Have got clearance for phase I of Raigarh project: JSPL

Q: Take us through what's the situation in Orissa first now? The environment ministry’s call to take action against you — has that been resolved?

A: We had got a letter from environment ministry about Orissa project. We made presentation to them and we explained them everything. Subsequently, they said okay. So the project is already on and they have cleared the whole thing and subsequently they have returned to the Orissa government to initiate action if there are violations under the Forest Preservation Act and Environment Act.

We are waiting for the Orissa government to do something and we will respond to Orissa government — whatever they do under the act because we feel that there is nothing, which really requires for action and there is nothing wrong that has been done and there is no violation. So we will respond to the Orissa government subsequently.

Q: Which way do you think this is going to go because for a lot of companies like yours issues with the environment ministry have basically headed to court? Do you think this may get into a litigation loop?

A: We really don’t know so far. The ministry has written to the Government of Orissa to initiate actions. We will wait for what action the Orissa government takes. But finally, we don’t know really what the Orissa government does. It may go to court and they may ask us for some information. We give it to them and let’s see what happens.

But even if it goes to the court, we are in a position to present our case whether to the Orissa government or to the court properly. So we really don’t know at this stage.

Q: Can you update us on what’s happening with your power project plant at Raigarh? How much has been cleared and on that as well do you have clearances from all the required or requisite ministries?

A: Yes, Ministry of Environment again cleared the 2400 megawatt. They’ve said that for a 1200 megawatt where the coal link has already been given subject to certain things, we can go ahead with that project. The work will start shortly on that project. Once we comply with the minor conditions, which are there, but 2400 megawatts should be ready in the financial year 2012-13.

We are doing all that is best possible. Once we will get the clearance, we will try to expedite the work on that project and try and complete it in the financial year 2012-13.

Q: Just to come back to the business, merchant power realisations had actually gone down quite significantly at the start of the year. Has there been some stabilization in those prices since then and are State Electricity Boards (SEB) now picking up power more than what they were doing earlier?

A: Normally in April-May and June, we see the demand for power coming up. But what is happening now that when the merchant market started opening up in last 2 years then the total market was largely for daily basis like what you see the rates on power expenses to six-eight months. But nowadays increasingly we are seeing a trend coming up for 1 year, 2 year and 3 year. There are large number of SEBs coming up to buy power for one-two-three year basis and there are lot of tenders floating around for that.

So for one-two-three year there is a good rate. It’s a comfortable rate and the demand is there for this medium-term. So many companies are primarily aiming at one-two-three year power market now rather than depending on this extremely short-term market.

But coming to your specific point, the power market on an extremely short-term, like one month basis or a day head basis, is firming up and for the first quarter normally it’s always high.

Q: What's going on in the steel market? How are realizations and prices moving there?

A: The steel market is little soft this time. In fact, in the March month it is a little soft world over and in India too. What has happened that that the steel market — the steel prices have gone down, something about USD 30-50 internationally and so is in India something about Rs 1,000 per metric tonne. Iron ore prices had also has gone down slightly. So to that extent it is okay.

We can say that some predictions, iron ore prices getting pass onto consumers also. But primarily, the demand side is low this time, maybe because inventory clean up, financial year-end. There maybe some build up of inventories from the next quarter onwards and the demand will come back again to coking coal price, which affects the steel prices also. There is no let up in the coking coal prices and price remains very firm.

Q: One word on what’s happening with the steel universe and whether over there you are seeing any pricing traction because the bigger concern is what’s happening with metals courtesy China and the way it’s crunching down?

A: No, internationally we are not seeing any sign of prices crumbling as such or demand crumbling anywhere. In fact, some demand has gone soft because what we are seeing unrest in some part of the world Middle East and the other countries.

People have become a little cautious in their purchases and they are not holding much inventory and they are also postponing their project expenditures and delaying it for a while that’s a precisely the reason.

But otherwise, we don’t see anything happening to steel demand worldwide and there is no reason to worry about.

Macquarie SBI Infra invests $200m in GMR Airport

GMR Infrastructure said on Thursday Macquarie SBI Infrastructure Investments has invested Rs 8.93 billion, or USD 200 million, in its unit GMR Airports Holding, which runs the Delhi and Hyderabad airports.

The investment was made through compulsorily convertible preference shares, the firm said in a statement to the Bombay Stock Exchange, without divulging details.

The Foreign Investment Promotion Board (FIPB) on February 11, had approved GMR's proposal to raise money from SBI-Macquarie and other funds, the Economic Times newspaper reported earlier this month, quoting an unnamed FIPB official.

The company plans to use funds for acquisitions and new projects and not for its existing portfolio, the report said.

See huge growth as wireless broadband becomes a need: WWIL

The Department of Telecommunication's (DoT) is planning to launch a new broadbond policy. The Telecom Regulatory Authority of India (TRAI) has recommended a set of new policy changes. The policy will materialise once the cabinet officials approve and finalise the broadband cabinet note that has been submitted by DoT.

Sudhir Agarwal CEO of Wire and Wireless India Ltd (WWIL) in an exclusive interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee says that the recommendations made by TRAI are likely to bring growth in broadband penetrationand hence, “the change in the policy will help grow the sector.”

He further says, “Every 10% growth in broadband penetration increases the GDP per capita roughly by 1.5%.” He says the company sees tremendous opportunities in the broadband segment for business. “I see huge growth happening in wireless sector of broadband, and hence, going forward we will shift focus from wireline broadband to wireless,” he says.

Below is a verbatim transcript of Sudhir Agarwal’s interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. 

Q: What are the primary contents of the broadband policy? What are you expecting to see by way of policy changes?

A: The current broadband penetration in this country is less than 1% versus tele density which is over 60% right now. Every 10% growth in broadband penetration increases the GDP per capita by roughly 1.5% in developing economies and beyond metro towns we need high-speed data and information for citizens.

TRAI made valid recommendations to the government for creating a national fibre network across the country. It is a good initiative because this will help getting more investments into this sector, thereby taking broadband across the country to normal citizens. Couple of key points which they have highlighted is they have recommended that there should be 100% depreciation in the first year on customer premises equipment, they should provide special permissions for infrastructure to be created and companies need to create that infrastructure plus duty exemptions on customer premise equipment. Overall, these are good recommendations and will help grow the sector.

Q: Right now broadband is a very small proportion of companies like yours. How bigger business opportunity do you see it for yourself?

A: The current broadband business is in single digits for us, however, we see huge opportunities for broadband, and since very soon it will become a basic need. People will find it difficult to survive without broadband connections, it will become integrated part of their lives. So, we see tremendous opportunities in this segment for our business. I see huge growth in wireless sector of broadband. Currently, we focus more in the wireline sector of broadband. Going forward, the focus will be on wireless segment of broadband.

Q: How is the core business doing in terms of subscriber addition?

A: It is doing well and we are looking at strong growth for WWIL.

Q: Where is market share right now? What do you think you may do by the time you hit the end of the calendar year?

A: It will be positive growth for us.

Q: Are there any fund raising plans for the company? 

A: The last time we raised funds were in end of 2009 and early 2010. We raised cash for the company and we are using that to bring our debts down and thereby, you will see constant decrease in interest cost for WWIL.

Alok Industries' textile business to multi-fold in 5 years

Sunil Khandelwal, CFO of Alok Industries, in an interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee, spoke about the recent happenings in his country and the road ahead.

Below is a verbatim transcript of the interview. Also watch the accompanying video.

Excerpts from Bazaar on CNBC-TV18 Watch the full show »

Q: There have been some talks on the flagship TUF scheme being resumed. Can you take us through the details? What could it mean for the sector and your company?

A: This was long awaited move. The entire industry has been waiting for this. The TUF scheme was in the ambiance since June 2010. It took a long time for the government to come out with the new scheme. It is a welcome step.

Definitely, the industry is in a growth path. For the first time, we are getting into a scenario where the demand is exceeding supply. In this scenario, the industry needs a lot of investment.

A study by Technopak says that in next 10 year from 2011 to 2020, the industry is likely to do a capex of USD 70 billion and achieve a target of USD 220 billion size of the industry by 2020.

It is a huge number. The government’s move will definitely strengthen and motivate the industry players to go for the large capex.

Q: How does this move or fund materially benefit your company given your outlined capex plans?

A: We are majorly through with our large capex. We are targeting only the balancing or marginal capex of about Rs 400 crore per annum for the next two-three years.

Definitely, we will get the benefit of the scheme for whatever new capex we do. The large backlog of interest subsidy would also get released with the new budget provision.

Q: What is the total debt of Alok Industries right now?

A: Alok’s standalone debt in the books is about Rs 9,500 crore. If we add another Rs 900 crore of the consolidated, the total consolidated debt is expected to be about Rs 10,500 crore as on March 2011.

Q: You had indicated that a part of the debt restructuring could involve you selling the real estate pockets and hence bringing down your debt equity with the money that you raised. Have you made any progress on that front?

A: It is not a part of the debt restructuring. It is a part of our overall consolidation of the group businesses. We have identified certain businesses in the group which are not core to our main businesses.

We are slowing exiting out of those businesses, one of which is realty. It will release a lot of cash to repay the debt at the subsidiary level and repayment of the Alok’s debt of another Rs 400-500 crore.

The next two years will be a year of consolidation for the group. We would be focusing on our core business that is textile. Within textile, we have identified three businesses like apparel fabric, home textiles and polyester yarn. These businesses will grow at least double or three times in the next four-five years.

GMR Infra

Remain invested in GMR Infra, says SP Tulsian, sptulsian.com.

Tulsian told CNBC-TV18, "I don’t think that there is dividend prospect for GMR Infra for next 3-4 years because they are into the asset creation stage of the infrastructure like airport, at Delhi Airport, Hyderabad Airport, Turkey Airport. You should look to the consolidated result because on a standalone basis, he is obviously going to see an EPS of 2 paisa, 3 paisa and all sorts of things. But on a consolidated basis because since the Delhi Airport has commenced the operations just 6 months back, they have huge burden of interest and depreciation, getting capitalize on completion of the project. But going forward, the Delhi Airport is going to be a big revenue earner for the company."

He further added, "Similar is the case for the Hyderabad Airport also because they have the land monetization also in the form of SEZ development and all that. So whoever is going for these kinds of stocks, they must have a clear horizon of at least 1-3 years because these infrastructure stocks once they create the capacity. Whether you talk of GMR, GVK, Mundra Airport or maybe JP Infra; all these stocks – all these companies, they take maybe couple of years to create the assets and then those assets will start yielding the earnings for the company thereafter. So maybe if one has a view of one year, can remain invested or otherwise should look for ideas. But I don’t think there will be any dividend prospects for the next 3 years in the company."

Reliance Capital

Hold Reliance Capital, says Shardul Kulkarni, Sr Technical Analyst, Angel Broking.

Kulkarni told CNBC-TV18, "If you actually see the charts of Reliance Capital, then the market has moved up 10%, but the stock has not. So I would ideally say that this is one stock which is consolidating. The stock has had good gains from the levels at around Rs 420, which it saw in the month of February. After that, this stock is moving in this range of Rs 560-600, a good sign of consolidation."

He further added, "Any breakout on the upside, above Rs 600, should be giving you a good move on the upside. So I think it makes sense to hold on. Stoploss on the lower side should be placed approximately at Rs 525 levels."

Govt liberalises FDI policy

Relaxing the rules for foreign direct investment (FDI) in the country, the government on Thursday decided to permit the issuance of equity to overseas firms against imported capital goods and machinery.

Crucial changes have also been made to norms regarding convertible instruments and downstream investments.

In an interview with CNBC-TV18, Dhiraj Mathur, PwC, speaks about the FDI policy and gives the outlook going forward.

Here is a verbatim transcript of the exclusive interview with Dhiraj Mathur on CNBC-TV18. Also watch the accompanying video.

Q: Out of all the changes that have been introduced today, is the one that is relating to joint venture perhaps the more important one? There have been several cases where India Inc has not allowed this foreign joint venture partner to enter the same field, so how crucial has this step been?

A: I think it’s an important step. We have a very robust judicial system. There is no need for policy instruments being used to sort of adjudicate between two parties in a commercial dispute. And that’s essentially what this condition did. As the secretary rightly pointed out, this condition wasn’t there in the very beginning and infact it started getting imposed sometime in the middle or late 90s and then it became part of a press note. So, there is no relevance for such a condition anymore. In any case companies after 2005 don’t have this clause at all. It is only the older companies that came in prior to 2005 potentially face this blockade.

Q: Do you think this will encourage FDI? Will it encourage foreign companies in India with JVs operational prior to the January 2005 to bring in additional investments as well as technology?

A: Absolutely. It removes the unnecessary pain, if I may use that expression, because for all the diversified multinationals that are present in India who have multiple joint-ventures, a lot of them have been able to successfully negotiate and get the consent of their earlier partners. But some of them are having a problem. Why should we not allow someone who came in prior to 2005 and wants to further invest and diversify in the Indian economy to do so?

Q: Department of Industrial Policy & Promotion (DIPP), in the case of convertible instrument, has said and allow the option of specifying a conversion formula in place of an upfront conversion price. What will be the benefits that will accrue from such a move? We understand initially that this is really going to help start ups, is that correct?

A: Yes, that’s right. Essentially companies that I have ventured, new ventures, in some of the more esoteric areas where typically valuations at this point of time would be very-very low and giving them the flexibility of giving a formula, a). B) mandating that the price of conversion cannot be lower than the price at the time of issue to take this from downside, while giving them the benefit of cashing in on the value that they created between the time of issue and time of conversion.

cement midcaps now

In an interview with CNBC-TV18, Jaspreet Singh Arora, Sr Analyst - Cement & Construction - Institution Equity at Anand Rathi Financial Services gave his readings and outlook on the cement sector.

He said that from a valuation perspective, the large caps are no longer as attractive as they were eight days back.

"Our view is pretty positive on the entire sector and the way largecaps have behaved in the last one week. We would prefer midcaps as on date," he added.

Citing his top picks from the mid caps in the cement sector he said, "Amongst the midcaps we prefer Birla Corp and Orient Paper. They are available at 1/3rd the valuation of a top player likeACC and Ambuja."

Below is the verbatim transcript of Arora's interview with Latha Venkatesh and Gautam Broker of CNBC-TV18. Also watch the accompanying video.

Q: That’s the issue. Had cement shares fallen low enough to become attractive we also heard about cement price hikes after the budget and even for that matter before the budget in the month of February. Is this indication of any improvement in fundamentals or is it just a cartelising that cannot carry on?

A: If you divide the seven stocks between largecap and midcap, the largecaps are actually instead of becoming cheap they are more expensive. So, from a valuation perspective they no longer as attractive as they were eight days back.

But, on the other side the midcaps having gone beaten down in the last three-four months and not having risen as much as some of the largecaps in the last eight days, definitely, offer some real value over there. So, basically, the valuation discount between the two has definitely widen and there is a scope of that getting narrowed.

The cement prices improved across regions barring a few pockets in central. Whether it’s a case of cartelisation or so-called corporation or understanding is something that one has to take with a pinch of salt. Surprisingly, this is one industry where when the prices rise all the players will have to giver reasons for why the prices are rising and in cases of cartelisation comes into picture.

But, when there is a freefall nobody is there to help the industry or even ask them any question on this. So coming to the bottomline our view is pretty positive on the entire sector and the way largecaps have behaved in the last one week. We would prefer midcaps as on date.

Q: The sceptic argument would be that cement prices have gone up quite substantially over the past two-three months and going forward, the demand may not catch up some much. The supply is increasing a lot, the industry is definitely going into expansion mode rather than contracting mode, their capacity utilisations have been rationalised which is perhaps helping prices at this point. What do you think, in hindsight could cement stocks begin to correct, at least the large ones, of course you are saying midcaps may have value in them still but would the largecaps correct having run up so much in the last one-two weeks?

A: Yes definitely, that’s what I said. We don’t see too much value left in the largecaps maybe our top pick in the sector is, in the pure cement play is Ambuja. We saw value between price of Rs 120-130 where it started about a month back or fortnight back. But, at Rs 150 definitely it doesn’t leave too much upside. So, is the case with ACC and Ultratech but one thing is clear.

We are the few brokerage houses who have a non consensus call. But, our call stands more from a double digit demand coming back to the system in the next fiscal year based on ways, assumptions and house calls that we have on industrial capex, infrastructure growth and the housing sector.

So that’s a broad call and the underlying assumption is also that the kinds of prices that we are seeing in the industry are there to hold. They probably may go up in the short-term slightly and then correct during monsoons. But, it should more or less stabilise in the second half.

So, for the year as a whole you might end up having between 10-15% higher prices which would be more than sufficient to cover up for the increase in cost. Therefore, there would be a case of expansions and margins.

Q: Which of the midcap cement companies do you still see value?

A: Amongst the midcaps that we track on active basis, we prefer is Birla Corp and Orient Paper. This is just based on two simple reasons; one, on cost parameter as both of them are cost affective and the other is the obvious thing on the valuation.

They are available at 1/3rd the valuation of a top player like ACC and Ambuja. This kind of valuation has never been sustained for too longer period of time. So, if one is looking at slightly more investment horizon, let’s say 9-12 months we would definitely recommend some of the midcaps at this point of time.

Q: Aren’t there more expansions that will bear fruit or that will come into play in the rest of 2011?

A: The kind of expansion that were there in the last two years is more or less what the industry was anticipating till now. To give you a figure, close to 290 million tonne and we have added about 70 million tonne in the last two year.

But, going forward we will at maximum have 20 million tonne coming in FY12 and another 10 million in FY13 that is where we stop. The next big expansion will come in FY15 and FY16.

So, what we are trying to say is even though the current utilisation rates are low there will only be a case of that going up in FY12 and FY13. Simply, because the pace of supply will not be as much as the pace of demand.

Demand will be a minimum of 25 million tonne to 30 million tonne on an annualised basis between FY12 as well as FY13.

Q: Any views on Grasim, it got into the Nifty, the VSF business is doing well. What is your view on the cement business of Grasim?

A: On the cement side, amongst the largecaps where we still hold value Grasim is the only pick left which offers reasonable upside. Beyond the cement regions which is through UltraTech Holding we are also positive on the VSF story.

The way prices have moved up in the last quarter or so and the company is more or less backward integrated for its raw material requirements. We are very positive on the VSF story and we believe this is one will offer real value in the times to come.

Ashok Soota calls MindTree exit 'destiny'

Ashok Soota, the outgoing executive chairman of mid-cap it company MindTree took everyone by surprise when he announced his decision to move out of the company he co-founded with nine others including the likes of Subroto Bagchi and Krishnakumar Natarajan among others.

In a very candid interview with CNBC-TV18's Sunanda Jayaseelan, Soota talks about the reasons behind what is being seen as an abrupt exit and clears the air on speculation about differences of opinion between the co-founders.

"It was an unexpected decision and even an unpredictable one," he says adding that it was destiny. "…perhaps I was intended to do another start up."

Rubbishing talks of disagreements with the board of directors, Soota says, "I can't imagine a greater degree of support that we have had on the board on virtually everything; there were really no negative undertones. All that is a part of media speculation which was built up and unfortunately there is no way to avoid people from speculating."

Below is the verbatim transcript of Soota's interview with Jayaseelan of CNBC-TV18. Also watch the accompanying video.

Q: Why did you choose to send out a note from your personal e-mail ID to the press including us? Isn't it rather unusual you think for an Executive Chairman to be communicating to the outside world through his personal ID and not through official channel?

A: The reason for that is very clear. I didn’t want speculation building up that I was about to leave because then it’s a very sensitive information. There could have been rumours, sort of a speculation certainly, within that I was about to leave.

That was a very important part of the reasoning for doing it in the way that I did it. I am glad that a large part of the media clearly saw it as a move of good corporate governance because the announcement was made in the public, didn’t allow any room for speculation.

Clearly, I was also indicating that, “Look, this isn't any revocable decision.” I don’t need to go back to the board for a discussion on these matters.

Q: There have reports that some board members have been unhappy with certain decisions whether it was related to retirements, whether it was related to your investments strategy and investments are something I guess we will come to later, that your shareholders are also expressed the unhappiness. What comments can you offer?

A: I must say that this is exactly what we call as business decision. The very fact that I mentioned that my decision was a personal one should indicate that it has absolutely nothing to do with it.

In fact, I can’t imagine, a greater degree of support than we have had on board from virtually everything. They have been involved very closely in strategy.

Everything that we have been doing has been discussed. There were really no negative under tones and that’s a part of the media speculation which has built up. Unfortunately, there is no way to avoid people from speculating because when you don’t have the obvious answer you have to look for some thing else.

Cheque payments to get costlier from tomorrow

Making payments through cheques may become a costlier affair from tomorrow, as RBI has allowed banks to levy higher service charges for their clearing, especially of high-value and outstation cheques.

As per a RBI circular coming into effect from April 1, 2011, banks would be free to fix service charges on speed clearing of cheques of value above Rs 1 lakh.

At present, RBI does not allow banks to charge more than Rs 150 per cheque for speed clearing of cheques worth over Rs 1 lakh, while there are no charges for value up to Rs 1 lakh.

However, speed clearing of cheques with value up to Rs 1 lakh would continue to remain exempt of any service charges.

World Cup bonanza: Cabinet announces tax exemption on sales

India's win over Pakistan in the World Cup semi finals seems to have brought more cheer to the ICC. The cabinet today announced tax exemption on the revenues from the World Cup, reports CNBC-TV18’s Tanvi Shukla.

ICC is expected to garner almost Rs 900 crore of revenues from World Cup this year and almost half of that would arise from India itself. So what we understand is about Rs 45 crore of tax will be exempted on these revenues. The cabinet announced that tax exemption will be given to the revenues arising from India for ICC and all of its subsidiaries, so that’s about Rs 45 crore of revenues.

This is not the first time that government has exempted tax. Back in 2005 also, the cabinet had made a proposal for an amendment to the Income Tax Act of 1961 stating that if there is an international sporting event being held in India and revenues arising from those, the service tax should be exempted and not be levied on such events. So, as a result the 2006 ICC Champions trophy which was held in India also did not have to really pay any tax. Seems like India’s brilliant performance this time has got the government in a generous mode.

Viewership ratings

Atleast for this World Cup this was the highest rating that we have seen. For the India-Pakistan match yesterday the rating was at 11.74, while India-Australia match got ratings of 6.53 and the India-England match got ratings of 6.44.

About 67.3 million viewers tuned in to watch the match yesterday. These ratings actually peaked to towards the end of the match probably because by then people had realised or were more sure of the fact that India would be winning. This ofcourse was not great news for general entertainment channels (GEC) channels which saw a dip in their GRPs of almost 20%.

Just another interesting fact here, the advertisement spot rates for yesterdays match was about Rs 15-20 lakh per ten seconds and now that India is in the finals these spot rates are expected to go as high as Rs 40 lakh.