The week in review

The week in review

The dispute between the Ambani brothers over allocation of gas from the D6 block, in the Krishna Godvari basin, dominated the headlines this week, with the issue figuring in Parliament. On Monday Murli Deora, the petroleum minister, told the Lok Sabha the government had no interest in interfering in the dispute between the two companies. It would however safeguard the public interest, he said. This was in contrast to an affidavit filed in the courts, that a private memorandum of understanding between the two Ambanis should be scrapped.

On Wenesday RNRL kept up the pressure, saying that there was a conflict of interest between Mukesh Ambai’s RIL, and the firm appointed by government regulators, to verify its gas field expenditure. And on Thursday, some members of Parliament said they were concerned about the private dispute affecting a national resource like gas. They demanded the government nationalize Reliance Industry’s gas fields. But Murli Deora turned them down; saying the era of nationalizing was over.

What would have been another big story of this week, a decision over the proposed $23 billion merger between Bharati Airtel and MTN has been postponed by a month. The two sides agreed to extend talks till 31 August. Bharti has also hinted it could sweeten its offer, to enable MTN shareholders support of the merger. At least three fourths of MTN shareholders need to back the deal for it to go through. Analysts say Bharti could sweeten the deal by having one of its major shareholders, Singtel buy GDRs at a premium, from MTN shareholders.

State-run MMTC, an agency that imports commodities for public sector companies, could be side stepped. Power company NTPC has decided to import coal directly, rather than routing it through MMTC. The move comes after a controversy over MMTC’s coal imports. More than 80% of NTPC’s installed power generating capacity runs on coal.

In another development, Coal India Limited, which supplies 85% of domestic demand, could raise its prices. This is to improve its finances before it goes to market with an IPO. The price hike, however, could fuel inflation by having a cascading impact on power, steel, and cement prices.

The earnings season has been unexpectedly good with 23 out of 30 Sensex companies beating analyst expectations on net profits. Tata Motors’ actual profit in Q1 was Rs514 crore, against street expectations of Rs99 crore, a difference of 419%. Similarly there were huge difference between the expectations and actuals of Larson and Toubro, Jaiprakash Associates, Grasim Industries and Hindalco industries.

Among the laggards in the first quarter were Reliance Industries, Hindustan Uniliver, Tata Steel, DLF and Sun Pharmaceuticals.

Overall, the Sensex rose 13.9% between 10 July; when Infosys announced its first quarter results; and 31 July, the end of the earnings season.

The IPO market is also on a boil. After the successful debut of Adani Power Limited, state owned NHPC opened its IPO on Friday, and within five minutes, it was oversubscribed. The hydropower company is selling 160 crore shares, which will bring the government’s stake down to 86 percent from 100%.

Real estate costs big money and raises the cost of doing business. And car dealerships are hit badly because they require lots of room. But Skoda in India has an idea. It’s setting up small boutique showrooms that display just one or two cars, and focus on advertising the brand. They also include model cars, and other merchandise you can buy. Skoda says it plans to open five such stores in big cities by the end of next year.