Companies & Sectors
Iron & steel industry in doldrums due to lack of vision by government

Domestic steel and sponge industry is not able to obtain raw materials; export of low grade iron fines from Goa cannot take place until legal issues are resolved while the little shipments of pellets now cannot be exported due to additional duty

Indian iron ore exports, prior to the mining ban, due to illegal mining activities in both Goa and Karnataka, was valued $7 billion. Subsequently, the ban in Karnataka was lifted. The Supreme Court had appointed an expert committee, consisting of ecologist CR Babu, geologist SC Dhiman, mineralogist BK Mishra, forest officer S Parameshwarappa and Goa Secretary Parimal Rai to study the matter and submit their report. The panel, headed by retired judge MV Shah to set a limit on the production of iron ore in Goa, is expected to submit its report by 15th March.
 

It appears that the Committee has opined that only 20 million tonnes of metal ore should be mined in Goa, as against opinion expressed from stake holders. According to demand made by stake holders a more realistic figure (metal ore mining) should be between 45 and 50 million tonnes.
 

It may be recalled that, Moneylife has carried a full coverage on this iron ore issues recently, and readers are aware that work in Goa, as such, in the mining industry has come to a stand still. Manohar Parikkar, Goa's chief minister, while awaiting the final decision on the matter, does not plan to permit mining in the State till the panel's findings are "adequately dealt with". Final report of Shah panel has not yet been tabled in Parliament.
 

During April 2013 to February 2014), iron ore exports from India have fallen to 12.5 million tonnes, due to continuation of export duty. And, according to Rajiv Kher, Commerce Secretary, it is very unlikely that the export target of $325 billion will be reached during the current fiscal, and "it is doubtful, if we can manage to reach $315 billion". Many exporters have blamed the poor export performance due to blocking of duty reimbursement payment by the Finance Ministry for the last four months.
 

Echoing this, it is reported that Anupam Shah, chairman of Engineering Export Promotion Council has pointed out that cash crunch due to pending duty drawback worth over Rs10,000 crore have also affected the exports. In case of iron ore, as mentioned earlier, China and Japan were the principal importers of fine low grade ores from Goa, which, particularly China managed to adopt a technique of blending with both Brazilian and Australian ores to use in the steel industry. Chinese economic slow down has resulted in lower off take, and, it is reported that they have as much as 105 million tonnes of iron ores lying in the port! The market feeling was that there is "over supply in the very near term and may prompt further drop in ore prices"; ore with 62% content delivered to Tinjin has fallen down to a price level of $ 104.70, the lowest in the last four years!
 

Our iron ore exports, from Goa alone, had reached a staggering $5.8 billion (about Rs34,940 crore) and the entire industry in that state is in doldrums. In the meantime, the domestic steel industry has also been facing various troubles, particularly from the supply front. Indian steel makers have been showing a marked preference to use lumps, rather than the low grade fines, and these were consumed by the recently established pellet industry on a large scale, involving, a reported investment of Rs35,000 crore. The recent decision by the government to slap a 5% export duty on them has also affected the export.
 

These beneficiation and pelletization plants, employing over 80,000 people, directly and indirectly, and paying an excise duty of 12% on the production has also come to a standstill. Many of these plants are now practically shut down and miners like NMDC cannot overnight increase their ore production. In other words, the domestic steel and sponge industry are not able to obtain their raw material needs; export of low grade iron fines from Goa cannot take place until legal issues are resolved; the main buyers are slowing down their purchase due to general economic slow down, but at the same time, also anticipating lower prices to be obtained in the months ahead, while the little shipments of pellets now cannot go for export due to export duty being slapped on them.

What a fine mess to be in! It is sad to assume that the international iron ore situation did not make much of dent in the concerned ministries! We do hope that the Supreme Court would consider the plight of the industry and at least give a conditional revival for mining to commence again in Goa, as this will enable miners to re-employ the workers and plan their marketing campaigns.

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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Insider trading in AstraZeneca Pharma?

One day before AstraZeneca Pharma announced delisting, its volumes spurted and share prices shot up by 9.13%. Could it be a case of insider trading?

On 3rd March AstraZeneca Pharma India Ltd, (AZ India) announced that its promoters AstraZeneca Pharmaceuticals AB (AZP AB) Sweden, will delist its shares. Because of this announcement, the share price shot up. But why was there a sudden increase in its turnover one day before the delisting announcement?

 

The sudden unusual rise in its turnover during three trading days seems fishy. The stock rose by Rs77.75 a day before its public announcement and just the day after, it fell by Rs107.40. Take a look at the following data:
 

The AstraZeneca Pharma India Prices on BSE

Date

Open
Price

High

Price

Low

Price

Close

Price

Close-Open

Total Turnover

28/2/2014

848

955

845

925.75

77.75

11,94,52,439

03/3/2014

1,110.90

1,110.90

1,110.90

1,110.90

0

97,50,369

04/3/2014

1,238.00

1,285.00

1,177.60

1,238.85

0.85

30,17,22,484


On 28th February, Friday, there was significant increase in its total turnover of its shares. The stock opened at Rs848 made day high at Rs955 and closed 9.16% up at Rs925.75;

On 3 March, Monday, it opened Rs185.15 higher at Rs1,110.90 price and closed at Rs1,110.90 same as its open price because shares were locked in upper circuit. AZ India announced the delisting offer on the same day;

On 4 March 2014, just a day after announcement, AZ India opened Rs127.10 higher at Rs1,238 than its previous closing price but fell by Rs107.40 to a day low of Rs1,177.60 and closed Rs46 down at Rs1,238.85

On 5 March, board of directors of AZ India announced that it seeks additional information from its Sweden based promoter AZP AB.

The suspicious spurt in volumes and price in this company calls for an investigations by the market regulator. But then while insider trading is rife in India, SEBI rarely acts, despite having spent Rs40 odd crore in sophisticated inter-market surveillance system.

 

The regulatory filing of AZ India mentions that it received scanned letter by email from its promoters regarding its voluntary delisting offer on 1 March, Saturday. If anyone had inside information about its delisting, a day before on 28th February, he/she would have bought heavily into the counter and sold it on 4th March at a handsome profit in just two days.
 

AZP AB, the Sweden-based promoter currently holds 75% of the total paid-up share capital of its subsidiary AZ India. As on December 2013, FIIs held 15.93% in AZ India. However, As per SEBI rules on delisting, AZP AB needed to buy an additional 15 % to raise its stake to 90% to delist.
 

Moneylife earlier wrote about, The deadly delisting itch of AstraZeneca Pharma India,  explaining how AstraZeneca is on course to achieve its decade-long plan to delist its shares from the Indian bourses by hook or by crook.

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COMMENTS

SUNIL KUMAR HEMNANI

4 years ago

Yes a feature of this company has become that it should be announced. Every year or when the insiders decide they need to create a news to take up the stock.We come across such a instance , I have been a victim of such a fraud by the company in the past.This proved for me a situation wherein a very big loss had to be taken by me.

Sreepathid

4 years ago

What about L&T finance. Before the announcement by NSE that the shares will be included in F&O the share prices moved.

sathyacumaran

4 years ago

sathyacumaran
Its not the only share that is traded inside trading there are quiet alot all the inside traders are patronised by sebi nse bse they knew very well who is operation g in whcih counter and the officials get their due share in the insider trading and one fine morning they would that we are going to release about yor inside trading and some of brokers should be caught and among the brokers they would be scape goat and after this episode nobody knew what happened and as such all in conspicracy with sebi nse bse is my conclusion if the sebi nse bse wants they bring the broker to very great extent and loot the investors money similarily viceversa so without their knowledge noting is done so all their saying of insider trading is just an crocodile tears to fool the investor

sathyacumaran

4 years ago

sathyacumaran
when the share price goes up the sebi normal procedure is accuse as inside trader when they find first day itself its going up why do they keep quiet infact they would have sent feelers to company about the movement when the company had not responded properly then they would raise the issue like inside trading its all the officials of sebi nse bse who lure the brokers and company to do inside trading after this they would accuse the company and afterwards they would keep quiet and what action taken by the inside trader the comapny and broker are kept mum this shows that their due share is received so the matter is kept in cold storage how the investors case even though they have fact they would not take any action similar would be case is my surmise

Auto Mode

Automatic manual transmission is the new buzz in the car market

Suddenly, the otherwise sleepy new car market in India is abuzz with discussions on the range of small cars which are already out with automatic transmission or promise to provide automatic transmission. Primarily, as on date, that means the Maruti Celerio, which sports a Magnetti Marelli AMT (automatic manual transmission), and a wide choice of cars from other stables that have promised the customer that they are almost ready too.
AMT has ‘automated’ the functions of a gear-shift and clutch and ensures that you use the hand-brake when you have to park. Gear selection is taken out of your left hand and left foot and transferred to your fingers, with some very minimal control still left for those high-revving moments that you may need every now and then.

All in all, it makes for a relaxed style of driving; but there is still no clarity on the issue of maintenance as well as how it will actually perform. To be fair, friends in the industry tell me that this has been tried and tested all over the country under real driving conditions. Have they included the typical overloaded conditions which require more clutch and gear play than city driving?

If your driving style is simple and non-aggressive, then this is certainly the best option with non-manual transmissions going on our roads in any segment. The old-style automatic transmission causes heavy torque loss and higher fuel consumption. The continuous variable transmission is complicated and makes a mess of the restricted engine area; and the double-clutch system is better suited for bigger cars because it also costs a lot.

Expect to see automobile garages attempting to re-set the AMT soon, to try and achieve better performance or more economy, as per the customer's desire. The other benefit I expect from this is that it will not be so easy any more for valets and others to damage the car by revving it up excessively—I hope. There is always the option of paddle-shifters or moving the drive position shifter around in such a way that the engine can be made to over-rev and then be slammed into a low gear.

Crash Test: Get Real

What’s the reality on the latest NCAP (new car assessment programme) results for Indian cars which have caused so much stress and confusion with their convoluted results on entry-level models of many cars sold in India? Well, without going into the specifics of their methodology, the makes and models tested, and the results, here is my view.

Indian road and driving conditions are certainly different. At this juncture, the idea is to improve the mobility of people at as low a cost as possible, with reasonable safety and efficiency. Loading a car with electronic gadgets on par with the rest of the world will, at this juncture, not really fit into that set of parameters. Though, personally, I do wish people would spend more on safety equipment than on stereos.

More important, this test also brings out the simple truth and reality that almost NONE of the cars tested, brand for brand, would match the same car as sold in European markets—which is where the real problem lies. We ASSUME that foreign brand cars sold to us in India are the same as those that sell abroad.

Remember, that’s why the Morris Oxford was renamed the Hindustan Ambassador and the Fiat 1100 was renamed the Premier President. And similar names for other vehicles—Tata Mercedes-Benz, Ashok Leyland, Standard Herald, to name just a few. Time we did the same, again, instead of fooling ourselves.

Veeresh Malik started and sold a couple of companies, is now back to his first love—writing. He is also involved in helping small and midsize family-run businesses re-invent themselves

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