Adani plans to merge SEZs

For the first time since its inception in 2006, the Board of Approval on special economic zones (SEZs) in its next meeting in March will take up a proposal from a developer to merge these tax-free industrial enclaves for exports. The Adani group has sought the board’s approval to merge its three SEZs at Mundra in Gujarat. The merger will result in lesser expenses on infrastructure, utilities and administration. Faced with a liquidity crunch, other developers too are expected to come to the board with a similar proposal. Reliance Industries-promoted Navi Mumbai SEZ Pvt Ltd is also planning to merge its notified zones in the Navi Mumbai area. “We were given five different land parcels; hence, we had to notify them separately," said a company source. An RIL spokesperson declined to comment. The three adjacent Adani SEZs are situated near the Mundra Port which too has been promoted by the group. While two of these are multi-product zones, the third is a power SEZ. The combined area of the three SEZs is well over 6,000 hectares. “The Board will discuss the proposal in its next meeting. Points that would come up for discussions include how to treat the processing and non-processing zones within the SEZs,” said a government official in the know. According to SEZ rules, each zone needs to have a separate processing area for factories and units, as well as a non-processing area for houses, schools, hospitals and shopping arcades. The three SEZs were notified separately as the Adani group bought the land in separate tranches. Moreover, a public utility road is present between the two multi-product zones. "There was a public utility road leading to an old port of Gujarat Maritime Board due to which there was a problem of contiguity. Hence we had to apply for notification for two different SEZs," said an Adani group executive.

RIL drops captive power plant move

Mukesh Ambani-promoted Reliance Industries (RIL) has dropped its plan of setting up a 345-MW gas-based power plant at its Nagothane manufacturing unit. While sources said the move stems from Reliance's plan to cut capital expenditure to tide over the economic slowdown, the company maintained the project was shelved in the light of a directive from an Empowered Group of Minister's (EGoM) about giving priority to existing customers for the supply of gas from the Krishna-Godawari(KG) basin. A few weeks ago, RIL had cancelled a turnkey contract worth Rs 866 crore for the supply and commissioning of an advanced Frame 9FA gas turbine, given to a joint venture of state-run power equipment supplier Bharat Heavy Electricals (BHEL) and General Electric in January last. "In view of the EGoM decision to prioritise gas allocation to existing consumers under the gas utilisation policy, we had to cancel the setting up of a captive power plant in Nagothane," said a Reliance spokesperson. The Nagothane manufacturing division of Reliance has ethane and propane gas cracker units and five downstream plants for manufacturing polymers, fibre intermediates and chemicals. The 1,860-acre facility currently has an 85-MW captive power unit, mainly run on naphtha. Sources said that the company earlier planned to set up an 800 MW combined cycle gas-based power project at an investment of over Rs 3,200 crore to power its future projects in the region, utilising 3.6 million metric standard cubic meter per day (MMSCMD) of gas. The Ministry of Environment and Forest (MoEF) had granted environment clearance for this project and also given nod for a 2,000-MW gas-based power project at Dronagiri, Navi Mumbai, to power the special economic zone coming in the region. This project is being set up by Urban Energy Generation, a special purpose vehicle of Anand Jain-promoted Jai Corp, which is setting up the SEZ. Reportedly, Reliance is also planning captive gas-fired power projects at its SEZs in Haryana, Orissa, Maharashtra and a fertiliser plant in Kakinada (Andhra Pradesh), banking on the huge gas reserves in the KG basin. "We have various projects in the planning stage but, as of now, we have not finalised any of them, except the order given for the Nagothane captive unit. All those are only in the blueprint stage,”said a company official.

Pledged share sale pulls down Unitech promoter holding

Promoter holding in Unitech, the nation’s second-largest property developer, has dropped by 7 per cent since their September disclosure after lenders sold the shares pledged with them, according to analysts. The promoter holding in Unitech has fallen to 67.2 per cent in the December quarter compared with 74.3 per cent in the quarter ended September 30, according to the shareholding pattern disclosed by the company on the website of the National Stock Exchange. The Sanjay Chandra-led group’s attempt to raise money to repay dues had forced the promoters to pledge shares with lenders, who, in turn, sold the shares to recover their loans. The promoters are yet to disclose the total extent of pledged shares to stock exchanges even though market regulator Securities and Exchange Board of India (Sebi) has advised companies to make such disclosures to enhance transparency. However, Unitech sources maintain that the company is not obliged to disclose the same as the Sebi directive requires an amendment to the listing agreement of stock exchanges. Only last month, IFCI and Sicom had confirmed selling pledged shares of Unitech. The lenders did not assign any reason for the sale and neither did the company comment on the same. Unitech has also applied to FIPB to raise $1 billion by selling shares to overseas investors. A few analysts view the move as a positive development since it will help the company lower its debt to equity ratio.

ITC, HUL to squeeze expansion in U'khand

Top FMCG companies ITC and HUL may be forced to cut down their expansion plans in Uttarakhand substantially due to scarcity of land. HUL had applied to the State Infrastructure and Industrial Development Corporation of Uttarakhand Ltd (Sidcul) for 50 acres in Haridwar. But the company got only 15 acres under the new allotment policy. The company had proposed to invest Rs 510 crore at the Haridwar industrial estate where it has already established a unit in 2004. “HUL is likely to cut down its expansion plans in Haridwar keeping in view the area of the land allotted,” an official said. Similarly, ITC wanted 30 acres in Haridwar but was given only 9 acres. ITC had also proposed an investment of Rs 260 crore initially. After failing to get the desired area, ITC would also shrink its expansion plans, the official said. The Sidcul, a state government enterprise, received nearly 105 proposals for different industrial areas of the state in July for the vacant plots. But a heavy rush was witnessed at Haridwar industrial estate where the land was far less as compared to other industrial estates like Pantnagar. In order to accommodate maximum industries, the government was forced to cut the size of plots despite a heavy demand from various companies. The official informed that that the government also could not fulfill the requirement of other top companies like Sterlite and Control and Switchgear Ltd also. But the situation was not that bad in Pantnagar industrial estates where the expansion plans of companies like Tata Motors, Delta India and Hindustan Zinc have not been affected. The lion’s share went to Tata Motors, which walked away with 45 acres of extra land for manufacturing Nano car.

Maruti hikes prices, others to follow

The price of its most recent product 'A Star' hatchback, which was launched in November 2008, has been increased by Rs 10,000 while prices of all variants of SX4 sedan have been hiked by Rs 9,000. The price of Swift Petrol LXi has now been revised upwards by Rs 5,000. For the higher variants of Swift -- VXi and ZXi -- and all variants of its diesel version the prices are now higher by Rs 6,000. The new prices for Swift DZire (all variants in Petrol and Diesel) are higher by Rs 7,000. "The price increase has been necessitated due to the increase in input costs like steel and foreign currency changes. There has been regular fluctuations in currency which has forced us to go for this increase in prices," the company spokesperson said.

SPV to address temporary liquidity concerns: RBI

Finance companies are keeping their fingers crossed regarding the structure of the proposed special purpose vehicle (SPV) for addressing the temporary liquidity constraints of systemically important non-deposit taking non-banking financial companies (NBFCs-ND-SI). NBFCs are sceptical about the time and the usefulness of the window, whenever it takes shape, for two reasons. One, most of the funds are available only for short-term and are aimed at correcting the asset-liability mismatch and not for business expansion. The second reason is that though the proposed SPV funds would be available against rated papers, there is no assurance on the extent of finance against a particular paper. For instance, there is no clarity regarding the amount of money that would be available against investment grade papers worth Rs 1,000 crore. “We need long-term funds to meet our business commitments. Most of the funds are available are for three to six months, so the regulator must ensure that we get loans for three to five years,”said an NBFC chief. According to industry sources, the Finance Industry Development Council (FIDC) has requested the Reserve Bank of India (RBI) to make sure that the SPV will ensure funding for up to five years, particularly for the asset-financing NBFCs. The proposed SPV would issue government guaranteed securities to RBI. In turn, the SPV will use the funds to acquire only investment grade commercial papers and non-convertible debentures of NBFCs. Support from the central bank would be limited to Rs 20,000 crore, with an option to raise it by Rs 5,000 crore more. “During its appraisal, the SPV will ensure that NBFCs use the money only for addressing liquidity constraints and not for business expansion. The facility will be available for a limited period to address current liquidity concerns of NBFCs,” RBI said. The regulator has taken a series of measures, beginning last October, including a special liquidity adjustment facility (LAF) to on-lend to mutual funds and finance companies. However, NBFCs have been complaining that the banks are reluctant to lend to the sector, citing higher risk and were charging higher rates.

SBI's ALCO to decide on rate cuts: Bhatt

Hinting at some interest rate cuts in the near future, State Bank of India (SBI) Chairman O P Bhatt today said that though several banks have slashed their rates in the recent past but these are not uniform and across the industry. "In the past 2-3-months, there have been some rate cuts by banks but these have not been across the industry and not uniform," he told reporters here today. It was possible that banks might cut rates around March, he said, adding that there was enough liquidity in the system. On whether SBI would cut its PLR and other interest rates, Bhatt said that its "asset-liability committee (ALCO) meets every week" and would look into the matter. "We will factor in the policy inputs" along with other factors (while taking a decision on its rates), Bhatt said. SBI was among the first banks to reduce its prime lending rate (PLR) as also its deposit rates, he said. "SBI reduced its deposit rates by 1.50 per cent," he said.