Power ministry seeks data on gas availability

An Empowered Group of Ministers headed by finance minister Pranab Mukherjee is likely to meet on 27th July to consider allocating natural gas from RIL's KG-D6 field

The power ministry is believed to have asked the oil ministry to provide data on the availability of gas from all sources — including Reliance Industries' (RIL) Krishna Godavari (KG) basin — for power projects, so it could decide on fuel allocation.

"We have asked petroleum ministry to indicate likely availability of gas from all sources," a power ministry official said.

The power ministry would soon decide on the allocation of fuel to gas-based power stations, including NTPC's expansion projects at Anta (Rajasthan), Auraiya (Uttar Pradesh), Faridabad (Haryana) and Dadri (UP).

The ministry has also sought a list of gas-based power plants that would come up during the current financial year (2010-11) from the Central Electricity Authority (CEA).

NTPC is planning to augment the combined capacity of its four power stations by about 6,000 MW in the next five years, for which the company would require 30 million standard cubic metres (mmscmd) of gas per day.

"We are planning an expansion of 6,000 MW of our gas-based stations at Anta, Auraiya, Faridabad and Dadri," NTPC official said, adding that the company requires 30 mmscmd of gas for the same.

"If we get the gas, we would be able to start work on the projects by February 2011," he added.

The fuel allocation would also be for Reliance Power's three gas-based power projects -- Samalkot (Andhra Pradesh), Shahapur (Maharashtra) and Bharuch in Gujarat.

An Empowered Group of Ministers (EGoM) headed by finance minister Pranab Mukherjee is likely to meet on 27th July to consider allocating natural gas from RIL's KG-D6 field.

It is likely to allocate gas to the projects, based on recommendations made by the power ministry.

Meanwhile, Reliance Power is also believed to have written to the oil ministry, asking for 29 mmscmd of gas for its three gas-based projects.

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Pawar confident of better production despite monsoon hiccups

While there has been insufficient rain in UP, Jharkhand and parts of Bihar, heavy rains have lashed Punjab and Haryana. However, agriculture minister Sharad Pawar is optimistic about foodgrain output

Agriculture minister Sharad Pawar today expressed confidence that India's foodgrain production would be better than last year despite scanty rain in Uttar Pradesh and flooding in parts of Punjab and Haryana, reports PTI.

"It is true that in parts of Uttar Pradesh, Jharkhand and in some parts of Bihar, there has been insufficient rain. It is also true that because of heavy rain in Punjab and Haryana, there are some damages. However, we will have more production than last year," Mr Pawar said in New Delhi.

India had produced 234.47 million tonnes of foodgrains in 2008-09 and last week, the agriculture minister, enthused by better prospect of rain, had said that the country would have "bumper produce" this year.

"The latest sowing report shows that compared to last year, the area coverage is more for rice, oilseeds, pulses, cotton, sugarcane and jute," Mr Pawar said, adding the prospect of monsoon is "quite encouraging" as of today.

The monsoon, however, has started playing truant since the past one week, raising some concerns about lower production.

"Definitely, there is a gap, but there will be continuity (of rainfall) after the gap. I am not worried as this happens sometimes. A year before also there was some gap but we could produce substantially without any problem," he said.

The Met department has predicted that rainfall would be 98% in July and 102% in August, he said.

Mr Pawar said that though there are "some damages" because of rain in Punjab and Haryana, the farmers and the government of the two states exuded confidence that the production, particularly rice, would not be affected.

"There could be some damages, but they are hopeful of meeting the gap," he said. Punjab and Haryana contribute maximum foodgrains to the Central pool.

The minister, however, expressed concerns about storage capacity, and said that the government is seriously pursuing state and private participation in the construction of godowns.

Currently, the government's storage capacity is 41 million tonnes against the stock of 60 million tonnes.

"If the assessment (sowing) is correct and the next year production is higher, then storage will be a serious problem.

That's why, we are aggressively going with the help of the state governments to construct warehouses in different parts of the country," Mr Pawar said.

Mr Pawar said that his ministry will assess the space crunch in a week's time and if required, might seek more concession from the finance ministry for parties interested in constructing warehouses.

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Big moves of small bank stocks

Shares of IDBI Bank, Indian Bank, UCO Bank, Dena Bank and Vijaya Bank are moving higher in a gallop. Is it just the capital infusion by the government or something else?

A lot of smaller banks seem to be in a tearing hurry to make new highs or recapture old ones. Among these are IDBI Bank, Indian Bank, UCO Bank, Dena Bank and Vijaya Bank. What gives? One of the key reasons could be the government’s recent equity infusion of up to Rs6,200 crore in five State-run banks — Bank of Maharashtra, Central Bank of India, IDBI Bank, UCO Bank and Union Bank of India — and another reason is most of these banks are planning FPOs. Let’s explore further...

IDBI has risen from a low of Rs106 late May to Rs124. By the looks of its chart, it seems all set to aim for the Rs140 mark, provided it holds above Rs130. IDBI is not very widely tracked by brokerages (Sharekhan, IDFC, and Macquarie are among the few who track it). Net interest income (NII) estimates for the first quarter (Q1) range from Rs750 crore to Rs760 crore and net profit estimates from Rs180 crore to Rs250 crore. Macquarie says in its earnings preview, “Asset quality continues to worsen. Margins should be relatively healthy but headwinds ahead on higher cost of funds as liquidity tightens.”

So why is the stock so bullish? In IDBI’s case, the recent infusion will take the government’s stake to over 65% giving it a temporary respite and enough headroom for a follow-on public offer (FPO) that should shore up its finances and fulfil its capital requirements with ease (results on 22nd July). This is also expected to give a push to its lending abilities.

In Indian Bank's case, asset quality is expected to improve even more in Q1 (it had improved quite a bit in Q4 already). NII expectations range from Rs920 crore to Rs970 crore and net profit expectations range from Rs380 crore to Rs470 crore. Indian Bank, too, plans to raise about Rs1,000 crore through Tier II bonds and its target is to achieve a 22% growth in business to Rs1.8 lakh crore by March 2011. The focus of the bank, according to its managing director TM Bhasin, in recent interviews, is on lending to SMEs, corporates, and infrastructure along with building a stronger CASA. To achieve its loan growth target, Indian Bank will have to get to a CASA level of at least 34%. Mr Bhasin recently said that loan growth for Q1 was at 30%, which is higher than what the market expects. In an interview with The Hindu Business Line newspaper, he revealed that savings bank account balances had grown by 4.5% in Q1 vs 2% growth in Q1FY10. So results expectations (24th July) from this company are on the higher side. Indian Bank is almost near its January 2008 high of Rs257.

UCO Bank is getting about Rs375 core from the government under the recapitalisation scheme and will probably follow this up with an FPO since its total need is around Rs1,300 crore. The bank’s guidance for Q1 is 19% credit and deposit growth, mainly driven by large and mid-corporate sector, and net interest margin of 2.6%. Another positive (as viewed by the market) is that Arun Kaul (currently at Central Bank of India) will soon head UCO Bank. UCO Bank had touched a high of about Rs90 in January 2008 and its current market price is Rs84.

Incidentally, a lot of top-level changes are expected soon — S Raman will move to Canara Bank from Union Bank of India.  M Narendra will move from Bank of India to Indian Overseas Bank. Ramnath Pradeep will shift from Central Bank of India to Corporation Bank. R Ramachandran will leave Syndicate Bank and assume charge as CMD of Andhra Bank, HSU Kamath will move from Canara Bank to Vijaya Bank, and Nagesh Pydah will move from Punjab National Bank to Oriental Bank of Commerce.

Dena Bank (results on 26th July) has risen from a low of Rs70 in January to almost Rs100. Dena Bank, too, is to be a beneficiary of government capital infusion. It is expected to receive Rs600 crore in this quarter and hopes to get another Rs700 crore over the next two quarters. Its CMD DL Rawal has decided to crack the whip on non-performing assets (NPAs) this year and has set a target of Rs75 crore-Rs100 crore cash recovery from written-off accounts in FY11. Motilal Oswal expects Dena Bank’s NII to grow 21% to Rs300 crore in Q1 and expects a 27% loan growth. Again, this bank is also not very widely tracked by institutional brokers. The stock is already at its January 2008 high of Rs98.

Vijaya Bank, too, has been the recent beneficiary of Rs1,200 crore recapitalisation from the Union government. Its chairman Albert Tauro said in an interview late June that protecting margins and asset quality has been a focus and hinted at a margin improvement and better NPAs this quarter. He set a net NPA target of less than 1% by end FY11 and net interest margin (NIM) target of 2.85% (results on 22nd July). The stock is not quite near its January 2008 highs of Rs100, but punters are watching for a breakout above Rs69.

Just a few days ago, Fitch Ratings upgraded the support ratings of five nationalised banks — Corporation Bank, Indian Bank, Andhra Bank, Vijaya Bank and Dena Bank to ‘3' from ‘4'. The upgrades “reflect the Centre's continued strong propensity and commitment towards maintaining healthy financial profiles for government-owned banks, and the government’s improved ability to do this based on better prospects for its fiscal position,” said the Fitch report. The government plans to ensure a minimum 8% Tier-I ratio for government-owned banks by end of FY11 and plans to infuse Rs16,500 crore to this end.

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COMMENTS

CACSMOHITJAIN

6 years ago

knowledgeable material available.T














































































hanks

vinod gupta

6 years ago

there seems to be much more than the government funding. dena and iob did not get any funding and both arec spurting as well. the rise of iob is baffling as the earnings have been very weak ans restructured loansat around 8.85%i % of total loans have been the highest in the banking industry. it is quoting at about 9.5 toimes its eps of 09-10. boi is another share which has risen very fast despite the advance tax in june 10 being about 70% of last june. on the contrary canara bank is quoting at about 7 times its 09-10 and at 5 times annualised eps based on june 10 actuals. boi is also quoting at about 12 times its 09-10 earnings. the exuberance, liquidity, fii interestseems to be other main reasond apoart from the government funding.

KRISH

6 years ago

VIJAYA BANK, LIKE HUL, HAS BEEN A LOUSY LAGGARD & HAS NOT PERFORMED AT ALL IN THE LAST MORE THAN A DECADE THOUGH IT IS A PUBLIC SECTOR BANK.

INVESTORS IN SUCH SCRIPS MUST BE REWARDED WITH AT LEAST 'KISAN VIKAS PATRA' (DOUBLE RETURNS IN 5,6,7 YRS.!)!TYPE OF (S)LOW / NO RETURNS COMPARED TO MANY UNKNOWN SCRIPS ALSO!

IS ANYBODY LISTENING?

HARSHIL J UDANI

6 years ago

vERY USEFULL ARTICALE,
THKS

HARSHIL J UDANI

6 years ago

Good Comments,very useful articale.

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