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Friday, June 23, 2017

Tata Steel, Thyssenkrupp looking at reducing Port Talbot’s capacity

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London/Frankfurt: Tata Steel and Thyssenkrupp are looking at reducing the size of Britain’s largest steel plant in Port Talbot, Wales, industry people familiar with the matter said, as the two firms press ahead with plans to merge their European steel operations and deal with the overcapacity afflicting the industry.

The move could see one of Port Talbot’s two blast furnaces shut, halving the plant’s capacity. Up to 4,000 people are employed at the site.

An industry source close to Thyssenkrupp’s board said the German group expected the struggling plant to be downsized in the event of a merger, without specifying by how much.

Two officials from the Community labour union said in a message emailed to union members last week and seen by Reuters, that Tata has only pledged to keep the two blast furnaces at Port Talbot running for three years, at which point one of them is due to close in the absence of further investment.

“Three years is nowhere near enough. Our line in the sand has always been keeping two blast furnaces running (long term). We want guarantees and besides, they’ve given us guarantees before that haven’t materialised,” said a union source.

Indian-owned Tata Steel, which employs 11,000 people in Britain, said it could not comment on speculation over its merger plans, while Thyssenkrupp declined to comment.

“The most important thing for us is that by a consolidation and by the underlying plan we can address the issues of overcapacity,” Thyssenkrupp’s chief financial officer Guido Kerkhoff said last week, in reference to the merger.

The fate of the Port Talbot plant has been up in the air since Tata Steel said in March it planned to sell all of its loss-making British assets. In July, however, it announced it was in talks with ThyssenKrupp about creating a joint venture for its European operations.

Port Talbot was losing 1 million pounds a day in the financial year which ended in March but has been making an operating profit since then, thanks to a weaker pound, higher steel prices and cost cutting.

Separately, the union chiefs said in their email to members that Tata Steel planned to start formal talks “within weeks” about closing its costly defined benefit UK pension scheme to future accruals.

The Thyssenkrupp merger plan hinges on Tata striking a deal with the British government to separate the pension scheme.

Union leaders said in the email that they would ballot for industrial action if Tata unilaterally triggered a 60-day consultation on closing the scheme without their agreement on outstanding matters.

The union is seeking assurances on the long-term future of Port Talbot and is opposed to the pension scheme being spun off due to concerns that it would be taken over by the state-backed Pension Protection Fund (PPF) which would cut current employees’ pension benefits.

Tata and the UK government are looking at the PPF option, and pensions experts say closing the scheme to future accruals is a necessary first step to achieving that end and plugging the scheme’s deficit.

Tata’s British Steel Pension Scheme is one of Britain’s largest defined benefit schemes with over 130,000 members.

Its deficit was estimated at 50 million pounds last October, though it stood at 700 million pounds earlier this year and could easily balloon again, depending on market conditions.

Thyssenkrupp, which has long been seeking to reverse the decline in its own steel business, has insisted it is not prepared to take on Tata’s pension liabilities.

Tata announced on Monday that it was investing 85 million pounds in its UK assets this year but the plan did not include any investment in Port Talbot.

Tata’s parent, Tata Sons, is now embroiled in a bitter boardroom battle putting it under even more pressure to stem the billions of dollars of losses it has made since entering the EU steel industry in 2007 with the acquisition of Anglo-Dutch group Corus, just a year before the financial crisis.

Infra sector sponsors try bonds backed by credit enhancements

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Mumbai: A handful of bond deals involving credit enhancements are helping sponsors of infrastructure projects repay costly bank loans and instead borrow from the bond market at a cheaper rate.

Over the past eight months, companies such as Tata Realty and Infrastructure Ltd (TRIL), Sterlite Grid Power Ventures Ltd and Hindustan Powerprojects Pvt. Ltd have raised money through bonds backed by credit enhancements.

Credit enhancements are essentially credit guarantees offered by a third party, India Infrastructure Finance Co. Ltd (IIFCL) or banks. They are also offered through structures that set aside a certain part of the funds raised into a reserve which can be used to pay interest in case of erratic cash flows.

Hindustan Powerprojects privately placed bonds after receiving an external credit enhancement from IIFCL. The enhancement for Sterlite Grid Power Ventures issuance came from banks.

Others, such as Hindalco Industries Ltd and Century Textiles and Industries Ltd, are also in talks for such credit enhancements, two bankers privy to the developments said on condition of anonymity.

Emails sent on 11 March to Hindalco and Century Textiles did not receive any response.

The motive behind a credit enhancement is to upgrade the rating of the issuer and the issuance. Typically, most projects, after they are completed and begin operations, are rated BBB-. This is the lowest investment grade rating and not high enough to attract investment from long-term investors such as insurance companies and provident funds owing to regulations that allow them to invest only in instruments rated AA and above.

“The market for below AA+ rated corporates is very limited and the cost benefit is also very low in comparison to loans,” said Ajay Manglunia, executive vice- president of fixed income at Edelweiss Securities Capital.

For instance, a 10-year AAA-rated corporate bond’s yield is around 8.5% while that on an AA-rated bond is over 9.5%. Bonds rated below AA do not get any interest, bankers said.

“Why most projects do not get a high rating as AA or AAA is because while the construction-related risks are behind them, what drives the rating is the adequacy of the cash flow to meet payment obligations. Typically this cushion is not very high for the projects, especially in the initial phase,” said Pawan Agrawal, chief analytical officer at Crisil Ratings.

This is where structures such as credit enhancements help.

For instance, TRIL, the special purpose vehicle for the construction of the Pune-Solapur toll road, raised Rs.1,000 crore through bonds after getting an upgrade in its rating to A+.

Besides the parentage of the Tata group, bankers created three reserves and added what is know as a “cash-trapping clause” that prevents the company from using a part of the funds set aside as a reserve. This cushion took the rating of the bond up by a notch, said the first of the bankers cited earlier. TRIL did not reply to an email sent on 11 March.

In a bond sale by East-North Interconnection Co. Ltd, a subsidiary of power transmission firm Sterlite Grid Power Ventures, bankers used the fact that it gets regular cash flows from Power Grid Corp. of India Ltd to push the rating of the bond up to AAA (structured obligation). The issue was rated by Crisil.

The company’s website says it raised about Rs.900 crore through the bond issue in January, selling bonds with a 17.5-year tenor in three parts, with the yield ranging between 8.8% and 9.25%. “This was used to repay a bank loan that had an interest rate of 10%. So there was a saving of nearly 100 basis points for the company,” said the first banker. A basis point is one-hundredth of a percentage point.

To be sure, such deals are still a rarity. “The cost of getting a credit enhancement is the deciding factor. Sometimes, investors tell us to give a higher yield on the bond that is rated probably A or below rather than charge some basis points for offering credit enhancement,” said the second banker.

However, bankers expect an increase in such deals given the urgency to unlock bank funds from infrastructure projects.

The Reserve Bank of India has indicated that project financing should move to the bond market. To this effect, the government entrusted IIFCL to provide credit enhancements and help companies access the bond market. IIFCL hopes deals will pick up in the coming months.

“We have a number of deals in the pipeline wherein we would be able to give credit enhancements to issuers,” said an official at the company, requesting anonymity.

Under the credit enhancement scheme, IIFCL has so far offered enhancements for two bond issuances with an aggregate size of about Rs.800 crore.

The government also announced that Life Insurance Corp. of India would offer credit enhancement through guarantees to infrastructure bonds and further deepen the bond market.

Top 3 Telcos may bear brunt of potential 16% fall in telecom industry revenues if Jio’s ‘Prime’ offer finds max traction

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KOLKATA: AirtelBSE -0.22 %, Vodafone and Idea are likely to bear the brunt of a potential 16-17 per cent fall in telecom industry revenues in FY18 if newcomer Reliance Jio’s Rs. 303 per month ‘Prime’ offer finds maximum traction from next month, analysts and sector experts said.

The price-value equation of Jio Prime offer of 28 GB data at 4G speeds with unlimited voice calls to any network is the best in the market, and incumbent carriers would do well to closely match it, they said. Brokerage Kotak Institutional Equities even warned that it would be “foolhardy for incumbents to assume they can command material pricing premium in the marketplace versus Jio”.

Kotak estimates “a potential ceteris paribus negative impact of around 16-17 per cent on industry revenue in FY2018” if Jio’s Rs.303/month offer appeals to customers with total monthly wireless spends of Rs. 200 or more. But it noted that the estimated dip in industry revenue could be restricted to 8-10 per cent if there is “ARPU sanity in the sub-Rs.200 segment of the market”.

Experts agreed that market share gains in the lower end of the market would restrict potential revenue declines for incumbent carriers in 2017-18.

Top 3 Telcos may bear brunt of potential 16% fall in telecom industry revenues if Jio's 'Prime' offer finds max traction

But Kotak estimates that even a 10 per cent dip would see the country’s telecom industry revenue in FY18 reduced to Rs. 1,57,200 crore from an estimated Rs.1,74,000 crore in FY17. AirtelBSE -0.22 %, Vodafone and Idea are likely to bear the brunt of a potential 16-17 per cent fall in telecom industry revenues in FY18 if newcomer Reliance Jio’s Rs. 303 per month ‘Prime’ offer finds maximum traction from next month, analysts and sector experts said.

The price-value equation of Jio Prime offer of 28 GB data at 4G speeds with unlimited voice calls to any network is the best in the market, and incumbent carriers would do well to closely match it, they said. Brokerage Kotak Institutional Equities even warned that it would be “foolhardy for incumbents to assume they can command material pricing premium in the marketplace versus Jio”.
Brokerage Credit Suisse, however, feels market leader Bharti Airtel will match Jio’s paid offers, going forward.

“While it didn’t make sense to match Jio’s free offer, we believe Bharti has decided that it will not hesitate from matching Jio’s paid offers,” the Swiss brokerage said.

Bharti Airtel chairman Sunil Mittal recently told at the Mobile World Congress that Jio’s rates are still unsustainable.

Airtel is already reckoned to have unveiled two super aggressive bundled plans at Rs.145 and Rs.349, both offering a generous 14 GB of 3G/4G data over a month, sweetened with unlimited voice calls, primarily aimed at retaining upper-end customers. Idea Cellular, too, has reportedly countered Jio Prime by unveiling a Rs.348 bundled plan, offering 14 GB of data over a 28-day span with unlimited voice calling.

A senior industry executive said incumbent carriers are more likely to “selectively match Jio’s Prime offer” to hold on to upper-end subscribers or those threatening to port out.

Analysts at Kotak said it was time incumbent carriers took a leaf out of Jio’s limited commercial history in the market, and treated all customers (in the same ARPU bucket) the same in terms of value offered.

What’s more, the brokerage feels “loyal customers have been short-changed a tad by the industry” historically.

“Some of the largest corporate customers of incumbents have not seen rates go down or data allowance go up since Jio’s launch, even as customers intending to port out and new users have seen a significant improvement in the price-value equation,” analysts at Kotak said.

The brokerage feels incumbent carriers have for long chased new customers with “materially superior price-value offerings than what old customers are getting,” and have also offered substantial retention benefits to customers who have expressed an intent to port out.

Another industry executive warned that incumbents could well end up paying a heavy price for not doing enough proactively to ring fence upper-tier customers since Jio’s entry last September. According to him, most incumbents have essentially focused on holding on to prepaid users by offering discounts, instead of taking proactive steps to retain top-end users who might now find the price-value equation of Jio’s Prime offers more exciting.

Rado Launches Lightness-inspired Timepieces in Hyderabad

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Hyderabad, India

Rado, the Swiss watch brand known for its innovative use of design and materials, officially launched its lightness-inspired collection in Hyderabad today. To mark the launch of this new collection in India, Rado brand ambassador and beloved Bollywood star Hrithik Roshan made an appearance at Sujana Forum mall, also home to the brand’s latest boutique.

To bring alive the theme of lightness, Rado also unveiled a delicate art piece created by popular Indian artist Janhavi Seksaria. The piece, entitled Time Spaces, gives the illusion of lightness in terms of both weight and emotion. The circular structure of the installation represents the dial and shows the time with the moving hands of the watch. Despite the weight of the material, the structure emanates a feeling of weightless.

Commenting on the launch, brand ambassador Hrithik Roshan stated, “Rado is known for being visionary and has yet again created something so simple and beautiful that it instantly catches your eye. For someone like me who believes that ‘less is more’, I am really excited to launch these stunning watches today and I’m sure they will be loved by the people of Hyderabad.”

Lightweight luxury

Many of Rado’s latest standout pieces have been crafted from the brand’s signature material, high‐tech ceramic, which is one of the lightest and most durable materials used in luxury watchmaking. The designs are light and atmospheric as well: The True Open Heart, with its diaphanous mother‐of‐pearl dial, evokes feelings of weightlessness, while the new True Thinline timepieces seemingly float on the wrist with their restrained lines and ultra‐slim profiles.

By far the lightest in the collection, the HyperChrome Ultra Light is crafted from a trio of featherweight materials: silicon nitride ceramic, hardened titanium inserts, and a movement with anodized aluminium bridges. There are non-ceramic highlights too: the HyperChrome 1616, for instance, truly breaks new ground in comfort and durability with its use of a new titanium hardening treatment. This treatment makes the titanium 5 times harder than watchmaking steel while being only half its weight.

The new collection is on display at the Rado boutique, Sujana Forum Mall, Kukatpally, Hyderabad. It is open 7 days a week from 11:00 a.m. to 8:00 p.m.

The lightness-inspired art piece Time Spaces will be on display at the central atrium, Forum Sujana Mall, from Aug. 1st to Aug. 7th.

About Rado

Rado is a globally recognised brand, famous for innovative design and its use of revolutionary materials to create some of the world’s most durable watches. Ever since its beginnings in Lengnau, Switzerland, Rado has been a pioneer, with the brand philosophy “if we can imagine it, we can make it” still holding true today.

TRAFI World’s Most Accurate Public Transportation App Launches in India

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Bangalore, Karnataka, India
TRAFI, the international public transport app that helps you plan your city journeys, is formally launched in India today in the key metro cities Mumbai and Bengaluru.

TRAFI is globally the most accurate urban commute planning tool through of its unique algorithms, supported by real-time data. “This will be a great help for commuters in large cities like Delhi, Mumbai and Bengaluru where complexity of transport networks and lack of accurate and complete information currently makes it difficult to plan their journeys. TRAFI’s highly accurate real-time focused approach offers the highest accuracy of information, showing you what really happens in your city right now. And because we apply this over all major transport modes, we will help you with any trip selecting the best buses, trains and metro options for you, in one clear overview” said Martynas Gudonavičius, Co-Founder and CEO of TRAFI, “All over India improving public transport is a hot topic, central to the Smart Cities agenda of government. For that reason, TRAFI has decided to do its part in helping India improve, by spending over $1M during 2016 on delivering better information about public transport in all major cities of India”.

TRAFI is one of the best applications for passengers in the global market to comfortably and efficiently navigate all public transport options. But in the background it is also a solution provider to the transport sector, helping agencies and authorities improve visibility on their fleet and increase the effectiveness of public transport. “We have been providing many host cities and transport agencies with dashboards, analysis and alerts on the operation of public transport. Our low-cost cloud-based solutions can replace the conventional hardware, computing power and cost heavy control centres, or can be run in parallel to conventional systems”, explains Rajarshi Rakesh Sahai, the Country Manager for India, “It is completely scalable, untying cities and agencies from the turnkey approach. TRAFI being cloud based means you can access it anywhere: we call it a control centre in your Starbucks. And what I like most about the app is the clean interface, a thing of beauty!”.

TRAFI, above all, remains an enabler for public transport. By aggregating and showcasing transport modes like buses, suburban trains, bike-share, and metro in their entirety and giving route suggestion based on convenience and speed, TRAFI makes it possible for people to shun cars with the convenience. In fact the real time function of the application, where supported by GPS data, allows for people to see public transport move on a city map, in the same way as Taxi aggregator applications, giving them complete confidence in public transport!.

The application is a perfect fit for the Indian market as it is focused on emerging economies and the problems faced by rapidly growing cities in providing reliable multi-modal transport information to people. The core objective of TRAFI, to make it more convenient for people to use public transport, will help significantly to reduce congestion, accidents, green house gases and health issues that our cities face every day forcing them to take extraordinary measures like the Odd-Even in Delhi and a similar fate awaiting Mumbai.

TRAFI is very much committed to the Smart Cities agenda of the Government of India. They remain open for partnerships, while ensuring that they don’t charge users and public agencies for the insights that TRAFI has been sharing with cities, globally.

TRAFI, which was founded in Lithuania in 2013, provides precise journey planning information, through strategic cooperation with transit authorities. The team’s focus is on high-growth emerging markets, where they use predictive technology to look at local traffic patterns and then apply TRAFI’s algorithm to calculate exact journey times. The app was chosen the best Travel Planner for public transport during the 2016 Olympic Games by Rio de Janeiro’s CidadeOlímpica (literally Olympic City), was named in Apple’s highly regarded ‘Best Apps of 2014’ list in Turkey, and it constantly features at the top of its category in the Google Play Store and Apple App Store in its key markets of presence. TRAFI is currently available in Turkey, Lithuania, Latvia, Estonia, Russia, Taiwan and Brazil. TRAFI’s India’s country manager’s office has become active in March 2016.

About TRAFI

TRAFI is the world’s most accurate public transportation app focusing on emerging high-growth markets and was listed in Apple’s highly regarded ‘Best apps of 2014’. The app has recently been adjudged the best Travel Planner for public transport during the 2016 Olympic Games by Rio de Janeiro’s CidadeOlímpica.Our unique technology and backend algorithms allow us to provide better quality public transportation information and help local transit authorities improve the effectiveness of their fleet. Founded in 2013 in Lithuania, TRAFI brings a scientific approach to public transportation with the aim of raising confidence in public transport and its usage. http://www.trafi.com

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