It is reported that Indian government is considering raising the tax on exports of iron ore.

Mr Ram Vilas Paswan steel minters after meeting officials of steel makers told reporters that "One issue being considered is raising the export tax on iron ore. The government is considering it.”

In the ongoing tussle between steelmakers and miners, steel makers have asked for hiking export tax to 35% from existing 15%.

India exported about 93 million tonnes of iron ore in the fiscal year ending March 2007, out of which about 75% went to China. Local miners say this could halve in the year to March 2009 as the existing tax makes rival suppliers attractive.

It is reported that Public Sector Undertakings under the Ministry of Steel will set up 150 relief camps in the flood hit districts of Bihar. 25 camps will be set up in each of the six worst affected ones.

Mr Paswan while addressing a press conference after meeting the heads of the PSUs under the ministry of steel to gear up relief measures said that the relief camps will be operational from 4th of this month. He took a meeting of the CMDs of SAIL, RINL, NMDC, MOIL, MSTC, FSNL, MECON, BRL, SIIL, HSCL, KIOCL and Bird Group of Companies under the Ministry of Steel to gear relief efforts.

He said that “The unprecedented floods caused by the river Kosi has brought untold misery to over 2.5 million people in Bihar. The floods have rendered lakhs of people homeless and without food and basic amenities, he said. The entire nation is concerned. The Prime Minister who visited the State had already declared it as a “National Calamity”.

Some of the other decisions are as follows:

1. Establishment of 1 health camp each in the 6 districts which will provide medical assistance and medicines beginning 4.9.2008. The Doctors for the same will be provided by the Steel PSUs from their own hospitals.

2. 1 million pieces of clothing comprising Dhoti, Lungi, Saree, Shirts and ladies dresses etc.

3. The State government of Bihar has made a request for provision of 2 million G I Sheets and 4 million feet of pipes. The ministry of steel will ensure priority delivery of this material to the state.

4. It was decided that the above relief activity will be coordinated at a senior level in the ministry of steel.

Steel Authority of India Limited has informed that with reference to the earlier announcement dated June 14th 2006 about production in 2011-12 and capital expenditure estimates as envisaged in the revised corporate plan, based on the latest review, production envisaged are as under

Envisaged production in 2011-12

In million tonnes
Earlier was intimated in June 2006

Further, the company has informed that, due to the increase in facilities required to achieve the enhanced production, rise in input costs and general inflationary trend, the capital expenditure is likely to be higher than what was estimated earlier.

As on date, expansion projects of IISCO Steel Plant and Salem Steel Plant approved at a cost of about INR 163.5 billion are under implementation. Expansion projects of other four plants Bhilai Steel Plant, Durgapur Steel Plant, Rourkela Steel Plant and Bokaro Steel Plant are at different stages of tendering.

Indian domestic steel prices remained stable on opening on September 1st 2008.

LPPI – Long Product Price Index
FPPI – Flat Product Price Index
ISPI – Indian Steel Price Index

Long products

Flat products

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ET reported that Indian steel makers have sought re imposition of import duty to protect the domestic industry from dumping of steel products.

The report cited a steel company official after a meeting with Mr PK Rastogi steel secretary as saying that “In absence of the duty, the secondary producers ought to go for massive imports, thereby turning the domestic steel industry sick.”

India had 5% duty on steel imports but was withdrawn to improve domestic availability

Melting scrap
80:20
HMS

Change on September 1st is with respect to prices on August 29th 2008
Change is in INR per tonne

Pencil ingot

Change on September 1st is with respect to prices on August 29th 2008
Change is in INR per tonne

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ET reported that Indian Railways has decided to offer 20% to 30% discount on movement of iron ore applicable across the country. The aim is to cushion steel companies from recent spurt in input prices and enable them to maintain the demand momentum by pricing the products competitively.

As per the new scheme, 30% freight discount would be given on iron ore loading on western and south western and south central divisions of the Railways. These divisions basically facilitate movement of iron ore from mineral bearing states to western coast of the country. The discounts in south western division would be subject to loading of higher class of iron ore.

For other steel players, the Railways would give 20% freight discounts on iron ore loaded in its southern division. The Railways have already announced discounts on the eastern part of the country for iron ore loading earlier.

The report cited a railway ministry source as saying that “High inflation rates continue to remain a worry for the government, even though there are some signs of it slowing down now. As iron ore has been one of the culprits for rising steel prices lately, Indian Railways has decided to extend its discount on the mineral on a national level now. Hence, movement of ore across the country would now get a discount between 20% and 30% on the prevailing freight rates.”

The policy to offer the discount is part of Railways’ strategy to reward bulk customers and insulate them from rising cost of inputs. The Railways have already carried out several policy changes to cool down inflationary pressure on transport of iron ore.

It is reported that Mr Ram Vilas Paswan steel minister said that a correction in steel prices is likely soon on the back of softening trend in global markets.

Mr Paswan at 34th annual conference of the International Manganese Institute said that "As per present indications, further correction in the prices of steel is expected.”

He said that government has taken certain measures to stabilize prices of steel and is committed to take further steps if the need arises.

The government shared industry's concern of rising input cost pressure and said that prices of essential raw materials should be maintained at reasonable levels. He said "The prices of critical inputs, such as coking coal, have increased more sharply than the prices of steel. This is a cause of concern. It is necessary that the prices of steel as well as its raw materials are maintained at reasonable levels to maintain growth momentum in the sector.”

Long products were somewhat stable with price decrease reported at some locations only

TMT
Fe 415
12mm

Change on September 1st is with respect to prices on August 29th 2008
Change is in INR per tonne

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BL reported that a ferromanganese and silicomanganese factory, set up by Yona Smelters Private Limited at Bobbili in Vizianagaram district was inaugurated by Mr PK Bishnoi CMD of Rashtriya Ispat Nigam Limited.

Mr Bishnoi said that RINL is in the expansion mode and it would need the ferroalloys. He added that “”Quality and timely supply are of the essence.”

Mr VR Krishna Prasad MD of the factory said that 6 acres of land had been acquired at Bobbili at the growth centre set up by the Andhra Pradesh Industrial Infrastructure Corporation and the first phase of the factory would be completed by February.

Suzlon Energy Ltd has informed BSE that the Company has signed an Agreement with Martifer SGPS SA whereby it has been agreed for exercise of an option for an early acquisition of Martifer's total stake of approximately 22.48% in REpower Systems AG of Germany for a total consideration of EUR 270 million.

The statement added that the agreement shall be concluded by December 15th 2008 and the acquisition shall consolidate Suzlon's total holding in REpower to approximately 90%.

Amidst the currently prevailing volatile and speculative steel price scenario in India, SteelGuru.com has started the much needed barometer to track and measure the price movements on daily basis.

Steel prices being an issue at the forefront in the context of inflation, drawing significant government attention, making up for about 4 per cent in the Wholesale Price Index(WPI), has been media's most favorite and hot topic at the moment. Unfortunately, the facts are misrepresented very often due to complexity in the structure and the dynamics of the steel market, leaving the users of the information mostly in a state of confusion.

In order to provide an index for steel prices, we call it SENSEX for steel, SteelGuru.com decided to work on both long products and flat products for respective category indices as also a composite one for steel. We call them LPPI, FPPI and SPI and have started releasing these indices with effect from July 1st 2008, after taking June 30th 2008 as base.

LPPI is based on daily market prices of three benchmark products rebars, wire rod and sections in 4 metros, whereas FPPI is based on HRC, plates, CR and HDG. These indices have been built considering their respective weights in the composite categories as also in the shares of sales in the regional markets.

The pricing input is from www.steelprices-india.com, which publishes market transaction prices of benchmark products among select locations 5 days a week.

These price indices outline the way domestic steel market is moving day by day and will help producers, agents in the supply chain, steel buyers, bankers and analysts in their respective businesses.

To know more, please visit
http://steelprices-india.com/spi_services/spi.html

It is reported that Heavy Engineering Corporation and Bharat Heavy Electrical is scheduled to sign a MoU to form a 50:50 JV on September 6th 2008.

As per the JV, BHEL will use the HEC's foundry and forges plant.

Exim News Service reported that maintenance dredging resumed at Paradip Port after several days following the breakdown of the Dredging Corporation of India’s equipment.

As per report, DCI has deployed another dredger, Aquarius, to undertake capital dredging in the Port.

Maintenance dredging at Paradip Port has to complete removal of 1.6 million cubic meters of silt by September to October and 1 million cubic meters of sand trap in December to January every year.

BS reported that Shriram EPC has acquired 55% in Blackstone Group Technologies, a Chennai based engineering consulting firm, for an undisclosed amount.

As per report, the acquisition will be funded through internal accruals. Shriram EPC has the option to acquire the balance equity after 3 years.

The report added that BGT India director Mr S Egbal will continue to head the organization.

Mumbai based Singhi Advisors were exclusive advisors to BGT for the transaction.

ET reported that State Bank of India will offer TATA Power USD 1 billion to help it acquire Singapore’s largest power utility Senoko Power.

The report cited a banker as saying that SBI has agreed to underwrite a sum of USD 1 billion for the Senoko bid.

Temasek Holdings had put Senoko Power on the block in early August, in a deal which is expected to increased close to USD 3 billion. Temasek is expected to shortlist bidders in the first week of September after which those short listed will be allowed to carry out a due diligence exercise. The entire sale is expected to be concluded by the end of 2009.

Other bidders for Senoko include Japan’s Marubeni & Mitsubishi, Malaysia’s YTL Power, France’s GDF Suez and the OneEnergy CLP Holdings combine are the other bidders.

SBI had earlier funded the House of TATAs in its acquisition of Corus and also in the deal to buy out Ford Motor’s luxury brands Jaguar and Land Rover.

ASSOCHAM Eco Pulse Study stated that India could save a whopping USD 17 billion in the crude oil import bill on account of the plummet in crude oil prices, currently hovering between USD 110 per barrel to USD 120 per barrel after nearly touching USD 150 per barrel.

The ASSOCHAM Study titled Crude Economics estimates that the oil import bill for the current fiscal would have soared to USD 125 billion had the crude oil prices remained at the level of USD 145 per barrel. However, with the reversal in the direction of price movement, the import bill for crude oil would be restrained to USD 108 billion, assuming the prices average out USD 120 per barrel for the last Q3 of the fiscal 2008-09. In the fiscal 2007-08, the import bill for crude oil was USD 67.98 billion.

The AEP study also revealed that crude prices have shed almost 25% since reaching their all time high of USD 147.27 per barrel. Considering the government estimates of 5% to 6% rise in the volumes of crude oil import bill to around 129 million tonnes this year, there would be a jump of 58% in the crude oil import bill from fiscal 2007-08.

The softening crude oil prices may come as a respite to the burgeoning current account deficit growing at an alarming rate mainly due to the rising crude oil bill. Trade deficit for the Q1 of the fiscal widened 42% on account of a 50.2% rise in the oil imports. The oil import bill for Q1 2008 stood at a whopping USD 25.5 billion on top of USD 17 billion in the same quarter last fiscal.

Mr Sajjan Jindal President of ASSOCHAM said that “The economic forces at play in, shrinking demand and improving supply facilities may cool down crude oil prices further which would lead to a narrower than estimated current account deficit. It’s a good positive sign for the economy.”

From 2006-07, the Indian crude oil import grew 9.11% in volume terms and a staggering 40% in dollar terms for the fiscal 2007-08. This upsurge in the crude import bill was on account of a steep rise in the Indian basket price from USD 62.4 per barrel to USD 79.2 per barrel.

According to the AEP study, oil prices, after reaching the all time high of USD 147.27 per barrel on July 11th have nosedived mainly on account of correction in demand, easing supply conditions and stronger US dollar.

It is reported that TATA Motors reported a total sale of 40,729 vehicles for the month of July 2008 down by 3% YoY as compared to 42,098 vehicles sold in July 2007. Cumulative sales for the company at 1 72,462 number grew by 2% YoY during April to July 2008

TATA Motors’s sales of commercial vehicles in July 2008 in the domestic market were 22,381 a growth of 8% YoY as compared to 20,705 vehicles sold in July last year. LCV sales were 12,284 growth of 19% YoY over July 2007. While M&HCV sales stood at 10,097 decline of 3% over July 2007.

Cumulative sales of commercial vehicles in the domestic market for the fiscal were 93,861 growth of 14% YoY over last year. Cumulative M&HCV sales stood at 45,932 growth of 7% YoY over last year, while LCV sales for the fiscal were 47,929 number a growth of 22% YoY over last year.

Restricted finance availability, high interest rates, increased prices and product maturity in some segments continued to impact passenger vehicle sales of the company in July.

Exports at 3,696 vehicles in July 2008 declined by 16%YoY as compared to 4,382 vehicles in July 2007. The cumulative sales from exports for the fiscal at 12,855 number declined by 29% over 18,204 number in the same period last year.

According to Mr VV Rama Rao general secretary of Port, Dock and Waterfront Workers’ Federation of India, the proposed merger of the Visakhapatnam Dock Labor Board and the Visakhapatnam Port Trust pending for more than 15 years, is likely to be achieved soon.

Mr Rama Rao also a trustee of the Visakhapatnam Port said that the Trust Chairman had submitted a draft scheme in March 2007 for the merger and the Union Ministry of Shipping had approved it. A sub committee was constituted to examine the financial implications and terms of settlement.

He said that the Visakhapatnam Dock Labor Board had also approved, at the special board meeting held on June 30th, the draft memorandum of settlement and it was sent to the ministry for approval. He added that “The ground has been prepared for the merger and we hope it will come about soon.”

He added that the Visakhapatnam port trust would be completing 75 years on October 7th and it would be nice if the merger could be completed by then.

Mr Rama Rao who said that his federation was representing 85% of the workforce in the port, his union had taken up the demand for regularization of the private pool workers, as was done in Tuticorin, New Mangalore and Paradip ports and auditing of the accounts of the pool.

(Sourced from BL)

It is reported that Anil Dhirubhai Ambani Group through its subsidiary company Global Wind Energy is setting up an INR 1,000 crore facilities for manufacturing wind farm equipment. Currently, the company has begun the necessary spadework for the project.

As per report, GWE has tied up with leading wind energy players across the globe as technology partners.

In the first phase, GWE's Silvassa unit will roll out 750 KW wind turbines and for this the company has roped in Denmark's Norwin. Phase I is slated to be completed by the end of 2008. The next 2 phases will see production of 1.5 MW of wind turbine generator for which it has entered into a technical tie up with Germany's Fuhrlander AG and for 2 MW, it has roped in the Netherlands based Lagarwey as technology partner.

Another ADAG subsidiary, Reliance Wind Energy is planning to set up 500 MW of wind power in various states over the next 3 years. The company in early 2008 placed an INR 900 crore order with Suzlon Energy for setting up 150 MW wind power project in Maharashtra.

ADAG is also in talks with the Gujarat government for setting up 200 MW wind power projects for an estimated investment of INR 1,200 crore.

ET reported that Rajkot Chamber of Commerce & Industries has invited TATA Motors to shift its small car project Nano.

It is learnt that spare parts being used in the Nano are supplied from Rajkot and transportation charges saved will help the company to reduce its price further by shifting the project in the city.

The invitation was given after the TATA group indicated that the project could be moved out of West Bengal because of constant violence and disruption that is threatening the security of the workers. Shares of the company closed up by INR 22.7 or 5.44% at INR 440.35.

Thomson Financial reported that Great Eastern Energy Corp Ltd has won a gas supply contract with SAIL Growth Works for initial supply of 233,000 cubic feet per day of gas, at a delivered price of USD 17.46 per million British thermal units.

The company involved in the exploration, development and production of coal bed methane in India, said the amount of gas supplied to SAIL works is expected to increase significantly as gas production increases and the steel pipeline for the supply of the gas has been successfully laid.

BS reported that Ennore Port Limited is set to sign a MoU with Nissan Motor for using the port to export cars. The report added that Ennore Port Limited’s board, which met recently at Chennai, also cleared the port’s proposal for creating infrastructure for the purpose.

Mr Rakesh Srivastava joint secretary ministry of shipping told BS that the agreement would be signed soon. Initially, the company will export 60,000 cars from 2010, which would gradually increase to 180,000. But he did not specify any time frame in this regard.

The board also cleared the proposal to invest INR 110 crore for creating a multi purpose berth, which can be used by others apart from Nissan.

Mr S Velumani CMD Ennore Port said that the car manufacturer was looking at exporting cars primarily to the European market. EPL has decided to construct an exclusive terminal for cars at a cost of INR 140 crore. The berth’s depth would be 12 meters and enable loading of 5,000 cars at a time.

The Telegraph reported that the mega power project at Bedabahal in Orissa is facing a land acquisition problem which can delay bidding for the over INR 16,000 crore project.

As per report, about 2,600 acres for the 4,000MW project is yet to be acquired by the state government. Given the opposition faced by the Orissa government to land acquisition for various projects.

Though the state government is yet to acquire the land for the power unit, the Union coal ministry has allocated 3 coal blocks, Meenakshi, Meenakshi B and Meenakshi dipside to the project which is in Sundergarh district.

Sources said that the project using super critical technology would evoke keen interest from domestic and international players because the government has not only allotted coal mines but also allowed the sale of surplus coal from the mines. Orissa has assured continued water supply to the coal based project from the Hirakud reservoir and the Ib River.

Power Finance Corporation plans to appoint a technical consultant for the project by the end of the next month. The special purpose vehicle for the project along with the state government would get the land, environmental clearance and coal blocks before starting the process of inviting bidders. If the land is acquired, bids will be invited from May next year.

Project Today reported that Gammon Infrastructure Projects has received a LoA from the Himachal Pradesh government for the development of the 261 MW Youngthang Khab hydroelectric power project on the river Spiti in the Kinnaur district, on BOOT basis.

As per report the project cost to be around INR 1,510 crore on the basis of current costs, excluding interest costs. The concession period of the project will be 40 years from the date of commencement of operations.

It is reported that Delhi Metro Rail Corporation has completed the work of a third tunnel at Jorbagh, as part of the upcoming Central Secretariat-Gurgaon route under the second phase of Delhi metro.

The 951 meters down line tunnel passes beneath the Indian railway track and flyover at Safdarjung and the tunneling was done 12 meters below the earth surface. For the purpose a tunnel boring machine, brought from Germany, was lowered on 19 February 2008.

A German laser system was used to guide the TBM along with the tunneling process and about 38,000 cubic meters of earth was excavated for setting up the tunnel. Another parallel tunnel is being built on the up line which will be completed by end September end 2008.

For the phase two project, fourteen tunnel boring machines will be used simultaneously for the first time in India for building tunnels.

The second phase of the Delhi Metro Rail Corporation will comprise of 30 kilometer of underground section of which 16 kilometer are to be built using TBM.

Godawari Power & Ispat announced that beginning from September 1st 2008, the company has started selling short term power under open access policy to the extent of 15 mw in view of better realization from sale of power as compared to captive consumption of the same in steel billet production.

Godawari Power said that the sale power would result in lower production volumes of steel billets to the extent of 20 to 25%.

ET reported that Bharat Heavy Electricals is planning to set up a Greenfield project for manufacturing locomotives in the country.

As per report, the company is already in talks with global majors such as French train maker Alstom, German rail transit solutions firm Bombardier Transportation, Siemens and General Electric for forming a JV.

The report added that BHEL proposes to offer 49% equity to its partner in the new venture. The project will start with an initial investment of INR 10 billion. BHEL is already looking for tie up with a foreign locomotive manufacturer to set up an electric locomotive factory at Madhepura in eastern Bihar.

The move comes after BHEL decided to bid for the tender floated by Indian Railways to procure 660 electric locomotives at an estimated cost of INR 250 billion.

The report further added that the company has a board meeting on September 17th where the issue of offering 49% in the JV will be discussed. It will announce the JV by end of this month. The company has already identified 2 locations Bhopal in Madhya Pradesh and Vizag in Andhra Pradesh where this project will be set.

BL reported that 2 new quay cranes to be supplied by ZPMC of China will start functioning at Gateway Terminals India’s existing berth at the Jawaharlal Nehru port from April next year. With this, the number of cranes at GTI terminal will rise to 10.

According to Mr Prakash Tulsiani COO of GTI, the installation of the new cranes will push up GTI’s handling capacity by an additional 5 lakh TEUs annually. He said that the cranes estimated to cost USD 6.9 million would arrive some time in December. Meanwhile, GTI has surpassed the throughput of one million TEUs recently for this year.

Mr Tulsiani attributing it to efficient operation “We’ve achieved the milestone on August 28 that is precisely within 241 days.” He estimated that the throughput in the whole of 2008, it would be around 1.45 million TEUs against the capacity of 1.3 million TEUs.

He further added that “We would have achieved an even higher throughput this year but for the arrival of the new cranes and the preliminary work related to their installation.”

It is reported Mr Murli Deora minister of petroleum and natural gas has sanctioned additional quantity of 10 thousand tonne of Superior Kerosene Oil to the flood affected areas of Bihar as requested by the CM of Bihar.

As per release, this emerged at a review meeting chaired by Mr Murli Deora on fuel supply and providing relief to the flood affected people. It was also reiterated that the required quantity of LPG would be supplied by the Oil Marketing Companies besides maintaining enough supply of transportation fuels like petroleum and diesel. In addition, the Oil PSUs would provide essential relief material like tents, medicine, etc worth INR 5 crore through the state government accredited agencies like the Red Cross Society of India. The retail outlets of the OMCs will also be made available for extending relief and assistance to the flood affected people.

The Commission has published draft regulations on terms and conditions of tariff for the period 2009 to 2014 seeking comments of stakeholders by September 28th 2008. Consumer interests are best served, the Central Commission believes by ensuring reasonable price for electricity while at the same time facilitating sufficiency of supply through adequate inducements to the investors. The proposed tariff terms announced by the Central Commission bear out this philosophy in letter as well as in spirit. Main highlights are:

1. Tariff fixation procedure simplified. Provision for provisional tariff done away with.

2. Benchmarking of capital cost for thermal and transmission projects.

3. Post tax ROE of 14% retained.

4. Sharing of hydrological risk in a reasonable manner. Norms of operation have been tightened. Beneficiaries not to take burden of payment of tax on the income on UI earnings and incentives.

5. Depreciation rationalized avoiding front loading of tariff.

The regulations reiterate the Commission’s commitment to a light handed regulation by providing inter alia for an enabling framework for capital cost benchmarks for prudence check, doing away with the requirement of provisional tariff, benchmark norm for continuous renovation and modernization of plants beyond normative useful life.

The tariff would be determined upfront for the tariff period based on the actually incurred and/or projected expenditure of capital nature and truing up exercise would be undertaken at the terminal year that is in 2013-14. Any attempt at over projection is discouraged by providing for refund of excess recovery at SBI PLR rate of interest. This seeks to provide regulatory certainty for the investors while at the same time safeguarding interests of beneficiaries against inflated projection of capital expenditure by the generators and transmission companies.

As per release, Capital cost is the starting point for cost plus tariff regulation and the Commission has set in motion a process of controlling such cost through benchmark norms for capital expenditure for thermal generation and transmission projects, proposed to be specified separately. This would go a long way in inducing investors to efficient management of capital expenditure resulting in benefits to the beneficiaries.

The depreciation rates have been rationalized in order to reduce front loading of tariff while at the same ensuring adequate cash flow for the investors. The consumers have also been given relief from payment of tax on the income on net Unscheduled Interchange earnings and incentives. This would reduce the burden of the beneficiaries.

The new mechanism proposed for additional expenditure on maintaining the efficiency of plants, as they age will ensure that consumers are not required to pay additional return on capital for the same level of benefits.

Tightening of norms of operation especially raising of availability factor for recovery of fixed cost would also relieve the burden of the beneficiaries significantly. In hydro, as a departure from the existing practice the hydrological risk has been proposed to be shared between the beneficiaries and the generators.

The new proposed tariff norms also ensure that power sector continues to be attract required investments. 14% post tax ROE has been retained. Incentive for performance better than norms has been linked to availability as against the existing practice of payment of incentive based on actual generation. Thermal generating stations will have a option to avail additional compensation in INR Lakh or MW per year terms so that the plant owners remain incentivised to maintain the unit availability at a good level even after its useful life. Norms of operation have been rationalized with due regard to the real life operational constraints and factors like vintage etc. O&M norms have been rationalized by duly factoring in the inflation and reasonable compensation for salary hike of employees.

Salient features of the proposed terms and conditions of tariff are summarized below:

1. Tariff fixation procedure simplified. Provision for provisional tariff done away with. Upfront fixation of payment based on actually incurred and/or projected expenditure of capi