ONGC consortium in race for Kuwait Oil’s Rs13,300 crore contract

ONGC Teri Biotech Ltd (OTBL) said it is competing with 12 companies for a contract worth about Rs13,300 crore from Kuwait Oil Corp. The project includes cleaning up a desert oil slick created in the Gulf war that followed Iraq's invasion of Kuwait in 1990.

OTBL is a joint venture between Oil and Natural Gas Corp Ltd (ONGC) and The Energy and Resources Institute (TERI).

The evaluation of the pre-qualification criteria (PQC) is currently in progress for the project that is funded by the United Nations. The PQC is being examined for a 160 sq km area that needs to be cleaned up. The oil spill covers 360 sq km of desert. After the PQC process is over, the selected companies will be given tender documents to submit commercial bids, ONGC said in a release.

On Friday, ONGC shares ended 1.7% down at Rs1,362 on the Bombay Stock Exchange, while the benchmark Sensex declined 0.3% to 20,250 points.


Urea prices could correct, DAP prices may cool down

Citi says supply & demand for fertilisers continues to shift east, urea prices are correcting, DAP prices could slow down in the near term, and capacity is expected to exceed demand. For a net importer of fertiliser such as India, this could be good news

Citi attended the Gulf Petrochemicals & Chemicals Association Fertiliser Convention in Dubai where companies such as Saudi Arabia's Sabic & Ma'aden, Qatar's QAFCO, Kuwait's PIC, Bahrain's GPIC and Oman's OMIFCO, Australia's Incitec Pivot, Norway's Yara, Germany's K+S, Fertiliser Association of India, and China's Sinochem participated. In a report early this week about its conclusions after the conference, Citi said that the fertiliser market appears to be in the midst of a price correction with prices having fallen by $10-$15 per tonne in the last week after a two-month run-up of $100-$120 per tonne.

The broker expects a fall in utilisation rates to below 80% (versus the 86% peak of 2007) in the medium term as new capacity comes on stream. Even assuming consumption at more than 2x the historical average, Citi still arrives at utilisation rates of 80% for 2011 and 81% for 2012.

From 2011-14, around 13 million tonnes (MT) of new capacity will come on stream with almost 65% of this coming from the Middle East and North Africa (MENA). MENA producers have two distinct advantages - low gas costs and phosphate rock deposits (in Morocco, Tunisia, Jordan and Saudi Arabia).

While DAP prices are steady at around $570 per tonne right now, Citi believes these may soften because of the recent slowdown in demand and resistance to the 2-month run-up in prices. Also, a lot of new new capacity is coming on stream, e.g., from Saudi Arabia's Ma'aden, which is due to add around 3MT of annual new DAP capacity - its commercial operations are set to begin in 2Q2011.

Under India's nutrient-based scheme, DAP consumption is expected to increase. India could import over 8MT of DAP in 2010 against 5.5MT in 2009. Indian demand is crucial for DAP imports since these account for almost 45% of global trade. India's bias to urea (81% of the country fertiliser use) still continues but Citi believes demand for other fertilisers will increase.

China, says the report, has increased its fertiliser self-sufficiency and has now become a net exporter of urea and DAP. Its urea market will remain balanced due to capacity cuts which are almost equal to additions. However, if it introduces a year-round 15%-20% export tariff versus its current staggered system, DAP exports may increase.

Early this month, Udai Shanker Awasthi, managing director of the Indian Farmers Fertiliser Co-operative had told the media that fertiliser demand may rise up to 60MT this year. This will mean more import due to India's problem of low domestic production. India imports almost 1/3rd of its fertilisers, most of them potash and phosphate.

In the past few weeks of September, a panel headed by former farm secretary T Nanda Kumar submitted its report, which said that urea should be urgently brought under the free pricing regime under the Nutrient Based Subsidy scheme and the government should slash subsidy for urea significantly to ensure that high price discourages its unproductive use.

Fertiliser stocks in India are showing mixed trends - some are trading near their all-time highs such as Coromandel International at Rs623 (high of Rs678 mid-September), Chambal at Rs74 (high of Rs78), and Deepak at Rs179 (high of Rs188) while others are quite below their all-time highs - such as National Fertiliser at Rs119 (high of Rs149) and RCF at Rs86 (high of Rs118).

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).



pravin kumar

5 years ago

i want to open new urea & dap shop

Barclays back in Intelenet with 12.75% stake buy

Mumbai: Global financial services firm Barclays Bank has acquired a 12.75% equity stake in BPO company Intelenet Global Services, reports PTI.

"Barclays Bank has acquired 12.75% fresh equity issue in SKR BPO Services, the holding company of Intelenet Global Services," Intelenet managing director and CEO Susir Kumar told journalists yesterday. Mr Kumar said Intelenet, which added 25 new clients during the last fiscal, plans to make an initial public offer in a year or two. The company, however, did not disclose the value of the deal.

Intelenet was a 50:50 joint venture between HDFC and Barclays before both stakeholders exited the company in 2007, in favour of Blackstone for a consideration of $200 million in a management-led buyout. At the time, Blackstone had an 80% stake in the firm and the Intelenet management 20%. Following the current stake sale Blackstone's stake has come down to 66.75% and the Intelenet management has 16.75%. HDFC also has 4.69%.

"We are pleased to again welcome Barclays as a shareholder and are grateful to them for their unwavering support," Mr Kumar said.

"At Blackstone, we continue to be very excited about the Intelenet management team's execution of its growth strategy and the further strengthening of its partnership with Barclays," Blackstone India chairman Akhil Gupta said.

Intelenet's revenues in 2009-10 were at about $240 million, compared to $90 million when Barclays exited three years ago. "In the last three years our growth has trebled and we hope the topline would jump by 20% to about $290 million this fiscal," Mr Kumar said.

He pointed out that the company planned to focus on the healthcare segment, which accounts for 10% of its revenues. "We expect the healthcare sector to grow between 12-15 per cent this fiscal," he said. Banks and other financial services customers account for about 42% of Intelenet's revenues. About 22% comes from travel and hospitality and 10% from telecom.

Mr Kumar also said that the company was scouting for acquisitions in the Philippines, China and Europe that would help it gain niche or special capabilities that would enhance its portfolio.



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