Top Stories
RIL in talks with R Power to develop Sohagpur CBM block: reports
Mukesh Ambani's Reliance Industries and his younger brother Anil's Reliance Power are in initial talks to jointly develop their adjoining coal-bed methane (CBM) blocks, according to reports.Reports stated that the talks were preliminary and so far they have not made significant headway. Cash-rich energy major Reliance Industries is close to starting production from its Sohagpur CBM block in 2012-13 and is locked in a dispute with the oil ministry over CBM pricing, says report.Reliance Power reportedly said it was generally open to cooperation.
Discoms in 5 Indian states impacting power sector: Fitch
Fitch Ratings says that distribution companies (discoms) in the five Indian states, namely Tamil Nadu (TN), Uttar Pradesh (UP), Madhya Pradesh (MP), Jammu & Kashmir (J&K) and Haryana, constituted 80% of the total book losses of all discoms in the country in financial ended March 2010 (FY10). Book losses in state power utilities (SPUs) are in turn concentrated (FY10: 93%) at the level of discoms, with generation/transmission/trading companies accounting for only 7%.
The weak financial profile of discoms is the primary cause of stress for SPUs, with the latter's aggregate annual book losses reaching Rs. 295bn in FY10 (FY06: Rs. 70bn). "This means that under the "cost-plus" tariff, generation and transmission companies are able to push their costs to the discoms, which are unable to recover the same from their consumers", says Salil Garg, Director in Fitch's Asia Pacific Utilities team. While the substantial increase in the book and cash losses of discoms is widely known, Fitch notes that such a macro view masks the presence of healthy and well-performing discoms.
States can be classified according to the book profits/losses of their discoms over FY08-FY10. There are 12 states where losses of discoms increased in FY10 versus FY08, and nine states where profits decreased. These 21 states resulted in the high net-aggregate book loss; of which, eight states had discoms with book losses greater than Rs. 10bn in FY10. Of these eight states, discoms in five states - TN, UP, MP, J&K and Haryana - contributed Rs. 220bn (80%) to the net aggregate book loss in FY10, with 66% being accounted by the first three states.
Coal ministry rejects Reliance Power's proposal: reports
The coal ministry has rejected Reliance Power's proposal to mortgage the mining lease of two blocks attached to the Sasan ultra mega power project (UMPP) to provide security to lenders, according to reports.The government of Madhya Pradesh had leased the mines to Reliance Power last September, says report.
Reliance Power reports stated that this is a very normal and standard process in each and every project finance transaction in all infrastructure projects. There are reports that the company is required to mortgage the mining lease as per financing agreement signed with a consortium of 14 lenders for the UMPP.
In Focus Stories
IIFL recommends ‘Buy’ on IRB Infrastructures
IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends ‘Buy’ on IRB Infrastructures.
IRB’s 3QFY12 consolidated revenue grew 11.5% YoY. Construction segment revenue declined marginally QoQ despite 2Q being impacted by monsoons. Construction revenues were lower as Surat-Dahisar project was completed substantially in 2Q. Construction revenue growth would remain sedate till execution of Ahmedabad-Vadodara project ramps up, brokerage said.
IIFL said “Net toll revenue grew 18% YoY, driven mostly by tariff revisions and the commissioning of the Tumkur-Chitradurga project in June-2011. Revenue growth suffered YoY for all the three major projects. Adjusting for increases in toll rate, underlying traffic growth was subdued. Traffic declined 3% YoY for Bharuch-Surat, increased only 0.7% YoY for Surat-Dahisar and 4.75% YoY for Mumbai-Pune.
FY12-14ii revenue would increase at 24% Cagr driven by construction revenue and commissioning of new projects. Nevertheless, slow traffic growth in key projects remains a concern, added IIFL.
The report was published by IIFL’s Institutional Equities Research desk.
IIFL recommends ‘Sell’ on BHEL
IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends ‘Sell’ on BHEL.
IIFL said, “While we were convinced about the medium-term earnings decline extending beyond FY18, the deterioration is earlier and steeper than we had expected”.
The brokerage stated that coupled with sharper-than-expected 360bps YoY Ebitda margin contraction despite stable staff costs, our estimates of moderation in revenue growth and earnings decline from FY14 onwards will likely advance by a year. We cut our FY13-14 estimates by 8-10%.
According to IIFL report, against consistent yearly free cash generation of Rs8-32bn over the past decade, BHEL used up Rs60bn cash during 9MFY12. Cash depleted by ~Rs30bn in 3Q alone. Working capital has more than trebled over 9MFY12 driven not only by lack of customer advances but also by higher receivables. Receivables increased by 37 days during the period.
Concerns on lack of order inflows and delays in existing orders are well known. But zero order inflows and cancellations totalling Rs58.5bn in 3Q are poorer than our worst-case expectations. 58% YoY decline in gross inflows and 74% net decline during 9MFY12 have resulted in end-3Q order book declining 7.3% YoY, report added.
The report was published by IIFL’s Institutional Equities Research desk.
IIFL recommends ‘Buy’ on NHPC
Domestic News
Suzlon Group announces 269 MW in new orders worldwide
Suzlon Group, the world’s fifth* leading and India’s largest wind turbine manufacturer has announced orders of 80 MW in India, and a total of 189 MW orders in Brazil and US, over a one month period, excluding orders announced separately. The cumulative orders are valued at approximately Rs. 20bn (US$ 403 mn).
These cover various firm orders secured between December 22, 2011 and January 23, 2012 and represent a strong customer–mix, covering international special purpose companies (SPCs), PSUs, large corporates and SMEs. The order sizes range from as small as 0.6 MW to 121 MW and comprises of turbines from Suzlon’s latest S9X suite, among other S-series models.
ADAG urges Govt not to review decision on surplus coal: reports
Anil Ambani's Reliance group has reportedly urged the government not to review the decision to allow the use of surplus coal from mines attached to its Sasan project for other plants.
The EGoM, which referred the matter to the attorney general, is scheduled to meet this month, says report.
Reports stated that Empowered Group of Ministers (EGoM) had allowed the company to fire its proposed Chitrani plant using surplus coal from the 4,000 mw Sasan Ultra Mega Power Project (UMPP).
NTPC signs JV agreement with Bangladesh Power Development Board
National Thermal Power Corporation Ltd has said that the company has signed a Joint Venture Agreement with Bangladesh Power Development Board (BPDP) on January 29, 2012 with the objective of setting up and implementing 1320 MW coal based power plant(s) in Bangladesh to cater to the growing power requirements of Bangladesh. This project will be developed through a 50:50 Joint Venture Company between NTPC Limited and BPDP on Build, Own and Operate basis.
Indian Energy plans 1,000 megawatts of Wind Projects: reports
GPT Infraprojects bags order worth Rs465.2mn
Suzlon Group signs 100 MW contract
IFC Invests $5mn in Mahindra Solar One in Rajasthan
Govt appoints three part-Time Directors on NTPC board
Using ocean temperature differences to create renewable energy
ARSS Infrastructure bags order worth Rs2.55bn
KEC International Q3 net profit up 39%
Srei Infrastructure cons disbursement up 22%
Pratibha Industries Q3 net profit up 35%
R P P Infra Projects bags order worth Rs230mn
KNR Constructions bags 2 Projects
Suzlon S9X turbine suite exceeds 1 GW in global orders
Electricity access still insufficient in developing countries: Study
Road Transport Ministry to set up Transport Hubs
Mission plan for electrical equipment industry in 3 months
Supreme Infra in agreement with 3i India Infra fund
ThyssenKrupp Elevators forms JV with Eros Elevators
International News
ABB to acquire Thomas & Betts for US$3.9bn
ABB, the leading power and automation technology group, and Thomas & Betts Corporation, a North American leader in low voltage products, today announced that both companies’ boards of directors have agreed to a transaction in which ABB will acquire Thomas & Betts for US$72 per share in cash or approximately US$3.9bn.
The acquisition price represents a 24% premium to Thomas & Betts’ closing stock price on Jan. 27, 2012 and a 35% premium to the volume weighted average stock price over the past 60 trading days. The transaction is subject to approval by Thomas & Betts shareholders as well as to customary regulatory approvals, and is expected to close by the middle of 2012.
Hager Group acquires ELCOM
Hager Group, one of the leading supplier of solutions and services for electro technical installation in residential and commercial buildings as well as for industrial applications announced the acquisition of ELCOM International, a German based , specialist in Video Door Phone business. The signing of the purchase agreement took place on 20 December 2011; at the corporate headquarter of Hager in Blieskastel, Germany. With this acquisition Hager Group also acquired over 51 % stake in ELCOM Door-Communications (I) Pvt. Ltd., an ELCOM joint venture, in India and is therefore now a close partner of ELCOM Door-Communications Pvt. Ltd.
With this strategic acquisition Hager Group underlines the defined goal to become a full supplier of electrical solutions for residential and commercial buildings. It also strengthens its activities in the BIC-countries, Brazil India China. The corporate culture and wealth of tradition at both companies are sure to form an excellent common platform for a successful future under the roof of Hager Group.