India Inc. doubles its revenue base in 5 years to over Rs 50 lakh crore

Regardless of global crisis, political upheaval and slowing capital investment, India Inc has remained on a high growth path and has doubled its revenue in five years to a little over Rs 50 lakh crore. Despite limited pricing power for oil companies, weakness in international commodities and a rise in the cost of borrowing hurting profitability, combined net profit has risen a significant Rs 100,000 lakh crore in four years to Rs 2.97 lakh crore.

The financial aggregates for 2011-12 are far healthier than those for 2008-09, when the global economic slowdown led to a significant fall in the net profit of Indian companies. Sales growth in 2012 remained strong, up 23 per cent, but there was a profit decline of 10 per cent, led by a net loss of Rs 27,000 core by 50 companies, mostly due to mark-to-market losses (revaluing assets at current values) on fore borrowing and hedging. However, the Rs 100,000 core revenue club, earlier comprising five oil companies, has now gone up to seven with Tata Motors and Tata Steel joining the big league, through two major foreign acquisitions. Analysts are expecting telecom giant Bhatia Aortal and the AV Birla Group’s metals giant, Hidalgo, to join the coveted list in the next two years.

In the past five years, companies have grown in profit and size in metal industries, technology, telecom, power, refining, automobiles, banking, pharmaceuticals and finance. Some retreat in profit growth has been seen for business groups having presence in construction, infrastructure and textiles, due to the economic slowdown.
The net profit for industrial giants in manufacturing and services sectors continues to be high. The number of companies with net profit of Rs 10,000 core has swelled to five from two and those with net profit of Rs 5,000 core or more increased from three to nine.

Major business houses have not faced cash flow pressure. The Tata Group aggregated net profit of Rs 106,375 core in five years. Makes Amana’s group, with the help of petrochemicals and oil gas giant Reliance Industries, took six years to earn a net profit of Rs 100,000 core. The AV Birla Group more than tripled it net sales to Rs 1.67 laky core in six years and aggregated a net profit of Rs 27,000 core in three years. The Vedanta group aggregated net profit of Rs 54,000 core in five years, while telecom giant Bhatia Aortal earned Rs 33,500 core in five years.

It does not mean all is well and across sectors. There are failures, mostly on account of foreign acquisitions and excessive foreign currency loans to fund expansion. For example, heavy borrowing net profit for the Anil Amana group fell sharply to Rs 2,800 core from Rs 7,500 core five years earlier. Suzlon Energy has witnessed stagnated sales, and has been in the red for three years after making a costly acquisition of REpower. Importantly, Tata Power, Videocon, Jet Airways, JSW Ispat, Kingfisher Airlines, Ranbaxy, MTNL and Essar Oil have reported a net loss of over Rs 1,000 crore each on account of forex loss and heavy borrowings.

The performance in 2011-12 appears a mixed bag. Cost pressure, lack of pricing power for the oil and gas sector, fall in prices of international commodities and a weak rupee impacted profit growth of major business groups in 2011-12. Among top business groups, while sales growth remained strong for the public sector, the Tatas, Mukesh Ambani and Mahindra, weak commodities’ prices put some growth pressure on the AV Birla and Vedanta groups.

Public sector units clocked five per cent growth in net profit despite a hefty decline in profit for three oil marketing companies. The Tata Group’s net profit declined around six per cent, led by net loss from Tata Communication and Tata Power and a sharp decline in profit of Tata Steel. Mukesh Ambani managed a to per cent rise in profit through Rs 6,124 crore worth of other income.

The AV Birla Group felt pressure on revenue growth, but net profit rose smartly by 27 per cent on account of a low base year and strong performance from Novelis. The Mahindra group outperformed all other majors with a strong 40 per cent growth in sales and profit, led by a turnaround in Satyam Computer.

Anand Sharma announces Rs 70,000 crore infrastructure projects in Haryana

Union Minister for Commerce, Industry and Textiles, Anand Sharma announced investment of Rs 70,000 crore entailed in projects coming up in Haryana including National Manufacturing Investment Zone at Manesar-Bawal Investment Region, setting up of a National Institute of Design at Kurukshetra, National Institute of Fashion Technology (NIFT) in Panchkula and an International Horticulture Hub, Gannaur.

"The progress in Manesar-Bawal region will see total infrastructure investments of over Rs 71,000 crore and total estimated investments in the region will be in the range of 2.5 lakh crores," the Union minister said after meeting heads of the state in Haryana and Punjab. He said that the over the next 30 years it would provide employment to over 28 lakh people.

He said that Delhi Mumbai Industrial Corridor project has reached implementation stage. "The infrastructure project would be get fund of Rs 18,500 crore from the Government of India, JBIC has forwarded a fund of $4.5 billion," the minister said.

"The states have initiated measures like zoning of land for the project. Manesar-Bawal Investment Region has been declared as one of the first eight National Manufacturing Investment Zones to be developed as green field integrated industrial townships. "The National Manufacturing Zones would create 100 million jobs in one decade," he said. A state of the art multi-modal logistic hub will be established near Panchgaon Chowk at an estimated cost of nearly Rs 2000 crores of which Government of India will contribute Rs.300 crore. This logistic hub will transform Haryana into a regional logistics centre for the entire northern region.

A Mass Rapid Transit System will be established in the Manesar-Bawal investment region at a projected cost of Rs.13580 crores. This will be developed in PPP mode. The Minister had a high level review meeting on the project implementation, land acquisition and a joint centre-state task force for monitoring the timelines of the project that has been agreed upon to ensure that the road map drawn for project implementation is followed through.

He said that the Government of India would support the establishment of a Global City spread over a large area of land which will be developed as a hi-tech city with a central business district, finance centre and an integrated exhibition-cum convention facility at Garhi-Harsaru.

The Government of India will establish a National Institute of Design at Kurukshetra for which the State Government has offered land. This Institute will be modeled on the NID, Ahmedabad and will be amongst one of the four national institutes being established across the country.

The Government of India will provide Rs.135 crores for the entire project. He said that the Government will support an International Horticulture Hub, Gannaur for which a detailed project report has been prepared. He said that a hub for perishable with cold storage and related infrastructure would be set up at Chandigarh -Mohali airport.

Gujarat Pipavav Port to invest Rs 1,097 cr on capacity expansion

Gujarat Pipavav Port Ltd (GPPL) on Monday said it plans to invest Rs 1,097 crore on expansion of Pipavav Port in Gujarat and has also concluded a capital-raising exercise of Rs 350 crore through Qualified Institutional Placement (QIP) and a preferential issue to its promoter, mainly to prepay the existing loan.

The company is proposing an expansion of the infrastructure facilities at APM Terminals at Pipavav in Gujarat to increase capacity and enhance operational efficiencies. “We propose to increase capacity for container cargo to about 1.5 million TEUs and the capacity for bulk cargo to 10 million tonnes,” said Mr Prakash Tulsiani, Managing Director.

The proposed expansion plans for container cargo include a new container berth of 348 meters to provide a contiguous berth of 735 meters to enable the port to simultaneously handle two post-Panamax vessels, dredging in berth pockets, three new post-Panamax cranes, increasing the yard capacity to 1.5 million TEUs and 10 new Rubber Tyred Gantry Cranes, besides internal roads.

For bulk cargo the plans include construction of a new container berth to enable the port to dedicate the existing multi-purpose berth exclusively for bulk cargo services, additional berth extension by 110 meters to provide a contiguous berth of 800 meters, dredging, new Gottwald crane, and a dedicated conveyor system for coal.
These proposed expansion activities for bulk cargo services will be undertaken based on customer requirements by entering into commercial arrangements with the customers.

The QIP was of 3.41 crore shares at a price of Rs 58.45 per share aggregating Rs 199.48 crore to institutional investors. The preferential issue was of 2.58 crore shares to the company’s promoter, APM Terminals Mauritius Ltd, at a price of Rs 58.45 per share, aggregating to Rs 150.52 crore. The promoter’s shareholding in the company has been maintained at 43.01 per cent post the QIP and the preferential issuance.

Kotak Mahindra Capital Company Ltd and IDFC Capital Ltd acted as the book-running lead managers for the company’s first QIP, said Mr Hariharan Iyer, CFO, GPPL/APM Terminals Pipavav. Those allotted shares included institutions such as Bajaj Life Insurance, SBI Life Insurance, Franklin Templeton, Kotak Mahindra, Vanguard International Explorer Fund, Schroder Asia Pacific Fund PLC and Jardine Fleming.

The funds raised will be largely used to prepay the existing loan in order to strengthen the company’s balance sheet and to facilitate funding options for its expansion plans. Gujarat Pipavav Port Ltd is the developer and operator of APM Terminals Pipavav located in Gujarat. The promoters, APM Terminals, bought a majority stake in the company in 2005, and the port began marketing its services to clients based in North-West India. In 2010, the company launched its IPO and improved cargo volumes, the number of clients, road and rail connectivity and storage facilities. The port is part of an international network of ports and terminals belonging to APM Terminals, which is part of the AP Moller-Maersk group.

OVL led consortia to increase its investments to over $3 billion in Venezuela

 ONGC Videsh Limited, the overseas arm of state-owned ONGC along with its consortium is planning to increase its investments in Venezuela to $3 billion, making it one of the biggest investments of Indian state-owned firms overseas.

"OVL with $ 350 million of investments wants to invest another $500 million in the San Cristobel oil field. In addition, ONGC Videsh with an Indian consortium proposes to invest US$ 2.2 billion in the Carobobo project. Thereby enhancing its investments over $3 biliion in Venezuela," said Jyotiraditya M Scindia, state minister for commerce and industry in a government statement after leading a business delegation in Venezuela.

Besides, the Indian state-owned firms are also looking at picking a minority stake in a green field refinery project in Venezuela, which will be majority owned by Venezuela state-owned firm PDVSA. Similarly, PDVSA has been offered to buy a stake in Indian Oil Corporations (IOCL) 15 mmtpa green filed refinery in Orissa, which is being set up for $5 billion.

Indian public sector oil companies want to enter into agreements with Venezuelan firms on a spot basis. GAIL is exploring opportunities in the natural gas value chain in Venezuela while BPCL is exploring opportunities to export base oil to Venezuela and its marketing. Engineers India Limited (EIL) is looking at providing its design and engineering services in the hydrocarbon sector.

India and Venezuela is also looking at building shipping lines between India and Venezuela and finalization of the double taxation avoidance agreement (DTAA) between India and Venezuela.