NEWS ANALYSIS

[RAJESH DESAI]

 

INFRASTRUCTURE

 

Power producers oppose terms of fuel supply agreements with CIL

·         Two days after Coal India Ltd (CIL), the world’s largest coal producer, entered into fuel supply agreements (FSAs) with 27 power companies, some power producers, including Maharashtra State Power Generation Co Ltd (Mahagenco), on Wednesday raised objections against some terms of the pacts.

·         Mahagenco, one of the largest power producers in the country, has sent a communication to CIL, demanding some provisions in the FSA, mainly the penalty clause, be revisited. The company further said the draft FSA, in its present format, took care of only CIL’s interests.

·         The government had issued a presidential directive to CIL in April to sign FSAs with the power producers, assuring them of at least 80% of the committed coal delivery.

UP buying power worth Rs 7 cr daily

·         The Uttar Pradesh Government on Wednsday said that it was buying power worth up to Rs 7 crore a day to meet the State’s requirements. There have been power cuts in the Taj Mahal premises in Agra also to shed the load over the national grid. The Government was serious about maintaining regular power supply to the heritage structure and directives had been issued to install inverters.

RInfra opens disaster control room

·         Reliance Infrastructure (RInfra), the largest power distributor in Mumbai suburbs, has opened a ‘central disaster control room’ (CDCR) in Aarey Colony. The CDCR is equipped to handle emergencies during the rains and ensure seamless communication and coordination with various utilities and government authorities. RInfra has also established a hotline between its disaster control room and the control room of the Municipal Corporation of Greater Mumbai.

Banks to pare exposure to SEBs; REC & PFC asked to share load

·         Public sector banks will limit their exposure to loss-making state electricity boards (SEBs) by sharply cutting the amount of short-term loans extended to these entities for meeting their daily expenses and repayment of interest.

·         As per a debt restructuring package finalised by the Prime Minister’s Office (PMO) for SEBs and distribution utilities, banks would be required to meet only 50% of the short-term loans required by these entities while the balance would have to be funded by state-owned Rural Electrification Corporation (REC) and Power Finance Corporation (PFC).

·         Banks are reluctant to extend fresh loans to discoms (distribution companies) fearing that it would add to their non-performing assets (NPAs). The finance ministry was also not keen on allowing additional exposure of banks in this risky sector. It has, therefore, been decided to divide the responsibility between banks and NBFCs.

CAPITAL GOODS

L&T-Tata-HCL in ~10k-crdefence deal race

·         In a long-anticipated move towards unleashing the abilities of India’s private sector in equipping the military, the ministry of defence (MoD) has chosen a private sector consortium to compete with Bharat Electronics Ltd (BEL), the public sector giant, to develop a backbone communications network for the 21st century battlefield. The project is worth an estimated ~10,000 crore. ·         Called the Tactical Communications System (TCS), this network will be created simultaneously by two Indian ‘development agencies’, or DAs. Besides BEL, the MoD’s traditional go-to shop for electronics and communications, South Block has selected a private sector consortium of Larsen & Toubro, Tata Power (Special Electronics Division) and HCL. The MoD today informed the two DAs in writing about their selection. ·         The two DAs will now take about six months to prepare a Detailed Project Report (DPR). This will define every system, sub-system, and capability of the TCS network. After studying the DPR, the MoD will estimate the cost of developing a TCS prototype. Industry sources say a working TCS prototype for an army division (15,000 troops) could cost about ~300 crore. MoD will fund 80 per cent of this cost; the vendors will pay 20 per cent. ·         The distribution of stakes in the SPC are: L&T, 56.67 per cent; Tata Power (SED), 33.33 per cent; and HCL 10 per cent.

CONSUMER DURABLES

Havells expands Crabtree range of switches

 

·         Crabtree, a well-known global brand for premium range of switches, plans to expand its product portfolio here to address a wide range of consumer needs and strengthen its market presence. Crabtree is a UK-based brand and its India rights are owned by Havells India Ltd. The company today launched a new range of switchgear – Crabtree Xpro – including miniature circuit breakers, distribution boards, residual current circuit breakers and a range of time switches.

 

·         Manufactured at the company’s facility at Baddi in Himachal Pradesh, these switches come with a 10-year warranty. Currently, the Crabtree range of modular switches contributes around Rs 200 crore to the company’s overall turnover. “With the addition of the Xpro range of switchgears and many to come, we expect its contribution to go up to Rs 500 crore in the next three years.

 

·         Apart from Crabtree, Havells owns various electrical goods brands such as Sylvania, Concord, Luminance and Standard. For the year ended March 31, 2012, the company posted a net profit of Rs 370 crore on a turnover of Rs 6,500 crore.

 

Sony India gets new MD

 

·         Sony India has announced Mr Kenichiro Hibi as its new Managing Director with effect from July 1, 2012. Mr Hibi has replaced Mr Masaru Tamagawa, who will move on to the position of President, Sony Europe. With 23 years of experience in Sony alone, Mr Hibi was the Managing Director, CIS for six years before becoming the India head.

 

FDI in multi-brand retail to benefit farmers: Basu

·         Chief Economic Adviser Kaushik Basu has favored opening up of multi-brand retail sector and said the move would help in improving farmers condition and boost India’s exports. This is (allowing FDI in multi-brand retail) actually more than just a small change. It can improve the condition for our farmers, increase India’s exports. Opening retail sector to international multinational corporations, would be an important policy reform.

 

 

 

Regards,

 

Team Microsec Research

 

 

 

Microsec Capital Limited

Tel: 91 33 30512100

Fax: 91 33 30512020

--
CA. Rajesh Desai

[RAJESH DESAI]

 

INFRASTRUCTURE

 

EPC highway projects to see aggressive bidding

·         Highway projects to be undertaken on engineering procurement contract (EPC) mode are likely to see aggressive bidding from companies such as Larsen & Toubro, Reliance Infrastructure, IL&FS Transportation, GMR Infrastructure, IRB Infrastructure and Soma Enterprises.

·         In EPC projects, the Government pays the contractor for constructing the highway and the toll revenues accrue to the Government. About 3,500 km — close to 30 per cent of projects to be implemented this fiscal — will be bid on the EPC mode.

·         Highway projects are bid via three modes — build operate transfer (BOT-toll), BOT-annuity and EPC. In the BOT mode, the developer has to operate the highway for longer durations. Among the three modes, the lowest risk for the private developer is in the EPC mode.

Power tariff set to soar in Delhi

·         Delhiites may soon see a major hike in their electricity bills. The three private distribution companies - Tata Delhi Power, BSES Rajdhani and BSES Yamuna – have sought a tariff hike of 18 per cent, 20 per cent and 27 per cent, respectively.

·         The tariff increase allowed last year was not enough to cover the gap of Rs 6,000 crore spent by the three distribution utilities. They could cover only Rs 1,200 crore in the first year and the remaining Rs 4,800 crore was to be collected over next three years. The private discoms have now demanded a hike excluding last year’s losses.

NTPC ends row with Coal India over fuel supply agreement; accepts changes proposed by PMO

·         The country's largest power producer NTPC has accepted the changes proposed by the Prime Minister's Office in the new fuel supply agreement, ending the standoff with Coal India.Company has no issues as long as CIL supplies coal. Company has been given to understand that the company cannot supply more than 65% in the first year.

·         The state-run power generator had earlier declined to sign the fuel supply agreement for plants commissioned after December 2009, saying the pact was lacking in commitment. According to estimates, the state-run miner will have to supply over 50 million tonne of coal through the new FSA. About half of this quantity will go to the new generation capacity added by NTPC, the largest consumer of coal in the country. 

GMR moves appellate tribunal for higher aeronautical charges

·         GMR Infrastructure has appealed to the Appellate Tribunal to further increase the aeronautical charges at the Delhi International Airport Limited (DIAL) that it manages. The Bangalore-based publicly-held infrastructure developer’s move comes hardly a month after the airport tariff regulator, Airports Economic Regulatory Authority (AERA), allowed a 16 per cent return on equity, while GMR had sought a 24 per cent return.

·         GMR has invested close to Rs 13,000 crore, and has developed a total of 5.5 million square feet at DIAL. The revised rates will be charged in the form of an enhanced landing and parking fee for aircraft and a user development fee for passengers. According to the new order, GMR is collecting Rs 426 per passenger, against Rs 101 earlier, on domestic routes and Rs 1,120 per passenger, against Rs 280, on international routes. Almost all airlines have understood to have filed in their appeals to AERA to resist the hike.

BHEL to recruit 11,000 people in 12th Plan

·         In the 11th Plan period, the public sector power equipment major, BHEL, recruited 7,266 people more than the number of employees who retired. However, in the 12th Plan period, manpower addition, net of retirement, is likely to be close to zero.

 

CONSUMER DURABLES

 

Panasonic plans selling ‘mass products’ to rural India

 

·         Consumer durables maker Panasonic India was likely to focus aggressively on Tier III markets in the country by next fiscal (2013-14). Panasonic India is a subsidiary of Panasonic Corporation of Japan. The company would focus on “mass segment products” and look at new channel partners to get into smaller towns. It currently, has 8,500 dealers and 134 standalone stores. Plans are afoot to take the exclusive store count to 200 by the end of this year.

 

 

Panasonic India aims ~25k-cr turnover 

 

·         Panasonic India would invest ~1,500 crore to touch the ~25,000-crore turnover mark by 2015. The volume strategy for India, which started in 2009, will continue further and we will invest $300 million (~1,500 crore) in the new plant and campaigns over the next three years.

 

Regards,

 

Team Microsec Research

 

 

 

Microsec Capital Limited

Tel: 91 33 30512100

Fax: 91 33 30512020

 

--
CA. Rajesh Desai