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INDIA’S OIL IMPORTS HIT RECORD HIGH IN SEPTEMBER

NEW DELHI: India imported a record 4.83 million barrels per day (bpd) of oil in September as several refiners resumed operations after extensive maintenance to meet rising local fuel demand.

The world’s third-biggest oil importer shipped in 4.2 percent more oil last month than a year earlier and about 19 percent more than in the previous month, ship-tracking data from industry sources showed.

“There was heavy maintenance at some refineries in July-August. All those refineries have come online, so naturally refiners will have to boost purchases to meet local demand,” said Senthil Kumaran, senior analyst at energy consultant FGE.

Maintenance turnaround at some refineries led to Indian Oil Corp deferring the shutdown of its 300,000 bpd coastal Paradip refinery to April-March.

During the first nine months of the year India’s oil imports rose 1.8 percent to about 4.4 million bpd, with most supplies coming from the Middle East, followed by Africa and Latin America.

Indian fuel demand typically eases in the third quarter as monsoon rains hit construction, industrial activity and reduces consumption of transport fuels. That provides refiners with an opportunity to carry out maintenance.

Capacity addition is also driving up India’s oil imports.

The country added 170,000 bpd of capacity at plants owned by Bharat Petroleum Corp and HPCL-Mittal Energy, which are gradually ramping up crude runs.

India, which imports about 80 percent of its oil needs, has emerged as a key driver for growth in global oil demand.

The South Asian nation is set to surpass China as the fastest-growing oil products market in Asia, with fuel demand growing by 6.1 percent in 2018, according to a recent report by the U.S. Energy Information Administration.

FGE expects India’s fuel demand to rise by about 4.5 percent this year to 4.2 million bpd and by 5.1-5.2 percent in 2018.

India is increasing refining capacity to keep pace with the expected growth in fuel demand as Prime Minister Narendra Modi seeks to boost the manufacturing sector.

AIRPORTS NEED $45 BN INVESTMENT TO IMPROVE CAPACITY BY 2030: CAPA

NEW DELHI: India needs to invest up to $45 billion to create an additional capacity of handling 500- 600 million passengers at its airports by 2030 as their capacity is likely to saturate within the next five years, a study by an aviation think-tank said.According to Centre for Asia Pacific Aviation (CAPA) estimates, the current capacity of the country’s top 17 airports is between 298-316.5 million passengers per annum.

This is expected to increase to 431-463 million once the existing airport sites are completely built and achieve their maximum structural capacity.

CAPA notes that airports at Mumbai, Chennai, Delhi and Kolkata will reach their maximum capacity in the next one to five years, i.e. between 2019 and 2022, assuming passenger growth rate is 10 per cent per annum.

Also, 10 airports — Pune, Jaipur, Srinagar, Lucknow, Dehradun, Agartala, Guwahati, Kozhikode, Mangalore, and Trichy — managed by the Airports Authority of India (AAI), are already operating “beyond their design capacity”.

Delhi’s Indira Gandhi International Airport’s current capacity is 64 to 72.5 million passengers per annum and its maximum structural capacity of 90-100 million passengers per annum is likely to be achieved by FY 2022, assuming a growth rate of 10 per cent.

Similarly, Mumbai’s Chhatrapati Shivaji International Airport with a maximum capacity of 50-52 million passengers per annum is likely to saturate by FY 2019.

“The airport system is expected to exceed its maximum structural capacity by FY 2022, based on data available to CAPA as of June 2017,” the CAPA report says.

It adds that if new projects are delayed and passenger traffic grows faster than the conservative estimate of 10 per cent, the threshold could be breached earlier than 2022.

“India will need to build an additional 500-600 million capacity by 2030. This will require $36-45 billion of investment, including $12-15 billion of equity capital,” the report adds.

There will also be a need to allocate 1,50,000 to 2,00,000 acres of land for 55 new airports by 2030, which CAPA says could be challenging as land banks on such a massive scale will become scarce.

KHARIF FOODGRAIN OUTPUT MAY FALL 2.78%: GOVT ESTIMATES

NEW DELHI: India’s summer-sown foodgrain production is likely to fall nearly 3 per cent , dashing hopes of higher farm income, because of erratic rainfall and farmers shifting to other remunerative crops.

Output of kharif, or summer-sown crops, is expected to fall to 134.67 million tonnes from the record 138.52 million tonnes last year, a fall of 2.8 per cent , according to the government’s first formal estimate of the harvest. It makes four ‘advance estimates’ in the course of the year.

This is expected to hit rural incomes in some areas, although the government said the harvest of 134.67 million tonnes, estimated with the help of inputs from states and other sources, would still be 5 per cent higher than the five-year average of 128.24 million tonnes.

“The country has adequate stock of foodgrain. So on food security front, there is nothing to worry about. But farmers in rain-fed areas may be hard-hit and their income might go down if prices don’t recover,” said former agriculture secretary Siraj Hussain.

He said lower production may hit rural economy and buying capacity of farmers. “The government has to ensure farmer gets minimum support price for pulses, soyabean and cotton. Also, a stable trading regime needs to be ensured for commodity prices to recover.”

Experts said food prices are likely to remain steady. This year’s monsoon is about 5 per cent below average, but some parts of the country were flooded while others were relatively dry, hurting kharif output.

However, the recent surge in rainfall will help the winter-sown, or rabi, crop because of good soil moisture and more water in reservoirs.

Production of rice, the main kharif crop, is estimated to be 94.48 million tonnes, or 1.98 per cent less than the previous year. There was a small drop in paddy acreage, to 37.68 million hectares from 38.18 million hectares a year earlier, on account of deficient rains in a number of districts in Chhattisgarh, Telangana, Madhya Pradesh and Karnataka.

“Rice is one commodity in which we have been self-sufficient since 1991-92,” grain analyst Tejinder Narang said. “There are unlikely to be a spike in prices. In winter, planting of rice will take place in Andhra Pradesh and Telangana which can make up the deficit.”

Output of kharif pulses such as tur, moong and urad is estimated at 8.71million tonnes against 9.42 million tonnes last year. The ministry cited a shift by farmers to more remunerative crops like sugarcane and cotton for this 7.5 per cent fall in production.

Lokesh Goenka, managing director of U Goenka Sons that trades in agriculture commodities, said this would have no major impact on prices in the short run. Area under pulses this season was 14.12 million hectares, 3.47 per cent less than last year.

Production of oilseeds such as groundnut, soyabean and castorseed is estimated to decrease by 7.68 per cent over the previous year to 20.68 million tonnes, with farmers shifting to urad, sugarcane and cotton on expectation of higher profitability, the government said.

INDEPENDENT DIRECTORS’ PAY HIKES SLIM DOWN AMID A MUTED SHOW

MUMBAI: The increase in remuneration for independent directors slowed nearly two-thirds in FY17 from a year earlier to 7% from 21%, according to Prime Database.

This was mostly due to lower profitability in certain sectors and a correction after a surge in demand for independent directors as the new Companies Act came into effect, experts said.

The average remuneration of independent directors, which includes sitting fees and commissions, was Rs 6.82 lakh in FY17 compared with Rs 6.36 lakh in FY16. Of about 6,000 independent directors, 100 account for as much as 70% of all commissions, according to Prime Database.

“Corporate results in FY17 were not as dramatically improved over the previous year as in FY16. So the remuneration paid to independent directors was also muted,” said Shailesh Haribhakti, chairman of audit and accounting firm Haribhakti & Co. “There was a general feeling among nomination and remuneration committees that ‘let’s continue with the same sitting fee and commission’.”

Special Commissions were Absent in FY17 Haribhakti is an independent director on several boards. In FY16, some companies gave special commissions in addition to sitting fees and regular commissions because of windfall profits, which were absent in FY17. “Commission is dependent on net profit and if that is not up, then it will hit the commission, too,” said Pranav Haldea, managing director, Prime Database.

“A year earlier, the remuneration base of independent directors was much lower, which went up in FY16. As a result, in FY17, the percentage increase was comparatively lower,” said JN Gupta, managing director of Stakeholders Empowerment Services, a proxy advisory firm. The Companies Act 2013 empowered independent directors while increasing accountability and transparency. It held independent directors liable for acts of omission or commission by a company that occurred with their knowledge and stemming from the board’s actions.

Under the Companies Act, independent directors can be paid up to Rs 1 lakh as sitting fees per board or committee meeting. Companies have the flexibility to pay more when it comes to commissions. The total commissions paid to all independent directors in a company can be up to 1% of the company’s profit under the rules.

“In FY16, there was a recalibration of the sitting fee. At the same time, companies also recalibrated the commission as there was a shortage of independent directors,” said Arun Duggal, chairman, ICRA. It was a one-shot correction in FY16 by several companies to bring remuneration to market levels, he said.

ARCELORMITTAL JOINS RACE TO ACQUIRE BHUSHAN STEEL UNDER BANKRUPTCY CODE

KOLKATA: ArcelorMittal, the world’s largest steel company, has joined the bidding race for stressed steel assets in the country by expressing interest to acquire Bhushan Steel.

Top banking sources told ET that LN Mittal-led ArcelorMittal has submitted an expression of interest (EoI) for Bhushan Steel, which has been referred to National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code.

This provides ArcelorMittal, which failed to make much headway in setting up greenfield steel projects in India, an opening to pick up good steel assets in the country at what is widely believed to be reasonable prices, sources said.

“We don’t comment on M&A speculation and rumour,” an ArcelorMittal spokesperson said in response to ET’s query. According to media reports, Korean steelmaker Posco, which faced delays in getting its proposed 10 mt greenfield steel unit in Odisha off the ground for over a decade, is also in the fray for stressed assets like Bhushan Steel and Essar Steel.

India is one of the world’s fastest growing markets for steel, including automotive steel, and the country is battling cheap imports from Japan and South Korea.

Bhushan Steel has a significant presence in auto steel categories with a 5.6-million tonne (mt) integrated steel unit, including a cold rolled facility, in Odisha. The company owes nearly Rs 42,000 crore to lender banks and was admitted into NCLT in July 2017.

It is one of the two biggest companies to have been admitted under insolvency proceedings this year along with Essar Steel. EoIs for companies referred to NCLT have to be submitted to the insolvency resolution professional (IRP) within a stipulated time period, said an insider in one of the stressed steel companies. Vijaykumar Iyer, IRP appointed for Bhushan Steel, has sought resolution plans by December 23.

ArcelorMittal, a leading global auto steel player, has been looking to build up a presence in India for well over a decade now. It had earlier planned two greenfield ventures of 10-12 million tonne capacity each in Jharkhand and Odisha. However, it was plagued by mining issues and land acquisition problems that took a toll on the fate of the proposed projects.

US-BASED PRIVATE INVESTIGATION FIRMS FORAYING INTO INDIA

When an Ahmedabad-based developer began scouting for global investors in an industrial park, a Chinese conglomerate was interested. But first it needed to check out the Indian firm.

The information needed to be comprehensive–political connections, any pending investigations by local law enforcement agencies, instances of bribery or corruption and details about the how the land was acquired for the park.

Among the first ports of call was the Tokyo office of a US-based private investigation firm headed by a former US Federal Bureau of Investigation (FBI) agent. He in turn contacted a former operative at one of India’s intelligence agencies. He also called a friend who had previously worked at Israeli intelligence agency Mossad, and is now based in India, to run similar checks, so that he could corroborate the two accounts.

Given the increased scrutiny on overseas investments, the demand for such investigations has risen exponentially. That’s why more private investigation firms such as New York-headquartered Mintz Group and California-based Berkeley Research Group are setting up shop in India, joining well-established names like Pinkerton and Kroll. India has become a more attractive investment destination under the reform-oriented Narendra Modi government, which has also been trying to stamp out corruption and crony capitalism.

“The current government’s emphasis on business reforms and foreign direct investments has propelled foreign investors to accelerate their investments in India,” said Stuart Witchell, managing director, Asia Pacific, for global investigations at Berkeley Research Group (BRG). “We also believe the crackdown on corruption will eventually have a major impact on foreign companies’ operations and they will need assistance to comply with both global and local governance norms.”

Keeping their nose clean is of vital importance, not just because of India’s campaign against corruption but also because authorities back home have become intolerant of bribery and other kinds of wrongdoing abroad.

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