TRACKPAD

JK Tyres, one of the leading manufactures of tyre in the country has acquired majority stake in Cavendish Industries Limited., The acquisition is made through the mix of equity and debt raised directly in the books of target company which is Cavendish Industries and the cost of acquisition to the company is Rs 2170 crores. Cavendish Industries is a tyre, tube and flap maker and also a unit of Kesoram Industries Ltd., which is a B.K. Birla Group company. The company’s tyre segment posted an operating loss at a time when tyre companies were riding high on plummeting rubber and raw material prices.

Market leader MRF Ltd and others were also in the fray for buying Cavendish, however the 3rd largest manufacturer of tyre, JK Tyre managed to crack the whip on the deal. JK Tyre  is the market leader in truck/bus radial tire in India and is the only tyre manufacturer offering the entire range of 4 wheeler radials for trucks, buses and cars. After the acquisition, JK’s total manufacturing capacity in India will increase to 26 million units a year; its revenue in the domestic market will increase by Rs 10,000 crores. Addressing company's share-holders, chairman and managing director of the company, Raghupati Singhania said, " with the Indian economy pitching for higher growth, the Indian automotive industry is poised for much higher growth in the years ahead which augurs well for the tyre industry. JK Tyre is well geared to capture this upswing and looks forward to higher sales and improved profitability in the years ahead." 

Monsoon will hit Kerala by June 9

After a series of speculation over the arrival of monsoon on the coast of Kerala, Indian Meteorological Department has predicted the south – west monsoon winds to reach the coast by June 9. So expect good monsoon by the time you read this. According to India Meteorological Department (IMD), conditions continue to remain favourable for the onset of south-west monsoon over Kerala in next 48 hours. As on Sunday, the south-west monsoon has covered Andaman completely, parts of east central bay, south-west bay and Tamil Nadu coast.

However, there is going to be no significant change in the temperatures in north-west India for the next five days, which is reeling under intense heat.

After a straight of 3 years of below average rainfall, Indian Meteorological Department has predicted an above normal rainfall this year. If the IMD is right in its prediction, then there are chances that the stock market will see a bull ride. 

HDFC Ergo secures L&T insurance

The insurance arm of the largest mortgage lender in the country, HDFC Ergo has acquired L&T General Insurance for Rs 551 crores. HDFC Ergo expects significant cost synergies arising out of business, technology optimisation and rationalisation of offices. L&T General Insurance is a wholly-owned subsidiary of infrastructure and engineering major Larsen & Toubro. The move marks an exit from the insurance business for the infrastructure behemoth. The company received licence to operate general insurance in 2010 and it has not been able to break even since then. It reported Rs 102 crore loss for 2015-16.

This is not the first attempt of L&T to sell its general insurance business. Earlier, it had entered into an agreement with Kishore Biyani’s Future Group along with Italy-based Generali Group to sell 49 per cent stake in March 2013. However, the deal was called off a year later due to ‘inordinate delay’ in finalising the transaction. The Insurance Laws (Amendment) Act of 2015 has allowed foreign direct investment up to 49 per cent in insurance companies. HDFC Ergo is a joint venture between HDFC and Germany-based Ergo Insurance Group. Mumbai-based Arpwood Capital was the banker to HDFC Ergo for the deal. The acquisition will make HDFC Ergo become the third largest private general insurer behind ICICI Lombard and Bajaj Allianz General Insurance. The Insurance industry is dominated by state owned insurers New India Assurance, United India, National India and Oriental Insurance.