NEWS ANALYSIS

[Rajesh Desai]

 

INFRASTRUCTURE

 

GMR Infrastructure-controlled Homeland Energy Group of Canada has suspended mining operations of its South African subsidiary

·         GMR Infrastructure-controlled Homeland Energy Group of Canada has suspended mining operations of its South African subsidiary, finding them unviable, two sources with direct knowledge of the development told ET.  Homeland Energy, in which GMR holds 55.84%, has terminated its African mining contractor and begun a tendering process that has attracted many players for the contract, they said. GMR has already spent over $80 million so far in Homeland. A few months ago, it agreed to lend $6 million to Homeland Mining Energy, the South African subsidiary, which is suffering from lower production levels and losses.

India faced peak power deficit of over 8,200 MW in Jan: CEA

 

·         India grappled with peak power shortage of over 8,200 MW in January mainly due to scarcity of fuel, says a report by Central Electricity Authority. As per the latest CEA Report, the country witnessed a peak power deficit—shortfall in generation capacity when electricity consumption is maximum—of 9.8% or 8,291 MW in January this year. The total power requirement of the country in January stood at 84,616 MW of which 76,325 MW was met.

Power PSUs NTPC, Power Grid Corporation to invest Rs 50,000 crore in 2013-14

·         Equipment manufacturers and contractors will count on state firms for large orders next fiscal as power sector giants plan to invest Rs 50,000 crore in various projects, although the private sector has been stymied by fuel scarcity and distribution problems. According to government sources, major chunk of these investments will come from internal and extra budgetary resources of public sector undertakings (PSUs) while the government will pump in close to Rs 10,000 crore through gross budgetary support. India's largest power producer NTPC and inter-state transmission major Power Grid Corporation will cumulatively bring in over Rs 40,000 crore investments in 2013-14.

 

METALS & MINING

Lloyds Steel to be renamed

·         Loss- making Lloyds Steel, in which Uttam Galva group acquired 58.35 per cent stake in December, has decided to rename itself Uttam Value Steels and sought shareholders approval.

BANKING

 

PSU banks' staff to go on two-day strike from Feb 20

Normal banking operations may be hit as employees unions of public sector banks have decided to join the two-days strike call given by central trade unions beginning February 20 to press for wage hike in the backdrop of rising inflation. The nation-wide strike call has been given by United Forum of Bank Unions (UFBU) consisting of nine national level unions including AIBEA, NCBE, BEFI, INBEF, NOBW and AIBOC in support of their demand. However, banks would be feeding additional cash in ATMs to take care of cash needs of their customers.

Loan recast to peak next fiscal at Rs 3.12 lakh crore: CARE

Ratings agency Care has estimated that loan restructuring will peak next fiscal to reach Rs 3.12 lakh crore if the latest Reserve Bank guidelines are accepted without any changes.

“If the draft RBI guidelines on restructured accounts are implemented as it is, it will prompt banks to carry out most of the restructuring in pipeline during the fourth quarter of this fiscal and through next fiscal in an attempt to upgrade fresh restructured accounts by the end of FY15 and to avoid incremental provisioning of 1.25 per cent,” Care said in a note.

The report says there will be new loan restructuring worth Rs 57,782 crore taking total recast loan book to Rs 3,12,022 crore next fiscal (2013-14).

Under the draft RBI guidelines on provisioning for standard restructured accounts, banks will be asked to set aside 3.75 per cent for each of the restructured accounts in FY14, which will increase to 5 per cent by FY15. Provisioning requirement stands at 2.75 per cent at present, which was 2 per cent till last October.

The draft norms also make it easier for banks to reclassify accounts as well as the restructured assets as standard accounts. The draft norms on provisioning are expected to push up total provisioning by Rs 5,000-7,000 crore till FY15.

Public sector banks are expected to be hurt the most because of the new rules as they carry the maximum bad books and CDR accounts, while private sector ones, with lower sizes of restructured assets, are expected to have a “muted impact”, the report said.

 

Regards,

 

Team Microsec Research

 

 

 

Microsec Capital Limited

Tel: 91 33 30512100

Fax: 91 33 30512020

 

--
CA. Rajesh Desai