Microsec - NEWS ANALYSIS
RAJESH DESAI
INFRASTRUCTURE
L&T Construction bags orders worth Rs 1,002 cr in August
· L&T Construction has bagged orders valued at over Rs 1,002 crore across business segments in August 2012.
· In the water and effluent treatment business, L&T has secured orders worth Rs 518 crore from the Public Health and Engineering Department (PHED), Rajasthan, for the construction of a 74 MLD water treatment plant along with associated civil and electro mechanical and instrumentation works. The scope also includes construction of intermediate pumping stations along with 33/11 kV switchyards for the Bisalpur Tonk Uniyara Water Supply Project.L&T Construction has also secured additional orders worth Rs 316 crore from ongoing projects.
NTPC to supply addl 335 MW power from Simhadri plant to Andhra Pradesh
· NTPC Ltd has assured the Andhra Pradesh Government of additional 335 MW power from its Simhadri plant located near Visakhapatnam. Following efforts made by Chief Minister N. Kiran Kumar Reddy, NTPC Chairman Arup Roy Chowdary has given assurance for additional power supply, according to a statement from the Chief Minister’s Office.
· Andhra Pradesh used to get 825 MW from Simhadri 1, 2 & 3 thermal power units till now against the original allocation of 1,200 MW. Following telephonic interaction, NTPC has assured a supply of about 1,160 MW.
· NTPC has been facing coal shortage for its super thermal power plant at Ramagundam and at Simhadri power projects in Andhra Pradesh. Power generated from these projects is supplied to southern States.
Ravi Uppal resigns from L&T
· Within two years of being inducted into the board of Larsen & Toubro, Ravi Uppal on Tuesday resigned from the infrastructure major. The company on Tuesday has informed the stock exchanges that Ravi Uppal, the whole-time director and president of power business, resigned as the director. The resignation will be effective from September 15, 2012.
Power bills set to shoot up from Sept |
· Monthly electricity bills of consumers are set to increase from next month with the Maharashtra Electricity Regulatory Commission (MERC) hiking the fuel adjustment cost (FAC) ceiling to 20 per cent from the present 10 per cent. The commission revises the average FAC ceiling to 20 per cent of variable tariff for all distribution licensees in the state. The revised FAC ceiling will come into effect (for the FAC allowable to be charged to consumers) from September onwards.
· The Fuel Adjustment Cost is a variable energy rate that can fluctuate each quarter with fuel and purchased power costs of suppliers. The decision is bound to affect monthly budgets of consumers who are already reeling under high tariffs and will now have to factor in the hike. Suppliers, including Tata Power, RInfra, MSEDCL and BEST, have been claiming that rising fuel cost and earlier ceiling of 10 percent on passing this burden to consumers have further aggravated their losses.
GMR on divestment drive
· In a bid to lighten its debt burden and infuse more liquidity in operations, energy-to-infrastructure major GMR Group is planning to bring down stake in its holding company, GMR Infrastructure, from 72 per cent. The group has also chalked out a new ‘asset light’ and ‘asset right’ strategy for all future infrastructure projects.
· As part of the new plan, the Bangalore-based group is also going to sell up to 49 per cent stake in GMR Highways, one of the three infrastructure holding companies, besides GMR Airports and GMR Energy.The group hopes the divestment of these stakes will garner Rs 3,500-4,000 crore. It is also scouting for strategic investors in GMR Sports, the firm that controls the Indian Premier League team Delhi Daredevils, and is willing to dilute 10-15 per cent stake.
METALS & MINING
JSW Steel shelves plan to raise $275 m via ECB
· JSW Steel has dropped plan to raise $275 million (about Rs 1,375 crore) through external commercial borrowing (ECB) as it has not received regulatory approval. Since the necessary approval from the relevant regulatory authority for the proposed transaction has not been received, the company has decided not to go ahead and the proposed transaction is withdrawn.
· In February, the company entered into an indicative, non-binding term sheet with the arranger for the ECB which was valid for five years from the date of drawdown. The lenders of the ECB facility had the option to convert the outstanding ECB into fully paid equity shares with full voting rights or GDRs with underlying equity shares.
· The fund raised through the ECB was to be used for buying back outstanding foreign currency convertible bonds (FCCB) and for capital expenditure. The company has to explore alternative funding source for its capital expenditure as it has already redeemed its FCCB. As of June 30, 2012, it reported a consolidated net debt of Rs 18,389 crore. In June, the company fully redeemed its FCCB by paying $392 million (about Rs 2,195 crore).
· The zero coupons convertible bonds of face value $100,000 each issued in June 2007 was redeemed at 142.801 per cent of the outstanding principal amount of $274.40 million. As a result of the redemption, there has been no dilution in the company’s equity share capital, which would have otherwise occurred through the issue of equity shares, the company had said. JSW Steel is setting up a 2.3-million-tonne a year cold rolling mill complex to manufacture high-grade automotive steel at its Vijayanagar plant in Bellary with an investment of Rs 4,500 crore.
· It is also in the process of setting up a 10 mt a year integrated steel plant in West Bengal and has already invested close to Rs 500 crore. Shares of the company were down two per cent at Rs 710 on Tuesday.
Tata Steel hikes stake in Tata Sponge to 51%
· Tata Steel has increased stake in its subsidiary Tata Sponge Iron to 51 per cent from 39.74 per cent after the open offer was fully subscribed. The voluntary open offer by Tata Steel to acquire 11.26 per cent stake of Tata Sponge Iron at Rs 375 a share closed on August 9.
· Share price of Tata Steel and Tata Sponge was down two per cent each at Rs 379 and Rs 300, respectively. Earlier, Tata Steel had clarified that the company does not intend to merge the subsidiary with itself.
CAG Study Drives Investors Away from Metal Stocks
· Shares of metal companies fell sharply on Tuesday, reflecting investor worries on the possible fallout of the recent CAG report that raised doubts about coal block allocations to companies. Jindal Steel & Power, which was one of the earliest companies to be allocated blocks, lost the maximum with its shares falling 4.8% to.358.75,a share on BSE. The stock has lost value for three successive trading days, having shed 11% in the past month, a period in which the representative BSE Metal Index was down 12.6%.In comparison, the broader index lost just 2.8%,since July 30.
· Tata Steel, India’s second-largest private steelmaker, fell 1.8%,while state run SAIL, which has coal blocks for captive consumption was down 1.3%.The Aditya Birla Group flagship Hindalco, which is awaiting a crucial Cabinet approval for a coal block, fell sharply by 3% on concerns that the government would delay the allocation. Supplies from the Mahan coal block are vital for the Birla’s Mahan aluminum smelter, failing which the company will have to buy costly coal from the open market.
· The Naveen Jindal-owned JSPL said its overall steel production will increase as the company has started commercial production of a plate mill in Odisha. The plant is part of the planned first phase 6 million tonne integrated project. Shares of resource companies have softened following the lull in demand and a general fall in raw material prices, putting pressure on the final product price and affecting profitability.
· CAG report has raised doubts about coal block allocations to companies Demand for metals has slowed in Europe and the US as the overall slowdown has cut purchases The sentiment has also spread to India and China with the overall demand halving to about 5-6 % Prices of coal at Australia’s Newcastle port have fallen 21% this year as China slowed and after US and South African producers shifted sales to Asia amid European crisis Prices of iron ore could decline by as much as 16% from its lowest price in more than two years.
Sesa Goa to buy Videocon arm
· Vedanta group company Sesa Goa will acquire all the stake in Goa Energy from Videocon Industries and other shareholders for INR53.72 crore. In a regulatory filing on Thursday, the private sector iron ore miner said it had signed a definitive share purchase agreement with the shareholders for the all-cash deal.
Pollution board order to Sesa Goa
· After massive protests by locals, Goa State Pollution Control Board has asked Sesa Goa to stop all activities at its coke oven unit at Navelim in Bicholim taluka, 40 kms away from Panaji. The locals held a day-long bandh on Monday protesting against the increasing pollution, allegedly due to coke oven plant at Navelim.
BANKING
RBI to soon issue Rs 1,000 notes with rupee symbol, more security features
The Reserve Bank of India will soon launch Rs 1,000 denomination banknotes with rupee symbol, and improved security features. “The Reserve Bank of India will shortly issue Rs 1,000 denomination banknotes incorporating rupee symbol, with inset letter ‘L’, in both the numbering panels, in the Mahatma Gandhi Series-2005 with improved security features,” RBI said in a notification. These banknotes will bear the signature of RBI Governor D. Subbarao and the year of printing 2012 will be on the reverse of the bank note. The design of these notes to be issued will be similar in all respects to the Rs 1,000 banknotes in Mahatma Gandhi Series-2005. All the banknotes in the denomination of Rs 1,000 issued by the bank (RBI) in the past will continue to be legal tender.
ICRA lowers PTC India Fin’s non-convertible debenture rating
ICRA has downgraded the rating assigned to the non-convertible debenture programme and the long term bank lines of PTC India Financial Services from ‘A+’ to ‘A’. However, the outlook on PFS’ (PTC India Financial Services) long-term rating is ‘Stable’. The revision in rating (assigned to the Rs 700 crore non-convertible debenture programme and Rs 425 crore long-term bank lines) factors in continued vulnerability of some of the PFS’ funded exposures considering the current policy stance.
“The vulnerability is arising due to concern on gas/coal availability, lack of end-use Power Purchase Agreements (PPAs) in some of the PFS’ funded projects, higher counter-party risk arising due to weak financials of State power utilities,” said ICRA.
SBI launches online credit card application service
Credit card issuer SBI Cards has launched its online application service Click2Card. Targeted at the internet-savvy customers across India, Click2Card allows customers to enter their details on a secure web interface. The customer can select a credit card from the choices offered. The interactive platform intuitively advises applicants on the credit card best suited for their lifestyle. Customer’s application for a credit card is approved, declined or referred on the basis of the credit history with the credit bureau and the SBI Cards risk and policy norms. The customer is updated on the status of his/her request instantly. For all approved or referred applications, the system sends back a “soft” approval (approval in principle) and the assigned credit limit.
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CA. Rajesh Desai