Mid and smallcaps buck the trend

Wed, 31 Mar Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

Indian markets lost all their early gains and joined to the list of losers in Asia by the close of the session today. Heavyweights across sectors including software, telecom, FMCG and commodities witnessed profit booking and dragged the indices lower.

Thus, while the BSE Sensex closed the day with losses in the region of 62 points (down 0.4%), NSE Nifty edged lower by around 13 points. The BSE Midcap and Smallcap indices, however, managed to buck the trend and ended higher by 0.3% and 0.5% today. Losses were also seen amongst most Asian markets today whereas Europe has also opened on a mixed note. The rupee was seen trading at Rs 44.9 to the dollar at the time of writing.

Crompton Greaves, a leading player in the power transmission and distribution (T&D) equipment and services business in India, has continued with its inorganic growth strategy. It has acquired UK-based electrical engineering firm Power Technology Solutions (PTS) for 30 million pounds (Rs 2 bn). This is the company's sixth acquisittion since 2005. Crompton Greaves will gain significant consolidation in the engineering, procurement & maintenance (EPM) segment in UK and get access to newer markets. This acquisition is a step forward towards achieving the company's revenue goal of US$ 8 bn by 2015. Crompton Greaves also has a good track record in turning around companies it has acquired.

Crompton's earlier acquisitions include Belgian-based Pauwels, Hungary's Ganz, Irish-based Microsol Holdings and Sonomatra of France. The acquisition of Pauwels (Belgium) in FY06 and Ganz (Hungary) in FY07 has catapulted Crompton Greaves to be amongst the top ten T&D equipment companies in the world. These inorganic growth initiatives formed an important phase of Crompton Greaves' restructuring strategy, as the company planned to chart out a global presence by acquiring companies with niche presence and having products that complemented its own portfolio.

Sintex Industries a dominant player in the plastic and textile business, is looking to restart two plants of its US subsidiary, Wausaukee Composites, in another 6-7 months. Both the plants manufacture parts of a wind turbine such as cones and nacelles. Although the decline in the wind turbine market has been arrested, the company believes that it will be another six months or so before the demand revives.

Sintex had acquired an 81% stake in Wausaukee in May 2008 for US$ 17 m. Because wind energy is an alternative source of energy, it took a beating when oil prices came down last year. However, Sintex's management has maintained that the overall business environment remains utterly challenging. While commodity prices have come down, the fact that the company is passing on the benefits of the same to customers has meant that realisations are under pressure. Apart from that, volumes have also come under pressure. Only once the company's customers start clearing their inventories there will be an increase in orders.

For the first time Indian pharma companies will be challenging fraudulent patents granted to MNCs and small players. Indian Pharmaceutical Association, which has Ranbaxy, Dr Reddy's and Sun Pharma as its members, will challenge such patent applications in the pre-grant stage itself. Challenging patents after grant is a time-consuming process which is also more expensive.At least 25 pre-grant patent challenges will be filed by the IPA team across four Indian patent offices in April.

A study by IPA claims 86 instances of frivolous patents. These, it says, include patents granted to multinational firms such as Novartis (16 products), Eli Lilly (10), Pfizer (9) and domestic firms Aurobindo (1) and Emcure (1). As pharma companies in Indian compete with their global counterparts in research and development, the patent laws here will also have to get stricter.