Sri Lanka has rejected a ship load of 5,000 tonnes of diesel from Indian Oil Corporation, saying the fuel is of poor quality. Officials of state-owned Ceylon Petroleum Storage Ltd (CPSTL) said that routine laboratory tests conducted by them have revealed that the cargo was of sub-quality.Indian Oil Corporation's Lanka chief Subod Dakwale said the shipment in question had came from Singapore."The sample tests proved they did not match the expected quality levels. We maintain high standards of quality for all products," Dakwale told PTI.Sri Lanka's state-owned oil company in the recent years have faced frequent complaints that sub-standard fuel is being imported into the country.The company was forced to pay compensation to affected motorists and at least two senior petroleum officials are currently facing litigation over the sub-standard fuel supplies.(PTI)
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Railways hiked freight rates for moving diesel and cooking fuels by almost 8 per cent on 26 February' 2013, a move that may result in marginal hike in retail fuel prices. Freight on diesel was increased by 5.79 per cent to Rs 1,041.80 per tonne from Rs 984.80 a tonne currently. The same on kerosene went up by 5.79 per cent from Rs 886.30 per tonne to Rs 937.60 a tonne and that on liquified petroleum gas (LPG) by 5.79 per cent to Rs 937.60 a tonne. The rates exclude development charge and busy season charges which essentially means that actual hike for oil companies would be higher, according to the Railway Budget for 2013-14 presented in Parliament by Railway Minister P K Bansal. Oil companies transport over about 32-33 per cent of diesel, LPG and kerosene through railways and the hike in freight will either have to be passed on to consumers or have to be accounted as under-recoveries which the government would compensate from the General Budget. Sources said it was unlikely that the government, which is hard pressed for finances, would agree to taking on additional burden and the freight increase is likely to be passed on to consumers. The increase in retail rates of diesel, LPG and kerosene that is needed because of the freight increase is yet to be calculated. Bansal said the increase in diesel prices last month had added Rs 3,330 crore to Railway's fuel bill. Also, adding to its burden, is electricity tariffs that are revised periodically. "The increase in fuel bill during 2013-14 on account of these revisions would be more than Rs 5,100 crore," he said while proposing an across-the-board increase in freight charges of over 5 per cent.(PTI)
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The global real estate fund of Morgan Stanley is in talks with the Wadhwa Group to invest 9 billion to 10 billion rupees in an office development in Mumbai, three sources familiar with the matter told Reuters. Morgan Stanley Real Estate Investing (MSREI) plans to invest in jointly developing 1.6 million square feet of office space in Bandra Kurla Complex, a financial district in Mumbai, said two of the sources on condition of anonymity as the deal is not yet final. Mumbai-based Wadhwa Group has already begun construction on the project, ONE BKC, which will consist of two office towers and is due to be completed by 2014. If the deal is concluded it would be the first investment by MSREI in an office development in India, said one source. MSREI has invested about $850 million in Indian real estate, mainly in residential projects, including $100 million to $125 million in a housing project by Mumbai-based Sheth Developers, Reuters reported in December 2011. MSREI and the Wadhwa Group declined to comment. Private equity investors have been cautious about the Indian real estate market, investing $1.95 billion in 2012 compared with $9.8 billion in 2007, according to data from research firm Venture Intelligence. On Thursday, Reuters reported that US private-equity firm Blackstone Group, along with two other companies, agreed to buy a business park in Bangalore for $367 million, citing two sources with direct knowledge of the matter.(Reuters)
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The government said on Thursday, 7 February, 2013 that it is satisfied with the response to NTPC's share sale and expects to garner more than Rs 11,500 crore from the offer -- the biggest disinvestment mop up so far this fiscal. A share auction in state-run power utility NTPC Ltd was fully covered taking the government closer to its target of raising money through stake sales in state enterprises to lower its fiscal deficit. "The government is satisfied with the response to this (NTPC) offer. We expect more than Rs 11,500 crore from the issue," Disinvestment Secretary Ravi Mathur said here after the offer closed for subscription. The total demand received is for 132.84 crore shares and indicative price is Rs 145.91. Thus, the offer has been subscribed 1.7 times, he said. Sharing further details, Mathur said there was good participation from foreign institutional investors (FIIs). "One FII bid for 1,000 crore shares in the early hours of the trade. More order inflow came in towards the end of the day. Individually, FIIs have put in USD 50-100 million," he said. By 3:30 p.m., the single-day auction had received bids for 1,328.46 million shares at an indicative weighted average price of Rs 145.91 per share, provisional data from the National Stock Exchange showed. Final bid numbers will be released later on Thursday. The government was selling 783.26 million shares, or 9.5 per cent of the company's stock, at a minimum price of Rs 145 per share for bids. Before the offer, it held 84.5 per cent of the company. The NTPC offer follows a $585 million share sale in state explorer Oil India Ltd (OILI.NS) last week and another $1.1 billion in state miner NMDC (NMDC.NS) last December. Selling shares in state companies is a key element of the government's plan to bring down its fiscal deficit to 5.3 percent of gross domestic product by the end of March, from 5.8 percent in 2011/12, to avoid a credit downgrade from global ratings agencies. New Delhi aims to raise a total of $5.1 billion through stake sales in the current fiscal year ending March. The government has raised nearly $4 billion, and wants to sell shares in at least four more state companies by March-end. NTPC is India's largest power generation company with capacity of nearly 40,000 megawatts. It aims to more than treble generation capacity by 2032. So far this fiscal the government has already raised over Rs 10,000 crore through stake sale in PSUs like Oil India, NMDC and HCL.(Agencies)
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US private equity firm Blackstone Group, along with two other companies, have agreed to buy a business park on the outskirts of Bangalore for Rs 1,950 crore, two sources with direct knowledge told Reuters.The deal, which is expected to be concluded within two to three months according to the sources, would be the largest private equity investment by value in India's real estate sector since 2008.Blackstone, a property fund founded by Housing Development Finance Corporation and unlisted real estate developer Embassy Group plan to invest an equal amount to buy Vrindavan Tech Village, a special economic zone on the outskirts of Bangalore in Karnataka, one source said on condition of anonymity as the deal is not yet finalised.The facility, built by Singapore-based developer Assetz Property Group, is spread across 106 acres of which about 20 acres have been developed into 1.9 million square feet of offices occupied by companies that include Cisco, Sony Corp and Nokia.On the remaining acres, Embassy plans to build homes on 30 acres and about 5 million to 6 million square feet of offices on the rest, said the source.Real estate made up about a quarter of Blackstone's total global assets under management of $210 billion at the end of December, and is its most profitable business.In India, Blackstone has invested nearly $600 million in commercial assets over the past two years, making it one of the largest private equity investors in the country.Blackstone, Embassy and Assetz declined to comment. HDFC did not respond to messages.(Reuters)
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The floor price for state-run power utility NTPC Ltd's share sale, scheduled for 7 February' 2013, has been set at Rs. 145, or a 4.5 per cent discount to its 6 February' 2013 close, said the company, valuing the sale at about $2.14 billion. The government expects to raise $2.25 billion from the offer, the disinvestment secretary has said. The government will sell a 783.26 million shares or 9.5 per cent stake in NTPC through the single-day auction, as part of its drive to raise Rs 27,000 crore by selling shares in some state enterprises in the 2012/13 fiscal year. Ahead of the share sale, NTPC shares closed at Rs. 151.80 rupees on Wednesday, down 2.4 per cent in a weak Mumbai market.(Reuters)
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The government expects to raise around Rs 12,000 crore by selling a 9.5 per cent stake in state power utility NTPC Ltd in a share auction on February 7, Disinvestment Secretary Ravi Mathur said.The floor price for the offer will be announced on 6 February, he said.Share sales in state companies has been a key element of the government's plan to bring down its fiscal deficit to 5.3 per cent of gross domestic product by March-end to avoid a credit downgrade from global ratings agencies.The government aims to raise Rs 30,000-crore by selling shares in the 2012-13 fiscal year to March. Last week, it raised Rs 3,100 crore through a 10 per cent stake sale in state explorer Oil India Ltd.It expects to sell shares in four other state companies before March-end, Mathur told reporters."The EGoM has approved 9.5 per cent stake sale in NTPC. The stake sale will be made on February 7," Disinvestment Secretary Ravi Mathur told reporters in New Delhi.When asked how much would be raised through the sale, Mathur said, "it would be as planned around Rs 12,000 crore".He said the floor price, or the minimum offer price, would be notified to the stock exchanges on 6 February.The government plans to sell over 78.32 crore shares or 9.5 per cent stake in NTPC through offer for sale (OFS). It currently holds 84.50 per cent stake in NTPC.Shares of NTPC closed at Rs 155.60, up 0.16 per cent on BSE. At the current market price, the stake sale could fetch over Rs 12,100 crore to the exchequer.The government had last month appointed merchant bankers, including Citigroup, SBI Capital Market and Morgan Stanley, for managing the NTPC stake sale.The department has recently completed 10 per cent stake sale of the Oil India (OIL) through the auction route raising over Rs 3,141 crore for the government. The government has raised over Rs 10,000 crore though PSU stake sale so far this fiscal.Besides OIL, the government has raised Rs 6,000 crore from stake sale in NMDC, Rs 800 crore from Hindustan Copper and Rs 125 crore from NBCC.The government's ambitious Rs 30,000-crore disinvestment programme got a boost on 23 November as the 5.6 per cent stake sale in Hindustan Copper was a resounding success, The government managed to raise Rs 810 crore in November, 2012 Read Also: Betting On DivestmentRead Also: Oil India Rs 3,100-Cr Share Sale OversubscribedThe government is banking heavily on disinvestment programme to rein in its fiscal deficit. It had revised the target to 5.3 per cent of the GDP. Global rating agencies have threatened to downgrade India's sovereign credit rating to junk if it fails to rein in its deficit, which is ballooning because of higher spending on food, fuel and fertiliser subsidies and poor tax receipts.(BW Online Bureau & Agencies)
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Seva Ram shows no signs of fatigue, though it’s way past 11 pm. Or of winding up his handcart, snuffing out the petromax lantern and heading home. He sells paani-puri outside Saket station on Delhi Metro’s Yellow line. In early 2010, he hawked the same fare, but went home as early as 9.30 pm. In distant Savli, Vadodara, the third shift is hard at work at 2 am at the Bombardier plant. The 55,000 sq. metre covered production unit of the $18 billion Montreal, Canada-based company is an unending buzz of activity. Bombardier, contracted to supply the Delhi Metro Rail Corporation (DMRC) in mid-2007, has already made 614 rail cars for the Metro. The 400-odd employees at the 33 million euro (Rs 230 crore) facility are in a rush to meet delivery schedules, turning out one coach every day. The common thread between the two is the Delhi Metro. Though not the first — the Kolkata Metro started back in 1984 — its success has had a rub-off on many — big and small. The Delhi Metro covers 190 km as of now and is expected to be a 330-km grid when the third phase is completed in 2016. With an investment of Rs 30,000 crore so far and another Rs 35,000 crore on the current expansion, it has inspired many cities to embark on similar projects. While the Bangalore Metro is up and running, the first phase of Gurgaon’s Rapid Metro is slated to start in May this year. By 2016, it is estimated that close to 600 km of fresh Metro networks will be added across a dozen cities, including Mumbai, Chennai, Hyderabad, Pune, Ahmedabad, Jaipur and Kochi. “There is huge activity happening across the country in building Metro rail networks. The bids for the third phase of the Delhi Metro, Mumbai’s line 3, Bangalore’s phase II, Kochi and Ahmedabad will be finalised in 2013,” says Harsh Dhingra, chief country representative and whole-time director, Bombardier Transportation India. Click on the graphic for an enlarged viewTrain to India Not surprisingly, the Indian Metro rail market is the fastest growing globally after China, which already has a dozen cities connected and is rolling out networks in another 10. It is estimated that by 2020, the investment in Metro rail projects in India is likely to be in the region of Rs 200,000 crore ($ 40 billion). So, some of the biggest names globally in railways — coach manufacturers, tunnel boring machine (TBM) makers, signalling and train control systems, electromechanical components, contactless cards and token manufacturers — have laid their tracks to India for setting up manufacturing facilities as the action in the Metro rail market has, to a large extent, shifted out of developed markets. These manufacturers have created close to 7,000 direct jobs and around 15,000 indirect jobs. Bombardier set up the Savli plant in mid-2007. The plant delivered its first rail car to the Delhi Metro in June 2009. Bombardier chose Vadodara as it already had its propulsion equipment plant there. Bombardier is not the only one making Metro rail cars in India. At Sri City on the Tamil Nadu-Andhra Pradesh border, Paris-based Alstom has set up a 30 million euro Metro rail coach manufacturing unit that can roll out over 300 rail cars a year. It is from here that the company will supply cars to the Chennai Metro. And, in Bangalore, state-owned BEML, in collaboration with South Korea’s Hyundai-Rotem, has got an Rs 1,800-crore contract from L&T Hyderabad Metro for the supply of 171 cars. Our Savli plant is as good as any of our plants globally and is the first railway coach facility in India to use robotic welding”HARSH DHINGRAChief country representative & whole-time director, Bombardier Transportation India (BW pic by Tribhuwan Sharma)Meanwhile, Spain’s CAF (Construcciones y Auxiliar de Ferrocarriles), the world’s fourth-largest railway car manufacturer, is scouting to set up a Metro rail car plant in the country after it bagged an order for 84 coaches from the Kolkata Metro. Says Sanjiv Rai, MD, Rapid Metro Gurgaon: “For international vendors to compete in the domestic market, they need facilities here. As manufacturing is cheaper, they are in a position to win more orders.” Metro rail car plants are usually set up after companies bag large contracts. Says Dhingra: “Our plant here is as good as any of our plants globally and is the first railway coach facility in India to use robotic welding.” Jojo Alexander, managing director, Alstom Transport India, says: “Apart from supplying rail cars, we are doing a significant part of the signalling business from India.” While these plants meet domestic demand, they also help India take a crack at the global market. Alstom’s Alexander points out that apart from India, there are opportunities for steel Metro railway cars in Thailand and the Middle East. Bombardier is already supplying semi-finished Metro coaches to Adelaide, Australia. The More the MerrierThe Metro juggernaut does not stop at rolling stock. Since a coach has close to 50,000 components, the rail car manufacturers need a steady supply of parts. Over the years, many component makers have set up shop in the country. They include France’s Faiveley Transport Rail Technologies (brake assembly, brake kits, air-conditioning systems, pantographs); Germany’s Schlatbau (electro-mechanical components); and Japan’s Asahi Glass. Faiveley has set up its plant at Hosur, near Bangalore. Says D. Kumar, executive director, Faiveley Transport Rail Technologies India: “We are already looking to expand our operations. We plan to start door manufacturing out of India soon.” break-page-break The action is not just restricted to building Metro rail cars and their components. The Alstom Transport Software Development Centre in Bangalore supports global R&D and product engineering activities. Says Alexander: “Signalling is a significant part of Metro rail operations. The train control and protection systems in the DMRC ensure that the driver has to only close the doors.” While Alstom has been in India for a while, France’s Thales has recently bagged the Rs 740-crore contract for providing communications-based train control (CBTC) and integrated communications and supervision (ICS) systems for the Hyderabad Metro. Says Reynald Seznec, senior VP, international, Thales: “As the growth areas are shifting, we need to be present in areas outside of Europe. As part of that, we would like to do more local R&D in India.” Bombardier too has been active in the signalling area—it has done work on 39 km of Delhi Metro’s lines 5 and 6. But, much before a Metro rail car starts moving, the infrastructure has to be in place. That is where TBMs come in. To cater to their rising demand, Germany’s 1 billion euro Herrenknecht has set up a facility on the outskirts of Chennai. It has, till date, supplied close to 75 per cent of the 40-odd TBMs used in India’s Metro rail projects. Herrenknecht is the only TBM maker present in India. For an underground rail network, security is critical. That’s where Sweden’s Gunnebo comes in. It supplies the turnstiles. Says Per Borgvall, president and CEO, Gunnebo: “There is a security need for airports, Metro systems, the railways, power plants and important buildings in India, which will continue to grow.” Local FlavourBut to cross the turnstile at a Metro station, commuters need either contactless tokens or magnetic cards. This brings in smaller Indian companies. Brothers Alok and Puneet Kapoor invested close to Rs 10 lakh to set up their radio frequency identification (RFID) venture — APK Identification (APK-ID) — at the Noida Special Economic Zone. It bagged the global tender to supply contactless tokens for the Delhi Metro in 2005. APK-ID brought down the price of a token — originally supplied by Japanese companies — from Rs 240 to Rs 15. Today, APK-ID supplies close to 3 million tokens annually to Delhi Metro. Says Puneet Kapoor, partner, APK-ID: “We are looking to bag contracts from other Metro systems as they are set up.” Another local player, Mumbai-based Seipmann’s Card Systems, makes magnetic cards. APK-ID is not the only home-grown company to ride the Metro manufacturing bandwagon. There are many small suppliers of components that include lights, glasses and track fittings. One such company is Delhi-based Sidwal Refrigeration that supplies roof-mounted air-conditioning units for Delhi Metro rail cars. There is also VAE-VKN, a joint venture between Europe’s VAE and Sonepat’s VKN Industries, that supplies railway track systems. Hot on the tail of the manufacturers are some of the world’s largest infrastructure consulting, technical and management support services firms. These include New York-based Parsons Brinckerhoff that is involved in the Gurgaon and Delhi Metros and AECOM, which did the concept plan for Gurgaon’s Rapid Metro. “Apart from supplying rail cars, we are doing a significant part of the signalling business from India” JOJO ALEXANDER Managing director, Alstom Transport India (BW pic by Sanjay Sakaria)Resurgent RealtyBesides spawning a manufacturing ecosystem, the Metro network has given a huge fillip to real estate as well. As a result, many areas that were once considered outlying, such as Dwarka in south-west Delhi, have seen property prices rise with the launch of Metro services. Says Rai: “Cyber City in Gurgaon has close to 25 million sq. ft of property. There is bound to be an impact on property value and rentals as connectivity improves with the arrival of the Metro.” Adds Manish Kashyap, managing director, transaction services, CBRE: “Today, when corporates are relocating, the first question they raise is ‘how far is it from the nearest Metro station?’” Builders are also using proximity to proposed Metro lines to advertise their properties. “They are attracting investors looking for price appreciation 3-4 years down the road,” adds Kashyap.The expanding Metro network requires a talent pool. To create one, former DMRC managing director E. Sreedharan tied up with the Indian Institute of Technology, Delhi, to start a one-year specialised course in Metro technology. Larsen & Toubro (L&T) too has set up a facility in Hyderabad to train people. Says Vivek B. Gadgil, chief executive and managing director, L&T Metro Rail Hyderabad: “We provide basic training in rail systems.” These are early days. The action in the Metro space is not expected to die down anytime soon.anup(dot)jayaram(at)abp(dot)in(This story was published in Businessworld Issue Dated 11-03-2013)
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