India's state-owned oil company ONGC is interested in exploring for oil and gas in the Arctic offshore with Russian partners, leaders of the two countries said after holding talks in Moscow on Monday, 21 October. The two sides will study the possibility of pumping Russian hydrocarbons by pipeline to India, while agreeing on the significance of supplying Russian liquefied natural gas (LNG) to India. A joint statement, issued after President Vladimir Putin hosted Prime Minister Manmohan Singh in the Kremlin, contained no energy breakthroughs. India has long sought to expand its upstream foothold in Russia, with little success. ONGC's overseas arm is a partner in the Sakhalin-1 oil and gas project, which is operated by a unit of Exxon Mobil State oil major Rosneft, another Sakhalin-1 partner, is lobbying for the right to export LNG to Asia-Pacific buyers. Rosneft and Exxon have announced plans to build a $15 billion LNG plant to process Sakhalin-1 gas, to be launched in 2018 with an initial capacity of 5 million tonnes per year. Russia estimates its offshore oil resources at 100 billion tonnes, which would be enough to satisfy global demand for 25 years at current levels of consumption. Rosneft already has agreements with ExxonMobil, Eni and Statoil to explore for Arctic deposits. These projects are unlikely to produce any oil or gas before the 2020s.(Reuters)
Read More
The rupee fell for a second session on Monday, 21 October, on dollar demand from private oil firms with the currency finding some support from continued strong inflows into local stocks. A large private oil company was a major dollar buyer in early session, dealers said, pulling the rupee further away from an over two-month high hit on Friday. Still, the partially convertible currency found some support from continued strong foreign fund inflows into local stocks which has propelled the shares to a near three-year high. "The market looks broadly stuck in a range. However, 60.90 seems like a good support for the pair. The dollar may see some more gains from here," said Hemal Doshi, currency strategist at Geojit Financial. Technically, the rupee is finding support from its 14-day moving average. The rupee closed at 61.52/53 per dollar compared with 61.27/28 on Friday. Foreigners bought shares worth 17.24 billion rupees on Friday, marking their biggest single-day buying since September 19 and bringing their total purchase over 11 sessions to 92.82 billion rupees. The rupee has recovered 12 percent from its life low of 68.85 to the dollar hit on August 28, largely helped by a return of risk appetite to global assets and the central bank's move to attract inflows from overseas Indians. While the market drew comfort on Friday from the fact that the central bank's oil window remains open, the Reserve Bank of India said it will taper it in a calibrated manner as and when it happens. The RBI has already reduced its marginal standing facility rate by 125 basis points to 9 percent as it unwinds the extraordinary measures taken since mid-July to stabilise the rupee. Dealers are now focused on the September U.S. jobs report, due Tuesday, which was delayed due to the shutdown. If the data beats expectations, then speculation over whether the Fed can taper this year or not is likely to return, injecting some volatility in the currency market. In the offshore non-deliverable forwards, the one-month contract was at 62 while the three-month was at 63. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 61.63 with a total traded volume of $1.65 billion. (Reuters)
Read More
The alleged chit fund scam in West Bengal involving the Saradha Group revolves around a total sum of Rs 2.46 billion with 80 per cent of the depositors' monies still remaining unpaid, a latest investigation report has revealed.The report also states that the arrested Saradha chairman Sudipta Sen was in "total control" of all deposits made by his group companies, which are under the scanner for having perpetrated the alleged fraud.Four companies of the Saradha Group, the report said, used to mobilise money through three schemes ? 'fixed deposit', 'recurring deposit' and 'monthly income deposit' which lured innocent depositors with promises of either "landed property or a foreign tour" as incentive returns.A joint investigation report of West Bengal police and Enforcement Directorate (ED), in possession of PTI, stated that, "the summary report (of the group) for the years 2008-12 revealed that the four companies of Saradha Group had mobilised an amount of Rs 2.46 billion through issuance of their policies."The investors were paid an amount of Rs 476.57 million."As of April 16, 2013, the principal amount to be paid to the investors stood at Rs 1.98 billion," the report added.The statistics, prepared by the probe agencies after analysing the companies' business sheets and recording the statements of investors, show that 80 per cent of the depositors' money was still held up.Sleuths found that the four Saradha Group companies, namely, Saradha Realty India Ltd, Saradha Tours and Travels Pvt Ltd, Saradha Housing Pvt Ltd and Saradha Garden Resort and Hotels Pvt Ltd were in the business of mobilising money from gullible investors."Investors were also given the option of encashing their investment after the specified period along with very high returns," the report said.A total of 560 complaints have so far been filed with West Bengal police by duped investors, the report stated.Describing the working of the scam, which broke early this year, the classified report stated that the "investigation so far carried out revealed that Sen had floated various companies, through numerous branch offices in West Bengal as also in Odisha, Assam, Jharkhand and other states to mobilise deposits from the public".(PTI)
Read More
Shares in Hindalco Industries gain as much as 3 per cent after Prime Minister Manmohan Singh's office says he is satisfied with the outcome of the process of allocating coal blocks to certain companies, dealers say.The comments were the first attributed to Singh since a case was filed this week against three companies in a scandal, dubbed "Coalgate." The scandal surfaced after an auditor's report last year questioning the government's practice of awarding coal mining concessions to companies without competitive bidding.Hindalco said last week it was being investigated in a coal block allocation case and it followed every process required in the coal block allocation.Read more about 'Coalgate' here(Reuters)
Read More
Prime Minister Manmohan Singh is satisfied with the outcome of the process of allocating coal blocks to certain companies, his office said on Saturday, 19 October, as the Central Bureau of Investigations (CBI) proceed with an investigation into the system.The comments were the first attributed to Singh since a case was filed this week against three companies in a scandal, dubbed "Coalgate," which surfaced after an auditor's report last year questioning the government's practice of awarding coal mining concessions to companies without competitive bidding.Critics allege the process has potentially cost the treasury billions of dollars in lost revenues. Opposition parties have called for Singh's resignation because he was in charge of the coal ministry when the allocations took place.The controversy gathered further momentum this week after the CBI filed a case against industrialist Kumar Mangalam Birla and two other companies, saying they flouted rules in coal block allocations."The Prime Minister is satisfied that the final decision taken in this regard was entirely appropriate and is based on the merits of the case placed before him," Singh's office said."No impediment is being placed on the CBI to continue the investigation and seek fresh information which may have a bearing on the case."India's federal auditor alleged that the government's under-priced sale of coal blocks may have cost the exchequer potential revenues of $33 billion, although industry watchers and the government have cast doubt on this figure.The prime minister is alleged to have reversed decisions on allocations in response to recommendations from ministries.Accusations of crony capitalism in allocating India's resources from coal to mobile telephone bandwidth have dogged Singh's government, which is now nearing the end of its second term in office.A general election must be held by May next year.(Reuters)
Read More
Income Tax department has seized Rs 25 crore that was recovered by CBI here during searches at the office of Hindalco Industries, even as the probe agency claimed to have recovered more cash from the company in connection with its investigation in the coal scam."The cash has been seized under Income Tax laws and further proceedings to check the source of the money are on," an official said. Later, a spokesperson of the Aditya Birla group said they were cooperating with the probe agencies."The company is taken aback by the discovery of cash at one of its offices by the investigating agency. It has taken a very serious view of the matter and has instituted an internal team of senior managers to make a thorough investigation and report its findings at the earliest. "In the meantime, the company has reiterated to the Government agencies of their continued cooperation," a statement from the group said.Meanwhile, CBI claimed to have made a fresh recovery from the group which included retail invoice of gold coins totalling to Rs 94 lakh, investments in various schemes to the tune of Rs 17 lakh besides Rs 24 lakh 'petty cash'.The agency was likely to hand over these fresh documents to the Income Tax department, sources said.I-T department will now ask the company to produce documents and validate the source of the recovered cash of Rs 25 crore, sources said. The CBI, during its searches conducted, at the fourth floor office of the UCO Bank building of the firm at Parliament Street in New Delhi, had found unaccounted Rs 25 crore in cash and incriminating documents. The agency had then sounded the I-T department. Soon after registering FIR against former Coal Secretary P.C. Parakh, Aditya Birla Group Chairman Kumar Mangalam Birla and Hindalco Industries for alleged irregularities in allocation of Talabira II and III coal block eight years ago, searches were conducted by CBI at six locations. The searches were carried out in Delhi, Mumbai, Hyderabad and Bhubaneshwar.CBI has registered the 14th FIR in the coal scam in the alleged "undue favours" shown to Birla by the then Coal Secretary. Sources said the probe is monitored by Supreme Court and CBI will inform the apex court of all developments that have taken place in its status report to be filed on 25 October.They said they have strong evidence to buttress their claims in connection with the case and the allegations would be probed further during their probe in the case.CBI sources said they have slapped charges of criminal misconduct on the part of the government official and that stands even if there is no quid pro quo.The sources claimed that alleged favours shown to Birla in awarding Talabira II and III resulted in notional loss to the exchequer which are enough to book Parakh and Birla for criminal conspiracy.Parakh and Hindalco have both refuted the allegations and claimed no wrong doing was involved in the decision.(PTI)
Read More
Consensus may be hard to find in Washington these days, but many corporate executives and economists seem to agree on one point: the biggest risk to the world's largest economy may be its own elected representatives.Down-to-the-wire budget and debt crises, indiscriminate spending cuts and a 16-day government shutdown may not be enough to push the U.S. economy back into recession.But Washington's policy blunders in recent years have significantly slowed economic growth and kept roughly 2 million people out of work, according to recent estimates.Steep spending cuts are a big reason. But the governance-by-crisis also may be prompting businesses to sit on their cash rather than building new factories, buying more equipment and hiring more workers, some economists say."Increasingly I'm of the view that the reason why our economy can't kick into a higher gear is because of the uncertainty created by Washington," said Mark Zandi, chief economist of Moody's Analytics.Congress on Wednesday voted to re-open the government and extend its borrowing authority through February of next year. But the deal did nothing to resolve the underlying disputes that led to the crisis in the first place - leading many to fear that the standoff may play out again in a few months. The plan sets up a forum to try to forge a more permanent budget deal, but few expect it to succeed."We have crisis after crisis after crisis and it has a corrosive impact on the economy," said Greg Valliere, an analyst with Potomac Research Group. "If you're a business, how do you make plans in this environment?"Leading chief executives agree."Most CEOs I speak to in the United States say they're seeing a slowdown in business because of this," said Laurence Fink, the CEO of giant asset manager BlackRock Inc, in an interview on Wednesday. "I was on a conference call with many of them, and I heard across the board, a slowdown from the American consumer because of this narrative, so it's having an impact on our economy already - and it's going to have an impact on job creation at a time when we need more job creation.Not all economists agree that the political circus in Washington is hurting the economy in a measurable sense. While worries over the debt ceiling have pushed up the government's borrowing costs over the past week, those increases are minimal, and the S&P 500 stock index remains near its all-time high.Slow RecoveryBut the pace of recovery since the 2008-2009 recession has been unusually slow.While America's total economic output is now higher than it was before the recession, the level of private investment remains lower than it was in 2007. Employers also continue to hire workers at a slower pace than before the recession.Since the financial crisis eased, Washington has sent out one jolt after another. Democrats passed sweeping reforms of the healthcare system and the financial sector in 2010 which, whatever their merits, imposed wrenching changes on two pillars of the United States' post-industrial economy.Public unease with the healthcare law helped Republicans win control of the House of Representatives in 2010, ushering in an era of divided government that has led to repeated standoffs over taxes and spending. A near-shutdown in April 2011 led to the debt-ceiling impasse in July and August of that year, which took the country to the edge of default and prompted the country's first-ever debt downgrade.Like this most recent crisis, Congress averted disaster at the last possible moment. But the brinkmanship pushed consumer confidence to rock-bottom levels, where it remained for months. The S&P 500 tumbled 17 percent and took more than six months to recover its gains.That debt-ceiling deal called for steep cuts to national defense, highway construction, scientific research and other forms of discretionary spending that Congress must approve annually.Another budget deal, reached in January of this year after another round of brinkmanship, included tax increases to help narrow budget deficits further.Neither of those deals addressed the health and retirement spending that poses the greatest threat to the country's long-term fiscal health. A failure to cut back these programs or find savings elsewhere prompted a round of deliberately disruptive across-the-board spending cuts - the so-called "sequester" - to take effect in March.Along with an improving economy, those steps helped U.S. budget deficits fall from 8.7 percent of GDP in the 2011 fiscal year to an anticipated 3.9 percent of GDP for the fiscal year that ended on September 30.But this has all come at a steep cost.Jobs Not CreatedIn a report released on Monday, Macroeconomic Advisers estimated that 1.2 million more Americans would be working today if Congress had kept discretionary spending at the levels that were in place in 2010.The forecasting firm estimated that Washington's erratic behavior had also driven up unemployment by a further 900,000 jobs.Zandi estimates the fiscal austerity has cost 2.25 million jobs. Without those measures, the unemployment rate wold stand at 6.3 percent now rather than 7.7 per cent, he says.Even many of those who disagree with the notion that policy uncertainty has hurt the economy agree that the spending cuts and tax increases should have been phased in more gradually."Fiscal consolidation has been a big drag on the economy," said Paul Ashworth, an economist with Capital Economics.The International Monetary Fund called the United States' deficit-reduction efforts "excessively rapid and ill-designed" in June and said the sequester cuts would nearly halve U.S. economic growth this year.Meanwhile, Congress has punted on other important legislation like immigration reform that could boost the economy.Construction firms have seen federal work plummet over the past several years. With the government shut down, they have been unable to use the federal E-Verify system to check workers' immigration status or get permits to build in environmentally sensitive areas, said Ken Simonson, chief economist of the Associated General Contractors of America.The delays could be more than an inconvenience for builders trying to line up financing for a new project, he said."You never know when the market's going to turn and ... for some reason you may have missed the boat," he said.There's more turbulence on the horizon. Simonson said lawmakers may not have the stomach to avoid further cuts on transportation spending when they take up the issue next year.Though Washington may be responsible for lackluster business on Main Street, it may not have much of an impact on Wall Street.Many economists had expected the Federal Reserve to begin scaling back its massive monetary stimulus program last month. The chaos in Congress means it now probably won't begin pulling back its bond purchases until next year."I think the markets are beginning to learn how to live with Washington dysfunction," said Valliere.(Reuters)
Read More
India’s power industry is one that has always been dogged by controversy and crises, and the last fiscal was no different. NTPC was no exception, and had to battle fuel shortages and delayed payments. But, despite the adverse environment, the public sector company managed to achieve the highest ever capacity addition in a single year of 4,170 MW — backed largely by the momentum it had gained over the past two years — and made it to the No. 8 slot in the BW 500 list. India’s largest power generator, along with its 22 joint venture and five subsidiary firms, accounted for 27 per cent of the total power generated in the country.In FY13, NTPC’s profit after tax (PAT) rose 28 per cent over the previous year. “The additional revenues we generate over the regulatory norms are due to our efficiency, experience and strength of specialised manpower, and our corporate and financial management,” says NTPC CMD Arup Roy Choudhury. Among the handful of Maharatna firms, NTPC remains among the cheapest power producers, with a generation capacity touching 41,187 MW. It also has 20,064 MW of capacity under construction. The fact that NTPC (by virtue of being a public sector unit) is paid on the basis of its installed capacity and not on the power generated/sold — like its private counterparts — explains its 5 per cent increase in revenues over the previous year. This, after it suffered a near 10 per cent drop in generation due to the unwillingness of distribution companies to buy power (on account of increased costs) and fuel shortages. According to Roy Choudhury, currently there “is a lull because states are working on this (cost restructuring)... and demand will increase” soon.Things are also looking up with respect to its primary fuel provider, Coal India (CIL). Roy Choudhary says, “We have a foolproof fuel procurement plan to meet coal requirements.” This year, NTPC was allotted four new coal blocks in addition to the six under development. Three blocks that were earlier de-allocated were re-allotted to it in FY13. The firm awarded contracts for 8,521 MW of capacity this year, taking its capex to Rs 19,925.53 crore — up almost 25 per cent over last year. Its assets went up by 15 per cent, largely on account of its entry into the solar power sector. Looking to expand its footprint, the thermal power company is entering the hydropower segment — with its first plant scheduled for the coming financial year. It has also been appointed the nodal agency for providing power to Bhutan, while it has already started selling power to Bangladesh. NTPC has targeted 128 GW capacity by 2032, having already surpassed the 11th Five-Year Plan target by 390 MW.(This story was published in BW | Businessworld Issue Dated 04-11-2013)
Read More
Three years ago, Hindustan Petroleum Corporation (HPCL) rolled out a short-term growth plan which has now begun to yield results. At number six in the BW Real 500 2012-13 rankings, HPCL’s total income increased from Rs 1,86,334 crore in FY12 to Rs 2,17,514 crore this year and, its profit after tax (PAT) was at Rs 500 crore, close to three times that of the previous year. This growth is significant considering consumption of petroleum products in India increased by only 5 per cent in 2012-13 and raw material costs for HPCL rose by Rs 6,239 crore over the previous year.“We decided to implement a short-term growth plan called Target Shikhar in 2010 with a focus on improving refining profitability, investments in new areas and operational efficiency. Its implementation has helped achieve growth over the past year,” says S. Roy Choudhury, chairman and managing director, HPCL. Analysts note that the move towards diesel price deregulation and increase in bulk diesel prices since January has helped oil marketing companies (OMC), including HPCL, improve their numbers in 2012-13. In the fourth quarter, HPCL’s earnings before interest, taxes, depreciation and amortisation (Ebitda) were Rs 860 crore as against analysts’ estimates of a loss of Rs 680 crore, due to inventory and exchange gains. They note that a gross refining margin (GRM) of $2 for FY13 was lower than the previous year ($3), driven by inventory loss in the first quarter of the year. “The company reported GRM of $3.7 per barrel in Q4 FY13, lower than our estimate of $4.6/barrel and the GRM for FY13 came at $2.1/barrel against our expectation of $2.6/barrel,” note Mayur Matani and Nishit Zota, analysts with ICICI Securities. HPCL, which aims to achieve 42 million metric tonnes (MMT) in marketing volume of total petroleum products by 2016-17, achieved sales of 30.32 MMT in 2012-13, 4.7 per cent higher than the previous year. HPCL now holds 20.19 per cent marketshare among public sector oil companies. The growth during the year was made possible by higher capacity utilisation at refineries and highest ever annual production of petroleum products like LPG, motor spirit (MS) and bitumen. Retail sales of petrol and diesel increased by 0.14 per cent during the year to help HPCL corner a 25.2 per cent marketshare. Its share in MS and high speed diesel also increased 0.14 per cent. As of 31 March 2013, HPCL’s domestic gas consumers stand at 395 lakh, an addition of 32.17 lakh during the year. To increase its rural penetration, HPCL commissioned 243 distributors under the Rajiv Gandhi Gramin LPG Vitaran Yojana, besides commissioning 54 regular distributors. HPCL’s focus on laying product pipelines to bring down transportation costs and its foray into wind energy have contributed to its performance.(This story was published in BW | Businessworld Issue Dated 04-11-2013)
Read More
It’s been a good year for R.K. Singh, who stepped down recently as chairman and managing director of Bharat Petroleum Corporation (BPCL), handing over the reins to S. Varadarajan. In 2012-13, BPCL achieved its highest ever profit after tax (PAT) in a financial year — Rs 1,936 crore, which was nearly double of the Rs 851 crore PAT in the previous year. Powered by higher refinery throughput and sales, BPCL reported 14 per cent growth in gross revenue from Rs 2,13,596 crore in 2011-12. Its consolidated earnings before interest, taxes, depreciation and amortisation (Ebitda) margin improved to 3.4 per cent from 3 per cent. The performance was helped by better gross refining margins — $4.97 a barrel against $2.29 a barrel a year ago. In FY13, BPCL incurred under-recoveries of Rs 3,900 crore, most of which was reimbursed. BPCL’s refinery throughput was the highest in five years — 23.21 million metric tonnes (mmt) — as was the production of petroleum products — 21.84 mmt. Market sales volumes were 33.30 mmt, 6.4 per cent higher than the previous year. “All six major businesses continued to deliver strong results. Marketing of petroleum products remained the core strength,” said Singh to shareholders about the 2012-13 performance. Except for the Assam refinery, all others — at Mumbai and Kochi and the joint venture Bharat Oman Refineries — set new benchmarks in production. With a capacity utilisation of 109 per cent, the Mumbai refinery had a throughput of 13.10 mmt. Its gross refining margin improved to $4.67 per barrel from just $1.73 per barrel the previous year; and the overall gross margin to Rs 2,499 crore, from Rs 831 crore a year ago (partly due to the high rupee-dollar exchange rate).The Kochi refinery achieved a throughput of 10.1 mmt in 2012-13, compared to 9.56 mmt a year ago. The gross refining margin was $5.36 per barrel, amounting to Rs 2,211 crore in gross margins — the highest it has achieved in a single fiscal.BPCL’s retail sales volume climbed 9.6 per cent — the most among oil marketing companies. Higher retail diesel prices helped reduce under-recoveries. The company reported a throughput of 188 kilolitres per month — its best till now, and 20 per cent higher than the industry average. The loyalty programmes generated an all-time-high turnover of over Rs 18,000 crore. BPCL’s total LPG sales for the year stood at 3,884 thousand metric tonne, giving it a marketshare of 25.9 per cent. It enrolled 3.06 million new domestic customers, taking the customer base to 37.38 million by the end of the year. Varadarajan can surely look forward to a comfortable ride next year. (This story was published in BW | Businessworld Issue Dated 04-11-2013)
Read More
