Top Stories
SAIL outlook revised to negative: S&P
Standard & Poor's Ratings Services said today that it had revised the outlooks on SAIL to negative from stable. The rating outlook revisions on the GREs reflect the change in outlook on the Republic of India (BBB-/Negative/A-3). "We assess SAIL's stand-alone credit profile as 'BBB-'. Our assessment of the likelihood of government support to SAIL is primarily due to the government's majority shareholding and its ability to exert a strong influence on the company's strategy through the appointment of the board," S&P said.
Gold ETFs score over physical gold on Akshaya Tritiya
High inflation, a depreciating rupee and 4% import duty hike on gold may have taken its toll on sales and demand this Akshaya Tritiya. Akshaya Tritiya is considered a very auspicious day to buy gold and is the second biggest gold-buying day in the country after Dhanteras. India is the largest imported of the yellow metal.According to Prithviraj Kothari, President of the Bombay Bullion Association, buying of physical gold had halved to 10 tonnes from 20 tonnes in the previous year.
"Sales are less than expected as prices are high and even inflation is high. So there are no savings," reports said quoting Kothari.Apart from inflation, the depreciating of the Indian rupee has also pushed gold prices higher. A weak rupee makes gold imports more expensive. Moreover, the hike in import duty of gold bars etc. in the Union Budget 2012 has only added to customer’s woes, who have sentimental and traditional value for the metal.
In the spot trade, standard gold (purity of 99.5) prices opened at Rs. 28,820, per 10 grams and ended at Rs. 28,885. On the other hand, pure gold (purity of 99.9) price opened at Rs. 28,950 per 10 grams and ended higher at Rs. 29,025.Amid all this, however, gold exchange traded funds seem to have benefitted as they give people the opportunity of buying gold minus the burden of storing it.
Sales volumes of gold ETFs in India have grown this year due partly to the ease of buying and selling over the Internet, reports said.Trading in gold ETFs jumped on Tuesday, because people have started presenting the paper instruments as gifts rather than the metal itself. ETFs' holdings of the metal are still small by comparison with India's annual consumption of about 900 tonnes of gold, but brokers and fund managers see the potential for growth of this paper gold.
In Focus Stories
IIFL recommends 'Reduce' on Sesa Goa
IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends “Reduce’’ Sesa Goa.
IIFL report says that Sesa Goa’s 4QFY12 ebitda was ahead of our estimates on better than estimated sales volume and lower costs. Sesa Goa’s iron-ore sales volume and production volume for the full year FY12 dropped by 11.6% and 27.1% respectively.In Karnataka, the preparation and implementation of reclamation and rehabilitation (R&R) plan and subsequent approval from forest ministry could delay resumption of production.Additionally, there is high probability that mining permit for its Karnataka mine may be cut from current 6mtpa. Fate of Goa operations depend on the state’s mining policy that is to be released in May, report stated.
IIFL said, "We see negligible probability of an increase in production permit. Accordingly, the drop in iron ore volumes is unlikely to recoup quickly. Retain Reduce."
The report was published by IIFL’s Institutional Equities Research desk.
IIFL recommends 'Reduce' on Sterlite Industries
IIFL Institutional Equities, a part of theIIFL Group, one of the leading players in the Indian financial services space, recommends “Reduce’’ Sterlite Industries
According to IIFL report, Sterlite’s underlying Ebitda at Rs 27bn was a tad ahead of our estimates. The aluminium and power businesses recorded marginal sequential improvement in production cost on improved coal supply and operational efficiency. However, medium-term issues of alumina and coal availability are far from being resolved, leading to elevated production cost and sub-optimal asset utilisation.
In the near term, the zinc business would suffer due to an expected drop in production at Hindustan Zinc (HZL) as well as Zinc International. HZL’s costs are set to increase as it starts underground production. The ongoing Group restructuring would translate into a simpler holding structure. But challenges remain with respect to the aluminium business and fungibility of cash flow. REDUCE, brokerage added.The report was published by IIFL’s Institutional Equities Research desk.
Domestic News
Construction of 3 railway lines for coal evacuation is top priority: Coal India
Coal India Ltd has reportedly said that the Construction of three railway lines for coal evacuation in Chhattisgarh, Jharkhand and Orissa will be a top priority for the company.
Reports stated that this move come amid the world’s largest coal miner preparing to enter into Fuel Supply Agreement with power producers following a Presidential directive.
CIL is expected to enter into FSAs for a total capacity of 50,000 MW, says report.
JSW Steel 4Q Crude Steel production up 26% to 2.07m tons
JSW Steel Limited reported 26% growth in crude steel production in Q4 FY 2012 compared to that of corresponding period of last fiscal year. The Company’s crude steel production for the year 2011-12 was 7.43 million tones, showing 16% growth over previous year.
The Company gave the guidance of 8.75 Million tons of Crude steel production in the beginning of FY 2011-12. In view of scarcity of Iron ore due to imposition of ban on Iron ore mining in the State of Karnataka by Honourable Supreme Court, the Company had to scale down its production, thus actual achievement is only 85% of initial guidance.
Sesa Goa Q4 net profit at Rs11621.10 mn
Sesa Goa Ltd has posted a net profit of Rs. 11621.10 mn for the quarter ended March 31, 2012 where as the same was at Rs. 14617.60 mn for the quarter ended March 31, 2011.Total Income is Rs. 28084.80 mn for the quarter ended March 31, 2012 where as the same was at Rs. 37755.90 mn for the quarter ended March 31, 2011.
The Group has posted a net profit of Rs. 26955.00 million for the year ended March 31, 2012 where as the same was at Rs. 42224.50 million for the year ended March 31, 2011.Total Income is Rs. 85446.40 million for the year ended March 31, 2012 where as the same was at Rs. 97450.30 million for the year ended March 31, 2011.
Board of Directors has recommended final dividend of 200% i.e. Rs 2.00 per share on equity share of Rs1.00 each. This is in addition to the interim dividend of Rs2.00 per equity share declared and paid during the year.
Hindalco raises Rs. 30bn via private placement of NCDs
JSW Steel clarifies on CEC Report
Sterlite Industries Q4 net profit at Rs12768.90 mn
Steelcast to spend Rs. 1bn on expansion, upgradation of facilities
Sesa Goa gains as profits beats estimates
Global News
Fitch: No rating impact on Chalco from Winsway stake buy
Fitch Ratings says Aluminum Corporation of China Limited's (Chalco, 'BBB+'/Stable) proposed acquisition of a 29.9% stake in Winsway Coking Coal Holdings Limited (Winsway, 'BB'/Stable) is a strategic fit but will not have any impact on its ratings.
The HKD2.39bn (CNY1.94bn equivalent) proposed acquisition will not significantly impact Chalco's financial profile as it forms just 3.34% of the company's net assets value as at 31 December 2011. Furthermore, Chalco has sufficient cash of CNY10.6bn and unutilised banking facilities of CNY42.7bn to fund this acquisition.
Chalco has been expanding its coal business since 2010 as part of the company's strategic transformation efforts including resources development. Prior to the proposed acquisition, Chalco entered into a long-term coking coal trading agreement with Mongolia Erdenes MGL LLC in July 2011. Chalco's coal trading operations will gain a strong partner in Winsway given the latter's comprehensive logistics network in trading Mongolian coal.
Coal is an important resource for Chalco's aluminium production as electricity and carbon products together form 50%-60% of total production costs.