Tata Motors may reopen Nano bookings before December
Sunday, 07 February 2010
07 Feb 2010;business-standard.com:Swaraj Baggonkar:Mumbai: Customers who missed the Nano bus in 2009 will have something to cheer later this year, when Tata Motors reopens bookings for the world’s cheapest car, perhaps before December. The company had got 100,000 bookings in the first phase. Production of the mini-car at the hitherto sole manufacturing unit at Pantnagar, Uttarakhand, is being raised, while the mother plant at Sanand, Gujarat, is being readied for operations. Even as the deadline for delivering all the bookings is the last quarter of the current calendar year, the company is expected to complete this well before December. Asked about reopening of bookings, Prakash M Telang, managing director (India operations) of Tata Motors, said, “We will open bookings when we come closer to completion of delivery. However, we will have some surprises this time.” Since mid-July last year, when the first customer got his Nano, the company has delivered 17,537 units. From producing 70 units a day from the excise-free zone of Pantnagar, the company now produces almost 150 units a day. This is expected to become 200 units per day in the next few months. The installed annual capacity of 50,000 units created in Uttarakhand will, therefore, be raised to 72,000 units. Sources say production can be stretched further to 90,000 units a year. The plant in Gujarat will add significant volumes once commercial production begins in March. A gradual rise to 20,000 units a month at Sanand will help the company meet the delivery target well before December, say market experts. The price will be an issue, considering the significant rise in key raw material prices lately. The company had frozen the price of the first lot of 100,000 units but stated that the next batch might come with revised prices. Prices of key materials such as steel, aluminium, copper and rubber, among other things, have moved north over the past six months. Tata Motors, like other vehicle manufacturers, raised prices of its cars, SUVs and MUVs by Rs 1,500-3,500 per unit this month. This, however, did not cover the entire increase in input costs, said officials.
BPCL to convert 60 In&Out stores into food courts by FY11
Sunday, 07 February 2010
07 Feb 2010;business-standard.com:Mumbai:PSU oil firm Bharat Petroleum Corporation (BPCL) plans to convert 60 'In&Out' outlets into profit making ventures such as food courts and coffee shops by the next fiscal, a senior company official here said. "The company has tied-up with leading food chains like McDonalds in the West, Subway in the South and Nirula's in the Delhi-NCR to revamp the stores and has earmarked an investment of Rs 20 crore for the purpose," BPCL General Manager (Brand and Allied Business) George Paul told PTI. "Many of these outlets were incurring losses. We have shut down a few while converting a few into food courts, coffee shops and book stores. We propose to have 60 such converted outlets next fiscal," Paul said. The state-run petroleum major has 300 'In & Out' outlets across the country and has already revamped 50 of them so far. The company is targeting a revenue of Rs 400 crore (post revamp) this fiscal from its 'In&Out' outlets against Rs 290 crore in the last fiscal, he said. BPCL's total turnover last fiscal from retail business, including loyalty programmes stood at Rs 85,000 crore, Paul said, adding that it targets a 20 per cent growth in FY10. Besides, the company also plans to expand its Petro and Smart Fleet cards base and is in talks with a few corporates for this purpose, he said. "We are planning to revive our old customers and issue more such cards to corporate customers, especially IT companies, banks and healthcare institutions," Paul said. The PSU also plans to install 80 more ATMs at its petrol pumps by March this year and scale it up to 1,000 over the next 3-4 years. Currently, the company has a 220-strong ATM network.
Freeing fuel price will help tame inflation: Montek
Friday, 05 February 2010
05 Feb 2010;business-standard.com:New Delhi: The Planning Commission today said that decontrolling fuel prices would not flare up inflation rather it will soften generalised rise in prices. "It (decontrolling fuel price) will not flare up the inflation. I just think that it is not sustainable to have prices those are not line with the world prices," Planning Commission Deputy Chairman Montek Singh Ahulwalia told reporters here. "By keeping the price of petroleum down you are actually bearing a subsidy that causes a generalised rise in price ... if you get rid of the subsidy there will be rise in petroleum prices but it will soften the generalised rise in prices," Ahluwalia said. "It (freeing fuel price) is there in the integrated energy policy, we had said that any policy that does not link petroleum and diesel price to evolving trend in world price is absolutely unsustainable. So I agree with the recommendation of the (Kirit Parikh )committee," he said. Earlier on Wednesday, an expert group, headed by former Planning Commission member Kirit Parikh, suggested freeing of fuel prices. At present, the government does not allow state-run fuel retailers to fix petrol, diesel, kerosene and LPG prices in line with international cost, resulting in huge revenue losses for the companies and subsidy burden on the government.
06 Feb 2010;economictimes.indiatimes.com:MUMBAI: Reliance Industries (RIL), India’s largest private sector company, has submitted an expression of interest (EoI) to acquire Canadian oil sands company Value Creation (VCI), as it looks to expand its global footprint in the oil exploration business. RIL may be willing to pay as much as $2 billion (Rs 9,250 crore), according to persons familiar with its plans. The Calgary-headquartered company’s subsidiary Technoeconomics is the owner of a technology, which helps to produce oil from sand and upgrade bitumen — a major feedstock for petroleum — at a relatively lower cost, according to oil industry experts. RIL’s oil and exploration business head PMS Prasad and group CFO Alok Agarwal are understood to have had initial discussions with VCI’s management, ahead of submitting the EoI, according to a person close to the development. VCI was founded by its CEO and chairman Columba Yeung in 1999 after a long career with Shell Canada and Royal Dutch Shell, where he held various executive positions in technology and project development. “BA Energy, a subsidiary of VCI, has filed for bankruptcy, which could bring the valuation down,” said an oil industry official close to the transaction. The first commercial application of VCI’s technology was by BA Energy, the bankrupt subsidiary, which is currently constructing an upgrader that processes bitumen, in Strathcona County north-east of Edmonton, Alberta. An RIL spokesperson said: “The company is reviewing a number of global opportunities for growth in its core business. The difficult operating environment of the past year has made available several interesting opportunities, where an investment by a strategic operator of industrial assets can add substantial value. The review is ongoing and there can be no assurance that any approach will be made with respect to the opportunities under review or that any such approach will result in a transaction.” RIL has raised Rs 9,300 crore so far through sale of treasury stocks, as it builds up a warchest for overseas acquisitions. It is also sitting on a cash balance of $4.65 billion or around Rs 18,000 crore.India’s largest private sector company, which is looking to expand its global footprint, has targeted loss-making companies. According to media reports BA energy filed for bankruptcy in early-2009 after it failed to repay a loan its parent, VCI. This default led to creditors recalling loans to VCI. RIL is also in discussions to take over bankrupt petrochemical major LyondellBassell. “RIL has been trying to expand its footprint across the global, as it has already consolidated its presence in India. The sharp fall in valuation of overseas assets, especially European ones, offers opportunity to the company,” said Deven Choksey, managing director, KR Choksey Securities. RIL, has raised its bid for LyondellBasel by 13% to $13.5 billion, is facing resistance from the LyondellBasell board, which is controlled by Access Industries. The board has valued the company at about $15 billion. Analysts forecast the asking price to keep rising given the improving prospects for companies, as the developed world emerges out of the recession.
05 Feb 2010;business-standard.com:New Delhi: A day after the Kirit Parikh committee recommended freeing of auto fuel prices and increase in kerosene and LPG prices, the Union petroleum ministry called a meeting of the public sector upstream and downstream oil companies to discuss the road ahead. Though oil companies have welcomed the report, they are keeping their fingers crossed, since the bold recommendations have invited political criticism. “We had a meeting on the Parikh Committee report. I am sure that by next week, the ministry will be ready to offer its suggestions. This has to go to the cabinet,” said Murli Deora, minister for petroleum and natural gas. “We are also inviting suggestions from the general public through our website.” Executives of Oil and Natural Gas Corporation (ONGC), GAIL, Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPC) and Bharat Petroleum Corporation (BPC) attended the meeting. S Sundareshan, petroleum secretary, said the ministry would send its proposals to the Cabinet by next week. Asked if a decision on the recommendations could be expected before the Union budget on February 26, he said, “I hope so.” Sources said while Deora was convinced about a rise in petrol prices, he was not sure about cooking fuel price increases. The Parikh committee had recommended market-determined pricing for petrol and diesel, while linking the price of domestic LPG and PDS kerosene to the increase in per capita GDP and agricultural GDP. At the current levels, it translates to a rise of Rs 3 a litre on petrol, Rs 3-4 on diesel, Rs 6 a litre on kerosene and Rs 100 on each domestic LPG cylinder. To bring down the underrecoveries suffered by oil marketing companies on sale of LPG and kerosene, the panel had suggested periodic reduction in PDS kerosene allocation, based on the level of electrification in villages and a periodic price increase. The eventual goal is to move to a ‘smart card’ system of direct subsidy through use of a citizen’s unique identification number. It also recommended that the two upstream companies, Oil and Natural Gas Corporation and Oil India, be asked to share a portion of their incremental revenue from nominated blocks. While accepting ONGC’s recommendations on a graded increase in burden sharing, based on increase in crude prices, the committee rejected the idea of a windfall tax. Share prices of most public sector oil companies gained today, even though the Sensex closed with a dip of 271 points. GAIL gained 3.14 per cent to close at Rs 418.20, ONGC gained 0.56 per cent to close at Rs 1,139.50, IOC gained 0.16 per cent to close at Rs 316.80 and BPC ended the day with a gain of 0.35 per cent, at Rs 582.50. The stock prices of HPC and OIL, however, lost 0.84 per cent and 0.98 per cent, respectively. A day after an expert group headed by former Planning Commission member Kirit Parikh recommended market-determined pricing for petrol, diesel and other fuel products, the government was looking for ways to dilute the suggestion substantially, after the proposal received criticism from within the ruling United Progressive Alliance (UPA). “If the Parikh committee report is accepted at all, all we will do is a small increase in the price of petrol,” a top source in the government said. Publicly, ministers gave hints that political compulsions would not let the government accept the report in totality. “The government will ensure that the least burden is passed on to the poor and the common man... while also ensuring that the financial health of (PSU fuel retailers) is protected,” Minister of State for Petroleum and Natural Gas Jitin Prasada said amid protests, both from the UPA allies as well as the Opposition over the proposed price rise. The Parikh report could not have been more ill-timed. The Congress Working Committee (CWC) is meeting tomorrow to discuss the price rise issue. This will be followed by a conference of chief ministers on the same issue. Privately, Congress leaders fretted that leave alone the allies, such a drastic increase in price would not fly even in CWC.
05 Feb 2010;business-standard.com:Sanjay Jog:Mumbai: Analysts have said the recommendation of the Kirit Parikh committee report on fuel prices need to be implemented as a package and not partially. Yet, they also feel the recommendations are too aggressive to be implemented in the current form, given inflation concerns, implementation issues and political considerations. However, analysts were unanimous that a one-time hike in petrol and diesel prices may happen. The report suggested the government deregulate these, increase the kerosene price by Rs 6/litre and raise it every year, and increase LPG prices by Rs 100/cylinder and revise upward periodically. However, investment bank and broking firm Morgan Stanley, in its report, observed that if all the price hikes are implemented, the direct impact on inflation would be 1.26 per cent (current inflation is 7.3 per cent). “We believe these policies would be positive if implemented, but in the short term, we expect at least the auto fuel price increases to take place. This should increase direct inflation by 0.23 per cent, taking the breakeven price to $69/bbl. The next step is for the ministry of petroleum to discuss the proposal with the government and set a path for implementation,” the report said. Goldman Sachs believes partial deregulation of fuel prices would not help oil marketing companies (OMCs), since they remain dependent on state-owned upstream companies and government grants. The government is keen to reduce its own share of subsidies over fiscal deficit concerns and, hence, OMCs have limited scope to earn high profits. “We continue to believe it is unlikely for OMCs to be fully compensated for losses on fuel sales, which the finance ministry has already indicated. Also, the fate of any fuel pricing reform remains hinged to the path taken by international oil prices. Even in China, which has instituted fuel pricing reforms, there is no clarity on fuel prices if oil goes beyond US$80/bbl. We prefer upstream companies (OIL/ONGC/GAIL) over downstream companies, which have more moving parts like refining margins, high debt. Auto fuel price deregulation, if implemented, would be positive for upstream companies, as they share the entire auto-fuel losses for the OMCs,” says Goldman Sachs’ report. According to Credit Suisse, the recommendations are a package; partial implementation not a solution “The recommendations of the Parikh committee tie in well together. If all recommendations are implemented, the government would have to bear a fixed amount of subsidy each year, making the system less volatile and government finances more predictable. This is important to ensure PSU company earnings are not uncertain as well. However, the non-implementation of one key aspect – the deregulation of diesel prices – would destroy this arithmetic. Without free diesel prices, the government faces ballooning funding issues at higher crude oil prices and would again be forced to cut corners in payments to companies. Even partial implementation of some recommendations will go some way in alleviating the stresses in the system and will help assure BPCL/HPCL company earnings if oil prices remain range-bound,” the report mentions. Edelweiss says the committee has recommended an extreme price hike scenario. With the current high inflation numbers and pressure from the opposition, it may be difficult for the government to increase prices. “On the other hand, we believe that this is the best period (next six months) to increase prices, due to absence of state elections and the fact that the Centre elections are still away (2014),” it said. CitiGroup, in its report, notes that despite the recommendations being positive in intent, practical hurdles exist, especially with the politically challenging issues of full deregulation of diesel and LPG/kerosene price hikes. Any compromise solution which selectively picks the recommendations and protects consumers could significantly reduce ONGC and OIL’s leverage on crude prices.
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