JK Group to buy Kesoram’s Haridwar tyre unit for Rs 2,200 crore

JK Group will acquire BK
Birla flagship firm Kesoram Industries’
tyre manufacturing plant at Haridwar for
up to Rs 2,200 crore.
JK Tyre and JK Asia Pacific Singapore Pte
Ltd , a wholly- owned subsidiary of the
company, have signed a binding term
sheet with Kesoram Industries Ltd (KIL) to
acquire 100 per cent equity in Cavendish
Industries Ltd (CIL), JK Tyre said in a
statement.
CIL houses a tyre business undertaking
located at Haridwar (Laksar) which
manufactures a range of tyres, tubes and
flaps.
“JK Group has agreed for this acquisition
at an enterprise value not exceeding Rs
2,200 crore, subject to conditions,
wherein JK Tyre will hold the largest
shareholding block and shall have
substantial management control of CIL
with an option to place up to 55 per cent
with its associates/group companies,” the
tyre maker said.
In a separate statement Kesoram
Industries said that it will divest its
subsidiary Cavendish Industries Limited
where it holds 99 per cent shareholding.
The company added the deal would
strengthen the balance sheet of the
company and it also remained committed
to tyre business.
For JK Tyre, the acquisition will provide
further impetus towards ready expansion
in the truck and bus radials segment as
well as its entry into the fast growing two-
and three- wheeler tyre market.
“The transaction is a reflection of the
inherent strength of the company in
undertaking acquisitions with turnaround
potential and successfully delivering
results to all the stakeholders in the
business,” JK Tyre Chairman Raghupati
Singhania said.
The acquisition is proposed to be funded
by a combination of debt and internal
accruals raised by JK Tyre and its other
group entities.
“The financial exposure of JK Tyre in the
acquisition is expected to be of the order
of Rs 450 crore. The final transaction is
expected to consummate over next few
months (subject to various approvals)
with definitive documentation expected to
be executed between the parties in due
course of time,” it added.
JK Group, is one of the leading
conglomerates in India with business
interests in automotive tyres, cement,
paper, auto-components and other
businesses.
The group’s flagship firm, JK Tyre is
among the top three automotive tyre
manufacturers in India with presence in
truck, bus, passenger cars and other
vehicles, having nine manufacturing
plants all over the world.
In 2008, JK Tyre and Industries had
acquired Mexican tyre company Tornel for
Rs 270 crore.

Mutual fund assets set to hit Rs 20 lakh crore by 2018

Mutual fund assets set to hit Rs 20 lakh crore by 2018
Despite the global
headwinds, retail investors are shopping
in a big way via the mutual fund route,
and the industry is set to touch Rs 20
lakh crore asset base in the next three
years.
Total assets under management or AUM
of the mutual fund industry are expected
to cross Rs 20 lakh crore mark by 2018
from Rs 12 lakh crore, or roughly 10 per
cent of India’s GDP , which stands at $2
trillion, according to a report.
Faster growth is backed by factors such
as low penetration, a sound
macroeconomic environment and
favourable demographics, according to a
joint report by EY and Cafemutual.
It is difficult to comment if AUM could
touch the Rs 20 lakh crore mark or not,
but it looks reasonable and very mush
possible, Dinesh Khara, MD & CEO, SBI
Mutual Fund, said on the sidelines of
Cafemutual Confluence 2015.
The India mutual fund industry is in a
sweet spot with all the enabling
ingredients in place. Strong fundamentals
of the economy helped cushion the Indian
financial markets (including mutual funds)
during the global financial crisis.
If we just look at the SIP or systematic
investment plan, which has increased
multiple times, it only shows that
investors are maturing, Anup Bagchi, MD
& CEO, ICICI Securities, said on the
sidelines of the Cafemutual Confluence
2015.
This is evident from the fact that fund
managers continued their shopping spree
in August, purchasing shares worth a
staggering Rs 10,533 crore even though
overseas investors or FIIs pulled out a
record amount of money from the stock
market.
This was the 16th consecutive month
when mutual funds were net buyers of
equities.
Latest data showed fund managers
bought shares worth a net Rs 10,533
crore last month while foreign portfolio
investors (FPIs) took a record Rs 17,434
crore off the table during the period.
This is an all-time high net outflow by
FPIs since 1997, said a PTI report. In
October 2008, FPIs offloaded a net of Rs
15,347 crore from the market in the
aftermath of the Lehman Brothers
collapse, which triggered the global
financial crisis.
Since 2008, AUM of the Indian mutual
fund industry has grown at a CAGR of
16.84 per cent, outpacing the global
average of approximately 8.8 per cent in
the same period, said the report.
The report also highlighted that there lies
a significant opportunity to channel
household savings, which are only at Rs
11.7 lakh crore into capital markets.

Oil and Natural Gas Corp ( ONGC ) has bought a 15 per cent stake in Russia’s second- largest oil field from Rosneft for about $1.35 billion

State-owned Oil and Natural Gas Corp
( ONGC ) has bought a 15 per cent stake in
Russia’s second- largest oil field from
Rosneft for about $1.35 billion.
ONGC Videsh Ltd, the overseas
investment arm of the state explorer,
signed agreements in Moscow to buy 15
per cent stake in the Vankor oil field in
East Siberia, sources said.
The 15 per cent stake will give OVL about
3.5 million metric tonnes of oil a year.
Under the terms of the agreement, OVL
will get two seats on the Board of
Directors of Vankorneft – a Rosneft
subsidiary that operates the Vankor field.
Rosneft will retain full control of
infrastructure of the Vankor cluster, they
said.
Vankor, which started production in 2009,
holds recoverable reserves of about 500
million tonnes.
OVL already has a 20 per cent stake in
the Sakhalin-1 oil and gas field off
Russia’s far eastern coast and owns
Imperial Energy which has fields in
Siberia.

Indian auto industry expected to see value rise to Rs 18.9 lakh crore by 2026

The government and
automobile industry today set an
ambitious target of increasing the value of
output of the sector to up to Rs 18.89
lakh crore and make it among top three
globally in the next decade under the
Automotive Mission Plan (AMP) 2016-26.
The plan, a collective vision of the
government and industry, also aims to
propel the Indian auto sector “to be the
engine of ‘Make in India’ programme,
potentially contributing in excess of 12
per cent of the country’s GDP.
“AMP 2026 envisages that the India
automotive industry will grow 3.5-4 times
in value from its current output of around
Rs 4.64 lakh crore to about Rs
16.16-18.89 lakh crore by 2026,” said a
curtain raiser on AMP 2016-26, which
was released here at the SIAM annual
convention.
Highlighting the significance of the
sector, it said: “Over the next decade, the
Indian automotive sector is likely to
contribute in excess of 12 per cent of the
country’s GDP and comprise more than 40
per cent of its manufacturing sector.”
On job creation, it said: “The potential for
incremental number of both direct and
indirect jobs to be created by the Indian
automotive industry over the next decade
is nearly 65 million.”
This is over and above an additional 25
million jobs created in the previous
decade, it added.
In terms of exports, the AMP 2016-26
envisages Rs 2.95 lakh crore from OEMs
and Rs 4.62 lakh crore from component
shipments.
On emission norms, the plan said there is
a need for a scientific and transparent
study of the causes of air pollution in
Indian cities, suggesting BS V by 2019 for
new models and BS VI by 2023 for four-
wheelers.
On safety regulations, it said the there is
a need for articulating a clear road map
over the next decade that will make Indian
vehicles comply with global standards.
About AMP 2016-26, SIAM past president
and Mahindra and Mahindra Executive
Director Pawan Goenka said: “We believe
that AMP 2026 has visionary targets. It
goes beyond just numbers and focuses
on promoting safe, efficient and
comfortable mobility for every person in
society.”
SIAM President Vikram Kirloskar said:
“Once we have a road map, its easy to go
and use this for all policy purposes for a
long time.”
In the first AMP 2006-16, the auto
industry had achieved a target of
incremental job creation of 25 million
while the country attracted investments
topping the target of Rs 1.55 lakh crore
from global and local OEMs as well as
component makers.