The coal block allocation issue cast its shadow on Parliament for the eleventh day on 5 September paralysing proceedings with BJP remaining unrelenting on the demand for resignation of Prime Minister Manmohan Singh.Lok Sabha and Rajya Sabha were adjourned till noon after opposition triggered ruckus on the issue and the Lower House adjourned for the day minutes after it re-assembled.When the Rajya Sabha met at noon, a scuffle broke out between Naresh Agrawal (SP) and Avtar Singh Karimpuri (BSP) during introduction of a Bill seeking to provide reservation in promotion to SC/ST in government jobs.The bill was introduced by minister of state for personnel V Narayansamy amid commotion due to the scuffle and slogan shouting by BJP on the coal block allocation issue.As the unruly scenes continued, the House was adjourned till 2 PM.Amid uproar over the coal issue in the Lok Sabha, members of the DMK, a constituent of the ruling UPA alliance, as also AIADMK were in the Well with DMK members holding placards against the upcoming visit of Sri Lankan President Mahinda Rajapaksha."Don't hurt Tamils. Don't allow war criminal Rajapaksha," read one of the placards while another said "Don't allow Rajapaksha to India".In the melee, the government withdrew the Securities and Exchange Board of India (Amendment) Bill, 2009 in Lok Sabha.(PTI)
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An increase in petrol, diesel, domestic cooking gas (LPG) and kerosene prices looks "imminent" after the finance ministry said it has no money to provide for fuel subsidy."This (hike) is imminent. There is no question of holding back now," a top oil ministry official said on 4 September.In all possibility, prices may be increased after the current monsoon session of Parliament ends on 7 September.Diesel, domestic LPG and PDS kerosene rates have not been changed since June 2011 even though cost of production has soared 28 per cent. State-owned fuel retailers are losing Rs 560 crore per day on sale of diesel and cooking fuel, and are forced to resort to short-term borrowings to meet funds needed for importing crude oil (raw material).Borrowings of the three fuel retailers have shot up to Rs 1,57,617 crore at end of June from Rs 1,28,272 crore as on March 31.Besides, they are losing close to Rs 5 per litre on petrol, a fuel that was decontrolled in June 2010 but rates of which haven't moved in tandem with cost."Finance Ministry says it is not left with funds to subsidise oil companies. Oil companies are jewels of India.They need to be saved at all cost. Governments come and go, but oil companies will be required to fuel the country," the official said.Diesel is being sold at a loss of Rs 19.26 a litre, kerosene at Rs 34.34 per litre and domestic LPG at Rs 347 per 14.2-kg cylinder.At current rate, the three firms are projected to lose Rs 1,92,951 crore in revenues in the financial year ending March 31, 2012.(PTI)
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The road to the village of Betim snakes up gently from the Mandovi river, and after a couple of turns reaches a dead end. And this is where Villa Paradiso lies. Mumbai’s jet-setters fly into Goa’s Dabolim airport, enjoy their weekend there, and are back to their dealing rooms after a 40-minute flight on Monday morning. Villa Paradiso was among the first properties developed by Tata Housing after it was re-launched in 2006. The Portuguese hillside villas with Mangalore tile roofs and verandahs dressed with quaint balustrades were a good brand advertisement. The well-heeled snapped up the two-bedroom apartments for Rs 1.5 crore and more. It was worth their while. They soaked up the sun in the kidney-shaped swimming pool, and spent their evenings watching the lights of Panjim, or toasting their luck as the casino boats drifted past on the Mandovi below. Since 2006, Tata Housing has come a long way from its early chequered history. Incorporated as Tata Housing Development Company (THDC) in 1984 with Tata Sons holding 99.87 per cent, the company initially did well but slowed down in the 1997 real estate recession, with sales of just Rs 80 crore. By 2000, it was off the radar of the Tata think tank, and business activity ground to a halt by 2000. “Till 2006, there was no land, and no projects. Even the company logo was withdrawn,” recalls Brotin Banerji, MD & CEO, Tata Housing. LUXURY and mid-level projects have higher marginsMIXED MARKET: The 36-acre project under development in Gurgaon, Primanti, is a mix of super-luxury villas, executive floors and apartments (BW Pic by Tribhuwan Sharma)After the trough, the revival started in 2006, and real estate was on the roll again. The Tata Group saw an opportunity. Tata Housing was given a new lease of life, and business plans were redrawn to ride the boom. How has it performed in its second outing?Homes For AllSales executive Mahesh Mahovar is cooling his heels after completing a hectic sales campaign for nearly 600 apartments at Tata’s Talegaon project. La Montana, set amidst the rain-drenched hills of the Western Ghats, 125 km from Mumbai, is an ‘affordable’ second-home project with neat little flats starting at Rs 19 lakh. The bare-bone shells of the apartment blocks are up and hectic work is on at the site for constructing the podium. Mahovar says they will begin delivering homes by July next year, by when the second batch of the more expensive 125 row houses will also be ready for launch. La Montana is being developed by Smart Value Homes (SVHL), a Tata Housing subsidiary focused on the ‘affordable’ housing segment. “Many of our buyers include local employees working in the Talegaon industrial area; some are asthma patients while others are in search of clean air,” Mahovar tells BW.Interestingly, while other builders turned to ‘affordable housing’ as a recession-tackling measure in 2008-09, THDC did so by choice. The company made its mark in 2006 with the launch of its mass housing project at Boisar, an industrial town about 90 km north of Mumbai, targeting the large working class population. 65% of Tata Housing’s sales come from upmarket residential projectsAt the ‘budget’ end, the company sold 1,500 small one- and two-room homes under the ‘Shubha Griha’ brand, priced between Rs 3.9 lakh and Rs 6.5 lakh. Company officials said the stock was over-sold as soon as bookings opened. Tata Housing simultaneously came out with the superior ‘New Haven’ brand at Boisar with 1,800 units priced between Rs 12 lakh and Rs 28 lakh. For the more discerning, ‘New Haven Crest’ offered a set of plush 150 row houses.The company replicated the Boisar experiment at another 65-acre project at Mumbai’s distant suburb of Vasind, which falls on the Central Railway line. At Vasind, Shubha Griha ‘budget’ homes of 360 and 490 sq. ft are marketed at Rs 5.8 lakh and Rs 7.8 lakh, respectively. The ‘New Haven’ units came in the range of Rs 15-35 lakh. Lap Of LuxuryIs it Tata Housing’s strategy to focus on the mass, affordable segment? In fact, not. It was a starting point, but the company has been quite clear it will get higher margins from middle class and luxury segments, while falling back on ‘budget’ housing to boost its top line in times of trouble. “About 35-40 per cent of our product is from Smart Value Homes; Tata Housing accounts for the upmarket 65 per cent,” says Banerji. SVHL is targeting the mass segment. Not far from Talegaon, and closer to Mumbai among the Khandala hills, Ritesh Kothari is busy selling the last of Tata Housing’s luxury villa project ‘Prive’. At the top of the hill of the 20-acre property is the ‘show villa’ now snapped up by Raj K. Chauhan of Parle Agro for Rs 14 crore. The stone inlaid exteriors open up to a spacious glass-fronted living and dining area and a massive wooden open deck. Clouds drift past nonchalantly, and when they open up, it is a 180-degree, breathtaking view of the rolling hills beyond, and the valley below. The lower floor is the living area and bedrooms that open to a small private garden and plunge pool. And finally there is the ‘entertainment room’ on the ground floor. One can take the stairs, but there is also a small elevator, hidden behind wooden closets, that commutes between the three levels. HIGH-END is a tough market as inventory moves slowlyIN NATURE’S LAP: The luxury villa project, Prive, has 73 houses, some priced between Rs 12-16 crore(BW Pic By Subhabrata Das)Kothari’s other celebrity clients include Vineet Nagrani of Credit Suisse, Arvind Sampat of Standard Chartered Bank, cricketer Ajit Agarkar and renowned cardiologist Dr Sudanshu Battacharyya. For them and the 60 others who have bought these villas, the second home in the clouds is a 90-minute drive from Mumbai. Kothari opened sales a couple of years ago between Rs 3.5 crore and Rs 8 crore for these 73 exclusive villas. He is holding on to a dozen or so fully-furnished villas and has pushed up the price to Rs 12-16 crore. Tata Housing’s expected revenue from the project: Rs 300 crore. There is competition too. Sahara’s Aamby Valley and the Ajit Gulabchand-promoted Lavasa both offer ‘hill station’ homes in the vicinity.In the upper middle-class market, Tata Housing’s offerings include a 36-acre project in Gurgaon called Primanti, which offers a mix of super-luxury villas, executive floors and apartments in high-rise towers with the standard garnishing of spas, gymnasiums and other condominium comforts of gated communities. In Bangalore, the company is selling The Premont — a project with 320 residences atop Banashankari Hill in four towers as well as row houses in the Rs 1.8-2.4 crore range. Anchor ManBanerji is clearly a Tata man. He wears his company logo literally on the collar of his white shirt. “The company was in cold storage for over a decade. Its logo had been withdrawn and even the domain name was up for grabs. But within a few years we have taken Tata Housing from 0 to 60 million sq. feet.” Banerji is not exactly modest, but he is the anchor man behind Tata Housing’s runaway growth. At 38, he is the youngest of the Tata CEOs, and the company website acknowledges that 43 million sq. ft has been delivered with Banerji at the helm. During his 13 years with the group, he has worked in Tata Chemicals to re-launch Tata Salt as a branded product; and then was with Barista in the 2004-06 period. It was perhaps his turnaround performance at Barista, which brought the coffee retailer back into the black, that marked him as the man for reviving THDC. 'Within a few years, we have taken Tata Housing from 0 to 60 million sq. ft'Brotin Banerji, MD and CEO, Tata HousingBanerji attributes the company’s rapid growth to two factors. The company’s strategy to straddle all segments, from the top-end luxury market to middle class homes and finally to the mass, budget category, has paid off. He also says the company has adopted the joint venture route wherein it prefers to develop projects with landowners as partners rather than sink scarce capital into acquiring expensive land banks. Banerji disagrees with the view that the JV route can hit growth if pesky landlords create problems.“Joint development accounts for 50-60 per cent of our projects and we are managing to add 10-15 million sq. ft every year to the pipleline. The Tata name gives us credibility. Landowners come back to us since we help them multiply their assets manifold. That is because we always sell at a premium. We opened Primanti at around Rs 5,500 a sq. ft, when similarly placed Gurgaon projects were selling at Rs 4,000,” he says. Banerji clarifies that in these JVs, Tata Housing is careful to ensure that operational command remains with it. It’s a tough market today though, concedes Banerji, with the luxury residences moving slowly compared to six months ago. The price of construction material is on an upward trajectory. Steel is up from Rs 32,000 to Rs 55,000 per tonne in the space of 18 months. This is increasingly squeezing margins. But Tata Housing hopes that its multi-segment approach will keep it ahead. “With no new launches this quarter, we have again fallen back on the ‘affordable segment’. It is 55 per cent of sales this quarter. That is keeping our cash-flow going,” says Rajeeb Dash, head of marketing services at Tata Housing. “Our launches have come down substantially because we do not launch without full approvals,” concedes Banerji. “We get stuck not so much because of the market, as much as because of permissions not coming through in time.” Ramping UpThe certificate of performance was delivered to Tata Housing when holding company Tata Sons decided to invest Rs 500 crore as fresh equity in its real estate subsidiary about six months ago. The infusion tripled its paid-up capital and reserves that earlier stood at Rs 250 crore. The rationale for the move is obvious. Tata Housing needs funds for its aggressive expansion programme through land acquisition and developing projects across all segments of the real estate market. Tata Sons, with surplus money for investments, is searching for the right avenues within the group. Tata Sons’ strategy was to differentiate housing from other real estate. It, therefore, simultaneously launched a sister company, Tata Realty and Infrastructure (TRIL), in 2007, around the time of Tata Housing’s revival, to focus on non-residential sectors such as IT parks, SEZs, airports, roads and bridges. Both the group companies are headed by R.K. Krishna Kumar, as chairman of their respective boards. BUDGET housing boosts the company’s toplineHOMING IN: Tata Housing’s budget houses at Boisar, near Mumbai, are mostly in the Rs 3.9-6.5 lakh and Rs 12-28 lakh range(BW Pic By Umesh Goswami)“We thought rather than starve it (Tata Housing) of capital, we should give it the means to grow. We could have easily brought in a private equity partner or launched an IPO, but given the scale of improvement in its operations, we feel we should fund this internally,” said Kumar at the time of announcing the Tata Sons’ infusion.The results support the Tata Sons move. Tata Housing grew 78 per cent with sales of Rs 1,098 crore in FY12, from Rs 617 crore the previous year. Net profit, too, has risen to Rs 180 crore from about Rs 100 crore for the same period in the last fiscal. This puts THDC ahead of similar corporate realty companies of the same genre. Godrej Properties (GPL), for instance, logged a consolidated turnover of Rs 820 crore for FY12, up 47 per cent from Rs 559 crore the previous year; net profit, however, declined from Rs 131 crore to Rs 98 crore for the year ended 31 March 2012 (see chart). Mahindra Lifespaces, an M&M group company, had earnings of Rs 701 crore for FY12, 13 per cent up from the previous year’s Rs 612 crore. Net profit grew marginally from Rs 113 crore to Rs 129 crore. The Ashok Piramal Group company, Peninsula Land, recorded a turnover of Rs 532 crore in FY12, up from Rs 501 crore the previous year; but net profit slipped 22 per cent to Rs 151 crore from Rs 191 crore in the same period. There are, however, some question marks about the JV route for development. Banerji’s reliance on partnering landowners, a business plan that is focused on doubling sales year on year, will face the downside if partnerships sour and thus affect project delivery. Tata Housing may not admit to the pitfalls but it has recently been aggressively buying land. Speaking about the company’s growth strategy, Anuj Puri, CEO of property brokers Jones Lang LaSalle (JLL), says: “Tata Housing has become more aggressive under the leadership of Brotin Banerjee. They have been acquiring properties across India, which speaks clearly of their confidence in being able to crystallise their expansion plans. Last year, JLL India transacted a property at Bhubaneswar to them via the PPP route, wherein they paid a much higher premium than their nearest bidder.”Being latecomers to the game of putting together large land banks, Tata Housing is taking on unconventional projects. For instance, in the Mumbai suburb of Mulund, the company is redeveloping a Maharashtra Housing Board colony that involves constructing a humungous 3.1 million sq. ft and rehabilitating the hundreds of displaced families currently living in dilapidated tenements. For funding, Banerji says that with the new equity infusion, the company would consider a healthy 1:1 debt-equity ratio, implying raising up to Rs 750 crore in debt. “There is no IPO on the cards, but to keep the funds pipeline going, we are considering a set of quasi-bond offerings at the end of this year.” A healthy land bank, a wide portfolio of projects and the advantage of the ‘Tata’ brand are all on the side of giving Tata Housing a healthy rate of growth. But the question is: will the jittery realty market sustain the company’s ambitions? gurbir(at)singh(at)abp(dot)in(This story was published in Businessworld Issue Dated 03-09-2012)
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Oil and Natural Gas Corp.'s plans to develop a gas field in Iran are in the balance as the company's exposure to the sanctions-hit OPEC member may hit aspirations for U.S. energy assets, Chairman Sudhir Vasudeva said on 4 September."We are present in Iran and Sudan. Because of this there are restrictions. We are trying to find ways to circumvent that. For any opportunity in the USA, we will have to address the law of the land," Vasudeva told reporters at an industry event.Western sanctions against Iran's disputed nuclear programme are aimed at stemming revenues of the OPEC member through sales of crude and bar institutions dealing with Iran's central bank from the US financial system.Many foreign companies have been forced to pull out of the Islamic state's energy sector due to the fear of sanctions.Mangalore Refinery and Petrochemicals Ltd, a subsidiary of ONGC, the country's biggest oil and gas producer, is one of the key Indian oil clients of Iran.ONGC is in talks with the Iranian government to develop the Farzad B gas field in the Farsi block. It also has a 25 per cent stake in the Greater Nile project in Sudan.Indian companies including Oil India Ltd and ONGC plan to buy a part of ConcoPhillips' Canadian oil sands assets worth around $5 billion.Houston-based ConocoPhillips is seeking a buyer for 50 per cent of a large portion of its Canadian oil sands holding, assets that could eventually produce more than half a million barrels a day.The Indian government has charged ONGC with securing energy supplies overseas to fuel the country's fast-growing economy. ONGC invests in foreign assets through is unit ONGC Videsh Ltd.A year ago ONGC Videsh announced a shift in its policy when its then managing director, Jomen Thomas, said his firm sought to buy assets in politically less risky countries like North America to cut its risk and boost output."We have the Farzad B discovery which requires millions of dollars so we have to weigh the pros and cons of that. We are in the process of doing that," Vasudeva said.India, the world's fourth-biggest oil importer, buys in nearly 80 percent of its oil needs as expanding refining capacity has outpaced growth in local oil output. ONGC's local oil output has been almost stagnant for years.ONGC last month announced the discovery of more oil reserves in its D1 field off India's western coast.Vasudeva said oil production from the new find may start in a year's time and has the potential to raise output of the field from the current 35,000 barrels per day (bpd) to 60,000 bpd.(Reuters)
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With no end to the government-BJP stand-off over CAG report on coal block allocation, the last week of the Monsoon session of Parliament began on 3 September' 2012 with a repeat of stormy scenes raising the possibility of a washout of the remaining four days.The month-long session, which already lost the previous two weeks to BJP's unrelenting demand for resignation of Prime Minister Manmohan Singh, again saw uproar created by BJP members, leading to wastage of one more day of both Lok Sabha and Rajya Sabha. However, amid the din, three bills, including Protection of Women Against Sexual Harassment at Workplace Bill, 2010, were passed in the Lok Sabha within minutes without any debate (rpt) debate. The other two legislations were the North-Eastern Areas (Reorganisation) Amendment Bill, 2011, and the National Highways Authority of India (Amendment) Bill, 2011. In the Rajya Sabha, repeated attempts by the government to ensure passage of the All India Institute of Medical Sciences (Amendment) Bill, 2012, were thwarted by Left parties which insisted that these should not be cleared without a debate. As the two Houses met for the day, it was the repeat of scenes witnessed over the last eight days with BJP members raising slogans and rushing into the Well to demand the Prime Minister's resignation. Slogans like "Koyle ki dalali hai, Congress sarkar kali hai (brokerage of coal has turned Congress government black)" and "Pradhan Mantri Isteefa Do (Prime Minister should quit)" rent the air leading to clashes as Congress members countered. Some UPA members were also seen waving the 'List of Business' at the agitating BJP members indicating their opposition to the disruption of the proceedings. (PTI)
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Amid the raging row over coal block allocation in India, as many as 90 mines face the threat of de-allocation as these are under scanner for non-production.Of these, 58 coal blocks are in the immediate focus with an Inter-Ministerial Group (IMG) set to decide their fate Monday.The government has already issued de-allocation notices to these 58 blocks -- 33 alloted to government firms and 25 to private entities.Besides these, there are 32 more whose cases would be reviewed by the IMG in its subsequent meetings, sources said.These 32 cases had been reviewed by the IMG in its previous meeting, they said.Coal minister Sriprakash Jaiswal had said on 2 September that any number of coal blocks could be cancelled if found that allocation was made in a wrongful manner or failed to start production in the stipulated time frame."On the basis of the IMG report, the allocations which were made in a wrongful manner or those allottees who have failed to start production of coal in a time-bound manner may face action. Any number of coal blocks can be cancelled," Jaiswal had said.Of the total 195 coal blocks allocated to both public and private firms over a decade, only 30 mines have begun production as per the government records.In its recent report tabled in Parliament, the CAG stated that undue benefits to the tune of Rs 1.86 lakh crore were extended to private firms on account of allocation of 57 mines to them without auction.The IMG comprising representatives from different ministries may recommend cancellation of such blocks, which did not comply to the development norms. The sources said the firms in their replies furnished to the ministry have cited various reasons, including land acquisition problems, delays in forestry and environment clearances and law and order problems for delays in developing the blocks.The government in April began the process of issuing notices to companies that failed to develop the 58 coal blocks within the stipulated time.The notices were issued to firms like Reliance Power's Sasan, Tata Power, Hindalco and Grasim Industries, ArcelorMittal, GVK Power, MMTC and others.In July, the government formed the IMG to review progress of coal blocks allocated to companies for captive use.The government had last year cancelled the allocation of 14 coal mines and one lignite mine to companies, including NTPC and DVC for failure to develop the blocks.(PTI)
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Sriprakash jaiswal — the usually sombre coal minister — is currently on a trip to Hong Kong and Singapore, along with an entourage of senior officials. The coal sector needs a big dose of efficiency to keep up with the nation’s growing demands. The aim: to woo foreign investors for this. But would a foreigner invest in mining in India when he cannot own or control the assets? Indian laws restrict ownership of coal mines to government-owned Coal India and Singareni Collieries Co. These companies can only involve the private sector as mine development operators in washeries, technology and contract mining. Then, remuneration probably is at a pre-determined price for every tonne mined. It is doubtful whether mining giants like Rio Tinto or BHP Billiton will take up such modest roles. At best, there could be offers from mid-sized firms. If at all.Strictly BusinessToyota has said it will recall 859,000 units of its RAV4 sports utility vehicle and 19,000 units of the Lexus HS 250H car in the US and Canada to fix a problem with the rear suspension arm.(This story was published in Businessworld Issue Dated 13-08-2012)
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Energy firms that have invested more than $12 billion have been hit by delays on required approvals for 52 exploration blocks, some awarded as far back as 1999, Oil Minister S. Jaipal Reddy said in a written response to parliament.Approvals have been delayed due to defence, environment and maritime boundary issues, Reddy said.Of the blocks awaiting approvals, 22 belong to Oil and Natural Gas Corp., 15 to Reliance Industries, five to BHP Billiton, three to Cairn Energy India and two to Australia's Santos Ltd.British firms BG Group, BP and Italy's ENI own one each.Reddy said clearances for larger areas from which these blocks are carved out are obtained from concerned ministries before auctioning them.Contractors then need approvals from the defence, environment and forest, and foreign ministries as well as the relevant state governments to start or continue exploration or production work.The firms have invested $12.4 billion for exploration and development activities in the blocks, Reddy told lawmakers.The world's fourth biggest oil importer, India wants to tap domestic supply to cut its ballooning import bill and widening fiscal deficit.Its crude oil import bill surged 48 percent to 6.72 trillion rupees in the year to March due to rising global oil prices, declining rupee and expanding refining capacity.The economy is growing at its slowest pace in nearly a decade and policy paralysis has stalled major reforms including those on fuel pricing, denting global investors' confidence in the Indian oil sector.In 2010, Brazil's Petrobras and Norway's Statoil <STL.OL> exited from a block operated by ONGC in the hydrocarbon-rich Krishna Godavari Basin off India's east coast.India, which imports about 80 per cent of its oil needs, has awarded 249 blocks under nine licensing rounds since 1999. Oil and gas discoveries have been made in 38 blocks.(Reuters)
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