Petrol and possibly diesel prices are likely to be hiked by Rs2-Rs4 per litre once assembly elections in five states, including Uttar Pradesh, are completed this week
New Delhi: Petrol and possibly diesel prices are likely to be hiked by Rs2-Rs4 per litre once assembly elections in five states, including Uttar Pradesh, are completed this week, reports PTI.
State-owned oil companies are losing about Rs4 per litre on petrol, industry officials said.
Oil firms had last revised petrol prices on 1st December after which rates have not been changed because of the assembly elections.
The industry, they said, has lost about Rs900 crore since the last revision which was done at international gasoline price (the benchmark for deciding domestic retail rates) was $109 per barrel. Gasoline rates have since risen to over $125 a barrel.
“In all probability, petrol price will be increased after assembly polls,” an official said.
Another official said diesel rates, too, may be hiked before the Budget session of Parliament that begins on 12th March.
State-owned oil firms lose Rs12,77 per litre on diesel.
They also lose Rs30.21 a litre on kerosene and Rs378 per 14.2kg domestic LPG cylinder.
Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are losing over Rs410 crore per day on sale of diesel, domestic LPG and kerosene.
Officials said the call on raising diesel prices would be taken by an Empowered Group of Minister (EGoM) as and when it meets while petrol rates would be revised by oil firms themselves.
Petrol price were freed from government control in June 2010 but rates have not moved in tandem with imported cost.
While petrol price were last revised on 1st December when they were cut by Rs0.78 per litre to Rs65.64 per litre in Delhi, diesel currently costs Rs40.91 a litre.
A mega merger between Sesa Goa and Sterlite is likely to negatively impact its shareholders
The mega merger plans announced by the Vedanta Group (Vedanta) of its two listed Indian entities—Sterlite and Sesa Goa—is bad news for domestic shareholders and the markets. The much awaited announcement stated that Vedanta is merging of its two entities—Sterlite and Sesa Goa—into one, now rechristened as Sesa Sterlite. The shareholders of the merged entity will foot the massive bill. We had given a brief of the merger over here: http://www.moneylife.in/article/vedanta-to-merge-sesa-goa-sterlite-to-create-20-billion-entity/23908.html
According to InGovern, an independent advisory firm, “The transfer of Cairn India’s stake to Sesa is taking place at cost with no profits to Vedanta. 38.5% of Cairn was acquired by Vedanta for $5.79 billion last year.” According to the company, Sesa Sterlite, the new entity would be acquiring its huge debt and will be servicing it. Effectively, Vedanta has dumped its massive debts on the two listed entities at the cost of its Indian shareholders. According to Dipen Shah of Kotak Securities, “Sesa Goa would be paying approximately 11% premium to acquire Cairn India from Vedanta Resources over its acquisition price for 20.1% stake in Cairn India which nullifies the earlier stated gain to large extent.”
Vedanta will transfer 70.5% shareholding in Vedanta Aluminium (VAL) to Sesa for new 72 million shares of Sesa. Sterlite owns the remaining 29.5% of Vedanta Aluminium and this would mean that Sesa Sterlite will now own the entire company. In the same report, InGovern states, “risks associated with VAL transferred from shareholders of Vedanta PLC to shareholders of Sterlite and Sesa Goa. This risk transfer may not be adequately compensated for shareholders of Sterlite and Sesa Goa.” It must be noted that VAL is a loss-making entity with zero operating earnings, wherein Vedanta had given a Rs2,300 crore loan to VAL at an interest rate of 10%. VAL posted Rs2,000 crore losses in the first nine months of 2012 due to non-availability of captive resources like bauxite and coal. In other words, Vedanta has essentially paired a loss-making entity (VAL), with a profit-making entity (Sesa Sterlite) in order to pare off the parent company’s (Vedanta) debt. The restructuring hasn’t accounted for this kind of risk.
InGovern further states, “Sesa will issue 72 million shares to the shareholders of VAL, the equity valuation of VAL is Rs2,332 crore. At this, VAL has an enterprise value of approximately $6 billion with zero EBITDA. The management commented that they have been conservative in valuing VAL as they have not considered operations of captive bauxite mines for the next three years. The management also commented that the replacement value of VAL assets is higher than $6 billion”. With no earnings in sight, VAL’s future, and by extension the future of the merged entity Sesa Sterlite, would have to depend on the having the Orissa bauxite mining ban revoked. VAL has aluminium smelting capacity up to 1.25 million tonnes. Last year, Orissa Mining Corporation, the Indian JV partner with Vedanta, had filed a petition against the Supreme Court order, to revoke the mining ban. The ban was imposed by the government on environmental concerns. If the ban is not revoked, there is a risk that shareholders of the merged entity would have grossly overpaid for VAL, which has virtually zero operating profits.
In additional to the Cairn India and VAL deals, Vedanta will transfer its 94.8% shareholding in Madras Aluminium Company (MALCO), whose principal assets are its 3.6% shareholding in Sterlite Industries, to Sesa for new shares of Sesa. According to InGovern, “This is at a 24% premium to the valuation of its principal assets—its 3.6% shareholding of Sterlite—the value of which comes to Rs1,435 crore.” Here too, shareholders of Sesa Goa and Sterlite are overpaying.
Following the restructuring, Sesa Sterlite will be in charge of the Indian operations and Vedanta will discontinue being part of the Indian operations. Vedanta, it must be noted, is listed on the London Stock Exchange and headquartered in London. All this responsibility will now fall under the new entity—Sesa Sterlite. It remains to be seen how the new entity deals with the restructured companies, let alone service its gargantuan debt. With the parent company taking a back-seat, it is left to these entities to figure out ways to create cash to not only pay off its newly-acquired debts but also continue the business.
Analysts in the financial circles have remarked that the deal favours Sterlite shareholders, as Sterlite will be obtaining shares of Sesa Goa, while the biggest beneficiary is, of course, Vedanta, whose debt obligations will fall by $6 billion, from $9 billion to $3 billion.
According to Vedanta, it stated, “The consolidation is expected to lead to significant synergies, including economies of scale, more efficient movement of group cash, improved allocation of capital and corporate cost savings including tax efficiencies”. However, Dipen Shah thinks otherwise. He chimes in, “no reasonable operational synergies are visible to us in the merger” and that there will be “limited financial and taxation synergies likely.”
Billionaire owner of Vedanta, Anil Agarwal, had told a TV channel, “If you look at the diversified company and the pure play, diversified has 30%-40% more value. So it was simplifying the process, creating more value for shareholders.” Sesa Goa’s stock tanked by around 10% while Sterlite has declined only by 2.5% on Monday (27th February).
WikiLeaks’ latest release comes at a time when the battle between cyber-activists and government is heating up
The latest WikiLeaks release makes a good example for irony. Not only has Julian Assange and friends delivered a solid upper cut to the US government and its intelligence agencies, to add insult to the injury, they have published the email by Stratfor’s CEO which says he has resigned because WikiLeaks has released confidential cables of his company.
For the latest expose, hackers group Anonymous had teamed up with Julian Assange. Today, WikiLeaks started publishing over five million emails of Stratfor, a Texas-based intelligence provider—which WikiLeaks defines as “a company that fronts as an intelligence publisher, but provides confidential intelligence services to large corporations”. The ‘corporations’ here includes the infamous Dow Chemicals, responsible for the Bhopal gas tragedy, and a sponsor for the upcoming London Olympics. Moneylife has written about Stratfor’s Bhopal connection here http://moneylife.in/article/us-intelligences-interest-in-bhopal-updates-grows-as-london-olympics-nears/23916.html
Stratfor’s CEO George Friedman resigned yesterday, just before the cables were leaked out. In his email, he says, “In the light of the recent events, especially the release of our company emails by WikiLeaks, I have decided that stepping down is in the best interest of Stratfor and its customer base. We certainly do not condone any criminal activities by groups like Anonymous or other hackers. This is theft and we will continue to co-operate with law enforcement agencies to bring those responsible to justice. But we must acknowledge that this incident would not have been possible if Stratfor had implemented stronger data protection mechanisms.”
Barrett Brown, spokesperson for Anonymous, soon after today’s leak, issued a statement explaining the logic behind hacking the 2.7 million cables by the group. “This wealth of data includes correspondence with untold thousands of contacts who have spoken to Stratfor’s employees off the record over more than a decade. Many of those contacts work for major corporations within the intelligence and military contracting sectors, government agencies, and other institutions for which Anonymous and associated parties have developed an interest since February of 2011, when another hack against the intelligence contractor/security firm HB Gary revealed, among many other things, a widespread conspiracy by the Justice Department, Bank of America, and other parties to attack and discredit WikiLeaks and other activist groups. Since that time, many of us in the movement have dedicated our lives to investigating this state-corporate alliance against the free information movement. The e-mails obtained before Christmas Day will vastly improve our ability to continue that investigation and thereby bring to light other instances of corruption, crime, and deception on the part of certain powerful actors based in the US and elsewhere.”
WikiLeaks’ latest release comes at a time when the battle between cyber-activists and government is heating up. Anonymous and other hacktivists, like Lulszec, had showed their support earlier for Julian Assange, when in 2011, they organised some of the biggest security breaches. Soon after MasterCard and PayPal disabled their services for WikiLeaks, Assange went public with the fact, and even expressed doubts about WikiLeaks’ survival.
Shortly after, MasterCard suffered a breakdown. It was followed by other massive hacks: Websites of FBI, US Senate, CIA, Sun newspaper, gaming and tourist websites—and the biggest: the Sony Playstation data theft. Individually and teaming up on occasions, hacktivists leaked military email addresses and snatched files from Viacom and Universal; and left the US government red faced. Soon after, Piratebay chief and hacker ‘Topiary’ were arrested, but that only gained more public sympathy for the hackers.
Free information activists, and internet users are gearing up for possible fights. Worldwide, attempts are being made to censor the Internet (including India)—but so far, this largely unorganised sector has shown remarkable solidarity and have refused to be pushed over. The biggest proof is the SOPA fiasco; which fell on its face after a day of blackout by leading websites and severe critique in Twitter and Facebook.
Even in India, despite government pressure, Internet companies have refused to be bow down. Although Google and Twitter agreed to offer “region specific” service tailored to ‘countries’ benchmark of free speech, options have been left open for overriding it. And if the latest release is of any indication, WikiLeaks need not fear to die of “lack of support”— at least for now.