MUMBAI: Life Insurance Corporation of India (LIC), the largest institutional investor in the country, is not in a hurry to bring down its holdings in unlisted companies to align with the 10 per cent equity exposure cap mandated by the insurance regulator.
According to highly placed sources in LIC, the insurance behemoth has already made its stance clear with the government and the Insurance Regulatory Development Authority of India (Irda), citing the practical hindrances involved. The largest life insurer in the country has also requested the regulator to tweak some of the debt investment norms to allow more flexibility.
“There are practical challenges involved, even if we are to bring down the stakes in these unlisted companies. It cannot happen overnight. We are aware of the regulations, but we are not in a hurry,” said an official at LIC.
The insurer has exceeded investment limit in 57 unlisted firms. “We need to arrive at a valuation, then need to look for a suitor. Also, some have been hugely profitable investments. All these procedures are easy and take a lot of time. We have made our position clear to the government and regulator,” he added.
LIC can invest up to 10 per cent of capital employed by the investee company or 10 per cent of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds. LIC has asked Irda to allow more investments in AA-rated papers. Otherwise it might impact yields.
According to the norms, insurers are required to invest 75 per cent of its debt investment in AAA-rated papers. “More than half of our debt instruments are in government securities, which are more secured than the AAA-rated papers. Now with 15-20 per cent investment in equities and another 10 per cent in policy loans, it leaves us with very small headroom. If we have to invest the remaining amount in AA-rated papers (to maintain 75 per cent cap) it means the return will be lower,” the official added.
The insurance behemoth has made a profit of Rs 15,000 crore from sale of equity investments in 2011-12, as against Rs 17,000 crore a year ago. LIC is planning an investment of around Rs 2.25 lakh crore in 2012-13, of this Rs 60,000 crore is expected to be in equities. In 2011-12, the insurer invested around Rs 2 lakh crore in debt and equities put together. “Last year, around Rs 1.5 lakh crore was invested in debt and around Rs 50,000 crore in equity investments,” an LIC official said.
During 2010-11, investments of the insurance behemoth stood at Rs 1.96 lakh crore and the corporation made a profit of Rs 9,000 crore by selling equity investments. LIC collected Rs 81,514 crore by selling new policies in 2011-12, down 5.7 per cent compared with Rs 86,444.72 crore in the corresponding period last year.
FOREIGN BRANDS PICK UP IN INDIAN TWO-WHEELER MARKET
MUMBAI: Demand for foreign branded bikes and scooters surged to an all-time high in 2011-12, thanks to people like Raghavendra Verma. One in every five bike buyers bought a motorcycle made for a foreign brand. Verma, a 26-year-old computer sales executive, was one of them. He could have gone for more powerful products of Indian brands, which cost more than 20 per cent less. But he picked a Japanese brand, 150cc Yamaha R15. “I paid Rs 1.22 lakh for it, but cost was never the criterion. I loved its styling and performance and decided to go for it. It is very fast too,” Verma said rather gleefully. Bowled over by aerodynamic shape, power muscled macho image, speed and durability, buyers like Verma are driving demand for foreign branded bikes and scooters, whose share in the mass market segment has almost increased by two-thirds in five years. Honda, Yamaha and Suzuki accounted for 20 per cent of the market in 2011-12, against 12 per cent in 2006-07. (For details log on to : http://www.business-standard.com/india/news/foreign-brands-pickin-indian-two-wheeler-market/472673/)
NTPC MAY REVISIT PLAN TO OFFER STAKE TO QATAR IN KERALA GAS-BASED PROJECT
NEW DELHI: Indiais mulling inviting Qatarto invest in the country’s energy sector, and may offer equity stake to the Gulf nation in NTPC’s gas-based project in Kerala for assured fuel supply for the plant. Power ministry which is battling with acute gas shortage at its generating stations is exploring avenues to source the fuel from overseas in order to mitigate the shortfall from domestic sources. This proposal was discussed at a meeting of the committee of secretaries headed by principal secretary to the Prime Minister Pulok Chatterji earlier this week, sources said. The power ministry’s proposal of offering stake to Qatargovernment in NTPC’s gas-based Kayamkulam plant in Kerala and also the company’s proposed renewable energy project was discussed, sources added. (For details log on to : http://www.financialexpress.com/news/ntpc-may-revisit-plan-to-offer-stake-to-qatar-in-kerala-gasbased-project/941690/)
GLOBAL VENTURE FUNDING IN WIND ENERGY SECTOR TOUCHED $240 MILLION
KOLKATA: Wind energy may have attracted lukewarm response in Indiabut global venture funding in wind energy sector touched $240 million with record 12 deals during first quarter of 2012 according a report by Mercom Capital Group. This is in sharp contrast to two deals totaling $12 million in the previous quarter. Top VC deals in the first quarter included a $183 million raised by Element Power, a global project developer, and a $20.2 million raised by ReGen Powertech, a turnkey solution provider as well as a wind turbine manufacturer. Other top transactions included a $18.6 million raised by project developer Leap Green Energy, a $10 million raise by Apex Wind Energy, a developer of commercial scale wind facilities, and a $3.5 million raised by Pentalum, a developer of Wind LiDAR for remote wind sensing. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/global-venture-funding-in-wind-energy-sector-touched-240-million/articleshow/12864899.cms)
INDIA TO REVISIT INVESTMENT PACTS TO KEEP VODAFONE-LIKE CASES AT BAY
NEW DELHI: The government is examining investment treaties signed with other countries individually and as part of larger free trade agreements to identify prickly clauses that may lead to disputes in future. The move comes days after the British telecom operator Vodafone served a notice on the government, saying the proposed changes in tax laws would violate India’s bilateral investment promotion agreement with The Netherlands. “Both the commerce department and the department of industrial policy & promotion are looking at existing investment treaties to see if there are any provisions which are difficult in terms of causing us problems later on or leading us to disputes,” commerce secretary Rahul Khullar told ET. “Right now the entire process is in the preliminary stage and it will be premature to say more on the issue,” he added. (For details log on to : http://economictimes.indiatimes.com/news/economy/policy/india-to-revisit-investment-pacts-to-keep-vodafone-like-cases-at-bay/articleshow/12873582.cms)
OPEN ACCESSIBILITY RIDER MOOTED FOR LNG TERMINALS
NEW DELHI: Liquified natural gas (LNG) handling terminals in the country, including the proposed ones, will have to offer a little less than a third of their total capacity for third-party use at fair and competitive terms, according to the norms being worked out by the oil ministry. The idea is to remove entry barriers in the business of supplying imported natural gas to industries. Open access is considered vital for fostering competition in the LNG sector as it optimises land use by various players for regasifying the frozen gas and its further transportation to customers. It would allow new players to enter into LNG trade without actually investing in infrastructure. They only need to partner with terminals and pipeline operators like GAIL India. Open access of LNG terminals would become mandatory once the oil ministry finalises the norms for registering these facilities with the sector regulator, the Petroleum and Natural Gas Regulatory Board (PNGRB). The government has asked the industry to give its views on the subject. Once the norms are notified, existing LNG terminals such as Petronet LNG’s Dahej facility and Shell-Total consortium’s Hazira terminal will have six months to get registered with the regulator, while the new ones will need prior registration to operate. (For details log on to : http://www.financialexpress.com/news/open-accessibility-rider-mooted-for-lng-terminals/941479/)
NEW COAL ROYALTY FORMULA TO HIT CAPTIVE MINERS
NEW DELHI: The government’s decision to switch to a new royalty formula for coal would erode the benefit currently available to captive coal miners by way of reduced royalty rates. At the same time, it would increase state governments’ royalty collection multi-fold. As captive miners do not engage in any sale, these currently pay royalty to states as a percentage of the sale price realised at the nearest Coal Indiamine. This arrangement benefits captive miners, as Coal India (CIL) prices are 70-80 per cent lower than those of international benchmarks. “As CIL prices determine the price at which royalty is charged from captive users, these companies have been securing coal at a lower price. This benefit would no more be available to captive miners. The shift to gross calorific value (GCV) has already increased the notified price. Also, the fixed component in the royalty formula has been done away with. So, the royalty outgo of captive miners is set to see a huge jump,” said a senior official privy to the development. (For details log on to : http://www.business-standard.com/india/news/new-coal-royalty-formula-to-hit-captive-miners/472668/)
SOLAR POWER PROJECT IN MAHARASHTRA CLEARED, SAYS OFFICIAL
JODHPUR: The environment ministry has cleared the way for the world’s largest consolidated solar power project to be located in Dhule, Maharashtra, a top government official said. A marquee project for the Maharashtra government to advertise its renewable energy commitments, the 125 megawatt (MW) solar plant was among the first large-scale projects by India’s nascent solar sector, which contributes around 1% of the installed power capacity in the country. “We just got the forest clearance” for the project, said G.J. Girase, director (finance), Maharashtra State Power Generation Co. Ltd. “We expect it to be commissioned by November.” (For details log on to : http://www.livemint.com/2012/04/25220206/Solar-power-project-in-Maharas.html?atype=tp)
OIL MINISTRY HOLDS BACK NOD TO ARROW ENERGY FOR CHINA LINKS
NEW DELHI: Chinese equity in the new owner of Arrow Energy, that operates five coal bed methane (CBM) blocks in India, has prompted the oil ministry to hold back approval for the company’s request to amend its CBM contracts to reflect the change in ownership, officials said. Arrow, an Australian company specialising in CBM and shale gas, was acquired by an equal joint venture of Shell and PetroChina in August 2010. Subsequently, its international assets, including Indian CBM blocks, were hived off to a new company Dart Energy. Dart Energy wants the CBM contract to reflect its name in place of Arrow, but the oil ministry has rejected its application four times in the past year, although on technical grounds that the request was not made in proper format. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/oil-ministry-holds-back-nod-to-arrow-energy-for-china-links/articleshow/12872716.cms)
GOVERNMENT MAY RE-INTRODUCE SOPS FOR WIND FARMS
MUMBAI: The renewable energy ministry is planning to re-introduce incentives for the wind energy sector to allay fears that capacity addition could fall after the sops were withdrawn from April 1. The government rolled back two key incentives for the sector this year: accelerated depreciation and generation-based incentive. Industry players say the withdrawal of these sops will keep power producers at bay and could reduce annual capacity addition to less than 1,000 mw in 2012-13, against the target of 3,000 mw. “We have requested the finance ministry again to reconsider introducing the incentives for the current financial year. They see the merit in our request and we have comfort that we should be able to reinstate it,” a senior ministry official said. Sources said there was consensus within the ministry for extension of the two incentives ahead of the Union Budget, but the government ended the tax break from March 31, much against the wishes of industry players. “We are working on the proposal and hope to put it before the cabinet for approval within two months,” the official added. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/government-may-re-introduce-sops-for-wind-farms/articleshow/12873801.cms)
INDUSTRIES CAN NOW PURCHASE POWER FROM OPEN MARKET
NEW DELHI: The government has invoked special powers under the Electricity Act and directed the central and state regulators to implement a long-pending reform to allow industrial consumers to buy cheaper power from the open market. The move will help 15,000 large consumers particularly the sick textile, cement and steel industrial units in states like Punjaband Tamil Nadu by ensuring regular supply of electricity at competitive rates and boost business of power bourses and 52 power traders including NTPC, PTC India, Tata Power, Reliance Infrastructure, Jindal Steel, Essar Power, JSW Energy, GMR Energy and Indiabulls. Power secretary P Uma Shankar said the decision was taken because similar directives in the past were taken lightly by regulators. “The ministry has issued letters to regulators to prepare regulations in line with communications sent earlier,” he told ET. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/industries-can-now-purchase-power-from-open-market/articleshow/12873780.cms)
NTPC OPPOSITION TO NEW FSA LIKELY TO HIT COAL SUPPLY PLAN FOR POWER PRODUCERS
KOLKATA: India’s largest power sector company NTPC’s denial to sign the newly formulated fuel supply agreement (FSA) for new power plants is likley to jeopardise the government mandated plan to secure committed coal supply to power producers. NTPC accounts for more than 35% of the quantity that CIL would have to supply under the new FSA. Of the 51 FSAs which six CIL subsidiaries (out of nine) would have to sign to supply an additional 70 million tonne to the new power plants to feed 28,000 MW of new generation, supplies to NTPC only would be 25mt to its capacity addition during 2009-12. But NTPC chairman Arup Roychowdhury made clear that his company would not sign the new FSA since there was nothing of supply guarantee in it. Although CIL’s new chairman S Narsing Rao said his company is in talks with NTPC to resolve issue, the matter have become aggravated with NTPC now also denying to pay for coal on Gross Calorific Value (GCV) based pricing. NTPC wants CIL to go back to the old regime of useful heat value (UHV) based pricing. (For details log on to : http://www.financialexpress.com/news/ntpc-opposition-to-new-fsa-likely-to-hit-coal-supply-plan-for-power-producers/941496/)
INDIA MULLS INVESTMENTS FROM QATAR INTO ENERGY SECTOR
NEW DELHI: Indiais mulling inviting Qatarto invest in the country’s energy sector, and may offer equity stake to the Gulf nation in NTPC’s gas-based project in Kerala, in lieu of assured fuel supply for the plant. Power Ministry which is battling with acute gas shortage at its generating stations is exploring avenues to source the fuel from overseas in order to mitigate the shortfall from domestic sources. This proposal was discussed at a meeting of the Committee of Secretaries headed by Principal Secretary to the Prime Minister Pulok Chatterji earlier this week, sources said. The Power Ministry’s proposal of offering stake to Qatargovernment in NTPC’s gas-based Kayamkulam plant in Kerala and also the company’s proposed renewable energy project was discussed, sources added. (For details log on to: http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/india-mulls-investments-from-qatar-into-energy-sector/articleshow/12865381.cms)
USIBC TO HOLD WEST COAST SUMMIT IN SILICON VALLEY
TORONTO: The US-India Business Council (USIBC) is going West, to the state considered America’s tech capital, and which leads all other US states in exports to India. This week, USIBC will hold its first ever West Coast Summit, in Menlo Park, in California’s Silicon Valley. This will be in addition to its annual summit held every year in Washington, DCin June. The Silicon Valleymeeting, organised in partnership with Ficci, will focus on sectors important to the region, including technology, media and entertainment, and venture capital. USIBC officials are confident the new event won’t cannibalise its traditional annual summit, and will instead draw those unable to make it to Washington, DCevery year. “It’s been hard for our West Coast members to attend the Washingtonsummit. The distance, topics, focus are all contributing factors,” said Mythili Sankaran, USIBC’s West Coast director, in an interview from Mountain View, California. (For details log on to: http://www.business-standard.com/india/news/usibc-to-hold-west-coast-summit-in-silicon-valley/472663/)
PASSENGERS TO BEAR BRUNT OF 345% INCREASE IN DELHI AIRPORT CHARGES
NEW DELHI/MUMBAI: Using Delhiairport is set to get more expensive from May 15. The Airports Economic Regulatory Authority (AERA) has allowed Delhi International Airport Ltd (DIAL) to charge a User Development Fee (UDF) from both departing and arriving passengers. UDF will be over and above the Airport Development Fee (ADF) charge of Rs 200 per domestic and Rs 1,300 per international passenger. it would range from Rs 195.80 to Rs 1,068 in the current year and from Rs 207.32 to Rs 1,130.85 in 2013-14. ADF is charged to bridge the gap between the airport’s projected and actual construction cost. UDF is levied to help recover the cost of operating the airport. AERA has approved an overall increase in aeronautical charges for the Delhiairport by 345.9 per cent, less than half the 770 per cent demanded by DIAL. (For details log on to : http://www.business-standard.com/india/news/passengers-to-bear-brunt345-increase-in-delhi-airport-charges/472611/)
STERLITE INDUSTRIES Q4 NET PROFIT DROPS 34%
MUMBAI: Sterlite Industries reported a 34% drop in the fourth quarter consolidated net profit to R1,277 crore on weak global metal prices and forex losses. The company, makers of copper, aluminium and zinc, had made net profit of R1,925 crore in the same quarter last year. “Sterlite has delivered strong operating and financial performance during the year despite marcro economic headwinds,” said its chairman, Anil Agarwal. Sterlite’s consolidated net sales for the quarter grew by 7.6% to R10,763 crore from R10,000 crore a year ago. “Revenue growth was driven by higher volumes as several of our growth projects commenced operations and ramped up production,” the company stated. (For details log on to : http://www.financialexpress.com/news/sterlite-industries-q4-net-profit-drops-34/941709/)
HIGHER IT RANKING SPELLS LOWER ATTRITION
NEW DELHI: The pecking order of the top four domestic information technology (IT) companies is well established by sales and profitability. However, if one ranks them on the basis of their attrition numbers — the rate at which they lose their employees — the order changes upside down. Thus, HCL Technologies — the fourth largest IT firm by sales and profitability — takes the top spot with highest attrition at 15% followed by Infosys Technologies at 14.7%. Wipro stands third with a quarterly attrition of 14.4% during the January-March quarter and the country’s largest IT firm Tata Consultancy Services (TCS) has seen one of the lowest attrition at 12.2%. The ranking with respect to attrition, according to analysts, is the result of the type of work especially done on-site, spread of the company and policies related to hiring, bench and utilisation which the firms follow. (For details log on to : http://www.financialexpress.com/news/higher-it-ranking-spells-lower-attrition/941699/)
FIRM READY FOR WAGE HIKES ‘IN LINE WITH INDUSTRY STANDARDS’
BANGALORE: Employees of the IT major Wipro can heave a sigh of relief. The company has committed to give wage hikes to its employees effective June this year, and while it did not specify the quantum of the wage increase, it confirmed that it will be in line with the industry. The salary hike in the sector has fallen roughly in the 6-8% range. Early this week, country’s largest software services exporter TCS doled out hikes in the range of 6-8% for employees in India. Infosys, on other hand, had announced that it will be withholding wage hikes till it gains more clarity on its business — an announcement that was met with much criticism. Wipro says it has no plans to follow suit. (For details log on to : http://www.financialexpress.com/news/firm-ready-for-wage-hikes-in-line-with-industry-standards/941705/)
CONSUMER DURABLES ARM TO INVEST R100 CR TO BOOST OUTPUT
BANGALORE: Wipro Consumer Care and Lighting, the consumer durables arm of Wipro, will invest R100 crore over the next one year to ramp up its production capacities across China, Vietnamand India. The expansion will include addition of lines for all product categories including personal care products and lights. China, and Vietnamhave been some of the fastest growing geographies for WCCLG’s international brands, necessitating a rapid scale up in supply. “In China, we have grown 28% in FY12 and Vietnamhas also recorded high double digit revenue growth rates, which is why we must have grow capacities there. We will add production lines in deodorants, lotions and shampoos under our toiletries brands Enchanteur and Unza,” Vineet Agarwal, president of WCCLG told FE. (For details log on to : http://www.financialexpress.com/news/consumer-durables-arm-to-invest-r100-cr-to-boost-output/941707/)
WIPRO IT CEO PLANS TO TRIM MIDDLE-LEVEL BULGE
BANGALORE: Chief executive of Wipro’s IT business TK Kurien is going after the company’s middle management bulge, having identified it as the software major’s Achilles Heel. The firm, which is undergoing a massive restructuring exercise under Kurien, is looking at sweeping cultural changes within the organisation, to get a firm grip back on sustained growth. “Wipro requires a cultural change. It’s about who can deliver and who cannot. It is longer about who’s the nice guy,” Kurien said, bringing to the fore his reputation as a hard task master. Wipro has reasons to worry. Cognizant has raced past it and TCS is increasing its lead over everyone. Its latest Q4 numbers have not been encouraging either. The muted guidance has been surprising and analysts are not confident about its ability to meet industry growth figures. Kurien has attributed the disappointing show to certain delays in deal closures during the quarter. One of its largest customers (unnamed by Wipro) has shown a decline in business as well. A slowing Indiabusiness — a traditional Wipro stronghold — is another worry. The $1.52-1.55 billion revenue guidance, representing a -1 to 1% growth in the first quarter, hardly inspires confidence. (For details log on to : http://www.financialexpress.com/news/wipro-it-ceo-plans-to-trim-middlelevel-bulge/941701/)
INTAS PHARMA RAISES R300 CRORE FROM CHRYSCAP BEFORE IPO
NEW DELHI: One of India’s largest private equity players, ChrysCapital, has invested R300 crore in Ahmedabad-based Intas Pharma in a pre-IPO round funding. ChrysCapital manages $2.5 billion across six funds and has made 60 investments in Indiasince 1999. This round of funding has come from ChrysCapital’s Fund Five and, with this investment, the firm has fully invested from its Fund Five. In March 2012, ChrysCapital raised $500 million for a new fund amid a tough fund-raising scenario. The Intas investment comes as another shot in the arm for the beleaguered healthcare sector, which struggled to find PE investments in 2011, scraping in merely $378.84 million PE investments. (For details log on to : http://www.financialexpress.com/news/intas-pharma-raises-r300-crore-from-chryscap-before-ipo/941606/)