The Tribune, Chandigarh, India

NTPC share sale oversubscribed
Govt to garner over Rs 11,500 cr at indicative offer price of Rs 145.46/share

New Delhi, February 7
NTPC's mega share sale was over- subscribed just before the market close today, helping the government fetch close to Rs 11,400 crore —the biggest disinvestment proceed this fiscal.

The indicative offer price, which is the weighted average price of all valid bids, was Rs 145.46 a share. At this price, the government would garner at least Rs 11,392 crore. The government had fixed the floor price for the 9.5% share auction of NTPC at Rs 145 apiece.

GOVT ‘SATISFIED’: The government today said it is satisfied with the response to NTPC's share sale and expects to garner over Rs 11,500 crore from the offer -— the biggest disinvestment mopup so far this fiscal.

"The government is satisfied with the response to this (NTPC) offer. We expect more than Rs 11,500 crore from the issue," disinvestment secretary Ravi Mathur said here after the offer closed for subscription.

The total demand received is for 132.84 crore shares and indicative price is Rs 145.91. Thus, the offer has been subscribed 1.7 times, he said.

Sharing further details, Mathur said there was good participation from foreign institutional investors. "One FII bid for 1,000 crore shares in the early hours of the trade. More order inflow came in towards the end of the day. Individually, FIIs have put in US $50-100 million," he said.

Bids for over 43.49 crore shares were with 100% margin, meaning if the bidder decides to withdraw later they can do so. Bids that came in with zero per cent margin were over 40.56 crore shares, according to NSE data.

The government is selling 78.32 crore shares or 9.5% of its stake in NTPC through the offer for sale route. The government holds a 84.50% stake. After the stake sale, its holding will come down to 75%.

Citigroup, Morgan Stanley, Goldman Sachs, Deutsche Equities, Kotak Securities and SBI Cap Securities are acting as the merchant bankers for the stake sale.

So far this fiscal the government has already raised over Rs 10,000 crore through stake sale in state-owned companies like Oil India, NMDC and Hindustan Copper Ltd.

The government hopes to raise Rs 300 billion this fiscal year by selling stakes in state-run companies. The share-sale revenue is key to its goal of containing its fiscal deficit within 5.3% of gross domestic product this year.

Market volatility early in the fiscal year forced New Delhi to postpone some of the offers. The BSE's benchmark 30-stock Sensitive Index hit a series of two-year highs last month, prompting the government to proceed.

Next up is National Aluminium Co later this month, a senior finance ministry official said on Friday. — Agencies

Stock down 2.5%, BUT STILL AT a PREMIUM TO indicative PRICE

A $2.1 billion share auction in state-run power utility NTPC Ltd was fully covered on Thursday, taking the government closer to its target of raising money through stake sales in state enterprises to lower its fiscal deficit. However, Shares in the company closed 2.5% lower at Rs 148.05, but still at a premium to the indicative offer price.The NTPC offer follows a $585 million share sale in state explorer Oil India Ltd last week and another $1.1 billion in state miner NMDC last December. Selling shares in state companies is a key element of the government's plan to bring down its fiscal deficit to 5.3% of GDP by the end of March, from 5.8% in 2011-12, to avoid a credit downgrade from global ratings agencies. The government aims to raise a total of $5.1 billion through stake sales in the current fiscal year ending March. It has raised nearly $4 billion, and wants to sell shares in at least four more state companies by March-end. NTPC is India's largest power generation company with capacity of nearly 40,000 MW. It aims to more than treble generation capacity by 2032. — Reuters

No impact on rating: S&P

Mumbai, February 7
Rating agency Standard & Poor's (S&P) said Thursday its rating on NTPC is not affected by the ongoing stake dilution by the government. S&P retained its BBB- rating on NTPC (at par with sovereign rating of the country).

"We expect the government to remain NTPC's majority shareholder and the power ministry to retain administrative control over the board. Therefore, at this stage, we believe the reduction in the government stake in NTPC to 75% from 84.5% will not change our assessment of the company's ‘very strong’ link with the government. Our view is based on our criteria for assessing government-related entities. In addition, we don't expect any change in the firm's 'very important' public policy role as the country's largest power utility," S&P said. — PTI

GDP growth to slump to 5% in FY13, lowest in a decade

New Delhi, February 7
India's economic growth rate this fiscal is estimated to be sharply lower at 5%, the lowest in a decade, on account of poor performance of manufacturing, agriculture and services sector. This estimate by the Central Statistical Organization (CSO) is drastically lower than what has been projected thus far by the government and Reserve Bank of India.

"The growth in GDP during 2012-13 is estimated at 5% as compared to a growth rate of 6.2% in 2011-12," according to the Advanced Estimates released Thursday by the CSO. In 2002-03, the gross domestic product had grown at 4%. Since then the Indian economy has been expanding at over 6%, the highest rate being 9.6% in 2006-07.

The CSO's advance estimate lowered the growth in agriculture and allied activities to 1.8% in 2012-13, compared to 3.6% 2011-12. Manufacturing growth is also expected to drop to 1.9% in this fiscal from 2.7% last year.

The CSO's GDP growth projection is a lower than the 5.5%t forecast made by the RBI in its quarterly monetary policy review last week. In its midyear Economic Review, the government had also estimated growth ranging from 5.7-5.9%. The current estimate is a sharply lower than the 7.6% growth projection for 2012-13 made by government in the FY2013 budget.

The latest estimate of 5% for the entire fiscal means that the pace of economic expansion has slowed sharply in the second half of fiscal 2012-13, given that GDP growth in the April-September period stood at 5.4%. According to the estimates, the services sector including finance, insurance, real estate and business services are likely to grow by 8.6% this fiscal against 11.7% in the last fiscal year.

On Wednesday, the IMF had said the Indian economy would grow by 5.4% in 2012-13, but should pick up to 6% in the next fiscal. It had expanded by 8.4% in both 2010-11 and 2009-10, while growth in FY09 was 6.7%.

The advance GDP estimates are released by the CSO before the fiscal-end to enable the government to formulate various estimates for inclusion in the budget. — PTI

RBI RULES OUT IMMEDIATE RATE CUTS

RBI governor D. Subbarao today ruled out any immediate rates cut on the basis of the Advanced Estimates released today by the CSO. Talking to reporters after chairing a meeting of the RBI’s central board of directors, he said the estimates would be taken into consideration when the RBI undertakes the next policy review. He added the RBI was looking forward to the FY14 budget to see what steps were being taken for fiscal consolidation in it. — TNS, Gauhati

Cabinet okays 3 rail projects; fares may be hiked again
Tribune News Service

New Delhi, February 7
While the Cabinet Committee on Economic Affairs (CCEA) cleared three new railway track projects worth over Rs 2,300 crore on Thursday, Railway Minister Pawan Kumar Bansal remained evasive on another round of passenger fare hikes in the upcoming rail budget. Though he indicated there could be another increase in the offing, he did not confirm this.

When asked specifically whether passenger fare would be hiked again in view of diesel price increase, the Minister replied, "Wait for another 19 days, you will have the answer, wait for the rail budget".

Facing an additional burden of Rs 3,300 crore as a result of hike in diesel prices, the railways would have to generate additional revenue to meet the this new expense.

"We were expecting Rs 6,600 crore after the recent passenger fare hike. But the Rs 10.80 per litre diesel hike would cost Indian Railways Rs 3,300 crore a year," Bansal said. "Funds are required for laying new lines, development of stations and for ongoing projects," he said, while adding "fares are one source but funds can be garnered from other nontraffic avenues which we’re exploring."

While announcing a passenger fare hike in December, Bansal had categorically stated there would be no fare hike in the 2013-14 rail budget. However, recent reports have suggested there could be another round of passenger fare hikes. Train fares were hiked from December 22 by 21% after a decade as successive railway ministers had not touched it for a decade.

Talking about the three new projects, Bansal said: "We hope to complete the projects in five years". Two projects are in the virgin coal belt in Chhattisgarh and will help bridge the gap between demand and supply in western parts of the country, the minister said. The third is in Gujarat.

The first project is a new 121-km broad gauge line between Gevra Road and Pendra Road in South East Central railway at a cost of . The second project relates to connecting the coal belt of Raigarh to Bhupdeopur, covering 63 km, at a cost of Rs.379 crore. The third project covers 247 km of doubling broad gauge line between Palanpur and Samakhiali in Kutch in Gujarat.

In another decision, the cabinet approved enhancing the authorized capital of the National Bank for Agriculture & Rural Development to Rs 20,000 crore from Rs 5,000 crore and expanding its scope of operations.

The CCEA also cleared the minimum support price for the 2013 season for fair average quality of milling copra at Rs 5,250 per quintal and of ball copra at Rs 5,500 per quintal. This represents an increase of Rs 150 per quintal for both milling and ball copra over the MSP announced by the government last season.

Diesel under-recovery to end by mid-2015, says Plan panel

New Delhi, February 7
The Planning Commission said on Thursday that the underrecoveries on account of sale of diesel will end by mid-2015 following progressive increase in the price of the fuel.

"Diesel is on a progressive elimination of subsidies and by mid-2015, present under pricing of diesel will be removed," Planning Commission deputy chairman Montek Singh Ahluwalia said in his address at India Energy Congress here.

The government recently partially decontrolled diesel prices, allowing oil marketing companies to raise prices by about 40-50 paise per litre every month to recover their loss of about Rs 10 per litre on selling the fuel at subsidized rates currently.

Ahluwalia said the management of energy resources in a world of scarcity is a big challenge. "Rich countries can afford to have energy subsidies because it will not prevent them from becoming richer. But poorer countries, that want to get richer, cannot continue with it," he added.

Ahluwalia said from a political point it was a difficult message to convey (to raise diesel prices). "The (energy) resources are scarce and finite and the capacity for growth and our ambitions are very high," he said, adding domestic endowment of energy will not be sustainable without renewable resources of energy. "We can't look at energy as an isolated issue...we’ve to get power, coal, gas all working together. It’ll not be possible to manage energy demand without energy efficiency."

Ahluwalia said there is a need to stimulate supply of nonconventional resources of energy as it is a must to have continues supply of energy. He added the government was exploring potential such as shale gas, though the initial assessment has not been very good.

Underlining the need for raising domestic fuel prices, he said diesel, LPG, coal and natural gas are underpriced in India. He added India has a lot of potential for solar and wind energy.— PTI

HAL to branch out into civil aviation, aircraft engines

Bangalore, February 7
State-owned aerospace company Hindustan Aeronautics Ltd would foray into the civil aviation sector and aircraft engine making business where it sees huge opportunities, besides designing, developing and manufacturing of unmanned aerial vehicles, its chairman R.K. Tyagi said Thursday.

He said the Director General of Civil Aviation had on Wednesday handed over civil certification to HAL Ozar airport, Nasik, which means it has been declared as an "alternate" airport to Mumbai. Ahmedabad airport was the case till now.

With this, he noted, flights coming to Mumbai, both domestic and international, can carry that much less fuel and more load, saving a lot of money, adding, with Mumbai airport getting congested, HAL is also eyeing the cargo business.

Addressing a press meet at Aero India 2013 here, Tyagi said, "Concerned authorities" have told HAL to take the role of a lead partner in the proposed Rs 7,500 crore national civil aircraft programme to develop a regional transport aircraft. Officials said the goal is to build a 90-seater regional aircraft with private participation under a joint venture model.

He also announced that HAL would design and develop a 20 kN aero-engine. "It will be a great emerging market to come because in a few years aero-engine market in India is expected to the tune of Rs 2,50,000 crore".

HAL's director (design & development) T. Suvarna Raju said Bangalore-headquartered defence PSU has the expertise of manufacturing engines under licence agreements and knows the technology involved.

"HAL is venturing into creating a mig-segment engine which will be used either on trainers what we have or regional jets (aircraft) we are looking at", he said. — PTI

Hero MotoCorp’s labour woes worsen

Gurgaon, February 7
The labour trouble at Hero MotoCorp’s Gurgaon plant have worsened further. Only two days after the Hero MotoCorp Workers’ Union threatened to go on a hunger strike, the management has reportedly issued “show cause” notices to six union office bearers seeking a reason for not taking any action against them for disruption of production on January 23 and 24.

The firm has alleged the workers had tampered with the equipment to reduce output which lead to huge losses.

However, union president Kanwalpreet Singh said: “We didn’t slow down production; instead, we chose to follow the exact quality procedures laid down by the firm.” — TNS

Cognizant Q4 net up 16%

New York City, February 7
IT services major Cognizant Technology Solutions Corp reported a higher quarterly profit as revenue from financial services clients jumped 20 per cent.

Cognizant's net income rose 16% to $278.8 million, or 92 cents per share, in the fourth quarter, from $240.1 million, or 78 cents per share, a year earlier. Total revenue rose 17% to $1.95 billion. Revenue from Cognizant's financial services business, which accounts for more than 40% of total revenue, rose to $815.4 million.

Meanwhile, top tier IT exporters appear to be well positioned to deliver a stronger performance in the March 2013 quarter based on their management commentary and resilience shown during the December quarter. Most players held on to moderate volume growth during the December quarter despite seasonal weakness pertaining to holidays and annual budget decisions.

This is likely to pick up in the March quarter as large projects that were bagged in the past two-three quarters will start coming on stream now. While the momentum is expected to increase, the performance of individual players will remain nonsecular.

The growth trajectory of the top tier IT companies over the last three years has been polarised with TCS and HCL Tech generating more additional revenues compared with Infosys and Wipro. — Reuters