Kavveri Telecom in pact with Canada's Valcom Manufacturing

MUMBAI: Kavveri Telecom Products Ltd said on Friday it has tied up with Valcom Manufacturing group of Canada to provide high-technology products to the defence industry .

Financial details of the agreement were not disclosed in the statement to stock exchanges. Kavveri Telecom produces radio frequency products and antennas, while Valcom Manufacturing makes defence products for the wireless industry.

Hutch deal: I-T Dept asks Vodafone to pay Rs 11,218 cr as tax

NEW DELHI: Indian tax authorities on Friday asked Vodafone to pay Rs 11,218 crore ($2.53 billion) tax on its 2007 purchase of Hutchison Whampoa Ltd's mobile business in the country.

"The tax demand is to be paid within 30 days of the receipt of the notice of demand," the tax office said in a statement.

Supreme Court had asked the tax department to determine by Oct. 25 the potential tax liability over the deal. The Supreme Court will set a date on October 25 for hearing Vodafone's appeal challenging a lower court ruling that Indian tax authorities had jurisdiction over tax bills in cross-border deals.

An earlier High Court judgement had identified two parts of the transaction, the transfer of shares between Vodafone and Hutch and an additional transfer of the 15% interest held by Analjit Singh and Ashim Ghosh.

Vodafone argues that only the 15% is subject to tax, according to its reading the judgement. The IT department disagrees with this analysis of HC ruling.

But, if the company is viewed as an acting agent to pay tax on behalf of Hutch, its liability and the method for calculating outstanding tax will be different.

For now, the Bombay High Court has given a stay order for any action against Vodafone. The case will be heard on October 27 after the Supreme Court hearing on October 25.

Vodafone, whose joint venture with India's Essar group is one of India's largest mobile operators, maintains that it does not owe tax on the $11 billion transaction because it took place between two foreign entities.

"Vodafone strongly disagrees with the tax calculation," the company said in a statement Friday. "The tax authority is attempting to interpret Indian law as it has never been interpreted for the past 50 years, and this interpretation also goes against internationally recognized tax norms."

Telcos to feel profit squeeze this quarter

NEW DELHI: Telecom operators Bharti Airtel, Reliance Communications and Idea Cellular are expected to report a fall in profits and a squeeze on margins in the July-September quarter, say analysts.

The quarter is seasonally weak with no major festivals or harvest season. Companies are also expected to face stiff interest charges on borrowings. So far, telecom companies have been capitalising — or accumulating on the balance sheet without providing funds in the cash flow — the cost of debt they raised to buy third-generation radio waves from the government.

With 3G launches impending, some may start debiting factoring the cost of this debt on profit-and-loss accounts from this debt in the September quarter. The monthly average revenue per user — a key indicator of profitability — is also expected to drop between 3% and 5% for the operators, despite a stable pricing environment, analysts said.

The softening of competition will continue to moderate declines in average revenue per minute (ARPM) for the incumbents, Religare said in a note on October 4. “However, Q2 is seasonally soft for traffic growth resulting in modest 2QFY11,” the note prepared by analysts Rumit Dugar, Manoj Singh and Udit Garg said.

An analyst, who asked not to be named, said, “The main aspect to watch out for in the quarter is usage on the network. That’s the only indicator of future consumption remaining after most companies pulled out free usage plans last quarter.”

In August, Reliance Communications had said its minutes of usage fell because some schemes in which it offered free minutes of calling had ended. Usage rose for the other two major listed players.

Bharti Airtel: Analysts expect the company to post a 50% rise in revenues compared with the same quarter a year ago, boosted by revenue from its acquisition in Africa. Bharti’s last year figures did not include numbers from its Africa operations. However, comparable revenue is expected to be almost flat, as per an average of five brokerages.

Since Zain, the company Bharti acquired in Africa, is still making loss, profit for the July-September quarter is expected to drop almost 20% from a year ago. Compared with the earlier quarter, however, profit is expected to rise 21%, as per average estimates.

The telco had recorded a profit of Rs 1,662 crore for the first quarter ended June on sales of Rs 12,231 crore. The African company functioned for only 23 days in June under Bharti’s ownership.

“Growth figures are not on a like-to-like basis, as 2QFY11 numbers would show full consolidation of Zain financials. On the domestic business front, revenue, EBITDA margin and PAT changes y-o-y would be 7.5%, -442 bps and -8.3%, respectively,” research and securities firm IIFL said in a note.

Credit Suisse said it expects the telco’s average revenue per user to fall 4.5% to Rs 306 in the September period, while brokerage Alchemy said its revenue per minute, another key indicator of profitability, is likely to decline 4% sequentially to Rs 0.43.

Bharti’s greatest challenge would be to turn around its loss-making African unit and also expand its footprint across the 15 geographies in that continent where the average telecom penetration is only 32% against 56% for India , analysts said.

Reliance Communications: The country’s second-largest wireless operator will see a profit drop of over 50%, as per consensus estimates from analysts and brokerage firms. For the period ended June, RCOM had a profit of Rs 250 crore against sales of Rs 5,109 crore. On a sequential basis, its profit is expected to witness a 75% increase from its June quarter earnings when it reported its worst-ever profit fall.

Brokerages Karvy and Nomura said that the Anil Dhirubhai Ambani Group-owned telco lags its peers in operating performance. The company already has amongst the lowest ARPU in the industry, yet it is likely to slip further 5% to Rs 128 as well as a 3% decline on the average number of minutes used per subscriber, brokerage ICICI direct said in a note.

Reliance Communications is also expected to gain from the rise in the rupee against the dollar. The company has foreign debt that is restated at current dollar price and adjusted in profits every quarter. This is a notional profit, not one the company actually gains till the loans are repaid.

In the earlier quarter, depreciation in the rupee hurt company profits.

Idea Cellular: Analysts say that Idea’s net profit is expected to decline by a little over 12% (y-o-y) as its bottomline will be impacted by higher interest costs and depreciation, while its revenues are slated to jump 26%. The reduced severity of tariff wars will enable revenue resilience, research analyst Harit Shah of Karvy said in a note. The contribution of Indus Towers will grow at a strong pace. Margins will remain flat, but higher interest and depreciation will reduce bottomline, the note said.

“Idea’s revenues (is) likely to be up 2% q-o-q. Idea has outperformed Bharti in terms of traffic growth in the last four quarters, while RCOM has consistently lagged behind and we expect this trend to continue. We build in traffic growth of 6.5% q-o-q for Idea and 3% q-o-q for RCOM. Revenue per minute in the quarter could be down 3% q-o-q for RCOM and 2.3% QoQ for Idea as a result of erosions in tariffs,” the IIFL note said

Solar energy to become must for telecom towers

NEW DELHI: The government will make it mandatory for mobile phone towers to be powered by solar energy, hoping to cut pollution and tamp down a key driver of diesel consumption in the country. But this would raise construction costs by up to 50% for cellphone operators such as Bharti, Vodafone and Reliance Communications .

“We are working on a new scheme that will support adoption of greener practices by telecos while rolling out their services for customers,” secretary with the ministry of new and renewable energy (MNRE), Deepak Gupta, told ET.
Over 200 crore litres of diesel are used every year by up to 3,50,000 cell towers across the country, and their numbers are increasing by the day.

The solar power initiative for cell towers will help cut the use of noisy, smoke-spewing diesel gensets in tower operations and prevent flow of government subsidy on diesel for unintended activities.
“A test project on adoption of solar power panels is being carried out in 600 towers. This will be completed by second half of the next year. Based on the inputs we get from it, the initiative will be rolled out nationally and a new funding scheme may be worked out,” he said.

The new scheme is being spearheaded under the recently launched Jawaharlal Nehru National Solar Mission (JNNSM) that aims to increase solar power capacity in the country by 20,000 mw by 2022.

The MNRE has already started discussing the proposal with various stakeholders and may seek Cabinet approval for the scheme. The ministry wants to initially ask only the new cell towers to use solar power, but all existing towers would also be covered under the scheme in phases.

The country currently has about 3,50,000 cell towers. Each tower costs about Rs 40 lakh, and the additional cost of installing a 10-kw solar power panel would be Rs 16 lakh, officials say. “The government’s proposed move may almost double the cost of laying towers. This could significantly impact the margins for companies already under pressure due to rising spectrum costs,” said an official of a major private sector telecom company, who did not want to be identified.

While the proposed government scheme will limit direct capital support to telecom companies to a basic minimum for laying solar power panels, it may offer soft loans to companies under refinancing schemes of Indian Renewable Energy Development Agency (IREDA). “Diesel-based electricity is both expensive — costs as high as Rs 15 per unit — and polluting. It is in this situation the solar imperative is both urgent and feasible,” said another government official involved in JNNSM. “Companies could recover their full investment in a span of 10 years,” he added.

Cochin Shipyard bags Rs.1,500 cr Coast Guard order

KOCHI: Cochin Shipyard Limited (CSL) has received an order of Rs.1,500 crore to build 20 fast patrol vessels (FPV) for the Coast Guard, the company said here on Thursday.

According to the shipyard, this is the single biggest contract executed by Coast Guard and would go a long way to beef up the coastal security of the country.

"This order has been secured under very severe competition from defence and private yards and has taken the present order book position of the company to 36 ships valued at Rs.6,000 crore," said the release.

The order book consists of 15 offshore support ships for various international owners and the Coast Guard order for 20 FPVs.

Besides, the yard is executing the indigenous aircraft carrier project for the Indian Navy .

Cochin Shipyard is one of the leading ship building and repair firms in the country. The FPVs have a speed of 35 knots and length of 50 metres. These are used for patrolling coastal areas.

Under the contract, the first ship is to be delivered within 20 months and one every three months thereafter.

R-Infra raises Rs 7k cr for Mumbai Metro project

MUMBAI: Reliance Infrastructure said on Thursday that it has tied up debt totalling Rs7,000 crore for developing the second Metro rail project in Mumbai, connecting the suburbs of Charkop, Bandra and Mankhurd. The total project cost is Rs11,500 crore.

Mumbai Metro Transport Private , the special purpose vehicle implementing the Charkop-Bandra-Mankhurd corridor, tied up the debt with seven financiers led by Axis Bank , the Anil Dhirubhai Ambani Group company said in a statement.

The SPV is owned by the Reliance Infrastructure-led consortium, which includes Reliance Communications and SNC Lavalin of Canada.

“We have tied up the entire Rs7,000 crore of debt funding and are ready to achieve financial closure for the project within the stipulated nine months period in the concession agreement. The average rate of interest on the debt is 10.5-11.0%,” Lalit Jalan, chief executive officer of Reliance Infra told ET.

The project, which is being set up under the public-private partnership model, would receive a viability gap funding of Rs2,298 crore from the Maharashtra government, while the balance amount would be infused by Reliance Infrastructure through equity contribution.

Reliance Infrastructure is executing the project on a build-operate-transfer basis, for a concession period of 35 years with an extension clause of another 10 years.

The project entails setting up a 32 km metro rail line connecting Charkop in northern Mumbai to Bandra in the west and then to Mankhurd in the eastern part of Mumbai. The route will have 27 stations. “We hope to start construction on the second metro line by December. As per our agreement, the project would be completed in five years from the beginning of construction,” Mr Jalan said.

Reliance Infrastructure is also executing the first Metro rail project in Mumbai on the Versova-Andheri-Ghatkopar route. That project would be completed ahead of schedule in 2011, the company said. After the transfer of its power generation units, except the 500 MW plant at Dahanu in Maharahstra, and upcoming power projects to group company Reliance Power , infrastructure projects have become the key growth area for Reliance Infrastructure. On Thursday, Reliance Infrastructure’s scrip ended at Rs1,074.70 on BSE, down 2.02%.

Chennai 2020 ( A Global City )

Chennai is well on the way to become a leading global city and to meet the demands of the fastest growing city by 2020

Chennai is well on the way to become a leading global city and to meet the demands of the fastest growing city by 2020, the State government will take steps to provide international infrastructural facilities in the coming years, said Deputy Chief Minister M.K. Stalin here on Tuesday.

Delivering his special address at a seminar on ‘Chennai 2020,' organised by the Confederation of Indian Industry, he said the State government had embarked upon several initiatives such as construction of circular high-speed corridors, a greenfield airport, implementation of Metro Rail project and construction of 11 more flyovers and overbridges; Financial City, Sports City, Media City and strengthening the water supply infrastructure among other things.

Mr. Stalin released a CD on ‘Chennai 2020' and said the Airports Authority of India was in the process of executing a project that included construction of a domestic terminal, cargo complex and multi-level car parking facilities; extension of international terminal and secondary runway through a bridge over the Adyar river.

“The State government is giving importance to environmental management. The Marina beach and many city parks have been upgraded. The Adyar estuary is being improved as Adyar eco-park. The Pallikaranai marsh has been declared a protected area and we have plans to restore the marsh area,” he said.

Mayor M. Subramanian gave an overall view and said Metro Rail covering 45 km would start functioning from 2015.

He urged the CII and Industry bodies to cooperate with the State government for early implementation of ongoing projects.

He said a portion of the Adyar estuary would be thrown open to public by January 2011 and the entire project completed in five to six years.

L. Mansingh, chairperson, Petroleum and Natural Gas Regulatory Board, said Tamil Nadu would start getting natural gas produced from the Krishna-Godavari basin from 2012. The bidding process for Chennai City Gas distribution would begin in the next six to eight months.

Iceland offers tech tie-up to Gujarat cos

Ahmedabad: Iceland has offered technological tie-up to Gujarat-based companies engaged in geothermal energy sector.

Mr Gudmundur Eiriksson, Ambassador of Iceland to India, made this offer at a meeting of the Associated Chambers of Commerce and Industry of India (Assocham) Regional Office in Ahmedabad, according to a release here today.

He said that the cost of geothermal energy generation is one-third compared with the cost of solar energy production. Iceland is already exporting geothermal technology to Abu Dhabi, Kenya and Sudan under the Development Assistance Project. He offered similar facilities for technological tie-up to Gujarat also.

oil exploration

Mr Eriksson also called upon oil exploration companies to consider the possibility of oil exploration in Iceland and said his country is prepared to offer blocks for the purpose.

He said the universities in Iceland offered special courses in geothermal, clean and green and renewable energy. Iceland and India could share similar technological tie–ups as both were in sensitive seismological zones, for which Iceland had excellent technology.

In view of typical climatic conditions of Iceland causing skin diseases, India's healthcare and pharmaceutical companies could export services and medicines there. Also, Gujarat-based seafood industry could benefit from Iceland's high technology in fisheries as well.

DuPont Sustainable Solutions to strengthen presence in India

Delaware: DuPont Sustainable Solutions (DSS) is on a growth curve in India. It is doubling its Group strength in the country in the next couple of years and setting up a Knowledge Management Centre (DKMC).

Its major presence now is in Chennai with the Coastal Training Technologies Centre, a e-Learning back office content developer, which has about 150 professionals. The DSS consists of DuPont clean technologies and Coastal Training Technologies at present.

The DSS, with focus on safety and renewable resources, is the most recent diversification by the $26-billion, science-driven company. The establishing of the DKMC in Hyderabad, to supplement the existing Services Centre at the DLF developed SEZ in the city, will be a significant step.

“Our plan is to shore up our consulting and training business in India and we feel we have many ways of connecting with customers. Clean technologies, environment, safety resources, training solutions are some which are promising in future,” said Mr James R. Weigand, President of DSS.

Ties with Indian majors

DuPont works closely with the Tatas, Reliance Group, the Aditya Birla Group on safety aspects as well as sustainable technologies. As for Tatas, starting from Tata Steel, Tata Chemicals, the engagement is growing now with Tata Power in their UMPP (Ultra Mega Power Project) in the area of safety, he told a group of visiting Indian Journalists at the company headquarters in Wilmington recently.

The company has also provided safety solutions to Hindustan Unilever. With the Reliance Group a close association in process management safety is on. Here also it started with safety issues.

“Our focus now in India is to offer safety and sustainable solutions to SMEs as well as large companies in the fields of oil and gas, transportation, chemicals, refining as well as in service industry, healthcare,” Mr Weigand explained.

Though companies are still not ready to spend big money on safety following the recession, things will improve with the economic turnaround. At present companies are focusing on investing in training, where we are quite strong and offer solutions, he explained.

“We do not compete with the likes of Deloitte or Mckenzie, but draw expertise from the inherent strengths of DuPont in many areas built over the years to provide management and consultancy services,” he said.

While refraining to project a definite number to the potential business turnover the DSS could bring into DuPont, Mr Weigand said, “Personally, I believe that it should contribute about 10 per cent ($26 billion present turnover) of the company's turnover in 10 years.”