Companies & Sectors
HC refuses stay on water supply to India Bulls' thermal plant

The state told the Court that since there have been adequate rains this year, the government was in a position to provide 328 mcm water to the farmers and also supply 87.06 mcm water to the thermal power plant

 
Mumbai: In a relief to Indiabulls Power Ltd, the Bombay High Court on Thursday refused to grant stay on water supply to its thermal power plant project in Amravati district of Maharashtra's Vidarbha region, reports PTI.
 
A division bench of Chief Justice Mohit Shah and Justice NM Jamdar was hearing a public interest litigation filed by Vidarbha Backlog Removal and Development Committee challenging the May 2011 water supply agreement signed between Maharashtra government and Indiabulls Power, formerly known as Sophia Power.
 
As per the agreement, the government had agreed to diverse 87.06 million cubic meter (mcm) water from the Upper Wardha dam project to the thermal power plant. The PIL, however, challenges this, claiming that the diversion will result in 23,219 hectares of land of over 25,000 farmers not getting irrigated.
 
According to the PIL, the state government was using funds provided by the central government for people of Vidharba region only for irrigation and not for other purposes.
 
The petition states that a minimum of 328 mcm water will have to be provided to the farmers for irrigation.
 
Advocate Prakash Lad, appearing for the government, told the court that since there have been adequate rains this year, the government was in a position to provide 328 mcm water to the farmers and also supply 87.06 mcm water to the thermal power plant.
 
Accepting the statement, the court said it does not see any need to restrain the government from implementing its water supply agreement with the thermal power plant company.
 
The state government had on 17 December 2007, permitted Indiabulls Pvt Ltd, which was formerly known as Sophia Power Company, to set up a 2,640 mega watt power project in Amravati.
 

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CIBIL-TransUnion launch newer version of credit score

The CIBIL TransUnion Score 2.0, which tracks six month's credit history, will grade customers on a risk index ranging from 1 to 5, with 1 denoting the highest risk and 5 the lowest risk of default

 
Mumbai: Credit information services provider CIBIL and TransUnion on Thursday formally launched a newer version of their score which incorporates customers having a credit history of less than six months, reports PTI.
 
The CIBIL TransUnion Score 2.0 will grade customers on a risk index ranging from 1 to 5, with 1 denoting the highest risk and 5 the lowest risk of default.
 
The new version will use different parameters like past delinquency, movement of average balances in accounts, credit seeking enquiries made, credit utilisation in the past, type of credit availed and the age for arriving at a number on the risk index of 1 to 5.
 
CIBIL's managing director Arun Thukral said the new version has been launched keeping in mind the changes observed in borrowing behaviour of consumers and evolving market landscape.
 
Earlier, customers having a credit history of less than six months were not able to get a credit score which will not be the case now, he said.
 
The newer version is initially made available only for CIBIL's 862 member banks and financial institutions, after which it will be available for the customers as well, he said, without giving an exact timeline for the completion of the process.
 
However, the fee structures for customers for availing their individual scores will not change, Thukral said.
 

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Great deal for GSPC under Gujarat government pressure?

GSPC may eventually end up with more than a 90% stake and possible delisting of Gujarat Gas. That too when there were several domestic and international buyers for the stake put on the block by the BG Group


The BG Group (formerly British Gas) has reached an agreement with GSPC to sell its majority stake in Gujarat Gas (BG owns a 65.12% stake) for Rs24.6 billion. The implied final deal price of Rs295/share (close to Nomura’s target price of Rs300) means a 12% discount to the current market price and a sharp 30% discount to the price when BG announced its intention to exit. BG had first announced its intention to exit Gujarat Gas in November 2011. The question being asked in corporate circles is that did the state government have a role in ensuring that GSPC got the deal and that too at a price that the state government wants?

 

It is reported that a clutch of government-owned firms, private companies and foreign entities were eyeing the 65% stake. PSUs BPCL, GAIL, ONGC, GSPC, private entities Adani Group, Torrent Power, and foreign firms European Gas Company GDF Suez, Germany-based E.ON looking at acquiring the BG Group’s promoter’s stake of Gujarat Gas Company. However, pressure from the state government is believed to be the main reason for other contenders dropping from the race.

 

With the purchase of a 65.12% stake from BG Group, new owner GSPC would have to come up with a mandatory 26% open offer for minority share holders. Nomura says that most of the minority shareholders may opt to tender their shares. Current regulatory uncertainties, exit of BG Group (with high standards of corporate governance) as a promoter, and limited growth opportunities in current operating areas of Gujarat Gas are the reasons, according to Nomura, for minority shareholders to opt to tender their shares.

 

The open offer may lead to GSPC eventually acquiring more than a 90% stake and possible delisting of Gujarat Gas. In Nomura’s view, it would also make strategic sense for the GSPC Group to merge Gujarat Gas with its existing city gas distribution entity GSPC Gas, which also operates in Gujarat.

 

Nomura Equity Research expects the Gujarat Gas stock to correct to deal valuation levels. Mandatory open offer of 26% would also happen close to the deal price. Low deal valuation reflects increased regulatory uncertainty and declined investors’ interest.

 

The increased regulatory uncertainties, post PNGRB’s (Petroleum and Natural Gas Regulatory Board) severe tariff order for Indraprastha Gas, and the fact that most other bidders lost interest (of six to seven bidders only GSPC remained in the fray) are the key reasons for lower deal valuation, in Nomura’s view. Nomura adds that having made its intention to exit Gujarat Gas public, the BG Group did not want to prolong the process and agreed on a somewhat depressed deal valuation.

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