IOB to raise $500 million through overseas bond sale

State-owned lender Indian Overseas Bank (IOB) announced here today that it plans to raise USD 500 million through a medium-term bond sale shortly. The bank has already received approval to raise up to USD 1 billion from its board.

State-owned lender  Indian Overseas Bank (IOB) announced here today that it plans to raise USD 500 million through a medium-term bond sale shortly. The bank has already received approval to raise up to USD 1 billion from its board.

"Currently, the market is very right. So, when we see good appetite from corporates, we will raise USD 500 million out of our medium term note programme," Indian Overseas Bank's outgoing Chairman and Managing Director M Narendra, who retires tomorrow, told reporters here.

He said that the bank would require Rs 3,500 crore as fresh capital during the current fiscal.

Also read: Indian Overseas Bank Q1 net zooms over 2-fold to Rs 271cr

"We have asked some amount from the government also. Last year, we got Rs 1,200 crore from the government and we hope this year we get a similar amount," Narendra said.

The bank also plans to raise some funds through Qualified Institutional Placement, but its timing and amount would be decided after government and Reserve Bank approvals.

In the quarter ended June, the bank's net profit more than doubled to Rs 271.72 crore from Rs 125.80 crore. Total income was tad up at Rs 6,284.69 crore compared to Rs 6,187.15 crore in the year-ago quarter.

Gross NPAs stood at 5.84 percent as against 4.45 percent, while net NPA increased to 3.85 percent from 2.81 percent in the year-ago period. Provision coverage ratio as on June 30 stood at 52.85 percent.

IOB stock price

On July 31, 2014, at 14:13 hrs Indian Overseas Bank was quoting at Rs 70.50, down Rs 0.4, or 0.56 percent. The 52-week high of the share was Rs 89.90 and the 52-week low was Rs 37.15.

The company's trailing 12-month (TTM) EPS was at Rs 6.05 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 11.65. The latest book value of the company is Rs 130.90 per share. At current value, the price-to-book value of the company is 0.54.

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Gulf Oil's RoE to be 30-35%: PBT to touch Rs 140cr in FY15

The Hinduja Group-owned Gulf Oil Corporation  on Thursday demerged its lubricants business to Gulf Oil Lubricants India Ltd and listed the latter as a separate entity on both domestic stock exchanges under the 'Gulf Oil' brand.

Sanjay Hinduja, Chairman of Gulf Oil Lubricants India is confident of the company's profit before tax (PBT) to grow significantly and touch Rs 140 crore in the coming fiscal itself.

In addition, EBIDTA margin is anticipated to improve substantially coupled with a double-digit topline growth, he says in an interview with CNBC-TV18 adding that Gulf Oil's return on equity (RoE) will advance to 30-35 percent.

Below is the edited transcript of the interview:

Q: Can you take us through the financials of the company in terms of projection for the current financial year and next financial year?

A: In terms of PBT, last year we closed around Rs 103 crore and this year expectation is to do significantly better than that and it terms of EBITDA Margins we are around 12 percent. I am expecting double-digit topline growth, both this year and going forward '15-16. We are in a growth pattern at the moment and all investments have been made for capturing this double digit growth.

Q: Can you focus a bit on your profits and what are the projections at least that you are working with in the foreseeable future?

A: Profit after tax (PAT) level we would be around Rs 70 crore plus and again the plan is to deliver significant value to the shareholders so PAT also will continue to grow northwards as we deliver double digit revenue growth.

Q: In that case, can you tell us if you would see some improvement in your return on assets and return on equity going forward?

A: Definitely, yes and this is one of the reasons we went ahead with this whole demerger process and we have been looking at this for the last one year and we can achieve those numbers. Of course on the other side, as you know on the real estate side also work has commenced on the Bangalore project. So I am expecting also on the Gulf Oil Corporation Limited side with the land projects now beginning to deliver revenue, I am sure both stocks will perform very well.

Q: Market share for lubricant side is around 5 percent. Where will the growth come from and what is the expected market share as well?

A: We are going to focus more on B2B tractor. We are going to be announcing in the next two weeks and other major OE tie-up. So, in terms of volumes, as I have mentioned before, the goal is to be the top three amongst the private sector players.

Q: Going back to number projection, for full year '15 can we expect a profit of Rs 100 crore or so?

A: On the PBT side right now, we are definitely looking at FY15 in excess of Rs 140 crore. So we are there near about I would say.

Q: And capex?

A: Yes we have acquired land in Chennai and we are going ahead with a second plant in Chennai, and I am expecting that will cost around Rs 120-130 crore and debottlenecking is happening in the existing plant in Silvassa which is Rs 30-40 crore.

Q: What about the promoter stake, are promoters looking to increase stake in the company going forward?

A: The promoter group GOI already has 60 percent, so we are well over 50 percent minimum. Therefore, we have no such plans for the moment.

Gulf Oil Corp stock price

On July 31, 2014, at 14:14 hrs Gulf Oil Corporation was quoting at Rs 153.00, down Rs 8.25, or 5.12 percent. The 52-week high of the share was Rs 197.00 and the 52-week low was Rs 62.10.

The company's trailing 12-month (TTM) EPS was at Rs 11.77 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 13. The latest book value of the company is Rs 232.56 per share. At current value, the price-to-book value of the company is 0.66.

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FDA raises concern over drug production process at Cadila

The FDA has not expressed concerns over the entire facility, said the sources. The US agency communicated its concern to Cadila in a Form 483, a letter in which the agency typically outlines violations of standard manufacturing practices.

The US Food and Drug Administration (FDA) has expressed concerns over the manufacturing process of at least one product at drugmaker Cadila Healthcare Ltd 's Moraiya facility, two sources with direct knowledge of the matter said.

The FDA has not expressed concerns over the entire facility, said the sources. The US agency communicated its concern to Cadila in a Form 483, a letter in which the agency typically outlines violations of standard manufacturing practices.

Once the Form 483 is sent, the company has 15 days to respond before the FDA takes any further action.

The FDA inspected the Moraiya plant, based in Gujarat, in the second week of July, one of the sources said.

The sources declined to be named as the information is not public yet. A Cadila spokeswoman declined to comment.

Cadila's shares dropped as much as 10.5 percent on Thursday and were trading down 5.3 percent to 1,106.50 rupees at 1:01 p.m., while the broader Nifty was down 0.22 percent.

Also read:  Cadila Health Q1 profit up 23% to Rs 240 cr led by US sales

Cadila Health stock price

On July 31, 2014, at 14:13 hrs Cadila Healthcare was quoting at Rs 1110.00, down Rs 55.45, or 4.76 percent. The 52-week high of the share was Rs 1195.00 and the 52-week low was Rs 631.00.

The company's trailing 12-month (TTM) EPS was at Rs 43.13 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 25.74. The latest book value of the company is Rs 177.28 per share. At current value, the price-to-book value of the company is 6.26.

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Cipla, BioQuiddity ink pact to sell pain management product

The pact between Cipla Europe (CE) NV, the company's wholly owned arm, and BioQuiddity Inc will cover countries in Europe, the company said in a statement.

Pharmaceutical firm Cipla  today announced a partnership with US-based BioQuiddity Inc for collaboration to sell the latter's post-surgical pain management product OneDose ReadyfusORTM in Europe.

The pact between Cipla Europe (CE) NV, the company's wholly owned arm, and BioQuiddity Inc will cover countries in Europe, the company said in a statement.

The Indian firm intends to launch the CE marked OneDose ReadyfusOR pre-filled with Ropivacaine under its own label into the German market late this year, it added.

"Cipla believes that this post-surgical pain product candidate presents a unique opportunity to provide an easy to use, well-tolerated, and efficient regional anesthesia system that could make savings for healthcare providers and patients," Cipla Europe Head Frank Pieters said.

BioQuiddity President and CEO Joshua Kriesel said: "Cipla's strong commercial record puts them in an outstanding position to detail the OneDose ReadyfusOR's safety, sterility, and ease of use value proposition objectives.

Also read:  FDA raises concern over drug production process at Cadila

Cipla stock price

On July 31, 2014, at 14:15 hrs Cipla was quoting at Rs 460.20, up Rs 12.50, or 2.79 percent. The 52-week high of the share was Rs 462.65 and the 52-week low was Rs 366.70.

The company's trailing 12-month (TTM) EPS was at Rs 17.29 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 26.62. The latest book value of the company is Rs 127.76 per share. At current value, the price-to-book value of the company is 3.60.

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ICVL to buy Rio Tinto's coal assets in Mozambique for $50m

ICVL - a joint venture company of Steel Authority of India (SAIL), Coal India, Rashtriya Ispat Nigam and NMDC - will buy the Tete East project and the Benga mine, which will give it captive coal mines.

State-owned International Coal Ventures Pvt Ltd (ICVL) has signed an agreement to buy Rio
Tinto's coal assets in Mozambique for USD 50 million.

ICVL - a joint venture company of Steel Authority of India ( SAIL ), Coal India , Rashtriya Ispat Nigam and NMDC  - will buy the Tete East project and the Benga mine, which will give it captive coal mines.

Rio Tinto had bought these assets as part of acquisition of Riversdale Mining Limited in 2011.
The acquisition will be the first of ICVL since its inception in 2009. "The sale is subject to certain conditions precedent and regulatory approvals. The transaction is expected to close in the third quarter of 2014," Rio Tinto said in a statement today.

During the transition to the new owner, Rio Tinto will continue to manage the mine to the highest safety and environmental standards. Rio Tinto's other assets in the country are unaffected by this transaction, it said.

SAIL stock price

On July 30, 2014, at 14:10 hrs Steel Authority of India was quoting at Rs 86.80, down Rs 0.15, or 0.17 percent. The 52-week high of the share was Rs 112.90 and the 52-week low was Rs 37.65.

The company's trailing 12-month (TTM) EPS was at Rs 6.33 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 13.71. The latest book value of the company is Rs 105.66 per share. At current value, the price-to-book value of the company is 0.82.

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Vedanta first-quarter core earnings rise marginally

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to USD 1.04 billion for the quarter ended June 30 from USD 1.03 billion a year earlier.

Diversified miner Vedanta Resources Plc ground out a marginal increase in quarterly core earnings as its oil and gas and aluminium businesses offset a decline in zinc and copper.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to USD 1.04 billion for the quarter ended June 30 from USD 1.03 billion a year earlier.

Revenue increased 7 percent to USD 3.06 billion.

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Is China's low-cost airline sector set for takeoff?

Following last year`s unprecedented policy change, China`s budget carriers are poised to soar and may hold the key to the future of aviation in the mainland, an analyst told CNBC.

"The future growth of aviation in the mainland will be budget travelers, as well as tourists looking to travel domestically and within Asia via low-cost carriers," said Jonathan Galaviz, partner at Global Market Advisors.

"The Chinese central government clearly indicated that they are looking for companies like China Eastern to... service customers like AirAsia or Southwest Airlines [do] in the US", Galaviz added, referring to state-run carrier China Eastern`s decision to convert a subsidiary into a low-fare unit early this month.

Beijing`s decision last year to lift a six-year ban on the formation of new airlines jumpstarted the low-cost carrier (LCC) market. Incentives including a cut in airport charges and simplifying approvals provided a further boost earlier this year.

Budget carriers, led by Shanghai-based Spring Airlines, currently account for 5 percent of China`s total air travel, according to Reuters. The untapped potential in China`s aviation market - the world`s second largest - attracted a wave of new entrants including HNA Group`s West Air and Jiuyuan Airlines.

Profit concerns

Explosive growth in the sector raised concerns that growing competition could hurt profitability but Global Market Advisors` Galaviz is optimistic.

"As long as China`s population remains 1.3 billion and more, there will be huge opportunities for airlines, tourism and travel. For example, the entry of Chinese tourists into Macau can be a very big play for budget airlines with the domestic market strategy. So this is a very ripe market and overall, the opportunity is very strong." said Galaviz.

Domestic air routes, including Hong Kong and Macau, saw an 11 percent on-year increase to over 690 million passengers last year, statistics from the Civil Aviation Administration of China showed.

Competition may also come from other transport means amid reports that China`s growing high-speed rail network has seen the termination of some shorter flight routes.

However, Will Horton, analyst at Sydney-based Centre for Aviation told CNBC: "There is limited overlap between high-speed rail and airlines. The former is not across every route, or even a majority as of yet."

Regulations

Challenges remain for China`s low-cost carrier segment.

"The biggest challenges at present are establishing a low-cost base and seeing what exactly the regulatory environment will permit LCCs to do. We`ve yet to see a new LCC launch with a thorough low-cost offering since last year`s reforms," Horton said.

"Chinese passengers like the rest of the world want cheap air fare but they demand quality so airlines will need to communicate what they offer. China`s LCCs will not in the short-term dominate short-haul travel the way AirAsia does in Southeast Asia or Ryanair does in Europe but this genie is not going back in the bottle. There is a well-reasoned national imperative to support this development," he added.

Copyright 2011 cnbc.com

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Decoding Tata Group's Cyrus Mistry

More than a year after Cyrus Mistry took charge at Bombay House, the media and employees of Tata Group were still starved to hear what exactly Mistry wants the future of Tata Group to achieve, until recently when Mistry came out of the shadow of former Chairman Ratan Tata and put across his vision for the 600,000 employees of the USD 100 billion group.

Nearly 2000 employees who were present at NCPA on July 29th, were impressed by the articulation of the youngest chairman of the Tata Group, when he presented the Vision 2025.

Employees who heard the Chairman at AGLC 2014 were enthused by the vision that will take the group to be counted amongst top 25 group globally.

My takeaway from those who heard the Cyrus Mistry face-to-face allows me draw a rough sketch of how Cyrus Mistry thinks. Mistry came across many as a confident group leader who knows what the group needs to achieve.

With 70% of groups' revenues now coming from global markets! Mistry wants Tata group to be compared to global peers. His attempt to compare the group to Pepsico, Ford Motors, Bank of China is nothing but benchmarking group's thinking process 'Global'.

(Also Read: Tata Motors at 'inflexion point', portfolio revamp underway )

Mistry may be the first Tata Group Chairman who has his eyes on profitability, not to say others didn't. But he articulated this very clearly to the group leaders. The fact that Mistry want to revert to 8.5% of operating margins is significant. He says a successful achievement of the 2008 margins will add USD 2.5 bn in cash flows. Something which is needed if the group wants to invest USD 35 billion in the next 3 years. Remember this investment equals group's current networth. Clearly as one of the largest shareholder of the group, he wants shareholder return to run parallel to groups' philanthropic philosophy.

Mistry wants the group to transform into a young organisation, wants to bring in more women in the group and boardrooms, including getting them into the GEC.   

Tata Sons invested USD 4.6 billion in the last decade in group companies, but that was primarily for inorganic growth and acquisitions. This would continue but it will also bring in sharper focus. And that's why when he says companies and geographies may see consolidation, he means 'perform or perish'.

My guess is, under Cyrus Mistry the Tata Group will see more aggression and decisiveness in terms of sectors they would like to be present.

And that's evident when Tata Sons withdrew itself from banking foray, Mistry says the group can leverage technology and many touch points through various business it runs to create a global financial services business, but if the risk weigh very high for the group's entry into the banking sector, then it is willing to let go the opportunities it dreamt of for decades.

Tata Group also created clusters to focus on - financial services, consumer and retail, defence and aerospace and realty and infrastructure. Though of the USD 138 billion market cap,  TCS accounted for over USD 100 billion, he clearly sees the next TCS emerge from this cluster. Mistry may not know who will be the next TCS within the group, he has narrowed it down to these four clusters. And these clusters don't include telecom, steel or automobiles. Not that these last three sectors aren't important, it may be that he knows it may be difficult get another TCS from these three sectors.

Mistry has articulated customer centric approach, scale, prospects and shareholder value at the same time profitability as a key metrics to watch out for. He says market cap and growth has to walk in tandem to achieve Vision 2025 - which will allow 25% of the world population to experience Tata products and count Tata Group to be amongst the top 25 globally amongst market cap.

And though the top leadership of Tata Group got a glimpse of what their relatively Young Chairman wants from them, the Media is yet to get a face to face interaction to decode Cyrus Mistry.

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MapmyIndia launches offline navigation app for Apple's iOS

Digital mapping firm MapmyIndia today launched offline navigation map, NaviMaps, for Apple's iOS for Rs 620 that will be able show house level addresses in around 80 Indian cities.

Digital mapping firm MapmyIndia today launched offline navigation map, NaviMaps, for Apple's iOS for Rs 620 that will be able show house level addresses in around 80 Indian cities.

"Millions of Apple users in India can now enjoy this app which features, for the first time in India, house-level navigation, regional language voice guidance in 10 languages and international navigation which included Sri Lanka, Bangladesh & Nepal," MapmyIndia Managing Director Rakesh Verma said in a statement.

The NaviMaps will work even if the phone does not have access to internet connection.

The application has house level data for all major Indian cities which include Delhi NCR, Mumbai, Pune, Chandigarh, Kolkata, Hyderabad, Chennai, Bangalore and Jaipur.

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NPPA's unilateral stand-off unhealthy for sector: Biocon

CII National Committee on Biotechnology Chairperson and Biocon CMD Kiran Mazumdar Shaw has written an open letter to the Prime Minister, seeking his intervention over "unilateral fixing" of drug prices by NPPA .

The government has to behave like a partner with the industry to address the healthcare issues.

Kiran Mazumdar Shaw

CMD

Biocon

The Indian Pharmaceutical Alliance (IPA) and the Organisation of Pharmaceutical Producers of India (OPPI) have taken the National Pharmaceutical Pricing Authority (NPPA) to court over a recent pricing order mandating price ceilings of several drugs.

Infact CII National Committee on Biotechnology Chairperson and Biocon  CMD Kiran Mazumdar Shaw has written an open letter to the Prime Minister Monday.

In her letter she has sought PM Narendra Modi's intervention over "unilateral fixing" of drug prices by NPPA saying the exercise based on "an inequitable formula" has done collateral damage to indigenous industry.

Below is the transcript of Kiran Mazumdar-Shaw's interview with CNBC-TV18's Shereen Bhan.

Q: The news that we have broken today is that the IPA and the OPPI have now decided to move court and have served a legal notice on this issue of price control. However our sources within the government and within the NPPA say, that the entire national list of essential medicines is under review and we are likely to see a new list by July 2015. It is implicit perhaps in the conversation that we have had that may be that list is going to be widened even further, your first reaction?

A: This kind of unilateral stand-off that is being created by NPPA is extremely unhealthy for such an important sector like the Indian pharma sector. The whole contentious issue that is being debated by the Indian pharma industry is the high handed unilateral measures taken by NPPA in arriving at the so called price ceiling formula. That is what the whole objection is about. Price ceiling per se is not the issue.

Q: What we are also being told is that this new price review order which was issued on July 10 is an interim arrangement, it is valid only for a year up until the government formalizes and puts forward the new list of National List of Essential Medicines which is expected in July 2015 making para 19 of the DPCO irrelevant perhaps?

A: The whole point is there has been no stakeholder consultation on arriving at an equitable formula. Today they have taken a simple average formula which cuts across different kinds of pharmaceutical companies from small to large, there is no semblance of reference to any of return on investments made by these kind of companies, there is no comparable basis on which these prices have been even referenced. So, there is a huge flaw in the way this price ceiling has been arrived at and that is really the contentious issue.

The government has to behave like a partner with the industry to address the healthcare issues. There are many market mechanisms available to bring in price discounting like government tenders where you are clearly seeing huge discounting on these very drugs.

Q: You have actually written and open letter to the Prime Minister, any response yet?

A: No response as yet. I am hoping that I will get a response soon.

Biocon stock price

On July 28, 2014, Biocon closed at Rs 465.15, down Rs 14.9, or 3.1 percent. The 52-week high of the share was Rs 553.70 and the 52-week low was Rs 312.00.

The company's trailing 12-month (TTM) EPS was at Rs 15.84 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 29.37. The latest book value of the company is Rs 120.89 per share. At current value, the price-to-book value of the company is 3.85.

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New Jaguar XE sedan to make global debut in September

The Jaguar XE will use a new grade of high strength aluminium called 'RC 5754', which has been developed specifically for the XE, the company said in a statement.

Tata Motors -owned Jaguar Land rover will hold the global premiere of the new Jaguar XE luxury sedan in London on September 8 with which it is looking to bring new levels of aluminium-intensive lightweight construction expertise to the segment.

The Jaguar XE will use a new grade of high strength aluminium called 'RC 5754', which has been developed specifically for the XE, the company said in a statement.

"This new alloy features a high level of recycled material and makes a significant contribution to Jaguar's goal of using 75 percent recycled material by 2020," it said.

Commenting on the new product, Jaguar's Chief Technical Specialist Mark White said: "The Jaguar XE body uses over 75 percent aluminium content, which far exceeds any other car in its class."

He further said: "We've made sure our aluminium-intensive body structure exceeds all global safety standards without compromising on vehicle design or refinement."

Designed and engineered in the UK, the Jaguar XE will be the first Jaguar to be manufactured at a new purpose-built production facility at the company's Solihull plant in the West Midlands in the UK.

"The world premiere of the new Jaguar XE will be held in London on September 8," the company added.

It further said the XE is projected to deliver fuel economy of less than 4 litres/100km on EU combined cycle.

JLR has been focussing on lightweight construction for its Jaguar brand. The Jaguar XJ, XK and F-Type have all been developed using aluminium structures. The XE becomes the
latest model to use aerospace-inspired technology in cars.

Tata Motors stock price

On July 28, 2014, Tata Motors closed at Rs 453.15, down Rs 8.75, or 1.89 percent. The 52-week high of the share was Rs 488.05 and the 52-week low was Rs 272.50.

The company's trailing 12-month (TTM) EPS was at Rs 1.04 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 435.72. The latest book value of the company is Rs 59.58 per share. At current value, the price-to-book value of the company is 7.61.

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CoalMin to review status of formation of JV, SPV next week

Kick-starting the process of coal blocks allocation, the government had last year allocated 17 coal mines - 14 to power and 3 to mining public sector undertakings (PSUs).

The Coal Ministry has convened a meeting next week to review the progress on setting up special purpose vehicles (SPV) and joint ventures (JV) among state-owned firms which have been jointly allocated coal blocks.

"Additional Secretary, Ministry of Coal, will hold a meeting with the representatives of the state government on August 4...to review the current status of formation of SPV/JV
company amongst the state government companies/corporations, those who have been allocated coal blocks jointly for the end use i.e power as well as for mining," according to the meeting notice.

The Coal Ministry had earlier asked states to advise the companies that have been allocated mines to either form SPVs or JVs for projects.

Kick-starting the process of coal blocks allocation, the government had last year allocated 17 coal mines - 14 to power and 3 to mining public sector undertakings (PSUs).

Of the 14 blocks alloted to power PSUs, four were alloted to NTPC.

Other power PSUs that were allocated mines included Neyveli Uttar Pradesh Power Ltd, Odisha Thermal Power Corp, Jammu & Kashmir State Power Dev Corp, Chhattisgarh State Power Gen Co Ltd, Andhra Pradesh Generation Co, Maharashtra State Power Generation Co, Rajasthan Vidyut Utpadan Nigam and Punjab State Power Corp Ltd.

Three three blocks were alloted to mining PSUs like Jharkhand State Mineral Development Corp and MP State Mining Corporation Ltd.

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Australia approves Adani's $15.5bn Carmichael coal project

The Carmichael mine, which could become Australia's largest coal mine producing 60 million tonne a year, has sparked protests from green groups and marine tour operators concerned about export of the coal from a port near the Great Barrier Reef.

Moneycontrol Bureau

The Australian government on Monday approved Gujarat-based Adani Mining Pty Ltd's USD 15.5 billion Carmichael coal and rail project in Queensland, subject to strict conditions to protect groundwater.

The Carmichael mine, which could become Australia's largest coal mine producing 60 million tonne a year, has sparked protests from green groups and marine tour operators concerned about export of the coal from a port near the Great Barrier Reef.

"The strict conditions will ensure the protection of the environment as a paramount concern," Australia's environment minister, Greg Hunt, said in a statement.

The coal from the Carmichael mine will be transported via a 400-km railway line to Abbot Port, where the company owns a shipping terminal, and from there it will be exported to India. Adani says the coal will help meet the country's rising power demands.

Adani  acquired the port, which is near the Great Barrier Reef, in 2011 and will have to expand it in order to ship the coal.

Post Q2FY14 results, the Adani management had indicated that in light of subdued imported coal prices, its Australian capex plans are currently on hold and no material capex is expected at least in FY14. It said the coal production may commence in FY18-19.

(With inputs from Reuters)

Adani Enterpris stock price

On July 23, 2014, Adani Enterprises closed at Rs 444.25, down Rs 2.6, or 0.58 percent. The 52-week high of the share was Rs 585.00 and the 52-week low was Rs 126.05.

The latest book value of the company is Rs 91.24 per share. At current value, the price-to-book value of the company was 4.87.

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Reliance Power to buy Jaiprakash's hydropower business

Moneycontrol Bureau

Anil Ambani-led  Reliance Power has acquired the 1800 MW hydroelectric power assets of Manoj Gaur led Jaypee Group worth over Rs 10,000 crore.  On Sunday, a MoU was signed between Reliance CleanGen (RCL), a 100 percent subsidiary of Reliance Power, and Jaiprakash Power Ventures (JPVL), a subsidiary of  Jaiprakash Associates (JAL), for the 100 percent acquisition by RCL of the entire hydroelectric power portfolio of JPVL.  

If this deal goes through, Reliance Power will become one of the largest provider of hydroelectric power in India's private sector with 7,800 MW operating capacity by end of FY15.  

JPVL's portfolio comprises of 3 plants, with an asset life of over 50 years, each using run-of-the-river technology to convert natural water flow to electricity, eliminating the need for a large reservoir. These plants include 300 MW Baspa stage two plant in Kinnaur, Himachal Pradesh, a 400 MW Vishnuprayagn plant Chamoli District, Uttarakhand and 1091 MW Karcham Wangtoo plant in Himachal Pradesh.

Reliance Power has its own hydro electric power projects aggregating over 5,000 MW, however, all under development. On the other hand, JPVL, which was the largest hydro power operator in the private sector, has all operational assets. The generation capacity and size of the assets being acquired would make it the largest M&A deal in India's infrastructure and power sector, for which SBI Capital Markets is acting as advisors for the proposed transaction.

Jaypee Group intends to utilise the entire proceeds of the proposed transaction to reduce its outstanding debt, and thereby deleverage its consolidated balance sheet, said a company statement.  

The Jaypee Group had sold its two hydro power projects in Kinnaur district to a consortium led by Abu Dhabi National Energy Company PJSC (TAQA), the international energy and water company from Abu Dhabi, for Rs 10500 crore, but the deal soured.  

Debt-ridden Jaypee Power management seems to reassure its investors that there is a Plan B in place. This deal is imperative for JPVL, which is facing huge project cost overruns.  

The company has equity commitments of Rs 2,000-2,500 crore just for this year. JPVL's board has already sought extension of approval from shareholders to raise Rs 3,000 crore funds through various options (QIP/ECB with right of conversion into shares / FCCBs/ ADRs/ GDRs/ FPO, preference shares, etc), hitherto valid up to July 2014.

Reliance Power has a debt of Rs 30,000 crore on its books and cash of approximately Rs 3,000 crore. In all likelihood, analysts say, it will have to come to the markets to raise funds for the buyout.  However, since all three plants of Jaypee are operational, they should be able to service their debts.

A Reliance Power spokesperson told CNBC-TV18 that there will be no issuance of equity at the company level. The deal, which it expects to close within the next six-months, will be EPS and RoE accretive from day one, he said.

Reliance Power stock price

On July 28, 2014, at 14:10 hrs Reliance Power was quoting at Rs 92.70, up Rs 1.85, or 2.04 percent. The 52-week high of the share was Rs 112.35 and the 52-week low was Rs 60.10.

The company's trailing 12-month (TTM) EPS was at Rs 0.07 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 1324.29. The latest book value of the company is Rs 60.18 per share. At current value, the price-to-book value of the company is 1.54.

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Cyrus Poonawalla ups the ante for Sahara's Grosvenor House

Considered a royal himself among the business elite, Poonawalla is up against the group backed by the royal family of Qatari and Sultan Hassanal Bolkiah of Brunei, considered to be one of the richest men in the world.

Cash-rich pharma billionaire Cyrus Poonawalla has upped the ante on his offer to buy out beleaguered Sahara Group's coveted overseas asset, the Grosvenor House Hotel in London. Sources say Poonawalla, who first bid for the hotel at 475 million pounds, could go as high as 550 million pounds.  

Sahara, which needs to cough up Rs 10,000 crore to secure bail for its founder and chief Subrata Roy, has valued Grosvenor House at 519 million. Considered a royal himself among the business elite, Poonawalla is up against the group backed by the royal family of Qatari and Sultan Hassanal Bolkiah of Brunei, considered to be one of the richest men in the world.

Poonawalla, though very serious about acquiring the asset, does not fancy entering into a bidding war. "We will not go down the auction route for Grosvenor House," he told CNBC-TV18. The Sahara Group is looking to sell three of its overseas assets— Grosvenor House, The Plaza and Dream Downtown hotels in New York — to raise Rs 24,000 crore it owes to the investors of its two companies.

Unlike the other bidders Poonawalla is only interested in Sahara's London property, which analysts say can go against him as the desperate Roy camp may go for a suitor who would be keen to buy its entire portfolio.

Nevertheless, Poonawalla is looking at an all-cash deal for Grosvenor House, which he plans to finance without any partner assistance. He wants to diversify into the brick and mortar business and considers real estate as a safe investment with good returns. "We are looking at real estate, hospitality assets in India," he told the channel.

Also Read: Supreme Court denies bail to Sahara supremo Subrata Roy

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CV sales to improve Q2 onwards; to cut costs: Ashok Leyland

In the analyst call, the company said it expected the economy to recover in the second half of this financial year, leading to increased demand for commercial vehicles.

Moneycontrol Bureau

Commercial vehicle major  Ashok Leyland sees sales of its medium and heavy commercial vehicles (M&HCV) improving from the second quarter of this financial year, the company told analysts in a conference call to discuss first quarter earnings.

The truck and bus manufacturer narrowed its first quarter loss to Rs 48 crore , compared to Rs 142 crore same period last year. Quarterly revenues rose 5 percent to Rs 2500 crore.

In the analyst call, the company said it expected the economy to recover in the second half of this financial year, leading to increased demand for commercial vehicles.

The company said the southern markets have seen a good recovery, and this trend is expected to continue because of the resumption of mining activity. It said tipper truckers and tractors were being ordered in anticipation of a revival in the economy.

The company's market share in the M&HCV segment rose to 25.5 percent in the June quarter, compared to 23.2 percent last year. Sales of its tipper trucks and tractors too saw an improvement, the company said.

Ashok Leyland said it will sell its loss-making arms and try to bolster its balance sheet. The subsidiaries include Albonair GMBH in Germany and Avia Ashok Leyland in Czech Republic.

Already, debt is down to Rs 4500 crore after the company raised Rs 666 crore through a qualified institutional placement (QIP) earlier this month. The debt to equity ratio now stands at 1.18:1.

However, the company is still trying to improve its working capital cycle. Operating working capital has risen to Rs 457 crore from Rs 244 crore, and the working capital cycle has risen to 12-13 days from 8 days earlier.

The company attributed the increase to higher pre-production on account of orders from JNNURM and from Sri Lanka.

It expects the working capital cycle to stay within 12-13 days band and not worsen further.

Other expenses in the June quarter were lower because of lower spend on R&D and sales & marketing. The company said it could trim expenses further.

Export volumes rose 8 percent and revenues increased 12 percent during the June quarter. The company said it is trying to further diversify exports to combat slowdown in the domestic business.

The company's operating margins improved 100-150 basis points during the June quarter, helped by a favourable product mix and price hikes of 1.0-1.5 percent.

The company said it deliberately cut down production of its light commercial vehicle Dost as there was excess inventory at the dealer level. Recently a new version of Dost and Partner has been launched and the company is hopeful that the LCV segment will see strong growth.
 

Ashok Leyland stock price

On July 28, 2014, at 14:13 hrs Ashok Leyland was quoting at Rs 33.05, down Rs 0.25, or 0.75 percent. The 52-week high of the share was Rs 39.00 and the 52-week low was Rs 11.82.

The company's trailing 12-month (TTM) EPS was at Rs 0.10 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 330.5. The latest book value of the company is Rs 15.69 per share. At current value, the price-to-book value of the company is 2.11.

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Tata-SIA flying permit exercise progressing well: Official

According to documents submitted to aviation regulator DGCA, it plans to begin services in five cities and go up to 11 within a year of operations. The airline would have 87 weekly flights, linking Delhi with Mumbai, Goa, Bangalore, Hyderabad, Ahmedabad, Jammu, Srinagar, Patna and Chandigarh.

Tata-SIA Airlines Ltd today said it hoped to launch flights by September-October this year as it expressed "satisfaction" over the progress made in getting the flying licence from aviation regulator DGCA. "The AOP (Air Operator's Permit or flying licence) exercise is progressing well and we are expecting to launch the full service airlines' domestic service in September-October," S Varadarajan, Chief Human Resource Officer and Chief of Corporate Affairs of the airline, said here.

Varadarajan, who was in the steel city to participate in the HR Conclave 2014 organised by CII Jamshedpur, said Tata-SIA has shared all relevant issues, including the route network plan of the company with the Director General of Civil Aviation (DGCA), and was awaiting the AOP. The company would procure four to five aircraft by end of March next year and enhance the procurement to 20 in next few years, he said.

Also Read: India to get more wings with aviation revamp on cards

To a query on the route network and destinations to launch flights, Varadarajan refused to comment saying the airline's route network wing was taking care of it. Earlier, the JV company got a go-ahead from the Foreign Investment Promotion Board (FIPB) in October 2013 and was awaiting AOP for launching a full-service carrier. Tata-SIA Airlines, a 51:49 joint venture between Tata Sons and Singapore Airlines, was also expected to announce its new brand name in the first half of next month and the airline would be based in Delhi.

According to documents submitted to aviation regulator DGCA, it plans to begin services in five cities and go up to 11 within a year of operations. The airline would have 87 weekly flights, linking Delhi with Mumbai, Goa, Bangalore, Hyderabad, Ahmedabad, Jammu, Srinagar, Patna and Chandigarh. The DGCA is in the process of examining its application for grant of AOP to launch a full-service carrier after recently dismissing objections from the Federation of Indian Airlines against granting of SOP to Tata-SIA Airline. The approval for an AOP, when granted, would be subject to the orders of the Delhi High Court in a case challenging foreign direct investment in new Indian carriers.

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Coal India undermined by basic equipment flaws

As Prime Minister Narendra Modi's government looks to shape up  Coal India Ltd for a potential major restructuring, the world's biggest coal miner still faces basic problems: it does not have enough mechanical shovels, dumpers and explosives.

The new government, which has a 90 percent stake in the company whose total market value is about USD 40 billion, is exploring a break up and opening up the sector to foreign investment to boost output and cut imports, sources have said.

But the firm, which accounts for more than 80 percent of India's production and employs 350,000, has not met its output target for years, ensuring the country remains the world's third-largest coal importer despite sitting on huge reserves.

Also Read: Coal India's plans for 20 mines hit by environment delays

A failure to boost efficiency could threaten long-run plans to spin off some of the seven units of the coal miner, a vital part of the government's reform strategy.

Two units produced less in the last fiscal year than a year ago, partly due to lack of basic equipment and ageing machinery, Power and Coal Minister Piyush Goyal told parliament this week.

The minister did not provide data but according to a top official at one Coal India unit this issue could be cutting Coal India's annual output by more than 10 percent. The official declined to be identified due to its policy on talking to media.

Coal India spokesman Vijay Sagar said it was difficult to assess how much production was affected due to shortages of equipment or explosives. The latter is in short supply mainly due to a restriction on moving chemicals such as ammonium nitrate to prevent it from being misused by extremists.

Nonetheless, resolving equipment issues may be easier to address than other problems such as difficulties pushing through land acquisition, delays in getting environmental clearances and lack of transport facilities.

Coal India produced 462 million tonnes in the last fiscal year, against a target of 482 million.

PROCUREMENT

Experts said a shortage of mechanical shovels and dumpers, used in open cast mining, was partly due to Coal India's procurement policy that forces it to issue a tender for every big purchase, even for spare parts.

Shortages of critical spare parts, including dumper tyres, can halt machinery for months, said Dipesh Dipu, a partner at Jenissi Management Consultants, which advises resource firms.

Coal India's Sagar said though procurement of big equipment may take time things had improved in the past three years after the appointment of an external monitor to oversee purchases.

In late 2011, some Coal India officials were charged for corruption over equipment tenders, leading to heightened scrutiny of the procurement process.

Coal India's productivity, in output-per-man each shift, was 4.92 tonnes in 2011-12, below a target of 5.54, according to the last available Planning Commission figures. The global average is about three times of that.

Productivity in underground mining is less than one tonne. About a tenth of India's underground output is loaded by workers, according to the planning commission, which has asked for it to be fully mechanised by 2017.

In addition, the number of hours a shovel would run would be around 22 hours a day in the private sector, but just 15 hours in a public sector firm like Coal India, according to experts.

Minister Goyal said there was scope to improve mechanization in underground mining and that Coal India was looking at a consultancy's recommendations on technology and modernising mines.

KPMG Advisory Services' recommendations include more detailed planning for mines, using international benchmarking for equipment productivity, refuelling of machinery in the field and improved training of workers.

(USD 1 = 60.1250 Indian Rupees)

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Tremendous mood swing, positivity on Modi govt: Indian CEOs

In his remarks, Chandrajit Banerjee, Director General, CII also appreciated the government's vision and receptivity to new ideas and thoughts, especially from industry.

After the formation of the Narendra Modi government, there is a tremendous mood swing and positivity in the country, a visiting delegation of Indian CEOs from CII said describing its maiden budget as visionary. The delegation of Indian CEOs from Confederation of Indian Industry in an interaction with the Washington audience at Carnegie Endowment for International Peace yesterday highlighted the growing sense of optimism amongst both the public and industry in India following the recent election results which brought BJP to power with a landslide majority.

Ajay Shriram, CII President described the unique nature of the recent elections, in which the BJP came to power solely on the campaign promise of growth and development, which speaks to the aspirations of India's young people. Describing the 2014-15 annual budget as visionary, Shriram commended the new government for moving very actively to ease and facilitate the way business is done in India. "Success in India will come with leadership, mindset change, philosophy and action," he said. In his remarks, Chandrajit Banerjee, Director General, CII also appreciated the government's vision and receptivity to new ideas and thoughts, especially from industry.

Also Read India refuses to endorse trade facilitation deal in WTO

Naushad Forbes, vice president, CII and director, Forbes Marshall Pvt Ltd focused on the promising steps being taken in India's education sector and the increasing role of the market in this sector which is having a net positive impact on issues related to quality and equity of access. He also specifically mentioned the community college model in the US as one worth looking at in India as well. Vikram Kirloskar, vice chairman, Toyota Kirloskar Motor, highlighted the importance of the manufacturing sector and pointed out that the role of industry in this sector related to enhancing quality, competitiveness and innovation.

Rajan Navani, chairman, CII National Committee on India@75 and managing director, Jetline Group of Companies  spoke about the need for India to channelize the power of India' youth through skilling and leadership development. He also spoke of the use of technology as a major potential game changer in India. The wide ranging discussion that followed came at a critical time in India's engagement with the US, with the resumption of several stalled bilateral dialogues , beginning with the US-India Strategic Dialogue in Delhi next week.

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Rel Power submits information on Sasan expansion to EAC

In its June 27 meeting to consider proposal for Moher and Moher Amlori coal mine capacity expansion, the Expert Appraisal Committee (EAC) had sought additional information from the company.

Reliance Power  has submitted additional information on expansion of coal mining for its Sasan power project in Madhya Pradesh for obtaining environment clearance.

In its June 27 meeting to consider proposal for Moher and Moher Amlori coal mine capacity expansion, the Expert Appraisal Committee (EAC) had sought additional information from the company.

Reliance Power has submitted the requisite information sought by EAC, a source said.

EAC had sought additional information by July 2. A company source confirmed that the additional information sought by EAC has been submitted within the deadline by Reliance Power.

Also read: Reliance Power consolidated Mar '14 sales at Rs 1,358.66 crore

The proposal was for expansion of production capacity at Moher coal mine from 12 million tonnes per annum (MTPA) to 15 MTPA and that at Moher Amlori mine from 16 MTPA to 20 MTPA to feed the ultra-mega Sasan power project.

The EAC "after detailed deliberations, sought information for further consideration of the project," minutes of the June 27 meeting stated.

It asked Reliance Power to submit details of land use pattern covering total project area; total mining lease area; total forest land; total forest clearance obtained and balance forest clearance awaited in a tabulated form.

Reliance Power had in September 2012 started mining for coal for the 4,000 MW Sasan project.

Reliance Power stock price

On July 25, 2014, Reliance Power closed at Rs 90.85, down Rs 3.65, or 3.86 percent. The 52-week high of the share was Rs 112.35 and the 52-week low was Rs 60.10.

The company's trailing 12-month (TTM) EPS was at Rs 0.07 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 1297.86. The latest book value of the company is Rs 60.18 per share. At current value, the price-to-book value of the company is 1.51.

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Confident this will be a year of robust growth: Firstsource

In an interview to CNBC-TV18's Reema Tendulkar and Nigel D'Souza, Sanjiv Goenka, Chairman,  Firstsource Solutions spoke about his plans and outlook for the company.  

Below is a verbatim transcript of the interview

Reema: Every quarter we look at it the earnings do look much better than they were in the previous quarter, so tell us how the outlook is looking for FY15. You had always indicated that after turning it around you would now like to consolidate before chasing growth. So in FY15 give us a ball park idea about how the revenues as well as the margins will be like?

A: Over the last few quarters margins for us have gone up by 3 percent, which is significant, and on a like-to-like basis, profits have actually gone up by 96 percent over last year. So that is a very significant jump forward. This year the board is yet to meet for a quarter result but we are very satisfied with the way the year is going. We are optimistic that this will be another year of robust growth and our focus has been on the bottom line and we do expect to see the bottom line growing forward very smartly.

Nigel: It has been growing very smartly in fact in the last year itself but could you take us through what is the guidance for this year in terms of constant currency revenue growth, are you expecting that five-six percent, are we on track?

A: We will have some revenue growth but as I said earlier my focus has been bottom line growth rather than revenue growth. We have had a few good wins on orders and that has been very encouraging. We have acquired a new logo in the US healthcare payer segment. We have acquired a couple of additional clients in UK but having said that we are also pruning down accounts which are loss making.

So, on a net basis, we will grow definitely. Last year revenues grew by 10 percent. We will grow this year as well but bottom line is what we are focusing on and we expect bottom lines to be very smartly up.

Nigel: Just looking at your bottom line growth in the last year was up 30 percent but in fact your revenues were up only around 10 percent but with regard to your debt are you comfortable with your debt levels. I believe it is a USD 120 million are you comfortable at that level, will that be part of boosting your profitability higher. Take us through those numbers?

A: As we speak debt stands at USD 114 million. It is already lower from March and we have paid off another USD 11 million in June and this year we expect to reduce debt totally by close to USD 45 million and debt-equity stands at 0.3:1 and we expect that to go down further.

Reema: You spoke about pruning down your loss making accounts, how many have been left, because you have been doing this exercise for the last few quarters, by when will all the loss making accounts that you have highlighted will be weeded out?

A: Very soon.

Reema: So in another quarter?

A: Maybe two.

Reema: So in two quarter all the loss making accounts will be out of the system?

A: We hope.

Reema: You spoke about that USD 45 million debt repayment this year and you have that quarterly payment of USD 11.25 million, can you tell us is there a chance or a scope to accelerate this debt repayment?

A: We would certainly be looking at accelerated repayments if we can. From our cash flow we certainly can. We are actually examining contracts with our contributors with the FCCB to see whether that is possible.

Firstsource Sol stock price

On July 25, 2014, Firstsource Solutions closed at Rs 37.25, down Rs 1.65, or 4.24 percent. The 52-week high of the share was Rs 41.90 and the 52-week low was Rs 11.02.

The company's trailing 12-month (TTM) EPS was at Rs 2.03 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 18.35. The latest book value of the company is Rs 20.89 per share. At current value, the price-to-book value of the company is 1.78.

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Adani Group in talks with Jaypee for buying hydel projects

According to them, Adani Group is in discussions for purchasing Jaypee Group's hydel projects, having total capacity of 1,700 MW, including two in Himachal Pradesh. The deal is estimated to be worth over Rs 11,000 crore, including debt component, sources said.

Adani Group is in talks with diversified Jaypee Group for acquiring some of its hydro projects in a deal worth over Rs 11,000 crore. Besides, Sajjan Jindal-led  JSW Energy is discussing the possibility of acquiring some thermal assets of Jaypee Group, industry sources said.

According to them, Adani Group is in discussions for purchasing Jaypee Group's hydel projects, having total capacity of 1,700 MW, including two in Himachal Pradesh. The deal is estimated to be worth over Rs 11,000 crore, including debt component, sources said.

The projects being eyed by Adani Group include 1,000 MW Karcham-Wangtoo and 300 MW Baspa II -- both are in Himachal Pradesh. Sources said Adani Group Chairman Gautam Adani has already held talks with Jaypee Group Executive Chairman Manoj Gaur in this regard.

Also Read: Why Jaypee may be better off after Taqa sale call-off

The discussion comes against the backdrop of TAQA pulling out of the deal to acquire Jaypee's two hydro projects.

When contacted, an Adani Group spokesperson said it would not like to comment on any market speculation. A Jaypee Group spokesperson declined to comment.

At present,  Adani Power -- part of Adani Group -- has an installed generation capacity of 8,580 MW. The proposed acquisition would help it to expand its portfolio as well as diversify into hydro sector.

On Thursday, Jaypee Group announced that Abu Dhabi National Energy Company (TAQA) was withdrawing from the nearly Rs 10,000 crore deal to acquire Karcham Wangtoo and Baspa II hydel projects.

TAQA India Power Ventures Ltd has decided to withdraw from its agreement with  Jaiprakash Power Ventures Ltd (JPVL). Meanwhile, sources said that JSW Energy has expressed interest in the thermal power generation assets of Jaypee Group.

Query send to JSW Energy did not elicit any response while Jaypee Group spokesperson declined to comment.

Adani Power stock price

On July 25, 2014, Adani Power closed at Rs 56.20, down Rs 1.75, or 3.02 percent. The 52-week high of the share was Rs 68.50 and the 52-week low was Rs 29.45.

The company's trailing 12-month (TTM) EPS was at Rs 2.07 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 27.15. The latest book value of the company is Rs 27.11 per share. At current value, the price-to-book value of the company is 2.07.

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RBI penalises ICICI Bank, Canara Bank, Yes Bank 9 others

The Reserve Bank said it had "carried out a scrutiny of the loan and current accounts of Deccan Chronicle Holdings, in certain branches of the 12 banks in late 2013". Based on the findings of the scrutiny, the RBI issued showcause notices to these banks in March 2014, to which the individual banks submitted written replies.

ICICI Bank , Axis Bank , Canara Bank , IDBI Bank ,  Yes Bank and seven other banks have been penalised in the case of Deccan Chronicle Holdings , the RBI said today. The total penalty on the banks stands at Rs 1.5 crore, RBI said in a release.

The RBI has imposed a monetary penalty of Rs 40 lakh on ICICI Bank and Rs 15 lakh each on Axis Bank and IDBI Bank.

Further Rs 10 lakh penalty each has been imposed on Andhra Bank , Canara Bank , Corporation Bank , IndusInd Bank , Kotak Mahindra Bank , State Bank of Hyderabad and Yes Bank . Penalty of Rs 5 lakh each has been imposed on  HDFC Bank and Ratnakar Bank.

The Reserve Bank said it had "carried out a scrutiny of the loan and current accounts of Deccan Chronicle Holdings, in certain branches of the 12 banks in late 2013". Based on the findings of the scrutiny, the RBI issued showcause notices to these banks in March 2014, to which the individual banks submitted written replies.

"After considering the facts of each case and the individual bank's reply, as also, the personal submissions etc, by some of the banks...the RBI came to the conclusion that some of the violations were substantiated and warranted imposition of monetary penalty," the RBI said in a release.

The RBI, however added that "this action is not intended to pronounce upon the validity of any transaction or agreement entered into between the concerned bank and the borrower".

ICICI Bank stock price

On July 23, 2014, ICICI Bank closed at Rs 1505.80, up Rs 22.60, or 1.52 percent. The 52-week high of the share was Rs 1590.35 and the 52-week low was Rs 758.80.

The company's trailing 12-month (TTM) EPS was at Rs 84.83 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 17.75. The latest book value of the company is Rs 633.00 per share. At current value, the price-to-book value of the company is 2.38.

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Coal India undermined by basic equipment flaws

As Prime Minister Narendra Modi's government looks to shape up  Coal India Ltd for a potential major restructuring, the world's biggest coal miner still faces basic problems: it does not have enough mechanical shovels, dumpers and explosives.

The new government, which has a 90 percent stake in the company whose total market value is about USD 40 billion, is exploring a break up and opening up the sector to foreign investment to boost output and cut imports, sources have said.

But the firm, which accounts for more than 80 percent of India's production and employs 350,000, has not met its output target for years, ensuring the country remains the world's third-largest coal importer despite sitting on huge reserves.

Also Read: Coal India's plans for 20 mines hit by environment delays

A failure to boost efficiency could threaten long-run plans to spin off some of the seven units of the coal miner, a vital part of the government's reform strategy.

Two units produced less in the last fiscal year than a year ago, partly due to lack of basic equipment and ageing machinery, Power and Coal Minister Piyush Goyal told parliament this week.

The minister did not provide data but according to a top official at one Coal India unit this issue could be cutting Coal India's annual output by more than 10 percent. The official declined to be identified due to its policy on talking to media.

Coal India spokesman Vijay Sagar said it was difficult to assess how much production was affected due to shortages of equipment or explosives. The latter is in short supply mainly due to a restriction on moving chemicals such as ammonium nitrate to prevent it from being misused by extremists.

Nonetheless, resolving equipment issues may be easier to address than other problems such as difficulties pushing through land acquisition, delays in getting environmental clearances and lack of transport facilities.

Coal India produced 462 million tonnes in the last fiscal year, against a target of 482 million.

PROCUREMENT

Experts said a shortage of mechanical shovels and dumpers, used in open cast mining, was partly due to Coal India's procurement policy that forces it to issue a tender for every big purchase, even for spare parts.

Shortages of critical spare parts, including dumper tyres, can halt machinery for months, said Dipesh Dipu, a partner at Jenissi Management Consultants, which advises resource firms.

Coal India's Sagar said though procurement of big equipment may take time things had improved in the past three years after the appointment of an external monitor to oversee purchases.

In late 2011, some Coal India officials were charged for corruption over equipment tenders, leading to heightened scrutiny of the procurement process.

Coal India's productivity, in output-per-man each shift, was 4.92 tonnes in 2011-12, below a target of 5.54, according to the last available Planning Commission figures. The global average is about three times of that.

Productivity in underground mining is less than one tonne. About a tenth of India's underground output is loaded by workers, according to the planning commission, which has asked for it to be fully mechanised by 2017.

In addition, the number of hours a shovel would run would be around 22 hours a day in the private sector, but just 15 hours in a public sector firm like Coal India, according to experts.

Minister Goyal said there was scope to improve mechanization in underground mining and that Coal India was looking at a consultancy's recommendations on technology and modernising mines.

KPMG Advisory Services' recommendations include more detailed planning for mines, using international benchmarking for equipment productivity, refuelling of machinery in the field and improved training of workers.

(USD 1 = 60.1250 Indian Rupees)

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Will TVS be able to hold on to Bajaj lead?

As June sales numbers trudged out, it emerged that  TVS Motor had overtaken Bajaj Auto as India's third-largest domestic two-wheeler maker.

Between April and June, TVS sold 5.1 lakh units domestic sales while Bajaj's local sales stood at 4.8 lakh. TVS' sales growth was driven by the success of its Jupiter scooter and Star City + motorcycle.

That TVS dislodged Bajaj from the third spot came as a bit of a surprise to some analysts while others attributed the development to TVS' diverse product portfolio as well as Bajaj's decision to not re-enter the fast-selling scooter segment.

TVS' presence in the motorcycle, scooters, mopeds and three-wheelers has worked well for it while Bajaj has focused on its Discover commuter and the aging Pulsar premium motorcycle.

But first-quarter results were a disappointment for TVS, with profitability taking a hit due to high raw-material costs, leading some analysts to wonder if the company will ever break out of its traditional mid-single digit operating margins. Bajaj, on the other hand, enjoys operating profits of around 20 percent helped by its lucrative exports business, which contributes 40 percent of the company's sales.

Bajaj is not taking things lying down: the company attributes the failure of the Discover model and is readying to give a focused push to the brand.

It is now launching a 150cc version of the Discover, which currently comes in a 125cc and 100cc version.

In an interview with DNA , S Ravikumar, a president with Bajaj, said he hopes the Discover 150 would bring Bajaj's market share back to traditional 24 percent mark (from 20 percent currently) by the January-March 2015 quarter.

But some analysts have wondered if the Discover 150 would eat into the Pulsar's sales.

TVS, too, is geared up for battle. "The company plans to launch a new product in the fastest-growing scooter segment in the first half of FY15 along with a motorcycle, followed by two more products in the second half," Anand Rathi said in a report .

"TVS targets to stick to its aggressive launch program, which should aid volume growth going forward."

The brokerage forecasts sales for TVS to grow from Rs 7,972 crore in FY14 to Rs 9,484 crore in FY15 and Rs 10,753 crore in FY16, a compounded growth of over 16 percent.

However, another subtext within the battle for the third spot could also be that Bajaj is in the market share game and is more focused on maintaining its industry-leading profit margins.

"Bajaj's strategy is to dominate multiple markets in one category, whereas that of our domestic rivals appears to be to dominate one country - India - in multiple categories," Rajiv Bajaj told the Economic Times recently. "As a global company with a huge exports base, we are primarily the No. 1 by far in terms of profitability."

TVS Motor stock price

On July 25, 2014, at 14:15 hrs TVS Motor Company was quoting at Rs 142.95, down Rs 15.75, or 9.92 percent. The 52-week high of the share was Rs 179.00 and the 52-week low was Rs 28.10.

The company's trailing 12-month (TTM) EPS was at Rs 5.51 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 25.94. The latest book value of the company is Rs 29.79 per share. At current value, the price-to-book value of the company is 4.80.

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Tata Steel raises USD 1.5 billion in overseas bond sale

The Tata Steel issue is the second largest bond issue from the country after the ONGC Videsh, the international arm of oil major ONGC earlier this month had mopped up a whopping USD 2.3 billion in a dual tranche issue.

Tata Steel  today raised USD 1.5 billion (about Rs 9,000 crore) in a dual tranche bond sale in the international market, making it the largest such deal by the Tata group firm, sources said.

The dollar money was raised by the Singapore arm of Tata Steel ABJA Investments and the issue got an oversubscribed worth nearly USD 9 billion, according to the merchant banking sources.

The dual tranche RegS bond include USD 500 million of 5.5 year-money priced at 4.85 percent over the US treasury and the remaining USD 1 billion carries a tenure of 10 years carrying a coupon of 5.95 percent, the sources at the i-banks, which include RBS and BNP Paribas, told PTI.

The company could not be reached for comments.

The Tata Steel issue is the second largest bond issue from the country after the ONGC Videsh, the international arm of oil major ONGC earlier this month had mopped up a whopping USD 2.3 billion in a dual tranche issue.

Tata Steel, which is the top producer of the alloy in the country, has been trying it pare its huge debt to lower interest costs and has a headroom to raise USD 3.2 billion for debt repayment through refinancing.

The company has to repay USD 5 billion worth of debt by the end of 2015. According to the balancesheet, the company has over USD 14.4 billion of bonds and loans outstanding.

It can be noted that after struggling for years, the domestic business of the company turned around last fiscal, but its larger international subsidiary Corus or Tata Steel Europe has been a drain on the company ever since it bought out the struggling Anglo-Dutch steel maker in March 2008 for USD 12.04 billion.

Tata Steel stock price

On July 25, 2014, at 14:14 hrs Tata Steel was quoting at Rs 555.75, down Rs 11.3, or 1.99 percent. The 52-week high of the share was Rs 578.60 and the 52-week low was Rs 195.40.

The company's trailing 12-month (TTM) EPS was at Rs 66.02 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 8.42. The latest book value of the company is Rs 629.60 per share. At current value, the price-to-book value of the company is 0.88.

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Insurance sector needs nearly Rs 25000cr capital: ICICI Pru

In a big boost for the insurance sector, the Cabinet has approved 49 percent foreign investment in insurance companies. This will be allowed through the FIPB route , ensuring management control in the hands of Indian promoters.

Welcoming the move, Prashant Sharma, CIO, Max Life Insurance said that foreign investors are looking to invest in insurance companies in India.

Sandeep Batra, Executive Director, ICICI Prudential Life Insurance added that insurance industry current requires nearly Rs 25,000 crore of capital. However, ICICI Prudential Life is adequately capitalized and doesn't need funds immediately, he said.

Below is the verbatim transcript of Sandeep Batra and Prashant Sharma's interview  with CNBC-TV18's Latha Venkatesh and Sonia Shenoy. For the complete discussion watch the accompanying videos.

Latha: What have you heard from the promoters, are they looking in more foreign investment, are they getting a lot of foreign interest at this juncture?

Sharma: Given the attractiveness of the industry there would be lot of interest from the foreigners, generally speaking but having said that whether the promoters or the management want this to happen at a certain point, is their prerogative and that may happen at some point in time in the future if the conditions are attractive and desirable for everybody concerned.

Latha: Has the parent spoken to foreign partner or spoken to other people. What is the kind of interest at current levels from foreigners because the rules do not allow foreign control, it is little more money that they can put in, they will not get control and it has to go through the approval route?

Sharma: We will have to see what exactly the guidelines are but it will depend on both the parties when they will discuss the offer at hand. Having said that it is a welcome move for the industry in general, it brings in a lot of long-term capital, the capital which is required for not only the insurance sector but for the country in general. Insurance companies are long-term investors of capital, be the bond market, be it equity markets.

This is a welcome move from the industry and country's perspective. However, whether it makes sense for two promoters - will be seen at a particular point in time when both of them sit down. On the exact guidelines we will have to probably read as to whether they are conducive in the current environment or they will be more appropriate at a future point in time. So it will get evolved over a period of time, it is not something which will get decided in the next couple of weeks is what my sense is.

Sonia: What is your take – the fact that foreign insurers will have to come through only after they get the Foreign Investment Promotion Board (FIPB) nod? In that sense an extra layer has been added before they come in. Do you think that would be any hurdle and how much of a positive would this be for the industry as a whole?

Batra: This is a very welcome move and a long awaited move. In the life insurance industry about Rs 35,000 crore of capital has been invested over the last decade or so and 15 percent growth of assets under management (AUM) from here. We will require a capital of Rs 25,000 crore odd. Therefore, any increase in avenues and which capital can be raised is certainly welcome and foreign capital is welcome for the industry, so that is both for the life and general side.

Latha: You have spoken with the Prudential management, are they enthused enough to bring in the capital anytime soon, should we expect capital changes in the current year?

Batra: As far as ICICI Prudential is concerned, we are very adequately capitalised. We have a solvency ratio of 370 percent which is more than double the regulatory requirement. We as a company do not need capital immediately because as growth happens - that's a completely different matter but what happens between the promoters is for them to decide and they will take a decision at an appropriate period of time.

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Banks not allowed to trade in bonds for infra lending: RBI

Reserve Bank of India Deputy Governor R Gandhi said the central bank would prefer that these bonds for infrastructure lending attract investors from outside the banking sector.

Banks will not be allowed to trade bonds issued by other lenders for infrastructure lending that would be exempted from mandatory reserve requirements under the guidelines issued last week, said Reserve Bank of India (RBI) Deputy Governor R Gandhi.

The RBI last week allowed lenders to issue bonds for infrastructure lending, but barred the banks from holding each other's bonds.

"Restriction on cross holding does apply to trading also," Gandhi told Reuters.

Gandhi said the central bank would prefer that these bonds for infrastructure lending attract investors from outside the banking sector.

"The idea is funds to come from outside the banking system," he said.

Dealers had been confused about whether the cross holding restriction also meant that the banks were not allowed to trade in these bonds, given that lenders are crucial market makers in this segment.

"Debt capital market traders in banks will help create liquidity in this market because they are market makers, otherwise liquidity in this segment will not pick up," said a senior dealer at a bank.

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Is lack of innovation hurting Bajaj Auto?

Two-wheeler maker Bajaj Auto  disappointed the Street with first quarter net profit rising marginally to Rs 740 crore compared to Rs 737.7 crore in same quarter last year, dented by weak operational performance and higher depreciation charge.

The stock fell 3 percent intraday on Thursday, post the results. Is brand fatigue and lack of innovation causing Bajaj Auto to fall back significantly in this market share race?

Bertrand D'souza, Editor, Overdrive, says the fact that they are not present in the scooter market is definitely affecting their numbers.

"Over the last few years, we have been seeing that scooters have been gaining a lot of market share over motorcycles. So definitely, for Bajaj Auto, the decision they took all those years ago to just follow the motorcycle market hasn't been a very forward-looking step," he feels.

But yes, the profitability in the motorcycle business has definitely been higher, said D'souza.

He said for Bajaj Auto, Discover is a good brand and has done well, but hasn't been able to put up a fight against Hero Splendor. "Splendor has been ruling the segment. Neither Bajaj nor Honda has been able to displace Hero from there."

D'souza feels Bajaj needs to revitalize its premium bike segment. One of the most profitable brands in their portfolio has been Pulsar and the company must rework on that.

Foe Honda, he thinks with the sole aim of having the largest market share, the company will come up with an extensive product line. Honda, which emerged as the second biggest producer of two-wheelers in India, is set to launch the most affordable 110 cc bike in August.

The dark horse in the race to market share has been TVS . It has dethroned Bajaj Auto in the overall two-wheeler markets purely because of its presence in the scooter segment.

Below is the transcript of Bertrand D'souza's interview with Latha Venkatesh and Sonia Shenoy of CNBC-TV18.

Latha: What is hurting Bajaj Auto according to you? Is it the fact that they have not entered the scooters market, is it exactly the mistake they made in the late 90s - sitting strong with scooters and refusing to get into motorcycles; are they making the same mistake the other way round?

A: The fact that they are not present in the scooter market definitely affects their numbers. Over the last few months we are seeing that the scooters essentially have been gaining a lot more market share than motorcycles. The have grown a lot more than motorcycles. So, that definitely for Bajaj that definitely hasn't been a very forward thinking step, that decision they took all those years ago to just follow the motorcycle market. 

Rajiv Bajaj has come on record and mentioned that what he is looking for essentially may not be numbers as much as he is looking at profitability. The profitability in the motorcycle market is higher for sure. The numbers at the end of the day will show better results also overall.

Sonia: What do you think Bajaj should do at this point? Should they come out with a completely new brand because as we have seen they have come out with so Discovers in the last many months and years but that just seems to be crowding the market a little bit? What would your suggestion be if you had to advice Rajiv Bajaj? 

A: The Discover is a good brand. They have done reasonably well with that. However, it has been a difficult take or rather it has been difficult putting up fight against the Hero Splendor; that still is the market leader in that segment. Even Honda has been trying very hard to displace the Splendor off that 100cc segment but neither Bajaj nor Honda have been able to displace Hero from that position. 

So, they do need to look at new segments. Probably not as much as creating new brands but revitalising what is already there in their portfolio. One of the most profitable brands for them has been the Pulsar brand and they need a lot of work to do in that direction. The last time we saw a Pulsar, the 150 which is essentially one of their large bread and butter segment as well, it is the motorcycle that got all the attention back on Bajaj, that motorcycle needs to be revitalised. There is a lot of work that has to come in that direction. 

They have shown a couple of motorcycles in larger capacities at auto expo – the 200 and 400 again from the Pulsar brand itself but they will be very niche players. Bajaj needs to look at the 150 and 180 segment motorcycles within that Pulsar brand; that is where they will do exceedingly well.

Latha: What are the lessons learned from Honda? It has really zoomed and has dethroned Bajaj Auto even as the largest producer of two wheelers. What lessons from there and it is not as if they are not catering to the value market, the 110cc market? Is there something to be learned from the Honda way of doing business?

A: They have been out in the market with just one goal in mind and it is to have the largest market share. Keeping that in mind, their product lineup is going to be pretty extensive. They are looking at several motorcycles in the future as well. 

However, essentially what they want is the volume segment, they need to capture the 100cc market, the 125cc market and there are a lot of sub-brands within this also. You have got the 100cc, you have got the 110cc, you have got the 125cc coming all the way up to 150cc and upwards. However, between 100cc and 150cc is where Honda wants to establish themselves as number one. 

Currently competition is just Hero Motors and Bajaj as we know now Bajaj is not really big player there. It is not affecting Honda's numbers. However, there are not going to be too many new products in that sense as much as Honda pushing forward what they already got and introduced in the market.

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AGM: Cairn India focuses on production; to spend $3bn capex

"We are confident that this will lead to a reserve replacement ratio of 150 percent and help us deliver a growth of 7 percent to 10 percent in production over the next three years from the Rajasthan block," Chairman of Cairn India, Navin Agarwal said.

Private oil & gas explorer  Cairn India at its AGM announced an investment of USD 3 billion towards the company's three-year capex programme.

"We are confident that this will lead to a reserve replacement ratio of 150 percent and help us deliver a growth of 7 percent to 10 percent in production over the next three years from the Rajasthan block," Chairman of Cairn India, Navin Agarwal said.

The AGM was held in Mumbai on Wednesday.

He further reiterated need for simple policy to improve oil and gas production. he said that the government can look at encouraging hydrocarbons to boost local production. Cairn India produced 66.3 million barrels of oil in FY14.

Meanwhile, the company will announce its first quarter (April-June) earnings today . According to CNBC-TV18 poll estimates, analysts expect consolidated net profit of the Vedanta Resources group company to fall 13 percent to Rs 2,630 crore in June quarter from Rs 3,040 crore in previous quarter on lower revenue and weak operating profit.

Cairn India stock price

On July 14, 2014, Cairn India closed at Rs 338.65, down Rs 4.65, or 1.35 percent. The 52-week high of the share was Rs 385.00 and the 52-week low was Rs 286.85.

The company's trailing 12-month (TTM) EPS was at Rs 39.77 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 8.52. The latest book value of the company is Rs 206.73 per share. At current value, the price-to-book value of the company is 1.64.

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Allcargo sees double-digit volume growth this fiscal

Allcargo Logistics  should be able to continue to grow volumes at a double-digit rate this year, Group CFO S Suryanarayanan told CNBC-TV18 in an interview.

The company has notched up impressive performances in the multimodal transport operations (MTO) business in the past few quarters, despite the overall shipping market remaining sluggish.

In the third quarter of FY14, Allcargo reported 20 percent quarter-on-quarter volume growth to 91,725 twenty-foot equivalent units (TEU).

Also read: Allcargo Logistics acquires majority stake in FCL Marine Agencies Rotterdam

"Our global MTO business is doing well. This trend should continue," he told the channel's Ekta Batra and Anuj Singhal.

The business' robust performance has reflected in the company's share prices, which rose to a 52-week high of Rs 271 recently, and are up about 113 percent year-to-date.

The CFO added that Allcargo does not have any immediate acquisitions plans and that its two recent acquisitions have been integrated with the company.

In FY14, the logistics firm acquired 100 percent interest in Econocaribe Consolidators, the third-largest less-than-container-load (LCL) consolidator in the United States and picked up a majority stake in FCL Marine Agencies.

Below is the transcript of the interview on CNBC-TV18.

Ekta: There was a brokerage report that I was reading with regards to a management meet that they had with you. One of the things which was spoken about was the Multimodal Transport Operation (MTO) segment, which is expected to do quite well in FY15 and this is despite the shipping industry underperforming. Can you give us guidance on the same?

A: From an overall perspective in the international business that is our global MTO business, we are doing reasonably well. We are growing in double digits in the volume as I compare with the previous year. So I think this trend should continue.

This is in spite of whatever is happening in the shipping industry because we don't own assets and that has been a big advantage for us and we are an aggregator. So therefore, a combination of all of this and the growth that is happening is good for us in our global MTO business.

Anuj: In this MTO business, what kind of guidance can you give us for the rest of the year in terms of revenues and margins?

A: They all depend a lot on the way freight moves. But all I can say is from a volume perspective, I think we should grow in double digits and consequent effect of this growth on the volumes should automatically come into our bottomline. So that is the way, we are looking at it. It is holding steady, we have been doing quite well over the last six months. So I think we are in a good shape in our international business.

Ekta: Any more acquisitions planned?

A: No, there is nothing that is planned in the immediate future. The two acquisitions that we did last year have been quite accretive. They have been fully integrated into our system and I think both of them are doing quite well.

Ekta: Do you have any near-term funding needs?

A: No, there is no such pressure on us because we don't have much of capex to go forward. Our entire focus has been to increase the asset utilisation of all the capex that has happened over the past years. The asset utilisation has also started to improve and I think this year should be a good one if I see the trends that have started to happen in the quarter.

Ekta: There was a lot which was spoken about with regards to the logistic sector from the Budget. Can you give us a sense in terms of one what the implementation of the goods and services tax (GST) would do for Allcargo in terms of your bottomline and secondly, any sort of near-term opportunities, which are coming up for you post the Budget?

A: In terms of the Budget if you see, it has led out conducive environment both financially as well as policy formulation in boosting the infrastructure and the manufacturing sector. Increased spends in these sectors will automatically mean more ExIm trade and therefore will benefit the logistics sector and since we are quite a lot focused on the ExIm trade as well as in the infrastructure in two of our businesses, it should be helpful to our company as a whole.

If you look at the GST implementation, it will address one of the inefficiencies of our entire distribution centre process. So its implementation will only help in the efficiency and make our domestic economy more competitive in the long run.

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Etihad alliance shows India's rapport with Abu Dhabi: Jet

Airline to start non-stop frequent flights to Middle East and SAARC countries. There are also plans to ramp up the long haul non-stop flights to Europe.

Moneycontrol Bureau

Jet Airways  has established a vibrant new landscape with its alliance with UAE-based Etihad. The partnership signifies India's rapport with Abu Dhabi, said chairman Naresh Goyal.

Addressing the media in a first joint press conference, Goyal said maintaining the focus to build Delhi and Mumbai as hubs, the airline will start non-stop frequent flights to Middle East and SAARC countries. There are also plans to ramp up the long haul non-stop flights to Europe.

The ongoing forex volatility has impacted the carrier's bottomline. Goyal further said that high tax on ATF continues to hurt airlines.

Jet chairman said the carrier will integrate sales with Etihad to optimise costs. "Etihad to help Jet in aircraft procurement, maintenance," he added.

Etihad holds 24 percent stake in Naresh Goyal-led Jet for about Rs 2,060 crore. The alliance went through turbulent times ever since it was announced in April 2013. After months of scrutiny, the deal got consummated late last year post clearance by various Indian regulators, including fair trade watchdog CCI (Competition Commission of India) and capital markets regulator Sebi.

Jet Airways stock price

On July 23, 2014, at 14:14 hrs Jet Airways was quoting at Rs 266.80, up Rs 10.75, or 4.20 percent. The 52-week high of the share was Rs 445.00 and the 52-week low was Rs 210.25.

The latest book value of the company is Rs -196.11 per share. At current value, the price-to-book value of the company was -1.36.

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Kotak-MCX deal: Is cleansing in commodities market over?

On Sunday, Kotak Mahindra Bank  announced it was buying a 15 percent stake in the commodity-exchange MCX . With this move, Financial Technologies  (FTIL), the parent company, becomes just a 5 percent holder in MCX.

Also Read: Kotak Bank pure financial investor in MCX: Paul Parambi

FTIL, promoted by Jignesh Shah, was asked by the regulator Forward Markets Commission to cut its MCX stake to 2 percent after its subsidiary NSEL was found violating regulations by facilitating forward contracts on the spot exchange and for allowing trading without holding collateral.

Will this pave a way for commodities market to become completely sophisticated or does it require further cleansing? Discussing the impact of the deal Ramesh Abhishek, chairman, Forward Market Commission, said the regulator is glad that finally the FTIL divestment in MCX has happened as per its 'fit and proper' order.

Going ahead he feels the market has an important role to play in the price discovery and hedging issues. Abhishek said FMC is working towards making the warehousing and forward market strong.

The regulator wants to make functioning of warehouses transparent and want to adopt third-party audit. "We are working closely with NSEL to repay money to borrowers," he added.

Agreeing with FMC Chairman, Rajnikant Patel, Former MD & CEO, BSE, said that WDRA (Warehousing Development and Regulatory Authority) must be put in place along with the entire networth criteria to check entries of fly-by-night operators, who get WDRA registration with one or two small warehouses.

"I think this is a care we must take and we have learnt a lot from the scam," he added.

Below is the transcript of Ramesh Abhishek and Rajnikant Patel's interview with Latha Venkatesh and Varinder Bansal of CNBC-TV18.

Latha: The regulator has had his way without getting into too many legal challenges. From Financial Technologies (FTIL) the regulator forcefully ensured that the stake of FTIL is brought down and will eventually be brought down to 2 percent in Multi Commodities Exchange (MCX). What are your next plans for the entire spectrum of commodity exchanges? Is the cleaning over so to speak? 

Abhishek: We are glad that finally divestment of FTIL is taking place in MCX as per our fit and proper order of December last year. Non compliance of this order so far had created a lot of regulatory issues with MCX which was also hampering its development and growth and also market confidence had been a bit shaken on that account. However, now those issues will get sorted out. 

Going ahead we feel that this market has a very important role to play in improving the price discovery and hedging issues on physical market. We would like this market to grow. We are trying to see that the warehousing in this market is made of highest quality because that is key to getting the confidence of the market participants. 

One more thing that we are planning to do very soon is to encourage forward trading which is delivery based only on our exchanges. The Forward Contract Regulation Act provides for only delivery based forward contracts and the forward contracts in the physical market are not guaranteed and there are lot of risks for both buyers and sellers. So, we plan to introduce that segment in our exchanges very soon. That will be a game changer. 

Latha: Can you just elaborate a little bit more on the warehousing bit. After all the chaos in National Spot Exchange Limited (NSEL) started from there. How are you planning to improve that piece?

Abhishek: After the NSEL scam we mandated our exchanges that they should get their warehouses registered by Warehousing Development and Regulatory Authority (WDRA). That process is going on. However, we are going to prescribe some capital adequacy norms, network criteria and other criteria for ensuring the proper warehouse service providers enter the exchange space. 

We would also want to make the functioning of warehouses very transparent. We want to introduce third party audits and a lot of disclosures on the website so that people know what commodities are there in which warehouse in what quantity. So, we want to make this absolutely full proof so that the service levels in warehouses improves; the transparency improves because without this the market confidence will not be there in our warehouses.

Varinder: Regarding the Kotak-MCX and the NSEL deal, what happens to the money raised by FTIL? Second, there has been no action which has been taken against borrowers or the brokers. So, what happens to them? What happens to the actually problem which created all this fiasco? 

Abhishek: One is what happens to the money that is going to FTIL. FTIL is a listed company which is not regulated by Forward Market Commission (FMC). So, what they do with money is not something that we have much to do with. They have to go by whatever are the prevalent laws enforced in the country. 

So far as NSEL is concerned, various investigations are going on including in the Maharashtra Protection of Interest of Depositors (MPID) Act and process of recovery also has been initiated. We are also working closely with NSEL and the committee of NSEL investors and brokers to see that NSEL takes whatever steps required to force the defaulting members to pay up as soon as they can. So, all these efforts are going on simultaneously; criminal investigations, the pressure on NSEL to force the defaulting members. We are in constant touch with them, the committee of investors and brokers are constantly reviewing their work. 

Today afternoon we have a joint meeting with NSEL board of directors and this committee to review what steps they have taken as they had agreed earlier. So, we are keeping all the pressure on but this is a judicial process on the investigation side and also on the recovery side under MPID Act. So, all things are going on and we are very hopeful that it will reach some stage where more recovery takes place and paid to the investors.

Latha: You heard the FMC Chairman's plans going forward both on warehousing as well as on forward markets trading. What are your thoughts; can it exponentially improve trading volumes? 

Patel: What FMC Chairman said, it is step in the right direction. I believe that unless you put in together the WDRA piece and the entire network criteria which is a very nice step. Take away these fly-by-night operators who would actually come again into the market by getting WDRA registration with one or two small warehouses, I think this care we must take and we have learned a lot from this scam so to say. 

Latha: Only network criteria is enough?

Patel: I would say network criteria and then also introduction of a warehouse management system and probably linking it to a clearing corporation. Varinder asked about what happens on the NSEL recovery process, I think to bring the entire piece into one integrated regulation of clearing corporation and then integrate it so that one side just as we have seen in the capital market similar seamless integration happens. 

Then we have with the warehouse management and regulatory oversight and registration process with the stricter norms which would be more not only on the network but also initial capital and even the control systems. We should go down that level where we do the warehouse management system. That could actually be a game changer.

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