Piramal Enterprises Ltd plans to invest $2 billion in real estate projects over the next two years, betting that a revival in the economy under a new government will boost demand for property, its billionaire chief said.Its planned investment could help developers complete commercial and residential projects left unfinished when they ran out of money and banks cut back on credit to a sector badly mauled by a slowdown in Asia's third-biggest economy."We are more optimistic about the sector this year compared to last year because of a stable government and the overlying expectations for the economy to perform better," Ajay Piramal, chairman of the diversified company, told Reuters.Home sales have come to a halt as high inflation and interest rates deter buyers, pushing up the stock of unsold inventory.In the region around the capital, New Delhi, the inventory pile-up could take 53 months to clear at the current pace of sales. In India's leading metropolitan areas, including financial capital Mumbai, it would take 35 months, according to Mumbai-based firm Liases Foras.Many property firms are scouting around for new sources of funding, with banks unwilling to lend more to the debt-laden sector and the weak financial situation of many developers making equity offerings unattractive.Indian and foreign investors have become cautious on real estate after two years of less than 5 per cent economic growth. Private equity investment in the sector dropped to $1.6 billion last year from $1.95 billion in 2012, according to research firm Venture Intelligence.A Reuters poll of economists last month forecast the economy would grow 5.5 per cent in the current fiscal year to March and 6.4 per cent the following year as Prime Minister Narendra Modi pushes through reforms to attract investment."The banks are not still increasing their allocations to real estate. Since banks are not increasing and demand for money is there, the NBFCs (non-banking financial companies) and PEs (private equity firms) are busy of course, more transactions are happening," said Amar Merani, CEO of Xander Finance Private Ltd, part of The Xander Group, an emerging markets investment firm.Piramal, known for identifying new investment opportunities and whose moves are closely watched by bankers and investors, said his company was looking to put money into both residential and commercial projects.It makes real estate investment through debt, equity and structured finance routes.In February, it tied up with the Canada Pension Plan Investment Board, which manages Canada's national pension fund, on a $500 million fund to finance residential projects in India.Piramal, whose other business interests include healthcare and speciality glass packaging, stepped up its financial service activities after selling its Indian drugs business to U.S.-based Abbott Laboratories for $3.72 billion in 2010.(Reuters)
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Reliance Industries Inc on Wednesday said it had agreed to consider the divestment of its Eagle Ford Shale midstream joint venture with partner Pioneer Natural Resources Co. Reliance owns a 49.9 percent stake in the business, EFS Midstream LLC, while Pioneer is the operator with a 50.1 percent stake in the Eagle Ford midstream system, which consists of 10 central gathering plants and about 460 miles of pipelines. Pioneer will redeploy capital from the sale to its core oil rich assets in West Texas, and currently has no plans to divest its upstream assets in the Eagle Ford shale, the company said in a statement on Wednesday. Reliance, which Reuters reported is seeking a buyer for its 45 percent stake in its Eagle Ford joint oil and natural gas venture, did not mention its plans for the upstream assets. The midstream business was set up in 2010 to construct facilities to handle condensate and natural gas from wells in the Eagle Ford shale and Pioneer's cash flow from the business is expected to be over $100 million in 2015, according to the company's statement. Reliance said in a statement to the exchange that its current investment in EFS Midstream was $208 million. Reliance shares were down 0.88 percent at 993.555 rupees as of 12:37 p.m. in a broader Mumbai market that was up 0.12 percent. (Reuters)
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The number of new home launches declined by 21 per cent to 34,600 units during the July-September period in India's eight major cities as property market continues to witness a slowdown and a large number of housing stocks remain unsold. Delhi-NCR, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Ahmedabad and Bangalore witnessed launch of 43,800 housing units in the year-ago period, according to property consultant Cushman & Wakefield. "Unit launches decreased as developers focused on completing existing projects (in the wake of significant unsold inventory) and delayed new launches awaiting an increase in demand," C&W said in a statement. During the third quarter of 2014, 166 new housing projects were launched across these eight cities, with Chennai recording the highest with 45 projects and Ahmedabad reporting the lowest number of new launches of 5 projects. City-wise, Ahmedabad witnessed the maximum fall of 62 per cent in the launches of new homes. Only 800 housing units were launched during July-September 2014 as against 2,100 units in the year-ago period. After Ahmedabad, Delhi-NCR saw a decline of 54 per cent in new residential launches of about 4,500 units as compared to 9,700 units the same time last year. Bangalore saw a fall of 27 per cent and Mumbai 11 per cent. However, the launches of new homes increased in Kolkata, Pune, Chennai and Hyderabad on expectation of improvement in housing demand. "Kolkata saw a significant rise in the new launches in the quarter over same time last year. With 2,300 unit launches, market activity improved by around 28 per cent from the previous year," C&W said, adding that Pune also experienced a growth in total units launched of about 18 per cent due to festive season demand. New home launches increased by 7 per cent and 5 per cent in Chennai and Hyderabad, respectively. Segment-wise, the consultant said that sharpest decline in launches was recorded in the affordable segment, which declined by 52 per cent in Q3 2014 as against Q3 2013. Commenting on the report, C&W India Executive Director (Residential Services) Shveta Jain said: "Supply outstrips demand in most of these cities due to weak market sentiments and slower growth rate in sales due to which new launches have remained checked." "There is a conscious effort by developers to keep the number units low thereby making smaller sized projects to help them deliver on time and meet the expectations of the purchasers. This in turn has been instrumental in keeping the prices stable in the market allowing the market to remain positive," she added. (PTI)
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Fed up with constant electricity cuts and government-enforced "power holidays", Indian IT firm ValueLabs has turned to the sun beaming down on its head office for help. In July, it finished building a 13 megawatt solar plant - enough to power 6,000 homes - to keep the lights on and computers humming for more than 3,000 employees at its base in Hyderabad. It is even selling surplus electricity back to the grid. "We plan to use the entire quantum of power generated from these plants in the coming years for our existing and upcoming campus," said Krishna Reddy, a senior ValueLabs executive. Factories and businesses have installed over 30 MW of rooftop solar panels in the last year, data compiled by New Delhi-based consultancy Bridge To India shows. That is a small amount compared with India's solar capacity of 2,700 MW, but demand may accelerate under Prime Minister Narendra Modi who has made renewable energy a priority. Bridge To India forecasts compound annual growth will hit more than 60 percent in the next five years, as falling panel prices make installations more alluring. In a sign that even big business is warming up to alternative energy sources, India's second-largest IT exporter Infosys Ltd is building a 50 MW solar plant in Karnataka to meet 30 percent of the company's power needs. Bridge To India estimates that commercial rooftop and smaller utility plants have the potential to provide up to 83,000 MW of solar energy, more than half of India's potential solar capacity out to 2024. "With the new government coming in, we see a clear intent to further increase allocation of solar in the energy mix," said Sujoy Ghosh, India head of U.S.-based First Solar. Along with SunEdison, First Solar is among foreign panel suppliers expecting to profit from rising demand in India. The new government is hoping to ramp up renewable energy, and wean the country off of a dependence on coal and oil and fulfil Modi's election pledge of bringing power to all. While India's overall installed capacity has risen 20 percent in the past three years and peak-hour shortfalls have eased, not enough power reaches end-users due to rickety transmission lines, and when it does, supply is often fickle. Many southern states, where ValueLabs and Infosys are based, enforce power cuts to keep a check on demand. Across the country, businesses are forced to buy costly back-up generators in case of outages. States in the arid north and west are building big solar plants at the fastest pace, though smaller commercial projects are cropping up across India, where nearly all states enjoy year-round sunshine, analysts say.Cost HurdlesBut, as for many in growth economies looking for ways to cut back on oil imports, costs are high on the whole and even early adopters say solar is only part of the answer. ValueLabs spent 1 billion rupees ($16.3 million), which it expects to make back in eight years. It is keeping its back-up generators. The Kanpur-based Indian Institute of Technology is installing rooftop solar panels. Yet some 70 percent of its energy will still come from conventional sources. Despite Modi's plans to target up to 100,000 MW of solar generation by 2022, far more than an existing 20,000 MW target, India remains heavily reliant on conventional thermal energy. Today, solar power generation accounts for about 1 percent of installed energy capacity and a fraction of the 26,000 MW China can produce. For now, individual companies say it is falling panel prices and government subsidies that have made solar more appealing. Infosys says its own solar-generated power will cost it less than the 6.15 rupees per unit it pays for electricity from the grid, even after factoring in depreciation expenses. It did not say how much lower the costs were. "The economics of doing this has improved. If you can get solar at a reasonable efficiency level...then it makes sense to have it as a main power source and have the grid as a backup," said Kalpana Jain, a senior director at Deloitte India. More broadly, securing stable demand is also not easy - a pitfall illustrated in China's huge solar market, where insufficient subsidies and poor infrastructure mean demand has not kept pace with supply. India's electricity distribution companies, which are ordered by politicians to keep prices low, have little incentive to buy renewable energy - roughly 15 percent pricier than thermal - because they cannot pass this on to consumers. But for companies, choosing solar is still better than the alternative. "We want to ensure we are free from power disruptions in the future," said ValueLabs' Reddy. (Reuters)
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Even as the 30-stock BSE benchmark index Sensex touches new heights every day, a report by Deloitte Global has stressed that India needs to focus on some key sectors like banking and infrastructure to attract foreign investment.In the report titled Competitiveness: Catching The Next Wave In India, Deloitte Global lists out the challenges faced by major sectors in the country. “To fully realise its potential, India must continue to invest in infrastructure, particularly transport networks and power systems, as well as work to enhance the employability of its working population. In addition, adopting an environment that enables innovation and collaboration to flourish across borders is critical to India’s economic growth. And of course, all this requires effective implementation,” says Gary Coleman, global managing director, Industries, Deloitte.The report has taken a growth horizon of 30 years for the country. The report says that the rural areas and lower-middle class in the urban areas are set to grow in the coming years. The report states that these are the two areas which would provide biggest opportunities for the financial services sector. “Despite the fact that more than 40 per cent of Indian households currently do not have access to banking services, the government’s strategy to promote financial inclusion in India, along with the country’s rising middle class, will likely continue to drive demand for services in the sector,” the report states.The report also emphasises the importance of the infrastructure if India is expected to achieve its targets in coming three decades. Indian infrastructure is set to become the world’s third-largest construction market by 2025. The country can bring back the growth in the sector by “removing bottlenecks for existing projects, and reviving the capital-expenditure cycle.”The report also goes on to mention the other sectors like retail, automobile manufacturing, pharma and IT that would also be crucial for the country’s growth in coming 30 years.
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Coal India Ltd's production beat its target in October, the first time in seven months, as the state-owned miner opened a major mine and there were no rain-related disruptions.The world's largest coal miner, which has missed its annual production targets for years due to its inefficiency and other reasons, is under pressure from Prime Minister Narendra Modi's government to quickly boost output to cater to fuel-starved power plants.The company produced 40.2 million tonnes last month, higher than its target of 39.74 million, it said in a statement on Monday. April-October production, however, was 97 per cent of its target.Scrambling to add new mines and expand capacity, Coal India started production in July at a 12-million-tonnes-per-year mine, its first major new project in at least five years.The mine is ramping up production but a lack of rail connectivity means it has been able to sell very little.The company failed to meet its offtake target for October and faces an uphill task of meeting its goal for this fiscal year ending March 31, a Coal India official said. He declined to be named as he is not authorised to talk to media.Sixty one of India's 103 power plants had coal enough to last less than four days as of Thursday mainly due to lower supplies from Coal India, which accounts for more than 80 percent of the country's total production. India sits on the world's fifth-largest reserves but is the third largest importer of the fuel. This has forced Modi to open up the sector to commercial mining by private companies incorporated in India. (Reuters)
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After years, there is some degree of excitement in the Indian lubricants market. Some of that is due to the increased focus of the new government on energy efficient solutions. As technology has improved, vehicles travel longer distances due to improved engine technology and state-of-the-art lubricants.Businessworld’s Anup Jayaram spoke to Nitin Prasad, Managing Director, Shell Lubricants to understand the changes that are happening in a business that can result in higher efficiencies for the automobile industry and industry at large.Excerpts:What is the big new trend in lubricants in the Indian market?The big change is the pace of technological change in the industry. More and more people are shifting to new generation of oil with advanced oil solutions. It may be one of the fastest that we’ve seen across the world in adopting next generation oils.My classic example is Tata and the commercial vehicle industry. Till five years ago, the oil replacement was after 20,000 kilometres. Today its 40-50,000 kilometres and they are already talking about next generation 80-100,000 kilometres. This change has happened over the last five years. There is also a growing consciousness on energy efficiency, lowering maintenance cost and increased productivity.However, the share of industrial and automobile lubricants is still 50:50. They are both growing at the same pace demonstrating good returns for everyone. On the industrial side, it is now about energy efficiency, total cost of ownership and reducing maintenance costs. On the automotive side, there is a clear focus on fuel efficiency and with oil prices heading upwards, commercial vehicle customers are talking about the fuel efficiency solution. They are working with us on oils that can deliver anywhere from 3 to 6 per cent worth of fuel efficiency savings..What kind of solutions are you offering?There are two sets of solutions. We do have the advanced oils available globally. But we are also working with many local OEMs to customise oil for Indian conditions and equipment both industrial and automotive. We are working with Eicher, Tata and Daimler here. Daimler in India has a different platform than Daimler outside in the commercial vehicle side. We work with Maruti, Hyundai, Ford, GM. In tractors we work with John Deere and in equipment with Atlas CopCo and Thermax.Essentially, it is about 2 to 2.5 billion litres, so that’s about 2 million tons roughly.Has the bazaar trade picked up?Bazaar trade has picked up, while sales at petrol pumps have declined because with 2T technology in bikes going away, the sales of lubricants have dropped dramatically. You don’t have the blending of oil and fuel anymore. Actually, development of independent workshops has also picked up. Mahindra’s First Choice is an example of companies looking to create independent workshops that are branded with high quality. And on the industrial side, it’s a lot more direct selling. So we are deploying technology to monitor engines.What kind of technology?We have a video check machine. Often you have to open up the engine fully. That means high cost and more time. But, putting the engine back together is not simple task and often it’s not the same again. So we have a video boroscope that you can go inside the engine without actually opening it up to be able to see the condition of the engine. Some of our partners are using it effectively to talk about wear and tear in the engine.Are others doing the same?This technology is exclusive to us. So this is one thing that we work with on the commercial vehicle side. So we have solutions by industry, by sector, cut across the automotive industry and even by the sub-segments.How has the slowdown affected your business?So, we see that our customers are running at low capacity. Most are averaging at 50-70 per cent of capacity. It hasn’t fully impacted our business because we have been able to increase our customer portfolio and add new customers. That has been able to replace the slowdown of existing business.So our business has continued to grow over the last couple of years. Our portfolio is technologically advanced. This is where Shell is quite good and strong. We are working with customers to increase the awareness and understanding about energy efficiency improvements, lower emissions and maintenance.We have something called Demonstrated Value Record. Here we may go into a very large customer, identify opportunities of cost reduction and improvement. We put in the new oils in their application of systems. We create a set of KPIs that we agree with the customer, monitor and track them over a period of 3, 6 or 12 months. Then we demonstrate to the customer how much they saved in plant maintenance. The customer gives us a sign off saying that I agree that I have saved this much money which is publically available. It’s like a customer testimonial that we create which we can share. But it shows that there are numerous examples of being able to go and save money for customers across segments.What’s your R&D base over here? How many people do you have?We have a big facility in Bangalore with 800 people today. We are expanding that to 1,500. This centre does global R&D. We spend about a billion dollars every year in global R&D for the entire Shell group. There are only three such centres and Bangalore is one of the main centres.We are looking to expand even further, so we have announced a new location. It’s under construction, and should be complete in the next couple of years. Shell has a big focus on technology, so we like to lead the world in new innovations, technology, and capabilities.We are looking into the next generation oil with more benefits, more fuel efficiency, with lower emissions, and we are working very closely with OEMs. One particular challenge that is coming up for example with new CAFC standards is lowering emissions and increasing efficiencies. When Europe went from Euro 4 to Euro 5, oil was no longer an afterthought. It became a part of the design of the entire solution. So what you see today across all the international players is the oil supplier is working very closely with engine manufacturers. And now that trend is also happening in India. Our specifications have also shifted. OEMs are working very closely with us in something called as Co-engineering partnership to develop those next generation oils.Do you see a move towards synthetic lubricants?Yes, there are mineral-based oils, semi-synthetic oils and fully-synthetic oils. And the world is shifting towards semi-synthetic oils and synthetic oils. India also we see more than double digit growth in semi-synthetic and synthetic oils because they have the best advantages in fuel efficiency, emissions and higher maintenance productivity etc.It is not just cars but also on the Industrial side. With the push towards higher uptime, higher productivity, industry needs lubricants that can last longer in all applications because anytime they need to go and change the lubricant that is effective downtime for the machine and can take several days. So this is where they are starting to adopt semi-synthetic and syntheticOn the automotive side, it has to do with fuel efficiency. Synthetic lubricants not only take care of engine, but also you get better fuel efficiency. As the customer starts to understand this, they start shifting.What are the new things that one can expect from the industry?From our side, we are going to continue pushing to next generation oil technologies. We believe in semi-synthetic and synthetic oils. You are going to see a lot more customised oils; so you will see solutions that will be custom designed by OEM both on the industrial and the automotive side.What are the challenges in the industry today?The biggest challenge is the state of the economy. It loops us very heavily, correlated to GDP. So we say it’s GDP minus a couple of percentage points is the growth of the lubricant industry. So the main limitation is the growth of industry itself. As we shift to newer emission standards, I think the challenge will be on finding the next generation of technological solutions to develop them.Do you see any change with the new government coming in?I think it is still early days. There is more optimism and there are more projects that people are talking about. I think in the end of the day, what we see is interest building for new equipment. Consumer optimism and industrial optimism in terms of way forward has always been one of the leading indicators of lubricant sales. But one of the bigger things that probably is also really helping is the focus on productivity. The government has brought in a very sharp focus on improving the economy though productivity gains, through infrastructure gains and all of this need to be done.One of the things is of course we are doing is for example, that is high on the government’s agenda is energy efficiency. That’s one area we are working with CII. So in that sense, one of the things that we have taken up in the mandate because we are an energy company and because we understand energy very well, how we can have more energy efficient solutions.anup@businessworld.inanupjayaram@gmail.com@anupjayaram
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NTPC remains one of the largest power producers in India and has been ranked at the 8th position in the BW top 500 companies ratings. Here, Chairman and Managing Director Arup Roy Choudhury talks to BW|Businessworld's Moyna about how the company fared the last financial year and strategies to boost growth. From increased commercialization of assets to further expansion in the renewable energy segment, NTPC has has shown close to 9 per cent increase in its income and almost 10 per cent jump in its assets.
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