Archive for the 'Multinationals' Category

IBM center in Bhubaneswar will be a development center; IBM will help IIIT Bhubaneswar

Bhubaneswar- Cuttack- Puri, IBM, IT, Khordha 1 Comment »

Earlier news mentioned about IBM expanding to or eying various tier 2 cities including Bhubaneswar. Economic Times now reports that the center in Bhubaneswar will be a development center. Following are excerpts from that report.

IT major IBM will soon open its third development centre in Orissa’s capital city. …

Sources said TCS, Infosys and Satyam already had their centres here while Wipro, Mindtree and Hexaware were expected to decide on their plan soon. Genpact had already committed to invest at Infocity-1, the state government’s IT cluster. …

The IBM team, on its part, assured the state government that they would provide technical know-how for Orissa’s ongoing e-governance programme.

Brain has also assured Patnaik that IBM would help the government to develop the proposed Indian Institute of Information Technology (IIIT) in Bhubaneswar.

IBM already has two centres, one in Chennai and another in Coimbatore, the sources added.

IBM Center in Bhubaneswar

Bhubaneswar- Cuttack- Puri, IBM, IT, Khordha 17 Comments »

Statesman reports on an IBM Center in Bhubaneswar. Following is an excerpt.

IBM is likely to establish a development centre in Bhubaneswar. A release issued by the CMO here said that indications to this effect were given by Mr Stephen W Braim, the vice-president, IBM Asia Pacific, today. Mr Braim met chief minister Mr Naveen Patnaik and discussed IT development and human resource development to meet the growing demand of such professionals. IBM has two development centres in the country and the one proposed to come up in Bhubaneswar will be its third centre, said the release.

GOM’s receommendation on the National Mineral Policy

Coal, INDUSTRY and INFRASTRUCTURE, Iron Ore, MINES and MINERALS, Mining royalty, POSCO, Steel Comments Off on GOM’s receommendation on the National Mineral Policy

Following are excerpts from the Economic Times report on this:

A GROUP of ministers (GoM) on Friday cleared the National Mineral Policy that retains the freedom of mining companies to export iron ore without restrictions on quantity or quality. …

The decision also clears the cloud over Posco’s proposed steel project in Orissa that has proposed to export some portion of ore from its captive mines. The company has proposed the exports to enable it to import high-grade ore required for mixing.

However, in order to facilitate value addition within the country and boost steel production, the new policy has given more powers to the state. The state governments will be able to give preference to companies undertaking value addition within the state while allotting iron ore mines. This will mean standalone mining activities will be disincentivised. However, the entire country will be treated as one economic region and states will have to permit transfer of ore outside the state if no one is willing to put up a plant there.

Moreover, the GoM has decided that a balanced policy will be followed while granting captive iron ore mines to steel companies. The policy will, therefore, provide captive mines to all steel units in operation up to July 2006 . It will also benefit the states as under the new policy, the present system of specific rate royalty will shift to ad valorem rate of 7.5%. Once notified, the proposal will increase royalty earnings by almost six times. For example, royalty earnings from iron ore of five ore producing states work out to Rs 250 crore. This will increase to Rs 1,250 crore under the new regime.

However, the new policy will also clip some of the powers of the states. The states sitting over mining applications of companies will be penalised as delays will transfer their powers to the Centre.

Another important aspect of the new policy is that a process of competitive bidding can be initiated for allocation of captive coal blocks. This is presently done by a screening committee within the coal ministry. The bidding process will also be started for all other major minerals.

Besides, the government will auction mining areas where full prospecting has to be done. This will require amendments to the Mines and Mineral (Development & Regulation) Act, 1957, that is likely to be introduced during the monsoon session of Parliament.

Under the new policy, companies will have to earmark 3% of turnover for undertaking rehabilitation and resettlement of displaced people under a sustainable development model. However, the ministry of environment and forests will work out fresh guidelines separately to introduce environment-friendly mining practices in the industry.

POSCO Status: a Financial express interview

Bhubaneswar-Paradip, Iron Ore, Jagatsinghpur, Paradip - Jatadhari - Kujanga, Ports and waterways, POSCO, R & R Comments Off on POSCO Status: a Financial express interview

Financial express carried a short interview of POSCO India Chairman and MD with journalist Dilip Bisoi. This interview gives a good idea of the status of the POSCO India project. Following are some excerpts:

  • How you are going to accelerate the project’s implementation? We have chalked out a strategy to implement the project. We are preparing to start the ground preparation work by October 2007. Out of the 4,004 acre of land, 3,566 acre is government land and 438 acre is private land. Out of the private land, only 30 acre is fertile land as it yields double crops. We are willing to exclude the 30-acre fertile land from the project site. We are also willing to differ use of the 438 acre private land until the villagers were willing to sell.
  • Anti-Posco activists have set up checkpoints and are not allowing anybody to enter the site. How do you plan to enter the area and start work? It is not true that we don’t have access to the site. We do have some access to the site. Villagers in Gadakujanga grampanchayat are supporting the project, while people in Nuagoan area are starting to change their mind in favour of the project. Only a small area of Dhinkia grampanchayat is not accessible. We will shed that portion from the project site for the time being. Access to the site and starting civil work will not be difficult.
  • Have you prepared your R&R package?  We are preparing a special R&R package for the displaced people. The Xavier Institute of Management, Bhubaneswar, has been engaged in conducting a survey to understand the needs of the people. The package will be announced once it gets the approval of the Rehabilitation & Peripheral Development Authority. I promise, I will make their lives better than before. Rehabilitating 450 displaced families is not a big job. We want to provide them with a sustainable livelihood.
  • How confident you are that the project work will start by October 2007? The next two to three months are very crucial. The prospecting licence for the Khandahar iron ore mines and forest clearance for the project site are expected in the next few months. Once these issues are settled, we will go ahead with the land preparation. If everything goes according to plan, we will procure equipment for the steel plant by the second half of next year. We will shop in the Indian market before going to Asian countries like China and Vietnam. The main plant, however, will be imported from Posco in South Korea. However, starting of the peripheral work at the site by October is very essential.

POSCO related road development

Bhubaneswar- Cuttack- Puri, Bhubaneswar-Cuttack- Kalinganagar, Bhubaneswar-Paradip, Cuttack, Iron Ore, Jagatsinghpur, Kendrapada, Paradip - Jatadhari - Kujanga, Ports and waterways, POSCO, Railways, Roads, highways and Bus stands, Steel, Thermal Comments Off on POSCO related road development

Economic Times reports  road development related to POSCO’s proposed operations. Following are excerpts from that report.

… the government has decided to develop 600 km of highways, to be called Posco roads, to provide connectivity for the 12 million-tonne capacity steel plant in Orissa. The Rs 4,000-crore highway would be constructed on built-operate-transfer (BOT) model and would be completed by 2010. 

The projects are part of phase-III of the National Highways Development Programme (NHDP). The Posco package consists of seven road stretches, including Panikholi-Keonjhar-Rimoli on national highway (NH)-215 and Chandikhole-Duburi on NH-200. The Cuttack-Paradip state road, jointly funded by the Orissa government, Paradip Port Trust and the roads ministry, will also help serve the transport of goods to and from Posco’s steel plant.

“NH-215 and NH-200 will be specifically geared to carry iron-ore traffic,” the official said. “The roads will serve Orissa’s industrial requirements for upcoming projects in the state, but Posco will be the biggest beneficiary,” he added.  …

Apart from road connectivity being provided by the Centre and the state government, a special purpose vehicle (SPV) to link Haridaspur and Paradip by railways has been formed by Rail Vikas Nigam (RVNL) in which Posco has 10% equity,” a Posco spokesperson said.  …

Posco-India will also build a captive port at Jatadhari, 10 km from Paradip and a captive power plant with a capacity of 1300 mw.  …

The company will also lay pipelines for industrial water utilisation from Jobra barrage.

Arcelor-Mittal project in Orissa on schedule

Arcelor Mittal, Keonjhar, Steel 1 Comment »

Zee news reports that Arcelor-Mittal’s project in Orissa on schedule. Following is an excerpt from that report.

Announcing that the company has already acquired space at the fortune tower for opening its Orissa office, the CEO said that the Dasturco would prepare reports for its steel mill, rehabilitation colony and an environment management plan (EMP).

“Since the Orissa government has been pressing for an EMP, we have also asked the Dasturco to look into this aspect”, Mishra said, adding that the company would proceed further after getting the reports.

Sources said the company expected the DPR from Dasturco within the next 12-18 months. Mittal Steel had signed an MoU with the Orissa government in December 2006.

The world’s number one steel company plans to set up its 12-mtpa steel unit in two phases. It has sought 8,000 acre of land in Keonjhar district to house its steel plant, a 7,500 mw captive power plant and a township.

IBM eyes Bhuabneswar among other tier 2 cities

IBM, INVESTMENTS and INVESTMENT PLANS, IT 5 Comments »

IBM does a lot of business with SMBs (small and medium businesses) in India. Thus it plans to expand its operation across India. Various news reports mention that it has plans to expand to 14 tier two cities. It has already started at Coimbatore and Goa, will start with Lucknow, and then follow it up with Bhopal, Nashik, Nagpur, Surat, Bhubaneswar, Jamshedpur, Jaipur, Ludhiana, Dehradun, Vizag and Madurai.

Orissa pursuing Accenture

Bhubaneswar- Cuttack- Puri, IT, Khordha, Multinationals 1 Comment »

Business standard reports that the Orissa government is after Accenture and other big IT consulting companies. There is nothing concerete here except that its a policy decisions to go after these biggies with an attractive package. Following are excerpts from that report.

The Orissa government is rolling out the red carpet to get the management consulting, technology services and outsourcing firm Accenture to set up facilities in the state. …

Orissa IT minister Surya Narayan Patro said, “We have initiated discussions with Accenture.”

A top official of the Orissa IT department said, “The government would leave no stone unturned in bringing in big companies like IBM, Cognizant and Accenture to the state. Discussion were on and the government would contact Accenture.”

The Orissa government was working out a package offering excellent infrastructure to companies keen to invest in the state.

Accenture currently had 1.5 lakh employees in 49 countries with global revenues of around $18 billion, and was one of the largest computer services and software companies.

India was an integral part of Accenture’s global delivery centre (GDC) and its second largest country of operation, with branches at Bangalore, Chennai, Hyderabad, Mumbai and New Delhi employing 15,000 professionals in India.

The Orissa government recently allotted 1074 acres of prime land for three IT zones labelled Infocity 1 to 3. While Infocity-1 was functional, Infocity-2 and Infocity-3 were
under planning and development. TCS, Infosys and Satyam had units here while Wipro, MindTree and Hexaware were expected to decide on facilities in Bhubaneswar soon and Genpact had committed to invest at Infocity-1.

Orissa expected software exports to cross Rs 1000 crore from the 2006-07 export figure of Rs 734 crore.

IT small and medium enterprises (ITSMEs) in Orissa were working on a plan to take up software exports. Currently there were about 135 IT firms registered with the Software Technology Park of India (STPI) in Orissa.

Arcelor-Mittal’s DPR to be made by Dastur

Arcelor Mittal, Iron Ore, Keonjhar, Steel 1 Comment »

Times of India reports that Arcelor-Mittal has hired M. N. Dastur to prepare the detailed project report of its proposed plant in Patna area of the Keonjhar district. Following are some excerpts of that article.

The world’s largest steelmaker Arcelor-Mittal has roped in M N Dastur and Company (P) Ltd (Dasturco) to prepare the detailed project report (DPR) for its proposed Rs 40,000 crore steel facility in Orissa’s Keonjhar district. …

The Arcelor-Mittal group, which signed an MoU with the state government for a greenfield steel plant in December, 2006, plans to have its DPR in place within the next 12 to 18 months, sources said.

Dasturco, a five-decade old leading engineering consultancy and design company, has well-known expertise in project planning and appraisal, economic evaluation, design and detailed engineering, project management, supervision of construction and erection and et al and this helped the company bag the deal, sources added.

Some reports about POSCO’s social spending

INVESTMENTS and INVESTMENT PLANS, Iron Ore, POSCO, Steel Comments Off on Some reports about POSCO’s social spending

Livemint was mentioning that POSCO is renowned to be socially a very conscious Industrial company. Following are some excerpts:

A mobile health van goes to some villages at least one day a week, young women have trained as beauticians, doctors have flown in from Korea to fix the cleft palates of local children, scholarships for study have been awarded and street lights have been erected.

On an international level, corporate social responsibility (CSR) has been a major focus for Posco, the only major steel company listed in the Dow Jones Sustainability Indexes, which track the performance of leading companies deemed to operate in a socially responsible manner. Its efforts in India coincide with increased attention to the subject.

Perhaps, this could be a pointer for MNCs who want to invest in backward states like Orissa.

POSCO-INDIA’s brochure highlighting the NCAER study

Bhubaneswar-Paradip, Jagatsinghpur, Paradip - Jatadhari - Kujanga, Ports and waterways, POSCO, Railways, Roads, highways and Bus stands, Steel Comments Off on POSCO-INDIA’s brochure highlighting the NCAER study

I came across several leaflets and brochures in POSCO-INDIA’s Press room pages. Following is the brochure that highlights the NCAER study that I mentioned earlier.

POSCO considering offering shares as part of R & R

Paradip - Jatadhari - Kujanga, POSCO, R & R, Steel Comments Off on POSCO considering offering shares as part of R & R

Business standard reports that POSCO is considering offering shares as part of its R & R. Following are some excerpts from that report.

Meanwhile, Posco is considering share allotment to landholders as an option for its Rs 52,000 crore project in Orissa. The company, which requires nearly 4,000 acres of land for a 12-million-tonne plant, says it will take a call on the issue by the end of this month.

“No doubt this is an option but we will decide after we know what people want,” a Posco spokesperson said. To understand land-holders’ demands, the company has asked Xavier Institute of Management, Bhubaneshwar, to carry out a socio-economic survey.

Of the 4,004 acres of land Posco requires, 3,566 acres is government land and 438 acres under private ownership.

The private land covers three gram panchayats of Gada Kujanga, Muagaon and Dhinkia. Dhinkia’s is the largest tract covering 200 acres. The area has a significant peasant population with communist affiliation.

The spokesperson added that any share issue would have to be over and above the compensation. “Otherwise, people will not like it,” he said.

Both Posco and Videocon will also offer one job per displaced family.

The Orissa rehabilitation and resettlement (R&R) policy has a provision for convertible preference shares to be issued to displaced people. The value of the shares could be up to 50 per cent of the one-time cash assistance.

Economic Effects of POSCO-India : A study by NCAER

Bhubaneswar-Paradip, Budget, State, INDUSTRY and INFRASTRUCTURE, INVESTMENTS and INVESTMENT PLANS, Iron Ore, Jagatsinghpur, MINES and MINERALS, Mining royalty, Paradip - Jatadhari - Kujanga, POSCO, PPP, SEZs, Steel, Taxes 1 Comment »

I came across a 1-page note someone from POSCO-India gave me when I was visiting Bhubaneswar in December 2006-Jan 2007. The 1-page note summarizes a study done by NCAER. The study has also been reported in News media such as Hindu Businessline. (POSCO-India in its web page has additional links.) We will give some excerpts from the Hindu Businessline report.

The 1-page note: POSCO-India’s rs 52,810 Cr investment by 2016 will stimulate Orissa Economy.

  • Economic Benefit:
    • Generate Rs 29,760 crores additional annual gross output for Orissa including Rs 12,610 Crore of POSCO-India’s direct gross output.
    • Create excess annual value addition of Rs. 12,100 crores for Orissa which equals 19% of Orissa’s state GDP in 2005-06 (equals 11.5% in 2016-17)
  • Employment:
    • Job creation of 870,000 man years, absorbs 88% of state unemployment backlog (i.e., decrease in backlog of employment from 9.9 lakhs in 2005-06 to 1.2 lakhs).
    • 18,000 man years of direct employment in POSCO-India.
  • Tax Contribution:
    • POSCO-India annual tax contribution (Rs 2,620 Crores) would be appx. 17.6% of total tax revenue of Govt. of Orissa in 2016-17.
    • POSCO-India SEZ would contribute Rs 174,970 crore tax revenue in next 35 years.
      • Rs 77,870 crores would be to Govt. of Orissa and Rs 97,100 crores to Govt. of India.
      • The differences of tax between SEZ and DTA status is less than 8% for Govt. of Orissa and 5% for Govt. of India.
  • Comparison with current Orissa Economy:
    • Orissa in 2003-04:
      • Gross Output: 111,378 crores
      • State GDP: 53,830 crores
      • Employment: 143 lakhs (2001 census)
      • Tax: 8170 crores (2005-06)
    • POSCO-India’s impact:
      • Gross Output: 29,760 crores
      • State GDP: 12,100 crores
      • Employment: 8.7 lakhs
      • Tax: 2620 crores

We now give some excerpts from the Hindu Business line article of January 2007 which partly explains how some of the above numbers were calculated. That article was written by R. Venkatesan who works for NCAER, but the article was his personal view.

The NCAER study broadly used the ADB/World Bank methodology on the social cost-benefit with minor adjustments for the local parameters. Econometric models were used to project border prices for the useful life of the project. The project’s impact from the State economy perspective — in terms of the impact on the State GDP (output multiplier effects) and employment opportunities created within the State (employment multiplier effects) was also assessed.

The output multiplier for iron ore was found to be 1.4 compared to 2.36 for steel. In other words, every Rs 1 lakh worth of output in the iron ore sector would result in Rs 1.4 lakh of output (including the Rs 1 lakh output of iron ore) compared to Rs 2.36 lakh for every Rs 1 lakh output of steel. The employment multipliers for iron ore and steel work out to 0.35 and 0.69 man-years respectively. Therefore, in terms of both output and employment, steel has a larger impact.

These multipliers imply that the Posco project would create an additional employment of 50,000 person years annually for the next 30 years vis-à-vis 870,000 person years in the steel project alternative. In terms of value addition, the iron ore and steel project alternatives would contribute 1.3 per cent and 11.5 per cent to Orissa’s State Gross Domestic Product (or SGDP) by 2016-17 respectively.

An important part of the study was the Least Cost Analysis of technology options in the steel-making, the Finex process that Posco purports to bring and the traditional blast-furnace technology. The Average Incremental Economic Cost was used as the yardstick; this was followed by computing the economic IRR (internal rate of return)
to examine whether the project was economically worthwhile from the national economy point of view.

The EIRR for the Orissa project works out to 16.6 per cent for base case and even in the worst case scenario, the EIRR at 13.9 per cent would remain above the hurdle rate of 12 per cent. The economic impact of the project was estimated at $2.5 billion at the test discount rate of 12 per cent.

The significant feature of the study was the estimation of depletion premium or the opportunity cost for depleteable and non-renewable resource iron ore for reasons cited below:

India’s high-grade ore (+ 65 per cent Fe content — Haematite) reserves, proven and probable, amount to only 0.58 billion tonnes. And even if we were to factor in indicative and inferred reserves (probable/feasible), the total reserves (proven and possibly future potential) would be only 0.92 billion tonnes.

India’s medium-grade ore (+62 per cent Fe to 65 per cent Fe — Haematite) reserves, proven and probable, is only 1.3 billion tonnes. Here too, if we factor in indicative and inferred (probable/feasible and pre-feasibility estimated) reserves, the total reserves (proven and possibly future potential) will be only 2.8 billion tonnes.

Policy Implications

Orissa stands to gain significantly if instead of exporting iron ore it processes it to steel within the State, in terms of both employment generation (17 times), and GDP impact (9 times).

India’s high and medium grade iron ore reserves may not last more than 19 years even if exports of these grades are frozen at the current level or if the targets set out in the draft steel policy are to be met. The economic analysis considered the depletion premium for high and medium grade iron ore. This is the opportunity cost to the national economy of using the depletable resource, which is the average incremental cost of depletion premiums computed year-wise.

Any exporter of iron ore of medium and high grades from the State needs to pay a depletion premium of $27 per tonne. Even this would be a sub-optimal policy from the State’s viewpoint if it can process the medium and high grade ore to steel. No such depletion premium has been applied for coking coal as its price did not exhibit any
trend before the recent steep price hike.

For the eastern States seeking to raise the mineral sector’s share in their GDP, it may be a good idea to set up processing facilities. It would not be advisable to allocate iron ore mines through open bids or accept increased royalty payments, even accounting for the depletion premium, compared to the option of processing iron ore to steel. Future cost-competitiveness and logistical advantage imply that iron ore-rich States can compete with existing over-capacities in the US, Europe and Japan even after factoring in the capital charges for new investments.

Export of iron ore needs to be restricted to grades other than medium and high-grade ore categories; for instance, export of beneficiated ore from Goa using inland waterways logistics advantages could be encouraged. Allowing exports of high grade ore would facilitate export of steel from existing over-capacities in the US, Europe and Japan to East Asia at the expense of future steel exports from new Indian steel capacities which are likely to enjoy cost-competitiveness over existing over-capacities elsewhere.

I am not qualified to judge the above analysis. I would appreciate any comments, analysis, criticisms etc. on the above.

Samaja Editorial page article : POSCO-TISCO-N-MITTAL – If not now, never

Arcelor Mittal, Balasore, Bhadrakh, Bhadrakh-Dhamara, Bhubaneswar- Cuttack- Puri, Bhubaneswar-Berhampur, Bhubaneswar-Paradip, Cuttack, INVESTMENTS and INVESTMENT PLANS, Jagatsinghpur, Jajpur, Jajpur Rd- Vyasanagar- Duburi- Kalinganagar, Kendrapada, Keonjhar, Khordha, MINES and MINERALS, Ports and waterways, POSCO, Puri, Railways, Roads, highways and Bus stands, Steel, Tatas, TRANSPORT AND COMMUNICATION Comments Off on Samaja Editorial page article : POSCO-TISCO-N-MITTAL – If not now, never

Samaja has a beautiful editorial page article by Ramachandra Pattanayak. In it the the author explains that if we continue opposing Posco, Tisco and Mittal what will happen is that steel plants will be made in other states, our mines will be assigned by the central government to these steel plants in other states and we will lose out on many fronts including infrastructure development that comes with steel plants, ancillaries, etc. Similarly, he says it does not make sense that we are so vocal about IIT etc. and yet we oppose Vedanta University.

I agree with the author. The assignment of mines is not fully under state govt. control. We can not sit on requests and delay assigning mines. If we do that currently the central govt. has the right to assign the mines to others. Losing out on the mines, we lose out on the related infrastructure developments such as townships, railways, roads, and to some degree ports. We also lose out on the ancillaries. In this regard one may note cities with big steel plants such as Rourkela or Jamshedpur. They all have lots of ancillary units around that area. So even if the main steel plant does not employ as many people as in the past, there are more opportunities for ancillaries these days as the state is keen on going after auto factories, bicycle factories etc. These ancillaries will hire a lot of people. But, of course, we should not force people out of their land; they should be enticed with good compensation (R&R). On the other hand we need to be very careful and wary of some of the neighboring states who are trying to spread their ideology to our state and in the process trying to steal some of these upcoming developments in Orissa. In this regard it is amazing that politicians and MPs from a neighboring state are able to come to Orissa and say that their party opposes such and such project in Orissa. At the same time the party of these politicians support industry in their state so much that they or their allies have sent in cadres dressed up as policemen to kill and rape people opposed to industrialization in their state. What gull these politicians from the neighboring state have and how stupid we Oriyas are to invite them, give them a platform and listen to them.

Collection of old links on investments and investment plans

Anil Ambani group, Arcelor Mittal, Birlas, Central public sector, CIL, Indian majors, Industrial houses, INVESTMENTS and INVESTMENT PLANS, IOC, L & T, MCL, Mukesh Ambani group, NALCO, NTPC, POSCO, SAIL, Tatas, Vedanta Comments Off on Collection of old links on investments and investment plans

Following is somewhat of a dated collection on investments and investment plans in Orissa.