Crude oil was little changed as Russia called off military action in Georgia and the dollar dropped from a 5 1/2-month high against the euro, curbing the appeal of commodities as an inflation hedge. Crude oil for September delivery fell to $112.31 a barrel on the New York Mercantile Exchange at the time of going to the Press. Futures touched $112.48 earlier on Tuesday, the lowest since May 2. Prices are up 60 per cent from a year ago.
Prices rebounded after Russian President Dmitry Medvedev announced the end to the five-day offensive in Georgia, a country that connects the oil-rich Caspian Sea region with world markets. BP stopped pumping oil into a pipeline from Azerbaijan to the Black Sea coast because of concern over security. The dollar declined 0.1 per cent to $1.4923 per euro at 9:02 am in New York, from $1.4909 yesterday. It touched $1.4816, the strongest since February 26.
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Reliance Communications expected to start nationwide commercial operations of its DTH service from August 15. ‘Big Digital TV DTH’, a subsidiary of RCOM, is betting big on the huge potential of home entertainment in the Indian households. It is estimated that India has over 124 million TV households, with roughly 80 million using the conventional cable delivery platform.
DTH operators in the country, Tata Sky, DishTV and Sun are estimated to have a user base of around 7-8 million. Big Digital TV DTH would announce its tariff plans in the next few days before the launch of services. When contacted company spokesperson refused to comment. Sources, however, said Big Digital TV DTH would unleash an aggressive launch plan with an aim to become the largest DTH operator in the country in the first year of operation.
The company is believed to have placed order for 5 million Set Top Boxes with Korean and Taiwanese vendors to meet its requirements in the first year, they said, adding Big Digital TV is targeting to capture a substantial share of the DTH market that is projected to cross 25-million user base in the next three years. The company has already completed trial runs across 2,400 towns and the service is currently available for customers of other Reliance ADAG group companies for Rs 1,000.
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The rupee closed about 13 paise lower against the dollar due to dollar buying by oil companies and news of Iran going ahead with its nuclear programme. The rupee opened at 42.45/46 and touched a high of 42.34. However, following this, the rupee moved down continuously and closed at 42.48/49, lower from the previous close of 42.35/36.
A forex dealer with a public sector bank said that there was heavy demand from oil companies. The stock market going into negative territory for some part of the day also resulted in dollar buying, he added. The rupee’s movement will track the oil price and is unlikely to cross 42.25, the dealer said. The forward premia also moved lower with the six-month closing at 4.22 per cent (4.6 per cent) and the 12-month closing at 3.54 per cent (3.88 per cent).
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Aditya Birla Nuvo reported a 130 per cent dip in its consolidated net profit for the quarter ended June 30, 2008, mostly on account of higher losses in its life insurance business and investments in its BPO and garment retail businesses. The company reported a consolidated net loss of Rs 28.3 crore during the quarter, as against a profit of Rs 94.7 crore in the corresponding period last fiscal.
Its life insurance business reported a net loss of Rs 146.8 crore during the quarter from Rs 33.6 crore in the year-ago period, which was largely due to the growing share of new business premium. “The new business is fully profitable – however, income from it will accrue over the policy period, as is the case with the nature of this business. Higher spends on intensification of distribution network also affected profitability,” the company said.
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NTPC Ltd, Asian Development Bank (ADB), GE Energy Financial Services, Kyushu Electric Power Co and Brookfield Renewable Power will form a joint venture company to undertake renewable power generation.
The companies on Tuesday signed a Memorandum of Understanding (MoU) to form a joint venture company for generating renewable power. NTPC would hold a 40 per cent stake in the company while the remaining would be equally shared by other entities. The joi nt venture company would develop greenfield and under-utilised potential sites to establish 500 MW of renewable power generation sources in the country.
The company would seek to develop projects in the country and may consider investing abroad in the near future. Initially, the company would concentrate on wind power, mini and micro-hydro electric power. The Chairman of the joint venture entity would b e nominated by NTPC.
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On 29 July 2008, the Reserve Bank of India increased the repo rate by 50 basis points to 9 per cent. It also hiked the cash reserve ratio (CRR) by 25 basis points to 9 per cent beginning 30 August 2008.
While the repo rate hike is expected to make overnight funds costlier for banks, the CRR hike is expected to marginally reduce the lendable funds of banks.
Banks are aggressively using the repo facility of the RBI since the beginning of July. They borrowed almost Rs.38,900 crore per day from the RBI through its liquidity adjustment facility. Therefore the hike in the repo rate by the RBI will surely put some pressure on the cost of funds of banks.
The 25 basis points hike in the cash reserve ratio will suck out about Rs.8,000-8,500 crore of liquidity from the banking system. This will reduce the lendable resources of banks and, coupled with the repo rate hike, will bring the net interest margins of banks a bit under pressure.
Surplus liquidity in the banking system stood at a robust Rs.1,37,215 lakh crore as on 18 July 2008. About Rs.1,30,000 of this surplus liquidity comprises long term securities issued under the market stabilisation scheme. None of these securities are maturing before April 2009.
In this context, it may be noted that demand for credit remains high with credit growth well outpacing deposit growth. SCB credit is growing at around 25-26 per cent while SCB deposits are growing by around 21-22 per cent. According the disaggregated data from the monetary authority's quarterly review, growth in credit to industry accelerated further from 26.4 per cent a year ago to 26.9 per cent as on 23 May 2008. Growth in credit to small scale industries accelerated sharply from 29.5 per cent to 52.1 per cent during this period. However, the continuous rise in interest rates over the past one year did take its toll on personal loans. Growth in personal loans slowed from 23.9 per cent a year ago to 15.9 per cent as on 23 May 2008.
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TATA Steel Limited has announced the following audited results for the year ended March 31st 2008
TATA Steel has posted a net profit of INR 46870.30 million for the year ended March 31st 2008 up by 11% YoY as compared to INR 42221.50 million for the year ended March 31st 2007. Total income has increased from INR 179847.60 million for the year ended March 31st 2007 to INR 200282.80 million for the year ended March 31st 2008, registering a growth of 11.3% YoY.
The consolidated results are as follows
TATA Steel has posted a profit after minority interest & share of profits of associates of INR 123499.80 million for the year ended March 31st 2008 up by 195.6% YoY as compared to INR 41772.70 million for the year ended March 31st 2007. Total income has increased from INR 256504.50 million for the year ended March 31st 2007 to INR 1321100.90 million for the year ended March 31st 2008, registering a growth of 415% YoY.
Addressing the media, Mr B Muthuraman MD of TATA Steel said that the TATA Steel group vision was to set a global benchmark in value creation and to increase the return on capital invested to 30% by 2012. He added that "Our aspiration in due course is to become a 50 million tonne plus steel company. Our bearings and tubular divisions are working on products for the TATA Nano."
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Here follows the commercial & technical aspects relating to this AgreementWhat is 123 Agreement?
This is called 123 Agreement because this comes under USA's Atomic Power Act Section 123.Let's see how India's (Indians?) Sovereinty & Independence are pledged..
(1) After this Agreement USA will supply all fuel, machinery / equipment & technology to India for producing Nuclear Power.
(2) India currently produces power from 22 Nuclear Power Plants. It's a top secret as of now that from where which is produced, how much is produced, where it issupplied, what research is being done with that, etc. But... if we sign this Agreement, we have to disclose these secrets and also agree to 14 of our Nuclear Power Plants to be under the scanner of International Atomic Power Organisation.
(3) The fuel utilised to produce Atomic Power can be recycled for reuse and this recycling plant will also be under the direct supervision of IAPO.If India does nuclear test, this agreement gets cancelled. But not so easy!!
* USA will take back all the machinery / equipments / technology supplied to India thus far.
* Those 14 plants will continue to be under scanner irrespective of the status of the agreement.
* On the other hand, if any of the commitments given by USA is breached by them, then there is no clause for cancelling this agreement.
The agreement is apparently like this... USA can either hug India or slap India. India will not ask why are we hugged or why are we slapped.On the other hand, India cannot hug or slap USA for breach of agreement.
This is only in its capsule form so that it is easy to read and digest.
Subject: India Pledged.... Part 2
Requirement of PowerThe most important requirement for India's Economic Growth in the coming years will be the power & infrastructure. The argument put forth favouring the 123 Agreement says that we need Nuclear Power Production to be increased to meet the demand.Power Production in IndiaPresently following are the figures:
Thermal Power 66%
Hydel Power 26%
Solar & Wind Power 5% -
Presently Rs.600 Crores are spent for producing this power.
Nuclear Power 3% -
If this is to be increased to 6%, it requires additional Rs.50,000 Crores.
Naturally it will be wise to increase other 3 modes of power production rather than the expensive & dangerous Nuclear Power.
Why dangerous?
Whether power is produced or Bomb is produced, using Atomic power without spoiling the infrastructure and without allowing the radiation is always under threat. Moreover preserving the wastes coming out of Atomic Power Plants is expensive & unsafe. There was an accident in Three Miles Island in USA. To close this plant nearly USD 200 Crores spent with tons & tons of concrete but yet to be fully closed. In an another accident at Soviet Union's Serbia Plant, even the next generation children are affected due to the radiation. It will be very very expensive to defuse & close down an Atomic Power Plant than its construction cost.
URANIUM
We used to import Uranium from various other countries. After the Pokhran Test, we are not getting it. To augment the supply, we need to sign the 123 Agreement to get Uranium from USA. But we will have to declare to USA from which power plant India takes raw material for producing Atom Bomb. Other study reveals that Uranium is available in India in plenty. Only hurdle is the acquisition of land. To produce Atomic Power & Bomb in the next 40 years, the requirement of Uranium is 25,000 MT whereas the availability is 78,000 MT across India.
PLUTONIUM
Presently 35% of Plutonium is used to produce Atomic Bombs. After signing the Agreement, we will be allowed to use only 10%. Signing the agreement will enable them to restrict the usage of our natural resources!! That is though you are capable of cooking & eating 10 idlis as your breakfast, you are allowed only 3 idlis henceforth.THORIUMAs told by Dr.APJ Abdul Kalam, we have abundant Thorium. In fact we are the 2nd largest producer of Thorium next only to Australia. India has to explore this further for producing power. For your information, in South India - particularly around Kanyakumari, the availability of Thorium is abundant.INDIA-IRAN-CHINAUSA does not like the amicable relationship between India-Iran and also India-China. If India-China relationship gets stronger, then both these can rule the Eastern Part of the Globe, which USA wants to break as per the old divide & rule.By signing this agreement, USA wants India to depend on it for producing power which is going to be a crucial factor in future. There is a talk of bringing Natural Gas from Iran to India with a big pipeline project. USA doesn't like this proposal.FranceFrance has got 56 Nuclear Power stations producing 73% of the country's total power requirement. They are catching up the problem of eliminating the wastes / emissions from out of those plants at the same time increase the power production capacity. Government of France is now thinking how to reduce the power consumption in the country.ConclusionIn view of the above danger, rather than signing the agreement and pledging India to USA, it will be prudent to increase the Solar & Wind Energy and more importantly Hyder Power Production can be increased by linking all rivers across India and by constructing DAMS.The whole process of this Agreement started in the year 2005 when Manmohan visited USA. In a span of just 2 years a major decision of signing this agreement has taken place with political motive. On the contrary, neither this Government nor any other earlier Central Government could not amend the Constitution thereby nationalise the rivers across the country thereby effectively utilise the water resources for both Agriculture purpose and producing Hydel Power.
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Ranbaxy Laboratories gained over 3 per cent after the pharmaceutical major announced the launch of a generic version of an ulcer pill Prilosec in the United States under an agreement with AstraZeneca. Omeprazole is the generic name of Prilosec. Prilosec 40 mg had sales of $204.2 million in the US market, Ranbaxy said in a statement citing IMS March 2008 data.
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Oil prices rise due to Anglo-Dutch energy giant Royal Dutch Shell cut output in Nigeria after militants sabotaged at least one of its pipelines supplying crude. Prices also climbed as the market tracked developments over a disputed nuclear programme being run by Iran, a major exporter of oil. Brent North Sea crude for September delivery climbed 42 cents to $124.94 a barrel, though off earlier highs of above $126 as profit-taking set in. New York's main contract, light sweet crude for September, advanced by 36 cents to $123.62 a barrel.
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Larsen & Toubro net profit rise up to 5 per cent after the capital goods major posted a 33 per cent rise in quarterly net profit, beating forecasts, helped by strong demand from the engineering and construction sector. Larsen & Toubro has been riding a construction boom as the country revamps crumbling infrastructure such as airports, roads, ports and power plants. L&T, which has operations ranging from manufacturing to software services, reported a net profit of Rs 502 crore in the fiscal first quarter ended June, compared with Rs 377 crore reported a year ago.
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The Sensex is likely to close below 14,000 and Nifty should breach the 4,300 mark before the expiry of the derivatives contract. Recent records suggest that indices close below their previous month’s levels on the derivatives expiry date if the preceding Friday witnesses bearish sentiment, as was the case today. Profit-booking dragged the benchmark indices near its support level of 4,300 today.
There was call selling at 4300 and 4400 strike prices and put buying at the strike price of 4400. The benchmark indices are unlikely to maintain those levels as the options traders are willing to pay a premium for in-the-money call and at-the-money put options.There was net buying in index futures and net sales in index options on July 24, going by the derivatives trading data for the day. The FIIs wrote calls at 4300 and 4400 strike prices and bought puts at the strike price of 4400.
The Nifty is likely to find support between 4200 and 4300. The put call ratio (PCR) at the strike price of 4200 is 2:1, while the PCR at the 4300 strike price is 1:1, suggesting support at these levels.The Nifty July and August futures contracts closed at a premium, indicating long rollovers at lower levels. The intra-day short positions in Nifty July futures were squared off and rollovers in August futures came down by 0.5 million shares in the after-trade session. With the July futures to expire in four days, the Nifty August futures witnessed an open interest build-up of 9.5 million shares. This is marginally higher from 9.1 million shares seen during the same time last month.
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Trades between FIIs generated a volume of Rs 111 crore on the BSE Friday-an increase of 68.12% from Rs 66 crore clocked on Thursday. As many as 7 stocks witnessed trades of 12 lakh shares on Friday.
Oriental Bank of Commerce was traded at highest premium of 3.48% on BSE with 62,900 shares changing hands at Rs 163.50 as against the spot price of Rs 158. Grasim Industries was traded at second highest premium of 3.10% on the BSE with 60,729 shares changing hands at Rs 1,900 as against the spot price of Rs 1,842.95.
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IDBI Bank today reported a 4 per cent rise in net profit to Rs 160 crore for the first quarter this year as against Rs 153 crore during the previous comparable period. The total income for the reporting quarter rose 24.94 per cent to Rs 2,740 crore from Rs 2,193 crore in the first quarter of 2007-08. Interest income grew 34.85 per cent to Rs 2,418 crore during the quarter ended June 2008, compared to Rs 1,793 crore the first quarter last year.
Interest expenses too grew at around the same pace, rising 34.45 per cent to Rs 2,326 crore. The bank's net interest income was up by 31 per cent at Rs 92 crore. While other banks are reporting a steep rise in provisions mainly for mark-to-market losses on their investment portfolio, IDBI Bank said that provisions and contingencies fell 76.81 per cent to Rs 19.88 crore during the first quarter of the current financial year, compared to Rs 85.73 crore during the corresponding period last year. It, however, reported a loss of Rs 34 crore on treasury operations, compared to a profit of Rs 85.73 crore.
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Reliance Industries Ltd (RIL) has reported a 13 per cent increase in net profit for the first quarter ended June 2008, as it was able to sell its products at higher prices and also because of doubling of export sales.
The Mukesh Ambani-owned flagship firm has reported a net profit of Rs 4,110 crore or earnings per share (EPS) of Rs 28.3 for the quarter ended June 2008, against Rs 3,630 crore, or EPS of Rs 25, in the year-ago period. Turnover in the first quarter of fiscal 2009 increased 41 per cent to touch Rs 41,805 crore against Rs 29,721 crore in April-June 2007.
Nearly 95 per cent of the increase in turnover was due to increase in prices, with volume increases accounting for the rest, said a press release from the company. One of the primary reasons it was able to export more was due to the company's decision to shut down 1,432 petrol pumps it owned in India after it could not compete with state-owned oil marketing companies supported by government subsidy.
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Reliance Natural Resources Ltd (RNRL)'s a net profit of Rs 16 crore for the first quarter ended June 30, a 6.67 per cent growth from that in the corresponding period a year-ago. The firm had a net profit of Rs 15 crore in the first quarter of FY'08, RNRL said in a filing to the Bombay Stock Exchange. The total income rose 42 per cent to Rs 93 crore in the latest quarter, from Rs 65 crore in the same period last fiscal. However, the company's cash profit dipped by Rs 1 crore to Rs 16 crore during the quarter.
Reliance Natural Resources Ltd (RNRL)'s net worth stood at Rs 1,746 crore, while the earnings per share was at Rs 0.10 per piece, the filing added. The board has appointed Mr Anil Singhvi as an additional Director and Vice-Chairman of the company, the filing said.Shares of RNRL closed at Rs 95.50, down 3.34 per cent on the BSE.
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India's annual inflation rate is expected to have risen to 11.63 per cent in the week ended June 21, Indian media said on Friday.This would put the wholesale price index at 237.1 points, up from 236.1 points a week earlier.
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The government has rolled out an expanded farm debt waiver scheme, which will cost the exchequer a whopping Rs 71,600 crore, 20% higher than the initial estimate of Rs 60,000 crore. The scheme will now include more than four crore farmers and will also cover those with land holdings in excess of two hectares.
The expanded loan waiver scheme, which was announced in the Union Budget 2008-09, will now include farmers engaged in allied activities such as poultry, dairy farming. Direct agricultural loans taken under a Kisan Credit Card, as well as loans of self-help and joint-liability groups would also be covered. Farmers in drought-prone areas covered under the Prime Minister’s relief plan have also been included in the scheme. While small and marginal farmers are eligible for debt waiver, others are eligible for a one-time settlement (OTS) scheme. The government has also decided to waive off restructured loans, including those under the Vidharba package and calamity relief, whether or not they were overdue.
In a separate development, RBI has asked banks to take necessary steps to complete the debt waiver scheme by June 30.
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Reliance Communications (RCOM) is all set to acquire UK-based global mobile virtual network operator (MVNO) Vanco. According to sources, RCOM is learnt to have emerged as the highest bidder and both the companies have already finalised 100% buyout deal, in which, RCOM may also take over Vanco’s £123-million debt. Earlier this month its CEO and founder Allen Timpany parted ways with the company, after it came out with a major profit warning, it was put on the block. Trading in the shares was also suspended earlier this month. RCOM will have to pay a very small sum for the troubled telco, which was at its peak (about two years ago) and had a market cap of close to $800 million. The deal is likely to be inked today, sources added. Like in earlier acquisitions, RCOM is expected to retain the workforce including the top management of Vanco.
Vanco is among the leading MVNOs in the world with its services available in over 200 countries.
An MVNO does not own any network assets, but leases infrastructure and bandwidth from others to serve its customers. This acquisition would bring under RCOM’s fold a virtual network in 230 countries across the world with over 800 new product offerings that Vanco has developed over the last 20 years. The ailing telco also has over $650 million worth of secure long-term contracts from its customers that would be accrued over the next 3-5 years.
With Vanco’s business model revolving around virtual networks, RCOM would be able to cut significant costs through routing the traffic on its own network which will result in considerable enhancement in EBIDTA of its global business, which has been looking towards forging alliances with regional and domestic carriers. Vanco has alliances with 700 carriers across the world. The acquisition is also in line with RCom's strategy of becoming one of the world's top five data communications players.
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As global auto majors go for more intelligent cars, the benefits are being reaped back in India by Tata Elxsi, which has the automobile sector as a key vertical in its product design services domain. The research and development of a number of path-breaking features that mark new vehicles are being developed at the company’s development centres, which presently have staff strength of roughly 700. Typically, the high-end cars of the world have as many as 70 little computers, or electronic control units (ECUs), which also mean that about 60% of the cost of automobiles are contributed by the electronics that they feature. This is in contrast to 10 ECUs in high end Indian cars at present.
The company is engaged in some of the cutting-edge work including bending the beam of vehicle lights while taking curves, night vision, elevating or dipping the beam as required and adaptive front lighting system (AFLS) which enabled drivers to prevent light from vehicles coming in the opposite direction blinding them temporarily. Some of the product designs undergoing development included censors that would automatically measure body temperature and pulse of the driver and accordingly adjust air-conditioning in the vehicle, adjust air-conditioning levels according to personal comfort levels of each passenger, and airbags that would open to the levels required for passengers of different weights.
Tata Elxsi has seven global development centers in the country, besides one centre in Japan. The centre here is targeted to have strength of 2,000 software professionals within the next two years. The increasing electronics constituent in automobiles means more business for Tata Elxsi, which has a strong presence in the automobile vertical.
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RCom is believed to have initiated talks with MTN Group, South Africa's largest telecom operator, even as Bharti Airtel decided to pull out of the negotiations citing differences with the management. Reliance is among the four telcom companies that have shown an interest in MTN. Russian telcom company Vimpel Communications, European major Deutsche Telecom and UAE telecom giant Etisalat are the other suitors that have announced their interest in bidding for the South African company. This is the second attempt by RCom to acquire MTN Group. RCom Chairman Anil Ambani had met Nhleko last year, but the talks were not successful.
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Housing Development and Infrastructure Ltd (HDIL), India’s third-largest realty player, is diversifying into the oil and gas sector. The company will bid for 10 of the 57 hydrocarbon blocks on offer in the seventh round of the New Exploration Licensing Policy (Nelp VII). The gambit is to offset softening growth in the real estate sector. HDIL is likely to bid with a foreign partner as it lacks the experience in oil exploration. However this was not confirmed by the management.
Meanwhile, as part of its airport slum rehabilitation project, HDIL has acquired 110 acres of the 170 acres that it needs to relocate 85,000 families. The average cost of the acquisition is Rs 22 crore per acre. The acquisition includes 53 acres in Kurla, where the Premier Automobiles car factory was once located. IL&FS sold the land for Rs 1,900 crore.
HDIL is expected to relocate 20,000 families to this place in the first phase of the rehab project. HDIL’s airport project is moving on schedule. This can unlock a lot of capital in the next two years. The company will get around Rs 10,000 crores from the project. HDIL’s current revenues are around Rs 17,000 crore, with a net profit of around Rs 1,301 crore.
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In a boost to the domestic tea vending industry, the Government has allowed export-oriented units (EoUs) to sell more ‘instant tea’ in the domestic market to meet the growing demand in the country. There is a strong demand for instant tea due to increased consumer preference for convenient, instant food and beverage products.
The Commerce Ministry has now increased the cap on EoU sales of ‘instant tea’ in the domestic tariff area (DTA) from the existing 20 per cent of free-on-board value of exports to 30 per cent. This will improve availability of ‘instant tea’ for tea vending industry, which has been importing (instant tea) from Sri Lanka and other foreign markets, say industry players. The domestic tea vending industry, valued at about Rs 400 crore, has been growing at 35 per cent compounded annual growth rate (CAGR) in the recent years, say industry observers.
This is a progressive welcome step. The cap should have been raised to 50 per cent as available for a number of products. Generally at present, EoUs are permitted to sell up to 50 per cent of their free-on-board (f.o.b.) value of exports in the DTA. Government has taken this supply side measure to control domestic inflation in food and food products. This will give Tea companies the flexibility in selling its products in the market which fetches highest price.
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State-run Bharat Heavy Electricals Ltd (BHEL) has bagged a Rs 1,150 crore turnkey contract for setting up an energy-efficient 153-MW captive power plant at the upcoming Guru Gobind Singh Refinery at Bhatinda in Punjab. The Rs 1,150 crore order has been placed on the company by HMEL, a joint venture of HPCL and Mittal Energy Ltd.
The company won the contract under international competitive bidding (ICB). The designing, engineering, manufacturing, supply, erection and commissioning work of the captive power plant in addition to complete civil works would be done by BHEL. The 153-MW gas turbine-based combined cycle power plant to be commissioned in a period of 30 months would meet the power and process steam requirement of the upcoming refinery.
The equipments for the project would be supplied by BHEL’s plants in Tiruchi, Ranipet, Bhopal, Jhansi and the Electronics Division in Bangalore. The civil works, erection and commissioning of the plant would be carried out by BHEL’s Power Sector-Northern Region. BHEL has so far supplied and commissioned more than 700 steam turbine and gas turbine-based plant for industries such as metal, paper, sugar, cement and process industries like refineries, petrochemicals, fertiliser in both domestic and overseas market.
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RIL is set to be the first oil and gas private major to develop an oil and gas market in the country. It will be inviting price quotes from oil refining companies. This would also set the first benchmark for market-driven prices in the crude oil sector. RIL has had initial round of talks with refinery companies such as Hindustan Petroleum Corp for its Vizag refinery, Mangalore Refinery & Petrochemicals and Chennai Petroleum Corp, to name a few.
RIL would float the tender in a few days when the company would set an indicative benchmarked price based on the quality of the crude. Initial tests have shown the crude to be sweet and light in nature, which is a premium crude. Refinery companies bidding for the crude oil will have to quote a price that is a discount or a premium to the indicative price. Although a final decision is yet to be taken, RIL which has two refineries, including the one being developed by Reliance Petroleum will not bid for the crude. This is aimed at keeping the price discovery process as fair and transparent as possible.
The company is planning to produce 40,000 barrels of oil from the MA field, which is a part of RIL’s D6 block. The government has approved $2.2-billion field development plan (FDP) of the MA field. The production is likely to commence in the second half of 2008.
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India's largest bank State Bank of India revised upwards interest rates on deposits of two years and more with effect from June 1. The deposits for the duration - two years to less than three years will now earn an interest of 8.75 per cent. Also, interest rate on deposits of three years to less than five years has been increased to 8.85 per cent from 8.5 per cent. Interest rates on deposits of five years and up to 10 years will be 9 per cent as against 8.5 per cent at present.
For senior citizens, the deposit of two years and up to 10 years has been bifurcated into two categories of deposits of three years to less than five years and 5 years to 10 years. The interest rates on the new buckets will be 9.35 per cent and 9.5 per cent as against 9 per cent earlier. Interest rates on senior citizen deposits of one year to less than two years will continue to be 9.25 per cent.
The counter-intuitive move to offer higher deposit rates, and crunch its spreads in times of dormant credit off take and rising inflation was not expected at this moment. However, long term loans are seeing growth as there is demand of loans from infrastructure projects, and to manage these, the bank may have hiked deposit rates.
However, SBI says that their move to raise rates is to realign them with that offered by the peers. Besides, the bank is looking at raising long term loans in the early part of the year in order to reduce any pressure on deposit mobilisation at the end of the year. It may also be recalled that SBI had decided to increase its market share in deposit market by 0.25% every quarter.
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Reliance Communications, is gearing up to launch videoconferencing services across 1,100 cities in 113 countries, including the US, Europe, Japan and Middle East nations. The company has also initiated talks with global telecom operators to set up backbones and provide bandwidth for the operations.
The company planning its global videoconferencing foray through its 100% subsidiary Reliance Globalcom, which already has Internet protocol-enabled optical fibre network across the globe. The company is looking at hosting over 2 million simultaneous videoconferences across 70 countries covering 6 continents. RCom, which is already providing videoconferencing services in over 105 cities in the country, is also expanding its presence. The group had earlier entered into tie-ups with over 1,000 corporates, who are using the facility from Reliance World Stores. The company is also providing managed videoconferencing services to customers in the country.
The fast growing global potential of videoconference services provides interesting opportunities to expand its service portfolio using the fully-IP enabled 65,000 fibre Kms undersea cable network connecting 40 top business centers of the world. The present size of global videoconferencing industry is estimated to be around $11 billion (Rs 44,000 crore). In India, the videoconferencing market is growing at over 50 per cent on a year-on-year basis.
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Homegrown pharma major Ranbaxy Laboratories Ltd has commenced Yemen operations in collaboration with local Pharma Ltd. With this it has strengthened its presence in the Middle-East. Ranbaxy has now become the first Indian pharma company to have a strong presence in the Middle-East with operations in 11 countries.
The company has a strong productline with over 160 approvals so far in Yemen. It has commenced operation by introducing products to more than 350 doctors in the country. Ranbaxy would focus more on therapeutic areas such as anti-infectives, gastro-intestine, cholesterol lowering and anti-allergic in the country. It has also become the first company to be registered in Saudi Arabia and to receive the centralised GCC registration.
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GMR Infrastructure has posted 129% growth in net profit after tax and minority interest at Rs 50.0 crore for the quarter ended March 31, 2008 as compared to Rs 21.9 crore for the quarter ended March 31, 2007. Net Revenues have increased 43% from Rs 619.6 crore for the quarter ended March 31, 2007 to Rs 885.3 crore for the quarter ended March 31, 2008.
For the year ended March 31, 2008, the company has posted a jump of 20% in net profit after tax and minority interest at Rs 210.1 crore for the year ended March 31, 2008 as compared to Rs 174.4 crore for the year ended March 31, 2007. Net Revenues have increased from Rs 1,696.7 crore for the year ended March 31, 2007 to Rs 2,294.8 crore for the year ended March 31, 2008.
GMR Infrastructure plans to invest Rs 2,400 crore this fiscal in various road projects. The company expects to commission four important road projects - two in Andhra Pradesh, one in Tamil Nadu and one in Ambala, by the end of the year.
Further GMR Infrastructure’s unit GMR Energy Ltd has acquired a 5% stake in South Africa’s Homeland Mining and Energy SA (Pty) Ltd, a unit of Canada’s Homeland Energy Group Ltd. It also has an option to buy additional 45% stake in the company.
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Bharti Airtel has signed a $35 million, three-year outsourcing agreement with BPO services provider Firstsource Solutions, which will offer both voice and backoffice services in areas such as customer accounting, VAS provisioning, fraud and credit monitoring, customer service, collections and customer retention to Airtel. While company officials declined to provide financial details, sources said the deal was valued at around $35 million.
In August 2005, Bharti had announced a Rs 1,000-crore deal with BPO firms IBM Daksh, MphasiS, TeleTech and Hinduja TMT to outsource its call centre operations. The Firstsource deal is another instance of the company's strategy to focus on its core areas of product innovation, marketing, brand building. Airtel has already outsourced its IT requirements to IBM and cellular networking operations of Nokia and Ericsson. However, the contract with Firstsource is more comprehensive as it includes mobile collection, welcome calling, VAS provisioning besides other services.
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Dr Reddy’s Laboratories (DRL) suffered a 68% fall in Q4 net profit ended March 2008, after writing down the intangible value of the products of its buyouts in Mexico and Germany, besides products in Spain. Fall in the revenues from generic drugs and pricing pressures from the US and Germany also pulled down revenues for the quarter by 15% year on year.
Net profit fell to Rs 102.8 crore in Q4FY08 from Rs 325.2 crore in the corresponding period of FY07 when it was aided by 180-day exclusivity for the generic version of a drug Zofran. In the period under review, revenues dropped to Rs 1,325.2 crore from Rs 1,557.3 crore. DRL is targeting a revenue growth of 25% in this fiscal. The focus will be to strengthen its global generics business in US and Europe, to build on the momentum in Active Pharma Ingredients and Organic Custom Pharma Services (CPS) business, and accelerate pipeline development and infrastructure in the innovation business.
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Rcom has announced the roadmap for launching competitively priced direct-to-home (DTH) services in 4,000 towns in the next few weeks. The company has already completed trial runs across 2,400 towns and the service, under the brand name, Big TV DTH. The service is currently available for customers of other DTH operators for just Rs 1,000 as compared to nearly Rs 4,000 being charged by existing DTH operators.
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In what could mark its foray into the real estate and hospitality sectors, Reliance Industries has sealed a $1-billion joint venture with the New York Stock Exchange-listed Vornado Realty Trust to set up a real estate fund that will develop a network of mega malls and highway shopping centres in India, not just for Reliance Retail (RRL) but also others. The joint venture with Vornado is Reliance’s fifth global partnership in three monthsthe other four being with Marks & Spencer, Vision Express, Miss Sixty and Office Depot. However, the latest partnership is important as it would deal with real estate acquisition and management, which is crucial for the viability of any retail company.
Reliance, which was averse to global partnerships in the past, has now adopted a more pragmatic approach to form joint ventures with the world’s best to capitalise on their domain expertise and brand power. Since the group is a green horn in retail and has never dealt with a consumer business on such a large scale, it wants to learn the systems and processes from experienced global companies so that it can apply them on its own retail venture. So, Reliance didn’t think too much when it had to relent majority control to global apparel and food company Marks & Spencer. Even in its JV with Vornado, Reliance may be a minority player, but the shareholding structure could not be confirmed.
Now the real estate assets of Reliance Retail will be parked with this realty fund, thus transferring a high cost base from the retail company’s balance sheet. With this, the fund becomes the official real estate supplier to RRL. Vornado, the $14-billion market cap company, develops and manages retail properties and office spaces in Washington and New York. In India, it is likely to give the much-needed push to RRL’s expansion plans, which have slowed down in recent months. It will also develop seamless malls, which will house global brands with which RRL is signing up joint ventures.
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Rcom may further dilute ~5% of Reliance Infratel through its subsidiary Reliance telecommunications infrastructure Ltd or Reliance telecom infrastructure holdings Ltd. in pre-IPO placement to a clutch of American and European investors, a deal that values the company at nearly Rs 50,000 crore, according to sources. The earlier 5% stake dilution that Reliance Infratel had made, valued the company at nearly Rs 28,000 crore. Earlier last week, Sebi cleared the initial public offering of Reliance Infratel.
Reliance Infratel, the telecom infrastructure division of Reliance Communications, would offer 10% equity to the public valued at Rs 5,000-6,000 crore. The issue proceeds are proposed to be utilised towards funding development of passive infrastructure and general corporate purposes. The re-rating in the valuation of Reliance Infratel should get reflected in the valuation of Reliance Communications going forward.
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In what is seen as one of the most significant milestones in its history, Bartronics India Ltd, a leading provider of solutions based on ATDC technologies in India, has emerged as the lowest bidder in the Bhamashah Financial Empowerment Scheme of Rajasthan Government. The bids for which were opened on May 16.
Under the scheme, the government intends covering about 50 lakh families through biometrically identifiable smart cards, and provides them financial relief. The project valued at about Rs 150 crore is one in a series of financial inclusion initiatives announced by the Finance Minister during his recent budget speech. Similar initiatives are underway in West Bengal, Bihar and some other states across the country.
While the confirmation of this order is awaited, this is seen as a major breakthrough as far as government projects are concerned. Apart from the financial inclusion project, we expect the demand to pick up further with smart cards expected to be used for variety of other applications namely driving licenses; transport application cards e.g. railway cards, PDS cards (Ration cards), MNIC (multi-purpose national ID Cards) & banking cards. With the company having garnered a major market share in the smart cards segment, BIL stands the biggest beneficiary in terms of awarding of these contracts.
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Shipping companies world over are looking to diversify to hedge against the cyclicality of their core business. But Mercator Lines has taken a deeper path into coal mining. The country’s second-largest private sector shipping company has entered the business through its second subsidiary in Singapore. It has secured mining licences for two coal blocks in Indonesia and one in Mozambique.
Mercator has secured 50% rights in two coal blocks in Indonesia, which have reserves of 15 million tonnes of decent to good quality coal. The company would start production of coal in July this year and expects the two mines to contribute one million tonne of coal in the first year. However, the coal block in Mozambique where Mercator Lines has 85% rights is still under development. The coal reserves there have been estimated to be around three billion tonnes and the company anticipates a wait of another two to three years before they can start production.
The operating cost of producing one tonne of coal is $25. This also includes production tax and 9% royalty that the company needs to pay the Indonesian government. Thermal coal, on the other hand is currently sold at $45-50 per tonne. While, doing a forward calculation, one million tonne of coal for Mercator would translate into $50 million of revenue and a $25 million profit. Having 50% rights in the Indonesian mines, Mercator is set to draw a profit of $11-12 per tonne of coal that they produce or about $12 million profit.
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In spite of a credit crunch and slowdown in the US, both Indian and global IT services companies have seen strong business growth in 2007. Worldwide IT services revenue totalled $748 billion in 2007, 10.5 per cent higher than $677 billion reported in 2006, according to research from Gartner Inc. In the same period, the top six Indian IT companies TCS, Infosys, Wipro, Satyam, HCL and Cognizant increased their collective market share in the global IT service arena to 2.4 per cent against 1.9 per cent in the previous fiscal.
Even though Indian IT companies have collectively improved their revenues in 2007, they are still laggards when compared with US-based vendors, who dominated the IT services pie with 55.4 per cent market share. Indian IT companies account only for 4.1 per cent of the global IT services revenue tracked. On the global front, IBM and Accenture delivered strong growth rates of 12.2 per cent and 19.7 per cent, respectively.
However, domestic IT services business in the country also seems to have come of age. The Indian domestic IT services market has been outpacing the overall Asia Pacific growth, as it grew by 18 per cent in 2007. While cost remains a key consideration for users in the outsourcing services market in India, operational efficiency and business agility are driving most of the IT services engagements.
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Freight rate for iron ore is set to come down further with the Railways deciding to remove the 30% port congestion surcharge levied on the mineral meant for domestic use. The move is set to benefit steel companies such as Essar Steel, Ispat Industries and Vikram Ispat which do not have captive mines. These companies depend mainly on rail transport for moving raw material to their steel plants. A fortnight ago, the Railways had shifted iron ore from class 180 to 170. The reclassification had resulted in freight cut of ore by 4-5%. However, the port congestion surcharge on iron ore meant for exports would continue to remain at 100%.
The proposed changes follow a series of high-level government meetings over finalising a steel package to contain inflation. Iron ore constitutes an important cost element in the entire process of steel making. With iron ore prices rising 100% in a year and expected to rise further, the Railways’ initiative is expected to reduce cost pressure on the steel sector.
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Bharti Airtel is set to partner IT and telecoms hardware major Cisco for enhancing its managed services portfolio. With falling tariffs and reduced average revenue per user (ARPUs), all major telcos, are now looking at managed services which combines IT services with telecom offerings. According to a recent report by Gartner, network IT services is set to become a $7 billion market by 2011. Telcos are, therefore, looking to bundle end-to-end managed servicesinstallation of the hardware at the customer premises, providing customised software solutions, managing and maintaining both IT and hardware platform.
Airtel is collaborating with Cisco to launch managed Multi Protocol Label Switching (MPLS) services. With Cisco’s Tier I certification for the CISCO Managed Serviced Channel Partnership programme, Airtel will now be able to offer Indian enterprises end to end Managed VPN Services including last mile and Customer premise equipment (CPE) management, network design, installation, configuration, and 24X7 monitoring and maintenance support. Bharti Airtel expects to grow their MPLS business by 50-60 % in this financial year. The company, which has more than 400 customers on its MPLS network, intends to increase its customer base by at least 30% in the next one year. Bharti-Cisco combine would look at partnering other service providers and IT players from time-to-time depending on the specific requirements of their customers.
The Bharti move has come within a day of French-US equipment firm Alcatel-Lucent forming a JV with Reliance Communications (RCOM) to offer managed network services to domestic as well as international telecom operators. Managed services helps telcos move up the value chain and increase revenues as Indian telcos extend their footprint both within the country and globally.
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Patni Computer, the Mumbai-based IT services provider, is about to close an over $50 million deal with a top telecom carrier in India to provide a proprietary service delivery framework. It is learnt that Patni will provide Telecom-in-a-box (TIAB), a service framework that will ease the process of delivery of various services such as multimedia content, IPTV by telecom carriers to their customers.
Meanwhile, Patni is also in talks with some IT service providers and telecom carriers to provide niche technology driven telecom services. For Patni the focus on India is part of its effort to bolster its Asia-Pacific revenue from 5% of its total revenues to 9% in the next financial year. Moreover, it is also looking at the second largest market for IT services i.e Japan. Business from Europe contributes about 13% of Patni’s revenue while the rest comes from the US.
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''The said news item is purely of speculative nature,'' company said in a statement. The media has reported that M&M is in talks to acquire Kinetic Motors. The Pune-based company Kinetic said it is exploring various alternatives to raise funds for its two wheeler business.
However, no definitive agreement has been entered with any investor or Mahindra & Mahindra Ltd, it added.
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A poor performance by mining, manufacturing and electricity sectors resulted in a dismal industrial production growth of 3 per cent during March 2008, as against 14.8 per cent in the same month of the previous year. Data released by Central Statistical Organization revealed that the production in manufacturing sector, which has an 80 per cent share in the Index of Industrial Production, grew by 2.9 per cent as against a robust 16 per cent in the same month of the previous year.
In the month under consideration, electricity production grew by 3.7 per cent as against 7.9 per cent in March 2007. Mining production growth also slumped to 3.8 per cent in March 2008 as against 8 per cent in the corresponding month of the previous year. Consumer durables production in March dipped by 2.1 per cent as against a growth of 3.8 per cent in March 2007. Capital goods production in March grew by 8.6 per cent as against 18.1 per cent in the same month of the previous year.
There is a silver lining, though. Part of the drop appears to be because of the base effect of the industrial growth in March 2007, the base for calculating growth in March 2008, which was unusually high. If we look at the numbers month-on-month (M-o-M) and look at March over February, we will notice a 23-point increase in the general index, which will translate to a growth of nearly 8.5%. Basically, in March 2007, growth had been 37 points over a base of 250, so that was a huge increase.
Thus considering the base effect and the M-o-M figures, there is really no signs of slowing down yet. The higher sequential growth (March over February), which had turned negative in February 2008, does underscore the point. However IIP figures for the coming months would be keenly watched to see whether there are actual signs of slowing down on account of prevailing higher interest rates and rising input costs.
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Ratan Jindal-led Jindal Stainless has entered into an agreement with Indonesian mining and metals firm PT Antam to form a $700-million joint venture to develop a nickel smelting and stainless steel facility in North Konawe, Southeast Sulawesi (Indonesia). While PT Antam will have a 55% stake in the JV, Jindal Stainless will hold the balance 45%.
The new venture would entail an investment of $700 million (Rs 2,900 crore approx), of which 30% would be raised through equity and the balance would be in the form of debt. The new plant will have a capacity of close to 20,000 tonne per annum (tpa) of contained nickel in the form of ferro-nickel and 2.5 lakh tpa of stainless steel. The facility will also have its own coal-based captive power plant and water-treatment plant, besides residential facilities for its employees.
While the construction work would begin from early next year, the plant would be commissioned by mid-2011. Under the terms of the agreement, while PT Antam will share its expertise in mining and nickel processing, Jindal Stainless will provide expertise in stainless steel processing and marketing. With Jindal Stainless already having a stainless steel plant in Indonesia, the new venture would strengthen its presence in the global stainless steel industry.
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Ranbaxy Laboratories has signed a strategic product development agreement with German pharma major Merck for drug discovery and clinical development collaboration in the anti-infectives field. As per the deal, the two partners will work together to develop clinically validated anti-bacterial and anti-fungal drug candidates. The agreement is in line with Ranbaxy’s recent overtures for collaborative research in various segments with other pharma companies both in India and abroad.
Under the terms of the agreement, Ranbaxy will receive an undisclosed upfront payment, in addition to potential payments totalling more than $100 million associated with the achievement of various research, development and regulatory approval milestones for each target included in the collaboration. This apart, Ranbaxy will also be eligible to receive significant royalties on worldwide net sales of any products commercialised under the agreement.
Ranbaxy will carry out drug discovery and clinical development through Phase II of clinical trials. Merck will then develop and commercialise the drug candidates. The collaboration, beginning this year, will have an initial term of five years and can be extended mutually. This deal could be similar in nature to Ranbaxy’s existing relationship with GlaxoSmithKline. The two had struck an alliance in 2003 under which Ranbaxy conducted the optimisation chemistry required to progress drug leads to the stage of candidate selection.
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Reliance Communications (RCom) has entered into a joint venture pact with global infrastructure provider Alcatel-Lucent to provide managed network services (MNS) to telecom service providers in the country. This is the first time two major firms have come together to jointly tap the emerging potential of MNS, a nascent sector in the country. The companies will float a new entity, which will kick off operations by providing services to RCom's CDMA and GSM networks. The new entity will initially focus on providing services to 12 circles in northern and western India. The JV firm will also help RCom's expansion plans outside the country and provide services to other firms across the world.
An MNS provider installs the infrastructure and equipment and manages it for the telecom service provider. Though data pertaining to the size of the MNS industry is not available, industry experts expect the sector to grow to about Rs 100 crore in the next couple of years. The JV will help RCom concentrate on its core competencies i.e. telecom services, while Alcatel-Lucent takes care of the infrastructure. After hiving off its passive infrastructure business of telecom towers this is a second move by Reliance Communications Ltd to outsource a core activity.
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The company announced the results during trading hours today, 7 May 2008.
Meanwhile, the BSE Sensex was down 31.86 points, or 0.18%, to 17,341.15.
On BSE, 31,328 lakh shares were traded in the counter. The scrip had an average daily volume of 12,764 shares in the past one quarter.
The stock hit a high of Rs 271 and a low of Rs 255 so far during the day. The stock had a 52-week high of Rs 382.70 on 4 January 2008 and a 52-week low of Rs 183.15 on 8 November 2007.
The mid-cap scrip had outperformed the market over the past one month till 6 May 2008, gaining 16.78% compared to the Sensex`s return of 10.26%. It had underperformed the market in the past one quarter, declining 4.39% compared to Sensex`s decline of 4.23%.
The company`s current equity is Rs 60.76 crore. Face value per share is Rs 10.
The current price of Rs 260 discounts its Q3 December 2007 annualised EPS of Rs 16.72, by a PE multiple of 15.55.
However, Punjab Tractors` net profit fell 16.43% to Rs 65.17 crore on 1.82% rise in total income to Rs 971.98 crore in the year ended March 2008 over the year ended March 2007.
The company is engaged in manufacturing, marketing and servicing of tractors. The products include agricultural tractors, self-propelled harvester combines, rice transplanters, forklifts, tractor drawn agricultural implements, gears, spare parts, casting and accessories.
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The BSE Sensex was down 29.80 points, or 0.17%, to 17,344.43
On BSE, 68.73 lakh shares were traded in the counter. The scrip had an average daily volume of 13.74 lakh shares in the past one quarter.
The stock hit a high of Rs 283.50, which is also its all time high on BSE. The stock touched a low of Rs 261 so far during the day. The stock had hit a 52-week low of Rs 128 on 9 May 2007.
The large-cap scrip had outperformed the market over the past one month till 6 May 2008, gaining 14.65% compared to the Sensex`s return of 10.26%. It also outperformed the market in the past one quarter, advancing 23.79% compared to Sensex`s decline of 4.23%.
The company`s current equity is Rs 1892.19 crore. Face value per share is Rs 10.
On 6 May 2008, Cairn India rose 1.67% to Rs 260.75 after Goldman Sachs Group Inc. raised the stock`s price estimate by 14% to Rs 325 per share.
Cairn India reported higher net loss of Rs 24.31 crore in Q1 March 2008 as compared to net loss of Rs 8.54 crore in Q1 March 2007. Total income rose 79.80% to Rs 22.66 crore in Q1 March 2008 over Q1 March 2007.
Cairn India`s principal activity is to explore, develop and produce crude oil and natural gas.
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Meanwhile the BSE Sensex was down 87.49 points or 0.50% to 17,285.52
India`s second largest software exporter by sales TCS was the top gainer from Sensex pack. The stock surged 3.22% to Rs 968.05 on 4.46 lakh shares.
Other Infosys Technologies (up 1.36% to Rs 1846), Wipro (up 0.30% to Rs 499.80), and Satyam Computers (up 0.20% to Rs 496.20), advanced.
The BSE IT sector outperformed the market over the past one month till 6 May 2008, gaining 18.87% compared to the Sensex`s return of 10.26%. It also outperformed the market in the past one quarter, advancing 14.93% compared to Sensex`s decline of 4.23%.
A firm dollar augurs well for IT pivotals as they derive majority of revenue from exports. The Indian rupee fell further sharply by 19 paise to Rs 41.13/14 against the American dollar as oil companies stepped up dollar buying after the global crude oil hit yet another high amid weakness in local stock.
IT pivotals had advanced steadily after India`s second largest software exporter by sales Infosys Technologies issued decent guidance for the year ending March 2009. Infosys has given guidance of a between 16.3% to 18.3% growth in earnings per share (EPS) to between Rs 92.32 to Rs 93.92 for the year ending March 2009 (FY 2009) over the year ending March 2008. It has given guidance of a between 19.2% to 21.1% growth in revenue to between Rs 19894 crore to Rs 20214 crore for the year ending March 2009 over the year ending March 2008
As per US GAAP, Infosys has given guidance of a 16.7% to 18.7% growth in earnings per American Depository Shares at between $2.31 to $2.35 for the year ending March 2009 over the year ending March 2008. It has given guidance of a between 19% to 21% growth in revenue as per US GAAP to between $4.97 billion to $5.05 billion for the year ending March 2009 over the year ending March 2008
The company sees significant growth opportunities in the medium to long term. It, however, may face short-term challenges due to global economic uncertainties
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National Aluminium Company (Nalco) is exploring the possibility of setting up a greenfield aluminium smelter and captive power plant near Jharsuguda, western Orissa at an investment of more than Rs 14,000 crore. The capacity of the proposed smelter is pegged at 5 lakh tonnes per annum with a captive generation facility of 1,250 MW. The alumina required for the project is likely to be sourced from Nalco's existing refinery at Damanjodi.
Engineer's India (EIL), which has been appointed the consultant, has found the project technically feasible. Jharsuguda is being chosen as the possible site for the plant as it is in the vicinity of the IB valley coal reserves. While the company has the required technology, land acquisition is expected to be trouble-free as most part of the identified patch is government land and barren. The state-owned Industrial Promotion and Investment Corporation of Orissa (Ipicol) has forwarded the company's application for water from IB River to the water resources department.
Besides, the company is weighing various options for setting up smelter plants in countries like South Africa and Iran depending upon the availability of cheap power. It has recently entered into a MoU with the Kerman Development Organisation for setting up a smelter and subsequently a gas-based power plant in Iran in a joint venture. The capacity of the proposed smelter will be 3.1 lakh tonnes which will come up in two phases.
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Our meeting with the management of Reliance Infrastructure Ltd. (REL Infra, earlier Reliance Energy Ltd.), on its Analyst Day reinforces our positive view on the stock. REL Infra has reorganized its holding structure to create separate SPVs for each different line of business, which we believe enables the company to unlock value in the EPC and BOT businesses over the medium term.
The company continues to focus on integrating its power distribution business with generation through Reliance Power Ltd. and transmission projects through Reliance Power Transmission Ltd. Moreover, REL infra is looking to scale up its EPC business (Rs90bn order backlog) through bidding for EPC contracts of RPL’s generation projects and other third party projects. The company has reported progress as per schedule in its five road and two metro rail BOTs. Further, Reliance Power (RPL), the power generation SPV of REL Infra, has acquired three coal mine concessions in Indonesia, with estimated reserves of 2bn tons having average GCV of 4,000-4,500Kcal with 30% moisture.
The total reserves are sufficient for 10,000MW of power capacity, including the 4,000MW Krishnapatnam UMPP and 1,200MW Shahpur thermal power plant. RPL has added another 4,000MW of projects to its portfolio, taking the total capacity under development to ~32,000MW. We continue to like REL Infra’s business model of integration across the value chain of power coupled with strong presence in EPC and BOT segments.
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