Companies & Sectors
Efficiency, tariff key to UDAY plan success for discoms: Fitch
American agency Fitch Ratings said on Thursday that the success of India's UDAY debt restructuring scheme for power distribution companies will depend on efficiency gains registered by the discoms and frequent tariff revisions.
 
In a report published from Singapore, the agency said the Indian central government's Ujjwal Discom Assurance Yojana (UDAY) has seen a large number of important states signing up for the programme.
 
Twenty Indian states and one union territory (UT) gave in-principle approval for UDAY and 16 have already signed up for the scheme.
 
According to Fitch, the committed states and UT accounted for almost 77 per cent of the total fiscal in 2014 net cash losses reported by discoms, and around 58 per cent of the total debt outstanding at end-September 2015.
 
"Tamil Nadu stands out among those which have not opted for UDAY, and accounted for 25 per cent of FY14 net cash losses of all discoms," the agency said.
 
"However, the immediate relief provided by interest-expense reduction, while beneficial to the cash flow positions of the discoms, is inadequate to turn these entities profitable," Fitch said.
 
"Achieving this goal by March 2019 as per the plan is highly predicated based on the ambitious efficiency improvements, coupled with tariff increases that are politically sensitive in India," it added.
 
UDAY envisages taking over 75 per cent of discoms' cumulative debt. States would issue loans against the debt at prevailing market rates. The balance 25 per cent would be issued as sovereign backed bonds by discoms.
 
The scheme also envisages access to cheaper coal, modernising transformers to cut distribution losses, as well as a provision to revise tariffs, which has been criticised by the AIADMK government in Tamil Nadu.
 
As per the report, UDAY is an improvement on previous debt restructuring packages for its four-pronged strategy that targets not only a reduction in interest burden but also operational efficiency improvement, reduced cost of power purchased and financial discipline.
 
According to Fitch, the aggregate technical and commercial (AT&C) loss in the Indian power sector is very high - ranging from 11 per cent to 71 per cent.
 
"For the majority of states, tariff increases are required to reach break-even status even after the other savings to which they are committed," Fitch said
 
"A meaningful improvement in discoms' economics will especially benefit power generation companies through higher utilisation and timely clearance of dues," the report said.
 
The current low capacity utilisation of power plants is driven primarily by stressed discoms, which are unable to buy electricity because of weak financial positions, it added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

 

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Nifty, Sensex still on an uptrend – Thursday closing report
We had mentioned in Wednesday’s closing report that Nifty, Sensex might continue to rally. The major indices of the Indian stock markets were range-bound on Thursday and closed with minor losses over Wednesday’s close. The trends of the major indices in the course of Thursday’s trading are given in the table below:
 
 
Following the big ticket announcement by Reliance Industries on Jio commercial launch, key Indian stock market indices were trading flat on Thursday afternoon. Most telecom stocks were trading lower. Selling pressure was seen in telecom, technology, media and entertainment (TECK) and realty sectors, while good buying was observed in auto, metal and fast moving consumer goods (FMCG) sectors. On the NSE, on Thursday, there were 479 advances, 993 declines and 50 unchanged.
 
Taking the tariff war and competition in Indian telecom a new level, Reliance Industries Chairman Mukesh Ambani on Thursday said domestic voice calls on the Jio network will be free forever, and unveiled a four-month introductory offer of free voice and data services. "The era of paying for voice calls is ending," Ambani told the Annual General Meeting of Reliance Industries (RIL) in Mumbai. "No Jio customer will ever have to pay for voice calls again," he added. Bharti Airtel shares closed at Rs310.50, down 6.43% on the BSE. Reliance Industries shares closed at Rs1,029.15, down 2.73% on the BSE.
 
Commercial vehicle major Ashok Leyland Ltd on Thursday said it sold a total of 10,897 units last month, down by 6%. In a statement issued here, the company said it closed last month selling 10,897 units -- down from 11,544 units sold in August 2015. While the sales of light commercial vehicles went up by two per cent last month to 2,696 units, the sales of medium, heavy commercial vehicles went down 8% to 8,201 units. Ashok Leyland shares closed at Rs83.80, down 4.45% on the BSE.
 
India's leading car maker Maruti Suzuki India Ltd said on Thursday it logged 12% growth in sales in August. In a regulatory filing with the BSE, the company said it sold 132,211 units (119.931 domestic/12,280 exports) last month against 117,864 units (106,781/11,083) during August 2015. While the sales of utility vehicles zoomed last month to 16,806 units up by 114.5%, the mid-size car segment (Ciaz) the compact segment (Swift, Ritz, Baleno, Celerio and Dzire) and the van segment also logged sales growth. However Maruti Suzuki saw negative growth in its mini segment (Alto, WagonR) and super compact segment (Dzire Tour) last month as compared to sales logged in August 2015. Maruti Suzuki shares closed at Rs5,058.25, up 0.11% on the BSE.
 
The Supreme Court on Thursday said that the National Mineral Development Corporation (NMDC) can continue with its dual pricing policy for iron ore. Under the dual pricing, NMDC sells iron ore at different prices in different states. While allowing the dual pricing policy, the court declined the plea by Vedanta to export the iron ore that it cannot sell in Goa and Karnataka. NMDC shares closed at Rs106.20, down 1.62% on the BSE. Vedanta shares closed at Rs170.20, up 0.09% on the BSE.
 
The US dollar declined against most major currencies as economic data from the country came out mixed. In late New York trading on Wednesday, the euro rose to $1.1152 from $1.1137 of the previous session, and the British pound increased to $1.3128 from $1.3078, Xinhua news agency reported. The Australian dollar climbed to $0.7516 from $0.7505. US private sector employment added 177,000 jobs from July to August, above the market consensus of 175,000, according to the August ADP National Employment Report on Wednesday. The ADP figure is watched closely as a pre-indicator for the non-farm payrolls report due on Friday.
 
The top gainers and top losers of the major indices are given in the table below:
 
 
The closing values of the major Asian indices are given in the table below:
 

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Rahul says RSS killed Mahatma, ready to face trial
Congress Vice President Rahul Gandhi on Thursday told the Supreme Court that he stood by his remarks blaming the RSS for the assassination of Mahatma Gandhi and said he was ready to face a trial for alleged defamation of the ideological parent of the ruling BJP.
 
Gandhi's lawyer Kapil Sibal told the Supreme Court that the Congress Vice President stood by what he had said about the RSS and the 1948 assasination of the Mahatma.
 
Rahul Gandhi withdrew a petition before the apex court that had sought quashing of the defamation proceeding in a Maharashtra trial court. 
 
The bench of Justice Dipak Misra and Justice Rohinton Fali Nariman allowed the petition to be withdrawn but did not grant Rahul Gandhi an exemption from appearing before the trial court.
 
Rashtriya Swayamsevak Sangh (RSS) activist Rajesh Kunte filed the defamation case against the Congress leader over his remarks at a 2014 election rally that people associated with the Hindutva group killed Mahatma Gandhi.
 
Rahul Gandhi had moved the Supreme Court challenging the Bombay High Court order refusing to interfere with the defamation case against him.
 
The Congress leader told the Supreme Court through his lawyer last week that he did not blame the RSS but "people associated with it" for the Mahatma's assassination.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
  

 

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