Oil ministry orders RIL to stop KG-D6 gas supply to non-core users

The government pointed out that Reliance, in its gas supply and pricing dispute with Anil Ambani Group's Reliance Natural Resources (RNRL), had submitted to the Supreme Court that it is a mere contractor and the government alone has the right to fix price as well as users of the gas

New Delhi: Admonishing the defiant Reliance Industries (RIL), the oil ministry has ordered the Mukesh Ambani-run firm to immediately stop natural gas sales to non-core users like Essar Steel to meet the full demand of fertiliser and power plants, reports PTI.

Citing the May 2010 Supreme Court ruling that upheld the government's right to frame the gas utilisation policy, the ministry last week wrote to Reliance directing it to first supply natural gas from its KG-D6 fields to priority sectors like fertiliser and power, official sources said.

Reliance is currently producing around 50 million cubic metres a day of gas from its eastern offshore KG-D6 gas block, just enough to meet contracted demand of priority sectors-urea manufacturing units, power plants, LPG extraction plants and city gas distribution companies.

It had refused to abide by the ministry's previous order that wanted the fuel to go to sectors like steel, refineries and petrochemical only if there was any gas left after meeting demand of core sectors.

Non-core sponge iron plants, petrochemicals units and oil refineries have cornered 13.13 million metric standard cubic metres per day (mmscmd) out of the 60.76 mmscmd of KG-D6 gas that the government had allocated in 2008 and 2009.

With production dipping to around 50 mmscmd, a worried oil ministry wanted the fuel to first go to core sectors.

But Reliance has refused to follow the dictat and has continued to follow the July 2010 policy of pro rata allocation, translating into proportionate cuts in supplies to all consumers, including urea-making plants and electricity generation units, they said.

A Reliance spokesperson could not be immediately reached for comment.

With production just a tad above the 47.59 mmscmd quota allocated to core sectors, Reliance says it cannot stop supplies to any customer unless the government indemnifies it against any legal and financial damages arising from such action.

Sources said the ministry was not impressed by the firm's reasoning and cited the Supreme Court's ruling to buttress its point.

Reliance had in its gas supply and pricing dispute with Anil Ambani Group's Reliance Natural Resources (RNRL) submitted to the Supreme Court that it is a mere contractor and the government alone has the right to fix price as well as users of the gas.

The same stand was taken by the government, which the Supreme Court upheld in its 7th May judgement.

Sources said Reliance itself had contended that it has no ownership over gas and it is bound by government orders and its gas utilisation policy (GUP).

The logic behind the ministry's order is that it does not want fertiliser production or generation of electricity during peak summer months to suffer because of a fall in KG-D6 gas output.

Reliance has so far signed up customers for 60.76 mmscmd of gas, while production from its eastern offshore KG-D6 fields in the week ending 3rd April was about 49 mmscmd. Output is lower than the 61.5 mmscmd output achieved in March 2010.

The government had accorded highest priority to urea plants followed by LPG extraction units, power plants and city gas distribution projects while allocating KG-D6 gas.

Sixteen fertiliser plants have been allocated 15.35 mmscmd of KG-D6 gas on a firm or permanent basis, while 27 power plants in the public and private sector have got 29 mmscmd.

A sizeable 7.79 mmscmd of gas has been signed up by steel producers, while LPG plants have been allotted 2.59 mmscmd.

Refineries, including that of Reliance, have been given 3.46 mmscmd, city gas projects 0.65 mmscmd and petrochemical plants the balance 1.92 mmscmd.

The priority sector allocation totals 47.59 mmscmd, leaving almost very little for steel plants, refineries and petrochemical units from current production, they said.


Indian IT Industry–A new order seems inevitable

Analysts expect more churn and consolidation on the road ahead in the Indian IT industry as companies rediscover themselves or reinvent to sustain growth and remain competitive

The acclaimed British leader (and great orator) Winston Churchill had said, "however beautiful the strategy, you should occasionally look at the results." And appropriately for the booming Indian IT industry (worth approximately Rs2.60 trillion), there hasn't been a better time for a serious review of the results emerging from the Street. The plates are shifting underneath the surface and a new order is likely to emerge even as India races towards emerging as the fastest growing economy, possibly by the middle of this decade.

As the earnings season plays out, bringing with it an inevitable cycle of elation and disappointment there are clear indications of a changing order among the leading players in the industry. The biggest surprise has come in the form of HCL Technologies, the fifth largest IT services provider in India.
Analysts were pleased that finally HCL managed to post third quarter growth not just in revenues (31.5% year-on-year (y-o-y) and profits 33% (y-o-y) but a simultaneous upturn in net profit margins (10.3% to 11.3%) and improved cash flows. It is likely that the stock gets re-rated if the same kinds of results are delivered for the financial year.

HCL's better than expected Q3 results helped lift some of the gloom brought about by the worse than expected performance of IT bellwether Infosys Technologies, which has lost further ground to Tata Consultancy Services (TCS). When TCS came out with its results which were in line with expectations, there was relief on the Street that fears of an industry-wide slowdown were just an unwarranted reaction.

While the results may be encouraging in general for the Indian IT industry, the excitement and action are stemming from the changing market position of the long established leaders. TCS has emerged as the clear industry leader, pushing Infosys into a distant second position. In fact, TCS has taken the game away from Infosys for a long time now. In FY07 the gap was small, but sound strategy, persistent marketing and stable leadership helped create an ever widening gulf which stands at Rs9,824 crore in FY11.

The primary driver for this has been the bigger exposure TCS has to the Banking & Financial Services (BFSI) sector. 44% of its revenues come from BFSI, while in the case of Infosys the share of the vertical stands at 36%. The fact that BFSI has been at the forefront of the global recovery in the past two years has been an enormous factor in the dominance of TCS. The aggressive leadership style of its CEO N Chandrasekaran, who shoots from his stable perch, is in stark contrast with the situation at Infosys and Wipro Technologies.

The worries for Infosys grew with the loss of key personnel even as it has its hands full dealing with falling margins and slowing revenues. Mohandas Pai's departure was a precursor to the appointment of a new CEO-most likely Shibulal-and more importantly a new Chairman to replace its legendary founder Narayana Murthy. A few more people are expected to leave the organisation, leaving the leadership to deal with the ensuing vacuum.

The fluid situation at Wipro has been well documented. Azim Premji's company has set about revising its strategies and building a leaner organisation to recharge growth and better leverage costs. But this was no proactive development; Wipro was pushed to the wall by its competitor Cognizant Technology Solutions (CTS). CTS has emerged as the fastest-growing IT company amongst the top ten in the industry and most of this growth has come at the expense of Wipro.

Cognizant, much like industry leader TCS, has benefitted immensely from its focus on verticals just as much as Infosys and Wipro are paying the price for a centralised approach. Now that HCL also is ready to challenge the established order, there will no shortage of excitement in the months ahead. HCL is building significant momentum in the Enterprise Application and Infrastructure Management space and if it continues to progress at current rates, it could stake a claim for a spot among the top three players.

There is also action brewing in the lower rungs of the IT industry. Genpact, the domestic BPO giant made a significant investment to acquire Headstrong and expand into the IT services segment. It could set up a solid platform to fuel its ambitious growth plans.

Mindtree's sexagenarian founder is also lurking in the shadows. The man may be advancing in age, but his serial entrepreneurial instincts are far from dimming. The 67-year-old Ashok Soota announced the launch of Happiest Minds Technologies barely days after making an exit from Mindtree, another company that he found and helped prosper.

With so much action at the top and middle segments of this industry, we can expect churn and consolidation on the road ahead as companies rediscover themselves or reinvent to sustain growth and remain competitive.




4 years ago

The difference between Infosys and TCS was that Infosys positioned itself as a high value- high cost provider, while TCS was willing to handle projects at all levels. Cognizant beat Infosys at the high value game and grew consistently on the basis of its strong fundamentals. Even today Infy is not a bad performer - however, to regain its leadership, it needs to infuse lot of management strength - split into clear SBUs, develop a strong line of IP based offerings, and cut flab to maintain cost/ productivity.


6 years ago

Infosys results in the last few quarter has to be seen in full light The bellwether is undergoing through organizational changes lately, and I believe it will emerge from it stronger. Despite some high profile attrition at top, I believe that the succession planning at Infosys is in place and the company is not so much dependent on individuals for its overall performance. Infosys has visionary leadership and they have correctly identified the shifting tide in the industry and are much better positioned to compete now than ever. In next year or so other competitors will be playing catch up to Infosys

SEBI to establish toll-free helpline for investors

SEBI will also launch a media campaign to demystify the securities market for investors, through films and advertisements in newspapers, radio and television in various languages

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) will set up a toll-free helpline to respond to queries of investors and help track the status of their complaints in its endeavour to resolve investors' grievances and spread financial literacy, reports PTI

The investors, according a strategic action plan approved by the SEBI board earlier, will be able to communicate in their own languages.

The investor awareness and education plan also includes a web-based centralised investor grievances tracking system to help investors track their complaints.

The proposals to establish a helpline for investors and have a grievances tracking system, among others, were approved by the Securities and Exchange Board of India (SEBI) in a board meeting held in February.

Besides, SEBI will launch a media campaign to demystify the securities market for investors, through films and advertisements in newspapers, radio and television in various languages.

It will also conduct workshops for pan-India target groups through its empanelled resource persons to spread financial awareness and literacy.

Besides, the market watchdog will offer financial education programmes to school children, and launch an investor awareness campaign for mutual fund investors directly and jointly through the Association of Mutual Funds in India (AMFI).

SEBI also plans to organise an international seminar along with the Organization for Economic Cooperation and Development (OECD) on investor education.



Narendra Doshi

6 years ago

Toll free availability is good. Make sure it doesn' function like MOST existing lines - unaccessible, operators without enough training to answer quick, correct & listen rather than give standard replies, noting & giving complaint numbers AFTER a wait lasting anything upwards of 15-20 minutes. Providing satisfactory solutions to investors problems in a reasonable time frame is of UTMOST importance whereby the number is spontaneously used again & again by more & more investors & the help line ACTUALLY proves the HELP.

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