CEMENT INDUSTRY ECONOMY - · PDF fileThe new growth numbers have confounded policymakers who'...

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Cement News Digest 21 – 28 February 2015

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ECONOMY Economic Growth/Reforms Bimal Jalan endorses higher deficit to boost India’s growth

The man who Prime Minister Narendra Modi appointed to fix public spending has some plain advice as the government prepares its first full-year budget don't be so dogmatic about trimming the fiscal deficit that you crimp economic growth. Bimal Jalan, the 73-year-old former governor of the Reserve Bank of India (RBI), heads a panel tasked with suggesting measures to reduce India's subsidy bill and create space for capital spending without compromising fiscal discipline. His expenditure management panel last month submitted to the government an interim report that is widely expected to inform the budget, which will be unveiled on 28 February. In an interview with Reuters, Jalan said Modi should not shy away from loosening the deficit target to ramp up public investment. "What I am trying to get at is that nothing should be cast in stone," he said. "Your policy n should be in tune with the changing economic dynamics.” Union finance minister Atun Jaitley has vowed to stick to strict deficit targets inherited from the previous government, despite opinions expressed by several top government advisers that the economy would be better served by stimulus spending focused on relieving infrastructure bottlenecks that constrain growth. With debt servicing devouring 42% of federal revenues, a higher deficit could delay further interest rate cuts by the RBI and revive threats from global credit rating agencies who have urged New Delhi to invest more without increasing borrowing. Higher deficits, the agencies warn, would pressure India's credit rating, which is now just a notch above "junk" status. Jalan did not reveal what recommendations he has made in his report but he said the government needed to identify high priority areas and spend accordingly. While a change in the methodology to measure India's national output has made it the fastest growing major economy in the world, economists say it needs to expand annually by 8-9% for decades to create jobs for a burgeoning workforce. The new growth numbers have confounded policymakers who' say the real economy does not appear so rosy. Jalan said that with corporate investment showing little sign of recovery, merchandise exports falling, rural demand flounders and inflation tumbling to a multi-year low, India can afford to use fiscal policy to lift economic growth. "I don't think with changing economic environment, both domestic as well as international, we should keep our eyes shut,” he said. "My personal view is that we should take into account the ground reality rather than go by a target:' Jaitley has committed to trimming the fiscal deficit to an eight-year low of 3.6% of gross domestic product (GDP) in the r year that begins in April and 3% the following year. He has promised to honour this commitment, and has been given more space by lower oil prices that allowed him to end diesel subsidies and save money s on other fuel subsidies. Even so, s depressed tax revenues at just a 10% of GDP, compared to a peak of 11.9% in 2007-08, have left him hard pressed to provide funds for new infrastructure.

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"Obviously, you can't say instead of 3.6%, it should be 6.8%,” said Jalan, who as the RBI chief in 1997 played a key role in shielding India's economy from the aftermath of the East Asian financial crisis.

The Mint

New Delhi, 21.02.2015

Fiscal deficit target at 3.6% of GDP in 2015-16

The Finance Commission suggested a fiscal deficit target of 3.6% of GDP in 2015-16 and 3% in the subsequent years. Fiscal deficit is the measure of the amount of money the government borrows to fund its expenses. "Recognising that the fiscal environment should be conducive to equitable growth, we recommend that the Union and all states should target improving the quality of fiscal management encompassing receipts and expenditures, while adhering to the roadmap," the commission said in its report. The commission is also of the view that establishment of a sinking fund - Consolidated Sinking Fund (CSF)- for states would be desirable as a part of the overall fiscal discipline. The report pointed out that the challenge was to design a basic incentive-compatible framework for the Centre and states. Besides, the Centre should set up a process to conduct independent review while monitoring the implementation of its own fiscal responsibility and budget management, it added. For this, a committee should be set up, which would undertake an annual independent and public review of compliance relating to fiscal responsibility.

The Hindustan Times

New Delhi, 25.02.2015

Fiscal deficit ceiling pegged at 3% of GDP from 2016-17 For the Union government, the ceiling on fiscal deficit has been set at 3% of GDP from 2016-17, the 14th Finance Commission said on Tuesday. Fiscal deficit of states will be anchored to an annual limit of 3% of gross state domestic product (GSDP) and they will have the flexibility of 0.2% over and above this limit for which borrowing limits would be fixed if their debt GSDP ratio is less than or equal to 25% in the preceding year. "We expect that an improvement in the macro economic conditions and revival of growth as well as tax reforms should enhance the total tax revenues of the Union government, enabling it to eliminate the revenue deficit completely, much earlier than 2019-20," the commission has said. It as also recommended that e Centre should consider amendment to the Fiscal Responsibility and Budget Management (FRBM) Act to strikeout the definition of effective revenue deficit from April 1, 2015 as it does not fit with global practices of classification of accounts/expenditure. The panel has also said that the Union and state governments may also amend their respective FRBM Acts to provide a statutory ceiling on the sanction of new capital works to an appropriate multiple of the annual Budget provisions. This is expected to curb the scope for perverse allocation of available funds among competing projects and ensure that the economy benefits from capital works. The commission has said that it is of the view to have an independent evaluation of fiscal implications of Budget proposals and called for setting up of an independent fiscal institution. "We recommend an amendment to the FRBM Act inserting a new section mandating the establishment of an independent fiscal council ...," the commission said. The NDA government has reiterated its commitment to fiscal consolidation and has said it will stick to the fiscal deficit target of 4.1% of GDP set for 2014-15, despite a challenging revenue situation.

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The panel has also called for excluding states from operation of the National Small Savings Fund (NSSF) from April 1, 2015. It says the exclusion will hamper the overall borrowing programme of the states and they will continue to have access to open market operations. "This arrangement should provide the Union government greater flexibility in taking operational decisions on the future of the scheme as well as freedom to manage it in the manner that it feels is appropriate," the panel said. It said the off budget nature of the NSSF operations renders them outside the regulatory framework of the FRBM Act, raising concerns of fiscal transparency and comprehensiveness.

The Times of India

New Delhi, 25.02.2015

Stuck reforms worry India Inc

Top business executives say they are worried over the government's move to withdraw three Bills they consider key and the tussle over the land acquisition Bill. These moves, they say, can discourage investments, especially in the insurance and infrastructure sectors. The chief executives (CEOs) also say the language used by Hindu nationalist groups on minorities is also vitiating the business atmosphere. "This is certainly a big worry. The Modi government was showcasing these three Bills as its reform agenda. But this back down shows the government does not have the means to get these passed," said one, asking not be identified. "What HDFC Chairman Deepak Parekh said last week is true, as nothing has changed on the ground. The government should also control the (Hindu) fringe elements, as this gives a bad impression to investors abroad." Last week, Parekh had said impatience was creeping in among business people, as nothing had changed on the ground in the first nine months of Narendra Modi's rule. On Tuesday, the Modi government had to abandon the attempt to have a joint sitting of Parliament to enact three pieces of legislation, including one on liberalisation of the insurance sector, due to hostile opposition in the Rajya sabha. The land acquisition Bill is facing opposition from other political parties, who say it is pro-business houses and anti-farmer. "Clearance of the land Bill is very important for infrastructure projects to pick up. The Navi Mumbai airport project is already costing `5,000 crore more due to the delay in the project and higher compensation for the land owners," said a CEO of an infrastructure firm. The land ordinance was seen by India Inc as evidence of the government's willingness to undertake bold reforms for development. Fast-tracking of procedures for defence investment, rural infrastructure, affordable housing, industrial corridors and public-private partnership projects is laudable. The CEOs say making land, acquisition easier would have got a large number of stalled projects going, invigorating the investment and growth cycle.

In fact, soon after the ordinance was enacted in December last year, the Maharashtra government cleared the development of two industrial-rum-residential hubs in the Mumbai region.

According to the Centre for Monitoring Indian Economy, around 70 projects worth a total of `3.52 lakh- crore have been stalled over the past two years because of land acquisition problems.

Due to these uncertainties, Indian companies are not opening their purse strings. A CRISIL survey of 192 companies, which comprise about 45 per cent of the capital expenditure undertaken by all National Stock Exchange-listed companies (barring the banking, financial services and insurance sector) in 2013-14, Showed 90 per cent expect a pick-up in overall capital investments by the next financial year.

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However, their own capital investment plans Show a four per cent decline. A turnaround in India Inc's investment cycle is unlikely anytime soon, warns CRISIL.

The Business Standard

Mumbai, 26.02.2015

Moody’s: India’s rating upgrade hinges on reforms push

Ahead of the Budget, rating agency Moody's on Wednesday said India's sovereign rating upgrade would depend upon the government's determination to push economic reforms and reduce fiscal deficit. "The extent to which accelerating growth will buttress the sovereign credit profile amid international uncertainty will depend on fiscal and structural reform policies," it said in are port titled 'GDP Revisions Underscore Economic Strength, But Are Credit Neutral'. Finance Minister Arun Jaitley; in his first full-fledged Budget on February 28, is likely to lay down the roadmap for economic reforms and fiscal consolidation with a view to boost growth. Earlier this week, another rating agency Standard & Poor's had said India must deliver on reform promises and boost growth as a weak fiscal position is constraining its sovereign rating.

The Financial Express

New Delhi, 26.02.2015

India to grow at 7.9% in 2015-16, says S&P

Terming India as "bright spot" in the Asia Pacific, rating agency Standard & Poor's (S&P) on Thursday raised GDP growth forecast to 7.9% for 2015-16 and 8.2% for 2016-17. The revision comes just days after the agency had flagged concerns over India's low per capita income and high fiscal deficit.

The agency rates India among the lowest in the investment grade at BBB just one notch above the junk status. S&P's growth forecasts are based on the government's new methodology to calculate GDP estimates. The new formula showed a dramatic rise in GDP growth to 6.9% from the earlier 5% in 2013-14, and 7.4% for 201415, up from a projected 6%.

"India should be Asia-Pacific region's bright spot," the rating agency said, while lowering the forecasts for other major economies in the region, including China and Japan. The rating agency's predictions come just two days before the Union Budget on February 28.

S&P had said earlier in the week that India must boost growth, reduce fiscal deficit and carry out financial reforms to justify an upgrade in credit rating. Earlier this month, the government said India's economy grew 7.5% year-on-year during the October-December quarter and that the COUl1try was well on track to grow by 7.4% in 2014-15.

The Hindustan Times

Mumbai, 27.02.2015

Inflation/Recession India on track to meet 6% inflation target by 2016: RBI

India' is likely to meet the Reserve Bank of India's (RBI's) inflation target of 4-6% by January 2016, deputy governor of the central bank, SS Mundra, said on Thursday. "Inflation should be as indicated by the RBI. By

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January 2016, it should be meeting our glide path of 6%," he told reporters on the sidelines of an event organised by brokerage house IIFL. India's retail inflation in January stood at 5.11% after the government shifted to a new base year for calculating prices. While it was much higher than 4.28% consumer price inflation in December, it was well within the RBI's target, thereby boosting hopes that the central bank will further cut interest rates. Meanwhile, Mundra believes that the capital requirement of the public sector banks to comply with the Basel-III norms by 2019 could overshoot the earlier estimate of `2.4 lakh crore. "As we move towards the Basel-III framework, may be in a year or two from now, the requirement will keep on increasing and certainly there would be enhanced capital requirement," he said. The RBI's earlier estimate of `2.40 lakh crore capital requirement was based on 15% growth in risk-weighted assets expected during the period till fiscal 2019. But now, with the expectation of a pickup in growth, the credit growth is likely to come in at 16-17%, according to Mundra. Mundra also expressed his reservations towards the government's move to infuse funds in state-run banks selectively. "To deprive them of capital at this time would only aggravate the problem and would also have implication on growth," he said. The government has adopted new criteria as per which, more efficient banks will be rewarded with extra capital.

The Hindustan Times

Mumbai, 27.02.2015

INDUSTRY Industrial Growth & Production

Capital expenditure plans by cos likely to decline, says Crisil

Capital expenditure plans by private sector companies may decline by an annual rate of 11 per cent starting 2016, according to a survey by Crisil. The survey of 192 listed, public and private sector companies from key sectors such as infrastructure, energy, metals and showed a 4 per cent decline in capex plans for 2015-16. The report said that while 90 per cent of the companies polled were of the opinion that sentiment has improved on the ground and capex should begin to recover by the next fiscal, ironically, near-term plans for their own companies belied this optimism. Raman Uberoi, President, Ratings, Crisil, "The message coming through is crystal clear: as things stand, there is only one way to kick-start the all-important investment cycle, and that is through public investment. The onus is on the Centre to do the initial heavy lifting." In terms of sectors, infrastructure and energy are expected to see a small increase in capex, but it will be more than offset by a decline in the manufacturing sector, the survey showed.

Demand surge

Amid softening interest rates and buoyant capital markets, funding is unlikely to constrain investments. According to Prasad Koparkar, Senior Director, Crisil Research, "If there is one thing corporates are looking for, it is better visibility in terms of a sharp improvement in demand. This seems to be the real reason behind the hesitation to commit larger monies." He added that demand has picked up and infrastructure and energy capex has shown a small increase as against a decrease last year.

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Manufacturing thrust

According to Crisil quick resolution of land-related issues and other on-the-ground factors impacting stuck projects, significant thrust to - and innovative financing schemes for - renewables and specific provisions to boost investment in manufacturing as part of 'Make in India' programme are the things that can make a difference. More than 80 per cent of the capex is expected to be from energy (mainly oil and gas), infrastructure (mainly power and roads) and metal sectors in 2015-16 - just the way it was expected to be in 2014-15. Bulk of these is in projects under implementation and expected to be incurred next fiscal.

The Hindu Business Line

Mumbai, 26.02.2015

Infrastructure Projects Financing

UP power sector gets `25,764 cr

The Uttar Pradesh chief minister on Tuesday presented a `3.02 lakh crore annual budget, 10.2% more than last fiscal, which shows a deficit of 2.96%. Akhilesh Yadav seems to have learnt from his previous extravaganzas and focused more on core areas such as infrastructure and social spending in the budget for 2015-16. The chief minister- who also holds the finance portfolio-made the biggest allocation of `25,764 crore to the power sector, out of which `14,502 crore have been proposed for new projects.


Lucknow, 25.02.2015

CEMENT INDUSTRY Growth/Marketing/Demand/Takeover Outlook brightens for cement

Over the last few years, the cement market has been dogged by excess supply and a demand slowdown, and prices have therefore increased much more slowly than the inflation in their input prices. Consider these trends. Since 2011-12, in North India, cement prices have moved up at an annual rate of 35 per cent. In the West, prices have risen at a rate of 5-7 percent a year. In the East, the annual increases have been 65 per cent. The cement industry is basically struggling to live down the effects of large capacity additions made during the previous economic upturn. The Government's increased spending on rural housing, road and railway infrastructure, combined with the growth in private capital spending and the increase in disposable income saw cement demand grow at an annual rate of 10 per cent between 2005 and 2008. Cement prices rose by 10-12 per cent annually in this period and manufacturers saw profit margins expand. They used these surpluses to create new capacities. The country's cement capacity increased by almost 100 million tonnes in the three years from 2008 to 2011 to 290 million tonnes. However, with the economy slowing sharply and unexpectedly, cement demand dropped from 2011, and manufacturers have lost much of their pricing power.

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Will prices go up now?

For cement prices to go up, a better demand-supply balance is required, and this is likely to happen soon. There appears to be a slowdown in capacity additions. Industry reports say that from about 25 million tonnes of capacity added in FY14, new capacity additions will slow down to 22 million tonnes, 19 million tonnes and 14 million tonnes in FY15, FY16 and FY17, respectively. Two, in the next three years, demand growth is also expected to pick up as the new government prioritises housing and infrastructure building. A declining rate cycle is also likely to spur housing demand. If the government keeps up the promise to revive the capex cycle and increases spending on infrastructure and building satellite townships, demand may well grow by 7-9 per cent annually. This would still not use up all the cement capacity. But capacity utilisation may improve from the current 73 per cent to 79-80 per cent in FY17. This can aid prices. Noopur Jain, Assistant Vice' President, ICRA, says cement manufacturers will definitely see pricing power improve. "With demand-supply gap narrowing, players should be able to increase prices. Even if they do not enjoy strong pricing power as they did in 2007 or 2008, it is definitely going to be better in the next six months to one year than what it is now." In this situation, the only factor that can bring about a sustainable improvement in prices is consolidation of capacities. In the last two years, we have seen. JP Associates selling some of its capacities in the north to Ultra-Tech. In 2012, Dalmia Cement acquired stake in two companies - Calcom and Adhunik Cement, both in the East. Current trend

Meanwhile, there has been a seasonal recovery in cement prices across regions in recent months. In Delhi, for

instance, retail cement prices climbed to about `288/bag in October from `2681 bag in September. After a pause, in January, prices zoomed to `285/bag. Cement prices have rebounded in most regions in January by 4 to 14 per cent - the least increase was in Kolkata and the highest in Mumbai. In Mumbai, wholesale cement prices increased from `320/bag in December to `364/bag in January. In the South, while prices in Hyderabad have risen from `321 to `350/bag, in Chennai too there has been an increase from `375-380 levels to `390/bag. Logistical bottlenecks have also contributed to the recent price rise, says Madhusudan Shah, President, Cement Stockists & Dealers Association of Bombay. "The increase was largely because supply was hampered because of shortage of wagons as many were diverted for transport of fertilisers. Actual demand pickup may take a little more time."


Mumbai, 23.02.2015

Cement Cos in South to Post Higher Revenue Growth

Incremental demand emanating from a new state, lower capacity utilisation, very little capacity addition and lower price of imports will help south-based cement companies record higher revenue growth than those in other regions in the next three fiscals. Additional demand of 23 MT is estimated from Andhra Pradesh and Telangana between FY14 and FYI7. This would be higher than the peak demand of 20 MT in unified Andhra. The new demand would come from irrigation projects proposed in the two states, the Vizag-Chennai industrial corridor, low cost housing schemes, and the Chennai-Bangalore industrial corridor. As against this, the demand in north will be 21 MT, in west 18

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MT and in east and central regions 15 MT during the same period. This would be a point when capacity utilisation in the south is at a multi-year low. Unlike most regions where cement companies had capacity utilisation of over 75 %, it was below 51 % in southern companies. This is because between FYI0 and FYI4, cement demand in the south grew at a compounded annual growth rate (CAGR) of 0.8%, while in other parts of the country demand rose at 4%-7%. With this, capacity utilisation in southern companies is expected to improve to 77% by FYI7, while the number for other regions would be in the range of 85-90 %. Another factor that would work in favour of southern companies is capacity addition. It is estimated that increment capacity addition between FY14 and 17 will grow at a CAGR of 2.2% against 6.3% in regions other than south. Also, southern companies have been able to deal with surplus capacity by supplying to other regions. In FYI4, these companies supplied 15 MT to the west and 4 MT to the east. Lastly, southern companies have a higher dependence on imported coal whose prices have been falling. (For instance, Australian coal prices have fallen 25 % -30%.) Three companies, in particular, are likely to show higher revenues. These are: The Ramco Cements, Orient Cement, and Mangalam Cements. Besides having a better balance-sheet and operational discipline, these companies have large distribution networks, high brand recall and reasonably good market share in the south. Based on FY16 earning forecast, Ramco, Orient Cement, and Mangalam are trading at an EV /EBIDTA of 10.6, 8.5 and 5.7 respectively, which is cheaper than large cement companies that are trading at an average EV /EBIT – DA range of 11.06 for FY 16.

The Economic Times

New Delhi, 24.02.2015

North-based cement firms in sweet spot

The share prices of many large and small cement companies have seen a strong run up on the bourses in the last few months in anticipation of strong demand. For instance Shree Cement is up 23 per cent. Ambuja Cement is up 13.5 per cent. JK Cement has gained15 per cent and UltraTech, the pan-India leader has surged22 per cent since the start of December 2014. However, at the ground level the demand and realisation pick up has not been as strong as anticipated earlier. The price hikes taken by players at the start of January 2015 have not sustained as demand remains soft. In this backdrop concerns have cropped up over the near-term prospects of the cement companies. As a result stocks of larger players have seen marginal decline, while smaller companies have seen sharper losses in the last few days. Nevertheless, analysts expect demand to improve in a few months' time. Traditionally, the June quarter is the strongest and analysts also expect the pace of infra structure development to pick-up post the June quarter. Analysts at Prabhudas Lilladher in their February 18 note say they remain confident on cement demand improvement from Q2 of FY16 onwards on the back of higher Budget allocation to the infra structure sector pick-up in housing demand aided by lower interest rates and thirdly a revival of the investment cycle with the series of policy initiatives undertaken by the government. North India-based cement players though remain better placed as there is limited capacity additions compared to south India which already has excess capacities. Thus capacity utilisation for North based players is likely to remain much higher than compared to South-based producers despite. Hence, the gains for the former are estimated to be larger despite the Southern manufacturers sustaining better pricing discipline. In this backdrop any correction should be seen as an opportunity to buy the stocks of north--based cement companies with a medium to long term investment horizon.

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Pricing

While cement manufacturers in the north hiked prices in January by `15-40 per 50 kg bag in February they have had to reverse about two-third of the price hikes. Central India too did not see the price hikes of no a bag being sustained. With pricing discipline in south west too has been able to see stable prices.

Though south Indian manufacturers maintain pricing discipline volumes are likely to remain low and excess capacities are seen putting pressure on capacity utilisations in the near-term thereby keeping margins under check. Capacity Utilisation

Analysts at India Ratings and Research a Fitch group company see cement capacity utilisation in the southern region improving to 61-63 per cent in FY16 from 56 per cent in FY14. However, even then the utilisation levels will be amongst the lowest in all regions. In eastern India they see reduction in capacity utilisations to around 70-71 per cent in FY16 from 75 per cent in FY14 due to capacity expansions (17 million tonnes per annum) exceeding demand.

Positively in the western region the capacity utilizations are likely to remain stable at 73 per cent with additions in line with demand. It is the central (85 per cent utilisation versus 81 per cent in FYl4) and northern regions (81 per cent versus 78 per cent) which are estimated to see good improvement and highest utilisation levels. Higher utilisation levels will help companies score better on the margin front.

Thus, north-based players with exposure to Northern Central and Western India are likely to continue outperforming.

These include Shree Cement Ambuja Cements, JK Lakshmi Cement, Mangalam Cement and JK Cement apart from UltraTech that remain top picks of analysts. Large cap players as Shree Cement and Ambuja though seem fairly priced are however best placed to gain from a demand recovery. JK Lakshmi and Mangalam Cement remain the picks in analysts polled by Bloomberg and their valuations too are very reasonable.


New Delhi, 26.02.2015

Performance of Eight Core Industries Including Cement for December 2014

The performance data of the Office of the Economic Advisor, Ministry

of Commerce & Industry (MOC&I), Government of India in respect of

eight core industries, including Cement for the month of

December 2014 is displayed on their Website www.eaindustry.nic.in.

CMA has analyzed the data of the MOC&I and the highlights are as follows:-

a. Though the Cement Industry has performed appreciably well at 11.34% in November 2014 on MOM after a dismal growth in September 2014 at 3.19% and negative growth of 1.02% in October 2014, the industry could not maintain the pace of growth in December 2014 & it shows a growth rate of just 3.81%. The Cement Production in the month of December 2014 was 23.15 million tonnes as against 22.30 million tonnes in the corresponding month of the previous year.

b. The overall performance of the Industry so far has improved this year compared to the previous year. In the 1st quarter (Apr-Jun 14), the Industry registered a growth of 9.53% on QoQ basis, followed by 9.79% in the 2nd quarter (July – Sept.14) and 4.49% in the 3rd quarter (Oct – Dec 14). The cumulative growth of the Industry in the first nine months of the current year (Apr-Dec) was 7.93%, as against the growth of 3.65% and 7.87% respectively for the corresponding period of the last two years i.e. 2013-14 and 2012-13.

c. The Table below gives Month-wise and cumulative cement production figures upto December for the financial years 2013-14 and 2014-15 respectively.

http://www.eaindustry.nic.in/

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Cement Production (Mn.T)

Month 2014-15 2013-14 %age Growth Over Previous Year

Month Cum Month Cum Month Quarter

Apr 23.84 23.84 22.35 22.35 6.67

1st Qtr. 9.53 May 23.72 47.56 21.82 44.17 8.71

Jun 22.99 70.55 20.24 64.41 13.59

Jul 22.68 93.23 19.48 83.89 16.43

2nd Qtr. 9.79 Aug 20.58 113.81 18.66 102.55 10.29

Sep 21.70 135.51 21.03 123.58 3.19

Oct 20.39 155.90 20.60 144.18 -1.02

3rd Qtr. 4.49 Nov 20.92 176.82 18.79 162.97 11.34

Dec 23.15 199.97 22.30 185.27 3.81

d. While analyzing the performance of two other major core sectors i.e. Coal and Steel, it is found that Coal

sector has performed much better than Steel sector in the First nine months (Apr – Dec) of the current Financial Year. The Coal production in the month of December 2014 has gone up by 7.52% on MoM basis. (Coal production increased to 58.37 Mn.T. in December 14 from 54.29 Mn.T. during corresponding month of the previous year).

Steel sector has shown a negative growth of 2.33% in the month of December 2014. (Steel production reached to 7.54 Mn.T. in December 14 from 7.72 Mn.T. during the corresponding month of the previous year).

e. The cumulative performance of these three important sectors for the nine months (April-December) is given

for ready comparison in the Table below.

Cumulative Production of Coal, Steel and Cement (Mn.T)

Sector

2014-15 2013-14

Growth (%) (April – Dec)

Coal 425.86 390.34 9.10

Steel 65.41 64.36 1.63

Cement 199.97 185.27 7.93

Month-wise and cumulative production details of the three sectors, namely Cement, Coal & Steel are given below.

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Statement prepared by CMA on the basis of Data obtained from official site of the

Economic Advisor, Ministry of Commerce & Industry (www.eaindustry.nic.in)

(A) C E M E N T P R O D U C T I O N

(Million Tonnes)

MONTH

(%AGE)

VARIATION OVER

AVERAGE

2014-2015 2013-2014 PREVIOUS YEAR

2014-2015 2013-2014

FOR MONTH CUM FOR MONTH CUM MONTH YEAR

(Apr -Dec)

Apr 23.84 23.84 22.35 22.35 6.67 6.67

23.84 22.35

May 23.72 47.56 21.82 44.17 8.71 7.67

23.78 22.09 Jun 22.99 70.55 20.24 64.41 13.59 9.53

23.52 21.47

Jul 22.68 93.23 19.48 83.89 16.43 11.13

23.31 20.97 Aug 20.58 113.81 18.66 102.55 10.29 10.98

22.76 20.51

Sep 21.70 135.51 21.03 123.58 3.19 9.65

22.59 20.60

Oct 20.39 155.90 20.60 144.18 -1.02 8.13

22.27 20.60

Nov 20.92 176.82 18.79 162.97 11.34 8.50

22.10 20.37 Dec 23.15 199.97 22.30 185.27 3.81 7.93

22.22 20.59

Jan

23.58 208.85

20.89 Feb

21.94 230.79

20.98

Mar

24.80 255.59

21.30

(B) C O A L P R O D U C T I O N

(Million Tonnes)

MONTH

(%AGE)

VARIATION OVER

AVERAGE

2014-2015 2013-2014 PREVIOUS YEAR

2014-2015 2013-2014


(Apr -Dec)

Apr 44.12 44.12 42.73 42.73 3.25 3.25

44.12 42.73

May 45.58 89.70 43.21 85.94 5.48 4.38

44.85 42.97 Jun 43.70 133.40 40.42 126.36 8.11 5.57

44.47 42.12

Jul 42.34 175.74 39.87 166.23 6.20 5.72

43.94 41.56 Aug 43.51 219.25 38.38 204.61 13.37 7.16

43.85 40.92

Sep 43.97 263.22 41.00 245.61 7.24 7.17

43.87 40.94

Oct 49.65 312.87 42.73 288.34 16.19 8.51

44.70 41.19 Nov 54.62 367.49 47.71 336.05 14.48 9.36

45.94 42.01

Dec 58.37 425.86 54.29 390.34 7.52 9.10

47.32 43.37

Jan

56.08 446.42

44.64 Feb

51.84 498.26

45.30

Mar

65.37 563.63

46.97

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(C) S T E E L P R O D U C T I O N

(Million Tonnes)

MONTH

(%AGE)

VARIATION OVER

AVERAGE

2014-2015 2013-2014 PREVIOUS YEAR

2014-2015 2013-2014


(Apr -Dec)

Apr 6.99 6.99 6.78 6.78 3.10 3.10

6.99 6.78

May 7.77 14.76 7.93 14.71 -2.02 0.34

7.38 7.36 Jun 7.11 21.87 6.83 21.54 4.10 1.53

7.29 7.18

Jul 7.27 29.14 7.52 29.06 -3.32 0.28

7.29 7.27 Aug 7.59 36.73 6.96 36.02 9.05 1.97

7.35 7.20

Sep 7.16 43.89 6.88 42.90 4.07 2.31

7.32 7.15

Oct 6.88 50.77 6.73 49.63 2.23 2.30

7.25 7.09 Nov 7.10 57.87 7.01 56.64 1.28 2.17

7.23 7.08

Dec 7.54 65.41 7.72 64.36 -2.33 1.63

7.27 7.15

Jan

7.30 71.66

7.17 Feb

6.98 78.64

7.15

Mar

7.77 86.41

7.20

f. The Combined growth of Eight Core Industries during Apr-Dec 2014 (comprising coal, crude oil, natural gas, petroleum refinery products, fertilizers, steel, electricity generation and cement) has scaled up to 4.4% from 4.1 % in the previous year for corresponding months.

UNION BUDGET 2015-16

Highlights Concerning Cement Industry

Shri Arun Jaitley, Hon’ble Minister of Finance, has presented the Union Budget for the year 2015-16 today (28.2.2015). As regards, the Cement Industry, considerable thrust and importance has been given for the development of Roads, Urban and Rural Housing, Infrastructure, Ultra Mega Power Projects, Port etc. which should increase the demand for cement. Tariff rate of excise duty on goods falling under Chapter Sub-heading “2523 29 (Cement)” is being increased from Rs.900 per tonne to Rs.1000 per tonne (Clause 104 of the Finance Bill 2015) with immediate effect. The standard ad-valorem rate of duty of excise is being increased from 12% to 12.50%. Further, specific rates of Rs.120 per tonne has been increased to Rs.125 per tonne with immediate effect [Notification No.12/2015-CE dated 1st March 2015 at Item ‘B’ in the Table (vii) & (viii)]. Simultaneously, the Education Cess levied on all excisable goods as a duty of excise under Section 91 read with Section 93 of the Finance Act, 2004 is being fully exempted (Notification No.15/2015-CE dated 1stMarch 2015). The effective rate of excise duty will now be 12.50% in place of the earlier 12.36% which included the Education Cess. The tariff rate of basic customs duty on bituminous Coal (2701 12 00) is being reduced from 55% to 10%. However, the effective rate of basic customs duty on bituminous coal continues to be 2.5%.

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The service tax rate is being increased from 12% plus Education Cesses to 14%. The ‘Education Cess’ and ‘Secondary and Higher Education Cess’ shall be subsumed in the new service tax rate. The revised rate shall come into effect from a date to be notified.

Clean Energy Cess increased from Rs.100 to Rs.200 per metric tonne of coal, etc. to finance clean environment initiatives. A gist of other major highlights which will have a bearing on the Cement Industry are given below:

i. GDP growth in 2015-16, projected to be between 8 to 8.5%.

ii. The year 2022 will be celebrated as Amrut Mahotsav being 75th year of Independence. The Vision for “Team India” led by PM for the same will include -

Housing for all - 2 crore houses in Urban areas and 4 crore houses in Rural areas.

Basic facility of 24x7 power, clean drinking water, a toilet and road connectivity.

Connecting each of the 1,78,000 un-connected habitation.

Ensuring a Senior Secondary School within 5 km reach of every child, while improving quality of education and learning outcomes.

Strengthening rural economy through increase irrigated area, improving the efficiency of existing irrigation systems, and ensuring value addition and reasonable price for farm produce.

Making India, the manufacturing hub of the World through Skill India and the Make in India Programmes.

Development of Eastern and North Eastern regions on par with the rest of the country.

iii. Increased outlays on both the roads and the gross budgetary support to the Railways, by Rs.14,031 crore, and Rs.10,050 crore respectively. The CAPEX of the public sector units is expected to be Rs.3,17,889 crore, an increase of approximately Rs.80,844 crore over RE 2014-15. Investment in infrastructure will go up by Rs.70,000 crore in the year 2015-16, over the year 2014-15.

iv. National Investment and Infrastructure Fund (NIIF), to be established with an annual flow of Rs.20,000 crores to it.

v. Ports in public sector will be encouraged, to corporatize, and become companies under the Companies Act 2013 to attract investment and leverage the huge land resources.

vi. An Expert Committee to examine the possibility and prepare a draft legislation where the need for multiple prior permission can be replaced by a pre-existing regulatory mechanism. This will facilitate India becoming an investment destination.

vii. 5 new Ultra Mega Power Projects, each of 4000 MW, in the Plug-and-Play mode.

viii. Target of renewable energy capacity revised to 175000 MW till 2022, comprising 100000 MW Solar, 60000 MW Wind, 10000 MW Biomass and 5000 MW Small Hydro.

ix. Efforts on various fronts to implement GST from next financial year, April 2016.

x. No change in rate of personal income tax.

xi. Proposal to reduce corporate tax from 30% to 25% over the next four years, starting from next financial year.

xii. Rationalisation and removal of various tax exemptions and incentives to reduce tax disputes and improve administration.

xiii. Rate of Income-tax on royalty and fees for technical services reduced from 25% to 10% to facilitate technology inflow.

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xiv. Basic Custom duty on certain inputs, raw materials, inter mediates and components in 22 items, reduced to minimise the impact of duty inversion.

xv. Balance of 50% of additional depreciation @ 20% for new plant and machinery installed and used for less than six months by a manufacturing unit or a unit engaged in generation and distribution of power to be allowed immediately in the next year.

xvi. Penalty provision in indirect taxes are being rationalised to encourage compliance and early dispute resolution.

xvii. Central Excise/Service tax assessees to be allowed to use digitally signed invoices and maintain record electronically.

xviii. Education cess and the Secondary and Higher education cess to be subsumed in Central Excise Duty.

xix. Online Central Excise and service tax registration to be completed in two working days.

xx. Time limit for taking CENVAT credit on inputs and input services increased from 6 months to 1 year.

xxi. 100% deduction for contributions, other than by way of CSR contribution, to Swachh Bharat Kosh and Clean Ganga Fund.

xxii. Negative List under service-tax is being slightly pruned to widen the tax base.

Housing & Building Construction 12 smart cities to come up at ports for `50,000 crore

The Government is working on an ambitious plan to build a smart city at each of the country's 12 major ports for an estimated total investment of Rs 50,000 crore, Union minister Nitin Gadkari has said. "Each port will construct one smart city. We are trying to do this. Each city will be built with an expenditure of about Rs 3,000 – Rs.4,000 crore," said the minister for road transport, highways and shipping. "These will be green smart cities. We are starting work on these in four to six months. You will see all these complete in five years," Gadkari said in an interview to a news agency. The 12 major ports under the Centre have between them an estimated 2.64 lakh acres of land, which is being mapped through satellites and is with the shipping ministry. Mumbai Port Trust alone has about 753 hectares of land with it, valued at about Rs 46,000 crore. "We are identifying our property through GPS system. We do not want to sell land to builders and developers. We will develop these," Gadkari said, adding that companies will be invited to construct houses there and private investment will be roped in. Detailing the concept, he said these cities will be built as per international standards and have wide roads, green energy, advanced townships and greenery. In addition, these smart cities and ports will have e-governance links, international standard facilities, special economic zones, ship breaking and ship building centres besides allied things, he said. "Port water will be recycled. Port waste will be turned into bio-gas. Vehicles will run on bio-fuel. Solar energy and wind power will be generated at ports. These cities will be pollution-free and very green smart cities. We are starting these," Gadari said.


New Delhi, 23.02.2015

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Budget for low-cost hosing The government's Sardar Patel Urban Housing Mission aims at "housing for all by 2022" building 30 million affordable houses though the public-private partnership (PPP) model and provide interest subsidy and increased flow of resources to the housing sector. This policy is perhaps one of the government's most important undertakings as there is a deep chasm in the demand and supply of affordable housing with - the shortage expected to touch 38 million by 2030. At the smile time, the National Housing Bank (NHB) Residex indicates that housing prices in major cities have doubled in the period of 2007 to 2014. What continues to be a challenge for the real estate sector is the uncertainty over the implementation of GST and the varying, high stamp duty across the country. Two of the most crucial challenges are ensuring that the industry has ready access to institutional funding to take on projects and ensuring quicker approvals. Whereas the former falls under the domain of the central govern-ment, the latter is a state subject. Coupled with easing of interest rates by RBI, if the finance minister and state governments deliver on the industry's demands, we could witness a period of high growth for the industry. The budget also needs to address the issue of high and varying stamp-duty across states. Indirect taxes on construction materials contribute nearly 33% to the total construction costs, which impacts the final price to the customer. Hence, a roadmap for introduction of GST is very important for this budget. The real estate sector, for long, has been demanding priority-lending status for affordable housing, the non-availability of which has placed a restriction on banks to provide funding for projects. This, coupled with lower margins and cumbersome procedures, has led to this segment being a virtual nonstarter. In this budget, the finance minister should look at treating affordable housing as an activity for 'public purpose' and should include it under the definition of infrastructure. This will ensure that banks are mandated to increase funding towards affordable housing and real estate companies have access to a bigger pool of funds from NBFCs, external commercial borrowing (ECB) and insurance companies. It will also bring about more transparency and .clarity which will go a long way in protecting consumer interests. The government should also look at opening the ECB route to all types of real estate rattier than restricting it to only affordable housing. This would be in keeping with its decision to open up FDI in construction. The total market size of the real estate construction sector stands at nearly $100 billion and is expected to touch $180 billion by 2020. In order to support the industry growth, a simpler and more transparent approval mechanism is needed. Lack of synchronization among various departments and unsynchronised growth between residential development and infrastructure around it lead to delays and rise in construction costs. The real estate regulation landscape is plagued by a multiple window system in which the clearances are sought from multiple state-level authorities. Decades of archaic procedures and red-tapism have meant that real estate companies only operate in geographies where they are entrenched in the system. This system is a barrier for entry of newer players since approval procedures of various states are at variance with each other. The intrinsic opaqueness of this system has meant that consumer interests are put on the back-burner. The Centre needs to find a way to influence the states towards a more consistent approval regime. Replacing this archaic system with a single-window mechanism will help to expedite the permissions. Most Indian cities especially tier II ones, lack basic infrastructure facilities like roads, electricity, while the existing infrastructure is often in a dilapidated state. This negatively impacts the real estate landscape. Lack of basic infrastructure becomes a hindrance for the developers who then have to also engage in providing these basic facilities in their township projects leading to cost escalations. It is important that the homes are ready for future challenges and use technology that is energy efficient and

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sustainable providing tax incentives will promote and encourage real estate companies to adopt new and sustainable technologies and will help developers pass on the cost benefit to consumers.


New Delhi, 24.02.2015

‘Housing for all’ project yet to take off

The Narendra Modi government has a mammoth task ahead of providing about 30 lakh houses every year to the poor to meet its ambitious target of Housing-for-all in urban areas by 2022. Though the President's speech on Monday mentioned this goal, the proposal is yet to get Cabinet approval. The scheme came up before the Cabinet twice in the past fortnight. Sources said now the government is keen to have a comprehensive programme that will cover both rural and urban poor who lack a pucca house. "Coming out with a comprehensive policy will take more time. Any delay in kicking off the programme will increase the burden as more houses for economically weaker sections will have to be built in lesser number of years," said a government official on condition of anonymity. The housing and poverty alleviation ministry has set a target to provide two crore houses to the economically weaker section (EWS) in the next seven years.

The Times of India

New Delhi, 24.02.2015

State needs 50 lakh new homes by 2022 to meet ‘housing for all’ target As part of the Centre’s target under the ‘housing for all’ scheme, the Maharashtra government will have to build 50 lakh new homes by 2022 and for this it can consider some projects based on PPP model, industry body Naredco said. “Maharashtra will need 50 lakh housing till 2022 if it has to meet the central government’s target of housing for all. So far, the state government’s contribution in creation of hosing stock is less than 5%, but we want it to make active participation by taking on some projects on PPP basis for planned development,” Naredco national president Sunil Mantri told reporters here on Wednesday. He said there are many government-owned land parcels in the state which can be developed on public-private partnership model wherein instead of charging premium for generating revenue, the state can have more share in the development and more affordable housing stock can be created. According to a KPMG report, the current shortage of housing is 19 lakh and will increase by 31 lakh by 2022. Mantri further said that apart from speedy approvals through single window clearance, the government also needs to review some of its Development Control Rules like 33(7) (redevelopment of buildings) and 33(9) (repairs and reconstruction of cessed buildings). “The government needs to review these rules to make redevelopment of cessed buildings more attractive for developers," he said, adding that the state should also normalise ready reckoner rates as well as stamp duty.

On the occasion, KPMG Partner, Real Estate and Hospitality, Chintan Patel said, "To achieve the vision of housing for all, the government needs to accelerate implementation of policy reforms such as ease of approval process, enhance transport and utility infrastructure, increase FSI, develop satellite cities to aug-ment development and rejuvenate existing cities, especially Mumbai." According to Patel, investment to the tune of `82,179 crore would be required to create infrastructure needed to support development of housing stock.


Mumbai, 26.02.2015

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Smart cities: Kochi port may get a new lease of life The Shipping Ministry's move to develop smart cities in each major port has revived the hopes of cash -starved Kochi Port to generate revenue. Total Investment Nitin Gadkari, Shipping Minister, had announced the ministry's plan to build one smart city each at major ports at an estimated total investment of `50,000 crore, as the 12 major ports in India have an estimated `2.64 lakh acre of land in its control. Kochi port, with around 383 hectares in its possession, is an ideal location to set up a smart city, CS Kartha, President, Cochin Chamber of Commerce and Industry said. Reclaimed land

Of this, around 152 hectares on the, southern-strip of the Willingdon Island, has already been reclaimed, he said, adding that this timely move by the ministry would help fetch more revenue to the port. Willingdon Island, according to him, has got substantial vacant areas for development activities, especially with the shifting of core business of container terminal operations to Vallarpadam. Unlike other major ports, Kochi does not have large areas of land for development and, therefore, the available land needs to be utilised properly in accordance to the environmental rules and regulations, he said. New cities It is estimated that by 2050, about 70 per cent of the population will be living in cities and India will need about 500 new cities to accommodate the influx. Special request

He requested the ministry to include these smart cities as special investment regions or SEZ with modified regulations and tax structures to make it attractive for foreign investment. This is essential because much of the funding for these projects will have come from private developers, he added.


Kochi, 27.02.2015

ENERGY/FUEL/POWER Coal

Coal auction to yield `1 lakh-cr to states

States will get about `l lakh crore, including royalty, over the next 30 years from the 16 coal blocks sold so far in the ongoing' auction, a senior government official said on Friday. Besides, reverse auction for the power sector will result in benefits of `37,050 crore to end-users by way of a cut in rates, Coal Secretary Anil Swamp said. The government has put on block 19 mines in the first tranche of auction. Companies such as Jindal Power, Hindalco and UltraTech and others have bagged 16 of them so far. "The e-auction amount is `83,662 crore. But these blocks will also entail an income to the states by why of royalty which comes to `12,801 crore," swamp told reporters.

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Madhya Pradesh will get `39,900 crore, Chhattisgarh `26,425 crore, Jharkhand `14,498 crore, West Bengal `13,21O crore, Maharashtra `1,819 crore and Odisha `607 crore, he said. On benefits to power consumers, he said: "This is also a huge amount (`37,050 crore). Because this is getting lost ... most of the auctions have begun at zero.... But what we are forgetting is that it comes from a ceiling price of a particular level td comes down to zero and this is the value that will get transferred to the tariffs." In the reverse auction, government sets a ceiling price that is representative of production cost of Coal India. The private sector companies, which are considered more efficient, are expected to bid at lower price. For example, if the ceiling price is 1,000 and the bidder bids `800, then the benefit of `200 is directly passed on to consumers. This would mean if the power is sold at `3.50, out of which is `1 is cost coal and the same will become 80 paise because of pass through benefit of `200. Thus the new price of power will be `3.30 per unit. In case the bids touch zero, meaning that the private producer is ready to pass on thebenet1f of coal extraction to power con-sumers, there would be a forward bidding. Under the forward bidding, the companies will be required to mention the price which they are willing to give to states.


New Delhi, 21.02.2015

TRANSPORT Railways

Cement Loading and Revenue Generation by Rail in January 2015

Statistical data for the month of January 2015 and cumulative figures for April

– January 2015 with corresponding figures of the previous year have been

hosted on Railway Board’s official website www.indianrailways.gov.in.

Month-wise and Zone-wise analysed data pertaining to Cement and Clinker loading by Rail (based on the information on their website) as also Railway Zone-wise Revenue Generation from cement is given below.

Statement-I

Month-wise Loading by Rail (Cement +Clinker)

(Statement prepared by CMA on the basis of Data obtained from official site of the

Railway Board www.indianrailways.gov.in)

Month 2013-14 2014-15 %age

2013-14 2014-15 %age

(Mn.T) Change

(Cummulative) (Mn.T) Change

Apr 9.27 10.54 13.70

9.27 10.54 13.70

May 8.75 10.22 16.80

18.01 20.77 15.32

Jun 8.23 9.25 12.39

26.22 29.99 14.38

Jul 7.98 9.78 22.56

34.21 39.74 16.16

Aug 7.91 8.14 2.91

42.13 47.87 13.62

Sep 9.14 8.97 -1.86

51.26 56.86 10.92

Oct 8.76 8.24 -5.94

60.01 65.10 8.48

Nov 8.26 7.86 -4.84

68.29 72.94 6.81

Dec 9.29 9.08 -2.26

77.58 82.00 5.70

Jan 10.65 9.95 -6.57

88.21 91.90 4.18

Source - Railway Board Website

http://www.rediffmail.com/cgi-bin/red.cgi?red=http%3A%2F%2Fwww%2Eindianrailways%2Egov%2Ein%2F&isImage=0&BlockImage=0&rediffng=0&rogue=4887fd70ca2cf8b7b084d6207f6ae25bbdf1dcdc

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Statement - II

Railway Zone-wise Loading by Rail (Cement +Clinker)



(Mn.T)

2014 2015 %age

2013-2014 2014-2015 %age

Railway - Zone (Jan) (Jan) Change

(Apr-Jan) (Apr-Jan) Change

Central Railway 0.69 0.66 -4.35

5.32 5.76 8.27

Eastern Railway 0.23 0.33 43.48

1.91 2.55 33.51

East Central Railway 0.25 0.13 -48.00

2.16 1.54 -28.70

East Coast Railway 0.10 0.07 -30.00

0.85 0.74 -12.94

Northern Railway 0.24 0.21 -12.50

1.92 1.99 3.65

North Central Railway 0.22 0.28 27.27

1.87 2.54 35.83

North Eastern Railway 0.01 0.00 -100.00

0.02 0.00 -100.00

Northeast Frontier Railway 0.06 0.09 50.00

0.21 0.48 128.57

North Western Railway 0.68 0.72 5.88

5.78 5.19 -10.21

Southern Railway 0.39 0.15 -61.54

2.38 2.48 4.20

South Central Railway 2.69 2.51 -6.69

22.80 23.62 3.60

South Eastern Railway 0.89 0.74 -16.85

7.16 7.18 0.28

South East Central Railway 1.41 1.26 -10.64

11.67 12.51 7.20

South Western Railway 0.03 0.07 133.33

0.46 0.49 6.52

Western Railway 0.70 0.70 0.00

6.27 6.05 -3.51

West Central Railway 2.06 2.03 -1.46

17.43 18.78 7.75

Grand Total 10.65 9.95 -6.57

88.21 91.90 4.18


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Statement- III

Railway Zone-wise Revenue Earnings from Cement



(Rs. In Crores)

2014 2015 %age

2013-2014 2014-2015 %age

Railway - Zone (Jan) (Jan) Change

(Apr-Jan) (Apr-Jan) Change

Central Railway 53.87 60.09 11.55

416.60 489.82 17.58

Eastern Railway 12.62 19.71 56.18

104.64 144.57 38.16

East Central Railway 11.66 3.93 -66.30

91.48 61.30 -32.99

East Coast Railway 7.14 6.42 -10.08

61.73 64.22 4.03

Northern Railway 14.33 12.33 -13.96

105.42 115.44 9.50

North Central Railway 10.93 15.04 37.60

99.91 138.35 38.47

North Eastern Railway 0.39 0.00 -100.00

1.19 0.44 -63.03

Northeast Frontier Railway 4.59 9.61 109.37

14.83 48.95 230.07

North Western Railway 58.38 68.36 17.09

475.94 473.46 -0.52

Southern Railway 24.64 9.53 -61.32

144.08 146.17 1.45

South Central Railway 243.44 242.80 -0.26

1925.82 2022.96 5.04

South Eastern Railway 57.87 50.12 -13.39

433.90 467.87 7.83

South East Central Railway 133.22 126.44 -5.09

1109.08 1236.81 11.52

South Western Railway 2.52 5.91 134.52

37.26 38.32 2.84

Western Railway 61.05 66.84 9.48

530.08 532.51 0.46

West Central Railway 169.13 180.28 6.59

1379.12 1569.98 13.84

Grand Total 865.78 877.41 1.34

6931.08 7551.17 8.95


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It will be observed from Statement-I that in the first four months (April-July 2014), the industry witnessed an appreciable growth in cement loading by Rail ranging between 12% and 23%. However, from September 2014 onwards, there has been a constant drop in the cement loading by Rail which includes clinker despatches also. The fall in cement loading by Rail was (-) 1.86%, (-) 5.94%, (-) 4.84%, (-) 2.26% and (-) 6.57% during the months of September, October, November, December 2014 and January 2015 respectively on MOM basis. Even in the month of August 2014, there was only a marginal growth of 2.91% on MOM basis in cement loading by Rail. One of the reasons for this sharp decline in the loading by Rail was acute shortages of rakes availability to the cement industry from August 2014 onwards, particularly in some major clusters, namely East Central Railway, Northern Railway, North Western Railway, Southern Railway, South Central Railway, South Eastern Railway and Western Railway. This has jeopardized the despatches plans of the cement industry completely. However, when cumulative growth of cement loading by Rail for ten months period (April-January 2015) is compared with the corresponding period of previous year, there has been a significant growth of 4.18% (from 88.21 million tonnes in April-January 14 to 91.90 million tonnes in April-January 15) as against the growth of 2.71% registered during the corresponding period of 2013, as can be observed from the table below :

%age Change in Loading by Rail (Cement and Clinker)

Month

%age Change

2013-14/2012-13

%age Change

2014-15/2013-14

Month Cumm. Month Cumm.

Apr 0.54 0.54 13.70 13.70

May -8.18 -3.90 16.80 15.32

Jun 0.98 -2.56 12.39 14.38

Jul -2.44 -2.42 22.56 16.16

Aug 5.19 -1.08 2.91 13.62

Sep 14.11 1.26 -1.86 10.92

Oct -1.68 0.82 -5.94 8.48

Nov 3.77 1.20 -4.84 6.81

Dec 6.54 1.84 -2.26 5.70

Jan 10.13 2.71 -6.57 4.18

For despatching 91.90 million tonnes of Cement and Clinker during April-January 2015, the revenue collection by the Railways from the Cement Industry was Rs. 7551.17 crores as against Rs. 6931.08 crores for loading 88.21 million tonnes last year for the same period, registering an increase of 8.95% in the Revenue Generation.

Highways/Roads/Bridges CCEA gives nod to highway projects worth `8,600 crore

The government on Thursday approved over Rs 8,600 crore of highway projects in Uttar Pradesh, Orissa and Chhattisgarh. "The Cabinet Committee on Economic Affairs (CCEA) has given its approval for the six laning of the Chakeri-Allahabad section of national highway in Uttar Pradesh," an official statement said. The total cost of this project is estimated to be Rs 1,999.85 crore.

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It has also approved six laning of the Handia-Varanasi section of National Highway in tar Pradesh. This project cost is estimated to be Rs.2,378.59 crore and total length will be about 72.4 kms. The CCEA also approved six-laning of Baleshwar-Chandikhole section of National Highway in Orissa. The project cost is estimated to be Rs 2,296.82 crore and total length will be about 137 kms. The CCEA has given its approval for development of four to six laning of the Raipur-Bilaspur section of National Highway in Chhattisgarh. The cost is estimated to be Rs 1,963.88 crore and total length of the road will be approximately 127 kms. The work for these projects will be under the National Highways Development Project (NHDP) Phase-V.

The Indian Express

New Delhi, 20.02.2015

Nitin Gadkari’s Innovative Plans

Union minister Nitin Gadkari revealed some interesting ideas during his interaction with this newspaper, apart from welcome determination to get things done. The most important among his ideas is speeding up highway construction with oodles of extra-budgetary resources, and using renewable fuel in city transport to bring down pollution levels. Gadkari is also determined to substitute cement for bitumen in all future road building, replacing imports with local produce in the process. And he expects to offset the higher upfront costs of cement roads through scale economies in huge purchase commitments on cement. The minister plans to utilise the future stream of toll collections to raise capital for investment now, through securitization or bond flotation. And he plans to augment toll revenues with fees from fibre-optic cables, transmission lines, gas pipelines, etc, that run alongside highways, besides from advertising. Also welcome is the intention to switch from physical toll collections to e-tolling, and in due course, de-tolling as costs are recouped. The minister's proposal to revamp the public-private partnership model also makes sense, as the extant model has flopped. Gadkari proposes a 40% government stake in the equity of road projects, with the remaining 60% raised by the private developer. State participation will help not only with funding but also in speeding up clearances and mitigating the myriad risks that stymie large projects in India. Such derisking will lower the cost of financing. In low-density traffic corridors, the state equity share could be higher, say, 60%. The government anyway plans to take on huge risks, like shortfalls in traffic projections, and it surely pays to be adequately capitalised to begin with. The world over, governments almost entirely fund roads India cannot dump it all on the private sector. The proposal to use city sewage and other waste, whether sorted household garbage or refuse from vegetable markets, for generating biogas, with which to generate , power or run public transport, is bold and doable. Cities must come forward to try out pilot projects.

The Economic Times

New Delhi, 20.02.2015

Focus on Scientific Road Construction Minister for road transport, highways and shipping Nitin Gadkari has said an appropriate scientific approach towards quality construction, time-bound solutions and road safety would certainly lower the number of road accidents.

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Mr Gadkari was speaking at the inaugural session of a workshop-cum-exhibition on 'adoption of innovative technologies and materials for road construction in India' organized by Indian Academy of Highway Engineers (IAHE) and ministry of road transport and highways in association with the World Bank at Noida today. The minister emphasised on the use of locally available material in the road construction sector to bring down costs. He added that there is a need to reduce the time for completion of projects, particularly in extremism-affected areas, through use of pre-fabricated and innovative technologies. Earlier, road transport & highways secretary Vijay Chhibber said MoRTHS has issued norms that new alternative materials/technologies proven in India or abroad shall be deemed to be accredited for adoption the highway sector.

The Statesman

New Delhi, 21.02.2015

Speed up project restructuring, say developers

Taking steps to improve the speed of project restructuring, distributing project across stake-holders, slashing interest rates to make available cheaper finance are some of the major demands made by the infrastructure players with stakes in the highway sector for this Budget. Finan¢e costs account for a large row on of the project costs. On interest rates, L&T Infrastructure Development Project Ltd's CEO and MD K Venkatesh said interest during construction can be 15-20 per cent of project cost on commissioning the asset, interest is 50-70 per cent of toll revenues. Srei Infrastructure Finance's CMD Hemant Kanoria also sought a 200 basis points reduction in interest rates. "There is a need to speed up restructuring of projects by identifying the underlying causes that are preventing projects from progressing be it the lack of physical progress or of good, project financials," added Venkatesh. There could be projects that have been commissioned, but rules of the game have changed due to factors beyond the control of investors. For instance, there could be a resistanse to pay toll by the highway users, he added. Banks' appetite tolend has gone down as they perceive more risks in projects. Developers are pitching for a mechanism that makes government shoulder a higher share of risk for any delay in decisions such as timely land acquisition and utility clearances. In effect, if the project costs soar due to any such delays on government agencies' part then the private developer should be accordingly compensated.

Major highway developers expect the project costs to go up due to the new land acquisition law. The Government has to find a way to ensure progress on all ongoing projects that are stuck due to land acquisition or delays in utility clearance, players assert.

Developing a long-term bond market by making available infrastructure investment trusts is another point on which, the infrastructure developer has sought government initiative. There are also tax-related demands regarding minimum alternate tax and removing the cascading effect of dividend distribution tax.

Venkatesh feels there should be more public-funded projects. However, the government has to take a call in view of the fiscal deficit. Funds to build highways are expected to go up with the Modi led government imposing an excise duty on fuel, a move which is likely to mop up an additional `19,000 crore. IL&FS Transportation Network Ltd has also recommended for setting up of an independent road sector regulator and clarity on its role. Highway users pay toll charges of over `15,000 crore a year for using the national highways network. A regulator is expected to monitor the quality of service provided by the highway operator.


New Delhi, 21.02.2015

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‘`10 lakh cr investment in highways, shipping by 2019’

Unveiling plans for `10 lakh crore investment in highways and shipping sectors by 2019, Union Minister Nitin Gadkari today said the face of India's basic infrastructure will be changed in five years. "My endeavour is to do work worth over if `5 lakh crore in highways sector during my present tenure. Another `5 lakh crore will be invested in the shipping sector taking the investments'" both the crucial infrastructure ministries to `10 lakh crore," Road Transport, Highways and Shipping Minister Gadkari told PTI in an interview here today. "I am sure this will change the face of the basic infrastructure in five years as projects have' already been fast-tracked while concerted efforts are on to remove all bottlenecks," he added. Gadkari said he was committed to overhauling the infrastructure of the capital as well as of the country and visible changes will be there.


New Delhi, 23.02.2015

Govt on the offensive, cities Opposition double-speak

The Bharatiya Janata Party on Wednesday went all out to convince the Opposition that the changes to the Land Acquisition Act, Rehabilitation and Resettlement Act, 2013, were in the interests of farmers. While on Tuesday BJP leaders led by finance minister Arun Jaitley had countered allegations by opposition parties that the amendments were not in favour of farmers, on Wednesday, road transport and highways minister Nitin Gadkari accused them of practising double standards. With the BJP facing opposition even from it allies like the Shiv Sena, Gadkari highlighted the fact that the compensation being offered now - four times the value of the land - was in fact higher than the level offered by states such as Maharashtra. Pointing out how the highways and coal ministries had compensated farmers to the tune of `2,000 crore after coal and land ordinances had been promulgated, the minister observed that 13 frequently used Acts that had been left out of the purview of the land Act had been brought into its fold, by which a larger numbers of farmers and families would get compensation. Gadkari, however, said the government was open to any suggestions. "If people have some opinion on social impact assessment or consent clauses, we are willing to hear them," he told reporters. On Tuesday, Prime Minister Narendra Modi had asserted at the BJP parliamentary meet that there was no going back on the changes. The ordinance has exempted certain categories of projects from conducting a social impact assessment (SIA) study and also from the consent clause under which private companies must obtain the prior consent of at least 80% of the affected families and public-private partnership projects must obtain that of at least 70%. These projects include those for rural infrastructure including electrification, affordable housing, industrial corridors, infrastructure and social infrastructure projects, including PPP projects where the ownership of the land continues to vest with the government. According to ministry documents, several states had observed at a meeting in June 2014 that the land Act passed by the UPA government in 2013 made development difficult. Ministry documents show that Haryana (then ruled by the Congress) was in favour of doing away with the consent clause for PPP projects or bringing it down to 50% from 70%. The Kerala government, also led by the Congress, had observed in its comments that identifying landowners and obtaining their consent prior to the preliminary notification could prove to be difficult.


New Delhi, 26.02.2015

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Inland Waterways & Irrigation Canals Panel Proposes More Financial Power for 12 Major Port Trusts

A high-level committee constituted by the shipping ministry has proposed more financial powers for the country's 12 major port trusts to allow them to take decisions faster and function more like commercial organisations on a par with public sector enterprises. The committee, comprising officials of the shipping ministry and representatives of port trusts, has recommended that board of port trusts be given full powers to execute contracts, take temporary loans, sanction works up to `200 crore and write off losses up to `40 crore in a year. "It will expedite a lot of our future projects, for which we had to get the ministry's approval. This does not mean that the scrutiny of the projects will be compromised in anyway," said Ravi Parmar, chairman of Mumbai and Kandla Port Trusts. At present, port trusts have to seek permission from the shipping ministry for projects over `50 crore. The committee has also suggested enhancing the powers of port trusts chairmen to decide over legal and trade matters. "Decentralisation is a good thing with the caveat that port management be professionalised. Powers should be delegated into the hands of competent people," former shipping secretary K Mohandas said. The government is also planning to provide training for port officers at Indian and international institutions to get "the required orientation."

The Economic Times

New Delhi, 21.02.2015

LABOUR General

Govt may relax LTC norms in Budget In order to give a boost to the tourism sector, the Budget for 2015-16 is likely to expand the scope of LTA and LTC by including hotel and other expenses besides travel for the purpose of tax benefit. The ministry, sources said, is also considering a proposal to allow employees to avail Leave Travel Concession (LTC)/Leave Travel Allocation (LTA) every year as against the current practice of two times in a block of four years. At present, LTA or LTC covers only economy class air travel or first class (AC I Class) rail fare. An announcement in this regard is likely to be made in the Budget to be presented by the finance minister Arun Jaitley on 28 February.

The Statesman

New Delhi, 20.02.2015

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MISCELLANEOUS

Govt offers home loans to its staff The state government has offered its 19 lakh employees home loans between Rs 20 and 50 lakh, depending upon the category of the city or district they work in. The state finance ministry has also made available loans between Rs 5 and 15 lakh for renovation of employees' existing properties, depending upon his/her salary structure. According to government the sixth pay commission has already fixed the categories of cities, depending upon the prevailing rates of properties like independent houses, flats and plots. The only pre-condition to avail such a benefit is the completion of five year in the state government service. Those employees whose tenure left m government ser-vice is less than five years will not be able to opt for the loan facility, it pointed out further. "In cities falling in the 'X' category the government has offered principal home loan up to Rs 50 lakh, while in 'Y

category cities the same will be upto Rs 30 lakh. For remaining areas, it is around Rs 20 lakh," a state government release said. Recently, the government announced a hike in the salary from the current month by increasing the dearness allowance from earlier 100% to now 107% with retrospective effect. The state has also decided to continue with the family pension scheme for Widows who have remarried. The state has also allowed such a facility to the parents of deceased unmarried employees. Any property to be bought using the government loan facility should be in the name of the one who is opting for such a loan and the interest rates in that year would be applicable.

The Times of India

Mumbai, 24.02.2015

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