NTPC approaches govt to raise ECBs worth $25 bn Tuesday, August 26, 2008 State-run power company NTPC has approached the government for free access to external capital markets for raising debt of around Rs 1.05 lakh crore (about 25 billion dollar) in order to become a 50,000 MW company by 2012. The ECB would include Rs 60,300 crore in foreign currency and Rs 45,200 crore in rupee term. In a letter written to Power Ministry, Chairman and Managing Director NTPC R S Sharma asked, "Government of India should recommend to the Reserve Bank of India for granting External Commercial Borrowings (ECBs) to meet both the rupee as well as foreign currency expenditure for subject packages." Countries largest power producer NTPC wants to raise money in foreign as well as domestic currency without any ceiling. In the present scenario, the companies can raise up to 500 million dollar per annum through ECBs under the automatic route for import of equipments. Apart from this an additional 250 million dollar can be raised for the said purpose with the approval of RBI. NTPC is pursuing this matter with the power minister to achieve its ultimate objective of becoming a 50,000 MW company by 2012 and a 75,000 MW company by 2017. For achieving these targets, the company is required to invest around Rs 1.6 lakh crore during the XI plan period. The debt requirement is around Rs 1. 05 lakh crore with 70:30 debt equity ratio.

Oil cos get govt notice for delay in paying royalty The government is taking a tough stand against oil majors ONGC, RIL, Cairn and the BG group (British Gas) for delaying payment of royalties. “Notices have been served to the members of the two consortia operating PMT (Panna-Mukta & Tapti) and Ravva fields for non-payment of government dues,” a source in the oil ministry said. Official sources said an audit by the Comptroller & Auditor General (CAG) found delays in payment of royalty by PMT consortium from 1994-95 to 2001-02. As per the production sharing contract (PSC), the consortium is required to pay royalty on biannual basis and any delay in paying the same would attract a 10% penal interest. While it has imposed penalties against the PMT consortium represented by ONGC, RIL and BG, in the case of Ravva, it has directed Indian Oil Corp to pay a lower price for the crude it buys from the field by adjusting the royalty that is due from this field. Members of Ravva consortium are ONGC, Cairn, Ravva Oil and Videocon Industries. On an earlier occasion also the petroleum ministry had warned PMT joint venture against the late payment. “Delay was found in royalty payment by the consortium in 1995-96 and the ministry had asked it to pay the fine,” a source said. It is understood from official sources that PMT partners did not pay any attention to the ministry’s demand. When contacted, Cairn India spokesperson declined to comment on the issue. Email enquiries to RIL, ONGC and BG group remained unanswered. One of the PMT JV partner, however, said on the condition of anonymity that the consortium has submitted all relevant papers to the authority that rules out the government’s claim. The PSC for PMT was signed in 1994 between the government and consortium. ONGC holds a 40% participating interest in the oil and gas blocks, while balance 60% interest is shared equally between RIL and BG Energy Holdings. The Panna-Mukta fields produced 1.77 million metric tonne (MMT) of crude oil and 1,662 million standard cubic meter per day (mmscmd) of gas in 2005-06. The Tapti field produced 2,228 mmscmd of natural gas during the same year. In the case of Cairn-operated Ravva, petroleum ministry advised Bongaigaon refinery in Assam to deduct the penalty amount (due to late payment of royalty) from the sale proceeds of the contractor in ratio of their respective participating interests. ONGC is 40% stake holder in the field. Participating interests of Cairn in the field is 22.5%, Singapore-based Ravva Oil (12.5%) and Videocon Industries is 25%. The average gross production from the field for 2007 was 60,441 barrels of oil equivalent per day (boepd), comprising average oil production of 48,078 bopd and average gas production of 74.18 million standard cubic feet per day (mmscfd).

Reliance may transfer 80% in KG D-6 to four affiliates Reliance Industries (RIL) is planning to transfer 80% of its participatory interest (PI) in the famous D6 block in the Krishna Godavari (KG) basin to four unlisted subsidiaries. Valued at nearly $50 billion with 14 trillion cubic feet of gas reserves, this is the arguably the most valuable asset held by the company. These four entities — Reliance KG Exploration and Development, Reliance KG D6 E&P, Reliance KG Basin and Reliance E&P KG — have recently become majority-owned subsidiaries of RIL. RIL has sought the petroleum ministry’s approval for this. The ministry, in turn, has asked the upstream regulator, the Directorate General of Hydrocarbons (DGH), to furnish a list of similar cases where more than 50% of PI in blocks have been transferred to affiliates. A source familiar with this development told ET: “This is a usual practice in the global oil and gas business. It will provide greater financial flexibility to these subsidiaries for raising funds.” However, Director General of Hydrocarbons VK Sibal declined to comment, saying he has not seen any such request from the company. The RIL spokesperson too declined to comment on the issue. An email sent to Niko Resources, which holds 10% stake in the block, failed to elicit any response. RIL holds 90% participating interest in the block. The exact value or structure of the transaction by which RIL would transfer its stake to the four subsidiaries could not be ascertained. However, it is learnt that RIL will continue to be operator of the block with at least a 10% stake, post the transaction. An analyst with an international research firm said: “The four affiliates will have strong balance-sheets, with a part of the KG basin assets. This will help them bid for global oil and gas assets. It also means that these companies may raise funds, if required, for their overseas bidding without stretching the RIL balance-sheet.” The analyst cautioned that there may be a perception that the interest of RIL shareholders may be affected by transferring this asset to the subsidiaries if it does not hold very large equity in them after the transaction. RIL’s exact shareholding in these four unlisted firms could be not ascertained.

Infy buy is largest outbound acquisition by Indian IT co. Infosys' plans to acquire UK-based Axon Group plc may spur high quality Indian corporates to go in for similar moves for offering transformational services, senior industry officials say. Kapil Dev Singh, Country Manager, IDC India said the acquisition signals a trend among Indian IT services firms to enhance their focus from low hanging maintenance kind of services, with a higher bias for top line growth, to high-end domain services that could add more to the bottom line. "It is the first of the many more steps that will ready Indian companies for offering transformational services", he added. Manoj Agarwal, ABN AMRO's Head of Investment Banking for India, said the all cash offer by Infosys is the largest outbound acquisition by an Indian IT company and underscores the continued cross border M&A interest of high quality Indian corporates. "We expect such trend to continue and we believe the transaction by Infosys would act as a catalyst for similar moves by other Indian IT companies", Agarwal said. Industry officials said the proposed acquisition of Axon by Infosys in a $753 million deal is a landmark transaction for the IT industry, as it reflects the tremendous growth of the industry.

Tata and Ambanis among bidders for Worli-Haji Ali sealink The first ever sealink in the country may be taking a long time to be built, but the excitement in the infrastructure industry over the project does not seem to be dying down. The Maharashtra State Road Development Corporation (MSRDC) received a good response with many bidders interested in constructing the next connection from the Bandra-Worli Sealink to Haji Ali. Around 20 bidders have purchased the bid boxes and are keen to build the 3.6 km long connection. At a time when the real estate industry is going through one of the worst recessions, the infrastructure sector seems to be going great guns. Though the construction of the sealink has seen many disputes between the state government and Hindustan Construction Company (HCC), the big-wigs of the infrastructure industry from all over the world have expressed interest in constructing the next phase of the sealink, said a senior MSRDC official. The public works (public undertakings) minister Anil Deshmukh said this second phase of the Western Freeway, connecting Bandra to Haji Ali would not be delayed like the first one. “This freeway with four lanes on each side should not have any trouble as there is no question of any litigation” he said. He added that the sealink would go till National Sports Club of India at Haji Ali. The big names interested in the second phase, costing about Rs 1,100 crore are Anil Ambani’s Reliance Infrastructure, the infrastructure wing of Mukesh Ambani’s Reliance Industries, Hindustan Construction Company with the Korean giant Samsung, Gammon India with a big infrastructure company from Spain, Tata Realty and Infrastructure Ltd., Indian Road Builders (in charge of maintaining the Mumbai-Pune Expressway), India Bulls and Mitas (the infrastructure wing of Satyam). The bids are expected to be received till the mid-October and the construction would commence either from May or October 2009, said a senior MSRDC official. The bridge would take three and a half years to complete. However, the government is still not sure about the third phase of the Western Freeway, which connects Haji Ali to Nariman Point. There is a plan to extend the Worli-Haji Ali Link till Priyadarshani Park at Nepean Sea Road, from where there are two ways of extending it till Nariman Point. One is to build an underground tunnel at Malabar Hill. The other is to build cut and curve tunnels (a method in which there is no disturbance at the surface) under Marine Drive. At present, a team of experts from Arup OBE, a British consultancy and CES, an Indian consultancy, are in the process of submitting a preliminary feasibility report.

Belief is must... Market has shown enough weakness as the rollover was not happening. It seems arbitrage players are not much interested in giving carrying cost. Yet they have to choice than to rollover in next 2 days come what it may. If they are rolling over in Aug, probably they may not get chance to ride in Sept. Irrespective of all weakness seen I am very firm with my targets. I have no doubt in my mind about OIL and gold behaviour. I have also no doubt in my anticipation of rise in US dollar. Therefore the equity market has to go up. Market is undoubtedly showing great picture of controlled moves and therefore it is solely dependent on few players. This time around they have preferred to hammer stock future which has now become weakness of every player as they have formed major habit of playing in Nifty. This exercise is seems to enter stocks now at lower levels. We had broken EIH and GHCL stories much ahead of market and both these stocks have worked. Now we are breaking another first story though we have no coverage to the said stock. FSL which has recently been shifted to A gr is set to announce buyback at or around Rs 60 which is still upside of 50% from here. This could be 100% buyback where ICICI and Temasek could surrender their holding in the buyback. The main reason for 100% buyback could be to sell the entire co as going concern in due course of time. We broke the story and historical volumes began in this counter. This stock has beaten all previous record by rising 25% in a day and especially when the F & O open interest was just 14000 shares till yesterday. Idevelop’s ability to spot such opportunities is not at stake as it is part of our journalism. Had Reliance shown its power today Sensex could have been 250 plus. Well, it could be for tomorrow. Reliance Capital has crossed its barrier level of Rs 1300 in closing session and set to explode tomorrow. Next great call from Idevelop fold could be I G Petro. The investor in this stock has already promised to convert warrants at Rs 200 per share. Even the first trounce was at Rs 77 and hence at cmp of Rs 45 to 46 this stock gives a good opportunity to investors to cash on its value. We understand from our sources that there could be huge buying in this co very shortly. The only resistance id Rs 58 its 200 DMA. Fundamental investors enter now and sell at 60 plus some part whereas technical experts must wait till the time this counter crosses Rs 58. Coming back to market, wait till Nifty crossing 4400 thereafter you do not have to do anything. Bears will the JOB for us. We always believe in…… Be swift to hear, slow to speak, slow to wrath.

December roses... Market was almost close to 4677 the 50 pc retracement theory as per chartists and most of the traders made up their mind to go short either at 4677 or max of 4700. Market once again did not allow them to catch the exact top and fell below 4600 instantly on IIP nos. There are 3 holidays starting Friday and general consensus is always in favour of no position ahead of holiday. Much is also talked about the SEBI meeting on P note tomorrow though in my opinion there may be anything. Ever since 4620 yesterday we avoided to generate buy call in Nifty because we will buy only when street sells it off. We have a stock specific approach at the moment though our targets of Nifty 4700 4812 and 5000 are intact. If market close on weak note then there is every possibility that it will correct further. We have great chance of re entering Nifty at 4460 to 4470 levels again. Oil, Gold and Silver all collapsed and the way it fell it did not give any chance of covering. Now there could be intermittent rallies in these commodities but my advise could be only actual long users must dare to enter in these three commodities for the next 3 months. The weakness will continue and oil will find its bottom at 72 USD for sure though the buying levels could be anywhere between 90 to 78. There are few fund managers who believe that the rally in RIL counter is over for now and RIL will never test 2600 again. They claim that RIL satta has broken and neither oil nor gases will this counter. In fact, this belief only made their conviction still stronger to the effective conclusion that the rally is bear rally and will not go past 16000. I believe otherwise. The best of RIL is yet to be out in public domain. FII which had 27% stake in this co had started making exit when RIL was at Rs 500 cum split. Now the FII holding is as low as 17% and the share price is already up by 6 times. This stock has habit of beating analyst all along. I am very confident of market breaching 18000 that too before Diwali and this will happen with RIL being out performer. Corrections are here to stay. Only those guys who buy in fall, wait and sell on rise could come out winners. There is no market for intra day trades because of volatility. For sure every dip is a buying opportunity provided you can spot the right stock at the right price. God gave us memory so that we might have roses in December.