PSU | Business Upturn

GAIL India Q4 results: 77.5% decrease in net profit

News Desk — Thu, 18 May 2023 11:41:17 +0000

GAIL India, a public sector organization that is owned by the Ministry of Petroleum and Natural Gas, published its Quarterly reports for the fourth quarter of the fiscal year 2023 on Thursday.

The petroleum public company declared a net profit of Rs 603.52 crore for the quarter that ended in March 2023, which was a solo figure. This is a decrease of 77.5 percent in comparison to the previous fiscal year’s equivalent quarter revenue of 2,683.11 crores.

The income that the state-owned corporation earned from its activities increased by around 22% to 328.58 crores. Despite this, the company’s petrochemical divisions saw a decrease in revenues of 46%.

The natural gas marketing division, which is responsible for 96% of the overall income, benefited from increased volumes as well as decreased costs, which led to a 37% increase in quarterly revenue.

Back in 2012, GAIL came to an agreement with the energy giant Gazprom of Russia to acquire around 2.5 lakh tonnes of liquified natural gas (LPG) over the course of the next 20 years.

Following the imposition of Western sanctions on Russia in response to the conflict in Ukraine, Gazprom was forced to relinquish its ownership in Germany’s Sefe.

GAIL said a month ago that it will obtain four cargoes of LNG from Sefe, which is similar to the amounts that it was acquiring under an agreement with a former subsidiary of Gazprom in Russia.

Government likely to pave way for railway PSUs merger in Budget 2022: Report

Malvika Choudhary — Fri, 31 Dec 2021 10:40:34 +0000

According to a report by MoneyControl, it is anticipated that the centre will come up with a roadmap for the merger of six public sector undertakings (PSUs) under the Ministry of Railways in Budget 2022-23, starting the process for a root-and-branch restructuring of these organisations.

Finance Minister Nirmala Sitharaman is likely to pave the way towards the merger of Rail Vikas Nigam Ltd (RVNL) with Indian Railway Construction Ltd (IRCON), RailTel Corporation with Indian Railway Catering and Tourism Corporation(IRTC) and Braithwaite & Co Ltd with Rail India Technical and Economic Services (RITES) when she presents Budget 2022-23 on February 1.

“Two out of the three railway PSU mergers are likely to be completed next year but adherence to timelines will depend on regulatory approvals,” one official said as per MoneyControl. Indian Railways Finance Corporation, Rail Vikas Nigam and Konkan Railway Corporation are among the PSUs listed. The Indian Railways has 11 PSUs under it.

Rail Vikas Nigam Limited is under the ownership of Indian Railways, Ministry of Railways & Government of India involved in building rail infrastructure required by the railways and is the number 1 PSU. The Union Cabinet in 2016 had decided to merge the Railway Budget with the General Budget, thus ending the 92-year-old tradition of having a separate Railway Budget.

Bank unions call for nationwide strike on 16-17 December

News Desk — Thu, 02 Dec 2021 14:39:56 +0000

A two-day nationwide walkout has been announced by the United Forum of Bank Unions, an umbrella group of nine unions, in protest of the government’s proposal to privatise public sector banks on December 16 and 17. In the Winter Session of Parliament, the national government will introduce the Banking Laws (Amendment) Bill 2021.

The Bill’s goal is to privatise two public sector banks, and adjustments to the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980, as well as incidental amendments to the Banking Regulation Act of 1949, are required.

While presenting the Budget for 2021-22, Finance Minister Nirmala Sitharaman announced the privatisation of PSBs as part of a disinvestment campaign to raise $1.75 lakh crore. Mahesh Mishra, the convener of the United Forum of Bank Unions, said on Thursday that the government hopes to approve the Banking Reforms Bill in this session of Parliament, clearing the way for privatisation.

In a statement, he added that as part of the action, the United Forum will organise a sit-in against the Bill commencing on Friday (December 3), and a two-day nationwide strike will be held on December 16 and 17 in protest of the Bill.
Bank unions, according to Mishra, favour policies that promote the country’s economic development, as well as employee and customer-friendly banking policies, but not bank privatisation.

The multi-year capex cycle in India will be similar to FY03-12: BofA Securities

Diya S. — Mon, 02 Aug 2021 14:38:05 +0000

As reported by LiveMint, BofA Securities Inc. has said that India is at a multi-year capex cycle whilst the US infrastructure stimulus is witnessing a positive. The country’s multi-year capex cycle will be similar to that seen in FY03-12.

Furthermore, it expects $356 billion orders to be awarded over two years with a rise of 14 and 7 per cent in FY22 and FY23 respectively by mainly government capex.

The US-based firm noted, “We expect private sector and PSUs to accelerate capex cycle growth from FY24 onwards. Government opening up large monopolies within gas/power distribution, railways, mining, would mainly drive private capex.”

It continued saying that most PSUs (public sector undertakings) were cash rich but re-invented their business models towards new growth areas resulting in the fall of PSUs’ share of orders i.e. 13 per cent over FY22-23 seemed transitory.

The $1 trillion US infrastructure stimulus would most possibly provide opportunities to capital good players like ABB India Ltd., Siemens Ltd. as well as Cummins India for the export of products considering their relatively low utilizations standing at 50 to 85 per cent and the ambition for expanding exports along with receiving support from their American or European parents. It could offer growth for EPC (engineering, procurement and construction) companies such as L&T which has expanded its US reach.

“Our analysis of previous cycles suggest margins, working capital cycle, return on equity (RoE) and earnings growth are highly co-related for this cyclical sector. RoEs and margins for the sector are currently close to multi-year lows while working capital close to multi-year highs,” added BofA.

Due to the acceleration of capex cycle, it has observed the scope for valuation expansion.

PM Modi addressed webinar on privatization; talks about divestment plans

Arnav Dogra — Wed, 24 Feb 2021 13:03:53 +0000

Addressing a webinar on privatization, Prime Minister Narendra Modi today said that several of the Indian Government’s Public Sector Undertakings (PSUs) are unprofitable or liabilities; since many of these undertakings are supported using the taxpayers’ money, strategic disinvestment is going to be the correct course of action for the Government.

He said that the fiscal support the Government provides these unprofitable companies has been severely burdening the economy and the ownerships in these companies have been maintained just because of legacy which is not practical.

Supporting the major divestments the Government of India has started, he said that the administration and the government should have no role in business as their primary goal is the welfare of people.

Briefly touching upon the Government’s strategy the Prime Minister mentioned how India has nearly 100 under-utilized and unutilized assets which now they seek to monetize. This privatization, he says, would be able to garner around Rs 2.5 lakh crore, all of which would be used for the welfare of the public.

According to him, the Government will be now turn its focus towards modernization and monetization which will create more jobs and increase the government’s efficiency. Under this plan, the Government will be making divestments in all but 4 strategically chosen sectors. The public ownership in these 4 sectors will be kept at a bare minimum.

Outlining the big scheme PM Modi said, “we are working on a Rs 111 lakh crore National Infrastructure Pipeline, by which India will become one market, one tax system.”

Government extends deadline for EOI submission for Shipping Corp to March 1

Devanshu Singla — Fri, 12 Feb 2021 11:21:16 +0000

The government on Friday extended the deadline for submission of initial bids to buy Shipping Corporation of India to March 1.

On December 22, Department of Investment and Public Asset Management (DIPAM), the government’s asset sale department, invited expressions of interest to privatise Shipping Corporation by selling the government’s 63.75 per cent stake, along with the transfer of management.

The Department of Investment and Public Asset Management (DIPAM) in December had invited expressions of interest for strategic disinvestment of its entire stake of 63.75 per cent in Shipping Corporation of India, along with the transfer of management to a strategic buyer

The last date for submitting the bid was February 13.

As per the notice from DIPAM, the last date for submission of EoI has been extended to March 1.

In November last year, the Cabinet had given in-principle approval for strategic divestment of Shipping Corp and Container Corp of India Ltd. However, the plans were delayed due to a delay by the SCI management in hiring a consultant for undertaking de-merger/disposal of its non-core assets (real estate) ahead of the sale and to carry out corporate restructuring for the better operational performance of the navratna company.

For 2021-22, the government has set a disinvestment target of Rs 1.75 lakh crore, over five times what it is aiming to raise in the current financial year. In the Revised Estimates, the target has been set at Rs 32,000 crore for current fiscal.

Coal India Q3 Results: Net profit drops 21% to ₹3,084.10 crore

Devanshu Singla — Thu, 11 Feb 2021 11:05:35 +0000

Coal India Ltd. today reported a 21.4% year-on-year decline in net profit to ₹3,084.10 crore for the year ended on 31 December and the revenue during the December quarter increased to ₹23,686 crore.

In the corresponding quarter in FY20 the company posted a net profit of ₹3,921.81 crore for the corresponding quarter in FY20 and the revenue was ₹23,190 crore.

The company reported total comprehensive income of ₹2,273.18 crore during the quarter under review against ₹3,669.98 crore a year ago.

The world’s largest coal miner’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose 4% year-on-year to ₹5,164 crore during December quarter. The operating profit was ₹4,968.3 crore for the same period last year.

Company’s operating margin rose 40 basis points to 21.8% in Q3FY21 from 21.4% in Q3FY20.

During the 3rd quarter, Coal India reported total net sales of ₹20670.59 crore from which the net sales from e-auction estimated at ₹3995.80 crore.

The combined production of coal recorded at 156.8 million tonnes during the December quarter. The offtake in the quarter rose nearly 9 per cent on-year to 153.85 million tonnes, the company said in the regulatory filing.

The board approved the incorporation of two wholly-owned subsidiaries — for solar value chain business vertical, and new and renewable energy.

“CIL Board in its Meeting held on date accorded its approval for incorporation of two wholly-owned subsidiaries of Coal India Limited, one for Solar value chain (lngot-wafercell- Module) business vertical and another for New and Renewable Energy subject to the approval of GOI,” the miner said in the statement.

Rs 1046 crore share buyback & 25% interim dividend, GAIL declares

Arjun Kalia — Fri, 15 Jan 2021 10:52:54 +0000

GAIL, the largest gas distribution company in the country, said its board approved the buyback of 6.97 crore shares at a price of Rs 150 per share. A Rs 1,046.35 crore share buyback program was revealed on Friday, as it aimed to refund surplus cash to shareholders, the largest being the Indian government. The approval for buyback of equity shares as come along with the declaration of an interim dividend for the ongoing fiscal at its board meeting.

The repurchase of 6.97 crore equity shares, represent 2.5% of the total paid-up equity share capital carrying a face value of Rs 10 each, also interim dividend declared is 25% (Rs 2.50 per share) for the financial year 2020-21.

After the announcement, GAIL’s shares dropped as much as 5.2 per cent to Rs 136.55 but recovered from the day’s low. 35 of the 39 analysts monitoring the business have a ‘buy’ rating and four show a ‘hold.’ The shares were trading 6% higher than its Bloomberg consensus 12-month price target of Rs 135.6.

According to the company’s latest shareholding, while foreign investors owned 15.74% stake in the company, the government held a 51.76% stake and has asked at least eight state-run companies including miner Coal India, power utility NTPC, and minerals producer NMDC as it scours for the ways to generate funds to rein in their fiscal deficit.

SAIL shares fall over 8%, Government to sell upto 10% stake

Devanshu Singla — Thu, 14 Jan 2021 05:41:45 +0000

A day after the government announced to sell up to 10 per cent stake Steel Authority of India (SAIL)’s share price fell over 8 per cent in the morning on January 14.

On January 13, the government confirmed the opening of Offer for Sale (OFS) in SAIL for retail and non-retail investors. The department of investment and asset management (DIPAM) secretary in a tweet said the OFS in SAIL would open for non-retail investors on January 14 and for retail investors on January 15. With this, the government would divest 5 per cent equity in the firm with a 5 per cent greenshoe option.

As per the details shared by the ministry of steel, the floor price for SAIL OFS has been set at Rs 64 per equity share. The total OFS size has been calculated at 206,526,264 equity shares of the face value of Rs 10 each (Base Offer Size), with an option to additionally sell up to 206,526,264 equity shares of the firm (over-subscription option). The OFS size stands at 413,052,528 shares, which is calculated at Rs 2,664 crore.

The stock was trading at Rs 68.40, down Rs 6.30, or 8.43 per cent, at 1006 hours. It has touched an intraday high of Rs 69.20 and an intraday low of Rs 67.60.

SAIL has chosen DAM Capital Advisors Limited (formerly known as IDFC) and ICICI Securities Limited as brokers. DAM Capital Advisors Limited will act as the settlement broker.

Canara Bank rises on raising Rs 1,635 cr through tier-I bonds

Devanshu Singla — Fri, 01 Jan 2021 07:57:50 +0000

State-owned Canara Bank on Thursday said it has raised Rs 1,635 crore through issuance of additional tier-I bonds.

Canara Bank rose 1.40% to Rs 130.75 after the bank issued and allotted Basel III compliant additional tier-I bonds amounting to Rs 1,635 crore.

The PSU bank allotted 16,350 units of 8.50%, non-convertible, perpetual, taxable, subordinated, fully-paid up, unsecured basel III compliant additional tier-I bonds series III worth Rs 1,635 crore. The announcement was made after market hours yesterday, 31 December 2020.

This will help the lender increase its capital adequacy ratio.

As at September-end 2020, the bank’s capital to risk-weighted assets ratio (CRAR) stood at 12.77 per cent. Out of this, tier-I was 9.54 per cent and tier-II was 3.23 per cent.

The PSU lender reported 14.9% jump in net profit to Rs 465.88 crore on 46.2% rise in total income to Rs 22,681.05 crore in Q2 September 2020 over Q2 September 2019.

Canara Bank is a state-owned commercial bank. The Government of India held 69.33% stake in the bank as of 30 September 2020.

Total government liabilities increase to Rs 107 lakh crore in Q2, 2020-21

Devanshu Singla — Thu, 31 Dec 2020 07:53:05 +0000

As per the official data public debt, total liabilities of the government increased to Rs 107.04 lakh crore at end-September 2020 from Rs 101.3 lakh crore at end-June 2020.

This represents a 5.6 per cent quarter-on-quarter increase in Q2 FY21.

As per the latest quarterly report on public debt management, public debt accounted for 91.1 per cent of total outstanding liabilities at September-end 2020,

The weighted average yield on primary issuances of dated securities showed further moderation to 5.80 per cent in Q2 of FY21 from 5.85 per cent in Q1 FY21, it said.

During Q2 FY21, 13 tranches of auctions were held for issuance of dated securities aggregating to Rs 4,20,000 crore, which was slightly more than the pre-announced calendar because of exercising of greenshoe option, it said.

The central government issued dated securities worth Rs 3,46,000 crore in the first quarter as against Rs 2,21,000 crore in the same period a year ago.

The ownership pattern of central government securities shows that the share of commercial banks stood at 38.6 per cent at end-September 2020, lower than 40.4 per cent at end-March 2020. “The share of insurance companies and provident funds at end-September 2020 stood at 25.3 per cent and 4.8 per cent, respectively. The share of mutual funds increased from 2.0 per cent at end-June 2020 to 2.4 per cent at end-September 2020,” it said.

During Q2, yields on government securities hardened due to apprehension about the Centre further raising the borrowing from the revised target of Rs 12 lakh crore amid the strained fiscal position, MPC decision to keep the policy rate unchanged in its meeting held on August 4, the geopolitical issue with China and higher retail inflation data, it said.

The yield on 10-year benchmark security opened at 5.84 per cent at the beginning of the quarter and closed at 6.02 per cent at end of the quarter in September.

Government is set to sell 10% stake in MIDHANI

Shalmali Bhagwat — Sun, 22 Nov 2020 14:10:26 +0000

The government is planning to sell up to 10 per cent stake in defence PSU Mishra Dhatu Nigam Ltd (MIDHANI) in the current fiscal ending March, an official said. The company got listed on stock exchanges in April 2018 and the government had attracted approximately Rs 438 crore by making available 26 per cent stake through IPO.

Mishra Dhatu Nigam Limited, is a specialized metals and metal alloys manufacturing facility in India, located in Hyderabad, Telangana. It is a Public Sector Undertaking, under the administrative control of Department of Defence Production, Ministry of Defence, Government of India. So far this fiscal, the government has collected Rs 6,138 crore by selling minority stake in Hindustan Aeronautics Ltd and Bharat Dynamics Ltd through offer for sale so far this year. The government also divested 15.2 per cent in Mazagon Dock Shipbuilders Ltd through an initial public offering. The government has set a Rs 2.1 lakh crore disinvestment target in current fiscal. This includes Rs 1.20 lakh crore through CPSE stake dilution and Rs 90,000 crore through stake sale in financial institutions — more than four times what it raised last financial year.

The official said that with the lifting of regulations in space sector to foreign investment and bringing defence sector under automatic route for 74 per cent foreign direct investment (FDI), MIDHANI shares are expected to attract investors.”We are looking at up to 10 per cent stake dilution via offer for sale,” the official reported. Shares of MIDHANI closed at Rs 193.50 apiece on the BSE on Friday. At the current market price, the government can create a capital of about Rs 360 crore by selling 10 per cent stake in the company. The official further said that with big ticket divestment plans hit by the COVID-19 pandemic, government is readying public sector companies for minority stake sale in the remaining months of current fiscal.

India on the road for 4 major PSU banking entities after new public policy

Chittesh Dalmia — Thu, 23 Jul 2020 06:44:23 +0000

India on the road for 4 major PSU banking entities. The Centre’s proposed new policy to have not more than four public sector undertakings (PSUs). However, in each ‘strategic sector’ will likely apply to the banking sector too. Department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey said on Wednesday. This will essentially mean that the number of public sector banks (PSBs) could be brought down to four from 12 now, via privatisation or consolidation.

The move, part of the new, bolstered, clear-cut privatisation policy, will also be in conformity with the policy objective to create at least a few global-size entities in each important economic segment, more particularly in areas like energy and banking.

An attendant benefit of the exercise will be that the government’s non-tax revenues will see a timely, big jump over the next few years, helping it restore its fiscal strength. The slowing economy has seriously dented the government’s tax revenues.

“We are very closely working with the department of financial services. And I think the general framework will be the same as the finance minister announced…It is in the works, and to be out soon. Also India on the road for 4 major PSU banking entities”. Pandey said at an event organised by industry body Ficci. When asked about privatization and consolidation of PSBs. Refusing to elaborate on the new policy, Pandey, however, said. “A broader vision is not just restricted to commercial enterprises”.

The Cabinet in March approved the proposed amalgamation of 10 public-sector banks to create four larger lenders and the exercise came into effect from April 1. India on the road for 4 major PSU banking entities.

PSU Banking Entities

The government had in August last year announced that Oriental Bank of Commerce and United Bank will be merged into Punjab National Bank (PNB). Therefore, to create the country’s largest state-run bank after SBI, with a total business of close to Rs 18 lakh crore. Similarly, Syndicate Bank is to be amalgamated with Canara Bank, and Andhra Bank and Corporation Bank will be merged into Union Bank. Also, Allahabad Bank will be amalgamated with Indian Bank. The consolidation exercise was aimed at creating only a few (6-7) but strong banks to support the rising credit appetite of the economy, help reverse a slide in economic growth and cut costs through greater synergy. Each of the amalgamated entity, created in April, has a business of over Rs 8 lakh crore.

On May 17, finance minister Nirmala Sitharaman announced that the Centre will soon come out with a new policy to privatise central public enterprises (CPSEs) in non-strategic space and some in strategic sector in order to open all the industries to private players. “In strategic sectors, at least one enterprise will remain in the public sector but private sector will also be allowed,” Sitharaman had said. To minimise wasteful administrative costs, the number of enterprises in strategic sectors will ordinarily be only one to four; others will be privatised or merged or brought under holding companies, she had said.

Official Investments

“The idea is that you’re trying to give more space to private sector in terms of brownfield investments. But, at the same time, the government has to see that assets are sold at the right value. As we have got some strategic disinvestment taking place on regular basis”. Pandey said.

According to official sources, the Centre’s much-awaited new policy to determine strategic/non-strategic sectors. Which will likely see as many as 16 sectors being identified as ‘strategic’. Also virtually covering all conceivable sectors with supposed strategic nature.

In its six years, the Modi government has mopped up Rs 3.29 lakh crore via disinvestment. But over three times of what was raised between 2004. And 2014 through minority stake sales. In the past six years, some Rs 66,000 crore was raised through strategic disinvestment, albeit most of it via PSU-to-PSU deals.

“We are shifting gears to the new territory, a very important territory of privatisation,” Pandey emphasised.

DIPAM is engaged with potential investors for the strategic sale of BPCL and Air India. Sale of BPCL and LIC IPO are crucial. For achieving the FY 21 ambitious disinvestment target of Rs 2.1 lakh crore. Therefore, almost four times the amount raised via stake sales in FY 20.

State owned Air India is also up for stake sale, with only Tata group bidding for the process.

Source: Financial Express