India Decontrols Fuel Prices; Rcom, GTL Deal

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
28 Jun, 2010
New York City

Stocks in Mumbai traded higher after the government decontrols fuel prices. Reliance Communications and GTL merge their telecom tower holdings to form the largest telecom tower company in the world. Reliance Industries finds more oil in Cambay basin. Resurgere Mines raises $53 in a GDR issue.

[R]5:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai traded higher after the government decontrols fuel prices. Reliance Communications and GTL merge their telecom tower holdings to form the largest telecom tower company in the world. Reliance Industries finds more oil in Cambay basin. Resurgere Mines raises $53 in a GDR issue.[/R]

Stocks in India traded higher following three days of decline after deregulation of fuel oil by the government stoked expectations that state-owned oil marketing companies will find favors with investors.

The Sensex Index gained 1.14% or 199.73 to close at 17,774.26 today and CNX Nifty index rose 54.75 or 1.04% to 5,323.80. Among the Sensex 30 stocks, 23 rose and 7 fell.

On BSE trading, 1,770 stocks advanced, 1,039 declined and 103 were unchanged. The government freed petrol pricing and raised prices of other fuels. Metal and realty stocks also gained.

Oil stocks rose across the board after the government on Friday raised fuel prices as it eliminates the subsidies that cost the government nearly Rs 25,000 crore.

Rupee edged higher 18 paisa to Rs. 46.10 against one dollar.

GTL Infrastructure Ltd and Reliance Infratel, a subsidiary of Reliance Communications Ltd entered into an Rs 50,000 crore deal to create the world’s largest independent telecom infrastructure company that will be neither owned nor controlled by a telecom operator.

Under the deal, which has in-principle approval of all three boards, GTL will purchase approximately 50,000 towers from Reliance in its second acquisition this year. The sale will cut Reliance’s debt by at least Rs 13,500 crore and also help in its network upgrades after it paid license fees to offer high-speed wireless phone services.

The Mumbai-based Life Insurance Corporation of India is planning to boost its investment in stocks and bonds by about 4% this year as its premium collections climb.

The nation’s largest money manager with Rs 10,70,000 crore of assets, is expecting to boost investments in bonds and stocks to by much as Rs 20,000 crore in the fiscal year ending March 31, 2011, said Thomas Mathew, Managing Director of the state-owned insurer, in Mumbai today.

Reliance Industry Ltd made its seventh oil discovery, named Dhirubhai-50, in a block in the Cambay Basin, according to a statement filed by the company today with the National Stock Exchange.

“The discovery is significant as it is expected to open more oil pool areas leading to better hydrocarbon potential within the block. RIL, as the operator, holds 100% participating interest in the block and is continuing further exploratory efforts,” Reliance Industries said in a press statement.

Reliance Industries Ltd, Royal Dutch Shell Plc, Essar Energy Plc are looking to start operating fuel oil outlets in India after the government eliminated petrol price controls. These three companies prior to the deregulation were operating less than 20% of the 10,849 pumps for which they have license.

“Essar will increase the number of outlets significantly,” said Naresh Nayyar, CEO of Essar Energy. “We are pleased with any move that creates a level playing field and enhances competitiveness in the industry,” said Deepak Mukharji, spokesman for Shell in India.

India, the second-biggest wheat producer may need to double cheaper wheat imports from Australia and Ukraine as the nation’s bread and cookie maker’s demand for wheat seems to be rising day by day.

Flour mills will have to import as much as 300,000 tons of wheat in the year March 31, 2011, compared with 158,000 tons last year, said M.K. Dattaraj, former president of the Roller Flour Millers Association of India. Premium quality wheat from Australia will make up most of the purchase he said.

Gainers & Losers

Aegis Logistics Limited advanced 1.9% to Rs 417.65 after the company said it looks forward to opportunity in petroleum logistics as recent oil price deregulation may attract private players in oil retail business.

Alembic Limited increased 4.4% to Rs 49.00 after the company said its board will meet tomorrow to consider corporate re-organization, including de-merger.

Arvind Limited gained 6.8% to Rs 35.80 after the company said it is planning to form an equal joint venture with B. Safal group to develop about 1 million square feet of residential complex at Ahmedabad, Gujarat.

Hindustan Construction Company Limited rose 0.8% to Rs 117.00 after the company said that it has received orders of Rs 431 crore for 100 mw Sainj Hydroelectric Power Project by Himachal Pradesh Power Corporation Ltd.

Jay Shree Tea & Industries Limited rose 4.8% to Rs 297.95 after the company said it is planning acquisitions in both sugar and tea segments in the current financial year.

Lumax Auto Technologies Limited rose 4.9% to Rs 126.65 after the company''s board decided to issue 2000,000 common shares on preferential basis to promoters and non-promoters in a private placement

Monnet Ispat & Energy Limited rose 3.6% to Rs 389.40 after the company said, the US private equity firm Blackstone Group may buy 12% stake in the company''s unit Monnet Power for Rs 300 crore as early as this week.

Reliance Communications Limited added 4.2% to Rs 200.75 after signing a deal that would see its tower business combine with smaller rival GTL Infrastructure to create what it claimed would be the independent telecom tower company with an enterprise value of Rs 50,000 crore and 80,000 towers.

Reliance Industries Limited rose 2.1% to Rs 1,085.55 after the company discovered more oil on Cambay basin, raising the potential of exploratory blocks it has been drilling, the company said on Monday.

Reliance Infrastructure rose 3.7% to Rs 1211.95 on the reports that the company signed a concession arrangement with Maharashtra State Road Development Corporation to develop the phase 2 of Mumbai Sea Link.

Resurgere Mines & Minerals India Limited added 3.5% to Rs 104.95 after the company raised $53.75 million in a GDR issue, priced at $10.32 each.

Setco Automotive Limited rose 1.7% to Rs 252.90 after the company''s board recommended a 1-to-1 bonus issue.