Domestic

Govt offers 67 blocks in second tranche of commercial coal mine auction

The government offered 67 coal mines for sale, launching the second tranche of commercial coal mining auction and termed it a step towards ‘Aatmanirbhar Bharat’. This is the highest number of mines on offer in a particular tranche after commencement of the auction regime in 2014. “India launched its 2nd tranche of auction for commercial coal mining, offering 67 mines for sale of coal, today. Union Coal Minister Pralhad Joshi launched the auction process in a programme held in New Delhi,” Ministry of Coal said in a statement. NITI Aayog CEO Amitabh Kant and Coal Secretary Anil Kumar Jain were also present in the function. Out of the total 67 mines offered by the ministry, 23 are under Coal Mines (Special Provisions) Act and 44 under Mines and Minerals (Development and Regulation) Act. The blocks on offer are a mix of mines with small and large reserves, coking and non-coking mines and fully and partially explored blocks spread across 6 states – Chhattisgarh, Jharkhand, Odisha, Madhya Pradesh, Maharashtra and Andhra Pradesh. In many countries including India, second or third COVID wave has led to partial or localised lockdowns delaying the pace of recovery, said D K Srivastava, Chief Policy Advisor, EY India. Lockdown anniversary: Worst behind, Indian economy poised for bounce back but rising virus cases a big risk according to the reply, the Ministry of Statistics and Programme Implementation has issued a circular in this regard on March 17, 2021.Govt to release pending funds of 2019-20 under MPLADS.

To enhance coal output govt identifies 15 new projects: Joshi

To enhance coal production and reduce imports, Coal India Ltd (CIL) has identified 15 new projects with a capacity to produce 160 million tonnes per annum, Parliament was informed. Coal India Ltd (CIL) aims to achieve 1 billion tonnes of coal production by 2023-24.

"The focus of the government is on increasing domestic production of coal and to achieve these targets through the allocation of more coal blocks, pursuing with the state government for assistance in land acquisition and co-ordinated efforts with railways for movement of coal... 15 greenfield projects identified with a capacity of about 160 MTPA (Million Tonnes per Annum) to be operated by mine developer cum operator mode," Coal and Mines Minister Pralhad Joshi told Lok Sabha. In order to enhance domestic production, 25 per cent of coal production has been allowed for the sale of coal for the newly-allocated captive coal blocks, he said and added that commercial mining, with a provision for 100 per cent foreign direct investment, has been allowed by the government. In order to enhance coal production and achieve coal production targets, CIL has initiated a number of steps, including introduction of mass production technology in underground coal mines. Another coal producing company Singareni Collieries Company Ltd (SCCL) is planning to open 11 new mines, including two in Talcher in Odisha, the minister said.

Changes in mines act to generate jobs, allow private sector with enhanced tech in mining: Pralhad Joshi

Mines Minister Pralhad Joshi said the amendments in the mines and minerals act will help create employment opportunities and allow private sector with enhanced technology in mining activities. Moving the Mines and Minerals Development (Amendment) Bill, 2021, in the LokSabha, Joshi said India produces 95 minerals and has same potential like South Africa and Australia, but still import minerals like gold and coal. "The reform in the mining sector would generate 55 lakh direct and indirect employments. To enhance mining activity, we will allow private sector with enhanced technology in mineral exploration," Joshi added. Mining sector is the biggest employment generator, but still we are underexplored. The minister said the bill has been drafted after con-

Coal mining norms to  be  eased further

India seeks to further liberalize its coal mining regime to ensure greater participation of all stakeholders, by allowing bidders to submit preferences for future mine auctions. Besides, as part of the Centre’s plan to usher in structural reforms in the coal sector, state-run Coal India Ltd is looking to merge e-auction windows to move toward a ‘one price for one coal grade’ system. Coal and mines minister Pralhad Joshi announced the proposed initiatives at the launch of the second tranche of commercial coal mine auctions. The moves assume significance considering that India has the world’s fourth largest reserves and is the second-largest producer of coal. With global shift to green energy to address growing environmental concerns, the Indian government is trying to harness coal reserves within the next three decades. The so-called ‘rolling auction’ mechanism announced by the minister will ensure that coal blocks are always available for auction. The initiative comes at a time when the global window for future coal mining is getting shorter.

Coal Ministry seeks rationalisation of coal cess

The Coal Ministry is looking to rationalize coal cess on the basis of grades, CNBC-TV18 learns that the ministry has written to the finance ministry to restructure coal cess to ad-valorem from currently fixed cess. Coal Miners have to pay Rs 400 per tonne as coal cess which is utilized by the central government to compensate states on account of revenue shortfall under the Goods & Services Tax (GST). This move comes on the back of industry concerns on fixed coal cess which is making coal mining expensive, also the next round of commercial coal auction is expected soon. Ad-valorem basis of coal cess will reduce some burden on high-grade coal miners and also translate

some benefit to consumers. “ The ad-valorem basis coal cess will be revenue neutral for the government and also help make the coal auction attractive as the prospective bidders have been seeking for this change from fixed to ad-valorem cess on coal,” said a source from the coal ministry. CNBC-TV18 learns from government sources that the Ministry of coal is likely to issue tender for about 70 coal mines for the second round of commercial coal auction. The tender for auction is expected by the end of March and e-auction expected in the month of May 2021.

Centre seeks to control district mineral funds

The Centre has inserted a new clause into the Mines and Minerals (Development and Regulation) Amendment Bill, 2021, to take control of the district mineral funds from the state governments. The amendment, part of many changes to the relevant Act cleared by the Cabinet last week and introduced in Parliament, could spark a political storm. As per the MMDR (Amendment) Act, 2015, state governments must establish district mineral foundations (DMFs) in all districts affected by mining-related operations; lease holders are required to contribute to these not-for-profit foundations as a defined percentage of royalty, in addition to the royalty paid to state governments. The DMFs are needed to use these funds, total collections stood at over Rs 45,000 crore in September 2020, for the welfare of persons and areas affected by mining-related operations, the tribal population being the principal intended beneficiaries. The scheme is called Pradhan Mantri Khanij Kshetra Kalyan Yojana. While the sub-section 3 of Section 9(B) of the MMDR Act brought in through the 2015 amendment, says, “The composition and functions of the District Mineral Foundation shall be such as may be prescribed by the State Government”.

CIL says coal grade slippage in Q3 down to 34%

State-owned Coal India (CIL) said coal grade slippage in the third quarter of the ongoing fiscal was down to 34 per cent and clarified that provisional bills of customers later get adjusted once the actual quality of coal is tested. Grade slippage implies that the fuel’s grade during the sampling is found inferior than the declared grade. CIL’s coal is divided into 17 grades. Each grade of coal depending on its heat content is assigned a Gross Calorific Value (GCV). If any reduction is found in the GCV of a particular grade of coal supplied then it is termed as ‘grade slippage’. The statement comes in the wake of reports saying there were discrepancies in coal quality and the billed amount by Coal India. “Grade slippage during the third quarter of FY’21 was down to 34 per cent compared to 41 per cent the same period year ago,” the company said. During first two months of the current fiscal’s fourth quarter (January-February), grade slippages declined further to 23 per cent compared to 42 per cent of in the same period last year.

India's coal import drops 14% to 196.13 million tonne in Apr-Feb FY21

India's coal import dropped 13.6 per cent to 196.13 million tonne (MT) in the April-February period of the ongoing fiscal year. The country had imported 227.23 MT of coal in the year-ago period, according to a report by mjunction services. A joint venture between Tata Steel and SAIL -- is a B2B e-commerce company and also publishes research reports on coal and steel verticals. "For April-February 2020-21, total coal and coke imports stood at 196.13 MT, about 13.69 per cent lower than 227.23 MT imported during April-February 2019-20," it said. During April-February 2020-21, non-coking coal import was at 128.91 MT, against 157.59 MT during the year-ago period. Coking coal import was recorded at 43.98 MT, lower than 45.17 MT imported during the same period a year ago. Coal import in February 2021 stood at 15.29 MT as

against 22.68 MT in the year-ago period. Of the total imports in February, non-coking coal was at 9.07 MT, against 16.94 MT in the same month last year. Coking coal import was at 4.82 MT, as against 4.02 MT imported in February last fiscal.

RAILwAYS Modest coking coal prices and high steel prices to support profitability for steel makers

Primary steel producers are expected to reduce debt by around 15 per cent or Rs 35,000 crore between 2020-21 and 2021-22 using higher operating profits generated for prepayment, rating agency CRISIL said.

“Rising volumes and moderate coking coal prices would mean healthy operating margins of 23 per cent next fiscal, compared with 25 per cent likely this fiscal,” Manish Gupta, Senior Director, CRISIL Ratings said. He added that the realization next fiscal may still be higher than the average of past five years. The domestic steel demand recovered strongly in the second half of this fiscal, growing 10 per cent between October and January versus 30 per cent fall in the first half. Higher infrastructure spending by the government and recovery in the residential state are expected to improve steel demand by 10-12 per cent next fiscal. “The five steel makers could cut Rs 25,000 crore of debt this fiscal. Next fiscal, despite capex rising 15 per cent, they can slice debt by another Rs 10,000 crore,” Naveen Vaidyanathan, Associate Director, CRISIL Ratings said.

Indian Railways defies Covid challenges! Freight in FY21 poised to surpass FY20 level

Defying Covid challenges, the Railways have carried 1,145.68 MT of freight till March 11 in the financial year 2020-21, marginally higher than the loading achieved in the corresponding period last year, official data released showed. The freight performance has been improving on month-to-month basis in recent months. IR’s loading in the first 11 days of March 2021 was at 43.43 MT, which is 10 % higher than in the year ago period. IPO, Rossari biotech, Happiest minds, Burger kingListing gains: 16 out of 21 IPOs so far in FY21 list at premium; will the bull run continue next year?IRCTC share price, IRCTC, Indian railwaysIRCTC share price hits all-time high, surges three times from IPO price; stock may rally up to 40% “There was a 70 MT year-on-year deficit in freight loading in the April-July period of 2020 but with a steady pick up in transportation of goods from August onwards, IR achieved incremental loading of 70 MT in the August-March 11 period, thus wiping out the shortfall,” said Railway Board Chairman & CEO Suneet Sharma. This has been possible despite 50 MT deficit in loading of coal, the main cargo and revenue stream of IR. Though the freight revenue figures till March 11 are not immediately available, the freight earnings in February this year was Rs 11,097 crore, up 7.7% on year.

STEEL Ind-Ra revises fiscal year 2022 steel sector outlook to stable

Ratings agency India Ratings and Research (Ind-Ra) has revised its outlook on the domestic steel sector from negative to stable for the fiscal year beginning April 1, 2021. The agency also expects the prices of iron ore, a raw material used for steel making, to increase in the coming financial year. In a statement, Ind-Ra said it "has revised its outlook on the steel sector to stable for FY22 (financial year 2021-22) from negative. "Ind-Ra expects FY22 steel volumes to improve yearon-year and compensate for a likely moderation in per tonne margins, as steel prices gradually moderate over FY22 from the high levels witnessed over 2HFY21."

In FY22, demand and supply are also expected to be strong and recover from the slowdown in FY20 and the COVID-induced demand and supply disruptions in FY21. Besides, the agency expects domestic iron ore prices to gradually correct in FY22, as iron ore supply improves, although remaining elevated till the domestic iron ore output increases to FY20 levels.

Indian steel firms to cut Rs 35,000 cr debt between FY21, FY22: Crisil

Primary steel producers in India are expected to reduce debt by Rs 35,000 crore, between FY21 and FY22, using the higher operating profits generated for prepayment, according to Crisil. This reduction in debt and a partial deferral of capex this fiscal will strengthen the balance sheets and credit metrics of five primary steel producers, which account for 55 per cent of domestic production. The outstanding debt of steel makers is pegged at Rs 2.15 trillion at end of March 2020. The reduction in debt is expected to be Rs 25,000 crore in this fiscal and about Rs 10,000 crore in fiscal 2022. Rating agency Crisil said domestic demand recovered strongly in the second half of this fiscal, growing nearly 10 per cent between October and January versus a 30 per cent on-year fall in the first half. Consequently, demand contraction will be less than 10 per cent for the whole of this fiscal. The higher infrastructure spending by government, and recovery in residential real estate are expected to improve steel demand by 10-12 per cent next fiscal, it added.

Arcelor Mittal’s Rs 50,000-crore Odisha steel plant plan hinges on quick land acquisition

Industry watchers, however, are apprehensive, particularly because apart from Tata Steel’s Kalinganagar plant, greenfield steel plants have rarely come up in India in recent times and the main hurdle is issued related to land acquisition. A senior industry leader, however, said, “I am sure the state will help the company in acquiring land.” Though rich in mineral resources, Odisha’s chequered past of letting go big-ticket investment proposals for its failure to arrange land is the challenge before Arcelor Mittal-Nippon Steel India (AM/NS India) as it revisits a plan to set up Rs 50,000 crore steel plant in the state. The unit requires 4,000 acre land and the state government will have to facilitate the acquisition of the land on time. Pursuant to the deal structure, a-iTrust will provide funding towards the development of the project. (Website image) a-iTrust to buy industrial park leased by iPhone maker Lombard board approves Rs 4/ share interim dividend for FY21 While the memorandum of understanding (MoUs) signed between the Odisha government and the company is just an expression of intent, a binding agreement will be signed only after the land and mining leases are transferred to the world’s largest steel maker.

CEMENT

Cement Sector Stocks To Strengthen In Q1FY22 Due To Sharp Price Hike

As hopes of normalcy returning to the economy get strengthened, there is an increased business activity in the construction and infrastructure sector. Due to this, the demand for construction materials like steel and cement shot up in February and March. The demand, along with the expected hike in cement prices, has led to brighter prospects for top cement stocks in the sector. In this backdrop, leading brokerages have undertaken channel checks and have concluded that based on the increased activity, the cement sector stocks will perform better in the fourth quarter 2020-21 and are

expected to continue better performance in the first quarter (April-June) of the new financial year 202122. Prabhudas Lilladher (PL), the brokerage house, has stated in its channel check report released last week that February 2021 was the best month for the cement sector since September 2020. All-India cement demand is estimated to grow by 8 per cent in February on a base of +4 per cent. PL has rated the quality of growth in cement demand as far better than September-November’20, where growth was largely led by pent-up demand and a weak base. Among regions, North and East maintained outperformance over other regions with demand growth at 15 per cent Year-on-Year (YoY) each. Demand in the Central region is estimated to have grown by 7 per cent. Western region’s demand grew by 4 per cent on the back of a mild recovery in Maharashtra. While demand in the South remained muted with flattish growth, it said. The cement price recovery is delayed due to intense competition in wake of strong demand. Cement dealers across regions expect sharp price hikes in March. Channel checks undertaken by Motilal Oswal Financial Service Limited (MOFAL), another brokerage house, suggested that the much-anticipated price hikes have materialized in March, with prices up by Rs 20–30 per bag Month-on- Month (MoM) in South and East and Rs 10–15 per bag in other regions. Demand remains strong, with growth in the high single digits in most regions (except South), which should help absorb these hikes. These hikes should also alleviate concerns on nearterm margins from the sharp cost inflation seen in the last few months – petcoke, coal, and diesel prices are up 74 per cent, 24 per cent, and 34 per cent YoY, respectively. However, PL remained doubtful of the price rise in March due to year closing led volume push. Factoring flattish prices MoM in March, “We estimate realisations to fall Rs 80-100/t QoQ in fourth quarter 2020-21. However, this trend will reverse in April with a steep price increase of Rs20-30 per bag on the back of tight discipline, higher costs, and lessened competition intensity”, PL said. Outlook on the cement sector strengthened significantly due to revival in the housing market, government's strong focus on spending, and pick-up in the industry wide capex cycle. This is visible via flattish demand in 2020-21, against estimates of a 5-10 per cent decline. “Given the weak demand base over the last eight years, compounded annual growth rate (CAGR MOFSL expects earnings before interest, tax, depreciation, and amortisation (EBITDA) of cement stocks under its coverage, to grow more than 25 per cent YoY in 4QFY21, driven by ~20 per cent YoY growth in volumes (low base due to covid induced lockdown in Mar’20). Ultratech Cement (NSE closing price 10th March, Rs 6,715) is the most favourite stock of both the brokerages, which is expected to outperform its peers. Among the other preferred stocks include ACC (Rs 1,836.15) from the large cap space and among the mid-cap category, Dalmia Bharat (Rs 1,469.25, BSE) and JK Lakshmi Cement (Rs 429) are expected to perform better. MOFSL does not expect much upside in Shree Cement (Rs 27,580), Ramco Cement (Rs 1,017), and Ambuja Cement (Rs 291.70), whose potential market share gains are already priced in.

Shree Cement's new cement grinding unit in Odisha commences commercial production

Shree Cement on Monday said its new cement grinding unit in Odisha with a manufacturing capacity of 3 million tonnes per annum (mtpa) has commenced commercial production. The company has commenced commercial production at its new cement grinding unit having capacity of 3.0 MTPA set-up at Athagarh Tehsil in Cuttack District of Odisha, Shree Cement said in a regulatory filing. Shree Cement had posted over two-fold jump in consolidated net profit to Rs 631.58 crore for the third quarter ended December 31, 2020, as against a net profit of Rs 311.83 crore in October-December period a year ago. Shares of Shree Cement Ltd were trading 1.41 per cent lower at Rs 27,334.55 apiece on BSE.