The Markets Slide For The 7th Day
Another day of close combat between the bulls and bears yesterday as the indices swung from loss to profit and back again
On Episode 508 of The Core Report, financial journalist Govindraj Ethiraj talks to Ajay Rotti, Founder and CEO of Tax Compaas as well as Avinash Gorakshakar, Head Research at Profitmart Securities Pvt. Ltd. We also feature an excerpt from our interview with Sandeep Kumar Gupta , Chairman and Managing Director, GAIL (India) limited.
(00:00)Stories of the Day
(00:41)The markets slide for the seventh day even as Asian markets perk up
(02:48)Small Cap Vs Large Cap Debate
(12:34)The New Income Tax Bill Will Be Old When It Arrives.
(20:32)How India is using gas to power economic growth
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning, it’s Friday, the 14th of February and this is Govindraj Ethiraj, headquartered and broadcasting and streaming like always from Mumbai, India’s financial capital.
And the headlines
The markets slide for the seventh day even as Asian markets perk up
Small Cap Vs Large Cap Debate
The New Income Tax Bill Will Be Old When It Arrives.
How India is using gas to power economic growth
Asian Markets
Another day of close combat between the bulls and bears today as the indices swung from loss to profit and back again.
The 30-share Sensex was down 32 points at 76,138.97from its previous close, moving over 750 points during the day.
The NSE Nifty50 was down 13.85 points at 23,031.40
The Nifty Midcap 100index was higher by 0.25 per cent, while the Nifty Smallcap100 index ended down 0.37 per cent.
Lets take a look at Asia-Pacific markets which traded higher Thursday which were up on Thursday taking a different path from Wall Street that fell overnight because of stronger-than-expected U.S. inflation expectations.
Interestingly, Australia’s S&P/ASX 200 hit a record intraday high surpassing its previous peak of 8,566.9 on Jan. 31, CNBC reported.
Other Asian indices, Japan’s Nikkei 225, Topix,South Korea’s Kospi traded 0.96% higher, and Hang Seng were all trading higher.
Only mainland China’s CSI 300 slipped 0.13%.
Back home, interestingly, India’s small and mid-cap stocks are likely to decline for the first time in three years in 2025 as the government scales back spending in favor of tax breaks to boost consumption, according to a Bank of America Corp. strategist.
This segment, dominated by infrastructure-related firms, had raced ahead of the broader stock market in the past two years.
Shares of these companies, that also include a few state-run enterprises, have traded at high valuations, due to their low-floats and demand from mutual funds, leading to “a lot of liquidity chasing the same stocks,” Shah said.
All this is now turning.
“The government’s policies have seemingly moved toward balancing capex and consumption versus being primarily focused on capex earlier,” the bank’s India research head said in a report quoted on Bloomberg.
“The capex cycle has reversed and a moderating growth would impact many sectors and stocks linked to this theme.”
The BSE Ltd.’s gauge of mid- and small-cap shares, in which a third of the constituents are industrial and capital goods stocks, has sunk 13 per cent this year. That compares with a 2 per cent retreat in the key BSE Sensex Index as investors turned to larger stocks amid rising volatility.
In August last year, the same analyst had warned that slowing earnings growth, a weak global macro-environment as well as high valuations posed a threat to Indian stocks, according to Bloomberg.
The BSE Sensex index has plunged almost 11 per cent since reaching a record high on Sept. 26.
Meanwhile, there is much debate on SIPs, particularly those that go into smaller cap stocks, the immediate future of which of course is looking a little grim.
Be that as it may, it is of course very likely that if you began your capital market journey four years ago as many did, thanks to proliferating free and usual misguided and inexperienced advice and slick broking apps, then you are likely looking at a haircut.
But on the other hand, the whole idea of SIP is to invest over a period of time so it equalises and then starts to compound.
That is the very principle of long term investing.
It is of course a fact that the longer the bull runs, the more we tend to forget history and cycles.
Analysts The Core Report speak to are confident that there are good buys in small caps even today but it will take time for them to flower so to speak.
It is of course a fact that the NSE Nifty50 is down over 12% from its all-time high of 26,277 levels in September 2024.
And the the Nifty Midcap100 index down nearly 16 per cent from its peak, and the Nifty Smallcap100 index falling around 18 per cent from its all-time high.
The data is showing that mutual funds are still seeing inflows, with a net inflow of Rs 39,688 crore in January 2025 — surpassing the average monthly inflows for the calendar year 2024.
INTERVIEW TRANSCRIPT
Avinash Gorakshakar: Govind, first of all, you know, when you construct a portfolio, you need to understand what is the of the investor, what is the kind of appetite the investor holds for the kind of risk he is willing enough to take in the markets. My sense is that when we talk to clients, we tell them what is their risk appetite. And accordingly, you know, I think the normal percentage of large cap versus small cap or mid cap, as you say, is about 70% large caps and 30% small to mid cap.
Because typically what we see in small cap and mid caps is that these provide very large alpha opportunities over the next, say, three to five years. And I think, you know, that is probably the reason, you know, very strong interest by a lot of investors, especially even the larger PMSs, the AI funds, the institutional guys, because obviously, the capital multiplication happens much faster in these smaller companies. So I think there's a fair amount of risk involved.
But obviously, the risk reward is also equally large. But the most important part is that I think valuations have to be really comfortable to get in. Because if you make a mistake on the valuation, liquidity is extremely tight in these counters.
If you make a mistake, even exiting such stocks takes a long time. So I think broadly, 70-30 is what we do for clients. And I think it again differs from client to client because risk appetite differs.
Govindraj Ethiraj: Right. If you look at this 30-70, which is today, and you go back, let's say, 10 or 15 years, when maybe the composition used to be a little different, and maybe the small caps are much smaller, and the valuations were also lower. Would we have seen this level of interest as we are seeing today or the levels of interest remain the same over time?
Avinash Gorakshakar: Levels of interest have definitely increased significantly over the last say, two to three years. And I think this is more prevalent in the small SME segment. I presume, you know, small medium enterprises have been the biggest kind of contributors to the small and mid cap because, you know, we have been seeing IPOs oversubscribed by almost 500 times, 1000 times.
So there's been a lot of retail interest which has brought into these kind of companies. And I think this was not the case about 10 years back. First of all, you know, regulation point of view, there were hardly any companies which went public.
People were quite sceptical about these companies because most of the promoters, the balance sheets were not up to order. But more and more professionalism has now come in this sector. And therefore, you know, you've seen a lot of interest now.
So, you know, what was 10 years back is completely different from what is currently the situation. In fact, today, there are many dedicated AIF funds who have come only to invest in SME companies. And the size of these funds is quite gigantic, you know, 500 crores, 1000 crores, 1500 crores only for putting money in SME companies.
So I think liquidity has also come in. Large institutional investors, FIs have also started putting money in these companies. So the whole complexion of the game has changed because you've got large investors also participating in these companies.
Govindraj Ethiraj: So if we are saying that today, the quantum, even proportionately of money going into small caps is much higher than ever before. Therefore, would it be correct to say that valuations are also therefore at levels that we are not able to now understand or manage?
Avinash Gorakshakar: Yeah, I think this is definitely a very valid kind of, you know, conclusion from our side also, because we feel that, you know, there's a lot of liquidity chasing a lot of stocks. And that's the key reason we find that most of these companies get valued at absurd kind of valuations. I think, frankly, even if the business is great, if you buy a stock, a small and mid cap stock, you know, at a very high valuation, the margin of safety is compromised right from day one.
So I think, yes, you're right. I think TLV valuations have been on the tipping side. I think what we have seen now is just the beginning of a correction.
And I think, see, I may be wrong in saying this, but typically, you know, investors who enter this segment have also got to realise that with higher reward comes a higher risk, which is not the case in case of large caps. So large caps offer you a much better comfort. But yes, I think in the longer term, I think somebody who's got the patience and the conviction to hold on for a long time, I think and definitely think of making good money in the small and mid cap.
But unfortunately, you know, most of the investors who have come post COVID, they want fast returns. And they're unlikely, you know, those kind of investors who would be willing enough to put five years or 10 years in this segment.
Govindraj Ethiraj: Therefore, those who've invested as through the SIP route have also been relatively impatient or impatient. Because I mean, SIP, I would think is usually means you hold on for several years so that you allow time to even out everything else.
Avinash Gorakshakar: To be very honest, you know, SIP is meant to be at least a 10 year or a 15 year journey. But honestly, you know, we come across very, very few investors who have the patience and conviction to invest for such long periods. I think everybody looks at the last 12 month returns and then decide you know what SIP needs to do.
And the moment the market corrects, or maybe it remains flattish, or it corrects for two months, these investors start discontinuing their SIP. So it's unfortunate, but retail investors don't have the staying power. So that's the main reason why so much panic has been spread out.
And people are now panicky, you know, because the moment they see a correction and continue selling, they feel that's the end of the journey for them.
Govindraj Ethiraj: How would you advise those who are wanting to invest or have invested recently, let's say in the last three, four years? I mean, I know, I mean, one is to tell them that to hold on. But beyond that, what is it that you would say?
Avinash Gorakshakar: My sense is whenever we put our money on any mid cap, small cap or SME company, we first look at the business and the promoter quality. See, I think unless these two things are really considered perfect, and we do a kind of a proper due diligence from our side, we don't take a short term call. See, in the short term, I think the prices may go up purely on the narrative.
But in the longer term, it's going to be only the earnings which decides the price earning multiple and which decides the future, you know, wealth creation journey. So I think, you know, investors who have put their money in good companies, I think need to give some time. It's not that, you know, markets would not come up, liquidity would not come in.
The best part is there are large investors now who are willing enough to put money and stay invested here. You know, it's not only a retail kind of segment, which drives these stocks. But yes, I think a lot of correction may happen.
And I think, you know, for that, investors need to be a little patient and a little stronger in accepting the fact that booking a loss actually would not help them. I think you need to take the pain in the longer term. I think things will improve.
Govindraj Ethiraj: In your own investing approach right now, are you seeing smaller caps or mid caps, which are still worth buying?
Avinash Gorakshakar: I think it depends on your risk appetite and the kind of investment timeframe. We have got many, many companies, you know, which have got market cap ranging from 250 crores to 500 crores. I think the most important question we need to ask is that do you want to multiply your capital in the next, say, three to four years?
And do you have that kind of timeframe in mind? Because if you have a six-month or a one-year kind of timeframe, I think then this is not the place to be because, you know, the risk appetite is also equally high. And obviously, the rewards can come only for those investors who can stay invested for a longer term.
So we are investing. Yes, we are finding many companies interesting and worthy of investment. But here we need to take a slightly moderate view.
And, you know, return expectations have also we have got to be realistic.
Govindraj Ethiraj: And last question. And these companies you're investing in, are these companies that have been beaten down in the last four or five months? Or is it companies that are a completely different set?
Avinash Gorakshakar: No, I think it's a combination of both. I think there are many companies, you know, which have been beaten down. They're available at 70-80% from their peak level.
There are some companies which have got listed about three, four months back, and which have done very well over the IPO price. But what we see essentially is growth going. I think growth is something which we bet on.
And I think if the growth quotient is very high, it's very encouraging and the promoter quality is strong, then I think you need to take a reasonable bet. I mean, at least out of 100 rupees investment, we try to put at least 20-25 rupees in such companies. Because we know that these companies click, they can make a multi-bagger return.
And see, ultimately, we are all here in the market to make capital growth, you know, much significantly. I think for us, 15% return growth is not something which excites us.
Govindraj Ethiraj: Avinash, that's a good note to end on. Thank you so much for joining me.
New Income Tax Bill
The important point is that nothing is likely to happen till next year.
The Finance Minister Nirmala Sitharaman presented the New Income Tax bill which is called ‘Income Tax Bill 2025’ in the parliament on Thursday.
The FM has asked the Lok Sabha speaker to create a standing committee that will review the newly tabled Income Tax Bill 2025, the Business Standard reported.
The new Income Tax Bill may also take some time to be passed in the Parliament as it will be sent for review by the committee and then a few more hoops.
So the new law will take effect from April 1, 2026 as it appears.
The shrunken version of the IT Act has no major changes and aims to simplify the tax system by using clear language, removing unnecessary clauses, and expanding the definition of income.
INTERVIEW TRANSCRIPT
Ajay Rotti: New income tax bill, no doubt there are changes, there are some changes, but it is more of the same thing and the reason is it was a stated objective. The FM was very clear that there's not going to be a fundamental change in the way tax works or the structure and it is more of simplification of the language, cutting out sections which are redundant and cutting it in size and making it simpler etc. So there was never an attempt to change anything drastically.
Like we had discussed the last time you and I spoke, I don't think I expected anything big to be changing and to that extent it's on the same line. A lot of the language, a lot of sections continue from what it used to be with minor changes. Of course, some of those minor changes are important changes which does simplify the language a bit.
Some sections have moved into a table etc. As with every other thing, this comes with its own plus and minuses and we'll have to see once it settles down. Some of it could create new issues which don't exist today.
We can't rule that out. Let's see what the select committee is going to do. They're going to, I'm sure, hear people take some inputs in what final shape could come out.
But on a few counts, it is, I would say, it's not changing anything very radically. The old jurisprudence should continue, some of the old settled principles should continue. To that extent, it is new and it is a bit old, like you said.
Govindraj Ethiraj: So give me an instance of something where you feel that while there has been an attempt to simplify, it's not maybe working exactly like that or maybe it's having the reverse effect.
Ajay Rotti: So let me take something very simple and which people will be able to relate to without getting into too technical details on sections. Now, we had multiple payments which were subject to TDS. Now, if you received interest from a bank who do TDS at 10%, professional fees if we received, the company paying it deducted 2%, dividends would be a different rate, different section, etc.
Therefore, there was a plethora of sections to be technical from 194 going up to 194R. So there were whatever 15-20 sections which said if it is this kind of payment, 2% of this kind of payment, 5%, commission, 10%, so on. What they have done is they have clubbed that entire list into a table and put it into one section.
Now, the table has different rows to say if it is rent, x percentage, commission, y percentage, etc.
Govindraj Ethiraj: That sounds like good news.
Ajay Rotti: It is, but it's not won the whole distance with because one thing they could have done is done away with 10 rows, done away with 5%, 2%, 8%, 6%, whatever and 15%. They could have just said all of them will be clubbed, 3-4 categories, etc. So while there is a bit of simplification to put it into one section and into a table, but when you're doing something like this, you could have gone the whole hog, number one.
Govindraj Ethiraj: But was changing of rates part of the remit of this whole exercise?
Ajay Rotti: It was not, but here, remember that TDS is not a tax rate. It is just a deduction and it's an advanced collection. So it does not technically impact your tax collections.
Either you end up refunding if it's less, the recipient pays the taxes. So it does not impact the collections as in the revenue tax. It may impact cash collections.
So there are one or two things like this where they could have probably gone a little further, even in simplification. And some of the issues which were there on interpretation, for example, it was there as an explanation or a proviso to use a technical term. They have now said that those are gone, but those have come in as a subsection or note below this table and things like that.
So it's sort of, yes, a bit of simplification, but some of the legacy issues may still continue.
Govindraj Ethiraj: The bill itself has shrunk. I mean, the number of pages has definitely come down by about 200 or so, right?
Ajay Rotti: See, that was expected. And I'll take an example again, while the current Income Tax Act was there, there were a few sections like ATHH, EHHC and I'll tell you what they were for. They were export benefits for which had long gone.
2011, some of them were gone. Some of them were gone in 2015, but they were there still in the statute. And the subsection said nothing in this section shall apply after a particular date.
So while there were 800 odd sections, there were a lot of sections which were in the statute but had no place, nothing they were doing. So now they've cleaned that. So you could have taken out these omitted sections long back.
It does not make a difference. We were never reading that. Those were never applicable.
Yes, there is a number thing that it reduces in size, but those are anyway not relevant even out here.
Govindraj Ethiraj: Right. So what's the one, let's say, refreshing part that you've taken away from this, which suggests that directionally we are maybe headed in the right direction?
Ajay Rotti: You know, it may sound a little bit contradictory, but I think we've not done too many changes. That's one good bit because we don't disturb everything completely in the desire to simplify things. So the overall structure remains the same.
The overall arrangement of the sections is a little change, but not too drastically. They have a saving provision for all the circular notifications, clarifications issued under the old act. So in all that, it is good, but there will be some problems with two parallel acts running for a few years, notices coming under the old act and under the new act, because the bill says that this will apply only for tax years after 1st April 2026.
So before that, the 1961 act continues. The last point, and I think this is the most important change, is this whole concept of assessment year was very alien. You know, when I talk to foreign tax heads, global tax heads, they just couldn't understand this concept of assessment year, financial year, and why do we call it assessment year, which is a year ahead of the tax year.
That's completely proposed to be done away with. In my view, that's the single biggest change, not really all other things. That changes a lot, eases compliance, eases some bit of understanding, reduces a bit of confusion.
Overall, I think there are a few good takeaways, but we could have done a lot better as with anything else.
Govindraj Ethiraj: And we still have time, because this is now going to go to a committee. A committee may give some recommendations, which may be along these lines.
Ajay Rotti: The committee could consider some of the inputs, and we have a lot of time now, because it's the first day of the next session, and whenever the fifth session, the monsoon session starts, we'll have to wait until then. It also depends on what the remit of the committee will be, because then, as you heard said, the speaker can decide what contours of the committee will be. That will be the thing that we will have to watch out for.
One thing that still continues to bother me is there's a lot of change that the department will have to do to their systems, IT systems, their websites, their forms, the way it is working, because all section numbers have changed.
Govindraj Ethiraj: Ajay, always a pleasure speaking with you. Thank you so much.
Ajay Rotti: Thank you, Govind.
Gas Deals
A flurry of agreements have been signed at the India Energy Week right now in Delhi and where your correspondent has been taking the rounds for importing liquified natural gas or LNG for long term sourcing.
The interesting thing about LNG contracts, as an aside, is that they usually run for between 10 and 20 years and may not start for a couple of years.
In this case, predicting demand ahead is always a challenge, a senior official of the Gas Authority of India Limited said yesterday in one of the sessions.
Speaking of GAIL, I spoke last week to Sandeep Kumar Gupta, Chairman and Managing Director of Gas Authority of India Limited or GAIL who by the way is a chartered accountant, unlike most of his peers who hail from engineering backgrounds.
I began by asking him about the role of gas in India’s energy mix as it stands today and the pathways forward.
TRANSCRIPT
Sandeep Kumar Gupta: So, as you are aware that in the energy basket of India, the composition of gas has been around 6% only. And Honourable Prime Minister had a vision of increasing that share to 15% by 2030. Unfortunately, that has not happened and it is still at the almost at the same levels.
The reason is that the energy demand of the country is growing rapidly because as you are aware that in the last decade, we have progressed from 10th largest economy to 5th largest economy and we are progressing very fast. So, energy demands of the country have increased whereas the natural gas consumption per se in terms of percentage has not increased. Though in absolute terms definitely it is increasing, but it is almost the same percentage as it was earlier in the energy basket.
We are producing about 50% of natural gas domestically, which definitely has increased. That is why it is maintained at 50% level and 50% is imported. The large producing geographies are Middle East, mainly Qatar and then United States, Russia, Australia and some other parts of the world.
And we have been sourcing from every geography. In fact, I must tell that we have a very good portfolio of natural gas long term contracts, which were hitherto about 14 million tonnes per annum and we have recently increased it to more than 16 million tonnes per annum, securing energy for India. So, the progress is there, but because in absolute terms, in the total terms, the percentage is not increasing.
The reason is that there are certain incentives which need to be given for a growing energy, which is natural gas. The conventional fuels like MS, HSD or LPG have been there in the country for more than half a century. And to displace those energies by a new coming energy is extremely difficult unless it is given due fiscal supports.
So, we hope that some supports will be given and then perhaps the natural gas consumption can take off from these levels.
Govindraj Ethiraj: Okay, if I can maybe draw you back to take us through some history as well. So, the first pipeline that Gas Authority of India set up was maybe in 84 and then subsequently the company has grown in two ways. One is the pipelines have grown, the utility or the usage of those of the gas has grown from what it was originally envisaged and Gale as a company itself has diversified.
So, take us through.
Sandeep Kumar Gupta: Yeah, we started with the HVG pipeline and now I am glad to inform you that about 70% of the natural gas pipeline in the country is owned by Gale India Limited. We have more than 16,240 kilometres of pipelines out of our total about 22,000 kilometre of pipeline. And we are executing projects which will ensure that another 3 to 4,000 kilometre of pipelines will be commissioned very, very shortly.
In fact, many of those pipelines will get commissioned in the current calendar year itself. So, it has progressed very well. About 70% of the natural gas pipeline is owned by Gale.
About 65% of the total transmission happens through Gale India Limited. Almost 50% of the natural gas consumption in the country is serviced by in terms of sale by Gale India Limited. So, we are the leading natural gas company out of the total 307 geographical areas in the country for city gas distribution.
Gale and Gale group companies own 72 which is good one-fourth share in the total city gas distribution. We own about 65% of the domestic PNG connections which have been authorised by any entity. And we have about 40% share in the CNG stations which have been put up in the country.
So, in the natural gas vertical definitely Gale is playing the leading role and have lion's share in most of the business. Besides that we have diversified into other areas in the gas value chain. In fact, you would be astonished to realise or know that Gale India Limited is the first company to put up a petrochemical plant in Pata which was in Pata and got commission in 1999.
Of all the existing public sector players, Gale was the first to set up that plant.
Govindraj Ethiraj: Using gas.
Sandeep Kumar Gupta: Using gas. We crack gas. And then thereafter we have expanded that particular capacity and we have also 70% stake holder in the Brahmaputra Cracker and Polymer Limited and also have a stake in OPAL that is ONGC Petro Additions Limited.
So, our total petrochemical capacity which is presently about 11% in the country. We are also planning to expand that capacity. We are putting up a 500 kTa country's first propane dehydrogenation polypropylene unit at USAR in Maharashtra.
And have also acquired a 1.25 million tonne PTA plant from Oswald JBF Petrochemicals at Mangalore. So, that will and we are putting up a 60 kTa polypropylene plant at Pata in addition to the polyethylene which is produced presently at Pata. So, that will take our total capacity to about 3 million tonne perhaps by end of this calendar year itself.
So, in that direction also we have progressed very well and definitely then we have our presence in the new energy verticals also of renewable etc.
So, you had earlier talked about a 30,000 crore capital expenditure across different verticals. But as you look ahead is Gale more a petrochemical company or a gas company or is it a blend of both?
Sandeep Kumar Gupta: No, we are primarily a gas company, natural gas company and our major capex comes from pipelines only, natural gas pipelines only. And as I mentioned you we are currently executing lot of pipelines like Mumbai-Nagpur-Jhansuguda-Jabalpur pipeline which will get commissioned in this calendar year itself. We recently commissioned our Srikakulam-Mangul pipeline and gasified it.
Prior to that we had commissioned our Baroni-Gohati pipeline. Urja-Ganga is almost complete except for these two sections which are Durgapur-Haldia and Dhamra-Haldia which also we are planning to commission in this particular year itself. We are also completing Kochi-Kotinad-Mangalore-Bangalore pipeline, the Tamil Nadu section of which was pending and we are confident that we will complete that also in the current calendar year itself.
And besides last year we won the Gurdaspur-Jammu pipeline in a bidding round and we are working on that particular pipeline also. So our major capex comes from pipelines only. We are also planning to put up as I mentioned we are doing USAR project and PATA project for polymers.
So some capex is in that also. We are reviving Mangalore plant which we acquired at investment of 2100 crores and we are investing another 2100 crores for its revival. So some capex is in that and as you are aware we advanced our net zero target for scope 1 and scope 2 100% from 2040 to 2035.
And we have drawn up roadmap which will entail an expenditure of 38000 crore by 2035. So that will also feature in our annual capex. And besides we are planning to put up a world scale ethane cracker, a new greenfield ethane cracker.
Work is the feasibility of which is being worked out and if it gets approved then definitely it will entail a lot of.
Govindraj Ethiraj: Okay I will come to ethane in a moment but sort of layman's question. You are laying a lot of pipelines even this year you talked about you have described at least 5 underway. What is the I mean how do you set up a certain pipeline I mean is it demand led, is it project led?
Sandeep Kumar Gupta: So depending upon the requirements because as you are aware as I mentioned Honourable PM has a vision of increasing the natural gas share from 6% to 15%. That will not happen unless the pipeline network reaches each part of the country. Because that is necessary not only to service the city gas distribution network.
The whole of India is now authorised except for Andaman, Lakshadweep and Ladakh. So we have to reach the natural gas pipelines as near as possible to the city gas distribution networks. But it is also necessary this network is also necessary to service the industrial customers.
So there are lot of maybe fertiliser plants or power plants or steel industries or refineries or petrochemicals which will need these pipelines for natural gas consumption is those factories. So we have to lay these pipelines to service them. Now how these pipelines are put up?
Now no natural gas pipeline can be put up by any entity at its will. There is a authorised agency which is petroleum and natural gas regulatory board which is a regulator for natural gas sector. Who basically invites expression of interest from entities and based on that there can be a bidding round or there can be a nomination.
So some of the pipelines which are which Gale has executed or is executing are based on nomination and some we have one in the bidding round only. So that UI which PNGRB floats is based on assessment of the demand by them and at sometimes the entities can also approach PNGRB to issue an UI depending upon their own assessment of the demand in a particular area.
So let me take a slightly different tag. So on a normal day when you look at the map of all your pipelines. So what are the data points that you are usually tracking?
Sandeep Kumar Gupta: The most crucial for us is the hydraulics of the pipelines actually because there are certain consumers who do not want gas at a pressure lower than a particular pressure. And at the same time there are other areas where so the pressure the hydraulics in the system has to be maintained and we have. Similar to water actually.
Yeah definitely but water is liquid and pressure does not play that much role. Here natural gas is in gaseous state in the pipelines and hydraulics are extremely important. So on a daily basis this is a very very critical role of our gas management centres national gas management centre at our Noida office.
And these are the gas management centres at dozens of other centres. It is very crucial for them to ensure that the hydraulics are properly maintained to ensure the convenience of the consumers mostly industrial and also to ensure the safety of the operation. And they also look into various other aspects like accounting.
Govindraj Ethiraj: And gas is coming from outside where for example we import from Qatar and we are also producing. So where does that feed into your network mostly?
Sandeep Kumar Gupta: Now this is also interesting for those who are new to natural gas sector. Gas wherever it is extracted is in gaseous form and it is only for transporting between the continents on sea that it is liquefied. At say supposing we are importing from Qatar or from US.
So the gas which is getting produced is in gaseous form. For transporting it over sea it is liquefied at that port and then filled in the LNG tankers. And then it reaches the port of importation in India which is now many ports.
The Hedge is the biggest. We have Hazira. We have our Dabhol.
We have Mundra, Kochi, Ennore and Dhamra. So at these terminals the tankers come and then at these terminals the gas is again regasified and then it is called regasified LNG. So regasified liquefied natural gas which is then injected into the pipelines and then it gets transported across the pipelines to the consumers.
Got it. And what about the gas that is produced locally? Again which is produced locally is inserted in the gas in the pipelines in the gaseous form.
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Honda and Nissan Split
Honda and Nissan on Thursday officially scrapped their planned merger less than two months after announcing it, putting pressure on troubled Nissan to look for other partnerships.
The two Japanese automakers had said in December that they planned to combine operations by 2026, but talks quickly broke down.
Honda had initially agreed to a merger of equals but the two companies said Thursday that Honda later sought to make Nissan a subsidiary. That shift angered Nissan’s board, a person familiar with the situation said.
The two companies said they would continue a collaboration on auto technology announced last August.
Nissan said in November it would cut 9,000 jobs and reduce global capacity by a fifth after facing troubles in its two biggest markets, the U.S. and China.
Analysts and people in the car industry said Nissan would likely seek out a new partner to help shore up its finances and collaborate on technology, and the partner could come from outside the auto industry.
Taiwanese electronics manufacturer Foxconn, best known for assembling iPhones and other Apple products, is one candidate. Young Liu, Foxconn’s chairman, said Wednesday that he was open to collaborating with Nissan but doesn’t intend to push for an acquisition.
Liu said that Foxconn has been in discussions with Renault, Nissan’s longstanding French partner, regarding potential cooperation. Under a 2023 agreement, Renault is gradually reducing its stake in Nissan to around 15%. After the most recent share sale last September, Renault held just over 17% of Nissan directly and an additional 18.7% through a French trust.
Liu said Foxconn was discussing the possibility of buying Renault’s stake in Nissan if it proved essential to forming a partnership.
Foxconn has been expanding into the electric-vehicle market in recent years. It hopes to use its manufacturing experience to produce EVs on behalf of established brands, much as it assembles electronics for brands such as Apple and Sony. Liu said he hoped to get business from Japanese automakers and named Nissan as one potential partner.
As technology advances, “it could well be the case that big tech companies and electronic components manufacturers—such as Foxconn—become crucial partners in automotive M&A,” said Lucinda Guthrie, head of analytics firm Mergermarket. Still, she questioned whether anyone would want to take on the challenge of helping Nissan out of its troubles.
