Companies & Sectors
Avantha Power revives plan to raise Rs1,000-Rs1,500 crore through IPO

The Gautam Thapar-led Avantha group company is trying to enter capital markets again after failing to do so it two years ago due to adverse market conditions


New Delhi: Avantha Power and Infrastructure is planning to revive plans to hit the capital market with an initial public offer (IPO) to raise Rs1,000-Rs1,500 crore, after having failed in its first attempt about two years ago, reports PTI.

The company, part of the Gautam Thapar-led Avantha group, is currently in the process of finalising its initial plans for the IPO, which would include roping in bankers to prepare the draft documents for market regulator Securities and Exchange Board of India (SEBI), sources said.

It may look at raising Rs1,000-Rs1,500 crore through the share sale, sources added.

A spokesperson of Avantha group did not reply to queries about the IPO plans.

Avantha Power & Infrastructure is a power generation company with 191 MW of operational thermal power capacity, 2,460 MW of generating capacity under various stages of implementation and 1,320 MW of generating capacity under planning.

Once all of these projects have achieved commercial operation, the company will have total installed capacity of 3,971 MW. Global private equity giant KKR has reportedly invested in the company.

Avantha Power had filed draft IPO documents with SEBI way back in March 2010 and the regulator gave its go-ahead a few months later in August that year for the public offer.

While the company had firmed up its plans to hit the market in October, adverse market conditions forced it to postpone the IPO.

Earlier, the IPO was said to have been postponed till the last quarter of the fiscal year 2011-12, but persisting sluggishness in the market conditions had kept the company's IPO plans on hold.

However, a relative improvement witnessed in the past few weeks seems to have led to the company reviving its IPO plans, sources said.

As SEBI's previous go-ahead for the IPO has already expired, the company would have to again file the draft prospectus with the regulator.

APIL's 191 MW operational power capacity is primarily captive in nature. It has four wholly-owned power plants in Ballarpur and Bhigwan (both in Maharashtra), Yamunanagar (Haryana) and Sewa (Orissa). It also has a 59% stake in a gas-fired plant at Malanpur (Madhya Pradesh).

APIL's two thermal power projects in Raigarh (Chhattisgarh) and Seoni (Madhya Pradesh) are under various stages of implementation and one thermal power project in Gujarat is under planning.

APIL sells and intends to sell the power generated from its operational, under implementation and under planning projects through power purchase agreement (PPAs) of various durations and also on a merchant basis.

It is part of the US four-billion Avantha Group whose listed group companies include Crompton Greaves Limited and Ballarpur Industries Ltd (BILT).


FII inflows into Indian market set to cross $10 billion

The hefty FII inflows have not resulted into a upward movement in the broader market with the Sensex down about 200 points, or 1.2% so far in the month


New Delhi: The investment by overseas investors into Indian stock market since the beginning of 2012 is set to cross the $10 billion level, out of which more than $1 billion were pumped in the first two weeks of July, reports PTI.

The total investment so far in 2012 by foreign institutional investors (FIIs) in to the Indian equity market to $9.82 billion (Rs49,349 crore), according to data available with capital market regulator, the Securities and Exchange Board of India (SEBI).

It seems foreign investors are reversing their bets on Indian equity market as after pulling out funds for the past three consecutive months, they have again infused $1.3 billion (about Rs7,356 crore) so far in July so far.

However, the hefty inflows have not resulted into a upward movement in the broader market with the Sensex down about 200 points, or 1.2% so far in the month to close at 17,430 points on Friday.

FIIs had pulled out Rs1,957 crore from equities in April-June quarter this year, in contrast to a whopping Rs44,000 crore investment in stocks in the previous quarter.

The nearly Rs2,000 crore outflow was mainly due to concerns of economic growth and depreciating rupee, say analysts.

They attributed the change of guard at Finance Ministry having prompted foreign investors to re-consider Indian equity market for investment purposes.

With the Prime Minister Manmohan Singh taking additional charge of the finance portfolio, investors are hopeful that the Prime Minster would take steps to revive the economy.

"The FII movement is partly because of fundamental factors and some optimism generated as the PM taking over as Finance Minister. Besides, potential implications of GAAR are also being seen as a very big positive. This inflow would sustain when all the policy talk translates into action," a stock broker said.

During 3rd July to 13th July, FIIs were gross buyers of shares worth Rs24,626 crore, while they sold equities amounting to Rs17,270 crore, translating into a net investment of Rs7,356 crore ($1.3 billion).

The foreign fund houses also infused Rs1,724 crore ($309 million) in the debt market so far this month. This takes the overall net investments by FIIs into debt markets to Rs22,585 crore ($4.32 billion) so far this year.

FIIs had mostly stayed away from Indian equities in 2011.

They flocked towards the debt market last year with a net investment of Rs20,293 crore, while pulling out Rs2,812 crore from equities.

As on 13th July, the number of registered FIIs in the country stood at 1,754 and total number of sub-accounts were 6,358 during the same period.


Agalega or Andaman Islands? Develop both as strategically important

While Andaman Islands is India’s territory, the government should discuss the development of the Agalega Islands with Mauritius at the DTAA review next month which would be mutually beneficial to both countries

In his recent visit to India, Dr Arvin Boolell, foreign affairs minister of Mauritius recalled the close relations with India for more than three decades now and expressed willingness to go for a review of the Double Taxation Accordance Agreement (DTAA) next month.  
Capital gains tax is almost nil in Mauritius and 40% of foreign investments into India come through this country. The DTAA will come up for renegotiation in August and the minister took the pains to explain that Mauritius is not a tax haven but has a low tax jurisdiction.
Under the Article 13 of DTAA, a company registered in Mauritius can get the benefits of the treaty and pay capital gains tax only in that country.  But, if they do not charge capital gains levy, the company can escape payment of tax on this gain! Such a loophole needs to be covered.
India wants to renegotiate the treaty because it feels round-tripping can and should be checked, which actually refers to the movement of money out a country to another and getting it back under the guise of foreign capital taking advantage of the tax breaks. This issue is likely to be one of prime concern during the August deliberations.
Also, it appears, several years ago, in 2006, Mauritius had offered two islands to India—Agalega Islands, some 70 sq km with a very small population—for what is known as the “Blue Development”. This was to focus in setting up hotels, resorts and building a new modern airport which would increase the tourist potential.  Such a foothold in the Islands would add to India's strategic advantage in battling Somali piracy which has now become rampant and attacks are made with impunity.

It is likely that this issue of Agalega Islands may also come up for discussions in the ensuing DTAA meeting. It is imperative that India and Mauritius discuss this issue for mutual benefit.
While India ponders over the Agalega Islands Development (AID), a walk down the memory lane on a similar issue would be appropriate.
In the late 1980s, the hottest topic for discussion, in the Middle East and in India, was on the development of Andaman Islands (or any one of the islands in that archipelago) as India's free Zone. It is difficult to pin-point where this idea germinated with businessmen from UK, Hong Kong and UAE (Dubai) claiming credit for such an innovative proposal.
The idea was to declare one of the islands as the free zone and let NRIs (non-resident Indians) develop it into a modern Hong Kong for India, free from too much bureaucracy, red-tapism and political interference. All kinds of petitions and proposals flashed around for a few months and eventually, as it normally happens in projects of such dynamic nature, slowly sank into the Andaman Sea, for reasons unknown!
Why, then, raise it now?
Strategic importance of the Andaman Islands does not require any elucidation. These are on the “India plate” and were subject to the tsunami a few years back, with its epicentre in Indonesia and where it caused havoc. Though there was some loss, the Andaman Islands overcame the tragedy, thanks to timely assistance from the central government.
In the meantime and in the background, China made deep inroads into Myanmar, not without a reason. With Pakistani support, when the Gwadar port is completed with Chinese help, it would help them to almost encircle India!
 Hence these islands need full protection of the Indian defence forces and it is highly debateable if the present ‘preparedness’ of our forces are adequate?
China’s expansionist policy in Far East is well known. Almost every island in the region is subject to claim by China which is in dispute with all its neighbours. That China is a bully need not be emphasised.
India needs to wake up and develop Andaman Islands a little more seriously. Economic importance in terms of oil/gas strikes cannot be ruled out. But the past feelings of Chini-Hindi-Bhai-Bhai would not get us anywhere in dealing with this giant and now, economically a very strong neighbour, who wants to treat Arunachal Pradesh as its backyard and calls it a ‘disputed’ area.
All said and done, this does not and should not prevent us from moving forward in discussing the issue of these Agalega Islands, which will be mutually beneficial. However, what needs to be made clear is whether it is just going to be a venture for development or one of a long-term lease of the islands so that India can plan a workable strategy? Can we have our naval presence and raise the Indian flag?

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts. From being the advisor to exporters, he took over the mantle of a trader, travelled far and wide, and switched over to setting up garment factories and then worked in the US. He can be contacted at [email protected].)


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