NEW DELHI: Public sector power producer NTPC may raise Rs 25,000-30,000 crore via domestic bonds to fund its expansion projects.
This was disclosed by the company’s Director (Finance), Mr A.K. Singhal, at an investors’ conference call on Friday, a day after its fourth quarter of 2011-12 numbers.
The company mentioned that it is in a ‘comfortable position’ to issue domestic bonds. NTPC did not give the timeline for raising such debt, said an analyst who participated in the call.
NTPC may take the ECB route now that the Government has reduced withholding tax on interest payments on foreign borrowings.
“We have tied up Rs 23,000 crore of domestic loans that we can draw anytime. Also, we have lined up ECBs of $200 million,” Mr Singal added.
At present, NTPC has debt of Rs 45,908 crore.
The power producer targets to set up 14,000 MW of new capacities during the Twelfth Plan period.
NTPC told investors that it would produce 50-52 million tonnes (mt) of coal from its own captive mines by 2017.
At the end of Twelfth Plan, its total coal requirement would be around 230-240 mt at 90 per cent plant load factor.
Out of these, NTPC aims to import 15-20 mt, while rest would be sourced domestically.
The power producer would require 164 mt of coal in 2012-13 and 180 mt in the following year.
BOARD OKAYS NTPC HYDRO MERGER WITH NTPC
NEW DELHI: State-run NTPC on Friday said the Board of Directors has approved the merged of wholly-owned subsidiary NTPC Hydro with itself.
“With a view to have benefit of synergy of operation, enhancement of efficiency and administrative control to optimise utilisation of resources, the Board of Directors has approved amalgamation of NTPC Hydro with NTPC Ltd,” the company informed BSE.
This merger is subject to compliance of Companies Act, 1956 and subject to receipt of requisite approval from the Ministry of Corporate Affairs, shareholders and stock exchanges, the company said.
Ministry of Power, the parent ministry of NTPC, last month, allowed amalgamation of NTPC Hydro with NTPC subject to approval from the competent authority.
NTPC, the country’s largest power generation utility, yesterday, posted a 5 per cent rise in consolidated net profit at Rs 9,814 crore in the financial year ended March 2012 against Rs 9,348 crore in the previous fiscal.
The company’s net profit on a standalone basis slumped 6.7 per cent to Rs 2,593.44 crore in the three months ended March against Rs 2,781 crore in the year-ago period. Total income from operations in 2011-12 jumped to Rs 65,893 crore from Rs 59,505 crore in the year-ago period.
In the 2012, March quarter, total income from operations climbed to Rs 16,361 crore from Rs 15,597 crore in the comparable period.
Shares of NTPC were trading at Rs 148.25 apiece, down 0.90 per cent, in the afternoon trade on BSE.
DIRECTORATE OF REVENUE INTELLIGENCE SEIZES PRIVATE FIRM’S CRANE AT NTPC, BARH
PATNA: Acting on specific information, a Directorate of Revenue Intelligence (DRI),Patna, team on Thursday seized a crawler crane owned by the Navyug Engineering Company Limited, Vishakhapattanam, which was being used in the National Thermal Power Corporation (NTPC), Barh, project work.
The Japan-made crane was imported fromVietnamthrough Mumbai port. Incidentally, the value of the machine was declared at Rs 14 lakh only. However, the value of the said machine has been assessed by the DRI team at approximately Rs 36 lakh while the value of a new machine is around Rs 1 crore. The said crane had been seized for evasion of customs duty, said DRI sources.
In the past, too, seizures of other machinery worth around Rs 19 crore owned by the same company had been seized at the same place NTPC, Barh, by the DRI.
ELECTRICAL EQUIPMENT INDUSTRY GROWTH SLOWS IN 2011-12: IEEMA
NEW DELHI: The overall growth of the domestic electrical equipment industry slowed sharply in 2011-12, hit by sluggishness in the power sector as well as rising imports, industry body IEEMA today said.
Indian Electrical and Electronics Manufacturers’ Association (IEEMA) said that growth declined to 6.6 per cent last fiscal from 13.7 per cent in 2010-11.
The figures are based on the production and sales data of its member entities, which the IEEMA claims account for about 95 per cent of the electrical equipment industry.
Sluggish growth in the power sector and the escalating imports of electrical equipment is significantly impacting the commercial viability of the domestic electrical equipment industry, the industry grouping said in a statement.
“Growth in the capacitor, switchgear and transmission line sectors in 2011-12 turned negative. The cable industry is the only sector that has shown a double digit growth of 25.7 per cent in the year,” IEEMA said.
INDUS TOWERS JOINS HANDS WITH TERI TO LIGHT RURAL VILLAGES THROUGH HIGH EFFICIENCY SOLAR LED LANTERNS
NEW DELHI:IndusTowersmade an announcement today that the company would provide high efficiency Solar LED Lighting Systems, to rural areas.
Speaking of the company’s Green Vision, BS Shantharaju, CEO,IndusTowerssaid, “One of Indus’ core Values is Environment. We are committed to our values framework and have already reduced usage of 62 million litres of diesel in the last 2 years and our endeavor will be to reduce it further every year. We will take this campaign to as many cities as possible and recreate the image of our country as a ‘Green Nation’. We, as a company, are dedicated to an eco- friendlyIndia’. Over 1.4 billion people in the world lack access to electricity and 25% of them live inIndia.”
For these people, life comes to a standstill after dusk. Inadequate lighting is not only an impediment to progress and development opportunities, but also has a direct impact on the health, environment, and safety of people who are forced to light their homes with kerosene lamps, dung cakes, firewood, and crop residue after sunset.
“Solar lanterns rented through the LaBL charging stations provide bright clean and affordable light to the rural households, eliminating the hazards of kerosene smoke and providing proper lighting for children to study.IndusTowers’ commitment to the cause is laudable,” said Shafat Sultan Marazi, Strategic Advisor- LaBL.
The 5 year partnership ofIndusTowersand TERI would sponsor clean energy and rural entrepreneurship through the Lighting a Billion Lives Program (LaBL) to over 165,000 people across 660 villages inIndia. The first villages chosen for implementation under this partnership are in Kanpur Dehat district. TERI’s local partner organization supporting the program is Shramik Bharti, who will help in identification and selection of the villages and also provide ground support for long term sustainability of the initiative.
LaBL is a unique and measurable sustainability initiative that effectively demonstrates how Public-Private-People (PPP) partnerships easily support clean energy schemes and initiatives, particularly in the area of rural development. In the process,IndusTowerswill help mitigate approx. 5,000 tonnes of CO2 per year and create over 660 green jobs.
The LaBL campaign targets all communities across the world that lack access to modern and clean sources of lighting. Through this campaign, local entrepreneur-driven delivery channels are created for distribution and servicing of solar lanterns to rural communities. The campaign also provides excellent opportunity for public-private-people-partnership (P4) wherein the private sector can enhance the effectiveness of development schemes of the government, particularly in health, education and livelihoods sectors, by providing lighting through LaBL.
SPECIAL US ENVOY ON ENERGY TO TRAVEL TO INDIA NEXT WEEK
WASHINGTON: A top American diplomat on energy issues would travel toIndianext week to discuss several broad themes, including emerging trends in the global energy economy and helpingIndiaaddress its challenges in the energy sector.
In his first trip toIndiain this capacity, the Special Envoy and Coordinator for International Energy Affairs Carlos Pascual will travel toDelhiand Mumbai, from May 14 to 17 to meet with Indian officials, energy industry experts, and members of civil society.
“Indiais a vital and growing actor in world energy markets,” the State Department said in a press statement.
“On this trip, Pascual will engage with the Indian government, private sector, and civil society on several broad themes, including regional energy security in South Asia, the next steps for India and the United States on unconventional gas, energy access, the UN initiative Sustainable Energy for All, the development of power markets, and emerging trends in the global energy economy,” the State Department said.
The announcement in this regard was made by the Secretary of State, Hillary Clinton, in an interview to the CNN while she was inNew Delhiearly this week.
She said she is dispatching her senior aide toIndiafor talks with Indian officials on Iranian issues.
“We are working with them to help them in any way that we can offer technical assistance, and next week my energy coordinator, Ambassador Carlos Pascual, will be here inIndiawith a team of experts,”Clintonhad told the CNN.
SUZLON COUNTS ON REPOWER TO REPAY $566 MILLION FOREIGN BONDS
MUMBAI: Life has come a full circle for Suzlon Energy. Riding on chairman Tulsi Tanti’s insatiable growth aspirations, the Pune-based company bought a majority stake in German wind turbine maker REpower for 1.3 billion in an intense, five-month long bidding war with French energy giant Areva in May 2007. By 2011, Tanti had bought 100% in REpower by spending another 500 million. Much of this acquisition was funded by money raised through foreign currency convertible bonds (FCCBs). Now it’s payback time, with the first tranche of FCCBs set to mature next month. And REpower – the biggest reason for his high leverage today – may be his best bet to get out of the debt trap he finds himself in.
“REpower is the reason why Suzlon raised money through FCCBs,” says Raj Kothari, a London-based bond trader at Sun Global Investments, which owns Suzlon bonds. “And REpower holds the key to resolve Suzlon’s repayment problems,” he adds.
Suzlon needs $360 million in June and $206 million in October, totaling $566 million (Rs 2,995 crore) for redemption of FCCBs issued five years ago. Suzlon’s high leverage-consolidated debt is double of equity-and repeated losses have left little room to organise the large amounts of cash needed to redeem the bonds. On the other hand, REpower is sitting pretty on cash of $247 million, a solid brand equity and a better operating performance.
In a report dated 26 March, HSBC notes that there are covenants that limit free transfer of cash from REpower to parent Suzlon, but anticipates that the German turbine maker could provide Rs 610 crore – Rs 110 crore as dividend and the balance as advance. This will be precious for Suzlon in his quest to repay FCCB holders, especially after the US customer Edison Mission Energy said it won’t pay before February next year. Suzlon was hoping to recover $211 million fromEdisonby June, when the first tranche of FCCB redemption is due, says Ankush Mahajan, research analyst with Mumbai-based KR Choksey. The delay can prove disastrous, and REpower may be the only immediate lifeline for Suzlon.
The Suzlon management is reluctant to divulge details on the role REpower can play, perhaps due to the covenants imposed by the German firm’s lenders. “Suzlon and REpower are now parts of one company; we have to balance interests of many stakeholders, and will ensure that we will take the best decisions in the interest of the Suzlon group,” says Suzlon CFO Kirti Vagadia when asked what role REpower could play to help Suzlon repay FCCB holders.
Suzlon is weighing various options to repay the FCCB holders, says Vagadia, who took over as CFO in March from Robin Banerjee. These include talking to a few bulge bracket investment banks for funding; and also to Indian banks for support as a backstop, added Vagadia in a written reply to ET’s queries.
“Suzlon continues to make progress on the sale of non-critical assets; we announced a sale for approximately $40 million just the other day. And the company is evaluating a high-yield bond instrument offering in the range of $300 million to $500 million,” says the CFO.
Analysts, however, are not too sure about Suzlon’s ability to raise that much through a high-yield bond. Bhargav Buddhadev, an analyst with Ambit Capital, thinks Suzlon could keep theEdisonreceivable as collateral to raise short-term financing in the form of high-yield bonds. But in that case the size of the issue could be around the amount of receivable, which is a little over $200 million.
If Suzlon wants to raise anything more than that, the holders of new bonds would demand access to REpower’s income, which Indian banks may not agree to, says Sun Global’s Kothari. Indian banks provided most of Suzlon’s consolidated debt of Rs 13,356 crore, over three times its market capitalisation. However, if Suzlon goes for the high-yield bond, REpower’s reputation as a technology leader would come handy to the company, says Mahajan.
In the December-ended quarter, REpower reported a 29% growth in revenues at 3,069 crore and a 60 basis point increase in operating margins, at 8.2%. On the other hand, Suzlon’s revenues (excluding REpower) dipped 22% to Rs 1,955 crore. Suzlon management acknowledges that. “As our cash generating assets are based inEurope, we naturally aim to tap the high-yield market in the EU,” says Vagadia, adding Suzlon will share more details closer to the transaction.
When Tanti, an aggressive, first generation entrepreneur, acquired REpower in 2007, he did not mind paying through his nose as the target provided him a strong foothold in Europe and access to offshore technology, which can convert wind into power in the deep seas. “REpower will be jewel in my crown,” he had said then.
Tanti, then the 10th richest Indian businessman, assumed that the FCCB conversion would be a walk in the park because he expected the bonds would automatically be converted into equity when they mature in 2012. But the situation took a dramatic turn after the 2008 global financial crisis hit demand for renewable energy. At its prime, in 2007-08, Suzlon earned a net profit of Rs 1,017 crore. Since then, it has slipped into losses: Rs 982 crore in 2009-10 and Rs 1,096 crore in 2010-11 (fiscal 2012 results will be announced later this month). The Suzlon stock has crashed from 246 in May, 2007 to under 20 on Friday, knocking Tanti off the billionaire list. His 53% stake (90% of which is pledged) is now valued at less than Rs 2,000 crore.
The stock is trading at a fraction of two sets of conversion prices, of Rs 97 and Rs 77 for the bonds that will mature next month. So, rather than conversion, the bondholders want Suzlon to repay them with a premium as was agreed when the bonds were issued.
Suzlon has made limited progress in hawking non-core assets. It has raised Rs 200 crore by selling wind-farm assets inIndiaand is looking for buyers for other non-core assets.
The HSBC report quoted earlier anticipates that Suzlon could raise 1,000 crore from asset sales to repay the FCCBs. The report said, in addition to wind-farms, Suzlon might raise 600 crore from the sale of SE Forge, a wholly-owned subsidiary, and Rs 200 crore from few other small business lines.
ARUN ICE-CREAM MAKER HATSUN AGRO EYES WIND POWER
CHENNAI: Hatsun Agro Product, the Chennai-based dairy known for brands such as Arun ice-cream, is scouting for partners in wind power generation.
The company has told stock exchanges that its board of directors have approved investment not less than 26% in a partnership firm, limited liability partnership or body corporate engaged either in windmill or any other mode of power generation.
RG Chandramogan, Chairman and Managing Director of Hatsun, said the company has zeroed in on 3 players, all of whom are in wind energy. “”We will finalise the deal in a month,”” he said.
Hatsun would use the power for its captive needs. Tamil Nadu has been experiencing a huge power deficit, which has impacted industrial units a great deal.
WELSPUN WINS 125 MW SOLAR BID IN MADHYA PRADESH
Welspun has emerged one among the four winning bidders for solar projects in Madhya Pradesh.
After the formal award of the project, Welspun Solar MP Pvt Ltd will put up one solar photo voltaic project of 100 MW and another of 25 MW capacity.
Welspun offered a tariff of Rs 8.05 a unit.
Typically, a solar power project costs Rs 10 crore a MW.
The other winning bidders are: Alpha Infra Properties 20 MW at Rs 7.90 a unit (the least of the four), Simplex 10 MW at Rs 9.59 a unit and Acme Telepower 45 MW for Rs 12.45 (the highest tariff).
Madhya Pradesh also followed a ‘reverse bidding’ process under which it would award projects to those who offer to sell power at the best (least) rates. The MP programme is for 200 MW, which means it would award projects up to a total of 200 MW.
Madhya Pradesh received bids for 430 MW for its tender for 200 MW, from 12 developers, including known names such as Azure (which submitted a bid for 5 MW), BGR Energy (10 MW), Essel Infra Properties (30 MW) and IL&FS (50 MW).
The tariffs offered in the Madhya Pradesh programme reveal a hardening of rates.
The least tariff ever offered was by Alex Green which won a 25-MW project in Odisha quoting Rs 7 a unit. “Viewed against this, the MP tariffs are very attractive to the developers, considering that costs have not gone down at all,” says Mr Vineeth Vijayaraghavan, Founder-Editor, Panchabuta, an online newsletter.
CABINET DIVIDED ON PRICING POWER TO COAL REGULATOR
NEW DELHI: The Cabinet was divided on giving pricing power to the proposed Coal Regulator. The Coal Minister, Mr Sriprakash Jaiswal, has told reporters that at the Cabinet meeting, consensus could not be reached on whether the coal regulator should be given rights to decide pricing of the commodity. The Cabinet referred The Coal Regulatory Bill to a Group of Ministers (GoM). Mr Jaiswal said the GoM would soon meet to fix the issue. The ministerial panel would discuss the issue and bring changes in the draft Bill. Other than pricing of coal, the regulator is aimed to ensure more optimal development and conservation of coal resources in the country. Mr Jaiswal said that he has asked Coal India Ltd to sort out differences with power producers and ensure smooth supplies.
COAL INDIA INVITES FIRMS FOR DRILLING MOZAMBIQUE MINES
NEW DELHI: Coal India (CIL) has come out with bids, inviting companies to take up drilling work of its twin mines in Mozambique that have reserves of over one billion tonnes.
“Coal India Africana Limitada (a CIL subsidiary) intends to invite Expression of Interest (EoI) for selection of companies to undertake drilling activities in its coal blocks isMozambique,” CoalIndiasaid on its website. The EoI which had opened last week, would close on May 25, the company said.
The development comes at a time when the country is facing demand supply gap of coal which widened to 161.5 million tonnes (MT) in the last fiscal. CIL, the world’s largest coal producer, had earlier invited tenders twice.
For the first time it was in 2010 which got cancelled due to shortcomings and for the second in June, 2011. The company that was shortlisted during the second tender had put some additional conditions as a result the tender became invalid, a CIL official had said earlier.
The production from the twin mines is scheduled from 2015 but according to analysts it may get delayed as CIL is yet to to zero in on a company for exploration. In 2010-11 the shortfall of coal was to the tune of 132.8 MT while in 2009-10 it was 90.5 MT.
SAIL EYES IRON, COAL RESOURCES IN MONGOLIA
NEW DELHI: Indian steelmakers have set their sights on mineral richMongolia, chasing the huge mineral wealth that is helping the once pastoral, land-locked economy register one of the fastest economic growth rates in the world.
Steel Authority of India Ltd (SAIL) is considering replicating its successful public-private approach inAfghanistanandMongolia. The two countries have signed a memorandum of understanding to study the possibilities of setting up mineral-processing facilities for iron ore and coal, both coking and thermal, inMongolia, and downstream steel-making facilities for domestic consumption and trade.
In a statement fromUlaanbaatar, the public sector steel maker said the MoU covers exploration of opportunities for investments to be made by SAIL either individually or in a consortium with other entities.
According to the MoU, Mongolia Mineral Resource & Energy (MMRE) will share information on possible iron ore and coal deposits with SAIL and offer options of locations for investments. A joint pre-feasibility study for setting up mineral-processing facilities for iron ore and coal and downstream steel-making facilities will be taken up by MMRE and SAIL, the statement said.
SAIL will select the best available technology to treat Mongolian iron ore and coal deposits based on the feasibility study. The development comes after the visit of a high-level Mongolian delegation to SAIL’s Bhilai Steel Plant in November 2011.
MORE COAL NON-SOLUTIONS
Instead of auctions, a curious half-way house
The government’s policies of allocating coal blocks, as well as coal to power plants, continues to bewilder. After CoalIndia, thanks to its independent directors, made it clear it wasn’t going to be able to supply the 55 million or so tonnes of extra coal for which the PMO wanted it to sign legally enforceable fuel supply agreements (FSAs) with new power plants, CIL diluted the penalty clauses in the FSAs and signed 12 of them. Since it now had to supply more coal to these plants—even though the penalties for non-supply were next to negligible!—it stopped supplying coal to the 28 new plants who had not signed FSAs with it. While the coal ministry has stepped in to say CIL has to supply coal to even these 28 power plants, this still doesn’t address the basic question of where the extra coal is to come from—indeed, were these plants to operate at full capacity, the shortage increases by another 20 million tonnes or so.
How this shortage is to be bridged is even more curious. Since the MMDR Act that was amended in 2010 allows coal mines to be allocated to power plants on the basis of a competitive bid, the government can do this even today—under the new MMDR Act which is still in Parliament, all minerals can be auctioned and to merchant miners as well. Instead of such auctions, however, the government plans to allocate captive mines to each state (how this will be allocated promises to be a huge mess). Once the states have the mines, in the same manner the Centre did with the ultra mega power plants (UMPP), the states will invite bids for power supplies. This is better than the current system where, since captive mines are allocated to power producers without auctions, the upside goes to the power producer. But since there is no clarity on what happens to the extra coal in the captive mines, as has happened in the Sasan UMPP, this will lead to more problems. Why not just do simple auctions under the current MMDR or wait for the new one when even merchant miners who are considered more efficient can also bid?
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