Adani Agro offer for sale subscribed 68%

The offer for sale by Adani Agro, promoters of Adani Enterprises, was subscribed 68.24 per cent till noon on Monday. The promoter received bids for 58 lakh shares as against an offer of 85 lakh shares for auction. Though it fixed a floor price of Rs 220 a share, the indicative price at which maximum shares were bid was Rs 222.28. The stock is currently ruling at Rs 208.85.

The promoters of Adani Enterprises held a 77.87 per cent stake in the company as of December 31, 2012, and they have to reduce it to 75 per cent before June in line with regulatory norms.

In December last year, Adani Agro diluted 2.3 crore shares at an indicative price of about Rs 284.
Wheat futures testing lower support level

Wheat futures traded on the Chicago Mercantile Exchange (CME) is considered the benchmark for tracking wheat prices in general. It was volatile last week, declining to an intra-week low of 692.7 cents a bushel before recovering its initial loss and finishing the week on an almost flat note at 713.2 cents. Wheat futures tumbled 9 per cent in February this year.

Ever since peaking out at its July 2012 peak of 947.2 cents, the commodity has been in an intermediate-term downtrend. While trending down, wheat futures broke through a key support at 850 and 750 cents in early December 2012 and early February.

In early January, the commodity conclusively breached its long-term moving average line (200-day). Subsequently, this average line acted as key resistance. Wheat futures is trading well below its 50- and 200-day moving averages.

Last week, wheat futures found base at around 700 cents and is currently testing this support. An emphatic breakthrough of this support will drag the commodity lower to 650 cents which is the next significant support level. Important support below 650 cents is positioned at 600 cents.

The daily as well as weekly relative strength indices are featuring in the bearish zone implying bearish momentum. Similarly, both daily and weekly moving average convergence divergence indicators are hovering in the negative territory.

However, an upward reversal from the present base level can take the commodity higher to 745 cents and then to 750 cents in the short-term. Next important resistance is pegged at 790-800 cents band. But only a strong breakthrough of the key trend-deciding level at 850 cents will reverse the intermediate-term downtrend and push the commodity northwards to 900 cents. Significant resistance above 900 cents is positioned at 950 cents.

The long-term trend has been up for wheat futures since its trough formed at 425 cents in June 2010. As long as wheat futures hovers above its key long-term base zone between 570 and 600 cents, its long-term uptrend will remain in place. Conclusive up-move above 950 cents will pave the way for a rally to 1,000 cents in the long-term horizon.

Limited inflow to keep rice prices firm

Restricted arrivals in the market coupled with steady domestic demand kept aromatic and non-basmati rice prices firm.

Rice millers are not showing much interest in selling at current levels and have started to hold onto their stocks. According to experts, the market is already ruling around the highest levels of the season and it may witness some good levels in the coming days.

Power generation from imported coal to become costlier

Generating electricity from imported coal will become costlier as finance minister P. Chidambaram on Thursday removed duty concessions granted in last year’s budget.

Instead, he imposed an equal duty on different types of coal imported for electricity generation in the budget for 2013-14.

Under the Customs Tariff Act, the fuel has been classified as anthracite, bituminous, coking and steam coal. While steam coal is only used for electricity generation, most bituminous coal is used for power generation and can also be used to produce sponge iron and as a partial substitute for metallurgical coal.

“Steam coal is exempt from customs duty but attracts a concessional CVD (countervailing duty) of 1%. Bituminous coal attracts a duty of 5% and CVD of 6%. Since both kinds of coal are used in thermal power stations, there is rampant mis-classification. I propose to equalize the duties on both kinds of coal and levy 2% customs duty and 2% CVD,” Chidambaram said in his budget presentation.

The issue stems from the interpretation of the exemption, which was granted to steam coal. Customs authorities have taken the view that the coal being imported for power generation is not steam coal, but bituminous and, therefore, liable for higher duty than the concessional duty of 1% announced in last year’s budget.

The budget may announce a clarification on coal imports meant for electricity generation that would resolve the confusion resulting in Indian customs authorities denying importers of the fuel duty concessions granted in last year’s budget, Mint reported on 19 February. This comes in the backdrop of customs authorities issuing notices to companies importing coal.

“The impact may be incremental now that prices are subdued from recent peaks, but will make it more expensive as international prices may be heading for a rise going by the forward-market transactions,” said Dipesh Dipu, a partner at Jenissi Management Consultants, a Hyderabad-based resources-focused consultancy.

India is facing a chronic fuel shortage. In such a scenario, imports hold the key. The size of the market for imported coal that goes into power generation in India is around 80 million tonnes per annum (mtpa).

Coal demand in India is expected to grow from 649 mtpa now to 730 mtpa in 2016-17. The availability of local coal is estimated at 550 mt in 2016-17, with the shortage largely expected to be met through imports. India’s demand for imported coal is growing and stands at an annual 137 mt.

Underlining the need for increasing the domestic production of coal, Chidambaram said, “Despite abundant coal reserves, we continue to import large volumes of coal. Coal imports in April-December 2012 have crossed 100 million tonnes. It is estimated that imports will rise to 185 million tonnes in 2016-17. If the coal requirements of the existing power plants and the power plants that will come into operation by 31 March 2015 are taken into account, there is no alternative except to import coal and adopt a policy of blending and pooled pricing. In the medium to long term, we must reduce our dependence on imported coal. One of the ways forward is to devise a public-private partnership (PPP) policy framework, with Coal India Ltd as one of the partners, in order to increase the production of coal for supply to power producers and other consumers.”

“The PPP mode also has an element of auction, but it is a better method of auction as for the private partner it speeds up processes of clearance at government level due to presence of Coal India. For Coal India, it opens up the trading route in a limited manner,” said Kameswara Rao, executive director and leader of energy, utilities and mining practice at audit and consulting firm PricewaterhouseCoopers Pvt. Ltd.

JFE Steel broadens iron powder range for high performance Powder Metallurgy parts

JFE Steel (formerly Kawasaki Steel Ltd) started the production of iron powders at its East Japan Works in Chiba in 1966 and is today one of Japan’s leading producers of both reduced (from mill scale) and water atomised iron and steel powders under the brand name of ‘JIP®’. Bernard Williams reports on recent technical breakthroughs announced by JFE at its exhibit at the PM2012 World Congress held in Yokohama, Japan, October 14-18 2012.

JFE Steel has in recent years been broadening its range of steel powders to meet the demands for high density, high performance, low cost Powder Metallurgy components having high fatigue strength, as well as powders for PM parts having enhanced green density, and machinability.

Some of these developments were discussed with Powder Metallurgy Review during the recent PM2012

Powder Metallurgy World Congress held in Yokohama, Japan.

Sugar to attract 20 pc export duty

THE Budget has made a provision to impose export duty on sugar. Export of both raw and refined (white) sugar would now attract a duty of up to 20 per cent. Currently, there is no export duty on the sweetener.

In case of imports, the government already has a provision to increase Customs duty to up to 60 per cent to check inflows into the country. The current duty on imported sugar stands at 10 per cent.

"The industry thinks it is a positive move towards decontrol of sugar exports and imports. We think there would no longer be a ban on exports, but the government would regulate the exports and imports of sugar through changes in tariff," said Mr A. Verma, Director-General of Indian Sugar Mills Association (ISMA).

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