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Firms in talks to buy significant stake in eastern cluster oil fields; investments likely in upstream sector

Money in oil: There are huge opportunities for investments in oil and gas in Russia. Russian investments will help change India into a gas-based economy, says the Oil Minister. Reuters

A consortium of Indian oil firms is in talks to buy a significant stake in the eastern cluster oil fields in Russia with investments running into billions of dollars.

This comes after Indian oil firms have recovered more than one-third of their $5 billion investments made in Russia within the last three years as dividend after accounting for capital expenditure and operational expenditure.

Deal at summit

A deal is likely to be announced at the Eastern Economic Forum and the Annual Bilateral Summit between Prime Minister Narendra Modi and Russian President Vladimir Putin in Vladivostok next week, sources in the know of the development told The Hindu.

“It’s a combination of producing assets and discovered assets that will be put on production soon. We need to see what kind of fields are likely to be clubbed [into] these assets. So, it is premature to talk about reserves and valuations, but we are putting in our expression of interest,” a source said.

Minister for Petroleum and Natural Gas and Minister of Steel Dharmendra Pradhan is already in Russia with a delegation of Indian oil firms and Indian Oil Corporation Ltd. chairman Sanjiv Singh for exploring partnerships with Russian firms. Indian firms are expected to invest in Russia’s upstream sector while Russian firms are expected to invest in India's downstream sector. Mr. Pradhan met Russia’s energy minister Alexender Novak and discussed Indian firms’ interest in investing more in Russian oil and gas fields. “Discussions [helped] recognise that there are still enormous opportunities for investments in oil and gas assets in Russia, and Russian investments in new initiatives launched [will help] transform India into a gas-based economy through CGD, LNG terminals and use of natural gas in transportation,” Mr. Pradhan tweeted after meeting his Russian counterpart.

Mr. Pradhan also met Russian Deputy Prime Minister Yuri Trutnev and discussed further cooperation in sourcing of crude oil from Far East of Russia.

D. Rajkumar, chairman, BPCL, said, “We are keeping some money [aside] for investment in upstream assets. As far as Russia is concerned, out of our $1 billion investment, we have recovered $340 million in the last three years by way of dividend, after accounting for capex and opex.”

Indian energy companies have so far invested close to $10 billion in acquiring stakes in hydrocarbon assets in Russia.

‘Enquiries-to-sales conversion weak’

Fewer takers: The passenger vehicle demand trend remains weak across major markets. B. VELANKANNI RAJ

The weeks prior to the onset of the festival season seem to have remained subdued for the automobile sector, with analysts seeing a slow start to festive offtake.

“Our recent interaction with leading two-wheeler (2W), passenger vehicles (PV) and commercial vehicles (CV) channel partners in key markets of Delhi, Maharashtra, Kerala and Rajasthan indicated no signs of demand recovery as enquiries-to-sales conversion continues to remain weak year on year,” said Deep Shah, research analyst, and Poorvi Banka, research associate, Institutional Equities, Prabhudas Lilladher Pvt. Ltd.

“However, with the onset of key September festivals like Ganesh Chaturthi in Maharashtra and Onam in Kerala, there has been an increase of 5-8% in retail sales (especially in PV and 2W segments), while CV sales continue to remain weak,” they said.

In the PV segment, the euphoria around new product launches is driving enquiries. Though the PV demand trend remained weak across major markets, with enquiries-to-sales conversion even weaker for existing models, recent launches such as Hyundai Venue, Kia Seltos, MG Hector and Suzuki XL6 have helped bring footfalls to showrooms.

“The average inventory levels for most PV players remained at 25-30 days (stable month-on-month) except for Tata Motors, where it is still higher at 35-40 days,” Prabhudas Lilladher analysts said.

“PV sales in key festive States like Kerala is witnessing 5-8% MoM recovery in bookings, led by onset of Onam festival. Our interaction with channel partners indicates there was no significant impact of floods in Kerala except in a few regions of northern Kerala,” they said.

In the two-wheeler segment, inventory still remained high despite continuous correction. “While demand continues to remain weak in major markets, we note 5-8% volume recovery in rural pockets of Maharashtra. However, in tier 2 cities like Pune there is still no sign of demand recovery even for the Ganesh festival yet, as volumes are down 10-15% YoY (festive to festive) so-far,” the analysts said, adding the CV segment remained impacted on account of weak freight availability.

The slump has also impacted the luxury vehicle and super bike segments. “The ongoing economic slowdown in India and slump in the automobile market has also impacted the super bikes segment as people are deferring purchase decisions. We hope things will change with improved liquidity during the festive season,” Ajinkya Firodia, managing director, Motoroyale Kinetic, said on the sidelines of the launch of MV Agusta Turismo Veloce 800 in Mumbai.

The automotive components sector will also continue to suffer and the sector’s revenue growth is expected to be halved in next two fiscals, according to Crisil.

Step-down subsidiary of GVK awards ₹6,200 crore project

Navi Mumbai International Airport Private Ltd. (NMIAPL), a step-down subsidiary of GVK, has awarded the engineering, procurement and construction (EPC) contract for the greenfield Navi Mumbai International Airport to L&T Construction.

L&T had built the iconic Terminal 2 of the existing airport of Mumbai and also undertook the airport’s reconstruction work spanning several years even while the airport was fully functional.

According to people in the know of the development, the order is worth about ₹6,200 crore. The companies had not specified the size of the order.

It would take about 30 months from now to complete the project which was originally intended to be operational by 2019. A complex process of hill-cutting, land-levelling and land-filling of marshy land, including mangroves, is believed to have delayed the project.

The project also had to wait for the relocation of several thousand project-affected people. This project is being implemented in a public private partnership format between State government arm CIDCO and GVK, which operates the existing airport of Mumbai. GVK had bagged this project through a competitive bidding process. In NMIAPL, CIDCO holds 26% equity while the balance 74% is with GVK. The project is estimated to cost ₹16,000 crore.

The scope of the order covers cut and fill works, terminal works, including departure and arrival forecourts, airfield development works (a 3,700 metre-long south runway, apron systems, taxiway systems, airfield ground lighting and other facilities), landside facilities (roads, multi-level car parking), utilities and support facilities.

The planned passenger terminal building will initially handle a capacity of 10 million passengers per annum (MPA). The project will subsequently be enhanced to handle 20 MPA. This will go a long way in decongesting the existing airport that is almost saturated.

GlobalLinker allows SMEs to network with peers, clients

At first glance, the GlobalLinker portal looks just like Facebook. Once logged in, a user will find posts from entities that he is connected with, his network of connections, notifications related to his posts, likes and comments, among other things.

There is just one difference, though. GlobalLinker is not a social media platform for individuals to share updates about their life. It is a dedicated portal for small and medium enterprises (SMEs) where such entities can network with peers and potential customers while marketing their products and services.

“Facebook is the world’s biggest social media platform for individuals and we intend to become such a platform for SMEs,” said Sameer Vakil, one of the three co-founders of the company.

“But, our mission and purpose is totally different. We want SMEs to come and talk about their businesses and services. They can connect with potential clients or peers to grow their businesses,” added Mr. Vakil, who has earlier worked with Citibank and MasterCard.

SMEs from 5,934 cities

Interestingly, if the numbers are anything to go by, then GlobalLinker has indeed found flavour in the vast SME community.

Launched in 2015, GlobalLinker currently has more than 2.65 lakh SMEs registered on its platform. Further, these SMEs come from 154 different countries or from 5,934 cities across the globe.

More importantly, the SMEs are able to unlock various benefits by being a part of the GlobalLinker community.

To start with, there are more than 100 offers on products and services offered by member SMEs. Companies from various sectors have even formed subgroups to have very focussed engagements.

Promoters of companies also regularly write on issues related to their sector or business environment to have an interactive discussion with fellow promoters.

“SMEs have written and contributed more than 2,500 articles on GlobalLinker, initiated 25,000 discussions and created more than 365 different groups on the platform,” said Mr. Vakil, while adding that over a million connections have been made between SMEs on the platform.

Mr. Vakil, along with Summi Gambhir and TJS Varadhan, founded what he calls an algorithm-based match-making and business networking platform, which currently has SMEs across 39 industries and 208 sub-industries with the highest representation from the food and beverage sector followed by construction and real estate.

At a time when a digitised or online presence is considered a necessary ingredient for business growth, GlobalLinker allows member SMEs to create a free e-commerce store apart from helping them create digital business cards, digital business profiles and also a digital product catalogue.

Apart from India, local versions of GlobalLinker are live in Thailand and Philippines. Going ahead, the company is eyeing a presence in regional associations such as South Asian Association for Regional Cooperation (SAARC), Association of Southeast Asian Nations (ASEAN), European Union (EU) and North American Free Trade Agreement.

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