This story first appeared in DNA Money edition on Wednesday, April 24, 2013.
Dish TV, India’s largest direct-to-home service provider, is set to turn net-profit positive this fiscal on the back of subscriber growth and improvement in average revenue per user (Arpu).
The company’s ability to generate good free cash flow will help it achieve this feat.
Suresh A Mahadevan and Varun Ahuja, analysts, UBS Securities India, said in a company note that Dish TV had already generated Rs60 crore of free cash flow (FCF) in the first nine months of fiscal 2013. “We believe the company will continue to generate FCF and expect it to generate FCF of around Rs100 crore in fiscal 2014. Further, we expect the company to turn net income positive from fiscal 2014,” the analysts said.
The said FCF generation coupled with net income breaking even is likely to drive a re-rating.
Dish TV officials couldn’t be reached for a comment.
With Phases I and II of digitisation progressing well, the ensuing phases (III and IV) are being seen by the analysts as very important for Dish TV on two accounts. One, the market size for the balance two phases is substantial with around 80-90 million households. Two, the absence of big multi-system operators (MSOs) in these phases. As a result, Dish TV’s net subscriber base is expected to reach 15.5 million by fiscal 2016, up from 10.5 million as of December 2012.
“Dish TV would emerge as one of the beneficiaries of digitisation given its leadership position in the sector. The recent move by DTH operators to increase the prices of set-top boxes (STBs) and base packages indicates the emergence of pricing power, which bodes well for Dish TV,” the analysts said.
They also expect Dish TV’s revenue to grow at a three-year compounded annual growth rate (CAGR) of 22%. The companys operating profit margins are likely to expand 3.5% by fiscal 2016 as the company benefits from the implementation of digitisation (Phases 3 and 4).
This, the UBS analysts said, is likely to aid subscriber growth and Arpu improvement.
Digitisation is also expected to boost Arpu that is pegged to grow at a CAGR of 9% over the next three years as overall tariffs move up and customers move the tariff curve (higher packages, HD etc). Earlier this month, Dish TV had announced a Rs 20 hike in its base package thus aiding Arpu improvement in fiscal 2014.
“We believe a pick-up in Arpu is the key for a stock re-rating as the improvement would result in higher profitability. The company’s Arpu has grown at a CAGR of 4% over the past three years,” the analysts said.
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Thursday 25 April 2013
Mahindra Lifespace plans to close 4-5 land acquisitions
This story first appeared in DNA Money edition on Tuesday, April 23, 2013.
Mahindra Lifespace Developers Ltd is likely to close 4-5 new land deals as it looks to step up on new projects.
The company has signed eight memorandum of understanding (MoUs) for land procurement so far.
Anita Arjundas, managing director and chief executive, Mahindra Lifespace, said, “We have already closed two (of the eight MoUs) in the last quarter and a new one early this month. The balance are in different stages of due diligence and will close them as we go along.” She did not share financial details related to the deals closed.
The company earlier had said it planned to sign in all 10 MoUs. The realtor, which recently raised Rs 500 crore through non-convertible debentures, will utilise the money to close MoUs that are under due diligence stage.
Of the three deals concluded, two are in Mumbai and one in Bangalore.
The Mumbai parcels include three acre Nicomet site on the Andheri-Kurla road with a development potential of 3.6 lakh sq ft and a 14.5 acre site at Boisar for affordable housing with a development potential of 5.5 lakh sq ft.
The 4.5 acre Bangalore parcel is on Bannerghatta Road for 6 lakh sq ft of development.
“For Boisar, we have completed designing and submitting for approvals next month. An architect has been appointed for the Andheri site and we should be signing the first round of design development soon. We haven’t really started on the Bangalore site yet,” said Arjundas.
The company has had a joint development agreement (profit-share) on a five acre mill land near Byculla Zoo in Mumbai. The partners are currently exploring the option of selling the land parcel together and sharing the consideration. Mahindra Lifespace has issued a mandate to Cushman & Wakefield for the sale of the property. The realtor had invested Rs70 crore in this land parcel.
Announcing its financial results, the company posted a 95% increase in its consolidated net profit at Rs82 crore for the quarter ended March 31, mainly on the back of improved sales. Total income during the reporting quarter rose 32% to Rs368 crore.
The company expects to complete five million sq ft development in fiscal 2014 even as it added new land inventory with an estimated development potential of two million sq ft in fiscal 2013.
Follow me on twitter @ashishktiwari.
Mahindra Lifespace Developers Ltd is likely to close 4-5 new land deals as it looks to step up on new projects.
The company has signed eight memorandum of understanding (MoUs) for land procurement so far.
Anita Arjundas, managing director and chief executive, Mahindra Lifespace, said, “We have already closed two (of the eight MoUs) in the last quarter and a new one early this month. The balance are in different stages of due diligence and will close them as we go along.” She did not share financial details related to the deals closed.
The company earlier had said it planned to sign in all 10 MoUs. The realtor, which recently raised Rs 500 crore through non-convertible debentures, will utilise the money to close MoUs that are under due diligence stage.
Of the three deals concluded, two are in Mumbai and one in Bangalore.
The Mumbai parcels include three acre Nicomet site on the Andheri-Kurla road with a development potential of 3.6 lakh sq ft and a 14.5 acre site at Boisar for affordable housing with a development potential of 5.5 lakh sq ft.
The 4.5 acre Bangalore parcel is on Bannerghatta Road for 6 lakh sq ft of development.
“For Boisar, we have completed designing and submitting for approvals next month. An architect has been appointed for the Andheri site and we should be signing the first round of design development soon. We haven’t really started on the Bangalore site yet,” said Arjundas.
The company has had a joint development agreement (profit-share) on a five acre mill land near Byculla Zoo in Mumbai. The partners are currently exploring the option of selling the land parcel together and sharing the consideration. Mahindra Lifespace has issued a mandate to Cushman & Wakefield for the sale of the property. The realtor had invested Rs70 crore in this land parcel.
Announcing its financial results, the company posted a 95% increase in its consolidated net profit at Rs82 crore for the quarter ended March 31, mainly on the back of improved sales. Total income during the reporting quarter rose 32% to Rs368 crore.
The company expects to complete five million sq ft development in fiscal 2014 even as it added new land inventory with an estimated development potential of two million sq ft in fiscal 2013.
Follow me on twitter @ashishktiwari.
Cement firms step up capex as upcycle seen
This story first appeared in DNA Money edition on Tuesday, April 23, 2013.
Cement companies are planning new expansions and going full steam with the ongoing ones despite market concerns of an emerging glut situation on hopes of demand reversal in the future.
UltraTech Ltd, the Aditya Birla group cement firm, is expanding its unit in Rajasthan by 2.9 million tonne at a cost of Rs2,000 crore.
“In this quarter, the board has decided to enhance capacity at Aditya Cement Works in Rajasthan by 2.9 million tonne, including the setting up of two grinding units,” said K C Birla, chief financial officer, UltraTech.
This expansion will be funded through a mix of internal accrual and borrowings. The additional facility is expected to be commissioned by March, 2015.
Similarly, another leading player Shree Cement, which spent Rs800 crore towards capex last year, is increasing its capex to Rs1,000-1,200 crore this year.
Currently, the company is setting up a 4 million tonne per annum (mtpa) clinker plant in North India and corresponding grinding unit, industry sources said.
“Out of this, 2 mtpa will be commissioned in June-July 2013 and the balance in July 2014. This apart, a Rs300 crore grinding unit is coming up in Bihar, which will get operational by July 2014. The company is not holding back any capex and all the investment that has been committed will be met with,” said the source.
Cement sector analysts concur.
V Srinivasan, research analyst-cement, Angel Broking, said, “Any expansion takes a minimum of two years depending on the type of project. We have had a downturn situation for the past three years and are only expecting an upcycle from here. In such a scenario, companies will come up with new capex and I don’t see any cutback.”
On Monday, Reuters had reported that Indian cement companies are planning to slash their capital expenditure over the next 12 months.
In 2011, UltraTech had announced mega capex plans around of Rs11,000 crore, to be spent over the next three years. The plan then included Rs5,600 crore for clinker plants at Chhattisgarh (4.2 mtpa) and Karnataka (5 mtpa) and remaining along with grinding units, bulk packaging terminals and ready- mix concrete plants at various location across India.
Recently, ACC had announced capex of Rs3,300 crore (to be spent over three years) for a new manufacturing (5 mtpa) plant at Jamul in Chhattisgarh. The unit is scheduled to start production in 2015.
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Monday 22 April 2013
Hilton enters franchise agreement for DoubleTree with Panchshil Hotels in Chinchwad-Pune
Leading global hospitality company Hilton Worldwide has signed a franchise agreement with Panchshil Hotels Pvt Ltd for an upscale, full-service DoubleTree by Hilton hotel at Chinchwad. Scheduled to open in June 2013, the new hotel featuring 115 guestrooms will also mark Hilton’s first hotel in Pune and will be Hilton's fourth DoubleTree by Hilton branded hotel in the country.
According to Martin Rinck, president-Asia Pacific, Hilton Worldwide, the new hotel at Chinchwad (Pune) will be another significant step in our growth strategy in India as it will represent the company's entry into Pune. “Following on from two great years of growth, when we grew our portfolio to 12 hotels and resorts, we are expanding rapidly in the country and anticipate increasing our presence to 17 hotels by the end of this year,” said Rinck.
John Greenleaf, global head, DoubleTree by Hilton, added that with the launch of fourth hotel in India, Hilton will be well on its way to doubling network in the country this year. "Presently, we have two hotels in Delhi NCR, at Gurgaon and Mayur Vihar, and a resort in Goa. We will open an all-suite hotel in Bangalore and a resort in Jaipur later this year,” said Greenleaf.
Centrally located in Chinchwad, the hotel is strategically situated northwest of Pune, The Pimpri-Chinchwad belt houses more than 50 large and 630 medium-sized companies and 7,000 small manufacturing units including Premier Ltd, Mahindra Navistar, Bajaj Auto, TATA Motors, Kinetic Engineering, Force Motors, DaimlerChrysler, Thermax, Forbes-Marshall and ThyssenKrupp.
Ajay Chordia, chairman and managing director, Panchshil Hotels, said, "The conveniently located hotel will allow excellent connectivity to the Mumbai-Pune National and Express highways and the Pune city centre, airport and railway station. The hotel will also be easily accessible to the Pune-Nashik highway, the arterial road connecting the two cities."
DoubleTree by Hilton Pune-Chinchwad will feature all modern conveniences including internet access, LCD televisions, electronic safes, refrigerated private bars and tea and coffee making facilities. Other facilities at the hotel include three dining outlets, an Executive Lounge, 24-hour business and fitness centres, outdoor rooftop pool and 2,800 square feet of meetings and events space.
Hilton Worldwide currently operates 12 hotels and resorts in India - New Delhi: Hilton Garden Inn New Delhi/Saket, Eros Hotel-Managed by Hilton New Delhi/Nehru Place and Hilton New Delhi/Janakpuri; Gurgaon: Hilton Garden Inn Gurgaon Baani Square and DoubleTree by Hilton Gurgaon-New Delhi NCR; NOIDA: DoubleTree by Hilton New Delhi-Noida-Mayur Vihar and Hilton New Delhi-Noida-Mayur Vihar; Mumbai: Hilton Mumbai International Airport; Chennai: Hilton Chennai; Vadodara: Hampton by Hilton Vadodara-Alkapuri; Goa: DoubleTree by Hilton Goa-Arpora-Baga and Shillim: Hilton Shillim Estate Retreat & Spa.
According to Martin Rinck, president-Asia Pacific, Hilton Worldwide, the new hotel at Chinchwad (Pune) will be another significant step in our growth strategy in India as it will represent the company's entry into Pune. “Following on from two great years of growth, when we grew our portfolio to 12 hotels and resorts, we are expanding rapidly in the country and anticipate increasing our presence to 17 hotels by the end of this year,” said Rinck.
John Greenleaf, global head, DoubleTree by Hilton, added that with the launch of fourth hotel in India, Hilton will be well on its way to doubling network in the country this year. "Presently, we have two hotels in Delhi NCR, at Gurgaon and Mayur Vihar, and a resort in Goa. We will open an all-suite hotel in Bangalore and a resort in Jaipur later this year,” said Greenleaf.
Centrally located in Chinchwad, the hotel is strategically situated northwest of Pune, The Pimpri-Chinchwad belt houses more than 50 large and 630 medium-sized companies and 7,000 small manufacturing units including Premier Ltd, Mahindra Navistar, Bajaj Auto, TATA Motors, Kinetic Engineering, Force Motors, DaimlerChrysler, Thermax, Forbes-Marshall and ThyssenKrupp.
Ajay Chordia, chairman and managing director, Panchshil Hotels, said, "The conveniently located hotel will allow excellent connectivity to the Mumbai-Pune National and Express highways and the Pune city centre, airport and railway station. The hotel will also be easily accessible to the Pune-Nashik highway, the arterial road connecting the two cities."
DoubleTree by Hilton Pune-Chinchwad will feature all modern conveniences including internet access, LCD televisions, electronic safes, refrigerated private bars and tea and coffee making facilities. Other facilities at the hotel include three dining outlets, an Executive Lounge, 24-hour business and fitness centres, outdoor rooftop pool and 2,800 square feet of meetings and events space.
Hilton Worldwide currently operates 12 hotels and resorts in India - New Delhi: Hilton Garden Inn New Delhi/Saket, Eros Hotel-Managed by Hilton New Delhi/Nehru Place and Hilton New Delhi/Janakpuri; Gurgaon: Hilton Garden Inn Gurgaon Baani Square and DoubleTree by Hilton Gurgaon-New Delhi NCR; NOIDA: DoubleTree by Hilton New Delhi-Noida-Mayur Vihar and Hilton New Delhi-Noida-Mayur Vihar; Mumbai: Hilton Mumbai International Airport; Chennai: Hilton Chennai; Vadodara: Hampton by Hilton Vadodara-Alkapuri; Goa: DoubleTree by Hilton Goa-Arpora-Baga and Shillim: Hilton Shillim Estate Retreat & Spa.
Sunday 21 April 2013
Entrepreneur gives loyalty programmes a social spin
Collecting reward points to redeem them for more goodies is a rage among upwardly mobile consumers. Now, a social entrepreneur has taken the concept to the lower echelons of the society, but with a difference.
Armed with the $1 million Hult Prize she won back in 2011, Akanksha Hazari will soon launch the beta version of the award winning concept m.Paani in Mumbai. Currently in the alpha stage, different iterations of its offerings are being tested in two underserved communities in Mumbai and the company is planning to do rural model sometime early 2014.
So what is m.Paani really all about? According to Akanksha Hazari, founder and CEO, m.Paani, the company designs and implements mobile-based loyalty programmes for underserved communities where they can earn more value for their spent.
"Like most people who are part of loyalty programmes they are able to earn points for certain types of spend and behaviour. They can collect and share these points with their families / communities and ultimately redeem them for a life-changing development rewards in multiple areas like education, healthcare, safe drinking water, nutrition, mobility, energy and financial inclusion," said Hazari who is also one of India's top 10 social entrepreneurs and an Echoing Green 2013 semi-finalist.
In simple terms, if someone who doesn't filter their water, and if they do something positive in that arena, m.Paani allows them to earn rewards points -- just like what a loyalty programme does. However, the rewards in this case are not materialistic or consumer rewards but are very impact focused that help people attain a better life.
The concept currently is at design lab stage, which is a 9-12 month pilot where alpha versions of the model are being tested. Different iterations of m.Paani's loyalty models are being tested to find out what works and what doesn't. "At the bottom of the pyramid - bastis and villages - people have never been offered anything like this. They have never interacted with the concept of loyalty points, they haven't even interacted with discounts etc in the same way middle- and high-income class does. That's what we want to change," said Hazari adding that a partnership with one of the biggest telco's in India will be inked son to help roll-out the offerings in India and Africa.
Based on the alpha phase the company will then design the beta service, which will be launched by the end of this summer. The beta pilot will be tested with a maximum of 1,000 users.
"We currently have two pilot communities in Mumbai - Parel and a corner of Dharavi. They are very different in nature and that's the reason why we picked them. We will run the beta service in these pilot communities and based on the beta service we will roll out first in Mumbai and the goal is by the beginning of 2014 to start a parallel rural pilot in Maharashtra," said Hazari. "The rural customer will be very different from the urban customer and so will the rewards be for these markets. Hence we will have a separate rural pilot as against extending the urban model into rural areas," she added.
The company is extensively leveraging technology and using a behavioral sciences approach to design and implement the model in the underserved communities.
"We are very much focused on helping this underserved segment in India, have a partner in their journey and attaining a better life. The reality is that this segment spends a lot of money and often pays a premium for things that not even the middle class has to pay for a premium or above," she said.
Based on her experience spending time with the underserved communities Hazari observed that people in the rural areas pay more for water, higher interest to the extent of 60% on loans (no access to banking system) and a whole lot of basic things.
"They are an extremely important customer at volume for big companies like telcos and FMCGs but they are not rewarded for it. In fact, the m.Paani model was born from this concept of why can't we connect business with impact leveraging technology and data. This customer is actually getting rewarded for being an important customer and that reward is something that's meaningful to them and can help them in their life journey with the things they are struggling with today," she said.
Hazari, a Princeton university graduate with an MBA from the Cambridge university, led the Cambridge team that won the Hult Prize. She was also honoured by former US President Bill Clinton and the Clinton Global Initiative.
Publicis Groupe acquires Neev, launches Razorfish Neev in India
This story first appeared in DNA Money edition on Friday, April 19, 2013.
Publicis Groupe, the world’s third largest communications firm, has acquired Bangalore-based technology services provider Neev as part of its plan to beef up digital presence in India.
Financial details were not disclosed.
Publicis plans to align Neev with Razorfish, a group firm, which is one of the largest interactive marketing and technology companies globally.
Kanika Mathur (pictured), managing director, Razorfish and Digitas India, told dna, “Collaboration of Razorfish’s interactive marketing prowess with Neev’s cutting-edge technology capabilities would play a determinative role in our digital leadership positioning here. With this deal in place, we will now be able to offer India, a state-of-the-art technology that is available globally.”
Neev specialises in eCommerce, SaaS (Software as a Service) and cloud applications across web, social media and mobile. The acquisition marks Razorfish’s launch in India, wherein Neev will help strengthen and scale up Razorfish’s expertise.
“It will be aligned with Razorfish and will operate as Razorfish Neev,” said Mathur without sharing Neev’s billing and market share details since its inception in 2005.
About 220 out of the 250 specialists employed by Neev are pure-play technologists with experience / expertise in leveraging cloud, mobile technologies and promoting innovation.
Saurabh Chandra, CEO, Neev, said the company has a track record for cutting edge product innovation and market firsts in areas of video streaming, e-commerce, data visualisation, including patents in cloud and mobility.
“Working seamlessly with the clients’ teams, we serve a growing list of prominent brands and technology companies, mainly in India and the US. The company has increased revenues on average 45% since 2007,” said Chandra.
While the technology centre and hub of Neev will continue to be in Bangalore, the new entity will have a national presence with offices in Delhi, Mumbai and Pune.
The company plans to increase team strength to 350 by the end of this year and double it in a few years.
Publicis Groupe, the world’s third largest communications firm, has acquired Bangalore-based technology services provider Neev as part of its plan to beef up digital presence in India.
Financial details were not disclosed.
Publicis plans to align Neev with Razorfish, a group firm, which is one of the largest interactive marketing and technology companies globally.
Kanika Mathur (pictured), managing director, Razorfish and Digitas India, told dna, “Collaboration of Razorfish’s interactive marketing prowess with Neev’s cutting-edge technology capabilities would play a determinative role in our digital leadership positioning here. With this deal in place, we will now be able to offer India, a state-of-the-art technology that is available globally.”
Neev specialises in eCommerce, SaaS (Software as a Service) and cloud applications across web, social media and mobile. The acquisition marks Razorfish’s launch in India, wherein Neev will help strengthen and scale up Razorfish’s expertise.
“It will be aligned with Razorfish and will operate as Razorfish Neev,” said Mathur without sharing Neev’s billing and market share details since its inception in 2005.
About 220 out of the 250 specialists employed by Neev are pure-play technologists with experience / expertise in leveraging cloud, mobile technologies and promoting innovation.
Saurabh Chandra, CEO, Neev, said the company has a track record for cutting edge product innovation and market firsts in areas of video streaming, e-commerce, data visualisation, including patents in cloud and mobility.
“Working seamlessly with the clients’ teams, we serve a growing list of prominent brands and technology companies, mainly in India and the US. The company has increased revenues on average 45% since 2007,” said Chandra.
While the technology centre and hub of Neev will continue to be in Bangalore, the new entity will have a national presence with offices in Delhi, Mumbai and Pune.
The company plans to increase team strength to 350 by the end of this year and double it in a few years.
Worldoo locks brands, kids in digital space
This story first appeared in DNA Money edition on Friday, Apr 19, 2013.
Brands like ZeeQ, Cartoon Network and Amar Chitra Katha that focus on kids aged 6-12 years now have a new online destination to engage in a novel way with their target audiences.
Worldoo (www.worldoo.com), an ad-free online hangout, offers edutainment, socialising and networking opportunities for kids. It also lets brands to reach out to them.
Launched by Focus, an advertising and digital media agency, Worldoo aspires to help children-focused brands make a splash in the digital space.
Monish Ghatalia, MD of Focus, said Worldoo can take brands to a large target audience at one go and help sustain such engagement. “Worldoo is much more than just impressions and clicks.”
Live, express and play — that’s what Worldoo encourages kids to do. Popular content — books, comics, movies and games — is a given. Worldoo also provides engaging experiences for kids by way of activities and interactions with other kids and brands.
From desktops and laptops, Worldoo plans to expand to tablets and mobile devices shortly.
And brands seem to welcome this. Aparna Bhosle, head of programming, ZeeQ, said the explosion in digital equipment has transformed broadcasting. But since kids also access alternatives like the digital medium, it becomes imperative for broadcasters to announce their existence via digital initiatives as well.
This is where partnerships with online destinations like Worldoo acquire significance. For example, target audiences can now sample ZeeQ content via Worldoo.
“Technology is central to how kids consume content these days. Multi-platform systems encompassing TV, internet and mobile phone allow greater opportunities to watch favourite shows at any time,” said Bhosle.
Besides ZeeQ, a host of brands, including gamebox, zapak, JeffCorwinConnect, Warner Brothers, Shemaroo, Sony Pictures, Reliance Big Flix, Crossword, Landmark, Dreamland, Champak and Singapore’s tourist destination Sentosa, have already made Worldoo their partner.
According to Juhi Ravindranath, Turner International India’s vice-president of advertising sales in South Asia, Worldoo is “a unique idea” that “promises to create the right brand experience for consumers”.
Brands like ZeeQ, Cartoon Network and Amar Chitra Katha that focus on kids aged 6-12 years now have a new online destination to engage in a novel way with their target audiences.
Worldoo (www.worldoo.com), an ad-free online hangout, offers edutainment, socialising and networking opportunities for kids. It also lets brands to reach out to them.
Launched by Focus, an advertising and digital media agency, Worldoo aspires to help children-focused brands make a splash in the digital space.
Monish Ghatalia, MD of Focus, said Worldoo can take brands to a large target audience at one go and help sustain such engagement. “Worldoo is much more than just impressions and clicks.”
Live, express and play — that’s what Worldoo encourages kids to do. Popular content — books, comics, movies and games — is a given. Worldoo also provides engaging experiences for kids by way of activities and interactions with other kids and brands.
From desktops and laptops, Worldoo plans to expand to tablets and mobile devices shortly.
And brands seem to welcome this. Aparna Bhosle, head of programming, ZeeQ, said the explosion in digital equipment has transformed broadcasting. But since kids also access alternatives like the digital medium, it becomes imperative for broadcasters to announce their existence via digital initiatives as well.
This is where partnerships with online destinations like Worldoo acquire significance. For example, target audiences can now sample ZeeQ content via Worldoo.
“Technology is central to how kids consume content these days. Multi-platform systems encompassing TV, internet and mobile phone allow greater opportunities to watch favourite shows at any time,” said Bhosle.
Besides ZeeQ, a host of brands, including gamebox, zapak, JeffCorwinConnect, Warner Brothers, Shemaroo, Sony Pictures, Reliance Big Flix, Crossword, Landmark, Dreamland, Champak and Singapore’s tourist destination Sentosa, have already made Worldoo their partner.
According to Juhi Ravindranath, Turner International India’s vice-president of advertising sales in South Asia, Worldoo is “a unique idea” that “promises to create the right brand experience for consumers”.
Cement prices crack as fiscal starts
An edited version of this story first appeared in DNA Money edition on Thursday, April 18, 2013,
If March 2013 was very unlike the business month it generally tends to be for the Indian cement industry, April isn't looking any better either.
Lack of demand, delay in government spend pick-up and weak rural demand have lead to correction in cement prices across some key markets in the country. Feedback from cement dealers indicates continued weakness in demand for the April month leading to price correction in most markets to the tune of 3-6%.
According to JP Morgan analysts, the sharpest decline has been witnessed in Western India -- where demand has also been impacted by the drought situation -- and in Southern India driven by sharply lower prices in the key state of Andhra Pradesh (AP).
Confirming the price correction, Pinakin Parekh and Neha Manpuria, research analysts, J P Morgan India Pvt Ltd, said in a note on Tuesday that cement supply discipline is under pressure as demand remains weak. "We are surprised by the quantum of price correction seen in AP, where prices are down below Rs 200 per bag of 50 kg, as some of the new capacities are selling aggressively. The other interesting feedback we have received is that of higher shipments from AP into neighboring states and this highlights AP’s overhang on Southern and Central India. The price correction has been equally sharp in Western India, with prices down sharply in both Gujarat and Maharashtra. Every single market has seen cement price correction in April," the analysts said.
Industry players are of the opinion that government spending should re-start at some point however, the situation will remain weak till then. At the recently conclude ACC Ltd annual general meeting (AGM), Kuldip Kaura, MD & CEO of the company told shareholders that cement growth is not doing good and is less than expected. "There is normally growth in election year but we are yet to see that trend," he'd said.
Echoing the sentiments, JPM analysts said that election led spending should start at some point over the next few months and government spending should also recover from the current very depressed levels. The analysts however expressed concerns over possibilities of rural demand deteriorating thereby taking away some of the government led incremental demand. "The other issue is the drop in cement prices in the interim. Cost trends continue to inch up especially in energy (diesel) and with lower aggregate demand, there is less supply discipline and hence more price competition," the analysts said in the note.
As for the correction trend in cement pricing is concerned, a dealer check in various regions of India by Anand Rathi Shares and Stock Brokers Ltd (ARSSBL) shows that the western region is expected to see further cuts in cement prices.
Anand Rathi research analysts Jaspreet Singh Arora and Manish Valecha said in a note on Wednesday that prices dipped by Rs 20 in Pune, with retail/wholesale prices at around Rs 275/Rs 245 respectively. "With no improvement in demand foreseen and water-shortage issues escalating in summer, further price cuts may be seen in the current quarter. Nagpur has seen no uptick in demand in April, with retail/wholesale prices hovering around Rs 290 / Rs 270. Mumbai retail prices have been static at Rs 310 even as demand is flat month-on-month," said the analysts.
Prices across various pockets in the eastern region either remained flat -- like in Kolkata -- or down Rs 10 in case of Bhubaneshwar. Though realty sector remained strong, slowdown in infrastructure projects led to poor demand. "Retail/wholesale prices in Bhubaneshwar are Rs 340 / Rs 290. Patna has seen prices dropping by Rs 20 in April due to slack demand -- and current retail/wholesale prices are around Rs 305 / Rs 290," the analysts added.
Cement prices in south India were under pressure mainly due to increased influx of material from AP. Despite good demand, Bangalore saw a correction by Rs 15 per bag of 50 kg and the current retail/wholesale prices stood at Rs 310 / Rs 275. Hyderabad (retail price Rs 200) and Visakhapatnam (retail price Rs 210) continued to suffer from a capacity glut and an increase in supply from JPA and JSW. Retail/wholesale prices in Chennai are around Rs 305 / Rs 265 even as demand continues weak.
A northward trend (increase by Rs 10) was witnessed in cement prices in north India where current retail/wholesale rates are around Rs 260/Rs215 respectively. However, prices remained flat in markets like Delhi and Gurgaon despite attempts by manufacturers to raise prices.
If March 2013 was very unlike the business month it generally tends to be for the Indian cement industry, April isn't looking any better either.
Lack of demand, delay in government spend pick-up and weak rural demand have lead to correction in cement prices across some key markets in the country. Feedback from cement dealers indicates continued weakness in demand for the April month leading to price correction in most markets to the tune of 3-6%.
According to JP Morgan analysts, the sharpest decline has been witnessed in Western India -- where demand has also been impacted by the drought situation -- and in Southern India driven by sharply lower prices in the key state of Andhra Pradesh (AP).
Confirming the price correction, Pinakin Parekh and Neha Manpuria, research analysts, J P Morgan India Pvt Ltd, said in a note on Tuesday that cement supply discipline is under pressure as demand remains weak. "We are surprised by the quantum of price correction seen in AP, where prices are down below Rs 200 per bag of 50 kg, as some of the new capacities are selling aggressively. The other interesting feedback we have received is that of higher shipments from AP into neighboring states and this highlights AP’s overhang on Southern and Central India. The price correction has been equally sharp in Western India, with prices down sharply in both Gujarat and Maharashtra. Every single market has seen cement price correction in April," the analysts said.
Industry players are of the opinion that government spending should re-start at some point however, the situation will remain weak till then. At the recently conclude ACC Ltd annual general meeting (AGM), Kuldip Kaura, MD & CEO of the company told shareholders that cement growth is not doing good and is less than expected. "There is normally growth in election year but we are yet to see that trend," he'd said.
Echoing the sentiments, JPM analysts said that election led spending should start at some point over the next few months and government spending should also recover from the current very depressed levels. The analysts however expressed concerns over possibilities of rural demand deteriorating thereby taking away some of the government led incremental demand. "The other issue is the drop in cement prices in the interim. Cost trends continue to inch up especially in energy (diesel) and with lower aggregate demand, there is less supply discipline and hence more price competition," the analysts said in the note.
As for the correction trend in cement pricing is concerned, a dealer check in various regions of India by Anand Rathi Shares and Stock Brokers Ltd (ARSSBL) shows that the western region is expected to see further cuts in cement prices.
Anand Rathi research analysts Jaspreet Singh Arora and Manish Valecha said in a note on Wednesday that prices dipped by Rs 20 in Pune, with retail/wholesale prices at around Rs 275/Rs 245 respectively. "With no improvement in demand foreseen and water-shortage issues escalating in summer, further price cuts may be seen in the current quarter. Nagpur has seen no uptick in demand in April, with retail/wholesale prices hovering around Rs 290 / Rs 270. Mumbai retail prices have been static at Rs 310 even as demand is flat month-on-month," said the analysts.
Prices across various pockets in the eastern region either remained flat -- like in Kolkata -- or down Rs 10 in case of Bhubaneshwar. Though realty sector remained strong, slowdown in infrastructure projects led to poor demand. "Retail/wholesale prices in Bhubaneshwar are Rs 340 / Rs 290. Patna has seen prices dropping by Rs 20 in April due to slack demand -- and current retail/wholesale prices are around Rs 305 / Rs 290," the analysts added.
Cement prices in south India were under pressure mainly due to increased influx of material from AP. Despite good demand, Bangalore saw a correction by Rs 15 per bag of 50 kg and the current retail/wholesale prices stood at Rs 310 / Rs 275. Hyderabad (retail price Rs 200) and Visakhapatnam (retail price Rs 210) continued to suffer from a capacity glut and an increase in supply from JPA and JSW. Retail/wholesale prices in Chennai are around Rs 305 / Rs 265 even as demand continues weak.
A northward trend (increase by Rs 10) was witnessed in cement prices in north India where current retail/wholesale rates are around Rs 260/Rs215 respectively. However, prices remained flat in markets like Delhi and Gurgaon despite attempts by manufacturers to raise prices.
Tuesday 16 April 2013
JK Lakshmi's Chhattisgarh project faces 3-mth delay
This story first appeared in DNA Money edition on Tuesday, April 16, 2013.
A delay of 2-3 months appears inevitable in the launch of JK Lakshmi Cement’s (JKLC) greenfield project at Durg, Chhattisgarh, following violent disruption of project work by irate local villagers seeking employment for all of them earlier this month.
It is learnt only around five locals lost their land due to the project getting located at Durg. Now, the plant may be commissioned by the first quarter of next fiscal, said a Karvy Stock Broking report written after a meeting with top JKLC officials.
The Durg project is expected to expand JKLC’s clinker capacity by 1.8 million metric tonne (mmt) and grinding capacity by 2.7 mmt. JKLC officials could not be reached for a comment.
The Karvy report said JKLC management expects damage caused to the new plant to be around Rs 150 crore. A precise figure will be arrived at over the next few days when equipment manufacturers and surveyors ascertain the actual damage.
There is low probability that such protests may recur, the management said in an analyst guidance.
Rajesh Kumar Ravi, research analyst at Karvy, said such agitations are mostly politically motivated and are part of business risks associated with large greenfield capital expenditure (capex).
“We do not expect any negative impact in our sales volume assumption for FY15E as we have already modelled this capacity to be effective in the second quarter of fiscal 2015 (2QFY15). With the financial damage covered under insurance, the expected loss of up to Rs 150 crore should not impact its near-term cash flow,” said Ravi.
A Religare Institutional Research note last week said JKLC had estimated an initial loss of Rs 250-300 crore when it first filed the first information report with the police. But this was revised down to Rs 120-150 crore on further examination. The insurance company will take around ten days to determine the actual loss.
Follow Ashish K Tiwari on twitter @ashishktiwari
A delay of 2-3 months appears inevitable in the launch of JK Lakshmi Cement’s (JKLC) greenfield project at Durg, Chhattisgarh, following violent disruption of project work by irate local villagers seeking employment for all of them earlier this month.
It is learnt only around five locals lost their land due to the project getting located at Durg. Now, the plant may be commissioned by the first quarter of next fiscal, said a Karvy Stock Broking report written after a meeting with top JKLC officials.
The Durg project is expected to expand JKLC’s clinker capacity by 1.8 million metric tonne (mmt) and grinding capacity by 2.7 mmt. JKLC officials could not be reached for a comment.
The Karvy report said JKLC management expects damage caused to the new plant to be around Rs 150 crore. A precise figure will be arrived at over the next few days when equipment manufacturers and surveyors ascertain the actual damage.
There is low probability that such protests may recur, the management said in an analyst guidance.
Rajesh Kumar Ravi, research analyst at Karvy, said such agitations are mostly politically motivated and are part of business risks associated with large greenfield capital expenditure (capex).
“We do not expect any negative impact in our sales volume assumption for FY15E as we have already modelled this capacity to be effective in the second quarter of fiscal 2015 (2QFY15). With the financial damage covered under insurance, the expected loss of up to Rs 150 crore should not impact its near-term cash flow,” said Ravi.
A Religare Institutional Research note last week said JKLC had estimated an initial loss of Rs 250-300 crore when it first filed the first information report with the police. But this was revised down to Rs 120-150 crore on further examination. The insurance company will take around ten days to determine the actual loss.
Follow Ashish K Tiwari on twitter @ashishktiwari
Broadcasters threaten to snap signals to MSOs
This story first appeared in DNA Money edition on April 5, 2013.
Cable television subscribers may bear the brunt of delays in finalising commercial agreements for Phase II digitisation between broadcasters / aggregators and the multi-system operators (MSOs).
With not much progress happening, some broadcasters may switch off the signals to some MSOs on account of contention over fee amount and piled up dues.
MSOs are large cable operators that distribute channels to local cable operators.
Atul Pande, CEO-sports business, Zee, said that the broadcaster is having issues with Hathway Cable and Datacom Ltd, which is not only refusing to pay them the right fee, but has also not made payments for the last 6-7 months.
"We have no option but to switch off the signal to Hathway or black the screen. Unfortunately, this will lead to a lot of consumer discomfort, but there is no other alternative," said Pande.
As a result, football fans may miss the UEFA Champions League on Hathway network as it faces a blackout of Ten Sports channel, which broadcasts the event.
Despite repeated attempts, Hathway officials did not offer a comment.
Pritesh Mistry, a football analyst, said, "The sporting event has a huge follower base in India and not being able to watch the matches will be very unfortunate thing to happen for the fans."
While commercial agreements between broadcasters and MSOs for Phase I digitisation are being implemented, doing the same for Phase II, which involves digitisation in 38 cities, is turning out to be a huge challenge.
Gaurav Gandhi, chief operating officer, IndiaCast Media Distribution Pvt Ltd, said the delay in commercial deal making for Phase II digitisation is not because of the broadcasters or aggregators.
"There are a few MSOs who are either unwilling to come to the discussion table or are trying their best to let the status quo continue. This is impacting the implementation of Phase II digitisation," he said.
Industry sources said there have been instances of some MSOs trying to use strong arm tactics to pressurise broadcasters in doing deals on lines of the analog regime deals -- both on subscription and carriage.
The MSOs fraternity, however, feels there is no serious disconnect between broadcasters and MSOs over negotiating the deals.
"This is a time for both parties to work together to create a good ecosystem as opposed to behaving like business partners at war. This is first time wherein there is flexibility in terms of options for the customer to choose from. There is real viewership and price to be discovered," said M G Azhar, COO, DEN Networks.
Follow Ashish K Tiwari on twitter@ashishktiwari
Cable television subscribers may bear the brunt of delays in finalising commercial agreements for Phase II digitisation between broadcasters / aggregators and the multi-system operators (MSOs).
With not much progress happening, some broadcasters may switch off the signals to some MSOs on account of contention over fee amount and piled up dues.
MSOs are large cable operators that distribute channels to local cable operators.
Atul Pande, CEO-sports business, Zee, said that the broadcaster is having issues with Hathway Cable and Datacom Ltd, which is not only refusing to pay them the right fee, but has also not made payments for the last 6-7 months.
"We have no option but to switch off the signal to Hathway or black the screen. Unfortunately, this will lead to a lot of consumer discomfort, but there is no other alternative," said Pande.
As a result, football fans may miss the UEFA Champions League on Hathway network as it faces a blackout of Ten Sports channel, which broadcasts the event.
Despite repeated attempts, Hathway officials did not offer a comment.
Pritesh Mistry, a football analyst, said, "The sporting event has a huge follower base in India and not being able to watch the matches will be very unfortunate thing to happen for the fans."
While commercial agreements between broadcasters and MSOs for Phase I digitisation are being implemented, doing the same for Phase II, which involves digitisation in 38 cities, is turning out to be a huge challenge.
Gaurav Gandhi, chief operating officer, IndiaCast Media Distribution Pvt Ltd, said the delay in commercial deal making for Phase II digitisation is not because of the broadcasters or aggregators.
"There are a few MSOs who are either unwilling to come to the discussion table or are trying their best to let the status quo continue. This is impacting the implementation of Phase II digitisation," he said.
Industry sources said there have been instances of some MSOs trying to use strong arm tactics to pressurise broadcasters in doing deals on lines of the analog regime deals -- both on subscription and carriage.
The MSOs fraternity, however, feels there is no serious disconnect between broadcasters and MSOs over negotiating the deals.
"This is a time for both parties to work together to create a good ecosystem as opposed to behaving like business partners at war. This is first time wherein there is flexibility in terms of options for the customer to choose from. There is real viewership and price to be discovered," said M G Azhar, COO, DEN Networks.
Follow Ashish K Tiwari on twitter
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