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Monday, September 08, 2008
Indo Tech Transformers
We recommend a buy in Indo Tech Transformers from a short-term perspective. It is evident from the charts of Indo Tech Transformers that it has been on a medium-term uptrend from its 52-week low of Rs 264, recorded in early July. Since then, the stock has been trending up forming higher peaks and higher troughs. During early August the stock gained bullish momentum and crossed over its 21- and 50-day moving averages sequentially.
On August 11, the stock surged 14 per cent penetrating the down trendline that was in place from this January. There is an increase in volume over the past three trading sessions. The daily relative strength index (RSI) is featuring in the bullish zone and weekly RSI has entered in to the neutral region from the bearish area.
The moving average convergence and divergence is rising in line with the stock and also featuring in the positive territory. The medium-term up trendline is intact. We are positive on the stock from a short-term perspective. We expect the stock to move up until it hits our price target of Rs 430 in the upcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining a stop-loss at Rs 369.
Market may stage a comeback
The modest rally in the US markets and a rise in all Asian indices in the ongoing trading session may help the domestic indices pull back from lower levels. However, lack of clarity in the market and volatility may drag down the market. Among the indices, the Nifty could face a resistance at 4400-4450 levels and has a likely supports at 4325-4280 levels. The Sensex has a likely support at 14333 and may face resistance at 14600.
US indices bounced back moderately and finished higher, helped by some takeover activity. While the Dow Jones moved up by 33 points at 11,221, the Nasdaq lost 3 points at 2,256.
Indian ADRs had a mixed outing on the US bourses. Rediff was the major loser and tanked 2.43% while Wipro, MTNL, Patni Computer and VSNL slumped over 1% each. Infosys, Satyam and Dr Reddy ended with steady losses. However, ICICI Bank jumped by 3.49% and Tata Motors gained 1.41% while HDFC Bank ended with marginal gains.
Crude oil prices eased a little, with the Nymex light crude oil for October delivery falling by $1.66 to close at $106.23 a barrel. In the commodity space, the Comex gold for December delivery rose by 30 cents to settle at $803.50 an ounce.
Pre Session Commentary - Sep 8 2008
The Indian Market is expected to have positive opening due to the supportive global cues as US markets ended mixed and Asian markets are trading higher along with strong domestic trigger as India succeed to get waiver from NSG. On Friday, domestic markets extended its losses to close with sharp gap on weak global cues along with concern over outcome of NSG meet in Vienna for Indo-US nuclear deal. Weekly jobless claims for US climbed 15,000 to 444,000. Market opened on downbeat note on adverse global signal. Further, market continued to remain under pressure nevertheless fight to find support. Fresh bouts of huge selling again crushed markets to end with sharp losses. NSE Nifty ended below 4,300 mark and BSE Sensex closed below 14,500 level. From the sectoral front, Reality index was worst performer as ended with gap of more than 4%. Other than that, Metal, Bank, Capital Goods, Oil & Gas and IT stocks also contributed to the day’s slide. However, FMCG stocks ended with marginal gain. The BSE Sensex closed lower by 415.27 points at 14,483.83 and NSE Nifty ended down by 95.45 points at 4,352.30. The BSE Mid Caps and Small Caps ended with losses of 75.45 points and 69.15 points at 5,753.72 and 6,905.22. We expect that market may remain bullish during the trading session.
NSG granted waiver for India on Saturday. It is an important breakthrough for India as opened door for nuclear trade. NSG has lifted hurdles for in India in the way of buying products and technologies for the civil uses of nuclear technology and nuclear power.
On Friday, the US market closed mixed. Light, sweet crude for October delivery fell $1.66 to settle at $106.23 a barrel on the New York Mercantile Exchange, which is its lowest settlement since early April.
The Dow Jones Industrial Average (DJIA) closed higher by 32.73 points to close at 11,220.96 followed by the S&P 500 (SPX) ended up by 5.48 points to close at 1,242.31 while the NASDAQ index lost 3.16 points to close at 2,255.88.
Indian ADRs ended mixed. In technology sector, Wipro ended lower by (1.83%) followed by Patni Computers plunged by (1.15%), Satyam by (0.68%) and Infosys lost (0.33%). In banking sector ICICI Bank and HDFC Bank gained (3.49%) and (0.09%). In telecommunication sector, MTNL ended and Tata Communication dropped by (1.56%) and (1.05%). Sterlite industries increased by (1.25%).
Today the major stock markets in Asia are trading higher. Hang Seng index is trading strong by 795.86 points at 20,729.84 along with Japan’s Nikkei trading up by 438.04 points at 12,650.27, Taiwan Weighted advanced by 333.24 points at 6,640.52 and Singapore''s Straits Times gained 91.87 points at 2,666.08.
The FIIs on Friday stood as net seller in equity and net buyer in debt. Gross equity purchased stood at Rs2,617.20 Crore and gross debt purchased stood at Rs62.60 Crore while the gross equity sold stood at Rs3,016.40 Crore and gross debt sold stood at Rs49.60 Crore. Therefore, the net investment of equity reported was (Rs399.10) Crore and net debt was Rs13.00 Crore.
The partially convertible Indian rupee fell to its weakest since December 2006, to close at 44.64/65 per dollar against previous close of 44.35/36. Weakness in Indian rupee was on account of dollar demand from corporate and share market losses.
Today, Nifty has support at 4,310 and resistance at 4,621 and BSE Sensex has support at 14,303 and resistance at 15,613.
Trading Calls - Sep 8 2008
Nifty (4352) Sup 4305 Res 4475
Buy BHEL (1735-1750) SL 1725 Target 1790, 1800
Buy L&T (2620-2640) SL 2610
Target 2680, 2695
Buy NTPC (174-177) SL 171
Target 185, 188
Buy Rolta (326-331) SL 322
Target 339, 343
Buy Suzlon (226-230) SL 223, Target 238, 242
Enjoy the new clear gain
Victory belongs to the most persevering.
Good morning and welcome to a gap-up opening. If you caught Friday's falling stars today would be a day to pocket some instant gains. The perseverance has resulted in
The indicators on the derivative side of the markets are also supportive. As a result, the bulls will have a field day today after being at the receiving end over the last two days amid anxiety over the NSG meet. Stocks that are likely to benefit from the Indo-US civil nuclear deal will shoot up. Watch out for the capital goods and engineering space. These stocks are surely going to rock today. Select IT shares may also do well as the sector may gain from the spin-off effect from the agreement. Tata Motors will be in action on resolution of the Singur issue.
As mentioned to you over the weekend, the victory at the NSG finally lifted the curbs on the country resuming nuclear trade with the world. This is a momentous occasion for
FIIs were net sellers of a whopping Rs18.57bn (provisional) in the cash segment on Friday while local institutions pumped in Rs4.85bn. In the F&O segment, the foreign funds were net sellers of Rs9.5bn. On Thursday, FIIs were net sellers of Rs3.99bn in the cash segment. Mutual funds were net buyers of Rs1.34bn on the same day.
Asian markets surged the most in eight months and US futures jumped after the Bush government seized control of Fannie Mae and Freddie Mac, shoring up global financial markets reeling from more than $500bn in credit losses.
Mizuho Financial and Macquarie rose more than 10% after the bailout of the two-biggest US mortgage guarantors lowered credit risk. Toyota led exporters higher with a 3.8% advance after the yen weakened as investors sought higher-yielding assets.
The MSCI Asia Pacific Index climbed 4.3% to 121.84 as of 10:55 a.m. in Tokyo, with financial companies accounting for almost half of that gain. The index on Friday closed at its lowest level since June 13, 2006.
US stocks staged a smart recovery on Friday to end slightly higher, as a rebound in the battered financial stocks helped offset renewed concerns over recession in the wake of the grim unemployment report.
The S&P 500 index added 5.48 points, or 0.4%, to 1,242.31. After earlier falling by nearly 150 points, The Dow Jones Industrial Average rose 32.73 points, or 0.3%, to 11,220.96. The Nasdaq Composite Index slipped 3.16 points to 2,255.88.
Market breadth was mixed. About six stocks rose for every five that fell on the New York Stock Exchange.
Bond prices edged lower, raising the corresponding yields, while the dollar strengthened versus the euro and yen. Oil prices settled at a fresh five-month low, while gold and other commodity prices declined modestly.
The S&P 500 and the Dow had lost more than 1% each early in the morning after a government report showed that the unemployment rate had jumped to a five-year high of 6.1% in August. Economists had expected the unemployment rate to hold steady at 5.7%.
American employers cut 84,000 jobs from their payrolls as against expectations of around 75,000. This was the eighth straight month of declines in jobs, heightening worries over the state of the world's biggest economy.
Employers cut 60,000 jobs from their payrolls in July. Through August, the U. economy has lost 605,000 jobs in 2008.
The report fanned speculation that the Federal Reserve will hold interest rates steady for the rest of the year. Chances that policy makers will leave the target rate for overnight loans between banks unchanged through January rose to 79% from 63%, futures trading shows.
All three major indices fell through the morning but managed to recover in the afternoon as the financial sector turned around. Financial stocks make up the second biggest sector in the S&P 500, after technology.
For the week, all the three US indices slipped. The Dow declined 2.8%, the Nasdaq slumped 4.7% and the S&P 500 shed 3.2%.
In other economic news, a record 1.25mn homes were in foreclosure during the second quarter, according to the Mortgage Bankers Association. Foreclosures rose above 1% in the second quarter for the first time since the Mortgage Bankers Association began its loan survey 29 years ago.
San Francisco Federal Reserve Bank president Janet Yellen said that the US economic growth will be weak in the second half of 2008. Yellen is an alternate member of the FOMC's rate-setting committee this year and will be on the committee next year.
Financial shares climbed 3.2%, the most among 10 S&P 500 industries.
Lehman Brothers' shares rallied 6.8% on a Reuters report that the beleaguered Wall Street firm may sell assets to Blackstone and Kohlberg Kravis Roberts. Blackstone and KKR may buy some of Lehman's assets, including real estate holdings and part of the asset-management unit, Reuters reported.
Bank of America, Citigroup and JPMorgan Chase climbed more than 4% apiece, as banks benefited from growing expectations that the Federal Reserve will not raise interest rates given the economic gloom.
Goldman Sachs downgraded Merrill Lynch to "sell," citing the likelihood of further writedowns tied to bad mortgage bets. Goldman also said it expects Merrill to post a bigger third-quarter and full-year loss than previously expected. Merrill shares ended higher, recovering from morning losses.
Finnish wireless handset maker Nokia warned that its third-quarter global market share will decline from second-quarter levels and that the global mobile device market will be hit by a sluggish global economy and slowdown in consumer spending. Its shares slumped 7.6%.
PC major Dell is reportedly looking to sell some or all of its PC-manufacturing plants as a means of cutting costs, according to the Wall Street Journal report. Dell shares were little changed.
UST rallied 25% after the New York Times reported that the Altria Group, parent of Philip Morris, plans to acquire the smokeless tobacco maker. However, Altria dismissed the report as untrue.
SanDisk had the biggest gain in more than eight years, soaring 31%. Samsung Electronics said it may buy the memory-card maker in what would be the South Korean company's biggest acquisition. Samsung said it was considering various options, including an acquisition.
US light crude oil for October delivery fell US$1.66 to settle at US$106.23 a barrel in New York, after ending the previous session at a five-month low. Oil prices are now down more than US$40 a barrel from a record high of US$147.20 in July on bets that a sluggish global economy is cutting into demand.
Investors have also been trying to determine the impact of Hurricane Gustav, which struck this week in the Gulf Coast region that accounts for about 25% of US oil production, as well as determine what threat there is from three other storms in the Atlantic.
Gasoline prices declined for a fifth straight day, according to a national survey of credit-card activity. The recent decline in driving has cut into the federal Highway Trust Fund, prompting the government to ask Congress for an US$8bn emergency infusion.
In the bond market, Treasury prices gave up early gains and turned lower. The decline lifted the yield on the benchmark 10-year note to 3.64% from 3.62% late on Thursday.
The dollar gained versus the euro, hitting its highest point against the European currency since October of last year. The dollar also hit its highest level against the British pound in two years. But the greenback was flat versus the yen.
COMEX gold for December delivery fell 40 cents to settle at US$802.80 an ounce.
The two government-sponsored firms own about half the mortgage debt in the US. Fannie Mae shares fell 18% in extended-hours trading, while Freddie Mac shares lost 10% on worries that the rescue might wipe out equity shareholders.
Next week brings a slew of relevant economic reports, but most are not due until the end of the week. The one early report will be the July pending home sales index on Tuesday. Other key reports include the August retail sales index and the producer price index, due out on Friday.
In Europe, key markets in UK, Germany and France closed down more than 2% each.
In the emerging markets, Brazil's Bovespa was up 1% at 51,939 while Mexico's IPC index also gave back almost 1% to 25,904. The RTS index in Russia tumbled 3.8% to 1469 and the ISE National-30 index in Turkey was down 1% at 48,574.
Global factors may dominate
Indian bourses were on the receiving end for second straight day posting its biggest fall in nearly two weeks on the back of weak global cues and selling pressure in 2the realty, banking and metal stocks. The BSE benchmark Sensex closed at 14,483 losing 415 points and the NSE Nifty index lost 95 points to close at 4,352.
Oil marketing companies were in momentum on the back of further slide in the crude oil prices. Crude oil prices hit a low of 105.76 as dollar rallied. BPCL rose over 8% to Rs357, HPCL gained by over 4.5% to Rs236 and IOC added 2.3% to Rs446.
Shares of Sasken Communications gained by half a percent to Rs142 after media reports stated that SEBI may not be able to curtail the company’s 12 month buyback window. Reports also stated that SEBI’s directive to buyback shares on weekly basis cannot be sustained. The scrip touched an intra-day high of Rs146 and a low of Rs139 and recorded volumes of over 5,00,000 shares on NSE.
Gujarat NRE Coke declined by over 5.5% to Rs94. The company announced its plans to boost production to 7mn metric tons in the next five years. The company plans to spend US$450mn tons to increase coking coal output. Gujarat NRE currently produces 1mn tons of the fuel. The scrip touched an intra-day high of Rs98.9 and a low of Rs94 and recorded volumes of over 20,00,000 shares on NSE.
Shares of Alembic Ltd rallied by over 7% to Rs44.9 after 2.02mn shares were traded in a single block deal. The scrip touched an intra-day high of Rs47.2 and a low of Rs41 and recorded volumes of over 3,00,000 shares on NSE.
Shares of Orbit Corp which is engaged in real estate construction and development gained by over 1% to Rs309 after reports stated that Supreme Court cleared way for builders to use 3-7 times FSI for re-development in Mumbai.
A Supreme Court order has smoothened the way for redevelopment of the entire city, the impact of which would be primarily seen in South Mumbai. The scrip touched an intra-day high of Rs328 and a low of Rs298 and recorded volumes of over 7,00,000 shares on NSE.
Sona Koyo rallied by over 19% to Rs21.2 on back of huge volumes. The scrip touched an intra-day high of Rs21.3 and a low of Rs17.5 and recorded volumes of over 17,00,000 shares on NSE.
Union Bank of India slipped 2.8% to Rs151. The bank announced that it has raised additional capital to the extent of Rs2bn by issue of Hybrid Tier I Capital t, Perpetual Bonds. The Bonds are rated as "AA+ / Stable" by CRISIL & "LAA" with Stable outlook by ICRA. The scrip touched an intra-day high of Rs155 and a low of Rs148 and recorded volumes of over 3,00,000 shares on NSE.
Coal India plans to import coal for the first time; could source up to 4mn tonnes of thermal coal this year.(BS)
Private equity firm Kohlberg Kravis Roberts & Co is eyeing BT’s stake in Tech Mahindra.(ET)
Supreme Court gives environmental clearance to Reliance Power’s 3,960MW UMPP at Sasan in Madhya Pradesh.(BL)
MTNL to install 1.5mn 3G lines in the first phase in Delhi and Mumbai.(TOI)
Jindal Power, a subsidiary of Jindal Steel & Power, has commissioned a fourth unit of 250MW at Raigarh in Chattisgarh.(FE)
BEML receives a Rs310mn development contract from the Indian Rail Board.(BL)
Maharashtra Seamless, part of DP Jindal group, receives export orders worth US$43mn from the US.(ET)
Promoters of retail chain Subhiksha may be looking for buyers for the business.(BS)
Anant Raj Industries to invest Rs43bn in three years to develop various properties across North India.(Mint)
Future Ventures India, the venture capital arm of Future Group, receives regulatory approval for its IPO.(ET)
BHEL to invest Rs14bn in a castings, forgings facility.(FE)
Reliance Industries to begin drilling in Colombian asset in 2010; plans to invest US$50mn in two blocks over a six year period.(DNA)
Indraprashta Gas plans to invest Rs5bn over next two years to expand its retail network.(BL)
Reliance Big Entertainment, part of ADAG group, acquires a majority stake in the US-based cricket web casting portal, Willow TV.(Mint)
Tata Motors may raise US$500-600mn by offering equity or equity-linked securities through international financial markets with securities having differential voting rights.(ET)
Adani group in an advanced stage of negotiations to acquire more captive thermal coal blocks in Indonesia.(BL)
ONGC aims to generate 1000 MW energy from its wind energy project.(BS)
Wipro Technologies puts about 4-5% of its workforce under the scanner for non-performance.(ET)
ONGC renews drilling in Cauvery deepwater block.(BL)
BHEL and GMR in talks with global companies for nuclear business.(BL)
Tata Motors plans to sell over 12,000 Indica ‘Vista’ units a month in the next four to five months.(FE)
GSPC hopes to get nod for commerciality of KG-8 discovery soon.(BL)
GAIL along with Reliance Industries with whom it has a JV agreement, may set up a mega petrochemical plant in Colombia.(BS)
Reliance Infrastructure invites bids by power generation companies to supply 50MW of power.(BS)
Big Pictures, the movie production arm of Reliance Big Entertainment, to invest Rs10bn for 70 films in the next two and a half years.(ET)
Petroleum Minister says he hopes acquisition of Imperial Energy by ONGC Videsh will be concluded in 4-5 weeks.(TOI)
Reliance Power may be allowed to use surplus coal from mines allotted to Sasan UMPP for its other power projects.(FE)
Alembic plans to foray in to the regulated US and European markets and also in to contract manufacturing. (BS)
Hindustan Aeronautics Ltd. decides to set up a base for its advance light helicopter ‘Dhruv’ in Ecuador.(BS)
S Kumars Nationwide set to buy an Italian shirt company for Rs4.8bn.(Mint)
SBI to revise a scheme which will enable farmers to avail term loans at 12% so as to clear 100% of the loans to money lenders. (ET)
Pantaloon group plans to open 15 more ‘Big Bazaar’ stores by end November at an investment of Rs16bn.(DNA)
Reliance Money close to signing a deal to acquire 15-26% stake in Hong Kong Mercantile Exchange.(ET)
Tata Steel signs a memorandum of settlement with it’s workers’ union for the 2007-08 annual bonus which will translate to a payout of Rs1.1bn.(BS)
A Ludhiana district court has authorized Axis Bank to enforce its derivatives contract with Nahar Industrial Enterprises.(Mint)
An oil rig deployed by ONGC Bombay High South Field catches fire. (BS)
Kotak Group is eyeing a majority stake in the Ahmedabad Commodity Exchange.(BS)
Surya Food Agro, maker of the Priyagold biscuits, to launch chocolates and wafers in November to expand its product portfolio.(ET)
Economy Front page
Forex reserves declined by US$2bn to US$295bn for week ended August 29.(BL)
Commission for Agricultural Costs and Prices recommends a statutory minimum price of Rs125/quintal for sugar cane in the 2009-10 season.(ET)
DoT to hold a pre-bid conference today for the auction of spectrum for 3G mobile services.(BS)
D Subbarao takes charge as the governor of RBI; sets for himself the immediate task of containing inflation.(FE)
Maharashtra government may raise FSI from one to four for areas connected with the Mumbai Trans Harbour Link.(BS)
Government considering allowing spectrum sharing between two mobile operators.(TOI)
Seven more firms get SEBI approval to sell mutual funds.(Mint)
NSG grants India a waiver that will enable it to carry out nuclear commerce, ending 34 years of nuclear isolation.(FE)
SEBI suggests 15% stake for strategic investors in stock exchanges.(TOI)
Petroleum Minister says international oil prices would have to fall further to trigger a fuel price reduction.(FE)
Government extends the suspension of futures trading in four key commodities till November 30.(FE)
Tea output is up by 12.7% for the period January-July 2008 as compared to the corresponding period last year.(BS)
Commerce and Industry ministry in talks to prepare guidelines for local governance bodies inside larger SEZs.(BS)
Market seen rallying on NSG approval
Key benchmark indices are geared for a sharp upward gap opening after the 45-nation Nuclear Supplier Group (NSG) on Saturday, 6 September 2008 reached a consensus on the crucial Indo-US nuke deal agreeing on a clean waiver for India. Boosted by the deal, the SGX Nifty surged 190.50 points to 4,558.50 in opening trade. Global cues were mixed. Crude oil gained over $2 per barrel.
The NSG’s acceptance of the US proposal to drop the ban on nuclear trade will now put the Indo-US nuclear deal on the fast track. The approval came after almost three days of meeting in Vienna, ending a three-decade-long ban on India buying materials related to nuclear energy. The NSG meet was called to minimise any damage to the Non-Proliferation Treaty, which India has not joined.
However, the nuclear deal still needs to be ratified by the US Congress before it could take force. The Congress must act before adjourning in late September 2008 for US presidential elections. If that does not happen then the deal could be left to an uncertain fate under a new US administration that takes office next year.
New York's main contract, light sweet crude for delivery in October 2008 rose $2.37 to $108.60 per barrel today, 8 September 2008 on worries hurricane Ike will threaten production facilities in the oil-rich US Gulf Coast.
Most Asian markets were trading firm today, 8 September 2008. Japan's Nikkei gained 3.59% or 438.04 points at 12,650.27, Hong Kong's Hang Seng rose 3.99% or 795.86 points at 20,729.14, Taiwan's Taiwan Weighted advanced 5.28% or 333.24 points at 6,640.52, Singapore's Straits Times surged 3.57% or 91.87 points at 2,666.08, South Korea's Seoul Composite added 4.40% or 61.82 points at 1,466.2. However, China's Shanghai Composite was down 0.27% or 6.01 points at 2,196.43
US markets ended mixed on Friday, 5 September 2008 after financial shares rebounded on hopes that concrete measures would be taken to rescue mortgage companies Fannie Mae and Freddie Mac. The Dow Jones industrial average roe 32.73 points, or 0.29%, to 11,220.96. The Standard & Poor's 500 index gained 5.48 points, or 0.44%, to 1,242.31. However the Nasdaq composite index slid 3.16 points, or 0.14%, to 2,255.88.
Back home, intense selling in index pivotals ever since the opening bell tracking weak global markets led a sell-off on the bourses on Friday, 5 September 2008. The BSE 30-share Sensex lost 415.27 points or 2.79% to 14,483.83 and the S&P CNX Nifty declined 95.45 points or 2.15%, to settle at 4352.30.
Gains led by a sharp fall in oil price were erased by setback in global equities and domestic political concerns. The Sensex lost 80.70 points or 0.55% to 14,483.83 and the S&P CNX Nifty lost 7.70 points or 0.17% to 4352.30 in the week ended Friday, 5 September 2008.
Foreign institutional investors (FIIs) were net equity sellers worth Rs 1857 crore while mutual funds purchased shares worth Rs 484.77 crore on Friday, 5 September 2008, according to provisional data on NSE.
FIIs were net sellers of Rs 949.97 crore in the futures & options segment on Friday, 5 September 2008. They were net sellers of index futures to the tune of Rs 632.74 crore and purchased index options worth Rs 345.37 crore. They were net sellers of stock futures to the tune of Rs 743.27 crore and bought stock options worth Rs 80.68 crore.
Sunday, September 07, 2008
Grey Market - 20 Microns, Chemcel Biotech
20 MICRONS Ltd. 50 to 55 7 to 9
Chemcel Biotech Ltd. 16 4 to 5
India US Nuclear Deal Beneficiaries
Larsen & Toubro
Bharat Heavy Electricals
National Thermal Power Corporation
Areva T&D India
Alstom Projects India
Rolta India
Gammon India
Hindustan Construction Company
ABB
Crompton Greaves
Walchandnagar Industries
Reliance Energy
Tata Power Company
Larsen & Toubro has done engineering, procurement and construction projects for nuke power plants. It is currently working on the 2,000 megawatt Kudankulam nuclear project.
Bharat Heavy Electricals supplies up to 500 megawatt of equipment to Nuclear Power Corporation. It has an existing tie-up with Siemens for nuclear technology.
National Thermal Power Corporation is reportedly in talks with Nuclear Power Corporation of India for setting up a 2000 megawatt nuclear plant.
Areva T&D is reportedly looking at a plant for uranium mining and recycling. The plant would be set up after nod from Nuclear Power Corporation.
Alstom Projects India already makes nuclear reactors and rotors. Its parent company is a world leader in conventional nuclear projects. It makes turbines for nuclear power stations.
Rolta India along with its joint venture Stone and Webster provides reactor-building technology. Stone & Webster’s parent has 20% in Westinghouse Electric, a nuclear reactor maker.
Gammon India has undertaken turnkey construction for nuclear projects.
Hindustan Construction Company has constructed four nuclear power projects in India. It is an engineering procurement and construction contractor for nuclear projects.
ABB makes components for power projects. Its parent company’s exposure includes new nuclear power plants, systems and components.
Crompton Greaves works with Nuclear Power Corporation of India. It has completed a switchyard for nuclear project.
Walchandnagar Industries makes critical equipment for India’s nuclear power facilities.
Reliance Energy reportedly plans to invest additional Rs 12,000 crore in nuclear power capacity. It plans to install 2000 megawatt of nuclear power capacity.
Tata Power Company has tied up with some major nuclear equipment suppliers like Areva. It already has a relationship with Toshiba.
Ultratech Cement - Annual Report - 2007-2008
ULTRATECH CEMENT LIMITED
ANNUAL REPORT 2007-2008
DIRECTOR'S REPORT
TO THE SHAREHOLDERS
Dear Shareholders,
Your Directors present the Eighth Annual Report together with the Audited Accounts of your Company for the year ended 31st March, 2008:
FINANCIAL RESULTS (Rs. in crores) 2007-08 2006-07
Gross Turnover 6,286.24 5,484.35
Gross Profit 1,744.24 1,392.44
Less: Depreciation 237.23 226.25
Profit Before Tax 1,507.01 1,166.19
Tax Expenses 499.40 383.91
Profit After Tax 1,007.61 782.28
Add: Balance brought forward from Previous Year 775.16 180.57
Surplus available for Appropriation 1,782.77 962.85
Appropriation
Debenture Redemption Reserve (8.17) 30.92
General Reserve 120.00 100.00
Dividend 62.24 49.79
Corporate tax on Dividend 10.58 6.98
Balance transferred to Balance Sheet 1,598.12 775.16
Total 1,782.77 962.85
REVIEW OF OPERATIONS AND OVERVIEW
During the year, your Company produced 15.07 MMT of cement (14.64 MMT). Effective capacity utilisation remained flat at 101%. Exports were curtailed to cater to the growing domestic demand. This supported domestic volume growth of 7%. Variable cost increased by over 8% mainly on account of escalation in the cost of raw materials, including imported coal and mounting freight charges.
Continuous de-bottlenecking efforts across your Company's Units resulted in a capacity increase of 1.2 MMT.
Your Company's turnover at Rs. 6,286.24 crores was up by 15% compared to Rs. 5,484.35 crores achieved in the previous year. Profit after tax stood at Rs.1,007.61 crores (Rs.782.28 crores) after providing for depreciation - Rs. 237.23 crores (Rs. 226.25 crores) and tax Rs. 499.40 crores (Rs. 383.91 crores).
DIVIDEND
Your Directors recommended a dividend of Rs. 5/- per equity share of Rs. 10/- each for the year ended 31st March, 2008. The dividend distribution would result in a cash outgo of Rs. 72.82 crores (including tax on dividend of Rs. 10.58 crores) compared to Rs. 56.77 crores (including tax on dividend of Rs. 6.98 crores) paid for the year 2006-07.
CAPITAL EXPENDITURE
Your Company initiated various expansion and de-bottlenecking programs to maintain growth and improve efficiencies.
The Clinkerisation (pyrosection) unit at Andhra Pradesh Cement Works (APCW) was commissioned during the fourth quarter of the financial year ended 31st March, 2008. The balance work on capacity expansion at APCW is progressing and the split grinding Unit at Ginigera in Karnataka is on track. The Unit will be operational in the first half of the current fiscal.
Upon commissioning of expanded capacity at APCW your Company's total capacity will be 23.1 MMT.
Trials have begun on the 1st Stream of the Thermal Power Plant (TPP) of 23MW at Gujarat Cement Works (GCW) in Gujarat. All four Streams aggregating to 92MW will be fully operational by HIFY09. In addition, TPP's aggregating to 135MWs are being set up at Awarpur Cement Works (ACW) in Maharashtra, APCW and Hirmi Cement Works (HCW) in Chhattisgarh. These power plants, except ACW will be commissioned in a phased manner in FY09.
In FY08 15 Ready Mix Concrete (RMC) plants have been set up across the country.
EMPLOYEE STOCK OPTION SCHEME
The ESOS Compensation Committee of the Board of your Company formulated the Employee Stock Option Scheme - 2006 ('ESOS-2006') at its meeting held on 23rd August, 2007.
The ESOS Compensation Committee granted 1,68,070 stock options to eligible employees of your Company. The disclosure, as required under Clause 12 of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is set out in Annexure I to this Report.
AWARDS
Your Company was the recipient of the following awards:
* The Top Exporter Award from CAPEXIL for the eleventh consecutive year.
* State level award for excellence in energy conservation and management for 2006 for ACW.
* The CII National award for excellence in Energy Management 2007 - Energy Efficient Unit' and Innovative Project' for APCW
* Mines safety award - First prize in Method of Working' and Second prize in Drilling and Blasting' for APCW.
* National Safety Award for outstanding performance in industrial safety for HCW
RESEARCH AND DEVELOPMENT
Your Company continued its efforts towards maximising waste utilisation, search for alternative sources of fuel and chemical and mineral evaluation of captive limestone mines. These measures will aid in conserving natural resources.
HUMAN RESOURCES
At your Company, employees continue to be the key driving force of the organisation and remain a strong source of our competitive advantage. We believe in aligning business priorities with the aspirations of employees leading to the development of an empowered and responsive human capital. We strive to create a work environment which encourages innovation and creativity.
Through our strong Employer Brand, we were able to attract quality people with required skills who have become part of our competent and committed workforce. Appropriate measures are being planned by your Company to ensure talent retention and employee engagement.
Your Company continued to support learning and development initiatives to enhance the functional as well as the behavioural competencies of our people. At Gyanodaya' - The Aditya Birla Institute of Management Learning, executives of your Company were enlisted for various high quality learning interventions. These programs supplemented with a combination of developmental assignments, classroom and web based training, has enabled our people to continuously learn, develop and grow.
Our performance management system is primarily based on competencies and values. We closely monitor growth and development of top talent in your Company, to align personal aspirations with the organisation purpose.
CORPORATE GOVERNANCE
Your Directors reaffirm their continued commitment to good corporate governance practices. During the year under review, your Company complied with the provisions of Clause 49 of the Listing Agreement with the stock exchanges which relates to corporate governance.
A separate section on corporate governance together with a certificate from your Company's Statutory Auditors forms a part of this Annual Report.
SUBSIDIARY COMPANIES
In terms of Section 212 of the Companies Act, 1956, ('the Act') the Accounts together with the Report of Directors and the Auditor's Report of your Company's subsidiaries viz. Dakshin Cements Limited (Dakshin) and U1traTech Ceylinco (Pvt) Limited (U1traTech Ceylinco) forms a part of this Report.
In line with the provisions of the Accounting Standards prescribed by the Institute of Chartered Accountants of India and the provisions of the Listing Agreement with the stock exchanges, the duly audited Consolidated Financial Statement has been prepared after considering the financial statements of your Company's subsidiaries viz. Dakshin and U1traTech Ceylinco.
FINANCE
CRISIL has upgraded your Company's rating from 'AA+/Stable' to 'AAA/Stable'. Your Company is also one of the few companies to have its bank loan facilities rated. CRISIL has assigned your Company's bank loan facility, the highest rating of 'AAA/Stable/Pl+'. Such a rating allows your Company to borrow on competitive terms.
Your Company has raised Rs.90 crores by way of fully hedged Buyers Credit for a tenure of three years. These funds have been used for various ongoing capex.
Your Company has repaid debentures and loans amounting to Rs. 285 crores.
Your Company has not invited or renewed deposits from the public/ shareholders in accordance with Section 58A of the Act.
ENERGY, TECHONOLOGY AND FOREIGN EXCHANGE
Information on conservation of energy, technology absorption and foreign exchange earnings and outgo, required to be disclosed pursuant to section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in Annexure II and forms part of this Report.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' Report, as an addendum thereto. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts as therein set out, are being sent to all Members of your Company excluding the aforesaid information about the employees. Any Member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office of your Company.
DIRECTOR'S RESPONSIBILITY STATEMENT
The Audited Accounts for the year under review are in conformity with the requirements of the Act and the Accounting Standards. The financial statements reflect fairly the form and substances of transactions carried out during the year under review and reasonably present your Company's financial condition and results of operations.
Your Directors confirm that:
(i) In the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;
(ii) The accounting policies selected have been applied consistently and judgments and estimates are made that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at 31st March, 2008 and of the profit of your Company for the year ended on that date;
(iii) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting frauds and other irregularities;
(iv) The Annual Accounts of your Company have been prepared on a going concern basis.
DIRECTORS
Mr. S. Rajgopal, Nominee Director resigned from the Board of your Company with effect from 20th October, 2007 consequent to the withdrawal of his nomination by the Administrator of the Specified Undertaking of the Unit Trust of India. However, considering his vast knowledge and experience, the Board inducted Mr. Rajgopal as an Additional Director with effect from that date. Mr. Rajgopal holds office upto the conclusion of the ensuing Annual General Meeting. Notice pursuant to Section 257 of the Act has been received from a Member of your Company proposing Mr. Rajgopal's appointment as Director.
Mrs. Rajashree Birla, Mr. V T. Moorthy and Mr. R. C. Bhargava retire from office by rotation and being eligible, offer themselves for re-appointment.
A brief resume of the Directors being appointed / re-appointed are attached to the Notice of the ensuing Annual General Meeting.
AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai and M/s. G. P. Kapadia & Co., Chartered Accountants, Mumbai were appointed Joint Statutory Auditors of your Company from the conclusion of the previous Annual General Meeting until the conclusion of the ensuing Annual General Meeting. M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai and M/s. G.P. Kapadia & Co., Chartered Accountants, Mumbai being eligible, offer themselves for re-appointment as auditors of your Company.
The Board proposes the re-appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai and M/s. G. P. Kapadia & Co., Chartered Accountants, Mumbai as Joint Statutory Auditors of your Company based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting.
The Board also proposes the re-appointment of M/s. Haribhakti & Co., Chartered Accountants, Mumbai as the Branch Auditors of your Company's Unit's at Jafrabad and Magdalla in Gujarat and Ratnagiri in Maharashtra, based on the recommendation of the Audit Committee, to hold office from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting. In terms of the provisions of the Act the Board also seeks your approval for the appointment of Branch Auditors in consultation with your Company's Statutory Auditors for any other Branch / Unit / Division of your Company, which may be opened / acquired / installed in future in India or abroad.
Resolutions seeking your approval on these items are included in the Notice convening the Annual General Meeting.
The observation made in the Auditor's Report are self-explanatory and therefore, do not call for any further comments under Section 217(3) of the Act.
COST AUDITORS
Pursuant to the provisions of Section 233E of the Act, your Directors have appointed M/s. N. 1. Mehta & Co., Cost Accountants, Mumbai as the Cost Auditor to conduct the cost audit of your Company for the financial year ending 31st March, 2009, subject to the approval of the Central Government.
APPRECIATION
Your Directors place on record their appreciation of the contribution made by employees at all levels. Your Company's growth was made possible by employee's support, co-operation, commitment, solidarity and hard work.
Your Directors wish to take this opportunity to express their deep sense of gratitude to the Central and State Governments, banks, financial institutions, shareholders and business associates for their co-operation and support and look forward to their continued support in future.
For and on behalf of the Board
Mumbai Kumar Mangalam Birla22nd April, 2008 Chairman
ANNEXURE I
Disclosure pursuant to Clause 12 of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999
Particulars ESOS - 2006 Tranche I [23rd August, 2007]
a. No. of Options granted 99,010
b. The Pricing formula The exercise price is the average price of the equity shares of the Company in the immediate preceding seven days period (at a stock exchange as determined by the ESOS Compensation Committee) on the date prior to the date on which the ESOS Compensation Committee finalised the specific number of Options to be granted to the employees, discounted by 30%.
Exercise Price : Rs. 606/- per option
c. Options vested Nil
d. Options exercised Nil
e. The total number of shares N.Aarising as a result of exerciseof the options
f. Options lapsed Nil
g. Variation of terms of options Nil
h. Money realised by exercise N.Aof options
i. Total number of optionsin force:
- Vested Nil
- Unvested 99,010
j. Employee wise details ofoptions granted to:
i. Senior Managerial Personnel Mr. S. Misra, 32,640Managing Director
ii. Any other employee who Nil receives a grant in any oneyear of option amounting to5% or more of option granted during that year
iii. Identified employees who Nil were granted option, during any one year, equal to orexceeding 1% of the issuedcapital (excluding outstandingwarrants and conversions)of the company at the timeof grant
ESOS - 2006 Tranche II [25th January, 2008]
a. No. of Options granted 69,060
b. The Pricing formula The exercise price is the average price of the equity shares of the Company in the immediate preceding seven days period (at a stock exchange as determined by the ESOS Compensation Committee) on the date prior to the date on which the ESOS Compensation Committee finalised the specific number of Options to be granted to the employees, discounted by 2%.
Exercise Price : Rs. 794/- per option
c. Options vested Nil
d. Options exercised Nil
e. The total number of shares N.Aarising as a result of exercise of the options
f. Options lapsed Nil
g. Variation of Nilterms of options
h. Money realised by exercise N.Aof options
i. Total number of options Nilin force:
- Vested Nil- Unvested 69,060
j. Employee wise details of
options granted to:
i. Senior Managerial Personnel Mr. S. Misra, 51,650Managing Director
ii. Any other employee who Nil receives a grant in any oneyear of option amounting to5% or more of option granted during that year
iii. Identified employees who Nilwere granted option, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant
ESOS - 2006 Tranche I Tranche II [23rd August, 2007] [25th January, 2008]
k. Diluted Earnings Per Share NA(EPS) pursuant to issue of shares on exercise of option calculated in accordance with Accounting Standard (AS) 20Earning Per Share'
1. Where the company has The Company has calculated the employee calculated the employees compensation cost using theintrinsic compensation cost using the value method of accounting to account intrinsic value of the for options issued under the stock options: ESOS - 2006.
i. The difference between the Employee compensation cost:employee compensation cost so - intrinsic value based Rs. 0.77 crorescomputed and the employee - fair value based Rs. 1.84 crorescompensation cost that shall Difference Rs. 1.07 croresbe recognised if it had used the fair value of the options shall be disclosed.
Reported Adjustedii. The impact of this difference:
- on profits Net Profit Rs. 1007.61 Rs. 1,006.54 crores crores
- EPS Basic: Rs. 80.94 Rs. 80.86 Diluted: Rs. 80.91 Rs. 80.83
m. Weighted average exerciseprices of options:
i. Equal to market price of -the stock
ii. less than market price of Rs. 683/the stock
Weighted average fair values of ontions
i. Equal to market price of thestock -
ii. less than the market priceof the stock. Rs. 462/-
n. A description of the methodused during the year to estimate Black - Scholes Methodthe fair values of options.
Significant assumptions usedduring the year to estimate the fair values of options including the following weighted average information:
i. Risk - free interest rate 8%
ii. Expected life Period up to vesting plus the average of the exercise period corresponding to each vesting.
iii. Expected volatility Implied volatility of the Company's stock prices on NSE based on the price data of last one year up to the date of grant
Tranche I = 49% Tranche II = 52%
iv. Expected dividend Adjustment of the closing price of the Company's share on the NSE for the expected dividend yield over the expected life of the options (dividend for FY 2006-07 and a growth factor have been considered, which are then discounted and an average present value of dividend ascertained)
v. The price of the underlying Rs. 829/-share in the market at thetime of option grant.
ANNEKURE II
DISCLOSURES OF PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO AS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988:
A. CONSERVATION OF ENERGY:
a) Energy Conservation Measures taken:
Installation of Variable Frequency Drives Use of fuel efficient and higher capacity mining equipments Optimisation of Grinding Media size distribution in mills Close circuiting of cement mills Cooler Gas waste heat recovery system installed.
b) Additional investments and proposals if any, being implemented for reduction of consumption of energy:
Close circuiting of cement mills Installation of Roller Press Installation of Vertical roller mill for fuel grinding Installation of Dry Fly Ash handling and feeding system Modification of clinker characteristic to improve clinker grindability Increased Fly Ash absorption and Blended Cement production.
c) Impact of measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods:
The proposals stated above shall result in reduction in power consumption and recovery of waste heat to use for productive purpose thereby reduction in cost.
d) Total energy consumption and energy consumption per unit of production:
As per FORM-A of this Annexure
B. TECHNOLOGY ABSORPTION:
Efforts made in technology absorption as per FORM-B of this Annexure.
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
The information on foreign exchange earnings and outgo is contained in Schedule 22(6) and (5) of the Accounts.
FORM - A(See Rule 2)
Form for disclosure of particulars with respect to conservation of energy
A. POWER AND FUEL CONSUMPTION Current Year Previous Year 2007-08 2006-071. Electricity (a) Purchased Units 000 Kwh 923400 847582 Total Amount Rs. crores 432.69 405.70 Rate/unit Rs. 4.69 4.79 (b) Own generation* (i) Through Diesel generator Units 000 Kwh 176961 188908 Units (Kwh) per Ltr. of fuel oil 3.96 4.03 Cost/Unit Rs. 5.62 4.91 (ii) Through Steam Turbine/Generator Units 000 Kwh 316750 309571 Units(Kwh) per kg of coal 0.70 0.73 Cost/Unit Rs. 1.73 1.40 (iii) Through Steam Turbine/Generator Units 000 Kwh 5527 64249 Units(Kwh) per kg of Naphtha 3.80 4.73 Cost/Unit Rs. 15.05 7.40 (iv) Waste Heat Recovery system Units 000 Kwh 19064 477.05 Cost/Unit Rs. 0.35 0.25
2. Coal (S1ack,Steam & ROM including lighting Coal) For Co-generation of Steam & Power Tonnes 454839 425246 Total Cost Rs. crores 46.95 35.23 Average rate Rs./Tonnes 1032 828 For Process in Cement Plants Quantity Tonnes 2157186 1991666 Total Cost Rs. crores 650.76 543.99 Average rate Rs./Tonnes 3017 2731
3. Furnace Oil (Including Naphtha) Quantity K. Ltrs 47020 66184 Total amount Rs. crores 86.70 122.70 Average rate Rs./K.ltr 18438 18539
4. Light Diesel Oil (LDO) Quantity K. Ltrs 1332 1431 Total amount Rs. crores 3.70 4.24 Average rate Rs./K ltr 27765 29626
5. High Speed Diesel Oil (HSD) Quantity K. Ltrs 358 265 Total amount Rs. crores 1.20 0.95 Average rate Rs./K ltr 33531 35661
B. CONSUMPTION PER UNIT OF PRODUCTION
Electricity # Kwh /T of Cement 84.69 86.93
Furnace oil $ Ltr /T of Clinker 0.11 0.10
Coal Kcal /Kg of 713 707 Clinker
* Excludes Auxillary & Wheeling# Excludes non production power consumption$ Furnace oil used for kiln light up
FORM - B(See Rule 2)
Form for disclosure of particulars with respect to absorption
RESEARCH AND DEVELOPMENT (R&D)
1. Specific areas in which R&D carried out by the Company
Evaluation of use of
* Mineralisers
* Performance improver to enhance quality
* Higher % of Fly Ash Content in PPC without affecting quality
* CFD technique for optimising Plant operations
2. Benefits derived as a result of the above R&D
The above initiatives have resulted in increase in production, energy efficiency, resources conservation and reduction in related cost of production.
3. Future plan of action
* Commercialisation of alternative fuels
* Optimisation of chemistry of raw mix and fuel mix to improve mines life
* Installation of waste heat recovery system for power generation
(Rs. in crores)4. Expenditure on R&D 2007-08 2006-07 a. Capital expenditure 0.53 1.12 b. Recurring expenditure 8.82 4.90 c. Total expenditure 9.36 6.02 d. Total R & D expenditure 0.17 0.12as % of turnover
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
1. Efforts, in brief, made towards technology absorption, adaptation and innovation:
* Participation in national and international conferences
* Imparting training to personnel by foreign technicians in various manufacturing techniques by foreign and Indian experts and technology suppliers
2. Benefits derived as a result of the above efforts:
* Improvement in existing processes and reducing consumption of scarce raw
materials and fuel
* Cost reduction
3. Information regarding technology imported during the last 5 years : Nil
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