A more-than-proportionate rise in capacity compared to despatches will flood supplies in the market and put downward pressure on prices, says the economic think-tank

Cement prices are expected to remain weak in the March 2010 quarter and decline further in 2010-11, economic think-tank Centre for Monitoring Indian Economy (CMIE), has said, reports PTI.

"We expect prices to remain weak in the March 2010 quarter and decline further in 2010-11," CMIE said.

As new capacities stabilise, these will effectively contribute to cement production in 2010-11. Another 38.4 million tonnes (MT) of fresh capacity will come on stream during the year. Healthy demand and aggressive capacity addition will boost production by 13% in 2010-11.

However, a more-than-proportionate rise in capacity compared to despatches will flood supplies in the market and put downward pressure on prices. Capacity addition of 21MT during April-September 2009 has already triggered a fall in cement prices in the second half of 2009.

Prices in the north and west zones fell by 3%-8%, while the decline in the southern regions was sharper by 15%-20%, it said.

However, with the onset of the peak construction season, cement dispatches are expected to grow briskly at 12.8%, CMIE said.
 

With the launch of its new packaging technology, Moldtek wants to garner support from FMCG majors

Hyderabad-based pail packager Moldtek Plastics Ltd is entering the food & fast-moving consumer goods (FMCG) packaging market, estimated to be between Rs9,000 crore-Rs13,000 crore, with its newly launched ‘In Mold Labels’ (IML) technology.

“The ice-cream packaging market alone is worth more than Rs150 crore and even if we grab 30% of that, we can add Rs30 crore-Rs40 crore of turnover in the next one year,” said A Subrahmanyam, deputy managing director, Moldtek Plastics.

Apart from the domestic market, Moldtek is planning to expand its horizons to the food & FMCG sectors in the Middle East and Asia Pacific regions. Moldtek is also eyeing IML exports to the EU, USA, Japan and other developing countries, due to its low-cost advantage.

IML allows print and labels to be impregnated directly on products with the help of a robot. In this process, the label becomes an integral part of the end product which cannot be torn or scratched off. 

The packaging industry currently uses sticking gum to brand products. IML technology is already popular in the EU and Taiwan. Although this technology was launched by the company eight months back, manufacturers shied away from adopting this packaging technique due to its high cost.

Moldtek Plastics has now re-started its negotiations with major FMCG players like Amul and Hindustan Unilever Ltd. The company claims to have brought down the production cost by 50% but it is too early to predict whether FMCG players will adopt the technology, considering that Moldtek Plastics will be charging a royalty of 10% on IML. Moreover, any hike in raw material costs is likely to increase the production costs as well.

Apart from manufacturing robots in India, the company is also planning to invest Rs12 crore every year for the next three years which would be raised through internal accruals and term loans.

During the quarter to end-December, the company reported a net profit of Rs1.87 crore on total revenues of Rs29.43 crore.
 

Strong economic data and global cues helped the Indian markets to gain momentum

Indian markets gained momentum today on strong response to NTPC’s follow-on public offer (FPO) and robust services sector data for January 2010. The markets also gained on back of positive global cues. At the end of the day, the Sensex surged a massive 333 points from the previous day’s close to 16,496 while the Nifty closed at 4,932, up 102 points.

Yesterday, we said the Indian markets will go up and it did so. Tomorrow, we expect the markets to pause before gaining further ground.

At 11:00 hrs IST, the Sensex was trading up 328 points from the previous day’s close at 16,492.

At the end of the day, Kabra Extrusion Technik zoomed 14% after the company’s board approved a proposal to upgrade and expand its existing manufacturing facilities at Kachigam, Daman, with an outlay of Rs85 crore.
Associated Stone Industries (Kotah) continued surging for the fifth day. The stock gained 14%, after the company’s board fixed 19 February 2010 as the record date for a 2-for-1 stock split.

JSW Steel has reported growth of 66% in crude steel production at 5.33 lakh tonnes for January 2010 over the corresponding year-ago period. The stock was up 8%.

Tata Communications was up 2% on reports that the company and Whygo, a global specialist in public videoconferencing facility scheduling, will team up to provide Telepresence solutions to Whygo customers.

Supreme Infrastructure India has received three projects together worth Rs363.94 crores. The stock was up 2%.

Larsen & Toubro shot up 4% after the company bagged new orders aggregating Rs1,100 crore.

Bharat Electronics was up 3%. The company is reportedly set to get an order worth Rs4,279 crore from the Indian Air Force to supply 750 Akash surface-to-air missiles.

INOX Leisure shot up 12% after the company acquired the entire promoter’s stake in Fame India. At the end of the day, Fame India was up 5%.

During trading hours, the government’s chief statistician Pronab Sen said that the data suggested that industrial recovery in the country was on track, but the government would wait for the March 2010-quarter economic data before taking a call on exiting stimulus measures.

The HSBC Markit Business Activity Index, based on a survey of 400 Indian firms, rose to 58.96 in January 2010,  its highest since September 2008, on sharp increase in new work orders after rising to 57.41 in December 2009.

Meanwhile, the FPO of NTPC was subscribed 70% on the first day of bidding. The government had fixed the benchmark price for the proposed divestment of government stake at Rs201 per share.

The government has targeted raising Rs25,000 crore in the fiscal year ending March 2010 by selling stakes in state-run companies. As per reports, Rural Electrification Corporation plans to raise nearly $1 billion through a follow-on offering which will open on 19 February 2010 and close on 23 February 2010.

Mining company NMDC’s IPO is also scheduled to come out in the second week of March 2010 to raise around $3 billion; and Satluj Jal Vidyut Nigam is expected to raise about $260 million toward the end of March 2010.

During the day, Asia’s key benchmark indices in China, Hong Kong, Indonesia, Japan, South Korea, Singapore and Taiwan rose by between 0.32%-2.36%.

In the US markets on Tuesday 2 February 2010, the Dow Jones Industrial Average was up 111 points while the S&P 500 and the Nasdaq Composite were up 14 points and 19 points, respectively.