MUMBAI: Oil and Natural Gas Corp has declined to participate in the stake sale of the pipelines company owned by Mukesh Ambani and other promoters of Reliance Industries Ltd but other state firms such as Oil India and Gail India are evaluating the prospect.
The company, Reliance Gas Transportation Infrastructure (RGTIL), operates the $3.75-billion East-West pipeline that was built to deliver D6 gas to Karnataka, Maharashtra and Gujarat. It has appointed JPMorgan, Citigroup and SBI Caps as advisors for the stake sale, industry officials said.
“RGTIL’s bankers had approached us recently to discuss the possibility of ONGC picking up an equity investment in RGTIL but we declined as we did not see any value in the proposition as pipelines is not our core business,” a senior ONGC official told ET.
Gail, which is keen to develop a countrywide network of pipelines, has shown interest. “RGTIL has contacted us for an expression of interest in the ongoing stake sale of RGTIL and Gail has shown preliminary interest. We will be undertaking a techno-commercial due diligence where we will be taking a close look at all the issues affecting the company,” a senior Gail official told ET.
While ONGC does not want to make an investment outside its core business of oil exploration and production, Oil India Ltd is looking for new growth strategies.
“RGTIL has contacted us and we are interested in the opportunity, it is too preliminary to talk numbers now but we are looking at diversification from our core business of exploration and production and thus are keen to explore both organic and inorganic opportunities. We will be soon be conducting a thorough due diligence,” T K Ananth Kumar, Director, Finance, OilIndia told ET.
Mukesh Ambani is reported to be seeking a valuation of up to Rs 10,000 crore for the company. According to industry experts, the key issue affecting the stake-sale would be the steep fall in gas production at KG-D6, which has now hit an all time low of 28.16 mmscmd, the lowest level since RIL began output from the KG-D6 block in April 2009.
Also, RIL the operator has told the petroleum ministry that any incremental production is only possible by 2016. “In the long term, this could make sense for Gail which is primarily a pipeline company and currently its HBJ pipeline runs from the west to north, so RGTIL’S east-west pipeline could help it to establish a nation-wide footprint.
Also Gail could be looking at protecting its turf given that GSPL has recently won a couple of new pipeline contracts,” said an energy analyst from a prominent Mumbai-based brokerage house.
“This move could also be a part of the government’s decision to establish a central gas grid,” he added. “By exiting RGTIL, Mukesh Ambani is sending a clear signal about the potential of KG-D6 and the markets will definitely view this development in that light,” he added.
There are other key issues flagged by industry experts. “The east-west pipeline was initially built for a capacity of 80-120 mmscmd and now it is not even transporting half of that volume, so its long-term hire charges and tariffs could be impacted negatively,” said another oil and gas analyst.
“In the long-term, this acquisition could benefit Gail as Petronet’s new 5 mtpa LNG terminal in Ganagavaram (situated close to Kakinada) could receive cargo by 2018 and by then even RIL could have resumed some production to at least 50 mmscmd,” he added.
Also apart from RIL, other players in the east coast like ONGC, OIL India and GSPC have not started any significant oil and gas production in the area as of now which puts a question mark on the immediate business opportunity in RGTIL’s pipeline assets.
RGTIL was set up as a wholly-owned subsidiary of RIL in 2003. In 2006 it became a privately-held company of Mukesh Ambani. RGTIL reported a net loss of Rs 210 crore on net sales of Rs 2,560 crore for the year ended March 2010. In 2010-11, RGTIL received Rs 652 crore as hire charges from RIL for the use of its pipelines to transport gas.
TATA COFFEE MAY MERGE WITH TATA GLOBAL BEVERAGES
MUMBAI: A series of open market share deals from February this year among Tata Group holding company Tata Sons and its three beverages companies — Tata Global Beverages, Tata Coffee and Mount Everest Mineral Water — signals a possible consolidation of all beverages makers under Tata Global Beverages to create one of the largest non-carbonated beverages company. First of the share deals on February 21 removed the crossholding between Tata Coffee and Tata Global Beverages. Tata Coffee sold 982,500 shares it owned in Tata Global Beverages to Tata Sons for R11.71 crore at R119.2 a piece. Six days later, another 10 lakh shares were sold to the holding company for R11.25 crore at R112.5 a piece. Tata Coffee sold its shares to parent Tata Sons despite its majority share of 57.48% owned by Tata Global. (For details log on to : http://www.financialexpress.com/news/tata-coffee-may-merge-with-tata-global-beverages/931799/)
MURDOCH PADS UP ON BCCI PITCH
CHENNAI/MUMBAI: The Rupert Murdoch-controlled STAR India pipped competitor Multi Screen Media (MSM), which runs the Sony channels, to win the Board of Control for Cricket in India (BCCI) media rights for matches played in India for Rs 3,851 crore. The rights include television, internet and mobile coverage for six years, starting July 2012. The deal would cover 96 matches at an average price of Rs 40.4 crore a match. STAR’s offer was higher than MSM’s (Rs 3,700 crore). STAR has paid 35 per cent more than Nimbus, which had won the rights earlier but had them cancelled due to a payment dispute. Nimbus had paid Rs 31.5 crore per match. The cricket board had terminated its four-year contract with Nimbus in December, after the latter defaulted on payments. Speaking to reporters in Chennai on Monday, BCCI president N Srinivasansaid, “Following a transparent process of verifying the eligibility of each bidder, the winner was chosen.” (For details log on to : http://www.business-standard.com/india/news/murdoch-pads-upbcci-pitch/469933/)
MARICO EYES STAKE SALE TO RAISE RS 500 CR FOR PARAS DEAL
MUMBAI: Marico, the consumer goods major, is eyeing a five per cent stake sale to fund its Rs 600-crore acquisition of Paras Pharmaceuticals’ personal care portfolio. In February, it had said it was acquiring Setwet, Livon, Zatak and a few other personal care products from Reckitt, the owner of Paras. Investment banking sources say the Mumbai-headquartered company was looking to raise Rs 500 crore from the stake sale. Private equity (PE) companies tapped include Apax, KKR, Khazana, TPG, ChrysCapital and GIC, they said. Citibank and Kotak are advisors to Marico on the deal. When asked, Saugata Gupta, chief executive officer of the consumer products division said the company does not comment on market speculation. But persons in the know say the deal is on and negotiations are centred on the sale price. Marico is said to be asking for a significant premium to its current market price, which is in the region of Rs 171. The stock was down 1.9 per cent (or Rs 3.25) on Monday, in a market that closed up 0.4 per cent on the Bombay Stock Exchange (BSE). Its intra-day high was Rs 173.95, while its low was Rs 170. (For details log on to : http://www.business-standard.com/india/news/marico-eyes-stake-sale-to-raise-rs-500-cr-for-paras-deal/469939/)
GERMAN FIRM ACQUIRES 70% STAKE IN NEUTRAL GLASS
MUMBAI/AHMEDABAD: Gerresheimer AG, a German supplier of pharma and healthcare products has acquired 70 per cent stake in the Indian bottles maker Neutral Glass & Allied Industries Pvt Ltd for an undisclosed sum. Post acquisition, the promoters of Neutral Glass will retain 30 per cent of the holding in the company, an official statement informed. Neutral Glass is based in Mumbai and has a moulded glass plant in Kosamba in Gujarat. The plant produces about 800 million bottles annually for type I &III pharmaceutical applications, like amber and flint vials and bottles for liquid oral medications and infusions, as well as injection bottles. According to a statement issued by Gerresheimer, for the financial year 2010-11, Neutral Glass revenues stood at approximately Rs 100 crore (around EUR 15 million). The company, established in 1986 employs around 600 employees. (For details log on to : http://www.business-standard.com/india/news/german-firm-acquires-70-stake-in-neutral-glass/469846/)
THERMAX SHIFTS FOCUS TO EXPORTS AS PROFITS DIP
PUNE: With the domestic order pipeline virtually drying up and the Union Budget bringing little cheer to domestic power equipment companies either, energy and environment solutions company Thermax is readying itself for difficult times. Thermax derives about 84% of its revenues from the domestic market and close to 80% from the energy segment. So, the crisis in the power sector has hit Thermax hard, just like it has some of the bigger names in this space, such as BHEL and L&T. Thermax MD & CEO MS Unnikrishnan admits the industry needs to tighten its belt. Unnikrishnan says he has personally spoken to all people in his organisation in batches of 100 to 200, explaining the global markets, the macroeconomic situation and the Indian scenario as he wanted them to be prepared for these difficult times. “We will have to function together so they need to have ideas of how to deal with this situation,” says Unnikrishnan. During Q3 of this fiscal Thermax posted just a 2% rise in revenues while profits were down 5%. The group order backlog was down 23% at R5,809 crore. Thermax told analysts that order finalisation was hit because of elevated interest rates and deepening fuel crisis and it was likely to be muted for the next one or two quarters so revenue growth were tough to deliver. The management has been selective in picking orders but if the situation persisted few more quarters they could sacrifice margins in order to cover fixed costs. (For details log on to : http://www.financialexpress.com/news/thermax-shifts-focus-to-exports-as-profits-dip/931813/)
JAGRAN PRAKASHAN ACQUIRES NAI DUNIA
NEW DELHI: Jagran Prakashan Ltd (JPL), which publishes the country’s largest-read newspaper Dainik Jagran, has acquired the Madhya Pradesh-based Hindi daily Nai Dunia for an effective enterprise value of Rs.150 crore. JPL informed BSE on Monday that it has acquired Suvi Info Management (Indore) Pvt. Ltd, which runs Nai Dunia through its subsidiary Nai Dunia Media Pvt. Ltd. “Suvi Info Management is the holding company for Nai Dunia. Vinay Chhajlani and several other persons and companies have shares in Suvi, which have been acquired by us,” said Mahendra Mohan Gupta, chairman and managing director of the Jagran group. Nai Dunia, with a circulation of nearly 500,000 copies a day, is printed in Gwalior, Indore, Jabalpur, Bhopal (in Madhya Pradesh) and in Raipur and Bilaspur (in Chhattisgarh). It is among the 10 most-widely read newspapers in the country, according to the Indian Readership Survey (IRS). (For details log on to : http://www.livemint.com/2012/04/02205457/Jagran-Prakashan-acquires-Nai.html?atype=tp)
SIKORSKY-TATA JOINT VENTURE APPLIES FOR DEFENCE LICENCE
CHENNAI/HYDERABAD: US-based chopper manufacturer Sikorsky Aircraft Corporation, part of United Technologies Corp, and Tata Advanced Systems Limited (TASL) have applied for a defence licence to manufacture components and assemble helicopters for use by the Indian Navy, according to Steve Estill, vice-president (strategic partnerships), Sikorsky. “The licence will pave the way for us to set up an assembly line in this country. We will decide on our plans once we hear from the Ministry of Defence. We expect our application to be cleared from the ministry in the second quarter of this financial year,” he told mediapersons here on Monday. L&T and Mahindra & Mahindra are among the other big Indian companies that have received licences in the past to manufacture defence equipment. (For details log on to : http://www.business-standard.com/india/news/sikorsky-tata-joint-venture-applies-for-defence-licence/469864/)
NTL ELECTRONICS FORMS JV WITH LEMNIS LIGHTING FOR LED LIGHTS
NEW DELHI: NTL Electronics India today said it has formed an equal joint venture with the Netherlands-based Lemnis Lighting to produce LED lights for both home and commercial purpose. “The new 50:50 JV company, which will be jointly controlled through offices in Barneveld, Netherlandsand Noida, India, will also have sales offices in South Africaand Ghana,” NTL Electronics India said in a statement. The two companies will put in an initial investment of around Rs 40 crore into the JV, it added. The JV firm — NTL Lemnis — will utilise the global design, production and distribution strengths of both the parent companies to deliver products for home and commercial lighting across the world. (For details log on to : http://economictimes.indiatimes.com/news/news-by-industry/cons-products/electronics/ntl-electronics-forms-jv-with-lemnis-lighting-for-led-lights/articleshow/12506808.cms)
BEML BEGINS WORK ON AEROSPACE UNIT AT SEZ
CHENNAI/BANGALORE: The BEML Limited, a defence public sector undertaking, is moving forward in the aerospace vertical as part of the expansion of its defence business. In this regard, BEML has begun work on an aerospace manufacturing division at SEZ near the BangaloreInternationalAirport, Devanahalli. The ground breaking for commencing the civil works was performed by BEML Chairman & Managing Director V RS Natarajan in the presence of functional directors and other senior executives. BEML Limited is the first company to set up Aerospace Facility at a SEZ. The construction work has begun and this infrastructure facility shall be ready by September this year. This will pave the way for BEML to enter into Aircraft component manufacturing field. This is the second new aerospace manufacturing facility. (For details log on to : http://www.business-standard.com/india/news/beml-begins-workaerospace-unit-at-sez/469848/)
ADVENT INTERNATIONAL TO INVEST $105 MILLION IN CARE HOSPITAL
CHENNAI/HYDERABAD: Global private equity firm Advent International will invest $105 million (Rs 512 crore) equity capital in Hyderabad-based CareHospital, a multi-specialty hospital chain in south India. According to a press release, Advent will invest the fund by acquiring shares from some of the existing investors and injecting additional capital into the business. Founded in 1997, Care has 11 hospitals with a total capacity of 1,590 beds in cities including Vishakhapatnam, Raipur, Bhubaneswar, Nagpur, Surat, Pune and Hyderabad. It plans to become a national player by expanding its presence to other cities. “Our partnership with Advent provides us with the required resources and support to expand our presence and reiterates our commitment in providing the best in healthcare with compassion, to more people in India,” said its founder B Soma Raju. (For details log on to : http://www.business-standard.com/india/news/advent-to-invest-105-mn-in-care-hospital-/469863/)
RANBAXY LABS STARTS SHIPPING LIPITOR GENERIC TO US MARKET
NEW DELHI: Ranbaxy Laboratories has started shipping its generic version of Lipitor from Indiato the USdrug market. The company has started manufacturing the cholesterol lowering drug at its Mohali facility, which has recently gained approval from the US Food and Drug Administration (US FDA). Till now, the generic drug that the company was marketing in US was being produced at its facility at Ohm Laboratories, US. Analysts said this move could help the company contain costs incurred during manufacturing of the drug and prepare it better for the fierce competition that is bound to ensue after May, once 180 days of exclusive marketing period ends for Ranbaxy. That is the time Ranbaxy would face onslaught of competition from other generic players as Israeli generic giant Teva, US generic drugmaker Mylan, Indian rivals — Dr Reddy’s and Lupin — are expected to jump into the fray to grab a bite of the $7-billion Lipitor drug pie. (For details log on to : http://www.financialexpress.com/news/ranbaxy-labs-starts-shipping-lipitor-generic-to-us-market/931803/)
GCMMF PLANS RS.3,000 CRORE EXPANSION
AHMEDABAD: Asia’s largest dairy, Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) that markets the Amul brand, has firmed plans to invest Rs.3,000 crore over the next five years to expand its existing plants and set up nine manufacturing units across the country. The expansion is a part of the federation’s aim to achieve a turnover of Rs.30,000 crore by 2020, said managing director R.S. Sodhi. The federation’s turnover in 2011-12 was Rs.11,600 crore, which it expects to increase to Rs.15,000 crore in this fiscal year. Sodhi was speaking on the sidelines of the launch of Amul Pro, a whey protein malt beverage that could offer competition to chocolate-flavoured supplements such as Cadbury India Ltd’s Bournvita and GlaxoSmithKline Consumer Healthcare Ltd’s Boost. GCMMF aims to increase its milk-processing capacity from 14.5 million litres a day to 20 million litres, Sodhi said. For this, the federation, which involves nearly three million villagers in its operations, will set up two milk processing plants in Delhi, one each in Mumbai and Kolkata, and four in Gujarat’s Saurashtra region. Currently, it has 52 such plants. (For details log on to : http://www.livemint.com/2012/04/02210015/GCMMF-plans-3000-crore-expan.html?atype=tp)
MANUFACTURING AND CAR SALES DATA KINDLE RECOVERY HOPES
NEW DELHI: Car sales touched record levels in March and a key indicator of factory output continued to signal expansion, prompting many economists to predict that the downturn in the economy may have bottomed out in the last quarter of 2011-12 when GDP growth dropped to 6.1%. The widely-followed HSBC manufacturing purchasing managers’ index (PMI) fell slightly to 54.7 in March from 56.6 in February, but the average value of the PMI during the last quarter of FY12 was higher at 56.3 compared with 52.4 in the previous quarter, indicating consolidation in economic activity. The three-monthly average “probably indicates prospects of a mild recovery in the industrial sector GDP during January-March ’12”, Deutsche Bank economists Taimur Baig and Kaushik Das wrote on Monday. India’s biggest carmakers – Maruti Suzuki , Hyundai and Tata Motors – reported buoyant car sales in March, though this was at least partly on account of consumers advancing purchases fearing a hike in excise duties in the Union budget. (For details log on to : http://economictimes.indiatimes.com/news/economy/indicators/manufacturing-and-car-sales-data-kindle-recovery-hopes-iip-core-growth-point-to-revival/articleshow/12510898.cms)
PRESIDENTIAL DIRECTIVE TO COAL INDIA TODAY
NEW DELHI: The government is likely to issue a presidential directive to Coal India (CIL) on fuel supply pacts tomorrow. This would force the state-owned miner to sign fuel supply agreements (FSAs) with power companies at 80 per cent commitment levels. The move would upset shareholders of the world’s largest coal producer, but ramp up fuel availability for power projects of 30,000-Mw capacity. The move is being planned after board members of the Bombay Stock Exchange-listed company approved an FSA with power companies last week, but turned down a Prime Minister’s Office (PMO) diktat that asked it to give 80 per cent commitment. “The files for issuing the directive are almost ready. The matter would be sorted by the afternoon on Tuesday,” a senior official close to the development told Business Standard. After a high-level meeting with a delegation comprising chiefs of the country’s most powerful companies in January, including Tata Sons chairman Ratan Tata and Anil Dhirubhai Ambani Group chairman Anil Ambani, the PMO had set a deadline of March 31 for CIL to sign full supply agreements for all projects commissioned before December 2011. (For details log on to : http://www.business-standard.com/india/news/presidential-directive-to-coal-india-today/469912/)
POWER PROFITEERS TOLD TO FOLLOW RATE REGIME
NEW DELHI: Private power companies, which have long had the luxury of selling cheap power from captive coal blocks with windfall profits by striking exclusive deals with discoms, will soon have to change tack. The power ministry has decided to make it mandatory for these firms to take part in tariff-based competitive bidding for supply of power to distribution companies. The move would benefit consumers in states like Chhattisgarh, Orissa, Jharkhand and Andhra Pradesh, while Jindal and Essar group firms, among others, will feel the heat. For instance, while the average return on equity for the power sector works out to 15-16%, Jindal Power has been earning a return of over 100% from its Tamnar power plant in Raipurdistrict of Chhattisgarh by selling the entire power generated through the merchant route. When contacted, Jindal Power MD RS Sharma declined to comment. (For details log on to : http://www.financialexpress.com/news/power-profiteers-told-to-follow-rate-regime/931752/)
UK DID THE SAME ON RETRO TAX CHANGES, FM TELLS OSBORNE
NEW DELHI/MUMBAI: New Delhitoday remained firm on its decision to amend the Income Tax Act retrospectively from 1962, even as the United Kingdomcategorically conveyed to Indiathat its proposed move would hurt the overall investment climate in the country. “We are concerned about the proposed Budget measure… Not just because of its impact on one company, Vodafone, but because we think it might damage the overall climate for investment in India,” the UK’s chancellor of the exchequer, George Osborne, told reporters after his meeting with finance minister Pranab Mukherjee. Officials said Osborne told Mukherjee UKinvestors were anxious as Indiaproposed to amend the tax law even, as the Supreme Court had turned down a Rs 11,000-crore tax notice on Vodafone. Later, the apex court had also rejected a review petition filed by the ministry. (For details log on to : http://www.business-standard.com/india/news/uk-didsameretro-tax-changes-fm-tells-osborne/469934/)
POWERMIN WANTS RIDER ON COAL ALLOCATION
NEW DELHI: At a time when the government is under pressure to explain its position on allocation of captive coal blocks, the power ministry has recommended cancellation of allocations to power companies not selling electricity through rate-based bidding. In a letter to the coal ministry, it has made a case for such stringent action on the reasoning that the benefit of lower-cost coal has not been passed on to consumers. It has asked the coal ministry to issue an advisory to all block allocates, to take part in bids for sale of power from end-use projects according to the guidelines of the ministry of power or face cancellation. Also, the power ministry wants the condition on rate-based bidding to be made a condition for even already-allotted blocks to independent power producers (IPPs). (For details log on to : http://www.business-standard.com/india/news/powermin-wants-ridercoal-allocation/469911/)
INDIAN ECONOMY TO GROW AT 7.6%: D&B
NEW DELHI: The Indian economy is expected to expand by 7.6 per cent in the current financial year on robust services sector, research firm Dun & Bradstreet said on Monday. Overall growth is expected to gain some traction during the second half of the current fiscal on account of gradual easing of inflationary pressures and some improvement in the investment activity, among others, it said. Noting the Indian economy is expected to expand 7.6 per cent in 2012-13, D&B said the uptick in GDP is anticipated to be driven by a robust services sector growth. (For details log on to : http://www.business-standard.com/india/news/indian-economy-to-grow-at-76-db/469953/)
EXPORTS GROW 4.2% IN FEBRUARY; DEFICIT WIDENS
NEW DELHI: Impacted by economic and financial problems in the US and euro-zone countries, India’s export growth slipped to three-month low of 4.2% to $24.6 billion in February. As import growth has decelerated only to a lesser extent (20.6% to $39.7 billion), the trade deficit for the month stood at a worrisome $15.1 billion. From a peak of 82% in July, export growth slipped to 44.25% in August, 36.36% in September, 10.8% in October and 3.8%t in November 2011. Commerce secretary Rahul Khullar has expressed concerns over the ballooning trade deficit. Though exports were showing a sign of slight pick up in December by growing at 6.7% and then continuing to over 10% in January, poor February numbers are showing the continuing slump in global demand. (For details log on to : http://www.financialexpress.com/news/exports-grow-4.2-in-feb;-deficit-widens/931730/)
MARUTI SUZUKI SALES INCREASE 3% IN MARCH
NEW DELHI/CHENNAI: Apprehensions of a possible duty hike on diesel cars in the Budget coupled with consumers rushing to buy cars at old excise rates drove cars sales up during the month of March. For the country’s largest car maker Maruti Suzuki India, a continued robust demand for its compact car segment and the new swift DZire helped keep up the momentum in sales as the company registered a 3.28% increase in sales at 125,952 units against corresponding sales figure for March 2011. The government was expected to levy an increased excise on diesel vehicles in the Budget, but it hiked it across the board making all consumer goods, including cars, expensive. Following the trend, the country’s second largest passenger car manufacturer Hyundai Motors India also posted a 6.6% increase in sales at 59,229 units over last year, largely driven by the 22.9% increase in the domestic sales at 39,122 units for the month. According to the company’s figures its sales in the A2 segment comprising Eon, Santro, i10 and i20 were 39,122 while in the A3 segment comprising Accent and Verna were 7,679 units. (For details log on to : http://www.financialexpress.com/news/maruti-suzuki-sales-increase-3-in-march/931811/)
GOVERNMENT REVISES DEFENCE OFFSET POLICY
NEW DELHI: Indiaon Monday allowed foreign vendors to use transfer of technology to fulfil their offset credits, easing the policy aimed at developing the indigenous industry. The government also increased the time for bank offset credits to seven years, from the present two-year limit within which foreign vendors have to execute their offset obligations after the execution of contract obligations. These were two of the several changes that were made to the guidelines that determine India’s policy on defence offsets. Under its defence procurement procedure, Indiaimposes counter-trade obligations on original equipment manufacturers (OEMs) awarded defence contracts worth more than Rs.300 crore by way of transfer of critical technologies and production of components in India. These changes are significant as they come just days after reports that army chief General V.K. Singh had written to Prime Minister Manmohan Singh regarding obsolescence in the equipment used by the armed forces. (For details log on to : http://www.livemint.com/2012/04/02225300/Government-revisesdefence-off.html?atype=tp)
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