INDUSTRY UPDATES - 11/04/2013

INDUSTRY UPDATES - 11/04/2013

Tata Metaliks to merge with Tata Steel

Tata Metaliks Ltd has informed the exchanges that its board of directors and the committee of directors of Tata Steel Ltd have approved the merger of the former with the latter.
The respective meetings on April 10 approved the proposal following their Audit Committee approving it with effect from April 1.
The stock of Tata Metaliks is ruling 1.33 per cent higher at Rs 45.70 in early trade on Thursday while Tata Steel remanied weak at Rs 305, down 0.2 per cent over the previous day's close.
In terms of the scheme, Tata Metaliks will be amalgamated with Tata Steel followed by the dissolution of the company without winding up.
The shares held by Tata Steel in Tata Metaliks shall get extinguished and the public shareholders of TML shall be issued shares of TSL in the ratio of 4 equity shares of Rs 10 each of TSL for every 29 equity shares of Rs. 10 each of TML in terms of the scheme.
At the end of December 2012, retail investors held 39.85 per cent stake in the company while promoters holding stood at 50.1 per cent.
Further, the company has informed that Tata Metaliks Kubota Pipes Ltd, subsidiary of the company, has also approved the amalgamation of the company with TSL.

Coal India adopted new pricing model without tech upgrade: NTPC

The showdown between two public sector companies – Coal India and NTPC – could not be resolved on Wednesday even after heads of both the companies met the Government.
NTPC said that it would continue to pay on the basis of calorific value of coal received at its power stations. However, Arup Roy Choudhury, Chairman and Managing Director of NTPC claimed that there are no pending dues to Coal India from his company.
At the same time, Coal India Chairman, S. Narsing Rao, said that the miner would supply coal that is being mined.
Coal India has started the process of putting in place a mechanism for third party sampling of coal. This may be in place even before targeted timeline of September, Rao added.
The Chiefs of NTPC and Coal India met Coal Secretary Sanjay Kumar Srivastava on Wednesday to resolve their row.
Earlier in the day, the Maharatna power producer said the miner did not make the required infrastructure
changes while employing a new pricing mechanism for coal.
“Some coal companies may be facing a problem following the introduction of the gross calorific value (GCV) method of measurement in January 2012. We are trying to sort it,” said N. N. Misra, Director (Operations) of NTPC.
This has created differences over the quality of coal, leading to NTPC not clearing nearly Rs 2,000 crore in dues to Coal India. This payment has been due since October 2012. In a full year, NTPC buys nearly Rs 23,000 crore worth of fuel from the monopoly miner.
Following the stoppage of payments, Coal India also restricted supply to the power producer from its subsidiary Eastern Coalfields Ltd (ECL). Supplies were resumed on the intervention of Coal Minister Sriprakash Jaiswal.
Currently, the public sector power producer says that till the time Coal India is able to build and upgrade its infrastructure, it will pay in accordance with the measurement done at the NTPC stations.
NTPC says because of the lower quality supplied by Coal India, it has to blend the local fuel with imported coal. This has led to the power generation cost rising by around 35 paise a unit.
In January 2012, Coal India switched to the international model of a gross calorific value (GCV) benchmark for pricing coal, from the useful heat value (UHV) mechanism previously.
However, the GCV method should accompany quality control measures such as crushing coal below 50 mm size, removing ash and other impurities by washing, auto-mechanical sampling and making Bomb Calorimeters (a device) available at sample analysis centres.
NTPC claims it has paid bills for the quality of coal it has received at its power stations (and not the charges as specified by the Coal India invoice).
The companies tried sampling in the first week of April, but that did not resolve the issue.

Bulk buying keeps bullish trend intact in rice

The bullish trend in the rice market continued with prices of a few aromatic and sharbati rice varieties moving up by Rs 50-400 a quintal on Wednesday.
Tara Chand Sharma, Proprietor, Tara Chand and Sons, told Business Line that a sudden increase in demand lifted prices of aromatic and sharbati rice varieties.The market has witnessed some frantic buying by bulk buyers and retail traders in last two days, he said.
According to market experts, domestic demand is improving and the aromatic and non-basmati varieties may continue at current levels for the next few days, said Sharma.The market is getting good demand from the overseas markets too, he said.
In the physical market, Pusa-1121 (steam) sold at Rs 8,100, while Pusa-1121 (sela) went up by Rs 100 and quoted at Rs 7,100. Pure basmati (raw) moved by Rs 400 and quoted at Rs 9,000. Duplicate basmati (steam) traded at Rs 7,000.For the brokens of Pusa-1121, Dubar improved by Rs 300 and quoted at Rs 4,000, Tibar up by Rs 200 and sold at Rs 4,900, while Mongra was Rs 100 up at Rs 3,000.
Similarly, sharbati rice varieties went up on rising demand. Sharbati (steam) moved up by Rs 100 and quoted at Rs 5,400, while Sharbati (sela) was Rs 50 up at Rs 5,050.On the other hand, after witnessing an uptrend earlier this week, PR varieties remained unchanged.

SAIL to reopen Jharkhand iron ore mine

Steel Authority of India Ltd (SAIL), which is struggling with a $13.2 billion (around Rs.71,980 crore today) expansion plan in the face of Maoist rebel attacks and government red tape, will reopen an iron ore mine key to capping costs.
 
India’s second-largest steel maker will resume work at the Gua mine in Jharkhand this week after authorities renewed an environmental permit four years after expiry, A.K. Singh, spokesman for the raw materials division, said in a phone interview. The mine will initially supply to a new $3 billion plant being set up in West Bengal and help boost the state-run company’s output by 60%.
SAIL, whose competitive edge lies in having its own mines, has been beset by delays in forestry clearances and land acquisitions, and threats from Maoists who have sworn to chop off a head for every tree should jungle cover be removed to start new mines in their hideouts. The hurdles faced by Indian steelmakers have come amid slowing economic growth and mining bans that have led to shortages of raw materials.
 
“Iron ore security has been the saving grace for SAIL,” said Abhisar Jain, an analyst with Centrum Broking Ltd in Mumbai, who recommends investors sell their shares. “High wage costs, slowing infrastructure orders and importing coking coal with a weakened rupee are pressuring margins.”
 

NTPC, Coal India resolve differences

 NTPC and Coal India Ltd , both state-owned companies, seemed to have resolved their differences over the alleged poor quality of coal supplied by the country’s monopoly coal miner to India’s largest power generator.
 
Still, it is unlikely that the last has been heard on this contentious issue, with the ceasefire depending on both companies agreeing to a common method of calculating the gross calorific value (GCV) of coal supplied, and at the miner’s end. Calorific value refers to the amount of heat that can be generated by burning a certain amount of a fuel.
 
“We should jointly collect the sample. If at the receiving end there is a problem, we will try to find out the reason. NTPC has agreed to this,” Coal India chairman S. Narsing Rao said.
Earlier on Wednesday, before the two companies announced that they had resolved the issue, power minister Jyotiraditya Scindia said the issue “should be sorted out at the earliest”, and stressed the need for complete transparency.
 
NTPC has been sparring with world’s biggest coal miner over the poor calorific value of coal being supplied by its subsidiary Eastern Coalfields Ltd (ECL). Typically, the calorific value falls when the fuel is of poor quality or has impurities (which means more of it will need to be burned to generate heat, and, consequently, electricity).
 
NTPC claims that while it is being charged for coal with a calorific value of 5,000 kilo calory per kg, it is getting that with a calorific value of 3,500 kcal/kg. It has held back payment of Rs.2,000 crore to Coal India on this account and denies owing any money to the miner. Mint couldn’t independently verify NTPC’s claim on the quality of coal. The annual bills raised by Coal India on NTPC are in the range of around Rs.20,000 crore.
 
SC relief for Vedanta TATA Steel and Essar steel in entry tax matter
The Supreme Court has asked a host of companies including Vedanta, Adani and TATA Steel and Essar Steel, to pay up 50% of the tax demanded by the state of Odisha by way of entry tax for now

The Supreme Court asked a host of companies including Vedanta, Adani and Tata Steel and Essar Steel, to pay up 50% of the tax demanded by the state of Odisha by way of entry tax for now TATA Steel Ltd.

A bench, comprising Justices HL Dattu and JS Khehar, directed all the companies to pay 50% of the tax and interest amounts demanded/assessed by the state. But the penalty amount would be excluded from the amount.

Senior counsel Mr Harish Salve argued the case for these companies. He was assisted by Tarun Gulati of Economic Laws Practice. Mr Salve urged the court to restrict the deposit to 33% for now, but the court refused to do so, instead asking them to pay 50% of any demands made by the state.

Mr Salve also urged that the penalty may be directed to be deposited as the case involves a constitutional challenge and that the assessees had already succeeded in the High Court in Reliance's case.
 

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