Tata Motors surges 54% in December quarter; sees sharpest gain in 10 years

Shares of Tata Motors were up nearly 3 per cent to Rs 181 on the BSE on Monday, gaining more than 50 per cent in October-December quarter. The stock of Tata Group automobiles company is set to post its sharpest quarterly gain in the past one decade.

Thus far in the fourth quarter of current calendar year 2019 (Q4CY19), shares of Tata Motors have rallied 54 per cent, as compared to 7.5 per cent rise in the S&P BSE Sensex. The stock hit a 52-week low of Rs 106 on September 4, 2019.

Tata Motors is the top gainer among BSE Auto and Nifty Auto indices - both of them have gained nearly 10 per cent each during the quarter. Earlier, in September 2009 quarter, the share price of Tata Motors had more-than-doubled.

The rally was also attributed to better-than-expected September quarter (Q2FY20) earnings, with improvement in the operational performance at Jaguar Land Rover (JLR), its Britain-based luxury vehicle arm. The infusions of fund worth Rs 6,500 crore by the promoter Tata Sons via preferential issue will help deleverage the standalone balance sheet.

"Against the backdrop of a downturn in the global automotive market, the management sees sales grow in the US and China. Despite the ongoing headwinds in China, the management continues to see green shoots of recovery in our sales there. The intensive work with retailers in the region, combined with significant process and product improvements are starting to gain traction," it had added.

With clarity over Brexit, US-China trade and the end of regulatory issues in the European Union (EU), analysts at JM Financial believe that pent-up demand and new model launches in the Battery Electric Vehicles (BEV) / Plug-in Hybrid Electric Vehicle (PHEV) space points to a relatively better market scenario than that in CY19.

“We are enthused by incremental capital commitment by Tata Sons. We believe it will help limit the company’s leverage, going forward. The Q2FY20 performance showed substantial promise but we await sustained margin improvement and further cash flow visibility at JLR before revisiting our directional call on Tata Motors,” analysts at ICICI Securities said in result update. The brokerage firm has ‘hold’ rating on the stock.

Farmers across India move online, earn over 15% more for their produce

Deepak Chauhan, a farmer in Sultanpur village of Aurangabad’s district, has six acres of land and he plans to buy an acre more. Chauhan is buoyed by the 20 per cent earnings he got additionally by selling his products online directly to Swarup Satkari FPC, a farmers produce company (FPC).

Swarup Satkari, one of the largest FPCs in Sultanpur, has registered around 400 farmers in the region and helps them trade maize, soybean, pulses and other agricultural commodities directly to bulk dealers and corporate consumers. There are more than 300 FPCs registered across Maharashtra that help farmers of all incomes sell their produce online. FPCs in Madhya Pradesh, Rajasthan, Telangana, Andhra Pradesh, and Punjab too have helped farmers take advantage of online trade that leaves out middle men and earn higher value of their produce.

A number of FPCs have taken membership of the National Commodity and Derivatives Exchange (NCDEX) to take reference of futures price and make selling decisions.

“We have successfully sold maize and soybean through online platforms through futures and spot auctions. Earlier, we used to sell our produce in distress at the time of harvesting to pay lenders spontaneously. But, our FPC has helped us realize higher. This year alone, we have successfully earned 20 per cent more profits by selling online,” said Chauhan.

Farmers like Chauhan have avoided distress sale, as FPCs and other online partners help them avail funds to pay lenders and sell their produce on highs.

Apart from that, warehousing companies like Star Agriwarehousing & Collateral management Ltd (Star Agri) and National Collateral Management Services Ltd (NCML) have also launched their online commodity trading platforms auction agricultural commodities of their clients to facilitate fetching higher prices. While Star Agri has launched agriBazaar dot com, NCML has introduced the marketyard dot com to facilitate their clients to sell their produce. Another warehousing company National Bulk Handling Corporation (NBHC) is planning to introduce online trading platform to facilitate its clients rule out commission agent and earn higher by selling agricultural produce directly to bulk consumers.

“On AgriBazaar, we have done transaction worth over $1.4 billion and delivered over 1.8 million tonnes of agri produce, largely pulses, grains, spices, apples and walnuts. Moreover, more than 150,000 farmers are associated with us to get benefit of our services,” said Amith Agarwal, co-founder and chief executive officer of Star Agri.

The online platforms by warehousing service providers are different from that of electronic National Agriculture Market (eNAM), a Union government initiative.

While eNAM is a mandi-linked service, the platforms developed by warehousing companies are useful for post-mandi services for their clients who deposit goods in these warehouses either for future sale or avail funding from banks and financial institutions to avoid distress sale.

“Our platforms offer clients auctions and other related services. In a major advantage for our clients, we have negotiated with seven banks to allow users settle their accounts even if they have loan outstanding against them,” said Sanjay Kaul, managing director, NCML.

Through online sale, farmers earn at least 15-20 per cent more now than the price they used to fetch earlier. Apart from that, the elimination of the middleman and commissioning agent has helped them get instant cash for their produce.

Jindal Steel & Power hits over 6 month high; stock up 23% in two weeks

Shares of Jindal Steel & Power (JSPL) gained 4 per cent on the BSE on Monday to hit an over six-month high of Rs 168 on expectation of improved earnings going forward. The stock of the OP Jindal Group company was trading at its highest level since June 14, 2019.

In the past two weeks, JSPL stock rallied 23 per cent after the company commissioned its fourth coke oven battery at Angul plant making it self-sufficient in coke requirement. In comparison, the S&P BSE Sensex was up 1.5 per cent during the same period.

The next leg of growth at Angul is expected to be driven by recommencement of production at the 1.8mtpa direct reduced iron (DRI) plant (by end-December 2019), which would use the rich gas produced by the coke oven batteries. The fourth unit of the 500ktpa coke oven battery has also been commissioned, which will supply coke to Raigarh, substituting purchased coke.

The company remains focused on debt reduction. The brokerage firm Motilal Oswal Securities expects JSPL to generate significant consolidated free cash flow (as major capital expenditure is now behind), which will help reduce leverage – Rs 36,500 crore net debt as of September 2019 with around 5 times net debt/ EBITDA.

JSPL is also pursuing overseas asset monetization (including stake sale in Oman), which when successful, would aid further deleveraging, the brokerage firm said, with ‘buy’ rating on the stock with a target price of Rs 184 per share.

Andhra govt scraps plan for Vizag Metro project, to start afresh

The Andhra Pradesh government on Monday decided to appoint a new consultant for preparing a revised detailed project report for the Visakhapatnam Metro Rail project that has been hanging fire for five years now.

The government also decided to cancel the single bid received from Essel Infra and Consortium for developing the 42.55-km project in public-private partnership mode at a cost of Rs 8,300 crore.

"The bidder did not offer much cost reduction. Moreover, the scope of the project has changed substantially in view of the new requirements suggested by Chief Minister Y S Jagan Mohan Reddy," Municipal Administration and Urban Development Secretary Jamjam Syamala Rao said.

Accordingly, the government has decided to appoint a new consultant for preparing a revised DPR, he said.

The Visakhapatnam Metro Rail project was mooted in 2014 in accordance with the AP Reorganisation Act and the Centre gave in principle approval in 2015.

As per the original plan it was supposed to be completed by 2018.

But the previous TDP government dilly-dallied on the project for more than two years by which time the Centre came out with the Metro Rail Policy, 2017.

Accordingly, the state was asked to re-examine and submit a fresh DPR.

With the incumbent YSR Congress government planning to shift the state administrative headquarters to Visakhapatnam soon, it was decided to expedite the Metro Rail project, official sources said.

"We will get a revised DPR prepared and send it to the Centre for approval. No timelines have been set for the project as of now," the sources added.

UP garners food processing proposals worth Rs 1,890 cr from 368 firms

The Uttar Pradesh government has received food processing sector investment proposals worth nearly Rs 1,890 crore from different private companies.

These projects pertain to various food processing verticals, including rice mills, consumer food products, oil seeds and fruits/vegetables processing, among others.

According to UP deputy chief minister Keshav Prasad Maurya, who also heads the food processing department, the government was providing a bouquet of capital and interest subsidy to the private sector enterprises under the UP Food Processing Industry Policy 2017 with a view to attracting investment.

He said the government had received 368 private investment proposals worth nearly Rs 1,890 crore in the food processing sector, which were estimated to generate 30,000 job opportunities.

In a recent meeting of the state level empowered committee (SLEC), 78 proposals worth Rs 232 crore were taken up for consideration, of which 68 proposals with estimated investment of Rs 154 crore were cleared for cleared for the subsidy component.

While, 32 companies were recommended for the capital subsidy, the remaining 36 private sector entities were deemed entitled for the interest subsidy.

UP horticulture and food processing director S B Sharma said earlier four meetings of the SLEC had taken place, which cleared 111 projects with investment profile of Rs 415 crore.

On September 10, the Yogi Adityanath government had announced the state’s maiden agricultural export policy targetting to augment farmers’ income and promote export of farm commodities.

The policy aims at creating a robust institutional mechanism for agro exports, promoting the cultivation of export oriented commodities and also encouraging the cultivation of environmentally friendly agricultural crops.

The new policy set the target of doubling the total export of agricultural commodities in UP from the current level of US$ 2,524 million or Rs 17,591 crore by 2024 with the help of creating a network of farmer producer organisations (FPO).

Under the agri export policy, the government would promote cluster farming of export oriented commodities over an area of at least 50 hectares by offering sops. For example, the state would provide subsidy of maximum Rs 10 lakh for cluster of 50-100 hectares during 5 year period, with 40% amount to be provided in the first year itself.

However, the cluster would have to ensure at least 30% of production is exported to be eligible to benefit under the scheme, apart from conforming to good agricultural practices mandated by the respective importing countries’ standards.

Since, UP is a landlocked state, the Adityanath government announced to give transport subsidy to the export consignments. The eligible agro commodities would be given Rs 10/kg and Rs 5/kg as export subsidy for air and sea transport respectively.

At the same time, students pursuing agricultural export courses would be given 50% fee subsidy to encourage the grooming of new age professionals in the field.

Reliance, BP pay $36 mn for exit of Niko in KG-D6 block, acquire 10% stake

Reliance Industries and UK's BP plc paid USD 36 million to get their defaulting Canadian partner Niko Resources to exit from the eastern offshore KG-D6 block.

In a statement, Niko said it has exited from the KG-DWN-98/3 block and its 10 per cent stake has been taken over by Reliance and BP.

The firm was paid USD 36 million to settle an arbitration it had initiated against Reliance and BP trying to force it out of the block over default in payment.

"An amendment to the production sharing contract for the D6 Block in India has been executed, reflecting the assignment of the 10 per cent interest previously held by the company's indirect subsidiary, Niko (NECO) Ltd to the remaining interest holders in the block, Reliance Industries Ltd and BP Exploration (Alpha) Ltd," the statement said.

Subsequent to this, Reliance's stake in KG-D6 has gone up to 66.67 per cent from the previous 60 per cent and that of BP to 33.33 per cent from 30 per cent.

"Niko NECO had entered into a settlement agreement with Reliance and BPEAL under which it agreed to withdraw from D6 PSC and settle its arbitration case filed under the rules of the London Court of International Arbitration in December 2017 in exchange for a settlement amount of USD 36 million, subject to adjustment prior to closing," it said.

The settlement agreement is subject to certain conditions precedent including the execution of the amendment to the D6 PSC, it said adding the USD 36 million will go lenders to settle a part of the debt.

Niko, which defaulted on payment of loans to its lenders, had been unsuccessful in seeking a possible buyer for its 10 per cent stake in Bay of Bengal block KG-D6 or securing financing for its share of the USD 5 billion R-Cluster, Satellite Cluster and MJ development projects in the block.

This led to the company defaulting in making payments for its share of development cost.

Reliance, being the operator of KG-D6 block, slapped a default notice on Niko soon after.

Under the terms of the joint operating agreement (JOA) between the participating interest holders in the KG-D6 production sharing contract (PSC), during the continuance of a default, the defaulting party shall not have a right to its share of revenue (which shall vest in and be the property of the non-defaulting parties who have paid to cover the amount in default).

In addition, if the defaulting party does not cure a default within 60 days of the default notice, the non-defaulting parties have the option to require the defaulting party to withdraw from the KG-D6 PSC and JOA.

In December 2018, Reliance and BP sent Niko a notice asking it to withdraw from KG-D6. Parallelly, they approached the sector regulator the Directorate General of Hydrocarbons (DGH) and the Oil Ministry for approval to take over Niko's share.

To stall the takeover, Niko filed a notice of arbitration challenging the withdrawal notice.

Niko had previously withdrawn from the eastern offshore NEC-25 block due to cash crunch. Its 10 per cent interest was assigned to Reliance and BP. Subsequent to that, Reliance now holds 66.6 per cent interest in NEC-25 and BP the remaining 33.37 per cent.

Reliance and BP are investing USD 5 billion to bring to production three sets of new discoveries in the KG-D6 block. R-Series will be the first to start output in mid-2020 with about 5 million standard cubic metres of daily production. The peak from R-Series is expected at 12 million standard cubic metres per day (mmscmd).

Satellite fields in the same block will go live a year later and are expected to contribute a peak output of 7 mmscmd. MJ field will start production in second half of 2022 with peak production of about 12 mmscmd.

Reliance has so far made 19 gas discoveries in the Bay of Bengal block. Of these, Dhirubhai-1 and 3 (D1 & D3) -- the largest among the lot -- were brought to production from April 2009 and MA, the only oilfield in the block was put to production in September 2008.

The output from D1 and D3 has dwindled to just 1.7 mmsmcd after touching a peak of 54 mmscmd in 2010. MA ceased to produce last year.

BSNL cleared Rs 1,700 cr in dues to vendors; paid November salaries: CMD

State-owned Bharat Sanchar Nigam Ltd (BSNL) has cleared Rs 1,700 crore of vendors dues, its CMD P K Purwar said on Monday.

The corporation has also made salary payment to its employees for November, Purwar added.

"Payments worth Rs 1,700 crore have been released to our vendors and contractors of BSNL," he said.

Overall, the outstanding to creditors is Rs 10,000 crore, he added.

"Employee salaries for November too have been released," he said adding that monthly wage cost stood at about Rs 800 crore.

In October this year, the government approved a Rs 69,000 crore revival package for BSNL and MTNL that includes merging the two loss-making firms, monetising their assets and giving VRS to employees so that the combined entity turns profitable in two years.

The Union Cabinet headed by Prime Minister Narendra Modi had approved a plan to combine Mahanagar Telephone Nigam Ltd - which provides services in Mumbai and New Delhi - with Bharat Sanchar Nigam Ltd that services the rest of the nation.

Over the last few weeks both the companies launched theirs VRS plans and thousands of employees of BSNL and MTNL have opted for voluntary retirement, which is expected to save about Rs 8,800 crore annually in salary bills for the debt-laden telecom companies.

The two firms will also monetise assets worth Rs 37,500 crore in the next three years.

MTNL has reported losses in nine of the past 10 years and BSNL too has been ringing in loss since 2010.