Companies & Sectors
Economy & Nation Exclusive
What can Coal India do to increase supplies

With banks reluctant to fund power projects, Coal India, which is flush with funds, should form joint ventures with power producers to ensure sales and power supply

After Tuesday’s board meeting of Coal India, chairman Narasing Rao announced that the company plans to import some 18 to 20 million tonnes (MT) of coal during 2012-13 since most of the power producers have agreed to its proposal for sharing the cost of imported coal.
 
In order to ensure supply of coal to power producers, which have signed the FSAs (fuel supply agreements), such an arrangement would be a relief. Although this cost sharing arrangement will result in a marginal increase in cost of 8 to 10 paise per kilowatt hour (kWh), it will enable the power utilities to generate an additional 32 billion units in the current year which will go up to 44 billion units in the next fiscal.
 
Under the proposed cost sharing arrangement, all the power producers irrespective of how much imported coal they consume will have to pay the average price. As of now these producers are obtaining domestic coal at much lower prices and the average price now proposed will eat into their profits, though it will guarantee their production will not fall.
 
However, it remains to be seen what the ultimate decision will be if and when the Coal Regulator is appointed, and whether his decisions will overrule all previous and existing contracts and supplies!

 In the meantime, Coal India has been making some serious attempts to increase its domestic coal supplies. For instance the Gevra project in Chhattisgarh, a wholly-owned subsidiary of South Eastern Coalfields, is India's largest single source of power grade coal and it is also an open cast mine. CIL produces 435 MT annually, out of which 35 MT came from Gevra. The production, however, stopped way back in 1980.
 
It was not possible to continue the production due to CIL’s inability to overcome the resistance by seven villages which were controlling 1,100 hectares of land, containing an estimated 160 MT of power grade coal.
 
Now, after a series of negotiations, it has been able to overcome the issues and come to acceptable terms of compensation and rehabilitation of the affected villages. The final acquisition process has just begun and is expected to be completed in the next few months.
 
When complete, SECL will begin to consolidate the land holdings so as to plan the mining operation which one can foresee is likely sometimes next year.
 
There is one other area when financially rich companies like Coal India can come to the rescue of power producers. Due to the current market situation and uncertain state of affairs, coupled with poor and deteriorating finances of state electricity boards, banks are showing their hesitancy to lend money for power projects.
 
Banks are willing to extend financial support for those power units which have guaranteed fuel supply arrangements together with transport logistics, because they consider these are ‘bankable’. Advances to power producers are now getting reduced as compared to last year.
 
So, in the interest of ensuring sales as well as power supplies, why not organizations like Coal India, which are flushed with funds, come forward to form some sort of joint ventures with these power generators?

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)

User

Struggle ahead: Wednesday Closing Report

 

If today’s low on the Nifty holds we may see the gains continuing, but a correction is due
 
The market, which was choppy during the entire session on concerns about the slowdown in growth as was highlighted by the economic indicators that were announced today, managed a flat close in the positive. Yesterday we had mentioned that the Nifty may see day of gains after which the market may correct. Today was a fourth day in a row when the index continued to make a higher high and higher low. If today’s low holds we may see the gain continuing or else the index may see a correction. The National Stock Exchange (NSE) saw a lower volume of 54.17 crore shares. 
 
The market opened flat with a mixed bias amid subdued cues from its Asian peers which were lower in morning trade on the back of poor manufacturing data from China for July. The Nifty opened eight points down at 5,221 and the Sensex resumed trade at 17,244, up eight points over its previous close.
 
The market was range-bound with the benchmarks hovering on both sides of their previous close. Investors are awaiting signals from the P Chidambaram, who has been re-appointed as finance minister, for further direction.
 
The benchmarks touched their lows in the first hour on profit booking following three days of gains. At the lows, the Nifty fell to 5,213 and the Sensex dipped to 17,189.
 
The market continued its sideways movement in subsequent trade. A lower reading of India’s manufacturing output for July also weighed on the investors.
 
The HSBC India Manufacturing Purchasing Managers’ Index (PMI)—a measure of factory production—declined to 52.9 in July, from 55 in June. Although it showed the weakest growth rate since November, the index has remained above the 50 mark—below which it indicates contraction.
 
This apart, the country’s exports contracted for the second consecutive month in June by 5.45%, year-on-year, to $25 billion on account of growing economic uncertainties in the Western markets. Imports dipped more sharply, by 13.5% to $35.37 billion during the month, compared to $40.8 billion in June 2011, resulting in a narrower trade deficit of $10.3 billion.
 
Renewed buying interest in select stocks saw the market emerge into the positive in noon trade. The indices hit the day’s high at around 12.45pm with the Nifty touching 5,246 and the Sensex rising to 17,292.
 
Volatility continued in the second session as the key European indices were mixed on receding hopes of fresh initiatives from the ECB.
 
The market settled flat in the absence of any domestic triggers with all eyes on the announcement from the US Federal Reserve at the end of its two-day meeting later today. The Nifty settled 12 points up at 5,241 and the Sensex closed trade at 17,257, a rise of 21 points.
 
The advance-decline ratio on the NSE was tilted in favour of the gainers at 1086:593.
 
Today was the day of the broader indices as the BSE Mid-cap index climbed 0.95% and the BSE Small-cap index surged 1.12%.
 
The leaders in the sectoral space were BSE Healthcare (up 1.32%); BSE Capital Goods (up 1.07%); BSE Realty (up 0.88%); BSE Power (up 0.87%) and BSE Fast Moving Consumer Goods (up 0.42%). BSE Metal (down 0.69%); BSE Oil & Gas (down 0.35%); BSE IT (down 0.34%); BSE TECk (down 0.33%) and BSE PSU (down 0.19%) settled at the lower end of the index.
 
Cipla (up 4.40%); BHEL (up 2.13%); Tata Power (up 1.63%); State Bank of India (up 1.37%) and HDFC (up 1.28%) were the top gainers on the Sensex. The key losers were Coal India (down 2.73%); ONGC (down 1.94%); Hero MotoCorp (down 1.71%); TCS (down 1.05%) and Tata Steel (down 1.03%).
 
The top two A Group gainers on the BSE were—Century Textiles (up 6.03%) and Rural Electrification Corporation (up 5.77%).
The top two A Group losers on the BSE were—Coal India (down 2.73%) and HPCL (down 2.40%).
 
The top two B Group gainers on the BSE were—Symphony (up 19.98%) and Sanhghvi Forging and Engineering (up 19.97%).
The top two B Group losers on the BSE were—Golden Securities (down 19.91%) and Zenith Healthcare (down 14.71%).
 
The top gainers on the Nifty were Cipla (up 4.46%); Kotak Mahindra Bank (up 3.71%); Ambuja Cement (up 3.19%); Jaiprakash Associates (up 3.07%) and Reliance Infrastructure (up 2.49%). The main laggards were Coal India (down 2.59%); ONGC (down 2.32%); Sesa Goa (down 2.13%); Hero MotoCorp (down 1.88%) and TCS (down 1.58%).
 
Markets in Asia settled mostly lower following a decline in China’s manufacturing output in July. China’s official factory purchasing managers’ index fell to an eight-month low of 50.1 in July from 50.2 in the previous month. Fading optimism on the economic stimulus from the ECB also dampened sentiments.
 
The Shanghai Composite surged 0.94%; the Hang Seng rose 0.12%; the KLSE Composite added 0.05% and the Straits Times gained 0.48%. On the other hand, the Jakarta Composite declined 0.29%; the Nikkei 225 dropped 0.61%; the Seoul Composite fell 0.11% and the Taiwan Weighted lost 0.03%.
 
At the time of writing, to of the three the key European indices were in the green and the US stock futures were in the positive.
 
Back home, foreign institutional investors were net buyers of shares totalling Rs879.97 crore on Tuesday while domestic institutional investors were net sellers of stocks worth Rs493.48 crore. 
 
After the oil ministry veto, three state-owned oil firms IOC, ONGC and BPCL have decided not to press for acquiring Asian Development Bank’s (ADB) stake in Petronet LNG (PLL), the nation’s largest liquefied natural gas importer. The ADB on 23rd August last year offered to sell its 5.2% stake in PLL, in which GAIL, Indian Oil (IOC), Bharat Petroleum (BPCL) and Oil and Natural Gas Corp (ONGC) hold 12.5% stake each and have a first right of refusal. PLL dipped 0.48% to close at Rs145.70 on the NSE.
 
Buoyed by the good response to the SBI bond sale last week, another public sector lender—Indian Overseas Bank (IOB)—on Wednesday said it will speed up its $500 million overseas bond issue and will launch the same within a month. The stock gained 1.10% to settle at Rs73.30 on the NSE.
 
IT services major Tulip Telecom has received a Rs 87.23-crore order from the Unique Identification Authority of India (UIDAI) for hosting data centre space. Tulip Telecom would host UIDAI servers from Tulip Data City based out of Bangalore for UIDAI’s unique ID project ‘Aadhaar’. The duration of the project is three years, which will be extended further. The stock tanked 3.64% to close at Rs97.95 on the NSE.
 

User

Toyota Kirloskar July sales up 7% at 14,574 units

TKM, a joint venture between Japan's Toyota Motor Corp and the Kirloskar Group, said the sales growth was mainly driven by its utility vehicles as car sales dropped during July  

 
New Delhi: Toyota Kirloskar Motor (TKM) on Wednesday reported a 7% increase in sales at 14,574 units during July 2012, reports PTI.
 
It had sold 13,592 units in July last year, TKM said in a statement.
 
TKM, a joint venture between Japan's Toyota Motor Corp and the Kirloskar Group, said the sales growth was mainly driven by its utility vehicles as car sales dropped during the month.
 
"We have registered a growth this month based on the strength of Innova and Fortuner sales. The Innova and Fortuner sales continue to grow with the increase in production. There has been a drop in sales of the Etios series, as we exported 1,488 units to South Africa," TKM Deputy Managing Director Marketing Sandeep Singh said in a statement.
 
TKM's Etios series registered a 9.4% decline in sales during the month at 6,024 units compared to 6,646 units in July 2011.
 
The Innova sales stood 6,678 units last month against 4,816 units in July last year, a growth of 39%.
 
The sales of Fortuner was 1,316 units compared to 1,060 units in July last year, up 24%, while the sales of Corolla Altis stood at 540 units last month.
 
TKM said it has launched a limited edition of its hatchback Etios Liva to celebrate the first anniversary of the launch of the car.
 
The 'Liva TRD Sportivo' is priced at Rs5.24 lakh (ex-showroom Delhi) for petrol and Rs6.32 lakh for diesel (ex-showroom Delhi) and only 1,200 units are on sale till October 2012, the company said.
 

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)