Power Grid to raise $3bn from capital market in 3 yrs

The Power Grid Corporation of India (Power Grid) is expected to raise around $3 billion (around Rs 13,500 crore) in the capital markets over the next three years to support government’s national transmission expansion plan, which is estimated to cost Rs 75,000 crore. Besides, the grid has also received loan to the tune of $1 billion (around Rs 4,500 crore) to strengthen five transmission systems in the country from the World Bank. A World Bank’s report on the country’s Power Grid quoted J Sridharan, Director Finance, Powergrid saying that Powergrid’s robust financial position ensures that it will not face difficulties in raising domestic financing – in fact it issued bonds of $750 million (around Rs 3,375 crore) in 2008-09 and intends raising close to another $3 billion in the capital markets over the next three years. This is to support national transmission expansion plan, which is estimated to cost around Rs 75,000 crore, of which Rs 20,000 crore is expected to be brought in by private investors, while the major portion — Rs 55,000 crore — will be mobilised by Powergrid from internal resources and external financing such as the World Bank’s loan, Sridharan was quoted. According to the national transmission plan, the cumulative transmission network of Powergrid is targeted to increase substantially over the 11th Plan (2007-12) allowing Powergrid to transfer 60 per cent of power generated in the country as against 45 per cent today. Meanwhile, World Bank has said that the $1 billion (around Rs 4,500 crore) loan is to strengthen five transmission systems in the northern, western and southern regions of the country. “In response to the global downturn and at the request of the government of India, the loan was extended to Powergrid. This will facilitate the transfer of power from energy surplus regions to towns and villages in under-served regions of the country. It will also increase the integration of national grid, resulting in increased system reliability and a reduction in transmission losses,” according to World Bank. The World Bank will finance 64 per cent of the total project cost on average. All schemes are likely to be completed by 2014-15. The loan will be an IBRD flexible loan with a variable spread, a maturity of 29.5 years and a grace period of 5 years. The World Bank has supported Power Grid since its inception, during which time the company has nearly tripled its transmission network to become one of the world's largest electricity transmission system operators. The Bank’s engagement with Powergrid investment programs with cumulative assistance of $3.1 billion (around Rs 13,950 crore) to date. According to World Bank’s report almost half of Indian households (44 per cent) do not have access to electricity. Average annual per capita consumption of electricity in India was only about 30 per cent of the world’s average in 2007- 2008. Generation capacity is insufficient to meet the existing demand for electricity, and transmission and distribution networks that carry power to consumers are inadequate. As the development of India’s power sector is vital for the country’s sustained and inclusive growth, the government of India has embarked on an ambitious program to provide power to all its people by 2012. It plans to increase generation capacity from the present 147 Gw to 200 Gw, including through mobilisation of private sector investment to the maximum extent possible. Cleaner energy sources – biomass, hydro, solar, wind, and nuclear – are also being developed.

ONGC-Hinduja JV loses rights to dev Iran's oilfield to China

In a major setback to India's oil diplomacy, the ONGC-Hinduja Group alliance has lost the rights to develop Iran's South Azadegan oilfield to CNPC of China. The joint venture of ONGC Videsh - the overseas arm of state-run Oil and Natural Gas Corp — and Hinduja Group firm Ashok Leyland Project Services Ltd, was touted to get at least 45 per cent stake in the 260,000 barrels per day South Azadegan oilfield but Beijing apparently offered multi-billion dollar soft loans to bag the rights, industry sources said. The China National Petroleum Corp (CNPC) on Sunday signed a contract with National Iranian Oil Co's overseas subsidiary, Naftiran Intertrade Co (NICO) in Lausanne, Switzerland to take 70 per cent stake in the oilfield along the Iraqi border. NICO, which held 90 per cent stake in the field, would be left with 20 per cent interest while Inpex of Japan would hold the remaining 10 per cent. Sources said China has agreed to even contribute NICO's share of the $2.5 billion cost for developing the field that holds an estimated 42 billion barrels of oil reserves, one of the world's largest finds in the last 30 years. CNPC had in January won rights to develop the North Azadegan oilfield and the Indian alliance was preferred for the southern fields as Iran was said to be against giving the entire block to one firm. South Azadegan and Phase-12 of the giant South Pars gas field in the Persian Gulf were two projects the Indian joint venture was pursuing in Iran. An official in the ONGC-Hinduja joint venture confirmed losing South Azadegan oilfield to the Chinese but said the development rights to Phase-12 of South Pars field were yet to be decided. China, which has ignored western concerns over Tehran's nuclear programme, has secured several oil and gas projects in Iran since 2005, including Yadavaran oilfield and preliminary agreements for development of North Pars gas field and Phase- 11 of South Pars field. Sources said China has used its vast foreign exchange reserves - which are nearly double of India's $1.1 trillion GDP - to give loans to oil producing countries. This year it has lended nearly $50 billion to Russia, Kazakhstan, Brazil and Venezuela in return for oil supplies. Iran is offering better fiscal terms like a 3 per cent higher rate of return on the investments in oil and gas fields, to Chinese firms. Indian firms, they say, are facing slight resistance as New Delhi deterred on importing natural gas from Iran and has made statements asking the Ahmednijad regime to fulfil its obligations as a signatory to the Nuclear Non-proliferation Treaty (NPT). Also, while Pakistan has gone ahead and signed an agreement on buying gas through the long-delayed Iran-Pakistan-India gas pipeline, New Delhi continues to play from the sidelines. Initially, Swiss-based NICO had 90 per cent share for the development of South Azadegan oilfield and 10 per cent of the project was with Inpex. However, NICO was unable to finance the project and ONGC -Hinduja Group was said to get half of its share, sources said, adding Hindujas had even signed a preliminary deal with NIOC in August 2007 for South Azadegan and South Pars Phase-12. Under Iranian law, companies hand over operations of fields to NIOC after development and then receive payment from oil or gas production for a few years to cover their investment. The so-called buy-backs provide for a fixed return on the investments made by the companies. South Azadegan would produce 150,000 barrels per day (7.5 million tonnes a year) of oil in Phase 1 and another 110,000 bpd (5.5 million tonnes per annum) in Phase-II. CNPC, sources said, would invest $1.76 billion in the North Azadegan oilfield that it won in January. North Azadegan is to produce 75,000 barrels per day of oil in 48 months. The period of development and reimbursement would be 12 years. Azadegan, in west Iran and close to Iraqi border, is the world's biggest united oilfield in last 30 years and has 42 billion barrels of oil reserves. It measures about 900 sq km - including southern and northern part.

BoM slashes home loans interest rates

Bank of Maharashtra, today said that it would offer reduced interest rates for housing loans sanctioned during the festival period under Mahabank Platinum Housing Loan Scheme. The new rates will be applicable for loans sanctioned between September 16 and December 31, a press release issued here said. For loans upto Rs 30-lakh, the new interest rate for the first two-years will be 8 per cent, for the third year 8.5 per cent, for the fourth year 9.5 per cent and for the fifth year 9.75 per cent. The average interest rate for the first five-year period will be 8.75 per cent. The rate will be reset at the end of every fifth year, the release said. For loans above Rs 30-lakh, the interest rate for the first two-years will be 8.25 per cent, for the third year 9 per cent and for the fourth and fifth year 9.75 per cent. Average interest rate for the first five-year period will be 9 per cent. The rate will be reset at the end of every fifth year, the release said.

Bombay Rayon Fashions to raise Rs 500 cr via various routes

Garment manufacturer Bombay Rayon Fashions today said it will raise Rs 500 crore by issuing shares and will issue 1 crore warrants to a promoter group company. Shareholders of the company have approved to raise funds to the tune of Rs 500 crore by issuing shares in the form of American Depository Receipts, Global Depository Receipts and Foreign Currency Convertible Bonds or through private placement of shares with potential buyers, Bombay Rayon Fashions said in a filing to the Bombay Stock Exchange. Further, it will issue one crore convertible warrants to Reynold Shining with an option to convert warrants into equivalent number of equity shares at Rs 193 a piece, the filing added. Shares of Bombay Rayon Fashions were trading at Rs 219.75 on BSE, up 0.80 per cent from the previous close.

Committee of eminent persons to monitor NREGA

To make implementation of its flagship programme for rural job guarantee more transparent, the government plans to constitute a group of eminent persons for its independent evaluation and monitoring. "We have decided to identify 100 eminent citizens to report independently further on the progress of National Rural Employment Guarantee Act (NREGA). The process is underway," Union Minister for Rural Development C P Joshi said. He said his ministry was preparing the essential criteria for the selection of these independent monitors, who would come from different walks of life. "After we finish preparing the criteria for their selection, we will post the proposal on our website inviting people to suggest the names of the persons of their choice," Joshi said. He said these independent monitors will be authorised to visit gram panchayats and conduct an independent evaluation on the progress of the programme in the area. They will submit their report to their respective state governments and Centre, Joshi said. "They will also report to the people about their findings and observations. Their (independent monitors) observations will definitely make a difference as people would take not of it and become more aware," he added. As per the plan, the reports of these 100 independent monitors will also be posted on the ministry's website for public view, a ministry official said. The ministry has already constituted a panel of 179 'National Level Monitors', including retired civil servants and senior ex-servicemen, to monitor the policy and implementation of the programmes at grassroots level, an official said. These monitors also look into various specific complaints regarding implementation of the programmes, as and when required by the ministry, which has also developed a system of online monitoring of the NREGA programme. Data relating to the progress of the programme is monthly updated from each district. Apart from this, the ministry undertakes concurrent evaluation, impact assessment studies and quick evaluations from time to time, through reputed and independent research organisations in order to assess impacts of the rural development programmes, an official said. The main objectives of these studies are to evaluate the performance of the schemes at the field level, assess the impact of the programmes and identify the problems in course of implementation so as to take mid-course corrective measures, he added.

Comexes given 6 more months for divesting foreign equity

The government today gave a second extension up to March 31, 2010 to commodity exchanges to fall in line with the foreign investment ceiling of 5 per cent for an individual investor within the cap of 49 per cent. The Department of Industrial Policy and Promotion (DIPP), however, has said this would be the "last opportunity" for complying with August 19, 2008 guidelines which required the commodity exchanges to bring the overall foreign investment ceiling to 49 per cent, within which the portfolio investment would be limited to 23 per cent and FDI to 26 per cent. Over and above this, no foreign investor/entity was to hold more than 5 per cent of equity in these companies. "Difficulties have been brought to the notice of the government in complying with the provisions...Within the stipulated time frame," the DIPP said in its latest Press Note 7 of 2009. It said non-compliance would be a violation of the Foreign Exchange Management Act, 1999. The department had originally given a deadline of June 30 this year which was later extended to September 30. The country's leading commodity exchange NCDEX is in the process of complying with DIPP guidelines. Global investors holding more than five per cent - Intercontinental Exchange and Goldman Sachs - have clinched a deal with Shree Renuka Sugar for divesting their NCDEX stake beyond 5 per cent. All commodity exchanges will have to inform the DIPP, Department of Consumer Affairs, Foreign Investment Promotion Board, Forward Market Commission and Sebi of their foreign investment composition.

Coal India's exploration arm to invest Rs 108cr in expansion

Central Mine Planning and Design Institute (CMPDIL), a subsidiary of country's largest coal producer Coal India, will invest over Rs 100 crore for acquiring advanced drilling equipment in the next two years. With this the mini-ratna aims to increase its annual exploration capacity to 10 lakh meters by 2010 from the present 2 lakh metres. "We have lined up an investment of Rs 108 crore for acquiring 18 new generation hydrostatic rigs from Sweden to replace old manual rigs. We have already received two such advanced machines," CMPDI CMD A K Singh told PTI. The coal ministry has got customs duty on import of such equipment reduced to 3 per cent from 7-10 per cent earlier. The investments are in line with the Coal India's strategy to prove about 161 billion tonnes of coal reserves out of the estimated reserves of 267 billion tonnes in the country. Coal India targets to mine about 435 million tonnes of coal in the current fiscal. "CMPDIL is planning a major revamp of its exploration activity... We plan to enhance annual drilling capacity to one million meters per annum," CIL Chairman Partha S Bhattacharyya told reporters. The company does exploration up to 300 metres and is planning to take it up to 600 meters, he added. Also on cards are introduction of the latest exploration technologies for more efficient reserve estimation. To meet the manpower requirement for enhanced drilling capacity CMPDIL is training 100 more geologist and 200 drilling staff, Singh said. "CIL has transferred its 100 geologists and 200 drilling persons to CMPDIL and we are training them to meet the extended drilling capacity," Singh added. The present manpower strength of the subsidiary, which is also the centre's nodal research and development wing for the coal sector is 3,173.

PM sees limited scope for accelerating stimulus

Prime Minister Manmohan Singh on Saturday said the scope and options for acceleration of stimulus package for the recovery of the economic crisis are "limited." "Our response (of stimulus packages) was to a specific domestic situation. It is true that we have limited scope for accelerating stimulus package and our options are limited because of factors like substantial fiscal deficit and Reserve Bank's monetary policies. As of now inflation is not a problem," he said at the end of his two-day visit in Pittsburgh. He was replying to a question whether government would consider withdrawing the stimulus package in view of signs of recovery or whether it would inject a fresh dose. "I would not like to announce package or policy from the foreign soil" he said in reply to a specific question whether steps for stimulating the economy would be taken up. On stock markets picking up in the last few days, the Prime Minister said it was reflective of the economic recovery in the country. The economic fundamentals were basically strong, he added. At the Summit, Singh strongly pitched for continuance of the global stimulus package. The Summit declaration also favoured continuance of the policy and going slow on exit strategy. In his introductory statement at the press conference, the Prime Minister said the Summit was a productive meeting and its purpose was to review what has happened and chart the way forward. This Summit, he said, was not meant to be a trillion dollar summit but there was a comprehensive discussion among the leaders on a wide range of issues. Singh said some of the important issues discussed were that there will be no premature withdrawal of the global stimulus package and the emergency financing for the fund has been successfully completed. "We now have to address the issue of the fund quota increase by early 2011. We have agreed to shift 5 per cent share to countries that are under-represented," he said. Singh also said the Summit has agreed to help the World Bank and other regional development banks to find necessary resources on a review of their capital needs in the first half of 2010. He said the Summit has agreed on a new framework for discussing global macro balances and the contributions individual countries can make through their own policies with a new process of peer review or discussion in the G-20. The leaders also discussed the important issue of climate change and the G-20 has called for a successful outcome in the UN's Framework Convention on Climate Change in Copenhagen. The Prime Minister said the Summit also agreed that the countries should work for an early resolution of Doha round to counter protectionism. The success of the Delhi ministerial meeting in reviewing the process of negotiations was appreciated, he said. Singh said the leaders agreed that the G-20 will henceforth be the premier forum for international economic issues. This is an important development broadening the global governance structure, the Prime Minister said. Answering a question, the Prime Minister said there was no economic crisis in India and it was true that because of the global economic meltdown Indian exports were affected. "But still the economy clocked a growth rate of 6-6.5 per cent. As such there is no crisis in India," he said. On the G-20 decision to shift 5 per cent voting rights to emerging economies, he said that could result in developing and emerging economies getting over 50 per cent of those rights or near about it. The BRIC (Brazil, Russia, India and China) countries requested for seven per cent voting rights but were given 5 per cent. "The demand was seven per cent and five per cent was agreed. Obviously it was a compromise," he said. About the peer review in the G-20, he said this would help in bringing up policies of major developed and developing countries for review in the G-20. "This will give an opportunity to pick up holes in their policies. This will be an advantage," he said. This reflects the governance reforms that India has been seeking in international financial institutions, he said. To a question on whether the US was not keen on the successful completion of the WTO round, Singh said Obama certainly has stated that US was as much interested in its success as others. "I have no reason to doubt his sincerity," he said. To a similar question on protectionism, Singh said obviously the G-20 countries were worried about protectionism raising its head in some developed countries and there was no doubt about it.

US court rules in favour of Orchid, rejects restraining order

Drug firm, Orchid Chemicals & Pharmaceuticals today said a US court has rejected Wyeth's request for a temporary restraining order (TRO) to prevent the Indian company from launching the generic version of the antibiotic injections, Piperacillin and Tazobactam in the US. "The court rejected Wyeth's request and denied the TRO," the company said in a filing to the Bombay Stock Exchange (BSE). In its memorandum opinion and order, the court found that "Wyeth has failed to demonstrate a likelihood of success on the merits" of its claim that the US Food Drug Administration's (FDA) approval to Orchid's generic application violated laws. The company further said it is pleased with this result and will protect abbreviated new drug applications (ANDA) for its Piperacillin and Tazobactam injections and also continue to supply the products to its distribution partner, Apotex Corp. Earlier, Wyeth had filed a motion in the US District Court of Columbia seeking TRO to refrain Ochid from launching the drug in the US market. Wyeth sells Piperacillin and Tazobactam injections under the brand Zosyn and the drug has a total market of more than $1.3 billion.

Govt mulls 10% cess on minerals' royalty

The government is considering levying up to 10 per cent cess on royalty charged on minerals like iron ore, copper and lead that would be used to promote scientific mining practices — an idea opposed by the mining industry. The proposal for the levy is part of a draft bill being formulated to replace the Mines and Minerals Development Regulation Act (1957), a senior ministry official said. "The central and state governments may levy and collect a cess on major and minor minerals respectively, at a rate not exceeding 10 per cent of the royalty in such a manner as may be prescribed," the official added. The proceeds would go to the proposed 'National Mineral Fund' and 'State Mineral Fund' for promoting scientific management of mining and mine closure, local development and preventing illegal mining among others, the official added. The mining industry, however, has opposed such a levy, saying it would hit hard the margins of firms which have already been asked to pay up to 10 per cent royalty on the market price of minerals such as iron ore. Opposing such an additional levy, the president of the miners' body FIMI, Siddarth Rungta, said, "We have to pay up to 10 per cent royalty on minerals like iron ore now. Government should not overburden us with further levy." Industry analysts say the cess, estimated to mop up around Rs 1,500 crore, would be an extra burden on the mining firms and may push up the cost of vital minerals. Last month, the government notified market-linked royalty rates on major minerals like iron ore. Iron ore would attract a maximum royalty of 10 per cent on the prevailing market price. Earlier, the royalty was linked to production. FIMI had opposed market-linked royalty on minerals and instead asked the government to hike the levy in the production-linked system. On copper, the royalty rate has been revised to 4.2 per cent from 3.2 per cent of the prevailing London Metal Exchange (LME) prices, while on zinc and lead it is 8 per cent and 7 per cent from 6.6 per cent and 5 per cent, respectively. The government is expected to place the bill to enact a Mines and Minerals (Scientific Development and Regulation) Act in the winter session of Parliament.

NTPC seeks confirmation on marketing margin from RIL

State-run NTPC has asked the Power Ministry to seek confirmation from the Oil Ministry/EGoM on payment of marketing margin, on the gas it will buy from Reliance Industries, even though it has agreed to pay the levy. NTPC after months of dithering this week signed pacts to buy 0.61 million metric standard cubic meters per day (mmscmd) of gas from RIL's KG-D6 fields at $4.20 per million British thermal unit (mBtu) price plus $0.135 per mBtu marketing margin. The company, which was opposed to paying marketing margin, on September 23 wrote to Power Ministry saying NTPC's board while approving signing of the Gas Sale and Purchase Agreement (GSPA) with RIL had decided to take up the matter of marketing margin separately with the appropriate government authority. NTPC said it had sought legal opinion on Oil Ministry's advice that marketing margin was purely a commercial issue between the seller and the buyer. The legal opinion stated that "this issue is a commercial issue and NTPC would need to look at it accordingly... NTPC should take up the issue of marketing margin separately through the Ministry of Power with the appropriate authority in the government." The move comes amid the tussle between Ambani brothers on the issue which had Mukesh Ambani-run RIL slap a notice for discontinuing supplies after younger brother Anil Ambani Group company stopped paying the levy on gas it buys from KG-D6.

Modicare eyes Rs 200-cr sales by FY11; enters F&B segment

Direct selling company Modicare has entered into the food and beverages segment and aims to double its sales to Rs 200 crore by the next fiscal on the back of its newly-launched products. The company, which launched 30 products under the personal and home care categories, also introduced 'Fruit of the Earth Premium Tea', marking its entry into the food and beverage (F&B) segment. Modicare is targeting sales of Rs 130 crore this fiscal, marking an increase of 30 per cent growth over last year. Besides, the company said it is planning to introduce a children's supplement by the end of this year and fruit concentrates by 2010 under its F&B category. "We will launch more wellness products soon and are also mulling at bringing out a Ginseng herb-based product," Modicare Vice President (Marketing) Manisha Amol said. Among the products launched by the company are car wash solution, multi-purpose cleaning liquid, toothpaste, coconut oil, cosmetics and disposable razors. Modicare is a Rs 100 crore company with 34 centres across India which supply products to over 2,600 cities.

Twitter nears deal to raise $100 mn: report

Micro-blogging site Twitter is close to securing $100 million funding from about seven investors, a move which will make it a billion-dollar entity, says a media report. Attributing to people familiar with the situation, The Wall Street Journal said, Twitter Inc is nearing a deal to garner as much as $100 million that would buy the fast- growing Internet-messaging company more time to chalk out its business model. The investor group, expected to pump in funds into Twitter, are likely to include mutual-fund Giant T Rowe Price Group Inc and private-equity firm Insight Venture Partners, the report said. The group of investors may also include firms that have previously made investments in the company, including Spark Capital and Institutional Venture Partners, it added. The proposed funding companies are valuing Twitter — which has yet to generate more than a trickle of revenue — at about $1 billion, the report said attributing to the people familiar with the plan. "That's more than triple the valuation Twitter received during its last round of capital raising in February, underscoring how quickly the company has grown," WSJ stated. Twitter offers micro-blogging, which allows users to send short text messages, among others, on various multimedia platforms.

R-Infra sees serious competition from BSNL, Railways

Planning to hit the market with an IPO to raise about Rs 5,000 crore, Anil Ambani group firm Reliance Infratel has said it could face serious competition from government-owned Bharat Sanchar Nigam (BSNL) and the Indian Railways in the telecom tower business. "If BSNL ...Begins to engage in significant amounts of site sharing with other operators or otherwise offer passive infrastructure sharing availability, this could create a significant new competitor to our Company," Reliance Infratel said in its draft prospectus filed before the market regulator Sebi. The company proposes to raise money through the public issue to expand its telecom tower business by setting up 16,000 telecom infrastructure sites at an estimated cost of Rs 4,623 crore. Besides BSNL, the largest service provider in the country, Reliance Infratel expects competition from the Indian Railways which offers mass communication facilities to the cellular and broadcast operators through its dedicated telecommunication infrastructure arm. Reliance Infratel also expects tough competition from its private sector rivals, especially from an alliance of the major national telecom infrastructure players. "Certain of our competitors are larger and may have access to greater financial resources than we do, or may act in unison with each other to our disadvantage," the DRHP said. Besides, increasing competition is also expected to make acquisition of high quality telecom tower assets, and securing rights to land for its telecom towers, more costly, the DRHP said. "Further, we believe there may be large international passive infrastructure operators that are considering or have taken steps toward entry into the Indian market," it added. "We believe that other Indian wireless service providers may be considering spinning off their passive infrastructure networks as well, which could further increase competition within our industry," the DRHP said. On December 8, 2007, Bharti Infratel, Idea Cellular and Vodafone Essar announced the formation of an independent tower joint venture company, Indus Towers, which will provide passive infrastructure services in India to all operators on a non-discriminatory basis. The growth and demand for cellular telecommunication services in India will lead to an increased impetus to the sharing of passive telecommunications infrastructure, as cellular telecommunication operators will increasingly need to outsource their passive telecom infrastructure needs.