Qatar's Oman Fund to pick up 15% in QTIL for Rs 480 cr

NEW DELHI: Qatar's Oman Investment Fund is all set to pick up a little over 15 per cent stake in telecom infrastructure company Quippo Telecom Infrastructure (QTIL) for Rs 480 crore.

FIPB on Thursday approved foreign investment proposals worth Rs 781 crore in Quippo Telecom, including the Rs 480-crore investment plan of the Qatar firm. The balance Rs 301 crore would come from existing investors including its parent company Quippo Inf rastructure, US investment major DB Zwirn, IDFC Private Equity and Indivest.

“The fresh investments would come through some existing investors and entry of a new player-Oman Investment Fund - which could pick up a little over 15 per cent in Quippo Telecom for Rs 480 crore,'' QTIL CEO, Mr Probal Ghosal told PTI.

The entry of fresh foreign funds would increase foreign equity to 82.55 per cent from 65.63 per cent. Post transaction Indvest and IDFC would have up to 30 per cent, Oman 15-17 per cent, DBZ 16-18 per cent and the rest would be with Quippo Infrastructure , he said.

At present, 100 per cent FDI is allowed in telecom tower business since it is into passive sharing of infrastructure.

Quippo Telecom is the telecom towers arm of Quippo Infrastructure, promoted by the Srei Group. The company is looking to rollout 5,000 towers by March 2009 and plans to increase it to 21,000 towers by 2011.

The funds would be used for financing this expansion. The company rents its towers to all telecom operators including Bharti Airtel, Vodafone Essar and Idea Cellular. - PTI ...

“We wanted to give some kind of a breather to our customers in the form of low-interest rates”, said Mr Mudit Gupta, SME Business Head, SREI Infrastructure Finance, when asked about what prompted the company to hold interest rate auction event ‘Paison ki neelami’ in so many cities.

A unique auction held primarily to enable retail customers acquire infrastructure equipment at low rates has met with huge success it terms of eliciting response from both customers and equipment manufacturers. Speaking to Business Line on the sidelines of the event, Mr Gupta, shared his insights on the current high interest rates and the challenges that lie ahead of the company.
The concept of bidding for interest rates is quite unique. Can you tell us how the whole auction process is carried out?

“Paison ki neelami” is a concept where we partner with leading manufacturers in the infrastructure industry and offer various schemes to the buyers. Basically, interest rates are auctioned in the Dutch method. This means the bidding comes down from the cut-off rate. There are various rounds for different equipment manufacturers such as JCB, AMW, Volvo and Tata. Interested customers who have registered with us are issued a baton. The baton is raised as and when the bidder gets interested in the interest rates.

So, even if one customer raises the baton the round is over. . The final decision however, is subject to SREI’s credit approvals. While we do some pre-event credit approvals, spot customers are screened only after the event.

You have typically spread out this auction over several months in the last few years. What prompted you to carry out a series of these auctions this year in such a short span of time?

The cost of funds has gone up considerably in the last few months and so have the cost of raw materials for contractors. Interest rates have also trended up. We wanted to give some kind of a breather to our customers in the form of low interest rates.

But has not your cost of funds also increased in the meanwhile? How are you managing this?

Our cost of funds has increased. It was around 9 per cent earlier, but has increased by about one percentage point. That is why we have partnered with manufacturers who give product discounts. We pass on the discount to customer by offering them the equipment at a low rate.

What is the interest rate at which you have seen sufficient interest from the customers’ side? Would you able to pass on any further hike in CRR to your customers?

For a three-year funding, the average rate would be 11-12 per cent, whereas the market rate would be 15-16 per cent. But if there is another CRR or repo rate hike and the overall market rate goes up, we will be compelled to increase our SREI Benchmark Rate (SBR), which is 14.5 per cent. But I feel that the probability of increasing SBR is very low as we have already increased our rates in the last two months by 150 bps.

What is your view on the interest rate scenario?

I think this situation of high interest rates will not last more than six-nine months. Once oil starts cooling and inflation comes down, things will begin to ease up.

You have been carrying out these auctions for the last four years, how has the response been this time around?

Well, the response is phenomenal. It is mainly the retail and SME customers who benefit from these schemes, as they have less bargaining power with the financiers and manufacturers. And it is this segment from whom we have got the maximum response. Of all the customers assembled for the event, 90 per cent will be retail and SME customers. With each auction, we have seen more manufacturers coming in and, notably, not one has so far opted out.

The logic is simple — in the nine days of the auction, the equipments are seen by 20,000-30,000 customers. It is otherwise very difficult to have this size of target audience. And from the customers’ point of view, we have seen the numbers increasing manifold with each paison ki neelami.

Having high exposure to retail and SME customers may also peg up the risk of bad loans. How do youdeal with this risk?

Basically, we don’t see ourselves as financiers. We look at ourselves as an asset provider and the end user as the manager of the asset. So, as long as the manager is doing well we try and support him but if we feel he is incompetent to mange the asset, we replace the manager and hand over the asset to some other manager.

So, in essence we are banking more on the asset than the customer and because we deal with good assets and good returns, there is not much to worry. Besides, we can also transfer the asset to our other group companies, such as Quipo which is into equipment rentals.

-manish...

31 Aug, 2008, 0202 hrs IST, ET Bureau
MUMBAI: Micro Technologies, a city-based security products company, is on an expansion mode by leveraging locations of Hindustan Petroleum Company (HPCL).

Starting with five HPCL petrol pumps in Mumbai, in three months, 500 HPCL outlets will have Micro Shoppees, retail stores of Micro Technologies. The numbers will go up to over 7,000 in future, Micro Retail CEO Vivek Rai said. Micro Technologies runs its retail business through Micro Retail.

“We have long been associated with HPCL. They (HPCL) have been using our products and has won awards owing to it. Therefore, we have decided to kick-start the process by forging alliance with HPCL. This will be extended to other partners later,” Rai told ET. Revenues from these outlets will be shared between both the companies.

Micro Retail has 100 outlets of Micro Shoppees. It will invest Rs 5-7 lakh for setting up each store. Nearly 20% of the stores are company-owned while the remaining is owned by dealers. The average store size is 500 square feet with an average monthly rental of Rs 15,000.

It had a turnover of over Rs 30 crore last year which is expected to quadruple by next year. Micro Retail’s hardware products constitute 45% of its turnover while the software business earns 55%.

Mr Rai added, “People save on insurance buying our products. thankfully, we are a cash-rich company. We are also supported by the strong balance sheet of our parent company, Micro Technologies.”

Mr Rai said that they have no competition excepting the category consisting of video-phones, which are negligible. The combined turnover of video-phones is nearly 2% of the company.

Micro Retail has received overseas contracts. It will soon expand its operations in Sri Lanka, Middle East( mainly UAE, Saudi Arabia), East and South Africa. It has already signed agreements with dealers in these countries for distribution of products.

-manish...

Packaging solutions provider Bilcare Ltd today launched its anti-counterfeit technology for the Indian automobile industry, which has been dealing with spurious components for long.

"Counterfeit components are not only a threat to the profit of automobile manufacturers but also to the vehicle users using sub-standard safety and performance parts. Our technology, equipped with nanotechnology and bluetooth, will fight this problem of the industry," Bilcare Technologies President and CEO Raman Nanda told PTI.

While launching the technology at the Society of Indian Automobile Manufacturers (SIAM) Annual Convention here, he said various car parts in India constitute an estimated 37 per cent of the total components market.

The company has launched the product from its Singapore facility, where it had earlier committed Rs 100 crore investment for carrying out R&D and setting up the plant.

When asked about the sales target in India, Nanda said: "In the next five to seven years we have a global target of up to one billion dollar from all industries, like automobile, engineering, fashion, pharma and aviation. Of this, India's share will be about 15-20 per cent."

Bilcare is also talking to some IT firms for forming alliances and partnerships in India, he said, but declined to give details.

According to a survey conducted by Motor & Equipment Manufacturers Association (MEMA), the global automotive industry loses up to 12 billion dollar per year to counterfeiting.

-manish...

Dear Taumatt,

Stock market investments should be for long term. Be patient. When there isn't any change in companies fundamental, why are you worried.

-manish...

I fully agree to you. To me looks like there is someone pushing it down from 200 levels and later would grab a major chunk. Same is the case with Sical logistics.

-manish...

It is an irony that Micro Tech is at a P/E of around 4 based on TTM earnings despite such a good growth. The market has become such that now a days people have become short term traders and at every rise they are selling. Retail investors shouldn't panic and keep holding their portfolio tight. Patience is the name of the game.

A better question to ask is:- what is the true share value of Micro Tech? If you can spend some time there, it would be good. If you already know it, you should share for the benefit of others.

-manish...

It is a miser company.With a early earning of Rs.54 per share,they are giving a misely dividend of Rs.2 per share.This-in the name of further expansion.It will be better if the chairman renunciates his salary to put it for further expansion!!!...

Manish - Your response is comforting. But even this friday when almost every stock rose, microtec\\`s share actually fell by a few points. I have been accumulating its shares for the past month and half based on the rationale you also mentioned. But now I am beginning to feel jittery. - taumatt ...

true.ion does hold promise,but poor liquidity being small cap is a big deterrent for big players. hin dorr oliver being a ivrcl subsidiary is abetter bet....

why microtec stock prices has been falling for the last 2 months? ...

Dear Manish, Thanx for replying i appreciate it, Can you please let me know what price band you expect the stock to touch next 2 yrs?...

One more thing - all my recommendations are long term (at least 2 years). Nobody ... I repeat nobody can tell you the target price of any stock in short term. thanks, manish...

Is it worthwile holding on 2 the stock? my cost is 30 busks do you have any insight or target price?...