Draft guidelines issued by the Central Electricity Regulatory Commission (CERC) on December 6, 2013, resulted in the fall in exchange rates of power generations companies. But utilities are confident that the regulations can be negotiated.Power companies are up in arms against the Central Electricity Regulatory Commission (CERC)’s draft regulations which will decide power tariffs for five years from 1 April 2014. Analysts placed the impact of these guidelines anything between 3-7 per cent decline in profits for companies like NTPC and NHPC. This led to panic in the stock market and shares of power generation and distribution firms declined following the announcement - NTPC (down 10.33 per cent), Adani Power (down 2.96 per cent), Power Grid Corporation of India (down 2.27 per cent), GVK Power & Infrastructure (down 2.77 per cent), Tata Power Company (down 2.08 per cent), Torrent Power (down 2.2 per cent),The draft seeks to tighten operating norms for generators, including parameters governing heat and oil consumption and links incentives to the plant load factor (PLF). Generators will be incentivised for higher generation reflected in PLF. There is also a disincentive to be levied if plants are available for less than 85 per cent of the time. The stricter guidelines imply “profitability squeeze”, explains Kameswar Rao, Leader Energy Utilities and Mining, PwC India.But the largest power producer says there is no need to panic as “These are just draft guidelines and there are many positive aspects as well that are not being counted.” The negatives we will be further discussed with the regulatory authority explained NTPC Chairman Arup Roy Choudhary, who is confident that in return the company will receive some relief.According to NTPC, the fact that Return on Equity (ROE) of 15.5 per cent remains unchanged, additional ROE of 0.5 per cent on early completion of project remains unchanged, special allowance for operating station after useful life has been enhanced to 7.5 lakh /mw/year from 5 lakh /mw/year in 2009-10, water charges to be excluded from O&M expenses and will be pass through separately, annual escalation on O&M expenses to 6.35 per cent from 5.72 per cent. Compensation allowance (Rs lakh /mw/year) has been enhanced, during R and M of units O&M expenses and interest on loan will be pass-through, rate of late payment surcharge increased from 1.25 per cent to 1.5 per cent per month, debt equity ratio remains the same, pay revision recognised as pass through.These guidelines are only applicable to power generators not granted under competitive bidding process and who supply electricity to more than one state therefore will have little impact on the private power developers immediately explains Kameswar Rao. But he cautions against the long term impact of these norms as they could mean a reduction in surplus and equity therefore impacting growth. According to him, “Large companies like NTPC use surplus to set up new plants and with stricter norms there will be less surplus and little equity to expand... it is not like the government will put in money to set up new plants.”mmatbworld@gmail.com
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The setback for ruling Congress Party in recent state elections could imperil the country's fiscal deficit target by tempting the government to have less restraint on spending, Fitch Ratings warned on Tuesday.The party, which rules India through a minority coalition, lost three of four key state polls held since last month, according to results unveiled on Sunday, in a major setback ahead of general elections due by May.Although Finance Minister P. Chidambaram has repeatedly pledged the country will meet its fiscal deficit target of 4.8 percent of gross domestic product for the year ending in March, investors now fear the government could crank up spending in a bid to boost its electoral standing.Fitch said on Tuesday the likelihood of that happening was increasing, but said the government has little room to manoeuvre on spending, given that India's fiscal deficit has already reached 84 percent of its target in the first seven months of the year."An evident anti-incumbency trend against the Congress could mean an increasing likelihood of political pressure to limit expenditure cut-backs," Fitch said in its note."This would help support economic recovery in the run-up to the national elections which must be held by May 2014. But it may raise some doubt about the government's ability to meet its stated near-term fiscal goals."Fitch noted that unless revenue unexpectedly surged, India would ultimately need to cut spending if it wanted to meet its fiscal deficit target.Investors are increasingly betting the Hindu nationalist Bharatiya Janata Party and its prime minister candidate Narendra Modi could win general elections next year after its strong showing in state elections.Although Indian shares hit a record high on Monday after the state results because of widespread perceptions of the BJP as a more business-friendly party, bonds have struggled, partly due to fear of less spending restraint by the government.The new benchmark 10-year bond yield is up 2 basis points at 8.87 percent this week.Still, analysts said markets were willing to give the government the benefit of the doubt for now."The growth in the planned expenditure gives a lot of scope to cut back. So we have to give benefit of doubt to the finance minister," said A. Prasanna, an economist at ICICI Securities Primary Dealership Ltd.Fitch returned India's outlook to "stable" in June, a year after it had downgraded it to "negative", citing the government's efforts to contain the fiscal deficit and revive economic growth.(Reuters)
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Indian factory output probably shrank in October, hurt mainly by key infrastructure industries cutting production for the first time in eight months, a Reuters poll found on 10 December.However, other data on Thursday is expected to show retail inflation remained elevated, giving little room for the Reserve Bank of India to support dwindling output.India's new central bank chief, who has raised policy interest rates twice since taking office in September to tackle price pressures, said last month no single data point will determine its next move on curtailing high inflation.Industrial production probably contracted 1.2 per cent annually in October, after rising 2.0 per cent in September, according to the median of 26 economists."The notable deceleration in the October core industries index, taken as an indication of the broader investment momentum, sets the stage for a weak IP (industrial production) outcome," said Radhika Rao, an economist at DBS in Singapore.Production in the core industries - also known as infrastructure output and includes coal, electricity, cement, crude oil and steel factories - contracted in October year-on-year for the first time since February.Output in those industries, which account for more than a third of overall factory production, fell 0.6 per cent annually that month versus 8.0 per cent growth in September, according to data last week.Weak factory production will also be in line with the findings of an HSBC purchasing managers' index (PMI) which showed manufacturing activity contracted for the third straight month in October on dwindling demand.However, the latest PMI reading showed factory activity returned to growth in November, suggesting a slow recovery in manufacturing may be under way."Overall the outlook (for industrial output) is for a modest recovery. I think we have seen the worst of it," said Vishnu Varathan, an economist at Mizuho Bank in Singapore.Although the PMI survey pointed to some good news on inflation, the Reuters poll showed retail inflation is forecast to have remained at uncomfortable levels for policymakers in November due to stubbornly high food prices.Annual consumer inflation is expected to just nudge lower to 10.00 per cent in November, from 10.09 per cent in October, according to the poll of 21 economists.Food prices rose 12.56 per cent in October and analysts say prices of vegetables still remain high due to supply-chain problems - despite a good monsoon harvest.An expansion in farm output and some infrastructure helped India's economy recover slightly in the July-September quarter, but growth still hovered close to decade lows, tempering hopes of a sustained rebound ahead of national elections due early next year.(Reuters)
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The rupee is trading at 61.23/24 versus its close of 61.13/14 on 9 December, tracking losses in the domestic sharemarket and on the back of dollar demand from oil importers.The BSE Sensex is down 0.2 per cent on profit-taking after hitting record highs in the previous session.Traders expect the pair to remain in a 60.90 to 61.40 range during the session with stocks moves the key to direction as traders will watch the likely direction of foreign fund flows.Almost all Asian currencies trading stronger to the dollar.(Reuters)
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Get It Done SoonerGetting things done becomes so much easier when the planning is enjoyable. And the iPhone app Sooner makes it so. This rather expensive app(Rs 350) uses gestures in a most unusual interface. It’s like a clock face. You drag a plus sign to the edge of the clock to add a task or list of tasks under a category. So you can make lists within broader lists. But its main idea is to lay out tasks and goals to span the clock, which is when you can actually get them done, one by one, in priority. Sooner has much-needed tips that come up contextually as you try to do something. Calendars, reminders, notes, etc., all pop up when needed and can be accessed with a swipe or tap. It’s very much a personal use app but you can edit the categories given and include professional work out tasks and goals to span the clock. A Network Of Wallpaper UsersFor the easily bored, here's a free app that changes your wallpaper every time you unlock your Android phone. If that's too much of a good thing, you can tune it down and change every once in a while. The wallpapers in Bitmado come from users. When you submit a photo to the wallpaper collection, Bitmado checks out the resolution and rejects the picture if it doesn't make the cut. So no one gets to see low-quality images. The context is up to the users and fortunately is mostly very nice. Users vote up or down an image and the selections show up on screen. It's addictive especially when you put in your own images. The app is like a social network of wallpaper users and could be more interesting. It would also be nice if the app didn't register users with their Google or Facebook logins. Change The LookLaunchers, or applications that can change the interface of your Android phone, have tended to be complicated to use. Sometimes, in fact, they only work with a ‘rooted’ phone. But they’re getting easier and mainstream. Find on the Google Play Store, an app called Themer. It’s still in beta, so you have to ask for an invite. Once you do, open it and allow it to be your main launcher temporarily. With the new themes from Themer, you can set widgets and apps afresh, in a new look, changing the look of your phone completely. Be prepared to find things that you’ve put in familiar places to have disappeared. They’re all in the app drawer and the widgets section, of course, and you can get back to them by selecting your smartphone’s own interface again. Themer is free. (This story was published in BW | Businessworld Issue Dated 30-12-2013)
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Newsweek’s new owners think they can succeed at something its previous owners failed at: printing a weekly magazine in the US. IBT Media, the obscure media firm that bought Newsweek in August, said it intends to revive the magazine’s print edition early next year, possibly as soon as January. The announcement is a remarkable twist in Newsweek’s evolution, coming less than a year after its previous owner, IAC, stopped printing the magazine. The brand was basically left for dead — but now the cover of IAC’s final edition, with the phrase ‘#LastPrintIssue’, rendered as a Twitter hashtag, seems decidedly premature. IBT’s decision is at odds with a general industry move away from print and towards the Web.A MeltdownArcelorMittal’s acquisition of a US plant jointly with Nippon Steel and Sumitomo Metal Corp will not affect the world’s No. 1 steelmaker’s debt targets, ArcelorMittal’s CEO Lakshmi Mittal said. ArcelorMittal unveiled the $1.55 billion takeover of ThyssenKrupp’s US steel finishing plant earlier in December, saying it would finance the deal via equity and debt at the joint venture level. Mittal said the deal would have a minimal impact on this year’s debt and no effect on medium-term debt target. The company estimates net debt of $17 billion by the end of 2013, falling to $15 billion in the medium term. Meanwhile, ThyssenKrupp announced plans to sell 51.5 million new shares as it seeks to shore up funds depleted by a downturn in the global steel market and an ill-advised foray into the Americas. The firm’s ventures comprised a steel slab mill in Brazil and a US finishing plant, but the plan fell apart when Brazil’s currency rose, hiking labour and production costs, and demand for cars slowed.Motown BluesIn a landmark ruling, Detroit was officially declared bankrupt, clearing the way for potentially sweeping cuts to city worker pensions and retirement benefits and for steep and possibly precedent-setting losses to the cash-strapped city’s bond holders. The federal judge based his decision on the city’s dismal finances and the $18 billion owed to a multitude of creditors. Detroit’s emergency manager Kevyn Orr said the city will seek to file a plan of readjustment — the city’s roadmap to financial solvency — by January. From being the cradle of US’s auto industry, Detroit is now known as the largest bankrupt city in US’s history.Sticking To His GunsUS President Barack Obama’s health initiative seems fraught with problems, but he’s not giving up. He urged Americans not to be discouraged by the rocky rollout of healthcare.gov and vowed to fix whatever glitches remained as he sought to restore confidence in his leadership. Obama, who has been struggling to contain the political damage from the troubled rollout of the new health law, said repairs to the website have now made it work well for the vast majority of users and that “we’re are going to keep on working to fix whatever problems come up”. He said Republican lawmakers were “rooting for this law to fail” and had offered no alternative to the law other than its repeal, which he rejected as a possibility.Looking UpA pick-up in inflation in November eases pressure on the European Central Bank (ECB), and the first fall in unemployment in almost three years shows that a tentative euro zone recovery is gaining traction. This data lent credence to the ECB view that the 17-country bloc is undergoing a gradual economic recovery more than five years after a financial crisis erupted. Consumer price inflation — the rate of increase in the cost of shopping and paying household bills — rose in the euro zone by 0.9 per cent in November, slightly more than economists had predicted. This, as unemployment fell in October to 12.1 per cent from September’s 12.2 per cent, the first fall since February 2011.Worst Over? Spain says it has technically escaped a two-year recession by posting feeble growth in the third quarter. But its unemployment rate still hovers at 26 per cent. The gross domestic product edged up by 0.1 per cent in the third quarter of 2013, the National Statistics Institute said. The upward tick snapped an unbroken two-year downturn in activity in Spain, the euro zone’s fourth largest economy. The government is forecasting a 1.3 per cent economic contraction in 2013 and 0.7 per cent growth in 2014.Running AheadGerman sporting goods maker Adidas is counting on soccer and running gear, among others, to help it achieve profit and sales growth in 2014 and achieve its 2015 goals, the company said. Adidas, the world’s second largest sportswear brand behind Nike, is aiming to increase sales to €17 billion in 2015 and raise its operating profit margin to 11 per cent by then, compared with €11 billion and 7.5 per cent in 2010.Pumping In MoneyJapanese Prime Minister Shinzo Abe’s cabinet approved a $182 billion (18.6 trillion yen) economic package to pull the economy out of deflation, but doubts remain about the economic impact. The core of the package is the 5.5 trillion yen in spending measures Abe ordered in October to bolster the economy. This package has raised concerns that Japan’s government hasn’t broken away from the stop-gap measures and piecemeal policymaking that some say has hampered long-term growth.Hair SmartSony is taking wearable technology to a whole new level. The electronics company has filed a US patent for a ‘SmartWig’, which will use sensors to detect everything from blood pressure to brain waves. The wearable wig could also be used in a number of practical ways, such as helping blind people navigate without any extra assistance, said Sony.Gaining FavourThe Chinese yuan overtook the euro in October, becoming the second-most used currency in trade finance after the US dollar, according to global transaction services organisation SWIFT. The market share of yuan usage in trade finance grew to 8.66 per cent in October from 1.89 per cent in January 2012. The US dollar has a share of 81.08 per cent. The top five countries using the yuan for trade finance were China, Hong Kong, Singapore, Germany and Australia.(This story was published in BW | Businessworld Issue Dated 30-12-2013)
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It (Nano) came to be termed the cheapest car by the public and, I am sorry to say, by ourselves. I think that is unfortunate”— Ratan Tata, former chairman, Tata Sons“Unfortunately, there are a number of cases where investigating agencies and other authorities like Comptroller and Auditor General have overstepped their limits”— P. Chidambaram, finance minister, at a CBI conference“Whatever the finance minister says should be considered as gospel (truth)”— Vinod Rai, former CAG, responding to the finance minister’s charge“Reports of our death are greatly exaggerated”— John Chen, interim chief executive, BlackBerry, in an open letterRatan Tata, former chairman, Tata Sons (Pic by Tribhuwan Sharma)“India is not a country for the weak-hearted”— Ramesh Tainwala, executive director & president, Asia-Pacific, Samsonite International , on doing business in India“I’m too grown up to be nervous about an election”— Sheila Dikshit, chief minister of Delhi, on the Delhi assembly elections“He had no long-term good intentions for the company or its shareholders or people inside the company”— Michael Dell, chairman and CEO, Dell, on billionaire investor Carl Icahn who had opposed the $24.9-billion deal to take Dell private(This story was published in BW | Businessworld Issue Dated 30-12-2013)
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Indian companies that built most of the parts for the country's recently launched Mars mission are using their low-cost, high-tech expertise in frugal space engineering to compete for global aerospace, defence and nuclear contracts worth billions.Mangalyaan spacecraft was launched last month and then catapulted from Earth orbit on 1 December, clearing an important hurdle on its 420 million mile journey to Mars and putting it on course to be the first Asian mission to reach the red planet.The venture has a price tag of just Rs 4.5 billion, roughly one-tenth the cost of Maven, NASA's latest Mars mission. Two-thirds of the parts for the Indian probe and rocket were made by domestic firms like Larsen & Toubro, the country's largest engineering firm, Godrej & Boyce, and state plane-maker Hindustan Aeronautics.While such companies have a long way to go before they can attract big business in the commercial space sector, years of work on home-grown space projects are helping them carve out a niche as suppliers of precision parts for related sectors like defence, aeronautics and nuclear energy.Those firms with proven space know-how will find themselves with the advantage as India, the world's biggest arms importer, shells out $100 billion over a decade to modernise its military with the country favouring local sources.India in June strengthened a defence policy stipulating that local firms must be considered first for contracts and foreign companies winning contracts worth more than Rs 3 billion must "offset" at least 30 per cent of the deal's value in India."We think over the next two to three years we will be able to convert this into a profit centre," said S. M. Vaidya, the business head of Godrej's aerospace division, which made the rocket's engine and fuel-powered thrusters for the Indian Mars probe.Thanks to the space work, the company's engineers now know how to handle the specific metal alloys and the high-precision welding needed for aircraft and missiles as well as rockets, Vaidya added.Godrej has worked with India's space agency for almost three decades and in recent years started making engine parts for aircraft makers Boeing Co, the Airbus unit of EADS and Israel's state-owned Rafael Advanced Defence Systems Ltd. It is in talks with Boeing to make parts for aircraft frames.Home-Grown, Go It AloneIndia launched its domestic space program 50 years ago and had to develop its own rocket technology after Western powers levied sanctions in response to a 1974 nuclear weapons test, resulting in a "go it alone" development mentality.The Indian Space Research Organisation, or ISRO, has worked to keep import costs low by designing most of the parts for its programme that are then outsourced to the domestic private sector.ISRO must still import some metal alloys used in the space programme that it then gives to its contractors and Indian companies also must buy some of the machinery needed to make the parts from Europe and Japan.India's heavy reliance on domestic companies for its space programme allows it to tap homegrown technicians and engineers who earn half as much as those in the West. Starting salaries for aerospace engineers in India are at most $2,000 per month, according to Indian recruitment consultancy TeamLease. The same role in the United States brings in about $5,300 on average, according to the National Association of Colleges and Employers."The commercial value of the business with ISRO is not high, it is the spin-offs that are valuable," said M. V. Kotwal, president of the heavy engineering division at Larsen & Toubro, which has made $5.7 million in parts for ISRO in recent years.L&T has also supplied $240 million worth of parts so far to ITER, an inter-governmental science experiment that is building a thermonuclear reactor in southern France.Godrej earlier this year won a deal to build a frame for the world's largest optical telescope in collaboration with University of California, the California Institute of Technology, and the Association of Canadian Universities for Research in Astronomy.Walchand Nagar Industries, a Pune-headquartered company that made Rs 100 million worth of parts for India's Mars rocket, said the project helped it win contracts worth double that amount for a state-run nuclear plant in Gujarat. (Reuters)
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The rupee and bonds rallied on 9 December after the country's main opposition party, BJP, which is widely seen by investors as being more business friendly, performed well in state elections.The centre-left party's main opponent, the Hindu nationalist Bharatiya Janata Party (BJP), was the clear winner in three big states that went to the polls according to results on 8 December, with the count close in a fourth.The partially convertible rupee was trading at 61.04/05 per dollar at 0913 IST (0343 GMT), after hitting as high as 60.84 to the dollar at the open, its strongest level since 12 August. It had closed 6 December at 61.41/42.The benchmark 10-year bond yields fell 4 basis points to 8.81 per cent. (Reuters)
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Vasundhara Raje, who failed five years ago on account of infighting in BJP, reinvented herself and galvanised the cadre to spearhead her party's spectacular comeback to power in Rajasthan. 60-year-old Raje, who belongs to the royal Scindia family of Gwalior and married in Rajasthan, had even once threatened to quit the party. But then she managed to get the BJP high command fully behind her in her bid to oust the Congress government headed by Ashok Gehlot. The icing on the cake for her was the full-throated backing from Narendra Modi who extensively toured Rajasthan during the election campaign. Her rise from a National Executive member of BJP to one of its most powerful leaders in Rajasthan can be attributed to her charismatic personality and strong will, which have helped her tide over political crises from within and outside in her 30-year-long political career. While she is adored by her supporters for her plainspoken and outgoing manners, her detractors believe her inaccessibility and like-it-or-lump-it attitude was the reason behind BJP's debacle in 2008 assembly polls and the subsequent Lok Sabha elections. Member of a Maratha royal family who married into a Jat family, she enjoys a connect with masses cutting across castes and communities that lends her the X-factor in a heterogeneous state like Rajasthan where acceptability of most politicians wilts outside a particular region or group. Daughter of founding BJP leader Vijayraje Scindia and sister of deceased Congress leader Madhavrao Scindia, she has been elected to the state assembly thrice and five times to Lok Sabha. After being appointed as BJP's National Executive member in 1984, she became vice-president of Yuva Morcha in Rajasthan a year later and was elected to state assembly the same year. Since then Raje's rise has been steady which culminated in her becoming the state's first woman chief minister in 2003 when the "angrezi-speaking maharani", a phrase used by her critics to refer to her elitist and royal background, led BJP to its most famous victory in the predominantly rural state. The saffron party had bagged a majority for the first time -- it won in 120 out of 200 seats -- a feat which had eluded even its stalwart and former CM Bhairon Singh Sekhawat. If she was seen as an efficient administrator with a grip on bureaucracy, she was also accused of having authoritarian tendencies which antagonised powerful satraps and numerically significant groups like Gujjars and Meenas, resulting in BJP losing a tight electoral race in 2008 to Congress. Raje became the leader of Opposition but had to quit in February, 2010, on the party's directions after BJP suffered a drubbing in Lok Sabha polls, winning only four of 25 seats. It was the time when RSS was asserting itself in the party's affairs and Raje was never a favourite of the Hindutva organisation. Unlike her mother, who passionately advocated political Hinduism, Raje kept RSS and its affiliates at an arm's length from government's affairs. Marginalised by her party, she kept a low profile for some time before she rallied her supporters to bounce back last year. First, she cut RSS-favourite Gulab Chand Kataria, a seasoned party leader and chief ministerial aspirant, to size by forcing the party to cancel his planed 28-day yatra across the state last year. The yatra, he believed, would have propelled him as the BJP's face in the state at a time the Ashok Gehlot government was seemingly in a drift. A majority of party's MLAs sided with her, knowing well that she and not Kataria had the charisma of bringing the party back to power. A reluctant BJP national leadership had little choice but to bow to her wishes and let her helm the party's affairs. Raje was appointed state party president and launched Suraj Sankalp Yatra in April, which drew a good response from people, lifting the morale of party workers. She was later named party's chief ministerial candidate. She also vociferously supported Narendra Modi's prime ministerial candidature within the party and as the Gujarat Chief Minister's graph rose so did hers, neutralising any potential obstacle she might have had to face. A graduate with economics and political science degrees from Mumbai University, Raje'e energetic campaign has been one of the hallmarks of the electioneering. At a personal level, she is more of the quintessential modern woman leader who is as much at ease in the traditional tribal dress hearing out the concerns of village population as she enjoyed walking the ramp or interacting with celebrities in royal parties. And her supporters love their 'maharani' for this.(PTI) =======
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