PSE Insights: Manufacturing

Public Sector Enterprises (PSEs) are emerging as lead players in the ‘Make in India’ initiative that is targeted at transforming the manufacturing sector of the country.
This edition of PSE Insights elaborates on the role of PSEs in manufacturing, their potential and the opportunities for partnerships arising under Make in India.

1. PSE
Vol 1 • No 4 • July 2015
insights
CEO SPEAK
Cmde K Subramaniam
Chairman & Managing Director
Cochin Shipyard Ltd
SECTOR IN FOCUS
Mr. T. Suvarna Raju
Chairman and Managing Director
Hindustan Aeronautics Ltd (HAL)
COVER STORY
Manufacturing –
The Growth Engine For Future
MANUFACTURING

2. Contents
3 Message from the
CII Director General
5 Chairman’s Message
6 CEO Speak – Cochin Shipyard to Become a Major Builder of Aircraft Carriers
Cmde K Subramaniam
Chairman & Managing Director Cochin Shipyard Ltd
8 Sector in Focus: Manufacturing
HAL on Massive Expansion Mode, Aims at Significant Global Presence
10 Manufacturing – The growth engine for future
38 Investments
40 Results
41 CSR Initiatives
42 Overseas
Operations
48 Appointments
13 Events
14 Policy & Impact
21 Tie-Ups, Procurement & Contracts
25 Project Updates
28 Operation Highlights
31 Export & Import
32 M&A
33 Marketing & Trade
35 Bottom Line Strategy
50 Stock-Talk
PSE Updates

3. 2 | PSE insights | JULY 2015
H
eralding a new era of Indo
– Belarus friendship, H.E. Mr.
Pranab Mukherjee, Hon’ble President
of India and H.E. Mr. Alexander
Lukashenko, Hon’ble President
of Belarus, jointly dedicated the
Bharat Heavy Electricals Limited
(BHEL) supplied 126 MW Grodno-II
Combined Heat and Power (CHP)
Plant to the Republic of Belarus and
its citizens, on 4th of June 2015 at a
grand ceremony in Minsk, Belarus.
The programme was attended by H.E.
Mr Andrei Kobyakov, Hon’ble Prime
Minister of Belarus, Ministers and H.E.
Mr. Manoj Bharti, India’s Ambassador
to the Republic of Belarus, besides
various other dignitaries and senior
officials of Government of Republic of
Belarus and key media persons from
both countries.
A dedication stone, with the details of
the plant and manufacturer inscribed
in golden letters, was unveiled at the
Grodno CHP-2 during the ceremony
to commemorate the dedication of
the Grodno CHP-2 to the Republic of
Belarus and its citizens.
The Grodno-II Combined Heat and Power Plant is the largest power plant set up by BHEL in the CIS region and has emerged to be a testimony of Indo-Belarus collaboration. This plant has achieved better performance in all aspects – whether it be output, fuel consumption, emissions, etc. BHEL has supplied the state-of-the art Frame 9E design gas turbine along with matching generator, heat recovery steam generator and control systems for this plant.
BHEL’s performance in the Grodno
CHP-2 has been appreciated by the
customer RUE “Belenergo”, which
consequently placed the largest
order for capital spares (in CIS region)
worth Rs. 22 crore on BHEL.
Hon’ble President of Belarus
appreciated BHEL services during
the project and welcomed the
company’s efforts for future projects
in his kind words, “... Indian and
Belarusian specialists maintain
productive cooperation in the
renovation of Grodno CHP plant No.
2. If they work as productively in the
future as they do now, you will have
no concerns about the projects in
Belarus, we will always support such
projects. They mean high quality,
reliability and excellent results. We
welcome such projects in the center
of Europe. We will always support
them...”
Mr B.P.Rao, CMD, BHEL signed a
Memorandum of Understanding
(MoU) with RUE “Belenergo”, the
central state owned public utility
of Belarus, for setting up Combined
Heat and Power plants in Belarus.
A Testimony to Indo-Belarus Friendship –
BHEL Supplied Co-Gen Power Plant in Belarus

4. JULY 2015 | PSE insights | 3
P
ublic Sector Enterprises (PSEs) are emerging as lead players in the seminal ‘Make in India’ initiative that is targeted
at transforming the manufacturing sector of the country. Having contributed to building the base of the Indian
manufacturing sector in the past, the long experience and capabilities accumulated by PSEs will be greatly relevant to
success of the initiative. This edition of PSE Insights elaborates on the role of PSEs in manufacturing, their potential and the
opportunities for partnerships arising under Make in India.
The Make in India mission has emphasized a multi-pronged strategy to harness manufacturing capabilities, leveraging
ease of doing business, industrial corridors and infrastructure, intellectual property and R&D, skill development and FDI.
25 sectors have been identified as growth engines, including manufacturing, services, and infrastructure to be converged
for industrial development. In many of these sectors, PSEs enjoy a strong presence and can emerge as the core of a new
growth trajectory.
Additionally, many companies from both the private and public sectors are now operating as global players. The ‘Make-in-
India’ campaign has boosted the spirit of these enterprises to excel in their respective areas of operation and sharpen their
competitive edge. With new avenues of opportunity opening up and global aspirations gaining pace, PSEs are moving in
new directions.
India’s leading PSEs such as Hindustan Aeronautics Limited (HAL) and Cochin Shipyard Limited (CSL) are fast emerging
as enterprises of global standard. HAL has already emerged into the high-profile top ‘Global 100’ defence manufacturers’
list, occupying 34th rank in annual sales. The company is contributing substantially to the ‘Make-in-India’ programme and
leading the country’s defence exports. HAL aims to become a significant global player in the aerospace industry. CSL, the
country’s first aircraft-carrier builder, now plans to construct more such vessels for the Indian Navy as well as overseas naval
establishments. CSL is also undertaking dry docking and ship repair works and has ambitious plans to expand as a world
class shipyard. PSEs like HAL and CSL make India proud.
In fact, a good number of India’s PSEs are performing at their peak levels and expanding to meet future business needs
and challenges. A number of them bring out internationally competitive products and services. Companies such as BHEL,
SAIL, HAL and CSL have set new benchmarks in production practices, manufacturing excellence and R&D spheres. For
example, BHEL’s scale of operation is emerging as a key competitive advantage, with power plant equipment capacity of
20,000 MW per annum and capacity to manufacture 75 locomotive units among others. The engineering and technology
company is spending around 2.5 per cent of its turnover on research and development.
CII is working closely with PSEs in a number of areas to expand and strengthen the partnership of public and private
sectors. We are excited about the possibilities for enhanced synergies under Make in India, and look forward to a strong,
competitive and global manufacturing sector taking shape in the country.
Chandrajit Banerjee
Director General
Confederation of Indian Industry
Message from
CII Director General

5. On the occasion of International Yoga Day on June 21, 2015, special Yoga
sessions & discourses were organized by CII offices across India.
The photograph below is of a special yoga session organized by CII
Eastern Region at the Suresh Neotia Centre of Excellence for Leadership
at Salt Lake in Kolkata. Trainers from ISHA Foundation explained through
both live demonstrations and video clippings how a few minutes of yoga
exercises a day can make a world of difference in the way people feel,
work, and achieve. About 130 participants showed up and joined the
yoga session.
The aim of the programme was to help people integrate body and mind,
reduce stress, experience happiness and enhance productivity in all
spheres of life, said Rear Admiral (Retired) A K Verma, Chairman, CII Eastern
Region and Chairman & Managing Director, GRSE, in his introductory
speech.
“Yoga embodies unity of mind and body; thought and action; restraint
and fulfillment; harmony between man and nature; a holistic approach to
health and well-being. It is not about mere exercise of body and muscles
but to discover the sense of oneness with yourself, the world and nature,”
he said.
CII joins the first
International Yoga Day celebration

6. Dear Colleagues,
Indian economy’s return to
higher growth path in 2014-15 is
encouraging news for all and will
further provide the much needed
boost for revival of investment
cycle. The contributions of the
manufacturing, agriculture and core
sectors will hold the key to higher
GDP growth in the coming years. IIP
data in the recent months suggest an
improvement in industrial activity this
year in comparison to 2014.
PSEs are ready to play their roles
to expand the economy that will
espouse the cause of inclusive
growth. From energy, power
equipment, steel and non-ferrous
metals, engineering, heavy
equipment, electronic products to
defence, aircraft and shipbuilding,
PSEs are at the helm of almost the
entire gamut of manufacturing.
In the last five years, large CPSEs
performed extremely well in the face
of protracted constraints, internal
and external. Around two-third of
the CPSEs signing MoUs with the
government had secured ‘excellent’
to ‘very good’ ratings indicating
their healthy performance. CPSEs
continued to be a major source of
revenue by way of payment of direct
and indirect taxes to the government,
apart from sharing nearly 10 per
cent of the country’s export income.
Thus, they play an integral role in the
country’s economic development
and enhance self-reliance in goods
and services, apart from contributing
to price stability.

From the
Chairman’s Desk
The turnover and net profit of CPSEs
have increased at 14.2 percent
and 7.2 percent CAGR respectively
during 2009-10 to 2013-14. Post
liberalization and with increased
globalization in the recent times,
PSEs are facing stiff competition.
Of late, net profit to turnover ratio
is witnessing a declining trend
indicating competition from imports
and pressure on the bottom line.
To enhance the scale of operations,
CPSEs have been expanding in
other geographies and exploring
untapped areas. However, a higher
local demand and domestic growth
rate will mean a bigger participation
of PSEs in all key sectors of
economy. According to projections
by several global consultants, the
manufacturing sector is expected
to grow six-fold by 2025 to USD 1
trillion creating a large number of
jobs, pushing domestic income and
expenditure leading to sustained
higher growth.

PSEs have to gear up to leverage on
the opportunities presented by the
Government’s ‘Make in India’ initiative
to their full potential. PSEs have to
focus on development of technology
to further extend their scope of
manufacturing to highly challenging
areas to emerge as major exporters of
goods and services. The current issue
provides a flavor of how our PSEs are
meeting such demands and making
modern engineering craft a strong
trajectory for the Indian economy.
B Prasada R ao, Chairman, CII Council on Public Sector Enterprises and CMD, BHEL

7. 6 | PSE insights | JULY 2015
Cmde K Subramaniam
Chairman & Managing Director
Cochin Shipyard Ltd
CEO SPEAK
Cochin S hipyard Limited (CSL) was originally designed
to build vessels for merchant marine upto 75,000 D WT
Panamax Type. However, the Company is now banking
substantially on orders from defence and Coast Guard.
What changed the operational strategy?
It is true that Cochin Shipyard was designed to build steel
intensive ships, viz bulk carriers and tankers upto aframax
size. As you would be aware the global recession of 2008
has impacted the shipping industry including shipbuilding.
There has been an oversupply of vessels in the market and
freight rates have moved sharply downwards. The shipyard
has responded with agility to the requirements of the
market place to garner remunerative orders. In the past six
years, the Shipyard has built and exported 34 high quality,
high end, high technology Offshore Support Vessels to
international clients. The recession in the shipbuilding
market has forced us to look at the defence sector also. It
would not be correct to say that CSL is banking only on
orders from the defence sector. The fact of the matter is
that CSL has built up a repertoire of skills required to build
various classes of ships, both commercial and defence. The
strategy is to look at remunerative value added products
and respond with agility to garner these orders.
What is the Company’s experience to design and build
aircraft carrier for Indian Navy? Is the S hipyard gearing
itself up to become a major builder of aircraft carriers
for both Indian Navy and transnational naval forces
outside India in future?
CSL has been entrusted with the onerous responsibility
of building the first indigenous aircraft carrier for the
Indian Navy. The design of the aircraft carrier has been
developed by the Indian Navy and this is a completely
indigenous design. The Shipyard has worked with a lot of
commitment to rise to the challenges posed in building the
first aircraft carrier. The inherent talent and strength of CSL
in designing commercial vessels, the advanced processes
of shipbuilding technology of an experienced shipyard
and most importantly the people’s skills along with eco
system for quality shipbuilding are the reasons why CSL
has been able to progress the construction of the aircraft
carrier. There have been a huge number of challenges in
building the first aircraft carrier, but all of them have been
resolved in-house by the inherent innovation, ingenuity
and commitment of the designers and workers of CSL. It
is quite clear that CSL is positioning itself as a major builder
of aircraft carrier. The skill sets nurtured and developed in
building the first aircraft carrier have given the Shipyard a
huge advantage in building carriers for both Indian Navy as
well as for transnational naval forces which we could meet
with due approval of Govt of India.
The Shipyard has also been doing well in shiprepair
though its turnover from such work dropped by almost
30% in 2013-14. How was the performance last year?
The Shipyard has assiduously nurtured the ship repair
business for the last 40 years and has emerged as a reputed
ship repair yard in the country. In my view, the success of
CSL is due to the fact that it is an integrated yard for both
shipbuilding and ship repair. The cyclicity of shipbuilding
could be offset to an extent by the steady and regular ship
repair business. The drop in ship repair turnover in 2013-
14 was due to occupancy of the repair dock by the aircraft
carrier which has now been undocked. We are confident
of improving the ship repair performance this year. In our
view, there is inadequate ship repair capacity in the country.
As part of its growth strategy the yard is setting up of
additional ship repair facilities in the leased land in Cochin
Port Trust area. It is expected that this facility will be ready in
the next three years time.
Cochin Shipyard to Become
a Major Builder of Aircraft
Carriers

8. JULY 2015 | PSE insights | 7
Although the Company is in operation for over four
decades, its growth was negligible until five years ago.
What were the reasons?
The growth of the Shipyard is an interesting study in itself.
Way back in the early 1980s, shipbuilding was regulated with
the price of ships being arrived at based on negotiations
and the Government approved a fair price. It is pertinent to
mention that in the initial years, the Shipyard as a PSE was
subjected to the permit raj system till 1991, by which time
the Shipyard was in the red. A debt restructuring plan in
1992-94 put the shipyard back on the rails and the yard has
posted profits since then. However, it was the agility and
business acumen of the top management which took some
extremely bold decisions in 2003-04 that led this spectacular
growth of the Shipyard. While CSL retained the processes
and meticulous approach of a typical PSE, we also looked at
shipbuilding with a business focus. CSL is perhaps the only
Shipyard in the country to have successfully tied up with
a private shipyard and jointly built ships which was a win-
win partnership for both. Similarly, the yard’s decision to
enter offshore supply vessel market in 2006, which required
a lot of re-engineering process within the Shipyard, was
another major factor which has contributed towards this
tremendous growth in the last five years. Further the move
towards the defence shipbuilding has also contributed to
this growth.
What are the company’s future plans to expand its
shipbuilding and repair yard capacities and outputs?
The Company has ambitious plans for expansion and as a
shipyard which has been successfully delivering very high
quality commercial ships and efficiently building defence
vessels, it is probably in the best position to expand its
market share. Cochin Shipyard, as mentioned earlier, is
pursuing an expansion plan to increase ship repair capacity
by putting up ship repair facility in Cochin Port Trust area.
CSL has also plans to build a larger dry dock within the
premises to cater to the large ship segment such as LNG
vessels, new generation aircraft carriers, repair of jack up
rigs, etc. These plans would fructify in the next three to
five years and would add capacity and capability to ensure
momentum of growth.
Does the Company see itself as a major international
player in the industry competing with global giants in
future?
Yes. The company is looking at emerging as an international
player in the industry and towards this end, it is evaluating
a proposal to setup a green field shipyard at a new location
in Gujarat. The Shipyard is looking at increasing its product
mix and investing in research and development. These are
the long term plans which will finally enable CSL to be an
internationally competitive global player.
Cochin S hipyard has been doing a good work in the
CSR field. What’s the feedback from the community it
serves?
CSL is proud of its commitment to serve the society
by undertaking CSR projects both in the immediate
neighbourhood as well as within the state of Kerala. The
Shipyard has done commendable work in the education
and health sectors. The Shipyard has a special focus on
programmes targeting disadvantaged sections of the
society as also geographically backward areas. The feed-
back on CSL initiatives in the field of CSR has been extremely
positive and the yard has earned a very good reputation as
a peoples friendly public sector undertaking in Kerala.

9. 8 | PSE insights | JULY 2015
SECTOR IN FOCUS – MANUFACTURING
Hindustan Aeronautics Limited (HAL) has pioneered
the manufacturing of military and civil aircraft in
India and stands as A sia’s premier aeronautical
complex today. What is the way forward and what
are HAL’s current programs?
 
HAL has been the mainstay of the Indian Defence for
over seven decades and its expertise today encompasses
design, production, repair, overhaul and upgrade of
aircraft, helicopters, aero engines, avionics, aero systems,
launch vehicles, satellite structures and Unmanned Aerial
Vehicles (UAV). HAL has made sterling contributions in the
field of aeronautics and aerospace and its indigenization
programs date back to the early fifties.  Over the years,
HAL has been successful in producing various types of
aircraft and helicopters and has grown into a company
with 20 production Divisions and 10 R&D centres. HAL’s
current programs are aimed at boosting the nation’s
defence requirements through indigenization efforts and
widening the export base.
Responding to India’s future requirements, HAL has
conceptualized the indigenous development of a
Basic Turbo-prop Trainer (HTT-40) and is working on
development of Light Utility Helicopter (LUH). HAL’s latest
indigenous product Light Combat Helicopter (LCH) has
completed rigorous hot and cold weather flight trials
recently and is expected to receive Initial Operational
Clearance and enter Series Production by end 2015. I am
happy to inform you that thanks to HAL, India happens to
be among the six countries in the world that designed a
combat helicopter.
It is important to note that HAL today provides one stop
solution for all the design needs of Aircraft & Helicopters
in airframes, airframe systems, avionics mission & combat
systems using advanced Design tools.
Also, HAL is determined to achieve its vision of becoming
a significant global player in the aerospace industry.
HAL’s thrust on co-development and co-production of
aircraft, engines and equipment with leading global
aerospace companies will not only meet India’s defence
requirements but will also increase the level of exports
of aerospace products. HAL currently exports its products
and services to more than 20 countries.
Regarding Research & Development strategy, HAL has
set up an R&D corpus earmarking 10% of its operational
profit after tax for technology development efforts. The
Company continues to focus on increasing its portfolio
of products including aero engines. The latest being a 25
kN turbofan engine suitable for trainer aircraft and a 1200
kW turbo shaft engine primarily for use on helicopters.
As part of R&D policy, a society has also been registered
for formation of Corporate Meta-university for industry
focused research relating to aeronautical sector in all
disciplines and inter-disciplinary areas of technologies.
 
HAL on Massive Expansion
Mode, Aims at Significant
Global Presence
Mr. T. Suvarna R aju
Chairman & Managing Director Hindustan Aeronautics Limited (HAL)

10. JULY 2015 | PSE insights | 9
What are the initiatives taken by HAL to realize
government’s ‘Make in India’ drive?
 
HAL has been one of the pioneers in meeting India’s
defence needs and ‘Make in India’ concept has been its
strength all along. HAL is committed to becoming self-
reliant in aircraft production and maintenance in the
strategic interest of the nation and has taken several
initiatives aligning with government’s ‘Make in India’ drive.
Indigenization is crucial to manufacturing in India and
HAL has been successful in indigenizing over 2000
components.  In addition, a total of 111 technology
projects have been identified in the areas of design,
manufacture, avionics and material to support indigenous
development and initiatives are being taken to develop
advanced aerospace materials in the country.
HAL has so far designed and developed 15 types of
Aircraft /Helicopters and has mastered the rotary wing
technology. Advanced Light Helicopter (ALH) Dhruv has
already proven its worth in India and other countries.
HAL’s current indigenous development/production
programs include Light Combat Aircraft (LCA),
Intermediate Jet Trainer (IJT), Hindustan Turboprop
Trainer (HTT)-40, Advanced Light Helicopter (ALH-
Weapon System Integration), Light Combat Helicopter
(LCH), Light Utility Helicopter (LUH), Fixed and Rotary
Wing UAV, Advanced 25kN Aero Engine and Mission
Computer (MC) etc.
To further propel indigenization efforts and boost private-
public partnership, HAL is keen on developing Micro
Small and Medium Enterprises (MSMEs) to sustain global
competitiveness. With a vendor base of about 2500, HAL
is outsourcing its manufacturing activities to the Indian
private industries and 25% of the total standard man
hours are outsourced. 
HAL is well poised to meet the future requirements of the
country and emerge as a global player with capabilities
in design, development, repair and upgrade of aircraft,
helicopters, aero engines and aero systems.
 
On the HR front, what are the initiatives taken up by
HAL to become a globally competitive organisation?
 
HAL has chalked out plans and strategies to launch
itself into the distinguished league of global companies
in the aerospace arena.  Human Resources has been
identified as one of the thrust areas. HAL’s belief is that
“people are key differentiators for sustained success”.  The
objectives are to ensure availability of right people to
meet the organizational goals; continuous improvement
in knowledge, skills and competence (managerial,
behavioural and technical); development of core
competence in high-tech areas; promote a culture of
achievement & excellence  with emphasis on integrity,
credibility and quality; maintain a motivated workforce
through empowerment of individuals and teams; ensure
organizational learning; and play a role directly to enhance
productivity, profitability and improve the  quality of
work life.
HAL is focused on getting the best of its workforce
through various measures:
•  At the entry level, HAL has put in place Induction Training
for Management Trainees (MT) / Design Trainees (DT)
intended to bridge the gap between the academics
and Industry. The 52-week structured training consists
of one semester at IITs and other reputed Institutes
to strengthen the technical skills and orientation
towards Aeronautics. The training also focuses on Basic
Management. 
• For mid-career level employees, opportunity is provided
to acquire latest and advanced technology in the
field of Aeronautics and to implement the same on
projects. HAL has a tie-up with Cranfield University
UK to sponsor Executives for acquiring M. Sc in Aero
Dynamics, Aerospace Vehicle Design, Material Science,
Thermal Power, Manufacturing etc. During the past five
years, more than 100 executives have been sponsored
for this programme. 
•  In addition, HAL has been sponsoring Officers to
reputed Institutions in India for higher studies in the
field of Technology and Management, in a structured
manner. In the Technical and Design Disciplines,
Officers have been sponsored to various IITs and in
the field of Management to IMI - New Delhi, XIME -
Bangalore, MDI – Gurgaon etc.  We recently introduced
a scheme for Sponsorship for MS, M Sc (Engg.) and Ph.
D Programme at Indian Institute of Science, Bangalore
and IIT Kharagpur, Kanpur, Madras, Delhi and Mumbai.
• Succession Planning is identified as a thrust area
to ensure continuous and timely supply of high
performance individuals, who will occupy leadership
roles as identified by HAL. The major initiatives launched
by the Company in this direction include outlining a
one year comprehensive Leadership Development
Programme (Sanghshaptak) in consultation with
IIM-Ahmedabad and revamping of Assessment &
Development Centres for the Senior Executives with
KPMG Advisory Service Pvt. Ltd. Also, customized
Competency Development Programmes (CDPs) have
been developed in collaboration with IIM Ahmedabad
for Business Excellence; IIM Bangalore for Operational
Excellence and IIM Calcutta for Leadership Excellence,
to bridge the competency gaps identified by way of
Assessment Centres. 
 

11. 10 | PSE insights | JULY 2015
COVER STORY
Manufacturing
–The growth engine for future

12. JULY 2015 | PSE insights | 11
R
evival of economy through investment driven growth
of industry and infrastructure sectors is the top most
priority before the government. Today’s evolving world-
order rests on the pillars of globalization and technological
advancement, offering a huge opportunity for the growth
of industry. The emerging paradigm of manufacturing is
based on productivity-adjusted labour, rationalisation in
consumption of natural gas and electricity, not merely on
the perceptions of high-cost or low-cost economies. In
this context, improvement in efficiency and technological
advancement are the two most important prime-movers to
achieve competitiveness in manufacturing.
Manufacturing in India today
Today, Indian manufacturing sector is at a cross road. Despite
being a major growth sector for the Indian economy, the
share of manufacturing is stagnating at around the 15%
of GDP for almost three decades now and it is indeed low
when compared to around 33 percent in China, 28 per cent
in South Korea, 25 per cent in Indonesia and around 20 per
cent in Japan, Malaysia and Germany. With share of non-
agricultural sectors growing faster than the performance
of the agricultural sector, there seems to be an aberration
in India’s structural transformation as India jumped directly
from an agrarian to a service driven economy leapfrogging
the intermediate manufacturing stage.
Country has experienced economic boom on the back of
services led growth while low agriculture growth, low quality
employment, rural-urban divide, continues to plague the
well-being of masses. Today, manufacturing sector employs
30% of the non-agricultural workforce with approximately
15% share in GDP while the agriculture contributes only
18% of GDP with a working population support of around
60%. This re-enforces the fact that domestic manufacturing
has to play a pivotal role in achieving consistent, more
inclusive, and sustainable growth.
Reaping demographic advantage
India is one of the best countries in the world poised
to take the manufacturing revolution to the next stage.
India has a strong advantage of being a nation with the
youngest population. With increasing population, the
working age people over the next decade is expected to
be approximately 900 million which works out to around
65% of India’s population in the age bracket of 18-59 years
by 2026. It is an imperative to focus on building a strong
and skilled workforce, as such an opportunity rarely comes
in the life of a nation and we as a nation should reap this
opportunity of “demographic dividend” in its entirety or else
we will lose the advantage if the situation does not change
in the next ten years.
Realising ‘Make In India’
Make in India’ initiative, aims to catapult Indian Industry into
a new phase of growth trajectory by providing one of the
best platforms to strengthen domestic manufacturing to
earn global recognition for the Indian economy and also
place India on the world map as a manufacturing hub.
The success of this initiative will depend on how we spur
up our level of operations with additional efforts in terms
of better technology and enhanced skill meeting global
quality standards while indigenizing technology intensive
manufacturing and not just acting as a hub for assembly of
manufactured components.
The Make in India’ campaign has the capability to lead to
more localisation by leveraging the incipient strength
of “Reverse Engineering” enshrined in various sectors of
entire domestic manufacturing value chain. This needs to
be cultivated and developed by providing an ecosystem
conducive to low-cost and high-quality products.
With impetus on developing industrial corridors and smart
cities, the government aims to ensure holistic development
of the nation. The corridors would further assist in integrating,
monitoring and developing a conducive environment
for the industrial development and will promote advance
practices in manufacturing. In a bid to reap advantage of
the initiatives taken by the Government, the manufacturing
sector needs to transform itself emphasizing on maintaining
superior quality while keeping price at a competitive level.
Appropriate quality standards are needed if the country has
to emerge as a destination for global manufacturing. Prime
Minister’s call for ‘zero defect and zero effect’ manufacturing
to produce quality products without any adverse impact on
the environment very well recognises shape of the things
to come in future. The government plans to introduce
quality standards for automobile, food processing, electrical
machinery, garments and textiles products among others
to drive exports of quality products. A policy ecosystem is
required to render necessary flexibility to PSEs to address
conflicting priorities enabling collaborative working with
private sector. In the context of foreign collaboration,
sharing business with collaborators on mutual benefit and
to the holistic benefit for the country in terms of technology
acquisition, skill development should be the hallmark.
Fostering innovation for Value added manufacturing
The shifting paradigm of global manufacturing led by lower
energy cost and improved technology is putting traditional
low cost counties under stress as manufacturing bases are
returning to US, UK, Germany and Mexico bringing supply
chain closer to demand centre. An enabling innovation

13. 12 | PSE insights | JULY 2015
ecosystem needs to be created to unlock the potential of
domestic manufacturers for higher value creation. Today,
Value Added by the manufacturing sector in India is less
than half that of China (30-35%). Even smaller countries (in
terms of GDP and population) like South Korea and Brazil
have larger manufacturing imprint than India. Today, Indian
manufacturers face a daunting task in terms of transforming
to a competing manufacturing centre and have to realize
that not spending on innovation would be akin to unilateral
disarmament in wartime. In the increasingly globalized
manufacturing context, customer-oriented manufacturing
is one of the promising approaches to improve product and
service quality with competitiveness. This is an imperative,
in particular, for the small and medium-sized enterprises
(SMEs).
Climate change is going to be one of the foremost factors
having a huge impact in terms of technology intervention on
the manufacturing industry worldwide. With the stringent
emissions controls and an earnest need to develop “Green
Technology”, technology ‘depth’ is required which seeks to
increase value addition and enhance competitiveness. As
Indian manufacturers, we need to enhance our R&D spend
from a paltry 0.8% of GDP vis-à-vis 1.5% spent by Chinese
and 3.5% by South Korea so that we are not left behind in
developing emerging technologies necessary for adding
higher value in manufacturing.
The pace of commercialization of R&D is a weakness of
Indian manufacturing calling for confidence and capacity
building with right policies and robust competence in
place. Other emerging areas like additive manufacturing;
factory of future with intelligent decision support models,
enveloping ambience of intelligence with sustainable and
reconfigurable systems to equip our manufacturing units to
cater to emerging kind of market demand are also necessary
for enduring existence. Skill developments for adapting the
best practices with improvements and modifications, Six
sigma, lean engineering, reconfigurable manufacturing
etc need to be emphasised to enhance capacity and
competitiveness. The approaches need to be designed
to reduce time to market innovative products. Towards
this improving capabilities for information collection and
analyzing data, knowledge and patterns with advanced
computing are crucial for manufacturing growth.
The necessary focus areas for value added manufacturing
consists of (a) bridging skill gap by investing in skill
development not only for the new entrants but also for
the existing workforce in order to enhance productivity.
(b) Creating an eco-system for innovation driven research,
development and deployment to match the global peers
(c) Supporting the SME sector in acquiring technology
and improving efficiency as the sector often acts as supply
chain partner of OEMs and large industries (d) Streamlining
the accessibility to abundant raw material and natural
resources of the country.
Conclusion
In fine, India has to stand up to the global challenges of
climate change, resource scarcity and social inequities by
leveraging technology and innovation in its manufacturing
capabilities for developing products and providing services
in an environmentally sustainable and socially responsible
manner. The necessary pieces of manufacturing jigsaw
need to be put together before global supply chain gets
fully re-defined to reap the benefits of “Make in India”
platform and overtakes domestic industry.
The author of the article is Mr Kaushik Acharya, General Manager, BHEL

14. JULY 2015 | PSE insights | 13
(L - R) Mr. N K Verma, MD, OVL, Mr. Vimal Wakhlu, CMD , TCIL, Ms. Nita Karmakar, Director, CII,
Mr. B Prasada Rao, Chairman, CII PSE Council and CMD, BHEL and Ms. Ratika Jain, Executive Director-
Manufacturing, CII.
The CII PSE Council, which is a forum
of Chairmen and Managing Directors
of the Public Sector Enterprises
chaired by Mr. B Prasada Rao,
Chairman and Managing Director,
BHEL, met on 21st July in Delhi for its
first meeting for the year 2014-15.
The following points were discussed:
• Need for the Public Sector
Enterprises to get due recognition
for their CSR oriented activities and
hence CPSEs to be encouraged
to apply for the CII Sustainability
Award.
• Swachh Bharat initiative taken by
CPSEs including building toilets
across the country.
• Discussion on the Public
Procurement Bill and its implication
for the CPSEs.
CII Council on Public Sector Enterprises
EVENTS
CII PSE SUBCOMMITTEE ON
CSR & SD
The CII CPSE Subcommittee on CSR
and SD, chaired by Mr. Vimal Wakhlu,
Chairman and Managing Director,
TCIL met on 21st July in Delhi to
discuss upon their various that would
be taken in the year 2014-2015.The
members discussed on their targets
of building toilets across the country.
Everyone would be completing their
targets except for those which are in
flooded areas.
The members also deliberated on the
CII CSR Summit which will focus on
sharing of experiences by both Public
and Private Sector being planned in
the month of September 2015.
• A presentation was made by Mr.
M L Shanmukh, Chairman, CII
Subgroup on Director (HR) on
issues of the present Pay Revision
and its solution for the next Pay
Revision for the CPSEs
• A Presentation on Exemptions,
Modification and Adaptations to
Companies Act 2013 was made
by Mr. Rudra Pandey, Partner,
Shardul Amarchand Mangaldas
& Co. Members were presented
the issues yet to be exempted
by MOCA for CPSEs and their
implication.
Mr. Vimal Wakhlu , Chairman, CII Subcommittee on CSR & Sustainable Development and CMD, TCIL.
(L-R) : Mr. Rabindra Singh, Director (Personnel), NMDC, Ms. Veena Swarup, Director (HR), EIL ,
Mr. Rajesh Goel, CMD, Hindustan Prefab and Ms. Anita Dhar Kaul, GGM, RITES.

15. 14 | PSE insights | JULY 2015
Policy & Impact
PSE DEFENCE FIRMS GET
ACCOUNTING EXEMPTION
The government has exempted its
defence companies from segment
account reporting so that these
entities don’t have to reveal sensitive
information in their books.
Segment reporting pertains to a
company’s financial information
with regard to the different products
and services it produces and the
geographical areas it operates in.
“For government companies engaged
in producing defence equipment,
the provisions of section 186 (loans
and investments by companies) and
accounting standard 17 (segment
reporting) shall not be applicable,”
said a senior official.
Besides, these companies have also
been exempted from complying
with section 186 of the Companies
Act, 2013, which prohibits a
company from making investments
through more than two layers of
subsidiaries and requires unanimous
board approval for giving any loan,
guarantee or security.
Many government defence
companies have more than two layers
of subsidiaries.
The decisions come at a time when
the government wants to increase
domestic defence production by
both public sector and private
companies. Currently, India is the
second-largest importer of defence
equipment.
The government has raised the
foreign direct investment (FDI) cap on
defence companies from 26 per cent
to 49 per cent. FDI beyond 49 per
cent is also allowed in state-of-the art
defence manufacturing, albeit with
riders.
“Keeping in view the nature of
business and the sensitive nature
of the disclosure, it is considered
prudent not to disclose the
information required by accounting
standard 17 regarding segment
reporting. Such non-disclosure does
not have any financial effect on the
accounts of the company,” HAL said in
its annual report.
Segment account reporting is only a
disclosure standard and doesn’t affect
the recognition or measurement
of any component in financial
statements.
Though no such exemptions have
been given to private companies
engaged in defence equipment
manufacturing, it is unlikely to
disrupt the level playing field, as
such exemptions do not have a
bearing on the manner in which the
performance of such companies are
depicted.
SHIPPING MINISTR Y LOOKING
FOR ALTERNATIVES TO PORT
CORPORATISATION: GADKARI
Shipping Minister Nitin Gadkari
on June 5 said attempts were
being made to find alternatives
to corporatisation, which was
opposed by port employees, for
upgrading infrastructure and
services, as announced in Budget
2015-16.“Finance Minister Arun
Jaitley had told us (in the Budget)
about the Companies Act, but we are
looking at other alternatives beyond
the Companies Act to modernise
and develop the ports,” Gadkari
told reporters at a Mumbai Port
Trust event. “Finance Minister Arun
Jaitley had said major ports would
be encouraged to come under the
Companies Act for better functioning.
Gadkari said his Ministry was
discussing and seeking guidance
from the Finance Ministry on the
alternatives. He did not elaborate.
“Basic concept for ports is
development and modernisation. We
don’t want to privatise ports, nor do
we want to give any equity to private
people. We want to modernise,
protect the interest of labour, protect
the interest of ports and, at the same
time, improve the services of the
ports to improve business and do
good profits.”
Speaking to reporters after
inaugurating an oil spill response
facility for the Mumbai harbour,
Gadkari said the 12 major ports
would be investing Rs 1,000 crore
to set up clean power facilities and
reduce reliance on grid power.
“The government has sanctioned
a 150-MW plan for green power for
ports,” he said, adding generating
funds would not be difficult. On the
occasion of the World Environment
Day, Gadkari also highlighted the
need to use recycled water and
reiterated his plans to have green
smart cities at each port, at an
estimated Rs 3,000-4,000 crore a city.
“Port water will be recycled. Port
waste will be turned into biogas.
Vehicles will run on biofuel. Solar
energy and wind power will be
generated at ports. These cities will be
pollution-free and aim at being green
smart cities,” Gadkari said.
The 12 major ports together have an
estimated 264,000 acres, and these
are being mapped through satellites.
Gadkari also said the government
had no plans to sell land to builders
and private developers. These smart
cities would be built according to
PSE NEWS UPDATE

16. JULY 2015 | PSE insights | 15
international standards and would
have wide roads, green energy,
advanced townships and greenery.
The major ports in the country
- Kandla, Mumbai, Jawaharlal
Nehru Port Trust, Marmugao, New
Managlore, Cochin, Chennai, V O
Chidambarnar,Visakhapatnam,
Paradip and Kolkata (including Haldia)
- handle approximately 61 per cent of
cargo traffic.
INDIA SCRAPS DUT Y BENEFIT S
FOR DEFENCE PSE s TO WOO
PRIVATE COMPANIES
The government has withdrawn a
critical preference given to state-run
companies and government entities
that manufacture defence goods, a
measure that will help attract private
capital to the sector and boost job
creation by creating a level playing
field.
The government has issued a
notification to withdraw the excise
and customs duty exemptions
enjoyed by the Ordnance Factory
Board and public sector units in
defence sector.
“This will provide a level playing
field ... by taking away the strategic
advantage with PSEs for quoting
lower rates in open bids,” a Commerce
and Industry Ministry statement said
on Monday.
The move addresses a key demand
of private sector and foreign original
equipment manufacturers (OEMs)
such as Boeing, Airbus, Lockheed
Martin and BAE Systems, which are
actively exploring the scope of future
investments in India, the statement
said.
It will also send a definitive message
to foreign OEMs that India is open to
business for defence manufacturing,
the notification said.
Foreign firms tying up Indian private
players have long complained that
the excise and customs exemption
gives an unfair cost advantage to
state-run enterprises.
It is partly due to this preference that
foreign firms preferred to tie up with
a public sector unit for a Defence
Ministry contract even when it was
more feasible to involve a private
partner that could deliver faster and
would be more efficient.
The withdrawal of exemption will
open up possibilities for smaller
Indian private players who can be sub
suppliers and contractors for larger
military contracts.
“This is a welcome move to put the
Indian private sector and PSEs at
par. However, the MoD (Ministry of
Defence) also needs to consider the
advantage that foreign companies
enjoy as it does not have to pay any
import levies for equipment it brings
in,” said Ankur Gupta of EY India. The
Indian aerospace and defence market
is among the most attractive globally
as the country is the highest importer
of defence items in the world, the
Ministry stated.
The government has systematically
opened up the sector for private
investment by raising the cap on
foreign direct investment to 49%
and rationalising certain conditions.
Almost 60 per cent items required
for industrial licence have now been
dereserved.
GOVERNMENT MULLS COMMON
COAL TRADING PLATFORM
FOR COAL INDIA AND PRIVATE
COMPANIES
The government is working on a
common coal trading platform for
Coal India and private companies
which are likely to be offered lucrative
blocks with prior clearances for
commercial mining.
The electronic platform is likely to be
an extension of the spot sale practice
of Coal India called ‘e-auction’ where
all the coal mined in the country,
excluding from captive blocks, will be
traded, a senior government official
told ET.
State-run Coal India sold around
11% of its output through e-auction
at a market-driven price in January-
March. The government has decided
to auction the company’s future coal
supply to unregulated sectors such
as steel, cement and captive power
plants.
The proposed platform could trade
Coal India’s auctioned supplies, the
PSE’s uncontracted output, imported
coal and the output of private
companies from coal mines that will
be auctioned for commercial use.
“A common electronic platform will
ensure transparent trading, while
letting the government record and
monitor every single transaction,”
another Coal Ministry official said.

17. 16 | PSE insights | JULY 2015
The NDA government is working
towards auctioning coal blocks for
commercial use after enactment of
Coal Mines Special Provisions Act
that provides for opening the sector
to Indian and foreign private firms,
ending Coal India’s monopoly. Prior to
this, Indian companies with end-use
plants were permitted to mine coal
for captive purposes.
COAL MINISTR Y TO RESER VE COAL
FOR AUCTION TO UNREGULATED
SECTORS
The Coal Ministry will reserve coal for
auction to unregulated sectors such
as steel and cement from Coal India’s
additional production every year so
that there isn’t any desperate bidding
by private firms in the upcoming
auction of coal supply contracts.
As per a draft model circulated for
stakeholders’ comments by the Coal
Ministry, separate bidding will be held
for cement, iron and steel, aluminium
and fertiliser plants.
As per the proposed mechanism, Coal
India will invite bids from companies
for supplying a fixed quantity of coal
at a floor price. Once bids are received,
the state-run miner will increase the
floor price till the demand and supply
reach the same level.
The proposed methodology is
among three options proposed by SBI
Capital Markets that was appointed
as the consultant for advising on
auctions of Coal India’s contracts. The
methodology is being used to derive
a market-driven price for the coal
contracts against the current system
of awarding the agreements based
on decisions of an interministerial
screening committee.
OIL MINISTR Y TO READY
ROAD MAP FOR SECTOR’S
INFRASTRUCTURE
With India’s demand for petroleum
products poised to grow at more than
3% annually and the country expected
to see average annual GDP growth
of 8-8.5% over the next several years,
the Oil Ministry has decided to roll out
a road map for development of the
sector’s infrastructure. This will include
decadal plans to meet demand till
2050.
This would be for the first time,
Petroleum Minister Dharmendra
Pradhan said, that his Ministry has
proposed a “long-term strategy
similar to developed nations” to
create infrastructure related to
transportation, marketing and
production of petroleum products to
be able to adequately meet demand
till 2050.
The ‘Vision Document 2050’, would
strategise the demand for petroleum
products and infrastructure in the
country for the next three decades.
One of the focus areas would be to
cut costs.
India, the fourth-largest energy
consumer in the world after the US,
China and Russia and accounting for
4.4% of global energy consumption,
would see highest oil demand
between 2013 and 2040, said
International Energy Agency’s World
Energy Outlook 2014. The country
is expected to see its demand for
petroleum products grow at a
compounded annual growth rate of
3.5%.
Moreover, with a positive outlook
from the government’s end to ramp
up investment in infrastructure,
including roads and railways, sales of
both passenger and utility vehicles
are expected to grow at 6-8% in the
current fiscal.
NEW POLICY LIKEL Y TO OPEN
PETROL PUMPS
With increased private participation
in retail sector appearing imminent,
the Ministry of petroleum is
contemplating to offer petrol pumps
on “self investment models” without
any outlay assistance from oil
marketing companies.
Under this new scheme, investments,
maintenance and running costs
will be done by dealer while the
Oil marketing companies (OMCs) –
IOCL, HPCL and BPCL – will mentor
successful bidders on facility and
equipments required, engineering
and list of vendors to fetch fuel, said
Ministry sources. Besides, the OMCs
will decide fuel and other product
prices offered at outlets to ensure that
customers are not taken for a ride.
Till now OMCs are operating more
than 50000 retail outlets all over the
country under different categories
– company-owned and company
operated (COCO), company-owned
and dealer operated (CODO) and
dealer-owned and dealer operated
(DODO).
PSE NEWS UPDATE

18. JULY 2015 | PSE insights | 17
The Ministry is mulling to add another
category in giving out retail outlets
to individuals and “legal entity” by
relaxing rules in the existing dealer
selection policy. This scheme will have
a provision for multiple dealerships
– which is an indication of opening
up of the retail sector for private
companies.
NATURAL GAS OUTPUT TO RISE
50% BY 2018-19
India’s natural gas output is likely to
rise by 50 per cent to 146.87 Million
Standard Cubic Meters per Day
(mmscmd) by 2018-19 on account of
higher production from ONGC fields,
Oil Ministry has said.
In its annual report, the Ministry has
said domestic gas production will rise
from 98.15 mmscmd in 2014-15 to
99.87 mmscmd in the current fiscal.
In 2016-17, the output will climb to
112.95 mmscmd and finally to 146.87
mmscmd in 2018-19. Bulk of the
incremental output will come from
state-owned Oil and Natural Gas Corp
(ONGC) which will see production rise
to 65.75 mmsmd in 2014-15 to 96.38
mmscmd.
ONGC production will include 4.66
mmscmd from New Exploration
Licensing Policy (NELP) block KG-
DWN-98/2 or KG-D5 in 2017-18 and
12.05 mmsmcd in 2018-19.
State-owned Oil India Ltd will see gas
production rise from 7.78 mmscmd last
fiscal to 10.96 mmscmd in four years.
The Ministry said output from fields
operated by private firms like Reliance
Industries is projected to rise from
24.62 mmscmd in 2014-15 to 39.53
mmscmd in 2018-19.
Demand, on the other hand, is
projected to increase by nearly 30
per cent to 523 mmscmd in 2018-19
from 405 mmscmd in 2014-15. Gas
demand is expected to climb 10
per cent in the current fiscal to 446
mmscmd.
India is world’s fourth largest
energy consumer with oil and gas
constituting about 37.24 per cent
of primary energy consumption.
“The world average primary energy
consumption growth rate (CAGR) for
2000-2013 has been 2.41 per cent, as
compared to Asia Pacific’s rate of 5.39
per cent and India’s rate of 5.52 per
cent,” the report said.
GREEN SIGNAL LIKEL Y FOR 42
STALLED PROJECTS WORTH Rs
1.15 LAKH CRORE
The Narendra Modi government
is gearing on the pedal to revive
the investment climate, facilitating
clearances for 42 stalled projects
worth Rs 1.15 lakh crore since it
presented the Budget for 2015-16.
In the previous nine months about
50 pending investment plans worth
Rs 1.45 lakh crore were granted
green signals through the Project
Monitoring Group (PMG) in the
cabinet secretariat. Highway projects
account for half of the 42 projects
whose pending clearances have been
resolved by the PMG in the three
months since the Budget.
Ten power generation and
transmission projects with
investments over Rs 72,000 crore have
also got the green signal.
Three oil and gas projects have also
got the nod, including Shell’s Rs 5,000
crore re-gasification plant in Kakinada.
Railway projects worth Rs 5,500 crore,
including the Patna Ganga Rail-Road
Bridge and a new 180 km rail line to
evacuate coal from Chhattisgarh’s
hinterland, are also now set for
implementation with all outstanding
nods secured.
Aditya Birla group firm Hindalco has
also secured permissions for a Rs
13,200 crore aluminium smelter plant
in Odisha’s Sambalpur district.
The PMG, set up by the UPA
in January 2013 to help stuck
investments, had cleared 155 projects
worth Rs 5.5 lakh crore in its first 16
months. Since the NDA came to
power in May last year, 91 projects
worth Rs 2.6 lakh crore have been put
back on track.
NO CENTRAL HELP TO DEBT-
RIDDEN STATE-RUN PO WER
DISCOMS: PI YUSH GO YAL
The government has ruled out the
possibility of a central package
for debt-ridden staterun power
distribution companies, and has
insisted that it’s time that they get
their act together. The combined debt
of all distribution companies was
around Rs 2 lakh crore as on March
last year, and despite most discoms
raising tariff, they haven’t really
managed to cut losses significantly.
They are, in fact, depending on loans
for even taking care of operational
expenses.
In the past, the central government
had introduced ‘restructuring
packages’ for discoms – the most
recent being 2013. What discoms
need to do is, set efficiency right,
eliminate corruption in the system,
reduce losses, cut transmission and
distribution losses. I need to handhold
them and put on my investment
banking hat to help them sort things
out,” Minister of Power, Coal and
Renewable Energy Piyush Goyal said.
The Minister added that the ‘onesize-
fits-all’ principle doesn’t work here.
“We have started dialogue with state
governments last year. The central
government, state governments and
outside experts are working together
for a 24x7 electricity plan by 2019 for
each state,” he said.
No state had signed new power
purchase agreements since 2013,

19. 18 | PSE insights | JULY 2015
and many continue to opt for load
shedding rather than buy power,
forcing the industry and commercial
outfits to depend on expensive power
from diesel generator sets. India has a
total installed capacity of 90,000 MW
of diesel generator sets, providing
power at upwards of Rs 20 a unit.
“We will eliminate consumption of
electricity through diesel generator
sets. This requires a lot of distribution
capacity augmentation and
improving transmission network.
We are also looking at changing the
existing transmission lines in parts
to double capacity,” Goyal said. The
Ministry plans to bid out contracts
worth Rs 1 lakh crore over the next
6-8 months to scale up transmission
infrastructure.
The recent coal mine auction and
bids for gas have given the sector
some relief and visibility to increase
generation. In the year ended March,
India added 22,566 MW of new
generation capacity, its highest ever
in a year. But these projects were
those which had been stranded or
stuck and thus delayed.
CENTRE PADS UP TO RAISE
RS 1-LAKH CR FOR PORT S &
INFRASTRUCTURE
Union Ministry of Shipping has chalked
out a plan to raise Rs 1-lakh crore to
develop ports, build ships and improve
inland waterways. The amount would
be raised in the dollar equivalent at an
interest of three per cent.
Gadkari said his Ministry is planning
to set up Ports Infrastructure
Development Finance Corporation to
fund ports and shipping infrastructure
in dollars. Inland waterways, ports
and shipping are on the top of
the agenda. The Centre is keen to
modernise large ports.
The Ministry has already taken
decisions to develop six ports,
including Rs 12,000 crore deep-water
Sagar port in West Bengal, Colachel in
Tamil Nadu, Rs 6,000 crore Vadhavan
port in Maharashtra, and Rs 1,200
crore Haldia dock 2. These ports
would be developed with 20 meter
draft. The handling capacity will be
more and the ports do not have to
annually spend money on dredging.
A port with 20 meter draft will also
help increase revenues. At present,
JNPT has to spend Rs 400 crore
annually on dredging.
GOVT PROPOSES TRIBUNAL FOR
PUBLIC CONTRACTS
To streamline the institutional
mechanism for resolution of disputes
arising from public contracts,
including public-private-partnership
projects, the government on June 18
released a draft Bill to set up a tribunal
for public contracts.
The Bill provides for the tribunal
to deal with disputes in the public
contracts exceeding Rs 5 crore. It
would deal with disputes relating
to execution of contract, specific
performance of the terms of the
contract, termination, cancellation,
repudiation and claims for damages
for breach of contract.
The tribunal has to conduct day-to-
day hearings and give final order
within 180 days from the date of
the application. Similarly, an arbitral
tribunal would be required to
announce its arbitral award within
120 days of referring the dispute to it.
The tribunal’s order will be binding on
all parties and can be challenged only
in the Supreme Court.
The Bill is part of the government’s
initiative to unclog stalled projects
that were holding back investments
worth several trillion rupees
and discouraging investors. The
government has envisaged $1 trillion
investment in infrastructure in five
years through FY17.
Acknowledging that disputes in
public contracts are costly and takes
a long process to resolve, Finance
Minister Arun Jaitley had proposed
the Bill in the Budget. According to
the draft Bill, the government would
constitute the tribunal for public
contracts with principal seat in
New Delhi and benches in Chennai,
Kolkata and Mumbai.
PSE NEWS UPDATE

20. JULY 2015 | PSE insights | 19
GOVERNMENT PLANS TO RAISE
NFL’S NANGAL UNIT CAPACITY BY
1.3 MT
The Fertiliser Ministry plans to increase
the capacity of National Fertilizer
Limited’s (NFL) plant at Nangal in
Punjab by 13 lakh tonnes (LT).
At present, NFL’s Nangal unit has an
installed capacity of 4.785 lakh tonnes
(LT )
“Government wants to produce more
fertilisers in the country and reduce
import dependence. The Ministry of
Chemicals and Fertilisers is working
on the Prime Minister’s ‘Make in India’
mantra and in this regard several
old and sick units are being revived,”
Minister of Chemicals and Fertilisers
Ananth Kumar said.
Besides reviving old units, new units
are also being set up, he added.
NFL has a total annual installed
capacity of 35.68 lakh tonnes and is
the second largest producer of urea in
the country.
GOVERNMENT EASES DEPOSIT -
TAKING, MANAGERIAL PAY
NORMS FOR FIRMS
Ushering in an easier set of
regulations, the government has
relaxed deposit-taking norms for
private companies and exempted the
Public Sector entities from managerial
remuneration restrictions.
The changes, which also include
relaxations for related party
transactions entered into by the
private companies under the
Companies Act, 2013, are part of
the government’s efforts to further
improve the ease of doing business in
the country.
The Corporate Affairs Ministry said
it has notified the changes that
broadly include easier compliance
requirements for private, government
and charitable companies.
Private firms can now provide a
shorter period for offering securities
to existing shareholders, approve
employee stock option plans through
a simple majority and follow “an easier
procedure” with regard to holding
general meetings.
“Private companies have also been
allowed to accept deposits from
members without the requirement of
offer circular and creation of deposit
repayment reserve etc. Flexibility has
also been provided in the types of
share capital that can be issued by
private companies,” the Ministry said
in a press release.
The mandatory consent of
shareholders for certain transactions
relating to sale of undertaking,
investments and borrowings etc. has
been done away with.
Among others, private companies not
having any investment by corporates
have been allowed to extend loans to
directors subject to certain conditions.
An interested private company
director has been allowed to can now
participate in board meeting after
declaring his interest.
For government companies, the
Ministry has done away with limits
on managerial remuneration as well
as restrictions on the maximum
number of directorships. Rules for
disqualification of directors in certain
cases have also been eased.
“The provisions relating to loans to
directors, loans and investments
by companies and related party
transactions have been modified to
provide flexibility to Government
companies in complying with such
provisions,” the release said.

21. 20 | PSE insights | JULY 2015
The Ministry has already made a
raft of changes to the Companies
Act, 2013 - whose most provisions
came into effect from April 1, 2014
– amid concerns raised from various
stakeholders. Besides, a committee
has also been set up to further review
the new law and suggest further
changes.
PSEs, CENTRAL DEPT S TO GET
RS1 CR PER MW TO SET UP SOLAR
UNITS
To boost the country’s energy
security, the government has
decided to give a push to solar power
generation by roping in Public Sector
units and Central departments and
Ministries. The government has
asked them to set up 1 MW solar
power plant each on their rooftops or
land for which they would be given
viability gap funding of Rs 1 crore per
MW.
The projects have to be implemented
by 2017 and the PSEs and Ministries
would be free to use the power
so generated for either self-use or
sell it to third party or discoms. The
incentives are being given under the
scheme to set up 1,000 MW of grid-
connected solar PV power project
to give fillip to generation of solar
power, which will help in promoting
ecological and sustainable growth
while meeting India’s energy needs.
The viability gap funding (VGF) will
be given in two tranches – 50 per
cent on successful commissioning
of the full capacity of the project and
the rest after one year of successful
operation of the project.
For encouraging domestic
manufacturers, the government
will give VGF of Rs 1 crore/MW if the
cells and modules are procured from
domestic source while it will give Rs
50 lakh/MW if only the modules are
procured from the domestic source.
The PSEs such as NTPC, NHPC,
CIL, IREDA, and Railways would be
allowed to participate in Central or
state government tenders from time
to time up to 2016-17 for selling
solar power to state utilities, discoms
or any other organisation. They
will also be allowed to sign power
purchase agreements and power sale
agreements with state utilities and
discoms at tariff determined by the
Central or state regulators.
The VGF will be provided through
Solar Energy Corporation of India
(SECI), which will be given a fee of
one per cent of the VGF disbursed for
handling the funds and managing the
scheme. However, if the project fails
to generate any power continuously
for any year within the 25 years or the
major assets are sold or the project is
dismantled during this tenure, SECI
will have a right to refund of VGF on
pro-rata basis.
The project falls under the Jawaharlal
Nehru National Solar Mission to
meet the energy demand and tackle
challenges of climate change. The
mission has set a target of deploying
grid-connected solar power capacity
of 20,000 MW by 2022 to be achieved
in three phases – first phase up to
2012-13, second phase by 2017 and
the third phase by 2022.
For encouraging domestic
manufacturers, the
government will give VGF
of Rs 1 crore/MW if the cells
and modules are procured
from domestic source while
it will give Rs 50 lakh/MW
if only the modules are
procured from the domestic
source.
PSE NEWS UPDATE

22. JULY 2015 | PSE insights | 21
Tie-Ups, Procurement & Contracts
AIR INDIA SEALS CODESHARE
ALLIANCE WITH AIR NE W
ZEALAND, AVIANCA
Providing a seamless connectivity
to its passengers bound for New
Zealand and Colombia, national
carrier Air India has sewed up a
codeshare alliance with Air New
Zealand and Avianca.
The two partnerships were sealed
during the 71st Annual General
Meeting of the International Air
Transport Association in Miami, in
June this year.
Both Air New Zealand and Avianca
are part of the global airlines group
Star Alliance, of which Air India is also
a member.
Code-sharing allows an airline to
book its passengers on its partner
carriers and provide seamless
transport to multiple destinations
where it has no presence.
Under the codeshare agreement
with Air New Zealand, Air India will
place its code on Air New Zealand’s
services from Melbourne, Sydney,
Hong Kong and Singapore to
destinations in New Zealand, Air
India said.
The state-run carrier would also
codeshare on Air New Zealand’s
domestic network.
In turn, Air New Zealand will place
its code exclusively on Air India’s
services to Delhi from Sydney,
Melbourne, Hong Kong, Bangkok and
Singapore.
In addition, Air New Zealand will
gain access to six points of call in
India – Mumbai, Kolkata, Hyderabad,
Chennai, Bangalore and Cochin apart
from Delhi, the airline said.
As part of its codeshare partnership
with the Colombian national airline,
which is a free flow pact, Avianca
would codeshare as a marketing
carrier on Air India operated flights
on the Delhi-New York and Delhi-
London sectors and Air India would
code share as a marketing carrier on
Avianca operated flights on the New
York-Bogota/Medellin/Cartagena and
London-Bogota sectors, the airline
said. The code share agreement with
Avianca is subject to flinalisation of
an Air Services Agreement between
India and Colombia and other
regulatory approvals.
The agreement will enable both
airlines to get additional feed from
each other’s network as it would
enable Air India to reach out to the
South American market.
The agreement means better
connecting times, seamless travel,
more travel options and more
competitive fares for passengers
traveling between both carriers’
home markets, for which Air India
and Avianca are the premier carriers,
Air India said.
HAL-TURBOMECA SIGN JV IN
PARIS FOR RS 200-CRORE MRO
FACILITY FOR HELICOPTER
ENGINES
Hindustan Aeronautics Ltd (HAL) has
signed an agreement with French
engine manufacturer, Turbomeca,
to support the redoubtable Shakti
helicopter engine, which would
power a fleet of 1,000 Indian military
choppers during the coming decade.
HAL’s joint venture (JV) with
Turbomeca, long in the making,
would support the Bengaluru-
headquartered aerospace company’s
ambitious vision of becoming a
helicopter production giant. India’s
military has already committed to
buying three different types of HAL
helicopters, all powered by the Shakti
engine that Turbomeca custom-
designed for HAL. Optimised to fly
at extreme altitudes of up to 6,000
metres (almost 20,000 feet), the
Shakti engine supports Indian army
troops deployed on the Himalayan
watershed.
An HAL release announced that the
new JV would provide maintenance,
repair and overhaul (MRO) support
for the Shakti engine, as well as for
the Turbomeca TM333 engine that
was initially fitted on the Dhruv
ALH while the Shakti was being
developed.
BEML RECEIVES RS 645 CR ORDER
FROM DELHI METRO
Defence PSE BEML has received an
order worth Rs 645 crore from Delhi
Metro Rail Corporation for supplying
74 broad gauge coaches.
DMRC signed a contract agreement
with BEML for design, manufacture,
supply testing and commissioning of
the coaches. BEML has forayed into
manufacture and supply of metro
cars in 2002 and is the reliable Make
in India partner in Metro Rolling
Stock.
BEML has supplied so far more than
600 metro cars or coaches to DMRC
and 150 units to Namma Metro of
Bengaluru for its Phase I.
The defence PSE claims that it has
emerged as the preferred metro
coach manufacturer in the country
to encash upon the emerging
opportunities in the Metro segment.
HAL, BEL JOIN HANDS TO MEET
DEFENCE NEEDS
Defence PSEs HAL and BEL have
signed an agreement to share their
expertise in design, development,
engineering and manufacturing

23. 22 | PSE insights | JULY 2015
to develop and produce advanced
airborne communication equipment
to meet the requirement of the
defence services.
Hindustan Aeronautics Limited and
Bharat Electronics Limited have
agreed to share the business from the
Indian defence services.
HAL has the expertise in design,
development, engineering,
manufacture of airborne
communications equipment and
BEL in communications and secrecy
products and solutions.
NTPC-JKSPDCL TO DEVELOP
COAL BLOCK IN JOINT VENTURE
State-run NTPC said, it has entered
into an agreement with Jammu and
Kashmir State Power Development
Corporation Ltd (JKSPDCL) to form a
joint venture company for mining at
Kudanali-Luburi coal block in Odisha.
NTPC and JKSPDCL will share equity
in the ratio of 67:33 in the joint
venture company for undertaking
exploration, development and
operation of jointly allocated
Kudanali-Luburi coal block by Coal
Ministry to them.
Earlier, a Power Ministry statement
had said that a joint venture
agreement between NTPC-JKSPDCL
was assigned for development of
coal mine for power generation.
According to the statement, the
agreement was signed during a
review meeting over power sector
of Jammu and Kashmir, which was
presided over by Power Minister
Piyush Goyal, on Monday. During
the meeting, Goyal had promised all
help from the central government
for expeditious development of
conventional and non-conventional
energy sources of the state.
US-BASED EMERSON TO PRO VIDE
AUTOMATION SOLUTIONS FOR
NTPC’S ORISSA UNIT S
US-based engineering company
Emerson will be providing
automation technology and
expertise for two new 80 MW
supercritical generating units of NTPC
at the Darlipali Super Thermal Power
Station in the Sundergarh District,
Odisha, India.
The first unit at the power plant
would be commissioned by
December 2017 while the second
unit would be done three months
after that. Emerson project teams
will engineer, install and commission
Ovation systems to monitor and
control each unit’s supercritical
boiler and critical balance-of-plant
processes and equipment.
“Supercritical technologies boost the
efficiency of coal-based electricity
generation while reducing carbon
and other emissions, but the high
temperatures and pressures involved
make them more challenging to control.
Emerson has earlier worked with
NTPC to automate units at the Sipat,
Simhadri, and Tanda power stations
and is currently carrying out projects
at several other sites.
COAL INDIA NEEDS MORE
CLARITY TO DETERMINE
E-AUCTION VOLUME
Even though Coal India(CIL) has been
allowed to revert to the old system
of removing the cap on e-auction
volumes with effect from April 2015,
in the absence of a specific guideline
from the Ministry, the state-owned
miner is in a fix over determining
the volume to be sold via e-auction
route.
The e-auction volume is key to CIL,
as its profitability to a large extent is
dependent on the realisation from
e-auction sales. While a small part
of overall volumes, e-action sales
contribute 35-40 per cent of total
Ebitda (earnings before interest,
taxes, depreciation and amortisation).
Hence, higher e-auction volumes
would mean higher profitability in
the coming quarters.
The standard practice as interpreted
by Coal India is 8-10 per cent of the
total sales. But out of total sales of
471.58 million tonnes (MT) in 2013-
14, a total of 58 MT of coal or 12.29
per cent was sold by CIL through
e-auctions which prompted the
Ministry to put a cap on the volume,
which has now have been removed.
PSE NEWS UPDATE

24. JULY 2015 | PSE insights | 23
MCL FLOAT S SECOND TENDER
FOR 10 MT COAL WASHERY
Mahanadi Coalfields Ltd, a subsidiary
of Coal India, has floated an online
tender seeking participation of
interested parties to set up a 10
million tonne (mt) per annum coal
washery at Talcher.
This is the second online tender by
the coal company for establishment
of coal washery. MCL, which plans to
set up five coal washeries in the state,
had floated the previous tender for
another washery on May 29 this year.
The washeries are to be set up under
build operate and maintain (BOM)
concept, where a bidder has the
liberty to choose the technology
keeping in mind the project cost and
return on investments. As per the
tender rules, the operator will have
to establish and operate the plant at
least for 10 years.
COAL MINISTR Y INVITES BIDS
FOR THIRD ROUND OF AUCTION
The government on June 8 kick-
started the process for auction of
10 coal blocks in the third tranche,
inviting bids from companies
engaged in sectors like steel, cement
and captive power generation.
“The government of India has
directed the Nominated Authority
to undertake the auction of 10
identified schedule II & III coal mines
to eligible companies. Accordingly,
bids were invited from eligible
companies for shortlisting of qualified
bidders,” the Coal Ministry said in a
notice inviting tender.
“Qualified bidders will be allowed to
participate in the auction for the coal
mines,” the Ministry said.
Government said that it will auction
10 coal mines with reserves of 858.19
million tonnes for steel, cement as well
as captive power plants and the process
will be completed by August end.
The government has so far auctioned
29 coal blocks in two tranches to
private companies and garnered
over Rs 2 lakh crore, surpassing CAG’s
loss estimates of Rs 1.86 lakh crore
in allotment of mines earlier without
auction.
Of the total estimated geological
reserves, these mines have
extractable coal of about 356.245
million tonnes and are located in
Maharashtra, Jharkhand, Chhattisgarh
and Odisha.
Coal Secretary Anil Swarup had said
that the government will execute
agreements with successful bidders
by August 31.
Under schedule II category
(producing) mines, two will be
auctioned, while in the schedule III
(ready to produce) eight mines will
be put on offer.
The two mines in schedule II
category are MarkiMangli-I mine in
Maharashtra and Parbatpur-Central
mine in Jharkhand. Both are explored
blocks having extractable reserves of
62.12 million tonnes.
The eight mines in the schedule
III category are Dongri Tal-II mine
(Madhya Pradesh), KosarDongergaon
(Maharashtra), Margi Mangli-IV
(Maharashtra), Majra (Maharashtra),
Chitarpur (Jharkhand), Bhaskarpara
(Chhattisgarh), Sondiha
(Chhattisgarh) and Jamkhani
(Odisha).
INCREASE PRODUCTION, RAMP
UP EXPLORATION: DHARMENDRA
PRADHAN TO ONGC
Petroleum Minister Dharmendra
Pradhan, who did a detailed review
of India’s flagship explorer ONGC on
June 6, saw several “improvement
areas” and asked the state-run firm to
work towards increasing hydrocarbon
output and expanding exploration
activity.
ONGC has set an ambitious target of
drilling about 1.74 Million Tonne (MT)
incremental crude oil and 2.98 Billion
Cubic Metres (bcm) of additional
natural gas in FY16. It produced 22.26
mt crude in FY15, marginally higher
from the previous year’s 22.25 mt.
Gas output was 22.02 bcm, less than
23.28 bcm in the previous year.
“The chunk of production is coming
from Western offshore. It is a tough
job to take out hydrocarbon from
offshore assets, which ONGC has
been doing for decades. In future,
incremental oil and gas would come
from the same region,” Pradhan
explained.
Currently, 34.5% of ONGC’s crude
production comes from improved
and enhanced oil recovery schemes.
This means extra efforts are being
put in to extract hydrocarbon from
ageing fields, which naturally see
a decline in output. Another 13.1%
hydrocarbon is drilled from new
fields.
ONGC had taken up 15 projects,
worth Rs 38,602 crore, for
monetisation of 39 new and marginal
offshore fields. Of this, nine have
been completed, which produced
2.74 mt crude (13.8% of ONGC’s
production) and 3.35 bcm natural gas
(15% of its gas output) in FY15.
ONGC is working on six major
field development and three
redevelopment projects with an
investment of Rs 41,678 crore. Of
this, Rs 24,188 crore is towards
development projects including
Daman, Vasistha & S-1, Bassein, Vasai,
Gamij and Nagyalanka. Another
Rs 17,490 crore is for three re-
development projects – the third
phase of Mumbai High North and
South and Heera-South.
Dinesh K Sarraf, CMD, ONGC, said
efforts were being made to achieve
the target for the current fiscal.
Meanwhile, if some opportunities
come up that could immediately
add to incremental production, they
would be explored. “The government
is supportive, which gives the push
and encouragement for ONGC to do
more,” Sarraf said.

25. 24 | PSE insights | JULY 2015
RINL IN TALKS WITH ODISHA
GOVT, NMDC
Rashtriya Ispat Nigam Ltd is in the
process of becoming a partner with
the Odisha Government and NMDC
Ltd in two projects – one for mining
iron ore and the other for a greenfield
steel plant.
RINL has been designated as the ‘lead
player’ in these two Odisha projects.
Following up a proposal mooted by
the Centre, the public sector steel
major was currently negotiating with
Odisha Government and NMDC, said
RINL CMD P Madhusudan.
RINL CMD mentioned that the
proposed SPV for mining will have
Odisha Mining Corporation Ltd
(OMC) as RINL’s partner along with
NMDC.
In the SPV for the proposed steel
plant, the Industrial Development
Corporation of Odisha Ltd (IDCOL)
will represent the State Government’s
interest.
RINL hoped to sign the MoU soon.
“The MoU will spell out the capacity
of the proposed steel making project.
As the State agency, OMC will
facilitate allocation of mines to the
SPV,” Madhusudan said.
IDCOL, as a partner, would take care
of the land and the related linkages
for the steel project, he indicated.
BALMER LA WRIE AND CGDA
LAUNCHES AIR TRAVEL PORTAL
FOR ARMED FOR CES
An Air Travel Module, developed and
implemented by Balmer Lawrie and
Co. Ltd. in the Defence Travel System
(DTS), was launched as an additional
facility for Armed Forces personnel by
Mr. Arvind Kaushal, IDAS - Controller
General of Defence Accounts (CGDA)
and Mr. Viren Sinha, C&MD (Balmer
Lawrie & Co. Ltd.) on 28th May 2015
in New Delhi. The Defence Travel
System which was developed in
2009 provided the facility of booking
railways tickets only. Senior officers
representing both the organisations
were present during the launch.

BHEL GET S LARGEST-EVER ORDER
WORTH RS 18,000 CRORE FROM
TSGENCO
Bharat Heavy Electricals Limited
(BHEL) secured the largest order
in its history for setting up a 4,000
megawatt (5x800 MW) super-
critical thermal power project from
Telangana State Power Generation
Corporation (TSGENCO). The order is
valued at Rs 17,950 crore.
The company in a statement said this
is also one of the highest value orders
ever placed in the capital goods
sector in India.
In December 2014, TSGENCO placed
an order for setting up Telangana’s
first super-critical thermal power
plant of 800 MW to BHEL, followed
by an order for the 4x270 MW
Bhadradari thermal power station at
Manuguru in Khammam district in
March 2015.
BHEL’s scope of work in the project
would include design, engineering,
manufacture, supply, construction,
erection, testing and commissioning
of 5x800 MW thermal sets on
engineering, procurement and
construction (EPC) basis.
“The key equipment for the contract
will be manufactured at BHEL’s
Trichy, Haridwar, Hyderabad, Bhopal,
Ranipet, Bangalore and Jhansi
plants, while the company’s power
sector construction division will
be responsible for civil works and
commissioning of the equipment,”
said the company’s statement.
To overcome the uncertainty of coal
supply, BHEL said it shall be supplying
its in-house developed fuel flexible
boiler, which is capable of firing the
entire range, from 100 per cent Indian
to 100 per cent imported mix of coal.
This will provide security against
variation in design coal and the coal
actually available during operation,
thereby offering operational flexibility
to ensure uninterrupted generation
of electricity.
Apart, amid a rigorous bidding
process, top public sector company
Bhel has bagged a Rs369 crores
contract for revival of NTPC’s power
plant in Barh in Patna, officials said on
Monday. The contract has been given
for supply and installation of the
Power Cycle Piping (PCP) package
for the Barh Thermal Power Project
- Stage-I (3x660 MW) of NTPC in Bihar.
IWAI, CANARA BANK
DEVELOPING MODEL TO ATTRACT
INVEST MENT IN INLAND WATER
VESSELS
The Inland Waterways Authority
of India (IWAI) is working with
Canara Bank to develop models
to incentivise entrepreneurs to
invest in inland water vessels. “The
proposal is at an advanced stage of
consideration by the government,”
said Amitabh Verma, Chairman, IWAI.
Canara Bank, in a study, has pointed
out that there are positive cash flow
options in case the government
subsidises vessel costs by 10-15 per
cent for inland waterways, said Ajit
Kumar Das, Deputy General Manager,
Canara Bank.
Meanwhile, marking one year
of the NDA government, the
Shipping Ministry said it is working
on a proposal to develop 300
lighthouses and 1,100 islands as
tourist destinations. “The Prime
Minister asked us to develop 300
lighthouses and 1,100 islands as
tourist destinations. We have made
that a part of the Cabinet note,” said
Nitin Gadkari, Minister of Shipping,
Road Transport and Highways.
He also said that Cochin Shipyard Ltd
was working on the first model of a
hovercraft that can operate on land
and water for a cost of Rs. 5 crore,
instead of Rs. 50-60 crore.
PSE NEWS UPDATE

26. JULY 2015 | PSE insights | 25
Project Updates
SAIL PREPARES FEASIBILIT Y
REPORT FOR TELANGANA
PROJECT
Steel Authority of India Limited (SAIL)
has prepared a feasibility report
and carried out site inspection and
market analysis for a proposal to
set up a 3-million tonne capacity
integrated steel plant in Telangana.
GSI and MECL, two government
organisation under the Ministry
of Mines, can assist the state in
assessing its mineral resources for
revenue generation, according to an
official statement.
Preferential treatment to Vizag
Steel (RINL) products needed
for infrastructure and industrial
development in the state and,
allotment of land to Vizag Steel
in Warangal for better reach and
distribution in Telangana were
discussed.
BPCL TO GO AHEAD WITH BINA
REFINERY EXPANSION SANS
OMAN OIL COMPANY IN MADHYA
PRADESH
With Oman Oil Company reluctant to
put more money, Bharat Petroleum
Corp Ltd has decided to fund the Rs
18,000-20,000 crore expansion of the
Bina refinery in Madhya Pradesh on
its own.
Bharat Petroleum Corp (BPCL), India’s
second-biggest state refiner, plans
to raise Bina refinery capacity to 15
million tons in two phases - to 7.8
million tons a year from current 6
million tons at a cost of Rs 3,500 crore
by 2018 and then to 15 million tons
at an additional investment of Rs
18,000-20,000 crore in 5-6 years.
Oman Oil Company (OCC), which
holds 26 per cent stake in the Bharat
Oman Refineries (BORL) - the firm
that built the refinery, is willing
to participate in the first phase
expansion but not in the second
phase, a top official said.
The BORL was formed as an equal
joint venture company way back in
1993. However, following inordinate
delays in the implementation of the
project, OOC froze its investment in
the company at Rs 75 crore for a two
per cent equity stake.
BPCL, which holds 49 per cent
stake in the project, provided
the unbridged portion of the Rs
4,000-crore equity in form of loan.
The state-run firm got its loan back
once OOC made payments for its 26
per cent share.
The remaining 25 per cent is
with financial institutions. BPCL
also operates a 12 million tons a
year refinery at Mumbai and 9.5
million tons Kochi unit. It also has
majority stakes in the 3 million tons
Numaligarh refinery in Assam.
The official said BPCL is expanding
and upgrading its Kochi refinery in
Kerala to process high sulphur crudes
by 2016. Kochi refinery capacity is
being raised to 15.5 million tons from
current 9.5 million tons.
NTPC PLANNING 3,000 MW
CAPACITY ADDITION AT TALCHER
State-owned NTPC said on June
11 Talcher in Odisha will become a
power hub with the PSE planning
around 3,000 MW of capacity
addition there.
“Talcher Thermal Power station we
are planning to add 1,320 MW. In
super thermal power station we are
planning to add another 1,600 MW.
So what will essentially happen is that
in that area itself there will be almost
3,000 MW of capacity addition, so it
will become a power hub in Odisha,”
NTPC Chairman and Managing
Director Arup Roy Choudhury said.
NTPL TUTICORIN TO COMMISSION
FIRST 1000-MW PO WER UNIT
The first 500-MW unit of coal-
based NTPL thermal power plant
of NLC Tamil Nadu Power (NTPL) in
Tuticorin has qualified for commercial
operations.
NTPL, a joint venture company of NLC
(89 per cent) and Tangedco (11 per
cent), is establishing a 1,000-MW (2
units of 500 MW) coal-based thermal
power plant at Tuticorin, Neyveli
Lignite Corporation.
The pre-commissioning activities
in Unit II of this plant are nearing

27. 26 | PSE insights | JULY 2015
completion and this unit will also be
ready by July.
MRPL COMMISSIONS
POLYPROPYLENE UNIT
Mangalore Refinery and
Petrochemicals Ltd (MRPL), an
ONGC company, has commenced
commercial production of
Polypropylene from its Polypropylene
(PP) Plant as part of its phase-III
refinery expansion and upgradation
project on June 18. The plant has
capacity to produce 440,000 tonnes
per annum of polypropylene, it said.
The feedstock for the Polypropylene
plant, polymer grade propylene,
is being produced from upstream
Petrochemical Fluidised Catalytic
Cracking Unit (PFCCU). The
technology-provider for the
Polypropylene Plant is Novolen of
Germany and the plant has been
engineered and constructed by
Engineers India Ltd, a Navaratna
CPSE.
HYDEL PO WER PUSHES NTPC
INTO GLOBAL BIG LEA GUE
State-run NTPC has switched on an
800 MW hydel plant to join a select
group of global peers who span
the entire fuel chain – coal, gas,
hydro power and renewables – for
generating greener electricity.
Last month, the country’s largest
fossil fuel-based generation utility
quietly switched on the last of the
four 200 MW units of its first hydel
project in Bilaspur district of Himachal
Pradesh, roughly 145 km before the
tourist destination of Manali.
The development marks fulfillment
of a vision, the seeds of which were
sown by then Chairman C P Jain
during early parts of the 2000-2002
period. The hydel foray is part of
NTPC’s diversification plan to widen
fuel base.
BHEL START S NTPC’S 800-MW
KOLDAM H YDRO PO WER PLANT
State-owned BHEL said it has
commissioned NTPC’s 800-MW
Koldam hydro power project in
Mandi district of Himachal Pradesh.
The Koldam project is capable of
generating approximately 3,054 GWH
annually.
All the four units have been
commissioned within a short span
of just 75 days, starting with the
commissioning of the first unit on
March 30, 2015.
Other than Koldam, the other
three hydro projects of NTPC being
executed by BHEL are Tapovan
Vishnugad HEP (4x130 MW), Lata
Tapovan HEP (3x57 MW) and
Rammam Stage-III HEP (3x40 MW).
ONGC INTRODUCES HF
TECHNOLOGY IN TRIPURA
Oil & Natural Gas Corp (ONGC) in
Tripura has undertaken hydro-
fracturing in Khubal to assess the
actual reserves of the field and in
Baramura to enhance production from
tight sands.
According to ONGC, the job involved
intricate coordination to get domain
experts, machine and chemicals from
various regions of the country apart
from understanding the reservoir
characteristics and geology of the
region. Hydro-fracturing units, high-
capacity storage tanks, Proppant
(special sand particles) and chemicals
for the work were mobilised
from six different assets of ONGC:
Ahmedabad, Karaikal, Rajamundry,
Bokaro and Assam.
ONGC said it made discovery of
commercial gas in the Khubal area in
February 2009. It completed drilling
of seven exploratory-cum-appraisal
wells out of which 2 are gases-
bearing, the state-run explorer said.
THREE OF NHPC’S FOUR STALLED
PROJECTS REVIVED
NHPC, the state-run hydroelectric
power producer, which has often
got stuck with environmentally
sensitive projects, may be on the
cusp of turning a new leaf on the
back of progress made on three out
of its four stalled projects and higher
power generation in FY15.
Out of the four under-construction
projects, Teesta Low Dam-IV,
Parbati-II and Kishanganga, with an
aggregate capacity of 1,290 MW,
have seen definitive progress towards
commissioning. While the geological
issues of tunnelling has been solved
for Parbati-II and work is likely to start
this month, work on Teesta Low Dam-
IV also resumed in November and
is likely to be commissioned in the
next fiscal year. Although Subansiri
Lower, with a capacity of 2,000 MW,
still faces headwinds from activists,
Kishanganga project in J&K is slated
for commissioning in FY 17.
INDIAN OIL CORPORATION
BEGINS WORK ON 4 MW
SOLAR PO WER PROJECT IN
NAGAPATTINAM
Indian Oil Corporation Limited (IOCL)
has commenced construction work
on its proposed 4 MW solar power
project at Muttam village in the
district.
Commencing the construction work
with a ‘bhoomi pooja’, Nagapattinam
District Collector S Palanisamy said
IOC was setting up the plant at a cost
of Rs 31 crore on 20 acres of land.
IOC has entrusted the construction
work to Tata Power Solar Systems
Limited, he said.
The Collector said IOC was setting
up the project with the objective of
generating green energy so as to
reduce carbon footprint.
PSE NEWS UPDATE

28. JULY 2015 | PSE insights | 27
In addition to meeting the power
consumption needs of IOC installation
here, the power produced from the
solar plant will help Muttam and
nearby villages of the district, he said.
CAPACITY OF INDIANOIL ’S
PANIPAT REFINER Y TO BE RAISED
TO 20.2 MMTPA
India’s largest refiner IndianOil will
expand refining capacity of its state-
of-the-art Panipat Refinery to 20.2
mmtpa. This was disclosed at the
first maiden visit of the State Minister
for Petroleum & Natural Gas ( I/C)
Dharmendra Pradhan to the refinery
on June 7.
Krishan Lal Panwar, (MLA), M P
Dhanda (MLA), Sandeep Poundrik,
Joint Secretary (Refineries), Ministry
of Petroleum & Natural Gas, B Ashok,
Chairman, Sanjiv Singh, Director
(Refineries), Debasis Sen, Director
(Planning & Business Development),
IndianOil, T K Basak, ED(I/c) - Panipat
Refinery & Petrochemical Complex
were also present on the occasion.
While appreciating performance of
the refinery, particularly its capacity
utilisation and energy management,
Pradhan emphasised the need for
effective integration of refinery
operations with Petrochemicals and
their positive contribution to develop
downstream industries in the region.
Panipat Refinery commissioned in 1998
with refining capacity of 6.0 mmtpa
had its first expansion of 6.0 mmtpa
in 2006. The capacity of 3.0 Mmtpa
was added in 2010. The proposed
expansion of refining capacity from
15.0 mmtpa to 20.2 mmtpa is being
planned at a cost of Rs 15
ARCELORMITTAL -SAIL PLANT
PROJECT REPORT BY AUGUST
A Detailed Project Report (DPR) on
the proposed Rs 5,000-crore steel
plant to be set up under a Joint
Venture (JV) between ArcelorMittal
and state-run SAIL will be completed
by August.
Last month, the world’s largest steel-
maker and domestic steel giant inked
a pact to jointly set up a steel plant
in India to cater to the fast growing
automotive sector.
FCI SILO PROJECT FETCHES
RESPONSE FROM 21 FIRMS
The Food Corporation of India’s (FCI)
attempt to create state-of-the-art
foodgrain storage facilities, ‘silos’,
through private sector participation
has evoked interest among various
companies.
Sources said 21 private players,
including Adani Agri Logistics, LT
overseas and OM Metals, have
evinced interest in setting up silos on
behalf of FCI at six locations spread
across Punjab, Delhi, Bihar, Assam and
Karnataka.
Silos with a capacity of 50,000
tonne each at four locations and
25,000 tonne grain capacity each
at two locations would be created
through private sector participation
at Sahnewal and Kotkapura (Punjab),
Narela (Delhi), Katihar (Bihar), White-
field (Karnataka) and Changsari
(Assam).
Sources also said that in all 92 tenders
have been received from various
private sector companies. At present
the tenders are being evaluated by
the FCI.
BHARAT ELECTRONICS
EMBARKS ON RS 2,000 CRORE
MODERNISATION DRIVE
Government-owned Bharat
Electronics Limited (BEL) is embarking
on an expansion-cum-modernisation
drive to explore new areas in the
defence and non-defence sectors.
In the next four to five years, the
company plans to invest at least
Rs 2,000 crore, to equip itself for new
business opportunities.
“In the past five years, non-defence
business has been 17 per cent of
the overall business and we plan to
increase this share in the coming
years,” said S K Sharma, Chairman and
Managing Director.
Some of the areas identified in
defence are SAM systems, electronic
ammunition fuses, satcom terminals,
LTE, Gigabit passive optical network,
routing and switching products, he
said. In non-defence, infrastructure
protection, air traffic management
radar, intelligent traffic management
systems, solar power plants and
smart city elements are being
focused on, he added.
BEL is planning to set up a Rs
500-crore weapon systems facility
in Andhra, covering design,
development and production. It is
expected to be ready in two years,
said Sharma. Land acquisition is on in
Ananthpur district, he said.

29. 28 | PSE insights | JULY 2015
Operation Highlights
INDIA’S CRUDE OIL OUTPUT RISES
0.8% IN MAY
India’s crude oil production rose
marginally by 0.8 per cent in May on
the back of improved performance
by state-owned Oil and Natural Gas
Corp (ONGC).
Crude oil production at 3.18 million
tons in May was 0.8 per cent
more than 3.16 million tons in the
same month a year ago, an official
statement issued here said.
The increase was on account of 1.8
per cent rise in ONGC’s oil output at
1.9 million tons. Its western offshore
fields produced 8.5 per cent more
crude oil at 1.3 million tons and
helped tied over a 9 per cent drop in
onshore output at 0.48 million tons.
However in April-May, the first two
months of the current fiscal, the
nation’s crude oil production dipped
1 per cent to 6.05 million tons. While
ONGC produced 1.7 per cent more
crude oil at 3.71 million tons, fields
operated by private firms saw a 6.3
per cent dip at 1.92 million tons.
Natural gas production declined 3.1
per cent in May to 2.85 billion cubic
meters as ONGC saw dip in output.
ONGC saw gas output dip by 1.8
per cent to 1.9 bcm while eastern
offshore production dropped 8.9 per
cent to 403.16 million cubic meters.
“Restricted gas withdrawal by GAIL
in view of safety issues of GAIL’s
pipeline” was the reasons for lower
output from eastern offshore fields,
the statement said.
In April-May, India’s gas production
decreased 3.3 per cent to 6 bcm.
ONGC’s output was down 1.7 per
cent at 3.67 bcm.
SAIL AIMS TO PRODUCE 50
MTPA OF STEEL BY 2015, SA YS
NARENDRA SINGH TOMAR
Public sector company Steel
Authority of India Limited (SAIL) has
set a target to produce 50 Million
Tonnes Per Annum (MTPA) of steel
by 2025 at an estimated investment
of Rs 1,50,000 crore, Union Minister
for Steel and Mines Narendra Singh
Tomar said.
SAIL’s steel plants are being expanded
from a capacity of 13 MTPA to 23
MTPA, at an investment of Rs 61,000
crore. The long term plan is to take
SAIL’s capacity upto 50 MTPA by 2025,
at an estimated investment of Rs
1,50,000 crore, the Minister said.
Last year, the Ministry placed a special
emphasis on timely completion of
modernisation and expansion of
public sector companies under the
Ministry of Steel.
On April 1, 2015, the Prime Minister
dedicated the modernised and
expanded steel plant of SAIL in
Rourkela to the nation.
The Ministry has also set up a Steel
Research and Technology Mission of
India at an initial allocation of Rs 100
crore which will be augmented by
another Rs 100 crore contributed by
private sector companies, in order to
enhance research and development
in the steel sector, he said.
In order to enhance steel production,
and encourage the ‘Make In India’
initiative in the steel sector, a Special
Purpose Vehicle (SPV) is dedicated
to the steel industry. In the first
phase, there are plans to establish
steel plants through the SPV route in
Chhattisgarh, Odisha, Jharkhand and
Karnataka.
HAL HANDS O VER
CHANDRAYAAN-2 COMPONENT
Public sector plane-maker Hindustan
Aeronautics Limited (HAL) has
delivered ‘Orbiter Craft Module
Structure’ of Chandrayaan-2 to the
ISRO Satellite Centre (ISAC).
Chandrayaan-2 is a two-module
configuration spacecraft comprising
of the ‘Orbiter Craft’ and the ‘Lander
Craft’.
“The Orbiter Craft Module structure is
a three-tonne category bus structure
made out of a central composite
cylinder, shear webs and deck panels,”
CMD of Hindustan Aeronautics
Limited T. Suvarna Raju said.
The Chandrayaan-2 mission is aimed
at placing an orbiter around the
moon and sending a lander and
rover to the surface of the moon. It
will be launched by a Geo-Stationary
Satellite Launch Vehicle (GSLV-MKII).
HAL’s association with ISRO’s space
programme dates back to the early
1970s, when HAL provided technical
inputs and manufacturing support
to ISRO for realisation of light alloy
structural assemblies for satellites and
launch vehicle.HAL has a division at
Bengaluru totally dedicated to cater
to ISRO’s growing requirement.
PSE NEWS UPDATE

30. JULY 2015 | PSE insights | 29
AIR INDIA TO DRY LEASE 14
AIRBUS A320 PLANES FROM
KUWAIT
National carrier Air India would dry
lease 14 Airbus A320 planes from a
Kuwaiti lessor as it seeks to replace its
ageing narrow-body fleet with new
fuel efficient planes.
The carrier plans to replace 19 A320
planes. It has already entered into
a deal with a Chinese firm for five
sharklets-equipped A320 (ceo-
current engine option) aircraft.
For these five planes, it has tied up
with independent Chinese lessor
China Aircraft Leasing Company,
which has already delivered one
plane in early February. The rest four
are to be inducted by October this
year.
Under the 14-plane deal with new
engine option (NEO), which was
inked recently after months of
evaluation, a Kuwaiti aircraft leasing
firm would deliver A320s between
April 2017 and March 31, 2018.
CIVIL A VIATION MINISTR Y TO
REVIEW AIR INDIA TURNAROUND
PLAN
The Union Civil Aviation Ministry
has asked SBI Capital Markets to
review the turnaround plan of
government-owned Air India (AI),
with the changes in the operating
environment and the airline’s inability
to reduce loss.
For 2014-15, the airline is expected
to see a consolidated net loss of
Rs 5,400 crore, the same as 2013-
14, despite substantial savings in
the fuel bill. However, those gains
have been offset by lower than
expected revenue and an increase in
engineering and maintenance costs,
and lease rents.
The airline’s accounts are yet to
be audited and the profit and loss
figures are provisional.
AI is also facing increasing
competition from both no-frills
and full-service airlines on the
domestic and international routes.
The turnaround plan approved in
2012 also did not contemplate the
Jet-Etihad alliance and proposed
relaxation of the government’s norms
on international flying, two factors
which will impact AI growth. Also,
the plan needs a review with the
fluctuations in currency rates and fuel
prices, an AI executive said.
By the provisional numbers, while
capacity deployed and passenger
revenue grew nine per cent to Rs
15,450 crore, this was about Rs 500
crore lower than the expectation. The
revenue was lower despite increasing
passenger feed from Star Alliance
partner airlines. Total revenue,
including income from charters,
cargo and Haj flights, is pegged at Rs
19,500 crore.
The airline spent Rs 8,400 crore on
fuel as against an initial budget
estimate of Rs 9,600 crore. The daily
spending on this has reduced to
about Rs 18 crore from Rs 27 crore
earlier, due to lower jet fuel prices.
FOREIGN AIRLINES TO TAKE AI
ON BOARD FOR EXPANDING IN
INDIAN MARKET
At least 14 foreign airlines are in
advanced talks with national carrier
Air India (AI) for stitching code-share
agreements that would help them
grab a pie of the lucrative Indian
aviation market.
Negotiations with two others –
TAP Portugal and LOT Polish – was
complete and code-shares could be
signed anytime soon, sources said.
Code-share is a ticket-selling
agreement between two airlines,
whereby one carrier can market and
sell the flights of another airline, and
provide seamless travel to multiple
destinations where it doesn’t fly.
Gulf carriers have managed to
corner the biggest pie of the Indian
international market and around 40%
of all global traffic from the country is
West Asia bound.
AI is in advanced talks for a code-
share with 10 Star Alliance member
airlines including Air China, Air New
Zealand, Shenzhen Airlines, United
Airlines, Croatia Airlines, Eva Air,
Avianca, Thai Airways, Copa and
Aegean Airlines.
VietJet, S7 Airlines, Air Austral and
Flybe are the nonStar Alliance
members that AI is in talks for a code-
share.
One of the fastest-growing aviation
markets in the world, India will
overtake the UK to become the
third largest by 2031, according to a
20-year passenger growth forecast
by the International Air Transport
Association.
DIRECT CONTAINER SER VICE
FROM BENGALURU TO
KRISHNAPATNAM
Eyeing the growing export-import
cargo traffic of Bengaluru, the
Krishnapatnam Port Container

31. 30 | PSE insights | JULY 2015
Terminal (KPCT) and Container
Corporation of India (Concor) have
announced the launch of direct
container train service from June 19
to cater to customers in the region.
The weekly train service will ply
between the Concor’s Whitefield
Depot in Bengaluru and
Krishnapatnam Port on the Eastern
Coast directly and is expected to
benefit the exporters of granite,
gherkins, coffee, pharmaceuticals and
engineering machinery.
The train will have a maximum
carrying capacity of 90 TEUs
containers and will operate every
Friday evening from Bengaluru.
“This will enable the traders to
complete their customs related
documentation at Whitefield Depot
during 5 days of the week and use
the weekend to get the goods
transported from Bengaluru and
load them onto the ships. The train
will return on Sundays from the Port
carrying the goods imported by the
traders and deliver the containers on
Monday in Bengaluru,” said Sriram
Ravichander, Executive Director, KPCT.
COAL INDIA NO W SIXTH-LARGEST
MINING COMPANY IN WORLD:
PwC
Country’s top dry-fuel miner Coal
India ( CIL) has become the sixth-
largest mining company in the world
in terms of market capital, says a
recent PwC report.
Earlier, the company was at the
eighth spot among top 40 global
mining firms, according to the report.
Another state-run company, NMDC,
the country’s top iron ore miner
which also figures in the list, has
improved its position by coming to
the 21st slot from 24th earlier.
The report “Mine 2015”, which
analyses the financial performance
of the top 40 mining companies by
market capitalisation, says though
there have been improvements in
most financial statement metrics
across the top 40 companies, market
values continued to decline.
“The top 40 miners lost USD 156
billion, or about 16 per cent of their
combined market value, in 2014,” the
report said, adding that the good
news is that it is only half of last year’s
slide.
The market capitalisation for the top
40 was USD 791 billion at the end of
2014, which is where it was 10 years
ago, it said.
CIL MAY EXCEED PRODUCTION
TARGET BY 60 MILLION TONNE
THIS YEAR: COAL SECRETAR Y
“Coal India has set a target of
increasing its production capacity by
60 million tonne this fiscal. But taking
into consideration the steps taken by
the company to increase production,
it may surpass the target,” Coal
Secretary Anil Swarup said at select
media interaction.
In 2014-15, the company’s total coal
production increased by 31.81 million
to over 494 million tonne, recording
nearly 7 per cent growth over 2013-
14.
“The company has anticipated higher
growth on the basis of the initiatives
taken by it. CIL recently acquired
2,000 hectares and also received
41 mine clearances. Consequent to
this, its subsidiary Western Coalfields
will be opening one new mine
every month for the next two years.
Therefore, we hope production will
increase,” he said.
BSNL PLANS TO LAUNCH 4G
SERVICES IN SIX CIR CLES
State-run telecom company Bharat
Sanchar Nigam (BSNL) plans to
launch high-speed fourth-generation
(4G) services across six telecom
circles, of the 20 circles where it
operates. BSNL is in talks with various
telecom companies, including
Reliance Jio Infocomm (RJIL) and
SSTL, for a strategic tie-up.
BSNL CMD Anupam Shrivastava said
that they were open for a strategic
tie-up for 4G operations and are in
talks with various telecom companies
in this regard.
Telcos are eagerly awaiting
announcement of the guidelines on
spectrum sharing and trading, which
is expected to be in place in a month
or two.
Official sources said for BSNL, RJIL
would be the first choice, as RJIL has
already signed a pact with BSNL to
lease out 4,000 of its mobile towers. It
is the only telco that has 4G spectrum
in 2300 MHz band across all 22
telecom circles. But, unlike RJIL, that
plans to launch 4G services in few
selected circles in next one or two
months, BSNL is expected to start its
4G operations in six of its circles only
by March 2016.
BHARAT ELECTRONICS LOOKS
TO DIVERSIFY AS BILLIONAIRES
ENTER INDIA ’S DEFENCE SECTOR
As Prime Minister Narendra
Modi turns to local billionaires to
modernize the nation’s military, a
state-owned defence supplier is
hedging its future by diversifying into
civilian contracts.
Bharat Electronics Ltd, a maker of
radar and avionics, is looking to
double its non-defence revenue in
three years in a strategy that may
help boost sales by 15% as early as
this year, a pace of growth not seen
in a decade, chairman S.K. Sharma
said in an interview.
Bharat Electronics will spend `500
crore in the year ending 31 March
2016, on securing orders for solar
power plants, Modi’s smart city
projects and air- traffic management
systems, Sharma said. The investment
will be the biggest for new initiatives
in the past five years, he said.
PSE NEWS UPDATE

32. JULY 2015 | PSE insights | 31
Export & Import
GOVERNMENT HIKES DUTIES
ON STEEL TO CHECK CHINESE
IMPORT S
In a decisive step, the government
has hiked import duties on steel
meeting a long standing demand
from domestic players reeling under
a flood of cheaper steel imports
from China and South East Asia. The
decision, which comes on top of
recent imposition of anti-dumping
duty on some grades of stainless
steel, brought much-needed cheer
to steel stocks. While industry
appreciated the step and remained
disappointed with the quantum
of the hike, analysts tracking metal
stocks remained indifferent to the
move calling it “too little too late.”
Duty on flat products of steel like hot
and cold rolled (HR/CR) sheets and
coils typically used in automobiles,
refrigerators and washing machines
were revised upwards from 7.5% to
10%. On long products of steel like
TMT bars, angles and channels, used
in building and construction, duty
has been raised from 5% to 7.5%.
The two exceptions were duty has
been maintained at existing levels
are -CRGO (cold rolled grain oriented)
steel or “electrical steels” that few
domestic players manufacture and
stainless steel flat products. Steel
stocks jumped in reaction to the
move, anticipating its impact of steel
companies’ financials.
“The move will benefit India steel
makers from the pressure of imports,”
Union Steel & Mines Minister
Narendra Singh Tomar tweeted on
the micro-blogging site. “Combined
with a recent anti dumping duty on
stainless steel, it is also a sign of our
commitment to Make in India,” the
Minister commented on Twitter.
Indian Steel Alliance (ISA), an industry
body of private and public steel
producers like JSW Steel, Tata Steel,
SAIL and JSPL lobbying for a duty
hike, said it welcomed the move. “It
is a welcome step since it relieves
some of the pressure on steelmakers
though we wanted a bigger hike
in duty. However, it shows the
government has recognized that
imports pose a serious challenge to
steel industry,” Sanak Mishra, secretary
general of ISA, an industry grouping
of top public and private steel
producers.
MMTC TO IMPORT 5,000 TONNE
PULSES TO CHECK SPIKE IN
PRICES
To augment domestic supplies,
which would curb a spike in prices,
the government has decided to
import around 5,000 tonne of pulses
through state-owned trading firm
MMTC.
MMTC would shortly float tenders for
the import of pulses. After getting
a response, the government will
consider importing higher quantity
pulses during the next few months.
One of the possibilities being
discussed is to use a portion of the
dedicated corpus of Rs 500 crore
under the Price Stabilisation Fund
(PSF).
The government had on Wednesday
stated that it would import lentils
on a “large scale’’ to boost domestic
supply and also asked states to take
action against hoarders.
Measures to increase the import of
pulses and action against hoarders
were taken in a cabinet meeting
chaired by Prime Minister Narendra
Modi.
MRPL BUYS FIRST CARGO OF
EGYPT ’S RAS GHARIB CRUDE
India’s Mangalore Refinery and
Petrochemicals Limited (MRPL) has
made its first purchase of Egypt’s
Ras Gharib crude, two sources with
knowledge of the tender award said.
The purchase is for loading in first
half of July. Trader Vitol will supply the
600,000 barrel cargo at a discount
of about $5.5 a barrel to Dubai on a
delivered basis, the sources said.
MRPL operates a 300,000 barrel per
day coastal refinery in Southern
Karnataka state.
KIOCL OFFERS PELLET PLANT TO
OVERSEAS BUYERS UNDER ‘MAKE
IN INDIA’
Steel Ministry undertaking KIOCL
Limited has floated a novel idea
to make use of its idle facilities at
Mangaluru. The company is offering
its pellet plant and blast furnace units
to overseas companies under the
‘Make in India’ programme by using it
as a tolling plant, wherein KIOCL will
convert imported ore or concentrate
into pellets and supply back to the
customers.
Under this programme, the company
has entered into a dialogue with an
Iranian firm for importing iron ore,
converting into pellets at its plant
in Mangaluru and then exporting it
back to them.
Malay Chatterjee, Chairman
and Managing Director, KIOCL
said said the the company was
inviting expression of interest from
international firms, buyers and mine
owners to bring iron ore fines to
India and use KIOCL’s pellet plant for
converting the ore into pellets and
export the same. “KIOCL is bringing
this tolling programme under
the ‘Make in India’ initiative of the
government of India,” he said.

33. 32 | PSE insights | JULY 2015
trouble due to problems over land
availability. A portion of this plant
is ready, but cannot commence
generation due to the absence of
land and water. NTPC has taken
over power assets in the past as
well. It took over West Bengal Power
Development Corporation’s project
in Katwa a few years ago. It took over
also a couple of hydroelectric projects
in the state. Recently, the company
entered into a memorandum of
understanding with Jharkhand to
acquire the Patratu thermal power
station, where it intends to scrap the
existing units and set up 4,000 MW of
fresh capacity.
M & A
NTPC TO BUY STRESSED PO WER
GENERATION ASSET S
NTPC is on the prowl again. Armed with a reserve of about Rs 5,000 crore, this time the nation’s largest power company intends to take over stressed power generation assets from central and state sector units. It is at present in talks with three such entities in Rajasthan, Madhya Pradesh and West Bengal, a person with knowledge of the plan said.
To own such power plants, NTPC is
proposing to create joint ventures
with state governments where it
will take a majority stake. It had
previously looked at acquiring private
power assets, but the plan hasn’t
taken off as expected.
NTPC intends to buy stressed power
generation assets, in talks with
Rajasthan, Madhya Pradesh, West
Bengal
“Following slow and dismal progress
of NTPC’s plan to take over stressed
assets from private sector entities,
the company has now decided to
take over assets or plants that are
facing problems in the central and
state sector. While we are in talks with
three assets at the moment, NTPC
is open to taking over more if they
are offered to the company,” a senior
NTPC official said.
In Rajasthan, NTPC is in discussions
with Rajasthan Rajya Vidyut Utpadan
Nigam to take over its entire
generation capacities through joint
ventures. The Rajasthan utility runs
plants with a total capacity of about
5,000 MW. It is also in the process of
setting up 900-MW power capacities,
but the projects are delayed by
several years.
In Madhya Pradesh, NTPC is talking
to MP Generating Company for
taking over 1,300 MW of the Satpura
thermal power plant through the
same joint-venture model. According
to reports, the plant, one of the oldest
in the state, faces an uncertain future
owing to poor utilisation of fly ash.
Its sole fly ash pond is full to capacity
and a union government committee
has turned down a request to build a
new ash pond.
In West Bengal, it is in talks with
Damodar Valley Corporation for
acquiring the Raghunathpur thermal
plant of 2,400 MW, which is in
PSE NEWS UPDATE

34. JULY 2015 | PSE insights | 33
Marketing & Trade
INDIAN OIL CORP’S LOTUS
XANGPO PETROL PUMP WORLD’S
HIGHEST ALTITUDE OUTLET
Indian Oil Corp’s (IOC) petrol pump,
Lotus Xangpo Memorial filling
station, in Leh has become the
world’s highest altitude retail outlet
to be powered by solar power.
A solar power generation system
has been installed at the petrol
pump situated at 11,500 feet above
the sea level to replace polluting
diesel generator. Besides cutting
greenhouse gas emission, the solar
power generation system enables the
retail outlet to save about Rs 30,000
per month. The investment in putting
up the solar system is recoverable in
about 18 months.
IOC already has two other solar
powered retail outlets operating at
Chuglamsar and Leh-Manali Road in
Ladakh region.
These outlets face extreme
weather conditions like minus 25
degrees Celcius during winters
and thin oxygen density, yet the
solar power generation systems
function smoothly as the region gets
bright sunlight due to dry weather
conditions for most part of the year.
IOC is increasingly using solar power
to light up its petrol pumps across
the country. In the year ended
March 31, 2015, 1,398 new outlets
were solarised, taking the total tally
to 2,663.The company plans to add
another 1,500 petrol pumps and
Kisan Seva Kendras in the current
financial year and envisions touching
5,000 solar-powered outlets by 2017-
18 and 10,000 by 2022.
IOC has 24,405 petrol pumps and
6,230 rural outlets called Kisan Seva
Kendras.
By installing solar power, the dealers
of the outlets are assured of power
supply at a constant voltage. Even
fuel dispensing units, fan, tube lights
and other essential electrical fittings
can be operated at optimal capacity,
which in turn ensures that a dealer is
able to provide consistent and quality
service to their customers.
BHARAT PETROLEUM READIES TO
ROLL OUT FULL -FLEDGED RETAIL
OPERATION
With 12,500 fuel outlets, where
anywhere between 24 million and 36
million customers top up their tanks
daily, Bharat Petroleum Corporation
(BPCL) is readying to roll out a full-
fledged retail operation. A revamp of
the non-fuel retail operations, which
now fetch less than 1% of the firm’s
revenues, is on the cards and Boston
Consulting Group (BCG) has been
tasked with finalising a blueprint
for a fresh roll-out both the In&Out
convenience stores and also Quick-
Service Restaurant (QSR) outlets.
The consulting firm will also come
up with ideas for loyalty cards and
the lubricants business, two highly
placed officials at BPCL said.
Even as it taps into a larger share of
customers’ wallets, the public sector
Oil Marketing Company (OMC)
wants to differentiate itself from
competitors so as to be able to retain
its customers. The BPCL top team
believes a separate Strategic Business
Unit (SBU) may be called for to
house the non-fuel retail operations.
George Paul, executive director,
retail, confirmed BPCL was looking
to monetise the non-fuel business,
making it a big enabler to grow the
fuel operations. “Earlier, the non-fuel
businesses were treated like any
other initiative. But now it’s a strategic
business proposition because this
could help customer retention,” Paul
said.
The initiative will not just be
restricted to offering food or
merchandise; financial and banking
services, e-seva kendras and Aadhaar
centres too are being contemplated.
BPCL has joined hands with Amazon
to set up pick- up points at some

35. 34 | PSE insights | JULY 2015
of its outlets to test whether the
model will work. “We are in a vantage
position and can designate these as
Amazon pick-up points. At the end
of the day e-commerce companies
need to have a brick and mortar
logistics network and we’re well
positioned for that,” Paul observed.
Paul pointed out that several large
retailers were struggling since they
needed to maintain stores on high
streets at high rentals. “We already
have 12,500 fuel outlets where we
can potentially open up stores. We
already have stores earning Rs 400
per sq feet in locations like Delhi,” he
said.
Pramod Sharma, executive director in
charge of business strategies, said the
oil retailer was toying with the idea
of teaming up with other retailers to
open stores outside of BPCL’s retail
outlets and possibly even managing
the back end.
BALMER LA WRIE PLANS
TO EXPAND DISTRIBUTION
NETWORK
Diversified Public Sector Enterprise
Balmer Lawrie is planning to expand
its distribution network and double
its market share over the next five
years, a senior official of the company
said.
“We are putting a lot of pressure on
expansion. We are focusing on the
automotive retail business, which
will drive growth and profitability.
The expansion will be done by
leveraging and rapidly expanding
the distribution network in focused
markets and effective brand building,”
Balmer Lawrie Chairman and
Managing Director Viren Sinha said.
He was speaking during the launch
of the new TechTonic Packs for
Diesel Engine Oils and 4T Oils for
automotive sector.
FUEL RETAILERS CONSIDER
DIFFERENTIAL PRICING AS
COMPETITION MOUNT S
Established companies in the Indian
fuel retail market, including Indian
Oil Corp. Ltd (IOC) and Hindustan
Petroleum Corp. Ltd (HPCL), are
considering a differential pricing
option in the wake of increasing
competition.
With new entrants such as Mangalore
Refinery and Petrochemicals Ltd
(MRPL) also considering the same,
such a move will benefit consumers,
analysts said.
The National Democratic Alliance government deregulated the pricing of diesel in October last year, leading to a surge of interest in this market.
While petrol and diesel prices are
deregulated, the prices of domestic
cooking gas and kerosene continue
to be set by the government.
B. Ashok, Chairman of IOC, and Nishi
Vasudeva, Chairperson and Managing
Director of HPCL, confirmed their
firm’s strategy while presenting their
annual earnings last week. India’s fuel
retail market, with 52,864 outlets, is
dominated by state-run companies
such as IOC, HPCL and BPCL.
Private-sector companies such as
Essar Oil Ltd and Reliance Industries
Ltd shut several retail outlets because
they couldn’t match the prices
offered at pumps run by their state-
controlled rivals.
PSE NEWS UPDATE

36. JULY 2015 | PSE insights | 35
Bottomline Strategy
CASH-RICH PSE s MAY HAVE TO
FORK OUT RS 15,000 CR FOR
NATIONAL INFRA FUND
The government is set to ask cash-rich
state-run enterprises to fork out Rs
10,000-15,000 crore in special dividends
this year to implement the budget’s
proposal of setting up a Rs 20,000-crore
National Investment and Infrastructure
Fund (NIIF), whose aim will be to
catalyse infrastructure development in
the country, sources said.
“One of the options is to provide
budgetary support of at least Rs 5,000-
10,000 crore and mobilise the rest by
way of special dividends from PSEs
this year,” a senior Finance Ministry
official said.
Announcing the setting up of NIIF
during the budget in February, Finance
Minister Arun Jaitley had said he would
find resources to ensure an annual
flow of Rs 20,000 crore to it. This would
enable the trust to raise long-term
debt to invest in equity of infrastructure
finance companies, such as the Indian
Railway Finance Corporation and the
National Housing Bank.
The fund would also invest directly in
infrastructure projects, such as ultra
mega power projects, smart cities,
roads, ports, rail lines and airports, the
official said.
Leveraging the Rs 20,000 crore, the
fund could raise debt up to 10 times,
or Rs 2 lakh crore, over a period of
time to ensure long-term fund flows
to the sector at a time when banks’
balance sheets are laden with NPAs.
The Finance Ministry has already
floated a draft cabinet paper for
consultation on the formation of NIIF,
which has been approved by the
Cabinet.
The Finance Ministry would keep fresh
fund infusions into NIIF flexible and look
for sources other than special dividends
from PSEs in subsequent years. The
government could provide up to Rs
10,000 crore budgetary support next
year as well, the sources said.
Through NIIF, the government is keen
on permanently resolving the nagging
problem of infrastructure funding
in the country, a prerequisite for the
government’s ‘Make in India’ drive to
succeed.
The government has announced
several ambitious infrastructure
projects, from building 100 smart
cities to improving infrastructure in
500 existing cities for Rs 1 lakh crore
over five years. Similarly, it plans to
build five new UMPPs, besides other
mega projects such as high-speed
trains and industrial corridors.
AIR INDIA TO GET Rs. 1,200 CRORE
FROM DEFENCE MINISTR Y
Air India is to receive Rs. 1,200 crore
in October this year from the Ministry
of Defence (MoD) for the transfer
of two Boeing 777-300 Extended
Range aircraft for VVIP operations.
These funds will be used to retire
outstanding loans for these aircraft.
Incidentally, the outstanding loans are
to the tune of about Rs. 1,200 crore.
A senior Air India official confirmed
that the two aircraft will be transferred
to the MoD on October 1, and that
the funds should flow into Air India’s
coffers almost immediately after the
transfer takes place.
VVIP aircraft are primarily used by the
President, Vice-President and Prime
Minister on their trips out of Delhi,
be it within India or while travelling
abroad.
While the aircraft will be transferred to
the VVIP squadron in October, it will
take some more time before they can
be used. This is because the aircraft
will have to refitted to meet VVIP
requirements, officials said.
Meanwhile, the national carrier, which
is to take delivery of its 21Boeing 787
aircraft at the end of the month, is
planning to place two such aircraft
exclusively for domestic operations.
The deployment of the Boeing 787
exclusively for domestic operations
will help the airline offer more
capacity in the domestic market. At
the moment, Air India primarily uses
the Airbus A320 series of aircraft to
operate domestic flights. While the
Boeing 787 seats 256 passengers, the
Airbus aircraft seats anything between
122 to 172 passengers on each flight.
The deployment of two Boeing
787 aircraft exclusively for domestic
operations could see the airline
increase the number of cities to which
it operates the Boeing 787 aircraft
as Mumbai will also be added to
the aircraft’s flight schedule. At the
moment, the Boeing 787 aircraft only
flies from Delhi to Kolkata, Chennai
and Bengaluru.

37. 36 | PSE insights | JULY 2015
AIR INDIA TO RAISE UP TO $350M
VIA ECB ROUTE
Air India is raising up to $350 million to
meet its working capital requirement
through the external commercial
borrowing (ECB) route.
In 2012, cash-strapped Indian carriers
were allowed to raise up to $1 billion
through ECB route for working capital
requirements. “A big private airline has
availed of $300 million and another
has taken $50 million this way. The
balance that remains is $650 million.
AI is going to raise $300-350 million
for meeting its working capital
requirement for spare parts,” said a
senior official.
AI has awarded the mandate to
Citibank and SBI. “The all-inclusive
financial cost works out to be
lower than 3% per annum. The
documentation has been completed.
We will start availing this funding from
second half of June and complete the
same over a year,” the official said.
With this working capital loan, AI
hopes to improve its aircraft usage
by cutting down the time they waste
on waiting for spare parts. “Our Airbus
A-320s fly for about 11 to 12 hours a
day. The wide-body fleet does 14 to
17 hours a day and the Boeing 787
Dreamliner does an average of 13
hours a day. An improved supply of
spares will increase aircraft utilization
by an average of one to two hours
daily,” the official said. AI currently has
55 A-320s and is taking four more on
lease by the coming winter.
Optimum utilization of assets is very
important for AI to generate more
revenue, given its precarious financial
condition. AI is currently facing a cash
crunch and has asked the government
to give it Rs 1,777 crore. The gap has
been created due to three factors
– shortfall of Rs 720 crore in equity
infusion last fiscal, along with the
rupee’s depreciation against the dollar
and spiking of oil price to $110 in that
financial year.
NHAI INVITES APPLICATIONS
FROM DE VELOPERS FOR FUND
INFUSION TO BOOST STUCK
PROJECTS
To accelerate highways building and
salvage stuck road projects, NHAI has
asked developers to come forward
with a financing plan and justification
for the fund infusion that they are
seeking from the authority.
The government last month allowed
the National Highways Authority
of India (NHAI) to provide funds to
projects that are in advanced stages
of completion but are stuck due to
equity crunch.
“The concessionaire seeking such
relief shall approach NHAI with an
application which shall clearly state
the financing plan required for
completing the project construction
and justifying one time fund infusion,”
NHAI said in a communique.
NHAI will provide financial assistance
from corpus earmarked to any
languishing highway project in BOT
(build, operate and transfer) mode
that has achieved at least 50 per cent
physical completion where infusion
of moderate funding could lead to its
completion.
“The assistance would be provided on
a loan basis at bank rate + 2 per cent
drawing a parallel with the provisions
of a model concession agreement.
A robust third party evaluation
mechanism will be developed by
NHAI to determine the eligibility of
the concerned project and the extent
of bridge fund required to complete
the project, ” the government has
said. Of the ongoing 240 PPP (public-
private-partnership) projects, some
are languishing due to delays on
land acquisition, grant of statutory
clearances, local issues and shortage
of construction materials etc.
In addition to steps to revive such
stalled projects, the government
last month approved a special
intervention for the projects that are in
advanced stage of completion but are
stuck due to either lack of additional
equity or lender’s inability to disburse
further.
Directing NHAI to develop a robust
mechanism to determine eligibility of
the project as also the extent of funds
required to complete projects, in time-
bound manner, the government had
expressed hope that about 16 such
projects languishing in various parts
of the country where public is facing
difficulty on account of incomplete
works will benefit from the decision.
The government had set a target of
constructing 6,300 kms of roads in
2013-14 and 2014-15 each, of which
4,260 kms and 4,410 kms, respectively,
were achieved during the two fiscals.
Now the government has decided to
take the road building pace to 30 kms
a day from existing about 14 km a day.
NEYVELI LIGNITE TO BORRO W Rs
1,185 CRORE FOR TAMIL NADU
POWER PROJECT
The board of NLC Tamil Nadu Power
Limited (NTPL), a joint venture
company involving Neyveli Lignite
Corporation, gave its nod to borrow
Rs 1,184.92 crore from Power Finance
Corporation.
The announced borrowing would
help NLC meet capital expenditure
for works on the ongoing 1000 MW
(2x500 MW) Thoothukudi power
project in Tamil Nadu.
The Unit I of the project involving
500 MW capacity had already been
declared for commercial operation on
June 6, 2015, and the commissioning
of 500 MW Unit-II is expected soon.
NLC said the announced borrowing
would result in reduced interest costs.
PSE NEWS UPDATE

38. JULY 2015 | PSE insights | 37
Officials of Power Finance Corporation
today met Neyveli Lignite Corporation
and an agreement for Rs 1,184.92
crore lending to the project was
signed by the Project Director, General
Manager (Finance) for new projects
and Chief Financial officer of NTPL.
PFC TO RAISE $1 B IN FOREIGN
CURRENCY BONDS
Power Finance Corporation said on
June 15 that the company will raise
$1 billion through foreign currency
denominated bonds.
The proceeds of the bonds, if and
when issued, will be utilised for on-
lending to the company’s borrowers
in the power sector in rupee and/or
foreign currency in accordance with
the rules and regulations framed by
the RBI.
NHPC MAY RAISE RS 1,475 CRORE
THROUGH LONG-TERM BONDS
NHPC is planning to raise Rs 1,475
crore from the bond markets through
long-term bonds, sources said.
The company is likely to raise funds
in July said to market participants
indicating that under current market
conditions, NHPC may be able to issue
bonds at yield close to 8.50%.
Bonds are likely to have a tenure of up
to 15 years with staggered payments
stretching from the fourth year till the
fifteenth year, sources indicated.
NHPC had reported a net profit of
R644.51 crore for the quarter ended
March against a net loss of R707.40
crore in the same period a year ago.
POWER GRID CORPORATION ARM
VIZAG TRANSMISSION ISSUES
FIVE-YEAR BONDS AT 8.9%
State-owned Power Grid Corporation
India Limited’s (PGCIL) subsidiary Vizag
Transmission has raised Rs 290 crore
at a coupon rate of 8.90% through its
five-year bonds.
PGCIL’s two subsidiaries – Vizag
Transmission and NM Transmission
company – were each looking to raise
up to Rs 500 crore through the bond
market.
These bonds are rated AAA (SO)
– structured obligation – and are
guaranteed by their parent PGCIL,
according to a dealer. This might have
resulted in a premium of 15-20 bps
over the prevailing market rate for a
5-year bond of a AAA-rated PSE which
is about 8.50-8.55%, he said.
A further premium of 15-20 bps
could be attributed to the fact the
subsidiaries are first time issuers and
the bonds are unlisted, the source
added.
SAIL RAISES Rs 420 CRORE VIA
SHORT-TERM BONDS
Steel Authority of India (SAIL) has
raised Rs 420 crore at a coupon rate
of 8.35% through bonds having a
maturity of three years, sources said.
Earlier, SAIL had issued short-tenure
bonds in April at a coupon rate of
7.95%. In early May, it had put off
the bond issue due to demand for
higher yield by investors, said sources,
indicating the company was planning
to raise funds at 8.25-8.30% even as it
received bids in the range of 8.43-
8.72%.
“After the June 2 monetary policy
review, G-sec yields have hardened
and so have corporate bond yields.
Considering that, 8.35% could be
a good yield. However, in the next
few days, we could expect the yields
on corporate bonds to be in the
range of 8.30-8.50% range,” said Ajay
Manglunia, Senior Vice President, fixed
income at Edelweiss Securities.
Nuclear Power Corporation of India
(NPCIL) and Rural Electrification
Corporation (REC) are also likely to
tap the bond markets in near term,
sources indicated.
POWER GRID CORP TO TAP BOND
MARKET TO RAISE Rs. 12,000
CRORE
State-run transmission utility Power
Grid Corporation of India Ltd (PGCIL)
would be tapping the bond market
to raise Rs. 12,000 crore in the current
fiscal, said Chairman R N Nayak on
June 2. The proceeds from the bonds
would be used for the Rs. 22,500- crore
capital expenditure plan.
Nayak said that the company has
earmarked a capital expenditure of
up to Rs. 1 lakh crore for the next
five years. The company would be
maintaining a 70:30 debt to equity
ratio for its capex plans.
REC, PFC, IREDA, OTHERS TO RAISE
Rs 5,000 CRORE VIA TAX-FREE
BONDS
State-owned firms, including
Power Finance Corp. Ltd (PFC),
Rural Electrification Corp. Ltd (REC)
and Indian Renewable Energy
Development Agency Ltd (Ireda) will
raise Rs.5,000 crore by selling tax-free
bonds to raise low-cost and long-term
funds to help finance India’s plan
to quadruple its renewable energy
production.
While Ireda will raise Rs.2,000 crore,
PFC and REC will raise Rs.1,000 crore
each. The companies will, in turn, lend
the money to solar energy developers
at a low interest rate of 10.5%.
The current base rate is upward of
9.75%, although banks typically lend
at base rate plus 1-2% for their best
customers. Developers may use these
funds for projects such as rooftop solar
panel installations.
The government has raised an earlier
target of installing 20,000 megawatts
(MW) of solar energy capacity by 2022
fivefold to 100,000MW.

39. 38 | PSE insights | JULY 2015
INVESTMENTS
HPCL INVESTING IN CLEAN FUEL
PROJECTS, SAYS OFFICIAL
Hindustan Petroleum Corporation
Limited (HPCL), a Navratna company,
is making huge investments in clean
fuel projects to meet the Bharat
Stage-III & BS-IV fuel specifications to
reduce vehicular pollution.
Flue gas desulphurisation units
had been added in the recent
past to reduce sulphur dioxide
and particulate matter contents
in the fluidized catalytic cracking
unit (FCCU).Online Analysers had
been provided on all refinery stacks
for monitoring various pollutant
concentrations in stack emissions.
These apart, Continuous Ambient Air
Quality Monitoring Stations had been
provided in three locations in Visakh
Refinery for monitoring the ground
level concentrations of various
pollutants.
BSNL TO INVEST RS 6,000 CRORE
TO SET UP 40,000 WI-FI HOT SPOTS
IN 20 CIR CLES
State-run Bharat Sanchar Nigam
(BSNL) will set up at least 40,000
Wi-Fi hotspots across 20 circles, other
than Delhi and Mumbai, for which
it has earmarked Rs 6,000 crore, said
Telecom Minister Ravi Shankar Prasad
while launching a wi-fi facility at Taj
Mahal on June 16.
The Telecom Minister said a global
tender for this project will be placed
in July seeking private participation.
“This project is likely to be completed
by March 2018,” he said.
BSNL CMD Anupam Srivastava said
this will help the state run telecom
operator to take on private telcos that
are rolling out 4G internet services.
“Our 3G reach is around 60% across
20 circles. By offering 40,000 Wi-Fi
hotspots, we will be able to reach out
to almost 85% of our total network
with high-speed internet services,”
said Srivastava.
The CMD also said BSNL will initially
involve private players in the scheme.
“After a year we will evaluate and
if we find the project feasible, we
will back up major part of this plan
through our own resources,” he said.
BSNL will provide free Wi-Fi services
for 30 minutes per 24 hours (three
times a month) which visitors can
utilise in multiple sessions. After
the free usage limit of 30 minutes is
exhausted, a customer can pay for
using the services. Subscription plans
are available in the denomination of
Rs 20, Rs 30, Rs 50, and Rs 70, valid for
30 minutes, 60 minutes, 120 minutes
and one day, respectively.
BSNL has also planned to expand
Wi-Fi coverage to other tourist and
religious locations like Khajuraho and
Jagannath Puri by March 2016.
ONGC TO INVEST RS 41,678 CRORE
ON NEW FIELDS
State-owned Oil and Natural Gas
Corp (ONGC) will invest Rs 41,678
crore for bringing to production
newer oil and gas fields and
redeveloping ageing fields as it looks
to boost output.
ONGC will invest Rs 24,188 crore in
development of six projects both
on the east and west coast. Another
Rs 17,490 crore will be spent on
redeveloping its prime Mumbai High
fields as well as Heera-South Heera
fields in western offshore, a top
company official said. The biggest
project is the western offshore
Daman field development where
Rs 6,086 crore is being invested to
produce 27.67 billion cubic meters
(bcm) of gas by 2034-35.

40. JULY 2015 | PSE insights | 39
In the neighbouring South Bassein
field, Rs 4,620 crore is being invested
in additional development by
April 2017 for an incremental gas
production of 18.83 bcm by 2030-31.
Also, Rs 2,477 crore additional
development of Vasai East will give
1.83 million tonnes and 1.97 bcm of
gas by 2029-30. The project will be
completed by December 2018, he
said.
The official said ONGC is investing Rs
1,881 crore in developing the Gamij
oilfield near Ahmedabad.
Of the east coast, ONGC is investing
Rs 4,124 crore in developing the
Vashista and S-1 gas fields in Krishna
Godavari basin. The project will be
completed by April 2017 and give an
incremental gas production of 15.96
bcm, he said.
Another Rs 5,000 crore is being
spent on Krishna Godavari basin
field of Nagyalanka which will start
production from September next
year.
Meanwhile, Oil and Natural Gas
Corporation (ONGC) will explore four
of its coal bed methane blocks on its
own. This will require an investment
of Rs 5,000 crore.
D K Sarraf, Chairman and Managing
Director, said, “We have decided
to expedite development in our
CBM blocks. CBM does not require
technology or expert knowledge. We
were in this business and our team is
familiar with exploration plans”.
ONGC has so far spent Rs 510 crore
on the four blocks.
IOC TO INVEST RS 1,500 CRORE TO
UP STORA GE IN NORTHEAST
Public Sector Enterprise Indian Oil
Corporation plans to invest around
Rs 1,500 crore in the Northeast to
strengthen its various divisions,
including storage and retail, over the
next three-four years. IndianOil-AOD,
the company’s Northeast division,
is scouting for land in states such
as Assam, Tripura and Mizoram
to increase storage capacities of
petroleum products. “Northeast is
very important for us and we are
focussing more to provide optimum
services to the people of the region.
“One of the most important issues
is availability of products, keeping in
mind the geographical disadvantages
of the region,” Indian Oil Corporation
Executive Director (IndianOil-AOD)
Dipankar Ray said here. Common
people of the region, especially in hill
states, suffer a lot whenever there is
any natural calamity or political or
social disturbances, he added.
“To mitigate this problem, we have
decided to increase our storage
capacities of petroleum products
and LPG in every state of the region
in a big way. “For this, we will invest
around Rs 1,500 crore over the next
three-four years in the seven states,”
Ray said. Out of this amount, about
Rs 1,250 crore will be put in to ramp
up the storages of petrol, diesel and
kerosene, while Rs 150 crore and Rs
50 crore will go for enhancing LPG
storage capacities and increasing the
number of retail outlets, respectively,
he added.
POWER GRID CORPORATION OF
INDIA LIMITED PLANS TO INVEST
RS 22,500 CRORE IN FY16
State-run transmission utility Power
Grid Corporation (PGCIL) is planning
to invest Rs 22,500 crore this fiscal to
fuel its expansion plans.
“We are very well on track on our
capex plans. This fiscal, we have
earmarked an expenditure of Rs
22,500 crore for FY16, which we
will use for expansion,” company’s
Chairman and Managing Director RN
Nayak told reporters.
He further said the company has
already deployed Rs 4,000 crore
for various projects in the last two
months.
“Out of the capex for FY16, we have
already spent Rs 4,000 crore in the
last two months for undertaking
various projects. We plan to maintain
70:30 debt equity ratio,” Nayak said.
NALCO TO INVEST RS 5,540 CRORE
IN 1 MILLION TONNE ALUMINA
REFINERY
The board of National Aluminium
Company (Nalco) has approved a
significant capacity expansion plan
to set up a one million tonne alumina
refinery at Damanjodi, Koraput,
Odisha at a proposed investment
of Rs 5,540 crore. Nalco already
has a captive bauxite deposit at
Pottangi in the state, which will be
utilized in this project. This is the first
major expansion in the state run
aluminium company in step with the
Modi government’s Make in India
campaign.
With a view to boost the ancillary
and downstream industries, Nalco
is also committed to supply 50,000
tonne of aluminium metal to ‘Angul
Aluminium Park’ which has been
formed as a joint venture between
Nalco and Industrial Development
Corporation of Odisha. Apart from
investing in its mainstay metals
business, the company is also
stepping up its fledgling presence
in the renewable energy sector. It
is in an advance stage of setting up
of 100 MW wind power plant at a
suitable location with an estimated
investment of Rs 660 crore.

41. 40 | PSE insights | JULY 2015
RESULTS
SCI FINALL Y STEADIES SHIP AND
REGISTERS PROFIT AFTER THREE
YEARS
The Shipping Corporation of India
Ltd (SCI), India’s largest shipping
company and a Government of
India Public Sector Enterprises, has
reported a quarterly profit of Rs.
101.49 crores for Q4 FY 2014-15 as
against Rs 13.24 crores reported
during the same quarter last year.
This is the fifth consecutive quarter
of reporting profits. After having
reported losses for last three financial
years, SCI has turned around and
reported a net profit of Rs. 200.93
crores for the year ended 31st March
2015, as against a net loss of Rs.
274.66 crores in the previous year.
While the net income from
operations has almost remained
flat, the appreciable decrease in
various expenses, impact of judicious
cancellation of new ship building
orders and sale of old vessels have
also contributed to the positive
results. The overall financial health
of the company has improved with
enhanced net-worth and reduced
borrowings.
All the three business segments
of SCI have reported profits before
interest in the last quarter and also
on annual basis. The losses due to
unprecedented downturn in the
dry bulk markets have been partially
offset by the rally in the tanker
market since early 2015. SCI prides in
having a diversified fleet of 69 vessels
of 5.89 mn dwt with an average age
below 9 years. SCI has been able to
maintain her tonnage over the year
and is aspiring to cross the 6 million
DWT mile stone in near future.
PGCIL REPORT S 20% RISE IN
STANDALONE NET PROFIT
Power Grid Corporation of India
has reported a 20 per cent rise in its
standalone net profit at Rs 1,412.48
crore for the quarter ended March 31
against Rs 1175.84 crore last fiscal.
NALCO NET ZOOMS 106% IN 2014-
15
National Aluminium Company
(Nalco) posted 106 per cent jump
in its net profit for the year ended
March 31, 2015 at Rs 1322 crore as
against Rs 642 crore achieved by the
company in the year ago fiscal.
During 2014-15, the navratna
company achieved its highest ever
gross turnover of Rs 7771 crore, 10.63
per cent higher than Rs 7024 crore
recorded in 2013-14. Nalco’s previous
best turnover was Rs 7247 crore
which it achieved in 2012-13.
Nalco also logged an export turnover
of Rs 3307 crore in 2014-15.
The Nalco board has recommended
final dividend at a rate of 10 per cent
(Rs 0.50 per equity share of Rs five
each) amounting to Rs 128.86 crore.
Earlier, Nalco had declared an interim
dividend of 25 per cent (or Rs 1.25
per share of Rs five each), amounting
to Rs 322.16 crore for 2014-15, on
the paid-up equity share capital of Rs
1288.62 crore.
STATE TRADING CORP. RECORDS
Rs 31 CRORE PROFIT DURING
2014-15
State Trading Corporation of India
has recorded a Profit Before Tax of
Rs31 crore during the year 2014-
15, officials have said, announcing
the annual results of the central
government’s premier global trading
company engaged in exports, and
imports operations.
“The company achieved an export
turnover of Rs1,884 crores, which is
the highest achieved during the last
six years. The total turnover of the
company during the year 2014-15
was of the order of Rs14,400 crore,”
he said.
Announcing that the company has
recorded a Profit Before Tax of Rs31
crore, officials said that they could
achieve this performance as a result
of many new initiatives undertaken
during the financial year. The
company in the meantime has also
recorded a huge volume of global
trade and commerce.
NHPC POST S RS 644 CR NET
PROFIT IN Q4
Swinging into black, hydel power
producer NHPC has reported a net
profit of Rs 644.51 crore for the March
quarter mainly on account of higher
power generation.
The state-owned company had
registered a net loss of Rs 707.4
crore in the year-ago period, it said
in a BSE filing. For the year ended
March 2015, the company posted a
standalone net profit of Rs 2,124.47
crore whereas the same stood at Rs
978.79 crore in the year-ago period.
Consolidated net profit stood at Rs
2,491.36 crore for the year ended
March 2015 as against Rs 1,218.75
crore posted in the year-ago period.
“The main reasons better
performance of the company in
the March quarter as well as in the
fiscal under review is higher power
generation compared and adopting
latest accounting standards,” a senior
official said.
He revealed that the NHPC generated
4,000 million units more in 2014-15
compared to total power generations
in the previous fiscal. “During the
last fiscal, we adopted Accounting
Standard-16 (AS-16) in line with
guidelines of Institute of Chartered
Accountant of India. Thus we did
not charge interest on borrowing to
our Profit and Loss Account, which
helped our improving our bottom
line,” the official added

42. JULY 2015 | PSE insights | 41
CSR INITIATIVES
HPCL EXTENDS UNSTINTED AID
TO VISAKHAPATNAM
It was nearly seven months ago
that the Hudhud cyclone wreaked
havoc here, leaving behind a trail
of untold devastation and damage.
Currently, as the region struggles
to rise once again from the ashes,
a ray of hope shines bright. The
Hindustan Petroleum Corporation
Limited is joining hands with the
state government to reconstruct the
devastated region.
The next three years will see
that the Navratna PSE invest the
collective efforts of its people
into Rs 3-crore joint rehabilitation
project in collaboration with
the state government. The Chief
Minister’s Office is currently in the
process of identifying the activities
to be undertaken as part of the
programme. The HPCL employees
had already contributed Rs 1.90 crore
to the CM’s Relief Fund Hudhud,
earmarked another Rs 3 crore
towards reconstruction for which
the state government offered 18
locations.
The HPCL-VR (Visakh refinery)
encompasses a wide range of
activities from collaborating
with educational institutions to
health care programmes. The
company is engaging the people of
Visakhapatnam through long-term
corporate level projects as well as on-
time field-level activities.
During the past three years, HPCL
has transformed the face of Andhra
Pradesh, with five long-term projects
– Swavalamban (skill development
programme to the unemployed
youth), Nanhi Kali (educating girl
Child and providing academic
and social support to continue
education), Unnati (computer
education to school children –
providing computer awareness and
basic education to Class VI to IX
in rural areas), A kshaypatra (mid-
day meal programme - providing
hygienic and nutritious food to
students from rural areas) and
Dhanwantari (Gramin Swasthya
Seva through Mobile Medical Vans
to provide basic medical attention in
villages).
Besides, HPCL has brought social
change across Visakhapatnam
through a series of field-level
interventions, which include building
of classrooms, computer labs and
toilets in schools; supplying furniture
and books to schools; providing
workshop tools and equipment to
the disabled; supporting medical
care in hospitals and organising skill
training programmes for the youth.
ENVIRONMENT A WARENESS
CAMPAIGN AT NTPC
VINDHYACHAL
NTPC Vindhyachal is organising
various competitions on Environment
Awareness for employees, school
children, teachers, housewives, and
members of Ladies Club, Suhasini
Sangh.
The Awareness Campaign for
protecting the Environment
culminates on World Environment
Day throughout the country,
Competitions will include Essay and
Slogan writing in English and Hindi
for children of various age groups
and ladies in various categories and
Painting and Drawing competition
for junior and senior children.

43. 42 | PSE insights | JULY 2015
OVERSEAS OPERATIONS
ONGC VIDESH SEEKS GREATER
FINANCIAL AUTONOMY
ONGC Videsh (OVL) said it was
seeking financial powers to invest
up to $1 billion without government
approval. Currently, the overseas
arm of ONGC,can independently
decide on investment of up to Rs 300
crore. An investment decision higher
than this needs to be ratified by the
PM-headed Cabinet Committee on
Economic Affairs (CCEA). “We are
seeking at least Navratna PSE status
for OVL, so that $1 billion investment
powers could be granted to us,”
Narendra K Verma, Managing Director
of OVL, said.
The MD said Rs 300 crore financial
power for OVL was set in 2000 when
the rupee-dollar exchange rate was
completely different’
OVL has 35 projects in 16 countries
from Brazil to New Zealand and is
looking at certain acquisitions in oil
and gas rich regions. Verma hinted
that OVL is contemplating selling
stake in some exploration assets
and buying equity in ‘five-six’ new
projects.
INDIA SEEKS TAX CONCESSIONS
FOR ONGC’S ASSET S IN RUSSIA
India has again pressed Russia for tax
concessions for some energy assets
Oil and Natural Gas Corporation
(ONGC) operates there. In a meeting
with his Russian counterpart last
month, Oil Minister Dharmendra
Pradhan argued for lower taxes for
Imperial Energy that ONGC has been
struggling with since its purchase six
years ago.
Pradhan led the Indian delegation
that met with Russian Energy
Minister on the sidelines of the
Organisation of Petroleum Exporting
Countries (OPEC) meeting in Vienna
and proposed a tax cut for Imperial
reserves, a request that has been
rejected in the past.
“We told them (Russia) that if they
allowed more concessions to such
difficult fields, production is likely
to go up. They also know by now
that it’s a difficult field,” said Dinesh
K Sarraf, Chairman, ONGC, who was
part of the delegation. He said the
Russians may consider India’s request
for tax concession.
A declining output, writedowns
and unavailability of certain oilfield
services due to western sanctions on
Russia has troubled Imperial Energy
that was purchased by ONGC for
about $2 billion in 2009. Imperial is
now hoping a tax reduction from
Russia and a quick production from
the shale reserves in Bazhenov region
may help boost its profit. ONGC
executives say Imperial makes barely
$21 on a barrel of oil sold at $100 and
desperately needs tax concessions to
be able to support the difficult and
expensive drilling needed to survive
in the Russian field. The Russian
government has offered lower tax
incentives to energy fields operated
by some other companies. India wants
that extended to Imperial as well.
During the delegation meeting, India
also showed interest in picking up
interests in a few more oil and gas
assets, while inviting the Russian
delegates to evaluate opportunities
in the Indian hydrocarbon sector,
Sarraf said.
PETROBRAS AND ONGC FIND
NEW OIL RESER VOIR OFF BRA ZIL’S
SERGIPE
Brazil’s state-run Petroleo Brasileiro
SA discovered a new deposit of light
oil in deep waters off the coast of
the northern state of Sergipe, the
company said.
Well 3-SES-189, located in the Poco
Verde area discovered in 2012 in
the BM-SEAL-4 exploration block,
was drilled down to 5,350 meters in
waters 2,479 meters deep.
Drilling began on April 6 by Diamond
Offshore Drilling Inc with its Ocean
Courage semi-submersible rig.
“The reservoirs contain light oil
of good market value and are 85
meters wide, with good porous and
permeable conditions,” a Petrobras
statement said. It said another test
is needed to confirm the conditions
and establish the well’s potential.
Petrobras is the operator and has a
75 per cent stake in the prospect,
in partnership with India’s Oil and
Natural Gas Corp , which holds 25 per
cent.
Deepwater exploration in the
Sergipe-Alagoas Basin by Petrobras,
ONGC and India’s Videocon Industries
Ltd and Bharat Petroleum Corp. has
resulted in some of Brazil’s largest oil
discoveries outside the giant finds in
the Santos Basin.
INDIA MAY FORM JOINT VENTURE
WITH UAE , KUWAIT FOR
OVERSEAS OIL & GAS ASSET S
India is in talks with the oil rich United
Arab Emirates and Kuwait to explore
the possibility of setting up separate
joint ventures that will acquire oil
and gas assets in other countries,
chairman of state-run Oil and Natural
Gas Corporation said.
A delegation led by Oil Minister
Dharmendra Pradhan held separate
discussions with the Energy Ministers
of the two countries on the margins of
a recent seminar of the Organisation
of Petroleum Exporting Countries
(OPEC) in Vienna. ONGC chairman
Dinesh K Sarraf said while the UAE and
Kuwait have plenty of oil to deal with
at home, unlike India, “they also have
plenty of cash to deploy”.
This explains the interest of the two
countries in forming joint ventures
with India to acquire assets in other
countries, said Sarraf, who was
part of the Indian delegation that
also included government officials
and top executives of other state-
run oil firms. If discussions were
to lead to a deal, Indian state-run
firms might form separate joint
ventures with state firms in the two
countries. India’s primary interest is
in acquiring upstream assets while
for Kuwait and the UAE the interests
stretch to refineries, retailing and
petrochemicals, Sarraf said.

44. JULY 2015 | PSE insights | 43
CII INVESTMENT
TRACKER
Highlights
Macro-economic conditions have
improved over the past one year
Economic reforms initiated in
the last one year have perked up
growth & investment
CII Business Confidence Index has
moved up
A pick-up in capital goods
coupled with investment
intentions hint at early stirrings of
investment revival
Foreign investment inflows have
stabilized
Project implementation has gone
up
Project revival has also improved
Incremental capital-output ratio
(ICOR) is declining, indicating
improved returns on investment
1. INVEST MENT SNAPSHOT
Unit 2013-14 2014-15 S ame Previous Latest
quarter quarter quarter
last year
New project announcements Rs bn 5737 10204 1249 4156 2344
Foreign investment inflows US$ bn 26.4 75.1 10.2 13.6 22.9
- FDI inflows US$ bn 25.3 31.9 8.0 6.6 10.2
- FII inflows US$ bn 5.0 40.9 9.5 6.1 12.4
Projects completed Rs bn 3279 3561 1556 778 1098
Project implementation Rs bn 363 2445 988 305
stalled 5
Projects revived Rs bn 1355 2050 224 203 382
GFCF as % of GDP % 29.7 28.7 29.8 28.2 28.7
ICOR Ratio 4.3 3.9 4.4 4.3 3.8
Latest quarter- Q4 2014-15, previous quarter- Q3 2014-15, same quarter last year- Q4 2013-14 ICOR: Incremental Capital-Output Ratio Source: CII compilation from various sources
2. INVEST MENT SCENARIO REGISTERS IMPRO VEMENT
2.1 Pick-up in capital goods, indicating early signs of investment revival
The capital goods, specifically machinery & equipment sector, has shown an improved performance since end 2014, indicating that investment activity is gradually gaining traction
Source: Office of the Economic Advisor
30
25
20
15
10
5
0
-5
-10
-15
-20
Capital Goods Machinery & Equipment
IIP growth (y-o-y)

45. 44 | PSE insights | JULY 2015
2.2 Investment Intentions Hint at Investment R evival
2006-07
17.1
20.1
22.4
16.116.1
9.7
5.3 5.7
10.2
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
New project announcements (Rs trillion)
New project announcements growth (%)
June-10
200
150
100
50
0
-50
-100
8000
7000
6000
5000
4000
3000
2000
1000
0
New project announcements by sector (Rs billion)
Manufacturing
Electricity
Construction & real estate
Mining
Services (other than fnancial)
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
16000
14000
12000
10000
8000
6000
4000
2000
0
New project announcements by ownership (Rs billion)
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Government
Foreign Private Sector
Indian Private Sector
Improved business confidence has translated into new project announcements on ground
New Projects announcements have nearly doubled
in 2014-15
Source: CII analysis & calculations based on CMIE data

Quarterly growth of new projects
announcements reveal a consistent increase in
2014-15
Growth of new project announcements has turned
positive in the last 3 quarters
Project announcements have picked up in
2014-15 in all sectors except manufacturing
Delayed revival of manufacturing is due to
subdued economic activity in last 2-3 years, which
has resulted in a huge surplus capacity in the
sector.
Project announcements by the government and
private sector have picked up in 2014-15
Source: CII analysis & calculations based on CMIE data
Source: CII analysis & calculations based on CMIE data
Source: CII analysis & calculations based on CMIE data

46. JULY 2015 | PSE insights | 45
New project announcements by states in 2014-15
(Rs billion)
Haryana
1,168
AndhraPradesh
Gujarat
Madhya Pradesh
Maharashtra
Odisha
Tamilnadu
Arunachal Pradesh
Karnataka
Telangana
Rajasthan
Jharkhand
Himachal Pradesh
WestBengal
UttarPrades
1,613
705
613
593
563
549
548
521
509
395
384
331
331
171
163
200920102011201220132014
3475
4336
3900
2828
2387
1843
868 826
Number of Proposals
2014-15
Jan-May
2014-15 Jan-May
200920102011201220132014
1040
1736
1540
568
530
405
124 150
Proposed Investment
(Rs thousand crore)
2014-15 Jan-May
200920102011201220132014
9.5
12.5
21.0
7.1
10.5
4.5
2.3 2.2
Proposed Employment (lakh)
Haryana, followed by Gujarat, Andhra Pradesh, Madhya Pradesh and Maharashtra, has attracted the maximum amount of new investments in 2014-15
Source: CII analysis & calculations based on CMIE data
While the significant growth in new project announcements is laudable, subdued new investment proposals (IEMs/LOI) indicate that a gradual recovery is underway as investors are still adopting a wait-and-watch approach before undertaking new investments
Source: DIPP’s SIA statistics

47. 46 | PSE insights | JULY 2015
Annual Projects completed
(Rs billion)
1,094
1,911
2,226
3,045
3,924
3,401
4,213
3,279
3,5613,681
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Quarterly Projects completed
(Rs billion)
2,135
851
577
871
1,381
544
637
532
1,566
1,123
562
778
1,098
M ar-12
Jun-12
S ep -12
D ec -12
M ar-13
Jun-13
S ep -13
D ec -13
M ar-14
Jun-14
S ep -14
D ec -14
M ar-15
3. PROJECT IMPLEMENTATION REGISTERS AN IMPRO VEMENT
Project implementation can be assessed by analyzing project completion and projects stalled.
3.1 Project completion
Project completion is improving. Number of
projects completed has gone up
Source: CII analysis & calculations based on CMIE data
Correspondingly, projects wherein implementation was stalled during the year/ quarter, have been coming down
Implementtaion Stalled during the year
(Rs billion)
2005-06
6
305218
876
2,759
2,535
4,943
3,955
3,635
2,445
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Impemetation Stalled during the quarter
(Rs billion)
2006
1412
886
1140
825
994988
1071827
652
305
415
516
M ar-12
Jun-12
S ep -12
D ec -12
M ar-13
Jun-13
S ep -13
D ec -13
M ar-14
Jun-14
S ep -14
D ec -14
M ar-15
Source: CII analysis & calculations based on CMIE data

48. JULY 2015 | PSE insights | 47
Lack of clearances
(environmental and non-
environmental) is the major
cause for projects getting stalled,
followed by problems related
to land acquisition, funds
availability and fuel feedstock &
raw material supply.
Lack of
environment
clearance,
17.4%
Lack of
funds,
10.9%
Lack of
promoter
interest,
3.0%
Land
acquisition
problem,
12.4%
Natural
calamity,
0.2%
Not
available,
3.5%
Others, 14.5%
Unfavourable market
conditions, 6.0%
Lack of
clearances
(non-env,),
22.5%
Fuel/feedstock/raw material
supply pb,
9.6%
Reasons for Stalled Projects, (% share in value)
Source: CII analysis & calculations based on CMIE data
4. PROJECTS REVIVAL HAS IMPRO VED
Project revival has picked up in 2014-15
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
Projects revived during the year
(Rs billion)
161
226
1,098
1,506
1,577
2,195
1,355
2,050
Projects revived during the quarter
(Rs billion)
428
890
408
379
518
252
580
300
224
513
952
203
382
M ar-12
Jun-12
S ep -12
D ec -12
M ar-13
Jun-13
S ep -13
D ec -13
M ar-14
Jun-14
S ep -14
D ec -14
M ar-15
Source: CII analysis & calculations based on CMIE data

49. 48 | PSE insights | JULY 2015
Sanjay Gupt a takes
charge as Chairman
and Managing
Director of Engineers
India Ltd
Sanjay Gupta, an engineering
graduate from University of Roorkee
has 34 years of extensive experience
in Engineers India Ltd (EIL) cutting
across implementation of various
mega projects. Gupta is a pioneer in
implementation of projects on OBE
(Open Book Estimate) mode.
Gupta joined EIL in 1981 as a
management trainee and has
served the company in various
positions. Prior to taking over as
Chairman and Managing Director
(CMD), EIL, he served as Director
(Commercial), EIL. As Director
(Commercial) he was mainly
responsible for Business Growth
Initiatives and Strategy Building to
enhance company business profile,
geographical spread and inorganic
growth. Major successes in the
overseas market have come during
his tenure including establishment
of Abu Dhabi Engineering Hub.
Implementation of major domestic
and internal jobs was also entrusted
to him given their strategic
importance.
Gupta has travelled extensively and
has been instrumental in enhancing
EIL’s international visibility and client
connect across the globe.

M K Singh takes
charge as Chairman
and Managing
Director of Bridge &
Roof Co. (I) Ltd.
M.K. Singh has been appointed as
the Chairman and Managing Director
of Bridge & Roof Co. (I) Ltd. (B&R)
from June 5, 2015. He joined the
Company in July 2011 as Director
(Project Management) and had held
additional charge of CMD of the
Company previously.
Singh has the distinction of having
diversified and varied experience
of working in various disciplines of
reputed Maharatna and Navratna
PSEs like NTPC and POWERGRID
in the areas of Engineering,
Procurement and Project
Management involving constructing
projects in India and abroad. He has
experience to handle manufacturing
business of various products while
working as MD/CMD of Richardson
& Cruddas (1972) Ltd., Mumbai and
Workshop of B&R at Howrah which
manufactures various Engineering
Products.
He is presently also holding
additional charge of CMD of National
Bicycle Corpn. Ltd., Mumbai and
has held position at Board Level
in many other Companies such as
Hindustan Cables Ltd., Bharat Bhari
Udyog Nigam Ltd., BBJ Construction
Co. Ltd. and has sound knowledge
of various policies, procedures and
guidelines including interfacing
between various departments of
Government, Statutory Bodies and
other stakeholders.
Manoj Mishra
takes charge as
Chairman and
Managing D irector of
National Fertilizers
Ltd
Manoj Mishra has taken over as
Chairman & Managing Director
(C&MD) of National Fertilizers Limited
(NFL) with effect from June 3, 2015.
He is a member of the Institute of
Cost Accountants of India.
Mishra has professional experience
of 30 years in various Public Sector
Undertakings and Co-operative sector.
Prior to his appointment as C&MD,
NFL, he held the position of Director
(Finance) in State Trading Corporation
(STC). He was also holding additional
charge of Director (Marketing) for
bullion and other divisions in State
Trading Corporation (STC).
Prior to his joining STC in 2010,
Mishra held various positions in
APPOINTMENTS
Ameising Luikham has taken over the charge as Secretary of the Department of Public Enterprises (DPE), the Government of India. Prior to this, he was the Secretary, North East Council.
An IAS officer of the 1981 batch of Manipur cadre, Shri. Luikham has served
the Manipur government in various capacities with distinction. In his 34-year-
old career, he has handled key ministries in the state including finance,
industry, agriculture and urban development and has earned the appreciation
of the authorities for his insight and tactful handling of sensitive issues.
He has also worked earlier at the Centre in the Department of Public
Enterprises as a Director.
Ameising Luikham Joins A s
Secretary, Department O f Public
Enterprises
SHRI Ameising Luikham is the new Secretary, Department of Public Enterprises

50. JULY 2015 | PSE insights | 49
Krishak Bharati Co-operative Limited
(KRIBHCO) for 23 years. Earlier, he had
worked in HHEC of India Ltd.
Rajendra
Chaudhari takes
charge as D irector
(Commercial) of
NBCC
Rajendra Chaudhari has taken charge
as Director (Commercial) of NBCC
on June 10, 2015. Prior to assuming
the office of Director (Commercial),
Chaudhari was holding the position
of Senior Executive Director
(Commercial) in NBCC, primarily
overseeing the operations of the
Company’s Real Estate Segment.
In addition, he was also heading
some key wings of NBCC namely,
Consultancy, Systems, Administration
and CSR. Known for his penchant in
digital dynamics, Chaudhari is a Civil
Engineering Graduate from Maharaja
Sayajirao University, Baroda (Gujarat)
and also had stint in Western Coal
Fields, another CPSE, before joining
NBCC in 2005.
P K Sharm a takes
charge as D irector
(Operations) of O il
India Ltd.
Pramod Kumar Sharma has taken
over as Director (Operations) of
Oil India Limited (OIL), on June 1,
2015. Sharma is a Post Graduate
in Geophysics from Banaras Hindu
University (BHU), Varanasi (UP) and
also possesses a Post Graduate
Diploma in Management (PGDM)
with dual specialization in HR &
International Business, from All India
Management Association (AIMA),
New Delhi.
Sharma has to his credit an
experience of more than three
decades in the E&P industry in India
A Government of India Undertaking, Ministry of Shipping, with its Head Office at Visakhapatnam, with effect from June 1, 2015.
M.S. Rao joined in DCI in the year
2006 as Deputy General Manager
(Operations) and got promotions
up to the level of General Manager
and now appointed as Director
(Operations & Technical). In DCI, he
worked in various capacities as Head
of Operations Department, Head
of Marketing Department, Project
Engineering Department, Human
Resources Department.
Rao is having vast experience
of about 24 years in the field of
Dredging (Operations, Marketing,
Contracts, Project Engineering, etc.)
and in other major Civil Engineering
projects.
Rao has obtained B.Tech (Civil
Engineering) from the Regional
Engineering College, Warangal (Now
NIT, Warangal), in the year 1990 and
MBA degree from Andhra University,
Visakhapatnam.
Sanjiv Sharm a
takes charge as
Director (Finance) of
Mazagon Dock Ltd.
Sanjiv Sharma has
been appointed as Director (Finance)
of Mazagon Dock Shipbuilders
Limited from June 1, 2015. Sharma
is a qualified Chartered Accountant
having vast experience in the field
of Finance. He held various Finance
portfolios such as Project Finance,
Resource Management, Costing
and Budgeting, Internal Audit and
implementation of ERP during his
career spreading over last three
decades. Prior to this, he was Director
(Finance) of Goa Shipyard Ltd.
and abroad. He has worked at various
senior positions in the Fields Head
Quarters of the Company at Duliajan,
Assam. His last assignment was as
Group General Manager (OSD) with
Director (Operations). Before being
OSD, he was Group General Manager
(Business Development) at Corporate
Office, Noida. As GGM (BD) he led the
Business Development team in Oil
India Limited, while discharging the
additional responsibilities as Chief
Executive Officer (CEO) of Oil India
International Limited (OIIL), a wholly
owned subsidiary of the company.
V Kalyana Rama
takes charge as
Director (Projects &
Services) of Container
Corporation of India
V. Kalyana Rama has taken over
as Director (Projects & Services)
Container Corporation of India
Limited (CONCOR). He was holding
the post of Executive Director, South
Central Region of CONCOR. He is a
Mechanical Engineer and worked in
BHEL, BHPV before joining Railways.
He had held various challenging
assignments in his career with Indian
Railways. He has been professionally
trained both in Railways and in
multi modal transport logistics. He
was instrumental in development
of container depots in South
Central and Southern Region of
CONCOR. He has been involved in
all the developmental planning and
operational activities of EXIM and
Domestic cargo at the various dry
port terminals of CONCOR.
M S Rao takes charge
as Director
(Operations &
Technical) of
Dredging Corporation
of India Ltd.
M.S. Rao has been appointed as
Director (Operations & Technical) in
Dredging Corporation of India Ltd.,

51. 50 | PSE insights | JULY 2015
STOCK TALK
GOVERNMENT LOOKING TO
PUSH STAKE SALES IN SMALLER
COMPANIES TO DRIVE SELLOFF
The government is looking to
push stake sales in smaller state-
run companies as part of a revised
strategy aimed at meeting its
ambitious disinvestment target.
Officials said public issues of blue-
chip firms such as NTPC and Oil and
Natural Gas Corporation may be
slipped in between issues of smaller
firms such as National Buildings
Construction Corporation (NBCC)
and SJVN.
The Disinvestment department,
which has approvals for about 20
public issues worth Rs 50,000 crore,
is working out a road map with an
aim to bring one issue each month.
Since the beginning of this fiscal,
the government has been able to
bring only one issue, that of Rural
Electrification Corporation, raising
Rs 1,600 crore through a 5% stake
sale. The disinvestment agenda has
received a setback on account of
choppy market conditions.
Finance Minister Arun Jaitley, during
his recent visit to the United States,
had addressed a select gathering
of portfolio managers from foreign
institutional investors as well as
officials from banks, insurance and
pension funds. The government will
further push those companies where
it currently holds around 90% stake,
and which needs to be brought
down by 2017 in order to meet the
mandated 25% public holding norm
prescribed by the market regulator,
Securities and Exchange Board of
India. “It is necessary to maintain
momentum throughout the year
and whenever market conditions
augur well, we will offload the bigger
issues,” the official said.
This will help the government
inch closer to the mammoth
disinvestment target of Rs 69,500
crore, of which Rs 41,000 crore is to
come from stake sales in state-owned
companies, the official said. Last
month, among a list of issues, the
cabinet had approved 10% stake sale
in the country’s biggest refiner and
fuel retailer, Indian Oil Corporation,
and 5% in power producer NTPC.
Approvals are already in place for
5% stake sale in ONGC. At current
valuations, the government may
be able to raise about Rs 28,000
crorefrom stake sale in these three
blue-chip firms.
The government also has cabinet
clearances for 5% stake sale in
Bharat Heavy Electricals and 10%
stake sale in both National Mineral
Development Corporation and
National Aluminium Company
Limited.
GOVT PLANS SINGLE ROADSHO W,
I-BANKER IN STAKE SALE PUSH
The Finance Ministry is considering
bundling requests for proposals and
roadshows in an effort to speed up
disinvestments during 2015-16.
The disinvestment department
usually issues separate requests
for proposal to engage merchant
bankers for each company in which
the government is planning a stake
sale. Similarly, investor roadshows
are conducted separately for each
company.
With a disinvestment target of Rs
69,500 crore for 2015-16, and with
Cabinet approvals already in for
stake sales worth Rs 50,000 crore
in 20 state-owned companies, the
government is weighing the option
of bundling requests for proposals
and roadshows.
If implemented, a request for
proposals may be issued for four or
five companies. Instead of working
on one scrip, merchant bankers may
find themselves handling a bunch of
Public Sector Enterprises’ stake sales
at the same time.
The disinvestment department
is working on how to bundle the
companies, by sector, market
capitalisation, or any other parameter.
“All the bundles may be similar in
value, but beyond that the modalities
are being worked upon,” the official
said.
Of the Rs 69,000 crore disinvestment
target, Rs 41,000 is expected from
minority stake sales and Rs 28,500
crore from strategic sales in loss-
making PSEs or other assets like
warehouses, factories, hotels and
office buildings.
The disinvestment department
has secured approvals for Rs
50,000 crore worth of stake sales
ranging from 5-15 per cent in 20
PSEs. These include Power Finance
Corp, NMDC, NTPC, Nalco, BHEL,
MMTC, National Fertilizers, Rashtriya
Chemicals and Fertilizers, Indian Oil,
Hindustan Copper, State Trading
Corp, India Tourism Development
Corp, Engineers India, MOIL, SJVN,
and Mangalore Refinery and
Petrochemicals.
Not all these companies’ stakes may
be sold in 2015-16, but most will be.
So far this year, only a five per cent
stake in Rural Electrification Corp has
been divested, garnering Rs 1,600
crore.

52. JULY 2015 | PSE insights | 51
PSE INDEX
S&P BSE PSU Index Stocks  (as on 31 July 2015)
SL.NO.SCRIP CODE COMPANY
CLOSING
PRICE
(Rs.)
CHANGE FROM
THE PREVIOUS
TRADING DAY (%)
CPSEs-Central Public Sector Enterprises
(Companies where the direct holding of the Central Government or of other CPSEs is 51% or more)
1  523319  BALMER LAWRIE & CO. LTD. 634.00 0.76% 
2  500048  BEML LTD. 1514.25 0.39% 
3  500049  BHARAT ELECTRONICS LTD. 3987.05 1.54% 
4  500103  BHARAT HEAVY ELECTRICALS LTD. 278.70 2.84% 
5  500547  BHARAT PETROLEUM CORP. LTD. 925.40 2.19% 
6  500110  CHENNAI PETROLEUM CORP. LTD. 191.45 7.33% 
7  533278  COAL INDIA LTD. 439.30 4.55% 
8  531344  CONTAINER CORP. OF INDIA LTD. 1643.15 0.06% 
9  532178  ENGINEERS INDIA LTD. 241.60 3.98% 
10  532155  GAIL (INDIA) LTD. 355.45 1.97% 
11  513599  HINDUSTAN COPPER LTD. 61.70 5.38% 
12  500104  HINDUSTAN PETROLEUM CORP. LTD. 924.05 1.48% 
13  500191  HMT LTD. 47.40 0.42% 
14  530965  INDIAN OIL CORP. LTD. 431.25 3.14% 
15  500108  MAHANAGAR TELEPHONE NIGAM LTD. 18.95 0.79% 
16  500109  MANGALORE REFINERY & PETROCHEMICALS LTD. 72.85 0.69% 
17  513377  MMTC LTD. 47.25 4.88% 
18  533286  MOIL LTD. 232.45 0.19% 
19  532234  NATIONAL ALUMINIUM CO. LTD. 35.50 0.14% 
20  534309  NATIONAL BUILDINGS CONSTRUCTION CORP. LTD. 1028.40 1.73% 
21  513683  NEYVELI LIGNITE CORP. LTD. 82.50 0.06% 
22  533098  NHPC LTD. 18.95 1.34% 
23  526371  NMDC LTD. 101.95 0.24% 
24  532555  NTPC LTD. 134.90 0.70% 
25  500312  OIL & NATURAL GAS CORP. LTD. 273.05 0.68% 
26  533106  OIL INDIA LTD. 432.40 2.02% 
27  532810  POWER FINANCE CORP. LTD. 245.85 1.03% 
28  532898  POWER GRID CORP. OF INDIA LTD. 141.55 0.53% 
29  524230  RASHTRIYA CHEMICALS & FERTILIZERS LTD. 54.40 0.55% 
30  532955  RURAL ELECTRIFICATION CORP. LTD. 271.35 1.47% 
31  523598  SHIPPING CORP. OF INDIA LTD. 64.70 1.25% 
32  533206  SJVN LTD. 25.25 1.00% 
33  500113  STEEL AUTHORITY OF INDIA LTD. 56.50 3.34% 

53. 52 | PSE insights | JULY 2015
The Facts
Bi Monthly Magazine of Central Public Sector Enterprises
Read by CII Members, Board level people of CPSEs, Top level Ministry officials.
The Coverage
CEO Speak
Sector in Focus
Lead Article
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Investments
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Stock Talk


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** Amount exclusive of service tax
insightsPSE
Vol 1 • No 1 • Nov 2014
SECTOR OF THE ISSUE: POWER
Dr. Arup Roy Choudhury, Chairman and Managing
Director, NTPC Ltd.
CEO SPEAK
Mr K.V. Varkey,
Chairman and Managing Director,
Hindustan Antibiotics Ltd.
INDIA’S PUBLIC
SECTOR:
Challenges and Opportunities
PSE UPDATES
Policy & Impact
Corporate Strategies
Tie-Ups, Procurement & Contracts
Project Updates
1
2
3
4
PSE
Vol 1 • No 3 • Mar 2015
insights
IN SEARCH OF
BLACK DIAMOND
CEO SPEAK
Mr M Narayana Rao
Chairman and Managing Director
MIDHANI Ltd
SECTOR IN FOCUS
Mr. Surender Mohan
Chairman and Managing Director
NLC Ltd
COVER STORY
NLC to Expand its Capacities in
Green Energy Projects
PSE
Vol 1 • No 2 • Jan 2015
insights
CEO SPEAK
Dr. R N Patra
Chairman and Managing Director
Indian Rare Earths Ltd
SECTOR IN FOCUS
Mr C S Verma
Chairman, Steel Authority of
India Limited (SAIL)
COVER STORY
MSME Needs Big Push, But Not
at State Enterprises’ Cost
GEARING UP TO REACH HIGHER GROWTH OBJECTIVES

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