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India's infrastructure sector growth remained robust in January as compared to the previous month as six core sectors
of Infrastructure: Petroleum refinery production registered a growth of 8.7% in January 2011 compared to 8.3%
in the previous month, Cement production rose by 1.8% in January 2011 compared to a decline of 2.2% in December
2010, Electricity generation grew by an impressive 9.3% in January 2011 versus 4.8% in the previous month, Finished
Steel production registered a growth of 8.2% in January 2011 as against 8.5% in the preceding month, Crude oil production
registered a growth of 10.8% in January 2011 compared to 15.8% in December 2010, Coal output contracted
by 1.2% in January 2011 versus 3% in December 2010.
The core sector growth, as measured by the index of six key infrastructure industries, stood at 7.1%
in January 2011 versus 6.1% in December. The Index of six core industries, having a combined weight of 26.7% in IIP
stood at 295.6 in January 2011. During April-January 2010-11, six core sector industries registered a growth of 5.6%
as against 5.5% during the corresponding period of the previous fiscal year.
Important News Snippets
Civil Infrastructure (Airports, Rail, Road, Bridges)
• GVK, through its subsidiary GVK Airport Holdings Pvt. Ltd. (GAHPL), increased its stake in MIAL to 50.5% by purchasing
13.5% stake from Bid Services Division of South African Airports. GVK, has agreed to pay US $ 231 mn, valuing
MIAL at US $ 1.71bn (~Rs77bn). The company funded this acquisition with a 3 year bank loan, structured as a LC
facility, which would be immediately cashed by SAA. At the end of three years, GVK would pay the bank a total of
US$287mn, including the principal amount of US$231mn and accumulated interest/financing charges of US$56mn.
The implied value for MIAL, inclusive of the funding cost, works out at ~Rs95.7bn. Post the acquisition, GVK’s would
acquire majority control of MIAL with a 50.5% stake, Airports Authority of India (AAI) would continue to hold a 26%
while South African Airports’ stake would reduce to 23.5%.
• Reliance Infrastructure commissioned” The Delhi Airport Metro Express Line”, on February 23 2011. It’s a 23 km
line built at a cost of ~Rs57bn, connecting New Delhi Railway Station to the IGI Airport, The Metro will initially run
at a speed of 105km/hr and the base ticket fare will be Rs80.
• NHAI awarded/declared preferred bidders for three road projects.
• Madhucon won the Barasat-Krishnagar - Rs1.48bn Annuity road BOT in West Bengal. The 84km long stretch
on NH-34 is an4-laning project with estimated project cost Rs12bn. The concession period 17 years including
construction period of 30 months.
• Punj Lloyd won the Khagaria-Purnea- Rs1.12bn Annuity road BOT project. The 140km long stretch on NH-31
in Bihar is a 2-laning project. The estimated project cost is Rs7.35bn and has a concession period of 17
years.
• Ashoka Buildcon has emerged as the preferred bidder for Dankuni-Kharagpur 6-laning project in West Bengal.
The 111 km long project on NH-6 is estimated to have a total project cost ~Rs14bn and a concession
period of 25 years.
Power
• The Union finance ministry has approved creation of a Rs500bn National Electricity Fund (NEF) with a provision
of interest subsidy for lending under it, this will cater to distribution reforms in the power sector. The objective of
the fund is to help critically bankrupt SEB’s by improving their finances and reducing distribution losses. The money
raised by NEF will be lent at low interest rates to SEB’s; the interest subsidy to be provided by the Centre would
depend on the size of loans, while the tenure will be fixed at 14 years.
• Lanco Infratech has received the environmental clearance for Lanco Vidarbha Thermal Power Ltd (2 x660 MW Coal
based Super-critical Thermal Power Project) planned in Wardha district of Maharashtra.
• Gammon India & Ansaldo JV won case for qualification for NTPC’s bulk tender of supercritical boilers. The Delhi
High Court ruled in favor of them and now the JV is qualified for the tender along BHEL, L&T and BGR. NTPC is
likely to open the price bids of all the 4 qualified parties in next 1 week’s time. The development is a key positive
for Gammon as the company’s technical qualifications/capabilities in super-critical boilers is reaffirmed. Moreover,
Gammon now has a fair chance of submitting a price bid and winning orders, which we believe can be a significant
driver of the company’s India business. The ruling also clears the way for NTPC to complete the bulk tendering
process, with potential order flows for L&T and/or BHEL.
• Reliance Power may sign up ~2,500MW purchase pact with UP Electricity Board as it has emerged as the L1
(preferred) bidder for supplying 2,456MW power to UP at a tariff of Rs3.7/unit. The PPA period would be 25 years
with the scheduled delivery from 2014, which is 48 months from the date of signing of the PPA (expected to be
signed within a month). Other bidders include Power Trading Corporation which placed bids on behalf of three companies,
Ind-Bharath Power (200MW at Rs 4.81/unit), KVK Nilachal Power (160MW at Rs4.413/unit), and Athena
Power (300MW at Rs3.324/unit),Lanco Infratech placed a bid for supplying 680MW at Rs 4.283/unit, Jaiprakash
Group offered 200MW at Rs3.9/unit,. Reliance Power is likely to supply this power from its upcoming ~3,960MW
Chitrangi power plant.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India's infrastructure sector growth remained robust in January as compared to the previous month as six core sectors
of Infrastructure: Petroleum refinery production registered a growth of 8.7% in January 2011 compared to 8.3%
in the previous month, Cement production rose by 1.8% in January 2011 compared to a decline of 2.2% in December
2010, Electricity generation grew by an impressive 9.3% in January 2011 versus 4.8% in the previous month, Finished
Steel production registered a growth of 8.2% in January 2011 as against 8.5% in the preceding month, Crude oil production
registered a growth of 10.8% in January 2011 compared to 15.8% in December 2010, Coal output contracted
by 1.2% in January 2011 versus 3% in December 2010.
The core sector growth, as measured by the index of six key infrastructure industries, stood at 7.1%
in January 2011 versus 6.1% in December. The Index of six core industries, having a combined weight of 26.7% in IIP
stood at 295.6 in January 2011. During April-January 2010-11, six core sector industries registered a growth of 5.6%
as against 5.5% during the corresponding period of the previous fiscal year.
Important News Snippets
Civil Infrastructure (Airports, Rail, Road, Bridges)
• GVK, through its subsidiary GVK Airport Holdings Pvt. Ltd. (GAHPL), increased its stake in MIAL to 50.5% by purchasing
13.5% stake from Bid Services Division of South African Airports. GVK, has agreed to pay US $ 231 mn, valuing
MIAL at US $ 1.71bn (~Rs77bn). The company funded this acquisition with a 3 year bank loan, structured as a LC
facility, which would be immediately cashed by SAA. At the end of three years, GVK would pay the bank a total of
US$287mn, including the principal amount of US$231mn and accumulated interest/financing charges of US$56mn.
The implied value for MIAL, inclusive of the funding cost, works out at ~Rs95.7bn. Post the acquisition, GVK’s would
acquire majority control of MIAL with a 50.5% stake, Airports Authority of India (AAI) would continue to hold a 26%
while South African Airports’ stake would reduce to 23.5%.
• Reliance Infrastructure commissioned” The Delhi Airport Metro Express Line”, on February 23 2011. It’s a 23 km
line built at a cost of ~Rs57bn, connecting New Delhi Railway Station to the IGI Airport, The Metro will initially run
at a speed of 105km/hr and the base ticket fare will be Rs80.
• NHAI awarded/declared preferred bidders for three road projects.
• Madhucon won the Barasat-Krishnagar - Rs1.48bn Annuity road BOT in West Bengal. The 84km long stretch
on NH-34 is an4-laning project with estimated project cost Rs12bn. The concession period 17 years including
construction period of 30 months.
• Punj Lloyd won the Khagaria-Purnea- Rs1.12bn Annuity road BOT project. The 140km long stretch on NH-31
in Bihar is a 2-laning project. The estimated project cost is Rs7.35bn and has a concession period of 17
years.
• Ashoka Buildcon has emerged as the preferred bidder for Dankuni-Kharagpur 6-laning project in West Bengal.
The 111 km long project on NH-6 is estimated to have a total project cost ~Rs14bn and a concession
period of 25 years.
Power
• The Union finance ministry has approved creation of a Rs500bn National Electricity Fund (NEF) with a provision
of interest subsidy for lending under it, this will cater to distribution reforms in the power sector. The objective of
the fund is to help critically bankrupt SEB’s by improving their finances and reducing distribution losses. The money
raised by NEF will be lent at low interest rates to SEB’s; the interest subsidy to be provided by the Centre would
depend on the size of loans, while the tenure will be fixed at 14 years.
• Lanco Infratech has received the environmental clearance for Lanco Vidarbha Thermal Power Ltd (2 x660 MW Coal
based Super-critical Thermal Power Project) planned in Wardha district of Maharashtra.
• Gammon India & Ansaldo JV won case for qualification for NTPC’s bulk tender of supercritical boilers. The Delhi
High Court ruled in favor of them and now the JV is qualified for the tender along BHEL, L&T and BGR. NTPC is
likely to open the price bids of all the 4 qualified parties in next 1 week’s time. The development is a key positive
for Gammon as the company’s technical qualifications/capabilities in super-critical boilers is reaffirmed. Moreover,
Gammon now has a fair chance of submitting a price bid and winning orders, which we believe can be a significant
driver of the company’s India business. The ruling also clears the way for NTPC to complete the bulk tendering
process, with potential order flows for L&T and/or BHEL.
• Reliance Power may sign up ~2,500MW purchase pact with UP Electricity Board as it has emerged as the L1
(preferred) bidder for supplying 2,456MW power to UP at a tariff of Rs3.7/unit. The PPA period would be 25 years
with the scheduled delivery from 2014, which is 48 months from the date of signing of the PPA (expected to be
signed within a month). Other bidders include Power Trading Corporation which placed bids on behalf of three companies,
Ind-Bharath Power (200MW at Rs 4.81/unit), KVK Nilachal Power (160MW at Rs4.413/unit), and Athena
Power (300MW at Rs3.324/unit),Lanco Infratech placed a bid for supplying 680MW at Rs 4.283/unit, Jaiprakash
Group offered 200MW at Rs3.9/unit,. Reliance Power is likely to supply this power from its upcoming ~3,960MW
Chitrangi power plant.
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