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18 June 2010
RIL bets big on power and telecom
RIL plans mega foray into India's power sector
MUMBAI: Billionaire Mukesh Ambani today said his firm Reliance Industries will supply natural gas to Anil Ambani Group's power plants as and when they are ready to receive the gas. ( Watch )
Addressing company shareholders, Ambani mentioned the Supreme Court judgment upholding the company's stand that government has a major say in pricing and allocation of gas produced from RIL's eastern offshore KG-D6 fields and that RIL would supply gas to Anil Ambani group in accordance with government policy.
"With the legal dispute behind us, we look forward to harmonious and constructive relationship with ADAG," Ambani said at the meeting, for which Anil did not turn up as speculated in the market and media.
The supplies to Anil Ambani Group's power plants including the one proposed at Dadri near Delhi, will be subject to government approving the allocation of the fuel, Mukesh Ambani said.
The Supreme Court had last month asked the companies headed by the two brothers to rework a gas supply contract keeping the government policy on pricing and allocation in mind.
Mukesh, 53, however did not say when RIL will be entering into a new Gas Sales and Purchase Agreement (GSPA) with Anil's Reliance Natural Resources Ltd (RNRL) as had been ordered by the apex court.
RIL production from KG-D6 block exceeds 60 million standard cubic meters per day and over 30,000 barrels per day, Mukesh Ambani said.
"RIL has intensified exploration campaign off the east coast," added Ambani.
In his speech Mukesh Ambani proposed 70 per cent dividend or Rs 7 a share for 2009-10 fiscal for RIL shareholders.
The court had, on May 7, turned down gas to Anil-led RNRL from RIL's KG-D6 basin at prices arrived at in a 2005 private family agreement.
RIL, which acquired 40 per cent in shale gas assets of Atlas Energy in US, will continue to pursue shale gas opportunities, Mukesh Ambani said. The energy major was also drawing mega investment plans in coal, hydel and nuclear power.
RIL is also looking at expediting developing discoveries in blocks KG-D6 in Krishna Godavari basin, NEC-25 in Mahanadi basin, CB-10 in Cambay basin and Sohagpur CBM block.
"Annulling of non-compete agreement with ADAG was a game changing development that paved the way for Reliance to participate in power sector," added Mukesh Ambani.
Reliance Industries, which has agreed to buy Infotel, the only company to win a nationwide licence in India's wireless broadband auction, will follow an "asset light" approach in telecoms and collaborate with partners.
Reliance Industries' 36th AGM: Analysts views
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Mukesh Ambani’s AGM speech focussed on RIL’s core competencies: Rajesh Jain, Market Strategist
Src: ET and MOneycontrol.com
Addressing company shareholders, Ambani mentioned the Supreme Court judgment upholding the company's stand that government has a major say in pricing and allocation of gas produced from RIL's eastern offshore KG-D6 fields and that RIL would supply gas to Anil Ambani group in accordance with government policy.
"With the legal dispute behind us, we look forward to harmonious and constructive relationship with ADAG," Ambani said at the meeting, for which Anil did not turn up as speculated in the market and media.
The supplies to Anil Ambani Group's power plants including the one proposed at Dadri near Delhi, will be subject to government approving the allocation of the fuel, Mukesh Ambani said.
The Supreme Court had last month asked the companies headed by the two brothers to rework a gas supply contract keeping the government policy on pricing and allocation in mind.
Mukesh, 53, however did not say when RIL will be entering into a new Gas Sales and Purchase Agreement (GSPA) with Anil's Reliance Natural Resources Ltd (RNRL) as had been ordered by the apex court.
RIL production from KG-D6 block exceeds 60 million standard cubic meters per day and over 30,000 barrels per day, Mukesh Ambani said.
"RIL has intensified exploration campaign off the east coast," added Ambani.
In his speech Mukesh Ambani proposed 70 per cent dividend or Rs 7 a share for 2009-10 fiscal for RIL shareholders.
The court had, on May 7, turned down gas to Anil-led RNRL from RIL's KG-D6 basin at prices arrived at in a 2005 private family agreement.
RIL, which acquired 40 per cent in shale gas assets of Atlas Energy in US, will continue to pursue shale gas opportunities, Mukesh Ambani said. The energy major was also drawing mega investment plans in coal, hydel and nuclear power.
RIL is also looking at expediting developing discoveries in blocks KG-D6 in Krishna Godavari basin, NEC-25 in Mahanadi basin, CB-10 in Cambay basin and Sohagpur CBM block.
"Annulling of non-compete agreement with ADAG was a game changing development that paved the way for Reliance to participate in power sector," added Mukesh Ambani.
Reliance Industries, which has agreed to buy Infotel, the only company to win a nationwide licence in India's wireless broadband auction, will follow an "asset light" approach in telecoms and collaborate with partners.
Reliance Industries' 36th AGM: Analysts views
MUMBAI: Mukesh Ambani, chairman of energy major Reliance Industries, said the firm is ready to provide gas to power plants controlled by his brother Anil Ambani's Reliance ADAG and looks forward to a "harmonious and constructive" relationship with the company. ( Watch )
Following are comments from analysts:
ARUN KEJRIWAL, DIRECTOR OF RESEARCH FIRM KRIS IN MUMBAI: "There were a lot of unrealistic expectations built around Reliance AGM. The hype is now fading, which is reflected in the share price movement."
NITIN ZAMRE, MANAGING DIRECTOR AT CONSULTANCY ICF INTERNATIONAL, NEW DELHI: "The AGM is on expected line. The two brothers coming together throws open opportunity for both RIL and ADAG, but more for RIL. "Given the fact Reliance has core competency in building very large projects, power is the next opportunity mainly ultra mega power Projects, data management and shale gas."
GAJENDRA NAGPAL, CEO OF UNICON FINANCIAL, NEW DELHI: On expansion into power: "They are sitting on so much cash. It's a natural extension of Reliance's business of energy. To that extent, it seems like a well thought of move. I am extremely bullish on the counter in the long run. He is absolutely making all the right moves." On share movement: "Expectations are slowly tickling down. I see no reason why shares should fall now. It's just profit taking. "One would want to hear about his financial services foray. That also seems like a big opportunity."
K.K. MITAL, HEAD OF PORTFOLIO MANAGEMENT SERVICES, GLOBE CAPITAL, NEW DELHI: "Mukesh's vision is quite clear. He wants to concentrate on 4G spectrum; he wants to concentrate on power. He wants to do global acquisitions. "There were lot of speculations that Reliance Industries may buy a stake in Reliance Communications; Mukesh may support Anil's Reliance Power. "There were also speculation that Anil Ambani might turn up at the AGM. But let's remember that this is just the beginning. Going forward there will be many more opportunities (for tie up between the brothers)"
TEJAS DOSHI, HEAD OF RESEARCH, SUSHIL FINANCE IN MUMBAI: "People had built unrealistic expectations that there would be big-bang announcements at the meeting. "The disappointment is showing in the stock price of the companies led by both Ambani brothers."
SUSHANT GUPTA, SENIOR ANALYST WITH WOOD MACKENZIE, SINGAPORE: "Refinery-wise they are the most competitive in the region. If you look at refining margins, there is a downward trend which I expect to continue for at least next few years. "Even companies like Reliance are finding it challenging to push products in the global markets at better margins. Reliance should diversify and step up focus on petrochemical sector, which is one of the major contributory to its profit."
MITEN MEHTA, FUND MANAGER BELLWETHER CAPITAL, MUMBAI: "Mukesh Ambani words were more or less expected after the end of the non-compete agreement. In fact there were more expectations than what was actually announced. Reliance Industries needs to get into other areas now and power is an obvious choice for them."
GUL TECKCHANDANI, INDEPENDENT ANALYST, MUMBAI: "His announcements on the power sector sound good. Mukesh has the record of being conservative in his announcements but delivering on what he says. "India needs more power and the more people that enter the sector, the better."
Following are comments from analysts:
ARUN KEJRIWAL, DIRECTOR OF RESEARCH FIRM KRIS IN MUMBAI: "There were a lot of unrealistic expectations built around Reliance AGM. The hype is now fading, which is reflected in the share price movement."
NITIN ZAMRE, MANAGING DIRECTOR AT CONSULTANCY ICF INTERNATIONAL, NEW DELHI: "The AGM is on expected line. The two brothers coming together throws open opportunity for both RIL and ADAG, but more for RIL. "Given the fact Reliance has core competency in building very large projects, power is the next opportunity mainly ultra mega power Projects, data management and shale gas."
GAJENDRA NAGPAL, CEO OF UNICON FINANCIAL, NEW DELHI: On expansion into power: "They are sitting on so much cash. It's a natural extension of Reliance's business of energy. To that extent, it seems like a well thought of move. I am extremely bullish on the counter in the long run. He is absolutely making all the right moves." On share movement: "Expectations are slowly tickling down. I see no reason why shares should fall now. It's just profit taking. "One would want to hear about his financial services foray. That also seems like a big opportunity."
K.K. MITAL, HEAD OF PORTFOLIO MANAGEMENT SERVICES, GLOBE CAPITAL, NEW DELHI: "Mukesh's vision is quite clear. He wants to concentrate on 4G spectrum; he wants to concentrate on power. He wants to do global acquisitions. "There were lot of speculations that Reliance Industries may buy a stake in Reliance Communications; Mukesh may support Anil's Reliance Power. "There were also speculation that Anil Ambani might turn up at the AGM. But let's remember that this is just the beginning. Going forward there will be many more opportunities (for tie up between the brothers)"
TEJAS DOSHI, HEAD OF RESEARCH, SUSHIL FINANCE IN MUMBAI: "People had built unrealistic expectations that there would be big-bang announcements at the meeting. "The disappointment is showing in the stock price of the companies led by both Ambani brothers."
SUSHANT GUPTA, SENIOR ANALYST WITH WOOD MACKENZIE, SINGAPORE: "Refinery-wise they are the most competitive in the region. If you look at refining margins, there is a downward trend which I expect to continue for at least next few years. "Even companies like Reliance are finding it challenging to push products in the global markets at better margins. Reliance should diversify and step up focus on petrochemical sector, which is one of the major contributory to its profit."
MITEN MEHTA, FUND MANAGER BELLWETHER CAPITAL, MUMBAI: "Mukesh Ambani words were more or less expected after the end of the non-compete agreement. In fact there were more expectations than what was actually announced. Reliance Industries needs to get into other areas now and power is an obvious choice for them."
GUL TECKCHANDANI, INDEPENDENT ANALYST, MUMBAI: "His announcements on the power sector sound good. Mukesh has the record of being conservative in his announcements but delivering on what he says. "India needs more power and the more people that enter the sector, the better."
Rajesh Jain, Market Strategist: 'Mukesh Ambani’s AGM speech focussed on RIL’s core competencies': Mukesh Ambani’s AGM speech should be signalled out for the fact that he has focussed most of it on driving the core competence and the world class scale that he enjoys in the refining, petrochemical and the exploration business. That is the biggest takeaway from this speech today aside from announcements for the power and the telecom in the broadband space.
Essentially what Mukesh has signalled today is that we are not going to be trading on each others’ stores. We have our domain cut out. We are going to be thinking big in power but it will be nuclear, it will be hydel, it will be the cleaner coal based projects.
Essentially what Mukesh has signalled today is that we are not going to be trading on each others’ stores. We have our domain cut out. We are going to be thinking big in power but it will be nuclear, it will be hydel, it will be the cleaner coal based projects.
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RIL bets big on power and telecom
Src: ET and MOneycontrol.com
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RIL may buy 26% stake in Pipavav
How does the RIL stock trade post its AGM?
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Heard on Street: M&M vaults 22% in 3 weeks
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Src: ET and DP blog and Smartinvestor
Mid-term picks | Top 5 picks |
RIL may buy 26% stake in Pipavav
How does the RIL stock trade post its AGM?
*******************************************
Heard on Street: M&M vaults 22% in 3 weeks
Bankers against French auction for PSU share sales
After the lukewarm response to recent public offers of REC and NTPC, which opted for the French auction method, merchant bankers are suggesting the book-building method to the disinvestment department for future public sector share offerings.
“In the book-building method, you essentially know the price range, which is better but in a French auction you are trying to discover the price of a listed company and investors are not willing to pay a premium as they would prefer to buy from the market,” said a senior banker. Last November, Sebi introduced the pure auction method of book-building in share sales, where institutional bidders could bid at any price above the floor price instead of restricting them to bid in a band fixed by investment bankers.
M&M vaults 22% in 3 weeks on bull bets
Shares of automobile major Mahindra & Mahindra (M&M) have risen 22% in the past three weeks. The buzz is that Rar(e)ing Bull has been active in the stock of late. Brokers said traders have been betting on M&M in the past few weeks on hopes that news of better-than-normal monsoon will enable the stock outperform the market in the short-term. The prospects of M&M, which manufactures tractors, is closely linked to the monsoon, as better-than-expected monsoon could boost demand for tractors. The stock closed marginally higher at Rs 631.65 on Thursday.
Bears tighten grip on steel stocks
Shares of leading steel companies — Tata Steel, Steel Authority of India and JSW Steel — underperformed in a firm market on Thursday. According to grapevine, local steel prices are likely to soften further due to a decline in demand. Bear traders are said to be cautiously building short positions at these counters. In the recent past, most traders who had gone short on steel stocks have been unable to profit to the extent they had hoped to.
The moment overall sentiment changes for the better, the stocks that were beaten down the most, would be the ones to rise the fastest. JSW Steel shares fell 0.8% to close at Rs 1,048.70, Tata Steel Steel ended 0.7% down at Rs 482.20, while Steel Authority shares rose marginally to close at Rs 198.35. Over the past one month, the BSE Metal Index has fallen 5.5%, compared to a 4% rise in the BSE Sensex.
(Contributed by Reena Zachariah, Nishanth Vasudevan & Santosh Nair)
After the lukewarm response to recent public offers of REC and NTPC, which opted for the French auction method, merchant bankers are suggesting the book-building method to the disinvestment department for future public sector share offerings.
“In the book-building method, you essentially know the price range, which is better but in a French auction you are trying to discover the price of a listed company and investors are not willing to pay a premium as they would prefer to buy from the market,” said a senior banker. Last November, Sebi introduced the pure auction method of book-building in share sales, where institutional bidders could bid at any price above the floor price instead of restricting them to bid in a band fixed by investment bankers.
M&M vaults 22% in 3 weeks on bull bets
Shares of automobile major Mahindra & Mahindra (M&M) have risen 22% in the past three weeks. The buzz is that Rar(e)ing Bull has been active in the stock of late. Brokers said traders have been betting on M&M in the past few weeks on hopes that news of better-than-normal monsoon will enable the stock outperform the market in the short-term. The prospects of M&M, which manufactures tractors, is closely linked to the monsoon, as better-than-expected monsoon could boost demand for tractors. The stock closed marginally higher at Rs 631.65 on Thursday.
Bears tighten grip on steel stocks
Shares of leading steel companies — Tata Steel, Steel Authority of India and JSW Steel — underperformed in a firm market on Thursday. According to grapevine, local steel prices are likely to soften further due to a decline in demand. Bear traders are said to be cautiously building short positions at these counters. In the recent past, most traders who had gone short on steel stocks have been unable to profit to the extent they had hoped to.
The moment overall sentiment changes for the better, the stocks that were beaten down the most, would be the ones to rise the fastest. JSW Steel shares fell 0.8% to close at Rs 1,048.70, Tata Steel Steel ended 0.7% down at Rs 482.20, while Steel Authority shares rose marginally to close at Rs 198.35. Over the past one month, the BSE Metal Index has fallen 5.5%, compared to a 4% rise in the BSE Sensex.
(Contributed by Reena Zachariah, Nishanth Vasudevan & Santosh Nair)
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