MOIL’s South African foray could prove costly

Company plans to acquire manganese reserves in South Africa, but poor infrastructure could increase costs significantly, says an official

Manganese Ore India Limited's (MOIL ) plans to acquire vast reserves of manganese in South Africa could prove costly for the company as the country lacks infrastructure and logistic facilities, a senior MOIL official told Moneylife.

"We are in initial stage of talks. Out of 5,000 million tonnes of manganese reserves in the world, South Africa owns 4,000 million tonnes. However, there are problems of logistics, power and infrastructure and the country meets only 20% of the world's requirements even though it has 80% of the reserves. The proposed investments in that country could be costly for us," said the MOIL official.

The company is also eyeing manganese reserves in Turkey and Congo. However, the official refused to comment on the progress of the both countries' reserves.

"The company may also form a joint venture for the acquisitions overseas reserves," added the official.

MOIL Limited, which accounts for about 50% of the manganese production in the country, will launch its initial public offering (IPO) comprising 33,600,000 shares on 26th November. Media reports say that the company is likely to raise Rs1,500 crore through the IPO. The issue will close for institutional bidders on 30th November and on 1st December for retail investors. 

The government has not disclosed the price band per share, which is likely to be announced on 22nd or 23rd November, said K J Singh, chairman and managing director, MOIL Limited.

"The government will divest 10% stake in MOIL, while the Madhya Pradesh and Maharashtra governments will sell 5% each. Maharashtra and Madhya Pradesh own 9.62% and 8.81%, respectively," Mr Singh added. 

The company is setting up two ferro-alloy projects in separate joint ventures with Steel Authority of India Limited (SAIL) and Rashtriya Ispat Nigam Limited (RINL) to increase the share of value-added products in the company's basket, said Mr Singh. The 50:50 joint ventures will be operational by July 2012, he added.

The joint venture with SAIL will be located at Bhillai and have capacity of 1.06 lakh tonnes with an investment of Rs400 crore,  while the RINL joint venture will take about Rs200 crore investment and have capacity of 57,000 tonnes.

The company intends to increase production capacity from 1.1 million tonnes to 1.5 million tonnes as demand from steel sector, the largest consumer of manganese, is growing rapidly, said the company. 

IDBI Capital, Edelweiss Capital and JP Morgan are the managers of the issue.


Govt pegs sugar output for 2010-11 season at 24.5 MT

New Delhi: India's sugar output in the 2010-11 season is estimated at 24.5 million tonnes (MT) against the annual domestic demand of 22.5-23 MT, the government today informed Rajya Sabha, reports PTI.

"The production of sugar during current sugar season (October-September) 2010-11 is provisionally estimated at about 24.5 MT against the provisionally estimated demand of about 22.5-23 MT," minister of state for food and agriculture K V Thomas said in a written reply to Rajya Sabha.

India, the world's second largest sugar producer, had produced 19 MT in the 2009-10 season.

The government's initial estimate is 1 MT lower than the industry's forecast of 25.5 MT for the 2010-11 season.

The minister said there is no proposal to impose import duty on raw and refined sugar before 31 December 2010. Early last year, the Centre had permitted duty-free import of raw and refined sugar up to 31st December this year. India imported about 6 MT of sugar to meet the domestic demand.

On decontrol of the sugar sector, Mr Thomas said: "No decision has been taken by the central government to decontrol the present controls over the sugar sector."

The government fixes the Fair and Remunerative Price (FRP) of sugarcane every season. FRP is the minimum price that mills have to pay to cane farmers for buying their produce.

Besides, it also fixes the sugar quota to be sold every month in the open market as well as through ration shops.


IRDA gives clean chit to LIC in transfer of profits case

Hyderabad: The Insurance Regulatory Authority of India (IRDA) today gave a clean chit to Life Insurance Corporation of India (LIC), the largest insurance company in India, in the case of alleged violation of rules pertaining to transfer of profits among its various schemes, reports PTI.

The insurance watchdog earlier said it would launch an investigation in to the books of LIC pertaining to 2009-10.

IRDA chairman J Hari Narayan said there is no violation committed by the LIC and it was just an actuarial shortage as to the current actuarial estimates.

An investigation done earlier by IRDA revealed that there was a deficit of around Rs14,000 crore in one account covering annuity policies that offered high assured returns.

"This is not a real cash shortage.... They will project the gap between the liabilities and assets assuming a certain pattern of liability and assuming a certain generation of income from the investments made," he told media persons after a function organised by IIRM here.

He said the LIC generates a lot of surplus which technically belong to shareholders.

"The LIC is used to meet the shortfall with this cash flow. It is entirely possible in the years to come that this imbalance will be rectified. So, at the moment it is not a cause of concern and these figures are disclosed in their annual account," Mr Hari Narayan said.

LIC, in a statement, earlier said the deficit is only a notional actuarially estimated figure for a period of over 20 years and it is different from a financial deficit or an investment loss.

Replying to a query, he said the IPO draft guidelines for non-life insurance companies have been sent to the Securities and Exchange Board of India (SEBI) for comments.

"As far as life insurance companies are concerned, the guidelines have been cleared by SCADA, a body constituted by and approved by SEBI.

We will be bringing out a circular shortly. With regard to non-life companies, we have done the preliminary work and the matter is engaged to the attention of SEBI," the regulator said.

The Institute of Insurance and Risk Management (IIRM), in partnership with ICICI Prudential Life, today announced the graduation of its third batch of full-time executive program in insurance and risk management program.


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