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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (5639)	8/18/1999 11:40:00 AM
From: Mohan Marette	Respond to of 12475

Honda picks India over China News reports reveal that, the US$ 45.5 bn Japanese auto major, Honda Motors, has chosen India over China as a hub for its global two-wheeler business. However, the company has acknowledged that China and India will continue to form the cornerstone of its two-wheeler business, due to the large two-wheeler market in both these countries. Earlier, Honda's plan to set up a 100% subsidiary in India for two-wheelers received the green signal from the Foreign Investment Promotion Board (FIPB). The manufacturing facility is expected to become operational in 2HFY01. The company plans to start exporting in third year of operation. The first three years of operations is estimated to garner US$ 18 m. Honda Motors' decision to make India its global base for two-wheeler production, follows closely on Fiat's (of Italy) move to use its Indian plant (at Ranjangoan) for passenger car exports. While it is yet too early to call this a trend, the confidence that auto majors like Honda and Fiat have placed in India, preferring it over China, is commendable. And India doesn't even have a stable government as yet! Earlier there was some apprehension whether India would ever attract global auto majors after the Indian government's differences with Suzuki over the appointment of a MD for Maruti. But these fears have now been allayed to an extent. Only time will tell if both Honda and Fiat will benefit from their decision to outsource from India. But even if they meet with marginal success, it may tempt other auto majors to look at India as a base, given India's stable economic credentials and a vibrant auto market. 18 August, 1999 (Courtesy:Quantum Research)

To: Mohan Marette who wrote (5639)	8/18/1999 11:56:00 AM
From: Mohan Marette	Read Replies (1) \| Respond to of 12475

Reliance issues Rs 300-cr zero coupon bonds ril.com Yassir A Pitalwalla Mumbai 17 August Reliance Industries Ltd (RIL) today issued Rs 300-crore worth of zero coupon bonds (ZCBs) of a 4-year 10-months tenure, with an implicit yield-to-maturity of 12.50 per cent. The tenure and structure of the ZCB ensures that it is at par with the five-year ZCBs already floated by RIL in May 1999 taking the outstanding value of the ZCBs to Rs 700 crore. Sources said RIL is following the example set by the Reserve Bank of India which is consolidating the government?s debt by issuing fresh bonds that are at par with existing securities, to increase liquidity in those securities. The issue, which closed on Wednesday, was managed by four investment bankers. ICICI Securities and Finance Company, DSP Merrill Lynch, ABN Amro Securities and Stratcap Securities. The earlier ZCB issuance under the same prospectus was for an amount of Rs 400 crore for a five-year tenure in May 1999. Both tranches mature on the same day and have the same terms and conditions including a planned listing on the National Stock Exchange of India. Bonds in both tranches have a face value of Rs one crore each and the proceeds are to be used by the company to retire the high cost debt raised earlier. Banks can use the instrument effectively by retaining it for four years and paying long-term capital gains tax and selling it to mutual funds in the fifth year. Both tranches carry a AAA (highest safety) rating by Crisil. The zero coupon option is preferred by the corporate over a term loan with quarterly interest payments as the term loan involves processing fees and other charges. As the ZCB involves a bullet repayment, RIL can conserve its cash flows during the ZCB tenure and deploy them in investments and earn an additional return to help defray part of the interest expenses. This is because the ZCB is in the nature of a deep discount bond which involves no interest or principal outgo for the entire term of the bond till maturity. The tranche is the latest in the series of issues by the company this year, designed to reduce its weighted average cost of capital to levels comparable to that of its international peer group.