Coal India and power generation firms will be in focus as the Union Cabinet on Tuesday approved the methodology for auctioning coal blocks, enabling the government to allot coal mining licences through competitive bidding for the first time. The Cabinet Committee on Economic Affairs (CCEA) approved the production-linked payment on rupee per tonne basis, plus a basic upfront payment of 10% of the intrinsic value of the coal block. The intrinsic value of coal block will be calculated on the basis of net present value of the block arrived through Discounted Cash Flow (DCF) method.
The DCF method relates the value of an asset to the present value of expected future cash flows of the asset. It is based on the principle that for any initial investment an investor will assess future cash flows from that entity to provide a minimum return. To help benchmark the selling price of coal, the international freight-on-board price from the public indices like Argus/Platts will be used to calculate the mine mouth price. As a buffer against short-term volatility, the average sale price will be calculated by taking prices of the last five years.
For the power sector, the CCEA directed providing 90% discount on the intrinsic value for tariff-based bidding, which will help in rationalising the electricity tariff. To ensure early operationalisation of blocks, there would be an agreement between the coal ministry and the bidder to perform an agreed minimum work programmes at all stages. There would be development stage obligations in terms of milestones to be achieved such as getting mining lease, obtaining environment or forest clearances, etc. The bidder will have to give performance guarantee during the developmental stage. The successful bidder will get two years for exploration and five years for block development.
The new auction blueprint allows relinquishment of a block without penalty, provided the bidder has carried out minimum work programme. The environment ministry will review the details of the coal blocks before they are up for auction. However, final approval will be subject to the statutory clearances under the law.
Tata Motor's subsidiary Jaguar Land Rover (JLR) on Tuesday, 24 September 2013, unveiled details of its future plans for advanced research and development in the UK which will now be focused on a new cutting-edge technology, innovation and education centre in Warwick. The National Automotive Innovation Campus (NAIC) is designed to create a large-scale collaborative research environment, JLR said in a statement. JLR is the lead partner in the project investing 50 million pounds, along with Tata Motors European Technical Centre (TMETC), WMG (Warwick Manufacturing Group) and the UK Government's Higher Education Funding Council England (HEFCE).
ONGC and Oil India will be in focus as the Cabinet Committee on Economic Affairs (CCEA) has approved shale gas and oil exploration programme to boost domestic output. In the first phase, ONGC and Oil India have been permitted to explore for and produce shale oil and gas from onland blocks that were allotted on a nomination basis before advent of the New Exploration Licensing Policy in 1999.
This policy will allow national oil companies to carry out exploration and exploitation of unconventional hydrocarbon resources particularly shale gas and oil in their already awarded on land Petroleum Exploration License/Petroleum Mining Lease acreages under the nomination regime, an official statement said. The government will offer shale oil and gas blocks to other companies through an auction planned after such a policy is taken to the Cabinet for approval in next few weeks.
Cairn India may be in focus on reports that the Anil Agarwal's Vedanta group has begun formal talks to buy London-based Cairn Plc's 10% residual stake in oil and gas producer for around Rs 6000 crore. Vedanta group's Indian holding company, Sesa Sterlite, currently owns 58.77% in Cairn India.
TCS announced after market hours on Tuesday, 24 September 2013, that the company, Saudi Aramco and GE launched the first all-female business process services center in Riyadh, Kingdom of Saudi Arabia. The center will be staffed by Saudi females, with TCS and GE owning 76% and 24% equity in the new venture, which will initially serve Saudi Aramco and GE as anchor clients. The new business process services center will serve as a building block to localize the business process outsourcing (BP0) industry in the Kingdom. The three partners will work together with the intention of scaling up the new venture to create up to 3,000 jobs for Saudi professional females. GE will create up to 1,000 employment opportunities for this initiative.
PSU OMCs will be in focus after the Minister of Petoleum & Natural Gas Dr. M. Veerappa Moily on Tuesday, 24 September 2013, warned that India needs to do more to conserve fuel or face tougher choices such as steep price increase or even quantitative restrictions. He said that the bulk of India's fuel consumption is in the transport sector. Consumers in the transport sector, agriculture sector as well as domestic consumers can adopt simple but effective conservation tips so as to reduce consumption of these products, he said. The oil ministry will be launching a nationwide campaign to generate awareness amongst the consumers for conserving petroleum products, with special focus on the transport sector. The total funds allocated for this campaign is over Rs 45 crore, to be shared by 6 Oil PSUs and the PCRA (Petroleum Conservation Research Association) budget. The objective will be to motivate the consumers in cities and towns to minimize their fuel bills, thereby helping the nation in reducing oil imports.
Dr. Moily said that PCRA has formulated benchmarking norms for LPG stoves, and diesel pumps, in consultation with Bureau of Energy Efficiency (BEE) and other stakeholders. This programme will facilitate availability of more fuel efficient appliances to the consumers, thereby reducing consumption of LPG and Diesel, he said.
PSU OMCs are marketing performance enhanced petrol and diesel. Some special additives are mixed in these fuels which enhance fuel efficiency, reduce maintenance cost and reduce pollution. However, these fuels are more costly due to higher statutory duties. The oil ministry will take up the issue with the finance ministry so that the duty structure is rationalized which will promote their mass consumption, Dr. Moily said.
He also said that the oil ministry has requested the Urban Development Minister to introduce "Free Cycle Scheme" in select cities for saving fuel and offered funding support from oil sector companies.
At present the state transport undertakings (STUs) are purchasing diesel at market driven prices without any subsidy. The oil ministry has received representation from various states on this issue. PSU OMCs have also reported that the dual pricing mechanism is not working since STU bus fleets are taking fuel from retail outlets causing hindrance in the smooth functioning of ROs and in the process wasting fuel. The oil ministry will consider allowing STUs to purchase diesel at the subsidized price in view of the need to encourage public transport but this would be subject to their active cooperation in the fuel conservation campaign, Dr. Moily said.
Ashoka Buildcon has received orders valued at Rs 494.50 crore for turnkey contracts for electrification work for Mahavitaran Infrastructure plan Phase-II floated by Maharashtra State Electricity Distribution Company (MSEDCL).
Mahanagar Telephone Nigam (MTNL) after market hours on Tuesday, 24 September 2013, confirmed that it signed an memorandum of understanding (MoU) with BSNL on Tuesday. As per the MoU, both the companies will share the network and infrastructure for greater operational synergy and single window customer delivery. This will result into greater synergy between the two organizations, MTNL added.
Garware Wall Ropes said the company's board of directors at its meeting held on 24 September 2013, approved the buy-back of company's shares from the shareholders of the company from open market through stock exchanges at a price not exceeding Rs 65 per share payable in cash for an aggregate amount not exceeding Rs 11 crore. The offer size represents 4.13% of the aggregate of the company's paid up equity capital and free reserves as at 31 March 2013.
Bosch said that with a view to adjust production to meet the demand for products and to avoid unnecessary buildup of inventory, it is proposed to suspend the manufacturing operations at the company's Jaipur Plant for a period of 5 days on 25 September 2013, 26 September 2013, 27 September 2013, 28 September 2013 and 30 September 2013.
Financial Technologies (India) (FTIL) announced after market hours on Tuesday, 24 September 2013, that due to purported crisis at National Spot Exchange (NSEL) in the recent past, the statutory auditors of FTIL on 23 September 2013, informed that the audit reports dated 30 May 2013, on the standalone and the consolidated financial statements of the company for the year ended 31 March 2013, should no longer be relied upon.
FTIL said that on conservative basis, it has decided to defer the agenda item no 1, 2 and 5 of the notice of AGM scheduled on 25 September 2013 to respect auditor's views and will satisfy the statutory auditors of the company on standalone financial accounts though standalone and the consolidated financial statements have been audited prior to the event occurred at NSEL.
On the basis of the above, FTIL standalone and consolidated accounts for the year ended March 2013 may undergo amendment together with revised auditors' report, which will be approved and published once the amendment to standalone and consolidated accounts is finalized, FTIL said in a statement.
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