Coal India shares hit all-time low

Coal India shares slumped to an all-time low on the BSE in early trade on Thursday.

The stock was trading at Rs 286.25, down 0.75 per cent. During intra-day, Coal India hit a low of Rs 285.25.

The stock has been under pressure, on fears the Cabinet may take a decision later today on the draft Bill for setting up the Coal Regulatory Authority.

Meanwhile, the signing of fuel supply agreements (FSA) between Coal India Ltd and its single-biggest buyer, NTPC will take place anytime soon.

The Coal India board, which met here on Wednesday, agreed to reduce incentives proportionately if the quality of coal was poor—with a gross calorific value of less than 3,100 calories. “This is a small amendment which we will make in our FSAs,” the CIL Chairman, S. Narsing Rao, said.

The FSAs may be signed in two weeks time once the matter is communicated to the individual CIL subsidiaries, he said.

Moreover, the Children's Investment Fund Management, which held 1.1 per cent of the equity in the state miner as of March 31, has been offlading its stake in the company. According to Reuters, it sold nearly 1.2 crore shares since April.

TCI has made public protests since the Centre last year forced Coal India to reverse a price hike.

It filed a writ petition in the Delhi high court and a lawsuit in the Calcutta High Court against Coal India's directors.

Investors in Gitanjali Gems lose over Rs 2,000 cr in just 4 days

Shares of Gitanjali Gems locked in lower circuit for forth day in a row, eroding over Rs 2,000 crore to its market value, on concerns that the recent drop in gold prices coupled with the Reserve Bank of India and restrictions by the government would hurt company's growth and earnings going forward.

The stock almost halved to Rs 263 from Rs 507 at the beginning of current week, have seen erosion of market capitalization of Rs 2,246 crore at Rs 2,418 crore on BSE. The company had m-cap of Rs 4,664 crore on June 21.

The Jewellery retailer has lost 60% or Rs 3,560 crore of its market value from its recent high of Rs 650 touched on April 23 this year.

Foreign institutional investors (FIIs), the largest non-pro
moter shareholders, are major losers, lost nearly Rs 450 crore in past four trading sessions. The overseas investors had raised their holdings in the company by 4.17 per cent points to 19.98% during January-March quarter, when the stock was trading at an average price of Rs 580.

Life Insurance Corporation of India has lost nearly Rs 100 crore, as the insurance giant hold 4.36% stake in the company at the end of March 2013 quarter.

Bodies corporate held 11.56% stake have seen value erosion of Rs 260 crore and individual public shareholders lost Rs 70 crore in past four trading sessions.

Walmart India chief Raj Jain quits

A townhall meeting called hastily this morning at Walmart India’s Gurgaon office was all it took to announce a leadership change at the company. Walmart Asia President & CEO Scott Price, who otherwise sits in the Hong Kong office, had called the meeting to inform India staff that country head Raj Jain “is no longer with the company”.

A statement issued soon after said quite the same, without elaborating on Jain’s exit or his next stop. However, it named Senior Vice-President Ramnik Narsey, who joined Walmart last month after quitting as India chairman & CEO of Australia-based Woolworths, as the interim India leader to replace Jain “with immediate effect”.

There was talk, in hushed tones, of more exits and changes in the organisation as part of a clean-up act. But people in the know said there wouldn’t be any change so far as Walmart’s India commitment went. In fact, reacting to the development, Future Group Founder & CEO Kishore Biyani said: “It (Walmart) is a large organisation. Issues like these happen at such large firms.”

Many reasons to explain Jain’s departure had started floating since morning, though all were off the record. However, from what a company executive told Business Standard, it was clear the parting was “not amicable”.

Price, who had come to India earlier this week, had yesterday presided over a quarterly business review, which, it is learnt, was not attended by Jain. A source said, Jain had not been heard saying “bye” when leaving office on Monday evening, perhaps for the last time. Narsey is believed to have moved into Jain’s fourth-floor cabin yesterday, hours before the townhall announcement.

The world’s largest retail chain has lately been in the middle of several controversies, including an internal investigation into violations of the Foreign Corrupt Practices Act (FCPA), or anti-bribery laws, across markets like Mexico, India, Brazil and China.

As a fallout of that probe, Bharti-Walmart CFO Pankaj Madan, besides four others from the legal team, had been sent on leave. A source said the investigation might have been completed now, and many more heads might roll as part of a clean-up act. This information could not be independently verified.

Current account deficit drops sharply to 3.6% of GDP in Q4

India’s current account deficit (CAD) moderated sharply to 3.6 per cent of GDP in Q4 of 2012-13, according to the Reserve Bank of India (RBI) data released today.

CAD had touched a historically high level of 6.7 per cent of GDP in Q3 of 2012-13 as trade deficit narrowed.

During 2012-13, CAD stood at $87.8 billion (4.8 per cent of GDP) against $78.2 billion (4.2 per cent of GDP) during 2011-12.

Trade deficit narrowed to $45.6 billion in Q4 of 2012-13 from $51.6 billion in Q4 of 2011-12.

Merchandise exports, imports

Merchandise exports (Balance of Payment basis) increased 5.9 per cent in Q4 of 2012-13 compared with 2.6 per cent in Q4 of 2011-12, RBI said.

Further, merchandise imports recorded a marginal decline of 1 per cent in Q4 of 2012-13 against an increase of 22.6 per cent in Q4 of 2011-12.

Essentially, non-oil non-gold component of imports showed a decline, reflecting slowdown in domestic economic activity.

Net capital inflows

Net capital inflows under financial account moderated in Q4 of 2012-13 largely due to slowdown in net portfolio investment and net repayment of loans by banks and corporates.

However, net capital inflows were more than adequate to finance CAD, resulting in accretion of $2.7 billion to the foreign exchange reserves.

Metal price decline casts shadow on Hindustan Zinc's prospects.

The Hindustan Zinc Ltd (HZL) stock has recently come under fresh pressure after the slide in global prices of silver, zinc and lead. On Wednesday, the stock fell to its 35-month low before closing at Rs 97.90, taking the total decline in the month of June to 15.6 per cent. Earlier in April, the stock had fallen to its 52-week low of Rs 107 on the back of weak metal prices and overhang of stake divestment by the government. However, it rose to Rs 124 levels in May, helped by a strong performance in the March  quarter. Analysts had also hoped that rising volumes in silver would offset a large part of the weakness in metal prices. However, now, with silver prices showing no signs of bottoming and zinc and lead prices near their recent lows, concerns have cropped up again. Analysts, thus, expect the company’s earnings to remain muted in FY14 and FY15. In fact, looking at the weak market sentiments, they are not ruling out further pressure on the stock in the near term.

Weak metal prices add to worries
Global silver prices, which averaged $30 an ounce in FY13 and around $28 an ounce at the start of the June quarter, have slid below $20 an ounce at the end of the June 2013 quarter. Analysts at HSBC have already tweaked their average silver price estimates from $30 an ounce in FY13 to $23 an ounce in FY14. With silver prices currently hovering around $18, other analysts are not ruling out further weakness.

Additionally, zinc and lead prices remain weak. The average zinc price in the June quarter is about $100 lower than the average FY13 price of about $1,950 a tonne. Lead prices are also under pressure. Going ahead, analysts expect average zinc prices to hover around $1,950-1,980 a tonne and to cross $2,200-$2,300 levels only around FY15. For lead, they expect prices to remain at similar or slightly lower levels of $2,111 a tonne seen in FY13.

Volumes to provide some support
On the flip side, the company is seeing improvement in volumes. The company’s SK mine, which had seen a decline in mined metal output in the first half of FY13 leading to lower production of zinc (153,000 tonnes each in the first two quarters of FY13), has seen higher production thereafter. Thus, zinc production increased to 168,000 tonnes and 181,000 tonnes in the quarter ending December 2012 and March 2013, respectively. Silver production also increased to 100 tonnes in the March 2013 quarter from 62 tonnes in the December 2012 quarter, taking the total production to 321 tonnes in FY13, an increase of 35 per cent over 237 tonnes in FY12. For FY14, the company has guided for a 15 per cent growth in mined metal production to one million tonnes on the back of increased output from the Zawar, SK and Kayar mines. The net saleable silver production (after accounting for own consumption) is guided to grow 25 per cent year-on-year to 360 tonnes (analysts see it achieving 350-360 tonnes) from 288 tonnes in FY13. Among key monitorables is the grade of silver reserves at SK mine, which fell to 146 gm/tonne in FY13 from 161 gm/tonne in FY12.
Analysts at Kotak Securities say this may not have a negative impact on current production levels, but point out that a further decline in grades can put a cap on potential increase in silver volumes.