Vodafone Pays $5 Billion to Essar; DoCoMo Invests $180 Million in Tata Tele

Devan Biswas
31 Mar, 2011
New York City

Stocks in Mumbai gained for the eight day in a row after foreign investors ratchet up deals. NTT DoCoMo Inc agreed to invest $180 million, Vodafone Group paid $5 billion to Essar Group to increase its stake in Vodafone India and International Paper acquired 54% stake in Andhra Pradesh Paper Mills.

[R]4:10 PM Mumbai – Stocks in Mumbai gained for the eight day in a row after foreign investors ratchet up deal making. NTT DoCoMo Inc agreed to invest $180 million, Vodafone Group paid $5 billion to Essar Group to increase its stake in Vodafone India and International Paper acquired 54% stake in Andhra Pradesh Paper Mills.[/R]

The latest read on wholesale inflation showed a decline and food prices edged lower to 9.5% from a year ago in the week to March 19.

The Sensex in Mumbai trading increased 155.04 to 19,455.22 and Nifty index increased 46.10 to 5,833.75.

The rupee declined to Rs 45.10 and gold price for ten grams increased to Rs 20,723.00 and crude oil price increased 75 cents to $105.02 a barrel.

In foreign direct investments news, the ministry of trade said foreign companies looking to open an independent company from their joint venture partners will not need a government approval.

Separately, Vodafone Group said it paid $5 billion or Rs 22,000 crore to Essar Group its joint venture partner in India and increase its stake to 75%.

The deal was expected as Vodafone was facing a May deadline to buyout the 33% stake of Essar.

Japan based NTT DoCoMo Inc said it will invest $179 million or Rs 800 crore in its joint venture with Tata group controlled Tata Teleservices.

Separately, Tata Teleservices is expected to raise Rs 3,000 crore through a rights issue and expand its 3G services in 22 service areas including Karnataka, Maharashtra and Gujarat. Tata Teleservices has 8.6 crore or 86 million subscribers at the end of January.

Stock Movers

Airlines were under pressure after the crude oil price increased. Kingfisher decreased 3% to Rs 39.75 and SpiceJet dropped 3.2% to Rs 38.85 and Jet Airways dropped 5% to Rs 446.14.

Smartlink Network Systems dropped 7.4% after surging as much as 20% in the early trading. Earlier the company announced the sale of its digilink business to Schneider Electric India for cash of Rs 503 crore.

The cabling business generated Rs 165 crore in operating income in the year to March 2010 and is the largest business segment for the company.

Essel Propack soared 6% and extended two day gains to 14% to Rs 49.50 after the company announced expansion plans in China, Mexico and Egypt.

Andhra Pradesh Paper Mills surged 20% to Rs 283.35 after the majority stake holder L.N. Bangur Group in the company sold its entire stake to U.S. based International Paper Company.

International Paper acquired the 53.46% stake in the company at $257 million or Rs 542 a share from L.N. Bangur Group and made an open offer for 21.5% of the additional stake to increase its stake to 75% of the company.

Paper industry stocks soared after the deal announcement. ABC Paper increased 9.5% and JK Paper added 5.3% and Emami Paper increased 0.3% and Malu Paper Mills added 20%.