pitching, but you don’t have to swing. You can stand there with the bat on your shoulder for six months until you get a fat pitch

....Warren Buffett