Domestic News - Feb 15 2009

Govt allows urea units to convert to gas

The Cabinet Committee on Economic Affairs approved a policy to encourage urea units across the nation to convert of natural gas. The new policy provides for a Special Fixed Cost towards reimbursement of the cost of conversion to the urea unit after its conversion to gas is completed. The Cabinet also approved a special dispensation under the New Pricing Scheme, Stage-III, to enable restarting of urea production from the Trombay-V unit of Rashtriya Chemicals Ltd. (RCF), which has remained closed for last more than four years. The Cabinet also approved restarting of existing Naphtha based units which are under shutdown, provided they convert to gas before March 2010, as is necessary for other operational Naphtha based units.

Newsprints get exemption in customs duty

The Government announced special custom duty exemptions to the newspaper and magazine publishing industry in the country. These concessions have been announced in view of the current economic slowdown, particularly affecting the newspaper industry. The customs duty has been fully exempted on ‘newsprint’, as well as on ‘uncoated paper used for printing of newspapers’- commonly known as ‘glazed newsprint’. The customs duty has been fully exempted on ‘light weight coated paper used for printing magazines’.

The newspaper and magazine publishing sector had sought relief from the Government in the wake of sharp rise in international prices of newsprint and light weight coated paper, which has resulted in a significant increase in publishing costs. Falling advertising revenues due to the recent economic slowdown have also afflicted this sector.

India signs uranium supply pact with Russia

India and Russia signed a deal, whereby OAO Tvel will supply uranium to Nuclear Power Corp., India’s monopoly atomic energy generator, for its nuclear power plants.

"The total cost of contracts is more than US$700mn," Russia's state-owned nuclear power company Atomenergoprom said. TVEL is a unit of Atomenergoprom. Nuclear Power Corp. will buy 2,000 tons of uranium from TVEL, according to the Sudhinder Thakur, executive director at India's largest nuclear power company. The uranium supplies are expected to start in three to four months, Thakur said. TVEL will also sell India 60 tons of light enriched uranium to fire two power generation units at Tarapur, he said.

January car sales down 3.2% yoy

Domestic sales of passenger cars fell 3.2% last month, as tight credit conditions coupled with a sharp slowdown in the Indian economy kept potential buyers at bay, data released by a leading industry body showed. Total sales of passenger cars stood at 110,212 units in January as against 113,894 units in the same month a year earlier, the Society of Indian Automobiles Manufacturers (SIAM) said. This was the sixth drop in domestic sales of passenger cars in the past seven months.

Meanwhile, commercial vehicle sales tumbled 51% to 23,157 units in January, while three-wheeler sales fell 12.3% to 26,439 units, data from SIAM revealed. Two-wheeler sales were down about 4% at 581,742 units last month with motorcycle sales falling 5.8% to 452,822 units and scooter sales rising 9% to 88,077 units. Overall, domestic sales of automobiles fell 7.4% to 768,688 units in January while exports rose 6.5% to 103,496 units

GSM firms add 9.3mn new subscribers

The cumulative all India GSM subscriber base has now grown to 267mn in Jan'09, up from 257mn in Dec’08, a growth of about 3.89% during the month of January 2009. Among all circles, Category C witnessed the highest rate of growth at nearly 4.19%. Category C circle was followed by Category B circle, which recorded a healthy growth of 3.98% over the previous month. Category A circle witnessed a growth of 3.28%.

The subscribers in Metro grew by 2.94% over the previous month, with Delhi recording the highest growth at 4.17% followed by Chennai at 3.81%.

Company wise break-up shows that Bharti Airtel added 2.73mn new customers in January while Vodafone Essar saw its subscriber base swell by 2.4mn new users. Idea Cellular added 2mn new customers, which includes subscribers of Spice Communications. State-run BSNL added around 1.31mn new customers.

Airlines hike fares…but Govt isn’t amused

Local airlines increased basic fares by discontinuing all the promotional offers, as they try to mitigate the impact from a sharp slowdown in demand for air travel amid a worsening global economic environment. While Air India, Jet Airways and Kingfisher Airlines hiked basic fares across sectors by an average of Rs1,200-1,800 per passenger. The Mumbai-Delhi sector's basic fare was increased by Rs1,800-2,200 per passenger. On the other hand, low-cost carriers like Indigo, Go Air and Spice Jet have hiked basic fares by an average of Rs2,000 per passenger on major routes.

But, the sudden fare hike by all airlines in the same day sparked speculation about an industry-wide arrangement. Civil Aviation Minister Praful Patel warned airlines against any price cartelization. As a result, Jet Airways decided to roll back the price increase. The Director General of Civil Aviation (DGCA) sought information regarding the airfare increase and transparency in airfare advertising. The MRTPC too decided to probe the matter.

RPower says it will finish all UMPPs on time

Reliance Power Ltd. said that it would be able to complete all its Ultra Mega Power Projects (UMPPs) of 4,000-megawatt each on schedule, and also plans to raise money to fund the same. The Anil Dhirubhai Ambani Group (ADAG) company won the coal-fired project at Tilaiya in Jharkhand after emerging as the lowest bidder. The company will build the plant as well as the UMPPs at Sasan and Krishnapatnam on time, CEO Jayarama Chalasani said in New Delhi. The company will need as much as Rs600bn to build the three plants and plans to borrow 75% of the funds, Chalasani told reporters. Reliance Power had bid Rs1.77 per unit for the Tilaiya plant, which is due to be completed by 2016, the CEO said.

Govt approves DIAL move to charge development fee

The Government approved the levy of Development Fee (DF) by the Delhi International Airport Ltd. (DIAL) at the rate of Rs.1300 per departing international passenger and at the rate of Rs200 per departing domestic passenger with effect from March 1. The DF is inclusive of all applicable taxes and is for a period of 36 months only. This approval shall be reviewed specifically upon achievement of certain milestones.

United Spirits mulls selling Whyte & Mackay stake: reports

United Spirits is reportedly planning to sell around 49% stake in Scotland-based Whyte & Mackay. The Vijay Mallya-promoted liquor giant plans to reduce its Rs71bn of debt by selling the Whyte & Mackay stake to a private equity investor, the report added. United Spirits had acquired Whyte & Mackay for £595mn in May 2007. "The divestment of up to 49% in Whyte & Mackay was always part of United Spirits' de-leveraging plan," a UB group spokesperson told reporters in New Delhi. He, however, declined to disclose further details.

The move is part of the United Spirits' plan to raise cash, including a strategic sale of up to 14.9% stake from the treasury stocks, for which it has had talks with Diageo recently. There have been reports that Diageo wants more than 15% in United Spirits, which means it will have to announce an open offer for another 20%.

BHEL wins orders worth Rs70bn

BHEL announced that it won four major contracts worth Rs70bn for the supply and installation of main plant equipment for thermal power projects. The projects, with a cumulative capacity of 3,250 MW, are located in Madhya Pradesh, Uttar Pradesh, Tamil Nadu and Maharashtra. The company has received orders from NTPC Ltd., NLC Tamil Nadu Power Ltd. (NTPL) and Mahagenco.

Ranbaxy gets USFDA approval for Imitrex

Ranbaxy Laboratories announced that it had received an approval from the USFDA to sell a generic version of GlaxoSmithKline Plc’s migraine pill Imitrex. The company got the approval to sell 100 milligram tablets of sumatriptan, the chemical name for Imitrex. The sumatriptan tablets will be manufactured in New Jersey. Imitrex and a low-dose, over-the-counter formula known as Imigran, recorded sales of over US$1bn in the first nine months of 2008 for Glaxo.

Unitech reschedules over 75% of debt

Unitech Ltd. announced that it has rescheduled more than 75% of its total debt of US$1.6bn, sending its shares higher amid expectations that the real estate major will improve its performance in the coming quarters. Unitech's debt stands at Rs80bn (US$1.6bn), of which Rs20bn would mature in the next one year, Sanjay Chandra, the New Delhi-based company's Managing Director, said. Unitech also said that it expects to receive Rs12.5bn this quarter, as part payment for the stake sale in its telecom venture to Norway's Telenor. Unitech sold a 60% stake in the wireless venture to Telenor for US$1.2bn last October.

TCS and Cisco sign strategic alliance

CISCO and Tata Consultancy Services (TCS) announced they have entered Into a strategic alliance to develop and deliver information technology (IT) service solutions to help customers build or evolve next-generation data centres by taking advantage of the network as a platform. Under the agreement, TCS will build a new technology practice focused on Cisco's Industry-leading data centre networking and security solutions. The companies also announced the formation of a Cisco Technology Lab at the TCS campus in Chennai. The Cisco technology lab will allow TCS to develop network-based data centre solutions, test frameworks, develop skills and certify employees in Cisco data centre technologies. The lab will also allow Cisco and TCS to illustrate proof-of-concepts and IT and networking methodologies for client-specific business processes.

TTML open offer begins on Feb 19

NTT DoCoMo Inc, along with Tata Sons Ltd. announced a revised schedule for the mandatory open offer for buying an additional 20% stake in Tata Teleservices Maharashtra Ltd. (TTML). The open offer will now begin on Feb. 19 and will close on March 12. Earlier, it was to open on January 8 and close on January 27, but was delayed due to non-receipt of regulatory approval from SEBI. DoCoMo acquired a 26% stake in Tata Teleservices (TTSL) for Rs130.7bn, in November and had given an open offer to acquire a 20% stake in TTML at Rs24.70 per share. TTSL is the unlisted parent of TTML. Recent media reports have suggested that capital market regulator SEBI had questioned the original open offer price and asked the companies to increase it in line with the valuation of TTSL, which owns 37.5% stake in TTML.

Edserv Softsystems IPO subscribed 1.30 times

The Initial Public Offer (IPO) of Edserv Softsystems Ltd., a web-learning, IT consulting and resource deployment company has been subscribed about 1.30 times as against 39,73,908 shares offered. The Qualified Institutional portion was subscribed by 1.08 times while Non-Institutional investor’s portion received a response of 3.10 times and the Retail portion was subscribed 1.0 times. The IPO opened on February 5 and closed on February 9. It was priced at a band of Rs55-60 through a 100% book-building route. The company would be listed on The Stock Exchange, Mumbai (BSE) and The National Stock Exchange (NSE)