NEWS ANALYSIS Apr 9, 2013
Rajesh Desai
INFRASTRUCTURE
RIL stops gas supply to power plants
· Reliance Industries (RIL) has stopped gas supplies to power plants after its KGD6 output hit an all-time low, prompting power minister Jyotiraditya Scindia to press for convening an urgent meeting of a ministerial panel to rework allocations. KG-D6 output last month fell to 16.46 million standard cubic meters per day, not even sufficient to meet requirement of urea-manufacturing fertiliser plants and LPG plants.
Negative For - GMR Infra, Lanco Infratech.
Positive For- Petronet.
BHEL's annual profit dips first time in 11 years
· Bharat Heavy Electricals Ltd (BHEL) on Monday said it would miss its 12th Plan revenue target of Rs 1 lakh crore, as a slowdown in the power sector had squeezed cash inflows. The company also announced that its net profit for the last financial year dipped eight per cent, declining for the first time in 11 years. However, it does not anticipate drastic problems as government orders continue to account for the bulk of its business. The largest power equipment manufacturer in the country posted a net profit of Rs 6,485 crore in 2012-13, compared with Rs 7,040 crore in the year before. Turnover increased by a marginal one per cent to Rs 50,015 crore from Rs 49,510 crore.
METALS & MINING
Panel on PPP with Coal India may Meet Today
· The panel formed to formulate a policy on public private-partnership with Coal India Ltd as one of the partners may meet for the first time on Tuesday. The committee under the Chairmanship of Coal Secretary S K Srivastava may meet tomorrow. Last month, the Coal Ministry had constituted a panel to increase coal output. The development followed Finance Minister P Chidambaram stating in his Budget speech that there was a need to devise such a policy to reduce the country's increasing dependence on imported coal.The nine-member committee has representatives from ministries, including Finance and Law and Justice.
JSW Steel production up 15% at 8.51 MT in FY13
· Jsw Steel said it has clocked 15 per cent growth in annual crude steel production at 8.51 million tonnes (MT) in 2012-13. The company had produced 7.4 MT of steel during the previous fiscal. The Sajjan Jindal-led steel maker said it could operate its Karnataka plant at 80 per cent capacity despite severe shortages of iron ore in the state.
· In spite of severe constraints in availability and quality of iron ore in the state of Karnataka, the company could operate its Vijaynagar plant at about 80 per cent capacity due to its unique ability of using low grade iron ore through beneficiation process. The company has its main facility at Karnataka with a 10 MT per year production capacity. Its output for flat-rolled products in 2012-13 was up 17 per cent to 6.28 MT. It has produced 5.36 MT in 2011-12.
· Long products output increased by 18 per cent to 1.8 MT in the last financial year compared to 1.5 MT in 2011-12, the company said. The company's quarterly crude production, in the January- March period, was marginally up 2 per cent at 2.1 MT compared to 2 MT in the year-ago period.
CIL chief raps NTPC on coal quality demand |
· Ruling out the possibility of giving in to NTPC’s demand for billing coal at the receiving point under the new fuel supply agreements ( FSAs), Coal India Limited ( CIL) Chairman Narsing Rao said the company was ready for a third party inspection of coal but at the loading point. · Everywhere in the world, quality analysis happens at the loading point. How can one ask CIL to ensure quality at the unloading point, when carrying it is not its responsibility? There is a joint sampling mechanism now; we are ready for third- party inspection at the loading point,” Rao said. Recently, CIL subsidiary Eastern Coalfields had stopped supply to NTPC’s plants at Kahalgaon and Farakka for three days ( since April 1), after the power company held back payment of about INR1,000 crore, alleging “ stones” were supplied in the name of coal. · In December 2012, the government had asked power producers to sign FSAs with CIL within a month. The cumulative generation of NTPC plants that had come on stream since March 2009 but for which FSAs were yet to be signed was about 8,500 Mw. · NTPC’s total dues stand at about INR2,000 crore. But to be fair, the main problem is with Eastern Coalfields. In 2012- 13, CIL’s supply to power utilities rose 10.2 per cent to 343.79 million tonnes (mt), while growth in overall offtake stood at 7.4 per cent (465.19 mt). NTPC’s power plants saw good growth in coal supply from CIL. Supplies to NTPC’s thermal power plants in 2012- 13 stood at 132.84 mt, compared with 115.84 mt in 2011- 12, a rise of 14.7 per cent. |
India steel demand growth slows |
· Steel consumption in India, the world’s third- largest user, grew at the slowest rate in four years as a faltering economy and lack of spending on cars and infrastructure projects eroded demand. Steel use in the year ended March 31 is estimated to have risen 3.3 per cent to 73.3 million tons from a year earlier. Production rose 2.5 per cent to 77.6 million tons.
· Steel demand growth was less than half of the Indian governments eight per cent estimate as home and car buyers delayed purchases. The economy grew five per cent in the year ended March, the slowest pace since 2003. Car sales fell for the first time in a decade, prompting producers to cut costs.
AUTOMOBILE TVS Motor joins BMW to drive in sub-500 cc bikes
TVS Motors now makes bikes in the sub-250 cc category. BMW, on the other hand, operates in the 600-1,600 cc space. TVS Motor and BMW Motorrad have made it clear that it is a “joint technical co-operation and manufacturing agreement’’ only to produce below 500 cc bikes. No equity participation The newly-formed partnership provides for the use of the production facilities of TVS Motor to make these bikes under TVS as well BMW badges. The co-operation agreement will see the two companies offer their own vehicle derivates manufactured in a common TVS Motor facility. However, these bikes will be sold through their distribution channels within the country, and across the globe. The bikes will be made either at Hosur or Mysore, where TVS Motor has facilities. The Indian company will invest 20 million euro in this joint initiative. The first product is expected to hit the market in 2015. “The agreement will bring together the expertise of both partners. BMW Motorrad is best known for its technology, quality, reliability, and engineering perfection. TVS Motor's strength, however, lies in its ability to develop smaller bikes, offer mass production products, and ensure a robust supply chain. BMW Motorrad, informed pressperson that the pact with TVS Motor was in line with the conscious decision taken by the German company to re-align its focus, which, among other things, envisaged a foray into motorcycles below 500 cc. “This long-term co-operation is an important step along the road to profitability and sustainable growth. Both partners will benefit immensely from this. A market leader in 13 countries, BMW Motorrad has a range of 19 premium motorcycle and scooter models. The main production facility of BMW Motorrad is in Berlin, Germany. The Chennai-based $1.3-billion TVS Motor Company has an annual production volume of around two million units. TVS Motor sold 61,808 motorcycles last month against 65,994 units in the same period in the previous year.
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Regards,
Team Microsec Research
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CA. Rajesh Desai