L&T Finance Holdings open to banking foray

HYDERABAD, JULY 22: 

L&T Finance Holdings Ltd today said the company has an open mind on foray into the banking business and awaiting regulatory guidelines on opening up of new banks.

Addressing newspersons here today ahead of the initial public offer next week, Mr Suneet Maheshwari, Chief Executive L&T Infra, said: “We look at growth opportunities wherever they come from. If it presents an opportunity to open a bank we will look at it. However, at the moment, it is too premature.”

“The investments we made into banks such as City Union Bank was in the form of portfolio investments and provide synergies for growth,” he explained.

Referring to their exposure to microfinance institutions (MFIs), he said: “L&T Finance has been lending to MFIs as we believe that this sector has immense potential to serve the unbanked section of population.”

“Notwithstanding recent developments and new laws and regulations in the MFI industry in the country, and in particular in Andhra Pradesh, we continue to believe in the medium and long term growth prospects of the MFI industry. However, in the short term, and owing to new laws and regulations and decline in collections from customers of microfinance in Andhra Pradesh, we have reduced disbursement of loans in general,” the L&T prospectus said.

However, Mr Maheshwari mentioned “the banks portfolio of MFI is generally doing well as the exposure is across eight States. However, we are cautious.”

“L&T Finance is also looking at infusion of funds into its arm India Infrastructure Developers Ltd to cater to new business segments. We may also consider infusing Tier II Capital in L&T Finance Holdings at a later date,” he said.

The Space Shuttle Era: A Review

(RTTNews) - The 30-year-old space shuttle program came to a final stop this month, following Atlantis' last touchdown on Earth. As curtains are drawn on this spaceflight program, it seems timely to take a look back at the manned program, its triumphs and its tragedies:

The plans for NASA's space shuttle program, officially called the Space Transportation System, or STS for short, were formally endorsed by President Richard Nixon in January 1972. It took nearly a decade before the first shuttle would blast off into space, beginning three decades of flights that included 133 successful missions. There were also two deadly accidents, leading to 14 deaths.
Apart from functioning as a space laboratory, the STS was engaged in launching numerous satellites and interplanetary probes, conducting space science experiments, and servicing and construction of space stations.
According to the NASA, over 2,000 experiments in the fields of Earth, astronomy, biological and materials sciences were conducted by the space shuttle program, whose cost has been pegged at $209 billion over the course of its history.
The space shuttle, a reusable orbital vehicle, consisted of three main components - a winged orbiter that carried crew and cargo; a large external fuel tank that held fuel for the main engines; and two solid rocket boosters which provided most of the shuttle's lift during the first two minutes of flight.

NASA's fleet of space shuttle orbiters in the STS program included Columbia, Challenger, Discovery, Atlantis and Endeavour - all named after famous sailing ships.
Columbia, launched on April 12, 1981, was the first orbiter to fly into space with a crew aboard. It made 28 flights and flew 125 million miles. The space shuttle would complete 27 successful missions, but will be remembered for its fateful 28th trip into space. On February 1, 2003, Columbia broke up on re-entering Earth's atmosphere, killing all 7 crew members.
The second orbiter, Challenger, also will go down in history for its tragic end. The ship made its maiden voyage to space on April 4, 1983 and completed nine missions. On January 28, 1986, only 73 seconds after liftoff, the ship exploded, killing all 7 crew members. The Challenger disaster became one of the defining moments of the era and certainly provided one of the darkest chapters in NASA's history, as an investigation into the accident led many experts to believe that it could have been avoided by taking simple safety precautions.
Discovery was NASA's third orbiter to head to space. It undertook its first mission on August 30, 1984. This space shuttle, which made its last-ever landing on March 9, 2011, successfully completed 39 missions and logged 148 million miles in space - the most of any of the shuttles.

Finance subsidiary is first out of L&T cradle

When the monolithic AT&T was carved up into eight companies in 1984, the original ‘Ma bell’ gave birth to seven subsidiaries called ‘baby bells’. These seven subsidiaries became leaner, more efficient machines and went on to outperform the parent company and the broader market.

On Thursday, Indian monolith Larsen & Toubro (L&T) announced the initial public offer (IPO) of one of its babies — L&T Finance Holdings — atRs51-59 a share.

Expectations are history will repeat itself.

“It is always good to separate your son and allow him to grow in a free environment. Making it independent will be a positive and help the company grow better,” said D D Sharma, vice-president - retail research, Anand Rathi Financial Services.

“Such cases have often resulted in value unlocking in the case of other corporate. This is a trend, which is expected to repeat itself for L&T Finance,” said John Perinchery, senior analyst at Asian Markets.

Analysts are also drawing parallels with Reliance Industries —- ironically a company that attempted to take over Larsen and Toubro during the time of Dhirubai Ambani in the late 1980s and early nineties. After Dhirubai passed away, the brothers Anil and Mukesh Ambani split their empire in 2006 when the total market capitalisation of the group was Rs1.58 lakh crore. The subsequent listing of spin-offs and value unlocking that followed has resulted in the capitalisation of the two brothers to increase to Rs3.64 lakh crore today.

In addition to the potential for value-unlocking, L&T’s listings are also because the company is becoming unwieldy, say analysts.
L&T has 10 operating divisions, including engineering, ship-building, information technology, power and railway projects.

“The company is becoming too big to handle and difficult to value as well,” said one analyst, seeking anonymity.

The first of the issues will be open from July 27-29, with the main institutional investors, called anchor investors, coming in on July 26.

The company will raise Rs1,245 crore through the issue which will result in a dilution of up to 17% in the stake of the parent company.

“The share price of Larsen and Toubro includes a valuation of Rs.118-137 for L&T Finance. The spin-off could result in a growth in the business which could also positively impact the share-price of the parent company as well,” said Deven Choksey, managing director at K R Choksey Securities.

L&T Finance had raised an additional Rs.330 crore by a pre-IPO placement of shares with Capital International at a share price of Rs55.

The total Rs1,575 crore is lower than the planned Rs1,750 crore, a reduction which is said to be based on weak market conditions. 
The proceeds of the IPO will be used to repay a Rs345 crore debt from the parent company as well as infusion of capital into the asset and infrastructure financing companies of Rs515 crore and Rs485 crore, respectively.

There is a Rs50 crore reservation for employees, who will be given a Rs2 discount on every share. There is an additional reservation of Rs120 crore for its shareholders.

The two rating agencies, which graded the IPO, have both given it a grade of 5, indicating strong fundamentals.

The merchant bankers involved in the issue are JM Financial Consultants, Citigroup Global Markets, HSBC Securities and Capital Markets, Barclays Securities, Credit Suisse Securities and Equirus Capital.

L&T has four subsidiaries, which are into asset financing, infrastructure financing, a mutual fund business and an infrastructure developer which has been set up to focus on working capital financing for corporate borrowers.

The next subsidiary in line for a listing may be L&T Infrastructure Development Projects Ltd (L&T IDPL), which develops roads, bridges, ports and other infrastructure, and might just have the scale required for a listing, said R Shankar Raman, senior vice-president, Larsen and Toubro.

“We could see a listing from the company over the next 12-24 months,” he said.

L&T has come a long way since its two founders set up base in an office so small that only one of them could use it at a time. Henning Holck-Larsen and Soren Kristian Toubro, school-mates in Denmark started the company in 1938.

Lenovo Jumps into Tablet Market: 10 Features They Need to Succeed

Lenovo is the latest company to jump into the tablet fray with its ThinkPad and IdeaPad K1 tablets. The company also unveiled its P1 Windows 7-based tablet, but this column will only focus on the prospects for the Android models.
At first glance, the ThinkPad and K1 are quite similar, offering 10.1-inch screens, Android 3.1 and the 1GHz Nvidia Tegra 2processor. However, the ThinkPad option is designed for enterprise users, while the K1 is made for consumers.
By joining the tablet space, Lenovo is now going up against Apple and the countless number of Android tablet makers out there. Now Lenovo, like all the others that came before it, will need to find a way to differentiate its products and appeal to customers who might not want to buy an iPad.
Admittedly, doing so is difficult in today’s crowded tablet space. The chances of Lenovo overcoming even the Galaxy Tab 10.1 to earn the second spot in the tablet space behind the iPad 2 are slim. But it doesn’t mean it’s impossible. With the right strategy and a few tweaks, Lenovo’s tablets have a chance at becoming a success.
Read on to find out what Lenovo should do to make its K1 and ThinkPad tablets successful.
1. Focus on the screen size
One of the major advantages of Lenovo’s tablets is their screen size. According to the company, both the ThinkPad tablet and the K1 offer 10.1-inch screens. The iPad 2, on the other hand, comes with just a 9.7-inch display. The difference might not be great, but in both the consumer and enterprise markets, larger screens are preferred. Lenovo must keep that in mind and make that a key component in its marketing.
2. Android 3.1 is integral to success
If Lenovo’s tablets shipped with Android 3.0, they would be failures out of the gate. But by offering Android 3.1, the tablets are on the same level as the Galaxy Tab 10.1, which also runs the operating system. Google’s first foray in the tablet space with Android 3.0 was a bit of a misstep, but most critics agree that version 3.1 is a fine improvement. Lenovo should make it clear to customers that unlike some other Android tablets, its products are running the best version yet of Google’s tablet platform.
3. A clear delineation
By selling two tablets, Lenovo is putting itself in an unenviable position. Rather than simply try to make customers get excited about a single tablet, the hardware maker must try and sell two different products aimed at two separate markets. In order to be successful at that, Lenovo needs to make it abundantly clear to customers that the ThinkPad is for businesses, and the K1 is for consumers. They should also be different enough to convince a tablet buyer that they should buy two tablets, one for their home and another for the office. If they seem too similar, Lenovo’s tablets could have trouble finding a suitable marketplace.
4. Talk about pricing
According to Lenovo, it’s selling the K1 tablet for just $499 for 32GB of storage. Apple’s iPad, on the other hand, retails for $599 for the same amount of storage. The company’s 16GB model goes for $499. That is a major selling point for Lenovo. As the economy still continues to struggle to turn around, consumers looking to get a tablet want the best value for their cash. Making them aware of its K1 pricing might help Lenovo appeal to those customers.