Cairn Energy to invest $1bn in India
Hyderabad, Sept. 19: Cairn Energy, an oil and gas
exploration and production company, will be investing
$1 billion in developing its oil blocks in India,
located at Rajasthan, the Krishna Godavari Basin and
in the Cambay region, even as it is scheduled to
launch drilling operations in the KG Basin in October.
“Cairn recently got a $1-billion facility from 14
international banks. We will be investing another $1
billion to develop our assets in India,” a Cairn
Energy official told this newspaper on Tuesday. The
$1-billion loan facility will be used to fund Cairn’s
share of dev-elopment costs of the Rajasthan oil and
gas fields, principally the Mangala field in the north
of the block. The official said Cairn Energy, a
Scotland-based firm listed on the London Stock
Exchange, would be launching an offshore drilling
programme in the Ravva blocks in the Krishna Godavari
Basin, off the coast of Andhra Pradesh, in the first
week of October.
Cairn Energy is bringing a drilling rig, the Hercules,
from Singapore for the Ravva oil fields operation.
“The Ravva oil and gas blocks, which are operated by
Cairn, are the bedrock of Cairn Energy’s operations
worldwide. The field produces 50,000 barrels of crude
oil per day, and 70 million cubic feet of gas per day.
Hercules will be drilling six infill wells and one or
two exploration wells in the Ravva field,” the
official said.
He said the exploration well (RX-9), spudded in June
2006, has been plugged and abandoned after a test
confirmed low volumes of gas and negligible quantity
of high viscous oil. Cairn holds a 22.5 per cent stake
in the Ravva field, and a 10 per cent stake in
KG-DWN-98/2, with the Oil and Natural Gas Corp.
holding the balance. In the Ravva field, ONGC,
Videocon and Marubeni also have stakes.
“The Ravva field has been in production since 1993,
when the daily output was 3,500 bpd. The 50,000 bpd
now constitutes eight per cent of the crude oil
produced in India,” the official said. According to an
August 25 report by DeGolyer and MacNaughton, a
reservoir evaluation firm, the Rajasthan blocks have
substantial potential.
“There are three significant field discoveries in the
RJ-ON-90/1 PSC that account for most of the oil
reserves owned by Cairn. These fields, the Aishwariya,
Bhagyam, and Mangala fields, have been discovered in
the last three years at relatively shallow depths in
the onshore block. These oil fields are expected to be
developed and start producing in 2008 at projected
plateau oil rates that combined will represent about
150,000 bpd,” it said.
Cairn Energy is planning to take its Indian operations
public, with the IPO likely to be floated in December.
“Cairn’s assets are in South Asia, principally in
India, and we are investing in developing our E&P
assets in the country. Once the Rajasthan blocks begin
production, Cairn expects to account for 30 per cent
of India’s crude oil production by 2010,” the official
said. Cairn has also submitted bids for 12 blocks,
five of them in association with ONGC in the NELP-VI,
which closed on Friday.
ONGC certain it can bag 22 blocks: CMD
New Delhi, Sept. 19: ONGC has said that it is
confident to get at least 22 oil and gas blocks from
the 45 blocks it has bid for under the sixth auction
of the New Exploration Licen-sing Policy (NELP-VI).
Mr R.S. Sharma, CMD, ONGC, who was addressing the
media after ONGC’s 13th AGM here said that ONGC has
bid for the maximum number of blocks under NELP-VI
because it wants to maintain its position as the
dominant player in the exploration of oil and gas in
India.
“ONGC has a huge infrastructure and even with the
entry of the new players, we have decided to remain
the dominant player in the exploration of oil and gas
in the country,” he said. He said that ONGC is
exploring the possibility of a tie-up for entering the
liquefied natural gas business. “Globally,
availability of LNG is not easy, so we are obviously
trying for some tie-up,” he said, but refused to
divulge details of the LNG tie-up, saying it could
hamper ONGC’s bargaining power.
He said the company was looking to source LNG from
Qatar, Egypt and Australia and is looking at a minimum
LNG supply of 5 mtpa. “We are looking to source 5 mtpa
of LNG and it can even go to 8-10 mtpa. The most
important aspect of the LNG deal will be its
commercial viability and pricing,” he said.
UB will pump in Rs 400cr for capex
Bangalore, Sept. 19: United Breweries Ltd (UBL),
India’s largest spirits company, would invest Rs 400
crore to expand production capacity, foray into the
Chinese market and launch Kingfisher wine, its
Chairman, Mr Vijay Mallya said on Tuesday.
He said the investments would be made in a phased
manner over the next three years to build and expand
capacities in different parts of India, including in
Rajasthan, UP Orissa and Andhra Pradesh. Addressing
the AGM of UBL, he said the investment would scale up
the capacities of the company by 50 per cent. “The
plan envisages setting up of greenfield breweries as
well as augmentation of capaci ty and technology at
existing sites”.
Mr Mallya said UB Group is all set to start operations
in China. “I have given instructions to United Spirits
to open an office (for marketing initially) in
Shanghai immediately. I have identified the executive
who will be transferred there to kickstart the
business”, he said. “All we know is that there is a
market for our products (in China). I walked around
retail shops and bars (in China). Our range can fit in
(there) quite nicely.”
Managing risks is the new buzz word
By Olga Tellis
Managing risks seems to be the buzz word at various
seminars and conferences. Managing and mitigating
risks cannot be emphasised enough, particularly in
India because we are a global economy and are affected
by rise in oil prices as much as by terrorist attacks
and naxalites. More recently, even natural calamities
have raised the risk quotient. So one needs to learn
how to identify various aspects of risks.
Currency fluctuations
All Indian companies are going through maturity cycles
and very few have been able to put together solid risk
management practices. In the developed countries, they
have a template. But here, it is not uncommon for an
instance to see an entire board travel on same flight,
as one of our friends said. Most Indian corporates
don’t, for instance, factor in rising interest rates.
Some of the smaller IT companies did not, for example,
mitigate the risk of foreign exchange currency
fluctuations. The result was that when the rupee went
down from 43 to 46 to a dollar, most of them bled.
It is necessary to impart risk management and
mitigation know-how to people of all ranks in a
company, from the employees to those managing core
business and processes as far as customer interfaces
are concerned. Many companies don’t even have back-ups
or offshore data centres outside the country. Large
American companies in the US have backups in Asian
countries. In India, you can get a large bank saying
that their systems are down.
IPR, a hefty risk
Another big risk is the intellectual property right.
Most companies are merrily transgressing the IPR, but
when the day of reckoning comes it will take a heavy
toll. Many foreign companies are already getting tough
on use of what is their IPR.
BSE, E&Y and mastering risk
To this end, it is interesting that Ernst&Young and
the Bombay Stock Exchange is holding a six-part series
on mastering risk. There is a lot of FII investment in
Indian companies and a huge family of investors as
companies are raising hundreds of crores in equity.
Investors demand better transparency and communication
on risk management from companies.
According to the E&Y survey, 69 per cent of the global
respondents identified transparency as top priority in
considering an initial investment in a company.
Investors feel that they might be making investment
decisions based on incomplete information about how
companies are managing risks and stress the importance
of a detailed investor communications programme to
make them aware about these risks.
Foreign investors risk conscious
The E&Y survey show that 61 per cent of the
respondents avoided investing in companies lacking a
risk programmes and 48 per cent actually de-invested
from companies where risk management performance was
insufficient. At the same time, 82 per cent of
investors were willing to pay a premium for companies
with good risk management. Investors also felt that
the onus of managing risk lies with the CEO of the
company and the risk management programme should go
beyond just compliance and corporate governance.
International accounting standards
One thing that would help in the context of risk
management, is to make Indian companies switch to the
international financial accounting standards. The
Indian accounting standards are opaque and
non-transparent. You must disclose only 180 days data
and there are no proper norms for valuation of stocks.
It is an antiquated and non-transparent system and the
balance sheet is a complex document designed to fox
the investor.
How does your PC really work?
IT Today
Here’s a quick question to test your knowledge of how
your personal computer works? What goes into making
the PC work seamlessly, so you can keep browsing the
Internet on your company’s dime? Honestly, not many of
us either knows, or cares. We just need the PC to boot
up when you boot it up, without a fuss.
While the moving parts in a computer are many, let’s
focus a bit on the connectors — those dinky little
components that connect a PC to a monitor. Currently,
there are currently two common connectors used to
attach PCs to monitors: the analogue Video Graphics
Array (VGA) and Digital Visual Interface (DVI). DVI
was created by the Digital Display Working Group,
which self-terminated after creating the DVI 1.0
standard in 1999, leaving no plans for updates, or a
successor technology.
However, according to In-Stat, a high-tech research
firm, two candidates have emerged over the last two
years to succeed both DVI and VGA. The first is
DisplayPort, which is designed as both an external and
internal interconnect — it can connect boxes to boxes
or chips to chips. “DisplayPort is designed to connect
PCs to LCD monitors and other display devices.
While DVI runs streaming video data at 1.6 Gbps,
DisplayPort runs packetised data at 2.7 Gbps.
Companies behind the development of DisplayPort
include Dell, HP, Genesis Microchip, Samsung, Philips,
ATI Technologies, NVIDIA, Molex and Tyco,” it says.
The Unified Display Interface (UDI) is an attempt to
create a digital interface that will replace the
external VGA or DVI external connector while also
replacing the Low Voltage Differential Signalling
(LVDS) specification internally.
In-Stat says the technology is based on PCI Express
electrical design. The first generation of UDI will
support up to three Gbps, and the second generation
will support 5-6 Gbps. “UDI is compatible with High
Definition Multimedia Interface (HDMI), meaning it
will be compatible with the millions of HDMI-enabled
devices already on the market,” the research firm
says.
Both DisplayPort and UDI specifications are published
and available, and chips are either available or will
soon be, there is some indecision among PC and monitor
vendors about which standard to adopt. “These
companies do not want to take sides in a format
battle, and risk supporting the losing side.
Currently, DisplayPort’s strengths include available
silicon, lower cost, and greater scalability. UDI’s
strength is its HDMI compatibility.
In response to the stalemate, Intel is leading a group
of companies looking for middle ground between the two
standards. The group hopes to hammer out a compromise
by early 2007,” In-Stat says.
Global imbalances bad for markets: Y.V. Reddy
Mumbai, Sept. 19: The current global imbalances could
disrupt financial markets in the form of large
cross-currency volatility and sharp rise in interest
rates, warned Dr Y.V. Reddy, the governor of the
Reserve Bank of India.
He was speaking on the theme of “The World in Asia,
Asia in the World” at the 2006 programme of seminars
in Singapore. Dr Reddy said, “With the global rise in
the interest rates, there is always a lurking fear in
the emerging market economies (EMEs) that the level of
capital flows may not be maintained. Thus, the comfort
level of reserves should not be viewed with respect to
the current situation alone but should also reckon the
assessment of the emerging risks.”
In this context, he said, the global economy has not
been tested on the eventuality of a not-so-orderly
correction of the current global imbalances. When the
test comes, he said, “There could be a disruption of
the financial markets in the form of large
cross-currency volatility and sharp rise in interest
rates in the global economy.”
Dr Reddy chose the theme of the degree of comfort that
various levels of foreign exchange reserves provide at
any given time and in a country context and in
general, he said the higher the degree of comfort, the
more numerous are the options. He said that in the
aftermath of the Asian crisis, large reserves were
needed by EMEs to withstand any crisis and to some
extent, it was a reflection of the lack of confidence
in the international financial architecture.
That is why the recent accretion of reserves has been
much higher than in the early 90s, he said. The Bank
for International Settlement has reported that EMEs
had accumulated reserves at an annual rate of $250
billion between 2000-05, which was five times higher
than in the early 90s.
Dr Reddy said that it may be useful to recognise that
reserve accumulation, in some senses, reflects the
savings-investment balances and is symptomatic of
both domestic and global factors, including
self-insurance which is a concept difficult to define.
Sensex takes a breather, dips 101 pts
Mumbai, Sept. 19: In a sudden change of fortune, the
Sensex plunged 100.83 points towards the last
half-hour of trade on Tuesday, erasing the rapid gains
it made on Tuesday morning. Explanations for this
plunge ranged from expected correction to profit
booking and FII selling.
The Sensex closed down 100.83 points at 11,970.46
after seeing an intra-day swing of between 11,915.21
and 12,152. The Nifty could not stay above the 3,500
mark and closed at 3,457.35, down 35.40 points. The
Asian markets, too, were all down except for the
Nikkei, which was up a marginal 7.35 points.
The Hang Seng was down 40.15 points, the Kospi 0.35
and the Straits Times 13.78 points. The turnover on
both the exchanges picked up at Rs 37,499 crores with
the F&O sector accounting for Rs 26,300 crores. The
stocks that escaped the bloodshed to end marginally in
positive territory were just 256, as against 650 that
ended in the red.
The only gainers in this sea of red were the
information technology stocks TCS and Satyam, which
were up Rs 13.40 and 14.70 respectively. Infosys and
Wipro were down marginally at Rs 0.95 and Rs 0.20
respectively. Among the stocks that took a drubbing
were the auto stocks with Bajaj Auto down Rs 24.30,
Tata Motors Rs 27.90, M&M Rs 16.35 and Maruti Rs
25.20.
Our concern on revenue loss from SEZs valid: FM
Singapore, Sept. 19: Finance minister P. Chidambaram
on Tuesday said his ministry’s concerns over revenue
loss in the long run due to proliferation of Special
Economic Zones (SEZs) still stands. “All that the
finance ministry has said was there must be some
caution in approving SEZs because in the long run
there could be a serious shift in the revenues,” he
said on the sidelines of the annual World Bank-IMF
meeting here.
“This point still remains and a Group of Ministers
(GoM) promised us that they will carefully watch the
progress of SEZs and review the policy if and when it
becomes necessary. So that is where it stands,” Mr
Chidambaram said. However, the finance minister
refused to be drawn into a controversy with the IMF
chief economist Raghuram Rajan over his remarks that
SEZs, particularly in the IT sector, are being set up
to take advantage of tax sops.
There were reports of serious differences between the
commerce ministry and the finance ministry, which sees
SEZs as revenue rip-offs. “I am not getting into a
debate between Raghuram Rajan and the commerce
ministry. Parliament has passed the law and we welcome
SEZs,” Mr Chidambram said.
The commerce ministry is now reported to be open to
capping the number of IT SEZs, provided the finance
ministry is willing to continue the tax sops given to
Software Technology Parks of India (STPIs) beyond
FY’09. The commerce ministry, which has come under
criticism for the disproportionately high number of IT
SEZs approved so far (94 against a total of 150), has
now put the ball in the finance ministry’s court.
Mr Chidambaram, however, said he was not aware of any
such reports. Nasscom had recently urged the
government to give STPIs the same status as SEZs as
small IT units operating in STPIs would not find it
viable to operate in SEZs due to high rents. A total
of 4,000 software companies, including 3,000 small and
medium companies, are currently registered under the
STPI scheme, contributing nearly 80-90 per cent of the
overall software exports.
Toshiba is latest to recall Sony batteries
Tokyo, Sept. 19: Toshiba is recalling 340,000 laptop
batteries made by Sony Corp. because of problems with
recharging them, the latest in a string of
embarrassing defects and production glitches for Sony.
The recall affects 100,000 batteries for laptops sold
in the United States, 45,000 in Japan, and the
remainder in other parts of the world, Toshiba Corp.
spokesman Keisuke Omori said on Tuesday, declining to
quantify the number of problems reported by customers.
The defect is not directly related to the problem
behind last month’s recall of Sony laptop batteries by
Dell Inc. and Apple Computer Inc., which cited
concerns the batteries could overheat and catch fire.
Dell asked customers to return 4.1 million faulty
batteries, while Apple Computer Inc. recalled 1.8
million.
In both those cases, the troubled lithium-ion
batteries were made by Sony Energy Devices, a
Japan-based subsidiary of Sony. The Toshiba recall
involves battery packs for Dynabook and Satellite
models made from March through May this year, and they
will be replaced for free, Mr Omori said.
The batteries sometimes stop recharging or run out of
power, but no injuries or other accidents have been
reported, he said. The new recall also comes soon
after production problems forced Sony to delay some
key product launches. Meanwhile, Canon, the camera and
photocopier maker, said on Tuesday that it was
recalling 800,000 desktop copiers in the United States
that could catch fire.
PVR to invest Rs 200cr for tier II, III cities
New Delhi, Sept. 19: PVR Cinemas on Tuesday announced
its foray into tier II and tier III cities of the
country with ‘PVR Talkies’ and said it would be
investing Rs 200 crore over the next three years
towards its expansion.
PVR Talkies has already signed 53 screens across the
country and is planning to spread in 13 states with a
target list of over 70 cities, Mr Ajay Bijli, chairman
and MD, PVR said here. This initiative would kickstart
with pilot projects in Aurangabad and Latur with a
ticket price range of Rs 40 and Rs 60 and is slated to
be operational from the last week of this month.
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