Companies & Sectors
RIL-BP relinquishes nine oil and gas blocks on poor prospects

RIL and BP are currently focused on reviving the flagging eastern offshore KG-D6 fields and bringing the Mahanadi basin NEC-25 discoveries to production

New Delhi: UK's BP plc has relinquished or surrendered 9 out of the 21 oil and gas blocks where it had bought 30% stake from Reliance Industries Ltd (RIL) for $7.2 billion, due to poor hydrocarbon prospects, reports PTI.
Last year, BP had bought 30% stake in 23 oil and gas blocks of RIL including the gas discovery areas of KG-D6 and NEC-25. The Cabinet had however approved of BP taking stake in 21.
Sources said that after initial assessment, RIL-BP have given up 9 out of the 21 blocks their joint venture had.
The joint venture is currently focused on reviving the flagging eastern offshore KG-D6 fields and bringing the Mahanadi basin NEC-25 discoveries to production.
Declining to comment on the relinquishment, BP India head Sashi Mukundan said, "We want to focus on quickly increasing production and finding more oil and gas".
He said output from the main Dhirubhai-1 and 3 (D1&D3) gas fields in KG-D6 block would increase in 2015 after the joint venture puts up additional gas compression facilities and revives some of the six closed wells.
D1&D3 fields have seen output fall from 53-54 million standard cubic meters per day achieved in March 2010 to 21-22 million metric standard cubic metre per day (mmscmd) currently as one-third of the wells ceased due to high water and sand ingress. Together with 5.5-6 mmscmd of output from MA field in the same area, the KG-D6 is currently 26.5-27 mmsmcd.
"We are still hopeful of increasing production from D1&D3 by 2015," he said, adding that satellite fields around the main producing areas would be put on producing beginning 2016. Besides D1&D3 and MA, KG-D6 has 16 more gas discoveries," he said.
Mukundan said RIL-BP is working on sequencing the gas discoveries towards raising production.


FDA asks Parle to recall entire stock of 'Mango Bite'

FDA has asked Parle to recall entire stock of Mango Bite candy as it was found to contain buffered lactic acid, a substance that is harmful and unsafe for human consumption

Thane: The Food and Drug Administration (FDA) in Maharashtra has asked Parle Products to recall entire stock of its popular candy 'Mango Bite' from the market as it is "unsafe" for consumption, reports PTI.
Officials of FDA Konkan Division recently raided two locations in Raigadh and Bhiwandi and seized stock of the finished goods and ingredients, valued at Rs2 crore.
According to FDA, the manufacturer Parle Biscuits Pvt Ltd at Kirkhinde in Khopoli (Raigadh) used buffered lactic acid (adulterant) in the confectionery which is not permited.
Joint Commissioner of FDA (Food) SK Shere said the seized goods include sugar boiled confectionery (Parle Kachha Mango Bite) packed in jars valued at Rs1.5 crore. Besides, the team also seized around 8158 kgs of Buffered Lactic Acid valued at Rs10.60 lakh.
The samples of the seized goods have been sent to lab for testing, the officer said.
In addition, the stock of Mango Bite was also seized from the godown at Bhiwandi, FDA officials said.
FDA has directed the company to recall the stock of Mango Bite in the market and a final decision on the matter would be taken only after the test report is received.
Officials said that Lactic Acid was "harmful and unsafe" but cannot be declared as unfit for human consumption. Its use is banned by the Food Authority of India.
Earlier, FDA officials had conducted a raid and seized Mango bite worth Rs60 lakh from a manufacturing unit at Nashik.
The use of lactic acid (chiefly found in milk products) was banned in foodstuff after a bench found it not good for consumption for its tooth decaying side effects. It has been ruled out in Food Safety & Standard Act of 2006.


Market in a no man’s land: Weekly Market Report

A clear direction to emerge in the next few trading sessions

The market snapped its five-week winning streak and closed over 1% down this week on concerns about the slowdown, as highlighted by a slew of economic indicators, and a weak guidance by IT major Infosys on Friday. Headline inflation numbers for September, due on Monday, and earnings reports will drive the market next week.
The Sensex settled 263 points (1.39%) lower at 18,675 and the Nifty declined 71 points (1.23%) to close the week at 5,676. We may continue to see the weakness prevailing on the bourses. However, in case the Nifty manages to close above the previous day’s high in consecutive trading sessions for a few trading days we may see the trend reversing, but the probability of this happening is weak.
The market settled lower on the first trading day of the week on profit booking and weak global cues. The benchmarks closed with modest gains on Tuesday after remaining in the positive for the entire trading session. However, political concerns which emerged in the second half of trade saw the market paring part of its gains. Warning of a downgrade of India’s sovereign rating in the next two years by Standard & Poor’s (S&P) and European concerns led the market lower on Wednesday.
The announcement by the government approving direct transfer of urea subsidy and a positive opening of the European markets helped the domestic indices close in the green on Thursday. The bleak revenue outlook by Infosys played on investor sentiments resulting in the market closing in the negative on Friday.
In the sectoral arena, BSE Fast Moving Consumer Goods and BSE Healthcare (up 2% each) were the top gainers whereas BSE Realty (down4%) and BSE Oil & Gas (down 3%) ended up as the top losers.
The top Sensex gainers in the week were Sun Pharmaceutical Industries (up 5%), ITC (up 3%), Tata Steel, Sterlite Industries and Hindustan Unilever (up 2% each). BHEL (down 7%), Wipro, Hindalco Industries (down 6% each), Infosys (down 5%) and Reliance Industries (down 4%) were the main losers.
In the Nifty space, Sun Pharma, Jaiprakash Associates, UltraTech Cement (up 4% each), ITC and ACC (up 3% each) were the top performers. The losers were led by DLF (down 10%), Siemens (down 8%), BHEL (down 7%), Wipro and Hindalco (down 6% each).    
There is a “one in three” chance of a downgrade of India’s sovereign rating to junk status in the next two years, according to ratings agency Standard & Poor's (S&P). Factors forcing a downgrade would be a drop in growth prospects, deterioration on the external front, worsening of the political climate and slow movement on fiscal reforms.
On the upside, especially given the slew of reform measures carried out by the government in the past three weeks, the outlook can be revised upwards to stable if the government succeeds in reducing fiscal deficit, improve the investment climate and revives growth, the agency added.
India's exports continued to decline for the fifth month, contracting 10.8% to $23.69 billion in September due to slowdown in the western economies. However, imports grew by 5% to $41.77 billion, leaving a trade deficit of $18 billion for the month.
Industrial growth, as measured by the Index of Industrial Production slowed to 2.7% in August due to poor show by the manufacturing sector and contraction in capital goods output. Commenting on the data, Prime Minister’s Economic Advisory Council chairman C Rangarajan said, “IIP numbers indicate there is some turnaround as far as manufacturing sector is concerned. I do expect in coming months the growth rate will further pick up...”
Among corporates, Infosys, India’s second-largest software services exporter, on Friday reported a 24% rise in second quarter profit at Rs2,369 crore but disappointed investors with its conservative revenue guidance. The company lowered its revenue growth guidance for the year ending 31 March 2013 to 17.3% at Rs 39,582 crore, from an earlier projection of 19.7% rise to Rs40,364 crore.
A healthy growth in the core net interest income and an uptick in retail advances pushed up HDFC Bank’s second quarter net profit by over 30% to Rs1,560 crore. The lender’s net interest income grew at a healthy 26.7% to Rs 3,731.7 crore, courtesy a 22.9% growth in advances. However, its other income was almost flat at Rs1,345 crore because of its mutual fund investments, and lower volumes coupled with squeezed margins on foreign exchange revenues.
On the international front, US stocks declined over 2% this week on global growth concerns. Top corporates like General Electric, IBM, Microsoft, Intel, Citigroup, McDonald’s and Coca-Cola are expected to announce their quarterly earnings next week.
In Europe, while the Spanish government is expected to seek a bailout from the European Central Bank’s European Stability Mechanism, the country has opposed the move as the bailout would mean that the nation would have to implement strict fiscal reforms.




5 years ago


As predicted, the Indian government has started its divestment drive. The govt. is behaving like the corrupt and bankrupt zamindar in a Tagore novel, who has to go to the old r a n d i (prostitute) to satisfy his private needs because the younger fresher one is too expensive. As outlined earlier, this is part of its plan. It is talking up the markets, announcing reforms that can never be developed on, and then selling its paper. It will recover Rs 40000 cr. from divestment and Rs. 30000 cr. from spectrum auctions. They say, the money will be applied towards the deficit. In reality it will be used to fund further sops and giveaways in the next budget. The deficit will be kept at 6 % of GDP and they will take their chances with the rating agencies like S and P later. SELL ALL STOCK. ( post below)

India. Reforms. Really?

Much has been made of the “burst of reforms” unleashed by Finance Minister Chidambaram in recent weeks. The stock market has rallied and animal spirits it seems are back. Everybody’s babbling about how the UPA, after eight years in power, has found religion ie “reforms”.

The market is now at 21 times price to earnings (trailing twelve month free float adjusted as per the National Stock Exchange). Once more the mood swings violently. More interestingly the India VIX , the fear index is at 3 year lows of 15. This is usually an indicator of complacency, and historically such lows have signified a massive sell off. The combination of the stretched price to earnings and the VIX means the market is ripe for a big sell off. My two bit as an Ivy educated fund manager in Bombay who has worked internationally on some of the world’s major structural adjustment and economic reform programs.

In reality, the reforms amount to bureaucratic tinkerings with percentages – of a sort that only tax mavens and accountants can comprehend. Witholding taxes go down by a percentage point or two. FII margin percentages change. Service tax percentages for insurance companies change. Now an attempt's been made to increase the percentages foreigners can hold in insurance and pensions. (This last will never pass through Parliament given the unanimous opposition to it). Blah Blah Blah.

The Indian economy, in fact, requires Parashurama’s ax and not the surgeon’s scalpel. The reference is to the mythical woodcutter of Indian mythology who wields a massive axe when needed. Wholesale violence will have to be committed on large areas of India’s economy with Parashurama’s axe, if we are to resume a decent growth rate.

The government had no choice but to unleash this wave of tinkering and call it “reform”. It is trying to keep the capital markets buoyant because it needs to sell or “chipkao” (i.e. stick, as we say in the business) close to Rs 40,000 crores worth of equity. This with spectrum auctions, hopefully plug the budget deficit a little by March. More crucially, it will also free up resources for massive election giveaways in next March’s budget. This is especially needed if the Food Security Bill –Madame Sonia’s chosen strategy for reelection – is to be passed.

Real reforms for India will not happen for a long time. These include financial sector reform, and an end to the financial repression signified by the statutory liquidity ratio. Privatization of the banking system that’s put an end to the ridiculous spectacle of 75 % of the banking system being owned by the government in a market economy. Bankruptcy and exit laws will have to be introduced. Labour market liberalization and the freedom to hire and fire labour will have to be allowed.

The collapsed state of Indian cities will have to be addressed by building 30 to 40 cities to accommodate massive rural urban migration. Land acquisition which is impossible now will have to be addressed. This list does not even include the sector changes required in real estate and infrastructure and sugar, and so on and so on. None of this is happening ever, it seems.

Everybody’s babbling in the media about how crucial the February budget is going to be for the UPA because it will be packed with big ticket sops like the Food Security Bill. Remember game theory however. It is crucial to take your opponent’s reaction into account. The Opposition also knows that the budget will be crucial to the UPA’s reelection chances ! Why then will they allow the UPA to present the budget at all. Especially when they have the numbers and the government is already on life support and in a minority. !!!

The government therefore, will, in all likelihood, fall in November-December, during the winter session of Parliament. Elections will take place in March-April as India needs the school system for a general election. This will allow the Opposition the chance to deny the government’s attempt to pass a budget full of sops and giveaways. The February budget will consequently be a vote on account. This scenario will suit all parties except the Congress and hence it will happen.

Is the market discounting the possibility that in a few weeks, all these guys PC etc. etc. will be gone ? Looking at the way its going up, I think not.

The logical conclusion also is that this is the high point of the markets move this year. India has gone from having the most incompetent FM (Pranab) to the most cunning FM (Chidambaram). The later is deliberately doing all he can to talk up markets to implement his plan. There is little need to oblige him and his plans of using the stock market as a financing vehicle, by buying high and losing one’s hard earned capital.

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