Bangalore, September 25
Liquor baron Vijay Mallya led UB Holding’s flagship company United Spirits Ltd has confirmed that it is in talks with UK-based multinational liquor giant Diageo plc, the world's largest distiller and maker of Johnnie Walker whiskey, Smirnoff vodka and other well-known brands, for selling an equity stake to the latter.

In a joint statement filed to the Bangalore Stock Exchange and the BSE on Tuesday, United Spirits and Diageo plc said they would like to “confirm that Diageo plc is in discussion with United Spirits Ltd and United Breweries (Holdings) Ltd in respect of possible transactions for Diageo plc to acquire an interest in United Spirits Ltd”.

“However there is no certainty that these discussions will lead to a transaction”, the statement added.

The joint statement has come on a day when the 13th annual general meeting of United Spirits is underway in Bangalore. How the shareholders have reacted to the news of the United Spirits’s proposed selling off stakes to the UK-based company is not immediately available.

But shares of United Spirits had soared more than 10% on Monday to a new 52-week high of Rs 1,100.95 on NSE on reports that Diageo Plc was in talks with it to buy stake in the Bangalore headquartered liquor firm. The stock was trading 2.69% higher at Rs 1,082.40 on the BSE in late Tuesday afternoon trade, after touching an intraday high of Rs.1,098.80.

It is not yet known how much the UK-based company would like to acquire from Mallya who owns about 28% of the company. If Diageo acquires 25% of United Spirits, it will have to launch a mandatory open offer for at least 26% more of United Spirits in order to bring its stake to 51%.

One theory is that Mallya move to sell stakes in the United Spirits has been prompted by his desperation to raise money for the ailing Kingfisher Airlines, the AGM of which is slated to take place in Bangalore on Wednesday. Shareholders are likely to ask the Kingfisher chairman some tough questions during the meeting.

Mallya had earlier claimed that foreign carriers were interested in investing in Kingfisher Airlines. However, even though the government has decided to relax the rules for FID in aviation sector, Kingfisher has failed to attract any FID proposal till date.

Talking to reporters on the sidelines of the company's annual general meeting in Bangalore, United Spirits chairman Mallya also confirmed that the two companies were in talks but said there was no certainty of the transaction. "This is at discussion stage and there is no certainty the transaction will take place. I’ll say nothing more, nothing less," Mallya said.

The announcement comes at a time when Mallya-led firms, notably Kingfisher Airlines, are reeling under huge financial troubles.

Declining to elaborate on the talks with the world's largest spirits firm by value, Mallya said the company’s shareholders had been informed about the discussions at the annual general meeting and all resolutions on the agenda have been passed unanimously.

New Delhi, September 25
Japanese auto major Nissan Motor on Tuesday launched its multiutility vehicle Evalia priced between Rs 8.49 lakh and Rs 9.99 lakh (ex- showroom Delhi), promising it would launch ten other models in the country by fiscal 2015-16.

Looking to garner 8% of the Indian car market by that year, Nissan said not only would the Evalia be a game changer but would also bring in the Datsun brand by 2014, which will give the company more leverage to become a significant player in India.

The Evalia can accommodate as many as 8 occupants. Mated to a 5-speed manual transmission the front-wheel drive MPV is powered by a 1.5-litre dCi diesel engine that produces 85PS of power and 200Nm of torque.

Nissan claims that the Evalia can hit 60 km/hour in 12.7 seconds owing to its monocoque construction that gives it a lower kerb weight compared to other MPVs available in the market today. The ARAI figure for the Evalia stands at 19.3 km/litre, which translates to a 50% better overall efficiency as compared to the current competition.

Nissan said it would look to expand production capacity either through new plants or the existing plant. With the expansion the auto giant seeks to be a significant player in the country.

"As part of our global Nissan Power 88 plan, we’ll be launching 10 new models by fiscal 2015-16, which is introducing two new models every year," Nissan Motor Co corporate VP for Africa, Middle East and India Toru Hasegawa told reporters here.

Elaborating on the launch plan for Datsun, he said by FY14, two products from the brand would be launched in India, Indonesia and Russia and another one would follow in three years after these have been launched.

Asked if the Datsun brand will be sold under same sales network as Nissan in India, he said: "There will be separate teams for Datsun and Nissan but initially, we may sell Datsun from the same showroom with Nissan. Once the volumes expand, then Datsun can have its own showrooms."

When asked about further investments in India, Hasegawa said the company has not yet decided India at the moment but would need to do s in future as volumes expand.

"We’re constantly studying as to how to meet the increasing demand. Soon our Chennai plant will reach the 400,000 annual capacity then we’ll decide if we need an additional plant or reinforce the existing one," he added.

Nissan and its parent Renault have jointly invested Rs 4,500 crore at the Chennai plant which produces models from both the companies.

The seven-seater Evalia will compete with the Toyota Innova, Maruti Suzuki’s Ertiga and the Mahindra Xylo. Production of the MUV has already begun at Nissan’s manufacturing facility in Chennai.

Mumbai/Bangalore, September 25
The government will likely borrow an additional Rs 50,000 crore ($9.34 billion) for the year ending in March and miss its fiscal deficit target, a Reuters poll showed, raising doubt about the fiscal discipline of a country whose credit ratings are under threat.

The country's fiscal deficit is expected to rise to 5.8% of gross domestic product, higher than the government's target of 5.1% of GDP given in March, according to the poll of 24 economists taken over the past week.

Estimates for the government's additional borrowing for the second half of the fiscal year which started in April ranged between Rs 15,000 crore to Rs 75,000 crore.

The government is set to unveil its borrowing plans for October-March this week, although it may delay announcing needing extra borrowing to avoid upsetting markets, and stick to its current target for now, analysts said.

But eventually, the government would have to announce extra borrowing, according to analysts tracking the trajectory of government spending and revenues.

"The market is not expecting any hike immediately. If Rs 500 billion of extra borrowing is announced now, yields may spike by 10-15 basis points," said the chief executive at a primary dealership.

The government and the central bank will meet sometime this week to set its borrowing programme for October-March, in what will be keenly watched by the bond markets and rating agencies for signs of fiscal slippage.

Although major reforms this month, including a hike in subsidised diesel prices, have been cheered by markets, investors remain worried about fiscal discipline.

The government had earlier set its borrowing target for October-March at Rs 2 trillion, as part of its plans to raise Rs 5.7 trillion for the full fiscal year.

However, four months into the year, the deficit has already hit 51.5 per cent of the full year target, making it likely the government will have to resort to more borrowing. — Reuters

New Delhi, September 25
A day after announcing a time-bound debt restructuring package for the state electricity boards, the government today said it would bring a draft model bill for efficient running and fixing responsibility on state distribution companies.

Talking to reporters here, Power Minister Veerappa Moily, while pointing out that SEBs’ debt had crossed Rs 2 lakh crore, said: "The power ministry will bring out a draft State Electricity Distribution Responsibility bill after due interministerial consultation within a period of 12 months following approval of the scheme".

States will enact the legislation within 12 months from the date of circulation of model legislation by the power ministry to mandate compliance of the provisions of the financial restructuring package, he said, adding state electricity boards had run up losses of Rs 246,000 crore between fiscal 2007-08 and 2011-12.

"Nonpayment of subsidies, high purchase costs are leading to losses. We have tried to move towards performance linked incentives," Moily added. He added the steps had been taken as banks had stopped lending to SEBs.

"State governments shall convert all SEB loans into equity," Moily said while admitting the attempt to make power distribution companies (discoms) debt-free in 2001 had failed.

States, he said, will have to notify revised power tariffs by March 31 each year. “They will have to implement legislation within a year. We don't want it to see the same fate as that of the 2001 discom restructuring plan”.

The Cabinet Committee on Economic Affairs had on Monday approved the scheme for financial restructuring of state distribution companies.

The scheme contains various measures required to be taken by state discoms and state governments for achieving the financial turnaround of the discoms by restructuring their debt. They will have to show the positive steps taken before getting the grant from the central government.

According to the scheme approved by the CCEA, 50 per cent of the short-term outstanding liabilities would be taken over by state governments. This shall be first converted into bonds and then issued by discoms to participating lenders, duly backed by the state government's guarantee. The remaining 50% loans would be restructured by providing a three-year moratorium on principle and the best possible terms for repayment.

Lenders will also have to agree to restructure or reschedule the existing short-term debt. The approved scheme is not mandatory for the states, but is open only till December 31 this year.

New Delhi, September 25
To promote cashless transactions, the finance ministry has asked public sector banks to take steps to reduce the fee to zero for electronic transfer of funds up to Rs one lakh.

Currently, most banks charge a maximum fee of Rs 5 per transfer of funds up to Rs 1 lakh from one account to another through National Electronic Funds Transfer (NEFT) system. Transfer of funds up to Rs 10,000 through NEFT system attract a maximum charge of Rs 2.50 per transaction.

In a recent communication to the state-owned banks, the Ministry had asked them to "take action" to reduce the NEFT charges to zero for value up to Rs 1 lakh.

However, some banks are yet to intimate the Ministry about the action taken by them to reduce the charges, sources said. The RBI has, however, retained maximum charges of Rs 15 per transaction for electronic transfer of funds beyond Rs 1 lakh to less than Rs 2 lakh,

The government has been asking banks to encourage transactions through e-payment channels so as to reduce the number of transactions through cheques and other expensive modes of transactions. State run banks have also been asked to identify top 20% branches in respect of business volumes. — PTI