DCM Shriram Consolidated rose 2.24% to Rs 63.90 on BSE,on -Oct-09, after net profit surged 95.6% to Rs 13.93 crore in Q2 September 2009 over Q2 September 2008.
The stock hit a high of Rs 66 and a low of Rs 63.55 so far during the day. The stock had hit a 52-week high of Rs 71 on 13 August 2009 and a 52-week low of Rs 20.80 on 4 March 2009.
The company's equity capital is Rs 33.18 crore. Face value per share is Rs 2.
The current price of Rs 63.95 discounts the company's Q2 September 2009 annualized EPS of Rs 3.34, by a PE multiple of 19.15.
DCM Shriram Consolidated's total income declined 13.5% to Rs 839.07 crore in Q2 September 2009 over Q2 September 2008. The company announced the results after market hours on Thursday, 22 October 2009.
The company's net profit advanced on the back of 81.03% spurt in other income to Rs 8.40 crore in Q2 September 2009 over Q2 September 2008.
The company is engaged in manufacturing fertilisers, plastics, chemicals, agri inputs trading, sugar and cement.
Sunday, October 25, 2009
Ponni Sugars moves north after robust quarterly earnings
Ponni Sugars (Erode) jumped 7.49% to Rs 107.65 on BSE, after net profit galloped 235.48% to Rs 10.40 crore in Q2 September 2009 over Q2 September 2008.
The stock hit a high of Rs 108 so far during the day, which is 52-week high for the counter. The stock hit a low of Rs 101.15 so far during the day. The stock had hit a 52-week low of Rs 19.75 on 28 November 2008.
The company's equity capital is Rs 8.60 crore. Face value per share is Rs 10.
The current price of Rs 107.65 discounts the company's Q1 June 2009 annualized EPS of Rs 20.74, by a PE multiple of 5.19.
Ponni Sugars (Erode)'s total income surged 44.36% to Rs 48.52 crore in Q2 September 2009 over Q2 September 2008. The company declared its results during trading hours today, 23 October 2009.
The company manufactures cane sugar, cane molasses and bagasse. The company operates in a single segment of sugar and its by products.
The stock hit a high of Rs 108 so far during the day, which is 52-week high for the counter. The stock hit a low of Rs 101.15 so far during the day. The stock had hit a 52-week low of Rs 19.75 on 28 November 2008.
The company's equity capital is Rs 8.60 crore. Face value per share is Rs 10.
The current price of Rs 107.65 discounts the company's Q1 June 2009 annualized EPS of Rs 20.74, by a PE multiple of 5.19.
Ponni Sugars (Erode)'s total income surged 44.36% to Rs 48.52 crore in Q2 September 2009 over Q2 September 2008. The company declared its results during trading hours today, 23 October 2009.
The company manufactures cane sugar, cane molasses and bagasse. The company operates in a single segment of sugar and its by products.
NRB Bearings on a roll after solid Q2 results
NRB Bearings spurted 6% to Rs 61.45 at 15:12 IST after net profit surged 325.8% to Rs 3.79 crore on a 4.5% decline in sales to Rs 78.93 crore in Q2 September 2009 over Q2 September 2008.
The results were announced during trading hours today, 23 October 2009.
The small-cap ball bearing maker has an equity capital of Rs 9.69 crore. Face value per share is Rs 2.
The current price of Rs 61.45 discounts the company's Q1 June 2009 annualised EPS of Rs 3.89, by a PE multiple of 15.79.
NRB Bearings manufactures a wide range of needle rollers, needle bushes, needle cages, needle bearings and tapered roller bearings.
The results were announced during trading hours today, 23 October 2009.
The small-cap ball bearing maker has an equity capital of Rs 9.69 crore. Face value per share is Rs 2.
The current price of Rs 61.45 discounts the company's Q1 June 2009 annualised EPS of Rs 3.89, by a PE multiple of 15.79.
NRB Bearings manufactures a wide range of needle rollers, needle bushes, needle cages, needle bearings and tapered roller bearings.
3M India Ltd. (3MI) (CMP: Rs. 1735.5)
3M India Ltd. (3MI) (CMP: Rs. 1735.5)on 21-oct-09
(Long Term Buy - Accumulate in the Rs. 1600-1850 band)
3M India Ltd. (3MI), a 76% subsidiary of Minnesota Mining and Manufacturing Company (USA), is a diversified technology company. The company started its operations in India as ‘Birla 3M' in 1988. Later, in 2002, it was rechristened '3M India Ltd'.
We think that long-term investors could accumulate the stock in the price band of Rs. 1600-1850. While we have made an attempt to forecast the earnings for the company, a better than expected topline / bottomline achievement and / or greater visibility on earnings or corporate development could result in a rise in its share price. We feel that the stock has the potential to trade at atleast 2829xCY10E EPS, which gives a price target of Rs. 2094-2169 in the next two to three quarters.
HDsec
(Long Term Buy - Accumulate in the Rs. 1600-1850 band)
3M India Ltd. (3MI), a 76% subsidiary of Minnesota Mining and Manufacturing Company (USA), is a diversified technology company. The company started its operations in India as ‘Birla 3M' in 1988. Later, in 2002, it was rechristened '3M India Ltd'.
We think that long-term investors could accumulate the stock in the price band of Rs. 1600-1850. While we have made an attempt to forecast the earnings for the company, a better than expected topline / bottomline achievement and / or greater visibility on earnings or corporate development could result in a rise in its share price. We feel that the stock has the potential to trade at atleast 2829xCY10E EPS, which gives a price target of Rs. 2094-2169 in the next two to three quarters.
HDsec
Monthly inflation report:
Currently, inflation is reported every week based on the Wholesale Price Index (WPI). The base year (reference) of the current WPI numbers is 1993-94 .
The integrity of inflation data and its coverage has been in question since the last few quarters. The government has recently cleared a proposal to shift to a monthly WPI series with a much wider coverage than the current WPI index.
The base year of the new WPI index will be 2004-05 and it will cover over 1,200 commodities . It is expected to deliver inflation numbers closer to ground reality.
The integrity of inflation data and its coverage has been in question since the last few quarters. The government has recently cleared a proposal to shift to a monthly WPI series with a much wider coverage than the current WPI index.
The base year of the new WPI index will be 2004-05 and it will cover over 1,200 commodities . It is expected to deliver inflation numbers closer to ground reality.
Investors trust cos where promoters sell stakes
Investors in Indian equity markets have remained bullish on companies where promoters reduced their stake, a trend totally different from the global scenario.
Companies which witnessed sizable selling of promoters’ stake are Unitech, Sobha Developers, Housing Development & Infrastructure and Bombay Rayon Fashions. In Unitech, promoters’ holding came down to 44% in the quarter ending September 2009 from 67% at the end of December quarter 2008. Similarly, in Sobha Developers
, promoters’ holding fell to 65% from 87%. Housing Development & Infrastructure also saw its promoters’ holding coming down to 48% from 62% during the same period.
On the other hand, major buying by promoters took place in companies such as Pfizer, Indo Tech Transformers, Dish TV India and Sesa Goa. In Pfizer, promoters’ holding went up from 41% to 71% between quarter ending December 2008 and September 2009. Promoters of Indo Tech Transformers increased their holdings from 54% to 74%, whereas in Sesa Goa, it increased from 51% to 57% during the same period.
Companies which witnessed sizable selling of promoters’ stake are Unitech, Sobha Developers, Housing Development & Infrastructure and Bombay Rayon Fashions. In Unitech, promoters’ holding came down to 44% in the quarter ending September 2009 from 67% at the end of December quarter 2008. Similarly, in Sobha Developers
, promoters’ holding fell to 65% from 87%. Housing Development & Infrastructure also saw its promoters’ holding coming down to 48% from 62% during the same period.
On the other hand, major buying by promoters took place in companies such as Pfizer, Indo Tech Transformers, Dish TV India and Sesa Goa. In Pfizer, promoters’ holding went up from 41% to 71% between quarter ending December 2008 and September 2009. Promoters of Indo Tech Transformers increased their holdings from 54% to 74%, whereas in Sesa Goa, it increased from 51% to 57% during the same period.
Thursday, October 15, 2009
5 mid-cap stocks: middle path to prosperity-DEEWALI GIFT
16 Oct 2009, 0425 hrs IST
ET Bureau It’s that time of the year again when many investors rejig their portfolio and take position on their favourite stocks. With most of the blue chips having turned expensive, the only option for most investors is the mid-cap sector.
We at ET Intelligence Group bring you a list of 5 mid-cap stocks that could make your next Diwali brighter. But, as always, make sure you’ve done the due diligence before placing your bets on these.
Tata Teleservices (Maharashtra) Ltd (CMP=32.6)
TTML, which has recently joined hands with Japan’s NTT Docomo, is the Rs 2,000-crore Tata Group company that provides telecom services in the circles of Mumbai and Maharashtra, including Goa. TTML has reported net loss in each of the past six years. However, the picture is likely to change soon.
The company is aggressively adding new subscribers and has topped the 10-million mark, following its innovative pricing methods. Higher users would improve network efficiency, thereby reducing cost per user. The company has undertaken necessary capex in the last few years.
TTML has reduced the level of net loss in the last three quarters. It is likely to post quarterly profit by the March 2010 quarter.
Indian Hotels Company Ltd (CMP=80)
Indian Hotels (IHCL), which has underperformed the markets, is currently trading below its book value. This appears pretty cheap as it has always traded between 1.4 and 5 times the book value in the last five years. The last few bad quarters indicate that the scrip is trading 28 times its past 12 months earnings.
The hospitality industry is now going through a tough phase. However, being the industry leader, IHCL could well be the first one to move up once the tide turns. The Commonwealth Games being held in Delhi next year can be one major trigger for the industry, apart from the global economic revival.
Supreme Industries Ltd (CMP=362)
Supreme Industries, India’s leading plastic goods manufacturers, has always enjoyed a healthy history of profit growth, cashflows and dividends. Its decision to exit unprofitable businesses, coupled with rising domestic demand for plastics and a likely glut situation in polymers, are likely to keep its profit growth strong in the coming quarters.
At the same time, the company has constructed a commercial complex at Andheri with 2.5-lakh square feet of saleable area at a cost of Rs 115 crore. The sale proceeds from this property will boost the company’s bottomline for the next few quarters. The scrip at Rs 363 values the company just 8.6 times its earnings for trailing 12 months, much cheaper compared to its peers.
IndusInd Bank Ltd (CMP=124)
IndusInd Bank has made a huge turnaround in the past one year, reporting a dramatic improvement on key parameters such as non-performing assets (NPAs), net interest margin (NIM) and business per employee. Its gross NPAs or bad loans as a percentage to gross advances have halved in the quarter ended September 2009 against the year-ago period, with NIM rising to 2.86% from 1.68%.
The bank has cleaned up its balance sheet and has more than doubled its profit in the September quarter. The next growth driver will be expansion of its loan book beating the industry growth and continued improvement in its NIM, which can transform it into one of the fastest growing banks.
Dalmia Cement (Bharat) Ltd. (CMP=170)
Dalmia Cement (Bharat) (DCBL) is aggressively expanding its cement capacity and is shortly bringing on stream 38% additional cement capacity, taking its total capacity to 9 million tonnes. It is also well positioned in the booming sugar business with a combined capacity of 22,500 TCD (tonnes of cane per day) at three locations in UP. These two businesses should help the company grow its net sales aggressively in the next two years.
In the past four years, the company has quadrupled its revenues and is expected to maintain its growth trajectory in the next few years. Dalmia Cements recently announced plans to raise nearly Rs 3,000 crore to fund its expansion plans. The company plans to add a further 10 million tonnes capacity across the country in a phased manner over the next three years. At Rs 169.3, Dalmia Cement (Bharat) trades at a P/E of 8.2 and looks cheap.
Via:E.T
ET Bureau It’s that time of the year again when many investors rejig their portfolio and take position on their favourite stocks. With most of the blue chips having turned expensive, the only option for most investors is the mid-cap sector.
We at ET Intelligence Group bring you a list of 5 mid-cap stocks that could make your next Diwali brighter. But, as always, make sure you’ve done the due diligence before placing your bets on these.
Tata Teleservices (Maharashtra) Ltd (CMP=32.6)
TTML, which has recently joined hands with Japan’s NTT Docomo, is the Rs 2,000-crore Tata Group company that provides telecom services in the circles of Mumbai and Maharashtra, including Goa. TTML has reported net loss in each of the past six years. However, the picture is likely to change soon.
The company is aggressively adding new subscribers and has topped the 10-million mark, following its innovative pricing methods. Higher users would improve network efficiency, thereby reducing cost per user. The company has undertaken necessary capex in the last few years.
TTML has reduced the level of net loss in the last three quarters. It is likely to post quarterly profit by the March 2010 quarter.
Indian Hotels Company Ltd (CMP=80)
Indian Hotels (IHCL), which has underperformed the markets, is currently trading below its book value. This appears pretty cheap as it has always traded between 1.4 and 5 times the book value in the last five years. The last few bad quarters indicate that the scrip is trading 28 times its past 12 months earnings.
The hospitality industry is now going through a tough phase. However, being the industry leader, IHCL could well be the first one to move up once the tide turns. The Commonwealth Games being held in Delhi next year can be one major trigger for the industry, apart from the global economic revival.
Supreme Industries Ltd (CMP=362)
Supreme Industries, India’s leading plastic goods manufacturers, has always enjoyed a healthy history of profit growth, cashflows and dividends. Its decision to exit unprofitable businesses, coupled with rising domestic demand for plastics and a likely glut situation in polymers, are likely to keep its profit growth strong in the coming quarters.
At the same time, the company has constructed a commercial complex at Andheri with 2.5-lakh square feet of saleable area at a cost of Rs 115 crore. The sale proceeds from this property will boost the company’s bottomline for the next few quarters. The scrip at Rs 363 values the company just 8.6 times its earnings for trailing 12 months, much cheaper compared to its peers.
IndusInd Bank Ltd (CMP=124)
IndusInd Bank has made a huge turnaround in the past one year, reporting a dramatic improvement on key parameters such as non-performing assets (NPAs), net interest margin (NIM) and business per employee. Its gross NPAs or bad loans as a percentage to gross advances have halved in the quarter ended September 2009 against the year-ago period, with NIM rising to 2.86% from 1.68%.
The bank has cleaned up its balance sheet and has more than doubled its profit in the September quarter. The next growth driver will be expansion of its loan book beating the industry growth and continued improvement in its NIM, which can transform it into one of the fastest growing banks.
Dalmia Cement (Bharat) Ltd. (CMP=170)
Dalmia Cement (Bharat) (DCBL) is aggressively expanding its cement capacity and is shortly bringing on stream 38% additional cement capacity, taking its total capacity to 9 million tonnes. It is also well positioned in the booming sugar business with a combined capacity of 22,500 TCD (tonnes of cane per day) at three locations in UP. These two businesses should help the company grow its net sales aggressively in the next two years.
In the past four years, the company has quadrupled its revenues and is expected to maintain its growth trajectory in the next few years. Dalmia Cements recently announced plans to raise nearly Rs 3,000 crore to fund its expansion plans. The company plans to add a further 10 million tonnes capacity across the country in a phased manner over the next three years. At Rs 169.3, Dalmia Cement (Bharat) trades at a P/E of 8.2 and looks cheap.
Via:E.T
Tuesday, October 13, 2009
EID Parry scrip seen playing catch-up
14 Oct 2009, 0124 hrs IST, Shikha Sharma, ET Bureau
Eid Parry (India), part of the $3.14-bn Murugappa Group, saw its stock price move up close to 4% to end at Rs 318 on Monday after hitting an intra-day high of Rs 329.
Although the diversified company generates a significantly large chunk of consolidated revenues from its fertiliser subsidiary, Coromandel Fertiliser, the latest uptick on the scrip is attributed to the acquisition of 76% equity stake in privately-held Sadashiva Sugar (SSL) for a consideration of Rs 50 crore.
With the acquisition of Bangalore-based SSL, its sugar production capacity is expected to grow 15% to around 21,500 tonnes crushed per day (TCD). Assuming the current capacity utilisation at 75% with increased capacity and the ruling price of sugar at Rs 30/kg, EID Parry is likely to grow standalone revenues in the coming quarters. At the consolidated level, however, the business is dominated by its fertiliser subsidiary, which accounted for 92% of the company’s revenues and its entire profits in FY09.
Its standalone turnover for the year ended March 2009 stood at Rs 755 crore compared with Rs 616 crore last year. For the first quarter ended June 2009, it posted 0.8% growth in standalone revenues to Rs 205 crore and net profit was Rs 26 crore compared with Rs 3 crore during the same quarter last year, due to improved realisation in sugar prices. Sugar is the main business of the company besides co-generation power and distillery.
EID Parry’s operating margin for the June quarter ended 2009 at 29.71% is comparable to its peers in the sugar industry and has improved significantly compared with 11.78% in the corresponding quarter last year. As the industry estimates supply deficit of close to 5 million tonnes of sugar during the sugar season 2009-10, prices may continue to see an upward trend. But availability of sugarcane poses challenge for sugar producers.
Despite the recent run-up in its stock price, the company looks cheaper than its peers. At its current stock price of Rs 318, the stock is trading at a trailing price-earning multiple of close 20x (on a standalone basis) and looks pricey, considering that sugar companies are currently trading at a P/E of around 10x.
However, the market value of EID Parry investment is equivalent to around 70% of its total market capitalisation, which means that either its sugar division is not getting fair valuation, or its investments in fertilisers are being undervalued by the market.
In the current rally, the EID Parry scrip has underperformed its peers. The stock has risen 115% between April 1 and September 30 against 147% rise in the ET Sugar index during the period. So the current move could be seen as the stock playing catch-up.
via:E.T
Eid Parry (India), part of the $3.14-bn Murugappa Group, saw its stock price move up close to 4% to end at Rs 318 on Monday after hitting an intra-day high of Rs 329.
Although the diversified company generates a significantly large chunk of consolidated revenues from its fertiliser subsidiary, Coromandel Fertiliser, the latest uptick on the scrip is attributed to the acquisition of 76% equity stake in privately-held Sadashiva Sugar (SSL) for a consideration of Rs 50 crore.
With the acquisition of Bangalore-based SSL, its sugar production capacity is expected to grow 15% to around 21,500 tonnes crushed per day (TCD). Assuming the current capacity utilisation at 75% with increased capacity and the ruling price of sugar at Rs 30/kg, EID Parry is likely to grow standalone revenues in the coming quarters. At the consolidated level, however, the business is dominated by its fertiliser subsidiary, which accounted for 92% of the company’s revenues and its entire profits in FY09.
Its standalone turnover for the year ended March 2009 stood at Rs 755 crore compared with Rs 616 crore last year. For the first quarter ended June 2009, it posted 0.8% growth in standalone revenues to Rs 205 crore and net profit was Rs 26 crore compared with Rs 3 crore during the same quarter last year, due to improved realisation in sugar prices. Sugar is the main business of the company besides co-generation power and distillery.
EID Parry’s operating margin for the June quarter ended 2009 at 29.71% is comparable to its peers in the sugar industry and has improved significantly compared with 11.78% in the corresponding quarter last year. As the industry estimates supply deficit of close to 5 million tonnes of sugar during the sugar season 2009-10, prices may continue to see an upward trend. But availability of sugarcane poses challenge for sugar producers.
Despite the recent run-up in its stock price, the company looks cheaper than its peers. At its current stock price of Rs 318, the stock is trading at a trailing price-earning multiple of close 20x (on a standalone basis) and looks pricey, considering that sugar companies are currently trading at a P/E of around 10x.
However, the market value of EID Parry investment is equivalent to around 70% of its total market capitalisation, which means that either its sugar division is not getting fair valuation, or its investments in fertilisers are being undervalued by the market.
In the current rally, the EID Parry scrip has underperformed its peers. The stock has risen 115% between April 1 and September 30 against 147% rise in the ET Sugar index during the period. So the current move could be seen as the stock playing catch-up.
via:E.T
Sunday, October 11, 2009
KG basin gas row
KG basin gas row
What is the Krishna-Godavari (KG) basin?
As the name implies, this refers to the area broadly enclosed by the deltaic basins of the two major rivers in Andhra Pradesh Krishna and Godavari. It includes part of the Bay of Bengal into which these rivers drain.
The area has been identified as one of India's biggest oil and gas fields, several times the size of Bombay High.
Onland, the KG basin has an area of about 28,000 sq km, while the offshore area is estimated at 21,000 sq km till a depth of 200m and another 18,000 sq km between 200m and 3000m.
KG basin controversies
How is Reliance Industries involved in the KG basin?
Under the government's New Exploration and Licensing Policy (NELP), various blocks in identified oil and gas fields were offered to private operators on lease for exploration and production. RIL won the bids for 12 such blocks in the KG basin in 2000.
Under the NELP, private operators sign a production sharing contract (PSC) with the government, which sets out the terms and conditions under which they operate their lease, including the share of revenues that would accrue to the government.
The PSC for block D6, which is at the heart of the current controversy, was signed between RIL, the government and Niko, which is partnering RIL, in April 2000.
Ambani group broke up in 2005
How is the Anil Ambani group involved?
When the Reliance group was still a unified entity with both brothers sharing management responsibilities, RIL had announced in 2003 that group company Reliance Energy Ltd (REL) would be setting up a gas-based power plant at Dadri in western Uttar Pradesh for which gas would supplied from RIL's KG basin production.
In 2005, however, the group broke up with each brother acquiring control of different business areas. While the oil and gas business went to elder brother Mukesh, Anil had control of the power business.
As part of the division of the group, RIL was demerged and Reliance Natural Resources LTD (RNRL) was formed to act as a conduit for the gas from the KG basin to REL.
All RIL shareholders were made RNRL shareholders, except that Mukesh's holding in the parent company was substituted by Anil in the new firm. Thus, RNRL was part of the Anil Dhirubhai Ambani group (ADAG).
MoU singed between RNRL-RIL in 2005
What is the MoU often referred to?
In 2005, RNRL and RIL signed a memorandum of understanding (MoU) on the terms under which gas would be supplied for the Dadri project . This MoU specified that the price at which the gas would be supplied would be the same as the price at which RIL would supply gas to an NTPC project. NTPC had invited global bids for supply of gas in 2003 and RIL finally won the bid and was issued a letter of intent by NTPC in June 2004.
The price quoted by RIL in its bid was $2.34 per mmbtu (million metric British thermal units). So what’s the dispute about? RIL argues that the $2.34 per unit price is not applicable to its deal with RNRL for various reasons. First, gas prices had since the 2005 MOU risen sharply.
Second, it has not concluded a deal with NTPC on that price, since it had some issues pertaining to damages it would have to pay in case of failure to supply the agreed quantity of gas. Hence, it says, there is no NTPC price to be followed as per the MOU with RNRL. Third, it says under the PSC signed with the government, the government has the final say on the price at which it can sell gas to third parties and in fact can even dictate to whom the gas should be sold.
RNRL contests each of these claims. It argues that international gas prices have historically been much higher than Indian prices and so that can't be a benchmark . Further, the bid price for the NTPC project must be followed under the MOU irrespective of whether or not RIL and NTPC have finalized their deal. Finally, it maintains that the government only has the right under the PSC to fix the price at which gas will be valued for the purpose of determining the government's share of revenues from the project. RIL, it insists , is free to sell its share of the gas at whatever price it decides.
RNRL-RIL gas row
Where did the price of $4.2 per unit come from?
In May 2007, RIL invited bids from various gas users like power and fertilizer companies and on that basis arrived at a price of $4.2 per, which was then approved by the petroleum ministry as a market-determined price.
RNRL alleges that this was an eyewash and an orchestrated auction between small time users and that the ministry has been partisan towards RIL in the whole issue.
Governments involvement in RIL-RNRL gas row!
How did the government get involved?
When, after sustained pressure from RNRL, RIL sought approval of the government for the price of $2.34 per unit, the government refused. It said the price was not marketdetermined and in any case gas was a national asset and its allocation could not be decided by some private agreement between two brothers.
ADAG points out that the ministry's stance in the matter which suits RIL's current position — has been a feature since Murli Deora became the petroleum minister in 2006.
How are courts involved? Following RIL's refusal to supply gas at the terms specified in the MOU with RNRL, the Anil group company went to the Bombay HC seeking an order to RIL to follow the terms of the MOU.
The Bombay HC finally in June this year passed an order that RIL must renegotiate a deal with RNRL that would make suitable arrangements for supply of gas. It also added that the basis for such an arrangement must be the scheme of demerger agreed between the brothers in 2005.
RNRL has now gone to the Supreme Court seeking a direction from the apex court that the HC order on renegotiation should be set aside and RIL should be asked to supply gas under the terms of the MoU.
via: E.T
What is the Krishna-Godavari (KG) basin?
As the name implies, this refers to the area broadly enclosed by the deltaic basins of the two major rivers in Andhra Pradesh Krishna and Godavari. It includes part of the Bay of Bengal into which these rivers drain.
The area has been identified as one of India's biggest oil and gas fields, several times the size of Bombay High.
Onland, the KG basin has an area of about 28,000 sq km, while the offshore area is estimated at 21,000 sq km till a depth of 200m and another 18,000 sq km between 200m and 3000m.
KG basin controversies
How is Reliance Industries involved in the KG basin?
Under the government's New Exploration and Licensing Policy (NELP), various blocks in identified oil and gas fields were offered to private operators on lease for exploration and production. RIL won the bids for 12 such blocks in the KG basin in 2000.
Under the NELP, private operators sign a production sharing contract (PSC) with the government, which sets out the terms and conditions under which they operate their lease, including the share of revenues that would accrue to the government.
The PSC for block D6, which is at the heart of the current controversy, was signed between RIL, the government and Niko, which is partnering RIL, in April 2000.
Ambani group broke up in 2005
How is the Anil Ambani group involved?
When the Reliance group was still a unified entity with both brothers sharing management responsibilities, RIL had announced in 2003 that group company Reliance Energy Ltd (REL) would be setting up a gas-based power plant at Dadri in western Uttar Pradesh for which gas would supplied from RIL's KG basin production.
In 2005, however, the group broke up with each brother acquiring control of different business areas. While the oil and gas business went to elder brother Mukesh, Anil had control of the power business.
As part of the division of the group, RIL was demerged and Reliance Natural Resources LTD (RNRL) was formed to act as a conduit for the gas from the KG basin to REL.
All RIL shareholders were made RNRL shareholders, except that Mukesh's holding in the parent company was substituted by Anil in the new firm. Thus, RNRL was part of the Anil Dhirubhai Ambani group (ADAG).
MoU singed between RNRL-RIL in 2005
What is the MoU often referred to?
In 2005, RNRL and RIL signed a memorandum of understanding (MoU) on the terms under which gas would be supplied for the Dadri project . This MoU specified that the price at which the gas would be supplied would be the same as the price at which RIL would supply gas to an NTPC project. NTPC had invited global bids for supply of gas in 2003 and RIL finally won the bid and was issued a letter of intent by NTPC in June 2004.
The price quoted by RIL in its bid was $2.34 per mmbtu (million metric British thermal units). So what’s the dispute about? RIL argues that the $2.34 per unit price is not applicable to its deal with RNRL for various reasons. First, gas prices had since the 2005 MOU risen sharply.
Second, it has not concluded a deal with NTPC on that price, since it had some issues pertaining to damages it would have to pay in case of failure to supply the agreed quantity of gas. Hence, it says, there is no NTPC price to be followed as per the MOU with RNRL. Third, it says under the PSC signed with the government, the government has the final say on the price at which it can sell gas to third parties and in fact can even dictate to whom the gas should be sold.
RNRL contests each of these claims. It argues that international gas prices have historically been much higher than Indian prices and so that can't be a benchmark . Further, the bid price for the NTPC project must be followed under the MOU irrespective of whether or not RIL and NTPC have finalized their deal. Finally, it maintains that the government only has the right under the PSC to fix the price at which gas will be valued for the purpose of determining the government's share of revenues from the project. RIL, it insists , is free to sell its share of the gas at whatever price it decides.
RNRL-RIL gas row
Where did the price of $4.2 per unit come from?
In May 2007, RIL invited bids from various gas users like power and fertilizer companies and on that basis arrived at a price of $4.2 per, which was then approved by the petroleum ministry as a market-determined price.
RNRL alleges that this was an eyewash and an orchestrated auction between small time users and that the ministry has been partisan towards RIL in the whole issue.
Governments involvement in RIL-RNRL gas row!
How did the government get involved?
When, after sustained pressure from RNRL, RIL sought approval of the government for the price of $2.34 per unit, the government refused. It said the price was not marketdetermined and in any case gas was a national asset and its allocation could not be decided by some private agreement between two brothers.
ADAG points out that the ministry's stance in the matter which suits RIL's current position — has been a feature since Murli Deora became the petroleum minister in 2006.
How are courts involved? Following RIL's refusal to supply gas at the terms specified in the MOU with RNRL, the Anil group company went to the Bombay HC seeking an order to RIL to follow the terms of the MOU.
The Bombay HC finally in June this year passed an order that RIL must renegotiate a deal with RNRL that would make suitable arrangements for supply of gas. It also added that the basis for such an arrangement must be the scheme of demerger agreed between the brothers in 2005.
RNRL has now gone to the Supreme Court seeking a direction from the apex court that the HC order on renegotiation should be set aside and RIL should be asked to supply gas under the terms of the MoU.
via: E.T
Wednesday, October 7, 2009
RIL to issue bonus shares, ratio 1:1
7 Oct 2009, 2000 hrs IST, PTI
Investors' darling Reliance Industries today announced issue of bonus shares after a 12 year-hiatus, a move that analysts expect would flare up the markets on the eve of Diwali.
The company founded by Dhirubhai Ambani, credited for drawing retail investors to stock markets in the 1970s, recommended an issue of one bonus share for every share held by shareholders and would help unlock value.
The shares fell 1.57 per cent to Rs 2,099 on the Bombay Stock Exchange, but is expected to jump after the unscheduled announcement.
The board has also approved a dividend of Rs 13 per fully paid-up equity share of Rs 10 of the company to the shareholders, Reliance Industries CFO Alok Agarwal said.
Analysts said that the surprise announcement of a bonus issue by RIL, will definitely act as trigger for the market tomorrow.
"This comes as a big surprise to the shareholders of Reliance Industries and would propel investor sentiment. The scrip, which has been under-performing for the past few days, is likely to open strong. It is a move by RIL to win back ivestor confidence," SMC Global Vice President Rajesh Jain said.
The last time Reliance Industries announced a bonus issue was in October 1997.
"Both the bonus shares and dividend will accrue to the shareholders of RPL," RIL CFO Agarwal said.
Geojit BNP Paribas Financial Services Research Head Alex Mathew said, "The company had last announced a bonus issue way back in 1997, so this is good move in the interest of investors. However, after an initial surge some profit booking may come into the stock later in the day."
The bonus issue could help regain flagging investor confidence in the scrip.
RIL scrip has been on a downslide since October one and has plunged over four per cent to Rs 2,099 today from Rs 2,201 on September 30.
Reliance Power, part of the other Reliance group led by Anil Ambani, had announced a 3:5 bonus issue in February 2008 after its disappointing debut at the bourses.
"The proposal for bonus and dividend continue RIL's tradition of awarding shareholders on a sustained basis. If we look at our track record since we listed in 1978, our shareholders have got 25 per cent compounded return over these 31 years since it became a public company," Agarwal said.
"The announcement can act as a trigger point for the stock (RIL) which was mired in controversy. RIL management is convinced that it can serve the investor interest and so it is thinking about increasing the equity share capital. It can hold up the momentum and the counter can outperform the Sensex in the coming days," Unicon Financial CEO G Nagpal said.
via: E.T
Investors' darling Reliance Industries today announced issue of bonus shares after a 12 year-hiatus, a move that analysts expect would flare up the markets on the eve of Diwali.
The company founded by Dhirubhai Ambani, credited for drawing retail investors to stock markets in the 1970s, recommended an issue of one bonus share for every share held by shareholders and would help unlock value.
The shares fell 1.57 per cent to Rs 2,099 on the Bombay Stock Exchange, but is expected to jump after the unscheduled announcement.
The board has also approved a dividend of Rs 13 per fully paid-up equity share of Rs 10 of the company to the shareholders, Reliance Industries CFO Alok Agarwal said.
Analysts said that the surprise announcement of a bonus issue by RIL, will definitely act as trigger for the market tomorrow.
"This comes as a big surprise to the shareholders of Reliance Industries and would propel investor sentiment. The scrip, which has been under-performing for the past few days, is likely to open strong. It is a move by RIL to win back ivestor confidence," SMC Global Vice President Rajesh Jain said.
The last time Reliance Industries announced a bonus issue was in October 1997.
"Both the bonus shares and dividend will accrue to the shareholders of RPL," RIL CFO Agarwal said.
Geojit BNP Paribas Financial Services Research Head Alex Mathew said, "The company had last announced a bonus issue way back in 1997, so this is good move in the interest of investors. However, after an initial surge some profit booking may come into the stock later in the day."
The bonus issue could help regain flagging investor confidence in the scrip.
RIL scrip has been on a downslide since October one and has plunged over four per cent to Rs 2,099 today from Rs 2,201 on September 30.
Reliance Power, part of the other Reliance group led by Anil Ambani, had announced a 3:5 bonus issue in February 2008 after its disappointing debut at the bourses.
"The proposal for bonus and dividend continue RIL's tradition of awarding shareholders on a sustained basis. If we look at our track record since we listed in 1978, our shareholders have got 25 per cent compounded return over these 31 years since it became a public company," Agarwal said.
"The announcement can act as a trigger point for the stock (RIL) which was mired in controversy. RIL management is convinced that it can serve the investor interest and so it is thinking about increasing the equity share capital. It can hold up the momentum and the counter can outperform the Sensex in the coming days," Unicon Financial CEO G Nagpal said.
via: E.T
RIL announces bonus bounty
A surprise bonus issue announced by India's biggest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) after trading hours may boost the bourses at the onset of the trading session on Thursday, 8 October 2009,
Despite correction in broad market, the market breadth was positive, although it was not as strong as it was in the opening session. Index heavyweight RIL which surprised the street with a liberal 1:1 bonus announcement after market hours.
Despite correction in broad market, the market breadth was positive, although it was not as strong as it was in the opening session. Index heavyweight RIL which surprised the street with a liberal 1:1 bonus announcement after market hours.
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