BlackRock Sees Revival as Roads Attract Tata: Corporate India

Billionaires Anil Ambani and Ajay Piramal are joining the Tata Group in seeking distressed Indian road projects offered by debt-laden builders amid Prime Minister Narendra Modi’s plan to boost infrastructure spending.

Photo: IBN Live

Jul 24, 2014: Piramal Enterprises Ltd. (PIEL) is negotiating to buy six road projects valued at 20 billion rupees ($333 million), said Parvez Umrigar, co-head of its structured investment group. The $100 billion Tata conglomerate, which bought three road projects last year, and Ambani-led Reliance Infrastructure Ltd. (RELI) are looking for more.

Modi’s pledge to spend $25 billion on roads, airports, ports and smart cities to unclog Asia’s third-largest economy and spur expansion is encouraging investors to buy stalled road and power projects. The highest interest rates among the region’s biggest markets and growth near a decade-low crippled the original builders, forcing them to sell.

“The infrastructure sector is at an inflection point right now,” Rohit Singhania, fund manager for DSP BlackRock T.I.G.E.R fund with 14.38 billion rupees under management, said in a July 17 telephone interview. “We need a lot more roads, power plants, highways and ports. And the new government understands it has to pump investment in these.”

The T.I.G.E.R fund, abbreviated for The Infrastructure Growth and Economic Reforms fund, has delivered returns of almost 44 percent this year beating 96 percent of its peers. The fund’s gains are almost double those of the benchmark S&P BSE Sensex this year.

Modi’s Task

Part of Modi’s task is to induce private investment in infrastructure to follow through on his campaign promises, curb a consumer inflation rate of more than 7 percent and rein in the fiscal deficit to a seven-year low of 4.1 percent of gross domestic product.

His administration’s maiden budget on July 10 cleared the way for dedicated investment trusts and eased infrastructure lending rules. Roads received an allocation of 523 billion rupees in the plan and urban infrastructure 500 billion rupees, as part of 1.48 trillion rupees for everything from highways, ports to housing.

India’s central bank allowed lenders to sell long-term bonds exempt from reserve requirements to bolster funding for infrastructure and affordable housing.

‘Booster Dose’

The budget announcements and central bank’s efforts, according to Singhania, will be “a big booster dose” for the sector. “Things will begin to improve over the next six to nine months” with road developers seeing a pick up in profits over the next year, he said.

India needs to spend about 17.6 trillion rupees by 2017 building roads, bridges, ports and railways, according to estimates of the Planning Commission of India.

The country will have to invest $2.2 trillion by 2030 on urban transportation, housing and office space, McKinsey & Co. estimated in a 2010 study. India’s infrastructure is ranked below that of Guatemala and Namibia by the World Economic Forum.

Tata Realty and Infrastructure Ltd. plans to spend 227 billion rupees by 2018 on roads, technology parks, malls and residential complexes, Managing Director Sanjay Ubale said. The company is one of three companies being handpicked by group chairman Cyrus Mistry to lead a $8 billion push into the sector.

“There is going to be a lot more action in the roads sector in the days to come,” Mumbai-based Ubale said in an interview on July 10. “We are looking at stressed road assets. We had bought some last year. We are looking at some more projects now.”

Debt Recast

Hyderabad-based IVRCL Ltd. (IVRC), which sold three projects to Tata Realty, this month received an approval for a debt recast as the builder struggled with a record annual loss and debt that more than quadrupled in the last five years, according to data compiled by Bloomberg.

IVRCL wrote off receivables worth 2.3 billion rupees in the March quarter, local brokerage Tata Securities Ltd. wrote in a June 3 note highlighting its “worry over high receivables.” It still has about 7.5 billion rupees of receivables under arbitration or unbilled for over three years, the note said.

Stalled power and road projects amid the economic slowdown impaired builders’ ability to repay loans, making them among the biggest contributors to banks’ soured debt in the past two years, according to the local arm of Fitch Ratings.

“Distressed road projects were an impediment to economic growth,” Chintan Lakhani, an analyst at India Ratings & Research, the local unit of Fitch Ratings, said in a telephone interview on July 16. “These deals would make way for fresh investments and renewed interest in the sector.”

Portfolio Churn

Piramal would only consider assets that are commissioned and face “no execution risk,” according to Umrigar. “We are not going to take the risk of land acquisition, forest clearance, environmental clearance. We will enter when the contractors want to churn their portfolio.”

Reliance Infrastructure, whose shares have risen 78 percent this year, expects more deals to close now as the asset valuation mismatch between the buyers and sellers narrows, Lalit Jalan group director for strategy and corporate affairs told reporters on July 18.

Reliance Infra shares rose 0.9 percent to 759.40 rupees in Mumbai, while the Sensex gained 0.5 percent. Piramal rose 0.9 percent, the most in a week, to 638.20 rupees.

An economic revival may widen the valuation gap between the buyers and sellers, hindering deals, said BlackRock’s Singhania, unless a road builder was “extremely starved of funds and being forced by its bankers.”

Piramal expects the deal stalemate to ease as developers try to either repay their debt or seek to exit from projects they have invested for 5 or 10 years, to free up their funds. Most road projects have a 25-year tenure.

“Nobody has a business thesis to continue holding a project from day one to 25 years,” said Piramal’s Umrigar. “Considering the macroeconomic scenario and financial health of the contractors, we are at a stage where projects will start changing hands.”

Courtesy: Bloomberg

WINNING STROKES: THINK DIFFERENT

Photo: Wallpaper.imcphoto.net

Genera Agri Corp Ltd hit another buyer freeze today at Rs.6.91 at the end of day, before closing at Rs.6.88. The scrip will reach Rs.9, in the next few trading sessions, as a pickup in seasonal rainfall tempered concern inflation will accelerate.

Today, the diversified firm (Real Estate, Special Situations and Media & Entertainment) PVP Ventures Ltd was recommended a buy to the Premium Group Members at Rs.8.10-8.30, after the source based news said that the company is now almost DEBT FREE. The company is tentative to declare its results on the 2nd week of August, 2014, according to the sources, who refused to be named. After the board meeting, the FY14, annual report will be also be out. It is to be remembered that PVP Ventures Ltd owns 70-acres of land parcel situated in the heart of the Chennai and about 4 km from Chennai Central Railway Station. This land is under joint development with Unitech Limited and Arihant Housing & Foundation Limited. Going by the response to the first few phases of this project, it is all set to be one of the largest realty projects in South India. Over the next few years, this project is expected to yield approximately Rs.1500 crores to PVP Ventures Ltd. Meanwhile, David James will be unveiled as the player-manager of the Kerala Blasters, which is the Kochi-based franchisee of the Indian Super League (ISL) owned by cricket legend Sachin Tendulkar and his partner Prasad Potluri of PVP Ventures Ltd. The scrip is therefore, moving towards Rs.11, in the coming days. 

As expected IVRCL Ltd (Rs.23.05), today formed a double bottom, and bounced from the support. The scrip should be accumulated at all declines as after the approval of any CDR package, the share price of a company, generally shoots up, Viz. Suzlon Energy Ltd, A2Z Maintenance Engineering Ltd, etc. 

A2Z Maintenance Engineering Ltd, which was recommended here in this blog, at around Rs.11-12, today hit anther upper circuits at Rs.33.35. When I recommended the scrip, few months back, many rebuked me; saying when even Rakesh Jhunjhunwala is selling his holdings, why I am recommending this kind of counter? Now they have mud on their faces.

Continuing the upward journey, Nifty closed with a huge gain of 27.90 points today at 7795.75. It was earlier mentioned to the Premium Group members, that, the bounce back from the level of 7442 and a rise of 263 points last week clearly showed buying interest at lower levels. A recovery after 5% correction was very much expected which came. However the area of 7800, being the previous high, is attracting some profit booking. Moreover, to add to the fundamentals, Indian Rupee strengthened the most in more than a week and the government bonds gained as a pickup in seasonal rainfall tempered the concern, that inflation will accelerate. According to Bloomberg: The deficit in the June-September monsoon, which accounts for more than 70% of India’s annual rainfall, has narrowed to 27% of the 50-year average, the weather department said yesterday. The gap was 43% on July 11. Gains in India’s consumer-price index slowed to 7.31% in June, the least since the gauge was introduced in January 2012. In such a scenario, the investors are suggested to focus once again on the small and mid cap counters (especially from the construction/ real estate and banking space) for some superb returns going forward; as large caps could consolidate around this range for some time and the RBI could either keep the rates unchanged or go for a slight cut. It seems the Bulls are in full control of the affairs in Dalal Street.

Resurgere Mines and Minerals Ltd: Shareholding Pattern of June, 2014 quarter

Please Click on the Photo to Expand

We can clearly see, from the shareholding pattern of the company, that holdings of the promoters (and other large entities) have more or less remained same during the last two quarters. This puts to rest, the controversy spread by vested interest group/s that the promoters have allegedly sold their holdings. If the company starts mining in its BAUXITE mines in Maharashtra, then the scrip could even cross its book value. 

Moreover, this event is in stark contrast to its peer group company, SVC Resources Ltd, whose promoter holding has steadily decreased during the last few quarters; but surprisingly, the Re.1, Face Value share is still at Rs.2.59 (Rs.25.9, if we consider Rs.10, as Face Value) as compared to Rs.2.16 (Face Value: Rs.10 and not Re.1) of Resurgere Mines and Minerals Ltd. 

A notorious group is very active on the counter, because they probably want to purchase the shares of the company, much below the CMP of Rs.2.16 (BSE rate). Hence, they are trying all the mischief, at their disposal to pull the share of Resurgere Mines and Minerals Ltd down. 

But then, it is only the fools who think that they can control the markets, all the time and everytime. 

Kerala Blasters Sign Seven Players

Photo: Telugu Cinema

Thiruvananthapuram, 23rd July 2014: Kochi-based Kerala Blasters Football Club did brisk business on day one of the central domestic player draft for Hero Indian Super League at Mumbai on Tuesday signing seven players, including Indian internationals Mehtab Hossain and Nirmal Chhetri.

Assistant coach Trevor Morgan was the kingpin for the Blasters and it showed with four out of seven players - Mehtab, Chhetri, Gurwinder Singh and Sushanth Mathew - drafted into the ISL team having played football for East Bengal FC when Morgan was the head coach there.

Mehtab Hossain, Nirmal Chhetri, Godwin Franco, Gurwinder Singh, Ishfaq Ahmed, Sushanth Mathew  and Sandesh Jhingan

Mehtab was reportedly the highest valued Indian at Rs 35 lakh in the draft while 23-year-old Chhetri has already won nine caps for India. Ishfaq Ahmed, Sandesh Jhingan and Godwin Franco completed the line up for the club owned by Sachin Tendulkar and Prasad V Potluri.

Blasters signed Sushanth in round six, their only acquisition of a Kerala player on day one, but missed out on another in Mohammed Rafi who was picked by Atletico de Kolkata, co-owned by Sourav Ganguly. Four more Kerala players will come up for grabs on the final day of draft on Wednesday.

Blasters secured the signature of highly- experienced winger Ishfaq Ahmed, who played for Mohammed Sporting SC last season. Jhingan, a young centre back, was a player for Mumbai FC in I-League.

28-year-old defender Franco, along with his soon-to-be teammate Chhetri, were called up for trials with German second division side Fortuna Dusseldorf last December.  Having already secured a winger and three defenders and midfielders each, Blasters are expected to try to bolster their striking department as well sign a goalkeeper in the remaining seven rounds on day two.

Apart from Morgan, Rajeev Kamineni, executive director of PVP Ventures, William D’Silva and Soli K Colah, managers of the team, represented Blasters at the draft.

Team owners Tendulkar and Potluri stayed away from the draft on Tuesday, but the latter is expected to attend on day two.

Courtesy: The New Indian Express

Private companies may be permitted to commercially mine coal

NEW DELHI, Jul 21, 2014: The Modi government will initiate the process of allowing private companies to commercially mine coal and end the state monopoly after the public offer of shares of Coal India Ltd (CIL), official sources said.

"The new government is keen to allow private firms into commercial coal mining to increase supply of the fuel in the country. But we are not opening too many fronts at this moment. We will start discussions with stakeholders on commercial mining only after Coal India's public offer," a senior coal ministry official said. A roadmap to allow private commercial mining of coal will be prepared after an in-principle nod from all stakeholders is secured, he said.

CIL has not been able to increase output to match the surge in demand although it has huge reserves of the fuel. The Tatas, Adani, Anil Ambani group and others have successfully mined coal in India or abroad, but the law requires them to use their domestic output only for their own captive plants. Allowing them to sell coal in the market will give a big boost to industry, particularly power plants, and cut imports that amount to almost Rs 1 lakh crore a year.

The coal ministry will hold talks with trade unions of coal companies on opening up the sector after the public offer of CIL that is expected later this financial year. Opposition from trade unions has stalled an amendment to the Coal Mines (Nationalisation) Act to allow commercial coal mining since 2000.

The amendment bill was introduced in RajyaSabha in April 2000 and a group of ministers was constituted in 2001 to convince the trade unions. The panel was re-constituted in August 2009 under the chairmanship of the finance minister. However, the previous governments did not succeed in getting the bill cleared. CIL's trade unions are against the government's move to offload 10% in the company. The public offer could fetch Rs 23,000 crore, over half of the Rs 43,425 crore that the government proposes to mop up in 2014-15 from equity sale in state-run companies.

The coal ministry has already sought the law ministry's comments on amending the Coal Mines Nationalisation Act in the backdrop of the recently amended Mines and Minerals Regulation and Development Act that provides for coal block allotments through auction for captive use.

"The Mines and Minerals (Development and Regulation) Act was amended only recently to auction coal blocks. Now, we have a challenge in opening the coal sector as the amended act doesn't provide for bidding blocks to commercial purposes. We have approached the law ministry for comments," the official said. The government in the Economic Survey released on July 9 said there was an urgent need to fast track entry of the private sector in commercial coal mining to augment country's coal production and reduce imports of the fuel that costed Rs 95,175 crore in 2013-2014.

Commercial coal mining is widely seen as an answer to the increasing demand-supply gap of coal in the county and allowing private commercial mining is expected to increase competition, infuse new technology and lead to a market-based price discovery.

CIL is unable to meet the demand for coal in the country. The firm blames delayed environment and forest clearances for the slow growth in production. The captive coal blocks have also not come up as per expectations.

Of the 218 allocated mines, only 40-odd have come into production. The coal ministry has de-allocated 80 of these mines and most of the captive coal block companies have challenged the decision in courts.

Courtesy: The Economic Times

New report forecasts boost for India’s construction sector in 2015

Photo: Udaipur Times

MUMBAI, JULY 22, 2014: India’s construction sector is forecast to grow at 7-8 per cent each year over the next decade. With the new government, the country is expected to see increased economic growth and the removal of barriers to foreign investment that will "spur demand for construction" over the coming 12 to 18 months, according to a report by international consultancy giant PwC.

The report highlights how an estimated $1 trillion would be spent on infrastructure over the next three years to 2017. Stating that there would be increased investment in industrial projects by the government, the report has noted that it is the private housing sector that would be a key growth area.

The total construction market in India for fiscal year ending March 2014 was $157 billion, an increase of $4 billion over FY2013. Infrastructure accounts for 49 per cent, housing and real estate for 42 per cent and industrial projects for 9 per cent, the report noted.

Courtesy: The Hindu Business Line

Infrastructure firms seek senior executives after two-year lull

 Firms seek to reduce debt, turn around projects and win new ones from an expected pick-up in infrastructure growth

The Narendra Modi-led government’s plans to build a high-speed train network, 100 smart cities, dedicated freight corridors and airports in smaller towns are expected to help infrastructure firms, which are beefing up manpower for growth. Photo: Pradeep Gaur/Mint

Mumbai, July 21, 2014: After two years mired in a slowdown, top and mid-tier infrastructure firms are looking to hire senior executives, as they seek to reduce debt, turn around projects and win new ones from an expected pick-up in infrastructure growth. Officials at executive search firms said they have been mandated to find suitable candidates for GMR Group, KEC International Ltd, Larsen & Toubro Ltd (hydrocarbon business), L&T Infrastructure Finance Ltd and SREI Infrastructure Finance Ltd, which have interests in power, roads, water and ports. 

Search firms like Executive Access Ltd, RGF Executive, EMA Partners International and ABC Consultants each have at least five mandates to hire senior-level executives with ‘entrepreneurial skills’ to support expected growth in the sector. 

The Narendra Modi-led government’s plans to build a high-speed train network, 100 smart cities, dedicated freight corridors and airports in smaller towns are expected to help infrastructure firms, which are beefing up manpower for growth. 

“Last two years was a phase of consolidation and we did not see profit growth. But we are geared for growth now,” said Hemant Kanoria, MD, Srei Infrastructure Finance Ltd, which is looking to add about five senior executives for its water, power, special economic zones and road businesses. 

Infrastructure was among the worst-hit during India’s economic slowdown, so much so that a March report by International Monetary Fund (IMF) attributed the slowdown largely to infrastructure delays. Delayed clearances, heavy debt, high interest rates and a slowdown in demand had all contributed to stagnation. 

As a result, senior-level hiring almost came to a standstill over the last two years and some companies even let people go, said headhunters and company executives, who did not want to be identified. 

Compensation also remained flat across the sector. “Executives were given phenomenal compensation, but over the last three years, with the slowdown, there have been very slight salary increases and very little incentives for the senior level, says Anandorup Ghose, Rewards Consulting Practice Leader at Aon Hewitt India. 

Last year, while the average salary increase across sectors at the top management was 8-9%, infrastructure executives saw lower salary increases of 5-7%, said Ghose. However, firms are now re-booting. KEC, part of the RPG Group, created a new role and hired Rakesh Amol as president of its infrastructure business in April, where he would be responsible for railways, water and any future infrastructure verticals the company may get into. 

“We wanted someone who had the entrepreneurial trait of capturing and leveraging all opportunities. In the past, while we looked at people with leadership skills and project execution capabilities, this time, our focus was on someone with strong entrepreneurial capabilities,” said Arvind Agarwal, president, corporate development & HR for RPG Group. Headhunters agree. “Earlier, senior executives held a more maintenance role, but now, they are looking for stronger execution skills coupled with the ability to identify opportunities and deliver faster turnaround on projects,” said Ronesh Puri, managing director, Executive Access. 

The ability to deleverage balance sheets is also sought after, at a time when most infrastructure companies are burdened with debt. “Infrastructure companies are heavily debt-laden and what they seek is expertise in financial turnaround skills and not just raising capital,” said K Sudarshan, managing partner of EMA Partners, who has mandates to hire 10 senior level infrastructure executives, including at the CEO and CFO level. 

“As part of the preparation for new projects in the coming year, we are looking at augmenting our talent pipeline in select and niche areas where specialized skill-sets are required for developing large, complex infrastructure projects and asset management, said Sanjeev Sahi, president, human resources, GMR Group. 

Hiring by infrastructure firms is driving business for search firms, making it one of their fastest-growing segments. “Business in this sector has more than doubled as there is a real war for talent,” says Puri.

Courtesy: Live Mint

PMO to take stock of infrastructure projects this week

NEW DELHI, Jul 22, 2014: For the first time, the Prime Minister's Office (PMO) will this week take stock of the targets set by each infrastructure ministry after the Narendra Modi government took charge.

The Planning Commission, which has been tasked to prepare the presentation for all infrastructure sectors, has sought details from all departments. Sources said the first such umbrella meeting on targets for this financial year is crucial since the Prime Minister has already gone through individual presentations by each ministry and department.

They added that ministries are likely to stick to their earlier targets, though a final call will be taken by PMO considering the achievable targets.

Government officials said the road ministry is likely to submit that NHAI and the ministry would be able to award 8,500 km including 3,500 km on build, operate and transfer (BOT) mode despite the first set of three BOT projects not getting a single bidder. All these projects — Delhi-Meerut Expressway, Varanasi-Sultanpur and Varanasi-Ghaghar bridge stretches — were cleared by the new cabinet.

On the construction front, the target is likely to be 6,300km, out of which NHAI would build about 2,000km.

Meanwhile, the PMO has also sought details of projects and programmes run by all the departments within a week. "Though the communication does not detail the reason behind this, we feel the intention could be to get a complete picture of the activities and to find out which all have been successful and what all have failed," said a senior government official. 

Courtesy: The Times of India

Market Mantra

Today's call: Genera Agri Corp Ltd (BSE Code: 590133)  at Rs.6.58-6.59 hit the buyer freeze, in the mid-afternoon trade. The scrip has a book value of Rs.74.27 and EPS of Rs.3.11.  The stock is expected to hit some more buyer freezes on the way to Rs.9. 

It seems the correction in IVRCL Ltd is over, and the scrip should move up after forming a double bottom. The book value of the shares of the company is Rs. 47.33, which is likely to improve in the coming days, as the company's CDR package has been approved and the government of India has decided to give more impetus to the Infrastructure (especially construction of roads and highways), sector. 
Allied Digital Services Ltd is slowly inching towards the 1st target of Rs.25. Today it touched Rs.21.45 and is now trading at Rs.21, up 2.92%. 
Resurgere Mines and Minerals Ltd (BSE Code: ) hit the buyer Freeze in NSE at Rs.2.20 and is slowly moving towards Upper Circuit in the BSE too; which is placed at Rs.2.27. The CMP in BSE is Rs.2.23.

Sebi draft norms for infrastructure trusts

[Editor: To encourage infrastructure development, RBI exempted long term bonds from mandatory regulatory norms like CRR and SLR if the money raised is used for funding of such projects. In other words, "Banks can issue long-term bonds with a minimum maturity of seven years to raise resources for lending to long term projects in infrastructure sub-sectors," the Reserve Bank said. The central bank said it intends to "ease the way for banks to raise long term resources to finance their long term loans to infrastructure". To say it in simple terms: Reserve Bank of India (RBI) said banks would not have to maintain cash reserve ratio (CRR) or statutory liquidity ratio (SLR) and will not have to meet priority-sector lending targets for funds raised through bonds for extending credit to these sectors. Meanwhile, the Planning Commission secretary Sindhushree Khullar is scheduled to make a presentation this week on the performance of infrastructure sector in 2013-14. Secretaries from the ministries of power, road transport, shipping, civil aviation, coal, petroleum will also be present during the presentation. As many as 189 highway projects with a cost of Rs.1,80,000 crore are stuck due to various hurdles. Therefore, the time has come to invest in the infrastructure stocks, like IVRCL Ltd at Rs.23.35 and keep holding. It is to be remembered that the corporate debt restructuring cell (CDR) has approved an almost Rs.7,000-crore debt recast proposal for IVRCL Ltd. The company is also coming up with a Rights issue]

MUMBAI, Jul 18, 2014: In an attempt to meet the long-term financing needs of the infrastructure sector, Sebi on Thursday issued draft guidelines that would pave the way for launching infrastructure investment trusts in India. These trusts will invest public money only into completed and revenue generating infrastructure assets, and under-construction projects. The units issued by these trusts, just like mutual funds, will also be compulsorily listed on the bourses thus providing liquidity to investors.

Banks, international multilateral financial institutions, foreign portfolio investors (FPIs), including sovereign wealth funds, can come in as strategic investors in infra investment trusts.

Infra investment trusts are proposed to "provide a suitable structure for financing/refinancing of infrastructure projects in the country," Sebi's draft guidelines said. These trusts will invest in "infrastructure projects, either directly or through SPVs. In case of PPP projects, such investments shall only be through SPV," it added.

According to Sebi's draft rules, an infra investment trusts which will invest at least 80% of the corpus in completed and revenue generating Infrastructure assets, will be allowed to raise funds only through public issue of units and the minimum subscription size and trading lot for such units will Rs 5 lakh. The balance 20% of the corpus may be invested in under construction infrastructure projects (subject to maximum of 10%) and other permissible investments.

An infra investment trust that aims at investing more than 10% of the corpus in under construction infrastructure projects, will be allowed to raise funds only through private placement from institutional players and body corporate. The minimum investment and trading lot for such units is fixed at Rs 1 crore. "Such (trusts) shall mandatorily invest in not less than one completed and revenue generating project and not less than one pre-COD project.

The draft guidelines said that the proposed holding of an infra investment trust in the underlying assets should be at least Rs 500 crore and the offer size of the trust shall not be less then Rs 250 crore at the time of initial offer of units. The rules also said that the total borrowing of such trusts and the underlying SPVs should not exceed 49% of the value of the trust's assets. However, this may exclude any debt infused by the trust in the underlying SPV. Further, for any borrowing exceeding 25% of the trust's corpus, requirement of credit rating and unit holders approval will be mandatory.

Source: The Times of India

Mining lease cancellation: Govt moves SC for transfer of cases

The illuminated building of
the Supreme Court of India

New Delhi  July 18, 2014: The Centre today approached the Supreme Court seeking its direction to transfer before it all cases arising out of mining licence cancellation that are pending in various high courts. 

Agreeing to hear the Centre's plea, a bench headed by Chief Justice R M Lodha issued notice to all the companies which have filed petitions in the high courts. 

The Supreme Court sought response from Corporate Ispat Alloys Ltd, JWS Energy Ltd (Jindal Thermal Power Company Ltd), Bhushan Power and Steel Ltd, Sainik Mining and Allied Service Ltd, Ultratech Cement Ltd, Jharkhand State Mineral Development Corporation, Jayaswal Neco Industries Ltd and Bihar Sponge Iron Ltd on transfer petition filed by the Centre.

Courtesy: The Business Standard

Domestic and Indian Gold Rally Strong In H1 2014

Domestic and Indian Gold Rally Points to a Strong Second Half by Frank Holmes

July 17, 2014: Earlier this week we reported that gold, defying expectations, is one of the best-performing commodities of the year so far.

And now we’ve learned that gold bullion imports by India climbed a stunning 65 percent last month after the country’s central bank allowed more investors to buy foreign bullion. Imports rose to $3.12 billion in June from $1.89 billion this time last year.

India is the world’s second-largest consumer of gold after China, accounting for approximately 25 percent of all gold consumption. Gold is the country’s second-largest import item after oil.

This news comes closely on the heels of the recent election of Prime Minister Narendra Modi, whose Bharatiya Janata Party (BJP) seeks to loosen import restrictions and other government regulations that tend to stifle economic growth. The rally also coincides with the Indian wedding season, which typically ends on July 7 and 8.

More importantly, what this news could portend is a stronger-than-normal second half of the year for the gold market. Data points going back 35 years confirm the probability of gold gaining strength in the second half, thanks largely to international celebrations such as Diwali, Ramadan and Christmas. This year in particular looks very promising indeed.

Keep your eyes on real interest rates

Recently I chatted with Daniela Cambone during my weekly Gold Game Film program on Kitco. I pointed out that, with the end of the Indian wedding season, we’re historically due for a slight correction in the gold market. But whereas last year saw a huge contraction and liquidation of gold around this time, the gold bullion exchange-traded funds (ETFs) around the world this year actually expanded.

Daniela and I also looked ahead at the gold market in the coming months. One of the points I shared dealt with the strong correlation between gold performance and real interest rates, which you arrive at after subtracting inflation from the nominal interest rate.

If we go back to when gold was at $1,900 [in August 2011], the negative real interest rates were 200 basis points. Then by December of last year, it went to plus 50 basis points. Now it’s gone negative again, and gold is rallying. And I think that that’s a key factor when we look forward, and I think we’re going to continue to have negative real interest rates. So when inflation starts to rise like it did in the ‘70s, [the Federal Reserve isn’t] going to be able to lift rates as fast as the inflationary rate because it will stifle the economy dramatically.

One last point I want to emphasize is our perennial suggestion to investors: 5 percent exposure to gold bullion, 5 to gold stocks, and rebalance each year for an overall 10 percent weighting in your portfolio.

Last year the stock market boomed, whereas bullion disappointed and gold stocks dramatically underperformed. Had investors taken their profits in the stock market and rolled it into gold, they would have done exceptionally well this year.

That continues to be our discipline here at U.S. Global Investors, and the recent gold rally, domestically and in India, substantiates this position.

Courtesy: Valuewalk

WINNING STROKES: THINK DIFFERENT

Nitin Goenka and Mahdeep Kapoor
Photo: www.sulekha.com

Allied Digital Services Ltd, recommended today, to the Paid Service Members, at around Rs.20.60-21, today hit the upper circuits, in the closing trade. The scrip could be hitting non-stop upper circuits during the next few trading sessions. 

Resurgere Mines and Minerals Ltd, after a brief correction has again bounced back, hitting upper circuits today, in the BSE. Later it turned out to be only buyer. The punters are probably taking positions in the scrip before the  much awaited start of operations in the company's bauxite mine in Maharashtra, post monsoon. If the mining really starts there, then the scrip would cross its book value of Rs.26.49. It is to be understood that in a BULL Market everything moves up, and I feel this scrip will also spurt ahead, considering that its peer group company SVC Resources Limited, with much worse fundamentals, is trading at Rs.22.60 (if we consider the face value of the scrip to be Rs.10, instead of Re.1). 

Rohit Ferro Tech Ltd, after a sell call at Rs.14.20, today fell further, and closed at Rs.12.76. The sell call was given on the source based news that the commencement of operation in its 67 MW captive power plant will get further delayed, due to tight liquidity conditions. The scrip could fall below Rs.12 in the coming days. 

The Nifty was given a buy today, and as expected it closed in the Green. The FII/FPI on 18th July, 2014 were net buyers to the tune of Rs.574.47 Crores. As long as 7650-7600 is not broken on the downsided, the longs are a hold. However, the action would now be concentrated in the small and mid cap counter, many of which are still trading near their 52-week low, eg. Goenka Diamond & Jewels Ltd (Rs.3.38).  Incorporated in 1990, Goenka Diamond & Jewels Limited is in the business of cutting and polishing of diamonds and manufacturing and retailing of diamond jewellery. Goenka's product profile includes rings, earrings, pendants, bracelets, necklaces, etc. which are manufactured using polished diamonds, precious and other semi precious stones which are set in gold. Company has its own diamond processing unit at SEZ in Surat and in Mumbai. Goenka Diamonds retail its diamond jewellery under two brands CERES and G WILD. Company retail high end diamond jewellery under the CERES brand targeting the top-end segment of the society while G WILD focuses on internationally designed diamond jewellery targeting the youth. It came up with an IPO in March, 2010 at an issue Price of Rs.135-Rs.145 per equity share (Face Value: Rs.10). According to Business Standard, 24 March, 2010: "The initial public offer (IPO) of Goenka Diamond & Jewels, which opened for subscription on Tuesday, was over subscribed on the first day with institutional investors putting in sizeable bids".  M. B. Diamonds, a Limited Liability  and Goenka Diamond & Jewels DMCC, Dubai. Goenka Dimond and Jewels Ltd's subsidiary, M.B. Diamonds, in Russia, is one of the largest diamond producers. This allows the company to source rough diamonds, its primary raw material, directly through diamond auctions held there, which reduces the raw material costs. The subsidiary also has a unit to polish diamonds. The entire output of the subsidiary — both processed and rough diamond — is sold to the company. Goenka Diamond & Jewels Ltd (Now its Face Value: Re.1 and not Rs.10) has now appointed a new company secretary, and a board meeting to declare, Q4FY14 results could be on the cards. 

IVRCL Ltd today closed at Rs.24.10 down 2.03%. You should buy this scrip like Fixed Deposit and keep holding. Earlier, there were media reports that the Corporate Debt Restructuring Empowered Group of the Reserve Bank of India, at its meeting held, approved the debt recast proposal submitted by IVRCL. The restructured package covers Rs.7,350 crore. About 20 banks led by State Bank of India were involved in the restructure process. Under CDR, banks typically increase the repayment period of loans to stressed borrowers, offer a moratorium and reduce lending rates. “This is a significant development and comes in as a big relief. This will enable us to take off again by implementing various projects which were stuck due to funding issues. We have a strong order book of Rs.20,000 crore and will implement them as per plans,” R Balarami Reddy, Chief Financial Officer, IVRCL, said. Explaining the terms, he said the company will have access to a priority debt of Rs.175 crore, additional cash credit of Rs.200 crore, Rs.1,400 crore non-fund credit and Rs.300 crore of letter of credit. All of them will be interest-free from December 1, 2013, and have a moratorium of 28 months on term loans. The funded interest term loan is to be paid within eight years after the moratorium. It will carry an interest rate of 11.25%. The company’s interest burden had piled up and the cash flows were impacted due to slowdown in project execution. IVRCL was, therefore, forced to knock at the CDR cell. IVRCL had divested its stakes in three road projects in Tamil Nadu to a Tata group company Tata Realty and Infrastructure Ltd, and is in negotiations to divest stake in a couple of other projects, including a Chennai desalination plant and road projects. 
Accumulate Western India Shipyard Ltd at the CMP of Rs.2.37. as some good news is on the anvil. 

Market Mantra

Soha Ali Khan at the Goenka Diamonds' Launch
Photo: Pinkvilla

The markets moved in line with expectations yesterday, taking cues from strong global markets, and finding support 7440 levels. It closed with a gain of 72 points at 7526. Although it was a more or less choppy session yesterday, the last hour of buying pulled it to a  high of 7535. This definitely gave more ammunition to the bulls. 

The bounce back of Nifty the support level of 7440 and the closing above 7500 shows buying interest at lower levels. Stay invested in Bank and Infrastructure stocks. Nifty is now trading at 7610, which is far above the resistance of 7580. 

Today's call:
(i) Buy IVRCL Ltd at Rs.24.40, T--Rs.27.20, SL--Rs.21. Most of the infrastructure stocks will move up taking cues from the budget.
(ii) Buy Marg Ltd at Rs.17.50, T--Rs.24, SL-Rs.15.50. In the recent budget the FM, has talked about strengthening the Shipping Sector. Also, the Finance Minister Arun Jaitley has proposed to award the development of 16 new port projects in the current fiscal year. Presenting the Union Budget 2014-15 in the Lok Sabha, Jaitley said, "A policy for encouraging the growth of Indian controlled tonnage will be formulated to ensure increase in employment of the Indian seafarers. Development of ports is also critical for boosting trade."
(ii) Buy Goenka Diamond and Jewels Ltd (BSE Code: 533189, Face Value: Re.1), for a target of Rs.4.80.  Though small players in the Gems and Jewelry sector are disappointed over not inclusion of their demand of introducing turnover tax among others, but many have expressed satisfaction over rationalization of customs duty for semi-processed, half cut or broken diamonds and cut and polished and coloured gemstones. This development has till now been  overlooked by the market. Goenka Diamonds Ltd is an established name in this sector.
(iv) Book profits in Rohit Ferro Tech Ltd at Rs.14.25 and enter Marg Ltd at around, which is a much safer play both on the infrastructure and shipping sectors. 

Note: These calls were given to the Paid Groups, in the morning and yesterday, they were asked to book partial profits in Rohit Ferro Tech Ltd. The call on Marg Ltd was given yesterday at around Rs.16.50--17. I feel most of them have made money by now. 

Business Offer: Digital Business Solutions

Friends, it has been long that I have been associated with you, basically with regards to investments in Indian Stock Market, and other other miscellaneous issues. Since, 2006, this blog  has been active, in giving information in this direction only, apart from touching other hot current affair topics, too, from time to time. In between, I made lot of friends, both in India and in overseas--regardless of caste, creed and colour. 

The advent of technology has made this possible, forgetting the barriers of time and distance. As a result, I was fortunate enough to have well-wishers and clients all over the globe, cutting across continents. When some of  you call me-up on my cell and say, that "I have been following your Blog and Yahoo Group Posts, since the last 5-6 years"; it gives me immense satisfaction. 

However, I have now diversified into other fields too, apart from Stock Market and Real Estate. Hence, I would like all of you who are in Indian subcontinent or Europe or Africa (a growing sphere in the IT enabled service space) or Gulf or in North American countries or anywhere in the world, to join me in this new Information Technology Venture. 

Our company Webworkz Interactive (P) Ltd have got necessary infrastructure and wherewithals to cater to  your Digital Business Solutions, including Software Development. 

Webworkz Interactive is a digital business solutions firm, located in Mumbai (Bombay), helping enterprises achieve their revenue, market-share and customer loyalty objectives through the use of digital media. 

At Webworkz, we design, develop and deliver customized digital media solutions that focus on customer acquisition, audience engagement, community development & brand visibility. 

From display media and search to social media and e-commerce, Webworkz has the entire range of digital media expertise and it effectively combines these areas of expertise to deliver exceptional solutions for its clients. 

At Webworkz, we partner with a diverse and prominent portfolio of clients in Financial Services, BPO, Real Estate, B2B, Consumer Goods and Services sector including mid-sized organizations to top corporations and have a high client retention ratio. This speaks volumes about our solutions expertise and our servicing standards.

If you are a CEO or a Top Official of a company and need to outsource your products / services or want Digital Business Solutions for your organization, then you could look for our company Webworkz Interactive (P) Ltd (www.webworkzinteractive.com), Mumbai (Bombay), for  a Joint Venture. Even if you are an ordinary guy and can bring a minimum business for our company, you can join the team and work with us; from any part of the world. 

Moreover, since, I will be there, in this  collaboration, hence, you will not have to bother much as far as the quality of the work is concerned. Even then you would have direct access to me for solving any of your problems.   

In any business trust is an important factor. If you think you have confidence in me and my organization, kindly drop in a mail at: suman2005s@rediffmail.com. I will make arrangements, so that the concerned person of our organization speaks with you and finalize the deal. 

Therefore, let us not waste further time and see, if we can make this effort a grand success. Let us join hands together for a great future, ahead. Thanks a lot for your continuous love and affection. 

FIIs and DII trading activity

Though today, also, FIIs were net sellers but chartically speaking, the good point is that, 7440 and 7500 were both held by the bulls. In the morning inputs to the Paid Group, it was mentioned that the market could bounce back, if and only if 7440 holds. At that time Nifty was trading at 7481.35, up 27.20 points.  The Nifty ended the day at 7,526.65 up 72.50 points. I hope the Nifty traders have money even today. 
Join the Paid Service or trade through my recommended brokerage house/s and be ahead of others.

India's infrastructure sector will receive a multi-year boost from budget, Fitch says

Photo: The Hindu

COIMBATORE, Jul 14, 2014: The infrastructure sector is set to receive a multi-year boost from the budget, Fitch Ratings has said.

"By carrying forward the previous administration's efforts to clear the country's infrastructure backlog, the new government has made it a policy focus to drive forward a new long-term capital investment cycle," it said.

"This means that fiscal and regulatory policy changes should be supportive of corporates in the infrastructure, construction, and real estate industries," the agency said. While Fitch expects them to have only a minimal impact in the short-term, they would have a positive effect on infrastructure over the medium to long-term.

Significant new urban development objectives and thousands of new kilometres of highways and gas pipelines were included in the budget, in addition to over Rs 60,000 crore in direct infrastructure investments, special economic zones, port and subway projects.

Stating that the direct project announcements and objectives were significant, Fitch said the measures to ease funding were particularly noteworthy and would be critical for driving the new investment cycle.

Banks would be allowed to raise long-term funds for infrastructure lending with minimum regulatory requirements. They are also being encouraged to extend loans to the infrastructure sector, with tenures of 25 years—far above the current norm of 10 years.

Further, REITs (real estate investment trusts) have been proposed and urban construction would be opened up to foreign capital. Tax incentives for investments in manufacturing— including an allowance of 15% for investments over Rs. 25 crore— would also support growth in the sector, Fitch stated.

Power and utilities also received supportive policy measures in the budget. Fitch views the government's plans to rationalise and improve coal supplies for power plants as particularly critical for improving productivity. "The extension of tax benefits for power generation companies for a further three years will also be supportive to their bottom line," the agency said.

The new infrastructure drive over the long- term would be positive for the steel, cement and capital goods industries, which would benefit from rising demand, it said.

Though the 0.5% increase in duty on coke is marginally negative for steel producers, the agency believes that the broader impacts from higher rates of growth will be sufficient to offset the rising operating costs.

Courtesy: The Times of India

WTO faults U.S. over duties on Chinese, Indian steel goods

Photo: News1st

Tue Jul 15, 2014: World Trade Organisation judges said on Monday the United States broke its rules in imposing hefty duties on Chinese steel products, solar panels and a range of other goods that Washington argues enjoyed government subsidies.

In a similar case involving U.S. methods in deciding when foreign imports are unfairly priced, another WTO panel ruled in support of some claims by India against tariffs on steel exports from three of its major firms.

Trade diplomats said the two cases, both under scrutiny for nearly two years by the separate panels, reflected a widespread concern in the 160-member WTO over what many see as illegal U.S. protection of its own producers.

In the $7.2 billion Chinese case, the panel found that Washington had overstepped the mark in justifying the so-called countervailing duties it imposed as a response to alleged subsidies to exporting firms by China's government.

Under the 1964 Marrakesh accords, which also set up the WTO, these duties can only be levied when there is clear evidence that state-owned or partially state-owned enterprises passing on the subsidies are "public bodies."

The panel found that Washington had produced insufficient evidence for this, and was also at fault in its calculations of the value of the subsidies to Chinese firms producing items like kitchen shelving, grass cutters and even citric acid.

And it told the United States it should adapt its measures to bring them into line with the WTO's agreement on subsidies and countervailing measures, dubbed the SCM in trade jargon.

SOME COMFORT

The ruling, which gave the United States some comfort in rejecting some aspects of the Chinese complaint, was welcomed in a statement from China's Ministry of Commerce distributed by Beijing's trade mission in Geneva.

"China urges the United States to respect the WTO rulings and correct its wrongdoings of abusively using trade remedy measures, and to ensure an environment of fair competition for Chinese enterprises," the statement said.

The United States said it was weighing its options.

U.S. Trade Representative Michael Froman said the decision to reject many of China's challenges was a victory for American businesses and workers.

"With respect to the other findings in the panel report, the Administration is carefully evaluating its options, and will take all appropriate steps to ensure that U.S. remedies against unfair subsidies remain strong and effective.”

Many other members of the organisation, including the European Union and Japan, declared themselves interested parties in the disputes, although they did not say if their sympathies lay with the United States or its challengers.

The ruling in the Indian case - which involves steelmakers like Tata, Jindal and Essar who are supplied by the state-run iron-ore mining firm, NMDC - was not so clear-cut.

It said the United States had "acted inconsistently" in terms of some provisions of the SCM agreement and had unfairly reduced Indian trade revenue. Washington should bring its measures into line with the pact, the panel said.

But it rejected many of the technical aspects of the Indian case.

Froman hailed the panel ruling while recognising it as a "mixed result."

"The panel's findings rejecting most of India's numerous challenges to our laws and determinations is a significant victory for the United States and for the (U.S.) workers and businesses making these steep products," he said.

(Reporting by Robert Evans, with additional reporting by Krista Hughes in Washington, Editing by Angus MacSwan)

Courtesy: Reuters

FIIs and DIIs trading activity

Resurgere Mines and Minerals Ltd: Clarifications

It has come to my notice, some days back that some baseless rumors are being spread by vested interest groups, having some ulterior motives, in various message boards and discussion forums. I had earlier given my clarifications on the same, but it seems, the things are being stressed beyond tolerable limits. Below, I have tried to answer some of the most talked about questions, to the best of my abilities; after speaking with my sources. If you still have questions on this scrip, please do mail me at: suman2005s@rediffmail.com. 

Moreover, the difference of price of the scrip in the two exchanges, have probably confused the investors; who are finding it difficult to gauge the discovery rate of the scrip. It is natural that when a scrip trades with so much difference in two of the leading exchanges in India, the investors are bound, get perplexed. I had mentioned about problem, a number of times earlier in various forums including this blog, but unfortunately, it perhaps fell in the deaf years of the regulators. Hope the exchange authorities will soon, bring the price of the scrip, almost same, in the two trading platforms, by putting suitable circuit filters. Anyway, here is my take:  

Q.1. The CMD of the company Mr.Subhash  Sharma is drawing Rs.10 lakhs salary per month. 

Ans. Mr.Sharma is not taking any salary since the last one year, according to my sources. Moreover, the total employee cost for FY14, is shown to be only, Rs.62.56 lakhs. If Mr.Sharma had taken such high salary, then the amount would have been crores. Isn't it?

Q.2. The company does not have any mines. 

Ans. If the company is not carrying out any mining activity then from where Mine Development Expenses, shown in the result sheet, being written off as Rs.1137.76 lakhs came for the year ended 31st March, 2014 and Rs.2472.07 lakkhs occurred for the year ending 31st March, 2013? This will only come if the mining takes place, isn't it?

Q3. If the company had mandates to do mining, in Maharashtra, then why is the mining  not taking place now? 

Ans. Yes, the company do have the permission for mining in Mahalmiriya (Bauxite), Maharashtra. But Resurgere Mines and Minerals Ltd, has some problems with the lease agreement. According to my close sources, the company hopes to solve it at any time from now. However, mining can take place only post monsoon, which is natural in this business. This is also one of the reasons, why there is no mining taking place now. 

Q4. The company does not  have any Iron Ore mines.

Ans. The company has applied to the authorities to allow them to mine in  Satarda Mine, Maharashtra. The management hopes that with the new government taking lot of initiatives to revive the steel sector, such permission would be granted soon.  

Q5. Resurgere Mines and Minerals Ltd is a paper company with no sales and  no employees. No one knows what it does at present. 

Ans: Resurgere Mines & Minerals India Limited is a Public Limited Company engaged in the business of extraction, processing & sale of Ore and exploration & development of mining assets. Presently the Company is enjoying long term raising and purchasing rights for Bauxite Mine in the State of Maharashtra and mining rights for Soapstone in the State of Rajasthan. The Company has also 99.98 % equity holding in Shree Warana Minerals (India) Pvt. Ltd. having another bauxite mine in the State of Maharashtra through its wholly owned subsidiary i.e. Warana Minerals Private Limited.

It has an office in one of the prime locations in Mumbai (Bombay) and does have employees. However, since at present it is engaged in very small amount of mining, the company shed its employee strength; with an eye to save costs. When full scale mining will take place, which is probably after the monsoon, we could see an increase of employee head count. 

Q. Recently the promoters sold the shares of the company and made  money. 

Ans. The promoters did not sell any share, in contrast to one of the peer group companies, like SVC Resources Limited (Rs.2.48, Face Value: Re.1). If anything has been sold, it happened when pledged shares were invoked by the lenders.

Q. The company has no future, as the management, till now has failed to perform. 

Ans. The management, in order  to further their business, opened the followed subsidiary companies, but due to tight liquidity conditions it was not able fructify their idea. Subsidiary companies are: 

a. Warana Minerals Private Limited - Wholly owned Subsidiary Company.

b. Shri Warana Minerals (India) Private Limited - Subsidiary Company of Warana Minerals Private Limited.

c. Resurgere Sponge Iron Limited - Wholly owned Subsidiary Company.

d. Resurgere Ferro Alloys Limited - Wholly owned Subsidiary Company.

e. Resurgere Industries Limited - Wholly owned Subsidiary Company.

f. Resurgere International FZE - Wholly owned Subsidiary Company at UAE.

g. Resurgere Coal India LLP - Limited Liability Partnership Firm. 

In future the company hopes to start business in these companies too. With the present government taking, a balanced view of the mining sector; the things have started to look better again.  

Q. At Rs.2.28 the shares of the company are overvalued and should be exited.

Ans. The book value of the shares of the company is Rs.26.49, which is more than 10 times the current price of the scrip. It's share price fell from Rs.200 plus to the current rate. However, if the company is not closing down, then what is the need to sell the shares of the company, at this price, which is almost one fifth of its Face Value of Rs.10? Moreover, the market cap of the company is only Rs.45.34 Cr, which fell from Rs.1500 Cr in 2008. 

Therefore, when one is buying the stocks of such a company, it is given that there are inherent risks involved. If anyone is able to take such risks, they only should stay invested for high gains. This is a high-risk-high-gain scrip. 

Disclaimer: I hold a very small stake in the company, but many of the blog readers and followers, might have taken large positions, based on my recommendation. This clarification is basically for them; so that they do not get unnecessarily worried due to misinformation campaign, under-taken by a group of unscrupulous fellows.