Gupta family to lose control over Lloyds Steel
Mumbai: Financial institutions, led by ICICI and IDBI who have an aggregate exposure of about Rs. 900 crore in the Lloyds group, have initiated a move to oust the Gupta family, which controlled the group, from the management of the group’s steel business. This is the first major attempt by the FIs to acquire the company’s control and change its management to recover their dues.

The FIs have asked Lloyds Group chairman Mr. Mukesh Gupta to merge the group’s steel businesses into one entity and pledge the promoters’ entire holding in it. The non-steel businesses should be consolidated into another entity. According to the plan put forward by the Fis, initially, the consolidated steel company’s board will be reconstituted. FIs will appoint the chairman and finance director and create a trust and retention account to monitor cash-flows. Eventually, the FIs will invite a strategic partner for the steel business and remove the Guptas from the management.

The group has two companies in steel -- Lloyds Steel and Lloyds Metals and Engineering. Lloyds Steel produces hot-rolled coils, cold-rolled coils and galvanised corrugated and plain sheets. Lloyds Metals manufactures sponge iron and steel pipes.

The sponge iron business of Lloyds Metals is proposed to be merged with the steel business of Lloyds Steel. Steel pipes and other activities of Lloyds Metals will be demerged into another company. The restructuring of the group’s businesses is in line with the recommendations of Ernst & Young and accepted by the institutions.

The FIs are also taking over the conversion rights attached to their loans which will enable them to raise their stake in the company and leverage it for inviting a strategic partner or even disposing it to another player. The Guptas have been asked to maintain personal guarantees with the institutional lenders till the management of the company is changed. The FIs do not have large stake in the group companies.

Besides steel and pipes business, Lloyds group is engaged in real estate and finance.
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Titan takes the fight to the enemy camp
Bangalore: In its bid to take on the Swiss giants, Titan Industries is taking its fight with the Swiss brands straight to the enemy camp. In an announcement made by Mr. Xerxes Desai, the managing director, the company is reportedly offering 1.15 mm thin movements -- form the heart of a watch akin to a processor in a computer -- in the global market under the brand name `Le Papillon' with the all important `made-in-Switzerland' label. Titan's Le Papillon movements will qualify for the made-in-Switzerland label as components, which constitute 50 per cent of the cost of the movement will be of Swiss origin.

The ultra slim offering will be very attractively priced at Swiss Francs 33, whereas the competing Swiss movements cost Swiss Francs 150.

The movements will be assembled in Switzerland. Titan is looking for an assembly facility in the Neuchatel area of the country. The delivery of the movements is expected to start in September/October this year.
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JK Pharma revamps finances
New Delhi: As part of its plan to reduce its overall debt burden, Pencillin G manufacturer, JK Pharmachem, has gone in for major financial restructuring.

In a report appearing in the Economic Times, the company is reportedly converting 25 per cent its total Rs 90-crore debt into equity, 25 per cent into preference shares and changing 50 per cent of its 16 per cent debentures to now carry a coupon of 13.75. The exercise will help the pharma company to save Rs 11 crore in costs and will enable it to post operating profits in the next quarter itself.

It is said that the financial institutions have already cleared the proposal and the company plans to get shareholder approval shortly. UTI and Tidco account for 90 per cent of this total debt. 

Meanwhile, the company has undertaken a three-pronged approach to improve its performance. This includes introducing new technology for formulations, new fermentation-based products in the market and stopping power purchases from the state electricity board. The company has also started to manufacture its own power and has already reduced costs by 25 per cent by increasing capacities substantially.

JK Pharmachem is the not the only Pen G manufacturer which has mounted losses. Spic, Torrent and MAX GB, are also in the red and Torrent Biotech has been referred to the BIFR.
Till the mid ’90s, Pen G was in short supply and many companies set up huge capacities. The markets sustained supply for a while but eventually prices crashed by 50 per cent.
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Britannia introduces local flavour to win dairy market
Bangalore: In its bid to re-enter the Indian dairy market, Britannia Industries, which first entered the segment in 1997, is revamping its offerings to make it more local in flavor, thus hoping it woud woo the Indian consumer.

It began by offering flavoured cheese spreads — masala onion, masala garlic, asli pepper — meant to specifically cater to the Indian palate in addition to the good old plain cheese. Also flavoured cubes. Britannia claims to have a 33 per cent share in organised cheese market.

Britannia has also completely reworked its milk strategy. It has discarded the word "flavoured". The 7,000 tonne per annum category is growing with both out of home and at home usage rising. Britannia, which claims a 25 per cent market share in this segment, wants to have the first mover advantage in this market and aims to emerge as a national brand in a market which already has strong local brands like Milma, Aavin, Nilgiris and others.

The company recently entered the ghee market in the country, with the key driver being freshness and purity. Ghee in India is used as a cooking medium and also as a taste and flavour enhancer. The regional dispersion of this market is conspicuous with north and west being the biggest. It is also highly fragmented with no national player.

One segment where Britannia has done really well is Milk Powder or dairy whitener. The company today claims to be number one brand in this segment in volume and tonnage with a 15 per cent share in the 32,000 tonne overall market.
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Eicher Tractors to shift focus to medium range
New Delhi: Eicher Tractors, a unit of Eicher Ltd, which has seen a slowdown in the growth of the its sales of its maximum selling product (24 HP tractors) in the domestic market, has decided to shift its focus on the medium range of tractors. The company enjoys around 60 per cent market share in the 24 HP category.

The company has identified 30-40 HP range of tractors as a future area of growth in the domestic as well as the export markets, and is planning to export around 1,000 tractors in the 30-40 HP range in the current fiscal.

Eicher has also entered the higher HP segment with its 61 HP tractor `Eicher Valtra 6100', designed and developed in association with Europe's leading tractor manufacturer, Valtra Inc. of Finland. With the introduction of the Valtra, Eicher now offers a complete range of tractors in the small, medium and large HP segment.

Eicher Valtra offers the latest features of power steering, fully synchronised gear box, wet disc brakes, dual PTO speed and a hydraulic lift capacity of 2,000 kg. Besides normal field applications, the Valtra is suitable for off-field applications such as earth scooping, dozer, compressor etc. It also has exclusive features such as adjustable deluxe seats and platform type construction with ROPS-cum-canopy for safety of the user.
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Reliance plans Rs 10,000 crore fibre optical backbone
New Delhi: India's largest private sector company, Reliance Industries, which has been making rapid strides in the telecom sector has, in a major step towards convergence, decided to set up a national fibre-optic backbone in the country’s key states. According to industry sources, the group is expected to invest between Rs 6,000 crore and 10,000 crore in the backbone.

In the first phase, the group will create a backbone in Karnataka, Gujarat, Tamil Nadu and Andhra Pradesh. Sources said the project was nearing completion in Andhra Pradesh.

In the second phase, Reliance will build the backbone in Delhi, Madhya Pradesh, Rajasthan and Haryana. Work on the second phase is expected to commence soon.

The broadband network is expected to help the group in the Internet business where it holds a category-A Internet service provider licence. The backbone is also expected to further the group’s telecom and entertainment business.
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PowerGen weighing sale of equity assets in India
New Delhi: In a major restructuring move as part of its worldwide strategy to raise funds, the UK-based power major, PowerGen, has appointed Goldman Sachs to look at the possibility of selling off its equity assets in India.

This move comes on the heels of the company havinig acquired LG&E Energy Corp. ("LG&E") in the US in February this year and is being done to enable PowerGen to maintain its adequate debt requirements after they acquired.

The US company had been acquired for $3.2 billion and the acquisition has just been cleared the US regulatory authorities. The deal, which is to be a cash transaction, has to be concluded by this year end, and hence the possibility of the asset sell-off. Based on the recommendations of Goldman Sachs, the company does not rule out the possibility of PowerGen pulling out its existing ventures in India.

PowerGen worldwide is involved in 11 power projects in Germany, Hungary, Portugal, India, Australia, Indonesia, Thailand and South Korea. With the exceptions of Germany, PowerGen is responsible for the operations and maintenance of all these power plants.
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Larsen & Toubro enters into joint venture with Sharp Electronics
Mumbai: Engineering major Larsen & Toubro (L&T) yesterday formed a joint venture company with Sharp Electronics of Japan, in which the Indian giant will have a 26 per cent stake.

L&T will contribute a platform in terms of market know-how, a distribution channel and a nation-wide reach through its network of offices, a company press release stated. L&T's existing electronics and electrical business division will continue to be part of the diversified company.

The joint venture company plans to offer offer products like digital and analog copiers and fax machines. Besides, it will bring to the domestic market information technology products such as notebook computers, ink-jet printers, among others. L&T had introduced some of these products a year ago in the Indian market

The venture is part of the restructuring process started at L&T earlier this year, following the recommendations of the Boston Consulting Group, under which the main company would concentrate on engineering and construction, and all other non-core businesses will be hived off into separate joint ventures with international market leaders.

Sharp Corporation, a Fortune 500 company, is a world major in electronics. The company offers business solutions, consumer electronics and electronic components, liquid crystal displays, optometrics and semiconductors.
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Virgin Airlines’ entry into India likely to get delayed
Bangalore: There is good news in the offing for our country's international carrier, Air India. The expected entry of Richard Branson's Virgin Airlines into this country, is likely to be late to India. The airline was slated to make a big bang entry to the Delhi market from July 1 this year. Since the airline has not been able to finalise the fares in consultation with Air India, the launch may be delayed at least by a couple of weeks.

A-I officials said their Virgin counterparts were expected soon in Mumbai to finalise the modalities of the fares. Once the fares for the code share flight are introduced across the A-I system, it will take about two months for the services to commence. Therefore, unless there is more delay, the Virgin flights should begin sometime in August.

Virgin pulled off a coup of sorts last year right under big brother British Airways' (BA) nose when it struck a deal with the Indian flagship carrier to get three weekly jumbo flights between London and Delhi on the Indian bilateral quota. It would mean that Virgin will operate code share flights with AI on the latter's unutilised capacity rights. BA flies 16 weekly services to the Indian cities of Delhi, Mumbai and Chennai, while A-I does about 10-11 flights to London. Virgin's entry to the busy UK-India sector is expected to up the competition, particularly as the Richard Branson carrier has the reputation of throwing up some very exciting introductory offers for passengers.
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