The government on Monday (23 March) is believed to have alloted the three cancelled coal blocks, for which JSPL and Balco had emerged as the highest bidders in the recently concluded auctions, to state-owned miner CIL."Three coal blocks - Gare Palma IV/1, IV 2 and IV 3 under Schedule II mines (blocks under production) have been today alloted to Coal India Ltd. JSPL and Balco had been successful bidders for these blocks," a highly placed source said.Shares in Jindal Steel and Power Ltd were heading towards their biggest daily loss in almost two years on Monday, hit by concerns over the company's ability to feed its power plants after the rejection of its bids for three coal mines auctioned by the government.Stocks of the company, controlled by former lawmaker Naveen Jindal, fell as much as 14.9 percent before paring some losses to trade down 8.1 percent at 2:27 p.m. on Monday, while the benchmark BSE Sensex was fell 0.15 percent.The development comes amid Jindal Steel and Power Ltd today moving the Delhi High Court against the decision of the Centre to cancel the coal blocks saying that the company apprehends that the blocks might be allocated to someone else as the government is "moving very fast".The source said the government decided promptly to allot the blocks to Coal India as the Supreme Court had allowed companies to continue mining till March 31 in blocks where coal production had already started.Total reserves of the three mines amount to 313.68 MT.The government had cancelled four blocks including Tara which falls under Schedule III (ready for production) category on March 20 saying the bids were undervalued and it will take a final call on these soon after deliberations.The four coal blocks whose bids were rejected include Gare IV/2, Gare Palma IV/3 and Tara coal blocks in Chhattisgarh in which JSPL had emerged as the highest bidder and Gare Palma IV/1 mine for which Bharat Aluminium Company (Balco) had emerged as highest bidder.Government re-examined the bids for nine coal blocks in the recently held auction amid reports that some bidders could have indulged in cartelisation to keep the prices low for these mines.While JSPL is yet to respond to the government move, Balco declined to comment on the development."Bids for Gare Palma IV/1, IV/2, IV/3 and Tara coal blocks not accepted," Coal Secretary Anil Swarup had earlier tweeted.However, bids for five other blocks which were accepted are Marki Mangli III mine, (with B S Ispat as the successful bidder), Mandla South mine (Jaypee Cement), Usha Martin Brinda and Sasai mines (Usha Martin), Dumri mine, (Hindalco Industries) and Meral mine (Trimula Industries).Through auctioning just 33 blocks, the government has garnered over Rs 2 lakh crore, surpassing the Rs 1.86 lakh crore loss estimated earlier by government auditor CAG for having given away mines to companies without bidding. The Supreme Court had cancelled the alloted mines leading to the auctions.Taking Govt To CourtSeparately on Monday, a company source told Reuters that Jindal Steel, which said it was "puzzled" by the government's decision over the weekend to reject the bids, will take the government to court over the cancellations.The absence of coal blocks for the company's power business leaves its 3.4 gigawatt (GW) of capacity near-stranded with linkage of only 1.2 GW in place, analysts at brokerage Kotak Institutional Equities said in a report to clients."Limited linkage and the absence of captive coal blocks would make imports an expensive and logistically difficult choice for fuel," the report added.The loss of the coal mines will have an adverse impact on the load factor of Jindal Steel's power plants in Chhattisgarh where the mines in question are located, chief executive Ravi Uppal said in a television interview."The present government is working so hard to see all the stalled projects become functional. Here we have a project which is functioning and I see no reason that anything should be done which will cause a functioning project to become a stalled project," Uppal told ET Now news channel.India rejected winning bids for four of 33 coal mines put up for auction in the past two months, after the coal ministry had examined nine blocks whose surprise low bids prompted the designation "outliers".The move to re-examine "price discrepancies" drew criticism from industry watchers, with some experts saying reassessing the auctions after the posting of the highest bids sends the wrong signal to the market ahead of more auctions."Unfair to even suggest that the bids were low, infact the bids were substantially above the base prices set by the government," chairman Naveen Jindal said in a Twitter post on Saturday.
Read More
India owes about $8.8 billion for oil imports from Iran, India's trade minister said on Friday, as economic sanctions imposed over Tehran's nuclear programme have cut its access to the global banking system and hit its oil revenue. Iran and Western powers are in talks to reach a framework agreement ahead of an end-March deadline to curb Tehran's nuclear activities seen as "sensitive" by the Western bloc in exchange for a gradual end to sanctions on the OPEC member. Indian refiners settle 45 per cent of Iranian oil payments by depositing rupees in Tehran's commercial banks' account with UCO Bank, and withhold the remaining 55 per cent. Iran taps funds in the rupee account to import goods from India. The balance in Iranian commercial banks' accounts with UCO Bank was 178.955 billion rupees ($2.86 billion) as of March 16 while refiners owed Tehran $5.943 billion as on Feb. 28, Nirmala Sitharaman told lawmakers in a written reply on Friday. Refiners usually release funds for Iran from the 55 per cent payment as and when the West allows Tehran access to frozen funds overseas. New Delhi is keen to narrow its trade gap with Tehran, and has allowed Indian exporters to import non-sanctioned goods into India for sale to Iran. "The Ministry of Finance has decided that payments to the extent of $100 million per month for such third-country exports to Iran would be allowed from the 45 per cent rupees vostro account held with the UCO Bank," Sitharaman said. Payment over and above $100 million per month would be met from the 55 per cent component held by refiners, she said. India, Iran's top client after China, has been reducing its imports from Iran under pressure from Western sanctions. The imports from Iran made up for 5.81 per cent of the nation's oil import needs in 2013-14, down from 7.11 per cent in the previous year. (Agencies)
Read More
India is set to import 8 million barrels of Iraqi oil to fill its first strategic petroleum reserve (SPR), taking advantage of cheap prices and lending some support to a market suffering from oversupply. India's SPR purchases could temporarily help offset the impact of an expected pause in China's strategic stocks build and the start of spring maintenance at Asian refiners. India's oil ministry on Tuesday instructed state refiners Indian Oil Corp and Hindustan Petroleum Corp Ltd to each seek two very large crude carriers (VLCC) of Basra oil for arrival in May-June, totalling 8 million barrels, two sources familiar with the matter said. The tenders are to be issued this month and plans call for the federal cabinet to approve issuing tenders at its meeting next week, said one of the sources, who declined to be identified. A committee of directors suggested Basra oil as it suits refineries on India's east coast, the source said, adding this will be a one-off purchase for the SPR as the stocks will be used only in case of supply disruptions. India's finance ministry has provided 24 billion rupees (about $383 million) from revised budget estimates for the current fiscal year to fill the first SPR. "In Asia we are trading May cargoes and demand from India for Basra will tighten the prompt market and will make contango in the Asia and Dubai markets narrower," said Ehsan Ul Haq, senior consultant at UK-based consultant KBC Energy Economics. Benchmark Brent futures have climbed off a six-year low hit in January but are still down more than 50 percent from last June at $53 per barrel. "It could weaken the price of Brent-linked crudes as traders were expecting India to buy sweet oil for its SPR. "On the other hand it would be good news for Iraq, which has been struggling to find buyers because of the deteriorating quality of Basra," Haq said. The world's fourth biggest oil consumer, India last month built its first underground SPR in Andhra Pradesh with a capacity to hold 9.75 million barrels of oil. The Vizag facility has two compartments of 7.55 million barrels and 2.20 million barrels. The smaller compartment will be used by HPCL for its 166,000 barrel-per-day Vizag refinery. A total of three SPRs in the south will hold more than 36 million barrels of oil, enough to cover about 13 days' supply for India in case of a supply disruption or extreme price volatility. The two other SPRs, at Padur and Mangalore in southern Karnataka state, will have a capacity of 29.3 million barrels and are expected to be ready by October. In addition to HPCL's Vizag refinery, the IOC's 150,000 bpd Haldia refinery and a 210,000 bpd refinery owned by Chennai Petroleum Corp., a subsidiary of IOC, can process Basra oil. (Reuters)
Read More
Faizal E Kottikollon, founder-chairman of UAE-based KEF Holdings, sold his valve manufacturing business to Tyco International, the $17.5 billion global security systems company, in 2011. He sold the business for $400 million at a time when the world economy just recovering after the financial meltdown of 2008 and 2009. Kottikollon toyed with the idea of investing Rs 1,500 crore in India. His plans came to fruition in 2013, when his company acquired a 42-acre facility in Tamil Nadu to build a large manufacturing plant for offsite construction for industrial parks. He spoke to BW|Businessworld's Vishal Krishna about his plans. Excerpts: What business model do you follow in India to help the construction industry and hospitals?KEF Holdings specialises in offsite construction. It is an exciting industry that directly addresses India’s massive need for infrastructure development. KEF combines its own in-house expertise with that of its global partners to bring the best quality, cost-effective and sustainable solutions into the market. We are modelled as a social enterprise and we are particularly interested in applying such industrial solutions towards building infrastructure for two key sectors that are critical to India’s welfare – education and healthcare. In both of these sectors, India needs to execute high quality projects on a wide scale, with speed, efficiency and reduced costs. This is where KEF’s core expertise comes in. We are aiming to create and replicate several industrial parks dedicated to offsite construction. Our 42-acre KEF Industrial Park in Krishnagiri, Tamil Nadu is a prototype, and is scheduled for launch in April 2015. KEF also believes in fostering strategic partnerships with organizations that are leaders in their space, thereby bringing to India global industry best practices. For example, for the 500-bed Premium Medical Healthcare Providers (PMHS) hospital in Calicut, Kerala, we are collaborating with The Cleveland Clinic, Ohio – the world’s leading medical and research facility, and with TAHPI (Total Alliance Health Partners International) of Australia, leaders in the design of medical facilities and health planning. Give us a sense of the kind of cost savings KEF Industrial Park would provide to the industry? How much does it save on carbon footprint?Inherently, offsite construction reduces project costs by as much as 30 per cent. It also shrinks project timelines, which means faster delivery by as much as 50 per cent. It is important to understand why offsite construction can deliver so well in terms of speed, scale and costs. Think about whole building components such as walls, staircases, pillars, bathroom units that are entirely manufactured inside a factory, in settings that are controlled by computers and aided by automation. High-end automation of processes will mean increased focus on quality and precision. For example, computers calculate the precise amounts of raw material that need to go into particular processes. There is optimal resource conservation throughout the manufacturing process and wastage is reduced. Wherever possible, we also recycle material. In terms of carbon footprint, the KEF Industrial Park subscribes to LEED platinum benchmarks. Working with our green consultants En3 Sustainability Solutions, we are designing the facility to use 40 per cent less water as opposed to conventional buildings. Similarly, energy consumption will be 30 per cent lesser compared to a conventional facilities. Almost all of the waste water will be treated at the Park itself and will be reused. Buildings will make smart use of electricity through the "envelope design", the use of natural lighting wherever possible, and energy efficient air conditioning systems. What is the amount KEF has invested in India?We will be investing approximately Rs 1,500 crore through our projects. This includes our two projects currently under construction – the KEF Industrial Park in Krishnagiri and the 500-bed PMHS hospital in Calicut. How many locations do you want to open your manufacturing facilities in?We aim to open four more industrial parks – similar to the KEF Industrial Park in Krishnagiri – across India within the next five years. Broadly speaking, we are planning for these industrial parks to be strategically located in Andhra Pradesh, Delhi and the NCR region, Gujarat and Maharashtra. What is ailing the Indian industry today, what should be done to meet the infrastructure requirements of his country?I think it is important for us to look ahead as a country. I believe India is on the verge of a construction revolution. The government has already resolved to create a hundred smart cities. The country needs such cities, which will become new hubs for sustainable economic activity and employment. The creation of India’s smart cities will require us to quickly adopt not just modern – but futuristic– processes across the board, right from arranging urban spaces, to designing its transportation, communication and building infrastructure. Offsite construction will undoubtedly be an important part of this equation. How much did you sell your previous company to Tyco for?I started my entrepreneurial journey by establishing Emirates Techno Casting FZE (ETC) in Sharjah in 1999. The facility specialised in the manufacture of industrial valves and within ten years it had grown to become the key supplier to major oil and gas companies in the region. It came to be recognised as the third most technologically advanced foundry in the world. As a social enterprise, KEF is founded on the vision that it will work to towards making a positive difference to society. There is plenty of work for an organization like KEF to do: as a nation, we need 110 million housing units by 2022. We need to build several more hospitals – currently, we don't even have one hospital bed per 1,000 people. Millions of our children drop out of school because the infrastructural facilities at government schools are inadequate and outdated. The KEF objective is to use its industrial expertise – as well as that of its local and global partners – to efficiently develop India’s infrastructure. We will focus on viable projects that answer to the needs of the community and the nation, while adhering to industry best practices as well as sustainability. Healthcare and education being our two main focus areas, our emphasis will continue to be on the building of related infrastructure such as schools, colleges, dormitories, hospitals and clinics.
Read More
India's debt-laden property developers are turning to deep discounts, free parking spots and even gimmicks like gifts of gold coins and motorbikes as they struggle to sell billions of dollars worth of as-yet unfinished homes. Now outstripping China as the world's fastest-growing major economy according to official data, India has a real estate market mired in debt piled up in a 2006-2007 construction boom that gave way to slowdown. It now takes developers about 4-1/2 years to turn property inventory into cash, more than a full year longer than it takes developers in China, according to Thomson Reuters Starmine data. It's not just bad news for developers in megacities like Mumbai, now seeking ways to offload inventory with increasing intensity. It's also making it harder for many debt-burdened lenders to pass on interest rate cuts to borrowers, hindering central bank efforts to accelerate growth: India's central bank has cut rates twice this year, with more cuts expected. "It is a buyer's market," said Preeti Patil, a 28-year-old who works for a large Indian media group and was in the market for a two-bedroom house in the suburbs of Mumbai. "Last week, we turned down a deal, two days later we had the builder call us to offer $8 (500 rupees) per square foot discount." Even worse for developers, Patil is among those who have little confidence property prices will rise in future. Despite cut-price offers, she abandoned plans to buy, saying she feared the investment would not reap near-term returns. Offers of coins of gold - prized in Indian culture - motorbikes and even Apple Inc iPhones have begun to feature in developers' advertising in recent weeks, prospective buyers say. While it's too early to say whether tactics like this will be enough to reel in upwardly mobile professionals and newly wealthy middle classes, demand for scores of empty, or under-construction, high-end residences remains flat. Decade Of Backlog?At brokerage Kotak Securities, analysts estimate unsold inventory held by a group of leading Mumbai developers alone now stands at some 534 billion rupees ($8.5 billion) - with an additional 368 billion rupees of project launches in the pipeline. That puts the current, unsold area in Mumbai at almost the value of the total sold in the 2014 calendar year. The backlog, analysts estimate, could take more than a decade to clear. "The overall market has slowed down in the last two years... overall demand has gone down," said Niranjan Hiranandani, managing director of privately held developer Hiranandani Constructions. Hirandani's own 500-acre residential project in Navi Mumbai, a new suburb east of the city, is gearing up for construction after being stalled for more than two years and does not have a completion date. Hiranandani declined to provide figures for his company's inventory, but said he was comfortable with its position. Issues ranging from a lack of approvals, a cash crunch and low demand mean several other Mumbai projects by developers such as IndiaBulls Real Estate and DB Realty have also slowed or stalled. Demand has been squeezed in part by Mumbai residential property prices more than doubling between 2009-2012. Part of the trouble is the excess supply of premium homes. While developers built houses to be sold at price tags of over $160,000, the huge bulk of demand is in the 500,000 rupee to 2 million rupee range ($8,000 to $32,000), said Kotak Securities analyst Akhilesh Tilotia. "On one side, there's a housing shortage and on another you have rising inventory and that's a very big paradox," Pankaj Kapoor, chief executive of real estate rating and research firm Liases Foras said. (Reuters)
Read More
Cairn India Ltd, a unit of London-listed Vedanta Group Plc, said it received a demand of about Rs 204 billion ($3.26 billion) from the Indian tax office on Friday (13 March) in relation to the 2007 listing of the company.Cairn India, the country's largest private sector crude oil producer, said in a statement to the stock exchanges that it did not agree with the demand and would pursue all possible options to "protect its interest".Cairn India received the order three days after Cairn Energy Plc, its former parent, said that it had filed a formal dispute against a $1.6 billion demand from the Indian tax department related to the same transaction. Cairn Energy sold its majority stake in Cairn India to Vedanta in 2011. The British company's stake in Cairn India was reduced to about 10 percent after the transaction.The high-value tax demand on the two companies comes after the Indian government, led by Prime Minister Narendra Modi, had sought to reduce tax-related litigation and move towards a tax-friendly regime to boost much-needed foreign investment.Cairn Energy and Cairn India join a slew of multinational firms including Vodafone Group Plc, Royal Dutch Shell Plc, IBM Corp and Microsoft Corp that have fallen foul of India's tax collectors in recent years.Britain's Foreign Secretary Philip Hammond said Finance Minister Arun Jaitley explained that the Cairn Energy case was started by the previous government and that New Delhi was powerless to stop it.Jaitley is scheduled to arrive in London on Friday to drum up investment in his country.Cairn India said on Friday the tax office raised the demand after its alleged failure to deduct withholding tax on capital gains made by its former parent during the fiscal year ended March 2007 as part of a reorganisation ahead of its market listing.The demand comprises Rs 102.48 billion in outstanding tax and a similar amount in interest.News of the tax order pulled Cairn India shares down as much as 3.8 per cent, while the broader Nifty was down 1.4 per cent. Cairn Energy shares were down 2.8 per cent.(Reuters)
Read More
Two key bills aimed at reforming coal and mines sectors are in for a delay as these were on Wednesday (11 March) referred to separate committees of Parliament after the government buckled under pressure from a united opposition to do so.The Select Committees, set up by the Rajya Sabha, were asked to submit their reports by March 18, two days before Parliament goes for a month-long recess in the Budget session.The government bowed to opposition pressure and agreed to refer these bills to the Select Committees after it faced the prospect of yet another embarrassment in Rajya Sabha last night when opposition amendments to the Mines bill appeared set to be passed.Rajya Sabha on Wednesday referred the bills to the two Select Committees, each having 19 members.The two Committees were finalised after a meeting Leader of the House and Finance Minister Arun Jaitley had with leaders of various parties, including Leader of Opposition Ghulam Nabi Azad this morning.The Select Committee to look into the Mines and Minerals (Development and Regulation) Amendment Bill, 2015, will be chaired by Bhupender Yadav of BJP and will have 18 other members from various parties.The Committee to look into the Coal Mines (Special Provisions) Bill, 2015, will be headed by Anil Madhav Dave of BJP and has 18 other members from various parties.Both the Bills seek to replace the Ordinances issued by the government in this regard.The House yesterday saw a battle of wits for hours as opposition pressed for sending the Mines bill to a Select Committee which the government tried to stonewall, though unsuccessfully in the end. Two almost identical motions said the bills are being sent to the Select Committees "with instructions to report to the Rajya Sabha not later than 18th March, 2015 to enable the Rajya Sabha for consideration and passing during the first part of the Budget Session."The other members of the Committee looking into the Coal Mines bill include V P Singh Badnore and Baswaraj Patil (both BJP), Digvijay Singh, P Bhattacharya and Rajeev Shukla (all Congress), Naresh Agarwal (SP), K C Tyagi (JD-U), Narendra Kumar Kashyap (BSP), Anubhav Mohanty (BJD), K N Balagopal (CPI-M), Sukhendu Sekhar Roy (TMC) and Vandana Chavan (NCP) and Tiruchi Siva (DMK).It also has Devender Goud T (TDS), A W Rabi Bernard (AIADMK), Naresh Gujral (SAD), Anil Desai (SS) and Rajeev Chandrasekhar (Ind).The other members of the Select panel to look into the Mines and Minerals Bill are Tarun Vijay and Ram Narain Dudi (both BJP), Shantaram Naik and Mani Shankar Aiyar (both Congress), K T S Tulsi (Nom), Ravi Prakash Verma (SP), Derek O'Brien (TMC), A W Rabi Bernard (AIADMK), Pavan Kumar Varma (JD-U), Satish Chandra Misra (BSP) and T K Rangarajan (CPI-M).Kalpataru Das (BJD), C M Ramesh (TDP), Majeed Memon (NCP), K P Ramalingam (DMK), Balwinder Singh Bhunder (SAD), D Raja (CPI) and Parimal Nathwani (Ind) are also members of the panel.While the Motion to send the Bill to Select Committee was approved by the house, a statutory resolution moved by some members to disapprove the Coal Mines (Special Provisions) Second Ordinance, 2014 was withdrawn.In the Upper House, where BJP and its allies are woefully short of numbers, government tried to stonewall the opposition demand for sending the Mines and Minerals (Development and Regulation) Amendment Bill, 2015 to a Select Committee and kept pressing for its passage yesterday.Soon after the Bill was moved for consideration, opposition moved amendments, creating possibility of putting government in an embarrassing situation as the ruling coalition is in a minority and the amendments would have got adopted.The government then agreed to refer the bill to a Select Committee, warding off an embarrassment after having faced such a situation in the House only last week when an opposition amendment to the Motion of Thanks to the President's Address was adopted.The situation created a ticklish task for Deputy Chairman P J Kurien, who after arguments and counter-arguments from both sides finally settled the matter on the basis of a consensus in the House and agreed to government's demand for leaving the matter till morning to finalise the names for the Select panel.(PTI)
Read More
Aditya Birla group flagship firm Hindalco said on Wednesday (11 March) it would defend its case through "legal process" after studying order of the special court, which summoned its Chairman Kumar Mangalam Birla, among others as accused in a coal scam case pertaining to allocation of Talabira-II coal block in Odisha in 2005."Hindalco reiterates that none of its officials, including its Chairman Kumar Mangalam Birla, have pursued any unlawful or inappropriate means for securing the allocation of the coal block," the company said in a statement.Hindalco Industries fell as much as 5.3 per cent to its lowest since May 5, 2014 after a court summoned billionaire Kumar Mangalam Birla, chairman of Aditya Birla Group to which Hindalco belongs and former Prime Minister Manmohan Singh.The summons were related to the allocation of coal blocks to Hindalco during the previous Congress government, which were later overturned by the supreme court. Hindalco declined to comment.Metal stocks also fell on concerns over the impact of the investigations by the Central Bureau of Investigation. Tata Steel fell 1.1 per cent, while Sesa Sterlite was down 1.7 per cent.Other laggards also include healthcare stocks as investors booked profits in recent outperformers such as Cipla Ltd, which fell 2.1 per cent. As of Tuesday, the stock had gained 16.5 per cent this year. It further said that Hindalco would study the order of the court in detail "and would defend its case through legal process."Stating that the company has "cooperated with investigating authorities completely during the course of investigation since October 2013, the company's management is confident that it will stand vindicated at the end of the ongoing legal process.""The company had represented its case to the concerned authorities in a transparent and lawful manner, following which it was allocated a 15 per cent share in the combined Talabira-II and III coal block in November 2005, in a JV with Mahanadi Coalfields Limited and Neyvili Lignite Corporation, both public sector undertakings with an 85 per cent stake," it said.The coal block was deallocated in 2014.Aditya Aluminium Project, for which this allocation was made, has been implemented by the company at an investment of over Rs 13,000 crore in Odisha."The plant is already operational even though Talabira-II & III coal block could not become operational for want of clearances. Consequently, Hindalco is having to suffer irrecoverable financial stress," the company said.(Agencies)
Read More
