26 per cent stake in RCom is to be picked up by the Etisalat, a UAE based telecommunication operator.  The stakes would be worth over Rs 15,000 crore.

Etisalat has been planning to pick up stakes in RCom for a long time and this deal would be a win-win situation for both the parties, with Etisalat gaining shares in India’s second largest mobile company and RCom getting the cash flow that it required for expansion and other purposes.

However the deal will not come through smoothly due to the Indian Laws. As per the laws a promoter cannot have stakes in any two mobile companies which are operating in the same vicinity. The maxim per cent of stake allowed is 10 per cent. Etisalat already has a 45 per cent stake in Swam and this is the reason for the hindrance in the merger.

Also there is a three year lock in period for the promoters which can make things more complicated.

Having received the license for Swan Etisalat in 2008 and with the lock in period, these stakes are locked till the year 2011. As Etisalat already has a 45 per cent stake with Swan, as per the laws Etisalat is not permitted to hold more than 10 percent stake in any other mobile company.

Thus the options are very few and clear for Etisalat if it wants to go ahead with the merger with RCom. They would either have to look at a different merger route with RCom, or exit its JV with Swan or return the license to the government.

Even though the current maker value of a share of RCom is over Rs191, Etisalat is looking to purchase shares at Rs252 a share which is the book value of the share.

Rajesh Jain, the SMC Global Vice President said “The deal, if it comes through, will be favorable for the company. On Monday, the scrip managed to rise even in the weak broader market, which shows the investors’ confidence in the stock”.

The total subscriber base has risen to 110 million with a new addition of close to 2.8 million new subscribers for RCom.

The services that RCom provides are long distance services, mobile services on GSM and CDMS, broadband and fixed line services.

The process for launching the mobile services by Swan Telecom (Etisalat DB) is underway and they hold UASL licenses (Universal Access Service Licenses) in 13 telecom service areas in India.

Dynamix Balwas Group, DB Group, which is based out of Mumbai and is primarily into hospitality and real estate business, hold a major chuck of the remaining 55 per cent of the shares of Swan Telecom. Apart from the DB group, there are several other groups owning parts of shares in this venture.

Last year, as the world witnessed one of the worst recessions, it also felt the might of the Chinese economy. The economies around the world struggled to come out of recession but at the same time China displayed a growing economy which was in sharp contrast to most of the world.

Commercial vehicle sales in India showed an impressive growth rate of 77% during the initial five month of year 2010 when compared to last year, this was primarily absorbed by the freight market in India which is growing at a real fast pace. India’s rate of growth over shadowed the 60% growth rate exhibited by China.

Pawan Goenka who currently is the president of the Society of Indian Automobile Manufacturers mentioned that “We are expecting stronger growth in the segment in the coming months, as the market would be led by new-generation trucks being introduced by several global companies”. The Society of Indian Automobile Manufacturers has compiled this data.

The sales of commercial vehicles reflect the state of the economy because the sales in this segment are directly linked to the growth of the country’s economy. In the quarter starting from January  and ending in March, the Indian economy bettered the growth forecasts and witnessed a growth rate of 8.6% and the economy is expected to grow at a rate of 9.5% as forecasted by IMF for the current year.

The economic growth happening in India has fed the demand for the commodities transportation, due to this increased demand for bulk transportation the freight market is thriving and growing at approximately 20% year on year. The current size of the freight market is estimated at Rs. 3 lakh crores.

Indian commercial vehicle market is doing good but still, it cannot be compared in terms of overall volume to the Chinese commercial vehicles market. The Chinese commercial vehicle market is much larger in size and it is still the world largest market for trucks, with almost every second medium-duty and heavy-duty commercial vehicle finding a buyer.

Three truck makers from the group of the five largest truck makers in the world are from China. China sold many more trucks in first 5 months of 2010 and the numbers stood at 30.41  lakh units when compared to a sale of 1.23 lakh units in India. Last year 5.31 lakh trucks were sold in India when compared to 8.67 lakh trucks sold in China. Overtaking China in growth rate of commercial vehicle sales is not mean achievement for India given that the economy was hit by the slowdown and has shown a turnaround only during last few months.

Mr. Vinod Dasari, full time director at Ashok Leyaland shared that “Sales are strong and better infrastructure is expected to result in higher demand for all types of trucks, especially the bigger ones in the 25-49 tonne segment”

Do they have an ‘Ace’ up their sleeve, or are they just building gigantic structures
over shaky grounds?

On the eve of its mini truck Ace’s fifth birthday, India’s largest truck maker also
announced its plans to go full throttle in the Light Commercial Vehicles (LCV)
segment. A part of their growing confidence stems from the fact that ‘Ace’,
otherwise fondly referred to as “Chotta Hathi” has been a whopping success,
selling over 5 lakh units since it first hit the markets.

So, how exactly is Tata planning to up the ante? Well, the roadmap for growth
will be charted out through three new vehicle launches. First in line is a mini
version of ‘Ace’ that intends to challenge the Mahindra Gio and tri-wheeler cargo
applications. This version will be mounted on an all-new platform and assembled
at the company’s Pantnagar plant. A four wheel passenger vehicle and an edition
of ‘Ace’ that runs on higher horsepower, and fitted with a DICOR engine are the
other plans on the anvil.

Tata Motors believes that Ace’s success is because it fulfills the commercial
needs of the common man. Since, its launch in May 2005, the mini-truck has
seen consistent growth patterns, except for the financial year 2008-09. However,
in 2009-10, it bounced back, with the sales crossing the one lakh unit-mark.
While Tata Motors anticipates great sales for ‘Ace’ from Europe, it’s the
Indian rural market that it’s really pinning its hopes on. The company has in
fact, set up a special rural wing and expanded opportunities for auto finance
solutions to farmers through tie-ups with PSUs, regional rural banks and
credit societies to realize its dreams of doubling its Indian rural market share.
While they are going all out on the volumes, what would be interesting to see
is how well ‘Ace’ copes with the price leniency model that its immediate rival,
M&M’s Maxximo has adopted.

The Indian car industry is poised for good times. Following in the wake of
global car makers, the European auto component major Magneti Marelli is also
casting its eyes on India and China. The spurt in the Indian car market is a great
opportunity for ancillaries like Magneti Marelli to hitch a ride on the growth curve.
The company is coming into the scene when it’s hot with 2009-10 being one of
the best sales years. The Indian automobile industry peaked with sales of 12
million units. Auto-component sales have to play catch-up as its own segment
saw a 14% growth to the car industry’s 26%.

The Italian company is a part of the Fiat Group and specializes in making high-
technology components for the automotive industry. The company’s CEO Dino
Marelli told a leading financial daily, “India is becoming a very important market
for global auto makers and we want to increase our India footprint significantly.”
Magneti Marelli’s own revenues from its Indian ventures came to around Euro 80
million, a leap of 100% from the previous year.

India and China would be contributing 5% and 7% of the revenues for the
company respectively. Instead of going it alone, Magneti Marelli is looking at
joint ventures. The company’s subsidiary firm has a tie-up with Delhi-based
Carnation Auto to launch ‘Auto Premio Solutions’ at Gurgaon. This new venture
is aimed to be a one-stop solution for luxury and premium cars in the region.
Magneti Marelli won’t have a difficult marriage with the companies in India as
it has worked with some of the biggest brands in the business globally. India’s
share in its revenue pie is low to begin with. Europe and Latin America are some
of its biggest markets.

But the overall economic growth in India can result in a significant increase in
revenue for Magneti Marelli.