SC stays Madras HC order for closure of Sterlite's plant

New Delhi: The Supreme Court today stayed the order of the Madras High Court directing Sterlite Industries to close down its copper smelting plant in Tuticorin, Tamil Nadu, reports PTI.

A bench comprising Justice R V Raveendran and H L Gokhale stayed operation of the order of the high court till 18th October, the next date of hearing.

"There would be a stay on the judgement of the high court. List it on 18th October for hearing," the bench said.

Senior advocate C A Sundaram, appearing on behalf of Sterlite Industries, submitted that if the high court order is not stayed, then it would be a great injury to the company, as the plant would have to be shut down.

Sterlite Industries, a subsidiary of UK-based Vedanta Group, had moved the apex court yesterday against the order of the high court, which on 28th September ordered shutting down of the smelting plant for not complying with environmental norms.

The company, in a special leave petition against the order, had claimed that the high court did not give it a proper hearing and ignored its submissions.

The high court had held that Sterlite's plant was within 25km of an ecologically fragile area and the company has failed to develop a green belt of 250metre width around the plant.

The order came a month after the Vedanta Group's Rs7,000 crore bauxite mining project at Niyamgiri Hills in Orissa was denied environmental clearance. The company was also issued a show-cause notice by the ministry of environment and forests for allegedly flouting green norms.

"The materials on record show that the continuing air pollution being caused by the noxious effluents discharged into the air by the respondent company is having a more devastating effect on the people living in the surroundings," the high court order said.


Street Beat: Minda Industries and Atul

These companies have strong underlying economic growth prospects, they are off the radar of most analysts and their stock prices have not already run up 

  • Auto components maker Minda Industries is growing at a steady pace

Delhi-based Minda Industries (MIL), the flagship company of the Minda group, manufactures a range of automotive components and supplies to global original equipment manufacturers (OEMs). The group has an annual turnover of Rs930 crore.

MIL designs, develops and manufactures switches for two- and three-wheelers and utility vehicles. The company also manufactures batteries for two-, three- and four-wheelers and utility vehicles. It enjoys more than 70% market share in the two- and three-wheeler segment in India.

The Automotive Component Manufacturers Association of India (ACMA) expects that the Indian auto components industry will achieve an annual turnover of $110 billion by 2020, and towards this it is likely to make an investment of $35 billion. An estimated $80 billion of the turnover is expected to come from the domestic sector and the remainder from exports.

MIL is well-positioned in this growing market. The company has eight state-of the-art facilities. Its manufacturing plants are located in Gurgaon, Pune, Hosur (Tamil Nadu), Delhi, Aurangabad and Pantnagar (Uttarakhand).
Among its clients are Yamaha, Bajaj, Hero Honda, Mahindra & Mahindra, Toyota, Tata Motors, Ford, Honda, General Motors and John Deere.

With the revival in the auto sector, MIL has improved its performance too. The company's net profit rose 50.86% to Rs22.87 crore in the year ended March 2010, from Rs15.16 crore in the previous year. Total revenues rose 31.40% to Rs598.57 crore in the March 2010 period, from Rs455.54 crore in the previous year. Net profit in the June 2010 quarter also registered a 158.66% increase to Rs10.71 crore, from Rs4.14 crore in the previous corresponding quarter. Revenues also increased to Rs195.48 crore in the June 2010 quarter, up 62.23% from Rs120.73 crore in the year-ago period. 

Sales and operating profit grew 62% and 37%, respectively, in the June 2010 quarter over that in the year-ago period. The June 2010 quarter operating profit margin stood at 10%, which is not encouraging. Based on the June quarter annualised sales and annualised operating profit, market-cap to sales was 0.50 times and market-cap to operating profit was five times. Return on equity last year was 25%. Buy the stock at around Rs330.

  • Expansion plans to help Atul achieve higher turnover

Atul Ltd operates through six business divisions, namely, agrochemicals, aromatics, bulk chemicals and intermediates, colours, pharmaceuticals and intermediates and polymers. Its colours division is the largest supplier of dyestuffs in India and the company also exports 40% of its production to 40 countries. Atul's aromatic division is one of the world's largest manufacturers of p-cresol, p-anisic, aldehyde and p-anisic alcohol, which are mainly used by flavours and fragrance, personal-care and pharmaceutical industries.

Its crop protection division is among the world's leading manufacturers of 2-D, 4-D range of chlorophenoxy derivatives with a nearly 8% market share, while its bulk chemicals and intermediaries division is a market leader with a 36% market share.

Atul manufactures over 700 products at three units in India and at the facilities of four overseas subsidiaries. It has around 2,800 employees and over 1,000 distributors. Atul also has offices in the US, the UK, Germany, China and Vietnam, servicing international clients.

The company has also made a significant contribution in the development of infrastructure in villages in Gujarat. It has already built over 1,000 houses, two schools, a medical centre, a sports complex, an open-air theatre and a community centre.

Steady growth in revenues has been a catalyst for continuous expansion. In the year ended March 2009, Atul's crop protection capacity increased by 1,500mt (metric tonnes) or 14%, fragrance intermediates capacity increased by 2,400mt (40%), chemicals intermediates capacity increased by 1,000mt (71%) and composite intermediate capacity increased by 540mt (68%) over the previous fiscal.

The company is hoping to improve its manufacturing efficiencies and bring down costs in a bid to enhance its competitiveness. On 18 June 2010, Atul had announced that its polymer division has acquired Polygrip, the country's leading rubber and polyurethane (PU)-based adhesive brand, for Rs10 crore. The acquisition will give Atul access to the rubber and PU-based adhesives market. Atul has chalked out plans for manufacturing new products. It also proposes to expand the existing capacity of para-cresol and set up facilities for the manufacture of sunscreen chemicals and an aromatic product - para-toluene sulphonic acid. 

The outlay for the new projects is pegged at Rs150 crore. The International Finance Corporation (IFC) is likely to extend a corporate loan of $15 million (Rs67.5 crore). IFC had earlier extended a loan of $16.3 million for the company's expansion project. In the June 2010 quarter, Atul's sales and operating profit grew by 26% and 5% respectively. It paid a total dividend of 40% in fiscal 2009-10.

On the basis of the June quarter annualised sales and operating profit, Atul's market-cap to sales ratio was 0.32 times and market-cap to operating profit was 3.14 times. In a market where reasonably priced stocks are hard to find, Atul is attractively priced. Return on equity in 2009-10 was 172%. Buy the stock at around Rs120.

(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security).


Personal finance Friday

Bharti AXA Life Insurance unveils new brand positioning; Kotak Mahindra Bank revises base rate to 7.50% per annum; Axis, IDBI Bank up base rates HDFC Mutual Fund launches HDFC FMP 100D September 2010 (5)

Bharti AXA Life Insurance unveils new brand positioning

Bharti AXA Life Insurance has launched its new brand positioning. This is predicated on redefining the life insurance category through a set of tangible delivery propositions satisfying the customers' greatest needs.

The company's new brand positioning as encapsulated in the signature 'Jeevan Suraksha Ka Naya Nazariya' has customer centricity at its core and is about providing a series of tangible and distinct proof points that clearly answer to customer expectations. These proof points form the bedrock of the differentiation strategy for Bharti AXA Life.

The launch is spearheaded by the first proof point-a service guarantee of "Release of Fund Value within 48 hours" of receiving claim intimation. The insurance company is going a step further to back this guarantee with an additional payout of 1% of fund value for every day of delay.

Bharti AXA Life Insurance Company Ltd is a joint venture between Bharti Enterprises and AXA, world leader in financial protection and wealth management. The joint venture company has a 74% stake from Bharti Enterprises and 26% stake of AXA Asia Pacific Holdings Ltd.

Kotak Mahindra Bank revises base rate to 7.50% per annum

Kotak Mahindra Bank has revised its base rate upwards from 7.25% per annum to 7.50% per annum. All categories of loans (other than the exceptions permitted by Reserve Bank of India) will henceforth be priced with reference to the revised base rate. Changes in the base rate from the current level of 7.50% per annum will be conveyed from time to time, said the Bank in a statement. The Bank has also revised its benchmark prime lending rate (BPLR) upwards by 25 basis points.

Axis, IDBI Bank up base rates

Axis Bank has revised its base to 7.75% from 7.5% from 1 October 2010. IDBI Bank has also revised its base rate upward by 0.50% to 8.5% from 1st October. The increase in base rate is in response to increase in the cost of funds and keeping in view the current interest rate environment.

IDBI Bank has also increased its retail term deposit rates by 0.15-0.50% in different maturity buckets. Keeping in view the inflation and liquidity scenario, IDBI Bank has decided to increase the retail term deposit rates by 15-50 basis points (bps) in different maturity buckets.

The revised interest rates are effective from 1st October and with this revision, the highest interest on retail term deposits would be 8%. Interest rates on deposits of a tenor of 1,100 days, 5-7 years and 7-10 years has been increased to 8% from 7.75%.

HDFC Mutual Fund launches HDFC FMP 100D September 2010 (5)

HDFC Mutual Fund has launched HDFC FMP 100D September 2010 (5) under HDFC Fixed Maturity Plans-Series XIV. The Scheme is a close-ended income scheme. The investment objective of the Plan is to generate income through investments in debt/money-market instruments and government securities maturing on or before the maturity date of the Plan. The Plan will invest 60%-100% of assets in debt and money-market instruments and the remaining in government securities.

The Plan offers growth and dividend (payout) option. The tenure of Plan is 100 days from the date of allotment. The Plan opened on 30th September and closes on 14th October. During the new fund offer (NFO), the units will be offered at face value of Rs10 per unit. The minimum investment amount is Rs5,000. The minimum subscription amount is Rs1 crore. Bharat Pareek and Anand Laddha are fund managers. 


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