Jaitley may peg FY15 fiscal deficit at 4.3%: Goldman Sachs

It will take three years for the high fiscal deficit, which was one the reasons why foreign rating agencies threatened to downgrade the country's sovereign rating to junk, down to 3 percent, the brokerage added.

Foreign brokerage Goldman Sachs today said it expects new Finance Minister Arun Jaitley to peg the fiscal deficit target for FY15 at 4.3 percent, up from the 4.1 percent stated by his predecessor P Chidambaram.

However, the Wall Street brokerage noted that 4.3 percent will be well below its earlier assessment of 4.8 percent.

"We expect a fiscal deficit target of 4.3 percent of GDP for FY15, slightly higher than the 4.1 percent presented in the interim budget by the previous government, but lower than our previous estimate of 4.8 percent," it said in a statement.

The previous government's expectation on tax revenue growth of 21 percent was "too optimistic," it said.

It will take three years for the high fiscal deficit, which was one the reasons why foreign rating agencies threatened to downgrade the country's sovereign rating to junk, down to 3 percent, the brokerage added.

In order to achieve the fiscal consolidation in the medium term, the government will return to fiscal rules, tax consumption instead of production, broaden the income tax base by creating a new Internal Revenue Service, and reduce fertiliser subsidies, it said.

Goldman said that the government will focus on shifting spending from consumption to capital expenditure in its Budget.

"To boost growth, we think the government would need to focus more on capital spending, especially infrastructure, relative to subsidies. We therefore expect an increase in capex relative to the interim budget," it said, adding that fuel subsidy will come down to 0.6 percent of GDP in FY15 from the 0.8 percent in the year ago.

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India Inc's foreign borrowings fall to $1.46 bn in May

Indian firms had raised USD 2.49 billion by way of External Commercial Borrowings (ECBs) and Foreign Currency Convertible Bonds (FCCBs) in May, 2013.

External borrowings of Indian companies fell by 41.3 percent to USD 1.46 billion in May this year compared to the same month last year, according to the Reserve Bank data.

Indian firms had raised USD 2.49 billion by way of External Commercial Borrowings (ECBs) and Foreign Currency Convertible Bonds (FCCBs) in May, 2013.

The borrowings were higher at USD 3.2 billion in April, 2014.

"I think it's a combined effect of political uncertainty (as May was the election month) and rising global interest rate cycle on the domestic investment sentiment. Relatively higher interest rates abroad have made external borrowings costlier and that also might have acted as a dampener," Bank of Baroda Chief Economist Rupa Rege-Nitsure said.

As many as 47 companies raised USD 536.32 million from the automatic route during the month, while a 20 firms raised USD 923.88 million from the approval route, showed RBI data.

Among the major borrowers from overseas markets in May were Rural Electrification Corp, General Motors India, Mylan Laboratories, Balkrishna Industries, Hospira Healthcare, India Gateway Terminal, and IPCA Laboratories.
In the approval route category, state-owned Rural Electrification Corporation Limited raised USD 250 million for sub-lending for a period of five years.

General Motors India raised USD 244.50 million for general corporate purpose (11.8 years) and Mylan Laboratories borrowed USD 200 million for general corporate purpose (8.2 years).

In the automatic route segment, Balkrishna Industries borrowed a sum of USD 100 million (4.3 years) for refinancing of earlier ECB and Hospira Healthcare India  raised USD 150 million (6.3 years) for import of capital goods.

Among others, India Gateway Terminal raised USD 20 million, 20 million and 10 million in three separate tranches for refinancing of earlier loan each for a period of 7.1 years.
IPCA Laboratories borrowed USD 20 million for modernisation (5.1 years); Jindal Ploy Films USD 16 million for new project (5.6 years) and Mercator Limited raised USD 16 million for import of capital goods.

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Icra Q1 net up 28% at Rs 19 crore on rise in other income

The New Delhi-headquartered company's total income was up 19 percent during the reporting period at Rs 49.10 crore as against Rs 41.41 crore in the same period year ago.

Rating agency  Icra today reported a 28 percent jump in June quarter net profit at Rs 19.40 crore, helped by a spurt in other income on the back of maturing of investments during the reporting period. The company, a division of international rating agency Moody's, had reported a post-tax profit of Rs 15.20 crore in the corresponding April-June period last year.

Other income was up 33 percent in the first quarter ended June 30, driven primarily by the the maturing of investments in fixed maturity plans, Icra said in a statement here, without giving the exact quantum. The New Delhi-headquartered company's total income was up 19 percent during the reporting period at Rs 49.10 crore as against Rs 41.41 crore in the same period year ago.

Operating income rose 14 percent at Rs 36.71 crore as against Rs 32.11 crore in the corresponding period. On a consolidated basis, the Group's profit after tax was up 32 percent to Rs 21.80 crore in the April-June period from Rs 16.57 crore a year ago. Meanwhile, Icra announced that during the quarter, Moody's has completed the process of acquiring more shares and raised its stake to 50.06 percent in the rating firm.

Also Read: Icra sees housing credit growing up to 21% this fiscal

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Coal India eyes 354 MT annual output from 118 projects

In a separate reply to the Upper House, Goyal said as per the report of the Working Group on Coal & Lignite for formulation of the Twelfth Five Year Plan (2012-17) production of coal, as per optimistic estimates was projected to reach 795 MT by the end of the Plan.

Against widening demand-supply deficit, the world's largest miner  Coal India Ltd (CIL) is set to take up 118 projects envisaging 354 million tonnes per annum (MTPA) output in three years, Parliament was informed today.

"CIL envisages taking up 118 projects for an ultimate capacity of 353.87 MTPA during the 12th five year plan. The envisaged contribution in 2016-17 the terminal year of the 12th five year plan is 137.77 MT," Minister of State for Coal, Power, New and Renewable Energy Piyush Goyal told Rajya Sabha in a written reply.

Goyal said these projects would be taken by seven subsidiaries of CIL. Besides, he said Singareni Collieries Company Limited (SCCL) will also take up nine projects for an ultimate capacity of 13 MTPA during the 12th plan. "The envisaged contribution in 2016-17 the terminal year of the 12th five year plan (by SCCL) is 4.04 MT," the Minister added.

CIL, which accounts for over 80 percent of the domestic coal production , has seven coal producing subsidiaries - Eastern Coalfields, Bharat Coking Coal, Central Coalfields, South Eastern Coalfields, Western Coalfields, Northern Coalfields and Mahanadi Coalfields. In a separate reply to the Upper House, Goyal said as per the report of the Working Group on Coal & Lignite for formulation of the Twelfth Five Year Plan (2012-17) production of coal, as per optimistic estimates was projected to reach 795 MT by the end of the Plan.

The group as per another estimate, i.e. "Business as Usual Scenario," projected production to reach 715 MT by 2016-17 including 100 MT from captive blocks, he said. The Minister said "the Optimistic Scenario was based on the assumptions about speedy development of coal evacuation, rail infrastructure and progress on environment and forest related clearances. The focus of the Government is to take all measures to facilitate increase in production of coal."

Coal India stock price

On July 07, 2014, Coal India closed at Rs 396.50, up Rs 2.45, or 0.62 percent. The 52-week high of the share was Rs 423.50 and the 52-week low was Rs 238.35.

The company's trailing 12-month (TTM) EPS was at Rs 23.76 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 16.69. The latest book value of the company is Rs 56.24 per share. At current value, the price-to-book value of the company is 7.05.

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StanChart PE to pump Rs 500cr in Sterlite Tech's power biz

The proceeds will be used for equity contribution in existing as well as new power transmission projects. This would be the first foreign investment into India's power transmission sector.

Standard Chartered Private Equity will invest Rs 500 crore in Sterlite Technologies power transmission infrastructure business for a minority stake. "Sterlite Technologies, power transmission solutions provider...has entered into agreements with Standard Chartered Private Equity for an equity investment of Rs 500 crore in Sterlite Power Grid Ventures Ltd (SPGVL)," Sterlite Technologies said in a statement.

SPGVL, a subsidiary of Sterlite, focused on the development and operations of power transmission projects, will issue convertible securities to Standard Chartered Private Equity for a minority share. The proceeds will be used for equity contribution in existing as well as new power transmission projects. This would be the first foreign investment into India's power transmission sector, the company said in the statement.

Also Read: M&M eyeing Rs 10k cr turnover for Power Train biz, says Wadhera

The first three projects of SPGVL with over 2,000 km of transmission lines are in final stages of completion, while the next 3 projects will start operating sequentially from financial 2017. "T&D is a clear bottleneck due to which many parts of the country are energy surplus while others remain power-deficient," said Pravin Agarwal, Chairman - SPGVL & Director - Sterlite Technologies Ltd.

"We believe that our partnership with the Sterlite group will help the build-out and the strengthening of the transmission infrastructure in India," said Udai Dhawan, Managing Director and India Head of Standard Chartered Private Equity.

Sterlite Techno stock price

On May 29, 2014, Sterlite Technologies closed at Rs 43.20, down Rs 1.25, or 2.81 percent. The 52-week high of the share was Rs 45.70 and the 52-week low was Rs 15.75.

The company's trailing 12-month (TTM) EPS was at Rs 1.27 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 34.02. The latest book value of the company is Rs 31.32 per share. At current value, the price-to-book value of the company is 1.38.

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Govt should take steps to ramp up coal production: IPCL

"On the generation front, the shortage of coal is essentially artificially created. Mechanisation and productivity of Coal India, a monopoly, is abysmally low," IPCL Chairman Hemant Kanoria said

The government should take measures in the Union Budget to ramp up coal production in the country , India Power Corporation Ltd today said. "Without stepping up coal production domestically, providing incentives for increasing generation capacity will be futile as that would have a chain impact of running power plants at sub-optimal load factors, power supply being erratic and cost of power remaining high," IPCL Chairman Hemant Kanoria said in a release stating his Budget wish list.

"On the generation front, the shortage of coal is essentially artificially created. Mechanisation and productivity of Coal India, a monopoly, is abysmally low," Kanoria said. He said that distribution reforms would determine the viability of the entire power sector in the country. "It is worthwhile to adopt a 'carrot-and-stick' policy so that discoms (distribution companies) which are able to reduce their ATC losses are rewarded by the government in terms of support to tide over their losses," he said.

Meanwhile, ICRA Senior VP and CO-head, corporate sector ratings Jayanta Roy said in a separate release that government should take steps for an improvement in evacuation facilities and removal of logistical bottlenecks, including assurance of higher wagon availability and better connectivity between coal mines and end user plants. "Roadmap for private and foreign participation in domestic coal mining is needed," he added.

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Assocham for Rs 40,000 cr budgetary support to Railways

"Capacity enhancement, efficiency, expansion and safety are major issues being faced by Indian Railways which plays a crucial role in development and operation of infrastructure sectors like coal, power, steel, cement and other critical sectors like fertilizers," said Assocham Secretary General D S Rawat.

Ahead of Railway Budget, industry body Assocham today asked the government to provide Rs 20,000 crore each for next two years in form of a soft loan or a grant to upgrade and plug all loopholes in the Indian Railways .

The industry chamber said the financial assistance will enable transformation of the Indian Railways, which at present is under tremendous financial constraint, into the most efficient and affordable carrier in the world. It said the support would evoke interest of global investors to invest in upgradation of the Indian Railways network.

"Capacity enhancement, efficiency, expansion and safety are major issues being faced by Indian Railways which plays a crucial role in development and operation of infrastructure sectors like coal, power, steel, cement and other critical sectors like fertilizers," said Assocham Secretary General D S Rawat.

"Innovative policies are required to be framed to attract finance for capacity building works. Effective public-private partnerships (PPPs) would go a long way in delivering modern, high quality public services competitively. Foreign direct investment in railways would also provide a big boost to its modernization and bring in state-of-the-art technology," he added.

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New government will deliver, says Ratan Tata

Tata is hopeful that the Modi government will elevate the situation of the country.

Expectations are sky high ahead of the Modi government's maiden budget. But, many are hopeful and one among them is Ratan Tata who expects that the new government will deliver.

Watch videos for more.

 

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Half of India's coal power plants have 1 week of stocks

Nearly half of India's coal-fired power stations only have enough stocks to last a week, the power minister said, as the country struggles to connect millions to the grid and wrestles with a growing coal import bill.

Coal imports equate to about one percent of India's economy as state behemoth Coal India , the world's largest coal miner, has failed to raise output fast enough to meet demand.

This leads to frequent blackouts, something new Prime Minister Narendra Modi is keen to fix soon but which will raise coal shipments from countries such as Indonesia, Australia and South Africa. Coal fires more than half if India's electricity.

Power Minister Piyush Goyal said on Monday 26 out of 100 coal-based power plants in India had "super critical coal stock" - enough to meet requirements for less than four days.

A total of 44 plants, including the super critical ones, have "critical coal stocks" sufficient for less than a week, with the majority in the state of Maharashtra, the home of India's financial capital Mumbai.

"In order to ensure adequate availability of coal, Coal India Limited has been impressed upon to enhance production of domestic coal in the country and power utilities have also been advised to enhance imports of coal," Goyal told lawmakers.

India is already the world's third-largest coal importer despite sitting on the fifth largest reserves, mainly due to delays in securing environmental clearances to add new mines and to build facilities to transport coal from remote mines.

Coal-fired power plants are expected to see demand of 551.60 million tonnes this fiscal year ending March 31, but supply will be limited to 466.89 million, Goyal said.

In April-June, Coal India supplied 88.66 million tonnes to power companies against a target of 101.61 million. Coal shipments rose as a result.

India's imports of thermal coal, used in power generation, rose 11 percent to 14.77 million tonnes in June, according to a joint venture of Tata Steel and Steel Authority of India Ltd.

Weaker-than-average monsoon rain this year could also encourage coal imports as hydro-electric production is expected to fall.

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'Simple regulatory framework to pull investment into India'

Vedanta Resources Chairman Anil Agarwal said that though India has the world's fourth largest coal deposits and seventh largest deposits of iron ore, these sectors are significantly underinvested in terms of exploration and development.

Implementation of simple regulatory framework and adherence to commitments will help India attract investments in natural resources sector, Vedanta Resources Chairman Anil Agarwal said.

"India is a country richly endowed with world's largest reserve of natural resources and in today's context, possesses the potential to add USD 1 trillion to the growth of the Indian economy over a period of few years and in turn, create millions of job opportunities," he said in his expectation from the government.

The key to this simple revolution lies in implementing a simple regulatory framework, based on a transparent structure of policies and regulations and a faithful adherence to commitments to attract investments. "I am sure this will attract many more companies willing to work in India, to explore and harness the vast reserve of natural resources to the benefit of the Indian economy," he said.

Stating that the need of the hour was to boost energy security through reform, Agarwal said that India can meet at least 50 percent of its oil and gas requirements from its own resources.

"Today India produces oil at around USD 4 per barrel and import at around USD 110 per barrel. We are sitting on a large resource base of oil and gas and what is needed is to encourage large companies to enter this sector to unlock the true potential. This can be through joint ventures and foreign investments," he said.

Agarwal said that though India has the world's fourth largest coal deposits and seventh largest deposits of iron ore, these sectors are significantly underinvested in terms of exploration and development.

"Encouraging private enterprise, exploration of natural resources, development of manufacturing, simplification of regulatory and approval processes, promoting tourism and liberal arts can open up new avenues of employment and accelerate the economic progress of the country," Agarwal said.

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