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."

Courtesy: The Economic Times

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

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

U.S. confirms duties on imports of steel threaded rod from India

[Editor: This gives India Finance minister, a chance to impose similar anti--dumping duty on cheap steel imports, which is threatening the domestic sector] 

Photo: TRUSTe Blog

WASHINGTON, Tue Jul 8, 2014: - The United States on Monday confirmed import duties on shipments of steel threaded rod from India after finding the goods were made using unfair government subsidies and sold too cheaply in U.S. markets.

In its final ruling, the Department of Commerce said most imports of the rod, which were valued at an estimated $19 million in 2013, would face a dumping margin of 16.74 percent and a subsidy rate of 8.61 percent.

The rod is often used in commercial construction to support electrical conduits, pipes for plumbing, ductwork and sprinkler systems and for bolting together pipe joints in the waterworks industry.

The complaint was lodged by All America Threaded Products, Bay Standard Manufacturing and Vulcan Threaded Products. The U.S. International Trade Commission is due to make its final decision in the case by Aug. 17.

Courtesy: Reuters

Economic Survey: Steel output grew by 7.9% in past 5 yrs 

Photo: ElEzz Steel Trading 

July 09, 2014: India ranked as the fourth largest crude steel producer in the world during 2013 after China, Japan and USA. During the last fiscal, the country had produced 81.54 million tonnes of crude steel clocking a 4 percent increase over 2012-13.

Driven by a 7 percent rise in consumption and high utilisation ratio, steel production in India grew at a compound annual growth rate of 7.9 percent in the past five years, the Economic Survey said. "In the last five years, domestic crude steel production grew at a compound annual growth rate of 7.9 percent. Such an increase in production was driven by 9.8 percent growth in crude steel capacity, high utilisation rates and a 7 percent growth in domestic steel consumption," it said. 

India ranked as the fourth largest crude steel producer in the world during 2013 after China, Japan and USA. During the last fiscal, the country had produced 81.54 million tonnes of crude steel clocking a 4 percent increase over 2012-13. The capacity utilisation during 2013-14 stood at 82 percent. However, steel consumption during the year grew by just 0.6 percent, the survey said. Construction sector accounts for around 60 percent of the country's total steel demand while the automobile industry consumes 15 percent. Both the sectors were plagued by a slowdown in the economy. 

The consumption of steel depends on the growth of the economy. A sound economy ensures higher consumption. User industries such as construction and consumer durables had a bad run last fiscal resulting in a dip in demand.

Courtesy: Moneycontrol.com

WINNING STROKES: THINK DIFFERENT

In the morning note to the Premium Service members we asked to SHORT Nifty_Futures with a SL at around 7810, the Nifty_Futures made an intra-day low of 7,567.75, after opening at 7,650, giving good returns to Nifty traders. Where will the market go from here? How to play the Indian Stock Markets, post budget? To know all these join the Premium Service or Trade through my recommended brokerage  house, to maximize your returns. This market is not for the new-comers and novices, therefore, allow the experts to trade on your behalf. 

A buy call call was initiated today on MCX Ltd at Rs.678, for an intra-day target of Rs.686-696, SL--Rs.674. The stock touched Rs.720.40, intra-day. Financial Technologies (I) Ltd (FT), sold 1.02 mln shares of the company at Rs.664 per share in a bulk deal while Rakesh Jhunjhunwala bought 1 mln shares of the company in a bulk deal. This stock was recommended a much lesser price, earlier also.

The investors were asked to buy (or average) the shares of Western India Shipyard Ltd at Rs.2.50-2.55, for a target of Rs.3.5 in the short term. The government has asked for more coals to be imported from outside, due to failure of Coal India Ltd, the world's largest coal miners to meet the consumption demands, of Indian power companies. Hence, the shipping sector would be one of the biggest beneficiaries of this move. And ship building or repair industry being a part of that, would also have a rub-off effect Moreover, the government is likely to continue with the tax breaks for the ship building and repair sectors, in this budget.
Those who bought the shares of Allied Digital Services Ltd (Rs.20.85) at higher price, should complete the average, as the scrip could rise post Infosy Ltd's, June, 2014 quarter results, which is due this week. 

Rohit Ferro Tech set to commission pellet plant

[Editor: Manufacturer of ferro alloys Rohit Ferro-Tech Ltd is in the process of setting up an additional sub-merged arc furnace of 33 MVA and a captive power plant at its Jajpur unit in Odisha. Moreover, the cost of setting up a 600,000-tonne tonne capacity iron ore pellets manufacturing unit will be not less than Rs.400 crores. On 24 December, 2013, the Business Standard reported that, Rs.200 crore JV between RINL-MOIL in Andhra Pradesh was supposed to manufacture 50,000 tonnes of ferro alloys a year. Presently, with the total installed capacity of 300,000 mtpa, Rohit Ferro Tech Ltd has Market Cap of only Rs.133.12 Crore]

Photo: Relybulls Stock Broking Pvt. Ltd. 

SKP Group company Rohit Ferro Tech Ltd (RFTL), a leading Ferro Alloy manufacturer , is set to commence operations at its newly set up pellet plant in May, a senior official of the company told Steel Insights.

"We are going to commission our 0.6 million tons per annum (mtpa) pellet plant in Odisha soon. It would be commissioned in May," Rohit Ferro Tech's Director Rakesh Agarwal said. The pellet plant is being set up by its group company Ankit Metal and Power Ltd (AMPL).

"With the commissioning of pellet plant our group company AMPL would be more viable because we have enough stock of fines which would be utilised for pellet making and thus our cost of production of steel will come down," Agarwal said.

AMPL is currently producing around 200,000 tons of Billets and re-rolled products at Chhatna, Jorehira in West Bengal's Bankura district.

Meanwhile, the company also plans to commission a 67 MW captive power plant at its Jajpur plant in Odisha within next few months, Agarwal said. "The construction work for the captive power plant is going on in full steam and (the plant) is expected to be commissioned soon," he said.

The SKP Group is promoted by S K Patni, a well-known figure in Ferro Alloys and steel industry. The group has achieved success in diverse aspects of business - manufacturing, trading, import and export. 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. 

RFTL started its journey in 2003 with a meagre capacity of 24,000 mtpa from its 2 nos. of 9 MVA furnaces in Bishnupur, West Bengal. Then with its continuous expansion every year, the same plant now has 5 nos. of 9 MVA furnaces with a total capacity of 90,000 mtpa.

In 2006, RFTL expanded its footsteps into the state of Odisha by installing an 110,000 mtpa manufacturing unit with 4 nos. 16.5 MVA furnaces at Kalinganagar Industrial Complex in Jajpur to manufacture bulk ferro alloys.

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). 

Presently, with the total installed capacity of 300,000 mtpa, RFTL exports nearly 70% of its production.

Courtesy: Mjunctionedge

Resurge Mines and Minerals Ltd

BSE Code: 533017

Financials and other Statistics:

## CMP: Rs.2.66 in BSE and Rs.2.40 in NSE, as of 9th July, 2014.

## Face Value: Rs.10 (not Re.1),

## Book Value: Rs.26.49,

## Market Cap: Rs. 57.87 Cr, down from Rs.1500 Crore in 2008.

##  IPO Price Band: Rs.263 - Rs.272 Per Equity Share

## IPO Issue Date: Aug 11, 2008 - Aug 13, 2008

Major Triggers: 

(i) Mahalmiriya (Bauxite) Mines in Maharashtra, has got the approval from the authorities. The mining could start post monsoon, after some issues regarding the lease agreement gets solved.

(ii) The mining is already taking place in the Soapstone Mine, Dhelana, Rajashtan.

URL: http://www.resurgere.in/environmentalreport/dhelana-clearance30-3-2012.pdf

(iii Yelwan Jugai Bauxite Mine in Maharashtra and Satarda Iron Ore Mine are expected to get fast approvals from the  the current NDA government led by Narendra Modi.

(iv) The book value of the share of the company is Rs.26.49 and the market cap is only Rs.52.50 Cr. The market cap of the company is less than price of the machineries purchased by the company till now for the mining operations. So, you are getting the business of the company, Free? 

Approvals==>> 

a) Environmental Clearances

(b) Forest Clearances, etc.
No mining can take place without getting such clearances, even if the government allots mine to any company or business concern--it is mandatory. 

(v) The mining sector stocks are likely to boom in the coming days, after the recent landmark, Supreme Court verdict. At present even the stocks like SVC Resources Ltd (BSE Code: 512449), which are from the same sector is trading multiple times its face value of Re.1 (now Rs.10). Another stock, NMDC Ltd having face value of Re.1 is trading at Rs.173.65. Whereas Resurgere Mines and Minerals Ltd, having a face value of Rs.10 (not Re.1) is trading at Rs.2.40 in the NSE. Is it  not surprising? 

Clarifications of baseless Rumours: 
(a) The promoters holding came down due to GDR and other issues. It did not come down because they directly sold shares in the market. 
(b) At present there are three directors of the company and they are: 
## Subhash Sharma: Chairman & Managing Director
#  Mayur Shah: Ind. Non-Executive Director
## Alok Ambastha: Ind. Non-Executive Director
(c) One of the auditors did not want to sign the balance sheet, but the subsequent auditors had no problem. The said auditor, went to the media without informing the management of the company, which by any standard is a breach of trust and constitutes a type of criminal conspiracy; though the management decided not initiate any legal action against the said auditor. 
(d) The company during the last few years, was affected due to mining ban in many states of Indian union, besides, the UPA government had a very unfavorable policy towards the Iron Ore exporters and dealers. However, in future, as the mining policy gets changed the company hopes to do well.  
(e) Inspite of getting approvals, the company could not start the operations in Mahalmiriya (Bauxite) Mines in Maharashtra because of some problems in the lease agreement. Also, mining generally does not take place during the monsoon season, because they are open fields. 

Conclusion: Accumulate on dips and keep holding for a target of Rs.9-10 in the coming days. This is a turnaround story. On the downside, it can fall maximum upto Rs.2.30. In the NSE the price is already Rs.2.40. 
Also, note that some panic selling due to vested interest groups, is going on, which will not be sustained in the long run. 

Rohit Ferro-Tech Ltd: Buy on dips

CMP: Rs.11.90

Introduction: Promoted by Mr. S K Patni, Rohit Ferro-Tech Ltd (RFTL) started its journey in 2003 with a humble capacity of 24,000 TPA from its 2 x 9 MVA furnaces in Bishnupur, West Bengal. 

In 2006, RFTL also expanded its wings into State of Orissa by installing a 110,000 mtpa manufacturing unit with 4 nos. 16.5 MVA furnaces at Kalinganagar Industrial Complex in Jajpur to manufacture bulk ferro alloys.

Recently, the company added another feather in 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 a status of 100% EOU.

Presently, with the total installed capacity of 300,000 mtpa, RFTL exports nearly 70% of its production.

Furthermore the company is setting up an additional 33 MVA SAF at its jajpur unit. The company is also in the process of setting up a 67.5 MW Captive Power Plant at its jajpur unit.

In an attempt to forward-integrate, RFTL has set up a 100,000 mtpa Stainless Steel manufacturing facility at its Bishnupur unit. On the side of backward integration, RFTL has acquired economic interest in Coking coal and Thermal coal mines in Indonesia.

Since its inception, the Company has come a long way to position itself as a leading producer of High Carbon Ferro Chrome. RFTL has accreditation like ISO 9001:2000, a Four Star Export House Status, Membership of ICDA (International Chrome Development Association), IMNI (International Manganese Institute) etc. The company recently got an award from EEPC as “Star Performer In Product Group - Medium Enterprise” on all India basis.

The company carries a part of its business activity through a Wholly owned Subsidiary Company M/S SKP Overseas Pte. Ltd incorporated at Singapore. During FY13, the Wholly Owned Subsidiary Company has acquired 60% equity stake in a company M/S PT Bara Prima Mandiri of Indonesia, a Company in which M/S SKP Overseas Pte. Ltd already had 60% economic interest . By virtue of the acquisition of equity stake M/W PT Bara Prima Mandiri of Indonesia has become a subsidiary of M/S SKP Oversea Pte. Ltd.

Since its inception, the Company has come a long way to position itself as one of the leading producer of High Carbon Ferro Chrome. RFTL has accreditation like ISO 9001:2000, a Two Star Export House Status, award for Export Excellence by EEPC, Membership of ICDA (International Chrome Development Association), IMNI (International Manganese Institute), etc.

Shareholding Pattern: The promoters  hold 72% (controlling) stake in the company while the general public holds 28%. In the general category,  Shriramrathi Marketing Pvt Ltd, Anumati Stock Broking Pvt Ltd and Quest Financial Services Ltd holds more than 1% stake in the company. 

Triggers: 

• During FY13, the company had allotted 3, 35, 00, 000 equity shares at Rs.10 each on preferential basis at a premium of Rs.50 per share aggregating to Rs.201.00 Cr to the entities belonging to promoter group and strategic investors belonging to the non promoters group. 
• The company is expected to install 67.5 MW captive power plant at its Jajpur unit. The basic engineering, civil work and structural fabrication has progressed significantly. All major equipment having long lead time has been received at the site and erection work is at the final stages. Since, Ferro-alloy sector is power intensive, it will save a substantial part of the cost of production. 
• The basic engineering, civil and fabrication work of 33 MVA Arc Furnace at Jajpur unit is  under progress. The company has placed order for all major Plant and Machinery and the delivery of the plant and Machinery are as per Schedule. 
• The company has acquired 60% equity state in a coking coal mine in Indonesia owned by M/S PT Bara Prima Mandiri Through its Subsidiary M/S SKP Overseas Pte. Ltd, Singapore. The mine located in Central Kalimantan province of Indonesia has an estimated coking coal reserve of 10 MN tonnes. 
• The company is also having 60% economic interest in thermal coal mine in Indonesia owned by M/S PT Palopo Indah Raya through its aforesaid subsidiary. The mine located in Central Kalimantan Province of Indonesia has an estimated thermal coal reserve of 20 MN. 
• The Finance Minister in this budget could rationalize the tax and duty structures of the ferro-alloys sector. There are already talks of raising the import duty, so that foreign countries are not able to dump their cheap products in Indian markets, easily.  
• India enjoys a natural advantage as it has the fifth-largest in chrome ore with a 100 million tones estimated reserve and the sixth-largest in manganese ore with an estimated 176 million tones reserve.

Conclusion: Ferro Alloys are used in the production of steel as de-oxidant and alloying agents and act as an intermediate industry to the iron and steel sector. The demand and prices of ferro alloys depend on the production and consumption of steel which in turn depends upon its user industries. 

Many Ferro-alloys companies, has substituted iron ore with pallets.The UPA Government during their tenure introduced duty on export of Iron ore fines, which has resulted in reduction in export from 25 million tons earlier to 3 million tons. Due to this, there has been improvement in availability of Iron ore fines for conversion  to pellets. Further, there are many pellets plants which are expected to come online in the next 6-12 months. This will in turn reduce the dependence of industry on sized ore and will  in-fact be a new source of raw material, thus increasing the overall availability substantially. With this new source of raw  material not only the availability of will increase but prices will also come down to normal level. Most of these plants are either merchant plants or their capacity is more than what is required by them captively for their own consumption. This will further increase the availability of raw material. 

Moreover, this will in turn reduce the dependence of industry on sized ore and will in-fact be a new source of raw material, thus increasing the overall availability substantially. With this new source of raw material not only the availability of will increase but prices will also come down to normal level. Most of these plants are either merchant plants or their capacity is more than what is required by them for their own consumption. This will further increase the availability of raw material.

Due proactive steps taken by the State Governments and favourable Supreme Court verdict in Karnataka the mining sector is slowly limping back to its normal operational level. 
Further, Orissa Government has also taken proactive steps and has recently allowed restart of mining in some of the mines, which is expected to alleviate the scarcity of raw material. The yield from Pellets is higher than yield from poor quality material.

However, the UPA government also imposed a 5% export duty on iron ore pellets, an agglomerated form of the raw material. Now, while the Associated Chambers of Commerce and Industry of India was of the view that the government should raise the export duty on iron ore pellets even further to safeguard the interests of India’s steel industry, the Pellet Manufacturers’ Association of India has demanded that commerce ministry remove the duty, claiming it was choking the industry and would stunt growth. 

Insiders have told the media that the Steel and Mining Minister seems inclined to continuing allow the export tax to stand. When asked for his reaction, Tomar told news agency, the Press Trust of India (PTI), that a conciliation had to be reached on the two issues, and that his ministry was studying both demands.

Though the Steel demand was low in 2012-14 due to continuing economic crisis and fall in the Indian GDP growth, however, spurt in demand is expected in 2014- 15. The Government of India has planned to invest about Rs.56.32 lakh crore in infrastructure during the 12th Five Year Plan period 2012-17. This will augur well for the industry.

Besides, the market cap of the company is only Rs.136.30 Cr and the book value of the shares of the company is Rs.50.87, as compared to the CMP of Rs.11.90. 

Going forward, the demand for Ferro Alloys is excepted to improve due to increase in investment plan in road sector, expansion in railways, increase in volume by automobile sector, uses of special steel in power sectors and refocus on the manufacturing sector. 

The scrip should bounce from the oversold positions and move up on the optimism of new power plant coming up. The stock could be accumulated around the support region of Rs.11.70-12, for a target of Rs.16-17 in the coming days. 

Sadananda Gowda Asks Cabinet to Allow FDI to Revamp Railways

Railway Projects, in NE, as of October 26, 2013
Photo: Business Standard

[Editor: The Railway minister's budget lacks vision and maturity. Moreover, his decision to start, Bullet Trains in the Mumbai--Ahmedabad route, is totally lopsided and devoid of any reasoning, when there are already more than 57-trains. The Bullet Trains should have been ideal for the Mumbai--Pune route (or at least Kolkata--Jamshedpur route) where many people come from Pune to work in Mumbai (Bombay), On the other hand though Assam sent one of the highest number of BJP MPs, in 2014 elections, nothing much came into its kitty. 

Moreover, the railway minister is silent on the  on the much-delayed Lumding-Silchar broad gauge project of North-east Frontier Railway (NFR) in Assam which has so far (in the last 15-plus years) made only 80% progress and the much-waited mega block in the 201-km section will be taken up from October 1, 2014. The project started in 20th Century and now we are already 13 years past in 21st Century, but no one knows when this project would get completed. The suffers are basically, the people of South Assam, Tripura, Mizoram and South Manipur, apart from the people of North Cachar Hills. The markets have rightly gave it a Thumbs Down, to such substandard budget. Therefore, don't expect much from Arun Jaitleys' Union Budget which is coming on 10th July, 2014. Till now NDA Government has survived only on hype, nothing came much on the table, except the bold decision to hike railway fares. At end I would like to lament that: "Whoever is sent to Delhi, he / she turns out to be "Shakuni Mama" (Mahabharata)"]

New Delhi, July 08, 2014: Railway Minister Sadananda Gowda, presenting the Narendra Modi government's first Rail Budget today, promised to seek increased foreign and domestic private investment to fund modernization of the country's huge but badly stretched network. 

The Railways need an "immediate course correction" after years of mismanagement, Mr  Gowda told Parliament as he outlined ambitious plans for the network that carries 23 million people daily. He did not raise passenger fares again, but defended a recent and unpopular fare hike of 14.2 per cent recently, saying, "The medicine appears bitter in the beginning, but is like nectar in the end." That revision, he said, would bring in additional revenue of about Rs. 8000 crore.

In a post-budget briefing, he also said that the Railways would continue with a Fuel Adjustment Cost formula under which there would be periodic hikes in fares and freight rates once in six months.

He announced a slew of passenger-focused measures - including proposing India's first bullet train to run on the Mumbai-Ahmedabad sector and 50 other new trains, several of them high speed. He promised cleaner, safer trains and stations and better food. 

He also promised Wi-Fi on trains and easier ticket booking - 7200 e-bookings per minute.

Prime Minister Narendra Modi said Mr Gowda's budget "shows it's planned for the railways as a whole, not piecemeal planning as was done till now. It is not an ad hoc budget. It shows where we want the Railways to head and also where we want the country to head through the Railways."

Mr Gowda's main emphasis today was on making the Railways profitable. "I can also get many claps from this house,  by announcing many new projects but that would be rendering injustice to the struggling organization," Mr Gowda said, adding that of every rupee earned, the Railways spends 94 paise, leaving only six paise. "This surplus, apart from being meager, is continuously on decline due to non-revision of fare." (Hungry Kya? Better Food on Trains, Promises Rail Minister)

Only government funding, the minister said, was insufficient and so, he was seeking the union cabinet's approval for allowing foreign direct investment or FDI in the industry.

He also sought greater private participation and exhorted corporates to adopt stations. The bulk of future projects would be public-private partnership or PPP funded, he said, emphasizing on the need to prioritise and complete projects, adopt safety standards of international level and encourage development.

He said he aimed to make the Railways the biggest freight carrier in the world, but said at present its share of total freight in the country had declined to only 31 per cent.

Mr Gowda, famous for his smiling countenance, did not smile much today as he accused previous governments of running the Railways for political benefit; more than half the projects worth lakhs of crores announced in the last 30 years had not been completed, he said, as new announcements were made every year. 

Courtesy: NDTV Ltd

FIIs' and DIIs' Trading Statistics

Contrary to the popular perception, FIIs were net buyers to the tune of Rs.422.72 Cr of India equities. However, it is the DIIs who sold Rs.399.56 crores of shares in the bourses today, i.e. on 8th July, 2014. 

Budget 2014: Raise duty-free liquor allowance to 4 litre for travellers, says ASSOCHAM

[Editor: According to Moneycontrol.com, 24 June, 2014, the ace Indian investor, Rakesh Jhunjhunwala is betting his chips on the Indian liquor industry and sees tremendous potential. He is positive on Vijay Mallya owned United Spirits Ltd and is holding the shares of Radico Khaitan Ltd]

NEW DELHI, Jul 3, 2014: Trade body ASSOCHAM today asked the government to raise the duty-free allowance for incoming international air travellers from two litres of liquor to four, saying 75 per cent of the total purchases was of wines and spirits.

Maintaining that duty-free sales at Indian airports was estimated to be around US $ 350 million annually, the ASSOCHAM said about 65 per cent of the total sales was from arrival duty-free shops and three-fourths of it consisted of liquor. 

An additional two litres of duty-free liquor sale would generate an estimated US $ 125 million extra, it said in a letter to Finance Minister Arun Jaitley ahead of the budget.

"To promote tourism and stimulate buying on international arrivals, many countries have a higher duty-free quota for travellers provided they do shopping at the arriving airport," the organisation said.

It gave examples of several countries including the European Union, the UK, Brazil, Sri Lanka, Dubai and Singapore to show that these nations allowed a higher quota if the wines and spirits were bought at their airports on landing. To compete with this, the government should allow duty- free import of additional two litres, as it would help enhance revenues to the airport operators including Airports Authority of India and the government, the ASSOCHAM said.

Courtesy: The Economic Times

Budget 2014: Stainless Steel Body for Duty Hike to Check China Imports

New Delhi, July 06, 2014: Stating that the share of Chinese stainless steel products has touched about 30 per cent in the Indian market, the Indian Stainless Steel Development Association (ISSDA) has demanded doubling the import duty on these to 10 per cent in the upcoming budget to safeguard interests of the domestic industry.

In a statement, the stainless steel body said Chinese producers were enjoying advantages like low power tariff and various forms of direct and indirect support provided by the Chinese government.

These were being dumped in India at the cost of domestic industry, it said, adding that the share of Chinese flat stainless steel products into the country had risen to 30 per cent.

"The basic customs duty on import of Stainless Steel Flat Products in China is 10 per cent as opposed to 5 per cent duty in India, while it is 14 per cent in Brazil," it said.

"Also, the import duties on raw materials like scrap, nickel and Ferro nickel is virtually nil in China as compared to 2.5 per cent in India," the statement said, adding that this gives the Chinese mills far higher levels of protection as compared to Indian manufacturers.

It further said the problem of trade imbalance is especially pronounced in the industry where China now accounts for almost 50 per cent of total stainless steel global production in the world.

India, on its part, witnessed a huge surge in its imports to 3,07,266 tonnes in 2013-14 from 1,78,611 tonnes in 2009-10, the industry body said.

On the contrary, Indian companies have made a huge investment of over Rs. 25,000 crore in the last few years and are reporting losses and that this may result in NPA due to the high import of stainless steel from China.

For April 2014, stainless steel exports data indicate an increase of 22 per cent during April to 3.9 lakh tonnes.

"Although India is the world's second-largest consumer and third-largest producer of stainless steel, the nation's average per capita consumption of stainless steel is only about 2 kilos, whereas the global average is 5 kilos," ISSDA president NC Mathur said.

"To address these challenges and meet development goals, an import duty hike is really needed to create a level-playing field for domestic steel producers because China uses dumping and other unfair trade practices to enter foreign markets," he said.

"It would also be in the national interest to abolish customs duty on the key raw materials so that Indian steel producers remain globally competitive and meet the challenge of cheaper Chinese products head on."

Courtesy: NDTV Profit

Narendra Singh Tomar, is likely to bring amendments, to more than half-a-century old Mining Law

Photo: www.narendramodi.in

NEW DELHI, July 2, 2014: Steel and Mines Minister Narendra Singh Tomar has written to states seeking their co-operation for evolving a transparent system of allocating mines.

The minister is slated to meet Chief Ministers of various mineral-rich states to take their views on bringing amendments to the more than half-a-century old mining law, an official statement said.

Tomar is likely to meet Chief Ministers of Goa and Rajastan tomorrow and is slated to meet Karnataka Chief Minister on Friday, it said.

Expressing concern over negative public perception with regard to mining, Tomar has urged states to come together to evolve a "transparent and efficient system of allocation of leases along with a robust regulatory framework that best serves India's interests".

"The letter also enunciates the need to safeguard environmental concerns and clearly spells out that 'intergeneration equity' should not be compromised in the process of easing the mining sector," the statement said.

Priorities laid out include re-invigorating of the mining sector, improving investment scenario and reaping benefits of enhanced technology and best practices, it added.

Tomar has written to the Chief Ministers soliciting their views on amendments to the Mines and Minerals (Development & Regulation) Act 1957 and relevant rules to find "expeditious and acceptable solutions" to the mining issues confronting the country.

Courtesy: The Economic Times

Will India Choose Steel or Iron Ore in its Budget Battle?
~by Sohrab Darabshaw 

Mr.Narendra Singh Tomar
Photo: BJP.Org

JULY 7, 2014: India’s new Steel and Mines Minister Narendra Singh Tomar needs to tread carefully. He must recommend a path that makes economic and financial sense, but it also must not anger either of the two lobbies, steel or iron ore. While one issue relates to mining, the other, to steel. In the previous governments, such a conflict never arose since both were separate ministries handled by different ministers. In the new Bharatiya Janata Party (BJP) Government, while the ministries continue to remain separate, there’s one minister in charge of both, so therein lies the rub.

The miners, inclined towards exports, hold the view that due to the paucity of ore, high duties have made exports not viable, resulting in job and revenue losses. The steel majors, on the other hand, cite the same iron ore shortage to prop up their case that India’s 30 percent duty on exports, imposed in late 2011, should be continued, stating that restrictions on mining of iron ore in the recent past had led to an estimated drop of 35 percent in India’s total annual output of ore, presenting a “grave challenge” within the steel industry.

Until recently, India was the third largest exporter of iron ore, but the combination of a series of mining bans and the export tax have dropped it a few nothces. Exports plummeted to just 14.42 million tons in 2013-14 compared to 117.37 million tons in 2009-10. During the period, India’s ore imports went up from 0.89 million tons to 5 million tons. For a while, India had turned into a net importer of iron ore.

The previous government also imposed a five percent export duty on iron ore pellets, an agglomerated form of the raw material. So, while industry association, the Associated Chambers of Commerce and Industry of India was of the view that the government should raise the export duty on iron ore pellets even further to safeguard the interests of India’s steel industry, the Pellet Manufacturers’ Association of India has demanded that commerce ministry remove the duty, claiming it was choking the industry and would stunt growth.

Anil Agarwal, Chairman of Vedanta, one of the world’s biggest diversified metals and mining companies, has supported the mining industry’s demand to reduce the export duty. In a tweet that he sent out, he said India could earn $10 billion if the government allowed the export of iron ore.

So how’s the Steel and Mining Minister planning to tackle the dichotomy? Insiders have told the media that he seems inclined to continuing allow the export tax to stand. When asked for his reaction, Tomar told news agency, the Press Trust of India (PTI), that a conciliation had to be reached on the two issues, and that his ministry was studying both demands.

Which is not saying much at all, is it?

Courtesy: Metal Miner