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INFRASTRUCTURE
Cabinet panel may take a call soon on divesting 5% in Neyveli Lignite
· The Cabinet Committee on Economic Affairs is likely to take a call soon on offloading 5 per cent stake in Neyveli Lignite (NLC).This will be the third attempt to offload Government’s stake in the company in the last six years.
· Such a move will meet twin objective, that is, disinvestment and meeting the minimum public shareholding norms. The Securities and Exchange Board of India (SEBI) has asked all the Public Sector Undertakings to have minimum public shareholding of 10 per cent by August next year. The Government currently owns 93.5 per cent in NLC.
L&T bags Rs 1,302-cr order from Oman
· Larsen & Toubro has bagged an order worth Rs 1,302 crore from Petroleum Development Oman, the company announced today. The job involves engineering, procurement, construction work for the Saih Rawl Depletion Compression project—which is basically to keep up the production of natural gas from the field at the desired level.
· The agency noted that L&T had an order book of Rs 153,100 crore as at the end of last quarter.Last week, the company announced that it had bagged several orders in the second quarter of the current year (that is, from July), cumulatively worth Rs 2,044 crore. The Oman order, therefore, would add another Rs 1,300-odd-crore to the order book.
L&T sells plastics machinery division to Toshiba
· Larsen & Toubro has signed a share sale and purchase agreement with Toshiba Machine Company Ltd, Japan, to sell its entire stake in L&T Plastics Machinery Ltd (L&TPM).The move is pending final closing conditions. L&T did not disclose the value of the deal. The divesture is in line with L&T’s strategic road-map to exit non-core businesses and rationalise its portfolio.
· The deal forms part of its strategy to expand globally with a focus on developing countries. L&TPM is a wholly owned subsidiary of L&T and manufactures and markets injection moulding machines.
BEL aims at Rs 6,300 cr turnover this year
· Bharat Electronics Ltd is targeting a turnover of Rs 6,300 crore for the current financial year “based on a healthy order book’’, Chairman and Managing Director Anil Kumar has said in the company’s Annual Report for 2011-12 released last week.
· BEL, a public sector undertaking under the control of the Ministry of Defence, has order book worth Rs 27,000 crore, more than half of it for the supply of components and integration services for the Akash Missile Systems project.
· BEL sees a good future for itself thanks to higher Defence budget and the favourable ‘offset policy’ (which mandates a foreign supplier of defence equipment to source a fixed percentage (30 per cent) from companies in India).
Private companies’ interest in road sector “subdued”, says government
· The response of the private sector to Build-Operate-Transfer projects in the roads sector in the current financial year “has been comparatively subdued”, according to Mr Jitin Prasada, Minister of State for Road Transport and Highways.
· This contrasts with the “overwhelming” response of the private companies till the year 2011-12. Last year, a record length of 7,957 km of roads was awarded for strengthening, upgradation or improvement, the Minister said in a written reply to a question in the Lok Sabha.
· The primary reason is lack of availability of finance, many banks having reached the sectoral ceiling prescribed by the Reserve Bank of India. Infrastructure developers are finding it difficult to raise equity. Delays are also due to delay in land acquisition process and in obtaining environment and forest clearances.
ICRA cuts R-Power's commercial paper rating
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· Rating agency ICRA has cut the rating for Reliance Power Ltd’s commercial paper (of Rs 1,000 crore) from A1+ to A1 on increased business risk profile of the company. The rating revision takes into account the rise in risks associated with the power projects being executed through majority-owned special purpose vehicles (SPVs) and large corporate guarantee exposure to Samalkot Power Ltd (SPL).
· The corporate guarantee for debt raised for the Samalkot project in Andhra Pradesh has been provided till such time that the gas allocation and long-term power purchase agreement (PPA) are finalised to the satisfaction of lenders.
· Icra said it drew comfort from the fact the Samalkot project would have priority in gas allocation by virtue of its status as an 11th Plan project. The debt raised for funding the Samalkot project has a moratorium of two years after commercial operations date, giving the company some cushion in finalising the gas supply agreements.
METALS & MINING
Coal scam: PM slams CAG report; BJP firm on quit demand
· The government kept up its offensive against the Comptroller & Auditor General (CAG) as the prime minister stepped into the arena to launch a scathing attack on the audit report on coal blocks and said some adverse comments of the national auditor were difficult to accept in a democracy. Singh told Parliament he took full responsibility for the decisions of the coal ministry, which he directly controlled during a part of the audit period, but rubbished allegations of impropriety as baseless. He said some observations of CAG were clearly disputable, while some were based on a selective reading of a 2006 law ministry opinion.
· The prime minister, who has been criticized by the Opposition for maintaining silence, recited an Urdu verse to reporters to say his silence was better than thousands of answers as it protected the honor of countless questions. BJP was unmoved by Singh’s remarks, and scaled up its attack on the government. It said the ruling party had bagged fat sum, by allocating blocks, which CAG estimates had coal worth.1.86 lakh crore.
· BJP demanded the prime minister’s resignation and cancellation of coal block allocations, and said it remained determined to stall parliamentary proceedings.BJP leader LK Advani criticized the PM for attacking a constitutional authority such as CAG but Finance Minister P Chidambaram rejected this, saying at a press conference that fair criticism of the rulings of constitutional bodies such as the Supreme Court were legitimate.
India set to become second largest steel producer
· India is poised to become the world’s second largest steel producer. However, this is subject to companies finding the right technology to produce special categories of steel. Currently, with 74 million tonnes annual production in 2011, India is the fourth largest producer. Per capita steel consumption went up to 59 kg in 2011-12, from 34 kg in 2004-05.
· With the modernization programmes of various public and private companies, the country will soon rise to second place, Prime Minister Manmohan Singh said in his address to the steel industry, after giving away trophies for the best integrated steel plant here on Monday. However, he noted that despite impressive data, per capita steel production was much lower than the global average of 215 kg. Also, the country was one of the importers of special category of steel. The Prime Minister’s trophy was awarded to SAIL’s Bhilai Steel Plant for 2009-10. Tata Steel got the trophy for 2008-09.
Mahanadi Coalfields hits hurdle in building loop line
· It is a land acquisition hurdle, but with a difference. Mahanadi Coalfields Ltd’s (MCL) plan to build the Talcher-Angul loop line, of a little over 30 km, to speed up evacuation from the resource-rich Talcher mines, has hit a roadblock in a 3-km stretch, at Natara village. While the miner needs just 41 acres of largely mono-crop land held by a section of villagers, Natara is offering the Coal India (CIL) subsidiary the entire 500 acres of non-coal bearing agricultural and homestead land in its possession. Its condition: MCL should offer jobs to all the village households against acquisition.
· Though the regulations permit CIL to offer jobs only against acquisition of coal-bearing land, the miner was ready to make a compromise, for the sake of the project. It did offer jobs, but only against the required 41 acres, to which villagers did not agree. They want jobs for every household. Awarded to RITES in 2006, at an estimated cost of Rs 29 crore, the loop line should extend the present 14.2 km single-line link to the coalfield. Since the existing line ends at the 60 million tonne (mt) capacity coalfield, rake movement is slow, leading to stocks building up at the pit-heads.
Orissa Mineral plans to hike capital to Rs 25 cr
· Orissa Minerals Development Co Ltd (OMDC) board has proposed the increase of authorized capital from existing Rs 60 lakh to Rs 25 crore, subject to approval from the shareholders. This is a precursor to the broad plan for capital restructuring, including issuance of bonus shares.
· The Kolkata-headquartered company’s board is scheduled to meet on September 3. On Monday, the shares of OMDC closed 4.63 per cent higher at Rs 56,377 on the BSE. The company also planned share split and merger of another Odhisha-based group mining company Bisra Stone Lime Co (BSLC) with it.
More coal blocks to be de-allocated: Jaiswal
· More coal blocks could be de-allocated based on the periodic review by an Inter-Ministerial Group (IMG). So far 25 blocks had been de-allocated. The IMG was reviewing the performance the 58 allocated coal blocks, he said, adding that action against companies as well as officers (both from companies and the Government) who had given wrong information would be taken.
· These coal blocks, under review, were allocated since 1993, but failed to achieve the milestones. The performance of allocated captive coal blocks is being reviewed periodically. Earlier, the Government issued show-cause notice for de-allocation of 58 blocks. This matter was brought before the IMG. The companies associated with these blocks were asked to give a detailed presentation before the IMG.
· Based on the review, the IMG will take a decision in the next three-four months. Besides, de-allocating 25 blocks, the IMG had also approved seizing bank guarantees in 16 blocks, he said, adding “the process for seizing bank guarantees are yet to be completed due to procedural issues.
· Jaiswal reiterated that during his tenure, no fresh allocations had been made. Though allocation letters for a couple of blocks were issued in 2011, these were for blocks already allocated in 2008. Since general elections were announced, the letters could not be issued at that time, which was done in due course.
AUTOMOBILES
Tata Motors sets aside land for combat vehicles in Karnataka
Tata Motors has set aside 16 acres exclusively for its Futuristic Infantry Combat Vehicles (FICV) project at Dharwad, Karnataka. The combat vehicles, leveraged from the strength in design and development of a wide range of commercial vehicles, has enabled the company to cover the entire defence mobility spectrum. The new unit is to have a capacity of 200 vehicles a year.
The company is to invest around Rs 600 crore for the development of the combat vehicles and to set up the manufacturing plant.
“Though a lot of work has already gone into developmental activities for the FICV at Pune, Tata Motors are hopeful to commence project development at our Dharwad facility soon.
Tata Motors have dedicated funds for the FICV project. Revenue from the defence business was about Rs 1,000 crore in 2011-12, up 50 per cent over the last year. Tata Motors is looking at 25-35 per cent growth in the current fiscal.
The knowledge and experience gained through the developmental projects has inspired Tata Motors to become a full-fledged Defence OEM in Land Systems with ‘System and System Integration’ (SOSI) capability. “This was one of the reasons for Tata Motors to bid for the FICV project.
Tata Motors are one among four companies to have received expression of interest (EOI) to supply around 2,000 units of indigenous infantry combat vehicles. With defence requirements on the rise in several States, especially in Chhattisgarh, Jharkhand, Bihar, MP and Maharashtra, the need for armored vehicles by the CRPF and other Central paramilitary forces has also precipitated. Demand from J&K and North Eastern States has also increased.
Tata Motors is striving to serve the need through the supply of Light Armored Troop Carriers, Light Bullet Proof Vehicles and Mine Protected Vehicles.
Tata Motors current market share in the wheeled military segment is approximately 40 per cent, and in the internal security is 75 per cent.
The company is also in the exploratory stage of entering the West Asian market for its defence vehicles.
BANKING
Special SBT offer on retail loans, deposits
State Bank of Travancore (SBT) has announced “Aishwaryotsav,” a festival offer of reduction of 0.50 per cent in interest rates for housing and car loans up to September 30. The margin for the loan also has been reduced by five per cent. Processing fee for the loans will be waived during this campaign period. The bank offers car loans up to a maximum of Rs 30 lakh and home loans up to Rs 3 crore. SBT has also announced a festival special term deposit scheme for Onam and the 67th year of existence of the bank. The offer is open for NRE as well as domestic customers at 9.50 per cent for a period of 670 days. The offer will be valid till September 15, 2012.
Chakrabarty frowns at SBI chief’s views on CRR phase-out
The Reserve Bank of India Deputy Governor, K. C. Chakrabarty, came down heavily on State Bank of India Chairman Pratip Chaudhuri’s views seeking the phase out of the cash reserve ratio (CRR), saying either comply or do business elsewhere. Chakrabarty said banks must work within the framework prescribed by the regulator. “If the SBI Chairman is not able to do the business in this regulatory environment, he has to find out some other place,”
Pratip Chaudhuri recently said that CRR does not help anybody. “When CRR is not applicable to insurance companies, non-banking finance companies and mutual funds that also mobilise funds from the public, it is an unfair imposition on banks,” he said to make a point that the CRR adds to the cost of doing business for banks.
Regards,
Team Microsec Research
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