This story first appeared in DNA Money edition on Friday, July 5, 2013.
Those looking to buy a new direct-to-home (DTH) connection, get ready to shell out more.
Given the rupee’s decline, DTH operators are left with no option but to pass on the incremental cost of importing set-top boxes (STBs) to new subscribers.
Leading the pack is DTH market leader Dish TV, which has a 28% share of India’s $1.5 billion, 32.4 million subscriber (2012 figures as per Media Partners Asia) DTH industry.
The company has increased the prices of its standard definition (SD) and Dish Plus recorder STBs by Rs 250 effective Thursday to Rs 2,249 and Rs 2,349, respectively. No hike has, however, been effected for high-definition (HD) set-top boxes, which continue to be sold at Rs 3,099.
The increase in STB prices more or less mirrors the rupee’s decline against the dollar. The local currency has lost almost 12% in the last two months and closed Thursday at 60.13.
Dish TV officials did not share further details citing silent period for their fiscal first quarter results, which are due soon.
Other DTH players, including Tata Sky, Reliance Digital and Airtel Digital are also hiking prices.
Harit Nagpal, CEO & MD, Tata Sky, the Tata Sons DTH joint venture with Star India, confirmed the price hike, saying changes in currency rates hurt the company since it imports all its STBs.
“New customers will now get a Tata Sky connection at a marginal (8-10%) increase owing to the falling exchange rate of the Indian rupee,” he said, adding that the new rates took effect on July 1.
A Reliance Digital TV spokesperson, too, confirmed a Rs 260 hike in SD set-top boxes to Rs 2,250 from July 4.
Officials from Videocon d2h and Sun Direct could not be reached.
Though Airtel Digital has not formally announced its decision yet, a company official said a price hike is inevitable.
“DTH companies are already facing challenges by offering STBs at subsidised rates. The depreciating rupee is only making things tougher. I’m most certain that STB prices will be increased in more or less the same proportion to what competition undertaken,” the official said, requesting anonymity.
The DTH industry is on a growth trajectory thanks to compulsory digitisation prescribed by the Telecom Regulatory Authority of India. Industry experts feel DTH players will benefit the most in the third and fourth phases of digitisation, covering the entire nation by December 2014.
A report by Media Partners Asia, an independent provider of information services focusing on media, communications and entertainment industries, the Indian DTH industry will grow to $3.9 billion and 63.8 million subscribers by 2017 and $5 billion and 76.6 million subscribers by 2020.
This story first appeared in DNA Money edition on Monday, July 1, 2013
Last week, IL&FS Transportation Networks (ITNL) partnered with Japanese road construction firm East Nippon Expressway Co to tap public private partnership (PPP) projects in India.
Tata Sons’ wholly owned subsidiary Tata Realty & Infrastructure Ltd (TRIL) is seeking foreign collaborations to bid for urban transportation projects, a space it believes will only get bigger in the coming years.
For airports development, TRIL is understood to have got on board a foreign partner to bid for upcoming projects.
A host of other infrastructure companies too are seeking foreign allies to grab a bigger share of Indian infrastructure growth story.
Overall infrastructure spend under the 12th Five Year Plan (2012-17) is estimated to be around $1 trillion (Rs 60 lakh crore). Half of the figure is expected to be invested by the private sector.
“In terms of the overall capacity addition, it would be the largest infrastructure build-up in the country and more than what has been built in the last two Five Year Plans put together,” said Mukund Sapre, executive director, ITNL.
He said the power sector will see the largest investment at Rs 15 lakh crore, followed by road and bridges (Rs 9.5 lakh crore), telecom (Rs 8.5 lakh crore), railways (Rs 4.5 lakh crore), irrigation (Rs 4.5 lakh crore) while ports, airports, water and sanitation, logistics, etc will make up the rest.
But why foreign collaborations?
Sanjay G Ubale, MD & CEO, TRIL, said “Foreign collaborations have become important as infrastructure projects are now getting bigger and complex requiring a lot of technology in terms of construction in addition to sound project management skills.”
He said such tie-ups help in pre-qualifications in the government tenders.
“There are various terms and conditions required to be fulfilled to pre-qualify when the government puts out a tender. Some of these criteria can only be met by a foreign construction company,” Ubale said.
TRIL had partnered with French company Vinci for the Mumbai Trans Harbour Link – a Rs 9,360 crore, 22 km freeway grade road bridge connecting Mumbai and Navi Mumbai. The contract is likely to be awarded by August.
Also, the infrastructure projects tend to be very large, calling for significant investments, which a single company may not be able to garner.
Most collaborations happening currently are for attracting foreign capital.
“Since in any collaboration the partner has to bring in capital to the extent of his participation, financial health is an important criteria,” said Sapre.
Sensing opportunity, many financial institutions too have formed joint ventures to build up infrastructure portfolios such as infrastructure fund by Macquarie-SBI.
Similarly, many other non-banking financial companies have set up infrastructure development funds to provide debt funding.
Of the total infra spend Rs 40,000 crore is estimated to be expended on the EPC works for roads, ports, solar power, thermal power, railways, etc. giving ample opportunities for private investment.
“The total investment envisaged during 2012-2017 is estimated to be $800 billion. The Indian infrastructure companies should see their order book growth by 20% annually over the next five years,” Sandeep Upadhyay, senior vice-president and head-infrastructure solutions group, Centrum Capital, said.
While all the infrastructure sectors provide excellent opportunities for investments major attractions would be in categories such as roads, railways, ports, power and airports, he said.
This story first appeared in DNA Money edition on Saturday, June 29, 2013.
The Association of Radio Operators for India (Aroi) is understood to be in favour of an increase in the foreign direct investment (FDI) limit to 49% from the current 26%, as proposed by the panel led by Arvind Mayaram, secretary, Department of Economic Affairs.
The Aroi governing body, in a meeting on Friday deliberated on the panel’s suggestions ahead of the inter-ministerial group’s meeting next week.
An industry source said the deliberations were not yet over and the matter has been opened to voting. “There is overwhelming support for increased FDI. The ministers will be consulting with leading industry layers on Saturday, post which, the matter will get discussed by the inter-ministerial group early next week,” said the source.
Officials of My FM, Radio City and BIG FM could not be reached for comments.
“It is a bit early to make a concrete statement considering the matter is still being discussed. Aroi has not gone official with its views. We’ll have to study Aroi’s stance and take a call on our approach accordingly,” said a top official of one of the big five private radio companies.
In May, the Union Cabinet had approved the EGoM’s decision to auction 839 channels in 294 cities as part of the third phase of private FM radio. The new FM radio frequencies will be opened for cities with a population above one lakh.
Currently, 86 cities are covered by FM radio services.
This story first appeared in DNA Money edition on Thursday, June 27, 2013.
Tata Housing, Tata Projects and Tata Realty & Infrastructure, the Tata Group’s unlisted infrastructure entities, are on course for a four-fold increase in order book over the next five years.
The current order book (fiscal 2014) stands at Rs 15,000-20,000 crore and the goal is to ratchet this beyond Rs 70,000 crore in the next five years.
The Tata Group, operating in the Indian infrastructure space since 1910, has eight companies across sectors like energy, telecom, realty, transportation, infrastructure, project execution, project consultancy.
They contributed $12.5 billion, or 12.4%, to the group’s overall revenues in 2011-12.
Siddhartha Roy, economic advisor to the group, said the ratio of private and public sector in the country’s infrastructure spend used to be 25:75 in the 10th Five Year Plan, which increased to 36:64 in the 11th and is almost 50:50 in the 12th.
“What this basically means is that a very large part of the investment or the funding for this investment has to come from the private sector. The group has already made significant investments in the area of power, telecom, housing, infrastructure (roads, airports, urban transportation) etc and will be aggressively building the pipeline across infrastructure projects in the coming years,” said Roy.
Of the envisaged Rs 70,000 crore orderbook, the share of Tata Projects Ltd will be about Rs 25,000 crore, while it will be Rs 24,000 crore and Rs 22,700 crore from Tata Housing Development Company and Tata Realty & Infrastructure, respectively.
Sanjay G Ubale, managing director and CEO, Tata Realty, said investments will be in areas like road projects (Rs 7,500 crore), airport (Rs 5,000 crore), urban transportation (Rs 3,000 crore), industrial park (Rs 3,000 crore), real estate (Rs 4,000 crore) and hospitality (Rs 200 crore).
“We are looking at three airport projects of which work on the Jamshedpur site has already started. We will also bid for the Goa and Navi Mumbai airport projects as and when they are invited. On the roads front, there are 10 projects for which bidding is likely to happen and we should get at least two projects if not more,” Ubale said.
The commercial real estate space currently offers huge potential for inorganic growth and the company should be concluding a few deals in the coming few quarters in addition to taking the organic approach to building up portfolio, he said.
As for Tata Housing, the company has been growing at almost 100% compounded annual growth rate (CAGR) over the last 4-5 years and currently has 26 signed projects at various stages of planning and execution.
With approximately 704 acres of landbank, the company currently has 55 million sq ft under development across 10 states across including eight major cities and 11 locations.
Brotin Banerjee, managing director and CEO, Tata Housing, said growth this year might be relatively slow mainly because of delayed approvals and general slowdown in the market.
“Having said that we have over 90 million sq ft in the pipeline under various stages of approvals. We are hoping to sign a very big private-public partnership project in Sri Lanka which should happen in the next couple of months.”
This story first appeared in DNA Money edition on Wednesday, June 26, 2013.
The Telecom Regulatory Authority of India (Trai) has extended the June 25 deadline for submission of television customer application forms (CAFs) by cable networks to July 10.
Multi-system operators (MSOs), or mega networks that deliver cable and satellite television channels to homes via neighbourhood allies, pleaded that since compiling CAFs is an enormous and complex task, a deadline extension is necessary, Trai said.
The extension was also done to minimise consumer inconvenience. If the new deadline is not complied with, subscribers’ existing connections via set-top boxes (STBs) would be disabled, Trai said.
Ashok Mansukhani, executive director of IndusInd Media and Communications, an MSO, welcomed the deadline extension. “Each MSO has given individual deadline to Trai. I’m sure they will do their best to achieve it.”
Trai said the number of identified subscribers has increased, but there are still a large number of television subscribers whose details are not yet available with cable operators and MSOs.
Industry sources said some 70% of CAFs may have been submitted so far under the new ‘digital addressable cable TV systems’ regime. “Certain operators will have to finally select which MSO to go with,” said Mansukhani.
But Roop Sharma, president of the Cable Operators’ Federation of India (COFI), said, “The extended period is not adequate. There are unresolved issues like the nature of deals between MSOs and broadcasters. MSOs are keen on offering bouquets or packages of channels, while the government is talking of an a la carte rates.”
Most of MSOs have begun offering a la carte pricing. “A la carte may not have caught on yet with consumers in India, but bouquets tend to be cheaper worldwide,” said an MSO official.
This story first appeared in DNA Money edition on Tuesday, June 25, 2013
Ranbaxy Laboratories seemed to be getting into more trouble on Monday after its stock tanked 6.8% to a almost 4-year low following reports that the US drug regulator had issued Form 483 to the pharma company’s drug manufacturing unit at Mohali in Punjab.
Responding to queries on the US Food and Drug Administration (FDA) issuance, a Ranbaxy spokesperson said, “We continue to make regulatory submissions from Mohali and as and when we get approvals we will commercialise products from Mohali.”
A Form 483 is issued by the FDA at the conclusion of an inspection to notify the company of objectionable conditions that might be in violation of the US Food, Drug and Cosmetic Act and related laws. However, it does not prevent a company from making regulatory filings from that unit.
Analysts said the implication of the fresh development on the business was not clear.
“There is no clarity from the Ranbaxy management on Form 483. We don’t know if the US FDA has actually issued anything like that,” said an analyst with a domestic brokerage.
“The stock has fallen almost 20% in the last four weeks owing to various negative developments. I think the Ranbaxy management doesn’t want the stock to go into a free-fall by acknowledging the US FDA move,” said another analyst, adding that development may not impact the stock significantly if the situation is not so critical.
“The management will, however, have to clarify the situation and its magnitude to avoid further damage,” the analyst said.
Earlier in April, the US FDA has issued a similar Form 483 to one of Wockhardt’s facilities at Aurangabad in Maharashtra. This led to the FDA issuing an import alert on that plant just last month. The Wockhardt stock had fallen 20% on both occasions and is currently trading at Rs 1,004.55, down 2.54% from Friday’s close of Rs 1,030.70. The stock was trading at Rs 1,229.7 a month ago.
Ranbaxy has been going through a tough phase for sometime. Last week, the EU antitrust regulators fined Ranbaxy to the tune of euros 10.3 million (the company management plans to appeal against the decision).
Prime Focus World NV (PFW), the creative services division of Prime Focus Ltd (PFL) has raised Rs 313 cr in private equity investment from Macquarie Capital. To be deployed in two phases the first tranche of Rs 224 cr has already been rceived in the first phase signed and Rs 89 cr in a second transactional phase, both of which are designated for strategic growth. This investment now places an enterprise valuation of Rs 1770 cr on PFW.
The capital raised will be used for the build out of the global creative services platform, near-term strategic acquisitions and deleveraging debt in the parent company, Prime Focus Limited, with the combined emphasis of expanding PFW's position as a global leader providing visual effects, animation, and stereo "3D" conversion services to major studios and filmmakers around the world.
Namit Malhotra, founder and chief executive officer-PFW and founder-PFL, said, “In the past five years, our business has gained tremendously through expansion of our product offerings and entrance into new markets. Combined with the backing we have received from our other financial partners AID Partners Capital and Suntrust, the investments will allow Prime Focus World to continue to expand and diversify our creative and technological offerings around the globe.”
Macquarie Capital, the advisory, capital raising and principal investing arm of Macquarie Group, made the investment to PFW and provided advisory services to its parent company, PFL. In addition to the funding from Macquarie, PFW also secured $10 million from China’s AID Partners in March. Coupled with a recent investment of $70 million from Standard Chartered Private Equity in PFL, these investments illustrate strong confidence in the business strategy and growth prospects for the overall group.
Namit added, "After having made an initial investment of $43million in 2008 to build out our global platform, we have transitioned and become a business where today our shareholders are seeing a seven times increase in value, while most companies have found it hard to keep pace with the changing times. The investments validate our global ambition to become a world leader while continuing to create greater value for our shareholders.”
PFW has brought its expertise to many wide release Hollywood films, including most recently Baz Lurhmann's The Great Gatsby and Paramount’s World War Z, and upcoming releases such as Sony Pictures’ White House Down. Previously released films that the company contributed to include Men in Black 3, Star Wars: Episode One – The Phantom Menace, Dredd 3D, Total Recall, Tim Burton's Frankenweenie, Harry Potter and the Deathly Hallows: Part 2, Narnia: The Voyage of the Dawn Treader, Resident Evil: Retribution, Green Lantern, Immortals, Wrath of the Titans, Mirror Mirror, Transformers: Dark of the Moon and Avatar.
