Capital spending in India may recover after 12 mnths: S&P

Capital spending in India is likely to take 12 more months to start recovering as private companies have adopted a 'Wait-And-See' approach, says a report by global ratings agency Standard and Poor's.



Capital spending in India is likely to take 12 more months to start recovering as private companies have adopted a 'Wait-And-See' approach, says a report by global ratings agency Standard and Poor's. "We expect capital spending in India will continue to fall in fiscal 2016 despite its economy being one of the few bright spots in Asia-Pacific," it said. According to the report, corporates in capital-intensive sectors are mostly focusing on improving profitability and lowering leverage rather than looking at new projects. "We believe capital spending will take 12 more months to start recovering," said the report titled 'India's Private Sector Companies Adopt Wait-And-See Approach To Capital Spending'. It said research indicates that capital expenditure peaked in fiscal 2014 at Rs 3.7 lakh crore for the top 100 Indian companies and it would decline over the next two years. India's fiscal year runs from April to March. It, however, added that "we expect government-owned companies and  Reliance Industries  to lead capital spending before a broader-based pick-up occurs." India, it said, is currently viewed as one of the few bright spots in the Asia-Pacific region and there is significant optimism all around, adding that the recent Union Budget has also bolstered optimism. "India's economic growth, according to revised GDP numbers based on a new methodology, is strong, and we expect further improvement. "However, top Indian corporates are not planning to increase their investments yet. We believe capital spending by top Indian corporates will further decline by 10-15 percent in fiscal 2016 from its peak in fiscal 2014," it said. This is because companies are "yet to materially benefit" from the government reforms or from an improvement in the Indian economy, it said, adding that the interest rates were high until last year and the global economic environment is also not rosy. The report further said that the slowdown, "we believe", will be most evident in utilities and infrastructure, with about 20 percent decline, and the metals and mining sector, with about 30 percent decline by fiscal 2016 as compared to fiscal 2014. "The few sectors in which we expect companies to maintain or increase capital spending are oil and gas, telecommunications and auto... This is because of the large capital spending programmes of Reliance Industries and Oil and Natural Gas Corp , which we believe will continue until fiscal 2016," it added. . The report added that it expects  Tata Motors  to increase capital spending, but it is mostly because of the planned expenditure by its Jaguar Land Rover business. It also said that while over the past two years, the Indian private sector generally has taken a back seat in capital spending, public sector has continued with its heightened pace of capital expenditure. The decline in India's private sector spending would have started in fiscal 2014 if it were not for Reliance Industries, it added. The company doubled its capital spending in fiscal 2014 to Rs 600 billion and accounted for about 25 percent of the private sector's capital spending. "It is also the reason why, despite our expectation of a fall, we believe private sector capital spending will remain materially higher than public sector spending among the top Indian corporates. "Reliance Industries has embarked on a large capital spending programme of about USD 30 billion over three years, mainly on refining, petrochemical, and the telecom sector," the report said.

Kriti Nutrients standalone Dec '14 sales at Rs 84.56 crore

Kriti Nutrients has reported a standalone total income from operations of Rs 84.56 crore and a net profit of Rs 3.82 crore for the quarter ended Dec '14. Other income for the quarter was Rs 0.93 crore. For the quarter ended Dec 2013 the standalone total income from operations was Rs 75.38 crore and net profit was Rs 1.69 crore, and other income Rs 0.51 crore. Kriti Nutrients shares closed at 5.16 on February 05, 2015 (BSE) and has given 21.41% returns over the last 6 months and 46.59% over the last 12 months.

Tirupati Industries to invest RS 150cr in chemicals division

Tirupati Industries and its shareholders at large about the company�s decision to invest RS 150 crore over next three years in the company�s fast expanding chemicals division with the aim of becoming India�s largest fully integrated Metallic Compounds manufacturer.

Tirupati Industries India Ltd has informed BSE regarding "Tirupati Industries (India) Limited to invest Rs. 150 Crores, become India's largest Metallic Compounds Player". Tirupati Industries and its shareholders at large about the company�s decision to invest RS 150 crore over next three years in the company�s fast expanding chemicals division with the aim of becoming India�s largest fully integrated Metallic Compounds manufacturer. Source : BSE 

GSPL up 5%, Citi says LNG imports policy to boost earnings

GSPL rallied 9 percent intraday as brokerage house Citi feels the natural gas transmission company could be the biggest beneficiary from new gas policy given its high operating leverage and connectivity to the Hazira regas terminal which is still running at 50 percent of its around 5 MMTPA capacity.




Investors continued to buy shares of  Gujarat State Petronet despite big fall in equity market on Thursday. The stock rallied 5 percent (9 percent intraday) as brokerage house Citi feels the natural gas transmission company could be the biggest beneficiary from new gas policy given its high operating leverage and connectivity to the Hazira regas terminal which is still running at 50 percent of its around 5 MMTPA capacity. Benefits for  Petronet LNG could be capped by capacity constraints at Dahej (already running at more than 110 percent utilisation) while GAIL 's principal benefits would be more material in the non-monsoon months (when Dabhol is operational), said the brokerage. Citi estimated that for every 5 mmscmd increase in volumes, GSPL's earnings could increase by around 28-30 percent against around 7 percent increase for GAIL's earnings. The Cabinet Committee on Economic Affairs, on Wednesday evening, cleared a new policy (reverse bidding method) for providing imported LNG to stranded gas-based power plants at a concessional rate. The government will auction gas with each power plant allowed to bid up to 30 percent plant load factor (PLF). The government believes the policy could lead to revival of 31 stranded gas-based power plants of 14 GW capacity and the incremental volumes of LNG that the government expects to import are 10-18 mmscmd. The government also proposed to provide support to distribution companies from the Power System Development Fund (PSDF) through a transparent reverse e-bidding process which will make the cost of power affordable. The government aimed to finalise the framework and technology for this policy in the next one month. Citi said, "The new policy only relies on imported LNG for meeting the fuel requirements of gas-based power plants, and is not akin to the oft-mentioned gas pooling. The latter was always shrouded in uncertainty as it would have involved pooling of LNG with domestic gas which, however, remains in shortage. The domestic allocation (to sectors such as city gas, fertilisers, etc.) therefore stays untouched." GAIL and GSPL have reportedly been given the responsibility by the government for importing the LNG and supplying it to the power plants. “However, the mechanism envisages sacrifices to be made collectively by all stakeholders on the incremental LNG imports, including the central & state governments (through exemptions from certain taxes & levies); gas pipeline transporters, viz. GAIL & GSPL (through lower transportation tariffs & marketing margins); regas terminals, viz. Petronet LNG's Dahej, GAIL's Dabhol, and Shell's Hazira (through lower regas charges); and power developers (by completely foregoing their ROEs),” said Citi in its note. The scrip of Gujarat State Petronet closed at Rs 123.75, up Rs 5.55, or 4.70 percent. GAIL also closed higher by 0.45 percent at Rs 381.80.

Lower gas price positive for all stakeholders: Gail CMD

The government’s decision to provide subsidy for gas-based power units will help revive stranded power plants, said BC Tripathi, Chairman and Managing Director of Gail India  in an interview to CNBC-TV18. Also, the decrease in gas prices from April 1 will be positive for all stakeholders, according to Tripathi. Prices of natural gas will be cut by 7.6 percent to USD 5.18/mmBtu from April 1. The revised price has been arrived at by applying the Cabinet-approved formula on the select average global prices for the fuel between January and December 2014. Tripathi said the LNG terminals of Gail were running at 40-50 percent capacity.

ONGC to invest Rs 40,000 crore in KG Basin in 4 years

The Chief Minister asked the ONGC officials to expedite the exploration process and ensure that substantial number of jobs (direct and indirect employment) are provided to locals, it said.




ONGC   on Wednesday said it would invest Rs 40,000 crore in Krishna-Godavari Basin in a phased manner over the next four years. ONGC Chairman and Managing Director D K Sarraf informed this to Andhra Pradesh Chief Minister N Chandrababu Naidu. Sarraf, who was accompanied by senior company executives, told Naidu that the state-owned oil and gas explorer aims to extract 25 million standard cubic meters per day (mmscmd) gas in KG Basin by 2018 and would also look into the exploration of oil by 2019, Andhra Pradesh government said in a statement. The Chief Minister asked the ONGC officials to expedite the exploration process and ensure that substantial number of jobs (direct and indirect employment) are provided to locals, it said. The ONGC executives informed the Chief Minister that they are keen on being partners in Petro University with other stakeholders, proposed in the state. ONGC would also invest "substantial amount" in Corporate Social Responsibility (CSR) initiatives in Krishna, East and West Godavari districts in partnership with Andhra Pradesh State Skill Development Centre, the statement said. One of their CSR initiatives includes partnering with deep-water skill development centre in Kakinada, in cooperation with JNTU Kakinada. Secretary (Energy) Ajay Jain and other officials were present at the meeting.

Akzo Nobel appoints Kimsuka Narsimhan as independent director

With reference to the earlier letter dated January 29, 2015, Akzo Nobel India Ltd has now informed BSE that Ms. Kimsuka Narsimhan has been appointed as an Independent Director of the Company with effect from January 30, 2015 in due compliance of Clause 49 (II)(A)(1) of the Listing Agreement.

With reference to the earlier letter dated January 29, 2015, Akzo Nobel India Ltd has now informed BSE that Ms. Kimsuka Narsimhan has been appointed as an Independent Director of the Company with effect from January 30, 2015 in due compliance of Clause 49 (II)(A)(1) of the Listing Agreement.