Tag: Indian economy news

Petrochemical majors step on expansion gas pedal

India’s manufacturing sector may not be seeing an investment pick-up but major petrochemical companies are in the process of mega investment plans for capacity enhancement.

Reliance Industries (RIL) commissioned the first phase of a paraxylene (PX) plant at Jamnagar, Gujarat, last month; it says it hopes to become the world’s second-largest PX producer on full commissioning. Government-owned GAIL (India) and Hindustan Petroleum Corporation (HPCL) plan a Rs 30,000-crore petrochem unit in Andhra.

IndianOil Corporation (IOC) plans to invest Rs 34,000 crore in a petrochem complex at Paradip in Odisha by 2021. The first unit, to produce polypropylene, is scheduled to be completed at a cost of Rs 3,150 crore by December this year. Bharat Petroleum Corporation (BPC) is planning a propylene derivative petrochem project at its Kochi refinery, at a cost of Rs 4,600 crore.

GAIL’s plant at Andhra is part of a plan to expand its presence in petrochemicals. The unit will have three feeds – naphtha, ethane and propane. Naphtha will be supplied from the Visakhapatnam refinery of HPCL, through a 150-kilometre pipeline. The ethane and propane feeds will be imported, via the Kakinada port. The complex will produce a million tonnes of ethylene with derivatives, to go into manufacturing of detergents, paints and coatings, cosmetics and textiles. A detailed feasibility report (DFR) is under work. “It will take probably six months for the DFR, financial appraisal and approval process to complete,” B C Tripathi, chairman and managing director of GAIL, told this newspaper.

GAIL and HPCL joined hands after HPCL’s plans to team with France’s Total, the Lakshmi N Mittal Group and Oil India for a 15-million tonne a year unit at Visakhapatnam was put on the back burner, citing viability issues. The two partners are now in talks to bring in a third. There are also plans to import ethane from the US for the plant.

GAIL has interest in three petrochem plants, including its own complex at Pata in Uttar Pradesh that has been expanded to a capacity of 81,000 tonnes annually. It has 70 per cent equity in a joint venture company, Brahmaputra Cracker and Polymer (BCP), at Dibrugarh, Assam. GAIL also has stake in Oil and Natural Gas Corporation Petro additions’ (OPaL) new petrochem project at Dahej, to produce high and low density polyethylene, or PE, (HDPE and LLDPE) and polypropylene.

“We are also working on stabilisation of our plant at Pata, where we have reached capacity utilisation of 70 per cent. We will try to scale up Pata and BCP to 100 per cent utilisation over the next five-six months,” said Tripathi. BCP, at Lepetkata in Assam, has a capacity of 280,000 tonnes per annum.

Though India imports certain categories of petrochem, it is also an exporter of some. GAIL exports HDPE and LLDPE to Bangladesh, Nepal, Vietnam and China. HDPE and LLDPE account for 88 per cent of India’s total PE consumption.

According to a recent HDFC Securities report, PE consumption in India grew at a compounded annual rate (CAGR) of seven per cent in the five years ended 2015. However, production India company news grew only a five per cent yearly. “This has made India a net importer of PE. The import share in total consumption has increased from 14 per cent in FY08 to 42 per cent in FY15.” However, over the next two to three years, the demand-supply scenario will reverse. Indian players are almost doubling total PE capacity, which remained 2.9 million tonnes a year over those five years.

“RIL, GAIL, IOC and Haldia Petrochemicals (HPL) are key PE players in India. HPL was operating at lower utilisation due to working capital funding issues,” the report said.

It cited studies by Assocham and GAIL to suggest demand for PE in India will rise at a CAGR of eight per cent over the next few years. “Indian will again become a net importer of PE in two years, even if all planned capacities come online,” said the report.

Refinery plans of all petroleum refiners are linked to their petrochem plans. BPC, for instance is investing Rs 4,600 crore, out of its Rs 1.65-lakh crore expansion plan for its Kochi refinery, in a propylene derivative petrochemical project. The company expects to complete the refinery expansion by the end of FY17 and to start operations in 2017.

RIL’s investment in the PX project referred to at the outset is part of its refinery and petrochem expansion. “Commissioning of the new PX plant marks the beginning of the culmination of a series of projects, including the refinery off-gas cracker, ethane import project and petcoke gasification. These projects are part of the largest contemporary investment, in excess of Rs 1 lakh crore, in refining and petrochem anywhere in the world,” said Mukesh Ambani, chairman, after commissioning of the first PX unit last month. After full commissioning, RIL’s capacity in PX will more than double to 4.2 million tonnes.

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Republic Day parade: India displays military might, cultural diversity

India’s military might, its cultural diversity and achievements in various areas were showcased at a grand parade here on Thursday as the nation celebrated its 68th Republic Day with the Crown Prince of Abu Dhabi Sheikh Mohammed bin Zayed Al Nahyan as the Chief Guest.

The country’s main celebration took place at Rajpath here where India’s Who’s Who assembled to watch a 90-minute parade that also focussed on the government’s Make in India initiative to boost manufacturing.

Amid fears of possible terror attacks, a tight security blanket was thrown around the national capital including the venue. Nearly 60,000 police and paramilitary personnel were deployed across Delhi.

Despite rain-bearing clouds and a drizzle, thousands turned up on both sides of Rajpath to watch the grand march that wound its way over eight kilometres from Raisina Hill, with the imposing Rashtrapati Bhavan in the backdrop, to the 17th century Red Fort.

The day began with President Pranab Mukherjee unfurling the Indian flag at the Rashtrapati Bhavan and Prime Minister Narendra Modi paying tributes to the fallen soldiers at the Amar Jawan Jyoti at India Gate.

Modi welcomed the President and the Chief Guest, Sheikh Mohammed, the son of the UAE’s founding president.

President Mukherjee, commander-in-chief of the armed forces, took salute as the parade began with a 149-member UAE military contingent marching down the boulevard. Led by Lt Col Abood Musabeh Abood Musabeh Alghfeli, it comprised of the UAE Presidential Guard, the Air Force, the Navy, the Army and 35 musicians.

It was followed by military and paramilitary contingents, including mounted troops from the 61st Cavalry and mechanised columns. Martial music belted out by military bands filled the air as soldiers drawn from some of the finest military units marched with clockwork precision.

Paramilitary personnel and Delhi Police also walked, step to step.

Making their debut on the occasion India business news were India’s Light Combat Aircraft (LCA) Tejas and Airborne Early Warning and Control System (AEW&C), both developed indigenously. Despite overcast conditions, three of the fighter jets flew at a height of 300 metres from the ground at a speed of 780 km per hour in ‘VIC’ formation, leaving the spectators in awe.

Developed by the Aeronautical Development Agency and produced by Hindustan Aeronautics Ltd, Tejas, as a fourth generation aircraft, can fly at 1,350 km per hour and is comparable to the world’s best fighters, including French Mirage 2000, American F-16 and Swedish Gripen.

The elite counter-terrorism force, National Security Guard (NSG), also made its maiden appearance with a contingent of 60 commandos in black overalls and armed gear giving the ceremonial salute to President Mukherjee. The other commandos were on seven vehicles.

After the armed forces came state tableaux, displaying India’s oneness amid a rich diversity.

Haryana’s tableau, dedicated to the ‘Beti Bachao, Beti Padhao’ campaign, came first. The Jammu and Kashmir tableau was clad in white, depicting the popular winter sports destination of Gulmarg.

A Delhi tableau made its appearance at the parade after many years.

The parade ended with a spectacular fly past by the Air Force, with aircraft and helicopters setting the skies ablaze. Mi-17 V5 helicopters flew with the Indian flag and showered flower petals.

The President presented a posthumous Ashok Chakra, the highest peacetime gallantry award, to the wife of Havildar Hangpan Dada of Assam Regiment who killed four terrorists before dying in Kupwara in Jammu and Kashmir.

The military parade was commanded by Lt Gen Manoj Mukund Naravane, General Officer Commanding, Delhi Area.

Dow opens above 20,000 for second straight day

The Dow Jones Industrial Average continued with its record run on Thursday, after breaching the 20,000 milestone a day earlier.

The S&P and Nasdaq also hit record levels immediately after open, before easing off their highs.

Earnings are expected to show growth of 6.8 per cent in the fourth quarter, their biggest increase in two years.

Of the 104 S&P 500 companies that have reported results so far, nearly 70 per cent have topped expectations, according to Thomson Reuters.

“Today is about earnings and part of the Dow reaching the 20,000 milestone is because of strong earnings,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

“Sure, Trump’s initiatives have been an element in the rise but the fundamentals of the market remain strong.”

The post-election rally roared back to life this week following optimism over US President Donald Trump’s pro-growth initiatives and solid earnings.

Trump’s business-friendly decisions since taking office on Friday include signing executive orders to reduce regulatory burden on domestic manufacturers and clearing the way for the construction of two oil pipelines.

The S&P 500 and the Nasdaq Composite indexes also closed at record highs for the second consecutive session on Wednesday.

At 9:39 am ET (1439 GMT) the Dow Jones industrial average was up 23.98 points, or 0.12 per cent, at 20,092.49.

The S&P 500 was up 0.42 points, or 0.01 per cent, at 2,298.79.

The Nasdaq Composite was up 10.57 points, or 0.19 per cent, at 5,666.91.

Seven of the 11 major S&P sectors were International News higher, with the energy index’s 0.36 per cent rise leading the advancers.

Tech giants Intel, Alphabet, Microsoft and Starbucks are scheduled to report after market close.

Initial claims for state unemployment benefits increased 22,000 to 259,000 for the week ended Jan. 21, the Labor Department said on Thursday. However, the underlying trend remained consistent with tightening labor market conditions.

The Commerce Department will release numbers for US single-family home sales in December. The report, which is expected to show a slight dip in sales from the previous month, is due at 10 am ET.

Biogen was up 3.4 per cent at $282.51 after the drugmaker reported results.

EBay jumped 7.3 per cent to $32.46, a day after the e-commerce company reported a rise in revenue for the fourth-quarter holiday period.

Whirlpool fell 4.6 per cent to $181.50 after the world’s largest maker of home appliances posted a quarterly profit that came in below expectations.

Verizon Communications fell 1.5 per cent to $49.09 after the Wall Street Journal reported the company is exploring a combination with cable company Charter Communications. Charter was up 6.6 per cent at $330.27.

Advancing issues outnumbered decliners on the NYSE by 1,532 to 1,069. On the Nasdaq, 1,227 issues rose and 1,001 fell.

The S&P 500 index showed 40 new 52-week highs and one new low, while the Nasdaq recorded 75 new highs and four new lows.

Good news! RBI may lift weekly cash withdrawal limit by February end

With the cash crunch situation easing, the Reserve Bank might do away with the weekly withdrawal limits from banks as well as ATMs by the end of next month, bankers said.

The RBI had recently raised the ATM withdrawal limit to Rs 10,000 a day but maintained the weekly cap at Rs 24,000 for saving account and Rs 1 lakh for current account holders.

“I think the restrictions on withdrawal by RBI should be completely lifted by February-end or by first half of March as cash situation is easing gradually,” Bank of Maharashtra executive director R K Gupta told PTI.

It is entirely RBI’s decision and the central bank would decide after making holistic assessment of the situation, he said.

According to SBI’s research report Ecowrap, “By the end of February, 78-88 per cent of the currency could be back in the system under the best case scenario in terms of an optimal currency distribution (more small denomination notes),” the report said, adding that “it seems within next 2 months things would be pretty close to normal.”

Another senior public sector bank official said the situation is easing and it is a matter of weeks when the curb on withdrawal gets eased.

“My hunch is that it should happen before end Indian Economy News of the current fiscal,” the official said, adding, RBI has been progressively easing the curb.

The RBI had earlier increased the daily withdrawal limit from ATMs to Rs 4,500 from Rs 2,500 effective January 1, just a day after 50-day demonetisation period ended.

Meanwhile, RBI Governor Urjit Patel could not set a time frame before the Standing Committee on Finance for return of normalcy in the banking system even as the central bank asserted that Rs 9.2 lakh crore or 60 per cent of demonetised currency has been replaced.

In a surprise move on November 8, Prime Minister Narendra Modi had announced demonetisation of old Rs 500 and Rs 1,000 notes.

Following the decision, the RBI had put restrictions on withdrawal of cash from ATMs as well as from banks to deal with shortage of new high denomination currency notes. This led to long queues at ATMs and bank branches.

All over the country, the banks had to deal with huge rush of people who thronged their branches to deposit junked notes. The deadline for depositing old notes with banks ended on December 30.

Mexican Prez cancels trip to Washington after he refuses to pay for wall

Mexican President Enrique Pena Nieto today cancelled his planned trip to the US after President Donald Trump tweeted that he should cancel his visit if Mexico is “unwilling to pay” for the massive border wall being build to stop illegal migrants from entering America.

“We informed the White House this morning that I will not attend the working meeting scheduled for next Tuesday” with Trump in Washington, Pena Nieto said on Twitter.

His decision came hours after Trump tweeted that “If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.” Trump’s Mexican counterpart condemned the US decision to build a border wall and repeated that Mexico would not pay for the wall despite Trump’s assertions that it would.

Pena Nieto was scheduled to be in Washington on January 31.

“Mexico does not believe in walls Donald Trump. I’ve said time again; Mexico will not pay for any wall,” Pena Nieto had said in a video statement posted to Twitter.

“I regret and reject the decision of the US to build the wall,” he had said.

Pena Nieto had said he would wait for a final report from his top officials who arrived here yesterday to meet with the Trump administration, and previous meetings with Mexican legislators, before deciding which steps he would take next.

Trump also tweeted that the US has a $60 billion trade deficit with Mexico.

“It has been a one-sided deal from the beginning of NAFTA (The North American Free Trade Agreement) with massive numbers of jobs and companies lost,” Trump, who has been in office for just six days, said.

Earlier, Trump had signed two executive orders directing the construction of a wall on the US-Mexico border, boosting border patrol forces and increasing the number of immigration enforcement officers who carry out deportations.

In a speech on Monday, Pena Nieto had said his government is prepared to negotiate with the US if Mexico’s national sovereignty is respected. He laid out economic integration and respect for the rights of migrants and the money they send home as his nation’s key negotiating points.

Trump has suggested some of the $25 billion in annual remittances that migrants return home would be retained to pay for the border wall.

Relief to Tata Sons as NCLT rejects Mistry firms’ contempt plea

The National Company Law Tribunal (NCLT) on Wednesday dismissed a contempt petition filed by two Cyrus Mistry family companies against Tata Sons and its directors, alleging violation of NCLT directives in taking steps to remove him from the board of Tata Sons.

The Bench, however, gave liberty to the Mistry family companies to file an affidavit within three days on the issue of Tata Sons holding extraordinary general meeting (EGM) on February 6.

Pronouncing the operative part of the order, a division Bench of NCLT said, “The contempt petition is dismissed.” The Bench was of the view that the action of Tata Sons did not amount to contempt of court.

In their petition, Cyrus Investments and Sterling Investment had also sought injunction against the Tata Sons barring them from “convening or holding of the EGM scheduled for February 6, 2017, or any other date or from transacting any business thereat.”

Though the contempt plea was dismissed, the Bench gave liberty to Mistry family companies to file an affidavit within three days on the issue of Tata Sons holding EGM on February 6.

Tata Sons was also asked to file a rejoinder, if any, three days thereafter.

NCLT kept this matter for hearing on January 31 and February 1 when the main petition filed earlier by the two Mistry companies against Tata Sons would be heard.

The earlier petition had challenged India company news Mistry’s removal as the chairman of Tata Sons alleging bad practices, oppression and mismanagement in the holding company.

NCLT, on December 22 last year, had refused interim relief and posted the main petition for hearing on January 31 and February 1. Today, the tribunal clubbed the issue of holding EGM of February 6 along with the hearing of the main petition.

Meanwhile, the Mistry companies filed a contempt plea with NCLT against Tata Sons alleging that the respondents “committed a breach” of an NCLT order of December 22 by giving a special notice on January 3, 2017, for removal of Mistry as a director of the board of Tata Sons, “in clear violation of the order”.

It sought punishment for Ratan Tata, other directors of Tata Sons and trustees of Sir Ratan Tata Trust and Sir Dorabjee Trust – N A Soonawala, R K Krishnakumar and R Venkatramana – under the Contempt of Court Act, which provides for simple imprisonment for a term which may extend to six months or fine of Rs 2,000 or both.

Last October, Tata Sons removed Mistry as its Chairman, nearly four years after he took over the reins of the over $100 billion salt-to-software conglomerate.

A Sundaram, counsel for Mistry’s family companies, had argued that removal of Mistry as a director of Tata Sons could have waited.

He contended that by calling an EGM to remove Mistry as a director of the company, Tata Sons and others had committed direct violation of the December 22 tribunal order and its action amounted to “wilful disobedience” of NCLT’s order in an earlier petition filed by Mistry’s family owned companies against Tata Sons.

Sundaram further argued that the move to remove Mistry was against the spirit of the NCLT order which had earlier stated that the respondents will not “initiate any action or proceedings over this subject matter pending disposal of the company petition.

The contempt petition contended that the move of Tata Sons to call an EGM on February 6 to remove Mistry as a director violates the undertaking given by its lawyers to NCLT, which heard an earlier petition filed by the investment firms on December 22.

The lawyers had assured the Tribunal that no further action would be taken in this matter until the petition was finally heard and disposed of, said the contempt petition.

Abhishek Manu Singhvi, counsel for Tata Sons, said the respondents – Tata Sons and its directors – had not committed any contempt of NCLT by calling an EGM to remove Mistry.

Singhvi had argued that Tata Sons had not given any specific undertaking to the tribunal earlier that Mistry would not be removed as director from the company. Hence, there was no contempt committed by Tata Sons and others.

The Tata Sons’ lawyer further argued that there was nothing implicit in the order of NCLT of December 22 that Mistry would not be removed.

He had said that Tata Sons had no option but to remove Mistry from the board because he violated his fiduciary duty to the shareholders by leaking confidential information, which was damaging to Tata companies.

He argued that Tata Sons was seeking Mistry’s removal as a director as he was acting in a manner detrimental to the company.

However, the NCLT dismissed the contempt petition of Mistry’s family owned companies, saying it does not amount to contempt of court.

Rs 9.2 lakh cr remonetised till date: Urjit Patel

The Reserve Bank of India (RBI) had infused around 63% of the total banned currency notes after demonetisation, its Governor Urjit Patel told a parliamentary panel on Wednesday.

According to sources, the RBI governor, who briefed the parliamentary standing committee on finance on demonetisation, said the central bank had infused new currency notes worth around Rs 9.2 lakh crore into the system.

Currency notes worth around Rs 14.5 lakh crore were withdrawn when the Centre announced demonetisation on November 8, 2016.

Most members in the finance committee, including former Prime Minister Manmohan Singh and panel chairman M Veerappa Moily, spoke in favour of protecting the autonomy of the RBI as an institution but said that accountability from its governor must be sought as the note ban had impacted a large of number of people.

Though the members found Patel’s explanation lucid, they were miffed that he did not answer queries like how much money had been deposited in banks after demonetisation or by when the cash supply situation would ease across the country.

“Patel came across as a professional in his brief… but we had a lot of issues to raise,” said an Opposition member.

The finance committee meeting was significant as key finance ministry officials, including Economic Affairs Secretary Shaktikanta Das, Revenue Secretary Hasmukh Adhia and Financial Services Secretary Anjuli Chib Duggal also briefed the panel on monetary policy, including the note ban.

Representatives of the Indian Banks’ Association also briefed the panel.

As members sought to know if the government forced the RBI to suggest the note ban, both Das and Patel replied that the government had been discussing the issue with the central bank since early 2016.

However, while Das said such consultations started in May, Patel said discussions were initiated in January.

When a member asked why a joint secretary of the finance ministry had been deployed at the RBI to monitor the currency situation after demonetisation, Patel had no reply.

Sources said both the briefings were inconclusive and would resume after the first half of the Budget session of Parliament ended on February 9.

According to sources, the Opposition members asked a lot of questions related to the suffering of the people, the economy, job losses and the over 100 deaths attributed to the note ban.

In response to queries related to the preparedness of the banking system to deal with the impact of the note ban, RBI Deputy Governor S S Mundra said all the automated teller machines (around 200,000) were functional now.

Congress member Digvijaya Singh wanted a timeline on lifting of cash withdrawal limits.

“Patel could not answer how much money India business news had come back into the system and by when banks’ operations would be normal. RBI officials were defensive on demonetisation,” another Opposition lawmaker said.

How Manmohan Singh came to Patel’s rescue

Former Prime Minister Mamnohan Singh, also a former RBI governor, saved incumbent central bank chief Urjit Patel from a tricky query from an Opposition member. Sources said when a member asked Patel if there would be chaos if the government removed the current cash withdrawal limits, Singh said the RBI chief need not take that query. Sources said Singh is a reputed economist and respects other professionals. The former PM also noted that autonomy of the RBI as an institution must be protected. While the Centre recently increased cash withdrawal limits from Rs 4,500 to Rs 10,000 per day from the ATMs, the limits on pulling out money from the banks still remains. Congress has been asking for removal of these caps.

Parliament panel meet: Focal points

* RBI Governor Urjit Patel told a parliamentary panel the central bank has injected 63% of the total banned currency notes since Nov 8 demonetisation

* RBI has infused new currency notes of around Rs 9.2 lakh crore into the system

* Rs 14.5 lakh crore withdrawn from the system due to note ban

* Most panel members favoured protection of RBI’s autonomy

* Economic Affairs Secretary Shaktikanta Das, Financial Services Secretary Anjuly Chib Duggal also briefed the panel, besides representatives of the Indian Banks’ Association

* Both Das and Patel said the government had been discussing note ban with RBI since early-2016

* Officials would again brief the panel after Feb 9

* Opposition members asked questions related to dent in economy, job losses and the over 100 deaths attributed to note ban

* RBI Deputy Governor S S Mundra said all ATMs (around 200,000) are functional till date