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Steel, aluminium projects fall behind planned investments

The gap between planned investments in steel and aluminium projects has widened during 2003 to 2009 due to various issues like land acquisition problems and statutory permissions

While investments in steel projects have been on a constant rise ever since 2003, the gap between planned investments and implementation of these projects has more than doubled. Problems such as land acquisition, rehabilitation and permissions from various government authorities are cited as reasons for the widening of this gap.

According to data from ProjectsToday—a website that tracks various projects—in 2003, the total worth of investment planned in steel projects and the total worth of projects in the implementation phase were at par at around Rs25,000 crore. Post 2003, though the planned investments have increased rapidly, the growth in the implementation rate has been abysmal. During 2003 to 2009, planned investment in steel projects went up to Rs4 lakh crore while implementation miserably fell behind at Rs1.50 lakh crore.

“The high investments were encouraged by investment-friendly announcements by states like Orissa and Jharkhand, global demand for steel before recession and huge iron ore deposits. Due to these factors, the number of announcements for such projects increased and there were a number of memorandums of understanding (MOUs) signed for various projects. These reflect in the total amount (of) investments planned. But issues like land availability, other permissions like environmental clearances and rehabilitation plans pose a problem in actual implementation of these projects,” said Shashikant Hegde, chief executive officer, ProjectsToday and director, Economic Research India Ltd in the sidelines of  Minerals and Metals Review seminar held last week.

In 2005, the total planned investment in steel projects was around Rs1 lakh crore. However, the rate of implementation continued to stagnate at below Rs50,000 crore with a marginal increase from the 2003 level. Post 2005, the gap between the total investments planned in steel projects and the amount of projects in the implementation phase increased drastically. From a marginal difference in 2003, the gap widened to Rs1 lakh crore in 2005–06. It further increased to a difference of Rs2 lakh crore in 2008.  In 2009, the total planned investment in steel projects stood at Rs4 lakh crore against just Rs1.50 lakh crore worth of projects in the implementation phase, showing a huge gap of Rs2.50 lakh crore.

A similar scenario is playing out in aluminium projects as well. In 2002, investments in aluminium projects and projects in the implementation phase were below Rs20,000 crore. In 2003, the investment in aluminium projects increased to Rs40,000 crore, while the projects in the implementation phase stagnated at below Rs20,000 crore. In 2006, the investments in aluminium projects touched Rs1 lakh crore, while the projects in the implemented phase rose to about Rs30,000 crore. In 2009, the total planned investment in aluminium projects stood at Rs1.80 lakh crore and the worth of projects in the implementation phase stood at around Rs50,000 crore.


Bharti offers $10.70 billion to buy Zain's African unit

Bharti Airtel has offered $10.70 billion to buy Kuwait-based Zain Telecom’s mobile operations in Africa

India's largest telecom operator Bharti Airtel Ltd on Monday said that it has offered $10.70 billion (nearly Rs50,000 crore) to buy Kuwait-based Zain Telecom's mobile operations in Africa, in a deal that would catapult India's largest private telecom firm in the league of the world's top ten operators, reports PTI.

"Bharti and Zain have agreed to enter into exclusive discussions until 25 March 2010 for the acquisition of Zain's African unit based on an enterprise value of $10.7 billion," the company said in a statement.

Zain has operations in 17 African countries and Bharti's offer covers all of them except Sudan and Morocco.

Bharti Airtel, which claims a subscriber base of over 125 million in India, would make it to the top 10 operators globally after acquisition of Zain, which has nearly 42 million users in Africa.

"This potential transaction does not include Zain's operations in Morocco and Sudan and remains subject to due diligence, customary regulatory approvals and signing of final transaction documentation," Bharti said.

This is Bharti's third attempt in the last two years to enter the African market. In September last year, Bharti's $23-billion merger talks with MTN fell through for the second time due to various reasons including regulatory approvals.

Other than India, Bharti has operations in Sri Lanka and Bangladesh. Bharti had recently recast its top management and had created a separate unit headed by chief executive officer Manoj Kohli to look into overseas opportunities.

With tariffs touching rock bottom and entry of eight new mobile players, Bharti has been facing tough competition in the domestic market and was looking for opportunities in the overseas market to spread its footprint.

"There can be no assurance that a transaction will be consummated. Further announcements will be made in due course," Bharti said in a statement.

Yesterday, the board of directors of Zain Group, formerly known as MTC, unanimously approved the sale of the group's assets in Africa to Bharti.

A consortium of Asian investors has for months been trying to buy Zain's stakes estimated to be worth $13.70 billion from Kuwaiti family conglomerate Kharafi Group, which is one of the main shareholders in Zain. In October last year, Zain halted talks to sell its African assets.


Inflation rises to 8.56% in January on rising food prices

India's WPI rose to 8.56% as food items such as sugar, potatoes and pulses turned costlier. In January, sugar prices rose by 59% compared with last year

Wholesale price-based inflation rose to 8.56% in January, shooting past the Reserve Bank of India (RBI)'s forecast of 8.5% for this fiscal end, as food items such as sugar, potatoes and pulses turned costlier. Overall inflation in December was 7.31%.

In January, sugar prices rose by 59% year-on-year (y-o-y) while potatoes turned costlier by 53.4% and pulses by 45.6%. On a monthly basis, prices of masur increased by 9%, arhar by 6% and wheat by 4%.

The fuel index rose by 1.8% due to higher prices of naphtha that rose 21%. Furnace oil rose 6% while bitumen, non-coking coal and light diesel oil rose 3% each.

To tame inflation, the RBI, in its quarterly monetary review, had asked banks to keep aside more cash with them. It hiked the cash reserve ratio—the amount banks have to park with the apex bank—by 75 basis points to 5.75%, which would mop up Rs36,000 crore from the system.

The RBI has also raised the inflation projection to 8.5% by this fiscal-end from 6.5%.


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