Monday, July 14, 2014

Budget 2014-15: Simplicity, transparency and thrust on growth in economy
~~Deven Choksey, MD K.R. Choksey Sec.Financial Solutions
Revolutionary Reforms:
Photo: Moneycontrol.com
1. Income Tax exemption: 21000 crores of money left in hands of individuals. This will boost savings and consumption in economy. 
2. Banks are exempted from CRR & SLR deductions on their infrastructure funds portfolios. This is a big booster as it will have few advantages:
(a) It will result in 34-35 bps savings in the margins of banks which could result in additional funds for lending. On ? 10 L crore portfolio, additional funds available with banks would be 3500 crores.
(b) Availability of funds for infrastructure will help revive stalled infrastructure projects. It would thus reduce NPA stress in the books of banks.
(c) It could pave way for faster expansion in economy, which would have positive impact on lending to infrastructure asset class in road, power sectors. It also holds promise to let banks grow faster.
3. Portfolio income of FII is being classified as capital gains vs business income would not only give greater clarity to global investors bout also would result in attracting higher tax compliance and more inflow of funds in India, under the transparent norms. Fine print reading of many other measures should reveal further growth. 
They are: (i) Increased allocation & spending by government of 50,000 crore has all the potential to kick start the mega investment program in the country.
(ii) For faster implementation of projects, thrust has been given on IITs or infrastructure investment
trusts & giving a larger thrust on REITs or Real Estate Investment Trusts means attracting more funds in economy.
(iii) Roadmap for fiscal deficit is made clear with intent to bring it down to 3% in 3 years from 4.5% currently. To bring down fiscal deficit, credit of 65000 crores has been taken from divestment, additional collection of 7500 crores from indirect tax and relying on growth coming from infrastructure spending measures which would eventually swell the collection kitty of the government.
(iv) FDI in defence and insurance raised to 49% from 26% which will result in higher inflow of foreign investments in the country. Defence import bill will eventually come down which also means that current account deficit equation will be taken care of now and also in future.
(v) Host of social and agriculture sector reforms has the character of transforming lives of masses and in turn give them large economic power. It could result into transforming rural lives and in turn higher spending by them could spur industrial growth.
Given the reform orientation covering rural to urban economy we think this budget should be given full marks. Fine print will help us analyse further and we will bring company specific impact analysis to you. 
Stay invested in cyclical stocks as they hold larger promise under the budgetary proposal

Sunday, July 13, 2014

India's steel consumption inches up by 0.7% in first quarter
NEW DELHI, 13 Jul, 2014: India's steel consumption grew by a mere 0.7 per cent during the first quarter of current fiscal to 18.82 million tonnes (MT). 

The country had consumed 18.69 MT steel in the April-June quarter of last fiscal, showed data compiled by Joint Plant Committee (JPC), a body under the Steel Ministry. 

In recent months, the rate of growth in consumption was the fastest at 3.4 per cent in April. It was 0.3 per cent in May and 0.9 per cent in June. 

Production of finished steel grew by 1.5 per cent during the period at 21.86 MT over the same period last year. SAILBSE -6.06 %, RINL, Tata SteelBSE -4.01 % and other major players cumulatively produced 11.34 MT clocking a growth of just two per cent, the JPC said. 

Contribution of mini and small firms' production rose by 0.3 per cent during the period. 

India, which became a net exporter of steel in recent times, exported 1.34 MT of finished steel during April-June period clocking a 18.5 per cent growth over a year ago. 

Imports also went up. During the period, India's import of finished steel saw a growth of 11.8 per cent to 1.49 MT. 

India's steel consumption grew by just 0.6 per cent in the 2013-14 fiscal, the slowest in at least four years, to 73.93 MT. Exports grew by 4.1 per cent at 5.59 MT, while imports were down by 31.3 per cent during the period 5.445 MT. 

India is the fourth largest steel maker in the world with 81 MT of production in last year. The sector contributes about two per cent of the country's GDP and employs over six lakh people. 

The Steel Ministry estimates that the country's consumption may go up to 176 MT by 2025-26 if the economy grows by 6.5 per cent during the period between now and 2025-26.

Courtesy: The Economic Times
Govt mulls single-window system to boost steel, mining sectors
[Editor: I have been saying this since the last couple of months and I am happy the government has at last started to think in this direction. The biggest beneficiaries, apart from Steel and Mining space, would be Construction and Power  sectors]
The Environment Minister 
June 25, 2014: To boost sagging sentiments in steel and mining sectors, the government on Tuesday began the process of setting up single-window mechanism to fast-track clearances for various projects and create special mining zones to ensure raw material security for existing and upcoming steel plants in the country.

In the course of a three-hour-long meeting steel and mines minister Narendra Singh Tomar, coal minister Piyush Goyal and environment minister Prakash Javadekar said that there is a pressing need for a single-window clearance system and agreed to engage more stakeholders to take the process forward.

While there was a general agreement that such a system “cannot happen overnight as rules for different departments are not the same,” but creating such a dispensation also cannot be an endless process.

Currently, 44 coal projects, both opencast and underground, and at least six steel projects are awaiting environmental and forest clearances.

Considering that over Rs 4.4 lakh crore of investments are in the pipeline in the steel sector in Jharkhand, Orissa and Chhattisgarh, such a mechanism is likely to translate these investments on the ground. In response to the contention of steel ministry officials that the existing plants perpetually complain about raw material insecurity, Goyal told the meeting that some blocks can be auctioned specifically for the steel companies, while steel PSUs can continue to enjoy allocations through the government dispensation route.

Steel ministry officials had, in a presentation to Tomar last month, contended that the sector has been discriminated in allocation of captive coal mines despite the companies completing their end-use plants and investing heavily in mining. They told the minister that 44 captive coal blocks pertaining to steel and iron projects have been canceled notwithstanding their investments made.

“The three ministers said that like the special economic zones, certain big mineral bearing areas can be demarcated as special mining zones exclusively for meeting the demands of the iron-ore starved plants,” a source said. The erstwhile UPA government had set a target of producing 300 million tonnes steel per year by 2025 for which the nation would require nearly 350 MT of iron ore.

However, the steel ministry officials could not confirm whether such mining zones would be entitled to financial sops as enjoyed by the SEZs. Javadekar said that National Board for Wildlife (NBWL) will be reconstituted soon and matters pending for clearance of the NBWL will be thereafter be disposed off expeditiously.

Goyal, meanwhile, is learnt to have been firm in ruling out de-merger of Bharat Coking Coal Limited (BCCL) from Coal India and making it a stand-alone company, as demanded by the steel ministry last year.

The 12th Five Year Plan working group had suggested de-merging BCCL from Coal India to service the raw material needs of the steel companies steel industry which spends heavily in sourcing the fuel from abroad.

Goyal, who also holds the charge of power ministry, is learnt to have told the meeting that since Coal India is a listed entity, it would be imprudent to distribute its assets.

Indian steel sector is upbeat on budget proposal to develop 100 smart cities
India is the biggest producer of sponge iron. Its production is set to jump 10 times in 20 years
Photo: Down To Earth
Sunday, 13 Jul 2014: The domestic steel sector is upbeat on the budget proposal to develop 100 smart cities, a move that is likely to generate demand for key building and construction materials like steel and cement.

Mr CS Verma chairman of Steel Authority of India Limited said that "The renewed focus on infrastructure viz. development of smart cities, ports, Pradhan Mantri Gram Sadak Yojna, power plants, plan for doubling pipeline grid, metro for tier 2 cities, industrial corridor, incentives for housing, and revival of SEZ etc. will go a long way to further consolidate growth and giving fillip to steel sector which has faced stagnant demand of late."

The increase in customs duty for stainless steel will provide the requisite protection at a time when the demand has slackened. Other measures such as reduction in customs duty for steel grade limestone and dolomite, as well as ships for breaking should also help the industry.

Mr Manoj Kumar Agarwal MD of Adhunik Metaliks, a maker of speciality steels said that "The move to develop 100 smart cities leading to infrastructural development will increase demand of steel and cement resulting in inclusive growth. Various sectors will be highly benefited by this infrastructural enhancement."

Mr Subhrakant Panda MD of Indian Metals and Ferro Alloys Limited said that "The Finance Minister's maiden budget is noteworthy for the statement of intent to revive manufacturing and infrastructure sectors while maintaining fiscal discipline. The government's mission of housing for everyone by 2022 and setting up 100 smart cities are bold moves which will go a long way in changing the country's landscape.”

He said that "These will not only help sectors like cement, steel etc but will also increase the employment opportunities. As far as the ferro alloys industry is specifically concerned, steps taken to encourage key sectors which in turn will boost growth will have a positive impact."

Mr Jayanta Roy Senior VP, Co-head, Corporate Ratings, ICRA Ltd said that "The long term impact on the steel sector is expected to be positive because of the policies on construction and infrastructure sectors, which generate around two third of steel demand in India.”

Mr Roy said that “Policies including increased tax incentives to individual home buyers and enhanced allocation towards affordable housing are expected to spur growth in the housing sector. Additionally, development of 100 smart cities, 15,000 kilometers of pipeline for the oil and gas sector, 8,500 kilometers of roads, and development of new ports and airports would provide a fillip to the construction sector.”

He said that also, the increase in custom duty on stainless steel flat products and reduction of customs duty on import of ships for breaking and steel grade dolomite and limestone are positives for the industry. The Government's intention to sort out the current issues in iron ore mining and a modification of the MMDR Act towards making it more supportive to the industry would be critical for the growth of the sector.

Mr Jaijit Bhattacharya, Partner, Infrastructure and Government Services, KPMG said that "We welcome the initiative which is the need of the hour for the Indian economy. Cities are the growth enablers and current Indian cities are choking with the economic growth in India. It is heartening to note that budgetary provisions have been made for modern next generation cities."

Mr Venkatesan Subramanian, Vice President & Global Leader, Metals & Minerals Practice, Frost & Sullivan said that "For the metals and minerals industry, the hike in export duty of bauxite and import duty hike on flat rolled products of stainless steel are positive as it is expected to boost domestic sales and bring additional investment into the sector in form of new projects and capacity expansion in these industries. The government policies in this sector points to the right direction of value addition for mineral ores fulfilling domestic demand through local production."

Courtesy: Steel Guru
Budget-2014-15: Power Sector
Photo: The World Bank
In the Union Budget 2014-15 presented on 10 July 2014, Finance Minister Arun Jaitley proposed Rs.200 crore for power reforms.

Jaitley also proposed a ten-year tax holiday to the power sector undertakings, which begin generation, distribution and transmission of power by 31 March 2017.

Further, the Finance Minister has proposed to allocate an initial sum of Rs.100 crore for preparatory work for a new scheme "Ultra-Modern Super Critical Coal Based Thermal Power Technology" to promote cleaner and more efficient thermal power.

Jaitley also announced comprehensive measures for enhancing domestic coal production with a stringent mechanism for quality control and environmental protection. Measures will be initiated to provide adequate quantity of coal to power plants which are already commissioned or would be commissioned by March 2015 to unlock dead investments.

To further improve rural life, the government will launch the Deen Dayal Upadhyay Gram Jyoti Yojana to augment power supply at a cost of Rs.500 crore.

To promote wind energy, Jaitley proposed to reduce the basic customs duty from 10% to 5% on forged steel rings used in the manufacture of bearings of wind operated electricity generators. Also, he proposed to exempt the SAD of 4% on parts and raw materials required for the manufacture of wind operated generators. Further, he proposed to prescribe a concessional basic customs duty of 5% on machinery and equipment required for setting up of compressed biogas plants (Bio-CNG).

Source: Capialmarket.com

Friday, July 11, 2014

Big boost for road, housing, power, shipping sectors
Friday, 11 July, 2014: With zero tolerance for poor infrastructure and amenities, Jaitley put infrastructure at the core of his budget.

A promise to create 'one hundred smart cities by putting in Rs.7,060 crore this year and giving the National Highways Authority of India and State Roads Rs.37,880 crore with a commitment to build 8,500 kilometers, the government kick-started the much needed investment cycle that would have a multiplier effect taking along every core industrial sector.

"The government's mission of housing for everyone by 2022 and setting up smart cities will not only help sectors like cement or steel but would go a long way in changing the country's landscape," said Subhrakant Panda, managing director, Indian Metals and Ferro Alloys.

Beyond smart cities, the real estate sector would greatly benefit from steps to attract Foreign Direct Investment in the sector.

Requirement of built-up area for FDI has been reduced from 50,000 square metres to 20,000 square metres while and capital conditions halved to $5 million.

Projects having 30% of cost for affordable housing, has been exempted from the minimum built up area.

"These coupled with pass-through of income allowed obviating incidence of double taxation on REIT would facilitate flow of savings into the real estate sector," said Harsh Vardhan Patodia, vice-president of a real estate body.

On the financing side, Jaitley talked of a modified REIT-type structure for infrastructure or Infrastructure Investment Trusts having similar pass through status while commercial banks, he said, would be helped to raise long term money to fund infrastructure projects.

"Infra Investment Trusts is not entirely new as SEBI had in December floated a consultation paper on it. Exempting CRR and SLR conditions on infra fund for commercial banks would help them raise cheap money which the sector needs," said Ashok Pareek, executive director of Srei Capital Market.

Shipping industry got a lot of attention: 16 new port projects to be awarded this year and Rs.11,635 crore for development of Outer Harbour Project in Tuticorin.

The finance minister also announced an ambitious inland transport project along Ganga between Allahabad and Haldia, at a cost of Rs.4,200 crore.

"If the project can ensure a minimum draft of 3.5 meters then it would be possible to sail 1500-2000 tonne barges giving shape to what the finance minister has wished for," V.K. Singh, chief executive officer of Shreyas Shipping, told dna.

Lowering of tax incidence on coastal shipping as well as changes made to Place of Provision of Services Rules, 2012, are the incentives that brought cheers from the shipping industry, he said.

In the amendment notification for Place of Provision of Services (Amendment) Rules, 2014 issued today aircrafts and vessels except yachts have been exempted.

Power sector including coal-based and renewable got the push with Jaitley proposing to channel coal supply to projects commissioned by year end and extending ten-year tax holiday to 2017.

The FM set aside Rs.500 crore for feeder separation to augment power supply to rural areas and for strengthening sub-transmission and distribution systems.

"The resources required for this, however, are far larger than budgeted, and this initial allocation should be used to attract domestic and multilateral funds," Kameswara Rao, Leader Energy, Utilities Mining, PwC India.

Import duty on coal was rationalised, a step welcomed by CESC Ltd chairman Sanjiv Goenka who said this would bring down costs at a time of poor domestic supplies and inability to power producers to pass on additional costs to consumers.

Goenka however rued that the larger issue of viability of the energy sector including poor financial health of the state-run discoms wasn't addressed.

FDI in housing
Built-area clause for FDI 50k sq mt 20k sq mt
Capital $10mn $5mn
Exemption on built-up: Projects having 30% of cost reserved for affordable housing

On a platter
100 smart cities Rs.7,060 Cr
NHAI and state roads Rs.37,880 Cr
Inland transport project along Ganga Rs.4,200 Cr

Courtesy: DNA India
Union Budget 2014: Import duty on stainless steel up 7.5%, to help domestic firms
[Editor: Rohit Ferro-Tech Ltd's (Rs.12.64) much awaited 67 MW captive power plant (at its Jajpur unit, Odisha), is likely to come up by September, 2014--the scrip is already reacting to the positive news and is moving up, since the last couple days. Moreover, the CDR money has already started to flow, into the company, which is meeting working capital and other requirements. It is to be noted that the company earlier, went in for restructure of its loan portfolio. Besides, the company's Manganese alloys production facility of 100,000 mtpa with 6 nos. 9 MVA furnaces in Haldia, West Bengal is working fine. NONE of the company's plants are are CURRENTLY CLOSED according to my close sources--all are RUNNING. This is just a baseless rumour spread by some vested interest groups. In April 9, 2008, the company incorporated a wholly owned subsidiary in Singapore named SKP Overseas Pte Ltd and acquired economic interest in two coal mining companies in Indonesia with a reserve of 20 million tonnes of Thermal Coal and 5 million tonnes of Coking coal. Also, Rohit Ferro-Tech Ltd, started operations in the thermal coal mine during the year 2008-09. Today, the scrip hit the upper circuits at Rs.13.50, before closing at Rs.12.64; as the Sensex ended the day with a net loss of 348.40 points. 
On 11 July, 2014, Steel Guru writes: Import duty on flat rolled products of stainless steel hiked from 5% to 7.5% percent (Budget: 2014-15). 
Impact: Theoretically, price of imported flat rolled products of stainless steel will rise benefiting Indian flat rolled stainless steel producers and cost of end users of this type stainless steel would rise by about INR 4000 per tonne to INR 5000 per tonne considering current prices of about USD 3000 per tonne to USD 4000 per tonne for 304 and 316 grades respectively. But as major volumes of imports take place from South Korea and Japan, the impact of import duty hike would not be this extant due to FTAs. However, thousands of small users could be impacted due to some price rise in domestic market]
Photo: DDN
Thursday, July 10, 2014: New Delhi: In a major relief to domestic stainless steel industry, reeling under severe under- utilisation of capacity, the government Thursday increased import duty on flat-rolled products from 5 percent to 7.5 percent.

Presenting his maiden Budget, Finance Minister Arun Jaitley said this was done to provide an impetus to domestic stainless steel industry.

"The domestic stainless steel industry is presently suffering from severe under-utilisation of capacity.

"To give an impetus to the stainless steel industry, I propose to increase the basic customs duty on imported flat- rolled products of stainless steel from 5 percent to 7.5 percent," he said.

The domestic stainless industry has been facing a threat in the form of a sudden and immense surge in imports from various countries, especially China, primarily because of the current import duty which is considered to be on the lower side in comparison to other nations.

China has an average customs duty of 10 percent and Brazil, 14 percent.

Taking opportunity of lower customs duty, imports from these countries were on the rise in recent times.

India's imports of stainless steel surged to 307,226 tonnes in 2013-14 from 239,136 tonnes in 2011-12, reporting a growth of nearly 30 percent.

Domestic makers have been demanding 15 percent duty. They were also demanding removal of the basic customs duty on key raw materials and on scraps to ensure the domestic stainless steel industry can manifest itself as a globally competitor.

India now ranks as the third largest consumer and producer of stainless steel.

Industry sources said country's stainless steel consumption was expected to grow at 8-9 per annum annually to reach around 3.5 million tonnes by 2015. 

Courtesy: Zeebiz
Fingers crossed for early resumption of mining
[Editor: The resumption of mining in Goa, will have sentimental effect on two of my recommended counters, viz. Resurgere Mines and Minerals Ltd (Rs.2.20) and Western India Shipyard Ltd (Rs.2.45). The former is a pure mining company, which is expected to start mining in Mahalmiriya (Bauxite) Mines in Maharashtra, post monsoon. It has already got approval for the same from the authorities, but got struck-up due to some problem in the lease agreement. While later would get benefited, as more ships will start taking ores from Mormugao Port, Goa. After repair, the ships do not generally want to go empty. Western India Shipyard Ltd (WISL) is strategically located at Mormugao Port Goa along the west coast of India. WISL repairs vessels such as cargo vessels, passenger vessels, transhippers, dredgers, coast gaurd / Naval vessels, barges, tugs, OSV'S, tankers and deepwater oil rigs. Its clients include: Chowgule Steamship Ld, Varun Shipping Ltd, Reliance Industries Ltd, SCI Ltd, Navy, Coast Guard, PFS Shipping, Transocean, Nobel Sedco Forex, Jindal Drilling, Aban Offshore, ONGC, etc. In the Budget 2014-15, the outlay for defense was hiked over the previous year. The Company hopes that repair of naval vessels will continue to be given priority in view need for extensive repair and modernization of the naval fleet in the coming years. Moreover, as a subsidiary of ABG Shipyard Limited, it enjoys continuous access to technical, marketing and financial support from ABG Shipyard Limited, who is an established market leader in the Shipbuilding Industry]
Abg shipyard, Dahej
Photo: Icon Ven
PANAJI, Jul 11, 2014:  The beleaguered mining industry in Goa hopes that mining activity will soon resume in the state as Union finance minister Arun Jaitley said that the current impasse in the mining sector, including, iron ore mining, will be resolved expeditiously.

"It is my government's intention to encourage investment in mining sector and promote sustainable mining practices to adequately meet the requirements of industry without sacrificing environmental concerns. The current impasse in the mining sector, including, iron ore mining, will be resolved expeditiously. Changes, if necessary, in the MMDR Act, 1957, would be introduced to facilitate this," Jaitley said.

Reacting to the budget speech, S Sridhar, executive director of the Goa Mineral Ore Exporters' Association (GMOEA), said that the GMOEA is hopeful of mining resuming.

Sridhar also said that the government intends to make changes in the MMDR Act and the GMOEA has to wait till it comes out. "We are waiting for the state government mining police and renewal of mining leases as soon as possible," he added

Jaitley also said, "There have been requests from several state governments to revise the rate of royalty on minerals. Members are aware that the rate of royalty can be revised after a period of three years. The last revision took place in August, 2009. Therefore, another revision, which is due, will be undertaken to ensure greater revenue to state governments."

Goa mining came to a halt in September 2012, since then the state's mining industry has been living in hope of an early resumption of mining activities.

Courtesy: The Times of India
Ban-hit Goa mining industry sees ray of hope in Budget
Time is running out for Mr.Manohar Parrikar 
Photo: Hindustan Times
Friday, July 11, 2014: Panaji: Goa's beleaguered mining industry on Thursday said certain proposals in the Union Budget are expected to help the resumption of iron ore extraction, which had been stalled in the State since the last two years.

Finance Minister Arun Jaitley, in his maiden Budget speech, proposed to expeditiously resolve the "current impasse" in mining industry to encourage investment and bridge supply-demand gap.

He proposed to revise royalty rates on minerals which would help swell the coffers of States and make changes, if necessary, in the Mines and Minerals (Development & Regulation) Amendment Act (MMDRA) to facilitate to encourage investment and promote sustainable mining practices.

"We hope necessary amendments are done in the MMRD Act so that mining operations resume at the earliest and existing ambiguities are removed," Glenn Kalavampara, Goa Mineral Ore Exporters Association (GMOEA) Secretary, told PTI, reacting to the Budget.

"It's correct decision to amend the MMRD Act. At present there is a lot of ambiguity due to multiple interpretation of the Act. The amendment will help the entire mining sector in the country," Kalavampara said.

Asked about the revision of royalty rates, he said stakeholders should be taken into confidence before moving ahead on this front as the current rates of taxes paid by the mining industry are high.

India's mining sector, particularly extraction of iron ore - the steel-making raw material - was affected after the Supreme Court imposed a ban in Karnataka and Goa on allegations of illegal mining.

The SC had banned iron ore mining in Karnataka in July-August 2011, and in Goa in October 2012 and it was lifted early this year with a cap on production.

As a result of the ban, both production and exports of iron ore fell drastically. 

Courtesy: Zee News India
FIIs' and DIIs' Trading Activity 
Today, customary selling after Infosys Ltd's Quarterly Results is going on. Also, some people are booking profits before the weekend. Nifty is now at 7514 and Sensex at 25232. The markets are expected to recover, by the end of the day, as Mr.Arun Jaitley's budget--2014-15 was more or less satisfactory, with no big bang reforms. 

However, that does not mean that the NDA government would not continue with policy reforms--the announcements can come up at any time. Some sectors like Ferro-alloys, Steel, Shipping, Mining, etc, could shine in the coming days. 

Also, the Finance Minister announced to increase export duty on bauxite from 10% to 20%, which is ill conceived and will damage the domestic mining sector. According to RK Sharma, Secretary General, Federation of Indian Mineral Industries, or FIMI: “At present, most of the bauxite that is exported from India comes from Gujarat and Maharashtra. These are not required in India as these are refractory grade bauxite and are not used by the aluminium makers in the country,” he says. “Now, these bauxite reserves will lie around unused". The government should immediately roll back this decision, so that domestic interests are protected. 
Pre-Session:Market may edge higher in early trade
11-Jul-14: Trading of CNX Nifty futures on the Singapore stock exchange indicates that the Nifty could gain 14 points at the opening bell. IT major, Infosys announces Q1 results today, 11 July 2014.

The Reserve Bank of India has on Thursday, 10 July 2014, notified that shares of Kotak Mahindra Bank can now be purchased through primary market and stock exchanges by Foreign Institutional Investors (FIIs)/Registered Foreign Portfolios Investors (RFPIs) as the restrictions placed on the purchase of shares of the above company was withdrawn with immediate effect after the share holdings by FIIs/RFPIs under Portfolio Investment Scheme in Kotak Mahindra Bank have gone below the prescribed threshold limit stipulated under the extant FDI Policy. The Reserve Bank has also notified that all the approvals received against the said scrip are duly cancelled.

GMR Infrastructure said after market hours on Thursday, 10 July 2014, the Management Committee of the Board of Directors of the company has, at its meeting held on 10 July 2014, approved the issue and allotment of 46.88 crore shares to eligible qualified institutional buyers at the issue price of Rs 31.50 per share which is at a discount of Rs 1.64 per share on the floor price of Rs 33.14 per share, aggregating to approximately Rs 1476.77 crore.

Shree Cement will be watched. With reference to the earlier announcement dated 1 July 2014, regarding the commissioning of 2 million Tons Per Annum (MTPA) capacity Grinding Unit at Aurangabad in Bihar on 30 June 2014, Shree Cement has now informed that the commercial production from the said Grinding Unit has started from 9 July 2014.

Exide Industries turns ex-dividend today, 11 July 2014, for dividend of Rs 0.70 per share for the year ending March 2014.

Jindal Steel & Power turns ex-dividend today, 11 July 2014, for dividend of Rs 1.50 per share for the year ending March 2014.

JSW Energy turns ex-dividend today, 11 July 2014, for dividend of Rs 2 per share for the year ending March 2014.

IL&FS Engineering and Construction Company bagged an EPC contract from Indian Strategic Petroleum Reserves (ISPRL), Ministry of Petroleum and Natural Gas, Government of India, for laying of pipeline from Land Fall Point (LFP), Mangalore Port to Mangalore/Padur Cavern via Intermediate Valve Station (IVS) for storage of crude oil project.

The total length of the Project is 50 kilometres. The total value of the contract is Rs 213 crore. It is to be completed within 15 months from the date of issue of LOA.

The company is currently executing Halol Dahod Pipeline Project of Gujarat State Petronet (GSPL) on EPC basis.

Further, the company is also executing two Oil & Gas projects - one involves construction of 15 storage tanks having a total storage capacity of 0.85 million tons at Fujairah, UAE, and the other consists of laying 6 pipelines from the IPTF Terminal at Fujairah to the Port of Fujairah for evacuation of white oil and black oil products, IL&FS Engineering and Construction Company said in a statement.

Astral Poly Technik said that its board will meet on 18 July 2014, to consider raising long term funds.

Industrial output is seen rising 3.8% in May higher than 3.4% in April, as per the median estimates of a poll of economists carried out by Capital Market. The government will unveil industrial production data for May 2014 today, 11 May 2014.

Indian stocks edged lower after witnessing immense intraday volatility on Thursday, 10 July 2014, after Finance Minster Arun Jaitley made a number of announcements in Union Budget 2014-15 such as a proposal to increase in foreign direct investment in insurance and defence manufacturing, a sharp increase in plan expenditure, measures to boost long term financing for infrastructure by banks and provided clarity on taxation with respect to foreign portfolio investors.

Market expectations that the Finance Minster would scrap the law on retrospective taxation were not met. The S&P BSE Sensex fell 72.06 points or 0.28% to settle at 25,372.75 on that day, its lowest closing level since 27 June 2014.

Foreign portfolio investors (FPIs) bought shares worth a net Rs 161.55 crore on Thursday, 10 July 2014, as per provisional data from the stock exchanges.

Asian stocks rose in choppy trade on Friday, 11 July 2014. Key benchmark indices in China, Taiwan, Hong Kong, and Singapore were up 0.14% to 0.56%. Key benchmark indices in Indonesia, South Korea and Japan fell 0.26% to 0.63%.

US stocks fell on Thursday, 10 July 2014, on concerns that trouble at a European bank might spread,

European bonds tumbled on Thursday after a parent of Portugal's No. 2 lender missed a debt payment. Shares of Banco Espirito Santo were suspended yesterday after sliding more than 17 percent, while its bonds sank to record lows even as Portugal's central bank said it can avoid contagion risks. Espirito Santo International missed payments on commercial paper to “a few clients,” according to a July 8 statement. The company is the biggest shareholder of Espirito Santo Financial Group, which owns 25% of the bank. Trading in ESFG shares and debt was also halted yesterday.

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Thursday, July 10, 2014

India Budget 2014: Positive measures will spur demand for metal and mining companies
 Government's initiatives will trigger investment cycle and give a new lease of life to such firms
Jul 10, 2014: Rising costs of raw material, delays in project execution and subdued demand have proved detrimental to metal and mining companies in the country. However, the Narendra Modi government’s maiden Union Budget gives them hope. The hope doesn’t necessarily come from budget measures announced specifically for the sectors, but from the positive ring around steps taken to prop up investment in the country.

“The government’s investments and measures will trigger investment cycle. He (Finance Minister Arun Jaitley) has facilitated ease with which business can be done and has given clarity on the tax regime,” Koushik Chatterjee, Group CFO, Tata Steel told CNBC-TV18.

Demand for steel grew by a mere 0.6 percent in 2013-14, the lowest in four years. The demand had gone up by over 3 percent a year earlier.

“There are a lot of measures in the budget, ranging from setting of new ‘smart cities’ to redevelopment of airports that will spur demand for metal companies. Also, measures like new ports and tax rationalisation of different grades of coals will improve logistics and ease the business atmosphere,” said SV Sukumar, Head of Operations and Supply Chain, KPMG.

Though the Union Budget was largely silent on major measures, steel companies will see some relief as basic custom duty on steel grade limestone and dolomite has been reduced from 5 percent to 2.5 percent. The two are used in steelmaking.

Tata Steel and its peers like JSW Steel and Jindal Stainless will also benefit from the increase in basic custom duty of imported flat-rolled products of stainless steel from 5 percent to 7.5 percent. “The domestic stainless steel industry is presently suffering from severe under-utilisation of capacity,” the Finance Minister reasoned. “We welcome the step,” said NC Mathur, President, Stainless Steel Development Association.

But the biggest concern for these companies has been access to raw material – iron ore and coal. JSW Steel, owned by Sajjan Jindal, recently announced that it will import 6 million tons of iron ore - an irony given India’s ample resources of the raw material.

Jaitley acknowledged this concern. “It is my government’s intention to encourage investment in mining sector and promote sustainable mining practices to adequately meet the requirements of industry without sacrificing environmental concerns. The current impasse in mining sector, including iron ore mining, will be resolved expeditiously. Changes, if necessary, in the MMDR Act, 1957, would be introduced to facilitate this,” he said. 

“We have been making presentations to the minister. We will have to wait and see what changes are brought in,” said RK Sharma, Secretary General, Federation of Indian Mineral Industries, or FIMI.

Sharma though criticised the government’s move to increase export duty on bauxite from 10 percent to 20 percent. “At present, most of the bauxite that is exported from India comes from Gujarat and Maharashtra. These are not required in India as these are refractory grade bauxite and are not used by the aluminium makers in the country,” he says. “Now, these bauxite reserves will lie around unused.”

In a move that was expected but one that might increase costs of metal companies and their customers, Jaitley has given the go-ahead for the revision of royalty on minerals. Mining companies have to pay royalty to state governments. In iron ore itself, the rate is expected to be increased to 15 percent from 10 percent of the output.

The S&P BSE Metal Index on Sensex was up 1.65 percent, outperforming the Sensex that was down 0.28 percent at 3.40pm.

Courtesy: Forbes India
Budget 2014: Several positives for metal and mining sector
Photo: DNA India
10 Jul, 2014: The budget had several positives for the metals and mining companies. There is an increase in the export duty on bauxite from 10 per cent to 20 per cent, which is a big positive for the aluminium manufacturing companies which depend heavily on domestic bauxite supply.

Hike in export duty will constraint bauxite exports and improve raw material availability for these companies.

Also the customs duty on imported flat-rolled products of stainless steel is hiked from 5 per cent to 7.5 per cent which is a positive for steel manufacturing companies which are facing severe competition from the Chinese, Japanese and Korean steel manufacturers that were dumping their inventory in the Indian market.

Hike in custom duty will constraint this, thus benefitting local flat steel producers.

Top Picks : NALCO, Jindal Steel, SAIL

Courtesy: The Economic Times
Metals & mining sector lauds Budget 2014 moves
10 Jul, 2014: Venkatesan Subramanian, Vice President & Global Leader, Metals & Minerals Practice, Frost & Sullivan said:

"For the metals and minerals industry, the hike in export duty of bauxite and import duty hike on flat rolled products of stainless steel are positive as it is expected to boost domestic sales and bring additional investment into the sector in form of new projects and capacity expansion in these industries. The government policies in this sector points to the right direction of value addition for mineral ores fulfilling domestic demand through local production."

Kameswara Rao, Leader Energy, Utilities Mining, PwC India said:
"The focus in mining sector is clearly on conservation, such as of using coal for existing power plants, encouraging sustainable mining practices, and setting up washeries. Normalisation of import duties on all forms of imported coal removes delays and procedural issues that importers faced.


The more challenging issues the industry faces in both coal and other minerals including iron ore will need legislative and structural changes, and the FM indicated these would be taken up. The indication that royalty rates could be revised are positive to the mineral rich states, and it is hoped some of that would be reinvested in improving access to the mines and local area development which will improve investment attractiveness."

Manoj Kumar Agarwal, managing director of Adhunik Metaliks, a leading manufacturer of speciality automotive steels said:

"The step taken by government to amend the MMDR act to increase investment in mining and the proactive initiative of Government to enhance coal production will add to the growth of the economy."

N C Mathur, president, Indian Stainless Steel Development Association (ISSDA) said:

"We welcome the step taken by the finance minister to increase the custom duty on imported flat rolled stainless steel from 5% in 7.5%. Keeping in mind the condition of the domestic industry the government should have also reduced the duty on input raw materials like stainless steel scrap, nickel both of which are not domestically available.

We applaud the government for recognizing the challenges which the domestic industry is facing especially in light of huge surge in imports from China. We hope this issue would also be addressed by the government on urgent basis through anti dumping and safe guard measures.

With a focus on development, the Modi government has also put impetus on improving the infrastructure and housing sector across the country. This should also translate into giving a boost to the domestic stainless steel market."

WINNING STROKES: THINK DIFFERENT
Photo: The Business Standard
As expected and as mentioned in this blog only yesterday to finish averaging, Western India Shipyard Ltd hit the buyer freeze at Rs.2.56. Finance Minister Arun Jaitley, while presenting his maiden budget after BJP's victory in May, said India will get 16 new port projects this year, with a focus on their connectivity to the hinterland. India currently has 13 major ports. He also, said a comprehensive policy will also be announced to promote the struggling shipbuilding industry in India this financial year. He further said a project on the river Ganga called ‘Jal Marg Vikas’(National Waterways-I) will be developed between Allahabad and Haldia to cover a distance of 1620 kms, which will enable commercial navigation of at least1500 tonne vessels. The project will be completed over a period of six years at an estimated cost of Rs.4,200 crore. 
Rohit Ferro Tech Ltd hit the buyer freeze in the afternoon trade at Rs.12.87, before closing at Rs.12.32. It is one of the largest merchant producers of High Carbon Ferro Chrome, Silico Manganese, Ferro Manganese & Ferro Silicon in India and exports 70% of Ferro Alloys manufactured to various countries across the world. The company plans to commission a 67 MW captive power plant at its Jajpur plant in Odisha within soon. Since ferro-alloy sector is power intensive, it will save a substantial part of the cost of production. Recently, the company added another feather to its cap by fully commissioning its Manganese alloys production facility of 100,000 mtpa with 6 nos. 9 MVA furnaces in Haldia, West Bengal. The unit has got the status of being a 100% export oriented unit (EOU). The Indian Finance Minister, Mr.Arun Jaitley, in his budget speed commented: "The domestic stainless steel industry is presently suffering from severe under-utilization of capacity. To give an impetus to the stainless steel industry, I propose to increase the basic customs duty on imported flat-rolled products of stainless steel from 5 percent to 7.5 percent". This was one of the major demands from the Ferro-alloys sector and I had mentioned quite a number of times in my recent blog posts. It is heartening to note that the Finance Minister, has decided, to act  upon this demand.
Today a buy call NIFTY_JUL-7700-CE @ Rs.59, for a target of Rs.81 and Rs.101, keeping SL of 7475 below NIFTY SPOT. It reached a high of Rs.137.70 intra-day giving more than double return in just 3-4 hours.
Resurgere Mines and Minerals Ltd today hit another lower circuits in the NSE at Rs.2.30 and Rs.2.51 in the BSE. It is probably because, the Finance Minister proposed to increase the export duty on bauxite (ore) from 10% to 20%. However, Mr.Arun Jaitley also, said: "It is my Government’s intention to encourage investment in mining sector and promote sustainable mining practices to adequately meet the requirements of industry without sacrificing environmental concerns. The current impasse in mining sector, including, iron ore mining, will be resolved expeditiously. Changes, if necessary, in the MMDR Act, 1957 would be introduced to facilitate this. There have been requests from several State Governments to revise rate of Royalty on minerals. Hon’ble Members are aware that rate of Royalty can be
revised after a period of three years. Last revision took place in August, 2009. Therefore, another revision, which is due, will be undertaken to ensure greater revenue to the State Governments". Hence,  the budget is infact positive for the mining sector. Moreover, selling bids in both the BSE and NSE, for Resurgere Mines and Minerals Ltd, has also come down, indicating that we are perhaps at the last leg of correction. The scrip is going for natural correction after a long and grueling rally. Those who will hold the scrip for the medium to long term would be benefited. All the negative factors are already factored in the current price of the scrip, whose market cap has come down from around Rs.1500 Cr in 2008 to Rs.49.91 Cr. The book value of the shares of the company is still at Rs.26.49. The company will start to show better sales volume, once the mining starts in Mahalmiriya (Bauxite) Mines in Maharashtra which has already got approval from the authorities, but got struck up due to some problem in the lease agreement. The mining could start post monsoon, in this mine and in other mines.
Allied Digital Services Ltd, today touched the upper circuits at Rs.21.85, before closing at Rs.21.15. This is also another turnaround case, and June, 2014 quarter results are also expected to be satisfactory. With INR near Rs.60, against USD, and both the US and European economies starting to pick-up steam, the Indian IT sector is expected to do well in the coming days.
Two injured in low-intensity blast in Pune
[Editor: Mr.Arun Jaitley's maiden budget was getting thumbs up by the stock market participants; suddenly some people thought to disrupt the rhythm of the market so that the newspaper headlines tomorrow do not scream that NDA government's budget gets 400-plus points salute. Now tell me what to do with these elements? If a cult is causing perennial problems, then I think the time has come to think seriously, whether to ban this cult or not; at least in India. We heard enough of lies and bluffs, saying that it propagates peace. However, the reality is different, therefore we  need to act fast, before it is too late. It is not possible to control an organized movement by putting "Rasogollas" in every mouth. The action has to be swift, decisive, and exemplary]
Dagdusheth Halwai Ganapati Temple
Photo: Flickr
Pune, July 10, 2014: Two persons were injured when an explosive placed on a motorcycle went off near a police station here on Thursday afternoon, police said.

The "low-intensity" blast occurred near Pharaskhana Police Station close to the famous Dagdusheth Halwai Temple in the busy Budhwar Peth area around 2:30 pm.

Top police officials and Bomb Detection and Disposal Squad have reached the spot, while forensic experts are scouring the area to collect evidence, sources said, adding the condition of those injured, who were yet to be identified, was not serious.

Senior police and ATS officials refused to give any further details about the incident.

Pune was rocked by four coordinated low-intensity explosions on August 1, 2012 which had left one person injured.

The city had come on the terror radar for the first tine when 17 people were killed and around 60 injured in a powerful blast at German Bakery, one of Pune's favourite eateries, on February 13, 2010.

Home-grown terror outfit Indian Mujahideen was blamed for both the attacks.

Meanwhile, a team from Mumbai Anti-terrorism Squad has been rushed to assist an ATS team already stationed in Pune in the probe.

Sources in Mumbai ATS said it was too early to conclude whether Thursday's explosion was the handiwork of terrorists.

Courtesy: India Today

Wednesday, July 09, 2014

Omar Abdullah meets Nitin Gadkari, seeks central aid for road projects in J-K
Jammu and Kashmir Chief Minister Omar Abdullah today sought the immediate intervention of the Centre to expedite work on the conversion of the four-lane National Highway which connects the Valley with the rest of the country.
Photo: Parda Phash
Jul 09 2014: Jammu and Kashmir Chief Minister Omar Abdullah today sought the immediate intervention of the Centre to expedite work on the conversion of the four-lane National Highway which connects the Valley with the rest of the country.

Omar raised the issue with Union Road Transport and Highways Minister Nitin Gadkari at a meeting today during which he also took up matters relating to road communication sector in J-K.

The Chief Minister emphasised the need for early completion of the four-lane project and also laid stress on the upgrade and improvement of the existing Jammu-Srinagar National Highway.

Omar also spoke of the need to transfer the maintenance of other highways in J-K to the state Public Works Department, said an official release from the state government.

The Chief Minister highlighted the importance of good roads in the state for its overall development and economic welfare.

Omar also urged that the 84-km Mughal Road, which connects Bafliaz town of Poonch district in Jammu region to Shopian district in the Valley, be declared an alternative National Highway while stating that a proposal for the same was already pending with the Centre.

He also raised the issue of construction of tunnels on various routes, including one at 'Peer Ki Gali' on the Mughal Road, a tunnel to connect Singhpora in Kishtwar to Vailoo in Anantnag, another between Lolab and Bandipora and a tunnel connecting Sudh-Mahadev with Marmath in Doda district.

"The proposals for the construction of these tunnels have already been referred to the Union government," Omar said.

The Chief Minister sought Centre's assistance for construction of five flyovers by National Highways Authority of India at various traffic junctions in the Valley and also called for aid for the building of two ring roads in J-K under the National Highway Development Project.

Issues relating to Pradhan Mantri Gram Sadak Yojana were also discussed at the meeting along with those pertaining to the sanctioning of special road projects for the state under the 'Militancy Hit Project' scheme, the release added.

Courtesy: The Financial Express
Steel industry demands easing of duty on scrap imports
With new policies likely to raise demand, ore mining restriction an issue
Photo: Imedia Internatiional
Mumbai  July 7, 2014 : With Transport Minister Nitin Gadkari proposing to garner Rs 100,000 crore for the development of highways in two years, steel mills are expecting a revival in demand. The scrap importis likely to pick up as the country is not producing enough ore to meet the demand.

The steel sector is demanding easing of duty on scrap import.

Import had fallen last year. Fears of ore prices shooting up due to rising steel demand may not hold true as sources said rising scrap import will help check ore prices. The latter have declined by 28 per cent this year to trade at $96.5 a tonne for delivery in China.

A slowdown in infrastructure investment in two-three years hit the sector hard. The steel demand in India grew 0.6 per cent in 2013-14 despite an average gross domestic product (GDP) growth of five per cent. The demand grows in 1.3 multiple of GDP. By that formula, the demand should have risen by 6.5 per cent.

In a recent statement, however, Gadkari and finance minister Arun Jaitley had hinted at measures to bring the manufacturing sector on the fast track.

Given ore mining continues to face hurdles, scrap is the only substitute, which India largely imports.

"In India, mills' excitement of owning raw material has come down. Rising import of scrap would keep ore prices under check," said T V Narendran, managing director, Tata Steel, in a recent interview with Business Standard.

India imported 4.6 million tonnes of scrap from China, Taiwan and Korea in 2013-14 compared to eight million tonnes the previous year. Despite a ban on ore mining, import of scrap plunged 42.5 per cent due to an overall slowdown in steel demand and, thereby, production in India. China has increased steel production capacity to 800 million tonnes adding 50-100 million tonnes annually for five-six years.

Data compiled by the Joint Plant Committee (JPC) showed India's finished steel consumption grew by 0.6 per cent to 74 million tonnes in 2013-14. India's iron ore production is estimated at 136.4 million tonnes in 2013-14 compared to 135.8 million tonnes in 2012-13.

"The slower-than-expected growth in steel demand can be attributed to lower demand from consumer sectors. But the future growth would depend on government measures in the coming Budget. With lots of free trade agreements signed with countries, scrap is imported at two per cent duty which needs to be increased at least to 10 per cent to bring the steel sector on track," said Neeraj Singhal, managing director, Bhushan Steel, one of the largest secondary steel manufacturers in India.

"Once investment in infrastructure projects starts coming, demand of raw material will also increase proportionately," said Amitabh Mudgal, president (marketing and corporate affairs), Monnet Ispat.

Iron ore production in India is likely to grow 14 per cent to 155 million tonnes in 2014-15.

Courtesy: Business Standard