Govt won’t rush into arbitration on RIL notice: Oil ministry

“We have got a letter from RIL. Whatever issues have been raised, we would study and whatever needs to be done, will be done,” minister of state for petroleum and natural gas RPN Singh told reporters

New Delhi: Days after Reliance Industries (RIL) slapped an arbitration notice on the government against its move to limit the cost the company can recoup from flagging KG-D6 gas fields, the oil ministry today hinted that it would not like to rush into arbitration. It said it would study the issue before deciding on the move to make, reports PTI.

“We have got a letter from RIL. Whatever issues have been raised, we would study and whatever needs to be done, will be done,” minister of state for petroleum and natural gas RPN Singh told reporters here.

The ministry has been contemplating action against RIL for acute pressure drop and water ingress bringing down output from Dhirubhai-1 and 3 gas fields in KG-D6 block, to about 34 million metric standard cubic meters per day compared to 61.88 mmscmd target, by limiting the amount of expenditure it is allowed to recoup.

“We are clearly not rushing into (arbitration)... we will look into issues raised by RIL,” Mr Singh said.

The 24th November arbitration notice gives the ministry 30 days time to initiate steps like appointing arbitrators.

Sudhir Bhargava, additional secretary, ministry of petroleum and natural gas stated that RIL had “only sent a letter” and not an arbitration notice.

“There is no arbitration notice,” he said.

Mr Singh said the ministry will act “as soon as possible” on the RIL notice.

Asked if the ministry was contemplating punitive action, he said “we are considering several things. The fall in output at KG-D6 is a matter of concern for the nation and for us”.

While action is contemplated against RIL for output being less than target, no incentive will be given to operators if production is higher than targets, Mr Singh said.

RIL’s KG-D6 fields produced more than 61.5 mmscmd of output by March 2010, 50% more than the target for 2009-10. And the production was lower than the target only for one year, 2010-11.

RIL, in its 24th November notice, stated that restricting cost recovery—now at 100% —in proportion to the gas output was against the Production Sharing Contract (PSC) it had signed for KG-D6 block in 2000.

The ministry and its technical arm DGH are calculating as to how much of the $5.693 billion expenditure RIL has incurred on building facilities—which can handle up to 80 mmscmd of output—can be disallowed.

The New Exploration Licensing Policy (NELP), under which RIL had won the KG-D6 block in the first bid round in 2000, allows operators to recover 100% expenditure on exploration and production before sharing profits from the field with the government. It does not link cost-recovery to output.

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IndusInd aims for 30% growth in credit offtake

IndusInd posted a 29% increase in the size of its loan book to Rs30,136 crore in the September quarter

Despite a rise in interest rates and the deteriorating macroeconomic environment, private sector lender IndusInd Bank has said it is hopeful of a 25%-30% growth in advances in the current financial year.

"We are hopeful of posting 25%-30% growth in credit this fiscal. Posting higher credit growth than the system will not be an issue for a mid-size bank like us," IndusInd Bank chief operating officer Paul Abraham told PTI.

IndusInd posted a 29% increase in the size of its loan book to Rs30,136 crore in the September quarter. As per the latest Reserve Bank of India (RBI) data, non-food credit offtake from banks grew by 18.5% to over Rs43.11 trillion in the 12 months to November 4, despite the higher interest rate. This was the first time that credit growth was below the 19%-mark on a year-on-year basis since August.

Referring to strains on its loan book, Abraham said the banking system as a whole is facing pressure from sectors like steel, power and textiles. "There is no perceptible pressure on our mid-corporate and retail portfolio as of now. But we are closely watching these accounts," he added.

During the July-September quarter, the private lender managed to maintain its asset quality. Its net non-performing asset (NPA) ratio stood at 0.31%, little changed from the previous quarter. Its gross NPA ratio also remained almost unchanged at 1.09%.

The Hinduja Group-promoted bank had earlier said it is following a cautious approach in extending new loans to firms that will be possibly impacted by currency fluctuation.

Abraham further said the bank is hopeful of logging sound growth in deposits in the current fiscal. IndusInd reported a 45% rise in net profit to Rs193 crore for the July-September quarter from Rs133 crore in the same period last year. Its net interest income rose by 27% to Rs419 crore during the period from Rs330 crore a year ago.

On Monday, IndusInd closed at Rs273.85 per share on the Bombay Stock Exchange, 0.25% down from the previous close.

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Ashok Leyland sales up 53% in November

Ashok Leyland had sold 5,137 units in November 2010

Hinduja Group flagship company Ashok Leyland reported 53.36% jump in commercial vehicle sales at 7,878 units in November. The company had sold 5,137 units in the same month of 2010.

Domestic sales were 6,477 units in November against 3,885 units in the same month of the previous year, up 66.72%, Ashok Leyland said in a statement. Exports increased 11.90% to 1,401 units last month from 1,252 units in the year-ago period.

On Monday, Ashok Leyland closed at Rs26.45 per share on the Bombay Stock Exchange, 5.59% up from the previous close.

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