At the Sensex, change is the only constant factor. B&E presents a quick analysis of some new behemoths, those whose positions are under threat & some potential new entrants
We take detours, we halt, but we continue to move forward. And a decade is some time on the calendar. This is as true about the grieving families of those 9/11 victims, as much as it is about elements in the circle we call India Inc. And what better an acceptably accurate mirror of India Inc. than the Sensex? Change is the word. First, you had 20 names that were left out of the Sensex in the decade leading to 2001. The next decade saw almost a repeat, with 17 names wiped off. Harsh. What is however encouraging is the sight of a newbie storming into the Sensex, every time a name loses out. The current list has quite a few of them. We call them the ‘towering newcomers’.
Coal India is the freshest and the biggest of the new entrants. Ever since it first featured on the Sensex (August 8, 2011), it has made waves, even temporarily dethroning RIL as the largest in m-cap (August 24, 2011). In fact, it created a sweeping impact the very first day it went public in October 21, 2010. It was oversubscribed 15.2 times and raised Rs.2361.48 billion – the second highest in the history of India Inc. (after R-Power in January 2008). Until late last year, CIL was considered an averagely performing PSU. But the company has today mixed well its present public status with the virtual monopoly it possesses for coal mining that serves the purpose of other private and public power generating companies in India. Currently, CIL has under it coal mines with reserves of 65 billion tonne of coal. But it will not use only this to fulfil the supply-demand gap that exists in the country. The company already has bagged 27 proposals from 16 companies for importing coal at discounted prices. As far as the future is concerned, with coal imports scheduled to touch 84 million tonne in FY2010-11 (a y-o-y rise of 15.07%) and estimated to reach 137 million tonne by FY2011-12 (total projected demand of 731 million tonne as per the BP World Energy Report), the company will continue to remain a common noun on the trading floors for years to come. Remember, coal contributes to 54% of India’s overall power needs and to 75% of power generation needs (as per IEA), and with coal demand and prices going nowhere but up, the growing demand-supply mismatch will only play in CIL’s favour. [Until the government allows private players like R-Power, Adani Enterprises, Lanco et al, to participate in the commercial supply of coal, CIL shareholders will continue having the last laugh.]
Coal India is the freshest and the biggest of the new entrants. Ever since it first featured on the Sensex (August 8, 2011), it has made waves, even temporarily dethroning RIL as the largest in m-cap (August 24, 2011). In fact, it created a sweeping impact the very first day it went public in October 21, 2010. It was oversubscribed 15.2 times and raised Rs.2361.48 billion – the second highest in the history of India Inc. (after R-Power in January 2008). Until late last year, CIL was considered an averagely performing PSU. But the company has today mixed well its present public status with the virtual monopoly it possesses for coal mining that serves the purpose of other private and public power generating companies in India. Currently, CIL has under it coal mines with reserves of 65 billion tonne of coal. But it will not use only this to fulfil the supply-demand gap that exists in the country. The company already has bagged 27 proposals from 16 companies for importing coal at discounted prices. As far as the future is concerned, with coal imports scheduled to touch 84 million tonne in FY2010-11 (a y-o-y rise of 15.07%) and estimated to reach 137 million tonne by FY2011-12 (total projected demand of 731 million tonne as per the BP World Energy Report), the company will continue to remain a common noun on the trading floors for years to come. Remember, coal contributes to 54% of India’s overall power needs and to 75% of power generation needs (as per IEA), and with coal demand and prices going nowhere but up, the growing demand-supply mismatch will only play in CIL’s favour. [Until the government allows private players like R-Power, Adani Enterprises, Lanco et al, to participate in the commercial supply of coal, CIL shareholders will continue having the last laugh.]
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
