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  • Adani gets OZ nodes for coal mine project
    Amid environmental concerns, the Australian government on Monday approved Adani's $16.5-billion Carmichael coal mine and rail project subject to a set of environmental conditions. The nod for the project comes at a time when the green lobby has raised serious doubts about the viability of the project, touted to be one of the world's biggest coal mines."This outstanding project will drive economic growth and create more than 6,000 jobs in Australia. It will also boost India's development by providing electricity to an estimated 100 million Indians," Australia's High Commissioner to India Patrick Suckling said, adding that the decision sends a clear signal to international investors.Welcoming the approval, Adani Group chairman Gautam Adani said, "It takes us another step closer to delivering our mine, rail and port development. Together with the North Galillee Basin rail and the company's port operations at Abbot Point, Adani's planned investments in Queensland will deliver more than 10,000 direct and indirect jobs in Australia, and vital opportunities for local suppliers."

  • Reliance Power mulls borrowing from Chinese banks for hydro power projects
    To support the recently acquired hydro power assets from Jaypee Power Ventures Ltd (JVPL), Reliance Power could look at Chinese banks for lending around Rs 9,500 crore. Some market experts said the debt amount could be even more. Reliance Power refused to disclose any information on the same.“The company has earlier taken loans from Chinese banks and has much experience of taking debt at low rate of interest from the same for its coal-based Sasan thermal power project. It is most likely to follow the same route in the hydro sector as well,” said one of the executives close to the developments.Reliance CleanGen, a wholly-owned subsidiary of Anil Ambani-controlled Reliance Power, on Sunday signed a memorandum of understanding with Jaiprakash Power Ventures Ltd (JPVL) on Sunday to buy off the company’s entire hydro power portfolio. The deal size, as shared by sources at Reliance Power, is Rs 12,000 crore, out which the company will infuse Rs 2,500 crore as equity, rest would be debt.“The rate of interest offered by state-owned Chinese banks are quite attractive, running into single digit at times. This, though usually happens if equipment are also sourced from the country,” said Kalpana Jain, senior director, Deloitte.  The current rate of interest for loans sought by power projects is around 12-14 per cent, though Chinese federal banks offer cheap debt in the range of 7-9 per cent, at the minimum, said Jain.
    A Mumbai-based power sector expert, however, said an Exim Bank lending kind of an arrangement is not possible with a private player and also when it has acquired operational assets, which do not even need equipment.Earlier, Abu Dhabi National Energy Company, or TAQA, pulled out of an agreement to acquire two of JPVL’s hydro power plants, valued at Rs 9,689 crore, on Thursday. “The concessional terms of credit are possible only when either equipment or service is sourced from the lending country. The company we are discussing here would have to look at multi-lateral funding agencies or development finance institutes that want to leverage their portfolio in hydro or clean energy,” said the expert on Reliance Power. He added that majority of the equipment in the Sasan Project were sourced from China and hence got cheap loans at throwaway interest rates. The Sasan power project of Reliance Power that has a capacity of 4,000 Mw and valuation of Rs 19,400 crore is funded by a 75:25 debt equity ratio. The lenders include a consortium of 12 state-owned banks led by SBI and other financial institutions.

  • JSW Steel wants to pay promoters wife for brand promotion
    Claiming the 'JSW' brand belongs to a private company owned by promoter and Chairman Sajjan Jindal's wife, Sangita, JSW Steel has proposed to pay a substantial sum annually for use and promotion of the brand name. The firm is going to seek its shareholders' approval for this related-party transaction at its annual general meeting on July 31.According to the terms of the deal, the annual recurring payment, linked to the turnover of the company, works out to around Rs 125 crore for the current year and is likely increase in subsequent years. The company says paying for brand promotion is an accepted practice among conglomerates and that the transaction is at an arm's length. But corporate governance experts are calling the deal, which is to take effect from April 1, 2014, "abusive". They say the brand has evolved over the years and cannot suddenly become the private property of promoters.In its notice for the annual general meeting (AGM), the company informed shareholders that the 'JSW' brand was owned by JSW Investments Pvt Ltd (JSWIPL), a promoter group company. "Sangita Jindal, wife of Mr Sajjan Jindal (promoter and chairman and managing director of the company), holds directly and through nominees 2,049,880 shares, representing 99.99 per cent of the total equity share capital of JSWIPL," it said.Encouraged by the recent success of Bengaluru FC, a football club sponsored by the company, JWISPL wants to promote the brand. For this, it wants a revenue-linked levy from all group companies. "Instead of taking such initiatives on an ad-hoc basis and on a standalone company basis, a professional approach with a structural set-up or framework has to be put in place to sustain the brand image. The company has been informed, given the size and scale of the JSW group, JSWIPL plans to nurture the brand by adopting the best global practices."The company said a levy in the range of 0.15-0.50 per cent of the consolidated total operating income as brand licence fee was being charged by brand owners in various groups for brand usage."So, it is proposed to pay a brand license fee of 0.25 per cent of the consolidated net turnover of the company to JSWIPL, with effect from April 1, 2014, payable quarterly," it said in the notice.In an emailed response to queries from Business Standard, a spokesperson for JSW Steel said: "To ensure consistency in brand usage, uniformity in performance standards among various companies using the brand, appropriate framework has to be in place through governance structure, code of conduct and a business-excellence model. The brand owner has to be vigilant and needs to monitor that the brand name is not misused and the value of the brand is not diluted. Accordingly, JSW Investment Ltd, the brand owner since inception, has carried out a study to adopt best practices in managing the brand architecture, benchmarking with both Indian and international conglomerates. To sustain and improve the brand value and to bestow the tangible and intangible benefits in the longer term, a sustainable corporate-branding campaign involving substantial expenditure has to be done on a consistent basis - to disseminate the idea, knowledge, information and core values of the brand through a systematic campaign."

  • Upgrade power plant and get more coal supply
    Small and old power generation units with a combined capacity of 25,000 MW in the government sector will be encouraged to replace their equipment with new ones above supercritical capacity threshold with assured coal linkages, as per a new policy formulated by the Narendra Modi government. The move would help increase the country’s installed power capacity significantly and in a hassle-free manner, as these old plants already have environmental/water clearances.Also, as these plants with obsolete machinery are fuel guzzlers and operate much below their rated capacities, the new policy would also be environment-friendly and in sync with India’s intent to regulate the carbon intensity of its economy under multilateral commitments.These old plants are generally of capacities ranging from 100 MW to 200 MW, while the minimum sizes in which supercritical units are globally available are 660 MW and 800 MW. Mostly, these plants, which have largely neglected repair and maintenance, are run by state, which rely on relatively cheaper power from them to avoid load shedding. There are also a few such plants with central PSUs like Damodar Valley Corporation and Neyveli Lignite Corporation.Official sources from the Union power ministry told FE that the proposed in situ capacity expansion would entail investments to the tune of over R1 lakh crore. These new capacities would supplement the capacity augmentation drive through larger power plants including ultra mega power projects being developed through the public-private partnership model. In the last couple of years, India’s power capacity addition targets have been outstripped thanks to the completion of projects rolled over from previous years.The normal operational life of a power plant is 25 years, though they can still be run at low efficiency, say, at a plant load factor of 40-50%. One-sixth of India’s installed coal-based generation capacity, or 25,000 MW, is already well past operational life.Despite little possibility of turning around operational performance of these “derated capacities” through repair, utilities remain stuck with them as currently there is no policy incentive from the Centre for replacing existing machinery with new ones.

  • Mining Engineers Association of India gives suggestions on new industrial policy
    A leading body of mining professionals has suggested the new industrial policy for states should make it clear that development and mining will take precedence in mineral bearing regions whether owned by government, private or occupied illegally by villagers. However, industries can finally assist in those areas where there is wildlife notification and the forest department is in full control of the area and is adopting conservation methods already. MEAI has also said since mining is site specific, the state government should also have the power to vacate illegally occupied mineral bearing land and hand it over to the lease holder.

  • ED attaches Rs100 crore assets of former Jharkhand minister Anosh Ekka
    The Enforcement Directorate (ED) on Monday attached properties estimated worth Rs.100 crore of former Jharkhand minister Anosh Ekka in connection with its money laundering probe against him based on a disproportionate assets complaint. Ekka, a former rural development minister in chief minister Madhu Koda’s cabinet, has been under the scanner of the agency for the last three years after multiple agencies initiated investigations against Koda and his cabinet colleagues. The agency attached a farm house property alleged to have been procured by Ekka in posh Hauz Khas area of Delhi apart from a building floor in Vasant Vihar, a property in Sushant Lok area in Gurgaon and a flat in Ranchi, ED sources said. The ED order said the estimated value of the assets, seized under the provisions of the Prevention of Money Laundering Act (PMLA), have an estimated value of over Rs.3.66 crore when they were purchased years ago but now the market value of these real estate properties have been valued by the central agency at Rs.100 crore. The agency had earlier attached Ekka’s and his associates’ assets worth Rs.8 crore in the same case. CBI had earlier accused Ekka, his wife and others of possessing disproportionate wealth of Rs.17 crore, allegedly acquired during his ministerial term in the Koda regime between 2006 and 2008. The agency on Monday dispatched the attachment orders to Ekka in Ranchi in Jharkhand.

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