Tuesday, June 24, 2008
Stocks to watch: DLF, Amtek, GHCL
Stocks are headed for yet another whirlwind session Monday sensing the gloom spreading across global markets. That apart, on the domestic front, inflationary concerns, likelihood of another interest rate hike and fears of political uncertainty could propel the equities into a downward frenzy. Finance minister P Chidambaram, who, along with petroleum minister Murli Deora, attend an emergency meeting of oil producing and consuming countries called by Opec in Jeddah, has urged oil producing nations not to remain “passive spectators of speculation”, and has advocated adopting a “price band mechanism” to cool down crude oil prices. Crude oil rose 36 cents to $135.72 per barrel, reversing earlier losses of more than $1 after concerns of tension between Israel and Iran shadowed pledge by Saudi Arabia to pump more oil. Rupee opened weak Monday on anticipation that foreign funds will continue to exit stock market. Rupee was at 42.95 down 3 paise against close of 42.93/94 on Friday. In one of the largest private equity investments in the textile sector, S Kumars’ subsidiary Reid & Taylor is close to signing a deal for $100-million fund infusion. It couldn’t be ascertained how much stake Reid & Taylor was likely to dilute, but sources said the company may issue fresh equity to a Europe-based fund at the rate of Rs 150 per share. The company is likely to make an announcement next week. When contacted, S Kumars managing director Nitin Kasliwal neither confirmed nor denied the development. Real estate developer DLF will soon get around 5,000 acres near Greater Noida at less than market rate under the Taj Expressway Industrial Development Authority’s (TEA) scheme. Jaypee group, too, has qualified for allotment of 2,500 acres, while Unitech and Punj Lloyd are in queue for 2,500 acres each. As part of its foray into railcars, auto component major Amtek has entered into a strategic pact with Missouri-based American Railcar Industries. The JV has been signed through Amtek Transportation Division, a subsidiary of Amtek Auto. Big courier players such as Blue Dart, DTDC and AFL WIZ have revised their charges by 15-20 per cent on account of the rise in fuel prices and there are indications that courier rates are likely to be hiked yet again by at least 3 per cent. Diamond jewellery maker and exporter Suashish Diamonds is planning to invest Rs 150 crore in setting up a new manufacturing facility at Mumbai’s Santacruz Electronic Export Processing Zone (SEEPZ). The investments will be made through the company’s wholly-owned subsidiary Suashish Jewellery. At least three UK-based companies are interested in picking up a controlling stake in GHCL, which is into soda ash and textiles. One of the intending investors has offered $175 million for a 20 per cent stake in the company, reports Hindu Businessline. With global crude prices shooting through the roof, corporates are making a beeline to exploit India's vast reserves of black diamond for producing liquid gold through CTL (coal-to-liquid) technology, reports Times of India. Naveen Jindal-led Jindal Steel & Power has joined the bandwagon and told the coal ministry earlier this month that it planned to pump Rs 32,000 crore into such a project for extracting 80,000 barrels per day of oil by synthesising coal
ENERGY SECTOR IS MOST PREFERED INVESTMENT BET TO P E PLAYER IN INDIA
An increasing number of private equity (PE) firms are making a beeline for investing in the booming energy sector. These firms have made a total investment of $990 million (Rs 4,158 crore) during the first five months of 2008 in this sector compared to just two deals worth $45 (Rs 189 crore) million during the same period of 2007.
The energy sector, especially power, has been witnessing a lot of interest from PE investors, said Arun Natarajan, chief executive officer (CEO), Venture Intelligence, a Chennai-based research service company focused on PE and venture capital activities.
Some of the big deals between January and May 2008 include Farallon Capital, L N Mittal India and Internet Ventures' investment of $395 million in Indiabulls Power Services in February 2008. In the Konaseema Gas deal in May this year, IDFC Private Equity and Lehman Brothers invested $125 million and in the KLG Power deal, TPG Growth put in about $50 million in April.
In the energy sector, renewable and power equipments are big attractions for PE investors, said Karthikeyan Ranganathan, Head, Investments, Baring Private Equity India. This fund is planning to invest $1 billion in India, of which a significant amount will go to the energy sector, he said.
Natarajan said the number of investments in the energy sector will grow manifold to bridge the demand-supply gap of energy in the country.
India needs to generate an additional 70,000 MW to meet its growing power requirements. Total investment required is $155 billion.
The Planning Commission expects private sector participation to increase by 25 per cent year-on-year.
In a recent report, KPMG Infrastructure Advisory Group had said that India needs to double its generation capacity (currently around 135 giga watt) by the year 2015. Enabled by the Electricity Act 2003, the Indian electricity sector is undergoing structural changes that aim to make it more competitive and bring back the interest of private sector in development and operation of power plants in India.
The energy sector, especially power, has been witnessing a lot of interest from PE investors, said Arun Natarajan, chief executive officer (CEO), Venture Intelligence, a Chennai-based research service company focused on PE and venture capital activities.
Some of the big deals between January and May 2008 include Farallon Capital, L N Mittal India and Internet Ventures' investment of $395 million in Indiabulls Power Services in February 2008. In the Konaseema Gas deal in May this year, IDFC Private Equity and Lehman Brothers invested $125 million and in the KLG Power deal, TPG Growth put in about $50 million in April.
In the energy sector, renewable and power equipments are big attractions for PE investors, said Karthikeyan Ranganathan, Head, Investments, Baring Private Equity India. This fund is planning to invest $1 billion in India, of which a significant amount will go to the energy sector, he said.
Natarajan said the number of investments in the energy sector will grow manifold to bridge the demand-supply gap of energy in the country.
India needs to generate an additional 70,000 MW to meet its growing power requirements. Total investment required is $155 billion.
The Planning Commission expects private sector participation to increase by 25 per cent year-on-year.
In a recent report, KPMG Infrastructure Advisory Group had said that India needs to double its generation capacity (currently around 135 giga watt) by the year 2015. Enabled by the Electricity Act 2003, the Indian electricity sector is undergoing structural changes that aim to make it more competitive and bring back the interest of private sector in development and operation of power plants in India.
MARKET PREDICTION
GLOBAL MARKET IS MIXED ...
NIFTY WILL OPEN IN NEGATIVE NOTE CLEARING IS APPROCHING FAST FOR THAT REASON WE CAN ASSUME SHORT COVERING IN BANKING AND CONSTRUCTION OIL&GAS ACTUALLY ACROSS THE BOARD WE CAN ASSUME SHORT COVERING.
NIFTY LEVEL IS 4250-4300-4350-4450 IF MARKET HOLDs 4300 GO LONG OR FROM 4230 LEVEL GO LONG WITH SL OF 4200 AND IF MARKET COULD NOT HOLD 4350 AND ABOVE GO SHORT WITH SL OF 4400.
TOTAL MARKET OI IS 79 K CR AND 56 K CR IN JUNE SERIES AND 22 K CR IN JULY.
PUT CALL RATIO IS 1.19% DUE TO CLOSER OF PUT AND ACCUMULATION IN CALL OPTION.
ROLLOVER IS 25-30 % FOUND YET.
MARKET WILL BE VOLATILE DUE TO FED MEETING TONIGHT.
HAVE A NICE TRADING DAY...........
-MR SAM
NIFTY WILL OPEN IN NEGATIVE NOTE CLEARING IS APPROCHING FAST FOR THAT REASON WE CAN ASSUME SHORT COVERING IN BANKING AND CONSTRUCTION OIL&GAS ACTUALLY ACROSS THE BOARD WE CAN ASSUME SHORT COVERING.
NIFTY LEVEL IS 4250-4300-4350-4450 IF MARKET HOLDs 4300 GO LONG OR FROM 4230 LEVEL GO LONG WITH SL OF 4200 AND IF MARKET COULD NOT HOLD 4350 AND ABOVE GO SHORT WITH SL OF 4400.
TOTAL MARKET OI IS 79 K CR AND 56 K CR IN JUNE SERIES AND 22 K CR IN JULY.
PUT CALL RATIO IS 1.19% DUE TO CLOSER OF PUT AND ACCUMULATION IN CALL OPTION.
ROLLOVER IS 25-30 % FOUND YET.
MARKET WILL BE VOLATILE DUE TO FED MEETING TONIGHT.
HAVE A NICE TRADING DAY...........
-MR SAM
ONGC to exit Kakinada refinery, GMR to take over
Infrastructure company GMR will replace Oil and Natural Gas Corporation (ONGC), the country's largest oil and gas producer, in the proposed Rs 31,000 crore refinery and petrochemical plant at Kakinada in Andhra Pradesh, after the oil company found the project to be non-profitable venture.
ONGC had also asked the Andhra Pradesh government for tax incentives of Rs 16,000 crore over eight years to make the project viable. The state government, however, declined.
ONGC, which signed an agreement with the Andhra Pradesh government in September 2006 to set up the refinery, says that the project would have been a non-profitable one. "It is a non-profitable business and that is why we have kept out of it," said a top ONGC official who did not want to be named.
A GMR spokesperson in Bangalore said the company had not yet received any official communication from ONGC. Neither he, nor ONGC, disclosed how much GMR would pay to ONGC.
The originally planned 7.5 million tonne per annum (mtpa) refinery was replanned with a capacity of 15 mtpa after the smaller refinery was found to be financially unviable. "Even the larger refinery was unviable. Refineries are not our business. We will continue to concentrate on exploration and production," said the ONGC official.
ONGC, which had 46 per cent stake present in the refinery and petrochemical project through its subsidiary Mangalore Refinery and Petrochemicals (MRPL), had asked the Andhra Pradesh state government for fiscal benefits worth Rs 16,000 crore over eight years. "The state government was not willing to give us that incentive, and we were not willing to go ahead without the incentive. So they wanted us out and we obliged," the ONGC official said.
The Andhra Pradesh government was keen that the refinery be set up. Chief Minister YS Rajasekhar Reddy had urged Prime Minister Manmohan Singh and Petroleum Minister Murli Deora to convince ONGC to execute the project after ONGC found the refinery unviable after many studies were conducted.
The refinery and petrochemical is being implemented by Kakinada Refinery and Petrochemicals (KRPL), in which MRPL had 46 per cent stake, IL&FS 51 per cent stake and the Andhra Pradesh government 3 per cent stake through Kakinada Seaports.
KRPL's shareholding will now be restructured with GMR controlling 51 per cent stakle, IL&FS and the Kainada Seaports holding 46 per cent and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) the remaining 3 per cent stake.
Even though ONGC had found the refinery unviable, various companies such as the Hinduja group, Reliance Industries and Essar Oil had shown interest in the refinery and petrochemical project. The project was initially conceptualised by then ONGC chairman and managing director Subir Raha, who is currently employed by the Hindujas. "The refinery is very feasible as its products can be exported to the east Asian countries. Kakinada also has a port which will facilitate import of crude oil and export of petroleum products," said a Delhi-based analyst who advises oil companies.
The refinery is being planned in a special economic zone land for which has already been acquired. The refinery will also be part of a Petroleum, Chemical and Petrochemical Investment Region (PCPIR) which runs from Vishakapatnam to Kakinada, a distance of around over 150 kms.
ONGC had also asked the Andhra Pradesh government for tax incentives of Rs 16,000 crore over eight years to make the project viable. The state government, however, declined.
ONGC, which signed an agreement with the Andhra Pradesh government in September 2006 to set up the refinery, says that the project would have been a non-profitable one. "It is a non-profitable business and that is why we have kept out of it," said a top ONGC official who did not want to be named.
A GMR spokesperson in Bangalore said the company had not yet received any official communication from ONGC. Neither he, nor ONGC, disclosed how much GMR would pay to ONGC.
The originally planned 7.5 million tonne per annum (mtpa) refinery was replanned with a capacity of 15 mtpa after the smaller refinery was found to be financially unviable. "Even the larger refinery was unviable. Refineries are not our business. We will continue to concentrate on exploration and production," said the ONGC official.
ONGC, which had 46 per cent stake present in the refinery and petrochemical project through its subsidiary Mangalore Refinery and Petrochemicals (MRPL), had asked the Andhra Pradesh state government for fiscal benefits worth Rs 16,000 crore over eight years. "The state government was not willing to give us that incentive, and we were not willing to go ahead without the incentive. So they wanted us out and we obliged," the ONGC official said.
The Andhra Pradesh government was keen that the refinery be set up. Chief Minister YS Rajasekhar Reddy had urged Prime Minister Manmohan Singh and Petroleum Minister Murli Deora to convince ONGC to execute the project after ONGC found the refinery unviable after many studies were conducted.
The refinery and petrochemical is being implemented by Kakinada Refinery and Petrochemicals (KRPL), in which MRPL had 46 per cent stake, IL&FS 51 per cent stake and the Andhra Pradesh government 3 per cent stake through Kakinada Seaports.
KRPL's shareholding will now be restructured with GMR controlling 51 per cent stakle, IL&FS and the Kainada Seaports holding 46 per cent and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) the remaining 3 per cent stake.
Even though ONGC had found the refinery unviable, various companies such as the Hinduja group, Reliance Industries and Essar Oil had shown interest in the refinery and petrochemical project. The project was initially conceptualised by then ONGC chairman and managing director Subir Raha, who is currently employed by the Hindujas. "The refinery is very feasible as its products can be exported to the east Asian countries. Kakinada also has a port which will facilitate import of crude oil and export of petroleum products," said a Delhi-based analyst who advises oil companies.
The refinery is being planned in a special economic zone land for which has already been acquired. The refinery will also be part of a Petroleum, Chemical and Petrochemical Investment Region (PCPIR) which runs from Vishakapatnam to Kakinada, a distance of around over 150 kms.
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