Promit Mukherjee MUMBAI

MSP Steel and Power Ltd, Kolkata-based steel player, is aiming at dou-bling revenues and trebling prof-its by fiscal 2013 on the back of itshuge backward integration plans.

While the company is still rela-tively small according to its salesnumbers, analysts say it is thecompany’s strategy of backwardand forward integration that willtake it to the big league of steelplayers.

The company posted revenuesof `395 crore and net profit of `32crore for the last fiscal. This yearit is expected to post a jump of atleast 33% and 72% in sales and netprofit, respectively, analysts track-ing the company say.

Saket Agarwal, promoter-direc-tor, MSP, said, “We have a capex

plan of `815 crore till fiscal 2013which is mainly to strengthen ourbackward integration plans.” Thiswas to be invested in two phases,out of which the first phase iscomplete and the second phase hasbegun.

“In the first phase, we expand-ed our sponge iron capacity from192,000 tonne per annum (tpa) to307,000 tpa at an investment ofclose to `240 crore,” he said.

Under the second phase, MSPwill expand its power generationand pellet capacity and opera-tionalise its coal and iron oremines, which are expected to becomplete by fiscal 2013. It is in-creasing its power capacity to 76megawatts (mw) from 42 mw cur-rently and pellet capacity to 900,000tpa from the current 300,000 tpa atpresent, besides bringing its mines

onstream.The company had been award-

ed a 26 million tonne coal mine anda 35 million tonne iron ore mine inChhattisgarh, which will start pro-duction from 2013.

“With the operationalisation ofmines, the company will become acompletely integrated steel player.

The mines will add significantly toits margins and bring down pro-duction costs,” said Rahul Son-thalia, vice-president, portfoliomanagement services, MPA Fin-securities.

Agarwal said it is only on theback of backward integration thatthe company will see a major jumpin its revenues and profits.

MSP currently sells four mainproducts in the market — pellet,sponge iron, TMT bars and heavystructural steel products. It alsohas a fungible model wherein itcan swap billet production by sell-ing power on a merchant basis inthe open market.

“Billet production is a very pow-er intensive activity and it makesno sense to make billets if the pow-er cost crosses `3.50 per unit.Therefore, whenever that happens

we stop production of billets andstart selling power,” said Agarwal.

Besides, with the increase in itspower capacity, the company willalso have surplus power to sell ona merchant basis. Post expansion,its power requirement will not bemore than 40 mw.

However, a Crisil Research re-port published after the company’slast quarterly results said, “MSP’sexpansion plans are on track and,therefore, we expect it to registersignificant growth going ahead.However, concerns relating to highleverage (net debt : equity of 2.8xfor FY11E) remain.”

But it said that since MSP com-pleted its first phase of expansionfive months before schedule, it ex-pects that the company will be ableto complete the remaining capaci-ty expansion on time.

MSP aims to treble profit in two yearsSteel player plans to secure coal and iron ore supplies, strengthen billets, pellets and power portfolios

Audi unveilsall new A8 Lsedan

Our Bureau NEW DELHI

German luxury car makerAudi on Friday unveiled the latest version of its flag-ship Audi A8 L sedan. Thelong wheel version comesequipped with a 4.2 FSI petrolengine and will cost `89,00,000(ex showroom Delhi) onwards.

“The launch of the all newAudi A8 L is a milestone for us as it marks the entry of our new flagship in India.This super luxury sedan will allow us to further buildupon the tremendous growth potential that the Indian market presents. With Audiwitnessing record sales in 2010to achieve exceptional growth,we believe the Audi A8 L willcontinue to spur demand in India,” said Michael Perschke,head, Audi India.

In the new A8, the lengthand wheelbase have both been stretched by 13 centime-tres versus the standard normal version wheelbase to measure 5.27 metres,offering increased comfort torear seat passengers.

The body of this light car ismade of aluminum AudiSpace Frame (ASF), weighingabout 40% less than a compa-rable steel structure. It alsoboasts of optional LED head-lights. The new 4.2 litre engineoffers 22% better fuel efficiency.

The car would be launchedwith the W12 engine and 3.0TDI engine in a phased manner.

IOC plans $5 billionrefinery in Turkey

Evrim Ergin ISTANBUL

Indian Oil Corp (IOC) is in-terested in building a $5 bil-lion refinery in Turkey and iscurrently carrying out feasi-bility work on the project,minister of state for trade Jy-otiraditya Scindia said onFriday.

IOC and Oil and NaturalGas Corp (ONGC) are inter-ested in exploring for oil andnatural gas in Turkey,Scindia also told reporters.

IOC “is looking at settingup a 15 million tonne refinerycompany in Turkey,” theminister said, referring tothe volume of crude oil a fa-cility could process in a year.“They are evaluating the fea-sibility of this.”

The company had previ-ously planned to build a re-

finery with Turkey’s CalikHolding at the Mediter-ranean port of Ceyhan,where pipelines carryingIraqi and Azeri crude termi-nate.

Plans for that plant wereput on hold during the glob-al financial crisis in 2008, andScindia did not say whetherIOC would partner againwith Calik. India importsabout 70% of its oil and gasand is interested in exploringfor new sources, Scindia said.

Turkey has tiny amountsof gas and oil reserves, re-quiring it to import about95% of the fuels. But the gov-ernment has agreed in re-cent years with US-basedChevron and Brazilian stateoil company Petrobras tolook for gas off its Black Seacoast. Reuters

Anurag Kotoky & Swati Pandey NEW DELHI/MUMBAI

As Indian companies farm out across theglobe chasing business through a slew ofM&As and joint ventures, stodgy Indianbanks are spreading following suit.

Deal volume in India surged three-foldto $67.2 billion in 2010 from $21.3 billionin 2009, according to Thomson Reutersdata, including Bharti Airtel’s $9 billionbuy of the African operations ofKuwait’s Zain.

Overseas acquisitions accounted fornearly half of the Indian M&A volumein 2010, the biggest year for outbounddeals from Asia’s third-largest economy.

This year, Aditya Birla Group boughtUS-based Columbian Chemicals for $875million, a state-run firm is bidding for aMongolian coal mine, and Reliance In-dustries has notched up shale gas JVswith US firms.

“We have to service all our Indianclientele. And if we cannot offer themforeign currency funding, we are miss-ing a huge opportunity of further en-gaging our customers,” Melwyn Rego, ex-ecutive director, IDBI Bank, said.

IDBI Bank started operating in Dubaiin early 2010 and has applied to the Mon-etary Authority of Singapore to set up abusiness and has plans to start opera-tions in London.

“Our broad strategy is that we shouldhave one in the Far East, one in the Mid-dle East and one in the West. Basically,we are following our customer base,”Rego said.

Providing finance and M&A advice isopportunity for commercial banks togenerate revenue and gain credit in deal-making league tables, another catalystfor banks.

India’s huge remittance economy isanother, as more and more expatriatesprefer banks to money transfer firms. In-dians remitted an estimated $49 billionin 2009, according to a World Bank De-

velopment Prospects Group study.India’s top two lenders, State Bank of

India and ICICI Bank, have plans to ex-pand existing operations abroad whilestate-owned Allahabad Bank and PunjabNational Bank are expediting theirs tospread wider.

Punjab National Bank Ltd acquired63.64% in Kazakhstan’s JSC Dana Bankin December.

“We are already having licence in NewZealand. We might start New Zealand op-erations in 3 months,” said B A Prab-hakar, executive director, Bank ofIndia.

“We are also applying to Uganda andBotswana, we have also made an appli-cation to Canada. In twelve months timeCanada will be operational. Uganda

might happen in 6-9 months time, Ithink.”

In late 2008, when the collapse ofLehman Brothers inter-twined with theglobal financial crisis, raising moneywas a challenging task even through bor-rowings, said Puneet Gulati, an analystwith JM Financial.

Indian banks are looking for earlystrikes as economic environment im-proves globally, Gulati added.

Current rules allow each Indian com-pany to raise up to $500 million per fiscalthrough foreign borrowings. A with-holding tax of 20% is applicable on in-terest earned by investors in foreign bor-rowings of local companies.

The interbank cost of borrowing dol-lars, euros and sterling based on 3 monthLibor has hit new lows as central banksand governments flood financial marketswith liquidity, raising appetite for In-dia-specific bonds.

The US, UK and the Middle East havea high concentration of non-resident In-dians. Nearly all of them have ties in In-dia and remit part of their earningshome.

In fact, banks’ increasing involvementin money-transfer has forced manytransfer companies like Western Unionand MoneyGram International to lookfor newer services.

“There are a lot of advantages forbanks to have their branch networkabroad, specially in NRI-centric coun-tries,” J Moses Harding, head of inter-national banking at IndusInd Bank, said.

“The selection criteria is to partnerwith one of the top three banks in re-spective countries, who do not have In-dia presence and have good appetite forIndian business and India risk.”

IndusInd has representative offices inDubai and London and strategic rela-tionships with banks in UAE and Qatar.

Harding said business opportunitiesemanate both ways — in bound into India and out bound from India. Reuters

Banks chasing firms to foreign pasturesProviding finance and M&A advice is opportunity for banks to generate revenue

Rakesh Bhatnagar NEW DELHI

The Supreme Court has asked telecomregulator Telecom Regulatory Author-ity of India (Trai) to evolve a new set ofrevenue sharing norms and other reg-ulations on interconnectivity amongoperators for carrying calls of one net-work through others.

Trai has also been asked to bring thenew Interconnect Regulation on mo-bile termination charges and carriagecharges within four months after con-sulting various stake holders.

A bench headed by Chief Justice SH Kapadia said Trai should evolve thenew norms and regulations as per thedirectives of sectoral tribunal TelecomDisputes Settlement and Appellate Tri-bunal (TDSAT).

The court passed this direction onFriday on a petition by Trai challeng-ing the TDSAT order, which had setaside on September 29 last year theTrai’s Interconnection Usage Charges(Regulation), 2009, and asked it to bringout fresh interconnection norms andregulations in consultations with var-ious stake holders.

The TDSAT had set aside the 2009IUCR on several petitions filed by dif-ferent mobile service providers object-ing to the telecom regulator’s order.

The tribunal had asked Trai to con-sult various telecom operators in atime bound manner and finish the en-tire exercise by January 1, 2011.

The Trai, however, failed to bringout the new regulation within the stip-ulated deadline.

In its 2009 IUC regulation, Trai hadfixed a mobile termination charge(MTC) at 20 paise per minute for all lo-cal and national long distance charges.

It had also raised the MTC for in-coming international calls to 40 paiseper minute from 30 paise, while puttinga ceiling on carriage fee of 65 paisa perminute for domestic

long distance calls.Besides BSNL, certain private play-

ers — Bharti, Vodafone, Idea, Aircel,Etisalat DB and CDMA lobby groupAUSPI — also objected to the policy.

BSNL wanted termination chargesfor the fixed wire line services to befixed by the regulator on the data sup-plied by it on actual cost basis.

It also wanted the MTC for incomingISD calls to be fixed through mutual ne-gotiation between operators. Alterna-tively, it wanted an MTC in the rangeof Rs 3 to Rs 4 instead of 30 paise, whichTRAI had fixed.

GSM operators including Airtel andVodafone, on the other hand, wantedan MTC of 35 paise instead of 20 paisaand had requested the TDSAT to directTRAI for a fresh consultation on thisissue.

SC asks Trai to evolvenew interconnectivity,revenue sharing normsHas to bring the new Interconnect Regulation on mobiletermination charges and carriage charges in 4 months

Will cost `89 lakhonwards

Company evaluating feasibility of 15 million tonne refinery, says minister

Coal IndiaidentifiesCTL blockPress Trust of IndiaKOLKATA

Coal India Ltd (CIL) hasidentified Deocha-Pachamiblock in Bankura district inWest Bengal for its proposedcoal-to-liquid (CTL) foray.

“We had pinpointed theblock for CTL project,” CoalIndia chairman ParthaBhattacharya said.

He said that the block hasa very good overburden ofhigh quality rocks, whichwere saleable and ex-portable, he told reporters ata seminar.

Bhattacharya said thatthe block had a huge reserveof 19 billion tonnes, whichcould be exploited for burn-ing coal to form oil.

He said that the projectedinvestment would be around`45,000 crore which might befunded through a joint ven-ture.

MUMBAI | SATURDAY, FEBRUARY 5, 2011THE BIG PICTURE www.dnaindia.com | epaper.dnaindia.com 11

THE CASE> SC passed the direction on a

petition by Trai challenging aTDSAT order, which had set asideon September 29 last year theTrai’s Interconnection UsageCharges (Regulation), 2009

> The tribunal had asked Trai toconsult various telecomoperators in a time boundmanner and finish the entireexercise by January 1, 2011

> Trai, however, failed to bring outthe new regulation within thestipulated deadline

SHORT STORIES

> Hind Unilever hints atfurther price hikes

Hindustan Unilever (HUL) onFriday said there could be furtherprice hikes in its products as inputcosts continue to rise. “We havetaken several price increasesrecently but if the commodityprices continue the way it is then Isuspect there could be furtherprice increase,” HUL chiefexecutive officer and managingdirector Nitin Paranjpe said. Askedhow the margins would be affected,he said, “We cannot talk about thespecifics...How the input cost willimpact our business but all I cansay is commodity prices areincreasing whether its palm oil,crude, tea...Everything that impactour business is increasing.”

> GM to launch new enginefor Chevrolet BeatGeneral Motors India will launchits 1.2-litre SMARTECH engine,which is set to power the ChevroletBeat from next month, a topcompany executive said on Friday.General Motors India president andMD, Karl Slym said the dieselversion of the vehicle will also belaunched by the end of this year.On the expansion programme ofthe company, he said GM Indiaplans to introduce light commercialvehicles by the end of this year orearly next year. He said the 1.2 litreengine was created by the GMTechnical Centre-India inBangalore in co-operation withGM’s new engine plant in Talegaon.

> VIP Industries to open100-110 stores in FY12VIP Industries Ltd is looking toopen 100-110 stores in India during2011-12 (Apr-Mar), chairman DilipG Piramal said. “The storeopenings would be similar to (in)FY11. We had plans of openingaround 110 stores and till now, wehave opened around 80 odd (stores)this financial year,” he said. Thecompany will open the remaining30 stores by March.

> Cox & Kings net profitup 19.4% in Q3 Cox & Kings on Friday said itsconsolidated net profit rose 19.39%to `23.02 crore for the third quarterended December 31, 2010, over thesame period previous fiscal. Thecompany had a net profit of `19.28crore for the same period last fiscal,Cox & Kings said in a filing to theBSE. The company’s income fromoperations rose to `108.31 crore forthe third quarter ended December31, 2010, compared with `78.89 crorein the same period last fiscal. “Wehave witnessed growth in all thesegments of business that wecurrently operate in and this isreflected in a 37% rise in ourrevenues this quarter. The travelindustry has been growing quitesignificantly and we believe we arepoised to capitalise on this growth,”director Peter Kerkar said.

GOLDEN SHORES> IDBI Bank started operating in

Dubai in early 2010 and hasapplied to the Monetary Authorityof Singapore to set up a business

> State Bank of India and ICICI Bankhave plans to expand existingoperations abroad

> Punjab National Bank Ltd acquired63.64% in Kazakhstan’s JSC DanaBank in December