Companies & Sectors
Posco India’s challenges not yet over; activists to resist land acquisition in Orissa

Even after receiving the clearance from the environment ministry, the challenges before the South Korean steel giant to set up a plant in India are far from over

Posco India Pvt Ltd, the unit of South Korean steel giant, is likely to face fresh agitations from activists who say that they are not in a mood to surrender an inch of land to for the project in Orissa.

"Though union environment minister Jairam Ramesh has given clearance for the Posco project, we will not surrender an inch of land for the project at any cost and will resist the land acquisition process," Abhaya Sahu, convenor, Posco Pratirodh Sangram Samiti (PPSS) told Moneylife, in Mumbai today.

Last week, Posco received a conditional clearance from the environment ministry to set up a 12 million tonne per annum plant along with a captive power plant and a port near Paradip. The project would be the largest foreign direct investment in India after 1991.

The state government has said that it will start acquiring land for the project within the next couple of weeks.

"We don't want to disturb a well-established agrarian economy of the region. We don't oppose industrialisation. But it should not happen at the cost of the agriculture economy," Mr Sahu said. "PPSS has closed down check gates. Posco officials, police and the administration will not be allowed to come inside the proposed acquisition area."

Last week, the environment minister gave the green signal for the project, listing 60 conditions-28 for the steel plant and 32 for the port. "These 60 conditions are just an eyewash. The government has been writing false statements and submitting to the Ministry of Environment and Forests (MoEF)," Mr Sahu alleged.

The Posco project requires about 4,000 acres, of which nearly 3,000 acres is forest land, the state owns 567 acres and 438 acres is private land. In May 2010, the state government started land acquisition after the project received conditional and forest clearance in 2007 and 2009. However, Mr Ramesh issued a stop-work order in August last year, after receiving complaints of violation of forest norms.

Questioning the decision of the MoEF, Mr Sahu said, "Government-appointed committees-the Saxena Committee and the Meena Gupta Committee-have reported that the clearances given to Posco were illegal. However, suddenly we find that Mr Ramesh has given the clearance for the project, which is quite surprising, given the negative remarks in the committee reports."

Although Posco has received the environment clearance, there will be other hurdles in its path like acquiring mines, rehabilitation of locals and allocation of raw material linkages. Posco has said on its website that the government of Orissa has assured a mining lease for 600 million tonne reserves, which would be adequate for the 12mtpa plant in Paradip for about 30 years. Nevertheless, Posco will be conscious that there is a lot of difference between signing the papers for such projects and their execution.

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COMMENTS

Shadi Katyal

7 years ago

We in India wish to improve quality of life but thee are so many road blocks that one wonders if we will ever be able to make things better.
First we have Environmental Minister who has made his affair to question every project,a kind of PERMIT RAJ .
Secondly unfortunately we have so called do gooders who show crocodile tears to the poor and mislead them as they dont wish to loose their constituency and power.
Did the people being misled not learn from NANO that how those who refused are still scratching a living?
These people should be educed of the better life and benefits.
Has India thought that with this kind of delays and objections will any investment from abroad will ever arrive.Is our nation doomed because of these anti nation specialist

Gitanjali Gems: Is the sheen fading from its glitter?

Despite its rapid expansion and big-ticket deals, Gitanjali Gems’ financials and stock movement is nothing to write home about

Gitanjali Gems Limited, a manufacturer and retailer of diamonds & jewellery, has been trying to expand its business horizon, with a number of overseas acquisitions and strategic moves over the past few years.

From the established retail & lifestyle sectors and to investment in real estate, the company has its fingers in a number of business pies. Despite all these overseas expansionary moves, its profits from its core business seem shaky.

A closer look at the financials of the company does not reveal a glittering picture. Gitanjali's operating margin has remained between 6%-8% quarter after quarter; this does not warrant the ambitious expansion and diversification plans frequently announced by the company.

For instance, for the September 2010 quarter, with net sales at Rs1,358.08 crore and operational profit of Rs79.05 crore, the operating margin stood at 6%.

While profits remain under pressure, the company continues to 'expand' overseas.

On 2 February 2011, the company said in a filing to the Bombay Stock Exchange (BSE) that it was "aiming to acquire (the) assets (of) M/s DIT Group SpA., an Italy-based jewellery company. However, in the same release, Gitanjali confirmed that DIT "is under liquidation process with the Civil Court of Alessandria (Italy)."

The Indian company also claimed that Gitanjali "has fulfilled the conditions prescribed by the (Italian) Court and now the matter is up for completion of final formalities."

On 28 December 2010, Gitanjali Gems Ltd informed the BSE that it had "acquired 90% stake in 'Giantti Italia S.R.L.', a company based in Milan, Italy." It confirmed that it had acquired the "said stake from its Dubai based wholly-owned subsidiary 'Gitanjali Ventures DMCC'. By virtue to this acquisition 'Giantti Italia S.R.L.' has become a direct subsidiary of the Company."

This acquisition was ostensibly aimed at "growth of the branded jewellery business and (to) gain the designing and branding concepts expertise from Italy."

In a recent interview with a business daily, Mehul Choksi, chairman and managing director, Gitanjali, said that his company was "planning an investment of about $100 million-$150 million in its e-retailing venture, which it was hoping to launch by the end of FY11."

In yet another interview with a business news channel last month, Mr Choksi had said that the company was "targeting" to bring down its debt by "more than Rs500 crore in the next year (2012)."

The stock hit an intraday high of Rs395 on 12 November 2010. But from then onwards, the scrip has steadily dropped. Today, the scrip was trading at Rs199.95 on the BSE.

In 2006, Gitanjali had announced that it had acquired a majority ownership interest in Samuels Jewelers Inc, in Austin, Texas.

But despite its rapid expansion and big-ticket deals, the financials and the stock movement are nothing to write home about.

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JSW Steel hikes product prices by about 6%

Company’s profit margins have been under pressure on account of surging coking coal prices

JSW Steel, India's third largest steel producer, has increased its product prices by around 6%, a senior official of JSW Steel told Moneylife. This is the second price hike by JSW in five weeks and comes after the Steel Authority of India Limited (SAIL) also hiked prices last week.

"Yes, we have increased our product prices by around 6%, effective from 5th February," said Sharad Mahendra, senior vice-president, marketing and sales, JSW Steel.

Last month state-owned SAIL increased prices of its long and flat products between Rs1,000 and Rs3,000. JSW had hiked prices of its flat products by around 5% on 3rd January. Flat products account for around 70% of JSW's production.

In January, Moneylife reported that JSW would increase prices again in February. (Read 'JSW Steel to again hike prices in February due to rising input cost',)

Sajjan Jindal-controlled JSW Steel's profit margin has been under pressure due to rising raw material costs. The company's consolidated profit for the third quarter ended December 2010 dropped by 32% to Rs292 crore compared with Rs430 crore in the corresponding period of the previous year, due to higher input costs.

JSW Steel's profit for the fourth quarter is also expected to be under pressure as the company almost totally depends on imports of coking coal.

The prices of raw materials-mainly coking coal-have been surging in international markets as the supply of the commodity has been disrupted due to flooding in Queensland, Australia. The spot price of coke from Australia has exceeded $300 per tonne and is expected to reach $400 a tonne, which would be a new high since 2008.

India imports about 70% of its coking coal requirements, and nearly 85% of it is from Australia.

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COMMENTS

Anil Gaikwad

7 years ago

This is latest news. Keep it up

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