18 Oct 2010;business-standard.com:Ajay Modi:New Delhi: In what will enhance the financial performance of upstream oil companies, the subsidy burden on Oil and Natural Gas Corporation (ONGC), Oil India Ltd (OIL) and GAIL Ltd has decreased by 45 per cent in a single quarter thanks to the June fuel price rises. The government uses a one-third burden sharing formula. In the first quarter of 2010-11, the subsidy burden on ONGC and OIL was Rs 5,515 crore and Rs 730 crore, respectively. In the second quarter ended September 30, it is projected to dip sharply to Rs 3,019 crore and Rs 400 crore, respectively, on lower fuel losses of oil marketing companies (OMCs), said a government official. For GAIL, the burden is estimated to decline 22 per cent to Rs 347 crore. The decline in the subsidy burden of these companies will reflect positively on their bottom line. All these companies are expected to declare their quarterly results towards the end of October. Both ONGC and OIL had reported lower profits in the first quarter, due to higher subsidy burden. For ONGC, the net profit was Rs 3,661 crore (compared to Rs 4,848 crore in the corresponding quarter of 2009-10). OIL’s net profit was Rs 501.1 crore (Rs 739.7 crore). While the OMCs — Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum — purchase crude oil at internationally benchmarked prices, the sale price of products such as diesel, kerosene and LPG are not maintained in line with international prices. This causes a revenue loss for the companies. The OMCsCs’ revenue loss on the sale of these products during 2010-11 is now estimated to be about Rs 53,500 crore. Following the decontrol of petrol and increase in prices of diesel, kerosene and LPG on June 25, the revenue loss of OMCs has declined to Rs 11,300 crore in Q2 from Rs 20,000 crore in Q1. Upstream companies such as ONGC, Oil India and GAIL (India) have to provide discounts on crude oil and product sales to public sector OMCs, under the government’s mechanism to compensate the retailers for selling auto and cooking fuels below the market price. The discount is capped at a third of the total revenue loss. Accordingly, the upstream companies including GAIL (India), had provided Rs 6,690 crore in the first quarter ending June. In the quarter ended September, the subsidy burden on upstream companies is estimated to be much lower, at Rs 3,766 crore.
Analysts bullish on CIL issue; India’s largest IPO opens today
18 Oct 2010;dailypioneer.com:New Delhi: Coal India Ltd’s Rs`15,000 crore mega issue, which opens on Monday for public subscription, has garnered a bullish endorsement from most of the market experts who believe it would be the star attraction of this week for all, including retail investors. “This week the main attraction for retail investors would be the primary market with the mega IPO of Coal India slated to open on Monday ,” Delhi-based SMC Global Securities Research Head of Retail Saurabh Jain said. CIL’s initial public offering, priced in the range of Rs 225 to Rs 245 per share, is the biggest issue in the Corporate India’s history so far. The offering opens on Monday and closes on October 21. For qualified institutional buyers, which include FIIs, insurance firms and mutual funds, the IPO will close on October 20. Analysts said the issue would be important not only for primary markets but also to secondary market participants who will be watching it closely. In fact, such was the momentum to stock up cash for CIL issue that in just last two trading sessions the BSE benchmark Sensex sank by a whopping over 500 points. Besides, there will be some short-term pressure in money market, as experts believe there could be a total liquidity impact of roughly about Rs 1.5 lakh crore during this IPO. “The liquidity tightness during a large IPO occurs as a result of fact that many bids are financed through borrowing. This leverage shows up as a temporary expansion in the credit during the IPO period,” Axis Mutual Fund said in a note. “The larger the share offer, the larger is the impact on credit and money markets. Thus large IPOs are associated with tight liquidity and rising money market rates,” it said. The CIL IPO has seen a broad endorsement from almost all the big as well as small investment banking firms. The Centre, which will divest its 10 per cent stake through the offering, is also bullish on the issue that will help the Government to fulfill Rs`40,000 crore divestment target this fiscal “I expect Coal India IPO to do very well. There should be huge response from retail as well as institutional investors,” Disinvestment Secretary Sumit Bose said last week. The world’s largest coal producer is expected to commence trading on the domestic bourses by November 4 and SMC Global Securities Strategist Jagannadham Thunuguntla believe that it will make a decent debut on the bourses. Brokerage house CLSA said, “CIL deserves to trade at a premium to global coal peers given much lower volatility of earnings and large headroom to raise prices in a supply- -deficit environment.”
ONGC to invest Rs 8,800 cr in Mumbai High redevelopment
17 Oct 2010;deccanherald.com:Mumbai:State-owned Oil and Natural Gas Corp (ONGC) has kicked off over Rs 8,800-crore redevelopment of the southern part of its Mumbai High fields, using a cost effective technology to maintain output from the prime western offshore fields. "The Mumbai High South redevelopment Phase-II project will cost Rs 8,813.41 crore," a company official said. The giant Mumbai High oil and gas field remains a challenge since its discovery in 1974. In its chequered production profile, the field hit a peak of 400,000 barrels per day before falling to current levels of 210,000 bpd, causing concerns in reservoir management. "ONGC has decisively initiated schemes to maintain production from this field", he said, adding the complex reservoir has thin oil bearing zones, as slim as 3 metres, with a highly heterogeneous flow capacity of rock, varying in thickness. The present scheme envisages incremental gain of 18.31 million tonnes of oil and 2.70 billion cubic meters of gas through drilling of 75 new wells and intervention in existing wells. The work includes enhancement of oil and gas processing capacity through installation of one process platform bridge connected to the existing ICP platform and installation of four new well head platforms. "The latest platform, RS12 is a special innovation, first for ONGC and India, in the sense that this is a 16-slot platform rather than a conventional 9-slot or 12-slot platform," the official said. This means as many as 16 wells can be drilled from this platform. "Eleven wells are planned for drilling in the current phase of development," he said. As opposed to conventional facilities for docking of drilling rigs for drilling wells, the platform is designed to accommodate the drilling rig on board. The soil testing data of the platform location indicated that this part of Mumbai High field was likely to be 'punch through' and not hard enough to bear the load of a conventional jack-up rig. "The rig mounted 16-slot platform option chosen by ONGC has provided a cost-effective solution to development drilling and a technically feasible solution to the 'punch through' problem," he said.
Petrol prices raised by BP by 70 paisa, IOC to raise price on Saturday
16 Oct 2010:New Delhi: Petrol prices were raised by 70 paisa by BP & 72 Paisa by IOC starting friday midnight 16 Oct 2010 and 17 Oct 2010 respectively. It is likely that HP will also raise the prices & follow suit.
15 Oct 2010;timesofindia.indiatimes.com:Prafulla Marpakwar:MUMBAI: For 32-year-old industrialist Rishi Darda, it was a dream come true when more than 120 swanky Mercedes Benz cars were delivered in Aurangabad on Thursday by Benz managing director Wilfried Aulbur himself. In January 2010, some like-minded industrialists led by Darda had set up Aurangabad group to promote the bulk booking of Mercedes Benz cars. Initially, the response was lukewarm in view of the huge cost of the car. However, later, when the group initiated a dialogue with leading financial institutions and the firm, there was a slow, but steady rise in club membership. Between January and September, the membership crossed 160. As a result, the car manufacturing company decided to visit Aurangabad to deliver the cars. On Thursday, at a colourful function, Aulbur personally handed over the keys to 120-and-odd individuals. "Certainly, its a proud moment for all of us. It marks a different kind of development. It also indicates that Aurangabad has potential for development," said Darda.
15 Oct 2010;timesofindia.indiatimes.com:Pankaj Doval:NEW DELHI: Days after Tata Motors drove in its new cross-over (a vehicle built on a car platform but which combines features of a traditional SUV) Aria, Hyundai on Thursday rolled out its Sante Fe SUV in two variants, priced at Rs 20.9 lakh and Rs 22.9 lakh (ex-showroom , Delhi ). The company, that earlier failed to cut ice in the segment with products like Terracan and Tucson, hopes that Santa Fe would provide "reasonable numbers" , with a target of selling 600-800 units per year. The SUV market in India spans across a wide price range, broadly starting from Scorpio and Safari, that are priced under Rs 10 lakh; Ford Endeavour and Toyota Fortuner , that are in the Rs 15-20 lakh range and Audi Q7, BMW X5 and Mercedes GLClass , which are priced around Rs 60 lakh. Sandeep Singh, deputy MD (marketing) at Toyota Kirloskar Motors, said the size of the SUV market is around 8,000 units per month and is growing at a scorching pace of 80%, much faster than the car market's 30%-plus growth rate. "It is a fast-paced market and a variety of factors , including the economic growth rate and addition of new vehicles, are fuelling this demand. Also, many people want to buy these vehicles to have a macho style statement ," he said. The high demand has seen waiting periods for some of the models. The Fortuner has been a runaway success for Toyota and the company sells about 1,000 units of the SUV per month, but carries a waiting list of five months. "Globally, Santa Fe has sold over 20 lakh units since its launch in June 2000 and we are confident that in India , it will give us a competitive edge in the SUV segment ," H W Park, MD & CEO of Hyundai India, said. Other companies are also queuing up to have a share of the market and a flurry of new launches are expected in the segment. Skoda, the Czech auto maker, is all set to launch its Yeti SUV, while Mahindra will add a new global SUV to its best-seller Scorpio. BMW will further intensify competition when it will launch X1, its entrylevel SUV, by December, priced at around Rs 25 lakh. The luxury end of the SUV market is also witnessing good growth, prompting companies like BMW, Audi and Mercedes to beef up their portfolio. "The Audi Q7 has been one of the main contributors to our success in the Indian market and we are confident that it will further help us consolidate our position in the market space," said Audi India Head Michael Perschke.
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