some interesting news

Interesting Sandwich
http://www.thehindubusinessline.com/companies/article2806045.ece
"We are under pressure from both the depreciating rupee (imports) and an appreciating yen(exports). This is the third time prices have been raised in 2011-12 — April, October and now January," Mr Sandeep Singh, Deputy Managing Director for Marketing, Toyota Kirloskar said
- Low market sentiments, cant raise the end product prices to keep in line with RM costs
- Localization on the diesel engine front
- For instance in India, we have an FTA with Thailand and components come at zero per cent import duty. Hence, localisation is not encouraged. Companies resist localisation as long as import duty is low

Race to buy BG stake in Gujarat Gas
http://www.thehindubusinessline.com/companies/article2811672.ece

Gail has exited due to valuation concerns, now only Adani and GSPC for Gujarat Gas stake, however the exit of state owned GAIL and IOCL from the bidding race, would also put pressure on GSPC to take an exit due to valuation reasons. So Adani is the only strong player left. But the biggest gainer in the entire process is British Gas which has maid 19 times returns (on an investment of INR170cr valued now at INR3250cr) in 1997, a CAGR of 22%, quite amazing. But at that time who would have though of city gas distribution to be such a good economic business. Well BG did think and has made strong returns.
I think the business enjoyed certain advantages till the gas was suffciciently available which were as follows
1. Cheapness as compared to petrol and diesel
2. Domestic gas was easily available and even RIL gas was there and lower dependence on imported costly LNG
3. Network exclusivity and marketing exclusivisity provided near monopoly
4. Preference for people to opt for diesel cars as the differential between the diesel prices and CNG prices have continued to narrow down
5. I personally would not want to stand in queues at filling stations which is normally the case with CNG stations, i would rather prefer to get a diesel car and get it filled immediately.

But as the domestic gas becomes less easily available, the margins are under increasing pressure and would be until cheap domestic gas finds its way, which seems difficult given the fact that Reliance is contesting for higher gas prices and ONGC on new discoveries is allowed to market determined rates. The lowering price differential between diesel and CNG, all make a strong case for BG to exit, but why Adani wants to buy the stock at current valuations which seem rich is a question mark?

Long term thinking always helps
http://www.thehindubusinessline.com/industry-and-economy/article2811737.ece

Fuel availability emerged the biggest risk faced by thermal power projects in India. Coal production has not kept pace with capacity addition and developers have been forced to import at a time when international coal prices have soared. The domestic power supply situation has deteriorated significantly and nearly 51 per cent of the coal-based projects are operating with less than seven days' stocks.

I was just going through past articles on coal shortages, the momentum of coal shortage gaining media space gained pace after coal India IPO particularly, because until then the coal Indai production numbers and managemnet was not accessible and hence everyone believed that we had sufficient coal reserves so mining it out should not be a problem. The other problem was the no-go classification which hampered mine development. So all within a span of 2 years, a problem which was not widely discussed in the media or at the government level, becomes so chronic that it is now touted as the major problem.

Why this Gas Merchant Power Plants Why this Gas Merchant Power Plants di?
The govt. has always come hard on merchant power developers, now in a recent meeting, it was mooted that gas supplies to merchant power producers should be stopped if they are not on long term basis. That generally happens when you have a scare resource, the benefit of which should be passed on to the end consumer. But this resrouce was not so scarce till FY11 since RL had not led the investors know that production would decline substantially due to "Reservoir Complexities" - a pseudonym for saying "We wont produce until you raise prices"

Sukam Joins Hands for Diesel Gensets
http://www.thehindubusinessline.com/companies/article2798740.ece

Finally something on subsidy sharing

http://business-standard.com/india/news/crude-price-cap-for-ongc-oil-mooted/462276/

I think its a great step from a valuation perspective because modelling would be far more easier. I think it is only fair to cap the realizations at $60/bbl because the average realizations have been in this range for ONGC over the past 4 years.