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Government seeks bids for Pawan Hans by Aug 22

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New Delhi, Aug 13 (IANS) The government has initiated the second step for disinvestment of Pawan Hans Limited (PHL), inviting expression of interest from the prospective bidders to sell its stake in the helicopter PSU.

The Centre is planning to exit Pawan Hans by selling its 51 per cent stake along with the transfer of management control. The Expression of Interest (EOI) window is open till August 22.

Both the shareholders of PHL — the government and the ONGC will indemnify the contingent liabilities to the extent of over Rs 500 crore for the potential buyers.

The renewed process had in fact gathered momentum with issuance of PIM (preliminary information memorandum) on July 11, 2019.

Now, the government proposes to disinvest its entire equity shareholding of 51 per cent in the PHL by way of strategic disinvestment to investor(s) along with transfer of management control.

The government has appointed SBI Capital Markets Limited (SBICAP) as its advisor to manage the strategic disinvestment process, DIPAM (Department of Investment and Public Asset Management) said in a notice.

Shortlisted Bidders (SBs) shall be provided with Request for Proposal in Stage II and would be required to submit their Financial Bid, SBI Caps said. After an unsuccessful attempt for sale of Pawan Hans earlier this year, the government provided indemnity to the potential buyers against contingent liability of over Rs 500 crore in the helicopter service company.

The government had to make the bid document more attractive after discussions with investors on their concerns after the sale process of Pawan Hans failed to attract any suitor when the bidding ended on March 6.

“It has been decided to indemnify the investors of the contingent liability of Rs 577 crore which relates to disputed tax demand,” an official said.

The government holds 51 per cent stake in helicopter service provider Pawan Hans, and the remaining 49 per cent is with the Oil and Natural Gas Corporation (ONGC). A total of 100 per cent stake in Pawan Hans, which has a fleet of 46 choppers, has been put on the block.

Though the renewed process has just started, officials said as per estimates of advisers to the deal, a 100 per cent stake sale could fetch about Rs 1,100-Rs 1,200 crore to the government.

This disinvestment process is to be implemented through open competitive bidding route. Accordingly, Expression of Interest (EOI) is invited to be submitted from interested bidders on or before August 22, 2019.

Since the PIM was out earlier, the prospective bidders have sought clarity on Contingent Liabilities of PHL where they want to know: “Whereas it is clearly laid out that the Centre will indemnify the successful bidder for 51 per cent of the contingent liability – Rs 577 crore, there is no clarity for the remaining 49 per cent. Clarity on the balance 49 per cent will have a direct impact on the bidding price and hence some clarity is required on the same.

It is expected that ONGC will provide the balance 49 per cent cover as they are obliged to sell at same terms as the government. SBI Caps has responded to that saying ‘It is clarified that ONGC on its board resolution dated July 26, 2019 has accorded to indemnify the balance 49 per cent (to the extent of its shareholding) of the contingent liability as identified in the PIM’.”

Pawan Hans Ltd. is a Mini Ratna-I category Public Sector Undertaking under the Ministry of Civil Aviation (MoCA) and provides helicopter services for offshore operations, inter island transportation, connecting inaccessible areas, rescue work and tourism.

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Slowdown: Hyundai Motor India lists ‘no production days’

The company had “no production days” on August 10 and 12 at its Body Shop-2, Paint Shop-2, Assembly Shop-2 and Support Teams (three shifts) and Transmission-2 (six shifts).

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Hyundai

Chennai, Aug 17 (IANS) India’s second largest car maker, Hyundai Motor India Ltd (HMIL) has declared “no production days” this month for some of its production departments owing to tough market conditions for the automobile sector.

The company, in a notification to its workers this month, said that due to prevailing market conditions, there will be no production days in its Engine Shop-1 between August 9-21 (10 shifts), and on August 10, 24, and 31 at Engine Shop-2 (nine shifts).

The company had “no production days” on August 10 and 12 at its Body Shop-2, Paint Shop-2, Assembly Shop-2 and Support Teams (three shifts) and Transmission-2 (six shifts).

A company official, who did not want to be identified, told IANS that there are three engine plants and plans are there to start another shift in the third.

The demand for models like Venue, and Creta is good and production is going on. The company is also expecting good demand for its new model Grand i10 NIOS.

Incidentally, HMIL is not the only company which has declared “no production days”.

According to reports, several other vehicle and component makers have cut down production by closing down plants to align production to the demand.

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Gold may surge to Rs 40,000 per 10 gram by Diwali

Currently the October contract of gold was priced at Rs 37,995 per 10 gram on the Multi-Commodity Exchange (MCX).

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Mumbai, Aug 17 (IANS) Amid global growth concerns and heightened trade tensions between the US and China, gold prices might cross the Rs 40,000 mark by Diwali, analysts have said.

Typically, the demand for gold reflects the expectations about the future, the prices of the precious metal tends to rise amid uncertain economic situations or political upheaval.

Currently the October contract of gold was priced at Rs 37,995 per 10 gram on the Multi-Commodity Exchange (MCX).

“Demand for the precious metal may slow down slightly owing to some easing in trade tension between US and China, but over the trend is negative. We see gold prices around Rs 39,000 to 40,000 per 10 gram by Diwali, ” said Anuj Gupta of Angel Brooking.

Gupta explained that the gold prices were surging primarily owing to the decline in global growth rate.

Experts globally are also suggesting investments in gold and other precious metals amid these uncertain times as an insurance against economic uncertainty.

“We now recommend all investors have a full allocation to precious metal investments in their portfolio,” said a Gohring and Rozencwajg report.

“We believe the bear market in gold has run its course and a new bull market has begun.”

Lower interest rate by central banks and the ongoing trade dispute between the two biggest economies, the US and China, were supporting the gain in gold prices.

Besides, latest worry came over the recession warning via bond market. The inversion in the US bond yield hit levels last seen in 2007, just ahead of the global financial crises.

This came even as the US decided to defer the rise in trade tariffs it announced earlier as major export market showed renewed signs of weakness.

Europe’s biggest economy, Germany, reported negative growth, hence nearing the risk of a recession. The UK had already reported a contraction in growth amid Brexit woes and China added fuel to fire after it released weaker than expected factory data.

Investment firm Morgan Stanley had said that if the trade war further soared via the US further raising tariffs on all goods imported from China to 25 per cent, “we would see the global economy entering recession in three quarters”.

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Gold ETFs: Investors bet big on the safe haven asset

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Mumbai, Aug 17 As the global economic scenario remains subdued and trade tensions remain volatile, investors have bet big on the safe haven of gold-backed exchange traded funds (ETF).

According to data from the World Gold Council (WGC), globally investors poured about $2.6 billion into gold-backed ETFs in July, the highest monthly investment since March 2013.

The Gold Exchange Traded Funds (ETFs) are simple investment products that combine the flexibility of stock investment and the simplicity of gold investments.

As per a report by natural resources investing company, Goehring & Rozencwajg, the Gold ETF bull run to continue for the foreseeable time.

“This (gold) bull market will be driven by Western investors, we should start to see robust physical accumulations of both gold and silver through the various ETFs which we believe will be the Western investment community’s vehicle of choice,” the Goehring & Rozencwajg report said.

“In the last several months, physical accumulation has indeed developed in both gold and silver physical ETFs.”

The report noted that ETF gold holdings are now approaching their old highs reached back in 2012.

The same phenomenon of rise in valuation of gold ETFs can be witnessed in India as value of the ETFs on the NSE have risen since April 1 in contrast to the subdued Nifty50 index.

The report further said that, “with central banks becoming significant buyers of gold instead of sellers and with producers no longer forward-selling their production, the only potential source of physical supply over the last eight years has come from the physical gold ETFs”.

Since their introduction in 2004, ETFs have become significant players in physical gold markets. Over an uninterrupted eight-year stretch, physical gold ETFs accumulated 2,600 tonnes of gold by the end of 2012, the report said.

The report showed that after the 2008 financial crisis, most of the inflows into the physical gold ETFs came from investment firms and hedge funds.

It observed that while buying gold in the 1970s was complicated as one had to either buy gold futures, physical coins or bars, or gold equities, the gold ETFs have made buying gold extremely accessible.

“Public participation in the coming bull market will be comparatively easy.”

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