EPFO likely to hike investment cap for PSU bonds

A proposal to enhance the investment limit to 60% of the net-worth of public sector banks and financial institutions or up to 10% of capital employed will be taken up at the EPFO's advisory body meeting on 26th February

Retirement fund managing entity Employees' Provident Fund Organisation (EPFO) is likely to hike the cap on investment in bonds of highest-rated public sector undertakings (PSUs), banks and financial institutions on the lines of the insurance sector to earn better returns, reports PTI.

A proposal to enhance the investment limit to 60% of the net-worth of public sector banks and financial institutions or up to 10% of capital employed will be taken up at the EPFO's advisory body Finance and Investment Committee (FIC) meeting on 26th February, sources said.

At present, EPFO can only invest up to 40% of the net-worth of PSUs or state-run financial institutions and up to 45% of that of public-sector banks.

The proposal will provide more investment opportunities to the EPFO, which is flush with funds with incremental deposits of about Rs25,000 crore every year, but its capability to subscribe to high-rated bonds is limited by the current curbs on investments.

"EPFO is at present facing an unusual situation of increasing funds but decreasing issuers to subscribe to. This may have serious repercussions on our ability to earn the best possible rates on our investments," says the proposal.

The total corpus of EPFO currently stands at around Rs2.57 lakh crore. It has a subscriber base of over 4.71 crore.

The proposal is required as the EPFO has either exhausted or is on the verge of exhausting the current investment limits in major players in the bond markets like IDBI Bank, Power Finance Corporation and Rural Electrification Corporation.

After the FIC firms up its views, the recommendations would be placed before the EPFO's apex body—the Central Board of Trustees (CBT).

Generally, FIC recommendations find favour with the Trustees, headed by labour minister M Mallikarjun Kharge.

According to the proposal for the forthcoming meeting of FIC, the enhanced limit should be restricted to issuers with the highest credit rating of ‘AAA’. The proposal is on the lines of the cap mandated by insurance regulator IRDA.

The proposal said for the remaining institutions, the current limit of 40%-45% of net-worth should be retained. For the bonds issued by private sector companies, the proposal calls for retaining the current limit of 25% of net-worth for non-banking companies and up to 30% for banks.
 

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IOC fire aftermath delays Cairn's Rajasthan pipeline

The fire that devastated IOC's fuel depot on 29 October 2009 destroyed a pumping station of the Mundra-Panipat pipeline at Jaipur, reducing the line capacity by one-third

The devastating fire at Indian Oil Corp's (IOC) Jaipur fuel depot has delayed commissioning of Cairn India's pipeline for transporting crude from its Rajasthan oil fields, reports PTI.

Cairn has laid a 600-km heated pipeline from Barmer to Salaya in Gujarat to transport Rajasthan crude oil to IOC's refineries but the fire on 29 October 2009 has delayed its commissioning, sources in the know said.

The pipeline was to carry Rajasthan oil to Gujarat, from where it had to be pumped into IOC's Mundra-Panipat pipeline for onward transportation to Panipat refinery in Haryana. But the fire destroyed a pumping station of the Mundra-Panipat pipeline at Jaipur, reducing the line capacity by one-third.

Sources said as Cairn crude was waxy, it turned solid at room temperature and had to be blended with normal oil in not more than 10% ratio for transportation in non-heated pipelines like Mundra-Panipat.

It was planned that 18,000 barrels of Rajasthan crude could be transported per day through the Mundra-Panipat pipeline, which has a capacity of 9 million tons a year (180,000 barrels per day).

But with the fire destroying the Jaipur pump, the pipeline capacity fell to 6.5 million tons, which meant that only 13,000 barrels of Rajasthan crude could be transported.

Cairn, however, felt that 13,000 bpd was too low a volume for safe operation of its Barmer-Salaya pipeline and pegged critical volumes at a minimum of 18,000 bpd, sources said.
 

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HDIL inks pre-lease deal with Future Group

HDIL and Future Group have agreed on a pre-lease deal for the entire retail space of about 10% (out of a total of a million square feet) at Metropolis Tower at suburban Andheri in Mumbai

Realty major Housing Development and Infrastructure Ltd (HDIL), and the Kishore Biyani-led Future Group have agreed on a pre-lease deal for the entire retail space at Metropolis Tower at suburban Andheri in Mumbai, reports PTI.

The project has over a million square feet mixed-use development of which 10% area has been leased to the Future Group, a press release issued on Monday said.

Metropolis Tower, a prime mixed-use development, has office space, retail, entertainment and hospitality segments and is located in the affluent locality of Four Bungalows. Metropolis Tower is located next to the upcoming metro station.

"Centrally located within the upscale residential and business districts of Four Bungalows, Versova and Lokhandwala, Metropolis Tower will be an iconic landmark that will cater to all business, entertainment, retail and F&B needs of this prime area," the release said.

"We are extremely pleased to welcome the Future Group into (the) Metropolis Tower. The very brand denotes a varied shopping experience that will capture the entire locale," HDIL's managing director, Sarang Wadhawan, said.

"Metropolis Tower is built on a formidable grid of planning and we are sure that it will soon be a premium business and entertainment destination in the city. This deal signifies that the commercial and retail real estate are on an upswing and the real-estate market has significantly recovered post correction," Mr Wadhawan said.

Future Group's director, Sunil Biyani, said, "With HDIL, we are assured that Metropolis Tower is not only centrally located ensuring we get good footfalls but is also meticulously planned and constructed. We are sure that this is just the beginning of a long association."

The Future Group is one of India's leading business houses with businesses spread across the consumption space in segments like retail, financial services and logistics.

Led by its flagship enterprise, Pantaloon Retail, the group operates close to 17 million square feet of retail space in 73 cities and towns and 65 rural locations across India.

HDIL, with a land reserve of 194.36 million square feet, has about three decades of experience in the real estate and infrastructure domains, having developed over 100 million square feet of commercial, residential and retail space.
 

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