Reliance Energy has posted a 35 per cent growth in profit after tax (PAT) at Rs 1,085 crore for the year ended March 31, 2008 (FY08), as compared with Rs 801.4 crore in FY07. Total income grew 14 per cent to Rs 7,501 crore, as against Rs 6,575 crore in FY07. In the fourth quarter ended March 31, the net profit grew 31 per cent to Rs 311 crore from Rs 237 crore in the corresponding period a year ago.
Aggregate sales of electricity stood at 9,292 million units in FY08, an increase of 6 per cent as compared with 8,766 million units in the previous year. Revenues from energy sales during FY08 stood at Rs 4,920 crore as against Rs 3,611 crore in 2006-07. During FY08, the customer base in the Mumbai increased by 0.13 million to 2.63 million. Its Dahanu Thermal Power Station achieved a plant load factor (PLF) of 101.5 per cent. The company gained about Rs 1 crore from its exposure to derivatives. The engineering, procurement and construction division has orders worth Rs 7,850 crore, an increase of 50 per cent over the previous year. The company has cash and cash equivalents of Rs 9,596 crore. Company has renamed itself Reliance Infrastructure.
We expect Reliance Infrastructure to perform well in the years ahead since it is currently executing infrastructure projects worth about Rs 16,000 crore in two years besides various Reliance Power projects. The company is developing two metro rail projects in Mumbai and Delhi, five road projects in Tamil Nadu, two SEZs and a business district in Hyderabad.
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Infrastructure Development Finance Company Ltd (IDFC) has posted over 60 per cent increase in net profit at Rs 149.4 crore for the quarter ended March 31, 2008 as compared to Rs 92.9 crore for the quarter ended March 31, 2007. Total income increased by 80.8 per cent to Rs 773.4 crore for January-March period of 2007-08 from Rs 427.7 crore for the corresponding period in 2006-07.
For the year ended March 31, IDFC has posted a 47 per cent increase in net profit at Rs 742.1 crore as compared to Rs 503.9 crore for the year ended March 31, 2007. Total income has increased by 78 per cent to Rs 2,804.5 crore for 2007-08 from Rs 1571.3 crore for 2006-07.
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Cement demand outlook this fiscal is expected to remain healthy, driven by rising investment in construction and real estate sectors, according to Centre for Monitoring Indian Economy (CMIE). CMIE expects cement production to grow 11.5 per cent and cement consumption 12 per cent during FY09.
The total annual installed capacity of the cement sector increased by about 22 million tonnes during FY08, of which 12.7 million tonnes were added during the March 2008 quarter. The CMIE expects another 25 million tonnes of new capacity to come on-stream in FY09. Northern region, which has seen additional capacity of around 15 million tonnes in FY08, will see an addition of another 7-8 million tonnes in 2009. Western and Eastern regions would continue to face a deficit. However, surplus volumes from the North are expected to meet demand in other regions. Sales volumes would drive the sectors growth during the fiscal. With limited year-on-year rise in realisations, the measures to improve cost efficiencies would play a significant role in determining the sectors profitability.
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Nirma reported net profit of Rs 37.87 crore in the quarter ended March 2008 as against net loss of Rs 93.45 crore during the previous quarter ended March 2007. Sales declined 1.10% to Rs 629.48 crore in the quarter ended March 2008 as against Rs 636.49 crore during the previous quarter ended March 2007.
For the full year, net profit rose 106.56% to Rs 223.93 crore in the yearended March 2008 as against Rs 108.41 crore during the previous year ended March 2007. Sales rose 3.05% to Rs 2312.69 crore in the year ended March 2008 as against Rs 2244.28 crore during the previous year ended March 2007.
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SEBI has issued final guidelines on real estate mutual funds (REMFs). The schemes can be launched by existing mutual fund houses or firms that have been operating in the real estate space for at least five years. In addition to the dedicated infrastructure funds and real estate investment trusts, REMFs would be the third product for mutual funds in the real estate category. While the draft guidelines had been put on all the three, the closed-ended REMFs are the first ones to see the final guidelines coming in.
Besides directly investing in real estate, SEBI has also permitted investments in mortgage-backed securities, securities of companies engaged in dealing in real estate assets or in undertaking real estate development projects and other securities. However, it has mandated that at least 35% of net assets of the scheme should be invested directly in real estate assets. Taken together, investments in real estate assets, real estate-related securities, including mortgage-backed securities, shall not be less than 75% of net assets of the scheme. Caps will be imposed on investments in a single city (not more than 30%), single project (15%), equity or debentures issued by unlisted real estate companies (15% across all schemes and 25% of issued capital in a single scheme). The assets held by one scheme cannot be transferred to another.
However, REMFs cannot invest in vacant land, deserted land or land earmarked for agricultural use. The guidelines also suggest that the assets of real estate schemes be valued every quarter by two valuers. With this move, retail investors can invest in real estate as an asset class, which has a low correlation with equity and bonds, and enjoy the benefits of asset class diversification.
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Moderate provisioning and lower deposit growth helped the country’s second largest bank, ICICI Bank post a 39% rise in net profit for the fourth quarter ended March 31, 2008. The net profit rose to Rs 1,148.8 crore from Rs 825.1 crore in the comparable period. The bank’s net interest income for the fourth quarter grew by 29% to Rs 2,080 crore as against Rs 1,609 crore in the year-ago period. Non-interest income, which comprises both fee income and income from treasury operations, rose marginally by 12% to Rs 2,361 crore.
Rising interest rates seems to be taking a toll on the bank’s retail operations on both the assets and liabilities’ side. While deposits in the March quarter have grown by just 6% to Rs 244,431 crore, advances rose by around 15% to Rs 225,616 crore. Retail advances rose 3% to Rs 131,663 crore. The average net interest margin for the fourth quarter was at 2.4% as against 2.3% the previous year.
The net profit for the year rose 33% to Rs 4,157 crore as compared to Rs 3,110 crore in FY07. The bank has taken Rs 680 crore hit for the year on accounts of its overseas books. Following the $5bn raised in ‘07-08, the bank has managed to improve its credit-deposit ratio to 92% from 85% last year.
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Public sector National Aluminium Company Ltd (Nalco) has lined up a $1 billion investment to put up smelters (1.55 lakh tonne smelter in the first phase and another identical capacity smelter in the second phase) and a power plant (750MW gas based captive power plant) in Iran. This will be implemented in joint venture with Kerman Development Organisation, Iran. Nalco will have majority stake in the project along with management control.
Meanwhile, the metal refiner will complete its Rs 5,100 crore expansion of its domestic production facilities by end of current calendar. It would then ramp up bauxite mining capacity from 48 lakh tonne to 63 lakh tonne, alumina refinery to 21 lakh tonne from 15.75 lakh tonne, and metal production to 4.6 lakh tonne from 3.45 lakh tonne. It is estimated that, even after meeting the requirement of its smelters at home, Nalco will be left with a surplus of 1.2 million tonne of alumina for the export market. This surplus alumina would be sufficient to produce around 5 lakh tonnes of metal.
Nalco’s overseas investments are part of its strategic plan to convert its surplus alumina production into metal in geographies with lower energy costs. It has already signed a deal with the Indonesian government to invest $3.4 billion in setting up a 5 lakh tonne smelter in two phases and a 1,250 MW power plant. Investments in South Africa are also currently under consideration.
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Swiss cement giant Holcim has decided to take complete control of Ambuja Cements India (ACIL), the local company through which it controls ACC, India’s largest cement major. Holcim will buy 11% from Ambuja Cement (ACL), formerly Gujarat Ambuja, for Rs 589 crore. Ambuja Cement, which created ACIL in 2000 and offered stakes to the Government of Singapore and American International Group (AIG) in what was then the country’s largest private equity transaction, will now completely exit the company.
The move will enable Holcim to own 100% of an entity that owns stakes in two of India’s largest cement players. ACIL controls 42.88% in ACC, India’s largest cement maker with a 13% market share. ACIL also owns 9.9% in Ambuja Cement, the third-biggest cement-maker with a 10% market share. Holcim directly owns 36% in Ambuja Cement.
In 1999, Ambuja Cement (ACL) stunned corporate India by buying the Tata Group’s 14% stake in ACC. The audacious move clearly signaled the company’s ambition in dominating the cement market. Two years later, in order to lessen the cost of the acquisition, Ambuja transferred its 14.5% stake in ACC to Ambuja Cement India (ACIL) and brought in the Government of Singapore and AIG as investors.
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Reliance Industries Ltd (RIL) is set to acquire majority stake in an oil block in Peru. The company is understood to have recently inked an agreement with Pan Andean for acquiring stake in Block 141 in Peru. The company is presently seeking necessary approvals from authorities in Peru. Pan Andean Resources explores and produces oil and gas in South America and the Gulf of Mexico.
Indications are that RIL is likely to acquire 90 per cent stake. Block 141 in the Lake Titicaca area of Peru is a large oil exploration play. RIL has been pursuing contracts for farm-in activities in two oil blocks in Peru. (Under Farm In practice, a company does not acquire the property directly, but rather develops the oil and natural gas properties by taking participating interest in the block)
Reliance already has 11 overseas oil and gas assets, with the latest being a block in Australia. With the Peru block, the number would go up to 12. The company is further looking at opportunities in Africa, Latin America and West Asia.
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