Govt to set up panel for US investments in infrastructure

The committee, to be set up under Planning Commission deputy chairman Montek Singh Ahluwalia, would coordinate with various ministries and prepare a roadmap before US president Barack Obama's India visit in November, finance minister Pranab Mukherjee said in Washington

India will set up a high-level committee to identify areas for expanding economic ties with the US, from where it expects an estimated investment of $250-$300 billion in infrastructure space, reports PTI.

The committee, to be set up under Planning Commission deputy chairman Montek Singh Ahluwalia, would coordinate with various ministries and prepare a roadmap before US president Barack Obama's India visit in November, finance minister Pranab Mukherjee told PTI in an interview in Washington.

India needs $1 trillion of infrastructure investment, where there is still a gap of 25%-30% and can be filled in by the US companies, Mr Mukherjee said.

Speaking after attending a meeting of Indo-US CEOs Forum in Washington, Mr Mukherjee said the US wants India to expedite relevant legislative actions for economic reforms like opening up of insurance, other sectors.

Terming his meetings here as very successful, Mr Mukherjee said: "My bilateral discussions with secretary of state (Hillary Clinton) and the secretary of treasury (Timothy Geithner) clearly indicated that they are interested in widening and deepening the relationship between India and the US.

"On the whole I say, this was a good visit and all the meetings were successful."

"We have identified certain issues on which we should work together. And this was the recommendations made jointly by both Indian CEOs and the US counterparts-education, infrastructure, clean energy, bio tech and health," Mr Mukherjee said.

"They also suggested what are the impediments in fully exploiting the relationship between our two countries and a breakthrough of the long term ideas," he noted.

Mr Mukherjee said that after returning to India he would "set up a committee, a small group, under deputy chairman Planning Commission, who will co-ordinate with all the concerned ministries on the issues which have been identified..."

The committee would then "prepare a road map on what could be done and what are doable, so that before (the US) president's visit to India in November, both the leaders (Obama and Indian prime minister Manmohan Singh) are in a position that these are the areas in which progress has been made and what further progress could be made, that could be known."

Mr Mukherjee said that Indo-US relations were "moving in the right direction" and the two countries would surely make breakthrough in major areas.

"I am quite confident that in major areas we will be able to make real breakthrough. Our relationship is expanding very fast. Despite the slowdown, I think, both way international trade is $37 billion."

Asked why India was not getting much US investment into the infrastructure sector, despite it being a focus area, Mr Mukherjee said: "We require more. It is incorrect to say that we are not getting. But we require more.

"Nearly $1 trillion is the level of investment which would be required. 25% to 30% of which ... still there is a gap. So this can be filled in by US companies, particularly in the long term infrastructure, for long term investment in road, shipping, communication, transport," he added.

Asked whether the US counterparts in his meetings sought more opening up on issues like taxation and liberalisation, he said, "Certain issues that are pending, naturally they emphasized on it. For instance the opening up of the insurance sector, 26% to 49%, where the pending legislation is there.

"Similarly to have the replicable model in respect of what we have done in the mega power project to replicate it in the sectors of road and others. There is also the land acquisition act, which is pending and rehabilitation of the displaced persons, these legislations are pending. So they expect that we shall have to expedite these legislative actions," Mr Mukherjee said.

"I am happy that the way things are moving and the chief executive officers representing important corporate sector, they also expressed their happiness that they are having exchange of views with the Indian government," he added.

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Power surplus: These States will be able to plug and play

The Central Electricity Authority (CEA) has listed eight States which will have surplus power by 2012. Out of these, Sikkim, Himachal Pradesh and Uttarakhand are most likely to generate significant surpluses

According to Central Electricity Authority (CEA) data, around eight States are expected to generate surplus power by the end of the XI Five Year Plan (2007-2012). However, Himachal Pradesh, Sikkim and Uttarakhand are States with greater probability of benefiting from a surplus. But these states too have their own share of glitches.

A CEA report dated April 2010 ('Power Scenario at a Glance') says that Himachal Pradesh, Jammu & Kashmir, Uttarakhand, Delhi, West Bengal, Sikkim, Arunachal Pradesh and Mizoram are the eight states likely to have surplus power at the end of the XI Five Year Plan. 

At the end of 2012, Delhi (peak surplus: 2,023 megawatts (MW), energy surplus:  23,344 million units (MUs); Sikkim (peak surplus: 1,214MW, energy surplus: 3,137 MUs); Uttarakhand (peak surplus: 772MW, energy surplus: 4,344 MUs) and Himachal Pradesh (peak surplus: 1,472MW, energy surplus: 4,609 MUs) are the States which will have significant surplus power.

The gains likely for these States from the sale of this surplus power are huge. Though it depends on how they sell the power to the grid, merchant power is expected to be priced at around Rs5 per unit against the production cost of Rs3 per unit. Margins can be more than 40% for short-term sale.

Himachal Pradesh expects to add around 1,782.50MW in the XI Five Year Plan. Overall, a high surplus of 91.4% or 1,472MW is expected by 2012, against the current deficit of 2.9% or 25MW. The State's current capacity is around 2,030.16MW.

This State has a high probability of becoming a power-surplus one. "Of the total 1,782MW expected capacity for HP, 1,000MW is to come from Karcham Wangtoo.  It is expected that it will be commissioned within the XI Plan and hence the State has a high probability of being a major surplus State by the end of 2012," said Somesh Kumar, associate director, Ernst and Young.

Sikkim, surprisingly, has added no capacity during the X Five Year Plan. Its current capacity is around 195.48MW (as on March 2010). During the XI Plan, it expects to add 775MW. The State is expected to have a surplus of 1,214MW against the current deficit of 1.2% or 1MW.

"Sikkim has 600MW share from the Teesta Stage III project (1,200MW) which eventually would result in surplus power. By the progress of the project it appears that Teesta would be commissioned in time, making Sikkim a surplus state," said Mr Kumar. Teesta III is under construction and is expected to be commissioned in the year 2011-12.

While the projects are likely to be commissioned on time, they may face issues with meeting the peak-hour demand. Moneylife had earlier reported on how hydropower projects like the Teesta and Karchan Wangtoo projects are unlikely to cater to peak hour demand, according to certain energy studies. (see: http://www.moneylife.in/article/8/5089.html).

Thus, not having peak surplus capacity will cut down on the high level of profits that can be made from trading, but the energy surplus would still be able for sale at a reasonable price.

 Uttarakhand expects to add total capacity of around 821.50MW by 2012. It added around 1,680MW during the X Five Year Plan. The State is expected to have a surplus of 50.4% or 772MW against the current deficit of 20% or 250MW. Uttarakhand's current installed capacity is around 2,404.99MW.

  The State is likely to emerge as a surplus power one provided the major power plants planned here come on stream on the decided deadlines.
       
"Uttrakhand had a major boost to its supply scenario with the commissioning of the 304MW Maner Bhali project in 2008. Another project which will be significant for the state is the 330MW Shrinagar project, being developed by GVK Industries Limited.

The plant is scheduled to be fully commissioned in March 2012 on best effort basis, but may get delayed as certain local issues are impacting its progress. If Shrinagar project is not commissioned on time, the State may not have significant surplus power," said Mr Kumar.

Delhi, which currently is facing load-shedding issues, added around 225MW during the X Plan. It is expected to add total capacity worth 6,790.5MW at the end of 2012. A surplus of 33.2% or 2,023MW against the current deficit of 5.4% or 192MW is expected to be achieved. The State's current installed capacity is around 4,114. 67MW.

However, Damodar Valley Corporation's three contributing projects Mejia II, Durgpur and Kodarma of (total capacity of around 3,000MW) are already running behind schedule. These are expected to be commissioned in the second half of 2010 or in 2011, and they will supply this power to Delhi.
 

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Aster Silicates IPO opens tomorrow

The stock cannot be compared to its competitors because they are not listed

Ahmedabad-based Aster Silicates, a manufacturer of sodium silicate, hits the market tomorrow. The company has set the price band at Rs112-Rs118 per share and plans to raise Rs53.10 crore from the IPO. The issue opens on 24 June 2010 and closes on 28 June 2010.

Aster makes sodium silicate which is an intermediate product for the personal care industry. Sodium silicate is used to make adhesives, cements, detergent & soaps, gels, catalysts and zeolites. It also used for soil stabilisation, water treatment and coatings.

Aster plans to acquire plant and machinery worth Rs36.65 crore or 69.04% of the issue proceeds for its proposed projects.

Based on 2009-10 earnings per share (EPS) of Rs5.14 its P/E at the lower end of the price band stands at 21.79 and at the higher band at 22.96. Its EPS for 2009-10 is Rs5.14.

There are 13 criminal proceedings filed against the company relating to income-tax, excise and foreign trade.

The company posted a net profit of Rs4.42 crore on a total income of Rs61.87 crore for the year ended 31 March 2010. Its top three customers contributed 60.95% of its sales for the year ended 31 March 2010 and the top five customers contributed 83.08% of sales for FY 2010.

The proceeds of the IPO will be utilised for expanding its manufacturing capacity of 50 MTPD (metric tonnes per day) of sodium silicate to 350 MTPD and to fund its additional working capital requirements. Rating agency Brickwork has assigned 'IPO grade 2' to the offering, indicating 'below average' fundamentals.

The company's closest competitors like Swapna Chemicals, Saibaba Chemicals and Nenco Chemicals are unlisted entities. Saffron Capital Advisors Pvt Ltd is the sole lead book running manager to the issue. 

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COMMENTS

MOHD TARIQ

6 years ago

ihave 1500 shares of aster silicates @rs 110 what we have to the of that company

k a prasanna

6 years ago

IPO – SKS MICRO FINANCE LIMITED- UNREALISTIC PREMIUM - DIFFICULT TO SEE LISTING GAINS – AVOID.


The company has fixed the price band at Rs 850-985 for the IPO, which is slated to open on 28-07-10. The company is proposing to issue1, 67,91,579 Equity Shares of Rs. 10 FV, including the offer for sale of 93,46,256 shares.

The company earned a net profit of Rs 173.95cr for FY10. On the post issue capital of Rs 71.97cr, the EPS comes to around Rs20/- At the upper price band, the company is demanding a valuation of almost 50 times its FY 10 earnings. For an NBFC, which has limited period of history and no dividend track record, the valuation is very very much stressed.

APART FROM IRRATIONAL PRICING, CONSIDER THE FOLLOWING BEFORE TAKING THE INVESTMENT DECISION:


1. Unethical business: The Company is charging interest around 40% p.a. on money lent to the poor and down trodden.

2. Unsustainable business model: The business model will not sustain in the long -run.

3. No commitment from the promoters: SKS’s founder and chairman sold his shares to Tree Line Asia Master Fund (Singapore) Pte for $12.9 million in Feb. this year.

4. Look at the salary of top executives:

Suresh Gurumani - Managing Director of the Company. The total monthly salary is Rs. 12, 50,000. In addition to the above, Mr. Suresh Gurumani was paid onetime bonus of Rs. 10,000,000, in April 2009.

Dr. Vikram Akula - chairman Rs 70.00 lacs p.a. In addition, ESOP amounting to Rs10.97lacs, totaling Rs 1.79cr p.a.
The irony is they are trying to eradicate poverty.

5. Mohd. Yunus says - “I get very worried when investment funds come to microfinance,” said the founder of Bangladesh’s Grameen Bank, which pioneered the industry by giving small loans to rural women to start their own businesses. “I don’t want to excite businessmen that there is profit to be made here,”


6. The IPO will make the promoters, and other venture capitalists including some P/E funds that have stakes in these companies’ millionaires. The hapless borrowers continue to live in abject poverty.

7. Government /RBI will not be mute spectators to the exploitation.
They are bound to regulate the segment. This will make the business un- attractive.


8. Financial inclusion initiatives taken by the public sector banks/government will marginalize the micro finance business. Do not buy the theories put forth by the BRLMs to sell the issue.

9. The average cost of acquisition of shares by promoters is less than Rs50/-

10. The Andhra Pradesh government has constituted district level ‘Task Force Committees’ (TFCs) to investigate the unethical practices of micro finance institutions in the state. The committees were constituted after the government received many complaints against the loan shark practices adopted by some leading MFI’s of the state.

RECOMMENDATIONS: CLEAR NO.

READ FULL ARTICLE IN - FIRST CHOICEIPOANALYSIS.COM

k a prasanna

6 years ago

TEN REASONS WHY ONE SHOULD NOT INVEST IN SKS MICRO FINANCE IPO



1. Unethical business: The Company is charging interest around 40% p.a. on money lent to the poor and down trodden.


2. Unsustainable business model: The business model will not sustain in the long -run.


3. No commitment from the promoters: SKS’s founder and chairman sold his shares to Tree Line Asia Master Fund (Singapore) Pte for $12.9 million in Feb. this year.


4. Look at the salary of top executives :

Suresh Gurumani - Managing Director of the Company. The total monthly salary is Rs. 12, 50,000. In addition to the above, Mr. Suresh Gurumani was paid onetime bonus of Rs. 10,000,000, in April 2009.

Dr. Vikram Akula - chairman Rs 70.00 lacs p.a. In addition, ESOP amounting to Rs10.97lacs, totaling Rs 1.79cr p.a.


5. Mohd. Yunus says - “I get very worried when investment funds come to microfinance,” said the founder of Bangladesh’s Grameen Bank, which pioneered the industry by giving small loans to rural women to start their own businesses. “I don’t want to excite businessmen that there is profit to be made here,”


6. The IPO will make the promoters, and other venture capitalists including some P/E funds that have stakes in these companies’ millionaires. The hapless borrowers continue to live in abject poverty.

7. Government /RBI will not be mute spectators to the exploitation.
They are bound to regulate the segment. This will make the business un- attractive.


8. Financial inclusion initiatives taken by the public sector banks will marginalize the micro finance business. Do not buy the theories put forth by the BRLMs to sell the issue.




9. The average cost of acquisition of shares by promoters is less than Rs50/-The Company has limited period of history and no dividend payment record.


10. The Andhra Pradesh government has constituted district level ‘Task Force Committees’ (TFCs) to investigate the unethical practices of micro finance institutions in the state. The committees were constituted after the government received many complaints against the loan shark practices adopted by some leading MFI’s of the state.



k a prasanna

6 years ago

SKS MICRO FINANCE RESULTS - CAUSE, EFFECT AND SIDE EFFECTS, WHOSE CASH IT IS ANY WAY?
SKS Micro Finance earned profit before tax of Rs 267.70 crore on the total income of Rs 958.92cr for the FY 2010. The basic is EPS of Rs 33, much more than some of the large software companies. The country’s largest micro financier is exploiting the poorest of the poor in rural India in the name of providing credit access to them. The company charges interest between 27% -36% p.a. on money lent to the poor. On the one hand, the company says, that there is no scope for reducing the interest; on the other hand, the company is posting robust profits year after year. The so-called valuations they are trying to create for the company is to serve for their own selfish motives. That will benefit the handful of shareholders / promoters.

k a prasanna

6 years ago

Poor quality IPO. Do not subscribe.

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