Crude spike sparks call for duty cut
There is a growing pressure on the Narendra Modi-government to cut excise duty on petrol and diesel at a time global crude prices have spiked to a six-month high of about $50 per barrel and inflation is showing signs of inching up. However, officials said they would “watch the trend before taking any action as they cannot let inflation go out of hand”. After showing a downtrend since June 2014, crude prices have been on the rise since January 20 this year. Brent has declined from the high of $115 per barrel to a low of $26.39 a barrel in January and surged to around $50 last week. The excise duty on petrol has increased 126.6 per cent to around Rs 21.48 per litre from Rs 9.48 per litre in July 2014. In the case of diesel, it has been hiked 386.8 per cent to Rs 17.33 per litre from Rs 3.56 per litre. “The government could look at reducing the excise duty at some point. This would be when the price of petroleum products increases and the burden falls on the consumers. The government’s primary responsibility is to give relief to consumers and we will do this,” petroleum minister Dharmendra Pradhan had said. The Indian Foundation of Transport Research and Training (IFTRT) has written to finance minister Arun Jaitley seeking a rollback of the nine excise duty hikes on diesel between November 2014 and January 2016. “The central government and later various state governments periodically increased excise duty and sales tax on diesel to retain the benefit of plummeting international crude oil prices. Now, the international crude oil prices have shot up… the truck rentals, too, are shooting up more because of the diesel price hike and other reasons. It is high time that the Centre reduces/rolls back at least half of the excise duty increase on diesel since November 2014,” S.P. Singh, senior fellow at the IFTRT, wrote in a letter to Jaitley. Goldman Sachs had said supply disruptions from Nigeria – Africa’s biggest crude oil producer – would lead to a deficit. This triggered the prices to head north and touch a six-month high last week. The disruptions triggered a U-turn in the outlook for the oil market from Goldman Sachs, which had long warned of global storage hitting capacity and of another price crash to as low as $20 per barrel. The NDA government took the benefit of a drastic fall in oil prices and hiked the excise duty on auto fuel several times since November 2014 to garner up to Rs 700 billion. India is highly dependent on imports to fulfil its energy needs. Therefore, the fall in crude prices has not only helped the government control its current account and fiscal deficits but also rein in inflation, which had been posing a serious challenge to the economy. However, the recent spike has again raised concerns of current account deficit rising as soaring oil prices have the potential to push up inflation besides increasing costs for the industry.
ONGC struggling to exploit 12.5 trn cubic feet of discovered gas reserves in Iran
India’s flagship explorer ONGC is facing a repeat of KG fiasco in Iran as lengthy negotiations on terms may drive it to a point where its discovered gas reserves in Farzad-B field in the Persian Gulf may be drawn out by neighbouring Saudi Arabia. State-owned Oil and Natural Gas Corp (ONGC) alleges that 11.12 billion cubic meters of natural gas worth Rs 110.55 billion has flowed from its idling Krishna Godavari basin blocks in Bay of Bengal blocks to neighbouring KG-D6 fields of Reliance Industries. And the same is now on the verge of repeating in the Farzad-B field, which it had discovered in 2008 but no contract to exploit the 12.5 trillion cubic feet of recoverable reserves has so far been concluded with Iran. Sources said a portion of Farzad-B field extends into territorial waters controlled by Iran’s regional arch-rival Saudi Arabia. Saudi Arabia has already drilled wells on the area falling in its territory, which it has named Hasbah field, and has begun production. The two fields are connected, with the area falling in Iranian territory holding larger share of 12.5 Tcf of recoverable reserves while the Saudi territory has only 3 Tcf or so. But the two fields are connected and whosoever is able to move first would extract more benefits. Sources said in the dispute with RIL, ONGC is claiming compensation for its gas flowing through under-sea connected reservoir to KG-D6 and the government has constituted a one-man committee to look into the issue and suggest compensation. But such a thing may not be possible for Farzad-B as rivalry between Saudi Arabia and Iran may prevent from arriving at any internationally recognised practice of splitting the spoils in conjoined fields. It was expected that Prime Minister Narendra Modi’s visit to Tehran today and tomorrow may see finalising of a contract, giving developmental rights of Farzad-B field to ONGC Videsh Ltd, the overseas arm of the state explorer. But Iran is yet to agree to USD 4.3 billion master development plan submitted by OVL. Also, it is yet to agree on the price at which OVL can take all of the gas produced from the field, they said adding that no definitive contract for the development of the field would be signed during Modi’s visit. Previously, Iran was to pay OVL a fixed fee for its effort for discovering and producing gas from Farzad-B field. The gas ownership was to be with Iran and so Tehran was pushing for a low price of gas. But now a new modified contract is being talked about which will part ownership of the gas produced to OVL. And so naturally, Iran is now seeking a higher gas price, they said. Once investment in the field and the gas price are frozen, possibly by August-end, an agreement confirming development rights on OVL will be signed. But after that negotiations on the terms of the contracts – fixed fee or ownership of gas as well as marketing of the fuel, will begin, sources said adding the entire process may take one year time. Also, Iranian Parliament, Majlis is yet to approve new Iran Petroleum Contract (IPC) under which the Farzad-B field is to be given to the OVL-led consortium. IPC ends two-decade old buyback system that prevented foreign companies from booking reserves or taking equity stakes in Iranian companies. Under some circumstances, the new model allows reserves to be booked, but foreign companies would still not own oil fields. While previously foreign firms were paid a fixed fee for discovering and bringing to production an oil and gas field, the new model raises their profit by grading the fee based on the risk of the fields, allows contracts to last for up to 25 years and no ceiling on capital expenditure. Foreign firms are to be paid a fee per barrel and they will also be entitled to an increase in profits in the face of dramatic oil price fluctuations. Back home, ONGC believes the KT-1/D-1 gas find in its Krishna Godavari block KG-DWN-98/2 (KG-D5) and G-4 Pliocene gas find in Godavari Block extend outside the block boundaries into KG-D6. According to ONGC, RIL’s D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary may be draining gas from the G-4 field while the D6-B8 well may be sucking out gas from DWN-D-1 field of KG-DWN-98/2 block. RIL has denied allegations saying RIL it has “scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block” in Krishna Godavari basin. Kris Versteeg Jersey
India, Iran sign Chabahar port deal
At the ceremonial signing of trilateral Transport and Transit agreement between India, Afghanistan and Iran Modi said, “It will open new routes for India, Iran and Afghanistan to connect among themselves. India and Iran also share a crucial stake in peace, stability and prosperity of the region.” The pact to develop Chabahar Port for which India will provide USD 500 million is a key milestone. Chabahar is a port in south-east Iran that will enable India to bypass Pakistan and open up a route to land-locked Afghanistan with which New Delhi has close security ties and economic interests. From Chabahar, the existing Iranian road network can link up to Zaranj in Afghanistan, about 883 kms from the port. The Zaranj-Delaram road constructed by India in 2009 can give access to Afghanistan’s Garland Highway, setting up road access to four major cities in Afghanistan — Herat, Kandahar, Kabul and Mazar-e-Sharif. Besides signing a deal on development of Chabahar port, India is looking at doubling oil imports from Iran which a few years back was its second-biggest oil supplier, as well as getting rights to develop a giant gas field. Jay Novacek Authentic Jersey
Cairn India MD & CEO Mayank Ashar resigns
Cairn India Ltd has announced Mayank Ashar, Managing Director and Chief Executive Officer has decided to step down for personal reasons effective June 05, 2016. Sudhir Mathur, CFO, will lead the organization as the acting CEO. Nicklas Grossmann Jersey
ONGC Videsh raises $1.2 billion foreign loans to buy 15 per cent stake in Russia’s Vankorneft
ONGC Videsh Ltd has taken a bridge loan of $1.2 billion from a group of foreign banks at a highly competitive rate of about 1.3 per cent to fund its acquisition of 15 per cent stake in Russia’s second biggest oil field of Vankor . Banks including Citi, DBS, Mizuho, Standard Chartered and Sumitomo Mitsui Banking Corp have given a nine-month loan to OVL (ONGC Videsh Ltd), the overseas arm of state-owned Oil and Natural Gas Corp (ONGC), at an interest rate of Libor plus 83 basis points, sources privy to the development said. At one-month average Libor rate, the interest rate comes to about 1.3 per cent, they said. OVL had in September last year struck a deal to buy 15 per cent in the Russia’s second biggest oil field of Vankor from Rosneft for $1.268 billion. Sources said the loan is likely to be drawn by the month end. It will be during the course of nine months replaced by a long-term financing. OVL had in September last year signed an agreement to buy 15 per cent stake in Vankorneft, the developer of the Vankor oil and gas condensate field in Turukhansky district of Krasnoyak Territory in Russia. In March, OVL signed an initial agreement to raise its stake in Vankor to 26 per cent from 15 per cent, while three other state companies- Indian Oil Corp (IOC), Oil India Ltd (OIL) and Bharat Petroleum Corp Ltd ( BPLC), would together pick up 23.9 per cent. The agreement for additional stake has not yet finalised, they said. Vankor is OVL’s fourth biggest acquisition ever. Vankorneft, a subsidiary of Rosneft, was founded in 2004 to carry out the project of the Vankor field development, the largest field to have been discovered and brought into production in Russia in the last 25 years. It is located in the northern part of Eastern Siberia, in Turukhansky District of Krasnoyarsk Territory, 142 km from Igarka. As of January 1, 2015, the initial recoverable reserves in the Vankor field are estimated at 476 million tonnes of oil and condensate, and 173 billion cubic meters of gas. The area of the Vankor field is 447 square kilometers. Oil and gas condensate production in 2015 was 22 million tonnes. The 15 per cent stake will give OVL 3.3 million tonnes per annum of oil production. Prior to the deal, Rosneft, Russia’s national oil company, held 100 per cent stake in Vankorneft. This will be the fourth biggest acquisition by OVL. It had in 2013 paid $4.125 billion for a 16 per cent stake in Mozambique’s offshore Rovuma Area 1, which holds as much as 75 Trillion cubic feet of gas reserves. In 2009, it had bought Russia-focused Imperial Energy for $2.1 billion. Prior to that, it had in 2001 paid $1.7 billion for a 20 per cent interest in the Sakhalin-1 oil and gas field off Russia’s far eastern coast. Vankor is Rosneft’s (and Russia’s) second largest field by production and accounts for 4 per cent of Russian production. The daily production from the field is around 442,000 barrels per day of crude oil on an average with OVL’s share of daily oil production at about 66,000. Upon completion of the deal, OVL will have two seats on the board of Vankorneft, Rosneft said. Indianapolis Colts Authentic Jersey
Amazon, Flipkart or Snapdeal: who will win India’s e-commerce wars?
Weather, access and traffic make India an ideal market for e-commerce. Growing Internet access, largely through smartphones, and the increasing emphasis on cashless transactions make it a potentially lucrative market for e-commerce. The country’s sheer size and its population make it a potentially big market for e-commerce. Not surprisingly, Amazon, Flipkart and Snapdeal are battling it out for supremacy in this market, estimated to be worth $38 billion this year, according to industry lobby group Assocham. Still, success will be more a function of how these three deal with the regulatory and market conditions than how they do with each other. India’s policy regarding foreign investment in retail is fluid. On paper, the country allows foreign investment in supermarkets and department stores, although this policy was crafted by the earlier government and the current dispensation in New Delhi, while not keen to undo a reformist policy, has made it clear that it will not sign off on any applications. Its policy on e-commerce is just a little more complex. India allows 100% foreign direct investment in marketplaces, which provide a technology, payment and delivery platform that connects buyers and sellers. And it places curbs on the extent any one seller can dominate the marketplace, and on discounts. The regulatory regime is likely transient. India should, sooner than later, allow foreign investment in supermarkets and also in e-commerce sites that are hybrid models allowing direct retail and serving as a marketplace (Amazon follows this model in many countries, including the US). But until then, the challenge for Amazon, Flipkart, and Snapdeal is not to fall foul of it. The situation is exacerbated by traditional retailers who have taken both the legal and the lobbying route to prevent the march of the marketplaces. Some of this opposition comes from small so-called kirana or mom-and-pop stores. And some definitely comes from Indian Big Retail that would like some protection against deep-pocketed marketplaces. Indeed, a Nielsen report in 2015 showed that online retail in India is growing more at the expense of modern and organized retail than at the cost of kirana stores. That’s the first challenge. The second is to build a brand and, through that, brand loyalty. Through 2014 and 2015, the marketplaces have been big advertisers on TV and in print, proof that the ability of the digital medium to build brands is still suspect. Despite that, none has managed to build brand loyalty. In part, the marketplaces themselves are to blame. They have used their capital, including venture capital, to fund discounts—to such an extent that many shoppers have been conditioned to expect significant discounts, sometimes in excess of 50%. To be sure, many have now gone slow on such sales, and will likely go slower, given the new government policy. The brand, and brand loyalty challenge remain. The third is to get the supply chain and customer service right—not the easiest thing to do when millions of products are being sold to millions of customers across a few hundred cities and towns. Of the three marketplaces, only Amazon seems to have really focused on this, and the results are there for all to see. Still, it’s far too early to pick a winner. Xavien Howard Authentic Jersey
SpiceJet posts ₹73 cr profit in fourth quarter
The Delhi-based low-cost airline SpiceJet has reported a net profit of ?73 crore for the fourth quarter of fiscal 2016, after taking a one-time expense of ?173 crore towards stabilising and improving the reliability of the fleet. This is the fifth profitable quarter in a row that the airline has reported a profit. “We have taken the expense to clean up and overhaul the fleet. A majority of the funds will go towards overhaul of engines and upgrade of fleet. It also provides for all claims. With this we hope that the past does not come back to haunt us,” Ajay Singh, Chairman and Managing Director, told newspersons after the results were announced. After this one-time expense, the airline will only have three outstanding claims of about $60 million of which at least two are in the process of being settled involving $30 million. The results are for the first full year that Singh has been at the helm of the then financially-strapped airline. He claims that the company’s networth has significantly improved to a negative networth of ?600 crore from a negative networth of ?1,300 crore. SpiceJet has reported a net profit of ?407 crore for the fiscal year 2016. The airline had reported a loss of ?687 crore in fiscal 2015 registering a positive change of ?1,094 crore. It reported an operating revenue of ?1,475 crore in the current quarter, a growth of 86 per cent over the same period in the last quarter. On an EBITDA basis, it reported a profit of ?146 crore against ?80 crore profit in the same quarter of last year. Timo Meier Authentic Jersey
Construction work in 20 smart cities to start on June 25: Naidu
Construction activity in first 20 smart cities will commence on June 25, urban development minister Venkaiah Naidu said in an interview to Bloomberg TV. “Detailed project report for the first 20 smart cities have been approved. We are going to start the construction on these cities on June 25,” said the minister. Naidu also informed that the names of another 13-14 cities will be announced on either May 22 or May 23. “We had given opportunity to 23 cities which could not find place in the first list. The competition is over now,” he said. The minister said a lot of international funding agencies are showing interest in participating in the government’s smart city scheme and ambassadors of around 34 countries have met him to discuss the same. Six ambassadors representing countries such as the US, the UK, Japan, Germany, Korea, Spain met the minister yesterday about finding opportunities in smart cities, he informed. “Good thing is there is awareness about the responsibility of local bodies; they are preparing smart plans, there is competition, there is an urge for improving the service to the people so that they can get recognition. This is a good development,” he said. The government in January this year announced the first list of 20 cities to be made smart under its 100 Smart City scheme. It also offered a fast track window for the next rejected 23 cities based on their ranks to upgrade their proposals and submit them by April 15, 2016 for evaluation. A total investment of Rs 50,802 crore has been proposed in these 20 cities and towns during a five-year period, of which, Rs 38,693 crore will be spent on area development and Rs 12,109 crore on a total of 56 pan-city solutions. A total area of 26,735 acres will be taken up for improvements in these 20 cities including redevelopment of 425 acres in Bhopal (350 acres) and Ahmedabad (75 acres) Kyle Brodziak Womens Jersey
Alibaba insists it can help fight counterfeit brand goods
Alibaba said on Thursday it still wanted to work with companies fighting counterfeit brand-name products, a week after the Chinese online shopping platform was kicked out of an industry coalition due to long-standing accusations that it has turned a blind eye to counterfeits. Alibaba has been dogged for years by critics who called its online shopping platforms conduits for counterfeiters. Critics say it has not done nearly enough to stop the problem. At least three members of the Washington-based International AntiCounterfeiting Coalition, including board member Tiffany & Co , quit the group in protest and others threatened to leave after Alibaba was admitted as a member in April. Last week the group suspended Alibaba’s membership. “We see no other path than working closely with you, the brands,” Alibaba Group Holdings President Michael Evans said on Thursday at a coalition meeting in Orlando. The IACC is made up of brand manufacturers, the lawyers who represent them and investigators who help ferret out counterfeit goods. Alibaba provided the text of his speech. The IACC declined to allow a Reuters reporter into the gathering. An IACC member who attended the speech told Reuters that Evans received a less-than-warm welcome and tepid applause from the group, which is split over Alibaba’s membership. Alibaba shopping sites contain a billion product listings, and the company says it is uniquely positioned to take on the global trade in fake goods which it estimates is a $500 billion market. “I think people are very reluctant to hear what he had to say,” said member Chris Barnes of Market Watch, a company the helps brands fight counterfeits. “I do think it’s letting the wolf in the hen house a little, but there has to be some collaboration.” Evans spoke in place of Executive Chairman Jack Ma, who changed his plans after the IACC suspended a new category in which Alibaba was admitted, effectively terminating its membership. IACC board chair Dawn Atlas told Reuters she could not comment on the Alibaba controversy. She is the vice president of enforcement and assistant general counsel for Calvin Klein, Inc., according to the IACC website. Frostee Rucker Authentic Jersey
Online shopping more popular among consumers: Survey
Online shopping is more popular among consumers with 80 per cent of buyers preferring to shop over the Internet instead of visiting different stores to purchase their favourite products, according to a new survey. The study undertaken jointly by Yahoo and Mindshare analyses the shopping behaviour of customers to reveal that 31 per cent shoppers opt for online shopping in order to save the time and effort that might be spent on physically going to stores to buy the same products. About 28 per cent customers are driven to buy online due to the availability of discounts and promotions while the convenience to shop anywhere, anytime attracts the remaining 21 per cent, it said. The study also highlights how more and more customers are taking to mobile phones to make online purchases as compared to other electronic devices. “The ecommerce landscape in India is perhaps the most dynamic in the world, largely due to the rapidly evolving mobile ecosystem. This research highlights the role of mobile from the top of funnel to the bottom and how it varies across product categories. It will help us develop sharper, more connected communication strategies for brands,” M A Parthasarathy, Chief Product Officer, Mindshare South Asia said. According to the survey, majority of consumers use only mobile devices while making purchases related to apparels, electronic devices, baby and pet care products. Most purchases made online over mobile phones tend to be regular or impulsive buys rather than expensive ones, the study claims. Over 90 per cent of the consumers use mobile devices for quick and frequent purchases of travel, music and movies, contrary to 36 per cent who purchase high consideration products like insurance on their PC or laptop. About 30 per cent people prefer buying products of personal hygiene from the store itself. The study also provides marketers with insights on India, to sharpen their digital and mobile commerce initiatives and build a strong mobile strategy. “The study shows that the consumer path-to-purchase is turning more complex and nonlinear, with mobile at the center of this evolution. “As mobile devices become more important in the consumer’s last mile of purchase decision, brands need to build targeted, more seamless shopping experience across all channels to strengthen sales and acquire new customers,” Francis Che, Head of Insights, APAC, Yahoo said. For those who continue to prefer in-store shopping, major detractors include non-authentic goods, unreliable delivery and lack of quality control. Walt Aikens Authentic Jersey