MS Rana set to take over as NMDC head
M S Rana, currently the chairman and managing director (CMD) of Security Printing and Minting Corporation of India, is all set to take over as CMD of National Mineral Development Corporation (NMDC).
Confirming this move, NMDC sources said that his name was recommended by the Public Enterprises Selection Board (PESB) for the post of CMD at NMDC from a field of 12 other high-profile candidates who appeared for an interview earlier this week. Rana Som, the current CMD of NMDC, will retire from the company on December 31.
Among the 12 others, two were from NMDC: finance director S Thiagrajan and technical director N K Nanda. MSTC CMD SK Tripathi, RINL finance director P Madhusudan, Hindustan Copper director (Operations) KD Diwan, Hindustan Steelwork Construction CMD Malay Chatterjee, SAIL executive director N Kothari and Bird Group of Companies CMD Satish Chandra were among the other candidates who appeared for the interview.
Sources said that the PESB will soon be recommending Rana’s name to the ministry of steel, which will subsequently refer it to the Appointments Committee of the Cabinet, which has the final say on any senior-level appointment at public sector units. Usually, the ministry follows the recommendations of PESB, until there are any clarifications sought on the decision making process, sources said.
Som was instrumental in various project implementations against many odds in the industry.
NMDC has been pursuing expansion plans and as part of its forward integration programme and value addition, the PSU has planned to set up a 3 MTPA steel plant at Nagamar in Chhattisgarh for which the land acquisition has been completed in August, 2010.
Lanco bags Maha Tamil project
Lanco Infratech (LITL) has emerged as successful bidder and is selected as the Mine Developer and Operator (MDO) for development, mining and operations of Gare Pelma II Coal block of Maha Tamil Collieries (MTCL) and development of associated power project.
Maha Tamil Collieries (MTCL) is a joint venture company formed and owned by Tamil Nadu Electricity Board (TNEB), 77% and Maharashtra State Mining Corporation (MSMC), 23% for exploring, developing, mining, supply of coal and power from the Gare Pelma Sector II coal block located in Raigarh District, Chhattisgarh State, having Geological Reserves of approximately 800 million tons. The bid envisages LITL to develop and operate the coal mine and setting up a power plant with 2000 MW capacity.
Petrol to turn negative for OMCs, diesel losses to rise
Oil marketers will lose their current retail margin of 40 paise on petrol while the loss on diesel is expected to increase by a fifth to Rs 6 per litre from next month. The price of aviation turbine fuel (ATF) is expected to increase by two per cent from next month.
Industry officials said petrol was expected to have an under-recovery of 50 paise per litre that would wipe off the current margins of 40 paise. “Petrol will have a marginal loss of 10 paise from next month in tune with the international trend,” said an industry executive. Petrol, a decontrolled product, will slip into negative territory after a month.
On diesel, a product still regulated by the government, the oil marketers — Indian Oil, Bharat Petroleum and Hindustan Petroleum — could see their under-recovery swell to about Rs 6 a litre from `5 now.
These companies, who purchase crude oil at market rate, are required to sell diesel, kerosene and liquefied petroleum gas (LPG) at government-subsidised prices, resulting in losses.
Price of the Indian basket of crude oil, that averaged $111.26 per barrel in the first fortnight of the month, has averaged $113.81 so far in the current fortnight, up over two per cent.
While it is not clear whether the oil marketers will increase prices of petrol and diesel, they will certainly pass on the increase in ATF, a decontrolled product. ATF prices had increased marginally earlier this month to `56,324.79 per kilo litre. Prices of ATF, that account for 40 per cent of the operating cost for airlines, are already 40 per cent high compared to last year’s corresponding price.
While the losses of oil industry will increase from next month, the situation is still better compared to most of the first quarter. Prior to June 24 when the government increased price of diesel and affected changes in duties of both diesel and petrol, the oil companies lost `14 on diesel and Rs 1 on petrol.
On June 24, the price of diesel was increased by `3 while its excise duty was cut by `2.6 to `2 per litre. The five per cent customs duty on crude was removed and a corresponding decrease in import duty of diesel and petrol was made.
Sluggish demand, high costs concern for steel companies
Contrary to the 8-10 per cent annual growth prediction, the steel industry witnessed only 1.5 per cent growth in consumption for the April-June period due to high interest rates.
Although a few companies said the slowdown in sales was temporary, the majority are worried. Ankit Miglani, deputy managing director, Uttam Galva, said: “Production cuts are imminent going forward. There is no possibility of price cuts as carbon steel is already being produced at cost levels.”
While three major producers — SAIL, RINL and Tata Steel — grew production by 1.3 per cent during April-June, mid-sized companies such as JSW Steel, Essar Steel Jindal Steel and Power, Bhushan Steel and Ispat Industries, saw production grow by 6.1 per cent. Production of other smaller steelmakers grew 9.6 per cent, according to data of the Joint Plant Committee (JPC), a government body that tracks steel data in India.
A top Essar Steel official said: “Infrastructure spends have come down. Steel is mostly used in the construction and infrastructure sectors and that is stalled at the moment.”
Although imports of steel has reduced sharply, India continues to be a net importer of the commodity. The country imported 1.3 million tonnes of steel and exported 1.07 million tonnes. Steel imports, however, dropped by 52 per cent over the same quarter of last year. Exports shot up by 71.8 per cent.
Prasad Baji, senior vice president, Edelweiss Securities, said: “There is definitely a slowdown in demand and that, in our view, will continue for at least two quarters.”
Baji said smaller steelmakers may have to resort to production cuts but that will be on a company-to-company basis and not an industry-wide phenomenon. “The bigger steelmakers will probably slow down capacity addition which were expected to come on stream this year.”
JSW Steel is expected to commission its three-million tonne steelmaking capacity at the Vijayanagar plant in Karnataka. The commissioning of the furnace is behind schedule by a quarter. Tata Steel is also expected to commission its blast furnace of three million tonnes by the year-end. Sushil Maroo, director (finance), Jindal Steel and Power, however, said: “This drop in steel demand is temporary. High inflation, high interest rates and scarce liquidity is hurting growth. But, this is temporary.”
Maroo said temporary hiccups are in no away affecting the long-term growth story. “Setting up of a steel plant takes 3-4 years and one quarter of slow demand does not deter the decision to allocate investments.”
ArcelorMittal earnings beat estimates
ArcelorMittal (MT), the world’s biggest steelmaker, said quarterly profit advanced 22% as rising demand boosted sales and forecast a better second-half performance than in 2010.
Earnings before interest, tax, depreciation and amortisation (Ebitda) climbed to $3.41 billion in the second quarter from $2.81 billion a year earlier, Luxembourg-based ArcelorMittal said. That beat the $3.25 billion average estimate of 14 analysts.
“The company has delivered a strong performance in the second quarter of 2011 underpinned by higher steel selling prices,” CEO Lakshmi Mittal said in the statement. “Although the third quarter will experience some seasonal impact, we do not expect this to be as pronounced as last year.”
Steelmaker earnings have risen on increased consumption of the alloy, used in construction, cars and pipes. US Steel Corp, the largest US steelmaker by volume, reported its first profit in 10 quarters on July 25, while India’s JSW Steel posted a 64% jump in quarterly net income on Tuesday.
HPCL reports Q1 net loss to `3,080 crore
State-run Hindustan Petroleum Corp (HPCL) recently reported net loss to `,080 crore in the first quarter of current financial year because of huge revenue losses on selling diesel, kerosene and cooking gas below market rates and rising borrowings.
“The loss was due to unmet under-recovery (revenue loss) of `3,060 crore,” HPCL director-finance B Mukherjee told reporters. The company had also reported `1,884 crore net loss in the same period previous year.
Out of `9,502 crore revenue loss on selling fuel below market rates, HPCL received `3,167 crore as upstream discount from state-run ONGC and Oil India and `3,275 crore from the government as cash subsidy.
Cairn India posts 870% rise in profit
Cairn India has reported a 10-fold jump (870 per cent) in net profit to `2,726.6 crore for the April-June quarter of the current fiscal as against `281.41 crore in the same period of last fiscal.
However, the net profit will halve to `1,435 crore in the quarter if it is asked to share royalty on crude production from the Rajasthan oilfield. The company has reported a revenue of `3,712.7 crore, up 342 per cent on a year-on-year basis. “If royalty were to be cost recoverable, it would lead to a decline in the revenues and PAT for the current quarter by `1,291.6 crore,” it said.
The company said it received “a requisition” from Cairn Energy under Section 169 of The Companies Act, 1956, for convening an extraordinary general meeting to consider the government riders.
Although Cairn India’s annual general meeting of shareholders — where the issue could have been considered — is scheduled for August 18, its board, which is headed by Cairn Energy chairman Bill Gammell, at a meeting in Edinburgh yesterday decided to hold a postal ballot.
Rashtriya Ispat Nigam to get mining rights at Bhilwara
The government is close to granting mining rights to Rashtriya Ispat Nigam at Bhilwara in Rajasthan, two people directly involved in the development said.
The world's largest steelmaker, ArcelorMittal, had also applied for a mining lease in Bhilwara, but there is no information on the progress of the global major's application. Queries to ArcelorMittal remained unanswered.
Rashtriya Ispat, which operates the coast-based steel plant Vizag Steel, will get 350 million tonnes of iron ore, a lion's share of the reserves. Earlier this year, the OP Jindal group's pipe business, Jindal Saw entered into an agreement with Rajasthan giving it rights to at least 180 million tonnes of ore with a ferrous content of about 30%. The company has also expressed its intention to build a steel plant in the state.
SAIL, which has been eyeing Rajasthan's reserves for two years, is expected to become the third beneficiary.
RINL chairman PK Bishnoi, who is scheduled to retire by July-end, returned from Jaipur last week after prolonged negotiations with the Rajasthan government. Iron ore in Bhilwara has a ferrous content of about 45-50%, which is lower than that mined in Karnataka and other states. Higher ferrous content indicates purity of the ore.
Rashtriya Ispat's 3.3-million tonne Vishakapatnam Steel Plant in Andhra Pradesh has been scouting for ores to reduce costs. Its iron ore requirements are being currently met by NMDC. RINL plans to expand the plant's capacity to 7.3 million tonnes by 2013. It has plans for an additional 4 million tonne plant, including an electrograde steel unit, for which it will partner with Bharat Heavy Electricals and SAIL.
Consultants and equipment and hardware providers are being finalised. Rashtriya Ispat owns about 20,000 acres at its existing location. According to Rashtriya Ispat Nigam chairman PK Bishnoi, the land is adequate to accommodate up to 20 million tones of steelmaking facility.
RINL currently has iron ore leases in Orissa, belonging to subsidiaries of the Bird Group of Companies, which it now owns through a majority stake in the holding company.
Petrobras unveils $225bn investment plan
Petrobras, Brazil's state oil giant, has announced a long-awaited plan to invest $224.7bn over the next five years following months of battling with the government over cost-cutting.
The Rio de Janeiro-based company is gearing up to exploit vast offshore oil reserves which could turn the country into one of the world's biggest energy exporters. However, the government, which has been under pressure to reduce spending and control inflation, has recently put pressure on Petrobras to rein in its ambitious investments. Although it still ranks among the world's biggest corporate investment programmes, the 2011-15 budget announced on Friday is only $700m bigger than the previous plan and significantly below some previous estimates.
Under the programme, 95 per cent of investments by the company will be in Brazil, leaving $11.2bn for investment abroad. "Of total investments, 57 per cent has already been authorised for execution," the company said.
The company said it was shrinking its proposed investment budget for this year to R$84.7bn from a previously planned R$93bn. However, even with this adjustment, the proposed investment would still represent an increase of 11 per cent compared with last year's realised investment of R$76.4bn. Petrobras said much of the investment was aimed at developing its large 'pre-salt' discoveries, which lie under a two-kilometre layer of salt in deep water off the southeast coast.
"The participation of the pre-salt [fields] in national oil production will rise from an estimated 2 per cent in 2011 to 40.5 per cent in 2020," the company said.
M S Rana, currently the chairman and managing director (CMD) of Security Printing and Minting Corporation of India, is all set to take over as CMD of National Mineral Development Corporation (NMDC).
Confirming this move, NMDC sources said that his name was recommended by the Public Enterprises Selection Board (PESB) for the post of CMD at NMDC from a field of 12 other high-profile candidates who appeared for an interview earlier this week. Rana Som, the current CMD of NMDC, will retire from the company on December 31.
Among the 12 others, two were from NMDC: finance director S Thiagrajan and technical director N K Nanda. MSTC CMD SK Tripathi, RINL finance director P Madhusudan, Hindustan Copper director (Operations) KD Diwan, Hindustan Steelwork Construction CMD Malay Chatterjee, SAIL executive director N Kothari and Bird Group of Companies CMD Satish Chandra were among the other candidates who appeared for the interview.
Sources said that the PESB will soon be recommending Rana’s name to the ministry of steel, which will subsequently refer it to the Appointments Committee of the Cabinet, which has the final say on any senior-level appointment at public sector units. Usually, the ministry follows the recommendations of PESB, until there are any clarifications sought on the decision making process, sources said.
Som was instrumental in various project implementations against many odds in the industry.
NMDC has been pursuing expansion plans and as part of its forward integration programme and value addition, the PSU has planned to set up a 3 MTPA steel plant at Nagamar in Chhattisgarh for which the land acquisition has been completed in August, 2010.
Lanco bags Maha Tamil project
Lanco Infratech (LITL) has emerged as successful bidder and is selected as the Mine Developer and Operator (MDO) for development, mining and operations of Gare Pelma II Coal block of Maha Tamil Collieries (MTCL) and development of associated power project.
Maha Tamil Collieries (MTCL) is a joint venture company formed and owned by Tamil Nadu Electricity Board (TNEB), 77% and Maharashtra State Mining Corporation (MSMC), 23% for exploring, developing, mining, supply of coal and power from the Gare Pelma Sector II coal block located in Raigarh District, Chhattisgarh State, having Geological Reserves of approximately 800 million tons. The bid envisages LITL to develop and operate the coal mine and setting up a power plant with 2000 MW capacity.
Petrol to turn negative for OMCs, diesel losses to rise
Oil marketers will lose their current retail margin of 40 paise on petrol while the loss on diesel is expected to increase by a fifth to Rs 6 per litre from next month. The price of aviation turbine fuel (ATF) is expected to increase by two per cent from next month.
Industry officials said petrol was expected to have an under-recovery of 50 paise per litre that would wipe off the current margins of 40 paise. “Petrol will have a marginal loss of 10 paise from next month in tune with the international trend,” said an industry executive. Petrol, a decontrolled product, will slip into negative territory after a month.
On diesel, a product still regulated by the government, the oil marketers — Indian Oil, Bharat Petroleum and Hindustan Petroleum — could see their under-recovery swell to about Rs 6 a litre from `5 now.
These companies, who purchase crude oil at market rate, are required to sell diesel, kerosene and liquefied petroleum gas (LPG) at government-subsidised prices, resulting in losses.
Price of the Indian basket of crude oil, that averaged $111.26 per barrel in the first fortnight of the month, has averaged $113.81 so far in the current fortnight, up over two per cent.
While it is not clear whether the oil marketers will increase prices of petrol and diesel, they will certainly pass on the increase in ATF, a decontrolled product. ATF prices had increased marginally earlier this month to `56,324.79 per kilo litre. Prices of ATF, that account for 40 per cent of the operating cost for airlines, are already 40 per cent high compared to last year’s corresponding price.
While the losses of oil industry will increase from next month, the situation is still better compared to most of the first quarter. Prior to June 24 when the government increased price of diesel and affected changes in duties of both diesel and petrol, the oil companies lost `14 on diesel and Rs 1 on petrol.
On June 24, the price of diesel was increased by `3 while its excise duty was cut by `2.6 to `2 per litre. The five per cent customs duty on crude was removed and a corresponding decrease in import duty of diesel and petrol was made.
Sluggish demand, high costs concern for steel companies
Contrary to the 8-10 per cent annual growth prediction, the steel industry witnessed only 1.5 per cent growth in consumption for the April-June period due to high interest rates.
Although a few companies said the slowdown in sales was temporary, the majority are worried. Ankit Miglani, deputy managing director, Uttam Galva, said: “Production cuts are imminent going forward. There is no possibility of price cuts as carbon steel is already being produced at cost levels.”
While three major producers — SAIL, RINL and Tata Steel — grew production by 1.3 per cent during April-June, mid-sized companies such as JSW Steel, Essar Steel Jindal Steel and Power, Bhushan Steel and Ispat Industries, saw production grow by 6.1 per cent. Production of other smaller steelmakers grew 9.6 per cent, according to data of the Joint Plant Committee (JPC), a government body that tracks steel data in India.
A top Essar Steel official said: “Infrastructure spends have come down. Steel is mostly used in the construction and infrastructure sectors and that is stalled at the moment.”
Although imports of steel has reduced sharply, India continues to be a net importer of the commodity. The country imported 1.3 million tonnes of steel and exported 1.07 million tonnes. Steel imports, however, dropped by 52 per cent over the same quarter of last year. Exports shot up by 71.8 per cent.
Prasad Baji, senior vice president, Edelweiss Securities, said: “There is definitely a slowdown in demand and that, in our view, will continue for at least two quarters.”
Baji said smaller steelmakers may have to resort to production cuts but that will be on a company-to-company basis and not an industry-wide phenomenon. “The bigger steelmakers will probably slow down capacity addition which were expected to come on stream this year.”
JSW Steel is expected to commission its three-million tonne steelmaking capacity at the Vijayanagar plant in Karnataka. The commissioning of the furnace is behind schedule by a quarter. Tata Steel is also expected to commission its blast furnace of three million tonnes by the year-end. Sushil Maroo, director (finance), Jindal Steel and Power, however, said: “This drop in steel demand is temporary. High inflation, high interest rates and scarce liquidity is hurting growth. But, this is temporary.”
Maroo said temporary hiccups are in no away affecting the long-term growth story. “Setting up of a steel plant takes 3-4 years and one quarter of slow demand does not deter the decision to allocate investments.”
ArcelorMittal earnings beat estimates
ArcelorMittal (MT), the world’s biggest steelmaker, said quarterly profit advanced 22% as rising demand boosted sales and forecast a better second-half performance than in 2010.
Earnings before interest, tax, depreciation and amortisation (Ebitda) climbed to $3.41 billion in the second quarter from $2.81 billion a year earlier, Luxembourg-based ArcelorMittal said. That beat the $3.25 billion average estimate of 14 analysts.
“The company has delivered a strong performance in the second quarter of 2011 underpinned by higher steel selling prices,” CEO Lakshmi Mittal said in the statement. “Although the third quarter will experience some seasonal impact, we do not expect this to be as pronounced as last year.”
Steelmaker earnings have risen on increased consumption of the alloy, used in construction, cars and pipes. US Steel Corp, the largest US steelmaker by volume, reported its first profit in 10 quarters on July 25, while India’s JSW Steel posted a 64% jump in quarterly net income on Tuesday.
HPCL reports Q1 net loss to `3,080 crore
State-run Hindustan Petroleum Corp (HPCL) recently reported net loss to `,080 crore in the first quarter of current financial year because of huge revenue losses on selling diesel, kerosene and cooking gas below market rates and rising borrowings.
“The loss was due to unmet under-recovery (revenue loss) of `3,060 crore,” HPCL director-finance B Mukherjee told reporters. The company had also reported `1,884 crore net loss in the same period previous year.
Out of `9,502 crore revenue loss on selling fuel below market rates, HPCL received `3,167 crore as upstream discount from state-run ONGC and Oil India and `3,275 crore from the government as cash subsidy.
Cairn India posts 870% rise in profit
Cairn India has reported a 10-fold jump (870 per cent) in net profit to `2,726.6 crore for the April-June quarter of the current fiscal as against `281.41 crore in the same period of last fiscal.
However, the net profit will halve to `1,435 crore in the quarter if it is asked to share royalty on crude production from the Rajasthan oilfield. The company has reported a revenue of `3,712.7 crore, up 342 per cent on a year-on-year basis. “If royalty were to be cost recoverable, it would lead to a decline in the revenues and PAT for the current quarter by `1,291.6 crore,” it said.
The company said it received “a requisition” from Cairn Energy under Section 169 of The Companies Act, 1956, for convening an extraordinary general meeting to consider the government riders.
Although Cairn India’s annual general meeting of shareholders — where the issue could have been considered — is scheduled for August 18, its board, which is headed by Cairn Energy chairman Bill Gammell, at a meeting in Edinburgh yesterday decided to hold a postal ballot.
Rashtriya Ispat Nigam to get mining rights at Bhilwara
The government is close to granting mining rights to Rashtriya Ispat Nigam at Bhilwara in Rajasthan, two people directly involved in the development said.
The world's largest steelmaker, ArcelorMittal, had also applied for a mining lease in Bhilwara, but there is no information on the progress of the global major's application. Queries to ArcelorMittal remained unanswered.
Rashtriya Ispat, which operates the coast-based steel plant Vizag Steel, will get 350 million tonnes of iron ore, a lion's share of the reserves. Earlier this year, the OP Jindal group's pipe business, Jindal Saw entered into an agreement with Rajasthan giving it rights to at least 180 million tonnes of ore with a ferrous content of about 30%. The company has also expressed its intention to build a steel plant in the state.
SAIL, which has been eyeing Rajasthan's reserves for two years, is expected to become the third beneficiary.
RINL chairman PK Bishnoi, who is scheduled to retire by July-end, returned from Jaipur last week after prolonged negotiations with the Rajasthan government. Iron ore in Bhilwara has a ferrous content of about 45-50%, which is lower than that mined in Karnataka and other states. Higher ferrous content indicates purity of the ore.
Rashtriya Ispat's 3.3-million tonne Vishakapatnam Steel Plant in Andhra Pradesh has been scouting for ores to reduce costs. Its iron ore requirements are being currently met by NMDC. RINL plans to expand the plant's capacity to 7.3 million tonnes by 2013. It has plans for an additional 4 million tonne plant, including an electrograde steel unit, for which it will partner with Bharat Heavy Electricals and SAIL.
Consultants and equipment and hardware providers are being finalised. Rashtriya Ispat owns about 20,000 acres at its existing location. According to Rashtriya Ispat Nigam chairman PK Bishnoi, the land is adequate to accommodate up to 20 million tones of steelmaking facility.
RINL currently has iron ore leases in Orissa, belonging to subsidiaries of the Bird Group of Companies, which it now owns through a majority stake in the holding company.
Petrobras unveils $225bn investment plan
Petrobras, Brazil's state oil giant, has announced a long-awaited plan to invest $224.7bn over the next five years following months of battling with the government over cost-cutting.
The Rio de Janeiro-based company is gearing up to exploit vast offshore oil reserves which could turn the country into one of the world's biggest energy exporters. However, the government, which has been under pressure to reduce spending and control inflation, has recently put pressure on Petrobras to rein in its ambitious investments. Although it still ranks among the world's biggest corporate investment programmes, the 2011-15 budget announced on Friday is only $700m bigger than the previous plan and significantly below some previous estimates.
Under the programme, 95 per cent of investments by the company will be in Brazil, leaving $11.2bn for investment abroad. "Of total investments, 57 per cent has already been authorised for execution," the company said.
The company said it was shrinking its proposed investment budget for this year to R$84.7bn from a previously planned R$93bn. However, even with this adjustment, the proposed investment would still represent an increase of 11 per cent compared with last year's realised investment of R$76.4bn. Petrobras said much of the investment was aimed at developing its large 'pre-salt' discoveries, which lie under a two-kilometre layer of salt in deep water off the southeast coast.
"The participation of the pre-salt [fields] in national oil production will rise from an estimated 2 per cent in 2011 to 40.5 per cent in 2020," the company said.
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