Indian Economic Weekly News

1. Top Headlines
 Microfinance firm Bandhan Financial Services to sell Rs
500-cr farm loans to IDBI.
 SBI decides to cut interest on Education loan
 SKS securities Rs 354 cr from PSB
 DLF expects Rs 700 cr sales realization from housing
project.
 OrbiMed To Pick 12% In Shasun Pharmaceuticals For
$10M.
 Accel Partners & Tiger Global Invest $6M In E-com Startup
Zansaar
 Berggruen Holdings Putting In Fresh Money In Accentia
Technologies
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2. Weekly Economic Review
New figures show economic growth has slowed down drastically in the fiscal
third quarter. GDP expansion decelerated to just 6.1% in the three months to
December. The latest numbers are worse than most expectations. The
government had already revised India growth target for 2011-12 to just 6.9%.
But the poor showing in the third quarter makes it unlikely India will even hit
that modest target.
Broken sector-wise, it’s clear some sectors have done especially badly.
Manufacturing grew a paltry 0.4% in the third quarter compared to the year-
ago period. And mining actually fell 3.1%. Farms showed a modest gain of
2.7%. But the pleasant surprise came from construction, which went up 7.2%.
Switching to corporate, GVK Power could sell off some of its stake in its deep
water hydrocarbon blocks. There are seven oil and gas fields in question, all of
them in the Arabian Sea. Mint has learnt the company is talking to the UK-
based B-G Group about a potential sale. GVK could also sell some of its stake to
BHP Billiton, its partner in the hydrocarbon fields. GVK currently owns 74% of
these blocks, with BHP Billiton holding the remaining 26%. The potential
stake sale may be part of a larger effort to raise funds for other ventures.
Moving on, India’s aviation industry may be in crisis, but at least one promoter
has cast a vote of confidence in the sector. On Friday, Spice Jet announced its
promoter, Kalanidhi Maran, had agreed to infuse Rs. 100 crore into the
airlines. The deal will give him 42.9 million shares, which is 5% of the total
equity. Maran will now own 48.6% of Spice Jet. Spice Jet had 16.3% of India’s
total market share as of January.
A nationwide strike on Tuesday brought businesses to a halt in many areas.
Some banks and transportation services were affected, but many others
continued to function normally. The protestors were from 11 trade unions
affiliated to both ruling and opposition parties. They were protesting against
rising prices, disinvestment and violations of labour laws.
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3. Inside The Story
Microfinance firm Bandhan Financial Services to sell Rs
500-cr farm loans to IDBI.
Microfinance company Bandhan Financial Services plans to sell Rs 500
crore worth of farm loans to IDBI Bank in what would be the biggest
securitisation deal this year. Selling loans releases capital for MFIs and
helps them deploy fresh loans to the poor without borrowing directly
from banks. The transaction will be through within a week.Ghosh said
both the parties will execute the deal once ratings agency Icra provides
a rating for the pool of 4.5 lakh small farm loans.
SBI decides to cut interest on Education loan
The country's largest lender State Bank of India (SBI) has taken in-
principle decision to slash interest on education loans by up to 1
percentage point. "The bank has taken in-principle decision to cut
(interest on) education loan," SBI Managing Director and Chief Finance
Officer Diwakar Gupta said. "Announcement would be made soon. The
bank will issue the notification shortly," he added. Without giving
details of quantum of rate cut, he said, it may be up to 100 basis points.
Interest rates on education loans range from 12.25 per cent to 14.50 per
cent, depending on their quantum and the duration.
SKS securities Rs 354 Cr. from PSB
SKS Microfinance, the country's only listed micro lender, today said it
has securitized Rs 354 crore of receivables from 18 states, except
Andhra Pradesh. The securitization was done by a major public sector
bank, SKS said in a statement, without naming the lender. SKS shares
were up 1.64 per cent at Rs 130.40 on the BSE in late morning trade.
Under the pool securitization, bundling micro loans made to borrowers
like micro-entrepreneurs are sold to investors such as banks to raise
funds.
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4. DLF expects Rs 700 cr sales realization from housing
project.
Realty giant DLF will soon launch a luxury housing project in Gurgaon
with an expected sales realization of about Rs 700 crore. According to
sources, the company will offer 562 premium apartments in the project
'Regal Gardens', which is spread over 11 acres. The project is part of the
450-acre integrated township 'Garden City' in Gurgaon. The company
expects a sales realization of about Rs 700 crore from the project, they
said.
OrbiMed to Pick 12% in Shasun Pharmaceuticals for $10M
OrbiMed Advisors, one of the world’s largest healthcare-dedicated
investment firms, is acquiring close to 12 per cent stake in midsize
drug-maker Shasun Pharmaceuticals Ltd by investing Rs 50 crore ($10
million).The investment is done through a preferential allotment where
Caduceus Asia Mauritius Ltd, an investment arm of OrbiMed Advisors
LLC, is subscribing to around 6.5 million shares of Shasun at a price of
Rs 76 per share, the company has disclosed in a statement to the
Bombay Stock Exchange. This would translate into an equity stake of
around 12 per cent post-dilution.
Accel Partners & Tiger Global Invest $6M in E-com Startup
Zansaar
Bangalore-based e-tailor of home décor products Zansaar.com (a brand
owned by Singapore-based Salar Online Pvt Ltd) has raised $6 million
funding from Accel Partners and Tiger Global, two of the most prolific
venture capital and private equity investors in the Indian e-commerce
sector. As per the official release, the money raised will be utilised by
Zansaar towards meeting its working capital requirements and
supporting organic growth, planned for the coming months. Part of the
capital will be also used for maintaining inventory and meeting
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5. marketing expenses. Speaking about the investment, Subrata Mitra,
Partner at Accel Partners, said, “We think very highly of the Zansaar
team and are confident that they are well-aligned to execute in a rather
complex category. We expect very healthy growth, and are proud and
confident to associate with and assist in Zansaar’s growth.”
Berggruen Holdings Putting In Fresh Money In Accentia
Technologies
Mumbai-based Accentia Technologies Ltd has received its board’s
approval to issue shares and warrants to its promoters and also to the
US-based private equity firm Berggruen Holdings and the hedge fund
Cycladic Capital LLP, the company has disclosed in a statement to the
Bombay Stock Exchange. The company will issue 24, 25,000 equity
shares and 5, 59,615 warrants to the investors. Although the issue price
has not been disclosed yet, Accentia will be able to raise around Rs 17
crore ($3.5 million) at the current market price.Berggruen Holdings is
an existing investor in the company and holds 12.67 per cent stake as of
December 30, 2011. It had originally invested in Q4 of 2007, when
valuations were close to peaking out. Although the stock price did move
up in 2010, the PE firm stuck around and is now sitting on unbooked
losses of over 75 per cent.
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