With more steel capacity coming on stream, the iron ore shortage will only increase. CARE Ratings suggest a control on iron ore exports
With the curb on illegal mining in two major iron ore producing states (Karnataka and Goa accounting for more than 35% share of the domestic production), India witnessed a significant decline in its iron ore production from the peak of about 218 million tonnes per annum (mtpa) in FY10 to about 135 mtpa in FY13. In line with the fall in iron ore production and with no new development of mines, availability of lumps in the domestic market also declined. Exports also plummeted to a decadal low of about 18 mtpa in FY13, as compared to the peak of about 117 mtpa achieved in FY10. Despite having ample resources, the scarcity situation has led to a vibrant debate on the government’s policy regarding iron ore exports and the distribution and allotment of existing and new mining assets. Both, the steel makers (for banning exports) and the private miners (against exports ban) hold a completely contrarian view regarding iron ore exports.
Overall, there is a shortage of iron ore and mining industry can do a lot better both with domestic steel manufacturers and export opportunities, points out CARE Research in a research note.
Gauging the need for utilising fines, steelmakers in the last 3-4 years have taken corrective steps to make themselves capable of using the low grade iron ore fines. These players are in the process of significantly increasing their sintering and pelletisation capacity, observes the research note.
According to CARE Research, sintering and pelletisation not only helps steelmakers in utilising the inferior grade fines, but also helps them in improving the quality of steel as well. Further pelletisation also helps steelmakers in transferring low grade iron ore fines in a much cleaner and efficient manner. Going ahead CARE Research expects significant pellets and sintering capacity addition. Sintering and pelletisation capacity is likely to increase from about 60 and 54 mtpa as recorded in FY13 to about 80 and 92 mtpa respectively during the next 3-4 years.
CARE Research believes these beneficiation plants are already facing acute shortage of iron ore fines for optimum utilisation of their existing capacity. Going ahead, with further increase in steel making capacity, the demand–supply gap for iron ore is only likely to widen, which additionally supports the argument to curtail iron ore exports.
If you look beyond CY14F, Mahindra and Mahindra looks attractive, forecasts Nomura
Mahindra and Mahindra expects 8%-10% volume growth for both UVs (utility vehicles) and tractors in FY15. For autos, while the new launch cycle will begin in 2015, some major refreshes are planned in 2014. There is also better visibility on the improved performance of Ssangyong and two wheelers. The truck business will be more dependent on the commercial vehicle cycle.
The company management sees the non-tractor agri business growing at 30%-35% in FY14 and FY15. It is still small but could go on to become the next growth driver in a few years. This is according to a research note prepared by Nomura.
The company will launch two compact SUV platforms in 2015. One will target the rural SUV segment and the other will target the urban SUV segment – competing with cars.
The R&D spend has increased to 2.5% of sales in FY13-14. It should remain around 2.5%-3% going ahead as well, according to management. M&M has lower new product development cost due to frugal engineering, but the company does not cut corners.
For trucks market segment of the company, the breakeven point earlier was around 10,000 LCVs (light commercial vehicles) and 10,000 MHCVs (medium and heavy commercial vehicles). The company has brought this down from around 12,000-13,000 units but cost reduction is not visible due to the weak CV cycle.
In the trucks segment, Nomura forecasts that it may take a few years to reach targets. If the company does not deliver even after the revival of the CV cycle, a call will need to be taken to curtail investments.
The Nomura research notes concludes that with new product launches coming up in
2015, there is attractive value on the table for investors looking beyond CY14F. Nomura maintains its ‘Buy’ rating for the company’s share in the stock market and TP (target price) of Rs1,261 with 25% upside potential.
Health and personal care category continues to lead with the highest number of complaints received by ASCI during December 2013. However, throughout the year 40% of complaints came from education sector
The Consumer Complaints Council (CCC) under the Advertising Standards Council of India (ASCI) has banned as many as 87 advertisements out of 108 complaints it received across segments during December 2013. Health and personal care category continued to lead with the highest number of complaints received In December 2013. The CCC received complaints from various sectors like consumer durables, education, food and beverages and others. It includes ads from prominent companies like, Ranbaxy Garlic Plus, Procter & Gamble's Wella colors, Dabur’s Fem Bleach, Bajaj Electricals’ CFL bulbs, Emami Sona Chandi Chyavanprash, Johnson Baby Soap, Cadbury Choclairs, and Dr Batra’s Homeopathic Clinic.
During 2013, ASCI’s proactive initiatives saw five times increase (YoY) in the number of complaints. During 2013, the CCC decided on 1,842 complaints out of which 1,477 were upheld. Out of the misleading advertisements, about 40% were ads from education sector and 36% from personal and healthcare category.
HEALTH AND PERSONAL CARE
The CCC found the following claims in health and personal care product or service ads of 65 advertisers, released in the press to be either misleading or false or not adequately/scientifically substantiated and hence violating ASCI’s Code. Some of the health care products or services ads also contravened provisions of the Drug & Magic Remedies Act. Complaints against the following ads were UPHELD –
Anurag Aggarwal Institute of Public Speaking: claims ‘ISO9000-2000 certified’, MPs from various political parties as their clients, ranking by Google as No.1, were not substantiated. The Website Ad contravened Chapter I.1 of the Code. The complaint was UPHELD.
Saffron Eduworld Pvt Ltd’s Saffron Eduworld Coaching, BSC Academy, National Institute of Banking, Tara Institute, Lakshya Bankers, National Institute of Nursery Teachers, Jeet Conceptual Classes, Indian Institute of Emergency Medical Services (IIEMS), Karunya University’s Karunya School of Business, Leadership and Management Complaints against advertisements of All above educational institutes were UPHELD because of unsubstantiated claims that they ‘provide 100% placement and/or they claim to be the no.1 in their respective fields’.
Bajaj Electricals Ltd: (Bajaj CFL Bulbs shows poor lighting, hides skin fairness of a girl who has to meet a potential suitor the next day. The ad denigrates women based on the color of the skin of the girl. The complaint was UPHELD.)
FOOD & BEVERAGES
The CCC concluded that the claims mentioned in these 7 advertisements were not substantiated. The advertisements contravened ASCI’s Code. The complaints were UPHELD.
ICICI Bank Ltd: ICICI Pockets advertisement shows a lady driving a scooter with 2 pillion (children on the back) riders which is against the rules, no one is wearing a helmet and she is also depicted as promoting unsafe driving as she has only 1 hand on the handle. The Ad depicts unsafe practices. The website advertisement contravened Chapter 3 of the ASCI Code. The complaint was UPHELD.
Microtek International Pvt Ltd: Microtek Inverter UPS claims that the inverter saves electricity was not substantiated.
JAM venture Publishing Pvt Ltd: The advertisement is a false job advertisement for the Royal National Hotel, London.
Ceat Ltd: In the TVC, a girl is shown driving a car while another lady sits in the backseat. They are constantly talking to each other. The protagonist in the TVC is shown driving carelessly and the TVC shows an unsafe practice. The advertisement contravened Chapter 3 of the ASCI Code and the Guidelines on Advertisements for Automotive Vehicles. The complaint was UPHELD.