In 2010-11, the revenue of Mangalore Refinery and Petrochemicals (MRPL) was Rs 30,000 crore less than that of its parent company, ONGC. Regular capacity enhancements at MRPL’s grassroot refinery, which was commissioned in 1988 with a 3 million tonne annual crude refining capacity, has helped bring down the gap to Rs 12,000 crore in 2013-14. At present, MRPL has the capacity to process 15 million tonnes of crude — up from 11.82 million tonne per annum — after the Rs 15,000-crore expansion drive over the past four years. In addition to improvements in production, the upswing in prices of refined products and higher export earnings due to an appreciating dollar have helped the company perform better.“A major concern for the company was its refining margins,” says P.P. Upadhya, managing director, MRPL. “We are past that hurdle. The complexity of the refinery has been improved to 10.5 from 5. As a result, the company’s gross refining margins have also improved to about $3 a barrel from $1.98.” Upadhya expects margins to go up at least by $2 a barrel in the first half of FY2015.Valued at Rs 71,810 crore, MRPL has been progressing at great pace — it recorded a compound annual growth rate (CAGR) in net sales of 22.4 per cent over the past four fiscals. Shell-MRPL Aviation Fuel & Services — a joint venture between Shell and MRPL that markets aviation turbine fuel — too performed well; its turnover rose 34 per cent in the last fiscal. This uptrend in the last fiscal marked a significant change in the company’s performance compared to the year before. In 2012-13, MRPL posted a net loss of Rs 757 crore as a result of a shutdown due to water shortage. During the year, the price of crude products also fell, resulting in inventory losses, lower operating margins, higher depreciation and interest costs. Upadhya believes the future of MRPL is bright. “By the end of this financial year, our upgradation projects will be complete; better margins can be expected thereafter.”Presently, MRPL is focused on direct marketing of petroleum products. In FY2012-13, its turnover from direct sales was Rs 3,750 crore, compared to Rs 2,755 crore in the previous year. With the government planning to decontrol diesel prices, MRPL is gearing up for a big retail push. (This story was published in BW | Businessworld Issue Dated 11-08-2014)
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It has been talked about for quite some time now. But it needed direction from the top. In his first Budget, finance minister Arun Jaitley did just that. He proposed to add 15,000 km of gas pipelines to form a national gas grid. That comes as a shot in the arm for India’s newest Maharatna, GAIL. It currently has a 10,900-km pipeline network and is working on adding another 5,000 km. “We are striving to expand India’s gas grid substantially in the coming years with the construction of the Jagdishpur-Haldia, Surat-Paradip and Kochi-Mangalore-Bangalore pipelines,” says B.C. Tripathi, chairman and managing director, GAIL.In recent times, GAIL India (in which the government of India has a 56.11 per cent stake) has been in the news for all the wrong reasons. The fallout over the recent gas leak being just the latest setback. Yet, India’s leading gas transporter has notched up a four-year net sales growth of 23.1 per cent. This is on the back of GAIL adding over 4,000 km of pipeline in the past three years and reviving the 5-million-tonne-per-annum (mtpa) Dabhol LNG terminal.During FY2014, over 76 per cent of GAIL’s revenues of Rs 57,245 came from gas trading. Fertiliser companies accounted for 32 per cent of the gas supplied by GAIL, followed by power (31 per cent) and city gas (11 per cent).One of the key issues for GAIL has been gas pricing. Says Tripathi: “We believe an upward revision of gas prices will have a positive impact on our topline, though the bottom line may be hit slightly because of exposure to liquid hydrocarbons and petrochemicals. However, the actual impact can be assessed only after a change in the pricing policy.” Tripathi was given a five-year extension as head of the state-owned utility in October 2013. Over the past few years, GAIL has considerably expanded its global footprint. It formed GAIL Global (Singapore) for tapping overseas business opportunities. It also established a wholly owned subsidiary, GAIL Global (USA) in Texas, which acquired a 20 per cent working interest in a joint venture with Carrizo Oil & Gas in the Eagle Ford shale gas acreage in Texas. Through aggressive sourcing agreements, GAIL has created a long-term import portfolio of 23.8 mtpa of re-gasified liquefied natural gas from diverse sources such as the US, Russia, the Middle East and Australia. Of this, 5.8 mtpa has been secured from the US, at prices based on the attractive Henry Hub index; this will ensure the Indian market receives relatively cheap natural gas from 2017. GAIL also expanded its exploration and production portfolio by starting production from two blocks in Myanmar.Within the country, it is looking to expand its city gas distribution business to 50 cities.(This story was published in BW | Businessworld Issue Dated 11-08-2014)
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Shares in wind turbine maker Suzlon Energy Ltd surged nearly 5 per cent, its daily limit, on Monday (21 July) following the government's move to re-introduce the acceleraed depreciation scheme for the wind energy sector.The gains add to Suzlon's 3.6 per cent gain in the previous session. Finance Minister Arun Jaitley said on late Friday that the government would amend the Finance Bill in this regard.Accelerated depreciation allows companies to claim a bigger deduction during the initial years after the purchase of an asset compared with other depreciation accounting methods, under which the cost is spread evenly over the lifespan of an asset.The accelerated depreciation scheme was disallowed two years ago under the previous Congress-led government.Accelerated depreciation could spur more orders of wind turbines and renewable assets and Suzlon would likely be a key beneficiary as the world's fifth-largest wind turbine maker, some analysts said."Accelerated depreciation will be significantly positive for the wind turbine industry and Suzlon in particular," said G. Chokkalingam, founder of Equinomics, a research and fund advisory firm.Suzlon, whose units include REpower Systems SE, is the only listed wind energy player in India. Its shares were up 4.85 percent at Rs 25.95, outperforming a 0.6 per cent gain in the broader Nifty.(Reuters)
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The new government has given Adani Ports and Special Economic Zone the green light to develop an 8,481 hectare coastal plot of land in western India, clearing the way for the group to build a huge desalination plant, Adani said on Wednesday (16 July).The clearance process had stalled under India's previous government, which lost power to Prime Minister Narendra Modi in May, and Adani has waited several years to get the go-ahead.Adani, part of billionaire Gautam Adani's conglomerate, said in a statement the environment ministry had granted environment and coastal regulation zone clearance for its Mundra Special Economic Zone, a huge industrial hub where it also plans to build an effluent treatment plant.Since investing billions of dollars into an area with large swathes of marshy wasteland, Adani has transformed Mundra into an industrial zone hosting India's largest commercial port and the country's largest privately-owned power plant.The rapid growth of Mundra, a once-remote coastal town on the Gulf of Kutch in Gujarat, has prompted some opponents to say the local government, then headed by Modi, favoured Adani with cheap land. Adani denies he has been granted any undue favours.Adani's rapid ascent to the top tier of Indian business is often associated with the rise of Modi. Shares in listed Adani Enterprises <ADEL.NS> have surged almost 70 percent this year, largely in the run-up to Modi's election victory in May.Adani Ports' stock closed up 6.82 per cent on Wednesday, outpacing a 1.27 percent rise in the benchmark.Long pushed by India as a way to encourage foreign direct investment and grow exports, special economic zones are exempt from certain labour laws, as well import and excise duties.(Reuters)
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Petronas' plan to build a liquefied natural gas (LNG) terminal on Canada's Pacific coast edged closer to reality on Friday (07 March), as the Malaysian energy giant secured a third equity and offtake partner for the massive gas export project.Petronas said it would sell state-owned refiner Indian Oil Corp (IOC) a 10 per cent stake in its Pacific NorthWest LNG project, along with a 10 per cent stake in the northern British Columbia shale gas assets that will feed the LNG facility.India's largest oil refiner also agreed to an offtake deal for 1.2 million tonnes of LNG each year, or about 10 per cent of the project's annual exports.Petronas' Pacific NorthWest project is just one of about a dozen LNG terminals proposed for British Columbia's rugged Pacific coast, as top global energy firms scramble to build the facilities to export cheap Canadian gas to hungry Asian markets.The Malaysian state oil firm, which landed on the scene in 2012 with its C$5.2 billion takeover of Canada's Progress Energy Resources, has moved quickly to leapfrog its rivals. It secured an export permit in December and filed its key environmental documents last month.Petronas to build a 12 million tonne per year terminal near Prince Rupert, along the province's north coast, with first exports in late 2018. The liquefaction and export facilities are expected to cost up to $11 billion.Petronas has so far signed on three partners, including Japan Petroleum Exploration Co Ltd (Japex) and state-owned PetroleumBRUNEI, and will hold a 77 per cent stake when the IOC deal closes.IOC and Petronas did not disclose the financial details of their deal, but the Indian cabinet approved the purchase of the stake for C$1 billion in February, a government source told Reuters at the time.Indian companies, like their Asian peers, have been scouting for oil and gas assets abroad to meet rising domestic demand.India's gas demand will rise to 466 million cubic metres per day (mcmd) in 2016/17 ending March 31 from 286 mcmd in 2012/2013, according to government estimates, while its supply will be only half that amount.IOC said the super-cooled gas it takes from the Canadian facility each year will meet some of the requirement of its planned 5 million tonne a year Ennore LNG import terminal in Southern India.Jefferies India Private Ltd acted as sole financial adviser for IOC on the deal, while Stikeman Elliott LLP was its legal adviser.(Reuters)
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The Central Bureau of Investigations (CBI) said on Monday (25 August) it will close this week the case against industrialist Kumar Mangalam Birla and former Coal Secretary P C Parakh in connection with alleged irregularities in the allocation of Talabira-II coal block.CBI spokesperson Kanchan Prasad said the closure report is likely to filed in the case this week.The agency had reached conclusion to include names of Birla and Parakh in the FIR in connection with allocation of Talabira-II coal block after scrutinising related files during its nearly 16 month-long preliminary enquiry.CBI sources said that allegations levelled by it in the FIR could not be substantiated by it.Immediately after the case was registered by the agency on October 15, 2013, Prime Minister's office had given a detailed clarification saying, "the Prime Minister is satisfied that the final decision taken in this regard was entirely appropriate and is based on the merits of the case placed before him."The agency's decision to file the FIR in which it accused Birla and Parakh of criminal conspiracy and criminal misconduct on the part of government officials had come under criticism from the former Coal secretary who said in his book that "CBI is either outright incompetent or is playing a deeper game."He blamed CBI Director Ranjit Sinha of abusing his office by accusing him and Birla of conspiracy and corruption.The FIR related to allocation of Talabira II and III coal blocks in 2005 and CBI had charged Birla, Parakh and other officials of Hindalco under various IPC sections including criminal conspiracy and criminal misconduct on the part of government officials.In its FIR, the agency had alleged that during the 25th Screening Committee meeting, chaired by Parakh, applications of Hindalco and Indal Industries were rejected for mining in Talabira II and III "citing valid reasons". The agency had alleged in its FIR that on the recommendations of the Screening Committee, the coal blocks were allocated to Mahanadi Coalfields and Neyveli Lignite Corporation, both public sector undertakings.These recommendations were placed before the "Competent Authority" which agreed with Parakh, who later issued letter of allocation to the PSUs on June 16 and July 15 of 2005.Within days, a "personal meeting" took place between Parakh and Birla in which the industrialist requested for the allocation of Talabira II coal block, CBI had said."Pursuant to these letters and personal meeting between Parakh and Birla, Parakh, by abusing his official position as a public servant recommended the allocation of Talabira II along with Talabira III coal block to Hindalco Industries Limited, along with other two companies without any valid basis or change in circumstances and with the sole intention to show undue favours to Hindalco Industries Limited," the agency had alleged in its FIR.The agency has said that Parakh recommended formation of a joint venture between Mahanadi Coalfields, Neyveli Lignite and Hindalco with equity share holding of 70 per cent, 15 per cent and 15 per cent respectively. The FIR alleged that inclusion of Hindalco reduced the share of Neyveli Lignite in the coal field."Due to this arrangement, the proposed power project of the NLC could not take off as planned," it alleged.Defending his decision, Parakh had said "there is absolutely nothing wrong with the decision. It was a very fair and correct decision that we took. I don't know why CBI thought that there is a conspiracy."(Agencies)
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India has set up a four-member panel of secretaries from different ministries to work out a new gas pricing mechanism, a senior official at the oil ministry said on Friday.The first meeting of the panel will be held on Monday, said Rajive Kumar, additional secretary in the oil ministry.Apart from Kumar, other panel members include secretary of expenditure in the finance ministry, power secretary and fertiliser secretary - all top-ranking bureaucrats."It (the gas pricing) will be re-examined comprehensively and we will have consultations with major stakeholders," Kumar said, referring to producers and buyers.In June, India had deferred gas pricing to end September saying the complex issue needed more discussion.India is a large importer of energy. Its net energy imports amounted to 6.3 percent of gross domestic product in the last fiscal year that ended in March.India's gas demand far exceeds output, but prices have been kept low for key industries such as fertiliser and power, deterring investment in the gas sector.Kumar hoped the panel could work out in two-to-three weeks a mechanism, which could then be submitted to the federal cabinet.(PTI)
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The conglomerate headed by billionaire Ajay Piramal is hunting for road projects put up for sale by stressed developers, betting a change of government will stimulate growth and revive an infrastructure sector plagued with delays.Piramal Enterprises Ltd, which sells drugs and financial services, has earmarked Rs 5,000 crore ($837 million) for projects jeopardised by an economy struggling through its longest period of sub-5 per cent growth since the 1980s.New Prime Minister Narendra Modi has vowed to turn around a country where one of the world's most extensive road-building programmes over the past decade ended with at least Rs 60,000 crore worth of projects stalled and highways half-built."India has never had the balance sheet needed to absorb these investments. With no third parties coming in, contractors and developers have only stretched themselves further," Parvez Umrigar, co-head of Piramal's Structured Investment Group, told Reuters in a recent interview."We believe there is adequate appetite (among developers) in the market presently for assets to change hands."Piramal is branching out into roads because infrastructure is likely to be one of the more visible beneficiaries of any pro-growth government policies, and competition for assets is likely to be less than in other infrastructure sectors, Parvez said.The company targets 16 percent annual return from investing in road projects which it will find with State Bank of India acting as matchmaker, Parvez said.So far, Piramal expects to buy majority stakes before March in six projects spanning the country, said Parvez, who left Gammon Infrastructure Projects Ltd last year to join Piramal.Led by one of India's 50 richest people, Piramal has evolved from a textiles manufacturer in the mid-1980s into a group with interests in pharmaceuticals, glass, financial services and real estate.The group's flagship unit, Piramal Enterprises, has a market value of $2 billion, according to Thomson Reuters Eikon. Its shares have risen 27 percent this year, compared with a 23 percent rise in the benchmark stock index.Rising InterestPiramal's investment would likely be welcome relief to heavily indebted developers and could free them to invest in new projects, which in turn would contribute towards recovery in both the infrastructure sector and economy.Road projects typically involve a developer winning a contract to build an interstate four or six lane highway which they then operate for a multi-year period on a concession agreement, often charging tolls to generate revenue which they share with the government.But many developers won road contracts by taking on significant amounts of debt and then ran into trouble by taking in too little revenue from toll collection as fewer cars used the roads than forecast.Even so, strained public finances mean private developers are widely expected to become more involved with infrastructure. Competition for road assets is limited, but demand is rising from firms such as Piramal and private equity funds like the Macquarie SBI Infrastructure Fund."We are seeing an increase in interest from strategic investors and from financial investors for these sorts of assets," said Sanjay Sethi, Head of Infrastructure Group at Kotak Investment Banking.Roads were particularly in demand because of recent regulatory change that makes it easier for developers to exit projects, said Sethi."That demand could become wider as the (economic) cycle progresses."(Reuters)
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