NEWS ANALYSIS Apr 11, 2013
Rajesh Desai
INFRASTRUCTURE
Coal India-NTPC dispute: Full coal supply to be resumed
· After days of intense stand-off over quality of fuel with NTPC, Coal India Ltd (CIL) today said it will resume full supplies even as the power producer continued to raise the quality issue. Coal India’s eastern subsidiary had last week threatened to snap coal supplies to NTPC after the power producer refused to honour bills saying that the quality of fuel supplied was not up to its satisfaction. After government intervention, CIL had restored 50 per cent supplies pending resolution of the issue.
METALS & MINING
Odisha Works on Master Plan for Mines & Coal Blocks
· Odisha is getting ready with a comprehensive master plan for development of mining and coal block very soon, reflecting the blueprint of the alignment of roads, railway lines, rehabilitation sites along with other service-based infrastructure. The first draft is expected by the end of this month and submitted to the government in the first week of May.
· Industrial Infrastructure Development Corp of Odisha (Idco) and Odisha Mining Corp (OMC) have received state approval for a special purpose vehicle to develop a 163-km common corridor for rail with 308 minor bridges and 77 major bridges, water and power in the coal-rich Angul-Chhendipada-Talcher region at a cost of about.5,500 crore.
Jindal Stainless Inks Strategic Pact With Posco
· Jindal Stainless Ltd (JSL) and Posco signed a strategic pact that includes cooperation in South Korean majors $12 billion steel mill project in Odisha and joint exploration for a nickel facility in Indonesia. Besides, JSL will sell certain products to Posco. JSL, a part of the $15-billion OP Jindal group has signed a memorandum of understanding (MoU) with Posco on this 10th day of April 2013,to mutually cooperate with each other for long-term joint business opportunities.
Coal India adopted new pricing model without tech upgrade: NTPC
· The showdown between two public sector companies – Coal India and NTPC – could not be resolved on Wednesday even after heads of both the companies met the Government. NTPC said that it would continue to pay on the basis of calorific value of coal received at its power stations. However, Arup Roy Choudhury, Chairman and Managing Director of NTPC claimed that there are no pending dues to Coal India from his company.
· At the same time, Coal India Chairman, S. Narsing Rao, said that the miner would supply coal that is being mined. Coal India has started the process of putting in place a mechanism for third party sampling of coal. This may be in place even before targeted timeline of September.
· Some coal companies may be facing a problem following the introduction of the gross calorific value (GCV) method of measurement in January 2012. We are trying to sort it. This has created differences over the quality of coal, leading to NTPC not clearing nearly Rs 2,000 crore in dues to Coal India. This payment has been due since October 2012. In a full year, NTPC buys nearly Rs 23,000 crore worth of fuel from the monopoly miner.
CIL-NTPC dispute: Full coal supply to be resumed
· After days of intense standoff over quality of fuel with NTPC, Coal India Ltd (CIL) said it will resume full supplies even as the power producer continued to raise the quality issue. Coal India’s eastern subsidiary had last week threatened to snap coal supplies to NTPC after the power producer refused to honour bills saying that the quality of fuel supplied was not up to its satisfaction. After government intervention, CIL had restored 50 per cent supplies pending resolution of the issue.
· On third party sampling of coal, CIL said it has already been initiated and the mechanism would be put in place by either June or July. Eastern Coalfields Ltd (ECL) officials had earlier said NTPC had made payments of Rs 150 crore against their dues of Rs 1,000 crore. ECL had stopped coal supply to NTPC from January 1 but later agreed to joint sampling and resumed supply.
Vedanta’s oil, copper, aluminium output up; iron ore, zinc down
· Diversified conglomerate Vedanta Resources reported a significant increase in production of oil, copper, aluminium, lead and silver in 2012-13, but its iron ore, zinc and alumina output showed a marked decline. While the company’s iron ore output was down to zero during the second half of the fiscal due to a mining ban in Goa and Karnataka, its production of zinc and alumina registered negative growth rates of 11 per cent and 43 per cent respectively in FY’13. In a statement, the company said its iron ore production, operated through subsidiary Sesa Goa, declined 73 per cent during the last fiscal to 3.7 million tonnes. Its iron ore operations at Karnataka are already closed for more than a year and half due to a Supreme Court imposed ban.
· Besides, Vedanta’s refined zinc production, managed through Hindustan Zinc Ltd, was down 11 per cent at 6, 77,000 tonnes in FY’13. Production of lead and silver, which is also done by HZL, were up 26 per cent and 69 per cent respectively. The Anil Agrawal-led firm, however, reported a 19 per cent growth in its crude oil production at 2, 05,323 barrels of oil equivalent per day (boepd) last fiscal.
· Cairn India, the oil producing arm of Vedanta, increased its crude oil production from its prolific Barmer block by 32 per cent in 2012-13 at 1, 69,390 boepd. Besides, Vedanta’s production of copper from its India and Australia division was up 15 per cent at 26,000 tonnes in FY’13, while integrated production at its Konkola Copper Mines, Zambia, increased by 16 per cent at 1,60,000 tonnes. Moreover, its aluminium production was also up 15 per cent at 7, 74,000 tonnes during the year as company’s Jharsugda—I and Korba—II smelters operated above their rated capacities.
Tata Steel’s Q4 show fails to lift market confidence
· Despite putting up a blockbuster performance in the fourth quarter of 2012-13, registering over 25 per cent growth in hot metal, crude steel and saleable steel production and in total sales, shares of Tata Steel Ltd sank to a fresh 52-week low on the NSE on Wednesday before staging a modest pullback at the close.
· It was not only the Q4 of last year that was good for Tata Steel but even on an annual basis, 2012-13 turned out to be the best year for the company in terms of production and sales as it recorded its best ever show, with an identical increase of 14 per cent in production, and a 13 per cent increase in sales in terms of volume.
· But the company’s record show in production and sales in terms of volume was not enough to push the stock price up and it fell to a new 52-week low of Rs 300 on the NSE, . It, however, recovered to Rs 305 at the close, a gain of 60 paise.
· Probably what weighed with the market was how Tata Steel’s consolidated financial performance would be, rather than its production and sales numbers or its stand-alone results. It would also be keen to know how its European operations would impact its consolidated financial results, since Europe that accounts for a huge chunk of its capacity shows little signs of any significant recovery.
Tata Steel to merge subsidiaries
· Tata Steel Ltd said that it will merge wholly-owned subsidiary companies Tata Metaliks Ltd (TML) and Tata Metaliks Kubota Pipes Ltd (TMKPL) with itself through a scheme of amalgamation, which will be sanctioned through a court approval process. For every 29 equity shares of Rs10 each held by the public shareholders of TML, four equity shares of Rs10 each of Tata Steel shall be issued after the scheme is approved by the courts. Tata Steel, along with a subsidiary, holds 50.09% of the equity share capital of TML. The scheme will be filed shortly with the stock exchanges where the shares of Tata Steel and TML are listed, as per capital market guidelines. Sanctioning of the scheme will also be subject to the approvals by the shareholders and creditors.
· Kalimati Investment merged into Tata Steel: Tata Steel also said Kalimati Investment Company Ltd (KICL) will be amalgamated into it with retrospective effect from January 1, 2013. The amalgamation is subject to and condition upon requisite approvals and orders under Companies Act, 1956. It added that in terms of the scheme, KICL will be merged with the company, followed by the dissolution without winding up of KICL. Tata Steel said since it is the sole shareholder of the KICL, the shares of the company in KICL will stand cancelled as a result of the amalgamation. No shares of the company will be issued in terms of the scheme.
BANKING
RBI may extend licence period of firms authorised to operate ATMs
The Reserve Bank of India is exploring the option of increasing the licence period for white label ATM providers to five years from one year. This has been prompted by the feedback from companies that have secured an in-principal approval to set up these ATMs. A white label ATM will serve the customers of all banks for the same fee.
The RBI had convened a meeting with officials of companies that were granted approval to set up the ATMs. Representatives from Tata Communications, SREI Infrastructure Finance, Vakrangee Software, Prizm Payments and AGS Transact were among those present.
Ratnakar Bank raises Rs 324 cr
Private sector lender Ratnakar Bank has completed its second round of capital infusion of Rs 324 crore by issuing 3 crore new shares to domestic and global investors. The bank had last raised capital in January 2011. With the latest round of funding, the bank has raised total equity capital of Rs 1,100 crore in two years.
Investors in this round of capital raising are International Finance Corporation, a member of the World Bank Group, Aditya Birla Private Equity, ICICI’s Emerging India Fund, IDFC S.P.I.C.E. Fund and Ascent Capital. Additionally, Faering Capital, an existing investor in the Maharashtra-headquartered bank too participated in the second round.
Vishwavir Ahuja, Managing Director and CEO, Ratnakar Bank said, “This equity raising has significantly strengthened the financial foundation of the bank and will allow us to continue our investments in new products, branches, technology etc to meet customer requirements.”
FSDC panel may discuss modalities of inflation-indexed bonds
The sub-committee of the Financial Stability and Development Council (FSDC) is likely to discuss the modalities of inflation-indexed bonds at its meeting in Mumbai. “The meeting will discuss, among other things, the inflation-indexed bonds with a view to give investors’ option to hedge their investments against inflation,” a Finance Ministry official said. During the meeting, the views of other sector regulators would also be taken into account for formulating the inflation-indexed bonds, which was proposed in 2013-14 Budget.
AUTOMOBILES
Jaguar Land Rover March Global Sales Rise 16% to 53,772 Units
Retail Volumes | Mar-13 |
Mar-12 |
Feb-13 |
YoY (%) |
MoM (%) |
|
Jaguar |
9,856 |
7,710 |
3,615 |
28 |
173 |
|
Land Rover |
43,916 |
38,494 |
22,434 |
14 |
96 |
|
JLR |
53,772 |
46,204 |
26,049 |
16 |
106 |
JLR sales in 1QCY13.
Quarterly volume |
|
Retail Volumes |
Q1CY13 |
Q1CY12 |
Q4CY12 |
YoY (%) |
QoQ(%) |
|
Jaguar |
20210 |
15431 |
11980 |
31 |
69 |
|
Land Rover |
95294 |
83177 |
76678 |
15 |
24 |
|
JLR |
115,504 |
98,608 |
88,658 |
17 |
30 |
Regards,
Team Microsec Research
Microsec Capital Limited
Tel: 91 33 30512100
Fax: 91 33 30512020
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CA. Rajesh Desai