Sesa Goa's growth plans face delays due to hurdles

New Delhi: Iron ore major Sesa Goa today said it was awaiting regulatory clearances to go ahead with its domestic growth plans aimed at doubling its annual production capacity to 50 million tonnes by 2011-12, reports PTI.

"Primarily, we are awaiting various clearances to raise capacity of our mines," Sesa Goa managing director P K Mukherjee told PTI in a telephonic interview after announcing a 131% growth in its consolidated net profit for the second quarter of the current fiscal.

The London-listed Vedanta Group subsidiary has joined the chorus of global firms like ArcelorMittal and Posco that have decried delays in getting regulatory approvals for their mega- India projects.

The company had earlier announced to almost double its annual production capacity to 50 million tonnes by the end of 2011-12. Sesa Goa, the country's biggest iron ore exporter, has operations in Goa, Karnataka and Orissa.

The growth projections of 2012 envisage nearly doubling the production capacity of its Goa mines to 30 million tonnes and that of Karnataka to 10 million tonnes. It also includes augmenting the production capacity of Orissa mines to 10 million tonnes in next two years from the current 2 million tonnes.

"Any decision on Goa is on hold, pending the new Goa Mineral Policy. In Karnataka, our projects are in advanced stage of clearances. In Orissa, we have to renew contracts with local miners," Mr Mukherjee said.

Global steel giants ArcelorMittal and Posco have failed to launch combined Rs1.5 lakh crore worth steel projects in the states of Orissa and Jharkhand for the last five years, on account of regulatory hurdles and problems in land acquisition.

The company said it increased shipments from Goa to meet any shortfall in exports, arising due to Karnataka government's decision to ban movement of iron ore from some of its ports. Mr Mukherjee said he was hopeful of a favourable decision by Karnataka High Court in this regard.

The company had last evening announced that its profit for the second quarter more than doubled at Rs385 crore as compared to Rs166.46 crore in the same period of last fiscal.

"The biggest driver was iron ore prices. Then it was the 25% jump in volume. Also due to Karnataka ban, we did more from Goa, which has high margins," he added. The company on an average sold its iron ore at $72 a tonne as against $52 a tonne in the year-ago period.

Going forward, Mr Mukherjee said the company expected prices of high grade iron ore to hover in the range of Mr 140 a tonne.

"The demand as well as market sentiment is strong. In the last few days prices have gone up by $8-9 a tonne. There will be some blips here and there but by the end of the third quarter prices should range at $140 a tonne level for the 63.5 Fe content (high grade) iron ore," he added.


SBI's debut bond sale oversubscribed over 17 times

New Delhi: The country's largest lender State Bank of India's (SBI) first retail bond issue of Rs1,000 crore was subscribed over 17 times on the opening day, showing enthused participation from investors, reports PTI.

The issue, which opened for subscription yesterday, will close on 25th October.

Market sources said that in the bond sale, the portion reserved for wealthy individuals (High Networth Individuals) was subscribed by over 16 times, while that reserved for retail investors was oversubscribed 6.4 times.

The offering comprises issue of bonds worth Rs500 crore, with an option to raise it further up to Rs500 crore by issuing additional bonds, with the total aggregating to Rs1,000 crore.

The bonds would offer an interest of 9.25% for 10 years and 9.5% for 15 years.

Citigroup, Kotak Mahindra Capital and SBI Capital Markets are the managers for the issue. The bonds are proposed to be listed on the National Stock Exchange of India (NSE).

The application size for retail investors in the issue is Rs5 lakh, for HNIs is Rs250 crore and for qualified institutional buyers (QIB) it is Rs250 crore.

Market sources said electronic subscriptions were not available for retail investors in the said issue.

They said that the market regulator Securities and Exchange Board of India (SEBI) has barred electronic subscription for retail investors to avoid confusion at the time of allotment. The bonds would be allotted to all categories on 'first-come-first-serve basis' based on the date of application.


L&T bags order worth Rs1,449 crore from DB Power

Mumbai: Engineering and construction major Larsen & Toubro (L&T) today said it has received an order worth Rs 1,449 crore from DB Power for the Bhaskar Group company's Chhattisgarh project, reports PTI.

L&T will execute the balance of plant (BOP) package for DB Power's 2x600MW thermal power plant in Chhattisgarh, the company said in a filing to the Bombay Stock Exchange (BSE).

The BoP is the sum of all equipment for safe operation as well as the technical coordination of all concerned parts of a power plant.

The total time period for completion of the project is 31 months, which was received following the international competitive bidding which involved also domestic bidders, it added.

The company will design, engineer, supply, erect and commission the BOP equipment and systems on an engineering, procurement and construction (EPC) basis.


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