Sensex sheds 75 points; Realty, FMCG stocks major laggards

The Sensex and the Nifty fell over 0.3 per cent at the closing session on Wednesday owing to sluggish industrial production and higher consumer inflation numbers.

The 30-share BSE index Sensex was down 75.5 points (0.37 per cent) at 20,206.41 and the 50-share NSE index Nifty was down 22.65 points (0.38 per cent) at 5,995.40.

Barring auto, consumer durables, metal and PSU, all other BSE sectoral indices ended in the red. Among them, realty index fell the most by 1.14 per cent, followed by FMCG 0.98 per cent, IT 0.65 per cent and banking 0.62 per cent.

On the other hand, auto index was up 0.47 per cent, followed by consumer durables 0.22 per cent, metal 0.19 per cent and PSU 0.11 per cent.

Hindalco, Tata Steel, M&M, Sun Pharma and Tata Motors were the top five Sensex gainers, while the top five losers were Cipla, GAIL, SSLT, Hero MotoCorp and HDFC Bank.

Dhananjay Sinha, Head-Institutional Research, Emkay Global Financial Services, in a report, said: “With several unrelenting upside risks to inflation, we believe, there is a hardening bias to our policy rate view with another 25 basis point hike in repo rate in the upcoming policy announcement.”

The Index of Industrial Production released yesterday for the month of September grew at below-market-estimates of 2 per cent versus 0.43 per cent in August.

The Consumer Price Index further disappointed the markets as it came in at double digits at 10.09 per cent compared with 9.84 per cent in September.

European stocks were down as investors weighed corporate earnings and awaited euro zone industrial output data. Asian stocks were down as China’s Communist Party leaders failed to outline steps to curb state dominance of the economy.

US stocks had ended lower yesterday as corporate earnings and an improving economy fuelled speculation the Federal Reserve will start reducing its $85-billion-a-month stimulus programme from as early as next month.

Change in trading holiday from November 14, 2013 to November 15,2013 on account of Moharram.

In lieu of the change of Holiday on November 14,2013 by Maharashtra Government and RBI Holiday Calendar ,there will be no trading holiday tomorrow  on Thursday November 14,2013 on account of Moharram and all the segments of the exchange such as Equity, Equity Derivatives, SLB and WDM shall remain open for trading.

There will be Trading Holiday on Friday November 15, 2013 on account of Moharram and all the segments of the exchange such as Equity, Equity Derivatives,SLB and WDM shall remain closed for trading.

Financial Technologies nominee resigns from MCX board

Paras Ajmera will no longer continue as FT's nominee on the Multi Commodity Exchange of India board

Paras Ajmera, a nominee of Financial Technologies on the board of Multi Commodity Exchange of India Ltd (MCX) as a shareholder representative resigned from the board of the exchange.

MCX informed the Bombay Stock Exchange that Financial Technologies (India) withdrew the nomination of Paras Ajmera, shareholder director, from the board with effect from November 12, 2013 consequent to his resignation from MCX Board.

Ajmera was the only FTIL representative on the MCX board after FTIL’s founder Jignesh Shah resigned from the board in October. According to the new rules of the commodity markets regulator Forward Markets Commission (FMC), FTIL, which holds 26 per cent equity in the bourse, can have only one nominee. With Ajmera also resigning from the company’s board, FTIL will have no nominee. However, sources said that FTIL may name another nominee director soon.

Andhra Bank Q2 net plummets to Rs 71 cr on higher provisions, NPAs

Andhra Bank’s net profit decreased significantly to Rs 71 crore in the second quarter ended September 30, 2013, against Rs 326 crore in the corresponding quarter of the previous year on higher provisions.

The total income of the Hyderabad-based bank, however, increased to Rs 3,817 crore from Rs 3,416 crore in the same period last year.

The provisions (other than tax) and contingencies increased to Rs 502 crore (Rs 139 crore) while the net non-performing assets had gone up to 3.54 per cent (2.16 per cent).

The earnings per share stood at Rs 1.26 (Rs 5.82), the Bombay Stock Exchange was informed on Wednesday.

Andhra Bank’s scrip lost 4.90 per cent on the Bombay Stock Exchange on Friday and was trading at Rs 59.25 after the lunch hour.

M&M net up 9.7% at Rs 989.5 cr, sales down 10%

Mahindra & Mahindra Ltd has reported a near 10 per cent drop in net sales on a standalone basis in the second quarter of the current fiscal compared to the corresponding period last year.

But the company posted a near 10 per cent increase in net profit, aided in part by the decline in tax expenses, though profit before tax showed only a marginal increase.

According to the unaudited results, the total income from operations declined to Rs 8,929.57 crore compared to Rs 9,812.96 crore in the same quarter last year. Profit from ordinary activities before tax was Rs 1,246.30 crore in Q2 of this year compared to Rs 1,215.95 crore in the same quarter in 2012-13.

Net profit edged up by 9.7 per cent to Rs 989.50 crore in the quarter ending September 30, 2013, as against Rs 901.80 crore in the corresponding period last year.

The EPS was higher at Rs 16.76 (Rs 15.30).

M&M said its South Korean acquisition Ssangyong Motor Company Ltd, that broke even in Q1, "continued its profitable ways" with a 20 per cent growth in consolidated revenues and a 114 per cent growth in results.

On the Indian economy’s outlook, M&M was optimistic that the second half of the current fiscal would be better. Because of domestic policy actions and with the US Fed putting off tapering, the "near term balance of payments risks" facing the Indian economy had eased. The good agricultural harvest was likely to dampen inflation even while boosting rural output, income and demand. With the developed markets recovering and rupee "no longer over-valued", exports should pick up. Given these factors, "our current outlook on the economy is one of cautious optimism", M&M said in its statement.

Shares of M&M were trading at Rs 893.40, up by Rs 14.15, after the results were announced.

BSE Sensex falls over 90 points

Some buying activity is seen in auto and consumer durables sectors on BSE, while realty, banking and capital goods sectors are losing sheen

At 2:36 PM, S&P BSE Sensex is 20,191 down 90 points, while CNX Nifty is at 5,983 down 34 points.

BSE Mid-cap is at 6,064 down 48 points, while BSE Small-cap is at 5,884 down 45 points.

Some buying activity is seen in auto and consumer durables sectors on BSE, while realty, banking and capital goods sectors are losing sheen.

HUL, Sun Pharma, Hindalco, BHEL, Tata Motors, Bajaj Auto, NTPC and SBI are up on BSE, whereas SSLT, HDFC Bank, Bharti Airtel, Cipla, Gail, Tata Power and Hero MotoCorp are showing some weakness.

Andhra Bank has posted a net profit of Rs. 706.50 million for the quarter ended September 30, 2013 as compared to Rs. 3256.30 million for the quarter ended September 30, 2012. The scrip is 4.65% down on BSE.

Bharat Petroleum Corporation declined 2.6%. The company posted a net profit of Rs. 9311.30 million for the quarter ended September 30, 2013 as compared to Rs. 50347.90 million for the quarter ended September 30, 2012.

Mahindra & Mahindra posted net profit after tax of Rs. 9895 million for the quarter ended September 30, 2013 as compared to Rs. 9018 million for the quarter ended September 30, 2012. The scrip is 0.78% up on BSE.

State Bank of India has posted net profit of Rs. 23750.10 million for the quarter ended September 30, 2013. The scrip is 0.78% up on BSE.

SEBI's (Securities and Exchange Board of India) mutual fund advisory committee has suggested that asset management companies (AMCs) with assets under management (AUM) of over Rs. 10 billion should have a net worth of Rs. 250 million, according to a media report.

The committee has also suggested Rs. 250 million as the minimum net worth for new players.

The Consumer Price Index (CPI) for the month of October rose to 10.09% versus 9.84% in September. The consumer food price inflation was reported at 12.56% versus 11.44% in September. The Index of Industrial Production in September rose 2%.

Nikkei closed 21 points down at 14,567, while Hang Seng closed 437 points down at 22,463.

SBI Q2 net down 35%; increase in NPAs not as bad as feared

State Bank  of India (SBI), the largest public sector lender, today reported a fall of 35.08% in standalone net profit to Rs 23.75 billion for the quarter ended Sept. 30, 2013 as compared to Rs 36.58 billion in the same period last year. Analysts had expected profit of Rs 26.75 billion.

Total income increased by 12.89% to Rs 371.99 billion for the quarter ended Sept. 30, 2013 as compared to Rs 329.53 billion in the same period last year.

Net interest income (NII) of the bank stood at Rs 122.52 billion during the quarter.

The bank has made provision of Rs 30.29 billion, which was 65.90% higher than the same period last year.

Net NPA was at Rs 321.51 billion for the quarter ended Sept 30, 2013, as compared to Rs 226.15 billion for the quarter ended Sept. 30, 2012, representing a sharp increase of 42.17%.

Meanwhile in percentage term, net NPA increased to 2.91% as on Sept. 30, 2013 from 2.44% as on Sept. 30, 2012.

Capital adequacy ratio (CAR) under Basel III of the bank was at 11.69% as on Sept. 30, 2013. Provision coverage ratio of the bank stood at 61.16% as on Sept. 30, 2013. Fresh slippages came at Rs 82.65 billion.

Domestic net interest margin increased sequentially to 3.51% for Q2FY14 from 3.44% for Q1FY14. CASA Ratio for September 2013 remained strong at 43.58% with savings bank deposits touching all time high at Rs 4,454.43 billion.

Shares of the bank gained Rs 35.6, or 2.12%, to trade at Rs 1,711.05. The total volume of shares traded was 515,211 at the BSE (12.49 p.m., Wednesday).

Tata Global tanks nearly 9% on dismal earnings, merger issue

Shares of Tata Global Beverages Ltd today slumped almost 9 per cent after the company’s quarterly results failed to meet market expectations and its decision to merge a subsidiary with itself weighed on investor sentiment.

The company’s results were announced post market hours yesterday.

Tata Global’s stock fell sharply by 8.6 per cent to Rs 141.35 on BSE. On the NSE it tanked 8.7 per cent to Rs 141.10.

“For Q2 FY14 Tata Global Beverages’ performance was below estimate on the top-line and bottom-line front,” said V. Srinivasan, Research Analyst — FMGC, Angel Broking.

Tata Global Beverages had yesterday reported a 51.23 per cent increase in consolidated net profit at Rs 180.03 crore for the second quarter ended September 30.

The company had posted a net profit of Rs 119.04 crore for the same period of previous fiscal.

Its net sales during the quarter under review rose to Rs 1,906.23 crore during the second quarter, as compared to Rs 1,842.57 crore during the same period of previous fiscal.

Meanwhile, the company also announced the merger of its subsidiary Mount Everest Mineral Water Ltd with TGBL.

“The boards of directors of Tata Global Beverages Ltd (TGBL) and Mount Everest Mineral Water Ltd (MEMW) in their respective meetings today, approved a proposal to merge MEMW with TGBL,” the company had said.

“The merger of Mount Everest is considered negative, so the stock is facing selling pressure,” said Kishor Ostwal, CMD, CNI Research.

ABB soars on inaugurating two new manufacturing plants for power products in India

ABB, the leading power and automation technology group, has inaugurated two new facilities producing power products in India to coincide, with the 50 year anniversary of the company's extensive Vadodara manufacturing hub in the western state of Gujarat. The new units covering an area of about 15,000 square meters were built in 18 months at an investment of approximately Rs 250 crore and are located in Savli, close to the Vadodara facility. The new manufacturing units will produce high-voltage switchgear and distribution transformers.

The high-voltage unit will produce gas-insulated switchgear (G1S) and PASS (plug and switch system) hybrid switchgear to serve growing demand in India and will also serve as an export hub. The new transformer factory will focus on the production of dry-type and oil immersed distribution transformers. The new transformer factory will enhance the company's offering in India and extend the distribution transformer range up to 10 megavolt amperes (MVA), 36 kilovolts (kV).

ABB is a global leader in power and automation technologies that enable utility and industry customers to improve their performance while lowering environmental impact.

Gillette offer-for-sale gets 8% response till noon

 The share sale offer made by Poddar group in Gillette India evoked little response till noon on Wednesday.

Gillette India had on Tuesday fixed the floor price at Rs 1,650 for the offer-for-sale (OFS) through which the Poddar group plans to dilute 8.77 per cent stake in the company.

Till noon, the OFS got response only for about 8 per cent.

Currently, the stock, however, surged 4.8 per cent at Rs 2,053.

The floor price was at a discount of 15.6 per cent to the stock’s closing price of Rs 1,959 on Tuesday on the BSE. At the floor price, Poddars would get about Rs 470 crore.

Gillette India’s promoters would sell 28.57 lakh shares of the total paid-up equity share capital of the company through the OFS on Wednesday, the company said in a regulatory filing to the stock exchanges.

According to the company, S.K. Poddar, Akshay Poddar, Shradha Agarwala, Jyotsna Poddar, Saroj Kumar Poddar, Adventz Investments and Holdings, Adventz Finance, Adventz Securities Enterprises, Planon Group, Globalware Trading and Holdings and Procter & Gamble India Holdings B.V., form part of the promoter and promoter group of Gillette India.

The promoters of Gillette India, jointly promoted by Procter & Gamble, hold 88.76 per cent in Gillette.

The offer-for-sale follows a prolonged battle between Gillette India’s promoters and the Securities and Exchange Board of India.

Earlier in September, market regulator SEBI had approved Gillette India’s revised proposal.

Accordingly, Gillette India agreed that its US promoter P&G would sell 0.9 per cent and the Poddar Group dilute at least 5 per cent of stake in the company.

It was also then decided that the remaining shareholding of the Poddar Group will be considered as public shareholding.

According to the revised proposal, S.K. Poddar and A. Poddar would step down from the Gillette India board on approval of the resolution passed by Gillette India shareholders in a general meeting or a postal ballot.

SEBI had earlier imposed penalties on the company’s promoters for failing to comply the minimum shareholding rules.

“If entities belonging to the Poddar group want to be classified as promoters of GIL again in future, they shall be required to make an open offer and no exemption shall be given in this regard,” SEBI had said.

The Poddar group had also been directed not to acquire any Gillette India shares for a period of one year from the date of reclassification.

ICICI Brokerage Services sells 6.20 lakh shares of Bata India: Report

ICICI Brokerage Services has reportedly sold 6.20 lakh shares or 0.97% stake of Bata India to Bata BN BV. The shares were sold on an average price of Rs 888.35 valuing the transaction to Rs 55.69 crore.

Bata India is the largest retailer and leading manufacturer of footwear in India and is a part of the Bata Shoe Organization. The company manufactures footwear for men, women and children. The company manufactures shoes of various quality such as leather, rubber, canvas and PVC shoes.

AMCs should have assets worth Rs. 250mn: SEBI panel

The SEBI committee recommended that fund houses with AUM of around Rs. 10 billion should have a net worth of Rs. 250 million

SEBI's (Securities and Exchange Board of India) mutual fund advisory committee has suggested that asset management companies (AMCs) with assets under management (AUM) of over Rs. 10 billion should have a net worth of Rs. 250 million, according to a media report.

In a meeting in Mumbai on Tuesday, the committee recommended that fund houses with AUM of around Rs. 10 billion should have a net worth of Rs. 250 million as against the current net worth requirement of Rs 100 million, the report added.

The committee has also suggested Rs. 250 million as the minimum net worth for new players.

The committee has also recommended that fund houses need to put in seed capital of Rs. 5 million for each scheme. This would be counted as part of net worth and excludes fixed maturity plans.

The recommendations of the mutual fund advisory committee would be sent to SEBI for approval.

Orient Paper inches up on reporting operational performance of Electrical Division in October

Orient Paper & Industries is currently trading at Rs. 9.92, up by 0.01 points or 0.10 % from its previous closing of Rs. 9.91 on the BSE.

The scrip opened at Rs. 9.95 and has touched a high and low of Rs. 10.10 and Rs. 9.91 respectively. So far 4472 shares were traded on the counter.

The BSE group 'B' stock of face value Rs. 1 has touched a 52 week high of Rs. 19.99 on 11-Dec-2012 and a 52 week low of Rs. 4.30 on 12-Aug-2013.

Last one week high and low of the scrip stood at Rs. 10.85 and Rs. 8.20 respectively. The current market cap of the company is Rs. 204.87 crore.

The promoters holding in the company stood at 38.23% while Institutions and Non-Institutions held 28.19% and 33.58% respectively.

Orient Paper & Industries has reported the operational performance of Electrical Division of the company for the month of October, 2013. The production of its CFL Lamps for October, 2013 stood at 1,323,000 units compared to 1,249,000 units in September 2013.

Orient Paper & Industries is part of the C K Birla Group has emerged as a multi-product, multi-location company. The company manufactures and markets range of fans under the name Orient Fans. It manufactures ceiling fans, desk fans, wall-mounted fans, pedestal fans, exhaust fans and multi-utility fans. It has production capacity of over 3 million units per annum.

NIIT Technologies gains on entering into partnership with Sao Paolo International Airport

NIIT Technologies, a leading global IT solutions organization, has entered into a partnership with GRU Aeroporto Internacional de São Paulo (Sao Paolo International Airport), the largest international airport in Latin America to implement and transform the Cargo Handling system at the airport.

This partnership, the first of its kind in Latin America, will result in a single platform cargo handling system, which will handle all performance and operational needs of the cargo terminal, including core processes such as import, export, national/domestic cargo and abandoned cargo. A web-enabled interface will connect and streamline all external customer service-based processes and agents. GRU will benefit with a fully integrated software platform that will enable enhanced efficiencies, increased monitoring and greater control over ground handling operations.

NIIT Technologies has a strategic partnership with SATS for marketing, implementation and support of COSYS solution globally. Combined with local processes and regulations, this solution ensures greater transparency and precision throughout the value chain. COSYS automates and simplifies processes, reduces duplication of data and paperwork and enhances overall customer service.

NIIT Technologies is a leading IT solutions organization, servicing customers in North America, Europe, Middle East, Asia and Australia. It offers services in application development and maintenance, managed services, IP Asset or platform solutions, and business process outsourcing to organizations in the financial services, travel & transportation, manufacturing/distribution, healthcare and government sectors.

Vodafone plans to invest more Rs70bn in India

This move comes within two weeks of Vodafone Plc, company said it would spend Rs 10,141 crore to buy out minority stake holders in the Indian entity.

British telecom giant Vodafone is planning to invest an extra Rs 7,000 crore in India between April 2014 and March 2016 on strengthening its network, Vodafone India’s chief financial officer, Colman Deegan reportedly said.

This move comes within two weeks of Vodafone Plc, company said it would spend Rs 10,141 crore to buy out minority stake holders in the Indian entity.
Out of the Rs 7,000 crore, a little more than 60% would be invested in enhancing its data network, said Vodafone India’s managing director and chief executive officer, Marten Pieters.

“This Rs 7,000-crore capex will only be invested in enhancing network, fibre optics and assets. This is in addition to our usual operating expenditure of Rs 4,000-5,000 crore every year” reports Deegan.

Vodafone has invested Rs 56,000 crore in India since its entry.


Also, Vodafone Plc chief executive Vittorio Colao reported that the company would look at listing its Indian entity once the Rs 11,200-crore tax dispute with the government was settled.

Mount Everest Mineral to merge with Tata Global

Tata Global Beverages Ltd has announced that the Board of Directors of the Company at its meeting held on November 12, 2013, considered and approved the proposal of merger of Mount Everest Mineral Water Limited ("MEMW") with the Company in terms of a Scheme of Amalgamation under Sections 391-394 and other applicable provisions of the Companies Act, 1956 ("the Scheme").

The entire undertaking of MEMW would be transferred to the Company as a going concern together with all assets and liabilities of MEMW;

In consideration of the amalgamation, the Company will issue shares to the shareholders of MEMW in the following swap ratio recommended by the independent valuers, SSPA & Co. and Haribhakti & Co. as under :

 3 fully paid up equity shares of Rs. 1 each of Tata Global Beverages Limited for every 4 fully paid up equity shares of Rs. 10 each of Mount Everest Mineral Water Limited.
Rothschild (India) Private Limited has issued a fairness opinion on the swap ratio.
The Company holds 50.07% of the total issued, subscribed and paid-up share capital of MEMW and the shares held by the Company in MEMW shall get extinguished. No new shares shall be issued in lieu of such shares of MEMW held by TGBL.


The Scheme will be filed with the Stock Exchanges where the shares of the Company are listed as per SEBI Circular dated February 04, 2013 and May 21, 2013 for receiving their comments to the Scheme. The Scheme is subject to other necessary statutory approvals, including sanction of the Hon'ble High Court of Himachal Pradesh at Shimla and Hon'ble High Court at Calcutta.

Corporation Bank signs MoU with warehousing and collateral management company

Corporation Bank has entered into a Memorandum of Understanding (MoU) with Star Agri Warehousing and Collateral Management Ltd, Mumbai, for providing finance against warehouse receipts.

A press statement by the bank said here that the MoU was exchanged between Lakshminatha Reddy, General Manager of Corporation Bank, and Jimmy John, Vice-President of Star Agri Warehousing and Collateral Management Ltd, in the presence of B.K. Shrivastav, Executive Director of the bank in Mangalore on Tuesday.

Banks are entering into tie-up arrangement with specialised warehousing and collateral management agencies wherein the pledge of negotiable warehouse receipt of the agencies with the banks facilitate farmers to get better agriculture credit facilities and prevent distress sale of the agricultural produce while mitigating risks of volatility in prices, the statement said.

Star Agri Warehousing and Collateral Management Ltd has its registered office in Jaipur. It has more than 200 warehouses across in India with the total warehousing capacity of 10 lakh tonnes, it added.

Asian shares fall on US Fed tapering uncertainty

Investors pondered mixed signals from US Federal Reserve officials about when the US central bank would start to pare its asset-buying stimulus

Asian shares sagged and the dollar wobbled on Wednesday as investors pondered mixed signals from US Federal Reserve officials about when the US central bank would start to pare its asset-buying stimulus.

MSCI's broadest index of Asia-Pacific shares outside Japan fell about 0.7%, while Japan's Nikkei stock average slipped 0.6%.

Atlanta Fed President Dennis Lockhart told reporters on Tuesday that a reduction of the central bank's quantitative easing program remains a possibility at the Federal Open Market Committee's next policy meeting on December 17-18, although he did say policy should remain very easy.

"There is a danger to the global stock market rally as the December FOMC meeting draws closer," said Andrew Wilkinson, chief economic strategist at Miller Tabak.

"Equity investors must monitor how emerging markets deal with the escalation of taper talk following a healthy October payroll report," he said in a note to clients.

Data on Friday showed an unexpected surge in US jobs growth in October, suggesting the labour market could be strong enough for the Fed to begin to pare its $85 billion-a-month bond-buying programme sooner rather than later.

Investors will also be paying close attention to any comments that Fed Vice Chair Janet Yellen makes at Thursday's Senate confirmation hearing on her nomination to become the first woman to head the world's most powerful central bank.

"Since Yellen has become a candidate to succeed Ben Bernanke, she has hardly spoken about her view on monetary policy. Because the market doesn't seem to doubt she is a dove, there's a chance she is not as dovish as expected," said Ichiro Asai, economist at Daiwa Securities.

A Reuters poll of primary dealers on Friday found a majority of respondents still believe the Fed taper would not happen until March or later.

Global markets have been buffeted since May over speculation of an imminent end to cheap dollars, a major driver of assets in recent years.

Signals from central bank officials have been mixed, with Narayana Kocherlakota, president of the Minneapolis Fed, speaking about the need for aggressive action to foster growth.

The dollar was off about 0.1% at 99.56 yen after rising as high as 99.79 yen on Tuesday, its strongest level since September 13. The dollar faces resistance at 100 yen, above which it has not traded since September 11.

The euro was nearly flat from US levels, holding well above lows set last week, when it suffered a heavy selloff on Thursday after the European Central Bank stunned investors by unexpectedly cutting its main rate to a record-low 0.25%.

The common currency bought $1.3439, well above its two-month low of $1.3295 hit on Thursday, but still down nearly 3 percent from a two-year peak of $1.3833 set last month.

The dollar index inched down about 0.1% to 81.125, edging away from a two-month peak of 81.482 struck on Friday.

In commodities markets, gold was slightly down, trading close to a four-week low, while copper fell on the heightened speculation that the Fed will taper its stimulus.

U.S. crude for December delivery slipped below $93 a barrel to near 4-1/2 month lows, while the benchmark three-month copper contract fell 0.4% to $7,093.50 a tonne.

GMR Kamalanga Energy’s second 350 MW unit becomes commercially operational

The second 350 MW unit of GMR Kamalanga Energy (GKEL) was declared commercially operational on November 11, 2013. The first unit of 350 MW commenced generation on April 30, 2013. The GMR Group is establishing 3x350 MW coal-based thermal power plant at Kamalanga in Odisha’s Dhenkanal district. With the commissioning of GKEL’s second unit, the GMR Group’s combined generation capacity has touched 2,136 MW.

Besides, projects totaling 5,038 MW are under implementation. The commissioning of GKEL’s second unit follows close on the heels of the synchronization of the second unit of GMR’s 2x300 MW EMCO Energy at Warora in Chandrapur district of Maharashtra on August 27. EMCO’s first unit of 300 MW became commercially operational in March 2013.

The power produced from GKEL is being supplied to GRIDCO in Odisha in line with the long-term Power Purchase Agreement (PPA), Besides Odisha, GKEL would supply power to Haryana, Bihar and other parts of the country. GKEL secured coal linkage for all its 1,050 MW capacity by signing Fuel Supply Agreements with Mahanadl Coalfields.

Steel producers in mega retail push to tap demand in rural markets

Segment has been growing despite overall economic downturn, with growth coming mainly from semi-rural and rural areas

In response to the rising demand for steel in rural India, primary steel producers are deploying aggressive marketing strategies. Among those trying to buttress their presence in the rural market are Essar Steel, Rashtriya Ispat Nigam, JSW Steel, Tata Steel, Steel Authority of India, and Jindal Steel & Power.

At present, the per capita consumption of steel in rural India stands at 10 kg, much lower than 60 kg in urban areas.

“We have tied up with 761 dealers across the country to supply our TMT (thermo-mechanically treated) rebars to the rural consumer,” said Y Sudhakar, general manager (marketing-retail sales) at Rashtriya Ispat Nigam Ltd. ”We also have a scheme for rural consumers to train the youth on how to use steel in terms of welding, drawing etc so that they get optimum benefit from the product procured,” he added.

The unlisted steel company aims at selling 50,000 tonnes through its retail segment in FY14. As on October 31, it has sold 22,000 tonnes.

TMT rebars
In rural India, steel demand is the strongest from the housing sector, where TMT rebars find wide application.

“We have a franchisee model for the retail segment and through this model we plan to penetrate deeper into several talukas of the country from the district level right now,” said Seshagiri Rao, joint managing director and group chief financial officer at JSW Steel. “We keep the staff motivated so that it brings in good sales and also provide them with lucrative incentives.”

TMT rebars, galvanised corrugated sheets, hot rolled coils, and colour-coated sheets are among the products offered by the Mumbai-based company, through its chain of outlets called JSW Shoppe.

“We have adopted what is known as a two-tier model comprising distributors and dealers,” said Jindal Steel & Power, which recently launched their TMT rebars under the brand of Jindal Panther. “We have already covered all the districts in the country, through a network of 40 distributors and about 1,000 dealers. We also have planned to expand our retail sale to cover our other products like light angles, channels and beams, so as to primarily cater to rural demand,” the company added.

Assured quality products, transparency in pricing and customised availability of material is a hurdle the rural consumer is currently grappling with. If the issues are addressed, it can only help a smooth break through into the market.

“The rural customer has become quality conscious and now knows where to look for, for the right kind of product,” said Rao of JSW Steel. “This has led to higher demand for steel from primary producers. The quality is assured at our end.”

To address the pricing issue, companies publish rates of steel products on their websites, helping bring about greater transparency, along with price discovery, said industry officials.

SAIL and Essar Steel regularly publish prices on their website.

“We also provide our rural dealers with a price list, which customers can refer to when they come for purchase,” said SAIL.

Since the retail requirement is relatively small compared to bulk demand, companies are also making products available in small quantities according to customer requirement.

“We have 23 branches across the country which have products available at its end. People from panchayats can come and lift the material from these branches,” said Sudhakar of Rashtriya Ispat. “This system takes care of sourcing material from the right supplier source.”

Tata Steel, which also has a strong presence in the retail segment, was not available for comment.

Essar Steel has the facility to allow customers to buy even a single sheet of steel plates to a few tonnes depending upon the requirement, said the company.

Retail boom
The retail segment has come as a boon for steel companies. Even in times of slowdown, this segment has been growing for most private players.

The retail segment contributes as much as 25 per cent to the total sales of Essar Steel, the first to enter this area, said Girish Rao, CEO of Essar Hypermart, which owns 68 stores and 300 franchisee outlets.

“We are currently consolidating out network and planning for growth through the existing outlets. Growth would come from new products and increased market shares,” said Rao.

Metros such as Mumbai, Ahmedabad and the national capital region (NCR) are the major markets for Essar Steel.

For JSW Steel, the retail segment contributes about one-fourth to the total sales, said Seshagiri Rao. For the company, which has 425 shops covering 600 districts, most of the growth comes from semi-urban and rural areas. “Next, we will go to every taluka level,” said Rao.

According to experts, with slow economic growth and slump in demand from major sectors such as infrastructure and auto, steel makers are going out to tap a new stream of revenues to overcome tough times and retail is one area with huge, untapped potential.

“This segment has grown year-on-year and in times of slowdown and volatility, it performs better,” Rao added.

Jayanta Rao, senior vice-president and co-head (corporate sector ratings) at ICRA, says: “Retail segment for steel has shown greater resilience compared to bulk buyers. When there is slowdown in the industry, bulk players defer their decisions. The retail shops service need-based customers. Mainly, the growth is coming from semi-rural and rural areas.”

With branded and customised steel products, this segment is becoming more of small customer-centric and some of the companies even offering delivery at doorsteps, he added.

JSPL, which recently forayed into this segment, expects the segment to contribute eight to 10 per cent to the total sales by the end of FY15. It has 661 retailers, according to managing director and CEO Ravi Uppal.

According to SAIL’s chairman and managing director C S Verma, the volume of branded products in SAIL’s retail channel will increase from 0.5 million tonnes per annum (mtpa) to one mtpa after the modernisation and expansion of SAIL’s IISCO Steel Plant and the launch of a new cold-rolling mill at Bokaro Steel Plant.

SAIL has 2,900 dealers in 611 districts to cater to small requirements of retail customers. The outlets have been given a distinct identity as Apna SAIL Shops and act as retail outlets for the company, Verma added.

The proportion of branded products in SAIL’s portfolio will go up from the present level of about 15 per cent to 25 per cent once the modernisation and expansion plans are complete.

Festive cheer gives industrial output a miss

Production grows only 2% in September; rate of retail inflation back in double digits in October

The expectation that the pre-festival month of September would be one of a demand revival looked punctured on Tuesday, as government data revealed India’s industrial production in the month had risen a mere two per cent from that a year back, compared with 0.4 per cent in August. The tepid show was mainly on account of a continued decline in output of capital goods, as high interest rates kept demand for consumer durables low.

The bright spots, however, were mining (production up 3.3 per cent after a contraction for 10 months in a row) and electricity generation (up 13 per cent), showed data released by the Ministry of Statistics and Programme Implementation (Mospi).

The industrial production data — released a day after trade numbers revealed exports in October had risen at a double-digit rate, for a fourth straight month, meaning there had been a demand revival in other countries — indicated the domestic market continued to suffer a demand slowdown.

Meanwhile, another set of data released on Tuesday sh
owed the rate of retail inflation, based on the Consumer Price Index, had returned to double digits in October, after six months, at 10.1 per cent, against 9.84 per cent the previous month.

For the industrial output growth, what looked more disappointing was the fact that it had remained weak despite a low base — the Index of Industrial Production (IIP) had contracted 0.7 per cent in September 2012.

The production growth in the first half of this year, as a result, remained almost stagnant at 0.4 per cent, against 0.1 per cent in the same period last year.

“This is disappointing; the expected turnaround has not been realised,” said CARE Ratings Chief Economist Madan Sabnavis. Also, given the weak show in September, the wait for a sustained industrial recovery might get longer, as the next month will see a high base — more than eight per cent growth in October last year.

The government, however, exuded confidence of a pick-up in the second half of this financial year.

“The growth in the first half has remained (near) flat, but we are moving in the right direction; this is an improvement from the August numbers. A pick-up will be seen in the second half,” C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council (PMEAC), told Business Standard.

He said he expected the industries to grow three per cent in the second half. That would take the annual industrial output expansion to 1.5 per cent for 2013-14.

Manufacturing, which accounts for more than 75 person of IIP, grew at a sluggish 0.6 per cent this month, against a 1.6 per cent decline in September last year. “It is the manufacturing sector that has let industries down,” said Sabnavis.

The output of consumer durable goods has been declining all this year; these contracted a steep 10.8 per cent in September. Consumer non-durables, on the other hand, grew 11.3 per cent, against 1.4 per cent. As a net effect, the consumer goods rose by a low 0.6 per cent in the month, compared with a stagnation in the same period last year.

“This, naturally, shows that people are restraining themselves from spending on non-food items due to high inflation,” Sabnavis added.

Garments output jumped 29.2 per cent in September and contributed 0.81 per cent to the overall industrial index, mainly due to a rise in demand.

“This is due to high demand in both international market — also seen in export numbers — and the domestic market,” said Ajay Kumar, economist at Confederation of Indian Textile Industry (CITI).

The capital goods continued to perform at a sluggish pace, contracting 6.8 per cent in this month, against a 13.3 per cent decline in output a year ago.

“This reflects low investment demand, which will pick up once more projects are cleared by the government. That will be reflected in the second half,” said Rangarajan.

Also, the industrial output numbers were subdued despite the eight core sector industries growing eight per cent in September.

On this, experts said the core sector, which constitutes 38 per cent of IIP, includes mainly intermediate and basic goods. The intermediate goods and basic goods grew by 4.1 per cent and 5.4 per cent, respectively, in September.

Lacklustre industrial growth might also take a toll on the larger economic growth rate — at a ten-year low of five per cent in 2012-13 and a four-year bottom of 4.4 per cent in the first quarter of 2013-14.

Independent analysts have pegged economic growth at below five per cent for the current financial year, while the government was sure it would cross five per cent.

Nifty struggles to hold 6,000; financials weigh

Weak global cues and macro data weigh on the investor sentiment

Markets started the day on a negative note tracking weak global cues and feeble macro data in the form of weaker-than-expected September IIP and double digit consumer price inflation which weighed on the investor sentiment.

The Sensex was down 33 points at 20,248 and the Nifty was hovering around the 6,000 mark.

In the broader markets, the midcap index was down 0.3% and the smallcap index was flat with a positive bias.

Stocks in Asia slipped tracking losses on Wall Street amid uncertainty when the US Fed might start pruning its monetary stimulus measures. Stocks in Japan witnessed profit after sharp gains yesterday. The Nikkei was down 0.5% while the Straits Times was down 0.1%. China's Shanghai Composite was down 0.8% while Hang Seng was down 1.3%.

Stocks on Wall Street ended marginally lower on Tuesday amid profit taking after recent gains which pushed the Dow Jones to a record closing highs. Further, the timing of the US Fed eainvestors adopted a cautious stance as when the US Fed may start withdrawing its bond buying programme.

The Dow Jones industrial average ended down 32 points, or 0.2%, to end at 15,750.67. The Standard & Poor's 500 Index closed 4 points, or 0.2% lower, at 1,767.69. However, the Nasdaq Composite Index ended flat nearly unchanged at 3,920.21.

Markets to get a gap-down start reacting to IIP and CPI numbers

The Indian markets fell in line to some of their regional counterparts in last session and ended with cut of about a percent despite a positive beginning. Today, the start is likely to be soft and indices may get a gap down start in a knee-jerk reaction to the lower than expected Industrial Production numbers, IIP for September grew 2% compared to a contraction of by 0.7% in the corresponding period last year. The rate sensitives’ are likely to remain under pressure, as in a separate development, driven by food prices, the annual consumer price inflation quickened to 10.09 percent in October from 9.84 percent in September. Meanwhile, there will be buzz among the foreign investors, as the Finance Ministry has said that it would finalise views on the definitions of foreign direct investment and foreign institutional investment in the next two weeks to remove any ambiguity over the two terms. There will be some action in all services related stocks, as the Commerce and Industry Minister Anand Sharma has said that the Government will set up a joint task force for the services sector together with the industry to prepare an action plan for the development of the sector and increase services exports.

There will be lots of important result announcements too, to keep the markets buzzing. Aban Offshore, ABG Shipyard, Ajcon Global, Andhra Bank, BGR Energy, BPCL, Cipla, Coal India,  Educomp Sol, Elder Pharma, Hindustan Copper and SBI are among the majors to announce their numbers today.

The US markets ended mostly lower after a lackluster day of trade, the concern about the timing of the Fed's plans to begin scaling back its asset purchases kept looming large, weighing on the sentiments. The Asian markets have made a weak start with many of the indices trading lower by over a percent in early deals. Chinese market was leading the pack of losers after China’s leaders failed to give details about a policy shift after a four-day gathering of Communist Party leaders in Beijing.

Back home, Tuesday despite a good beginning could not bring any relief to the Indian markets, which extending their losses for the sixth straight session closed with cut of around a percent. Benchmark indices that moved higher in early trade bucking the sluggishness in the regional peers could not hold up to their gains for long and in afternoon slipped into red from where they could not recover, instead the selling intensified towards the closing and they ended at their lowest point of the day. The continuous decline in the domestic currency that took it to its two months low, too weighed on the market sentiments, while traders eyed the important macro data release of IIP and CPI inflation. On the global front, while the US markets managed a positive closing overnight, the Asian markets ended mixed with some of the indices snapping the session marginally in red. The European markets too remained sluggish and made a soft start, adding pressure to the domestic markets. Back home, the markets after a surprisingly positive start went through rounds of volatility during the day. Traders continued booking profits at every opportunity and had dragged the markets into red in the very first hour of trade but soon recovery was seen though that too did not lasted long, both the major indices slipped into red in late morning trade. There was bounce back in noon trade that took the markets out of red but there were no major support that could have kept the indices in green for long and traders awaiting the IIP and CPI numbers preferred to remain on sidelines. While, the CPI is placed on the higher side at around 10%, there might be some improvement in the overall IIP data for the month of September, given the strong growth in core sector. There were mixed set of earnings and that too were unable to give any direction to the markets. Canara Bank reported a fall of 5.29% in its net profit at Rs 625.94 crore for the quarter ended September 30, 2013 and Corporation Bank reported a fall of 96.18% in its net profit at Rs 15.47 crore for the quarter. On the other hand, Britannia Industries posted a rise of Rs 109.82% in its net profit at Rs 95.68 crore. Sectorally, barring the defensive FMCG all other indices closed in red on the BSE with metal and power taking the maximum beating, while the rate sensitive auto and banking index too suffered cut of over one and half a percent. The auto stocks were additionally under pressure with SIAM reporting that domestic passenger car sales segment, declined by 3.88% to 163,199 units for the month of October compared with 169,788 in the same month of 2012. Finally, the BSE Sensex lost 209.05 points or 1.02%, to settle at 20281.91, while the CNX Nifty plunged by 60.75 points or 1.00% to settle at 6,018.05.