Gold could quaduruple, says chairman of US Gold Corp

Robert McEwen, chairman of U.S. Gold Corp says that investors will reallocate capital to hard assets and real money as the dollar loses its strength and excessive printing of paper money all around the world causes money to move into gold.

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Future Logistics expects revenues of Rs1,400 crore by 2013

The company plans to increase revenue up to Rs1,400 crore by 2013 and is targeting an investment of Rs500 crore by 2013, across various segments

Future Logistics Solutions Ltd said that it expects its revenue to increase to Rs1,400 crore by 2013 from Rs200 crore in FY09. Company officials said this would be driven by the various expansions that the company plans across various segments.

“We expect revenue of Rs1,400 crore by 2013. The total revenues last year were Rs200 crore, for this fiscal (FY10) we expect it to be more than Rs250 crore but less than Rs300 crore,” said Anshuman Singh, managing director and chief executive, Future Logistics.

On being questioned how much was each segment expected to contribute to the Rs1,400 crore revenue, Mr Singh said, “Business is growing rapidly and thus giving a break-up will be difficult.”

The company also plans an investment of around Rs500 crore by 2013. It has presence across five main segments—reverse logistics, warehousing, transportation, brand distribution and international logistics business. Last year, it also entered the third party logistics segment.

In the warehousing segment, the company has huge expansion plans. “We are setting 5 million sq ft of warehousing capacity in the next three years. The warehousing centres will come up across the country mainly in major towns and cities. Altogether, we are setting it up in 30 cities in the country,” said Mr Singh.

In the transportation segment, the company plans to expand its current fleet of 500 trucks to 1,000 in the next one year. The company has recently entered the brand distribution segment and claims to be the first player for brand distribution in the FMCG segment.

“We are especially approaching small scale and medium scale players in the FMCG segment. Such players face problems in modern organised distribution. This is the segment that we are trying to capture and we have already started,” added Mr Singh.

Speaking on the size of the market in this segment, he said, “Brand distribution is a very big industry. There is a large market available worth several thousands of crore.”

In the reverse logistics segment, the company is operational in the apparel and furniture segments and soon plans to enter the consumer durables segment. “The mobile segment also has a decent market available, but we do not plan to enter it,” Mr Singh added.


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Capital goods orders decline for third consecutive quarter, belie recovery assumption

While analysts and commentators are celebrating an industrial revival, order inflow for EPC companies have witnessed a 6% decline qoq and 14% decline yoy in the December quarter – a third consecutive quarter of decline

Companies in the engineering, capital goods and infrastructure (ECI) segment have reported a decline in order inflow for the third consecutive quarter due to lacklustre activity by India Inc, especially in capital spends that has resulted in muted order inflows for ECI companies.

In a research report brokerage, Emkay Global Financial Services Ltd said, “Order inflows (estimated) for the third quarter of FY10 declined by 14% year-on-year (y-o-y) and 6% quarter-on-quarter to Rs302 billion and order inflows (estimated) for the first nine months of FY10 declined by 7% y-o-y to Rs961 billion.”

The decline in order inflows is led by cyclical or process sectors like metals, oil & gas and chemicals, witnessing near halt or standstill in capital expenditure (capex) activities. Structural sectors like power and infrastructure largely supported by government participation reported robust business activity translating into strong order inflows for ECI companies, the brokerage added.

It said companies like McNally Bharat Engineering Co Ltd and TRF Ltd reported strong growth in order inflows at 84% y-o-y and 60% y-o-y respectively in the first nine months of FY10 (estimated)—led by exposure to structural capex. Large companies like L&T recorded 12% y-o-y growth in order inflows, benefited by exposure to structural capital expenditure. Bharat Heavy Electricals Ltd (BHEL) is an exception, reporting 25% decline in order inflows in the first nine months of FY10 (estimated), despite significant exposure to structural capex. As expected, companies like Punj Lloyd Ltd and Elecon Engineering Co Ltd reported muted order inflows in the first nine months of FY10 (estimated) owing to large exposure to process capex.

For the third quarter of FY10 (estimated), Punj Lloyd Ltd witnessed a 100% y-o-y negative growth in order inflow, with not even a single order. While McNally Bharat Ltd has had a strong order inflow for the nine months, order inflow for the company witnessed a marginal decline of 0.6% y-o-y. L&T and Thermax reported a marginal increase of around 9% y-o-y. Order inflow for BHEL and Elecon Engineering has also declined sharply by 21.7% and 33.3% respectively.

McNally Bharat Ltd has emerged as the best performing company with high growth in order inflows. McNally Bharat’s order inflow has been boosted mainly by a slew of orders in the June- July 2009 period, mainly for power projects and steel & zinc plants. The company recently won an order worth Rs330 crore from Steel Authority of India Ltd (SAIL).

While there has been a lot of consensual optimism and management expectation for higher order inflows for ECI companies, such dismal order inflow figures are surprising.

Emkay said that it expects companies having least risk to FY11 (estimated) earnings accompanied by robust order inflows in the first nine months of FY10 (estimated) or healthy order book cover to progressively rollover the valuation to FY12E earnings in the next two quarters or by first quarter FY11 (estimated).

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