Cut in KG gas supply derails GVK Power’s expansion plans
Thursday, 12 May 2011
13 May 2011;economictimes.indiatimes.com:Sobia Khan:BANGALORE: GVKPIL has put the expansion of two gas-based power projects - Gautami Power II and Jegurupadu III - estimated at Rs 6,000 crore, on hold due to uncertainties over gas supply by Reliance Industries . "GVK is currently pinning its hopes on the re-gasified liquefied natural gas (R-LNG ) being supplied by the state government, which is expected to stop after May 2011. In the absence of assured gas the company had decided to put the expansion on hold," said a person having direct knowledge of the development. The company has so far invested over Rs 200 crore in securing land and giving advance to the contractors for the two projects. GVK CFO Isaac George could not be reached for comment. The Hyderabad -based company had earlier planned to set up the second phase of its gasbased power project, Gautami II, with a capacity of 800MW in Andhra Pradesh. The company had secured all approvals and made arrangements for land, water and other requirements. The first unit of the project is scheduled to go into commercial operation in the first quarter of 2013. "Shortage of natural gas supplies and subsequent delay in testing its new Gautami Power plant is significantly escalating the costs for GVK, thereby making it unviable," said a person having direct knowledge of the development. The company had earlier said the gas supply for the Gautami power project would be ensured from Reliance's KG basin field, which has also been supplying gas for the 464-MW unit of the Gautami plant. "Power purchase agreements for the project have also been signed with Southern states and Maharashtra," it said. Similarly , GVK's planned expansion of its Jegurupadu project (Phase III) in Andhra Pradesh has also been put on the back burner. The proposed 800-MW project was announced in January and was expected to go on stream in the next 36 months. The infrastructure company has also started cancelling orders given to vendors for both power plants. Last year, it had entered into an agreement with a consortium that included Hyundai Engineering Company and Larsen & Toubro to construct the Jegurupadu-based power plant. Early this year, GVK had awarded contracts to Alstom to build two units in the East Godavari District in Andhra Pradesh. "The company has asked Alstom to return the advance," said another person close to development. GVKPIL operates about 1,178-MW gas-based combined cycle power plants in Andhra Pradesh supplied by Reliance from its Krishna-Godavari basin. The capacities are spread between Jegurupadu I (235 MW), Jegurupadu II (479 MW) and Gautami Power (464 MW), all located in Andhra Pradesh. The company has already taken a hit on its power business with gas supplies from Reliance turning unpredictable. The power units, which were operating at about 90% PLFs, have slipped on generation to operate at about 75% of the capacity. "GVK has been facing problems in gas supplies since November last year and the impact of shortage in supplies has affected its power generation in the fourth quarter of the last fiscal. If the gas supplies continue to be low, the company will take a big hit on its power business," said an analyst form a Mumbai based broking firm Infrastructure companies buying gas from Reliance have been facing problems because the energy giant has been pumping less from its D6 block in the Krishna-Godawari basin than it did last year. Last month, Reliance warned the country's upstream regulator that production from the field could drop further. Reliance has been maintaining the gas output under 50 mmcmd as against the earlier peak of about 61 mmcmd. This was mainly on account of serious reservoir (water) issues as well as water entering wells, sand interference and pressure depletion.
Honda plans diesel City to beat heat from competition
Thursday, 12 May 2011
13 May 2011;business-standard.com:Surajeet Das Gupta & Sharmistha Mukherjee:New Delhi: In response to challenge from new diesel models in India’s premium mid-size sedan car segment, Honda is developing a diesel engine for Honda City. Globally, Honda has only one diesel engine, developed for Europe. This 2.2-litre engine cannot be used as Honda City needs an engine of 1.4-1.6 litres. Also, it runs on fuel with low sulphur content. Honda Siel Cars India (HSCI), the Indian arm of Honda Motor Company, also plans to develop a car smaller than Brio, its passenger car. With a price of less than Rs 5 lakh, it will mark Honda’s entry into the mass market. In the premium mid-size sedan segment, 65 per cent cars sold by City’s competitors run on diesel. The growing difference between petrol and diesel prices has seen newcomer Volkswagen Vento (which has both petrol and diesel versions) race ahead of City in the last two months. Volkswagen sold 3,973 units of Vento in March, as compared to City’s 2,773 units. Jnaneswar Sen, senior vice-president (sales & marketing), HSCI, told Business Standard: “We are developing a diesel engine in Japan to power City. It could take us more than two years.” Admitting the shift was sudden, Sen said: “The rapid dieselisation of the market has happened only in the last one year, as the price difference between diesel and petrol has gone up from Rs 10 to Rs 21. We had to prioritise our efforts to be a big brand with big volumes, which will come from Brio.” Sen ruled out importing diesel engines, as many others had done. “We believe we make the best engines and, therefore, there is no question of importing. Till then, we will continue to dominate the petrol segment.” Key segment The premium mid-sized sedan segment is one of the fastest-growing, with sales rising 25 per cent a year on an average. About 140,000 units were sold in 2010-11. Honda City has been the leader for a decade. Its share was 35 per cent in 2010. Its nearest competitor, Hyundai Verna, sold half as many units. Honda is not the only company which has felt the need for a diesel variant in this category. A few years ago, Maruti Suzuki introduced SX4 petrol, but could sell 800-2,000 units a month. This February, it launched a diesel model. There have been over 10,000 bookings so far. Honda will also face fiercer competition in this segment. Hyundai Motor, for instance, launched the new Verna this week, with diesel variants priced between Rs 8.09 lakh and Rs 10.75 lakh. Ford Global Fiesta’s petrol and diesel versions will be launched in July.
Indian Oil losing fuel retail market share to HPCL, BPCL, sales decline more than half a million ton
Thursday, 12 May 2011
12 May 2011;economictimes.indiatimes.com:Sanjay Dutta:NEW DELHI: Flagship refinermarketer Indian Oil Corporation has lost a substantial share of the fuel retail market to the other two state-run players who are stepping on gas with increased focus on quality of fuels and service. According to oil ministry data , Indian Oil's share in total petrol and diesel sales in the country declined to nearly 53% in 2010-11 from around 54% in 2009-10. This translates into loss of sale of half a million tonne and an equivalent gain for rivals Bharat Petroleum and Hindustan Petroleum. Many attribute the loss in market share to the leadership flux the company went through for almost 11 months before R S Butola was appointed as the full-time chairman on February 28. The decline in market share is alarming since it comes in a regulated market scenario that is almost completely dominated by only three state-run companies. It also indicates the big challenge IndianOil would face when the gap between prices offered by state-run retailers and private players narrows or disappears once the government affects an upward revision. Mukesh Ambani's Reliance Industries Ltd , for example, had captured almost 18% of the market for diesel, which sells more than petrol, by mid-2006 before it was forced to shut down its pumps as it could not match the subsidised price of its state-run competitors. For IOC, one saving grace was the low-cost Kisan Seva Kendras that cater to rural markets. Sales from such outlets contributed almost 8% to the firm's overall petrol sales and nearly 7% to diesel volumes. IndianOil's share in diesel sales declined 0.9% to 47.1% in 2010-11 , 0.7% lower than 2009-10. It lost petrol market share by 0.3% to 44.7%. In direct sales to bulk customers , however, it continued to have a commanding 77.5% market share. In terms of volume, IndianOil Corporation sold 31.58 million tonne of diesel in 2010-11. Some 22.91 million tonne of this was through petrol pumps and 8.67 million tonne through direct sales. In 2010-11 , the industry sold 59.86 million tonne of diesel. It sold a total of 6.34 million tonne of petrol out of the total industry sales of 14.19 million tonne in 2010-11. IndianOil Corporation added 900 retail outlets, including 575 Kisan Seva Kendras, in 2010-11. Bharat Petroleum added 600 and Hindustan Petroleum 1,086 petrol pumps.
12 May 2011;dailypioneer.com:Rakesh Bihari Jha:New Delhi: In a bid to boost sales and further strengthen its market share in the country Hyundai Motor will continue to invest and launch models across segments in India. “HMIL is very important for Hyundai Motor Company (HMC). The company has kept pace with the growth in the Indian market and we’ll offer a full line of products here,” said HMC President and CEO SS Yang, adding, “the company will bring in new models in all segments such as small car, mid-size and even premium segment to change its image of a small car maker only.” Country’s second largest car maker HMIL’s market share fell to 18.10 per cent in FY’11 from 20.61 per cent in the previous fiscal. And with new launches, the company is hoping not only to regain its lost share and but also maintain it in the future. “We would like to maintain our market share at about 20 per cent in India. Unfortunately, our production capacity is only about 6,00,000 units per annum,” he added. To handle the situation, HMIL is focussing more on the Indian market by shifting some of its exports volumes to the domestic market after it opened after it opened two new plants in Russia and Czech Republic to meet the demand in Europe. The company on Wednesday launched the new version of ‘Verna’, in both petrol and diesel options at an introductory price between Rs 6.99 lakh and Rs 10.75 lakh (ex-showroom Delhi). “With the launch of the new Verna, I am confident that it will help in consolidating our position in the mid-size segment. Our brand image will enhance and we’ll no longer be considered as a small car maker in India.” Talking about the investments and profitability of the company in the country Yang said: “We have profitable operations in India and have so far invested $1.8 billion (over Rs 8,000 crore) in the country. The company is currently putting in Rs 400 crore to set up a diesel engine plant here.”
10 May 2011;deccanherald.com:Mumbai: Tata Motors, on Tuesday, launched two new models: Ace Zip and Magic Iris priced at Rs 1.95 lakh and Rs 1.90 lakh (ex-showroom Thane) respectively here. The Magic IRIS is a low-cost public transport, while Ace Zip is a micro truck with a payload capacity of 600 kg, an upgrade for three-wheeler operators. Both vehicles are equipped with a 611 cc, water cooled diesel engine producing 11 HP power and 31 Nm torque and are BS3 compliant. Also they offer superior profitability to their owners, the company said. Briefing reporters, Tata Motors’ Managing Director (India operations) P M Telang said that with the launch of the two vehicles, the company will more comprehensively address the burgeoning need of public transportation and goods movement, besides growing the small commercial vehicles market in India. He pointed out that both vehicles come with a warranty of 1-year or 36,000 kms. Magic IRIS comes with 4 colour options: Arctic White, Ruby Red, School Yellow and Jet Black, while Ace Zip comes loaded with safety features like retractable seat belts and a sturdy all steel cabin ensuring the safety of its occupants.
11 May 2011;dailypioneer.com:Rakesh Bihari Jha:New Delhi: Some auto companies like Audi openly expressing its resentment against Government’s Budget provision of CKD attracting 30 per cent import duty as against an earlier duty of 10 per cent has forced Government to rethink on the same. Heavy Industries and Public Enterprises Minister Praful Patel on Tuesday said his Ministry has asked the Ministry of Finance to give two years’ time to the auto industry to comply with the new import duty norms for CKD units. “We have sent a formal request to the Ministry of Finance with the request from SIAM. The industry is asking sometime to set up facilities to have more indigenisation,” said Patel, adding, “industry players are asking for two year’s time to implement the new norms and we have forwarded the request.” The Minister also said that now this is an issue of the Finance Ministry to decide on. We do share some of concerns of the industry. “According to them, it will take a year to have more indigenization,” said Patel. In the Budget for 2011-12, Finance Minister Pranab Mukherjee had redefined the meaning of completely knocked down (CKD) units to encourage local production of automobiles. Subsequently, pre-assembled engines, gearboxes and transmissions were kept out of the ambit of CKD and now attract 30 per cent import duty as against an earlier duty of 10 per cent. Industry body SIAM has been asking the government to either reduce the duty or give manufacturers more time to prepare for more localisation of parts.
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