By Sanjeev Prasad, Kotak Institutional Equities
The Indian government’s annual budget – to be announced on Saturday – will be intensely scrutinised for clues about the evolving policy priorities of Narendra Modi, the prime minister.
But while many will be focused on expenditure and revenue plans, Indian business will be looking in a somewhat different direction. It is hoping that the budget will further reforms to bring about a lower ‘visible’ role of the government in the economy, under which it relinquishes or reduces its multiple roles of financier, manager, owner, policy-maker and regulator.
The budget is an ideal opportunity for the government to re-evaluate its role in the economy at a time when the private sector, states and local governments are playing an increasingly larger role in economic and social development. A greater ‘invisible’ role of the government simply as a facilitator of private sector investment is required. Read more
By Shumita Sharma Deveshwar of Trusted Sources
The Indian government’s sale of a 5 per cent stake in the Steel Authority of India Ltd (SAIL) was meant to serve as a gauge of investor sentiment towards public sector stocks before the bigger sell-offs of shares in Coal India and the ONGC oil & gas group. But it has left some doubts about the potential success of the record disinvestment programme and the consequent reduction of the fiscal deficit. Read more
While most Indians were celebrating the Diwali holiday last week, authorities in New Delhi slipped out an order that may bring an end to the state monopoly on coal mining.
Many analysts are now questioning, however, whether international mining groups will enter India if the government follows through on last week’s ordinance. And more to the point – even if they do, is this the answer to India’s acute energy shortage? Read more
By Amitabh Dubey of Trusted Sources
Elections this week in the states of Maharashtra and Haryana offered the first popular gauge of India’s reformist government since it won its big parliamentary majority in May, and underscored its dominance of Indian politics. But an equally important test has emerged in one of the country’s most troubled sectors, coal, after the Supreme Court’s mass cancellation of captive coal block allocations last month. How Prime Minister Narendra Modi handles the issue will be the first major test of his capacity for reform affecting a vital industry which finds itself in a dire situation. Read more
As Narendra Modi, India’s new prime minister, grapples with slowing growth, weak output and rising inflation, he will pay particular attention to one company whose performance has a bearing on all those issues: Coal India, the public sector behemoth that mines 80 per cent of the country’s coal.
That in itself presents a big challenge. For Coal India is not performing well. It has missed production targets in five of the last eight months and output has grown at less than 2 per cent annually over the past four years. Read more
Shares in Coal India were up 2.6 per cent to Rs296.35 by 10.30am on Wednesday, after the state-controlled fuel supplier declared a special interim dividend.
It’s another unexpected move by New Delhi as the state struggles to meet its target fiscal deficit of 4.8 per cent of GDP. The public coffers will benefit by over $2.6bn. Read more
On Friday, India’s cabinet approved the creation of an independent regulator for the coal industry and announced that the Coal Regulatory Authority Bill 2013 will now be put before Parliament.
So far, all as expected. So why have shares in Coal India jumped over 7 per cent? Read more
This week, India’s Cabinet Committee on Economic Affairs gave its approval “in principle” for coal price pooling. State governments have spoken out, stocks have rallied and companies have had their say.
So, what’s all the fuss about? Read more
By Akshay Mathur of Gateway House
It’s not easy to defend India’s democratic structure and economic policy-making these days. The latest gridlock in parliament over the national auditor’s estimation of a potential loss of $33bn in revenue associated with coal blocks allocation is only the latest indictment of the country’s leadership. Read more
It may seem no bad thing that India Inc is sitting on a mountain of cash – over $167bn at the end of March for the top listed 500 companies, according to the Economic Times. With the economy slowing and earnings weak – from State Bank of India to Bharti Airtel – the money might come in useful.
But in reality, the 26 per cent increase in net cash over the past three years is worrying evidence of the concerns India’s corporate leaders have over the economy. With industrial production flat, growth slackening, and inflation running high, these companies are unlikely to spend their reserves anytime soon. Read more
As electricity supplies go back online, advocates of energy reform in India are hoping that this week’s power outages will provide an opening to press for far-reaching changes. However, the desire for reform will as ever come up against the politically possible. Read more
Well, that was quick.
A mere 24 hours after the state-run Indian Oil Corp introduced what has been widely-acknowledged as a much-needed and long overdue 11 per cent price hike on the price of petrol on Wednesday, Delhi’s already talking about a partial rollback. Read more
Indian power companies rejoiced on Wednesday after the government issued a rare decree forcing state-controlled Coal India to increase supplies of cheap fuel to ease chronic energy shortages.
And investors lapped it up: despite a generally weak market, shares in Adani Power, Tata Power, and JSW Energy all rose by more than 2 per cent in early trading. Tata and and JSW later fell back, but Adani finished 2.8 per cent up.
But there was at least one player who was not so excited: The Children’s Investment Fund, the hedge fund that recently launched a campaign against political interference in Coal India. If this were a cartoon, this would be the point at which steam pours out of TCI’s ears. Read more
The Children’s Investment Fund wants to raise electricity bills for the 67 per cent of Indians with access to electricity.
Not that TCI doesn’t have a good reason. Coal India, the 90 per cent state-owned giant, sells coal at prices 40 to 70 per cent lower than international ones, and TCI is the company’s biggest minority shareholder. Read more
By Shriram Subramanian of InGovern
The letter sent by The Children’s Investment Fund (TCI) to Coal India is a wakeup call for the Indian government, companies and institutional investors to take corporate governance issues seriously. Probably for the first time in Indian corporate history, an institutional investor has threatened to sue individual board members of a listed entity. Read more
By Varun Bhandari
India’s energy sector is attracting the eyes of one of the world’s largest energy consultancies.
Wood Mackenzie, the UK-based company, will open up shop in India by May this year, in a move that reflects the growing importance of India in the global coal market, it announced at a coal conference in Delhi this week. Read more
A wake-up call for complacent corporate India from The Children’s Investment Fund, the UK-based activist hedge fund. It sent a letter on Monday to Coal India – in which TCI’s 2 per cent stake makes it the biggest shareholder after the Indian government, with 90 per cent – accusing it of committing a “breach of fiduciary duties” to minority shareholders by reversing an earlier steep increase in the price it charges for coal. Read more