NEW DELHI: Retail magnate Kishore Biyani says he is not in talks with anybody to sell stake in Big Bazaar and Food Bazaar chains because his Future Group has sorted out its debt crisis after three back-to-back deals in the past one month.
“We are not in discussions with anybody. I don’t want to divest my core retail business now. I want to run it,” Biyani told ET. “Our debt levels are very comfortable and divestment, if any, will only be in non-core assets,” the Future Group chief said.
In recent weeks, the retail industry has been abuzz with speculation that the Future Group was in talks with India’s richest man Mukesh Ambani to sell stake in its flagship Big Bazaar hypermarket network, which contributes almost 65% of revenues of Pantaloon Retail (India) Ltd, the listed entity of Future Group.
Reliance Industries operates a nationwide network of retail chains under Reliance Retail and Ambani sees this segment as one of the engines of future growth for the conglomerate.
A Reliance Industries spokesman denied any negotiations with Biyani. “We deny that Reliance Industries has ever been in talks with Future Group or Mr Kishore Biyani for any stake sale,” he said.
A person aware of developments in Future Group, however, said Reliance Retail and Future Group had explored the possibility of a partnership about three months ago. But the talks did not proceed because the AV Birla Group moved faster and agreed to buy Pantaloons department chain, helping Future Group improve its precarious financial situation.
“At that time the priority was to bring money into the company and the Pantaloons deal addressed that issue,” the person said.
The Future Group, which has been in an aggressive expansion mode, ran into a crisis with consolidated debt of Rs 7,800 crore that weighed on its profitability. Pantaloon Retail has been spending more than Rs 100 crore in interest over each of the past three quarters. This started to pinch as consumer spending slowed. That was when Biyani started looking to sell assets to pare debt.
Last month, the Future Group sold a majority stake in Pantaloons department chain to AV Birla Group’s Aditya Birla Nuvo for Rs 1,600 crore that included Rs 800 crore of debt transfer.
No Hurry to Sell Core Business
Then, last week, the Future Group announced sale of its 53.67% stake in Future Capital Holdings to US-based private equity firm Warburg Pincus for Rs 4,250 crore, which included Rs 450 crore of cash payout and Rs 3,800 crore of debt transfer. Pantaloon Retail also raised Rs 200 crore through a preferential share allotment last week.
“In the past one month, Biyani has managed to reduce his debt by Rs 6,000 crore. Now, he is in no hurry to sell any of his core businesses,” the person close to Future Group said. A senior official of a rival retailer, however, said Biyani will ultimately get a partner for his value chain. “The only question is if he will tie up with an Indian company or wait for foreign direct investment to be allowed in the sector so he can find an international partner,” the person said.
Meanwhile, Biyani plans to sell more non-core assets in a bid to make the Bombay Stock Exchange-listed Pantaloon Retail debt-free by March 2013.
He plans to raise Rs 1,650 crore by October by offloading shares in his insurance and stationery joint ventures, the consumer electronics chain and home furnishing network. This would include raising Rs 1,000 crore by divesting stake in Future Generali insurance. This will help prune Pantaloon Retail’s standalone debt, which stood at about Rs 5,500 crore at the end of March.
The group also plans to shed 40% stake in the electronics retailing business eZone when it merges it with Noida-based InTarvo Technologies, which specialises in providing technical support to large corporations and retailers. InTarvo could not be contacted for comment despite repeated attempts.
Biyani also plans to sell a minority stake in home furnishing and do-it-yourself chain Home Town network for about Rs 300 crore in the next two months.
He said his group’s May deal to cede controlling stake in Pantaloons chain to AV Birla Group was a one-off transaction. The company will only sell minority stakes in any future deals in its core retailing business and will maintain majority stake in such ventures, he said.
Biyani added that he doesn’t want to touch Future Value Retail, which operates Big Bazaar and Food Bazaar, as the group’s debt situation can be controlled.
The only way he wants to touch Big Bazaar is by undertaking some tweaking in the profitable 150-strong chain by introducing improved services and consumer-centric approaches, underscoring with a new tagline ‘Aapki Sewa Mein’ (or, ‘At Your Service’). Big Bazaar is changing its tagline months after it adopted ‘New India’s New Bazaar’.
BHARAT FORGE MAY BUY SIGNIFICANT STAKE IN SHANTHI GEARS
MUMBAI: Bharat Forge, the world’s largest forging manufacturer, is in talks to buy out a significant stake in Coimbatore-based Shanthi Gears, India’s second-largest industrial-gear box maker, said persons close to the situation. The Pune-based forging major is looking to acquire chairman P Subramanian and his family’s stake in the company founded in 1969 as a small manufacturing unit. While details of the valuation are not yet known, investment bankers said industrial gear makers command a valuation of eight times of their respective earnings before interest, taxes, depreciation and amortisation (Ebidta). If this is the case, Bharat Forge will have to pay Rs 227.30 crore to buy out 44% stake held by P Subramanian and family. Shanthi Gears reported an Ebidta of Rs 64.4 crore during the year ended March 31, 2012. While Shanthi Gears chairman P Subramanian did not respond to a set of questions on the subject, Bharat Forge declined to comment. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/engineering/bharat-forge-may-buy-significant-stake-in-shanthi-gears/articleshow/14005209.cms)
HAVELLS INDIA LOOKS FOR ACQUISITIONS IN CHINA, AFRICA
NEW DELHI: Electrical goods maker Havells India is mulling over acquisitions in China and Africa that may entail an investment of up to $200 million (about Rs 1,100 crore) to strengthen its overseas operations. The company is also expanding presence in other nations like Turkey, Russia, Indonesiaand Malaysia. “We are open for any strategic acquisition in those locations, such as Chinaand Africa, where we are not present now,” Havells India Joint Managing Director Anil Gupta told the news agency. Last year, the company had formed a manufacturing joint venture with a local Chinese firm to produce various lighting products for its overseas markets, he added. “We are keeping our eyes open. In fact, we have talked to some in China, but nothing worked out,” Gupta said, adding the company is also looking for targets in Africa. (For details log on to : http://www.dailypioneer.com/business/72006-havells-india-looks-for-acquisitions-in-china-africa.html)
RCOM DEAL: ALCATEL, ERICSSON FRONT RUNNERS
NEW DELHI: Global telecom companies Alcatel-Lucent SA and Ericsson have emerged as front runners for Reliance Communications Ltd (RCom)’s Rs 8,000-crore long-term outsourcing contract. The deal, to be awarded to a single operator, was expected to be finalised early next month and the talks were in the final stages, said people aware of the development. Other leading international telecom equipment makers, including Nokia Siemens Network, Huawei Technology Co Ltd and ZTe Corp, had also bid for one of the largest managed services contract in the past few years. As part of its offer, the new contract would cover the entire range of RCom’s telecom services — wireless, wire-line, and utilities — on an end-to-end basis across the country. This is different from managed service contracts deals signed by other telecom companies, where the deals would be restricted only to the company’s wireless operations. (For details log on to : http://www.business-standard.com/india/news/rcom-deal-alcatel-ericsson-front-runners/476959/)
VISA STEEL PROMOTERS TO SELL STAKE TO PARE DEBT
MUMBAI: Promoters of Visa Steel, part of the R5,000-crore Visa Group, are looking to shed part of their stake in the company to raise funds and pare down debt, two persons familiar with the development said. Promoters own 74% stake in Visa Steel. “We have a large promoter stake in the company. So, there’s always an option to sell some stake,” said a senior official with the company. “We are monitoring the market conditions and when the time is right, a stake sale can happen.” He, however, did not specify the quantum of stake that will be offloaded. “We had approached merchant bankers last year to sell some stake, but it did not work out,” said the company’s spokesperson, when contacted. “However, we were unable to get the buyers and, finally, we had to go for corporate debt restructuring.” (For details log on to : http://www.financialexpress.com/news/visa-steel-promoters-to-sell-stake-to-pare-debt/960429/)
NHPC MULLS JOINT VENTURES TO REVIVE PVT HYDEL PROJECTS
NEW DELHI: State-owned hydroelectric power major NHPC plans to form joint venture companies with private sector hydel project developers to rehabilitate their projects hit by a shortage of funds and lack of technical expertise. Under a proposal being finalised by the NHPC management, the company will pick up stakes of up to 49% in private hydro projects. These projects were allocated by various state governments to private players on the basis of financial commitments and promise of free power to sections of consumers. As per the plan, the PSU will be able to exercise control over the JVs with powers to nominate managing directors. The proposed arrangement is expected to come handy for NHPC. While it will not lose any business at hand, the JVs would facilitate the PSU to regain control of a few projects that were taken away from it by the state governments in favour of private sector developers. (For details log on to : http://www.financialexpress.com/news/nhpc-mulls-jvs-to-revive-pvt-hydel-projects/960427/0)
BHEL MAY NOT JOIN RINL, MECON FOR RS 2,000-CRORE STEEL UNIT
NEW DELHI: Power equipment maker Bharat Heavy Electricals Ltd (BHEL) may not join hands with steel maker Rashtriya Ispat Nigam Limited (RINL) and MECON Ltd for the proposed Rs 2,000-crore joint venture that plans to set up a factory at Vizag for manufacturing steel for core sectors. Sources in the know said BHEL has expressed its unwillingness to be a party in the venture at a meeting with steel secretary D R S Chaudhary last week. “BHEL is not keen on setting up any such manufacturing unit as it already has factories for manufacturing equipment for power, auto and rail sectors at Trichy, Ranipet, Haridwar, Hyderabad, Banga-lore and Bhopal,” a source said. “It (BHEL) does not find the proposition viable at this point in time,” the source added. MECON is a state-run engineering and consultancy firm offering full range of services required for setting up of a core sector project from concept to commissioning, including turnkey execution. (For details log on to : http://www.business-standard.com/india/news/bhel-may-not-join-rinl-mecon-for-rs-2000-cr-steel-unit/476946/)
EXPEDIA TO OPEN RETAIL OUTLETS IN INDIA
NEW DELHI: In a first, online travel company Expedia is planning to open retail outlets for the Indian market. This is a strategy it has not adopted anywhere else worldwide. However, it is not the first online travel company to have offline presence in India. MakeMyTrip has 54 stores across India. Yatra.com has 23 outlets, including one in Kathmandu, which it refers to as ‘Yatra holiday lounges’. In a contrast scenario, traditional travel companies like Cox & Kings and Thomas Cook are looking at online as an important tool for growth and remaining relevant. A senior travel industry expert said, “Companies have to go for a hybrid model and have a healthy mix of both online and offline if they want to compete and get a wider market share.” Expedia’s plans for offline retail outlets may have been triggered by restrictions in the Indian market, including poor broadband penetration and problems related to online payment. While noting Expedia had become a familiar name in the online travel space, Vikram Malhi, the company’s country head, confirmed plans to set up offline retail stores. (For details log on to : http://www.business-standard.com/india/news/expedia-to-open-retail-outlets-in-india/476949/)
SAHARA INDIA TO ENTER DAIRY BUSINESS
LUCKNOW: SaharaIndia Pariwar today announced its decision to make a foray into dairy business from next year. “We are going to make a foray into dairy business by opening the world’s biggest dairy on April 1, 2013. We plan to produce 50 lakh tonnes of milk — the largest in the country,” Managing Worker and Chairman Sahara India Pariwar told reporters here. He said pure milk would be made available to the public from his dairy and for this 9,000 acres would be acquired near Muzaffarnagar in Uttar Pradesh besides land in Madhya Pradesh. Asked why the company is not entering West Bengal in infrastructure business, Roysaid there were a lot of political problems there. “We faced a lot of legal hurdles in acquiring 175 acres of land in Kolkata”, he said adding that in Siliguri and Kharagpur the company is likely to launch its projects soon. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/cons-products/food/sahara-india-to-enter-dairy-business/articleshow/14001772.cms)
APOLLO HOSPITALS TO INVEST 1,940 CRORE TO ADD 2,955 BEDS
NEW DELHI: Chennai-based Apollo Hospitals plans to invest nearly Rs 1,940 crore to add another 2,955 beds across the country in the next three years. The healthcare major, which has 37 hospitals in the country at present, plans to add another 14 to take the total number of hospitals to 51 by 2014-15. “We intend to add 2,955 beds in next three years. The total investment for the expansion would be Rs 1,938.7 crore,” said a Apollo Hospitals spokesperson. With the addition of 2,955 beds, the total bed strength of the healthcare chain would go up to around 8,800 beds by 2014-15. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/healthcare/apollo-hospitals-to-invest-1940-crore-to-add-2955-beds/articleshow/14011757.cms)
FDI IN RETAIL REFORMS STUCK: INDIAN RETAILERS FACE CASH CRUNCH & SLOWING GROWTH
MUMBAI: India’s largest supermarket operator, Future Group, is having a clearance sale: its financial service business and flagship clothing brand are gone, and more deals are in the pipeline. Six months after the government backtracked on plans to allow foreign retail giants such as Wal-Mart Stores and Carrefour to form joint ventures, cash-starved domestic chains are selling assets, shutting stores, and scaling back expansion plans. It seems improbable that retailers could be in such trouble in India. They have the world’s second-largest population, increasingly affluent consumers, and limited competition. But things are tough for supermarkets, a relatively new business sector in India, with every major chain losing money. The economy has lost momentum, compounding problems of high food inflation and low retail prices, and expensive real estate. Foreign partners would bring experience, expertise and funds, but many in the industry do not expect a decision on foreign investment in supermarkets before elections in 2014. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/services/retailing/fdi-in-retail-reforms-stuck-indian-retailers-face-cash-crunch-slowing-growth/articleshow/14006270.cms)
AFRICA GAS FIND MAY FIRE INDIA’S ENERGY SECURITY
MUMBAI: Natural gas reserves in Mozambique’s oil-rich Rovuma Basin, where Indian companies hold stakes, are expected to rise dramatically with a giant new discovery, catapulting the African nation to the league of the world’s top gas exporters and boosting India’s energy security. Texas-based Anadarko Petroleum, the operator of the Rovuma Offshore Area 1 in southern Africa, is expected to shortly announce a significant upgrade in estimated reserves in the basin, sources familiar with the development said. The new discovery would make the basin’s reserves 20 times the size of India’s KG-D6 and make Mozambiquea major exporter of liquefied natural gas (LNG). This can sharply raise supplies and calm LNG prices at a time USgas prices have crashed after supplies surged with shale gas. “It will be the world’s biggest gas field. Mozambiquecan become a gas major like Qatar,” said a source involved in the development, who refused to be identified before the formal announcement. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/oil-gas/discovery-at-africas-basin-where-videocon-bpcl-hold-stake-may-strengthen-indias-energy-security/articleshow/14007782.cms)
POWER MINISTRY MAY SEEK CERC ADVICE TO BAIL OUT CRISIS-HIT PROJECTS
NEW DELHI: Power projects with a combined generating capacity of over 59,000 MW facing the prospect of default on supply contracts due to the developers’ inability to pass on increase in fuel cost to distribution companies might get some relief soon. The Union power ministry is planning to ask the Central Electricity Regulatory Commission (CERC) to suggest ways to bail out these beleaguered projects, sources said. Tata Power’s Mundra and Reliance Power’s Krishnapatnam ultra mega power projects (UMPPs) and Adani Power’s Mundra plant are among projects likely to benefit from the ministry’s move. CERC chairman Pramod Deo declined to comment on the issue. “We have not yet received any such letter from the ministry. We will comment only when we receive the letter,” Deo told FE. (For details log on to : http://www.financialexpress.com/news/power-min-may-seek-cerc-advice-to-bail-out-crisishit-projects/960442/0)
GOVT TO RELAX SEZ LAND NORMS SOON
NEW DELHI: The ministry of commerce and industry would soon announce relaxed land-related norms for Special Economic Zones (SEZs) to arrest the slackening pace of growth in these tax-free zones by making certain changes in the SEZ policy. In a major amendment to the policy, enacted in 2006, for the first time the government will change the minimum land requirement across all sectors. It will reduce the threshold limit for each sector-specific SEZ, in the wake of severe constraints faced by the developers in acquiring huge tracts of contiguous land. At present, the minimum land required for multi-product, multi-service, information technology and gem & jewellery SEZs is 1,000 hectares (ha), 100 ha and 10 ha each, respectively. This is also referred to as the ‘10-100-1,000’ model. The problem faced by most developers is with acquiring land for multi-product SEZs of 1,000 ha that is ‘vacant’ as well as ‘contiguous’. The government has now planned to reduce the minimum land requirement significantly. (For details log on to : http://www.business-standard.com/india/news/govt-to-relax-sez-land-norms-soon/476954/)
BRITISH GAS MIGHT LOWER PRICE FOR GUJARAT GAS SALE
MUMBAI: British Gas might have finally blinked on the Gujarat Gas issue. According to sources from the consortium led by Gujarat State Petroleum Corp (GSPC), it has agreed to lower its asking price from Rs 4,500 crore. “BG has proposed a new price to us but we have to discuss this with members and take a call,” said a senior member of the consortium, requesting anonymity, as the companies were still in discussion. He did not disclose the price BG had quoted, but said this was closer to what GSPC and its consortium members had earlier offered. Beside GSPC, the consortium has Oil and Natural Gas Corp and Bharat Petroleum. It had offered between Rs 3,800 crore and Rs 3,900 crore for the 65.12 per cent stake in Gujarat Gas. Gujarat Gas has a market cap of Rs 3,828 crore. This implies BG’s stake of 65.12 per cent is valued at Rs 2,492.7 crore. BG’s asking price so far has been around Rs 4,500 crore for sale of its stake. The member added officials from BG and the GSPC-led consortium were to meet this month to finalise the details. “If the consortium agrees to BG’s new pricing, the deal should be sealed shortly,” the member added. The last meeting between the two companies took place in April, where BG and GSPC could not reach a conclusion on the matter of valuation. BG India’s spokesperson could not be reached for a comment. (For details log on to : http://www.business-standard.com/india/news/british-gas-might-lower-price-for-gujarat-gas-sale/476945/)
POWER COMPANIES MAY GET TO RAISE TARIFFS
NEW DELHI: Power projects using imported coal would soon be allowed to raise tariffs by up to Re 1 per unit to offset the effect of increase in fuel price due to additional taxes or changes in law by the governments of source countries. The power ministry has suggested to the central regulator to figure a way out of the logjam between promoters of big power projects and their bulk consumers – the state utilities. Power producers have been demanding tariff revision on the ground of coal prices rising substantially – in several instances five times – due to various reasons since the time their project was bid out or power supply pacts were signed. A major upsetting factor for Indian power producers is the changes made in tax laws by source countries such as Australiaand Indonesia. These changes have raised fuel costs for all imported coal-fired power projects, even those that were based on supplies from captive mines in these countries. (For details log on to: http://economictimes.indiatimes.com/news/news-by-industry/energy/power/power-companies-may-get-to-raise-tariffs/articleshow/14009458.cms)
POLICY OF ALLOTTING COAL MINES OPAQUE, SAYS CAG’S FINAL REPORT
NEW DELHI: The Comptroller and Auditor General’s final report on the allocation of coal blocks has concluded the government did not follow a transparent policy in selecting beneficiaries and was wrong in ignoring a 2004 recommendation by the secretary in the coal ministry that mines should be awarded through competitive bidding. The report, whose conclusions were described to ET by people familiar with its content, will be presented to Parliament during the monsoon session. The people familiar with the report said the CAG has concluded that no information was available on how a company was chosen to mine a particular coal block. A senior government official, among the people who described the key features of the report, said one of the CAG’s core conclusions was that competitive bidding should have been adopted to allot coal mines instead of following what the government auditor describes as an “opaque” policy that remained in place in February 2012. The report says the potential gain to companies allotted blocks was Rs 1,86,000 crore, a number first reported by The Times of India. The beneficiaries include Jindal Steel and Power and a joint venture between the Tatas and South Africa’s Sasol, among others. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/metals-mining/coal-gate-scam-policy-of-allotting-coal-mines-opaque-says-cags-final-report/articleshow/14007892.cms)
SUZLON ENERGY MAY GET 45-DAY BREATHER ON FCCB REPAYMENT
MUMBAI: Suzlon Energy is likely to get a breather on Monday when its foreign currency bond holders may approve of the 45-day repayment extension sought by the loss-making wind turbine maker, saving it from default, experts tracking the development said. Loss making-Suzlon has sought the extension from bondholders to repay FCCBs maturing on June 12 while it’s trying to raise as much as $300 million in foreign currency loans to repay its $360 million liability. The bondholders meet the company on Monday in Londonto take a call on it. “Suzlon’s assurance that it would manage to raise funds for the repayment has given comfort to bondholders,” said Bhargav Buddhadev, an analyst with Ambit Capital. “The FCCB price has gone up and yields have fallen in the last 10 days, and there may have been some over-the-counter trade in the secondary market, indicating that bondholders expect the company to meet its obligation,” he said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/energy/power/suzlon-energy-may-get-45-day-breather-on-fccb-repayment/articleshow/14008612.cms)
CIL MAY SUPPLY COAL IF PURCHASERS LIFT STOCK DIRECTLY FROM MINES
KOLKATA/MUMBAI: Private power producers will get a new opportunity to get additional supplies of scarce fuel as Coal Indiaplans to supply incremental coal from its bulging stocks if buyers can lift it directly from the mines and make their own transport arrangements. Coal IndiaChairman Narsing Rao told ET that executives from the state-run firm have already started sending letters to power producers and utilities with offers to lift coal directly from the mines. The move is expected to help private firms get additional supplies as they can take quick decisions but even state firms are willing. NTPC chairman, Arup Roy Choudhury said: “If they offer crushed coal at the pit heads we are ready to lift it. There may be some logistics issues but we will work it out with Coal Indiaand the Railways.” Many private power firms, which have led the rapid expansion in India’s power capacity in recent years, are unable to commission their plants or run them optimally because Coal India’s supply has stagnated, while stocks of more than 60 million tonnes have piled up because of logistical bottlenecks. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/indl-goods/svs/metals-mining/cil-may-supply-coal-if-purchasers-lift-stock-directly-from-mines/articleshow/14009054.cms)
CII SURVEY PREDICTS A DISMAL GDP GROWTH IN 2012-13
NEW DELHI: Economic growth slipped to a nine-year low of 6.5 per cent last financial year, but India Inc fears further deceleration in the GDP expansion during 2012-13, shows a survey. Industry wants the government to unleash a slew of policies to perk up the economy facing adverse circumstances. In the survey conducted by the Confederation of Indian Industry (CII), 43 per cent of 110 respondents felt that India’s GDP growth would fall below 6.5 per cent but would not go below six per cent, while 40 per cent of them expected it to nosedive to less than six per cent. Only 13 per cent of respondents were optimistic that the economy would grow in the range of 6.5 to seven per cent, and just five per cent expected the GDP to expand in the range of seven to 7.5 per cent. Some of the respondents would be common, so the sum total has exceeded 100 per cent. CII said that the survey was conducted in various sectors of the economy which together contribute to 50 per cent of the country’s production. The majority of senior industry leaders expected their top line and bottom line growth to decline and in some cases it was expected to be negative. (For details log on to : http://www.business-standard.com/india/news/cii-survey-predictsdismal-gdp-growth-in-2012-13-/476964/)
US BUSINESSES IN INDIA TRY TO PUSH REFORMS
NEW DELHI: American businesses are lobbying with political parties here to build a consensus on stalled economic reforms such as liberalisation of foreign direct investment (FDI) in sectors like multi-brand retail, aviation and insurance, and for expeditious introduction of a Goods and Services Tax (GST). The American Chamber of Commrece in India(Amcham) led a delegation for a meeting with Bharatiya Janata Party (BJP) president Nitin Gadkari last week, and pressed for opening of crucial sectors for FDI or raising the FDI cap, those in the know said. Representatives from Intel, Accenture, IBM, AT&T, Hewlett-Packard, Bank of America, Cargill, GE Transportation and Boeing India were among those present, as well as officials of the USembassy. In the three-hour meeting, US representatives tried to get the principal opposition party on board regarding pending reform measures, sources said. They say Gadkari told them his party was ready to meet Prime Minister Manmohan Singh and finance minister Pranab Mukherjee to discuss FDI reforms, but the government does not approach the opposition to discuss these issues. (For details log on to : http://www.business-standard.com/india/news/us-businesses-in-india-try-to-push-reforms/476968/)
POWER MINISTRY MULLS COAL IMPORTS TO MEET SUPPLY SHORTAGE
NEW DELHI: The Power Ministry is likely to move a proposal this week to Coal Indiafor importing the dry fuel to bridge the shortfall in supply under fuel supply agreements (FSAs). Central Electricity Authority (CEA) is working on a proposal along with the Power Ministry to work out a mechanism for importing coal, a source close the development said. As per the Presidential Directive to Coal India, the PSU has to supply a minimum 80 per cent of the requirement to power companies. But Coal Indiahas expressed inability in delivering that quantity due to low production. “To meet the gap between the 80 per cent level and whatever quantity Coal Indiacan deliver, the remaining (quantity) can be imported by Coal India,” the source said. (For details log on to: http://economictimes.indiatimes.com/news/news-by-industry/energy/power/power-ministry-mulls-coal-imports-to-meet-supply-shortage/articleshow/13990609.cms)
GREEN TRIBUNAL WANTS ENVIRONMENT MINISTRY TO STRENGTHEN PUBLIC HEARING PROCESS
CHENNAI: The Union Ministry of Environment and Forests has to strengthen the public hearing process and make it “meaningful” in the grant of environmental clearances for projects, according to the National Green Tribunal. The Tribunal, constituted under the National Green Tribunal Act 2010, for handling environmental cases, was critical of the way public hearings are conducted. It has suggested a set of measures for the Ministry to include in the rules on conducting public hearings, and compiling draft and final environmental impact assessment reports. The Expert Appraisal Committee can also refine the procedures. The Tribunal’s Principal Bench made these general observations while disposing the appeal against the grant of clearance for a power project in Nagapattinam, Tamil Nadu. The order was passed on May 30, 2012, on Appeal No. 12/2011 on Chettinad Power Corporation. (For details log on to : http://www.thehindubusinessline.com/todays-paper/tp-economy/article3513065.ece)
GAS BURNS A BIGGER HOLE THAN COAL
NEW DELHI: Electricity produced using imported gas is more expensive than using imported coal. Tariff figures would be typically around Rs 4.5 a unit for generation of power using imported coal as compared to a level of Rs 7.5 to 8 a unit in case of using liquefied natural gas (LNG). The power sector, which is suffering because of high fuel costs and supply constraints, says that it would prefer to fire plants using coal from Indonesiaor Australiafor another decade, at least till natural gas prices drop. On the face of it, the high costs of gas may be a damper for several companies, but subsequent to the duty exemption on gas imports by the power developers for projects, some have decided to source it themselves. (For details log on to : http://www.thehindubusinessline.com/todays-paper/article3513086.ece)
RAY OF HOPE FOR POWER FIRMS ON RATE RAISE ISSUE
MUMBAI: The power ministry is set to refer the issue of cost escalations and price pass-throughs to the Central Electricity Regulatory Commission (CERC). The ministry’s decision is a ray of hope for private power players such as Tata Power, Reliance Power, Adani, JSW and state-run NTPC, and comes in the backdrop of state regulators recently rejecting tariff escalations on signed power purchase agreements (PPA), though coal prices have seen major escalations. The power ministry is likely to refer the matter to the regulator under Section 72(2) (iv) of the Electricity Act, 2003, which gives the regulator the jurisdiction to look into such contractual issues and suggest a framework. Using the same clause, the ministry will also seek CERC’s intervention for alternative scenarios if Coal Indiafails to deliver on its supply commitments to the power producers. NTPC and state-owned generating companies have been forced to rely on expensive imported coal. (For details log on to : http://www.business-standard.com/india/news/rayhope-for-power-firmsrate-raise-issue/476942/)
NEW TARIFF MAY NOT COVER DEFICIT: DISCOMS
NEW DELHI: With the new power tariff for the financial year 2012-13 expected within a month, discoms have stressed the need for immediate implementation of the power purchase adjustment formula. Discoms said fuel cost adjustment alone is not enough to cover the deficit faced by them, and accounts for only 1/3rd of the total variation in cost. Discoms said they are already under a financial strain and the actual cost of power procured by them was significantly higher than that factored in by the regulator, DERC, in the tariff order. This was due to the higher tariff charged by NTPC, DVC and other stations as well as higher inter- and intra-state transmission charges. “Power purchase and transmission charges cannot be controlled or predicted,” said an official. Discoms expect the new tariff to be announced within a month as the 120-day period from when they submitted their average revenue requirement (ARR) petitions to DERC is due to lapse soon. The Electricity Act recommends that regulators announce new tariff within this period, but there have been cases when tariff has been announced beyond this time frame. (For details log on to : http://timesofindia.indiatimes.com/city/delhi/New-tariff-may-not-cover-deficit-Discoms/articleshow/14005934.cms)
TELECOM COMPANIES UNITE TO FIGHT HIGH AUCTION PRICE
NEW DELHI: Ahead of the impact analysis of the high reserve price set by the Telecom Regulatory Authority of India, mobile operators have opened channels with each other to present a united front to abstain from the forthcoming 2G spectrum auction. The idea is to create a scenario where no operator participates in the upcoming auctions if the government does not lower the base price of R18,110 crore for spectrum in the 1,800 MHz band. “Discussions are on to jointly abstain from the auctions if the reserve price is not realistically pegged,” an industry official confirmed. If the operators are able to forge a united front on this aspect, it would not be without precedent. In 2001, when the government had conducted auctions for granting licences for inducting a fourth operator in circles, no bids came for the C circles like Bihar, Orissa and West Bengal because these were then not seen attractive enough considering the reserve price. (For details log on to : http://www.financialexpress.com/news/telcos-unite-to-fight-high-auction-price/960436/)
HIRING OF SENIOR EXECUTIVES MAY GROW BY 12 PER CENT IN 2012: EXPERTS
MUMBAI: The hiring of ‘grey hairs’ or senior executives is likely to grow by 12 per cent this year as companies are looking at battling the continued economic crisis with experience, according to experts. “Earlier, to gain edge over competitors or to boost the top line companies would take unimaginable risks. Now that is thought of the past and to bring a balance to their aggressive postures men with ‘grey hair’ or experience are warranted. This year will see a growth of almost 12 per cent,” Executive Search firm Symbiosis Management Consultants CEO Vinay Grover said. Being risk-averse is a major virtue of senior managers and the ability to take on multiple roles will become the differentiator for these men, he explained. “The trend of hiring experienced people started during 2008-2009 post recession after the financial markets were in turmoil and was visible across sectors,” he pointed out. The senior executives are mainly being hired in the banking and financial sectors followed by steel, engineering, power, real estate, infrastructure among others, he said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/jobs/hiring-of-senior-executives-may-grow-by-12-per-cent-in-2012-experts/articleshow/13990546.cms)
PHARMA COMPANIES NEED AGGRESSIVE R&D AND PATENT FILING: EXPERTS
MUMBAI: Indian pharmaceutical companies need to go for aggressive research and patent filing like Chinaand Japanand unless spending on R&D is scaled up, it would be difficult to create new molecules, industry experts said. “Our Indian companies are just beginning to realise that they also need an R&D Department, as merely quality control would not help. Unless spending on R&D is scaled up, it will be difficult to create new molecules. It is time to go for aggressive research and patent filing just like Chinaand Japan,” Deputy Controller of Patents & Designs, Intellectual Property Office K S Kardam said at a workshop on ‘Patenting Pharmaceuticals in India’. “The next stage of development for the Indian pharmaceutical sector will definitely lie in the aspect of value creation, for which, Intellectual Property becomes indispensable. Over the next few years, it is expected that the patent laws will provide impetus to the launch of patent-protected products,” Corporate Law Group, and member of Advisory Council of India of Drug Information Association (DIA), Managing Partner Krishna Sarma said. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/pharmaceuticals/pharma-companies-need-aggressive-rd-and-patent-filing-experts/articleshow/13996729.cms)
CONSUMER DURABLES PRICES TO GO UP AGAIN
NEW DELHI: If you were planning to buy a refrigerator or an air conditioner this month, do it soon. Companies are about to raise the prices of consumer durables again to offset the impact of a depreciating rupee and rising input costs. Industry sources say the price increase this time would be between 4 to 10 per cent. Most of the firms had hiked prices post-budget. “The company will be increasing the prices of refrigerators and washing machines,” Mahesh Krishnan, vice-president, home appliances, Samsung India, said. Krishnan could not give the exact percentage hike as the company is still computing it. “We are still working on that,” he said. Industry and trade sources say the prices would vary depending on the import content of the products. Consumer durables have 30-70 per cent import content. Almost all the firms import their top-end refrigerators, air-conditioners and washing machines as “completely-built units”. Insiders said inflation in petroleum products and freight charges have added to the costs. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/cons-products/durables/consumer-durables-prices-to-go-up-again/articleshow/13993302.cms)