Energy and Utilities Sector in India Monthly Update July 2012
Top Story
2,000 solar product stores to open in India Solar powered electronic products will now be available at retail stores across the country. Bangalore‐based Anu Solar Pvt Ltd, a leading manufacturer and seller of solar products, will open 2,000 stores across India on franchisee basis. These stores will sell varied products ranging from solar water heaters to solar powered calculators, caps with fans that run on solar power, solar power storing batteries and inverters. These stores will double as ‘one stop experience’ stores where the general public will see the benefits and uses of solar power. With an investment of around INR 2.5 mn per store, the turnover expected is INR 60 mn per year per store. There is a 5‐year unconditional warranty on all the products except solar power storing batteries for which the warranty period is 3 years. Since currently there are no private retailers for solar products, these stores will go a long way in increasing awareness of solar products and improving the availability. Also certain amount of power from conventional sources will be saved.
News Update General
MNRE to focus on biomass power The union Ministry of New and Renewable Energy (MNRE) is looking at setting up a company for biomass‐based power generation and promotion on the lines of Solar Energy Corporation of India (SECI) so as to encourage renewable energy sources of power generation in India. This company would look at promotion and generation of biomass‐based power and execute projects in the country. According to MNRE data agricultural and forestry residues has the potential to generate 18000 MW of power. MNRE has decided to set up a fund for this purpose. Suzlon bags deal worth INR 18 bn Suzlon Energy‐ India’s largest wind turbine manufacturer has signed an equipment sale deal valued around INR 18 bn with ReNew Power Ventures for wind energy projects to be developed across India. This is a repeat order from ReNew Power Ventures for Suzlon. This new deal will help to restructure the finances of the debt ridden company‐ Suzlon. This deal has been cracked at a crucial juncture when Suzlon has already sold off its Chinese assets and its shares are trading at extremely low values.
Energy and Utilities – Monthly Update
Availability of natural gas to SMEs to improve Oil and Natural Gas Corporation Ltd (ONGC) has decided to sell natural gas from its small and marginal gas fields to the consumers directly. To begin with the Ahmedabad asset of ONGC has invited bids for the sale of gas from its one of the marginal gas fields near Kheda in Gujarat. ONGC has invited e‐bids from the interested natural gas consumers for supply of about 15,000 scmd of gas for a period of five years. India misses the oil and natural gas target India’s crude oil production target was 206.73 mn tonnes in 11th (Five Year) Plan period (2007‐12), the anticipated achievement is 177 mn tonnes, i.e. 14% below the target. This is primarily because of fall in output at Reliance Industries' KG‐D6 fields and delays in implementation of project by ONGC. Similarly, natural gas production at 216.65 bn cubic metres was 16% short of 255.76 bn cubic metres target. Cairn Energy and ONGC had faced regulatory issues whereas KG‐D6 block had operational problems. Indian solar panel manufacturers are in doldrums Indian solar panel manufacturers are facing tight financial situation. This is primarily because the solar power plants prefer to buy equipments from overseas especially from China as they are cheap. The Chinese manufacturers get huge amount of grant from the government as well as soft loans from the export import bank of China at near zero percent interest. Also, the European manufacturers are selling at dirt cheap prices so as to clear their inventory as the European market is reducing its investments in solar power on the backdrop of turbulent economic conditions. As a result the Indian manufacturers are operating their plants at (10‐25) % of their operating capacity. India weighs option to import natural gas via Atlantic Indian government is mulling the option to import liquefied natural gas to India, using pipelines and terminals on Canada's East Coast. This is mainly because of the discovery of shale gas in large quantity – which has led to substantial fall in prices. The Canadian government is also upbeat about the prospects of shipping natural gas to India. This is of strategic importance to India as she tries to achieve energy security. Indian oil companies are trying to tap all domestic oil and natural gas projects and also invest in global oil and gas resources to meet the ever increasing demand for energy. India wants land passage for fuels in Pakistan India wants transportation of fuels and petrochem products to Pakistan in truck or rail tankers instead of the sea route which is in vogue now. Due to this restriction, Indian refiners have found it difficult to match the rate Pakistan gets from its ally Kuwait. If the proposed land route is opened up, HPCL based out of Bhatinda and IOCL based out of Jalandhar can cater to these needs. (Both the cities being very close to Lahore their main distribution hub). India also suggested that Pakistan should allow solid products like petcoke, sulphur and chemicals to be transported in trucks rather than the rail transport. Energy and Utilities – Monthly Update
News Update Regulatory
New solar policy approved by MP government The Solar Energy Policy‐2012 has been approved by the Madhya Pradesh Government under which, four solar energy parks each generating 200 MW of power will be set up in the state under public‐private partnership. Other features of the new policy are 10 year exemption in electricity fee and cess, 4 % subsidy by the state government in the wheeling charges, banking of generated power and exemption as per rules in VAT and entry tax. Import taxes to be levied on power gear In order to prevent rampant import of Chinese goods‐ Ministry of Power has proposed protecting local manufacturers by expanding the 21% tax on imported generating equipment. India already levies a 21% tax on imports of generating equipment for power projects with a capacity of less than one GW. But equipment for larger projects is exempted as a part of a drive to boost the country's generating capacity. The proposed tax would apply to larger projects, but only new ones. It is crucial in the long term for India to be self‐reliant in a sector as sensitive as electricity. Indian electricity‐generation companies favor Chinese imports—not just because the imports are generally cheaper, but also because the companies get access to overseas loans at lower rates than at home.
News Update Expansion Plans
Saint Gobain plans to venture into solar energy solutions Saint‐Gobain India which is a leading manufacturer of glass in India wants to venture into solar solutions. The company already has solar energy equipment production facilities in Europe. The company will focus on setting up rooftop solar photovoltaic systems of a wide range of capacities. They will also make thin film photovoltaic modules by importing solar modules from group company Avancis Solar, Germany. India and South Africa to cooperate for renewable energy generation India has invited South Africa to invest in its renewable energy sector. India hopes to utilize the expertise of South Africa to harness power from renewable energy source. Since both countries are growing economies they would like to develop their renewable energy sources to meet their ever increasing demand for energy. India needs an investment of INR 25,000 bn in next 5 years to meet its target of energy production. Also companies from India will help South Africa for certain transfer of technology.
Energy and Utilities – Monthly Update
Industry Expert Speak India to cooperate with South Africa in the field of renewable energy – Dipuo Peters, South African Energy Minister “The South African government and the government of India have committed to cooperate in the fields of renewable energy.”
Transaction Detail (MayJul 2012)
Date
Buyer
Target
Deal Size (INR mn)
% stake
Deal Status
Type of Transaction
2nd Jul 2012
NEA
Trishe Energy
1000
N.A.
Not Complete
Private Equity
25th Jun 2012
Morgan Stanley
Continuum Wind Energy
12000
50%
Not Complete
Private Equity
2nd May 2012
TVS Capital M Cap Fund advisors
ReGen Power Tech
40000
2.81
Complete
Private Equity
Events Calendar Power Industry India Date: 30‐31st Aug, 2012 Venue: Le Meridian Hotel, New Delhi Organizer: ITE Group, Plc Ph: + 44‐207‐5965000
Energy and Utilities – Monthly Update
Annual Financial Results – Revenue (INR mn) Company
FY 09
FY 10
FY 11
FY 12
1,365,571.2
1,238,167.2
1,536,449.7
2119638.1
GAIL India Ltd.
247,818.0
270,353.0
351,066.5
440578.2
Gujarat Gas Co. Ltd.
14,196.7
18,493.3
N.A.
26294.9
IKF Technologies
1,853.626
2,101.123
2,398.877
N.A.
2,862,330.2
2,502,393.3
3,082,561.7
4072314.3
8,527.70
10,781.20
17,440.70
25192.3
1,052,756.6
1,026,655.8
1,201,955.1
1463705.6
Oil India Ltd.
72,308.0
79,335.3
83,668.6
95188.1
Petronet LNG Ltd.
84,287.0
106,490.9
131,972.9
224506.5
Praj Industries Ltd
9,542.2
7,344.4
6,649.3
N.A.
Suzlon Energy Ltd.
260,817.0
206,196.6
178,791.3
210823.7
Tata Power Co. Ltd
180,613.2
189,765.2
194,418.5
258688
Bharat Petroleum Corp. Ltd.
Indian Oil Corporation Ltd Indraprastha Gas Ltd. Oil and Natural Gas Corp. Ltd.
Annual Financial Results – Net Income (INR mn) Company
FY 09
FY 10
FY 11
FY 12
Bharat Petroleum Corp. Ltd.
6,337.60
16,323.60
16,349.60
7808.3
GAIL India Ltd.
28,263.5
33,278.3
40,209.7
44436.1
Gujarat Gas Co. Ltd.
1,741.7
2,577.5
N.A.
2734.8
IKF Technologies
283.532
354.144
434.885
N.A.
Indian Oil Corporation Ltd
25,994.0
107,131.9
78,307.2
42259.8
Indraprastha Gas Ltd.
1,724.70
2,155.00
2,597.70
3072
Oil and Natural Gas Corp. Ltd.
197,953.4
194,035.3
224,559.3
281436.1
Oil India Ltd.
21,616.8
26,104.4
28,837.3
34691.8
Petronet LNG Ltd.
5,184.4
4,045.0
6,196.2
10575.4
Praj Industries Ltd
1,211.9
1,195.9
577.5
N.A.
Suzlon Energy Ltd.
2,364.8
(9,825.6)
(13,239.7)
(4785.8)
Tata Power Co. Ltd
12,187.4
19,668.4
20,596.0
(10876.9)
Energy and Utilities – Monthly Update
Quarterly Financial Results – Revenue (INR mn) Company
AprJun 2011
JulSep 2011
OctDec 2011
JanMar 2012
461,396.10
N.A.
588,467.90
N.A.
GAIL India Ltd.
88,673.8
N.A.
112,597.8
N.A.
Gujarat Gas Co. Ltd.
5,766.3
6,435.1
N.A.
6890.4
IKF Technologies
720.802
N.A.
341.816
N.A.
Indian Oil Corporation Ltd
930,836.6
N.A.
N.A.
N.A.
Indraprastha Gas Ltd.
5,363.90
5,969.00
6,615.4
7212.1
Oil and Natural Gas Corp. Ltd.
164,019.2
N.A.
185,171.3
N.A.
Oil India Ltd.
22,878.0
N.A.
25,897.9
N.A.
Petronet LNG Ltd.
46,233.1
53,668.7
63,302.6
63227.7
Praj Industries Ltd
1,647.1
2,289.0
2,192.5
N.A.
Suzlon Energy Ltd.
43,260.0
50,711.0
49,857.9
66994.8
Tata Power Co. Ltd
58,048.2
62,483.3
66,458.7
71698.5
Bharat Petroleum Corp. Ltd.
Quarterly Financial Results – Net Income (INR mn) Company
AprJun 2011
JulSep 2011
OctDec 2011
JanMar 2012
(25,618.9)
N.A.
31,396.0
N.A.
9,846.7
N.A.
10,914.2
N.A.
962.8
804.7
N.A.
246.5
143.813
N.A.
37.182
N.A.
(37,187.0)
N.A.
N.A.
N.A.
800.7
772.2
691.5
807.6
Oil and Natural Gas Corp. Ltd.
40,949.0
N.A.
67,414.1
N.A.
Oil India Ltd.
8,496.1
N.A.
10,139.8
N.A.
Petronet LNG Ltd.
2,567.1
2,603.3
2,953.8
2451.2
Praj Industries Ltd
136.7
205.3
215.0
N.A.
Suzlon Energy Ltd.
601.2
480.0
(2,864.6)
(‐3002.4)
Tata Power Co. Ltd
4,304.4
(11,873.2)
2,979.5
(‐6287.5)
Bharat Petroleum Corp. Ltd. GAIL India Ltd. Gujarat Gas Co. Ltd. IKF Technologies Indian Oil Corporation Ltd Indraprastha Gas Ltd.
Energy and Utilities – Monthly Update
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Energy and Utilities – Monthly Update