NEWS ANALYSIS
RAJESH DESAI
INFRASTRUCTURE
Jaitapur n-power project faces non-cooperation from locals
· Villagers opposing the 10,000 MW Jaitapur nuclear power project in Maharashtra's Ratnagiri district have decided to launch an economic non-cooperation movement against Nuclear Power Corporation of India Ltd.
· About 4,000 locals participated in a protest rally from Ratnagiri to Jaitapur on Sunday. About 700 of them signed a pledge that they would not give any lodging and material supplies to the contractors and NPCIL staff working on the project.
· The NPCIL is in the process of building a mammoth 10,000 MW nuclear power project at Jaitapur. In spite of vehement opposition, the company has been able to acquire 938 hectares of land for the project.
Industrial output rises to 6.8% in Jan
· Aided by a rebound in manufacturing performance, the country's factory output grew 6.8 per cent in January on a year-on-year basis, official data released today showed.
· On a cumulative basis, the Index of Industrial Production recorded 4 per cent growth for the period April-January 2012. While mining output contracted 2.7 per cent in January, manufacturing and electricity recorded robust growth of 8.5 per cent and 3.2 per cent respectively for the same month.
· As per use-based classification, there was negative growth of 1.5 per cent in capital goods, intermediate goods (-3.2 per cent) and consumer durables (-6.8 per cent). However, positive growth was achieved in basic goods (1.6 per cent) and consumer non-durables (42.1 per cent).
Unitech eyes Rs 250 cr sales realisation from B’lore project
· Real estate major Unitech on Monday said it eyes a sales realisation of about Rs 250 crore over two years from the luxury housing project in Bangalore.
· The company announced the launch of its luxury villas project ‘Aranya.’ It plans to develop 68 villas in the 15-acre project. The villas sizes range from 4,319-7,000 sq ft.
· The project is in line with the rising demand for the luxury living propositions in Bangalore. Company expect to generate sales booking of Rs 250 crore from the project over two years.
· In the first nine months of this fiscal, Unitech sold 5.4 million sq ft for a sales value of Rs 3,029 crore, while it launched projects totalling 7.17 million sq ft of area.
DLF to move Compat against CCI order
· DLF notified Bombay Stock Exchange, that it will move Competition Appellate Tribunal (Compat), against the Competition Commission of India’s (CCI) order accusing DLF for abusing its dominant market position and imposing unfair conditions on home buyers, in its high-end residential project Magnolia in Gurgaon. On August 16. 2011 CCI had slapped a penalty of Rs 630 crore on DLF for its projects in Gurgaon on similar grounds.
CAPITAL GOODS
Suzlon to unveil 1.5 MW range for low-wind sites
· Wind turbine maker, Suzlon Group will introduce a 1.5 MW range focused on harnessing low-wind sites. The new turbine is specifically designed to deliver high efficiency and cost-effective power generation even at low wind speeds. It will therefore increase the size of the market and make wind power projects even more financially competitive than what they are today. Scheduled for launch this year, the turbine is designed specifically for the Indian market where the potential is in medium-to-low wind sites.
Thermax to replace Container Corp in FTSE IDFC infra index
· Thermax Ltd will replace Container Corporation of India in the FTSE IDFC India Infrastructure-30 Index. Created in 2007, the FTSE IDFC India Infrastructure Index Series is designed to represent the performance of those Indian companies that generate the majority of their revenue from infrastructure. The series is reviewed semi-annually in accordance with the index ground rules which ensure that both the tradable FTSE IDFC India Infrastructure-30 Index and the benchmark version FTSE IDFC India Infrastructure Index continue to accurately represent the investable universe for index-linked products such as funds, structured products and ETFs.
AUTOMOBILES
Car sales up 13 per cent in Feb 2012
Car sales in India grew 13.11 per cent to 2,11,402 units in February as customers rushed to buy vehicles fearing rise in prices post the Union Budget, to be presented this week.
People are expecting increase in car prices after the Budget as the government may roll back two per cent excise concession given as stimulus during the 2008-9 slowdown.
Domestic passenger car sales grew 13.11 per cent to 2,11,402 units in February against 1,86,890 units in the year-ago period.
During February, the country’s largest car maker Maruti Suzuki India sold 94,118 vehicles, a jump of 7.13 per cent, over the same period last year.
Rival Hyundai Motor India’s sales grew by 12.78 per cent to 36,658 units, while Tata Motors’ sales increased by 5.46 per cent to 28,236 units.
There has been an improvement as consumers are no longer expecting increase in interest rates.
This is the first time ever that the monthly car sales crossed the two lakh units.
Motorcycle sales in the country during the month grew by 8.01 per cent to 8,38,193 units, from 7,76,005 units in the same month last year.
Market leader Hero MotoCorp witnessed a growth of 9.55 per cent at 4,70,994 units compared to the same month a year ago.
TVS Motor’s scooter sales were at 34,796 units, a decrease of 8.7 per cent, while that of Hero MotoCorp went up by 19.49 per cent to 39,464 units.
Light commercial vehicle sales rose by 31.02 per cent last month to 43,982 units from 33,568 units in the same month in 2011. Medium and heavy commercial vehicle sales were up 5.45 per cent at 32,909 units during the month from 31,207 units in the year-ago period, it added.
Three-wheeler sales during February 2012 were down 13.57 per cent to 42,242 units compared to 48,878 units in the year ago period.
In February 2012, total sale of vehicles across categories registered a growth of 12.06 per cent to 15,33,474 units in February 2012, as against 13,68,370 units in the same month of 2011.
CEMENT
Cement prices to go up by Rs 10/bag on rly freight hike
The recent hike in railway freight rates is expected to push up cement prices by Rs 8 to Rs 10 a 50-kg bag. Most cement companies seem to have already implemented a price increase.
Cement makers may face further cost pressure with expected mark-up in petrol and diesel prices and possible coal price hike of 10-12 per cent by Coal India to offset the increase in its wage costs.
PRODUCTION PRICE
ACC, which is largely dependent on the railway network for moving in raw material and moving out finished products to and from its plant in Karnataka, expects its production cost to increase.
The increase in railway freight by way of rationalization of distance slabs will have an impact of about Rs 225 crore per annum. This will mean a per tonne cost increase of Rs 225 on rail movement on an all-India basis.
There are expectations that the Government may increase excise duty by two per cent in the Budget to make up for the widening fiscal deficit. If this comes through, it will lead to a further rise in cement prices.
MORE REVENUE
The Railways intends to mop up additional revenue of Rs 15,000-20,000 crore from the recent freight hike for commodities including food grains, fertiliser, cement, coal and petroleum.
While the freight on coal and cement will go up by between 18 per cent and 24 per cent, it will rise between 20 and 35 per cent for food grains and fertilizers. The Railways have a revenue target of Rs 70,000 crore from freight during the current financial year.
In January, the Railways earned revenue of Rs 615 crore by transporting 9.92 million tonnes of cement. It also generated revenue of Rs 2,584 crore from transportation of 41.35 million tonnes of coal, a key raw material for cement companies.
The total freight earnings from commodities amounted to Rs 6,174 crore in January. Cement production in January increased 10.6 per cent to 20.6 million tonnes, while dispatches grew 10 per cent to 20.4 million tonnes.
In the last couple of years, the Railways has revised the classification of cement and clinker resulting in indirect freight hikes. In addition, a further burden on the cement industry has been imposed by levy of various surcharges.
BANKING
PNB plans to undertake Rs 2,360 cr capital infusion
Punjab National Bank (PNB), the country's second largest public sector lender, plans to undertake capital infusion to the tune of Rs 2,360 crore to maintain the financial strength of the bank. The bank would go for capital infusion of Rs 1,075 crore from LIC of India, an amount of Rs 1,285 crore has been sought from the government. The bank continues to hold its leadership position in business, network and technology adoption. The capital infusion would impart flexibility in its operations. The bank is also planning to cover 4,588 villages with population of over 2,000 by the end of this month. Out of these, 4,084 villages have been covered by December 31, 2011.
Performance Highlights
Total business of the bank crossed Rs 6,00,000 crore milestone to reach Rs 6,19,122 crore, recording a growth of 21.4%. PNB's net profit for nine months ended December, 2011, stood at Rs 3,460 crore, registering a year-on-year growth of 7%, net profit of the bank for the third quarter of 2011-12 recorded a growth of 5.5% to reach Rs 1,150 crore. Similarly, PNB's operating profit grew by 17.3% to reach Rs 7,678 crore during first nine months of the current fiscal. Core operating profit, excluding trading profit, rose by 18.9% to Rs 7,490 crore during the period.
Life insurers hail move to reduce ratio of premium paid to sum assured
The report of the Standing Committee on Finance, released recently, has given life insurance companies a reason to rejoice. The Committee has recommended that for insurance policies to be eligible for tax exemption the sum assured should be 10 times the annual premium. In the Direct Taxes Code, this limit was set higher, at 20 times the annual premium. The Committee said increasing the ratio of premium paid to sum assured to 20 is too drastic a change and will have an adverse impact on the life insurance sector. Hence, it has recommended a more reasonable multiple/ratio of 10 times the annual premium, which will fulfill the desired objective of ensuring adequate protection in insurance.
Regards,
Team Microsec Research
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CA. Rajesh Desai