New Delhi, February 27
The mega Sesa Sterlite merger got off to a rocky start with the markets not enthused with the restructuring and Sesa Goa ended up falling more than ten per cent on a day when the broader markets also sold off.

There are concerns that the deal to create the world’s seventh largest natural resources company does not favour Sesa Goa and also indications that large institutional shareholders in that firm including some mutual funds may oppose the transaction.

Dipen Shah, head of fundamental research, Kotak Securities said Sesa Goa fell on the back of the deal announcement due to concerns and also as the merger ratio was apparently favouring Sterlite.

On the concerns regarding the deal, Shah said no reasonable operational synergies are visible in the merger and there will likely to be limited financial and taxation synergies. In addition, the transaction would result in merging the considerably high and consistent cash burning Vedanta Aluminium Ltd (VAL) with good cash generating entities to meet VAL’s ongoing funding requirements.

Barclays Capital said according to Vedanta’s management the restructuring exercise is to generate synergies of $200 million. However, it added the VAL stake transfer may not find favour with Sesa shareholders given the uncertain outlook over the unavailability of captive bauxite due to the Niyamgiri controversy. The transaction may lead to significant reduction in debt exposure for the parent company, Vedanta.

Quant Capital says the deal is tilted very marginally in favour of sterlite shareholders as they may witness better earnings impact than Sesa.

Jagannadham Thunuguntla, strategist & head of research, SMC Global Securities said, prima facie, the merger ratio appeared to be slightly in favour of Sterlite shareholders. “And it appears that the merger ratio is slightly detrimental to the Sesa Goa shareholders”, he added.

He said Sesa Sterlite would benefit as the bluechip asset of Cairn India is brought into the group. As the latter has proven oil reserves, with ability to generate significant cash flows, this could prove to be a significant benefit for Sesa Sterlite shareholders.

Thunuguntla added Sesa Sterlite was expected to have a market cap upwards of $20 billion (about Rs 1 lakh crore) and the restructuring would give the group better representative weightage in the Nifty and Sensex as well.

Meanwhile, the BSE Sensex dropped 2.7 per cent on Monday to post its biggest fall in five months, as high oil prices due to escalating tensions over Iran's nuclear programme renewed worries about domestic inflation.

Mexico City, February 27
Leading economies told Europe it must put up extra money to fight its debt crisis if it wants more help from the rest of the world, piling pressure on Germany to drop its opposition to a bigger European bailout fund.

Eurozone countries pledged on Sunday, at a meeting of finance leaders from the Group of 20 economic powers, to reassess next month the strength of their bailout fund.

This would be "essential input" when it comes for the G20 countries to consider putting more money into the International Monetary Fund's crisis war chest, G20 finance ministers and central bankers said in their final communique after two days of meetings here.

"There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and the IMF cannot move forward without more clarity on Europe's own plans," U.S. Treasury Secretary Timothy Geithner said.

Germany, as Europe's largest economy, has sent conflicting signals over whether it is ready to soften its position, and it came under intense pressure this weekend to support enlarging the region's war chest.

It faces political hurdles at home. German lawmakers, who vote on Monday on a second Greek bailout package, have argued that imposing fiscal discipline on indebted countries is far more important to regaining the confidence of markets and reviving economic growth than bigger rescue funds.

Geithner disagreed. While Europe's actions so far have reduced the risks of a "catastrophic" financial crisis, more must be done, he said.

British finance minister George Osborne was even sharper. "We have to see the color of the euro zone's money first - and, quite frankly, that hasn't happened. Until it does, there's no question of extra IMF money from Britain or probably anyone else," he said.

The G20 is racing to line up massive international resources worth nearly $2 trillion — including existing and new funds - possibly by late April. That would help to draw a line under the financial crisis that erupted in 2008 when Lehman Brothers collapsed, spawned the deepest U.S. recession since the 1930s and now has engulfed Europe's deeply indebted countries.

It would mark their boldest move since they ploughed $1 trillion into their economies three years ago to combat recession. — Reuters

New Delhi, February 27
The country's top commodity exchange MCX has fixed the price of its initial public offering at the upper end of the band at Rs 1,032 a share, raising about Rs 663 crore through the IPO. Drawing a huge investor response, the float was oversubscribed by more than 54 times attracting bids of about Rs 36,000 crore.

"The offer price is fixed at Rs 1,032 per equity share of face value of Rs 10 each. The offer price is 103.2 times of the face value," MCX said in a public announcement on Monday.

The MCX IPO, that closed on Friday last week, received a record breaking demand from retail, institutional and high net worth individual investors. In terms of demand from retail investors, the IPO is believed to have surpassed all previous records, as the shares reserved for the retail shareholders was over-subscribed by nearly 24 times.

"The MCX IPO has brought much required smile on the face of the capital market and IPO market, which have remained grim in the past two years. Almost in all the metrics, the IPO has proved to be successful," SMC Global securities strategist & head of research Jagannadham Thunuguntla said.

The bidding for the MCX IPO began on February 22 and closed on February 24 in a price band of Rs 860-1,032 per share. MCX has more than 70% share in the annual estimated turnover of Rs 177 lakh crore for the entire commodity derivatives market.

Globally, MCX is the fifth-largest commodity exchange, while it figures among the top two positions in gold and silver segments. It is the first exchange in India to go public. — PTI

New Delhi, February 27
Kingfisher Airlines’ owner Vijay Mallya said Monday he had organised funds to pay "seriously overdue salaries" to employees and hoped to resolve the crisis facing the cash-strapped carrier early next week.

While he gave no details about the funding, Mallaya said the airline promoters had converted their loans for an additional 5% equity last week. “I’ve organised funding so that we can pay your seriously overdue salaries which is a source of great personal sorrow for me. We are currently handicapped as our bank accounts are frozen by the tax authorities,” he said.

Separately, Mallya told The Times newspaper in London that Kingfisher was in talks with two unidentified foreign carriers about equity tie-up that could be announced within days.

International Airlines Group, the owner of British Airways and Iberia, and Abu Dhabi's Etihad Airways have been involved in talks for investment in the Indian carrier, the newspaper said, citing unnamed sources.

Mumbai, February 27
Banking services across the country will be affected on Tuesday with employees of all the public sector banks joining the nationwide general strike.

In a joint statement issued here on Monday, the All India Bank Employees Association (AIBEA) and the All India Bank Officers Association (AIBOA) said seven unions in the sector were joining the strike in pursuit of their demands. "The government should put in place effective measures to recover bad loans made by the public sector banks to various corporate houses. We are also opposed to the unilateral decision to implement the Khandelwal committee’s recommendations," AIBEA secretary Vishwas Utagi said.

The bank employees say the government is keen on pushing banks to outsource a number of noncore activities to outside agencies in a bid to reduce operating costs of the banks.

State Bank of India, its affiliates and the other nationalized banks together account or 75% of the banking system in India with 87,000 branches and more than 800,000 employees spread across the country, the unions said.

A number of state-owned banks like Bank of Baroda, Corporation Bank and Punjab National Bank have already warned customers that services would be affected on account of Tuesday’s nationwide strike.

Apart from banks, a number of other government employees including those in the postal department have said they would join the strike. Among other things, the unions are opposing curtailment of contractual employment, disinvestment of public sector undertakings apart from pressing for a social security net for all employees.

In Mumbai, the government has managed to prevail upon various trade unions not to paralyze life in the city. NCP leader and veteran labour unionist Sharad Rao who controls unions of BEST workers, auto-rickshaw and taxi drivers and civic employees said essential services will not be affected in Mumbai.

The Hotel Owners Association has also clarified that their establishments wouldn't be shutting down though they are supporting the nationwide strike.

London, February 27
HSBC Holdings Plc, Europe's biggest bank, predicted growth in Asia and other emerging markets would outweigh sluggish European economies this year as it posted a $21.9 billion profit for 2011, the best outturn by a western bank so far.

HSBC added, however, that success in emerging markets was becoming increasingly expensive, with costs rising 10 percent to $3.9 billion — a third of that due to higher pay.

Banks across Europe have been posting billions of dollars of losses as the euro zone sovereign debt crisis has eroded the value of their government bond holdings and hit their trading operations, and as they strive to meet tough new rules aimed at preventing a repeat of the 2007-09 banking crisis.

HSBC has been relatively unscathed because it makes more than three quarters of its profits outside Europe and north America. It remained upbeat on Monday about prospects for emerging markets despite fears that some are overheating and could see an abrupt slowdown in growth this year.

"We remain comfortable with the emerging markets (outlook) and are confident that GDP growth in emerging markets will be positive and China will have a soft landing," chief executive Stuart Gulliver told reporters.

HSBC, with around 7,200 offices in 80 countries, said pretax profit rose 15% to $21.9 billion in 2011. , just below analysts' average forecast of $22.2 billion. — Reuters