|Cabinet approves Goods and Services Tax Bill|
|The Cabinet has approved the Constitution Amendment Bill on Goods and Services Tax (GST), clearing the way for its introduction in ongoing session of Parliament to bring about long-pending indirect tax reforms. The Bill is likely to be tabled in the ongoing winter session of Parliament that concludes on 23 December. The government aims to roll out the Goods and Services Tax (GST) from 01 April 2016.The revised Constitutional Amendment Bill was brought before the Cabinet after the Centre and states earlier this week reached a consensus on contentious issues, including those related to petroleum product taxation, which were holding up the proposed nation-wide indirect tax regime for about seven years.
|CCEA approves scheme for setting up 1000 MW of Grid Connected Solar PV Power projects|
|The Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister has approved the scheme for setting up of 1000 MW of Grid-Connected Solar PV Power Projects with VGF (Viability Gap Fund) support of Rs 1000 crore, by CPSUs under various Central/State Schemes, in three years period from 2015-16 to 2017-18. The Scheme will have a mandatory condition that all PV cells and modules used in solar plants set up under this Scheme, will be made in India.All States and Union Territories are eligible for benefitting under the scheme.
Solar parks will enable development of solar power in remote areas where land is inexpensive. As a transmission system will be developed for the entire Park, developers will not have to set up their own transmission lines. This will not only save money but will also avoid damaging the landscape of the area as only limited transmission lines would be laid.
Further developers would be able to set up projects quickly as they will not have to get statutory and other clearances.
India will emerge as a major solar power producing country as nowhere in the world are solar parks are being developed on such a large scale. The CPSUs and Government of India organizations will participate in various Central/State Government tenders, from time to time for sale of solar power to the State.
The State Government will first nominate the implementing agency for the solar park and also identify the land for the proposed solar park. It will then send a proposal to the Ministry of New and Renewable Energy (MNRE) for approval along with (or later) the name of the implementing agency. The implementing agency may be sanctioned a grant of upto Rs 25 Lakh for preparing a Detailed Project Report (DPR) of the Solar Park, conducting surveys, etc. The DPR must be prepared in 60 days.
Thereafter, application may be made by the implementing agency to Solar Energy Corporation of India (SECI) for the grant of up to Rs 20 lakhs/MW or 30% of the project cost including Grid-connectivity cost, whichever is lower. The approved grant will be released by SECI as per milestones prescribed in the scheme.
Lupin- Launches Authorized Generic (AG) of Celebrex: Lupin announced that its US subsidiary, Lupin Pharmaceuticals Inc. (Lupin) has launched the authorized generic for G.D. Searle LLC’s (a subsidiary of Pfizer Inc.) Celebrex® Capsules (Celebrex) 50 mg, 100 mg, 200 mg and 400 mg strengths. Lupin had earlier signed a licensing agreement with Pfizer Inc. regarding Celebrex. Celebrex® Capsules had annual U.S sales of US$2.54bn (IMS MAT September, 2014). Teva is has the 180- day exclusivity on the product and launched the product yesterday. Apart from Lupin there is another AG players like Actavis, thus the product can add conservatively around US$90-100mn on sales and US $18-20mn on the net profit front during the exclusivity period. The numbers will be fully reflected in the 4QFY2015 and 1QFY2016 numbers. Apart from Teva and Lupin, many other generic companies would enter the market post the exclusivity period. We maintain our neutral stance on the stock.
Cadila Healthcare- Recalls anti-hypertension drug from US: It has been reported that the Cadila Healthcare is voluntarily recalling 15,144 bottles of its anti-hypertension drug Amlodipine Besylate tablets in the US market, according to the US Food and Drug Administration (USFDA). As per information, Zydus Pharmaceuticals USA Inc, the US-based arm of the company, is recalling the drug due to “discoloration”. The nationwide recall has been initiated by the company on October 1 this year and has been initiated under Class-III which FDA defined as “a situation in which use of or exposure to a volatile product is not likely to cause adverse health consequences”. The tablets, which are indicated for the treatment of hypertension, to lower blood pressure, were manufactured by Cadila Healthcare and distributed by Zydus Pharmaceuticals USA Inc. Since the recall is voluntary and not significant the numbers are unlikely to be impacted greatly. We remain neutral on the stock.
|M3 growth further decelerates to lowest since January 2013|
|Money Supply (M3) growth decelerated to lowest since January 2013 to 11% in month of November 2014, same as recorded in the month of October and 12.7% recorded in September. The M3 growth eased amidst deceleration in both time deposits with banks and currency with the public. While demand deposits with banks registered a growth of 13.8% y-o-y. Meanwhile, in the fortnight ended 14 November 2014, the growth in M3 fell by Rs 27.6 billion led by fall in both time deposits and demand deposits with banks while currency with the public increased. The growth in other deposits with RBI also declined.Components
M3 decelerated 6.8% till 14 November 2014 during 2014-15 compared with a 8.6% rise in the same period a year ago. However, the annual growth rate at 11.4% is lower than the 14.2% increase a year ago, mainly due to the deceleration in both time deposits with banks and currency with the public. The growth rate in time deposits with banks increased 11.7% (y-o-y) from 15.4% a year ago, demand deposits with banks, another major component of broad money, increased at 13.8% (y-o-y) from 8.3% a year ago and currency with public decelerated to 7.5% from 10.9% last year. In the fortnight ended 14 November 2014, the M3 eased by Rs 27.6 billion led by fall in other deposits with RBI and time deposits and demand deposits with banks . However, the fall in M3 was restricted by rise in currency with the public by Rs 204.1 billion.
Demand deposit with banks recorded a growth of 3.9% till 14 November 2014 compared with a fall of 2.6% in the same period last year. The annual growth rate as on 14 November 2014 stood at 13.8% compared with a rise of 8.3% last year. On other hand, time deposits recorded a 7.2% growth rate till 14 November 2014 during 2014-15 compared with 10% growth in the same period last year. The annual growth rate as on 14 November 2014 stood at 11.7% compared with a 15.4% increase last year.
One of the major components in money supply, that is currency with the public, recorded a 7.5% annual growth rate as on 14 November 2014 compared with a 10.9% increase last year. In 2014-15, till 14 November 2014 it recorded a 5.8% growth compared with a 7.6% increase in the same period last year. Meanwhile, fortnightly currency with the public increased by 1.6% to Rs 204.1 billion. Sources
SPARC receives Complete Response Letter (CRL) from USFDA for Latanoprost NDA : Sun Pharma Advanced Research Company Ltd. (SPARC) today announced that the U.S. Food and Drug Administration (FDA) has issued a Complete Response letter to its New Drug Application (NDA) for Latanoprost BAK-free eyedrops. While the FDA did not seek any additional information for supporting clinical data, it sought additional information on certain labeling and other deficiencies for processing the NDA. SPARC believes that this additional information request from the FDA can be addressed on priority.
A complete response letter provides a more consistent and neutral mechanism to convey that USFDA’s initial review of an application is complete and that they cannot approve the application in its present form. It provides a more consistent approach to informing applicants of changes that must be made before an application can be approved, with no implication regarding the ultimate approvability of the application.
Latanoprost BAK-free is a preservative-free, once-a-day formulation of the glaucoma medication Latanoprost using SPARC’s novel Swollen Micelle Microemulsion (SMM) technology. Unlike conventional glaucoma eyedrops, Latanoprost BAK-free does not cause or aggravate Ocular Surface Disease (OSD). Prostaglandin analogues like latanoprost are the first line of treatment for glaucoma. Market estimates place Latanoprost usage at as high as 55% of the US glaucoma market. Swollen micelle microemulsion technology, or SMM, helps to solubilize drugs that have limited or no solubility, and cuts out the need for a preservative.
In terms of sales the, Gluacoma products sales in US (it constitutes around 40% of the global ophthalmic market) at ~ US$2bn, with Prostaglandin products constitute 55% of sales, growing was growing at 6.0% in 2013. Thus the Latanoprost BAK-free address a market opportunity of around ~US$3bn globally. While, the NDA for the product was filled by SPARC in 4QFY2013-14 in US, while in ROW it has filed in 4 Emerging markets with 5 more planned in FY2015. Conservatively, assuming a 15% market share the product can conservatively gross globally around sales of US $600mn and net profit of around US $180mn annually. On EPS front, it can add around ~`4.5 to Sun Pharma’s earning. Since, the product is yet not commercialized we maintain our numbers and view on the stock.
Ranbaxy Lab’s Dewas plant banned by Germany: It has been reported, that Ranbaxy Lab’s has been barred from exporting antibiotics cephalosporin produced at its Dewas plant to Germany for non-compliance to ‘good manufacturing practice’ norms. The German health watchdog has also communicated its latest regulatory action against Ranbaxy to the European Medicines Agency (EMA).Germany’s regulator issued a non-compliance report for the Dewas facility where Ranbaxy manufactures cephalosporin antibiotics, after an inspection in June this year, according to European Medicines Agency. As per the notice, the German regulator found various deficiencies at the plant including unsatisfactory investigations and deficiencies concerning design and operation of clean rooms. Germany (15- month sales of `224.0cr in FY2014) accounted for 1.7% of global sales. While the current action will not that greatly impact the company, however a potential similar action from other members of the EMA could be a possible threat as the EMA economies almost account for 16.5% of its sales in FY2014. We remain neutral on the stock.
Sun Pharmaceutical & Ranbaxy Lab Merger Update: FIPB unit of Ministry of Finance, Department of Economic Affairs, approved the proposal of the Company for issuing equity shares of the Company to the non-resident investors of Ranbaxy Laboratories Limited pursuant to the merger of Ranbaxy Laboratories Limited into Sun Pharmaceutical Industries Limited through the scheme of arrangement between Ranbaxy Laboratories Limited and Sun Pharmaceutical Industries Limited, which is a positive news for the company.
However, on the other side, the main approval from the Competition Commission of India (CCI) has hit a roadblock. It has been reported by Cogencis, that the Competition Commission of India has rejected the proposed merger between Sun Pharmaceutical Industries Ltd and Ranbaxy Laboratories Ltd in its current form and has suggested remedial steps to the companies to secure its nod. It has reoprted that letters have been sent to the two companies, the competition watchdog has suggested certain steps that the two companies could take to avoid dominance in their markets and comply with the watchdog's norms. While the exact nature of the concerns the competition panel has with the merger are not know , neither the remedies suggested, though it could include selling some businesses. Besides this, the competition panel has also asked Sun-Ranbaxy to suggest alternate solutions, if the ones suggested by the panel are not found suitable by them. This possibly could delay the merger process and the timleines. However, on lack of clarity on the nature of objections, we currently retaining the numbers and remain neutral on Sun Pharmaceuticals & Ranbaxy Labs.
|Government Issued Dated Securities Worth Rs.1,54,000 Crore During the Quarter Taking The Gross Borrowings to Rs.3,52,000 Crore|
|During Q2 of Fiscal Year 2014-15 (FY15), the Government issued dated securities worth Rs.1,54,000 crore taking the gross borrowings for HY1 of FY 15 to Rs.3,52,000 crore (58.7 per cent of BE), as compared to Rs.3,44,000 crore (59.4 per cent of BE) in H1 of FY 14. Net market borrowing (including repurchases) during the first half of FY 15 at Rs.2,76,887 crore or 56.0 per cent of BE was higher than Rs.2,69,265 or 55.6 per cent of BE in the previous year. The government repurchase securities worth Rs.18,805 crore during September 2014 to prematurely redeem the Government Stocks by utilizing surplus cash balances. Auctions were reduced by Rs.16,000 during Q2 of FY 15 from the proposed auction calendar for H1 FY15 in March 2014, after review of Central Governments cash position. During the quarter, emphasis on re-issues was continued with a view to build up adequate volumes under existing securities imparting greater liquidity in the secondary market. One new benchmark security of 10 year maturity (8.40 per cent GS 2024) was issued during the quarter on July 28, 2014. The amount issued under new securities constituted Rs. 32,000 or 20.8 per cent of total issuances during Q2 of FY 15. The weighted average maturity (WAM) of dated securities issued during Q2 of FY15 at 14.70 years was higher than 14.13 years for dated securities issued in Q1 of FY15. The weighted average yield of issuance during Q2 of FY15 also declined to 8.67 per cent from 8.92 per cent in Q1 of FY15, reflecting moderation in yields during the quarter. Liquidity conditions in the economy remained comfortable during the quarter, barring period of advance tax outflows, with the liquidity deficit, as reflected by net borrowings from RBI, remaining near the Reserve Banks stated comfort zone. The cash position of the Government during Q2 of FY15 was comfortable during the quarter barring a few occasions, when it took recourse to WMA.The Public Debt (excluding liabilities under the Public Account) of the Central Government provisionally increased by 2.7 per cent in Q2 of FY 15 on Q-o-Q basis as compared with an increase of 3.7 per cent in the previous quarter (Q1 of FY15). Internal debt constituted 91.7 per cent of public debt as at end-September 2014, while marketable securities accounted for 83.9 per cent of public debt. About 28.4 per cent of outstanding stock has a residual maturity of up to 5 years, which implies that over the next five years, on an average, 5.68 per cent of outstanding stock needs to be rolled over every year. Thus, the rollover risk in the debt portfolio continues to be low. The implementation of budgeted buy back/ switches in coming quarters is expected to reduce roll over risk further.
Dr Reddy’s Lab (DRL) gets 483 from USFDA for its API facility: DRL received 483 observations for its unit 6 of Vizag plant. The Vizag plant, which manufactures active pharmaceutical ingredient (API) and bulk drugs, was visited by the US Food and Drug Administration last week. According to the company 483 observations are unlikely to affect the production of the company and therefore, it will continue as per normal routine. We maintain our neutral stance on the stock.