NEWS ANALYSIS
Rajesh Desai
INFRASTRUCTURE
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Tatas, Essar race with foreign firms to build freight corridor |
· After years of planning, the 3,300-km Dedicated Freight Corridor (DFC) is finally on the horizon, with Indian and global construction companies vying for around Rs 12,000 crore worth of civil works for two stretches. Among these are not only theTatas, Essar and IVRCL Infrastructures Projects Ltd, but also Chinese, Russian and Spanish firms.
· Of the 12 companies technically qualified for the Khurja-Kanpur section, 10 gave financial bids, while Lanco Infratech and Hindustan Construction decided to skip the race. The land acquisition process for the two stretches is almost complete.
· The World Bank approved a loan of $975 million in October 2011 for the first phase of the eastern corridor (Khurja-Bhaupur). With the DFCCIL’s compliance with various triggers, the World Bank is also expected to sanction $1,050 million loan for the Kanpur-Ludhiana section.
Crucial decision on Adani Power's Rs 25k-cr Mundra project today |
· On Monday, a high-level inter-ministerial panel will take a call on fuel supply for Adani Power’s Rs 25,000-crore imported coal-based power plant at Mundra in Gujarat. The infrastructure and mining major had asked the government to review an earlier decision to cut off domestic coal supply for the flagship 4,620 megawatt (Mw) project.
· The Standing Linkage Committee (SLC) for the power sector, in its meeting on January 7, may take a view on the request of Adani Power for restoration of a decision for grant of 30 per cent linkage for their Mundra plant. Later this week, the Central Electricity Regulatory Commission (CERC) is likely to hear Adani Power’s petition seeking a rise in rates for supply of power generated at Mundra.
GVK Group walks out of 330-km highway in MP
· A few days after the GMR Group announced its intent to walk out of the 555-km long Kishangarh-Ahmedabad highway, the GVK Group has informed the National Highway Authority of India (NHAI) that it wished to exit the 330-km long Shivpuri-Dewas Highway in Madhya Pradesh. GVK had promised to pay NHAI a little under Rs.3,000 crore (on an NPV basis, using a 10% annual discount) for the highway over a period of 30 years.
METALS & MINING
Coal India hits 93% of output target in April-November
· Coal India has achieved 93 per cent of its output target during April-November 2012. This is a 6.4 per cent growth over the corresponding period of the previous year, it said. The target of coal production for 2012-13 has been set seven per cent higher at 578.10 million tonnes against the actual production of about 540 million tonnes achieved in 2011-12. As against this, the actual production during April-November 2012 has been 330.61 million tonnes which is about 93 per cent of the target for this period.
· At the same time, coal offtake during April-November 2012 has been nearly 360 million tonnes touching 95 per cent of the target, up 7.8 per cent over the corresponding period of the previous year. The target for 2012-13 has been set at 585.60 million tonnes. The coal offtake to power producers during April-November 2012 from Coal India Ltd and Singareni Collieries Co. Ltd has been around 237 million tonnes. This is a 92 per cent achievement of the target for this period, up 12 per cent over the corresponding period of the previous year.
Steel Prices Head North In Line With Global Trends
· For the first time in months, steel prices in India are inching upwards led by higher input costs and hopes of improved demand. While RINL, which runs Vizag steel plant, and JSW Steel have already raised prices by INR500-750 per tonne, Essar Steel, too, has increased prices by 3-4 %. State-owned RINL said it has increased prices of steel products by around INR500 per tonne in January 2013.The move was led by expectations of an improvement in the overall steel market with signs of increased demand and a firming up of domestic and global steel prices.
· One of the largest private steel companies, JSW Steel also said it will raise prices by 2%,with effect from Thursday, due to rising input costs. Sources said seasonal pickup in demand during the Jan-March quarter is likely to support the price increase. On likely price hike, CS Verma, chairman of SAIL, the country’s largest steel player, said: For steel companies raw material prices have been going up in the past two months. Global iron prices have touched $145 per tonne. With input prices firming up, steel prices are also expected to go up. The company may withdraw some of the discounts that were earlier being offered to customers.
BANKING
UCO Bank seeks Rs 800-cr capital from Centre
Kolkata-based UCO Bank has sought Rs 800-crore capital from the Union Government to fund its growth needs and boost its capital adequacy ratio. The bank has already garnered Rs 1,000-crore worth capital by way of Tier-II bonds so far during this fiscal. Bank have asked for Rs 800 crore and hope to get it soon. The bank aims to achieve 20 per cent growth in business this year.
BoB organises retail credit camp
Bank of Baroda organised a ‘centralised retail credit camp’ to promote retail finance in West Bengal. The camp aimed to step up the growth of retail finance, with a special focus on home , car and tractor loans. The camp was inaugurated by M. L. Jain, General Manager, Eastern Zone of Bank of Baroda. The bank distributed sanction letters to 207 borrowers amounting to Rs 41.30 crore.
Regards,
Team Microsec Research
Microsec Capital Limited
Tel: 91 33 30512100
Fax: 91 33 30512020
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CA. Rajesh Desai
Rajesh Desai
METALS & MINING
Coal India to fund construction of rail network to link coalfields |
· In a first, Coal India Ltd ( CIL), the world’s largest coal miner, is set to fund construction of a large rail network connecting the country’s coalfields. For this, CIL would float a special- purpose vehicle ( SPV) that would lay a 180- km line for evacuating coal currently blocked in Chhattisgarh. To cover its investment, in yet another first for the miner, it is planning to levy a user charge, marking its entry into haulage business. · While CIL would hold 64 per cent stake in the SPV, the rest would be shared between Ircon, a company under the rail ministry, and the Chhattisgarh government. The move is part of a bigger plan being implemented under the PMO’s watch to set up three rail lines, running 300- km across three naxal- affected but coal rich states of Chhattisgarh, Odisha and Jharkhand. The PMO has asked the coal, environment and rail ministries to complete the project in three years to free up 300 tm coal supply. |
JSW Ispat Steel’s promoter companies sell 6.38 per cent stake |
· Ten promoter group companies of JSW Ispat Steel have sold their 6.38 per cent stake in the company for INR174.47 crore. According to the filings made by the 10 companies to the BSE, over 16 crore shares amounting to 6.38 per cent of JSW Ispat Steel were sold through both off and on market transactions for INR174.47 crore.
· The promoter group companies, which have reduced their stakes, are Ispat Steel Holdings Ltd, Kartik Credit Pvt Ltd, Navoday Consultants Ltd, Navoday Highrise Pvt Ltd, Navoday Niketan Pvt Ltd, Ushaditya Trading Pvt Ltd, Goldline Tracom Pvt Lt, Mita Holdings Pvt Ltd, Navadisha Real Estate Pvt Ltd and Denro Holdings Pvt Ltd. All these firms belong to Pramod and Vinod Mittal or their families, which held less than 20 per cent stake in JSW Ispat before these transactions. The share sale took place ahead of a meeting of company shareholders, which is scheduled for January 30, to approve JSW Ispats merger with JSW Steel.
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Singapore Exchange to offer iron ore futures from February 25 |
· The Singapore Exchange (SGX) will launch futures contracts next month, including iron ore, as it aims to keep and attract more US clients faced with tougher over- the counter trading rules. The move by SGX, which clears the bulk of globally traded iron ore swaps, shows how exchanges outside the United States are acting to ensure Washingtons regulatory net over the worlds $ 640- trillion OTC market does not dent their US client base.
· Reuters first reported SGXs plan in December. SGX said the futures contracts, which will also include freight and oil and will be offered from February 25, will be fully fungible, with bilateral swaps now cleared by the exchange. SGX clears more than 90 per cent of globally traded iron ore swaps. |
Copper edges higher on investment flows
· Copper edged higher on Wednesday in a second day of modest gains, boosted by solid results from the biggest US aluminium producer Alcoa and as investors earmarked New Year cash allocations for the sector. Optimism about further recovery in the world’s biggest metals consumer China ahead of trade data also helped three month copper on the London Metal Exchange add 0.6 per cent to $ 8,130 per tonne by 1312 GMT. Copper did not trade in official rings, but was bid at $8,090.
· The most- traded April copper contract on the Shanghai Futures Exchange closed barely changed at 58,340 yuan ($ 9,400) a tonne. LME copper, which gained 4.3 per cent last year, jumped to the highest levels in more than two months last week after a deal on the US budget deficit, establishing a base above the $ 8,000 a tonne level after touching lows near $ 7,500 in November. |
BANKING
IRDA revises norms for life insurance products
The Insurance Regulatory and Development Authority (IRDA) has revised the norms for traditional life insurance products at its board meeting. The insurance products would now have mandatory minimum death benefit and minimum surrender value. The life insurance products have also been aligned with the pension products in some aspects of benefits.
Draft guidelines
In June last year, the insurance regulator had circulated draft guidelines on the proposed changes in life insurance products. It was proposed that the minimum sum assured should be higher by 10 times the annual premium or 0.5 times of the annual premium multiplied by the term of the policy for those who are below 45 years. For below 45 years, according to the draft, the minimum sum assured is higher by 10 times the annual premium or 0.5 times the annual premium multiplied by the term of the policy or 105 per cent the premium paid as on the date of the policyholder’s death.
S&P assigns ‘BBB-’ rating to ICICI Bank’s overseas bond issue
Standard & Poor’s Ratings Services assigned ‘BBB-’ long-term issue rating to a proposed issue of Singapore dollar-denominated senior unsecured notes by ICICI Bank Ltd. The rating on the notes reflects the long-term issuer credit rating on the bank. The proposed notes will constitute direct, unconditional, unsecured, and unsubordinated obligations of the bank. They will rank at par with all other unsecured obligations of the bank. The bank will list the notes on the Singapore Exchange.
Regards,
Team Microsec Research
Microsec Capital Limited
Tel: 91 33 30512100
Fax: 91 33 30512020
CA. Rajesh Desai
Rajesh Desai
INFRASTRUCTURE
Rajasthan may face blackout from Sunday as NTPC threatens to snap supply for defaulting on Rs 367 crore pay
· NTPC has threatened to snap supply to penalize the state for defaulting on payment of INR367 crore dues and non-compliance of collateral arrangements. A senior NTPC official said three distribution companies — Ajmer Vidyut Vitran Nigam, Jaipur Vidyut Vitran Nigam and Jodhpur Vidyut Vitran Nigam — owe about INR95 crore to the power generating company in addition to a recent bill raised for INR272 crore. The Rajasthan companies also did not renew INR187.95 crore security with NTPC after December 31, 2012. In a regulatory notice to the three distribution companies NTPC has said it would either curb the supply of 1258-MW or regulate it from the midnight of January 13, 2013.
BANKING
Cabinet okays Rs 12,517-cr capital infusion in PSU banks
In keeping with Government’s commitment to provide capital support for state-owned banks, the Cabinet approved infusion of Rs 12,517 crore into about ten banks during the current fiscal. An in-principle approval of the Cabinet has also been accorded for need-based additional capital infusion in public sector banks (PSBs) from 2013-14 to 2018-19 so as to help them conform to the Basel-III capital rules. Simply put, PSBs need not worry about capital support from the Government for adhering to the Basel-III capital norms.
Support till 2018-19
This could also imply that all the capital support provided by the Government in the Budgets for the 2013-14 to 2018-19 can be infused in various PSBs without obtaining further Cabinet nod. The exact amount — out of the Rs 12,517 crore — and mode of recapitalisation would be decided in consultation with the banks at the time of infusion.
In 2011-12 and 2010-11, the Centre had infused Rs 12,000 crore and Rs 20,117 crore, respectively, in various banks. For 2012-13, the Government had in last year’s Budget provided about Rs 15,000 crore for recapitalisation of various PSBs.
Regards,
Team Microsec Research
Microsec Capital Limited
Tel: 91 33 30512100
Fax: 91 33 30512020
CA. Rajesh Desai
Rajesh Desai
INFRASTRUCTURE
BHEL renovates, commissions Tajikistan plant
· Strengthening its overseas footprint, state-run Bhel on Tuesday said a renovated hydro project with enhanced generation capacity has been commissioned in Tajikistan. The power equipment major is also implementing hydro projects in Rwanda, Afghanistan, Vietnam, DR Congo and Bhutan.
· Bhel has completed the renovation, modernisation & uprating (RMU) of the 2x4.75 MW Varjob hydro power plant of Barki Tojik in Tajikistan. The project is funded by the Indian government. Both the units have achieved uprated full load and are running successfully following the RMU job.
NHPC to raise Rs 1,500 crore through bonds by February
· State run-hydro power generator National Hydroelectric Power Corporation (NHPC) will raise Rs 1,500 crore through domestic bonds to fund its ongoing projects, as decline in yields may make it cheaper to borrow from the bond market now, company official said. NHPC will raise the money by the first week of February. The bonds will be in tenures of fifteen years, though the company is yet to finalise the pricing of the bonds.
· NHPC had earlier expressed intentions to diversify, keeping hydro power as its core business and planning to invest Rs 29,000 crore in the next five years. The company has been keen to diversify after receiving government's approval to set up thermal power projects, to reduce its exposure and risk related to hydropower projects.
Adani to buy Dhamra Port for Rs 5.5k cr from Tata, L&T |
· The Ahmedabad-based Adani Group has finalised the terms and conditions to buy out construction major Larsen & Toubro (L&T) and Tata Steel’s stakes in Dhamra Port Company Limited (DPCL) in Odisha for an enterprise valuation of close to $1 billion (about Rs 5,500 crore). The deal was agreed in a recent meeting between Adani Group Chairman Gautam Adani, L&T Chairman A M Naik and Tata Group’s new Chairman Cyrus Mistry.
· This will be the second attempt by the Adani group to buy a port in eastern India after its bid for the Chennai port terminal was rejected on security grounds. L&T and Tata Steel own 50 per cent stake each in the Dhamra project. With this acquisition, Adani will get a toehold in the eastern coast.
· The transactions, as and when they materialise, could unlock L&T’s value and improve its consolidated earnings. In FY12, DPCL had pulled down L&T’s consolidated earnings per share by five per cent.
Regards,
Team Microsec Research
Microsec Capital Limited
Tel: 91 33 30512100
Fax: 91 33 30512020
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CA. Rajesh Desai