Dalmia sets up money talks with HDFC
Oil majors run Petronet gauntlet
Joshi double-talk on Maruti
Vintron Info plans to tap market

New Delhi, Nov 19: 
Abhishek Dalmia, the Dalmia family scion who has mounted an audacious takeover bid on the Mumbai-based realty firm, Gesco Corporation, will be talking to Housing Development and Finance Company (HDFC) next week to firm up a credit-line to fund his market raid.

“We are certainly not backing out of this,” Dalmia told The Telegraph in response to reports that Gesco promoters and their friends had bought back 6.34 per cent stake from International Finance Corporation in a bid to defend themselves from his takeover attempt.

According to sources, Dalmia will use the credit-line to raise his offer price for Gesco shares beyond the Rs 44 apiece now being offered by the promoters, Seths, and their friends , the Mahindra family, which has stepped in to bail them out.

Dalmia, however , would not offer comment on whether he was ready to raise his offer price for Gesco Corporation’s shares. He said he had not worked out how much he would need as loans from HDFC. “They will have to say how much they can give me along with the terms and conditions,” he said.

Amid all the behind-the-scenes wheeling and dealing, the takeover bid is fast running out of time. If Dalmia has to succeed in his maiden takeover battle, he has to manoeuvre quickly. He knows that. “We have little time left,” he said.

Dalmia can, of course, raise his offer price up to Rs 45.50, even if he gets no more fresh funds. He has already deposited Rs 14.66 crore in an escrow account. Under the provisions of the takeover code, he can increase his bid for Gesco Corp shares up to an amount that is four times the escrow money. But, the HDFC funding is probably needed to make the final and full payment for the deal after the offer price is raised.

He can also take a short-term loan to bolster his escrow account to raise his offer price to levels higher than Rs 45.50. It is already known that he is talks with various financial institutions — domestic and foreign — for possible purchase of the stake they hold in Gesco Corp. Even if he strikes a deal with one of them, his bid will have succeeded.

Abhishek and his father, A.H. Dalmia, had pulled out of the family-controlled Orissa Cements after a division of family properties and assets last year.    

New Delhi, Nov 19: 
The public sector oil and gas companies, ONGC, IOC, BPCL and GAIL, will take a calculated risk by guaranteeing the take-or-pay gas purchase contract that will be signed between Qatar’s Ras Gas and Petronet LNG.

The companies will provide a guarantee in their capacity as the promoters of Petronet LNG, in which they hold a combined stake of 50 per cent. The contract, the biggest to be signed by India, entails a cash outflow of $ 1 billion annually. If the venture flops, the guarantee might turn out to be their death warrants, highly placed industry sources say.

Neither Petronet, nor the promoters, has an idea about the end-price of gas. However, some of them are extremely bullish about the market in India. There will be no problem in marketing up to 5 million tonnes of LNG on the West coast, a nominee director of Petronet LNG said. This is based on his assumption that gas will be cheaper than naphtha, the alternative fuel. Also, in view of the declining gas output from Bombay Offshore, there will be takers for imported gas. The premise is being questioned by many in the industry, who say the economics of liquefied natural gas has not been linked to that of naphtha anywhere in the world. They say the claim that gas would be 20 per cent cheaper than naphtha, is unfounded.

The proposition that the price offered by Ras Gas to Petronet LNG is the cheapest may turn out to be untenable as well. This springs from an insufficient understanding of the sale-purchase agreement. Whatever be the figure, the end-price will have to be worked out by adding the shipping, regassification and transportation costs, besides marketing margins.

The alternative to costly LNG is not naphtha, but cheaper LNG and gas. It could also be other fuels, such as coal. The United Kingdom, for instance, is reverting to coal.

Petronet LNG has not established the competitiveness of its gas. If someone else can offer it cheaper on the West coast, Petronet’s investment will be a dud. With oil major Shell entering the race, Petronet LNG will face stiff competition. Shell is the biggest multinational player in the LNG business. If it can source cheaper LNG (it knows the price at which Ras Gas will supply gas), it can certainly price out Petronet. The Ambanis are also working on their pet idea of bringing gas from Iran through an on-shore pipeline. These projects can make Petronet’s business assumptions go awry.

Industry circles point out that Oman pipeline fiasco is still fresh in the memory of energy experts. The country’s Prime Minister, petroleum minister and petroleum secretary, apart from a host of experts flew down to Muscat six years ago and signed a MoU for a deep-water gas pipeline. They forgot to determine whether Oman had the kind of proven gas reserves to sustain a pipeline of this magnitude. The data was available in the British Petroleum’s encyclopedia.

Oman’s proven reserves remain committed to its LNG project set up in collaboration with Shell. The country now plans to import gas from Qatar. This proves that the ministry of petroleum is capable of acting on assumptions, which may later turn out to be unfounded.

Two years ago, it encouraged the idea of naphtha-based power projects for a total capacity of 12,000 MW. But, not a single one took off.    

New Delhi, Nov 19: 
A day after the government authorised a Committee of Secretaries to suggest ways to sell its stake in Maruti Udyog, heavy industries minister Manohar Joshi told PTI there was no decision for disinvestment in the auto maker.

In a statement that contradicted the decision taken at Saturday’s meeting of the Cabinet Committee on Disinvestment (CCD) Joshi said the issue will be discussed at the panel’s next meeting, slated for December 23.

“The CCD has not taken an in-principle decision to sell the government equity in Maruti,” he said, barely 24 hours after disinvestment minister Arun Shourie had told a press conference that Suzuki Motor Corporation -— the government’s partner in Maruti — (SMC) will be consulted before the sale. The joint venture agreement requires the two partners to seek mutual consent before offloading equity.

Maruti is under the control of the heavy industry ministry, which is known to be uneasy at the prospect of letting the company slip away from its grasp. Joshi, who was privy to the CCD decision, said he was not opposed to the move. He also denied he had differences with his Cabinet colleagues on the issue. “I have expressed my opinions in the committee earlier and I have no differences with the CCD’s decision.” Asked if Suzuki wanted to buy the government’s shares, he said there was no such proposal.    

Calcutta, Nov 19: 
Vintron Informatics Ltd, the Delhi-based manufacturer of personal computers, is planning a rights-cum-public issue to raise Rs 40 crore.

The fund will be deployed to expand the hardware manufacturing unit and the company’s acquisition drive as well. While the time and other aspects of the issue are yet to be finalised, the company is in the process of appointing a merchant banker.

Sources said the company would double PC manufacturing over the next couple of years from the current 40,000 units. It is planning acquisitions in the hardware sector and it has kept aside Rs 14 crore for this purpose. “We are expecting the hardware market to grow by 30 to 40 per cent in the next few years. And our current capacity is far from the future demand,” sources said.

The firm is setting up a printed mother board manufacturing facility with an investment of Rs 5 crore and a manufacturing capacity of 2.5 lakh pieces of PCBs.

Vintron Informatics is planning to acquire software firms savvy in e-commerce technology. Sources said that these acquisitions would mostly be implemented from the funds to be raised through the rights-cum-public issue. “Our aim is to strengthen the software division for which we need to acquire firms with knowledge in e-commerce technology,” they said.    


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