Essar has shut down all units at the UK's No. 2 refinery due to a steam supply issue on Tuesday (4 February) and said it did not yet have an estimate for when the plant could resume operations.The problem at the 296,000 barrel-per-day (bpd) Stanlow refinery in northwestern England developed just before 2:00 p.m. local time (1400 GMT) on Tuesday, Essar spokesman Jonathan Miller said in a statement."We are now working to restore steam supply and effect a safe re-start," he said.The Stanlow refinery supplies 15 per cent of the UK's fuel needs, shipping it around the country by road and pipelines, Essar's website said. It has broadened its crude slate to increase its use of West and North African and Canadian crude alongside North Sea oil.The plant underwent a substantial turnaround towards the end of last year, refurbishing a gasoline-making catalytic cracker for around $35 million.Essar is an Indian-owned company with a refinery in India and interest in a refinery in Kenya. It also has power and upstream oil and gas operations.(Reuters)
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In a scathing attack on Reliance Group companies BSES Rajdhani and BSES Yamuna, state-run NTPC said on Tuesday, it may be forced to suspend electricity supply to the two Delhi discoms if they fail to clear their outstanding bills in time. After issuing notices to BSES Rajdhani and BSES Yamuna on Saturday, NTPC said that it is in trouble and unless its dues are cleared the company may have to stop power supply to these discoms. "We are in a difficult situation. If we are not paid in time, we will have to regulate nearly 2,000 MW of power, we have (other) buyers for it," Chairman and Managing Director, NTPC, Arup Roy Choudhury said here. When asked for comments, Power Minister Jyotiraditya Scindia said, "This issue is between DERC (Delhi Electricity Regulatory Commission), the discoms in Delhi and the state government, it is not for Power Ministry to comment but what we certainly do hope is that the dues rightfully in the case of NTPC should be paid as soon as possible." Choudhury said the companies have a history of payment issues. He said, "This is not the first notice on BSES. They have been constantly defaulting in their payment security mechanism and this time it is the outstanding dues also." However, the company added that there are no payment issues with Tata Power Delhi Distribution Limited, another discom which supplies electricity in the National Capital. "Tata Power has been paying their bills in time, we never had a problem them. With BSES this is the third time we are facing problems," Choudhury added. "We do not have TPA (Third Party Protection Audit) with the Delhi government like other governments. The discoms (in other states) are saved by state governments through the TPAs, under which we get payment from the states under the state allocation," he said. hese bills, due to BSES Rajdhani and Yamuna, are for the amount of power consumed in December and billed in January to be payable by the end of January. "For energy supplied in December, we paid Coal India in October and November and 75-80 per cent of the electricity tariff is cost of coal," Choudhury added. There are two components of electricity cost -- fixed cost and variable cost -- and both are regulated by the Central Electricity Regulatory Commission. Variable cost comprises cost of fuel, railway freight etc while the fixed cost components are employee cost, cost of land and equipment etc. NTPC, last week, issued notices to BSES Rajdhani and BSES Yamuna for defaulting on payment security mechanism and non-payment of outstanding dues to the state-run company. The present allocation of power to BSES Rajdhani from NTPC stations is l,26l MW and for BSES Yamuna it is 811 MW. BSES Rajdhani distributes power to over 18.5 lakh customers in south and west Delhi, including Alaknanda, Vasant Kunj, Saket, Nehru Place, Nizamuddin, Sarita Vihar, Hauz Khas, R K Puram, Janakpuri, Punjabi Bagh, Tagore Garden, Vikas Puri, Palam and Dwarka, according to its website. BSES Yamuna has 13.5 lakh customers in central and east Delhi, including Chandni Chowk, Daryaganj, Paharganj, Shankar Road, Patel Nagar, Krishna Nagar, Laxmi Nagar, Mayur Vihar and Yamuna Vihar.(PTI)
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India's top power producer NTPC Ltd said on Saturday (1 February, 2014) it might cut supplies to a company that distributes electricity to parts of New Delhi, something that could plunge the heart of India's capital into darkness.State utility NTPC said distribution company BSES Yamuna Power Ltd, which sells electricity in the central and eastern parts of the city of about 16 million people, must clear its dues or else supplies would be cut from February 11.Citing lower tariffs and a shortfall in revenues, BSES Yamuna Power Ltd, an arm of Reliance Infrastructure Ltd, has already expressed its inability to pay state-run power generation companies.The row could result in an outage of up to 10 hours a day, exacerbating problems for Delhi's newly-elected Chief Minister Arvind Kejriwal, elected on the promise of cutting electricity tariffs for millions of Delhi's voters.Kejriwal, a former anti-corruption activist, recently asked the state auditor to look into the accounts power distribution companies to see if they are profiteering. The companies have challenged the move in a court.BSES Rajdhani Power Ltd and Tata Power Delhi Distribution Ltd are the other companies that sell electricity to consumers of Delhi.BSES Yamuna Power Ltd on Friday warned the local government of power cuts and Kejriwal responded with a warning of a possible cancellation of its licences. But Delhi's power sector regulator approved a 6-8 percent tariff increase.(PTI)
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London-listed oil and mining conglomerate Vedanta Resources Plc's third-quarter core earnings rose 3 per cent, helped primarily by its oil and gas operations in India.The company, controlled by Indian billionaire Anil Agarwal, said group core earnings or earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased to $1.14 billion in the quarter ended Dec. 31 from $1.11 billion a year earlier.Revenue fell about 3 per cent to $3.45 billion.Vedanta simplified its byzantine structure last year when it overhauled its web of subsidiaries and created Sesa Sterlite - an umbrella unit that groups most of its assets.(Reuters)
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Some 30-odd kilometres south of Delhi is the dull, drab industrial town of Ballabgarh — home to the 66-acre campus of global construction equipment major JCB. The verdant campus, in stark contrast to its surrounding, is dotted with hundreds of yellow 2-tonne backhoe loaders (vehicle with arm and bucket at the back and a loader in the front) ready to be shipped out across India and abroad. After all, the world’s largest backhoe loader manufacturing plant rolls out an average of 100 machines every day. For the £2.7-billion, Staffordshire, UK-based JCB, the action is very much in India. And, why not? While the global construction equipment market is growing at a meagre 5 per cent, India is clocking a healthy 15 per cent. And JCB has been the prime gainer. So much so, the company accounts for close to half the backhoe loaders sold annually in India.JCB chairman Anthony Bamford recently called India a hub and said it was a crucial destination for the world’s third largest construction equipment manufacturer by volume. Interestingly, for a company with operations in close to 150 countries, India is truly the crown jewel, accounting as it does for a little more than a quarter of JCB’s global revenues. JCB entered India in 1979 as a joint venture partner with Escorts. As the Indian economy grew, JCB bought out its partner in 2003. It brought in the latest technology from Europe. This gave the company the much-needed edge over peers such as state-owned Bharat Earth Movers, and pushed it to the No. 1 slot from 2006-07 onwards. With the Golden Quadrilateral project taking off and the announcement of other road projects, the firm gained traction. The company has seen revenues rise from just Rs 450 crore in 2001 to Rs 5,700 crore in 2012. JCB’s Global Revenues (2012) £2.7 BILLION (RS 22,295.35 CRORE)JCB India Revenues Rs 5,700 CroreJCB India’s Share Of Global Revenues 25.59%Named after founder Joseph Cyril Bamford — the Bamford family was ranked the ninth richest in the UK by a business magazine in 2013 — JCB is among the global construction equipment majors looking to grab a bigger slice of India’s growing construction pie. The reasons are not hard to find. The $6.5-billion Indian construction equipment market is expected to be worth a whopping $23 billion by 2020, according to a 2013 Accenture report. Earth-moving equipment accounts for $3.7 billion (57 per cent) of the Indian market, and JCB is currently the biggest player in the segment. “Anybody who needs to dig earth comes to us,” says Vipin Sondhi, MD and CEO, JCB India. The construction equipment market globally comprises four verticals — earth-moving equipment, material handling and cranes, concrete equipment, and road-building equipment (in descending order of market share). JCB is among the 21-odd global construction equipment majors to have invested in India. These companies are setting store by the central government’s announcement last year that it would spend $1 trillion on infrastructure development during the 12th Five-year Plan (2012-17). Spotting an opportunity, global firms, including Caterpillar, Eaton Construction, John Deere Construction Equipment (with Ashok Leyland) and LeeBoy Indian Construction Equipment, have been expanding operations in India. This has raised the level of activity among construction equipment companies in India. Recently, Larsen and Toubro bought out Japan’s Komatsu from a joint venture. Meanwhile, Japan’s Hitachi is looking to make India the base for its construction equipment and power electronics business, and intends to invest Rs 4,700 crore by 2015-16. It plans to set up a research and development centre for construction equipment in Bangalore. So widespread is the company’s presence in India that its bright yellow backhoe loaders with ‘JCB’ imprinted on them have now become synonymous with earth-movers. While JCB is the market leader in India, it trails the global majors in other emerging markets. It recently entered Brazil and faces immense competition from domestic manufacturers in China. But in India, the firm already has three manufacturing facilities — two in Pune and one at Ballabgarh. One Pune plant is component-oriented and caters to the needs of JCB factories in India and abroad, while the other makes excavators, wheeled loading shovels and vibratory compactors. The company plans to invest an additional Rs 500 crore over the next five years in a new plant in Jaipur. To be initially used for fabrication work, it is being set up on a 115-acre plot at the Mahindra World City special economic zone. “India is a very important market for JCB. The investment in Jaipur is a vital step to further strengthen our position in this growing market,” says Alan Blake, who recently retired as JCB’s global CEO. All along, JCB India’s focus has been to meet the needs of road projects. As Sondhi says, the Golden Quadrilateral project saw demand for equipment rise manifold. However, with many road projects getting delayed, JCB saw revenues fall 15 per cent in 2012. So, the company decided to give exports from India a push. In 2012, it exported 970 machines to the Middle East and Africa, over three times the number it exported in 2011. Surprisingly, Sondhi continues to be unfazed by the slowdown in road projects. “We’re an infrastructure-deficit country,” he says, convinced that demand will soon pick up, and a lot of the action in the sector will start once the 2014 elections are over.Market MedleySo how does JCB fare in such a competitive market? The answer lies in the numbers. “Almost every second construction machine sold in India today is made by us,” says Sondhi. In 2012, JCB accounted for close to half — over 24,000 of the 49,000—of the backhoe loaders sold in India. Its closest competitors are Caterpillar and Case New Holland. break-page-breakBut the real opportunity lies in the fact that even today JCB India makes only 24 of the 300-odd machines that it makes globally. That is where the investment in Jaipur will help. Fabrication work can be used as a template for machines that will be produced in the future. JCB is also looking to expand its India advantage. It has set up a 200-person design centre, spread across 18,000 sq. ft, in Pune to cater to its global needs. This is in addition to two design centres that the group has in Rocester and Foston in the UK. Over the next few years, the company plans to add more products to its India portfolio. The other advantage the company has is its distribution muscle. Today, it has 58 dealers and 500 outlets as compared to 45 dealers and 175 outlets five years ago. This network is much bigger than what any of its competitors have. Across other construction equipment companies, it is estimated that there are a little less than 1,000 outlets. Though demand has been rising steadily, input costs have outpaced it. The biggest outgo is definitely on steel. The industry has been looking at ways and means to curb costs. “The objective of construction equipment companies all along has been to undertake value engineering projects that prune costs. That, however, is not easy in a world of rising commodity prices,” says an industry consultant. Apart from production costs, the other issue that needs to be factored in is the cost of ownership. The growing demand for infrastructure entails increasing investment in these machines. Incidentally, it is not large corporations that are picking up these machines that start at around Rs 22 lakh and go all the way up to Rs 50 lakh. Close to 40 per cent are first-time buyers who use the equipment as an investment to get into a lucrative business. Satinder Singh, 32, a petty contractor from Narela near Delhi is one such person. He bought a backhoe loader a couple of years ago on loan. He operated the machine on his own while working for contractors on the six-laning of the Delhi-Jaipur highway. Now, he is all set to add a couple more machines. Says Singh: “Shuruat mein thodi mushkil thi. Uske baad to kaam aata raha hai (It was difficult at first, but the work flow has been steady ever since).” That, according to Sondhi, is the norm. Most people who start with one machine now have many. He points out that most owners lease the machines out to road developers, while others hire people to run them. Singh can earn around Rs 600 an hour by leasing out his machines to road companies. ON A ROLL: The JCB plant turns out 100 units a dayTo ensure that people operate the machines correctly, JCB has set up operator training centres. This is important as the machines have multiple gears to handle different operations. The centres do not just help bridge the gap between the demand and supply of trained operators but also assist in improving the productivity of the machines due to better operations. Apart from training, they also help people like Singh run their additional machines.But like with most other equipment, the machines in India need to be far more rugged than in the developed world. That’s because the conditions in India are harsher, the machines are used for much longer periods at a time and operators have to factor in the supply of adulterated fuel. To make the machines cheaper for the price-sensitive Indian customer, JCB has localised its products. More than 80 per cent of the components in the backhoe loader are now sourced locally. However, JCB has still been quite focused on sticking to a small range of equipment unlike global competitors, which have moved on to make bigger machines that cater to the needs of the mining industry. JCB has no immediate plans to manufacture mining equipment in India. Apart from backhoe loaders, the company also makes tracked excavators, wheeled loaders and compactors in India. At the recent Excon 2013 (South Asia’s largest construction equipment exhibition) in Bangalore, JCB introduced 19 made-in-India machines. After all, it is the infrastructure deficit that Sondhi is looking to address. That will take a lot more time after the damage wrought by the Uttarakhand floods and the Phailin cyclone. The demand for construction equipment is, however, definitely on the rise. That means JCB should see a lot more orders in the next few months. But, it remains to be seen if it can retain its pole position in a market that is teeming with global companies looking to make a mark. (This story was published in BW | Businessworld Issue Dated 10-02-2014)
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Compiled by MoynaGraphic by Prashant Chaudhary (This story was published in BW | Businessworld Issue Dated 10-02-2014)
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Industrial groups like Tata and Anil Ambani's Reliance ADAG were allocated coal blocks despite not being recommended by the Power Ministry during UPA 1 when Prime Minister Manmohan Singh was heading the coal ministry, shows a list submitted by the Centre to Supreme Court today.A day after the Supreme Court raised questions on how the companies, whose names were not recommended by Central Electricity Authority and Ministry of Power, were allocated coal blocks, the Centre placed a list of 11 such firms which were given blocks for end-use power plants.The list also includes Tata Power, Reliance Energy Ltd, Balco SKS Ispat and Power, Prakash Industries, Green Infrastructure, Visa Power, Vandana Vidyut, GVK, Gagan Sponge Iron and Lanco Group Ltd.Attorney General also provided a list of eight companies recommended by Ministry of Power but not selected by Screening Committee. They are Rashmi Cement, TRN Energy, Maithon Power, Mahabir Global Co., Rosa Power Co., Bhushan Energy, Lanco Amarkantak and Vedanta.The apex court had yesterday questioned the Centre over the functioning of the screening committee for allocation of coal blocks in which 11 private companies were allegedly preferred despite not figuring in the recommendations by competent authorities."What appears to be for sure is that the screening committee is not accepting the broad guidelines," it observed while hearing the issue of allocation of coal blocks by screening committee in 2007-08 when Prime Minister Manmohan Singh was holding charge of the coal ministry.Referring to one screening committee decision, the bench said it needs explanation as out of 28 recommendations, it accepted 20 and rejected another 8 while adding on the application of 11 private companies for allocation of coal blocks on its own."Of the 28 recommendations made by the CEA and endorsed by the Ministry of Power, 20 were accepted by the screening committee and eight were not. Why was this?"What was the criteria adopted by the screening committee to exclude eight. Why 11 were added by the screening committee which were not recommended by the CEA and Ministry of Power.What makes screening committee to add or include the 11 companies/applicants. Please look into it and tell us," the bench asked the Attorney General.(PTI)
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Shares in State-run Coal India Ltd rose 2.3 per cent in trade after the company on 14 January said it will pay an interim dividend of Rs 29 a share, or Rs 183.2 billion, in the current fiscal year.The government's 90 per cent shareholding in the company will fetch it about $2.7 billion.Reuters)
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