New Delhi: A ministerial panel, headed by finance minister Pranab Mukherjee, today reached a consensus to give a go ahead to the draft mining bill, which seeks that miners share 26% of profits with local people who get affected by their projects, reports PTI.
"It is largely approved. One more sitting of GoM (Group of Ministers) remains after which it will go to the Cabinet.
Whatever we have suggested has by and large been approved. We will work on it," mines minister B K Handique told media after the meet.
"GOM approved the new mining bill," another minister said on the condition of anonymity.
Senior officials present at the meeting said the mines ministry would work on the final draft and place it before the GoM soon. The dates of the next meeting could not be immediately ascertained.
The new bill has proposed that a fund — District Mineral Foundation — be created and the beneficiaries be paid out from it.
Besides, it proposes that in case of a mine being non-functional or in losses the firms should compensate the people affected by land acquisition, by paying them an amount equal to the royalty given to state governments.
The royalty paid by mining companies to state governments runs into hundreds of crores of rupees.
The new bill seeks to expedite the grant of mineral concessions in a transparent manner and attracting big investments in the sector.
Mr Handique said the ministry plans to introduce the bill in the winter session of Parliament to replace the existing Mines and Mineral Development and Regulation Act (MMDR Act), 1957.
The new legislation is being framed amid United Progressive Alliance (UPA) chief Sonia Gandhi voicing concerns over land acquisition norms and favouring the Haryana model — where farmers are provided lucrative compensation in addition to annuity for 33 years.
In the earlier draft of MMDR Act, the provision was made for companies to either share 26% equity or profits with the locals and tribals. However, the equity sharing proviso was opposed fiercely by the industry, especially the lobby group Federation of Indian Chambers of Commerce and Industry (FICCI).
Besides Mr Mukherjee, the GoM includes home minister P Chidambaram, steel minister Virbhadra Singh, law minister V Moily, mines minister B K Handique, commerce minister Anand Sharma, tribal affairs minister K Bhuria, Planning Commission deputy chairman Montek Singh Ahluwalia, coal minister Sriprakash Jaiswal and environment minister Jairam Ramesh.
The GoM, constituted in June to examine the bill, has so far met thrice including on 20th July and 30th July.
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After forming a base at around Rs150, Max India shares have begun a tentative rise. Could the rise sustain? A look at this not so widely tracked stock
Max India's share price took a hit due to the changes in insurance rules when the Insurance Regulatory and Development Authority put a cap on both entry load and fees that are charged to customers. From a high of Rs220 in April, the shares dropped to Rs150 levels. However, of late, the stock has broken out above its 50-day moving average but it is yet to break out above its 200-day moving average. In June, its promoters, led by Analjit Singh, increased their stake in the company to about 35% through market purchases. A near-term trigger for the stock could be the Max Healthcare IPO. A look at the company:
Market cap: Rs37 billion
Face value: Rs2
52 week H/L: Rs245 (15 January 2010) /Rs149 (17 August 2010)
Max India consists of:
-Max New York Life Insurance, a 74:26 JV with New York Life
-Max Healthcare, 75.6% ownership; 8 facilities with 1,100 beds
-Max Bupa, health insurance, 74:26 JV with BUPA Finance Plc, UK (new business)
-Max Neeman, contract and clinical research, 100% owned; 180 active sites
-Max Specialty Films, high barrier polymer films and leather finishing foils
As of now, the two most important businesses for Max India are Max New York Life and Max Healthcare. Max Bupa and Max Neeman have high potential.
Max New York Life's distribution agreement with Axis Bank became effective in Q1FY11 - the tie-up with Axis Bank is seen as a big positive for the company as it will expand its reach and reduce dependency on the agency channel. Other perceived positives are its high conservation ratio at 79% (which is the renewal premium for the current year divided by the first year plus the renewal premium for the previous year; basically, it measures the commitment of the consumer to pay premiums regularly over a long period of time). However, it must be said that its conservation ratio has slipped from 85% in June 2009. A negative in the short term could be that ULIPs contribute 73% to new sales. However, its average case size per agent grew 5% y-o-y to Rs23,400 in Q1FY11. Its AUM stands at around Rs110 billion at the end of Q1FY11, up 55% y-o-y. As of the June quarter, it had 8% share of new business premium.
Goldman Sachs has invested Rs5.22 billion through FCDs (Fully Convertible Debentures) in Max Healthcare representing 9% equity stake and promoters have subscribed to warrants convertible into 3% equity stake at an investment of Rs1.73 billion of which they have already infused 50%. The arm plans to add 800 additional beds by 2012 and has entered into a JV with Nova Medical Centres, which specialises in day-care surgical centres. The 26% JV is to initially set up two centres in Delhi/NCR. Max Healthcare is looking at approaching the capital markets towards the end of 2010 for raising funds - this could result in value unlocking for shareholders.
Max Bupa has launched itself in nine cities including Delhi/NCR, Mumbai, Hyderabad, Chennai, Pune, Bengaluru, Jaipur, Surat and Ludhiana and plans to breakeven and achieve a market share of 5% in five years. It has a tie-up with Karvy Insurance Broking, which has 500 branches, to augment its third-party distribution.
Max Neeman has a confirmed order book of Rs370 million as of June. Its business development pipeline is around Rs760 million. It added five new clients in Q1FY11 taking its client base to 62. It currently has 92 studies being executed across 180 sites.
In Q1FY11 Max India's consolidated net loss narrowed to Rs230 million versus a loss of Rs750 million in Q1FY10. But total revenues fell by 19% y-o-y to Rs18.6 billion due to a 64% fall in investment revenues. Operating revenues did rise by 17% y-o-y.
The life insurance business maintained its profitability, recording a statutory profit of Rs190 million versus a loss of Rs790 million in Q1FY2010 - this despite a flat annual premium of Rs3.8 billion. Max Healthcare reported quarterly revenues of Rs1.6 billion, up 35% y-o-y. Max Speciality's revenues rose 16% y-o-y to Rs920 million.
Retail focused brokerage firm Sharekhan has a 'Buy' recommendation on the stock with a target price of Rs231 (current market price is Rs160). The stock is not very widely tracked.
(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).