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+ 4 PAGES MARKETING FEATURENew Delhi, Mumbai, Bangalore, Kolkata, Chennai, Ahmedabad, Chandigarh*, Pune* Thursday, October 14, 2010 Vol.4 No.245 `3.00 32 PAGES

SENSEX 20,687.88 Æ 484.54 NIFTY 6,233.90 Æ 143.00 DOLLAR `44.51 æ `0.15 EURO `61.87 Æ `0.28 GOLD `19,695 Æ `105.00 OIL $84.24 Æ $0.89

Even in a country usedto seeing legislators

wasting taxpayer funds,events in Karnatakashould mark a nadir ofsorts. Today, theKarnataka legislativeassembly meets to voteon a trust motion movedby the government. Theoutcome of the vote, thesecond such in four days,may be irrelevantbecause the Karnatakahigh court has ruled thatthe outcome will bedependent on ajudgement it will deliveron 18 October—onwhether or not the fiveindependentrepresentatives of theassembly who weredisqualified by thespeaker and therebyprevented from takingpart in Monday’s trustvote can go ahead and doso. If the court rules thatthey can indeed vote, athird trust vote may haveto be conducted, thoughthere is no clarity on thisas yet. Surely, thegovernor could havewaited for the court’sverdict before asking thegovernment to seek aconclusive trust vote.

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RIGHT PRICING

Coal India IPO plangives market a lift

B Y R A V I K R I S H N A N &

N . S U N D A R E S H A

S U B R A M A N I A N·························MUMBAI

Indian stocks dipped mar-ginally at the start ofWednesday’s trading, in

half-hearted acknowledge-ment of Tuesday’s announce-ment of slower-than-expectedgrowth in factory output, thengained strongly on continuedbuying by foreign investors.

Analysts predict further in-flows aimed at Coal India Ltd’s(CIL) attractively priced IPO(initial public offering). Anoth-er round of quantitative easingin the US and elsewhereshould help, they add.

The Bombay Stock Ex-change’s Sensex gained 484.54points, or 2.4%, to close at20,687.88 on Wednesday. TheNational Stock Exchange’s Nif-ty gained 2.35% to close at6,233.90.

There “was a big bout ofbuying by the FIIs (foreign in-stitutional investors) in themorning since the CIL IPOprice was considered reason-able,” said Deepak Jasani,head of retail research, HDFCSecurities Ltd. “There is an ex-pectation that this IPO willbring in more investors. Thereis a good likelihood that wewill see new highs in the com-ing months.” His logic is thathigher investor interest bodeswell for the markets.

FIIs have so far bought Indi-an stocks worth a record $21.8billion (`9.7 trillion).

“Foreign inflows are quitestrong,” said Ullal RavindraBhat, managing director of theIndian arm of Dalton StrategicPartnership Llp, a global fundregistered as an FII. “There isanticipation of quantitative eas-ing in the US and elsewhere.”

Bodies such as the Organiza-tion for Economic Co-opera-tion and Development predicta slowdown that will promptthe easing of policy. This willpush money into emergingmarkets as investors chasehigher returns, analysts say.

Estimated economic growthof 8.5% in India has encour-aged foreign investors, push-ing the market to rise the mostin 2010 among the world’s 10largest economies. Year todate, the Sensex has gained22% in dollar terms, outper-forming the MSCI EmergingMarket Index, which is up 13%.

This also augurs well forCIL’s $3.5 billion IPO, whichopens on 18 October. While

some observers term this a wa-tershed event that will set thedirection the markets will takebecause of its huge size, mostanalysts and investment bank-ers say there is enough liquidi-ty in the system to fund thisIPO and further fuel the rally.

One reason for this is thatFII flows are expected to con-tinue, said Nilesh Shah, deputymanaging director, ICICI Pru-dential Asset Management Co.“Lot of money we are getting isfrom fresh allocations made toIndia by existing investors.This is likely to continue.”

Vikas Khattar, managing di-rector and head of South Asia,equity and equity-linked capi-tal markets origination, for Cit-igroup Global Markets IndiaPvt. Ltd, one of the bankers tothe IPO, reckons FIIs roughlyaccount for one-fourth of qual-ified institutional placement inIPOs. For the CIL issue, thisworks out to under $1 billion,compared with the $7 billioninflows seen in September.

After the `11,700 crore issueof Reliance Power Ltd, thelargest in India till now, mar-kets rose 5% in the followingmonth before slumping. Aftersubscription closed for theworld’s largest IPO by PetroleoBrasileiro SA that raised $70billion, the Brazilian marketshave gained 4.6%.

ravi.k@livemint.comPramit Bhattacharya and Ash-

win Ramarathinam contributedto this story.

Prospect of India’slargest offeringcheers investors topush stocks higheramid global upsurge

Birla to raisestake in Nuvo,plans bankB Y B A I J U K A L E S H &

J O E L R E B E L L O·························MUMBAI

Kumar Mangalam Birla,chairman of the `1.4 tril-

lion aluminium-to-mobile te-lephony conglomerate AdityaBirla Group, will raise his stakein Aditya Birla Nuvo Ltd by De-cember. The group companyruns Aditya Birla FinancialServices, or ABFS, and holds25.38% of mobile firm IdeaCellular Ltd.

The holding will be in-creased by converting prefer-ential warrants issued in June2009 into equity shares.

“Our balance sheet will fur-ther improve with the remain-ing equity infusion by promot-ers for `425 crore and the pro-moter’s stake will rise to 51%from the current 46%,” AdityaBirla Nuvo chief financial offi-cer Sushil Agarwal said in aninterview last week.

Aditya Birla Nuvo, a compa-ny with interests in informa-tion technology, garments,carbon black and fertilizers,had issued 18.5 million war-rants to promoters on 22 June2009, giving them the option topurchase one equity shareagainst one warrant at `541.19a share.

TURN TO PAGE 2®Source: BSE

RIDING THE IPO WAVEWith the Sensex rising 485 points a day after the price band of the Coal India IPO was announced, here’s a look at where the index stood when previous mega IPOs opened for subscription.

5,880.35(5 Mar 04)

5,120.45(29 Jul 04)

13,399.43(11 Dec 06)

Cairn India

14,063.81(8 Jun 07)

DLF

20,687.88(13 Oct 10)

20,873.33(8 Jan 08)

4,505.16(17 May 04)

20,251.09(15 Jan 08)

Reliance Power

TCS

ONGC

R11,700 cr

Issue size

R9,500 cr

R9,188 cr

R5,788 cr

R5,420 cr

IISc scientistsmake progresson newthyroid drugB Y J A C O B P . K O S H Y

jacob.k@livemint.com·························NEW DELHI

Ateam of scientists at theBangalore-based Indian

Institute of Science (IISc) hassynthesized a key moleculethat could potentially translateinto a drug for hyperthyroid-ism, a disorder that’s increas-ingly associated with a host oflifestyle diseases.

If successful, the chemicalentity could contain thyroidlevels without side effects suchas excessive balding and jaun-dice, commonly associatedwith the relevant drugs, the re-searchers added. It would bethe first successful moleculefor hyperthyroidism to comeout of an Indian lab.

“We are still very much in thepre-clinical stage,” said Govin-dasamy Mugesh, associate pro-fessor, department of inorganicand physical chemistry, IISc.“We’ve synthesized the mole-cule and have seen that the un-derlying mechanism works. Butanimal studies and clinical tri-als are a long way off.”

The findings of the teamwere published on Wednesdayin the peer-reviewed Ange-wandte Chemie (internationaledition), a top chemistry jour-nal published out of Germany.

The basic “mechanism” thatMugesh refers to involves cir-cumventing the approach thatthe contemporary drugs use.Hyperthyroidism involves theover-production of key thyroidhormones called T3 and T4.

The current drug approach tostemming the disease involvescutting the levels of iodine—thekey thyroid regulator—by mim-icking an enzyme called deiodi-nase, which completely blockstheir production. “That worksnegatively because these hor-mones are responsible for prac-tically every metabolic functionin the body. So, complete shut-down could trigger side effectsand even hypothyroidism,which comes with its own prob-lems,” said Mugesh.

His team has developed acompletely new compoundthat only lowers—and doesn’t

TURN TO PAGE 2®

>The big boss of Indian IPOs >P4>The growing IPO appetite >P12

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02THURSDAY, OCTOBER 14, 2010, DELHI ° WWW.LIVEMINT.COM

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INDEX OFCOMPANIESKey companies in Mint today.

INDEX OFPEOPLEKey people cited in Mint today.

Aditya Birla Nuvo Ltd ..........................1,2Agricultural Bank of China Ltd ...............4Apple Inc. ...............................................27Ashok Leyland Ltd ..............................8,18Axis Bank Ltd ........................................20Bajaj Auto Ltd .......................................21Bajaj Holdings and Investment Ltd ....... 9Bank of America Corp. .....................27,28Bayerische Motoren Werke AG ..............8Bharat Heavy Electricals Ltd ................21Citigroup Inc. ...........................................6Coal India Ltd ............................. 1,4,11,15DB Corp Ltd ...........................................18DP World Ltd ...........................................7Daimler AG ..............................................8Deccan Chronicle Holdings Ltd .............18Deutsche Bank AG ................................19Dish TV India Ltd ..................................18EIH Ltd ...................................................18Enam Securities Pvt. Ltd ......................15Exide Industries Ltd ..............................21Goldman Sachs ......................................18Google Inc. .............................................27HT Media Ltd .........................................18Hotel Leela Venture Ltd ....................... 18Hyundai Steel Co. ....................................9IBN18 Broadcast Ltd .............................18ICICI Bank Ltd .......................................1,2ITC Ltd ....................................................18

Idea Cellular Ltd ...................................1,2Indian Hotels Co. Ltd ............................18Indian Oil Corp. Ltd ...............................10Intel Corp. ..............................................27JBF Industries Ltd .................................21JSW Steel Ltd .........................................9Jagran Prakashan Ltd ........................... 18Kotak Mahindra Capital Co. Ltd .............4Lupin Ltd ................................................21Mahindra and Mahindra Ltd ...................8Maruti Suzuki India Ltd ..........................3Mercedes­Benz India Pvt. Ltd ................8Microsoft Corp. ......................................27Multi Screen Media Pvt. Ltd ..................8NTPC Ltd ..................................................7New England Sports Ventures Llc .......32Nissan Motor Co. .....................................8Oil and Natural Gas Corp. Ltd ..............10Petroleo Brasileiro SA ............................ 1Porsche SE .............................................27Reliance Capital Ltd ................................9Reliance Industries Ltd .........................10Reliance Power Ltd .................................1SKS Microfinance Ltd ............................. 3Shipping Corp. of India Ltd .....................7Standard Chartered Bank Plc ............6,19Standard Chartered Plc .........................10Star India Pvt. Ltd .................................. 8State Bank of India ..............................1,2Steel Authority of India Ltd ...................9Sun TV Network Ltd .............................18Tata Motors Ltd .................................8,18Tata Steel Ltd ..........................................9Vizhinjam International Seaport Ltd .....7Vodafone Essar Ltd ...............................11

Achanta, Sharath Kamal .......................14Advani, L.K. ..............................................5Agarwal, Sushil ....................................1,2Ahmadinejad, Mahmoud .......................27Arora, Kapil ..............................................8Aulbur, Wilfried .......................................8Bajaj, Sanjiv .............................................9Balsara, Sam ........................................... 8Bannerjee, Mamta ...................................4Basu, Kaushik ..........................................6Bernanke, Ben ..................................18,28Bhardwaj, H.R. .........................................5Bhatia, Dilip ...........................................10Bhattacharya, Partha .........................4,15Birla, Kumar Mangalam .......................1,2Bose, Sumit ........................................4,10Cable, Vince ...........................................28Carey, Peter ...........................................32Chidambaram, P. ...................................5,6Chopra, Priyanka ......................................8Chowdhry, Arup Roy ............................... 7Dimon, James ...................................27,28Dixit, Madhuri ......................................... 8Farooq, Mirwaiz Umer .............................6Ferguson, Niall ......................................19Galgut, Damon .......................................32Ganguly, Sourav ...................................... 8Geelani, Syed Ali Shah ........................... 6Geithner, Timothy .................................27

Gopalan, R. ......................................... 3,11Hicks, Tom .............................................32Jacobson, Howard .................................32Jiabao, Wen ...........................................27Kapoor, Ravi .............................................4Kaushik, Sanjeev .....................................7Kotak, Uday .............................................4Krishna, S.M. ...........................................4Krugman, Paul .......................................19Kumar, Akshay ........................................8Kumar, K. Vijay ........................................6Kumar, Manoj ........................................14Lim, Peter ..............................................32Macalintal, Ivan .....................................27Macht, Michael ......................................27Malkani, Manoj ........................................8Mathew, Rajan ........................................4McCarthy, Tom ...................................... 32Mehta, Nalin ............................................8Modi, Lalit ............................................. 10Mohta, Manoj ..........................................8Motion, Andrew .................................... 32Mukherjee, Pranab .......................1,2,6,11Naidu, Venkaiah ...................................... 5Obama, Barack ........................................ 4Padgaonkar, Dileep ..................................6Raja, A. ..................................................11Rao, Seshagiri ......................................... 9Roshan, Hrithik ....................................... 8Saunders, Bradley .................................14Sibal, Kapil ...............................................3Sidhu, Navjot Singh ................................8Singh, Manmohan ................................5,6Xiaobo, Liu .............................................27Yeddyurappa, B.S. ....................................5

INDEX OFBRANDSKey brands in Mint today.

Apple ......................................................27Audi ..........................................................8BMW ........................................................8Bajaj Auto ...............................................9Colors ..................................................8,18Deutsche Bank ...................................... 19Dish TV ..................................................18ICICI Bank .............................................1,2ITC ..........................................................18Idea .......................................................1,2Intel ........................................................27Jaguar Land Rover ..................................8Mercedes­Benz ........................................8Microsoft ...............................................27Standard Chartered .................................6Star Plus ..................................................8Tata .......................................................1,2Tata Motors ...........................................18Vodafone ................................................11iPad ........................................................27

KM Birla to raise stake in Nuvo, plans bankAditya Birla Nuvo rose 0.16%

to close at `854.65 on the Bom-bay Stock Exchange onWednesday even as the ex-change’s benchmark index,the Sensex, rose 2.4%.

The promoters have an18-month window till Decem-ber for conversion. The Birlaspaid `575 crore and increasedthe stake to 46% from 41.5% byconverting part of the warrantsinto equity shares betweenJune and September.

Most of the money will gointo fuelling the growth ofABFS, a business which thegroup plans to strengthen andconvert into a bank as andwhen the Reserve Bank of In-dia (RBI) gives licences.

“We would be keen to have abanking licence (if allowed bythe regulator) as this will be astrategic fit for our financialservices business,” Agarwalsaid. “We need more banks aswe have around 400 millionbank accounts, including mul-tiple bank accounts in a coun-try of more than a billion.However, everything will de-pend on the regulator’s guide-lines.”

RBI had in August releaseddraft guidelines on licensingnorms for new banks after fi-nance minister PranabMukherjee in his FebruaryBudget announced that thecentral bank will allow the en-try of new players in banking.The objective is to spreadbanking services across the na-tion.

RBI is currently in talks withindustry lobbies, banks andcorporations before draftingthe final guidelines. The bank-ing regulator has made it clearthat companies with exposureto real estate may not be con-sidered for setting up new

® FROM PAGE 1

banks. Its stance vis-a-vis bigindustrial conglomerates is notknown, though some have res-ervations about their being al-lowed to set up banks.

Analysts said the Birlas arein contention for a bank li-cence with other large indus-trial houses such as the Tatas,but RBI may be cautious aboutgiving licences to groups withdiversified business interests.

“They will look for compa-nies with strong corporate gov-ernance and the Birlas fit thebill,” said Deepak Tiwari, ana-lyst with domestic brokerageKisan Ratilal Choksey Sharesand Securities Pvt. Ltd. “Butthe central bank will be cau-tious.”

Another analyst with a localbrokerage said there may bereluctance because RBI won’tbe able to pick and chooseamong industrial houses and ifthe Birlas are given (a licence)the banking regulator will haveto say yes to others as well.

“Conglomerates such as theReliance-Anil Dhirubhai Am-bani Group, which competeswith the Birlas in financialservices, will also ask for a li-

cence. More than the Birlas, Ithink NBFCs (non-banking fi-nancial companies) like theShriram Group have a betterchance,” the analyst said oncondition of anonymity as hisviews were personal.

ABFS has assets of around`90,000 crore under manage-ment, including mutual funds,life insurance, private equity,and general insurance spreadover 1,600 branches. It has16,500 employees.

Aditya Birla Nuvo has ap-plied to financial sector regu-lators, including RBI, the Secu-rities and Exchange Board ofIndia (Sebi) and the InsuranceRegulatory and DevelopmentAuthority (Irda) to create anew company for financialservices.

“All the financial servicesbusinesses are already operat-ing under a virtual entity,ABFS. A holding companystructure is indeed very sup-portive in creating a success-ful, long-term and sustainablefinancial services business asthis helps in bringing synergyand sharper focus among thesebusinesses in line with our vi-

sion,” Agarwal said.The financial services-fo-

cused company will improvesynergies in marketing, legal,compliance and human re-sources, besides strengtheningcapital-raising ability.

The company has alreadygot an in-principle approvalfrom Sebi, but RBI and Irda areyet to give their nod. Thegroup sought their permissionto create a holding companylast year.

RBI’s reservations about theholding company structure areknown. In the past, ICICI BankLtd, the nation’s largest privatesector lender, had wanted tohave a holding company for itsinsurance ventures, but it didnot get an RBI approval. StateBank of India, too, is awaitingRBI approval for a similar pro-posal.

Earlier in 2009, Birla re-frained from converting 20.5million preferential warrantsof Aditya Birla Nuvo into equi-ty at `1,997.45 a share after thestock lost 60%. These warrantswere issued in February 2008and had they been convertedin September 2009, the compa-ny would have raised `4,000crore.

The latest move to increasethe promoter’s stake in thecompany also coincides withan improvement in Nuvo’s fi-nancial performance. Revenuerose to `15,500 crore, the high-est ever for the company, in2009-10.

The company posted a netprofit of `155 crore in 2009-10against a loss of `436 crore inthe previous year.

In the April-June quarterthis fiscal, Aditya Birla Nuvoposted a net profit of `149crore against a loss of `35crore in the correspondingquarter last year.

baiju.k@livemint.com

IISc scientistsmake progresson newthyroid drug

entirely deplete—T3 and T4levels. “Therefore, the opti-mum balance is maintained,”he said.

Previous efforts to mimic deio-dinase to develop a drug forpractical use have been unsuc-cessful, said V.S. Dubey, a Delhi-based endocrinologist and a for-mer adviser to the governmenton women’s health.

Typically, hyperthyroidism af-fects women more than men,and according to estimates bythe health ministry, there are atleast 10 million patients afflictedwith the disorder to varying de-grees in India.

Dubey said that an erratic diet,increasing stress levels at workand a rising urban trend of wom-en opting for delayed pregnan-cies were correlated to hyperthy-roidism disorders.

“It’s not a killer disease, butchanging lifestyles such as work-related stress, late births all im-pact women far more adversely.In fact, one of the key signs ofpolycystic ovarian syndrome(which affects one in 10 Indianwomen) are thyroid-related dis-orders,” he said.

Others say Mugesh’s resultsare interesting but there’s a highrisk of failure with the chemicaleventually revealing some sideeffects during clinical trials.

“It’s a useful finding, but Iwould wait at least for prelimi-nary level clinical trials before Igot really excited,” said C.R. Pil-lai, an emeritus scientist with theIndian Council for Medical Re-search. “Wet labs (synthesizingcompounds in the lab) are usual-ly very successful, but clinical tri-als can break even the mostpromising of candidate drugs.”

® FROM PAGE 1

Future plans: Aditya Birla Group chairman Kumar Mangalam Birla.

ABHIJIT BHATLEKAR/MINT