News Analysis
Rajesh Desai
METALS & MINING
Tata Steel loss widens to Rs 763 cr on rising costs
· Tata Steel reported that its losses in the December quarter widened to Rs 763 crore against Rs 603 crore registered in the same period last year, largely due to rising costs in India and lower demand in Europe. Net sales were lower at Rs 31,821 crore (Rs 32,964 crore).
· The company expects better performance in the coming quarters with the ramping up of fresh capacity of three million tonnes at Jamshedpur in Jharkhand and restart of second blast furnace at the Port Talbot steelworks in the UK after the £185-million rebuilding project. Tata Steel Group has a net debt of Rs 57,981 crore ($10.5 billion) and plans to raise about Rs 12,000-Rs 13,000 crore from banks to finance its Odisha project. The company said it would focus on cost cutting measures and divest smaller loss-making overseas assets to improve liquidity.
12% fuel sales growth boosts Coal India net
· Coal India Ltd on Wednesday declared close to nine per cent growth in net profit to Rs 4,395 crore during October-December 2012, compared to the same period previous year. The profit growth was attributed to a phenomenal 12 per cent growth in fuel sales to thermal power plants and, in the face of lower offerings on highly profitable e-auction (open market) platform.
· Overall the company supplied over 10 million tonnes (mt) more coal during the quarter. The entire incremental supply was directed to power sector, paying the lowest price for coal. State-owned NTPC was the single largest beneficiary, receiving 17 per cent more fuel compared to same period last year.
· To mitigate its supply commitments to power sector, CIL sold one mt less coal through open market where coal is sold at double the price paid by power sector. This is in sharp contrast to the previous years. The net result is: e-auction revenues are down by Rs 190 crore. The company also absorbed the impact of diesel price hike during the quarter.
· Q4 Outlook: CIL now loading 214 wagons a day, up by approximately 20 wagons compared to last year. But to reach the targeted off-take we need 238 wagons a day. Wagon availability is good. But not good enough,” CIL chairman said. the wagon availability was hit due to Kumbh Mela arrangements. As a result, the pit-head inventory, which was consistently on the decline till November last year, started accumulating once again.
Lower output drags NMDC net down 30%
· Iron ore miner NMDC reported a 30 per cent drop in net profit for the quarter ended December 31 due to lower production and offtake by steelmakers. Its net profit was Rs 1,293 crore, down from Rs 1,859 crore in the year-ago quarter. Heavy rains in the Bailadila mines area dragged down production to 5.36 million tonnes during the quarter, as against 7.14 million tonnes in the corresponding quarter of last fiscal. Its turnover was at Rs 2,048 crore (Rs 2,822 crore), a drop of 27 per cent.
· The company is, however, confident that production will pick up in the current quarter. “In January, we have recorded production of three million tonnes, the highest monthly production in the history of the company. The company expects to end the year with a production of about 26 million tonnes, marginally lower than last year’s production of 27 million tonnes.
Odisha eases sales restriction on ore from lease- expired mines |
· · The lifting of the restriction would enable miners to sell iron ore and fines stacked since October, which would be somewhere between nine and 10 mt. It’s welcome step and will boost ore availability for steel makers. · Many large miners of the state such as Aditya Birla Groupmanaged Essel Mining, Rungta and KJS Ahluwalia had to halt operations at some of their mines due to the October resolution of the state government. The recent order provides an opportunity for them to sell iron ore and fines stacked since October. Steel makers and pellet producers such as Brahmani River Pellet Ltd, a Stemcor group company, and Essar Steel, which has a six- mt pellet making plant. |
6mines resume operations in Karnataka |
· About 10 months after the Supreme Court had approved the resumption of mining operations by 18 category- A mines, six mines have resumed operations in Karnataka. Together, these mines are allowed to produce 3.3 million tonnes ( mt) of ore a year, about 10 per cent of the iron ore requirement of steel mills in the state.
· Till December 2012, the six mines produced 710,000 mt, which is yet to be e- auctioned. An additional four mines, with a capacity of 1.8 mt, are in various stages of securing approvals. It is expected these would commence production by March- end, said sources in the steel industry.
· On April 20, 2012, the court had approved the reopening of 18 category- A mines. The remaining category A and B mines would be allowed to resume operations after these fulfilled the court’s conditions. |
Regards,
Team Microsec Research
Microsec Capital Limited
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CA. Rajesh Desai