Odisha topples Maharashtra in attracting new investments in H2 FY20

Odisha has edged past Maharashtra as the most attractive destination for investments during H1 or the April-September period of FY20. Cornering 18 per cent of the virgin investments drawn by all states, Odisha won hands down, surging past Maharashtra, which mopped up 16 per cent.

In FY19, Maharashtra had aced other states, grabbing 21 per cent share of the new investments. By contrast, Odisha which had a mere four per cent share last fiscal, drastically improved its tally to 18 per cent in the April-September period of this financial year, data from the Centre for Monitoring Indian Economy (CMIE) showed. Gujarat was another major gainer, scaling up its share in total new investments from two per cent to nine per cent in the period under review. Gujarat’s share in the new investments had deteriorated from nine per cent in FY17 to two per cent in FY19. However, during the first six months of the current fiscal year, it regained its share in the new investments to nine per cent in H1 FY20.

The percentage share of eight states in new investments plunged in During H1 of FY20. These were: Telangana, Bihar, Madhya Pradesh, Andhra Pradesh, Tamil Nadu, Punjab, Haryana and Maharashtra. Seven other states gained in share: Odisha, Gujarat, Rajasthan, West Bengal, Uttar Pradesh, Delhi and Andaman & Nicobar.

New investments

During H1 FY20, new investments contracted by 83 per cent as against a 15 per cent growth logged in the corresponding period last year. Transport services had the highest share of 77 per cent in the services sector in FY19, an analysis by CARE Ratings noted. Construction and real estate, where investments shrank in FY19, witnessed their share contracting 49 per cent in H1 FY20.

New investment projects in FY19 were the lowest in the past five years. The scenario deteriorated in H1 of FY20 as fresh investments slumped to a 15-year low. The private sector committed more investment projects in the period than the government. The manufacturing sector drove new investments, whereas services and electricity sectors witnessed a decline.

“There has been a sustained decline in the new projects undertaken in the past five years. Investments in the new projects amounted to Rs 11.9 trillion, the lowest in the past five years. New investments contracted for the fourth consecutive year by 10 per cent in FY19, lower than the 22 per cent contraction in the previous year. During H1 FY20, the aggregate new investments were lowest in the corresponding period in the past 15 years at Rs 1.9 trillion,” the report by CARE Ratings said.

The overall investment climate is emblematic of a slowdown aligning with the relatively slow growth in consumption and surplus capacity of the industry in general. Funding continues to remain a key challenge to be negotiated unless the stress in banking and NBFC (non-banking financial services) is mitigated. A confluence of growth in new projects and reduction in stalled projects is needed to improve the investment climate, the report noted.

Odisha govt allows merchant miners to stash minerals in stock yards

The Odisha government has provisioned for intermediate storage of minerals like iron ore, manganese ore and chromite ore produced by merchant miners. Like end-use industries, the merchant miners have also got permission from the state steel & mines department to stash ore in storage depots or stockyards.

The merchant miners will be granted storage licenses valid is till March 31, 2022. The facility of storage licenses has been provided to the non-captive or merchant miners keeping in view the fact that their lease validity ceases by March 31, 2020. Odisha has 16 operative merchant miners who lease tenure ends by that period as per the provisions contained in the amended Mines and Minerals- Development & Regulation (MMDR) Act of 2015. The combined approved output of iron ore from these mines is 85 million tonnes against which they were producing 55-60 million tonnes annually.

According to MMDR Act’s provisions, the merchant miners could move the ore for only six months after the expiry of the lease validity. Since Odisha boasts of around 100 million tonnes of iron ore accumulated at the pit heads of mines, their liquidation within six months of the lease expiry seemed unfeasible.

Moreover, the stockpile consisted largely of baser grade iron ore fines for which there were hardly any takers in the domestic steel market. Cost-efficient steel companies opted for higher grade ore to keep their steel making costs competitive. Moreover, exports of lower grade ore up to 60 per cent iron ore fines attracted a steep tax of 30 per cent, rendering the Indian material uncompetitive in global seaborne trade.

Hence, the state by invoking powers vested under Rule 10 B of Odisha Minerals (Prevention of Theft, Smuggling and Illegal Mining and Regulation of Possession, Storage, Trading & Transportation) Rules 2007 has allowed the establishment of intermediate storage depots (stock-yards) by the merchant mine leaseholders.

All approvals and clearances required for setting up and upkeep of the storage depots will be obtained by the merchant miners.

The grant of storage licenses for merchant miners was warranted by the huge inventory of minerals within the lease area. Disposal and sale of this stockpile was needed to facilitate smooth transition of ownership of mines and avert any obstruction in their production after takeover by the new bidders following auctions.

Odisha has enlisted 20 lapsing merchant mines for auctions. It has already issued the Notice Inviting Tenders (NITs) and model tender documents in respect of five iron and manganese ore blocks on October 4. Auctions for the rest 10 blocks are scheduled to be notified on October 14. Five out of the 20 merchant blocks headed for expiry are reserved for steel and other end use industries. The balance15 blocks are meant for bidding by merchant miners.

Odisha plans to provide incubation facility, co-working space for start-ups

The Odisha government is planning to set up a start-up hub in line with India’s largest electronic hardware incubator, Maker Village in Kochi and T-Hub (Telangana Hub), the country’s largest incubator for start-ups in Hyderabad.

“The state plans to provide incubation facility, labs and co-working space at the proposed hub for start-ups registered in Odisha. The move is in line with the Odisha government’s 5Ts initiative”, said an official.

After assuming office as the chief minister of Odisha for fifth consecutive term, Naveen Patnaik had emphasised on 5Ts-Teamwork, Transparency, Time, Technology and Transformation.

He had advised his Council of Ministers, newly-elected MLAs and bureaucrats to focus on the five mantras to build a ‘New Odisha’.

The new facility will come up at the outskirts of the city which is built by Odisha Industrial Infrastrcture Development Corporation (Idco).

Odisha clears Rs 2.04-trn investments; focus on sectors other than mining

The High Level-Clearance Authority (HLCA), the apex body to approve investments in Odisha, has given its go-ahead to five new projects, with a total value of Rs 2.04 trillion.

Four of the five proposed investments were in non-mineral-based sectors, endorsing the state government's aspiration to diversify and lure investors beyond its historical strengths of mining, metals and power.

“The chief minister in his Vision 2025 statement had aimed to attract Rs 2.5 trillion investments in non-mineral investments. And true to this vision, the HLCA has given its nod to investments worth Rs 2.04 trillion in the focus sectors. The new investments will generate direct employment for 30,000 people while creating indirect job opportunities for 100,000 others”, said Dibya Shankar Mishra, minister for industries and energy.

The HLCA cleared the mega project of Haldia Petrochemicals Ltd (HPL) to install a hydrocarbon processing complex comprising light crude oil refinery, an aromatics complex and ethylene cracker complex at a combined investment of Rs 78,000 crore. HPL's planned facilities are supposed to come up near the port project at Subarnarekha and will spawn job opportunities for 10,000 people. The West Bengal-based petrochemicals major has sought a land parcel of 2500 acres.

The state government also cleared two separate proposals by midstream oil major Indian Oil Corporation (IOC). IOC has pledged a massive investment of Rs 1 trillion to ramp up the capacity of its coastal crude oil refinery at Paradip from 15 million tonnes per annum (mtpa) to 25 mtpa. It also intends to put up a petrochemicals complex consisting of a dual feed cracker, naphtha cracker and petcoke gasification plant at Paradip. Besides creating employment for 12,595 people, IOC's facilities will ensure the availability of building block feedstock to ancillary and downstream units in the chemical and petrochemicals sector.

The second investment from IOC was the establishment of PX-PTA (purified terephthalic acid) with an investment of Rs 9,136 crore in the existing crude oil refinery at Paradip. IOC has already invested Rs 35,000 crore on the refinery project. To fulfill the expansion plan and install all the envisaged units, IOC has asked for around 4000 acres of land.

Separately, the HLCA chaired by the chief minister, approved the plan by Talcher Fertilizer Ltd to set up a coal-based urea fertilizer complex of 1.99 mtpa at Talcher with an investment of Rs 14732 crore, creating employment for around 550 people.

The only proposal in metal downstream sector was from Jindal (India) Ltd to establish a cold rolling complex of 0.5 mtpa and steel processing plant at Kalinga Nagar Industrial Complex at a cost of Rs 1676 crore and providing employment to about 1300 people. The company will use ingredients provided by Tata Steel's greenfield plant at the location. Its land requirement of 400 acres would be appraised by the state government.

Odisha to act against 24 mines for not paying fines ordered by apex court

Odisha has warned 24 mines of coercive action, like freezing bank accounts, for failing to pay fines ordered by the Supreme Court for overproducing minerals—an unprecedented crackdown on a sector that earns the state vital revenue.

Some mines have not paid even a single rupee as compensation for producing mineral ores in breach of approved limits between 2000-01 and 2010-11. Other businesses said that cannot arrange funds as their mines were inoperative when the Supreme Court ordered the compensation in August 2017. The apex court pronounced the body blow on miners while adjudicating in a case of rampant illegal mining in Odisha filed by the NGO Common Cause.

“After the lessees did not pay their share of compensation, certificate cases were filed at the district level. A total of 39 mine lease holders were booked under the cases. Of these, 15 have made partial payments and have pledged to pay the balance. So, we have spared them. For the rest 24 miners, we have instructed the district authorities to launch coercive action- attaching properties and freezing bank accounts”, said an official source.

Mid-East Integrated Steels, B K Mohanty, Arjun Ladha, Ferro Alloys Corporation (FACOR), B C Deb and S N Das Mohapatra are among the 24 miners. The Keonjhar district administration has already issued orders to crack down on six defaulting lessees.

A mining industry source said, the state government was at the end of its tether and hence, has set off on this extreme step. He feels that the miners lack a credible ground for a legal showdown with the state government. “The order was from the Supreme Court. Miners can’t deny the overproduction of ore. The compensation, too, was fixed by the central empowered committee (CEC), a Supreme Court appointed panel,” he said.

The CEC had extrapolated the compensation amount at Rs 17576.16 crore as notional value of excess production. Predicating on this figure, the apex court in its order asked for full recovery from the erring lessees. Between 2000-01 and 2010-11, miners had illegally unearthed 215.5 million tonnes or iron and manganese ore. The Supreme Court had expressed grave concern over the rapacious scale of mining operations.

Acting upon the court order, the state government had issued show-cause notices to 131 miners for compensation. Separately, the government had raised demand of about Rs 2000 crore as penalty on the lessees for violating forest laws.