Tatas bid for Liberian mines, to put in $1.5 bn

Tata Steel is looking for raw material security at a frenetic pace and the world’s sixth largest steelmaker is now eyeing the Western Cluster Iron Ore deposits in Liberia, for which a bid has already been submitted.

The Western Cluster consists of several deposits spread over 207.58 sq km and the investment is likely to be around $1.5 billion.

When asked, a Tata Steel spokesperson refused to comment and said that the company was looking at all opportunities globally in the area of resource security for the group.

Other companies have also evinced interest in these deposits and Tata Steel has responded to a bid put out by the Liberian government. Tata Steel is one of the shortlisted bidders and the only company from India.

The Western Cluster comprises the Mano River Iron Ore, The Western Position of Bomi Hills Iron Ore Deposits and the Mountain Iron Ore Deposits.

Recently, Tata Steel signed a joint venture agreement with Sodemi (a state-owned Ivory Coast mineral development company) for development of Mount Nimba Iron Ore deposits. Liberia is also on the west coast of Africa.

The Mount Nimba initiative was the first iron ore venture outside India for Tata Steel and the investment in the project by the joint venture company, where Tata Steel holds 75 per cent, could be around $1-1.5 billion in 3-4 years. The company has set a target of achieving raw material security of 50-60 per cent in the next 5-6 years.

Currently, the company’s iron ore security with Corus is 20 per cent, while on a standalone basis, Tata Steel has a 100 per cent security.

Industry analysts said galloping raw material prices were propelling steel companies to run for security cover.

Iron ore prices might jump as much as 50 per cent in 2008. Contract prices for iron ore have tripled in the past five years, and back home, allocation of captive mines has become a time-consuming exercise.

The Tata group consists of Corus and Tata Steel (including Tata Steel Thailand and NatSteel Asia) and the captive iron ore resources would help in bringing down the cost of production at the Corus facilities. Corus requires 28-30 million tonnes of iron ore per annum.

Earlier this month, Tata Steel signed a joint venture agreement with Australia’s Riversdale Mining to set up a special purpose vehicle to develop a hard coking coal and thermal coal project at Riversdale’s key exploration tenements in Mozambique.

On the coal front, Tata Steel has a security of around 15 per cent from a standalone of 60 per cent security.

Cement shortage to continue

Prices may remain firm in the coming months.

The cement industry is likely to add around 15 million tonnes of fresh capacity in 2007-08 – a little over half of the 27 million tonnes it had talked about at the beginning of the financial year.

As a result, the cement capacity in the country will be 182 million tonnes by March 2008, 8.5 per cent short of the target set by the working group on cement industry for the Eleventh Five Year Plan (2007-12).

Analysts felt this could keep cement prices buoyant in the months to come.

The industry and the government have been locked in a confrontation for several months now over high cement prices, prompting the Centre to allow duty-free imports. Some quantities of imported cement have already reached the Indian markets from Pakistan.

Nine months after promising to put up additional capacities of 27 million tonnes, cement companies have added a mere 11.50 million tonnes till date. While the Cement Manufacturers' Association says the industry has so far added 6.35 million tonnes, the figure does not include the capacity expansion of two companies – ACC and Binani Cement. ACC added 1.4 million tonnes at its two plants and Binani added 4.1 million tonnes recently.

Market players said the industry may add another 3.5 million tonnes in the next three months, taking the total tally to 15 million tonnes.

Market players said that the delay in projects was mainly on account of supply constraints on the plant and machinery front and environment clearances from the government. H M Bangur, president, CMA, and the managing director of Shree Cement, said, "We will not be able to meet the target as project delays are taking place. There will be at least one quarter’s delay."

"As most of the projects are greenfield ventures, unlike the earlier expansions which were through modernisations, debottlenecking and brownfield projects, the time being taken for operationalisation is more,” said A K Saraogi, chief financial officer, JK Cement, adding: “Additional land requirement and delay in delivery of equipment are adding to the problems."

Market players said that the gestation period for the newer plants had increased by around 6-8 months. Normally it should have been 20-22 months, but now it was reaching 26-28 months, they added.

K C Jain, managing director, Mangalam Cement, said, "My assessment is that by March, 2008, industry will add another 6-7 million tonnes."

L&T floats power generation arm

To invest Rs 20,000 cr to produce 5,000 mw in five years

Engineering firm Larsen and Toubro (L&T) today said it has floated a power generation arm, called L&T Power Development.

“The overall investment in the company would be Rs 20,000 crore. L&T would invest Rs 5,000 crore and the rest would come through debt,” L&T Chairman and Managing Director A M Naik told reporters. The new firm would generate 5,000 mw of power in the next five years.

In November, L&T entered into a joint venture agreement with Japan’s Mitsubishi Heavy Industries for setting up a manufacturing unit in India for super-critical steam turbine and generator equipment.

The JV will invest about Rs 880 crore and have a product range catering to plant capacities ranging 500-1,000 mw.

Earlier, speaking at a function to celebrate 70 years of L&T and the centenary of its co-founder Henning Holck-Larsen, Finance Minister P Chidambaram hailed the company as India’s only national sector company.

“L&T is unique, it does not belong to the public sector, or the private sector, it belongs to the national sector. It is the company of the people of India.”

Chidambaram spoke at length about L&T making the impossible possible and held it out as an example of a company capable of dreaming big and making it happen.

Naik spoke about the history of the company and its abiding commitment to the cause of building a strong India. He said, “L&T is only one of its kind between Europe and Japan, right from manufacturing nuclear reactors, steam generators, off-shore platforms to sub-sea pipelines, cross-country pipelines, refineries, petrochemical projects, IT parks and naval bases.”

Tata Motors unveils range of tough CVs

In a bid to align its products with global trends and preparing itself for the huge strides expected to be witnessed in infrastructure, Tata Motors today unveiled a new range of commercial vehicles that promise to deliver greater return on investment and higher user satisfaction.

The vehicles include multi-axle trucks, heavy-duty trucks, tractor trailors and tippers. The new products will largely cater to sectors such as mining, construction, road building, logistics and petrochemicals.

Prakash Telang, executive director, commercial vehicles business, told mediapersons that the introduction of the vehicles is part of the company’s programme to redefine its products to bring in customised solutions with latest technologies.

The company unveiled Tata LPS 4923 TC, which is a 49-tonne Novus tractor customised to offer optimum performance under Indian conditions.

The vehicle has an air-conditioner fitted driver cabin and has a GPS / data logger solution. The product is pitted to be the right solution for transporting containers, steel, cement and petroleum loads.

The Tata LPS 4923 TC tractor has a Cummins engine and Eaton gear-box, and offers 25 per cent higher gradeability for use in tough terrains. The vehicle would be ideal for carrying steel coils, cement or over-dimensional cargo, company sources said.

The company also launched a 3118 truck which is India’s first multi-axle truck with a lift axle fitted with automatic load sensing value for optimum lift axle function.

The other products launched were 2516 Super Turbo multi-axle truck, 2518 tipper and 1618 tipper.

Thailand plant to begin production in mid-2008

Manufacturing activities at Thonbury Assembly Plant Company of Thailand, with which the Tatas have set up a joint venture some time ago, would begin around the middle of the next year, Telang informed.

The plant will make two vehicles – Xenon and SpaceCab – which will be versions built on the same platform meant to build products for composite use of goods and passengers, he said.

The initial production would be 25,000 units and the company could expand the numbers as and when necessary, he added.

IFCI stock plunge hits investors

The shares of Industrial Finance Corporation of India (IFCI) plunged by 23.41 per cent on Thursday after the stake sale of 26 per cent to strategic investors collapsed.

Thursday’s decline was the biggest in a single day in the past 13 years, bleeding small investors and margin traders the most.

Several small investors had bought the IFCI shares at higher levels of Rs 100-plus, hoping that the stock would further run up to new highs following a turnaround in the company’s fortunes after the entry of strategic investors.

The stock closed at Rs 76.70 on Thursday against its previous close of Rs 100.15, forcing several brokerage houses to ask clients to pay the mark-to-market losses or wind up their positions at the counter in the derivatives segment.

The general expectation in the market was that strategic investors might be bidding close to Rs 140 or Rs 135, which tempted investors to buy the stock at Rs 100-plus levels.

On Tuesday’s stock price of Rs 100, the trader would have had to pay a 25 per cent margin on one market lot of 7,875 shares, which works out to around Rs 2.5 lakh.

Therefore, when the stock fell to Rs 77.05, nearly 80 per cent or over Rs 2 lakh of traders’ margin money got wiped out, said dealers.

According to the data available on the National Stock Exchange (NSE) website, the standing market-wide position is over six crore shares currently.

“If the stock does not bounce back to Rs 90 or Rs 95 in the next three trading sessions before the F&O expiry, it is then likely that the stock may see a further downside,” said a dealer.

In the cash segment, over 210 million shares were transacted on both BSE and NSE.

Sebi nod for short selling in F&O scrips

After a wait of nearly two years, Securities and Exchange Board of India (Sebi) today gave its green signal to allow short sales - sale of a stock that a seller does not own at the time of trade - for all class of investors.

The capital market regulator also announced the broad framework for the Securities Lending and Borrowing (SLB) scheme.

Sebi said stock exchanges shall put in place a full fledged securities lending and borrowing (SLB) scheme, which, to begin with, shall be operated through clearing corporation/clearing house of stock exchanges having nationwide terminals who will be registered as Approved Intermediaries (AIs) under Securities Lending Scheme, 1997 (SLS, 1997).

"The SLB shall take place on an automated, screen-based, order-matching platform, which will be provided by the AIs. This platform shall be independent of the other trading platforms,"Sebi said in a release issued today.

All shares in the futures and options (F&O) segment will be eligible for short selling. Currently, there are 200-odd stocks available in F&O on the National Stock Exchange. Sebi said it will review the list of stocks that are eligible for short selling transactions from time to time.

The tenure of lending/borrowing shall be fixed as standardised contracts, and, to start with, contracts with tenure of seven trading days is likely to be introduced.

"The settlement cycle for SLB transactions shall be on T+1 basis. The settlement of lending and borrowing transactions shall be independent of normal market settlement.

"The settlement of the lending and borrowing transactions shall be done on a gross basis at the level of the clients i.e. no netting of transactions at any level will be permitted," the release said.

Sebi, which first invited comments from market players on short sales in January 2006, however, did not specify any date for implementation saying it will inform the date later after stock exchanges and depositories put in place fool-proof systems.

Some of the features of the short selling rules include a ban on naked short selling - meaning all investors would be required to mandatorily honour their obligation of delivering the securities at the time of settlement (using the SLB scheme). No institutional investor will be allowed to do day trading - virtually prohibiting squaring-off of their transactions intra-day.

At present, there is no prohibition on short selling by retail investors. Institutional investors, viz., foreign institutional investors, mutual funds, banks and insurance companies, are prohibited from short selling under different regulations, and are currently required to settle trades on delivery basis in the cash markets.

Short selling by institutions, which was banned in early 2001 following the Ketan Parekh-scam when stock prices plunged, is regarded by experts as an essential and desirable requirement for a vibrant securities market.

Restrictions on short-selling, according to its votaries, distorts efficient price discovery. By allowing short selling, the market will have much-needed liquidity and help corrections in over-valued stocks.

ITC expands Fiama Di Wills brand to soaps

ITC today announced an expansion in its personal care goods portfolio by introducing soaps under the Fiama Di Wills brand. The company had launched Fiama Di Wills shampoos and shower gels earliert this year to mark its entry into the personal care business.

Packaging for the soaps has been developed by a European design firm and the fragrance has been developed by an international house in France. It is named 'Fiama Di Wills SkinSense Soft Green' and it helps enhance retention of skin proteins to create a beautiful look, says the company. It is available in a 100 gms pack priced at Rs 40.

Other launches by ITC under the Fiama Di Wills brand include 'Polishing Drops' conditioner, which contains avocado oil and burdock extract that according to company claims make the hair feel smooth and shiny.

The company's FMCG business accounts for 14% of its revenues Rs 12,369 crore. Its other brands in the FMCG space include Aashirwad, Bingo, Sunfeast and Mint-o-fresh. ITC is competiting with other biggies like Hindustan Unilever and Nestle India in the personal care and foods business.